Exhibit 16(C)(3)
BCT International, Inc. CONFIDENTIAL
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05.27.03
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 23,
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.
[LOGO] BCT [LOGO] CAPITAL LINK
Smart Investment Banking/SM/
BCT International, Inc. CONFIDENTIAL
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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
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TRANSACTION OVERVIEW
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BCT International, Inc. CONFIDENTIAL
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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 23, 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 23, 2003 (date
presentation materials completed) was $1.00.
. 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
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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
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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
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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
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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
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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
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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
23, 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
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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
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COMPANY OVERVIEW
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BCT International, Inc. CONFIDENTIAL
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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
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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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COMPANY FINANCIAL PERFORMANCE
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BCT International, Inc. CONFIDENTIAL
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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 $523,000 in
interest-bearing debt, the majority of which relates to equipment
leases on the Company's plant operations.
. Given the little growth seen in the Company's core franchising
business, the Company has begun several new initiatives, which include
the addition of Company-owned plants and the implementation and
roll-out of satellite stores. The satellite store plan will involve
the franchising of smaller franchise regions to individuals who
contract to provide business cards and other forms to customers within
that region. The
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BCT International, Inc. CONFIDENTIAL
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COMPANY FINANCIAL PERFORMANCE
supply of the cards and other forms would be provided by plants owned
by the Company or other franchisees.
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BCT International, Inc. CONFIDENTIAL
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COMPANY FINANCIAL PERFORMANCE
Normalized Comparative Summary Income Statements
($ 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
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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
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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
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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
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Sources of information: Company financial statements and management.
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BCT International, Inc. CONFIDENTIAL
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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.
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BCT International, Inc. CONFIDENTIAL
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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.
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BCT International, Inc. CONFIDENTIAL
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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 Profitablity and Cost Ratio (as % of Revenue) Graphs
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003E
---------------------------------------------------------
[Graph Appears Here]
Gross Profit Margin 40.1% 40.0% 38.9% 39.8% 43.1%
[Graph Appears Here]
SG&A 23.5% 34.3% 34.0% 36.2% 36.7%
[Graph Appears Here]
Operating Income 15.6% 4.8% 3.7% 2.3% 5.1%
[Graph Appears Here]
Interest Income (Expense) 1.9% 1.7% 2.0% 2.3% 1.6%
[Graph Appears Here]
Pre-tax Income (Loss) 17.5% 11.4% 6.0% 4.6% 6.8%
[Graph Appears Here]
Normalized Net Income (Loss) 13.7% 7.1% 3.7% 2.8% 4.2%
[Graph Appears Here]
Normalized EBIT 15.6% 9.7% 4.0% 2.3% 5.2%
[Graph Appears Here]
Normalized EBITDA 16.6% 10.7% 5.2% 3.6% 6.5%
[Graph Appears Here]
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
[Graph Appears Here]
Net Working Capital
$ 6,253 $ 5,666 $ 6,921 $ 8,285 $ 9,166
[Graph Appears Here]
Quick Ratio
3.0 2.2 4.6 4.2 4.8
[Graph Appears Here]
Current Ratio
4.1 3.0 6.5 5.2 6.4
[Graph Appears Here]
Total Liabilities to Net Worth
18.9% 25.9% 13.3% 15.7% 14.8%
[Graph Appears Here]
Total Interest Bearing Debt to Net Worth
4.2% 3.2% 2.3% 3.8% 3.4%
[Graph Appears Here]
Total Interest Bearing Debt to Total Capitalization
4.0% 3.1% 2.2% 3.7% 3.3%
[Graph Appears Here]
Interest Expense to Interest Bearing Debt
na na na na na
[Graph Appears Here]
Total Interest Bearing Debt to EBITDA
0.2 0.2 0.3 0.9 0.4
[Graph Appears Here]
EBITDA to Interest Expense
na na na na na
- --------------------------------------------------------------------------------
Sources of information: Company financial statements and management
Page 26
3
BCT International, Inc. CONFIDENTIAL
- --------------------------------------------------------------------------------
COMPANY FINANCIAL PERFORMANCE
Selected Normalized Efficency Graphs
FY 2000 FY 2001 FY 2002 FY 2003E
--------------------------------------------------------
Days Sales Outstanding
[Graph Appears Here]
61.9 65.9 67.0 58.2
Days Inventory Outstanding
[Graph Appears Here]
70.7 74.1 73.0 78.1
Days Payable Outstanding
[Graph Appears Here]
14.8 15.0 13.5 9.0
Normalized EBIT to Average Assets
[Graph Appears Here]
11.4% 4.5% 2.4% 5.6%
Normalized EBIT to Average Net Worth
[Graph Appears Here]
14.0% 5.4% 2.8% 6.4%
Normalized EBITDA to Average Assets
[Graph Appears Here]
12.6% 5.9% 3.8% 7.0%
Normalized EBITDA to Average Net Worth
[Graph Appears Here]
15.4% 7.0% 4.3% 8.0%
Net Income to Average Assets
[Graph Appears Here]
8.4% 4.1% 3.0% 4.5%
Net Income to Average Net Worth
[Graph Appears Here]
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 23, 2002
through May 23, 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 5,279
and 200 respectively. It was further noted that there was no
volume on 115 trading days or approximately 45.5% of the
available trading days.
. During the twelve months ended May 23, 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 $1.00 on May 23, 2003.
. Capitalink noted that during the twelve months ended May 19, 2003, the
Company's common stock increased 17.6%, while the Comparable Companies
index fell slightly by 1.2% and the Russell 3000 Index declined 14.7%.
