<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 2000
FILE NO. 0-19516
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Under Section 13(e) of the Securities Exchange Act of 1934)
------------------------------------
SUNRISE INTERNATIONAL LEASING CORPORATION
(Name of the Issuer)
SUNRISE INTERNATIONAL LEASING CORPORATION,
PETER J. KING,
THE KING MANAGEMENT CORPORATION,
STEPHEN D. HIGGINS, AS CO-TRUSTEE UNDER THE
WILLIAM B. KING STOCK TRUST UA DATED NOVEMBER 21, 1989 FBO WILLIAM B. KING,
STEPHEN D. HIGGINS, AS CO-TRUSTEE UNDER THE
RUSSELL S. KING STOCK TRUST UA DATED NOVEMBER 11, 1989 FBO
RUSSELL S. KING, AND PETER J. KING, AS SOLE TRUSTEE UNDER
THE VOTING TRUST UA DATED MAY 27, 1998
(Names of the Persons Filing Statement)
------------------------------------
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
86769K-10-5
(CUSIP Number of Class of Securities)
PETER J. KING
CHIEF EXECUTIVE OFFICER
SUNRISE INTERNATIONAL LEASING CORPORATION
5500 WAYZATA BLVD., SUITE 750
GOLDEN VALLEY, MINNESOTA 55416
612-593-1904
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Persons Filing Statement)
COPIES TO:
THOMAS R. KING BRUCE A. MACHMEIER
FREDRIKSON & BYRON, P.A. OPPENHEIMER WOLFF & DONNELLY LLP
1100 INTERNATIONAL CENTRE 45 SOUTH SEVENTH STREET
900 SECOND AVENUE SOUTH SUITE 3300
MINNEAPOLIS, MINNESOTA 55402 MINNEAPOLIS, MINNESOTA 55402
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 (17 CFR 240.14a-1 to
240.14b-1), Regulation 14C (17 CFR 240.14c-1 to 240.14c-101)
or Rule 13e-3(c) (ss. 240.13e-3(c)) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
<PAGE> 2
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
================================================================================
Transaction Valuation Amount of Filing Fee
$14,000,000* $2,800**
================================================================================
* The "Transaction Valuation" amount referred to above is approximately
the sum of (i) the product of 2,481,627 outstanding shares of Common
Stock (excluding 4,154,626 shares owned by King Management and its
affiliates) and $5.25, the cash price per share to be paid in the
merger, plus (ii) cash consideration of up to $792,430 to be paid for
options to purchase 400,116 shares of Common Stock being surrendered in
connection with the merger.
** In accordance with Rule 0-11 under the Securities Exchange Act of 1934,
as amended, the filing fee is determined by multiplying the Transaction
Valuation by 1/50th of 1%.
[x] Check box if any part of the fee is offset as provided by Rule 0-11
(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $2,800
Form or Registration No.: Preliminary Proxy Statement on Schedule 14A
Filing Party: Sunrise International Leasing Corporation
Date Filed: March 10, 2000
================================================================================
2
<PAGE> 3
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 ("Statement")
is being filed jointly by Sunrise International Leasing Corporation, a Delaware
corporation ("Sunrise"), The King Management Corporation, a Minnesota
corporation ("King Management"), Peter J. King, Chief Executive Officer and
Chairman of the Board of both Sunrise and King Management ("King") Stephen D.
Higgins, as co-trustee under the William B. King Stock Trust UA dated November
21, 1989 FBO William B. King, Stephen D. Higgins, as co-trustee under the
Russell S. King Stock Trust UA dated November 11, 1989 FBO Russell S. King and
Peter J. King, as sole voting trustee under the Voting Trust UA dated May 27,
1998 in connection with a proposed merger ("Merger") of Sunrise with and into
King Management, with King Management as the surviving entity, pursuant to an
Agreement and Plan of Merger, dated January 31, 2000, between Sunrise and King
Management (the "Merger Agreement"). The Merger Agreement and the Merger have
already been approved by a special committee of Sunrise's Board of Directors and
Sunrise's Board of Directors. Sunrise's stockholders will be asked to vote upon
the approval of the Merger Agreement at a Special Meeting of the Stockholders of
Sunrise (the "Special Meeting"). Copies of the Merger Agreement have been filed
by Sunrise as Exhibit 2.1 to Sunrise's Current Report on Form 8-K ("Form 8-K")
filed with the Securities and Exchange Commission on February 3, 2000.
This Statement is intended to satisfy the reporting requirements of
Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Concurrently with the filing of this Statement, Sunrise is filing a
preliminary proxy statement (the "Proxy Statement") under Regulation 14A of the
Exchange Act pursuant to which the stockholders of Sunrise will be given notice
of, and an opportunity to vote on, the Merger at the Special Meeting. The Proxy
Statement is incorporated herein by reference. Except as otherwise set forth
below, the information set forth in the Proxy Statement, including all
appendices thereto, is hereby expressly incorporated herein by reference in
response to the items of this Schedule 13E-3, and the responses to each item in
this Statement are qualified in their entirety by the information contained in
the Proxy Statement and the appendices thereto. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Proxy
Statement.
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the Proxy Statement under the captions
"SUMMARY TERM SHEET" and "QUESTIONS AND ANSWERS ABOUT THE SPECIAL
MEETING" is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The information set forth on the cover page of the Proxy
Statement and in the Proxy Statement under the caption
"SUMMARY TERM SHEET - The Companies" is incorporated herein by
reference.
(b) The information set forth in the Proxy Statement under the
caption "INFORMATION CONCERNING THE SPECIAL MEETING - Record
Date and Quorum Requirement" and on the cover page of the
Proxy Statement is incorporated herein by reference.
(c)-(d) The information set forth in the Proxy Statement under
the caption "COMMON STOCK MARKET PRICE AND DIVIDEND
INFORMATION" is incorporated herein by reference.
3
<PAGE> 4
(e) The information set forth in the Proxy Statement under the
caption "SPECIAL FACTORS - Public Offerings and Repurchases of
Common Stock" is incorporated herein by reference.
(f) The information set forth in the Proxy Statement under the
caption "COMMON STOCK PURCHASE INFORMATION" is incorporated
herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS.
(a)-(c) The information set forth in the Proxy Statement under
the captions "SUMMARY TERM SHEET - The Companies;" "CURRENT
MANAGEMENT OF SUNRISE;" "KING MANAGEMENT;" "SPECIAL FACTORS -
Interests of Certain Persons in the Merger; - Consequences of
the Merger; - Plans for Surviving Company After the Merger"
and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT" is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the Proxy Statement and under the
captions "SUMMARY TERM SHEET;" "INFORMATION CONCERNING THE
SPECIAL MEETING - Vote Required;" "SPECIAL FACTORS" and "THE
MERGER AGREEMENT" is incorporated herein by reference and
Appendices A and B to the Proxy Statement are also
incorporated herein by reference.
(c) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET;" "INFORMATION CONCERNING THE
SPECIAL MEETING - Agreement to Facilitate the Merger;"
"SPECIAL FACTORS - Interests of Certain Persons in the
Merger;" "THE MERGER AGREEMENT - The Merger; - Treatment of
Stock Options; - Agreement to Facilitate the Merger" and
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSHIP AND
MANAGEMENT" is incorporated herein by reference and Appendices
A and B to the Proxy Statement are also incorporated herein by
reference.
(d)-(e) The information set forth in the Proxy Statement under
the caption "APPRAISAL RIGHTS" is incorporated herein by
reference and Appendix D to the Proxy Statement is also
incorporated herein by reference.
(f) Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS AND AGREEMENTS.
(a) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET;" "INFORMATION CONCERNING THE
SPECIAL MEETING - Agreement to Facilitate the Merger;"
"SPECIAL FACTORS - Background of the Merger; - Interests of
Certain Persons in the Merger;" "THE MERGER AGREEMENT -
Agreement to Facilitate the Merger" and "RELATED PARTY
TRANSACTIONS" is incorporated herein by reference and Appendix
B to the Proxy Statement is also incorporated herein by
reference.
4
<PAGE> 5
(b)-(c) The information set forth in the Proxy Statement under
the caption "SPECIAL FACTORS - Background of the Merger" is
incorporated herein by reference.
(e) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - The Merger; - Agreement to
Facilitate the Merger; - Security Ownership of Management; -
Interests of Certain Persons in the Merger;" "INFORMATION
CONCERNING THE SPECIAL MEETING - Agreement to Facilitate the
Merger;" "THE MERGER AGREEMENT;" "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" and "RELATED PARTY
TRANSACTIONS" is incorporated herein by reference and
Appendices A and B to the Proxy Statement are also
incorporated herein by reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(b) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Consequences of the Merger" and
"SPECIAL FACTORS - Interests of Certain Persons in the Merger;
- Consequences of the Merger; - Plans for Surviving Company
After the Merger" is incorporated herein by reference.
