EX-16.(C)(3) 6 dex16c3.txt EXHIBIT 16.(C)(3) Exhibit 16(C)(3) BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- 05.27.03 PRESENTATION TO THE INDEPENDENT COMMITTEE OF THE BOARD OF DIRECTORS This presentation and its analyses are only for the use of the Independent Committee of the Board of Directors and are not intended to, nor should they be, relied upon by any other party, including shareholders of BCT International, Inc. The consent of Capitalink is required prior to the disclosure to any third party of this presentation, its analyses, or of the assessments made by Capitalink. These materials are based solely on information contained in publicly available documents and certain other information provided to Capitalink by management and the Independent Committee of the Board of Directors. Capitalink has not attempted to investigate or verify the accuracy or completeness of such publicly available information or other information provided to Capitalink. Capitalink has relied upon the accuracy and completeness of such publicly available information and other information supplied to Capitalink. These materials are being furnished, and should be considered only in connection with, the oral presentation being provided by Capitalink in connection herewith. The preparation of these materials was completed on May 23, 2003 based on information publicly available or supplied to Capitalink through such date. Capitalink is not obligated to update this presentation or its analyses to reflect any information that becomes publicly available or that is provided to Capitalink after such date. [LOGO] BCT [LOGO] CAPITAL LINK Smart Investment Banking/SM/ BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TABLE OF CONTENTS TRANSACTION OVERVIEW...........................................................3 COMPANY OVERVIEW..............................................................12 COMPANY FINANCIAL PERFORMANCE.................................................15 COMPANY MARKET PERFORMANCE....................................................28 VALUATION ANALYSIS............................................................35 Page 2 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW Page 3 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW INTRODUCTION . The Independent Committee of the Board of Directors of BCT International, Inc. ("BCT" or the "Company") has retained Capitalink, L.C. ("Capitalink") as financial advisor and to render an opinion as to whether, on the date of such opinion, the Merger Consideration (as defined below) as set forth in the draft Agreement and Plan of Merger, dated May 19, 2003, by and among the Company, Phoenix Group of Florida, Inc. ("Phoenix"), Phoenix Acquisition Corp and William A. Wilkerson ("Wilkerson", and collectively with Phoenix, the "Phoenix Group") (the "Draft Agreement"), to purchase, by means of a merger, all of the Company's outstanding common stock that is not beneficially owned by Phoenix or Wilkerson, or their respective affiliates (the "Non-Affiliated Stockholders")(the "Proposed Transaction") is fair, from a financial point of view, to the Non-Affiliated Stockholders of the Company. . The Company's common stock is publicly traded on the over-the-counter market under the symbol "BCTI", and as of May 23, 2003, there were 5,121,471 shares of the Company's common stock outstanding (excluding treasury shares). . The closing price of the Company's stock on May 23, 2003 (date presentation materials completed) was $1.00. . The consideration proposed by Phoenix is $2.00 in cash for each share of the Company's common stock not beneficially owned by the Phoenix Group (the "Merger Consideration"). . Wilkerson, who is also the Company's Chairman and Chief Executive Officer, owns Phoenix. . The Phoenix Group beneficially owns 2,690,282 shares of common stock or approximately 52.6% of the issued and outstanding common stock. In addition, Wilkerson has an option to acquire an additional 327,500 shares of the common stock. If this option were exercised the Phoenix Group would then be the owner of 3,094,487 shares of common stock or approximately 55.4% of the issued and outstanding common stock. Page 4 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW SUMMARY OF PROPOSED TRANSACTION TERMS Merger Consideration: $2.00 per share. Transaction Structure: The Phoenix Group will acquire the outstanding common stock of the Company that it does not own through a merger with a wholly owned subsidiary of Phoenix with the Company, which shall continue to operate under the name BCT International, Inc. Estimated Timetable: The agreement is terminable by either party if not consummated on or prior to December 31, 2003. Shareholder Vote: The Company shall hold a stockholders meeting to be held as promptly as practicable for the purposes of voting upon the approval of the Proposed Transaction. A majority of the outstanding shares of common stock held by the Non-Affiliated Stockholders is required to approve the Proposed Transaction. Dissenters Rights: The consummation of the proposed transaction is conditioned, among other things, on holders of no more than 25% of the Company's outstanding common stock exercising their right to dissent from the Proposed Transaction, under the Delaware General Corporation Law (the "DGCL"). To the extent provided by the DGCL, Phoenix will not make any payment of merger consideration with respect to shares held by any person who elects to demand appraisal of such dissenting stockholder's shares and duly and timely complies with all the provisions of the DGCL concerning the right of holders of shares to require appraisal of their shares, but such dissenting stockholders shall have the right to receive such consideration as may be determined to be due such dissenting stockholders pursuant to the DGCL. Page 5 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW SUMMARY OF PROPOSED TRANSACTION TERMS Stock Options Generally: The Company will take necessary action to cause all outstanding options to terminate and expire upon consummation of the Proposed Transaction. No consideration shall be paid with respect to Company options beneficially owned by Wilkerson. Phoenix Group Stock Options: Members of the Phoenix Group shall not exercise options to purchase any additional shares of the Company's common stock, and the Company shall not exercise options to acquire any shares of its common stock from members of the Phoenix Group; provided however, that if there is a Competing Proposal or a Superior Proposal (each as defined in the Draft Agreement), Phoenix shall grant the Independent Committee a proxy to vote 454,036 shares of the Company's common stock currently held by members of the Phoenix Group (which are subject to an option held by the Company to purchase such shares). Competing Transactions: The Company may enter into discussions or negotiate with a party that makes an unsolicited written, bona fide proposal to the Company, provided, among other things, that Phoenix Group is provided with reasonable notice of the existence of such discussions or negotiations. Page 6 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW BACKGROUND OF AND EVENTS LEADING TO PROPOSED TRANSACTION . In September 2001, Phoenix offered to acquire the Company's outstanding stock not owned or controlled by the Phoenix Group for $0.85 per share in cash. During the Fall of 2001, the Independent Committee negotiated with members of the Phoenix Group, which concluded in an offer accepted at $1.13 in cash. . Subsequently, during the Securities and Exchange Commission review period, the Company and Phoenix Group agreed to terminate the offer. Pursuant to prior agreements, the Company retained options to acquire certain shares the Phoenix Group owned at prices ranging from $0.90 to $1.75. . In October 2002, the Company received an unsolicited indication of interest letter from a third party considering an offer to acquire the Company at a price ranging from $1.25 to $1.75 per share. . The Company had a preliminary discussion with the third party regarding their intentions. About that same time, management had begun to revise and update its business plans and strategy. Management asked the third party for a period of time to finalize their new plans and budgets. . In January 2003, the Independent Committee retained Capitalink to serve as its financial advisor. In addition, management presented the Independent Committee and Capitalink with a revised business plan and budgets. Subsequently Capitalink reviewed with management their business plan and budgets. . During January through March 2003, the Independent Committee and Capitalink had numerous meetings and discussions regarding the Company's strategic alternatives and management's revised business plan and budgets. . In late March 2003, Capitalink provided the Independent Committee with its recommendations. . On April 23, 2003, the Company received a proposal from Phoenix to acquire the outstanding shares of the Company's common stock not owned by the Phoenix Group for cash consideration. The proposal indicated a belief that the fair range of per share consideration was $1.50 to $1.60, but that the Phoenix Group was willing to negotiate a price closer to $2.00 per share. Page 7 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW BACKGROUND OF AND EVENTS LEADING TO PROPOSED TRANSACTION . The Phoenix Group and the Independent Committee entered into negotiations, and on May 5, 2003, the Phoenix Group submitted a proposal of $1.85 per share. . The Independent Committee had additional discussions with Capitalink and subsequently entered into further negotiations with the Phoenix Group. . On May 8, 2003, the Independent Committee and the Phoenix Group agreed on per share consideration of $2.00. . The Independent Committee subsequently instructed Capitalink to undertake its analyses required to issue a fairness opinion. Page 8 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW SCOPE OF ENGAGEMENT . The Independent Committee has retained Capitalink to render an opinion as to the fairness, from a financial point of view, of a proposal by Phoenix to purchase, by means of a merger, all of the Company's outstanding common stock not beneficially owned by the Phoenix Group. . For purposes of rendering its opinion, Capitalink has: . Reviewed documents relating to the Proposed Transaction, including the Draft Agreement. . Reviewed publicly available financial information and other data with respect to the Company, including the Annual Report on Form 10-K for the fiscal year ended February 28, 2002, and the Quarterly Report on Form 10-Q for the quarter ended November 30, 2002. . Reviewed draft financial information provided by the Company for the fiscal year ended February 28, 2003. . Reviewed and analyzed the Company's projected unlevered free cash flows and prepared discounted cash flows. . Reviewed and analyzed certain financial characteristics of companies that were deemed to have characteristics comparable to those of the Company. . Reviewed and analyzed the premiums paid in transactions involving the acquisition of a minority ownership interest in publicly-traded companies. . Reviewed and analyzed the premiums implied by the per share consideration in the Proposed Transaction. . Reviewed and analyzed the Company's adjusted book value. . Reviewed and analyzed the market value of the Notes (as defined below). . Reviewed and discussed with representatives of the management of the Company certain financial and operating information furnished by them, including financial analyses and projections and related assumptions with respect to the business, operations and prospects of the Company. . Considered the historical financial results and present financial condition of the Company. . Reviewed certain publicly available information concerning the trading of, and the trading market for, the common stock of the Company. . Inquired about and discussed the Proposed Transaction and other matters related thereto with Company management, the Independent Committee and its legal counsel. Page 9 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW SCOPE OF ENGAGEMENT . Performed such other analyses and examinations as were deemed appropriate. . The Capitalink opinion is necessarily based upon market, economic and other conditions, as they exist on, and could be evaluated as of May 23, 2003. Accordingly, although subsequent developments may affect its opinion, Capitalink does not assume any obligation to update, review or reaffirm its opinion. . Capitalink assumes that the Proposed Transaction will be consummated substantially in accordance with the terms set forth in the Draft Agreement, without any further amendments thereto, and without waiver by the Company of any of the conditions to any obligations or in the alternative that any such amendments, revisions or waivers thereto will not be detrimental to the Company or the Non-Affiliated Stockholders of the Company. . Capitalink has relied upon and assumed the accuracy and completeness of all of the financial and other information that was used by it without assuming any responsibility for any independent verification of any such information and has further relied upon the assurances of Company management that it is not aware of any facts or circumstances that would make any such information inaccurate or misleading. With respect to the financial projections utilized, Capitalink assumed that such projections have been reasonably prepared on a basis reflecting the best currently available estimates and judgments, and that such projections provide a reasonable basis upon which it could form an opinion. . Capitalink has not made a physical inspection of the properties and facilities of the Company and has not made or obtained any evaluations or appraisals of the assets and liabilities (contingent or otherwise) of the Company. Page 10 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- TRANSACTION OVERVIEW SCOPE OF ENGAGEMENT . Capitalink assumed that the Proposed Transaction will be consummated in a manner that complies in all respects with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statues, rules and regulations. In addition, based upon discussions with the Company, it is assumed that the Proposed Transaction will be a taxable event to the Company's stockholders. . Capitalink has not been requested to opine as to, and the opinion does not in any manner address, the underlying business decision of the Company to proceed with or affect the Proposed Transaction. . Capitalink was not asked to consider, and its opinion does not address, the relative merits of the Proposed Transaction as compared to any alternative business strategy that might exist for the Company. Capitalink was not engaged to seek alternatives to the Proposed Transaction that might exist for the Company. . The opinion is for the use and benefit of the Independent Committee in connection with its consideration of the Proposed Transaction and is not intended to be and does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote in connection with the Proposed Transaction. We do not express any opinion as to the underlying valuation or future performance of the Company or the price at which the Company's common stock would trade at any time in the future. Page 11 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY OVERVIEW Page 12 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- OVERVIEW OF COMPANY SUMMARY . BCT International, Inc. is the holding company of Business Cards Tomorrow, Inc. Business Cards Tomorrow, Inc.'s franchise system is the world's largest wholesale franchise printing chain, specializing in thermography products, labels, rubber stamps and business announcements for resale by retail printing providers. . As of May 2003, 82 BCT franchises were in operation in 36 states and Canada (eight franchises). . Thermography is a specialized printing process that gives a raised printing effect similar to engraving and requires specialized equipment and operating techniques which commercial printers, quick printers, office superstores and other retail dealers choose not to invest in. . The Company's franchises typically operate through the placement of business card, stationery, rubber stamp and labels catalogs with commercial and retail "quick" printers, office superstores, forms brokers, office supply companies and stationers in the franchises' trade areas. . Franchises specialize in the fast turnaround of their products, delivering many items, such as business cards, in one business day, with most products being delivered within two days of the date of order. . BCT's operations also include the Pelican Paper Products Division ("PPP") that supplies paper products, press supplies and press parts to the BCT franchises (PPP is a primary supplier of paper products for the BCT franchises). PPP purchases raw paper directly from paper mills and paper brokers and utilizes the services of converters to convert the raw material to finished paper products. . PPP also performs converting and handling services for third parties. PPP utilizes three public storage facilities located strategically throughout the United States to house and ship out paper products to the franchises. . The Company's Orderprinting.com is a web-based ordering system that allows users to special order products from a personalized Internet site. The orders are electronically transmitted to the local BCT franchise for processing. Page 13 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- OVERVIEW OF COMPANY SUMMARY . BCT derives its revenue from five principal sources: (i) royalties, which are based on a percentage of sales of the BCT franchises; (ii) franchise fees from newly franchised franchises and resale fees from the resale of operating franchises; (iii) sales of paper products to franchisees; (iv) catalog and miscellaneous equipment and parts sales classified as printing sales; and (v) interest income from financing franchise acquisitions (primarily resales) and receivables. . Capitalink noted several general factors to be considered in connection with the status of BCT as a publicly traded company: . The Company's common stock was delisted from NASDAQ National Market based on its failure to meet the minimum market value public float requirement of $5 million and it has traded on the OTC Bulletin Board since September 2001. . The Company does not have a distinct comparable peer group. For this reason, among others, the Company does not have any analyst coverage. . The Company's common stock historically has a limited trading volume and therefore a lack of liquidity for the Company's stockholders. . The Company is not part of a high-growth industry that attracts investor interest and a high trading multiple. . The Company has not realized the benefits of public company status (i.e., ability to raise capital, use of stock as currency in acquisitions), but incurs the increased expenses necessary to comply with reporting requirements and other public company obligations. Page 14 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Page 15 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE . Capitalink reviewed the Company's historical and estimated financial data for the five years ended February 28, 2003. In addition, Capitalink reviewed the Company's preliminary projections for the fiscal years ("FY") ending February 29, 2004 through February 28, 2007. . Revenue for the Company remained constant over the historical and review period - with a low of $17.5 million and a high of $19.3 million. Of the total revenue, approximately 28% is derived from royalties and franchise fees and approximately 64% from paper and printing sales. For FY2003, the Company also derived revenue of approximately $1.0 million from the operation of two Company-owned plants. . Over the past five fiscal years, the Company's gross margin for paper and printing sales has remained constant at approximately 15%. However, the Company's earning before interest, taxes, depreciation and amortization ("EBITDA") has gradually fallen from a high of $3.0 million in FY1999 to $791,000 in FY2002, primarily as a result of rising selling, general and administrative costs. In addition, FY2002 EBITDA was negatively impacted from the downturn in the U.S. economy as a result of the events of September 11th. For FY2003, EBITDA increased slightly to approximately $1.2 million. . Despite little growth in the Company's underlying business, the Company's capital position has improved significantly over the past five years, with rising cash balances of approximately $1.1 million in FY1999 to $4.2 million in FY2003. This is primarily a result of the repayment of notes owed to the Company by franchisees (the "Notes"). The Notes primarily are comprised of overdue accounts receivable relating to the sale of paper products and royalty revenue that have been converted into longer-term commitments. Of the Company's approximately $10.6 million of total receivables as of February 28, 2003, approximately $6.8 million are represented by the Notes. . As of February 28, 2003, the Company had approximately $523,000 in interest-bearing debt, the majority of which relates to equipment leases on the Company's plant operations. . Given the little growth seen in the Company's core franchising business, the Company has begun several new initiatives, which include the addition of Company-owned plants and the implementation and roll-out of satellite stores. The satellite store plan will involve the franchising of smaller franchise regions to individuals who contract to provide business cards and other forms to customers within that region. The Page 16 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE supply of the cards and other forms would be provided by plants owned by the Company or other franchisees. Page 17 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Normalized Comparative Summary Income Statements ($ in thousands except per share)
for years ended February 28/29, ----------------------------------------------- 1999 2000 2001 2002 2003E ----------------------------------------------- Revenue Royalties and Franchise Fees $ 5,356 $ 5,394 $ 5,267 $ 5,117 $ 5,221 Paper and Printing Sales 12,817 13,881 13,424 12,068 12,019 Sales of Franchises 87 27 46 99 4 Company Owned Plant Sales -- -- -- -- 1,036 Other Fees -- -- 262 315 426 ----------------------------------------------- Total Revenue 18,260 19,302 18,999 17,599 18,706 Cost of Revenue Cost of Paper and Printing Sales 10,939 11,574 11,605 10,592 10,410 Cost of Company Owned Plant Sales -- -- -- -- 237 ----------------------------------------------- Cost of Revenue 10,939 11,574 11,605 10,592 10,647 ----------------------------------------------- Gross Profit 7,321 7,728 7,394 7,007 8,059 Selling, General & Admin 4,290 6,619 6,455 6,376 6,863 Other 186 189 232 226 241 ----------------------------------------------- Total Operating Expenses 4,476 6,808 6,687 6,602 7,104 ----------------------------------------------- Operating Income (Loss) 2,845 920 707 405 955 Interest Income (Expense) 340 336 381 408 303 Other Income (Expense) 6 952 49 -- 18 ----------------------------------------------- Pre-tax Income (Loss) 3,191 2,208 1,137 813 1,276 Income Tax (Benefit) 690 837 442 321 491 ----------------------------------------------- Normalized Net Income $ 2,501 $ 1,371 $ 695 $ 492 $ 785 =============================================== Normalized EBIT $ 2,851 $ 1,872 $ 756 $ 405 $ 973 Total Depreciation & Amortization $ 186 $ 189 $ 232 $ 226 $ 241 Normalized EBITDA $ 3,037 $ 2,061 $ 988 $ 631 $ 1,214 Capital Expenditures, net of Disposals (CAPEX, net) $ 82 $ 262 $ 150 $ 162 $ 427 Normalized EBITDA - CAPEX $ 2,955 $ 1,799 $ 838 $ 469 $ 787 Earnings per Share Basic Normalized EPS $ 0.47 $ 0.26 $ 0.13 $ 0.10 $ 0.15 Basic Reported EPS $ 0.41 $ 0.19 $ 0.13 $ 0.10 $ 0.15 Weighted Average Shares Outstanding (thousands) 5,323 5,257 5,214 5,123 5,121 Diluted Normalized EPS $ 0.45 $ 0.25 $ 0.13 $ 0.10 $ 0.15 Diluted Reported EPS $ 0.39 $ 0.19 $ 0.13 $ 0.10 $ 0.15 Weighted Average Shares Outstanding (thousands) 5,596 5,388 5,235 5,123 5,121 Normalizing Reconciliation Discontinued Operations, net of Taxes $ (327) $ (357) $ (31) $ -- $ -- Extraordinary Items, net of Taxes -- -- -- -- -- ----------------------------------------------- Total Reconciling Items, net of Taxes $ (327) $ (357) $ (31) $ -- $ -- =============================================== Reported Income Tax (Benefit) $ 690 $ 837 $ 442 $ 321 $ 491 Reported Net Income (Loss) $ 2,174 $ 1,014 $ 664 $ 492 $ 785
