-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KKvj0VDV7XcFo70U0vc2LDhtJo9+LGFs5m9gZ5Zk+GsPZXaqa3grmaL/yGrGq0By H1uNRm4QtJE86Nk4CSNy8A== 0001005477-99-004121.txt : 19990901 0001005477-99-004121.hdr.sgml : 19990901 ACCESSION NUMBER: 0001005477-99-004121 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990831 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONCORD FABRICS INC CENTRAL INDEX KEY: 0000023249 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] IRS NUMBER: 135673758 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: SEC FILE NUMBER: 005-06707 FILM NUMBER: 99704085 BUSINESS ADDRESS: STREET 1: 1359 BROADWAY STREET 2: 4TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2127600300 MAIL ADDRESS: STREET 1: 1359 BROADWAY 4TH FLOOR STREET 2: 1359 BROADWAY 4TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CONCORD MERGER CORP CENTRAL INDEX KEY: 0001092644 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: 1359 BROADWAY STREET 2: 4TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2127600300 MAIL ADDRESS: STREET 1: 1359 BROADWAY 4TH FLOOR STREET 2: 1359 BROADWAY 4TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 SC 13E3/A 1 SCHEDULE 13E-3/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- SCHEDULE 13E-3 Amendment No. 1 RULE 13E-3 TRANSACTION STATEMENT (Pursuant to Section 13(e) of the Securities Exchange Act) Amendment No. 1 Concord Fabrics Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Alvin Weinstein Joan Weinstein David Weinstein Peter Weinstein Jonathan Weinstein Earl Kramer Concord Merger Corp. Concord Fabrics Inc. - -------------------------------------------------------------------------------- (Name of Person(s) Filing Statement) Class A Common Stock, $.50 per share ------------------------------------ Class B Common Stock, $.50 per share ------------------------------------ (Title of Class of Securities) Class A Common Stock: 206219206 Class B Common Stock: 206219305 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Peter A. Eisenberg, Esq. Bryan Cave LLP 245 Park Avenue New York, New York 10167 (212) 692-1800 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communication on Behalf of Person(s) Filing Statement) This statement is filed in connection with (check the appropriate box): a. |_| The filing of solicitation materials or in information statement subject to Regulation 14A, Regulation 14C, or Rule 13E-3(c) under the Securities Exchange Act of 1934. b. |_| The filing of registration statement under the Securities Act of 1933. c. |X| A tender offer. d. |_| None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: |_| Calculation of Filing Fee - -------------------------------------------------------------------------------- 10,495,146.38 $2,099.03 Transaction Valuation(1) Amount of Filing Fee - -------------------------------------------------------------------------------- |X| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount previously paid: $2,099.03 Filing party: Concord Merger Corp. --------- -------------------- Form or registration no.: 14D-1 Date filed: August 5, 1999 ------- -------------- This Amendment No. 1 to the Schedule 13E-3 (the "Statement") relates to the offer by Concord Merger Corp., a Delaware corporation ("Purchaser"), to purchase all of the outstanding shares of Class A Common Stock, par value $.50 per share, and Class B Common Stock, par value $.50 per share, of Concord Fabrics Inc., a Delaware - ---------- (1) The Company has 3,614,215 shares outstanding. 2,281,498 shares are owned by the purchaser. Therefore, the fee is based on 1,332,717 multiplied by the merger price of $7.875 per share. corporation (the "Company"), not owned by the Purchaser on July 29, 1999, at a price of $7.875 per share, net to the seller in cash, upon the terms and subject to the conditions set forth in Purchaser's Offer to Purchase dated August 4 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer"), and the Purchaser's Supplement to Offer to Purchase, dated August 31, 1999 (the "Supplement to the Offer to Purchase"), a copy of which is attached hereto as Exhibit (c)(3). The following Cross-Reference Sheet prepared pursuant to General Instruction F to Schedule 13E-3 shows the location in the Tender Offer Statement on Schedule 14D-1 filed by Purchaser (the "Schedule 14D-1") with the Securities and Exchange Commission on August 5, 1999, of the information requested to be included in this Schedule 13E-3. The information set forth both in the Schedule 14D-1, including all exhibits thereto, is expressly incorporated herein by reference as set forth in the Cross-Reference Sheet and in the responses in this Schedule 13E-3, and such responses are qualified in their entirety by reference to the information contained in the Offer to Purchase and the annexes and supplements thereto. Item in 13E-3 Where located in Schedule 14D-1 - ------------- ------------------------------- Item 1 (a) - (c)................................... Item 1 (a) - (c) Item 1 (d) - (f)................................... * Item 2............................................. Item 2 Item 3 (a)(1)...................................... Item 3 (a)(1) Item 3 (a)(2)...................................... Item 3 (b) Item 3 (b)......................................... * Item 4............................................. * Item 5 (a) - (e)................................... Item 5 (a) - (e) Item 5 (f)......................................... Item 5 (g) Item 5 (g)......................................... * Item 6 (a)......................................... Item 4 (a) Item 6 (b)......................................... * Item 6 (c) - (d)................................... Item 4 (b) - (c) Item 7 (a)......................................... Item 5 Item 7 (b) - (d)................................... * Item 8............................................. * Item 9............................................. * Item 10............................................ Item 6 Item 11............................................ Item 7 Item 12............................................ * 3 Item 13............................................ * Item 14............................................ * Item 15 (a)........................................ * Item 15 (b)........................................ Item 8 Item 16............................................ Schedule 14D-1 Item 17 (a)........................................ Item 11(b) Item 17 (b)........................................ * Item 17 (c)........................................ Item 11(c) Item 17 (d)........................................ * Item 17 (e)........................................ * Item 17 (f)........................................ Not Applicable * This information is provided only in the Schedule 13E-3 Item 2. Identity and Background. (a)-(d) and (g) This Statement is filed jointly by Purchaser, as well as Alvin Weinstein, Joan Weinstein, David Weinstein, Peter Weinstein, Jonathan Weinstein and Earl Kramer (the "Continuing Shareholders"), and the Company (which is the issuer of the class of equity securities that is the subject of the Rule 13e-3 transaction). The information concerning the name, state or other place of organization, principal business and address of the principal office of Purchaser and the Company, and the information concerning the name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment or occupation is conducted, material occupations, positions, offices or employments during the last five years and citizenship of each of the executive officers and directors of Purchaser are set forth in the "Introduction", "The Tender Offer - 7. Certain Information Concerning Purchaser" and Schedule II of the Offer to Purchase and are incorporated herein by reference. Jonathan Weinstein is a citizen of the United States. His address is 2217 11th Avenue East, Seattle, Washington 98102. He is Marketing Manager of E-Commence for Microsoft Corporation. Peter Weinstein is a citizen of the United States and resides at 2339 Stone Road, Ann Arbor, Michigan 48105. He recently successfully defended a dissertation in software architecture from the University of Michigan. (e) and (f) During the last five years, neither Purchaser nor to the best knowledge of Purchaser, any of the Continuing Shareholders has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future 4 violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. During the last five years, neither the Company, nor, to the best of its knowledge, any of its directors, executive officers or controlling persons has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. Item 4. Terms of the Transaction. (a) The information contained in "The Tender Offer - 1. Terms of the Offer", "Special Factors - 2. The Offer and Merger; Merger Agreement", "Special Factors - 3. Purpose of the Offer and the Merger; Plans for the Company", and "The Tender Offer - 9. Conditions to the Offer" of the Offer to Purchase and the Supplement to Offer to Purchase is incorporated herein by reference. (b) The terms of the 13E-3 transaction are the same for all shareholders of the Company other than Purchaser. Item 8. Fairness of the Transaction. (a) Purchaser, the Continuing Shareholders and the Company reasonably believe that the Rule 13e-3 transaction is fair to unaffiliated shareholders of Class A Common Stock and Class B Common Stock. (b) The information set forth in "Special Factors - 1. Background of the Offer; Contacts with the Company" of the Offer to Purchase and the Supplement to the Offer to Purchase is incorporated herein by reference. (c) The information set forth in "Special Factors - 2. the Offer and Merger; Merger Agreement and "The Tender Offer - 9. Conditions to the Offer" of the Offer to Purchase and the Supplement to the Offer to Purchase is incorporated herein by reference. 5 (d) - (e) The information set forth in "Special Factors -1. Background of the Offer; Contacts with the Company" of the Offer to Purchase and the Supplement to the Offer to Purchase is incorporated herein by reference. Item 9. Reports, Opinions, Appraisals and Certain Negotiations. (a), (b) The information set forth in the Introduction and "Special Factors - 1. Background, and Schedule I of the Offer" of the Offer to Purchase and the Supplement to the Offer to Purchase is incorporated herein by reference. (c) Any report referred to in Item 9(a) or 9(b) shall be made available for inspection or copying at the principal executive office of the Company during its regular business hours by any interested equity security holder of the Company or his or her representative who has been so designated in writing. Item 17. Material to be Filed as Exhibits. (a) (1) Form of Commitment Letter from the Chase Manhattan Bank to Alvin Weinstein, Joan Weinstein and David Weinstein, dated July 26, 1999.** (b) (1) Form of Opinion of Peter J. Solomon Company Limited, dated July 29, 1999.** (b) (2) First Union Capital Markets Furnishing and Textiles Group Presentation To Concord Fabrics Inc., dated May 19, 1999. (b) (3) Presentation to the Special Committee of Board of Directors, dated July 29, 1999, by Peter J. Solomon Company Limited. (c) (1) Form of Offer to Purchase for Cash All Outstanding Shares of Class A and Class B Common Stock of Concord Fabric Inc., at $7.875 Net Per Share by Concord Merger Corp., dated August 4, 1999.** (c) (2) Form of Shareholders' Agreement, dated July 29, 1999, among Alvin Weinstein, Joan Weinstein, David Weinstein, Peter Weinstein, Jonathan Weinstein and Earl Kramer.** (c) (3) Form of Supplement to Offer to Purchase for Cash All Outstanding Shares of Class A and Class B Common Stock of Concord Fabric Inc., at $7.875 Net Per Share by Concord Merger Corp., dated August 31, 1999. 6 (d) (1) Form of Letter of Transmittal, dated August 4, 1999.** (d) (2) Form of Letter of Transmittal, dated August 31, 1999. ** Previously filed as an exhibit to the Schedule 13E-3 filed with the Securities and Exchange Commission by Alvin Weinstein, Joan Weinstein, David Weinstein, Peter Weinstein, Jonathan Weinstein, Earl Kramer and Concord Merger Corp. on August 5, 1999. 7 Signature After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. August 31, 1999 ----------------------------------- (Date) Concord Merger Corp. By: /s/ Earl Kramer --------------------------------- (Signature) President ----------------------------------- (Name and Title) /s/ Alvin Weinstein ----------------------------------- Alvin Weinstein /s/ Joan Weinstein ----------------------------------- Joan Weinstein /s/ David Weinstein ----------------------------------- David Weinstein /s/ Peter Weinstein ----------------------------------- Peter Weinstein /s/ Jonathan Weinstein ----------------------------------- Jonathan Weinstein /s/ Earl Kramer ----------------------------------- Earl Kramer Concord Fabrics Inc. By: /s/ Earl Kramer --------------------------------- (Signature) ----------------------------------- (Name and Title) 8 EX-99.(B)(2) 2 PRESENTATION TO CONCORD FABRICS INC. ================================================================================ Book ____ ============================ First Union Capital Markets Furnishings & Textiles Group Presentation to CONCORD FABRICS INC. ============================ May 19, 1999 FIRST UNION(R) Capital Markets ================================================================================ ================================================================================ TABLE OF CONTENTS Presentation to Concord Fabrics Inc. pg. 1 ================================================================================ SECTION --------------------------------------- I Executive Summary --------------------------------------- II Company Overview III Preliminary Valuation Analysis IV Preliminary Transaction Timing --------------------------- First Union Capital Markets ================================================================================ EXECUTIVE SUMMARY Presentation to Concord Fabrics Inc. pg. 2 ================================================================================ EXECUTIVE SUMMARY o Bowles Hollowell Conner ("BHC") has been engaged by Concord Fabrics Inc. ("Concord" or the "Company") to work with Concord's senior managers in those managers' preliminary review of acquiring the Company's outstanding shares that they do not currently hold. o Bowles Hollowell Conner has analyzed Concord Fabrics Inc.'s historical and management - prepared projected financial information. o Concord's financial information was then applied to various standard valuation methodologies. o We have listed preliminary timelines for various potential methods to initiate and execute a transaction. o The comments and analysis provided in this presentation are confidential, preliminary, for discussion purposes only, and should not be shared with anyone. --------------------------- First Union Capital Markets ================================================================================ TABLE OF CONTENTS Presentation to Concord Fabrics Inc. pg. 3 ================================================================================ SECTION I Executive Summary --------------------------------------- II Company Overview --------------------------------------- III Preliminary Valuation Analysis IV Preliminary Transaction Timing --------------------------- First Union Capital Markets ================================================================================ COMPANY OVERVIEW Presentation to Concord Fabrics Inc. pg. 4 ================================================================================ STOCK PRICE HISTORY DAILY FROM MAY 14, 1996 - MAY 14, 1999 Source: FactSet Research Systems Inc. [The following table was represented as a line chart in the printed material.] CONCORD FABRICS INC CL A CONCORD FABRICS INC CL B 6/12/96 - Announced de-emphasis on woven fabrics strategy 11/3/97 - Announced Fiscal Year Earnings 9/1/98 - Share buy back announcement 3/25/99 - Announced 2Q Earnings [PLOT POINTS NEEDED] o Concord is currently trading at $4.75 per share, a 55.3% discount to its 52-week high and a 15.0% premium to its 52-week low. o Concord's stock price has declined 16.5% over the past three years and 50.7% over the past 52-week period. --------------------------- First Union Capital Markets ================================================================================ COMPANY OVERVIEW Presentation to Concord Fabrics Inc. pg. 5 ================================================================================ STOCK PRICE PERFORMANCE - TEXTILES COMPOSITE AND MARKET INDICES DAILY FROM MAY 14, 1998 - MAY 14, 1999 Source: FactSet Research Systems Inc. [The following table was represented as a line chart in the printed material.] S&P 500 STOCK INDEX RUSSELL 2000 INDEX CONCORD FABRICS INC CL A COMPARABLE COMPANY INDEX [PLOT POINTS NEEDED] Indexed prices are market cap. weighted. Peer Group includes: CFI, COE, DBG, FIT, GFD, GNL, JII, QFAB. --------------------------- First Union Capital Markets ================================================================================ COMPANY OVERVIEW Presentation to Concord Fabrics Inc. pg. 6 ================================================================================ DAILY VOLUME SUMMARY Class A - -------------------------------------------------------------------------------- - ------------------------- Avg. Daily Volume = 2.447 - ------------------------- (Daily Volume in Thousands) [PLOT POINTS NEEDED] - -------------------------------------------------------------------------------- Class B - -------------------------------------------------------------------------------- - ------------------------- Avg. Daily Volume = 0.160 - ------------------------- (Daily Volume in Thousands) [PLOT POINTS NEEDED] - -------------------------------------------------------------------------------- --------------------------- First Union Capital Markets ================================================================================ COMPANY OVERVIEW Presentation to Concord Fabrics Inc. pg. 7 ================================================================================ TRADING ANALYSIS Class A Shares Traded April 30, 1998 - May 3, 1999 [The following table was represented as a bar chart in the printed material.] [PLOT POINTS NEEDED] ----------------------------------- Total Shares Traded ----------------------------------- Less than $7.50 479,000 $7.50 - $9.00 134,600 Greater than $9.00 56,600 ----------------------------------- Class A Shares Traded May 3, 1996 - May 3, 1999 [The following table was represented as a bar chart in the printed material.] [PLOT POINTS NEEDED] ----------------------------------- Total Shares Traded ----------------------------------- Less than $7.50 1,048,100 $7.50 - $9.00 535,500 Greater than $9.00 263,400 ----------------------------------- --------------------------- First Union Capital Markets ================================================================================ COMPANY OVERVIEW Presentation to Concord Fabrics Inc. pg. 8 ================================================================================ HISTORICAL AND PROJECTED OPERATING PERFORMANCE [The following table was represented as a combination bar/line chart in the printed material.] ($ in Millions) (FY Ended and Ending August 31,) Revenue EBITDA ------- ------ 1994 $197.8 $13.1 1995 $180.2 $ 1.4 1996 $146.6 $ 5.3 1997 $108.8 $ 8.3 1998 $101.3 $ 7.9 1999(E) $ 87.8 $ 6.4 2000(E) $ 89.0 $ 6.6 --------------------------- First Union Capital Markets ================================================================================ COMPANY OVERVIEW Presentation to Concord Fabrics Inc. pg. 9 ================================================================================ OWNERSHIP PROFILE - -------------------------------------------------------------------------------- Total Shares Outstanding (Class A and B) = 3,615,077 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Institutional Holders(1) - -------------------------------------------------------------------------------- % of Shares Institution Shares Held Outstanding - ------------------------------------------ ----------- ----------- Fidelity Management 292,300 8.1% Dimensional Fund Advisors Inc. 218,000 6.0% Franklin Resources Inc. 148,800 4.1% Rosenberg Institutional Equity 62,000 1.7% BZW Barclays 26,077 0.7% Kennedy Capital Management 25,800 0.7% Brandywine Asset Management 23,800 0.7% Mellon Bank 13,900 0.4% Northern Trust 10,800 0.3% ANB Investment Management 10,800 0.3% Weiss Peck & Greer 1,000 0.0% ----------- ----------- Total 833,277 23.1% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Insiders (2) - -------------------------------------------------------------------------------- % of Shares Insider Shares Held Outstanding - --------------------------------- ----------- ----------- Alvin Weinstein 1,990,374 55.1% David Weinstein 154,576 4.3% Earl Kramer 44,400 1.2% Fred Heller 4,500 0.1% Other Insiders ----------- ----------- Total 2,193,850 60.7% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- % of Shares Shares Held Outstanding ----------- ----------- Estimated Retail and Other 587,950 16.2% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Ownership Breakdown ------------------- [The following table was represented as a pie chart in the printed material.] Institutions 23.1% Insiders 60.7% Retail & Other 16.2% - -------------------------------------------------------------------------------- (1) As of latest 13F filing available on 5/14/99. (2) As of latest proxy statement dated December 18, 1998; Excludes options. --------------------------- First Union Capital Markets ================================================================================ COMPANY OVERVIEW Presentation to Concord Fabrics Inc. pg. 10 ================================================================================ EARNINGS GENERATING CAPACITY o The following chart summarizes key statistics used to value Concord Fabrics Inc.: ---------------------------------------------------------------- Concord Fabrics Inc. ($ in Thousands) ---------------------------------------------------------------- Latest Twelve Months Fiscal Year Reported Results Ending as of 2/28/99 8/31/99(E) -------------------- ----------- EBIT $4.5 $4.6 EBITDA $6.3 $6.4 Net Income $1.8 $2.2 Net Debt (1) ($3.3) ($11.5) ---------------------------------------------------------------- (1) Third party debt less cash. ---------------------------------------------------------------- --------------------------- First Union Capital Markets ================================================================================ TABLE OF CONTENTS Presentation to Concord Fabrics Inc. pg. 11 ================================================================================ SECTION I Executive Summary II Company Overview --------------------------------------- III Preliminary Valuation Analysis --------------------------------------- IV Preliminary Transaction Timing --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 12 ================================================================================ SUMMARY VALUATION o The following are examples of various standard valuation methodologies (as applied to Concord's financial information), which may or may not be appropriate for Concord Fabrics Inc. - -------------------------------------------------------------------------------- Concord Fabrics Inc. Preliminary Valuation Summary [The following table was represented as a bar chart in the printed material.] Value Per Share --------------- Publicly Held Companies Discounted Cash Flow Analysis Earnings Impact (Dilution) Analysis [PLOT POINTS NEEDED] Leveraged Buyout Analysis Premiums Paid Analysis Price as of 5/14/99 ($4.75) - -------------------------------------------------------------------------------- --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 13 ================================================================================ COMPARISON TO PUBLICLY HELD COMPANIES
- ------------------------------------------------------------------------------------------------------------------------------------ LTM Sales Mkt. Cap. Company Name ($MM) ($MM) Description of Business - ------------------------------------------------------------------------------------------------------------------------------------ Cone Mills Corp. (NYSE: COE) $728.6 $152.6 Cone Mills designs, manufactures, and markets apparel fabrics, including denim. The company also designs and distributes decorative fabrics for the home furnishings industry. Culp, Inc. (NYSE: CFI) 486.8 99.1 Culp is a manufacturer of upholstery fabrics and mattress tickings primarily for use in the furniture, bedding, and industrial furnishings markets. Dyersburg Corp. (NYSE: DBG) 401.0 22.5 Dyersburg is a leading manufacturer of knit fleece, jersey, and stretch fabrics sold principally to domestic apparel producers. The company's manufacturing operations are vertically integrated, beginning with the conversion of fiber into yarn and knitting, dyeing, and finishing the fabric into a wide range of styles and colors. FAB Industries, Inc. (AMEX: FIT) 146.2 88.6 FAB is a manufacturer of warp and circular knit fabrics, raschel laces, and polyurethane coated fabrics. FAB's textile fabrics are sold to a wide variety of manufacturers of apparel for men, women, and children, home furnishings, over-the-counter fabrics, industrial fabrics, upholstery fabrics for residential and contact markets, and health care and consumer products. Galey & Lord, Inc. (NYSE; GNL) 1,062.3 48.7 Galey & Lord is a leading developer, manufacturer, and marketer of high quality woven cotton and cotton blended fabrics. The company principally sells fabrics to well-known manufacturers of sportswear for use in the production of pants and shorts and to manufacturers of commercial uniforms. Guilford Mills, Inc. (NYSE: GFD) 885.9 214.4 Guilford produces, processes, and sells warp knit fabrics. The company knits synthetic yarn, primarily nylon, acetate, and polyester on warp knitting machinery into warp knit fabrics, which it then dyes and finishes. Johnston Industries, Inc. (NYSE: JII) 283.7 26.8 Johnston is a diversified manufacturer of industrial textiles, as well as basic apparel textile fabrics. The company serves the automotive, coating, home furnishing, bedding, and apparel markets. Quaker Fabric Corp. (NASDAQ: QFAB) 252.6 83.1 Quaker designs, manufactures, and markets woven upholstery fabrics for residential furniture and is one of the largest producers of jacquard upholstery fabrics in the world.
--------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 14 ================================================================================ COMPARISON TO PUBLICLY HELD COMPANIES OPERATING STATISTICS
--------------------------------------------- ------------------------------ Income Statement Data Profitability --------------------------------------------- ------------------------------ Latest Twelve Months Percent of Sales --------------------------------------------- ------------------------------ Company Name Net Net Latest Qtr.- FYE Sales EBITDA EBIT Income(1) EBITDA EBIT Income - ------------------------------- ----------- --------- --------- ---------- ---------- ------ ---------- Cone Mills Corp. $728.6 $39.8 $9.5 $3.9 5.5% 1.3% 0.5% 1/3/99 - Dec. Culp, Inc. 486.8 36.7 17.1 4.4 7.5% 3.5% 0.9% 1/31/99 - Apr. Dyersburg Corp. 401.0 50.6 31.3 5.2 12.6% 7.8% 1.3% 1/2/99 - Sept. FAB Industries, Inc. 146.2 4.7 (1.2) 2.5 3.2% NM 1.7% 2/27/99 - Nov. Galey & Lord, Inc.(2) 1,062.3 120.1 70.6 9.1 11.3% 6.6% 0.9% 3/31/99 - Sept. Guilford Mills, Inc. 885.9 123.5 60.5 28.9 13.9% 6.8% 3.3% 3/31/99 - Sept. Johnston Industries, Inc. 283.7 32.7 11.1 (0.6) 11.5% 3.9% NM 1/2/99 - Jan. Quaker Fabric Corp. 252.6 24.6 14.0 5.8 9.7% 5.5% 2.3% 1/2/99 - Dec. --------------------------------------------- ------------------------------ - ------------------------------------------------------------------------------------------------------------------- Mean: $530.9 $54.1 $26.6 $7.4 9.4% 5.1% 1.5% Median: 443.9 38.3 15.6 4.8 10.5% 5.5% 1.3% - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- Concord Fabrics Inc. $93.0 $6.3 $4.5 $1.8 6.8% 4.8% 1.9% 2/28/99 - Aug. - ------------------------------------------------------------------------------------------------------------------- ------------------------------- ------------------------------- Growth Capitalization ------------------------------- ------------------------------- 2 - Year CAGR ------------------------------- Net Debt Net Debt Company Name Net to Total to Book Latest Qtr.- FYE Sales EBITDA Income Capital EBITDA Value - ------------------------------- -------- --------- -------- ---------- ---------- -------- Cone Mills Corp. (1.2%) (8.7%) NM 48.7% 4.3x $181.9 1/3/99 - Dec. Culp, Inc. 16.4% 13.1% 18.9% 52.0% 3.8x 130.2 1/31/99 - Apr. Dyersburg Corp. 12.0% 29.8% 37.3% 64.9% 3.9x 106.6 1/2/99 - Sept. FAB Industries, Inc. (1.5%) (19.9%) (17.3%) NM NM 131.5 2/27/99 - Nov. Galey & Lord, Inc.(2) 48.1% 67.6% 29.7% 84.5% 5.5x 121.3 3/31/99 - Sept. Guilford Mills, Inc. 3.8% 2.4% 5.2% 37.4% 1.8x 376.9 3/31/99 - Sept. Johnston Industries, Inc. (4.5%) 1.1% NM 72.4% 3.9x 48.3 1/2/99 - Jan. Quaker Fabric Corp. 12.7% 0.5% (17.9%) 36.3% 2.9x 125.0 1/2/99 - Dec. ------------------------------- ------------------------------- - --------------------------------------------------------------------------------------------------- Mean: 10.7% 10.7% 9.3% 56.6% 3.7x $152.7 Median: 7.9% 1.7% 12.0% 52.0% 3.9x 127.6 - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- Concord Fabrics Inc. (16.9%) 21.8% 71.3% NM NM $47.2 2/28/99 - Aug. - ---------------------------------------------------------------------------------------------------
(1) Before one-time charges. (2) Income Statement data represents proforma LTM for acquisitions (First Union Research). --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 15 ================================================================================ COMPARISON TO PUBLICLY HELD COMPANIES OPERATING STATISTICS SUMMARY - ---------------------------------------- SALES - ---------------------------------------- Galey & Lord, Inc. $1,062.3 Guilford Mills, Inc. $885.9 Cone Mills Corp. $728.6 Culp, Inc. $486.8 Dyersburg Corp. $401.0 Johnston Industries, Inc. $283.7 Quaker Fabric Corp. $252.6 FAB Industries, Inc. $146.2 - ---------------------------------------- Concord Fabrics Inc. $93.0 - ---------------------------------------- - ---------------------------------------- EBITDA - ---------------------------------------- Guilford Mills, Inc. $123.5 Galey & Lord, Inc. $120.1 Dyersburg Corp. $50.6 Cone Mills Corp. $39.8 Culp, Inc. $36.7 Johnston Industries, Inc. $32.7 Quaker Fabric Corp. $24.6 - ---------------------------------------- Concord Fabrics Inc. $6.3 - ---------------------------------------- FAB Industries, Inc. $4.7 - ---------------------------------------- EBIT - ---------------------------------------- Galey & Lord, Inc. $70.6 Guilford Mills, Inc. $60.5 Dyersburg Corp. $31.3 Culp, Inc. $17.1 Quaker Fabric Corp. $14.0 Johnston Industries, Inc. $11.1 Cone Mills Corp. $9.5 - ---------------------------------------- Concord Fabrics Inc. $4.5 - ---------------------------------------- FAB Industries, Inc. ($1.2) - ---------------------------------------- NET INCOME - ---------------------------------------- Guilford Mills, Inc. $28.9 Galey & Lord, Inc. $9.1 Quaker Fabric Corp. $5.8 Dyersburg Corp. $5.2 Culp, Inc. $4.4 Cone Mills Corp. $3.9 FAB Industries, Inc. $2.5 - ---------------------------------------- Concord Fabrics Inc. $1.8 - ---------------------------------------- Johnston Industries, Inc. ($0.6) - ---------------------------------------- 2-YEAR SALES GROWTH - ---------------------------------------- Galey & Lord, Inc. 48.1% Culp, Inc. 16.4% Quaker Fabric Corp. 12.7% Dyersburg Corp. 12.0% - ---------------------------------------- Mean 7.7% - ---------------------------------------- Guilford Mills, Inc. 3.8% Cone Mills Corp. (1.2%) FAB Industries, Inc. (1.5%) Johnston Industries, Inc. (4.5%) - ---------------------------------------- Concord Fabrics Inc. (16.9%) - ---------------------------------------- - ---------------------------------------- EBITDA MARGIN - ---------------------------------------- Guilford Mills, Inc. 13.9% Dyersburg Corp. 12.6% Johnston Industries, Inc. 11.5% Galey & Lord, Inc. 11.3% Quaker Fabric Corp. 9.7% - ---------------------------------------- Mean 9.1% - ---------------------------------------- Culp, Inc. 7.5% - ---------------------------------------- Concord Fabrics Inc. 6.8% - ---------------------------------------- Cone Mills Corp. 5.5% FAB Industries, Inc. 3.2% - ---------------------------------------- EBIT MARGIN - ---------------------------------------- Dyersburg Corp. 7.8% Guilford Mills, Inc. 6.8% Galey & Lord, Inc. 6.6% Quaker Fabric Corp. 5.5% - ---------------------------------------- Mean 5.0% - ---------------------------------------- Concord Fabrics Inc. 4.8% - ---------------------------------------- Johnston Industries, Inc. 3.9% Culp, Inc. 3.5% Cone Mills Corp. 1.3% FAB Industries, Inc. NM - ---------------------------------------- NET MARGIN - ---------------------------------------- Guilford Mills, Inc. 3.3% Quaker Fabric Corp. 2.3% - ---------------------------------------- Concord Fabrics Inc. 1.9% - ---------------------------------------- FAB Industries, Inc. 1.7% - ---------------------------------------- Mean 1.6% - ---------------------------------------- Dyersburg Corp. 1.3% Galey & Lord, Inc. 0.9% Culp, Inc. 0.9% Cone Mills Corp. 0.5% Johnston Industries, Inc. NM --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 16 ================================================================================ COMPARISON TO PUBLICLY HELD COMPANIES VALUATION STATISTICS