(c)(1)-(8) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Consequences of the Merger;"
"SPECIAL FACTORS - Interests of Certain Persons in the Merger;
- Consequences of the Merger; - Plans for Surviving Company
After the Merger" and "KING MANAGEMENT" is incorporated herein
by reference.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a)-(d) The information set forth in the Proxy Statement under
the captions "SUMMARY TERM SHEET - Consequences of the Merger;
- Recommendation of the Special Committee and Sunrise's Board
of Directors; Reasons for the Merger; - Interests of Certain
Persons in the Merger; - Material Federal Income Tax
Consequences;" "SPECIAL FACTORS - Background of the Merger; -
Recommendation of the Special Committee and the Board of
Directors; Reasons for the Merger; - King Management's
Purpose; Reasons for and Structure of the Merger; - Interests
of Certain Persons in the Merger; - Consequences of the
Merger; - Plans for the Surviving Company After the Merger; -
U.S. Federal Income Tax Consequences" and "THE MERGER
AGREEMENT" is incorporated herein by reference.
5
<PAGE> 6
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(e) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Fairness Opinion of U.S.
Bancorp Piper Jaffray;" "INFORMATION CONCERNING THE SPECIAL
MEETING - Vote Required; - Agreement to Facilitate the
Merger;" "SPECIAL FACTORS - Background of the Merger; -
Recommendation of the Special Committee and Sunrise's Board of
Directors; Reasons for the Merger; - Opinion of the Financial
Advisor for the Special Committee; - Position of King
Management as to the Fairness of the Merger;" "THE MERGER
AGREEMENT;" "SELECTED HISTORICAL CONSOLIDATED FINANCIAL
INFORMATION;" "FINANCIAL PROJECTIONS;" "COMMON STOCK MARKET
PRICE AND DIVIDEND INFORMATION" and "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" is incorporated
herein by reference and Appendices B and C to the Proxy
Statement are also incorporated herein by reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a)-(c) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Fairness Opinion of U.S.
Bancorp Piper Jaffray;" and "SPECIAL FACTORS - Background of
the Merger; - Recommendation of the Special Committee and
Sunrise's Board of Directors; Reasons for the Merger; -
Opinion of the Financial Advisor for the Special Committee; -
Position of King Management as to the Fairness of the Merger"
is incorporated herein by reference and Appendix C to the
Proxy Statement is also incorporated herein by reference.
ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the Proxy Statement under
the captions "SUMMARY TERM SHEET - The Merger; - Financing;
Source of Funds;" "SPECIAL FACTORS - Financing; Source of
Funds" and "THE MERGER AGREEMENT" is incorporated herein by
reference.
(c) The information set forth in the Proxy Statement under the
captions "INFORMATION CONCERNING THE SPECIAL MEETING -
Solicitation, Revocation and Use of Proxies" and "SPECIAL
FACTORS - Fees and Expenses" is incorporated herein by
reference.
(d) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Financing; Source of Funds;"
"SPECIAL FACTORS - Financing; Source of Funds" and "THE MERGER
AGREEMENT" is incorporated herein by reference.
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Interests of Certain Persons in
the Merger;" "SPECIAL FACTORS - Interests of Certain Persons
in the Merger;" "SECURITY OWNERSHIP OF CERTAIN
6
<PAGE> 7
BENEFICIAL OWNERS AND MANAGEMENT" and "COMMON STOCK
PURCHASE INFORMATION" is incorporated herein by reference.
(b) The information set forth in the Proxy Statement under the
caption "COMMON STOCK PURCHASE INFORMATION - Recent
Transactions" is incorporated herein by reference.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
(d) The information set forth in the Proxy Statement under the
captions "QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING;"
"INFORMATION CONCERNING THE SPECIAL MEETING" and "THE MERGER
AGREEMENT" is incorporated herein by reference.
(e) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Recommendation of the Special
Committee and Sunrise's Board of Directors; Reasons for the
Merger;" "INFORMATION CONCERNING THE SPECIAL MEETING -
Solicitation, Revocation and Use of Proxies;" and "SPECIAL
FACTORS - Background of the Merger; - Recommendations of the
Special Committee and the Board of Directors; Reasons for the
Merger; - King Management's Purpose; Reasons for and
Structure of the Merger; - Position of King Management as to
Fairness of the Merger" is incorporated herein by reference.
ITEM 13. FINANCIAL STATEMENTS.
(a) The information set forth in the Proxy Statement under the
captions "SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA" and
"DOCUMENTS INCORPORATED BY REFERENCE" is incorporated herein
by reference.
(b) The information set forth in the Proxy Statement under the
caption "PRO FORMA FINANCIAL INFORMATION" is incorporated
herein by reference.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a)and(b) The information set forth in the Proxy Statement under
the caption "INFORMATION CONCERNING THE SPECIAL MEETING -
Solicitation, Revocation and Use of Proxies" is incorporated
herein by reference.
ITEM 15. ADDITIONAL INFORMATION.
The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET - Stockholder Lawsuit Challenging
the Merger;" "FINANCIAL PROJECTIONS" and "SPECIAL FACTORS -
Stockholder Lawsuit Challenging the Merger" is incorporated
herein by reference.
7
<PAGE> 8
ITEM 16. EXHIBITS.
(a) Preliminary Proxy Statement, including all appendices thereto,
and related Notice of Special Meeting of Stockholders
(incorporated herein by reference to the Preliminary Proxy
Statement filed concurrently with this Statement).
(b) None.
(c)(1) Fairness Opinion of U.S. Bancorp Piper Jaffray dated January
27, 2000 (incorporated herein by reference to Appendix C to
the Proxy Statement filed as Exhibit (a) to this Statement).
(c)(2) Fairness Opinion Presentation to the Special Committee of the
Board of Directors of Sunrise prepared and presented by U.S.
Bancorp Piper Jaffray dated January 27, 2000 (filed herewith).
(d)(1) Agreement and Plan of Merger, dated January 31, 2000, between
Sunrise and King Management (incorporated herein by reference
to Exhibit 2.1 to Sunrise's Current Report on Form 8-K filed
with the SEC on February 3, 2000).
(d)(2) Agreement to Facilitate Merger, dated January 31, 2000, by
and among King Management, Peter J. King, Stephen D. Higgins,
as trustee under each of the William B. King Stock Trust UA
Dated November 21, 1989 FBO William B. King and the Russell S.
King Stock Trust UA Dated November 11, 1989 FBO Russell S.
King, and Stephen D. Higgins, as sole trustee under each of
the Separate Trust FBO William B. King UA Dated April 28,
1995, the Separate Trust FBO Russell S. King UA Dated April
28, 1995, the GST Trust FBO William B. King UA Dated April 28,
1995 and the GST Trust FBO Russell S. King UA Dated April 28,
1995 (incorporated herein by reference to Exhibit 2.2 to
Sunrise's Current Report on Form 8-K filed with the SEC on
February 3, 2000).
(d)(3) Voting Trust Agreement dated May 27, 1998 among Peter J.
King, The King Management Corporation, the William B. King
Stock Trust, the Russell S. King Stock Trust and the Peter J.
King 1996 Grantor Retained Annuity Trust (incorporated herein
by reference to Exhibit 1 contained in Amendment No. 5 to
Schedule 13D dated May 28, 1998 filed by Peter J. King (File
No. 5-42174)).
(f) Statement of Appraisal Rights and Procedures (incorporated
herein by reference to Appendix D to the Proxy Statement filed
as Exhibit (a) to this Statement).
(g) None.
8
<PAGE> 9
SIGNATURE
After due inquiry and to the best of our knowledge and belief, we certify
that the information set forth in this statement is true, complete and correct.
SUNRISE INTERNATIONAL LEASING CORPORATION
By /s/ Peter J. King
--------------------------------------
Peter J. King
Chief Executive Officer
THE KING MANAGEMENT CORPORATION
By /s/ Peter J. King
--------------------------------------
Peter J. King
Chief Executive Officer
/s/ Peter J. King
-----------------------------------------
Peter J. King
THE WILLIAM B. KING STOCK TRUST UA
DATED NOVEMBER 21, 1989 FOR THE
BENEFIT OF WILLIAM B. KING
/s/ Stephen D. Higgins
-----------------------------------------
Stephen D. Higgins
Co-Trustee
/s/ William B. King
-----------------------------------------
William B. King
Co-Trustee
THE RUSSELL S. KING STOCK TRUST UA
DATED NOVEMBER 11, 1989 FOR THE
BENEFIT OF RUSSELL S. KING
/s/ Stephen D. Higgins
-----------------------------------------
Stephen D. Higgins
Co-Trustee
/s/ Russell S. King
-----------------------------------------
Russell S. King
Co-Trustee
9
<PAGE> 10
VOTING TRUST UA DATED MAY 27, 1998
/s/ Peter J. King
-----------------------------------------
Peter J. King
Sole Voting Trustee
Dated: March 10, 2000
--
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT FILING METHOD
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a) Preliminary Proxy Statement, including all Incorporated herein by reference to the
appendices thereto, and related Notice of Preliminary Proxy Statement filed
Special Meeting of Stockholder concurrently with this Statement
- ----------------------------------------------------------------------------------------------------------------------
(c)(1) Fairness Opinion of U.S. Bancorp Piper Incorporated herein by reference to
Jaffray dated January 27, 2000 Appendix C to the Proxy Statement
filed as Exhibit (a) to this Statement
- ----------------------------------------------------------------------------------------------------------------------
(c)(2) Fairness Opinion Presentation to the Special Filed herewith
Committee of the Board of Directors of
Sunrise prepared and presented by U.S.
