<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
SECTION 240.13e.100.
Schedule 13E-3 [Section 240.13e-3], Rule 13e-3 Transaction Statement
Pursuant to Section 13(e) of the Securities Exchange Act of 1934 and Rule 13e-3
[Section 240.13e-3] thereunder.
RULE 13e-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
[AMENDMENT NO. 1]
CAPITAL FACTORS HOLDING, INC.
- --------------------------------------------------------------------------------
(Name of the Issuer)
UNION PLANTERS BANK, NATIONAL ASSOCIATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Statement)
Common Stock, $.01 par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
139905103
- --------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
E. James House, Jr. - 7130 Goodlett Farms Parkway, Memphis,
Tennessee 38018 - (901) 580-6596
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. The filing of solicitation materials or an information statement
- --- subject to Regulation 14A (17 CFR 240.14a-1 to 240.14b-1], Regulation
14C [17 CFR 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [Section
240.13e-3(c)] under the Securities Exchange Act of 1934.
b. The filing of a registration statement under the Securities Act of 1933.
- ---
c. A tender offer.
- ---
X d. None of the above.
- ---
Check the following box if the soliciting materials or information
- --- statement referred to in checking box (a) are preliminary copies:
CALCULATION OF FILING FEE
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Transaction Valuation* Amount of filing fee
$16,645,335 $3,329
- --------------------------------------------------------------------------------
</TABLE>
* The filing fee as calculated in accordance with Rule 0-11 by multiplying
the product of cash consideration amount of $17.50 per share and 951,162,
the remaining number of shares outstanding not owned by filer, by 1/50 of
one percent.
X Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
- --- and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<PAGE> 2
Amount Previously Paid: $3,329
---------------------------------------------------
Form or Registration No.: Schedule 13E-3
-------------------------------------------------
Filing Party: Union Planters Bank, National Association
-------------------------------------------------------------
Date Filed: October 26, 1998
---------------------------------------------------------------
Instruction: Eight copies of this statement, including all exhibits, should
be filed with the Commission.
- 2 -
<PAGE> 3
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
(a) See response to Item 8(d).
(b) (1) Stifel Nicolaus & Company, Incorporated prepared the fairness opinion
which has been previously filed as Exhibit B and the fairness
opinion analysis which is attached hereto as Exhibit B(1).
(2) See "SPECIAL FACTORS -- Opinion of the Financial Advisor" in the
Information Statement attached hereto as Exhibit D which has been
previously filed. The first sentence of the fifth paragraph of the
"SPECIAL FACTORS -- Opinion of the Financial Advisor" Section of the
Information Statement is replaced by the following sentences.
"Stifel was furnished by representatives of management of the
Company financial forecasts and related assumptions for the fiscal
years ending 1998 and 1999 prepared by management of the Company.
Utilizing the forecasts, publicly available information, and
other information furnished to Stifel by the Company, in
consultation with the Company's management and with the Company's
advice and consent, Stifel created a five-year financial projection
for use in preparing Stifel's opinion. The 1998 and 1999 financial
forecasts were modified in consultation with the Company's
management through the process of creating the five-year financial
projection, and such final financial forecasts were incorporated
into the five-year financial projection."
- 3 -
<PAGE> 4
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
Furnish a copy of:
(a) Not applicable.
(b) The opinion of Stifel, Nicolaus & Company, Incorporated has been previously
filed as Exhibit B. The fairness opinion analysis of Stifel, Nicolaus &
Company, Incorporated is attached as Exhibit B(1).
(c) Not applicable.
(d) The Information Statement to be furnished to Minority Holders has been
previously filed as Exhibit D.
(e) Not applicable.
(f) Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in the amendment to this statement is true, complete
and correct.
November 30, 1998
-------------------------------
(Date)
/s/ E. James House, Jr.
-------------------------------
(Signature)
E. James House, Jr.
-------------------------------
Corporate Secretary
-------------------------------
(Name and Title)
- 4 -
<PAGE> 5
CAPITAL FACTORS HOLDING, INC.
FAIRNESS OPINION ANALYSIS
OCTOBER 16, 1998
<PAGE> 6
TABLE OF CONTENTS
CAPITAL FACTORS HOLDING, INC.
FAIRNESS OPINION ANALYSIS
<TABLE>
<CAPTION>
TAB
---
<S> <C>
SUMMARY INFORMATION
Stifel's Process................................................................................................. 1
Summary Terms of the Transaction................................................................................. 2
Stock Ownership.................................................................................................. 3
Transactions Between Affiliates.................................................................................. 4
EXECUTIVE SUMMARY OF ANALYSIS
Overview of Valuation Methodologies and Summary of Values........................................................ 5
Historical Performance Data...................................................................................... 6
COMPARABLE PUBLIC COMPANY ANALYSIS
Valuation Graph.................................................................................................. 7
Description of Selected Comparable Companies and Process......................................................... 8
Market Data and Implied Values................................................................................... 9
Liquidity Graph.................................................................................................. 10
DISCOUNTED CASH FLOW ANALYSIS
DCF Graphs....................................................................................................... 11
DCF Valuation Tables............................................................................................. 12
Description of the DCF Process and Assumptions Used.............................................................. 13
Financial Model.................................................................................................. 14
Supporting Schedules............................................................................................. 15
</TABLE>
(CONTINUED)
<PAGE> 7
TABLE OF CONTENTS
CAPITAL FACTORS HOLDING, INC.
FAIRNESS OPINION ANALYSIS
<TABLE>
<CAPTION>
TAB
---
<S> <C>
COMPARABLE TRANSACTION ANALYSIS
Valuation Graph.................................................................................................. 16
Description of Selected Transactions and Process................................................................. 17
Merger and Acquisition Data and Implied Values................................................................... 18
PREMIUMS PAID ANALYSIS
Valuation Graph.................................................................................................. 19
Description of Selected Transactions and Process................................................................. 20
Merger and Acquisition Data and Implied Values................................................................... 21
APPENDIX
Capital Factors Holding, Inc. Stock Trading Data................................................................. 22
5-Year Factoring Market Share Table.............................................................................. 23
</TABLE>
<PAGE> 8
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
STIFEL'S PROCESS
Stifel is an investment banking and securities firm with membership
on all principal U.S. securities exchanges. As part of its investment banking
activities, Stifel is regularly engaged in the valuation of businesses and
their securities in connection with merger transactions and other types of
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate, and other
purposes.
The full text of Stifel's opinion, which sets forth the assumptions
made, matters considered, and limitations of the review undertaken, is attached
as an appendix to the Information Statement and is incorporated herein by
reference, and should be read in its entirety in connection with the
Information Statement. The summary of the opinion of Stifel set forth here is
qualified in its entirety by reference to the full text of such opinion.
In connection with its opinion, Stifel, among other things: (i)
reviewed certain publicly available financial and other data with respect to
the Company, including its consolidated financial statements, for the 1997,
1996 and 1995 fiscal years and interim periods to June 30, 1998, and certain
other relevant financial and operating data relating to the Company made
available to Stifel from published sources and from internal records of the
Company; (ii) reviewed the financial terms and conditions of drafts of the
Merger Agreement, Information Statement and 13E-3; (iii) reviewed certain
publicly available information concerning the trading of, and the trading
market for, the Company's Common Stock, including the prices of certain recent
purchases of large blocks of the Company's shares from sophisticated investors
by UPBNA; (iv) compared the Company from a financial point of view with certain
other companies in the factoring and commercial finance industries, the
securities of which are publicly traded; (v) considered the financial terms, to
the extent publicly available, of selected recent business combinations
involving companies in the factoring and commercial finance industries which
Stifel
1
<PAGE> 9
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
deemed to be comparable, in whole or in part, to the Company; (vi) considered
the financial terms, to the extent publicly available, of selected recent
business combinations whereby the buyer owned a majority of the capital stock
of the seller prior the combination and as a result of the combination owned
100% of the capital stock of the seller following the combination, which Stifel
deemed to be comparable, in whole or in part, to the Merger; (vii) reviewed and
discussed with representatives of management of the Company certain information
of a business and financial nature regarding the Company, furnished to Stifel
by them, including financial forecasts and related assumptions prepared by
management of the Company; (viii) utilizing the information and forecasts
furnished by the Company, in consultation with the Company's management and
with the Company's advice and consent, created a 5-year financial projection
for use in preparing Stifel's opinion; (ix) made inquiries regarding and
discussed the Merger, the Merger Agreement and other matters related thereto
with UPBNA's counsel; and (x) performed such other analysis and examinations as
Stifel deemed appropriate.
In rendering its opinion, Stifel relied upon and assumed, without
independent verification, the accuracy and completeness of all of the financial
and other information that was provided to it or that was otherwise reviewed by
it and did not assume any responsibility for independently verifying any of
such information. With respect to the financial forecasts supplied to Stifel
and the 5-year financial projections prepared therefrom, Stifel assumed with
UPBNA's and the Company's consent that they were reasonably prepared on the
basis reflecting the best currently available estimates and judgements of UPBNA
and the Company as to the future operating and financial performance of the
Company, that they would be realized in the amounts and time periods estimated
and that they provided a reasonable basis upon which Stifel could form its
opinion. Stifel also assumed that there were no material changes in the assets,
liabilities, financial condition, results of operations, business, or prospects
of the Company since the date of the last financial statements and that the
aggregate allowances for loan losses are in the aggregate adequate to cover all
such losses. Stifel did not make or obtain any independent evaluation,
appraisal, or physical inspection of the Company's assets or liabilities, the
collateral securing any of such assets or liabilities, or
2
<PAGE> 10
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
the collectibility of any such assets nor did it review loan or credit files of
the Company. Stifel relied on advice of UPBNA's and the Company's counsel and
accountants as to all legal and accounting matters with respect to UPBNA, the
Company, the Merger, the Merger Agreement, and other matters contained or
contemplated therein. Stifel assumed, with UPBNA's and the Company's consent,
that there are no factors that would delay or subject to any adverse conditions
any necessary regulatory or governmental approval and that all conditions to
the Merger will be satisfied and not waived.
The financial forecasts furnished to Stifel for the Company and the
5-year financial projections prepared therefrom were prepared by and in
consultation with the management of the Company and constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. As a matter of policy, the Company does not publicly disclose internal
management forecasts, projections or estimates of the type furnished to Stifel
in connection with its analysis of the financial terms of the Merger, and such
forecasts and estimates were not prepared with a view towards public
disclosure. These forecasts and estimates were based on numerous variables and
assumptions which are inherently uncertain and which may not be within the
control of the management of the Company, including, without limitation,
factors related to general economic, regulatory, and competitive conditions.
Accordingly, actual results could vary materially from those set forth in such
forecasts and estimates.
Stifel has performed various investment banking services for Union
Planters Corporation, the parent of UPBNA, from time to time in the past, and
expects to render such services to Union Planters Corporation and its
subsidiaries and affiliates in the future.
Stifel's opinion addresses only the fairness from a financial point
of view of the Cash Consideration to be received by the holders of Common Stock
(other than shares of Common Stock owned directly or indirectly by
3
<PAGE> 11
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
UPBNA or Merger Sub) and does not address the relative merits of the Merger and
any affect the Merger may have on the Company or any other aspect of the
Merger. Stifel was not authorized to solicit, and did not solicit, interest
from any party with respect to the acquisition of the Company, any of its
assets or minority shares.
4
<PAGE> 12
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
SUMMARY TERMS OF THE TRANSACTION
Stifel understands that Capital Factors Holding, Inc. (the
"Company") and UPBNA propose to enter into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the Merger Agreement, UPBNA proposes to form a
wholly-owned subsidiary ("Merger Sub") to which it will contribute the shares
of the Common Stock of the Company (the "Common Stock") owned by it and then
merge (the "Merger") Merger Sub with and into the Company. Upon consummation of
the Merger, all of the issued and outstanding shares of the Common Stock will
be cancelled and each holder of Common Stock other than Merger Sub will receive
$17.50 in cash (the "Cash Consideration") in exchange for each share of Common
Stock held by such holder immediately prior to consummation of the Merger.
Stifel understands that approximately 92% of the outstanding shares of Common
Stock are currently owned by UPBNA.
5
<PAGE> 13
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
STOCK OWNERSHIP
The Company has authorized 25,000,000 shares of $.01 par value
common stock, of which 12,309,012 shares were issued and outstanding as of
August 31, 1998. As of September 16, 1998, UPBNA owned 11,357,850 shares of the
Company Common Stock, or approximately 92.27% of the issued and outstanding
shares of the Company Common Stock.
On July 16, 1996, the Company completed an initial public offering
of 2,000,000 shares of the Company Common Stock at a price of $8.50 per share,
with the 300,000 share over-allotment option exercised on August 2, 1996. Prior
to the IPO, the Company was a wholly-owned subsidiary of Capital Bank. As a
result of the IPO, Capital Bank's ownership of the Company was reduced to
approximately 81%. Capital Bank was the principal banking subsidiary of Capital
Bancorp, which UPC, the parent of UPBNA, acquired on December 31, 1997. As a
result of this acquisition, Capital Bank became a subsidiary of UPC. Capital
Bank was merged with UPBNA on August 1, 1998 and as a result, the Company
became a subsidiary of UPBNA.
6
<PAGE> 14
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
UPBNA has made subsequent purchases of the Company Common Stock.
The following table details recent purchase activity which brought UPBNA's
ownership to its current level:
<TABLE>
<CAPTION>
DATE OF NUMBER OF PER SHARE
PURCHASE SHARES PRICE SELLER
- -------- ------ ----- ------
<S> <C> <C> <C>
8/10/98 500,000 $17.50 Franklin Mutual
8/18/98 157,700 $17.50 Kramer Spellman
8/31/98 444,900 $17.50 Wellington Management
9/1/98 143,250 $17.50 Furman Selz
9/3/98 87,500 $17.50 Keefe Management
9/9/98 24,500 $17.50 Oppenheimer
</TABLE>
7
<PAGE> 15
CAPITAL FACTORS HOLDING, INC.
INTRODUCTION
TRANSACTIONS BETWEEN AFFILIATES
The Company had a $150 million credit facility with Capital Bank.
In January 1998, the Company entered into a new $150 million credit facility
with UPC. Capital Bank provided approximately $166.5 million and $135.5
million, during 1997 and 1996, respectively of letters of credit for clients of
the Company. The Company obtained group medical, dental and life insurance
coverage on behalf of the Company and this practice is continued by UPBNA.
8
<PAGE> 16
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
I. PURCHASE PRICE MULTIPLES
- RANGE OF PURCHASE PRICE MULTIPLES
For the purpose of our analysis we examined the results of 6 selected
purchase price multiples based on a cash purchase price of $17.50 per
share of Capital Factors common stock. The common stock valuation is
based on 12,309,012 shares outstanding at 8/31/98. The actual shares to
be purchased by UPC is approximately 951,162 or 7.73% of the total
shares outstanding as of 8/31/98.
<TABLE>
<CAPTION>
PURCHASE PRICE PER
SHARE DIVIDED BY PURCHASE PRICE PER SHARE PREMIUM
COMMON ---------------------------- DIVIDED TO 10/12/98
PURCHASE STOCK TRANSACTION BOOK TANGIBLE BY EARNINGS PER SHARE MARKET
PRICE VALUATION VALUATION VALUE BOOK VALUE -------------------------------------- PRICE
PER SHARE (MM) (MM) 6/30/98 6/30/98 LTM 1998 EST. 1999 EST. OF $16.25
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Amount $6.55 $6.41 $1.01 $1.31 $1.38
$17.50 $215.41 $16.65 267% 273% 17.33x 13.37x 12.70x 7.69%
</TABLE>
1
<PAGE> 17
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
II. RECENT STOCK TRANSACTIONS
- RECENT PURCHASE OF CAPITAL FACTORS COMMON STOCK BY UNION PLANTERS
- On December 31, 1997, Union Planters Corporation acquired
Capital Bancorp, whose principal banking subsidiary Capital
Bank was 81% owner of Capital Factors ("CAPF"). Capital Bank
was merged with Union Planters Bank N.A. ("UPBNA") on August
1, 1998, and as a result Capital Factors became a subsidiary
of UPBNA.
