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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT
OF 1934)
(AMENDMENT NO. ___________)
AM International, Inc.
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(Name of the Issuer)
AM International, Inc.
8044 Acquisition Inc.
8044 Acquisition Sub Inc.
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(Name of Person(s) Filing Statement)
Common Stock, $.01 par value per share
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(Title of Class of Securities)
17251
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(CUSIP Number of Class of Securities)
Steven R. Andrews
AM International, Inc.
431 Lakeview Court
Mt. Prospect, Illinois 60056
(847) 375-1700
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATION ON BEHALF OF PERSON(S) FILING STATEMENT)
This statement is filed in connection with (check the appropriate box):
a. [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 AMOUNT OF FILING FEE
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$35,192,178 $7,038.10
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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.
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Amount previously paid: $7,038.10 Filing party: AM International, Inc.
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Form or registration no.: Schedule 14A Date filed: December 10, 1996
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INTRODUCTION
This Rule 13e-3 Transaction Statement (this "Statement") relates to the
Merger Purchase Agreement (the "Merger Agreement") dated October 29, 1996 among
AM International, Inc., a Delaware corporation (the "Company"), 8044 Acquisition
Inc., a Delaware corporation ("Buyer"), and 8044 Acquisition Sub Inc., a
Delaware corporation and a wholly-owned subsidiary of Buyer ("Sub"), and the
proposed merger (the "Merger") of Sub with and into the Company which will
result in the Company becoming a wholly-owned subsidiary of Buyer. The Merger
and the Merger Agreement are more fully described in the Proxy Statement.
The cross reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Preliminary Proxy
Materials of the Company for the Special Meeting of Stockholders to be held on
____________, ___________ __, 1997 (the "Proxy Statement") filed by the Company
with the Securities and Exchange Commission on the date hereof of the
information required to be included in response to the items of this Statement.
The information set forth in the Proxy Statement, which is attached hereto as
Exhibit d(1), including all exhibits thereto, is expressly incorporated by
reference and responses to each item herein are qualified in their entirety by
the provisions of the Proxy Statement.
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CROSS REFERENCE SHEET
(Pursuant to General Instruction F to Schedule 13E-3)
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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1. Issuer and Class of Security Subject
to the Transaction.
(a) This Statement relates to the Common
Stock, $.01 par value per share, of
AM International, Inc., a Delaware
corporation. Reference is made to
"INTRODUCTION"; "SUMMARY -- AM
International, Inc."; and "CERTAIN
INFORMATION CONCERNING THE COMPANY."
(b) "INTRODUCTION"; and "VOTING RIGHTS
AND PROXY INFORMATION."
(c) "INTRODUCTION"; and "MARKET PRICES
OF COMMON STOCK; DIVIDENDS."
(d) "DIVIDENDS; MARKET PRICES OF COMMON
STOCK."
(e) Not applicable.
(f) "SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS."
2. Identity and Background. This Statement is being filed
jointly by the Company (the issuer
of the class of securities which is
the subject of the Rule 13e-3
transaction) and by 8044
Acquisition Inc. and 8044
Acquisition Sub Inc., each of which
may be deemed an affiliate of the
Company.
(a) to (d) and (g) "INTRODUCTION"; "SUMMARY -- AM
International, Inc."; "CERTAIN
INFORMATION CONCERNING THE COMPANY";
"SUMMARY -- Buyer"; and "CERTAIN
INFORMATION CONCERNING BUYER AND
SUB."
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<TABLE>
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(e) and (f) None of the persons with respect to
whom information is provided in response to
this Item was, during the last five years,
convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors)
or was, during the last five years, a party
to a civil proceeding of a judicial or
administrative body of competent jurisdiction
and as a result of such proceeding was or is
subject to a judgment, decree or final order
enjoining further violations of, or
prohibiting activities subject to, federal or
state securities laws or finding any
violation of such laws.
3. Past Contacts, Transactions
or Negotiations.
(a) (1) No applicable transactions.
(a) (2) "SPECIAL FACTORS -- Background of the
Merger"; and "--Interest of Certain Persons
in the Merger."
(b) "SPECIAL FACTORS -- Background of the
Merger"; and "--Interest of Certain Persons
in the Merger."
4. Terms of the Transaction.
(a) "INTRODUCTION"; "SPECIAL FACTORS --
Recommendation of the Board of Directors of
the Company; Reasons for the Merger"; "SOURCE
AND AMOUNT OF FUNDS"; and "THE MERGER
AGREEMENT."
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<TABLE>
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(b) "SUMMARY -- Interest of Certain Persons in
the Merger"; "SPECIAL FACTORS --
Interest of Certain Persons in the Merger."
5. Plans or Proposals of the
Issuer or Affiliate.
(a) Not applicable.
(b) Not applicable.
(c) "SPECIAL FACTORS -- Buyer's Purpose and
Reasons for the Merger; Plans Following
the Merger"; "--Interest of Certain Persons
in the Merger"; "THE MERGER AGREEMENT"; and
"CERTAIN INFORMATION CONCERNING BUYER AND
SUB."
(d) "SPECIAL FACTORS -- Buyer's Purpose and
Reasons for the Merger; Plans Following
the Merger"; and "SOURCE AND AMOUNT OF
FUNDS."
(e) "SPECIAL FACTORS -- Buyer's Purpose and
Reasons for the Merger; Plans Following
the Merger."
(f) and (g) "INTRODUCTION."
6. Source and Amounts of Funds
or Other Consideration.
(a) "SUMMARY -- Source and Amount of
Funds"; and "SOURCE AND AMOUNT OF FUNDS."
(b) "VOTING RIGHTS AND PROXY INFORMATION"; "THE
MERGER AGREEMENT -- Termination Fees
and Expenses"; and "EXPENSES."
(c) "SUMMARY -- Source and Amount of Funds"; and
"SOURCE AND AMOUNT OF FUNDS."
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<TABLE>
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(d) Not applicable.
7. Purpose(s), Alternatives,
Reasons and Effects.
(a) "SPECIAL FACTORS -- Background of the
Merger:' "--Recommendation of the Board
of Directors of the Company; Reasons for the
Merger"; and "--Buyer's Purpose and Reasons
for the Merger; Plans Following the Merger."
(b) "SPECIAL FACTORS -- Background of the
Merger"; "--Recommendation of the Board
of Directors of the Company; Reasons for the
Merger"; and "--Buyer's Purpose and Reasons
for the Merger; Plans Following the Merger."
(c) "SPECIAL FACTORS -- Background of the
Merger"; "--Recommendation of the Board
of Directors of the Company; Reasons for the
Merger"; and "--Buyer's Purpose and Reasons
for the Merger; Plans Following the Merger."
(d) "INTRODUCTION"; "SPECIAL FACTORS -- Background
of the Merger"; "--Recommendation of the
Board of Directors of the Company; Reasons
for the Merger"; "--Buyer's Purpose and
Reasons for the Merger; Plans Following the
Merger"; "--Opinion of the Company's
Financial Advisor"; "--Interest of Certain
Persons in the Merger"; and "--Certain
Federal Income Tax Consequences."
8. Fairness of the Transaction.
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<TABLE>
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(a) "SPECIAL FACTORS --Background of the
Merger"; "--Recommendation of the
Board of Directors of the Company;
Reasons for the Merger"; "--Opinion
of the Company's Financial Advisor";
and "--Buyer's Purpose and Reasons
for the Merger; Plans Following the
Merger."
(b) "SPECIAL FACTORS --Recommendation of
the Board of Directors of the
Company; Reasons for the Merger";
"--Opinion of the Company's Financial
Advisor"; and "--Buyer's Purpose and
Reasons for the Merger; Plans
Following the Merger."
(c) "SUMMARY -- Quorum and Vote Required";
and "VOTING RIGHTS AND PROXY
INFORMATION"
(d) No applicable representative.
(e) "SPECIAL FACTORS -- Recommendation of
the Board of Directors of the Company;
Reasons for the Merger."
(f) "SPECIAL FACTORS -- Background of the Merger."
9. Reports, Opinions, Appraisals and
Certain Negotiations.
(a) "SPECIAL FACTORS -- Background of the
Merger"; "--Recommendation of the
Board of Directors of the Company;
Reasons for the Merger"; "--Opinion of
the Company's Financial Advisor"; and
"--Certain Financial Forecasts."
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<TABLE>
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(b) "SPECIAL FACTORS -- Background of the
Merger"; "--Recommendation of the
Board of Directors of the Company;
Reasons for the Merger"; "--Opinion
of the Company's Financial Advisor";
"--Certain Financial Forecasts"; and
"--Certain Significant Financial
Considerations."
(c) "AVAILABLE INFORMATION"; "APPENDIX II."
10. Interest in Securities of the Issuer.
(a) "PRINCIPAL STOCKHOLDERS"; and
"SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS."
(b) None.
11. Contracts, Arrangements or "SPECIAL FACTORS -- Interest of
Understandings with Respect to Certain Persons in the Merger"; "THE
the Issuer's Securities. MERGER AGREEMENT -- Company Stock Options."
12. Present Intention and
Recommendation of Certain Persons
With Regard to the Transaction.
(a) "INTRODUCTION"; "SPECIAL FACTORS
--Recommendation of the Board of
Directors of the Company; Reasons
for the Merger."
(b) "CHAIRMAN'S LETTER TO STOCKHOLDERS";
"SPECIAL FACTORS --Recommendation of
the Board of Directors of the
Company; Reasons for the Merger."
13. Other Provisions of the Transaction.
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<TABLE>
<CAPTION>
Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(a) "SUMMARY -- Appraisal Rights";
and "APPRAISAL RIGHTS."
(b) None.
(c) Not applicable.
14. Financial Information.
(a)(1) "INDEX TO FINANCIAL STATEMENTS OF AM
INTERNATIONAL, INC."
(a)(2) Unaudited financial statements for
the quarterly period ended October
31, 1996 will be filed under "INDEX
TO FINANCIAL STATEMENTS OF AM
INTERNATIONAL, INC." when such
statements become available.
(a)(3) "SELECTED FINANCIAL DATA."
(a)(4) "SELECTED FINANCIAL DATA."
(b) Not applicable.
15. Persons and Assets
Employed, Retained or
Utilized.
(a) "VOTING RIGHTS AND PROXY
INFORMATION"; "SPECIAL FACTORS
--Recommendation of the Board of
Directors of the Company; Reasons for
the Merger"; and "-- Interest of
Certain Persons in the Merger";
"SOURCE AND AMOUNT OF FUNDS";
"THE MERGER AGREEMENT -- Termination
Fees and Expenses"; and "Expenses."
(b) "VOTING RIGHTS AND PROXY INFORMATION."
16. Additional Information. See text of the Proxy Statement.
17. Material to be Filed as Exhibits.
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<TABLE>
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(a)(1) Undertaking dated October 29, 1996
from PM Delaware Inc. and Pacholder
Associates, Inc.
(a)(2) Commitment Letter, dated November 26,
1996, between Provident Bank
and 8044 Acquisition Inc.
(b)(1) Opinion of Bears, Stearns & Co., Inc.
(included as Appendix II to the Proxy
Statement)
(b)(2) Materials prepared by Bear, Stearns &
Co., Inc. for the Board of Directors of AM
International, Inc. mailed prior to
the October 29, 1996 meeting.
(b)(3) Presentation by Bear, Stearns & Co., Inc.,
to the Board of Directors of AM
International, Inc. dated October 29,
1996.
(c)(1) Merger Purchase Agreement dated
October 29, 1996 among AM
International, Inc., 8044
Acquisition Inc. and 8044 Acquisition
Sub Inc. (included as Appendix I to
the Proxy Statement).
(c)(2) Form of Stock Option Agreement for Employees
(c)(3) Form of Stock Option Agreement for Non-Employee
Directors
(d)(1) Preliminary copy of Chairman's Letter
to Stockholders, Notice of Special
Meeting of Stockholders and Proxy
Statement for the Special Meeting of
the Stockholders of AM International,
Inc. to be held on ___________, 1997.
(incorporated herein by reference to the
Preliminary Schedule 14A filed
concurrently herewith).
(e)(1) Section 262 of The Delaware
General Corporation Law (included as
Appendix III to the Proxy Statement).
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Schedule 13E-3 Item Caption in Proxy
Number and Caption Statement
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(f)(1) See Item 17(d)(1).
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
December 9, 1996
AM INTERNATIONAL, INC.
By:/s/ Jerome D. Brady
----------------------------
Jerome D. Brady
Chairman, Chief Executive Officer and
President
8044 ACQUISITION INC.
By:/s/ James P. Shanahan, Jr.
----------------------------
James P. Shanahan, Jr.
Treasurer
8044 ACQUISITION SUB INC.
By:/s/ James P. Shanahan, Jr.
----------------------------
James P. Shanahan, Jr.
Treasurer
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EXHIBIT (a)(1)
UNDERTAKING
The undersigned, PM DELAWARE INC. and PACHOLDER ASSOCIATES, INC.
(collectively, the "Covenantors"), do hereby, jointly and severally, covenant
and undertake to invest in, or otherwise provide equity contributions or funds
in the form of equity for, 8044 ACQUISITION INC. ("Buyer") and/or 8044
ACQUISITION SUB INC. ("Transitory Subsidiary") in an amount of Two Million
Dollars ($2,000,000) on a timely basis to enable the Buyer and the Transitory
Subsidiary fully to perform and satisfy their respective obligations to AM
INTERNATIONAL, INC. ("AM") under or with respect to the Merger Purchase
Agreement dated as of October 29, 1996, as it may be amended from time to time,
among AM, the Buyer and the Transitory Subsidiary (the "Merger Agreement"),
including (without limitation) the payment of any damages to AM that may be
payable by Buyer or the Transitory Subsidiary as a result of any breach of the
Merger Agreement by the Buyer and/or the Transitory Subsidiary. The
Covenantors provide the above undertakings to AM to induce AM to enter into the
Merger Agreement and understanding that AM is expressly relying on the
undertakings hereby given by the Covenantors. No provision of this Undertaking
may be amended nor may performance of any provision hereof waived without the
written consent of AM. In addition, it is agreed that AM may proceed directly
against the Covenantors with respect to any failure to perform under this
Undertaking.
This Undertaking shall be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned hereunto set their respective hands as
of this 29th day of October 1996.
PM DELAWARE INC.
By: /s/ James P. Shanahan, Jr.
-----------------------------------
Name: James P. Shanahan, Jr.
Title: President
PACHOLDER ASSOCIATES INC.
By: /s/ James P. Shanahan, Jr.
-----------------------------------
Name: James P. Shanahan, Jr.
Title: Executive Vice President and
General Counsel
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EXHIBIT (a)(2)
November 26, 1996
Mr. James Shanahan
8044 Acquisition, Inc.
8044 Montgomery Road, Suite 382
Cincinnati, OH 45236
Dear Jim:
We are pleased to provide this commitment for the financing arrangements
outlined below for your consideration:
I. ACQUISITION FACILITY
BORROWER: 8044 Acquisition Sub Inc., a wholly owned subsidiary of
8044 Acquisition, Inc. ("8044 Acquisition").
AMOUNT: $35,200,000
TYPE: Revolver
MATURITY: Seven (7) days
PURPOSE: To fund the acquisition by Borrower of all of the
issued and outstanding shares of capital stock of AM
International, Inc. ("AMI").
INTEREST RATE: A per annum rate equal to The Provident Bank's ("Provident"
or the "Bank") floating Prime Rate plus one percent (1%). In
the event of a default, Provident at its option may adjust the
interest rate to its floating Prime Rate plus four percent
(4%). Interest shall be calculated based upon actual number of
days elapsed and assuming a 360 day year. All interest and
principal shall be due and payable at maturity.
FACILITY FEE: $176,000 (1/2 of 1%), which shall be payable and deemed
fully earned by Provident at the closing contemplated by this
commitment letter ("Closing").
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Mr. James Shanahan
November 19, 1996
Page 2
II. WORKING CAPITAL FACILITY
BORROWER: 8044 Acquisition Sub Inc.
COMMITMENT
AMOUNT: $12,000,000
TYPE: Asset-Based Revolver
MATURITY: Three (3) years
PURPOSE: To fund the working capital needs of the ongoing business of
AMI following the merger of Borrower with and into AMI (the
"Merger"), including commercial and standby letters of credit.
INTEREST RATE: A per annum rate equal to Provident's floating Prime Rate
plus two percent (2%). In the event of a default, Provident at
its option may adjust the interest rate to its floating Prime
Rate plus four percent (4%). Interest shall be calculated
based upon actual number of days elapsed and assuming a 360 day
year. All interest and principal shall be due and payable at
maturity.
ADVANCE RATE: Eighty percent (80%) of Eligible Receivables and
thirty-five (35) to fifty (50) percent of Eligible Inventory
(in each case to be defined in the definitive loan agreement).
The advance rates on Eligible Inventory are subject to the
results of the examination by Provident's asset-based lending
field examiners.
FEES: a) Letter of Credit Fee for all standby letters of credit
issued under the Working Capital Facility, such fee
to be calculated for each day at a per annum rate
equal to one and three-fourths percent (1.75%)
of the aggregate stated amount of all standby letters
of credit outstanding from time to time, payable
annually in advance.
b) Unused Commitment Fee in an amount equal to
three-eighths of one percent (0.375%) per annum of
the daily
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Mr. James Shanahan
November 19, 1996
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average of the unused portion of the Commitment
Amount, payable quarterly in arrears.
c) Asset Based Fee for ongoing monitoring of Borrower's
assets in an amount of $1,000 per month, plus
reimbursement of all out-of-pocket expenses incurred
by the Bank with respect to such monitoring.
d) Termination Fee in an amount equal to one percent
(1%) of the Total Commitment Amount, payable in the
event Borrower terminates the Working Capital
Facility within thirty (30) months after the Closing.
e) Facility fee of $90,000 which shall be payable and
deemed fully earned by Provident at the closing.
CASH COLLATERAL
ACCOUNT: All customer payments will be sent to a lockbox and
deposited into a cash collateral account. Funds will be
held for two (2) days and then either paid down on the
Facility or released into Borrower's operating account.
III. The following terms and provisions shall apply to both the Acquisition
Facility and the Working Capital Facility:
DEPOSIT: $20,000, payable by Borrower or 8044 Acquisition, Inc. upon
the execution of this commitment letter. If the Closing
does not occur due to a failure of one or more conditions
to be satisfied, the Bank shall retain the deposit and it
will not be applied toward the Bank's legal fees and
expenses. If the Closing does not occur due to the refusal
by the Bank to complete the transaction for reasons not
otherwise permitted by this commitment, such deposit shall
be refunded to Borrower or 8044 Acquisition only after
payment of the Bank's costs and expenses incurred in
connection herewith including, but not limited to, legal
fees and expenses. If the Closing occurs, the deposit
shall be applied toward payment of fees and expenses
payable to the Bank as described herein.
EXPENSES: Borrower shall reimburse Provident, promptly upon receipt
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Mr. James Shanahan
November 19, 1996
Page 4
of an invoice therefor, for all reasonable fees and
expenses incurred by the Bank and its legal counsel in
connection with the preparation and negotiation of this
commitment letter and the definitive loan documentation,
and the closing including, without limitation, legal fees,
search fees, delivery costs, copying costs and telephone
and facsimile charges, whether or not the Closing occurs.
In addition, Borrower shall pay to the Bank at the Closing
a non-accountable expense allowance of $10,000.
CLOSING: The Closing of the transactions contemplated hereby shall
be held not later than February 28, 1997, in Chicago,
Illinois, at such time, place and on such date as the
parties may mutually agree.
COLLATERAL: a) First security interest in all assets of Borrower,
including without limitation inventory, cash and cash
equivalents, accounts receivable, machinery and
equipment, general intangibles and all proceeds
thereof.
b) Pledge of all cash funds in depository account of
AMI at Provident as of the date of Closing (the "AMI
Cash Account").
c) Assignment to the Bank of proceeds of an insurance
policy, in a face amount mutually agreed upon by the
parties, on the life of Thomas D. Rooney.
d) Assignment to the Bank of Borrower's and 8044
Acquisition's rights under the Merger Agreement and
any other contract to related to the Merger
transaction.
REPRESENTATIONS
AND WARRANTIES: Borrower shall provide usual and customary
representations and warranties in the definitive loan
agreement, including without limitation
representations and warranties with respect to (a)
corporate existence and authority, (b) borrowing
authorization, (c) financial statements, (d) no
indebtedness other than permitted indebtedness, (e)
employee benefit matters, (f) no
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Mr. James Shanahan
November 19, 1996
Page 5
material litigation except as specifically disclosed
to the Bank in writing, (g) compliance with laws, (h)
no adverse contracts, (i) condition and sufficiency
of assets, (j) no existing defaults, and (k) payment
of taxes.
