Exhibit 16(c)(1)
BCT International, Inc. CONFIDENTIAL
05.20.03
PRESENTATION TO THE INDEPENDENT COMMITTEE OF THE BOARD OF DIRECTORS
This presentation and its analyses are only for the use of the Independent
Committee of the Board of Directors and are not intended to, nor should they be,
relied upon by any other party, including shareholders of BCT International,
Inc. The consent of Capitalink is required prior to the disclosure to any third
party of this presentation, its analyses, or of the assessments made by
Capitalink. These materials are based solely on information contained in
publicly available documents and certain other information provided to
Capitalink by management and the Independent Committee of the Board of
Directors. Capitalink has not attempted to investigate or verify the accuracy or
completeness of such publicly available information or other information
provided to Capitalink. Capitalink has relied upon the accuracy and completeness
of such publicly available information and other information supplied to
Capitalink. These materials are being furnished, and should be considered only
in connection with, the oral presentation being provided by Capitalink in
connection herewith. The preparation of these materials was completed on May 19,
2003 based on information publicly available or supplied to Capitalink through
such date. Capitalink is not obligated to update this presentation or its
analyses to reflect any information that becomes publicly available or that is
provided to Capitalink after such date.
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BCT International, Inc. CONFIDENTIAL
TABLE OF CONTENTS
TRANSACTION OVERVIEW...............................3
COMPANY OVERVIEW..................................12
COMPANY FINANCIAL PERFORMANCE.....................15
COMPANY MARKET PERFORMANCE........................28
VALUATION ANALYSIS................................35
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
Page 3
BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
INTRODUCTION
. The Independent Committee of the Board of Directors of BCT
International, Inc. ("BCT" or the "Company") has retained
Capitalink, L.C. ("Capitalink") as financial advisor and to
render an opinion as to whether, on the date of such opinion,
the Merger Consideration (as defined below) as set forth in the
draft Agreement and Plan of Merger, dated May 19, 2003, by and
among the Company, Phoenix Group of Florida, Inc. ("Phoenix"),
Phoenix Acquisition Corp and William A. Wilkerson ("Wilkerson",
and collectively with Phoenix, the "Phoenix Group") (the "Draft
Agreement"), to purchase, by means of a merger, all of the
Company's outstanding common stock that is not beneficially
owned by Phoenix or Wilkerson, or their respective affiliates
(the "Non-Affiliated Stockholders")(the "Proposed Transaction")
is fair, from a financial point of view, to the Non-Affiliated
Stockholders of the Company.
. The Company's common stock is publicly traded on the
over-the-counter market under the symbol "BCTI", and as of
May 19, 2003, there were 5,121,471 shares of the Company's
common stock outstanding (excluding treasury shares).
. The closing price of the Company's stock on May 19, 2003 (date
presentation materials completed) was $0.95.
. The consideration proposed by Phoenix is $2.00 in cash for each
share of the Company's common stock not beneficially owned by
the Phoenix Group (the "Merger Consideration").
. Wilkerson, who is also the Company's Chairman and Chief
Executive Officer, owns Phoenix.
. The Phoenix Group beneficially owns 2,690,282 shares of common
stock or approximately 52.6% of the issued and outstanding
common stock. In addition, Wilkerson has an option to acquire an
additional 327,500 shares of the common stock. If this option
were exercised the Phoenix Group would then be the owner of
3,094,487 shares of common stock or approximately 55.4% of the
issued and outstanding common stock.
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
SUMMARY OF PROPOSED TRANSACTION TERMS
Merger Consideration: $2.00 per share.
Transaction Structure: The Phoenix Group will acquire the
outstanding common stock of the Company
that it does not own through a merger
with a wholly owned subsidiary of
Phoenix with the Company, which shall
continue to operate under the name BCT
International, Inc.
Estimated Timetable: The agreement is terminable by either
party if not consummated on or prior to
December 31, 2003.
Shareholder Vote: The Company shall hold a stockholders
meeting to be held as promptly as
practicable for the purposes of voting
upon the approval of the Proposed
Transaction. A majority of the
outstanding shares of common stock held
by the Non-Affiliated Stockholders is
required to approve the Proposed
Transaction.
Dissenters Rights: The consummation of the proposed
transaction is conditioned, among other
things, on holders of no more than 25%
of the Company's outstanding common
stock exercising their right to dissent
from the Proposed Transaction, under the
Delaware General Corporation Law (the
"DGCL"). To the extent provided by the
DGCL, Phoenix will not make any payment
of merger consideration with respect to
shares held by any person who elects to
demand appraisal of such dissenting
stockholder's shares and duly and timely
complies with all the provisions of the
DGCL concerning the right of holders of
shares to require appraisal of their
shares, but such dissenting stockholders
shall have the right to receive such
consideration as may be determined to be
due such dissenting stockholders
pursuant to the DGCL.
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
SUMMARY OF PROPOSED TRANSACTION TERMS
Stock Options Generally: The Company will take necessary action
to cause all outstanding options to
terminate and expire upon consummation
of the Proposed Transaction. No
consideration shall be paid with respect
to Company options beneficially owned by
Wilkerson.
Phoenix Group Stock Options: Members of the Phoenix Group shall not
exercise options to purchase any
additional shares of the Company's
common stock, and the Company shall not
exercise options to acquire any shares
of its common stock from members of the
Phoenix Group; provided however, that if
there is a Competing Proposal or a
Superior Proposal (each as defined in
the Draft Agreement), Phoenix shall
grant the Independent Committee a proxy
to vote 454,036 shares of the Company's
common stock currently held by members
of the Phoenix Group (which are subject
to an option held by the Company to
purchase such shares).
Competing Transactions: The Company may enter into discussions
or negotiate with a party that makes an
unsolicited written, bona fide proposal
to the Company, provided, among other
things, that Phoenix Group is provided
with reasonable notice of the existence
of such discussions or negotiations.
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
BACKGROUND OF AND EVENTS LEADING TO PROPOSED TRANSACTION
. In September 2001, Phoenix offered to acquire the Company's
outstanding stock not owned or controlled by the Phoenix Group
for $0.85 per share in cash. During the Fall of 2001, the
Independent Committee negotiated with members of the Phoenix
Group, which concluded in an offer accepted at $1.13 in cash.
. Subsequently, during the Securities and Exchange Commission
review period, the Company and Phoenix Group agreed to terminate
the offer. Pursuant to prior agreements, the Company retained
options to acquire certain shares the Phoenix Group owned at
prices ranging from $0.90 to $1.75.
. In October 2002, the Company received an unsolicited indication
of interest letter from a third party considering an offer to
acquire the Company at a price ranging from $1.25 to $1.75 per
share.
. The Company had a preliminary discussion with the third party
regarding their intentions. About that same time, management had
begun to revise and update its business plans and strategy.
Management asked the third party for a period of time to
finalize their new plans and budgets.
. In January 2003, the Independent Committee retained Capitalink
to serve as its financial advisor. In addition, management
presented the Independent Committee and Capitalink with a
revised business plan and budgets. Subsequently Capitalink
reviewed with management their business plan and budgets.
. During January through March 2003, the Independent Committee and
Capitalink had numerous meetings and discussions regarding the
Company's strategic alternatives and management's revised
business plan and budgets.
. In late March 2003, Capitalink provided the Independent
Committee with its recommendations.
. On April 23, 2003, the Company received a proposal from Phoenix
to acquire the outstanding shares of the Company's common stock
not owned by the Phoenix Group for cash consideration. The
proposal indicated a belief that the fair range of per share
consideration was $1.50 to $1.60, but that the Phoenix Group was
willing to negotiate a price closer to $2.00 per share.
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
BACKGROUND OF AND EVENTS LEADING TO PROPOSED TRANSACTION
. The Phoenix Group and the Independent Committee entered into
negotiations, and on May 5, 2003, the Phoenix Group submitted a
proposal of $1.85 per share.
. The Independent Committee had additional discussions with
Capitalink and subsequently entered into further negotiations
with the Phoenix Group.
. On May 8, 2003, the Independent Committee and the Phoenix Group
agreed on per share consideration of $2.00.
. The Independent Committee subsequently instructed Capitalink to
undertake its analyses required to issue a fairness opinion.
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
SCOPE OF ENGAGEMENT
. The Independent Committee has retained Capitalink to render an
opinion as to the fairness, from a financial point of view, of a
proposal by Phoenix to purchase, by means of a merger, all of
the Company's outstanding common stock not beneficially owned by
the Phoenix Group.
. For purposes of rendering its opinion, Capitalink has:
. Reviewed documents relating to the Proposed Transaction,
including the Draft Agreement.
. Reviewed publicly available financial information and
other data with respect to the Company, including the
Annual Report on Form 10-K for the fiscal year ended
February 28, 2002, and the Quarterly Report on Form 10-Q
for the quarter ended November 30, 2002.
. Reviewed draft financial information provided by the
Company for the fiscal year ended February 28, 2003.
. Reviewed and analyzed the Company's projected unlevered
free cash flows and prepared discounted cash flows.
. Reviewed and analyzed certain financial characteristics
of companies that were deemed to have characteristics
comparable to those of the Company.
. Reviewed and analyzed the premiums paid in transactions
involving the acquisition of a minority ownership
interest in publicly-traded companies.
. Reviewed and analyzed the premiums implied by the per
share consideration in the Proposed Transaction.
. Reviewed and analyzed the Company's adjusted book value.
. Reviewed and analyzed the market value of the Notes (as
defined below).
. Reviewed and discussed with representatives of the
management of the Company certain financial and
operating information furnished by them, including
financial analyses and projections and related
assumptions with respect to the business, operations and
prospects of the Company.
. Considered the historical financial results and present
financial condition of the Company.
. Reviewed certain publicly available information
concerning the trading of, and the trading market for,
the common stock of the Company.
. Inquired about and discussed the Proposed Transaction
and other matters related thereto with Company
management, the Independent Committee and its legal
counsel.
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
SCOPE OF ENGAGEMENT
. Performed such other analyses and examinations as were
deemed appropriate.
. The Capitalink opinion is necessarily based upon market,
economic and other conditions, as they exist on, and could be
evaluated as of May 20, 2003. Accordingly, although subsequent
developments may affect its opinion, Capitalink does not assume
any obligation to update, review or reaffirm its opinion.
. Capitalink assumes that the Proposed Transaction will be
consummated substantially in accordance with the terms set forth
in the Draft Agreement, without any further amendments thereto,
and without waiver by the Company of any of the conditions to
any obligations or in the alternative that any such amendments,
revisions or waivers thereto will not be detrimental to the
Company or the Non-Affiliated Stockholders of the Company.
. Capitalink has relied upon and assumed the accuracy and
completeness of all of the financial and other information that
was used by it without assuming any responsibility for any
independent verification of any such information and has further
relied upon the assurances of Company management that it is not
aware of any facts or circumstances that would make any such
information inaccurate or misleading. With respect to the
financial projections utilized, Capitalink assumed that such
projections have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments, and that
such projections provide a reasonable basis upon which it could
form an opinion.
. Capitalink has not made a physical inspection of the properties
and facilities of the Company and has not made or obtained any
evaluations or appraisals of the assets and liabilities
(contingent or otherwise) of the Company.
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BCT International, Inc. CONFIDENTIAL
TRANSACTION OVERVIEW
SCOPE OF ENGAGEMENT
. Capitalink assumed that the Proposed Transaction will be
consummated in a manner that complies in all respects with the
applicable provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and all other
applicable federal and state statues, rules and regulations. In
addition, based upon discussions with the Company, it is assumed
that the Proposed Transaction will be a taxable event to the
Company's stockholders.
. Capitalink has not been requested to opine as to, and the
opinion does not in any manner address, the underlying business
decision of the Company to proceed with or affect the Proposed
Transaction.
. Capitalink was not asked to consider, and its opinion does not
address, the relative merits of the Proposed Transaction as
compared to any alternative business strategy that might exist
for the Company. Capitalink was not engaged to seek alternatives
to the Proposed Transaction that might exist for the Company.
. The opinion is for the use and benefit of the Independent
Committee in connection with its consideration of the Proposed
Transaction and is not intended to be and does not constitute a
recommendation to any stockholder of the Company as to how such
stockholder should vote in connection with the Proposed
Transaction. We do not express any opinion as to the underlying
valuation or future performance of the Company or the price at
which the Company's common stock would trade at any time in the
future.
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BCT International, Inc. CONFIDENTIAL
COMPANY OVERVIEW
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BCT International, Inc. CONFIDENTIAL
OVERVIEW OF COMPANY
SUMMARY
. BCT International, Inc. is the holding company of Business Cards
Tomorrow, Inc. Business Cards Tomorrow, Inc.'s franchise system
is the world's largest wholesale franchise printing chain,
specializing in thermography products, labels, rubber stamps and
business announcements for resale by retail printing providers.
. As of May 2003, 82 BCT franchises were in operation in 36 states
and Canada (eight franchises).
. Thermography is a specialized printing process that gives a
raised printing effect similar to engraving and requires
specialized equipment and operating techniques which commercial
printers, quick printers, office superstores and other retail
dealers choose not to invest in.
. The Company's franchises typically operate through the placement
of business card, stationery, rubber stamp and labels catalogs
with commercial and retail "quick" printers, office superstores,
forms brokers, office supply companies and stationers in the
franchises' trade areas.
. Franchises specialize in the fast turnaround of their products,
delivering many items, such as business cards, in one business
day, with most products being delivered within two days of the
date of order.
. BCT's operations also include the Pelican Paper Products
Division ("PPP") that supplies paper products, press supplies
and press parts to the BCT franchises (PPP is a primary supplier
of paper products for the BCT franchises). PPP purchases raw
paper directly from paper mills and paper brokers and utilizes
the services of converters to convert the raw material to
finished paper products.
. PPP also performs converting and handling services for third
parties. PPP utilizes three public storage facilities located
strategically throughout the United States to house and ship out
paper products to the franchises.
. The Company's Orderprinting.com is a web-based ordering system
that allows users to special order products from a personalized
Internet site. The orders are electronically transmitted to the
local BCT franchise for processing.
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BCT International, Inc. CONFIDENTIAL
OVERVIEW OF COMPANY
SUMMARY
. BCT derives its revenue from five principal sources: (i)
royalties, which are based on a percentage of sales of the BCT
franchises; (ii) franchise fees from newly franchised franchises
and resale fees from the resale of operating franchises; (iii)
sales of paper products to franchisees; (iv) catalog and
miscellaneous equipment and parts sales classified as printing
sales; and (v) interest income from financing franchise
acquisitions (primarily resales) and receivables.
. Capitalink noted several general factors to be considered in
connection with the status of BCT as a publicly traded company:
. The Company's common stock was delisted from NASDAQ
National Market based on its failure to meet the minimum
market value public float requirement of $5 million and
it has traded on the OTC Bulletin Board since September
2001.
. The Company does not have a distinct comparable peer
group. For this reason, among others, the Company does
not have any analyst coverage.
. The Company's common stock historically has a limited
trading volume and therefore a lack of liquidity for the
Company's stockholders.
. The Company is not part of a high-growth industry that
attracts investor interest and a high trading multiple.
. The Company has not realized the benefits of public
company status (i.e., ability to raise capital, use of
stock as currency in acquisitions), but incurs the
increased expenses necessary to comply with reporting
requirements and other public company obligations.
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BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Page 15
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
. Capitalink reviewed the Company's historical and estimated
financial data for the five years ended February 28, 2003. In
addition, Capitalink reviewed the Company's preliminary
projections for the fiscal years ("FY") ending February 29, 2004
through February 28, 2007.
. Revenue for the Company remained constant over the historical
and review period - with a low of $17.5 million and a high of
$19.3 million. Of the total revenue, approximately 28% is
derived from royalties and franchise fees and approximately 64%
from paper and printing sales. For FY2003, the Company also
derived revenue of approximately $1.0 million from the operation
of two Company-owned plants.
. Over the past five fiscal years, the Company's gross margin for
paper and printing sales has remained constant at approximately
15%. However, the Company's earning before interest, taxes,
depreciation and amortization ("EBITDA") has gradually fallen
from a high of $3.0 million in FY1999 to $791,000 in FY2002,
primarily as a result of rising selling, general and
administrative costs. In addition, FY2002 EBITDA was negatively
impacted from the downturn in the U.S. economy as a result of
the events of September 11th. For FY2003, EBITDA increased
slightly to approximately $1.2 million.
. Despite little growth in the Company's underlying business, the
Company's capital position has improved significantly over the
past five years, with rising cash balances of approximately $1.1
million in FY1999 to $4.2 million in FY2003. This is primarily a
result of the repayment of notes owed to the Company by
franchisees (the "Notes"). The Notes primarily are comprised of
overdue accounts receivable relating to the sale of paper
products and royalty revenue that have been converted into
longer-term commitments. Of the Company's approximately $10.6
million of total receivables as of February 28, 2003,
approximately $6.8 million are represented by the Notes.
. As of February 28, 2003, the Company had approximately $523,000
in interest-bearing debt, the majority of which relates to
equipment leases on the Company's plant operations.
. Given the little growth seen in the Company's core franchising
business, the Company has begun several new initiatives, which
include the addition of Company-owned plants and the
implementation and roll-out of satellite stores. The satellite
store plan will involve the franchising of smaller franchise
regions to individuals who contract to provide business cards
and other forms to customers within that region. The
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BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
supply of the cards and other forms would be provided by plants
owned by the Company or other franchisees.
Page 17
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Normalized Comparative Summary Income Statements
($ in thousands except per share)
for years ended February 28/29,
-------------------------------------------------------
1999 2000 2001 2002 2003E
-------------------------------------------------------
Revenue
Royalties and Franchise Fees $ 5,356 $ 5,394 $ 5,267 $ 5,117 $ 5,221
Paper and Printing Sales 12,817 13,881 13,424 12,068 12,019
Sales of Franchises 87 27 46 99 4
Company Owned Plant Sales - - - - 1,036
Other Fees - - 262 315 426
-------------------------------------------------------
Total Revenue 18,260 19,302 18,999 17,599 18,706
Cost of Revenue
Cost of Paper and Printing Sales 10,939 11,574 11,605 10,592 10,410
Cost of Company Owned Plant Sales - - - - 237
-------------------------------------------------------
Cost of Revenue 10,939 11,574 11,605 10,592 10,647
-------------------------------------------------------
Gross Profit 7,321 7,728 7,394 7,007 8,059
Selling, General & Admin 4,290 6,619 6,455 6,376 6,863
Other 186 189 232 226 241
-------------------------------------------------------
Total Operating Expenses 4,476 6,808 6,687 6,602 7,104
-------------------------------------------------------
Operating Income (Loss) 2,845 920 707 405 955
Interest Income (Expense) 340 336 381 408 303
Other Income (Expense) 6 952 49 - 18
-------------------------------------------------------
Pre-tax Income (Loss) 3,191 2,208 1,137 813 1,276
Income Tax (Benefit) 690 837 442 321 491
-------------------------------------------------------
Normalized Net Income $ 2,501 $ 1,371 $ 695 $ 492 $ 785
=======================================================
Normalized EBIT $ 2,851 $ 1,872 $ 756 $ 405 $ 973
Total Depreciation & Amortization $ 186 $ 189 $ 232 $ 226 $ 241
Normalized EBITDA $ 3,037 $ 2,061 $ 988 $ 631 $ 1,214
Capital Expenditures, net of Disposals (CAPEX, net) $ 82 $ 262 $ 150 $ 162 $ 427
Normalized EBITDA - CAPEX $ 2,955 $ 1,799 $ 838 $ 469 $ 787
EARNINGS PER SHARE
Basic Normalized EPS $ 0.47 $ 0.26 $ 0.13 $ 0.10 $ 0.15
Basic Reported EPS $ 0.41 $ 0.19 $ 0.13 $ 0.10 $ 0.15
Weighted Average Shares Outstanding (thousands) 5,323 5,257 5,214 5,123 5,121
Diluted Normalized EPS $ 0.45 $ 0.25 $ 0.13 $ 0.10 $ 0.15
Diluted Reported EPS $ 0.39 $ 0.19 $ 0.13 $ 0.10 $ 0.15
Weighted Average Shares Outstanding (thousands) 5,596 5,388 5,235 5,123 5,121
NORMALIZING RECONCILIATION
Discontinued Operations, net of Taxes $ (327) $ (357) $ (31) $ - $ -
Extraordinary Items, net of Taxes - - - - -
-------------------------------------------------------
Total Reconciling Items, net of Taxes $ (327) $ (357) $ (31) $ - $ -
=======================================================
Reported Income Tax (Benefit) $ 690 $ 837 $ 442 $ 321 $ 491
Reported Net Income (Loss) $ 2,174 $ 1,014 $ 664 $ 492 $ 785
Sources of information: Company financial statements and management.
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BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Normalized Common Sized Summary Income Statements
for years ended February 28/29,
-----------------------------------------
1999 2000 2001 2002 2003E
-----------------------------------------
Revenue
Royalties and Franchise Fees 29.3% 27.9% 27.7% 29.1% 27.9%
Paper and Printing Sales 70.2% 71.9% 70.7% 68.6% 64.3%
Sales of Franchises 0.5% 0.1% 0.2% 0.6% 0.0%
Company Owned Plant Sales 0.0% 0.0% 0.0% 0.0% 5.5%
Other Fees 0.0% 0.0% 1.4% 1.8% 2.3%
-----------------------------------------
Total Revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Revenue
Cost of Paper and Printing Sales 59.9% 60.0% 61.1% 60.2% 55.7%
Cost of Company Owned Plant Sales 0.0% 0.0% 0.0% 0.0% 1.3%
-----------------------------------------
Cost of Revenue 59.9% 60.0% 61.1% 60.2% 56.9%
-----------------------------------------
Gross Profit 40.1% 40.0% 38.9% 39.8% 43.1%
Selling, General & Admin 23.5% 34.3% 34.0% 36.2% 36.7%
Other 1.0% 1.0% 1.2% 1.3% 1.3%
-----------------------------------------
Total Operating Expenses 24.5% 35.3% 35.2% 37.5% 38.0%
-----------------------------------------
Operating Income (Loss) 15.6% 4.8% 3.7% 2.3% 5.1%
Interest Income (Expense) 1.9% 1.7% 2.0% 2.3% 1.6%
Other Income (Expense) 0.0% 4.9% 0.3% 0.0% 0.1%
-----------------------------------------
Pre-tax Income (Loss) 17.5% 11.4% 6.0% 4.6% 6.8%
Income Tax (Benefit) 3.8% 4.3% 2.3% 1.8% 2.6%
-----------------------------------------
Normalized Net Income 13.7% 7.1% 3.7% 2.8% 4.2%
=========================================
Normalized EBIT 15.6% 9.7% 4.0% 2.3% 5.2%
Total Depreciation & Amortization 1.0% 1.0% 1.2% 1.3% 1.3%
Normalized EBITDA 16.6% 10.7% 5.2% 3.6% 6.5%
Capital Expenditures, net of Disposals (CAPEX, net) 0.4% 1.4% 0.8% 0.9% 2.3%
Normalized EBITDA - CAPEX 16.2% 9.3% 4.4% 2.7% 4.2%
Normalizing Reconciliation
Discontinued Operations, net of Taxes -1.8% -1.8% -0.2% 0.0% 0.0%
Extraordinary Items, net of Taxes 0.0% 0.0% 0.0% 0.0% 0.0%
-----------------------------------------
Total Reconciling Items, net of Taxes -1.8% -1.8% -0.2% 0.0% 0.0%
=========================================
Reported Income Tax (Benefit) 3.8% 4.3% 2.3% 1.8% 2.6%
Reported Net Income (Loss) 11.9% 5.3% 3.5% 2.8% 4.2%
Sources of information: Company financial statements and management.
Page 19
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Comparative Summary Balance Sheets
($ in thousands, except per share)
as of February 28/29,
--------------------------------------------------------
1999 2000 2001 2002 2003E
--------------------------------------------------------
ASSETS
Current Assets
Cash & Equivalents $ 1,143 $ 1,906 $ 1,799 $ 4,819 $ 4,244
Accounts and Notes Receivable, net 3,252 3,293 3,568 2,889 3,076
Inventory 2,122 2,359 2,352 1,887 2,668
Deferred Income Taxes 476 482 321 419 369
Prepaid & Other 1,281 408 134 259 513
--------------------------------------------------------
Total Current Assets 8,274 8,448 8,174 10,273 10,870
Property & Equipment 1,442 1,633 1,707 1,869 2,638
Less Accumulated Depreciation (982) (1,104) (1,234) (1,434) (1,649)
--------------------------------------------------------
Property & Equipment, net 460 529 473 435 989
Accounts and Notes Receivable, net 6,052 7,275 6,362 5,170 4,807
Deferred Income Taxes 246 722 925 970 956
Intangible Assets, net 284 258 232 206 180
Other Assets 90 89 24 24 47
--------------------------------------------------------
$ 15,406 $ 17,321 $ 16,190 $ 17,078 $ 17,849
========================================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 844 $ 1,111 $ 597 $ 432 $ 875
Accrued Expenses 753 1,349 403 871 519
Interest Bearing Debt 113 104 86 560 255
Other 311 218 167 125 55
--------------------------------------------------------
Total Current Liabilities 2,021 2,782 1,253 1,988 1,704
Long Term Interest Bearing Debt 433 330 236 - 268
Other Long Term - 453 417 334 335
--------------------------------------------------------
Total Liabilities 2,454 3,565 1,906 2,322 2,307
Stockholders' Equity
Preferred Stock 60 - - - -
Common Stock 230 233 233 233 233
Paid in Capital 12,506 12,597 12,597 12,605 12,605
Accumulated Earnings (Deficit) 1,322 2,334 2,998 3,490 4,276
Treasury Stock & Stock Receivable (1,166) (1,408) (1,544) (1,572) (1,572)
--------------------------------------------------------
Total Stockholders' Equity 12,952 13,756 14,284 14,756 15,542
--------------------------------------------------------
$ 15,406 $ 17,321 $ 16,190 $ 17,078 $ 17,849
========================================================
Net Working Capital $ 6,253 $ 5,666 $ 6,921 $ 8,285 $ 9,166
Common Shares Outstanding (thousands) 5,257 5,231 5,136 5,121 5,121
Book Value per Share $ 2.46 $ 2.63 $ 2.78 $ 2.88 $ 3.03
Tangible Book Value Per Share $ 2.41 $ 2.58 $ 2.74 $ 2.84 $ 3.00
Sources of information: Company financial statements and management.