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management. Page 18 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Normalized Common Sized Summary Income Statements
for years ended February 28/29, ------------------------------------- 1999 2000 2001 2002 2003E ------------------------------------- Revenue Royalties and Franchise Fees 29.3% 27.9% 27.7% 29.1% 27.9% Paper and Printing Sales 70.2% 71.9% 70.7% 68.6% 64.3% Sales of Franchises 0.5% 0.1% 0.2% 0.6% 0.0% Company Owned Plant Sales 0.0% 0.0% 0.0% 0.0% 5.5% Other Fees 0.0% 0.0% 1.4% 1.8% 2.3% ------------------------------------- Total Revenue 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Revenue Cost of Paper and Printing Sales 59.9% 60.0% 61.1% 60.2% 55.7% Cost of Company Owned Plant Sales 0.0% 0.0% 0.0% 0.0% 1.3% ------------------------------------- Cost of Revenue 59.9% 60.0% 61.1% 60.2% 56.9% ------------------------------------- Gross Profit 40.1% 40.0% 38.9% 39.8% 43.1% Selling, General & Admin 23.5% 34.3% 34.0% 36.2% 36.7% Other 1.0% 1.0% 1.2% 1.3% 1.3% ------------------------------------- Total Operating Expenses 24.5% 35.3% 35.2% 37.5% 38.0% ------------------------------------- Operating Income (Loss) 15.6% 4.8% 3.7% 2.3% 5.1% Interest Income (Expense) 1.9% 1.7% 2.0% 2.3% 1.6% Other Income (Expense) 0.0% 4.9% 0.3% 0.0% 0.1% ------------------------------------- Pre-tax Income (Loss) 17.5% 11.4% 6.0% 4.6% 6.8% Income Tax (Benefit) 3.8% 4.3% 2.3% 1.8% 2.6% ------------------------------------- Normalized Net Income 13.7% 7.1% 3.7% 2.8% 4.2% ===================================== Normalized EBIT 15.6% 9.7% 4.0% 2.3% 5.2% Total Depreciation & Amortization 1.0% 1.0% 1.2% 1.3% 1.3% Normalized EBITDA 16.6% 10.7% 5.2% 3.6% 6.5% Capital Expenditures, net of Disposals (CAPEX, net) 0.4% 1.4% 0.8% 0.9% 2.3% Normalized EBITDA - CAPEX 16.2% 9.3% 4.4% 2.7% 4.2% Normalizing Reconciliation Discontinued Operations, net of Taxes -1.8% -1.8% -0.2% 0.0% 0.0% Extraordinary Items, net of Taxes 0.0% 0.0% 0.0% 0.0% 0.0% ------------------------------------- Total Reconciling Items, net of Taxes -1.8% -1.8% -0.2% 0.0% 0.0% ===================================== Reported Income Tax (Benefit) 3.8% 4.3% 2.3% 1.8% 2.6% Reported Net Income (Loss) 11.9% 5.3% 3.5% 2.8% 4.2%
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management. Page 19 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Comparative Summary Balance Sheets ($ in thousands, except per share)
as of February 28/29, ----------------------------------------------- 1999 2000 2001 2002 2003E ----------------------------------------------- Assets Current Assets Cash & Equivalents $ 1,143 $ 1,906 $ 1,799 $ 4,819 $ 4,244 Accounts and Notes Receivable, net 3,252 3,293 3,568 2,889 3,076 Inventory 2,122 2,359 2,352 1,887 2,668 Deferred Income Taxes 476 482 321 419 369 Prepaid & Other 1,281 408 134 259 513 ----------------------------------------------- Total Current Assets 8,274 8,448 8,174 10,273 10,870 Property & Equipment 1,442 1,633 1,707 1,869 2,638 Less Accumulated Depreciation (982) (1,104) (1,234) (1,434) (1,649) ----------------------------------------------- Property & Equipment, net 460 529 473 435 989 Accounts and Notes Receivable, net 6,052 7,275 6,362 5,170 4,807 Deferred Income Taxes 246 722 925 970 956 Intangible Assets, net 284 258 232 206 180 Other Assets 90 89 24 24 47 ----------------------------------------------- $15,406 $17,321 $16,190 $17,078 $17,849 =============================================== Liabilities & Stockholders' Equity Current Liabilities Accounts Payable $ 844 $ 1,111 $ 597 $ 432 $ 875 Accrued Expenses 753 1,349 403 871 519 Interest Bearing Debt 113 104 86 560 255 Other 311 218 167 125 55 ----------------------------------------------- Total Current Liabilities 2,021 2,782 1,253 1,988 1,704 Long Term Interest Bearing Debt 433 330 236 -- 268 Other Long Term -- 453 417 334 335 ----------------------------------------------- Total Liabilities 2,454 3,565 1,906 2,322 2,307 Stockholders' Equity Preferred Stock 60 -- -- -- -- Common Stock 230 233 233 233 233 Paid in Capital 12,506 12,597 12,597 12,605 12,605 Accumulated Earnings (Deficit) 1,322 2,334 2,998 3,490 4,276 Treasury Stock & Stock Receivable (1,166) (1,408) (1,544) (1,572) (1,572) ----------------------------------------------- Total Stockholders' Equity 12,952 13,756 14,284 14,756 15,542 ----------------------------------------------- $15,406 $17,321 $16,190 $17,078 $17,849 =============================================== Net Working Capital $ 6,253 $ 5,666 $ 6,921 $ 8,285 $ 9,166 Common Shares Outstanding (thousands) 5,257 5,231 5,136 5,121 5,121 Book Value per Share $ 2.46 $ 2.63 $ 2.78 $ 2.88 $ 3.03 Tangible Book Value Per Share $ 2.41 $ 2.58 $ 2.74 $ 2.84 $ 3.00
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management. Page 20 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Common Sized Summary Balance Sheets
as of February 28/29, ------------------------------------- 1999 2000 2001 2002 2003E ------------------------------------- Assets Current Assets Cash & Equivalents 7.4% 11.0% 11.1% 28.2% 23.8% Accounts and Notes Receivable, net 21.1% 19.0% 22.0% 16.9% 17.2% Inventory 13.8% 13.6% 14.5% 11.0% 14.9% Deferred Income Taxes 3.1% 2.8% 2.0% 2.5% 2.1% Prepaid & Other 8.3% 2.4% 0.8% 1.5% 2.9% ------------------------------------- Total Current Assets 53.7% 48.8% 50.5% 60.2% 60.9% Property & Equipment 9.4% 9.4% 10.5% 10.9% 14.8% Less Accumulated Depreciation -6.4% -6.4% -7.6% -8.4% -9.2% ------------------------------------- Property & Equipment, net 3.0% 3.1% 2.9% 2.5% 5.5% Accounts and Notes Receivable, net 39.3% 42.0% 39.3% 30.3% 26.9% Deferred Income Taxes 1.6% 4.2% 5.7% 5.7% 5.4% Intangible Assets, net 1.8% 1.5% 1.4% 1.2% 1.0% Other Assets 0.6% 0.5% 0.1% 0.1% 0.3% ------------------------------------- 100.0% 100.0% 100.0% 100.0% 100.0% ===================================== Liabilities & Stockholders' Equity Current Liabilities Accounts Payable 5.5% 6.4% 3.7% 2.5% 4.9% Accrued Expenses 4.9% 7.8% 2.5% 5.1% 2.9% Interest Bearing Debt 0.7% 0.6% 0.5% 3.3% 1.4% Other 2.0% 1.3% 1.0% 0.7% 0.3% ------------------------------------- Total Current Liabilities 13.1% 16.1% 7.7% 11.6% 9.5% Long Term Interest Bearing Debt 2.8% 1.9% 1.5% 0.0% 1.5% Other Long Term 0.0% 2.6% 2.6% 2.0% 1.9% ------------------------------------- Total Liabilities 15.9% 20.6% 11.8% 13.6% 12.9% Stockholders' Equity Preferred Stock 0.4% 0.0% 0.0% 0.0% 0.0% Common Stock 1.5% 1.3% 1.4% 1.4% 1.3% Paid in Capital 81.2% 72.7% 77.8% 73.8% 70.6% Accumulated Earnings (Deficit) 8.6% 13.5% 18.5% 20.4% 24.0% Treasury Stock & Stock Receivable -7.6% -8.1% -9.5% -9.2% -8.8% ------------------------------------- Total Stockholders' Equity 84.1% 79.4% 88.2% 86.4% 87.1% ------------------------------------- 100.0% 100.0% 100.0% 100.0% 100.0% ===================================== Net Working Capital 40.6% 32.7% 42.7% 48.5% 51.4%
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management. Page 21 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Comparative Financial Analysis ($ in thousands, except per share)
as of & for years ended February 28/29, ----------------------------------------------- 1999 2000 2001 2002 2003E ------- ------- ------- ------- ------- Financial Review Revenue $18,260 $19,302 $18,999 $17,599 $18,706 Gross Profit $ 7,321 $ 7,728 $ 7,394 $ 7,007 $ 8,059 Total Operating Expenses $ 4,476 $ 6,808 $ 6,687 $ 6,602 $ 7,104 Operating Income $ 2,845 $ 920 $ 707 $ 405 $ 955 Pre-tax Income (Loss) $ 3,191 $ 2,208 $ 1,137 $ 813 $ 1,276 Normalized Net Income (Loss) $ 2,501 $ 1,371 $ 695 $ 492 $ 785 Normalized EBIT $ 2,851 $ 1,872 $ 756 $ 405 $ 973 Normalized EBITDA $ 3,037 $ 2,061 $ 988 $ 631 $ 1,214 Normalized Basic EPS $ 0.41 $ 0.19 $ 0.13 $ 0.10 $ 0.15 Normalized Diluted EPS $ 0.39 $ 0.19 $ 0.13 $ 0.10 $ 0.15 Total Assets $15,406 $17,321 $16,190 $17,078 $17,849 Net Worth $12,952 $13,756 $14,284 $14,756 $15,542 Tangible Net Worth $12,668 $13,498 $14,052 $14,550 $15,362 Total Interest Bearing Debt $ 546 $ 434 $ 322 $ 560 $ 523 Net Interest Bearing Debt $ (597) $(1,472) $(1,477) $(4,259) $(3,721) Total Capitalization $13,498 $14,190 $14,606 $15,316 $16,065 Financial Strength Quick Ratio 3.0 2.2 4.6 4.2 4.8 Current Ratio 4.1 3.0 6.5 5.2 6.4 Total Liabilities to Net Worth 18.9% 25.9% 13.3% 15.7% 14.8% Total Interest Bearing Debt to Net Worth 4.2% 3.2% 2.3% 3.8% 3.4% Total Interest Bearing Debt to Total Capitalization 4.0% 3.1% 2.2% 3.7% 3.3% Net Interest Bearing Debt to Total Capitalization -4.4% -10.4% -10.1% -27.8% -23.2% Interest Expense to Interest Bearing Debt na na na na na Total Interest Bearing Debt to Normalized EBITDA 0.2 0.2 0.3 0.9 0.4 Normalized EBITDA to Interest Expense na na na na na Normalized EBITDA-CAPEX, net to Interest Exp na na na na na Effectiveness and Efficiency Accounts Receivable Turnover na 5.9 5.5 5.5 6.3 Inventory Turnover na 5.2 4.9 5.0 4.7 Asset Turnover na 1.2 1.1 1.1 1.1 Days Sales Outstanding na 61.9 65.9 67.0 58.2 Days Inventory Outstanding na 70.7 74.1 73.0 78.1 Days Payable Outstanding na 14.8 15.0 13.5 9.0 Normalized EBIT to Average Assets na 11.4% 4.5% 2.4% 5.6% Normalized EBIT to Net Worth na 14.0% 5.4% 2.8% 6.4% Normalized EBITDA to Average Assets na 12.6% 5.9% 3.8% 7.0% Normalized EBITDA to Net Worth na 15.4% 7.0% 4.3% 8.0% Normalized Net Income to Average Assets na 8.4% 4.1% 3.0% 4.5% Normalized Net Income to Net Worth na 10.3% 5.0% 3.4% 5.2%
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management Page 22 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Comparative Financial Analysis Continued ($ in thousands, except per share)
as of & for years ended February 28/29, --------------------------------------- 1999 2000 2001 2002 2003E ----- ----- ----- ----- ----- Profitability Ratios (as % of Revenue) Gross Profit Margin 40.1% 40.0% 38.9% 39.8% 43.1% SG&A 23.5% 34.3% 34.0% 36.2% 36.7% Total Operating Expenses 24.5% 35.3% 35.2% 37.5% 38.0% Operating Income 15.6% 4.8% 3.7% 2.3% 5.1% Pre-tax Income (Loss) 17.5% 11.4% 6.0% 4.6% 6.8% Normalized Net Income (Loss) 13.7% 7.1% 3.7% 2.8% 4.2% Normalized EBIT 15.6% 9.7% 4.0% 2.3% 5.2% Normalized EBITDA 16.6% 10.7% 5.2% 3.6% 6.5% Growth Rates Revenue na 5.7% -1.6% -7.4% 6.3% Gross Profit na 5.6% -4.3% -5.2% 15.0% Operating Income na -67.7% -23.2% -42.7% 135.8% Pre-tax Income (Loss) na -30.8% -48.5% -28.5% 56.9% Normalized Net Income (Loss) na -45.2% -49.3% -29.2% 59.6% Normalized EBIT na -34.3% -59.6% -46.4% 140.2% Normalized EBITDA na -32.1% -52.1% -36.1% 92.4% Normalized Basic EPS na -53.7% -31.6% -23.1% 50.0% Normalized Diluted EPS na -51.3% -31.6% -23.1% 50.0% Total Assets na 12.4% -6.5% 5.5% 4.5% Net Worth na 6.2% 3.8% 3.3% 5.3% Tangible Net Worth na 6.6% 4.1% 3.5% 5.6% CAPEX, net na 219.5% -42.7% 8.0% 163.6% Cumulative Average Growth Rate (CAGR) Statistics Revenue na 5.7% 2.0% -1.2% 0.6% Gross Profit na 5.6% 0.5% -1.5% 2.4% Operating Income na -67.7% -50.1% -47.8% -23.9% Pre-tax Income (Loss) na -30.8% -40.3% -36.6% -20.5% Normalized Net Income (Loss) na -45.2% -47.3% -41.8% -25.2% Normalized EBIT na -34.3% -48.5% -47.8% -23.6% Normalized EBITDA na -32.1% -43.0% -40.8% -20.5% Normalized Basic EPS na -53.7% -43.7% -37.5% -22.2% Normalized Diluted EPS na -51.3% -42.3% -36.5% -21.2% Total Assets na 12.4% 2.5% 3.5% 3.7% Net Worth na 6.2% 5.0% 4.4% 4.7% Tangible Net Worth na 6.6% 5.3% 4.7% 4.9% CAPEX, net na 219.5% 35.3% 25.5% 51.1% Depreciation & Capital Spending Depreciation to CAPEX, net 226.8% 72.1% 154.7% 139.5% 56.4% CAPEX, net to Revenue 0.4% 1.4% 0.8% 0.9% 2.3%
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management Page 23 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Selected Normalized Income Statement Graphs ($ in thousands, except per share)
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003E --------------------------------------------------------- [Bar Graph] Revenue $ 18,260 $ 19,302 $ 18,999 $ 17,599 $ 18,706 [Bar Graph] Gross Profit $ 7,321 $ 7,728 $ 7,394 $ 7,007 $ 8,059 [Bar Graph] Total Operating Expenses $ 4,476 $ 6,808 $ 6,687 $ 6,602 $ 7,104 [Bar Graph] Operating Income $ 2,845 $ 920 $ 707 $ 405 $ 955 [Bar Graph] Interest Income (Expense) $ 340 $ 336 $ 381 $ 408 $ 303 [Bar Graph] Normalized EBIT $ 2,851 $ 1,872 $ 756 $ 405 $ 973 [Bar Graph] Normalized EBITDA $ 3,037 $ 2,061 $ 988 $ 631 $ 1,214 [Bar Graph] Normalized Net Income (Loss) $ 2,501 $ 1,371 $ 695 $ 492 $ 785
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management Page 24 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Selected Normalized Profitablity and Cost Ratio (as % of Revenue) Graphs
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003E --------------------------------------------------------- [Graph Appears Here] Gross Profit Margin 40.1% 40.0% 38.9% 39.8% 43.1% [Graph Appears Here] SG&A 23.5% 34.3% 34.0% 36.2% 36.7% [Graph Appears Here] Operating Income 15.6% 4.8% 3.7% 2.3% 5.1% [Graph Appears Here] Interest Income (Expense) 1.9% 1.7% 2.0% 2.3% 1.6% [Graph Appears Here] Pre-tax Income (Loss) 17.5% 11.4% 6.0% 4.6% 6.8% [Graph Appears Here] Normalized Net Income (Loss) 13.7% 7.1% 3.7% 2.8% 4.2% [Graph Appears Here] Normalized EBIT 15.6% 9.7% 4.0% 2.3% 5.2% [Graph Appears Here] Normalized EBITDA 16.6% 10.7% 5.2% 3.6% 6.5% [Graph Appears Here] CAPEX, net to Revenue 0.4% 1.4% 0.8% 0.9% 2.3%
-------------------------------------------------------------------------------- Sources of information: Company financial statements and management Page 25 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Selected Normalized Financial Strength Graphs ($ in thousands) FY 1999 FY 2000 FY 2001 FY 2002 FY 2003E [Graph Appears Here] Net Working Capital $ 6,253 $ 5,666 $ 6,921 $ 8,285 $ 9,166 [Graph Appears Here] Quick Ratio 3.0 2.2 4.6 4.2 4.8 [Graph Appears Here] Current Ratio 4.1 3.0 6.5 5.2 6.4 [Graph Appears Here] Total Liabilities to Net Worth 18.9% 25.9% 13.3% 15.7% 14.8% [Graph Appears Here] Total Interest Bearing Debt to Net Worth 4.2% 3.2% 2.3% 3.8% 3.4% [Graph Appears Here] Total Interest Bearing Debt to Total Capitalization 4.0% 3.1% 2.2% 3.7% 3.3% [Graph Appears Here] Interest Expense to Interest Bearing Debt na na na na na [Graph Appears Here] Total Interest Bearing Debt to EBITDA 0.2 0.2 0.3 0.9 0.4 [Graph Appears Here] EBITDA to Interest Expense na na na na na -------------------------------------------------------------------------------- Sources of information: Company financial statements and management Page 26 3 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY FINANCIAL PERFORMANCE Selected Normalized Efficency Graphs FY 2000 FY 2001 FY 2002 FY 2003E -------------------------------------------------------- Days Sales Outstanding [Graph Appears Here] 61.9 65.9 67.0 58.2 Days Inventory Outstanding [Graph Appears Here] 70.7 74.1 73.0 78.1 Days Payable Outstanding [Graph Appears Here] 14.8 15.0 13.5 9.0 Normalized EBIT to Average Assets [Graph Appears Here] 11.4% 4.5% 2.4% 5.6% Normalized EBIT to Average Net Worth [Graph Appears Here] 14.0% 5.4% 2.8% 6.4% Normalized EBITDA to Average Assets [Graph Appears Here] 12.6% 5.9% 3.8% 7.0% Normalized EBITDA to Average Net Worth [Graph Appears Here] 15.4% 7.0% 4.3% 8.0% Net Income to Average Assets [Graph Appears Here] 8.4% 4.1% 3.0% 4.5% Net Income to Average Net Worth [Graph Appears Here] 10.3% 5.0% 3.4% 5.2% -------------------------------------------------------------------------------- Sources of information: Company financial statements and management Page 27 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY MARKET PERFORMANCE Page 28 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY MARKET PERFORMANCE . Capitalink reviewed the daily closing market price and trading volume of the Company's common stock over the period commencing May 23, 2002 through May 23, 2003. . Capitalink compared the daily closing market price performance of the Company's common stock for such period to both the Comparable Companies (as defined below) and the Russell 3000 Index. . Capitalink calculated total trading volumes at various closing price ranges of the Company's common stock. In addition, the number of trading days, and the respective percentages, at certain trading volumes, was set forth. . Capitalink noted the following characteristics of the Company's common stock: . The Company's stock has experienced limited liquidity with the average and median daily number of shares traded equal to 5,279 and 200 respectively. It was further noted that there was no volume on 115 trading days or approximately 45.5% of the available trading days. . During the twelve months ended May 23, 2003 the Company's share price has ranged from as high as $1.05 to as low as $0.67. The Company's common stock closed at $1.00 on May 23, 2003. . Capitalink noted that during the twelve months ended May 19, 2003, the Company's common stock increased 17.6%, while the Comparable Companies index fell slightly by 1.2% and the Russell 3000 Index declined 14.7%. Page 29 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY MARKET PERFORMANCE BCTI Closing Price & Trading Volume History May 23, 2002 - May 23, 2003 [LINE CHART] BCTI Closing Price & Volume History ------------------------------ [Graph Appears Here] Date Volume BCTI Close ------------------------------------ 23-May-03 0 1.00 22-May-03 7600 1.00 21-May-03 0 0.93 20-May-03 300 0.93 19-May-03 6400 0.95 16-May-03 0 1.00 15-May-03 0 1.00 14-May-03 0 1.00 13-May-03 3,500 1.00 12-May-03 0 0.95 09-May-03 0 0.95 08-May-03 0 0.95 07-May-03 2,500 0.95 06-May-03 6,000 1.04 05-May-03 5,500 1.01 02-May-03 2,000 1.01 01-May-03 4,600 1.05 30-Apr-03 0 0.98 29-Apr-03 0 0.98 28-Apr-03 500 0.98 25-Apr-03 17,900 0.99 24-Apr-03 9,100 0.99 23-Apr-03 7,000 0.95 22-Apr-03 7,800 0.91 21-Apr-03 1,900 0.91 17-Apr-03 200 0.91 16-Apr-03 0 0.91 15-Apr-03 0 0.91 14-Apr-03 300 0.91 11-Apr-03 0 0.91 10-Apr-03 0 0.91 09-Apr-03 100 0.91 08-Apr-03 0 0.91 07-Apr-03 9,500 0.91 04-Apr-03 0 0.95 03-Apr-03 7,500 0.95 02-Apr-03 0 0.92 01-Apr-03 300 0.92 31-Mar-03 0 0.92 28-Mar-03 200 0.92 27-Mar-03 200 0.92 26-Mar-03 0 0.92 25-Mar-03 7,300 0.92 24-Mar-03 0 0.92 21-Mar-03 6,000 0.92 20-Mar-03 2,500 0.92 19-Mar-03 5,500 0.92 18-Mar-03 3,000 0.92 17-Mar-03 0 0.92 14-Mar-03 0 0.92 13-Mar-03 0 0.92 12-Mar-03 0 0.92 11-Mar-03 0 0.92 10-Mar-03 100 0.92 07-Mar-03 0 0.93 06-Mar-03 0 0.93 05-Mar-03 2,000 0.93 04-Mar-03 3,600 0.92 03-Mar-03 0 0.92 28-Feb-03 100 0.92 27-Feb-03 10,000 0.96 26-Feb-03 0 0.91 25-Feb-03 0 0.91 24-Feb-03 0 0.91 21-Feb-03 0 0.91 20-Feb-03 0 0.76 19-Feb-03 0 0.91 18-Feb-03 29800 0.91 14-Feb-03 800 0.97 13-Feb-03 5800 0.96 12-Feb-03 0 0.97 11-Feb-03 500 0.97 10-Feb-03 9500 0.99 07-Feb-03 0 0.98 06-Feb-03 0 0.98 05-Feb-03 0 0.98 04-Feb-03 5000 0.98 03-Feb-03 700 0.96 31-Jan-03 5000 0.96 30-Jan-03 0 0.96 29-Jan-03 0 0.96 28-Jan-03 100 0.96 27-Jan-03 0 0.96 24-Jan-03 6200 0.96 23-Jan-03 1000 1.01 22-Jan-03 100 1.03 21-Jan-03 2200 1.01 17-Jan-03 181,100 1.05 16-Jan-03 57,600 1.02 15-Jan-03 17,000 0.9 14-Jan-03 300 0.9 13-Jan-03 0 0.81 10-Jan-03 0 0.81 09-Jan-03 1,000 0.81 08-Jan-03 300 0.81 07-Jan-03 0 0.81 06-Jan-03 0 0.81 03-Jan-03 0 0.81 02-Jan-03 0 0.81 31-Dec-02 13,100 0.81 30-Dec-02 16,000 0.8 27-Dec-02 100 0.78 26-Dec-02 1,600 0.78 24-Dec-02 0 0.78 23-Dec-02 0 0.78 20-Dec-02 400 0.78 19-Dec-02 0 0.85 18-Dec-02 2,300 0.85 17-Dec-02 100 0.78 16-Dec-02 0 0.78 13-Dec-02 0 0.78 12-Dec-02 0 0.78 11-Dec-02 0 0.78 10-Dec-02 0 0.78 09-Dec-02 200 0.78 06-Dec-02 6,700 0.78 05-Dec-02 0 0.76 04-Dec-02 16,000 0.76 03-Dec-02 0 0.83 02-Dec-02 7,300 0.83 29-Nov-02 0 0.761 27-Nov-02 4,100 0.761 26-Nov-02 2,500 0.76 25-Nov-02 300 0.75 22-Nov-02 800 0.9 21-Nov-02 0 0.75 20-Nov-02 1,100 0.75 19-Nov-02 4,100 0.75 18-Nov-02 1,800 0.75 15-Nov-02 0 0.75 14-Nov-02 0 0.75 13-Nov-02 0 0.75 12-Nov-02 0 0.75 11-Nov-02 0 0.75 08-Nov-02 7,900 0.75 07-Nov-02 13,000 0.76 06-Nov-02 1,700 0.72 05-Nov-02 0 0.72 04-Nov-02 0 0.72 01-Nov-02 2,500 0.72 31-Oct-02 15,500 0.75 30-Oct-02 3,800 0.685 29-Oct-02 0 0.68 28-Oct-02 200 0.68 25-Oct-02 14,900 0.68 24-Oct-02 0 0.74 23-Oct-02 500 0.74 22-Oct-02 0 0.68 21-Oct-02 0 0.68 18-Oct-02 500 0.68 17-Oct-02 0 0.68 16-Oct-02 1,000 0.68 15-Oct-02 200 0.68 14-Oct-02 0 0.67 11-Oct-02 16,700 0.67 10-Oct-02 0 0.71 09-Oct-02 5,000 0.71 08-Oct-02 6,500 0.72 07-Oct-02 7,200 0.72 04-Oct-02 100 0.71 03-Oct-02 0 0.71 02-Oct-02 100 0.71 01-Oct-02 0 0.7 30-Sep-02 9,400 0.7 27-Sep-02 0 0.71 26-Sep-02 2,000 0.71 25-Sep-02 4,300 0.71 24-Sep-02 11,100 0.7 23-Sep-02 2,000 0.7 20-Sep-02 5,000 0.73 19-Sep-02 88,700 0.72 18-Sep-02 0 0.78 17-Sep-02 1,800 0.78 16-Sep-02 55,900 0.765 13-Sep-02 0 0.76 12-Sep-02 0 0.76 11-Sep-02 200 0.76 10-Sep-02 0 0.82 09-Sep-02 10,000 0.82 06-Sep-02 0 0.81 05-Sep-02 0 0.81 04-Sep-02 2,500 0.81 03-Sep-02 4,000 0.83 30-Aug-02 100 0.81 29-Aug-02 0 0.8 28-Aug-02 0 0.8 27-Aug-02 0 0.8 26-Aug-02 0 0.8 23-Aug-02 500 0.8 22-Aug-02 0 0.82 21-Aug-02 15,000 0.82 20-Aug-02 16,000 0.85 19-Aug-02 5,000 0.93 16-Aug-02 0 0.85 15-Aug-02 2,400 0.85 14-Aug-02 17,000 0.85 13-Aug-02 6,000 0.858 12-Aug-02 5,500 0.8 09-Aug-02 0 0.75 08-Aug-02 34,300 0.75 07-Aug-02 4,500 0.81 06-Aug-02 0 0.81 05-Aug-02 175,200 0.81 02-Aug-02 200 0.81 01-Aug-02 0 0.81 31-Jul-02 0 0.81 30-Jul-02 2,600 0.81 29-Jul-02 7,200 0.8 26-Jul-02 71,900 0.81 25-Jul-02 5,700 0.79 24-Jul-02 500 0.78 23-Jul-02 3,000 0.78 22-Jul-02 3,500 0.75 19-Jul-02 0 0.8 18-Jul-02 1,500 0.8 17-Jul-02 0 0.78 16-Jul-02 1,500 0.78 15-Jul-02 2,500 0.82 12-Jul-02 5,000 0.82 11-Jul-02 0 0.77 10-Jul-02 0 0.77 09-Jul-02 0 0.77 08-Jul-02 2,500 0.77 05-Jul-02 0 0.79 03-Jul-02 64,600 0.79 02-Jul-02 11,000 0.79 01-Jul-02 0 0.84 28-Jun-02 0 0.84 27-Jun-02 0 0.84 26-Jun-02 0 0.84 25-Jun-02 0 0.84 24-Jun-02 0 0.84 21-Jun-02 0 0.84 20-Jun-02 5,700 0.84 19-Jun-02 100 0.82 18-Jun-02 2,000 0.82 17-Jun-02 0 0.82 14-Jun-02 0 0.82 13-Jun-02 0 0.82 12-Jun-02 10,000 0.82 11-Jun-02 2,400 0.83 10-Jun-02 0 0.83 07-Jun-02 0 0.83 06-Jun-02 2,000 0.83 05-Jun-02 1,000 0.83 04-Jun-02 9,500 0.83 03-Jun-02 200 0.85 31-May-02 0 0.82 30-May-02 0 0.82 29-May-02 200 0.82 28-May-02 0 0.85 24-May-02 0 0.85 23-May-02 0 0.85
Start End High Average Median Low Avg.Volume Median Volume ------------------- ------------------- ------------------ -------- -------- ------------------- ---------- ------------- 23-May-02 $ 0.8500 23-May-03 $ 1.0000 1-May-03 $ 1.0500 $ 0.8407 $ 0.8200 14-Oct-02 $ 0.6700 5.279 200