- As of August 31, 1998, Capital Factors had 12,309,012 common
shares outstanding. UPBNA currently owns approximatley
11,357,850 shares or approximately 92.27% of Capital Factors
outstanding common stock.
- UPBNA has made recent unsolicited purchases of Capital Factors
common stock. The following table details recent purchase
activity which brought UPBNA's ownership to its current level:
<TABLE>
<CAPTION>
PER
DATE OF NUMBER OF SHARE
PURCHASE SHARES PRICE SELLER
<S> <C> <C> <C>
8/10/98 500,000 $17.50 Franklin Mutual
8/18/98 157,700 $17.50 Kramer Spellman
8/31/98 444,900 $17.50 Wellington Management
9/1/98 143,250 $17.50 Furman Selz
9/3/98 87,500 $17.50 Keefe Management
9/9/98 24,500 $17.50 Oppenheimer
</TABLE>
2
<PAGE> 18
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
III. SELECTED COMPARABLE PUBLIC COMPANIES ANALYSIS
- PURCHASE PRICE MULITPLE COMPARISON TO SELECTED COMPARABLE PUBLIC
COMPANIES
The table below compares the pricing multiples for this deal to the
multiples of publicly traded comparable companies. The group of
comparable companies was selected primarily based on companies similar
in scope to Capital Factors. This group includes the 16 companies
listed below:
<TABLE>
<CAPTION>
SELECTED TRANSACTIONS
PRICE = $17.50 TRANS. DEAL MULTIPLES IMPLIED PRICE PER SHARE
PRICING MULTIPLE MULTIPLES MEDIAN MEDIAN
<S> <C> <C> <C>
Number of Transactions 16 16
Price to Book Value 267% 126% $8.23
Price to Tangible Book Value 273% 147% $9.43
Price to Latest 12 Months Earnings 17.33x 13.56x $13.69
Price to Est. 1999 EPS 12.70x 8.72x $12.01
</TABLE>
<TABLE>
<S> <C>
Allstate Financial Corp. HPSC Inc.
CIT Group Inc. Interpool Inc.
DVI Inc. KBK Capital Corp.
Financial Federal Corp. Leasing Solutions Inc.
FINOVA Group Inc. Resource America Inc.
First Sierra Financial Inc. Source Capital Corp.
HealthCare Financial Partners T&W Financial Corp.
Heller Financial Inc. Willis Lease Finance Corp.
</TABLE>
3
<PAGE> 19
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
IV. DISCOUNTED CASH FLOW ANALYSIS
The DCF analysis is an economic model utilizing a long-term earnings
forecast which is discounted to present value, via the cost of capital
discount rate, to reflect risk and the time value of money. The
"terminal value" of CAPF's earnings at the end of year 2003 was
determined by applying a range of price-to-earnings multiples (12.0x
through 16.0x) to CAPF's projected income. The income stream and
terminal value were discounted to present values using a range of
discount rates determined from the Capital Asset Pricing Model.
<TABLE>
<CAPTION>
PER SHARE PRESENT VALUE OF FUTURE CASH FLOWS
BASED ON EXIT MULTIPLES OF:
DISCOUNT RATE ASSUMPTIONS 12.0x 13.0x 14.0x 15.0x 16.0x
<S> <C> <C> <C> <C> <C>
DISCOUNT RATE - 19.00% $15.83 $16.63 $17.44 $18.25 $19.05
DISCOUNT RATE - 20.00% 15.32 16.09 16.86 17.64 18.41
DISCOUNT RATE - 21.00% 14.83 15.57 16.32 17.06 17.80
DISCOUNT RATE - 22.00% 14.37 15.08 15.79 16.50 17.22
DISCOUNT RATE - 23.00% 13.93 14.61 15.29 15.98 16.66
</TABLE>
Using the Capital Asset Pricing Model, our cost of equity was determined
to be 21.38% which is equal to the middle of the discount rate range.
Exit multiples are based on the median price to latest twelve month
multiples for comparable companies.
4
<PAGE> 20
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
V. COMPARABLE TRANSACTION ANALYSIS
- PURCHASE PRICE MULTIPLE COMPARISON TO SELECTED MERGER TRANSACTIONS
The table below compares the pricing multiples for this deal to the
multiples of 33 comparable merger transactions of selected finance
companies that have been announced since January 1, 1995. The list of
transactions was primarily selected based on the seller's industry being
comparable to Capital Factors and other finance companies with
transaction values between $100 million and $500 million.
<TABLE>
<CAPTION>
SELECTED TRANSACTIONS
---------------------------------------------
DEAL MULTIPLES IMPLIED PRICE PER SHARE
PRICE = $17.50 TRANS. ---------------------------------------------
PRICING MULTIPLE MULTIPLES MEDIAN MEDIAN
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of Transactions 33 33
Price to Book Value 267% 238% $15.62
Price to Latest 12 Months Earnings 17.33x 17.46x $17.63
</TABLE>
5
<PAGE> 21
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
VI. PREMIUMS PAID ANALYSIS
- PURCHASE PRICE PREMIUM COMPARISON TO SELECTED MERGER TRANSACTIONS
The table below shows the implied price per share of this deal based on
premiums of 17 comparable merger transactions that have been announced
since January 1, 1995 in which the Acquiror owned at least 75% of the
target before the merger and 100% after.
<TABLE>
<CAPTION>
CURRENT TRANSACTION SELECTED TRANSACTIONS
--------------------------- --------------------------
DEAL IMPLIED PRICE
PRICE = $17.50 DATE OF PREMIUM PREMIUMS PER SHARE
STOCK STOCK TO STOCK ---------- -------------
PRICING MULTIPLE PRICE PRICE PRICE MEDIAN MEDIAN
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of Transactions 17 17
Premium to 1 Day Trading Price 12-Oct-98 $16.25 7.69% 21.65% $19.77
Premium to 1 Week Trading Price 05-Oct-98 $16.50 6.06% 25.25% $20.67
Premium to 4 Week Trading Price 14-Sep-98 $16.94 3.32% 27.62% $21.62
</TABLE>
<TABLE>
<CAPTION>
The 17 transactions consist of the following Targets:
<S> <C>
Group 1 Software Inc Bankers Life Holding(Conseco)
XLConnect Solutions Inc WCI Steel Inc(Renco Group Inc)
Steck-Vaughn Publishing Corp Bobbie Brooks Inc(Pubco Corp)
Seaman Furniture Co Great American Mgmt & Invt Inc
Guaranty National Corp SCOR US Corp(SCOR SA)
Golden Poultry Co Inc Sportmart Inc
Mafco Consolidated Grp(Mafco) Grand Gaming Corp
Bally's Grand Inc Rust International Inc
LXE(Electromagnetic Sciences)
</TABLE>
6
<PAGE> 22
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- PERFORMANCE STATISTICS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
GROWTH RATES 1997 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Primary Earnings Per Share Growth -5.80% 15.77% 42.69%
Fully Diluted Earnings Per Share Growth -7.12% 14.66% 42.69%
Book Value Per Share Growth 19.44% 51.40% 35.27%
Operating Revenue Growth 23.32% 31.33% 28.45%
</TABLE>
[GRAPH] [GRAPH]
[GRAPH] [GRAPH]
1
<PAGE> 23
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- PERFORMANCE STATISTICS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
PROFITABLITITY RATIOS 1997 1996 1995 1994
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Return on Average Assets 1.84% 2.36% 2.71% 2.35%
Return on Average Equity 17.17% 24.01% 30.20% 28.80%
Factoring Fees / Factored Sales 0.93% 0.98% 0.98% 1.13%
Net Interest Income / Average Funds Exployed 5.27% 5.39% 5.62% 4.75%
</TABLE>
[GRAPH] [GRAPH]
[GRAPH] [GRAPH]
2
<PAGE> 24
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- INCOME STATEMENT COMPOSITION
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Factoring Fees / Factored Sales 0.93% 0.98% 0.98% 1.13%
Net Interest Income / Factored Sales 0.63% 0.58% 0.59% 0.47%
Letter of Credit / Factored Sales 0.13% 0.12% 0.10% 0.08%
Other Income / Factored Sales 0.06% 0.06% 0.09% 0.10%
Operating Revenues / Factored Sales 1.76% 1.75% 1.76% 1.79%
Operating Expense / Factored Sales 0.93% 0.89% 0.92% 0.92%
Total Expense / Factored Sales 1.15% 1.03% 1.03% 1.07%
Income Before Income Taxes / Factored Sales 0.60% 0.72% 0.73% 0.72%
</TABLE>
[GRAPH]
3
<PAGE> 25
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- BALANCE SHEET GROWTH RATES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
----------------------------------------------------------
<S> <C> <C> <C>
Total Assets 42.60% 32.82% 41.22%
Total Receivables 42.73% 35.93% 38.72%
Factored Sales Volume 22.68% 32.48% 30.22%
Common Equity 19.48% 86.23% 35.27%
</TABLE>
[GRAPH] [GRAPH]
[GRAPH] [GRAPH]
4
<PAGE> 26
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
(DOLLARS IN MILLIONS) 1997 1996 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Factored Accounts Receivables $527.96 $426.99 $296.48 $226.49
Loans to Factoring Clients $54.03 $27.97 $26.42 $23.43
Asset Based Loans $118.79 $36.02 $38.32 $10.47
</TABLE>
[GRAPH] [GRAPH]
[GRAPH] [GRAPH]
5
<PAGE> 27
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- FUNDING
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
(DOLLARS IN MILLIONS) 1997 1996 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Factors Asset Backed Cert $275.00 $175.00 $175.00 $125.00
Note Payable to Affiliate $111.75 $70.13 $52.26 $34.54
Note Payable to Unaffiliated Bank $43.60 $15.90 $0.00 $0.00
Subordinated Notes $10.00 $10.00 $0.00 $0.00
</TABLE>
[GRAPH] [GRAPH]
[GRAPH] [GRAPH]
6
<PAGE> 28
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- CAPITALIZATION
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995 1994
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Debt / Equity 5.9 x 4.4 x 6.8 x 6.5 x
Equity / Assets 9.80% 11.70% 8.35% 8.71%
Total Debt (millions) $440.35 $271.03 $227.26 $159.54
Total Equity (millions) $74.18 $62.09 $33.34 $24.65
</TABLE>
[GRAPH] [GRAPH]
[GRAPH] [GRAPH]
7
<PAGE> 29
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
HISTORICAL FINANCIAL CONDITION
- ASSET QUALITY RATIOS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995 1994
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Provision for Credit Losses / Factored Sales 0.22% 0.14% 0.11% 0.15%
Provision for Credit Losses / Average Receivables 1.23% 0.85% 0.72% 0.92%
Net Charge-Offs / Average Receivables 0.70% 0.87% 0.33% 1.08%
Non-Accruing Advances / Receivables 0.06% 0.13% 0.60% 0.28%
</TABLE>
[GRAPH] [GRAPH]
[GRAPH] [GRAPH]
8
<PAGE> 30
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
STOCK TRADING ANALYSIS
- THE FOLLOWING TABLE PRESENTS THE HISTORICAL TRADING ACTIVITY FOR CAPF
COMMON STOCK:
<TABLE>
<CAPTION>
AVERAGE TOTAL EST VALUE
SHARES SHARES AVERAGE TRADED
TRADED TRADED CLOSING IN PERIOD
PERIOD (000) (000) PRICE (000)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997
----
1st Quarter 6.15 375.40 $14.48 $5,435
2nd Quarter 6.96 445.70 15.11 6,735
3rd Quarter 10.56 676.00 17.79 12,029
4th Quarter 3.79 242.60 18.06 4,381
-------
Total 28,580
-------
1998
----
1st Quarter 7.62 464.80 $17.68 $8,220
2nd Quarter 5.19 326.90 $18.62 $6,086
3rd Quarter 11.10 710.70 $16.90 $12,011
-------
Total 26,316
-------
</TABLE>
9
<PAGE> 31
CAPITAL FACTORS HOLDING, INC.
IMPLIED VALUATION MULTIPLES BASED ON COMPARABLE COMPANIES
- COMPARABLE PUBLIC COMPANY ANALYSIS
The following graph examines a range of prices based on financial and
market data of comparable Factoring and Commercial Finance companies.
[GRAPH]
<TABLE>
<CAPTION>
IMPLIED PER SHARE VALUATION BASED ON
MULTIPLES OF COMPARABLE COMPANIES
----------------------------------
MEDIAN PREMIUM (1)
------ -----------
<S> <C> <C> <C>
Price / Book $ 8.23 126% (49.3%)
Price / Tangible Book $ 9.43 147% (42.0%)
Price / LTM EPS $ 13.69 13.56x (15.7%)
Price / 1999 EPS $ 12.01 8.72x (26.1%)
</TABLE>
(1) Implied per share premium (or discount) to current market price of $16.250
on 10/12/98.
1
<PAGE> 32
COMPARABLE PUBLIC COMPANY ANALYSIS
- Determination of fair market value based on public market value
indicators involves the follow steps:
1. (a) Selection of Comparable Companies (Group 1): These selected
publicly traded companies include commercial and specialty finance
companies that provide financing through factoring, purchases of
accounts receivables, and asset based lending. (There are a
limited amount of publicly traded factoring companies and most
that are public, such as the group below, have factoring as one of
many different lines of business, therefore there are no companies
that are substantially similar to the Company in size or scope.)
These include the following companies:
Allstate Financial Corp CIT Group, Inc.
DVI Inc. FINOVA Group Inc.
Healthcare Financial Partners Heller Financial Inc.
HPSC Inc. KBK Capital Corp.
Source Capital Corp.
(b) Selection of Comparable Companies (Group 2): In addition to
the selected publicly traded companies above, we added additional
commercial finance companies that have current market
capitalizations of $100 million to $500 million. These include
the following companies:
Financial Federal Corp. First Sierra Financial Inc.
Interpool Inc. Leasing Solution Inc.
Resource America Inc. T&W Financial Corp.
Willis Lease Finance Corp.
<PAGE> 33
COMPARABLE PUBLIC COMPANY ANALYSIS
2. Determination of median values for a range of valuation statistics
for the comparable public companies, including:
a) Price to Book Value
b) Price to Tangible Book Value
c) Price to LTM EPS
d) Price to 1999 EPS
3. Apply the comparable public company median values determined to
Capital Factors, Inc.'s corresponding financial data in order to
get an implied common stock value based on a number of valuation
statistics.
<PAGE> 34
COMPARABLE PUBLIC COMPANY ANALYSIS
(GROUP 1)
ALLSTATE FINANCIAL CORP
- - The Company is a specialized commercial finance company principally
engaged in providing small- to medium-sized, high risk growth and
turnaround companies, including debtors-in-possession, with capital
through the discounted purchase of their accounts receivable. The Company
also makes advances to its clients collateralized by inventory,
equipment, real estate and other assets. In May 1997 the Company
established a new division, Allstate Factors, which is engaged in
traditional "non-recourse" factoring of accounts receivable.