COVENANTS: Provident anticipates placing certain operating and
financial covenants on Borrower which shall include,
without limitation, (a) restrictions on changes of
ownership or management (with respect to Thomas D. Rooney),
(b) restrictions on additional indebtedness and the
incurrence or existence of liens, (c) Provident to be the
prime depository of Borrower, with amounts on deposit with
Provident being not less than $150,000 at any time, (d)
requirement for delivery of audited financial statements
to Provident no later than 90 days after the end of each
fiscal year of Borrower, and quarterly, monthly and other
financial information at the Bank's request, (e)
requirement that Provident be the escrow and payment agent,
at normal fees, for the Merger transactions, (f)
maintenance of property and casualty and liability
insurance in amounts and with carriers acceptable to the
Bank, (g) maintenance of property in good condition and
repair, (h) compliance with laws and (i) solvency and
maintenance of sufficient capital.
FINANCIAL
COVENANTS: See Schedule A.
CONDITIONS: The obligations of Provident under this commitment are
subject to:
a) Execution and delivery of definitive loan
documentation satisfactory in form and substance to
Provident and its legal counsel by not later than
February 28, 1997;
b) Receipt of a solvency opinion from Houlihan Lokey
Howard & Zukin, satisfactory in form and substance to
the Bank, and satisfactory evidence of compliance by
Borrower of any and all conditions for solvency set
forth in such opinion;
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Mr. James Shanahan
November 19, 1996
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c) Consummation, simultaneously with the Closing, of the
Merger whereby Borrower shall have been merged with
and into AMI on terms and conditions substantially
the same as those set forth in the form of Merger
Agreement previously reviewed by the Bank, with the
resulting shareholders of Borrower being Asher
and Sylvia Pacholder, William Morgan, James Shanahan
and Thomas Rooney. These persons shall retain
controlling ownership during the term of the Working
Capital Facility;
d) Receipt of updated financial statements of Borrower,
8044 Acquisition and AMI;
e) Evidence of an equity contribution to Borrower by
8044 Acquisition of not less than $2,300,000;
f) Evidence that the net worth of Borrower, upon the
Closing and the consummation of the Merger, and
determined in accordance with generally accepted
accounting principles, is not less than $2,300,000;
g) Evidence that funds in the AMI Cash Account are not
less than $35,200,000 immediately prior to the Merger-
for purposes of satisfying this condition, funds
in a pledged depository account at Provident in the
name of 8044 Acquisition Sub Inc. may be included;
h) Evidence of consent to the Merger by the Bankruptcy
Court, if necessary;
i) Evidence of receipt of all required regulatory
approvals with respect to the loans contemplated
hereby or by the Merger;
j) Receipt of UCC, tax and judgment lien and litigation
searches as to Borrower, 8044 Acquisition and AMI,
which shall be satisfactory in form and substance to
Provident and its legal counsel;
k) Receipt of legal opinions satisfactory in form and
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Mr. James Shanahan
November 19, 1996
Page 7
substance to Provident and its legal counsel;
l) Receipt of certified resolutions, charter documents
and good standing certificates with respect to
Borrower, 8044 Acquisition and AMI;
m) No material adverse change in the business, assets,
operations or prospects of Borrower or AMI; and
n) Receipt of such other documents, certificates,
information and matters as Provident or its legal
counsel deems necessary or appropriate.
All of the above conditions must be satisfied in a manner satisfactory to
Provident in its sole discretion.
The rights and obligations of Borrower and 8044 Acquisition hereunder may
not be assigned without the prior written consent of the Bank, as determined in
its sole discretion. This commitment and the obligations, if any, of the Bank
hereunder are for the benefit of the undersigned only and may not be relied on
by any third party without the Bank's express prior written consent. Neither
Borrower nor 8044 Acquisition shall disclose the terms and provisions of this
commitment to any third party without the Bank's prior written consent;
provided, however, that disclosure of such terms and provisions to their
respective attorneys, accountants and other professional advisers who will be
advising them with respect to the loans and the Merger referred to herein, is
permitted. The Bank understands that AMI will be advised of the terms of the
commitment and that they will maintain the same confidentiality standards as
outlined above; provided, however, that AMI may make any disclosure which it
may be required by any Federal or state law or regulation to make, including,
but not limited to press releases, and inclusion in filings with the Securities
and Exchange Commission and inclusion in any proxy material related to the
merger.
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Mr. James Shanahan
November 19, 1996
Page 8
This commitment will expire if a counterpart hereof is not signed by you
and delivered to me, together with the $20,000 deposit, by 5:00 p.m. on
November 27, 1996. Time is of the essence.
Sincerely,
/s/ Donald J. Feldmann
Donald J. Feldmann
Vice President
Agreed and Accepted:
8044 ACQUISITION, INC.
By: /s/ James P. Shanahan, Jr.
---------------------------------
Title: Treasurer
------------------------------
Date: November 26, 1996
------------------------------
8044 ACQUISITION SUB INC.
By: /s/ James P. Shanahan, Jr.
---------------------------------
Title: Treasurer
------------------------------
Date: November 26, 1996
------------------------------
<PAGE> 1
EXHIBIT (b)(2)
AM INTERNATIONAL, INC.
CONFIDENTIAL
Presentation to the Board of Directors
of AM International, Inc.
October 29, 1996
[BEAR STEARNS LOGO]
<PAGE> 2
AM INTERNATIONAL, INC.
Table of Contents
I Review of Proposed Transaction
II Review of Sale Process
III Business and Valuation Issues
-Summary of Fiscal 1996 Projections and Estimates
-Summary Review of 1997 Budget and Current Strategy
-Fiscal 1997-1999 Projections
-Review of Liabilities
-Review of Working Capital Deficit
IV Valuation Analysis
-Analysis of AMI Transaction Enterprise Value
-Transaction Multiples
-Precedent Acquisition Analysis
-Comparable Public Company Analysis
-Stock Price Trading History
-Summary of Valuation Analysis
V Conclusions
Exhibits
A. Sale Process Details
B. July vs. October Balance Sheet
C. Selected Information on Precedent
Acquisitions
D. Selected Information on Comparable
Companies
[BEAR STEARNS LOGO]
<PAGE> 3
AM INTERNATIONAL, INC.
SECTION I
Review of Proposed Transaction
[BEAR STEARNS LOGO]
<PAGE> 4
AM INTERNATIONAL, INC.
Review of Proposed Transaction
- - AM Acquisition, Inc. (the "Buyer"), a corporation formed by affiliates of
Pacholder Associates, Inc., proposes to purchase (the "Transaction") all of
the outstanding shares of AM International, Inc. ("AMI" or the "Company")
for $5.00 per share in cash (the "Transaction Consideration"). It is
contemplated that Thomas D. Rooney and A. Carl Mudd will own an equity
interest in the Buyer.
- - One-step cash merger
- - Summary of key terms
- Fiduciary out
- Breakup of expenses plus $1.0 million
- Reps and warranties terminate at closing
- Closing conditions
-Solvency opinion
-No "material adverse change"
- Termination date
- - Contemplated sources of Buyer financing
- Minimum equity investment of $2.0 million
- Acquisition facility of $35.0 million provided by one or more
institutional lenders
- Working Capital facility of $15.0 million provided by institutional lenders
[BEAR STEARNS LOGO]
Page 1
<PAGE> 5
AM INTERNATIONAL, INC.
SECTION II
Review of Sale Process
[BEAR STEARNS LOGO]
<PAGE> 6
AM INTERNATIONAL, INC.
Review of Sale Process - Summary of Contacts
<TABLE>
<CAPTION>
CORPORATE FINANCIAL
BUYERS BUYERS TOTAL
--------- --------- -----
<S> <C> <C> <C>
- - Parties Contacted 24 63 87
=== == ==
- - Parties that Were Not Interested or Gave No
Response 17 32 49
- - Parties Who Executed Confidentiality and Were
Not Interested 5 28 33
- - Preliminary Indications of Interest Received 2 3(1) 5
--- -- --
24 63 87
=== == ==
</TABLE>
- ------------------------
(1) Excludes Field Point Capital.
[BEAR STEARNS LOGO]
Page 2
<PAGE> 7
AM INTERNATIONAL, INC.
Review of Sale Process - Summary of Indications
($ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FINAL
INDICATION
PRELIMINARY SUBSEQUENT (ENTERPRISE PER SHARE
BIDDER INDICATION INDICATION VALUE) PRICE COMMENTS
- ------------------- ----------- ---------- ----------- -------------- --------------------------------------
<S> <C> <C> <C> <C> <C>
Buyer $25 $16 $26(1) $5.00 (1)Enterprise value derived from
$5.00 per share offer assuming net
debt of ($8.9) (e.g. excess cash)
Financial Bidder #1 -- 5 - 12 5 - 12(2) 2.00 - 3.00 (2)Enterprise value derived from
$2.00 - $3.00 per share offer
Corporate Bidder #1 20 - 25 15 15(3) 2.00 - 3.00(3) (3)Corporate Bidder #1 preferred
asset deal at $15 million but
offered "less attractive" stock deal
at $2.00 - $3.00 per share. Asset
deal had implied equity value of
approximately $3.40 per share,
versus stock deal at $2.00-$3.00 per
share
Corporate Bidder #2 20 - 30 15 Withdrawn Withdrawn Withdrawn after acquisition in the
industry fell through
Financial Bidder #2 20 - 30 Withdrawn Withdrawn Withdrawn Withdrawn after initial due diligence
Financial Bidder #3 20 - 23 Withdrawn Withdrawn Withdrawn Withdrawn after initial due diligence
</TABLE>
[BEAR STEARNS LOGO]
Page 3
<PAGE> 8
AM INTERNATIONAL, INC.
SECTION III
Business and Valuation Issues
[BEAR STEARNS LOGO]
<PAGE> 9
AM INTERNATIONAL, INC.
Summary of Fiscal 1996 Projections and Estimates
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PROJECTED FISCAL YEAR ENDED JULY 31, 1996
-----------------------------------------------------------------------------------
OFFERING CURRENT
INITIAL MEMORANDUM ESTIMATE
PROJECTIONS PROJECTIONS PROJECTIONS PROJECTIONS PROJECTIONS AS OF
AS OF 7/10/95 AS OF 11/1/95 AS OF 1/26/96 AS OF 3/19/96 AS OF 5/13/96 8/27/96
------------- ------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
MULTIGRAPHICS - NORTH AMERICA
Revenue(1) $169,774 $175,200 $174,237 $154,765 $143,245 $142,862
EBIT(1)(2) $ 830 $ 2,000 $ 2,278 $ 0 ($740) ($7,568)
</TABLE>
- ----------------------
(1) Includes Canadian operations and excludes Japan.
(2) Prior to corporate charges.
[BEAR STEARNS LOGO] Page 4
<PAGE> 10
AM INTERNATIONAL, INC.
Summary Review of 1997 Budget and Current Strategy
<TABLE>
<CAPTION>
1997 BUDGET CURRENT STRATEGY
-------------------------- -------------------------------------
<S> <C> <C>
KEY ASSUMPTIONS: - Curtailment of - Operate Xeikon profitably or exit
manufacturing
- Steady supplies business - "Harvest" service
- "Harvest" service - Grow base supplies business
- Xeikon breakeven - Supply acquisitions
- Realize cost savings
- Eliminate redundant systems
ISSUES AND RISKS: - Systems transitions - Xeikon relationship and viability
- Management and personnel - Competition for the supply business
- Canada restructuring - Ability to transition outside
salesforce
- Xeikon - Acquisitions are unidentified
- Cost savings are unidentified
</TABLE>
[BEAR STEARNS LOGO] Page 5
<PAGE> 11
AM INTERNATIONAL, INC.
(1)
Fiscal 1997-1999 Projections
PROJECTED INCOME STATEMENT
<TABLE>
<CAPTION>
($ in millions) FISCAL YEARS ENDED JULY 31,
-------------------------------------
1996E 1997 1998 1999
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
- --------
Supplies / Pre-Press $40.3 $43.7 $46.8
Service 39.2 35.3 32.3
Xeikon 11.9 14.7 17.5
------- -------- ---------
Existing Operations Revenues 91.3 93.7 96.6
Acquisitions 3.3 25.0 55.0
------- ------- -------- ---------
TOTAL REVENUES $142.9 94.6 118.7 151.6
OPERATING INCOME
- ----------------
Base Income 1.6 1.6 1.6
Supplies/ Pre-Press -- 0.7 1.3
Service -- (1.0) (1.7)
Xeikon -- 0.3 0.6
Acquisitions 0.3 2.5 5.5
COST REDUCTIONS
- ---------------
SG&A Reductions -- 1.1 2.2
Eliminate Redundant Systems -- 0.6 0.6
------- ------- -------- ---------
EBIT - Multigraphics (7.6) 1.9 5.8 10.1
Corporate Expense 3.5 2.0 2.0 2.0
------- ------- -------- ---------
CONSOLIDATED EBIT (11.1) (0.1) 3.8 8.1
Depreciation and Amortization 2.0 1.9 1.9 1.9
------- ------- -------- ---------
CONSOLIDATED EBITDA $ (9.1) $ 1.8 $5.7 $10.0
</TABLE>
ADJUSTED INCOME STATEMENT
<TABLE>
<CAPTION>
($ in millions) FISCAL YEARS ENDED JULY 31,
---------------------------
1997 1998 1999
-------- ------- -------
<S> <C> <C> <C>
EBITDA as projected $1.8 $ 5.7 $10.0
Less:
Unidentified SG&A Reductions -- (1.1) (2.2)
Xeikon Projected Growth -- (0.3) (0.6)
Acquisitions (0.3) (2.5) (5.5)
------- ------ ------
"Adjusted" EBITDA $1.4 $ 1.8 $ 1.7
</TABLE>
Due to the numerous revisions to the 1996 projections, the risks associated
with the Company's current strategic plan and the uncertainty of the
Company's future projections, we have determined not to rely on the estimates
of AMI's future financial performance in our analysis.
- -------------
(1) 1996E includes Canada; 1997-1999 includes revenues from Canada but no
significant operating profit contributions.
[BEAR STEARNS LOGO] Page 6
<PAGE> 12
AM INTERNATIONAL, INC.
Review of Liabilities
($ in millions)
<TABLE>
<CAPTION>
COMPONENTS OF TRANSACTION ENTERPRISE VALUE
-------------------------------------------------------
RESTRUCTURING OTHER LONG-TERM
AT 7/31/96 TOTAL DEBT RESERVE LIABILITIES CASH
---------- ---------- ------------- --------------- ------
<S> <C> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Short-term debt
- ---------------
CP capital leases $ 1.2
ST prepetition liabilities 7.2
Total short-term debt 8.4 8.4
Accounts payable (net of overdue A/P of $6.8mm) 10.5
Service contract deferred income 13.7
Other current liabilities
- -------------------------
Payroll related (non-restructuring) 11.4(1)
Other accrued (non-restructuring) 9.1(2)
----------
Subtotal 20.5
Restructuring reserve 17.3(3) 17.3
Total other current liabilities 37.8
----------
TOTAL CURRENT LIABILITIES 70.4
Long-term debt (capital lease obligations) 2.5 2.5
Prepetition liabilities 6.0 6.0
Other long-term liabilities 13.2(4) 13.2
TOTAL LIABILITIES $92.2 $16.9 $17.3 $13.2 $43.1(5)
========== ========== ============ =============== ========
</TABLE>
- ---------------------------
(1) (2) (3) (4) (5) See next page for explanation of notes.
[BEAR STEARNS LOGO] Page 7
<PAGE> 13
AM INTERNATIONAL, INC.
Review of Liabilities - Notes
<TABLE>
<C> <S> <C>
(1) PAYROLL RELATED IS COMPRISED OF THE FOLLOWING:
(a) Vacation & Holiday Salary $ 3.8
(b) Insurance (workers comp., HS&M) 2.9
(c) Severance pay 2.0
(d) Other 2.7
-----
Total payroll related 11.4
(2) OTHER ACCRUED/NON-RESTRUCTURING IS COMPRISED OF THE FOLLOWING:
(a) Interest $ 1.4
(b) Insurance 1.0
(c) Other (approx. 24 items: audit, warranty, legal fees, etc.) 6.7
-----
Total non-restructuring reserves included in other current liabilities 9.1
(3) RESTRUCTURING RESERVE IS COMPRISED OF THE FOLLOWING:
(a) AM Multigraphics: primarily severance and obsolete inventory reserves $ 4.2
(b) AM Canada 1.3
(c) Corporate: primarily Rosemont shutdown costs and Germany & UK HQ lease
guarantees 11.3
(d) Eliminations 0.5
-----
Total restructuring reserves included in other current liabilities 17.3
(4) OTHER LONG-TERM LIABILITIES ARE COMPRISED OF THE FOLLOWING:
(a) Retirees' medical benefits $11.0
(b) SERP liabilities 1.0
(c) Directors' retirement plan 0.8
(d) Other 0.4
-----
Total other long-term liabilities 13.2
(5) Cash is net of pay down in overdue accounts payable of $6.8 million in Q1FY97
</TABLE>
[BEAR STEARNS LOGO] Page 8
<PAGE> 14
AM INTERNATIONAL, INC.
Review of Working Capital Deficit
($ IN MILLIONS)
AS OF 7/31/96
-------------
Accounts receivable, net $ 21.6
Inventories, net 15.8
Other current assets 1.2
Accounts payable (1) (10.5)
Service contract deferred income (13.7)
Other current liabilities (excl. restructuring reserve) (20.5)
------
WORKING CAPITAL DEFICIT $ (6.2)
======
- ---------------
(1) Net of $6.8 million of overdue accounts payable that were paid in Q1FY97.
[BEAR STEARNS LOGO] Page 9
<PAGE> 15
AM INTERNATIONAL, INC.
SECTION IV
Valuation Analysis
[BEAR STEARNS LOGO]
<PAGE> 16
AM INTERNATIONAL, INC.
Analysis of AMI Transaction Enterprise Value(1)
($ IN MILLIONS)
<TABLE>
<CAPTION>
SCENARIO I SCENARIO II SCENARIO III
---------- ----------- ------------
<S> <C> <C> <C>
Equity Value(2) $ 35.2 $ 35.2 $ 35.2
Plus: Total Debt 16.9 16.9 16.9
Less: Cash(3) (43.1) (43.1) (43.1)
------ ------- ------
Subtotal 9.0 9.0 9.0
Plus: Restructuring Reserve 17.3 17.3 17.3
Plus: Other Long-Term Liabilities -- 13.2 13.2
Plus: Working Capital Deficit(4) -- -- 6.2
------ ------ ------
AMI Transaction Enterprise Value ("TEV")(5) $ 26.3 $ 39.5 $ 45.7
====== ====== ======
</TABLE>
- ---------------
(1) Based on 7/31 balance sheet.
(2) $5.00 per share times 7.0 million shares.
(3) Assumed cash reduced by $6.8 million, reflecting paydown of overdue
payables which occurred in 1Q FY1997.
(4) Adjusted for paydown of overdue payables.
(5) Total Enterprise Value implied by $5.00 per share bid.
[BEAR STEARNS LOGO] Page 10
<PAGE> 17
AM INTERNATIONAL, INC.
Transaction Multiples
<TABLE>
<CAPTION>
SCENARIO I SCENARIO II SCENARIO III
----------- ----------- ------------
AMI TEV $26.3 $39.5 $45.7
- ------- --------- ---------- -----------
AMI TEV/
- --------------
<S> <C> <C> <C>
FY97 Revenue 0.28x 0.42x 0.48x
FY97 EBITDA 14.8 22.2 25.7
FY97 EBITDA - Base Business 18.2 27.3 31.6
</TABLE>
[BEAR STEARNS LOGO] Page 11
<PAGE> 18
AM INTERNATIONAL, INC.
