1 EXHIBIT 99(b)(2) 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%. 6 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 7 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 9 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 depicting the performance of Norwood Promotional Products, Inc. Common Stock versus the S&P 400 Industrial Index, the Nasdaq Composite Index, and the Promotional Company Index. 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 depicting the weekly price and volume [Chart depicting the weekly price and volume trading statistics since December 29, 1995 trading statistics since December 29, 1995 for for CSS Industries, Inc.] Equity Marketing, Inc.] LILLIAN VERNON CORP. AUSTIN [Chart depicting the weekly price and volume [Chart depicting the weekly price and volume trading statistics since December 29, 1995 trading statistics since December 29, 1995 for for Lillian Vernon Corp.] Norwood Promotional Products, Inc.] 13 16 INVESTMENT BANKING GROUP PROMOTIONAL COMPANIES WEEKLY PRICE & VOLUME TRADING STATISTICS SINCE 12/29/95 RACING CHAMPIONS CORP. SWISS ARMY BRANDS, INC. [Chart depicting the weekly price and volume [Chart depicting the weekly price and volume trading statistics since December 29, 1995 trading statistics since December 29, 1995 for Racing Champions Corp.] for Swiss Army Brands, Inc.] 14 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. 15 18 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 -------- ------- ------- ------ -------- 17 20 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 depicting the daily price and volume trading statistics since February 4, 1998 for Norwood Promotional Products, Inc.] 66 69 INVESTMENT BANKING GROUP AUSTIN DAILY PRICE & VOLUME TRADING STATISTICS SINCE 9/4/97 [Chart depicting the daily price and volume trading statistics since September 4, 1997 for Norwood Promotional Products, Inc.] 67 70 INVESTMENT BANKING GROUP AUSTIN WEEKLY PRICE & VOLUME TRADING STATISTICS SINCE 3/7/97 [Chart depicting the weekly price and volume trading statistics since March 7, 1997 for Norwood Promotional Products, Inc.] 68 71 INVESTMENT BANKING GROUP AUSTIN WEEKLY PRICE & VOLUME TRADING STATISTICS SINCE 6/18/93 [Chart depicting the weekly price and volume trading statistics since June 18, 1993 for Norwood Promotional Products, Inc.] 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% > or = to $16.95...... 0 0.0% -- 0.0% 20 100.0% 99,900 100.0% TOTAL:................ 20 100.0% 99,900 100.0% [Chart depicting the number of shares of Norwood Promotional Products, Inc. Common Stock that traded in specific price ranges from February 4, 1998 through March 4, 1998.] - --------------- (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% > or = 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% [Chart depicting the number of shares of Norwood Promotional Products, Inc. common stock that traded in specific price ranges from September 4, 1997 through March 4, 1998.] - --------------- (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% > or = 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% [Chart depicting the number of shares of Norwood Promotional Products, Inc. Common Stock that traded in specific price ranges from March 4, 1997 through March 4, 1998.] - --------------- (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 depicting the percentage of the outstanding Common Stock of Norwood Promotional Products, Inc. owned by Institutions, Retail and Officers and Directors.] 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% ----- ----- ----- ----- ----- ----- ----- ----- 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% ----- ----- ----- ----- ----- ----- ----- ----- 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% ----- ----- ----- ----- ----- ----- ----- ----- 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% ----- ----- ----- ----- ----- ----- ----- ----- 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% ----- ----- ----- ----- ----- ----- ----- ----- Total stockholders' equity... 29.2% 30.7% 29.9% 33.4% 36.4% 40.0% 43.8% 48.1% ----- ----- ----- ----- ----- ----- ----- ----- Total liabilities & equity... 76.9% 69.8% 73.4% 64.9% 60.6% 56.8% 54.7% 58.6% ===== ===== ===== ===== ===== ===== ===== ===== 80