Page 29
BCT International, Inc. CONFIDENTIAL
- --------------------------------------------------------------------------------
COMPANY MARKET PERFORMANCE
BCTI Closing Price & Trading Volume History
May 23, 2002 - May 23, 2003
[LINE CHART]
BCTI Closing Price & Volume History
------------------------------
[Graph Appears Here]
Date Volume BCTI Close
------------------------------------
23-May-03 0 1.00
22-May-03 7600 1.00
21-May-03 0 0.93
20-May-03 300 0.93
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
09-May-03 0 0.95
08-May-03 0 0.95
07-May-03 2,500 0.95
06-May-03 6,000 1.04
05-May-03 5,500 1.01
02-May-03 2,000 1.01
01-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
09-Apr-03 100 0.91
08-Apr-03 0 0.91
07-Apr-03 9,500 0.91
04-Apr-03 0 0.95
03-Apr-03 7,500 0.95
02-Apr-03 0 0.92
01-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
07-Mar-03 0 0.93
06-Mar-03 0 0.93
05-Mar-03 2,000 0.93
04-Mar-03 3,600 0.92
03-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
07-Feb-03 0 0.98
06-Feb-03 0 0.98
05-Feb-03 0 0.98
04-Feb-03 5000 0.98
03-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
09-Jan-03 1,000 0.81
08-Jan-03 300 0.81
07-Jan-03 0 0.81
06-Jan-03 0 0.81
03-Jan-03 0 0.81
02-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
09-Dec-02 200 0.78
06-Dec-02 6,700 0.78
05-Dec-02 0 0.76
04-Dec-02 16,000 0.76
03-Dec-02 0 0.83
02-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
08-Nov-02 7,900 0.75
07-Nov-02 13,000 0.76
06-Nov-02 1,700 0.72
05-Nov-02 0 0.72
04-Nov-02 0 0.72
01-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
09-Oct-02 5,000 0.71
08-Oct-02 6,500 0.72
07-Oct-02 7,200 0.72
04-Oct-02 100 0.71
03-Oct-02 0 0.71
02-Oct-02 100 0.71
01-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
09-Sep-02 10,000 0.82
06-Sep-02 0 0.81
05-Sep-02 0 0.81
04-Sep-02 2,500 0.81
03-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
09-Aug-02 0 0.75
08-Aug-02 34,300 0.75
07-Aug-02 4,500 0.81
06-Aug-02 0 0.81
05-Aug-02 175,200 0.81
02-Aug-02 200 0.81
01-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
09-Jul-02 0 0.77
08-Jul-02 2,500 0.77
05-Jul-02 0 0.79
03-Jul-02 64,600 0.79
02-Jul-02 11,000 0.79
01-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
07-Jun-02 0 0.83
06-Jun-02 2,000 0.83
05-Jun-02 1,000 0.83
04-Jun-02 9,500 0.83
03-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
Start End High Average Median Low Avg.Volume Median Volume
- ------------------- ------------------- ------------------ -------- -------- ------------------- ---------- -------------
23-May-02 $ 0.8500 23-May-03 $ 1.0000 1-May-03 $ 1.0500 $ 0.8407 $ 0.8200 14-Oct-02 $ 0.6700 5.279 200
- --------------------------------------------------------------------------------
Sources of information: Commodity Systems, Inc.
Page 30
BCT International, Inc. CONFIDENTIAL
- -------------------------------------------------------------------------------
COMPANY MARKET PERFORMANCE
BCTI vs Comparable Company Index vs Russel 3000 Index
-------------------------------------------
[Graph Appears Here]
-------------------------------------------
Company Comparable Russell
Date Index Company 3000 Index
------------------------------------------------------------
23-May-03 17.6 98.8 85.3
22-May-03 17.6 97.8 85.1
21-May-03 09.4 96.8 84.3
20-May-03 09.4 96.1 83.9
19-May-03 11.8 96.3 84.0
16-May-03 17.6 97.5 86.0
15-May-03 17.6 96.9 86.3
14-May-03 17.6 97.1 85.7
13-May-03 17.6 96.2 85.9
12-May-03 11.8 97.5 86.1
09-May-03 11.8 95.3 85.0
08-May-03 11.8 93.5 83.9
07-May-03 11.8 94.7 84.7
06-May-03 22.4 95.5 85.1
05-May-03 18.8 93.7 84.4
02-May-03 18.8 93.4 84.6
01-May-03 23.5 92.9 83.3
30-Apr-03 15.3 93.6 83.3
29-Apr-03 15.3 90.7 83.3
28-Apr-03 15.3 91.7 83.0
25-Apr-03 16.5 89.3 81.6
24-Apr-03 16.5 89.0 82.7
23-Apr-03 11.8 89.0 83.4
22-Apr-03 07.1 90.1 82.7
21-Apr-03 07.1 88.6 81.0
17-Apr-03 07.1 88.0 81.1
16-Apr-03 07.1 88.0 79.9
15-Apr-03 07.1 87.6 80.8
14-Apr-03 07.1 86.1 80.3
11-Apr-03 07.1 85.7 78.8
10-Apr-03 07.1 85.8 79.0
09-Apr-03 07.1 86.2 78.6
08-Apr-03 07.1 87.5 79.6
07-Apr-03 07.1 86.3 79.9
04-Apr-03 11.8 85.8 79.7
03-Apr-03 11.8 87.2 79.6
02-Apr-03 08.2 87.1 80.0
01-Apr-03 08.2 86.7 78.0
31-Mar-03 08.2 86.8 77.1
28-Mar-03 08.2 88.1 78.4
27-Mar-03 08.2 88.3 78.8
26-Mar-03 08.2 89.4 78.9
25-Mar-03 08.2 90.0 79.4
24-Mar-03 08.2 88.5 78.4
21-Mar-03 08.2 90.4 81.2
20-Mar-03 08.2 89.1 79.4
19-Mar-03 08.2 88.5 79.2
18-Mar-03 08.2 88.2 78.6
17-Mar-03 08.2 90.4 78.2
14-Mar-03 08.2 91.0 75.6
13-Mar-03 08.2 94.6 75.5
12-Mar-03 08.2 92.0 73.1
11-Mar-03 08.2 92.8 72.9
10-Mar-03 08.2 92.7 73.5
07-Mar-03 09.4 94.2 75.3
06-Mar-03 09.4 94.0 74.8
05-Mar-03 09.4 93.9 75.4
04-Mar-03 08.2 94.1 74.8
03-Mar-03 08.2 93.1 75.9
28-Feb-03 08.2 93.1 76.4
27-Feb-03 12.9 92.2 76.1
26-Feb-03 07.1 91.7 75.2
25-Feb-03 07.1 92.9 76.2
24-Feb-03 07.1 92.7 75.6
21-Feb-03 07.1 93.1 77.0
20-Feb-03 89.4 92.8 76.0