Precedent Acquisition Analysis - Based on FY97 Projections
<TABLE>
<CAPTION>
MULTIPLES PAID IN SUPPLIES DISTRIBUTION TRANSACTIONS
TOTAL ENTERPRISE VALUE/LTM
----------------------------------
TARGET COMPANY REVENUE EBITDA EBIT
------- ------ -----
<S> <C> <C> <C>
United Stationers 0.32x 7.9x 12.3x
Joyce Int'l(2) 0.26 6.0 10.5
Reliable Corp(3) 0.45 NA NA
National Office Supply Co. 0.74 NM NM
Eastman Office Prod. Corp. 0.72 10.7 14.5
Eastman Corp. 0.50 5.9 7.0
OW Office Warehouse 0.57 NM NM
SDC Distribution Corp. 0.19 4.1 4.7
Boise Cascade Corp. 0.23 NA NA
High 0.74x 10.7x 14.5x
Low 0.19 4.1 4.7
Median 0.45 6.0 10.5
Harmonic Mean 0.35 6.2 8.3
</TABLE>
IMPUTED VALUE OF AM INTERNATIONAL*
TOTAL ENTERPRISE VALUE
AT INDICATED
MULTIPLES OF PROJECTED FY97 RESULTS(4)
<TABLE>
<CAPTION>
REVENUE MULTIPLE
-------------------------
<S> <C> <C> <C>
($ MILLIONS) 0.32X 0.35X 0.39X
----- ----- -----
Revenues - $94.6 $30.3 $33.1 $36.9
EBITDA MULTIPLE
------------------------
5.6X 6.2X 6.8X
----- ----- -----
EBITDA - $1.8 $10.1 $11.2 $12.2
EBIT MULTIPLE
------------------------
7.5X 8.3X 9.1X
------- ----- ------
EBIT - $(0.1) NM NM NM
</TABLE>
<TABLE>
<CAPTION>
REFERENCE RANGE
ENTERPRISE VALUE SCENARIO I SCENARIO II SCENARIO III
---------- ----------- ------------
<S> <C> <C> <C>
AS A MULTIPLE OF $26.3 $39.5 $45.7
- ----------------
REVENUE 0.28X 0.42X 0.48X
EBITDA 14.8X 22.2X 25.7X
EBIT NM NM NM
</TABLE>
- ---------------
* Note that this value range is derived by applying a valuation multiple
based on LTM operating results of comparable acquisitions to AMI's
projected fiscal 1997 results. This method was used since reliable
projected operating performance for the comparable acquisitions was not
available. However, since multiples of forward results are typically
lower than multiples of trailing results, the imputed valuation ranges may
be overstated.
(1) Represents the service component of Eastman Kodak's Office Imaging
business.
(2) Represents the office products division of Joyce International.
(3) Represents the Mail Office Supply business of Reliable Corp.
(4) Multiple range is harmonic mean plus/minus 10%.
[BEAR STEARNS LOGO] Page 12
<PAGE> 19
AM INTERNATIONAL, INC.
Comparable Public Company Analysis - Based on FY97 Projections
<TABLE>
<CAPTION>
MULTIPLES OF COMPARABLE PUBLIC COMPANIES
TOTAL ENTERPRISE VALUE/LTM
---------------------------
COMPARABLE COMPANY REVENUE EBITDA EBIT
- ------------------ ------- ------- ------
<S> <C> <C> <C>
AFP Imaging Corp. 0.47x 6.6x 10.7x
Avery-Dennison 1.22 9.9 13.7
Danka Business Systems 1.90 15.3 23.7
Oce Van Der Grinten 1.25 9.0 16.3
PRIMESOURCE CORP. 0.19 6.8 9.3
Scitex Corp. 0.43 NM NM
High 1.90x 15.3x 23.7x
Low 0.19 6.6 9.3
Median 0.84 9.0 13.7
Harmonic Mean 0.51 8.7 13.2
</TABLE>
IMPUTED VALUE OF AM INTERNATIONAL*
TOTAL ENTERPRISE VALUE
AT INDICATED
MULTIPLES OF PROJECTED FY97 RESULTS(1)
<TABLE>
<CAPTION>
REVENUE MULTIPLE
-----------------------
<S> <C> <C> <C>
($ MILLIONS) 0.46X 0.51X 0.56X
-------- ----- -----
Revenues - $94.6 $43.5 $48.2 $53.0
EBITDA MULTIPLE
------------------------
7.8X 8.7X 9.6X
--------- ----- -----
EBITDA - $1.8 $13.8 $15.4 $17.0
EBIT MULTIPLE
-------------------------
11.9X 13.2X 14.5X
----- ----- -----
EBIT - $(0.1) NM NM NM
</TABLE>
<TABLE>
<CAPTION>
REFERENCE RANGE
ENTERPRISE VALUE SCENARIO I SCENARIO II SCENARIO III
---------- ----------- ------------
<S> <C> <C> <C>
AS A MULTIPLE OF $26.3 $39.5 $45.7
- ----------------
REVENUE 0.28X 0.42X 0.48X
EBITDA 14.8X 22.2X 25.7X
EBIT NM NM NM
</TABLE>
- ---------------
* Note that this value range is derived by applying a valuation multiple
based on LTM operating results of comparable publicly traded companies to
AMI's projected fiscal 1997 results. This method was used since reliable
projected operating performance for the comparable publicly traded
companies was not available. However, since multiples of forward results
are typically lower than multiples of trailing results, the imputed
valuation ranges may be overstated.
(1) Multiple range is harmonic mean plus/minus 10%.
[BEAR STEARNS LOGO] Page 13
<PAGE> 20
AM INTERNATIONAL, INC.
Stock Price Trading History
<TABLE>
<CAPTION>
DATE CLOSING PRICE TRADING VOLUME
- ---- ------------- --------------
<S> <C> <C>
24-Oct-95 $7.250 #N/A
15-Dec-95 6.313 200
06-Feb-96 4.188 #N/A
01-Apr-96 2.063 500
22-May-96 2.938 100
16-Jul-96 2.000 #N/A
05-Sep-96 2.750 4,200
28-Oct-96 2.500 #N/A
</TABLE>
[BEAR STEARNS LOGO] Page 14
<PAGE> 21
AM INTERNATIONAL, INC.
Summary of Valuation Analysis
($ IN MILLIONS)
- Valuation analysis of AM International is based on the
following projections for fiscal 1997 financial performance:
Revenues $94.6
EBITDA(1) 1.8
EBIT(1) (0.1)
ENTERPRISE
VALUATION METHOD VALUE RANGE TEV/FY97 EBITDA
- ------------------------------------ ----------- ---------------
Precedent Acquisition Analysis $10 - $12 5.6x - 6.8x
Comparable Public Company Analysis $14 - $17 7.8x - 9.6x
PRIMESOURCE $12 6.8x
Buyer Acquisition Consideration
Scenario I $26.3 14.8x
Scenario II $39.5 22.2
Scenario III $45.7 25.7
- ---------------
(1) Includes corporate expenses.
[BEAR STEARNS LOGO] Page 15
<PAGE> 22
AM INTERNATIONAL, INC.
SECTION V
Conclusions
[BEAR STEARNS LOGO]
<PAGE> 23
AM INTERNATIONAL, INC.
Conclusions
- Proposed Transaction Consideration - $5.00 per share in cash
- Clear best offer for AMI after full sale process
- Compares favorably to recent stock price trading history (Closing
price of $2.50 on 10/24/96)
- The TEV/ EBITDA multiple of the proposed transaction compares
favorably to the multiples of precedent acquisition and comparable
companies even assuming a conservative Enterprise Value for the
proposed Transaction and giving full credit to the 1997 projections
(which due to uncertainties and risks cannot be relied upon).
- The Transaction Consideration is fair to the
stockholders of AMI, other than the Buyer and its
affiliates, including shareholders of the Buyer.
[BEAR STEARNS LOGO] Page 16
<PAGE> 24
AM INTERNATIONAL, INC.
EXHIBIT A
Sale Process Details
[BEAR STEARNS LOGO]
<PAGE> 25
AM INTERNATIONAL, INC.
Summary of Preliminary Indications of Interest
($ IN MILLIONS)
<TABLE>
<CAPTION>
PRICE
BIDDER INDICATION CAPITALIZATION COMMENTS/OTHER
- ---------------------- ------------- -------------- -------------------------------------------------
<S> <C> <C> <C>
- - Buyer - $25 - Debt - Customary due diligence
- Equity - No approvals needed
- Could close within 60-90 days from
commencement of due diligence
- - Financial Bidder #2 - $20 - $30 - Unspecified - Customary due diligence
- - Corporate Bidder #1 - $20 - $25 - Unspecified - Subject to due diligence and review of
post-closing balance sheet
- Prepared to sign Purchase Agreement
within 30 days and close by April 30, 1996.
- - Corporate Bidder #2 - $20 - $30 - $10.0 - $20.0 cash - Offer not subject to financing
- $5.0 five-year - Subject to no material change in financial
interest only note condition of Company at closing
- 5-year 25% profit - Interest based on industry acquisition
share in operating
income > $3 mm
subject to max
of $5.0 mm.
- - Financial Bidder #3 - $20 - $23(1) - Bank financing - Prepared to begin due diligence immediately
- Equity - Subject to (i) review of all costs related to
closure of European operations; and (ii) no
material change in business
</TABLE>
(1) Revised indication. Initial indication was $12.5 million.
[BEAR STEARNS LOGO] Page 17
<PAGE> 26
AM INTERNATIONAL, INC.
Summary of Subsequent Indications of Interest
($ IN MILLIONS)
<TABLE>
<CAPTION>
PRICE
BIDDER INDICATION COMMENTS/OTHER
- --------------------- ---------- --------------------------------------------------
<S> <C> <C>
- - Buyer - $26.3 - Offer for stock of AMI at $5.00 per share.
- - Financial Bidder #1 - $5-$12 - $2.00-$3.00 per share.
- Preliminary oral indicaton.
- - Corporate Bidder #1 - $15 - Would consider $2.00-$3.00 per share for AMI.
- Dependent on further due diligence.
- - Corporate Bidder #2 - $15 - Dependent on due diligence.
- Contigent on closing an industry acquisition.
- Lost industry acquisition and withdrew from process.
- - Financial Bidder #2 - NA - Withdrew from process.
- - Financial Bidder #3 - NA - Withdrew from process.
</TABLE>
[BEAR STEARNS LOGO] Page 18
<PAGE> 27
AM INTERNATIONAL, INC.
EXHIBIT B
July vs. October Balance Sheet
[BEAR STEARNS LOGO]
<PAGE> 28
AM INTERNATIONAL, INC.
July vs. October Balance Sheet
($ IN MILLIONS)
<TABLE>
<CAPTION>
OCTOBER
FY96 (Q1FY97)
----- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (net of overdue A/P of $6.8mm) $43.1 $34.3
Accounts receivable, net 21.6 20.5
Inventories, net 15.8 10.1
Other current assets 1.2 1.2
----- -----
TOTAL CURRENT ASSETS 81.7 66.1
Net assets of discontinued operations - -
Other assets 16.7 20.3
----- -----
TOTAL ASSETS $98.4 $86.4
===== =====
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 8.4 $ 7.4
Accounts payable (net of overdue A/P of $6.8mm) 10.5 8.7
Service contract deferred income 13.7 13.0
Other current liabilities 37.8 30.3
----- -----
TOTAL CURRENT LIABILITIES 70.4 59.4
Long-term debt 2.5 2.3
Prepetition liabilities 6.0 4.8
Other long-term liabilities 13.2 13.0
Shareholders' equity 6.2 6.8
----- -----
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $98.4 $86.4
===== =====
</TABLE>
[BEAR STEARNS LOGO] Page 19
<PAGE> 29
AM INTERNATIONAL, INC.
EXHIBIT C
Selected Information On Precedent Acquisitions
<TABLE>
<CAPTION>
Date Announced/
Date Effective Acquirer
- ---------------------------------------- -------------------------------------------------
Supply Distribution Transactions
- ----------------------------------------
<S> <C>
01/09/95 04/05/95 Associated Stationers, Inc. (Wingate Partners)
01/13/95 03/02/95 Corporate Express Inc.
04/18/94 04/29/94 Boise Cascade Corp
01/24/94 03/05/94 Staples Inc
07/13/93 09/14/93 Office Depot Inc.
11/20/92 11/20/92 Eastman Acquisition Corp
03/25/92 06/30/92 OfficeMax Inc. (K- Mart Corp)
06/01/92 06/24/92 United Stationers Inc
09/19/91 02/03/92 Associated Stationers Inc
<CAPTION>
Target Business Description of Target
----------------------------------------------------- -------------------------------------------------------------------
<S> <C>
United Stationers Inc. Wholesale office stationery, furniture, equipment, and computers
Joyce International Inc - Office Products Division Wholesale office supplies
Reliable Corp-Mail Office Supply Business Wholesale office supplies
National Office Supply Co. Inc. Wholesale office supplies via contract
Eastman Office Products Corp (McCown de Leeuw & Co.) Wholesale and Retail stationery supplies.
Eastman Corp Wholesale office equipment and supplies.
OW Office Warehouse, Inc. Wholesale office furniture, equipment, and supplies.
SDC Distributing Corp. Wholesale general line office supplies and furniture.
Boise Cascade Corp. Wholesale Products Distribution Business.
<CAPTION>
Enterprise Value/
-------------------------------------
Equity LTM LTM LTM
Business Decsription of Target Value Revenues EBIT EBITDA
- --------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C>
475.7 0.32x 12.3x 7.9x
27.5 0.26x 10.5x 6.0x
70.0 0.45x NA NA
100.8 0.74x NM NM
225.4 0.72x 14.5x 10.7x
142.0 0.50x 7.0x 5.9x
91.7 0.57x NM NM
80.0 0.19x 4.7x 4.1x
90.0 0.23x NA NA
HIGH 0.74x 14.5x 10.7x
LOW 0.19x 4.7x 4.1x
MEDIAN 0.45x 10.5x 6.0x
MEAN 0.44x 9.8x 6.9x
HARMONIC MEAN 0.35x 8.3x 6.2x
</TABLE>
<TABLE>
<CAPTION>
Date Announced/
Date Effective Acquirer Target
- ------------------ -------------------------- ------------------------------------------------
EQUIPMENT DISTRIBUTION SERVICE AND MANUFACTURING TRANSACTIONS
- ---------------------------------------------------------------
<S> <C> <C> <C>
9/9/96 Pending Danka Business Systems Eastman Kodak's Office Imaging Equipment Service Business
5/31/96 5/31/96 Danka Business Systems Leslie Supply Company, Inc.
4/1/96 4/1/96 Oce Van Der Grinten High performance printing division of Siemens Nixdorf Informationsysteme AG
10/25/95 11/1/95 Danka Business Systems Infotec Europe B.V.
11/23/93 03/01/94 Corporate Express Inc. Hanson Office Products (Hanson Industries/Hanson PLC)
<CAPTION>
Enterprise Value/
---------------------------
Equity LTM LTM LTM
Business Decsription of Target Value Revenues EBIT EBITDA
- -------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C>
Services Office Imaging Equipment mfr by Kodak. 684.0 0.38x NA NA
Distributes and services photocopiers. 83.5 1.52x NA NA
Markets a range of products and services to the
high and very high performance printing market. 550.0 0.89x 11.4x NA
European supplier of photocopiers and facsimile
machines and related service, parts and supplies. 235.7 0.86x 11.9x 6.0x
Provides contract stationery and forms management
services. 171.1 0.45x 13.1x 9.4x
HIGH 1.52x 13.1x 9.4x
LOW 0.38x 11.4x 6.0x
MEDIAN 0.86x 11.9x 7.7x
MEAN 0.82x 12.1x 7.7x
HARMONIC MEAN 0.64x 12.1x 7.3x
</TABLE>
<PAGE> 30
AM INTERNATIONAL, INC.
EXHIBIT D
Selected Information on Comparable Companies
[BEAR STEARNS LOGO]
COMPARABLE COMPANY ANALYSIS
($ in millions. All financials reflect latest twelve months' results unless
otherwise indicated.)
<TABLE>
<CAPTION>
AFP Imaging Avery- Danka Business Oce Van Der PrimeSource Scitex
OPERATING STATISTICS Corp. Dennison Systems Grinten Corp Corp.
----- -------- ------- -------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Last Fiscal Year 06/30/96 12/31/95 03/31/96 11/30/95 12/31/95 12/31/95
LTM 06/30/96 06/29/96 06/30/96 03/31/96 06/30/96 6/30/96
Sales $36.5 $3,154.5 $1,393.2 $2,427.3 $353.2 $759.9
Three Year Net Sales CAGR -1.5% 5.9% 52.1% 16.7% 31.0% 9.9%
FY 97 Sales NA 3,480.0 (1) 1,773.1 (2) 2,929.9 (3) NA 757.4 (4)
Gross Profit 12.2 968.6 555.9 964.6 62.1 309.0
Gross Margin 33.3% 30.7% 39.9% 39.7% 17.6% 40.7%
EBITDA 2.6 386.8 173.0 335.5 10.1 3.2
EBITDA Margin 7.0% 12.3% 12.4% 13.8% 2.9% 0.4%
FY97 EBITDA NA 464.5 (1) 180.8 (2) 502.1 (3) NA 74.0 (4)
EBIT 1.6 280.9 112.0 185.1 7.4 (41.7)
EBIT Margin 4.4% 8.9% 8.0% 7.6% 2.1% -5.5%
Net Income 0.8 154.1 55.1 NA 2.5 (36.8)
Net Margin 2.1% 4.9% 4.0% NA 0.7% -4.8%
<CAPTION>
OPERATING STATISTICS Average
-------
<S> <C>
Last Fiscal Year
LTM
Sales
Three Year Net Sales CAGR 19.0%
FY 97 Sales
Gross Profit
Gross Margin 33.6%
EBITDA
EBITDA Margin 8.1%
FY97 EBITDA
EBIT
EBIT Margin 4.3%
Net Income
Net Margin 1.4%
<CAPTION>
AFP Imaging Avery- Danka Business Oce Van Der PrimeSource Scitex
VALUATION STATISTICS Corp. Dennison Systems Grinten Corp Corp.
----- -------- ------- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Current Price as of
- ---- 24-Oct-96 $1.38 $63.38 $40.50 $106.25 $6.50 $10.63
Shares Outstanding (millions) 7.08 52.45 56.49 16.32 6.53 42.81
Market Value of Equity $9.7 $3,323.9 $2,288.0 $1,734.2 $42.5 $454.9
Net Debt 7.3 511.1 363.9 1,289.2 26.3 (131.1)
----- -------- -------- -------- ----- ------
Total Enterprise Value 17.1 3,835.0 2,651.9 3,023.4 68.7 323.8
Debt / Book Capitalization 45.9% 38.8% 47.0% 63.8% 35.9% 0.4%
Total Enterprise Value / Sales 0.47 1.22 1.90 1.25 0.19 0.43
Total Enterprise Value/ FY97 Sales NA 1.10 1.50 1.03 NA 0.43
Total Enterprise Value / EBITDA 6.6 9.9 15.3 9.0 6.8 NM
Total Enterprise Value / FY97 EBITDA NA 8.3 14.7 6.0 NA 4.4
Total Enterprise Value / EBIT 10.7 13.7 23.7 16.3 9.3 NM
EPS LTM $0.08 $2.91 $1.03 NA $0.38 ($0.86)
EPS Calendar Year 1996 NA $3.15 $1.07 $5.04 NA $0.07
EPS Calendar Year 1997 NA $3.55 $1.60 $5.50 NA $0.66
P/E LTM 16.5 21.8 39.5 NA 17.1 NM
P/E Calendar 1996 NA 20.1 37.9 21.1 NA NM
P/E Calendar 1997 NA 17.9 25.3 19.3 NA 16.1
<CAPTION>
Harmonic
VALUATION STATISTICS Mean (5)
--------
<S> <C>
Current Price as of ---- 24-Oct-96
Shares Outstanding (millions)
Market Value of Equity
Net Debt
Total Enterprise Value
Debt / Book Capitalization 38.6%
Total Enterprise Value / Sales 0.51
Total Enterprise Value/ FY97 Sales 0.82
Total Enterprise Value / EBITDA 8.7
Total Enterprise Value / FY97 EBITDA 6.9
Total Enterprise Value / EBIT 13.2
EPS LTM
EPS Calendar Year 1996
EPS Calendar Year 1997
P/E LTM 21.0
P/E Calendar 1996 24.3
P/E Calendar 1997 19.1
</TABLE>
- ----------------
Footnotes:
(1) Source: Merrill Lynch Research dated July 30, 1996.
(2) Source: Prudential Securities Research dated July 27,1996.
(3) Source: Merrill Lynch Research dated June 27,1996.
(4) Source: Prudential Securities Research dated August 9, 1996.
(5) Harmonic mean is the inverse of the average of the reciprocals. It is used
to calculate an "average" of multiples. Debt to Book Capitalization is an
arithmetic mean and not a harmonic mean.