Page 20
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Common Sized Summary Balance Sheets
as of February 28/29,
-----------------------------------------
1999 2000 2001 2002 2003E
-----------------------------------------
ASSETS
Current Assets
Cash & Equivalents 7.4% 11.0% 11.1% 28.2% 23.8%
Accounts and Notes Receivable, net 21.1% 19.0% 22.0% 16.9% 17.2%
Inventory 13.8% 13.6% 14.5% 11.0% 14.9%
Deferred Income Taxes 3.1% 2.8% 2.0% 2.5% 2.1%
Prepaid & Other 8.3% 2.4% 0.8% 1.5% 2.9%
-----------------------------------------
Total Current Assets 53.7% 48.8% 50.5% 60.2% 60.9%
Property & Equipment 9.4% 9.4% 10.5% 10.9% 14.8%
Less Accumulated Depreciation -6.4% -6.4% -7.6% -8.4% -9.2%
-----------------------------------------
Property & Equipment, net 3.0% 3.1% 2.9% 2.5% 5.5%
Accounts and Notes Receivable, net 39.3% 42.0% 39.3% 30.3% 26.9%
Deferred Income Taxes 1.6% 4.2% 5.7% 5.7% 5.4%
Intangible Assets, net 1.8% 1.5% 1.4% 1.2% 1.0%
Other Assets 0.6% 0.5% 0.1% 0.1% 0.3%
-----------------------------------------
100.0% 100.0% 100.0% 100.0% 100.0%
=========================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable 5.5% 6.4% 3.7% 2.5% 4.9%
Accrued Expenses 4.9% 7.8% 2.5% 5.1% 2.9%
Interest Bearing Debt 0.7% 0.6% 0.5% 3.3% 1.4%
Other 2.0% 1.3% 1.0% 0.7% 0.3%
-----------------------------------------
Total Current Liabilities 13.1% 16.1% 7.7% 11.6% 9.5%
Long Term Interest Bearing Debt 2.8% 1.9% 1.5% 0.0% 1.5%
Other Long Term 0.0% 2.6% 2.6% 2.0% 1.9%
-----------------------------------------
Total Liabilities 15.9% 20.6% 11.8% 13.6% 12.9%
Stockholders' Equity
Preferred Stock 0.4% 0.0% 0.0% 0.0% 0.0%
Common Stock 1.5% 1.3% 1.4% 1.4% 1.3%
Paid in Capital 81.2% 72.7% 77.8% 73.8% 70.6%
Accumulated Earnings (Deficit) 8.6% 13.5% 18.5% 20.4% 24.0%
Treasury Stock & Stock Receivable -7.6% -8.1% -9.5% -9.2% -8.8%
-----------------------------------------
Total Stockholders' Equity 84.1% 79.4% 88.2% 86.4% 87.1%
-----------------------------------------
100.0% 100.0% 100.0% 100.0% 100.0%
=========================================
Net Working Capital 40.6% 32.7% 42.7% 48.5% 51.4%
Sources of information: Company financial statements and management.
Page 21
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Comparative Financial Analysis
($ in thousands, except per share)
as of & for years ended February 28/29,
-------------------------------------------------------------
1999 2000 2001 2002 2003E
-------------------------------------------------------------
FINANCIAL REVIEW
Revenue $ 18,260 $ 19,302 $ 18,999 $ 17,599 $ 18,706
Gross Profit $ 7,321 $ 7,728 $ 7,394 $ 7,007 $ 8,059
Total Operating Expenses $ 4,476 $ 6,808 $ 6,687 $ 6,602 $ 7,104
Operating Income $ 2,845 $ 920 $ 707 $ 405 $ 955
Pre-tax Income (Loss) $ 3,191 $ 2,208 $ 1,137 $ 813 $ 1,276
Normalized Net Income (Loss) $ 2,501 $ 1,371 $ 695 $ 492 $ 785
Normalized EBIT $ 2,851 $ 1,872 $ 756 $ 405 $ 973
Normalized EBITDA $ 3,037 $ 2,061 $ 988 $ 631 $ 1,214
Normalized Basic EPS $ 0.41 $ 0.19 $ 0.13 $ 0.10 $ 0.15
Normalized Diluted EPS $ 0.39 $ 0.19 $ 0.13 $ 0.10 $ 0.15
Total Assets $ 15,406 $ 17,321 $ 16,190 $ 17,078 $ 17,849
Net Worth $ 12,952 $ 13,756 $ 14,284 $ 14,756 $ 15,542
Tangible Net Worth $ 12,668 $ 13,498 $ 14,052 $ 14,550 $ 15,362
Total Interest Bearing Debt $ 546 $ 434 $ 322 $ 560 $ 523
Net Interest Bearing Debt $ (597) $ (1,472) $ (1,477) $ (4,259) $ (3,721)
Total Capitalization $ 13,498 $ 14,190 $ 14,606 $ 15,316 $ 16,065
FINANCIAL STRENGTH
Quick Ratio 3.0 2.2 4.6 4.2 4.8
Current Ratio 4.1 3.0 6.5 5.2 6.4
Total Liabilities to Net Worth 18.9% 25.9% 13.3% 15.7% 14.8%
Total Interest Bearing Debt to Net Worth 4.2% 3.2% 2.3% 3.8% 3.4%
Total Interest Bearing Debt to Total Capitalization 4.0% 3.1% 2.2% 3.7% 3.3%
Net Interest Bearing Debt to Total Capitalization -4.4% -10.4% -10.1% -27.8% -23.2%
Interest Expense to Interest Bearing Debt na na na na na
Total Interest Bearing Debt to Normalized EBITDA 0.2 0.2 0.3 0.9 0.4
Normalized EBITDA to Interest Expense na na na na na
Normalized EBITDA-CAPEX, net to Interest Exp. na na na na na
EFFECTIVENESS AND EFFICIENCY
Accounts Receivable Turnover na 5.9 5.5 5.5 6.3
Inventory Turnover na 5.2 4.9 5.0 4.7
Asset Turnover na 1.2 1.1 1.1 1.1
Days Sales Outstanding na 61.9 65.9 67.0 58.2
Days Inventory Outstanding na 70.7 74.1 73.0 78.1
Days Payable Outstanding na 14.8 15.0 13.5 9.0
Normalized EBIT to Average Assets na 11.4% 4.5% 2.4% 5.6%
Normalized EBIT to Net Worth na 14.0% 5.4% 2.8% 6.4%
Normalized EBITDA to Average Assets na 12.6% 5.9% 3.8% 7.0%
Normalized EBITDA to Net Worth na 15.4% 7.0% 4.3% 8.0%
Normalized Net Income to Average Assets na 8.4% 4.1% 3.0% 4.5%
Normalized Net Income to Net Worth na 10.3% 5.0% 3.4% 5.2%
Sources of information: Company financial statements and management
Page 22
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Comparative Financial Analysis Continued
($ in thousands, except per share)
as of & for years ended February 28/29,
-----------------------------------------
1999 2000 2001 2002 2003E
-----------------------------------------
PROFITABILITY RATIOS (as % of Revenue)
Gross Profit Margin 40.1% 40.0% 38.9% 39.8% 43.1%
SG&A 23.5% 34.3% 34.0% 36.2% 36.7%
Total Operating Expenses 24.5% 35.3% 35.2% 37.5% 38.0%
Operating Income 15.6% 4.8% 3.7% 2.3% 5.1%
Pre-tax Income (Loss) 17.5% 11.4% 6.0% 4.6% 6.8%
Normalized Net Income (Loss) 13.7% 7.1% 3.7% 2.8% 4.2%
Normalized EBIT 15.6% 9.7% 4.0% 2.3% 5.2%
Normalized EBITDA 16.6% 10.7% 5.2% 3.6% 6.5%
GROWTH RATES
Revenue na 5.7% -1.6% -7.4% 6.3%
Gross Profit na 5.6% -4.3% -5.2% 15.0%
Operating Income na -67.7% -23.2% -42.7% 135.8%
Pre-tax Income (Loss) na -30.8% -48.5% -28.5% 56.9%
Normalized Net Income (Loss) na -45.2% -49.3% -29.2% 59.6%
Normalized EBIT na -34.3% -59.6% -46.4% 140.2%
Normalized EBITDA na -32.1% -52.1% -36.1% 92.4%
Normalized Basic EPS na -53.7% -31.6% -23.1% 50.0%
Normalized Diluted EPS na -51.3% -31.6% -23.1% 50.0%
Total Assets na 12.4% -6.5% 5.5% 4.5%
Net Worth na 6.2% 3.8% 3.3% 5.3%
Tangible Net Worth na 6.6% 4.1% 3.5% 5.6%
CAPEX, net na 219.5% -42.7% 8.0% 163.6%
CUMULATIVE AVERAGE GROWTH RATE (CAGR) STATISTICS
Revenue na 5.7% 2.0% -1.2% 0.6%
Gross Profit na 5.6% 0.5% -1.5% 2.4%
Operating Income na -67.7% -50.1% -47.8% -23.9%
Pre-tax Income (Loss) na -30.8% -40.3% -36.6% -20.5%
Normalized Net Income (Loss) na -45.2% -47.3% -41.8% -25.2%
Normalized EBIT na -34.3% -48.5% -47.8% -23.6%
Normalized EBITDA na -32.1% -43.0% -40.8% -20.5%
Normalized Basic EPS na -53.7% -43.7% -37.5% -22.2%
Normalized Diluted EPS na -51.3% -42.3% -36.5% -21.2%
Total Assets na 12.4% 2.5% 3.5% 3.7%
Net Worth na 6.2% 5.0% 4.4% 4.7%
Tangible Net Worth na 6.6% 5.3% 4.7% 4.9%
CAPEX, net na 219.5% 35.3% 25.5% 51.1%
DEPRECIATION & Capital Spending
Depreciation to CAPEX, net 226.8% 72.1% 154.7% 139.5% 56.4%
CAPEX, net to Revenue 0.4% 1.4% 0.8% 0.9% 2.3%
Sources of information: Company financial statements and management
Page 23
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Selected Normalized Income Statement Graphs
($ in thousands, except per share)
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003E
-------------------------------------------------------
[Bar Graph]
Revenue $ 18,260 $ 19,302 $ 18,999 $ 17,599 $ 18,706
[Bar Graph]
Gross Profit $ 7,321 $ 7,728 $ 7,394 $ 7,007 $ 8,059
[Bar Graph]
Total Operating Expenses $ 4,476 $ 6,808 $ 6,687 $ 6,602 $ 7,104
[Bar Graph]
Operating Income $ 2,845 $ 920 $ 707 $ 405 $ 955
[Bar Graph]
Interest Income (Expense) $ 340 $ 336 $ 381 $ 408 $ 303
[Bar Graph]
Normalized EBIT $ 2,851 $ 1,872 $ 756 $ 405 $ 973
[Bar Graph]
Normalized EBITDA $ 3,037 $ 2,061 $ 988 $ 631 $ 1,214
[Bar Graph]
Normalized Net Income (Loss) $ 2,501 $ 1,371 $ 695 $ 492 $ 785
Sources of information: Company financial statements and management
Page 24
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Selected Normalized Profitability and Cost Ratio (as % of Revenue) Graphs
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003E
-------------------------------------------------------
[Bar Graph]
Gross Profit Margin 40.1% 40.0% 38.9% 39.8% 43.1%
[Bar Graph]
SG&A 23.5% 34.3% 34.0% 36.2% 36.7%
[Bar Graph]
Operating Income 15.6% 4.8% 3.7% 2.3% 5.1%
[Bar Graph]
Interest Income (Expense) 1.9% 1.7% 2.0% 2.3% 1.6%
[Bar Graph]
Pre-tax Income (Loss) 17.5% 11.4% 6.0% 4.6% 6.8%
[Bar Graph]
Normalized Net Income (Loss) 13.7% 7.1% 3.7% 2.8% 4.2%
[Bar Graph]
Normalized EBIT 15.6% 9.7% 4.0% 2.3% 5.2%
[Bar Graph]
Normalized EBITDA 16.6% 10.7% 5.2% 3.6% 6.5%
[Bar Graph]
CAPEX, net to Revenue 0.4% 1.4% 0.8% 0.9% 2.3%
Sources of information: Company financial statements and management
Page 25
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Selected Normalized Financial Strength Graphs
($ in thousands)
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003E
------------------------------------------------------
[Bar Graph]
Net Working Capital $ 6,253 $ 5,666 $ 6,921 $ 8,285 $ 9,166
[Bar Graph]
Quick Ratio 3.0 2.2 4.6 4.2 4.8
[Bar Graph]
Current Ratio 4.1 3.0 6.5 5.2 6.4
[Bar Graph]
Total Liabilities to Net Worth 18.9% 25.9% 13.3% 15.7% 14.8%
[Bar Graph]
Total Interest Bearing Debt to Net Worth 4.2% 3.2% 2.3% 3.8% 3.4%
[Bar Graph]
Total Interest Bearing Debt to Total Capitalization 4.0% 3.1% 2.2% 3.7% 3.3%
[Bar Graph]
Interest Expense to Interest Bearing Debt na na na na na
[Bar Graph]
Total Interest Bearing Debt to EBITDA 0.2 0.2 0.3 0.9 0.4
[Bar Graph]
EBITDA to Interest Expense na na na na na
Sources of information: Company financial statements and management
Page 26
BCT International, Inc. CONFIDENTIAL
COMPANY FINANCIAL PERFORMANCE
Selected Normalized Efficiency Graphs
FY 2000 FY 2001 FY 2002 FY 2003E
--------------------------------------------
[Bar Graph]
Days Sales Outstanding 61.9 65.9 67.0 58.2
[Bar Graph]
Days Inventory Outstanding 70.7 74.1 73.0 78.1
[Bar Graph]
Days Payable Outstanding 14.8 15.0 13.5 9.0
[Bar Graph]
Normalized EBIT to Average Assets 11.4% 4.5% 2.4% 5.6%
[Bar Graph]
Normalized EBIT to Average Net Worth 14.0% 5.4% 2.8% 6.4%
[Bar Graph]
Normalized EBITDA to Average Assets 12.6% 5.9% 3.8% 7.0%
[Bar Graph]
Normalized EBITDA to Average Net Worth 15.4% 7.0% 4.3% 8.0%
[Bar Graph]
Net Income to Average Assets 8.4% 4.1% 3.0% 4.5%
[Bar Graph]
Net Income to Average Net Worth 10.3% 5.0% 3.4% 5.2%
Sources of information: Company financial statements and management
Page 27
BCT International, Inc. CONFIDENTIAL
COMPANY MARKET PERFORMANCE
Page 28
BCT International, Inc. CONFIDENTIAL
COMPANY MARKET PERFORMANCE
. Capitalink reviewed the daily closing market price and trading
volume of the Company's common stock over the period commencing
May 20, 2002 through May 19, 2003.
. Capitalink compared the daily closing market price performance
of the Company's common stock for such period to both the
Comparable Companies (as defined below) and the Russell 3000
Index.
. Capitalink calculated total trading volumes at various closing
price ranges of the Company's common stock. In addition, the
number of trading days, and the respective percentages, at
certain trading volumes, was set forth.
. Capitalink noted the following characteristics of the Company's
common stock:
. The Company's stock has experienced limited liquidity
with the average and median daily number of shares
traded equal to 5,379 and 200 respectively. It was
further noted that there was no volume on 114 trading
days or approximately 45.2% of the available trading
days.
. During the twelve months ended May 19, 2003 the
Company's share price has ranged from as high as $1.05
to as low as $0.67. The Company's common stock closed at
$0.95 on May 19, 2003.
. Capitalink noted that during the twelve months ended May 19,
2003, the Company's common stock increased 15.9%, while the
Comparable Companies index fell slightly by 1.0% and the Russell
3000 Index declined 15.7%.
Page 29
BCT International, Inc. CONFIDENTIAL
COMPANY MARKET PERFORMANCE
BCTI Closing Price & Volume History
[Bar Graph]
DATE VOLUME BCTI CLOSE
------------------------------------
19-May-03 6400 0.95
16-May-03 0 1.00
15-May-03 0 1.00
14-May-03 0 1.00
13-May-03 3,500 1.00
12-May-03 0 0.95
9-May-03 0 0.95
8-May-03 0 0.95
7-May-03 2,500 0.95
6-May-03 6,000 1.04
5-May-03 5,500 1.01
2-May-03 2,000 1.01
1-May-03 4,600 1.05
30-Apr-03 0 0.98
29-Apr-03 0 0.98
28-Apr-03 500 0.98
25-Apr-03 17,900 0.99
24-Apr-03 9,100 0.99
23-Apr-03 7,000 0.95
22-Apr-03 7,800 0.91
21-Apr-03 1,900 0.91
17-Apr-03 200 0.91
16-Apr-03 0 0.91
15-Apr-03 0 0.91
14-Apr-03 300 0.91
11-Apr-03 0 0.91
10-Apr-03 0 0.91
9-Apr-03 100 0.91
8-Apr-03 0 0.91
7-Apr-03 9,500 0.91
4-Apr-03 0 0.95
3-Apr-03 7,500 0.95
2-Apr-03 0 0.92
1-Apr-03 300 0.92
31-Mar-03 0 0.92
28-Mar-03 200 0.92
27-Mar-03 200 0.92
26-Mar-03 0 0.92
25-Mar-03 7,300 0.92
24-Mar-03 0 0.92
21-Mar-03 6,000 0.92
20-Mar-03 2,500 0.92
19-Mar-03 5,500 0.92
18-Mar-03 3,000 0.92
17-Mar-03 0 0.92
14-Mar-03 0 0.92
13-Mar-03 0 0.92
12-Mar-03 0 0.92
11-Mar-03 0 0.92
10-Mar-03 100 0.92
7-Mar-03 0 0.93
6-Mar-03 0 0.93
5-Mar-03 2,000 0.93
4-Mar-03 3,600 0.92
3-Mar-03 0 0.92
28-Feb-03 100 0.92
27-Feb-03 10,000 0.96
26-Feb-03 0 0.91
25-Feb-03 0 0.91
24-Feb-03 0 0.91
21-Feb-03 0 0.91
20-Feb-03 0 0.76
19-Feb-03 0 0.91
18-Feb-03 29800 0.91
14-Feb-03 800 0.97
13-Feb-03 5800 0.96
12-Feb-03 0 0.97
11-Feb-03 500 0.97
10-Feb-03 9500 0.99
7-Feb-03 0 0.98
6-Feb-03 0 0.98
5-Feb-03 0 0.98
4-Feb-03 5000 0.98
3-Feb-03 700 0.96
31-Jan-03 5000 0.96
30-Jan-03 0 0.96
29-Jan-03 0 0.96
28-Jan-03 100 0.96
27-Jan-03 0 0.96
24-Jan-03 6200 0.96
23-Jan-03 1000 1.01
22-Jan-03 100 1.03
21-Jan-03 2200 1.01
17-Jan-03 181,100 1.05
16-Jan-03 57,600 1.02
15-Jan-03 17,000 0.9
14-Jan-03 300 0.9
13-Jan-03 0 0.81
10-Jan-03 0 0.81
9-Jan-03 1,000 0.81
8-Jan-03 300 0.81
7-Jan-03 0 0.81
6-Jan-03 0 0.81
3-Jan-03 0 0.81
2-Jan-03 0 0.81
31-Dec-02 13,100 0.81
30-Dec-02 16,000 0.8
27-Dec-02 100 0.78
26-Dec-02 1,600 0.78
24-Dec-02 0 0.78
23-Dec-02 0 0.78
20-Dec-02 400 0.78
19-Dec-02 0 0.85
18-Dec-02 2,300 0.85
17-Dec-02 100 0.78
16-Dec-02 0 0.78
13-Dec-02 0 0.78
12-Dec-02 0 0.78
11-Dec-02 0 0.78
10-Dec-02 0 0.78
9-Dec-02 200 0.78
6-Dec-02 6,700 0.78
5-Dec-02 0 0.76
4-Dec-02 16,000 0.76
3-Dec-02 0 0.83
2-Dec-02 7,300 0.83
29-Nov-02 0 0.761
27-Nov-02 4,100 0.761
26-Nov-02 2,500 0.76
25-Nov-02 300 0.75
22-Nov-02 800 0.9
21-Nov-02 0 0.75
20-Nov-02 1,100 0.75
19-Nov-02 4,100 0.75
18-Nov-02 1,800 0.75
15-Nov-02 0 0.75
14-Nov-02 0 0.75
13-Nov-02 0 0.75
12-Nov-02 0 0.75
11-Nov-02 0 0.75
8-Nov-02 7,900 0.75
7-Nov-02 13,000 0.76
6-Nov-02 1,700 0.72
5-Nov-02 0 0.72
4-Nov-02 0 0.72
1-Nov-02 2,500 0.72
31-Oct-02 15,500 0.75
30-Oct-02 3,800 0.685
29-Oct-02 0 0.68
28-Oct-02 200 0.68
25-Oct-02 14,900 0.68
24-Oct-02 0 0.74
23-Oct-02 500 0.74
22-Oct-02 0 0.68
21-Oct-02 0 0.68
18-Oct-02 500 0.68
17-Oct-02 0 0.68
16-Oct-02 1,000 0.68
15-Oct-02 200 0.68
14-Oct-02 0 0.67
11-Oct-02 16,700 0.67
10-Oct-02 0 0.71
9-Oct-02 5,000 0.71
8-Oct-02 6,500 0.72
7-Oct-02 7,200 0.72
4-Oct-02 100 0.71
3-Oct-02 0 0.71
2-Oct-02 100 0.71
1-Oct-02 0 0.7
30-Sep-02 9,400 0.7
27-Sep-02 0 0.71
26-Sep-02 2,000 0.71
25-Sep-02 4,300 0.71
24-Sep-02 11,100 0.7
23-Sep-02 2,000 0.7
20-Sep-02 5,000 0.73
19-Sep-02 88,700 0.72
18-Sep-02 0 0.78
17-Sep-02 1,800 0.78
16-Sep-02 55,900 0.765
13-Sep-02 0 0.76
12-Sep-02 0 0.76
11-Sep-02 200 0.76
10-Sep-02 0 0.82
9-Sep-02 10,000 0.82
6-Sep-02 0 0.81
5-Sep-02 0 0.81
4-Sep-02 2,500 0.81
3-Sep-02 4,000 0.83
30-Aug-02 100 0.81
29-Aug-02 0 0.8
28-Aug-02 0 0.8
27-Aug-02 0 0.8
26-Aug-02 0 0.8
23-Aug-02 500 0.8
22-Aug-02 0 0.82
21-Aug-02 15,000 0.82
20-Aug-02 16,000 0.85
19-Aug-02 5,000 0.93
16-Aug-02 0 0.85
15-Aug-02 2,400 0.85
14-Aug-02 17,000 0.85
13-Aug-02 6,000 0.858
12-Aug-02 5,500 0.8
9-Aug-02 0 0.75
8-Aug-02 34,300 0.75
7-Aug-02 4,500 0.81
6-Aug-02 0 0.81
5-Aug-02 175,200 0.81
2-Aug-02 200 0.81
1-Aug-02 0 0.81
31-Jul-02 0 0.81
30-Jul-02 2,600 0.81
29-Jul-02 7,200 0.8
26-Jul-02 71,900 0.81
25-Jul-02 5,700 0.79
24-Jul-02 500 0.78
23-Jul-02 3,000 0.78
22-Jul-02 3,500 0.75
19-Jul-02 0 0.8
18-Jul-02 1,500 0.8
17-Jul-02 0 0.78
16-Jul-02 1,500 0.78
15-Jul-02 2,500 0.82
12-Jul-02 5,000 0.82
11-Jul-02 0 0.77
10-Jul-02 0 0.77
9-Jul-02 0 0.77
8-Jul-02 2,500 0.77
5-Jul-02 0 0.79
3-Jul-02 64,600 0.79
2-Jul-02 11,000 0.79
1-Jul-02 0 0.84
28-Jun-02 0 0.84
27-Jun-02 0 0.84
26-Jun-02 0 0.84
25-Jun-02 0 0.84
24-Jun-02 0 0.84
21-Jun-02 0 0.84
20-Jun-02 5,700 0.84
19-Jun-02 100 0.82
18-Jun-02 2,000 0.82
17-Jun-02 0 0.82
14-Jun-02 0 0.82
13-Jun-02 0 0.82
12-Jun-02 10,000 0.82
11-Jun-02 2,400 0.83
10-Jun-02 0 0.83
7-Jun-02 0 0.83
6-Jun-02 2,000 0.83
5-Jun-02 1,000 0.83
4-Jun-02 9,500 0.83
3-Jun-02 200 0.85
31-May-02 0 0.82
30-May-02 0 0.82
29-May-02 200 0.82
28-May-02 0 0.85
24-May-02 0 0.85
23-May-02 0 0.85
22-May-02 26300 0.85
21-May-02 0 0.82
20-May-02 1500 0.82
Start End High Average Median Low Avg. Volume Median Volume
- ------------------- ------------------- ------------------ --------- -------- ------------------- ----------- -------------
20-May-02 $ 0.8200 19-May-03 $ 0.9500 1-May-03 $ 1.0500 $ 0.8386 $ 0.8200 14-Oct-02 $ 0.6700 5,379 200
Sources of information: Commodity Systems, Inc.