19-Feb-03 07.1 93.9 76.7
18-Feb-03 07.1 94.0 77.2
14-Feb-03 14.1 94.9 75.7
13-Feb-03 12.9 95.1 74.3
12-Feb-03 14.1 92.7 74.4
11-Feb-03 14.1 93.9 75.4
10-Feb-03 16.5 95.1 76.0
07-Feb-03 15.3 94.3 75.5
06-Feb-03 15.3 95.6 76.3
05-Feb-03 15.3 95.4 76.8
04-Feb-03 15.3 96.7 77.2
03-Feb-03 12.9 98.2 78.2
31-Jan-03 12.9 98.3 77.9
30-Jan-03 12.9 96.8 76.8
29-Jan-03 12.9 96.2 78.5
28-Jan-03 12.9 95.3 78.0
27-Jan-03 12.9 92.8 77.1
24-Jan-03 12.9 93.5 78.3
23-Jan-03 18.8 94.0 80.6
22-Jan-03 21.2 89.5 79.8
21-Jan-03 18.8 88.9 80.6
17-Jan-03 23.5 91.0 81.8
16-Jan-03 20.0 83.9 83.0
15-Jan-03 05.9 83.6 83.3
14-Jan-03 05.9 83.6 84.4
13-Jan-03 95.3 83.5 84.0
10-Jan-03 95.3 83.7 84.1
09-Jan-03 95.3 84.1 84.0
08-Jan-03 95.3 81.9 82.5
07-Jan-03 95.3 81.8 83.7
06-Jan-03 95.3 82.3 84.3
03-Jan-03 95.3 79.4 82.4
02-Jan-03 95.3 80.5 82.5
31-Dec-02 95.3 78.7 79.9
30-Dec-02 94.1 79.2 79.8
27-Dec-02 91.8 79.0 79.6
26-Dec-02 91.8 79.2 80.8
24-Dec-02 91.8 78.1 81.0
23-Dec-02 91.8 78.0 81.5
20-Dec-02 91.8 77.8 81.3
19-Dec-02 00.0 76.8 80.2
18-Dec-02 00.0 75.5 80.8
17-Dec-02 91.8 76.7 81.9
16-Dec-02 91.8 76.8 82.6
13-Dec-02 91.8 75.4 80.8
12-Dec-02 91.8 75.9 81.9
11-Dec-02 91.8 75.3 82.1
10-Dec-02 91.8 75.4 82.0
09-Dec-02 91.8 72.9 80.9
06-Dec-02 91.8 76.9 82.7
05-Dec-02 89.4 75.5 82.2
04-Dec-02 89.4 76.0 83.1
03-Dec-02 97.6 76.6 83.5
02-Dec-02 97.6 77.1 84.8
29-Nov-02 89.5 78.6 84.9
27-Nov-02 89.5 78.1 85.1
26-Nov-02 89.4 77.1 82.8
25-Nov-02 88.2 79.6 84.6
22-Nov-02 105.9 79.4 84.3
21-Nov-02 88.2 80.5 84.5
20-Nov-02 88.2 79.9 82.7
19-Nov-02 88.2 78.2 81.1
18-Nov-02 88.2 79.0 81.5
15-Nov-02 88.2 80.7 82.3
14-Nov-02 88.2 79.5 81.8
13-Nov-02 88.2 78.2 79.8
12-Nov-02 88.2 77.3 79.9
11-Nov-02 88.2 76.6 79.2
08-Nov-02 88.2 78.9 80.9
07-Nov-02 89.4 78.7 81.7
06-Nov-02 84.7 80.4 83.6
05-Nov-02 84.7 79.7 82.8
04-Nov-02 84.7 79.9 82.2
01-Nov-02 84.7 80.5 81.6
31-Oct-02 88.2 77.1 80.2
30-Oct-02 80.6 76.8 80.5
29-Oct-02 80.0 75.9 79.7
28-Oct-02 80.0 75.1 80.4
25-Oct-02 80.0 74.9 81.1
24-Oct-02 87.1 74.0 79.7
23-Oct-02 87.1 76.5 80.9
22-Oct-02 80.0 74.9 80.3
21-Oct-02 80.0 74.8 81.2
18-Oct-02 80.0 71.6 79.9
17-Oct-02 80.0 72.0 79.5
16-Oct-02 80.0 69.5 77.6
15-Oct-02 80.0 70.9 79.5
14-Oct-02 78.8 67.6 76.0
11-Oct-02 78.8 67.8 75.4
10-Oct-02 83.5 66.1 72.7
09-Oct-02 83.5 65.3 70.2
08-Oct-02 84.7 67.0 72.3
07-Oct-02 84.7 68.8 71.2
04-Oct-02 83.5 71.5 72.6
03-Oct-02 83.5 72.8 74.4
02-Oct-02 83.5 74.6 75.2
01-Oct-02 82.4 75.3 77.1
30-Sep-02 82.4 71.6 74.4
27-Sep-02 83.5 72.2 75.3
26-Sep-02 83.5 74.4 77.7
25-Sep-02 83.5 73.3 76.4
24-Sep-02 82.4 71.7 74.5
23-Sep-02 82.4 74.3 75.8
20-Sep-02 85.9 76.1 76.8
19-Sep-02 84.7 74.8 76.7
18-Sep-02 91.8 76.0 79.0
17-Sep-02 91.8 76.3 79.4
16-Sep-02 90.0 77.6 81.0
13-Sep-02 89.4 77.5 81.0
12-Sep-02 89.4 78.5 80.7
11-Sep-02 89.4 80.2 82.7
10-Sep-02 96.5 79.3 82.7
09-Sep-02 96.5 79.9 82.2
06-Sep-02 95.3 80.8 81.4
05-Sep-02 95.3 78.0 80.0
04-Sep-02 95.3 81.1 81.3
03-Sep-02 97.6 78.0 79.9
30-Aug-02 95.3 80.9 83.2
29-Aug-02 94.1 79.3 83.4
28-Aug-02 94.1 80.7 83.3
27-Aug-02 94.1 82.7 84.8
26-Aug-02 94.1 82.8 86.1
23-Aug-02 94.1 81.9 85.4
22-Aug-02 96.5 81.0 87.4
21-Aug-02 96.5 79.0 86.3
20-Aug-02 100.0 77.7 85.1
19-Aug-02 109.4 78.2 86.2
16-Aug-02 100.0 76.7 84.4
15-Aug-02 100.0 76.2 83.4
14-Aug-02 100.0 76.3 83.4
13-Aug-02 100.9 75.0 80.4
12-Aug-02 94.1 74.4 82.2
09-Aug-02 88.2 75.8 82.6
08-Aug-02 88.2 74.4 82.3
07-Aug-02 95.3 73.3 79.9
06-Aug-02 95.3 74.1 78.4
05-Aug-02 95.3 70.5 76.1
02-Aug-02 95.3 71.5 78.8
01-Aug-02 95.3 74.0 80.7
31-Jul-02 95.3 73.5 83.0
30-Jul-02 95.3 73.5 82.4
29-Jul-02 94.1 74.2 82.0
26-Jul-02 95.3 69.3 77.8
25-Jul-02 92.9 67.7 76.6
24-Jul-02 91.8 68.7 77.0
23-Jul-02 91.8 66.2 72.9
22-Jul-02 88.2 69.7 75.0
19-Jul-02 94.1 71.5 77.5
18-Jul-02 94.1 73.4 80.3
17-Jul-02 91.8 75.2 82.6
16-Jul-02 91.8 75.2 82.1
15-Jul-02 96.5 75.1 83.3
12-Jul-02 96.5 78.9 83.6
11-Jul-02 90.6 79.0 84.1
10-Jul-02 90.6 81.3 83.6
09-Jul-02 90.6 81.9 86.3
08-Jul-02 90.6 83.6 88.4
05-Jul-02 92.9 82.9 89.6
03-Jul-02 92.9 81.0 86.5
02-Jul-02 92.9 81.0 86.1
01-Jul-02 98.8 85.3 88.1
28-Jun-02 98.8 87.5 90.2
27-Jun-02 98.8 87.1 90.1
26-Jun-02 98.8 87.6 88.6
25-Jun-02 98.8 86.6 88.9
24-Jun-02 98.8 86.8 90.4
21-Jun-02 98.8 85.5 90.2
20-Jun-02 98.8 86.6 91.6
19-Jun-02 96.5 84.2 92.9
18-Jun-02 96.5 85.0 94.5
17-Jun-02 96.5 85.0 94.4
14-Jun-02 96.5 83.2 91.8
13-Jun-02 96.5 84.1 91.9
12-Jun-02 96.5 87.4 92.9
11-Jun-02 97.6 84.8 92.4
10-Jun-02 97.6 87.5 94.1
07-Jun-02 97.6 89.8 93.9
06-Jun-02 97.6 89.5 93.8
05-Jun-02 97.6 95.0 95.7
04-Jun-02 97.6 96.4 94.9
03-Jun-02 100.0 97.0 95.0
31-May-02 96.5 97.5 97.4
30-May-02 96.5 97.4 97.2
29-May-02 96.5 97.0 97.4
28-May-02 100.0 98.1 98.1
24-May-02 100.0 98.8 98.8
23-May-02 100.0 100.0 100.0
% Change BCTI Comparables Russell 3000
First Half of Period 5.9% -20.6% -15.7%
Second Half of Period 11.1% 24.4% 1.2%
Full Period 17.6% -1.2% -14.7%
