Exhibit 16(c)
HIGHLY CONFIDENTIAL
JANUARY 26, 2004
[UNI-MART LOGO]
FAIRNESS OPINION PRESENTATION
Boenning & Scattergood, Inc.
4 Tower Bridge, 200 Barr Harbor Drive, Suite 300
West Conshohocken, PA 19428-2979
Phone: 610-832-1212
Fax: 610-832-5301
www.boenningandscattergood.com
Member NASD and SIPC
BOENNING & SCATTERGOOD, INC.
-------------------------------------------
ESTABLISHED 1914
INVESTMENT BANKING
TABLE OF CONTENTS
SECTION PAGE
- -------------------------------------------------- ----
I. Transaction & Engagement Overview 2
II. Company Overview 6
III. Considerations 21
1. Comparable Company Analysis
2. Comparable Transactions Analysis
3. Discounted Cash Flow Analysis
4. Financial Sponsor Analysis
5. Premiums Paid Analysis
6. Liquidation Analysis
Appendix A - Form of Opinion
Appendix B - Comparable Company Descriptions
[UNI-MART LOGO] 1 BOENNING & SCATTERGOOD, INC.
TAB I
TRANSACTION & ENGAGEMENT
OVERVIEW
[UNI-MART LOGO] 2 BOENNING & SCATTERGOOD, INC.
TRANSACTION OVERVIEW
- - In May 2003, Boenning & Scattergood, Inc. ("Boenning") was retained by the
Ad Hoc Committee of the Board of Directors (the "Committee") of Uni-Marts,
Inc. ("Uni-Marts" or the "Company") to provide a written opinion to the
Committee as to the fairness, from a financial point of view, of an offer
that was received from HFL Corporation. HFL Corporation is an entity that
is controlled by certain insiders of Uni-Marts. Ultimately the proposed
transaction was terminated.
- - Uni-Marts has received an offer (the "Offer") to be acquired by [BUYING
GROUP]. [BUYING GROUP] is 60% owned by insiders including Chairman Henry
Sahakian and Director Daniel Sahakian.
- - Boenning understands the material terms of the Offer to be as follows:
- [BUYING GROUP] will acquire all of the outstanding stock of
Uni-Marts for $2.25 in cash except for those shares held by
shareholders of [BUYING GROUP].
- Option holders who own Uni-Marts options with strike prices less
than $2.25 per share will receive $2.25 less the strike price of
their options in cash for each option they own.
- - Boenning formed its opinion based on the terms of the transaction as
outlined in a draft of the Agreement and Plan of Merger provided to it on
January 23, 2004.
[UNI-MART LOGO] 3 BOENNING & SCATTERGOOD, INC.
TRANSACTION SUMMARY
The Offer from [BUYING GROUP] implies an equity value of $18.4 MM and an
enterprise value of $89.8 MM.
ANALYSIS OF OFFER(a):
NUMBER OFFER
($ ACTUAL) OUTSTANDING PRICE VALUE
- ------------------------------------------------------------ ----------- ------ ------------
VALUE OF EQUITY:
Common Shares Outstanding 7,202,979 $ 2.25 $ 16,206,703
"In the Money" Options Outstanding 977,333 $ 2.25 2,198,999
--------- ------------
Total Equity Value 8,180,312 $ 18,405,702
VALUE OF DEBT:
Revolving Credit $ 7,875,314
Current Maturities of Long-Term Debt 35,852,731
Current Obligations Under Capital Leases 94,577
Long-Term Debt, Less Current Maturities 34,398,464
Obligations Under Capital Leases, Less Current Maturities 87,721
Cash on Balance Sheet (5,184,965)
Cash from Exercise of Options (1,745,141)
------------
Net Debt $ 71,378,701
------------
ENTERPRISE VALUE $ 89,784,403
MULTIPLES ANALYSIS:
LTM BUDGET
YEAR ENDED 1/1/2004 9/30/2004
- --------------------------------------------------------------
EQUITY MULTIPLES:
Net Income Multiple NM NM
Book Value Multiple 0.9x 1.0x
ENTERPRISE VALUE MULTIPLES:
Revenue Multiple 0.2x 0.2x
EBITDA Multiple 7.9x 9.8x
EBIT Multiple 16.9x 19.7x
(a) All values based on data as of January 1, 2004 unless noted.
[UNI-MART LOGO] 4 BOENNING & SCATTERGOOD, INC.
ANALYSIS OVERVIEW
Boenning considered the following when evaluating the fairness of the Offer:
- COMPARABLE COMPANY ANALYSIS - The financial performance and market
valuations of North American publicly held companies considered
comparable to Uni-Marts.
- COMPARABLE TRANSACTIONS ANALYSIS - The valuations implied by recent
transactions of selling operators of U.S. convenience store
companies (and block sales of stores) considered comparable to
Uni-Marts.
- DISCOUNTED CASH FLOW ANALYSIS - The value of the Company implied by
management's expected future earnings, discounted back to present.
- FINANCIAL SPONSOR ANALYSIS - Rates of return a financial sponsor may
receive based on Uni-Marts' balance sheet, market levels of funded
debt to equity and management projections.
- PREMIUMS PAID ANALYSIS - The premium to the prevailing market price
implied by recent acquisitions of public companies of comparable
equity value to Uni-Marts.
- LIQUIDATION ANALYSIS - The amount of financial consideration that
could be distributed to shareholders if Uni-Marts was liquidated.
- OTHER - Other industry and Company specific factors considered
relevant.
[UNI-MART LOGO] 5 BOENNING & SCATTERGOOD, INC.
TAB II
COMPANY OVERVIEW
[UNI-MART LOGO] 6 BOENNING & SCATTERGOOD, INC.
COMPANY OVERVIEW
Based in State College, PA, Uni-Marts is an operator of convenience stores and
discount tobacco stores. The following information is as of January 1, 2004.
- The Company operates 286 stores (223 convenience stores operating
under the Uni-Marts name and 63 discount tobacco stores operating
under the Choice Cigarette Discount Outlet name) in primarily small
towns and rural parts of Pennsylvania, New York, Delaware, Maryland
and Virginia.
- Revenue is derived from sales of merchandise (such as dry grocery
items, health and beauty aids, newspapers and magazines, dairy
products, candy, frozen foods, beverages, tobacco products, novelty
items, fountain drinks and freshly-ground coffee and cappuccino
products) and gasoline, which is sold at 235 stores.
- The Company employs approximately 2,450 people, 1,330 on a full-time
basis.
- The Company owns 1 administrative office, 167 store locations and 1
gasoline service station. The Company leases 6 administrative
properties and 14 store locations from affiliated parties. The
additional 105 store locations are leased from unaffiliated parties.
- The Company's shares are quoted on the American Stock Exchange under
the ticker "UNI" and the Company has not paid cash dividends since
1997.
[UNI-MART LOGO] 7 BOENNING & SCATTERGOOD, INC.
COMPANY OBSERVATIONS
- The convenience store industry has faced significant challenges in
the last few years:
- Although industry revenues have continued to increase as
gas prices and the cost of tobacco products have
increased, industry pretax profits have declined from
$4.774 billion in 1999 to $2.615 billion in 2002 (45%)
as a result of higher operating costs and decreasing
margins(a)
- As profitability has declined, several convenience store
companies have faced liquidity crises and/or filed for
bankruptcy (Swiftly Serve, Dairy Mart, Fas Mart, Clark)
- Industry trends have impacted Uni-Marts with declining average
margins in two of the Company's significant product lines (gas and
tobacco), decreasing the Company's cash flow available to service
debt and invest in capital expenditures.
- In January 2004, the Commonwealth of Pennsylvania increased the tax
on cigarettes by $0.35 per pack. Management has indicated that this
may cause some customers to seek other lower cost distributors of
cigarettes including online merchants, vendors in neighboring states
and stores on Indian reservations.
- In addition to the declining performance, expansion and acquisition
have increased the Company's debt load from its late 1990's level of
50% - 60% of total capital to ~ 80% of total capital.
- In an effort to reduce its debt burden, the Company developed a
strategic plan to divest 100+ stores. A formal process was
undertaken in 2002.
- Current lenders, Provident Bank and GE Capital Franchise Finance
Corporation, have continued to work with the Company on current
terms based on their acceptance of the Company's strategic plan and
their understanding that the Company may pursue a sale of the entire
Company.
(a) National Association of Convenience Stores 2003 State of the Industry Report
[UNI-MART LOGO] 8 BOENNING & SCATTERGOOD, INC.
COMPANY OBSERVATIONS - (CONT.)
- While the formal divestiture process did not yield a transaction, a
series of conversations led to the public announcement of a
transaction with HFL Corporation (a company controlled by certain
insiders of Uni-Marts) to acquire the Company in June 2003. This
transaction was later terminated.
- A second transaction was considered by the Company in the 1st
quarter of 2004 for $1.87 per share in cash. The sides failed to
reach agreement and the transaction did not occur.
- Within the last few quarters, vendors, such as Stroehmann Bakeries,
L.C., Pepsico, Inc., McLane Company, Inc. and Exxon Mobil Corp.,
have either terminated their relationships with the Company or have
had discussions regarding tightening the terms of their
relationships.
- In the 4th quarter of 2003 and the 1st quarter of 2004, results were
impacted by abnormally high margins on gasoline, which management
believes is not a sustainable trend, and a decrease in depreciation
expense resulting from the reclassification of certain properties to
held for sale.
- Utilizing historical gasoline margins in its budgeting, management
estimates that the Company will approach its credit limits and may
violate covenants under its existing credit facilities during the
current fiscal year.
- If the proposed transaction or a successful implementation of the
divestiture plan does not occur, management has indicated that the
Company's auditors may want to discuss the Company's ability to
operate as a going concern in the upcoming financial quarters.
[UNI-MART LOGO] 9 BOENNING & SCATTERGOOD, INC.
FINANCIAL SUMMARY
($ IN THOUSANDS)
NET SALES
[BAR CHART]
1999 $252,306
2000 $348,704
2001 $422,266
2002 $409,501
2003 $458,479
2004B $445,366
EBITDA
[BAR CHART]
1999 $ 6,735
2000 $13,725
2001 $16,685
2002 $12,704
2003 $11,196
2004B $ 9,142
EBIT
[BAR CHART]
1999 $ 767
2000 $ 7,073
2001 $ 8,545
2002 $ 4,447
2003 $ 4,247
2004B $ 4,547
NET INCOME
[BAR CHART]
1999 ($ 2,236)
2000 $ 880
2001 $ 451
2002 ($ 1,317)
2003 ($ 2,079)
2004B ($ 1,495)
Sources: Company reports and management projections
[UNI-MART LOGO] 10 BOENNING & SCATTERGOOD, INC.