Page 30
BCT International, Inc. CONFIDENTIAL
COMPANY MARKET PERFORMANCE
BCTI vs Comparable Company Index vs Russel 3000 Index
[Bar Graph]
-------------------------------------------
COMPANY COMPARABLE RUSSELL
DATE INDEX INDEX 3000 INDEX
---------------------------------------------------------
19-May-03 115.9 99.0 84.3
16-May-03 122.0 100.2 86.3
15-May-03 122.0 99.6 86.6
14-May-03 122.0 99.8 86.0
13-May-03 122.0 98.9 86.2
12-May-03 115.9 100.1 86.4
9-May-03 115.9 98.0 85.3
8-May-03 115.9 96.1 84.2
7-May-03 115.9 97.4 85.0
6-May-03 126.8 98.2 85.4
5-May-03 123.2 96.3 84.7
2-May-03 123.2 96.0 84.9
1-May-03 128.0 95.5 83.6
30-Apr-03 119.5 96.2 83.6
29-Apr-03 119.5 93.3 83.6
28-Apr-03 119.5 94.3 83.3
25-Apr-03 120.7 91.9 81.9
24-Apr-03 120.7 91.5 83.0
23-Apr-03 115.9 91.6 83.7
22-Apr-03 111.0 92.7 83.0
21-Apr-03 111.0 91.2 81.3
17-Apr-03 111.0 90.5 81.4
16-Apr-03 111.0 90.5 80.2
15-Apr-03 111.0 90.1 81.1
14-Apr-03 111.0 88.6 80.6
11-Apr-03 111.0 88.2 79.1
10-Apr-03 111.0 88.3 79.3
9-Apr-03 111.0 88.7 78.9
8-Apr-03 111.0 90.0 79.9
7-Apr-03 111.0 88.8 80.2
4-Apr-03 115.9 88.2 80.0
3-Apr-03 115.9 89.8 79.9
2-Apr-03 112.2 89.7 80.3
1-Apr-03 112.2 89.2 78.3
31-Mar-03 112.2 89.3 77.4
28-Mar-03 112.2 90.6 78.7
27-Mar-03 112.2 90.8 79.1
26-Mar-03 112.2 92.0 79.2
25-Mar-03 112.2 92.6 79.7
24-Mar-03 112.2 91.1 78.7
21-Mar-03 112.2 93.0 81.5
20-Mar-03 112.2 91.7 79.7
19-Mar-03 112.2 91.0 79.5
18-Mar-03 112.2 90.7 78.9
17-Mar-03 112.2 93.0 78.5
14-Mar-03 112.2 93.6 75.9
13-Mar-03 112.2 97.3 75.8
12-Mar-03 112.2 94.7 73.4
11-Mar-03 112.2 95.4 73.2
10-Mar-03 112.2 95.3 73.7
7-Mar-03 113.4 96.8 75.6
6-Mar-03 113.4 96.7 75.0
5-Mar-03 113.4 96.5 75.7
4-Mar-03 112.2 96.8 75.1
3-Mar-03 112.2 95.7 76.2
28-Feb-03 112.2 95.8 76.7
27-Feb-03 117.1 94.9 76.4
26-Feb-03 111.0 94.3 75.5
25-Feb-03 111.0 95.6 76.5
24-Feb-03 111.0 95.4 75.9
21-Feb-03 111.0 95.8 77.3
20-Feb-03 92.7 95.4 76.3
19-Feb-03 111.0 96.5 76.9
18-Feb-03 111.0 96.7 77.5
14-Feb-03 118.3 97.6 76.0
13-Feb-03 117.1 97.7 74.6
12-Feb-03 118.3 95.3 74.7
11-Feb-03 118.3 96.6 75.7
10-Feb-03 120.7 97.8 76.3
7-Feb-03 119.5 97.0 75.7
6-Feb-03 119.5 98.2 76.5
5-Feb-03 119.5 98.1 77.0
4-Feb-03 119.5 99.4 77.4
3-Feb-03 117.1 100.9 78.5
31-Jan-03 117.1 101.1 78.2
30-Jan-03 117.1 99.6 77.1
29-Jan-03 117.1 99.0 78.8
28-Jan-03 117.1 98.0 78.3
27-Jan-03 117.1 95.5 77.3
24-Jan-03 117.1 96.2 78.6
23-Jan-03 123.2 96.7 80.9
22-Jan-03 125.6 92.0 80.1
21-Jan-03 123.2 91.5 80.9
17-Jan-03 128.0 93.5 82.1
16-Jan-03 124.4 86.2 83.3
15-Jan-03 109.8 85.8 83.6
14-Jan-03 109.8 85.8 84.7
13-Jan-03 98.8 85.7 84.3
10-Jan-03 98.8 86.0 84.4
9-Jan-03 98.8 86.4 84.4
8-Jan-03 98.8 84.1 82.8
7-Jan-03 98.8 84.1 84.0
6-Jan-03 98.8 84.5 84.6
3-Jan-03 98.8 81.6 82.7
2-Jan-03 98.8 82.8 82.8
31-Dec-02 98.8 80.9 80.2
30-Dec-02 97.6 81.4 80.1
27-Dec-02 95.1 81.3 79.9
26-Dec-02 95.1 81.5 81.1
24-Dec-02 95.1 80.3 81.3
23-Dec-02 95.1 80.2 81.8
20-Dec-02 95.1 80.0 81.6
19-Dec-02 103.7 79.0 80.5
18-Dec-02 103.7 77.6 81.1
17-Dec-02 95.1 78.9 82.2
16-Dec-02 95.1 78.9 82.9
13-Dec-02 95.1 77.5 81.1
12-Dec-02 95.1 77.9 82.2
11-Dec-02 95.1 77.3 82.4
10-Dec-02 95.1 77.4 82.3
9-Dec-02 95.1 74.9 81.2
6-Dec-02 95.1 78.9 83.0
5-Dec-02 92.7 77.5 82.5
4-Dec-02 92.7 78.0 83.4
3-Dec-02 101.2 78.6 83.8
2-Dec-02 101.2 79.0 85.1
29-Nov-02 92.8 80.6 85.2
27-Nov-02 92.8 80.1 85.4
26-Nov-02 92.7 79.1 83.1
25-Nov-02 91.5 81.6 84.9
22-Nov-02 109.8 81.5 84.6
21-Nov-02 91.5 82.5 84.8
20-Nov-02 91.5 81.9 83.0
19-Nov-02 91.5 80.2 81.4
18-Nov-02 91.5 81.0 81.8
15-Nov-02 91.5 82.8 82.6
14-Nov-02 91.5 81.6 82.1
13-Nov-02 91.5 80.2 80.1
12-Nov-02 91.5 79.3 80.2
11-Nov-02 91.5 78.6 79.5
8-Nov-02 91.5 80.9 81.2
7-Nov-02 92.7 80.7 82.0
6-Nov-02 87.8 82.5 83.9
5-Nov-02 87.8 81.8 83.1
4-Nov-02 87.8 81.9 82.5
1-Nov-02 87.8 82.6 81.9
31-Oct-02 91.5 79.1 80.5
30-Oct-02 83.5 78.7 80.8
29-Oct-02 82.9 77.9 80.0
28-Oct-02 82.9 77.1 80.7
25-Oct-02 82.9 76.8 81.4
24-Oct-02 90.2 76.0 80.0
23-Oct-02 90.2 78.5 81.2
22-Oct-02 82.9 76.9 80.6
21-Oct-02 82.9 76.8 81.5
18-Oct-02 82.9 73.6 80.1
17-Oct-02 82.9 73.9 79.8
16-Oct-02 82.9 71.4 77.9
15-Oct-02 82.9 72.8 79.8
14-Oct-02 81.7 69.4 76.3
11-Oct-02 81.7 69.6 75.7
10-Oct-02 86.6 67.9 73.0
9-Oct-02 86.6 67.0 70.5
8-Oct-02 87.8 68.8 72.5
7-Oct-02 87.8 70.6 71.5
4-Oct-02 86.6 73.4 72.9
3-Oct-02 86.6 74.8 74.7
2-Oct-02 86.6 76.6 75.5
1-Oct-02 85.4 77.3 77.4
30-Sep-02 85.4 73.5 74.6
27-Sep-02 86.6 74.2 75.6
26-Sep-02 86.6 76.4 78.0
25-Sep-02 86.6 75.2 76.6
24-Sep-02 85.4 73.6 74.8
23-Sep-02 85.4 76.2 76.0
20-Sep-02 89.0 78.1 77.1
19-Sep-02 87.8 76.7 77.0
18-Sep-02 95.1 78.0 79.3
17-Sep-02 95.1 78.3 79.7
16-Sep-02 93.3 79.6 81.3
13-Sep-02 92.7 79.6 81.3
12-Sep-02 92.7 80.6 81.0
11-Sep-02 92.7 82.3 83.0
10-Sep-02 100.0 81.4 83.0
9-Sep-02 100.0 82.0 82.5
6-Sep-02 98.8 82.8 81.7
5-Sep-02 98.8 80.0 80.3
4-Sep-02 98.8 83.2 81.6
3-Sep-02 101.2 80.0 80.2
30-Aug-02 98.8 83.0 83.5
29-Aug-02 97.6 81.4 83.7
28-Aug-02 97.6 82.7 83.6
27-Aug-02 97.6 84.8 85.1
26-Aug-02 97.6 84.9 86.4
23-Aug-02 97.6 84.0 85.7
22-Aug-02 100.0 83.1 87.7
21-Aug-02 100.0 81.0 86.6
20-Aug-02 103.7 79.7 85.4
19-Aug-02 113.4 80.3 86.6
16-Aug-02 103.7 78.7 84.7
15-Aug-02 103.7 78.2 83.7
14-Aug-02 103.7 78.3 83.7
13-Aug-02 104.6 77.0 80.7
12-Aug-02 97.6 76.3 82.5
9-Aug-02 91.5 77.7 82.9
8-Aug-02 91.5 76.4 82.7
7-Aug-02 98.8 75.3 80.2
6-Aug-02 98.8 76.1 78.7
5-Aug-02 98.8 72.3 76.4
2-Aug-02 98.8 73.4 79.0
1-Aug-02 98.8 75.9 81.0
31-Jul-02 98.8 75.4 83.3
30-Jul-02 98.8 75.4 82.7
29-Jul-02 97.6 76.1 82.3
26-Jul-02 98.8 71.1 78.1
25-Jul-02 96.3 69.5 76.9
24-Jul-02 95.1 70.4 77.2
23-Jul-02 95.1 67.9 73.2
22-Jul-02 91.5 71.5 75.3
19-Jul-02 97.6 73.3 77.8
18-Jul-02 97.6 75.2 80.6
17-Jul-02 95.1 77.1 82.9
16-Jul-02 95.1 77.1 82.4
15-Jul-02 100.0 77.0 83.6
12-Jul-02 100.0 80.8 83.9
11-Jul-02 93.9 81.0 84.4
10-Jul-02 93.9 83.2 83.9
9-Jul-02 93.9 83.9 86.6
8-Jul-02 93.9 85.6 88.8
5-Jul-02 96.3 84.8 89.9
3-Jul-02 96.3 82.8 86.8
2-Jul-02 96.3 82.8 86.4
1-Jul-02 102.4 87.3 88.4
28-Jun-02 102.4 89.6 90.6
27-Jun-02 102.4 89.1 90.5
26-Jun-02 102.4 89.6 89.0
25-Jun-02 102.4 88.5 89.2
24-Jun-02 102.4 88.7 90.7
21-Jun-02 102.4 87.4 90.5
20-Jun-02 102.4 88.5 92.0
19-Jun-02 100.0 86.0 93.3
18-Jun-02 100.0 86.9 94.8
17-Jun-02 100.0 86.9 94.8
14-Jun-02 100.0 85.1 92.2
13-Jun-02 100.0 86.0 92.3
12-Jun-02 100.0 89.3 93.3
11-Jun-02 101.2 86.6 92.8
10-Jun-02 101.2 89.4 94.4
7-Jun-02 101.2 91.8 94.2
6-Jun-02 101.2 91.4 94.1
5-Jun-02 101.2 97.1 96.0
4-Jun-02 101.2 98.5 95.3
3-Jun-02 103.7 99.1 95.4
31-May-02 100.0 99.6 97.7
30-May-02 100.0 99.5 97.5
29-May-02 100.0 99.1 97.8
28-May-02 103.7 100.3 98.4
24-May-02 103.7 101.0 99.2
23-May-02 103.7 102.2 100.4
22-May-02 103.7 101.104 99.29366
21-May-02 100.0 100.2193 98.86757
20-May-02 100.0 100 100
% Change BCTI Comparables Russell 3000
First Half of Period -8.5% -19.8% -18.6%
Second Half of Period 26.7% 23.6% 3.6%
Full Period 15.9% -1.0% -15.7%
- --------------------------------------------------------------------------------
(1) Reflects the market cap weighted prices of the comparable companies utilized
in the Comparable Company Analysis.
Sources of information: Commodity Systems, Inc.
Page 31
BCT International, Inc. CONFIDENTIAL
COMPANY MARKET PERFORMANCE
BCTI Closing Price Ranges as Percentage of Total Trading Days
May 20, 2002 - May 19, 2003
[CHART APPEARS HERE]
Price Range $0.000 - $0.675 $0.676 - $0.725 $0.726 - $0.775 $0.776 - $0.825 $0.826 - $0.875 $0.876 - $0.925
- ---------------------------------------------------------------------------------------------------------------------
Days in Range 2 29 33 71 29 41
Percentage 0.8% 11.5% 13.1% 28.2% 11.5% 16.3%
Price Range $0.926 - $0.975 $0.976 - $1.025 $1.026 +
- ------------------------------------------------------------
Days in Range 24 19 4
Percentage 9.5% 7.5% 1.6%
Sources of information: Commodity Systems, Inc.
Page 32
BCT International, Inc. CONFIDENTIAL
COMPANY MARKET PERFORMANCE
BCTI Trading Volume per Price Range as Percentage of Total Volume
May 20, 2002 - May 19, 2003
[CHART APPEARS HERE]
Price Range $0.000 - $0.675 $0.676 - $0.725 $0.726 - $0.775 $0.776 - $0.825 $0.826 - $0.875 $0.876 - $0.925
- ---------------------------------------------------------------------------------------------------------------------
Volume 16,700 161,200 168,200 445,600 102,100 96,500
Percentage 1.2% 11.9% 12.4% 32.9% 7.5% 7.1%
Price Range $0.926 - $0.975 $0.976 - $1.025 $1.026 +
- ------------------------------------------------------------
Volume 59,500 113,800 191,800
Percentage 4.4% 8.4% 14.2%
Sources of information: Commodity Systems, Inc.
Page 33
BCT International, Inc. CONFIDENTIAL
COMPANY MARKET PERFORMANCE
BCTI Trading Volume Ranges as Percentage of Total Volume
May 20, 2002 - May 19, 2003
[CHART APPEARS HERE]
No volume **0*0,250 **0,251*1,000 **1,001*2,500 **2,501*5,000 **5,001*10,000 **10,001*25,000 **25,001
--------------------------------------------------------------------------------------------------------------------
Days in Range 114 21 19 26 19 29 14 10
Percentage 45.2% 8.3% 7.5% 10.3% 7.5% 11.5% 5.6% 4.0%
Sources of information: Commodity Systems, Inc.
Page 34
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
Page 35
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
METHODOLOGIES
. Based upon a review of the Company's historical financial data,
projections, and certain other qualitative data, Capitalink
utilized several valuation methodologies to determine a range of
values for the Company.
. Capitalink did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or
failed to support an opinion as to the fairness, from a
financial point of view, of the Proposed Transaction.
. Capitalink did not place any particular reliance or weight on
any individual analysis, but instead concluded that the
analyses, taken as a whole, supported its determination.
Accordingly, the analyses must be considered as a whole and
selecting portions of analyses or the factors considered,
without considering all analyses and factors collectively, could
create an incomplete and incorrect view of the process
underlying the analyses in connection with the preparation of
the opinion.
. The financial reviews and analyses include information presented
in tabular format. In order to fully understand Capitalink's
financial review and analyses, the tables must be read together
with the text of the presentation. The tables alone are not a
complete description of the financial review and analyses and
considering the tables alone could create a misleading or
incomplete view of Capitalink's financial review and analyses.
. The methodologies utilized by Capitalink included:
. A review of the historical and projected financial
information of the Company as prepared by management.
. A review and comparison of the trading of, and the
trading market for, the common stock of the Company, the
Comparable Companies and a general market index.
. A review of a discounted cash flow analysis of the
Company, with sensitivity analyses based on a range of
assumptions.
. A review and comparison of trading multiples for deemed
comparable publicly-traded companies for the Company.
Page 36
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
METHODOLOGIES
. A review and comparison of the premiums paid in
transactions involving the acquisition of a minority
ownership interest in publicly-traded companies.
. A review of the premiums implied by the per share
consideration in the Proposed Transaction.
. A review and determination of the Company's adjusted
book value analysis.
. A review and determination of the market value of the
Notes.
Page 37
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
ILLUSTRATIVE INDICATED REFERENCE RANGE SUMMARY
[Bar Graph]
RANGE
----------------
Discounted Cash Flow Analysis $ 1.89 -- $ 2.06
Comparable Company Analysis $ 1.57 -- $ 2.20
Minority Interest Acquisitions/
Premiums Paid Analysis $ 1.29 -- $ 1.51
Adjusted Net Book Value Analysis $ 2.02 -- $ 2.02
One Year Stock Trading Range $ 0.67 -- $ 1.05
Merger Consideration $ 2.00 -- $ 2.00
(1) Please reference the appropriate Analysis for further discussion and sources
of information.
Page 38
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
Indicated Reference Range Summary
($ in thousands, except per share)
Methodology (1) Statistic Selected Multiple Range TIC/Enterprise Value Indicated Share Price
- -------------------------------------------- ----------- ----------------------- -------------------- ---------------------
DISCOUNTED CASH FLOW ANALYSIS
Revenue Terminal Multiple $ 3,381 - $ 4,638 $ 1.88 - $ 2.11
EBITDA Terminal Multiple $ 3,972 - $ 4,808 $ 1.99 - $ 2.14
Perpetual Growth Terminal Value $ 2,809 - $ 3,645 $ 1.78 - $ 1.93
Indicated Reference Range $ 1.89 - $ 2.06
COMPARABLE COMPANY ANALYSIS
Total Invested Capital as Multiple of:
LTM Revenue $ 18,381 0.32x - 0.59x $ 5,853 - $ 10,890 $ 0.88 - $ 1.77
LTM EBITDA $ 988 5.4x - 7.7x $ 5,327 - $ 7,628 $ 0.79 - $ 1.20
Enterprise Value as Multiple of:
LTM Revenue $ 18,381 0.32x - 0.58x $ 5,835 - $ 10,707 $ 2.36 - $ 3.22
LTM EBITDA $ 988 5.3x - 7.4x $ 5,238 - $ 7,295 $ 2.26 - $ 2.62
Indicated Reference Range $ 1.57 - $ 2.20
MINORITY INTEREST ACQUISITIONS PREMIUMS PAID
ANALYSIS
Prior One Day $ 0.95 33.3% - 54.8% $ 1.27 - $ 1.47
Prior Five Day $ 0.95 40.5% - 64.0% $ 1.33 - $ 1.56
Prior 30 Day $ 0.91 40.8% - 63.9% $ 1.28 - $ 1.49
Indicated Reference Range $ 1.29 - $ 1.51
PREMIUMS PAID ANALYSIS
Closing Price as of May 19, 2003 110.5%
Prior Day Closing Price 100.0%
Prior 5 Trading Day Average Closing Price 104.1%
Prior 10 Trading Day Average Closing Price 104.1%
Prior 20 Trading Day Average Closing Price 104.6%
Prior 30 Trading Day Average Closing Price 109.1%
Prior 60 Trading Day Average Closing Price 113.0%
Prior 90 Trading Day Average Closing Price 112.8%
Prior Six Month Average Closing Price 122.1%
Prior Year Average Closing Price 138.5%
ADJUSTED NET BOOK VALUE ANALYSIS
As of February 28, 2003 $ 2.02
(1) Please reference the appropriate Analysis for further discussion and
sources of information.
Page 39
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
. The discounted cash flow analysis estimates value based upon a
company's projected future free cash flow discounted at a rate
reflecting risks inherent in its business and capital structure.
Unlevered free cash flow represents the amount of cash generated
and available for principal, interest and dividend payments
after providing for ongoing business operations.
. While the discounted cash flow analysis is the most scientific
of the methodologies, it is dependent on projections and is
further dependent on numerous industry-specific and
macroeconomic factors.
. Capitalink performed discounted cash flow analyses based on the
preliminary projected cash flows for the Company's (i) base case
franchising operations, (ii) Company-owned plants, and (iii)
satellite stores concept. A set of projected cash flows was
derived for each operation, as differing sets of assumptions
were applied to each given the specific risks of each operation.
. The range of terminal values represents the residual value of
the operation at the end of the forecast period. Capitalink
presented a range of terminal values by applying a range of
multiples to each of the operations FY2007 projected revenue and
EBITDA.
. In addition, Capitalink presented a perpetual growth scenario
whereby ranges of growth rates were applied to the operation's
FY2007 free cash flows in order to determine a terminal value,
rather than multiples.
. In each of the scenarios noted in (i) to (iii) above, ranges of
enterprise values were derived. These operation value ranges
were added together to derive the total estimated enterprise
value of the Company. The total enterprise value range was
reduced by the Company's net debt to arrive at an equity value
range. The Company's estimated net debt as of February 28, 2003
was approximately ($7.3) million, which includes approximately
$523,000 in interest bearing debt, $4.2 million in cash, an
estimated $1.0 million from the exercise of in the money ("ITM")
options and an assumed $2.5 million fair market value of the
Notes (see Notes analysis).
Page 40
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
. Taking into account the enterprise value ranges for all three
operations, and the Company's net debt and common stock share
equivalents of 5.68 million, Capitalink calculated a range of
indicated shares prices of between $1.89 and $2.06.
. Capitalink noted that the offer price of the Proposed
Transaction was within this indicated valuation range.
BASE CASE OPERATIONS
. The Company's base case operations include the Company's core
franchising revenues and expenses and the Company's general and
administration expenses. Capitalink utilized the forecasts
provided by Company management, which show little growth in
revenues, constant margins, and a gradual increase in salaries
and other general and administration expenses. For the forecast
period, the Company projects a gradual decrease in EBITDA from
approximately $1.4 million for FY2004, to approximately $615,000
for FY2007.
. In order to arrive at a present value, Capitalink utilized
discount rates ranging from 16.0% to 18.5%. This was based on an
estimated weighted average cost of capital ("WACC") of 17.3%
(based on the Company's existing debt and an 18.8% estimated
cost of equity).
. The results of the base case discounted cash flow analysis under
the three terminal value scenarios were as follows:
. Utilizing the revenue terminal scenario (range of 0.15
times to 0.2 times), Capitalink calculated a range of
indicated enterprise value of $3.4 million to $4.1
million.
. Utilizing the EBITDA terminal scenario (range of 3.5
times to 4.0 times), Capitalink calculated a range of
indicated enterprise values of $3.1 million to $3.5
million.
. Utilizing a perpetual growth scenario (growth rates of
2.75% to 3.00%), Capitalink calculated a range of
indicated enterprise values of $2.9 million to $3.3
million.
Page 41
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
COMPANY-OWNED PLANT OPERATIONS
. The Company's plant operations include the associated revenues
and expenses related to the operation of the Company-owned
plants. The Company currently owns a plant in San Francisco and
Tampa and expects to purchase an additional three plants over
the next three years. Capitalink utilized the forecasts provided
by Company management, which show an increase in revenue from
$3.7 million for FY2004 to $7.8 million for FY2007, and EBITDA
from $180,000 in FY2004 to $1.1 million in FY2007.
. In order to arrive at a present value, Capitalink utilized
discount rates ranging from 23.0% to 25.5%. This was based on an
estimated WACC of 24.5% (based on the Company's existing debt
and a 26.8% estimated cost of equity).
. The results of the Company plant discounted cash flow analysis
under the three terminal value scenarios were as follows:
. Utilizing the revenue terminal scenario (range of 0.4
times to 0.5 times), Capitalink calculated a range of
indicated enterprise value of $(290,000) to $195,000.
. Utilizing the EBITDA terminal scenario (range of 4.5
times to 5.0 times), Capitalink calculated a range of
indicated enterprise values of $490,000 to $913,000.
. Utilizing a perpetual growth scenario (growth rates of
4.50% to 4.75%), Capitalink calculated a range of
indicated enterprise values of $(357,000) to $(35,000).
SATELLITE STORE OPERATIONS
. The Company's satellite store operations include the associated
revenues and expenses related to the franchising of satellite
stores in regions that are currently underserved by BCT or are
not profitable enough to justify the existence of a full plant.
The Company is currently testing the concept in Tampa. The
Company expects to roll out these new line of stores across the
country gradually over the next five years and projects a total
of 14 satellite stores in operation by FY2007.
Page 42
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
. In order to arrive at a present value, Capitalink utilized
discount rates ranging from 20.5% to 23.0%. This was based on an
estimated WACC of 21.8% (based on the Company's existing debt
and a 23.8% estimated cost of equity).
. The results of the satellite store discounted cash flow analysis
under the three terminal value scenarios were as follows:
. Utilizing the revenue terminal scenario (range of 0.9
times to 1.0 times), Capitalink calculated a range of
indicated enterprise value of $234,000 and $315,000.
. Utilizing the EBITDA terminal scenario (range of 6.0
times to 6.5 times), Capitalink calculated a range of
indicated enterprise values of $308,000 to $389,000.
. Utilizing a perpetual growth scenario (with growth rates
of 10.50% to 10.75%), Capitalink calculated a range of
indicated enterprise values of $257,000 to $428,000.
Page 43
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS - INDICATED REFERENCE RANGE
($ in thousands, except per share)
Selected Indicated Equity Indicated Share
Multiple Range Indicated EV Value Value (1) Price (2)
---------------- --------------------- --------------------- -----------------
REVENUE TERMINAL VALUE ANALYSIS
Base Case 0.15x - 0.20x $ 3,437 - $ 4,129
Company Owned Plants 0.40x - 0.50x (290) - 195
Satellite Store Initiative 0.90x - 1.00x 234 - 315
-------- -------
$ 3,381 - $ 4,638 $ 10,713 - $ 11,970 $ 1.88 - $ 2.11
======== =======
EBITDA TERMINAL VALUE ANALYSIS
Base Case 3.5x - 4.0x $ 3,173 - $ 3,505
Company Owned Plants 4.5x - 5.0x 490 - 913
Satellite Store Initiative 6.0x - 6.5x 308 - 389
-------- -------
$ 3,972 - $ 4,808 $ 11,304 - $ 12,140 $ 1.99 - $ 2.14
======== =======
PERPETUAL GROWTH TERMINAL VALUE ANALYSIS
Base Case 2.75% - 3.00% $ 2,909 - $ 3,252
Company Owned Plants 4.50% - 4.75% (357) - (35)
Satellite Store Initiative 10.50% - 10.75% 257 - 428
-------- --------
$ 2,809 - $ 3,645 $ 10,141 - $ 10,977 $ 1.78 - $ 1.93
======== ========
Indicated Reference Range $ 1.89 - $ 2.06
(1) Adjusted for ($7,332) net debt, which includes assumed cash from in the
money options/warrants and the net present value of notes receivable.
(2) Based upon and assumes 5,686 common stock share equivalents outstanding.
