Exhibit C(2)
RAYMOND JAMES
& ASSOCIATES, INC.
PRESENTATION MATERIALS
PROJECT DEVIL RAY
JULY 25, 2001
TABLE OF CONTENTS
[ ] Scope of Raymond James' Assignment 1
[ ] Ecometry Corporation 2
[ ] Valuation Analysis 3
- Liquidation Value
- Precedent M&A Transactions
- Discounted Cash Flow
- Comparable Public Companies
[ ] Conclusions 4
SCOPE OF RAYMOND JAMES' ASSIGNMENT
SCOPE OF RAYMOND JAMES' ASSIGNMENT
OVERVIEW
[ ] Raymond James has been asked to provide a valuation analysis
of Ecometry Corporation
[ ] In performing our analysis, Raymond James used the following
methodologies to assess Ecometry's valuation:
- Liquidation Value
- Precedent M&A Transactions
- Recent software transactions
- Recent going-private transactions
- Discounted Cash Flow
- Comparable Public Companies
- Direct comparables
- Other software companies
ECOMETRY CORPORATION
ECOMETRY CORPORATION
SITUATION ANALYSIS
[ ] Company is experiencing negative trends in its recent
financial and operational performance
- Revenues and profitability
- New implementations
- Lost a number of customers to dot-com shakeout (more
to come)
[ ] Lack of substantial backlog for remainder of 2001 (already
through peak buying season)
[ ] Ecometry has fallen behind on technology curve
- Historically, spending on R&D has not been comparable
to competitors
R&D % Sales
------- -------
Ecometry $ 4.6 m 11.9%
Retek $39.4 m 34.3%
JDA Software $30.5 m 35.1%
Egain $22.3 m 48.9%
- To remain competitive, R&D spending will continue to
be a significant % of sales
ECOMETRY CORPORATION
SITUATION ANALYSIS
[ ] Company has relied on the HP/MPE platform. NT and Unix
offerings have been released but remain unproven
[ ] Software development language is considered outdated and
difficult to work with
[ ] Customer satisfaction is declining
[ ] United Kingdom/Global product is outdated
- 8 active customers; 13 inactive customers
- Providing any support to active customers (no new
product sales)
- Current release = Version 3.1
[ ] Retail Management System functionality is needed to round-out
Ecometry's product offering
ECOMETRY CORPORATION
SITUATION ANALYSIS
[ ] Blue-chip customer base
- Over 220 active U.S. customers
- Sample of current customers:
Nordstrom KBKids.com Egghead
Urban Outfitters Hickory Farms Lego
[ ] Ecometry is continuing to win new business
- 14 installations in 2nd quarter
Sample of new customers:
Coach Ross Simon's Flaghouse
Vitacost Cosmetique Home Trends
[ ] Proven management team
ECOMETRY CORPORATION
CUSTOMER CALL FEEDBACK
Customers expressed a need for improved customer support and technical
functionality, but believe Ecometry's business logic is sound.
CUSTOMER PLATFORM SIZE COMMENTS
-------- -------- --------- -----------------------------------------------------------------------------------
A MPE 210 Users - Serious problems with customer support and technology
- No front-end edit validation
- Spaghetti code requires significant regression testing which is not completed
- When the software works correctly, it does what is advertised
- Technology is a big weakness, but call center reps like ease of use
- Tries not to install any upgrades that are not absolutely necessary
B MPE 250 Users - Generally pleased with the Company and the software
- No serious problems with customer support
- One outstanding support issue, which is currently being worked on
- One downfall is the non-windows interface
- Functional shortcoming is the inability to do point-to-point marketing
C MPE 20 Users - Mixed reviews about Ecometry
- Software works well, most of the time
- Ecometry is not very responsive when a problem occurs
- Ecometry is not willing to work to find a solution acceptable to all involved
parties
D MPE Site license - Needs improvement in customer support
- Should become more forward-looking with their technology
- Software is written in an old language
- Cannot easily get to the data; have commit/rollback problems with database
- Would like to use their own modules and integrate them with Ecometry
- Considering going to a homegrown solution
E NT 20 Users - Generally pleased with the Company and the software
- Liked the "one-stop" solution Ecometry offered
- Ecometry needs to work on its marketing effort
Note: Attempted to contact 4 other customers, but phone calls were
not returned
ECOMETRY CORPORATION
RESEARCH & DEVELOPMENT
ECOMETRY'S SPENDING ON RESEARCH & DEVELOPMENT HAS FALLEN BEHIND THE COMPETITION
[GRAPH OMITTED]
Graphic depicts amount of money Ecometry has spent on research and
development as compared to its peer group and plots research and development
spending as a percentage of each company's revenue.
ECOMETRY CORPORATION
MARKET ENVIRONMENT
+ -
---------------- ------------
[ ] Substanial market opportunity [ ] Economic slowdown has caused companies to conserve
cash and delay new, discretionary investments
- Retail companies spend approximately
$20 billion per year on software solutions
[ ] Start-ups are struggling to raise capital and
- 6,000 brick and mortar retailers therefore do not have the funds to invest in new
8,000 manufacturers and brands systems or technology
4,000 direct marketers and catologers
[ ] Projected shift from home-grown solutions to [ ] Retail companies are being very cautious given
packaged applications indications that consumer spending is slowing
ECOMETRY CORPORATION
COMPETITIVE LANDSCAPE
[ ] Convergence of catalog, direct sales, traditional retail
stores, and Internet market into a single multi-channel
marketplace
[ ] Increased number of competitors in the new marketplace
- Companies traditionally focused on e-business and
traditional retail stores are now entering
multi-channel market
- Larger ERP companies are looking downstream to smaller
companies for new selling opportunities
[ ] Increased competitiveness is forcing companies to discount
to win business leading to reduced margins
[ ] "One-stop shopping" is becoming more pervasive as clients
demand full solutions from service providers
VALUATION ANALYSIS
LIQUIDATION VALUE
LIQUIDATION VALUE
SUMMARY
[ ] Hypothetical analysis which represents "floor" valuation for
the Company
[ ] Applied "recovery" percentages to balance sheet assets and
liabilities
- Also considered off-balance sheet assets and liabilities
and necessary short-term operating costs
[ ] Significant Variables:
- Litigation contingency
- Accounts receivable collectibility
- Lease commitments
LIQUIDATION VALUE
ADJUSTED BOOK VALUE ANALYSIS
AS OF ASSUMED ADJUSTED BOOK
JUNE 30, 2001 VALUE % VALUE
------------- -------- -------------
Current Assets:
Cash and Cash Equivalents $ 37,781 100% $ 37,781
Accounts Receivable 3,445 50% 1,723
Income Tax Receivable 1,742 100% 1,742
Inventory 189 50% 95
Deferred Income Taxes 595 0% --
Prepaid Expenses and Other Current Assets 779 10% 78
-------- --------
Total Current Assets 44,532 41,418
Property and Equipment (net) 2,782 50% 1,391
Other Assets 148 0% --
-------- --------
TOTAL ASSETS $ 47,462 $ 42,809
Current Liabilities:
Accounts Payable and Accrued Expenses 4,065 100% 4,065
Deferred Revenue 1,452 100% 1,452
Current Portion of Capital Lease Obligations 33 100% 33
-------- --------
Total Current Liabilities 5,551 5,551
Long-term Portion of Capital Lease Obligations 98 100% 98
Deferred Income Taxes 173 100% 173
-------- --------
TOTAL LIABILITIES $ 5,821 $ 5,821
EXCESS OF ASSETS OVER LIABILITIES $ 41,641 $ 36,988
Other/Contingencies:
Operating Costs for 60 days (3,393)
Equipment Lease Buyouts (231)
NPV of Asset Marketing Receivable 721
Legal Fees (300)
Facility Lease Buyouts (1,080)
Litigation Contingency --
--------
ESTIMATED PROCEEDS TO COMMON SHAREHOLDERS $ 41,641 $ 32,705
======== ========
-------------------------------------------------------------------------------------------------
NUMBER OF COMMON SHARES OUTSTANDING 12,446 12,446
PRICE PER SHARE $ 3.35 $ 2.63
-------------------------------------------------------------------------------------------------
LIQUIDATION VALUE
CONCLUSIONS
[ ] Our estimated liquidation value is significantly higher than
the current public market value of Ecometry
[ ] This approach does not assign "going concern" value to
Ecometry. Approach ignores:
- Customer base
- Product and technology
- Brand and reputation
[ ] However, ongoing commitment to installed base of customers is
difficult to determine
- If Ecometry is unable to remove itself from its
current contracts or assign contracts to a third
party, could result in a further financial drain on
the Company
VALUATION ANALYSIS
PRECEDENT M&A TRANSACTIONS
PRECEDENT M&A TRANSACTIONS
SUMMARY
[ ] Analyzed recent M&A transactions in the software space
- Total Enterprise Value (TEV)/Revenues
- Purchase Price of Equity/Tangible Book Value
[ ] Examined recent going-private transactions across all
industries (with transaction values less than $200 million)
- TEV/Revenues
- Purchase Price of Equity/Tangible Book Value
[ ] Analyzed specific transactions:
- Roy F. Weston Going-Private
- Kana/Broadbase Software Merger
- Divine/eshare Merger (announced)
- CIBER/Aris Merger (announced)
PRECEDENT M&A TRANSACTIONS
RECENT SOFTWARE TRANSACTIONS
Total Equity
Enter- Value/
Equity prise TEV/ TEV/ Net
Announced Target Name Target Description Acquirer Name Value Value Sales EBITDA Income
- --------- ----------- ------------------ ------------- ------- ------- ----- ------ ------
06/22/01 Sunquest Information Develops integrated software Misys PLC
Systems $ 404.2 $ 399.9 3.2x 16.3x 30.9
06/18/01 Avert Inc Develops software Automatic Data
Processing 90.1 88.9 5.1 19.8 33.4
05/16/01 Integrated Measurement Develops engineering test Credence Systems
Systems software Corp 191.3 182.0 2.3 8.6 18.0
04/09/01 Broadbase Software Develops e-business software Kana
Communications 176.0 46.3 0.8 N/M N/M
01/17/01 WebTrends Corporation Provides Internet Solutions NetIQ Corp 1,031.2 1,022.9 21.2 129.5 149.5
12/21/00 Great Plains Software Business management software Microsoft Corp 939.9 911.0 4.1 36.3 N/M