FINANCIAL OVERVIEW
GALLONS OF GAS SOLD PER STORE
(GALLONS IN THOUSANDS)
[BAR CHART]
Q1 '99 160
Q2 '99 150
Q3 '99 155
Q4 '99 154
Q1 '00 163
Q2 '00 145
Q3 '00 174
Q4 '00 188
Q1 '01 192
Q2 '01 173
Q3 '01 185
Q4 '01 184
Q1 '02 190
Q2 '02 172
Q3 '02 189
Q4 '02 183
Q1 '03 189
Q2 '03 168
Q3 '03 188
Q4 '03 187
Q1 '04 185
GASOLINE GROSS PROFIT MARGINS
[LINE GRAPH]
Q1 '99 14.3%
Q2 '99 14.7%
Q3 '99 11.7%
Q4 '99 10.0%
Q1 '00 10.9%
Q2 '00 9.0%
Q3 '00 8.9%
Q4 '00 9.6%
Q1 '01 10.0%
Q2 '01 9.5%
Q3 '01 10.6%
Q4 '01 11.3%
Q1 '02 11.1%
Q2 '02 11.5%
Q3 '02 9.1%
Q4 '02 8.5%
Q1 '03 8.6%
Q2 '03 8.8%
Q3 '03 (a) 7.4%
Q4 '03 7.4%
Q1 '04 (a) 8.0%
MERCHANDISE SALES PER STORE
(IN THOUSANDS)
[BAR CHART]
Q1 '99 129
Q2 '99 131
Q3 '99 145
Q4 '99 152
Q1 '00 143
Q2 '00 139
Q3 '00 162
Q4 '00 176
Q1 '01 169
Q2 '01 158
Q3 '01 179
Q4 '01 177
Q1 '02 187
Q2 '02 173
Q3 '02 193
Q4 '02 200
Q1 '03 190
Q2 '03 173
Q3 '03 195
Q4 '04 198
Q1 '04 194
MERCHANDISE GROSS PROFIT MARGINS
[LINE GRAPH]
Q1 '99 37.1%
Q2 '99 33.8%
Q3 '99 35.2%
Q4 '99 36.0%
Q1 '00 34.3%
Q2 '00 33.1%
Q3 '00 33.1%
Q4 '00 33.1%
Q1 '01 33.2%
Q2 '01 32.4%
Q3 '01 32.1%
Q4 '01 31.7%
Q1 '02 31.6%
Q2 '02 30.5%
Q3 '02 30.5%
Q4 '02 29.0%
Q1 '03 30.8%
Q2 '03 30.0%
Q3 '03 (a) 30.0%
Q4 '03 29.7%
Q1 '04 (a) 30.5%
(a) Beginning in Q3 2003 margins do not reflect operations of stores listed as
discontinued operations (122 as of 1/1/04). Since Jun. '03, the Company has
included gasoline taxes in revenue and COGS.
Sources: Company and Company reports
[UNI-MART LOGO] 11 BOENNING & SCATTERGOOD, INC.
HISTORICAL AND BUDGETED INCOME STATEMENT
($ IN THOUSANDS) FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------
1999 2000 2001 2002 2003(a)
---------- ----------- ----------- ---------- ----------
Merchandise Sales $ 146,718 $ 172,209 $ 204,580 $ 226,030 $ 222,624
Gasoline Sales 103,418 174,586 215,796 181,600 234,216
Other Income 2,170 1,909 1,890 1,871 1,639
---------- ----------- ----------- ---------- ----------
SALES $ 252,306 $ 348,704 $ 422,266 $ 409,501 $ 458,479
% Growth (5.3%) 38.2% 21.1% (3.0%) 12.0%
Cost of Sales 185,285 272,754 332,003 320,776 371,371
---------- ----------- ----------- ---------- ----------
GROSS PROFIT $ 67,021 $ 75,950 $ 90,263 $ 88,725 $ 87,108
Gross Margin 26.6% 21.8% 21.4% 21.7% 19.0%
Selling 52,569 55,334 66,260 67,995 68,292
General and Administrative 7,509 6,731 7,264 8,026 7,621
Depreciation and Amortization 5,968 6,652 8,140 8,257 6,948
Provision for Loss on Disposal - - - - -
Provision for Asset Impairment 208 160 54 - -
---------- ----------- ----------- ---------- ----------
EBIT $ 767 $ 7,073 $ 8,545 $ 4,447 $ 4,247
EBIT Margin 0.3% 2.0% 2.0% 1.1% 0.9%
Interest Expense 3,951 5,621 7,797 6,726 6,341
Profit Before Taxes ($ 3,184) $ 1,452 $ 748 ($ 2,279) ($ 2,093)
Income Taxes (948) 572 297 (962) (15)
---------- ----------- ----------- ---------- ----------
NET INCOME ($ 2,236) $ 880 $ 451 ($ 1,317) ($ 2,079) (b)
========== =========== =========== ========== ==========
Wtd. Avg. Shares 6,887,000 6,989,000 7,053,000 7,099,000 7,165,321
Earnings Per Share ($ 0.32) $ 0.13 $ 0.06 ($ 0.19) ($ 0.29)
EBIT $ 767 $ 7,073 $ 8,545 $ 4,447 $ 4,247
Depreciation and Amortization 5,968 6,652 8,140 8,257 6,948
Extraordinary Expense - - - - -
---------- ----------- ----------- ---------- ----------
EBITDA $ 6,735 $ 13,725 $ 16,685 $ 12,704 $ 11,196
EBITDA Margin 2.7% 3.9% 4.0% 3.1% 2.4%
Stores (At Period End) 246 291 293 295 292
($ IN THOUSAND)
5 YEAR LTM JAN. 1, BUDGET FYE SEP. 30
CAGR 2004 (a) 2004(a)
------ ---------- ------------------
Merchandise Sales 11.0% $ 221,477 $ 221,413
Gasoline Sales 22.7% 248,126 222,271
Other Income (6.8%) 1,539 1,682
---------- ----------
SALES 16.1% $ 471,142 $ 445,366
% Growth 12.1% (2.9%)
Cost of Sales 19.0% 384,215 361,842
---------- ----------
GROSS PROFIT 6.8% $ 86,926 $ 83,524
Gross Margin 18.5% 18.8%
Selling 6.8% 67,586 67,241
General and Administrative 0.4% 7,917 7,142
Depreciation and Amortization 3.9% 6,123 4,595
Provision for Loss on Disposal NM - -
Provision for Asset Impairment NM - -
---------- ----------
EBIT 53.4% $ 5,300 $ 4,547
EBIT Margin 1.1% 1.0%
Interest Expense 12.6% 6,237 6,121
Profit Before Taxes NM ($ 937) ($ 1,574)
Income Taxes NM 10 (79)
---------- ----------
NET INCOME NM ($ 947) (b) ($ 1,495)
========== ==========
Wtd. Avg. Shares 1.0% 7,181,762 7,190,000
Earnings Per Share NM ($ 0.13) ($ 0.21)
EBIT 53.4% $ 5,300 $ 4,547
Depreciation and Amortization 3.9% 6,123 4,595
Extraordinary Expense NM - -
---------- ----------
EBITDA 13.5% $ 11,423 $ 9,142
EBITDA Margin 2.4% 2.1%
Stores (At Period End) 4.4% 286 286
(a) Considers stores classified as discontinued operations during Q3 2003.
(b) Does not consider one-time expense relating to a change in accounting
principles.
Sources: Company reports and management estimates.
[UNI-MART LOGO] 12 BOENNING & SCATTERGOOD, INC.
HISTORICAL BALANCE SHEETS
($ IN THOUSANDS) AS OF SEPTEMBER 30,
---------------------------------------------------- JANUARY 1,
1999 2000 2001 2002 2003 2004
-------- -------- -------- -------- -------- ----------
CURRENT ASSETS
Cash $ 1,944 $ 7,882 $ 5,075 $ 6,501 $ 6,619 $ 5,185
Accounts Receivable 2,525 6,106 7,305 8,324 6,186 5,665
Inventories 11,737 16,236 18,471 20,859 20,167 19,196
Prepaid and Current Deferred Taxes 2,079 1,856 1,672 1,494 57 41
Property and Equipment Held for Sale 1,411 1,603 3,137 1,098 41,024 40,496
Prepaid Expenses and Other 1,099 1,205 1,265 1,137 1,317 1,029
Loan Due from Officer, Current Portion 60 60 - - - -
-------- -------- -------- -------- -------- --------
Total Current Assets 20,856 34,948 36,925 39,413 75,370 71,610
NON-CURRENT ASSETS
Net Property, Equipment and Improvements 61,713 100,701 103,488 98,037 51,083 50,386
Loan Due from Officer 480 420 420 360 - -
Intangible Assets 3,943 7,137 6,689 6,235 385 287
Other Assets 1,483 1,031 1,108 1,100 1,123 1,111
-------- -------- -------- -------- -------- --------
Total Non-Current Assets 67,619 109,289 111,705 105,732 52,591 51,784
======== ======== ======== ======== ======== ========
Total Assets 88,475 144,237 148,630 145,145 127,961 123,395
CURRENT LIABILITIES
Accounts Payable 10,967 18,400 16,239 17,811 19,056 13,245
Gas Taxes Payable 2,183 3,399 3,360 3,460 45 0
Accrued Expenses 5,223 7,029 6,820 7,207 7,425 7,217
Revolving Credit 1,800 - - 5,867 5,705 7,875
Current Maturities of Long-Term Debt 959 2,233 2,920 3,212 36,934 35,853
Current Obligations Under Capital Leases 264 386 391 113 122 95
-------- -------- -------- -------- -------- --------
Total Current Liabilities 21,397 31,447 29,730 37,670 69,287 64,284
NON CURRENT LIABILITIES
Long-Term Debt, Less Current 33,265 74,220 80,912 71,912 34,358 34,398
Maturities
Obligations Under Capital Leases, Less 876 786 361 214 92 88
Current Maturities
Deferred Taxes 2,562 2,956 2,917 1,797 0 0
Deferred Income and Other Liabilities 2,430 5,860 5,217 5,235 4,101 3,780
-------- -------- -------- -------- -------- --------
Total Non Current Liabilities 39,132 83,822 89,407 79,158 38,551 38,266
-------- -------- -------- -------- -------- --------
Total Liabilities 60,529 115,269 119,137 116,828 107,838 102,550
Total Stockholders' Equity 27,946 28,968 29,493 28,317 20,123 20,844
======== ======== ======== ======== ======== ========
Total Liabilities and Stockholders' Equity 88,475 144,237 148,630 145,145 127,961 123,395
Source: Company reports
[UNI-MART LOGO] 13 BOENNING & SCATTERGOOD, INC.
FIXED CHARGES COVERAGE AND LEVERAGE
OPERATING INCOME / INTEREST EXPENSE
(1999-LTM 1/1/2004)
[BAR GRAPH]
1999 01.19x
2000 1.26x
2001 1.10x
2002 0.66x
2003(a) 0.67x
1/1/2004 0.85x
FISCAL YEAR ENDED SEPTEMBER 30,
------------------------------- LTM JAN. 1,
($ IN THOUSAND) 1999 2000 2001 2002 2003(a) 2004(a)
- --------------- ------ ------ ------ ------ ------- -------
EBIT $ 767 $7,073 $8,545 $4,447 $4,247 $5,300
Interest Expense 3,951 5,621 7,797 6,726 6,341 6,237
------ ------ ------ ------ ------ ------
EBIT /Interest Expense 0.19x 1.26X 1.10x 0.66X 0.67x 0.85x
------ ------ ------ ------ ------ ------
(a) In the 3rd quarter of 2003 the Company reclassified certain assets as
discontinued operations. As a result of this transaction, deprecation expense
was reduced.
Source: Company reports
HISTORICAL TOTAL DEBT / TOTAL CAPITALIZATION
(199-1/1/2004)
[BAR GRAPH]
1999 57.1%
2000 72.8%
2001 74.1%
2002 74.2%
2003 79.3%
1/1/2004 79.0%
AS OF SEPTEMBER 30,
------------------- JANUARY 1,
($ IN THOUSAND) 1999 2000 2001 2002 2003 2004
- --------------- ------ ------- ------- ------- ------ ------
Revolving Credit 1,800 -- -- 5,867 5,705 7,875
Current Maturities of Long-Term Debt 959 2,233 2,920 3,212 36,934 35,853
Current Obligations Under Capital Leases 264 386 391 113 122 95
Long-Term Debt, Less Current Maturities 33,265 74,220 80,912 71,912 34,358 34,398
Obligations Under Capital Leases, Less Current Maturities 876 786 361 214 92 88
------ ------- ------- ------- ------ ------
Total Debt 37,164 77,624 84,584 81,318 77,211 78,309
Equity 27,946 28,968 29,493 28,317 20,123 20,844
------ ------- ------- ------- ------ ------
Total Capitalization 65,110 106,593 114,077 109,635 97,334 99,153
------ ------- ------- ------- ------ ------
Total Debt/Total Capitalization 57.1% 72.8% 74.1% 74.2% 79.3% 79.0%
------ ------- ------- ------- ------ ------
[UNI-MART LOGO] 14 BOENNING & SCATTERGOOD, INC.