Page 44
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
FINANCIAL PROJECTIONS - BASE CASE PROJECTIONS
($ in thousands)
ACTUAL/ESTIMATED PROJECTED
----------------------- -------------------------------------------------
FYE FEB 28/29 FYE FEB 28/29
----------------------- -------------------------------------------------
2002 2003 2004 2005 2006 2007
----------------------- -------------------------------------------------
REVENUE
Royalty Income $ 5,117 $ 5,221 $ 5,209 $ 5,209 $ 5,209 $ 5,209
Pelican Paper Sales 12,068 12,019 12,000 12,000 12,000 12,000
Franchise Sales 99 4 - - - -
OPC Fees 306 426 360 330 330 330
Company Plant Sales - - - - - -
----------------------- -------------------------------------------------
17,590 17,670 17,569 17,539 17,539 17,539
Cost of Goods Sold 10,726 10,410 10,468 10,480 10,492 10,492
----------------------- -------------------------------------------------
Gross Margin 6,864 7,260 7,101 7,059 7,047 7,047
OPERATING EXPENSES
Salaries & Employee Benefits 3219 2,763 3,074 3,258 3,454 3,661
Consultancy Costs 602 519 400 400 400 400
Occupancy Costs 200 216 220 234 249 249
Travel and Entertainment 147 188 238 246 254 262
Bad Debt 1300 1,400 900 900 900 900
Other G&A 739 765 848 882 921 960
----------------------- -------------------------------------------------
6,207 5,851 5,680 5,920 6,178 6,432
----------------------- -------------------------------------------------
EBITDA 657 1,409 1,421 1,139 869 615
Deprec. & Amort 226 218 200 200 200 200
----------------------- -------------------------------------------------
EBIT 431 1,191 1,221 939 669 415
Income Taxes 168 464 476 366 261 162
----------------------- -------------------------------------------------
Unlevered After-tax Income 263 727 745 573 408 253
Add: Deprec. & Amort 226 218 200 200 200 200
Add: Change in Net WC - (1,151) 311 12 8 9
Less: Capital Expenditures 162 520 150 150 150 150
----------------------- -------------------------------------------------
Unlevered Free Cash Flows $ 327 $ (726) $ 1,106 $ 635 $ 466 $ 312
======================= =================================================
INCOME TAX EXPENSE AND ASSUMPTIONS
Statutory Tax Rate 39.0% 39.0% 39.0% 39.0% 39.0% 39.0%
Effective Tax Rate 39.0% 39.0% 39.0% 39.0% 39.0% 39.0%
Current Period Tax $ 168 $ 464 $ 476 $ 366 $ 261 $ 162
NOL Usage - - - - - -
----------------------- -------------------------------------------------
Income Tax Expense $ 168 $ 464 $ 476 $ 366 $ 261 $ 162
======================= =================================================
Ending NOL Balance $ - $ - $ - $ - $ -
========== =================================================
ACTUAL/ESTIMATED PROJECTED
----------------------- ----------------------------------------------------
FYE FEB 28/29 FYE FEB 28/29
----------------------- ----------------------------------------------------
2002 2003 2004 2005 2006 2007
----------------------- ----------------------------------------------------
GROWTH ASSUMPTIONS
Royalty Income na 2.0% -0.2% 0.0% 0.0% 0.0%
Pelican Paper Sales na -0.4% -0.2% 0.0% 0.0% 0.0%
Franchise Sales na -96.0% -100.0% na na na
OPC Fees na 39.2% -15.5% -8.3% 0.0% 0.0%
Company Plant Sales na na na na na na
Total Revenue na 0.5% -0.6% -0.2% 0.0% 0.0%
Cost of Goods Sold na -2.9% 0.6% 0.1% 0.1% 0.0%
Gross Margin na 5.8% -2.2% -0.6% -0.2% 0.0%
Salaries & Employee Benefits na -14.2% 11.3% 6.0% 6.0% 6.0%
Consultancy Costs na -13.8% -22.9% 0.0% 0.0% 0.0%
Occupancy Costs na 8.0% 1.9% 6.4% 6.4% 0.0%
Travel and Entertainment na 27.9% 26.6% 3.4% 3.3% 3.1%
Bad Debt na 7.7% -35.7% 0.0% 0.0% 0.0%
Other G&A na 3.5% 10.8% 4.0% 4.4% 4.2%
Total Operating Expenses na -5.7% -2.9% 4.2% 4.4% 4.1%
EBITDA na 114.5% 0.9% -19.8% -23.7% -29.2%
Unlevered After-tax Income na 176.3% 2.5% -23.1% -28.8% -38.0%
MARGIN REVIEW
Cost of Paper Sales Margin 11.1% 13.4% 12.8% 12.7% 12.6% 12.6%
Gross Margin 39.0% 41.1% 40.4% 40.2% 40.2% 40.2%
EBITDA Margin 3.7% 8.0% 8.1% 6.5% 5.0% 3.5%
NON-CASH WORKING CAPITAL ASSUMPTIONS
AR Days Outstanding 64 60 60 60 60
A/R - % of Sales 17.5% 16.4% 16.4% 16.4% 16.4%
Days Inventory Outs. 91 90 90 90 90
Inv - % Cost of Sales 24.9% 24.7% 24.7% 24.7% 24.7%
Prepay - % of Direct and Op Costs 5.4% 4.0% 4.0% 4.0% 4.0%
AP Days Outstanding 20 10 10 10 10
A/P - % of Direct and Op Costs 5.4% 2.7% 2.7% 2.7% 2.7%
Acc Exp - % of Direct and Op Costs 3.5% 5.0% 5.0% 5.0% 5.0%
NON-CASH NET WORKING CAPITAL
Accounts Receivable $ 2,889 $ 3,076 $ 2,888 $ 2,883 $ 2,883 $ 2,883
Inventory 1,887 2,668 2,581 2,584 2,587 2,587
Prepayments 678 882 646 656 667 677
Accounts Payable 432 875 442 449 457 464
Acc Exp & Deferred Rev 996 574 807 820 834 846
----------------------- ----------------------------------------------------
Non-Cash Net WC $ 4,026 $ 5,177 $ 4,866 $ 4,854 $ 4,846 $ 4,837
======================= ====================================================
Change in Non-Cash Net WC $ (1,151) $ 311 $ 12 $ 8 $ 9
========== ====================================================
Sources of information: Company financials, projections and management.
Page 45
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS - BASE CASE PROJECTIONS
($ in thousands)
REVENUE TERMINAL VALUE ANALYSIS
ESTIMATED RANGE OF ENTERPRISE VALUES
- -----------------------------------------------------------------------------------------
TERMINAL REVENUE MULTIPLES
Discount ------------------------------------------------------------------------
Rate 0.05x 0.10x 0.15x 0.20x 0.25x 0.30x
- -----------------------------------------------------------------------------------------
11.0% $ 2,777 $ 3,385 $ 3,994 $ 4,602 $ 5,211 $ 5,820
13.5% $ 2,666 $ 3,229 $ 3,792 $ 4,355 $ 4,918 $ 5,481
16.0% $ 2,564 $ 3,085 $ 3,607 $ 4,129 $ 4,650 $ 5,172
18.5% $ 2,469 $ 2,953 $ 3,437 $ 3,922 $ 4,406 $ 4,890
21.0% $ 2,382 $ 2,832 $ 3,282 $ 3,732 $ 4,182 $ 4,632
23.5% $ 2,301 $ 2,719 $ 3,138 $ 3,557 $ 3,976 $ 4,395
Average of Box $ 3,774
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
- -----------------------------------------------------------------------------------------
TERMINAL REVENUE MULTIPLES
Discount ------------------------------------------------------------------------
Rate 0.05x 0.10x 0.15x 0.20x 0.25x 0.30x
- -----------------------------------------------------------------------------------------
11.0% 21.9% 36.0% 45.7% 52.9% 58.4% 62.7%
13.5% 21.1% 34.9% 44.5% 51.7% 57.2% 61.6%
16.0% 20.3% 33.8% 43.4% 50.5% 56.1% 60.5%
18.5% 19.6% 32.8% 42.3% 49.4% 54.9% 59.4%
21.0% 18.9% 31.8% 41.1% 48.2% 53.8% 58.3%
23.5% 18.2% 30.8% 40.0% 47.1% 52.7% 57.2%
Average of Box 46.4%
EBITDA TERMINAL VALUE ANALYSIS
ESTIMATED RANGE OF ENTERPRISE VALUES
- -----------------------------------------------------------------------------------------
TERMINAL EBITDA MULTIPLES
Discount ------------------------------------------------------------------------
Rate 2.50x 3.00x 3.50x 4.00x 4.50x 5.00x
- -----------------------------------------------------------------------------------------
11.0% $ 3,235 $ 3,448 $ 3,662 $ 3,875 $ 4,089 $ 4,302
13.5% $ 3,090 $ 3,287 $ 3,485 $ 3,682 $ 3,879 $ 4,077
16.0% $ 2,957 $ 3,139 $ 3,322 $ 3,505 $ 3,688 $ 3,871
18.5% $ 2,834 $ 3,004 $ 3,173 $ 3,343 $ 3,513 $ 3,683
21.0% $ 2,721 $ 2,878 $ 3,036 $ 3,194 $ 3,352 $ 3,510
23.5% $ 2,616 $ 2,763 $ 2,910 $ 3,057 $ 3,204 $ 3,351
Average of Box $ 3,336
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
- -----------------------------------------------------------------------------------------
TERMINAL EBITDA MULTIPLES
Discount ------------------------------------------------------------------------
Rate 2.50x 3.00x 3.50x 4.00x 4.50x 5.00x
- -----------------------------------------------------------------------------------------
11.0% 33.0% 37.1% 40.8% 44.1% 47.0% 49.6%
13.5% 31.9% 36.0% 39.7% 42.9% 45.8% 48.4%
16.0% 30.9% 35.0% 38.5% 41.7% 44.6% 47.3%
18.5% 30.0% 33.9% 37.4% 40.6% 43.5% 46.1%
21.0% 29.0% 32.9% 36.4% 39.5% 42.4% 45.0%
23.5% 28.1% 31.9% 35.3% 38.4% 41.3% 43.8%
Average of Box 39.6%
PERPETUAL GROWTH TERMINAL VALUE ANALYSIS
ESTIMATED RANGE OF ENTERPRISE VALUES
- -----------------------------------------------------------------------------------------
TERMINAL PERPETUAL GROWTH RATES
Discount ------------------------------------------------------------------------
Rate 2.25% 2.50% 2.75% 3.00% 3.25% 3.50%
- -----------------------------------------------------------------------------------------
11.0% $ 4,243 $ 4,311 $ 4,384 $ 4,462 $ 4,544 $ 4,632
13.5% $ 3,596 $ 3,635 $ 3,676 $ 3,719 $ 3,765 $ 3,812
16.0% $ 3,174 $ 3,199 $ 3,225 $ 3,252 $ 3,280 $ 3,309
18.5% $ 2,874 $ 2,891 $ 2,909 $ 2,927 $ 2,946 $ 2,965
21.0% $ 2,648 $ 2,660 $ 2,673 $ 2,685 $ 2,699 $ 2,713
23.5% $ 2,470 $ 2,479 $ 2,488 $ 2,498 $ 2,508 $ 2,518
Average of Box $ 3,078
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
- -----------------------------------------------------------------------------------------
TERMINAL PERPETUAL GROWTH RATES
Discount ------------------------------------------------------------------------
Rate 2.25% 2.50% 2.75% 3.00% 3.25% 3.50%
- -----------------------------------------------------------------------------------------
11.0% 48.9% 49.7% 50.6% 51.4% 52.3% 53.2%
13.5% 41.5% 42.2% 42.8% 43.5% 44.1% 44.8%
16.0% 35.7% 36.2% 36.7% 37.2% 37.7% 38.3%
18.5% 30.9% 31.3% 31.8% 32.2% 32.6% 33.1%
21.0% 27.0% 27.4% 27.7% 28.1% 28.4% 28.8%
23.5% 23.8% 24.1% 24.4% 24.7% 25.0% 25.3%
Average of Box 34.5%
All Discounted amounts have been calculated utilizing a mid-year convention.
Sources of information: Company financials, projections and management.
Page 46
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
FINANCIAL PROJECTIONS - COMPANY OWNED PLANT PROJECTIONS
($ in thousands)
ACTUAL/ESTIMATED PROJECTED
------------------ -----------------------------------------------
FYE FEB 28/29 FYE FEB 28/29
------------------ -----------------------------------------------
2002 2003 2004 2005 2006 2007
------------------ -----------------------------------------------
REVENUE
San Francisco $ - $ 286 $ 688 $ 791 $ 869 $ 913
Tampa - 750 1,620 1,782 1,960 2,156
Mid-South - - 700 1,470 1,544 1,621
Mid-West - - 700 1,470 1,544 1,621
Northeast - - - 1,050 1,470 1,543
------------------ -----------------------------------------------
- 1,036 3,708 6,563 7,387 7,854
Cost of Goods Sold - 237 846 1,502 1,690 1,797
------------------ -----------------------------------------------
Gross Margin - 799 2,862 5,061 5,697 6,057
OPERATING EXPENSES
Salaries & Employee Benefits - - 1,746 2,870 3,155 3,354
Occupancy Costs - - 177 318 352 368
Equipment Leases - - 81 89 76 76
Advertising - - 72 114 120 120
Delivery Expense - - 348 525 591 628
Training Costs 100 150 238 250
Other - 995 158 248 181 179
------------------ -----------------------------------------------
- 995 2,682 4,314 4,713 4,975
------------------ -----------------------------------------------
EBITDA - (196) 180 747 984 1,082
Deprec. & Amort - 23 100 100 100 100
------------------ -----------------------------------------------
EBIT - (219) 80 647 884 982
Income Taxes - (85 31 252 345 383
------------------ -----------------------------------------------
Unlevered After-tax Income - (134) 49 395 539 599
Add: Deprec. & Amort - 23 100 100 100 100
Add: Change in Net WC - - (305) (235) (68) (38)
Less: Capital Expenditures - - 1,800 975 75 75
------------------ -----------------------------------------------
Unlevered Free Cash Flows $ - $ (111) $ (1,956) $ (715) $ 496 $ 586
================== ===============================================
INCOME TAX EXPENSE AND ASSUMPTIONS
Statutory Tax Rate 0.0% 39.0 39.0% 39.0% 39.0% 39.0%
Effective Tax Rate 0.0% 39.0 39.0% 39.0% 39.0% 39.0%
Current Period Tax $ - $ (85) $ 31 $ 252 $ 345 $ 383
NOL Usage - - - - - -
------------------ -----------------------------------------------
Income Tax Expense $ - $ (85) $ 31 $ 252 $ 345 $ 383
================== ===============================================
Ending NOL Balance $ - $ - $ - $ - $ -
======== ===============================================
ACTUAL/ESTIMATED PROJECTED
------------------ -----------------------------------------------
FYE FEB 28/29 FYE FEB 28/29
------------------ -----------------------------------------------
2002 2003 2004 2005 2006 2007
------------------ -----------------------------------------------
GROWTH ASSUMPTIONS
San Francisco na na 140.4% 15.0% 9.9% 5.1%
Tampa na na 116.0% 10.0% 10.0% 10.0%
Mid-South na na na 110.0% 5.0% 5.0%
Mid-West na na na 110.0% 5.0% 5.0%
Northeast na na na na 40.0% 5.0%
Total Revenue na na 257.9% 77.0% 12.6% 6.3%
Cost of Goods Sold na na 256.9% 77.5% 12.6% 6.3%
Gross Margin na na 258.2% 76.9% 12.6% 6.3%
Salaries & Employee Benefits na na na 64.3% 9.9% 6.3%
Occupancy Costs na na na 79.8% 10.7% 4.5%
Equipment Leases na na na 9.5% -14.6% 0.0%
Advertising na na na 58.3% 5.3% 0.0%
Delivery Expense na na na 51.1% 12.6% 6.3%
Training Costs na na na 50.0% 58.7% 5.0%
Other na na -84.1% 57.1% -27.0% -1.1%
Total Operating Expenses na na 169.5% 60.9% 9.2% 5.6%
EBITDA na na na 315.9% 31.7% 10.0%
Unlevered After-tax Income na na na 712.4% 36.6% 11.1%
MARGIN REVIEW
Cost of Paper Sales Margin na na 47.8% 15.7% 13.8% 16.7%
Gross Margin na na 77.2% 77.1% 77.1% 77.1%
EBITDA Margin na na 4.8% 11.4% 13.3% 13.8%
NON-CASH WORKING CAPITAL ASSUMPTIONS
AR Days Outstanding na 30 30 30 30
A/R - % of Sales na 8.2% 8.2% 8.2% 8.2%
Days Inventory Outs. na - - - -
Inv - % Cost of Sales na 0.0% 0.0% 0.0% 0.0%
Prepay - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0%
AP Days Outstanding na - - - -
A/P - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0%
Acc Exp - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0%
NON-CASH NET WORKING CAPITAL
Accounts Receivable $ - $ - $ 305 $ 539 $ 607 $ 646
Inventory - - - - - -
Prepayments - - - - - -
Accounts Payable - - - - - -
Accrued Expenses - - - - - -
------------------ -----------------------------------------------
Non-Cash Net WC $ - $ - $ 305 $ 539 $ 607 $ 646
================== ===============================================
Change in Non-Cash Net WC $ - $ (305) $ (235) $ (68) $ (38)
======= ===============================================
Sources of information: Company financials, projections and management.
Page 47
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS - COMPANY OWNED PLANT PROJECTIONS
($ in thousands)
REVENUE TERMINAL VALUE ANALYSIS
ESTIMATED RANGE OF ENTERPRISE VALUES
- ------------------------------------------------------------------------------------------------------------
TERMINAL REVENUE MULTIPLES
Discount -------------------------------------------------------------------------------------------
Rate 0.20x 0.30x 0.40x 0.50x 0.60x 0.70x
- ------------------------------------------------------------------------------------------------------------
18.0% $ (822) $ (382) $ 58 $ 498 $ 938 $ 1,378
20.5% $ (888) $ (479) $ (70) $ 339 $ 747 $ 1,156
23.0% $ (947) $ (567) $ (186) $ 195 $ 575 $ 956
25.5% $ (999) $ (645) $ (290) $ 65 $ 419 $ 774
28.0% $ (1,046) $ (715) $ (384) $ (53) $ 278 $ 609
30.5% $ (1,087) $ (778) $ (469) $ (159) $ 150 $ 459
Average of Box $ (54)
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
- ------------------------------------------------------------------------------------------------------------
TERMINAL REVENUE MULTIPLES
Discount -------------------------------------------------------------------------------------------
Rate 0.20x 0.30x 0.40x 0.50x 0.60x 0.70x
- ------------------------------------------------------------------------------------------------------------
18.0% -107.1% -345.6% 3032.2% 441.7% 281.4% 223.5%
20.5% -92.1% -255.9% -2322.9% 604.0% 328.3% 247.5%
23.0% -80.4% -201.5% -818.5% 977.9% 397.0% 278.7%
25.5% -71.0% -165.0% -489.1% 2744.9% 507.5% 320.8%
28.0% -63.3% -138.9% -344.9% -3128.1% 714.2% 380.4%
30.5% -56.9% -119.3% -264.0% -971.0% 1236.9% 471.4%
Average of Box 603.8%
EBITDA TERMINAL VALUE ANALYSIS
ESTIMATED RANGE OF ENTERPRISE VALUES
- ------------------------------------------------------------------------------------------------------------
TERMINAL EBITDA MULTIPLES
Discount -------------------------------------------------------------------------------------------
Rate 3.50x 4.00x 4.50x 5.00x 5.50x 6.00x
- ------------------------------------------------------------------------------------------------------------
18.0% $ 420 $ 723 $ 1,026 $ 1,329 $ 1,632 $ 1,935
20.5% $ 266 $ 547 $ 829 $ 1,111 $ 1,392 $ 1,674
23.0% $ 127 $ 389 $ 651 $ 913 $ 1,175 $ 1,437
25.5% $ 1 $ 246 $ 490 $ 734 $ 979 $ 1,223
28.0% $ (112) $ 116 $ 344 $ 572 $ 800 $ 1,028
30.5% $ (214) $ (1) $ 212 $ 425 $ 638 $ 851
Average of Box $ 697
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
- ------------------------------------------------------------------------------------------------------------
TERMINAL EBITDA MULTIPLES
Discount -------------------------------------------------------------------------------------------
Rate 3.50x 4.00x 4.50x 5.00x 5.50x 6.00x
- ------------------------------------------------------------------------------------------------------------
18.0% 505.6% 335.5% 265.9% 228.1% 204.3% 188.0%
20.5% 742.3% 411.7% 305.8% 253.6% 222.5% 201.9%
23.0% 1447.8% 539.3% 362.4% 287.1% 245.3% 218.8%
25.5% 123579.0% 795.5% 448.7% 332.7% 274.6% 239.7%
28.0% -1426.2% 1571.2% 596.4% 398.5% 313.5% 266.1%
30.5% -695.6% -126359.9% 905.7% 501.6% 367.4% 300.5%
Average of Box 357.7%
PERPETUAL GROWTH TERMINAL VALUE ANALYSIS
ESTIMATED RANGE OF ENTERPRISE VALUES
- ------------------------------------------------------------------------------------------------------------
TERMINAL PERPETUAL GROWTH RATES
Discount -------------------------------------------------------------------------------------------
Rate 4.00% 4.25% 4.50% 4.75% 5.00% 5.25%
- ------------------------------------------------------------------------------------------------------------
18.0% $ 801 $ 853 $ 907 $ 963 $ 1,022 $ 1,082
20.5% $ 267 $ 303 $ 340 $ 378 $ 417 $ 457
23.0% $ (113) $ (88) $ (62) $ (35) $ (7) $ 22
25.5% $ (395) $ (376) $ (357) $ (337) $ (317) $ (296)
28.0% $ (610) $ (595) $ (580) $ (565) $ (550) $ (534)
30.5% $ (776) $ (765) $ (754) $ (742) $ (730) $ (718)
Average of Box $ (197)
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
- ------------------------------------------------------------------------------------------------------------
TERMINAL PERPETUAL GROWTH RATES
Discount -------------------------------------------------------------------------------------------
Rate 4.00% 4.25% 4.50% 4.75% 5.00% 5.25%
- ------------------------------------------------------------------------------------------------------------
18.0% 312.6% 299.5% 287.6% 276.7% 266.6% 257.2%
20.5% 738.0% 663.0% 602.1% 551.7% 509.2% 473.1%
23.0% -1408.2% -1847.2% -2677.2% -4841.4% -24719.4% 8014.2%
25.5% -332.4% -354.2% -379.0% -407.2% -439.9% -478.0%
28.0% -180.1% -187.0% -194.3% -202.1% -210.6% -219.8%
30.5% -119.7% -123.0% -126.4% -130.0% -133.8% -137.8%
Average of Box -2076.2%
All Discounted amounts have been calculated utilizing a mid-year convention.
Sources of information: Company financials, projections and management.
Page 48
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
FINANCIAL PROJECTIONS - SATELLITE STORE PROJECTIONS
($ in thousands)
ACTUAL/ESTIMATED PROJECTED
--------------------- -----------------------------------------------
FYE FEB 28/29 FYE FEB 28/29
--------------------- -----------------------------------------------
2002 2003 2004 2005 2006 2007
--------------------- -----------------------------------------------
REVENUE
Royalty Income $ - $ - $ - $ 23 $ 123 $ 293
Pelican Paper Sales - - - 42 231 548
Franchise Sales - - 35 140 140 140
OPC Fees - - - - - -
Company Plant Sales - - - - - -
--------------------- -----------------------------------------------
- - 35 205 494 981
Cost of Goods Sold - - - 37 201 477
--------------------- -----------------------------------------------
Gross Margin - - 35 168 293 504
OPERATING EXPENSES
Salaries & Employee Benefits - - 39 142 146 149
Advertising - - 25 25 25 25
Admin - - 8 6 6 6
Other - - 92 141 146 151
--------------------- -----------------------------------------------
- - 164 314 323 331
--------------------- -----------------------------------------------
EBITDA - - (129) (146) (29) 173
Deprec. & Amort. - - - - - -
--------------------- -----------------------------------------------
EBIT - - (129) (146) (29) 173
Income Taxes - - - - - -
--------------------- -----------------------------------------------
Unlevered After-tax Income - - (129) (146) (29) 173
Add: Deprec. & Amort. - - - - - -
Add: Change in Net WC - - - (5) (24) (40)
Less: Capital Expenditures - - - - - -
--------------------- -----------------------------------------------
Unlevered Free Cash Flows $ - $ - $ (129) $ (151) $ (53) $ 133
===================== ===============================================
INCOME TAX EXPENSE AND ASSUMPTIONS
Statutory Tax Rate 39.0% 39.0% 39.0% 39.0%
Effective Tax Rate na na 0.0% 0.0% 0.0% 0.0%
Current Period Tax $ - $ - $ (50) $ (57) $ (11) $ 67
NOL Usage - - 50 57 11 (67)
--------------------- -----------------------------------------------
Income Tax Expense $ - $ - $ - $ - $ - $ -
===================== ===============================================
Ending NOL Balance $ - $ 50 $ 107 $ 118 $ 40
======== ===============================================
ACTUAL/ESTIMATED PROJECTED
---------------------- ------------------------------------------------
FYE FEB 28/29 FYE FEB 28/29
---------------------- ------------------------------------------------
2002 2003 2004 2005 2006 2007
---------------------- ------------------------------------------------
GROWTH ASSUMPTIONS
Royalty Income na na na na 448.0% 137.2%
Pelican Paper Sales na na na na 448.0% 137.2%
Franchise Sales na na na 300.0% 0.0% 0.0%
OPC Fees na na na na na na
Company Plant Sales na na na na na na
Total Revenue na na na 484.8% 141.6% 98.4%
Cost of Goods Sold na na na na 448.0% 137.2%
Gross Margin na na na 380.0% 74.6% 71.7%
Salaries & Employee Benefits na na na 268.8% 2.5% 2.4%
Advertising na na na 0.0% 0.0% 0.0%
Admin na na na -25.0% 0.0% 0.0%
Other na na na 53.3% 3.5% 3.4%
Total Operating Expenses na na na 92.0% 2.7% 2.6%
EBITDA na na na na na na
Unlevered After-tax Income na na na na na na
MARGIN REVIEW
Cost of Paper Sales Margin na na na 13.0% 13.0% 13.0%
Gross Margin na na 100.0% 82.1% 59.3% 51.4%
EBITDA Margin na na -367.1% -71.3% -5.9% 17.6%
NON-CASH WORKING CAPITAL ASSUMPTIONS
AR Days Outstanding na 30 30 30 30
A/R - % of Sales na 8.2% 8.2% 8.2% 8.2%
Days Inventory Outs. na - - - -
Inv - % Cost of Sales na 0.0% 0.0% 0.0% 0.0%
Prepay - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0%
AP Days Outstanding na - - - -
A/P - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0%
Acc Exp - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0%
NON-CASH NET WORKING CAPITAL
Accounts Receivable $ - $ - $ - $ 5 $ 29 $ 69
Inventory - - - - - -
Prepayments - - - - - -
Accounts Payable - - - - - -
Accrued Expenses - - - - - -
---------------------- ------------------------------------------------
Non-Cash Net WC $ - $ - $ - $ 5 $ 29 $ 69
====================== ================================================
Change in Non-Cash Net WC $ - $ - $ (5) $ (24) $ (40)
========= ================================================
Sources of information: Company financials, projections and management.
Page 49
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS - SATELLITE STORE PROJECTIONS
($ in thousands)
REVENUE TERMINAL VALUE ANALYSIS
- -----------------------------------------------------------------------
ESTIMATED RANGE OF ENTERPRISE VALUES
--------------------------------------------------------------------
TERMINAL REVENUE MULTIPLES
Discount ---------------------------------------------------------
Rate 0.70x 0.80x 0.90x 1.00x 1.10x 1.20x
--------------------------------------------------------------------
15.5% $ 216 $ 276 $ 335 $ 394 $ 453 $ 513
18.0% $ 188 $ 243 $ 298 $ 353 $ 408 $ 463
20.5% $ 162 $ 213 $ 264 $ 315 $ 366 $ 417
23.0% $ 139 $ 186 $ 234 $ 281 $ 329 $ 376
25.5% $ 118 $ 162 $ 206 $ 251 $ 295 $ 339
28.0% $ 99 $ 140 $ 181 $ 223 $ 264 $ 305
Average of Box $ 274
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
--------------------------------------------------------------------
TERMINAL REVENUE MULTIPLES
Discount ---------------------------------------------------------
Rate 0.70x 0.80x 0.90x 1.00x 1.10x 1.20x
--------------------------------------------------------------------
15.5% 191.6% 171.9% 159.2% 150.3% 143.7% 138.7%
18.0% 204.9% 181.1% 166.2% 155.8% 148.3% 142.6%
20.5% 220.7% 191.8% 174.0% 162.0% 153.4% 146.9%
23.0% 239.9% 204.2% 183.0% 169.0% 159.0% 151.5%
25.5% 263.4% 218.7% 193.2% 176.8% 165.2% 156.7%
28.0% 293.1% 236.1% 205.1% 185.6% 172.2% 162.4%
Average of Box 172.0%
EBITDA TERMINAL VALUE ANALYSIS
- -----------------------------------------------------------------------
ESTIMATED RANGE OF ENTERPRISE VALUES
--------------------------------------------------------------------
TERMINAL EBITDA MULTIPLES
Discount ---------------------------------------------------------
Rate 5.00x 5.50x 6.00x 6.50x 7.00x 7.50x
--------------------------------------------------------------------
15.5% $ 324 $ 376 $ 428 $ 480 $ 532 $ 584
18.0% $ 287 $ 336 $ 384 $ 432 $ 481 $ 529
20.5% $ 254 $ 299 $ 344 $ 389 $ 434 $ 479
23.0% $ 225 $ 267 $ 308 $ 350 $ 392 $ 434
25.5% $ 198 $ 237 $ 276 $ 315 $ 354 $ 393
28.0% $ 173 $ 210 $ 246 $ 283 $ 319 $ 356
Average of Box $ 348
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
--------------------------------------------------------------------
TERMINAL EBITDA MULTIPLES
Discount ---------------------------------------------------------
Rate 5.00x 5.50x 6.00x 6.50x 7.00x 7.50x
--------------------------------------------------------------------
15.5% 161.3% 152.8% 146.3% 141.3% 137.2% 133.9%
18.0% 168.6% 158.7% 151.3% 145.6% 141.0% 137.2%
20.5% 176.9% 165.3% 156.8% 150.2% 145.0% 140.8%
23.0% 186.4% 172.8% 162.9% 155.4% 149.5% 144.7%
25.5% 197.3% 181.2% 169.7% 161.1% 154.4% 149.0%
28.0% 209.9% 190.8% 177.4% 167.4% 159.7% 153.6%
Average of Box 156.3%
PERPETUAL GROWTH TERMINAL VALUE ANALYSIS
- -----------------------------------------------------------------------
ESTIMATED RANGE OF ENTERPRISE VALUES
--------------------------------------------------------------------
TERMINAL PERPETUAL GROWTH RATES
Discount ---------------------------------------------------------
Rate 10.00% 10.25% 10.50% 10.75% 11.00% 11.25%
--------------------------------------------------------------------
15.5% $ 1,075 $ 1,139 $ 1,209 $ 1,286 $ 1,372 $ 1,468
18.0% $ 615 $ 643 $ 673 $ 705 $ 740 $ 776
20.5% $ 379 $ 395 $ 411 $ 428 $ 446 $ 465
23.0% $ 238 $ 248 $ 257 $ 268 $ 278 $ 290
25.5% $ 145 $ 152 $ 158 $ 165 $ 172 $ 179
28.0% $ 81 $ 85 $ 90 $ 95 $ 99 $ 104
Average of Box $ 341
DISCOUNTED TERMINAL VALUES AS % OF ENTERPRISE VALUES
--------------------------------------------------------------------
TERMINAL PERPETUAL GROWTH RATES
Discount ---------------------------------------------------------
Rate 10.00% 10.25% 10.50% 10.75% 11.00% 11.25%
--------------------------------------------------------------------
15.5% 118.4% 117.4% 116.4% 115.4% 114.4% 113.5%
18.0% 132.0% 130.6% 129.3% 127.9% 126.6% 125.4%
20.5% 151.5% 149.5% 147.6% 145.7% 143.9% 142.1%
23.0% 181.5% 178.3% 175.3% 172.5% 169.7% 167.0%
25.5% 232.3% 226.8% 221.5% 216.6% 211.8% 207.3%
28.0% 335.9% 323.6% 312.2% 301.6% 291.8% 282.6%
Average of Box 160.3%
All Discounted amounts have been calculated utilizing a mid-year convention.
