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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
Amendment No. 1
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CONCENTRA MANAGED CARE, INC.
(Name of the Issuer)
Welsh, Carson, Anderson & Stowe, VIII, L.P.
Yankee Acquisition Corp.
John K. Carlyle
W. Tom Fogarty, M.D.
James M. Greenwood
Thomas E. Kiraly
Kenneth Loffredo
Richard A. Parr II
Daniel J. Thomas
Concentra Managed Care, Inc.
(Name of Person(s) Filing Statement)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
---------------
20589T103
(CUSIP Number of Class of Securities)
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Paul B. Queally
Yankee Acquisition Corp
c/o Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue
New York, New York 10022
(212) 893-9500
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Daniel J. Thomas
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
(617) 367-2163
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WITH COPIES TO:
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Robert A. Schwed, Esq.
Othon A. Prounis, Esq.
Reboul, MacMurray, Hewitt,
Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
(212) 841-5700
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Richard A. Parr II
Concentra Managed Care, Inc.
5080 Spectrum Drive
Suite 400, West Tower
Addison, Texas 75001
(800) 232-3550
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Jeffrey A. Chapman, Esq.
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
(214) 220-7795
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. / X / The filing of solicitation materials or an
information statement subject to Regulation 14A,
Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. / / The filing of a registration statement under the
Securities Act of 1933.
c. / / A tender offer.
d. / / None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: /X/
CALCULATION OF FILING FEE
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TRANSACTION VALUATION (1) AMOUNT OF FILING FEE
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$ 792,505,929.90 $ 158,501.19
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/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)
(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount previously paid: $158,501.19
Form or registration no.: Schedule 14A - Preliminary
Proxy Statement
Filing Party: Concentra Managed Care, Inc.
Dated filed: March 31, 1999
(1) For purposes of calculating the fee only. Assumes purchase of
47,294,074 shares of common stock, par value $.01 per share, of Concentra
Managed Care, Inc. at $16.50 per share and the purchase of underlying options to
purchase Common Stock for an aggregate of $12,153,708.90
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<PAGE>
EXPLANATORY NOTE
The purpose of Amendment No. 1 to Concentra's Rule 13e-3 Transaction
Statement is to file the Financial Analysis Presentation materials prepared by
BT Alex. Brown Incorporated in connection with its opinion dated March 2, 1999
to Concentra's board of directors and special committee as Exhibit(b)(2) and to
file revised (d)(3), which is Amendment No. 3 to the proxy statement for the
Special Meeting of Shareholders to approve the rule 13e-3 transaction.
<PAGE>
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
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EXHIBIT NO. DESCRIPTION
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(a)(1)* Commitment Letter dated February 26, 1999 from Chase
Securities Inc., The Chase Manhattan Bank, DLJ Capital
Funding, Inc., Credit Suisse First Boston and Fleet
National Bank.
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(a)(2)* Letter dated February 24, 1999 from Chase Capital
Partners.
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(a)(3)* Letter dated March 1, 1999 from WCAS Capital Partners III,
L.P.
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(b)(1) Opinion of BT Alex. Brown Incorporated dated March 2, 1999
(included as Appendix B to the Preliminary Proxy
Statement, which is filed herewith as Exhibit (d)(3)).
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(b)(2) Financial Analysis Presentation materials prepared by BT
Alex. Brown Incorporated in connection with its opinion
dated March 2, 1999 to Concentra's board of directors and
special committee.
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(c)(1) Agreement and Plan of Merger dated as of March 24, 1999 by
and between Yankee
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<PAGE>
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EXHIBIT NO. DESCRIPTION
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Acquisition Corp. and Concentra Managed Care, Inc.
(included as Appendix A to the Preliminary Proxy
Statement, which is filed herewith as Exhibit (d)(3)).
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(c)(2)* Contribution Letter dated March 24, 1999 by Welsh, Carson,
Anderson & Stowe VIII, L.P.
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(c)(3)* Stock Subscription Agreement dated as of March 24, 1999 by
Ferrer Freeman Thompson & Co. on behalf of Health Care
Capital Partners L.P. and on behalf of Health Care
Executive Partners and Yankee Acquisition Corp.
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(d)(1) Letter to Stockholders (included in the Preliminary Proxy
Statement, which is filed herewith as Exhibit (d)(3)).
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(d)(2) Notice of Special Meeting of Stockholders (included in the
Preliminary Proxy Statement, which is filed herewith as
Exhibit (d)(3)).
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(d)(3) Preliminary Proxy Statement.
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(d)(4) Form of Proxy (included in the Preliminary Proxy
Statement, which is filed herewith as Exhibit (d)(3)).
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(d)(5) Press Release issued by Concentra Managed Care, Inc. dated
as of April 28, 1999 (incorporated by reference to the
Current Report on Form 8-K filed by Concentra on April 28,
1999).
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(d)(6) Press Release issued by Concentra Managed Care, Inc. dated
as of March 3, 1999 (incorporated by reference to the
Current Report on Form 8-K filed by Concentra on March 3,
1999).
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(d)(7) Press Release issued by Concentra Managed Care, Inc. dated
as of March 25, 1999 (incorporated by reference to the
Current Report on Form 8-K filed by Concentra on March 29,
1999).
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(e) Text of Section 262 of the Delaware General Corporation
Law (included as Appendix C to the Preliminary Proxy
Statement, which is filed herewith as Exhibit (d)(3)).
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(f) Not applicable.
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99.1* Powers of Attorney.
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* Previously filed
<PAGE>
SIGNATURES
After due inquiry and to the best of our knowledge and belief, each of
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
CONCENTRA MANAGED CARE, INC.
By: /s/ Daniel J. Thomas*
-----------------------------------
Daniel J. Thomas
Dated: President
YANKEE ACQUISITION CORP.
By: /s/ Paul B. Queally
-----------------------------------
Paul B. Queally
Dated: President
WELSH, CARSON, ANDERSON & STOWE, VIII, L.P.
By: WCAS VIII Associates, LLC, General Partner
By: /s/ Paul B. Queally
-----------------------------------
Paul B. Queally
Dated: Managing Member
JOHN K. CARLYLE
/s/ John K. Carlyle*
Dated: --------------------------------------------------
W. TOM FOGARTY, M.D.
/s/ W. Tom Fogarty, M.D.*
Dated: --------------------------------------------------
JAMES M. GREENWOOD
/s/ James M. Greenwood*
Dated: --------------------------------------------------
THOMAS E. KIRALY
/s/ Thomas E. Kiraly*
Dated: --------------------------------------------------
KENNETH LOFFREDO
/s/ Kenneth Loffredo*
Dated: --------------------------------------------------
RICHARD A. PARR II
/s/ Richard A. Parr II
Dated: --------------------------------------------------
DANIEL J. THOMAS
/s/ Daniel J. Thomas*
Dated: --------------------------------------------------
*The undersigned, by signing his name hereto, does sign and execute this
Schedule 13E-3 as of this 1st day of July, 1999 pursuant to the Powers of
Attorney executed on behalf of the above-named officers and directors as
previously filed with the Securities and Exchange Commission
By: /s/ Richard A. Parr II
--------------------------------------------------
Richard A. Parr II
Attorney-in-Fact
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Exhibits in Support of Fairness Opinion For
PROJECT COP
[LOGO]BT Alex. Brown
March 2, 1999
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<PAGE>
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<PAGE>
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The information contained in this document was obtained from the management of
CAPTAIN and other sources.
This document has been prepared for the use of the Board of Directors of CAPTAIN
only. It is confidential and may not be disclosed or provided to any third
parties without the written permission of BT Alex. Brown Incorporated ("BT Alex.
Brown").
This document is prepared as of February 26, 1999 and reflects information made
available to us prior to such date. It does not include information regarding
all of the assessments made by BT Alex. Brown in arriving at its conclusions.
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PROJECT COP - 3 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Table of Contents
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Tab
---
I. Overview of Proposed Transaction
Review of Process 1
Overview of Acquiror 2
Financial Overview of Proposed Transaction 3
II. Overview of CAPTAIN 4
III. Summary Valuation Analysis
Selected Public Companies 5
Selected M&A Transactions 6
Discounted Cash Flow Analysis 7
Premiums Paid Analysis 8
Post-Transaction Common Stock Value Analysis 9
Leveraged Recapitalization Analysis 10
IV. Appendix 11
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PROJECT COP - 4 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
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Review of Process
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PROJECT COP - 5 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Review of Process
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o On September 9, 1998, CAPTAIN preannounces Q3 and Q4 1998 and 1999E EPS
shortfalls and a change in its expected forward growth rate.
o On September 15, 1998, Chairman, CEO and Founder Don Larson resigns and
Dan Thomas, former COO, is named interim CEO.
o On September 15, 1998, Welsh, Carson, Anderson & Stowe ("WCAS") submits to
the Board an unsolicited expression of interest to acquire the Company.
o On September 22, 1998, WCAS makes a Hart Scott Rodino filing, indicating a
desire to acquire in excess of $15 million of CAPTAIN stock.
o Between September 15, 1998 and October 1, 1998, the Company receives four
additional unsolicited expressions of interest.
o On October 1, 1998, the Board forms a Special Committee to consider
various strategic alternatives.
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PROJECT COP - 6 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Review of Process
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o On October 20, 1998, WCAS files with the SEC a Schedule 13D indicating a
9.1% ownership position in the Company.
o On October 29, 1998, in conjunction with its Q3 earnings release and
announcement of a non-recurring charge of $15 to $25 million, the Company
announces the formation of a Special Committee and the hiring of BT Alex.
Brown Incorporated ("BTAB") as financial advisor.
o On November 17, 1998, the Board elects Dan Thomas, Chief Executive
Officer.
o Between December 7, 1998 and December 14, 1998, eleven financial and nine
strategic parties are contacted regarding their interest in acquiring
CAPTAIN.
o Subsequently, confidentiality agreements are signed by, and descriptive
memorandums are sent to, nine financial and two strategic parties.
o On January 28, 1999, five financial parties indicate in writing an
interest in a transaction involving the acquisition of CAPTAIN. One
strategic party indicates verbally an interest in a transaction with the
Company.
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PROJECT COP - 7 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Review of Process
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o Between February 9, 1999 and February 23, 1999, all of the potential
acquirors attend management presentations, several conduct legal, tax and
accounting reviews and participate in business due diligence sessions with
members of the CAPTAIN management team.
o On February 24, 1999, second round indications of interest are received
from four financial parties including WCAS, indicating an interest in
purchasing all or substantially all of the Company effected through a
leveraged recapitalization.
o Three parties express indications that are subject to substantial business
and confirmatory due diligence. WCAS' indication expires on March 5, 1999
and expresses no need for incremental due diligence on the part of WCAS or
its financing sources other than "informal confirmatory follow-up."
o On February 26, 1999, the Special Committee elects to pursue an
accelerated transaction with WCAS on the condition that a definitive
agreement be approved or executed by March 2, 1999 at $16.50 per share.
o On February 27, 1999, the Special Committee updates the Board of Directors
regarding the process and the pursuit of a transaction with WCAS.
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PROJECT COP - 8 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Review of Process
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Number of Parties
-----------------
Initial Discussions 20
Confidentiality Agreements Signed 11
Descriptive Memorandums Sent 11
First Round Written Indications of Interest 6
Management Meetings 6
Detailed Due Diligence Review 5
Second Round Proposals Received 4
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PROJECT COP - 9 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Review of Process
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Second Round Proposals
<TABLE>
<CAPTION>
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Proposed
Rollover Total Debt to Comments on
Bidder Price Structure % LTM EBITDA Agreement
- ----------------------- ---------- --------------- -------- ------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Welsh, Carson, Anderson $16.50 (a) 100% turnover None 6.0x Detailed but
& Stowe, L.P. or public or negotiable, including
leveraged recap. 7% softening MAC language
and expansion of
break-up fee language.
Incremental reps include
Y2K, labor, real property,
and contracts.
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Bidder B $15.00 Public or 8% 5.0x One page summary
private including recapitalization
leveraged recap. condition and break-up
fee and benefit
continuation
comments; Additional reps
include Y2K, medical
fraud, and contracts
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Bidder C $16.00 - Public leveraged 6-7% 5.0x Two page summary
$17.00 recapitalization tightening no-shop and
softening MAC language;
Incremental reps include
Y2K, insurance, real
property and environmental
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Bidder D $16.00 Leveraged 5-10% 5.0x Two page summary including
recapitalization tightening no-shop,
expansion
of breakup fee language;
Additional reps include
Y2K, contracts and
completeness of disclosure.
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<CAPTION>
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Bidder Financing Other
- ----------------------- ------------------- ---------------------
<S> <C> <C>
Welsh, Carson, Anderson Fully-financed No additional
& Stowe, L.P. including bridge diligence
commitment on required
sub-debt component
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Bidder B Credit Facility Not more than
and 2 weeks to complete
Highly Confident confirmatory
Letters subject due diligence
to business due
diligence and market
conditions
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Bidder C Credit Facility 3 additional weeks
and to complete business
Highly Confident due diligence
Letters subject to
business due diligence
and market conditions
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Bidder D Credit Facility 2-3 weeks to complete
and additional business
Highly Confident due diligence
Letters subject to
business due diligence
and market conditions
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</TABLE>
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(a) Original proposal dated 2/24/99 indicated $15.50; in an unsolicited
follow-up telephone call on 2/25/99, the proposal was raised to $16.25.