HISTORICAL CASH FLOW STATEMENTS
FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------- YTD JAN. 1,
($ IN THOUSAND) 1999 2000 2001 2002 2003 2004
- -------------- --------- --------- --------- --------- --------- ---------
Cash Flows from Operating Activities
Cash received from customers and others $ 250,706 $ 348,513 $ 418,400 $ 410,392 $ 296,999 $ 81,520
Cash paid to suppliers and employees (247,105) (329,222) (410,275) (396,579) (289,099) (83,762)
Net receipts for sales and purchases of trading equity
securities -- -- -- -- -- --
Dividends and interest received 112 108 77 45 30 6
Interest paid (3,641) (5,100) (7,527) (6,637) (3,193) (775)
Income taxes received (paid) 691 45 (152) 21 32 16
Discontinued Operations -- -- -- -- 203 378
Net Cash Provided (Used) by Operating Activities 763 14,344 523 7,242 4,971 (2,617)
Cash Flows from Investing Activities
Acquisition of business -- (42,745) -- -- -- --
Receipts from sale of capital assets 2,313 993 394 559 29 --
Receipts from sale of discontinued operations -- -- -- -- 1,530 491
Purchase of property, equipment, and other assets (4,800) (7,036) (10,402) (2,868) (2,137) (385)
Note receivable from officer 111 60 60 60 360 --
Cash advanced for intangible and other assets (509) (191) (207) (177) (276) --
Cash received for intangible and other assets 239 633 66 69 -- 37
--------- --------- --------- --------- --------- ---------
Net Cash Provided (Used) by Investing Activities (2,646) (48,286) (10,089) (2,357) (493) 142
Cash Flows from Financing Activities
Borrowings (payments) on revolving credit agreement (1,700) (656) 4,615 109 (162) 2,171
Additional long-term borrowings 722 42,238 5,197 -- -- --
Principal payments on debt (1,026) (1,710) (3,065) (3,599) (4,200) (1,131)
Purchases of treasury stock (9) -- -- -- -- --
Proceeds from issuance of common stock 3 8 12 31 3 1
Dividends paid to stockholders -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net Cash (Used) by Financing Activities (2,011) 39,880 6,759 (3,459) (4,360) 1,041
Net Increase (Decrease) in Cash (3,894) 5,938 (2,807) 1,426 118 (1,434)
========= ========= ========= ========= ========= =========
Cash Beginning $ 5,838 $ 1,944 $ 7,882 $ 5,075 $ 6,501 $ 6,619
Cash Ending $ 1,944 $ 7,882 $ 5,075 $ 6,501 $ 6,619 $ 5,185
Source: Company reports
[UNI-MART LOGO] 15 BOENNING & SCATTERGOOD, INC.
SHARE TRADING HISTORY
UNI-MARTS PRICE / VOLUME PERFORMANCE
(1/1/00 - 1/22/04)
[Line graph entitled "Uni-Marts Price / Volume Performance" is omitted. The line
graph depicts Uni-Marts' price and volume performance from January 1, 2000 to
January 22, 2004. The announced hiring of a financial advisor on April 1, 2002,
and the period following announcement of the letter of intent with HFL Corp.
(June 3, 2003) through the day after the announcement of the termination of the
letter of intent with HFL (June 19, 2003) are noted.]
MARKET STATISTICS
-----------------
Market Price on 1/22/04 $ 1.76
52-Week High Price $ 2.26
52-Week Low Price $ 0.98
Avg. Daily Volume (52 Week) 2,293
OFFER STATISTICS
----------------
Offer Price Per Share $ 2.25
Premium to Current Market Price 27.8%
Premium to 52-Week High Price (0.4)%
Premium to 52-Week Low Price 129.6%
Source: Bloomberg
[UNI-MART LOGO] 16 BOENNING & SCATTERGOOD, INC.
QUARTERLY SHARE PRICE HISTORY
PRICE VOLUME
----- ------
CALENDAR YEAR OPEN CLOSE MID HIGH LOW AVERAGE CLOSE TOTAL AVERAGE DAILY
------------- ---- ----- --- ---- --- ------------- ----- -------------
1999 1st Quarter 2.75 2.38 2.75 3.00 2.25 2.72 150,700 3,140
2nd Quarter 2.31 1.88 1.88 2.38 1.38 1.89 321,200 5,948
3rd Quarter 1.88 1.25 1.50 1.94 1.13 1.54 264,700 5,190
4th Quarter 1.13 0.81 0.97 1.63 0.69 1.06 666,700 12,821
2000 1st Quarter 0.81 2.38 1.56 4.25 0.75 1.55 627,100 10,629
2nd Quarter 2.50 2.00 2.13 2.81 1.94 2.20 239,400 4,128
3rd Quarter 2.00 2.00 2.03 2.38 1.75 2.05 185,500 3,710
4th Quarter 1.88 1.50 1.81 2.13 1.38 1.80 262,000 5,458
2001 1st Quarter 1.44 1.86 1.95 2.30 1.50 1.94 162,200 3,244
2nd Quarter 1.86 1.80 1.85 1.99 1.75 1.85 169,500 3,852
3rd Quarter 1.80 2.30 2.20 2.99 1.75 2.11 364,300 6,874
4th Quarter 2.30 2.51 2.30 3.10 1.80 2.39 235,000 3,790
2002 1st Quarter 2.50 2.59 2.59 3.20 1.59 2.55 539,300 9,298
2nd Quarter 2.65 2.60 2.76 3.10 2.25 2.77 200,600 3,519
3rd Quarter 2.59 1.43 1.52 2.64 1.18 1.75 155,500 3,110
4th Quarter 1.43 1.49 1.30 1.50 1.07 1.31 164,500 3,290
2003 1st Quarter 1.25 1.12 1.26 1.40 0.98 1.21 83,700 1,947
2nd Quarter 1.12 1.80 1.45 2.26 1.10 1.57 173,400 3,400
3rd Quarter 1.75 1.45 1.57 1.94 1.35 1.59 121,700 2,340
4th Quarter 1.45 1.56 1.61 1.94 1.41 1.64 157,900 2,820
2004 1st Quarter (1/22/04) 1.51 1.76 1.60 2.10 1.40 1.62 53,200 3,800
Offer Price to Shareholders $2.25
Source: Bloomberg
[UNI-MART LOGO] 17 BOENNING & SCATTERGOOD, INC.
HISTORICAL MARKET VALUATION
IMPLIED ENTERPRISE VALUE TO EBITDA MULTIPLE(a)
(6/1/00 - 1/22/04)
[Line graph entitled "Implied Enterprise Value to EBITDA Multiple" is omitted.
The line graph depicts the historical implied enterprise value to EBITDA
multiples from June 1, 2000 to January 22, 2004. The implied enterprise value is
equal to the market capitalization plus cash less funded debt. Market
capitalization is based on Uni-Marts' daily closing price multiplied by the
number of shares outstanding. The historical implied enterprise value to EBITDA
multiples range from a high of 8.15x to a low of 4.73x over the period covered
by the graph. The historical implied enterprise value to EBITDA multiple is
plotted against an implied enterprise value to EBITDA multiple of 7.9x
calculated using the merger consideration of $2.25 per share. The announced
hiring of a financial advisor on April 1, 2002, and the period following
announcement of the letter of intent with HFL Corp. (June 3, 2003) through the
day after the announcement of the termination of the letter of intent with HFL
(June 19, 2003) are noted.]
(a) Results from Q3 2000 through Q2 2001 are pro forma results that include the
impact of the Orloski acquisition.
Sources: Company reports and Bloomberg
[UNI-MART LOGO] 18 BOENNING & SCATTERGOOD, INC.
SHARE TRADING HISTORY
1 YEAR INDEXED PERFORMANCE
(1/23/03 - 1/22/04)
[Line graph entitled the "1 Year Indexed Performance" is omitted. The line graph
depicts the year-to-date cumulative returns on Uni-Marts' common stock from
January 23, 2003 to January 22, 2004 measured by the percentage increase or
decrease of Uni-Marts' common stock price from the beginning of the measurement
period to the end of the measurement period, compared to the cumulative returns
of the Wilshire Total Market Index and a comparable company index. The Wilshire
Total Market Index measures performance of all United States headquartered
equity securities with readily available price data. The comparable company
index is an index created by Boenning & Scattergood, Inc. consisting of the
companies utilized in the Comparable Company Analysis. Specifically, these
companies are: 7-Eleven, Inc., Alimentation Couche-Tard, Inc. (B Shares), Bowlin
Travel Centers, Inc., Casey's General Stores, Inc., The Kroger Co. and The
Pantry, Inc. The cumulative total returns for the period from January 23, 2003
to January 22, 2004 for Uni-Marts' common stock, the Wilshire Total Market Index
and the comparable company index are 36.4%, 32.8% and 102.1%, respectively.]
3 YEAR INDEXED PERFORMANCE
(1/23/03 - 1/22/04)
[Line graph entitled the "3 Year Indexed Performance" is omitted. The line graph
depicts the period-to-date cumulative returns on Uni-Marts' common stock from
January 23, 2001 to January 22, 2004 measured by the percentage increase or
decrease of Uni-Marts' common stock price from the beginning of the measurement
period to the end of the measurement period, compared to the cumulative returns
of the Wilshire Total Market Index and a comparable company index. The Wilshire
Total Market Index measures performance of all United States headquartered
equity securities with readily available price data. The comparable company
index is an index created by Boenning & Scattergood, Inc. consisting of the
companies utilized in the Comparable Company Analysis. Specifically, these
companies are: 7-Eleven, Inc., Alimentation Couche-Tard, Inc. (B Shares), Bowlin
Travel Centers, Inc., Casey's General Stores, Inc., The Kroger Co. and The
Pantry, Inc. The historical cumulative returns for the period from January 23,
2001 to January 22, 2004 for Uni-Marts' common stock, the Wilshire Total Market
Index and the comparable company index are -6.1%, -11.3% and 77.9%,
respectively.]
5 YEAR INDEXED PERFORMANCE
(1/23/99 - 1/22/04)
[Line graph entitled the "5 Year Indexed Performance" is omitted. The line graph
depicts the period-to-date cumulative returns on Uni-Marts' common stock from
January 23, 1999 to January 22, 2004 measured by the percentage increase or
decrease of Uni-Marts' common stock price from the beginning of the measurement
period to the end of the measurement period, compared to the cumulative returns
of the Wilshire Total Market Index and a comparable company index. The Wilshire
Total Market Index measures performance of all United States headquartered
equity securities with readily available price data. The comparable company
index is an index created by Boenning & Scattergood, Inc. consisting of the
companies utilized in the Comparable Company Analysis. Specifically, these
companies are: 7-Eleven, Inc., Alimentation Couche-Tard, Inc. (B Shares), Bowlin
Travel Centers, Inc., Casey's General Stores, Inc., The Kroger Co. and The
Pantry, Inc. The historical cumulative returns for the period from January 23,
1999 to January 22, 2004 for Uni-Marts' common stock, the Wilshire Total Market
Index and the comparable company index are -40.1%, -1.1% and 96.8%,
respectively.]
Source: Bloomberg
[UNI-MART LOGO] 19 BOENNING & SCATTERGOOD, INC.