Sources of information: Company financials, projections and management.
Page 50
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
Cost of Capital Calculation & Net Debt
($ and shares in thousands, except per share)
COST OF EQUITY+A33 Company Owned
Base Case Plants Satellite Stores
--------- ------------- ----------------
Riskless (1)
20 year treasury yield (Rf) 4.7% 4.7% 4.7%
Risk (2)
Equity risk premium (EP) 7.8% 7.8% 7.8%
Industry risk premium (IP) -2.9% -2.9% -2.9%
Size Premium (SP) 9.2% 9.2% 9.2%
Company Specific
Operational Risk 0.0% 3.0% 0.0%
New Strategy Risk 0.0% 5.0% 5.0%
--------- ------------- ----------------
Cost of Equity 18.8% 26.8% 23.8%
========= ============= ================
WEIGHTED AVERAGE COST OF CAPITAL
After Tax Cost of Debt 3.4% 3.4% 3.4%
========= ============= ================
Weighted Average Cost of Capital 17.3% 24.5% 21.8%
========= ============= ================
EQUITY VALUE NET DEBT ASSUMPTIONS
As of Feb 28, 2003
------------------------------------------
Company Owned
Base Case Plants Satellite Stores
--------- ------------- ----------------
Debt & Other Obligations
Interest Bearing Debt $ 523 $ 523 $ 523
Minority Interests - - -
Preferred Stock - - -
--------- ------------- ----------------
523 523 523
--------- ------------- ----------------
Less Cash
Cash on Hand 4,244 4,244 4,244
Assumed $ - exercise of options 1,017 1,017 1,017
Assumed $ - Notes (3) 2,594 2,594 2,594
--------- ------------- ----------------
7,855 7,855 7,855
--------- ------------- ----------------
Net Debt $ (7,332) $ (7,332) $ (7,332)
========= ============= ================
COST OF DEBT
Nominal % of Weighted
Type of Debt Rate Amount of Debt Cost of Debt
----------------------------------------------------------------------
Note 1 9.00% $ 193 36.9% 3.3%
Note 2 6.50% 182 34.8% 2.3%
Note 3 0.00% 148 28.3% 0.0%
------ ------- -------------
$ 523 100.0% 5.6%
====== ======= =============
CAPITALIZATION
Stock Price Market % of
Type Shares Outs. 19-May-03 Value Total Capital
----------------------------------------------------------------------------
Debt $ 523 9.7%
Common Stock 5,121 $ 0.9500 4,865 90.3%
-------- --------------
$ 5,388 100.0%
======== ==============
COMMON STOCK EQUIVALENTS
As of Feb 28, 2003
------------------------------------------
Company Owned
Base Case Plants Satellite Stores
--------- ------------- ----------------
Common Stock Outstanding 5,121 5,121 5,121
Stock issued re Other - - -
--------- ------------- ----------------
5,121 5,121 5,121
--------- ------------- ----------------
Options in the money: Avg Exercise $
Options * $2.00 $ 1.80 565 565 565
- - -
--------- ------------- ----------------
565 565 565
--------- ------------- ----------------
Total Common Stock Equivalents 5,686 5,686 5,686
========= ============= ================
* denotes less than or equal to
- ----------
(1) As reported by the Federal Reserve Board on a weekly-average basis for the
week ended March 9, 2003.
(2) Sourced from the Ibbotson SBBI Valuation Edition 2003 Yearbook. Industry
risk premium is based on SIC 27 (Printing, Publishing, And Allied
Industries) and SIC 511 (Paper & Paper Products).
(3) See Notes Analysis for details.
Sources of information: Company financials, projections & management, Ibbotson
2003 SBBI and Federal Reserve Board.
Page 51
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
. The selected comparable company analysis compares the trading
multiples of the Company with those of other publicly traded companies
that are similar with respect to business and revenue model, operating
sector, size and target customer base.
. Capitalink located five companies that it deemed comparable to the
Company with respect to their industry sector and market served (the
"Comparable Companies"). However, none of the Comparable Companies are
involved in franchising. All provide commercial printing services
including business forms and labels, and the supply of paper and
related products as their primary business and are classified either
under the SIC code 27 (Printing, Publishing and Allied Services)
and/or 511 (Paper and Paper Products).
. Based on size (in terms of enterprise value and revenues), BCT is in
the lower range of the Comparable Companies. As of May 19, 2003, the
enterprise values for the Comparable Companies ranged from
approximately $43.7 million to approximately $2.3 billion and revenue
ranged from approximately $134.8 million to approximately $2.0
billion. In comparison, BCT had an enterprise value and latest twelve
months ("LTM") revenue of approximately $888,000 and $18.4 million,
respectively.
. Multiples utilizing market value, total invested capital ("TIC") and
enterprise value were used in the analyses. The differences among the
three are as follows:
. Market value equals price per share times number of shares
outstanding,
. TIC equals market value plus interest bearing debt,
preferred stock and minority interest, and
. Enterprise value equals TIC, less cash and equivalents.
. Multiples based on TIC were calculated given the significant level of
cash held by the Company (approximately $4.8 million, as of November
30, 2002). The significant difference between the multiples based on
TIC and enterprise value suggests that the market is not fully valuing
the cash and assets of the business.
Page 52
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
. Market values were used to calculate multiples of earnings per share
("EPS"), common equity, and net tangible common equity, while TIC and
enterprise values were used to calculate multiples of LTM revenue, LTM
EBITDA, and total assets. For comparison purposes, all operating
profits including EBITDA were normalized to exclude unusual and
extra-ordinary expenses or income.
. The comparable company analysis generated a wide range of multiples:
. Based on TIC, the mean LTM revenue and EBITDA multiple was
0.71 times and 8.6 times respectively, compared with 0.31
times and 5.8 times, respectively for the Company.
. Based on enterprise value, the mean LTM revenue and EBITDA
multiple was 0.69 times and 8.3 times respectively, compared
with 0.05 times and 0.9 times, respectively for the Company.
. Capitalink noted that the EBITDA margin for the Company of 5.4% was
lower than all of the Comparable Companies (the median of which was
9.4%) with the exception of Impresso (3.1%). This might account for
the lower valuation of the Company relative to the Comparable
Companies, despite the fact that most of the Company's profits come
from its franchising operations.
. Capitalink also noted that the Company's debt ratio (5.1%) is much
lower than any of the Comparable Companies (the mean of which was
60.7%). This explains the significant difference between multiples
based on TIC and enterprise value for the Comparable Companies
relative to the Company.
. Capitalink also calculated and compared the implied multiples for the
Company based on the Merger Consideration in the Proposed Transaction.
Based on TIC, this would represent an LTM revenue and LTM EBITDA
multiple of 0.66 times and 12.3 times, respectively, which is
significantly greater than the average of the Comparable Companies.
However, based on enterprise value, this would represent a LTM revenue
and LTM EBITDA multiple of 0.21 times and 3.8 times, respectively.
These multiples lie just below the low end of the range of the
Comparable Companies. In determining the enterprise value for this
calculation, Capitalink included both cash balances and an estimation
of the fair market value of the Notes (see Notes analysis).
Page 53
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
. Capitalink expects the Company's valuation multiples to be below the
Comparable Companies due to the smaller size of the Company, lower
historical growth and limited future growth.
. Capitalink selected an appropriate multiple range for the Company as
follows:
. 0.32 times to 0.59 times LTM revenue based on TIC, and 0.32
times to 0.58 times LTM revenue based on enterprise value.
. 5.4 times to 7.7 times LTM EBITDA based on TIC, and 5.3
times to 7.4 times LTM EBITDA based on enterprise value.
. Based on the selected multiple ranges, Capitalink calculated a range
of indicated share prices of $1.57 to $2.20.
. Capitalink noted that the offer price of the Proposed Transaction was
within this indicated valuation range.
. An analysis of publicly-traded comparable companies is not
mathematical; rather it involves complex consideration and judgments
concerning differences in financial and operating characteristics of
the Comparable Companies and other factors that could affect the
public trading of the Comparable Companies.
Page 54
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
COMPARABLE COMPANY ANALYSIS - INDICATED REFERENCE RANGE
($ in thousands, except per share)
Statistic Selected Multiple Range Indicated TIC/EV Value
--------- ----------------------- ----------------------
TOTAL INVESTED CAPITAL (TIC) MULTIPLE
LTM Revenue $ 18,381 0.32x - 0.59x $ 5,853 - $ 10,890
LTM EBITDA $ 988 5.4x - 7.7x $ 5,327 - $ 7,628
TOTAL ENTERPRISE VALUE (EV) MULTIPLE
LTM Revenue $ 18,381 0.32x - 0.58x $ 5,835 - $ 10,707
LTM EBITDA $ 988 5.3x - 7.4x $ 5,238 - $ 7,295
Indicated Reference Range
Indicated Equity Value(1) Indicated Share Price (2)
------------------------- -------------------------
TOTAL INVESTED CAPITAL (TIC) MULTIPLE
LTM Revenue $ 5,025 - $ 10,062 $ 0.88 - $ 1.77
LTM EBITDA $ 4,499 - $ 6,800 $ 0.79 - $ 1.20
TOTAL ENTERPRISE VALUE (EV) MULTIPLE
LTM Revenue $ 13,423 - $ 18,295 $ 2.36 - $ 3.22
LTM EBITDA $ 12,826 - $ 14,883 $ 2.26 - $ 2.62
INDICATED REFERENCE RANGE $ 1.57 - $ 2.20
- ----------
(1) Adjusted for $828 and ($7,588) debt and net debt, respectively for TIC and
EV. Net debt includes assumed cash from in the money options/warrants and
the net present value of notes receivable.
(2) Based upon and assumes 5,686 common stock share equivalents outstanding.
Page 55
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
COMPARABLE COMPANY ANALYSIS - VALUATION MULTIPLES
($ in thousands, except per share data)
Total
% Below/Above Market Invested Enterprise
Stock Price 52-week Value Capital Value
Company 19-May-03 High-Low MV TIC (1) EV (2)
- ---------------------------- ----------- ------------- ----------- ----------- -----------
Consolidated Graphics, Inc. $ 18.320 27.3% - 27.7% $ 244,169 $ 420,503 $ 413,453
Mail-Well, Inc. 2.310 65.2% - 143.2% 111,672 888,923 888,579
Impreso, Inc. 2.030 42.7% - 18.0% 10,716 42,919 42,787
Moore Corporation(4) 12.050 16.6% - 53.5% 1,365,542 2,461,655 2,341,674
Wallace Computer Services(4) 26.860 0.3% - 70.0% 1,134,674 1,343,581 1,284,804
High $ 1,365,542 $ 2,461,655 $ 2,341,674
Mean 573,355 1,031,516 994,260
Median 244,169 888,923 888,579
Low 10,716 42,919 42,787
BCT International $ 0.950 11.2% - 41.8% $ 4,865 $ 5,693 $ 888
BCT International - Merger
Consideration(5) $ 11,372 $ 12,200 $ 3,784
MV as a Multiple of TIC as a Multiple of EV as a Multiple of
----------------------- ----------------------- ----------------------- 5 Yr EPS
LTM Common Net Tang. LTM LTM Total LTM LTM Total Growth
Company EPS Equity Equity Revenue EBITDA Assets Revenue EBITDA Assets Proj. (3)
- ---------------------------- ---- ------ --------- ------- ------ ------ ------- ------ ------ ---------
Consolidated Graphics, Inc. 15.3x 1.0x 1.8x 0.59x 5.4x 0.7x 0.58x 5.3x 0.7x 10.0%
Mail-Well, Inc. 1.8 2.1 na 0.52 6.7 0.8 0.52 6.7 0.8 5.0%
Impreso, Inc. 16.9 0.6 0.6 0.32 10.1 0.7 0.32 10.1 0.7 na
Moore Corporation(4) 15.1 3.2 4.4 1.22 12.9 1.0 1.16 12.3 1.0 na
Wallace Computer Services(4) 14.0 2.4 4.0 0.89 7.7 1.4 0.85 7.4 1.4 na
High 16.9x 3.2x 4.4x 1.22x 12.9x 1.4x 1.16x 12.3x 1.4x 10.0%
Mean 12.6 1.9 2.7 0.71 8.6 0.9 0.69 8.3 0.9 7.5%
Median 15.1 2.1 2.9 0.59 7.7 0.8 0.58 7.4 0.8 7.5%
Low 1.8 0.6 0.6 0.32 5.4 0.7 0.32 5.3 0.7 5.0%
BCT International 10.6x 0.3x 0.3x 0.31x 5.8x 0.3x 0.05x 0.9x 0.0x na
BCT International - Merger
Consideration(5) 24.7x 0.7x 0.8x 0.66x 12.3x 0.7x 0.21x 3.8x 0.2x na
(1) Total Invested Capital equals Market Value plus total debt, preferred
stock, and minority interests.
(2) Enterprise Value equals Market Value plus total debt, preferred stock, and
minority interests, less cash.
(3) Sources of estimates: Multex Estimates and other various securities
analysts' estimates and reports.
(4) Merger of Moore and Wallace in final stages.
(5) Reflects Merger Consideration, the effect of in-the-money options/warrants
and the net present value of notes receivable.
Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems,
& Hoovers.
Page 56
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
COMPARABLE COMPANY ANALYSIS - MARGIN AND OTHER ANALYSES
($ in thousands)
LTM (1)
-----------------------------------------------------------------
as Percentage of Revenue Return on
------------------------------------------------ ----------------
Gross Operating Net Average Average
Company Ticker Revenue Margin S G & A Margin EBITDA EBIT Income Assets Equity
- ---------------------------- ------ ----------- ------ ------- --------- ------ ---- ------ ------- -------
Consolidated Graphics, Inc. CGX $ 709,780 24.5% 19.0% 5.5% 11.0% 5.5% 2.2% 2.6% 5.7%
Mail-Well, Inc. MWL 1,712,542 19.8% 15.1% 4.7% 7.8% 4.6% 3.7% 5.7% 130.5%
Impreso, Inc. ZCOM 134,781 10.1% 7.3% 2.7% 3.1% 2.2% 0.5% 1.0% 3.9%
Moore Corporation MCL 2,019,683 31.9% 26.2% 5.7% 9.4% 5.2% 4.4% 4.7% 22.0%
Wallace Computer Services WCS 1,505,704 27.3% 19.9% 7.4% 11.6% 7.4% 5.3% 8.6% 17.4%
High $ 2,019,683 31.9% 26.2% 7.4% 11.6% 7.4% 5.3% 8.6% 130.5%
Mean 1,216,498 22.7% 17.5% 5.2% 8.6% 5.0% 3.2% 4.5% 35.9%
Median 1,505,704 24.5% 19.0% 5.5% 9.4% 5.2% 3.7% 4.7% 17.4%
Low 134,781 10.1% 7.3% 2.7% 3.1% 2.2% 0.5% 1.0% 3.9%
BCT International BCTI $ 18,381 43.1% 39.0% 4.1% 5.4% 4.1% 2.5% 2.6% 3.1%
LTM (1) as of Latest Available Filing
------------------------- --------------------------------------------------
Days Total Debt Total Total Latest FY
A/R Inv. Sales Current to Total Debt Debt to Rev
Company Ticker Turnover Turnover Outs. Ratio Capitaliztion to TIC EBITDA Growth
- ---------------------------- ------ -------- -------- ----- ------- ------------- ------ ------- ---------
Consolidated Graphics, Inc. CGX 6.0x 16.55x 60.4 1.7 41.4% 41.6% 2.3x -5.8%
Mail-Well, Inc. MWL 7.7 13.2 47.6 1.5 93.6% 87.4% 5.8x -7.5%
Impreso, Inc. ZCOM 9.2 3.5 39.8 1.3 65.5% 74.3% 7.6x 27.9%
Moore Corporation MCL 5.9 10.3 62.0 1.3 72.0% 43.9% 5.7x -5.4%
Wallace Computer Services WCS 6.3 12.5 57.6 2.7 30.8% 15.5% 1.2x -8.5%
High 9.2x 16.5x 62.0 2.7 93.6% 87.4% 7.6x 27.9%
Mean 7.0 11.2 53.5 1.7 60.7% 52.6% 4.5 0.1%
Median 6.3 12.5 57.6 1.5 65.5% 43.9% 5.7 -5.8%
Low 5.9 3.5 39.8 1.3 30.8% 15.5% 1.2 -8.5%
BCT International BCTI 7.0x 4.56x 52.4 5.0 5.1% 13.9% 0.8x -7.3%
(1) May exclude special items, such as extraordinary and non-recurring
expenses. See individual company overviews for details of exclusions, if
any.
Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems,
& Hoovers.
Page 57
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
COMPARABLE COMPANY ANALYSIS - INCOME STATEMENT OVERVIEW
($ in thousands, except per share data)
Revenue EBITDA (1) EBIT (1) Net Income (1)
------------------------- ---------------------- ---------------------- ----------------------
Latest Latest Latest Latest
Company LTM 10-K LTM 10-K LTM 10-K LTM 10-K
- --------------------------- ----------- ----------- ---------- --------- --------- ---------- ---------- ---------
Consolidated Graphics, Inc. $ 709,780 $ 643,948 $ 77,984 $ 84,256 $ 39,343 $ 42,944 $ 15,887 $ 16,680
Mail-Well, Inc. 1,712,542 1,728,705 133,127 133,309 78,546 77,856 62,777 70,169
Impreso, Inc. 134,781 123,065 4,234 4,730 2,972 3,468 655 1,063
Moore Corporation 2,019,683 2,038,039 190,747 175,393 104,981 88,647 89,073 72,408
Wallace Computer Services 1,505,704 1,545,629 174,014 176,292 111,510 109,885 80,056 89,588
High $ 2,019,68 $ 2,038,039 $ 190,747 $ 176,292 $ 111,510 $ 109,885 $ 89,073 $ 89,588
Mean 1,216,498 1,215,877 116,021 114,796 67,470 64,560 49,690 49,982
Median 1,505,704 1,545,629 133,127 133,309 78,546 77,856 62,777 70,169
Low 134,781 123,065 4,234 4,730 2,972 3,468 655 1,063
BCT International $ 18,381 $ 18,007 $ 988 $ 1,039 $ 755 $ 813 $ 460 $ 492
EPS (1)
------------------------- Latest Latest
Latest Available Available
Company LTM 10-K 10-Q 10-K
- --------------------------- ----------- ----------- ---------- ----------
Consolidated Graphics, Inc. $ 1.20 $ 1.27 31-Dec-02 31-Mar-02
Mail-Well, Inc. 1.32 1.47 31-Mar-03 31-Dec-02
Impreso, Inc. 0.12 0.20 28-Feb-03 31-Aug-02
Moore Corporation 0.80 0.65 31-Mar-03 31-Dec-02
Wallace Computer Services 1.92 2.17 31-Jan-03 31-Jul-02
High $ 1.92 $ 2.17
Mean 1.07 1.15
Median 1.20 1.27
Low 0.12 0.20
BCT International $ 0.09 $ 0.10 30-Nov-02 28-Feb-02
(1) May exclude special items, such as extraordinary and non-recurring
expenses. See individual company overviews for details of exclusions, if
any.
Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems,
& Hoovers.
Page 58
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
COMPARABLE COMPANY ANALYSIS - BALANCE SHEET OVERVIEW
($ in thousands)
As of Latest Available Filing
---------------------------------------------------------------------------------------------
Cash, Total
Equivalents Accounts Current Intangibles, Total
Company & Mrkt Sec Receivables Inventory Assets PPE, net net Assets
- --------------------------- ----------- ----------- ---------- ---------- ---------- ------------ -----------
Consolidated Graphics, Inc. $ 7,050 $ 113,018 $ 31,991 $ 162,276 $ 281,661 $ 110,556 $ 562,466
Mail-Well, Inc. 344 227,049 104,546 380,164 379,677 311,578 1,110,270
Impreso, Inc. 132 13,562 34,318 48,816 15,411 - 64,327
Moore Corporation 119,981 344,567 137,372 673,487 252,549 113,927 2,352,830
Wallace Computer Services 58,777 229,882 89,799 419,524 307,745 184,624 931,247
High $ 119,981 $ 344,567 $ 137,372 $ 673,487 $ 379,677 $ 311,578 $ 2,352,830
Mean 37,257 185,616 79,605 336,853 247,409 144,137 1,004,228
Median 7,050 227,049 89,799 380,164 281,661 113,927 931,247
Low 132 13,562 31,991 48,816 15,411 - 64,327
BCT International $ 4,805 $ 2,386 $ 2,697 $ 10,806 $ 963 $ 186 $ 18,185
As of Latest Available Filing
-------------------------------------------------------
Total Latest
Current Total Total Net Tangible Available
Company Liabilities Debt Common Eq Common Eq Filing
- --------------------------- ----------- ----------- ---------- -------------- ------------
Consolidated Graphics, Inc. $ 97,442 $ 176,334 $ 249,809 $ 139,253 31-Dec-02
Mail-Well, Inc. 255,547 777,251 53,449 (258,129) 31-Mar-03
Impreso, Inc. 36,194 32,203 16,944 16,944 28-Feb-03
Moore Corporation 538,210 1,096,113 425,819 311,892 31-Mar-03
Wallace Computer Services 155,862 208,907 468,983 284,359 31-Jan-03
High $ 538,210 $ 1,096,113 $ 468,983 $ 311,892
Mean 216,651 458,162 243,001 98,864
Median 155,862 208,907 249,809 139,253
Low 36,194 32,203 16,944 (258,129)
BCT International $ 2,146 $ 828 $ 15,291 $ 15,105 30-Nov-02
Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems,
& Hoovers.
Page 59
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
CONSOLIDATED GRAPHICS, INC. OVERVIEW
Name Consolidated Graphic
Symbol CGX
Latest Fiscal YE 31-Mar-02
Latest Rprt Per 31-Dec-02
Address 5858 Westheimer
City, State Zip Houston, TX 77057
Telephone 713-787-0977
Website consolidatedgraphics.com
Officers Joe Davis, Chmn & CEO
A national provider of commercial printing services. Sales are mainly derived
from commercial printing services, which include electronic prepress, printing,
finishing, storage and delivery of high quality, custom-designed products.
Examples of such products include multicolor product and capability brochures,
shareholder communications, catalogs, training manuals, point-of-purchase
marketing materials and direct mail pieces.