CIT GROUP
- - The Company offers secured commercial and consumer financing primarily in
the United States to smaller, middle-market and larger businesses and to
individuals through a nationwide distribution network. The secured
lending, leasing and factoring products of the Company's commercial
operations include direct loans and leases, operating leases, leveraged
and single investor leases, secured revolving lines of credit and term
loans, credit protection, accounts receivable collection, import and
export financing and factoring, debtor-in-possession and turnaround
financing and acquisition and expansion financing.
DVI INC.
- - DVI, Inc. is an independent specialty finance company that conducts a
medical equipment finance business and a related medical receivables
finance business. Medical Equipment Finance - The Company finances the
acquisition of diagnostic imaging and other types of sophisticated
medical equipment used by outpatient healthcare providers, medical
imaging centers, groups of physicians, integrated healthcare delivery
networks and hospitals. Medical Receivables Finance - The Company
provides lines of credit to a wide variety of healthcare providers.
Substantially all of the lines of credit are collateralized by third
party medical receivables due from Medicare, Medicaid, HMOs, PPOs and
commercial insurance companies.
<PAGE> 35
COMPARABLE PUBLIC COMPANY ANALYSIS
(GROUP 1)
FINOVA GROUP, INC.
- - Through its principal subsidiary, FINOVA Capital, the Company provides a
broad range of financing and capital market products to midsize businesses.
FINOVA operates the following principal lines of business under three market
groups: (1) Commercial Finance (including Factoring Services which offers
full service factoring and accounts receivable management services for
entrepreneurial and larger firms, primarily in the textile and apparel
industries with an annual factored volume of generally between $5 million and
$25 million), (2) Specialty Finance, and (3) Capital Markets.
HEALTHCARE FINANCIAL PARTNERS
- - HealthCare Financial Partners, Inc. (the "Company") is a specialty finance
company offering asset-based financing to healthcare service providers, with
a primary focus on clients operating in sub-markets of the healthcare
industry. The Company also provides asset-based financing to clients in other
sub-markets of the healthcare industry. The Company targets small and middle
market healthcare service providers with financing needs in the $100,000 to
$10 million range in healthcare sub-markets which have favorable. The Company
currently provides financing to its clients through (i) revolving lines of
credit secured by, and advances against, accounts receivable, and (ii) term
loans secured by first or second liens on real estate, accounts receivable or
other assets.
HELLER FINANCIAL
- - Heller Financial, Inc. is a leading diversified commercial financial
services company which provides a broad array of financial products and
services to mid-sized and small businesses in the United States and selected
international markets. The Company provides its products and services
principally in five business categories: (i) asset based finance, which
provides secured loans and factoring through five business groups, (ii)
Heller Real Estate Financial Services, which provides secured real estate
financing, (iii) Heller International Group, Inc., which provides
international asset based financing and factoring, (iv) Heller Corporate
Finance, which provides collateralized cash flow lending, and (v) Heller
Project Finance, which provides structured financing for domestic
energy-related projects
<PAGE> 36
COMPARABLE PUBLIC COMPANY ANALYSIS
(GROUP 1)
HPSC INC.
- - The Company is a specialty finance company engaged primarily in financing
healthcare providers throughout the United States. The largest part of the
Company's revenues has been derived from its financing of healthcare
equipment. Through its subsidiary, ACFC, the Company also provides
asset-based lending to a variety of businesses, principally in the
northeastern United States. ACFC makes asset-based loans of $5 million or
less, primarily secured by accounts receivable, inventory and equipment.
KBK CAPITAL
- - KBK, in operation since 1962, is principally engaged in providing financing
to middle-market businesses through loans secured by accounts receivable,
inventory, equipment, owner-occupied real estate or other assets of the
borrower and through the discounted purchase of accounts receivable.
SOURCE CAPITAL CORP
- - The Company is engaged in the business of lending, primarily through direct
loans to individuals and corporations. Generally, its loans are
collateralized, in whole or in part by real estate or personal property. The
Company's wholly owned subsidiary, Source Capital Leasing Company, is engaged
in the business of providing lease financing for a wide array of equipment
and vehicle contracts. Leases are structured as direct financing contracts
and are generally collateralized through collateral perfection and personal
guarantees. The Company's other wholly owned subsidiary, Source Capital
Finance Inc. is engaged in the business of purchasing accounts receivable
from various manufacturing and wholesale clients on a full recourse, complete
notification basis.
<PAGE> 37
COMPARABLE PUBLIC COMPANY ANALYSIS
(GROUP 2)
FINANCIAL FEDERAL CORP
- - The Company is an independent financial services company engaged in
financing industrial, commercial and professional equipment through
installment sales and leasing programs for manufacturers, dealers and users
of such equipment. The Company also makes capital loans to its customers,
primarily secured by the same types of equipment. The Company provides its
services primarily to middle-market businesses located throughout the nation
in diverse industries, the majority of which businesses have annual sales of
up to $20 million.
FIRST SIERRA FINANCIAL INC.
- - First Sierra Financial, Inc. is a specialized finance company that acquires
and originates, sells and services equipment leases. The underlying leases
financed by the Company relate to a wide range of equipment, including
computers and peripherals, computer software, medical, dental and diagnostic,
telecommunications, office, automotive servicing, hotel security, food
services, tree service and industrial, as well as specialty vehicles. The
equipment generally has a purchase price of less than $250,000, and thus the
Company's leases are commonly referred to as "small ticket leases."
INTERPOOL INC.
- - Interpool, Inc is one of the world's leading lessors of intermodal dry
freight standard containers and is the second largest lessor of intermodal
container chassis in the United States. The Company leases its containers and
chassis to over 200 customers, including nearly all of the world's 20 largest
international container shipping lines. The Company focuses on leasing dry
freight standard containers and container chassis on a long-term basis in
order to achieve high utilization of its equipment and stable and predictable
earnings.
<PAGE> 38
COMPARABLE PUBLIC COMPANY ANALYSIS
(GROUP 2)
LEASING SOLUTIONS INC.
- - Leasing Solutions, Inc. is a full-service global leasing company that
specializes in leasing information processing and communications equipment,
principally to large, creditworthy customers, both U.S. and foreign. The
Company's leasing activities are conducted primarily through vendor programs
and strategic alliances with equipment manufacturers, value-added resellers
and systems integrators.
RESOURCE AMERICA INC.
- - The Company is a specialty finance company engaged primarily in real estate
finance and equipment leasing. For approximately 25 years prior to 1991, the
Company was principally involved in the energy industry and it continues to
have energy industry operations, including natural gas and oil production.
Since 1991, the Company's business strategy has focused on locating and
developing niche finance businesses in which the Company can realize
attractive returns by targeting well-defined financial services markets and
by developing specialized skills to service those markets on a cost-effective
basis. To date, the Company has developed two main businesses: real estate
finance and equipment leasing.
T & W FINANCIAL CORP
- - T&W Financial Corporation is a specialized commercial finance company that
provides equipment financing, principally in the form of leases, to small and
medium-sized businesses. The Company originates leases through direct
relationships with equipment providers that generally offer the Company's
leasing services as a preferred method of financing equipment sales. The
Company also originates leases through referrals from financial institutions
and other lessors. The Company is a "credit lender" and, as such, its
underwriting policies and procedures focus on the creditworthiness of the
lessee rather than the value of the equipment financed. The Company
concentrates on "prime credits," which it defines as lessees that have been
under the same ownership for at least 10 years and have a record of meeting
their financial obligations. The Company focuses on financing equipment with
a purchase price of less than $250,000 ("small ticket" equipment leases) in
various industries.
<PAGE> 39
COMPARABLE PUBLIC COMPANY ANALYSIS
(GROUP 2)
WILLIS LEASE FINANCE CORP
- - Willis Lease Finance Corporation and its subsidiaries is a provider of
operating leases of aircraft equipment and aircraft parts worldwide. The
Company's core business is acquiring and leasing commercial aircraft spare
engines and other aircraft equipment to domestic and international airlines,
manufacturers and overhaul/repair facilities pursuant to operating leases. As
a significant corollary to its core business, the Company through its wholly
owned subsidiary Willis Aeronautical Services, Inc. ("WASI"), acquires engine
parts and other aviation equipment, such as whole engines and aircraft, which
can be dismantled and sold as parts. In addition, the Company engages in the
selective purchase and resale of commercial aircraft engines and engine
components in the aftermarket.
<PAGE> 40
CAPITAL FACTORS HOLDING, INC.
IMPLIED VALUATION MULTIPLES BASED ON COMPARABLE COMPANIES
<TABLE>
<CAPTION>
CURRENT MARKET AND FINANCIAL DATA
------------------------------------------------------------------------------
1999
TRADING CURRENT I/B/E/S LTM 6/30/98 6/30/98
PRICE MARKET EARNINGS EARNINGS BOOK TANG. BOOK
TICKER COMPANY 10/12/98 VALUE ESTIMATES PER SHARE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
ASFN Allstate Financial Corp. $2.88 $6,680 $3.25 -$1.23 $8.71 $8.71
CIT CIT Group Inc. $20.38 $757,260 $2.36 NA $15.84 NA
DVI DVI Inc. $11.88 $167,200 $1.69 $1.03 $12.24 $11.98
FIF Financial Federal Corp. $21.44 $318,190 $1.26 $1.03 $8.30 $8.30
FNV FINOVA Group Inc. $43.75 $2,471,500 $3.32 $2.62 $20.42 NA
FSFH First Sierra Financial Inc. $7.00 $97,680 $0.00 NA $6.50 $4.42
HCFP HealthCare Financial Partners $31.31 $419,750 $1.94 $1.26 $17.62 $17.50
HF Heller Financial Inc. $19.00 $741,390 $2.18 NA $16.53 NA
HPSC HPSC Inc. $7.88 $35,880 NA $0.36 $8.60 $8.60
IPX Interpool Inc. $10.81 $298,080 $1.50 $1.14 $9.64 $9.64
KBK KBK Capital Corp. $9.63 $31,510 NA $0.71 $7.66 $6.54
LSN Leasing Solutions Inc. $16.44 $135,420 $2.37 $1.78 $10.34 NA
REXI Resource America Inc. $8.25 $166,610 $2.67 $1.37 $10.89 $10.33
SOCC Source Capital Corp. $5.38 $7,290 NA $0.53 $9.20 $9.20
TWFC T&W Financial Corp. $8.00 $67,160 $3.45 NA $5.81 $5.37
WLFC Willis Lease Finance Corp. $15.38 $111,890 $1.54 $1.08 $7.93 $7.93
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Dollars in thousands, except per share amounts.
Source: SNL Financial Datasource (unless otherwise noted).
NM - Not Meaningful (P/E's of less than 5x and Price/Book of less than 35%).
ASFN's earnings estimates are from Nelson Information.
FIF's financials are as of 7/31/98 and earnings estimates are for the fiscal
year end 7/31/99.
DVI's and REXI's earnings estimates are for the fiscal year ends 6/30/00 and
9/30/99, respectively.
CIT's market cap does not include 126 million shares of Class B common stock
which is owned by The Dai-Ichi Kangyo Bank, Limited.
HF's market cap does not include 51 million shares of Class B common stock
which is owned by The Fuji Bank, Limited.
2
<PAGE> 41
CAPITAL FACTORS HOLDING, INC.
IMPLIED VALUATION MULTIPLES BASED ON COMPARABLE COMPANIES
<TABLE>
<CAPTION>
MULTIPLES BASED ON THE CURRENT TRADING PRICE
--------------------------------------------------------------------
PRICE/ PRICE/ PRICE/
LTM 1999 PRICE/ TANGIBLE
TICKER COMPANY EARNINGS EARNINGS BOOK BOOK
<S> <C> <C> <C> <C> <C>
ASFN Allstate Financial Corp. NM NM NM NM
CIT CIT Group Inc. NA 8.63x 129% NA
DVI DVI Inc. 11.53x 7.03x 97% 99%
FIF Financial Federal Corp. 20.81x 17.01x 258% 258%
FNV FINOVA Group Inc. 16.70x 13.18x 214% NA
FSFH First Sierra Financial Inc. NA NA 108% 158%
HCFP HealthCare Financial Partners 24.85x 16.14x 178% 179%
HF Heller Financial Inc. NA 8.72x 115% NA
HPSC HPSC Inc. 21.88x NA 92% 92%
IPX Interpool Inc. 9.49x 7.21x 112% 112%
KBK KBK Capital Corp. 13.56x NA 126% 147%
LSN Leasing Solutions Inc. 9.23x 6.94x 159% NA
REXI Resource America Inc. 6.02x NM 76% 80%
SOCC Source Capital Corp. 10.14x NA 58% 58%
TWFC T&W Financial Corp. NA NM 138% 149%
WLFC Willis Lease Finance Corp. 14.24x 9.98x 194% 194%
AVERAGE 14.40x 10.54x 137% 139%
MINIMUM 6.02x 6.94x 58% 58%
MEDIAN 13.56x 8.72x 126% 147%
MAXIMUM 24.85x 17.01x 258% 258%
</TABLE>
Dollars in thousands, except per share amounts.
Source: SNL Financial Datasource (unless otherwise noted).
NM - Not Meaningful (P/E's of less than 5x and Price/Book of less than 35%).
ASFN's earnings estimates are from Nelson Information.
FIF's financials are as of 7/31/98 and earnings estimates are for the fiscal
year end 7/31/99.
DVI's and REXI's earnings estimates are for the fiscal year ends 6/30/00 and
9/30/99, respectively.
CIT's market cap does not include 126 million shares of Class B common stock
which is owned by The Dai-Ichi Kangyo Bank, Limited.
HF's market cap does not include 51 million shares of Class B common stock
which is owned by The Fuji Bank, Limited.
3
<PAGE> 42
LIQUIDITY OF COMPARABLE COMPANIES
GROUP 1
<TABLE>
<CAPTION>
10/12/98 AVERAGE DAILY TRADING VOLUME
STOCK MARKET --------------------------------------------------
TICKER COMPANY PRICE CAPITALIZATION 1 DAY 1 MONTH 6 MONTHS LTM
<S> <C> <C> <C> <C> <C> <C> <C>
ASFN ALLSTATE FINANCIAL CORP/VA $ 2.875 $ 6.681 1,000 9,018 4,817 4,044
CIT CIT GROUP INC $ 20.375 $ 757.260 370,400 252,823 173,983 246,646
DVI DVI INC $ 11.875 $ 167.200 20,800 43,105 38,353 31,166
FNV FINOVA GROUP INC $ 43.750 $ 2,468.900 489,600 245,727 168,941 141,109
HCFP HEALTHCARE FINL PARTNERS INC $ 31.375 $ 420.582 200,700 227,014 220,588 172,959
HF HELLER FINANCIAL INC $ 19.000 $ 741.390 173,300 253,123 443,421 224,340
HPSC HPSC INC $ 7.875 $ 33.721 9,800 12,991 6,836 4,484
KBK KBK CAPITAL CORP $ 9.625 $ 31.512 7,800 3,045 2,727 4,276
SOCC SOURCE CAPITAL CORP A $ 5.375 $ 7.288 200 2,332 2,772 2,769
CAPF CAPITAL FACTORS HLDG INC $ 16.375 $ 201.494 0 5,055 7,380 6,902
----------------------------------------------------------------------------------
AVERAGE 141,511 116,575 118,049 92,422
MEDIAN 20,800 43,105 38,353 31,166
----------------------------------------------------------------------------------
</TABLE>
Source: Factset Data Systems.