-------------------------------------------------------------------------------- Sources of information: Commodity Systems, Inc. Page 30 BCT International, Inc. CONFIDENTIAL ------------------------------------------------------------------------------- COMPANY MARKET PERFORMANCE BCTI vs Comparable Company Index vs Russel 3000 Index ------------------------------------------- [Graph Appears Here] ------------------------------------------- Company Comparable Russell Date Index Company 3000 Index ------------------------------------------------------------ 23-May-03 17.6 98.8 85.3 22-May-03 17.6 97.8 85.1 21-May-03 09.4 96.8 84.3 20-May-03 09.4 96.1 83.9 19-May-03 11.8 96.3 84.0 16-May-03 17.6 97.5 86.0 15-May-03 17.6 96.9 86.3 14-May-03 17.6 97.1 85.7 13-May-03 17.6 96.2 85.9 12-May-03 11.8 97.5 86.1 09-May-03 11.8 95.3 85.0 08-May-03 11.8 93.5 83.9 07-May-03 11.8 94.7 84.7 06-May-03 22.4 95.5 85.1 05-May-03 18.8 93.7 84.4 02-May-03 18.8 93.4 84.6 01-May-03 23.5 92.9 83.3 30-Apr-03 15.3 93.6 83.3 29-Apr-03 15.3 90.7 83.3 28-Apr-03 15.3 91.7 83.0 25-Apr-03 16.5 89.3 81.6 24-Apr-03 16.5 89.0 82.7 23-Apr-03 11.8 89.0 83.4 22-Apr-03 07.1 90.1 82.7 21-Apr-03 07.1 88.6 81.0 17-Apr-03 07.1 88.0 81.1 16-Apr-03 07.1 88.0 79.9 15-Apr-03 07.1 87.6 80.8 14-Apr-03 07.1 86.1 80.3 11-Apr-03 07.1 85.7 78.8 10-Apr-03 07.1 85.8 79.0 09-Apr-03 07.1 86.2 78.6 08-Apr-03 07.1 87.5 79.6 07-Apr-03 07.1 86.3 79.9 04-Apr-03 11.8 85.8 79.7 03-Apr-03 11.8 87.2 79.6 02-Apr-03 08.2 87.1 80.0 01-Apr-03 08.2 86.7 78.0 31-Mar-03 08.2 86.8 77.1 28-Mar-03 08.2 88.1 78.4 27-Mar-03 08.2 88.3 78.8 26-Mar-03 08.2 89.4 78.9 25-Mar-03 08.2 90.0 79.4 24-Mar-03 08.2 88.5 78.4 21-Mar-03 08.2 90.4 81.2 20-Mar-03 08.2 89.1 79.4 19-Mar-03 08.2 88.5 79.2 18-Mar-03 08.2 88.2 78.6 17-Mar-03 08.2 90.4 78.2 14-Mar-03 08.2 91.0 75.6 13-Mar-03 08.2 94.6 75.5 12-Mar-03 08.2 92.0 73.1 11-Mar-03 08.2 92.8 72.9 10-Mar-03 08.2 92.7 73.5 07-Mar-03 09.4 94.2 75.3 06-Mar-03 09.4 94.0 74.8 05-Mar-03 09.4 93.9 75.4 04-Mar-03 08.2 94.1 74.8 03-Mar-03 08.2 93.1 75.9 28-Feb-03 08.2 93.1 76.4 27-Feb-03 12.9 92.2 76.1 26-Feb-03 07.1 91.7 75.2 25-Feb-03 07.1 92.9 76.2 24-Feb-03 07.1 92.7 75.6 21-Feb-03 07.1 93.1 77.0 20-Feb-03 89.4 92.8 76.0 19-Feb-03 07.1 93.9 76.7 18-Feb-03 07.1 94.0 77.2 14-Feb-03 14.1 94.9 75.7 13-Feb-03 12.9 95.1 74.3 12-Feb-03 14.1 92.7 74.4 11-Feb-03 14.1 93.9 75.4 10-Feb-03 16.5 95.1 76.0 07-Feb-03 15.3 94.3 75.5 06-Feb-03 15.3 95.6 76.3 05-Feb-03 15.3 95.4 76.8 04-Feb-03 15.3 96.7 77.2 03-Feb-03 12.9 98.2 78.2 31-Jan-03 12.9 98.3 77.9 30-Jan-03 12.9 96.8 76.8 29-Jan-03 12.9 96.2 78.5 28-Jan-03 12.9 95.3 78.0 27-Jan-03 12.9 92.8 77.1 24-Jan-03 12.9 93.5 78.3 23-Jan-03 18.8 94.0 80.6 22-Jan-03 21.2 89.5 79.8 21-Jan-03 18.8 88.9 80.6 17-Jan-03 23.5 91.0 81.8 16-Jan-03 20.0 83.9 83.0 15-Jan-03 05.9 83.6 83.3 14-Jan-03 05.9 83.6 84.4 13-Jan-03 95.3 83.5 84.0 10-Jan-03 95.3 83.7 84.1 09-Jan-03 95.3 84.1 84.0 08-Jan-03 95.3 81.9 82.5 07-Jan-03 95.3 81.8 83.7 06-Jan-03 95.3 82.3 84.3 03-Jan-03 95.3 79.4 82.4 02-Jan-03 95.3 80.5 82.5 31-Dec-02 95.3 78.7 79.9 30-Dec-02 94.1 79.2 79.8 27-Dec-02 91.8 79.0 79.6 26-Dec-02 91.8 79.2 80.8 24-Dec-02 91.8 78.1 81.0 23-Dec-02 91.8 78.0 81.5 20-Dec-02 91.8 77.8 81.3 19-Dec-02 00.0 76.8 80.2 18-Dec-02 00.0 75.5 80.8 17-Dec-02 91.8 76.7 81.9 16-Dec-02 91.8 76.8 82.6 13-Dec-02 91.8 75.4 80.8 12-Dec-02 91.8 75.9 81.9 11-Dec-02 91.8 75.3 82.1 10-Dec-02 91.8 75.4 82.0 09-Dec-02 91.8 72.9 80.9 06-Dec-02 91.8 76.9 82.7 05-Dec-02 89.4 75.5 82.2 04-Dec-02 89.4 76.0 83.1 03-Dec-02 97.6 76.6 83.5 02-Dec-02 97.6 77.1 84.8 29-Nov-02 89.5 78.6 84.9 27-Nov-02 89.5 78.1 85.1 26-Nov-02 89.4 77.1 82.8 25-Nov-02 88.2 79.6 84.6 22-Nov-02 105.9 79.4 84.3 21-Nov-02 88.2 80.5 84.5 20-Nov-02 88.2 79.9 82.7 19-Nov-02 88.2 78.2 81.1 18-Nov-02 88.2 79.0 81.5 15-Nov-02 88.2 80.7 82.3 14-Nov-02 88.2 79.5 81.8 13-Nov-02 88.2 78.2 79.8 12-Nov-02 88.2 77.3 79.9 11-Nov-02 88.2 76.6 79.2 08-Nov-02 88.2 78.9 80.9 07-Nov-02 89.4 78.7 81.7 06-Nov-02 84.7 80.4 83.6 05-Nov-02 84.7 79.7 82.8 04-Nov-02 84.7 79.9 82.2 01-Nov-02 84.7 80.5 81.6 31-Oct-02 88.2 77.1 80.2 30-Oct-02 80.6 76.8 80.5 29-Oct-02 80.0 75.9 79.7 28-Oct-02 80.0 75.1 80.4 25-Oct-02 80.0 74.9 81.1 24-Oct-02 87.1 74.0 79.7 23-Oct-02 87.1 76.5 80.9 22-Oct-02 80.0 74.9 80.3 21-Oct-02 80.0 74.8 81.2 18-Oct-02 80.0 71.6 79.9 17-Oct-02 80.0 72.0 79.5 16-Oct-02 80.0 69.5 77.6 15-Oct-02 80.0 70.9 79.5 14-Oct-02 78.8 67.6 76.0 11-Oct-02 78.8 67.8 75.4 10-Oct-02 83.5 66.1 72.7 09-Oct-02 83.5 65.3 70.2 08-Oct-02 84.7 67.0 72.3 07-Oct-02 84.7 68.8 71.2 04-Oct-02 83.5 71.5 72.6 03-Oct-02 83.5 72.8 74.4 02-Oct-02 83.5 74.6 75.2 01-Oct-02 82.4 75.3 77.1 30-Sep-02 82.4 71.6 74.4 27-Sep-02 83.5 72.2 75.3 26-Sep-02 83.5 74.4 77.7 25-Sep-02 83.5 73.3 76.4 24-Sep-02 82.4 71.7 74.5 23-Sep-02 82.4 74.3 75.8 20-Sep-02 85.9 76.1 76.8 19-Sep-02 84.7 74.8 76.7 18-Sep-02 91.8 76.0 79.0 17-Sep-02 91.8 76.3 79.4 16-Sep-02 90.0 77.6 81.0 13-Sep-02 89.4 77.5 81.0 12-Sep-02 89.4 78.5 80.7 11-Sep-02 89.4 80.2 82.7 10-Sep-02 96.5 79.3 82.7 09-Sep-02 96.5 79.9 82.2 06-Sep-02 95.3 80.8 81.4 05-Sep-02 95.3 78.0 80.0 04-Sep-02 95.3 81.1 81.3 03-Sep-02 97.6 78.0 79.9 30-Aug-02 95.3 80.9 83.2 29-Aug-02 94.1 79.3 83.4 28-Aug-02 94.1 80.7 83.3 27-Aug-02 94.1 82.7 84.8 26-Aug-02 94.1 82.8 86.1 23-Aug-02 94.1 81.9 85.4 22-Aug-02 96.5 81.0 87.4 21-Aug-02 96.5 79.0 86.3 20-Aug-02 100.0 77.7 85.1 19-Aug-02 109.4 78.2 86.2 16-Aug-02 100.0 76.7 84.4 15-Aug-02 100.0 76.2 83.4 14-Aug-02 100.0 76.3 83.4 13-Aug-02 100.9 75.0 80.4 12-Aug-02 94.1 74.4 82.2 09-Aug-02 88.2 75.8 82.6 08-Aug-02 88.2 74.4 82.3 07-Aug-02 95.3 73.3 79.9 06-Aug-02 95.3 74.1 78.4 05-Aug-02 95.3 70.5 76.1 02-Aug-02 95.3 71.5 78.8 01-Aug-02 95.3 74.0 80.7 31-Jul-02 95.3 73.5 83.0 30-Jul-02 95.3 73.5 82.4 29-Jul-02 94.1 74.2 82.0 26-Jul-02 95.3 69.3 77.8 25-Jul-02 92.9 67.7 76.6 24-Jul-02 91.8 68.7 77.0 23-Jul-02 91.8 66.2 72.9 22-Jul-02 88.2 69.7 75.0 19-Jul-02 94.1 71.5 77.5 18-Jul-02 94.1 73.4 80.3 17-Jul-02 91.8 75.2 82.6 16-Jul-02 91.8 75.2 82.1 15-Jul-02 96.5 75.1 83.3 12-Jul-02 96.5 78.9 83.6 11-Jul-02 90.6 79.0 84.1 10-Jul-02 90.6 81.3 83.6 09-Jul-02 90.6 81.9 86.3 08-Jul-02 90.6 83.6 88.4 05-Jul-02 92.9 82.9 89.6 03-Jul-02 92.9 81.0 86.5 02-Jul-02 92.9 81.0 86.1 01-Jul-02 98.8 85.3 88.1 28-Jun-02 98.8 87.5 90.2 27-Jun-02 98.8 87.1 90.1 26-Jun-02 98.8 87.6 88.6 25-Jun-02 98.8 86.6 88.9 24-Jun-02 98.8 86.8 90.4 21-Jun-02 98.8 85.5 90.2 20-Jun-02 98.8 86.6 91.6 19-Jun-02 96.5 84.2 92.9 18-Jun-02 96.5 85.0 94.5 17-Jun-02 96.5 85.0 94.4 14-Jun-02 96.5 83.2 91.8 13-Jun-02 96.5 84.1 91.9 12-Jun-02 96.5 87.4 92.9 11-Jun-02 97.6 84.8 92.4 10-Jun-02 97.6 87.5 94.1 07-Jun-02 97.6 89.8 93.9 06-Jun-02 97.6 89.5 93.8 05-Jun-02 97.6 95.0 95.7 04-Jun-02 97.6 96.4 94.9 03-Jun-02 100.0 97.0 95.0 31-May-02 96.5 97.5 97.4 30-May-02 96.5 97.4 97.2 29-May-02 96.5 97.0 97.4 28-May-02 100.0 98.1 98.1 24-May-02 100.0 98.8 98.8 23-May-02 100.0 100.0 100.0 % Change BCTI Comparables Russell 3000 First Half of Period 5.9% -20.6% -15.7% Second Half of Period 11.1% 24.4% 1.2% Full Period 17.6% -1.2% -14.7% -------------------------------------------------------------------------------- (1) Reflects the market cap weighted prices of the comparable companies utilized in the Comparable Company Analysis. Sources of information: Commodity Systems, Inc. Page 31 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY MARKET PERFORMANCE BCTI Closing Price Ranges as Percentage of Total Trading Days May 23, 2002 - May 23, 2003 [BAR GRAPH]
Price Range $0.000 - $0.675 $0.676 - $0.725 $0.726 - $0.775 $0.776 - $0.825 $0.826 - $0.875 $0.876 - $0.925 ------------------------------------------------------------------------------------------------------------------- Days in Range 2 29 33 69 28 41 Percentage 0.8% 11.5% 13.0% 27.3% 11.1% 16.2% Price Range $0.926 - $0.975 $0.976 - $1.025 $1.026 + --------------------------------------------------------- Days in Range 26 21 4 Percentage 10.3% 8.3% 1.6%
-------------------------------------------------------------------------------- Sources of information: Commodity Systems, Inc. Page 32 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY MARKET PERFORMANCE BCTI Trading Volume per Price Range as Percentage of Total Volume May 23, 2002 - May 23, 2003 [BAR GRAPH]
Price Range $0.000 - $0.675 $0.676 - $0.725 $0.726 - $0.775 $0.776 - $0.825 $0.826 - $0.875 $0.876 - $0.925 $0.926 - $0.975 ---------------------------------------------------------------------------------------------------------------------------------- Volume 16,700 161,200 168,200 444,100 75,800 96,500 59,800 Percentage 1.3% 12.1% 12.6% 33.3% 5.7% 7.2% 4.5% Price Range $0.976 - $1.025 $1.026 + -------------------------------------- Volume 121,400 191,800 Percentage 9.1% 14.4%
-------------------------------------------------------------------------------- Sources of information: Commodity Systems, Inc. Page 33 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- COMPANY MARKET PERFORMANCE BCTI Trading Volume Ranges as a Percentage of Total Volume May 23, 2002 - May 23, 2003 [BAR GRAPH]
No volume **0* 0,250 **0,251*1,000 **1,001*2,500 **2,501*5,000 **5,001*10,000 **10,001*25,000 **25,001 -------------------------------------------------------------------------------------------------------------- Days in Range 115 21 20 25 19 30 14 9 Percentage 45.5% 8.3% 7.9% 9.9% 7.5% 11.9% 5.5% 3.6%
-------------------------------------------------------------------------------- Sources of information: Commodity Systems, Inc. Page 34 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS Page 35 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS METHODOLOGIES . Based upon a review of the Company's historical financial data, projections, and certain other qualitative data, Capitalink utilized several valuation methodologies to determine a range of values for the Company. . Capitalink did not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support an opinion as to the fairness, from a financial point of view, of the Proposed Transaction. . Capitalink did not place any particular reliance or weight on any individual analysis, but instead concluded that the analyses, taken as a whole, supported its determination. Accordingly, the analyses must be considered as a whole and selecting portions of analyses or the factors considered, without considering all analyses and factors collectively, could create an incomplete and incorrect view of the process underlying the analyses in connection with the preparation of the opinion. . The financial reviews and analyses include information presented in tabular format. In order to fully understand Capitalink's financial review and analyses, the tables must be read together with the text of the presentation. The tables alone are not a complete description of the financial review and analyses and considering the tables alone could create a misleading or incomplete view of Capitalink's financial review and analyses. . The methodologies utilized by Capitalink included: . A review of the historical and projected financial information of the Company as prepared by management. . A review and comparison of the trading of, and the trading market for, the common stock of the Company, the Comparable Companies and a general market index. . A review of a discounted cash flow analysis of the Company, with sensitivity analyses based on a range of assumptions. . A review and comparison of trading multiples for deemed comparable publicly-traded companies for the Company. Page 36 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS METHODOLOGIES . A review and comparison of the premiums paid in transactions involving the acquisition of a minority ownership interest in publicly-traded companies. . A review of the premiums implied by the per share consideration in the Proposed Transaction. . A review and determination of the Company's adjusted book value analysis. . A review and determination of the market value of the Notes. Page 37 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS Illustrative Indicated Reference Range Summary ---------------------------------------------- [Graph Appears Here] Range ------------------ Discounted Cash Flow Analysis $1.88 -- $2.06 Comparable Company Analysis $1.58 -- $2.20 Minority Interest Acquisitions/ $1.36 -- $1.58 Premiums Paid Analysis Adjusted Net Book Value Analysis $2.02 -- $2.02 One Year Stock Trading Range $0.67 -- $1.05 Merger Consideration $2.00 -- $2.00 -------------------------------------------------------------------------------- (1) Please reference the appropriate Analysis for further discussion and sources of information. Page 38 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS Indicated Reference Range Summary ($ in thousands, except per share)
Selected Multiple TIC/Enterprise Indicated Share Methodology (1) Statistic Range Value Price ----------------------------------------------------- --------- ----------------- ---------------- --------------- Discounted Cash Flow Analysis Revenue Terminal Multiple $3,381 - $ 4,638 $1.88 - $ 2.10 EBITDA Terminal Multiple $3,972 - $ 4,808 $1.99 - $ 2.13 Perpetual Growth Terminal Value $2,809 - $ 3,645 $1.78 - $ 1.93 Indicated Reference Range $1.88 - $ 2.06 Comparable Company Analysis Total Invested Capital as Multiple of: LTM Revenue $18,381 0.32x - 0.59x $5,961 - $10,852 $0.90 - $ 1.76 LTM EBITDA $ 988 5.4x - 7.7x $5,309 - $ 7,628 $0.79 - $ 1.20 Enterprise Value as Multiple of: LTM Revenue $18,381 0.32x - 0.58x $5,943 - $10,669 $2.38 - $ 3.21 LTM EBITDA $ 988 5.3x - 7.4x $5,220 - $ 7,295 $2.25 - $ 2.62 Indicated Reference Range $1.58 - $ 2.20 Minority Interest Acquisitions Premiums Paid Analysis Prior One Day $ 1.00 33.3% - 54.8% $1.33 - $ 1.55 Prior Five Day $ 1.00 40.5% - 64.0% $1.40 - $ 1.64 Prior 30 Day $ 0.95 40.8% - 63.9% $1.34 - $ 1.56 Indicated Reference Range $1.36 - $ 1.58 Premiums Paid Analysis Closing Price as of May 23, 2003 100.0% Prior Day Closing Price 100.0% Prior 5 Trading Day Average Closing Price 107.9% Prior 10 Trading Day Average Closing Price 104.9% Prior 20 Trading Day Average Closing Price 103.5% Prior 30 Trading Day Average Closing Price 107.2% Prior 60 Trading Day Average Closing Price 112.0% Prior 90 Trading Day Average Closing Price 111.0% Prior Six Month Average Closing Price 120.7% Prior Year Average Closing Price 137.9% Adjusted Net Book Value Analysis As of February 28, 2003 $ 2.02
-------------------------------------------------------------------------------- (1) Please reference the appropriate Analysis for further discussion and sources of information. Page 39 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS . The discounted cash flow analysis estimates value based upon a company's projected future free cash flow discounted at a rate reflecting risks inherent in its business and capital structure. Unlevered free cash flow represents the amount of cash generated and available for principal, interest and dividend payments after providing for ongoing business operations. . While the discounted cash flow analysis is the most scientific of the methodologies, it is dependent on projections and is further dependent on numerous industry-specific and macroeconomic factors. . Capitalink performed discounted cash flow analyses based on the preliminary projected cash flows for the Company's (i) base case franchising operations, (ii) Company-owned plants, and (iii) satellite stores concept. A set of projected cash flows was derived for each operation, as differing sets of assumptions were applied to each given the specific risks of each operation. . The range of terminal values represents the residual value of the operation at the end of the forecast period. Capitalink presented a range of terminal values by applying a range of multiples to each of the operations FY2007 projected revenue and EBITDA. . In addition, Capitalink presented a perpetual growth scenario whereby ranges of growth rates were applied to the operation's FY2007 free cash flows in order to determine a terminal value, rather than multiples. . In each of the scenarios noted in (i) to (iii) above, ranges of enterprise values were derived. These operation value ranges were added together to derive the total estimated enterprise value of the Company. The total enterprise value range was reduced by the Company's net debt to arrive at an equity value range. The Company's estimated net debt as of February 28, 2003 was approximately ($7.3) million, which includes approximately $523,000 in interest bearing debt, $4.2 million in cash, an estimated $1.0 million from the exercise of in the money ("ITM") options and an assumed $2.6 million market value of the Notes (see Notes analysis). Page 40 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS . Taking into account the enterprise value ranges for all three operations, and the Company's net debt and common stock share equivalents of 5.68 million, Capitalink calculated a range of indicated shares prices of between $1.88 and $2.06. . Capitalink noted that the offer price of the Proposed Transaction was within this indicated valuation range. Base Case Operations . The Company's base case operations include the Company's core franchising revenues and expenses and the Company's general and administration expenses. Capitalink utilized the forecasts provided by Company management, which show little growth in revenues, constant margins, and a gradual increase in salaries and other general and administration expenses. For the forecast period, the Company projects a gradual decrease in EBITDA from approximately $1.4 million for FY2004, to approximately $615,000 for FY2007. . In order to arrive at a present value, Capitalink utilized discount rates ranging from 16.0% to 18.5%. This was based on an estimated weighted average cost of capital ("WACC") of 17.4% (based on the Company's existing debt and an 18.8% estimated cost of equity). . The results of the base case discounted cash flow analysis under the three terminal value scenarios were as follows: . Utilizing the revenue terminal scenario (range of 0.15 times to 0.2 times), Capitalink calculated a range of indicated enterprise value of $3.4 million to $4.1 million. . Utilizing the EBITDA terminal scenario (range of 3.5 times to 4.0 times), Capitalink calculated a range of indicated enterprise values of $3.1 million to $3.5 million. . Utilizing a perpetual growth scenario (growth rates of 2.75% to 3.00%), Capitalink calculated a range of indicated enterprise values of $2.9 million to $3.3 million. Page 41 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Company-owned Plant Operations . The Company's plant operations include the associated revenues and expenses related to the operation of the Company-owned plants. The Company currently owns a plant in San Francisco and Tampa and expects to purchase an additional three plants over the next three years. Capitalink utilized the forecasts provided by Company management, which show an increase in revenue from $3.7 million for FY2004 to $7.8 million for FY2007, and EBITDA from $180,000 in FY2004 to $1.1 million in FY2007. . In order to arrive at a present value, Capitalink utilized discount rates ranging from 23.0% to 25.5%. This was based on an estimated WACC of 24.6% (based on the Company's existing debt and a 26.8% estimated cost of equity). . The results of the Company plant discounted cash flow analysis under the three terminal value scenarios were as follows: . Utilizing the revenue terminal scenario (range of 0.4 times to 0.5 times), Capitalink calculated a range of indicated enterprise value of $(290,000) to $195,000. . Utilizing the EBITDA terminal scenario (range of 4.5 times to 5.0 times), Capitalink calculated a range of indicated enterprise values of $490,000 to $913,000. . Utilizing a perpetual growth scenario (growth rates of 4.50% to 4.75%), Capitalink calculated a range of indicated enterprise values of $(357,000) to $(35,000). Satellite Store Operations . The Company's satellite store operations include the associated revenues and expenses related to the franchising of satellite stores in regions that are currently underserved by BCT or are not profitable enough to justify the existence of a full plant. The Company is currently testing the concept in Tampa. The Company expects to roll out these new line of stores across the country gradually over the next five years and projects a total of 14 satellite stores in operation by FY2007. Page 42 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS . In order to arrive at a present value, Capitalink utilized discount rates ranging from 20.5% to 23.0%. This was based on an estimated WACC of 21.9% (based on the Company's existing debt and a 23.8% estimated cost of equity). . The results of the satellite store discounted cash flow analysis under the three terminal value scenarios were as follows: . Utilizing the revenue terminal scenario (range of 0.9 times to 1.0 times), Capitalink calculated a range of indicated enterprise value of $234,000 and $315,000. . Utilizing the EBITDA terminal scenario (range of 6.0 times to 6.5 times), Capitalink calculated a range of indicated enterprise values of $308,000 to $389,000. . Utilizing a perpetual growth scenario (with growth rates of 10.50% to 10.75%), Capitalink calculated a range of indicated enterprise values of $257,000 to $428,000. Page 43 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Discounted Cash Flow Analysis - Indicated Reference Range ($ in thousands, except per share)
Indicated Equity Indicated Share Selected Multiple Range Indicated EV Value Value (1) Price (2) ----------------------- ------------------ ----------------- --------------- Revenue Terminal Value Analysis Base Case 0.15x - 0.20x $3,437 - $4,129 Company Owned Plants 0.40x - 0.50x (290) - 195 Satellite Store Initiative 0.90x - 1.00x 234 - 315 ------ ------ $3,381 - $4,638 $10,706 - $11,963 $1.88 - $2.10 ====== ====== EBITDA Terminal Value Analysis Base Case 3.5x - 4.0x $3,173 - $3,505 Company Owned Plants 4.5x - 5.0x 490 - 913 Satellite Store Initiative 6.0x - 6.5x 308 - 389 ------ ------ $3,972 - $4,808 $11,297 - $12,133 $1.99 - $2.13 ====== ====== Perpetual Growth Terminal Value Analysis Base Case 2.75% - 3.00% $2,909 - $3,252 Company Owned Plants 4.50% - 4.75% (357) - (35) Satellite Store Initiative 10.50% - 10.75% 257 - 428 ------ ------ $2,809 - $3,645 $10,134 - $10,970 $1.78 - $1.93 ====== ====== Indicated Reference Range $1.88 - $2.06
-------------------------------------------------------------------------------- (1) Adjusted for ($7,325) net debt, which includes assumed cash from in the money options/warrants and the net present value of notes receivable. (2) Based upon and assumes 5,686 common stock share equivalents outstanding. Page 44 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Financial Projections - Base Case Projections ($ in thousands)
Actual/Estimated Projected ----------------- ------------------------------------- FYE Feb 28/29 FYE Feb 28/29 ----------------- ------------------------------------- 2002 2003 2004 2005 2006 2007 ----------------- ------------------------------------- Revenue Royalty Income $ 5,117 $ 5,221 $ 5,209 $ 5,209 $ 5,209 $ 5,209 Pelican Paper Sales 12,068 12,019 12,000 12,000 12,000 12,000 Franchise Sales 99 4 -- -- -- -- OPC Fees 306 426 360 330 330 330 Company Plant Sales -- -- -- -- -- -- ----------------- ------------------------------------- 17,590 17,670 17,569 17,539 17,539 17,539 Cost of Goods Sold 10,726 10,410 10,468 10,480 10,492 10,492 ----------------- ------------------------------------- Gross Margin 6,864 7,260 7,101 7,059 7,047 7,047 Operating Expenses Salaries & Employee Benefits 3219 2,763 3,074 3,258 3,454 3,661 Consultancy Costs 602 519 400 400 400 400 Occupancy Costs 200 216 220 234 249 249 Travel and Entertainment 147 188 238 246 254 262 Bad Debt 1300 1,400 900 900 900 900 Other G&A 739 765 848 882 921 960 ----------------- ------------------------------------- 6,207 5,851 5,680 5,920 6,178 6,432 ----------------- ------------------------------------- EBITDA 657 1,409 1,421 1,139 869 615 Deprec. & Amort 226 218 200 200 200 200 ----------------- ------------------------------------- EBIT 431 1,191 1,221 939 669 415 Income Taxes 168 464 476 366 261 162 ----------------- ------------------------------------- Unlevered After-tax Income 263 727 745 573 408 253 Add: Deprec. & Amort 226 218 200 200 200 200 Add: Change in Net WC -- (1,151) 311 12 8 9 Less: Capital Expenditures 162 520 150 150 150 150 ----------------- ------------------------------------- Unlevered Free Cash Flows $ 327 $ (726) $ 1,106 $ 635 $ 466 $ 312 ================= ===================================== Income Tax Expense and Assumptions Statutory Tax Rate 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% Effective Tax Rate 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% Current Period Tax $ 168 $ 464 $ 476 $ 366 $ 261 $ 162 NOL Usage -- -- -- -- -- -- ----------------- ------------------------------------- Income Tax Expense $ 168 $ 464 $ 476 $ 366 $ 261 $ 162 ================= ===================================== Ending NOL Balance $ -- $ -- $ -- $ -- $ -- ======= =====================================