INCOME AND CASHFLOW STATEMENT DATA
($ in thousands, except per share)
Nine Months Ended Fiscal Years Ended
LTM ---------------------- ----------------------
Dec-02 Dec-02 Dec-01 Mar-02 Mar-01
--------- ---------- --------- ---------- ---------
Revenue $ 709,780 $ 544,174 $ 478,342 $ 643,948 $ 683,396
COGS 535,750 411,860 353,257 477,147 494,158
--------- ---------- --------- ---------- ---------
Gross Profit 174,030 132,314 125,085 166,801 189,238
Selling, General & Administrative 134,687 98,188 87,358 123,857 124,665
Research & Development - - - - -
Other Operating - - - - -
--------- ---------- --------- ---------- ---------
Operating Income 39,343 34,126 37,727 42,944 64,573
Interest Income / (Expense), net (11,053) (8,020) (12,111) (15,144) (20,858)
Other Income / (Expense), net - - - - -
--------- ---------- --------- ---------- ---------
Pre-tax Income 28,290 26,106 25,616 27,800 43,715
Taxes 12,403 9,920 8,637 11,120 15,164
--------- ---------- --------- ---------- ---------
After-tax Income 15,887 16,186 16,979 16,680 28,551
Minority Interest - - - - -
Equity in Affiliates - - - - -
--------- ---------- --------- ---------- ---------
Normalized Net Income 15,887 16,186 16,979 16,680 28,551
Preferred Dividends - - - - -
--------- ---------- --------- ---------- ---------
Normalized Net Income to Common $ 15,887 $ 16,186 $ 16,979 $ 16,680 $ 28,551
========= ========== ========= ========== =========
EBIT $ 39,343 $ 34,126 $ 37,727 $ 42,944 $ 64,573
Depreciation & Amortization $ 38,641 $ 27,658 $ 30,329 $ 41,312 $ 38,783
EBITDA $ 77,984 $ 61,784 $ 68,056 $ 84,256 $ 103,356
CAPEX $ 14,838 $ 9,507 $ 10,939 $ 16,270 $ 26,434
EBITDA - CAPEX $ 63,146 $ 52,277 $ 57,117 $ 67,986 $ 76,922
GAAP Operating Cash Flow $ 86,415 $ 72,566 $ 55,907 $ 69,756 $ 68,118
Basic Reported Weighted Avg Shares Out (000's) 13,212 13,054 13,107 13,142
Basic Normalized EPS $ 1.20 $ 1.23 $ 1.30 $ 1.27 $ 2.17
Basic Reported EPS $ (4.12) $ (4.40) $ 0.99 $ 1.27 $ 1.68
Diluted Reported Weighted Avg Shares Out (000's) 13,528 13,334 13,380 13,186
Diluted Normalized EPS $ 1.18 $ 1.20 $ 1.27 $ 1.25 $ 2.17
Diluted Reported EPS $ (4.02) $ (4.30) $ 0.97 $ 1.25 $ 1.68
NORMALIZED RECONCILIATION
Restructuring/Goodwill Impairment $ (70,351) $ (74,376) $ (4,025) $ - $ (6,440)
Other Unusual (Expense) Gain Items - - - - -
Tax Shelter (Charge) on Unusual Items - - - - -
--------- ---------- --------- ---------- ---------
Unusual (Exp) Gain Items, net of Taxes (70,351) (74,376) (4,025) - (6,440)
Accounting Changes, net of Taxes - - - - -
Discontinued Operations, net of Taxes - - - - -
Extraordinary Items, net of Taxes - - - - -
--------- ---------- --------- ---------- ---------
Total Reconciling Items, net of Taxes $ (70,351) $ (74,376) $ (4,025) $ - $ (6,440)
========= ========== ========= ========== =========
Reported Income Tax (Benefit) $ 12,403 $ 9,920 $ 8,637 $ 11,120 $ 15,164
Reported Net Income (Loss) $ (54,464) $ (58,190) $ 12,954 $ 16,680 $ 22,111
PROFITABILITY & COST RATIOS (AS % OF REVENUE)
Gross Profit 24.5% 24.3% 26.1% 25.9% 27.7%
S,G & A 19.0% 18.0% 18.3% 19.2% 18.2%
Operating Income 5.5% 6.3% 7.9% 6.7% 9.4%
Pre-Tax 4.0% 4.8% 5.4% 4.3% 6.4%
EBIT 5.5% 6.3% 7.9% 6.7% 9.4%
EBITDA 11.0% 11.4% 14.2% 13.1% 15.1%
Normalized Net Income to Common 2.2% 3.0% 3.5% 2.6% 4.2%
Reported Net Income -7.7% -10.7% 2.7% 2.6% 3.2%
CAPEX 2.1% 1.7% 2.3% 2.5% 3.9%
BALANCE SHEET DATA
($ in thousands, except per share) As of
As of ----------------------
31-Dec-02 Mar-02 Mar-01
--------- ---------- ---------
Cash & Equivalents $ 7,050 $ 8,955 $ 8,667
Marketable Securities - - -
--------- ---------- ---------
Total Cash & Mkt Securities 7,050 8,955 8,667
Accounts Receivable 113,018 121,981 116,095
Inventory 31,991 32,771 31,536
Other Current Assets 10,217 11,267 8,628
--------- ---------- ---------
Total Current Assets 162,276 174,974 164,926
PPE, net 281,661 293,831 299,871
Intangibles, net 110,556 199,331 203,030
Investments - - -
Other Assets 7,973 8,597 6,840
--------- ---------- ---------
Total Assets $ 562,466 $ 676,733 $ 674,667
========= ========== =========
Accounts Payable $ 32,759 $ 32,068 $ 33,865
Accrued Expenses 43,435 37,382 32,609
Short Term Debt 21,198 19,877 18,711
Short Term Capital Leases - - -
Other Current Liabilities 50 611 253
--------- ---------- ---------
Total Current Liabilities 97,442 89,938 85,438
Other LT Liabilities 60,079 66,337 54,966
Long Term Debt 155,136 213,860 246,729
Long Term Capital Leases - - -
Minority Interests - - -
Pref Stock (Liq Value) - - -
--------- ---------- ---------
Total Liabilities & Pref Stock 312,657 370,135 387,133
--------- ---------- ---------
Common Equity 249,809 306,598 287,534
--------- ---------- ---------
Total Liabilities & Equity $ 562,466 $ 676,733 $ 674,667
========= ========== =========
Common Shares Outstanding (000's) 13,314 13,206 13,019
Cash Value per share $ 0.53 $ 0.68 $ 0.67
Book Value per share $ 18.76 $ 23.22 $ 22.09
Tangible Book Value per share $ 10.46 $ 8.12 $ 6.49
EFFECTIVENESS AND EFFICIENCY
A/R Turnover 6.04x 5.41x 5.89x
Inventory Turnover 16.55x 14.84x 15.67x
Asset Turnover 1.15x 0.95x 1.01x
Days Sales Outstanding 60.4 67.5 62.0
Days Inventory Outstanding 22.1 24.6 23.3
Days Payable Outstanding 17.6 20.0 20.0
Return on Avg Assets 2.6% 2.5% na
Return on Avg Common Equity 5.7% 5.6% na
FINANCIAL STRENGTH
Current Ratio 1.67 1.95 1.93
Quick Ratio 1.34 1.58 1.56
Total Debt $ 176,334 $ 233,737 $ 265,440
Net Debt $ 169,284 $ 224,782 $ 256,773
Total Capitalization $ 426,143 $ 540,335 $ 552,974
Total Debt/Total Capitalization 41.4% 43.3% 48.0%
Net Debt/Total Capitalization 39.7% 41.6% 46.4%
Total Debt/TIC 41.9% 55.6% 63.1%
Total Debt/EBITDA 2.26x 2.77x 2.57x
Total Debt/EBITDA-CAPEX 2.79x 3.44x 3.45x
EBITDA/Interest Expense 7.06x 5.56x 4.96x
EBITDA-CAPEX/Interest Expense 5.71x 4.49x 3.69x
MARKET INFORMATION
As of Date 19-May-03
Exchange NYSE
Stock Price $ 18.32
52 Week High $ 25.20
52 Week Low $ 14.35
Avg. Daily Volume (000's) 56
Beta 0.53
Shares Outstanding (000's) 13,328
Total Outstanding Warrants & Options (000's) -
Float (000's) 11,100
Market Cap $ 244,169
Total Invested Capital (TIC) $ 420,503
Enterprise Value (EV) $ 413,453
Ownership
Insiders% Owned 17.00%
Institutional % Owned 59.00%
Number of Institutions 235
VALUATION RATIOS
Multiple of
----------------------------------
Market Cap TIC EV
----------------------------------
Latest Twelve Months
Revenue 0.34x 0.59x 0.58x
EBIT 6.21x 10.69x 10.51x
EBITDA 3.13x 5.39x 5.30x
Normalized Net Income 15.37x 26.47x 26.02x
Basic Normalized EPS 15.27x na na
Projected
Mar-04 Mean Revenue 0.34x 0.59x 0.58x
Mar-05 Mean Revenue 0.33x 0.57x 0.56x
Mar-04 Mean EPS 18.69x na na
Mar-05 Mean EPS na na na
Most Recent Filing
Assets 0.43x 0.75x 0.74x
Common Equity 0.98x na na
Tangible Common Equity 1.75x na na
MEAN CONSENSUS ESTIMATES
Year Ending # Ests Revenue EPS
- -----------------------------------------------------------------------
March-04 1 $ 712,300 $ 0.98
March-05 1 $ 733,700 na
LT Growth 1 10.00%
PERIOD GROWTH RATES
Nine Months Ended Fiscal Years Ended
Dec-02 Mar-02
----------------- ------------------
Revenue 13.8% -5.8%
EBIT -9.5% -33.5%
EBITDA -9.2% -18.5%
NOTES
Add backs include restructuring expenses and asset impairment charges.
Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover
Page 60
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
MAIL-WELL, INC. OVERVIEW
Name Mail-Well, Inc.
Symbol MWL
Latest Fiscal YE 31-Dec-02
Latest Rprt Per 31-Mar-03
Address 8310 S. Valley Highway #400
City, State Zip Englewood, CO 80112
Telephone (303) 790-8023
Website imagex.com
Officers Paul Reilly, Pres & CEO
Operates 103 printing and manufacturing facilities throughout North America and
three in the United Kingdom. The Company provides high-impact color printing,
and general commercial printing. The Company also has an envelope business that
provides customized envelopes and packaging products, including Tyvek mailers
used by the United States Postal Service, sold directly to end users or to
independent distributors who sell to end users, and envelopes and other products
sold to wholesalers, paper merchants, printers, brokerage firms, office product
establishments and superstores.
INCOME AND CASHFLOW STATEMENT DATA
($ in thousands, except per share)
Three Months Ended Fiscal Years Ended
LTM ----------------------- -------------------------
Mar-03 Mar-03 Mar-02 Dec-02 Dec-01
----------- ---------- ---------- ----------- -----------
Revenue $ 1,712,542 $ 427,319 $ 443,482 $ 1,728,705 $ 1,868,768
COGS 1,373,380 343,472 355,453 1,385,361 1,481,135
----------- ---------- ---------- ----------- -----------
Gross Profit 339,162 83,847 88,029 343,344 387,633
Selling, General & Administrative 259,023 63,480 68,191 263,734 277,004
Research & Development - - - - -
Other Operating - - - - -
----------- ---------- ---------- ----------- -----------
Operating Income 80,139 20,367 19,838 79,610 110,629
Interest Income / (Expense), net (73,535) (17,979) (14,905) (70,461) (63,314)
Other Income / (Expense), net (1,593) (131) (292) (1,754) (1,923)
----------- ---------- ---------- ----------- -----------
Pre-tax Income 5,011 2,257 4,641 7,395 45,392
Taxes (57,766) 484 (4,524) (62,774) (5,200)
----------- ---------- ---------- ----------- -----------
After-tax Income 62,777 1,773 9,165 70,169 50,592
Minority Interest - - - - -
Equity in Affiliates - - - - -
----------- ---------- ---------- ----------- -----------
Normalized Net Income 62,777 1,773 9,165 70,169 50,592
Preferred Dividends - - - - -
----------- ---------- ---------- ----------- -----------
Normalized Net Income to Common $ 62,777 $ 1,773 $ 9,165 $ 70,169 $ 50,592
=========== ========== ========== =========== ===========
EBIT $ 78,546 $ 20,236 $ 19,546 $ 77,856 $ 108,706
Depreciation & Amortization $ 54,581 $ 12,573 $ 13,445 $ 55,453 $ 69,402
EBITDA $ 133,127 $ 32,809 $ 32,991 $ 133,309 $ 178,108
CAPEX $ 25,972 $ 6,416 $ 11,340 $ 30,896 $ 32,742
EBITDA - CAPEX $ 107,155 $ 26,393 $ 21,651 $ 102,413 $ 145,366
GAAP Operating Cash Flow $ 1,845 $ (13,440) $ 7,686 $ 22,971 $ 170,935
Basic Reported Weighted Avg Shares Out (000's) 47,668 47,358 47,665 47,562
Basic Normalized EPS $ 1.32 $ 0.04 $ 0.19 $ 1.47 $ 1.06
Basic Reported EPS $ (1.35) $ 0.07 $ (2.82) $ (4.24) $ (2.86)
Diluted Reported Weighted Avg Shares Out (000's) 48,376 47,358 47,665 47,562
Diluted Normalized EPS $ 1.32 $ 0.04 $ 0.19 $ 1.47 $ 1.06
Diluted Reported EPS $ (1.36) $ 0.06 $ (2.82) $ (4.24) $ (2.86)
NORMALIZED RECONCILIATION
Restructuring/Goodwill Impairment $ (74,422) $ (1,130) $ (22,774) $ (96,066) $ (95,805)
Other Unusual (Expense) Gain Items - - - - -
Tax Shelter (Charge) on Unusual Items (37,466) - - (37,466) -
----------- ---------- ---------- ----------- -----------
Unusual (Exp) Gain Items, net of Taxes (111,888) (1,130) (22,774) (133,532) (95,805)
Accounting Changes, net of Taxes - - - - -
Discontinued Operations, net of Taxes (6,369) 2,500 (7,999) (16,868) (91,004)
Extraordinary Items, net of Taxes (10,125) - - (10,125) -
----------- ---------- ---------- ----------- -----------
Total Reconciling Items, net of Taxes $ (128,382) $ 1,370 $ (142,521) $ (272,273) $ (186,809)
=========== ========== ========== =========== ===========
Reported Income Tax (Benefit) $ (20,300) $ 484 $ (4,524) $ (25,308) $ (5,200)
Reported Net Income (Loss) $ (65,605) $ 3,143 $ (133,356) $ (202,104) $ (136,217)
PROFITABILITY & COST RATIOS (AS % OF REVENUE)
Gross Profit 19.8% 19.6% 19.8% 19.9% 20.7%
S,G & A 15.1% 14.9% 15.4% 15.3% 14.8%
Operating Income 4.7% 4.8% 4.5% 4.6% 5.9%
Pre-Tax 0.3% 0.5% 1.0% 0.4% 2.4%
EBIT 4.6% 4.7% 4.4% 4.5% 5.8%
EBITDA 7.8% 7.7% 7.4% 7.7% 9.5%
Normalized Net Income to Common 3.7% 0.4% 2.1% 4.1% 2.7%
Reported Net Income -3.8% 0.7% -30.1% -11.7% -7.3%
CAPEX 1.5% 1.5% 2.6% 1.8% 1.8%
BALANCE SHEET DATA
($ in thousands, except per share) As of
As of --------------------------
31-Mar-03 Dec-02 Dec-01
----------- ----------- ------------
Cash & Equivalents $ 344 $ 2,650 $ 894
Marketable Securities - - -
----------- ----------- ------------
Total Cash & Mkt Securities 344 2,650 894
Accounts Receivable 227,049 219,924 233,045
Inventory 104,546 103,533 111,648
Other Current Assets 48,225 50,254 233,462
----------- ----------- ------------
Total Current Assets 380,164 376,361 579,049
PPE, net 379,677 379,624 428,564
Intangibles, net 311,578 308,947 420,723
Investments - - -
Other Assets 38,851 42,435 48,531
----------- ----------- ------------
Total Assets $ 1,110,270 $ 1,107,367 $ 1,476,867
=========== =========== ============
Accounts Payable $ 143,715 $ 151,930 $ 160,659
Accrued Expenses 49,660 53,292 51,407
Short Term Debt 2,193 2,961 303,170
Short Term Capital Leases - - -
Other Current Liabilities 59,979 67,848 62,520
----------- ----------- ------------
Total Current Liabilities 255,547 276,031 577,756
Other LT Liabilities 26,216 27,630 105,183
Long Term Debt 775,058 760,938 552,051
Long Term Capital Leases - - -
Minority Interests - - -
Pref Stock (Liq Value) - - -
----------- ----------- ------------
Total Liabilities & Pref Stock 1,056,821 1,064,599 1,234,990
----------- ----------- ------------
Common Equity 53,449 42,768 241,877
----------- ----------- ------------
Total Liabilities & Equity $ 1,110,270 $ 1,107,367 $ 1,476,867
=========== =========== ============
Common Shares Outstanding (000's) 48,343 48,337 48,326
Cash Value per share $ 0.01 $ 0.05 $ 0.02
Book Value per share $ 1.11 $ 0.88 $ 5.01
Tangible Book Value per share $ (5.34) $ (5.51) $ (3.70)
EFFECTIVENESS AND EFFICIENCY
A/R Turnover 7.66x 7.63x 8.02x
Inventory Turnover 13.20x 12.88x 13.27x
Asset Turnover 1.54x 1.34x 1.27x
Days Sales Outstanding 47.6 47.8 45.5
Days Inventory Outstanding 27.7 28.3 27.5
Days Payable Outstanding 33.1 34.6 33.4
Return on Avg Assets 5.7% 5.4% na
Return on Avg Common Equity 130.5% 49.3% na
FINANCIAL STRENGTH
Current Ratio 1.49 1.36 1.00
Quick Ratio 1.08 0.99 0.81
Total Debt $ 777,251 $ 763,899 $ 855,221
Net Debt $ 776,907 $ 761,249 $ 854,327
Total Capitalization $ 830,700 $ 806,667 $ 1,097,098
Total Debt/Total Capitalization 93.6% 94.7% 78.0%
Net Debt/Total Capitalization 93.5% 94.4% 77.9%
Total Debt/TIC 87.4% 85.9% 96.2%
Total Debt/EBITDA 5.84x 5.73x 4.80x
Total Debt/EBITDA-CAPEX 7.25x 7.46x 5.88x
EBITDA/Interest Expense 1.81x 1.89x 2.81x
EBITDA-CAPEX/Interest Expense 1.46x 1.45x 2.30x
MARKET INFORMATION
As of Date 19-May-03
Exchange NYSE
Stock Price $ 2.31
52 Week High $ 6.63
52 Week Low $ 0.95
Avg. Daily Volume (000's) 92
Beta 1.53
Shares Outstanding (000's) 48,343
Total Outstanding Warrants & Options (000's) -
Float (000's) 26,300
Market Cap $ 111,672
Total Invested Capital (TIC) $ 888,923
Enterprise Value (EV) $ 888,579
Ownership
Insiders% Owned 46.00%
Institutional % Owned 54.00%
Number of Institutions 117
VALUATION RATIOS
Multiple of
------------------------------------
Market Cap TIC EV
------------------------------------
Latest Twelve Months
Revenue 0.07x 0.52x 0.52x
EBIT 1.42x 11.32x 11.31x
EBITDA 0.84x 6.68x 6.67x
Normalized Net Income 1.78x 14.16x 14.15x
Basic Normalized EPS 1.75x na na
Projected
Dec-03 Mean Revenue 0.07x 0.52x 0.52x
Dec-04 Mean Revenue 0.06x 0.52x 0.51x
Dec-03 Mean EPS 9.24x na na
Dec-04 Mean EPS 5.50x na na
Most Recent Filing
Assets 0.10x 0.80x 0.80x
Common Equity 2.09x na na
Tangible Common Equity na na na
MEAN CONSENSUS ESTIMATES
Year Ending # Ests Revenue EPS
- --------------------------------------------------------------------------------
December-03 1 $ 1,696,000 $ 0.25
December-04 1 $ 1,726,000 $ 0.42
LT Growth - 5.00%
PERIOD GROWTH RATES
Three Months Ended Fiscal Years Ended
Mar-03 Dec-02
------------------ ------------------
Revenue -3.6% -7.5%
EBIT 3.5% -28.4%
EBITDA -0.6% -25.2%
NOTES
Add backs include restructuring expenses and asset impairment charges.
Discontinued operations represent sale of label & printed office product
segments.
Extraordinary items include gain from settlement of debt.
Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover
Page 61
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
IMPRESO, INC. OVERVIEW
Name Impreso, Inc.
Symbol ZCOM
Latest Fiscal YE 31-Aug-02
Latest Rprt Per 28-Feb-03
Address 652 Southwestern Blvd.
City, State Zip Coppell, TX 75019
Telephone 972-462-0100
Website tstimpreso.com
Officers Marshall Sorokwasz, CEO
Impreso, Inc. is the holding company of TST/Impreso, Inc. (TST), a manufacturer
and distributor to dealers and other resellers of various paper and film
products for commercial and home use in domestic and international markets, and
Hotsheet.com, Inc., the owner of Hotsheet.com, an online Web reference
directory. TST manufactures and distributes its products under its own IMPRESO
label, generic labels and private labels. Hotsheet is an Internet Website
directory, or portal, specializing in listing popular and useful Web
destinations utilized by a wide general audience.
INCOME AND CASHFLOW STATEMENT DATA
($ in thousands, except per share)
Six Months Ended Fiscal Years Ended
LTM ----------------------- -------------------------
Feb-03 Feb-03 Feb-02 Aug-02 Aug-01
----------- ---------- ---------- ----------- -----------
Revenue $ 134,781 $ 63,512 $ 51,796 $ 123,065 $ 96,208
COGS 121,187 57,062 46,323 110,448 84,752
----------- ---------- ---------- ----------- -----------
Gross Profit 13,594 6,450 5,473 12,617 11,456
Selling, General & Administrative 9,896 4,785 4,221 9,332 7,872
Research & Development - - - - -
Other Operating - - - - -
----------- ---------- ---------- ----------- -----------
Operating Income 3,698 1,665 1,252 3,285 3,584
Interest Income / (Expense), net (1,871) (958) (831) (1,744) (1,633)
Other Income / (Expense), net (726) 157 1,066 183 72
----------- ---------- ---------- ----------- -----------
Pre-tax Income 1,101 864 1,487 1,724 2,023
Taxes 446 343 558 661 776
----------- ---------- ---------- ----------- -----------
After-tax Income 655 521 929 1,063 1,247
Minority Interest - - - - -
Equity in Affiliates - - - - -
----------- ---------- ---------- ----------- -----------
Normalized Net Income 655 521 929 1,063 1,247
Preferred Dividends - - - - -
----------- ---------- ---------- ----------- -----------
Normalized Net Income to Common $ 655 $ 521 $ 929 $ 1,063 $ 1,247
=========== ========== ========== =========== ===========
EBIT $ 2,972 $ 1,822 $ 2,318 $ 3,468 $ 3,656
Depreciation & Amortization $ 1,262 $ - $ - $ 1,262 $ 874
EBITDA $ 4,234 $ 1,822 $ 2,318 $ 4,730 $ 4,530
CAPEX $ 1,540 $ - $ - $ 1,540 $ 1,200
EBITDA - CAPEX $ 2,694 $ 1,822 $ 2,318 $ 3,190 $ 3,330
GAAP Operating Cash Flow $ 5,441 $ - $ - $ 5,441 $ 4,946
Basic Reported Weighted Avg Shares Out (000's) 5,279 5,279 5,279 5,281
Basic Normalized EPS $ 0.12 $ 0.10 $ 0.18 $ 0.20 $ 0.24
Basic Reported EPS $ 0.24 $ 0.10 $ 0.18 $ 0.32 $ 0.24
Diluted Reported Weighted Avg Shares Out (000's) 5,279 5,279 5,279 5,281
Diluted Normalized EPS $ 0.12 $ 0.10 $ 0.18 $ 0.20 $ 0.24
Diluted Reported EPS $ 0.24 $ 0.10 $ 0.18 $ 0.32 $ 0.24
NORMALIZED RECONCILIATION
Restructuring/Goodwill Impairment $ - $ - $ - $ - $ -
Other Unusual (Expense) Gain Items 1,005 - - 1,005 -
Tax Shelter (Charge) on Unusual Items (392) - - (392) -
----------- ---------- ---------- ----------- -----------
Unusual (Exp) Gain Items, net of Taxes 613 - - 613 -
Accounting Changes, net of Taxes - - - - -
Discontinued Operations, net of Taxes - - - - -
Extraordinary Items, net of Taxes - - - - -
----------- ---------- ---------- ----------- -----------
Total Reconciling Items, net of Taxes $ 613 $ - $ - $ 613 $ -
=========== ========== ========== =========== ===========
Reported Income Tax (Benefit) $ 838 $ 343 $ 558 $ 1,053 $ 776
Reported Net Income (Loss) $ 1,268 $ 521 $ 929 $ 1,676 $ 1,247
PROFITABILITY & COST RATIOS (as % of Revenue)
Gross Profit 10.1% 10.2% 10.6% 10.3% 11.9%
S,G & A 7.3% 7.5% 8.1% 7.6% 8.2%
Operating Income 2.7% 2.6% 2.4% 2.7% 3.7%
Pre-Tax 0.8% 1.4% 2.9% 1.4% 2.1%
EBIT 2.2% 2.9% 4.5% 2.8% 3.8%
EBITDA 3.1% 2.9% 4.5% 3.8% 4.7%
Normalized Net Income to Common 0.5% 0.8% 1.8% 0.9% 1.3%
Reported Net Income 0.9% 0.8% 1.8% 1.4% 1.3%
CAPEX 1.1% 0.0% 0.0% 1.3% 1.2%
BALANCE SHEET DATA
($ in thousands, except per share) As of
As of ----------------------
28-Feb-03 Aug-02 Aug-01
---------- ---------- ---------
Cash & Equivalents $ 132 $ 203 $ 211
Marketable Securities - - -
---------- ---------- ---------
Total Cash & Mkt Securities 132 203 211
Accounts Receivable 13,562 15,864 11,748
Inventory 34,318 34,111 38,460
Other Current Assets 804 740 351
---------- ---------- ---------
Total Current Assets 48,816 50,918 50,770
PPE, net 15,411 15,939 11,213
Intangibles, net - - -
Investments - - -
Other Assets 100 115 219
---------- ---------- ---------
Total Assets $ 64,327 $ 66,972 $ 62,202
========== ========== =========
Accounts Payable $ 11,606 $ 16,302 $ 18,572
Accrued Expenses 2,596 3,703 1,942
Short Term Debt 21,992 18,992 19,720
Short Term Capital Leases - - -
Other Current Liabilities - - -
---------- ---------- ---------
Total Current Liabilities 36,194 38,997 40,234
Other LT Liabilities 978 949 927
Long Term Debt 10,211 10,609 6,328
Long Term Capital Leases - - -
Minority Interests - - -
Pref Stock (Liq Value) - - -
---------- ---------- ---------
Total Liabilities & Pref Stock 47,383 50,555 47,489
---------- ---------- ---------
Common Equity 16,944 16,417 14,713
---------- ---------- ---------
Total Liabilities & Equity $ 64,327 $ 66,972 $ 62,202
========== ========== =========
Common Shares Outstanding (000's) 5,279 5,279 5,265
Cash Value per share $ 0.03 $ 0.04 $ 0.04
Book Value per share $ 3.21 $ 3.11 $ 2.79
Tangible Book Value per share $ 3.21 $ 3.11 $ 2.79
EFFECTIVENESS AND EFFICIENCY
A/R Turnover 9.16x 8.91x 8.19x
Inventory Turnover 3.54x 3.04x 2.20x
Asset Turnover 2.05x 1.91x 1.55x
Days Sales Outstanding 39.8 40.9 44.6
Days Inventory Outstanding 103.0 119.9 165.6
Days Payable Outstanding 38.9 53.1 73.2
Return on Avg Assets 1.0% 1.6% na
Return on Avg Common Equity 3.9% 6.8% na
FINANCIAL STRENGTH
Current Ratio 1.35 1.31 1.26
Quick Ratio 0.40 0.43 0.31
Total Debt $ 32,203 $ 29,601 $ 26,048
Net Debt $ 32,071 $ 29,398 $ 25,837
Total Capitalization $ 49,147 $ 46,018 $ 40,761
Total Debt/Total Capitalization 65.5% 64.3% 63.9%
Net Debt/Total Capitalization 65.3% 63.9% 63.4%
Total Debt/TIC 75.0% 69.0% 60.7%
Total Debt/EBITDA 7.61x 6.26x 5.75x
Total Debt/EBITDA-CAPEX 11.95x 9.28x 7.82x
EBITDA/Interest Expense 2.26x 2.71x 2.77x
EBITDA-CAPEX/Interest Expense 1.44x 1.83x 2.04x
MARKET INFORMATION
As of Date 19-May-03
Exchange NASDAQ
Stock Price $ 2.03
52 Week High $ 3.54
52 Week Low $ 1.72
Avg. Daily Volume (000's) 2
Beta 0.94
Shares Outstanding (000's) 5,279
Total Outstanding Warrants & Options (000's) -
Float (000's) 1,700
Market Cap $ 10,716
Total Invested Capital (TIC) $ 42,919
Enterprise Value (EV) $ 42,787
Ownership
Insiders % Owned 68.00%
Institutional % Owned 3.00%
Number of Institutions 9
VALUATION RATIOS
Multiple of
-----------------------------------
Market Cap TIC EV
-----------------------------------
Latest Twelve Months
Revenue 0.08x 0.32x 0.32x
EBIT 3.61x 14.44x 14.40x
EBITDA 2.53x 10.14x 10.11x
Normalized Net Income 16.36x 65.53x 65.33x
Basic Normalized EPS 16.92x na na
Projected
Dec-02 Mean Revenue na na na
Dec-03 Mean Revenue na na na
Dec-02 Mean EPS na na na
Dec-03 Mean EPS na na na
Most Recent Filing
Assets 0.17x 0.67x 0.67x
Common Equity 0.63x na na
Tangible Common Equity 0.63x na na
MEAN CONSENSUS ESTIMATES
Year Ending # Ests Revenue EPS
- --------------------------------------------------------------------------
December-02 na na na
December-03 na na na
LT Growth na na na
PERIOD GROWTH RATES
Six Months Ended Fiscal Years Ended
Feb-03 Aug-02
---------------- ------------------
Revenue 22.6% 27.9%
EBIT -21.4% -5.1%
EBITDA -21.4% 4.4%
NOTES
Unusual expense relates to litigation settlement
Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover
Page 62
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
MOORE CORPORATION OVERVIEW
Name Moore Corporation
Symbol MCL
Latest Fiscal YE 31-Dec-02
Latest Rprt Per 31-Mar-03
Address 6100 Vipond Drive
City, State Zip Mississauga, ON L5T 2, Canada
Telephone (905) 362-3100
Website http://www.moore.com/
Officers Alfred Eckert, III, Chair
Moore operates in three complementary business segments: Forms and Labels,
Outsourcing and Commercial. The Forms and Labels business designs, manufactures
and sells paper based and electronic business forms and labels, and provides
electronic print management solutions. The Outsourcing business provides
high-quality, high-volume variably imaged print and mail, electronic statement
and database management services. The Commercial business produces high-quality,
multi-color personalized business communications and provides direct marketing
services.