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PROJECT COP - 10 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
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Overview of Acquiror
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PROJECT COP - 11 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Overview of Acquiror
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o One of the nation's leading sources of private equity, with resources of
over $7.6 billion.
o Focus on two industries: health care and information services.
o Completed more than 77 initial buy-out investments as well as numerous
follow-on acquisitions for its portfolio companies.
o WCAS' core group of portfolio companies have combined revenues of
approximately $17 billion.
o WCAS' sponsorship has created public companies such as American Oncology
Resources, National Surgery Centers and Lincare Holdings.
o WCAS' recently announced transactions or completed recapitalizations
include Centennial HealthCare Corporation and MedCath Incorporated.
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PROJECT COP - 12 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
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Financial Overview of Proposed Transaction
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PROJECT COP - 13 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Summary of Proposed Transaction Terms
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Transaction: Cash merger for approximately 95.8% of the
outstanding common stock of CAPTAIN. The remaining
4.2% of the outstanding common stock would remain
outstanding as shares of the surviving
corporation, representing 7% of the post-
transaction equity.
Commercially reasonable efforts obligation to
consummate "100% Turnover" structure allowing
shareholders to receive 100% cash. This structure
requires an independent and unaffiliated investor
to be identified within 20 calendar days to
purchase 7% of the post-transaction equity (a).
Price per Share: $16.50
Accounting Treatment: Recapitalization
Termination Fee: $29 million
Key Conditions to Closing: Customary Conditions
Solvency Letter
Financing
Termination Date: August 31, 1999
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(a) This structure was successfully executed in the Regal Cinemas Transaction
announced January 1, 1998.
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PROJECT COP - 14 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Financial Overview of the Proposed Transaction
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(dollars in millions, except per share amounts)
Purchase Price per Share $16.50
Shares Outstanding:
Shares Outstanding (a) 47.3
In-the-Money Options Outstanding (a) (b) 1.2
--------
Total Shares Outstanding 48.5
Total Implied Equity Purchase Price $800.4
Less: Exercise of In-the-Money Option Proceeds (a) (b) ($7.9)
--------
Net Equity Purchase Price $792.5
Plus: Total Debt (as of 12/31/98) $327.9
Less: Total Cash (as of 12/31/98) ($120.1)
--------
Enterprise Purchase Price $1,000.4
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(a) Source: CAPTAIN management.
(b) Based on a purchase price per share of $16.50 and in-the-money options
with a weighted average exercise price of $6.50.
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PROJECT COP - 15 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Financial Overview of the Proposed Transaction
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(dollars in millions, except per share amounts)
Transaction
CAPTAIN Multiples
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Enterprise Value Multiples:
LTM Revenues $ 616.8 1.6x
LTM EBITDA $ 112.3 8.9x
LTM EBITDA less CapEx $ 78.0 12.8x
LTM EBIT $ 89.0 11.2x
Equity Value Multiples:
LTM Net Income $ 44.2 17.9x
CY 1999 Earnings per Share (a) $ 0.95 17.3x
CY 2000 Earnings per Share (a) $ 1.10 15.0x
Premium to Market:
One day prior (02/26/99) $ 10.63 55.3%
One month prior (01/26/99) $ 10.81 52.6%
One day prior to grant of early termination of
WCAS' Hart Scott Rodino filing (10/09/98) $ 6.31 161.4%
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Note: LTM as of 12/31/98.
(a) Source: CAPTAIN management estimates.
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PROJECT COP - 16 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
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Overview of CAPTAIN
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PROJECT COP - 17 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Historical Stock Price History
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January 1, 1998 to Present
[The following table was depicted as a line graph in the printed material.]
Daily Closing Stock Price
1/1/98 $33.75
1/2/98 $33.25
1/5/98 $33.25
1/6/98 $32.88
1/7/98 $32.13
1/8/98 $31.63
1/9/98 $29.50
1/12/98 $29.00
1/13/98 $31.38
1/14/98 $31.38
1/15/98 $32.00
1/16/98 $33.13
1/20/98 $33.25
1/21/98 $33.38
1/22/98 $34.13
1/23/98 $32.50
1/26/98 $30.88
1/27/98 $30.50
1/28/98 $32.94
1/29/98 $30.44
1/30/98 $32.13
2/2/98 $32.25
2/3/98 $31.75
2/4/98 $31.50
2/5/98 $31.44
2/6/98 $30.88
2/9/98 $30.50
2/10/98 $30.13
2/11/98 $29.75
2/12/98 $29.25
2/13/98 $30.13
2/17/98 $30.13
2/18/98 $31.13
2/19/98 $31.88
2/20/98 $32.00
2/23/98 $32.25
2/24/98 $32.75 CAPTAIN buys Preferred Payment Systems.
2/25/98 $33.50
2/26/98 $32.63
2/27/98 $34.31
3/2/98 $35.06
3/3/98 $34.50
3/4/98 $34.06
3/5/98 $33.63
3/6/98 $33.75
3/9/98 $33.06
3/10/98 $33.00
3/11/98 $31.63
3/12/98 $31.94
3/13/98 $31.50
3/16/98 $30.38
3/17/98 $29.94
3/18/98 $31.13
3/19/98 $31.44
3/20/98 $30.88
3/23/98 $31.06
3/24/98 $31.00
3/25/98 $30.69
3/26/98 $30.56
3/27/98 $30.63
3/30/98 $29.88
3/31/98 $30.75
4/1/98 $30.69
4/2/98 $31.81
4/3/98 $32.06
4/6/98 $31.75
4/7/98 $31.69
4/8/98 $31.25
4/9/98 $31.88
4/13/98 $32.56
4/14/98 $33.50
4/15/98 $33.63
4/16/98 $33.38
4/17/98 $33.81
4/20/98 $33.88
4/21/98 $33.56
4/22/98 $33.63
4/23/98 $33.75
4/24/98 $33.50
4/27/98 $32.38
4/28/98 $32.75
4/29/98 $32.75
4/30/98 $31.13
5/1/98 $30.69
5/4/98 $30.94
5/5/98 $30.25
5/6/98 $30.06
5/7/98 $30.00
5/8/98 $30.88
5/11/98 $30.88
5/12/98 $30.00
5/13/98 $29.44
5/14/98 $29.38
5/15/98 $28.63
5/18/98 $27.50
5/19/98 $28.06
5/20/98 $28.44
5/21/98 $27.00
5/22/98 $25.69
5/26/98 $25.19
5/27/98 $24.88
5/28/98 $23.63
5/29/98 $23.38
6/1/98 $23.38
6/2/98 $23.56
6/3/98 $24.19
6/4/98 $24.88
6/5/98 $26.25
6/8/98 $27.50
6/9/98 $26.81
6/10/98 $26.00
6/11/98 $26.75
6/12/98 $27.75
6/15/98 $26.69
6/16/98 $27.38
6/17/98 $27.56
6/18/98 $26.94
6/19/98 $26.13
6/22/98 $25.88
6/23/98 $26.19
6/24/98 $26.75
6/25/98 $26.06
6/26/98 $26.56
6/29/98 $24.13
6/30/98 $26.00
7/1/98 $24.31
7/2/98 $24.75
7/6/98 $24.25
7/7/98 $23.38
7/8/98 $23.63
7/9/98 $24.38
7/10/98 $24.00
7/13/98 $24.00
7/14/98 $23.75
7/15/98 $24.38
7/16/98 $24.19
7/17/98 $24.00
7/20/98 $23.88
7/21/98 $23.63
7/22/98 $23.44
7/23/98 $23.31
7/24/98 $21.00
7/27/98 $21.50
7/28/98 $21.44
7/29/98 $20.25
7/30/98 $22.41
7/31/98 $23.00
8/3/98 $23.00
8/4/98 $21.81
8/5/98 $20.88
8/6/98 $20.88
8/7/98 $21.00
8/10/98 $20.50
8/11/98 $19.44
8/12/98 $19.38
8/13/98 $19.13
8/14/98 $18.56
8/17/98 $17.56
8/18/98 $17.88
8/19/98 $17.31
8/20/98 $16.38
8/21/98 $18.09
8/24/98 $18.31
8/25/98 $17.13
8/26/98 $16.00
8/27/98 $15.06
8/28/98 $14.56
8/31/98 $12.81
9/1/98 $13.56
9/2/98 $12.06
9/3/98 $12.25
9/4/98 $12.19
9/8/98 $ 6.09
9/9/98 $ 7.25 CAPTAIN announces 2H'98 and '99 EPS shortfall
and revision of projected growth rate.
9/10/98 $ 7.13
9/11/98 $ 8.00
9/14/98 $ 7.97
9/15/98 $ 7.69
9/16/98 $ 6.56 CAPTAIN's Chairman and CEO resigns.
9/17/98 $ 6.63
9/18/98 $ 7.09
9/21/98 $ 7.00
9/22/98 $ 7.38
9/23/98 $ 8.88
9/24/98 $ 9.13
9/25/98 $ 9.00
9/28/98 $ 8.75
9/29/98 $ 7.81
9/30/98 $ 8.00
10/1/98 $ 7.50
10/2/98 $ 7.25
10/5/98 $ 7.38
10/6/98 $ 6.63
10/7/98 $ 6.19
10/8/98 $ 6.19
10/9/98 $ 6.31 FTC clears Welsh, Carson, Anderson and
Stowe's HSR filing for early termination.
10/12/98 $ 8.06
10/13/98 $ 8.56
10/14/98 $ 8.06
10/15/98 $ 8.44
10/16/98 $ 8.69
10/19/98 $ 9.00
10/20/98 $10.44
10/21/98 $11.00
10/22/98 $10.25
10/23/98 $10.13
10/26/98 $10.50
10/27/98 $10.81
10/28/98 $12.00
10/29/98 $10.50 CAPTAIN announces disappointing 3Q earnings,
a non-recurring charge of $15-$25 million,
and the establishment of the Special
Committee.
10/30/98 $10.25
11/2/98 $10.88
11/3/98 $10.63
11/4/98 $10.44
11/5/98 $10.25
11/6/98 $10.25
11/9/98 $10.13
11/10/98 $10.56
11/11/98 $10.38
11/12/98 $10.38
11/13/98 $10.63
11/16/98 $10.75
11/17/98 $10.75
11/18/98 $10.56
11/19/98 $10.63
11/20/98 $10.75
11/23/98 $12.19
11/24/98 $11.25
11/25/98 $11.94
11/27/98 $11.94
11/30/98 $11.81
12/1/98 $11.38
12/2/98 $11.25
12/3/98 $11.38
12/4/98 $11.44
12/7/98 $11.25
12/8/98 $10.88
12/9/98 $10.88
12/10/98 $10.19
12/11/98 $10.50
12/14/98 $10.56
12/15/98 $10.31
12/16/98 $10.13
12/17/98 $ 9.94
12/18/98 $ 9.97
12/21/98 $10.00
12/22/98 $ 9.88
12/23/98 $ 9.81
12/24/98 $ 9.75
12/28/98 $ 9.50
12/29/98 $ 9.41
12/30/98 $ 9.81
12/31/98 $10.69
1/4/99 $10.06
1/5/99 $10.13
1/6/99 $10.44
1/7/99 $10.38
1/8/99 $10.81
1/11/99 $10.81
1/12/99 $10.50
1/13/99 $11.56
1/14/99 $11.56
1/15/99 $11.63
1/19/99 $11.00
1/20/99 $10.69
1/21/99 $10.81
1/22/99 $10.75
1/25/99 $10.88
1/26/99 $10.81
1/27/99 $10.75
1/28/99 $11.56
1/29/99 $11.50
2/1/99 $11.50
2/2/99 $11.69
2/3/99 $10.44
2/4/99 $10.25 CAPTAIN announces 1999 EPS expectation of
$0.90-$0.95
2/5/99 $11.19
2/8/99 $11.00
2/9/99 $10.91
2/10/99 $10.50
2/11/99 $10.50
2/12/99 $10.75
2/16/99 $10.50
2/17/99 $10.13
2/18/99 $10.31
2/19/99 $10.63
2/22/99 $10.88
2/23/99 $10.75
2/24/99 $10.56
2/25/99 $10.38
2/26/99 $10.63
- --------------------------------------------------------------------------------
PROJECT COP - 18 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Relative Stock Price Performance
- --------------------------------------------------------------------------------
February 26, 1998 through Present
[The following table was depicted as a line graph in the printed material.]