---------------------------------------------------------- Market Data ---------------------------------------------------------- 5/14/99 Shares Adjusted Company Name Price Out. Market Market Latest Qtr. - FYE Ticker 52-Week Range (mils.) Value Value(1) - ----------------------------- ------ ------------------- ------------- ---------- ---------- Cone Mills Corp. COE $6.00 25.43 $152.6 $325.1 1/3/99 - Dec. $3.81 - $10.13 Culp, Inc. CFI 7.63 13.00 99.1 240.3 1/31/99 - Apr. 5.13 - 19.00 Dyersburg Corp. DBG 1.69 13.34 22.5 219.4 1/2/99 - Sept. 1.31 - 8.06 FAB Industries, Inc. FIT 15.88 5.58 88.6 36.7 2/27/99 - Nov. 13.63 - 32.50 Galey & Lord, Inc.(3) GNL 4.13 11.81 48.7 708.2 3/31/99 - Sept. 3.50 - 25.56 Guilford Mills, Inc. GFD 9.31 23.02 214.4 439.4 3/31/99 - Sept. 8.13 - 27.50 Johnston Industries, Inc. JII 2.50 10.72 26.8 153.6 1/2/99 - Jan. 1.44 - 5.75 Quaker Fabric Corp. QFAB 5.31 15.65 83.1 154.3 1/2/99 - Dec. 3.50 - 19.42 ---------------------------------------------------------- - ------------------------------------------------------------------------------------------------------ Concord Fabrics Inc. CIS $4.75 3.6 $17.2 $13.9 2/28/99-Aug. $4.00 - $10.00 - ------------------------------------------------------------------------------------------------------ --------------------- -------------------------------------------------------------------- EPS Data Valuation Data --------------------- -------------------------------------------------------------------- Latest Twelve Months P/E Multiples -------------------- Company Name ------------------ AMV/ AMV/ AMV/ MV/ Latest Qtr. - FYE LTM 1999(E)(2) LTM 1999(E)(2) Sales EBITDA EBIT BV - --------------------------- ------- ------------ ----- ----------- ---------- ---------- ------------ ------- Cone Mills Corp. 0.08 0.37 NM 16.2x 0.4x 8.2x NM 0.8x 1/3/99 - Dec. Culp, Inc. 0.33 0.79 23.1x 9.7x 0.5x 6.5x 14.0x 0.8x 1/31/99 - Apr. Dyersburg Corp. 0.34 (0.34) 5.0x NM 0.5x 4.3x 7.0x 0.2x 1/2/99 - Sept. FAB Industries, Inc. 0.43 NA 36.9x NA 0.3x 7.9x NM 0.7x 2/27/99 - Nov. Galey & Lord, Inc.(3) 0.74 (0.11) 5.6x NM 0.7x 5.9x 10.0x 0.4x 3/31/99 - Sept. Guilford Mills, Inc. 1.17 1.20 8.0x 7.8x 0.5x 3.6x 7.3x 0.6x 3/31/99 - Sept. Johnston Industries, Inc. (0.06) 0.20 NM 12.5x 0.5x 4.7x 13.8x 0.6x 1/2/99 - Jan. Quaker Fabric Corp. 0.40 0.27 13.3x 19.7x 0.6x 6.3x 11.0x 0.7x 1/2/99 - Dec. --------------------- -------------------------------------------------------------------- ---------------------------------------------------------------------------------- Mean: 15.3x 13.2x 0.5x 5.9x 10.5x 0.6x Median: 10.6x 12.5x 0.5x 6.1x 10.5x 0.6x ---------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- Concord Fabrics Inc. 0.47 0.65 10.1x 7.3x 0.1x 2.2x 3.1x 0.4x 2/28/99-Aug. - --------------------------------------------------------------------------------------------------------------------------
(1) Market value of equity plus net debt. (2) Estimates obtained from the First Call Network as of May 14, 1999. 1999 estimates are calendarized to December year end. (3) Income Statement data represents proforma LTM for acquisitions (First Union Research). --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 17 ================================================================================ COMPARISON TO PUBLICLY HELD COMPANIES VALUATION SUMMARY ($ in Thousands except per share figures)
Concord Fabrics Inc. Median Debt- Discount for Adjusted Valuation Measure (LTM)(1) x Multiple = Gross Value - Cash (1) = Equity Value - Size (15%) = Equity Value - -------------------- -------------------- -------- ----------- -------- ------------ ------------ ------------ AMV / EBIT $4,451 10.5 $46,858 ($3,251) $50,109 $7,516 $42,593 AMV / EBITDA 6,309 6.1 38,381 (3,251) 41,632 6,245 35,387 LTM P/E Multiple 1,759 10.6 18,681 -- 18,681 2,802 15,879 1999(E) P/E Multiple 2,295 12.5 28,681 -- 28,681 4,302 24,379 MV / BV 47,219 0.6 29,131 -- 29,131 4,370 24,762 Implied Equity Value Range $24,379 - $35,387 ---------------------- Implied Equity Value Range Per Share(2) $6.73 - $9.78 ----------------------
(1) Latest Twelve Months reported results as of 2/28/99. 1999(E) net income is for calendar year and was supplied by management. (2) Diluted shares outstanding. --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 18 ================================================================================ PRECEDENT MERGERS AND ACQUISTIONS
- ------------------------------------------------------------------------------------------------------------------------------- Target/ Adj. Market Value Date Closed Acquiror ($MM) Description of Acquired Companies - ------------------------------------------------------------------------------------------------------------------------------- October 14, 1998 The Bibb Company $251.0 Bibb is a manufacturer and marketer of Dan River, Inc. sheets, pillowcases, and other bedding accessories used in the home, hotels, hospitals, and segments serving the hospitality market. The company manufactures specially treated and engineered textile products. 1998 Target 79.6 Private company transaction by BHC. Acquiror January 29, 1998 Dominion Textile - Apparel 464.5 Dominion is a leading international Galey & Lord, Inc. producer and marketer of textile related products in the apparel fabrics market. December 1, 1997 Elastic Corp. of America 82.1 Elastic Corp. is a manufacturer of woven Worldtex, Inc. and knitted narrow elastic fabrics supplying the apparel industry. August 27, 1997 WestPoint Stevens - Alamac Div. 178.5 Alamac manufactures and sells knitted Dyersburg Corp. fabrics primarily to manufacturers of men's, women's, and children's apparel. February 3, 1997 New Cherokee Corp. 70.0 New Cherokee is a manufacturer and Dan River, Inc. supplier of men's and women's yarn-dyed fabrics to shirting manufacturers and of sportswear fabrics to the converting trade. August 1, 1996 Perfect Fit 45.4 Perfect Fit is a home comfort products PFI Acquisition Corp. subsidiary of Foamex International, Inc. that manufactures bedroom furnishings and draperies. April 29, 1996 Graniteville Company 255.0 Graniteville manufactures, dyes, and Avondale, Inc. finishes cotton, synthetic, and blended (cotton and polyester) apparel fabrics. Products are used for utility wear, sportswear, casual wear, and outerwear. March 29, 1996 Jupiter National, Inc. 113.8 Jupiter is a manufacturer of cotton and Johnston Industries, Inc. polyester textiles for the home furnishings and industrial products markets. The company also holds a portfolio of venture capital investments. January 17, 1996 Hofmann Laces, Ltd. 128.7 Hofmann Laces produces warp knitted Guilford Mills, Inc. fabrics, including lace and plain-stretch fabrics, curtains, shower curtains, and knitted bedding products.
--------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 19 ================================================================================ PRECEDENT MERGERS AND ACQUISTIONS o BHC reviewed the merger and acquisition transactions listed on the previous page and other transactions in the broader textile industry. o There are no precedent merger and acquisition transactions where the nature of the target's business closely resembles that of Concord's. o BHC has determined that the transactions reviewed do not provide relevant guidance as to how Concord Fabrics Inc. would be viewed by potential acquirors. As such, we did not utilize this methodology as a valuation measure for Concord. --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 20 ================================================================================ DISCOUNTED CASH FLOW ANALYSIS ASSUMPTIONS o The following assumptions for Concord Fabrics Inc. were used to value the company based on a five-year discounted cash flow analysis: o Revenues are expected to grow slightly as a result of increased sales at Concord House Division. o EBITDA margin of 7.2% in 1999, increasing slightly due to improved margin contribution from the Concord House Division. o Capital expenditures and depreciation are expected to be approximately $1.8 million. o Base year is estimated to be the fiscal year ending 8/31/99. o 179,000 shares of common stock authorized to be repurchased are assumed to be repurchased equally in Years 2000 and 2001 at a Price to Forward Earnings multiple of 7.3x. o Chino, California facility is assumed to be sold in 2000 for $3.0 million (for a gain of $1.4 million). --------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 21 ================================================================================ DISCOUNTED CASH FLOW ANALYSIS FINANCIAL SUMMARY o Projections used in the discounted cash flow analysis were provided by management and are as follows:
INCOME STATEMENT: HISTORICAL ----------------------------------------------------------------- 1995 1996 1997 1998 1999(E) ----------------------------------------------------------------- Net Sales $180,153 $146,561 $108,820 $101,297 $87,847 Cost of Goods Sold 141,959 107,001 74,579 68,780 59,421 ----------------------------------------------------------------- Gross Profit 38,194 39,560 34,242 32,517 28,425 SG & A 36,770 34,221 25,957 24,592 22,057 ----------------------------------------------------------------- EBITDA 1,424 5,339 8,284 7,925 6,368 Depreciation & Amortization 1,991 1,813 1,724 1,865 1,800 ----------------------------------------------------------------- EBIT (567) 3,526 6,560 6,060 4,568 Gain on Sale of Chino Facility 0 0 0 0 0 ----------------------------------------------------------------- Earnings Before Taxes (567) 3,526 6,560 6,060 4,568 Provision for Taxes(1) (227) 1,597 2,526 2,679 1,930 ----------------------------------------------------------------- UNLEVERED NET INCOME ($340) $1,928 $4,035 $3,381 $2,638 ================================================================= Plus: Depreciation & Amortization $1,991 $1,813 $1,724 $1,865 $1,800 Less: Capital Expenditures 4,113 1,696 942 3,412 1,800 Less: Incremental Working Capital Needs 19,094 (6,911) (7,463) (611) (5,104) ----------------------------------------------------------------- UNLEVERED FREE CASH FLOW ($21,556) $8,956 $12,279 $2,446 $7,742 ================================================================= - ----------------------------------------------------------------------------------------------------------- OPERATING ASSUMPTIONS: Net Sales Growth -8.9% -18.6% -25.8% -6.9% -13.3% Gross Profit as % of Sales 21.2% 27.0% 31.5% 32.1% 32.4% SG & A Expenses as % of Sales 20.4% 23.3% 23.9% 24.3% 25.1% - ----------------------------------------------------------------------------------------------------------- INCOME STATEMENT: PROJECTED ---------------------------------------------------------- 2000 2001 2002 2003 2004 ---------------------------------------------------------- Net Sales $89,002 $90,588 $92,650 $94,815 $97,088 Cost of Goods Sold 60,083 61,016 62,245 63,531 64,877 ----------------------------------------------------------- Gross Profit 28,918 29,572 30,405 31,284 32,211 SG & A 22,366 22,826 23,424 24,052 24,711 ----------------------------------------------------------- EBITDA 6,552 6,746 6,981 7,232 7,500 Depreciation & Amortization 1,800 1,800 1,800 1,800 1,800 ----------------------------------------------------------- EBIT 4,752 4,946 5,181 5,432 5,700 Gain on Sale of Chino Facility 1,373 0 0 0 0 ----------------------------------------------------------- Earnings Before Taxes 6,125 4,946 5,181 5,432 5,700 Provision for Taxes(1) 2,450 1,978 2,072 2,173 2,280 ----------------------------------------------------------- UNLEVERED NET INCOME $3,675 $2,967 $3,108 $3,259 $3,420 =========================================================== Plus: Depreciation & Amortization $1,800 $1,800 $1,800 $1,800 $1,800 Less: Capital Expenditures 1,800 1,800 1,800 1,800 1,800 Less: Incremental Working Capital Needs 300 416 543 569 597 ----------------------------------------------------------- UNLEVERED FREE CASH FLOW $3,375 $2,552 $2,566 $2,690 $2,823 =========================================================== - ------------------------------------------------------------------------------------------------------ OPERATING ASSUMPTIONS: Net Sales Growth 1.3% 1.8% 2.3% 2.3% 2.4% Gross Profit as % of Sales 32.5% 32.6% 32.8% 33.0% 33.2% SG & A Expenses as % of Sales 25.1% 25.2% 25.3% 25.4% 25.5% - ------------------------------------------------------------------------------------------------------
(1) Utilizes historical tax rate for the historical years, a 42.25% rate for 1999(E) and a 40.00% rate for the projected years. ------------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 22 ================================================================================ DISCOUNTED CASH FLOW ANALYSIS VALUATION SUMMARY o Yields an implied adjusted market value of $26.1 million, which equates to $10.38 per share. ---------------------------------------------------------------- Discount Rate = 11.50% Growth Rate of Unlevered Free Cash Flow after 2004 = 1.00% Unlevered Free Cash Flow Grown Into Perpetuity = $2,823 ---------------------------------------------------------------- NPV of Free Cash Flows in Years 1-5 $10,309 NPV of Free Cash Flows after Year 5 15,756 ------- Adjusted Market Value 26,065 Less: 1999(E) Existing Debt (14,300) Plus: 1999(E) Cash & Marketable Securities 25,822 ------- Implied Equity Value $37,587 ------- Implied Per Share Value $10.38 ------- o Assumptions of different discount rates and/or terminal growth rates provide a range of values. Cash Flow Growth Rate After 2004 ------------------------------------------------- -1.0% 0.0% 1.0% 2.0% 3.0% ------------------------------------------------- 10.5% $10.18 $10.61 $11.13 $11.78 $12.60 ------------------------------ Weighted 11.0% 9.88 10.27 10.74 11.31 12.02 Average --------- Cost of 11.5% 9.61 9.97 10.38 10.89 11.51 Capital --------- 12.0% 9.37 9.68 10.06 10.51 11.06 ------------------------------ 12.5% 9.14 9.43 9.76 10.17 10.66 ------------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 23 ================================================================================ EARNINGS IMPACT ANALYSIS - -------------------------------------------------------------------------------- Assumptions - -------------------------------------------------------------------------------- Purchase Price Per Share $10.61 Implied Adjusted Market Value / 1999(E) EBITDA 4.5x % Debt 100% Interest Rate on Debt 7.5% New Goodwill Created 0 2000(E) Earnings Per Share (1) $0.76 - -------------------------------------------------------------------------------- Accretion (Dilution) At Various Purchase Prices - -------------------------------------------------------------------------------- Purchase Price --------------------------------------------------------- $10.00 $10.25 $10.61 $10.75 $11.00 --------------------------------------------------------- 7.00% 14.1% 10.8% 3.7% (0.9%) (9.0%) 7.25% 12.4% 9.0% 1.9% (2.8%) (11.0%) ---------- Rate 7.50% 10.7% 7.2% 0.0% (4.7%) (12.9%) ---------- 7.75% 9.0% 5.4% (1.8%) (6.6%) (14.9%) 8.00% 7.3% 3.6% (3.7%) (8.5%) (16.8%) 2000(E) ------------------------------ Pre- Post- Deal Deal ------------------------------ Sales $89,002 $89,002 EBITDA 6,526 6,526 Depreciation & Amortization 1,800 579 EBIT 4,726 5,947 Interest Expense 1,331 2,503 Tax Provision 1,792 773 Net Income 2,689 2,757 Net Income Per Share(2) $0.76 $0.76 - -------------------------------------------------------------------------------- Purchase Price Per Share [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- (1) Does not include Chino gain of $1.4 million. (2) Pre-Deal utilizes Diluted shares adjusted for share repurchase. Post-Deal utilizes Diluted shares (treasury stock method) assuming no share repurchase. o Based on fiscal year 2000 earnings, the above figure represents the maximum amount an acquiror could pay assuming an all cash purchase with zero dilution to earnings. ------------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 24 ================================================================================ LEVERAGED BUYOUT ANALYSIS
- ------------------------------------------------------------------------------------------------- Uses Sources % Total 5 Year Return - ------------------------------------------------------------------------------------------------- Purchase of Shares(1) $32,262 Excess Cash / Investments(2) $23,822 47.8% Fees and Expenses 3,317 Revolver 19,057 38.2% 7.5% Debt Paydown(2) 14,300 New Equity 7,000 14.0% 30.0% ------- ------- ----- $49,879 $49,879 100.0% ======= ======= =====