Bancorp Piper Jaffray dated January 27, 2000
- ----------------------------------------------------------------------------------------------------------------------
(d)(1) Agreement and Plan of Merger, dated January Incorporated herein by reference to
31, 2000, between Sunrise and King Exhibit 2.1 to Sunrise's Current
Management Report on Form 8-K filed with the SEC
on February 3, 2000
- ----------------------------------------------------------------------------------------------------------------------
(d)(2) Agreement to Facilitate Merger, dated Incorporated herein by reference to
January 31, 2000, by and among King Exhibit 2.2 to Sunrise's Current
Management, Peter J. King, Stephen D. Report on Form 8-K filed with the SEC
Higgins, as trustee under each of the on February 3, 2000
William B. King Stock Trust UA Dated November
21, 1989 FBO William B. King and the Russell
S. King Stock Trust UA Dated November 11,
1989 FBO Russell S. King, and Stephen D.
Higgins, as sole trustee under each of the
Separate Trust FBO William B. King UA Dated
April 28, 1995, the Separate Trust FBO
Russell S. King UA Dated April 28, 1995, the
GST Trust FBO William B. King UA Dated April
28, 1995 and the GST Trust FBO Russell S.
King UA Dated April 28, 1995
- ----------------------------------------------------------------------------------------------------------------------
(d)(3) Voting Trust Agreement dated May 27, 1998 Incorporated herein by reference to
among Peter J. King, The King Management Exhibit 1 contained in Amendment No. 5 to
Corporation, the William B. King Stock Schedule 13D dated May 28, 1998 filed
Trust, the Russell S. King Stock Trust and by Peter J. King (File No. 5-42174)
the Peter J. King 1996 Grantor Retained
Annuity Trust
- ----------------------------------------------------------------------------------------------------------------------
(f) Statement of Appraisal Rights and Procedures Incorporated herein by reference to
Appendix D to the Proxy Statement
filed as Exhibit (a) to this Statement.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 1
FAIRNESS OPINION PRESENTATION
TO THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS
Project Horizon
[US BANCORP PIPER JAFFRAY(R) LOGO]
January 27, 2000
<PAGE> 2
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Section
<S> <C>
Description of Horizon 1
- Company Overview
- Recent Performance Issues
Overview of Transaction 2
- Transaction Background
- Proposed Deal Structure and Terms
Due Diligence Procedures 3
Summary of Valuation Analyses 4
Appendices
Portfolio Run-Off and Liquidation/Sale Analyses A
Discounted Dividend Stream Analysis B
Comparable Merger and Acquisition Transaction Analysis C
Implied Premiums Paid Analysis D
Comparable Public Company Analysis E
</TABLE>
PROJECT HORIZON U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 3
DESCRIPTION OF HORIZON
- --------------------------------------------------------------------------------
COMPANY OVERVIEW
- Horizon (or the "Company"), incorporated in Minnesota in February
1989, is a lessor of principally high technology, telecommunications
and other capital equipment.
- Horizon has two lease origination platforms referred to as ILC/Vendor
and SLC/Direct. ILC/Vendor develops market-oriented vendor programs
emphasizing the formulation of customized lease and rental programs
for vendors of high technology and other equipment. SLC/Direct
provides its customers with lease financing for high technology,
telecommunications and other capital equipment. All of Horizon's
leases are noncancelable "net" leases with terms ranging from six
months to five years, although the vast majority have terms in the
one to three year category.
- The majority of Horizon's leases are accounted for as operating
leases for financial reporting purposes. At completion of the initial
lease term, the lessee may return the equipment, renew the lease for
an additional term or purchase the equipment. If the equipment is
returned to Horizon, it is either re-leased to another customer or
sold in the secondary market as used equipment.
- Residual values, which are recorded on Horizon's balance sheet,
represent the estimated value of the equipment at the completion of
the lease. Horizon realizes estimated residual values at lease
completion through: (i) renewal or extension of the original lease,
(ii) sale of the equipment to the lessee or a new user or (iii)
leasing the equipment to a new user.
PROJECT HORIZON 1-1 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 4
DESCRIPTION OF HORIZON
- --------------------------------------------------------------------------------
RECENT PERFORMANCE ISSUES
Capital Market Issues
- Stagnant stock price
- Small market capitalization
- Limited trading volume and float
- Large insider holdings
- Limited institutional support
- Lack of research sponsorship
Business Platform Concerns
- Increased rate of obsolescence on [two vendors']
equipment
- acceleration of depreciation compresses leasing gross margin
- Large vendor of Horizon to begin writing leases on its own behalf
- [under an alliance with a major leasing company]
- Elimination of SLC/Direct salesforce
- Increased utilization of recourse debt to finance equipment
purchases
- Rising interest rates compress leasing gross margin
PROJECT HORIZON 1-2 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 5
DESCRIPTION OF HORIZON
- --------------------------------------------------------------------------------
RECENT MARKET PERFORMANCE
<TABLE>
<CAPTION>
HORIZON
<S> <C>
Stock Market NASDAQ
Stock Price as of 1/26/00:
-- Last Close $ 5.38
-- Last Bid $ 5.25
-- Last Ask $ 5.63
-- 30 Day Average $ 5.31
-- 60 Day Average $ 5.20
-- 90 Day Average $ 5.17
-- 180 Day Average $ 4.92
-- Stock Price as of September 7,1999 (1) $ 4.25
For the 52 week period ending 1/26/00:
-- Low $ 2.88
-- High $ 5.81
-- Average Daily Volume 8,575
Summary Capitalization:
Common Stock Outstanding as of 1/26/00 6,636,253
1/26/00 Close $ 5.38
-----------
Market Capitalization $35,669,860
===========
Annual Dividends per Share $ 0.00
Dividend Yield 0.00%
</TABLE>
(1) The day preceding Horizon's announcement of receipt of proposal from
management.
PROJECT HORIZON 1-3 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 6
DESCRIPTION OF HORIZON
- --------------------------------------------------------------------------------
RECENT MARKET PERFORMANCE
WEEKLY STOCK PRICE/VOLUME PERFORMANCE
1/26/98 - 1/26/00
[LINE GRAPH]
<TABLE>
<CAPTION>
DATE VOLUME HIGH LOW CLOSE
<S> <C> <C> <C> <C>
1/23/98 20.7 2.94 2.75 2.94
1/30/98 112.7 3.00 2.63 2.69
2/06/98 61.9 2.88 2.63 2.69
2/13/98 157.9 3.06 2.69 2.81
2/20/98 162.1 2.88 2.81 2.88
2/27/98 291.5 3.06 2.88 3.00
3/06/98 173.5 3.31 3.00 3.00
3/13/98 57.9 3.44 3.13 3.19
3/20/98 59.1 3.50 3.19 3.25
3/27/98 49.3 3.69 3.38 3.69
4/03/98 52.9 3.88 3.63 3.75
4/09/98 48.8 3.88 3.69 3.75
4/17/98 17.0 3.81 3.56 3.75
4/24/98 5.3 3.75 3.56 3.56
5/01/98 15.4 3.63 3.25 3.56
5/08/98 12.8 3.50 3.38 3.38
5/15/98 6.4 3.63 3.25 3.25
5/22/98 18.7 3.50 3.25 3.38
5/29/98 28.3 3.50 3.19 3.31
6/05/98 63.6 3.38 3.13 3.13
6/12/98 17.7 3.25 3.00 3.25
6/19/98 49.9 3.19 3.00 3.00
6/26/98 136.6 3.50 3.00 3.47
7/02/98 15.8 3.50 3.44 3.44
7/10/98 54.4 3.56 3.44 3.50
7/17/98 108.6 4.00 3.50 4.00
7/24/98 98.5 4.38 4.00 4.13
7/31/98 65.8 4.31 4.00 4.25
8/07/98 32.0 4.19 3.88 3.88
8/14/98 17.3 4.00 3.75 3.75
8/21/98 21.5 3.75 3.25 3.50
8/28/98 66.4 3.50 3.25 3.50
9/04/98 43.3 3.25 2.88 3.25
9/11/98 40.2 3.25 3.00 3.09
9/18/98 32.2 3.09 2.88 2.88
9/25/98 87.7 2.88 2.25 2.63