CAPTAIN Selected S&P
(-67.4%) Public 500
Companies (18.1%)
(-30.5%)
2/26/98 100 100 100
2/27/98 105.17 99.68 100.06
3/2/98 107.47 98.92 99.91
3/3/98 105.75 99.87 100.32
3/4/98 104.41 99.2 99.87
3/5/98 103.07 99.19 98.7
3/6/98 103.45 100.01 100.67
3/9/98 101.34 100.35 100.35
3/10/98 101.15 100.94 101.49
3/11/98 96.93 103.28 101.89
3/12/98 97.89 104.09 102.03
3/13/98 96.55 103.34 101.9
3/16/98 93.1 104.9 102.92
3/17/98 91.76 105.25 103.03
3/18/98 95.4 104.8 103.51
3/19/98 96.36 105.11 103.92
3/20/98 94.64 105.02 104.81
3/23/98 95.21 105.84 104.47
3/24/98 95.02 106.06 105.43
3/25/98 94.06 106.13 105.08
3/26/98 93.68 107.71 104.97
3/27/98 93.87 107.89 104.46
3/30/98 91.57 108.37 104.28
3/31/98 94.25 110.69 105.06
4/1/98 94.06 109.5 105.67
4/2/98 97.51 108.99 106.8
4/3/98 98.28 108.92 107.06
4/6/98 97.32 108.46 106.93
4/7/98 97.13 106.38 105.81
4/8/98 95.79 106.7 105.05
4/9/98 97.7 107.48 105.91
4/13/98 99.81 106.33 105.82
4/14/98 102.68 108.05 106.4
4/15/98 103.07 108.63 106.74
4/16/98 102.3 108 105.67
4/17/98 103.64 108.83 107.06
4/20/98 103.83 109.79 107.15
4/21/98 102.87 110.02 107.44
4/22/98 103.07 109.74 107.81
4/23/98 103.45 108.48 106.76
4/24/98 102.68 107.84 105.65
4/27/98 99.23 104.26 103.61
4/28/98 100.38 104.78 103.47
4/29/98 100.38 106.15 104.38
4/30/98 95.4 106.79 106.02
5/1/98 94.06 106.72 106.9
5/4/98 94.83 106.88 107
5/5/98 92.72 106.11 106.37
5/6/98 92.15 105.07 105.36
5/7/98 91.95 104.31 104.43
5/8/98 94.64 101.7 105.67
5/11/98 94.64 101.99 105.53
5/12/98 91.95 103.5 106.4
5/13/98 90.23 103.26 106.69
5/14/98 90.04 102.98 106.55
5/15/98 87.74 101.97 105.73
5/18/98 84.29 99.76 105.45
5/19/98 86.02 99.33 105.8
5/20/98 87.16 98.3 106.71
5/21/98 82.76 100.16 106.29
5/22/98 78.74 100.05 105.89
5/26/98 77.2 98.01 104.32
5/27/98 76.25 96.71 104.15
5/28/98 72.41 97.28 104.67
5/29/98 71.65 98.07 104.02
6/1/98 71.65 96 104.03
6/2/98 72.22 95.22 104.25
6/3/98 74.14 95.99 103.25
6/4/98 76.25 95.4 104.4
6/5/98 80.46 95.5 106.22
6/8/98 84.29 95.65 106.39
6/9/98 82.18 95.63 106.65
6/10/98 79.69 94.93 106.07
6/11/98 81.99 94 104.38
6/12/98 85.06 94.56 104.78
6/15/98 81.8 91.54 102.7
6/16/98 83.91 92.2 103.71
6/17/98 84.48 93.14 105.57
6/18/98 82.57 92.9 105.5
6/19/98 80.08 92.85 104.96
6/22/98 79.31 92.89 105.2
6/23/98 80.27 92.9 106.75
6/24/98 81.99 93.44 108.03
6/25/98 79.89 93.73 107.69
6/26/98 81.42 92.42 108.06
6/29/98 73.95 93.98 108.57
6/30/98 79.69 95.09 108.12
7/1/98 74.52 97.13 109.53
7/2/98 75.86 97.67 109.32
7/6/98 74.33 97.86 110.36
7/7/98 71.65 97.2 110.11
7/8/98 72.41 96.82 111.22
7/9/98 74.71 97.45 110.48
7/10/98 73.56 96.93 111.03
7/13/98 73.56 96.06 111.11
7/14/98 72.8 95.63 112.29
7/15/98 74.71 95.19 112.03
7/16/98 74.14 95.87 112.9
7/17/98 73.56 95.87 113.17
7/20/98 73.18 95.93 112.91
7/21/98 72.41 95.11 111.1
7/22/98 71.84 95.22 111.01
7/23/98 71.46 92.54 108.69
7/24/98 64.37 92.46 108.79
7/27/98 65.9 90.97 109.4
7/28/98 65.71 90.06 107.78
7/29/98 62.07 90.01 107.3
7/30/98 68.68 90.7 108.99
7/31/98 70.5 89.72 106.87
8/3/98 70.5 87.66 106.08
8/4/98 66.86 85.16 102.24
8/5/98 63.98 84.01 103.12
8/6/98 63.98 84.16 103.91
8/7/98 64.37 87.24 103.89
8/10/98 62.84 86.16 103.29
8/11/98 59.58 84.23 101.94
8/12/98 59.39 86.37 103.39
8/13/98 58.62 85.22 102.5
8/14/98 56.9 84.25 101.34
8/17/98 53.83 83.67 103.34
8/18/98 54.79 85 105.01
8/19/98 53.07 84.44 104.71
8/20/98 50.19 82.99 104.09
8/21/98 55.46 82.66 103.11
8/24/98 56.13 81.97 103.76
8/25/98 52.49 81.44 104.21
8/26/98 49.04 78.07 103.39
8/27/98 46.17 73.36 99.42
8/28/98 44.64 73.52 97.95
8/31/98 39.27 70.44 91.29
9/1/98 41.57 72.25 94.81
9/2/98 36.97 72.26 94.45
9/3/98 37.55 71.3 93.67
9/4/98 37.36 72.18 92.87
9/8/98 18.68 73.06 97.6
9/9/98 22.22 71.26 95.95
9/10/98 21.84 69.71 93.47
9/11/98 24.52 71.35 96.22
9/14/98 24.43 73.42 98.19
9/15/98 23.56 74.15 98.95
9/16/98 20.11 74.98 99.7
9/17/98 20.31 74.84 97.16
9/18/98 21.74 77.35 97.27
9/21/98 21.46 76.81 97.64
9/22/98 22.61 78.17 98.18
9/23/98 27.2 80.28 101.66
9/24/98 27.97 80.03 99.43
9/25/98 27.59 79.29 99.63
9/28/98 26.82 80.75 100
9/29/98 23.95 78.22 100.03
9/30/98 24.52 79.15 96.98
10/1/98 22.99 75.89 94.06
10/2/98 22.22 75.17 95.61
10/5/98 22.61 73.17 94.27
10/6/98 20.31 72.09 93.89
10/7/98 18.97 69.36 92.56
10/8/98 18.97 67.87 91.49
10/9/98 19.35 68.71 93.87
10/12/98 24.71 70.55 95.14
10/13/98 26.25 69.43 94.86
10/14/98 24.71 68.82 95.89
10/15/98 25.86 71.55 99.89
10/16/98 26.63 74.2 100.74
10/19/98 27.59 77.69 101.31
10/20/98 31.99 78.29 101.46
10/21/98 33.72 78.99 102.03
10/22/98 31.42 79.35 102.84
10/23/98 31.03 79.22 102.1
10/26/98 32.18 81.03 102.26
10/27/98 33.14 82.74 101.59
10/28/98 36.78 81.56 101.85
10/29/98 32.18 81.81 103.55
10/30/98 31.42 82.4 104.77
11/2/98 33.33 84.46 106
11/3/98 32.57 82.5 105.93
11/4/98 31.99 83.59 106.68
11/5/98 31.42 85.2 108.12
11/6/98 31.42 83.21 108.81
11/9/98 31.03 83.24 107.77
11/10/98 32.38 83.7 107.59
11/11/98 31.8 83.86 106.89
11/12/98 31.8 84.01 106.58
11/13/98 32.57 83.75 107.35
11/16/98 32.95 83.28 108.32
11/17/98 32.95 82.15 108.64
11/18/98 32.38 82.56 109.14
11/19/98 32.57 83.01 109.91
11/20/98 32.95 84.21 110.95
11/23/98 37.36 86.72 113.31
11/24/98 34.48 86.17 112.81
11/25/98 36.59 86.18 113.18
11/27/98 36.59 85.41 113.7
11/30/98 36.21 85.7 110.96
12/1/98 34.87 85.84 112.07
12/2/98 34.48 84.64 111.69
12/3/98 34.87 85.07 109.68
12/4/98 35.06 84.94 112.21
12/7/98 34.48 84.21 113.26
12/8/98 33.33 84.58 112.66
12/9/98 33.33 85.18 112.86
12/10/98 31.23 83.96 111.1
12/11/98 32.18 82.9 111.23
12/14/98 32.38 81.46 108.82
12/15/98 31.61 81.35 110.89
12/16/98 31.03 83.14 110.8
12/17/98 30.46 84.1 112.52
12/18/98 30.56 84.94 113.29
12/21/98 30.65 86.48 114.7
12/22/98 30.27 85.96 114.77
12/23/98 30.08 86.6 117.15
12/24/98 29.89 86.58 116.94
12/28/98 29.12 87.92 116.86
12/29/98 28.83 89.01 118.42
12/30/98 30.08 89.79 117.48
12/31/98 32.76 91.46 117.22
1/4/99 30.84 90.21 117.11
1/5/99 31.03 88.98 118.7
1/6/99 31.99 89.28 121.33
1/7/99 31.8 89.06 121.08
1/8/99 33.14 90.13 121.59
1/11/99 33.14 89.51 120.52
1/12/99 32.18 89.47 118.2
1/13/99 35.44 89.38 117.71
1/14/99 35.44 87.85 115.59
1/15/99 35.63 88.79 118.56
1/19/99 33.72 88.62 119.39
1/20/99 32.76 88.06 119.83
1/21/99 33.14 87.15 117.78
1/22/99 32.95 87.19 116.83
1/25/99 33.33 86.14 117.67
1/26/99 33.14 86.37 119.42
1/27/99 32.95 85.16 118.55
1/28/99 35.44 85.65 120.66
1/29/99 35.25 86.74 122.03
2/1/99 35.25 85.02 121.39
2/2/99 35.82 84.8 120.34
2/3/99 31.99 83.94 121.3
2/4/99 31.42 82.85 119.05
2/5/99 34.29 81.95 118.19
2/8/99 33.72 80.47 118.6
2/9/99 33.43 79.69 115.97
2/10/99 32.18 79.23 116.68
2/11/99 32.18 78.93 119.58
2/12/99 32.95 72.62 117.3
2/16/99 32.18 70.96 118.42
2/17/99 31.03 70.15 116.72
2/18/99 31.61 68.42 117.99
2/19/99 32.57 67.23 118.17
2/22/99 33.33 66.47 121.31
2/23/99 32.95 67.78 121.22
2/24/99 32.38 68.53 119.52
2/25/99 31.8 68.96 118.72
2/26/99 32.57 69.54 118.09
- ----------
Note: Selected Public Companies include: American Dental Partners, American
Oncology Resources, Corvel, First Commonwealth, First Health Group, Healthcare
Recoveries, Healthplan Services, Orthodontic Centers of America, Pediatrix
Medical Group, United Payors & United Providers and Vision Twenty-One.
- --------------------------------------------------------------------------------
PROJECT COP - 19 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Relative Stock Price Performance
- --------------------------------------------------------------------------------
October 29, 1998 (a) through Present
[The following table was depicted as a line graph in the printed material.]
CAPTAIN Selected S&P
(1.2%) Public 500
Companies (14.0%)
(-16.3%)
10/29/98 100 100 100
10/30/98 97.62 100.44 101.17
11/2/98 103.57 103.56 102.36
11/3/98 101.19 101.96 102.29
11/4/98 99.4 103.43 103.01
11/5/98 97.62 105.76 104.41
11/6/98 97.62 101.98 105.07
11/9/98 96.43 102.18 104.08
11/10/98 100.6 103.3 103.9
11/11/98 98.81 103.69 103.23
11/12/98 98.81 104.34 102.92
11/13/98 101.19 104.21 103.66
11/16/98 102.38 103.48 104.6
11/17/98 102.38 101.81 104.92
11/18/98 100.6 102.44 105.39
11/19/98 101.19 102.91 106.14
11/20/98 102.38 104.2 107.15
11/23/98 116.07 106.54 109.42
11/24/98 107.14 105.88 108.94
11/25/98 113.69 105.85 109.3
11/27/98 113.69 104.93 109.8
11/30/98 112.5 105.71 107.16
12/1/98 108.33 105.87 108.23
12/2/98 107.14 104.6 107.86
12/3/98 108.33 104.81 105.91
12/4/98 108.93 104.74 108.36
12/7/98 107.14 104.09 109.37
12/8/98 103.57 104.36 108.79
12/9/98 103.57 105.31 108.98
12/10/98 97.02 103.67 107.28
12/11/98 100 102.22 107.42
12/14/98 100.6 100.92 105.09
12/15/98 98.21 101.12 107.08
12/16/98 96.43 103.2 107
12/17/98 94.64 104.31 108.66
12/18/98 94.94 104.79 109.4
12/21/98 95.24 106.39 110.77
12/22/98 94.05 105.2 110.83
12/23/98 93.45 105.91 113.13
12/24/98 92.86 105.85 112.92
12/28/98 90.48 106.97 112.85
12/29/98 89.58 107.93 114.35
12/30/98 93.45 109.18 113.44
12/31/98 101.79 112.95 113.2
1/4/99 95.83 111.49 113.09
1/5/99 96.43 109.44 114.63
1/6/99 99.4 109.46 117.17
1/7/99 98.81 109.55 116.93
1/8/99 102.98 110.52 117.42
1/11/99 102.98 109.94 116.39
1/12/99 100 109.4 114.14
1/13/99 110.12 108.8 113.67
1/14/99 110.12 107.22 111.63
1/15/99 110.71 108.24 114.49
1/19/99 104.76 108.15 115.29
1/20/99 101.79 107.64 115.72
1/21/99 102.98 105.93 113.74
1/22/99 102.38 106.18 112.82
1/25/99 103.57 104.91 113.63
1/26/99 102.98 104.76 115.32
1/27/99 102.38 102.92 114.48
1/28/99 110.12 103.26 116.52
1/29/99 109.52 104.07 117.84
2/1/99 109.52 102.32 117.23
2/2/99 111.31 102.26 116.21
2/3/99 99.4 101.42 117.14
2/4/99 97.62 100.61 114.97
2/5/99 106.55 99.54 114.13
2/8/99 104.76 97.36 114.54
2/9/99 103.87 95.97 111.99
2/10/99 100 95.83 112.67
2/11/99 100 95.82 115.48
2/12/99 102.38 89.34 113.28
2/16/99 100 87.1 114.36
2/17/99 96.43 86.37 112.72
2/18/99 98.21 84.47 113.94
2/19/99 101.19 82.35 114.12
2/22/99 103.57 81.24 117.15
2/23/99 102.38 82.27 117.06
2/24/99 100.6 82.47 115.42
2/25/99 98.81 82.59 114.65
2/26/99 101.19 83.69 114.03
- ----------
Note: Selected Public Companies include: American Dental Partners, American
Oncology Resources, Corvel, First Commonwealth, First Health Group, Healthcare
Recoveries, Healthplan Services, Orthodontic Centers of America, Pediatrix
Medical Group, United Payors & United Providers and Vision Twenty-One.