- -------------------------------------------------------------------------------- Assumptions - -------------------------------------------------------------------------------- Purchase Price Per Share $8.65 5 Year Exit Multiple 4.0x - -------------------------------------------------------------------------------- Common Equity Returns - Sensitivity Analysis - -------------------------------------------------------------------------------- Exit Multiple ------------------------------------- 3.0x 3.5x 4.0x 4.5x 5.0x ------------------------------------- 21.1% 25.9% 30.0% 33.7% 37.0% (1) Dilute shares outstanding adjusted using the treasury stock method at the buyout price per share. (2) Management assumptions for 8/31/99. ------------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 25 ================================================================================ PREMIUMS PAID ANALYSIS - -------------------------------------------------------------------------------- Premiums Paid Analysis - -------------------------------------------------------------------------------- Median Premium Paid Transaction Size 1997 - YTD 1999 - -------------------------------------------------- ------------------- $25.0MM - $50.0MM 44.3% $50.0MM - $100.0MM 35.5% Implied Concord Fabrics Inc. Per Share Value At: Current Price ($4.75) $25 - $50MM $6.85 $50 -$100MM $6.44 Source: Securities Data Company as of 5/7/99 - -------------------------------------------------------------------------------- ------------------------------- First Union Capital Markets ================================================================================ PRELIMINARY VALUATION ANALYSIS Presentation to Concord Fabrics Inc. pg. 26 ================================================================================ IMPLIED TRADING VALUATION BASED ON CLASS A STOCK PRICE
- --------------------------------------------------------------------------------------------------------- ($ in Millions, except per share data) ------------------------------------------------------------------------------- 30-Day 60-Day 90-Day 180-Day One Year Two Year Three Year 5/14/99 Average Average Average Average Average Average Average ------------------------------------------------------------------------------- Stock Price $4.75 $4.70 $4.94 $5.30 $5.80 $6.86 $7.52 $7.12 Implied Equity Value(1) $17.3 $17.1 $18.0 $19.3 $21.1 $25.0 $27.4 $25.9 Net Debt (2) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) Implied AMV $14.0 $13.8 $14.7 $16.0 $17.8 $21.7 $24.1 $22.6 AMV /EBITDA 2.2x 2.2x 2.3x 2.5x 2.8x 3.4x 3.8x 3.6x - ---------------------------------------------------------------------------------------------------------
(1) Diluted shares outstanding. (2) Latest Twelve Months reported results as of 2/28/99. - -------------------------------------------------------------------------------- [The following table was depicted as a bar chart in the printed material.] Stock Price $4.75 $4.70 $4.94 $5.30 $5.80 $6.86 $7.52 $7.12 5/14/99 Average Average Average Average Average Average Average 30-Day 60-Day 90-Day 180-Day One Year Two Year Three Year Period
- -------------------------------------------------------------------------------- ------------------------------- First Union Capital Markets ================================================================================ TABLE OF CONTENTS Presentation to Concord Fabrics Inc. pg. 27 ================================================================================ SECTION I Executive Summary II Company Overview III Preliminary Valuation Analysis - -------------------------------------------------- IV Preliminary Transaction Timing - -------------------------------------------------- ------------------------------- First Union Capital Markets ================================================================================ PRELIMINARY TRANSACTION TIMING Presentation to Concord Fabrics Inc. pg. 28 ================================================================================ TIMING UNDER VARIOUS STRUCTURAL SCENARIOS
Transaction Step Tender/Short-Form Merger Merger - ---------------- ------------------------ ------ Raise proposal with Board of Directors Week 1 Week 1 [Discuss proposal with large institutional shareholders] Week 1 Week 1 Execute confidentiality agreements with institutions Board forms a special committee Week 1 Week 1 Special committee retains financial/legal advisors Week 1 Week 1 Due diligence by special committee's financial/legal advisors Weeks 2 - 5 Weeks 2 - 5 Special committee decides how to proceed Weeks 2 - 5 Weeks 2 - 5 Begin 14D-1 preparations Weeks 2 - 5 N/A Begin 13E-3 preparations Weeks 2 - 5 Weeks 2 - 5 Management group enters into definitive agreement with Company N/A Week 6 Special committee completes 14D-9 Week 6 N/A Contribute shares to Delaware takeover vehicle Week 6 Week 6 Press release announces transaction Week 6 Week 6 Tender offer commenced Week 6 N/A Prepare proxy statement N/A Weeks 7 - 10 File proxy statements with SEC N/A Week 11 Receive and respond to SEC comments N/A Weeks 15 - 16 Mail proxy to stockholders N/A Weeks 15 - 16 Special stockholders meeting to approve transaction N/A Week 20 Close transaction Week 10 Week 20
------------------------------- First Union Capital Markets EX-99.(B)(3) 3 PRESENTATION TO THE SPECIAL COMMITTEE ================================================================================ PROJECT FABRIC Presentation to the Special Committee of the Board of Directors July 29, 1999 PETER J. SOLOMON COMPANY LIMITED ================================================================================ ================================================================================ This presentation has been prepared by Peter J. Solomon Company Limited ("PJSC") from materials and information supplied (whether orally or in writing) by the corporation code-named "Fabric" (the "Company") and from publicly available sources. This presentation includes certain statements, estimates and projections provided by Fabric with respect to the historical and anticipated future performance of Fabric. In preparing this presentation, PJSC has assumed and relied upon the accuracy and completeness of the information provided to and reviewed by PJSC for the purposes of this presentation and PJSC does not assume any responsibility for independent verification of such information. With respect to financial projections, PJSC has assumed that the financial projections were reasonably prepared on a basis which reflects the best currently available estimates and judgments of the future financial performance of Fabric. PJSC makes no representation or warranty as to, and assumes no responsibility for, the accuracy or completeness of any such statements, 7estimates and projections and for the effect which any inaccuracy or incompleteness may have on the results or judgments contained in this presentation. Except where otherwise indicated, this analysis speaks as of the date hereof. Under no circumstances should the delivery of this document imply that the analysis would be the same if made as of any other date. THIS REPORT HAS BEEN ISSUED FOR THE INFORMATION AND ASSISTANCE OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF FABRIC (THE "SPECIAL COMMITTEE"). IT IS NOT INTENDED TO BE USED, AND SHOULD NOT BE RELIED UPON, BY ANY OTHER ENTITY OR PERSON. THIS PRESENTATION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF FABRIC COMMON STOCK AS TO WHETHER OR NOT SUCH HOLDER SHOULD TENDER SHARES OR HOW ANY SUCH HOLDER SHOULD VOTE ON THE TRANSACTION WITH RESPECT TO WHICH AN OPINION MAY BE RENDERED. THIS REPORT IS CONFIDENTIAL AND SHOULD NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF PJSC, BE COPIED OR MADE AVAILABLE TO ANY PERSON OTHER THAN THE SPECIAL COMMITTEE. PJSC SHALL NOT HAVE LIABILITY, WHETHER DIRECT OR INDIRECT, IN CONTRACT OR TORT OR OTHERWISE, TO ANY PERSON IN CONNECTION WITH THIS REPORT. - -------------------------------------------------------------------------------- PROJECT FABRIC 1 PETER J. SOLOMON COMPANY Table of Contents ================================================================================ Tab Page ---- I. Introduction 3 II. Summary Historical and Projected Financial Information 9 III. Summary Historical Stock Performance 19 IV. Summary Management and Ownership Profile 28 V. Valuation Analysis 31 - -------------------------------------------------------------------------------- PROJECT FABRIC 2 PETER J. SOLOMON COMPANY ================================================================================ - -------------------------------------------------------------------------------- Introduction - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROJECT FABRIC 3 PETER J. SOLOMON COMPANY Introduction ================================================================================ o Concord Merger Corp. ("Merger Corp.") an entity owned and controlled by an investor group that includes Alvin Weinstein, the Chairman of Fabric, Earl Kramer, the President of Fabric, David Weinstein, the President of the Concord House Division of Fabric, and members of the Weinstein family (the "Investor Group"), has made an offer to purchase the Class A and Class B common shares (the "Common Shares") and common share equivalents of the Company not owned by Merger Corp. and the Investor Group for $7.875 per share (the "Transaction"). o The Special Committee has asked PJSC to advise it with respect to the fairness to the shareholders of the Company other than Merger Corp., the members of the Investor Group and their affiliates, from a financial point of view, of the consideration proposed to be paid by Merger Corp. pursuant to the terms of the Agreement and Plan of Merger (the "Agreement"), draft of July 28, 1999, between Merger Corp. and the Company. o Pursuant to the Agreement, Merger Corp. will commence a tender offer for the outstanding Common Shares not owned by Merger Corp. and its affiliates and, upon completion thereof, intends to merge itself with and into the Company. o Merger Corp. and the Investor Group currently own approximately 63% of the Common Shares. - -------------------------------------------------------------------------------- PROJECT FABRIC 4 PETER J. SOLOMON COMPANY Introduction ================================================================================ o We have assumed and relied upon the accuracy and completeness of the information reviewed by us for the purposes of this opinion and we have not assumed any responsibility for independent verification of such information. With respect to the financial projections, including the estimates made by Fabric management, we have assumed that the financial projections were reasonably prepared on a basis which reflects the best currently available estimates and judgements of the future financial performance of Fabric. We have not conducted a physical inspection of the facilities or properties of Fabric. We have not assumed any responsibility for any independent valuation or appraisal of the assets or liabilities of Fabric, nor have we been furnished with any such valuation or appraisal. For purposes of rendering this opinion, we have assumed and relied upon, in all respects material to our analysis, the following: that the representations and warranties of each party contained in the Agreement are true and correct; that each party will perform all of the covenants and agreements required to be performed by it; and that all of the conditions to the Transaction will be satisfied without waiver thereof. We have assumed, with your permission, for purposes of this opinion that the proposed consummation of the Transaction as set forth in the Agreement complies in all material respects with all statutory, common and other applicable law. We have also assumed that all material governmental, regulatory and other consents and approvals will be obtained and that in the course of obtaining any of the foregoing, as contemplated by the Agreement, no restrictions or conditions will be imposed or waivers made that would have any material effect on the Transaction. We have relied as to all legal matters on advice of counsel to the Special Committee. Our opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to us as of July 29, 1999. o In arriving at our opinion, we were not authorized to solicit, and did not solicit, interest from any other party with respect to the sale or other business combination transaction involving the Company or any of its assets. The Company represented to us that it had not received any expressions of interest or offers from any party with respect to any such transaction. Further, the members of the Investor Group represented to us that they would not entertain or accept any offers from any party to purchase their Common Shares. Our opinion is predicated on these bases. - -------------------------------------------------------------------------------- PROJECT FABRIC 5 PETER J. SOLOMON COMPANY Introduction ================================================================================ o Our advisory services are provided solely for the information and assistance of the Special Committee and are not on behalf of and are not intended to confer rights or remedies upon any other entity or persons, and may not be used for any other purpose without our prior written consent (except that our opinion may be included in its entirety in any filings made with respect to the Transaction with the Securities and Exchange Commission). This presentation does not constitute a recommendation to any holder of Fabric Common Stock as to whether or not such holder should tender shares or how any such holder should vote on the Transaction. - -------------------------------------------------------------------------------- PROJECT FABRIC 6 PETER J. SOLOMON COMPANY Introduction ================================================================================ o For purposes of this presentation, PJSC has: - reviewed certain publicly available financial statements and other information of Fabric; - reviewed certain internal financial statements and other financial and operating data concerning Fabric prepared by the management of Fabric (the "Management"); - reviewed certain financial projections of Fabric prepared by Management; - discussed the past and current operations, financial condition and prospects of Fabric with Management; - reviewed the reported prices and trading activity of Fabric Common Stock; - compared the financial performance and condition of Fabric and the liquidity of Fabric Common Stock with that of certain other comparable publicly traded companies; - reviewed publicly available information regarding the financial terms of certain transactions comparable, in whole or part, to the Transaction; - participated in certain discussions among representatives of Fabric and Merger Corp.; - reviewed drafts of the Agreement (and we have assumed that the final form thereof will not vary in any regard that is material to our analysis); and - performed such other analyses as we have deemed appropriate. - -------------------------------------------------------------------------------- PROJECT FABRIC 7 PETER J. SOLOMON COMPANY Transaction Overview ================================================================================ (Dollars in millions except per share data) Tender Price $7.875 Class A Class B ------- ------- Stock Price as of 7/28/99 $5.625 $5.625(a) Premium of Tender Price to Stock Price as of 7/28/99 40.0% 40.0% Equity Value (b) $28.62 Enterprise Value (b) 24.73 Enterprise Value as a Multiple of: Net Sales LTM (c) $90.6 27.3% FY 1999P (d) 87.8 28.1% FY 2000P (d) 89.0 27.8% EBITDA LTM (c) 6.4 3.9x FY 1999P (d) 6.4 3.9x FY 2000P (d) 5.1 4.9x EBIT LTM (c) 4.5 5.5x FY 1999P (d) 4.6 5.4x FY 2000P (d) 3.3 7.6x P/E Ratios: LTM EPS (c) $0.53 14.8x FY99 EPS estimate (d) 0.61 12.8x FY00 EPS estimate (d) 0.46 17.1x CY99 EPS estimate (d) 0.56 14.0x CY00 EPS estimate (d) 0.45 17.3x - ---------- (a) Class B shares are convertible to Class A shares on a 1:1 basis. (b) Assuming stock price of $7.875. Assume same number of shares outstanding as of 5/30/99 and 182,500 options which are currently in the money. (c) Source: Company's Form 10-Q for the fiscal quarter ended May 30, 1999 and Company's Form 10-K for the fiscal year ended August 30, 1998. (d) Source: Company Management. - -------------------------------------------------------------------------------- PROJECT FABRIC 8 PETER J. SOLOMON COMPANY ================================================================================ - -------------------------------------------------------------------------------- Summary Historical and Projected Financial Information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROJECT FABRIC 9 PETER J. SOLOMON COMPANY Summary Capitalization and Valuation Data ================================================================================ (Amounts in Millions, Except Per Share Data and Common Stock Ownership) Stock Information - -------------------------------------------------------------------------------- Stock Exchange AMEX Class A Class B ------- ------- Stock Price as of 7/28/99 $5.63 $5.63 Fiscal year end 8/30/98 52-Week Stock Price Class A Class B ------- ------- High $8.50 (08/13/98) $8.25 (07/28/98) Low $4.00 (04/01/99) $4.38 (04/26/99) 5-Year Stock Price High $10.69 (04/29/98) $10.63 (04/30/98) Low $3.63 (12/27/95) $3.63 (12/11/95) LTM Financial Information (5/30/99)(a) - -------------------------------------------------------------------------------- Net Sales $90.6 EBITDA 6.4 EBIT 4.5 Net Income 2.0 LTM EPS $0.53 FY99 EPS estimate 0.61(b) FY00 EPS estimate 0.46(b) CY99 EPS estimate 0.56(b) CY00 EPS estimate 0.45(b) Projected 3 Year Growth Rate(c) -5.9%(b) Summary Capitalization - -------------------------------------------------------------------------------- As of 5/30/99 ------- Total Debt $17.2 Shareholders' Equity 47.9 ------- Total Capitalization $65.1 Book Value / Share $13.19 Market Capitalization and Firm Value - -------------------------------------------------------------------------------- Class A Class B ------- ------- Stock Price as of 7/28/99 $5.63 $5.63 Primary Shares Outstanding (f) 2.17 1.44 Total Primary Shares Outstanding (f) 3.61 Option Equivalent Shares (g) 0.02 ------ Fully-diluted Shares Outstanding 3.63 Equity Value 20.44 Plus: Total debt (as of 5/30/99) 17.15 Less: Cash (as of 5/30/99) (21.04) ------ Enterprise Value 16.55 Valuation - -------------------------------------------------------------------------------- Enterprise Value as a Multiple of LTM: Net Sales 18.3% EBITDA 2.6x EBIT 3.7 P/E Ratio: Class A Class B ------- ------- LTM EPS 10.6x 10.6x FY99 EPS estimate 9.2 9.2 FY00 EPS estimate 12.2 12.2 CY99 EPS estimate 10.0 10.0 CY00 EPS estimate 12.4 12.4 Common Stock Ownership by Category(d) - -------------------------------------------------------------------------------- (Amounts in Thousands) Common % of Shares(e) Total -------------------------------------- Ownership Alvin Weinstein 1,839.8 47.7% David Weinstein, etc. 566.2 14.7% Earl Kramer 94.4 2.4% Other Insiders 45.0 1.2% -------------------------------------- Total Insiders 2,545.4 65.9% FMR Corp 292.3 7.6% Dimensional Fund Advisors Inc 218.0 5.6% Franklin Resources Inc 146.0 3.8% Other Institutions 187.9 4.9% -------------------------------------- Total Institutions 844.2 21.9% Public and Other 470.6 12.2% -------------------------------------- Total Shares Outstanding 3,860.1 100.0% - ---------- (a) Source: Company's Form 10-Q for the fiscal quarter ended May 30, 1999 and Company's Form 10-K for the fiscal year ended August 30, 1998. (b) Source: Company's Management. Assumed same number of shares outstanding as of 5/30/99 and 182,500 options which are currently in the money. (c) Growth rate for period 8/30/1999 - 8/30/2002. (d) Source: Company's Proxy Statement dated January 12, 1999 and Bloomberg. (e) Combined ownership of Class A and Class B common shares. (f) Source: Company's Form 10-Q for the fiscal quarter ended May 30, 1999. (g) Represents treasury stock method applied to 182,500 options which are currently in the money, as provided by Company's Management. - -------------------------------------------------------------------------------- PROJECT FABRIC 10 PETER J. SOLOMON COMPANY Historical Fabric Income Statement ================================================================================ (Dollars in millions)
Fiscal Year Ending August 30,(a) Nine Months Ended(b) LTM FYE 8/30(d) --------------------------------------------------- -------------------- --------- ----------- 1994 1995 1996 1997 1998 5/31/98 5/30/99 5/30/99 1999 -------- -------- -------- -------- -------- --------- --------- --------- ----------- Net Sales $197.8 $180.2 $146.6 $108.8 $101.3 $76.5 $65.8 $90.6 $87.8 Gross Profit 48.9 36.2 37.7 32.5 30.7 23.7 21.1 28.1 27.2 SG&A 36.4 36.1 33.2 25.1 24.3 18.8 17.8 23.3 22.7 EBITDA 13.1 1.4 5.3 8.3 7.9 6.1 4.6 6.4 6.4 EBIT 11.1 (0.6) 3.5 6.6 6.1 4.9 3.3 4.5 4.6 Net Income (c) 5.6 (2.0) 0.9 3.4 3.1 2.6 1.5 2.0 2.2 EPS (c) $1.56 ($0.56) $0.26 $0.90 $0.80 $0.68 $0.41 $0.53 $0.61(e) Margins (as a % of Revenues) Gross Profit 24.7% 20.1% 25.8% 29.9% 30.3% 31.0% 32.1% 31.0% 31.0% SG&A 18.4 20.1 22.6 23.0 24.0 24.5 27.0 25.7 25.8 EBITDA 6.6 0.8 3.6 7.6 7.8 8.0 7.0 7.0 7.3 EBIT 5.6 (0.3) 2.4 6.0 6.0 6.4 5.1 4.9 5.2 Net Income 2.8 (1.1) 0.6 3.1 3.0 3.4 2.3 2.2 2.5 Growth Rates (year-over-year) Sales 0.4% (8.9)% (18.6)% (25.8)% (6.9)% -- (13.9)% -- (13.3)% Gross Profit 11.8 (25.9) 4.3 (13.9) (5.7) -- (10.8) -- (11.2) EBITDA 11.0 (88.8) 275.0 55.2 (4.3) -- (25.1) -- (19.6) EBIT 10.6 NM NM 86.1 (7.6) -- (32.2) -- (24.6) Net Income 20.9 NM NM 258.1 (9.1) -- (41.1) -- (26.9) EPS 20.3 NM NM 251.0 (10.8) -- (39.4) -- (23.1)
(a) Source: Company Form 10-K for the fiscal years ended August 30, 1994 through 1998. (b) Source: Company Form 10-Q for the fiscal quarters ended May 31, 1998 and May 30, 1999. (c) Adjusted to exclude $1.4 million for gain on sale of equipment in 1994, $1.1 million for plant shut-down costs in 1995, $0.5 million for provision for impairment in value of property held for sale in 1998 and $0.09 for loss on sale of plant in 9 Months ended 5/30/99. (d) Projected by Company Management. (e) Shares outstanding as of 5/30/1999. - -------------------------------------------------------------------------------- PROJECT FABRIC 11 PETER J. SOLOMON COMPANY Historical Fabric Income Statement by Division ================================================================================ (Dollars in millions)
Fiscal Year Ending August 30, Nine Months Ended LTM FYE 8/30 -------------------------------------------------- ----------------- ------- -------- 1994 1995 1996 1997 1998 5/31/98 5/30/99 5/30/99 1999P ------- ------- ------- ------- ------- ------- ------- ------- -------- Net Sales Knitted Fabrics $56.3 $55.1 $58.4 $50.2 $53.4 $40.9 $37.4 $50.0 $49.3 Concord House 56.7 58.0 48.7 56.8 47.9 35.6 28.4 40.7 38.5 Phased-out Operations 84.8 67.1 39.4 1.8 0.0 0.0 0.0 0.0 0.0 ------- ------- ------- ------- ------- ------- ------- ------- -------- Total Sales 197.8 180.1 146.6 108.8 101.3 76.5 65.8 90.6 87.8 Gross Profit Knitted Fabrics $7.0 $4.8 $9.9 $9.1 $12.1 $9.1 $10.7 $13.6 $12.8 Concord House 25.7 25.1 20.1 22.6 17.5 13.7 9.6 13.4 13.8 Phased-out Operations 15.0 5.0 7.0 (0.1) 0.0 0.0 0.0 0.0 0.0 ------- ------- ------- ------- ------- ------- ------- ------- -------- Total Gross Profit (a) 48.9 34.9 36.9 31.6 29.6 22.9 20.3 27.0 26.6 Operating Expenses Knitted Fabrics $1.6 $1.6 $1.5 $1.5 $1.5 $1.1 $1.2 $1.5 $1.5 Concord House 9.5 10.9 11.4 11.9 12.0 9.2 8.2 11.0 11.2 Phased-out Operations 8.1 14.3 8.5 1.0 0.0 0.0 0.0 0.0 0.0 ------- ------- ------- ------- ------- ------- ------- ------- -------- Total Expenses 19.2 26.9 21.5 14.4 13.4 10.3 9.4 12.5 12.7 Divisional Performance Margin Knitted Fabrics $5.4 $3.1 $8.3 $7.6 $10.6 $8.0 $9.5 $12.1 $11.3 Concord House 16.2 14.2 8.6 10.7 5.5 4.6 1.4 2.3 2.6 Phased-out Operations 6.9 (5.8) (1.5) (0.2) 0.0 0.0 0.0 0.0 0.0 ------- ---------------------------------------- ------- ------- ------- -------- Total DPM 28.4 11.5 15.5 18.1 16.1 12.6 10.9 14.4 13.9
- ---------- Sources: Company Management. (a) Difference between Total Gross Profit as reported on divisional basis and Total Gross Profit as reported on the Financial Statements due to reclassification of SG&A expenses for the Milledgeville Facility. - -------------------------------------------------------------------------------- PROJECT FABRIC 12 PETER J. SOLOMON COMPANY Historical Fabric Income Statement Margins by Division ================================================================================
Fiscal Year Ending August 30, Nine Months Ended LTM FYE 8/30 ------------------------------------------------- ----------------- ------- -------- 1994 1995 1996 1997 1998 5/31/98 5/30/99 5/30/99 1999P ------ ------ ------ ------ ------ ------- ------- ------- -------- Margins (as a % of Revenues) Gross Profit Knitted Fabrics 12.4% 8.6% 16.9% 18.1% 22.6% 22.3% 28.5% 27.3% 26.0% Concord House 45.3 43.3 41.2 39.9 36.5 38.6 33.9 32.8 35.8 Phased-out Operations 17.6 7.5 17.7 (6.2) -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ -------- Total Gross Profit 24.7 19.4 25.2 29.1 29.2 29.9 30.8 29.8 30.3 Operating Expenses Knitted Fabrics 2.8% 3.0% 2.6% 2.9% 2.7% 2.7% 3.1% 3.0% 3.1% Concord House 16.7 18.9 23.5 21.1 25.0 25.8 29.0 27.2 29.0 Phased-out Operations 9.5 21.3 21.5 55.7 -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ -------- Total Expenses 9.7 14.9 14.6 13.3 13.3 13.4 14.3 13.8 14.5 Divisional Performance Margin Knitted Fabrics 9.5% 5.7% 14.3% 15.2% 19.9% 19.6% 25.4% 24.2% 22.9% Concord House 28.6 24.5 17.7 18.8 11.5 12.9 4.9 5.7 6.8 Phased-out Operations 8.1 (8.7) (3.8) (11.3) -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ -------- Total DPM 14.4 6.4 10.5 16.6 15.9 16.5 16.6 15.9 15.8
- ---------- Sources: Company Management. - -------------------------------------------------------------------------------- PROJECT FABRIC 13 PETER J. SOLOMON COMPANY Historical Fabric Income Statement Growth by Division ================================================================================
Fiscal Year Ending August 30, Nine Months Ended LTM FYE 8/30 -------------------------------------------------- ----------------- ------- -------- 1994 1995 1996 1997 1998 5/31/98 5/30/99 5/30/99 1999P ------ ------ ------ ------ ------ ------- ------- ------- -------- Growth Rates (year-over-year) Net Sales Knitted Fabrics 5.5% (2.1)% 6.0% (14.0)% 6.4% --% (8.5)% --% (7.7)% Concord House (6.1) 2.2 (15.9) 16.5 (15.7) -- (20.2) -- (19.5) Phased-out Operations 1.8 (20.9) (41.2) (95.4) (100.0) -- 0.0 -- 0.0 ------ ------ ------ ------ ------ ------ ------ ------ -------- Total Net Sales 0.4 (8.9) (18.6) (25.8) (6.9) -- (13.9) -- (13.3) Gross Profit Knitted Fabrics (8.5)% (31.5)% 107.2% (7.7)% 32.5% --% 16.9% --% 6.4% Concord House 10.6 (2.2) (20.1) 12.8 (22.8) -- (30.0) -- (21.1) Phased-out Operations 43.2 (66.5) 39.1 (101.6) (100.0) -- 0.0 -- 0.0 ------ ------ ------ ------ ------ ------ ------ ------ -------- Total Gross Profit 18.5 (28.6) 5.8 (14.3) (6.6) -- (11.3) -- (9.9) Operating Expenses Knitted Fabrics 15.3% 2.7% (6.0)% (4.7)% (1.6)% --% 5.1% --% 6.8% Concord House 8.0 15.5 4.5 4.6 0.3 -- (10.3) -- (6.8) Phased-out Operations 35.0 76.7 (40.7) (88.0) (100.0) -- 0.0 -- 0.0 ------ ------ ------ ------ ------ ------ ------ ------ -------- Total Expenses 18.6 40.3 (20.2) (32.7) (7.0) -- (8.6) -- (5.4) Divisional Performance Margin Knitted Fabrics (13.8)% (41.7)% 166.9% (8.3)% 39.1% --% 18.5% --% 6.3% Concord House 12.2 (12.6) (39.0) 23.7 (48.6) -- (69.6) -- (52.3) Phased-out Operations 38.7 (185.1) (74.1) (86.3) (100.0) -- 0.0 -- 0.0 ------ ------ ------ ------ ------ ------ ------ ------ -------- Total DPM 11.0 (59.7) 34.9 17.3 (11.1) -- (13.4) -- (13.7)
- ---------- Sources: Company Management. - -------------------------------------------------------------------------------- PROJECT FABRIC 14 PETER J. SOLOMON COMPANY Historical Fabric Balance Sheet ================================================================================ (Dollars in Millions)
At Fiscal Year End(a) -------------------------------- As of 1996 1997 1998 5/30/99(b) -------- -------- -------- ---------- Current Assets Cash, Cash Equivalents and Investments $9.7 $20.9 $23.3 $21.0 Accounts Receivable and Other Current Assets 27.1 21.3 18.0 18.1 Inventories 17.3 12.9 16.0 15.2 Deferred Income Taxes and Other Expenses 4.2 3.4 3.2 3.2 -------- -------- -------- ---------- Total Current Assets $58.4 $58.6 $60.5 $57.6 Long-Term Assets Property, Plant and Equipment, net 12.3 11.3 12.2 11.0 Other Assets 2.5 3.2 3.1 3.3 -------- -------- -------- ---------- Total Long-Term Assets 14.8 14.5 15.4 14.2 Total Assets $73.2 $73.0 $75.9 $71.9 ======== ======== ======== ========== Current Liabilities Accounts Payable 6.9 4.3 4.6 3.7 Short Term Debt and Current Portion of Debt 0.0 0.0 2.9 2.9 Accrued Liabilities 4.4 3.5 3.3 1.9 Income Taxes Payable 0.0 0.0 0.1 0.4 -------- -------- -------- ---------- Total Current Liabilities $11.3 $7.8 $10.8 $8.9 Long-Term Liabilities Notes Payable 20.0 20.0 17.2 14.3 Other Long-Term Liabilities 1.0 1.0 0.8 0.7 -------- -------- -------- ---------- Total Long-Term Liabilities $21.0 $21.0 $18.0 $15.0 Shareholders' Equity 40.8 44.2 47.1 47.9 -------- -------- -------- ---------- Total Liabilities and Shareholders Equity $73.2 $73.0 $75.9 $71.9 ======== ======== ======== ========== Select Balance Sheet Ratios Accounts Receivable Days 67.5 71.5 64.9 73.0 Inventory Turnover 6.3x 5.9x 4.4x 4.1x Accounts Payable Days 23.3 20.5 23.8 21.4 Net Working Capital as a % of Revenues 22.6% 24.3% 25.8% 30.6% Total Debt / Total Capitalization 32.9% 31.1% 29.8% 26.3% Net Debt / Total Capitalization(c) 16.9% 0.0% 0.0% 0.0%
- ---------- (a) Source: Company Form 10-K for the fiscal years ended August 30, 1996, 1997 and 1998. (b) Source: Company Form 10-Q for the fiscal quarter ended May 30, 1999. (c) Net Debt presented as $0.0 when total debt is less than cash and cash equivalents. - -------------------------------------------------------------------------------- PROJECT FABRIC 15 PETER J. SOLOMON COMPANY Historical Fabric Statement of Cash Flow ================================================================================
(Dollars in Millions) 9 Months Fiscal Years (a) Ended -------------------------------- ---------- 1996 1997 1998 5/30/99(b) -------- -------- -------- ---------- Operating Activities Net Income $0.9 $3.4 $3.1(c) $1.5 Depreciation and Amortization 1.8 1.7 1.9 1.3 Deferred Taxes 0.4 0.4 (0.4) 0.2 Other Long-Term Assets and Liabilities 1.1 1.0 0.3 0.4 Change in Working Capital Accounts 5.8 5.4 0.6 (1.8) -------- -------- -------- ---------- Net cash provided by operating activities 10.1 11.8 5.4 1.6 Investing Activities (e) Capital Expenditures (1.7) (0.9) (3.4)(d) (1.3) Proceeds from sale of plant and equipment 0.9 0.3 0.1 1.0 -------- -------- -------- ---------- Net cash provided from investing activities (0.8) (0.7) (3.3) (0.3) Net Cash Before Financing Activities 9.3 11.1 2.1 1.2 Financing Activities Decrease in Notes Payable (2.0) 0.0 0.0 (2.9) Proceeds from the issuance of Common Stock 0.1 0.0 0.1 0.2 Repurchases of Common Stock 0.0 0.0 0.0 (0.8) -------- -------- -------- ---------- Net cash used in financing activities (1.9) 0.0 0.1 (3.5) Net increase/(decrease) in cash & cash equivalents 7.4 11.2 2.2 (2.2) Cash & cash equivalents at beginning of period 2.4 9.7 20.9 23.1 -------- -------- -------- ---------- Cash & cash equivalents at end of period $9.7 $20.9 $23.1(f) $20.8(f)
(a) Source: Company Form 10-K for the fiscal years ended August 30, 1996, 1997 and 1998. (b) Source: Company Form 10-Q for the fiscal quarter ended May 30, 1999. (c) Adjusted to exclude $0.5 million for provision for impairment in value of property held for sale in 1998. (d) Larger than ordinary capex is due to $1.6 million capacity expansion of a plant and replacement of old equipment. (e) Excludes purchase of held-to-maturity securities and proceeds from sales of held-to-maturity securities. (f) Differs from cash and cash equivalents on Balance Sheet due to tax effect of $0.5 million adjustment for provision for asset impairment. - -------------------------------------------------------------------------------- PROJECT FABRIC 16 PETER J. SOLOMON COMPANY Projected Fabric Income Statement ================================================================================ (Dollars in millions)
Projected Fiscal Year Ending August 30,(b) FYE 8/30 ----------------------------------------------------------- 1998(a) 1999 2000 2001 2002 2003 -------- -------- -------- -------- -------- -------- Revenues $101.3 $87.8 $89.0 $90.6 $92.7 $94.8 Gross Profit 30.7 27.2 26.2 26.4 27.2 28.1 SG&A 24.3 22.7 23.0 23.4 24.0 24.7 EBITDA 7.9 6.4 5.1 4.7 5.0 5.2 EBIT 6.1 4.6 3.3 2.9 3.2 3.4 Net Income 3.1 2.2 1.7(c) 1.6 1.9 2.1 Earnings per Share (d) $0.80 $0.61 $0.46 $0.44 $0.51 $0.59 ======== ======== ======== ======== ======== ======== Margins (as a % of Revenues) Gross Profit 30.3% 31.0% 29.5% 29.1% 29.4% 29.6% SG&A 24.0 25.8 25.8 25.9 25.9 26.0 EBITDA 7.8 7.3 5.7 5.2 5.4 5.5 EBIT 6.0 5.2 3.7 3.3 3.4 3.6 Net Income 3.0 2.5 1.9 1.8 2.0 2.2 Growth Rates (year-over-year) Revenues (6.9)% (13.3)% 1.3% 1.8% 2.3% 2.3% Gross Profit (5.7) (11.2) (3.7) 0.6 3.2 3.2 EBITDA (4.3) (19.6) (20.7) (6.1) 5.0 5.0 EBIT (7.6) (24.6) (28.8) (9.4) 8.0 7.9 Net Income (9.1) (26.9) (24.9) (4.0) 15.7 14.4 Earnings per Share (10.8) (23.1) (24.9) (4.0) 15.7 14.4
(a) Source: Company Form 10-K for the fiscal year ended August 30, 1998. (b) Provided by Company Management. (c) Adjusted to exclude gain on sale of plant of $1.4 million. (d) Assume shares outstanding as of 5/30/1999 and 182,500 options which are in the money. - -------------------------------------------------------------------------------- PROJECT FABRIC 17 PETER J. SOLOMON COMPANY Projected Fabric Income Statement by Division ================================================================================ (Dollars in millions)