Market capitalization is in millions.
Average and median trading volumes do not include CAPF.
CIT's market cap does not include 126 million shares of Class B common stock
which is owned by The Dai-Ichi Kangyo Bank, Limited.
HF's market cap does not include 51 million shares of Class B common stock which
is owned by The Fuji Bank, Limited.
<PAGE> 43
LIQUIDITY OF COMPARABLE COMPANIES
GROUP 2
<TABLE>
<CAPTION>
10/12/98 AVERAGE DAILY TRADING VOLUME
STOCK MARKET ---------------------------------------------
TICKER COMPANY PRICE CAPITALIZATION 1 DAY 1 MONTH 6 MONTHS LTM
<S> <C> <C> <C> <C> <C> <C> <C>
FIF FINANCIAL FEDERAL CORP $ 21.438 $ 318.197 39,700 47,827 51,844 39,017
FSFH FIRST SIERRA FINANCIAL INC $ 7.000 $ 88.697 33,700 125,582 122,773 96,904
IPX INTERPOOL INC $ 10.813 $ 297.949 14,200 37,873 19,305 16,458
LSN LEASING SOLUTIONS INC $ 16.438 $ 135.346 65,800 64,386 37,147 45,229
REXI RESOURCE AMERICA INC $ 8.250 $ 166.592 355,600 930,382 740,712 397,527
TWFC T & W FINANCIAL CORP $ 8.000 $ 67.160 50,900 95,718 36,541 43,751
WLFC WILLIS LEASE FINANCE CORP $ 15.375 $ 111.776 1,600 10,477 20,551 26,868
CAPF CAPITAL FACTORS HLDG INC $ 16.375 $ 201.494 0 5,055 7,380 6,902
-----------------------------------------------------------------------------
AVERAGE 80,214 187,464 146,982 95,108
MEDIAN 39,700 64,386 37,147 43,751
-----------------------------------------------------------------------------
</TABLE>
Source: Factset Data Systems.
Market capitalization is in millions.
Average and median trading volumes do not include CAPF.
<PAGE> 44
CAPITAL FACTORS HOLDING, INC.
DISCOUNTED CASH FLOW ANALYSIS
(Dollars in millions, except per share amounts)
- - DISCOUNTED CASH FLOW ANALYSIS
The following graph examines a range of prices
based on the Company's discounted cash flow over a range of terminal value
multiples and discount rates.
[GRAPH]
PER SHARE DCF ANALYSIS
PRESENT VALUE OF NET INCOME
<TABLE>
<CAPTION>
DISCOUNT
RATE TERMINAL VALUE MULTIPLE
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
12.0X 13.0X 14.0X 15.0X 16.0X
19.00% $15.83 $16.63 $17.44 $18.25 $19.05
20.00% $15.32 $16.09 $16.86 $17.64 $18.41
21.00% $14.83 $15.57 $16.32 $17.06 $17.80
22.00% $14.37 $15.08 $15.79 $16.50 $17.22
23.00% $13.93 $14.61 $15.29 $15.98 $16.66
</TABLE>
Graph: Blue Vertical Line indicates a range of discounted cash flow values over
a range of discount rates from 19% to 23%. The Red Dot represents the discounted
cash flow using a 21% discount rate.
<PAGE> 45
CAPITAL FACTORS HOLDING, INC.
DISCOUNTED CASH FLOW ANALYSIS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
SUMMARY INCOME STATEMENT 1998 1999 2000 2001 2002 2003
- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES $68.98 $73.46 $80.83 $89.57 $96.75
PROVISION FOR CREDIT LOSSES $7.70 $8.34 $9.72 $10.81 $11.76
OPERATING EXPENSES $34.52 $36.94 $41.10 $45.50 $48.82
INCOME TAXES $10.48 $11.03 $11.75 $13.02 $14.16
NET INCOME $16.29 $17.15 $18.26 $20.24 $22.01 $23.94
</TABLE>
* The year 2003 is the terminal year. Net income in the terminal year was
determined based on a 8.75% growth rate which is equivalent to the net income
growth rate from Year 2001 to Year 2002.
TERMINAL VALUE IN YEAR 5 BASED
ON MULTIPLE OF NET INCOME
12.0X 13.0X 14.0X 15.0X 16.0X
$287.23 $311.16 $335.10 $359.03 $382.97
DCF ANALYSIS
PRESENT VALUE OF TERMINAL VALUE
<TABLE>
<CAPTION>
DISCOUNT
RATE TERMINAL VALUE MULTIPLE
- -------- -----------------------
<S> <C> <C> <C> <C> <C>
12.0X 13.0X 14.0X 15.0X 16.0X
19.00% $120.4 $130.4 $140.4 $150.5 $160.5
20.00% $115.4 $125.0 $134.7 $144.3 $153.9
21.00% $110.7 $120.0 $129.2 $138.4 $147.7
22.00% $106.3 $115.1 $124.0 $132.8 $141.7
23.00% $102.0 $110.5 $119.0 $127.5 $136.0
</TABLE>
DCF ANALYSIS
PRESENT VALUE OF NET INCOME
<TABLE>
<CAPTION>
TERMINAL VALUE
DISCOUNT AS A % OF
RATE TERMINAL VALUE MULTIPLE PRESENT VALUE
- -------- ----------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
12.0X 13.0X 14.0X 15.0X 16.0X 12.0X 16.0X
19.00% $197.0 $207.0 $217.0 $227.1 $237.1 61.1% 67.7%
20.00% $190.6 $200.3 $209.9 $219.5 $229.1 60.5% 67.2%
21.00% $184.6 $193.8 $203.0 $212.3 $221.5 60.0% 66.7%
22.00% $178.8 $187.7 $196.5 $205.4 $214.3 59.4% 66.1%
23.00% $173.3 $181.8 $190.3 $198.8 $207.3 58.9% 65.6%
</TABLE>
PER SHARE DCF ANALYSIS
PRESENT VALUE OF NET INCOME (1)
<TABLE>
<CAPTION>
TERMINAL VALUE
DISCOUNT AS A % OF
RATE TERMINAL VALUE MULTIPLE PRESENT VALUE
- -------- ----------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
12.0X 13.0X 14.0X 15.0X 16.0X 12.0X 16.0X
19.00% $15.83 $16.63 $17.44 $18.25 $19.05 61.1% 67.7%
20.00% $15.32 $16.09 $16.86 $17.64 $18.41 60.5% 67.2%
21.00% $14.83 $15.57 $16.32 $17.06 $17.80 60.0% 66.7%
22.00% $14.37 $15.08 $15.79 $16.50 $17.22 59.4% 66.1%
23.00% $13.93 $14.61 $15.29 $15.98 $16.66 58.9% 65.6%
</TABLE>
(1) Based on 12.44 million fully diluted shares outstanding as of June 30, 1998.
1
<PAGE> 46
DISCOUNTED CASH FLOW ANALYSIS
- - Overview: Discounted cash flow analysis is an economic model utilizing a
long-term earnings forecast which is discounted to present value, via the
cost of capital (discount rate), to reflect risk and the time value of
money.
- - The discounted cash flow methodology involves the following steps:
1. In conjunction with management of Capital Factors, preparation
of financial projections through an explicit forecast period,
usually five years. Our financial projections includes the
Company's forecast for 1998 and 1999, and is projected through
the year 2002 based on reasonable assumptions provided by
management.
2. To avoid forecasting year-by-year into perpetuity, a
simplifying assumption is made that the Company is sold for a
multiple of 2003 earnings. The year 2003 earnings were
projected based on the final year of the explicit forecast net
income growing at 8.75% rate.
3. An assumption is made that the Company is sold at the end of
the final year for a multiple of earnings, such value is
referred to as the "terminal value." The middle terminal value
is determined based on the comparable companies median Price/
LTM Earnings.
4. Both the earnings that Capital Factors could generate on a
standalone basis through year 2003 and the terminal value are
discounted to present value using a range of discount rates.
To approximate the discount rate (cost of equity) we used the
Capital Asset Pricing Model which sets the cost of equity
equal to the sum of the risk free rate (estimated from the 10
year Treasury) and the expected return on the market times the
systematic risk associated with the Company's stock (Beta).
<PAGE> 47
CAPITAL FACTORS HOLDING, INC.
THEORITICAL COST OF CAPITAL CALCULATIONS
Cost of Equity k(e)
CAPITAL ASSET PRICING MODEL (CAPM) ======> K(E) = R(F) + B X[R(M) - R(F)]
k(e) = Cost of Equity
R(f) = Risk Free Rate
[R(m) - R(f)] = Expected Return on the Market
in Excess of the Risk Free Rate
B = Beta = Level of Systematic Risk Associated
with the Company's Stock
ASSUMPTIONS
Risk Free Rate R(f) (1) 4.78%
R(m) - R(f) (2) 13.20%
Adjusted Beta 1.26
COST OF EQUITY K(E)
Cost of Equity k(e) 21.38%
(1) Risk Free Rate is equal to the 10 year Treasury on October 12, 1998.
(2) Expected return on the Market is the mean equity risk premium of the
Russell 2000 from 1/1/85 - 8/31/98.
2
<PAGE> 48
CAPITAL FACTORS HOLDING, INC.
THEORITICAL COST OF CAPITAL CALCULATIONS
BETA CALCULATION:
B = Beta = Level of Systematic Risk Associated
with the Company's Stock
<TABLE>
<CAPTION>
COMPARABLE COMPANY GROUP ADJUSTED LTM AVERAGE DAILY
USED FOR BETA CALCULATION: BETA (1) TRADING VOLUME
<S> <C> <C>
C.I.T. Group Inc. 0.86 234,721
Heller Financial Inc. 1.48 210,507
Healthcare Financial Partners 1.34 167,235
FINOVA Group Inc. 1.14 133,412
First Sierra Financial Inc. 1.47 94,344
MEDIAN 1.34 167,235
AVERAGE 1.26 168,044
COMPANIES NOT USED FOR BETA CALCULATION:
Capital Factors Holding Inc. 0.69 6,815
Leasing Solutions Inc. 0.94 42,921
Financial Federal Corp. 1.22 38,805
T&W Financial Corp. 1.55 37,632
DVI Inc. 0.89 29,900
Willis Lease Finance Corp. 1.05 27,000
Interpool Inc. 0.94 16,147
KBK Capital Corp. 0.39 4,306
HPSC Inc. 0.53 4,188
Allstate Financial Corp. 0.81 3,623
Source Capital Corp. 0.75 2,745
MEDIAN (ALL COMPANIES) 0.94 33,766
AVERAGE (ALL COMPANIES) 1.00 65,894
</TABLE>
(1) Adjusted Beta relative to the Russell 2000 Index, as reported by
Bloomberg. The adjusted Beta is an estimate of a security's future Beta.
Adjusted Beta is initially derived from historical data, but modified by the
assumption that a security's true Beta will move towards the market average of
one, over time. The formula used to adjust Beta is: .67 * Raw Beta + .33 *
1.00.
The Russell 2000 index is comprised of the smallest 2000 companies in the
Russell 3000 index, representing approximately 11% of the Russell 3000 total
market capitalization. The Russell 3000 index is composed of 3000 large U.S.
Companies, as determined by market capitalization. The Russell 3000 securities
represents approximately 98% of the investable U.S. equity market. Capital
Factors Holding, Inc. is a member of the Russell 2000 and Russell 3000.
