EX-99.(C)(2) 3 a2056206zex-99_c2.htm EXHIBIT 99.(C)(2) Prepared by MERRILL CORPORATION
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CONFIDENTIAL


PRELIMINARY

PROJECT COLORS

Preliminary Discussion Materials

May 18, 2001

SG Cowen

INTRODUCTION

    The following materials, including the information on specific companies and transactions, are preliminary and for use solely by the Special Committee of the Board of Directors of Colors for discussion purposes only. These materials are not meant to suggest or assign any value to any company. These materials are confidential and shall not be reproduced or provided to any third party except with the express written consent of SG Cowen Securities Corporation.

TRADING MULTIPLES OF SELECTED COMPANIES
Trading Multiples of Selected Companies
(US$ in millions, except per share data)

 
    
    
    
    
   Enterprise Value as a
Multiple of (b)(c)(d)
    
    
    
  
 
    
    
    
    
   Revenues
   Price/Earnings(c)(d)
    
  
Company (FYE)
   Stock Price(a)
   % of 52 Week High(a)
   Market Value
   Enterprise Value(b)
   Estimated 5 yr EPS Growth(e)
  
  LTM
   CY01E
   CY02P
   LTM
   CY01E
   CY02P
  
ASPs                                                    
Corio, Inc. (12/31)   $ 1.08   5.0 % $ 56.9   $ (50.6 ) (0.98 )x (0.78 )x (0.44 )x NM   NM   NM   20.0 %
Interliant, Inc. (12/31)     1.30   4.5     87.1     216.6   1.27   1.06   0.67   NM   NM   NM   32.5  
NaviSite, Inc. (7/31)     1.96   3.3     116.7     48.0   0.54   0.11   NM   NM   NM   NM   122.9  
eCRM                                                    
Chordiant Software Inc. (12/31)     3.05   16.0     161.0     82.8   1.98   1.15   0.80   NM   NM   NM   45.0  
FirePond, Inc. ( 10/31)     1.93   4.5     69.4     (31.5 ) (0.49 ) (0.41 ) NM   NM   NM   NM   62.5  
Onyx Software (12/31)     4.96   15.4     213.4     182.6   1.44   1.32   0.93   NM   NM   62.0 x 41.0  
B2B                                                    
Onvia.com, Inc. (12/31)   $ 0.89   7.5 % $ 80.9   $ (30.7 ) (0.22 )x (1.36 )x (0.87 )x NM   NM   NM   100.0 %
PurchasePro.com (12/31)     2.53   5.3     173.8     150.7   1.67   0.92   0.63   NM   84.3 x 9.0 x NM  
VerticalNet, Inc. (12/31)     2.74   4.3     268.6     202.5   1.49   0.90   0.54   NM   NM   NM   35.0  
Transportation                                                    
Autobytel.com (12/31)   $ 1.37   16.0 % $ 27.9   ($ 39.6 ) (0.58 )x (0.51 )x NM   NM   NM   NM   20.0 %
CCC Information Services Group (12/31)     9.75   70.9     215.1     257.4   1.23   1.22   NM   NM   NM   NM   NM  
PartsBase.com (12/31)     1.03   11.8     14.8     (12.3 ) (2.39 ) (1.76 ) (0.95 )x NM   NM   NM   NM  
The Reynolds and Reynolds Co. (9/30)     22.15   82.2     1,667.1     1,856.7   1.92   1.78   NM   17.7 x 16.2 x NM   NM  
High         82.2 %             1.98 x 1.78 x 0.93 x 17.7 x 84.3 x 62.0 x 122.9 %
Median         7.5               1.23 x 0.90 x 0.59 x 17.7 x 50.3 x 35.5 x 41.0 %
Mean         19.0               0.53   0.28   0.16   17.7   50.3   35.5   53.2  
Low         3.3               (2.39 ) (1.76 ) (0.95 ) 17.7   16.2   9.0   20.0  
(a)
Stock price data as of May 15, 2001.

(b)
Enterprise Value defined as Market Value plus Total Debt less Cash.

(c)
LTM as of last reported quarter.

(d)
Estimates are calendar year end per First Call where available, otherwise IBES.

(e)
Five-Year Growth Rate Estimates are from First Call where available; otherwise IBES, Zacks or S&P Earnings Report.