11/27/00 Objective Systems Develops management software Agilent
Integrators Technologies 733.5 707.2 9.2 75.2 170.6
11/02/00 SAGA Systems Inc Develops applications Software AG
software 348.0 295.1 1.5 12.8 35.2
10/26/00 Corsair Communications Inc Telecom software systems Lightbridge 170.9 161.7 2.4 9.2 11.7
10/24/00 Intrepa LLC Develops software Manhattan
Associates 30.0 31.3 4.4 N/M N/M
07/27/00 AXENT Technologies Inc Develops software Symantec Corp 988.1 933.1 7.2 84.1 395.2
06/12/00 Comptek Research Programming software & Northrop Grumman
services Corp 180.5 224.1 1.7 14.6 40.1
06/08/00 CustomerAnalytics Develops software Exchange
Applications 108.9 106.9 6.3 N/M N/M
06/05/00 Primark Corp Develops databases software Thomson Corp 1,080.9 1,132.9 2.3 10.9 79.5
04/05/00 Harbinger Corp Electronic commerce software Peregrine Systems 1,907.4 1,856.5 12.4 65.2 94.9
04/03/00 Knowledge Stream Partners Develops e-crm software Exchange
Applications 52.0 52.5 12.5 N/M N/M
03/06/00 Loronix Information Develops software Comverse
Systems Technology 268.9 264.6 9.0 111.5 336.1
02/22/00 Sterling Commerce Develops e-commerce software SBC Communications 3,840.9 3,557.8 23.5 N/A 136.2
02/14/00 Sterling Software Develop systems software Computer
Associates 68.9 264.6 9.0 111.5 336.1
02/07/00 Inprise Corp Develop computer software Corel Corp 1,255.5 918.2 5.3 N/M 20.7
01/17/00 Caere corp Develops software ScanSoft 147.5 123.7 1.9 9.3 16.2
01/12/00 Best Software Develop HR software Sage Group PLC 446.3 421.6 4.9 22.5 53.8
12/01/99 Ardent Software Develops applications Informix Corp
software 909.2 883.7 5.7 32.3 154.1
10/18/99 Clarify Develops retail office Nortel Networks
software Corp 1,863.2 1,839.8 9.2 63.4 120.2
06/08/99 Island Pacific Systems Retail computer software SVI Holdings 35.0 33.4 2.2 N/M N/M
05/17/99 ULTRADATA Corp Develops financial software CFI ProServices 64.0 64.9 2.1 32.6 213.4
-------------------------------
Mean 6.3x 41.4x 117.1x
Median 4.6 31.7 87.2
Max 23.5 129.5 395.2
Min 0.8 8.6 11.7
Equity Equity
Value/ Value/
Net Tangible
Announced Target Name Target Description Acquirer Name Income Book Premium Analysis
- --------- ----------- ------------------ ------------- -------- -------- -------------------------
1 day 1 week 1 month
------- ------ -------
06/22/01 Sunquest Information Develops integrated software Misys PLC
Systems 30.9 4.0x 63.3% 65.5% 71.4%
06/18/01 Avert Inc Develops software Automatic Data
Processing 33.4 8.5 25.7% 13.7% 35.0%
05/16/01 Integrated Measurement Develops engineering test Credence Systems
Systems software Corp 18.0 2.9 58.5% 49.6% 65.0%
04/09/01 Broadbase Software Develops e-business software Kana
Communications N/M 1.3 28.0% -54.7% -69.6%
01/17/01 WebTrends Corporation Provides Internet Solutions NetIQ Corp 149.5 11.3 9.5% 29.4% 43.6%
12/21/00 Great Plains Software Business management software Microsoft Corp N/M 9.8 29.7% -19.8% 6.5%
11/27/00 Objective Systems Develops management software Agilent
Integrators Technologies 170.6 14.2 31.5% 79.8% 99.3%
11/02/00 SAGA Systems Inc Develops applications Software AG
software 35.2 3.1 109.1% 130.0% 119.1%
10/26/00 Corsair Communications Inc Telecom software systems Lightbridge 11.7 2.7 34.6% 35.2% 16.8%
10/24/00 Intrepa LLC Develops software Manhattan
Associates N/M N/M N/M N/M N/M
07/27/00 AXENT Technologies Inc Develops software Symantec Corp 395.2 7.0 67.1% 41.5% 27.4%
06/12/00 Comptek Research Programming software & Northrop Grumman
services Corp 40.1 N/M 29.7% 31.6% 39.3%
06/08/00 CustomerAnalytics Develops software Exchange
Applications N/M N/M N/M N/M N/M
06/05/00 Primark Corp Develops databases software Thomson Corp 79.5 N/M 31.0% 45.8% 49.4%
04/05/00 Harbinger Corp Electronic commerce software Peregrine System 94.9 18.4 90.6% 42.3% 29.7%
04/03/00 Knowledge Stream Partners Develops e-crm software Exchange
Applications N/M N/M N/M N/M N/M
03/06/00 Loronix Information Develops software Comverse
Systems Technology 336.1 25.2 40.0% 48.2% 62.6%
02/22/00 Sterling Commerce Develops e-commerce software SBC Communicatio 136.2 8.5 40.2% 36.7% 70.2%
02/14/00 Sterling Software Develop systems software Computer
Associates 232.5 7.7 14.1% 35.8% 31.3%
02/07/00 Inprise Corp Develop computer software Corel Corp 20.7 5.8 15.5% 22.0% 6.2%
01/17/00 Caere corp Develops software ScanSoft 16.2 2.4 58.0% 59.3% 69.4%
01/12/00 Best Software Develop HR software Sage Group PLC 53.8 13.3 16.9% 30.2% 35.9%
12/01/99 Ardent Software Develops applications Informix Corp
software 154.1 20.1 46.7% 51.4% 80.7%
10/18/99 Clarify Develops retail office Nortel Networks
software Corp 120.2 18.9 58.0% 48.8% 37.2%
06/08/99 Island Pacific Systems Retail computer software SVI Holdings N/M N/M N/M N/M N/M
05/17/99 ULTRADATA Corp Develops financial software CFI ProServices 213.4 9.0 42.9% 50.0% 66.7%
---------------------------------------------
117.1 9.7 42.7% 39.6% 45.1%
87.2 8.5 37.3% 41.9% 41.5%
395.2 25.2 109.1% 130.0% 119.1%
11.7 1.3 9.5% -54.7% -69.6%
---------------------------------------------
PRECEDENT M&A TRANSACTIONS
RECENT SOFTWARE TRANSACTIONS (CONTINUED)
Stock
Price of
Transaction Buyer at
Announced Target Name Acquiror Name Structure Ticker Announcement
--------- ----------- ------------- ------------ ------ ------------
06/22/01 Sunquest Information Systems Misys PLC All Cash N/M N/M
06/18/01 Avert Inc Automatic Data Processing All Cash N/M N/M
05/16/01 Integrated Measurement Credence Systems Corp All Stock CMOS $ 24.76
04/09/01 Broadbase Software Kana Communications All Stock KANA $ 0.81
01/17/01 WebTrends Corporation NetIQ Corp All Stock NTIQ $ 61.25
12/21/00 Great Plains Software Microsoft Corp All Stock MSFT $ 43.44
11/27/00 Objective Systems Integrators Agilent Technologies All Cash N/M N/M
11/02/00 SAGA Systems Inc Software AG All Cash N/M N/M
10/26/00 Corsair Communications Inc Lightbridge All Stock LTBG $ 13.13
10/24/00 Intrepa LLC Manhattan Associates Cash/Stock MANH $ 62.75
07/27/00 AXENT Technologies Inc Symantec Corp All Stock SYMC $ 50.25
06/12/00 Comptek Research Northrop Grumman Corp All Stock NOC $ 75.38
06/08/00 Customer Analytics Exchange Applications All Stock EXAP $ 23.13
06/05/00 Primark Corp Thomson Corp All Cash N/M N/M
04/05/00 Harbinger Corp Peregrine Systems All Stock PRGN $ 58.00
04/03/00 Knowledge Stream Partners Exchange Applications All Stock EXAP $ 43.31
03/06/00 Loronix Information Systems Comverse Technology All Stock CMVT $235.63
02/22/00 Sterling Commerce SBC Communications All Cash N/M N/M
02/14/00 Sterling Software Computer Associates All Stock CA $ 69.31
02/07/00 Inprise Corp Corel Corp All Stock CORL $ 19.31
01/17/00 Caere Corp ScanSoft Cash/Stock SSFT $ 6.56
01/12/00 Best Software Sage Group PLC All Cash N/M N/M
12/01/99 Ardent Software Informix Corp All Cash N/M N/M
10/18/99 Clarify Nortel Networks Corp All Stock NT $ 52.38
06/08/99 Island Pacific Systems SVI Holdings All Cash N/M N/M
05/17/99 ULTRADATA Corp CFI ProServices All Cash N/M N/M
Stock Price
Of Buyer Percent
Announced Target Name Acquiror Name 7/23/01 Change
--------- ----------- ------------- ----------- -------
06/22/01 Sunquest Information Systems Misys PLC N/M N/M
06/18/01 Avert Inc Automatic Data Processing N/M N/M
05/16/01 Integrated Measurement Credence Systems Corp $21.58 -12.8%
04/09/01 Broadbase Software Kana Communications $ 1.90 134.6%
01/17/01 WebTrends Corporation NetIQ Corp $25.65 -58.1%
12/21/00 Great Plains Software Microsoft Corp $67.32 55.0%
11/27/00 Objective Systems Integrators Agilent Technologies N/M N/M
11/02/00 SAGA Systems Inc Software AG N/M N/M
10/26/00 Corsair Communications Inc Lightbridge $13.70 4.4%
10/24/00 Intrepa LLC Manhattan Associates $32.52 -48.2%
07/27/00 AXENT Technologies Inc Symantec Corp $48.67 -3.1%
06/12/00 Comptek Research Northrop Grumman Corp $77.89 3.3%
06/08/00 Customer Analytics Exchange Applications $ 0.38 -98.4%
06/05/00 Primark Corp Thomson Corp N/M N/M
04/05/00 Harbinger Corp Peregrine Systems $21.96 -62.1%
04/03/00 Knowledge Stream Partners Exchange Applications $ 0.56 -98.7%
03/06/00 Loronix Information Systems Comverse Technology $26.94 -88.6%
02/22/00 Sterling Commerce SBC Communications N/M N/M
02/14/00 Sterling Software Computer Associates $33.00 -52.4%
02/07/00 Inprise Corp Corel Corp $ 3.45 -82.1%
01/17/00 Caere Corp ScanSoft $ 1.57 -76.1%
01/12/00 Best Software Sage Group PLC N/M N/M
12/01/99 Ardent Software Informix Corp N/M N/M
10/18/99 Clarify Nortel Networks Corp $ 7.24 -86.2%
06/08/99 Island Pacific Systems SVI Holdings N/M N/M
05/17/99 ULTRADATA Corp CFI ProServices N/M N/M
-------------------------
Mean -35.6%
Median -55.3%
Max 134.6%
Min -98.7%
-------------------------
PRECEDENT M&A TRANSACTIONS
RECENT GOING-PRIVATE TRANSACTIONS
Equity
Announced Target Name Target Business Description Acquiror Name Value
- --------- ----------- --------------------------- ------------- -----
12/11/2000 PBOC Holdings Inc Bank holding co FBOP Corp, Oak Park, Illinois $3,089.9
07/22/1999 White Cap Industries Inc Wholesale specialty tools Investor Group 238.9
11/10/1999 Avado Brands Inc Own and operate restaurants Investor Group 543.0
02/15/2001 VICORP Restaurants Inc Own,op franchised restaurants Investor Group 178.0
07/12/1999 TSI Inc Mnfr indl measuring instr JJF Acquisition Inc 167.4
05/30/2001 Bacou USA Inc Manufacture ophthalmic goods Bacou SA 621.9
02/28/2000 Bristol Hotels & Resorts Inc Own and operate hotels Bass PLC 144.0
11/22/1999 Garden Ridge Corp Own,op homefurnishing stores GR Acquisition Corp 181.5
05/25/2000 Protocol Systems Inc Mnfr patient monitors Welch Allyn Inc 125.0
05/10/2000 WMF Group LTD Mortgage bank Prudential Mortgage Capital 170.5
05/17/2001 Armtran Inc Own,op passenger airline co J. George Mikelsons 761.1
04/24/2000 Cherry Corp Mnfr electronic equipment Investor Group 348.4
10/25/2000 Meridian Insurance Group Inc Insurance holding company State Auto Mutual Insurance Co. 263.2