3
<PAGE> 49
CAPITAL FACTORS HOLDINGS, INC.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
2002 2001 2000 1999 1998
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT
FEE AND INTEREST INCOME
Factoring Fees $41,089 $38,527 $36,119 $34,228 $33,151
Interest Income 109,867 98,345 86,460 72,289 66,955
Interest Expense 62,532 55,006 49,777 41,388 39,256
Net Interest Income $47,335 $43,339 $36,684 $30,901 $27,699
Letter of Credit and Other Fees 5,721 5,297 5,351 5,638 5,918
Other Income 2,601 2,408 2,675 2,698 2,215
Operating Revenues $96,745 $89,571 $80,829 $73,464 $68,983
Provision for Credit Losses 11,757 10,808 9,717 8,340 7,698
OPERATING EXPENSES
Salaries and Benefits 31,373 29,001 25,916 23,128 21,745
Occupancy and Other Office Expense 7,640 7,250 6,589 5,928 5,139
Depreciation and Amortization 1,014 1,017 1,020 1,024 1,029
Professional Fees 2,028 1,966 1,867 1,710 1,699
Other Expenses 6,761 6,267 5,710 5,150 4,910
Total Operating Expenses $48,817 $45,501 $41,102 $36,940 $34,521
Income before income Taxes 36,171 33,262 30,010 28,185 26,765
Income Tax Rate 39.1% 39.1% 39.1% 39.1% 39.1%
Income Tax 14,161 13,022 11,749 11,034 10,478
NET INCOME $22,011 $20,240 $18,261 $17,151 $16,286
Factored Sales 5,201,114 4,815,846 4,459,117 4,026,824 3,630,956
Total Funds Employed 1,009,653 911,610 804,385 699,769 608,762
Capital Expenditures 1,000 1,000 1,000 1,000 1,100
Basic Shares Outstanding 12,304.273 12,304.273 12,304.273 12,304.273 12,304.273
Fully Diluted Shares Outstanding 12,444.841 12,444.841 12,444.841 12,444.841 12,444.841
Period End Shares Outstanding 12,304.650 12,304.650 12,304.650 12,304.650 12,304.650
Basic Earnings Per Share $1.79 $1.64 $1.48 $1.39 $1.32
Fully Diluted Earnings Per Share $1.77 $1.63 $1.47 $1.38 $1.31
Book Value Per Share $13.66 $11.88 $10.23 $8.75 $7.35
Tangible Book Value Per Share $13.57 $11.77 $10.11 $8.62 $7.22
Primary EPS Growth Rate 8.75% 10.84% 6.48% 5.31% 39.62%
Fully Diluted EPS Growth Rate 8.75% 10.84% 6.48% 5.31% 41.36%
Book Value Per Share Growth Rate 15.06% 16.08% 16.97% 18.96% 21.96%
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
6/30/98 1997 1996 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT
FEE AND INTEREST INCOME
Factoring Fees $14,741 $30,140 $26,066 $19,519 $17,371
Interest Income 29,482 48,192 35,835 28,211 17,628
Interest Expense 17,299 27,587 20,403 16,361 10,329
Net Interest Income $12,183 $20,605 $15,432 $11,850 $7,299
Letter of Credit and Other Fees 2,330 4,260 3,099 2,040 1,238
Other Income 931 2,099 1,708 1,849 1,541
Operating Revenues $30,185 $57,104 $46,305 $35,258 $27,449
Provision for Credit Losses 2,850 7,250 3,750 2,235 2,235
OPERATING EXPENSES
Salaries and Benefits 10,719 19,142 14,674 11,240 8,699
Occupancy and Other Office Expense 2,450 4,719 3,628 2,588 2,135
Depreciation and Amortization 552 898 656 633 592
Professional Fees 753 1,274 1,006 992 1,181
Other Expenses 2,323 4,220 3,550 3,005 1,530
Total Operating Expenses $16,797 $30,253 $23,516 $18,457 $14,137
Income before income Taxes 10,538 19,601 19,039 14,566 11,077
Income Tax Rate 38.9% 40.5% 41.6% 40.3% 45.0%
Income Tax 4,096 7,939 7,924 5,873 4,984
NET INCOME $6,442 $11,662 $11,115 $8,693 $6,092
Factored Sales 1,644,100 3,252,686 2,651,442 2,001,364 1,536,960
Total Funds Employed 503,327 466,042 299,489 232,628 169,684
Capital Expenditures
Basic Shares Outstanding 12,304.273 12,301.315 11,044.809 10,000.000 10,000.000
Fully Diluted Shares Outstanding 12,444.841 12,596.270 11,150.843 10,000.000 10,000.000
Period End Shares Outstanding 12,304.650 12,303.950 12,300.000 10,000.000 10,000.000
Basic Earnings Per Share $0.52 $0.95 $1.01 $0.87 $0.61
Fully Diluted Earnings Per Share $0.52 $0.93 $1.00 $0.87 $0.61
Book Value Per Share $6.55 $6.03 $5.05 $3.33 $2.46
Tangible Book Value Per Share $6.41
Primary EPS Growth Rate 11.36% -5.80% 15.77% 42.69%
Fully Diluted EPS Growth Rate 12.75% -7.12% 14.66% 42.69%
Book Value Per Share Growth Rate 8.68% 19.44% 51.40% 35.27%
</TABLE>
1
<PAGE> 50
CAPITAL FACTORS HOLDING, INC.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
ASSETS
Cash $53,831 $51,106 $48,518 $46,061 $43,729
Restricted Cash 17,500 17,500 17,500 17,500 17,500
Nonrecourse Receivables 548,199 507,591 469,992 435,178 402,942
Recourse Receivables 213,188 197,397 182,775 169,236 156,700
Factored Accounts Receivables 761,387 704,988 652,767 604,414 559,642
Loans to Factoring Clients 94,818 87,795 81,291 75,270 69,694
Factored Receivables and Loans to
Factoring Clt. 856,205 792,783 734,058 679,683 629,336
Asset Based Loans 496,072 436,072 364,072 292,072 220,072
Total Receivables 1,352,277 1,228,855 1,098,130 971,755 849,409
Less: Allowance for Losses 11,795 10,665 9,439 8,244 7,080
Less: Unearned Discount Fees 8,819 8,166 7,561 7,001 6,482
Net Finance Receivables $1,331,663 $1,210,024 $1,081,131 $956,510 $835,847
Property and equipment, net 4,469 4,483 4,499 4,519 4,543
Intangible Assets 1,200 1,320 1,440 1,560 1,680
Other Assets 7,397 7,009 6,595 6,352 6,428
TOTAL ASSETS $1,416,061 $1,291,441 $1,159,683 $1,032,503 $909,727
LIABILITIES
Due to Affiliates $715 $715 $715 $715 $715
Capital Factors Variable Rate Asset
Backed Cert 100,000 100,000 150,000 275,000 275,000
Note Payable to Affiliate 300,000 300,000 300,000 282,849 208,922
Note Payable to Unaffiliated Bank 75,000 75,000 75,000 75,000 75,000
Subordinated Notes 0 0 2,857 10,000 10,000
Incremental Borrowing Facility 419,091 342,266 201,778 0 0
Due To Factoring Clients 342,624 317,245 293,745 271,986 240,646
Other Liabilities 10,493 10,089 9,701 9,328 8,969
TOTAL LIABILITIES $1,247,924 $1,145,315 $1,033,797 $924,879 $819,253
Common Equity 168,137 146,126 125,886 107,624 90,474
TOTAL LIABILITIES AND EQUITY $1,416,061 $1,291,441 $1,159,683 $1,032,503 $909,727
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
6/30/98 1997 1996 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
ASSETS
Cash $39,804 $41,254 $28,101 $20,327 $15,447
Restricted Cash 9,375 10,134 6,563 16,188 4,688
Nonrecourse Receivables 361,626 326,642 269,813 226,917 188,699
Recourse Receivables 122,835 201,322 157,178 69,559 37,787
Factored Accounts Receivables 484,462 527,964 426,991 296,476 226,485
Loans to Factoring Clients 60,332 54,029 27,967 26,415 23,431
Factored Receivables and Loans to
Factoring Clt. 544,793 581,993 454,958 322,891 249,917
Asset Based Loans 160,072 118,793 36,020 38,315 10,474
Total Receivables 704,866 700,787 490,978 361,206 260,390
Less: Allowance for Losses 6,192 6,125 2,994 2,981 1,774
Less: Unearned Discount Fees 2,862 2,927 2,436 3,404 2,781
Net Finance Receivables $695,812 $691,734 $485,548 $354,821 $255,835
Property and equipment, net 4,321 4,471 3,095 3,285 3,026
Intangible Assets 1,800
Other Assets 7,430 8,983 7,261 4,851 3,884
TOTAL ASSETS $758,542 $756,577 $530,567 $399,471 $282,880
LIABILITIES
Due to Affiliates $715 $146 $1,310 $6,453 $4,836
Capital Factors Variable Rate Asset
Backed Cert 253,740 275,000 175,000 175,000 125,000
Note Payable to Affiliate 129,411 111,754 70,131 52,260 34,540
Note Payable to Unaffiliated Bank 73,800 43,600 15,900 0 0
Subordinated Notes 10,000 10,000 10,000 0 0
Incremental Borrowing Facility
Due To Factoring Clients 201,538 234,745 191,489 128,578 90,707
Other Liabilities 8,708 7,151 4,649 3,840 3,150
TOTAL LIABILITIES $677,913 $682,395 $468,479 $366,131 $258,233
Common Equity 80,629 74,182 62,088 33,340 24,647
TOTAL LIABILITIES AND EQUITY $758,542 $756,577 $530,567 $399,471 $282,880
</TABLE>
2
<PAGE> 51
CAPITAL FACTORS HOLDING, INC.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
2002 2001 2000 1999 1998
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET
Average Cash and Restricted Cash $69,968 $67,312 $64,790 $61,646 $59,210
Average Assets 1,353,751 1,225,562 1,096,093 931,689 878,309
Average Fact Recv and Loans to Fact Clients 824,494 763,420 706,871 638,342 619,624
Average Asset Based Loans 466,072 400,072 328,072 232,951 199,295
Average Total Receivables 1,290,566 1,163,492 1,034,943 871,294 818,920
Average Funds Employed 907,019 805,690 706,574 625,042 579,484
Average Capital Factors Var Rate Asset Backed Cert 100,000 104,167 162,500 275,000 275,000
Average Note Payable to Affiliate 300,000 300,000 291,424 219,944 196,131
Average Payable to Unaffiliated Bank 75,000 75,000 75,000 75,000 70,867
Average Subordinated Notes 0 238 3,571 10,000 10,000
Average Incremental Borrowing Facility 380,679 272,022 150,889 0 0
Average Due to Clients 329,934 305,495 282,866 245,319 239,869
Average Common Equity 157,131 136,006 116,755 93,031 88,329
INTEREST INCOME AND EXPENSE
Net Yield on Cash 5.00%
Net Yield on Factoring 11.00%
Net Yield on Asset Based Loans 11.15%
Capital Factors Variable Rate Asset Backed Cert 6.67%
All Incremental from Affiliate 7.75%
Existing Fleet Facility 6.94%
Subordinated Note 7.95%
Incremental Borrowing Facility 7.20%
Interest Income from Cash $3,498 $3,366 $3,239 $3,082 $2,961
Interest Income from Factoring 54,402 50,372 46,641 43,233 41,773
Interest Income from Asset Based Loans 51,967 44,608 36,580 25,974 22,221
Interest Expense from Variable Rate Asset Backed Cert 6,670 6,948 10,839 18,343 18,343
Interest Expense from Note Payable to Affiliate 23,250 23,250 22,585 17,046 15,200
Interest Expense from Note Payable to Unaffiliated Bank 5,205 5,205 5,205 5,205 4,918
Interest Expense from Subordinated notes 0 19 284 795 795
Interest Expense from Incremental Borrowing Facility 27,407 19,585 10,863 0 0
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
6/30/98 1997 1996 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET
Average Cash and Restricted Cash
Average Assets 751,870 632,976 470,183 341,176
Average Fact Recv and Loans to Fact Clients
Average Asset Based Loans
Average Total Receivables 681,630 591,328 438,815 312,124 241,815
Average Funds Employed 483,100 391,000 286,200 210,900 153,600
Average Capital Factors Var Rate Asset Backed Cert
Average Note Payable to Affiliate
Average Payable to Unaffiliated Bank
Average Subordinated Notes
Average Incremental Borrowing Facility
Average Due to Clients
Average Common Equity 77,502 67,904 46,287 28,994 21,601
INTEREST INCOME AND EXPENSE
Net Yield on Cash
Net Yield on Factoring
Net Yield on Asset Based Loans
Capital Factors Variable Rate Asset Backed Cert
All Incremental from Affiliate
Existing Fleet Facility
Subordinated Note
Incremental Borrowing Facility
Interest Income from Cash
Interest Income from Factoring
Interest Income from Asset Based Loans
Interest Expense from Variable Rate Asset Backed Cert
Interest Expense from Note Payable to Affiliate
Interest Expense from Note Payable to Unaffiliated Bank
Interest Expense from Subordinated notes
Interest Expense from Incremental Borrowing Facility
</TABLE>
3
<PAGE> 52
CAPITAL FACTORS HOLDING, INC.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
2002 2001 2000 1999 1998
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEY RATIOS
ROAA 1.63% 1.65% 1.67% 1.84% 1.85%
ROACE 14.01% 14.88% 15.64% 18.44% 18.44%
GROWTH RATES
Factored Sales Volume 8.00% 8.00% 10.74% 10.90% 11.63%
Factored Accounts Receivables 8.00% 8.00% 8.00% 8.00% 6.00%
Loans to Factoring Clients 8.00% 8.00% 8.00% 8.00% 28.99%
Asset Based Loans 13.76% 19.78% 24.65% 32.72% 85.26%
Total Receivables 10.04% 11.90% 13.00% 14.40% 21.21%
Total Assets 9.65% 11.36% 12.32% 13.50% 20.24%
INCOME STATEMENT
Factoring Fees / Factored Sales 0.79% 0.80% 0.81% 0.85% 0.91%
Net Interest Income / Factored Sales 0.91% 0.90% 0.82% 0.77% 0.76%
Net Interest Income / Average Funds Employed 5.22% 5.38% 5.19% 4.94% 4.78%
Letter of Credit / Factored Sales 0.11% 0.11% 0.12% 0.14% 0.16%
Other Income / Factored Sales 0.05% 0.05% 0.06% 0.07% 0.06%
Operating Revenues / Factored Sales 1.86% 1.86% 1.81% 1.82% 1.90%
Salaries and Benefits / Total Receivables 2.32% 2.36% 2.36% 2.38% 2.56%
Occupancy and Other Exp / Total Receivables 0.57% 0.59% 0.60% 0.61% 0.61%
Professional Fees / Total Receivables 0.15% 0.16% 0.17% 0.18% 0.20%
Other Expense / Total Receivables 0.50% 0.51% 0.52% 0.53% 0.58%
Operating Expense / Factored Sales 0.94% 0.94% 0.92% 0.92% 0.95%
Total Expense / Factored Sales 1.16% 1.17% 1.14% 1.12% 1.16%
Income Before Income Taxes / Factored Sales 0.70% 0.69% 0.67% 0.70% 0.74%
Accounts Receivable Turnover in Days 58 58 58 58 62
BALANCE SHEET
Nonrecourse Receivables / Factored Accts Receivables 72.00% 72.00% 72.00% 72.00% 72.00%
Recourse Receivables / Factored Accts Receivables 28.00% 28.00% 28.00% 28.00% 28.00%
Loans to Factoring Clients / Factored Accts Receivables 12.45% 12.45% 12.45% 12.45% 12.45%
Asset Based Loans Net Growth Per Month $5,000 $6,000 $6,000 $6,000 $10,000
Allowance for Losses on Nonrecourse Loans 1.00% 1.00% 1.00% 1.00% 1.00%
Allowance for Losses on Asset Based Loans 1.00% 1.00% 1.00% 1.00% 1.00%
Allowance for Losses on Non Accruing Receivables 50.00% 50.00% 50.00% 50.00% 50.00%
Unearned Discount Fees / Fact. Recv. and Loans to
Factoring Clients 1.03% 1.03% 1.03% 1.03% 1.03%
Due to Factoring Clients / Factored Receivables 45.00% 45.00% 45.00% 45.00% 43.00%
Debt / Equity 531.76% 559.29% 579.60% 597.31% 628.83%
Common Equity / Total Assets 11.87% 11.31% 10.86% 10.42% 9.95%
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
6/30/98 1997 1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEY RATIOS
ROAA 1.73% 1.84% 2.36% 2.71% 2.35%
ROACE 16.76% 17.17% 24.01% 30.20% 28.80%
GROWTH RATES
Factored Sales Volume 1.93% 22.68% 32.48% 30.22%
Factored Accounts Receivables -15.80% 23.65% 44.02% 30.90%
Loans to Factoring Clients 24.69% 93.19% 5.87% 12.73%
Asset Based Loans 81.57% 229.80% -5.99% 265.83%
Total Receivables 1.17% 42.73% 35.93% 38.72%
Total Assets 0.52% 42.60% 32.82% 41.22%
INCOME STATEMENT
Factoring Fees / Factored Sales 0.90% 0.93% 0.98% 0.98% 1.13%
Net Interest Income / Factored Sales 0.74% 0.63% 0.58% 0.59% 0.47%
Net Interest Income / Average Funds Employed 5.09% 5.27% 5.39% 5.62% 4.75%
Letter of Credit / Factored Sales 0.14% 0.13% 0.12% 0.10% 0.08%
Other Income / Factored Sales 0.06% 0.06% 0.06% 0.09% 0.10%
Operating Revenues / Factored Sales 1.84% 1.76% 1.75% 1.76% 1.79%
Salaries and Benefits / Total Receivables 3.07% 2.73% 2.99% 3.11% 3.34%
Occupancy and Other Exp / Total Receivables 0.70% 0.67% 0.74% 0.72% 0.82%
Professional Fees / Total Receivables 0.22% 0.18% 0.20% 0.27% 0.45%
Other Expense / Total Receivables 0.66% 0.60% 0.72% 0.83% 0.59%
Operating Expense / Factored Sales 1.02% 0.93% 0.89% 0.92% 0.92%
Total Expense / Factored Sales 1.20% 1.15% 1.03% 1.03% 1.07%
Income Before Income Taxes / Factored Sales 0.64% 0.60% 0.72% 0.73% 0.72%
Accounts Receivable Turnover in Days 55 55 52 53 53
BALANCE SHEET
Nonrecourse Receivables / Factored Accts Receivables 74.64% 61.87% 63.19% 76.54% 83.32%
Recourse Receivables / Factored Accts Receivables 25.36% 38.13% 36.81% 23.46% 16.68%
Loans to Factoring Clients / Factored Accts Receivables 12.45% 10.23% 6.55% 8.91% 10.35%
Asset Based Loans Net Growth Per Month
Allowance for Losses on Nonrecourse Loans
Allowance for Losses on Asset Based Loans
Allowance for Losses on Non Accruing Receivables
Unearned Discount Fees / Fact. Recv. and Loans to
Factoring Clients 0.53% 0.50% 0.54% 1.05% 1.11%
Due to Factoring Clients / Factored Receivables 41.60% 44.46% 44.85% 43.37% 40.05%
Debt / Equity 579.14% 593.62% 436.52% 681.64% 647.29%
Common Equity / Total Assets 10.63% 9.80% 11.70% 8.35% 8.71%
</TABLE>
4
<PAGE> 53
CAPITAL FACTORS HOLDING, INC.