- --------------------------------------------------------------------------------
(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
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COMPANY MARKET PERFORMANCE
BCTI Closing Price Ranges as Percentage of Total Trading Days
May 23, 2002 - May 23, 2003
[BAR GRAPH]
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 69 28 41
Percentage 0.8% 11.5% 13.0% 27.3% 11.1% 16.2%
Price Range $0.926 - $0.975 $0.976 - $1.025 $1.026 +
- ---------------------------------------------------------
Days in Range 26 21 4
Percentage 10.3% 8.3% 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 23, 2002 - May 23, 2003
[BAR GRAPH]
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 $0.926 - $0.975
- ----------------------------------------------------------------------------------------------------------------------------------
Volume 16,700 161,200 168,200 444,100 75,800 96,500 59,800
Percentage 1.3% 12.1% 12.6% 33.3% 5.7% 7.2% 4.5%
Price Range $0.976 - $1.025 $1.026 +
- --------------------------------------
Volume 121,400 191,800
Percentage 9.1% 14.4%
- --------------------------------------------------------------------------------
Sources of information: Commodity Systems, Inc.
Page 33
BCT International, Inc. CONFIDENTIAL
- --------------------------------------------------------------------------------
COMPANY MARKET PERFORMANCE
BCTI Trading Volume Ranges as a Percentage of Total Volume
May 23, 2002 - May 23, 2003
[BAR GRAPH]
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 115 21 20 25 19 30 14 9
Percentage 45.5% 8.3% 7.9% 9.9% 7.5% 11.9% 5.5% 3.6%
- --------------------------------------------------------------------------------
Sources of information: Commodity Systems, Inc.
Page 34
BCT International, Inc. CONFIDENTIAL
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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
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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
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VALUATION ANALYSIS
Illustrative Indicated Reference Range Summary
----------------------------------------------
[Graph Appears Here]
Range
------------------
Discounted Cash Flow Analysis $1.88 -- $2.06
Comparable Company Analysis $1.58 -- $2.20
Minority Interest Acquisitions/ $1.36 -- $1.58
Premiums Paid Analysis
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)
Selected Multiple TIC/Enterprise Indicated Share
Methodology (1) Statistic Range Value Price
- ----------------------------------------------------- --------- ----------------- ---------------- ---------------
Discounted Cash Flow Analysis
Revenue Terminal Multiple $3,381 - $ 4,638 $1.88 - $ 2.10
EBITDA Terminal Multiple $3,972 - $ 4,808 $1.99 - $ 2.13
Perpetual Growth Terminal Value $2,809 - $ 3,645 $1.78 - $ 1.93
Indicated Reference Range $1.88 - $ 2.06
Comparable Company Analysis
Total Invested Capital as Multiple of:
LTM Revenue $18,381 0.32x - 0.59x $5,961 - $10,852 $0.90 - $ 1.76
LTM EBITDA $ 988 5.4x - 7.7x $5,309 - $ 7,628 $0.79 - $ 1.20
Enterprise Value as Multiple of:
LTM Revenue $18,381 0.32x - 0.58x $5,943 - $10,669 $2.38 - $ 3.21
LTM EBITDA $ 988 5.3x - 7.4x $5,220 - $ 7,295 $2.25 - $ 2.62
Indicated Reference Range $1.58 - $ 2.20
Minority Interest Acquisitions Premiums Paid Analysis
Prior One Day $ 1.00 33.3% - 54.8% $1.33 - $ 1.55
Prior Five Day $ 1.00 40.5% - 64.0% $1.40 - $ 1.64
Prior 30 Day $ 0.95 40.8% - 63.9% $1.34 - $ 1.56
Indicated Reference Range $1.36 - $ 1.58
Premiums Paid Analysis
Closing Price as of May 23, 2003 100.0%
Prior Day Closing Price 100.0%
Prior 5 Trading Day Average Closing Price 107.9%
Prior 10 Trading Day Average Closing Price 104.9%
Prior 20 Trading Day Average Closing Price 103.5%
Prior 30 Trading Day Average Closing Price 107.2%
Prior 60 Trading Day Average Closing Price 112.0%
Prior 90 Trading Day Average Closing Price 111.0%
Prior Six Month Average Closing Price 120.7%
Prior Year Average Closing Price 137.9%
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
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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 $2.6 million market value of the
Notes (see Notes analysis).
Page 40
BCT International, Inc. CONFIDENTIAL
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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 $1.88 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 17.4% (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
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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 24.6% (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
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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 21.9% (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 $428,000.