06/06/2000 PSC Inc Mnfr, whl bar code products Welch Allyn Inc 244.6
12/26/2000 Netcreations Inc Advertising agency Seat Pagine Gialle SPA 79.2
09/19/2000 US Franchise Systems Inc Pvd franchise services Pritzker Group 97.8
01/31/2000 ThermoQuest Corp Mnfr mass spectrometers Thermo Instrument Systems Inc 902.2
12/19/2000 Loislaw.com Inc Pvd legal info via internet Wolters Kluwer NV 84.4
11/16/2000 II Fornaio America Corp Own, operate restaurant Bruckman Rosser Sherill & Co 72.4
09/09/1999 Novacare Employee Services Inc PVD help supply services Investor Group 70.0
02/25/2000 Spanlink Communications Inc Mfr interactive comp telecomm Spanlink Acquisition Group 69.3
10/06/1999 Conso International Corp Mnfr homefurnishings, trimming CIC Acquisition Co 106.4
03/15/1999 Haskel International Inc Mnfr pumps, plungers, boosters Investor Group 52.8
05/26/2000 Acme Electric Corp Mnfr electronic transformers Key Components LLC (Kelso & Co) 55.5
10/20/1999 Thermoretec Corp Mnfr processed metals Thermo Electron Corp 165.1
03/13/2001 Roy F Weston Inc Environmental consulting Investor Group 52.3
04/26/2000 Acme Electric Corp Mnfr electronic transformers Investor Group 50.2
10/04/2000 Home-Stake Oil & Gas Co Oil and Gas exploration, prodn Cortez Oil & Gas 49.8
05/17/2001 Data Research Associates Inc Dvlp integrated computer sys SIRSI Corp 40.9
10/25/2000 Uno Restaurant Corp Own,op franchise restaurants Investor Group 166.4
05/11/2000 Old Guard Group Inc Insurance company Ohio Farmers Insurance Co 38.8
02/21/2000 Northstar Computer Forms Inc Publish manifold bus forms Ennis Business Forms Inc 40.3
01/06/2000 Saratoga Beverage Group Inc Produce, whl bottled water North Castle Partners 60.3
08/28/2000 800-JR Cigar Inc Wholesale tobacco Investor Group 151.5
05/26/2000 KLLM Transport Services Inc Trucking Company Height Road Acquisition Corp 77.5
01/31/2000 Thermo Sentron Inc (Thermedics) Mnfr packaging machinery Thermedics (Thermo Electron) 153.5
02/19/2000 Diehl Graphsoft Inc Develop commercial programs Nemetschek AG 28.3
08/07/2000 US Vision Inc Operate optical goods stores Norcross Roberts Group 51.8
01/31/2000 ONIX Systems Inc Mnfr process control device Thermo Instrument Systems Inc 128.8
05/10/2000 GZA GeoEnvironmental Tech Pvd remediation systems svcs Investor Group 18.1
01/26/2001 Perry County Financial Corp Savings,loan holding co Jefferson County Bancshares 58.5
01/31/2000 Sunrise Intl Leasing Inc Provide computer leasing svcs King Management Corp 112.1
10/17/2000 Trex Medical Corp (ThermoTrex) Mnfr mammography, x-ray equip Thermo Electron Corp 72.9
01/31/2000 Metrika Systems Corp Mnfr measurement technologies Thermo Instrument Systems Inc 81.2
11/10/2000 Holt's Cigar Holding Inc Own and operate tobacco stores HCH Acquisition Corp 28.1
07/29/1999 Concord Fabrics Inc Mnfr, whl woven converters, knit Concord Fabrics Inc 28.7
02/01/2000 Arizona Instrument Corp Mnfr moisture analysis instr Investor Group 6.9
12/27/2000 Venturian Corp Wholesale trucks, related parts Investor Group 11.8
11/06/2000 Elliott Brothers Inc Mnfr, wholesale sporting goods Investor Group 56.9
12/11/2000 Casco International Inc Pvd incentive programs Investor Group 8.1
Equity
Total Tangible Value/
Enterprise TTM TTM Book TEV/ TEV/ Tang. Control
Announced Target Name Value Revenues EBITDA Value Revenue EBITDA Book Premium(1)
- --------- ----------- ---------- -------- ------ -------- ------- ------ ------ ----------
12/11/2000 PBOC Holdings Inc $ 199.2 $ 244.6 $ 13.9 $ 193.3 0.8x 14.3x 16.0x 8.1%
07/22/1999 White Cap Industries Inc 185.3 304.2 26.3 25.2 0.6 7.0 9.5 45.1%
11/10/1999 Avado Brands Inc 239.9 662.8 79.9 (14.0) 0.4 3.0 N/M 38.1%
02/15/2001 VICORP Restaurants Inc 178.5 372.0 41.4 126.7 0.5 4.3 1.4 34.6%
07/12/1999 TSI Inc 177.9 85.2 12.5 43.9 2.1 14.2 3.8 45.2%
05/30/2001 Bacou USA Inc 515.5 322.3 78.7 27.8 1.6 6.6 22.4 17.3%
02/28/2000 Bristol Hotels & Resorts Inc 169.0 294.9 4.9 31.9 0.6 34.6 4.5 94.9%
11/22/1999 Garden Ridge Corp 217.4 364.7 24.8 128.3 0.6 8.8 1.4 65.8%
05/25/2000 Protocol Systems Inc 140.4 65.5 2.2 50.2 2.1 64.0 2.5 25.5%
05/10/2000 WMF Group LTD 101.6 70.4 7.2 38.5 1.4 14.1 4.4 42.4%
05/17/2001 Armtran Inc 321.9 1317.7 126.8 96.8 0.2 2.5 7.9 114.0%
04/24/2000 Cherry Corp 275.7 482.7 53.8 173.1 0.6 5.1 2.0 109.1%
10/25/2000 Meridian Insurance Group Inc 258.8 243.1 51.4 118.2 1.1 5.0 2.2 65.5%
06/06/2000 PSC Inc 117.1 233.5 35.2 (49.5) 0.5 3.3 N/M 111.3%
12/26/2000 Netcreations Inc 109.2 55.3 13.1 50.4 2.0 8.3 1.6 25.1%
09/19/2000 US Franchise Systems Inc 100.2 22.9 2.4 29.7 4.4 41.8 3.3 14.3%
01/31/2000 ThermoQuest Corp 873.5 443.8 88.7 192.7 2.0 9.9 4.7 47.0%
12/19/2000 Loislaw.com Inc 92.0 10.3 (15.3) 28.0 8.9 N/M 3.0 322.3%
11/16/2000 II Fornaio America Corp 76.8 117.2 10.8 45.8 0.7 7.1 1.6 23.9%
09/09/1999 Novacare Employee Services Inc 72.7 1544.6 22.3 (2.2) 0.0 3.3 N/M -3.6%
02/25/2000 Spanlink Communications Inc 67.8 11.3 0.339 2.5 6.0 199.9 28.0 6.3%
10/06/1999 Conso International Corp 66.1 117.6 17.0 28.7 0.6 3.9 3.7 75.6%
03/15/1999 Haskel International Inc 64.9 53.8 7.8 32.2 1.2 8.3 1.6 49.6%
05/26/2000 Acme Electric Corp 46.5 77.2 8.1 23.3 0.6 5.8 2.4 22.0%
10/20/1999 Thermoretec Corp 124.5 146.8 4.8 30.6 0.8 25.8 5.4 33.3%
03/13/2001 Roy F Weston Inc 66.0 267.0 8.8 61.5 0.2 7.5 0.9 14.7%
04/26/2000 Acme Electric Corp 41.3 77.2 8.1 23.3 0.5 5.1 2.2 33.3%
10/04/2000 Home-Stake Oil & Gas Co 50.3 16.9 10.3 22.1 3.0 4.9 2.3 2.3%
05/17/2001 Data Research Associates Inc 50.0 27.7 4.8 26.1 1.8 10.4 1.6 86.1%
10/25/2000 Uno Restaurant Corp 111.8 231.2 30.7 81.7 0.5 3.6 2.0 60.8%
05/11/2000 Old Guard Group Inc 47.1 112.7 24.6 73.3 0.4 1.9 0.5 25.5%
02/21/2000 Northstar Computer Forms Inc 41.8 44.4 7.3 19.1 0.9 5.8 2.1 51.4%
01/06/2000 Saratoga Beverage Group Inc 39.7 40.0 3.5 (8.3) 1.0 11.2 N/M 23.9%
08/28/2000 800-JR Cigar Inc 155.6 317.0 21.7 79.3 0.5 7.2 1.9 18.9%
05/26/2000 KLLM Transport Services Inc 33.0 230.0 19.6 50.9 0.1 1.7 1.5 -5.3%
01/31/2000 Thermo Sentron Inc (Thermedics) 148.8 110.9 14.1 20.7 1.3 10.6 7.4 6.9%
02/19/2000 Diehl Graphsoft Inc 29.5 8.8 2.6 9.5 3.3 11.2 3.0 52.0%
08/07/2000 US Vision Inc 31.2 147.4 5.8 40.4 0.2 5.4 1.3 33.3%
01/31/2000 ONIX Systems Inc 129.5 141.7 9.9 86.6 0.9 13.1 1.5 16.1%
05/10/2000 GZA GeoEnvironmental Tech 24.1 44.2 3.7 25.6 0.5 6.5 0.7 0.4%
01/26/2001 Perry County Financial Corp 13.0 6.3 1.6 12.4 2.1 8.1 4.7 34.3%
01/31/2000 Sunrise Intl Leasing Inc 37.6 64.8 48.4 31.5 0.6 0.8 3.6 0.0%
10/17/2000 Trex Medical Corp (ThermoTrex) 70.3 251.6 (17.7) 96.5 0.3 N/M 0.8 -37.5%
01/31/2000 Metrika Systems Corp 66.8 72.8 9.0 35.3 0.9 7.4 2.3 0.0%
11/10/2000 Holt's Cigar Holding Inc 34.8 34.3 4.9 29.0 1.0 7.1 1.0 44.3%
07/29/1999 Concord Fabrics Inc 18.0 90.6 5.1 47.9 0.2 3.6 0.6 35.5%
02/01/2000 Arizona Instrument Corp 9.9 13.6 1.4 6.1 0.7 7.0 1.1 40.4%
12/27/2000 Venturian Corp 7.1 25.1 0.2 10.9 0.3 35.3 1.1 196.3%
11/06/2000 Elliott Brothers Inc 11.9 163.6 7.0 23.5 0.1 1.7 2.4 2.3%
12/11/2000 Casco International Inc 3.4 24.2 1.8 3.8 0.1 1.9 2.1 71.0%
Mean 1.2x 14.2x 4.0x 44.8%
Median 0.6 7.1 2.2 33.8%
Max 8.9 199.9 28.0 322.3%
Min 0.0 0.8 0.5 -37.5%
Criteria:
a) Transaction Value <$200 m
b) January 1, 1999 - June 29, 2001
(1) Control premiums are calculated from the target stock price one week
before the announcement
PRECEDENT M&A TRANSACTIONS
SELECTED GOING-PRIVATE TRANSACTIONS
Equity Book Tangible Equity Value/ Equity Value/
Target Name Target Description Value Value Book Value Book Value Tang. Book
- ----------- ------------------ ------ ----- ---------- ------------ ------------
Roy F Weston Inc Environmental consulting $52.3 $63.2 $61.5 0.8x 0.9x
Novacare Employee Services Inc Pvd help supply services 70.0 75.8 (2.2) 0.9 N/M
Casco International Inc Pvd incentive programs 8.1 9.0 3.8 0.9 2.1
Old Guard Group Inc Insurance company 38.8 73.9 73.3 0.5 0.5
ONIX Systems Inc Mnfr process control device 128.8 147.9 86.6 0.9 1.5
GZA GeoEnvironmental Tech PVD remediation systems svcs 18.1 29.2 25.6 0.6 0.7
Trex Medical Corp (Thermo Trex) Mnfr mammography, x-ray equip 72.9 147.7 96.5 0.5 0.8
Concord Fabrics Inc Mnfr, whl woven converters, knit 28.7 47.9 47.9 0.6 0.6
Arizona Instrument Corp Mnfr moisture analysis instr 6.9 8.0 6.1 0.9 1.1
Criteria:
a) Transaction Value <$200 m
b) Equity Value/Book Value <1.0x
PRECEDENT M&A TRANSACTIONS
ROY F. WESTON GOING-PRIVATE TRANSACTION
TARGET'S DESCRIPTION: Weston is an infrastructure redevelopment services
firm which delivers integrated environmental
engineering solutions to industrial and government
clients, providing services in site remediation,
redevelopment, infrastructure operations and
knowledge management.
ACQUIROR: American Capital Strategies (ACAS)
DATES: Announced - March 13, 2001 Completed - June 4, 2001
TERMS: $5.02 per share for Class A shares $5.38 for Common shares
DEAL VALUE
Class A Shares Outstanding 8.19
Class A Share Price 5.02
-------
Implied Class A Total $ 41.10
Common Shares Outstanding 2.09
Common Share Price 5.38
-------
Implied Common Share Total $ 11.24
-------
Total Implied Purchase Price $ 52.34
Net Debt $ 13.66
-------
Total Enterprise Value $ 66.00
<Caption>
ROY WESTON
TTM Revenues $266.98
Book Value $ 63.20
Tangible Book Value $ 61.52
<Caption>
ACAS STOCK PERFORMANCE
Stock Price at Announcement $25.56
Stock Price (07/23/01) $26.84
Percent Change 5.0%
<Caption>
CONTROL PREMIUMS (1)
1 Day Before Announcement 7.1%
1 Week Before Announcement 14.7%
1 Month Before Announcement 13.1%
<Caption>
TRANSACTION MULTIPLES
TEV/TTM Revenues 0.25x
Equity Value/Book Value 0.83
Equity Value/Tangible Book Value 0.85
</Table>
(1) Control premiums calculated using Class A share price
PRECEDENT M&A TRANSACTIONS
ROY F. WESTON GOING-PRIVATE TRANSACTION
RAYMOND JAMES ROLE: Weston retained Raymond James in 2000 to advise the
company and its Special Committee of the Board of
Directors on strategic alternatives for the company.
