1
INFORMATION FOR
THE BOARD OF DIRECTORS OF
NORWOOD PROMOTIONAL
PRODUCTS
[J.C. BRADFORD & CO. LOGO]
MARCH 7, 1998
2
INVESTMENT BANKING GROUP
I. Summary Analysis
II. Comparable Company Analysis
III. Discounted Cash Flow Analysis
IV. LBO Analysis
V. Comparable Transaction Analysis
VI. Premium Analysis
VII. Stock Price and Ownership Profiles
VIII. Company Projections
(i)
3
INVESTMENT BANKING GROUP
AUSTIN -- COMPANY PROJECTIONS
SUMMARY VALUATION MULTIPLES AT PROPOSED $20.70 OFFER
(IN THOUSANDS)
Proposed Offer Price:....................................... $ 20.70
Current Shares Outstanding:................................. 5,311
--------
Equity Value........................................... $109,929
Add: Debt, Net of Cash...................................... 56,495
Market Capitalization.................................. $166,424
PRICE TO TRAILING EARNINGS MULTIPLE
Equity Value................................................ $109,929
LTM Earnings Ended 11/30/97................................. 6,008
--------
Multiple.................................................... 18.3x
PRICE TO 1998 EARNINGS MULTIPLE
Equity Value................................................ $109,929
Estimated Earnings Ended 12/31/98........................... 8,729
--------
Multiple.................................................... 12.6x
PRICE TO 1999 EARNINGS MULTIPLE
Equity Value................................................ $109,929
Estimated Earnings Ended 12/31/99........................... 10,707
--------
Multiple.................................................... 10.3x
PRICE TO BOOK VALUE MULTIPLE
Equity Value................................................ $109,929
Current Book Value 11/30/97................................. 53,204
--------
Multiple.................................................... 2.1x
PRICE TO LTM EBITDA MULTIPLE
Equity Value................................................ $166,424
LTM EBITDA 11/30/97......................................... 23,267
--------
Multiple.................................................... 7.2x
PRICE TO 1998 EBITDA MULTIPLE
Equity Value plus Debt, Net of Cash(1)...................... $163,627
Estimated EBITDA 8/31/98.................................... 25,975
--------
Multiple.................................................... 6.3x
PRICE TO LTM REVENUE MULTIPLE
Equity Value plus Debt, Net of Cash......................... $166,424
LTM Revenue Ended 11/30/97.................................. 182,981
--------
Multiple.................................................... 0.91x
- ---------------
(1) Total debt, net of cash at 8/31/98 is projected to be $53,698
1
4
INVESTMENT BANKING GROUP
SUMMARY OF PROJECTIONS PROVIDED BY MANAGEMENT
(NUMBERS IN THOUSANDS)
(FISCAL YEAR ENDED AUGUST)
PROJECTED SUMMARY INCOME STATEMENT
1998 1999 2000 2001 2002 2003 CAGR%
-------- -------- -------- -------- -------- -------- -----
Revenues............. $193,391 $207,846 $223,500 $239,900 $257,562 $276,160 7.4%
EBITDA............... 25,976 29,318 32,169 35,366 38,508 42,510 10.4%
Pre-tax Income....... 13,695 16,998 20,448 24,444 28,885 33,886 19.9%
HISTORICAL SUMMARY INCOME STATEMENT
1993 1994 1995 1996 1997 CAGR%
------- ------- -------- -------- -------- -----
Revenues......................... $49,300 $62,385 $103,860 $144,048 $175,833 37.4%
EDITDA(1)........................ 6,485 8,526 14,476 16,841 12,878 14.7%
Pre-tax Income(1)................ 2,678 5,308 6,832 6,922 1,721 (8.5%)
- ---------------
(1) Includes extraordinary losses before taxes of 40%.
2
5
INVESTMENT BANKING GROUP
SUMMARY VALUATION FOR AUSTIN
(IN THOUSANDS, EXCEPT PER SHARE)
PROPOSED MARKET VALUATION:
AUSTIN
--------
Proposed offer price........................................ $ 20.70
Shares outstanding.......................................... 5,311
--------
Equity Mkt Cap of Offer:.................................. $109,929
========
COMPARABLE COMPANY VALUATION:
IMPLIED PRICES
AUSTIN ADJ. AVG. --------------
FINANCIALS MULT. MULT. ADJ. AVG.
---------- ------ --------- --------------
Trailing Earnings(1).................... $ 6,008 18.3x 15.4x $ 17.45
Est. '98 Earnings....................... 8,729 12.6x 13.1x 21.54
Est. '99 Earnings....................... 10,707 10.3x 11.2x 22.61
Trailing EDITDA multiple(1)(2).......... 23,267 7.2x 7.4x 21.95
Trailing Revenues(1)(2)................. 182,981 0.91x 0.93x 21.54
Book Value.............................. 53,204 2.1x 1.7x 17.40
Relevant Range:....................... $17.40-$22.61
LBO ANALYSIS:
ASSUMPTIONS RESULTS
----------- -------
0% Revolver
57% Senior sub-debt $111.6 million ($21.00 per share) purchase price yields:
14% Senior term loan 25.0% return to convertible preferred equity holders.
11% Preferred Stock 35.3% return to equity holders.
17% Management equity -- Common
Stock
6.25x EBITDA exit multiple
ASSUMPTIONS RESULTS
----------- -------
0% Revolver
58% Senior sub-debt $109.9 million ($20.70 per share) purchase price yields:
14% Senior term loan 25.0% return to convertible preferred equity holders.
12% Preferred Stock 36.9% return to equity holders.
16% Management equity -- Common
Stock
6.25x EBITDA exit multiple
Relevant Range: $20.50 - $21.50
3
6
MARKET PREMIUMS VALUATION:
ONE DAY ONE WEEK ONE MONTH
PRIOR TO PRIOR TO PRIOR TO
ANNOUNCEMENT ANNOUNCEMENT ANNOUNCEMENT
ALL CASH DEALS SINCE 1/1/95 ------------ ------------- ------------
Actual Stock Prices:.................... $17.38 $16.38 $15.88
30 Day Average Price:................... 16.12 16.12 16.12
Median Premium.......................... 24.0% 27.5% 33.6%
Implied Stock Price:
Actual Stock Prices:.................... $21.54 $20.88 $21.21
30 Day Average Price:................... 19.98 20.55 21.54
Relevant Range:......................... $20.00-$21.50
- ---------------
(1) LTM results as of November 1997.
(2) At 11/30/97, Austin's total debt, net of cash was $56,495.
4
7
INVESTMENT BANKING GROUP
SUMMARY VALUATION FOR AUSTIN
(IN THOUSANDS, EXCEPT PER SHARE)
PROPOSED MARKET VALUATION:
AUSTIN
--------
Proposed offer price........................................ $ 20.70
Shares Outstanding.......................................... 5,311
--------
Equity Mkt Cap of Offer: $109,929
========
DISCOUNTED CASH FLOW VALUATION:
COMPANY PROJECTION MODEL
EBITDA AVERAGE
DISCOUNT MULTIPLES EQUITY
RATE APPLIED LOW HIGH VALUE RELEVANT RANGE
-------- ----------- ------ ------ ------- ---------------
Operating Cash Flow
Method.................. 16.5% 5.50x-6.25x $20.38 $23.17
17.0% 5.50x-6.25x 19.82 22.56 $21.19 $19.27 - $23.17
17.5% 5.50x-6.25x 19.27 21.96
NET INCOME AVERAGE
DISCOUNT MULTIPLES EQUITY
RATE APPLIED LOW HIGH VALUE RELEVANT RANGE
-------- ----------- ------ ------ ------- ---------------
Free Cash Flow Method..... 19.0% 12.0x-13.0x $20.79 $22.37
19.5% 12.0x-13.0x 20.36 21.91 $21.14 $19.94 - $22.37
20.0% 12.0x-13.0x 19.94 21.45
NET INCOME
DISCOUNT MULTIPLES
RATE APPLIED RANGE RELEVANT RANGE
-------- ----------- --------------- ---------------
Discounted Future Stock Price
2003 Net Income............ 19%-20% 12.0x-13.0x $18.16 - $20.51
2002 Net Income............ 19%-20% 12.0x-13.0x 18.57 - 20.80
2001 Net Income............ 19%-20% 12.0x-13.0x 18.86 - 20.95 $18.16 - $20.95
2000 Net Income............ 19%-20% 12.0x-13.0x 18.93 - 20.85
1999 Net Income............ 19%-20% 12.0x-13.0x 18.88 - 20.63
5
8
INVESTMENT BANKING GROUP
HISTORICAL ACTUAL VS. BUDGETED FINANCIAL RESULTS FOR AUSTIN
1995 1996 1997
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
------- -------- -------- -------- -------- -------- -------- -------- --------
Total Revenue......... $88,142 $103,860 17.8% $135,119 $151,962 12.5% $183,683 $175,835 (4.3)%
Cost of Sales......... 60,566 70,963 91,558 106,992 129,008 125,732
------- -------- -------- -------- -------- --------
Gross Profit.......... 27,576 32,897 19.3% 43,561 44,970 3.2% 54,675 50,103 (8.4)%
% of Total Rev........ 31.3% 31.7% 32.2% 29.6% 29.8% 28.5%
S,G&A................. 18,579 22,446 29,590 34,583 37,253 36,945
------- -------- -------- -------- -------- --------
Operating Profit...... 8,997 10,451 16.2% 13,971 10,387 (25.7)% 17,422 13,158 (24.5)%
% of Total Rev........ 10.2% 10.1% 10.3% 6.8% 9.5% 7.5%
Pre-Tax(1)............ 6,446 6,832 6.0% 8,771 6,922 (21.1)% 14,022 1,721 (87.7)%
Net Income............ 3,836 4,032 5.1% 5,175 4,155 (19.7)% 8,274 1,004 (87.9)%
EPS................... $ 1.07 $ 1.11 3.7% $ 1.40 $ 0.82 (41.4)% $ 1.41 $ 0.18 (87.2)%
- ---------------
(1) Includes extraordinary losses before taxes of 40%.
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9
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
PROJECTED INCOME STATEMENTS -- ADJUSTED FOR CALENDAR YEAR END
(NUMBERS IN THOUSANDS)
(FISCAL YEAR ENDED AUGUST) 3/5/98 6:13 PM
YEAR END AUGUST 31,
--------------------------------------
1997 1998 1999 2000
------ ------ ------- -------
Net income........................................... $1,004 $8,079 $10,029 $12,064
PROJECTED, YEAR END DECEMBER 31,
- ---------------------------------------------------------------------------
1998 1999
- ---------------------------------- -----------------------------------
(8/12 X $8,079) + (4/12 X $10,029) (8/12 X $10,029) + (4/12 X $12,064)
$8,729 $10,707
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10
INVESTMENT BANKING GROUP
AUSTIN COMPARABLE COMPANIES
COMPARABLE COMPANY MARKET MULTIPLES
CAL. 1999 5-YEAR 52 WEEK
LTM LTM CAL. 1998 EST. PROJECTED ---------------
COMPANY TICKER END EPS EST. EPS EPS(1) GROWTH RATE HIGH LOW
- ------- ------ ------ ------ --------- --------- ----------- ------ ------
AUSTIN....................................... AUSTIN NOV 97(2) $ 1.13 $1.64 $2.02 18.0% $18.00 $12.00
C S S Industries, Inc........................ CSS Dec 97 2.23 2.55 2.86 12.0% 39.25 26.38
Equity Marketing, Inc........................ EMAK Sep 97 1.37 1.85 2.25 25.0% 30.75 16.25
Lillian Vernon Corp.......................... LVC Nov 97 0.97 1.27 1.46 15.0% 18.63 12.50
Racing Champions Corp........................ RACN Dec 97 0.73 0.86 1.07 25.0% 18.50 6.50
Swiss Army Brands, Inc....................... SABI Dec 97 (0.49) 0.45 0.52 15.0% 13.50 9.13
Median (excluding NPPI):..............
Average (excluding NPPI):.............
Adjusted Average (excludes high and
low and NPPI):.......................
BASED ON CLOSING STOCK PRICE AS OF 3/3/98
-------------------------------------------
PRICE/ PRICE/ CAL. 1998 CAL. 1999 PRICE/
PRICE PRICE/ CAL. 1998 CAL. 1999 PE/ PE/ BOOK
COMPANY PER SHARE LTM EPS EST. EPS EST. EPS GROWTH RATE GROWTH RATE VALUE
- ------- --------- ------- --------- --------- ----------- ----------- ------
AUSTIN....................................... $20.70 18.3x 12.6x 10.3x 70.0% 57.0% 2.1x
C S S Industries, Inc........................ 34.81 15.6 13.7 12.2 113.8% 101.6% 2.0
Equity Marketing, Inc........................ 20.88 15.2 11.3 9.3 45.1% 37.1% 2.6
Lillian Vernon Corp.......................... 17.06 17.6 13.4 11.6 89.3% 77.7% 1.4
Racing Champions Corp........................ 10.50 14.4 12.3 9.8 49.0% 39.2% 1.8
Swiss Army Brands, Inc....................... 11.50 NM 25.6 22.2 170.4% 148.1% 1.2
Median (excluding NPPI):.............. 15.4x 13.4x 11.6x 89.3% 77.7% 1.8x
Average (excluding NPPI):............. 15.7 15.2 13.0 93.5% 80.7% 1.8
Adjusted Average (excludes high and
low and NPPI):....................... 15.4 13.1 11.2 84.0% 72.8% 1.7
- ---------------
(1) When calendar 1999 EPS Multiple is not available it is approximated using
company's 5-year projected growth rate.
(2) Austin's EPS figures are calculated from company projected net income
figures, adjusted for calendar year ends and divided by current fully
diluted shares outstanding.
8
11
INVESTMENT BANKING GROUP
AUSTIN COMPARABLE COMPANIES
COMPARABLE COMPANY MARKET CAPITALIZATION MULTIPLES
TOTAL TOTAL LTM MARKET MARKET
3/3/98 NUMBER OF TOTAL DEBT, NET MARKET TOTAL LTM CAP./ CAP./
TICKER PRICE SHARES EQUITY OF CASH CAPITAL REVENUES EBITDA EBITDA REVENUES
------ ------ --------- -------- --------- -------- -------- ------- ------ --------
(IN THOUSANDS)
AUSTIN.................... AUSTIN $20.70 5,311 $109,929 $ 56,495 $166,424 $182,981 $23,267 7.2x 0.91x
C S S Industries, Inc. ... CSS 34.81 10,875 378,586 106,546 485,132 357,720 59,944 8.1 1.36
Equity Marketing, Inc. ... EMAK 20.88 4,079 85,149 0 85,149 130,946 15,036 5.7 0.65
Lillian Vernon Corp. ..... LVC 17.06 9,482 161,787 0 161,787 251,736 17,898 9.0 0.64
Racing Champions Corp. ... RACN 10.50 13,242 139,041 22,661 161,702 76,562 23,838 6.8 2.11
Swiss Army Brands, SABI
Inc. ................... 11.50 8,210 94,415 0 94,415 118,744 (3,230) NM 0.80
Median (excluding
NPPI):.......... 7.4x 0.80x
Average (excluding
NPPI):.......... 7.4 1.11
Adjusted Average
(excludes high
and low and
NPPI):.......... 7.4 0.93
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12
INVESTMENT BANKING GROUP
AUSTIN COMPARABLE COMPANIES
COMPARABLE COMPANY SUMMARY VALUATION
OVERALL ADJUSTED AVERAGE MULTIPLES
(IN THOUSANDS)
PRICE TO TRAILING EARNINGS MULTIPLE BASIS:
LTM earnings ended November 30, 1997...................... $ 6,008
Adjusted Average Multiple................................... 15.42x
--------
$ 92,668
Implied Share Price:........................................ $ 17.45
PRICE TO CALENDAR 1998 EARNINGS MULTIPLE BASIS:
Estimated earnings ended December 31, 1998.................. $ 8,729
Adjusted Average Multiple................................... 13.10x
--------
$114,365
Implied Share Price:........................................ $ 21.54
PRICE TO CALENDAR 1999 EARNINGS MULTIPLE BASIS:
Estimated earnings ended December 31, 1999.................. $ 10,707
Adjusted Average Multiple................................... 11.21
--------
$120,073
Implied Share Price:........................................ $ 22.61
LTM EBITDA MULTIPLE BASIS:
LTM EBITDA ended November 30, 1997.......................... $ 23,267
Adjusted Average Multiple................................... 7.44x
--------
173,066
Less total debt, net of cash on November 30, 1997........... 56,495
--------
$116,571
Implied Share Price:........................................ $ 21.95
LTM REVENUES MULTIPLE BASIS:
LTM Revenues ended November 30, 1997........................ $182,981
Adjusted Average Multiple................................... 0.93x
--------
170,877
Less total debt, net of cash on November 30, 1997........... 56,495
--------
$114,382
Implied Share Price:........................................ $ 21.54
10
13
INVESTMENT BANKING GROUP
AUSTIN COMPARABLE COMPANIES
COMPARABLE COMPANY SUMMARY VALUATION
MEDIAN MULTIPLES
(IN THOUSANDS)
PRICE TO TRAILING EARNINGS MULTIPLE BASIS:
LTM earnings ended 11/30/97................................. $ 6,008
Median Multiple............................................. 15.42x
--------
$ 92,668
Implied Share Price:........................................ $ 17.45
PRICE TO CALENDAR 1998 EARNINGS MULTIPLE BASIS:
Estimated earnings ended 12/31/98........................... $ 8,729
Median Multiple............................................. 13.40x
--------
$116,931
Implied Share Price:........................................ $ 22.02
PRICE TO CALENDAR 1999 EARNINGS MULTIPLE BASIS:
Estimated earnings ended 12/31/99........................... $ 10,707
Median Multiple............................................. 11.65
$124,718
--------
Implied Share Price:........................................ $ 23.48
LTM EBITDA MULTIPLE BASIS:
LTM EBITDA ended 11/30/97................................... $ 23,267
Median Multiple............................................. 7.44x
--------
173,066
Less total debt, net of cash on 11/30/97.................... 56,495
--------
$116,571
Implied Share Price:........................................ $ 21.95
LTM REVENUES MULTIPLE BASIS:
LTM Revenues ended 11/30/97................................. $182,981
Median Multiple............................................. 0.80x
--------
145,491
Less total debt, net of cash on 11/30/97.................... 56,495
--------
$ 88,996
Implied Share Price:........................................ $ 16.76
11
14
INVESTMENT BANKING GROUP
AUSTIN VS. PROMOTIONAL COMPANY INDEX* AND NASDAQ COMPOSITE INDEX AND S&P 400
INDUSTRIALS SINCE 12/29/95
[CHART]
*Promotional Company Index includes CSS, EMAK, LVC, RACN and SABI.
12
15
INVESTMENT BANKING GROUP
PROMOTIONAL COMPANIES
WEEKLY PRICE & VOLUME TRADING STATISTICS SINCE 12/29/95
CSS INDUSTRIES, INC. EQUITY MARKETING, INC.
[CHART] [CHART]
LILLIAN VERNON CORP. AUSTIN
[CHART] [CHART]
13
16
INVESTMENT BANKING GROUP
PROMOTIONAL COMPANIES
WEEKLY PRICE & VOLUME TRADING STATISTICS SINCE 12/29/95
RACING CHAMPIONS CORP. SWISS ARMY BRANDS, INC.
[CHART] [CHART]
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17
INVESTMENT BANKING GROUP
DESCRIPTION OF COMPARABLE COMPANIES
CSS INDUSTRIES, INC. is a diversified company involved in the sale of
consumer and business products. The Company's subsidiaries, The Paper Magic
Group, Inc. and Berwick Industries, Inc., designs, manufactures and sells gift
wrap, gift bags, boxed greeting cards, decorative products and many others. CSS,
through Rapidforms, Inc., designs and sells business forms and supplies.
EQUITY MARKETING INC., designs, develops, produces and markets custom made
toy, gift and other products based on entertainment properties licensed by
television and motion pictures studios. The products include figurines, action
vehicles, plush toys, dolls and other novelty items. The Company sells its
products worldwide to restaurant chains, consumer product companies and toy/gift
distributors.
LILLIAN VERNON CORPORATION retails gift, household, gardening, kitchen,
Christmas and children's products. The Company publishes eight catalog titles;
"Lillian Vernon," "Lilly's Kids," "Christmas Memories," "Neat Ideas For An
Organized Life," "Lillian Vernon's Kitchen," "Personalized Gifts," "Private
Sale" and "Welcome To The Best of Lillian Vernon."
RACING CHAMPIONS CORPORATION produces and markets collectible scaled die
cast vehicle replicas. The Company's product lines include and extensive line of
officially licensed collectible replicas of actual race cars and related
vehicles from the five most popular US professional racing series, including
NASCAR. Racing Champions also produces non-racing vehicle replicas and pewter
figures.
SWISS ARMY BRANDS, INC. markets the "Victorinox Original Swiss Army" Knife
in the United States, Canada and the Caribbean. The Company also markets "Swiss
Army" brand watches, sunglasses and writing instruments; "Swiss Air Force"
watches; "Victorinox" watches and "R.H. Forschner" professional cutlery.
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INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED CASH FLOW ANALYSIS -- OPERATING CASH FLOW EBITDA EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
March 5, 1998 5:32 PM
1999 2000 2001 2002 2003
------- ------- ------- ------- -------
EBITDA....................................... $29,318 $32,168 $35,366 $38,508 $42,510
Depreciation and amortization................ 8,120 8,121 8,122 8,123 8,124
Interest expense............................. 4,200 3,600 2,800 1,500 500
Other expenses............................... -- -- -- -- --
------- ------- ------- ------- -------
Pre-tax income............................. 16,998 20,447 24,444 28,885 33,886
Provision for income taxes................... 6,969 8,383 10,022 11,843 13,893
------- ------- ------- ------- -------
Net income................................... 10,029 12,064 14,422 17,042 19,993
======= ======= ======= ======= =======
Add: Depreciation & amortization........... 8,120 8,121 8,122 8,123 8,124
Add: After-tax interest expense............ 2,478 2,124 1,652 885 295
Less: Net additions to working
capital(1).............................. (3,200) (3,300) (3,400) (3,900) (3,800)
Less: Capital expenditures................. (3,834) (3,935) (3,936) (3,937) (3,938)
------- ------- ------- ------- -------
Operating cash flow..................... $13,593 $15,074 $16,860 $18,213 $20,674
======= ======= ======= ======= =======
Cash flow growth...................... 10.9% 11.8% 8.0% 13.5%
EQUITY VALUATION MATRIX(2)
YEAR 2003 EBITDA EXIT MULTIPLE
DISCOUNT -----------------------------------------
RATE(3) 5.50X 5.75X 6.00X 6.25X
- -------- -------- -------- -------- --------
16.5% $108,210 $113,162 $118,114 $123,066
17.0% 105,249 110,096 114,943 119,791
17.5% 102,359 107,104 111,849 116,594
--------
AVERAGE .................................
$112,545
========
EQUITY VALUATION MATRIX PER SHARE
YEAR 2003 EBITDA EXIT MULTIPLE
DISCOUNT ---------------------------------
RATE(3) 5.5X 5.75X 6.0X 6.25X
- -------- ------ ------ ------ ------
16.5% $20.38 $21.31 $22.24 $23.17
17.0% 19.82 20.73 21.64 22.56
17.5% 19.27 20.17 21.06 21.96
------
AVERAGE VALUATION OF EQUITY PER
SHARE(4)........................... $21.19
======
- ---------------
(1) Excluding cash and short-term debt.
(2) Less total capital liab. (net of cash) of $53,698
(3) Discount rates are near estimates of WACC.
(4) Based on 5,311 shares outstanding.
16
19
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED CASH FLOW ANALYSIS -- OPERATING CASH FLOW EBITDA EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 5:32 PM
1999 2000 2001 2002 2003
---------------- ---------------- ---------------- ---------------- ----------------
Operating Cash Flow... $13,593 $15,074 $16,860 $18,213 $20,674
------- ------- ------- ------- -------
Present Value of
Oper. Cash Flows
at 17.50%
Discount.......... 11,568 10,918 10,393 9,555 9,231
Formula........... CF(1)/(1+R)(1) CF(2)/(1+R)(2) CF(3)/(1+R)(3) CF(4)/(1+R)(4) CF(5)/(1+R)(5)
YEAR 2003
TERMINAL VALUE
BASED ON EBITDA
EXIT MULTIPLE
---------------
EBITDA...................................................... $ 42,510
Exit Multiple............................................... 5.5x
-------------
Terminal Value in 2003...................................... 233,805
PV of Terminal Value........................................ 104,391
TV/(1+R)(5)
-------------
Present Value of All
Cash Flow............. $ 11,568 $10,918 $10,393 $9,555 $113,622
======== ======= ======= ====== ========
Sum of All PV of Cash Flow
equals Firm Value to
Both Equity & Debt
holders................. $156,056
-------- ------- ------- ------ --------
Less: Current Total Debt,
Net of Cash............. (53,698)
-------- ------- ------- ------ --------
Valuation of
Equity.......... $102,359
-------- ------- ------- ------ --------
Per Share......... $ 19.27
-------- ------- ------- ------ --------
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INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED CASH FLOW ANALYSIS -- FREE CASH FLOW NET INCOME EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
1999 2000 2001 2002 2003
-------- -------- -------- -------- -------
EBITDA................................... $ 29,318 $ 32,168 $ 35,366 $ 38,508 $42,510
Depreciation and amortization............ 8,120 8,121 8,122 8,123 8,124
Interest expense......................... 4,200 3,600 2,800 1,500 500
Other expenses........................... -- -- -- -- --
-------- -------- -------- -------- -------
Pre-tax income......................... 16,998 20,447 24,444 28,885 33,886
Provision for income taxes............... 6,969 8,383 10,022 11,843 13,893
-------- -------- -------- -------- -------
Net income............................... $ 10,029 $ 12,064 $ 14,422 $ 17,042 $19,993
======== ======== ======== ======== =======
Add: Depreciation & amortization....... 8,120 8,121 8,122 8,123 8,124
Less: Mandatory debt repayments........ (11,298) (12,983) (15,033) (13,900) (700)
Less: Net additions to working
capital(1).......................... (3,200) (3,300) (3,400) (3,900) (3,800)
Less: Capital expenditures............. (3,834) (3,935) (3,936) (3,937) (3,938)
-------- -------- -------- -------- -------
Free cash flow...................... $ (183) $ (33) $ 175 $ 3,428 $19,679
======== ======== ======== ======== =======
Cash flow growth............... (81.9)% (630.4)% 1859.3% 474.0%
EQUITY VALUATION MATRIX
YEAR 2003 NET INCOME EXIT MULTIPLE
DISCOUNT -----------------------------------
RATE(2) 12.0X 12.5X 13.0X
-------- --------- --------- ---------
19.0% $110,418 $114,607 $118,796
19.5% 108,133 112,235 116,337
20.0% 105,903 109,921 113,938
--------
AVERAGE VALUATION OF EQUITY................................................ $112,254
--------
EQUITY VALUATION MATRIX PER SHARE
YEAR 2003 NET INCOME EXIT MULTIPLE
DISCOUNT -----------------------------------
RATE(2) 12.0X 12.5X 13.0X
-------- --------- --------- ---------
19.0% $ 20.79 $ 21.58 $ 22.37
19.5% $ 20.36 $ 21.13 $ 21.91
20.0% $ 19.94 $ 20.70 $ 21.45
--------
AVERAGE VALUATION OF EQUITY PER SHARE(3)................................... $ 21.14
--------
- ---------------
(1) Excluding cash and short-term debt.