OWNERSHIP SUMMARY
COMMON SHARES OPTIONS TOTAL OWNERSHIP
--------------------- ------------------ --------------------
HOLDER AFFILIATION NUMBER % NUMBER % NUMBER %
- ------ ----------- --------- ------ --------- ----- --------- -----
OFFICERS AND DIRECTORS (a):
Daniel D. Sahakian (b) Director 1,014,308 14.1% 31,000 2.6% 1,045,308 12.4%
Henry D. Sahakian (b) Chairman & CEO 837,530 11.6% 79,667 6.7% 917,197 10.9%
Ara M. Kervandjian President (c) 59,309 0.8% 50,000 4.2% 109,309 1.3%
N. Gregory Petrick EVP and CFO 5,062 0.1% 48,333 4.1% 53,395 0.6%
Herbert C. Graves Director 25,785 0.4% 20,000 1.7% 45,785 0.5%
Gerold C. Shea Director 13,285 0.2% 20,000 1.7% 33,285 0.4%
Stephen B. Krumholz Director 11,960 0.2% 20,000 1.7% 31,960 0.4%
Frank R. Orloski, Sr. Director 15,635 0.2% 11,500 1.0% 27,135 0.3%
Jack G. Najarian Director 9,840 0.1% 15,000 1.3% 24,840 0.3%
Anthony S. Regensburg Director 9,840 0.1% 15,000 1.3% 24,840 0.3%
--------- ----- --------- ----- --------- -----
2,002,554 27.8% 310,500 26.0% 2,313,054 27.5%
BENEFICIAL OWNERS (a):
Linda Ordoukhanian 838,468 11.6% - 0.0% 838,468 10.0%
HP Limited Partnership 701,000 9.7% - 0.0% 701,000 8.3%
Dimensional Fund Advisors, Inc. 477,100 6.6% - 0.0% 477,100 5.7%
--------- ----- --------- ----- --------- -----
2,016,568 28.0% - 0.0% 2,016,568 24.0%
OTHER OWNERSHIP 3,183,857 44.2% 882,833 74.0% 4,066,690 48.4%
--------- ----- --------- ----- --------- -----
TOTAL OWNERSHIP 7,202,979 100.0% 1,193,333 100.0% 8,396,312 100.0%
(a) As reported in Uni-Marts' Def 14A filed January 21, 2003 with the
exception of M. Michael Arjmand who resigned in September 2003.
(b) Includes 139,450 shares of 278,900 shares held by HFL Corporation.
(c) The Company announced Mr. Kervandjian's promotion to President in April
2003.
Source: Company reports.
[UNI-MART LOGO] 20 BOENNING & SCATTERGOOD, INC.
TAB III
CONSIDERATIONS
1. COMPARABLE COMPANY ANALYSIS
2. Comparable Transactions Analysis
3. Discounted Cash Flow Analysis
4. Financial Sponsor Analysis
5. Premiums Paid Analysis
6. Liquidation Analysis
[UNI-MART LOGO] 21 BOENNING & SCATTERGOOD, INC.
COMPARABLE COMPANY OVERVIEW*
(All data is as of most recent quarter (LTM) except for store count. See
footnote (a))
LTM
REVENUE CONVENIENCE FRANCHISE STORES
($MMS) TOTAL STORES STORES (a) STORES W/ GAS (a) (a) AREAS OF OPERATION
------- ------------ ----------- ---------------- ---------------- --------------------------
The Kroger Co. $53,227 4,215 798 N/A(b) 97 Midwest, PA South and West
The Pantry, Inc. (c) 2,877 1,385 1,385 N/A None Southeast
Casey's General Stores, Inc. 2,279 1,345 1,345 1,345 55 Midwest
7-Eleven, Inc. 10,968 25,515 25,515 2,444 3,300 Nationwide and
Franchised International
19,700 Licensed
Bowlin Travel Centers, Inc. 22 11 11 11 None Arizona, New Mexico
Alimentation Couche-Tard, Inc.(d) 2,881 2,580 2,580 1,002 N/A Canada and Midwest
------- ------ ------ ----- ----- --------------------------
Uni-Marts, Inc. (e) 471 286 223 235 3 Mid-Atlantic
------- ------ ------ ----- ----- --------------------------
(a) All store count information as most recently reported in company
filings.
(b) Company SEC filings indicate that most convenience stores sell gas.
(c) Does not consider the Company's acquisition of Golden Gallon on
10/20/03. Total stores as of 9/25/03, stores with gas as of 6/26/03.
(d) Does not consider the Company's acquisition of Circle K Corp. on
12/17/03.
(e) Considers stores classified as discontinued operations.
LTM LTM GAS LTM MERCHANDISE LTM GAS LTM LTM GAS
MERCHANDISE SALES GROSS PROFIT GROSS PROFIT MERCHANDISE GROSS
SALES($MMS) ($MMS) ($MMS) ($MMS) GROSS MARGIN MARGIN
----------- ------ ------ ------ ------------ ------
The Kroger Co. N/A N/A N/A N/A N/A N/A
The Pantry, Inc. (a) $1,037 $1,813 $ 351 $147 33.9% 8.1%
Casey's General Stores, Inc. 842 1,402 316 107 37.5% 7.6%
7-Eleven, Inc. 7,613 3,355 2,612 326 34.3% 9.7%
Bowlin Travel Centers, Inc. 9 10 5 1 57.4% 10.6%
Alimentation Couche-Tard, Inc. (b,c) 503 701 166 55 32.9% 7.8%
------ ------ ------ ---- ---- ----
Uni-Marts, Inc. (d) 221 248 66 19 30.0% 7.8%
------ ------ ------ ---- ---- ----
(a) Does not consider the Company's acquisition of Golden Gallon on
10/20/03.
(b) Merchandise and gas sales (and margins) only consider Company's U.S.
sales. All Canadian Dollars converted to US Dollars using exchange
rate as of 1/22/04.
(c) Does not consider the Company's acquisition of Circle K Corp. on
12/17/03.
(d) Considers stores classified as discontinued operations.
*See Appendix B for descriptions of comparable companies.
Source: Company reports
[UNI-MART LOGO] 22 BOENNING & SCATTERGOOD, INC.
COMPARABLE COMPANY ANALYSIS
(USD, $000s, except for per share data)
LTM GROSS
COMPANY TICKER LTM SALES PROFIT LTM EBITDA LTM EBIT
- -------------------------------------- ----------------- ----------- ----------- ------------ -----------
The Kroger Co. KR $53,226,900 $14,213,700 $ 3,650,900 $ 2,479,900
7-Eleven, Inc. SE 10,967,891 2,938,141 402,642 102,946
Alimentation Couche-Tard, Inc. (a,b) ATDb.TO/ATDa.TO 2,880,557 632,490 134,114 95,112
Casey's General Stores, Inc. CASY 2,279,004 428,499 129,932 81,546
The Pantry, Inc. PTRY 2,876,720 525,176 128,268 72,987
Bowlin Travel Centers, Inc. BWTL.OB 21,594 7,950 1,484 762
----------- ----------- ----------- -----------
High $53,226,900 $14,213,700 $ 3,650,900 $ 2,479,900
Median $ 2,878,638 $ 578,833 $ 132,023 $ 88,329
Low $ 21,594 $ 7,950 $ 1,484 $ 762
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
UNI-MARTS, INC. (IMPLIED VALUES) UNI $ 471,142 $ 86,926 $ 11,423 $ 5,300
----------- ----------- ----------- -----------
LTM NET LTM GROSS LTM EBITDA LTM NET
COMPANY TICKER INCOME MARGIN(%) MARGIN(%) MARGIN(%)
- -------------------------------------- ----------------- ----------- -------- -------- ---------
The Kroger Co. KR $ 1,180,340 26.7% 6.9% 2.2%
7-Eleven, Inc. SE 86,310 26.8% 3.7% 0.8%
Alimentation Couche-Tard, Inc. (a,b) ATDb.TO/ATDa.TO 58,062 22.0% 4.7% 2.0%
Casey's General Stores, Inc. CASY 43,497 18.8% 5.7% 1.9%
The Pantry, Inc. PTRY 17,734 18.3% 4.5% 0.6%
Bowlin Travel Centers, Inc. BWTL.OB 488 36.8% 6.9% 2.3%
----------- ----- --- ------
High $ 1,180,340 36.8% 6.9% 2.3%
Median $ 50,779 24.3% 5.2% 2.0%
Low $ 488 18.3% 3.7% 0.6%
----------- ----- --- ------
----------- ----- --- ------
UNI-MARTS, INC. (IMPLIED VALUES) UNI ($ 947) 18.5% 2.4% NM
----------- ----- --- ------
(USD, $000s, except for per share data)
STOCK PRICE AS %OF 52 WEEK EQUITY MARKET ENTERPRISE DEBT/TOTAL
COMPANY TICKER OF 1/22/04 HIGH CAP. VALUE(c) CAP.(%)
- -------------------------------------- ---------------- -------------- ------------ ------------- -----------------------
The Kroger Co. KR $ 18.660 94.7% $ 14,060,310 $22,352,910 66.4%
7-Eleven, Inc. SE 16.660 85.4% 2,125,316 3,693,175 83.8%
Alimentation Couche-Tard, Inc. (a,b) ATDb.TO/ATDa.TO 18.666 98.8% 1,665,989 1,811,535 33.0%
Casey's General Stores, Inc. CASY 17.520 92.5% 876,301 997,258 29.2%
The Pantry, Inc. PTRY 21.500 78.3% 437,912 978,069 81.5%
Bowlin Travel Centers, Inc. BWTL.0B 1.750 87,5% 8,021 10,537 25.8%
------------- ------- ------------- --------------------
High 98.8% $ 14,060,310 $22,352,910 83.8%
Median 90.0% $ 1,271,145 $ 1,404,396 49.7%
Low 78.3% $ 8,021 $ 10,537 25.8%
------------- ------- ------------- --------------------
- ------------------------------------- ----------------- ------------- ------- ------------- --------------------
UNI-MARTS, INC. (IMPLIED VALUES) UNI $ 2.250 99.6% $ 16,661 $ 89,784 79.0%
- ------------------------------------- ----------------- ------------- ------- ------------- --------------------
ENTERPRISE MULTIPLES(c) EQUITY MULTIPLES
----------------------------- -------------------------
LTM BOOK
COMPANY TICKER LTM SALES EBITDA LTM EBIT VALUE LTM P/E 2004 P/E(D)
- -------------------------------------- ---------------- --------- ------- --------- ------ ------- ----------
The Kroger Co. KR 0.4x 6.1x 9.0x 3.3x 11.9x 12.4x
7-Eleven, Inc. SE 0.3x 9.2x 35.9x 6.3x 24.6x 19.5x
Alimentation Couche-Tard, Inc. (a,b) ATDb.TO/ATDa.TO 0.6x 13.5x 19.0x 4.4x 28.7x 18.0x
Casey's General Stores, Inc. CASY 0.4x 7.7x 12.2x 2.0x 20.1x 17.8x
The Pantry, Inc. PTRY 0.3x 7.6x 13.4x 3.3x 24.7x 17.0x
Bowlin Travel Centers, Inc. BWTL.OB 0.5x 7.1x 13.8x 0.7x 16.4x NA
------- ------ ------- ----- ------ ------
0.6x 13.5x 35.9x 6.3x 28.7x 19.5x
0.4x 7.7x 13.6x 3.3x 22.4x 17.8x
0.3x 6.1x 9.0x 0.7x 11.9x 12.4x
- ------------------------------------- ----------------- ------- ------ ------- ----- ------ ------
UNI-MARTS, INC. (IMPLIED VALUES) UNI 0.2x 7.9x 16.9x 0.9x NM NM
- ------------------------------------- ----------------- ------- ----- ------- ----- ------ ------
(a) All data converted to U.S. Dollars using spot prices as of 1/22/04.
(b) Share price shown, % of 52 week high and 2004 EPS estimate based on Class
B shares,
(c) Enterprise value equals equity purchase price plus net debt (debt and
preferred stock, less cash and marketable securities).
(d) Based on IBES mean estimates for calendar year 2004.
Source: Publicly filed SEC documents, Bloomberg.
[UNI-MARK LOGO] 23 BOENNING & SCATTERGOOD, INC.
TAB III
CONSIDERATIONS
1. Comparable Company Analysis
2. COMPARABLE TRANSACTIONS ANALYSIS
3. Discounted Cash Flow Analysis
4. Financial Sponsor Analysis
5. Premiums Paid Analysis
6. Liquidation Analysis
[UNI-MART LOGO] 24 BOENNING & SCATTERGOOD, INC.