Raymond James examined an array of alternatives
including the sale of the company, merger with a
third party, an aggressive acquisition program and
re-capitalization of the company to eliminate its
existing two tier stock structure.
The Special Committee, with concurrence of the full
Board, concluded that either the sale of the company
or merger with a third party were the only
alternatives that would address the objectives of the
company's stake holders.
Number of Contacts Made = 20 financial and/or
strategic buyers
Received 6 written
indications of interest
Raymond James served as financial advisor to Weston
and issued a fairness opinion on the transaction.
PRECEDENT M&A TRANSACTIONS
KANA/BROADBASE SOFTWARE
TARGET'S DESCRIPTION: Broadbase Software is a provider of customer-focused
analytic, marketing automation and e-service software
applications that analyze customer data from multiple
touch points, and use that information to execute
marketing campaigns, online merchandising and
content.
ACQUIROR: Kana (KANA)
DATES: Announced - April 9, 2001 Completed - June 29, 2001
TERMS: 1.05 shares of Kana per Broadbase share
DEAL VALUE
Number of Shares 82.19
Exchange Ratio 1.05
-------
Kana Equivalent 86.29
Kana Stock Price $ 2.04
-------
Implied Purchase Price $176.04
Cash (03/31/01) $130.67
Debt (03/31/01) $ 0.94
-------
Total Enterprise Value $ 46.31
<Caption>
BROADBASE
TTM Revenues $ 54.99
Book Value $169.15
Tangible Book Value $136.38
<Caption>
ACAS STOCK PERFORMANCE
Stock Price at Announcement $ 0.81
Stock Price (07/23/01) $ 1.88
Percent Change 132%
<Caption>
CONTROL PREMIUMS
1 Day Before Announcement 28.0%
1 Week Before Announcement -54.7%
1 Month Before Announcement -69.6%
<Caption>
TRANSACTION MULTIPLES
TEV/TTM Revenues 0.84 x
Equity Value/Book Value 1.04
Equity Value/Tangible Book Value 1.29
PRECEDENT M&A TRANSACTIONS
DIVINE/ESHARE
TARGET'S DESCRIPTION: eshare communications is a provider of integrated
Customer Interaction Management (CIM) solutions that
power the customer relationship strategies of
businesses conducting traditional and Internet
commerce. eshare provides solutions for both
Web-based and traditional call center technologies.
ACQUIROR: Divine (DVIN)
DATES: Announced - July 9, 2001 Completed - Pending (3Q 2001)
TERMS: 1.94 shares of Divine per eshare share
DEAL VALUE DIVINE STOCK PERFORMANCE
Number of Shares 22.73 Stock Price at Announcement $ 1.36
Exchange Ratio 1.94 Stock Price (07/23/01) $ 1.22
------ Percent Change -10.3%
Divine Equivalent (1) 44.10
Average Divine Stock Price $ 1.61
------
Implied Purchase Price $71.00
Cash (03/31/01) $ 9.88 CONTROL PREMIUMS
Debt (03/31/01) $ 0.00
------ 1 Day Before Announcement 144.0%
Total Enterprise Value $61.12 1 Week Before Announcement 142.1%
1 Month Before Announcement 147.9%
ESHARE TRANSACTION MULTIPLES
TTM Revenues $82.60 TEV/TTM Revenues 0.74x
Book Value $42.15 Equity Value/Book Value 1.68
Tangible Book Value $38.23 Equity Value/Tangible Book Value 1.86
(1) divine can elect to pay cash, at an equivalent price ($3.12), for all shares
issued over 28.5 million
PRECEDENT M&A TRANSACTIONS
CIBER/ARIS
TARGET'S DESCRIPTION: Aris Corporation is an e-business and information technology consulting company
that helps companies maximize existing and new information technologies through a full
range of e-business solutions, from business strategy and back-end enterprise
applications to front-end Web development.
ACQUIROR: CIBER (CBR)
DATES: Announced - June 14, 2001 Completed - Pending (3Q2001)
TERMS: 0.22 shares of CIBER plus $1.30 in cash per eshare share
</Table>
<Table>
<Caption>
DEAL VALUE
Number of Shares 11.32
Exchange Ratio 0.22
------
CIBER Equivalent 2.49
CIBER Stock Price $ 6.71
Cash ($1.30 per share) $14.71
------
Implied Purchase Price $31.42
Cash (03/31/01) $10.84
Debt (03/31/01) $ 0.00
------
Total Enterprise Value $20.58
ARIS
TTM Revenues $60.80
Book Value $44.78
Tangible Book Value $34.75
<Table>
<Caption>
CIBER STOCK PERFORMANCE
Stock Price at Announcement $ 6.63
Stock Price (07/23/01) $ 7.48
Percent Change 12.8%
CONTROL PREMIUMS
1 Day Before Announcement 47.7%
1 Week Before Announcement 38.8%
1 Month Before Announcement 46.1%
TRANSACTION MULTIPLES
TEV/TTM Revenues 0.34 x
Equity Value/Book Value 0.70
Equity Value/Tangible Book Value 0.90
</Table>
PRECEDENT MK&A TRANSACTIONS
CONCLUSIONS
- In general, recent software transactions occurred at relatively high
multiples of revenues and book value. Multiples impacted by:
- Timing of transaction - level of overall markets
- Size and profitability of target
- Consideration used in transaction
- There have been a number of going-private transactions that have been
completed at or below tangible book value
- Transactions announced/completed at less than cash have only occurred
when the companies are burning significant amounts of cash
- Announced purchase price for Broadbase was 35% of cash
- Broadbase was expected to consume between $80 million and $100
million of cash in FY2001
VALUATION ANALYSIS
DISCOUNTED CASH FLOW
DISCOUNTED CASH FLOW
CHALLENGES
- Negative trends in business and general economy
- Revenues
- Profitability
- Net new customer growth
- Lack of predictability
- New installations
- Contract size and hardware component
- Upgrade revenues
- Services revenue
- Technology issues
- NT& Unix platform
- Version 6.0
- United Kingdom & New Haven
- Global product
- Castle product and New Haven customer base
DISCOUNTED CASH FLOW
MAJOR ASSUMPTIONS
- Revenues
- New implementations grow at an annual rate of 10%
- 5% of total accounts go inactive each year
- Average contract size equal to $250,000 in 2002 and
decreases 5% per year
- Mix of proprietary software and third party software &
hardware is 60% and
- increases yearly because of new NT and Unix platforms
- Upgrade revenue in 2002 equal to $10 million and grows 5%
annually
- Global product development starts in 2002 (revenues expected
in 2004)
- Gross Margins
- 70% on license fees
- 25% on third party hardware and software
- 40% on support revenues
- 5% annual increase in services COGS
- Operating Expenses
- 5% increase in operating expenses starting in 2003
- Discount Rate
- 20-35% discount rates used to approximate level of
investment risk
- Terminal Value
- 0.7 - 1.2 x 2005 revenues
DISCOUNTED CASH FLOW
PROJECTED INCOME STATEMENTS
Historical Budget (1)
---------- ----------
Revenues: 1999 2000 2001
------------ ------------ ------------
License Fees $ 26,102,000 $ 22,070,000 $ 8,239,451
New License Fees 8,341,701 6,835,060 4,666,693
Upgrade License Fees 17,760,299 15,234,940 3,572,758
3rd Party Hardware & Software 8,598,000 8,661,000 8,948,784
New Sales 6,972,175 5,757,181 3,519,308
Upgrade Sales 1,625,825 2,903,819 5,429,476
Support 7,630,000 9,696,000 10,311,607
Services 4,268,000 5,189,000 3,448,637
International - existing 1,997,749
International - Global Product
New Haven - existing 323,310
New Haven - Castle
------------ ------------ ------------
TOTAL REVENUE $ 46,598,000 $ 45,616,000 $ 33,269,537
Costs of Goods Sold:
License Fees 7,957,000 8,595,000 1,999,797
3rd Party Hardware & Software 6,372,000 7,083,000 6,441,559
Support 5,050,000 6,098,000 5,952,326
Services 3,165,000 3,525,000 2,234,796
International (inc. operating expenses) 2,271,115
New Haven (inc. for operating expenses) 756,639
------------ ------------ ------------
Total Cost of Goods Sold 22,544,000 25,301,000 19,656,233
Gross Margin $ 24,054,000 $ 20,315,000 $ 13,613,303
Operating Expenses:
General & Administrative 8,061,000 11,559,000 8,950,164
Selling & Marketing 5,585,000 7,825,000 6,326,930
Research & Development 3,421,000 4,439,000 4,355,786
Research & Development - International
Research & Development - New Haven
------------ ------------ ------------
Total Operating Expenses 17,067,000 23,823,000 19,632,880
OPERATING INCOME $ 6,987,000 $ (3,508,000) $ (6,019,576)
Interest Income
1,584,000 2,299,000 1,850,320
------------ ------------ ------------
Pretax Income $ 8,571,000 $ (1,209,000) $ (4,169,256)
Income Taxes (3,048,000) (375,000) 1,667,702
------------ ------------ ------------
NET INCOME $ 5,523,000 $ (1,584,000) $ (2,501,554)
============ ============ ============
Projected (2)
------------------------------------------------------------
Revenues: 2002 2003 2004 2005
------------ ------------ ------------ ------------
License Fees $ 14,800,000 $ 15,801,000 $ 16,801,000 $ 17,612,170
New License Fees 4,800,000 5,301,000 5,776,000 6,035,920
Upgrade License Fees 10,000,000 10,5000,000 11,025,000 11,576,250
3rd Party Hardware & Software 8,900,950 9,234,997 9,534,297 9,994,767
New Sales 3,200,000 3,249,000 3,249,000 3,395,205
Upgrade Sales 5,700,950 5,985,997 6,285,297 6,599,562
Support 11,142,607 13,171,615 15,407,813 17,827,701
Services 3,621,068 3,802,122 3,992,228 4,191,839
International - existing 1,598,199 1,278,559 639,280 --
International - Global Product -- -- 4,573,534 7,443,971
New Haven - existing -- -- -- --
New Haven - Castle -- -- -- --
------------ ------------ ------------ ------------
TOTAL REVENUE $ 40,062,824 $ 43,288,293 $ 50,948,151 $ 57,070,448
Costs of Goods Sold:
License Fees 3,700,000 3,950,250 4,200,250 4,403,043
3rd Party Hardware & Software 6,675,712 6,926,248 7,150,723 7,496,075
Support 6,685,564 7,902,969 9,244,688 10,696,620
Services 2,346,536 2,463,863 2,587,056 2,716,409
International (inc. operating expenses) 1,758,019 1,406,415 5,048,065 6,327,376
New Haven (inc. for operating expenses) -- -- -- --
------------ ------------ ------------ ------------
Total Cost of Goods Sold 21,165,831 22,649,745 28,230,781 31,639,523
Gross Margin $ 18,896,992 $ 20,638,548 $ 22,717,370 $ 25,430,925
Operating Expenses:
General & Administrative 8,950,164 9,397,672 9,867,556 10,360,933
Selling & Marketing 6,326,930 6,643,276 6,975,440 7,324,212
Research & Development 4,355,786 4,573,575 4,802,254 5,042,367
Research & Development - International 1,000,000 1,000,000 1,000,000 500,000
Research & Development - New Haven -- -- -- --
------------ ------------ ------------ ------------
Total Operating Expenses 20,632,880 21,614,523 22,645,250 23,227,512
OPERATING INCOME $ (1,735,887) $ (975,975) $ 72,170 23,227,512
Interest Income
1,406,302 1,404,213 1,397,722 1,456,165
------------ ------------ ------------ ------------
Pretax Income $ (329,585) 428,238 1,469,842 3,659,578
Income Taxes 131,834 (171,295) (587,937) (1,463,831)
------------ ------------ ------------ ------------
NET INCOME $ (197,751) $ 256,943 $ 881,905 $ 2,195,747
============ ============ ============ ============
(1) Based on Ecometry's budget for 2001
(2) Based on discussions with management