C-1
<PAGE> 31
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
Operating Data
<TABLE>
<CAPTION>
LTM Net Sales LTM Gross Profit LTM EBITDA
<S> <C> <C> <C> <C> <C>
Avery-Dennison $3,154.5 Avery-Dennison $968.6 Avery-Dennison $386.8
Oce Van Der Grinten 2,427.3 Oce Van Der Grinten 964.6 Oce Van Der Grinten 335.5
Danka Business Systems 1,393.2 Danka Business Systems 555.9 Danka Business Systems 173.0
Scitex Corp. 759.9 Scitex Corp. 309.0 PrimeSource Corp. 10.1
PrimeSource Corp. 353.2 PrimeSource Corp. 62.1 Scitex Corp. 3.2
AFP Imaging Corp. 36.5 AFP Imaging Corp. 12.2 AFP Imaging Corp. 2.6
LTM EBIT LTM Pretax Income LTM Net Income
<S> <C> <C> <C> <C> <C>
Avery-Dennison $280.9 Avery-Dennison $240.0 Oce Van Der Grinten NA
Oce Van Der Grinten 185.1 Oce Van Der Grinten 115.7 Avery-Dennison $154.1
Danka Business Systems 112.0 Danka Business Systems 88.7 Danka Business Systems 55.1
PrimeSource Corp. 7.4 PrimeSource Corp. 5.2 PrimeSource Corp. 2.5
AFP Imaging Corp. 1.6 AFP Imaging Corp. 0.8 AFP Imaging Corp. 0.8
Scitex Corp. (41.7) Scitex Corp. (36.8) Scitex Corp. (36.8)
3-Year Net Sales CAGR LTM Gross Margin LTM EBITDA Margin
Danka Business Systems 52.1% Scitex Corp. 40.7% Oce Van Der Grinten 13.8%
PrimeSource Corp. 31.0% Danka Business System 39.9% Danka Business Systems 12.4%
Oce Van Der Grinten 16.7% Oce Van Der Grinten 39.7% Avery-Dennison 12.3%
Scitex Corp. 9.9% AFP Imaging Corp. 33.3% AFP Imaging Corp. 7.0%
Avery-Dennison 5.9% Avery-Dennison 30.7% PrimeSource Corp. 2.9%
AFP Imaging Corp. (1.5%) PrimeSource Corp. 17.6% Scitex Corp. 0.4%
Average 19.0% Average 33.6% Average 8.1%
LTM EBIT Margin LTM Pretax Margin LTM Net Margin
Avery-Dennison 8.9% Avery-Dennison 7.6% Oce Van Der Grinten NA
Danka Business Systems 8.0% Danka Business System 6.4% Avery-Dennison 4.9%
Oce Van Der Grinten 7.6% Oce Van Der Grinten 4.8% Danka Business Systems 4.0%
AFP Imaging Corp. 4.4% AFP Imaging Corp. 2.2% AFP Imaging Corp. 2.1%
PrimeSource Corp. 2.1% PrimeSource Corp. 1.5% PrimeSource Corp. 0.7%
Scitex Corp. (5.5%) Scitex Corp. (4.8%) Scitex Corp. (4.8%)
Average 4.3% Average 2.9% Average 1.4%
LTM Return on Equity LTM Return on Assets Total Debt / Total Capitalization
Oce Van Der Grinten NA Avery-Dennison 14.3% Oce Van Der Grinten 63.8%
Avery-Dennison 18.9% Danka Business System 9.5% Danka Business Systems 47.0%
Danka Business Systems 11.9% AFP Imaging Corp. 7.9% AFP Imaging Corp. 45.9%
AFP Imaging Corp. 8.2% Oce Van Der Grinten 7.4% Avery-Dennison 38.8%
PrimeSource Corp. 5.3% PrimeSource Corp. 6.3% PrimeSource Corp. 35.9%
Scitex Corp. (5.3%) Scitex Corp. (4.1%) Scitex Corp. 0.4%
Average 7.8% Average 6.9% Average 38.6%
</TABLE>
C-2
<PAGE> 32
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
Market Data
<TABLE>
<CAPTION>
Market Value of Equity Enterprise Value
<S> <C> <C> <C>
Avery-Dennison $3,323.9 Avery-Dennison $3,835.0
Danka Business Systems 2,288.0 Oce Van Der Grinten 3,023.4
Oce Van Der Grinten 1,734.2 Danka Business Systems 2,651.9
Scitex Corp. 454.9 Scitex Corp. 323.8
PrimeSource Corp. 42.5 PrimeSource Corp. 68.7
AFP Imaging Corp. 9.7 AFP Imaging Corp. 17.1
Price / LTM Earnings Per Share Price / Current Calendar Year EPS Current Price / Next Calendar Year EPS
<S> <C> <C> <C> <C> <C>
Scitex Corp. NM Scitex Corp. NM AFP Imaging Corp. NA
Oce Van Der Grinten NA AFP Imaging Corp. NA PrimeSource Corp. NA
Danka Business Systems 39.5 PrimeSource Corp. NA Danka Business Systems 25.3
Avery-Dennison 21.8 Danka Business Systems 37.9 Oce Van Der Grinten 19.3
PrimeSource Corp. 17.1 Oce Van Der Grinten 21.1 Avery-Dennison 17.9
AFP Imaging Corp. 16.5 Avery-Dennison 20.1 Scitex Corp. 16.1
Harmonic Mean 21.0 Harmonic Mean 24.3 Harmonic Mean 19.1
Enterprise Value / LTM Revenue Enterprise Value / LTM EBITDA Enterprise Value / LTM EBIT
Danka Business Systems 1.90 Scitex Corp. NM Scitex Corp. NM
Oce Van Der Grinten 1.25 Danka Business Systems 15.3 Danka Business Systems 23.7
Avery-Dennison 1.22 Avery-Dennison 9.9 Oce Van Der Grinten 16.3
AFP Imaging Corp. 0.47 Oce Van Der Grinten 9.0 Avery-Dennison 13.7
Scitex Corp. 0.43 PrimeSource Corp. 6.8 AFP Imaging Corp. 10.7
PrimeSource Corp. 0.19 AFP Imaging Corp. 6.6 PrimeSource Corp. 9.3
Harmonic Mean 0.51 Harmonic Mean 8.7 Harmonic Mean 13.2
</TABLE>
C-3
<PAGE> 33
AM MULTIGRAPHICS
Survey of Comparable Companies
($ in Millions)
<TABLE>
<CAPTION>
AFP IMAGING CORP. AVERY-DENNISON DANKA BUSINESS SYSTEMS OCE VAN DER GRINTEN
----------------- -------------- ---------------------- -------------------
LATEST FISCAL YEAR END 30-Jun-96 31-Dec-95 31-Mar-96 30-Nov-95
LATEST 12 MONTHS ENDED 30-Jun-96 29-Jun-96 30-Jun-96 31-Mar-96
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL ANNUAL ANNUAL ANNUAL
NET SALES GROWTH GROWTH GROWTH GROWTH
LFY-3 $38.3 $2,622.9 $352.7 $1,528.6
LFY-2 30.5 -20.3% 2,608.7 -0.5% 531.4 50.7% 1,366.7 -10.6%
LFY-1 26.6 -12.8% 2,856.7 9.5% 802.2 51.0% 1,575.1 15.3%
LFY 36.5 37.4% 3,113.9 9.0% 1,240.3 54.6% 2,427.3 54.1%
LTM 36.5 3,154.5 1,393.2 2,427.3
GROSS PROFIT % SALES % SALES % SALES % SALES
LFY-2 9.5 $818.1 31.4% $213.8 40.2% $608.1 44.5%
LFY-1 9.2 907.8 31.8% 323.9 40.4% 697.0 44.2%
LFY 12.2 33.3% 957.3 30.7% 496.6 40.0% 964.6 39.7%
LTM 12.2 33.3% 968.6 30.7% 555.9 39.9% 964.6 39.7%
EBITDA
LFY-2 1.1 $269.3 10.3% $67.5 12.7% $216.9 15.9%
LFY-1 2.3 311.3 10.9% 104.0 13.0% 244.7 15.5%
LFY 2.6 7.0% 370.0 11.9% 156.8 12.6% 335.5 13.8%
LTM 2.6 7.0% 386.8 12.3% 173.0 12.4% 335.5 13.8%
OPERATING INCOME
LFY-2 0.2 $175.4 6.7% $47.9 9.0% $85.8 6.3%
LFY-1 1.5 215.9 7.6% 71.6 8.9% 105.8 6.7%
LFY 1.6 4.4% 267.5 8.6% 104.7 8.4% 185.1 7.6%
LTM 1.6 4.4% 280.9 8.9% 112.0 8.0% 185.1 7.6%
EBIT
LFY-2 0.2 $175.4 6.7% $47.9 9.0% $85.8 6.3%
LFY-1 1.5 215.9 7.6% 71.6 8.9% 105.8 6.7%
LFY 1.6 4.4% 267.5 8.6% 104.7 8.4% 185.1 7.6%
LTM 1.6 4.4% 280.9 8.9% 112.0 8.0% 185.1 7.6%
PRETAX INCOME
LFY-2 (0.8) $132.2 5.1% $44.2 8.3% $38.9 2.8%
LFY-1 0.9 172.9 6.1% 63.8 8.0% 60.9 3.9%
LFY 0.8 2.2% 223.2 7.2% 83.1 6.7% 115.7 4.8%
LTM 0.8 2.2% 240.0 7.6% 88.7 6.4% 115.7 4.8%
NET INCOME
LFY-2 (0.6) $83.3 3.2% $26.5 5.0% $32.2 2.4%
LFY-1 0.9 109.4 3.8% 39.0 4.9% 50.4 3.2%
LFY 0.8 2.1% 142.7 4.6% 51.6 4.2% 93.5 3.9%
LTM 0.8 2.1% 154.1 4.9% 55.1 4.0% NA
ANNUAL ANNUAL ANNUAL ANNUAL
EARNINGS PER SHARE GROWTH GROWTH GROWTH GROWTH
LFY-2 ($0.11) $1.44 $0.59 $2.02
LFY-1 0.13 1.97 37.0% 0.80 36.9% 3.12 54.2%
LFY 0.08 2.68 36.1% 1.00 25.0% NA
LTM 0.08 2.91 1.03 NA
Calendar 1996 NA 3.15 1.07 5.04
Calendar 1998 NA 3.55 12.7% 1.60 49.5% 5.50 9.1%
<CAPTION>
PRIMESOURCE CORP. SCITEX CORP.
----------------- ------------
LATEST FISCAL YEAR END 31-Dec-95 31-Dec-95
LATEST 12 MONTHS ENDED 30-Jun-96 30-Jun-96
--------- ---------
<S> <C> <C> <C> <C>
ANNUAL ANNUAL
NET SALES GROWTH GROWTH
LFY-3 $158.7 $549.7
LFY-2 167.7 5.7% 622.8 13.3%
LFY-1 238.2 42.0% 704.1 13.1%
LFY 357.1 49.9% 728.9 3.5%
LTM 353.2 759.9
GROSS PROFIT % SALES % SALES
LFY-2 $32.7 19.5% $339.8 54.6%
LFY-1 43.8 18.4% 368.0 52.3%
LFY 63.3 17.7% 319.6 43.8%
LTM 62.1 17.6% 309.0 40.7%
EBITDA
LFY-2 $8.1 4.8% $129.4 20.8%
LFY-1 8.6 3.6% 116.1 16.5%
LFY 9.1 2.5% 8.6 1.2%
LTM 10.1 2.9% 3.2 0.4%
OPERATING INCOME
LFY-2 $6.7 4.0% $101.1 16.2%
LFY-1 6.4 2.7% 78.8 11.2%
LFY 6.0 1.7% (32.3)
LTM 6.9 1.9% (36.0)
EBIT
LFY-2 $6.9 4.1% $101.5 16.3%
LFY-1 6.9 2.9% 81.6 11.6%
LFY 6.4 1.8% (34.8)
LTM 7.4 2.1% (41.7)
PRETAX INCOME
LFY-2 $6.4 3.8% $106.2 17.1%
LFY-1 5.7 2.4% 87.1 12.4%
LFY 4.2 1.2% (24.9)
LTM 5.2 1.5% (36.8)
NET INCOME
LFY-2 $3.8 2.2% $89.4 14.4%
LFY-1 3.5 1.5% 70.2 10.0%
LFY 2.4 0.7% (16.3)
LTM 2.5 0.7% (36.8)
ANNUAL ANNUAL
EARNINGS PER SHARE GROWTH GROWTH
LFY-2 $0.92 $2.10
LFY-1 0.71 -22.4% 1.64 -21.8%
LFY 0.37 -48.7% (0.38) -123.2%
LTM 0.38 (0.86)
Calendar 1996 NA 0.07
Calendar 1998 NA 0.66 842.9%
</TABLE>
C-4
<PAGE> 34
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
<TABLE>
<CAPTION>
AFP Imaging Corp. Avery-Dennison Danka Business Systems
-------------------- -------------------- --------------------------
<S> <C> <C> <C>
Latest Fiscal Year End 30-Jun-96 31-Dec-95 31-Mar-96
Latest 12 Months Ended 30-Jun-96 29-Jun-96 30-Jun-96
ASSETS
Current Assets
Cash and Equivalents $3.1 $5.1 $44.8
Accounts Receivable 6.0 451.7 279.7
Inventory 7.5 230.4 243.4
Other Current Assets 0.2 97.2 11.2
---- ----- -----
Total Current Assets $16.8 $784.4 $579.1
Property, Plant & Equipment, net 1.3 916.1 131.0
Intangibles, net 1.9 121.3 439.7
Other Assets, net 0.2 138.4 32.2
--- ----- ----
Total Assets $20.3 $1,960.2 $1,182.0
LIABILITIES % Total % Total % Total
Current Liabilities: Capitalization Capitalization Capitalization
Short-Term Debt (Incl. CPLTD) $0.4 2.4% $111.6 8.4% $29.1 3.3%
Accounts Payable 1.4 147.8 197.8
Other Current Liabilities 1.7 329.2 71.4
--- ----- ----
Total Current Liabilities $3.5 $588.6 $298.3
Long-Term Debt (Incl. Capital Leases) 7.5 43.5% 404.6 30.4% 379.5 43.6%
Deferred Taxes 0.0 151.6 42.8
Other Non-Current Liabilities 0.0 0.0 0.0
Minority Interest 0.0 0.0% 0.0 0.0% 0.0 0.0%
---- --- ---
Total Liabilities $10.9 $1,144.8 $720.6
SHAREHOLDERS' EQUITY
Preferred Equity 2.6 14.9% 0.0 0.0% 0.0 0.0%
Common Equity 6.8 39.2% 815.4 61.2% 461.3 53.0%
--- ----- -----
Total Equity 9.3 54.1% 815.4 61.2% 461.3 53.0%
Total Liabilities and Shareholders' Equity $20.3 $1,960.2 $1,182.0
Total Book Capitalization 17.2 100.0% 1,331.6 100.0% 870.0 100.0%
Balance Sheet Ratio Analysis:
Working Capital $13.4 $195.8 $280.8
Net Working Capital 10.7 302.3 265.2
Current Ratio 4.86 x 1.33 x 1.94 x
Quick Ratio 2.69 0.94 1.13
Days of Sales in Receivables 60 52 73
Inventory Turnover 3.2 x 9.5 x 3.4 x
Debt/Equity Ratio 0.85 0.63 0.89
Debt/Capitalization Ratio 0.46 0.39 0.47
Return on Equity 8.2% 18.9% 11.9%
Return on Assets 7.9% 14.3% 9.5%
<CAPTION>
Oce Van Der Grinten PrimeSource Corp. Scitex Corp.
----------------------- -------------------- -------------------
<S> <C> <C> <C>
Latest Fiscal Year End 30-Nov-95 31-Dec-95 31-Dec-95
Latest 12 Months Ended 31-Mar-96 30-Jun-96 30-Jun-96
ASSETS
Current Assets
Cash and Equivalents $15.3 $0.0 $133.6
Accounts Receivable 665.1 52.3 302.2
Inventory 349.2 36.6 186.2
Other Current Assets 279.6 2.5 40.6
----- --- ----
Total Current Assets $1,309.3 $91.4 $662.6
Property, Plant & Equipment, net 924.1 9.6 98.8
Intangibles, net 274.7 4.7 98.1
Other Assets, net 0.0 3.0 22.9
--- --- ----
Total Assets $2,508.0 $108.7 $882.4
LIABILITIES % Total % Total % Total
Current Liabilities: Capitalization Capitalization Capitalization
Short-Term Debt (Incl. CPLTD) $237.2 12.3% $1.2 1.7% $2.5 0.4%
Accounts Payable 124.9 23.6 60.1
Other Current Liabilities 297.7 6.9 128.3
----- --- -----
Total Current Liabilities $659.9 $31.8 $190.9
Long-Term Debt (Incl. Capital Leases) 990.0 51.5% 25.1 34.3% 0.0 0.0%
Deferred Taxes 50.3 0.0 0.0
Other Non-Current Liabilities 112.6 5.0 0.4
Minority Interest 0.1 0.0% 0.0 0.0% 0.0 0.0%
--- --- ---
Total Liabilities $1,813.0 $61.9 $191.3
SHAREHOLDERS' EQUITY
Preferred Equity 77.2 4.0% 0.0 0.0% 0.0 0.0%
Common Equity 617.9 32.1% 46.9 64.1% 691.1 99.6%
----- ---- -----
Total Equity 695.1 36.2% 46.9 64.1% 691.1 99.6%
Total Liabilities and Shareholders' Equity $2,508.0 $108.7 $882.4
Total Book Capitalization 1,922.4 100.0% 73.1 100.0% 693.6 100.0%
Balance Sheet Ratio Analysis:
Working Capital $649.4 $59.6 $471.7
Net Working Capital 871.3 60.8 340.6
Current Ratio 1.98 x 2.88 x 3.47 x
Quick Ratio 1.45 1.72 2.50
Days of Sales in Receivables 100 54 145
Inventory Turnover 4.2 x 7.9 x 2.4 x
Debt / Equity Ratio 1.77 0.56 0.00
Debt / Capitalization Ratio 0.64 0.36 0.00
Return on Equity NA 5.3% NM
Return on Assets 7.4% 6.3% NM
</TABLE>
C-5
<PAGE> 35
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
<TABLE>
<CAPTION>
AFP Imaging Corp. Avery-Dennison Danka Business Systems
LATEST FISCAL YEAR END 30-JUN-96 31-Dec-95 31-Mar-96
LATEST 12 MONTHS ENDED 30-JUN-96 29-Jun-96 30-Jun-96
------------------- ------------------- ---------------------
MARKET INFORMATION
Ticker Symbol AFPC AVY DANKY
Historical Price Ranges Low High Low High Low High
<S> <C> <C> <C>
LTM 0.875 - 2.250 44.000 - 63.750 22.250 - 51.875
Current Price as of ---- 24-Oct-96 $1.38 $63.38 $40.50
Shares Outstanding (millions) 7.078 52.449 56.493
LTM EPS $0.08 $2.91 $1.03
Calendar 1996 EPS NA 3.15 1.07
Calendar 1998 EPS NA 3.55 1.60
Calendar EPS Growth 12.7% 49.5%
Book Value Per Share $1.32 $15.55 $8.17
Tangible Net Worth Per Share 1.05 13.23 0.38
Current Share Price /
LTM EPS 16.5 21.8 x 39.5 x
Calendar 1996 EPS NA 20.1 37.9
Calendar 1998 EPS NA 17.9 25.3
Book Value Per Share 1.04 4.08 x 4.96 x
Tangible Net Worth Per Share 1.31 4.79 105.59
Total Market Value of Common Equity $9.7 $3,323.9 $2,288.0
Total Enterprise Value 17.1 3,835.0 2,651.9
Enterprise Value /
LTM Net Sales 0.47 1.22 x 1.90 x
LTM EBITDA 6.65 9.91 15.33
LTM EBIT 10.68 13.65 23.68
2 Year Compound Growth Rates
Net Sales 9.4% 9.3% 52.8%
Operating Income 200.1% 23.5% 47.8%
Net Income NM 30.9% 39.7%
Earnings Per Share NM 36.6% 30.8%
<CAPTION>
Oce Van Der Grinten PrimeSource Corp. Scitex Corp.
LATEST FISCAL YEAR END 30-Nov-95 31-Dec-95 31-Dec-95
LATEST 12 MONTHS ENDED 31-Mar-96 30-Jun-96 30-Jun-96
-------------------- ------------------- ---------------------
MARKET INFORMATION
Ticker Symbol OCENY PSRC SCIXF
Historical Price Ranges Low High Low High Low High
<S> <C> <C> <C>
LTM 57.250 - 114.250 5.000 - 8.250 9.875 - 21.875
Current Price as of ---- 24-Oct-96 $106.25 $6.50 $10.63
Shares Outstanding (millions) 16.322 6.531 42.810
LTM EPS NA $0.38 ($0.86)
Calendar 1996 EPS 5.04 NA 0.07
Calendar 1998 EPS 5.50 NA 0.66
Calendar EPS Growth 9.1% 842.9%
Book Value Per Share $42.58 $7.17 $16.14
Tangible Net Worth Per Share 25.75 6.45 13.85
Current Share Price /
LTM EPS NA x 17.1 x NM x
Calendar 1996 EPS 21.1 NA NM
Calendar 1998 EPS 19.3 NA 16.1
Book Value Per Share 2.50 x 0.91 x 0.66 x
Tangible Net Worth Per Share 4.13 1.01 0.77
Total Market Value of Common Equity $1,734.2 $42.5 $454.9
Total Enterprise Value 3,023.4 68.7 323.8
Enterprise Value /
LTM Net Sales 1.25 x 0.19 x 0.43 x
LTM EBITDA 9.01 6.81 99.93
LTM EBIT 16.33 9.27 NM
2 Year Compound Growth Rates
Net Sales 33.3% 45.9% 8.2%
Operating Income 46.8% -5.4% NM
Net Income 70.4% -20.1% NM
Earnings Per Share NA -36.9% NM
</TABLE>
C-6
<PAGE> 36
1 INTERNATIONAL, INC.
Survey of Comparable Companies
<TABLE>
GENERAL FOOTNOTES
<S><C>
LTM: Latest Twelve Months; NA: Not Available; NM: Not Meaningful
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization
EBIT: Earnings Before Interest and Taxes
Market Equity Value: Closing Stock Price x Shares Outstanding
Market Capitalization: Market Equity Value + Preferred Equity + Total Debt - Cash & Cash Equivalents
Book Value Per Share: Total Equity / Shares Outstanding
Tangible Book Value Per Share: (Total Equity - Liquidation Value of Preferred Equity - Intangible Assets) / Shares
Outstanding
Source of EPS estimates: October First Call Estimates
COMPANY FOOTNOTES
<S> <C>
AFP Imaging Corp Fiscal Year Ended 6/30/96 excludes $0.06 million in non-recurring charges.