COMPARABLE TRANSACTIONS
Boenning analyzed acquisitions of independent companies that operate convenience
stores and acquisitions of blocks of convenience stores:
- Analyzed 13 transactions announced between January 1, 2000 and
January 22, 2004:
($ IN MILLIONS) ENTERPRISE VALUE MULTIPLES EQUITY VALUE MULTIPLES
------------------------------------------- ----------------------
Equity Enterprise Ltm Number of Ltm Net
Purchase Price Value (a) Ltm Sales Ebitda Ltm Ebit Stores (b) Book Value Income
-------------- --------- --------- ------ -------- ---------- ---------- ------
High $830.0 $839.1 0.6 x 9.5 x 16.0 x 1.36 x 25.8 x 22.6 x
MEDIAN 70.6 60.4 0.1 x 5.4 x 8.4 x 0.33 x 3.4 x 15.5 x
Low 16.9 16.9 0.1 x 2.7 x 4.2 x 0.05 x 1.2 x 12.5 x
------ ------ --- --- ---- ---- --- ----
Number of Data Points 13 13 7 6 3 13 3 3
------ ------ --- --- ---- ---- --- ----
IMPLIED UNI-MARTS, INC. VALUES $18.4 $ 89.8 0.2 x 7.9 x 16.9 x 0.31 x 0.9 x NM
(a) Enterprise value equals equity purchase price plus net debt (debt
and preferred stock,less cash and marketable securities).
(b) Does not include franchised stores
Sources: Mergerstat, Bloomberg, Company reports
[UNI-MART LOGO] 25 BOENNING & SCATTERGOOD, INC.
COMPARABLE TRANSACTIONS
DATE ANNOUNCED ENTERPRISE VALUE MULTIPLES
--------------------------
EQUITY
($ MILLIONS) PURCHASE ENTERPRISE LTM LTM
DATE ANNOUNCED BUYER SELLER SELLER DESCRIPTION PRICE VALUE (A) LTM SALES EBITDA EBIT STORES(B)
- -------------- ----- ------ ------------------ ----- --------- --------- ------ ---- ---------
11/25/2003 WHP Holdings Corp. White Hen 230 store chain in 45.0 45.0 NA NA NA 0.20 x
Pantry (Clark Chicago and New England
Retail
Enterprises
Inc.)
10/6/2003 Alimentation Couche Circle K Operator of convenience 830.0 839.1 NA 5.4 x NA 0.50 x
Tard Corporation stores
Inc (ConocoPhillips)
8/25/2003 Pantry Inc (The) Golden Gallon Operates fuel servicing 187.0 187.0 0.5 x 6.1 x 8.4 x 1.36x
(Royal Ahold convenience stores
NV)
7/28/2003 Alimentation Clark Retail Group Owns and operates 24.5 24.5 0.2 x 5.4 x NA 0.57 x
Couche-Tard Inc gasoline service
Inc. stations and convenience
stores
2/7/2003 Sunoco, Inc. Marathon Ashland Speedway SuperAmerica 140.0 140.0 NA NA NA 0.73 x
Petroleum LLC convience stores
10/21/2002 Mariaz Financial Fas Mart Operates convenience 39.0 39.0 0.1 x NA NA 0.23 x
Group/Polar Convenience stores, delis, and
Investments Ltd Stores Inc gas stations
7/29/2002 Alimentation Dairy Mart 287 Convenience stores 79.5 79.5 0.1 x NM NM 0.28 x
Couche Tard Inc Convenience in the Midwest and
Stores Southeast
5/16/2001 Alimentation Johnson Oil Owner and operator of 74.8 74.8 0.1 x 2.7 x 4.2 x 0.33 x
Couche Tard Inc Company, Inc. the BigFoot convenience
store chain
5/1/2001 United Refining Co. Country Fair, Inc. Operator of convenience 16.9 16.9 NA NA NA 0.25 x
stores
4/17/2001 Delek Group Ltd The Williams Cos Operates a chain 147.0 147.0 NA NA NA 0.74 x
Inc of convenience stores
2/1/2001 Sunoco, Inc. The Coastal Corp. Retail gasoline outlets 59.0 59.0 NA NA NA 0.12 x
11/3/2000 Lukoil Getty Petroluem Operates 1,300 filling 70.6 60.4 0.1 x 5.0 x NM 0.05 x
Marketing stations and
convenience stores
2/24/2000 Uni-Marts Inc Orloski Service 43 convenience stores in 42.7 45.2 0.6 x 9.5 x 16.0x 1.05x
Station Inc Pennsylvania
EQUITY VALUE MULTIPLES
----------------------
($ MILLIONS) LTM NET
DATE ANNOUNCED BUYER SELLER SELLER DESCRIPTION BOOK VALUE INCOME
- -------------- ----- ------ ------------------ ---------- ------
11/25/2003 WHP Holdings Corp. White Hen 230 store chain in NA NA
Pantry (Clark Chicago and New England
Retail
Enterprises
Inc.)
10/6/2003 Alimentation Couche Circle K Operator of convenience NA NA
Tard Corporation stores
Inc (ConocoPhillips)
8/25/2003 Pantry Inc (The) Golden Gallon Operates fuel servicing NA 22.6 x
(Royal Ahold convenience stores
NV)
7/28/2003 Alimentation Clark Retail Group Owns and operates NA NA
Couche-Tard Inc gasoline service
Inc. stations and convenience
stores
2/7/2003 Sunoco, Inc. Marathon Ashland Speedway SuperAmerica NA NA
Petroleum LLC convience stores
10/21/2002 Mariaz Financial Fas Mart Operates convenience NA NA
Group/Polar Convenience stores, delis, and
Investments Ltd Stores Inc gas stations
7/29/2002 Alimentation Dairy Mart 287 Convenience stores NM NM
Couche Tard Inc Convenience in the Midwest and
Southeast Stores
5/16/2001 Alimentation Johnson Oil Owner and operator of 3.4 x 12.5 x
Couche Tard Inc Company, Inc. the BigFoot convenience
store chain
5/1/2001 United Refining Co. Country Fair, Inc. Operator of convenience NA NA
4/17/2001 Delek Group Ltd The Williams Cos stores Operates a chain NA NA
Inc of convenience stores
2/1/2001 Sunoco, Inc. The Coastal Corp. Retail gasoline outlets NA NA
11/3/2000 Lukoil Getty Petroluem Operates 1,300 filling 1.2 x NM
Marketing stations and
convenience stores
2/24/2000 Uni-Marts Inc Orloski Service 43 convenience stores in 25.8 x 15.5 x
Station Inc Pennsylvania
(a) Enterprise value equals equity purchase price plus net debt (debt and
preferred stock, less cash and marketable securities).
(b) Does not include franchised stores.
Sources: Mergerstat, Bloomberg. Company reports
[UNI-MART LOGO] 26 BOENNING & SCATTERGOOD, INC.
TAB III
CONSIDERATIONS
1. Comparable Company Analysis
2. Comparable Transactions Analysis
3. DISCOUNTED CASH FLOW ANALYSIS
4. Financial Sponsor Analysis
5. Premiums Paid Analysis
6. Liquidation Analysis
[UNI-MART LOGO] 27 BOENNING & SCATTERGOOD, INC.
DISCOUNTED CASH FLOW ANALYSIS
When preparing the discounted cash flow model, Boenning made the following
assumptions:
- - Examined 2 scenarios projected by Uni-Marts management:
- Divestiture of 128 stores
- No material divestitures
- - Discount rate used is Uni-Marts' Weighted Average Cost of Capital, which
was calculated to be 10.56%.
- - Analysis performed the discounted cash flow analysis using two terminal
value calculation methods:
- Exit EBITDA Multiple - Multiple implied by comparable transactions
analysis.
- Perpetual Growth Method - Growth rate of 1.25% in "No Store
Divestitures" scenario and 1.17% used in "Divestures" scenario
(management estimates).
($ in thousands)
NO DIVESTITURES
Actual - Fiscal Year Ended Projected - Fiscal Year Ended
---------------------------------- ----------------------------------------------------------
Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08
--------- --------- --------- --------- --------- --------- --------- ---------
INCOME STATEMENT:
Sales Growth 21.1% (3.0%) 12.0% (2.9%) 1.2% 1.3% 1.3% 1.3%
Gross Margin 21.4 21.7% 19.0% 18.7% 19.0% 19.0% 19.0% 19.0%
Operating Margin 2.0% 1.1% 0.9% 1.0% 0.7% 0.8% 0.8% 0.8%
BALANCE SHEET:
Capital Expenditures $ 7,036 $ 10,402 $ 2,868 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
Sales /A/R 69.2 56.1 74.1 73.8 60.0 60.0 60.0 60.0
COGS /Inventory 20.4 17.4 18.4 18.3 18.0 18.0 18.0 18.0
Accounts Payable /Inventory 113% 88% 94% 98% 80% 80% 80% 80%
DIVESTITURES
Actual - Fiscal Year Ended Projected - Fiscal Year Ended
---------------------------------- ----------------------------------------------------------
Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08
--------- --------- --------- --------- --------- --------- --------- ---------
INCOME STATEMENT:
Sales Growth 21.1% (3.0%) 12.0% (35.8%) (8.6%) 1.2% 1.2% 1.2%
Gross Margin 21.4% 21.7% 19.0% 20.6% 18.3% 18.2% 18.3% 18.3%
Operating Margin 2.0% 1.1% 0.9% 1.6% 2.5% 2.4% 2.3% 2.1%
BALANCE SHEET:
Capital Expenditures $ 7,036 $ 10,402 $ 2,868 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
Sales /A/R 69.2 56.1 74.1 60.0 60.0 60.0 60.0 60.0
COGS /Inventory 20.4 17.4 18.4 22.2 18.0 18.0 18.0 18.0
Accounts Payable /
Inventory 113% 88% 94% 76% 80% 80% 80% 80%
[UNI-MART LOGO] 28 BOENNING & SCATTERGOOD, INC.
WEIGHTED AVERAGE COST OF CAPITAL ANALYSIS
($ IN MILLIONS) CURRENT DILUTED TOTAL EQUITY TOTAL DEBT/ UN- % OF TOTAL WTD.AVG.
PRICE SHARES OUT. MARKET TOTAL MARKET RAW MARKET LEVERED MARKET UNLEV.
COMPARABLE COMPANY (1/22/04) (THOUSANDS) CAPITAL DEBT CAPITAL BETA CAPITAL BETA (A) CAPITAL BETA
- ------------------ --------- ----------- ------------ -------- ------- ---- ------- -------- ---------- --------
Kroger Co $ 18.66 753,500 $ 14,060 $ 8,427 $22,488 1.01 59.9% 0.71 74.2% 0.53
Pantry Inc/The 21.50 20,368 438 592 1,030 0.77 135.2% 0.39 3.4% 0.01
Casey's Genera! Stores Inc 17.52 50,017 876 179 1,055 0.66 20.4% 0.58 3.5% 0.02
7-Eleven Inc 16.66 127,570 2,125 1,737 3,863 1.16 81.7% 0.74 12.7% 0.09
Bowlin Travel Centers Inc 1.75 4,583 8 4 12 0.21 47.2% 0.16 0.0% 0.00
Alimentation Couche Tard Inc (b) 18.98 87,776 1,666 187 1,853 1.02 11.2% 0.94 6.1% 0.06
--------- -------- ------- ---- ------ ----- ----
TOTAL $ 19,174 $ 11,126 $30,300 100.0% 0.71
--------- -------- ------- ---- ------ ----- ----
Comparable Group Wtd, Avg.