Page 43
BCT International, Inc. CONFIDENTIAL
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VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
Discounted Cash Flow Analysis - Indicated Reference Range
($ in thousands, except per share)
Indicated Equity Indicated Share
Selected 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 $10,706 - $11,963 $1.88 - $2.10
====== ======
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 $11,297 - $12,133 $1.99 - $2.13
====== ======
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 $10,134 - $10,970 $1.78 - $1.93
====== ======
Indicated Reference Range $1.88 - $2.06
- --------------------------------------------------------------------------------
(1) Adjusted for ($7,325) net debt, which includes assumed cash from in the
money options/warrants and the net present value of notes receivable.
(2) Based upon and assumes 5,686 common stock share equivalents outstanding.
Page 44
BCT International, Inc. CONFIDENTIAL
- --------------------------------------------------------------------------------
VALUATION ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS
Financial Projections - Base Case Projections
($ 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 17.4% 24.6% 21.9%
==== ==== ====
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) 2,587 2,587 2,587
------- ------- -------
7,848 7,848 7,848
------- ------- -------
Net Debt $(7,325) $(7,325) $(7,325)
======= ======= =======
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. 23-May-03 Value Total Capital
- ---- ------------ --------- ------ -------------
Debt $ 523 9.3%
Common Stock 5,121 $1.0000 5,121 90.7%
------ -----
$5,644 100.0%
====== =====
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 less than $2.00 $1.80 565 565 565
-- -- --
----- ----- -----
565 565 565
----- ----- -----
Total Common Stock Equivalents 5,686 5,686 5,686
===== ===== =====
- --------------------------------------------------------------------------------
(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 23, 2003, the
enterprise values for the Comparable Companies ranged from
approximately $43.7 million to approximately $2.5 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 $1.1 million 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 0.72
times and 8.7 times respectively, compared with 0.32 times and
6.0 times, respectively for the Company.
. Based on enterprise value, the mean LTM revenue and EBITDA
multiple was 0.70 times and 8.5 times respectively, compared with
0.06 times and 1.2 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 $1.58 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)
Selected Indicated Indicated Indicated
Statistic Multiple Range TIC/EV Value Equity Value (1) Share Price (2)
--------- -------------- ---------------- ----------------- ---------------
Total Invested Capital (TIC) Multiple
LTM Revenue $18,381 0.32x - 0.59x $5,961 - $10,852 $ 5,133 - $10,024 $0.90 - $1.76
LTM EBITDA $ 988 5.4x - 7.7x $5,309 - $ 7,628 $ 4,481 - $ 6,800 $0.79 - $1.20
Total Enterprise Value (EV) Multiple
LTM Revenue $18,381 0.32x - 0.58x $5,943 - $10,669 $13,524 - $18,250 $2.38 - $3.21
LTM EBITDA $ 988 5.3x - 7.4x $5,220 - $ 7,295 $12,801 - $14,876 $2.25 - $2.62
Indicated Reference Range $1.58 - $2.20
- --------------------------------------------------------------------------------
(1) Adjusted for $828 and ($7,581) debt and net debt, respectively for TIC and
EV. Net debt includes assumed cash from in the money options/warrants and
the net present value of notes receivable.
(2) Based upon and assumes 5,686 common stock share equivalents outstanding.
Page 55
BCT International, Inc. CONFIDENTIAL
- --------------------------------------------------------------------------------
VALUATION ANALYSIS
SELECTED COMPARABLE COMPANY ANALYSIS
Comparable Company Analysis - Valuation Multiples
($ in thousands, except per share data)
Total
% Below/Above Market Invested Enterprise
Stock Price 52-week Value Capital Value
Company 23-May-03 High-Low MV TIC (1) EV (2)
- ----------------------------- ----------- ------------- ---------- ---------- ----------
Consolidated Graphics, Inc. $18.210 27.7% - 26.9% $ 242,703 $ 419,037 $ 411,987
Mail-Well, Inc. 2.550 61.5% - 168.4% 123,275 900,526 900,182
Impreso, Inc. 2.180 37.0% - 26.7% 11,508 43,711 43,579
Moore Corporation (4) 12.730 11.9% - 62.2% 1,442,602 2,538,715 2,418,734
Wallace Computer Services (4) 26.860 0.3% - 70.0% 1,134,674 1,343,581 1,284,804
---------------------------------------------
High $1,442,602 $2,538,715 $2,418,734
Mean 590,952 1,049,114 1,011,857
Median 242,703 900,526 900,182
Low 11,508 43,711 43,579
---------------------------------------------
BCT International $ 1.000 6.5% - 49.3% $ 5,121 $ 5,949 $ 1,144
BCT International - Merger
Consideration (5) $ 11,372 $ 12,200 $ 3,791
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. 15.2x 1.0x 1.7x 0.59x 5.4x 0.7x 0.58x 5.3x 0.7x 10.0%
Mail-Well, Inc. 1.9 2.3 na 0.53 6.8 0.8 0.53 6.8 0.8 5.0%
Impreso, Inc. 18.2 0.7 0.7 0.32 10.3 0.7 0.32 10.3 0.7 na
Moore Corporation (4) 15.9 3.4 4.6 1.26 13.3 1.1 1.20 12.7 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 18.2x 3.4x 4.6x 1.26x 13.3x 1.4x 1.20x 12.7x 1.4x 10.0%
Mean 13.0 2.0 2.8 0.72 8.7 1.0 0.70 8.5 0.9 7.5%
Median 15.2 2.3 2.9 0.59 7.7 0.8 0.58 7.4 0.8 7.5%
Low 1.9 0.7 0.7 0.32 5.4 0.7 0.32 5.3 0.7 5.0%
------------------------------------------------------------------------------------------------------
BCT International 11.1x 0.3x 0.3x 0.32x 6.0x 0.3x 0.06x 1.2x 0.1x 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 Turnover Turnover Outs. Ratio Capitalization to TIC EBITDA Growth
- --------------------------- -------- -------- ----- ------- -------------- ------ ------- ---------
Consolidated Graphics, Inc. 6.0x 16.55x 60.4 1.7 41.4% 41.6% 2.3x -5.8%
Mail-Well, Inc. 7.7 13.2 47.6 1.5 93.6% 87.4% 5.8x -7.5%
Impreso, Inc. 9.2 3.5 39.8 1.3 65.5% 74.3% 7.6x 27.9%
Moore Corporation 5.9 10.3 62.0 1.3 72.0% 43.9% 5.7x -5.4%
Wallace Computer Services 6.3 12.5 57.6 2.7 30.8% 15.5% 1.2x -8.5%
-------------------------------------------------------------------------------------
9.2x 16.5x 62.0 2.7 93.6% 87.4% 7.6x 27.9%
7.0 11.2 53.5 1.7 60.7% 52.6% 4.5 0.1%
6.3 12.5 57.6 1.5 65.5% 43.9% 5.7 -5.8%
5.9 3.5 39.8 1.3 30.8% 15.5% 1.2 -8.5%
-------------------------------------------------------------------------------------
BCT International 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)
----------------------- ------------------- -------------------
Latest Latest Latest
Company LTM 10-K LTM 10-K LTM 10-K
- --------------------------- ---------- ---------- -------- -------- -------- --------
Consolidated Graphics, Inc. $ 709,780 $ 643,948 $ 77,984 $ 84,256 $ 39,343 $ 42,944
Mail-Well, Inc. 1,712,542 1,728,705 133,127 133,309 78,546 77,856
Impreso, Inc. 134,781 123,065 4,234 4,730 2,972 3,468