10/02/98 14.9 3.00 2.63 2.88
10/09/98 17.0 3.00 2.63 2.63
10/16/98 47.1 3.50 2.75 3.00
10/23/98 9.9 3.19 3.00 3.06
10/30/98 42.9 3.63 3.00 3.38
11/06/98 23.7 3.75 3.44 3.50
11/13/98 79.8 3.75 3.44 3.75
11/20/98 52.5 3.75 3.50 3.56
11/27/98 683.5 3.88 3.50 3.63
12/04/98 8.6 3.75 3.25 3.25
12/11/98 10.0 3.50 3.25 3.25
12/18/98 85.8 3.38 3.13 3.25
12/24/98 27.2 3.31 3.25 3.25
12/31/98 12.6 3.31 3.25 3.25
1/08/99 54.1 3.38 3.13 3.31
1/15/99 22.7 3.50 3.25 3.25
1/22/99 19.3 3.38 3.00 3.25
1/29/99 44.8 3.38 3.13 3.38
2/05/99 26.0 3.25 3.13 3.19
2/12/99 21.9 3.25 3.13 3.13
2/19/99 10.3 3.44 3.13 3.31
2/26/99 11.2 3.38 3.00 3.00
3/05/99 20.8 3.25 2.88 3.06
3/12/99 22.9 3.25 3.00 3.19
3/19/99 62.2 3.38 3.00 3.19
3/26/99 14.2 3.38 3.25 3.31
4/01/99 43.3 3.56 3.25 3.44
4/09/99 29.2 3.81 3.38 3.80
4/16/99 10.1 4.00 3.38 3.72
4/23/99 5.0 3.88 3.50 3.63
4/30/99 1.6 3.75 3.63 3.69
5/07/99 78.0 4.00 3.55 3.81
5/14/99 80.8 4.25 3.75 4.00
5/21/99 34.1 4.25 3.63 4.19
5/28/99 19.4 4.19 3.94 4.09
6/04/99 22.1 4.13 4.00 4.13
6/11/99 37.2 4.50 4.06 4.25
6/18/99 16.2 4.38 4.00 4.19
6/25/99 14.9 4.38 4.25 4.25
7/02/99 64.1 4.75 4.09 4.50
7/09/99 18.2 4.75 4.28 4.28
7/16/99 51.1 4.50 4.19 4.25
7/23/99 12.2 4.50 4.25 4.38
7/30/99 42.9 4.75 4.00 4.30
8/06/99 31.7 4.38 4.00 4.06
8/13/99 14.0 4.50 4.00 4.13
8/20/99 20.6 4.25 4.00 4.25
8/27/99 87.1 4.56 4.13 4.38
9/03/99 22.0 4.56 4.19 4.34
9/10/99 44.4 5.75 4.19 5.00
9/17/99 44.2 5.25 5.06 5.13
9/24/99 164.7 5.19 5.00 5.03
10/01/99 75.8 5.19 5.00 5.00
10/08/99 88.4 5.19 4.94 5.03
10/15/99 80.7 5.13 4.81 5.03
10/22/99 32.1 5.03 4.81 4.91
10/29/99 55.1 5.00 4.81 4.91
11/05/99 55.6 5.38 4.88 5.38
11/12/99 38.2 5.31 5.13 5.13
11/19/99 35.9 5.19 4.81 5.03
11/26/99 32.9 5.25 4.75 5.16
12/03/99 75.5 5.25 4.94 5.03
12/10/99 44.5 5.25 4.88 5.14
12/17/99 54.9 5.25 4.88 5.06
12/23/99 48.8 5.06 4.88 5.06
12/31/99 78.1 5.25 4.94 5.23
1/07/00 90.4 5.38 4.88 5.38
1/14/00 43.3 5.38 5.13 5.38
1/21/00 1.9 5.81 5.13 5.69
1/26/00 7.7 5.69 5.25 5.38
</TABLE>
PROJECT HORIZON 1-4 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 7
DESCRIPTION OF HORIZON
- --------------------------------------------------------------------------------
RECENT MARKET PERFORMANCE
ANALYSIS OF TRADING VOLUME AT VARIOUS PRICES
1/26/98-1/26/00
[BAR GRAPH]
<TABLE>
<CAPTION>
PRICE RANGE VOLUME
----------- ------
<S> <C>
$2.01-$2.50 14,200
$2.51-$3.00 1,043,600
$3.01-$3.50 1,744,100
$3.51-$4.00 1,084,700
$4.01-$4.50 591,800
$4.51-$5.00 357,900
$5.01-$5.25 765,800
$5.26-$5.50 74,000
$5.51-$6.00 1,700
</TABLE>
PRICE RANGE
PROJECT HORIZON 1-5 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 8
DESCRIPTION OF HORIZON
- --------------------------------------------------------------------------------
RECENT MARKET PERFORMANCE
ANALYSIS OF TRADING VOLUME AT VARIOUS PRICES
9/8/99 - 1/26/00
[BAR GRAPH]
<TABLE>
<CAPTION>
PRICE RANGE VOLUME
----------- ------
<S> <C>
$2.01-$2.50 0
$2.51-$3.00 0
$3.01-$3.50 0
$3.51-$4.00 0
$4.01-$4.50 0
$4.51-$5.00 348800
$5.01-$5.25 765800
$5.26-$5.50 74000.00
$5.51-$6.00 1700
</TABLE>
PRICE RANGE
PROJECT HORIZON 1-6 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 9
DESCRIPTION OF HORIZON
RECENT MARKET PERFORMANCE
Daily Relative Price Performance
1/26/98 - 1/26/00
[Line Graph Comparing Company's performance to
(1) Comparible Company Group which includes:
AMPI, BTOB, ELRC, LNCC, REXI, TWFC and UCP;
(2) Nasdaq; (3) S&P 500 Composite;
and (4) Dow Jones Industrial Average]
PROJECT HORIZON 1-7 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 10
DESCRIPTION OF HORIZON
- --------------------------------------------------------------------------------
RECENT MARKET PERFORMANCE
DAILY RELATIVE PRICE PERFORMANCE
9/8/99 - 1/26/00
[Line Graph Comparing Company's performance to
(1) Comparible Company Group which includes:
AMPI, BTOB, ELRC, LNCC, REXI, TWFC and UCP;
(2) Nasdaq; (3) S&P 500 Composite;
and (4) Dow Jones Industrial Average]
PROJECT HORIZON 1-14 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 11
OVERVIEW OF TRANSACTION
- --------------------------------------------------------------------------------
TRANSACTION BACKGROUND
- On September 8, 1999, Horizon received a non-binding proposal from its
Chairman and Chief Executive Officer to purchase all of the outstanding
shares of the Company not currently owned or controlled.
- Currently, the Chairman and Chief Executive Officer owns 3,802,126
shares of Horizon's common stock, or approximately 57.3% of the
outstanding shares.
- U.S. Bancorp Piper Jaffray Inc. ("US Bancorp Piper Jaffray") was
engaged by Horizon's Special Committee of the Board of Directors on
September 15, 1999 to act as its exclusive financial advisor with
respect to the above- referenced proposal.
PROJECT HORIZON 2-1 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 12
OVERVIEW OF TRANSACTION
- --------------------------------------------------------------------------------
PROPOSED DEAL STRUCTURE AND TERMS
Structure Merger of Company with and into a company
controlled by Horizon's Chairman and Chief
Executive Officer ("Acquiror")
Per Share Merger
Consideration $5.25
Shares Outstanding 6,636,253 (as of January 24, 2000)
Implied Equity Value
Shares Outstanding $34,840,328
Vested Options $770,696 (1)
--------
Aggregate Implied
Equity Value $35,611,024
(1) All vested plan options will receive cash proceeds equal to the
difference between the offer price per share of $5.25 and the exercise
price of the underlying plan option. All non-plan options will be canceled.
As of January 24, 2000, the total number of vested plan options was 389,575
and the weighted average exercise price was $3.27.
PROJECT HORIZON 2-2 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 13
DUE DILIGENCE PROCEDURES
- --------------------------------------------------------------------------------
US Bancorp Piper Jaffray worked extensively with Horizon's Special Committee
of the Board of Directors and Company management throughout the Fall of 1999
and up to the date of this presentation in connection with its role as
financial advisor. During the course of due diligence in connection with the
rendering of its Fairness Opinion, US Bancorp Piper Jaffray has, among other
things, undertaken the following:
1) Completed general business and financial due diligence with certain
members of Horizon's senior management team regarding the Company's
financial condition, operating performance and future prospects.
2) Participated in/attended meetings with Horizon's Special Committee of
the Board of Directors.
3) Reviewed certain publicly available business and financial information
relating to the Company which we deemed to be relevant, including
Reports on Form 10-K for the fiscal years ended March 31, 1997, 1998 and
1999 and Reports on Form 10-Q for the quarters ended June 30, 1998,
September 30, 1998, December 31, 1998, June 30, 1999 and September 30,
1999.
4) Reviewed the Company's March 31, 1999 shareholder proxy materials.
5) Reviewed interim monthly financial and operating data for July, August,
October and November 1999.
6) Reviewed a projection model prepared by the Company, covering the fiscal
years ending March 31, 2000 through 2005.
PROJECT HORIZON 3-1 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 14
DUE DILIGENCE PROCEDURES
- --------------------------------------------------------------------------------
CONTINUED
7) Reviewed copies of Company press releases over the past three fiscal
years.
8) Reviewed historical price/volume trading activity in the Company's common
stock.