(2) Discount rates are near estimates of the cost of equity.
(3) Based on 5,311 shares outstanding.
18
21
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED CASH FLOW ANALYSIS -- FREE CASH FLOW NET INCOME EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 10:23 AM
1999 2000 2001 2002 2003
--------------- --------------- --------------- --------------- ---------------
Free Cash Flow........ $ (183) $ (33) $ 175 $ 3,428 $ 19,679
--------------- --------------- --------------- --------------- ---------------
Present Value of
Free Cash Flows at
20.0% Discount.... (152) (23) 101 1,653 7,908
Formula........... CF(1)/(1+R)(1) CF(2)/(1+R)(2) CF(3)/(1+R)(3) CF(4)/(1+R)(4) CF(5)/(1+R)(5)
YEAR TERMINAL
VALUE
BASED ON NET
INCOME EXIT
MULTIPLE
---------------
Net Income............ $ 19,993
Exit Multiple......... 12.0x
---------------
Terminal Value in
2003................ 239,913
PV of Terminal
Value............... 96,416
TV/(1+R)(5)
--------------- --------------- --------------- --------------- ---------------
Present Value of All
Cash Flow......... $ (152) $ (23) $ 101 $ 1,653 $ 104,324
=============== =============== =============== =============== ===============
Sum of All PV of Cash
Flow equals......... $ 105,903
---------------
Valuation of
Equity...... $ 105,903
---------------
Per Share..... $ 19.94
---------------
19
22
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED FUTURE STOCK PRICE ANALYSIS -- NET INCOME EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
March 5, 1998 10:23 AM
1999 2000 2001 2002 2003
------ ------ ------ ------ ------
Net income.................................... 10,029 12,064 14,422 17,042 19,993
====== ====== ====== ====== ======
EQUITY VALUATION MATRIX
2003 NET INCOME
MULTIPLE ASSUMED 2003 NET INCOME EQUITY VALUE
- ---------------- --------------- ------------
11.0x X $19,993 = $219,920
13.0x X 19,993 = 259,906
15.0x X 19,993 = 299,891
17.0x X 19,993 = 339,877
YEAR 2003 NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------
RATE(1) 12.0X 12.5X 13.0X
- -------- ---------- ---------- ----------
19.0% $100,535 $104,724 $108,913
19.5% $ 98,450 $102,552 $106,654
20.0% $ 96,416 $100,433 $104,450
--------
AVERAGE VALUATION OF EQUITY......... $102,570
========
EQUITY VALUATION MATRIX PER SHARE
YEAR ASSUMPTIONS NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------------
RATE 12.0X 12.5X 13.0X
- -------- ------------ ------------ ------------
19.0% $18.93 $19.72 $20.51
19.5% $18.54 $19.31 $20.08
20.0% $18.16 $18.91 $19.67
------
AVERAGE ..............................
SHARE(2) $19.31
======
- ---------------
(1) Discounted rates are near estimates of the cost of equity.
(2) Based on 5,311 shares outstanding.
20
23
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED FUTURE STOCK PRICE ANALYSIS -- NET INCOME EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
March 5, 1998 10:23 AM
1999 2000 2001 2002
------ ------ ------ ------
Net income.............................................. 10,029 12,064 14,422 17,042
====== ====== ====== ======
EQUITY VALUATION MATRIX
2002 NET INCOME
MULTIPLE ASSUMED 2002 NET INCOME EQUITY VALUE
- ---------------- --------------- ------------
11.0x X $17,042 = $187,464
13.0x X 17,042 = 221,548
15.0x X 17,042 = 255,632
17.0x X 17,042 = 289,717
YEAR 2002 NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------
RATE(1) 12.0X 12.5X 13.0X
- -------- ---------- ---------- ----------
19.0% $101,981 $106,230 $110,479
19.5% $100,285 $104,463 $108,642
20.0% $ 98,624 $102,733 $106,842
--------
AVERAGE VALUATION OF EQUITY......... $104,475
========
EQUITY VALUATION MATRIX PER SHARE
YEAR 2002 NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------
RATE 12.0X 12.5X 13.0X
- -------- ---------- ---------- ----------
19.0% $19.20 $20.00 $20.80
19.5% $18.88 $19.67 $20.46
20.0% $18.57 $19.34 $20.12
------
AVERAGE VALUATION OF EQUITY PER
SHARE(2) $19.67
======
- ---------------
(1) Discounted rates are near estimates of the cost of equity.
(2) Based on 5,311 shares outstanding.
21
24
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED FUTURE STOCK PRICE ANALYSIS -- NET INCOME EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 10:23 AM
1999 2000 2001
------ ------ ------
Net income............................................... 10,029 12,064 14,422
====== ====== ======
EQUITY VALUATION MATRIX
2001 NET INCOME
MULTIPLE ASSUMED 2001 NET INCOME EQUITY VALUE
- ---------------- --------------- ------------
11.0x X $14,422 = $158,642
13.0x X 14,422 = 187,485
15.0x X 14,422 = 216,329
17.0x X 14,422 = 245,173
YEAR 2001 NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------
RATE(1) 12.0X 12.5X 13.0X
- -------- ---------- ---------- ----------
19.0% $102,699 $106,978 $111,257
19.5% $101,415 $105,641 $109,866
20.0% $100,153 $104,326 $108,499
--------
AVERAGE VALUATION OF EQUITY...... $105,648
========
EQUITY VALUATION MATRIX PER SHARE
YEAR ASSUMPTIONS NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------------
RATE 12.0X 12.5X 13.0X
- -------- ------------ ------------ ------------
19.0% $19.34 $20.14 $20.95
19.5% $19.10 $19.89 $20.69
20.0% $18.86 $19.64 $20.43
------
AVERAGE VALUATION OF EQUITY PER
SHARE(2)............................. $19.89
======
- ---------------
(1) Discounted rates are near estimates of the cost of equity.
(2) Based on 5,311 shares outstanding.
22
25
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED FUTURE STOCK PRICE ANALYSIS -- NET INCOME EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 10:23 AM
1999 2000
------ ------
Net income.................................................. 10,029 12,064
====== ======
EQUITY VALUATION MATRIX
2000 NET INCOME
MULTIPLE ASSUMED 2000 NET INCOME EQUITY VALUE
- ---------------- --------------- ------------
11.0x X $12,064 = $132,701
13.0x X 12,064 = 156,828
15.0x X 12,064 = 180,956
17.0x X 12,064 = 205,082
YEAR 2000 NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------
RATE(1) 12.0X 12.5X 13.0X
- -------- ---------- ---------- ----------
19.0% $102,228 $106,487 $110,747
19.5% $101,374 $105,598 $109,822
20.0% $100,531 $104,720 $108,909
--------
AVERAGE VALUATION OF EQUITY...... $105,602
========
EQUITY VALUATION MATRIX PER SHARE
YEAR ASSUMPTIONS NET INCOME EXIT MULTIPLE
DISCOUNT ------------------------------------------
RATE(1) 12.0X 12.5X 13.0X
- -------- ------------ ------------ ------------
19.0% $19.25 $20.05 $20.85
19.5% $19.09 $19.88 $20.68
20.0% $18.93 $19.72 $20.51
------
AVERAGE VALUATION OF EQUITY PER
SHARE(2).............................. $19.89
======
- ---------------
(1) Discounted rates are near estimates of the cost of equity.
(2) Based on 5,311 shares outstanding.
23
26
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
DISCOUNTED FUTURE STOCK PRICE ANALYSIS -- NET INCOME EXIT MULTIPLE METHOD
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 10:23 AM
1999
-------
Net income.................................................. $10,029
=======
EQUITY VALUATION MATRIX
1999 NET INCOME
MULTIPLE ASSUMED 1999 NET INCOME EQUITY VALUE
- ---------------- --------------- ------------
11.0x X $10,029 = $110,317
13.0x X 10,029 = 130,375
15.0x X 10,029 = 150,432
17.0x X 10,029 = 170,490
YEAR 1999 NET INCOME EXIT MULTIPLE
DISCOUNT ----------------------------------
RATE(1) 12.0X 12.5X 13.0X
- -------- ---------- ---------- ----------
19.0% $101,131 $105,345 $109,559
19.5% $100,708 $104,904 $109,100
20.0% $100,288 $104,467 $108,646
--------
AVERAGE VALUATION OF EQUITY....... $104,905
--------
EQUITY VALUATION MATRIX PER SHARE
YEAR ASSUMPTIONS NET INCOME EXIT MULTIPLE
DISCOUNT -------------------------------------------
RATE 12.0X 12.5X 13.0X
- -------- ------------- ------------- -------------
19.0% $19.04 $19.84 $20.63
19.5% $18.96 $19.75 $20.54
20.0% $18.88 $19.67 $20.46
------
AVERAGE VALUATION OF EQUITY PER SHARE(2).. $19.75
------
- ---------------
(1) Discounted rates are near estimates of the cost of equity.
(2) Based on 5,311 shares outstanding.
24
27
INVESTMENT BANKING GROUP
AUSTIN
CALCULATION OF WEIGHTED AVERAGE COST OF CAPITAL
(IN 000'S EXCEPT PER SHARE)
Weighted Average Cost of Capital (WACC) = (Equity % of Capitalization)(Cost of
Equity)
+ (Debt % of Capitalization)(Cost of Debt)
85.0% Equity (18.99%) + 15.0% Debt (4.36%)
16.79%
COST OF EQUITY DATA USED
-------------- ---------
Capital Asset
Cost of Equity = R(l) + B (R(m) - R(l)) Pricing Model (a)
5 Year Treasury
Risk Free Rate = R(l) Yield = 5.70%(b)
Beta of Common Stock = B Austin Beta = 1.10(c)
Common Stock
Returns over
Int.-term Gov't
Market Risk Premium = (R(m) - R(l)) Bonds = 8.90%(d)
Micro-Cap Stock
Cost of Equity = 5.7% + 1.10*(8.9%) + 3.5% Premium = 3.50%
Cost of Debt = (1-T)*R(l)(e)
COST OF EQUITY = 18.99% COST OF DEBT = 4.36%
Capitalization(f) = $104,973 of Market Equity + $18,503 of Long Term Debt =
$123,476
= 85.01% Equity + 14.99% Debt
- ---------------
(a) The Capital Asset Pricing Model states that the return on an asset or
security is equal to the risk free return (i.e., Treasury Bonds) plus a
risk premium.
(b) 5 Year Treasury as of 3/4/98.
(c) Beta of 1.1 is based on monthly volatility for two years as compared to the
S&P 500.
(d) Intermediate horizon risk premium of 8.9%, as calculated by Ibbotson &
Sinquefield, 1995. Includes an additional Micro-Cap Stock Premium of 3.5%.
(e) Interest cost of 7.27%, tax adjusted at 40.00%.
(f) Austin's debt balance represents the average total debt over the life of
the Company's five-year forecast.
25
28
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
TRANSACTION SUMMARY
($S IN 000S)
% OF
USES OF FUNDS: AMOUNT CAPITAL
- -------------- -------- -------
Offer for equity (to cash out owner)........................ $109,929 63.3%
Debt to be refinanced....................................... 54,698 31.5%
Cash........................................................ 3,000 1.7%
Transaction fees & expenses................................. 6,000 3.5%
-------- -----
Total Uses of Funds....................................... $173,627 100.0%
======== =====
PROPOSED OFFER PRICE
$20.70
INTEREST % OF
SOURCES OF FUNDS: RATE AMOUNT CAPITAL
- ----------------- -------- -------- -------
Revolver................................................. 8.80% $ 0 0.0%
Senior sub-debt.......................................... 10.00% 100,000 57.6%
Senior term loan......................................... 8.80% 25,000 14.4%
Preferred Stock.......................................... 12.00% 20,000 11.5%
Management equity -- Common Stock........................ 28,627 16.5%
-------- -----
Total Sources of Funds......................... $173,627 100.0%
======== =====
FIVE YEAR IRR @ 6.25X EBITDA
OWNERSHIP % RETURN
----------- ------
Preferred Stock............................................. 16% 25.0%
Management equity -- Common Stock........................... 84% 36.9%
TRANSACTION SUMMARY STATISTICS
Transaction value
FISCAL YEAR END AUG.: 1998
- --------------------- -----
Transaction value/EBIT...................................... 9.70x
Transaction value/EBITDA.................................... 6.68x
Transaction value/Sales..................................... .90x
GOODWILL CALCULATION
Purchase price of equity.................................... $109,929
Plus: Transaction fees...................................... 0
Less: Book value acquired................................... 59,355
Less: Assumed asset write-up
Less: Deferred income taxes................................. 0
--------
Book goodwill............................................... $ 50,574(a)
========
- ---------------
(a) Based on 5,310,579 shares outstanding as of 1/6/98.
(b) Transaction fees are amortized separately and therefore are excluded from
book goodwill.
26
29
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
ASSUMPTIONS SUMMARY, KEY RATIOS AND AMORTIZATION SCHEDULE
($S IN 000S)
Transaction Assumptions
$173,627 Transaction value
PROJECTED FISCAL YEAR ENDED AUGUST
PROFORMA --------------------------------------------
1998(1) 1999 2000 2001
-------- -------- -------- --------
Key Ratios:
EBIT/interest expense................ 1.5x 1.8x 2.2x 2.7x
(EBIT -- cap ex)/interest expense.... 1.5x 1.4x 1.8x 2.3x
EBITDA/interest expense.............. 2.2x 2.5x 3.0x 3.6x
(EBITDA -- cap ex)/interest
expense............................ 2.2x 2.2x 2.6x 3.2x
(EBITDA -- change in working cap-cap
ex)/interest expense............... 1.9x 2.3x 2.9x
Senior debt/EBITDA................... 3.8x 3.3x 2.7x 2.2x
-------- -------- -------- --------
Total debt/EBITDA.................... 4.8x 4.1x 3.5x 2.9x
Capitalization:
Senior debt........................ $100,000 58% $ 90,677 53% $ 82,364 49% $ 71,704
Other debt......................... 25,000 14% 25,000 15% 25,000 15% 25,000
-------- -------- -------- --------
Total debt......................... 125,000 72% 115,677 68% 107,364 64% 96,704
Equity............................. 48,627 28% 53,874 32% 61,362 36% 71,329
-------- -------- -------- --------
Total capitalization............... $173,627 100% $169,551 100% $168,726 100% $168,033
Amortization:
Senior sub-debt retired annually..... 14,286 14,286 14,286
Senior term loan retired annually.... -- -- --
Sub-debt retired annually............ -- -- --
Other notes retired annually......... -- -- --
Goodwill amortization over 15
years.............................. $ 4,186 $ 4,186 $ 4,186
Fee amortization over 10 years....... $ 600 $ 600 $ 600
PROJECTED FISCAL YEAR ENDED AUGUST
----------------------------------------
2002 2003
-------- --------
Key Ratios:
EBIT/interest expense................ 3.5x 4.7x
(EBIT -- cap ex)/interest expense.... 3.0x 4.2x
EBITDA/interest expense.............. 4.5x 6.0x
(EBITDA -- cap ex)/interest
expense............................ 4.0x 5.4x
(EBITDA -- change in working cap-cap
ex)/interest expense............... 3.6x 4.9x
Senior debt/EBITDA................... 1.7x 1.2x
-------- --------
Total debt/EBITDA.................... 2.3x 1.8x
Capitalization:
Senior debt........................ 43% $ 59,036 35% $ 43,104 26%
Other debt......................... 15% 25,000 15% 25,000 15%
-------- --------
Total debt......................... 58% 84,036 50% 68,104 41%
Equity............................. 42% 83,856 50% 99,587 59%
-------- --------
Total capitalization............... 100% $167,892 100% $167,692 100%
Amortization:
Senior sub-debt retired annually..... 14,286 14,286
Senior term loan retired annually.... -- --
Sub-debt retired annually............ -- --
Other notes retired annually......... -- --
Goodwill amortization over 15
years.............................. $ 4,186 $ 4,186
Fee amortization over 10 years....... $ 600 $ 600
- ---------------
(1) Adjusted to show historical operating results with proforma interest expense
and proforma capitalization.
27
30
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
PROJECTED INCOME STATEMENTS
($S IN 000S)
HISTORICAL ESTIMATED PROJECTED FISCAL YEAR ENDED AUGUST
---------- --------- ----------------------------------------------------
1997 1998 1999 2000 2001 2002 2003
---------- --------- -------- -------- -------- -------- --------
Revenues..................................... $175,835 $193,391 $207,846 $223,500 $239,900 $257,562 $276,160
% growth................................... 10.0% 7.5% 7.5% 7.3% 7.4% 7.2%
Cost of sales................................ $125,732 $138,952 $149,319 $160,546 $172,085 $184,850 $197,826
% of revenue............................... 71.5% 71.9% 71.8% 71.8% 71.7% 71.8% 71.6%
-------- -------- -------- -------- -------- -------- --------
Gross profit................................. $ 50,103 $ 54,439 $ 58,527 $ 62,954 $ 67,815 $ 72,712 $ 78,334
gross margin............................... 28.5% 28.1% 28.2% 28.2% 28.3% 28.2% 28.4%
General and administrative................... $ 8,855 $ 10,513 $ 10,477 $ 11,003 $ 11,549 $ 12,116 $ 12,661
% of revenue............................... 5.0% 5.4% 5.0% 4.9% 4.8% 4.7% 4.6%
Sales and marketing.......................... 18,119 17,951 18,732 19,783 20,900 22,088 23,163
% of revenue............................... 10.3% 9.3% 9.0% 8.9% 8.7% 8.6% 8.4%
Restructuring and unusual charges............ 1,816 -- -- -- -- -- --
% of revenue............................... 1.0%
Other operating expenses..................... -- -- -- -- -- -- --
% of revenue...............................
-------- -------- -------- -------- -------- -------- --------
Total operating expenses................. $ 28,790 $ 28,464 $ 29,209 $ 30,786 $ 32,449 $ 34,204 $ 35,824
% of revenue............................... 16.4% 14.7% 14.1% 13.8% 13.5% 13.3% 13.0%
EBITDA..................................... $ 21,313 $ 25,975 $ 29,318 $ 32,168 $ 35,366 $ 38,508 $ 42,510
% of revenue............................... 12.1% 13.4% 14.1% 14.4% 14.7% 15.0% 15.4%
Depreciation................................. $ 4,270 $ 3,960 $ 3,934 $ 3,935 $ 3,936 $ 3,937 $ 3,938
Goodwill amortization........................ 3,885 4,121 4,186 4,186 4,186 4,186 4,186
Transaction fee amortization................. -- -- 600 600 600 600 600
-------- -------- -------- -------- -------- -------- --------
Total depreciation & amortization........ $ 8,155 $ 8,081 $ 8,720 $ 8,721 $ 8,722 $ 8,723 $ 8,724
% of revenue............................... 4.6% 4.2% 4.2% 3.9% 3.6% 3.4% 3.2%
-------- -------- -------- -------- -------- -------- --------
EBIT....................................... $ 13,158 $ 17,894 $ 20,598 $ 23,447 $ 26,644 $ 29,785 $ 33,786
% of revenue............................... 7.5% 9.3% 9.9% 10.5% 11.1% 11.6% 12.2%
Capital expenditures....................... $ 3,834 $ 3,935 $ 3,936 $ 3,937 $ 3,938
% of revenue............................... 1.8% 1.8% 1.6% 1.5% 1.4%
28
31
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
PROJECTED BALANCE SHEETS
($S IN 000S)
HISTORICAL ESTIMATED PROJECTED FISCAL YEAR ENDED AUG.