Actual/Estimated Projected ---------------- --------------------------------- FYE Feb 28/29 FYE Feb 28/29 ---------------- --------------------------------- 2002 2003 2004 2005 2006 2007 ---------------- --------------------------------- Growth Assumptions Royalty Income na 2.0% -0.2% 0.0% 0.0% 0.0% Pelican Paper Sales na -0.4% -0.2% 0.0% 0.0% 0.0% Franchise Sales na -96.0% -100.0% na na na OPC Fees na 39.2% -15.5% -8.3% 0.0% 0.0% Company Plant Sales na na na na na na Total Revenue na 0.5% -0.6% -0.2% 0.0% 0.0% Cost of Goods Sold na -2.9% 0.6% 0.1% 0.1% 0.0% Gross Margin na 5.8% -2.2% -0.6% -0.2% 0.0% Salaries & Employee Benefits na -14.2% 11.3% 6.0% 6.0% 6.0% Consultancy Costs na -13.8% -22.9% 0.0% 0.0% 0.0% Occupancy Costs na 8.0% 1.9% 6.4% 6.4% 0.0% Travel and Entertainment na 27.9% 26.6% 3.4% 3.3% 3.1% Bad Debt na 7.7% -35.7% 0.0% 0.0% 0.0% Other G&A na 3.5% 10.8% 4.0% 4.4% 4.2% Total Operating Expenses na -5.7% -2.9% 4.2% 4.4% 4.1% EBITDA na 114.5% 0.9% -19.8% -23.7% -29.2% Unlevered After-tax Income na 176.3% 2.5% -23.1% -28.8% -38.0% Margin Review Cost of Paper Sales Margin 11.1% 13.4% 12.8% 12.7% 12.6% 12.6% Gross Margin 39.0% 41.1% 40.4% 40.2% 40.2% 40.2% EBITDA Margin 3.7% 8.0% 8.1% 6.5% 5.0% 3.5% Non-Cash Working Capital Assumptions AR Days Outstanding 64 60 60 60 60 A/R - % of Sales 17.5% 16.4% 16.4% 16.4% 16.4% Days Inventory Outs. 91 90 90 90 90 Inv - % Cost of Sales 24.9% 24.7% 24.7% 24.7% 24.7% Prepay - % of Direct and Op Costs 5.4% 4.0% 4.0% 4.0% 4.0% AP Days Outstanding 20 10 10 10 10 A/P - % of Direct and Op Costs 5.4% 2.7% 2.7% 2.7% 2.7% Acc Exp - % of Direct and Op Costs 3.5% 5.0% 5.0% 5.0% 5.0% Non-Cash Net Working Capital Accounts Receivable $2,889 $ 3,076 $2,888 $2,883 $2,883 $2,883 Inventory 1,887 2,668 2,581 2,584 2,587 2,587 Prepayments 678 882 646 656 667 677 Accounts Payable 432 875 442 449 457 464 Acc Exp & Deferred Rev 996 574 807 820 834 846 ---------------- --------------------------------- Non-Cash Net WC $4,026 $ 5,177 $4,866 $4,854 $4,846 $4,837 ================ ================================= Change in Non-Cash Net WC $(1,151) $ 311 $ 12 $ 8 $ 9 ======= =================================
-------------------------------------------------------------------------------- Sources of information: Company financials, projections and management. Page 45 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Discounted Cash Flow Analysis - Base Case Projections ($ in thousands) Revenue Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal Revenue Multiples Discount --------------------------------------------------- Rate 0.05x 0.10x 0.15x 0.20x 0.25x 0.30x ------------------------------------------------------------------------------- 11.0% $2,777 $3,385 $3,994 $4,602 $5,211 $5,820 13.5% $2,666 $3,229 $3,792 $4,355 $4,918 $5,481 --------------- 16.0% $2,564 $3,085 $3,607 $4,129 $4,650 $5,172 18.5% $2,469 $2,953 $3,437 $3,922 $4,406 $4,890 --------------- 21.0% $2,382 $2,832 $3,282 $3,732 $4,182 $4,632 23.5% $2,301 $2,719 $3,138 $3,557 $3,976 $4,395 ------ Average of Box $3,774 ------ -------------------------------------------------------------------------------- Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal Revenue Multiples Discount --------------------------------------------------- Rate 0.05x 0.10x 0.15x 0.20x 0.25x 0.30x ------------------------------------------------------------------------------- 11.0% 21.9% 36.0% 45.7% 52.9% 58.4% 62.7% 13.5% 21.1% 34.9% 44.5% 51.7% 57.2% 61.6% ------------- 16.0% 20.3% 33.8% 43.4% 50.5% 56.1% 60.5% 18.5% 19.6% 32.8% 42.3% 49.4% 54.9% 59.4% ------------- 21.0% 18.9% 31.8% 41.1% 48.2% 53.8% 58.3% 23.5% 18.2% 30.8% 40.0% 47.1% 52.7% 57.2% ---- Average of Box 46.4% ---- EBITDA Terminal Value Analysis ------------------------------------------------------------------------------- Estimated Range of Enterprise Values ------------------------------------------------------------------------------- Terminal EBITDA Multiples Discount --------------------------------------------------- Rate 2.50x 3.00x 3.50x 4.00x 4.50x 5.00x ------------------------------------------------------------------------------- 11.0% $3,235 $3,448 $3,662 $3,875 $4,089 $4,302 13.5% $3,090 $3,287 $3,485 $3,682 $3,879 $4,077 --------------- 16.0% $2,957 $3,139 $3,322 $3,505 $3,688 $3,871 18.5% $2,834 $3,004 $3,173 $3,343 $3,513 $3,683 --------------- 21.0% $2,721 $2,878 $3,036 $3,194 $3,352 $3,510 23.5% $2,616 $2,763 $2,910 $3,057 $3,204 $3,351 ------ Average of Box $3,336 ------ -------------------------------------------------------------------------------- Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal EBITDA Multiples Discount --------------------------------------------------- Rate 2.50x 3.00x 3.50x 4.00x 4.50x 5.00x ------------------------------------------------------------------------------- 11.0% 33.0% 37.1% 40.8% 44.1% 47.0% 49.6% 13.5% 31.9% 36.0% 39.7% 42.9% 45.8% 48.4% ------------- 16.0% 30.9% 35.0% 38.5% 41.7% 44.6% 47.3% 18.5% 30.0% 33.9% 37.4% 40.6% 43.5% 46.1% ------------- 21.0% 29.0% 32.9% 36.4% 39.5% 42.4% 45.0% 23.5% 28.1% 31.9% 35.3% 38.4% 41.3% 43.8% ---- Average of Box 39.6% ---- Perpetual Growth Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal Perpetual Growth Rates Discount --------------------------------------------------- Rate 2.25% 2.50% 2.75% 3.00% 3.25% 3.50% ------------------------------------------------------------------------------- 11.0% $4,243 $4,311 $4,384 $4,462 $4,544 $4,632 13.5% $3,596 $3,635 $3,676 $3,719 $3,765 $3,812 --------------- 16.0% $3,174 $3,199 $3,225 $3,252 $3,280 $3,309 18.5% $2,874 $2,891 $2,909 $2,927 $2,946 $2,965 --------------- 21.0% $2,648 $2,660 $2,673 $2,685 $2,699 $2,713 23.5% $2,470 $2,479 $2,488 $2,498 $2,508 $2,518 ------ Average of Box $3,078 ------ -------------------------------------------------------------------------------- Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal Perpetual Growth Rates Discount ------------------------------------------------- Rate 2.25% 2.50% 2.75% 3.00% 3.25% 3.50% ------------------------------------------------------------------------------- 11.0% 48.9% 49.7% 50.6% 51.4% 52.3% 53.2% 13.5% 41.5% 42.2% 42.8% 43.5% 44.1% 44.8% ------------- 16.0% 35.7% 36.2% 36.7% 37.2% 37.7% 38.3% 18.5% 30.9% 31.3% 31.8% 32.2% 32.6% 33.1% ------------- 21.0% 27.0% 27.4% 27.7% 28.1% 28.4% 28.8% 23.5% 23.8% 24.1% 24.4% 24.7% 25.0% 25.3% ---- Average of Box 34.5% ---- -------------------------------------------------------------------------------- All Discounted amounts have been calculated utilizing a mid-year convention. Sources of information: Company financials, projections and management. Page 46 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Financial Projections - Company Owned Plant Projections ($ in thousands)
Actual/Estimated Projected ---------------- ---------------------------------- FYE Feb 28/29 FYE Feb 28/29 ---------------- ---------------------------------- 2002 2003 2004 2005 2006 2007 ------------- ---------------------------------- Revenue San Francisco $ -- $ 286 $ 688 $ 791 $ 869 $ 913 Tampa -- 750 1,620 1,782 1,960 2,156 Mid-South -- -- 700 1,470 1,544 1,621 Mid-West -- -- 700 1,470 1,544 1,621 Northeast -- -- -- 1,050 1,470 1,543 ------------- ---------------------------------- -- 1,036 3,708 6,563 7,387 7,854 Cost of Goods Sold -- 237 846 1,502 1,690 1,797 ------------- ---------------------------------- Gross Margin -- 799 2,862 5,061 5,697 6,057 Operating Expenses Salaries & Employee Benefits -- -- 1,746 2,870 3,155 3,354 Occupancy Costs -- -- 177 318 352 368 Equipment Leases -- -- 81 89 76 76 Advertising -- -- 72 114 120 120 Delivery Expense -- -- 348 525 591 628 Training Costs 100 150 238 250 Other -- 995 158 248 181 179 ------------- ---------------------------------- -- 995 2,682 4,314 4,713 4,975 ------------- ---------------------------------- EBITDA -- (196) 180 747 984 1,082 Deprec. & Amort. -- 23 100 100 100 100 ------------- ---------------------------------- EBIT -- (219) 80 647 884 982 Income Taxes -- (85) 31 252 345 383 ------------- ---------------------------------- Unlevered After-tax Income -- (134) 49 395 539 599 Add: Deprec. & Amort. -- 23 100 100 100 100 Add: Change in Net WC -- -- (305) (235) (68) (38) Less: Capital Expenditures -- -- 1,800 975 75 75 ------------- ---------------------------------- Unlevered Free Cash Flows $ -- $ (111) $(1,956) $ (715) $ 496 $ 586 ============= ================================== Income Tax Expense and Assumptions Statutory Tax Rate 0.0% 39.0% 39.0% 39.0% 39.0% 39.0% Effective Tax Rate 0.0% 39.0% 39.0% 39.0% 39.0% 39.0% Current Period Tax $ -- $ (85) $ 31 $ 252 $ 345 $ 383 NOL Usage -- -- -- -- -- -- ------------- ---------------------------------- Income Tax Expense $ -- $ (85) $ 31 $ 252 $ 345 $ 383 ============= ================================== Ending NOL Balance $ -- $ -- $ -- $ -- $ -- ====== ==================================
Actual/Estimated Projected ---------------- -------------------------------- FYE Feb 28/29 FYE Feb 28/29 ---------------- -------------------------------- 2002 2003 2004 2005 2006 2007 ----------- -------------------------------- Growth Assumptions San Francisco na na 140.4% 15.0% 9.9% 5.1% Tampa na na 116.0% 10.0% 10.0% 10.0% Mid-South na na na 110.0% 5.0% 5.0% Mid-West na na na 110.0% 5.0% 5.0% Northeast na na na na 40.0% 5.0% Total Revenue na na 257.9% 77.0% 12.6% 6.3% Cost of Goods Sold na na 256.9% 77.5% 12.6% 6.3% Gross Margin na na 258.2% 76.9% 12.6% 6.3% Salaries & Employee Benefits na na na 64.3% 9.9% 6.3% Occupancy Costs na na na 79.8% 10.7% 4.5% Equipment Leases na na na 9.5% -14.6% 0.0% Advertising na na na 58.3% 5.3% 0.0% Delivery Expense na na na 51.1% 12.6% 6.3% Training Costs na na na 50.0% 58.7% 5.0% Other na na -84.1% 57.1% -27.0% -1.1% Total Operating Expenses na na 169.5% 60.9% 9.2% 5.6% EBITDA na na na 315.9% 31.7% 10.0% Unlevered After-tax Income na na na 712.4% 36.6% 11.1% Margin Review Cost of Paper Sales Margin na na 47.8% 15.7% 13.8% 16.7% Gross Margin na na 77.2% 77.1% 77.1% 77.1% EBITDA Margin na na 4.8% 11.4% 13.3% 13.8% Non-Cash Working Capital Assumptions AR Days Outstanding na 30 30 30 30 A/R - % of Sales na 8.2% 8.2% 8.2% 8.2% Days Inventory Outs. na -- -- -- -- Inv - % Cost of Sales na 0.0% 0.0% 0.0% 0.0% Prepay - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0% AP Days Outstanding na -- -- -- -- A/P - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0% Acc Exp - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0% Non-Cash Net Working Capital Accounts Receivable $-- $-- $ 305 $ 539 $ 607 $ 646 Inventory -- -- -- -- -- -- Prepayments -- -- -- -- -- -- Accounts Payable -- -- -- -- -- -- Accrued Expenses -- -- -- -- -- -- --------- -------------------------------- Non-Cash Net WC $-- $-- $ 305 $ 539 $ 607 $ 646 ========= ================================ Change in Non-Cash Net WC $-- $ (305) $ (235) $ (68) $ (38) === ================================
-------------------------------------------------------------------------------- Sources of information: Company financials, projections and management. Page 47 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Discounted Cash Flow Analysis - Company Owned Plant Projections ($ in thousands) Revenue Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal Revenue Multiples Discount ------------------------------------------------------ Rate 0.20x 0.30x 0.40x 0.50x 0.60x 0.70x ------------------------------------------------------------------------------ 18.0% $ (822) $(382) $ 58 $ 498 $938 $1,378 20.5% $ (888) $(479) $ (70) $ 339 $747 $1,156 --------------- 23.0% $ (947) $(567) $(186) $ 195 $575 $ 956 25.5% $ (999) $(645) $(290) $ 65 $419 $ 774 --------------- 28.0% $(1,046) $(715) $(384) $ (53) $278 $ 609 30.5% $(1,087) $(778) $(469) $(159) $150 $ 459 ----- Average of Box $ (54) ----- Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal Revenue Multiples Discount ------------------------------------------------------ Rate 0.20x 0.30x 0.40x 0.50x 0.60x 0.70x ------------------------------------------------------------------------------ 18.0% -107.1% -345.6% 3032.2% 441.7% 281.4% 223.5% 20.5% -92.1% -255.9% -2322.9% 604.0% 328.3% 247.5% ----------------- 23.0% -80.4% -201.5% -818.5% 977.9% 397.0% 278.7% 25.5% -71.0% -165.0% -489.1% 2744.9% 507.5% 320.8% ----------------- 28.0% -63.3% -138.9% -344.9% -3128.1% 714.2% 380.4% 30.5% -56.9% -119.3% -264.0% -971.0% 1236.9% 471.4% ------- Average of Box 603.8% ------- EBITDA Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal EBITDA Multiples Discount ---------------------------------------------------------- Rate 3.50x 4.00x 4.50x 5.00x 5.50x 6.00x -------------------------------------------------------------------------------- 18.0% $ 420 $723 $1,026 $1,329 $1,632 $1,935 20.5% $ 266 $547 $ 829 $1,111 $1,392 $1,674 --------------- 23.0% $ 127 $389 $ 651 $ 913 $1,175 $1,437 25.5% $ 1 $246 $ 490 $ 734 $ 979 $1,223 --------------- 28.0% $(112) $116 $ 344 $ 572 $ 800 $1,028 30.5% $(214) $ (1) $ 212 $ 425 $ 638 $ 851 ------ Average of Box $ 697 ------ Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal EBITDA Multiples Discount --------------------------------------------------------- Rate 3.50x 4.00x 4.50x 5.00x 5.50x 6.00x ------------------------------------------------------------------------------ 18.0% 505.6% 335.5% 265.9% 228.1% 204.3% 188.0% 20.5% 742.3% 411.7% 305.8% 253.6% 222.5% 201.9% --------------- 23.0% 1447.8% 539.3% 362.4% 287.1% 245.3% 218.8% 25.5% 123579.0% 795.5% 448.7% 332.7% 274.6% 239.7% --------------- 28.0% -1426.2% 1571.2% 596.4% 398.5% 313.5% 266.1% 30.5% -695.6% -126359.9% 905.7% 501.6% 367.4% 300.5% ----- Average of Box 357.7% ----- Perpetual Growth Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal Perpetual Growth Rates Discount ---------------------------------------------------------- Rate 4.00% 4.25% 4.50% 4.75% 5.00% 5.25% ------------------------------------------------------------------------------- 18.0% $ 801 $ 853 $ 907 $ 963 $1,022 $1,082 20.5% $ 267 $ 303 $ 340 $ 378 $ 417 $ 457 --------------- 23.0% $(113) $ (88) $ (62) $ (35) $ (7) $ 22 25.5% $(395) $(376) $(357) $(337) $ (317) $ (296) --------------- 28.0% $(610) $(595) $(580) $(565) $ (550) $ (534) 30.5% $(776) $(765) $(754) $(742) $ (730) $ (718) ----- Average of Box $(197) ----- -------------------------------------------------------------------------------- Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal Perpetual Growth Rates Discount --------------------------------------------------------- Rate 4.00% 4.25% 4.50% 4.75% 5.00% 5.25% ------------------------------------------------------------------------------- 18.0% 312.6% 299.5% 287.6% 276.7% 266.6% 257.2% 20.5% 738.0% 663.0% 602.1% 551.7% 509.2% 473.1% ----------------- 23.0% -1408.2% -1847.2% -2677.2% -4841.4% -24719.4% 8014.2% 25.5% -332.4% -354.2% -379.0% -407.2% -439.9% -478.0% ----------------- 28.0% -180.1% -187.0% -194.3% -202.1% -210.6% -219.8% 30.5% -119.7% -123.0% -126.4% -130.0% -133.8% -137.8% ------- Average of Box -2076.2% ------- -------------------------------------------------------------------------------- All Discounted amounts have been calculated utilizing a mid-year convention. Sources of information: Company financials, projections and management. Page 48 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Financial Projections - Satellite Store Projections ($ in thousands)
Actual/Estimated Projected ---------------- ----------------------------- FYE Feb 28/29 FYE Feb 28/29 ---------------- ----------------------------- 2002 2003 2004 2005 2006 2007 ------------ ----------------------------- Revenue Royalty Income $-- $-- $ -- $ 23 $ 123 $ 293 Pelican Paper Sales -- -- -- 42 231 548 Franchise Sales -- -- 35 140 140 140 OPC Fees -- -- -- -- -- -- Company Plant Sales -- -- -- -- -- -- ----------- ----------------------------- -- -- 35 205 494 981 Cost of Goods Sold -- -- -- 37 201 477 ----------- ----------------------------- Gross Margin -- -- 35 168 293 504 Operating Expenses Salaries & Employee Benefits -- -- 39 142 146 149 Advertising -- -- 25 25 25 25 Admin -- -- 8 6 6 6 Other -- -- 92 141 146 151 ----------- ----------------------------- -- -- 164 314 323 331 ----------- ----------------------------- EBITDA -- -- (129) (146) (29) 173 Deprec. & Amort -- -- -- -- -- -- ----------- ----------------------------- EBIT -- -- (129) (146) (29) 173 Income Taxes -- -- -- -- -- -- ----------- ----------------------------- Unlevered After-tax Income -- -- (129) (146) (29) 173 Add: Deprec. & Amort -- -- -- -- -- -- Add: Change in Net WC -- -- -- (5) (24) (40) Less: Capital Expenditures -- -- -- -- -- -- ----------- ----------------------------- Unlevered Free Cash Flows $-- $-- $(129) $(151) $ (53) $ 133 =========== ============================= Income Tax Expense and Assumptions Statutory Tax Rate 39.0% 39.0% 39.0% 39.0% Effective Tax Rate na na 0.0% 0.0% 0.0% 0.0% Current Period Tax $-- $-- $ (50) $ (57) $ (11) $ 67 NOL Usage -- -- 50 57 11 (67) ----------- ----------------------------- Income Tax Expense $-- $-- $ -- $ -- $ -- $ -- =========== ============================= Ending NOL Balance $-- $ 50 $ 107 $ 118 $ 40 === =============================
Actual/Estimated Projected ---------------- ---------------------------------- FYE Feb 28/29 FYE Feb 28/29 ---------------- ---------------------------------- 2002 2003 2004 2005 2006 2007 ---- ---- ------- ------ ------ ------ Growth Assumptions Royalty Income na na na na 448.0% 137.2% Pelican Paper Sales na na na na 448.0% 137.2% Franchise Sales na na na 300.0% 0.0% 0.0% OPC Fees na na na na na na Company Plant Sales na na na na na na Total Revenue na na na 484.8% 141.6% 98.4% Cost of Goods Sold na na na na 448.0% 137.2% Gross Margin na na na 380.0% 74.6% 71.7% Salaries & Employee Benefits na na na 268.8% 2.5% 2.4% Advertising na na na 0.0% 0.0% 0.0% Admin na na na -25.0% 0.0% 0.0% Other na na na 53.3% 3.5% 3.4% Total Operating Expenses na na na 92.0% 2.7% 2.6% EBITDA na na na na na na Unlevered After-tax Income na na na na na na Margin Review Cost of Paper Sales Margin na na na 13.0% 13.0% 13.0% Gross Margin na na 100.0% 82.1% 59.3% 51.4% EBITDA Margin na na -367.1% -71.3% -5.9% 17.6% Non-Cash Working Capital Assumptions AR Days Outstanding na 30 30 30 30 A/R - % of Sales na 8.2% 8.2% 8.2% 8.2% Days Inventory Outs na -- -- -- -- Inv - % Cost of Sales na 0.0% 0.0% 0.0% 0.0% Prepay - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0% AP Days Outstanding na -- -- -- -- A/P - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0% Acc Exp - % of Direct and Op Costs na 0.0% 0.0% 0.0% 0.0% Non-Cash Net Working Capital Accounts Receivable $-- $-- $ -- $ 5 $ 29 $ 69 Inventory -- -- -- -- -- -- Prepayments -- -- -- -- -- -- Accounts Payable -- -- -- -- -- -- Accrued Expenses -- -- -- -- -- -- ---------- ---------------------------------- Non-Cash Net WC $-- $-- $ -- $ 5 $ 29 $ 69 ========== ================================== Change in Non-Cash Net WC $-- $ -- $ (5) $ (24) $ (40) === ==================================
-------------------------------------------------------------------------------- Sources of information: Company financials, projections and management. Page 49 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Discounted Cash Flow Analysis - Satellite Store Projections ($ in thousands) Revenue Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal Revenue Multiples Discount --------------------------------------------- Rate 0.70x 0.80x 0.90x 1.00x 1.10x 1.20x ------------------------------------------------------------------------------- 15.5% $216 $276 $335 $394 $453 $513 18.0% $188 $243 $298 $353 $408 $463 ------------ 20.5% $162 $213 $264 $315 $366 $417 23.0% $139 $186 $234 $281 $329 $376 ------------ 25.5% $118 $162 $206 $251 $295 $339 28.0% $ 99 $140 $181 $223 $264 $305 ---- Average of Box $274 ---- Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal Revenue Multiples Discount --------------------------------------------- Rate 0.70x 0.80x 0.90x 1.00x 1.10x 1.20x ------------------------------------------------------------------------------- 15.5% 191.6% 171.9% 159.2% 150.3% 143.7% 138.7% 18.0% 204.9% 181.1% 166.2% 155.8% 148.3% 142.6% ------------- 20.5% 220.7% 191.8% 174.0% 162.0% 153.4% 146.9% 23.0% 239.9% 204.2% 183.0% 169.0% 159.0% 151.5% ------------- 25.5% 263.4% 218.7% 193.2% 176.8% 165.2% 156.7% 28.0% 293.1% 236.1% 205.1% 185.6% 172.2% 162.4% ----- Average of Box 172.0% ----- EBITDA Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal EBITDA Multiples Discount --------------------------------------------- Rate 5.00x 5.50x 6.00x 6.50x 7.00x 7.50x ------------------------------------------------------------------------------- 15.5% $324 $376 $428 $480 $532 $584 18.0% $287 $336 $384 $432 $481 $529 ------------ 20.5% $254 $299 $344 $389 $434 $479 23.0% $225 $267 $308 $350 $392 $434 ------------ 25.5% $198 $237 $276 $315 $354 $393 28.0% $173 $210 $246 $283 $319 $356 ----- Average of Box $ 348 ----- Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal EBITDA Multiples Discount --------------------------------------------- Rate 5.00x 5.50x 6.00x 6.50x 7.00x 7.50x ------------------------------------------------------------------------------- 15.5% 161.3% 152.8% 146.3% 141.3% 137.2% 133.9% 18.0% 168.6% 158.7% 151.3% 145.6% 141.0% 137.2% ------------- 20.5% 176.9% 165.3% 156.8% 150.2% 145.0% 140.8% 23.0% 186.4% 172.8% 162.9% 155.4% 149.5% 144.7% ------------- 25.5% 197.3% 181.2% 169.7% 161.1% 154.4% 149.0% 28.0% 209.9% 190.8% 177.4% 167.4% 159.7% 153.6% ----- Average of Box 156.3% ----- Perpetual Growth Terminal Value Analysis -------------------------------------------------------------------------------- Estimated Range of Enterprise Values -------------------------------------------------------------------------------- Terminal Perpetual Growth Rates Discount --------------------------------------------------- Rate 10.00% 10.25% 10.50% 10.75% 11.00% 11.25% -------------------------------------------------------------------------------- 15.5% $1,075 $1,139 $1,209 $1,286 $1,372 $1,468 18.0% $ 615 $ 643 $ 673 $ 705 $ 740 $ 776 --------------- 20.5% $ 379 $ 395 $ 411 $ 428 $ 446 $ 465 23.0% $ 238 $ 248 $ 257 $ 268 $ 278 $ 290 --------------- 25.5% $ 145 $ 152 $ 158 $ 165 $ 172 $ 179 28.0% $ 81 $ 85 $ 90 $ 95 $ 99 $ 104 ------ Average of Box $ 341 ------ Discounted Terminal Values as % of Enterprise Values -------------------------------------------------------------------------------- Terminal Perpetual Growth Rates Discount --------------------------------------------------- Rate 10.00% 10.25% 10.50% 10.75% 11.00% 11.25% -------------------------------------------------------------------------------- 15.5% 118.4% 117.4% 116.4% 115.4% 114.4% 113.5% 18.0% 132.0% 130.6% 129.3% 127.9% 126.6% 125.4% -------------- 20.5% 151.5% 149.5% 147.6% 145.7% 143.9% 142.1% 23.0% 181.5% 178.3% 175.3% 172.5% 169.7% 167.0% -------------- 25.5% 232.3% 226.8% 221.5% 216.6% 211.8% 207.3% 28.0% 335.9% 323.6% 312.2% 301.6% 291.8% 282.6% ----- Average of Box 160.3% ----- -------------------------------------------------------------------------------- All Discounted amounts have been calculated utilizing a mid-year convention. Sources of information: Company financials, projections and management. Page 50 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS DISCOUNTED CASH FLOW ANALYSIS Cost of Capital Calculation & Net Debt ($ and shares in thousands, except per share) Cost of Equity+A33 Company Owned Base Case Plants Satellite Stores --------- ------------- ---------------- Riskless (1) 20 year treasury yield (Rf) 4.7% 4.7% 4.7% Risk (2) Equity risk premium (EP) 7.8% 7.8% 7.8% Industry risk premium (IP) -2.9% -2.9% -2.9% Size Premium (SP) 9.2% 9.2% 9.2% Company Specific Operational Risk 0.0% 3.0% 0.0% New Strategy Risk 0.0% 5.0% 5.0% ---- ---- ---- Cost of Equity 18.8% 26.8% 23.8% ==== ==== ==== Weighted Average Cost of Capital After Tax Cost of Debt 3.4% 3.4% 3.4% ==== ==== ==== Weighted Average Cost of Capital 17.4% 24.6% 21.9% ==== ==== ==== Equity Value Net Debt Assumptions As of Feb 28, 2003 ------------------------------------------- Company Owned Base Case Plants Satellite Stores --------- ------------- ---------------- Debt & Other Obligations Interest Bearing Debt $ 523 $ 523 $ 523 Minority Interests -- -- -- Preferred Stock -- -- -- ------- ------- ------- 523 523 523 ------- ------- ------- Less Cash Cash on Hand 4,244 4,244 4,244 Assumed $ - exercise of options 1,017 1,017 1,017 Assumed $ - Notes (3) 2,587 2,587 2,587 ------- ------- ------- 7,848 7,848 7,848 ------- ------- ------- Net Debt $(7,325) $(7,325) $(7,325) ======= ======= ======= Cost of Debt Nominal % of Weighted Type of Debt Rate Amount of Debt Cost of Debt ------------ ------- ------ ------- ------------ Note 1 9.00% $193 36.9% 3.3% Note 2 6.50% 182 34.8% 2.3% Note 3 0.00% 148 28.3% 0.0% ---- ----- --- $523 100.0% 5.6% ==== ===== === Capitalization Stock Price Market % of Type Shares Outs. 23-May-03 Value Total Capital ---- ------------ --------- ------ ------------- Debt $ 523 9.3% Common Stock 5,121 $1.0000 5,121 90.7% ------ ----- $5,644 100.0% ====== ===== Common Stock Equivalents