AFPC Fiscal Year Ended 6/30/94 excludes $3.6 million in non-recurring charges.
Avery-Dennison Fiscal Year ended 12/31/95 excludes $1.5MM gain on divestitures and restructuring, tax effected
AVY at 36%
Danka Business Systems FY 1996 excludes $8.5 MM restructuring charge.
DANKY
Oce Van Der Grinten LTM and FY 1995 are pro forma 11/30/95 for the acquisition of Siemens Nixdorf Information systeme
OCENY AG. Balance Sheet data is pro forma for the acquisition of Siemens Nixdorf Informationsysteme AG.
Balance Sheet Allocations per Bear Stearns estimate due to lack of individual account breakout.
Depreciation and Amortization and CapEx for the three months ended 2/29/95 and 2/29/96 based of
historical percentage of sales due to lack of Company disclosure
PrimeSource Corp. Six Months ended 6/30/96 excludes $1.315 million in restructuring expense.
PRSC Fiscal year ended 12/31/95 excludes $1.3 MM for restructuring, tax effected at 43%.
Fiscal year ended 12/31/93, excludes $0.609 MM provision for cost of spin-off.
Fiscal year ended 12/31/93, excludes cumulative effects on prior years of changes in accounting
policies of $0.098 MM for income taxes and $1.208 MM for postretirement benefits other than
pensions, net of taxes.
Scitex Corp. Fiscal year ended 12/31/95 excludes a $22.0 MM loss due to employee termination and reorganization
SCIXF tax effected at 17%
Fiscal year ended 12/31/94 excludes a $7.8 million charge attributed to incomplete R&D tax effected
at 17%.
</TABLE>
C-7
<PAGE> 37
AM International, Inc.
Survey of Comparable Companies
<TABLE>
COMPANY BUSINESS DESCRIPTION
<S> <C>
AFP Imaging Corp. AFP produces image-making equipment, including systems for hard-copy recording of diagnostic
AFPC images, used in the graphic arts, markets industrial X-ray markets.
Avery-Dennison Avery-Dennison Corporation is a worldwide manufacturer of pressure-sensitive adhesives and
AVY materials, office products, converted products and specialty chemicals. The Company
serves a broad consumer and industrial base, with major markets in office products, retail,
industrial tapes, durable goods, apparel, food, transportation, health care and data processing.
Danka Business Systems Danka Business Systems PLC operates through its subsidiary, Danka Industries, Inc., which
DANKY distributes and services office equipment, including copiers and facsimile machines. The machines
are distributed throughout the United States. Another subsidiary, Copy Products, Inc., sells,
leases, rents and services automated office equipment and related parts.
Oce Van Der Grinten Oce Van Der Grinten develops, produces and markets a variety of products and services for the
OCENY presentation and reproduction of information on paper in both the Engineering Systems and the
Office Systems markets.
PrimeSource Corp. PrimeSource Corporation distributes graphic arts equipment and supplies to the printing and
PRSC publishing industries. The Company operates 30 centers nationwide.
Scitex Corp. Scitex Corporation designs, develops, manufactures, markets and services interactive turnkey
SCIXF computer imaging systems. These systems are used primarily in the printing, publishing and
graphic arts industries.
</TABLE>
C-8
<PAGE> 38
AM INTERNATIONAL, INC.
Page Title
[BEAR STEARNS LOGO] Page 21
<PAGE> 1
EXHIBIT (b)(3)
AM INTERNATIONAL, INC.
CONFIDENTIAL
Presentation to the Board of Directors
of AM International, Inc.
October 29, 1996
[BEAR STEARNS LOGO]
<PAGE> 2
AM INTERNATIONAL, INC.
Table of Contents
I Review of Proposed Transaction
II Review of Sale Process
III Business and Valuation Issues
- Summary of Fiscal 1996 Projections and Actual Results
- Summary Review of 1997 Budget and Current Strategy
- Fiscal 1997-1999 Projections
- Review of Liabilities
- Review of Working Capital Deficit
IV Valuation Analysis
- Analysis of AMI Transaction Enterprise Value
- Transaction Multiples
- Precedent Acquisition Analysis
- Comparable Public Company Analysis
- Stock Price Trading History
- Summary of Valuation Analysis
V Conclusions
Exhibits
A. Sale Process Details
B. Selected Information on Precedent Acquisitions
C. Selected Information on Comparable Companies
[BEAR STEARNS LOGO] 0051352.01
<PAGE> 3
AM INTERNATIONAL, INC.
SECTION I
Review of Proposed Transaction
[BEAR STEARNS LOGO]
<PAGE> 4
AM INTERNATIONAL, INC.
Review of Proposed Transaction
- AM Acquisition, Inc. (the "Buyer"), a corporation formed by affiliates
of Pacholder Associates, Inc., proposes to purchase (the "Transaction")
all of the outstanding shares of AM International, Inc. ("AMI" or the
"Company") for $5.00 per share in cash (the "Transaction
Consideration"). It is contemplated that Thomas D. Rooney and A. Carl
Mudd will own an equity interest in the Buyer.
- One-step cash merger
- Summary of key terms
- Fiduciary out
- Breakup of expenses plus $1.0 million
- Reps and warranties terminate at closing
- Closing conditions
- Solvency opinion
- No "material adverse change"
- Termination date
- Contemplated sources of Buyer financing
- Minimum equity investment of $2.0 million
- Acquisition facility of $35.0 million provided by one or more
institutional lenders
- Working Capital facility of $15.0 million provided by
institutional lenders
[BEAR STEARNS LOGO] Paage 1
<PAGE> 5
AM INTERNATIONAL, INC.
SECTION II
Review of Sale Process
[BEAR STEARNS LOGO]
<PAGE> 6
AM INTERNATIONAL, INC.
Review of Sale Process - Summary of Contacts
CORPORATE FINANCIAL
BUYERS BUYERS TOTAL
--------- --------- -----
- - Parties Contacted 24 63 87
== == ==
- - Parties that Were Not Interested or Gave No
Response 17 32 49
- - Parties Who Executed Confidentiality and Were
Not Interested 5 28 33
- - Preliminary Indications of Interest Received 2 3(1) 5
-- -- --
24 63 87
== == ==
(1) Excludes Financial Bidder #1.
[BEAR STEARNS LOGO] Page 2
<PAGE> 7
AM INTERNATIONAL, INC.
Review of Sale Process - Summary of Indications
($ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FINAL
INDICATION
PRELIMINARY SUBSEQUENT (ENTERPRISE PER SHARE
BIDDER INDICATION INDICATION VALUE) PRICE COMMENTS
- ------------------- ---------- ---------- ---------- --------- -------------------------------------
<S> <C> <C> <C> <C> <C>
Buyer $25 $16 $23(1) $5.00 (1) Enterprise value derived from
$5.00 per share offer assuming net
debt of ($11.9) (e.g. excess cash)
Financial Bidder #1 -- 2 - 9 2 - 9(2) 2.00 - 3.00 (2) Enterprise value derived from
$2.00 - $3.00 per share offer
Corporate Bidder #1 20 - 25 15 15 (3) 2.00 - 3.00(3) (3) Corporate Bidder #1 preferred
asset deal at $15 million but
offered "less attractive" stock deal
at $2.00 - $3.00 per share. Asset
deal had implied equity value of
approximately $3.82 per share,
versus stock deal at $2.00-$3.00 per
share
Corporate Bidder #2 20 - 30 15 Withdrawn Withdrawn Withdrawn after acquisition in the
industry fell through
Financial Bidder #2 20 - 30 Withdrawn Withdrawn Withdrawn Withdrawn after initial due diligence
Financial Bidder #3 20 - 23 Withdrawn Withdrawn Withdrawn Withdrawn after initial due diligence
</TABLE>
[BEAR STEARNS LOGO] Page 3
<PAGE> 8
AM INTERNATIONAL, INC.
SECTION III
Business and Valuation Issues
[BEAR STEARNS LOGO]
<PAGE> 9
AM INTERNATIONAL, INC.
Summary of Fiscal 1996 Projections and Actual Results
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PROJECTED FISCAL YEAR ENDED JULY 31, 1996
-----------------------------------------------------------------------
OFFERING
INITIAL MEMORANDUM
PROJECTIONS PROJECTIONS PROJECTIONS PROJECTIONS PROJECTIONS
AS OF 7/10/95 AS OF 11/1/95 AS OF 1/26/96 AS OF 3/19/96 AS OF 5/13/96 ACTUAL
------------- ------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
MULTIGRAPHICS - NORTH AMERICA
Revenue(1) $169,774 $175,200 $174,237 $154,765 $143,245 $137,981
EBIT(1)(2) $ 830 $ 2,000 $ 2,278 $ 0 ($740) ($8,189)
</TABLE>
(1) Includes Canadian operations and excludes Japan.
(2) Prior to corporate and restructuring charges, non-operating costs and
non-recurring items.
[BEAR STEARNS LOGO] Page 4
<PAGE> 10
AM INTERNATIONAL, INC.
Summary Review of 1997 Budget and Current Strategy
<TABLE>
<CAPTION>
1997 BUDGET CURRENT STRATEGY
------------------------------ -----------------------------------
<S> <C> <C>
KEY ASSUMPTIONS: - Curtailment of manufacturing - Operate Xeikon profitably or exit
- Steady supplies business - "Harvest" service
- "Harvest" service - Grow base supplies business
- Xeikon breakeven - Supply acquisitions
- Realize cost savings
- Eliminate redundant systems
ISSUES AND RISKS: - Systems transitions - Xeikon relationship and viability
- Management and personnel - Competition for the supply business
- Canada restructuring - Ability to transition outside salesforce
- Xeikon - Acquisitions are unidentified
- Cost savings are unidentified
</TABLE>
[BEAR STEARNS LOGO] Page 5
<PAGE> 11
AM INTERNATIONAL, INC.
Fiscal 1997-1999 Projections(1)
<TABLE>
<CAPTION>
PROJECTED INCOME STATEMENT
($ in millions) FISCAL YEARS ENDED JULY 31,
-------------------------------------
1996A 1997 1998 1999
------- ------- --------- -------
<S> <C> <C> <C> <C>
REVENUES
- --------
Supplies / Pre-Press $40.3 $ 43.7 $ 46.8
Service 39.2 35.3 32.3
Xeikon 11.9 14.7 17.5
----- ------ ------
Existing Operations Revenues 91.3 93.7 96.6
Acquisitions 3.3 25.0 55.0
------ ----- ------ ------
TOTAL REVENUES $138.0 94.6 118.7 151.6
OPERATING INCOME
- ----------------
Base Income 1.6 1.6 1.6
Supplies/ Pre-Press -- 0.7 1.3
Service -- (1.0) (1.7)
Xeikon -- 0.3 0.6
Acquisitions 0.3 2.5 5.5
COST REDUCTIONS
- ---------------
SG&A Reductions -- 1.1 2.2
Eliminate Redundant Systems -- 0.6 0.6
------ ----- ------ ------
EBIT - Multigraphics (8.2) 1.9 5.8 10.1
Corporate Expense 3.5 2.0 2.0 2.0
------ ----- ------ ------
CONSOLIDATED EBIT (11.7) (0.1) 3.8 8.1
Depreciation and Amortization 2.0 1.9 1.9 1.9
------ ----- ------ ------
CONSOLIDATED EBITDA $ (9.7) $ 1.8 $ 5.7 $ 10.0
</TABLE>
<TABLE>
<CAPTION>
ADJUSTED INCOME STATEMENT
($ in millions) FISCAL YEARS ENDED JULY 31,
----------------------------
1997 1998 1999
------- --------- -------
<S> <C> <C> <C>
EBITDA as projected $ 1.8 $ 5.7 $10.0
Less:
Unidentified SG&A Reductions -- (1.1) (2.2)
Xeikon Projected Growth -- (0.3) (0.6)
Acquisitions (0.3) (2.5) (5.5)
"Adjusted" EBITDA $ 1.4 $ 1.8 $ 1.7
</TABLE>
Due to the numerous revisions to the 1996 projections, the risks associated
with the Company's current strategic plan and the uncertainty of the
Company's future projections, we have determined not to rely on the estimates
of AMI's future financial performance in our analysis.
(1) 1996 includes Canada; 1997-1999 includes revenues from Canada but no
significant operating profit contributions. 1996 EBIT and EBITDA are
prior to corporate and restructuring charges, non-operating costs and
non-recurring items.
[BEAR STEARNS LOGO] Page 6
<PAGE> 12
AM INTERNATIONAL, INC.
Review of Liabilities
($ in millions)
<TABLE>
<CAPTION>
COMPONENTS OF TRANSACTION ENTERPRISE VALUE
---------------------------------------------------------
RESTRUCTURING OTHER LONG-TERM
AT 7/31/96 TOTAL DEBT RESERVE LIABILITIES CASH
---------- ---------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Short-term debt
- ---------------
Revolver $ 5.4
CP capital leases 1.2
ST prepetition liabilities 7.7
Total short-term debt 14.3 14.3
Accounts payable (net of overdue A/P of $6.0mm) 9.4
Service contract deferred income 12.9
Other current liabilities
- -------------------------
Payroll related (non-restructuring) 8.9(1)
Other accrued (non-restructuring) 8.0(2)
----------
Subtotal 16.9
----------
Restructuring reserve 14.3(3) 14.3
----------
Total other current liabilities 31.2
----------
TOTAL CURRENT LIABILITIES 67.8
Long-term debt (capital lease obligations) 2.5 2.5
Prepetition liabilities 6.0 6.0
Other long-term liabilities 13.2(4) 13.2
TOTAL LIABILITIES $89.5 $22.8 $14.3 $13.2 $49.0(5)
========== ========== ============= =============== =========
</TABLE>
(1) (2) (3) (4) (5) See next page for explanation of notes.
[BEAR STEARNS LOGO] Page 7
<PAGE> 13
AM INTERNATIONAL, INC.
Review of Liabilities - Notes
<TABLE>
<S> <C>
(1) PAYROLL RELATED (VACATION/HOLIDAY SALARY, INSURANCE, SEVERANCE PAY, ETC.) IS $8.9 MILLION.
(2) OTHER ACCRUED/NON-RESTRUCTURING IS COMPRISED OF THE FOLLOWING:
(a) Interest $ 1.4
(b) Income tax reserve 1.2
(c) Product liability insurance reserve 1.0
(d) Other (sales tax audit, warranty, deferred tax liability, property tax, legal fees, etc.) 4.4
-----
Total non-restructuring reserves included in other current liabilities $ 8.0
(3) RESTRUCTURING RESERVE IS COMPRISED OF THE FOLLOWING:
(a) International $ 5.7
(b) Severance 5.9
(c) Change in control payments 1.3
(d) Other (bankruptcy, other Rosemont shut down, idle facility) 1.5
-----
Total restructuring reserves included in other current liabilities $14.3
(4) OTHER LONG-TERM LIABILITIES ARE COMPRISED OF THE FOLLOWING:
(a) Postretirement benefits $10.4
(b) Pension retirement benefits 2.7
(c) Other 0.1
-----
Total other long-term liabilities $13.2
(5) CASH IS CALCULATED AS FOLLOWS:
(a) Current cash on hand (at 7/31/96) $ 2.6
(b) Proceeds from sale of Sheridan 50.0
(c) Proceeds from sale of AM Japan 10.5
(d) Heidelberg checkbook balance (1.7)
(e) Sheridan outstanding checks (4.4)
(f) Accounts payable paydown (6.0)
(g) Deal costs (2.0)
-----
Total cash $49.0
</TABLE>
[BEAR STEARNS LOGO] Page 8
<PAGE> 14
AM INTERNATIONAL, INC.
Review of Working Capital Deficit
($ IN MILLIONS)
<TABLE>
<CAPTION>
AS OF 7/31/96
-------------
<S> <C>
Accounts receivable, net $ 19.8
Inventories, net 11.6
Other current assets 1.1
Accounts payable (1) (9.4)
Service contract deferred income (12.9)
Other current liabilities (excl. restructuring reserve) (16.9)
----
WORKING CAPITAL DEFICIT ($6.7)
====
</TABLE>
- -------------------
(1) Net of $6.0 million of overdue accounts payable that were paid in Q1FY97.
[BEAR STEARNS LOGO] Page 9
<PAGE> 15
AM INTERNATIONAL, INC.
SECTION IV
Valuation Analysis
[BEAR STEARNS LOGO]
<PAGE> 16
AM INTERNATIONAL, INC.
Analysis of AMI Transaction Enterprise Value(1)
($ IN MILLIONS)
<TABLE>
<CAPTION>
SCENARIO I SCENARIO II SCENARIO III
---------- ----------- ------------
<S> <C> <C> <C>
Equity Value(2) $ 35.2 $ 35.2 $ 35.2
Plus: Total Debt 22.8 22.8 22.8
Less: Cash(3) (49.0) (49.0) (49.0)
------ ------ ------
Subtotal 9.0 9.0 9.0
Plus: Restructuring Reserve 14.3 14.3 14.3
Plus: Other Long-Term Liabilities -- 13.2 13.2
Plus: Working Capital Deficit(4) -- -- 6.7
------ ------ ------
AMI Transaction Enterprise Value ("TEV")(5) $ 23.3 $ 36.5 $ 43.2
====== ====== ======
</TABLE>
- ---------------
(1) Based on 7/31 balance sheet.
(2) $5.00 per share times 7.0 million shares.
(3) Assumed cash reduced by $6.0 million, reflecting paydown of overdue
payables which occurred in 1Q FY1997.
(4) Adjusted for paydown of overdue payables.
(5) Total Enterprise Value implied by $5.00 per share bid.
[BEAR STEARNS LOGO] Page 10
<PAGE> 17
AM INTERNATIONAL, INC.
Transaction Multiples
<TABLE>
<CAPTION>
SCENARIO I SCENARIO II SCENARIO III
---------- ----------- ------------
<S> <C> <C> <C>
AMI TEV $23.3 $36.5 $43.2
AMI TEV/
FY97 Revenue 0.25x 0.39x 0.46x
FY97 EBITDA 12.9 20.3 24.0
FY97 EBITDA - Base Business 16.6 26.1 30.9
</TABLE>
[BEAR STEARNS LOGO] Page 11
<PAGE> 18
AM INTERNATIONAL, INC.
Precedent Acquisition Analysis - Based on FY97 Projections
<TABLE>
<CAPTION>
MULTIPLES PAID IN SUPPLIES DISTRIBUTION TRANSACTIONS
TOTAL ENTERPRISE VALUE/LTM
-----------------------------------
TARGET COMPANY REVENUE EBITDA EBIT
- --------------- ------- ------- -----
<S> <C> <C> <C>
United Stationers 0.32x 7.9x 12.3x
Joyce Int'l(2) 0.26 6.0 10.5
Reliable Corp(3) 0.45 NA NA
National Office Supply Co. 0.74 NM NM
Eastman Office Prod. Corp. 0.72 10.7 14.5
Eastman Corp. 0.50 5.9 7.0
OW Office Warehouse 0.57 NM NM
SDC Distribution Corp. 0.19 4.1 4.7
Boise Cascade Corp. 0.23 NA NA
High 0.74x 10.7x 14.5x
Low 0.19 4.1 4.7
Median 0.45 6.0 10.5
Harmonic Mean 0.35 6.2 8.3
</TABLE>
<TABLE>
<CAPTION>
IMPUTED VALUE OF AM INTERNATIONAL*
TOTAL ENTERPRISE VALUE
AT INDICATED
MULTIPLES OF PROJECTED FY97 RESULTS(4)
REVENUE MULTIPLE
-------------------------
<S> <C> <C> <C>
($ MILLIONS) 0.32X 0.35X 0.39X
----- ----- -----
Revenues - $94.6 $30.3 $33.1 $36.9
EBITDA MULTIPLE
--------------------------
5.6X 6.2X 6.8X
----- ----- -----
EBITDA - $1.8 $10.1 $11.2 $12.2
EBIT MULTIPLE
--------------------------
7.5X 8.3X 9.1X
----- ----- -----
EBIT - $(0.1) NM NM NM
</TABLE>
<TABLE>
<CAPTION>
REFERENCE RANGE
ENTERPRISE VALUE SCENARIO I SCENARIO II SCENARIO III
---------- ----------- ------------
AS A MULTIPLE OF $23.3 $36.5 $43.2
- ----------------
<S> <C> <C> <C>
REVENUE 0.25X 0.39X 0.46X
EBITDA 12.9X 20.3X 24.0X
EBIT NM NM NM
</TABLE>
- ---------------
* Note that this value range is derived by applying a valuation multiple
based on LTM operating results of comparable acquisitions to AMI's
projected fiscal 1997 results. This method was used since reliable
projected operating performance for the comparable acquisitions was not
available. However, since multiples of forward results are typically
lower than multiples of trailing results, the imputed valuation ranges may
be overstated.