(a) Date of announcement of the formation of the Special Committee.
- --------------------------------------------------------------------------------
PROJECT COP - 20 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Public Companies Forward P/E Multiples
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Forward P/E Multiple (a)
----------------------------------------------------------------------------------------
Company 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 Current (b)
-------- ------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
American Dental Partners (c) NA NA 19.9x 11.2x 13.8x 10.0x
American Oncology Resources, Inc. 24.4x 21.6x 16.3x 13.8x 19.0x 13.2x
Corvel Corporation 15.4x 15.3x 14.3x 13.8x 12.4x 12.7x
First Commonwealth, Inc. 10.9x 13.6x 13.2x 9.8x 10.8x 9.8x
First Health Group Corp. 16.5x 17.2x 17.6x 14.5x 10.6x 11.0x
Healthcare Recoveries, Inc. 28.7x 28.2x 22.6x 10.9x 17.6x 9.2x
Healthplan Services Corporation 14.6x 18.2x 12.0x 12.4x 11.5x 11.1x
Orthodontic Centers of America, Inc. 23.1x 27.9x 24.9x 18.5x 20.1x 15.9x
Pediatrix Medical Group, Inc. 24.8x 25.3x 19.1x 20.5x 25.8x 13.8x
United Payors & United Providers, Inc. 12.2x 20.0x 19.6x 15.8x 22.3x 19.0x
Vision Twenty-One, Inc. 9.6x 15.0x 9.3x 9.4x 10.5x 7.5x
- ------------------------------------------------------------------------------------------------------------------------------------
Mean 18.0x 20.2x 17.2x 13.7x 15.8x 12.1x
- ------------------------------------------------------------------------------------------------------------------------------------
CAPTAIN 29.5x 24.9x 19.7x 6.6x 10.4x 11.1x
</TABLE>
- ----------------
(a) Source: FactSet Data Systems.
(b) Calendar year 1999 P/E.
(c) American Dental Partners' IPO was on 4/16/98.
- --------------------------------------------------------------------------------
PROJECT COP - 21 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Calendar Year 1999 Estimates
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
Calendar Year 1999
------------------------------------------
Wall Street Current
Estimate as of CAPTAIN Mngt.
4/30/98 (a) Estimate Change
------------- ------------- ------
Revenue $ 827.9 $ 722.0 ($105.9)
Operating Income (b) $ 139.9 $ 95.0(c) ($ 44.9)
Earnings per Share $ 1.48 $ 0.95 ($ 0.53)
- ----------
(a) Based on Eleanor Kerns of BT Alex. Brown research dated April 30, 1998.
(b) As defined by the research analyst (revenues less cost of services, G&A
and amortization).
(c) Adjusted to exclude $2.0 million of financing costs to match cost
allocations with BT Alex. Brown research.
- --------------------------------------------------------------------------------
PROJECT COP - 22 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Volume At Price Graph
- --------------------------------------------------------------------------------
October 9, 1998 (c) through Present
[The following table was depicted as a bar chart in the printed material.]
---------------------------------
Total Volume: 121.0 million
Turnover (% of Float (a)): 269.2%
---------------------------------
Percentage of Shares Traded
At This(b) Below This
$6 0.0% 23.3%
$7 23.3% 20.3%
$8 43.5% 8.8%
$9 52.3% 4.5%
$10 56.8% 30.8%
$11 87.6% 7.3%
$12 94.9% 4.4%
$13 99.3% 0.7%
- ----------
(a) Source: CAPTAIN Management.
(b) Refers to specified price or any decimal value of that price.
(c) Since announcement of early termination for WCAS' HSR filing.
- --------------------------------------------------------------------------------
PROJECT COP - 23 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Volume At Price Graph
- --------------------------------------------------------------------------------
February 26, 1998 through Present
[The following table was depicted as a bar chart in the printed material.]
---------------------------------
Total Volume: 191.7 million
Turnover (% of Float (a)): 426.4%
---------------------------------
Percentage of Shares Traded
At This(b) Below This
$ 6 14.7% 0.0%
$ 7 12.8% 14.7%
$ 8 5.5% 27.5%
$ 9 2.8% 33.0%
$10 19.4% 35.9%
$11 4.6% 55.3%
$12 3.1% 59.9%
$13 0.5% 63.0%
$14 0.3% 63.5%
$15 0.5% 63.8%
$16 0.9% 64.3%
$17 0.7% 65.1%
$18 0.7% 65.8%
$19 0.6% 66.5%
$20 1.0% 67.2%
$21 2.0% 68.1%
$22 0.5% 70.2%
$23 3.1% 70.7%
$24 4.1% 73.8%
$25 1.6% 77.9%
$26 2.7% 79.6%
$27 2.2 82.2%
$28 0.8% 84.4%
$29 1.3% 85.2%
$30 3.9% 86.5%
$31 4.6% 90.4%
$32 0.8% 95.0%
$33 2.8% 95.8%
$34 1.0% 98.7%
$35 0.4% 99.6%
- ----------
(a) Source: CAPTAIN Management.
(b) Refers to specified price or any decimal value of that price.
- --------------------------------------------------------------------------------
PROJECT COP - 24 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Summary of Analysts' Estimates and Comments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Report Stock Price 1999 2000 Long-term
Financial Institution Date Recommendation Target Estimates Estimates Growth Rate
- --------------------------------- ------ -------------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Advest (Mains) 2/5/99 Buy $11.50 $ 0.90 $ 1.05 30%
BT Alex. Brown (Kerns/Ockers) 2/5/99 Buy -- $ 0.90 $ 1.04 15%
DLJ (Willard) 2/8/99 Mkt. Performance -- $ 0.86 $ 1.00 25%
Hambrecht & Quist (Lunbeck/Pryce) 2/5/99 Hold Mid-Teens $ 0.90 $ 1.04 25%
JP Morgan (Chiarelli/Baldwin) 2/5/99 Long-Term Buy $14.00 $ 0.90 -- --
Morgan Stanley DW (Richter/Kravec) 2/5/99 Neutral $13.00-$15.00 $ 0.93 $ 1.08 15%
NMS (Greub) 2/8/99 Buy $12.00 $ 0.90 $ 1.03 15%
PaineWebber (McKeever) 2/5/99 Neutral -- $ 0.90 $ 1.05 15%
Stephens Inc. (Weaver/Fitz) 2/8/99 Outperform $14.00 $ 0.88 $ 1.02 20%
- -------------------------------------------------------------------------------------------------------------------------------
Mean $13.42 $ 0.90 $ 1.04 20.0%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Stephens Inc. (2/8/99) -- We believe that CAPTAIN's management is making the
right investments for the long-term viability of the Company. CAPTAIN remains
cash flow positive, with cash flow from operations of $7 million during the
quarter, and has net debt of $218 million. Consequently, we believe the Company
is worth $14 a share on a take-out basis.
BT Alex. Brown (2/5/99) -- CAPTAIN has experienced three quarters of earnings
disappointments. We have reduced our 1999 EPS estimate to $0.90 from $0.95 and
our 2000 estimate to $1.04 from $1.12 due to lower-than-expected margins.
However, we believe it will take 2-3 quarters of solid earnings performance for
wide-spread investor support.
Morgan Stanley Dean Witter (2/5/99) -- We believe CAPTAIN would make a
compelling partner in any buyout transaction, especially given the Company's
extremely solid balance sheet and healthy cash flow from operations. Although
the fourth quarter result was below expectations, we believe the worst may be
over. We believe the takeout value of the stock could be in the $13-$15 range.
Hambrecht & Quist (2/5/99) -- New executive management is making important
changes in both CAPTAIN's menu of products and their pricing and in CAPTAIN's
administrative infrastructure. In the near-term, we believe the stock continues
to enjoy some support from the well appreciated buyout potential, but we believe
that there is less of a takeover premium in the shares than existed last fall.
We continue to believe an acquisition could occur in the low to mid-teens.
- --------------------------------------------------------------------------------
PROJECT COP - 25 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Overview of CAPTAIN
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Projected Year Ended December 31, (a)
------------------------------------------------------
1996 1997 1998 1999E 2000E 2001E 2002E 2003E
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Field Case Management $ 118.9 $ 138.7 $ 167.8 $ 172.0 $ 180.0 $ 185.4 $ 191.0 $ 196.8
Cost Containment 83.8 142.9 183.7 225.0 261.8 301.2 340.2 382.0
Health Services 170.0 212.2 265.2 325.0 389.7 449.0 513.2 581.4
-------- -------- -------- -------- -------- -------- -------- --------
Total Revenues $ 372.7 $ 493.9 $ 616.8 $ 722.0 $ 831.5 $ 935.6 $1,044.3 $1,160.2
====================================================================================================================================
Revenue Mix:
Field Case Management 31.9% 28.1% 27.2% 23.8% 21.6% 19.8% 18.3% 17.0%
Cost Containment 22.5% 28.9% 29.8% 31.2% 31.5% 32.2% 32.6% 32.9%
Health Services 45.6% 43.0% 43.0% 45.0% 46.9% 48.0% 49.1% 50.1%
</TABLE>
- ----------
(a) Source: CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 26 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Overview of CAPTAIN
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Projected Year Ended December 31,(a)
-------------------------------------------------------
1996 1997(b) 1998(c) 1999E 2000E 2001E 2002E 2003E
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $ 372.7 $ 493.9 $ 616.8 $ 722.0 $ 831.5 $ 935.6 $ 1,044.3 $ 1,160.2
EBITDA 56.3 88.1 112.3 126.4 149.9 174.7 201.5 231.8
EBIT(d) 46.1 70.9 87.3 93.0 108.9 129.3 153.3 176.5
Net Income $ 25.8 $ 36.2 $ 44.2 $ 46.5 $ 55.0 $ 66.4 $ 83.5 $ 99.3
========= ========= ========= ========= ========= ========= ========= =========
EPS $ 0.60 $ 0.78 $ 0.93 $ 0.95 $ 1.10 $ 1.30 $ 1.60 $ 1.91
========= ========= ========= ========= ========= ========= ========= =========
====================================================================================================================================
Margins (% of Net Revenues):
EBITDA 15.1% 17.8% 18.2% 17.5% 18.0% 18.7% 19.3% 20.0%
EBIT 12.4% 14.4% 14.2% 12.9% 13.1% 13.8% 14.7% 15.2%
Net Income 6.9% 7.3% 7.2% 6.4% 6.6% 7.1% 8.0% 8.6%
Growth Rates:
Total Revenues -- 32.5% 24.9% 17.1% 15.2% 12.5% 11.6% 11.1%
EBITDA -- 56.5% 27.5% 12.5% 18.6% 16.6% 15.3% 15.0%
EBIT -- 53.8% 23.1% 6.6% 17.0% 18.7% 18.6% 15.1%
Net Income -- 40.3% 22.0% 5.2% 18.4% 20.5% 25.8% 19.0%
EPS -- 30.7% 18.7% 3.1% 15.6% 17.9% 22.9% 19.8%
</TABLE>
- ----------
(a) Source: CAPTAIN management estimates.
(b) Excludes the effects of a $38.6 million non-recurring charge taken in
conjunction with the merger between CONSTABLE and OFFICER which formed
CAPTAIN.
(c) Excludes the effects of a $12.6 million non-recurring charge taken in the
first quarter in conjunction with the acquisition of POLICE and a
non-recurring charge of $20.5 million taken in the fourth quarter, which
was primarily associated with the restructuring of the case management
businesses.
(d) EBIT includes the effects of the amortization of finance charges, which
were $1.7 million in 1998.
- --------------------------------------------------------------------------------
PROJECT COP - 27 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Historical and Projected Quarterly EBITDA and EPS
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
[The following table was depicted as a bar chart in the printed material.]
1997A EBITDA EPS
Q1 $17.2 $0.15
Q2 $21.9 $0.21
Q3 $26.9 $0.25
Q4 $23.0 $0.17
1998A
Q1 $27.0 $0.22
Q2 $33.6 $0.30
Q3 $31.0 $0.26
Q4 $20.8 $0.15
1998E(a)
Q1 $22.1 $0.14
Q2 $33.5 $0.26
Q3 $39.7 $0.32
Q4 $31.2 $0.22
- ----------
(a) Source: CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 28 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Public Company CapEx Statistics
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-----------------------
LTM CapEx / LTM Revenue
-----------------------
Healthcare Recoveries 9.7%
Ortho. Centers 9.0%
First Health 8.8%
CAPTAIN 5.6%
CorVel 4.9%
Vision Twenty-One 4.8%
AOR 4.4%
Amer. Dental Partners 4.1%
Healthplan Services 3.0%
Pediatrix 2.0%
UP & UP 1.3%
First Commonwealth 1.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
----------------------
LTM CapEx / LTM EBITDA
----------------------
Vision Twenty-One 56.1%
Amer. Dental Partners 44.5%
CorVel 35.2%
Ortho. Centers 31.3%
CAPTAIN 30.6%
AOR 30.5%
Healthcare Recoveries 30.1%
Healthplan Services 26.6%
First Health 26.5%
First Commonwealth 10.1%
Pediatrix 6.4%
UP & UP 3.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROJECT COP - 29 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Valuation Based on Selected Public Companies
- --------------------------------------------------------------------------------
PROJECT COP - 30 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Valuation Based on Selected Public Companies
- --------------------------------------------------------------------------------
[The following table was depicted as a bar chart in the printed material.]