As of Feb 28, 2003 ------------------------------------------- Company Owned Base Case Plants Satellite Stores --------- ------------- ---------------- Common Stock Outstanding 5,121 5,121 5,121 Stock issued re Other -- -- -- ----- ----- ----- 5,121 5,121 5,121 ----- ----- ----- Options in the money: Avg Exercise $ Options less than $2.00 $1.80 565 565 565 -- -- -- ----- ----- ----- 565 565 565 ----- ----- ----- Total Common Stock Equivalents 5,686 5,686 5,686 ===== ===== =====
-------------------------------------------------------------------------------- (1) As reported by the Federal Reserve Board on a weekly-average basis for the week ended March 9, 2003. (2) Sourced from the Ibbotson SBBI Valuation Edition 2003 Yearbook. Industry risk premium is based on SIC 27 (Printing, Publishing, And Allied Industries) and SIC 511 (Paper & Paper Products). (3) See Notes Analysis for details. Sources of information: Company financials, projections & management, Ibbotson 2003 SBBI and Federal Reserve Board. Page 51 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS . The selected comparable company analysis compares the trading multiples of the Company with those of other publicly traded companies that are similar with respect to business and revenue model, operating sector, size and target customer base. . Capitalink located five companies that it deemed comparable to the Company with respect to their industry sector and market served (the "Comparable Companies"). However, none of the Comparable Companies are involved in franchising. All provide commercial printing services including business forms and labels, and the supply of paper and related products as their primary business and are classified either under the SIC code 27 (Printing, Publishing and Allied Services) and/or 511 (Paper and Paper Products). . Based on size (in terms of enterprise value and revenues), BCT is in the lower range of the Comparable Companies. As of May 23, 2003, the enterprise values for the Comparable Companies ranged from approximately $43.7 million to approximately $2.5 billion and revenue ranged from approximately $134.8 million to approximately $2.0 billion. In comparison, BCT had an enterprise value and latest twelve months ("LTM") revenue of approximately $1.1 million and $18.4 million, respectively. . Multiples utilizing market value, total invested capital ("TIC") and enterprise value were used in the analyses. The differences among the three are as follows: . Market value equals price per share times number of shares outstanding, . TIC equals market value plus interest bearing debt, preferred stock and minority interest, and . Enterprise value equals TIC, less cash and equivalents. . Multiples based on TIC were calculated given the significant level of cash held by the Company (approximately $4.8 million, as of November 30, 2002). The significant difference between the multiples based on TIC and enterprise value suggests that the market is not fully valuing the cash and assets of the business. Page 52 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS . Market values were used to calculate multiples of earnings per share ("EPS"), common equity, and net tangible common equity, while TIC and enterprise values were used to calculate multiples of LTM revenue, LTM EBITDA, and total assets. For comparison purposes, all operating profits including EBITDA were normalized to exclude unusual and extra-ordinary expenses or income. . The comparable company analysis generated a wide range of multiples: . Based on TIC, the mean LTM revenue and EBITDA multiple was 0.72 times and 8.7 times respectively, compared with 0.32 times and 6.0 times, respectively for the Company. . Based on enterprise value, the mean LTM revenue and EBITDA multiple was 0.70 times and 8.5 times respectively, compared with 0.06 times and 1.2 times, respectively for the Company. . Capitalink noted that the EBITDA margin for the Company of 5.4% was lower than all of the Comparable Companies (the median of which was 9.4%) with the exception of Impresso (3.1%). This might account for the lower valuation of the Company relative to the Comparable Companies, despite the fact that most of the Company's profits come from its franchising operations. . Capitalink also noted that the Company's debt ratio (5.1%) is much lower than any of the Comparable Companies (the mean of which was 60.7%). This explains the significant difference between multiples based on TIC and enterprise value for the Comparable Companies relative to the Company. . Capitalink also calculated and compared the implied multiples for the Company based on the Merger Consideration in the Proposed Transaction. Based on TIC, this would represent an LTM revenue and LTM EBITDA multiple of 0.66 times and 12.3 times, respectively, which is significantly greater than the average of the Comparable Companies. However, based on enterprise value, this would represent a LTM revenue and LTM EBITDA multiple of 0.21 times and 3.8 times, respectively. These multiples lie just below the low end of the range of the Comparable Companies. In determining the enterprise value for this calculation, Capitalink included both cash balances and an estimation of the fair market value of the Notes (see Notes Analysis). Page 53 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS . Capitalink expects the Company's valuation multiples to be below the Comparable Companies due to the smaller size of the Company, lower historical growth and limited future growth. . Capitalink selected an appropriate multiple range for the Company as follows: . 0.32 times to 0.59 times LTM revenue based on TIC, and 0.32 times to 0.58 times LTM revenue based on enterprise value. . 5.4 times to 7.7 times LTM EBITDA based on TIC, and 5.3 times to 7.4 times LTM EBITDA based on enterprise value. . Based on the selected multiple ranges, Capitalink calculated a range of indicated share prices of $1.58 to $2.20. . Capitalink noted that the offer price of the Proposed Transaction was within this indicated valuation range. . An analysis of publicly-traded comparable companies is not mathematical; rather it involves complex consideration and judgments concerning differences in financial and operating characteristics of the Comparable Companies and other factors that could affect the public trading of the Comparable Companies. Page 54 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS Comparable Company Analysis - Indicated Reference Range ($ in thousands, except per share)
Selected Indicated Indicated Indicated Statistic Multiple Range TIC/EV Value Equity Value (1) Share Price (2) --------- -------------- ---------------- ----------------- --------------- Total Invested Capital (TIC) Multiple LTM Revenue $18,381 0.32x - 0.59x $5,961 - $10,852 $ 5,133 - $10,024 $0.90 - $1.76 LTM EBITDA $ 988 5.4x - 7.7x $5,309 - $ 7,628 $ 4,481 - $ 6,800 $0.79 - $1.20 Total Enterprise Value (EV) Multiple LTM Revenue $18,381 0.32x - 0.58x $5,943 - $10,669 $13,524 - $18,250 $2.38 - $3.21 LTM EBITDA $ 988 5.3x - 7.4x $5,220 - $ 7,295 $12,801 - $14,876 $2.25 - $2.62 Indicated Reference Range $1.58 - $2.20
-------------------------------------------------------------------------------- (1) Adjusted for $828 and ($7,581) debt and net debt, respectively for TIC and EV. Net debt includes assumed cash from in the money options/warrants and the net present value of notes receivable. (2) Based upon and assumes 5,686 common stock share equivalents outstanding. Page 55 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS Comparable Company Analysis - Valuation Multiples ($ in thousands, except per share data)
Total % Below/Above Market Invested Enterprise Stock Price 52-week Value Capital Value Company 23-May-03 High-Low MV TIC (1) EV (2) ----------------------------- ----------- ------------- ---------- ---------- ---------- Consolidated Graphics, Inc. $18.210 27.7% - 26.9% $ 242,703 $ 419,037 $ 411,987 Mail-Well, Inc. 2.550 61.5% - 168.4% 123,275 900,526 900,182 Impreso, Inc. 2.180 37.0% - 26.7% 11,508 43,711 43,579 Moore Corporation (4) 12.730 11.9% - 62.2% 1,442,602 2,538,715 2,418,734 Wallace Computer Services (4) 26.860 0.3% - 70.0% 1,134,674 1,343,581 1,284,804 --------------------------------------------- High $1,442,602 $2,538,715 $2,418,734 Mean 590,952 1,049,114 1,011,857 Median 242,703 900,526 900,182 Low 11,508 43,711 43,579 --------------------------------------------- BCT International $ 1.000 6.5% - 49.3% $ 5,121 $ 5,949 $ 1,144 BCT International - Merger Consideration (5) $ 11,372 $ 12,200 $ 3,791 MV as a Multiple of TIC as a Multiple of EV as a Multiple of ------------------------- ------------------------- ------------------------- 5 Yr EPS LTM Common Net Tang. LTM LTM Total LTM LTM Total Growth Company EPS Equity Equity Revenue EBITDA Assets Revenue EBITDA Assets Proj. (3) ----------------------------- ---- ------ --------- ------- ------ ------ ------- ------ ------ --------- Consolidated Graphics, Inc. 15.2x 1.0x 1.7x 0.59x 5.4x 0.7x 0.58x 5.3x 0.7x 10.0% Mail-Well, Inc. 1.9 2.3 na 0.53 6.8 0.8 0.53 6.8 0.8 5.0% Impreso, Inc. 18.2 0.7 0.7 0.32 10.3 0.7 0.32 10.3 0.7 na Moore Corporation (4) 15.9 3.4 4.6 1.26 13.3 1.1 1.20 12.7 1.0 na Wallace Computer Services (4) 14.0 2.4 4.0 0.89 7.7 1.4 0.85 7.4 1.4 na ------------------------------------------------------------------------------------------------------ High 18.2x 3.4x 4.6x 1.26x 13.3x 1.4x 1.20x 12.7x 1.4x 10.0% Mean 13.0 2.0 2.8 0.72 8.7 1.0 0.70 8.5 0.9 7.5% Median 15.2 2.3 2.9 0.59 7.7 0.8 0.58 7.4 0.8 7.5% Low 1.9 0.7 0.7 0.32 5.4 0.7 0.32 5.3 0.7 5.0% ------------------------------------------------------------------------------------------------------ BCT International 11.1x 0.3x 0.3x 0.32x 6.0x 0.3x 0.06x 1.2x 0.1x na BCT International - Merger Consideration (5) 24.7x 0.7x 0.8x 0.66x 12.3x 0.7x 0.21x 3.8x 0.2x na
-------------------------------------------------------------------------------- (1) Total Invested Capital equals Market Value plus total debt, preferred stock, and minority interests. (2) Enterprise Value equals Market Value plus total debt, preferred stock, and minority interests, less cash. (3) Sources of estimates: Multex Estimates and other various securities analysts' estimates and reports. (4) Merger of Moore and Wallace in final stages. (5) Reflects Merger Consideration, the effect of in-the-money options/warrants and the net present value of notes receivable. Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems, & Hoovers. Page 56 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS Comparable Company Analysis - Margin and Other Analyses ($ in thousands)
LTM (1) -------------------------------------------------------------------------------------- as Percentage of Revenue Return on ----------------------------------------------------- ----------------- Gross Operating Net Average Average Company Ticker Revenue Margin S G & A Margin EBITDA EBIT Income Assets Equity --------------------------- ------ ---------- ------ ------- --------- ------ ---- ------ ------- ------- Consolidated Graphics, Inc. CGX $ 709,780 24.5% 19.0% 5.5% 11.0% 5.5% 2.2% 2.6% 5.7% Mail-Well, Inc. MWL 1,712,542 19.8% 15.1% 4.7% 7.8% 4.6% 3.7% 5.7% 130.5% Impreso, Inc. ZCOM 134,781 10.1% 7.3% 2.7% 3.1% 2.2% 0.5% 1.0% 3.9% Moore Corporation MCL 2,019,683 31.9% 26.2% 5.7% 9.4% 5.2% 4.4% 4.7% 22.0% Wallace Computer Services WCS 1,505,704 27.3% 19.9% 7.4% 11.6% 7.4% 5.3% 8.6% 17.4% ----------------------------------------------------------------------------------------------- High $2,019,683 31.9% 26.2% 7.4% 11.6% 7.4% 5.3% 8.6% 130.5% Mean 1,216,498 22.7% 17.5% 5.2% 8.6% 5.0% 3.2% 4.5% 35.9% Median 1,505,704 24.5% 19.0% 5.5% 9.4% 5.2% 3.7% 4.7% 17.4% Low 134,781 10.1% 7.3% 2.7% 3.1% 2.2% 0.5% 1.0% 3.9% ----------------------------------------------------------------------------------------------- BCT International BCTI $ 18,381 43.1% 39.0% 4.1% 5.4% 4.1% 2.5% 2.6% 3.1% LTM (1) as of Latest Available Filing ------------------------------------- --------------------------------------------- Days Total Debt Total Total Latest FY A/R Inv. Sales Current to Total Debt Debt to Rev Company Turnover Turnover Outs. Ratio Capitalization to TIC EBITDA Growth --------------------------- -------- -------- ----- ------- -------------- ------ ------- --------- Consolidated Graphics, Inc. 6.0x 16.55x 60.4 1.7 41.4% 41.6% 2.3x -5.8% Mail-Well, Inc. 7.7 13.2 47.6 1.5 93.6% 87.4% 5.8x -7.5% Impreso, Inc. 9.2 3.5 39.8 1.3 65.5% 74.3% 7.6x 27.9% Moore Corporation 5.9 10.3 62.0 1.3 72.0% 43.9% 5.7x -5.4% Wallace Computer Services 6.3 12.5 57.6 2.7 30.8% 15.5% 1.2x -8.5% ------------------------------------------------------------------------------------- 9.2x 16.5x 62.0 2.7 93.6% 87.4% 7.6x 27.9% 7.0 11.2 53.5 1.7 60.7% 52.6% 4.5 0.1% 6.3 12.5 57.6 1.5 65.5% 43.9% 5.7 -5.8% 5.9 3.5 39.8 1.3 30.8% 15.5% 1.2 -8.5% ------------------------------------------------------------------------------------- BCT International 7.0x 4.56x 52.4 5.0 5.1% 13.9% 0.8x -7.3%
-------------------------------------------------------------------------------- (1) May exclude special items, such as extraordinary and non-recurring expenses. See individual company overviews for details of exclusions, if any. Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems, & Hoovers. Page 57 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS Comparable Company Analysis - Income Statement Overview ($ in thousands, except per share data)
Revenue EBITDA (1) EBIT (1) ----------------------- ------------------- ------------------- Latest Latest Latest Company LTM 10-K LTM 10-K LTM 10-K --------------------------- ---------- ---------- -------- -------- -------- -------- Consolidated Graphics, Inc. $ 709,780 $ 643,948 $ 77,984 $ 84,256 $ 39,343 $ 42,944 Mail-Well, Inc. 1,712,542 1,728,705 133,127 133,309 78,546 77,856 Impreso, Inc. 134,781 123,065 4,234 4,730 2,972 3,468 Moore Corporation 2,019,683 2,038,039 190,747 175,393 104,981 88,647 Wallace Computer Services 1,505,704 1,545,629 174,014 176,292 111,510 109,885 ---------------------------------------------------------------------------- High $2,019,683 $2,038,039 $190,747 $176,292 $111,510 $109,885 Mean 1,216,498 1,215,877 116,021 114,796 67,470 64,560 Median 1,505,704 1,545,629 133,127 133,309 78,546 77,856 Low 134,781 123,065 4,234 4,730 2,972 3,468 ---------------------------------------------------------------------------- BCT International $ 18,381 $ 18,007 $ 988 $ 1,039 $ 755 $ 813 Net Income (1) EPS (1) ----------------- -------------- Latest Latest Latest Latest Available Available Company LTM 10-K LTM 10-K 10-Q 10-K --------------------------- ------- ------- ----- ------ --------- --------- Consolidated Graphics, Inc. $15,887 $16,680 $1.20 $1.27 31-Dec-02 31-Mar-02 Mail-Well, Inc. 62,777 70,169 1.32 1.47 31-Mar-03 31-Dec-02 Impreso, Inc. 655 1,063 0.12 0.20 28-Feb-03 31-Aug-02 Moore Corporation 89,073 72,408 0.80 0.65 31-Mar-03 31-Dec-02 Wallace Computer Services 80,056 89,588 1.92 2.17 31-Jan-03 31-Jul-02 ------------------------------------------ High $89,073 $89,588 $1.92 $2.17 Mean 49,690 49,982 1.07 1.15 Median 62,777 70,169 1.20 1.27 Low 655 1,063 0.12 0.20 ------------------------------------------ BCT International $ 460 $ 492 $0.09 $0.10 30-Nov-02 28-Feb-02
-------------------------------------------------------------------------------- (1) May exclude special items, such as extraordinary and non-recurring expenses. See individual company overviews for details of exclusions, if any. Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems, & Hoovers. Page 58 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS Comparable Company Analysis - Balance Sheet Overview ($ in thousands)
As of Latest Available Filing --------------------------------------------------------------------------------------- Cash, Total Equivalents Accounts Current Intangibles, Total Company & Mrkt Sec Receivables Inventory Assets PPE, net net Assets --------------------------- ----------- ----------- --------- -------- -------- ------------ ---------- Consolidated Graphics, Inc. $ 7,050 $113,018 $ 31,991 $162,276 $281,661 $110,556 $ 562,466 Mail-Well, Inc. 344 227,049 104,546 380,164 379,677 311,578 1,110,270 Impreso, Inc. 132 13,562 34,318 48,816 15,411 -- 64,327 Moore Corporation 119,981 344,567 137,372 673,487 252,549 113,927 2,352,830 Wallace Computer Services 58,777 229,882 89,799 419,524 307,745 184,624 931,247 ------------------------------------------------------------------------------------------------ High $119,981 $344,567 $137,372 $673,487 $379,677 $311,578 $2,352,830 Mean 37,257 185,616 79,605 336,853 247,409 144,137 1,004,228 Median 7,050 227,049 89,799 380,164 281,661 113,927 931,247 Low 132 13,562 31,991 48,816 15,411 -- 64,327 ------------------------------------------------------------------------------------------------ BCT International $ 4,805 $ 2,386 $ 2,697 $ 10,806 $ 963 $ 186 $ 18,185 As of Latest Available Filing ----------------------------------------------------- Latest Total Current Total Total Net Tangible Available Company Liabilities Debt Common Eq Common Eq Filing --------------------------- ------------- ---------- --------- ------------ --------- Consolidated Graphics, Inc. $ 97,442 $ 176,334 $249,809 $ 139,253 31-Dec-02 Mail-Well, Inc. 255,547 777,251 53,449 (258,129) 31-Mar-03 Impreso, Inc. 36,194 32,203 16,944 16,944 28-Feb-03 Moore Corporation 538,210 1,096,113 425,819 311,892 31-Mar-03 Wallace Computer Services 155,862 208,907 468,983 284,359 31-Jan-03 ------------------------------------------------------------ High $538,210 $1,096,113 $468,983 $ 311,892 Mean 216,651 458,162 243,001 98,864 Median 155,862 208,907 249,809 139,253 Low 36,194 32,203 16,944 (258,129) ------------------------------------------------------------ BCT International $ 2,146 $ 828 $ 15,291 $ 15,105 30-Nov-02
-------------------------------------------------------------------------------- Sources of information: SEC Edgar filings, Multex, CapitalIQ, Commodity Systems, & Hoovers. Page 59 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS -------------------------------------------------------------------------------- Consolidated Graphics, Inc. Overview -------------------------------------------------------------------------------- Name Consolidated Graphic Address 5858 Officers Symbol CGX Westheimer Joe Davis, Latest Fiscal YE 31-Mar-02 City, State Zip Chmn & CEO Latest Rprt Per 31-Dec-02 Houston, TX 77057 Telephone 713-787-0977 Website consolidatedgraphics.com A national provider of commercial printing services. Sales are mainly derived from commercial printing services, which include electronic prepress, printing, finishing, storage and delivery of high quality, custom-designed products. Examples of such products include multicolor and capability brochures, shareholder communications, catalogs, training manuals, point-of-purchase marketing materials and direct mail pieces. --------------------------------------------------------------------------------
------------------------------------------------------------------------------------------ Income and Cashflow Statement Data ------------------------------------------------------------------------------------------ ($ in thousands, except per share) Nine Months Ended Fiscal Years Ended LTM ----------------------------------------- Dec-02 Dec-02 Dec-01 Mar-02 Mar-01 -------- ------------------- ------------------- Revenue $709,780 $544,174 $478,342 $643,948 $683,396 COGS 535,750 411,860 353,257 477,147 494,158 -------- ------------------- ------------------- Gross Profit 174,030 132,314 125,085 166,801 189,238 Selling, General & Administrative 134,687 98,188 87,358 123,857 124,665 Research & Development -- -- -- -- -- Other Operating -- -- -- -- -- -------- ------------------- ------------------- Operating Income 39,343 34,126 37,727 42,944 64,573 Interest Income / (Expense), net (11,053) (8,020) (12,111) (15,144) (20,858) Other Income / (Expense), net -- -- -- -- -- -------- ------------------- ------------------- Pre-tax Income 28,290 26,106 25,616 27,800 43,715 Taxes 12,403 9,920 8,637 11,120 15,164 -------- ------------------- ------------------- After-tax Income 15,887 16,186 16,979 16,680 28,551 Minority Interest -- -- -- -- -- Equity in Affiliates -- -- -- -- -- -------- ------------------- ------------------- Normalized Net Income 15,887 16,186 16,979 16,680 28,551 Preferred Dividends -- -- -- -- -- -------- ------------------- ------------------- Normalized Net Income to Common $ 15,887 $ 16,186 $ 16,979 $ 16,680 $ 28,551 ======== =================== =================== EBIT $ 39,343 $ 34,126 $ 37,727 $ 42,944 $ 64,573 Depreciation & Amortization $ 38,641 $ 27,658 $ 30,329 $ 41,312 $ 38,783 EBITDA $ 77,984 $ 61,784 $ 68,056 $ 84,256 $103,356 CAPEX $ 14,838 $ 9,507 $ 10,939 $ 16,270 $ 26,434 EBITDA - CAPEX $ 63,146 $ 52,277 $ 57,117 $ 67,986 $ 76,922 GAAP Operating Cash Flow $ 86,415 $ 72,566 $ 55,907 $ 69,756 $ 68,118 Basic Reported Weighted Avg Shares Out (000's) 13,212 13,054 13,107 13,142 Basic Normalized EPS $ 1.20 $ 1.23 $ 1.30 $ 1.27 $ 2.17 Basic Reported EPS $ (4.12) $ (4.40) $ 0.99 $ 1.27 $ 1.68 Diluted Reported Weighted Avg Shares Out (000's) 13,528 13,334 13,380 13,186 Diluted Normalized EPS $ 1.18 $ 1.20 $ 1.27 $ 1.25 $ 2.17 Diluted Reported EPS $ (4.02) $ (4.30) $ 0.97 $ 1.25 $ 1.68 ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ Normalized Reconciliation ------------------------------------------------------------------------------------------ Restructuring/Goodwill Impairment $(70,351) $(74,376) $ (4,025) $ -- $ (6,440) Other Unusual (Expense) Gain Items -- -- -- -- -- Tax Shelter (Charge) on Unusual Items -- -- -- -- -- -------- ------------------- ------------------- Unusual (Exp) Gain Items, net of Taxes (70,351) (74,376) (4,025) -- (6,440) Accounting Changes, net of Taxes -- -- -- -- -- Discontinued Operations, net of Taxes -- -- -- -- -- Extraordinary Items, net of Taxes -- -- -- -- -- -------- ------------------- ------------------- Total Reconciling Items, net of Taxes $(70,351) $(74,376) $ (4,025) $ -- $ (6,440) ======== =================== =================== Reported Income Tax (Benefit) $ 12,403 $ 9,920 $ 8,637 $ 11,120 $ 15,164 Reported Net Income (Loss) $(54,464) $(58,190) $ 12,954 $ 16,680 $ 22,111 ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ Profitability & Cost Ratios (as % of Revenue) ------------------------------------------------------------------------------------------ Gross Profit 24.5% 24.3% 26.1% 25.9% 27.7% S,G & A 19.0% 18.0% 18.3% 19.2% 18.2% Operating Income 5.5% 6.3% 7.9% 6.7% 9.4% Pre-Tax 4.0% 4.8% 5.4% 4.3% 6.4% EBIT 5.5% 6.3% 7.9% 6.7% 9.4% EBITDA 11.0% 11.4% 14.2% 13.1% 15.1% Normalized Net Income to Common 2.2% 3.0% 3.5% 2.6% 4.2% Reported Net Income -7.7% -10.7% 2.7% 2.6% 3.2% CAPEX 2.1% 1.7% 2.3% 2.5% 3.9% ------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Balance Sheet Data -------------------------------------------------------------------------------- ($ in thousands, except per share) As of As of ------------------- 31-Dec-02 Mar-02 Mar-01 --------- ------------------- Cash & Equivalents $ 7,050 $ 8,955 $ 8,667 Marketable Securities -- -- -- -------- ------------------- Total Cash & Mkt Securities 7,050 8,955 8,667 Accounts Receivable 113,018 121,981 116,095 Inventory 31,991 32,771 31,536 Other Current Assets 10,217 11,267 8,628 -------- ------------------- Total Current Assets 162,276 174,974 164,926 PPE, net 281,661 293,831 299,871 Intangibles, net 110,556 199,331 203,030 Investments -- -- -- Other Assets 7,973 8,597 6,840 -------- ------------------- Total Assets $562,466 $676,733 $674,667 ======== =================== Accounts Payable $ 32,759 $ 32,068 $ 33,865 Accrued Expenses 43,435 37,382 32,609 Short Term Debt 21,198 19,877 18,711 Short Term Capital Leases -- -- -- Other Current Liabilities 50 611 253 -------- ------------------- Total Current Liabilities 97,442 89,938 85,438 Other LT Liabilities 60,079 66,337 54,966 Long Term Debt 155,136 213,860 246,729 Long Term Capital Leases -- -- -- Minority Interests -- -- -- Pref Stock (Liq Value) -- -- -- -------- ------------------- Total Liabilities & Pref Stock 312,657 370,135 387,133 -------- ------------------- Common Equity 249,809 306,598 287,534 -------- ------------------- Total Liabilities & Equity $562,466 $676,733 $674,667 ======== =================== Common Shares Outstanding (000's) 13,314 13,206 13,019 Cash Value per share $ 0.53 $ 0.68 $ 0.67 Book Value per share $ 18.76 $ 23.22 $ 22.09 Tangible Book Value per share $ 10.46 $ 8.12 $ 6.49 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effectiveness and Efficiency -------------------------------------------------------------------------------- A/R Turnover 6.04x 5.41x 5.89x Inventory Turnover 16.55x 14.84x 15.67x Asset Turnover 1.15x 0.95x 1.01x Days Sales Outstanding 60.4 67.5 62.0 Days Inventory Outstanding 22.1 24.6 23.3 Days Payable Outstanding 17.6 20.0 20.0 Return on Avg Assets 2.6% 2.5% na Return on Avg Common Equity 5.7% 5.6% na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial Strength -------------------------------------------------------------------------------- Current Ratio 1.67 1.95 1.93 Quick Ratio 1.34 1.58 1.56 Total Debt $176,334 $233,737 $265,440 Net Debt $169,284 $224,782 $256,773 Total Capitalization $426,143 $540,335 $552,974 Total Debt/Total Capitalization 41.4% 43.3% 48.0% Net Debt/Total Capitalization 39.7% 41.6% 46.4% Total Debt/TIC 42.1% 55.8% 63.3% Total Debt/EBITDA 2.26x 2.77x 2.57x Total Debt/EBITDA-CAPEX 2.79x 3.44x 3.45x EBITDA/Interest Expense 7.06x 5.56x 4.96x EBITDA-CAPEX/Interest Expense 5.71x 4.49x 3.69x -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Market Information -------------------------------------------------------------------------------- As of Date 23-May-03 ---------- --------- Exchange NYSE Stock Price $ 18.21 52 Week High $ 25.20 52 Week Low $ 14.35 Avg. Daily Volume (000's) 56 Beta 0.53 Shares Outstanding (000's) 13,328 Total Outstanding Warrants & Options (000's) -- Float (000's) 11,100 Market Cap $242,703 Total Invested Capital (TIC) $419,037 Enterprise Value (EV) $411,987 Ownership Insiders % Owned 17.00% Institutional % Owned 59.00% Number of Institutions 235 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Valuation Ratios -------------------------------------------------------------------------------- Multiple of --------------------------- Market Cap TIC EV --------------------------- Latest Twelve Months Revenue 0.34x 0.59x 0.58x EBIT 6.17x 10.65x 10.47x EBITDA 3.11x 5.37x 5.28x Normalized Net Income 15.28x 26.38x 25.93x Basic Normalized EPS 15.18x na na Projected Mar-04 Mean Revenue 0.34x 0.59x 0.58x Mar-05 Mean Revenue 0.33x 0.57x 0.56x Mar-04 Mean EPS 18.58x na na Mar-05 Mean EPS na na na Most Recent Filing Assets 0.43x 0.74x 0.73x Common Equity 0.97x na na Tangible Common Equity 1.74x na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Mean Consensus Estimates -------------------------------------------------------------------------------- Year Ending # Ests Revenue EPS -------------------------------------------------------------------------------- March-04 1 $712,300 $ 0.98 March-05 1 $733,700 na LT Growth 1 10.00% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Period Growth Rates -------------------------------------------------------------------------------- Nine Months Ended Fiscal Years Ended Dec-02 Mar-02 ------------------------------------- Revenue 13.8% -5.8% EBIT -9.5% -33.5% EBITDA -9.2% -18.5% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Notes Add backs include restructuring expenses and asset impairment charges. -------------------------------------------------------------------------------- Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover Page 60 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS -------------------------------------------------------------------------------- Mail-Well, Inc. Overview -------------------------------------------------------------------------------- Name Mail-Well, Inc. Address 8310 S. Valley Highway #400 Officers Symbol MWL City, State Zip Englewood, Paul Reilly, Latest Fiscal YE 31-Dec-02 CO 80112 Pres & CEO Telephone (303) 790-8023 Latest Rprt Per 31-Mar-03 Website imagex.com Operates 103 printing and manufacturing facilities throughout North America and three in the United Kingdom. The Company provides high-impact color printing, and general commercial printing. The Company also has an envelope business that provides customized envelopes and packaging products, including Tyvek mailers used by the United States Postal Service, sold directly to end users or to independent distributors who sell to end users, and envelopes and other products sold to wholesalers, paper merchants, printers, brokerage firms, office product establishments and superstores. --------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------- Income and Cashflow Statement Data --------------------------------------------------------------------------------------------------------------- ($ in thousands, except per share) Three Months Ended Fiscal Years Ended LTM -------------------- ----------------------- Mar-03 Mar-03 Mar-02 Dec-02 Dec-01 ---------- -------------------- ----------------------- Revenue $1,712,542 $427,319 $ 443,482 $1,728,705 $1,868,768 COGS 1,373,380 343,472 355,453 1,385,361 1,481,135 ---------- -------------------- ----------------------- Gross Profit 339,162 83,847 88,029 343,344 387,633 Selling, General & Administrative 259,023 63,480 68,191 263,734 277,004 Research & Development -- -- -- -- -- Other Operating -- -- -- -- -- ---------- -------------------- ----------------------- Operating Income 80,139 20,367 19,838 79,610 110,629 Interest Income / (Expense), net (73,535) (17,979) (14,905) (70,461) (63,314) Other Income / (Expense), net (1,593) (131) (292) (1,754) (1,923) ---------- -------------------- ----------------------- Pre-tax Income 5,011 2,257 4,641 7,395 45,392 Taxes (57,766) 484 (4,524) (62,774) (5,200) ---------- -------------------- ----------------------- After-tax Income 62,777 1,773 9,165 70,169 50,592 Minority Interest -- -- -- -- -- Equity in Affiliates -- -- -- -- -- ---------- -------------------- ----------------------- Normalized Net Income 62,777 1,773 9,165 70,169 50,592 Preferred Dividends -- -- -- -- -- ---------- -------------------- ----------------------- Normalized Net Income to Common $ 62,777 $ 1,773 $ 9,165 $ 70,169 $ 50,592 ========== ==================== ======================= EBIT $ 78,546 $ 20,236 $ 19,546 $ 77,856 $ 108,706 Depreciation & Amortization $ 54,581 $ 12,573 $ 13,445 $ 55,453 $ 69,402 EBITDA $ 133,127 $ 32,809 $ 32,991 $ 133,309 $ 178,108 CAPEX $ 25,972 $ 6,416 $ 11,340 $ 30,896 $ 32,742 EBITDA - CAPEX $ 107,155 $ 26,393 $ 21,651 $ 102,413 $ 145,366 GAAP Operating Cash Flow $ 1,845 $(13,440) $ 7,686 $ 22,971 $ 170,935 Basic Reported Weighted Avg Shares Out (000's) 47,668 47,358 47,665 47,562 Basic Normalized EPS $ 1.32 $ 0.04 $ 0.19 $ 1.47 $ 1.06 Basic Reported EPS $ (1.35) $ 0.07 $ (2.82) $ (4.24) $ (2.86) Diluted Reported Weighted Avg Shares Out (000's) 48,376 47,358 47,665 47,562 Diluted Normalized EPS $ 1.32 $ 0.04 $ 0.19 $ 1.47 $ 1.06 Diluted Reported EPS $ (1.36) $ 0.06 $ (2.82) $ (4.24) $ (2.86) --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Normalized Reconciliation --------------------------------------------------------------------------------------------------------------- Restructuring/Goodwill Impairment $ (74,422) $ (1,130) $ (22,774) $ (96,066) $ (95,805) Other Unusual (Expense) Gain Items -- -- -- -- -- Tax Shelter (Charge) on Unusual Items (37,466) -- -- (37,466) -- ---------- -------------------- ----------------------- Unusual (Exp) Gain Items, net of Taxes (111,888) (1,130) (22,774) (133,532) (95,805) Accounting Changes, net of Taxes -- -- (111,748) (111,748) -- Discontinued Operations, net of Taxes (6,369) 2,500 (7,999) (16,868) (91,004) Extraordinary Items, net of Taxes (10,125) -- -- (10,125) -- ---------- -------------------- ----------------------- Total Reconciling Items, net of Taxes $ (128,382) $ 1,370 $(142,521) $ (272,273) $ (186,809) ========== ==================== ======================= Reported Income Tax (Benefit) $ (20,300) $ 484 $ (4,524) $ (25,308) $ (5,200) Reported Net Income (Loss) $ (65,605) $ 3,143 $(133,356) $ (202,104) $ (136,217) --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Profitability & Cost Ratios (as % of Revenue) --------------------------------------------------------------------------------------------------------------- Gross Profit 19.8% 19.6% 19.8% 19.9% 20.7% S,G & A 15.1% 14.9% 15.4% 15.3% 14.8% Operating Income 4.7% 4.8% 4.5% 4.6% 5.9% Pre-Tax 0.3% 0.5% 1.0% 0.4% 2.4% EBIT 4.6% 4.7% 4.4% 4.5% 5.8% EBITDA 7.8% 7.7% 7.4% 7.7% 9.5% Normalized Net Income to Common 3.7% 0.4% 2.1% 4.1% 2.7% Reported Net Income -3.8% 0.7% -30.1% -11.7% -7.3% CAPEX 1.5% 1.5% 2.6% 1.8% 1.8% ---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Balance Sheet Data -------------------------------------------------------------------------------- ($ in thousands, except per share) As of As of ------------------------ 31-Mar-03 Dec-02 Dec-01 ---------- ------------------------ Cash & Equivalents $ 344 $ 2,650 $ 894 Marketable Securities -- -- -- ---------- ------------------------ Total Cash & Mkt Securities 344 2,650 894 Accounts Receivable 227,049 219,924 233,045 Inventory 104,546 103,533 111,648 Other Current Assets 48,225 50,254 233,462 ---------- ------------------------ Total Current Assets 380,164 376,361 579,049 PPE, net 379,677 379,624 428,564 Intangibles, net 311,578 308,947 420,723 Investments -- -- -- Other Assets 38,851 42,435 48,531 ---------- ------------------------ Total Assets $1,110,270 $1,107,367 $1,476,867 ========== ======================== Accounts Payable $ 143,715 $ 151,930 $ 160,659 Accrued Expenses 49,660 53,292 51,407 Short Term Debt 2,193 2,961 303,170 Short Term Capital Leases -- -- -- Other Current Liabilities 59,979 67,848 62,520 ---------- ------------------------ Total Current Liabilities 255,547 276,031 577,756 Other LT Liabilities 26,216 27,630 105,183 Long Term Debt 775,058 760,938 552,051 Long Term Capital Leases -- -- -- Minority Interests -- -- -- Pref Stock (Liq Value) -- -- -- ---------- ------------------------ Total Liabilities & Pref Stock 1,056,821 1,064,599 1,234,990 ---------- ------------------------ Common Equity 53,449 42,768 241,877 ---------- ------------------------ Total Liabilities & Equity $1,110,270 $ 1,107,36 $1,476,867 ========== ======================== Common Shares Outstanding (000's) 48,343 48,337 48,326 Cash Value per share $ 0.01 $ 0.05 $ 0.02 Book Value per share $ 1.11 $ 0.88 $ 5.01 Tangible Book Value per share $ (5.34) $ (5.51) $ (3.70) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effectiveness and Efficiency -------------------------------------------------------------------------------- A/R Turnover 7.66x 7.63x 8.02x Inventory Turnover 13.20x 12.88x 13.27x Asset Turnover 1.54x 1.34x 1.27x Days Sales Outstanding 47.6 47.8 45.5 Days Inventory Outstanding 27.7 28.3 27.5 Days Payable Outstanding 33.1 34.6 33.4 Return on Avg Assets 5.7% 5.4% na Return on Avg Common Equity 130.5% 49.3% na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial Strength -------------------------------------------------------------------------------- Current Ratio 1.49 1.36 1.00 Quick Ratio 1.08 0.99 0.81 Total Debt $ 777,251 $ 763,899 $ 855,221 Net Debt $ 776,907 $ 761,249 $ 854,327 Total Capitalization $ 830,700 $ 806,667 $1,097,098 Total Debt/Total Capitalization 93.6% 94.7% 78.0% Net Debt/Total Capitalization 93.5% 94.4% 77.9% Total Debt/TIC 86.3% 84.8% 95.0% Total Debt/EBITDA 5.84x 5.73x 4.80x Total Debt/EBITDA-CAPEX 7.25x 7.46x 5.88x EBITDA/Interest Expense 1.81x 1.89x 2.81x EBITDA-CAPEX/Interest Expense 1.46x 1.45x 2.30x -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Market Information -------------------------------------------------------------------------------- As of Date 23-May-03 ---------- --------- Exchange NYSE Stock Price $ 2.55 52 Week High $ 6.63 52 Week Low $ 0.95 Avg. Daily Volume (000's) 92 Beta 1.53 Shares Outstanding (000's) 48,343 Total Outstanding Warrants & Options (000's) -- Float (000's) 26,300 Market Cap $123,275 Total Invested Capital (TIC) $900,526 Enterprise Value (EV) $900,182 Ownership Insiders % Owned 46.00% Institutional %Owned 54.00% Number of Institutions 117 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Valuation Ratios -------------------------------------------------------------------------------- Multiple of --------------------------------------- Market Cap TIC EV --------------------------------------- Latest Twelve Months Revenue 0.07x 0.53x 0.53x EBIT 1.57x 11.46x 11.46x EBITDA 0.93x 6.76x 6.76x Normalized Net Income 1.96x 14.34x 14.34x Basic Normalized EPS 1.93x na na Projected Dec-03 Mean Revenue 0.07x 0.53x 0.53x Dec-04 Mean Revenue 0.07x 0.52x 0.52x Dec-03 Mean EPS 10.20x na na Dec-04 Mean EPS 6.07x na na Most Recent Filing Assets 0.11x 0.81x 0.81x Common Equity 2.31x na na Tangible Common Equity na na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Mean Consensus Estimates -------------------------------------------------------------------------------- Year Ending # Ests Revenue EPS -------------------------------------------------------------------------------- December-03 1 $1,696,000 $0.25 December-04 1 $1,726,000 $0.42 LT Growth -- 5.00% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Period Growth Rates -------------------------------------------------------------------------------- Three Months Ended Fiscal Years Ended Mar-03 Dec-02 ------------------ ------------------ Revenue -3.6% -7.5% EBIT 3.5% -28.4% EBITDA -0.6% -25.2% -------------------------------------------------------------------------------- Notes Add backs include restructuring expenses and asset impairment charges. Discontinued operations represent sale of label & printed office product segments. Extraordinary items include gain from settlement of debt. -------------------------------------------------------------------------------- Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover Page 61 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS -------------------------------------------------------------------------------- Impreso, Inc. Overview -------------------------------------------------------------------------------- Name Impreso, Inc. Address 652 Officers Southwestern Blvd. Marshall Sorokwasz, Symbol ZCOM City, State Zip Coppell, CEO TX 75019 Latest Fiscal YE 31-Aug-02 Telephone 972-462-0100 Latest Rprt Per 28-Feb-03 Website tstimpreso.com Impreso, Inc. is the holding company of TST/Impreso, Inc. (TST), a manufacturer and distributor to dealers and other resellers of various paper and film products for commercial and home use in domestic and international markets, and Hotsheet.com, Inc., the owner of Hotsheet.com, an online Web reference directory. TST manufactures and distributes its products under its own IMPRESO label, generic labels and private labels. Hotsheet is an Internet Website directory, or portal, specializing in listing popular and useful Web destinations utilized by a wide general audience.
------------------------------------------------------------------------------------ Income and Cashflow Statement Data ------------------------------------------------------------------------------------ ($ in thousands, except per share) Six Months Ended Fiscal Years Ended LTM ----------------- ------------------ Feb-03 Feb-03 Feb-02 Aug-02 Aug-01 -------- ----------------- ------------------ Revenue $134,781 $63,512 $51,796 $123,065 $96,208 COGS 121,187 57,062 46,323 110,448 84,752 -------- ----------------- ------------------ Gross Profit 13,594 6,450 5,473 12,617 11,456 Selling, General & Administrative 9,896 4,785 4,221 9,332 7,872 Research & Development -- -- -- -- -- Other Operating -- -- -- -- -- -------- ----------------- ------------------ Operating Income 3,698 1,665 1,252 3,285 3,584 Interest Income / (Expense), net (1,871) (958) (831) (1,744) (1,633) Other Income / (Expense), net (726) 157 1,066 183 72 -------- ----------------- ------------------ Pre-tax Income 1,101 864 1,487 1,724 2,023 Taxes 446 343 558 661 776 -------- ----------------- ------------------ After-tax Income 655 521 929 1,063 1,247 Minority Interest -- -- -- -- -- Equity in Affiliates -- -- -- -- -- -------- ----------------- ------------------ Normalized Net Income 655 521 929 1,063 1,247 Preferred Dividends -- -- -- -- -- -------- ----------------- ------------------ Normalized Net Income to Common $ 655 $ 521 $ 929 $ 1,063 $ 1,247 ======== ================= ================== EBIT $ 2,972 $ 1,822 $ 2,318 $ 3,468 $ 3,656 Depreciation & Amortization $ 1,262 $ -- $ -- $ 1,262 $ 874 EBITDA $ 4,234 $ 1,822 $ 2,318 $ 4,730 $ 4,530 CAPEX $ 1,540 $ -- $ -- $ 1,540 $ 1,200 EBITDA - CAPEX $ 2,694 $ 1,822 $ 2,318 $ 3,190 $ 3,330 GAAP Operating Cash Flow $ 5,441 $ -- $ -- $ 5,441 $ 4,946 Basic Reported Weighted Avg Shares Out (000's) 5,279 5,279 5,279 5,281 Basic Normalized EPS $ 0.12 $ 0.10 $ 0.18 $ 0.20 $ 0.24 Basic Reported EPS $ 0.24 $ 0.10 $ 0.18 $ 0.32 $ 0.24 Diluted Reported Weighted Avg Shares Out (000's) 5,279 5,279 5,279 5,281 Diluted Normalized EPS $ 0.12 $ 0.10 $ 0.18 $ 0.20 $ 0.24 Diluted Reported EPS $ 0.24 $ 0.10 $ 0.18 $ 0.32 $ 0.24 ------------------------------------------------------------------------------------
------------------------------------------------------------------------------------ Normalized Reconciliation ------------------------------------------------------------------------------------ Restructuring/Goodwill Impairment $ -- $ -- $ -- $ -- $ -- Other Unusual (Expense) Gain Items 1,005 -- -- 1,005 -- Tax Shelter (Charge) on Unusual Items (392) -- -- (392) -- -------- ----------------- ------------------ Unusual (Exp) Gain Items, net of Taxes 613 -- -- 613 -- Accounting Changes, net of Taxes -- -- -- -- -- Discontinued Operations, net of Taxes -- -- -- -- -- Extraordinary Items, net of Taxes -- -- -- -- -- -------- ----------------- ------------------ Total Reconciling Items, net of Taxes $ 613 $ -- $ -- $ 613 $ -- ======== ================= ================== Reported Income Tax (Benefit) $ 838 $ 343 $ 558 $ 1,053 $ 776 Reported Net Income (Loss) $ 1,268 $ 521 $ 929 $ 1,676 $ 1,247 ------------------------------------------------------------------------------------
------------------------------------------------------------------------------------ Profitability & Cost Ratios (as % of Revenue) ------------------------------------------------------------------------------------ Gross Profit 10.1% 10.2% 10.6% 10.3% 11.9% S,G & A 7.3% 7.5% 8.1% 7.6% 8.2% Operating Income 2.7% 2.6% 2.4% 2.7% 3.7% Pre-Tax 0.8% 1.4% 2.9% 1.4% 2.1% EBIT 2.2% 2.9% 4.5% 2.8% 3.8% EBITDA 3.1% 2.9% 4.5% 3.8% 4.7% Normalized Net Income to Common 0.5% 0.8% 1.8% 0.9% 1.3% Reported Net Income 0.9% 0.8% 1.8% 1.4% 1.3% CAPEX 1.1% 0.0% 0.0% 1.3% 1.2% ------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Balance Sheet Data -------------------------------------------------------------------------------- ($ in thousands, except per share) As of As of ----------------- 28-Feb-03 Aug-02 Aug-01 --------- ----------------- Cash & Equivalents $ 132 $ 203 $ 211 Marketable Securities -- -- -- ------- ------- ------- Total Cash & Mkt Securities 132 203 211 Accounts Receivable 13,562 15,864 11,748 Inventory 34,318 34,111 38,460 Other Current Assets 804 740 351 ------- ------- ------- Total Current Assets 48,816 50,918 50,770 PPE, net 15,411 15,939 11,213 Intangibles, net -- -- -- Investments -- -- -- Other Assets 100 115 219 ------- ------- ------- Total Assets $64,327 $66,972 $62,202 ======= ======= ======= Accounts Payable $11,606 $16,302 $18,572 Accrued Expenses 2,596 3,703 1,942 Short Term Debt 21,992 18,992 19,720 Short Term Capital Leases -- -- -- Other Current Liabilities -- -- -- ------- ------- ------- Total Current Liabilities 36,194 38,997 40,234 Other LT Liabilities 978 949 927 Long Term Debt 10,211 10,609 6,328 Long Term Capital Leases -- -- -- Minority Interests -- -- -- Pref Stock (Liq Value) -- -- -- ------- ------- ------- Total Liabilities & Pref Stock 47,383 50,555 47,489 ------- ------- ------- Common Equity 16,944 16,417 14,713 ------- ------- ------- Total Liabilities & Equity $64,327 $66,972 $62,202 ======= ======= ======= Common Shares Outstanding (000's) 5,279 5,279 5,265 Cash Value per share $ 0.03 $ 0.04 $ 0.04 Book Value per share $ 3.21 $ 3.11 $ 2.79 Tangible Book Value per share $ 3.21 $ 3.11 $ 2.79 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effectiveness and Efficiency -------------------------------------------------------------------------------- A/R Turnover 9.16x 8.91x 8.19x Inventory Turnover 3.54x 3.04x 2.20x Asset Turnover 2.05x 1.91x 1.55x Days Sales Outstanding 39.8 40.9 44.6 Days Inventory Outstanding 103.0 119.9 165.6 Days Payable Outstanding 38.9 53.1 73.2 Return on Avg Assets 1.0% 1.6% na Return on Avg Common Equity 3.9% 6.8% na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial Strength -------------------------------------------------------------------------------- Current Ratio 1.35 1.31 1.26 Quick Ratio 0.40 0.43 0.31 Total Debt $32,203 $29,601 $26,048 Net Debt $32,071 $29,398 $25,837 Total Capitalization $49,147 $46,018 $40,761 Total Debt/Total Capitalization 65.5% 64.3% 63.9% Net Debt/Total Capitalization 65.3% 63.9% 63.4% Total Debt/TIC 73.7% 67.7% 59.6% Total Debt/EBITDA 7.61x 6.26x 5.75x Total Debt/EBITDA-CAPEX 11.95x 9.28x 7.82x EBITDA/Interest Expense 2.26x 2.71x 2.77x EBITDA-CAPEX/Interest Expense 1.44x 1.83x 2.04x -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Market Information -------------------------------------------------------------------------------- As of Date 23-May-03 Exchange NASDAQ --------- Stock Price $ 2.18 52 Week High $ 3.46 52 Week Low $ 1.72 Avg. Daily Volume (000's) 2 Beta 0.94 Shares Outstanding (000's) 5,279 Total Outstanding Warrants & Options (000's) -- Float (000's) 1,700 Market Cap $11,508 Total Invested Capital (TIC) $43,711 Enterprise Value (EV) $43,579 Ownership Insiders % Owned 68.00% Institutional % Owned 3.00% Number of Institutions 9 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Valuation Ratios -------------------------------------------------------------------------------- Multiple of ------------------------- Market Cap TIC EV ------------------------- Latest Twelve Months Revenue 0.09x 0.32x 0.32x EBIT 3.87x 14.71x 14.66x EBITDA 2.72x 10.32x 10.29x Normalized Net Income 17.57x 66.74x 66.54x Basic Normalized EPS 18.17x na na Projected Dec-02 Mean Revenue na na na Dec-03 Mean Revenue na na na Dec-02 Mean EPS na na na Dec-03 Mean EPS na na na Most Recent Filing Assets 0.18x 0.68x 0.68x Common Equity 0.68x na na Tangible Common Equity 0.68x na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Mean Consensus Estimates -------------------------------------------------------------------------------- Year Ending # Ests Revenue EPS ----------- ---------------------- December-02 na na na December-03 na na na LT Growth na na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Period Growth Rates -------------------------------------------------------------------------------- Six Months Ended Fiscal Years Ended Feb-03 Aug-02 ---------------- ------------------ Revenue 22.6% 27.9% EBIT -21.4% -5.1% EBITDA -21.4% 4.4% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Notes Unusual expense relates to litigation settlement -------------------------------------------------------------------------------- Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover Page 62 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS -------------------------------------------------------------------------------- Moore Corporation Overview -------------------------------------------------------------------------------- Name Moore Address 6100 Vipond Drive Officers Corporation City, State Zip Alfred Eckert, Symbol MCL Mississauga, ON L5T 2, III, Chair Latest Fiscal YE 31-Dec-02 Canada Latest Rprt Per 31-Mar-03 Telephone (905) 362-3100 Website http: //www.moore.com/ Moore operates in three complementary business segments: Forms and Labels, Outsourcing and Commercial. The Forms and Labels business designs, manufactures and sells paper based and electronic business forms and labels, and provides electronic print management solutions. The Outsourcing business provides high-quality, high-volume variably imaged print and mail, electronic statement and database management services. The Commercial business