<TABLE>
<CAPTION>
------------------------------------------------------------------
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
2002 2001 2000 1999 1998
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSET QUALITY
Beginning Reserve for Credit Loss $10,665 $9,439 $8,244 $7,080 $6,125
Provision for Credit Losses 11,757 10,808 9,717 8,340 7,698
Charge offs Net of Recoveries 10,628 9,581 8,523 7,175 6,744
Other Net Additions 0 0 0 0 0
Ending Reserve for Credit Losses $11,795 $10,665 $9,439 $8,244 $7,080
Non Accruing Receivables $2,705 $2,458 $2,196 $1,944 $1,699
ASSET QUALITY RATIOS
Net Charge Offs / Factored Sales 0.20% 0.20% 0.19% 0.18% 0.19%
Net Charge Offs / Average Receivables 0.82% 0.82% 0.82% 0.82% 0.82%
Net Charge Offs / Average Funds Employed 1.17% 1.19% 1.21% 1.15% 1.16%
Provision for Credit Loss / Factored Sales 0.23% 0.22% 0.22% 0.21% 0.21%
Provision for Credit Loss / Average Receivables 0.91% 0.93% 0.94% 0.96% 0.94%
Provision for Credit Loss / Average Funds Employed 1.30% 1.34% 1.38% 1.33% 1.33%
Non accruing Advances / Total Receivables 0.20% 0.20% 0.20% 0.20% 0.20%
Non accruing Advances / Total Funds Employed 0.27% 0.27% 0.27% 0.28% 0.28%
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
6/30/98 1997 1996 1995 1994
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSET QUALITY
Beginning Reserve for Credit Loss $6,125 $2,994 $2,981 $1,774 $2,157
Provision for Credit Losses 2,850 7,250 3,750 2,235 2,235
Charge offs Net of Recoveries 2,783 4,118 3,837 1,028 2,618
Other Net Additions 0 0 100 (0) 0
Ending Reserve for Credit Losses $6,192 $6,125 $2,994 $2,981 $1,774
Non Accruing Receivables $1,464 $430 $660 $2,184 $739
ASSET QUALITY RATIOS
Net Charge Offs / Factored Sales 0.17% 0.13% 0.14% 0.05% 0.17%
Net Charge Offs / Average Receivables 0.82% 0.70% 0.87% 0.33% 1.08%
Net Charge Offs / Average Funds Employed 1.16% 1.05% 1.34% 0.49% 1.70%
Provision for Credit Loss / Factored Sales 0.17% 0.22% 0.14% 0.11% 0.15%
Provision for Credit Loss / Average Receivables 0.84% 1.23% 0.85% 0.72% 0.92%
Non accruing Advances / Total Receivables 1.19% 1.85% 1.31% 1.06% 1.46%
Provision for Credit Loss / Average Funds Employed 0.21% 0.06% 0.13% 0.60% 0.28%
Non accruing Advances / Total Funds Employed 0.29% 0.09% 0.22% 0.94% 0.44%
</TABLE>
5
<PAGE> 54
TABLE 1 - CALCULATON OF DEFERRED ISSUANCE COSTS BY YEAR FOR EXISTING VARIABLE
RATE ABS
<TABLE>
<CAPTION>
SERIES. . . . . . . . . . . . . . . . . . . . . 1 2 3 4
-------------------------------------------------
DATE ISSUED . . . . . . . . . . . . . . . . . . 6/29/94 12/15/94 7/28/95 4/30/97
AMOUNT ISSUED (000'S) . . . . . . . . . . . . . $100,000 $25,000 $50,000 $100,000
DEFERRED ISSUANCE COST (RATE) . . . . . . . . . 1.50% 1.50% 1.50% 1.25% TOTAL
DEFERRED ISSUANCE COST (000'S). . . . . . . . . $1,500 $375 $750 $1,250 DEFERRED
AMOUNT AMORTIZED (STRAIGHT LINE). . . . . . . . $273 $68 $136 $174 ISSUANCE
YEARS TO MATURITY . . . . . . . . . . . . . . . 5.5 5.5 5.5 7.17 COST
<S> <C> <C> <C> <C> <C> <C>
12/31/94 $1,363.64 $375.00 $1,738.64
12/31/95 $1,090.91 $306.82 $693.18 $2,090.91
12/31/96 $818.18 $238.64 $556.82 $1,613.64
12/31/97 $545.45 $170.45 $420.45 $1,133.72 $2,270.08
12/31/98 $272.73 $102.27 $284.09 $959.30 $1,618.39
12/31/99 $0.00 $34.09 $147.73 $784.88 $966.70
6/30/00 $0.00
12/31/00 $11.36 $610.47 $621.83
1/31/01 ($0.00)
12/31/01 $436.05 $436.05
12/31/02 $261.63 $261.63
12/31/03 $87.21 $87.21
6/30/04 $0.00 $0.00
</TABLE>
Dollars in thousands. 1
<PAGE> 55
TABLE 2 - CALCULATION OF AVERAGE BALANCE FOR EXISTING VARIABLE RATE ABS
<TABLE>
<CAPTION>
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
OUTSTANDING BALANCE 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 12/31/97
<S> <C> <C> <C> <C> <C> <C>
SERIES 1 0 0 0 100,000 $100,000 $100,000
SERIES 2 0 0 0 $ 25,000 $ 25,000 $ 25,000
SERIES 3 0 0 $ 50,000 $ 50,000 $ 50,000 $ 50,000
SERIES 4 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
TOTAL $100,000 $100,000 $150,000 $275,000 $275,000 $275,000
AVERAGE BALANCE
SERIES 1 $ 0 $ 0 $ 0 $100,000 $100,000
SERIES 2 $ 0 $ 0 $ 12,500 $ 25,000 $ 25,000
SERIES 3 $ 0 $ 4,167 $ 50,000 $ 50,000 $ 50,000
SERIES 4 $100,000 $100,000 $100,000 $100,000 $100,000
TOTAL $100,000 $104,167 $162,500 $275,000 $275,000
</TABLE>
<TABLE>
<CAPTION>
SERIES 1 SERIES 2 SERIES 3 SERIES 4
YEAR OF MATURITY . . . . . . . . . . . DEC-99 JUN-00 JAN-01 JUN-04
<S> <C> <C> <C> <C>
JANUARY $100,000 $ 25,000 $ 50,000 $100,000
FEBRUARY 100,000 25,000 0 100,000
MARCH 100,000 25,000 0 100,000
APRIL 100,000 25,000 0 100,000
AVERAGE BALANCE MAY 100,000 25,000 0 100,000
IN YEAR OF MATURITY JUNE 100,000 25,000 0 100,000
JULY 100,000 0 0 0
AUGUST 100,000 0 0 0
SEPTEMBER 100,000 0 0 0
OCTOBER 100,000 0 0 0
NOVEMBER 100,000 0 0 0
DECEMBER 100,000 0 0 0
Average $100,000 $ 12,500 $ 4,167 $ 50,000
</TABLE>
Dollars in thousands.
2
<PAGE> 56
TABLE 3 (a) - CALCULATION OF OUTSTANDING BALANCE FOR SUBORDINATED NOTES
SUBORDINATED NOTES
The 7.95% Subordinated Notes were issued in connection with Capital Factors
Securitized Financings. Interest is payable monthly and the loan is due in July
2001. We assume that the Subordinated Notes will reduce porportionally with the
total of the first 3 series of Asset Backed Certificates.
VARIABLE RATE ASSET BACKED CERTIFICATES
<TABLE>
<CAPTION>
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
OUTSTANDING BALANCE 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SERIES 1 0 0 0 100,000 $100,000 $100,000
SERIES 2 0 0 0 $ 25,000 $ 25,000 $ 25,000
SERIES 3 0 0 $ 50,000 $ 50,000 $ 50,000 $ 50,000
TOTAL $ 0 $ 0 $ 50,000 $175,000 $175,000 $175,000
SUBORDINATED NOTES
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
OUTSTANDING BALANCE 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TOTAL $ 0 $ 0 $ 2,857 $ 10,000 $ 10,000 $ 10,000
</TABLE>
<TABLE>
<CAPTION>
SERIES 1 SERIES 2 SERIES 3 SUBORDINATED
YEAR OF MATURITY . . . . . . . . . . . DEC-99 JUN-00 JAN-01 TOTAL NOTES
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
DEC-99 $100,000 $ 25,000 $ 50,000 $175,000 $ 10,000
JAN-00 25,000 $ 50,000 $ 75,000 $ 4,286
FEB-00 25,000 $ 50,000 $ 75,000 $ 4,286
MAR-00 25,000 $ 50,000 $ 75,000 $ 4,286
APR-00 25,000 $ 50,000 $ 75,000 $ 4,286
OUTSTANDING BALANCE MAY-00 25,000 $ 50,000 $ 75,000 $ 4,286
JUN-00 25,000 $ 50,000 $ 75,000 $ 4,286
JUL-00 $ 50,000 $ 50,000 $ 2,857
AUG-00 $ 50,000 $ 50,000 $ 2,857
SEP-00 $ 50,000 $ 50,000 $ 2,857
OCT-00 $ 50,000 $ 50,000 $ 2,857
NOV-00 $ 50,000 $ 50,000 $ 2,857
DEC-00 $ 50,000 $ 50,000 $ 2,857
JAN-01 $ 50,000 $ 50,000 $ 2,857
</TABLE>
Dollars in thousands
3
<PAGE> 57
TABLE 3 (a) - CALCULATION OF AVERAGE BALANCE FOR SUBORDINATED NOTES
SUBORDINATED NOTES
<TABLE>
<CAPTION>
ESTIMATED FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
AVERAGE BALANCE 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
TOTAL $ 0 $ 238 $ 3,571 $10,000 $10,000
</TABLE>
<TABLE>
2000 2001
------- -------
<S> <C> <C>
JANUARY $4,286 $2,857
FEBRUARY $4,286 $ 0
MARCH $4,286 $ 0
APRIL $4,286 $ 0
AVERAGE BALANCE MAY $4,286 $ 0
JUNE $4,286 $ 0
JULY $2,857 $ 0
AUGUST $2,857 $ 0
SEPTEMBER $2,857 $ 0
OCTOBER $2,857 $ 0
NOVEMBER $2,857 $ 0
DECEMBER $2,857 $ 0
Average $3,571 $ 238
</TABLE>
Dollars in thousands.
4
<PAGE> 58
CAPITAL FACTORS HOLDINGS, INC.
IMPLIED VALUATION MULTIPLES BASED ON SELECTED MERGER TRANSACTIONS
- COMPARABLE TRANSACTION ANALYSIS
The following graph examines a range of prices based on 33
selected finance company merger transactions which have been
publicly announced since January 1, 1995.
[GRAPH]
<TABLE>
<CAPTION>
IMPLIED PER SHARE VALUATION BASED ON
MULTIPLES OF COMPARABLE TRANSACTIONS
MEDIAN PREMIUM(1)
------ ----------
<S> <C> <C> <C>
Price / Book $15.62 238% (3.9%)
Price / LTM EPS $17.63 17.46x 8.5%
</TABLE>
(1) Implied per share premium (or discount) to current market price of $16.250
on 10/12/98.
1
<PAGE> 59
COMPARABLE TRANSACTION ANALYSIS
- The merger and acquisition methodology involves the following steps:
1. Selection of a group of recent merger and acquisition transactions
involving comparable selling companies. The list of 33 selected
transactions includes factoring and asset based finance companies
with publicly announced deal values since January 1, 1995. It also
includes specialty finance companies with transaction values between
$100 million and $500 million. Of the transactions with publicly
announced deal values, certain transactions did not have adequate
disclosure to calculate all transaction multiples. In addition to
this list, there were an additional 9 factoring companies that did
not have a publicly announced transaction value.
2. Determination of median transaction values for relevant valuation
statistics for the selected merger and acquisition transactions,
including:
Price to Book Price to LTM Earnings
3. Applying the merger and acquisition median values determined to
Capital Factors book value and latest twelve month earnings in order
to imply acquisition values for the Company based on the valuation
statistics above.
<PAGE> 60
SELECTED FINANCE COMPANY M&A TRANSACTIONS
JANUARY 1, 1995 - SEPTEMBER 29, 1998
SELECTED FINANCE COMPANY MERGER TRANSACTIONS WITH PUBLICLY ANNOUNCED DEAL
VALUES.