(1) Represents the service component of Eastman Kodak's Office Imaging
business.
(2) Represents the office products division of Joyce International.
(3) Represents the Mail Office Supply business of Reliable Corp.
(4) Multiple range is harmonic mean plus/minus 10%.
[BEAR STEARNS LOGO] Page 12
<PAGE> 19
AM INTERNATIONAL, INC.
Comparable Public Company Analysis - Based on FY97 Projections
<TABLE>
<CAPTION>
MULTIPLES OF COMPARABLE PUBLIC COMPANIES
TOTAL ENTERPRISE VALUE/LTM
--------------------------------
COMPARABLE COMPANY REVENUE EBITDA EBIT
- ------------------ ------- ------ ----
<S> <C> <C> <C>
AFP Imaging Corp. 0.47x 6.6x 10.7x
Avery-Dennison 1.27 10.3 14.2
Danka Business Systems 1.86 15.0 23.1
Oce Van Der Grinten 1.26 9.1 16.5
PRIMESOURCE CORP. 0.20 7.1 9.7
Scitex Corp. 0.40 NM NM
High 1.86x 15.0x 23.1x
Low 0.20 6.6 9.7
Median 0.87 9.1 14.2
Harmonic Mean 0.52 8.9 13.5
</TABLE>
IMPUTED VALUE OF AM INTERNATIONAL*
TOTAL ENTERPRISE VALUE
AT INDICATED
MULTIPLES OF PROJECTED FY97 RESULTS(1)
<TABLE>
<CAPTION>
REVENUE MULTIPLE
-------------------------
<S> <C> <C> <C>
($ MILLIONS) 0.47X 0.52X 0.57X
------ ------ ------
Revenues - $94.6 $44.3 $49.2 $54.1
EBITDA MULTIPLE
-------------------------
8.0X 8.9X 9.8X
------ ------ ------
EBITDA - $1.8 $14.4 $16.0 $17.6
EBIT MULTIPLE
-------------------------
12.2X 13.5X 14.9X
----- ----- -----
EBIT - $(0.1) NM NM NM
</TABLE>
<TABLE>
<CAPTION>
REFERENCE RANGE
ENTERPRISE VALUE SCENARIO I SCENARIO II SCENARIO III
--------- ----------- ------------
<S> <C> <C> <C>
AS A MULTIPLE OF $23.3 $36.5 $43.2
- ---------------
REVENUE 0.25X 0.39X 0.46X
EBITDA 12.9X 20.3X 24.0X
EBIT NM NM NM
</TABLE>
- ---------------
* Note that this value range is derived by applying a valuation multiple
based on LTM operating results of comparable publicly traded companies to
AMI's projected fiscal 1997 results. This method was used since reliable
projected operating performance for the comparable publicly traded
companies was not available. However, since multiples of forward results
are typically lower than multiples of trailing results, the imputed
valuation ranges may be overstated.
(1) Multiple range is harmonic mean plus/minus 10%.
[BEAR STEARNS LOGO] Page 13
<PAGE> 20
AM INTERNATIONAL, INC.
Stock Price Trading History
<TABLE>
<CAPTION>
DATE CLOSING PRICE TRADING VOLUME
- ---- ------------- --------------
<S> <C> <C>
24-Oct-95 $7.250 #N/A
15-Dec-95 6.313 200
06-Feb-96 4.188 #N/A
01-Apr-96 2.063 500
22-May-96 2.938 100
16-Jul-96 2.000 #N/A
05-Sep-96 2.750 4,200
28-Oct-96 2.500 #N/A
</TABLE>
[BEAR STEARNS LOGO] Page 14
<PAGE> 21
AM INTERNATIONAL, INC.
Summary of Valuation Analysis
($IN MILLIONS)
- Valuation analysis of AM International is based on the
following projections for fiscal 1997 financial performance:
Revenues $94.6
EBITDA(1) 1.8
EBIT(1) (0.1)
<TABLE>
<CAPTION>
ENTERPRISE
VALUATION METHOD VALUE RANGE TEV/FY97 EBITDA
- ---------------------------------- ----------- ---------------
<S> <C> <C>
Precedent Acquisition Analysis $10 - $12 5.6x - 6.8x
Comparable Public Company Analysis $14 - $17 7.8x - 9.6x
PRIMESOURCE $13 7.1x
Buyer Acquisition Consideration
Scenario I $23.3 12.9x
Scenario II $36.5 20.3x
Scenario III $43.2 24.0x
</TABLE>
- ---------------
(1) Includes corporate expenses.
[BEAR STEARNS LOGO] Page 15
<PAGE> 22
AM INTERNATIONAL, INC.
SECTION V
Conclusions
[BEAR STEARNS LOGO]
<PAGE> 23
AM INTERNATIONAL, INC.
Conclusions
- - Proposed Transaction Consideration - $5.00 per share in cash
- - Clear best offer for AMI after full sale process
- - Compares favorably to recent stock price trading history (Closing price of
$2.75 on 10/28/96)
- - The TEV/ EBITDA multiple of the proposed transaction compares favorably to
the multiples of precedent acquisition and comparable companies even
assuming a conservative Enterprise Value for the proposed Transaction and
giving full credit to the 1997 projections (which due to uncertainties
and risks cannot be relied upon).
- The Transaction Consideration is fair to the stockholders of
AMI, other than the Buyer and its affiliates, including
shareholders of the Buyer.
[BEAR STEARNS LOGO] Page 16
<PAGE> 24
AM INTERNATIONAL, INC.
EXHIBIT A
Sale Process Details
[BEAR STEARNS LOGO]
<PAGE> 25
AM INTERNATIONAL, INC.
Summary of Preliminary Indications of Interest
($ IN MILLIONS)
<TABLE>
<CAPTION>
PRICE
BIDDER INDICATION CAPITALIZATION COMMENTS/OTHER
- --------------------- ----------- ------------------------ ----------------------------------------------
<S> <C> <C> <C>
- - Buyer - $25 - Debt - Customary due diligence
- Equity - No approvals needed
- Could close within 60-90 days from
commencement of due diligence
- - Financial Bidder #2 - $20 - $30 - Unspecified - Customary due diligence
- - Corporate Bidder #1 - $20 - $25 - Unspecified - Subject to due diligence and review of
post-closing balance sheet
- Prepared to sign Purchase Agreement
within 30 days and close by April 30, 1996.
- - Corporate Bidder #2 - $20 - $30 - $10.0 - $20.0 cash - Offer not subject to financing
- $5.0 five-year interest - Subject to no material change in financial
only note condition of Company at closing
- 5-year 25% profit share - Interest based on industry acquisition
in operating income >
$3 mm subject to max of
$5.0 mm.
- - Financial Bidder #3 - $20 - $23(1) - Bank financing - Prepared to begin due diligence immediately
- Equity - Subject to (i) review of all costs related to
closure of European operations; and (ii) no
material change in business
</TABLE>
- -----------------------
(1) Revised indication. Initial indication was $12.5 million.
[BEAR STEARNS LOGO] Page 17
<PAGE> 26
AM INTERNATIONAL, INC.
Summary of Subsequent Indications of Interest
($ IN MILLIONS)
<TABLE>
<CAPTION>
PRICE
BIDDER INDICATION COMMENTS/OTHER
- --------------------- ---------- ------------------------------------------------
<S> <C> <C>
- - Buyer - $26.3 - Offer for stock of AMI at $5.00 per share.
- - Financial Bidder #1 - $2-$9 - $2.00-$3.00 per share.
- Preliminary oral indicaton.
- - Corporate Bidder #1 - $15 - Would consider $2.00-$3.00 per share for AMI.
- Dependent on further due diligence.
- - Corporate Bidder #2 - $15 - Dependent on due diligence.
- Contigent on closing an industry acquisition.
- Lost industry acquisition and withdrew from
process.
- - Financial Bidder #2 - NA - Withdrew from process.
- - Financial Bidder #3 - NA - Withdrew from process.
</TABLE>
[BEAR STEARNS LOGO] Page 18
<PAGE> 27
AM INTERNATIONAL, INC.
EXHIBIT B
Selected Information on Precedent Acquisitions
<TABLE>
<CAPTION>
Date Announced/
Date Effective Acquirer
- ---------------------------------------- -------------------------------------------------
Supply Distribution Transactions
- ----------------------------------------
<S> <C>
01/09/95 04/05/95 Associated Stationers, Inc. (Wingate Partners)
01/13/95 03/02/95 Corporate Express Inc.
04/18/94 04/29/94 Boise Cascade Corp
01/24/94 03/05/94 Staples Inc
07/13/93 09/14/93 Office Depot Inc.
11/20/92 11/20/92 Eastman Acquisition Corp
03/25/92 06/30/92 OfficeMax Inc. (K- Mart Corp)
06/01/92 06/24/92 United Stationers Inc
09/19/91 02/03/92 Associated Stationers Inc
<CAPTION>
Target Business Description of Target
----------------------------------------------------- -------------------------------------------------------------------
<S> <C>
United Stationers Inc. Wholesale office stationery, furniture, equipment, and computers
Joyce International Inc - Office Products Division Wholesale office supplies
Reliable Corp-Mail Office Supply Business Wholesale office supplies
National Office Supply Co. Inc. Wholesale office supplies via contract
Eastman Office Products Corp (McCown de Leeuw & Co.) Wholesale and Retail stationery supplies.
Eastman Corp Wholesale office equipment and supplies.
OW Office Warehouse, Inc. Wholesale office furniture, equipment, and supplies.
SDC Distributing Corp. Wholesale general line office supplies and furniture.
Boise Cascade Corp. Wholesale Products Distribution Business.
<CAPTION>
Enterprise Value/
-------------------------------------
Enterprise LTM LTM LTM
Business Description of Target Value Revenues EBIT EBITDA
- --------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C>
475.7 0.32x 12.3x 7.9x
27.5 0.26x 10.5x 6.0x
70.0 0.45x NA NA
100.8 0.74x NM NM
225.4 0.72x 14.5x 10.7x
142.0 0.50x 7.0x 5.9x
91.7 0.57x NM NM
80.0 0.19x 4.7x 4.1x
90.0 0.23x NA NA
- --------------------------------------------------------------------------------------------------------------
HIGH 0.74x 14.5x 10.7x
LOW 0.19x 4.7x 4.1x
MEDIAN 0.45x 10.5x 6.0x
MEAN 0.44x 9.8x 6.9x
HARMONIC MEAN 0.35x 8.3x 6.2x
</TABLE>
<TABLE>
<CAPTION>
Date Announced/
Date Effective Acquirer Target
- ------------------ -------------------------- ------------------------------------------------
EQUIPMENT DISTRIBUTION SERVICE AND MANUFACTURING TRANSACTIONS
- ---------------------------------------------------------------
<S> <C> <C>
9/9/96 Pending Danka Business Systems Eastman Kodak's Office Imaging Equipment Service Business
5/31/96 5/31/96 Danka Business Systems Leslie Supply Company, Inc.
4/1/96 4/1/96 Oce Van Der Grinten High performance printing division of Siemens Nixdorf Informationsysteme AG
10/25/95 11/1/95 Danka Business Systems Infotec Europe B.V.
11/23/93 03/01/94 Corporate Express Inc. Hanson Office Products (Hanson Industries/Hanson PLC)
<CAPTION>
Enterprise Value/
---------------------------
Enterprise LTM LTM LTM
Business Decsription of Target Value Revenues EBIT EBITDA
- -------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C>
Services Office Imaging Equipment mfr by Kodak. 684.0 0.38x NA NA
Distributes and services photocopiers. 83.5 1.52x NA NA
Markets a range of products and services to the
high and very high performance printing market. 550.0 0.89x 11.4x NA
European supplier of photocopiers and facsimile
machines and related service, parts and supplies. 235.7 0.86x 11.9x 6.0x
Provides contract stationery and forms management
services. 171.1 0.45x 13.1x 9.4x
- ------------------------------------------------------------------------------------------------
HIGH 1.52x 13.1x 9.4x
LOW 0.38x 11.4x 6.0x
MEDIAN 0.86x 11.9x 7.7x
MEAN 0.82x 12.1x 7.7x
HARMONIC MEAN 0.64x 12.1x 7.3x
</TABLE>
AM INTERNATIONAL, INC.
Summary of Precedent Acquisitions Analysis
[BEAR STEARNS LOGO] Page 19
<PAGE> 28
AM INTERNATIONAL, INC.
EXHIBIT C
Selected Information on Comparable Companies
[BEAR STEARNS LOGO]
COMPARABLE COMPANY ANALYSIS
($ in millions. All financials reflect latest twelve months' results unless
otherwise indicated.)
<TABLE>
<CAPTION>
AFP Imaging Avery- Danka Business Oce Van Der PrimeSource Scitex
OPERATING STATISTICS Corp. Dennison Systems Grinten Corp Corp.
----- -------- ------- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Last Fiscal Year 06/30/96 12/31/95 03/31/96 11/30/95 12/31/95 12/31/95
LTM 06/30/96 06/29/96 06/30/96 03/31/96 06/30/96 6/30/96
Sales $36.5 $3,154.5 $1,393.2 $2,427.3 $353.2 $759.9
Three Year Net Sales CAGR -1.5% 5.9% 52.1% 16.7% 31.0% 9.9%
FY 97 Sales NA 3,480.0 (1) 1,773.1 (2) 2,929.9 (3) NA 757.4 (4)
Gross Profit 12.2 968.6 555.9 964.6 62.1 309.0
Gross Margin 33.3% 30.7% 39.9% 39.7% 17.6% 40.7%
EBITDA 2.6 386.8 173.0 335.5 10.1 3.2
EBITDA Margin 7.0% 12.3% 12.4% 13.8% 2.9% 0.4%
FY97 EBITDA NA 464.5 (1) 180.8 (2) 502.1 (3) NA 74.0 (4)
EBIT 1.6 280.9 112.0 185.1 7.4 (41.7)
EBIT Margin 4.4% 8.9% 8.0% 7.6% 2.1% -5.5%
Net Income 0.8 154.1 55.1 NA 2.5 (36.8)
Net Margin 2.1% 4.9% 4.0% NA 0.7% -4.8%
<CAPTION>
OPERATING STATISTICS Average
-------
<S> <C>
Last Fiscal Year
LTM
Sales
Three Year Net Sales CAGR 19.0%
FY 97 Sales
Gross Profit
Gross Margin 33.6%
EBITDA
EBITDA Margin 8.1%
FY97 EBITDA
EBIT
EBIT Margin 4.3%
Net Income
Net Margin 1.4%
<CAPTION>
AFP Imaging Avery- Danka Business Oce Van Der PrimeSource Scitex
VALUATION STATISTICS Corp. Dennison Systems Grinten Corp Corp.
----- -------- ------- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Current Price as of
- ---- 24-Oct-96 $1.38 $63.38 $40.50 $106.25 $6.50 $10.63
Shares Outstanding (millions) 7.08 52.45 56.49 16.32 6.53 42.81
Market Value of Equity $9.7 $3,323.9 $2,288.0 $1,734.2 $42.5 $454.9
Net Debt 7.3 511.1 363.9 1,289.2 26.3 (131.1)
----- -------- -------- -------- ----- ------
Total Enterprise Value 17.1 3,835.0 2,651.9 3,023.4 68.7 323.8
Debt / Book Capitalization 45.9% 38.8% 47.0% 63.8% 35.9% 0.4%
Total Enterprise Value / Sales 0.47 1.22 1.90 1.25 0.19 0.43
Total Enterprise Value/ FY97 Sales NA 1.10 1.50 1.03 NA 0.43
Total Enterprise Value / EBITDA 6.6 9.9 15.3 9.0 6.8 NM
Total Enterprise Value / FY97 EBITDA NA 8.3 14.7 6.0 NA 4.4
Total Enterprise Value / EBIT 10.7 13.7 23.7 16.3 9.3 NM
EPS LTM $0.08 $2.91 $1.03 NA $0.38 ($0.86)
EPS Calendar Year 1996 NA $3.15 $1.07 $5.04 NA $0.07
EPS Calendar Year 1997 NA $3.55 $1.60 $5.50 NA $0.66
P/E LTM 16.5 21.8 39.5 NA 17.1 NM
P/E Calendar 1996 NA 20.1 37.9 21.1 NA NM
P/E Calendar 1997 NA 17.9 25.3 19.3 NA 16.1
<CAPTION>
Harmonic
VALUATION STATISTICS Mean (5)
--------
<S> <C>
Current Price as of ---- 24-Oct-96
Shares Outstanding (millions)
Market Value of Equity
Net Debt
Total Enterprise Value
Debt / Book Capitalization 38.6%
Total Enterprise Value / Sales 0.51
Total Enterprise Value/ FY97 Sales 0.82
Total Enterprise Value / EBITDA 8.7
Total Enterprise Value / FY97 EBITDA 6.9
Total Enterprise Value / EBIT 13.2
EPS LTM
EPS Calendar Year 1996
EPS Calendar Year 1997
P/E LTM 21.0
P/E Calendar 1996 24.3
P/E Calendar 1997 19.1
</TABLE>
- ----------------
Footnotes:
(1) Source: Merrill Lynch Research dated July 30, 1996.
(2) Source: Prudential Securities Research dated July 27,1996.
(3) Source: Merrill Lynch Research dated June 27,1996.
(4) Source: Prudential Securities Research dated August 9, 1996.
(5) Harmonic mean is the inverse of the average of the reciprocals. It is used
to calculate an "average" of multiples. Debt to Book Capitalization is an
arithmetic mean and not a harmonic mean.