--------------------- -----------------------------------------------
1997 1998 1999 2000 2001 2002 2003
--------- --------- ------- ------- ------- ------- -------
EBIT..................................... $13,158 $17,894 $20,598 $23,447 $26,644 $29,785 $33,786
Interest expense:
Revolver............................... -- -- 218 700 1,122 1,353 1,351
Senior sub-debt........................ -- -- 9,286 7,857 6,429 5,000 3,571
Sub-debt............................... -- -- -- -- -- -- --
Cap. lease oblg........................ -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total interest expense................... 3,002 4,200 11,704 10,757 9,750 8,553 7,123
Home office expense...................... -- -- -- -- -- -- --
Discontinued operations expenses......... 4,820 -- -- -- -- -- --
Extraordinary loss from debt
extinguishment......................... 241 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Other expenses (income).................. 8,063 --
Minority interest........................ -- -- -- -- -- -- --
Pre-tax income........................... 5,095 13,694 8,894 12,690 16,894 21,232 26,663
Provision (benefit) for income taxes..... 4,091 5,615 3,647 5,203 6,926 8,705 10,932
------- ------- ------- ------- ------- ------- -------
Net income............................... $ 1,004 $ 8,079 $ 5,247 $ 7,487 $ 9,967 $12,527 $15,731
======= ======= ======= ======= ======= ======= =======
Preferred dividends...................... -- -- 2,400 2,688 3,011 3,372 3,776
------- ------- ------- ------- ------- ------- -------
Net income to common..................... $ 1,004 $ 8,079 $ 2,847 $ 4,799 $ 6,957 $ 9,155 $11,955
------- ------- ------- ------- ------- ------- -------
29
32
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
PROJECTED BALANCE SHEETS
($S IN 000S)
ESTIMATED PROFORMA
AUG. 1998 ADJUSTMENTS AUG. 1998
----------- -------------------- -----------
ASSETS
Cash and equivalents.................... $ 1,000 $ 0 $ 3,000 $ 4,000
Short-term investments.................. -- -- -- --
Accounts receivable..................... 26,336 -- -- 26,336
Inventories............................. 34,821 -- -- 34,821
Income taxes receivable................. 598 -- -- 598
Other receivables....................... 773 -- -- 773
Prepaid expenses and other current
assets................................ 2,672 -- -- 2,672
-------- --------- -------- --------
Total current assets.................... 66,200 -- 3,000 69,200
Land.................................... 478 -- -- 478
Gross plant and equip................... 37,971 -- -- 37,971
Accumulated depreciation................ (16,849) -- -- (16,849)
-------- --------- -------- --------
Net P,P&E............................... 21,600 -- -- 21,600
Goodwill, net of accumulated
amortization.......................... 34,888 -- 50,574 85,462
Transaction fee & expenses.............. -- -- 6,000 6,000
Other intangible assets................. 8,165 -- -- 8,165
Deferred income taxes and other
assets................................ 4,200 -- -- 4,200
-------- --------- -------- --------
Total assets.......................... $135,053 $ 0 $ 59,574 $194,627
======== ========= ======== ========
LIABILITIES & EQUITY
Current maturities & short-term debt.... $ 0 $ 0 $ 0 $ 0
Trade accounts payable.................. 10,442 -- -- 10,442
Accrued liabilities..................... 10,347 -- -- 10,347
Current portion of lease obligation..... 211 -- -- 211
-------- --------- -------- --------
Total current liabilities............... 21,000 -- -- 21,000
Long term debt
Revolver.............................. 2,098 (2,098) -- --
Senior sub-debt....................... 39,600 (39,600) 100,000 100,000
Senior term loan...................... 13,000 (13,000) 25,000 25,000
Sub-debt.............................. -- -- -- --
Other notes........................... -- -- -- --
Cap. lease oblg....................... -- -- -- --
-------- --------- -------- --------
Total debt.......................... 54,698 (54,698) 125,000 125,000
Less current portion................ -- -- -- --
-------- --------- -------- --------
Total long-term debt.................. 54,698 (54,698) 125,000 125,000
-------- --------- -------- --------
Total liabilities....................... 75,698 (54,698) 125,000 146,000
Preferred stock......................... -- -- 20,000 20,000
Common stock............................ 22,858 (22,858) 28,627 28,627
Unrealized gain (loss) on marketable
securities............................ 21,949 (21,949) -- --
Retained earnings....................... 14,548 (14,548) -- --
-------- --------- -------- --------
Total stockholders' equity.............. 59,355 (59,355) 48,627 48,627
-------- --------- -------- --------
Total liabilities & equity............ $135,053 ($114,053) $173,627 $194,627
======== ========= ======== ========
PROJECTED FISCAL YEAR ENDED AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
ASSETS
Cash and equivalents.................... $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Short-term investments.................. -- -- -- -- --
Accounts receivable..................... 28,032 29,931 31,910 34,051 36,232
Inventories............................. 37,064 39,574 42,191 45,021 47,905
Income taxes receivable................. 636 679 724 773 822
Other receivables....................... 823 879 937 1,000 1,064
Prepaid expenses and other current
assets................................ 2,845 3,037 3,238 3,455 3,677
-------- -------- -------- -------- --------
Total current assets.................... 70,400 75,100 80,000 85,300 90,700
Land.................................... 478 478 478 478 478
Gross plant and equip................... 41,805 45,740 49,676 53,613 57,551
Accumulated depreciation................ (20,783) (24,718) (28,654) (32,591) (36,529)
-------- -------- -------- -------- --------
Net P,P&E............................... 21,500 21,500 21,500 21,500 21,500
Goodwill, net of accumulated
amortization.......................... 81,276 77,090 72,904 68,718 64,532
Transaction fee & expenses.............. 5,400 4,800 4,200 3,600 3,000
Other intangible assets................. 8,775 9,436 10,129 10,874 11,660
Deferred income taxes and other
assets................................ 4,200 4,200 4,200 4,200 4,200
-------- -------- -------- -------- --------
Total assets.......................... $191,551 $192,126 $192,933 $194,192 $195,592
======== ======== ======== ======== ========
LIABILITIES & EQUITY
Current maturities & short-term debt.... $ 0 $ 0 $ 0 $ 0 $ 0
Trade accounts payable.................. 11,050 11,753 12,506 13,210 14,013
Accrued liabilities..................... 10,950 11,647 12,394 13,090 13,887
Current portion of lease obligation..... -- -- -- -- --
-------- -------- -------- -------- --------
Total current liabilities............... 22,000 23,400 24,900 26,300 27,900
Long term debt
Revolver.............................. 4,963 10,936 14,561 16,179 14,533
Senior sub-debt....................... 85,714 71,429 57,143 42,857 28,571
Senior term loan...................... 25,000 25,000 25,000 25,000 25,000
Sub-debt.............................. -- -- -- -- --
Other notes........................... -- -- -- -- --
Cap. lease oblg....................... -- -- -- -- --
-------- -------- -------- -------- --------
Total debt.......................... 115,677 107,364 96,704 84,036 68,104
Less current portion................ -- -- -- -- --
-------- -------- -------- -------- --------
Total long-term debt.................. 115,677 107,364 96,704 84,036 68,104
-------- -------- -------- -------- --------
Total liabilities....................... 137,677 130,764 121,604 110,336 96,004
Preferred stock......................... 22,400 25,088 28,099 31,470 35,247
Common stock............................ 28,627 28,627 28,627 28,627 28,627
Unrealized gain (loss) on marketable
securities............................ -- -- -- -- --
Retained earnings....................... 2,847 7,647 14,603 23,759 35,714
-------- -------- -------- -------- --------
Total stockholders' equity.............. 53,874 61,362 71,329 83,856 99,587
-------- -------- -------- -------- --------
Total liabilities & equity............ $191,551 $192,126 $192,933 $194,192 $195,592
======== ======== ======== ======== ========
30
33
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
CASH FLOW
($'S IN 000S)
PROJECTED FISCAL YEAR ENDED AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
Net Income.................................. $ 5,247 $ 7,487 $ 9,967 $ 12,527 $ 15,731
Add: Depreciation & amortization.......... 3,934 3,935 3,936 3,937 3,938
Add: Goodwill amortization................ 4,186 4,186 4,186 4,186 4,186
Add: Fee amortization..................... 600 600 600 600 600
Add: Minority interest.................... -- -- -- -- --
Add: PIK Dividend......................... 2,400 2,688 3,011 3,372 3,776
Add: Dividend............................. (2,400) (2,688) (3,011) (3,372) (3,776)
-------- -------- -------- -------- --------
Total Sources............................... $ 13,967 $ 16,208 $ 18,689 $ 21,250 $ 24,455
Less: Changes in other long-term assets &
liabilities............................ (610) (661) (692) (746) (785)
Less: Change in working capital........... (3,200) (3,300) (3,400) (3,900) (3,800)
Less: Capital expenditures (Net of
dispos.)............................... (3,834) (3,935) (3,936) (3,937) (3,938)
-------- -------- -------- -------- --------
Total Uses.................................. ($ 7,644) ($ 7,896) ($ 8,028) ($ 8,583) ($ 8,523)
-------- -------- -------- -------- --------
TOTAL FREE CASH FLOW BEFORE FINANCING....... $ 6,323 $ 8,312 $ 10,661 $ 12,667 $ 15,932
REPAYMENT/ BORROWING OF DEBT
Revolver.................................... 4,963 5,973 3,625 1,618 (1,646)
Senior sub-debt............................. (14,286) (14,286) (14,286) (14,286) (14,286)
Senior term loan............................ -- -- -- -- --
Sub-debt.................................... -- -- -- -- --
Other notes................................. -- -- -- -- --
Cap. lease oblg............................. -- -- -- -- --
-------- -------- -------- -------- --------
Total Debt (Repayments)/ Borrowing.......... ($ 9,323) ($ 8,312) ($10,661) ($12,667) ($15,932)
CHANGE IN CASH BALANCE...................... ($ 3,000) $ 0 $ 0 $ 0 $ 0
31
34
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
WORKING CAPITAL ASSUMPTIONS
($'S IN 000S)
ESTIMATED PROFORMA PROJECTED FISCAL YEAR ENDED AUGUST
----------------- AUGUST -----------------------------------------------
1997 1998 ADJUSTMENTS 1998 1999 2000 2001 2002 2003
------- ------- ----------------- -------- ------- ------- ------- ------- -------
Accounts receivable......... $24,282 $26,336 -- -- $26,336 $28,032 $29,931 $31,910 $34,051 $36,232
% of sales................ 13.8% 13.6% 13.6% 13.5% 13.4% 13.3% 13.2% 13.1%
Inventories................. $32,105 $34,821 -- -- $34,821 $37,064 $39,574 $42,191 $45,021 $47,905
% of sales................ 18.3% 18.0% 18.0% 17.8% 17.7% 17.6% 17.5% 17.3%
Income taxes receivable..... $ 551 $ 598 -- -- $ 598 $ 636 $ 679 $ 724 $ 773 $ 822
% of sales................ 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Other receivables........... $ 713 $ 773 -- -- $ 773 $ 823 $ 879 $ 937 $ 1,000 $ 1,064
% of sales................ 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%
Prepaid expenses and other
current assets............ $ 2,464 $ 2,672 -- -- $ 2,672 $ 2,845 $ 3,037 $ 3,238 $ 3,455 $ 3,677
% of sales................ 1.4% 1.4% 1.4% 1.4% 1.4% 1.3% 1.3% 1.3%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL CURRENT ASSETS,
EXCLUDING CASH............ $65,200 -- -- $65,200 $69,400 $74,100 $79,000 $84,300 $89,700
% of sales................ 0.0% 33.7% 33.7% 33.4% 33.2% 32.9% 32.7% 32.5%
Trade accounts payable...... $11,299 $10,442 -- -- $10,442 $11,050 $11,753 $12,506 $13,210 $14,013
% of sales................ 6.4% 5.4% 5.4% 5.3% 5.3% 5.2% 5.1% 5.1%
Accrued liabilities......... $11,197 $10,347 -- -- $10,347 $10,950 $11,647 $12,394 $13,090 $13,887
% of sales................ 6.4% 5.4% 5.4% 5.3% 5.2% 5.2% 5.1% 5.0%
Current portion of lease
obligation................ $ 481 $ 211 -- -- $ 211 $ 0 $ 0 $ 0 $ 0 $ 0
% of sales................ 0.3% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL CURRENT LIABILITIES
EXCLUDING S-T DEBT........ $21,000 -- -- $21,000 $22,000 $23,400 $24,900 $26,300 $27,900
% of sales................ 0.0% 10.9% 10.9% 10.6% 10.5% 10.4% 10.2% 10.1%
Net non-cash working
capital................... $44,200 $44,200 $47,400 $50,700 $54,100 $58,000 $61,800
% of sales................ 0.0% 22.9% 22.9% 22.8% 22.7% 22.6% 22.5% 22.4%
Change in non-cash working
capital................... $ 3,200 $ 3,300 $ 3,400 $ 3,900 $ 3,800
32
35
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
RETURNS ANALYSIS
($0S IN 000S)
PROJECTED RETURNS ON MANAGEMENT EQUITY
----------------------------------------------------
YEAR ENDING AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
TOTAL CAPITALIZATION AS A MULTIPLE OF EBITDA
5.50x......................................... $161,249 $176,924 $194,513 $211,794 $233,805
5.75x......................................... 168,579 184,966 203,355 221,421 244,433
6.00x......................................... 175,908 193,008 212,196 231,048 255,060
6.25x......................................... 183,238 201,050 221,038 240,675 265,688
LESS: TOTAL DEBT (NET OF CASH)(1)................. 137,077 131,452 123,802 114,507 102,351
VALUE OF EQUITY
5.50x......................................... $ 24,172 $ 45,472 $ 70,711 $ 97,287 $131,454
5.75x......................................... 31,502 53,514 79,552 106,914 142,082
6.00x......................................... 38,831 61,556 88,394 116,541 152,709
6.25x......................................... 46,161 69,598 97,235 126,168 163,337
RETURNS ANALYSIS
28,627
OWNERSHIP PERCENTAGE.............................. 84.2% 84.2% 84.2% 84.2% 84.2%
IRR ASSUMING EBITDA MULTIPLES OF:
5.50x......................................... (28.9%) 15.6% 27.6% 30.1% 31.1%
5.75x......................................... (7.3%) 25.5% 32.8% 33.2% 33.1%
7.1x 6.00x.................................... 14.2% 34.6% 37.5% 36.1% 35.0%
6.25x......................................... 35.8% 43.1% 41.9% 38.8% 36.9%
- ---------------
(1) Includes the repayment of preferred stock.
33
36
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS
RETURNS ANALYSIS
($0S IN 000S)
PROJECTED RETURNS ON PREFERRED EQUITY
----------------------------------------------------
YEAR ENDING AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
TOTAL CAPITALIZATION AS A MULTIPLE OF
EBITDA
5.50x.............................. $161,249 $176,924 $194,513 $211,794 $233,805
5.75x.............................. 168,579 184,966 203,355 221,421 244,433
6.00x.............................. 175,908 193,008 212,196 231,048 255,060
6.25x.............................. 183,238 201,050 221,038 240,675 265,688
LESS: TOTAL DEBT (NET OF CASH)(1)....... 137,077 131,452 123,802 114,507 102,351
VALUE OF EQUITY
5.50x.............................. $ 24,172 $ 45,472 $ 70,711 $ 97,287 $131,454
5.75x.............................. 31,502 53,514 79,552 106,914 142,082
6.00x.............................. 38,831 61,556 88,394 116,541 152,709
6.25x.............................. 46,161 69,598 97,235 126,168 163,337
BALANCE AT YEAR END:(2)
----------------------------------------------------
RETURNS ANALYSIS
20,000............................. 22,400 25,088 28,099 31,470 35,247
OWNERSHIP PERCENTAGE.................... 15.8% 15.8% 15.8% 15.8% 15.8%
IRR ASSUMING EBITDA MULTIPLES OF:
5.50x.............................. 31.1% 27.0% 25.2% 23.7% 22.9%
5.75x.............................. 36.9% 29.5% 26.7% 24.7% 23.6%
6.00x.............................. 42.7% 31.9% 28.1% 25.7% 24.3%
6.25x.............................. 48.5% 34.3% 29.5% 26.6% 25.0%
- ---------------
(1) Includes the repayment of preferred stock.
(2) Includes PIK Dividends
34
37
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
TRANSACTION SUMMARY
($S IN 000S)
% OF
USES OF FUNDS: AMOUNT CAPITAL
-------------- -------- -------
Offer for equity (to cash out owner)........................ $111,645 63.7%
Debt to be refinanced....................................... 54,698 31.2%
Cash........................................................ 3,000 1.7%
Transaction fees & expenses................................. 6,000 3.4%
-------- -----
Total Uses of Funds............................... $175,343 100.0%
======== =====
PROPOSED OFFER PRICE
$21.00
INTEREST % OF
SOURCES OF FUNDS: RATE AMOUNT CAPITAL
----------------- -------- -------- -------
Revolver................................................ 8.80% $ 0 0.0%
Senior sub-debt......................................... 10.00% 100,000 57.0%
Senior term loan........................................ 8.80% 25,000 14.3%
Preferred Stock......................................... 12.00% 20,000 11.4%
Management equity -- Common Stock................................. 30,343 17.3%
-------- -----
Total Sources of Funds.................................. $175,343 100.0%
======== =====
FIVE YEAR IRR @ 6.25X EBITDA
OWNERSHIP % RETURN
----------- ------
Preferred Stock............................................. 16% 25.0%
Management equity -- Common Stock........................... 84% 35.3%
TRANSACTION SUMMARY STATISTICS
TRANSACTION VALUE
FISCAL YEAR END AUGUST 1998
---------------------- -----
Transaction value/EBIT...................................... 9.80x
Transaction value/EBITDA.................................... 6.75x
Transaction value/Sales..................................... .91x
GOODWILL CALCULATION
Purchase price of equity.................................... 111,645
Plus: Transaction fees...................................... 0
Less: Book value acquired................................... 59,355
Less: Assumed asset write-up
Less: Deferred income taxes................................. 0
--------
Book goodwill............................................... $ 52,290(a)
========
- ---------------
(a) Based on 5,316,446 shares outstanding as of 1/6/98.
(b) Transaction fees are amortized separately and therefore are excluded from
book goodwill.
35
38
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
ASSUMPTIONS SUMMARY, KEY RATIOS AND AMORTIZATION SCHEDULE
($S IN 000S)
Transaction Assumptions
$175,343 Transaction value
PROJECTED FISCAL YEAR ENDED AUGUST
PROFORMA --------------------------------------------
1998(1) 1999 2000 2001
-------- -------- -------- --------
Key Ratios:
EBIT/interest expense.............. 1.5x 1.8x 2.2x 2.7x
(EBIT -- cap ex)/interest
expense.......................... 1.5x 1.4x 1.8x 2.3x
EBITDA/interest expense............ 2.2x 2.5x 3.0x 3.6x
(EBITDA -- cap ex)/interest
expense.......................... 2.2x 2.2x 2.6x 3.2x
(EBITDA -- change in working cap --
cap ex)/interest expense......... 1.9x 2.3x 2.9x
Senior debt/EBITDA................. 3.8x 3.3x 2.7x 2.2x
Total debt/EBITDA.................. 4.8x 4.1x 3.5x 2.9x
Capitalization:
Senior debt........................ $100,000 57% $ 90,677 53% $ 82,364 48% $ 71,704
Other debt......................... 25,000 14% 25,000 15% 25,000 15% 25,000
-------- ---- -------- ---- -------- ---- --------
Total debt......................... 125,000 71% 115,677 68% 107,364 63% 96,704
Equity............................. 50,343 29% 55,591 32% 63,078 37% 73,045
-------- ---- -------- ---- -------- ---- --------
Total capitalization............... $175,343 100% $171,268 100% $170,443 100% $169,749
Amortization:
Senior sub-debt retired annually... 14,286 14,286 14,286
Senior term loan retired
annually......................... -- -- --
Sub-debt retired annually.......... -- -- --
Other notes retired annually....... -- -- --
Goodwill amortization over 15
years.............................. $ 4,186 $ 4,186 $ 4,186
Fee amortization over 10 years....... $ 600 $ 600 $ 600
PROJECTED FISCAL YEAR ENDED AUGUST
----------------------------------------
2002 2003
-------- --------
Key Ratios:
EBIT/interest expense.............. 3.5x 4.7x
(EBIT -- cap ex)/interest
expense.......................... 3.0x 4.2x
EBITDA/interest expense............ 4.5x 6.0x
(EBITDA -- cap ex)/interest
expense.......................... 4.0x 5.4x
(EBITDA -- change in working cap --
cap ex)/interest expense......... 3.6x 4.9x
Senior debt/EBITDA................. 1.7x 1.2x
Total debt/EBITDA.................. 2.3x 1.8x
Capitalization:
Senior debt........................ 42% $ 59,036 35% $ 43,104 25%
Other debt......................... 15% 25,000 15% 25,000 15%
---- -------- ---- -------- ----
Total debt......................... 57% 84,036 50% 68,104 40%
Equity............................. 43% 85,572 50% 01,304 60%
---- -------- ---- -------- ----
Total capitalization............... 100% $169,609 100% $169,408 100%
Amortization:
Senior sub-debt retired annually... 14,286 14,286
Senior term loan retired
annually......................... -- --
Sub-debt retired annually.......... -- --
Other notes retired annually....... -- --
Goodwill amortization over 15
years.............................. $ 4,186 $ 4,186
Fee amortization over 10 years....... $ 600 $ 600
- ---------------
(1) Adjusted to show historical operating results with proforma interest expense
and proforma capitalization.
36
39
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
PROJECTED INCOME STATEMENTS
($S IN 000S)
HISTORICAL ESTIMATED PROJECTED FISCAL YEAR ENDED AUGUST
---------- --------- ----------------------------------------------------
1997 1998 1999 2000 2001 2002 2003
---------- --------- -------- -------- -------- -------- --------
Revenues.......................................... $175,835 $193,391 $207,846 $223,500 $239,900 $257,562 $276,160
% growth........................................ 10.0% 7.5% 7.5% 7.3% 7.4% 7.2%
Cost of sales..................................... $125,732 $138,952 $149,319 $160,546 $172,085 $184,850 $197,826
% of revenue.................................... 71.5% 71.9% 71.8% 71.8% 71.7% 71.8% 71.6%
-------- -------- -------- -------- -------- -------- --------
Gross profit...................................... $ 50,103 $ 54,439 $ 58,527 $ 62,954 $ 67,815 $ 72,712 $ 78,334
Gross margin.................................... 28.5% 28.1% 28.2% 28.2% 28.3% 28.2% 28.4%
General and administrative........................ $ 8,855 $ 10,513 $ 10,477 $ 11,003 $ 11,549 $ 12,116 $ 12,661
% of revenue.................................... 5.0% 5.4% 5.0% 4.9% 4.8% 4.7% 4.6%
Sales and marketing............................... 18,119 17,951 18,732 19,783 20,900 22,088 23,163
% of revenue.................................... 10.3% 9.3% 9.0% 8.9% 8.7% 8.6% 8.4%
Restructuring and unusual charges................. 1,816 -- -- -- -- -- --
% of revenue.................................... 1.0% --
Other operating expenses.......................... -- -- -- -- -- -- --
% of revenue....................................