Implied Price Per Share
[The following table was depicted as a bar chart in the printed material.]
LTM Revenues(b) $19.89
LTM EBITDA(b) $14.42
LTM EBIT(b) $15.38
LTM EPS(b) $15.24
1999 EPS(c) $11.55 WCAS Offer $16.50
2000 EPS(c) $10.93
- ----------
Note: Implied prices per share based on mean multiples of selected public
companies: American Dental Partners, American Oncology Resources, Corvel, First
Commonwealth, First Health Group, Healthcare Recoveries, Healthplan Services,
Orthodontic Centers of America, Pediatrix Medical Group, United Payors & United
Providers and Vision Twenty-One.
(a) Based on 47.3 million shares outstanding and 1.2 million in-the-money
options with a weighted average exercise price of $6.50.
(b) LTM as of 12/31/98.
(c) 1999 and 2000 EPS projections based on CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 31 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Valuation Based on Selected Public Companies
- --------------------------------------------------------------------------------
(dollars in millions)
<TABLE>
<CAPTION>
CAPTAIN Selected Public
-------------------------- Company Multiples
Transaction ----------------------------
Statistics Multiples (a) Mean Range
---------- ------------- ---- ---------------
<S> <C> <C> <C> <C>
Valuation Based on Latest Twelve Months Statistics (b) (c)
- ----------------------------------------------------------
-------------------------- ----------------------------
LTM Revenues $ 616.8 1.6x 1.9x 0.6x - 5.9x
LTM EBITDA $ 112.3 8.9x 8.0x 3.4x - 13.7x
LTM EBIT $ 89.0 11.2x 10.6x 4.0x - 15.4x
LTM Earnings per Share $ 0.93 17.8x 16.5x 11.2x - 23.9x
-------------------------- ----------------------------
Valuation Based on Projected Statistics (d)
- -------------------------------------------
-------------------------- ----------------------------
Cal. 1999 Earnings per Share $ 0.95 17.3x 12.1x 7.5x - 19.0x
Cal. 2000 Earnings per Share $ 1.10 15.0x 9.9x 5.8x - 15.8x
-------------------------- ----------------------------
</TABLE>
- ----------
(a) Assumes a $16.50 per share purchase price.
(b) Implied valuation based on revenues, EBITDA and EBIT are adjusted by
adding cash of $120.1 and subtracting debt of $327.9.
(c) LTM as of 12/31/98.
(d) CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 32 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Valuation Based on Selected M&A Transactions
- --------------------------------------------------------------------------------
PROJECT COP - 33 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Valuation Based on Selected M&A Transactions
- --------------------------------------------------------------------------------
Implied Price per Share
[The following table was depicted as a bar chart in the printed material.]
Purchase Transactions* CompDent Transaction**
LTM Revenues(b) $ 12.67 $ 10.66
LTM EBITDA(b) $ 22.81 $ 13.08
LTM EBIT(b) $ 19.97 $ 13.13 WCAS Offer $16.50
LTM Net Income(b) $ 19.67 $ 15.53
Forward Net Income(c) $ 17.46 $ 14.86
- ----------
Note: Implied prices per share based on mean multiples of selected purchase
accounting M&A transactions greater than $150 million since 1/1/95 in the
specialty managed care and physician practice management sectors
(target/acquiror): CompDent/Golder, Thoma; United Dental/Protective Life; Merit
Behavioral Care/Magellan Health Services; Human Affairs Intl./Magellan Health
Services; Value Health/Columbia/HCA; Merit Behavioral Care/KKR; Talbert Medical
Management/MedPartners; and EmCare/Laidlaw.
* Purchase transactions greater than $150 million in equity value.
** CompDent represents the only purchase accounting specialty managed care or
PPM transaction greater than $150 million since the decline in market
value of the respective industries.
(a) Based on 47.3 million shares outstanding and 1.2 million in-the-money
options with a weighted average exercise price of $6.50.
(b) LTM as of 12/31/98.
(c) 1999 and 2000 net income projections based on CAPTAIN management
estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 34 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Valuation Based on Selected M&A Transactions
- --------------------------------------------------------------------------------
(dollars in millions)
<TABLE>
<CAPTION>
CAPTAIN
------------------------------ Selected M&A Transactions
Transaction -------------------------------
Statistics Multiples (a) Mean Range
<S> <C> <C> <C> <C> <C>
Valuation Based on Latest Twelve Months (b) (c)
- -----------------------------------------------
------------------------------ -------------------------------
LTM Revenues $616.8 1.6x 1.3x 0.3x - 3.4x
LTM EBITDA $112.3 8.9x 11.6x 6.5x - 16.0x
LTM EBIT $ 89.0 11.2x 13.1x 8.5x - 20.4x
LTM Net Income $ 44.2 17.9x 21.4x 15.4x - 30.5x
------------------------------ -------------------------------
Valuation Based on Projected Statistics
- ---------------------------------------
------------------------------ -------------------------------
Forward Net Income (d) $ 47.8 16.6x 17.6x 12.7x - 21.6x
------------------------------ -------------------------------
</TABLE>
- ----------
(a) Multiples based on purchase price of $16.50.
(b) Implied valuation based on revenues, EBITDA and EBIT are adjusted by
adding cash of $120.1 and subtracting debt of $327.9.
(c) LTM as of 12/31/98.
(d) Source: CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 35 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Purchase M&A Transactions (a)
- --------------------------------------------------------------------------------
(dollars in millions)
<TABLE>
<CAPTION>
Enterprise Purchase Price
as a Multiple of LTM:
Equity Enterprise ---------------------------
Date Target Purchase Purchase
Ann. Acquiror Price Price Revenue EBITDA EBIT
- ---------- -------------------------------------------------------- --------- ---------- ------- ------ ----
<S> <C> <C> <C> <C> <C> <C>
01/19/1999 CompDent Corporation $ 152 $ 199 1.2x 7.4x 9.4x
Golder, Thoma, Cressey, Rauner, Inc., TA Associates,
Inc., NMS Capital Partners
03/11/1998 United Dental Corporation $ 180 $ 177 1.0x NM NM
Protective Life Corporation
10/27/1997 Merit Behavioral Care Corporation $ 458 $ 696 1.1x 13.6x NM
Magellan Health Services, Inc.
08/14/1997 Talbert Medical Management Holdings, Inc. $ 194 $ 126 0.3x NA NA
MedPartners, Inc.
08/06/1997 Human Affairs International, Incorporated $ 422 $ 396 3.4x 14.1x 14.3x
Magellan Health Services, Inc.
07/30/1997 EmCare Holdings, Inc. $ 337 $ 394 1.9x 16.0x 20.4x
Laidlaw, Inc.
04/15/1997 Value Health, Inc. $ 1,124 $ 1,122 0.6x 6.5x 8.5x
Columbia/HCA Healthcare Corporation
06/30/1995 Merit Behavioral Care Corporation $ 392 $ 408 1.2x 12.1x NM
Kohlberg Kravis Roberts & Co.
------------------------------------------------------------------
Mean: $ 407 $ 440 1.3x 11.6x 13.1x
------------------------------------------------------------------
Low: $ 152 $ 126 0.3x 6.5x 8.5x
High: $ 1,124 $ 1,122 3.4x 16.0x 20.4x
------------------------------------------------------------------
<CAPTION>
Equity Purchase Price
as a Multiple of:
--------------------------
Date Trailing Forward
Ann. Net Income Net Income Accounting
- ---------- ---------- ---------- -------------
<S> <C> <C> <C>
01/19/1999 16.8x 14.9x Purchase
03/11/1998 NM 21.6x Purchase
10/27/1997 NA NA Purchase
08/14/1997 NA NA Purchase
08/06/1997 22.8x NA Purchase
07/30/1997 30.5x 21.0x Purchase
04/15/1997 15.4x 12.7x Purchase
06/30/1995 NM NA Recapitalization
----------------------------------
Mean: 21.4x 17.6x
----------------------------------
Low: 15.4x 12.7x
High: 30.5x 21.6x
----------------------------------
</TABLE>
- ----------
(a) Purchase transactions greater than $150 million since 1/1/95 in the
specialty managed care and physician practice management industries.
- --------------------------------------------------------------------------------
PROJECT COP - 36 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Pooling M&A Transactions (a)
- --------------------------------------------------------------------------------
(dollars in millions)
<TABLE>
<CAPTION>
Enterprise Purchase Price
as a Multiple of LTM:
Equity Enterprise ---------------------------
Date Target Purchase Purchase
Ann. Acquiror Price Price Revenue EBITDA EBIT
- ---------- ------------------------------------- --------- ---------- ------- ------ ----
<S> <C> <C> <C> <C> <C> <C>
12/14/1998 Physician Reliance Network, Inc. $ 654 $ 705 1.4x 9.0x 13.6x
American Oncology Resources, Inc.
02/24/1998 Preferred Payment Systems, Inc. $ 267 $ 316 7.2x 17.5x 19.5x
Concentra Managed Care, Inc.
04/22/1997 OccuSystems, Inc. $ 474 $ 508 3.0x 19.0x 25.6x
CRA Managed Care, Inc.
01/21/1997 InPhyNet Medical Management Inc. $ 481 $ 478 1.2x 17.4x 20.9x
MedPartners, Inc.
05/20/1996 Sterling Healthcare Group, Inc. $ 219 $ 201 1.6x 17.5x 22.7x
FPA Medical Management, Inc.
05/14/1996 Caremark International $2,724 $3,106 1.3x 20.0x 24.5x
MedPartners/Mullikin, Inc.
12/12/1995 Pacific Physician Services, Inc. $ 332 $ 343 0.8x 10.8x 17.1x
MedPartners/Mullikin, Inc.
08/15/1995 Mullikin Medical Enterprises, L.P. $ 360 $ 357 0.9x 16.5x NM
MedPartners, Inc.
03/27/1995 Diagnostek, Inc. $ 412 $ 431 0.6x 12.7x 15.2x
Value Health, Inc.
<CAPTION>
Equity Purchase Price
as a Multiple of:
--------------------------
Date Trailing Forward
Ann. Net Income Net Income Accounting
- ---------- ---------- ---------- -------------
<S> <C> <C> <C>
12/14/1998 21.5x NA Pooling
02/24/1998 25.6x NA Pooling
04/22/1997 40.8x 24.0x Pooling
01/21/1997 30.0x 22.1x Pooling
05/20/1996 50.6x 28.2x Pooling
05/14/1996 37.7x 23.6x Pooling
12/12/1995 30.4x 19.7x Pooling
08/15/1995 NM NA Pooling
03/27/1995 22.1x 16.2x Pooling
</TABLE>
- ----------
(a) Pooling transactions greater than $150 million since 1/1/95 in the
specialty managed care and physician practice management industries.
- --------------------------------------------------------------------------------
PROJECT COP - 37 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Valuation Based on
Discounted Cash Flow Analysis
- --------------------------------------------------------------------------------
PROJECT COP - 38 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Discounted Cash Flow Analysis
- --------------------------------------------------------------------------------
Based on Terminal Value as a Multiple of CY 2003 EBITDA
[The following table was depicted as a bar chart in the printed material.]
Implied Price Per Share (a)
Capital WCAS offer $16.50
Discount
Rate 6.0x 7.5x 9.0x
=============================================
19.00% $ 12.59 $ 16.15 $ 19.71
17.00% $ 11.25 $ 14.52 $ 17.79
15.00% $ 10.04 $ 13.05 $ 16.05
Multiple of CY 2003 EBITDA
- ----------
(a) Based on 47.3 million shares outstanding and 1.2 million in-the-money
options with a weighted average exercise price of $6.50.
- --------------------------------------------------------------------------------
PROJECT COP - 39 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Discounted Cash Flow Analysis
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended December 31 (a),
----------------------------------------------------------------------
1998A 1999E 2000E 2001E 2002E 2003E
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue $616.8 $722.0 $831.5 $935.6 $1,044.3 $1,160.2
Growth Rate -- 17.1% 15.2% 12.5% 11.6% 11.1%
EBITDA 112.3 126.4 149.9 174.7 201.5 231.8
EBITDA Margin 18.2% 17.5% 18.0% 18.7% 19.3% 20.0%
EBIT 87.3 93.0 108.9 129.3 153.3 176.5
EBIT Margin 14.2% 12.9% 13.1% 13.8% 14.7% 15.2%
EBIT After Tax (b) 51.5 54.9 64.2 76.3 90.5 104.1
plus: Depreciation & Amortization 25.1 33.3 41.0 45.5 48.2 55.3
less: Use of Non-cash Working Capital (Source) (11.9) (10.3) (30.4) (2.9) (31.0) (4.2)
less: Maintenance Capital Expenditures (34.4) (39.1) (42.4) (44.2) (46.0) (47.8)
less: Acquisition Capital Expenditures (18.1) (35.7) (25.5) (15.5) (15.5) (15.5)
-------- -------- -------- -------- -------- --------
Unlevered Free Cash Flow $12.2 $3.1 $7.0 $59.2 $46.2 $91.9
======== ======== ======== ======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PV of Terminal Value as of 12/31/98
---------------------------------------- ----------------------------------
PV Cash Multiple of 2003 EBITDA ($231.8 million) Less: Implied Equity Valuation
Discount Flows as of ---------------------------------------- Net Debt ----------------------------------
Rate 12/31/98 6.0x 7.5x 9.0x @ 12/31/98 6.0x 7.5x 9.0x
- -------- ----------- ------ ------ -------- ---------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15.0% $119.1 $691.5 $864.4 $1,037.3 ($207.9) $602.7 $775.6 $948.5
17.0% $111.3 $634.4 $793.0 $951.6 ($207.9) $537.9 $696.5 $855.1
19.0% $104.3 $582.8 $728.6 $874.3 ($207.9) $479.3 $625.0 $770.7
<CAPTION>
--------------------------------------
Implied Equity Valuation per Share (c)
Discount --------------------------------------
Rate 6.0x 7.5x 9.0x
-------- ------ ------ ------
<S> <C> <C> <C>
15.0% $12.59 $16.15 $19.71
17.0% $11.25 $14.52 $17.79
19.0% $10.04 $13.05 $16.05
</TABLE>
- ----------
(a) Source: CAPTAIN management estimates.