C-1
<PAGE> 29
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
Operating Data
<TABLE>
<CAPTION>
LTM Net Sales LTM Gross Profit LTM EBITDA
<S> <C> <C> <C> <C> <C>
Avery-Dennison $3,154.5 Avery-Dennison $968.6 Avery-Dennison $386.8
Oce Van Der Grinten 2,427.3 Oce Van Der Grinten 964.6 Oce Van Der Grinten 335.5
Danka Business Systems 1,393.2 Danka Business Systems 555.9 Danka Business Systems 173.0
Scitex Corp. 759.9 Scitex Corp. 309.0 PrimeSource Corp. 10.1
PrimeSource Corp. 353.2 PrimeSource Corp. 62.1 Scitex Corp. 3.2
AFP Imaging Corp. 36.5 AFP Imaging Corp. 12.2 AFP Imaging Corp. 2.6
LTM EBIT LTM Pretax Income LTM Net Income
<S> <C> <C> <C> <C> <C>
Avery-Dennison $280.9 Avery-Dennison $240.0 Oce Van Der Grinten NA
Oce Van Der Grinten 185.1 Oce Van Der Grinten 115.7 Avery-Dennison $154.1
Danka Business Systems 112.0 Danka Business Systems 88.7 Danka Business Systems 55.1
PrimeSource Corp. 7.4 PrimeSource Corp. 5.2 PrimeSource Corp. 2.5
AFP Imaging Corp. 1.6 AFP Imaging Corp. 0.8 AFP Imaging Corp. 0.8
Scitex Corp. (41.7) Scitex Corp. (36.8) Scitex Corp. (36.8)
3-Year Net Sales CAGR LTM Gross Margin LTM EBITDA Margin
Danka Business Systems 52.1% Scitex Corp. 40.7% Oce Van Der Grinten 13.8%
PrimeSource Corp. 31.0% Danka Business System 39.9% Danka Business Systems 12.4%
Oce Van Der Grinten 16.7% Oce Van Der Grinten 39.7% Avery-Dennison 12.3%
Scitex Corp. 9.9% AFP Imaging Corp. 33.3% AFP Imaging Corp. 7.0%
Avery-Dennison 5.9% Avery-Dennison 30.7% PrimeSource Corp. 2.9%
AFP Imaging Corp. (1.5%) PrimeSource Corp. 17.6% Scitex Corp. 0.4%
Average 19.0% Average 33.6% Average 8.1%
LTM EBIT Margin LTM Pretax Margin LTM Net Margin
Avery-Dennison 8.9% Avery-Dennison 7.6% Oce Van Der Grinten NA
Danka Business Systems 8.0% Danka Business System 6.4% Avery-Dennison 4.9%
Oce Van Der Grinten 7.6% Oce Van Der Grinten 4.8% Danka Business Systems 4.0%
AFP Imaging Corp. 4.4% AFP Imaging Corp. 2.2% AFP Imaging Corp. 2.1%
PrimeSource Corp. 2.1% PrimeSource Corp. 1.5% PrimeSource Corp. 0.7%
Scitex Corp. (5.5%) Scitex Corp. (4.8%) Scitex Corp. (4.8%)
Average 4.3% Average 2.9% Average 1.4%
LTM Return on Equity LTM Return on Assets Total Debt / Total Capitalization
Oce Van Der Grinten NA Avery-Dennison 14.3% Oce Van Der Grinten 63.8%
Avery-Dennison 18.9% Danka Business System 9.5% Danka Business Systems 47.0%
Danka Business Systems 11.9% AFP Imaging Corp. 7.9% AFP Imaging Corp. 45.9%
AFP Imaging Corp. 8.2% Oce Van Der Grinten 7.4% Avery-Dennison 38.8%
PrimeSource Corp. 5.3% PrimeSource Corp. 6.3% PrimeSource Corp. 35.9%
Scitex Corp. (5.3%) Scitex Corp. (4.1%) Scitex Corp. 0.4%
Average 7.8% Average 6.9% Average 38.6%
</TABLE>
C-2
<PAGE> 30
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
Market Data
<TABLE>
<CAPTION>
Market Value of Equity Enterprise Value
<S> <C> <C> <C>
Avery-Dennison $3,323.9 Avery-Dennison $3,835.0
Danka Business Systems 2,288.0 Oce Van Der Grinten 3,023.4
Oce Van Der Grinten 1,734.2 Danka Business Systems 2,651.9
Scitex Corp. 454.9 Scitex Corp. 323.8
PrimeSource Corp. 42.5 PrimeSource Corp. 68.7
AFP Imaging Corp. 9.7 AFP Imaging Corp. 17.1
Price / LTM Earnings Per Share Price / Current Calendar Year EPS Current Price / Next Calendar Year EPS
<S> <C> <C> <C> <C> <C>
Scitex Corp. NM Scitex Corp. NM AFP Imaging Corp. NA
Oce Van Der Grinten NA AFP Imaging Corp. NA PrimeSource Corp. NA
Danka Business Systems 39.5 PrimeSource Corp. NA Danka Business Systems 25.3
Avery-Dennison 21.8 Danka Business Systems 37.9 Oce Van Der Grinten 19.3
PrimeSource Corp. 17.1 Oce Van Der Grinten 21.1 Avery-Dennison 17.9
AFP Imaging Corp. 16.5 Avery-Dennison 20.1 Scitex Corp. 16.1
Harmonic Mean 21.0 Harmonic Mean 24.3 Harmonic Mean 19.1
Enterprise Value / LTM Revenue Enterprise Value / LTM EBITDA Enterprise Value / LTM EBIT
Danka Business Systems 1.90 Scitex Corp. NM Scitex Corp. NM
Oce Van Der Grinten 1.25 Danka Business Systems 15.3 Danka Business Systems 23.7
Avery-Dennison 1.22 Avery-Dennison 9.9 Oce Van Der Grinten 16.3
AFP Imaging Corp. 0.47 Oce Van Der Grinten 9.0 Avery-Dennison 13.7
Scitex Corp. 0.43 PrimeSource Corp. 6.8 AFP Imaging Corp. 10.7
PrimeSource Corp. 0.19 AFP Imaging Corp. 6.6 PrimeSource Corp. 9.3
Harmonic Mean 0.51 Harmonic Mean 8.7 Harmonic Mean 13.2
</TABLE>
C-3
<PAGE> 31
AM MULTIGRAPHICS
Survey of Comparable Companies
($ in Millions)
<TABLE>
<CAPTION>
AFP IMAGING CORP. AVERY-DENNISON DANKA BUSINESS SYSTEMS OCE VAN DER GRINTEN
----------------- -------------- ---------------------- -------------------
LATEST FISCAL YEAR END 30-Jun-96 31-Dec-95 31-Mar-96 30-Nov-95
LATEST 12 MONTHS ENDED 30-Jun-96 29-Jun-96 30-Jun-96 31-Mar-96
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL ANNUAL ANNUAL ANNUAL
NET SALES GROWTH GROWTH GROWTH GROWTH
LFY-3 $38.3 $2,622.9 $352.7 $1,528.6
LFY-2 30.5 -20.3% 2,608.7 -0.5% 531.4 50.7% 1,366.7 -10.6%
LFY-1 26.6 -12.8% 2,856.7 9.5% 802.2 51.0% 1,575.1 15.3%
LFY 36.5 37.4% 3,113.9 9.0% 1,240.3 54.6% 2,427.3 54.1%
LTM 36.5 3,154.5 1,393.2 2,427.3
GROSS PROFIT % SALES % SALES % SALES % SALES
LFY-2 9.5 $818.1 31.4% $213.8 40.2% $608.1 44.5%
LFY-1 9.2 907.8 31.8% 323.9 40.4% 697.0 44.2%
LFY 12.2 33.3% 957.3 30.7% 496.6 40.0% 964.6 39.7%
LTM 12.2 33.3% 968.6 30.7% 555.9 39.9% 964.6 39.7%
EBITDA
LFY-2 1.1 $269.3 10.3% $67.5 12.7% $216.9 15.9%
LFY-1 2.3 311.3 10.9% 104.0 13.0% 244.7 15.5%
LFY 2.6 7.0% 370.0 11.9% 156.8 12.6% 335.5 13.8%
LTM 2.6 7.0% 386.8 12.3% 173.0 12.4% 335.5 13.8%
OPERATING INCOME
LFY-2 0.2 $175.4 6.7% $47.9 9.0% $85.8 6.3%
LFY-1 1.5 215.9 7.6% 71.6 8.9% 105.8 6.7%
LFY 1.6 4.4% 267.5 8.6% 104.7 8.4% 185.1 7.6%
LTM 1.6 4.4% 280.9 8.9% 112.0 8.0% 185.1 7.6%
EBIT
LFY-2 0.2 $175.4 6.7% $47.9 9.0% $85.8 6.3%
LFY-1 1.5 215.9 7.6% 71.6 8.9% 105.8 6.7%
LFY 1.6 4.4% 267.5 8.6% 104.7 8.4% 185.1 7.6%
LTM 1.6 4.4% 280.9 8.9% 112.0 8.0% 185.1 7.6%
PRETAX INCOME
LFY-2 (0.8) $132.2 5.1% $44.2 8.3% $38.9 2.8%
LFY-1 0.9 172.9 6.1% 63.8 8.0% 60.9 3.9%
LFY 0.8 2.2% 223.2 7.2% 83.1 6.7% 115.7 4.8%
LTM 0.8 2.2% 240.0 7.6% 88.7 6.4% 115.7 4.8%
NET INCOME
LFY-2 (0.6) $83.3 3.2% $26.5 5.0% $32.2 2.4%
LFY-1 0.9 109.4 3.8% 39.0 4.9% 50.4 3.2%
LFY 0.8 2.1% 142.7 4.6% 51.6 4.2% 93.5 3.9%
LTM 0.8 2.1% 154.1 4.9% 55.1 4.0% NA
ANNUAL ANNUAL ANNUAL ANNUAL
EARNINGS PER SHARE GROWTH GROWTH GROWTH GROWTH
LFY-2 ($0.11) $1.44 $0.59 $2.02
LFY-1 0.13 1.97 37.0% 0.80 36.9% 3.12 54.2%
LFY 0.08 2.68 36.1% 1.00 25.0% NA
LTM 0.08 2.91 1.03 NA
Calendar 1996 NA 3.15 1.07 5.04
Calendar 1998 NA 3.55 12.7% 1.60 49.5% 5.50 9.1%
<CAPTION>
PRIMESOURCE CORP. SCITEX CORP.
----------------- ------------
LATEST FISCAL YEAR END 31-Dec-95 31-Dec-95
LATEST 12 MONTHS ENDED 30-Jun-96 30-Jun-96
--------- ---------
<S> <C> <C> <C> <C>
ANNUAL ANNUAL
NET SALES GROWTH GROWTH
LFY-3 $158.7 $549.7
LFY-2 167.7 5.7% 622.8 13.3%
LFY-1 238.2 42.0% 704.1 13.1%
LFY 357.1 49.9% 728.9 3.5%
LTM 353.2 759.9
GROSS PROFIT % SALES % SALES
LFY-2 $32.7 19.5% $339.8 54.6%
LFY-1 43.8 18.4% 368.0 52.3%
LFY 63.3 17.7% 319.6 43.8%
LTM 62.1 17.6% 309.0 40.7%
EBITDA
LFY-2 $8.1 4.8% $129.4 20.8%
LFY-1 8.6 3.6% 116.1 16.5%
LFY 9.1 2.5% 8.6 1.2%
LTM 10.1 2.9% 3.2 0.4%
OPERATING INCOME
LFY-2 $6.7 4.0% $101.1 16.2%
LFY-1 6.4 2.7% 78.8 11.2%
LFY 6.0 1.7% (32.3)
LTM 6.9 1.9% (36.0)
EBIT
LFY-2 $6.9 4.1% $101.5 16.3%
LFY-1 6.9 2.9% 81.6 11.6%
LFY 6.4 1.8% (34.8)
LTM 7.4 2.1% (41.7)
PRETAX INCOME
LFY-2 $6.4 3.8% $106.2 17.1%
LFY-1 5.7 2.4% 87.1 12.4%
LFY 4.2 1.2% (24.9)
LTM 5.2 1.5% (36.8)
NET INCOME
LFY-2 $3.8 2.2% $89.4 14.4%
LFY-1 3.5 1.5% 70.2 10.0%
LFY 2.4 0.7% (16.3)
LTM 2.5 0.7% (36.8)
ANNUAL ANNUAL
EARNINGS PER SHARE GROWTH GROWTH
LFY-2 $0.92 $2.10
LFY-1 0.71 -22.4% 1.64 -21.8%
LFY 0.37 -48.7% (0.38) -123.2%
LTM 0.38 (0.86)
Calendar 1996 NA 0.07
Calendar 1998 NA 0.66 842.9%
</TABLE>
C-4
<PAGE> 32
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
<TABLE>
<CAPTION>
AFP Imaging Corp. Avery-Dennison Danka Business Systems
-------------------- -------------------- --------------------------
<S> <C> <C> <C>
Latest Fiscal Year End 30-Jun-96 31-Dec-95 31-Mar-96
Latest 12 Months Ended 30-Jun-96 29-Jun-96 30-Jun-96
ASSETS
Current Assets
Cash and Equivalents $3.1 $5.1 $44.8
Accounts Receivable 6.0 451.7 279.7
Inventory 7.5 230.4 243.4
Other Current Assets 0.2 97.2 11.2
---- ----- -----
Total Current Assets $16.8 $784.4 $579.1
Property, Plant & Equipment, net 1.3 916.1 131.0
Intangibles, net 1.9 121.3 439.7
Other Assets, net 0.2 138.4 32.2
--- ----- ----
Total Assets $20.3 $1,960.2 $1,182.0
LIABILITIES % Total % Total % Total
Current Liabilities: Capitalization Capitalization Capitalization
Short-Term Debt (Incl. CPLTD) $0.4 2.4% $111.6 8.4% $29.1 3.3%
Accounts Payable 1.4 147.8 197.8
Other Current Liabilities 1.7 329.2 71.4
--- ----- ----
Total Current Liabilities $3.5 $588.6 $298.3
Long-Term Debt (Incl. Capital Leases) 7.5 43.5% 404.6 30.4% 379.5 43.6%
Deferred Taxes 0.0 151.6 42.8
Other Non-Current Liabilities 0.0 0.0 0.0
Minority Interest 0.0 0.0% 0.0 0.0% 0.0 0.0%
---- --- ---
Total Liabilities $10.9 $1,144.8 $720.6
SHAREHOLDERS' EQUITY
Preferred Equity 2.6 14.9% 0.0 0.0% 0.0 0.0%
Common Equity 6.8 39.2% 815.4 61.2% 461.3 53.0%
--- ----- -----
Total Equity 9.3 54.1% 815.4 61.2% 461.3 53.0%
Total Liabilities and Shareholders' Equity $20.3 $1,960.2 $1,182.0
Total Book Capitalization 17.2 100.0% 1,331.6 100.0% 870.0 100.0%
Balance Sheet Ratio Analysis:
Working Capital $13.4 $195.8 $280.8
Net Working Capital 10.7 302.3 265.2
Current Ratio 4.86 x 1.33 x 1.94 x
Quick Ratio 2.69 0.94 1.13
Days of Sales in Receivables 60 52 73
Inventory Turnover 3.2 x 9.5 x 3.4 x
Debt/Equity Ratio 0.85 0.63 0.89
Debt/Capitalization Ratio 0.46 0.39 0.47
Return on Equity 8.2% 18.9% 11.9%
Return on Assets 7.9% 14.3% 9.5%
<CAPTION>
Oce Van Der Grinten PrimeSource Corp. Scitex Corp.
----------------------- -------------------- -------------------
<S> <C> <C> <C>
Latest Fiscal Year End 30-Nov-95 31-Dec-95 31-Dec-95
Latest 12 Months Ended 31-Mar-96 30-Jun-96 30-Jun-96
ASSETS
Current Assets
Cash and Equivalents $15.3 $0.0 $133.6
Accounts Receivable 665.1 52.3 302.2
Inventory 349.2 36.6 186.2
Other Current Assets 279.6 2.5 40.6
----- --- ----
Total Current Assets $1,309.3 $91.4 $662.6
Property, Plant & Equipment, net 924.1 9.6 98.8
Intangibles, net 274.7 4.7 98.1
Other Assets, net 0.0 3.0 22.9
--- --- ----
Total Assets $2,508.0 $108.7 $882.4
LIABILITIES % Total % Total % Total
Current Liabilities: Capitalization Capitalization Capitalization
Short-Term Debt (Incl. CPLTD) $237.2 12.3% $1.2 1.7% $2.5 0.4%
Accounts Payable 124.9 23.6 60.1
Other Current Liabilities 297.7 6.9 128.3
----- --- -----
Total Current Liabilities $659.9 $31.8 $190.9
Long-Term Debt (Incl. Capital Leases) 990.0 51.5% 25.1 34.3% 0.0 0.0%
Deferred Taxes 50.3 0.0 0.0
Other Non-Current Liabilities 112.6 5.0 0.4
Minority Interest 0.1 0.0% 0.0 0.0% 0.0 0.0%
--- --- ---
Total Liabilities $1,813.0 $61.9 $191.3
SHAREHOLDERS' EQUITY
Preferred Equity 77.2 4.0% 0.0 0.0% 0.0 0.0%
Common Equity 617.9 32.1% 46.9 64.1% 691.1 99.6%
----- ---- -----
Total Equity 695.1 36.2% 46.9 64.1% 691.1 99.6%
Total Liabilities and Shareholders' Equity $2,508.0 $108.7 $882.4
Total Book Capitalization 1,922.4 100.0% 73.1 100.0% 693.6 100.0%
Balance Sheet Ratio Analysis:
Working Capital $649.4 $59.6 $471.7
Net Working Capital 871.3 60.8 340.6
Current Ratio 1.98 x 2.88 x 3.47 x
Quick Ratio 1.45 1.72 2.50
Days of Sales in Receivables 100 54 145
Inventory Turnover 4.2 x 7.9 x 2.4 x
Debt / Equity Ratio 1.77 0.56 0.00
Debt / Capitalization Ratio 0.64 0.36 0.00
Return on Equity NA 5.3% NM
Return on Assets 7.4% 6.3% NM
</TABLE>
C-5
<PAGE> 33
AM Multigraphics
Survey of Comparable Companies
($ in Millions)
<TABLE>
<CAPTION>
AFP Imaging Corp. Avery-Dennison Danka Business Systems
LATEST FISCAL YEAR END 30-JUN-96 31-Dec-95 31-Mar-96
LATEST 12 MONTHS ENDED 30-JUN-96 29-Jun-96 30-Jun-96
------------------- ------------------- ---------------------
MARKET INFORMATION
Ticker Symbol AFPC AVY DANKY
Historical Price Ranges Low High Low High Low High
<S> <C> <C> <C>
LTM 0.875 - 2.250 44.000 - 63.750 22.250 - 51.875
Current Price as of ---- 24-Oct-96 $1.38 $63.38 $40.50
Shares Outstanding (millions) 7.078 52.449 56.493
LTM EPS $0.08 $2.91 $1.03
Calendar 1996 EPS NA 3.15 1.07
Calendar 1998 EPS NA 3.55 1.60
Calendar EPS Growth 12.7% 49.5%
Book Value Per Share $1.32 $15.55 $8.17
Tangible Net Worth Per Share 1.05 13.23 0.38
Current Share Price /
LTM EPS 16.5 21.8 x 39.5 x
Calendar 1996 EPS NA 20.1 37.9
Calendar 1998 EPS NA 17.9 25.3
Book Value Per Share 1.04 4.08 x 4.96 x
Tangible Net Worth Per Share 1.31 4.79 105.59
Total Market Value of Common Equity $9.7 $3,323.9 $2,288.0
Total Enterprise Value 17.1 3,835.0 2,651.9
Enterprise Value /
LTM Net Sales 0.47 1.22 x 1.90 x
LTM EBITDA 6.65 9.91 15.33
LTM EBIT 10.68 13.65 23.68
2 Year Compound Growth Rates
Net Sales 9.4% 9.3% 52.8%
Operating Income 200.1% 23.5% 47.8%
Net Income NM 30.9% 39.7%
Earnings Per Share NM 36.6% 30.8%
<CAPTION>
Oce Van Der Grinten PrimeSource Corp. Scitex Corp.
LATEST FISCAL YEAR END 30-Nov-95 31-Dec-95 31-Dec-95
LATEST 12 MONTHS ENDED 31-Mar-96 30-Jun-96 30-Jun-96
-------------------- ------------------- ---------------------
MARKET INFORMATION
Ticker Symbol OCENY PSRC SCIXF
Historical Price Ranges Low High Low High Low High
<S> <C> <C> <C>
LTM 57.250 - 114.250 5.000 - 8.250 9.875 - 21.875
Current Price as of ---- 24-Oct-96 $106.25 $6.50 $10.63
Shares Outstanding (millions) 16.322 6.531 42.810
LTM EPS NA $0.38 ($0.86)
Calendar 1996 EPS 5.04 NA 0.07
Calendar 1998 EPS 5.50 NA 0.66
Calendar EPS Growth 9.1% 842.9%
Book Value Per Share $42.58 $7.17 $16.14
Tangible Net Worth Per Share 25.75 6.45 13.85
Current Share Price /
LTM EPS NA x 17.1 x NM x
Calendar 1996 EPS 21.1 NA NM
Calendar 1998 EPS 19.3 NA 16.1
Book Value Per Share 2.50 x 0.91 x 0.66 x
Tangible Net Worth Per Share 4.13 1.01 0.77
Total Market Value of Common Equity $1,734.2 $42.5 $454.9
Total Enterprise Value 3,023.4 68.7 323.8
Enterprise Value /
LTM Net Sales 1.25 x 0.19 x 0.43 x
LTM EBITDA 9.01 6.81 99.93
LTM EBIT 16.33 9.27 NM
2 Year Compound Growth Rates
Net Sales 33.3% 45.9% 8.2%
Operating Income 46.8% -5.4% NM
Net Income 70.4% -20.1% NM
Earnings Per Share NA -36.9% NM
</TABLE>
C-6
<PAGE> 34
1 INTERNATIONAL, INC.
Survey of Comparable Companies
<TABLE>
GENERAL FOOTNOTES
<S><C>
LTM: Latest Twelve Months; NA: Not Available; NM: Not Meaningful
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization
EBIT: Earnings Before Interest and Taxes
Market Equity Value: Closing Stock Price x Shares Outstanding
Market Capitalization: Market Equity Value + Preferred Equity + Total Debt - Cash & Cash Equivalents
Book Value Per Share: Total Equity / Shares Outstanding
Tangible Book Value Per Share: (Total Equity - Liquidation Value of Preferred Equity - Intangible Assets) / Shares
Outstanding
Source of EPS estimates: October First Call Estimates
COMPANY FOOTNOTES
<S> <C>
AFP Imaging Corp Fiscal Year Ended 6/30/96 excludes $0.06 million in non-recurring charges.