INCOME AND CASHFLOW STATEMENT DATA
($ in thousands, except per share)
Three Months Ended Fiscal Years Ended
LTM ---------------------------- ----------------------------
Mar-03 Mar-03 Mar-02 Dec-02 Dec-01
------------ ---------------------------- ----------------------------
Revenue $ 2,019,683 $ 511,145 $ 529,501 $ 2,038,039 $ 2,154,57
COGS 1,374,451 345,452 361,008 1,390,007 1,552,561
------------ ---------------------------- ----------------------------
Gross Profit 645,232 165,693 168,493 648,032 602,013
Selling, General & Administrative 529,559 129,833 146,633 546,359 814,658
Research & Development - - - - -
Other Operating - - - - -
------------ ---------------------------- ----------------------------
Operating Income 115,673 35,860 21,860 101,673 (212,645)
Interest Income / (Expense), net (16,033) (6,499) (2,611) (12,145) (23,758)
Other Income / (Expense), net (10,692) 839 (1,495) (13,026) (22,338)
------------ ---------------------------- ----------------------------
Pre-tax Income 88,948 30,200 17,754 76,502 (258,741)
Taxes (1,482) 840 4,794 2,472 (32,192)
------------ ---------------------------- ----------------------------
After-tax Income 90,430 29,360 12,960 74,030 (226,549)
Minority Interest (1,357) (202) (467) (1,622) (1,810)
Equity in Affiliates - - - - -
------------ ---------------------------- ----------------------------
Normalized Net Income 89,073 29,158 12,493 72,408 (228,359)
Preferred Dividends - - - - -
------------ ---------------------------- ----------------------------
Normalized Net Income to Common $ 89,073 $ 29,158 $ 12,493 $ 72,408 $ (228,359)
============ ============================ ============================
EBIT $ 104,981 $ 36,699 $ 20,365 $ 88,647 $ (234,983)
Depreciation & Amortization $ 85,766 $ 21,175 $ 22,155 $ 86,746 $ 239,072
EBITDA $ 190,747 $ 57,874 $ 42,520 $ 175,393 $ 4,089
CAPEX $ 14,441 $ 7,583 $ 2,083 $ 8,941 $ 37,072
EBITDA - CAPEX $ 176,306 $ 50,291 $ 40,437 $ 166,452 $ (32,983)
GAAP Operating Cash Flow $ 134,865 $ (22,395) $ 1,135 $ 158,395 $ 137,121
Basic Reported Weighted Avg Shares Out (000's) 112,276 111,848 111,556 88,648
Basic Normalized EPS $ 0.80 $ 0.26 $ 0.11 $ 0.65 $ (2.58)
Basic Reported EPS $ 0.81 $ 0.26 $ 0.11 $ 0.66 $ (4.21)
Diluted Reported Weighted Avg Shares Out (000's) 113,229 114,269 114,022 88,648
Diluted Normalized EPS $ 0.79 $ 0.26 $ 0.11 $ 0.64 $ (2.58)
Diluted Reported EPS $ 0.79 $ 0.26 $ 0.11 $ 0.64 $ (4.21)
NORMALIZED RECONCILIATION
Restructuring/Goodwill Impairment $ 850 $ - $ - $ 850 $ (129,679)
Other Unusual (Expense) Gain Items - - - - (15,345)
Tax Shelter (Charge) on Unusual Items - - - - -
------------ ---------------------------- ----------------------------
Unusual (Exp) Gain Items, net of Taxes 850 - - 850 (145,024)
Accounting Changes, net of Taxes - - - - -
Discontinued Operations, net of Taxes - - - - -
Extraordinary Items, net of Taxes - - - - -
------------ ---------------------------- ----------------------------
Total Reconciling Items, net of Taxes $ 850 $ - $ - $ 850 $ (145,024)
============ ============================ ============================
Reported Income Tax (Benefit) $ (1,482) $ 840 $ 4,794 $ 2,472 $ (32,192)
Reported Net Income (Loss) $ 89,923 $ 29,158 $ 12,493 $ 73,258 $ (373,383)
PROFITABILITY & COST RATIOS (AS % OF REVENUE)
Gross Profit 31.9% 32.4% 31.8% 31.8% 27.9%
S,G & A 26.2% 25.4% 27.7% 26.8% 37.8%
Operating Income 5.7% 7.0% 4.1% 5.0% -9.9%
Pre-Tax 4.4% 5.9% 3.4% 3.8% -12.0%
EBIT 5.2% 7.2% 3.8% 4.3% -10.9%
EBITDA 9.4% 11.3% 8.0% 8.6% 0.2%
Normalized Net Income to Common 4.4% 5.7% 2.4% 3.6% -10.6%
Reported Net Income 4.5% 5.7% 2.4% 3.6% -17.3%
CAPEX 0.7% 1.5% 0.4% 0.4% 1.7%
BALANCE SHEET DATA
($ in thousands, except per share) As of
As of -------------------------
31-Mar-03 Dec-02 Dec-01
----------- -------------------------
Cash & Equivalents $ 119,981 $ 139,630 $ 84,855
Marketable Securities - - -
----------- -------------------------
Total Cash & Mkt Securities 119,981 139,630 84,855
Accounts Receivable 344,567 341,383 336,153
Inventory 137,372 129,889 128,421
Other Current Assets 71,567 49,229 27,110
----------- -------------------------
Total Current Assets 673,487 660,131 576,539
PPE, net 252,549 255,722 307,640
Intangibles, net 113,927 112,688 42,294
Investments 928,151 32,256 32,204
Other Assets 384,716 378,962 378,309
----------- -------------------------
Total Assets $ 2,352,830 $ 1,439,759 $ 1,336,986
=========== =========================
Accounts Payable $ 450,779 $ 486,507 $ 486,626
Accrued Expenses - - -
Short Term Debt 2,642 2,135 18,034
Short Term Capital Leases - - -
Other Current Liabilities 84,789 79,904 84,182
----------- -------------------------
Total Current Liabilities 538,210 568,546 588,842
Other LT Liabilities 295,330 294,602 304,632
Long Term Debt 1,087,106 187,463 111,062
Long Term Capital Leases - - -
Minority Interests 6,365 6,652 11,200
Pref Stock (Liq Value) - - -
----------- -------------------------
Total Liabilities & Pref Stock 1,927,011 1,057,263 1,015,736
----------- -------------------------
Common Equity 425,819 382,496 321,250
----------- -------------------------
Total Liabilities & Equity $ 2,352,830 $ 1,439,759 $ 1,336,986
=========== =========================
Common Shares Outstanding (000's) 113,398 111,842 111,804
Cash Value per share $ 1.06 $ 1.25 $ 0.76
Book Value per share $ 3.76 $ 3.42 $ 2.87
Tangible Book Value per share $ 2.75 $ 2.41 $ 2.50
EFFECTIVENESS AND EFFICIENCY
A/R Turnover 5.89x 6.02x 6.41x
Inventory Turnover 10.29x 10.76x 12.09x
Asset Turnover 1.07x 1.47x 1.61x
Days Sales Outstanding 62.0 60.7 56.9
Days Inventory Outstanding 35.5 33.9 30.2
Days Payable Outstanding 89.8 91.7 75.0
Return on Avg Assets 4.7% 5.2% na
Return on Avg Common Equity 22.0% 20.6% na
FINANCIAL STRENGTH
Current Ratio 1.25 1.16 0.98
Quick Ratio 1.00 0.93 0.76
Total Debt $ 1,096,113 $ 196,250 $ 140,296
Net Debt $ 976,132 $ 56,620 $ 55,441
Total Capitalization $ 1,521,932 $ 578,746 $ 461,546
Total Debt/Total Capitalization 72.0% 33.9% 30.4%
Net Debt/Total Capitalization 64.1% 9.8% 12.0%
Total Debt/TIC 44.5% 8.0% 5.7%
Total Debt/EBITDA 5.75x 1.12x 34.31x
Total Debt/EBITDA-CAPEX 6.22x 1.18x na
EBITDA/Interest Expense 11.90x 14.44x 0.17x
EBITDA-CAPEX/Interest Expense 11.00x 13.71x na
MARKET INFORMATION
As of Date 19-May-03
Exchange NYSE
Stock Price $ 12.05
52 Week High $ 14.45
52 Week Low $ 7.85
Avg. Daily Volume (000's) 1
Beta 0.69
Shares Outstanding (000's) 113,323
Total Outstanding Warrants & Options (000's) -
Float (000's) 111,100
Market Cap $ 1,365,542
Total Invested Capital (TIC) $ 2,461,655
Enterprise Value (EV) $ 2,341,674
OWNERSHIP
Insiders % Owned 2.00%
Institutional % Owned 70.00%
Number of Institutions 226
VALUATION RATIOS
Multiple of
---------------------------
Market Cap TIC EV
---------------------------
Latest Twelve Months
Revenue 0.68x 1.22x 1.16x
EBIT 13.01x 23.45x 22.31x
EBITDA 7.16x 12.91x 12.28x
Normalized Net Income 15.33x 27.64x 26.29x
Basic Normalized EPS 15.06x na na
Projected
Dec-03 Mean Revenue 0.54x 0.97x 0.93x
Dec-04 Mean Revenue 0.48x 0.87x 0.82x
Dec-03 Mean EPS 14.01x na na
Dec-04 Mean EPS 10.86x na na
Most Recent Filing
Assets 0.58x 1.05x 1.00x
Common Equity 3.21x na na
Tangible Common Equity 4.38x na na
MEAN CONSENSUS ESTIMATES
Year Ending # Ests Revenue EPS
- ----------------------------------------------
December-03 2 $ 2,529,010 $ 0.86
December-04 2 $ 2,845,600 $ 1.11
LT Growth na na na
PERIOD GROWTH RATES
Three Months Ended Fiscal Years Ended
Mar-03 Dec-02
---------------------------------------
Revenue -3.5% -5.4%
EBIT 80.2% -137.7%
EBITDA 36.1% 4189.4%
NOTES
Add backs include restructuring cost provisioning, and debt settlement
expenses.
Note - Merger with Wallace in final stages.
Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover
Page 63
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
WALLACE COMPUTER SERVICES OVERVIEW
Name Wallace Computer Se
Symbol WCS
Latest Fiscal YE 31-Jul-02
Latest Rprt Per 31-Jan-03
Address 2275 Cabot Drive
City, State Zip Lisle, IL 60532
Telephone (630) 588-5000
Website http://www.wallace.com/
Officers M. David Jones, CEO
A provider of printed products and print management services to Fortune 1000
customers. The Company operates in two business segments: the forms and labels
segment and the integrated graphics segment. The principal products and services
supplied by the forms and labels segment include the design and manufacture of
paper-based forms, the manufacture of both electronic data processing (EDP)
labels and packaging labels, as well as the manufacture and distribution of a
standard line of office products.
INCOME AND CASHFLOW STATEMENT DATA
($ in thousands, except per share)
Six Months Ended Fiscal Years Ended
LTM ---------------------------- ----------------------------
Jan-03 Jan-03 Jan-02 Jul-02 Jul-01
------------ ---------------------------- ----------------------------
Revenue $ 1,505,704 $ 764,888 $ 804,813 $ 1,545,629 $ 1,689,534
COGS 1,094,087 555,959 596,266 1,134,394 1,236,589
------------ ---------------------------- ----------------------------
Gross Profit 411,617 208,929 208,547 411,235 452,945
Selling, General & Administrative 300,107 155,599 156,842 301,350 334,452
Research & Development - - - - -
Other Operating - - - - -
------------ ---------------------------- ----------------------------
Operating Income 111,510 53,330 51,705 109,885 118,493
Interest Income / (Expense), net (18,231) (8,917) (11,529) (20,843) (28,273)
Other Income / (Expense), net - - - - -
------------ ---------------------------- ----------------------------
Pre-tax Income 93,279 44,413 40,176 89,042 90,220
Taxes 13,223 16,633 2,864 (546) 36,311
------------ ---------------------------- ----------------------------
After-tax Income 80,056 27,780 37,312 89,588 53,909
Minority Interest - - - - -
Equity in Affiliates - - - - -
------------ ---------------------------- ----------------------------
Normalized Net Income 80,056 27,780 37,312 89,588 53,909
Preferred Dividends - - - - -
------------ ---------------------------- ----------------------------
Normalized Net Income to Common $ 80,056 $ 27,780 $ 37,312 $ 89,588 $ 53,909
============ ============================ ============================
EBIT $ 111,510 $ 53,330 $ 51,705 $ 109,885 $ 118,493
Depreciation & Amortization $ 62,504 $ 30,848 $ 34,751 $ 66,407 $ 78,848
EBITDA $ 174,014 $ 84,178 $ 86,456 $ 176,292 $ 197,341
CAPEX $ 26,715 $ 15,067 $ 11,603 $ 23,251 $ 41,310
EBITDA - CAPEX $ 147,299 $ 69,111 $ 74,853 $ 153,041 $ 156,031
GAAP Operating Cash Flow $ 133,352 $ 53,099 $ 61,300 $ 141,553 $ 175,703
Basic Reported Weighted Avg Shares Out (000's) 41,917 41,098 41,326 40,699
Basic Normalized EPS $ 1.92 $ 0.66 $ 0.91 $ 2.17 $ 1.32
Basic Reported EPS $ 1.28 $ 0.65 $ (3.40) $ (2.77) $ 1.31
Diluted Reported Weighted Avg Shares Out (000's) 42,483 41,098 41,699 40,951
Diluted Normalized EPS $ 1.89 $ 0.65 $ 0.91 $ 2.15 $ 1.32
Diluted Reported EPS $ 1.29 $ 0.64 $ (3.40) $ (2.75) $ 1.30
NORMALIZED RECONCILIATION
Restructuring/Goodwill Impairment $ (11,096) $ (643) $ (32,832) $ (43,285) $ (513)
Other Unusual (Expense) Gain Items - - - - -
Tax Shelter (Charge) on Unusual Items (16,881) - - (16,881) (200)
------------ ---------------------------- ----------------------------
Unusual (Exp) Gain Items, net of Taxes (27,977) (643) (32,832) (60,166) (713)
Accounting Changes, net of Taxes - - (144,078) (144,078) -
Discontinued Operations, net of Taxes - - - - -
Extraordinary Items, net of Taxes - - - - -
------------ ---------------------------- ----------------------------
Total Reconciling Items, net of Taxes $ (27,977) $ (643) $ (176,910) $ (204,244) $ (713)
============ ============================ ============================
Reported Income Tax (Benefit) $ 30,104 $ 16,633 $ 2,864 $ 16,335 $ 36,511
Reported Net Income (Loss) $ 52,079 $ 27,137 $ (139,598) $ (114,656) $ 53,196
PROFITABILITY & COST RATIOS (as % of Revenue)
Gross Profit 27.3% 27.3% 25.9% 26.6% 26.8%
S,G & A 19.9% 20.3% 19.5% 19.5% 19.8%
Operating Income 7.4% 7.0% 6.4% 7.1% 7.0%
Pre-Tax 6.2% 5.8% 5.0% 5.8% 5.3%
EBIT 7.4% 7.0% 6.4% 7.1% 7.0%
EBITDA 11.6% 11.0% 10.7% 11.4% 11.7%
Normalized Net Income to Common 5.3% 3.6% 4.6% 5.8% 3.2%
Reported Net Income 3.5% 3.5% -17.3% -7.4% 3.1%
CAPEX 1.8% 2.0% 1.4% 1.5% 2.4%
BALANCE SHEET DATA
($ in thousands, except per share) As of
As of -------------------------
31-Jan-03 Jul-02 Jul-01
----------- -------------------------
Cash & Equivalents $ 58,777 $ 25,178 $ -
Marketable Securities - - -
----------- -------------------------
Total Cash & Mkt Securities 58,777 25,178 -
Accounts Receivable 229,882 245,141 280,456
Inventory 89,799 85,437 100,922
Other Current Assets 41,066 49,159 33,661
----------- -------------------------
Total Current Assets 419,524 404,915 415,039
PPE, net 307,745 318,338 391,166
Intangibles, net 184,624 188,101 340,180
Investments - - -
Other Assets 19,354 18,640 18,037
----------- -------------------------
Total Assets $ 931,247 $ 929,994 $ 1,164,422
=========== =========================
Accounts Payable $ 68,942 $ 78,403 $ 74,087
Accrued Expenses 86,241 76,467 91,284
Short Term Debt 679 1,233 4,000
Short Term Capital Leases - - -
Other Current Liabilities - 13,373 20,231
----------- -------------------------
Total Current Liabilities 155,862 169,476 189,602
Other LT Liabilities 98,174 102,086 110,116
Long Term Debt 208,228 209,303 284,087
Long Term Capital Leases - - -
Minority Interests - - -
Pref Stock (Liq Value) - - -
----------- -------------------------
Total Liabilities & Pref Stock 462,264 480,865 583,805
----------- -------------------------
Common Equity 468,983 449,129 580,617
----------- -------------------------
Total Liabilities & Equity $ 931,247 $ 929,994 $ 1,164,422
=========== =========================
Common Shares Outstanding (000's) 42,244 41,556 40,889
Cash Value per share $ 1.39 $ 0.61 $ -
Book Value per share $ 11.10 $ 10.81 $ 14.20
Tangible Book Value per share $ 6.73 $ 6.28 $ 5.88
EFFECTIVENESS AND EFFICIENCY
A/R Turnover 6.34x 5.88x 6.02x
Inventory Turnover 12.49x 12.17x 12.25x
Asset Turnover 1.62x 1.48x 1.45x
Days Sales Outstanding 57.6 62.1 60.6
Days Inventory Outstanding 29.2 30.0 29.8
Days Payable Outstanding 19.3 19.4 17.2
Return on Avg Assets 8.6% 8.6% na
Return on Avg Common Equity 17.4% 17.4% na
FINANCIAL STRENGTH
Current Ratio 2.69 2.39 2.19
Quick Ratio 2.12 1.89 1.66
Total Debt $ 208,907 $ 210,536 $ 288,087
Net Debt $ 150,130 $ 185,358 $ 288,087
Total Capitalization $ 677,890 $ 659,665 $ 868,704
Total Debt/Total Capitalization 30.8% 31.9% 33.2%
Net Debt/Total Capitalization 22.1% 28.1% 33.2%
Total Debt/TIC 15.5% 15.7% 21.4%
Total Debt/EBITDA 1.20x 1.19x 1.46x
Total Debt/EBITDA-CAPEX 1.42x 1.38x 1.85x
EBITDA/Interest Expense 9.54x 8.46x 6.98x
EBITDA-CAPEX/Interest Expense 8.08x 7.34x 5.52x
MARKET INFORMATION
As of Date 19-May-03
Exchange NYSE
Stock Price $ 26.86
52 Week High $ 26.94
52 Week Low $ 15.80
Avg. Daily Volume (000's) 340
Beta 0.82
Shares Outstanding (000's) 42,244
Total Outstanding Warrants & Options (000's) -
Float (000's) 41,000
Market Cap $ 1,134,674
Total Invested Capital (TIC) $ 1,343,581
Enterprise Value (EV) $ 1,284,804
OWNERSHIP
Insiders % Owned 3.00%
Institutional % Owned 83.00%
Number of Institutions 329
VALUATION RATIOS
Multiple of
---------------------------
Market Cap TIC EV
---------------------------
Latest Twelve Months
Revenue 0.75x 0.89x 0.85x
EBIT 10.18x 12.05x 11.52x
EBITDA 6.52x 7.72x 7.38x
Normalized Net Income 14.17x 16.78x 16.05x
Basic Normalized EPS 13.99x na na
Projected
Dec-02 Mean Revenue na na na
Dec-03 Mean Revenue na na na
Dec-02 Mean EPS na na na
Dec-03 Mean EPS na na na
Most Recent Filing
Assets 1.22x 1.44x 1.38x
Common Equity 2.42x na na
Tangible Common Equity 3.99x na na
MEAN CONSENSUS ESTIMATES
Year Ending # Ests Revenue EPS
- ----------------------------------------------
December-02 na na na
December-03 na na na
LT Growth na na na
PERIOD GROWTH RATES
Six Months Ended Fiscal Years Ended
Jan-03 Jul-02
- --------------------------------------------------------
Revenue -5.0% -8.5%
EBIT 3.1% -7.3%
EBITDA -2.6% -10.7%
NOTES
Add backs reflect restructuring charges and change in accounting principle
in accordance with SFAS No.142 (Goodwill impairment).
Note - Merger with Moore in final stages.
Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover
Page 64
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
BCT INTERNATIONAL OVERVIEW
Name BCT International
Symbol BCTI
Latest Fiscal YE 28-Feb-02
Latest Rprt Per 30-Nov-02
Address 3000 NE 30th Place
City, State Zip Ft. Lauderdale, FL 33306
Telephone 954-563-1224
Website
Officers Bill Wilkerson, CEO
BCT International, Inc. operates the Business Cards Tomorrow franchise system.
Founded in 1975, the system has grown to include 82 Business Cards Tomorrow
Franchises specializing in thermography products, labels, rubber stamps and
business announcements for resale by retail printing providers in 36 states and
Canada. BCT's operations also include the Pelican Paper Products Division (PPP),
which supplies paper products, press supplies and press parts to the BCT
Franchises.
INCOME AND CASHFLOW STATEMENT DATA
($ in thousands, except per share)
Nine Months Ended Fiscal Years Ended
LTM ---------------------------- ----------------------------
Nov-02 Nov-02 Nov-01 Feb-02 Feb-01
------------ ---------------------------- ----------------------------
Revenue $ 18,381 $ 14,097 $ 13,723 $ 18,007 $ 19,429
COGS 10,460 7,941 8,073 10,592 11,605
------------ ---------------------------- ----------------------------
Gross Profit 7,921 6,156 5,650 7,415 7,824
Selling, General & Administrative 7,166 5,279 4,715 6,602 6,687
Research & Development - - - - -
Other Operating - - - - -
------------ ---------------------------- ----------------------------
Operating Income 755 877 935 813 1,137
Interest Income / (Expense), net - - - - -
Other Income / (Expense), net - - - - -
------------ ---------------------------- ----------------------------
Pre-tax Income 755 877 935 813 1,137
Taxes 295 342 368 321 442
------------ ---------------------------- ----------------------------
After-tax Income 460 535 567 492 695
Minority Interest - - - - -
Equity in Affiliates - - - - -
------------ ---------------------------- ----------------------------
Normalized Net Income 460 535 567 492 695
Preferred Dividends - - - - -
------------ ---------------------------- ----------------------------
Normalized Net Income to Common $ 460 $ 535 $ 567 $ 492 $ 695
============ ============================ ============================
EBIT $ 755 $ 877 $ 935 $ 813 $ 1,137
Depreciation & Amortization $ 233 $ 177 $ 170 $ 226 $ 232
EBITDA $ 988 $ 1,054 $ 1,105 $ 1,039 $ 1,369
CAPEX $ 142 $ 124 $ 144 $ 162 $ 150
EBITDA - CAPEX $ 846 $ 930 $ 961 $ 877 $ 1,219
GAAP Operating Cash Flow $ 981 $ 450 $ 2,729 $ 3,260 $ 316
Basic Reported Weighted Avg Shares Out (000's) 5,121 5,121 5,123 5,214
Basic Normalized EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13
Basic Reported EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13
Diluted Reported Weighted Avg Shares Out (000's) 5,121 5,121 5,123 5,235
Diluted Normalized EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13
Diluted Reported EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13
NORMALIZED RECONCILIATION
Restructuring/Goodwill Impairment $ - $ - $ - $ - $ -
Other Unusual (Expense) Gain Items - - - - -
Tax Shelter (Charge) on Unusual Items - - - - -
------------ ---------------------------- ----------------------------
Unusual (Exp) Gain Items, net of Taxes - - - - -
Accounting Changes, net of Taxes - - - - -
Discontinued Operations, net of Taxes - - - - (31)
Extraordinary Items, net of Taxes - - - - -
------------ ---------------------------- ----------------------------
Total Reconciling Items, net of Taxes $ - $ - $ - $ - $ (31)
============ ============================ ============================
Reported Income Tax (Benefit) $ 295 $ 342 $ 368 $ 321 $ 442
Reported Net Income (Loss) $ 460 $ 535 $ 567 $ 492 $ 664
PROFITABILITY & COST RATIOS (AS % OF REVENUE)
Gross Profit 43.1% 43.7% 41.2% 41.2% 40.3%
S,G & A 39.0% 37.4% 34.4% 36.7% 34.4%
Operating Income 4.1% 6.2% 6.8% 4.5% 5.9%
Pre-Tax 4.1% 6.2% 6.8% 4.5% 5.9%
EBIT 4.1% 6.2% 6.8% 4.5% 5.9%
EBITDA 5.4% 7.5% 8.1% 5.8% 7.0%
Normalized Net Income to Common 2.5% 3.8% 4.1% 2.7% 3.6%
Reported Net Income 2.5% 3.8% 4.1% 2.7% 3.4%
CAPEX 0.8% 0.9% 1.0% 0.9% 0.8%
BALANCE SHEET DATA
($ in thousands, except per share) As of
As of -------------------------
30-Nov-02 Feb-02 Feb-01
----------- -------------------------
Cash & Equivalents $ 4,805 $ 4,819 $ 1,799
Marketable Securities - - -
----------- -------------------------
Total Cash & Mkt Securities 4,805 4,819 1,799
Accounts Receivable 2,386 2,889 3,568
Inventory 2,697 1,887 2,352
Other Current Assets 918 678 455
----------- -------------------------
Total Current Assets 10,806 10,273 8,174
PPE, net 963 435 473
Intangibles, net 186 206 232
Investments 43 24 24
Other Assets 6,187 6,140 7,287
----------- -------------------------
Total Assets $ 18,185 $ 17,078 $ 16,190
=========== =========================
Accounts Payable $ 789 $ 432 $ 597
Accrued Expenses 938 791 403
Short Term Debt 294 640 86
Short Term Capital Leases - - -
Other Current Liabilities 125 125 167
----------- -------------------------
Total Current Liabilities 2,146 1,988 1,253
Other LT Liabilities 214 334 417
Long Term Debt 534 - 236
Long Term Capital Leases - - -
Minority Interests - - -
Pref Stock (Liq Value) - - -
----------- -------------------------
Total Liabilities & Pref Stock 2,894 2,322 1,906
----------- -------------------------
Common Equity 15,291 14,756 14,284
----------- -------------------------
Total Liabilities & Equity $ 18,185 $ 17,078 $ 16,190
=========== =========================
Common Shares Outstanding (000's) 5,121 5,121 5,136
Cash Value per share $ 0.94 $ 0.94 $ 0.35
Book Value per share $ 2.99 $ 2.88 $ 2.78
Tangible Book Value per share $ 2.95 $ 2.84 $ 2.74
EFFECTIVENESS AND EFFICIENCY
A/R Turnover 6.97x 5.58x 5.45x
Inventory Turnover 4.56x 5.00x 4.93x
Asset Turnover 1.04x 1.08x 1.20x
Days Sales Outstanding 52.4 65.4 67.0
Days Inventory Outstanding 80.0 73.0 74.0
Days Payable Outstanding 12.6 10.9 11.9
Return on Avg Assets 2.6% 3.0% na
Return on Avg Common Equity 3.1% 3.4% na
FINANCIAL STRENGTH
Current Ratio 5.04 5.17 6.52
Quick Ratio 3.78 4.22 4.65
Total Debt $ 828 $ 640 $ 322
Net Debt $ (3,977) $ (4,179) $ (1,477)
Total Capitalization $ 16,119 $ 15,396 $ 14,606
Total Debt/Total Capitalization 5.1% 4.2% 2.2%
Net Debt/Total Capitalization -24.7% -27.1% -10.1%
Total Debt/TIC 14.5% 11.2% 5.7%
Total Debt/EBITDA 0.84x 0.62x 0.24x
Total Debt/EBITDA-CAPEX 0.98x 0.73x 0.26x
EBITDA/Interest Expense na na na
EBITDA-CAPEX/Interest Expense na na na
MARKET INFORMATION
As of Date 19-May-03
Exchange OTC BB
Stock Price $ 0.95
52 Week High $ 1.07
52 Week Low $ 0.67
Avg. Daily Volume (000's) 3
Beta 0.83
Shares Outstanding (000's) 5,121
Total Outstanding Warrants & Options (000's) -
Float (000's) 2,800
Market Cap $ 4,865
Total Invested Capital (TIC) $ 5,693
Enterprise Value (EV) $ 888
OWNERSHIP
Insiders % Owned 52.00%
Institutional % Owned 2.00%
Number of Institutions 4
VALUATION RATIOS
Multiple of
---------------------------
Market Cap TIC EV
---------------------------
Latest Twelve Months
Revenue 0.26x 0.31x 0.05x
EBIT 6.44x 7.54x 1.18x
EBITDA 4.92x 5.76x 0.90x
Normalized Net Income 10.58x 12.38x 1.93x
Basic Normalized EPS 10.56x na na
Projected
Dec-02 Mean Revenue na na na
Dec-03 Mean Revenue na na na
Dec-02 Mean EPS na na na
Dec-03 Mean EPS na na na
Most Recent Filing
Assets 0.27x 0.31x 0.05x
Common Equity 0.32x na na
Tangible Common Equity 0.32x na na
MEAN CONSENSUS ESTIMATES
Year Ending # Ests Revenue EPS
- ----------------------------------------------
December-02 na - $ -
December-03 na - $ -
LT Growth na na na
PERIOD GROWTH RATES
Nine Months Ended Fiscal Years Ended
Nov-02 Feb-02
---------------------------------------
Revenue 2.7% -7.3%
EBIT -6.2% -28.5%
EBITDA -4.6% -24.1%
NOTES
Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover
Page 65
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
MINORITY INTEREST ACQUISITION PREMIUMS ANALYSIS
. The minority interest acquisition premiums analysis involves the
comparison of the premium derived in the Proposed Transaction to
premiums in other transactions where a minority interest of a
public company was acquired. Capitalink reviewed the one-day,
five-day and 30-day premiums for all minority interest
transactions where:
. The acquiring party previously had greater than
50% shareholding in the target company,
. The transaction was announced on or after
January 2001, and
. The transaction value is less than or equal to
$25.0 million.