Moore Corporation 2,019,683 2,038,039 190,747 175,393 104,981 88,647
Wallace Computer Services 1,505,704 1,545,629 174,014 176,292 111,510 109,885
----------------------------------------------------------------------------
High $2,019,683 $2,038,039 $190,747 $176,292 $111,510 $109,885
Mean 1,216,498 1,215,877 116,021 114,796 67,470 64,560
Median 1,505,704 1,545,629 133,127 133,309 78,546 77,856
Low 134,781 123,065 4,234 4,730 2,972 3,468
----------------------------------------------------------------------------
BCT International $ 18,381 $ 18,007 $ 988 $ 1,039 $ 755 $ 813
Net Income (1) EPS (1)
----------------- -------------- Latest Latest
Latest Latest Available Available
Company LTM 10-K LTM 10-K 10-Q 10-K
- --------------------------- ------- ------- ----- ------ --------- ---------
Consolidated Graphics, Inc. $15,887 $16,680 $1.20 $1.27 31-Dec-02 31-Mar-02
Mail-Well, Inc. 62,777 70,169 1.32 1.47 31-Mar-03 31-Dec-02
Impreso, Inc. 655 1,063 0.12 0.20 28-Feb-03 31-Aug-02
Moore Corporation 89,073 72,408 0.80 0.65 31-Mar-03 31-Dec-02
Wallace Computer Services 80,056 89,588 1.92 2.17 31-Jan-03 31-Jul-02
------------------------------------------
High $89,073 $89,588 $1.92 $2.17
Mean 49,690 49,982 1.07 1.15
Median 62,777 70,169 1.20 1.27
Low 655 1,063 0.12 0.20
------------------------------------------
BCT International $ 460 $ 492 $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
-----------------------------------------------------
Latest
Total 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 Address 5858 Officers
Symbol CGX Westheimer Joe Davis,
Latest Fiscal YE 31-Mar-02 City, State Zip Chmn & CEO
Latest Rprt Per 31-Dec-02 Houston, TX 77057
Telephone
713-787-0977
Website
consolidatedgraphics.com
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 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 42.1% 55.8% 63.3%
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 23-May-03
- ---------- ---------
Exchange NYSE
Stock Price $ 18.21
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 $242,703
Total Invested Capital (TIC) $419,037
Enterprise Value (EV) $411,987
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 6.17x 10.65x 10.47x
EBITDA 3.11x 5.37x 5.28x
Normalized Net Income 15.28x 26.38x 25.93x
Basic Normalized EPS 15.18x 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 18.58x na na
Mar-05 Mean EPS na na na
Most Recent Filing
Assets 0.43x 0.74x 0.73x
Common Equity 0.97x na na
Tangible Common Equity 1.74x 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. Address 8310 S. Valley Highway #400 Officers
Symbol MWL City, State Zip Englewood, Paul Reilly,
Latest Fiscal YE 31-Dec-02 CO 80112 Pres & CEO
Telephone (303) 790-8023
Latest Rprt Per 31-Mar-03 Website imagex.com
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 -- -- (111,748) (111,748) --
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 $ 1,107,36 $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 86.3% 84.8% 95.0%
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 23-May-03
- ---------- ---------
Exchange NYSE
Stock Price $ 2.55
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 $123,275
Total Invested Capital (TIC) $900,526
Enterprise Value (EV) $900,182
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 0.53x 0.53x
EBIT 1.57x 11.46x 11.46x
EBITDA 0.93x 6.76x 6.76x
Normalized Net Income 1.96x 14.34x 14.34x
Basic Normalized EPS 1.93x na na
Projected
Dec-03 Mean Revenue 0.07x 0.53x 0.53x
Dec-04 Mean Revenue 0.07x 0.52x 0.52x
Dec-03 Mean EPS 10.20x na na
Dec-04 Mean EPS 6.07x na na
Most Recent Filing
Assets 0.11x 0.81x 0.81x
Common Equity 2.31x 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. Address 652 Officers
Southwestern Blvd. Marshall Sorokwasz,
Symbol ZCOM City, State Zip Coppell, CEO
TX 75019
Latest Fiscal YE 31-Aug-02 Telephone 972-462-0100
Latest Rprt Per 28-Feb-03 Website tstimpreso.com
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 73.7% 67.7% 59.6%
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 23-May-03
Exchange NASDAQ
---------
Stock Price $ 2.18
52 Week High $ 3.46
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 $11,508
Total Invested Capital (TIC) $43,711
Enterprise Value (EV) $43,579
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 0.09x 0.32x 0.32x
EBIT 3.87x 14.71x 14.66x
EBITDA 2.72x 10.32x 10.29x
Normalized Net Income 17.57x 66.74x 66.54x
Basic Normalized EPS 18.17x 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 0.18x 0.68x 0.68x
Common Equity 0.68x na na
Tangible Common Equity 0.68x 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 Address 6100 Vipond Drive Officers
Corporation City, State Zip Alfred Eckert,
Symbol MCL Mississauga, ON L5T 2, III, Chair
Latest Fiscal YE 31-Dec-02 Canada
Latest Rprt Per 31-Mar-03 Telephone (905) 362-3100
Website http:
//www.moore.com/
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 $2,154,574
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 $ 1,439,75 $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 $ 1,439,75 $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 72.0% 33.9% 30.4%
Capitalization
Net Debt/Total 64.1% 9.8% 12.0%
Capitalization
Total Debt/TIC 43.2% 7.7% 5.5%
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 23-May-03
----------
Exchange NYSE
Stock Price $ 12.73
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 $1,442,602
Total Invested Capital (TIC) $2,538,715
Enterprise Value (EV) $2,418,734
Ownership
Insiders % Owned 2.00%
Institutional
% Owned 70.00%
Number of Institutions 226
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Valuation Ratios
- --------------------------------------------------------------------------------
Mutiple of
--------------------------
Market Cap TIC EV
--------------------------
Latest Twelve Months
Revenue 0.71x 1.26x 1.20x
EBIT 13.74x 24.18x 23.04x
EBITDA 7.56x 13.31x 12.68x
Normalized Net Income 16.20x 28.50x 27.15x
Basic Normalized EPS 15.91x na na
Projected
Dec-03 Mean Revenue 0.57x 1.00x 0.96x
Dec-04 Mean Revenue 0.51x 0.89x 0.85x
Dec-03 Mean EPS 14.80x na na
Dec-04 Mean EPS 11.47x na na
Most Recent Filing
Assets 0.61x 1.08x 1.03x
Common Equity 3.39x na na
Tangible Common Equity 4.63x 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_ Address 2275 Officers
Cabot Drive M. David Jones,
Symbol WCS City, State Zip Lisle, CEO
IL 60532
Latest Fiscal YE 31-Jul-02 Telephone
(630) 588-5000
Latest Rprt Per 31-Jan-03 Website
http://www.wallace.com/
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 23-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
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BCT International Overview
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Name BCT Address 3000 NE Officers
International 30th Place Bill Wilkerson,
Symbol BCTI City, State Zip Ft. CEO
Lauderdale, FL 33306
Latest Fiscal YE 28-Feb-02 Telephone 954-563-1224
Latest Rprt Per 30-Nov-02 Website
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.