FYE 8/30 Fiscal Year Ending August 30,(a) -------- ----------------------------------------------------------- 1998(a) 1999 2000 2001 2002 2003 -------- -------- -------- -------- -------- -------- Net Sales Knitted Fabrics $53.4 $49.3 $49.3 $49.3 $49.3 $49.3 Concord House 47.9 38.5 39.7 41.2 43.3 45.5 -------- -------- -------- -------- -------- -------- Total Sales 101.3 87.8 89.0 90.6 92.7 94.8 Gross Profit Knitted Fabrics $12.1 $12.8 $11.3 $10.8 $10.8 $10.8 Concord House 17.5 $13.8 $14.3 $14.9 $15.8 $16.6 -------- -------- -------- -------- -------- -------- Total Gross Profit (b) 29.6 26.6 25.6 25.8 26.6 27.5 Margins (as a % of Revenues) Gross Profit Knitted Fabrics 22.6% 26.0% 23.0% 22.0% 22.0% 22.0% Concord House 36.5 35.8 36.0 36.2 36.4 36.6 -------- -------- -------- -------- -------- -------- Total Gross Profit 29.2 30.3 28.8 28.4 28.7 29.0 Growth Rates (year-over-year) Net Sales Knitted Fabrics 6.4% (7.7)% 0.0% 0.0% 0.0% 0.0% Concord House (15.7) (19.5) 3.0 4.0 5.0 5.0 -------- -------- -------- -------- -------- -------- Total Net Sales (6.9) (13.3) 1.3 1.8 2.3 2.3 Gross Profit Knitted Fabrics 32.5 6.4% (11.7)% (4.4)% 0.0% 0.0% Concord House (22.8) (21.1) 3.6 4.6 5.6 5.6 -------- -------- -------- -------- -------- -------- Total Gross Profit (6.6) (9.9) (3.8) 0.6 3.2 3.3
- ---------- (a) Source: Company Management. (b) Difference between Total Gross Profit as reported on divisional basis and Total Gross Profit as reported on consolidated basis due to reclassification of SG&A expenses for the Milledgeville Facility. - -------------------------------------------------------------------------------- PROJECT FABRIC 18 PETER J. SOLOMON COMPANY - -------------------------------------------------------------------------------- Summary Historical Stock Performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROJECT FABRIC 19 PETER J. SOLOMON COMPANY Historical Stock Price Performance - Fabric Class A ================================================================================ Weekly Price/Volume Analysis over Last 3 Years ---------------------------------------------- July 28, 1996 to July 28, 1999 [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- PROJECT FABRIC 20 PETER J. SOLOMON COMPANY Historical Stock Price Performance - Fabric Class B ================================================================================ Weekly Price/Volume Analysis over Last 3 Years ---------------------------------------------- July 28, 1996 to July 28, 1999 [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- PROJECT FABRIC 21 PETER J. SOLOMON COMPANY Historical Stock Price Performance - Fabric Class A and Class B ================================================================================ Weekly Price/Volume Analysis over Last 3 Years ---------------------------------------------- July 28, 1996 to July 28, 1999 [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- PROJECT FABRIC 22 PETER J. SOLOMON COMPANY Historical Stock Price Performance - Fabric Class A ================================================================================ Latest Twelve Months Daily Price/Volume Analysis ------------------------------------------------ July 28, 1998 to July 28, 1999 [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- PROJECT FABRIC 23 PETER J. SOLOMON COMPANY Historical Stock Price Performance - Fabric Class B ================================================================================ Latest Twelve Months Daily Price/Volume Analysis ------------------------------------------------ July 28, 1998 to July 28, 1999 [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- PROJECT FABRIC 24 PETER J. SOLOMON COMPANY Historical Stock Price Performance - Fabric Class A and Class B ================================================================================ Latest Twelve Months Daily Price/Volume Analysis ------------------------------------------------ July 28, 1998 to July 28, 1999 [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- PROJECT FABRIC 25 PETER J. SOLOMON COMPANY Summary of Historical Closing Stock Prices - Fabric Class A ================================================================================ - -------------------------------------------------------------------------------- Fabric Closing Stock Prices Daily for the ---------------------------------------- Following Periods: Time Period High Low Average Median - ------------------ ------------ ------ ------ ------- ------ 07/21/99 - 7/28/99 Last Week $5.875 $5.625 $5.781 $5.781 07/14/99 - 7/28/99 Last 14 Days 5.875 5.625 5.761 5.750 06/28/99 - 7/28/99 Last 30 Days 5.875 5.375 5.704 5.750 06/11/99 - 7/28/99 Last 45 Days 5.875 4.563 5.438 5.625 05/28/99 - 7/28/99 Last 60 Days 5.875 4.313 5.224 5.438 04/28/99 - 7/28/99 Last 90 Days 5.875 4.313 5.043 4.813 01/29/99 - 7/28/99 Last 180 Days 6.250 4.125 5.293 5.375 07/28/99 - 7/28/99 Last 1 Year 5.625 5.625 5.625 5.625 07/28/99 - 7/28/99 Last 2 Years 5.625 5.625 5.625 5.625 07/28/99 - 7/28/99 Last 3 Years 5.625 5.625 5.625 5.625 - -------------------------------------------------------------------------------- Source: Bloomberg. - -------------------------------------------------------------------------------- PROJECT FABRIC 26 PETER J. SOLOMON COMPANY Summary of Historical Closing Stock Prices - Fabric Class B ================================================================================ - -------------------------------------------------------------------------------- Fabric Closing Stock Prices Daily for the ---------------------------------------- Following Periods: Time Period High Low Average Median - ------------------ ------------ ------ ------ ------- ------ 07/21/99 - 7/28/99 Last Week $5.750 $4.375 $5.021 $5.000 07/14/99 - 7/28/99 Last 14 Days 5.750 4.375 4.727 4.375 06/28/99 - 7/28/99 Last 30 Days 5.750 4.375 4.543 4.375 06/11/99 - 7/28/99 Last 45 Days 5.750 4.375 4.489 4.375 05/28/99 - 7/28/99 Last 60 Days 5.750 4.375 4.527 4.375 04/28/99 - 7/28/99 Last 90 Days 5.750 4.375 4.486 4.375 01/29/99 - 7/28/99 Last 180 Days 5.875 4.375 5.036 4.688 07/28/99 - 7/28/99 Last 1 Year 5.625 5.625 5.625 5.625 07/28/99 - 7/28/99 Last 2 Years 5.625 5.625 5.625 5.625 07/28/99 - 7/28/99 Last 3 Years 5.625 5.625 5.625 5.625 - -------------------------------------------------------------------------------- Source: Bloomberg. - -------------------------------------------------------------------------------- PROJECT FABRIC 27 PETER J. SOLOMON COMPANY - -------------------------------------------------------------------------------- Summary Management and Ownership Profile - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROJECT FABRIC 28 PETER J. SOLOMON COMPANY Summary Fabric Ownership Profile ================================================================================ (Amounts in Thousands)
Common Stock ----------------------------------------------------------- Total Class A % of Class B % of Common % of Exercisable % of Stock Total Stock Total Shares Total Options(d) Total Total ----------------------------------------------------------- ------------------------------ Inside Owners (a) Alvin Weinstein 837.31 38.59% 902.46 62.48% 1,739.77 48.14% 100.00 1,839.77 47.67% David Weinstein, etc. 254.12 11.71 212.07 14.68 466.18 12.90 100.00 566.18 14.67 Earl Kramer 94.20 4.34 0.20 0.01 94.40 2.61 0.00 94.40 2.45 ----------------------------------------------------------- ------------------------------ Investor Group 1,185.63 54.64 1,114.73 77.17 2,300.35 63.65 200.00 2,500.35 64.79 Fred Heller 0.00 -- 0.00 -- 0.00 0.00 15.00 15.00 0.39 Richard Solar 0.00 -- 0.00 -- 0.00 0.00 17.50 17.50 0.45 George Gleitman 0.00 -- 0.00 -- 0.00 0.00 12.5 12.50 0.32 Other Executive Officers and Directors 0.00 -- 0.00 -- 0.00 0.00 0.00 0.00 0.00 ----------------------------------------------------------- ------------------------------ Total Insiders 1,185.63 54.64 1,114.73 77.17 2,300.35 63.65 245.00 2,545.35 65.96 ----------------------------------------------------------- ------------------------------ Institutions (b) FMR Corp 169.60 7.82 122.70 8.49 292.30 8.09 -- 292.30 7.57 Dimensional Fund Advisors Inc 132.70 6.12 85.30 5.91 218.00 6.03 -- 218.00 5.65 Franklin Resources Inc 146.00 6.73 0.00 -- 146.00 4.04 -- 146.00 3.78 Resenberg Institutional Equity 78.10 3.60 0.00 -- 78.10 2.16 -- 78.10 2.02 Brandywine Asset Management 29.30 1.35 0.00 -- 29.30 0.81 -- 29.30 0.76 Dreyfus Corp 28.90 1.33 0.00 -- 28.90 0.80 -- 28.90 0.75 BZW Barclays Bank PLC 27.21 1.25 0.00 -- 27.21 0.75 -- 27.21 0.71 Mellon Bank 13.90 0.64 0.00 -- 13.90 0.38 -- 13.90 0.36 Other Institutions 9.17 0.42 1.30 0.09 10.47 0.29 -- 10.47 0.27 ----------------------------------------------------------- ------------------------------ Total Institutions 634.88 29.26 209.30 14.49 844.18 23.36 -- 844.18 21.87 Public and Other 349.26 16.10 120.43 8.34 469.69 13.00 -- 469.69 12.17 ----------------------------------------------------------- ------------------------------ Total Shares Outstanding (c) 2,169.76 100.00% 1,444.45 100.00% 3,614.22 100.00% 245.00 3,859.22 100.00% =========================================================== ==============================
- ---------- (a) Source: Company's Proxy Statement dated January 12, 1999. (b) Source: Bloomberg and Company's Proxy Statement dated January 12, 1999. (c) Source: Company's Form 10-Q for the fiscal quarter ended May 30, 1999. (d) Includes only exercisable options held by directors and executive officers, as provided by Management. - -------------------------------------------------------------------------------- PROJECT FABRIC 29 PETER J. SOLOMON COMPANY Summary Fabric Management Profile ================================================================================ Executive Officers Years at Name Age Company Current Position - ------------------- ----- -------- ---------------------------------------- Earl Kramer 65 27 President and Director Alvin Weinstein 73 30 Chairman of the Board and Director Martin Wolfson 62 26 Senior Vice President - Treasurer and Director David Weinstein 36 8 President of the Company's Concord House Division Mark Neugeboren 48 27 Vice President Joan Weinstein 66 26 Secretary Jack Tannenbaum N/A N/A Assistant Treasurer Donald Birgeles N/A N/A Assistant Secretary Board of Directors Name Age Current Position - ------------------- ----- ---------------------------------------- Alvin Weinstein 73 Chairman of the Board and Director David Weinstein 36 President of the Company's Concord House Division Earl Kramer 65 President and Director Fred Heller 74 Chairman Emeritus of Genlyte Group, Inc. Martin Wolfson 62 Senior Vice President - Treasurer and Director Richard Solar 59 Senior Vice president of Gerber Childrenswear, Inc. George Gleitman 70 President Emeritus of the Company's Concord House Division - ---------- Source: Company's Form 10-K for the fiscal year ended August 30, 1998, Proxy Statement dated January 12, 1999 and Bloomberg. - -------------------------------------------------------------------------------- PROJECT FABRIC 30 PETER J. SOLOMON COMPANY - -------------------------------------------------------------------------------- Valuation Analysis - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROJECT FABRIC 31 PETER J. SOLOMON COMPANY Summary Valuation Analysis of Fabric ================================================================================ Price per Fabric Share -------------------------- Low High -------------------------- Comparable Company Analysis(a) $7.00 $9.75 Comparable Transaction Analysis(b) $7.00 $9.75 Discounted Cash Flow Analysis $6.00 $7.00 - ---------- (a) Based on selected public textile companies. (b) Based on "Going Private" Transactions of Companies with Enterprise Value Between $10 and $50 million. - -------------------------------------------------------------------------------- PROJECT FABRIC 32 PETER J. SOLOMON COMPANY Summary Fabric Premium Analysis ================================================================================ (Dollars in millions) Class A and B Offer Price ------------- Fabric Price Per Share $7.88 ------------- Premium (Discount) to Stock Prices Class A Current Stock Price (7/28/99) $5.625 40.0% 52 week High (8/13/98) $8.500 -7.4% 52 week Low (4/1/99) $4.000 96.9% Class B Current Stock Price (7/28/99) $5.625 40.0% 52 week High (7/28/98) $8.250 -4.5% 52 week Low (4/26/99) $4.380 79.8% Total Equity Value(a) $29.0 Total Enterprise Value(a)(b) 25.1 Enterprise Value as a Multiple: Revenues LTM $90.6 27.7% FY 1999P 87.8 28.6% FY 2000P 89.0 28.2% EBITDA LTM $6.4 3.9x FY 1999P 6.4 3.9x FY 2000P 5.1 5.0x EBIT LTM $4.5 5.6x FY 1999P 4.6 5.5x FY 2000P 3.3 7.7x Equity Value as a Multiple: EPS LTM $0.53 14.8x FY 1999P(c) $0.61 12.8x FY 2000P(c) $0.46 17.1x CY 1999P(c) $0.56 14.0x CY 2000P(c) $0.45 17.3x - ---------- (a) Represents treasury stock method applied to 325,000 options outstanding. (b) Assumes net debt per Company Form 10-Q for the fiscal quarter ended May 30, 1999. (c) Company Management. - -------------------------------------------------------------------------------- PROJECT FABRIC 33 PETER J. SOLOMON COMPANY Summary Analysis of Selected Public Textile Companies ================================================================================ Selection Criteria o All publicly traded companies in the textile industry in the U.S. with positive EBITDA and enterprise value less than $50 million, provided by Bloomberg. Companies Description o Burke Mills Inc. twists, textures, winds, dyes, processes and sells filament, novelty and spun yarns. The company's principal market is the upholstery, knitting and weaving industry. Burke Mills markets its products throughout the US and Canada. o Carlyle Industries Inc. distributes a line of home sewing and craft products, principally buttons. The Company packages and distributes a variety of buttons and embellishments to mass merchandisers, specialty chains and independent retailers and wholesalers throughout the US. Carlyle also markets complementary product lines, including appliques, craft kits and fashion accessories. o Decorator Industries Inc. designs, manufactures and sells window coverings, bedspreads, furniture and complementary products. The company's products are sold to original equipment manufacturers of recreational vehicles and manufactured housing and to the hospitality industry, either through distributors or directly to the customers. o Lakeland Industries Inc. manufactures and distributes disposable and reusable protective work clothing. The company's products are used in the chemical, petrochemical, health care, automotive, glass, cement, asbestos/lead abatement, waste management and other industries. Lakeland markets its products around the world. - -------------------------------------------------------------------------------- PROJECT FABRIC 34 PETER J. SOLOMON COMPANY Summary Analysis of Selected Public Textile Companies ================================================================================ (Dollars in millions, except per share amounts)
- ----------------------------------------------------------------------------------------------------------------------------------- MARKET DATA Equity Value Price/Earnings Multiples as a Enterprise Value as a Closing --------------------------------------- Multiple of Multiple of LTM: Price on Equity CY 1999 CY 2000 Tangible Enterprise ------------------------ Selected Companies 7/28/99 Value LTM EPS EPS(a) EPS(a) Book Value Value(b) Net Sales EBIT EBITDA - ----------------------------------------------------------------------------------------------------------------------------------- CONCORD FABRICS, INC. $5.625(c) $20.5 10.6x 10.0x 12.4x 0.4x $16.6 18.3% 3.7x 2.6x Burke Mills Inc 2.000 5.5 7.6 NA NA 0.4 8.3 19.9 6.9 2.8 Carlyle Industries Inc 0.906 6.7 3.6 NA NA NM 16.4 64.7 3.2 2.9 Decorator Industries Inc 7.125 24.5 9.4 NA NA 2.1(c) 23.2 44.1 5.3 4.6 Lakeland Industries Inc 6.063 16.1 9.1 NA NA 1.2 24.7 45.7 7.2 6.2 Median 8.4x N/A N/A 0.8x 44.9% 6.1x 3.7x Mean 7.4 N/A N/A 0.8 43.6 5.6 4.1 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATING DATA Net Income Net Sales Gross Margin EBITDA EBIT to Common ----------------- ---------------- ---------------- --------------- ------------- LTM CAGR LTM CAGR LTM CAGR LTM CAGR LTM CAGR - ----------------------------------------------------------------------------------------------------------------------------------- CONCORD FABRICS, INC. $90.6 -16.9% $28.1 -9.9% $6.4 21.8% $4.5 31.1% $2.0 80.4% Burke Mills Inc 41.5 1.9 4.4 7.5 3.0 0.0 1.2 0.4 0.7 30.7 Carlyle Industries Inc 25.4 3.6 11.6 -2.5 5.7 NM 5.1 8.2 1.9 20.5 Decorator Industries Inc 52.5 16.0 11.3 6.7 5.0 3.7 4.4 0.0 2.9 0.0 Lakeland Industries Inc 54.1 -13.5(c) 9.8 19.7 4.0 NM 3.4 38.5 1.8 39.9 Median 3.6% 7.1% 1.8% 4.3% 25.6% Mean 7.1 7.9 1.8 11.8 22.8