OPERATING STATISTICS OF SELECTED COMPANIES
Operating Statistics of Selected Companies
(US$ in millions, except per share data)

 
    
   Operating Results(a)(b)(c)
    
    
    
    
    
    
    
    
    
    
  
 
    
   Revenues
    
   Margins
   EPS(a)(b)(c)
    
    
    
    
    
  
Company (FYE)
   Revenue Growth Rate CY/CY+1
    
    
    
    
   Book Value(d)
    
  
  LTM
   CY01E
   CY02P
   LTM EBIT
   Gross
   EBIT
   LTM
   CY01E
   CY02P
   Cash(d)
   STD(d)
   LTD(d)
   Debt/Cap.
  
ASPs                                                                                    
Corio, Inc. (12/31)   76.6 % $ 51.9   $ 64.6   $ 114.0   ($ 82.5 ) (23.1) % (159.1) % ($ 1.65 ) ($ 1.68 ) ($ 1.15 ) $ 117.1   $ 0.0   $ 9.6   $ 137.8   6.5 %
Interliant, Inc. (12/31)   58.8     170.8     204.0     324.0     (98.4 ) 27.3   (57.6 )   (2.12 )   (3.26 )   (2.63 )   68.1     14.1     183.6     29.3   87.1  
NaviSite, Inc. (7/31)   NM     88.5     454.8     NA     (90.2 ) (27.7 ) (102.0 )   (1.87 )   (1.64 )   NA     68.7     0.0     0.0     57.2   0.0  
eCRM                                                                                    
Chordiant Software, Inc. (13/31)   43.5     41.7     72.3     103.7     (26.6 ) 51.1   (63.7 )   (0.59 )   (0.51 )   (0.06 )   78.7     0.5     0.0     94.8   0.5  
FirePond, Inc. (10/31)   NM     64.5     77.3     NA     (18.4 ) 56.6   (28.6 )   (0.36 )   (0.73 )   NA     101.2     0.3     0.0     104.4   0.3  
Onyx Software (12/31)   41.9     126.7     138.6     196.7     (11.1 ) 74.3   (8.8 )   (0.29 )   (0.56 )   0.08     36.4     1.2     4.3     83.4   6.2  
B2B                                                                                    
Onvia.com, Inc. (12/31)   57.1 % $ 137.9   $ 22.5   $ 35.3   ($ 102.8 ) (1.5) % (74.6) % ($ 1.03 ) ($ 0.53 ) ($ 0.26 ) $ 118.6   $ 4.8   $ 2.2   $ 163.2   4.1 %
PurchasePro.com (12/31)   45.8     90.2     163.1     237.7     (9.5 ) 93.0   (10.6 )   (0.08 )   0.03     0.28     54.9     24.7     7.2     263.7   10.8  
VerticalNet, Inc. (12/31)   67.8     136.3     224.1     376.0     (113.4 ) 36.1   (83.2 )   (1.29 )   (0.68 )   (0.01 )   107.3     2.1     39.1     647.5   6.0  
Transportation                                                                                    
Autobytel.com (12/31)   NM   $ 68.1   $ 78.0     NA   ($ 30.1 ) NM   (44.2) % ($ 1.17 ) ($ 0.28 )   NA   $ 76.2   $ 0.0   $ 8.8   $ 86.2   9.3 %
CCC Information Services Group (12/31)   NM     209.5     210.5     NA     (3.5 ) 64.5  % (1.7 )   (1.10 )   (0.34 )   NA     11.6     0.4     53.4     (5.5 ) NM  
PartsBase.com (12/31)   85.7 %   5.1     7.0   $ 13.0     (11.0 ) (21.1 ) (213.4 )   (0.60 )   (0.72 ) ($ 0.54 )   27.1     0.0     0.0     30.3   0.0  
The Reynolds and Reynolds Co. (9/30)   NM     967.4     1,041.9     NA     158.8   58.5   16.4     1.25     1.37     NA     134.0     211.6     112.1     467.1   40.9  
High   85.7 %                         93.0 % 16.4  %                                           87.1 %
Median   57.9 %                         43.6 % (57.6) %                                           6.1 %
Mean   59.6                           32.3   (63.9 )                                           14.3  
Low   41.9                           (27.7 ) (213.4 )                                           0.0  
(a)
EBIT, net income and earnings per share before extraordinary item(s) and cumulative effect of accounting change.

(b)
LTM as of last reported quarter.

(c)
Estimates are calendar year end per First Call where available, otherwise IBES.

(d)
Book Value, Total Debt and Cash as of last reported quarter.