(b) Assumes a 41.0% tax rate.
(c) Based on 47.3 million shares outstanding and 1.2 million in-the-money
options with a weighted average exercise price of $6.50.
- --------------------------------------------------------------------------------
PROJECT COP - 40 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Valuation Based on Premiums Paid
- --------------------------------------------------------------------------------
PROJECT COP - 41 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Premiums Paid Analysis
- --------------------------------------------------------------------------------
January 1, 1995 through Present
-------------------------------
WCAS Offer:
One Day Prior to Grant of Early
Termination of WCAS' HSR Filing
161.4%
-------------------------------
-------------------------------
WCAS Offer:
One Day Prior Premium
55.3%
-------------------------------
[The following table was depicted as a bar chart in the printed material.]
All Deals (84) Health Care (16) Health Care Services (9)
-------------- ---------------- ------------------------
One Day 26.30% 37.70% 34.10%
One Month 35.30% 45.50% 49.50%
- ----------
Source: Securities Data Company.
(a) Includes completed deals between $750 and $1,250 million since 1/1/95.
Includes only changes of control for non-finance companies.
- --------------------------------------------------------------------------------
PROJECT COP - 42 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Premiums Paid Analysis
- --------------------------------------------------------------------------------
Selected Mergers and Acquisitions (84) (a)
<TABLE>
<CAPTION>
Premium
CAPTAIN Transaction -------------------------------- Implied Price
Price Premium (b) Mean Range per Share
------- ----------- ----- ------------------- -------------
------- ----------- -------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
One Day Prior (02/26/99) $10.63 55.3% 26.3% -24.3% 118.5% $13.42
One Month Prior (01/26/99) $10.81 52.6% 35.3% -27.5% 118.5% $14.63
One day prior to grant of early termination
of WCAS' HSR filing (10/09/98) $6.31 161.4% -- -- -- --
------- ----------- -------------------------------- -------------
</TABLE>
Selected Health Care Mergers and Acquisitions (16) (a)
<TABLE>
<CAPTION>
Premium
CAPTAIN Transaction -------------------------------- Implied Price
Price Premium (b) Mean Range per Share
------- ----------- ----- ------------------- -------------
------- ----------- -------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
One Day Prior (02/26/99) $10.63 55.3% 37.7% -5.2% 118.5% $14.63
One Month Prior (01/26/99) $10.81 52.6% 45.5% 5.5% 118.5% $15.73
One day prior to grant of early termination
of WCAS' HSR filing (10/09/98) $6.31 161.4% -- -- -- --
------- ----------- -------------------------------- -------------
</TABLE>
Selected Health Care Services Mergers and Acquisitions (9) (a)
<TABLE>
<CAPTION>
Premium
CAPTAIN Transaction -------------------------------- Implied Price
Price Premium (b) Mean Range per Share
------- ----------- ----- ------------------- -------------
------- ----------- -------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
One Day Prior (02/26/99) $10.63 55.3% 34.1% 7.7% 118.5% $14.25
One Month Prior (01/26/99) $10.81 52.6% 49.5% 18.9% 118.5% $16.17
One day prior to grant of early termination
of WCAS' HSR filing (10/09/98) $6.31 161.4% -- -- -- --
------- ----------- -------------------------------- -------------
</TABLE>
- ----------
(a) Includes completed deals between $750 million and $1,250 million since
1/1/95. Includes only changes of control for non-finance companies.
(b) Based on a purchase price per share of $16.50.
- --------------------------------------------------------------------------------
PROJECT COP - 43 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Post-Transaction Common Stock Analysis
- --------------------------------------------------------------------------------
PROJECT COP - 44 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Post-Transaction Common Stock Analysis
- --------------------------------------------------------------------------------
- --------------------------------------------------------
Total Gross Shares Outstanding (a):
2002 Basic Shares 25.1
2002 Mngt. Options 2.1
2002 PIK/Mezzanine Debt Shares 1.3
-----------
Total Gross Shares Outstanding 28.5
========================================================
Implied Price per Share Based on Forward Net Income Multiples:
2002 Forward Net Income Multiple (c)
Discount ----------------------------------------
Rate (b) 11.0x 13.0x 15.0x
- -------- ------ ------ ------
25.0% $10.64 $12.47 $14.30
27.5% $9.92 $11.63 $13.34
30.0% $9.27 $10.87 $12.46
Implied Price per Share Based on LTM EBITDA Multiples:
2002 LTM EBITDA Multiple (c)
Discount ----------------------------------------
Rate (b) 6.0x 7.5x 9.0x
- -------- ------ ------ ------
25.0% $11.85 $15.08 $18.30
27.5% $11.05 $14.06 $17.08
30.0% $10.32 $13.14 $15.95
- ----------
Note: Assumes a transaction closing date of 06/30/99.
(a) Based on WCAS offer.
(b) Discount rates based on expected returns for equity investors in highly
leveraged capital structures.
(c) Based on forward net income and LTM EBITDA multiples as of 2/26/99 for the
the comparable public companies.
- --------------------------------------------------------------------------------
PROJECT COP - 45 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Leveraged Recapitalization Analysis
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended December (a),
------------------------------------------------------------------------------------
Actual Pro Forma
1998 1998 (b) 1999E (c) 2000E (c) 2001E (c) 2002E (c) 2003E (c)
------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Revenues $616.8 $616.8 $722.0 $831.5 $935.6 $1,044.3 $1,160.2
EBITDA 112.3 112.3 126.4 149.9 174.7 201.5 231.8
Net Income 44.2 11.4 29.9 21.5 32.1 45.0 57.1
Earnings per Share $0.93 $0.43 $0.79 $0.80 $1.18 $1.64 $2.06
Capital Expenditures $34.4 $34.4 $39.1 $42.4 $44.2 $46.0 $47.8
Interest Expense 16.3 69.5 43.0 71.0 73.0 74.4 77.1
Total Cash $120.1 $45.0 $19.9 $19.4 $24.3 $42.0 $107.6
Total Debt 327.9 675.0 679.0 715.6 706.8 724.5 745.1
Total Equity 239.9 (171.6) (141.7) (120.2) (88.2) (43.1) 14.0
Key Ratios:
EBITDA/Interest 6.9x 1.6x 2.9x 2.1x 2.4x 2.7x 3.0x
(EBITDA - CapEx)/Interest 4.8x 1.1x 2.0x 1.5x 1.8x 2.1x 2.4x
Senior Debt/EBITDA 0.6x 3.3x 2.9x 2.6x 2.1x 1.8x 1.5x
Total Debt/EBITDA 2.9x 6.0x 5.4x 4.8x 4.0x 3.6x 3.2x
</TABLE>
- ----------
Note: Assumes recapitalization occurs 6/30/99.
(a) Recapitalization structure based on WCAS offer.
(b) Assumes recapitalization occurs 1/1/98.
(c) Projections based on CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 46 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Leveraged Recapitalization Analysis
- --------------------------------------------------------------------------------
PROJECT COP - 47 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Leveraged Recapitalization Analysis
- --------------------------------------------------------------------------------
Key Financial Assumptions (a):
<TABLE>
<CAPTION>
Multiple of
Debt Structure Amount Interest Rate LTM EBITDA Amortization/Maturity
- -------------- ------ ------------- ---------- ---------------------
<S> <C> <C> <C> <C>
Senior B Term Loan $250 8.25% 2.2x 1%, 1%, 1%, 1%, 1%, 1%, 94%
Senior C Term Loan $125 8.50% 1.1x 1%, 1%, 1%, 1%, 1%, 1%, 1%, 93%
Senior Sub. Notes $190 12.00% 1.7x None / 10 Years
PIK/Mezzanine Debt $110 14.00% 1.0x None / 10 Years
---- ----
Total $675 6.0x
</TABLE>
o Rollover Equity of 7% of fully-diluted post-transaction shares
o Management options grant of 7.5% of fully diluted post-transaction shares
o Terminal value as a multiple of LTM EBITDA of 6.0x to 9.0x
o Required equity returns of 25% to 30%
- ----------
(a) Based on WCAS capital structure. Interest rates and amortization/maturity
may very based on market conditions.
- --------------------------------------------------------------------------------
PROJECT COP - 48 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Leveraged Recapitalization Analysis
- --------------------------------------------------------------------------------
- -----------------------------
Assuming 9.0x EBITDA Multiple
in Year 2002 (a)
- -----------------------------
Implied Equity Returns:
Purchase Price per Share
Total Debt/ --------------------------------------------------------------
EBITDA $15.00 $15.50 $16.00 $16.50 $17.00
- ----------- ------ ------ ------ ------ ------
6.0x 35.9% 33.3% 30.9% 28.8% 26.7%
5.5x 32.3% 30.1% 28.1% 26.3% 24.5%
5.0x 29.6% 27.8% 26.0% 24.4% 22.9%
4.5x 27.5% 25.8% 24.3% 22.8% 21.4%
- ----------
(a) Based on CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 49 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Leveraged Recapitalization Analysis
- --------------------------------------------------------------------------------
- -----------------------
Assuming 6.0x
Total Debt / EBITDA (a)
- -----------------------
Implied Equity Returns:
Purchase Price per Share
EBITDA Multiple ------------------------------------------------------------
in Year 2002 $14.00 $14.50 $15.00 $15.50 $16.00 $16.50 $17.00
- --------------- ------ ------ ------ ------ ------ ------ ------
6.0x 14.1% 11.6% 9.4% 7.4% 5.6% 3.9% 2.3%
6.5x 19.9% 17.3% 15.0% 12.8% 10.9% 9.1% 7.4%
7.0x 25.1% 22.4% 19.9% 17.7% 15.6% 13.7% 12.0%
7.5x 29.8% 27.0% 24.4% 22.1% 19.9% 18.0% 16.1%
8.0x 34.2% 31.2% 28.5% 26.1% 23.9% 21.8% 19.9%
8.5x 38.2% 35.1% 32.3% 29.8% 27.5% 25.4% 23.4%
9.0x 41.9% 38.7% 35.9% 33.3% 30.9% 28.8% 26.7%
- ----------
(a) Based on the WCAS proposal and CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 50 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
Appendix
- --------------------------------------------------------------------------------
PROJECT COP - 51 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Post-Transaction Capitalization
- --------------------------------------------------------------------------------
PROJECT COP - 52 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Post-Transaction Capitalization
- --------------------------------------------------------------------------------
(dollars in millions)
- -----------------------
WCAS Proposed Structure
=======================
<TABLE>
<CAPTION>
Multiple of Multiple of Multiple of
Sources LTM EBITDA (a) 1999 EBITDA 2000 EBITDA
------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Revolving Credit Facility $0.0 0.0 x 0.0 x 0.0 x
Senior Term Loans 375.0 3.3 x 3.0 x 2.5 x
Senior Subordinated Notes 190.0 1.7 x 1.5 x 1.3 x
PIK/Mezzanine Debt 110.0 1.0 x 0.9 x 0.7 x
-------- ------ ------ ------
Total Debt $675.0 6.0 x 5.3 x 4.5 x
New Equity $381.4 3.4 x 3.0 x 2.5 x
Rollover Equity 33.0 0.3 x 0.3 x 0.2 x
-------- ------ ------ ------
Total Equity $414.3 3.7 x 3.3 x 2.8 x
Total $1,089.3 9.7 x 8.6 x 7.3 x
======== ====== ====== ======
LTM EBITDA $112.3 $126.4 $149.9
</TABLE>
- ----------
(a) LTM as of December 31, 1998; excludes non-recurring charges.