<TABLE>
<CAPTION>
BUYER STATE SELLER STATE ENTITY SOLD
----- ----- ------ ----- -----------
<S> <C> <C> <C> <C>
1 Greater Bay Bancorp CA Pacific Business Funding Corp. CA Pacific Business Funding Corp.
2 SJNB Financial Corp. CA Epic Funding Corp. CA Epic Funding Corp.
3 Walnut Financial Services VA Pacific Financial Services Corp. WA Pacific Financial Services Corp.
4 BB&T Corp. NC Phillips Industries Inc. NC Phillips Factors Corp.
5 Bay View Capital Corp. CA EXXE Data Corp. CA EXXE Data Corp.
6 Capital Bancorp FL TempFunds America, Inc. SC TempFunds America Inc.
7 Norwest Corp. MN National Business Finance Inc. CO National Business Finance Inc.
8 FINOVA Group, Inc. AZ The LINC Group Inc. IL LINC Financial Services Inc.
9 Surety Capital Corporation TX Providers Funding Corp. TX Providers Funding Corp.
10 Imperial Credit Industries Inc. CA Coast Savings Financial CA CoastFed Business Credit Corporation
1 First Sierra Financial Inc. TX Booker Montague Leasing Ltd. FO Booker Montague Leasing Ltd.
2 General Electric Co. CT Metropolitan Life Insurance Co. NY MetLife Capital Corp.
3 Cowlitz Bancorp. WA Business Finance Corp. WA Business Finance Corp.
4 PNC Bank Corp. PA Bank of Tokyo-Mitsubishi Ltd. FO Asset-based finance business
5 Newcourt Credit Group Inc. FO Nomura International PLC FO AT&T Capital Corp.
6 BankBoston Corp. MA Gordon Brothers MA GBFC Inc.
7 The Nomura Securities Co. Ltd. FO AT&T Capital Corp. NJ AT&T Capital Corp.
8 SJNB Financial Corp. CA Astra Financial Inc. CA Astra Financial Inc.
9 Norwest Corp. MN LFC Financial Corp PA Beacon Business Credit Corp.
10 First Capital Corp. OK Sterling West Bancorp CA Sterling Business Credit Inc.
11 Norwest Corp. MN Foothill Group, Inc. CA Foothill Group, Inc.
1 General Electric Company CT Nissan Motor Company Ltd. FO Nissan Finance Corp. Ltd.
2 Firstar Corporation WI Cargill Inc. MN Cargill Leasing Corp.
3 UniCapital Corp. FL Jacom Computer Services Inc. NJ Jacom Computer Services Inc.
4 Fidelity National Financial Inc. CA Granite Financial Inc. CO Granite Financial Inc.
5 Imperial Credit Industries Inc. CA PrinCap Mortgage Warehouse Inc. NJ PrinCap Mortgage Warehouse Inc.
6 General Electric Capital Corp. CT TLS Plc FO TLS Plc
7 Cypress Group/Keystone Inc. NY Odyssey Partners NY 90% of Scotsman Holdings Inc.
8 TCF Financial Corp. MN Winthrop Resources Corp. MN Winthrop Resources Corp.
9 Transamerica Corp. CA Trans Ocean Ltd. CA Trans Ocean Ltd.
10 AT&T Capital Corporation NJ Municipal Financial Corporation FO Municipal Leasing
11 Newcourt Credit Group Inc. FO Pitney Bowes Inc. CT Custom Vendor Finance
12 Leasetec Corp. CO Storage Technology Corp. CO StorageTek Financial Services
</TABLE>
<TABLE>
<CAPTION>
ANNOUNCE
BUYER SALE DESCRIPTION DATE
----- ---------------- --------
<S> <C> <C>
1 Greater Bay Bancorp Factoring and asset-based lender 8/4/98
2 SJNB Financial Corp. Provider of direct & vendor lease programs, accounts receivables financing 4/13/98
3 Walnut Financial Services Accounts receivable factoring services 1/28/98
4 BB&T Corp. A/R Factor: textiles, furniture, home furnishing 2/4/97
5 Bay View Capital Corp. Commercial factor, asset-based lender 1/23/97
6 Capital Bancorp Commercial factor 8/12/96
7 Norwest Corp. Commercial factor 8/12/96
8 FINOVA Group, Inc. Medical accounts receivable factor 4/24/96
9 Surety Capital Corporation Medical accounts receivable factor 3/15/96
10 Imperial Credit Industries Inc. Provides A/R lines of credit to Calif. businesses 9/19/95
1 First Sierra Financial Inc. Equipment financier and lessor 8/19/98
2 General Electric Co. Equipment financier and lessor 8/14/98
3 Cowlitz Bancorp. Asset-based financier 8/11/98
4 PNC Bank Corp. Commercial asset-based finance business 4/15/98
5 Newcourt Credit Group Inc. Commercial equipment lessor / financier 11/17/97
6 BankBoston Corp. Asset-based lender 10/15/96
7 The Nomura Securities Co. Ltd. Commercial equipment lessor / financier 6/6/96
8 SJNB Financial Corp. Asset-based commercial finance and factoring co. 11/16/95
9 Norwest Corp. Asset-based lender to small/mid-sized mftrs/whole. 9/27/95
10 First Capital Corp. Asset-Based lender, small manuftrs. & wholesalers 8/14/95
11 Norwest Corp. Asset-based commercial lender and money manager 5/15/95
1 General Electric Company Australian dealer autofinance operations 9/28/98
2 Firstar Corporation equipment lessor 6/4/98
3 UniCapital Corp. computer and telecommunications equipment lessor 2/14/98
4 Fidelity National Financial Inc. business equipment lessor 11/17/97
5 Imperial Credit Industries Inc. warehouse lender to mortgage brokers 10/2/97
6 General Electric Capital Corp. car, commercial & civil engineering vehicle lessor 6/27/97
7 Cypress Group/Keystone Inc. lessor of mobile office units 4/14/97
8 TCF Financial Corp. computer, telecommunications and equipment lessor 2/14/97
9 Transamerica Corp. container leasing company 7/25/96
10 AT&T Capital Corporation office equipment and automobile lessor 6/12/96
11 Newcourt Credit Group Inc. vendor financier 6/12/96
12 Leasetec Corp. computer storage leasing (hard drives, etc.) 2/9/96
</TABLE>
<TABLE>
<CAPTION>
STATUS
BUYER STATUS DATE
----- ------ -------
<S> <C> <C>
1 Greater Bay Bancorp Pending NA
2 SJNB Financial Corp. Completed 5/22/98
3 Walnut Financial Services Completed 1/30/98
4 BB&T Corp. Completed 5/20/97
5 Bay View Capital Corp. Completed 3/17/97
6 Capital Bancorp Completed 8/12/96
7 Norwest Corp. Completed 9/30/96
8 FINOVA Group, Inc. Completed 5/9/96
9 Surety Capital Corporation Completed 3/15/96
10 Imperial Credit Industries Inc. Completed 9/30/95
1 First Sierra Financial Inc. Completed 8/19/98
2 General Electric Co. Completed 8/14/98
3 Cowlitz Bancorp. Completed 9/1/98
4 PNC Bank Corp. Completed 4/15/98
5 Newcourt Credit Group Inc. Completed 1/12/98
6 BankBoston Corp. Completed 10/15/96
7 The Nomura Securities Co. Ltd. Completed 10/1/96
8 SJNB Financial Corp. Completed 1/2/96
9 Norwest Corp. Completed 12/1/95
10 First Capital Corp. Completed 9/7/95
11 Norwest Corp. Completed 10/19/95
1 General Electric Company Pending NA
2 Firstar Corporation Completed 7/31/98
3 UniCapital Corp. Completed 5/20/98
4 Fidelity National Financial Inc. Completed 2/26/98
5 Imperial Credit Industries Inc. Completed 10/2/97
6 General Electric Capital Corp. Completed 9/10/97
7 Cypress Group/Keystone Inc. Completed 5/22/97
8 TCF Financial Corp. Completed 6/24/97
9 Transamerica Corp. Completed 10/16/96
10 AT&T Capital Corporation Completed 8/7/96
11 Newcourt Credit Group Inc. Completed 6/12/96
12 Leasetec Corp. Completed 3/29/96
</TABLE>
Factoring company mergers are in yellow; asset based lenders in blue and other
speciality finance companies with deal values between $100 and $500 are in red.
In addition to the factoring mergers listed above, there were 9 more deals
without publicly announced transaction values.
All financials are in thousands; financials as of deal announcement.
Source: SNL Securities Financial Services M&A Database.
1
<PAGE> 61
SELECTED FINANCE COMPANY M&A TRANSACTIONS
JANUARY 1, 1995 - SEPTEMBER 29, 1998
SELECTED FINANCE COMPANY MERGER TRANSACTIONS WITH PUBLICLY ANNOUNCED DEAL
VALUES.
<TABLE>
<CAPTION>
ANNOUNCE DEAL TOTAL
SELLER ENTITY SOLD DATE VALUE ASSETS RECEIVABLES
------ ----------- -------- ----- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
1 Pacific Business Funding Corp. Pacific Business Funding Corp. 8/4/98 $9,504 NA $20,000
2 Epic Funding Corp. Epic Funding Corp. 4/13/98 $541 $360 $157
3 Pacific Financial Services Corp. Pacific Financial Services Corp. 1/28/98 $3,000 NA $3,000
4 Phillips Industries Inc. Phillips Factors Corp. 2/4/97 $15,000 NA NA
5 EXXE Data Corp. EXXE Data Corp. 1/23/97 $19,798 NA NA
6 TempFunds America, Inc. TempFunds America Inc. 8/12/96 $5,900 NA $5,800
7 National Business Finance Inc. National Business Finance Inc. 8/12/96 $7,500 $8,400 $105,000
8 The LINC Group Inc. LINC Financial Services Inc. 4/24/96 $3,200 NA NA
9 Providers Funding Corp. Providers Funding Corp. 3/15/96 $1,000 NA NA
10 Coast Savings Financial CoastFed Business Credit Corporation 9/19/95 $150,000 $139,000 $139,000
1 Booker Montague Leasing Ltd. Booker Montague Leasing Ltd. 8/19/98 $3,925 NA NA
2 Metropolitan Life Insurance Co. MetLife Capital Corp. 8/14/98 $1,000,000 NA NA
3 Business Finance Corp. Business Finance Corp. 8/11/98 $2,300 NA $3,000
4 Bank of Tokyo-Mitsubishi Ltd. Asset-based finance business 4/15/98 $600,000 NA $600,000
5 Nomura International PLC AT&T Capital Corp. 11/17/97 $1,610,000 $8,785,688 $5,987,217
6 Gordon Brothers GBFC Inc. 10/15/96 $40,000 NA NA
7 AT&T Capital Corp. AT&T Capital Corp. 6/6/96 $2,137,983 $9,607,766 $8,024,649
8 Astra Financial Inc. Astra Financial Inc. 11/16/95 $760 $2,600 $2,200
9 LFC Financial Corp Beacon Business Credit Corp. 9/27/95 $12,500 $30,600 $28,100
10 Sterling West Bancorp Sterling Business Credit Inc. 8/14/95 $16,675 NA NA
11 Foothill Group, Inc. Foothill Group, Inc. 5/15/95 $463,749 $811,243 $726,345
1 Nissan Motor Company Ltd. Nissan Finance Corp. Ltd. 9/28/98 $105,462 $624,580 NA
2 Cargill Inc. Cargill Leasing Corp. 6/4/98 $220,000 NA NA
3 Jacom Computer Services Inc. Jacom Computer Services Inc. 2/14/98 $191,999 $118,948 $3,655
4 Granite Financial Inc. Granite Financial Inc. 11/17/97 $119,958 $63,817 $13,018
5 PrinCap Mortgage Warehouse Inc. PrinCap Mortgage Warehouse Inc. 10/2/97 $123,738 NA $133,800
6 TLS Plc TLS Plc 6/27/97 $113,635 NA NA
7 Odyssey Partners 90% of Scotsman Holdings Inc. 4/14/97 $450,600 $443,219 NA
8 Winthrop Resources Corp. Winthrop Resources Corp. 2/14/97 $324,252 $350,110 $295,842
9 Trans Ocean Ltd. Trans Ocean Ltd. 7/25/96 $111,541 $421,747 $41,468
10 Municipal Financial Corporation Municipal Leasing 6/12/96 $158,330 $165,000 NA
11 Pitney Bowes Inc. Custom Vendor Finance 6/12/96 $126,000 NA NA
12 Storage Technology Corp. StorageTek Financial Services 2/9/96 $253,538 $265,000 NA
------------------------------------------------------------------------------------------
AVERAGE $254,618 $1,364,880 $896,236
MEDIAN $111,541 $215,000 $34,784
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
MINIMUM $541 $360 $157
MAXIMUM $2,137,983 $9,607,766 $8,024,649
------------------------------------------------------------------------------------------
</TABLE>
SELECTED FINANCE COMPANY M&A TRANSACTIONS
JANUARY 1, 1995 - SEPTEMBER 29, 1998
SELECTED FINANCE COMPANY MERGER TRANSACTIONS WITH PUBLICLY ANNOUNCED DEAL
VALUES.
<TABLE>
<CAPTION>
LTM LTM PRICE / PRICE
SELLER EQUITY EARNINGS REVENUES BOOK LTM EARNINGS
------ ------ -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
1 Pacific Business Funding Corp. NA NA NA NA NA
2 Epic Funding Corp. $120 -$11 $225 450.83% NA
3 Pacific Financial Services Corp. NA NA NA NA NA
4 Phillips Industries Inc. NA NA NA NA NA
5 EXXE Data Corp. NA NA NA NA NA
6 TempFunds America, Inc. $5,000 NA NA 118.00% NA
7 National Business Finance Inc. NA $3,000 NA NA 2.5x
8 The LINC Group Inc. NA NA NA NA NA
9 Providers Funding Corp. NA NA NA NA NA
10 Coast Savings Financial NA NA NA NA NA
1 Booker Montague Leasing Ltd. NA NA NA NA NA
2 Metropolitan Life Insurance Co. NA NA NA NA NA
3 Business Finance Corp. NA $283 $929 NA 8.1x
4 Bank of Tokyo-Mitsubishi Ltd. NA NA NA NA NA
5 Nomura International PLC $749,575 $89,047 $1,448,123 214.79% 18.1x
6 Gordon Brothers NA NA NA NA NA
7 AT&T Capital Corp. $1,149,643 $139,516 $1,222,866 183.90% 15.3x
8 Astra Financial Inc. $400 NA NA 190.00% NA
9 LFC Financial Corp NA NA NA NA NA
10 Sterling West Bancorp NA $955 $3,419 NA 17.5x
11 Foothill Group, Inc. $184,916 $28,029 $84,330 238.44% 16.6x
1 Nissan Motor Company Ltd. NA NA NA NA NA
2 Cargill Inc. NA NA NA NA NA
3 Jacom Computer Services Inc. $69,168 $17,126 $85,426 277.58% 11.2x
4 Granite Financial Inc. $34,332 $2,602 $106,087 100.71% 46.1x
5 PrinCap Mortgage Warehouse Inc. NA NA NA NA NA
6 TLS Plc NA NA NA NA NA
7 Odyssey Partners $48,138 $8,614 $175,674 936.06% 52.3x
8 Winthrop Resources Corp. $81,180 $14,714 $61,109 387.67% 22.0x
9 Trans Ocean Ltd. $34,344 $5,513 $149,370 324.78% 20.2x
10 Municipal Financial Corporation NA NA NA NA NA
11 Pitney Bowes Inc. NA NA NA NA NA
12 Storage Technology Corp. NA NA NA NA NA
-------------------------------------------------------------------------------------
AVERAGE $214,256 $25,782 $303,414 311.16% 20.9X
MEDIAN $48,138 $7,064 $85,426 238.44% 17.5X
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
MINIMUM $120 -$11 $225 100.71% 2.5X
MAXIMUM $1,149,643 $139,516 $1,448,123 936.06% 52.3X
-------------------------------------------------------------------------------------
</TABLE>
Factoring company mergers are in yellow; asset based lenders in blue and other
speciality finance companies with deal values between $100 and $500 are in red.
In addition to the factoring mergers listed above, there were 9 more deals
without publicly announced transaction values.
All financials are in thousands; financials as of deal announcement.
Source: SNL Securities Financial Services M&A Database.
2
<PAGE> 62
CAPITAL FACTORS HOLDING, INC.
IMPLIED VALUATION MULTIPLES BASED ON SELECTED MERGER TRANSACTIONS
- - PREMIUMS PAID ANALYSIS The following graph examines a range of prices
based on 17 comparable merger transactions which have been announced
since January 1, 1995 in which the Acquiror owned at least 75% of the
Target before the merger and 100% after.
[GRAPH]
IMPLIED PER SHARE VALUATION BASED ON
PREMIUMS OF COMPARABLE TRANSACTIONS
<TABLE>
<CAPTION>
DATE PRICE MEDIAN PREMIUM(1)
---- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Premium to 1 Day Trading Price 12-Oct-98 $16.25 $19.77 21.65% 21.6%
Premium to 1 Week Trading Price 05-Oct-98 $16.50 $20.67 25.25% 27.2%
Premium to 4 Week Trading Price 14-Sep-98 $16.94 $21.62 27.62% 33.0%
</TABLE>
(1) Implied per share premium (or discount) to current market price of $16.250
on 10/21/98.
1
<PAGE> 63
PREMIUMS PAID ANALYSIS
- The premiums paid methodology involves the following steps:
1. Selection of a group of recent merger and acquisition transactions
in which the Acquiror owned at least 75% of the Target before the
transaction and 100% after. The list of 17 selected transactions
includes U.S. based Targets with transaction values of $150 million
or less that have been announced since January 1, 1995.
2. Determination of median premiums paid over historical stock prices
for the selected transactions:
Premium to Stock Price 1 Day Before Announcement
Premium to Stock Price 1 Week Before Announcement
Premium to Stock Price 4 Weeks Before Announcement
3. Applying the merger and acquisition median premium values determined
to Capital Factors 1 day, 1 week and 4 week stock prices in order to
imply acquisition values for the Company based on the premiums paid
above.
<PAGE> 64
SELECTED MERGER TRANSACTIONS
JANUARY 1, 1995 - OCTOBER 5, 1998
U.S. MERGER TRANSACTIONS IN WHICH THE ACQUIROR OWNED AT LEAST 75% OF THE TARGET
BEFORE THE MERGER AND 100% AFTER.