-------- -------- -------- -------- -------- -------- --------
Total operating expenses........................ $ 28,790 $ 28,464 $ 29,209 $ 30,786 $ 32,449 $ 34,204 $ 35,824
% of revenue.................................. 16.4% 14.7% 14.1% 13.8% 13.5% 13.3% 13.0%
EBITDA............................................ $ 21,313 $ 25,975 $ 29,318 $ 32,168 $ 35,366 $ 38,508 $ 42,510
% of revenue.................................... 12.1% 13.4% 14.1% 14.4% 14.7% 15.0% 15.4%
Depreciation...................................... $ 4,270 $ 3,960 $ 3,934 $ 3,935 $ 3,936 $ 3,937 $ 3,938
Goodwill amortization............................. 3,885 4,121 4,186 4,186 4,186 4,186 4,186
Transaction fee amortization...................... -- -- 600 600 600 600 600
-------- -------- -------- -------- -------- -------- --------
Total depreciation & amortization............... $ 8,155 $ 8,081 $ 8,720 $ 8,721 $ 8,722 $ 8,723 $ 8,724
% of revenue.................................. 4.6% 4.2% 4.2% 3.9% 3.6% 3.4% 3.2%
-------- -------- -------- -------- -------- -------- --------
EBIT.............................................. $ 13,158 $ 17,894 $ 20,598 $ 23,447 $ 26,644 $ 29,785 $ 33,786
% of revenue.................................... 7.5% 9.3% 9.9% 10.5% 11.1% 11.6% 12.2%
Capital expenditures.............................. $ 3,834 $ 3,935 $ 3,936 $ 3,937 $ 3,938
% of revenue.................................... 1.8% 1.8% 1.6% 1.5% 1.4%
37
40
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
PROJECTED INCOME STATEMENTS
($S IN 000S)
HISTORICAL ESTIMATED PROJECTED FISCAL YEAR ENDED AUGUST
-------------------- ---------------------------------------------------
1997 1998 1999 2000 2001 2002 2003
-------- -------- ------- ------- ------- ------- -------
EBIT............................. $13,158 $17,894 $20,598 $23,447 $26,644 $29,785 $33,786
Interest expense:
Revolver......................... -- -- 218 700 1,122 1,353 1,351
Senior sub-debt.................. -- -- 9,286 7,857 6,429 5,000 3,571
Sub-debt......................... -- -- -- -- -- -- --
Cap. lease oblg.................. -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total interest expense............. 3,002 4,200 11,704 10,757 9,750 8,553 7,123
Home office expense................ -- -- -- -- -- -- --
Discontinued operations expenses... 4,820 -- -- -- -- -- --
Extraordinary loss from debt
extinguishment................... 241 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Other expenses (income)............ 8,063 --
Minority interest.................. -- -- -- -- -- -- --
Pre-tax income..................... 5,095 13,694 8,894 12,690 16,894 21,232 26,663
Provision (benefit) for income
taxes............................ 4,091 5,615 3,647 5,203 6,926 8,705 10,932
------- ------- ------- ------- ------- ------- -------
Net income....................... $ 1,004 $ 8,079 $ 5,247 $ 7,487 $ 9,967 $12,527 $15,731
======= ======= ======= ======= ======= ======= =======
Preferred dividends................ -- -- 2,400 2,688 3,011 3,372 3,776
------- ------- ------- ------- ------- ------- -------
Net income to common............... $ 1,004 $ 8,079 $ 2,847 $ 4,799 $ 6,957 $ 9,155 $11,955
------- ------- ------- ------- ------- ------- -------
38
41
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
PROJECTED BALANCE SHEETS
($S IN 000S)
ASSETS
ESTIMATED PROFORMA
AUGUST 1998 ADJUSTMENTS AUGUST 1998
----------- -------------------- -----------
Cash and equivalents.................... $ 1,000 $ 0 $ 3,000 $ 4,000
Short-term investments.................. -- -- -- --
Accounts receivable..................... 26,336 -- -- 26,336
Inventories............................. 34,821 -- -- 34,821
Income taxes receivable................. 598 -- -- 598
Other receivables....................... 773 -- -- 773
Prepaid expenses and other current
assets................................ 2,672 -- -- 2,672
-------- --------- -------- --------
Total current assets.................... 66,200 -- 3,000 69,200
Land.................................... 478 -- -- 478
Gross plant and equip................... 37,971 -- -- 37,971
Accumulated depreciation................ (16,849) -- -- (16,849)
-------- --------- -------- --------
Net P, P&E.............................. 21,600 -- -- 21,600
Goodwill, net of accumulated
amortization.......................... 34,888 -- 52,290 87,178
Transaction fee & expenses.............. -- -- 6,000 6,000
Other intangible assets................. 8,165 -- -- 8,165
Deferred income taxes and other
assets................................ 4,200 -- -- 4,200
-------- --------- -------- --------
Total assets.......................... $135,053 $ 0 $ 61,290 $196,343
======== ========= ======== ========
LIABILITIES & EQUITY
Current maturities & short-term debt.... $ 0 $ 0 $ 0 $ 0
Trade accounts payable.................. 10,442 -- -- 10,442
Accrued liabilities..................... 10,347 -- -- 10,347
Current portion of lease obligation..... 211 -- -- 211
-------- --------- -------- --------
Total current liabilities............... 21,000 -- -- 21,000
Long term debt
Revolver.............................. 2,098 (2,098) -- --
Senior sub-debt....................... 39,600 (39,600) 100,000 100,000
Senior term loan...................... 13,000 (13,000) 25,000 25,000
Sub-debt.............................. -- -- -- --
Other notes........................... -- -- -- --
Cap. lease oblg....................... -- -- -- --
-------- --------- -------- --------
Total debt............................ 54,698 (54,698) 125,000 125,000
Less current portion.................. -- -- -- --
-------- --------- -------- --------
Total long-term debt.................. 54,698 (54,698) 125,000 125,000
Total liabilities....................... 75,698 (54,698) 125,000 146,000
Preferred stock......................... -- -- 20,000 20,000
Common stock............................ 22,858 (22,858) 30,343 30,343
Unrealized gain (loss) on marketable
securities............................ 21,949 (21,949) -- --
Retained earnings....................... 14,548 (14,548) -- --
-------- --------- -------- --------
Total stockholders' equity.............. 59,355 (59,355) 50,343 50,343
-------- --------- -------- --------
Total liabilities & equity...... $135,053 $(114,053) $175,343 $196,343
======== ========= ======== ========
PROJECTED FISCAL YEAR ENDED AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
Cash and equivalents.................... $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Short-term investments.................. -- -- -- -- --
Accounts receivable..................... 28,032 29,931 31,910 34,051 36,232
Inventories............................. 37,064 39,574 42,191 45,021 47,905
Income taxes receivable................. 636 679 724 773 822
Other receivables....................... 823 879 937 1,000 1,064
Prepaid expenses and other current
assets................................ 2,845 3,037 3,238 3,455 3,677
-------- -------- -------- -------- --------
Total current assets.................... 70,400 75,100 80,000 85,300 90,700
Land.................................... 478 478 478 478 478
Gross plant and equip................... 41,805 45,740 49,676 53,613 57,551
Accumulated depreciation................ (20,783) (24,718) (28,654) (32,591) (36,529)
-------- -------- -------- -------- --------
Net P, P&E.............................. 21,500 21,500 21,500 21,500 21,500
Goodwill, net of accumulated
amortization.......................... 82,992 78,806 74,620 70,434 66,248
Transaction fee & expenses.............. 5,400 4,800 4,200 3,600 3,000
Other intangible assets................. 8,775 9,436 10,129 10,874 11,660
Deferred income taxes and other
assets................................ 4,200 4,200 4,200 4,200 4,200
-------- -------- -------- -------- --------
Total assets.......................... $193,268 $193,843 $194,649 $195,909 $197,308
======== ======== ======== ======== ========
LIABILITIES & EQUITY
Current maturities & short-term debt.... $ 0 $ 0 $ 0 $ 0 $ 0
Trade accounts payable.................. 11,050 11,753 12,506 13,210 14,013
Accrued liabilities..................... 10,950 11,647 12,394 13,090 13,887
Current portion of lease obligation..... -- -- -- -- --
-------- -------- -------- -------- --------
Total current liabilities............... 22,000 23,400 24,900 26,300 27,900
Long term debt
Revolver.............................. 4,963 10,936 14,561 16,179 14,533
Senior sub-debt....................... 85,714 71,429 57,143 42,857 28,571
Senior term loan...................... 25,000 25,000 25,000 25,000 25,000
Sub-debt.............................. -- -- -- -- --
Other notes........................... -- -- -- -- --
Cap. lease oblg....................... -- -- -- -- --
-------- -------- -------- -------- --------
Total debt............................ 115,677 107,364 96,704 84,036 68,104
Less current portion.................. -- -- -- -- --
-------- -------- -------- -------- --------
Total long-term debt.................. 115,677 107,364 96,704 84,036 68,104
Total liabilities....................... 137,677 130,764 121,604 110,336 96,004
Preferred stock......................... 22,400 25,088 28,099 31,470 35,247
Common stock............................ 30,343 30,343 30,343 30,343 30,343
Unrealized gain (loss) on marketable
securities............................ -- -- -- -- --
Retained earnings....................... 2,847 7,647 14,603 23,759 35,714
-------- -------- -------- -------- --------
Total stockholders' equity.............. 55,591 63,078 73,045 85,572 101,304
-------- -------- -------- -------- --------
Total liabilities & equity...... $193,268 $193,843 $194,649 $195,909 $197,308
======== ======== ======== ======== ========
39
42
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
CASH FLOW
($S IN 000S)
PROJECTED FISCAL YEAR ENDED AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
Net Income.............................. $ 5,247 $ 7,487 $ 9,967 $ 12,527 $ 15,731
Add: Depreciation & amortization...... 3,934 3,935 3,936 3,937 3,938
Add: Goodwill amortization............ 4,186 4,186 4,186 4,186 4,186
Add: Fee amortization................. 600 600 600 600 600
Add: Minority interest................ -- -- -- -- --
Add: PIK Dividend..................... 2,400 2,688 3,011 3,372 3,776
Add: Dividend......................... (2,400) (2,688) (3,011) (3,372) (3,776)
-------- -------- -------- -------- --------
Total Sources........................... $ 13,967 $ 16,208 $ 18,689 $ 21,250 $ 24,455
Less: Changes in other long-term
assets & liabilities............... (610) (661) (692) (746) (785)
Less: Change in working capital....... (3,200) (3,300) (3,400) (3,900) (3,800)
Less: Capital expenditures (Net of
dispos.)........................... (3,834) (3,935) (3,936) (3,937) (3,938)
-------- -------- -------- -------- --------
Total Uses.............................. $ (7,644) $ (7,896) $ (8,028) $ (8,583) $ (8,523)
-------- -------- -------- -------- --------
TOTAL FREE CASH FLOW BEFORE FINANCING... $ 6,323 $ 8,312 $ 10,661 $ 12,667 $ 15,932
REPAYMENT/ BORROWING OF DEBT
Revolver................................ 4,963 5,973 3,625 1,618 (1,646)
Senior sub-debt......................... (14,286) (14,286) (14,286) (14,286) (14,286)
Senior term loan........................ -- -- -- -- --
Sub-debt................................ -- -- -- -- --
Other notes............................. -- -- -- -- --
Cap. lease oblg......................... -- -- -- -- --
-------- -------- -------- -------- --------
Total Debt (Repayments)/ Borrowing...... $ (9,323) $ (8,312) $(10,661) $(12,667) $(15,932)
CHANGE IN CASH BALANCE.................. $ (3,000) $ 0 $ 0 $ 0 $ 0
40
43
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
WORKING CAPITAL ASSUMPTIONS
($'S IN 000S)
ESTIMATED PROFORMA PROJECTED FISCAL YEAR ENDED AUGUST
----------------- AUGUST -----------------------------------------------
1997 1998 ADJUSTMENTS 1998 1999 2000 2001 2002 2003
------- ------- ----------------- -------- ------- ------- ------- ------- -------
Accounts receivable.......... $24,282 $26,336 -- -- $26,336 $28,032 $29,931 $31,910 $34,051 $36,232
% of sales................. 13.8% 13.6% 13.6% 13.5% 13.4% 13.3% 13.2% 13.1%
Inventories.................. $32,105 $34,821 -- -- $34,821 $37,064 $39,574 $42,191 $45,021 $47,905
% of sales................. 18.3% 18.0% 18.0% 17.8% 17.7% 17.6% 17.5% 17.3%
Income taxes receivable...... $ 551 $ 598 -- -- $ 598 $ 636 $ 679 $ 724 $ 773 $ 822
% of sales................. 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Other receivables............ $ 713 $ 773 -- -- $ 773 $ 823 $ 879 $ 937 $ 1,000 $ 1,064
% of sales................. 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%
Prepaid expenses and other
current assets............. $ 2,464 $ 2,672 -- -- $ 2,672 $ 2,845 $ 3,037 $ 3,238 $ 3,455 $ 3,677
% of sales................. 1.4% 1.4% 1.4% 1.4% 1.4% 1.3% 1.3% 1.3%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL CURRENT ASSETS,
EXCLUDING CASH............. $65,200 -- -- $65,200 $69,400 $74,100 $79,000 $84,300 $89,700
% of sales................. 0.0% 33.7% 33.7% 33.4% 33.2% 32.9% 32.7% 32.5%
Trade accounts payable....... $11,299 $10,442 -- -- $10,442 $11,050 $11,753 $12,506 $13,210 $14,013
% of sales................. 6.4% 5.4% 5.4% 5.3% 5.3% 5.2% 5.1% 5.1%
Accrued liabilities.......... $11,197 $10,347 -- -- $10,347 $10,950 $11,647 $12,394 $13,090 $13,887
% of sales................. 6.4% 5.4% 5.4% 5.3% 5.2% 5.2% 5.1% 5.0%
Current portion of lease
obligation................. $ 481 $ 211 -- -- $ 211 $ 0 $ 0 $ 0 $ 0 $ 0
% of sales................. 0.3% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL CURRENT LIABILITIES
EXCLUDING S-T DEBT......... $21,000 -- -- $21,000 $22,000 $23,400 $24,900 $26,300 $27,900
% of sales................. 0.0% 10.9% 10.9% 10.6% 10.5% 10.4% 10.2% 10.1%
Net non-cash working
capital.................... $44,200 $44,200 $47,400 $50,700 $54,100 $58,000 $61,800
% of sales................. 0.0% 22.9% 22.9% 22.8% 22.7% 22.6% 22.5% 22.4%
Change in non-cash working
capital.................... $ 3,200 $ 3,300 $ 3,400 $ 3,900 $ 3,800
41
44
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
RETURNS ANALYSIS
($0S IN 000S)
PROJECTED RETURNS ON MANAGEMENT EQUITY
----------------------------------------------------
YEAR ENDING AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
TOTAL CAPITALIZATION AS A MULTIPLE OF
EBITDA
5.50 x............................. $161,249 $176,924 $194,513 $211,794 $233,805
5.75 x............................. 168,579 184,966 203,355 221,421 244,433
6.00 x............................. 175,908 193,008 212,196 231,048 255,060
6.25 x............................. 183,238 201,050 221,038 240,675 265,688
LESS: TOTAL DEBT (NET OF CASH)(1)....... 137,077 131,452 123,802 114,507 102,351
VALUE OF EQUITY
5.50 x............................. $ 24,172 $ 45,472 $ 70,711 $ 97,287 $131,454
5.75 x............................. 31,502 53,514 79,552 106,914 142,082
6.00 x............................. 38,831 61,556 88,394 116,541 152,709
6.25 x............................. 46,161 69,598 97,235 126,168 163,337
RETURNS ANALYSIS
30,343
OWNERSHIP PERCENTAGE.................... 84.2% 84.2% 84.2% 84.2% 84.2%
IRR ASSUMING EBITDA MULTIPLES OF:
5.50 x............................. (32.9%) 12.3% 25.2% 28.2% 29.5%
5.75 x............................. (12.6%) 21.9% 30.2% 31.2% 31.6%
6.00 x............................. 7.8% 30.7% 34.9% 34.1% 33.5%
--------
6.25 x............................. 28.1% 39.0% 39.2% 36.8% 35.3%
--------
- ---------------
(1) Includes the repayment of preferred stock.
42
45
INVESTMENT BANKING GROUP
AUSTIN -- LEVERAGED BUYOUT ANALYSIS -- MAXIMIZED PRICE
RETURNS ANALYSIS
($0S IN 000S)
PROJECTED RETURNS ON PREFERRED EQUITY
----------------------------------------------------
YEAR ENDING AUGUST
----------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
TOTAL CAPITALIZATION AS A MULTIPLE OF
EBITDA
5.50 x............................. $161,249 $176,924 $194,513 $211,794 $233,805
5.75 x............................. 168,579 184,966 203,355 221,421 244,433
6.00 x............................. 175,908 193,008 212,196 231,048 255,060
6.25 x............................. 183,238 201,050 221,038 240,675 265,688
LESS: TOTAL DEBT (NET OF CASH)(1)....... 137,077 131,452 123,802 114,507 102,351
VALUE OF EQUITY
5.50 x............................. $ 24,172 $ 45,472 $ 70,711 $ 97,287 $131,454
5.75 x............................. 31,502 53,514 79,552 106,914 142,082
6.00 x............................. 38,831 61,556 88,394 116,541 152,709
6.25 x............................. 46,161 69,598 97,235 126,168 163,337
BALANCE AT YEAR END:(2)
----------------------------------------------------
RETURNS ANALYSIS
20,000............................. 22,400 25,088 28,099 31,470 35,247
OWNERSHIP PERCENTAGE.................... 15.8% 15.8% 15.8% 15.8% 15.8%
IRR ASSUMING EBITDA MULTIPLES OF:
5.50 x............................. 31.1% 27.0% 25.2% 23.7% 22.9%
5.75 x............................. 36.9% 29.5% 26.7% 24.7% 23.6%
6.00 x............................. 42.7% 31.9% 28.1% 25.7% 24.3%
--------
6.25 x............................. 48.5% 34.3% 29.5% 26.6% 25.0%
--------
- ---------------
(1) Includes the repayment of preferred stock.
(2) Includes PIK Dividends
43
46
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
ANALYSIS OF M&A TRANSACTION MULTIPLES SINCE 1/1/95
(DOLLARS IN MILLIONS)
AGGREG. EQUITY LEVERED AGGREGATE
CONSID. AS A CONSIDERATION AS A
MULTIPLE OF: MULTIPLE OF:
AGGREGATE LEVERED --------------- -----------------------
DATE EQUITY AGGREGATE LTM NET BOOK LTM LTM LTM PERCENT
ANNOUNCED ACQUIROR / TARGET CONSIDERATION CONSIDERATION(2) INCOME VALUE REVENUE EBITDA EBIT ACQUIRED
- --------- ----------------- ------------- ---------------- ------- ----- ------- ------ ---- --------
03/17/95 Devon Group Inc $ 17.2 $ 17.2 NA NA NA NA NA NA
Devon Group Inc
02/01/96 Arctco Inc $ 16.5 $ 16.5 NA NA NA NA NA NA
Arctco Inc
07/25/96 RR Donnelley & Sons $250.0 $250.0 NA NA NA NA NA NA
Co
RR Donnelley & Sons
Co
11/01/96 Social Expressions $ 2.5 $ 8.5 NA NA NA NA NA NA
Acquisition
TMC Group Inc (AGP &
Co Inc)
01/29/97 Agritherm Corp NA NA NA NA NA NA NA 100.0%
Fieldsheer Inc
04/14/97 Katz Digital $ 0.8 $ 0.8 NA 2.7 0.3 NA NA 100.0%
Technologies Inc
Advanced Digital
Services Inc
05/19/97 LSI Industries Inc $ 17.9 $ 17.9 NA NA 1.2 NA NA 100.0%
Grady McCauley Inc
06/26/97 CYRK Inc NA NA NA NA NA NA NA 100.0%
Champion Awards &
Advertising
07/10/97 Mail-Well Inc NA NA NA NA NA NA NA NA
Allied Printers
07/15/97 Applied Graphics NA NA NA NA NA NA NA 100.0%
Technologies
MBA Graphics Inc
10/14/97 Big Flower Press NA NA NA NA NA NA NA NA
Holdings Inc
Gamma One Inc
AVERAGE: NA 2.7 0.8 NA NA
ADJUSTED
AVERAGE NA 2.7 0.8 NA NA
- ---------------
* Covers industries with SIC Codes of 5090 and 7336. Source: Securities Data
Company, Inc. (201) 622-3100. As of 4/18/98.
(2) Levered aggregate consideration is defined as aggregate equity consideration
plus total debt, net of cash and equivalents.
44
47
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET
VALUE SHARE-
EQUITY OF PRICE HOLDERS
DATE DATE VALUE DEAL PER SHARES EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE OUT. (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
3/17/1995 -- Devon Group Inc Devon Group Inc $17.2 $17.2 $24.50 7.4 $ 81.6
Advisor -- --
Company Status Public Public
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
3/17/1995 $ 219.6 $ 18.8 $32.2 $42.2 $ 2.2 $ 128.5 -- Intended
Advisor Buyback
Not Appl.
Deal Description In March 1995, Devon Group's (DG) board
authorized the repurchase of up to .700 mil common shares, or
about 9.5% of the company's common stock outstanding, in open
market transactions. Based on DG closing stock price of $24.50
on Mar 16, the last full trading day prior to the announcement
of the board's approval, the buyback had an indicated value of
up to $17.15 mil in cash.
Target Business Description Provide pre-press computer
typesetting, composition and color separation services;
Typesetting, printing services distribute posters, art
reproductions and note cards
Acquiror Business Description Provide pre-press computer
typesetting, composition and color separation services;
Typesetting, printing services distribute posters, art
reproductions and note cards
TARGET
VALUE SHARE-
EQUITY OF PRICE HOLDERS
DATE DATE VALUE DEAL PER SHARES EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE OUT. (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
2/1/1996 -- Arctco Inc Arctco Inc $16.5 $16.5 $11.00 29.7 $ 157.3
Advisor -- --
Company Status Public Public
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
2/1/1996 $ 389.8 $ 24.5 $35.9 $42.4 -- $ 224.8 -- Intended
Advisor
Not Appl.
Deal Description In February 1996, Arctco's (AR) board
authorized the repurchase of up to 1.5 mil common shares, or
about 5% of the company's common stock outstanding, in open
market transactions. Based on AR's closing stock price of $11
on Jan 31, the last full trading day prior to the announcement
of the board's approval, the buyback had an indicated value of
up to $16.5 mil in cash.
Target Business Description Manufacture and wholesale
snowmobiles and related parts, garments and accessories
Acquiror Business Description Manufacture and wholesale
snowmobiles and related parts, garments and accessories
- ---------------
* Covers industries with SIC Codes of 5090 and 7336. Source: Securities Data
Company, Inc. (201) 622-3100. As of April 18, 1998.
45
48
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
7/25/96 -- RR Donnelley & Sons Co RR Donnelley & Sons Co $250.0 $250.0 -- 154.1 $1,790.8
Advisor -- --
Company Status Public Public
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
7/25/96 $6,827.6 $(135.2) $(50.9) $281.5 $1,247.6 $4,499.9 -- Intended
Buyback
Advisor
Not Appl.
Deal Description RR Donnelley & Sons' board authorized the
repurchase of up to $250 mil of the company's common stock
outstanding in open market and privately negotiated
transactions.
Target Business Description Provide books, reports, catalogs,
documents and business forms printing as well as book binding
and graphic arts services for the publishing, retailing,
merchandising and information technology markets worldwide.
Acquiror Business Description Provide books, reports,
catalogs, documents and business forms printing as well as
book binding and graphic arts services for the publishing,
retailing, merchandising and information technology markets
worldwide.
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
11/1/96 -- Social Expressions Acquisition TMC Group Inc $ 2.5 $ 8.5 -- -- --
(AGP & Co Inc)
Advisor -- --
Company Status Priv. Sub.
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
11/1/96 $ 13.2 -- -- -- -- -- -- Pending Acq.
of Asset
Advisor
Friendly
Deal Description Social Expression Acquisition (SEA) agreed to
acquire TMC, a unit of AGP, for approximately $8.5 mil.
Consideration was to consist of $2.5 mil in common stock, the
assumption of approximately $6 mil in liabilities and profit
related payments. Additionally, AGP was to receive a $2.5 mil
10-year promissory note convertible into SEA voting stock. The
receipt of the promissory note was contingent on SEA being a
privately held company at the time of closing of the
transaction.
Target Business Description manufacture and wholesale wedding
related accessories.
Acquiror Business Description Manufacture and wholesale
wedding accessories and gifts.
- --------
* Covers industries with SIC Codes of 5090 and 7336. Source: Securities Data
Company, Inc. (201) 622-3100. As of April 18, 1998.
46
49
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
1/29/97 1/29/97 Agritherm Corp Fieldsheer Inc -- -- -- -- --
Advisor -- --
Company Status Public Priv.
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
1/29/97 $ 3.8 -- -- -- -- -- 100 Completed
Merger
Friendly
Deal Description
Agritherm acquired Fieldsheer in a stock swap transaction.
Target Business Description
Manufacture athletic clothing and accessories
Acquiror Business Description
Manufacture clothing
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
4/14/97 8/4/97 Katz Digital Advanced Digital $ 0.8 $ 0.8 -- -- $ 0.3
Technologies Inc Services Inc
Advisor -- --
Company Status Public Priv.
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
4/14/97 $ 2.5 $ 0.0- -- -- -- $ 1.1 100 Completed
Acq. of
Friendly
Deal Description
Katz Digital Technologies acquired Advanced Digital Services
for approximately $.75 mil in cash plus 301,800 restricted
common shares.
Target Business Description
Provide commercial graphic design services
Acquiror Business Description
Print plates and related products
- --------
* Covers industries with SIC Codes of 5090 and 7336. Source: Securities Data
Company, Inc. (201) 622-3100. As of April 18, 1998.
47
50
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
5/19/97 7/1/97 LSI Industries Inc. Grady McCauley Inc. $17.9 $17.9 -- -- --
Advisor -- --
Company Status Public Priv.
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
5/19/97 $ 14.5 -- -- -- -- -- 100 Completed
Acq. of
Assets
Friendly
Deal Description LSI Industries (LSI) acquired Grady McCauley
for approximately $17.9 mil. The consideration consisted of
$11.5 mil in cash, 475,700 LSI common shares valued at $6.4
mil, and the assumption of an undisclosed amount in
liabilities. The shares were valued based on LSI's closing
stock price of $13.5 on June 30, the last full trading day
prior to the announcement.
Target Business Description Provide custom graphics services
for retail industry
Acquiror Business Description Manufactures & designs lighting
and graphics products
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
6/26/97 6/26/97 Cyrk Inc Champion Awards & -- -- -- -- --
Advertising
Advisor -- --
Company Status Public Priv.
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
6/26/97 $ 4.5 -- -- -- -- -- 100 Completed
Acq. of
Friendly
Deal Description Cyrk acquired Champion Awards & Advertising.
Terms were not disclosed.
Target Business Description Manufacture promotional products
Acquiror Business Description Manufacture high quality
products for promotional programs and custom-designed sports
apparel and accessories including T-shirts, fleece pullovers,
jackets, sports bags, caps and watches that bear a brand or
company name or logo
- --------
* Covers industries with SIC Codes of 5090 and 7336. Source: Securities Data
Company, Inc. (201) 622-3100. As of April 18, 1998.
48
51
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
7/10/97 -- Mail-Well Inc. Allied Printers -- -- -- -- --
Advisor -- --
Company Status Public Priv.
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
7/10/97 $ 17.0 -- -- -- -- -- -- Pending Acq.
of Assets
Advisor
Friendly
Deal Description Mail-Well, a majority-owned unit of Mail-Well
Holdings, agreed to acquire Allied Printers for an undisclosed
amount in a combination of cash and Mail-Well common stock.
Target Business Description Provide high-ended commercial
printing, service corporate clients
Acquiror Business Description Manufacture envelopes in the
United States and Canada; provide high-impact color printing
services
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
7/15/97 7/15/97 Applied Graphics MBA Graphics Inc -- -- -- -- --
Technologies
Advisor -- --
Company Status Public Priv.
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
7/15/97 $ 5.5 -- -- -- -- -- 100 Completed
Acq. of
Advisor
Friendly
Deal Description Applied Graphics Technologies acquired MBA
Graphics. Terms were not disclosed.
Target Business Description Provide commercial graphic design
services
Acquiror Business Description Provide digital prepress
services to magazine publishers, advertising agencies,
entertainment companies, automobile manufacturers and
retailers
- --------
* Covers industries with SIC Codes of 5090 and 7336. Source: Securities Data
Company, Inc. (201) 622-3100. As of April 18, 1998.
49
52
INVESTMENT BANKING GROUP
PROMOTIONAL PRODUCTS INDUSTRY*
MERGERS & ACQUISITION TRANSACTIONS SINCE JANUARY 1, 1995
TARGET
VALUE SHARE-
EQUITY OF PRICE SHARES HOLDERS
DATE DATE VALUE DEAL PER OUT. EQUITY
ANNOUNCED EFFECTIVE ACQUIROR TARGET ($MIL) ($MIL) SHARE (MIL) ($MIL)
- --------- --------- -------- ------ ------ ------ ------ ---------- --------
10/14/97 11/4/97 Big Flower Press Gamma One Inc -- -- -- -- --
Holdings Inc
Advisor -- --
Company Status Public Sub.
TARGET TARGET
NET NET TARGET TARGET
SALES INCOME EBIT EBITDA TOTAL % OF STATUS/
DATE LTM LTM LTM LTM DEBT, NET TOTAL SHARES FORM/
ANNOUNCED ($MIL) ($MIL) ($MIL) ($MIL) OF CASH ASSETS ACQ. ATTITUDE
- --------- -------- ------- ------ ------ --------- -------- ------ -------------
10/14/97 $ 19.0 -- -- -- -- -- -- Complete
Acq. of
Assets
Friendly
Deal Description Big Flower Press Holdings acquired Gamma One.
Terms were not disclosed.
Target Business Description Provide digital premedia services
including digital photography, digital prepress and content
management.
Acquiror Business Description Provide integrated advertising
and marketing services, including direct marketing and digital
media services; print newspaper advertisement inserts.
- --------
* Covers industries with SIC Codes of 5090 and 7336. Source: Securities Data
Company, Inc. (201) 622-3100. As of April 18, 1998.