9) Completed portfolio run-off and liquidation valuation analyses with
respect to the Company's operating and direct finance lease portfolios.
10) Completed a discounted dividend stream analysis utilizing the five year
projection model prepared by the Company.
11) Reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions which we deemed
relevant.
12) Compared the implied premium inherent in certain comparable merger and
acquisition transactions deemed relevant to Horizon's pre-announcement
trading price.
13) Compared certain financial and market performance data of Horizon with
comparable data of publicly traded entities deemed similar to Horizon.
14) Reviewed such other operating and financial data and such other matters
as we deemed necessary, including our assessment of general economic,
industry and financial market conditions.
PROJECT HORIZON 3-2 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 15
SUMMARY OF ANALYSES
- --------------------------------------------------------------------------------
PORTFOLIO RUN-OFF SCENARIO
Residual Realization as a Percent of Net Book Value
75% 100% 125%
DISCOUNT 14% $32,013,012 $35,375,225 $38,741,271
RATE 16% $30,894,092 $34,146,929 $37,404,751
18% $29,818,197 $32,965,743 $36,119,371
Residual Realization as a Percent of Net Book Value
75% 100% 125%
DISCOUNT 14% $ 4.72 $ 5.22 $ 5.71
RATE 16% $ 4.55 $ 5.03 $ 5.51
18% $ 4.40 $ 4.86 $ 5.32
Significant Assumptions:
1) Fuly diluted shares outstanding as of 1/26/00: 6,783,052.
2) Residual is realized at an assumed percentage of net book value one month
after the date of the last firm-term contractual lease payment.
3) 90-day notice is provided by all lessees currently classified as
"Direct-Month to Month" (i.e., only three additional payments will be
collected).
4) As of September 30, 1999, $59.3 million of the Company's $85.3 million of
debt was subject to prepayment penalties ranging from 1% to 2%.
The prepayment penalties are not triggered until 75% of the debt is repaid in
any calendar year. Thus, the prepayment penalties only apply to the remaining
25% and would range from $148,250 to $296,500. Due to the immateriality of the
prepayment penalties, they have been excluded from this analysis.
PROJECT HORIZON 4-1 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 16
SUMMARY OF ANALYSES
- --------------------------------------------------------------------------------
PORTFOLIO LIQUIDATION/SALE SCENARIO
Residual Realization as a Percent of Net Book Value
75% 100% 125%
DISCOUNT 14% $29,421,555 $32,848,166 $36,274,777
RATE 16% $27,468,231 $30,805,489 $34,142,746
18% $25,572,131 $28,823,436 $32,074,742
Residual Realization as a Percent of Net Book Value
75% 100% 125%
DISCOUNT 14% $ 4.34 $4.84 $5.35
RATE 16% $ 4.05 $4.54 $5.03
18% $ 3.77 $4.25 $4.73
Significant Assumptions:
1) Fuly diluted shares outstanding as of 1/26/00: 6,783,052.
2) Residual is realized at an assumed percentage of net book value one month
after the date of the last firm-term contractual lease payment.
3) 90-day notice is provided by all lessees currently classified as
"Direct-Month to Month" (i.e., only three additional payments will be
collected).
4) As of September 30, 1999, $59.3 million of the Company's $85.3 million of
debt was subject to prepayment penalties ranging from 1% to 2%. The
prepayment penalties are not triggered until 75% of the debt is repaid in any
calendar year. Thus, the prepayment penalties only apply to the remaining 25%
and would range from $148,250 to $296,500. Due to the immateriality of the
prepayment penalties, they have been excluded from this analysis.
PROJECT HORIZON 4-2 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 17
SUMMARY OF ANALYSES
- --------------------------------------------------------------------------------
DISCOUNTED DIVIDEND STREAM ANALYSIS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Sensitivity Analysis on Total Value of Dividend Stream - Aggregate Value
Net Income Multiple
7.0x 9.0x 11.0x
DISCOUNT 14.0% $31,364 $37,788 $44,211
RATE 16.0% $28,863 $34,751 $40,640
18.0% $26,600 $32,007 $37,413
Sensitivity Analysis on Total Value of Dividend Stream - Per Share
7.0x 9.0x 11.0x
DISCOUNT 14.0% $4.62 $5.57 $6.52
RATE 16.0% $4.26 $5.12 $5.99
18.0% $3.92 $4.72 $5.52
NOTE: ASSUMED 25% REQUIRED CAPITAL RATIO.
PROJECT HORIZON 4-3 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 18
SUMMARY OF ANALYSES
- --------------------------------------------------------------------------------
COMPARABLE MERGER AND ACQUISITION TRANSACTION ANALYSIS
<TABLE>
<CAPTION>
(IN THOUSANDS) HORIZON Minimum Mean Median Maximum
<S> <C> <C> <C> <C> <C>
Transaction Value/LTM Earnings (Through 9/30/99) 9.2x 2.6x 13.9x 12.7x 29.7x
Transaction Value/Book Value (As of 9/30/99) 1.1x 0.9x 1.5x 1.3x 2.4x
</TABLE>
PROJECT HORIZON 4-4 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 19
SUMMARY OF ANALYSES
- --------------------------------------------------------------------------------
IMPLIED PREMIUMS PAID ANALYSIS - MERGER AND ACQUISITION TRANSACTIONS
<TABLE>
<CAPTION>
HORIZON Minimum Mean Median Maximum
9/8/99(1) 1/26/00
---------------------
<S> <C> <C> <C> <C> <C> <C>
Implied Premium 1 Day Prior 23.5% -7.7% -29.3% 24.0% 30.7% 67.5%
Implied Premium 15 Days Prior 23.5% 1.2% -33.2% 36.7% 40.7% 67.5%
Implied Premium 30 Days Prior 22.6% 2.4% -50.7% 42.9% 38.5% 121.0%
</TABLE>
IMPLIED PREMIUMS PAID ANALYSIS - GOING PRIVATE TRANSACTIONS
<TABLE>
<CAPTION>
HORIZON Minimum Mean Median Maximum
9/8/99(1) 1/26/00
---------------------
<S> <C> <C> <C> <C> <C> <C>
Implied Premium 1 Day Prior 23.5% -7.7% 2.6% 28.5% 22.6% 56.3%
Implied Premium 15 Days Prior 23.5% 1.2% 4.2% 31.1% 26.7% 58.7%
Implied Premium 30 Days Prior 22.6% 2.4% 3.6% 37.3% 39.0% 77.8%
</TABLE>
(1) Announcement of receipt of proposal from management.
PROJECT HORIZON 4-5 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 20
SUMMARY OF ANALYSES
- --------------------------------------------------------------------------------
COMPARABLE PUBLIC COMPANY ANALYSIS
<TABLE>
<CAPTION>
(IN THOUSANDS) HORIZON Minimum Mean Median Maximum
<S> <C> <C> <C> <C> <C>
Price/Tangible Book Value (As of 9/30/99) 1.1x 0.2x 1.2x 0.9x 3.3x
Price/LTM Earnings (Through 9/30/99) 9.2x 1.1x 5.6x 6.9x 7.6x
Price/1999 Calendar Earnings 11.4x 1.3x 9.7x 9.7x 18.1x
Price/2000 Calendar Earnings 9.6x 0.9x 14.0x 10.3x 34.5x
</TABLE>
PROJECT HORIZON 4-6 U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 21
PORTFOLIO RUN-OFF AND LIQUIDATION/SALE ANALYSES
- --------------------------------------------------------------------------------
Overview
PORTFOLIO RUN-OFF ANALYSIS
- The portfolio run-off analysis assumes Horizon's leasing operations were
to cease and its operating and direct finance lease portfolios run-off,
with the Company servicing and collecting the remaining contractual lease
payments. The priority on cash receipts is as follows: (i) retire
Horizon's debt and then (ii) the remaining cash flow belongs to the
Company's shareholders.
PORTFOLIO LIQUIDATION/SALE ANALYSIS
- The portfolio liquidation analysis calculates the present value of
Horizon's existing operating and direct finance lease portfolios, net of
the underlying debt.
Key Assumptions
- Equipment residual values are realized at an assumed percentage
of net book value (75%, 100% or 125%) one month after the last
contractual lease payment.
- Lessees provide 90-day notice on all leases currently classified
as month-to-month, resulting in the realization of three
additional residual lease payments.
- Discount rates ranged from 14% to 18%.
PROJECT HORIZON U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 22
DISCOUNTED DIVIDEND STREAM ANALYSIS
- --------------------------------------------------------------------------------
Overview
- The discounted dividend stream analysis is used to calculate a
range of theoretical values for Horizon based upon the following two
components: (i) the present value of future dividends that could be
paid by Horizon while maintaining an assumed required capital ratio
and (ii) the present value of Horizon's terminal value, which is an
estimate of the future value of the Company, calculated as a multiple
of estimated net income at the end of the projection period.
Key Assumptions
- Projected net income derived from Horizon's projection model.
- Implied dividend income assumes that Horizon maximizes its
dividend payout each year, subject to the constraint of
maintaining an assumed required capital ratio (tangible
equity/tangible assets) of 25%.