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Income and Cashflow Statement Data
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($ 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
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Normalized Reconciliation
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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
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Profitability & Cost Ratios (as % of Revenue)
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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%
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Balance Sheet Data
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($ 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
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Effectiveness and Efficiency
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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
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Financial Strength
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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 13.9% 10.8% 5.4%
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
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Market Information
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As of Date 23-May-03
Exchange OTC BB
Stock Price $ 1.00
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 $5,121
Total Invested Capital (TIC) $5,949
Enterprise Value (EV) $1,144
Ownership
Insiders % Owned 52.00%
Institutional
% Owned 2.00%
Number of Institutions 4
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Valuation Ratios
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Multple of
--------------------------
Market Cap TIC EV
--------------------------
Latest Twelve Months
Revenue 0.28x 0.32x 0.06x
EBIT 6.78x 7.88x 1.52x
EBITDA 5.18x 6.02x 1.16x
Normalized Net Income 11.13x 12.93x 2.49x
Basic Normalized EPS 11.11x 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 0.28x 0.33x 0.06x
Common Equity 0.33x na na
Tangible Common Equity 0.34x na na
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Mean Consensus Estimates
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Year Ending # Ests Revenue EPS
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December-02 na -- $--
December-03 na -- $--
LT Growth na na na
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Period Growth Rates
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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%
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Notes
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Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover
Page 65
BCT International, Inc. CONFIDENTIAL
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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 23,
2003. Based on the selected multiple ranges, Capitalink calculated a
range of indicated share prices of $1.36 to $1.58.
. Capitalink noted that the offer price of the Proposed Transaction was
above this indicated valuation range.
Page 66
BCT International, Inc. CONFIDENTIAL
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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 $1.00 33.3% - 54.8% $1.33 - $1.55
Prior 5 Day $1.00 40.5% - 64.0% $1.40 - $1.64
Prior 30 Day $0.95 40.8% - 63.9% $1.34 - $1.56
Indicated Reference Range $1.36 - $1.58
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(1) Includes acquisitions by controlling shareholder (greater than 50%)of
minority interests from January 2001 with deal value less than $25 million.
Acquisitions at a discount (negative premiums) have been excluded.
Sources of information: Commodity Systems, Inc. and Mergerstat, Inc.
Page 67
BCT International, Inc. CONFIDENTIAL
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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 Inc Private Group Led by Management of
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 Corp Private Group Led By CBNY 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 Inc Private Group Led By Dwain 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 Warehouse Inc Private Group Led By Futerman 64.00% 36.00% 33.33% 33.33% 9.89%
9-Feb-01 Marketing Specialists Corp Private Group Led By Richmont 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%
----------------------------------
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(1) Includes acquisitions by controlling shareholder (greater than 50%)of
minority interests from January 2001 with deal value less than $25 million.
Acquisitions at a discount (negative premiums) have been excluded.
Sources of information: Mergerstat, Inc.
Page 68
BCT International, Inc. CONFIDENTIAL
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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 23, 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
23, 2003 was 100.0%.
. In addition, the daily premium or discount over the period May 23,
2002 to May 23, 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
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VALUATION ANALYSIS
PREMIUMS PAID ANALYSIS
Premiums Paid Analysis
Merger Consideration $2.0000
Price
per Share Premium
--------- -------
Closing Price as of May 23, 2003 $1.0000 100.0%
Sensitivity Analysis:
Prior Day Closing Price $1.0000 100.0%
Prior 5 Trading Day Average Closing Price $0.9620 107.9%
Prior 10 Trading Day Average Closing Price $0.9760 104.9%
Prior 20 Trading Day Average Closing Price $0.9830 103.5%
Prior 30 Trading Day Average Closing Price $0.9653 107.2%
Prior 60 Trading Day Average Closing Price $0.9435 112.0%
Prior 90 Trading Day Average Closing Price $0.9479 111.0%
Prior Six Month Average Closing Price $0.9060 120.7%
Prior Year Average Closing Price $0.8407 137.9%
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Sources of information: Draft Agreement and Commodity Systems, Inc.