produces high-quality, multi-color personalized business communications and provides direct marketing services. --------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------- Income and Cashflow Statement Data -------------------------------------------------------------------------------------------- ($ in thousands, except per share) Three Months Ended Fiscal Years Ended LTM ------------------- ----------------------- Mar-03 Mar-03 Mar-02 Dec-02 Dec-01 ---------- ------------------- ----------------------- Revenue $2,019,683 $511,145 $529,501 $2,038,039 $2,154,574 COGS 1,374,451 345,452 361,008 1,390,007 1,552,561 ---------- ------------------- ----------------------- Gross Profit 645,232 165,693 168,493 648,032 602,013 Selling, General & Administrative 529,559 129,833 146,633 546,359 814,658 Research & Development -- -- -- -- -- Other Operating -- -- -- -- -- ---------- ------------------- ----------------------- Operating Income 115,673 35,860 21,860 101,673 (212,645) Interest Income / (Expense), net (16,033) (6,499) (2,611) (12,145) (23,758) Other Income / (Expense), net (10,692) 839 (1,495) (13,026) (22,338) ---------- ------------------- ----------------------- Pre-tax Income 88,948 30,200 17,754 76,502 (258,741) Taxes (1,482) 840 4,794 2,472 (32,192) ---------- ------------------- ----------------------- After-tax Income 90,430 29,360 12,960 74,030 (226,549) Minority Interest (1,357) (202) (467) (1,622) (1,810) Equity in Affiliates -- -- -- -- -- ---------- ------------------- ----------------------- Normalized Net Income 89,073 29,158 12,493 72,408 (228,359) Preferred Dividends -- -- -- -- ---------- ------------------- ----------------------- Normalized Net Income to Common $ 89,073 $ 29,158 $ 12,493 $ 72,408 $ (228,359) ========== =================== ======================= EBIT $ 104,981 $ 36,699 $ 20,365 $ 88,647 $ (234,983) Depreciation & Amortization $ 85,766 $ 21,175 $ 22,155 $ 86,746 $ 239,072 EBITDA $ 190,747 $ 57,874 $ 42,520 $ 175,393 $ 4,089 CAPEX $ 14,441 $ 7,583 $ 2,083 $ 8,941 $ 37,072 EBITDA - CAPEX $ 176,306 $ 50,291 $ 40,437 $ 166,452 $ (32,983) GAAP Operating Cash Flow $ 134,865 $(22,395) $ 1,135 $ 158,395 $ 137,121 Basic Reported Weighted Avg Shares Out (000's) 112,276 111,848 111,556 88,648 Basic Normalized EPS $ 0.80 $ 0.26 $ 0.11 $ 0.65 $ (2.58) Basic Reported EPS $ 0.81 $ 0.26 $ 0.11 $ 0.66 $ (4.21) Diluted Reported Weighted Avg Shares Out (000's) 113,229 114,269 114,022 88,648 Diluted Normalized EPS $ 0.79 $ 0.26 $ 0.11 $ 0.64 $ (2.58) Diluted Reported EPS $ 0.79 $ 0.26 $ 0.11 $ 0.64 $ (4.21) -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- Normalized Reconciliation -------------------------------------------------------------------------------------------- Restructuring/Goodwill Impairment $ 850 $ -- $ -- $ 850 $ (129,679) Other Unusual (Expense) Gain Items -- -- -- -- (15,345) Tax Shelter (Charge) on Unusual Items -- -- -- -- -- ---------- -------- -------- ----------------------- Unusual (Exp) Gain Items, net of Taxes 850 -- -- 850 (145,024) Accounting Changes, net of Taxes -- -- -- -- -- Discontinued Operations, net of Taxes -- -- -- -- -- Extraordinary Items, net of Taxes -- -- -- -- -- ---------- -------- -------- ----------------------- Total Reconciling Items, net of Taxes $ 850 $ -- $ -- $ 850 $ (145,024) ========== ======== ======== ======================= Reported Income Tax (Benefit) $ (1,482) $ 840 $ 4,794 $ 2,472 $ (32,192) Reported Net Income (Loss) $ 89,923 $ 29,158 $ 12,493 $ 73,258 $ (373,383) -------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- Profitability & Cost Ratios (as % of Revenue) -------------------------------------------------------------------------------------------- Gross Profit 31.9% 32.4% 31.8% 31.8% 27.9% S, G & A 26.2% 25.4% 27.7% 26.8% 37.8% Operating Income 5.7% 7.0% 4.1% 5.0% -9.9% Pre-Tax 4.4% 5.9% 3.4% 3.8% -12.0% EBIT 5.2% 7.2% 3.8% 4.3% -10.9% EBITDA 9.4% 11.3% 8.0% 8.6% 0.2% Normalized Net Income to Common 4.4% 5.7% 2.4% 3.6% -10.6% Reported Net Income 4.5% 5.7% 2.4% 3.6% -17.3% CAPEX 0.7% 1.5% 0.4% 0.4% 1.7% --------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Balance Sheet Data -------------------------------------------------------------------------------- ($ in thousands, except per share) As of As of ------------------------ 31-Mar-03 Dec-02 Dec-01 ---------- ------------------------ Cash & Equivalents $ 119,981 $ 139,630 $ 84,855 Marketable Securities -- -- -- ---------- ------------------------ Total Cash & Mkt Securities 119,981 139,630 84,855 Accounts Receivable 344,567 341,383 336,153 Inventory 137,372 129,889 128,421 Other Current Assets 71,567 49,229 27,110 ---------- ------------------------ Total Current Assets 673,487 660,131 576,539 PPE, net 252,549 255,722 307,640 Intangibles, net 113,927 112,688 42,294 Investments 928,151 32,256 32,204 Other Assets 384,716 378,962 378,309 ---------- ------------------------ Total Assets $2,352,830 $ 1,439,75 $1,336,986 ========== ======================== Accounts Payable $ 450,779 $ 486,507 $ 486,626 Accrued Expenses -- -- -- Short Term Debt 2,642 2,135 18,034 Short Term Capital Leases -- -- -- Other Current Liabilities 84,789 79,904 84,182 ---------- ------------------------ Total Current Liabilities 538,210 568,546 588,842 Other LT Liabilities 295,330 294,602 304,632 Long Term Debt 1,087,106 187,463 111,062 Long Term Capital Leases -- -- -- Minority Interests 6,365 6,652 11,200 Pref Stock (Liq Value) -- -- -- ---------- ------------------------ Total Liabilities & Pref Stock 1,927,011 1,057,263 1,015,736 ---------- ------------------------ Common Equity 425,819 382,496 321,250 ---------- ------------------------ Total Liabilities & Equity $2,352,830 $ 1,439,75 $1,336,986 ========== ======================= Common Shares Outstanding (000's) 113,398 111,842 111,804 Cash Value per share $ 1.06 $ 1.25 $ 0.76 Book Value per share $ 3.76 $ 3.42 $ 2.87 Tangible Book Value per share $ 2.75 $ 2.41 $ 2.50 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effectiveness and Efficiency -------------------------------------------------------------------------------- A/R Turnover 5.89x 6.02x 6.41x Inventory Turnover 10.29x 10.76x 12.09x Asset Turnover 1.07x 1.47x 1.61x Days Sales Outstanding 62.0 60.7 56.9 Days Inventory Outstanding 35.5 33.9 30.2 Days Payable Outstanding 89.8 91.7 75.0 Return on Avg Assets 4.7% 5.2% na Return on Avg Common Equity 22.0% 20.6% na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial Strength -------------------------------------------------------------------------------- Current Ratio 1.25 1.16 0.98 Quick Ratio 1.00 0.93 0.76 Total Debt $1,096,113 $ 196,250 $ 140,296 Net Debt $ 976,132 $ 56,620 $ 55,441 Total Capitalization $1,521,932 $ 578,746 $ 461,546 Total Debt/Total 72.0% 33.9% 30.4% Capitalization Net Debt/Total 64.1% 9.8% 12.0% Capitalization Total Debt/TIC 43.2% 7.7% 5.5% Total Debt/EBITDA 5.75x 1.12x 34.31x Total Debt/EBITDA-CAPEX 6.22x 1.18x na EBITDA/Interest Expense 11.90x 14.44x 0.17x EBITDA-CAPEX/Interest Expense 11.00x 13.71x na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Market Information -------------------------------------------------------------------------------- As of Date 23-May-03 ---------- Exchange NYSE Stock Price $ 12.73 52 Week High $ 14.45 52 Week Low $ 7.85 Avg. Daily Volume (000's) 1 Beta 0.69 Shares Outstanding (000's) 113,323 Total Outstanding Warrants & Options (000's) -- Float (000's) 111,100 Market Cap $1,442,602 Total Invested Capital (TIC) $2,538,715 Enterprise Value (EV) $2,418,734 Ownership Insiders % Owned 2.00% Institutional % Owned 70.00% Number of Institutions 226 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Valuation Ratios -------------------------------------------------------------------------------- Mutiple of -------------------------- Market Cap TIC EV -------------------------- Latest Twelve Months Revenue 0.71x 1.26x 1.20x EBIT 13.74x 24.18x 23.04x EBITDA 7.56x 13.31x 12.68x Normalized Net Income 16.20x 28.50x 27.15x Basic Normalized EPS 15.91x na na Projected Dec-03 Mean Revenue 0.57x 1.00x 0.96x Dec-04 Mean Revenue 0.51x 0.89x 0.85x Dec-03 Mean EPS 14.80x na na Dec-04 Mean EPS 11.47x na na Most Recent Filing Assets 0.61x 1.08x 1.03x Common Equity 3.39x na na Tangible Common Equity 4.63x na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Mean Consensus Estimates ------------------------------------------------------------------------------- Year Ending # Ests Revenue EPS ------------------------------------------------------------------------------- December-03 2 $2,529,010 $0.86 December-04 2 $2,845,600 $1.11 LT Growth na na na ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Period Growth Rates -------------------------------------------------------------------------------- Three Months Ended Fiscal Years Ended Mar-03 Dec-02 ------------------ ------------------ Revenue -3.5% -5.4% EBIT 80.2% -137.7% EBITDA 36.1% 4189.4% -------------------------------------------------------------------------------- Notes Add backs include restructuring cost provisioning, and debt settlement expenses. Note - Merger with Wallace in final stages. -------------------------------------------------------------------------------- Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover Page 63 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS -------------------------------------------------------------------------------- Wallace Computer Services Overview -------------------------------------------------------------------------------- Name Wallace Computer Se_ Address 2275 Officers Cabot Drive M. David Jones, Symbol WCS City, State Zip Lisle, CEO IL 60532 Latest Fiscal YE 31-Jul-02 Telephone (630) 588-5000 Latest Rprt Per 31-Jan-03 Website http://www.wallace.com/ A provider of printed products and print management services to Fortune 1000 customers. The Company operates in two business segments: the forms and labels segment and the integrated graphics segment. The principal products and services supplied by the forms and labels segment include the design and manufacture of paper-based forms, the manufacture of both electronic data processing (EDP) labels and packaging labels, as well as the manufacture and distribution of a standard line of office products. --------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------- Income and Cashflow Statement Data ----------------------------------------------------------------------------------------------- ($ in thousands, except per share) Six Months Ended Fiscal Years Ended LTM -------------------- ----------------------- Jan-03 Jan-03 Jan-02 Jul-02 Jul-01 ---------- -------- --------- ---------- ---------- Revenue $1,505,704 $764,888 $804,813 $1,545,629 $1,689,534 COGS 1,094,087 555,959 596,266 1,134,394 1,236,589 ---------- -------- -------- ---------- ---------- Gross Profit 411,617 208,929 208,547 411,235 452,945 Selling, General & Administrative 300,107 155,599 156,842 301,350 334,452 Research & Development -- -- -- -- -- Other Operating -- -- -- -- -- ---------- -------- -------- ---------- ---------- Operating Income 111,510 53,330 51,705 109,885 118,493 Interest Income / (Expense), net (18,231) (8,917) (11,529) (20,843) (28,273) Other Income / (Expense), net -- -- -- -- -- ---------- -------- -------- ---------- ---------- Pre-tax Income 93,279 44,413 40,176 89,042 90,220 Taxes 13,223 16,633 2,864 (546) 36,311 ---------- -------- -------- ---------- ---------- After-tax Income 80,056 27,780 37,312 89,588 53,909 Minority Interest -- -- -- -- -- Equity in Affiliates -- -- -- -- -- ---------- -------- -------- ---------- ---------- Normalized Net Income 80,056 27,780 37,312 89,588 53,909 Preferred Dividends -- -- -- -- -- ---------- -------- -------- ---------- ---------- Normalized Net Income to Common $ 80,056 $ 27,780 $ 37,312 $ 89,588 $ 53,909 ========== ======== ======== ========== ========== EBIT $ 111,510 $ 53,330 $ 51,705 $ 109,885 $ 118,493 Depreciation & Amortization $ 62,504 $ 30,848 $ 34,751 $ 66,407 $ 78,848 EBITDA $ 174,014 $ 84,178 $ 86,456 $ 176,292 $ 197,341 CAPEX $ 26,715 $ 15,067 $ 11,603 $ 23,251 $ 41,310 EBITDA - CAPEX $ 147,299 $ 69,111 $ 74,853 $ 153,041 $ 156,031 GAAP Operating Cash Flow $ 133,352 $ 53,099 $ 61,300 $ 141,553 $ 175,703 Basic Reported Weighted Avg Shares Out (000's) 41,917 41,098 41,326 40,699 Basic Normalized EPS $ 1.92 $ 0.66 $ 0.91 $ 2.17 $ 1.32 Basic Reported EPS $ 1.28 $ 0.65 $ (3.40) $ (2.77) $ 1.31 Diluted Reported Weighted Avg Shares Out (000's) 42,483 41,098 41,699 40,951 Diluted Normalized EPS $ 1.89 $ 0.65 $ 0.91 $ 2.15 $ 1.32 Diluted Reported EPS $ 1.29 $ 0.64 $ (3.40) $ (2.75) $ 1.30 ----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------- Normalized Reconciliation --------------------------------------------------------------------------------------- Restructuring/Goodwill Impairment $(11,096) $ (643) $ (32,832) $ (43,285) $ (513) Other Unusual (Expense) Gain Items -- -- -- -- -- Tax Shelter (Charge) on Unusual Items (16,881) -- -- (16,881) (200) -------- ------- --------- --------- ------- Unusual (Exp) Gain Items, net of Taxes (27,977) (643) (32,832) (60,166) (713) Accounting Changes, net of Taxes -- -- (144,078) (144,078) -- Discontinued Operations, net of Taxes -- -- -- -- -- Extraordinary Items, net of Taxes -- -- -- -- -- -------- ------- --------- --------- ------- Total Reconciling Items, net of Taxes $(27,977) $ (643) $(176,910) $(204,244) $ (713) ======== ======= ========= ========= ======= Reported Income Tax (Benefit) $ 30,104 $16,633 $ 2,864 $ 16,335 $36,511 Reported Net Income (Loss) $ 52,079 $27,137 $(139,598) $(114,656) $53,196 ---------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------- Profitability & Cost Ratios (as % of Revenue) ----------------------------------------------------------------------------------------------- Gross Profit 27.3% 27.3% 25.9% 26.6% 26.8% S,G & A 19.9% 20.3% 19.5% 19.5% 19.8% Operating Income 7.4% 7.0% 6.4% 7.1% 7.0% Pre-Tax 6.2% 5.8% 5.0% 5.8% 5.3% EBIT 7.4% 7.0% 6.4% 7.1% 7.0% EBITDA 11.6% 11.0% 10.7% 11.4% 11.7% Normalized Net Income to Common 5.3% 3.6% 4.6% 5.8% 3.2% Reported Net Income 3.5% 3.5% -17.3% -7.4% 3.1% CAPEX 1.8% 2.0% 1.4% 1.5% 2.4% -----------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Balance Sheet Data -------------------------------------------------------------------------------- ($ in thousands, except per share) As of As of ---------------------- 31-Jan-03 Jul-02 Jul-01 --------- -------- ---------- Cash & Equivalents $ 58,777 $ 25,178 $ -- Marketable Securities -- -- -- -------- -------- ---------- Total Cash & Mkt Securities 58,777 25,178 -- Accounts Receivable 229,882 245,141 280,456 Inventory 89,799 85,437 100,922 Other Current Assets 41,066 49,159 33,661 -------- -------- ---------- Total Current Assets 419,524 404,915 415,039 PPE, net 307,745 318,338 391,166 Intangibles, net 184,624 188,101 340,180 Investments -- -- -- Other Assets 19,354 18,640 18,037 -------- -------- ---------- Total Assets $931,247 $929,994 $1,164,422 ======== ======== ========== Accounts Payable $ 68,942 $ 78,403 $ 74,087 Accrued Expenses 86,241 76,467 91,284 Short Term Debt 679 1,233 4,000 Short Term Capital Leases -- -- -- Other Current Liabilities -- 13,373 20,231 -------- -------- ---------- Total Current Liabilities 155,862 169,476 189,602 Other LT Liabilities 98,174 102,086 110,116 Long Term Debt 208,228 209,303 284,087 Long Term Capital Leases -- -- -- Minority Interests -- -- -- Pref Stock (Liq Value) -- -- -- -------- -------- ---------- Total Liabilities & Pref Stock 462,264 480,865 583,805 -------- -------- ---------- Common Equity 468,983 449,129 580,617 -------- -------- ---------- Total Liabilities & Equity $931,247 $929,994 $1,164,422 ======== ======== ========== Common Shares Outstanding (000's) 42,244 41,556 40,889 Cash Value per share $ 1.39 $ 0.61 $ -- Book Value per share $ 11.10 $ 10.81 $ 14.20 Tangible Book Value per share $ 6.73 $ 6.28 $ 5.88 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effectiveness and Efficiency -------------------------------------------------------------------------------- A/R Turnover 6.34x 5.88x 6.02x Inventory Turnover 12.49x 12.17x 12.25x Asset Turnover 1.62x 1.48x 1.45x Days Sales Outstanding 57.6 62.1 60.6 Days Inventory Outstanding 29.2 30.0 29.8 Days Payable Outstanding 19.3 19.4 17.2 Return on Avg Assets 8.6% 8.6% na Return on Avg Common Equity 17.4% 17.4% na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial Strength -------------------------------------------------------------------------------- Current Ratio 2.69 2.39 2.19 Quick Ratio 2.12 1.89 1.66 Total Debt $208,907 $210,536 $288,087 Net Debt $150,130 $185,358 $288,087 Total Capitalization $677,890 $659,665 $868,704 Total Debt/Total Capitalization 30.8% 31.9% 33.2% Net Debt/Total Capitalization 22.1% 28.1% 33.2% Total Debt/TIC 15.5% 15.7% 21.4% Total Debt/EBITDA 1.20x 1.19x 1.46x Total Debt/EBITDA-CAPEX 1.42x 1.38x 1.85x EBITDA/Interest Expense 9.54x 8.46x 6.98x EBITDA-CAPEX/Interest Expense 8.08x 7.34x 5.52x -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Market Information -------------------------------------------------------------------------------- As of Date 23-May-03 ---------- --------- Exchange NYSE Stock Price $ 26.86 52 Week High $ 26.94 52 Week Low $ 15.80 Avg. Daily Volume (000's) 340 Beta 0.82 Shares Outstanding (000's) 42,244 Total Outstanding Warrants & Options (000's) -- Float (000's) 41,000 Market Cap $1,134,674 Total Invested Capital (TIC) $1,343,581 Enterprise Value (EV) $1,284,804 Ownership Insiders % Owned 3.00% Institutional % Owned 83.00% Number of Institutions 329 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Valuation Ratios -------------------------------------------------------------------------------- Multiple of --------------------------- Market Cap TIC EV ---------- ----- ------ Latest Twelve Months Revenue 0.75x 0.89x 0.85x EBIT 10.18x 12.05x 11.52x EBITDA 6.52x 7.72x 7.38x Normalized Net Income 14.17x 16.78x 16.05x Basic Normalized EPS 13.99x na na Projected Dec-02 Mean Revenue na na na Dec-03 Mean Revenue na na na Dec-02 Mean EPS na na na Dec-03 Mean EPS na na na Most Recent Filing Assets 1.22x 1.44x 1.38x Common Equity 2.42x na na Tangible Common Equity 3.99x na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Mean Consensus Estimates -------------------------------------------------------------------------------- Year Ending # Ests Revenue EPS -------------------------------------------------------------------------------- December-02 na na na December-03 na na na LT Growth na na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Period Growth Rates -------------------------------------------------------------------------------- Six Months Ended Fiscal Years Ended Jan-03 Jul-02 ---------------- ------------------ Revenue -5.0% -8.5% EBIT 3.1% -7.3% EBITDA -2.6% -10.7% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Notes Add backs reflect restructuring charges and change in accounting principle in accordance with SFAS No.142 (Goodwill impairment). Note - Merger with Moore in final stages. -------------------------------------------------------------------------------- Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover Page 64 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS SELECTED COMPARABLE COMPANY ANALYSIS -------------------------------------------------------------------------------- BCT International Overview -------------------------------------------------------------------------------- Name BCT Address 3000 NE Officers International 30th Place Bill Wilkerson, Symbol BCTI City, State Zip Ft. CEO Lauderdale, FL 33306 Latest Fiscal YE 28-Feb-02 Telephone 954-563-1224 Latest Rprt Per 30-Nov-02 Website BCT International, Inc. operates the Business Cards Tomorrow franchise system. Founded in 1975, the system has grown to include 82 Business Cards Tomorrow Franchises specializing in thermography products, labels, rubber stamps and business announcements for resale by retail printing providers in 36 states and Canada. BCT's operations also include the Pelican Paper Products Division (PPP), which supplies paper products, press supplies and press parts to the BCT Franchises. --------------------------------------------------------------------------------
------------------------------------------------------------------------------------------- Income and Cashflow Statement Data ------------------------------------------------------------------------------------------- ($ in thousands, except per share) Nine Months Ended Fiscal Years Ended LTM ----------------- ------------------ Nov-02 Nov-02 Nov-01 Feb-02 Feb-01 ------- ----------------- ------------------ Revenue $18,381 $14,097 $13,723 $18,007 $19,429 COGS 10,460 7,941 8,073 10,592 11,605 ------- ----------------- ----------------- Gross Profit 7,921 6,156 5,650 7,415 7,824 Selling, General & Administrative 7,166 5,279 4,715 6,602 6,687 Research & Development -- -- -- -- -- Other Operating -- -- -- -- -- ------- ----------------- ----------------- Operating Income 755 877 935 813 1,137 Interest Income / (Expense), net -- -- -- -- -- Other Income / (Expense), net -- -- -- -- -- ------- ----------------- ----------------- Pre-tax Income 755 877 935 813 1,137 Taxes 295 342 368 321 442 ------- ----------------- ----------------- After-tax Income 460 535 567 492 695 Minority Interest -- -- -- -- -- Equity in Affiliates -- -- -- -- -- ------- ----------------- ----------------- Normalized Net Income 460 535 567 492 695 Preferred Dividends -- -- -- -- -- ------- ----------------- ----------------- Normalized Net Income to Common $ 460 $ 535 $ 567 $ 492 $ 695 ======= ================= ================= EBIT $ 755 $ 877 $ 935 $ 813 $ 1,137 Depreciation & Amortization $ 233 $ 177 $ 170 $ 226 $ 232 EBITDA $ 988 $ 1,054 $ 1,105 $ 1,039 $ 1,369 CAPEX $ 142 $ 124 $ 144 $ 162 $ 150 EBITDA - CAPEX $ 846 $ 930 $ 961 $ 877 $ 1,219 GAAP Operating Cash Flow $ 981 $ 450 $ 2,729 $ 3,260 $ 316 Basic Reported Weighted Avg Shares Out (000's) 5,121 5,121 5,123 5,214 Basic Normalized EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13 Basic Reported EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13 Diluted Reported Weighted Avg Shares Out (000's) 5,121 5,121 5,123 5,235 Diluted Normalized EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13 Diluted Reported EPS $ 0.09 $ 0.10 $ 0.11 $ 0.10 $ 0.13 ------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------- Normalized Reconciliation ------------------------------------------------------------------------------------------- Restructuring/Goodwill Impairment $ -- $ -- $ -- $ -- $ -- Other Unusual (Expense) Gain Items -- -- -- -- -- Tax Shelter (Charge) on Unusual Items -- -- -- -- -- ------- ----------------- ----------------- Unusual (Exp) Gain Items, net of Taxes -- -- -- -- -- Accounting Changes, net of Taxes -- -- -- -- -- Discontinued Operations, net of Taxes -- -- -- -- (31) Extraordinary Items, net of Taxes -- -- -- -- -- ------- ----------------- ----------------- Total Reconciling Items, net of Taxes $ -- $ -- $ -- $ -- $ (31) ======= ================= ================= Reported Income Tax (Benefit) $ 295 $ 342 $ 368 $ 321 $ 442 Reported Net Income (Loss) $ 460 $ 535 $ 567 $ 492 $ 664 ------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------- Profitability & Cost Ratios (as % of Revenue) ------------------------------------------------------------------------------------------- Gross Profit 43.1% 43.7% 41.2% 41.2% 40.3% S,G & A 39.0% 37.4% 34.4% 36.7% 34.4% Operating Income 4.1% 6.2% 6.8% 4.5% 5.9% Pre-Tax 4.1% 6.2% 6.8% 4.5% 5.9% EBIT 4.1% 6.2% 6.8% 4.5% 5.9% EBITDA 5.4% 7.5% 8.1% 5.8% 7.0% Normalized Net Income to Common 2.5% 3.8% 4.1% 2.7% 3.6% Reported Net Income 2.5% 3.8% 4.1% 2.7% 3.4% CAPEX 0.8% 0.9% 1.0% 0.9% 0.8% -------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Balance Sheet Data -------------------------------------------------------------------------------- ($ in thousands, except per share) As of As of ----------------- 30-Nov-02 Feb-02 Feb-01 --------- ----------------- Cash & Equivalents $ 4,805 $ 4,819 $ 1,799 Marketable Securities -- -- -- -------- ----------------- Total Cash & Mkt Securities 4,805 4,819 1,799 Accounts Receivable 2,386 2,889 3,568 Inventory 2,697 1,887 2,352 Other Current Assets 918 678 455 -------- ----------------- Total Current Assets 10,806 10,273 8,174 PPE, net 963 435 473 Intangibles, net 186 206 232 Investments 43 24 24 Other Assets 6,187 6,140 7,287 -------- ----------------- Total Assets $18,185 $17,078 $16,190 ======== ================= Accounts Payable $ 789 $ 432 $ 597 Accrued Expenses 938 791 403 Short Term Debt 294 640 86 Short Term Capital Leases -- -- -- Other Current Liabilities 125 125 167 -------- ----------------- Total Current Liabilities 2,146 1,988 1,253 Other LT Liabilities 214 334 417 Long Term Debt 534 -- 236 Long Term Capital Leases -- -- -- Minority Interests -- -- -- Pref Stock (Liq Value) -- -- -- -------- ----------------- Total Liabilities & Pref Stock 2,894 2,322 1,906 -------- ----------------- Common Equity 15,291 14,756 14,284 -------- ----------------- Total Liabilities & Equity $18,185 $17,078 $16,190 ======== ================= Common Shares Outstanding (000's) 5,121 5,121 5,136 Cash Value per share $ 0.94 $ 0.94 $ 0.35 Book Value per share $ 2.99 $ 2.88 $ 2.78 Tangible Book Value per share $ 2.95 $ 2.84 $ 2.74 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Effectiveness and Efficiency -------------------------------------------------------------------------------- A/R Turnover 6.97x 5.58x 5.45x Inventory Turnover 4.56x 5.00x 4.93x Asset Turnover 1.04x 1.08x 1.20x Days Sales Outstanding 52.4 65.4 67.0 Days Inventory Outstanding 80.0 73.0 74.0 Days Payable Outstanding 12.6 10.9 11.9 Return on Avg Assets 2.6% 3.0% na Return on Avg Common Equity 3.1% 3.4% na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Financial Strength -------------------------------------------------------------------------------- Current Ratio 5.04 5.17 6.52 Quick Ratio 3.78 4.22 4.65 Total Debt $ 828 $ 640 $ 322 Net Debt $(3,977) $(4,179) $(1,477) Total Capitalization $16,119 $15,396 $14,606 Total Debt/Total Capitalization 5.1% 4.2% 2.2% Net Debt/Total Capitalization -24.7% -27.1% -10.1% Total Debt/TIC 13.9% 10.8% 5.4% Total Debt/EBITDA 0.84x 0.62x 0.24x Total Debt/EBITDA-CAPEX 0.98x 0.73x 0.26x EBITDA/Interest Expense na na na EBITDA-CAPEX/Interest Expense na na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Market Information -------------------------------------------------------------------------------- As of Date 23-May-03 Exchange OTC BB Stock Price $ 1.00 52 Week High $ 1.07 52 Week Low $ 0.67 Avg. Daily Volume (000's) 3 Beta 0.83 Shares Outstanding (000's) 5,121 Total Outstanding Warrants & Options (000's) -- Float (000's) 2,800 Market Cap $5,121 Total Invested Capital (TIC) $5,949 Enterprise Value (EV) $1,144 Ownership Insiders % Owned 52.00% Institutional % Owned 2.00% Number of Institutions 4 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Valuation Ratios -------------------------------------------------------------------------------- Multple of -------------------------- Market Cap TIC EV -------------------------- Latest Twelve Months Revenue 0.28x 0.32x 0.06x EBIT 6.78x 7.88x 1.52x EBITDA 5.18x 6.02x 1.16x Normalized Net Income 11.13x 12.93x 2.49x Basic Normalized EPS 11.11x na na Projected Dec-02 Mean Revenue na na na Dec-03 Mean Revenue na na na Dec-02 Mean EPS na na na Dec-03 Mean EPS na na na Most Recent Filing Assets 0.28x 0.33x 0.06x Common Equity 0.33x na na Tangible Common Equity 0.34x na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Mean Consensus Estimates -------------------------------------------------------------------------------- Year Ending # Ests Revenue EPS -------------------------------------------------------------------------------- December-02 na -- $-- December-03 na -- $-- LT Growth na na na -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Period Growth Rates -------------------------------------------------------------------------------- Nine Months Ended Fiscal Years Ended Nov-02 Feb-02 ----------------- ------------------ Revenue 2.7% -7.3% EBIT -6.2% -28.5% EBITDA -4.6% -24.1% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Notes -------------------------------------------------------------------------------- Sources: SEC Edgar, Multex, CapitalIQ, Commodity Systems, and/or Hoover Page 65 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS MINORITY INTEREST ACQUISITION PREMIUMS ANALYSIS . The minority interest acquisition premiums analysis involves the comparison of the premium derived in the Proposed Transaction to premiums in other transactions where a minority interest of a public company was acquired. Capitalink reviewed the one-day, five-day and 30-day premiums for all minority interest transactions where: . The acquiring party previously had greater than 50% shareholding in the target company, . The transaction was announced on or after January 2001, and . The transaction value is less than or equal to $25.0 million. . Capitalink believes an examination of the premiums paid in minority acquisitions are more appropriate than transactions involving a control acquisition and are more comparable to the Proposed Transaction. The premium in such a scenario should not be as high as a situation where control is acquired. . Based on the premiums paid in the scenario set forth above, Capitalink derived an indicated range of per share market values for the Company using the prior one-day, five-day and 30-day share price as of May 23, 2003. Based on the selected multiple ranges, Capitalink calculated a range of indicated share prices of $1.36 to $1.58. . Capitalink noted that the offer price of the Proposed Transaction was above this indicated valuation range. Page 66 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS MINORITY INTEREST ACQUISITION PREMIUMS ANALYSIS Indicated Reference Range - Acquisitions Premiums Paid Analysis
Statistic Selected Multiple Range Indicated Share Price --------- ----------------------- --------------------- Acquisitions Premiums Paid (1) Prior One Day $1.00 33.3% - 54.8% $1.33 - $1.55 Prior 5 Day $1.00 40.5% - 64.0% $1.40 - $1.64 Prior 30 Day $0.95 40.8% - 63.9% $1.34 - $1.56 Indicated Reference Range $1.36 - $1.58
-------------------------------------------------------------------------------- (1) Includes acquisitions by controlling shareholder (greater than 50%)of minority interests from January 2001 with deal value less than $25 million. Acquisitions at a discount (negative premiums) have been excluded. Sources of information: Commodity Systems, Inc. and Mergerstat, Inc. Page 67 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS MINORITY INTEREST ACQUISITION PREMIUMS ANALYSIS Acquisition Premiums Paid Analysis (1)
Previous Premiums Announc. Ownership Percentage ---------------------- Date Seller Buyer Percentage Sought 1 Day 5 Day 30 Day --------- ----------------------------- ---------------------------------------- ---------- ---------- ------ ------ ------ 5-May-03 Westerbeke Corp Westerbeke Acquisition Corp 56.20% 43.80% 65.75% 65.75% 71.43% 5-May-03 Atlantic Data Services Inc Private Group Led by Management of Atlantic Data 65.06% 34.94% 1.01% 2.04% 14.50% 5-May-03 Semele Group Inc Private Group Led by Management of Semele Group Inc 53.08% 46.92% 25.00% 25.00% 21.21% 29-Apr-03 RWD Technologies Inc Research Park Acquisition Inc 66.00% 34.00% 128.26% 147.06% 156.10% 27-Mar-03 DSI Toys Inc DSI Acquisition Inc 73.28% 26.72% 11.90% 8.05% 0.00% 26-Mar-03 InvestorsBancorp Inc Private Group Led by Management of InvestorsBancor 61.80% 38.20% -1.39% 4.80% 9.65% 24-Mar-03 Judge Group Inc Private Group Led by Management of Judge Group Inc 60.00% 40.00% 17.14% 12.33% 29.13% 6-Feb-03 deltathree Inc Atarey Hasharon Chevra Lepituach Vehashkaot Benadl 71.00% 29.00% 37.25% 27.27% 48.94% 3-Feb-03 9278 Communications Inc NTSE Holding Corp 54.20% 45.80% 185.71% 257.14% 150.00% 29-Jan-03 DSI Toys Inc Mvii Llc 55.20% 44.80% -2.22% -6.38% 15.79% 22-Nov-02 Unimark Group Inc (The) M&M Nominee LLC 62.50% 37.50% 132.14% 160.00% 66.67% 19-Nov-02 MDI Entertainment Inc Scientific Games Corp 66.00% 34.00% 27.27% 40.00% 53.85% 13-Nov-02 Media Source Inc Private Group Led By Davis 65.90% 34.10% 12.44% 45.16% 36.36% 19-Sep-02 WJ Communications Inc Fox Paine & Co LLC 65.50% 34.50% 0.92% 0.00% 29.41% 13-Aug-02 Oriole Homes Corp Levy Group (The) 60.10% 39.90% 63.33% 63.33% 29.29% 13-Aug-02 R-B Rubber Products Inc Dash Multi-Corp Inc 70.00% 30.00% 83.01% 69.70% 95.80% 5-Aug-02 Sandata Technologies Inc Sandata Acquisition Corp 74.40% 25.60% 282.00% 516.13% 180.88% 12-Jun-02 Swiss Army Brands Inc Victorinox AG 66.90% 33.10% 41.73% 42.63% 40.85% 16-May-02 Electric Lightwave Inc Citizens Communications Co 85.00% 15.00% 105.88% 79.49% 55.56% 16-May-02 Balanced Care Corp IPC Advisors Sarl 53.30% 46.70% 150.00% 177.78% 127.27% 10-Apr-02 PartsBase Inc Private Group Led by Robert A Hammond Jr 65.00% 35.00% 95.83% 95.83% 95.83% 3-Apr-02 CBNY Investment Services Corp Private Group Led By CBNY Investment Services Mgmt 73.60% 26.40% 1.30% 1.00% 1.00% 28-Mar-02 Shibazaki Seisakusho Ltd Alcoa Inc 50.50% 20.30% 30.87% 28.09% 44.71% 14-Mar-02 Konover Property Trust Prometheus Southeast Retail Trust 66.00% 34.00% 20.00% 20.00% 24.26% 11-Mar-02 Hawker Pacific Aerospace Deutsche Lufthansa AG 72.70% 27.30% 2.20% 3.50% 51.16% 6-Mar-02 CAA AG Harman International Industries Inc 78.15% 21.85% 0.44% 27.50% 12.50% 22-Jan-02 Rottlund Co Inc (The) Private Group Led by David and Bernard Rotter 71.40% 28.60% 18.06% 29.79% 46.63% 16-Nov-01 Ugly Duckling Corp Private Group led by Ernest C Garcia II 61.00% 39.00% 41.77% 42.91% 30.74% 18-Sep-01 Organic Inc Seneca Investments LLC 80.90% 19.10% 13.79% 17.86% 37.50% 22-Aug-01 HomeServices.Com Inc Berkshire Hathaway Inc 83.50% 16.50% 38.78% 40.50% 66.67% 14-Aug-01 National Home Centers Inc Private Group Led By Dwain A Newman 63.49% 36.51% 21.74% 17.65% 35.92% 3-Aug-01 Lincoln Snacks Co Lincoln Snacks Acquisition Corp 89.80% 10.20% 12.90% 16.67% 27.27% 6-Jun-01 HIS Sportswear AG VF Corp 85.00% 15.00% 18.48% 46.72% 32.09% 30-Apr-01 STV Group Inc Private Group Led By ESOP Of STV Group Inc 62.81% 37.19% 97.37% 110.28% 80.00% 27-Apr-01 Pierre Foods Inc PF Management Inc 63.00% 37.00% 101.61% 62.34% 121.24% 2-Apr-01 Milestone Properties Inc Concord Assets Group Inc 68.80% 31.20% 40.96% 40.96% 40.96% 27-Mar-01 Hahn Automotive Warehouse Inc Private Group Led By Futerman 64.00% 36.00% 33.33% 33.33% 9.89% 9-Feb-01 Marketing Specialists Corp Private Group Led By Richmont Capital Partners I 83.20% 16.80% 98.41% 66.67% 468.18% 24-Jan-01 Firecom Inc Private Group Led By Mendez 68.80% 31.20% 59.09% 59.09% 34.62% ---------------------------------- High 282.0% 516.1% 468.2% Mean 54.8% 64.0% 63.9% Median 33.3% 40.5% 40.8% Low -2.2% -6.4% 0.0% ----------------------------------
-------------------------------------------------------------------------------- (1) Includes acquisitions by controlling shareholder (greater than 50%)of minority interests from January 2001 with deal value less than $25 million. Acquisitions at a discount (negative premiums) have been excluded. Sources of information: Mergerstat, Inc. Page 68 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS PREMIUMS PAID ANALYSIS . The premiums paid analysis involves the comparison of Merger Consideration to the average closing price of the Company's common stock over varying time periods prior to May 23, 2003. . The analysis suggests that for the periods calculated, the Merger Consideration represents a significant premium (100.0% to 138.5%) over the average closing share price for each period. The premium as of May 23, 2003 was 100.0%. . In addition, the daily premium or discount over the period May 23, 2002 to May 23, 2003 was graphed based on Merger Consideration. For the full prior one-year period, the Merger Consideration represented a significant premium over the prevailing daily share price. Page 69 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS PREMIUMS PAID ANALYSIS Premiums Paid Analysis Merger Consideration $2.0000 Price per Share Premium --------- ------- Closing Price as of May 23, 2003 $1.0000 100.0% Sensitivity Analysis: Prior Day Closing Price $1.0000 100.0% Prior 5 Trading Day Average Closing Price $0.9620 107.9% Prior 10 Trading Day Average Closing Price $0.9760 104.9% Prior 20 Trading Day Average Closing Price $0.9830 103.5% Prior 30 Trading Day Average Closing Price $0.9653 107.2% Prior 60 Trading Day Average Closing Price $0.9435 112.0% Prior 90 Trading Day Average Closing Price $0.9479 111.0% Prior Six Month Average Closing Price $0.9060 120.7% Prior Year Average Closing Price $0.8407 137.9% -------------------------------------------------------------------------------- Sources of information: Draft Agreement and Commodity Systems, Inc. Page 70 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS PREMIUMS PAID ANALYSIS Daily Premium/ Date (Discount) ---------------------- 05/23/2003 100.0% 05/22/2003 100.0% 05/21/2003 115.1% 05/20/2003 115.1% 05/19/2003 110.5% 05/16/2003 100.0% 05/15/2003 100.0% 05/14/2003 100.0% 05/13/2003 100.0% 05/12/2003 110.5% 05/09/2003 110.5% 05/08/2003 110.5% 05/07/2003 110.5% 05/06/2003 92.3% 05/05/2003 98.0% 05/02/2003 98.0% 05/01/2003 90.5% 04/30/2003 104.1% 04/29/2003 104.1% 04/28/2003 104.1% 04/25/2003 102.0% 04/24/2003 102.0% 04/23/2003 110.5% 04/22/2003 119.8% 04/21/2003 119.8% 04/17/2003 119.8% 04/16/2003 119.8% 04/15/2003 119.8% 04/14/2003 119.8% 04/11/2003 119.8% 04/10/2003 119.8% 04/09/2003 119.8% 04/08/2003 119.8% 04/07/2003 119.8% 04/04/2003 110.5% 04/03/2003 110.5% 04/02/2003 117.4% 04/01/2003 117.4% 03/31/2003 117.4% 03/28/2003 117.4% 03/27/2003 117.4% 03/26/2003 117.4% 03/25/2003 117.4% 03/24/2003 117.4% 03/21/2003 117.4% 03/20/2003 117.4% 03/19/2003 117.4% 03/18/2003 117.4% 03/17/2003 117.4% 03/14/2003 117.4% 03/13/2003 117.4% 03/12/2003 117.4% 03/11/2003 117.4% 03/10/2003 117.4% 03/07/2003 115.1% 03/06/2003 115.1% 03/05/2003 115.1% 03/04/2003 117.4% 03/03/2003 117.4% 02/28/2003 117.4% 02/27/2003 108.3% 02/26/2003 119.8% 02/25/2003 119.8% 02/24/2003 119.8% 02/21/2003 119.8% 02/20/2003 163.2% 02/19/2003 119.8% 02/18/2003 119.8% 02/14/2003 106.2% 02/13/2003 108.3% 02/12/2003 106.2% 02/11/2003 106.2% 02/10/2003 102.0% 02/07/2003 104.1% 02/06/2003 104.1% 02/05/2003 104.1% 02/04/2003 104.1% 02/03/2003 108.3% 01/31/2003 108.3% 01/30/2003 108.3% 01/29/2003 108.3% 01/28/2003 108.3% 01/27/2003 108.3% 01/24/2003 108.3% 01/23/2003 98.0% 01/22/2003 94.2% 01/21/2003 98.0% 01/17/2003 90.5% 01/16/2003 96.1% 01/15/2003 122.2% 01/14/2003 122.2% 01/13/2003 146.9% 01/10/2003 146.9% 01/09/2003 146.9% 01/08/2003 146.9% 01/07/2003 146.9% 01/06/2003 146.9% 01/03/2003 146.9% 01/02/2003 146.9% 12/31/2002 146.9% 12/30/2002 150.0% 12/27/2002 156.4% 12/26/2002 156.4% 12/24/2002 156.4% 12/23/2002 156.4% 12/20/2002 156.4% 12/19/2002 135.3% 12/18/2002 135.3% 12/17/2002 156.4% 12/16/2002 156.4% 12/13/2002 156.4% 12/12/2002 156.4% 12/11/2002 156.4% 12/10/2002 156.4% 12/09/2002 156.4% 12/06/2002 156.4% 12/05/2002 163.2% 12/04/2002 163.2% 12/03/2002 141.0% 12/02/2002 141.0% 11/29/2002 162.8% 11/27/2002 162.8% 11/26/2002 163.2% 11/25/2002 166.7% 11/22/2002 122.2% 11/21/2002 166.7% 11/20/2002 166.7% 11/19/2002 166.7% 11/18/2002 166.7% 11/15/2002 166.7% 11/14/2002 166.7% 11/13/2002 166.7% 11/12/2002 166.7% 11/11/2002 166.7% 11/08/2002 166.7% 11/07/2002 163.2% 11/06/2002 177.8% 11/05/2002 177.8% 11/04/2002 177.8% 11/01/2002 177.8% 10/31/2002 166.7% 10/30/2002 192.0% 10/29/2002 194.1% 10/28/2002 194.1% 10/25/2002 194.1% 10/24/2002 170.3% 10/23/2002 170.3% 10/22/2002 194.1% 10/21/2002 194.1% 10/18/2002 194.1% 10/17/2002 194.1% 10/16/2002 194.1% 10/15/2002 194.1% 10/14/2002 198.5% 10/11/2002 198.5% 10/10/2002 181.7% 10/09/2002 181.7% 10/08/2002 177.8% 10/07/2002 177.8% 10/04/2002 181.7% 10/03/2002 181.7% 10/02/2002 181.7% 10/01/2002 185.7% 09/30/2002 185.7% 09/27/2002 181.7% 09/26/2002 181.7% 09/25/2002 181.7% 09/24/2002 185.7% 09/23/2002 185.7% 09/20/2002 174.0% 09/19/2002 177.8% 09/18/2002 156.4% 09/17/2002 156.4% 09/16/2002 161.4% 09/13/2002 163.2% 09/12/2002 163.2% 09/11/2002 163.2% 09/10/2002 143.9% 09/09/2002 143.9% 09/06/2002 146.9% 09/05/2002 146.9% 09/04/2002 146.9% 09/03/2002 141.0% 08/30/2002 146.9% 08/29/2002 150.0% 08/28/2002 150.0% 08/27/2002 150.0% 08/26/2002 150.0% 08/23/2002 150.0% 08/22/2002 143.9% 08/21/2002 143.9% 08/20/2002 135.3% 08/19/2002 115.1% 08/16/2002 135.3% 08/15/2002 135.3% 08/14/2002 135.3% 08/13/2002 133.1% 08/12/2002 150.0% 08/09/2002 166.7% 08/08/2002 166.7% 08/07/2002 146.9% 08/06/2002 146.9% 08/05/2002 146.9% 08/02/2002 146.9% 08/01/2002 146.9% 07/31/2002 146.9% 07/30/2002 146.9% 07/29/2002 150.0% 07/26/2002 146.9% 07/25/2002 153.2% 07/24/2002 156.4% 07/23/2002 156.4% 07/22/2002 166.7% 07/19/2002 150.0% 07/18/2002 150.0% 07/17/2002 156.4% 07/16/2002 156.4% 07/15/2002 143.9% 07/12/2002 143.9% 07/11/2002 159.7% 07/10/2002 159.7% 07/09/2002 159.7% 07/08/2002 159.7% 07/05/2002 153.2% 07/03/2002 153.2% 07/02/2002 153.2% 07/01/2002 138.1% 06/28/2002 138.1% 06/27/2002 138.1% 06/26/2002 138.1% 06/25/2002 138.1% 06/24/2002 138.1% 06/21/2002 138.1% 06/20/2002 138.1% 06/19/2002 143.9% 06/18/2002 143.9% 06/17/2002 143.9% 06/14/2002 143.9% 06/13/2002 143.9% 06/12/2002 143.9% 06/11/2002 141.0% 06/10/2002 141.0% 06/07/2002 141.0% 06/06/2002 141.0% 06/05/2002 141.0% 06/04/2002 141.0% 06/03/2002 135.3% 05/31/2002 143.9% 05/30/2002 143.9% 05/29/2002 143.9% 05/28/2002 135.3% 05/24/2002 135.3% 05/23/2002 135.3% -------------------------------------------------------------------------------- Sources of information: Draft Agreement and Commodity Systems, Inc. Page 71 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS ADJUSTED NET BOOK VALUE ANALYSIS . Capitalink performed an adjusted book value analysis, based upon a going concern premise, to determine the value of the Company assuming all of its assets were valued at market value. Under historical cost accounting most assets in the Company's financial statements are generally not reflected at market value, but reflect historical acquisition costs. . For the purposes of this analysis, based upon discussions with Company management and utilizing the Company's balance sheet as of February 28, 2003, the following adjustments to market value were assumed: . Accounts receivable for collectability and timing issues. . Inventory to reflect spoilage, wastage, obsolete inventory and timing issues. . Property, plant and equipment to reflect obsolescence and current market value. . Notes to reflect market value (see Notes Analysis). . No market value for intangible assets. . Deferred taxes for timing issues. . The results of the analysis indicate that the market value of the Company's assets is approximately $12.8 million. After deducting total liabilities of approximately $2.3 million, the adjusted net book value of common equity is approximately $10.5 million. Taking into account the 565,000 assumed in the money options, Capitalink calculated an indicated equity value of approximately $11.5 million or $2.02 per share. . Capitalink noted that the offer price of the Proposed Transaction was slightly below this indicated valuation range. Page 72 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS ADJUSTED NET BOOK VALUE ANALYSIS Adjusted Net Book Value Analysis ($ in thousands)
Feb 28, 2003E Unadjusted Book Value Adjs (1) Notes Adjusted ------------- -------- ----- -------- Assets: Cash & Equivalents $ 4,244 $ -- $ 4,244 Accounts Receivable, net 2,570 (643) a 1,928 Notes Receivables, net 5,313 (2,726) b 2,587 Inventory 2,668 (534) c 2,134 Deferred Income Taxes 1,325 (506) d 819 Prepaid & Other 513 -- 513 Net Property, Plant & Equipment 989 (495) e 495 Intangible Assets 180 (180) f -- Other 47 -- 47 ------- ------- ------- Total Assets $17,849 $(5,083) $12,766 ======= ======= ======= Liabilities: Accounts Payable 875 -- 875 Accrued Expenses 519 -- 519 Interest Bearing Debt 523 -- 523 Deferred Revenue 390 -- 390 ------- ------- ------- 2,307 -- 2,307 Contingent Liabilities: Contingencies -- -- -- ------- ------- ------- -- -- -- ------- ------- ------- Total Liabilities 2,307 -- 2,307 ------- ------- ------- Net Book Value $15,542 $(5,083) $10,459 ======= ======= ======= Adjusted Net Book Value: Indicated Net Book Value $10,459 Cash from assumed exercise of in the money options 1,017 ------- Indicated Equity Value 11,476 ======= Common Stock Equivalents: Common Stock Shares Outstanding 5,121 Shares from in the money options 565 ------- Total Common Stock Equivalents 5,686 ======= Indicated Share Price $ 2.02 =======
Adjustment A55Notes: a 25% market value adjustment for collectability and timing issues. b See Note Analysis for details. c 20% market value adjustment for spoilage, wastage, usage and timing issues. d Market value calculated at Base Case WACC and estimated three year horizon. e 50% market value adjustment for obsolescence. f No market value. -------------------------------------------------------------------------------- (1) Assumes assets are sold as part of ongoing business. Estimated market value adjustments determined in discussions with Company management. Please note, this analysis is not a liquidation analysis, which would have resulting in substantially lower indicated values. Sources of information: Company financials and management. Page 73 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS NOTES RECEIVABLE NET PRESENT VALUE ANALYSIS . Capitalink reviewed the Notes to determine their estimated current market value. The Notes were primarily generated from overdue accounts receivables owed by franchisees as a result of royalty and paper product payments that were in default. These balances were rolled into each of the Notes, each with a scheduled payment plan. Although the Company does provide a reserve for collectability of the Notes, it does not take into account the current market value of the Notes. . The Notes represent a level of excess working capital in the Company's operations that would not normally be taken into account in any cash flow valuation based on earnings or revenues. Consequently, Capitalink separately determined the Note's estimated current market value, and utilizing that indicated value in its valuation analyses, providing greater accuracy as to the Company's value. . As of February 28, 2003, the Company had approximately 39 Notes totaling approximately $6.8 million. Based on discussions with Company management, Capitalink determined the payment probability for each of the Notes. Payment probability was based on a number of factors, including the franchisee's performance record, debt balances, management quality, security, and local market growth. In the aggregate, the payment probability was approximately 55%, or receipt of approximately $3.7 million is expected, over the aggregate life of the Notes. . Utilizing the Company's base case WACC of 17.4% (as discussed in the Discounted Cash Flow Analysis) and applying the varying time horizons for each of the Notes, Capitalink derived the net present value of the amount anticipated to be collected. The net present value of the amount to be collected was calculated to be approximately $2.6 million. . It is important to note that Capitalink derived payment probabilities of the Notes in conjunction with and based on discussions with management. Capitalink does not guarantee or assure, in any respect, that any of the Notes will be collected. Page 74 BCT International, Inc. CONFIDENTIAL -------------------------------------------------------------------------------- VALUATION ANALYSIS NOTES RECEIVABLE NET PRESENT VALUE ANALYSIS Notes Receivable Net Present Value Analysis ($ in thousands)
Feb 28, 2003 Net Principal Adjusted Expected Average Present Balance Value (1) Realization % Term (Months) Value (2) ------------ --------- ------------- ------------- --------- Total Notes Receivable $6,813 $3,744 55.0% 67 $2,587 Notes Receivable Statistics Number of Issued Notes 39 Size Statistics Largest $ 898 Average $ 175 Median $ 98 Smallest $ 5
-------------------------------------------------------------------------------- (1) Realization based on discussions with Company management, given the performance of each plant, accounts receivable balance, expected collateral and payment history of each note holder. (2) Determined by discounting the after tax principal and interest cash flows of the notes at the Company's base case WACC estimated at 17.4%. Sources of information: Company financial statements and management. Page 75