- --------------------------------------------------------------------------------
PROJECT COP - 53 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
CAPTAIN Financial and Stock Price Information
- --------------------------------------------------------------------------------
PROJECT COP - 54 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Historical and Projected Balance Sheet
- --------------------------------------------------------------------------------
(dollars in millions)
<TABLE>
<CAPTION>
As of December 31, Projected as of December 31,
-------------------------- ----------------------------------------------
1996 1997 1998 1999E 2000E 2001E 2002E 2003E
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and Cash Equivalents $70.3 $12.6 $120.1 $108.5 $104.8 $54.8 $92.6 $24.9
Accounts Receivable, Net 78.7 107.0 128.5 148.4 170.5 188.3 212.2 232.8
Other Current Assets 8.9 26.2 29.7 35.1 40.4 45.5 50.8 56.4
------ ------ ------ ------ ------ ------ ------ ------
Total Current Assets 157.9 145.8 278.3 292.1 315.8 288.7 355.6 314.2
PP&E, Net 45.9 65.7 86.9 111.1 130.0 144.7 158.2 165.9
Goodwill and Other Intangibles, net 155.2 262.6 280.4 299.7 309.5 311.0 312.1 312.8
Financing Costs 3.4 3.1 7.7 5.7 3.7 1.8 0.5 (0.0)
Other Non-Current Assets 5.5 5.8 3.9 10.0 11.5 13.0 14.5 16.1
------ ------ ------ ------ ------ ------ ------ ------
Total Non-Current Assets 210.0 337.2 378.9 426.5 454.8 470.4 485.2 494.8
------ ------ ------ ------ ------ ------ ------ ------
TOTAL ASSETS $367.9 $483.0 $657.2 $718.5 $770.6 $759.1 $840.8 $808.9
====== ====== ====== ====== ====== ====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses $31.7 $52.1 $57.8 $79.4 $77.3 $97.3 $95.5 $117.4
Current Portion of L-T Debt 4.1 7.5 0.1 0.0 97.9 0.0 230.0 0.0
Revolver 5.7 49.0 0.0 0.0 0.0 0.0 0.0 76.9
Other Current Liabilities 0.0 0.0 7.5 0.8 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------ ------ ------
Total Current Liabilities 41.5 108.6 65.3 80.2 175.2 97.3 325.5 194.3
Long-Term Debt 132.5 150.1 327.9 327.9 230.0 230.0 0.0 0.0
Other Non-Current Liabilities 15.8 17.8 24.1 24.1 24.1 24.1 24.1 24.1
------ ------ ------ ------ ------ ------ ------ ------
Total Non-Current Liabilities 148.3 167.9 352.0 352.0 254.1 254.1 24.1 24.1
Stockholders' Equity 178.1 206.4 239.9 286.4 341.4 407.7 491.2 590.5
------ ------ ------ ------ ------ ------ ------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $367.9 $483.0 $657.2 $718.5 $770.6 $759.1 $840.8 $808.9
====== ====== ====== ====== ====== ====== ====== ======
- -------------------------------------------------------------------------------------------------------------------------
Selected Financial Data
Current Ratio 3.8x 1.3x 4.3x 3.6x 1.8x 3.0x 1.1x 1.6x
Working Capital $116.4 $37.1 $213.0 $211.8 $140.6 $191.4 $30.1 $119.8
Non-Cash Working Capital $55.9 $81.0 $92.9 $103.3 $133.7 $136.6 $167.6 $171.8
Total Debt / Equity 79.8% 100.1% 136.7% 114.5% 96.0% 56.4% 46.8% 13.0%
Total Debt / Total Capitalization 44.4% 50.0% 57.8% 53.4% 49.0% 36.1% 31.9% 11.5%
Total Debt / EBITDA 2.5x 2.3x 2.9x 2.6x 2.2x 1.3x 1.1x 0.3x
</TABLE>
- ----------
Source: CAPTAIN management estimates.
- --------------------------------------------------------------------------------
PROJECT COP - 55 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Historical and Projected Cash Flow Statement
- --------------------------------------------------------------------------------
(dollars in millions)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1996 1997 1998E 1999E 2000E 2001E 2002E 2003E
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $28.0 $10.0 $24.6 $29.9 $21.5 $32.1 $45.0 $57.1
------ ------ ------ ------ ------ ------ ------ ------
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by (Used in) Operating Activities:
Depreciation 6.7 10.5 15.2 22.4 29.4 33.4 36.4 44.1
Amortization of Goodwill and Financing Costs 3.5 6.7 9.9 10.0 11.8 12.2 12.5 12.9
Changes in Assets and Liabilities:
Accounts Receivable (15.0) (27.4) (21.6) (19.9) (22.1) (17.8) (23.9) (20.5)
Accounts Payable (2.7) 12.3 5.6 21.7 (2.1) 20.0 (1.8) 21.9
Other (5.0) (12.4) 18.6 (18.3) (7.6) (6.5) (6.8) (7.2)
------ ------ ------ ------ ------ ------ ------ ------
Net Cash Provided by (Used in) Operating Activities: 15.6 (0.3) 162.3 53.5 47.2 92.2 82.9 132.6
Investing Activities:
Total Non Acquisition CapEx (24.0) (26.3) (34.4) (39.1) (42.4) (44.2) (46.0) (47.8)
Acquisition Purchase Price (68.8) (102.1) (18.1) (35.7) (25.5) (15.5) (15.5) (15.5)
Disposals of PP&E 0.0 0.6 0.4 0.0 0.0 0.0 0.0 0.0
Other Investing Activities (12.0) 12.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------ ------ ------
Net Cash Used in Investment Activities: (104.9) (115.8) (52.0) (74.8) (67.8) (59.6) (61.4) (63.3)
Financing Activities:
Proceeds from Issuance of Debt 160.1 69.8 223.6 0.0 0.0 0.0 0.0 0.0
Other 13.2 5.7 (3.1) 0.0 0.0 0.0 0.0 0.0
Cash Flow Before Debt Repayment 84.1 (40.6) 330.7 (21.3) (20.6) 32.5 21.5 69.3
Revolver Draw (Repayment) 0.0 0.0 (49.0) 0.0 0.0 0.0 0.0 0.0
Other Debt Repayment, net (37.2) (5.1) (49.7) (3.8) 20.1 (27.6) (3.8) (3.8)(a)
------ ------ ------ ------ ------ ------ ------ ------
Net Increase (Decrease) in Cash 46.8 (45.6) 232.0 (25.0) (0.5) 4.9 17.7 65.6
Cash - Beginning of Period 11.4 58.2 12.6 45.0 19.9 19.4 24.3 42.0
------ ------ ------ ------ ------ ------ ------ ------
Cash - End of Period $58.2 $12.6 $244.6 $19.9 $19.4 $24.3 $42.0 $107.6
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- ----------
Source: CAPTAIN management estimates.
(a) Amount represents $230 million of repayment of convertible securities and
an $82.9 million draw down on the Company's revolving credit facilities.
- --------------------------------------------------------------------------------
PROJECT COP - 56 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
Selected Public Companies
- --------------------------------------------------------------------------------
PROJECT COP - 57 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Public Company Statistics
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------- --------------------------------- ----------------------------------
---------------------------- --------------------------- ----------------------------
Revenue Multiple EBITDA Multiple EBIT Multiple
---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
UP & UP 5.9 x UP & UP 13.7 x Ortho. Centers 15.4 x
Ortho. Centers 3.8 x Ortho. Centers 13.2 x UP & UP 14.9 x
Pediatrix 3.0 x Pediatrix 9.7 x Healthplan Services 12.9 x
First Health 2.2 x CAPTAIN (a) 8.9 x Amer. Dental Partners 12.0 x
CAPTAIN (a) 1.6 x AOR 8.1 x AOR 11.5 x
AOR 1.2 x Vision Twenty-One 7.2 x Pediatrix 11.4 x
CAPTAIN 1.2 x Amer. Dental Partners 7.2 x Vision Twenty-One 11.3 x
Healthcare Recoveries 1.1 x First Health 6.6 x CAPTAIN (a) 11.2 x
CorVel 0.9 x Healthplan Services 6.5 x CorVel 8.7 x
Healthplan Services 0.7 x CAPTAIN 6.3 x CAPTAIN 8.0 x
Amer. Dental Partners 0.7 x CorVel 6.3 x First Health 7.7 x
First Commonwealth 0.7 x First Commonwealth 6.2 x First Commonwealth 7.2 x
Vision Twenty-One 0.6 x Healthcare Recoveries 3.4 x Healthcare Recoveries 4.0 x
- ---------------------------------- --------------------------------- ----------------------------------
<CAPTION>
- ---------------------------------- --------------------------------- ----------------------------------
---------------------------- --------------------------- ----------------------------
Calendar 1999 P/E Calendar 2000 P/E Cal. 2000 P/E to Growth
---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
UP & UP 19.0 x UP & UP 15.8 x CorVel 73.4%
CAPTAIN (a) 17.3 x CAPTAIN (a) 15.0 x First Health 72.5%
Ortho. Centers 15.9 x Ortho. Centers 12.0 x CAPTAIN (a) 64.3%
Pediatrix 13.8 x Pediatrix 11.6 x Healthplan Services 59.8%
AOR 13.2 x CorVel 11.0 x First Commonwealth 56.6%
CorVel 12.7 x AOR 10.3 x Pediatrix 42.8%
CAPTAIN 11.1 x First Health 9.9 x CAPTAIN 41.4%
Healthplan Services 11.1 x CAPTAIN 9.6 x AOR 39.8%
First Health 11.0 x Healthplan Services 9.0 x Ortho. Centers 35.3%
Amer. Dental Partners 10.0 x First Commonwealth 8.5 x Healthcare Recoveries 28.2%
First Commonwealth 9.8 x Amer. Dental Partners 8.0 x Amer. Dental Partners 24.5%
Healthcare Recoveries 9.2 x Healthcare Recoveries 7.2 x Vision Twenty-One 19.3%
Vision Twenty-One 7.5 x Vision Twenty-One 5.8 x UP & UP NA
- ---------------------------------- --------------------------------- ----------------------------------
</TABLE>
- ----------
(a) CAPTAIN at $16.50 purchase price per share.
- --------------------------------------------------------------------------------
PROJECT COP - 58 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Public Company Statistics
- --------------------------------------------------------------------------------
(dollars in millions)
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------- ---------------------------------
---------------------------- -------------------------- ---------------------------
Equity Value Enterprise Value Q Over Q EPS Growth
---------------------------- -------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
AOR $984.8 AOR $1,213.7 Pediatrix 37.6%
First Health $973.2 First Health $1,119.4 Ortho. Centers 37.0%
CAPTAIN (a) $792.5 CAPTAIN (a) $1,000.4 AOR 34.0%
Ortho. Centers $740.2 Ortho. Centers $763.7 Healthcare Recoveries 25.4%
CAPTAIN $502.5 CAPTAIN $710.3 UP & UP 23.9%
Pediatrix $492.6 Pediatrix $515.4 Vision Twenty-One 20.6%
UP & UP $465.3 UP & UP $449.5 First Commonwealth 15.4%
CorVel $147.7 Healthplan Services $206.6 CorVel 13.6%
Healthplan Services $117.5 CorVel $140.7 CAPTAIN -11.9%
Healthcare Recoveries $95.6 Vision Twenty-One $127.1 First Health NM
Amer. Dental Partners $59.5 Amer. Dental Partners $68.4 Amer. Dental Partners NM
Vision Twenty-One $55.4 Healthcare Recoveries $51.6 Healthplan Services NM
First Commonwealth $47.1 First Commonwealth $40.8
- ---------------------------------- -------------------------------- ---------------------------------
<CAPTION>
- ---------------------------------- -------------------------------- ---------------------------------
---------------------------- -------------------------- ---------------------------
EBITDA Margin EBIT Margin Net Income Margin
---------------------------- -------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
UP & UP 43.4% UP & UP 39.9% UP & UP 24.4%
First Health 33.2% First Health 28.6% Healthcare Recoveries 18.4%
Healthcare Recoveries 32.3% Healthcare Recoveries 27.9% First Health 17.9%
Pediatrix 31.1% Pediatrix 26.6% Pediatrix 16.0%
Ortho. Centers 28.7% Ortho. Centers 24.6% Ortho. Centers 15.4%
CAPTAIN 18.2% CAPTAIN 14.4% CAPTAIN 7.2%
AOR 14.6% AOR 10.3% CorVel 6.3%
CorVel 14.0% CorVel 10.1% First Commonwealth 6.0%
Healthplan Services 11.3% First Commonwealth 9.0% AOR 5.5%
First Commonwealth 10.6% Healthplan Services 5.7% Amer. Dental Partners 2.3%
Amer. Dental Partners 9.3% Amer. Dental Partners 5.5% Vision Twenty-One 2.2%
Vision Twenty-One 8.5% Vision Twenty-One 5.4% Healthplan Services 1.4%
- ---------------------------------- -------------------------------- ---------------------------------
</TABLE>
- ----------
(a) CAPTAIN at $16.50 purchase price per share.