50
53
INVESTMENT BANKING GROUP
MARKET PREMIUM SUMMARY VALUATION
MERGER & ACQUISITION ACTIVITY
SINCE 1/1/95
MARKET PREMIUMS
MEDIAN PREMIUMS
TRANS. --------------------------------------------
STRUCTURE 1 DAY PRIOR 1 WEEK PRIOR 4 WEEKS PRIOR
- --------- ----------- ------------ -------------
All Cash..................................... 24.0% 27.5% 33.6%
IMPLIED AUSTIN SHARE PRICE
IMPLIED SHARE PRICES
TRANS. --------------------------------------------
STRUCTURE 1 DAY PRIOR 1 WEEK PRIOR 4 WEEKS PRIOR
- --------- ----------- ------------ -------------
All Cash..................................... $21.54 $20.88 $21.21
------ ------ ------
Actual Stock Prices:......................... $17.38 $16.38 $15.88
------ ------ ------
51
54
INVESTMENT BANKING GROUP
MARKET PREMIUM SUMMARY VALUATION
MERGER & ACQUISITION ACTIVITY
SINCE 1/1/95
MARKET PREMIUMS
MEDIAN PREMIUMS
TRANS. ------------------------------------------
STRUCTURE 1 DAY PRIOR 1 WEEK PRIOR 4 WEEKS PRIOR
--------- ----------- ------------ -------------
All Cash.......................................... 24.0% 27.5% 33.6%
IMPLIED AUSTIN SHARE PRICE
IMPLIED SHARE PRICES
TRANS. -------------------------------------------
STRUCTURE 1 DAY PRIOR 1 WEEK PRIOR 4 WEEKS PRIOR
--------- ----------- ------------ --------------
All Cash......................................... $19.98 $20.55 $21.54
------ ------ ------
30 Day Weighted Average Price.................... $16.12 $16.12 $16.12
------ ------ ------
52
55
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
01/03/95 06/01/95 First Union Natl Bk of Florida Coral Gables Fedcorp Inc Commercial bank
01/05/95 06/30/95 Minnesota Power & Light Co ADESA Corp Electric utility
01/06/95 07/12/95 Eridania Beghin-Say(Montediso) American Maize-Products Co Produce sugar
01/06/95 01/19/95 V'Power Corp Vector Aeromotive Corp Investment firm
01/09/95 03/07/95 Siemens Nixdorf Info AG Pyramid Technology Corp Mnfr wiring devices, computers
01/09/95 05/17/95 Investor Group Standard Brands Paint Co Investor group
01/10/95 03/31/95 Laidlaw Inc Mayflower Group Inc Pvd busing, waste mgmt svcs
01/13/95 07/13/95 ADAC Laboratories Community Health Computing Mnfr diagnostic imaging sys
01/13/95 08/18/95 Staten Island Savings Bank Gateway Bancorp, New York Savings bank
01/19/95 03/16/95 ALC Communications Corp ConferTech International Pvd long distance commun svcs
01/30/95 11/30/95 First Banks Inc, Clayton, MO QCB Bancorp Commercial bank holding co
02/03/95 03/17/95 Clark Equipment Co Club Car Inc Mnfr, whl construction equip
02/03/95 11/02/95 National Australia Bank Ltd Michigan National Corp Bank, insurance co
02/07/95 07/12/95 WMX Technologies Inc Rust International Inc Pvd chemical waste mgmt svcs
02/15/95 03/31/95 Hollywood Entertainment Corp Title Wave Stores Inc Own op video rental stores
02/27/95 08/31/95 Conseco Inc CCP Insurance Inc Insurance holding company
02/28/95 07/18/95 Hoechst AG Marion Merrell Dow Inc Mnfr chemicals and fibers
03/02/95 08/30/95 Trans Union (Marmon Holdings) DATEQ Information Network Pvd credit reporting svcs
03/02/95 05/26/95 Luxottica Group SpA US Shoe Corp (Luxottica Group) Manufacture eyeglass frames
03/06/95 08/01/95 Mothers Work Inc A Pea in the Pod Inc Own, operate maternity stores
03/08/95 04/26/95 Marvel Entertainment Group Inc SkyBox International Publish comic books
03/08/95 07/06/95 ENSERCH Corp Sunrise Energy Services Inc Gas transmission, distribution
03/14/95 04/25/95 Penske Truck Leasing Co LP Leaseway Transportation Corp Provide truck leasing services
03/15/95 06/16/95 LinPac Mouldings Ltd Ropak Corp Mfr plastic-injected mouldings
03/15/95 03/15/95 Remy Capital Partners III LP UTI Energy Corp Investment partnership
03/17/95 05/01/95 Waste Management Inc Resource Recycling Techs Inc Solid, chemical waste mgmt svc
03/24/95 04/26/95 West Co Inc Paco Pharmaceutical Services Mnfr packaging components
03/27/95 12/01/95 BayBanks, Boston, Massachusetts Cornerstone Financial Corp Bank holding company
03/28/95 05/25/95 Ingersoll-Rand Co Clark Equipment Co Mnfr industrial machinery
04/03/95 05/08/95 Raytheon Co E-Systems Inc Mnfr radar equipment, aircrafts
04/04/95 06/26/95 FMC Corp Moorco International Mnfr petro equip, chemicals
04/05/95 08/02/95 Club Mediterranee SA Club Med Inc Op travel agency, hotel resorts
04/05/95 04/05/95 Coinmach Corp Solon Automated Services Inc Mnfr, whl laundry equipment
04/06/95 08/31/95 Apollo Holding Inc Intermetrics Inc Investor group
04/07/95 10/03/95 McCaw Cellular Commun(AT&T) LIN Bdcstg (McCaw Cellular) Pvd cellular commun services
04/10/95 01/04/96 Investor Group Kemper Corp Investor group
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ------ ------- ------- -------
01/03/95 Bank holding company 515.7 26.59 23.7% 26.6% 43.7%
01/05/95 Wholesale automobiles 165.3 17.00 19.3% 25.9% 38.8%
01/06/95 Produce corn; mnfr tobacco prod 434.0 40.00 49.5% 56.9% 66.7%
01/06/95 Manufacture exotic sports cars 5.5 --
01/09/95 Manufacture, whl computers 205.1 16.00 30.6% 23.1% 43.8%
01/09/95 Mnfr paints, varnishes 18.0 --
01/10/95 Trucking and bussing services 158.4 12.39
01/13/95 Manufacture medical equipment 16.5 --
01/13/95 Bank holding co 56.8 12.61 20.1% 26.1% 9.7%
01/19/95 Mnfr teleconferencing systems 66.0 8.00 45.5% 28.0% 85.5%
01/30/95 Bank holding company 5.0 --
02/03/95 Manufacture golf cars 243.0 25.00 50.4% 47.1% 57.5%
02/03/95 Bank holding company 1713.3 110.00 25.7% 26.4% 44.5%
02/07/95 Provide engineering services 56.9 16.35 27.0% 39.1% 39.1%
02/15/95 Own, op record & tape stores 8.5 2.00 33.3% 77.8% 34.7%
02/27/95 Insurance company 273.7 23.25 20.0% 30.1% 23.2%
02/28/95 Manufacture pharmaceuticals 7264.6 25.75 8.4% 14.4% 11.4%
03/02/95 Provide info retrieval svcs 19.1 5.41 27.3% 27.3% 27.3%
03/02/95 Manufacture shoes 1326.4 28.00 45.5% 45.5% 43.6%
03/06/95 Own, op women's clothing stores 22.5 5.50 37.5% 83.3% 57.1%
03/08/95 Print trading cards 136.6 16.00 29.3% 33.3% 31.3%
03/08/95 Pvd natural gas distn services 8.5 --
03/14/95 Trucking company, related svcs 199.8 20.00 54.6% 55.3% 60.0%
03/15/95 Manufacture plastic containers 28.5 11.00 4.8% 6.0% 4.8%
03/15/95 Pvd oil, nat gas drilling svcs 7.8 4.50 28.6% 20.0% 12.5%
03/17/95 Waste mgmt, recycling services 33.5 11.50 37.3% 50.8% 46.0%
03/24/95 Pharmaceutical packaging prod 50.5 12.25 66.1% 66.1% 58.1%
03/27/95 Bank holding company 21.3 8.80 8.3% 35.4% 32.8%
03/28/95 Mnfr, whl construction equip 1467.4 86.00 63.4% 69.9% 60.7%
04/03/95 Mnfr defense electronics 2255.2 64.00 41.0% 43.0% 46.3%
04/04/95 Mnfr totalizing fluid meters 316.5 28.00 105.5% 111.3% 91.5%
04/05/95 Operate vacation resorts 153.4 32.00 41.4% 39.9% 44.6%
04/05/95 Operate coin laundries 11.5 --
04/06/95 Pvd computer programming svcs 27.9 6.80 60.0% 60.0% 43.2%
04/07/95 Pvd cellular commun services 3209.4 129.90 18.2% 19.7% 19.7%
04/10/95 Life insurance company 1872.4 49.80 20.7% 24.5% 21.5%
53
56
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
04/12/95 04/12/95 Loral Conic (Loral Corp) Microcom Inc Mnfr radio, tv commun equip
04/12/95 10/20/95 Roosevelt Finl Group, Missouri WSB Bancorp Inc Bank holding company
04/18/95 06/30/95 California Bancshares Inc First Community Bankshares, CA Commercial bank
04/26/95 08/11/95 Stonington Partners Inc Dictaphone Corp Investment firm
04/28/95 06/16/95 ICI PLC Grow Group Inc Manufacture petrochemicals
04/28/95 06/02/95 American Vision Centers Inc NuVision Inc Operate retail optical stores
05/03/95 10/24/95 Manor Healthcare Corp In Home Health Inc Nursing homes
05/04/95 06/08/95 Douglas & Lomason Co Bestop Inc Wholesale motor vehicles
05/10/95 06/14/95 General Signal Corp Best Power Technology Inc Mnfr electric control equip
05/15/95 09/20/95 Entex Information Svcs Random Access Inc Pvd computer integrated svcs
05/15/95 11/14/95 DMB Property Ventures LP UDC Homes Inc RE investment, dvlp firm
05/16/95 01/05/96 Independence Community Bank Bay Ridge Bancorp Inc Mutual savings bank holding co
05/16/95 05/16/95 Philips Electronics North Regina Co Inc Mnfr home entertainment prod
05/17/95 07/27/95 American Tractebel Corp CRSS Inc (American Tractebel) Mnfr semiconductors
05/19/95 12/06/95 BIC SA Bic Corp (BIC SA) Manufacture pens and lighters
05/22/95 09/21/95 MCI Communications Corp Nationwide Cellular Services Pvd telecommunication services
05/25/95 11/08/95 Computer Associates Intl Inc Legent Corp Develop applications software
05/30/95 05/30/95 First Interstate Bancorp, CA MNB Bancshares Inc Bank holding company
05/30/95 09/01/95 Schein Pharmaceutical Inc Marsam Pharmaceuticals Inc Manufacture pharmaceuticals
06/05/95 09/01/95 Dyson Dyson & Dunn Inc Designatronics Inc Wholesale lumber, plywood
06/05/95 07/05/95 IBM Corp Lotus Development Corp Mnfr computers, office equip
06/09/95 08/30/95 Thermo Electron Corp Bird Medical Technologies Inc Mnfr cogeneration systems
06/19/95 12/20/95 HVB Ltd BioSafety Systems Inc Investment firm
06/19/95 10/03/95 Unitrin Inc Milwaukee Insurance Group Inc Insurance company
06/20/95 01/03/96 ALBANK FSB (ALBANK Financial) Marble Financial Corp Savings and loan
06/20/95 03/08/96 Investor Group Marietta Corp Investor group
06/22/95 12/06/95 Genetics Institute Inc SciGenics Inc Pharmaceutical prods, R&D
07/04/95 04/01/96 Johnston Industries Inc Jupiter National Inc (Johnston) Mnfr woven indl textile prod
07/05/95 01/10/96 NationsBank Corp, Charlotte, NC CSF Holdings Inc Bank hldg co; pvd finl svcs
07/06/95 08/04/95 United Acquisition Co Arcus Inc (Armored Transport) Investment firm
07/10/95 01/03/96 THORN Americas Inc (Thorn EMI) Advantage Companies Inc Provide rental equipment svcs
07/10/95 08/11/95 Sandoz AG Genetic Therapy Inc Manufacture dyestuffs
07/10/95 09/05/95 Danaher Corp Joslyn Corp Mnfr auto parts, main equip
07/14/95 12/11/95 COBE Laboratories (Gambro AB) REN Corp-USA (COBE Labs Inc) Mnfr medical equipment
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ------ ------- ------- -------
04/12/95 Mnfr data comm products 7.0 --
04/12/95 Commercial bank 26.2 22.75 15.2% 12.3% 30.0%
04/18/95 Bank holding company 16.3 --
04/26/95 Dictating mach, office equip 450.0 --
04/28/95 Mnfr paints, chemicals 353.5 22.00 30.4% 38.6% 37.5%
04/28/95 Eye care products stores 21.7 7.60 32.2% 38.2% 35.1%
05/03/95 Pvd home health care services 20.0 --
05/04/95 Manufacture automobile parts 44.1 12.75 22.0% 18.6% 27.5%
05/10/95 Mnfr power protection equip 201.1 21.00 61.5% 68.0% 75.0%
05/15/95 Own, operate computer stores 22.1 3.25 6.1% 26.8% 23.8%
05/15/95 Construct homes; RE development 109.2 9.47 0.0% 0.0% 741.8%
05/16/95 Savings and loan 133.2 22.06 24.3% 20.9% 35.8%
05/16/95 Mnfr vacuum cleaners, products 17.5 --
05/17/95 Provide engineering services 191.6 14.50 45.0% 56.8% 56.8%
05/19/95 Mnfr writing instruments 212.6 40.50 13.3% 12.5% 28.6%
05/22/95 Pvd cellular telephone svcs 174.3 18.50 5.7% 8.0% 18.4%
05/25/95 Develop software 1799.0 47.95 53.4% 65.3% 76.0%
05/30/95 Savings and loan 5.0 --
05/30/95 Mnfr generic drug products 239.0 21.00 29.2% 47.4% 55.6%
06/05/95 Mnfr speed changers 17.4 6.00 45.5% 29.7% 29.7%
06/05/95 Develop applications software 3263.8 64.00 96.9% 100.8% 103.2%
06/09/95 Mnfr respiratory care prod 61.4 9.25 39.6% 57.4% 72.1%
06/19/95 Mnfr healthcare gloves, masks 10.6 3.16 40.4% 40.4% 44.5%
06/19/95 Insurance holding company 92.7 22.00 63.0% 63.0% 77.8%
06/20/95 Bank holding company 62.6 18.00 37.1% 35.8% 46.9%
06/20/95 Mnfr, wholesale toiletries 33.8 10.25 6.5% 24.2% 36.7%
06/22/95 Manufacture biological prod 29.3 14.00 (1.8%) 7.7% (1.8%)
07/04/95 Venture capital firm 30.5 33.97 0.0% 25.8% 47.7%
07/05/95 Bank holding company 401.1 39.50 26.9% 19.7% 30.0%
07/06/95 Provide security services 50.1 6.33 1.3% 1.3% 1.3%
07/10/95 Telecomm services, magazines 77.7 18.50
07/10/95 Dvlp delivery sys; Pvd research 283.4 21.00 37.7% 38.8% 84.6%
07/10/95 Electrical transmission equip 227.1 34.00 37.4% 34.7% 29.5%
07/14/95 Own, op kidney dialysis centers 182.1 20.00 27.0% 20.3% 26.0%
54
57
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
07/17/95 08/22/95 Lear Seating Corp Automotive Industries Holding Mnfr automobile seats
07/17/95 11/08/95 LG Electronics Co Ltd. (LG Grp) Zenith Electronics Corp Mnfr electronic components
07/31/95 01/11/96 Reliance Bancorp Inc, New York Sunrise Bancorp Inc Bank holding company
08/01/95 11/24/95 Westinghouse Electric Corp CBS Inc Mnfr elec defense electn equip
08/04/95 09/12/95 Advance Publications Inc American City Business Journal Publish newspapers, magazines
08/04/95 02/29/96 Trigon Blue Cross Blue Shield Mid-South Insurance Co Pvd hospital, med service plans
08/09/95 09/30/95 Loewen Group Inc MHI Group Inc Own, operate funeral homes
08/10/95 10/13/95 Humana Inc Emphesys Financial Group Inc Own and operate HMOs
08/10/95 11/15/95 Agrium Inc Nu-West Industries Inc Manufacture fertilizers
08/11/95 02/01/96 Life Bancorp Inc Seaboard Bancorp Inc Bank holding company
08/15/95 10/06/95 Johnson Matthey PLC Advance Circuits Inc Mnfr dyes, pigments, paints
08/16/95 08/16/95 Investor Abigail Adams National Bancorp Investor
08/17/95 01/15/96 Standard Fed Bancorp, Troy, MI FSB Financial Corp Commercial bank
08/22/95 12/29/95 First Midwest Finl, Iowa Iowa Bancorp Inc Bank holding company
08/23/95 10/04/95 Schering Berlin Inc Medrad Inc Manufacture pharmaceuticals
08/25/95 01/02/96 Berkshire Hathaway Inc GEICO Corp (Berkshire Hathaway) Property, casualty insurance co
08/28/95 02/01/96 First Nationwide Bank, TX SFFed Corp Savings bank
08/29/95 09/29/95 Vista 2000 Inc American Consumer Products Inc Develop security systems
08/30/95 01/03/96 Michigan Physicians Mutual Kentucky Medical Insurance Co Surety insurance co
08/31/95 02/01/96 Ace Cash Express Inc Check Express Inc Provide check cashing services
08/31/95 04/01/96 Western Ohio Financial Corp Mayflower Financial Corp Investment firm
09/07/95 03/06/96 Principal Health Care Inc Admar Group Inc Own and operate HMO's
09/08/95 12/26/95 Pelican Cos Inc Sunbelt Cos Inc Wholesale lumber
09/12/95 10/20/95 Textron Inc Elco Industries Inc Mnfr aircraft engines, parts
09/13/95 01/19/96 Barnett Banks, Jacksonville, FL First Financial Bancshares Commercial bank
09/14/95 11/11/95 Thomas Nelson Inc CR Gibson Co Publish books
09/15/95 01/11/96 Measurex Corp Data Measurement Corp Mnfr comptr process cntrl sys
09/18/95 09/23/96 Shinhan Bank Marine National Bank, Irvine, CA Foreign bank
09/19/95 10/31/95 Breuners Home Furnishings Corp Huffman Koos (SGH/JG Inds Inc) Own, operate furniture store
09/22/95 03/01/96 Republic New York Corp, NY, NY Brooklyn Bancorp Inc Bank holding company
09/25/95 09/25/95 CD Spangler National Gypsum Co (Delcor) Investment firm
09/25/95 11/06/95 Mallinckrodt Veterinary Inc Syntro Corp Manufacture animal food
09/26/95 12/21/95 SCOR SCOR US Corp (SCOR SA) Insurance holding company
09/29/95 10/02/95 Investors Prudential Reinsurance Hldgs Investors
10/04/95 12/22/95 Westcorp Hammond Co Bank holding company
10/09/95 10/09/95 Investors Personnel Group of America Inc Investors
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ------ ------- ------- -------
07/17/95 Mnfr autoparts 613.1 33.50 3.9% 10.7% 45.7%
07/17/95 Mnfr consumer electronics 186.2 10.00 17.6% 29.0% 29.0%
07/31/95 Bank holding company 116.8 32.00 9.9% 11.3% 11.3%
08/01/95 Own, op TV, radio stations 5122.3 82.07 24.8% 22.5% 18.9%
08/04/95 Publish journals and magazines 205.4 28.00 28.7% 23.1% 28.0%
08/04/95 Health, accident, life ins co 85.5 15.67 56.7% 56.7% 45.8%
08/09/95 Pvd funeral, crematory svcs 69.9 10.25 15.5% 34.4% 46.4%
08/10/95 Insurance holding company 642.8 37.50 13.6% (3.8%) 1.4%
08/10/95 Manufacture fertilizers 87.7 10.50 (12.5%) (12.5%) (8.7%)
08/11/95 Bank holding company 8.2 1.65 10.0% 20.0% 32.0%
08/15/95 Mnfr printed circuit boards 171.0 22.50 39.5% 36.4% 37.4%
08/16/95 Bank holding company 5.1 --
08/17/95 Savings bank 27.2 23.50 19.0% 27.0% 32.4%
08/22/95 Commercial bank 9.0 --
08/23/95 Mnfr medical instruments 181.2 28.00 25.8% 25.8% 28.7%
08/25/95 Insurance and financial svcs 2349.2 70.00 25.6% 23.1% 25.3%
08/28/95 Savings and loan 264.0 32.00 21.9% 36.9% 43.4%
08/29/95 Mnfr consumer hardware prods 13.0 5.30 17.8% 28.5% 41.3%
08/30/95 Insurance company 25.0 12.37 45.5% 37.4% 76.7%
08/31/95 Provide check cashing services 6.3 1.20 37.1% 37.1% 37.1%
08/31/95 Savings and loan holding co 10.0 28.50
09/07/95 Provide health care mgmt svcs 19.8 2.25 60.0% 84.6% 75.6%
09/08/95 Wholesale lumber 18.0 7.95 32.5% 27.2% 44.5%
09/12/95 Mnfr fasteners, hardware 182.2 36.00 93.3% 97.3% 100.0%
09/13/95 Savings bank 20.0 15.51 8.8% 8.8% 17.1%
09/14/95 Mnfr, publish memory books 67.5 9.00 2.9% 1.4% 5.9%
09/15/95 Mnfr quality control instr 32.2 18.63 2.4% 18.3% 11.2%
09/18/95 Commercial bank 21.9 --
09/19/95 Own, operate furniture stores 37.6 9.38 50.0% 38.9% 33.9%
09/22/95 Commercial bank 508.8 41.50 9.2% 9.6% 15.7%
09/25/95 Mnfr gypsum, wallboard prods 1134.9 54.00 0.0% 0.9% 0.9%
09/25/95 Manufacture vaccines 41.5 3.55 42.0% 42.0% 49.5%
09/26/95 Reinsurance holding company 59.9 15.25 37.1% 35.6% 38.6%
09/29/95 Insurance holding company 837.5 --
10/04/95 Mortgage bank; holding co 5.4 --
10/09/95 Pvd temporary staffing svcs 105.0 13.13
55
58
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
10/09/95 03/13/96 Pioneer Financial Services Universal Fidelity Life Ins Co Life, health, accident ins svcs
10/10/95 05/07/96 Pacific Bank NA, CA Burlingame Bancorp Commercial bank
10/13/95 11/13/95 Twentieth Century Fox Film Carolco Pictures Inc Radio, TV stations; movie prod
10/13/95 03/08/96 Chelton Communications Systems Kevlin Corp Mnfr electronic components
10/18/95 11/28/95 Rhone-Poulenc Rorer Inc Applied Immune Sciences Inc Manufacture pharmaceuticals
10/18/95 03/29/96 Logicon Inc Geodynamics Corp Pvd computer svcs to military
10/20/95 10/20/95 Roosevelt Bank, Chesterfield, MO Washington Savings Bank FSB Savings bank
10/23/95 12/07/95 Diebold Inc Griffin Technology Inc Mnfr ATMs, security equip
10/26/95 01/17/96 Hyundai Electronics Industries Maxtor Corp Mnfr computers, semiconductors
10/30/95 12/28/95 SoftKey International Inc Learning Co Develops consumer software
10/30/95 06/07/96 Great Financial Corp, Kentucky LFS Bancorp Bank holding company
10/31/95 02/06/96 Alberto-Culver Co St Ives Laboratories Mnfr and whl consumer products
11/02/95 06/20/96 Riverside Group Inc Wickes Lumber Co Fire, marine casualty ins co
11/03/95 06/26/96 Dime Savings Bk, Williamsburgh Conestoga Bancorp Inc Savings bank
11/06/95 01/10/96 Marquette Electronics Inc USA E For M Corp Mnfr electromedical apparatus
11/06/95 02/01/96 Airline Investors Partnership Hawaiian Airlines Inc (HAL Inc) Investment firm
11/06/95 01/08/96 Compaq Computer Corp NetWorth Inc (Ungermann-Bass) Manufacture personal computers
11/06/95 01/10/96 Sherwin-Williams Co Pratt & Lambert United Inc Mnfr and retail paint products
11/08/95 02/15/96 ADT Ltd Alert Centre Inc (ADT Ltd) Provide security, cleaning svcs
11/08/95 04/23/96 MA Hanna Co CIMCO Inc Mnfr rubber, plastic polymers
11/08/95 02/23/96 Packaging Acq (MST Part, MST Of) Dolco Packaging Corp Investment firm
11/10/95 04/29/96 Bank of the West Northbay Financial Corp, CA Commercial bank
11/13/95 04/22/96 Harris Savings Assn, Harrisburg First Harrisburg Bancor Inc Savings bank
11/13/95 12/19/95 S.O.C. Corp (Blount/Blount Int) Simmons Outdoor Corp Whl professional equipment
11/14/95 12/29/95 Main Line Fed Svgs Bk (MLF Ban) Suburban Federal Savings Bk, PA Savings bank
11/15/95 05/02/96 ERD Waste Corp Environmental Services of Amer Pvd waste mgmt, business svcs
11/22/95 01/31/96 Baxter Healthcare Corp PSICOR Inc Manufacture pharmaceuticals
11/27/95 01/11/96 Wolters Kluwer NV Commerce Clearing House Inc Publish newspapers, books
11/29/95 02/16/96 Kuhlman Corp Communication Cable Inc Mnfr transformers, indl springs
12/07/95 02/16/96 Syratech Corp Rauch Industries Inc Manufacture silver flatware
12/11/95 01/19/96 Tyco International Ltd Earth Technology Corp USA Mnfr fire protection systems
12/11/95 07/01/96 Capital City Bank Group, FL First Financial Bancorp Inc Commercial state bank
12/11/95 06/28/96 Union Safe Deposit Bank Great Valley Bank, Ceres, CA Commercial bank
12/11/95 01/22/96 Newell Co Holson Burnes Group Inc Mnfr food serving, storage prod
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ------ ------- ------- -------
10/09/95 Insurance co 26.0 28.00
10/10/95 Commercial bank 7.5 12.00
10/13/95 Motion picture prodn svcs 50.0 --
10/13/95 Mnfr microwave components 15.9 4.54 0.0% 11.8% 17.2%
10/18/95 Mnfr blood therapeutic systems 84.6 11.75 67.9% 51.6% 38.2%
10/18/95 Provide info engineering svcs 31.2 10.76 13.3% 13.3% 23.0%
10/20/95 Savings bank 103.7 22.75 360.8% 372.7% 295.7%
10/23/95 Mnfr, whl computers 18.0 7.75 (8.8%) 0.0% (6.1%)