Page 70
BCT International, Inc. CONFIDENTIAL
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VALUATION ANALYSIS
PREMIUMS PAID ANALYSIS
Daily
Premium/
Date (Discount)
----------------------
05/23/2003 100.0%
05/22/2003 100.0%
05/21/2003 115.1%
05/20/2003 115.1%
05/19/2003 110.5%
05/16/2003 100.0%
05/15/2003 100.0%
05/14/2003 100.0%
05/13/2003 100.0%
05/12/2003 110.5%
05/09/2003 110.5%
05/08/2003 110.5%
05/07/2003 110.5%
05/06/2003 92.3%
05/05/2003 98.0%
05/02/2003 98.0%
05/01/2003 90.5%
04/30/2003 104.1%
04/29/2003 104.1%
04/28/2003 104.1%
04/25/2003 102.0%
04/24/2003 102.0%
04/23/2003 110.5%
04/22/2003 119.8%
04/21/2003 119.8%
04/17/2003 119.8%
04/16/2003 119.8%
04/15/2003 119.8%
04/14/2003 119.8%
04/11/2003 119.8%
04/10/2003 119.8%
04/09/2003 119.8%
04/08/2003 119.8%
04/07/2003 119.8%
04/04/2003 110.5%
04/03/2003 110.5%
04/02/2003 117.4%
04/01/2003 117.4%
03/31/2003 117.4%
03/28/2003 117.4%
03/27/2003 117.4%
03/26/2003 117.4%
03/25/2003 117.4%
03/24/2003 117.4%
03/21/2003 117.4%
03/20/2003 117.4%
03/19/2003 117.4%
03/18/2003 117.4%
03/17/2003 117.4%
03/14/2003 117.4%
03/13/2003 117.4%
03/12/2003 117.4%
03/11/2003 117.4%
03/10/2003 117.4%
03/07/2003 115.1%
03/06/2003 115.1%
03/05/2003 115.1%
03/04/2003 117.4%
03/03/2003 117.4%
02/28/2003 117.4%
02/27/2003 108.3%
02/26/2003 119.8%
02/25/2003 119.8%
02/24/2003 119.8%
02/21/2003 119.8%
02/20/2003 163.2%
02/19/2003 119.8%
02/18/2003 119.8%
02/14/2003 106.2%
02/13/2003 108.3%
02/12/2003 106.2%
02/11/2003 106.2%
02/10/2003 102.0%
02/07/2003 104.1%
02/06/2003 104.1%
02/05/2003 104.1%
02/04/2003 104.1%
02/03/2003 108.3%
01/31/2003 108.3%
01/30/2003 108.3%
01/29/2003 108.3%
01/28/2003 108.3%
01/27/2003 108.3%
01/24/2003 108.3%
01/23/2003 98.0%
01/22/2003 94.2%
01/21/2003 98.0%
01/17/2003 90.5%
01/16/2003 96.1%
01/15/2003 122.2%
01/14/2003 122.2%
01/13/2003 146.9%
01/10/2003 146.9%
01/09/2003 146.9%
01/08/2003 146.9%
01/07/2003 146.9%
01/06/2003 146.9%
01/03/2003 146.9%
01/02/2003 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%
12/09/2002 156.4%
12/06/2002 156.4%
12/05/2002 163.2%
12/04/2002 163.2%
12/03/2002 141.0%
12/02/2002 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%
11/08/2002 166.7%
11/07/2002 163.2%
11/06/2002 177.8%
11/05/2002 177.8%
11/04/2002 177.8%
11/01/2002 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%
10/09/2002 181.7%
10/08/2002 177.8%
10/07/2002 177.8%
10/04/2002 181.7%
10/03/2002 181.7%
10/02/2002 181.7%
10/01/2002 185.7%
09/30/2002 185.7%
09/27/2002 181.7%
09/26/2002 181.7%
09/25/2002 181.7%
09/24/2002 185.7%
09/23/2002 185.7%
09/20/2002 174.0%
09/19/2002 177.8%
09/18/2002 156.4%
09/17/2002 156.4%
09/16/2002 161.4%
09/13/2002 163.2%
09/12/2002 163.2%
09/11/2002 163.2%
09/10/2002 143.9%
09/09/2002 143.9%
09/06/2002 146.9%
09/05/2002 146.9%
09/04/2002 146.9%
09/03/2002 141.0%
08/30/2002 146.9%
08/29/2002 150.0%
08/28/2002 150.0%
08/27/2002 150.0%
08/26/2002 150.0%
08/23/2002 150.0%
08/22/2002 143.9%
08/21/2002 143.9%
08/20/2002 135.3%
08/19/2002 115.1%
08/16/2002 135.3%
08/15/2002 135.3%
08/14/2002 135.3%
08/13/2002 133.1%
08/12/2002 150.0%
08/09/2002 166.7%
08/08/2002 166.7%
08/07/2002 146.9%
08/06/2002 146.9%
08/05/2002 146.9%
08/02/2002 146.9%
08/01/2002 146.9%
07/31/2002 146.9%
07/30/2002 146.9%
07/29/2002 150.0%
07/26/2002 146.9%
07/25/2002 153.2%
07/24/2002 156.4%
07/23/2002 156.4%
07/22/2002 166.7%
07/19/2002 150.0%
07/18/2002 150.0%
07/17/2002 156.4%
07/16/2002 156.4%
07/15/2002 143.9%
07/12/2002 143.9%
07/11/2002 159.7%
07/10/2002 159.7%
07/09/2002 159.7%
07/08/2002 159.7%
07/05/2002 153.2%
07/03/2002 153.2%
07/02/2002 153.2%
07/01/2002 138.1%
06/28/2002 138.1%
06/27/2002 138.1%
06/26/2002 138.1%
06/25/2002 138.1%
06/24/2002 138.1%
06/21/2002 138.1%
06/20/2002 138.1%
06/19/2002 143.9%
06/18/2002 143.9%
06/17/2002 143.9%
06/14/2002 143.9%
06/13/2002 143.9%
06/12/2002 143.9%
06/11/2002 141.0%
06/10/2002 141.0%
06/07/2002 141.0%
06/06/2002 141.0%
06/05/2002 141.0%
06/04/2002 141.0%
06/03/2002 135.3%
05/31/2002 143.9%
05/30/2002 143.9%
05/29/2002 143.9%
05/28/2002 135.3%
05/24/2002 135.3%
05/23/2002 135.3%
- --------------------------------------------------------------------------------
Sources of information: Draft Agreement and Commodity Systems, Inc.
Page 71
BCT International, Inc. CONFIDENTIAL
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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 $2.02 per
share.
. Capitalink noted that the offer price of the Proposed Transaction was
slightly below this indicated valuation range.
Page 72
BCT International, Inc. CONFIDENTIAL
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VALUATION ANALYSIS
ADJUSTED NET BOOK VALUE ANALYSIS
Adjusted Net Book Value Analysis
($ 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 (2,726) b 2,587
Inventory 2,668 (534) c 2,134
Deferred Income Taxes 1,325 (506) d 819
Prepaid & Other 513 -- 513
Net Property, Plant & Equipment 989 (495) e 495
Intangible Assets 180 (180) f --
Other 47 -- 47
------- ------- -------
Total Assets $17,849 $(5,083) $12,766
======= ======= =======
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 $(5,083) $10,459
======= ======= =======
Adjusted Net Book Value:
Indicated Net Book Value $10,459
Cash from assumed exercise of in the
money options 1,017
-------
Indicated Equity Value 11,476
=======
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
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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 17.4% (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 $2.6
million.
. It is important to note that Capitalink derived payment probabilities
of the Notes in conjunction with and based on discussions with
management. Capitalink does not guarantee or assure, in any respect,
that any of the Notes will be collected.
Page 74
BCT International, Inc. CONFIDENTIAL
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VALUATION ANALYSIS
NOTES RECEIVABLE NET PRESENT VALUE ANALYSIS
Notes Receivable Net Present Value Analysis
($ 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 $2,587
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 17.4%.
Sources of information: Company financial statements and management.
Page 75