- --------------------------------------------------------------------------------
PROJECT COP - 59 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Public Companies
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
--------------------------------------------
Market Statistics
--------------------------------------------
Stock Price Equity Enterprise
Company 02/26/99 Value Value
- ------------------------------------- ----------- ------ ----------
<S> <C> <C> <C>
American Dental Partners $8.00 $59.5 $68.4
American Oncology Resources, Inc. $10.00 $984.8 $1,213.7
Corvel Corporation $35.50 $147.7 $140.7
First Commonwealth, Inc. $12.50 $47.1 $40.8
First Health Group Corp. $16.00 $973.2 $1,119.4
Healthcare Recoveries, Inc. $8.31 $95.6 $51.6
Healthplan Services Corporation $8.44 $117.5 $206.6
Orthodontic Centers of America, Inc. $15.13 $740.2 $763.7
Pediatrix Medical Group, Inc. $30.88 $492.6 $515.4
United Payors & United Providers, Inc $24.75 $465.3 $449.5
Vision Twenty-One, Inc. $3.69 $55.4 $127.1
- -----------------------------------------------------------------------------------------
Mean:
- -----------------------------------------------------------------------------------------
CAPTAIN Trading $10.63 $502.5 $710.3
CAPTAIN Purchase Price $16.50 $792.5 $1,000.4
<CAPTION>
-------------------------------------------------------------------------------------------
Valuation Benchmarks
-------------------------------------------------------------------------------------------
Enterprise Value as a Multiple of LTM Equity Value as a Multiple of
----------------------------------------- ----------------------------------------------
Company Revenues EBITDA EBIT Trailing EPS Cal '99 EPS Cal '00 EPS
- ------------------------------------- -------- ------ ------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
American Dental Partners 0.7 x 7.2 x 12.0 x 20.3 x 10.0 x 8.0 x
American Oncology Resources, Inc. 1.2 x 8.1 x 11.5 x 17.6 x 13.2 x 10.3 x
Corvel Corporation 0.9 x 6.3 x 8.7 x 14.6 x 12.7 x 11.0 x
First Commonwealth, Inc. 0.7 x 6.2 x 7.2 x 12.4 x 9.8 x 8.5 x
First Health Group Corp. 2.2 x 6.6 x 7.7 x 11.5 x 11.0 x 9.9 x
Healthcare Recoveries, Inc. 1.1 x 3.4 x 4.0 x 11.2 x 9.2 x 7.2 x
Healthplan Services Corporation 0.7 x 6.5 x 12.9 x NM 11.1 x 9.0 x
Orthodontic Centers of America, Inc. 3.8 x 13.2 x 15.4 x 23.5 x 15.9 x 12.0 x
Pediatrix Medical Group, Inc. 3.0 x 9.7 x 11.4 x 18.0 x 13.8 x 11.6 x
United Payors & United Providers, Inc 5.9 x 13.7 x 14.9 x 23.9 x 19.0 x 15.8 x
Vision Twenty-One, Inc. 0.6 x 7.2 x 11.3 x 11.7 x 7.5 x 5.8 x
- ------------------------------------------------------------------------------------------------------------------------------------
Mean: 1.9 x 8.0 x 10.6 x 16.5 x 12.1 x 9.9 x
- ------------------------------------------------------------------------------------------------------------------------------------
CAPTAIN Trading 1.2 x 6.3 x 8.0 x 11.5 x 11.1 x 9.6 x
CAPTAIN Purchase Price 1.6 x 8.9 x 11.2 x 17.8 x 17.3 x 15.0 x
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------- ---------------------------
Growth Rates Margins (LTM)
-------------------------------------------------------------- ---------------------------
Historical
(Most Recent Qtr.) Projected Calendar Year EPS
------------------ ----------------------------- 2000 P/E to Net
Company Revenues EPS 1998-1999 1999-2000 I/B/E/S Growth Rate EBITDA EBIT Income
- ------------------------------------- -------- ------- --------- --------- ------- ----------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Dental Partners 67.7% NM 48.1% 25.0% 32.6% 24.5% 9.3% 5.5% 2.3%
American Oncology Resources, Inc. 34.3% 34.0% 24.6% 27.6% 25.9% 39.8% 14.6% 10.3% 5.5%
Corvel Corporation 18.2% 13.6% 14.4% 15.7% 15.0% 73.4% 14.0% 10.1% 6.3%
First Commonwealth, Inc. 11.2% 15.4% 21.9% 15.0% 15.0% 56.6% 10.6% 9.0% 6.0%
First Health Group Corp. -0.2% NM 3.6% 11.0% 13.7% 72.5% 33.2% 28.6% 17.9%
Healthcare Recoveries, Inc. 24.9% 25.4% 15.4% 27.8% 25.6% 28.2% 32.3% 27.9% 18.4%
Healthplan Services Corporation 8.3% NM -2.6% 23.7% 15.0% 59.8% 11.3% 5.7% 1.4%
Orthodontic Centers of America, Inc. 42.2% 37.0% 35.7% 32.6% 34.0% 35.3% 28.7% 24.6% 15.4%
Pediatrix Medical Group, Inc. 43.3% 37.6% 25.8% 19.2% 27.0% 42.8% 31.1% 26.6% 16.0%
United Payors & United Providers, Inc 27.9% 23.9% 17.1% 20.8% NA NA 43.4% 39.9% 24.4%
Vision Twenty-One, Inc. 36.7% 20.6% 28.9% 30.0% 30.0% 19.3% 8.5% 5.4% 2.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Mean: 28.6% 25.9% 21.2% 22.6% 23.4% 45.2% 21.5% 17.6% 10.5%
- ------------------------------------------------------------------------------------------------------------------------------------
CAPTAIN Trading 13.8% -11.9% 2.5% 15.6% 23.3% 41.4% 18.2% 14.4% 7.2%
CAPTAIN Purchase Price 13.8% -11.9% 2.5% 15.6% 23.3% 64.3% 18.2% 14.4% 7.2%
</TABLE>
- --------------------------------------------------------------------------------
PROJECT COP - 60 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
Selected Public Companies
- --------------------------------------------------------------------------------
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
---------------------------------------------- ---------------------------------------------
Market Statistics Balance Sheet Data
---------------------------------------------- ---------------------------------------------
Stock 52-Week Price Price as
Price ---------------- Change a % Cash and Total
Company 02/26/99 High Low 12 Months of High Equivalents Assets Total Debt Book Value
- ------------------------------------- -------- ------ ------ --------- -------- ----------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Dental Partners $8.00 $19.38 $7.00 NA 41.3% $3.1 $71.5 $12.1 $46.9
American Oncology Resources, Inc. $10.00 $16.13 $7.81 -36.3% 62.0% $10.1 $976.5 $238.9 $612.6
Corvel Corporation $35.50 $40.88 $32.50 -1.0% 86.9% $7.0 $64.5 $0.0 $50.4
First Commonwealth, Inc. $12.50 $16.50 $9.50 -15.3% 75.8% $6.3 $37.4 $0.0 $26.2
First Health Group Corp. $16.00 $30.88 $13.63 -34.7% 51.8% $53.8 $638.9 $200.0 $242.7
Healthcare Recoveries, Inc. $8.31 $24.38 $8.31 -61.1% 34.1% $44.0 $55.8 $0.0 $34.8
Healthplan Services Corporation $8.44 $27.00 $8.00 -66.1% 31.3% $6.1 $280.5 $95.2 $93.6
Orthodontic Centers of America, Inc. $15.13 $24.06 $11.75 -21.4% 62.9% $0.5 $270.9 $23.9 $219.3
Pediatrix Medical Group, Inc. $30.88 $65.56 $18.06 -25.0% 47.1% $0.6 $252.9 $23.4 $188.3
United Payors & United Providers, Inc $24.75 $29.75 $14.00 37.5% 83.2% $28.7 $99.6 $12.8 $73.0
Vision Twenty-One, Inc. $3.69 $11.88 $3.44 -61.4% 31.1% $10.7 $197.5 $82.3 $80.9
- ------------------------------------------------------------------------------------------------------------------------------------
Mean: -28.5% 55.2%
- ------------------------------------------------------------------------------------------------------------------------------------
CAPTAIN Trading $10.63 $35.50 $5.44 -67.4% 29.9% $120.1 $657.2 $327.9 $239.9
CAPTAIN Purchase Price $16.50 $35.50 $5.44 -49.4% 46.5% $120.1 $657.2 $327.9 $239.9
</TABLE>
<TABLE>
<CAPTION>
Operating Data (LTM) EPS Estimates
----------------------------------------- ----------------
Calendar
Net ----------------
Company Revenues EBITDA EBIT Income 1999 2000
- ------------------------------------- -------- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
American Dental Partners $103.2 $9.5 $5.7 $2.4 $0.80 $1.00
American Oncology Resources, Inc. $1,028.4 $149.7 $105.5 $56.5 $0.76 $0.97
Corvel Corporation $159.5 $22.3 $16.1 $10.1 $2.79 $3.23
First Commonwealth, Inc. $62.5 $6.6 $5.6 $3.8 $1.28 $1.47
First Health Group Corp. $509.5 $169.4 $145.6 $91.4 $1.45 $1.61
Healthcare Recoveries, Inc. $46.8 $15.1 $13.0 $8.6 $0.90 $1.15
Healthplan Services Corporation $282.5 $32.0 $16.0 $4.0 $0.76 $0.94
Orthodontic Centers of America, Inc. $201.8 $58.0 $49.7 $31.1 $0.95 $1.26
Pediatrix Medical Group, Inc. $170.1 $52.9 $45.3 $27.2 $2.24 $2.67
United Payors & United Providers, Inc $75.7 $32.8 $30.2 $18.4 $1.30 $1.57
Vision Twenty-One, Inc. $206.8 $17.7 $11.2 $4.6 $0.49 $0.64
- -------------------------------------------------------------------------------------------------------
Mean: $258.8 $51.5 $40.4 $23.4 $1.25 $1.50
- -------------------------------------------------------------------------------------------------------
CAPTAIN Trading $616.8 $112.3 $89.0 $44.2 $0.95 $1.10
CAPTAIN Purchase Price $616.8 $112.3 $89.0 $44.2 $0.95 $1.10
<CAPTION>
Capitalization
----------------------------------------
Total Debt/ Total Debt/ Total Debt/
Company Book Value Capitalization EBITDA
- ------------------------------------- ----------- -------------- -----------
<S> <C> <C> <C>
American Dental Partners 25.7% 20.5% 1.3 x
American Oncology Resources, Inc. 39.0% 28.1% 1.6 x
Corvel Corporation 0.0% 0.0% 0.0 x
First Commonwealth, Inc. 0.0% 0.0% 0.0 x
First Health Group Corp. 82.4% 45.2% 1.2 x
Healthcare Recoveries, Inc. 0.0% 0.0% 0.0 x
Healthplan Services Corporation 101.7% 50.4% 3.0 x
Orthodontic Centers of America, Inc. 10.9% 9.8% 0.4 x
Pediatrix Medical Group, Inc. 12.4% 11.1% 0.4 x
United Payors & United Providers, Inc 17.6% 15.0% 0.4 x
Vision Twenty-One, Inc. 101.7% 50.4% 4.7 x
- --------------------------------------------------------------------------------
Mean: 35.6% 20.9% 1.2 x
- --------------------------------------------------------------------------------
CAPTAIN Trading 136.7% 57.8% 2.9 x
CAPTAIN Purchase Price 136.7% 57.8% 2.9 x
</TABLE>
- --------------------------------------------------------------------------------
PROJECT COP - 61 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
- --------------------------------------------------------------------------------
Ownership Summary
- --------------------------------------------------------------------------------
PROJECT COP - 62 - [LOGO]BT Alex. Brown
Incorporated
<PAGE>
CAPTAIN Ownership Summary
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
Institutional Holdings (a) Shares Held Outstanding
- ---------------------------------- ----------- -----------
<S> <C> <C>
Welsh, Carson, Anderson & Stowe 6,299,763 13.3%
Massachusetts Finl Svcs 5,852,888 12.4%
TA Associates Inc 2,659,138 5.6%
Warburg Pincus Asset Mgt 1,469,938 3.1%
Travelers Inc 1,239,612 2.6%
Waddell & Reed Inc 1,112,118 2.4%
TCW Group Inc 1,086,048 2.3%
Wasatch Advr Inc 825,900 1.7%
Bankers Trust N Y Corp 719,252 1.5%
American General Corp 659,429 1.4%
General Motors Invt Mgmt 600,700 1.3%
Chase Manhattan Corp 599,331 1.3%
American Cent Cos 577,551 1.2%
Mcstay John Invt Counsel 540,400 1.1%
Advantus Capital Mgmt 520,535 1.1%
College Retire Equities 513,500 1.1%
Nicholas Co 503,385 1.1%
Merrill Lynch Asset Mgmt 490,842 1.0%
Barclays Bank Plc 437,248 0.9%
Eaton Vance Management 410,257 0.9%
Scudder Kemper Invts Inc 355,000 0.8%
Crown Advr Ltd 351,050 0.7%
Citicorp 350,329 0.7%
Mellon Bank Corporation 317,764 0.7%
Vanguard Group Inc 303,650 0.6%
Manley Fuller Asset Mgmt 272,200 0.6%
Dimensional Fund Advs 269,200 0.6%
New York St Common Ret 263,200 0.6%
State Street Corp 230,904 0.5%
Equitable Companies Inc 220,251 0.5%
All Other Institutional Holders (52) 3,011,129 6.4%
---------- ----
Total 26,762,749 56.6%
<CAPTION>
Percent of Options
Insider Holdings (b) Shares Held (b)(c) Outstanding(c) Held (b)(d)
- ----------------------------------------------------------- ------------------ -------------- -----------
<S> <C> <C> <C>
Donald J. Larson (Former Chariman and CEO) 1,671,889 3.5% 35,720
Steven E. Nelson (Pres. of Concentra Preferred Systems) (e) 1,336,937 2.8% 26,474
John K. Carlyle (Chairman) 0 0.0% 150,000
Daniel J. Thomas (President, CEO, Director) 367 0.0% 287,500
Joseph F. Pesce (Exec. VP, CFO, Treasurer) 5,821 0.0% 64,902
George H. Conrades (Director) 0 0.0% 41,971
Robert W. O'Leary (Director) 0 0.0% 10,000
Robert W. Ortenzio (Director) 14,219 0.0% 11,250
Mitchell T. Rabkin, M.D. (Director) 357 0.0% 41,971
Lois E. Silverman (Director) 640,543 1.4% 0
---------- ----- -------
Total 3,670,133 7.8% 669,788
Institutional Holdings 26,762,749 56.6%
Insider Holdings 3,670,133 7.8%
Retail and Other Holdings 16,858,986 35.6%
---------- -----
Total Shares Outstanding (f) 47,291,868 100.0%
========== =====
</TABLE>
- ----------
(a) Source: CDA Spectrum as of December 31, 1998.
(b) Source: Company Proxy dated April 6, 1998.
(c) Excludes options exercisable within sixty days.
(d) Options exercisable within sixty days.
(e) Shares held calculated using 0.5 million POLICE shares mulitplied by the
2.6474 exchange ratio upon the merger with CAPTAIN.
(f) Source: CAPTAIN management.
- --------------------------------------------------------------------------------
PROJECT COP - 63 - [LOGO]BT Alex. Brown
Incorporated