10/26/95 Mnfr computer disk drives 228.2 6.70 42.9% 64.9% 44.9%
10/30/95 Develop educational software 579.6 67.50 80.0% 95.7% 84.9%
10/30/95 Commercial bank 68.5 19.50 16.4% 7.2% 6.8%
10/31/95 Manufacture personal care prod 110.4 15.00 20.0% 50.0% 55.8%
11/02/95 Whl, ret lumber; wood millwork 10.0 5.00 (36.5%) (39.4%) (47.0%)
11/03/95 Commercial bank; holding co 105.3 21.25 11.8% 13.3% 18.9%
11/06/95 Manufacture HDTVs 88.9 12.00 29.7% 37.1% 31.5%
11/06/95 Passenger airline 20.0 1.10 (64.8%) (60.9%) (64.1%)
11/06/95 Mnfr networking equipment 342.5 42.00 21.7% 48.7% 111.3%
11/06/95 Mnfr, whl paints, adhesives 405.2 35.00 68.7% 60.9% 49.7%
11/08/95 Pvd alarm maintenance svcs 93.1 9.25 94.7% 117.6% 120.9%
11/08/95 Thermoplastic products 31.8 10.50 104.9% 147.1% 133.3%
11/08/95 Mnfr packaging, shipping prods 31.8 21.00 (9.7%) (15.2%) (12.5%)
11/10/95 Svgs bk; provide credit svcs 45.9 15.75 21.2% 21.2% 16.7%
11/13/95 Savings and loan 35.2 14.77 31.3% 24.4% 15.8%
11/13/95 Whl professional equipment 34.2 10.40 66.4% 73.3% 77.0%
11/14/95 Savings bank 5.7 10.25
11/15/95 Provide disposal services 7.5 1.66 39.8% 66.0% 39.8%
11/22/95 Provide health services 81.3 17.50 14.8% 25.0% 48.9%
11/27/95 Publish books and law reports 1901.0 55.50 100.0% 115.5% 131.3%
11/29/95 Mnfr, whl electronic cable 51.7 14.00 55.6% 55.6% 47.4%
12/07/95 Manufacture glass products 48.2 13.00 35.1% 31.6% 32.5%
12/11/95 Hazardous waste consulting svc 69.6 8.00 36.2% 33.3% 73.0%
12/11/95 Bank holding co; savings bank 11.0 22.00 11.4% 14.3% 20.5%
12/11/95 Commercial bank 12.2 8.75
12/11/95 Manufacture photo albums 34.0 5.50 4.8% 41.9% 46.7%
56
59
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
12/14/95 06/10/96 Standard Federal Bank, Troy, MI Bell Bancorp Inc, Chicago, IL Savings bank
12/18/95 01/29/96 American Brands Inc Cobra Golf Inc Mnfr cigarettes, cigars
12/19/95 05/31/96 First Nationwide Bank, CA Home Fed Finl, San Francisco, CA Savings and loan
12/20/95 02/05/96 Thomson US Holdings Inc SCS/Compute Inc Publish newspapers
01/02/96 01/02/96 Investor Auto Parts Club Inc Investor
01/03/96 08/28/96 Recoton Corp International Jensen Inc Mnfr audio, video equipment
01/05/96 09/09/96 Investor Group Finl Institutions Ins Grp Ltd Investor group
01/05/96 02/15/96 GreenGrass Holdings Swing-N-Slide Corp Investment holding company
01/09/96 04/30/96 CompuWare Corp Technalysis Corp Dvlp, whl software systems
01/16/96 02/26/96 Multicare Cos Inc Concord Health Group Own, op nursing care facilities
01/16/96 04/10/96 Depuy Inc (Corange Ltd) Orthopedic Technology Inc Mnfr orthopedic devices
01/18/96 07/02/96 Pfizer Inc Corvita Corp Manufacture pharmaceuticals
01/23/96 05/09/96 Spartech Corp Portage Industries Corp Manufacture plastic products
01/24/96 07/16/96 First Maryland Bancorp, MD 1st Washington Bancorp Inc Bank holding company
01/24/96 08/08/96 Chartwell Leisure Associates National Lodging Corp Own and operate hotels
01/26/96 05/15/96 Charter Financial Inc, Illinois Community Savings Bk, Marion, IL Savings bank; holding co
01/29/96 04/08/96 WH Brady Co Varitronic Systems Inc Mnfr indl labeling machines
01/31/96 03/04/96 IBM Corp Tivoli Systems Inc Mnfr computers, office equip
02/05/96 06/19/96 Bay View Capital, San Mateo, CA CTL Credit Inc Bank holding company
02/08/96 07/31/96 Meridian Insurance Group Citizens Security Group Inc Insurance holding company
02/12/96 05/03/96 Essilor of America Inc Benson Eyecare Corp Mnfr, whl ophthalmic goods
02/12/96 05/01/96 Honeywell Inc Duracraft Corp Mnfr automation, control sys
02/13/96 07/12/96 Horizon/CMS Healthcare Corp Medical Innovations Inc Pvd nursing care services
02/13/96 08/02/96 American Federal Savings Bk, MN Northwestern Financial Corp Savings bank
02/14/96 03/20/96 Unilever NV Helene Curtis Industries Inc Produce foods; holding company
02/15/96 05/14/96 Genstar Capital Partners II LP Andros Inc Investment firm
02/15/96 04/29/96 NationsBank Corp, Charlotte, NC LDI Corp Bank hldg co; pvd finl svcs
02/21/96 03/29/96 Welsh Carson Anderson & Stowe Aurora Electronics Inc Venture capital firm
02/29/96 07/10/96 TBC Corp Big O Tires Inc Whl tires, automobile parts
02/29/96 09/30/96 Trenton Savings Bank, NJ Burlington County Bank, NJ Savings and loan
03/04/96 04/08/96 Lilly Industries Inc Guardsman Products Inc Mnfr industrial finishings
03/07/96 07/03/96 Danaher Corp Acme-Cleveland Corp Mnfr auto parts, main equip
03/13/96 04/18/96 Eaton Corp CAPCO Automotive Products Corp Manufacture automotive parts
03/21/96 10/01/96 Monarch Bancorp, California Western Bank, Los Angeles, CA Bank holding co
03/29/96 04/26/96 Equity Holdings, Chicago, IL Great American Mgmt & Invt Inc Investment firm
03/29/96 10/21/96 ISB Financial, New Iberia, LA Jefferson Bancorp, Gretna, LA Savings bank; bank holding co
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ------ ------- ------- -------
12/14/95 Bank holding company 361.2 37.50 13.6% 10.3% 23.0%
12/18/95 Mnfr sporting, athletic goods 670.4 36.00 30.3% 32.1% 32.7%
12/19/95 Bank holding company 69.1 18.50 8.8% 2.8% 15.6%
12/20/95 Pvd income tax processing svcs 17.8 6.75 134.8% 157.1% 145.5%
01/02/96 Mnfr, whl auto parts 5.1 --
01/03/96 Mnfr radios and televisions 109.1 11.00 29.4% 57.1% 49.2%
01/05/96 Investment holding company 53.0 16.00 9.4% (1.5%) (4.1%)
01/05/96 Mnfr backyard swings, slides 22.8 6.50 (25.7%) (29.7%) (36.6%)
01/09/96 Develop software 32.6 14.00 12.0% 16.7% 16.7%
01/16/96 Pvd healthcare mgmt services 126.9 7.35 25.1% 43.4% 58.9%
01/16/96 Manufacture surgical supplies 45.2 10.43 26.4% 43.9% 49.0%
01/18/96 Manufacture medical equipment 78.5 10.25 (2.4%) 2.5% (2.4%)
01/23/96 Mnfr extruded plastic sheets 15.8 6.60 46.7% 79.0% 79.0%
01/24/96 Bank holding company 81.9 8.13 27.5% 51.2% 44.4%
01/24/96 Own and operate casinos 57.0 14.25 34.1% 26.7% 0.0%
01/26/96 Savings bank 7.5 50.00
01/29/96 Mnfr typewriters 42.5 17.50 79.5% 79.5% 62.8%
01/31/96 Dvlp systems mgmt software 709.8 47.50 25.8% 25.0% 41.8%
02/05/96 Bank holding company 65.0 18.00 53.2% 82.3% 69.4%
02/08/96 Insurance holding company 22.6 12.50 88.7% 108.3% 117.4%
02/12/96 Wholesale ophthalmic goods 210.3 6.60 (26.7%) (30.5%) (17.5%)
02/12/96 Mnfr electric housewares 286.7 43.50 58.2% 50.0% 68.1%
02/13/96 Pvd home health care services 30.3 1.85 13.8% 18.4% 5.7%
02/13/96 Bank holding co; coml bank 12.5 23.25
02/14/96 Mnfr perfumes, cosmetics 737.4 70.00 18.6% 30.2% 71.8%
02/15/96 Mnfr infrared gas analyzers 92.6 18.00 16.1% 24.1% 35.8%
02/15/96 Computer equip leasing svcs 28.1 4.10 31.2% 21.5% 49.1%
02/21/96 Recycle integrated circuits 50.0 --
02/29/96 Own, operate tire stores 56.6 16.50 5.6% 7.3% 12.8%
02/29/96 Commercial bank 12.5 77.00
03/04/96 Mnfr coatings, cleaning prod 227.8 23.00 32.4% 32.4% 57.3%
03/07/96 Mnfr metal cutting tools 204.4 30.00 50.0% 55.8% 56.9%
03/13/96 Mnfr automobile parts 128.9 12.50 66.7% 72.4% 78.6%
03/21/96 Savings and loan 61.0 --
03/29/96 Invt advice and financial svcs 63.3 50.00 2.6% 4.2% 3.6%
03/29/96 Savings bank; bank holding co 52.0 23.00 15.0% 16.5% 18.7%
57
60
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
03/29/96 08/07/96 Abbott Laboratories MediSense Inc Mnfr pharmaceuticals, med equip
04/02/96 08/26/96 Hibernia National Bank, LA CM Bank Holding Co Commercial bank
04/22/96 06/03/96 K-III Communications Corp Westcott Communications Inc Publish magazines
04/23/96 10/21/96 Security Banc Corp, OH Third Financial Corp, Piqua, OH Bank holding co; coml bank
04/26/96 07/03/96 Movie Gallery Inc Home Vision Entertainment Inc Own, op video stores
04/29/96 09/03/96 Hubco Inc, Mahwah, New Jersey Hometown Bancorporation Inc, CT Bank holding company
05/07/96 07/03/96 Orion Capital Corp Guaranty National Corp Insurance company; holding co
05/10/96 10/01/96 HF Bancorp Inc, Hemet, CA Palm Springs Savings Bank, CA Bank holding co; savings bank
05/13/96 08/15/96 Northern Telecom Ltd (BCE Inc) MICOM Communications Corp Mnfr telephone apparatus
05/15/96 06/21/96 Heritage Fund I Klearfold Inc Investment firm
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY -- (CONTINUED)
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ------ ------- ------- -------
03/29/96 Mnfr blood monitoring systems 821.6 45.00 48.8% 48.8% 39.0%
04/02/96 Bank holding company 201.7 193.52
04/22/96 Pvd motion picture prodn svcs 438.9 21.50 43.3% 57.8% 56.4%
04/23/96 Bank holding company 43.9 33.41 11.4% 13.7% 14.2%
04/26/96 Pvd video tape rental svcs 32.0 --
04/29/96 Bank holding company 31.9 17.75 20.3% 29.1% 29.1%
05/07/96 Insurance company 85.1 18.50 15.6% 15.6% 22.3%
05/10/96 Savings bank 17.3 14.38 36.9% 43.8% 43.8%
05/13/96 Mnfr communications equipment 138.3 12.00 (14.3%) 9.1% 58.4%
05/15/96 Mnfr paperboard packaging prod 45.8 --
58
61
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
05/16/96 10/31/96 Markel Corp Investors Insurance Group Insurance firm,agency
05/20/96 07/23/96 General Electric Capital Svcs AmeriData Technologies Inc Pvd financing services
Financing for Science Intl
05/20/96 08/29/96 Finova Group Inc Inc Pvd financial services
Collective Bancorp, New
05/21/96 10/01/96 Jersey Continental Bancorporation Bank holding company
05/24/96 09/04/96 Joint Energy Development Clinton Gas Systems Inc Oil and gas exploration,prodn
05/24/96 07/02/96 Lear Corp Masland Corp Mnfr automobile seats
05/27/96 02/16/97 Novartis AG SyStemix Inc (Novartis AG) Manufacture pharmaceuticals
05/29/96 01/28/97 Regions Finl, Birmingham, AL Florida First Bancorp Inc, FL Bank holding company
06/03/96 09/30/96 Pakhoed Holding NV Univar Corp Pvd freight transp services
06/06/96 10/01/96 Investor Group AT&T Capital Corp (AT&T Corp) Investor group
Whl industrial machinery
06/06/96 07/09/96 Lacy Distribution Inc Finish Master Inc(Maxco Inc) equip
06/10/96 08/23/96 Vemco Acquisition Corp Bailey Corp Investment holding company
06/10/96 07/22/96 Merck-Medco Managed Care Inc SysteMed Inc Health insurance company
06/11/96 07/23/96 Forstmann Little & Co Community Health Systems Inc Investment company
06/11/96 11/30/96 TDI Financial, Chicago, IL Security Chicago, Chicago, IL Commercial bank; holding co
06/13/96 11/07/96 Citizens Financial Group, RI Farmers & Mechanics Bank, CT Savings bank; holding co
06/14/96 08/23/96 Varlen Corp Brenco Inc Mnfr custom tubular products
06/14/96 07/12/96 Falcon Holding Group LP Falcon Cable Systems Co Own and operate cable TV sys
06/14/96 11/14/96 Western Ohio Financial Corp Seven Hills Financial Investment firm
06/20/96 09/16/96 Public Storage Inc Public Storage Properties X Real estate investment trust
06/20/96 09/16/96 Public Storage Inc Public Storage Properties XII Real estate investment trust
06/21/96 08/23/96 United Communications Group Computer Petroleum Corp Publish newsletters
Sunrise Bancorp, Roseville,
06/24/96 11/01/96 First Banks America Inc CA Savings bank
06/27/96 02/21/97 Northwest Svgs Bk, Warre, PA Bridgeville Savings Bank Savings and loan
06/28/96 09/27/96 Investor Group Salem Corp Investor group
Mnfr aircraft, defense
07/01/96 09/25/96 Rockwell International Corp Brooktree Corp systems
Publish newspaper; cable TV
07/01/96 03/25/97 Tribune Co Renaissance Commun Corp sys
07/03/96 09/05/97 Gold Kist Inc Golden Poultry Co Inc Produce, wholesale poultry
07/12/96 10/10/96 Astor Chemicals ADCO Technologies Inc Mnfr specialty chemicals
07/22/96 10/25/96 cisco Systems Inc Telebit Corp Mnfr inter-networking systems
07/23/96 02/19/97 Capstar Broadcasting Partners Osborn Communications Corp Own, operate radio stations
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ----- ------- ------- -------
05/16/96 Insurance company; holding co 38.0 --
05/20/96 Whl computers, peripherals 454.8 16.00 4.1% 25.5% 47.1%
05/20/96 Pvd business credit services 39.2 6.40 4.5% 6.7% 12.5%
05/21/96 Bank holding company 28.7 5.00
Oil and gas exploration,
05/24/96 prodn 38.4 6.75 3.8% 14.9% 31.7%
05/24/96 Mnfr motor vehicle parts 413.5 26.00 6.1% 18.2% 30.0%
05/27/96 Mnfr, dvlp cellular processes 107.6 19.50 4.7% 69.6% 59.2%
05/29/96 Savings and loan; holding co 40.9 11.65 21.0% 19.5% 33.1%
06/03/96 Whl chemicals, pesticides 331.8 19.45 57.2% 54.1% 58.8%
Pvd leasing, financing
06/06/96 services 2128.6 45.00 37.4% 38.5% 42.3%
Whl automotive paint,
06/06/96 coatings 62.6 15.65 30.4% 27.8% 42.3%
06/10/96 Manufacture rubber products 47.8 8.75 5.5% 6.1% 11.1%
06/10/96 Pvd medical services 64.8 3.00 (4.0%) 4.3% 9.1%
06/11/96 Operate medical clinics 1080.0 52.00 20.2% 19.9% 18.9%
06/11/96 Commercial bank; holding co 12.5 60.00
06/13/96 Commercial bank 52.9 32.00 58.0% 62.0% 62.0%
06/14/96 Ball and roller bearings 161.4 16.13 31.0% 30.3% 20.6%
06/14/96 Own, operate cable TV systems 247.4 --
06/14/96 Savings and loan 11.0 19.70 19.4% 19.4% 19.4%
06/20/96 Pvd warehousing, storage svcs 50.2 20.92 13.9% 13.1% 10.8%
06/20/96 Rent storage space 55.2 22.34 14.6% 14.6% 15.3%
06/21/96 Information retrieval svcs 12.0 3.85 28.3% 46.7% 71.1%
06/24/96 Commercial bank 18.7 4.00 39.1% 52.4% 45.5%
06/27/96 Savings bank 18.3 16.00 10.3% 10.3% 8.5%
06/28/96 Whl industrial mach and equip 46.6 25.00 22.0% 23.5% 11.7%
07/01/96 Manufacture semiconductors 261.8 15.00 42.9% 64.4% 16.5%
07/01/96 Own and operate TV stations 1094.4 36.00 11.6% 19.0% 20.5%
07/03/96 Produce, wholesale poultry 52.1 14.25 52.0% 50.0% 39.0%
07/12/96 Mnfr adhesives and sealants 53.8 10.25 28.1% 51.9% 57.7%
07/22/96 Mnfr data transmission equip 196.3 13.35 22.8% 22.8% 4.7%
07/23/96 Own, op radio and TV stations 89.9 15.38 28.1% 50.0% 38.2%
59
62
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
07/29/96 01/03/97 First Nationwide Bank, CA Cal Fed Bancorp, Savings and loan
Los Angeles, CA
07/31/96 11/13/96 Monsanto Co Calgene Inc Mnfr agro chems, manmade
fibers
07/31/96 09/17/96 Investor Group Grand Union Co Investor group
08/02/96 11/29/96 General Electric Capital Corp First Colony Corp Pvd consumer financing svcs
08/07/96 10/03/96 Magna International Inc Douglas & Lomason Co Mnfr auto parts, accessories
08/07/96 08/26/97 Bank SinoPac Far East National Bank, CA Bank (Foreign)
08/08/96 09/17/96 Chemed Corp Roto-Rooter Inc (Chemed Corp) Mnfr chems, janitorial equip
08/16/96 07/31/96 Pengo Industries Inc Inland Resources Inc Provide oil field services
08/21/96 11/22/96 Golden Technologies (ACX Photocomm Inc Produce corn related products
Tech)
08/29/96 11/14/96 Cypress Group LLC Amtrol Inc Investment bank
09/09/96 09/23/96 Highwoods Properties Inc Crocker Realty Trust Inc Real estate investment trust
09/11/96 03/04/97 American Eco Corp Chempower Inc Pvd engineering services
09/16/96 03/31/97 Mutual Savings Bk, Milwaukee, First Fed Bancshares of Eau Savings Bank
WI Cl
09/16/96 04/11/97 Superior National Ins Group Pac Rim Holding Corp Pvd workers' compensation
svcs
09/16/96 12/06/96 Schnitzer Steel Industries Proler International Corp Manufacture steel products
Inc
09/20/96 11/01/96 Sanmina Corp Comptronix Corp Mnfr printed circuit boards
09/24/96 01/02/97 Oracle Corp Datalogix International Develop database software
09/30/96 02/28/97 Cullen/Frost Bankers Inc, Corpus Christi Bancshares, TX Bank holding company
Texas
10/07/96 12/02/96 Computer Associates Intl Inc Cheyenne Software Inc Develop applications software
10/07/96 12/05/96 Southwide Life Insurance Corp Southland National Insurance Life insurance company
10/08/96 11/22/96 Nash Finch Co Super Food Services Inc Wholesale groceries
10/10/96 11/27/96 Renco Group Inc WCI Steel Inc (Renco Group Mnfr steel products
Inc)
10/15/96 06/03/97 Investor Group Conrail Inc Investor group
10/17/96 12/03/96 LF Strategic Investors RF&P Corp Investment company
10/17/96 02/27/97 Investor Group Triad Systems Corp Investor group
10/21/96 03/31/97 Investor Group Detroit & Canada Tunnel Corp Investor group
10/21/96 04/10/97 Newnan Holdings Inc, Tara Bankshares Corp,Georgia Bank holding company
Newnan,GA
10/28/96 01/15/97 Henkel KGaA Loctite Corp Mnfr, whl chemicals,
detergents
11/04/96 03/05/97 Citizens Bank of Grove Banks,Chesnut Hill, MA Commercial savings and loan
Massachusetts
11/04/96 05/19/97 Glendale Fed Bk, Glendale, CA TransWorld Bancorp, Savings and loan
California
11/05/96 03/14/97 Harbour Group Ltd Panatech Research & Mnfr steel cutting tools
Development
VALUE OF SHARE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ----- ------- ------- -------
07/29/96 Bank holding company
1287.8 23.50 18.2% 32.4% 31.5%
07/31/96 Own and operate greenhouse
50.0 8.00 64.1% 80.3% 39.1%
07/31/96 Own and operate supermarkets 100.0 --
08/02/96 Insurance holding company 1799.2 36.15 37.7% 32.7% 39.0%
08/07/96 Wholesale motor vehicles 134.6 31.00 39.3% 90.8% 103.3%
08/07/96 Savings and loan 94.0 --
08/08/96 Provide plumbing services,
prod 93.6 41.00 12.3% 12.3% 11.2%
08/16/96 Oil and gas field exploration 9.5 --
08/21/96 Mnfr, whl solar electric
prods 16.8 --
08/29/96 Mnfr plumbing, heating
systems 227.2 28.25 71.2% 56.9% 56.9%
09/09/96 REIT 76.1 11.88 18.8% 20.3% 21.8%
09/11/96 Insulation, asbestos
abatement 50.0 6.20 48.1% 48.1% 45.9%
09/16/96 Commercial bank
132.7 18.85 23.1% 25.7% 25.7%
09/16/96 Pvd workers' compensation
svcs 42.0 --
09/16/96 Whl scrap metals & metals
42.5 9.00 132.3% 125.0% 148.3%
09/20/96 Mnfr printed circuit boards 22.0 --
09/24/96 Develop business software 80.0 8.00 28.0% 42.2% 56.1%
09/30/96 Bank holding company
32.4 18.84 17.8% 17.8% 17.8%
10/07/96 Develop computer software 1247.6 30.50 32.6% 34.8% 30.5%
10/07/96 Pvd funeral insurance svcs 9.5 38.00
10/08/96 Wholesale food products 164.2 15.50 37.8% 36.3% 29.2%
10/10/96 Manufacture steel
56.5 10.00 17.6% 29.0% 77.8%
10/15/96 Own, op freight railroad
lines 10435.9 115.00 62.0% 60.3% 60.3%
10/17/96 Real estate development firm 570.0 --
10/17/96 Develop turnkey computer sys 193.1 9.25 68.2% 60.9% 89.7%
10/21/96 Pvd tunnel operation services 36.5 54.00 64.9% 74.2% 54.3%
10/21/96 Commercial bank; holding co
10.5 15.00
10/28/96 Mnfr adhesives & sealants
1289.1 61.00 31.9% 36.7% 34.8%
11/04/96 Savings bank
78.7 51.00 37.8% 46.8% 50.0%
11/04/96 Bank holding company
63.2 18.25 10.6% 12.3% 30.4%
11/05/96 Manufacture semiconductors
29.2 7.00 55.6% 55.6% 51.4%
60
63
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
11/06/96 03/07/97 Progressive Corp Midland Financial Group Inc Insurance holding company
11/07/96 06/13/97 Shoreline Financial Corp, MI SJS Bancorp Inc, St Joseph,
MI Commercial bank; holding co
11/12/96 06/12/97 Investor Group Leslie's Poolmart Investor group
11/13/96 12/17/96 IBM Corp Edmark Corp Mnfr computers, office equip
11/13/96 01/20/97 FCY Inc Medex Inc Mnfr engineered polymer prods
11/18/96 01/02/97 Intermet Corp Sudbury Inc Ductile, gray iron castings
11/22/96 05/01/97 ABN-AMRO Holding NV Standard Fed Bancorp, Troy,
MI Bank holding company
11/25/96 01/09/97 Applied Materials Inc Mnfr wafer fabrication
Opal Inc systems
11/26/96 12/30/96 Clorox Co Armor All Products (McKesson) Manufacture household bleach
11/26/96 11/27/96 Software Acquisition Co NeoStar Retail Group Inc Leverage buyout company
11/27/96 12/27/96 JW Childs Equity Partners LP Central Tractor Farm &
Country Investment company
11/27/96 03/27/97 JW Childs Equity Partners LP Central Tractor Farm &
Country Investment company
11/27/96 01/16/97 Bell Industries Inc Mnfr electronic, computer
Milgray Electronics Inc prods
11/29/96 01/06/97 Tyco International Ltd ElectroStar Inc Mnfr fire protection systems
12/03/96 05/01/97 Dime Bancorp Inc, New York, Savings, mortgage bank hldg
NY BFS Bankorp Inc, New York, NY co
12/04/96 12/04/96 DowElanco
(Dow Chem, Eli Lilly) Mycogen Corp (DowElanco/Dow) Manufacture insecticides
12/05/96 03/27/97 Centex Corp Cavco Industries Inc Construct bldgs, RE dvlp firm
12/05/96 01/10/97 Hadco Corp Zycon Corp Mnfr computer circuit boards
12/06/96 03/18/97 Sears Roebuck & Co
MaxServ Inc (Sears Roebuck) Department stores; finl svcs
12/11/96 02/21/97 Aon Corp Alexander & Alexander
Services Insurance holding company
12/12/96 01/22/97 Forcenergy Inc Oil, gas exploration and
Great Western Resources Inc prodn
12/16/96 01/27/97 Zurn Industries Inc Eljer Industries Inc Mnfr enviromental equipment
12/24/96 03/11/97 DENTSPLY International Inc New Image Industries Inc Mnfr dental, med X-ray equip
12/26/96 06/09/97 Commerce Security Bancorp, CA Eldorado Bancorp, Tustin, CA Commercial bank; holding co
12/27/96 05/01/97 US Bancorp, Portland, Oregon Business & Professional Bk, Commercial bank; trust
CA facility
01/02/97 01/20/97 Thermo Trilogy Corp biosys Mnfr biochemical products
01/07/97 02/25/97 MedTrans Inc (Laidlaw Inc) American Medical Response Inc Pvd ambulance svcs
01/07/97 02/10/97 DLB Oil & Gas Inc Oil and gas exploration,
Bonray Drilling Corp prodn
01/13/97 09/02/97 Zurich Versicherungs GmbH Zurich Reinsurance Centre Insurance holding company