DISCOUNTED CASH FLOW
CASH FLOW CALCULATION
Budget Projected
----------- --------------------------------------------------------
2001 2002 2003 2004 2005
----------- ----------- ----------- ----------- -----------
EBIT $(6,019,576) $(1,735,887) $ (975,975) $ 72,120 $ 2,203,413
Less: Taxes at 40% 2,407,831 694,355 390,390 (28,848) (881,365)
Plus: Depreciation 1,022,464 1,126,270 1,077,891 875,000 1,000,000
Less: Investment in working capital 1,196,573 (815,194) (387,056) (919,183) (734,676)
Less: Capital expenditures (500,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000)
----------- ----------- ----------- ----------- -----------
UNLEVERED FREE CASH FLOW $(1,892,709) $(1,730,457) $ (894,751) $(1,000,911) $ 587,372
=========== =========== =========== =========== ===========
DISCOUNTED CASH FLOW
DCF VALUATION ANALYSIS
Terminal Value Revenue Multiples
----------------------------------------------
0.7 0.8 0.9
------------ ------------ ------------
20%
Present Value of Unlevered Free Cash Flows $ (3,881,600) $ (3,881,600) $ (3,881,600)
Present Value of Year 5 Terminal Value 17,587,079 20,099,519 22,611,959
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 13,705,479 16,217,919 18,730,359
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 51,335,932 $ 53,868,372 $ 56,380,812
============ ============ ============
% Value in Terminal Value 34.2% 37.3% 40.1%
% Value in Cash 73.3% 69.9% 66.8%
% of Book Value 123.3% 129.4% 135.4%
25%
Present Value of Unlevered Free Cash Flows $ (3,686,466) $ (3,686,466) $ (3,686,466)
Present Value of Year 5 Terminal Value 14,635,726 16,726,544 18,817,362
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 10,949,260 13,040,078 15,130,896
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 48,599,713 $ 50,690,531 $ 52,781,349
============ ============ ============
% Value in Terminal Value 30.1% 33.0% 35.7%
% Value in Cash 77.5% 74.3% 71.3%
% of Book Value 116.7% 121.7% 126.8%
30%
Present Value of Unlevered Free Cash Flows $ (3,511,033) $ (3,511,033) $ (3,511,033)
Present Value of Year 5 Terminal Value 12,267,731 14,020,264 15,772,797
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 8,756,698 10,509,321 12,261,764
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 46,407,151 $ 48,159,684 $ 49,912,217
============ ============ ============
% Value in Terminal Value 26.4% 29.1% 31.6%
% Value in Cash 81.1% 78.2% 75.4%
% of Book Value 111.4% 115.7% 119.9%
35%
Present Value of Unlevered Free Cash Flows $ (3,352,669) $ (3,352,669) $ (3,352,669)
Present Value of Year 5 Terminal Value 10,351,597 11,830,397 13,309,196
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 6,998,928 8,477,728 9,956,528
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 44,649,381 $ 46,128,181 $ 47,606,981
============ ============ ============
% Value in Terminal Value 23.2% 25.6% 28.0%
% Value in Cash 84.3% 81.6% 79.1%
% of Book Value 107.2% 110.8% 114.3%
Terminal Value Revenue Multiples
----------------------------------------------
1.0 1.1 1.2
------------ ------------ ------------
20%
Present Value of Unlevered Free Cash Flows $ (3,881,600) $ (3,881,600) $ (3,881,600)
Present Value of Year 5 Terminal Value 25,124,399 27,636,838 30,149,278
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 21,242,798 23,755,238 26,267,678
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 58,893,251 $ 61,405,691 $ 63,918,131
============ ============ ============
% Value in Terminal Value 42.7% 45.0% 47.2%
% Value in Cash 63.9% 61.3% 58.9%
% of Book Value 141.4% 147.5% 153.5%
25%
Present Value of Unlevered Free Cash Flows $ (3,686,466) $ (3,686,466) $ (3,686,466)
Present Value of Year 5 Terminal Value 20,908,180 22,998,998 25,089,816
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 17,221,714 19,312,532 21,403,350
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 54,872,167 $ 56,962,985 $ 59,053,803
============ ============ ============
% Value in Terminal Value 38.1% 40.4% 42.5%
% Value in Cash 68.6% 66.1% 63.8%
% of Book Value 131.8% 136.8% 141.8%
30%
Present Value of Unlevered Free Cash Flows $ (3,511,033) $ (3,511,033) $ (3,511,033)
Present Value of Year 5 Terminal Value 17,525,330 19,277,863 21,030,396
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 14,014,297 15,766,830 17,519,363
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 51,664,750 $ 53,417,283 $ 55,169,816
============ ============ ============
% Value in Terminal Value 33.9% 36.1% 38.1%
% Value in Cash 72.9% 70.5% 68.2%
% of Book Value 124.1% 128.3% 132.5%
35%
Present Value of Unlevered Free Cash Flows $ (3,352,669) $ (3,352,669) $ (3,352,669)
Present Value of Year 5 Terminal Value 14,787,996 16,266,796 17,745,595
------------ ------------ ------------
PRESENT VALUE OF ENTERPRISE 11,435,327 12,914,127 14,392,926
Plus: Cash (6/01) 37,781,362 37,781,362 37,781,362
Less: Debt (6/01) (130,909) (130,909) (130,909)
------------ ------------ ------------
PRESENT VALUE OF EQUITY $ 49,085,780 $ 50,564,580 $ 52,043,379
============ ============ ============
% Value in Terminal Value 30.1% 32.2% 34.1%
% Value in Cash 76.7% 74.5% 72.3%
% of Book Value 117.9% 121.4% 125.0%
DISCOUNTED CASH FLOW
CONCLUSIONS
- We believe assumptions used in DCF are fairly optimistic
- Generally assumes business will return to profitability by
reversing current trends and overcoming technology issues.
- Based on these assumptions, valuation of Ecometry ranges from:
<Table>
<Caption>
Discount Terminal
Rate Multiple TEV MVE
---- -------- --- ---
Low 35% 0.7 x $ 7.0 m $44.6 m
High 20% 1.2 x $26.3 m $63.9 m
</Table>
VALUATION ANALYSIS
Comparable Public Companies
COMPARABLE PUBLIC COMPANIES
SUMMARY
- Analyzed companies in the same/similar competitive space as Ecometry
- Only companies with market capitalization greater than $10
million were considered
- TEV/Revenues
MVE/Tangible Book Value
- Evaluated public software companies in similar business segments, but
not direct competitors of Ecometry, with sales less than $75M
- TEV/Revenues
MVE/Tangible Book Value
COMPARABLE PUBLIC COMPANIES
DIRECT COMPARABLES
Stock
Most Price Total
Recent as of Shares MarketValue Enterprise
Symbol Company Name FYE Quarter 7/23/01 Outstanding of Equity Debt Cash Value(1)
------ ------------ --- ------- ------- ----------- --------- ---- ---- --------
A EGAN Egain 6/00 3/01 $ 2.29 36.2 $ 82.9 $ 3.0 $ 53.2 $ 32.7
EXEE EXE Technologies, Inc. 12/00 3/01 4.00 45.3 181.2 0.4 40.0 141.6
JDAS JDA Software 12/00 3/01 18.70 24.7 461.9 0.0 83.7 378.2
MANH Manhattan Associates 12/00 3/01 32.45 26.8 869.7 7.7 71.8 805.6
RETK Retek Inc. 12/00 3/01 30.05 48.7 1,463.4 0.4 49.8 1,414.0
B BVSN Broadvision 12/00 3/01 $ 3.48 273.6 $ 952.1 $ 4.6 $ 176.3 $ 780.4
PSFT PeopleSoft 12/00 3/01 34.51 294.0 10,145.9 57.0 1,063.9 9,139.0
ORCL Oracle 5/00 2/01 18.13 5,615.0 101,800.0 303.7 4,985.2 97,118.5
SAP SAP 12/00 3/01 34.40 1,260.0 43,344.0 0.0 1,344.7 41,993.3
ECOM ECOMETRY 12/00 3/01 $ 1.43 12.4 $ 17.7 $ 0.1 $ 38.7 $ (20.8)
(1) Total Enterprise Value is Market Capitalization plus Debt minus Cash.
COMPARABLE PUBLIC COMPANIES
DIRECT COMPARABLES
TTM Multiples
------------------------------------------
Sequential Net Tangible
Symbol Company Name Rev. Growth Revenue EBIT Income Book Value
----- -------------------- ----------- ------- ---- ------ ----------
A EGAN Egain 14.8% 0.7x N/Mx N/Mx 1.4x
EXEE EXE Technologies, Inc. -6.7% 1.2 N/M N/M 2.4
JDAS JDA Software -5.6% 2.1 36.7 51.9 3.3
MANH Manhattan Associates -1.0% 5.7 32.0 49.4 10.1
RETK Retek Inc. 15.6% 12.3 N/M N/M 15.1
Mean 3.4% 4.4x 34.3x 50.7x 6.5x
Median -1.0% 2.1 34.3x 50.7 3.3
B BVSN Broadvision -33.4% 1.8x N/Mx N/Mx 2.6x
PSFT PeopleSoft 1.1% 4.9 63.2 61.5 9.4
ORCL Oracle 0.5% 8.9 25.1 15.4 22.4
SAP SAP AG -29.6% 5.5 32.6 54.4 19.1
Mean -10.6% 5.2x 40.3x 43.8 13.4x
Median 0.5% 5.2 32.6 54.4 14.3
ECOM Ecometry -25.7% N/Mx N/Mx N/Mx 0.4x
2001 Proj. Multiples 2002 Proj. Multiples
--------------------------- -----------------------------
Net Net
Symbol Company Name Revenue EBIT Income Revenue EBIT Income
----- -------------------- ------- ---- ------ ------- ---- ------
A EGAN Egain 0.4x N/Mx N/Mx 0.3x N/Mx N/Mx
EXEE EXE Technologies, Inc. 1.1 20.2 27.0 1.0 7.9 13.1
JDAS JDA Software 2.0 21.7 37.0 1.8 14.7 29.8
MANH Manhattan Associates 5.2 25.4 43.7 4.4 17.6 29.2
RETK Retek Inc. 8.3 N/M N/M 5.4 41.5 103.7
Mean 3.4x 22.4x 35.9x 2.6x 20.5x 44.0x
Median 2.0 21.7 37.0 1.8 16.2 29.5
B BVSN Broadvision 2.0x N/Mx N/Mx 1.4x 14.1x 21.7x
PSFT PeopleSoft 4.4 39.5 56.7 3.7 24.7 36.2
ORCL Oracle 8.6 25.6 39.4 8.0 21.1 32.4
SAP SAP AG 4.9 26.0 44.8 4.4 19.2 32.8
Mean 5.0x 30.4x 47.0 4.4 19.8x 30.8x
Median 4.7 26.0 44.8 4.1x 20.1 32.6
ECOM Ecometry N/Mx N/Mx N/Mx N/Mx N/Mx N/Mx
COMPARABLE PUBLIC COMPANIES
DIRECT COMPARABLES
TRAILING TWELVE MONTHS (1)
STOCK STOCK -------------------------------------
PRICE PRICE PRICE
AS OF AS OF PERF. NET
SYMBOL COMPANY NAME 7/23/01 12/31/00 YTD REVENUE EBIT INCOME
------ ---------------------- ------- -------- ------ ---------- ---------- ----------
A EGAN Egain (2) $ 2.69 $ 3.09 -13.1% $ 45.6 $ (108.3) $ (105.9)
EXEE EXE Technologies, Inc. 4.00 13.00 -69.2% 119.5 (2.6) (2.3)
JDAS JDA Software 18.70 13.06 43.2% 180.1 10.3 8.9
MANH Manhattan Associates 32.45 42.63 -23.9% 140.8 25.2 17.6
RETK Retek Inc. 30.05 24.38 23.3% 115.0 (50.7) (38.4)
0.00
B BVSN Broadvision $ 3.48 $11.81 -70.5% $ 443.5 $ (270.8) $ (276.8)
PSFT PeopleSoft 34.51 37.19 -7.2% 1,864.1 144.6 164.9
ORCL Oracle (3,4) 18.13 29.06 -37.6% 10,970.1 3,870.7 6,618.6
SAP SAP AG 18.13 33.69 -46.2% 7,669.2 1,289.6 797.4
ECOM ECOMETRY $ 1.43 $ 1.75 -18.3% $ 38.9 $ (7.2) $ (4.3)
CALENDAR 2001 PROJECTED CALENDAR 2002 PROJECTED
------------------------------------- -------------------------------------
NET NET
SYMBOL COMPANY NAME REVENUE EBIT INCOME REVENUE EBIT INCOME
------ ---------------------- ---------- ---------- ---------- ---------- ---------- ----------
A EGAN Egain (2) $ 74.5 $ (45.9) $ (43.7) $ 102.4 $ (18.8) $ (17.6)
EXEE EXE Technologies, Inc. 125.0 7.0 6.7 144.8 17.8 13.8
JDAS JDA Software 193.5 17.4 12.5 214.0 25.7 15.5
MANH Manhattan Associates 155.5 31.7 19.9 181.1 45.7 29.7
RETK Retek Inc. 170.7 0.5 (7.8) 260.1 34.1 14.1
B BVSN Broadvision $ 400.2 $ (76.2) $ (75.7) $ 559.6 $ 55.3 $ 43.8
PSFT PeopleSoft 2,093.6 231.2 178.9 2,455.0 370.0 280.4
ORCL Oracle (3,4) 11,354.0 3,797.0 2,584.0 12,160.0 4,612.0 3,139.0
SAP SAP AG 8,496.8 1,613.5 968.1 9,581.0 2,185.7 1,323.3
ECOM ECOMETRY $ 33.3 $ (6.0) $ (2.5) $ 40.1 $ (1.7) $ (0.2)
(1) All data excludes extraordinary items, losses or gains from
discontinued operations and cumulative effects of accounting change.