- Terminal value multiples ranged from 7.0x to 11.0x Horizon's
fiscal 2005 net income.
- Discount rates ranged from 14% to 18%.
PROJECT HORIZON U.S. BANCORP PIPER JAFFRAY INC.
<PAGE> 23
<TABLE>
<CAPTION>
HORIZON
-----------------------------------------------------------
Discounted Dividend Stream Analysis Piper Jaffray Inc.
(figures in thousands) 1/27/00 12:18 PM
- ------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------
Projected
-----------------------------------------------------------
Year Ended March 31,
2001 2002 2003 2004 2005
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $ 3,991 $ 6,265 $ 6,781 $ 6,604 $ 6,184
Net Synergies 0 0 0 0 0
-----------------------------------------------------------
$ 3,991 $ 6,265 $ 6,781 $ 6,604 $ 6,184
% Growth NA 57.0% 8.2% -2.6% -6.4%
Dividend Payout Ratio 0% 0% 29% 107% 105%
-----------------------------------------------------------
Implied Dividend Income $ 0 $ 0 $ 1,969 $ 7,078 $ 6,474
Terminal Value @ 9.0x 2005 Net Income $ 0 $ 0 $ 0 $ 0 $ 55,656
-----------------------------------------------------------
Total Value of Dividend Stream $ 0 $ 0 $ 1,969 $ 7,078 $ 62,130
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Structure
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period Tangible Assets $177,560 $188,096 $189,028 $187,134 $185,974
% Growth 6% 0% -1% -1%
Required Capital Ratio 20.38% 22.57% 25.00% 25.00% 25.00%
Required Equity 36,180 42,445 47,257 46,784 46,494
Beginning Tangible Stockholders' Equity (3/31/00) $ 32,189 $ 36,180 $ 42,445 $ 47,257 $ 46,784
Net Income $ 3,991 $ 6,265 $ 6,781 $ 6,604 $ 6,184
-----------------------------------------------------------
Ending Tangible Stockholders' Equity $ 36,180 $ 42,445 $ 49,226 $ 53,861 $ 52,967
Implied Dividend Income - Excess Equity(1) $ 0 $ 0 $ 1,969 $ 7,078 $ 6,474
Ending Stockholders' Equity $ 36,180 $ 42,445 $ 47,257 $ 46,784 $ 46,494
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------
NET PRESENT VALUE (@ 25.00% EQUITY) 1/27/00
- -------------------------------------------------------
<S> <C>
NPV of Dividend Income $ 8,253
NPV of Terminal Value $26,498
-----------
Total Value of Dividend Stream $34,751
Shares Outstanding: 6,783
Per Share Value: $ 5.12
- --------------------------------------------------------
- --------------------------------------------------------
Assumptions:
- ------------
Discount Rate 16.0%
Net Income Multiple: 9.0x
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Sensitivity Analysis on Total Value of Dividend Stream - Aggregate Value
- -------------------------------------------------------------------------
Net Income Multiple
7.0x 9.0x 11.0x
-------------------------------------
<S> <C> <C> <C> <C>
Discount 14.0% $31,364 $37,788 $44,211
Rate 16.0% $28,863 $34,751 $40,640
18.0% $26,600 $32,007 $37,413
- -------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------
Sensitivity Analysis on Total Value of Dividend Stream - Per Share
- -------------------------------------------------------------------------
7.0x 9.0x 11.0x
-------------------------------------
<S> <C> <C> <C> <C>
Discount 14.0% $ 4.62 $ 5.57 $ 6.52
Rate 16.0% $ 4.26 $ 5.12 $ 5.99
18.0% $ 3.92 $ 4.72 $ 5.52
- -------------------------------------------------------------------------
</TABLE>
(1) Based on assumption that all excess capital is paid out in dividends.
PROJECT HORIZON
<PAGE> 24
COMPARABLE MERGER AND ACQUISITION TRANSACTION ANALYSIS
- --------------------------------------------------------------------------------
OVERVIEW
- - The comparable merger and acquisition transaction analysis completed by US
Bancorp Piper Jaffray included a review of transactions involving commercial
specialty finance companies deemed similar to Horizon.
- - The group of transactions analyzed had announcement dates ranging from January
1, 1996 to present and deal values not exceeding $100.0 million.
- - Disclosed information regarding such transactions is often incomplete,
however, especially for deals involving acquisitions of or by privately held
companies. US Bancorp Piper Jaffray's analysis is based upon information
obtained from SEC filings, public company disclosures, press releases,
industry and popular press reports, certain databases and other sources
believed to be reliable.
- - The group of comparable merger and acquisition transactions was analyzed with
respect to Horizon's transaction value/LTM earnings and transaction value/book
value multiples.
- Book value and earnings purchase price multiples in excess of 3.5x and
30.0x, respectively, were deemed not meaningful.
Project Horizon U.S. Bancorp Piper Jaffray Inc.
<PAGE> 25
IMPLIED PREMIUMS PAID ANALYSIS
- --------------------------------------------------------------------------------
OVERVIEW
- - US Bancorp Piper Jaffray reviewed premiums paid relative to pre-announcement
trading prices for a group of merger and acquisition transactions involving
commercial specialty finance companies deemed similar to Horizon. In addition,
U.S. Bancorp Piper Jaffray reviewed premiums paid relative to pre-announcement
trading prices for a group of going private transactions with deal values less
than $100.0 million where the acquiror owned in excess of 50% of the entity's
outstanding common stock.
- - Both groups of transactions analyzed had announcement dates ranging from
January 1, 1996 to present.
- - This analysis examines the difference between the transaction value and the
target's market capitalization at distinct points in time prior to the
announcement of the transaction. US Bancorp Piper Jaffray's analysis is based
upon information obtained from SEC filings, public company disclosures, press
releases, industry and popular press reports, certain databases and other
sources believed to be reliable.
Project Horizon U.S. Bancorp Piper Jaffray Inc.
<PAGE> 26
SELECTED FINANCE COMPANY DEALS 1/1/96 - 1/26/00
- --------------------------------------------------------------------------------
PREMIUM ANALYSIS
<TABLE>
<CAPTION>
ANNOUNCEMENT
DATE BUYER SELLER
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/20/99 Integrated Capital Associates Inc. PSG PS Group Holdings Inc.
11/12/99 AFS Associates First Capital Corp. AAC Arcadia Financial Ltd.
10/7/99 INTU Inuit Inc. RCCK Rock Financial Corp.
9/23/99 TXT Textron Inc. LTCH Litchfield Financial Corp.
6/8/99 GM General Motors Corp. BNY Bank of New York Company, Inc.
4/19/99 HF Heller Financial Inc. HCF HealthCare Financial Partners Inc.
3/11/99 BVC Bay View Capital Corp. Franchise Mortgage Acceptance Co.
3/8/99 CIT CIT Group Inc. NCT Newcourt Credit Group Inc.
3/8/99 Rabobank Tokai Bank Ltd.
1/29/99 Atlantic Bank of New York SFUN Standard Funding Corp.
1/7/99 FNV FINOVA Group Inc. Sirrom Capital Corp.
12/16/98 REXI Resource America Inc. Japan Leasing Corp.
11/9/98 AXP American Express Co. ROCF Rockford Industries Inc.
6/19/98 An Inventor Group - Apollo
Mgmt & Interpool XTR XTRA Corp.
4/20/98 AFS Associates First Capital Corp. PAY Morgan Stanley Dean Witter & Co.
3/2/98 BANC BankAtlantic Bancorporation Leasing Technology Inc.
11/17/97 NCT Newcourt Credit Group Inc. Nomura International PLC
11/17/97 Fidelity National Financial, Inc. GFNL Granite Financial Inc.
8/14/97 Allied Capital Lending Corp. ALII Allied Capital Corp.
8/14/97 Allied Capital Lending Corp. ALII Allied Capital Corp. II
8/12/97 USTB UST Corp Firestone Financial Corp.
2/14/97 TCB TCF Financial Corp. WTNR Winthrop Resources Corporation
11/18/96 PBCP Provident Bancorp, Inc. Information Leasing Corporation
11/11/96 HFS HFS Inc. PHH PHH Corp.
11/1/96 Undisclosed Buyer ZCO Ziegler Companies, Inc.
7/25/96 TA Transamerica Corporation Trans Ocean Ltd.
6/17/96 TRN Trinity Industries Inc. TNI Transcisco Industries Inc.
6/6/96 GRS Holding Co. Ltd. AT&T Corp.
2/5/96 BVC Bay View Capital Corporation CTLI CTL Credit, Inc.