01/15/97 08/06/97 Columbia/HCA Healthcare Corp Value Health Inc Own, operate hospitals
01/21/97 07/09/97 Mafco Holdings Inc Mafco Consolidated Grp
(Mafco) Mnfr toilet preparations
VALUE OF SHARE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ----- ------- ------- -------
11/06/96 Fire, marine, casualty ins co 47.2 9.00 30.9% 24.1% 0.0%
11/07/96
Commercial bank; holding co 26.5 27.00 18.7% 13.7% 24.1%
11/12/96 Own, op swimming pool stores 112.8 14.50 26.1% 31.8% 31.8%
11/13/96 Develop educational software 123.8 15.50 35.5% 63.2% 31.9%
11/13/96 Mnfr drug infusion products 150.6 23.50 54.1% 58.0% 66.7%
11/18/96 Mnfr automotive parts 155.4 12.50 19.0% 25.0% 9.9%
11/22/96
Commercial bank 1971.1 59.00 1.7% 6.8% 15.4%
11/25/96
Mnfr special industry equip 189.6 18.50 52.6% 64.4% 105.6%
11/26/96 Mnfr cleaners and waxes 410.1 19.09 9.1% 14.0% 14.0%
11/26/96 Wholesale computer software 58.5 -- 0.0% 0.0% 0.0%
11/27/96 Own, op tractor, hardware
stores 81.0 14.00 15.5% 15.5% 16.7%
11/27/96 Own, op tractor, hardware
stores 56.7 14.25 17.5% 17.5% 18.8%
11/27/96
Whl electronic equip 100.0 14.77 8.4% 17.0% 20.6%
11/29/96 Mnfr printed circuit boards 111.0 14.00 7.7% 27.3% 16.7%
12/03/96
Bank holding company 91.5 52.00 11.8% 16.9% 22.4%
12/04/96
Develop biological pesticides 16.8 16.75 (1.5%) 0.0% 4.7%
12/05/96 Mnfr mobile homes 76.2 26.75 13.2% 20.2% 30.5%
12/05/96 Mnfr printed circuit boards 211.7 18.00 12.5% 46.9% 94.6%
12/06/96 Pvd technical info support
svc 46.0 7.75 19.2% 67.6% 55.0%
12/11/96
Pvd insurance brokerage svcs 1227.4 17.50 6.1% 8.5% 9.4%
12/12/96
Oil and gas production 48.3 --
12/16/96 Manufacture plumbing fixtures 175.6 24.00 77.8% 84.6% 90.1%
12/24/96 Dev computer imaging software 11.4 2.00 0.0% 0.0% 77.8%
12/26/96 Bank holding company 91.7 23.00 12.9% 14.3% 12.9%
12/27/96
Commercial bank 33.5 18.00 14.3% 20.0% 30.9%
01/02/97 Mnfr pharmaceutical products 11.0 --
01/07/97 Provide ambulance services 1011.1 40.00 21.2% 23.1% 36.8%
01/07/97
On-shore oil and gas drilling 12.7 30.00 11.1% 11.1% 30.4%
01/13/97 Insurance agency 319.0 36.00 17.1% 18.5% 11.6%
01/15/97 Provide health plan services 1132.3 20.50 1.2% 0.6% 0.0%
01/21/97 Mnfr cosmetics,beauty
products 116.8 33.50 23.5% 23.5% 27.6%
61
64
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
01/27/97 03/07/97 Honeywell Inc Measurex Corp Mnfr automation, control sys
01/28/97 05/21/97 Monsanto Co Calgene Inc (Monsanto Co) Mnfr agro chems, manmade
fibers
02/10/97 03/31/97 Vencor Inc TheraTx Inc Provide healthcare services
02/13/97 02/13/97 Resources Corp (Uniwide) Contour Medical (Retirement) Pvd construction services
02/13/97 05/20/97 British Aerospace Holdings Reflectone Inc Whl aircraft, aircraft equip
02/18/97 06/27/97 NGC Corp Destec Energy Inc Wholesale natural gas
products
02/18/97 05/09/97 Tracy Bankshares, Denver, CO Tracy Federal Bk FSB, Tracy,
CA Commercial bank; holding co
02/19/97 08/06/97 United Bankshares Inc, WV First Patriot Bankshares, VA Bank holding company
03/06/97 08/13/97 Fireman's Fund Insurance Co Crop Growers Corp Insurance company
03/14/97 10/01/97 Berlin City National Bank PEMI Bancorp Inc, Plymouth,
NH State bank
03/21/97 05/02/97 Health Systems International FOHP Inc Own, op HMO's; holding
company
03/24/97 04/28/97 Elsevier Science MDL Information Systems Publish scientific journals
03/26/97 08/01/97 Deposit Guaranty, Jackson, MS CitiSave Finl, Baton Rouge,
LA Bank holding co
03/27/97 03/27/97 Hamilton Acquisition LLC Strober Organization Inc Investment company
03/28/97 06/04/97 R-B Capital Corp Peerless Industrial Group Inc Investment company
03/31/97 06/03/97 Moore Corp Ltd Peak Technologies Group Inc Mnfr manifold business forms
04/08/97 08/28/97 Citizens Financial Group, RI BNH Bancshares, New Haven, CT Savings bank; holding co
04/10/97 06/26/97 Compaq Computer Corp Microcom Inc Manufacture personal
computers
04/14/97 11/12/97 Neptune Orient Lines Ltd APL Ltd Pvd deep sea oil transp svcs
04/16/97 01/30/98 Harcourt General Inc Steck-Vaughn Publishing Corp Operate movie theaters,
stores
04/18/97 04/21/97 Manor Care Inc Vitalink Pharmacy Services
Inc Own, op nursing homes, hotels
04/21/97 06/10/97 Harcourt General Inc National Education Corp Operate movie theaters,
stores
04/25/97 04/25/97 U-C Holdings LLC UC Television Network Corp investment company
04/30/97 07/25/97 Park-Ohio Industries Inc Arden Industrial Products Inc Mnfr forged and machined
parts
04/30/97 09/26/97 SunTrust Banks Inc, Atlanta,
GA Union Planters Corp, Memphis,
TN Commercial bank
05/01/97 10/01/97 Area Bancshares Corp,
Kentucky Cardinal Bancshares, Kentucky Bank holding co
05/01/97 07/30/97 Choucroute Partners David White Inc Investment company
05/02/97 06/30/97 Investor Group WRT Energy Corp Investor group
05/05/97 06/13/97 Incentive AB Vivra Inc Mnfr medical instr, ind equip
05/06/97 01/05/98 Foundation Health Systems Inc Physicians Health Services
Inc Own, op HMO's; holding
company
05/06/97 07/25/97 Riddell Sports Inc Varsity Spirit Manufacture football
equipment
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ----- ------- ------- -------
01/27/97 Mnfr comptr process cntrl sys 597.0 35.00 44.3% 42.1% 45.8%
01/28/97
Own and operate greenhouse 242.6 8.00 62.0% 60.0% 60.0%
02/10/97 Own, op nursing care
facilities 378.2 17.10 30.3% 35.4% 59.1%
02/13/97 Mnfr surgical supplies 9.8 5.00 (14.0%) (18.4%) (2.4%)
02/13/97 Manufacture flight simulators 41.1 24.00 20.0% 18.5% 25.5%
02/18/97
Electric utility 1222.4 21.65 82.3% 80.4% 63.4%
02/18/97
Savings bank 5.7 2.40
02/19/97 Bank holding company 35.4 17.00 15.3% 9.7% 4.6%
03/06/97 Insurance agency 82.1 10.25 20.6% 15.5% 41.4%
03/14/97
Bank holding company 19.3 28.00
03/21/97
Pvd healthcare management
svcs 51.7 --
03/24/97 Pvd scientific info svcs 310.7 32.00 85.5% 43.8% 54.2%
03/26/97
Bank holding co 20.3 20.50 46.4% 50.5% 46.4%
03/27/97 Wholesale building materials 33.4 6.00 0.0% 3.2% 2.1%
03/28/97 Mnfr chain and wire 10.5 1.67
03/31/97 Whl integrated systems 169.8 18.00 108.7% 97.3% 65.5%
04/08/97 Bank holding company 58.0 15.50 14.8% 26.5% 19.2%
04/10/97
Mnfr data comm products 267.6 16.25 54.8% 91.2% 35.4%
04/14/97 Shipping, trucking company 878.5 33.50 55.8% 65.4% 42.6%
04/16/97
Publish books, magazines 40.3 14.75 21.6% 32.6% 24.2%
04/18/97
Pvd health and allied svcs 30.0 20.00 14.3% 8.1% (4.2%)
04/21/97
Vocational training services 776.1 21.00 22.6% 54.1% 40.0%
04/25/97 Own, op interactive TV
network 16.2 --
04/30/97
Whl fasteners 42.0 6.00 41.2% 50.0% 37.1%
04/30/97
Commercial bank holding co 10.8 --
05/01/97
Bank holding co 96.0 60.26 26.9% 33.9% 31.0%
05/01/97 Mnfr, whl surveying
instruments 5.9 12.00 11.6% 14.3% 18.5%
05/02/97 Oil and gas exploration,
prodn 30.0 --
05/05/97 Provide home health care svcs 1660.5 35.62 26.1% 41.8% 35.7%
05/06/97
Own and operate HMO's 268.2 28.25 23.5% 27.0% 51.7%
05/06/97
Pvd cheerleading training
svcs 91.0 18.90 30.3% 28.1% 23.9%
62
65
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
05/08/97 09/10/97 Nicolet Biomedical Inc Imex Medical Systems Inc Investment company
05/30/97 07/09/97 Whitehall Street Real Estate Integrated Living Communities Real estate development firm
06/02/97 07/15/97 Anthem Inc Acordia Inc (Anthem Inc) Insurance company
06/03/97 09/30/97 Santa Barbara Bancorp, CA Citizens State Bank, CA Bank holding co
06/05/97 10/20/97 Humana Inc ChoiceCare Corp Own and operate HMOs
06/05/97 07/14/97 Intermedia Communications Inc DIGEX Inc Pvd telecommunications svcs
06/09/97 10/01/97 SAFECO Corp American States Financial Provide insurance services
Corp
06/10/97 08/28/97 Micron Electronics Inc NetFrame Systems Inc Mnfr electronic components
06/12/97 07/31/97 Fahnestock Viner Holdings Inc First of Michigan Capital Securities brokerage firm
Corp
06/12/97 10/01/97 Thyssen AG Giddings & Lewis Inc Manufacture malleable iron
06/16/97 08/29/97 United Dominion Industries Core Industries Inc Mnfr structural metal
Ltd
06/16/97 09/30/97 Investor Group Frederick's of Hollywood, Investor group
Inc.
06/16/97 10/10/97 Genesis Eldercare Acquisition Multicare Cos Inc Own, op geriatric facilities
06/16/97 08/07/97 BT Industries AB Raymond Corp Mnfr fork lift trucks
06/17/97 09/25/97 Leonard Green & Partners LP Hechinger Co Merchant banking firm
06/17/97 07/24/97 Monterey Resources Inc McFarland Energy Inc Oil and gas exploration,
prodn
06/17/97 07/25/97 CCL Industries Inc Seda Specialty Packaging Corp Mnfr, pvd specialty packaging
06/19/97 08/15/97 Gateway 2000 Inc Advanced Logic Research Inc Mnfr personal computers
06/23/97 10/17/97 General Motors Acceptance(GM) Integon Corp Provide business finance svcs
06/24/97 09/29/97 Three Rivers Holding Corp SMT Health Services Inc Investment company
06/26/97 11/26/97 Rhone-Poulenc SA (France) Rhone-Poulenc Rorer Inc Mnfr chemicals and cosmetics
06/30/97 10/09/97 Eaton Corp Fusion Systems Corp Manufacture automotive parts
07/02/97 09/23/97 Bunzl PLC American Filtrona Corp Whl, mnfr paper,constn
material
07/02/97 10/28/97 Summa Industries Inc Calnetics Corp Mnfr plastic conveyor parts
07/08/97 09/30/97 Jitney-Jungle Stores of Amer Delchamps Inc Own and operate grocery
stores
07/09/97 09/23/97 CDSI Holding Corp Control Data Systems Inc Investment holding company
07/09/97 12/23/97 Investor Group Seaman Furniture Co Investor group
07/10/97 11/18/97 Investor Group Kinetic Concepts Inc Investor group
07/15/97 10/02/97 Axiohm SA DH Technology Inc Mnfr,whl computer printers
07/17/97 09/29/97 Lucent Technologies Inc Octel Communications Corp Mnfr telecommun sys, software
07/23/97 12/18/97 Newport Investment LLC Alliance Imaging Inc Investment company
07/23/97 12/02/97 Benihana Inc Rudy's Restaurant Group Own and operate restaurants
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ----- ------- ------- -------
05/08/97 Mnfr fetal diagnostic instr 9.3 1.35 7.9% 2.8% 2.8%
05/30/97 Pvd nursing, personal care 79.7 11.50 26.9% 21.1% 50.8%
svcs
06/02/97 Pvd insurance brokerage svcs 193.2 40.00 12.7% 11.5% 26.0%
06/03/97 Commercial bank 16.2 1925.00
06/05/97 Own, operate HMOs 243.3 16.38
06/05/97 Develop Internet software 171.6 13.00 19.5% 35.9% 31.6%
06/09/97 Fire and marine insurance co 3127.1 47.00 45.7% 48.6% 57.3%
06/10/97 Manufacture electn computers 14.0 1.00 (23.8%) (15.8%) (20.0%)
06/12/97 Securities brokerage firm 38.4 15.00
06/12/97 Mnfr automated machine tools 703.0 21.00 10.5% 9.8% 0.6%
06/16/97 Manufacture electronic equip 275.2 25.00 26.6% 37.9% 49.3%
06/16/97 Women's clothing stores 69.4 7.75 48.8% 44.5% 25.9%
06/16/97 Own, op nursing care 1249.1 28.00 9.3% 13.7% 34.9%
facilities
06/16/97 Mnfr industrial lift trucks 360.4 33.00 (6.1%) (1.5%) 6.5%
06/17/97 Own, op retail home centers 127.0 3.00 (14.3%) (7.7%) (11.1%)
06/17/97 Oil and gas exploration, 111.2 18.55 11.6% 41.3% 44.8%
prodn
06/17/97 Mnfr specialty packaging 182.6 29.00 31.8% 36.5% 52.6%
prods
06/19/97 Mnfr microcomputer systems 206.8 15.50 29.2% 30.5% 34.8%
06/23/97 Insurance holding company 517.1 26.00 173.7% 92.6% 74.8%
06/24/97 Operate outpatient facilities 75.6 11.75 4.4% 2.2% 8.0%
06/26/97 Manufacture pharmaceuticals 4831.6 97.00 22.1% 22.8% 29.3%
06/30/97 Mnfr curing sys, 308.6 39.00 11.4% 9.9% 24.3%
semiconductors
07/02/97 Mnfr bonded fiber 183.5 46.52 8.8% 2.2% 3.4%
07/02/97 Manufacture plastic products 23.4 7.35 30.7% 33.6% 25.1%
07/08/97 Own and operate supermarkets 213.6 30.00 (2.4%) (0.8%) 6.7%
07/09/97 Mnfr computers, peripherals 273.9 20.25 29.1% 30.6% 35.0%
07/09/97 Own, op ret furniture stores 31.6 25.05 21.5% 25.3% 21.5%
07/10/97 Mnfr medical treatment tables 776.7 19.25 6.9% 7.7% 9.2%
07/15/97 Mnfr, whl computer printers 169.5 25.00 57.5% 56.3% 57.5%
07/17/97 Mnfr voice processing systems 1824.8 31.00 15.9% 37.4% 41.3%
07/23/97 Pvd diagnostic imaging svcs 114.2 11.00 7.3% 3.5% 14.3%
07/23/97 Own and operate restaurants 18.8 5.00 50.9% 70.2% 72.0%
63
66
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
07/24/97 09/15/97 Mallinckrodt Inc Nellcor Puritan-Bennett Mnfr diagnostic products
07/25/97 07/25/97 McCown de Leeuw & Co Healthcare America Inc Venture capital firm
07/25/97 08/28/97 Constellation Capital Imo Industries Inc Investment company
Partners
07/28/97 02/02/98 Intel Corp Chips and Technologies Inc Mnfr, whl microprocessors
07/30/97 09/18/97 Fujitsu Ltd Amdahl Corp Mnfr computers, telecommn
equip
07/30/97 02/02/98 PL Holdings Corp Plasti-Line Inc Investor group formed by mgmt
08/04/97 12/23/97 Restaurant Co Perkins Family Restaurant LP Own, operate restaurants
08/07/97 12/02/97 SPS Technologies Inc Magnetic Technologies Corp Mnfr industrial fasteners
08/07/97 09/30/97 Investor Group Outboard Marine Corp Investor group
08/12/97 09/17/97 Steris Corp Isomedix Inc Mnfr sterile processing sys
08/14/97 09/16/97 Omnicare Inc American Medserve Corp Whl, retail pharmaceuticals
08/14/97 10/01/97 Counsel Corp Health Management Inc Own, op pharmacy;
whl pharm prod
08/14/97 09/24/97 MedPartners Inc Talbert Medical Management Pvd medical services to HMO's
08/14/97 12/29/97 Madison Dearborn Partners Tuesday Morning Corp Investors
08/15/97 10/09/97 VS&A Communications Partners T/SF Communications Corp Investment firm
08/25/97 10/03/97 Cambrex Corp Bio Whittaker Inc Mnfr specialty chemicals
08/28/97 10/10/97 Applied Power Inc Versa Technologies Inc Mnfr tool, equip, consumables
08/29/97 12/29/97 Rexel SA(Pinault-Printemps) Rexel Inc Whl radios, televisions
09/02/97 12/03/97 GRR Holdings LLC Ground Round Restaurants Investment company
09/04/97 12/30/97 Investor Group Cinergi Pictures Investor group
Entertainment
09/05/97 11/26/97 Misys PLC Medic Computer Systems Inc Manufacture computers
09/22/97 12/05/97 Conseco Inc Washington National Corp Insurance holding company
09/23/97 01/22/98 Investor Group El Chico Restaurants Inc Investor group
09/26/97 09/26/97 Birmingham Steel Corp Laclede Steel Co Manufacture steel, steel prod
10/01/97 12/05/97 Land O' Lakes Inc Alpine Lace Brands Inc Produce butter, milk and
meats
10/02/97 10/02/97 Investor Biomagnetic Technologies Inc Investor
10/09/97 12/23/97 Borden Chemical Inc(Borden) Melamine Chemicals Inc Mnfr formaldehyde, resins
10/15/97 11/21/97 Finish Master Inc(Lacey Thompson PBE Inc Whl automotive paint,
Distn) coatings
10/16/97 02/12/98 Hartford Financial Services Omni Insurance Group Inc Provide insurance services
10/25/97 11/04/97 Blackstone Group Clark USA Inc Investment bank
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ----- ------- ------- -------
07/24/97 Mnfr electn patient monitors 1858.4 28.50 36.1% 43.4% 57.2%
07/25/97 Own, operate hospitals 85.0 --
07/25/97 Mnfr industrial controls,
pumps 112.1 7.05 18.7% 20.0% 22.6%
07/28/97 Design, whl integrated
circuit 422.9 17.50 25.0% 32.1% 68.7%
07/30/97
Develop computer sys,
software 924.8 12.40 5.0% 22.5% 25.6%
07/30/97 Mnfr illuminated outdoor
signs 30.7 14.50 36.5% 36.5% 30.3%
08/04/97 Own, op franchised
restaurants 76.3 14.00 28.7% 26.6% 31.8%
08/07/97 Manufacture copiers, printers 16.8 5.00 25.0% 25.0% 33.3%
08/07/97 Manufacture marine products 330.9 18.00 (7.7%) (2.4%) 20.0%
08/12/97 Pvd contract sterilization
svc 139.8 20.50 5.8% 15.5% 13.9%
08/14/97 Wholesale pharmaceuticals 233.2 18.00 2.5% 16.1% 25.8%
08/14/97
Pvd prescription distn svcs 40.0 --
08/14/97 Own, op medical, dental
clinics 189.0 63.00 10.5% 18.9% 37.0%
08/14/97 Own, operate giftware stores 298.6 25.00 22.7% 25.8% 11.1%
08/15/97 Publish newspapers, magazines 115.2 --
08/25/97 Mnfr, whl medical testing
prods 130.5 11.63 17.8% 38.9% 47.7%
08/28/97 Mnfr rubber components, molds 141.9 24.63 36.8% 33.1% 31.3%
08/29/97 Whl electrical components 302.0 22.50 19.2% 26.3% 21.6%
09/02/97 Own and operate restaurants 17.5 1.65 10.0% 10.0% (5.7%)
09/04/97 Pvd motion picture prodn svcs
16.3 2.52 26.9% 24.7% 56.6%
09/05/97 Pvd mgmt info sys design svcs 915.8 35.00 7.7% 12.0% 25.0%
09/22/97 Insurance company 424.0 33.25 2.7% 4.1% 12.2%
09/23/97 Own and operate restaurant 49.2 12.75 64.5% 75.9% 104.0%
09/26/97 Own, operate steel works 15.0 8.00 106.5% 106.5% 106.5%
10/01/97 Whl dairy products, cheese
48.4 9.13 15.9% 49.0% 46.0%
10/02/97 Mnfr medical imaging
equipment 31.3 1.25
10/09/97 Manufacture melamine crystal 119.7 20.50 70.8% 72.6% 70.8%
10/15/97 Whl automotive paint,
supplies 69.3 8.00 25.5% 33.3% 42.2%
10/16/97 Insurance company 184.7 31.75 78.9% 75.8% 130.9%
10/25/97 Mnfr petroleum products 135.0 --
64
67
INVESTMENT BANKING GROUP
MERGER & ACQUISITION ACTIVITY
JANUARY 1, 1995 -- MARCH 3, 1998
CASH TRANSACTIONS
DATE DATE
ANNOUNCED UNCON. ACQUIROR NAME TARGET NAME ACQUIROR BUSINESS DESCRIPTION
- --------- -------- ------------- ----------- -----------------------------
10/27/97 02/10/98 National Australia Bank Ltd HomeSide Inc Bank, insurance co
11/13/97 12/02/97 Thiokol Corp Howmet International Inc Mnfr chemicals, propulsion
sys
11/18/97 01/08/98 Cendant Corp Jackson Hewitt Provide discount club svcs
11/21/97 01/28/97 TRW Inc BDM International Inc Elect equip, credit reporting
11/24/97 02/03/98 Davel Communications Group
Inc Communications Central Inc Pvd pay telephone commun svcs
11/24/97 11/24/97 Sinophil Corp MagiNet Corp Own, operate resorts
12/11/97 01/20/98 MascoTech Inc TriMas Corp Mnfr motor vehicle components
12/11/97 01/07/98 Harvard Private Capital Group White River Corp Investment company
12/12/97 02/13/98 Voith Sulzer Paper Technology Impact Systems Inc Provide paper tech dvlp svcs
12/17/97 01/23/98 Invacare Corp Suburban Ostomy Supply Co Inc Mnfr surgical, medical
supplies
12/22/97 02/02/98 OM Group Inc Auric Corp Mnfr chemicals; holding co
12/23/97 01/27/98 O'Reilly Automotive Inc Hi-Lo Automotive Inc Own, op auto supply stores
01/29/98 01/29/98 Flowers Industries Inc Keebler Foods Co Produce baked foods
02/04/98 02/04/98 Investor Group Tremont Corp Investor group
Median
Average
Adj. Avg.
Low Middle Quartile
High Middle Quartile
VALUE OF PRICE PREMIUM PREMIUM PREMIUM
DATE TRANSACTION PER 1 DAY 1 WEEK 4 WEEKS
ANNOUNCED TARGET BUSINESS DESCRIPTION ($ MIL) SHARE PRIOR PRIOR PRIOR
- --------- --------------------------- ----------- ----- ------- ------- -------
10/27/97 Mortgage bank 1230.1 27.83 14.7% 12.1% 7.3%
11/13/97 Mnfr steel invest foundries
183.8 --
11/18/97 Pvd tax preparation services 468.2 68.00 26.5% 21.7% 47.8%
11/21/97 Pvd comp info technology svcs 888.0 29.50 31.1% 43.5% 38.0%
11/24/97
Pvd telecommunications svcs 102.4 10.50 30.2% 25.4% 12.0%
11/24/97 Pvd cable, pay television
svcs 15.0 --
12/11/97 Mnfr specialty closures, caps 911.7 34.50 12.7% 10.0% 19.0%
12/11/97 Insurance agency; holding co 400.0 --
12/12/97 Paper prodn control systems 28.6 2.75 57.1% 49.2% 44.3%
12/17/97 Whl medical and hospital
equip 130.8 11.75 8.0% 13.3% 13.3%
12/22/97 Mnfr electroless nickel 80.0 203.00
12/23/97 Own, op auto parts stores 42.5 4.35 (14.1%) 12.3% 24.3%
01/29/98 Produce bread, cookies; hldg
co 309.1 27.60
02/04/98 Mnfr drilling lubricants 5.6 54.00 (6.4%) (4.4%) 0.5%
24.0% 27.5% 33.6%
29.5% 34.7% 40.2%
28.7% 33.9% 38.3%
11.5% 14.5% 18.5%
39.7% 48.8% 51.4%
65
68
INVESTMENT BANKING GROUP
AUSTIN
DAILY PRICE & VOLUME TRADING STATISTICS SINCE 2/4/98
[CHART]
66
69
INVESTMENT BANKING GROUP
AUSTIN
DAILY PRICE & VOLUME TRADING STATISTICS SINCE 9/4/97
[CHART]
67
70
INVESTMENT BANKING GROUP
AUSTIN
WEEKLY PRICE & VOLUME TRADING STATISTICS SINCE 3/7/97
[CHART]
68
71
INVESTMENT BANKING GROUP
AUSTIN
WEEKLY PRICE & VOLUME TRADING STATISTICS SINCE 6/18/93
[CHART]
69
72
INVESTMENT BANKING GROUP
AUSTIN
SHARES TRADED AT VARIOUS PRICES FROM 2/4/98 TO 3/4/98
CUMULATIVE
----------------------------------------------
DAYS % OF TOTAL % OF TOTAL DAYS % OF TOTAL % OF TOTAL
TRADING DAILY AVG. DAYS TRADING TRADING DAILY AVG. DAYS TRADING TRADING
RANGE(1) IN RANGE TRADED VOLUME VOLUME IN RANGE TRADED VOLUME VOLUME
-------- ----------- ---------- ------- ---------- ---------- ---------- ------- ----------
<$15.75............... 0 0.0% -- 0.0% 0 0.0% -- 0.0%
$15.75-$15.87......... 2 10.0% 11,300 11.3% 2 10.0% 11,300 11.3%
$15.87-$15.99......... 3 15.0% 5,600 5.6% 5 25.0% 16,900 16.9%
$15.99-$16.11......... 2 10.0% 19,500 19.5% 7 35.0% 36,400 36.4%
$16.11-$16.23......... 0 0.0% -- 0.0% 7 35.0% 36,400 36.4%
$16.23-$16.35......... 1 5.0% 9,500 9.5% 8 40.0% 45,900 45.9%
$16.35-$16.47......... 0 0.0% -- 0.0% 8 40.0% 45,900 45.9%
$16.47-$16.59......... 1 5.0% -- 0.0% 9 45.0% 45,900 45.9%
$16.59-$16.71......... 2 10.0% 16,100 16.1% 11 55.0% 62,000 62.1%
$16.71-$16.83......... 4 20.0% 20,200 20.2% 15 75.0% 82,200 82.3%
$16.83-$16.95......... 5 25.0% 17,700 17.7% 20 100.0% 99,900 100.0%
Greater than or equal
to $16.95............ 0 0.0% -- 0.0% 20 100.0% 99,900 100.0%
TOTAL:................ 20 100.0% 99,900 100.0%
AUSTIN
SHARES TRADED AT VARIOUS PRICES FROM 2/4/98 TO 3/4/98
[CHART]
- ---------------
(1) Price ranges include low range price and exclude high range price.