SELECTED TRANSACTION STATISTICS(a)
Selected Transaction Statistics
(US$ in millions)

 
    
    
    
    
   Total Consideration as a Multiple of:
   Premiums Paid to Market(a)
  
Announce
Date
   Closing
Date
   Acquiring Company/
Target Company
   Equity
Value
   Enterprise
Value
   LTM
Revenue
   LQA
Revenue
   FY+1
Revenue
   4 Weeks Prior
   One Day Prior
  
4/11/01   Pending   Autobytel.com Inc.
 Autoweb.com, Inc.		   $ 15.6   $ 2.6   0.06 x 0.07 x NA   69.4 % 82.6 %
4/9/01   Pending   Kana Communications, Inc.
 Broadbase Software, Inc.		     87.1     (45.1 ) (0.82 ) (0.86 ) (0.78) x (55.1 %) 27.8 %
4/9/01   Pending   General Electric
 NBCi		     86.1     244.8   1.99   1.97   2.76   24.0 % 46.0 %
1/8/01   3/27/01   Chordiant Software Inc.
 Prime Response Inc.		     34.2     2.2   0.07   0.08   NA   (5.7 %) (2.4 %)
12/20/00   4/12/01   Vitamin Shoppe Industries Inc.
 VitaminShoppe.com, Inc.		     20.4     18.6   0.54   0.48   0.27   113.3 % 220.0 %
12/11/00   1/22/01   Bosch Security Systems Corp.
 Detection Systems, Inc.		     121.1     139.0   1.00   0.98   NA   46.9 % 38.5 %
10/25/00   11/29/00   Telelogic AB
 Continuus Software Corp.		     41.5     41.8   1.03   0.95   0.60   90.9 % 28.7 %
10/25/00   12/21/00   Trilogy Software, Inc.
 pcOrder.com, Inc.		     105.5     32.9   0.56   0.61   0.60   55.7 % 85.5 %
6/27/00   9/29/00   Integrated Defense Technologies, Inc.
 Tech-Sym		     183.0     151.1   0.89   0.84   NA   36.4 % 25.0 %
4/27/00   9/1/00   Allen Systems Group, Inc.
 Viasoft, Inc.		     157.4     69.1   1.00   1.54   1.10   26.8 % 52.7 %

 
 
 
 
High
 
$
183.0
 
$
244.8
 
1.99
x
1.97
x
2.76
x
113.3
%
220.0
%
        Median     86.6     37.3   0.73   0.73   0.60   41.7 % 42.2 %
        Mean     85.2     65.7   0.63   0.67   0.76   40.3 % 60.4 %
        Low     15.6     (45.1 ) (0.82 ) (0.86 ) (0.78 ) (55.1 %) (2.4 %)
(a)
As per Press Releases and SEC filings of either Target or Acquiror.

PREMIUMS PAID IN RECENT PRIVATIZATION TRANSACTIONS(a)

Recent Privatization Premiums Paid
(US$ in millions)

 
    
    
    
    
    
   Premium
  
Ann. Date
   Eff. Date
   Target Name
   Acquiror Name
   Trans. Val.
   Ent. Val.
   1 day
   1 week
   4 weeks
  