<CAPTION>
TARGET STOCK PRICE IMPLIED PREMIUM
ANNOUNCEMENT ----------------------------------------------- -----------------------------------------------
DATE 30 DAYS PRIOR 15 DAYS PRIOR 1 DAY PRIOR 30 DAYS PRIOR 15 DAYS PRIOR 1 DAY PRIOR
- ------------- ----------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/20/99 10.38 10.88 11.00 NA NA NA
11/12/99 3.94 4.00 3.75 24.4% 22.5% 30.7%
10/7/99 16.88 17.75 20.13 36.3% 29.6% 14.3%
9/23/99 18.94 18.00 17.75 29.4% 36.1% 38.0%
6/8/99 NA NA NA NA NA NA
4/19/99 24.88 24.88 29.75 40.7% 40.7% 17.6%
3/11/99 NA NA NA NA NA NA
3/8/99 37.00 27.31 25.81 - 50.7% -33.2% -29.3%
3/8/99 NA NA NA NA NA NA
1/29/99 2.00 2.25 2.63 75.0% 55.6% 33.3%
1/7/99 NA NA NA NA NA NA
12/16/98 NA NA NA NA NA NA
11/9/98 5.38 8.13 11.81 121.0% 46.2% 0.6%
6/19/98 57.81 50.75 46.06 NA NA NA
4/20/98 27.00 27.31 33.00 21.6% 20.2% - 0.5%
3/2/98 NA NA NA NA NA NA
11/17/97 NA NA NA NA NA NA
11/17/97 10.88 10.75 10.75 65.6% 67.5% 67.5%
8/14/97 20.50 20.88 21.50 NA NA NA
8/14/97 20.50 20.88 21.50 NA NA NA
8/12/97 NA NA NA NA NA NA
2/14/97 NA NA NA NA NA NA
11/18/96 NA NA NA NA NA NA
11/11/96 29.13 30.63 30.75 70.0% 61.6% 61.0%
11/1/96 17.88 18.13 18.38 NA NA NA
7/25/96 NA NA NA NA NA NA
6/17/96 25.00 25.13 23.88 NA NA NA
6/6/96 NA NA NA NA NA NA
2/5/96 13.00 11.50 13.75 38.5% 56.5% 30.9%
</TABLE>
<TABLE>
<CAPTION>
1996 - Present
- ----------------------------------------------
<S> <C> <C> <C>
MAXIMUM 121.0% 67.5% 67.5%
MEAN 42.9% 36.7% 24.0%
MEDIAN 38.5% 40.7% 30.7%
MINIMUM -50.7% -33.2% -29.3%
- ----------------------------------------------
</TABLE>
Note:
(1) Finance Company Deals not exceeding $100.0 million in transaction value.
<PAGE> 27
SELECTED GOING PRIVATE DEALS 1/1/96 - 1/25/00
- --------------------------------------------------------------------------------
PREMIUM ANALYSIS
<TABLE>
<CAPTION>
ANNOUNCED TARGET NAME TARGET BUSINESS DESCRIPTION ACQUIROR NAME
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5/21/99 ThermoSpectra(Thermo Insir) Mnfr precision imaging equip Thermo Instrument Systems Inc
3/8/99 ENStar Inc Whl connectivity devices Investor Group
9/4/97 Cinergi Pictures Entertainment Pvd motion picture prodn svcs Investor Group
7/9/97 Seaman Furniture Co Own,op ret furniture stores Investor Group
11/27/96 Central Tractor Farm & Country Own,op tractor, hardware stores JW Childs Equity Partners LP
10/10/96 WCI Steel Inc(Renco Group Inc) Manufacture steel Renco Group Inc
7/3/96 Golden Poultry Co Inc Produce, wholesale poultry Gold Kist Inc
3/29/96 Great American Mgmt & Invt Inc Invt advice and financial svcs Equity Holdings,Chicago,IL
2/5/96 Customedix Corp Mnfr dental, medical products CUS Acquisition Inc
<CAPTION>
VALUE OF
TRANSACTION EQUITY VALUE PREMIUM TO OFFER PRICE (%)
ANNOUNCED ACQUIROR BUSINESS DESCRIPTION ($MIL) ($MIL) 1 DAY PRIOR 15 DAYS PRIOR 30 DAYS PRIOR
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
5/21/99 Mnfr monitoring devices 26.1 251.6 39.1 43.8 61.0
3/8/99 Investor group 13.2 37.2 56.3 58.7 51.5
9/4/97 Investor group 16.3 33.9 26.9 24.7 56.6
7/9/97 Investor group 45.6 122.5 21.5 25.3 21.5
11/27/96 Investment company 56.7 154.0 17.5 17.5 18.8
10/10/96 Mnfr steel products 56.5 364.0 17.6 29.0 77.8
7/3/96 Produce, wholesale poultry 52.1 206.9 52.0 50.0 39.0
3/29/96 Investment firm 63.3 459.8 2.6 4.2 3.6
2/5/96 Investment company 3.6 7.8 22.6 26.7 5.6
</TABLE>
<TABLE>
<CAPTION>
1996-Present
- --------------------------------------
<S> <C> <C> <C>
Maximum 56.3% 58.7% 77.8%
Mean 28.5% 31.1% 37.3%
Median 22.6% 26.7% 39.0%
Minimum 2.6% 4.2% 3.6%
--------------------------------------
</TABLE>
Source: Securities Data Company, Inc.
Note:
(1) Going private deals not exceeding $100.0 million in transaction value where
the acquiror owns at least 51% of the target's equity pre-acquisition and
100% of target's equity post-acquisition.
<PAGE> 28
COMPARABLE PUBLIC COMPANY ANALYSIS
- -------------------------------------------------------------------------------
- - The objective of the comparable public company analysis is to identify a group
of publicly traded companies deemed similar to Horizon. US Bancorp Piper
Jaffray reviewed and compared certain publicly available financial, operating
and market performance data for Horizon's comparable public company group.
- - The comparable public company group was selected based upon, in part, U.S.
Bancorp Piper Jaffray's expertise with companies in the commercial specialty
finance industry. The comparable public company group is composed of the
following entities:
Amplicon, Inc. (AMPI) Resource America, Inc. (REXI)
Electro Rent Corp (ELRC) T & W Financial, Inc. (TWFC)
First Sierra Financial Inc (BTOB) UniCapital Corp (UCP)
Linc Capital, Inc. (LNCC)
- - Our analysis includes a comparison of Horizon's financial data with the
comparable public company group, including, among others, total revenues, net
income, book value and projected earnings per share growth. Selected financial
and market performance data for the comparable public company group and
Horizon is summarized on the following pages.
- - The comparable public company group was analyzed with respect to
Horizon's price/tangible book value. Price/LTM earnings, price/1999
calendar year earnings and price/2000 calendar year earnings multiples.
Project Horizon U.S. Bancorp Piper Jaffray Inc.
<PAGE> 29
HORIZON
- --------------------------------------------------------------------------------
Comparable Company Analysis 1/27/00
($ in millions except per share) 12:18
<TABLE>
<CAPTION>
AVERAGE
LTM NET MARKET DAILY
TICKER QUARTER NET MARGIN VALUE VOLUME
SYMBOL COMPANY DATE REVENUES INCOME (%) OF EQUITY (000S)
- ------ -------------------------- ------- -------- ------ ------ --------- -------
COMPARABLE GROUP
<S> <C> <C> <C> <C> <C> <C> <C>
AMPI AMPLICON INC 9/99 $ 70.7 $ 19.5 27.6 $135.3 0.0
ELRC ELECTRO RENT CORP 11/99 $252.4 $ 26.3 10.4 $273.8 0.0
BTOB FIRST SIERRA FINANCIAL INC 9/99 $ 85.7 ($4.4) NM $412.4 0.3
LNCC LINC CAPITAL INC 9/99 $ 82.5 ($0.2) NM $ 27.0 0.0
REXI RESOURCE AMERICA INC 9/99 $134.8 $ 28.5 21.1 $151.8 0.2
TWFC T & W FINANCIAL CORP 9/99 $ 67.0 $ 4.0 6.0 $ 7.4 0.0
UCP UNICAPITAL CORP 9/99 $821.0 $ 23.9 2.9 $181.3 0.2
MAXIMUM 27.6
MEAN 13.6
MEDIAN 10.4
MINIMUM 2.9
SUNL SUNRISE INTL LEASING CORP 9/99 $ 64.8 $ 3.9 5.9 $ 35.7 0.0
<CAPTION>
01/26/00
STOCK
STOCK PRICE AS 52 WEEK PRICE RANGE
TICKER PRICE A % OF 52 ---------------------
SYMBOL COMPANY 01/26/00 WEEK HIGH LOW HIGH
- ------ -------------------------- -------- --------- ----- ------
COMPARABLE GROUP
<S> <C> <C> <C> <C> <C>
AMPI AMPLICON INC $11.63 75.0% $8.00 - $15.50
ELRC ELECTRO RENT CORP $11.13 79.5% $9.00 - $14.00
BTOB FIRST SIERRA FINANCIAL INC $21.75 72.2% $8.13 - $30.13
LNCC LINC CAPITAL INC $ 5.13 52.6% $3.88 - $ 9.75
REXI RESOURCE AMERICA INC $ 6.88 37.2% $6.50 - $18.50
TWFC T & W FINANCIAL CORP $ 0.88 5.1% $0.63 - $17.25
UCP UNICAPITAL CORP $ 3.44 40.4% $1.56 - $ 8.50
MAXIMUM 79.5%
MEAN 51.7%
MEDIAN 52.6%
MINIMUM 0.1%
SUNL SUNRISE INTL LEASING CORP $ 5.38 92.5% $2.88 - $ 5.81
</TABLE>
Financial data provided by Compustat Data Service.