(2) CY02 Numbers are June 02 projections
(3) CY01 is 11/00-11/01
(4) CY02 Numbers are May 02 projections
COMPARABLE PUBLIC COMPANIES
SOFTWARE COMPANIES WITH SALES <$75 MILLION
MVE/
TANGIBLE MVE/ TANGIBLE
INTANGIBLE BOOK BOOK BOOK
NAME TICKER MVE CASH DEBT TEV BOOK ASSETS (1) VALUE VALUE VALUE
- --------------------------- ------ -------- -------- -------- -------- -------- ---------- -------- ----- --------
OPENTV CORP OPTV $ 918.5 $ 231.0 $ 0.0 $ 687.5 $2,015.8 $1,777.6 $ 238.3 0.5 x 3.9 x
NETEGRITY INC NETE 1010.9 118.1 0.0 892.8 124.2 1.1 123.2 8.1 8.2
MOBIUS MGMT SYSTEMS INC MOBI 55.2 36.7 0.0 18.5 37.8 6.2 31.6 1.5 1.7
BOTTOMLINE TECHNOLOGIES INC EPAY 65.3 12.7 21.4 74.0 82.3 83.4 (1.0) 0.8 N/M
INDUSRI-MATEMATIK INTL CORP IMIC 53.3 25.6 0.0 27.7 25.8 6.8 19.0 2.1 2.8
BSQUARE CORP BSQR 322.4 74.6 0.3 248.1 108.3 24.4 83.8 3.0 3.8
EXCELON CORP EXLN 39.9 12.4 0.0 27.6 17.2 2.5 14.7 2.3 2.7
WATCHGUARD TECHNOLOGIES INC WGRD 259.5 114.8 0.0 144.6 168.2 45.3 122.9 1.5 2.1
PARADIGM GEOPHYSICAL LTD PGEO 89.8 8.4 10.2 91.6 46.7 25.7 21.1 1.9 4.3
INTRANET SOLUTIONS INC INRS 786.5 95.6 0.0 690.9 167.4 54.2 113.2 4.7 6.9
JETFORM CORP FORM 59.1 27.0 7.8 39.9 46.0 8.0 38.0 1.3 1.6
AUTONOMY CORP PLC -ADR AUTN 767.8 137.5 0.0 630.3 148.9 8.2 140.7 5.2 5.5
MDSI MOBILE DATA SOLUTIONS MDSI 44.0 11.5 5.9 38.4 32.1 1.4 30.8 1.4 1.4
CROSSWORLDS SOFTWARE INC CWLD 86.5 34.7 3.0 54.8 20.3 1.2 19.1 4.3 4.5
FIREPOND INC FIRE 42.3 70.4 0.0 (28.1) 84.3 14.3 70.0 0.5 0.6
COMSHARE INC CSRE 33.3 23.1 0.3 10.5 30.3 9.3 21.0 1.1 1.6
EXCHANGE APPLICATIONS EXAP 29.5 7.1 20.7 43.1 97.8 111.8 (14.0) 0.3 N/M
ULTIMATE SOFTWARE GROUP INC ULTI 80.9 14.5 2.6 69.0 13.1 0.8 12.3 6.2 6.6
DOCUCORP INTERNATIONAL INC DOCC 49.8 9.6 0.0 40.2 32.1 14.8 17.2 1.6 2.9
CAMINUS CORP CAMZ 437.9 32.1 0.0 405.8 86.2 40.5 45.7 5.1 9.6
LANDMARK SYSTEM CORP LDMK 43.2 32.9 0.0 10.3 35.2 16.5 18.7 1.2 2.3
ROGUE WAVE SOFTWARE INC RWAV 45.7 31.3 0.0 14.4 36.7 0.9 35.8 1.2 1.3
SS&C TECHNOLOGIES INC SSNC 91.2 57.5 0.0 33.7 71.3 9.2 62.1 1.3 1.5
VERSATA INC VATA 35.2 52.8 0.3 (17.3) 63.9 11.6 52.3 0.6 0.7
MEDICALOGIC/MEDSCAPE INC MDLI 36.0 33.4 13.5 16.1 817.5 775.4 42.1 0.1 0.9
SEGUE SOFTWARE INC SEGU 26.2 14.0 0.0 12.2 16.7 2.8 13.9 1.6 1.9
ULTICOM INC ULCM 1418.4 214.2 0.0 1204.3 212.2 6.0 206.2 6.7 6.9
NETCENTIVES INC NCNT 26.7 25.8 7.1 8.1 279.3 261.9 17.4 0.1 1.5
NUANCE COMMUNICATIONS INC NUAN 540.6 206.1 0.0 334.5 242.4 25.4 217.0 2.2 2.5
SAGENT TECHNOLOGY INC SGNT 62.8 17.2 1.5 47.1 36.3 13.3 23.0 1.7 2.7
SCANSOFT INC SSFT 55.4 2.8 2.6 55.1 80.4 86.2 (5.7) 0.7 N/M
SELECTICA INC SLTC 154.2 170.4 0.0 (16.1) 182.5 15.0 167.5 0.8 0.9
LIGHTSPAN INC LSPN 54.9 66.8 0.5 (11.4) 109.6 45.9 63.8 0.5 0.9
GSE SYSTEMS INC GVP 10.5 1.1 12.7 22.0 10.5 16.7 (6.2) 1.0 N/M
TIMBERLINE SOFTWARE CORP TMBS 61.2 10.4 0.0 50.8 25.0 7.1 17.9 2.4 3.4
TRADESTATION GROUP INC TRAD 216.2 14.9 0.2 201.5 37.4 18.2 19.2 5.8 11.3
COMPARABLE PUBLIC COMPANIES
SOFTWARE COMPANIES WITH SALES <$75 MILLION
MVE/
TANGIBLE MVE/ TANGIBLE
INTANGIBLE BOOK BOOK BOOK
NAME TICKER MVE CASH DEBT TEV BOOK ASSETS VALUE VALUE VALUE
- ----------------------------- ------ ------- ------- ------- ------- ------- ---------- -------- ----- --------
HEALTHCARE.COM CORP HCDC $ 127.7 $ 1.5 $ 4.2 $ 130.4 $ 23.9 $ 14.9 $ 9.0 5.4x 14.2x
WITNESS SYSTEMS INC WITS 227.0 57.0 0.0 170.1 66.6 6.0 60.6 3.4 3.7
NOVADIGM INC MVDM 240.7 27.2 0.0 213.6 44.2 10.6 33.5 5.5 7.2
PFSWEB INC PFSW 18.6 22.3 2.7 (1.0) 37.0 0.5 36.5 0.5 0.5
MECHANICAL DYNAMICS MDII 70.3 15.1 1.0 56.2 27.1 8.4 18.7 2.6 3.8
MCAFEE.COM CORP MCAP 549.0 53.0 0.0 496.1 51.5 35.1 16.4 10.7 33.5
CONVERA CORP CNVR 229.3 146.0 0.0 83.3 956.6 814.9 141.7 0.2 1.6
CRYSTAL SYSTEMS SOLUTIONS LTD CRYS 42.8 17.2 1.0 26.7 51.4 21.4 30.0 0.8 1.4
PRIMUS KNOWLEDGE SOLUTIONS PKSI 79.4 34.3 0.0 45.1 36.7 0.4 36.4 2.2 2.2
EGAIN COMMUNICATIONS EGAN 94.2 53.2 4.0 45.0 149.6 92.2 57.3 1.5 1.6
PACKETEER INC PKTR 335.4 39.3 8.0 304.1 116.2 84.5 31.8 2.9 10.6
VOCALTEC COMMUNCATIONS VOCL 24.4 38.8 0.0 (14.4) 56.0 17.5 38.5 0.4 0.6
LIBERATE TECHNOLOGIES LBRT 1034.3 313.4 1.2 722.2 949.7 711.1 238.6 1.0 4.3
MARIMBA INC MRBA 52.0 60.9 0.2 (8.7) 63.2 5.1 58.2 0.8 0.9
INTERACTIVE INTELLIGENCE INC ININ 162.1 27.7 0.2 134.5 34.3 3.1 31.1 4.7 5.2
ANSOFT CORP ANST 203.6 28.2 9.0 184.4 41.7 15.2 26.5 4.9 7.7
CLICK2LEARN INC CLKS 30.1 9.6 0.0 20.5 31.1 10.7 20.4 1.0 1.5
RETALIX LTD RTLX 170.4 26.5 17.3 161.2 44.1 16.7 27.4 3.9 6.2
CLICK COMMERCE INC CKCM 360.8 47.8 1.3 314.3 55.9 6.7 49.2 6.5 7.3
APPLIX INC APLX 21.7 12.2 0.0 9.5 16.3 4.5 11.9 1.3 1.8
PRACTICE WORKS INC PRW 76.9 7.1 22.2 91.9 43.8 49.1 (5.3) 3.3 N/M
CHORDIANT SOFTWARED INC CHRD 147.1 78.7 0.5 68.9 94.8 30.8 64.0 1.6 2.3
STARBASE CORP SBAS 249.1 14.3 0.6 235.3 118.2 109.2 9.0 2.1 27.8
SYNPLICITY INC SYNP 224.8 44.2 0.1 180.8 41.3 5.4 35.9 5.7 6.3
CORILLIAN CORP CORI 139.8 37.1 7.9 110.6 64.7 23.5 41.1 2.2 3.4
PERVASIVE SOFTWARE INC PVSW 22.6 25.5 0.0 (2.8) 29.7 1.4 28.3 0.8 0.8
PUMATECH INC PUMA 116.1 53.0 0.4 63.4 88.9 29.0 59.9 1.3 1.9
CATALYST INTERNATIONAL INC CLYS 31.9 14.4 1.4 18.9 21.4 10.3 11.1 1.5 2.9
DALEEN TECHNOLOGIES INC DALN 22.2 9.2 0.6 13.6 55.5 44.0 11.6 0.4 1.9
VASTERA INC VAST 525.1 83.6 3.4 444.9 159.3 83.7 75.5 3.3 7.0
EDGEWATER TECHNOLOGY INC EDGW 41.3 44.0 0.0 (2.7) 109.3 57.7 51.5 0.4 0.8
MOLDFLOW CORP MFLO 143.3 43.9 0.0 99.4 57.1 11.7 45.4 2.5 3.2
ECOMETRY CORP ECOM 18.1 38.7 0.1 (20.5) 42.3 0.2 42.1 0.4 0.4
CEDERA SOFTWARE CORP CDSW 18.6 1.9 14.0 30.8 25.5 17.0 8.5 0.5 2.2
CRYPTOLOGIC INC CRYP 322.5 61.2 0.0 261.4 62.0 2.4 59.6 5.2 5.4
BACKWEB TECHNOLOGIES LTD BWEB 57.1 59.6 0.3 (2.2) 71.8 10.1 61.8 0.8 0.9
(1) Includes Other Assets
COMPARABLE PUBLIC COMPANIES
SOFTWARE COMPANIES WITH SALES <$75 MILLION
MVE/
TANGIBLE MVE/ TANGIBLE
INTANGIBLE BOOK BOOK BOOK
NAME TICKER MVE CASH DEBT TEV BOOK ASSETS (1) VALUE VALUE VALUE
- ----------------------------- ------ ------- ------- ------- ------- ------- ---------- -------- ----- --------
CLICKATION INC CLAC $ 25.8 $ 4.7 $ 0.0 $ 21.1 $ 19.2 $ 2.4 $ 16.8 1.3X 1.5X
SYNQUEST INC SYNQ 79.8 23.1 0.3 56.9 19.0 0.2 18.8 4.2 4.2
TUMBLEWEED COMMUNICATIONS CO TMWD 110.2 58.0 0.8 53.0 72.6 16.1 56.5 1.5 2.0
PRECISE SOFTWARE SOLTNS LTD PRSE 693.7 121.7 0.1 572.1 167.8 43.0 124.7 4.2 5.6
APPLIED MICROSYSTEMS CORP APMC 36.5 6.3 0.2 30.3 10.9 0.4 10.4 3.4 3.5
MADE2MANAGE SYSTEMS INC MTMS 18.2 12.5 0.0 5.7 15.4 2.1 13.3 1.2 1.4
TRIPOS INC TRPS 101.2 24.0 3.9 81.2 39.1 5.7 33.5 3.9 3.0
CONCUR TECHNOLOGIES INC CNQR 38.5 38.8 4.1 3.8 35.5 0.8 34.7 1.1 1.1