12/20/2000   04/12/2001   Vitaminshoppe.com Inc.   Vitamin Shoppe Industries Inc.   $ 7.3   $ 13.0   220.0 % 113.3 % 166.7 %
12/19/2000   01/31/2001   Loislaw.com Inc.   Wolters Kluwer NV     92.9     84.4   190.3   322.3   298.1  
10/25/2000   12/22/2000   pcOrder.com   Trilogy Software Inc.     48.3     48.5   85.5   108.2   55.7  
10/25/2000   12/29/2000   Axcelis Technologies(Eaton)   Shareholders     696.8     689.0              
10/01/2000       Detection Systems Inc.   Robert Bosch GmbH     117.5     135.4   95.9   93.9   97.3  
08/11/2000   10/06/2000   BI Inc.   Investor Group     67.4     72.3   78.4   106.3   65.0  
07/17/2000   08/24/2000   CareerBuilder Inc.   Investor Group     199.3     134.7   93.9   106.5   169.5  
06/27/2000   09/29/2000   Tech-Sym Corp.   Integrated Defense Tech     93.0     154.3   25.0   23.7   36.4  
06/08/2000   07/07/2000   PFSweb Inc.   Shareholders     60.8     NA              
05/25/2000   08/01/2000   Neoforma.com Inc.   Investor Group     630.0     NA              
04/27/2000   09/01/2000   VIASOFT Inc.   Allen Systems Group     157.4     119.2   52.7   46.1   29.9  
03/06/2000   04/25/2000   Data Transmission Network Corp.   Veronis Suhler & Assoc Commun     467.1     477.3   16.0   16.6   52.6  
02/25/2000   04/13/2000   Spanlink Communications Inc.   Spanlink Acquisition Group     69.5     69.3   NM   6.3   47.4  
02/19/2000   02/19/2000   Diehl Graphsoft Inc.   Nemetschek AG     29.5     28.3   33.3   52.0   94.9  
02/14/2000   03/29/2000   GRC International Inc.   AT&T Corp.     218.9     217.6   12.2   16.5   18.8  
01/31/2000   05/12/2000   ThermoQuest Corp.   Thermo Instrument Systems Inc.     96.9     902.2              
01/31/2000   05/03/2000   Metrika Systems Corp.   Thermo Instrument Systems Inc.     14.2     81.2              
01/31/2000   04/13/2000   ONIX Systems Inc.   Thermo Instrument Systems Inc.     23.1     128.8              
01/31/2000   04/04/2000   Thermo Sentron Inc. (Thermedics)   Thermedics (Thermo Electron)     30.7     153.5   7.4   6.9   6.9  
12/21/1999   02/03/2000   Micro Warehouse Inc.   Investor Group     679.9     543.4   24.6   51.2   47.6  
12/03/1999   03/23/2000   Analogy Inc.   Avant Corp.     24.3     25.0   32.3   24.0   16.7  
11/15/1999   03/08/2000   n-Vision Inc.   ATS Acquisitions Inc.     1.3     NA              
11/12/1999   02/09/2000   Vertex Communications Corp.   TriPoint Global Communications     116.0     102.5   48.5   37.5   71.7  
10/26/1999   01/31/2000   Watkins-Johnson Co.   Fox Paine & Co LLC     319.0     334.0   30.0   29.0   24.6  
10/21/1999   12/22/1999   Premisys Communications Inc.   Zhone Technologies Inc.     249.9     243.6   12.7   23.1   22.1  
10/19/1999   12/10/1999   TeleSciences Inc.   EDB AS     17.3     21.8              
08/24/1999   02/02/2000   Aavid Thermal Technologies Inc.   Willis Stein & Partners LP     264.1     245.5   29.1   23.3   28.7  
07/28/1999   10/19/1999   Kofax Image Products   Investor Group   $ 70.7   $ 42.5   36.0 % 30.8 % 30.8 %
07/07/1999   08/31/1999   Smartflex Systems   Saturn Electronics     69.1     90.1   108.7   217.0   205.5  
06/24/1999   12/22/1999   Lasergate Systems Inc.   Tickets.com     1.5     NA              
05/21/1999   12/10/1999   ThermoSpectra (Thermo Instr)   Thermo Instrument Systems Inc.     26.1     298.2   39.1 % 43.8 % 61.0 %
05/18/1999   08/16/1999   Varlen Corp.   AMSTED Industries Inc.     784.8     817.1   61.9   50.0   68.4  
05/14/1999   10/29/1999   Kentek Information Systems Inc.   Investor Group     42.1     29.8   8.7   8.7   18.4  
05/14/1999   09/02/1999   WesTower Corp.   SpectraSite Holdings Inc.     330.0     NA              
05/12/1999   06/21/1999   Optek Technology Inc.   Dyson-Kissner-Moran Corp.     202.6     184.6   29.9   47.8   81.3  
05/07/1999   09/29/1999   Instron Corp.   Kirtland Capital Partners     159.9     180.0   36.4   29.4   31.3  
05/05/1999   09/17/1999   Enterprise Software Inc.   LiveWire Ventures LLC     74.0     69.2   23.3   25.4   49.5  
05/03/1999   08/24/1999   Cellular Commun of Puerto Rico   Investor Group     867.8     850.6   24.2   12.9   7.3  
04/05/1999   07/22/1999   BancTec Inc.   Welsh Carson Anderson & Stowe     535.5     497.6   42.3   33.9   28.1  
03/29/1999   12/31/1999   Logitek Inc.   North Atlantic Instruments Inc.     3.3     NA              
03/15/1999   05/30/1999   Haskel International Inc.   Investor Group     65.4     52.8   42.3   49.6   51.8  
03/08/1999   06/24/1999   Analysis & Technology Inc.   Anteon Corp.     108.5     115.3   18.9   16.2   23.8  
02/17/1999   08/06/1999   Equitrac Corp.   Investor Group     81.5     78.8   4.3   5.7   15.9  
02/17/1999   07/09/1999   Precision Systems Inc.   Anshutz Digital Media Inc.     20.2     27.2   NM   NM   NM  
            High               220.0 % 322.3 % 298.1 %
            Median               33.3 % 32.4 % 47.5 %
            Mean               50.5 % 55.6 % 63.2 %
            Low               4.3 % 5.7 % 6.9 %
(a)
Source: SDC.


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PRELIMINARY PROJECT COLORS Preliminary Discussion Materials May 18, 2001 SG Cowen