AFPC Fiscal Year Ended 6/30/94 excludes $3.6 million in non-recurring charges.
Avery-Dennison Fiscal Year ended 12/31/95 excludes $1.5MM gain on divestitures and restructuring, tax effected
AVY at 36%
Danka Business Systems FY 1996 excludes $8.5 MM restructuring charge.
DANKY
Oce Van Der Grinten LTM and FY 1995 are pro forma 11/30/95 for the acquisition of Siemens Nixdorf Information systeme AG.
OCENY Balance Sheet data is pro forma for the acquisition of Siemens Nixdorf Informationsysteme AG.
Balance Sheet Allocations per Bear Stearns estimate due to lack of individual account breakout.
Depreciation and Amortization and CapEx for the three months ended 2/29/95 and 2/29/96 based of
historical percentage of sales due to lack of Company disclosure
PrimeSource Corp. Six Months ended 6/30/96 excludes $1.315 million in restructuring expense.
PRSC Fiscal year ended 12/31/95 excludes $1.3 MM for restructuring, tax effected at 43%.
Fiscal year ended 12/31/93, excludes $0.609 MM provision for cost of spin-off.
Fiscal year ended 12/31/93, excludes cumulative effects on prior years of changes in accounting
policies of $0.098 MM for income taxes and $1.208 MM for postretirement benefits other than
pensions, net of taxes.
Scitex Corp. Fiscal year ended 12/31/95 excludes a $22.0 MM loss due to employee termination and reorganization
SCIXF tax effected at 17%
Fiscal year ended 12/31/94 excludes a $7.8 million charge attributed to incomplete R&D tax effected
at 17%.
</TABLE>
C-7
<PAGE> 35
AM International, Inc.
Survey of Comparable Companies
<TABLE>
COMPANY BUSINESS DESCRIPTION
<S> <C>
AFP Imaging Corp. AFP produces image-making equipment, including systems for hard-copy recording of diagnostic
AFPC images, used in the graphic arts, markets industrial X-ray markets.
Avery-Dennison Avery-Dennison Corporation is a worldwide manufacturer of pressure-sensitive adhesives and
AVY materials, office products, converted products and specialty chemicals. The Company
serves a broad consumer and industrial base, with major markets in office products, retail,
industrial tapes, durable goods, apparel, food, transportation, health care and data processing.
Danka Business Systems Danka Business Systems PLC operates through its subsidiary, Danka Industries, Inc., which
DANKY distributes and services office equipment, including copiers and facsimile machines. The machines
are distributed throughout the United States. Another subsidiary, Copy Products, Inc., sells,
leases, rents and services automated office equipment and related parts.
Oce Van Der Grinten Oce Van Der Grinten develops, produces and markets a variety of products and services for the
OCENY presentation and reproduction of information on paper in both the Engineering Systems and the
Office Systems markets.
PrimeSource Corp. PrimeSource Corporation distributes graphic arts equipment and supplies to the printing and
PRSC publishing industries. The Company operates 30 centers nationwide.
Scitex Corp. Scitex Corporation designs, develops, manufactures, markets and services interactive turnkey
SCIXF computer imaging systems. These systems are used primarily in the printing, publishing and
graphic arts industries.
</TABLE>
C-8
<PAGE> 1
EXHIBIT (c)(2)
NONQUALIFIED STOCK OPTION AGREEMENT
FOR EMPLOYEES
AM International, Inc., a Delaware corporation (the "Company"), hereby
grants to ______________ (the "Optionee") as of _________ (the "Option Date"),
pursuant to the provisions of the _______________________________________ Plan
(the "Plan"), a non-qualified option to purchase from the Company (the "Option")
___ shares of its Common Stock, $.01 par value ("Stock"), at the price of $____
per share upon and subject to the terms and conditions set forth below.
Capitalized terms not defined herein shall have the meanings specified in the
Plan.
1. Option Subject to Acceptance of Agreement.
The Option shall become null and void unless the Optionee shall accept this
Agreement by executing it in the space provided below and returning it to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after ______________ (the "Expiration Date").
2.2. Exercise of Option. (a) The Option shall become exercisable [insert
vesting schedule], and ( ) as otherwise provided pursuant to Sections 2.2(b)
and (c) hereof or in accordance with Section 6.8 of the Plan.
(b) If the Optionee's employment by the Company terminates for any reason
the Option shall be exercisable only to the extent that it is exercisable on the
effective date of the Optionee's termination of employment and may thereafter be
exercised by the Optionee or the Optionee's Legal Representative for a period of
three months after the effective date of the Optionee's termination of
employment or until the Expiration Date, whichever period is shorter.
2.3 Method of Exercise. (a) Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the satisfaction of the Company) either (i) in cash, (ii) in
previously owned whole shares of Stock (which the Optionee has held for at least
six months prior to the delivery of such shares and for which the Optionee has
good title free and clear of all liens and encumbrances) having a Fair Market
Value determined as of the date of exercise, (iii) by authorizing the Company to
withhold whole shares of Stock which would otherwise be deliverable upon
exercise of the Option having a Fair Market Value determined as of the date of
exercise, (iv) in cash by a broker-dealer acceptable to the Company to whom the
Optionee has submitted an irrevocable notice of exercise, or (v) a combination
of (i), (ii) and (iii), and (2) by executing such documents as the Company may
reasonably request. The Committee shall have sole discretion to disapprove of
an election pursuant
<PAGE> 2
to any of clauses (ii) - (v). No shares of Stock shall be delivered until the
full purchase price therefor has been paid.
(b) Unless the Committee otherwise determines, if the Optionee is subject
to Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), the
following provisions shall apply to the Optionee's election to authorize the
Company to withhold whole shares of Stock purchasable upon exercise of the
Option in payment of all or a portion of the option price:
(1) Such election may apply only to the Option or any or all options held
by the Optionee, shall be filed with the Secretary of the Company (the "Company
Officer") at least six months prior to the exercise date of the Option and may
not take effect during the six-month period beginning on the date of grant of
the Option (other than in the event of the Optionee's death) or (2) such
election (i) shall be subject to approval by the Committee, (ii) may not take
effect during the six-month period beginning on the date of grant of the Option
(other than in the event of the Optionee's death), (iii) must be filed with
Company Officer during (or must be filed with Company Officer in advance of, but
take effect during) the ten business day period beginning on the third business
day following the date of release of the Company's quarterly or annual summary
statements of sales and earnings and (iv) the exercise of the Option must occur
during such ten business day period. Unless the Committee otherwise determines,
any election pursuant to clause (1) may be revoked or changed only if such
revocation or change is made at least six months prior to the exercise of the
Option. Any election made pursuant to clause (2) may be revoked or changed
prior to the exercise of the Option during the ten business day period.
2.4 Termination of Option. (a) In no event may the Option be exercised
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the shares of
Stock subject to the Option expire or are exercised, cancelled or forfeited, the
Optionee shall promptly return this Agreement to the Company for full or partial
cancellation, as the case may be. Such cancellation shall be effective
regardless of whether the Optionee returns this Agreement. If the Optionee
continues to have rights to purchase shares of Stock hereunder, the Company
shall, within 10 days of the Optionee's delivery of this Agreement to the
Company, either (i) mark this Agreement to indicate the extent to which the
Option has expired or been exercised, cancelled or forfeited or (ii) issue to
the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be substantially similar to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred by
the Optionee other than by will or the laws of descent and distribution.
During the Optionee's lifetime the Option is exercisable only by the Optionee
or the Optionee's Legal Representative. Except as permitted by the foregoing,
the Option may not be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon
-2-
<PAGE> 3
any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of the Option, the Option and all rights hereunder shall
immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of the
Option, the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board or the Committee shall in its sole discretion deem necessary or
advisable.
3.3. Withholding Taxes. (a) As a condition precedent to any exercise of
the Option, the Optionee shall, upon request by the Company, pay to the Company
in addition to the purchase price of the shares, such amount of cash as the
Company may be required, under all applicable federal, state, local or other
laws or regulations, to withhold and pay over as income or other withholding
taxes (the "Required Tax Payments") with respect to such exercise of the Option.
If the Optionee shall fail to advance the Required Tax Payments after request by
the Company, the Company may, in its discretion, deduct any Required Tax
Payments from any amount then or thereafter payable by the Company to the
Optionee.
(b) The Optionee may elect to satisfy his or her obligation to advance the
Required Tax Payments by any of the following means: (1) a cash payment to the
Company pursuant to Section 3.3(a), (2) delivery to the Company of previously
owned whole shares of Stock (which the Optionee has held for at least six months
prior to the delivery of such shares and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value
determined as of the date the obligation to withhold or pay taxes first arises
in connection with the Option (the "Tax Date"), (3) authorizing the Company to
withhold whole shares of Stock which would otherwise be delivered to the
Optionee upon exercise of the Option, a Fair Market Value determined as of the
Tax Date, (4) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise or (5) any
combination of (1), (2) and (3). The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5). Shares of Stock
to be delivered or withheld may have a Fair Market Value in excess of the
minimum amount of the Required Tax Payments, but not in excess of the amount
determined by applying the Optionee's maximum marginal tax rate. Any fraction
of a share of Stock which would be required to satisfy any such obligation shall
be disregarded and the remaining amount due shall be paid in cash by the
Optionee.
-3-
<PAGE> 4
(c) Unless the Committee otherwise determines, if the Optionee is subject
to Section 16 of the Exchange Act, the following provisions shall apply to the
Optionee's election to deliver to the Company whole shares of Stock or to
authorize the Company to withhold whole shares of Stock purchasable upon
exercise of the Option in payment of all or a portion of the Optionee's tax
liability in connection with such exercise:
(1) The Optionee may deliver to the Company previously owned whole shares
of Stock in accordance with Section 3.3(b), if such delivery is in connection
with the delivery of shares of Stock in payment of the exercise price of the
Option.
(2) The Optionee may authorize the Company to withhold whole shares of
Stock purchasable upon exercise of the Option in accordance with Section 3.3(b);
provided, that the following provisions shall apply to such election:
(i) Such election may apply only to the Option or any or all options held
by the Optionee, shall be filed with the Company Officer at least six months
prior to the exercise date of the Option and may not take effect during the
six-month period beginning on the date of grant of the Option (other than in the
event of the Optionee's death) or (ii) such election (A) shall be subject to
approval by the Committee, (B) may not take effect during the six-month period
beginning on the date of grant of the Option (other than in the event of the
Optionee's death), (C) must be filed with the Company Officer during (or must be
filed with the Company Officer in advance of, but take effect during) the ten
business day period beginning on the third business day following the date of
release of the Company's quarterly or annual summary statements of sales and
earnings and (D) the exercise of the Option must occur during such ten business
day period. Unless the Committee otherwise determines, any election pursuant to
clause (i) may be revoked or changed only if such revocation or change is made
at least six months prior to the exercise of the Option. Any election made
pursuant to clause (ii) may be revoked or changed prior to the exercise of the
Option during the ten business day period.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without a change in the aggregate purchase price, other than a change in the
aggregate purchase price resulting from rounding. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option, in whole
or in part, occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such security (rounded to the nearest hundredth)
by (ii) the excess, if any, of (A) the Fair Market Value on the exercise date
over (B) the exercise price of the Option. The decision of the Committee
regarding the amount and timing of any adjustment pursuant to this Section 3.4
shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
-4-
<PAGE> 5
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the
purchase or delivery of shares hereunder, the Option may not be exercised, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company agrees to use reasonable efforts to
effect or obtain any such listing, registration, qualification, consent or
approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in whole
or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the
exercise of the Option, in whole or in part, and the Optionee becomes a
stockholder of record with respect to such delivered shares; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares not so purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event shall
the granting of the Option or its acceptance by the Optionee give or be deemed
to give the Optionee any right to continued employment by the Company or any
affiliate of the Company.
3.9. Decisions of Board or Committee. The Board or the Committee shall
have the right to resolve all questions which may arise in connection with the
Option or its exercise. Any interpretation, determination or other action made
or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times prior
to the expiration or termination of the Option reserve and keep available,
either in its treasury or out of its authorized but unissued shares of Stock,
the full number of shares subject to the Option from time to time.
3.11. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith. The
Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. (a) As used herein, employment by the
Company shall include employment by the Company or any of its
-5-
<PAGE> 6
Subsidiaries. References in this Agreement to sections of the Code shall be
deemed to refer to any successor section of the Code or any successor internal
revenue law.
(b) As used herein, the term "Legal Representative" shall include an
executor, administrator, guardian, legal representative or other person acting
in a similar capacity.
4.3. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided for
in this Agreement shall be made in writing either (a) by actual delivery to the
party entitled thereto, (b) by mailing in the United States mails to the last
known address of the party entitled thereto, via certified or registered mail,
postage prepaid and return receipt requested, or (c) by telecopy with
confirmation of receipt. The notice shall be deemed to be received in case of
delivery, on the date of its actual receipt by the party entitled thereto, in
case of mailing by certified or registered mail, five days following the date
of such mailing, and in the case of telecopy, on the date of confirmation of
receipt.
4.5. Governing Law. The Option, this Agreement, and all determinations
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Delaware and construed in accordance therewith without regard to principles of
conflicts of laws.
4.6. Counterparts. This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
4.7. Stockholder Approval. As provided in the Plan, this Option shall be
null and void if adoption of the Plan is not approved by the stockholders of
the Company.
AM INTERNATIONAL, INC.
By:
------------------------------------
Accepted this day of
----
199
- -----------------, -.
- --------------------------
Optionee
-6-
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EXHIBIT C-3
NONQUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
AM International, Inc., a Delaware corporation (the "Company"), hereby
grants to (the "Optionee") as of , 1996 (the "Option Date"), pursuant to the
provisions of the AM International, Inc. 1994 Long Term Incentive Plan (the
"Plan"), a non-qualified option to purchase from the Company (the "Option")
shares of its Common Stock, $.01 par value ("Stock"), at the price of $ per
share upon and subject to the terms and conditions set forth below.
Capitalized terms not defined herein shall have the meanings specified in the
Plan.
1. Option Subject to Acceptance of Agreement.
The Option shall become null and void unless the Optionee shall accept
this Agreement by executing it in the space provided below and returning it to
the Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be exercised,
after February 7, 2006 (the "Expiration Date").
2.2. Exercise of Option. (a) The Option shall become exercisable as to
100% of the Stock subject to the Option on the date hereof, and as otherwise
provided pursuant to Section 2.2(b) hereof or in accordance with Section 5.2 of
the Plan.
(b) If the Optionee's service as a director of the Company terminates for
any reason the Option shall be exercisable by the Optionee or the Optionee's
Legal Representative for a period extending from the effective date of such
termination until (1) three months after the effective date of such termination
as a director, or (2) the Expiration Date.
2.3 Method of Exercise. (a) Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the satisfaction of the Company) either (i) in cash, (ii) in
previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares and for which the
Optionee has good title free and clear of all liens and encumbrances) having a
Fair Market Value determined as of the date of exercise, (iii) by authorizing
the Company to withhold whole shares of Stock which would otherwise be
deliverable upon exercise of the Option having a Fair Market Value determined
as of the date of exercise, (iv) in cash by a broker-dealer acceptable to the
Company to whom the Optionee has submitted an irrevocable notice of exercise,
or (v) a combination of (i), (ii) and (iii), and (2) by executing such
documents as the Company may reasonably request. The Committee shall have sole
discretion to disapprove of an election pursuant to any of clauses (ii) - (v).
No shares of Stock shall be delivered until the full purchase price therefor
has been paid.
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(b) Unless the Committee otherwise determines, if the Optionee is subject
to Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), the
following provisions shall apply to the Optionee's election to authorize the
Company to withhold whole shares of Stock purchasable upon exercise of the
Option in payment of all or a portion of the option price:
(1) Such election may apply only to the Option or any or all options held
by the Optionee, shall be filed with the Secretary of the Company (the "Company
Officer") at least six months prior to the exercise date of the Option and may
not take effect during the six-month period beginning on the date of grant of
the Option (other than in the event of the Optionee's death) or (2) such
election (i) shall be subject to approval by the Committee, (ii) may not take
effect during the six-month period beginning on the date of grant of the Option
(other than in the event of the Optionee's death), (iii) must be filed with
Company Officer during (or must be filed with Company Officer in advance of,
but take effect during) the ten business day period beginning on the third
business day following the date of release of the Company's quarterly or annual
summary statements of sales and earnings and (iv) the exercise of the Option
must occur during such ten business day period. Unless the Committee otherwise
determines, any election pursuant to clause (1) may be revoked or changed only
if such revocation or change is made at least six months prior to the exercise
of the Option. Any election made pursuant to clause (2) may be revoked or
changed prior to the exercise of the Option during the ten business day period.
2.4 Termination of Option. (a) In no event may the Option be exercised
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the shares
of Stock subject to the Option expire or are exercised, cancelled or forfeited,
the Optionee shall promptly return this Agreement to the Company for full or
partial cancellation, as the case may be. Such cancellation shall be effective
regardless of whether the Optionee returns this Agreement. If the Optionee
continues to have rights to purchase shares of Stock hereunder, the Company
shall, within 10 days of the Optionee's delivery of this Agreement to the
Company, either (i) mark this Agreement to indicate the extent to which the
Option has expired or been exercised, cancelled or forfeited or (ii) issue to
the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be substantially similar to this Agreement in form
and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred by
the Optionee other than by will or the laws of descent and distribution.
During the Optionee's lifetime the Option is exercisable only by the Optionee
or the Optionee's Legal Representative. Except as permitted by the foregoing,
the Option may not be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon any attempt to
so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose
of the Option, the Option and all rights hereunder shall immediately become
null and void.
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3.2. Investment Representation. The Optionee hereby represents and
covenants that (a) any share of Stock purchased upon exercise of the Option
will be purchased for investment and not with a view to the distribution
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), unless such purchase has been registered under the
Securities Act and any applicable state securities law; (b) any subsequent sale
of any such shares shall be made either pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws, or
pursuant to an exemption from registration under the Securities Act and such
state securities laws; and (c) if requested by the Company, the Optionee shall
submit a written statement, in form satisfactory to the Company, to the effect
that such representation (x) is true and correct as of the date of purchase of
any shares hereunder or (y) is true and correct as of the date of any sale of
any such shares, as applicable. As a further condition precedent to any
exercise of the Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of or supervision over
the issuance or delivery of the shares and, in connection therewith, shall
execute any documents which the Board of the Committee shall in its sole
discretion deem necessary or advisable.
3.3 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without a change in the aggregate purchase price, other than a change in the
aggregate purchase price resulting from rounding. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option, in whole
or in part, occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the
exercise date over (B) the exercise price of the Option. The decision of the
Committee regarding the amount and timing of any adjustment pursuant to this
Section 3.3 shall be final, binding and conclusive.
3.4. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the
purchase or delivery of shares hereunder, the Option may not be exercised,
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained, free of any conditions not acceptable to the
Company. The Company agrees to use reasonable efforts to effect or obtain any
such listing, registration, qualification, consent or approval.
3.5. Delivery of Certificates. Upon the exercise of the Option, in whole
or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
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3.6. Option Confers No Rights as Stockholder. The Optionee shall not be
entitled to any privileges of ownership with respect to shares of Stock subject
to the Option unless and until purchased and delivered upon the exercise of the
Option, and the Optionee becomes a stockholder of record with respect to such
delivered shares; and the Optionee shall not be considered a stockholder of the
Company with respect to any such shares not so purchased and delivered.
3.7. Company to Reserve Shares. The Company shall at all times prior to
the expiration or termination of the Option reserve and keep available, either
in its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Option from time to time.
3.8. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith. The
Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. (a) References in this Agreement to
sections of the Code shall be deemed to refer to any successor section of the
Code or any successor internal revenue law.
(b) As used herein, the term "Legal Representative" shall include an
executor, administrator, guardian, legal representative or other person acting
in a similar capacity.
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4.3. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided for
in this Agreement shall be made in writing either (a) by actual delivery to the
party entitled thereto, (b) by mailing in the United States mails to the last
known address of the party entitled thereto, via certified or registered mail,
postage prepaid and return receipt requested, or (c) by telecopy with
confirmation of receipt. The notice shall be deemed to be received in case of
delivery, on the date of its actual receipt by the party entitled thereto, in
case of mailing by certified or registered mail, five days following the date
of such mailing, and in the case of telecopy, on the date of confirmation of
receipt.
4.5. Governing Law. The Option, this Agreement, and all determinations
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Delaware and construed in accordance therewith without regard to principles of
conflicts of laws.
4.6. Counterparts. This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
AM INTERNATIONAL, INC.
By:________________________________
Accepted this __day of
_________________, 199_.
______________________
Optionee
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