NOTE: CAGRs (Compound Annual Growth Rates) are for the last three completed fiscal years for each company. All operating data has been adjusted to exclude unusual and extraordinary items. (a) Provided by Company Management. Projected EPS estimates not provided by First Call as of 7/28/99. (b) Enterprise value represents equity value plus book values of total debt, preferred stock and minority interest less cash. (c) Weighted average closing price for Class A and Class B shares outstanding. - -------------------------------------------------------------------------------- PROJECT FABRIC 35 PETER J. SOLOMON COMPANY Summary Analysis of Selected Public Textile Companies (Cont'd) ================================================================================ (Dollars in millions, except per share amounts)
- ----------------------------------------------------------------------------------------------------------------------------------- SELECTED RATIOS Net Working Return on Capital/ Gross Margin/ Common Sales Sales EBITDA/Sales EBIT/Sales Net Income/Sales Equity Net Debt/ ----------- ------------- --------------- ---------------- ----------------- --------- Total Cap LTM LTM LTM Average LTM Average LTM Average LTM LTM - ----------------------------------------------------------------------------------------------------------------------------------- CONCORD FABRICS, INC 33.7% 31.0% 7.0% 6.4% 4.9% 4.8% 2.2% 2.3% 4.2% 0.0% Burke Mills Inc 15.0 10.5 7.2 7.2 2.9 3.3 1.7 1.6 5.0 14.3 Carlyle Industries Inc 36.1 45.9 22.7(c) 26.1 20.2(c) 23.7 7.4 8.8 -11.1 NM Decorator Industries Inc 9.1 21.6 9.5 11.2 8.4 10.1 5.5 7.0 19.6 -8.2 Lakeland Industries Inc 39.2 18.1 7.3 7.8 6.3 6.8 3.3 3.6 12.5 35.4 Median 19.8% 7.3% 9.5% 6.3% 8.5% 4.4% 5.3% 8.8% 14.3% Mean 24.0 8.0 13.1 5.9 11.0 4.5 5.2 6.5 13.8
- ---------- NOTE: CAGRs (Compound Annual Growth Rates) are for the last three completed fiscal years for each company. All operating data has been adjusted to exclude unusual and extraordinary items. (c) Excluded as outliers. - -------------------------------------------------------------------------------- PROJECT FABRIC 36 PETER J. SOLOMON COMPANY Summary Valuation Analysis of Fabric ================================================================================ Based on Selected Public Textile Companies. (Dollars in millions)
Implied Fabric Implied Fabric Implied Fabric Precedent Enterprise Equity Per Share Fabric Value Range(b) Value Range Value Range(c) Value Range(d) LTM ---------------- ---------------- ---------------- ---------------------------- 5/30/1999(a) Low High Low High Low High Low Mean High ------------ ---------------- ---------------- ---------------- ---------------------------- Net Sales $90.6 40.0% 50.0% $36.3 $45.3 $40.1 $49.2 $11.05 $12.29 $13.54 EBITDA 6.4 3.0x 5.0x 19.2 31.9 23.0 35.8 6.34 8.10 9.86 EBIT 4.5 5.0x 7.0x 22.4 31.4 26.3 35.3 7.23 8.47 9.70 LTM Net Income 2.0 7.5x 9.5x 11.0 15.0 14.9 18.9 4.11 4.66 5.21
(a) Source: Company's Form 10-Q for the fiscal quarter ended May 30, 1999 and Company's Form 10-K for the fiscal year ended August 30, 1998. (b) Based on analysis of selected comparable publicly-traded small cap textile companies. (c) Equity represents enterprise value minus debt plus cash as of fiscal quarter ended May 30, 1999. (d) Source: Company's Management. Assumed same number of shares outstanding as of 5/30/99 and 182,500 options which are currently in the money. - -------------------------------------------------------------------------------- PROJECT FABRIC 37 PETER J. SOLOMON COMPANY Summary Analysis of Selected Precedent Transactions ================================================================================ Based on "Going Private" Transactions of Companies with Enterprise Value Between $10 and $50 million from 1997 to Present.
($ in millions) Enterprise Value as a Equity Value as a Enterprise Value as a Multiple of: Multiple of: ------------------------------------ ------------------ Date Acquiror Name Enterprise LTM LTM LTM Equity LTM Net Annc'd Target Name Value (a) Sales EBITDA EBIT Value Income - ------ ---------------------------------- ---------- ------------------------------------ ------ ------------------ Jun-99 Investor Group $12.4 20.3% 3.6x 3.9x $14.9 8.1x Winston Resources, Inc. Dec-98 SRC Holdings 42.6 43.8 5.1 10.4 28.8 11.5 Back Bay Restaurants Group Inc Sep-98 PH II Inc 14.3 73.1 4.0 4.9 8.7 4.8 THT Inc Aug-98 Malt Acquiring Inc 14.4 51.8 3.4 4.4 15.8 7.5 Lion Brewery Inc May-97 Oxford Automotive Inc 19.1 20.5 7.1(b) 15.9(b) 19.5 27.9(b) Howell Industries Inc Mar-97 Hamilton Acquisition LLC 30.9 23.7 4.7 6.1 36.2 11.0 Strober Organization Inc Jan-97 HIG Investment Group 27.4 60.1 NA 7.0 21.5 8.3 Thermal Industries Inc ----------------------------------------------------------------------------- Mean 41.9% 4.2x 6.1x 8.5x Median 43.8% 4.0x 5.5x 8.2x -----------------------------------------------------------------------------
Source: Securities Data Co and other public sources. (a) Enterprise value equals equity value plus debt less cash. (b) Excluded as outlier. - -------------------------------------------------------------------------------- PROJECT FABRIC 38 PETER J. SOLOMON COMPANY Summary Valuation Analysis of Fabric ================================================================================ Based on "Going Private" Transactions of Companies with Enterprise Value Between $10 and $50 million. (Dollars in millions)
Implied Fabric Implied Fabric Implied Fabric Precedent Enterprise Equity Per Share Fabric Value Range(b) Value Range Value Range(c) Value Range(d) LTM -------------- ---------------- ---------------- ------------------------------- 5/30/1999(a) Low High Low High Low High Low Mean High ------------ ----- ----- ----- ----- ----- ----- ----- ------ ------ Net Sales $90.6 35.0% 45.0% $31.7 $40.8 $35.6 $44.7 $9.80 $11.05 $12.29 EBITDA 6.4 3.5x 5.0x 22.4 31.9 26.2 35.8 7.22 8.54 9.86 EBIT 4.5 5.0x 7.0x 22.4 31.4 26.3 35.3 7.23 8.47 9.70 LTM Net Income 2.0 7.0x 11.0x 10.1 18.0 13.9 21.9 3.84 4.93 6.03
(a) Source: Company's Form 10-Q for the fiscal quarter ended May 30, 1999 and Company's Form 10-K for the fiscal year ended August 30, 1998. (b) Based on analysis of selected comparable "going private" company transactions. (c) Equity represents enterprise value minus debt plus cash as of fiscal quarter ended May 30, 1999. (d) Source: Company Management. Assumed same number of shares outstanding as of 5/30/99 and 182,500 options which are currently in the money. - -------------------------------------------------------------------------------- PROJECT FABRIC 39 PETER J. SOLOMON COMPANY Discounted Cash Flow Analysis ================================================================================ (Dollars in millions)
Projected Fiscal Year Ending August 30, (a) ---------------------------------------------------- 1999E 2000P 2001P 2002P 2003P ---------------------------------------------------- Revenues $87.8 $89.0 $90.6 $92.7 $94.8 Year-to-Year % Growth -- 1.3% 1.8% 2.3% 2.3% EBITDA 6.4 5.1 4.7 5.0 5.2 % of Revenue 7.3% 5.7% 5.2% 5.4% 5.5% EBIT 4.6 3.3 2.9 3.2 3.4 % of Revenue 5.2% 3.7% 3.3% 3.4% 3.6% Taxes @ 40.0% 1.8 1.3 1.2 1.3 1.4 ---------------------------------------------------- Unlevered Net Income 2.7 2.0 1.8 1.9 2.1 Depreciation and Amortization 1.8 1.8 1.8 1.8 1.8 Changes in Working Capital 0.2 (0.5) (0.5) (0.6) (0.6) Capital Expenditure (1.8) (1.8) (1.8) (1.8) (1.8) ---------------------------------------------------- Free Cash Flow $2.9 $1.4 $1.3 $1.3 $1.4 ==================================================== 4.0x 5.0x 6.0x Terminal Value EBITDA Multiple ----------------------------------------------------------------------------------------------- Discount Rate 9.0% 10.0% 11.0% 9.0% 10.0% 11.0% 9.0% 10.0% 11.0% ----------------------------------------------------------------------------------------------- Present Value of Free Cash Flow $4.4 $4.3 $4.2 $4.4 $4.3 $4.2 $4.4 $4.3 $4.2 Present Value of Terminal Value 14.8 14.3 13.8 18.5 17.9 17.2 22.2 21.4 20.7 ----- ----- ----- ----- ----- ----- ----- ----- ----- Total Enterprise Value $19.2 $18.6 $18.0 $22.9 $22.2 $21.5 $26.6 $25.8 $24.9 Less: Net Debt (as of 5/30/99) (3.9) (3.9) (3.9) (3.9) (3.9) (3.9) (3.9) (3.9) (3.9) ===== ===== ===== ===== ===== ===== ===== ===== ===== Equity Value $23.1 $22.5 $21.9 $26.8 $26.1 $25.3 $30.5 $29.6 $28.8 Shares Outstanding 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 Total Equity Value Per Share (b) $6.36 $6.19 $6.03 $7.38 $7.17 $6.97 $8.40 $8.16 $7.92 -----------------------------------------------------------------------------------------------
- ---------- (a) Company Management. (b) Based on outstanding shares as of May 30, 1999 and options which are currently in the money. Treasury stock method applied to 182,500 options, as provided by Company Management. - -------------------------------------------------------------------------------- PROJECT FABRIC 40 PETER J. SOLOMON COMPANY EX-99.(D)(2) 4 CORRESPONDENCE LETTER OF TRANSMITTAL To Tender Shares of Common Stock of CONCORD FABRICS INC. at $7.875 Net Per Share Pursuant to the Offer to Purchase Dated August 31, 1999 by Concord Merger Corp., a Delaware corporation - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON SEPTEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank or other nominee to the Depository at one of its addresses set forth below. The Depository for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Overnight Courier Delivery: Post Office Box 3301 85 Challenger Road-Mail South Hackensack, NJ 07606 Drop-Reorg Attn.: Reorganization Department Ridgefield Park, NJ 07660 Attn.: Reorganization Department By Facsimile Transmission: By Hand: (201) 329-8936 120 Broadway, 13th Floor Confirm by Telephone: New York, NY 10271 (201) 296-4860 Attn.: Reorganization Department DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- ------------------------------------------------------------------------------------------------------------------------------------ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------------------------ Name(s) and Address(es) of Registered Holder(s) Share Certificate(s) and Share(s) Tendered (Please fill in, if blank, exactly as name(s) appear(s) (Attach additional list if necessary) on Share Certificate(s) and Share(s) Tendered) - ------------------------------------------------------------------------------------------------------------------------------------ Total Number Share of Shares Number Certificate Represented of Shares Number(s)* by Certificates** Tendered ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- Total Number of Common Shares - ------------------------------------------------------------------------------------------------------------------------------------ * Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the Depository are being tendered hereby. See Instruction 4. - ------------------------------------------------------------------------------------------------------------------------------------
This Letter of Transmittal is to be completed by stockholders either if certificates are to be forwarded herewith or if delivery is to be made by book-entry transfer to the Depository's account at The Depository Trust Company or Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in "The Tender Offer - 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITORY. BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY. Stockholders whose certificates evidencing Shares ("Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other documents required hereby to the Depository prior to the Expiration Date (as defined in "The Tender Offer - 1. Terms of the Offer" of the Offer to Purchase) or who cannot comply with the book-entry transfer procedures on a timely basis must tender their Shares according to the guaranteed delivery procedure set forth in "The Tender Offer - 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase. See Instruction 2. |_| CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITORY WITH ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of Tendering Institution: _________________________________________________ Check Box of Book-Entry Transfer Facility (check one): |_| The Depository Trust Company |_| Philadelphia Depository Trust Company Account Number: ________________________________________________________________ Transaction Code Number: _______________________________________________________ |_| CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY SENT TO THE DEPOSITORY PRIOR TO THE DATE HEREOF AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): ________________________________________________ Window Ticket Number (if any): _________________________________________________ Date of Execution of Notice of Guaranteed Delivery: ____________________________ Name of Institution that Guaranteed Delivery: __________________________________ The names and addresses of the registered holders should be printed, if not already printed above, exactly as they appear on the certificates representing Shares tendered hereby. The certificates and number of Shares that the undersigned wishes to tender should be indicated in the appropriate boxes. |_| CHECK HERE IF TENDER IS BEING MADE PURSUANT TO LOST, STOLEN, DESTROYED OR MUTILATED SECURITIES. SEE INSTRUCTION 11. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to Concord Merger Corp., a Delaware corporation ("Purchaser"), the above-described shares of Common Stock, par value $0.50 per share (collectively, the "Shares"), of Concord Fabrics Inc., a Delaware corporation (the "Company"), at $7.875 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 4, 1999 (the "Offer to Purchase"),the Supplement to Offer to Purchase, dated August 31, 1999 (the "Supplement to Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). The undersigned understands that Purchaser reserves the right to transfer or assign, in whole or in part from time to time, to one or more of its affiliates, the right to purchase Shares tendered pursuant to the Offer. Subject to and effective upon acceptance for payment of the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and irrevocably appoints the Depository the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver Share Certificates evidencing such Shares, or transfer ownership of such Shares on the account books maintained by any of the Book-Entry Transfer Facilities, together, in either case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser, upon receipt by the Depository, as the undersigned's agent, of the purchase price (adjusted, if appropriate, as provided in the Offer to Purchase), (b) present such for transfer on the books of the Company, and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Purchaser or any other designees of Purchaser, the attorneys and proxies of the undersigned, each with full power of substitution, to the full extent of the undersigned's rights, including to exercise such voting and other rights as each such attorney and proxy or his (or her) substitute shall, in his (or her) sole discretion, deem proper, and otherwise act (including pursuant to written consent), with respect to all of the Shares tendered hereby which have been accepted for payment by Purchaser, which the undersigned is entitled to vote at any meeting of stockholders of the Company (whether annual or special and whether or not an adjourned meeting), or written consent in lieu of such meeting, or otherwise. This proxy and power of attorney is coupled with an interest in the Shares tendered hereby and is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall, without further action, revoke all prior proxies and consents granted by the undersigned with respect to such Shares, and no subsequent proxy or power of attorney or written consent shall be given (and if given or executed, shall be deemed not to be effective) with respect thereto by the undersigned. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser is able to exercise full voting and other rights with respect to such Shares (including voting at any meeting of stockholders then scheduled or acting by written consent without a meeting). The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby, and that when such Shares are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and that none of such Shares will be subject to any adverse claim. The undersigned, upon request, shall execute and deliver any signature guarantees or additional documents deemed by the Depository or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in "The Tender Offer - 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any Share Certificates evidencing Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any Share Certificates evidencing Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or return any Share Certificates evidencing Shares not purchased (together with accompanying documents as appropriate) in the name(s) of, and deliver said check and/or return such Share Certificates to, the person or persons so indicated. Stockholders tendering Shares by book-entry transfer may request that any Shares not accepted for payment be returned by crediting the account at the Book-Entry Transfer Facility designated above or as such stockholder may designate by making an appropriate entry under "Special Payment Instructions." The undersigned recognizes that Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered holder(s) thereof if Purchaser does not accept for payment any of the Shares so tendered. ================================================================================ SPECIAL PAYMENT INSTRUCTIONS (See Instructions 1, 5, 6, and 7) To be completed ONLY if the check for the purchase price of Shares purchased or Share Certificates evidencing Shares not tendered or not purchased are to be issued in the name of someone other than the undersigned. Issue: |_| Check and/or |_| Certificate(s) To: Name: __________________________________________________________________________ (Please Print) Address: _______________________________________________________________________ (Please Print) ________________________________________________________________________________ (Zip Code) ________________________________________________________________________________ (Tax Identification or Social Security Number) (See Substitute Form W-9) |_| Check here if any of the Share Certificates that you own and wish to tender have been lost, destroyed or stolen. (See Instruction 11.) Number of Shares represented by lost, destroyed or stolen certificates: ================================================================================ ================================================================================ SPECIAL DELIVERY INSTRUCTIONS (See Instructions 5 and 7) To be completed ONLY if the check for the purchase price of Shares purchased or Share Certificates evidencing Shares not tendered or not purchased are to be mailed to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Shares Tendered." Mail: |_| Check and/or |_| Certificate(s) To: Name: __________________________________________________________________________ (Please Print) Address: _______________________________________________________________________ (Please Print) ________________________________________________________________________________ (Zip Code) ________________________________________________________________________________ (Tax Identification or Social Security Number) (See Substitute Form W-9) ================================================================================ (Please also complete the enclosed Substitute Form W-9 herein) ================================================================================ STOCKHOLDERS SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN) X ______________________________________________________________________________ X ______________________________________________________________________________ SIGNATURE(S) OF STOCKHOLDER(S) Dated: ___________________________________________________________________, 1999 Name(s) ________________________________________________________________________ ________________________________________________________________________________ (Please Type or Print) Capacity (full title): _________________________________________________________ Address: _______________________________________________________________________ ________________________________________________________________________________ (Including Zip Code) Area Code and Telephone No.: ___________________________________________________ Employer Identification or Social Security Number: _____________________________ GUARANTEE OF SIGNATURE(S) (If Required - See Instructions 1 and 5) ________________________________________________________________________________ AUTHORIZED SIGNATURE _____________________________________ _____________________________________ FULL TITLE NAME OF FIRM ________________________________________________________________________________ ADDRESS (INCLUDE ZIP CODE) ________________________________________________________________________________ AREA CODE AND TELEPHONE NUMBER Date: ____________________________________________________________________, 1997 ================================================================================ INSTRUCTIONS (FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER) 1. Guarantee of Signatures. All signatures on this Letter of Transmittal must be guaranteed by a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States (each of the foregoing, an "Eligible Institution"), except in cases where (a) the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and such holder has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal, or (b) such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by stockholders either if Share Certificates are to be forwarded herewith or if a tender of Shares is to be made pursuant to the procedures for delivery by book-entry transfer set forth in "The Tender Offer - 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase. Share Certificates evidencing all physically tendered Shares, or confirmation ("Book-Entry Confirmation") of any book-entry transfer into the Depository's account at a Book-Entry Transfer Facility of Shares delivered by book-entry transfer as well as a properly completed and duly executed Letter of Transmittal, must be received by the Depository, at one of the addresses set forth herein prior to the Expiration Date (as defined in "The Tender Offer - 1. Terms of the Offer" of the Offer to Purchase). If Share Certificates are forwarded to the Depository in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Stockholders whose Share Certificates are not immediately available, who cannot deliver their Share Certificates and all other required documents to the Depository prior to the Expiration Date or who cannot comply with the book-entry transfer procedures on a timely basis may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in "The Tender Offer - 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase. Pursuant to such procedure, (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser, must be received by the Depository prior to the Expiration Date and (iii) the Share Certificates evidencing all physically tendered Shares (or Book-Entry Confirmation with respect to such Shares), as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Depository within three American Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in "The Tender Offer - 3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to Purchase. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITORY. IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted. All tendering stockholders, by execution of this Letter of Transmittal (or facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. Inadequate Space. If the space provided herein under "Description of Shares Tendered" is inadequate, the certificate numbers and/or the number of Shares tendered should be listed on a separate signed schedule and attached hereto. 4. Partial Tenders. (Not applicable to stockholders who tender by book-entry transfer.) If fewer than all the Shares evidenced by any Share Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, new Share Certificate(s) evidencing the remainder of the Shares that were evidenced by the old Share Certificate(s) will be sent to the registered holder, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Share Certificates delivered to the Depository will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Share Certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any tendered Shares are registered in different names on several Share Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such Shares. If this Letter of Transmittal is signed by the registered holder(s) of the Shares evidenced by Share Certificates listed and transmitted hereby, no endorsements of Share Certificates or separate stock powers are required unless payment is to be made to or Share Certificates evidencing Shares not tendered or purchased are to be issued in the name of a person other than the registered holder(s), in which case the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such certificates and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holder or holders appear on the Share Certificate(s). Signatures on such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any Share Certificates or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or any person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of such person's authority so to act must be submitted. 6. Stock Transfer Taxes. Except as set forth in this Instruction 6, Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if Share Certificates evidencing Shares not tendered or purchased are to be registered in the name of, any person other than the registered holder(s), or if Share Certificates evidencing tendered Shares are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such other person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF TRANSMITTAL. 7. Special Payment and Delivery Instructions. If a check for the purchase price of any Shares tendered hereby is to be issued, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Letter of Transmittal or if such check or any such Share Certificate is to be sent and/or any Share Certificates are to be returned to someone other than the signer above, or to the signer above but at an address other than that shown in the box entitled "Description of Shares Tendered" on the first page hereof, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account maintained at any of the Book-Entry Transfer Facilities as such stockholder may designate under "Special Delivery Instructions." If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facilities designated above. 8. Request for Assistance or Additional Copies. Requests for assistance may be directed to, or additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from, the Information Agent or the Dealer Managers at the telephone numbers and address set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company. 9. Waiver of Conditions. Except as otherwise provided in the Offer to Purchase, Purchaser reserves the right in its sole discretion to waive in whole or in part at any time or from time to time any of the specified conditions of the Offer or any defect or irregularity in tender with regard to any Shares tendered. 10. Substitute Form W-9. The tendering stockholder is required to provide the Depository with a correct Taxpayer Identification Number ("TIN"), generally the stockholder's social security or employer identification number, on Substitute Form W-9, which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, whether he or she is subject to backup withholding of federal income tax. If a tendering stockholder is subject to backup withholding, he or she must cross out item (2) of the Certification Box on Substitute Form W-9. Failure to provide the information on Substitute Form W-9 may subject the tendering stockholder to 31% federal income tax withholding on the payment of the purchase price. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, he or she should write "Applied For" in the space provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I and the Depository is not provided with a TIN within 60 days, the Depository will withhold 31% of payments for surrendered Shares thereafter until a TIN is provided to the Depository. 11. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder of a Share Certificate whose certificate(s) has been mutilated, lost, stolen or destroyed should (i) complete this Letter of Transmittal and check the appropriate box on this Letter of Transmittal and (ii) complete and return to the Depository any additional documentation, including the posting of any indemnity bond, requested by the Depository. If required by Purchaser, the holder will be required to post a bond in such reasonable amount as Purchaser may direct as indemnity against any claim that may be made against Purchaser or any of its respective affiliates with respect to such certificate(s). IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY DELIVERY, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY CONFIRMATION) AND ALL OTHER REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITORY ON OR PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under federal tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depository (as payor) with such stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is an individual, the TIN is such stockholder's Social Security Number. If the Depository is not provided with the correct TIN or an adequate basis for exemption, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding in an amount equal to 31% of the gross proceeds resulting from the Offer. Certain stockholders (including, among others, certain corporations and foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that stockholder must submit an IRS Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depository. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depository is required to withhold 31% of any payments made to the stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. Purpose of Substitute Form W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depository of his or her correct TIN by completing the Substitute Form W-9 contained herein, certifying that the TIN provided on the Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and that (1) the stockholder is exempt from backup withholding, (2) the stockholder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of failure to report all interest or dividends, or (3) the Internal Revenue Service has notified the stockholder that he or she is no longer subject to backup withholding. What Number to Give the Depository The stockholder is required to give the Depository the social security number or employer identification number of the record owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, he or she should write "Applied For" in the space provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I and the Depository is not provided with a TIN within 60 days, the Depository will withhold 31% of all payments of the purchase price until a TIN is provided to the Depository.
==================================================================================================================================== ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING: PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, LLC, AS DEPOSITORY - ------------------------------------------------------------------------------------------------------------------------------------ SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY Social security Form W-9 SIGNING AND DATING BELOW number or ______/______/_______ Employer identification number - ------------------------------------------------------------------------------------------------------------------------------------ DEPARTMENT OF THE TREASURY NAME (PLEASE PRINT): ___________________________ (If awaiting TIN INTERNAL REVENUE SERVICE write "Applied For") ADDRESS: _______________________________________ - ------------------------------------------------------------------------------------------------------------------------------------ Payer's Request for Taxpayer PART II--For Payees NOT subject to backup withholding, see the enclosed Identification Number (TIN) Guidelines for Certification of Taxpayer Identification Number on Substitute and Certification Form W-9 and complete as instructed therein. CITY:________________ ______________________________________________________________________________ STATE:_______________ ZIP CODE:____________ CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. - ------------------------------------------------------------------------------------------------------------------------------------ CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding you received under notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) Signature: _________________________________ Dated: ________________________, 1999 ====================================================================================================================================
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART I OF SUBSTITUTE FORM W-9. ================================================================================ CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Officer or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number. Signature(s): _________________________________ Dated: _____________________ ================================================================================ The Information Agent for the Offer is: AMERICAN STOCK TRANSFER & TRUST COMPANY 40 Wall Street 46th Floor New York, NY 10005 (800) 937-5449 or (212) 936-5100 The Dealer Manager for the Offer are: FIRST UNION CAPITAL MARKETS CORP. 901 East Byrd Street 3rd Floor Richmond, VA 23219 (800) 532-2916 -----END PRIVACY-ENHANCED MESSAGE-----