<TABLE>
<CAPTION>
DATE
EFFECTIVE TARGET NAME TARGET BUSINESS DESCRIPTION ACQUIROR NAME
- --------- ----------- --------------------------- -------------
<S> <C> <C> <C>
09/25/98 Group 1 Software Inc Develop software COMNET Corp
05/20/98 XLConnect Solutions Inc Pvd integrated sys design svcs Xerox Corp
01/30/98 Steck-Vaughn Publishing Corp Publish books, magazines Harcourt General Inc
12/23/97 Seaman Furniture Co Own,op ret furniture stores Investor Group
12/16/97 Guaranty National Corp Insurance company Orion Capital Corp
09/05/97 Golden Poultry Co Inc Produce,wholesale poultry Gold Kist Inc
07/09/97 Mafco Consolidated Grp(Mafco) Mnfr cosmetics,beauty products Mafco Holdings Inc
03/26/97 Bally's Grand Inc Own and operate casino hotels Hilton Hotels Corp
12/31/96 LXE(Electromagnetic Sciences) Mnfr microwave components Electromagnetic Sciences Inc
12/31/96 Bankers Life Holding(Conseco) Life ins co;holding company Conseco Inc
11/27/96 WCI Steel Inc(Renco Group Inc) Manufacture steel Renco Group Inc
06/27/96 Bobbie Brooks Inc(Pubco Corp) Manufacture women's apparel Pubco Corp
04/26/96 Great American Mgmt & Invt Inc Invt advice and financial svcs Equity Holdings,Chicago,IL
12/21/95 SCOR US Corp(SCOR SA) Reinsurance holding company SCOR
12/05/95 Sportmart Inc Sporting goods,bicycle shops Investor
11/30/95 Grand Gaming Corp Own,operate casinos Grand Casinos Inc
07/12/95 Rust International Inc Provide engineering services WMX Technologies Inc
<CAPTION>
% TARGETS
% OF AFTER EQUITY VALUE
DATE SHARES TRANS- IN MERGER
EFFECTIVE TARGET NAME STATUS ACQUIRED ACTION ($MIL)
- --------- ----------- ------ -------- ------- --------------
<S> <C> <C> <C> <C> <C>
09/25/98 Group 1 Software Inc Completed 18.80% 100% $59.6
05/20/98 XLConnect Solutions Inc Completed 20.00% 100% 354.5
01/30/98 Steck-Vaughn Publishing Corp Completed 17.00% 100% 215.9
12/23/97 Seaman Furniture Co Completed 20.00% 100% 122.5
12/16/97 Guaranty National Corp Completed 22.70% 100% 554.2
09/05/97 Golden Poultry Co Inc Completed 25.00% 100% 206.9
07/09/97 Mafco Consolidated Grp(Mafco) Completed 15.00% 100% 778.5
03/26/97 Bally's Grand Inc Completed 7.47% 100% 468.7
12/31/96 LXE(Electromagnetic Sciences) Completed 22.20% 100% 74.4
12/31/96 Bankers Life Holding(Conseco) Completed 11.50% 100% 1,236.8
11/27/96 WCI Steel Inc(Renco Group Inc) Completed 15.53% 100% 364.0
06/27/96 Bobbie Brooks Inc(Pubco Corp) Completed 10.00% 100% 4.7
04/26/96 Great American Mgmt & Invt Inc Completed 15.60% 100% 459.8
12/21/95 SCOR US Corp(SCOR SA) Completed 20.00% 100% 281.6
12/05/95 Sportmart Inc Completed 7.07% 100% 17.9
11/30/95 Grand Gaming Corp Completed 22.20% 100% 164.3
07/12/95 Rust International Inc Completed 3.61% 100% 1,366.4
AVERAGE 16.10% 100% 395.9
MEDIAN 17.00% 100% 281.6
MINIMUM 3.61% 100% 4.7
MAXIMUM 25.00% 100% 1,366.4
</TABLE>
Transactions with no pre-transaction trading values, from which to calculate a
premium, have been eliminated.
Transaction values of $150 million or less.
Source: Securities Data Company, Inc.
<PAGE> 65
SELECTED MERGER TRANSACTIONS
JANUARY 1, 1995 - OCTOBER 5, 1998
U.S. MERGER TRANSACTIONS IN WHICH THE ACQUIROR OWNED AT LEAST 75% OF THE TARGET
BEFORE THE MERGER AND 100% AFTER.
<TABLE>
<CAPTION>
TARGET BOOK TARGET MERGER
LTM VALUE COMMON PRICE
NET INCOME PER EQUITY PER
TARGET NAME ($MIL) SHARE ($MIL) SHARE
- ----------- ---------- ----- ----- -----
<S> <C> <C> <C> <C>
Group 1 Software Inc ($ 2.0) $ 6.8 $ 29.0 $ 13.73
XLConnect Solutions Inc 3.9 3.4 56.2 20.00
SteckVaughn Publishing Corp 3.2 4.2 59.7 14.75
Seaman Furniture Co 4.1 23.3 105.6 25.05
Guaranty National Corp 36.0 17.3 259.8 36.00
Golden Poultry Co Inc 16.0 7.2 104.4 14.25
Mafco Consolidated Grp(Mafco) 119.3 10.1 233.8 33.50
Bally's Grand Inc 23.0 14.0 118.6 52.75
LXE(Electromagnetic Sciences) 0.3 5.9 32.9 13.13
Bankers Life Holding(Conseco) 140.3 19.9 980.3 25.00
WCI Steel Inc(Renco Group Inc) 3.2 2.0 73.5 10.00
Bobbie Brooks Inc(Pubco Corp) 2.0 3.6 17.8 0.96
Great American Mgmt & Invt Inc 150.3 26.9 247.5 50.00
SCOR US Corp(SCOR SA) 14.3 15.0 272.7 15.25
Sportmart Inc 6.5 2.2 11.4 3.47
Grand Gaming Corp (1.9) 1.6 51.7 5.06
Rust International Inc 68.5 11.6 965.2 16.35
</TABLE>
<TABLE>
<CAPTION>
PRICES BEFORE
ANNOUNCEMENT DATE PREMIUMS
--------------------------------------- ----------------------------------
TARGET NAME 1 DAY 1 WEEK 4 WEEKS 1 DAY 1 WEEK 4 WEEKS
- ----------- --------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Group 1 Software Inc $ 8.00 $ 8.50 $ 8.00 71.63% 61.53% 71.63%
XLConnect Solutions Inc 22.50 17.38 16.38 (11.11%) 15.11% 22.14%
SteckVaughn Publishing Corp 12.13 11.13 11.88 21.65% 32.58% 24.21%
Seaman Furniture Co 20.63 20.00 20.63 21.45% 25.25% 21.45%
Guaranty National Corp 32.50 29.06 28.19 10.77% 23.87% 27.72%
Golden Poultry Co Inc 9.38 9.50 10.25 52.00% 50.00% 39.02%
Mafco Consolidated Grp(Mafco) 27.13 27.13 26.25 23.50% 23.50% 27.62%
Bally's Grand Inc 41.25 40.63 40.25 27.88% 29.85% 31.06%
LXE(Electromagnetic Sciences) 10.75 11.50 11.00 22.14% 14.17% 19.36%
Bankers Life Holding(Conseco) 21.75 22.63 22.38 14.94% 10.50% 11.73%
WCI Steel Inc(Renco Group Inc) 8.50 7.75 5.63 17.65% 29.03% 77.78%
Bobbie Brooks Inc(Pubco Corp) 1.13 1.13 1.31 (14.67%) (14.67%) (26.86%)
Great American Mgmt & Invt Inc 48.75 48.00 48.25 2.56% 4.17% 3.63%
SCOR US Corp(SCOR SA) 11.13 11.25 11.00 37.08% 35.56% 38.64%
Sportmart Inc 3.25 3.63 4.94 6.77% (4.28%) (29.72%)
Grand Gaming Corp 3.75 3.75 3.25 34.93% 34.93% 55.69%
Rust International Inc 12.88 11.75 11.75 26.99% 39.15% 39.15%
AVERAGE 21.54% 24.13% 26.72%
MEDIAN 21.65% 25.25% 27.62%
MINIMUM (14.67%) (14.67%) (29.72%)
MAXIMUM 71.63% 61.53% 77.78%
</TABLE>
Transactions with no pretransaction trading values, from which to calculate a
premium, have been eliminated.
Transaction values of $150 million or less.
Source: Securities Data Company, Inc.
<PAGE> 66
CAPITAL FACTORS HLDG INC
PRICE / VOLUME CHART 7/11/96 THROUGH OCT. 12, 1998
[GRAPH]
<TABLE>
OPEN HIGH LOW CLOSE
---- ---- --- -----
<S> <C> <C> <C> <C>
CAPITAL FACTORS HLDG INC $8.50 $19.75 $8.50 $16.38 --
DATE 7/11/96 4/30/98 7/11/96 10/12/98 --
% CHG FROM OPEN -- 132.4% 0.0% 92.6% --
AVERAGE DAILY VOLUME ('000) -- -- -- -- 9.5
</TABLE>
Source: FactSet Data Systems
<PAGE> 67
CAPITAL FACTORS HLDG INC
PRICE / VOLUME CHART OCT. 13, 1997 THROUGH OCT. 12, 1998
[GRAPH]
<TABLE>
<CAPTION>
OPEN HIGH LOW CLOSE
---- ---- --- -----
<S> <C> <C> <C> <C> <C>
CAPITAL FACTORS HLDG INC $19.25 $19.75 $15.50 $16.38 --
DATE 10/13/97 4/30/98 9/3/98 10/12/98 --
% CHG FROM OPEN -- 2.6% (19.5%) (14.9%) --
AVERAGE DAILY VOLUME ('000) -- -- -- -- 6.9
</TABLE>
Source: FactSet Data Systems
<PAGE> 68
CAPITAL FACTORS HLDG INC
PRICE / VOLUME CHART 9/11/98 THROUGH OCT. 12, 1998
[GRAPH]
<TABLE>
<CAPTION>
OPEN HIGH LOW CLOSE
---- ---- --- -----
<S> <C> <C> <C> <C> <C>
CAPITAL FACTORS HLDG INC $16.25 $17.13 $16.00 $16.38 --
DATE 9/11/98 9/30/98 9/17/98 10/12/98 --
% CHG FROM OPEN -- 5.4% (1.5%) 0.8% --
AVERAGE DAILY VOLUME ('000) -- -- -- -- 5.1
</TABLE>
Source: FactSet Data Systems
<PAGE> 69
CAPITAL FACTORS HLDG INC
Historical Price Summary
<TABLE>
<CAPTION>
1994 - 1998 YTD 1997 1996 1995
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
High Close $19.75 High Close $19.38 High Close $13.25 High Close #N/A
Low Close $8.50 Low Close $12.50 Low Close $8.50 Low Close #N/A
High Volume 448,100 High Volume 70,200 High Volume 429,000 High Volume #N/A
Low Volume 0 Low Volume 0 Low Volume 0 Low Volume 0
Average Volume 9,470 Average Volume 6,887 Average Volume 17,719 Average Volume #N/A
1998 FIRST QUARTER 1997 FIRST QUARTER 1996 FIRST QUARTER 1995 FIRST QUARTER
---------------------- ---------------------- ---------------------- ----------------------
High Close $19.00 High Close $15.38 High Close #N/A High Close #N/A
Low Close $15.75 Low Close $12.50 Low Close #N/A Low Close #N/A
High Volume 75,700 High Volume 68,000 High Volume #N/A High Volume #N/A
Low Volume 0 Low Volume 0 Low Volume 0 Low Volume 0
Average Volume 7,502 Average Volume 6,208 Average Volume #N/A Average Volume #N/A
1998 SECOND QUARTER 1997 SECOND QUARTER 1996 SECOND QUARTER 1995 SECOND QUARTER
---------------------- ---------------------- ---------------------- ----------------------
High Close $19.75 High Close $17.50 High Close #N/A High Close #N/A
Low Close $17.63 Low Close $13.25 Low Close #N/A Low Close #N/A
High Volume 31,600 High Volume 51,200 High Volume #N/A High Volume #N/A
Low Volume 0 Low Volume 0 Low Volume 0 Low Volume 0
Average Volume 5,189 Average Volume 6,964 Average Volume #N/A Average Volume #N/A
1998 THIRD QUARTER 1997 THIRD QUARTER 1996 THIRD QUARTER 1995 THIRD QUARTER
---------------------- ---------------------- ---------------------- ----------------------
High Close $17.88 High Close $19.38 High Close $10.25 High Close #N/A
Low Close $15.50 Low Close $16.75 Low Close $8.50 Low Close #N/A
High Volume 448,100 High Volume 70,200 High Volume 429,000 High Volume #N/A
Low Volume 0 Low Volume 0 Low Volume 0 Low Volume 0
Average Volume 11,105 Average Volume 10,563 Average Volume 28,156 Average Volume #N/A
1997 FOURTH QUARTER 1996 FOURTH QUARTER 1995 FOURTH QUARTER
----------------------- ---------------------- ----------------------
High Close $19.25 High Close $13.25 High Close #N/A
Low Close $16.50 Low Close $10.13 Low Close #N/A
High Volume 44,100 High Volume 70,300 High Volume #N/A
Low Volume 0 Low Volume 0 Low Volume 0
Average Volume 3,791 Average Volume 8,423 Average Volume #N/A
</TABLE>
<TABLE>
<CAPTION>
1994
----------------------
<S> <C>
High Close #N/A
Low Close #N/A
High Volume #N/A
Low Volume 0
Average Volume #N/A
1994 FIRST QUARTER
----------------------
High Close #N/A
Low Close #N/A
High Volume #N/A
Low Volume 0
Average Volume #N/A
1994 SECOND QUARTER
----------------------
High Close #N/A
Low Close #N/A
High Volume #N/A
Low Volume 0
Average Volume #N/A
1994 THIRD QUARTER
----------------------
High Close #N/A
Low Close #N/A
High Volume #N/A
Low Volume 0
Average Volume #N/A
1994 FOURTH QUARTER
----------------------
High Close #N/A
Low Close #N/A
High Volume #N/A
Low Volume 0
Average Volume #N/A
</TABLE>
Source: FactSet Data Systems
<PAGE> 70
CAPITAL FACTORS HOLDING, INC.
EXECUTIVE SUMMARY
COMPARABLE FACTORS AND FACTORING VOLUME
<TABLE>
<CAPTION>
Factoring Volume (in millions)
YEAR ENDED
--------------------------------------------------------
COMPANY 1997 1996 1995 1994 1993
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BNY Financial $15,125 $11,200 $11,100 $10,500 $7,600
CIT Group/Coml.Serv. 13,700 13,208 12,702 13,576 12,620 (1)
NationsBanc Commercial 8,200 7,734 7,856 7,615 7,344 (1)
Heller Financial 7,400 7,000 6,200 6,500 6,395
Republic Business Credit 5,600 5,520 5,260 5,360 4,760
Congress-Talcott Corp. 4,000 3,786 4,023 4,250 4,026
SunTrust Bank 3,273 3,347 3,175 3,230 3,255
Century Business Credit 3,254 2,796 2,403 2,014 1,546
Capital Factors 3,253 2,600 2,001 1,523 1,327
Finova Capital 2,900 2,900 2,000 1,100 810 (1)
Milberg Factors 2,010 1,705 1,520 1,405 1,210
Rosenthal & Rosenthal 1,920 1,660 1,537 1,420 1,310
Sterling Factors 402 325 225 187 170
Total (2) $71,037 $63,781 $60,902 $59,582 $56,990
</TABLE>
(1) DNR estimates.
(2) Totals for years prior to 1995 are as previously reported and may not
add up because the figures include volume of factors that have been
merged out of existence.
Source: DNR, Friday, February 27, 1998
1