RIVERDEEP GROUP PLC - ADR RVDP 955.6 60.7 0.5 895.5 173.9 100.6 73.3 5.5 13.0
OPNET TECHNOLOGIES INC OPNT 198.3 62.6 0.0 135.7 76.5 13.4 63.1 2.6 3.1
CENTURA SOFTWARE CORP MBRN 12.5 3.3 2.4 11.6 7.2 5.5 1.6 2.3 7.7
EVOLVE SOFTWARE INC EVLV 20.4 33.0 5.8 (6.8) 53.2 21.6 31.6 0.4 0.6
724 SOLUTIONS INC SVNX 418.6 168.3 5.0 255.4 570.3 412.2 158.1 0.7 2.6
CLARUS CORP CLRS 96.3 151.0 7.8 (46.8) 222.8 67.8 155.1 0.4 0.6
IMANAGE INC IMAN 88.9 36.6 6.3 58.6 49.5 16.8 32.6 1.8 2.7
APROPOS TECHNOLOGY INC APRS 40.2 60.7 0.0 (20.5) 69.0 0.2 68.8 0.6 0.6
EXTENSITY INC EXTN 219.2 73.4 1.6 147.5 57.4 0.6 56.8 3.5 3.9
T/R SYSTEMS INC TRSI 43.8 22.4 0.0 21.4 37.7 0.5 37.2 1.2 1.2
DELANO TECHNOLOGY CORP DTEC 15.3 35.4 0.2 (19.9) 49.9 6.2 43.7 0.3 0.3
NET PERCEPTIONS INC NETP 48.1 87.3 2.3 (36.8) 89.8 10.6 79.2 0.5 0.6
NUMERICAL TECHNOLOGIES INC NMTC 654.0 54.7 0.0 599.3 200.5 152.6 48.0 3.1 13.6
SONIC FOUNDRY INC SOFO 38.5 10.3 7.6 35.7 80.5 59.1 21.5 0.5 1.8
SVI SOLUTIONS INC SVI 36.8 0.9 7.6 43.4 45.3 67.7 (22.4) 0.8 N/M
PEERLESS SYSTEMS CORP PRLS 26.7 17.7 0.0 9.0 23.6 4.8 18.8 1.1 1.4
GRIC COMMUNICATIONS INC GRIC 59.4 29.1 1.0 31.3 28.0 0.4 27.6 2.1 2.2
CENTRA SOFTWARE INC CTRA 364.9 59.8 2.3 307.4 56.6 8.7 47.9 6.3 7.6
LOGILITY INC LGTY 38.6 16.0 0.0 22.5 26.3 13.4 12.9 1.4 3.0
JACADA LTD JCDA 76.8 51.7 0.0 25.1 56.4 4.1 52.4 1.4 1.5
CARECENTRIC INC CURA 12.5 0.3 8.9 21.1 8.7 22.7 (13.9) 1.4 N/M
NEWKIDCO INTL INC NKCIF 12.1 0.2 11.5 23.4 11.3 13.2 (1.9) 1.1 N/M
ACTIONPOINT INC ACTP 12.5 3.9 0.0 8.6 9.6 4.2 5.4 1.3 2.3
VERSANT CORP VSNT 18.9 3.0 0.2 16.0 9.8 1.3 8.6 3.8 2.2
NEON SYSTEMS INC NESY 82.6 43.3 0.0 30.3 49.3 6.9 42.5 1.7 1.9
VIRYANET LTD VRYA 17.4 15.8 0.1 1.8 15.6 1.0 14.7 0.7 1.2
ESPS INC ESPS 18.8 20.5 0.5 (1.2) 22.5 2.4 20.1 0.6 0.9
SERVICEWARE TECHNOLOGIES INC SVCW 17.1 17.3 0.2 (0.0) 22.0 8.6 13.4 0.8 1.3
COMPARABLE PUBLIC COMPANIES
SOFTWARE COMPANIES WITH SALES <$75 MILLION
MVE/
TANGIBLE MVE/ TANGIBLE
INTANGIBLE BOOK BOOK BOOK
NAME TICKER MVE CASH DEBT TEV BOOK ASSETS (1) VALUE VALUE VALUE
- ----------------------------- ------ ------- ------- ------- ------- ------- ---------- -------- ----- --------
PERSISTENCE SOFTWARE INC PRSW $ 11.8 14.8 2.1 (1.0) 17.8 3.7 14.1 0.7X 0.8X
ON TECHNOLOGY CORP ONTC 14.3 8.6 0.8 6.5 3.5 0.1 3.4 4.1 4.2
ACCRUE SOFTWARE INC ACRU 16.5 14.2 2.0 4.3 17.9 10.7 7.1 0.9 2.3
EPIQ SYSTEMS INC EPIQ 205.6 10.6 0.4 195.4 37.2 17.5 19.7 5.5 10.4
SUPPORT.COM INC SPRT 175.8 45.1 1.7 132.3 33.8 5.5 28.3 4.3 6.2
NET.GENESIS CORP NTGX 17.4 48.7 4.5 (26.8) 57.7 5.0 52.8 0.3 0.3
WEBHIRE, INC JIRED 13.6 8.3 2.4 7.7 8.9 5.7 3.3 1.5 4.2
CYBERGUARD CORP CYBG 42.2 5.1 1.4 38.5 6.5 1.2 5.3 6.5 7.9
DOCUMENT SCIENCES CORP DOCX 16.8 19.0 0.0 (2.1) 20.8 2.2 18.6 0.8 0.9
AVANTGO INC AVGO 69.7 66.5 0.0 3.3 84.9 15.8 69.1 0.8 1.0
INFOVISTA S A -ADR IVTA 98.4 55.8 0.7 43.3 63.5 5.0 58.4 1.6 1.7
INTRUSION.COM INC INTZ 79.7 40.3 0.0 39.4 66.3 16.0 50.3 1.2 1.6
LEARN2.COM INC LTWO 10.6 3.4 9.4 16.5 30.3 34.4 (4.1) 0.3 N/M
WEBSENSE INC WBSN 372.4 83.7 0.0 288.7 64.1 0.2 63.9 5.8 5.8
EPRISE CORP EPRS 21.8 61.9 0.1 (40.1) 65.1 0.2 64.9 0.3 0.3
IMFORMAX INC INMX 137.8 75.5 2.1 64.4 87.9 3.2 84.7 1.6 1.6
ATTUNITY LTD ATTU 28.3 4.4 0.2 24.1 19.8 11.9 7.9 1.4 3.6
RESONATE INC RSNT 107.6 102.8 5.6 10.5 97.7 0.6 97.0 1.1 1.1
ASTEA INTERNATIONAL INC ATEA 17.1 8.5 0.1 8.8 11.8 1.6 10.2 1.5 1.7
NETOBJECTS INC NETO 24.2 9.4 0.0 14.8 13.1 7.4 5.8 1.8 4.2
SIGNALSOFT CORP SGSF 232.3 64.6 0.0 167.8 94.4 22.0 72.5 2.5 3.2
EAGLE POINT SOFTWARE CORP EGPT 24.9 13.2 0.0 11.7 21.3 2.1 19.2 1.2 1.3
DOCENT INC DCNT 309.5 72.3 1.2 238.4 102.9 31.8 71.1 3.0 4.4
TCSI CORP TCSI 24.4 32.7 0.0 (8.4) 35.8 1.0 34.9 0.7 0.7
TALARIAN CORP TALR 29.5 58.4 0.0 (29.0) 57.5 5.6 51.8 0.5 0.6
CLICKSOFTWARE TECHNOL LTD CLSW 36.2 16.3 0.3 20.2 24.4 2.1 22.0 1.5 1.6
GEOWORKS CORP GWRX 35.3 13.7 0.2 21.7 49.7 35.7 14.1 0.7 2.5
NETSPEAK CORP NSPK 40.3 25.6 0.0 14.7 28.8 0.8 27.9 1.3 1.4
XCARE.NET INC XCAR 207.7 74.3 0.1 133.5 89.8 5.0 84.8 2.3 2.4
INSIGHTFUL CORP IFUL 30.7 9.9 0.2 21.0 6.9 0.3 6.7 4.4 4.6
LANDACORP INC LCOR 27.5 17.8 0.3 10.0 30.5 14.1 16.4 0.9 1.7
SCIENTIFIC LEARNING CORP SCIL 25.1 3.4 2.0 23.8 10.1 6.2 3.8 2.5 6.6
TANGRAM ENTP SOLUTIONS TESI 18.3 0.7 1.2 18.8 6.7 9.3 (2.6) 2.7 N/M
MICROWARE SYSTEMS CORP MWAR 12.6 1.8 7.4 18.2 5.1 0.8 4.2 2.5 3.0
VERTEL CORP VRTL 32.9 9.3 0.0 23.6 12.9 3.6 9.3 2.6 3.5
SMITH MICRO SOFTWARE INC SMSI 21.1 5.7 0.0 15.4 10.8 2.8 8.1 2.0 2.6
(1) Includes Other Assets
COMPARABLE PUBLIC COMPANIES
Software Companies with Sales <$75 million
MVE/
TANGIBLE MVE/ TANGIBLE
INTANGIBLE BOOK BOOK BOOK
NAME TICKER MVE CASH DEBT TEV BOOK ASSETS (1) VALUE VALUE VALUE
- ----------------------------- ------ ------- ------- ------- ------- ------- ---------- -------- ----- --------
EBT INTERNATIONAL INC EBTI $ 39.5 $ 60.6 $ 0.0 $(21.1) $ 61.5 $ 1.7 $ 59.8 0.6 X 0.7 X
ELOQUENT INC ELOQ 22.3 36.4 0.7 (13.5) 36.1 2.1 34.0 0.6 0.7
PHARSIGHT CORP PHST 34.4 21.4 3.4 16.4 22.2 0.7 21.5 1.5 1.6
VITAL IMAGES INC VTAL 35.9 1.0 0.0 34.9 2.9 0.0 2.9 11.3 12.2
VIRAGE INC VRGE 65.5 48.1 0.0 17.4 44.2 2.5 41.7 1.3 1.6
INSIGNIA SOLUTIONS PLC-ADR INSG 64.4 17.0 0.0 47.4 14.8 5.3 9.5 3.7 6.8
ARTISOFT INC ASFT 75.5 8.1 0.0 67.4 9.3 0.2 9.1 8.1 8.3
RADVIEW SOFTWARE LTD RDVW 14.2 24.5 0.0 (10.3) 23.8 0.6 23.3 0.6 0.6
ACTV INC IATV 156.8 101.0 0.0 55.7 158.0 123.7 34.3 1.0 4.6
CUSEEME NETWORKS INC CUSM 14.9 9.8 0.0 5.0 15.2 3.2 12.0 1.0 1.2
LION BIOSCIENCE AG -ADR LEON 474.6 182.0 6.0 298.6 198.9 21.5 177.4 2.4 2.7
TELEMATE.NET SOFTWARE TMNT 12.0 25.6 0.0 (13.6) 24.8 0.1 24.7 0.5 0.5
E SIM LTD ESIM 25.5 6.2 4.0 23.3 3.9 1.6 2.2 6.6 11.4
ADAM.COM INC ADA, 13.5 1.6 0.2 12.0 3.1 2.4 0.7 4.4 19.8
INTERTRUST TECHNOLOGIES CORP ITRU 113.3 148.1 0.0 (34.8) 215.6 72.8 142.8 0.5 0.8
SAND TECHNOLOGY INC -CL A SNDT 43.5 1.6 0.3 42.2 4.4 1.1 3.3 10.0 13.4
CARESCIENCE INC CARE 22.1 26.1 0.7 (3.3) 25.1 1.4 23.7 0.9 0.9
BITSTREAM INC- CL A BITS 26.1 6.9 0.0 19.1 8.9 2.1 6.8 2.9 3.8
GRAPHON CORP GOJO 35.6 11.1 0.0 24.5 17.4 5.9 11.5 2.1 3.1
NETSOL INTERNATIONAL INC NTWK 20.3 1.0 0.5 19.8 16.7 13.9 2.8 1.2 7.4
PREVIEW SYSTEMS INC PRVW 55.4 70.7 0.2 (15.1) 67.5 4.3 63.2 0.7 0.9
INTELLIGENT SYSTEM CP INS 25.7 0.4 1.7 27.0 15.8 11.7 4.2 1.6 6.1
MOMENTUM BUSINESS APPS INC MMTM 65.7 77.1 0.0 (11.3) 92.2 22.8 69.5 0.7 0.9
PREVIO INC PRVO 21.9 26.7 0.0 (4.8) 25.2 0.3 24.9 0.9 0.9
VIEWPOINT CORP VWPT 284.8 28.4 0.0 256.4 85.7 52.0 33.7 3.3 8.5
RAINING DATA CORP RDTA 89.2 1.5 16.8 104.6 61.4 83.6 (22.2) 1.4 N/M
WINK COMMUNICATIONS INC WINK 96.5 107.2 0.0 (10.7) 118.3 18.8 99.5 0.8 1.0