Unlevered Beta: 0.71
Industry Debt / Equity ratio (c) 73.89%
Implied Levered Industry Beta (a) 1.08
---------
DERIVATION OF WEIGHTED AVERAGE
COST OF CAPITAL
Cost of Equity Cost of Debt
Risk Free Rate (e) 3.96% Risk Free Rate (e) 3.96%
Equity Risk Premium (f) 6.00% Spread to Risk Free Debt
Small Company Equity Risk (B rated debt) (i) 4.39%
Premium (g) 3.61% Marginal Tax Rate (j) 30.00%
Cost of Equity (CAPM) (h) 14.05% After Tax Cost of Debt (k) 5.84%
Debt /Total Cap. Ratio (I) 42.49%
MARKET BASED WEIGHTED AVERAGE
COST OF CAPITAL (d) 10.56%
Specify Company Risk Premium (m) 0.00%
---------
WEIGHTED AVERAGE COST OF
CAPITAL (WACC) 10.56%
=========
NOTES:
(a) Beta (L) = [1+ (1-Tax Rate)* Debt / Equity] * Beta (U)
(b) Stock price equal to weighted avg. price of Class A and B shares. Shares
outstanding equal to sum of Class A and B shares.
(c) Composite debt / equity ratio of companies with SIC codes starting with 54,
per Ibbotson's Cost of Capital 2003 Yearbook, data through June 2003.
(d) WACC = [Cost of Debt* (1-Tax Rate) * (Debt/Tot. Cap.)] + [Cost of Equity*
(1 - Debt/Tot. Cap.)].
(e) 10-year U.S. Treasury rate as of January 22, 2004.
(f) Per Ibbotson's Stocks, Bonds, Bills and Inflation 2003 Yearbook.
(g) Size premium for micro-cap stock, per Ibbotson's Stocks, Bonds, Bills and
Inflation 2003 Yearbook.
(h) Cost of Equity = Risk Free Rate + (Implied Levered Beta * Equity Risk Prem.)
+ Size Premium.
(i) Spread for 10 year B- rated U.S. industrial bonds per Bloomberg as of
January 22, 2004.
(j) Uni-Mart's long-term tax rate per management.
(k) After Tax Cost of Debt = (Risk Free Rate + Spread to Risk Free Debt)* (1-Tax
Rate).
(i) Composite debt /tot. capital ratio of companies with SIC codes starting with
54, per Ibbotson.
(m) Boenning assessment based on specific company and industry risk factors.
Note: Uni-Marts' beta and capital ratios were not used because the Company's
stock is illiquid and its current capital structure is not indicative of a
normal structure.
Sources: Ibbotson Associates: Stocks, Bonds, Bills, and Inflation 2003 Yearbook;
Ibbotson Associates: Cost of Capital Yearbook, Data Through June 2003; Shannon
P. Pratt; Bloomberg.
[UNI-MART LOGO] 29 BOENNING & SCATTERGOOD, INC.
DISCOUNTED CASH FLOW ANALYSIS - NO STORE DIVESTITURES
DISCOUNTED CASHFLOW PROJECTION
Year Ending September 30,
-------------------------------------------------------------
($ in thousands) 2004 2005 2006 2007 2008
---------------- --------- --------- --------- --------- ---------
Sales $ 445,323 $ 450,842 $ 456,499 $ 462,298 $ 468,242
Cost of Goods Sold 361,828 365,118 369,612 374,617 379,435
--------- --------- --------- --------- ---------
Gross Profit $ 83,495 $ 85,724 $ 86,887 $ 87,681 $ 88,807
Operating Expenses 78,945 82,374 83,387 84,158 85,281
--------- --------- --------- --------- ---------
Operating Income (EBIT) $ 4,550 $ 3,350 $ 3,500 $ 3,523 $ 3,526
Other Expenses - - - - -
--------- --------- --------- --------- ---------
Pretax Income $ 4,550 $ 3,350 $ 3,500 $ 3,523 $ 3,526
Income Tax Provision 1,365 1,005 1,050 1,057 1,058
--------- --------- --------- --------- ---------
Operating Profit (after tax) $ 3,185 $ 2,345 $ 2,450 $ 2,466 $ 2,468
Adjustments to Operating Profit:
Depreciation & Amortization 4,594 6,872 6,376 5,607 5,158
Changes in Working Capital 1,118 (6,487) (144) (152) (153)
Capital Expenditures (2,000) (2,000) (2,000) (2,000) (2,000)
--------- --------- --------- --------- ---------
Net Adjustments to Cash Flow 3,712 (1,615) 4,232 3,455 3,005
Free Cash Flows $ 6,897 $ 730 $ 6,682 $ 5,921 $ 5,474
========= ========= ========= ========= =========
Periodic Discount Rate 10.56% 10.56% 10.56% 10.56% 10.56% 10.56%
Discounting Time Period (Years) 1.00 2.00 3.00 4.00 5.00
Discount Factor 1.106 1.222 1.352 1.494 1.652
--------- --------- --------- --------- ---------
PRESENT VALUE OF FREE CASH FLOWS $ 6,238 $ 597 $ 4,944 $ 3,962 $ 3,313
========= ========= ========= ========= =========
Note: Interest expense is excluded for calculation of Free Cash Flows.
[UNI-MART LOGO] 30 BOENNING & SCATTERGOOD, INC.
DISCOUNTED CASH FLOW ANALYSIS - NO STORE DIVESTITURES
($ IN THOUSANDS)
PERPETUAL GROWTH MODEL
DISCOUNT RATE USED 10.56%
Assumed Perpetuity Growth Rate (a) 1.25%
Terminal Value based on Year 5 Cashflow $ 59,510
Discount Factor 1.652
--------
Net Present Value of Terminal Value $ 36,020
Net Present Value of Free Cash Flows $ 19,054
TOTAL NET PRESENT VALUE OF CASH FLOWS $ 55,073
Total Debt (As of Sep. 30, 2003) (77,211)
Cash on Balance Sheet (As of Sep. 30, 2003) 6,619
Cash From Options 0
--------
Equity Value ($ 15,519)
Diluted Shares Outstanding 7,196
--------
IMPLIED PRICE PER SHARE ($ 2.16)
SENSITIVITY ANALYSIS:
Perpetuity Growth Rate
--------------------------------------------
0.25% 0.75% 1.25% 1.75% 2.25%
------ ------ ------ ------ ------
8.56% 63,859 66,892 70,341 74,295 78,876
9.56% 56,880 59,195 61,787 64,711 68,036
10.56% 51,259 53,069 55,073 57,305 59,805
11.56% 46,636 48,080 49,665 51,410 53,344
12.56% 42,767 43,939 45,214 46,608 48,137
EXIT MULTIPLE MODEL
DISCOUNT RATE USED 10.56%
Adjusted EBITDA Year 5 $ 8,684
Assumed Exit EBITDA Multiple (b) 5.4 x
--------
Terminal Value based on 2008 EBITDA $ 46,894
Discount Factor 1.652
--------
Net Present Value of Terminal Value $ 28,384
Net Present Value of Free Cash Flows $ 19,054
TOTAL NET PRESENT VALUE OF CASH FLOWS $ 47,437
Total Debt (As of Sep. 30, 2003) (77,211)
Cash on Balance Sheet (As of Sep. 30, 2003) 6,619
Cash From Options 0
--------
Equity Value ($ 23,155)
Diluted Shares Outstanding 7,196
--------
IMPLIED PRICE PER SHARE ($ 3.22)
SENSITIVITY ANALYSIS:
Exit EBITDA Multiple
--------------------------------------------
4.4 x 4.9 x 5.4 x 5.9 x 6.4 x
------ ------ ------ ------ ------
8.56% 45,424 48,303 51,182 54,061 56,941
9.56% 43,761 46,511 49,262 52,012 54,762
10.56% 42,181 44,809 47,437 50,065 52,694
11.56% 40,679 43,191 45,703 48,216 50,728
12.56% 39,249 41,652 44,055 46,458 48,860
(a) Management estimated value.
(b) Exit EBITDA multiple is the median EBITDA multiple from the comparable
transactions analysis.
[UNI-MART LOGO] 31 BOENNING & SCATTERGOOD, INC.
DISCOUNTED CASH FLOW ANALYSIS - DIVESTITURES
DISCOUNTED CASHFLOW PROJECTION
Year Ending September 30,
----------------------------------------------------------
($ in thousands) 2004 2005 2006 2007 2008
- ------------------------------------------------------------------ --------- --------- --------- --------- ---------
Sales $ 294,299 $ 269,081 $ 272,195 $ 275,386 $ 278,658
Cost of Goods Sold 233,626 219,891 222,535 225,005 227,678
--------- --------- --------- --------- ---------
Gross Profit $ 60,673 $ 49,190 $ 49,660 $ 50,381 $ 50,980
Operating Expenses 55,832 42,360 43,221 44,101 44,998
--------- --------- --------- --------- ---------
Operating Income (EBIT) $ 4,841 $ 6,830 $ 6,439 $ 6,280 $ 5,982
Other Expenses (5,463) - - - -
--------- --------- --------- --------- ---------
Pretax Income $ 10,304 $ 6,830 $ 6,439 $ 6,280 $ 5,982
Income Tax Provision 3,091 2,049 1,932 1,884 1,795
--------- --------- --------- --------- ---------
Operating Profit (after tax) $ 1,750 $ 4,781 $ 4,507 $ 4,396 $ 4,187
Adjustments to Operating Profit:
Depreciation & Amortization 5,017 3,665 3,715 3,765 3,816
Changes in Working Capital (1,564) 1,337 (81) (81) (84)
Gain Due to Divestiture 39,864 - - - -
Capital Expenditures (2,000) (2,000) (2,000) (2,000) (2,000)
--------- --------- --------- --------- ---------
Net Adjustments to Cash Flow 41,317 3,002 1,634 1,684 1,732
Free Cash Flows $ 43,067 $ 7,783 $ 6,141 $ 6,080 $ 5,919
========= ========= ========= ========= =========
Periodic Discount Rate 10.56% 10.56% 10.56% 10.56% 10.56% 10.56%
Discounting Time Period (Years) 1.00 2.00 3.00 4.00 5.00
Discount Factor 1.106 1.222 1.351 1.494 1.652
--------- --------- --------- --------- ---------
PRESENT VALUE OF FREE CASH FLOWS $ 38,953 $ 6,367 $ 4,544 $ 4,069 $ 3,583
========= ========= ========= ========= =========
Note: Interest expense is excluded for calculation of Free Cash Flows.
[UNI-MART LOGO] 32 BOENNING & SCATTERGOOD, INC.
DISCOUNTED CASH FLOW ANALYSIS - DIVESTITURES
($ in thousands)
PERPETUAL GROWTH MODEL
DISCOUNT RATE USED 10.56%
Assumed Perpetuity Growth Rate (a) 1.17%
Terminal Value based on Year 5 Cashflow $ 63,762
Discount Factor 1.652
--------
Net Present Value of Terminal Value $ 38,595
Net Present Value of Free Cash Flows $ 57,516
TOTAL NET PRESENT VALUE OF CASH FLOWS $ 96,111
Total Debt (As of Sep. 30, 2003) (77,211)
Cash on Balance Sheet (As of Sep. 30, 2003) 6,619
Cash From Options 1,961
--------
Equity Value $ 27,480
Diluted Shares Outstanding 8,251
--------
IMPLIED PRICE PER SHARE $ 3.33
SENSITIVITY ANALYSIS:
Perpetuity Growth Rate
-----------------------------------------------
0.17% 0.67% 1.17% 1.67% 2.17%
------- ------- ------- ------- -------
8.56% 106,231 109,449 113,101 117,284 122,120
9.56% 98,421 100,880 103,633 106,734 110,255
10.56% 92,052 93,979 96,111 98,483 101,137
11.56% 86,748 88,288 89,976 91,835 93,891
12.56% 82,252 83,503 84,864 86,350 87,979
EXIT MULTIPLE MODEL
DISCOUNT RATE USED 10.56%
Adjusted EBITDA Year 5 $ 9,798
Assumed Exit EBITDA Multiple (b) 5.4 x
--------
Terminal Value based on 2008 EBITDA $ 52,909
Discount Factor 1.652
--------
Net Present Value of Terminal Value $ 32,026
Net Present Value of Free Cash Flows $ 57,516
TOTAL NET PRESENT VALUE OF CASH FLOWS $ 89,542
Total Debt (As of Sep. 30, 2003) (77,211)
Cash on Balance Sheet (As of Sep. 30, 2003) 6,619
Cash From Options 1,769
--------
Equity Value $ 20,719
Diluted Shares Outstanding 8,184
--------
IMPLIED PRICE PER SHARE $ 2.53
SENSITIVITY ANALYSIS:
Exit EBITDA Multiple
--------------------------------------------
4.4 x 4.9 x 5.4 x 5.9 x 6.4 x
------ ------ ------ ------ -------
8.56% 87,966 91,215 94,463 97,712 100,961
9.56% 85,739 88,842 91,945 95,049 98,152
10.56% 83,611 86,576 89,542 92,507 95,473
11.56% 81,577 84,412 87,246 90,081 92,916
12.56% 79,631 82,342 85,053 87,764 90,475
(a) Management estimated value.