. Capitalink believes an examination of the premiums paid in
minority acquisitions are more appropriate than transactions
involving a control acquisition and are more comparable to the
Proposed Transaction. The premium in such a scenario should not
be as high as a situation where control is acquired.
. Based on the premiums paid in the scenario set forth above,
Capitalink derived an indicated range of per share market values
for the Company using the prior one-day, five-day and 30-day
share price as of May 19, 2003. Based on the selected multiple
ranges, Capitalink calculated a range of indicated share prices
of $1.29 to $1.51.
. Capitalink noted that the offer price of the Proposed
Transaction was above this indicated valuation range.
Page 66
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
MINORITY INTEREST ACQUISITION PREMIUMS ANALYSIS
INDICATED REFERENCE RANGE - ACQUISITIONS PREMIUMS PAID ANALYSIS
Statistic Selected Multiple Range Indicated Share Price
--------- ----------------------- ---------------------
ACQUISITIONS PREMIUMS PAID (1)
Prior One Day $ 0.95 33.3% - 54.8% $ 1.27 - $ 1.47
Prior 5 Day $ 0.95 40.5% - 64.0% $ 1.33 - $ 1.56
Prior 30 Day $ 0.91 40.8% - 63.9% $ 1.28 - $ 1.49
Indicated Reference Range $ 1.29 - $ 1.51
- ----------
(1) Includes acquisitions by controlling shareholder (*50%)of minority
interests from January 2001 with deal value * $25 million. Acquisitions at
a discount (negative premiums) have been excluded.
* denotes less than or equal to
Sources of information: Commodity Systems, Inc. and Mergerstat, Inc.
Page 67
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
MINORITY INTEREST ACQUISITION PREMIUMS ANALYSIS
ACQUISITION PREMIUMS PAID ANALYSIS (1)
PREVIOUS PREMIUMS
ANNOUNC. OWNERSHIP PERCENTAGE ------------------------
DATE SELLER BUYER PERCENTAGE SOUGHT 1 DAY 5 DAY 30 DAY
--------- ------------------------ ----------------------------------- ---------- ---------- ------ ------ ------
5-May-03 Westerbeke Corp Westerbeke Acquisition Corp 56.20% 43.80% 65.75% 65.75% 71.43%
5-May-03 Atlantic Data Services Private Group Led by Management of
Inc Atlantic Data 65.06% 34.94% 1.01% 2.04% 14.50%
5-May-03 Semele Group Inc Private Group Led by Management of
Semele Group Inc 53.08% 46.92% 25.00% 25.00% 21.21%
29-Apr-03 RWD Technologies Inc Research Park Acquisition Inc 66.00% 34.00% 128.26% 147.06% 156.10%
27-Mar-03 DSI Toys Inc DSI Acquisition Inc 73.28% 26.72% 11.90% 8.05% 0.00%
26-Mar-03 InvestorsBancorp Inc Private Group Led by Management of
InvestorsBancor 61.80% 38.20% -1.39% 4.80% 9.65%
24-Mar-03 Judge Group Inc Private Group Led by Management of
Judge Group Inc 60.00% 40.00% 17.14% 12.33% 29.13%
6-Feb-03 deltathree Inc Atarey Hasharon Chevra Lepituach
Vehashkaot Benadl 71.00% 29.00% 37.25% 27.27% 48.94%
3-Feb-03 9278 Communications Inc NTSE Holding Corp 54.20% 45.80% 185.71% 257.14% 150.00%
29-Jan-03 DSI Toys Inc Mvii Llc 55.20% 44.80% -2.22% -6.38% 15.79%
22-Nov-02 Unimark Group Inc (The) M&M Nominee LLC 62.50% 37.50% 132.14% 160.00% 66.67%
19-Nov-02 MDI Entertainment Inc Scientific Games Corp 66.00% 34.00% 27.27% 40.00% 53.85%
13-Nov-02 Media Source Inc Private Group Led By Davis 65.90% 34.10% 12.44% 45.16% 36.36%
19-Sep-02 WJ Communications Inc Fox Paine & Co LLC 65.50% 34.50% 0.92% 0.00% 29.41%
13-Aug-02 Oriole Homes Corp Levy Group (The) 60.10% 39.90% 63.33% 63.33% 29.29%
13-Aug-02 R-B Rubber Products Inc Dash Multi-Corp Inc 70.00% 30.00% 83.01% 69.70% 95.80%
5-Aug-02 Sandata Technologies Inc Sandata Acquisition Corp 74.40% 25.60% 282.00% 516.13% 180.88%
12-Jun-02 Swiss Army Brands Inc Victorinox AG 66.90% 33.10% 41.73% 42.63% 40.85%
16-May-02 Electric Lightwave Inc Citizens Communications Co 85.00% 15.00% 105.88% 79.49% 55.56%
16-May-02 Balanced Care Corp IPC Advisors Sarl 53.30% 46.70% 150.00% 177.78% 127.27%
10-Apr-02 PartsBase Inc Private Group Led by Robert A
Hammond Jr 65.00% 35.00% 95.83% 95.83% 95.83%
3-Apr-02 CBNY Investment Services Private Group Led By CBNY
Corp Investment Services Mgmt 73.60% 26.40% 1.30% 1.00% 1.00%
28-Mar-02 Shibazaki Seisakusho Ltd Alcoa Inc 50.50% 20.30% 30.87% 28.09% 44.71%
14-Mar-02 Konover Property Trust Prometheus Southeast Retail Trust 66.00% 34.00% 20.00% 20.00% 24.26%
11-Mar-02 Hawker Pacific Aerospace Deutsche Lufthansa AG 72.70% 27.30% 2.20% 3.50% 51.16%
6-Mar-02 CAA AG Harman International Industries Inc 78.15% 21.85% 0.44% 27.50% 12.50%
22-Jan-02 Rottlund Co Inc (The) Private Group Led by David and
Bernard Rotter 71.40% 28.60% 18.06% 29.79% 46.63%
16-Nov-01 Ugly Duckling Corp Private Group led by
Ernest C Garcia II 61.00% 39.00% 41.77% 42.91% 30.74%
18-Sep-01 Organic Inc Seneca Investments LLC 80.90% 19.10% 13.79% 17.86% 37.50%
22-Aug-01 HomeServices.Com Inc Berkshire Hathaway Inc 83.50% 16.50% 38.78% 40.50% 66.67%
14-Aug-01 National Home Centers Private Group Led By Dwain
Inc A Newman 63.49% 36.51% 21.74% 17.65% 35.92%
3-Aug-01 Lincoln Snacks Co Lincoln Snacks Acquisition Corp 89.80% 10.20% 12.90% 16.67% 27.27%
6-Jun-01 HIS Sportswear AG VF Corp 85.00% 15.00% 18.48% 46.72% 32.09%
30-Apr-01 STV Group Inc Private Group Led By ESOP Of STV
Group Inc 62.81% 37.19% 97.37% 110.28% 80.00%
27-Apr-01 Pierre Foods Inc PF Management Inc 63.00% 37.00% 101.61% 62.34% 121.24%
2-Apr-01 Milestone Properties Inc Concord Assets Group Inc 68.80% 31.20% 40.96% 40.96% 40.96%
27-Mar-01 Hahn Automotive Private Group Led By Futerman
Warehouse Inc 64.00% 36.00% 33.33% 33.33% 9.89%
9-Feb-01 Marketing Specialists Private Group Led By Richmont
Corp Capital Partners I 83.20% 16.80% 98.41% 66.67% 468.18%
24-Jan-01 Firecom Inc Private Group Led By Mendez 68.80% 31.20% 59.09% 59.09% 34.62%
High 282.0% 516.1% 468.2%
Mean 54.8% 64.0% 63.9%
Median 33.3% 40.5% 40.8%
Low -2.2% -6.4% 0.0%
- ----------
(1) Includes acquisitions by controlling shareholder (*50%)of minority
interests from January 2001 with deal value * $25 million. Acquisitions at
a discount (negative premiums) have been excluded.
* denotes less than or equal to
Sources of information: Mergerstat, Inc.
Page 68
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
PREMIUMS PAID ANALYSIS
. The premiums paid analysis involves the comparison of Merger
Consideration to the average closing price of the Company's
common stock over varying time periods prior to May 19, 2003.
. The analysis suggests that for the periods calculated, the
Merger Consideration represents a significant premium (100.0% to
138.5%) over the average closing share price for each period.
The premium as of May 19, 2003 was 110.5%.
. In addition, the daily premium or discount over the period May
20, 2002 to May 19, 2003 was graphed based on Merger
Consideration. For the full prior one-year period, the Merger
Consideration represented a significant premium over the
prevailing daily share price.
Page 69
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
PREMIUMS PAID ANALYSIS
PREMIUMS PAID ANALYSIS
Merger Consideration $ 2.0000
Price
per Share Premium
--------- -------
Closing Price as of May 19, 2003 $ 0.9500 110.5%
Sensitivity Analysis:
Prior Day Closing Price $ 1.0000 100.0%
Prior 5 Trading Day Average Closing Price $ 0.9800 104.1%
Prior 10 Trading Day Average Closing Price $ 0.9800 104.1%
Prior 20 Trading Day Average Closing Price $ 0.9775 104.6%
Prior 30 Trading Day Average Closing Price $ 0.9563 109.1%
Prior 60 Trading Day Average Closing Price $ 0.9392 113.0%
Prior 90 Trading Day Average Closing Price $ 0.9399 112.8%
Prior Six Month Average Closing Price $ 0.9003 122.1%
Prior Year Average Closing Price $ 0.8386 138.5%
Sources of information: Draft Agreement and Commodity Systems, Inc.
Page 70
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
PREMIUMS PAID ANALYSIS
BCTI DAILY MERGER CONSIDERATION PREMIUM
(MAY 23, 2002 - MAY 23, 2003)
[Bar Graph]
DAILY
PREMIUM/
DATE (DISCOUNT)
---------- -----------
5/19/2003 110.5%
5/16/2003 100.0%
5/15/2003 100.0%
5/14/2003 100.0%
5/13/2003 100.0%
5/12/2003 110.5%
5/9/2003 110.5%
5/8/2003 110.5%
5/7/2003 110.5%
5/6/2003 92.3%
5/5/2003 98.0%
5/2/2003 98.0%
5/1/2003 90.5%
4/30/2003 104.1%
4/29/2003 104.1%
4/28/2003 104.1%
4/25/2003 102.0%
4/24/2003 102.0%
4/23/2003 110.5%
4/22/2003 119.8%
4/21/2003 119.8%
4/17/2003 119.8%
4/16/2003 119.8%
4/15/2003 119.8%
4/14/2003 119.8%
4/11/2003 119.8%
4/10/2003 119.8%
4/9/2003 119.8%
4/8/2003 119.8%
4/7/2003 119.8%
4/4/2003 110.5%
4/3/2003 110.5%
4/2/2003 117.4%
4/1/2003 117.4%
3/31/2003 117.4%
3/28/2003 117.4%
3/27/2003 117.4%
3/26/2003 117.4%
3/25/2003 117.4%
3/24/2003 117.4%
3/21/2003 117.4%
3/20/2003 117.4%
3/19/2003 117.4%
3/18/2003 117.4%
3/17/2003 117.4%
3/14/2003 117.4%
3/13/2003 117.4%
3/12/2003 117.4%
3/11/2003 117.4%
3/10/2003 117.4%
3/7/2003 115.1%
3/6/2003 115.1%
3/5/2003 115.1%
3/4/2003 117.4%
3/3/2003 117.4%
2/28/2003 117.4%
2/27/2003 108.3%
2/26/2003 119.8%
2/25/2003 119.8%
2/24/2003 119.8%
2/21/2003 119.8%
2/20/2003 163.2%
2/19/2003 119.8%
2/18/2003 119.8%
2/14/2003 106.2%
2/13/2003 108.3%
2/12/2003 106.2%
2/11/2003 106.2%
2/10/2003 102.0%
2/7/2003 104.1%
2/6/2003 104.1%
2/5/2003 104.1%
2/4/2003 104.1%
2/3/2003 108.3%
1/31/2003 108.3%
1/30/2003 108.3%
1/29/2003 108.3%
1/28/2003 108.3%
1/27/2003 108.3%
1/24/2003 108.3%
1/23/2003 98.0%
1/22/2003 94.2%
1/21/2003 98.0%
1/17/2003 90.5%
1/16/2003 96.1%
1/15/2003 122.2%
1/14/2003 122.2%
1/13/2003 146.9%
1/10/2003 146.9%
1/9/2003 146.9%
1/8/2003 146.9%
1/7/2003 146.9%
1/6/2003 146.9%
1/3/2003 146.9%
1/2/2003 146.9%
12/31/2002 146.9%
12/30/2002 150.0%
12/27/2002 156.4%
12/26/2002 156.4%
12/24/2002 156.4%
12/23/2002 156.4%
12/20/2002 156.4%
12/19/2002 135.3%
12/18/2002 135.3%
12/17/2002 156.4%
12/16/2002 156.4%
12/13/2002 156.4%
12/12/2002 156.4%
12/11/2002 156.4%
12/10/2002 156.4%
12/9/2002 156.4%
12/6/2002 156.4%
12/5/2002 163.2%
12/4/2002 163.2%
12/3/2002 141.0%
12/2/2002 141.0%
11/29/2002 162.8%
11/27/2002 162.8%
11/26/2002 163.2%
11/25/2002 166.7%
11/22/2002 122.2%
11/21/2002 166.7%
11/20/2002 166.7%
11/19/2002 166.7%
11/18/2002 166.7%
11/15/2002 166.7%
11/14/2002 166.7%
11/13/2002 166.7%
11/12/2002 166.7%
11/11/2002 166.7%
11/8/2002 166.7%
11/7/2002 163.2%
11/6/2002 177.8%
11/5/2002 177.8%
11/4/2002 177.8%
11/1/2002 177.8%
10/31/2002 166.7%
10/30/2002 192.0%
10/29/2002 194.1%
10/28/2002 194.1%
10/25/2002 194.1%
10/24/2002 170.3%
10/23/2002 170.3%
10/22/2002 194.1%
10/21/2002 194.1%
10/18/2002 194.1%
10/17/2002 194.1%
10/16/2002 194.1%
10/15/2002 194.1%
10/14/2002 198.5%
10/11/2002 198.5%
10/10/2002 181.7%
10/9/2002 181.7%
10/8/2002 177.8%
10/7/2002 177.8%
10/4/2002 181.7%
10/3/2002 181.7%
10/2/2002 181.7%
10/1/2002 185.7%
9/30/2002 185.7%
9/27/2002 181.7%
9/26/2002 181.7%
9/25/2002 181.7%
9/24/2002 185.7%
9/23/2002 185.7%
9/20/2002 174.0%
9/19/2002 177.8%
9/18/2002 156.4%
9/17/2002 156.4%
9/16/2002 161.4%
9/13/2002 163.2%
9/12/2002 163.2%
9/11/2002 163.2%
9/10/2002 143.9%
9/9/2002 143.9%
9/6/2002 146.9%
9/5/2002 146.9%
9/4/2002 146.9%
9/3/2002 141.0%
8/30/2002 146.9%
8/29/2002 150.0%
8/28/2002 150.0%
8/27/2002 150.0%
8/26/2002 150.0%
8/23/2002 150.0%
8/22/2002 143.9%
8/21/2002 143.9%
8/20/2002 135.3%
8/19/2002 115.1%
8/16/2002 135.3%
8/15/2002 135.3%
8/14/2002 135.3%
8/13/2002 133.1%
8/12/2002 150.0%
8/9/2002 166.7%
8/8/2002 166.7%
8/7/2002 146.9%
8/6/2002 146.9%
8/5/2002 146.9%
8/2/2002 146.9%
8/1/2002 146.9%
7/31/2002 146.9%
7/30/2002 146.9%
7/29/2002 150.0%
7/26/2002 146.9%
7/25/2002 153.2%
7/24/2002 156.4%
7/23/2002 156.4%
7/22/2002 166.7%
7/19/2002 150.0%
7/18/2002 150.0%
7/17/2002 156.4%
7/16/2002 156.4%
7/15/2002 143.9%
7/12/2002 143.9%
7/11/2002 159.7%
7/10/2002 159.7%
7/9/2002 159.7%
7/8/2002 159.7%
7/5/2002 153.2%
7/3/2002 153.2%
7/2/2002 153.2%
7/1/2002 138.1%
6/28/2002 138.1%
6/27/2002 138.1%
6/26/2002 138.1%
6/25/2002 138.1%
6/24/2002 138.1%
6/21/2002 138.1%
6/20/2002 138.1%
6/19/2002 143.9%
6/18/2002 143.9%
6/17/2002 143.9%
6/14/2002 143.9%
6/13/2002 143.9%
6/12/2002 143.9%
6/11/2002 141.0%
6/10/2002 141.0%
6/7/2002 141.0%
6/6/2002 141.0%
6/5/2002 141.0%
6/4/2002 141.0%
6/3/2002 135.3%
5/31/2002 143.9%
5/30/2002 143.9%
5/29/2002 143.9%
5/28/2002 135.3%
5/24/2002 135.3%
5/23/2002 135.3%
22-May-02 135.3%
21-May-02 143.9%
20-May-02 143.9%
Sources of information: Draft Agreement and Commodity Systems, Inc.
Page 71
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
ADJUSTED NET BOOK VALUE ANALYSIS
. Capitalink performed an adjusted book value analysis, based upon
a going concern premise, to determine the value of the Company
assuming all of its assets were valued at market value. Under
historical cost accounting most assets in the Company's
financial statements are generally not reflected at market
value, but reflect historical acquisition costs.
. For the purposes of this analysis, based upon discussions with
Company management and utilizing the Company's balance sheet as
of February 28, 2003, the following adjustments to market value
were assumed:
. Accounts receivable for collectability and
timing issues.
. Inventory to reflect spoilage, wastage, obsolete
inventory and timing issues.
. Property, plant and equipment to reflect
obsolescence and current market value.
. Notes to reflect market value (see Notes
Analysis).
. No market value for intangible assets.
. Deferred taxes for timing issues.
. The results of the analysis indicate that the market value of
the Company's assets is approximately $12.8 million. After
deducting total liabilities of approximately $2.3 million, the
adjusted net book value of common equity is approximately $10.5
million. Taking into account the 565,000 assumed in the money
options, Capitalink calculated an indicated equity value of
approximately $11.5 million or $2.02 per share.
. Capitalink noted that the offer price of the Proposed
Transaction was slightly below this indicated valuation range.
Page 72
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
ADJUSTED NET BOOK VALUE ANALYSIS
ADJUSTED NET BOOK VALUE ANALYSIS
($ in thousands)
FEB 28, 2003E
UNADJUSTED
BOOK VALUE Adjs (1) Notes ADJUSTED
------------- -------- ----- --------
Assets:
Cash & Equivalents $ 4,244 $ - $ 4,244
Accounts Receivable, net 2,570 (643) a 1,928
Notes Receivables, net 5,313 (2,719) b 2,594
Inventory 2,668 (534) c 2,134
Deferred Income Taxes 1,325 (504) d 821
Prepaid & Other 513 - 513
Net Property, Plant &
Equipment 989 (495) e 495
Intangible Assets 180 (180) f -
Other 47 - 47
------------- -------- --------
Total Assets $ 17,849 $ (5,074) $ 12,775
============= ======== ========
Liabilities:
Accounts Payable 875 - 875
Accrued Expenses 519 - 519
Interest Bearing Debt 523 - 523
Deferred Revenue 390 - 390
------------- -------- --------
2,307 - 2,307
Contingent Liabilities:
Contingencies - - -
------------- -------- --------
- - -
------------- -------- --------
Total Liabilities 2,307 - 2,307
------------- -------- --------
Net Book Value $ 15,542 $ (5,074) $ 10,468
============= ======== ========
Adjusted Net Book Value:
Indicated Net Book Value $ 10,468
Cash from assumed exercise of
in the money options 1,017
--------
Indicated Equity Value 11,485
========
Common Stock Equivalents:
Common Stock Shares Outstanding 5,121
Shares from in the money options 565
--------
Total Common Stock Equivalents 5,686
========
Indicated Share Price $ 2.02
========
ADJUSTMENT A55NOTES:
a 25% market value adjustment for collectability and timing issues.
b See Note Analysis for details.
c 20% market value adjustment for spoilage, wastage, usage and timing issues.
d Market value calculated at Base Case WACC and estimated three year horizon.
e 50% market value adjustment for obsolescence.
f No market value.
- ----------
(1) Assumes assets are sold as part of ongoing business. Estimated market value
adjustments determined in discussions with Company management. Please note,
this analysis is not a liquidation analysis, which would have resulting in
substantially lower indicated values.
Sources of information: Company financials and management.
Page 73
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
NOTES RECEIVABLE NET PRESENT VALUE ANALYSIS
. Capitalink reviewed the Notes to determine their estimated
current market value. The Notes were primarily generated from
overdue accounts receivables owed by franchisees as a result of
royalty and paper product payments that were in default. These
balances were rolled into each of the Notes, each with a
scheduled payment plan. Although the Company does provide a
reserve for collectability of the Notes, it does not take into
account the current market value of the Notes.
. The Notes represent a level of excess working capital in the
Company's operations that would not normally be taken into
account in any cash flow valuation based on earnings or
revenues. Consequently, Capitalink separately determined the
Note's estimated current market value, and utilizing that
indicated value in its valuation analyses, providing greater
accuracy as to the Company's value.
. As of February 28, 2003, the Company had approximately 39 Notes
totaling approximately $6.8 million. Based on discussions with
Company management, Capitalink determined the payment
probability for each of the Notes. Payment probability was based
on a number of factors, including the franchisee's performance
record, debt balances, management quality, security, and local
market growth. In the aggregate, the payment probability was
approximately 55%, or receipt of approximately $3.7 million is
expected, over the aggregate life of the Notes.
. Utilizing the Company's base case WACC of 17.3% (as discussed in
the Discounted Cash Flow Analysis) and applying the varying time
horizons for each of the Notes, Capitalink derived the net
present value of the amount anticipated to be collected. The net
present value of the amount to be collected was calculated to be
approximately $2.6 million.
. It is important to note that Capitalink derived payment
probabilities of the Notes in conjunction with and based on
discussions with management. Capitalink does not guarantee or
assure, in any respect, that any of the Notes will be collected.
Page 74
BCT International, Inc. CONFIDENTIAL
VALUATION ANALYSIS
NOTES RECEIVABLE NET PRESENT VALUE ANALYSIS
NOTES RECEIVABLE NET PRESENT VALUE ANALYSIS
($ in thousands)
FEB 28, 2003 NET
PRINCIPAL ADJUSTED EXPECTED AVERAGE PRESENT
BALANCE VALUE (1) REALIZATION % TERM (MONTHS) VALUE (2)
------------ --------- ------------- ------------- ---------
Total Notes Receivable $ 6,813 $ 3,744 55.0% 67 $ 2,594
NOTES RECEIVABLE STATISTICS
Number of Issued Notes 39
Size Statistics
Largest $ 898
Average $ 175
Median $ 98
Smallest $ 5
- ----------
(1) Realization based on discussions with Company management, given the
performance of each plant, accounts receivable balance, expected collateral
and payment history of each note holder.
(2) Determined by discounting the after tax principal and interest cash flows
of the notes at the Company's base case WACC estimated at 17.3%.
Sources of information: Company financial statements and management.
Page 75