HAMBRECHT & QUIST LLC
EXHIBIT 15
ONE BUSH STREET
SAN FRANCISCO, CA 94104
(415)576-3300
October 30, 1997
Confidential
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The Board of Directors
Cambridge SoundWorks, Inc.
333 Needham Street
Newton, Massachusetts 02164
Dear Board of Directors:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock, no par value
per share (the "Common Stock"), Cambridge SoundWorks Inc. (the "Company") of
the consideration to be received by such holders in connection with a proposed
transaction as set forth below.
We understand that the Company, Creative Technology Ltd., ("Creative") and CSW
Acquisition Corporation (the "Purchaser") propose to enter into an Agreement
and Plan of Merger (the "Agreement") dated as of October 30, 1997. The terms
of the Agreement provide, among other things, that (i) the Purchaser will
promptly commence a tender offer (the "Offer") to purchase for cash all of the
outstanding shares of Common Stock at a purchase price of $10.68 per share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Agreement and certain ancillary documents to be filed with the
Securities and Exchange Commission; and (ii) the Purchaser will subsequently
be merged (the "Merger") with and into the Company in a transaction which will
provide all remaining holders of shares of Common Stock (other than the
Company, Creative, the Purchaser or their respective subsidiaries, and holders
who have perfected their appraisal rights under Massachusetts law) with $10.68
per share in cash. The Offer and the Merger constitute the "Proposed
Transaction."
Hambrecht & Quist LLC ("Hambrecht & Quist"), as part of its investment banking
services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic
transactions, corporate restructurings, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. We have acted as a financial
advisor to the Board of Directors of the Company in connection with the
Proposed Transaction, and we will receive a fee for our services, which
include the rendering of this opinion.
In the past, we have provided investment banking and other financial advisory
services to the Company and have received fees for rendering these services.
In particular, Hambrecht & Quist acted as lead managing underwriter in the
Company's initial public offering in 1994. In the ordinary course of business,
Hambrecht & Quist acts as a market maker and broker in the publicly traded
securities of the Company and receives customary compensation in connection
therewith, and also provides research coverage for the Company. In the
ordinary course of business, Hambrecht & Quist actively trades in the equity
and derivative securities of the Company for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities. In addition, Hambrecht & Quist and its
affiliates currently own approximately 337,000 shares of Company Common Stock.
SAN FRANCISCO . NEW YORK . BOSTON
MEMBERS NEW YORK STOCK EXCHANGE . AMERICAN STOCK EXCHANGE . PACIFIC STOCK EXCHANGE
The Board of Directors
Cambridge SoundWorks, Inc.
Page 2
In connection with our review of the Proposed Transaction, and in arriving at
our opinion, we have, among other things:
(i) reviewed the publicly available consolidated financial statements of
Creative for recent years and interim periods to date and certain other
relevant financial and operating data of Creative made available to us
from published sources;
(ii) reviewed the financial statements of the Company for recent years and
interim periods to date and certain other relevant financial and
operating data of the Company made available to us from published
sources and from the internal records of the Company;
(iii) reviewed certain internal financial and operating information
relating to the Company, including certain financial projections,
prepared by the management of the Company;
(iv) discussed the business, financial condition and prospects of the Company
with certain of its officers;
(v) reviewed the recent reported prices and trading activity for the common
stock of the Company and compared such information and certain financial
information for the Company with similar information for certain other
companies engaged in businesses we consider comparable;
(vi) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
(vii) reviewed the Agreement; and
(viii) performed such other analyses and examinations and considered such
other information, financial studies, analyses and investigations and
financial, economic and market data as we deemed relevant.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all of the information concerning the Company or Creative
considered in connection with our review of the Proposed Transaction, and we
have not assumed any responsibility for independent verification of such
information. We have not undertaken any independent valuation or appraisal of
any of the assets or liabilities of the Company or Creative; nor have we
conducted a physical inspection of the properties and facilities of either
company. With respect to the financial forecasts and projections used in our
analysis, we have assumed that they reflect the best currently available
estimates and judgments of the expected future financial performance of the
Company. For purposes of this Opinion, we have assumed that neither the
Company nor Creative is a party to any pending transactions, including
external financings, recapitalizations or material merger discussions, other
than the Proposed Transaction and those activities undertaken in the ordinary
course of conducting their respective businesses. Our opinion is necessarily
based upon market, economic, financial and other conditions as they exist and
can be evaluated as of the date of this letter and any change in such
conditions would require a reevaluation of this opinion. We were not requested
to, and did not, formally solicit indications of interest from any other
parties in connection with a possible acquisition of, or business combination
with, the Company.
It is understood that this letter is addressed to and for the information of
the Board of Directors in connection with their evaluation of the Proposed
Transaction and may not be used for any other purpose without our prior
written consent; provided, however, that this letter may be reproduced in full
in any filing with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934. This letter does not constitute a
recommendation to any stockholder of the Company as to whether such
stockholder should accept the Offer.
The Board of Directors
Cambridge SoundWorks, Inc.
Page 3
Based upon and subject to the foregoing and after considering such other
matters as we deem relevant, we are of the opinion that as of the date hereof
the consideration to be received by the holders of Company Common Stock in the
Proposed Transaction is fair to such holders from a financial point of view.
We express no opinion, however, as to the adequacy or financial fairness of
any consideration received in the Proposed Transaction by Creative or any of
its affiliates.
Very truly yours,
HAMBRECHT & QUIST LLC
/s/ David Golden
By _______________________________________
David Golden
Managing Director