(c) Exit EBITDA multiple is the median EBITDA multiple from the comparable
transactions analysis.
[UNI-MART LOGO] 33 BOENNING & SCATTERGOOD, INC.
TAB III
CONSIDERATIONS
1. Comparable Company Analysis
2. Comparable Transactions Analysis
3. Discounted Cash Flow Analysis
4. FINANCIAL SPONSOR ANALYSIS
5. Premiums Paid Analysis
6. Liquidation Analysis
[UNI-MART LOGO] 34 BOENNING & SCATTERGOOD, INC.
FINANCIAL SPONSOR ANALYSIS
Boenning prepared a leveraged buyout model in order to analyze how much a
financial sponsor (an investor that acquires companies for a limited time period
in order to achieve a return) could pay for Uni-Marts, given Uni-Marts' balance
sheet, market guidelines for acceptable levels of total debt to EBITDA, and
average equity contributions in leveraged buyouts. This analysis resulted in a
negative amount of equity contribution. As a result, Boenning examined the
returns investors may receive based on the financial consideration offered by
[BUYING GROUP] to shareholders.
When preparing the LBO model, Boenning made the following assumptions:
- Analysis examined two scenarios:
- Divestiture of 128 stores.
- No material divestitures.
- Projection assumptions:
- Same Income Statement and Balance Sheet projections as used in
the Discounted Cash Flow analysis.
- Cashflow assumptions:
- No cash dividends to common equity holders.
- Tax rate over the projection period assumed to be 30%.
- Debt assumptions:
- Rates on senior facilities are based on Uni-Marts' existing
facilities and market rates.
- Uni-Marts borrows to the full extent of its borrowing base at
closing, and borrows the maximum amount under its revolving
line of credit over the projection period.
- Average levels of subordinated debt to EBITDA in leveraged
buyouts are currently approximately 1.5 times, and average
levels of total debt to EBITDA are 3.5 - 4.0 times.
- Average expected subordinated debt rates of returns are
currently 15% - 25%.
- Equity assumptions:
- Average equity contributions to leveraged buyouts are
currently approximately 35% - 45%.
- Average expected private equity rates of return are currently
30% - 40%.
- Management typically receives between 0%-10% of the equity in
a leveraged buyout.
[UNI-MART LOGO] 35 BOENNING & SCATTERGOOD, INC.
FINANCIAL SPONSOR ANALYSIS - NO STORE DIVESTITURES
($ in thousands)
SOURCES OF FUNDS:
$ %
------- -----
Term Loan A $10,000 10.4%
Revolver Cash Borrowings 15,000 15.5%
Revolver Adv. for LOCs 0 0.0%
Term Loan B 0 0.0%
CapEx Facility 0 0.0%
Subordinated Debt 12,000 12.4%
Preferred Equity 0 0.0%
Common Equity 59,592 61.7%
------- -----
Total $96,592 100.0%
======= =====
LEVERAGE & COVERAGE RATIOS:
PROJECTED - FISCAL YEAR ENDING,
---------------------------------------------------
SEP-04 SEP-05 SEP-06 SEP-07 SEP-08
------ ------ ------ ------ ------
Senior Funded Debt /EBITDA 2.7x 2.3x 2.4x 2.5x 2.6x
Subordinated Debt /EBITDA 1.3x 1.2x 1.2x 1.3x 1.4x
Total Funded Debt /EBITDA 4.0x 3.5x 3.6x 3.8x 4.0x
EBITDA-Non-Fin Capex / Sr Debt Svc 4.2x 4.6x 4.2x 3.6x 3.3x
EBITDA-Non-Fin Capex /Total Debt Svc 2.3x 2.5x 2.4x 2.1x 1.9x
EBITDA-Non-Fin Capex / Fixed Charges 2.0x 2.5x 2.4x 2.1x 1.9x
USES OF FUNDS:
$ %
------- ------
Repay Existing Senior Debt $71,292 73.8%
Repay Existing Sub Debt 0 0.0%
Repay Existing Revolver 5,705 5.9%
Other 0 0.0%
Other 0 0.0%
Equity Purchase Price 18,390 19.0%
Proceeds from Options
Exercise (1,745) -1.8%
Transaction Expenses 2,950 3.1%
------- -----
Total $96,592 100.0%
======= =====
DEBT AMORT. & INTEREST RATES:
AMORT LIBOR SPREAD RATE LOC UNUSED MAX AVAIL.
-------- ----- ------ ---- ---- ------ ----------
Term Loan A 20 years 1.12% 3.52% 4.64% n/a n/a 0
Revolver n/a 1.12% 3.00% 4.12% 0.00% 0.00% 15,000
Term Loan B 5 years 1.12% 8.00% 9.12% n/a n/a 0
CapEx Facility 5 years 1.12% 3.75% 4.87% n/a n/a 0
CASH PIK RATE
------ ----- ------
Subordinated Debt 12.00% 0.00% 12.00%
Preferred Equity 8.00% 0.00% 8.00%
Cash Interest 1%
Cash Minimum Balance 100
Annual LIBOR Rate Adj. 0.5%
Avg. Balance Interest Calc. Yes
IRR AND DILUTION SUMMARY:
POST-
TRANSACTION EXERCISE
IRR OWNERSHIP PRICE
------------------------ ----------- --------
Year 5 Exit EBITDA Multiple 4.4x 5.4x 6.4x
Subordinated Debt 16.4% 18.0% 19.5% 17.0% $ 0.01
New Common Equity -22.5% -16.7% -12.2% 83.0% -
Management Options nm nm nm 0.0% -
PROPERTY, PLANT, & EQUIPMENT - COLLATERAL ASSUMPTIONS:
SOURCE VALUE ADVANCE COLLATERAL
------ ------- ------- ----------
Real Estate -- $97,845 75% $73,384
Machinery & Equipment -- - 75% -
-------
$73,384
=======
REVOLVER AVAILABILITY AT CLOSING:
BOOK VALUE DISCOUNT DISCOUNTED ADVANCE REVOLVER CASH LETTERS OF EXCESS
SEP-03 % VALUE RATE AVAIL. BORROWINGS CREDIT AVAIL.
---------- -------- ---------- ------- -------- ---------- ---------- ------
Receivables $ 6,186 10.0% $ 5,567 75.0% $ 4,176
Inventory 20,167 5.0% 19,159 60.0% 11,495
------- ------- ------- ------- ----- -----
Total $26,353 $24,726 $15,671 $15,000 $ 0 $ 671
======= ======= ======= ======= ===== =====
PRICE PER SHARE IMPLIED BY ANALYSIS:
Equity Purchase Price $18,390
Shares Outstanding (Diluted) 8,174
-------
Implied Price per Share $ 2.25
[UNI-MART LOGO] 36 BOENNING & SCATTERGOOD, INC.
FINANCIAL SPONSOR ANALYSIS - DIVESTITURES
($ in thousands)
SOURCES OF FUNDS:
$ %
------- -----
Term Loan A $10,000 10.3%
Revolver Cash Borrowings 15,000 15.5%
Revolver Adv. for LOCs 0 0.0%
Term Loan B 0 0.0%
CapEx Facility 0 0.0%
Subordinated Debt 15,000 15.5%
Preferred Equity 0 0.0%
Common Equity 56,622 58.6%
------- -----
Total $96,622 100.0%
======= =====
LEVERAGE & COVERAGE RATIOS:
PROJECTED - FISCAL YEAR ENDING,
---------------------------------------------------
SEP-04 SEP-05 SEP-06 SEP-07 SEP-08
------ ------ ------ ------ ------
Senior Funded Debt /EBITDA 2.5x 0.0x 0.0x 0.0x 0.0x
Subordinated Debt /EBITDA 1.5x 1.4x 1.5x 1.5x 1.5x
Total Funded Debt /EBITDA 4.0x 1.4x 1.5x 1.5x 1.5x
EBITDA-Non-Fin Capex / Sr Debt Svc 4.6x 0.3x nm nm nm
EBITDA-Non-Fin Capex /Total Debt Svc 2.2x 0.3x 4.5x 4.5x 4.3x
EBITDA-Non-Fin Capex / Fixed Charges 1.4x 0.3x 2.7x 2.7x 2.7x
USES OF FUNDS:
$ %
------- ------
Repay Existing Senior Debt $71,292 73.8%
Repay Existing Sub Debt 0 0.0%
Repay Existing Revolver 5,705 5.9%
Other 0 0.0%
Other 0 0.0%
Equity Purchase Price 18,391 19.0%
Proceeds from Options
Exercise (1,746) -1.8%
Transaction Expenses 2,980 3.1%
------- -----
Total $96,622 100.0%
======= =====
DEBT AMORT. & INTEREST RATES:
AMORT LIBOR SPREAD RATE LOC UNUSED MAX AVAIL.
-------- ----- ------ ---- ---- ------ ----------
Term Loan A 20 years 1.12% 3.52% 4.64% n/a n/a 0
Revolver n/a 1.12% 3.00% 4.12% 0.00% 0.00% 15,000
Term Loan B 5 years 1.12% 8.00% 9.12% n/a n/a 0
CapEx Facility 5 years 1.12% 3.75% 4.87% n/a n/a 0
CASH PIK RATE
------ ----- ------
Subordinated Debt 12.00% 0.00% 12.00%
Preferred Equity 8.00% 0.00% 8.00%
Cash Interest 1%
Cash Minimum Balance 100
Annual LIBOR Rate Adj. 0.5%
Avg. Balance Interest Calc. Yes
IRR AND DILUTION SUMMARY:
POST-
TRANSACTION EXERCISE
IRR OWNERSHIP PRICE
------------------------ ----------- --------
Year 5 Exit EBITDA Multiple 4.4x 5.4x 6.4x
Subordinated Debt 17.4% 18.0% 18.5% 7.1% $ 0.01
New Common Equity 4.5% 7.0% 9.4% 92.9% -
Management Options nm nm nm 0.0% -
PROPERTY, PLANT & EQUIPMENT - COLLATERAL ASSUMPTIONS:
SOURCE VALUE ADVANCE COLLATERAL
------ ------- ------- ----------
Real Estate --- $97,845 75% $73,384
Machinary & Equipment -- - 75% -
-------
$73,384
=======
REVOLVER AVAILABILITY AT CLOSING:
BOOK VALUE DISCOUNT DISCOUNTED ADVANCE REVOLVER CASH LETTERS OF EXCESS
SEP-03 % VALUE RATE AVAIL. BORROWINGS CREDIT AVAIL.
---------- -------- ---------- ------- -------- ---------- ---------- ------
Receivables $ 6,186 10.0% $ 5,567 75.0% $ 4,176
Inventory 20,167 5.0% 19,159 60.0% 11,495
---------- ---------- -------- ---------- ---------- ------
Total $26,353 $ 24,726 $ 15,671 $15,000 $ 0 $ 671
PRICE PER SHARE IMPLIED BY ANALYSIS:
Equity Purchase Price $18,391
Shares Outstanding (Diluted) 8,174
-------
Implied Price per Share $ 2.25
[UNI-MART LOGO] 37 BOENNING & SCATTERGOOD, INC.