INTELIDATA TECHNOLOGIES CORP INTD 246.4 23.0 0.0 223.4 57.0 37.6 19.4 4.3 12.7
INFORMATION ARCHITECTS CORP IARC 55.6 8.9 0.0 46.7 13.9 2.9 11.0 4.0 5.0
CALDERA INTERNATIONAL INC CALD 58.4 67.3 0.0 (8.8) 81.8 9.2 72.6 0.7 0.8
SOFTQUAD SOFTWARE LTD SXML 14.5 8.7 0.0 5.8 13.6 4.9 8.7 0.8 1.7
CALTON INC CN 14.2 30.7 0.0 (16.4) 31.9 0.0 31.9 0.4 0.4
SOURCINGLINK.NET INC SNET 10.1 4.1 0.0 6.0 3.7 0.1 3.6 2.7 2.8
V-ONE CORP VONE 27.6 8.8 0.1 18.9 8.2 0.1 8.1 3.4 3.4
ZI CORP ZICA 279.3 27.7 0.2 251.8 35.9 5.8 30.1 7.0 9.3
SMARTSERV ONLINE INC SSOL 52.8 15.6 0.0 37.3 13.1 1.6 11.5 4.0 4.6
(1) Includes Other Assets
COMPARABLE PUBLIC COMPANIES
SOFTWARE COMPANIES WITH SALES <$75 MILLION
MVE/
TANGIBLE MVE/ TANGIBLE
INTANGIBLE BOOK BOOK BOOK
NAME TICKER MVE CASH DEBT TEV BOOK ASSETS (1) VALUE VALUE VALUE
- -------------------------- ------ ------- ------- ------- ------- ------- ---------- -------- ----- --------
SEEC INC SEEC $ 16.4 $ 20.3 $ 0.0 $ (3.9) $ 21.2 $ 0.4 $ 20.8 0.8 X 0.8 X
PRECIS SMART CARD SYS INC PCIS 11.5 4.5 0.0 7.0 6.9 2.8 4.1 2.4 2.8
DIVERSINET CORP DVNT 45.6 8.9 0.0 36.7 9.4 0.2 9.1 4.9 5.0
E-CRUITER.COM INC ECRU 32.1 4.5 0.3 27.8 5.3 0.0 5.3 6.1 6.1
FINANCIAL PERFORMANCE CORP FPCX 28.7 4.5 22.4 46.6 22.0 36.9 (14.9) 1.3 N/M
GENOMICA CORP GNOM 96.6 78.8 0.0 17.9 124.2 41.0 83.2 0.8 1.2
ON2 TECHNOLOGIES INC ONT 13.8 0.2 0.4 14.0 7.3 5.8 1.5 1.9 9.0
NET4MUSIC INC NMUS 19.5 6.0 1.3 14.8 31.0 26.8 4.3 0.6 4.6
CT HOLDINGS INC CITN 16.9 1.1 0.2 16.0 3.7 3.8 (0.1) 4.5 N/M
ZIXIT CORP ZIXI 168.7 43.2 0.0 125.5 65.5 6.7 58.8 2.6 2.9
BE INC BEOS 17.2 9.3 0.0 7.9 8.6 0.9 7.7 2.0 2.2
SUNHAWK.COM CORP SNHK 13.1 4.0 0.9 9.9 14.0 13.2 0.8 1.2 17.0
Mean 1.9 x 4.0 x
Median 1.2 2.5
Max 11.3 33.5
Min 0.1 0.3
(1) Includes Other Assets
COMPARABLE PUBLIC COMPANIES
SOFTWARE COMPANIES WITH SALES <$75 MILLION
BOOK INTANGIBLE
COMPANY NAME DESCRIPTION MVE CASH DEBT TEV VALUE ASSETS
- ---------------------- ----------------------------------- -------- -------- -------- -------- -------- ----------
Apropos Technology Develops and supports a solution for $ 41.0 $ 60.7 $ 0.0 $ (19.7) $ 69.0 $ 0.0
managing customer interaction
Document Sciences Document automation software used in 5.5 19.0 0.0 (13.5) 20.82 2.12
high-volume publishing
Edgewater Technology Full-service provider of consulting and 40.6 44.0 0.0 (3.4) 109.27 35.32
system integration services
ESPS Publishing software solutions for 17.3 19.5 0.3 (1.9) 22.52 1.13
document-intensive industries
Landacorp B-to-B internet-based medical management 26.7 17.8 0.2 9.1 30.46 14.05
solutions
Mercator Software Software and services to integrate 69.6 13.5 0.0 56.1 94.122 74.63
business applications
Pervasive Software Software that reduces the costs of Web 20.5 25.5 0.0 (5.0) 29.487 0.87
applications
PFSweb Transaction management services to 18.5 22.3 2.4 (1.4) 47.65 0.00
e-commerce companies
SVI Solutions (1) System software for enterprise retailers 33.4 0.9 0.0 32.5 45.30 51.07
and retail chains
Vertex Interactive Supply chain management software and 62.1 2.6 1.6 61.1 108.35 7.35
systems
TANGIBLE MVE/ MVE/
BOOK BOOK TANG.
COMPANY NAME DESCRIPTION VALUE VALUE BOOK
- ---------------------- ----------------------------------- -------- ------ ------
Apropos Technology Develops and supports a solution for $ 69.0 0.59 X 0.59 X
managing customer interaction
Document Sciences Document automation software used in 18.70 0.27 0.30
high-volume publishing
Edgewater Technology Full-service provider of consulting and 73.95 0.37 0.55
system integration services
ESPS Publishing software solutions for 21.39 0.77 0.81
document-intensive industries
Landacorp B-to-B internet-based medical management 16.41 0.88 1.63
solutions
Mercator Software Software and services to integrate 19.49 0.74 3.57
business applications
Pervasive Software Software that reduces the costs of Web 28.62 0.70 0.72
applications
PFSweb Transaction management services to 47.65 0.39 0.39
e-commerce companies
SVI Solutions (1) System software for enterprise retailers -5.77 0.74 N/M
and retail chains
Vertex Interactive Supply chain management software and 101.00 0.57 0.61
systems
Criteria:
Software companies with:
a) $10 m <Sales <$75 m
c) $(10 m) <EBIT <$0 m
b) Market cap.> $10 m
COMPARABLE PUBLIC COMPANIES
CONCLUSIONS
- - Ecometry is undervalued when compared to its public competitors, but
Ecometry's situation is materially different
- For most part, public comps are profitable or will reach
profitability in very near term
- Direct comparables have greater historical and expected growth
rates
- Direct comparables are larger and serve multiple markets
- Direct comparables have significant research coverage
- - Analyzing "small" software companies produces valuations that are lower
than those afforded to Ecometry's direct comps
- - Further analysis of those software companies losing up to $10 million
in EBIT shows that companies trade at a fraction of their book value
CONCLUSIONS
CONCLUSIONS
- - Ecometry is clearly undervalued in the public markets regardless of the
valuation methodology used in the analysis
- - Ecometry's financial condition and operating performance make
determining the appropriate valuation for the Company very challenging
- Very strong balance sheet
- Negative operating trends
- Modest projected cash burn rate
- - Our preliminary valuation analysis produced a broad range of values
depending on the methodology used
CONCLUSIONS
VALUATION SUMMARY
ECOMETRY MEDIAN TEV LESS: MVE PRICE PER
APPROACH STATISTIC MULTIPLE INDICATION NET DEBT INDICATION SHARE
- -------- --------- -------- ---------- -------- ---------- ----------
Current Ecometry Book Value $ 41,641 $ 3.35
Liquidation Value $ 32,705 $ 2.63
Precedent M&A Transactions
Software Companies
TTM Revenues $38,854 4.60 x $178,727 $(37,650) $216,378 $17.39
Tangible Book Value (6/01) 41,556 8.50 315,578 $(37,650) 353,229 $28.38
Going-Private Transactions
TTM Revenues $38,854 0.60 x $ 23,312 $(37,650) $ 60,963 $ 4.90
Tangible Book Value (6/01) 41,556 2.20 53,773 $(37,650) 91,424 $ 7.35
Discounted Cash Flow
Low (35% WACC; .7x Terminal Multiple) $ 6,999 $(37,650) $ 44,649 $ 3.59
High (20% WACC; 1.2x Terminal Multiple) 26,268 $(37,650) 63,918 $ 5.14
Comparable Public Companies
Direct Comparables (A)
TTM Revenues $38,854 2.10 x $ 81,593 $(37,650) $119,243 $ 9.58
Tangible Book Value (6/01) 41,556 3.30 99,485 $(37,650) 137,136 $11.02
Other Software Companies
Tangible Book Value (6/01) 41,556 2.50 66,240 $(37,650) 103,891 $ 8.35