Analyst: ILS
<PAGE> 30
<TABLE>
<CAPTION>
HORIZON
- -------------------------------------------------------------------------------------------------------------
Comparable Company Analysis 1/27/00
($ in Millions Except Per Share) 12:18
P/E RATIOS MARKET 1999
---------------------------------- VALUE/ CAL. P/E
FISCAL LATEST 1999 2000 "COMPANY TANGIBLE AS A % OF
YEAR TWELVE CALENDAR CALENDAR VALUE"/ COMMON 5-YEAR EPS
COMPANY END MONTHS YEAR YEAR REVENUE EQUITY GROWTH
- ------------------------ ------- --------- ---------- ---------- --------- -------- ------------
COMPARABLE GROUP
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
AMPLICON INC 6/99 7.6 NA NA 4.3x 0.9x NA
ELECTRO RENT CORP 5/99 NA NA NA 1.4x 1.8x NA
FIRST SIERRA FINANCIAL INC 12/98 NM NM 34.5 12.4x 3.3x NA
LINC CAPITAL INC 12/98 NM NM 5.7 5.4x 1.0x NA
RESOURCE AMERICA INC 9/99 6.3 NA NA 4.7x 0.6x NA
T & W FINANCIAL CORP 12/98 1.1 1.3 0.9 3.6x 0.2x NA
UNICAPITAL CORP 12/98 7.5 18.1 14.9 3.4x 0.8x 103.4%
MAXIMUM 7.6 18.1 34.5 12.4x 3.3x 103.4%
MEAN 5.6 9.7 14.0 5.0x 1.2x 103.4%
MEDIAN 6.9 9.7 10.3 4.3x 0.9x 103.4%
MINIMUM 1.1 1.3 0.9 1.4 0.2 1.0
SUNRISE INTL LEASING CORP 6/99 10.5 NA NA 1.7x 1.1x NA
<CAPTION>
EPS ESTIMATES(1)
------------------------------------------------------------------
1999 1999 2000 2000 2001
EPS Fiscal Calendar Fiscal Calendar Fiscal
(LTM) Year Year Year Year Year
-------- -------- ----------- -------- ----------- ---------
COMPANY
- ------------------------
COMPARABLE GROUP
- ----------------
<S> <C> <C> <C> <C> <C> <C>
AMPLICON INC $1.53 $1.60 NA NA NA NA
ELECTRO RENT CORP $1.05 NA NA NA NA NA
FIRST SIERRA FINANCIAL INC ($0.12) $0.11 $0.11 $0.63 $0.63 $1.20
LINC CAPITAL INC ($0.03) $0.06 $0.06 $0.90 $0.90 NA
RESOURCE AMERICA INC $1.09 $1.09 NA NA NA NA
T & W FINANCIAL CORP $0.78 $0.65 $0.65 $1.00 $1.00 NA
UNICAPITAL CORP $0.46 $0.19 $0.19 $0.23 $0.23 NA
MAXIMUM
MEAN
MEDIAN
MINIMUM
SUNRISE INTL LEASING CORP $0.51 $0.45 NA NA NA NA
</TABLE>
(1) Estimates provided as of 1/25/00 by the Institutional Brokers' Estimate
Service (IBES)
<PAGE> 31
HORIZON
- --------------------------------------------------------------------------------
Comparable Company Analysis 1/27/00
($ in millions except per share) 12:18
<TABLE>
<CAPTION>
FISCAL YEAR END
COMPOUND
REVENUE %
REVENUES GROWTH RATES (1)
LATEST ----------------------------------- (-2 YEARS TO
COMPANY YEAR -2 YEARS -1 YEAR LATEST YEAR LATEST YEAR)
- --------------------------- ------ -------- ------- ------------ -----------------
COMPARABLE GROUP
- ----------------
<S> <C> <C> <C> <C> <C>
AMPLICON INC 6/99 $ 64.1 $ 65.8 $ 71.2 5.4
ELECTRO RENT CORP 5/99 $ 150.5 $ 255.5 $ 269.7 33.9
FIRST SIERRA FINANCIAL INC 12/98 $ 23.4 $ 51.6 $ 61.1 61.7
LINC CAPITAL INC 12/98 $ 36.1 $ 41.7 $ 73.0 42.3
RESOURCE AMERICA INC 9/99 $ 32.9 $ 81.1 $ 145.1 109.9
T & W FINANCIAL CORP 12/98 $ 19.5 $ 29.3 $ 65.3 83.0
UNICAPITAL CORP 12/98 NA NA $ 510.9 NA
Maximum 109.9
Mean 56.0
Median 52.0
Minimum 5.4
SUNRISE INTL LEASING CORP 6/99 $ 43.0 $ 49.1 $ 51.6 9.6
<CAPTION>
FISCAL YEAR END
COMPOUND
EPS % 5-YEAR
EARNINGS PER SHARE GROWTH RATES (1) ESTIMATED
----------------------------------- (-2 YEARS TO EPS %
COMPANY -2 YEARS -1 YEAR LATEST YEAR LATEST YEAR) GROWTH RATE
- --------------------------- --------- ------- ----------- ----------------- -----------
COMPARABLE GROUP
- ----------------
<S> <C> <C> <C> <C> <C>
AMPLICON INC $ 1.31 $ 1.55 $ 1.60 10.5 NA
ELECTRO RENT CORP $ 0.97 $ 1.29 $ 0.96 -0.5 NA
FIRST SIERRA FINANCIAL INC $ 0.41 $ 1.03 ($ 0.43) NM 60.0
LINC CAPITAL INC $ 0.45 $ 0.72 $ 0.86 38.2 25.0
RESOURCE AMERICA INC $ 0.62 $ 0.84 $ 1.60 60.6 NA
T & W FINANCIAL CORP $ 1.06 $ 1.14 $ 2.00 37.4 NA
UNICAPITAL CORP NA NA $ 0.72 NA 17.5
MAXIMUM 60.6 60.0
MEAN 29.2 34.2
MEDIAN 37.4 25.0
MINIMUM -0.5 17.5
SUNRISE INTL LEASING CORP ($ 0.35) $ 0.29 $ 0.45 NM NA
</TABLE>
<PAGE> 32
HORIZON
- --------------------------------------------------------------------------------
Comparable Company Analysis 1/27/00
($ in millions except per share) 12:18
<TABLE>
<CAPTION>
BOOK VALUE
---------------------------------
FYE QUARTERLY RECENT SHARES
INTANGIBLE STOCKHOLDERS' PRICE OUTSTANDING MARKET
COMPANY ASSETS EQUITY 1/26/00 X (000s) = CAPITALIZATION +
- ---------------------------- ---------- ------------- ------- ----------- --------------
COMPARABLE GROUP
- ----------------
<S> <C> <C> <C> <C> <C>
AMPLICON INC $ 0.0 $155.2 $11.63 11,640 $135.3
ELECTRO RENT CORP $ 60.6 $209.0 $11.13 24,614 $273.8
FIRST SIERRA FINANCIAL INC $ 41.4 $165.4 $21.75 18,963 $412.4
LINC CAPITAL INC $ 15.5 $ 42.4 $ 5.13 5,265 $ 27.0
RESOURCE AMERICA INC $ 0.0 $254.7 $ 6.88 22,074 $151.8
T & W FINANCIAL CORP $ 19.8 $ 57.6 $ 0.88 8,431 $ 7.4
UNICAPITAL CORP $616.2 $833.2 $ 3.44 52,743 $181.3
SUNRISE INTL LEASING CORP $ 0.0 $ 31.5 $ 5.38 6,633 $ 35.7
<CAPTION>
LATEST QUARTERLY DATA
-------------------------------------------------------------------------
LONG-TERM SHORT-TERM PREFERRED CASH ON "COMPANY
COMPANY DEBT + DEBT + STOCK - BALANCE SHEET = VALUE"
- ---------------------------- --------- ---------- --------- ------------- -------
COMPARABLE GROUP
- ----------------
<S> <C> <C> <C> <C> <C>
AMPLICON INC $ 234.7 $0.0 $0.0 $65.1 $ 304.9
ELECTRO RENT CORP $ 68.4 $0.0 $0.0 $ 0.9 $ 341.4
FIRST SIERRA FINANCIAL INC $ 680.6 $0.0 $0.5 $28.0 $1,065.5
LINC CAPITAL INC $ 430.0 $0.0 $0.0 $ 9.1 $ 447.8
RESOURCE AMERICA INC $ 517.4 $6.9 $0.0 $45.4 $ 630.7
T & W FINANCIAL CORP $ 235.3 $0.0 $0.0 $ 0.4 $ 242.3
UNICAPITAL CORP $2,676.8 $0.0 $0.0 $40.1 $2,818.0
SUNRISE INTL LEASING CORP $ 76.8 $0.0 $0.0 $ 2.4 $ 110.1
</TABLE>