TAB III
CONSIDERATIONS
1. Comparable Company Analysis
2. Comparable Transactions Analysis
3. Discounted Cash Flow Analysis
4. Financial Sponsor Analysis
5. PREMIUMS PAID ANALYSIS
6. Liquidation Analysis
[UNI-MART LOGO] 38 BOENNING & SCATTERGOOD, INC.
PREMIUMS PAID ANALYSIS
Boenning analyzed the premiums paid to the prevailing share price in
transactions with the following characteristics:
- U.S. based targets which were acquired at equity values in the range
of $10 to $35 million.
- Transactions announced between January 1, 2001 through to January
22, 2004.
TRANSACTION PREMIUM UNI-MARTS, INC. IMPLIED
-------------------------------- PREMIUM
LOW MEDIAN HIGH BASED ON OFFER PRICE
-------------------------------- -----------------------
1 DAY BEFORE ANNOUNCEMENT (78.0%) 34.2% 520.0% 27.8%
5 DAYS BEFORE ANNOUNCEMENT (80.0%) 39.1% 520.0% 38.9%
30 DAYS BEFORE ANNOUNCEMENT (88.4%) 49.6% 520.0% 33.1%
UNI-MARTS, INC.
Close 1 Day Prior (1/22/04) $1.76
Close 5 Day Prior (1/15/04) 1.62
Close 30 Day Prior (12/9/03) 1.69
Source: Mergerstat
[UNI-MART LOGO] 39 BOENNING & SCATTERGOOD, INC.
TAB III
CONSIDERATIONS
1. Comparable Company Analysis
2. Comparable Transactions Analysis
3. Discounted Cash Flow Analysis
4. Financial Sponsor Analysis
5. Premiums Paid Analysis
6. LIQUIDATION ANALYSIS
[UNI-MART LOGO] 40 BOENNING & SCATTERGOOD, INC.
LIQUIDATION ANALYSIS
($ IN THOUSANDS) REPORTED 1/1/2004 ADJS. PRO FORMA 1/1/2004
- ---------------- ----------------- ----- ------------------
CURRENT ASSETS
CASH $ 5,185 - $ 5,185
Accounts Receivable 5,665 (1,416) (a) 4,248
Inventories 19,196 (7,678) (b) 11,517
Prepaid and Current Deferred Taxes 41 (41) (c) -
Property and Equipment Held for Sale 40,496 - (d) 40,496
Prepaid Expenses and Other 1,029 (1,029) (c) -
--------- --------- ---------
Total Current Assets 71,610 (10,164) 61,447
NON-CURRENT ASSETS
Net Property, Equipment and Improvements 50,386 (21,358) (d) 29,028
Intangible Assets 287 (287) (c) -
Other Assets 1,111 (1,111) (c) -
--------- --------- ---------
Total Non-Current Assets 51,784 (22,756) 29,028
========= ========= =========
Total Assets 123,395 (32,920) 90,475
CURRENT LIABILITIES
Accounts Payable 13,245 - 13,245
Accrued Expenses 7,217 - 7,217
Revolving Credit 7,875 - 7,875
Current Maturities of Long-Term Debt 35,853 - 35,853
Current Obligations Under Capital Leases 95 - 95
--------- --------- ---------
Total Current Liabilities 64,284 - 64,284
NON CURRENT LIABILITIES
Long-Term Debt, Less Current Maturities 34,398 - 34,398
Obligations Under Capital Leases, Less Current Maturities 88 - 88
Deferred Income and Other Liabilities 3,780 (3,780) (e) -
Termination Costs - 22,175 (f) 22,175
--------- --------- ---------
Total Non Current Liabilities 38,266 18,395 56,661
--------- --------- ---------
Total Liabilities 102,550 18,395 120,945
Total Stockholders' Equity 20,844 (51,315) (30,471)
========= ========= =========
Total Liabilities and Net Worth 123,395 (32,920) 90,475
Shares Outstanding 7,202,979 7,202,979
Book Value Per Share $ 2.89 ($ 4.23)
NOTES
(a) Discounted at Company's advance rate by lenders (75%).
(b) Discounted at Company's advance rate by lenders (60%).
(c) Would not be convertible into cash in a liquidation scenario.
(d) Company estimated value of real estate of $97,845 MM, plus 10% to estimate
asking price, less 30% to estimate negotiated contract price, less 9%
transaction costs. Plus $0.964 MM in other PP&E held for sale.
(e) These liabilities are captured in the estimated termination costs.
(f) Termination costs estimated by Company as follows:
($ in thousands)
Estimated operating lease payoff $3,442
Estimated gas termination costs 11,010
Estimated debt prepayment costs 6,206
Estimated supply termination costs 1,517
-------
Total $22,175
Sources: Company reports and management assumptions.
[UNI-MART LOGO] 41 BOENNING & SCATTERGOOD, INC.
TAB A
APPENDIX A
FORM OF OPINION
[UNI-MART LOGO] 42 BOENNING & SCATTERGOOD, INC.
FORM OF OPINION
January 26, 2004 BOENNING & SCATTERGOOD, INC.
ESTABLISHED 1914
INVESTMENT BANKING
Ad-Hoc Committee of The Board of Directors
Uni-Marts, Inc.
477 East Beaver Avenue
State College, Pennsylvania 16801-5690
Dear Sirs:
We understand that Uni-Marts, Inc. (the "Company") and Green Valley
Acquisition Co., LLC ("Purchaser"), entered into an Agreement and Plan of Merger
dated January 26, 2004 (the "Merger Agreement") pursuant to which, upon the
terms and subject to the conditions contained in the Merger Agreement, the
Company shall be merged with and into the Purchaser (the "Transaction") and all
of the issued and outstanding shares of common stock of the Company, par value
$.10 per share (the "Shares"), other than shares held by shareholders of the
Purchaser, shall be converted into the right to receive $2.25 per share in cash
(the "Consideration").
You have asked us whether, in our opinion, the Consideration to be
received by holders of the Shares pursuant to the Merger Agreement is fair from
a financial point of view to such holders.
Boenning & Scattergood, Inc., as part of its investment banking business,
regularly is engaged in the valuation of assets, securities and companies in
connection with various types of asset and securities transactions, including
mergers, acquisitions, going-private transactions, private placements and
valuations for various other purposes, and in the determination of the adequacy
of consideration in such transactions. We have been retained by the Ad Hoc
Committee of the Board of Directors (the "Committee") for the purpose of
providing this opinion. We have not been authorized by the Company, the
Committee or the Board of Directors to solicit, nor have we solicited,
third-party indications of interest for acquisition of all or any part of the
Company. In the ordinary course of its business as a broker-dealer, Boenning
may, from time to time, purchase securities from, and sell securities to, the
Company. In the ordinary course of business, Boenning & Scattergood may actively
trade the securities of the Company for its own account and for the accounts of
customers and accordingly may at any time hold a long or short position in such
securities.
In arriving at our opinion, we have, among other things: (i) reviewed the
historical financial performance, current financial position and general
prospects of the Company, and reviewed certain internal financial analyses and
forecasts prepared by the management of the Company, (ii) reviewed a draft of
the Merger Agreement, (iii) studied and analyzed the stock market trading
history of the Company, (iv) considered the terms and conditions of the
Transaction as compared with the terms and conditions of certain acquisition
transactions involving operators of convenience stores and blocks of stores, (v)
met and/or communicated with certain members of the Company's senior management
to discuss its operations, historical financial statements and future prospects,
and (vi) conducted such other financial analyses, studies and investigations as
we deemed appropriate.
4 Tower Bridge - 200 Barr Harbor Drive - Suite 300 - West Conshohocken
- PA 19428-2979 (610)832-1212 - (800)883-1212 - FAX (610) 832-5301
Member NASD, SIPC
Ad-Hoc Committee of The Board of Directors
January 26, 2004
Page 2
Our opinion is given in reliance on information and representations made
or given by the Company, and its officers, directors, auditors, counsel and
other agents, and on filings, releases and other information issued or provided
to us by the Company including financial statements, financial projections and
stock price data as well as certain information from recognized independent
sources. We have not independently verified the information concerning the
Company or other data which we have considered in our review and, for purposes
of the opinion set forth below, we have assumed and relied upon the accuracy and
completeness of all such information and data. We have not conducted a physical
inspection of any properties or facilities of the Company. We have not made or
obtained any independent evaluation or appraisal of any of the properties or
facilities of the Company. Additionally, we assume that the Transaction is in
all respects lawful under applicable law.
With regard to financial and other information relating to the general
prospects of the Company, we have assumed that such information has been
reasonably prepared and reflects the best currently available estimates and
judgments of the management of the Company as to the Company's most likely
future performance. We have also assumed, with your consent, that the Merger
Agreement and related documents that we reviewed will conform in all material
respects to their final form.
Our opinion is based upon information provided to us by the management of
the Company, as well as market, economic, industry, financial and other
conditions as they exist and can be evaluated only as of the date hereof and
speaks to no other period. Our opinion pertains only to the financial
consideration of the Transaction and is provided for the information and
assistance of the Committee. Our opinion does not constitute a recommendation to
the Committee and does not constitute a recommendation to the Company's
shareholders as to whether how such shareholders should vote on the Transaction.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Consideration to be received by the holders of Shares
pursuant to the Merger Agreement is fair from a financial point of view to such
holders.
Sincerely,
BOENNING & SCATTERGOOD, INC.
[UNI-MART LOGO] 43 BOENNING & SCATTERGOOD, INC.
TAB B
APPENDIX B
COMPARABLE COMPANY DESCRIPTIONS
[UNI-MART LOGO] 44 BOENNING & SCATTERGOOD, INC.
COMPARABLE COMPANY ANALYSIS - DESCRIPTIONS
COMPANY TICKER DESCRIPTION
- ------- ------ -----------
Alimentation Couche Tard Inc ATD/A CN Alimentation Couche-Tard Inc. operates a network of 24-hour convenience stores in Canada
and the United States. The Company offers a variety of food and other products, fast-food
services, lottery and gasoline sales, and automated banking machines.
Bowlin Travel Centers Inc BWTL Bowlin Travel Centers, Inc. operates travel centers dedicated to serving the traveling
public in rural and smaller metropolitan areas of the Southwestern United States. The
Company's travel centers offer brand name food, gasoline, and a variety of unique
Southwestern merchandise.
Casey's General Stores Inc CASY Casey's General Stores, Inc. operates convenience stores in the Midwest. The Company's
stores operating under the name Casey's General Store, carry a selection of food,
beverages, tobacco products, health and beauty aids, automotive products, and other
non-food items, as well as sells gasoline.
Kroger Co KR The Kroger Co. operates supermarkets and convenience stores in the United States. The
Company also manufactures and processes food that its supermarkets sell. Kroger's stores
operate under names such as Dillon Food Stores, City Market, Sav-Mor, Kwik Shop, and Mini
Mart.
Pantry Inc/The PTRY The Pantry, Inc. operates convenience stores in the southeastern United States. The
Company's stores offer a variety of merchandise and gasoline, as well as ancillary services
designed to appeal to the convenience needs of the customers. The Pantry's stores are
located in Florida, North Carolina, South Carolina, Kentucky, Indiana, Tennessee, Virginia,
and Georgia.
7-Eleven Inc SE 7-Eleven, Inc. operates, franchises, and licenses a convenience store chain on a worldwide
basis. The Company's stores operate under the 7-ELEVEN name, as well as the Christy's
Markets and Quik Marts names. 7-Eleven's stores are extended-hour retail stores, providing
beverages, candy, fresh take-out foods, groceries, tobacco items, self-serve gasoline,
lottery tickets, and other items.
[UNI-MART LOGO] 45 BOENNING & SCATTERGOOD, INC.