(2) The average daily trading volume has been 4,995 shares or $82,035.31 and the
average daily close has been $16.51.
70
73
INVESTMENT BANKING GROUP
AUSTIN
SHARES TRADED AT VARIOUS PRICES FROM 9/4/97 TO 3/4/98
CUMULATIVE
------------------------------------------------
DAYS % OF TOTAL % OF TOTAL DAYS % OF TOTAL % OF TOTAL
TRADING DAILY AVG. DAYS TRADING TRADING DAILY AVG. DAYS TRADING TRADING
RANGE(1) IN RANGE TRADED VOLUME VOLUME IN RANGE TRADED VOLUME VOLUME
-------- ---------- ---------- --------- ---------- ---------- ---------- --------- ----------
<$14.00.............. 0 0.0% -- 0.0% 0 0.0% -- 0.0%
$14.00-$14.35........ 3 2.4% 15,200 0.9% 3 2.4% 15,200 0.9%
$14.35-$14.70........ 1 0.8% 29,600 1.7% 4 3.2% 44,800 2.6%
$14.70-$15.05........ 7 5.6% 39,800 2.4% 11 8.8% 84,600 5.0%
$15.05-$15.40........ 21 16.8% 191,300 11.3% 32 25.6% 275,900 16.3%
$15.40-$15.75........ 26 20.8% 183,200 10.8% 58 46.4% 459,100 27.1%
$15.75-$16.10........ 37 29.6% 577,400 34.1% 95 76.0% 1,036,500 61.2%
$16.10-$16.45........ 11 8.8% 400,900 23.7% 106 84.8% 1,437,400 84.9%
$16.45-$16.80........ 12 9.6% 211,500 12.5% 118 94.4% 1,648,900 97.4%
$16.80-$17.15........ 7 5.6% 44,000 2.6% 125 100.0% 1,692,900 100.0%
Greater than or equal
to $17.15........... 0 0.0% -- 0.0% 125 100.0% 1,692,900 100.0%
TOTAL:............... 125 100.0% 1,692,900 100.0%
AUSTIN
SHARES TRADED AT VARIOUS PRICES FROM 9/4/97 TO 3/4/98
[CHART]
- ---------------
(1) Price ranges include low range price and exclude high range price.
(2) The average daily trading volume has been 13,543 shares or $215,777.80 and
the average daily close has been $15.78.
71
74
INVESTMENT BANKING GROUP
AUSTIN
SHARES TRADED AT VARIOUS PRICES FROM 3/4/97 TO 3/4/98
CUMULATIVE
------------------------------------------------
DAYS % OF TOTAL % OF TOTAL DAYS % OF TOTAL % OF TOTAL
TRADING DAILY AVG. DAYS TRADING TRADING DAILY AVG. DAYS TRADING TRADING
RANGE(1) IN RANGE TRADED VOLUME VOLUME IN RANGE TRADED VOLUME VOLUME
-------- ---------- ---------- --------- ---------- ---------- ---------- --------- ----------
<$12.60 0 0.0% -- 0.0% 0 0.0% -- 0.0%
$12.60-$13.20 6 2.3% 731,900 12.7% 6 2.3% 731,900 12.7%
$13.20-$13.80 29 11.1% 1,407,000 24.5% 35 13.4% 2,138,900 37.2%
$13.80-$14.40 49 18.7% 1,342,100 23.4% 84 32.1% 3,481,000 60.6%
$14.40-$15.00 39 14.9% 341,000 5.9% 123 46.9% 3,822,000 66.6%
$15.00-$15.60 44 16.8% 438,100 7.6% 167 63.7% 4,260,100 74.2%
$15.60-$16.20 59 22.5% 842,800 14.7% 226 86.3% 5,102,900 88.9%
$16.20-$16.80 21 8.0% 551,200 9.6% 247 94.3% 5,654,100 98.5%
$16.80-$17.40 14 5.3% 87,400 1.5% 261 99.6% 5,741,500 100.0%
$17.40-$18.00 1 0.4% 600 0.0% 262 100.0% 5,742,100 100.0%
Greater than or equal
to $18.00 0 0.0% -- 0.0% 262 100.0% 5,742,100 100.0%
TOTAL: 262 100.0% 5,742,100 100.0%
AUSTIN
SHARES TRADED AT VARIOUS PRICES FROM 3/4/97 TO 3/4/98
[CHART]
- ---------------
(1) Price ranges include low range price and exclude high range price.
(2) The average daily trading volume has been 21,916 shares or $318,348.90 and
the average daily close has been $15.06.
72
75
INVESTMENT BANKING GROUP
AUSTIN OWNERSHIP PROFILE
CHANGE
SHARES FROM
SHAREHOLDERS HELD PRIOR PERIOD % OWNERSHIP
------------ --------- ------------ -----------
OFFICERS AND DIRECTORS(1)................................... 880,006 17.35%
INSTITUTIONAL INVESTORS(2)..................................
Neuberger & Berman.......................................... 706,500 304,900 13.93%
Heartland Investors......................................... 486,000 286,000 9.58%
TCW Group................................................... 472,400 (3,100) 9.32%
Thomson Horstman............................................ 442,700 (17,300) 8.73%
Tweedy Browne............................................... 160,000 160,000 3.16%
Dimensional Fund............................................ 156,500 20,300 3.09%
Hathaway & Assoc............................................ 150,000 (77,500) 2.96%
Neuberger & Berman.......................................... 142,200 35,000 2.80%
Glickenhaus & Co............................................ 140,100 0 2.76%
Putnam Management........................................... 112,300 0 2.21%
Franklin Mutual............................................. 94,900 94,900 1.87%
AGF Management Ltd.......................................... 75,000 0 1.48%
BZW Barclays................................................ 81,812 700 1.61%
Jenswold, Roger H. & Co..................................... 37,500 (31,050) 0.74%
Luther King Capital......................................... 20,000 0 0.39%
Goldman Sachs............................................... 20,000 0 0.39%
Clover Capital.............................................. 14,700 14,700 0.29%
Merrill Lynch & Co.......................................... 2,397 2,397 0.05%
Bank of NY.................................................. 970 970 0.02%
Travelers Group............................................. 300 (300) 0.01%
Legg Mason Wood Walker...................................... 200 200 0.00%
GHS Management.............................................. 0 (128,000) 0.00%
T Rowe Price................................................ 0 (300,000) 0.00%
TOTAL INSTITUTIONAL INVESTORS............................... 3,316,479 362,817 65.40%
IMPLIED RETAIL HOLDINGS..................................... 874,684 17.25%
--------- ------
TOTAL SHARES OUTSTANDING(3)....................... 5,071,169 100.00%
========= ======
- ---------------
(1) Source: 10-K/A as of 9/30/97 with updated information from company.
(2) Source: Bloomberg as of February 16, 1998.
(3) Source: 10-Q dated November 29, 1997.
[CHART]
73
76
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
PROJECTED INCOME STATEMENTS
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 12:51 PM
PROJECTED
HISTORICAL ESTIMATED ---------------------------------------------------
1997 1998 1999 2000 2001
---------- --------- --------------- --------------- ---------------
Revenues...................................... $175,835 $193,391 $207,846 $223,500 $239,900
Cost of sales................................. 125,732 138,952 149,319 160,546 172,085
Gross profit.................................. 50,103 54,439 58,527 62,954 67,815
General and administrative, net dep........... 8,855 10,513 10,477 11,003 11,549
Sales and marketing........................... 18,119 17,951 18,732 19,783 20,900
Restructuring and unusual charges............. 1,816 -- -- -- --
Other operating expenses...................... -- -- -- -- --
-------- -------- -------- -------- --------
Total operating expenses...................... 28,790 28,464 29,209 30,786 32,449
EBITDA........................................ 21,313 25,975 29,318 32,168 35,366
Depreciation.................................. 4,270 3,960 3,934 3,935 3,936
Amortization.................................. 3,885 4,121 4,186 4,186 4,186
-------- -------- -------- -------- --------
Total depreciation & amortization............. 8,155 8,081 8,120 8,121 8,122
Total operating income........................ 13,158 17,894 21,198 24,047 27,244
Interest expense.............................. 3,002 4,200 4,200 3,600 2,800
Interest (income)............................. -- -- -- -- --
Home office expense........................... -- -- -- -- --
Discontinued operations expense............... 4,820 -- -- -- --
Extraordinary loss from debt extinguishment... 241 -- -- -- --
-------- -------- -------- -------- --------
Other expenses (income)....................... 8,063 4,200 4,200 3,600 2,800
Pre-tax income................................ 5,095 13,694 16,998 20,447 24,444
Provision for income taxes.................... 4,091 5,615 6,969 8,383 10,022
-------- -------- -------- -------- --------
Net income.................................... $ 1,004 $ 8,079 $ 10,029 $ 12,064 $ 14,422
======== ======== ======== ======== ========
PROJECTED
---------------------------------
2002 2003
--------------- ---------------
Revenues...................................... $257,562 $276,160
Cost of sales................................. 184,850 197,826
Gross profit.................................. 72,712 78,334
General and administrative, net dep........... 12,116 12,661
Sales and marketing........................... 22,088 23,163
Restructuring and unusual charges............. -- --
Other operating expenses...................... -- --
-------- --------
Total operating expenses...................... 34,204 35,824
EBITDA........................................ 38,508 42,510
Depreciation.................................. 3,937 3,938
Amortization.................................. 4,186 4,186
-------- --------
Total depreciation & amortization............. 8,123 8,124
Total operating income........................ 30,385 34,386
Interest expense.............................. 1,500 500
Interest (income)............................. -- --
Home office expense........................... -- --
Discontinued operations expense............... -- --
Extraordinary loss from debt extinguishment... -- --
-------- --------
Other expenses (income)....................... 1,500 500
Pre-tax income................................ 28,885 33,886
Provision for income taxes.................... 11,843 13,893
-------- --------
Net income.................................... $ 17,042 $ 19,993
======== ========
74
77
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
PROJECTED BALANCE SHEETS
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 12:51 PM
PROJECTED
HISTORICAL ---------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003
---------- -------- -------- -------- -------- -------- --------
ASSETS
Cash.................................... $ 2,609 $ 1,000 $ 1,000 $ 1,000 $ 1,175 $ 4,603 $ 24,282
Accounts receivable..................... 24,282 26,336 28,032 29,931 31,910 34,051 36,232
Inventories............................. 32,105 34,821 37,064 39,574 42,191 45,021 47,905
Income taxes receivable................. 551 598 636 679 724 773 822
Other receivables....................... 713 773 823 879 937 1,000 1,064
Prepaid expenses and other current
assets................................ 2,464 2,672 2,845 3,037 3,238 3,455 3,677
-------- -------- -------- -------- -------- -------- --------
Total current assets.................... 62,724 66,200 70,400 75,100 80,175 88,903 113,982
Land.................................... 478 478 478 478 478 478 478
Gross plant and equip................... 34,877 37,971 41,805 45,740 49,676 53,613 57,551
Accumulated depreciation................ (14,214) (16,849) (20,783) (24,718) (28,654) (32,591) (36,529)
-------- -------- -------- -------- -------- -------- --------
Net P, P&E.............................. 21,141 21,600 21,500 21,500 21,500 21,500 21,500
Goodwill, net of accumulated
amortization.......................... 39,009 34,888 30,702 26,516 22,330 18,144 13,958
Other intangible assets................. 8,165 8,165 8,165 8,165 8,165 8,165 8,165
Other fixed assets...................... -- -- -- -- -- -- --
Deferred income taxes and other
assets................................ 4,155 4,200 4,200 4,200 4,200 4,200 4,200
Other assets............................ -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total assets............................ $135,194 $135,053 $134,967 $135,481 $136,370 $140,912 $161,805
======== ======== ======== ======== ======== ======== ========
75
78
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
PROJECTED BALANCE SHEETS
(Numbers in Thousands)
(Fiscal Year Ended August)
3/5/98 12:51 PM
PROJECTED
HISTORICAL ---------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003
---------- --------- --------- --------- --------- --------- ---------
LIABILITIES & EQUITY
Current maturities & short-term
debt............................. $ 1,871 $ -- $ -- $ -- $ -- $ -- $ --
Trade accounts payable............. 11,299 10,442 11,050 11,753 12,506 13,210 14,013
Accrued liabilities................ 11,197 10,347 10,950 11,647 12,394 13,090 13,887
Current portion of lease
obligation....................... 481 211 -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total current liabilities.......... 24,848 21,000 22,000 23,400 24,900 26,300 27,900
Long term debt
Revolver......................... -- -- 183 33 -- -- --
Senior term note................. 40,000 39,600 34,200 26,000 13,200 -- --
Notes payable.................... 13,740 13,000 9,200 4,600 2,400 1,700 1,000
Existing revolver................ 6,990 2,098 -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total debt....................... 60,730 54,698 43,583 30,633 15,600 1,700 1,000
Less current portion............. (1,871) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total long-term debt............. 58,859 54,698 43,583 30,633 15,600 1,700 1,000
Capitalized lease obligations...... 211 -- -- -- -- -- --
Other.............................. -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total liabilities.................. 83,918 75,698 65,583 54,033 40,500 28,000 28,900
Common stock....................... 22,858 22,858 22,858 22,858 22,858 22,858 22,858
Additional paid-in-capital......... 21,949 21,949 21,949 21,949 21,949 21,949 21,949
Retained earnings.................. 6,469 14,548 24,577 36,641 51,063 68,105 88,098
--------- --------- --------- --------- --------- --------- ---------
Total stockholders' equity......... 51,276 59,355 69,384 81,448 95,870 112,912 132,905
--------- --------- --------- --------- --------- --------- ---------
Total liabilities & equity......... $ 135,194 $ 135,053 $ 134,967 $ 135,481 $ 136,370 $ 140,912 $ 161,805
========= ========= ========= ========= ========= ========= =========
76
79
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
PROJECTED CASH FLOW STATEMENTS
(NUMBERS IN THOUSANDS)
(Fiscal Year Ended August)
3/5/98 12:51 PM
PROJECTED
-----------------------------------------------
1999 2000 2001 2002 2003
------- ------- ------- ------- -------
Cash flows from operating activities:
Net income..................................... $10,029 $12,064 $14,422 $17,042 $19,993
Depreciation................................... 3,934 3,935 3,936 3,937 3,938
Amortization of goodwill....................... 4,186 4,186 4,186 4,186 4,186
Amortization of intangibles.................... -- -- -- -- --
Minority interest.............................. -- -- -- -- --
Other non-cash................................. -- -- -- -- --
Changes in current assets...................... (4,200) (4,700) (4,900) (5,300) (5,400)
Changes in current liabilities................. 1,000 1,400 1,500 1,400 1,600
------- ------- ------- ------- -------
Net cash provided by operating activities........ 14,949 16,885 19,144 21,265 24,317
Cash flows from investing activities
Capital expenditures (net of dispositions)..... (3,834) (3,935) (3,936) (3,937) (3,938)
Investments in new goodwill.................... -- -- -- -- --
Acquisition of additional intangibles.......... -- -- -- -- --
Changes in other long-term assets &
liabilities................................. -- -- -- -- --
------- ------- ------- ------- -------
Net cash provided by investing activities........ (3,834) (3,935) (3,936) (3,937) (3,938)
Cash flows from financing activities
Dividends paid................................. -- -- -- -- --
Proceeds from sale of stock.................... -- -- -- -- --
Proceeds from debt issue....................... -- -- -- -- --
Cash inflow (outflow) from other equity........ -- -- -- -- --
Repayment of debt.............................. (11,298) (12,983) (15,033) (13,900) (700)
Repurchase of stock............................ -- -- -- -- --
Drawdown on revolver........................... 183 33 -- -- --
------- ------- ------- ------- -------
Net cash provided by financing activities........ (11,115) (12,950) (15,033) (13,900) (700)
------- ------- ------- ------- -------
Net additions to cash............................ $ -- $ -- $ 175 $ 3,428 $19,679
======= ======= ======= ======= =======
Beginning cash balance........................... 1,000 1,000 1,000 1,175 4,603
Ending cash balance.............................. 1,000 1,000 1,175 4,603 24,282
77
80
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
HISTORICAL AND PROJECTED INCOME STATEMENT RATIOS (PERCENT OF SALES)
(Fiscal Year Ended August)
3/5/98 12:51 PM
PROJECTED
HISTORICAL ---------------------------------------------
1997 1998 AVERAGE 1999 2000 2001 2002 2003
---------- ------ ------- ------ ------ --------- ------ ------
Revenues.................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............. 71.5% 71.9% 71.7% 71.8% 71.8% 71.7% 71.8% 71.6%
------ ------ ------ ------ ------ ------ ------ ------
Gross profit.............. 28.5% 28.1% 28.3% 28.2% 28.2% 28.3% 28.2% 28.4%
General and
administrative, net
dep..................... 5.0% 5.4% 5.2% 5.0% 4.9% 4.8% 4.7% 4.6%
Sales and marketing....... 10.3% 9.3% 9.8% 9.0% 8.9% 8.7% 8.6% 8.4%
Restructuring and unusual
charges................. 1.0% 0.0% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0%
------ ------ ------ ------ ------ ------ ------ ------
Total operating
expenses................ 16.4% 14.7% 15.5% 14.1% 13.8% 13.5% 13.3% 13.0%
EBITDA.................... 12.1% 13.4% 12.8% 14.1% 14.4% 14.7% 15.0% 15.4%
Depreciation.............. 2.4% 2.0% 2.2% 1.9% 1.8% 1.6% 1.5% 1.4%
Amortization.............. 2.2% 2.1% 2.2% 2.0% 1.9% 1.7% 1.6% 1.5%
------ ------ ------ ------ ------ ------ ------ ------
Total depreciation &
amortization............ 4.6% 4.2% 4.4% 3.9% 3.6% 3.4% 3.2% 2.9%
Total operating income.... 7.5% 9.3% 8.4% 10.2% 10.8% 11.4% 11.8% 12.5%
Interest expense.......... 1.7% 2.2% 1.9% 2.0% 1.6% 1.2% 0.6% 0.2%
Interest (income)......... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Home office expense....... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Discontinued operations
expense................. 2.7% 0.0% 1.4% 0.0% 0.0% 0.0% 0.0% 0.0%
Extraordinary loss from
debt extinguishment..... 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
------ ------ ------ ------ ------ ------ ------ ------
Other expenses (income)... 4.6% 2.2% 3.4% 2.0% 1.6% 1.2% 0.6% 0.2%
Pre-tax income............ 2.9% 7.1% 5.0% 8.2% 9.1% 10.2% 11.2% 12.3%
Provision for income
taxes................... 80.3% 41.0% 60.6% 41.0% 41.0% 41.0% 41.0% 41.0%
------ ------ ------ ------ ------ ------ ------ ------
Net income................ 0.6% 4.2% 2.4% 4.8% 5.4% 6.0% 6.6% 7.2%
====== ====== ====== ====== ====== ====== ====== ======
78
81
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
HISTORICAL AND PROJECTED BALANCE SHEET RATIOS (PERCENT OF SALES)
(Fiscal Year Ended August)
3/5/98 12:51 PM
PROJECTED
HISTORICAL ------------------------------------------
1997 1998 AVERAGE 1999 2000 2001 2002 2003
---------- ------ ------- ------ ------ ------ ------ ------
ASSETS
Cash................................... 1.5% 0.5% 1.0% 0.5% 0.4% 0.5% 1.8% 8.8%
Accounts receivable.................... 13.8% 13.6% 13.7% 13.5% 13.4% 13.3% 13.2% 13.1%
Inventories............................ 18.3% 18.0% 18.1% 17.8% 17.7% 17.6% 17.5% 17.3%
Income taxes receivable................ 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Other receivables...................... 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%
Prepaid expenses and other current
assets............................... 1.4% 1.4% 1.4% 1.4% 1.4% 1.3% 1.3% 1.3%
------ ------ ------ ------ ------ ------ ------ ------
Total current assets................... 35.7% 34.2% 35.0% 33.9% 33.6% 33.4% 34.5% 41.3%
Land................................... 0.3% 0.2% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2%
Gross plant and equip.................. 19.8% 19.6% 19.7% 20.1% 20.5% 20.7% 20.8% 20.8%
Accumulated depreciation............... (8.1%) (8.7%) (8.4%) (10.0%) (11.1%) (11.9%) (12.7%) (13.2%)
------ ------ ------ ------ ------ ------ ------ ------
Net P,P&E.............................. 12.0% 11.2% 11.6% 10.3% 9.6% 9.0% 8.3% 7.8%
Goodwill, net of accumulated
amortization......................... 22.2% 18.0% 20.1% 14.8% 11.9% 9.3% 7.0% 5.1%
Deferred income taxes and other
assets............................... 2.4% 2.2% 2.3% 2.0% 1.9% 1.8% 1.6% 1.5%
Other assets........................... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
------ ------ ------ ------ ------ ------ ------ ------
Total assets........................... 76.9% 69.8% 73.4% 64.9% 60.6% 56.8% 54.7% 58.6%
====== ====== ====== ====== ====== ====== ====== ======
79
82
INVESTMENT BANKING GROUP
PROJECT AUSTIN -- PROJECTION MODEL
HISTORICAL AND PROJECTED BALANCE SHEET RATIOS (PERCENT OF SALES)
(Fiscal Year Ended August)
3/5/98 12:51 PM
PROJECTED
HISTORICAL -------------------------------------
1997 1998 AVERAGE 1999 2000 2001 2002 2003
---------- ----- ------- ----- ----- ----- ----- -----
LIABILITIES & EQUITY
Current maturities &
short-term debt............ 1.1% 0.0% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0%
Trade accounts payable....... 6.4% 5.4% 5.9% 5.3% 5.3% 5.2% 5.1% 5.1%
Accrued liabilities.......... 6.4% 5.4% 5.9% 5.3% 5.2% 5.2% 5.1% 5.0%
Current portion of lease
obligation................. 0.3% 0.1% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0%
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Total current liabilities.... 14.1% 10.9% 12.5% 10.6% 10.5% 10.4% 10.2% 10.1%
Long term debt Revolver...... 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0%
Senior term note........... 22.7% 20.5% 21.6% 16.5% 11.6% 5.5% 0.0% 0.0%
Notes payable.............. 7.8% 6.7% 7.3% 4.4% 2.1% 1.0% 0.7% 0.4%
Existing revolver.......... 4.0% 1.1% 2.5% 0.0% 0.0% 0.0% 0.0% 0.0%
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Total debt................. 34.5% 28.3% 31.4% 21.0% 13.7% 6.5% 0.7% 0.4%
Less current portion....... (1.1%) 0.0% (0.5%) 0.0% 0.0% 0.0% 0.0% 0.0%
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Total long-term debt....... 33.5% 28.3% 30.9% 21.0% 13.7% 6.5% 0.7% 0.4%
Capitalized lease
obligations................ 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
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Total liabilities............ 47.7% 39.1% 43.4% 31.6% 24.2% 16.9% 10.9% 10.5%
Common stock................. 13.0% 11.8% 12.4% 11.0% 10.2% 9.5% 8.9% 8.3%
Additional paid-in-capital... 12.5% 11.3% 11.9% 10.6% 9.8% 9.1% 8.5% 7.9%
Retained earnings............ 3.7% 7.5% 5.6% 11.8% 16.4% 21.3% 26.4% 31.9%
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Total stockholders' equity... 29.2% 30.7% 29.9% 33.4% 36.4% 40.0% 43.8% 48.1%
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Total liabilities & equity... 76.9% 69.8% 73.4% 64.9% 60.6% 56.8% 54.7% 58.6%
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80