HEALTH POWER INC /DE/, SC 13E3, EX-99.(C)(4), 2000-09-21

HEALTH POWER INC /DE/
SC 13E3, EX-99.(C)(4), 2000-09-21
HOSPITAL & MEDICAL SERVICE PLANS

Previous: HEALTH POWER INC /DE/, SC 13E3, EX-99.(C)(3), 2000-09-21

Next: HEALTH POWER INC /DE/, SC 13E3, EX-99.(D)(6), 2000-09-21

EXHIBIT 99(c)(4)

May 9, 2000 (Revised 9/12/00 to reflect changes in expense structure)

Presentation to The Board of Directors
Project Phoenix

Table of Contents

1.		Executive Summary and Transaction Overview

2.		Valuation Analysis

3.		Stock Premium Analysis

Exhibits

A.		Discounted Cashflow Analysis ("DCF")

B.		Comparable Public Company - Trading Multiple Analysis

C.		Comparable Acquisition Analysis

D.		Draft - Fairness Opinion Letter

Executive Summary and Transaction Overview

Transaction Overview and Executive Summary

This presentation is intended to provide the Board of Directors of Health Power, Inc. (“HPWR”) an overview of the proposed sale of the Company to Security Capital Corporation (“SCC”). The proposed Total Consideration would be $36.250 million prior to change of control bonus payments to management ($4.743mm), payment of the Company’s debt ($2.751mm), payment of stock options ($.471mm) and estimated Transaction Expenses ($1.125mm) which would provide the shareholders with $27.16mm or $6.98 per share.

Summary Terms	Anticipated Timing		Estimated Transaction Multiples
Total Consideration of $36.250 million.	Event	Date		Actual 1999	Transaction Multiples⁽¹⁾
$6.98 per share implies an Equity Value of approximately $27.16 million, based on projected net indebtedness (debt less cash), stock option payments, change of control bonuses to management and transaction expenses of $2.751mm, $.471mm, $4.743mm and $1.125mm.	Board Approval	<TBD>		Revenues ($38.3) EBITDA⁽⁴⁾ ($4.6) EBIT⁽⁴⁾ ($3.2)	0.95x 7.88x 11.33x
	Merger Agreement Signed / Announcement	<TBD>		Revenues ($38.3) EBITDA⁽⁴⁾ ($4.6) EBIT⁽⁴⁾ ($3.2)	0.95x 7.88x 11.33x
					Transaction
Approximately $27.16 million in cash for all of the outstanding shares - 3,887,785.	File with SEC	<TBD>		2000⁽²⁾ Revenues ($49.5) EBITDA⁽²⁾ ($9.7) EBIT⁽²⁾ ($8.3)	Multiples⁽¹⁾ 0.73x 3.74x 4.37x
Deal capitalized with $ million of equity capital from SCC and $ million of rollover equity capital from the management of CompManagement.	SEC Effective Notice of Shareholders Meeting	<TBD> <TBD>			Multiples⁽¹⁾ 0.73x 3.74x 4.37x
					Transaction
Senior Debt funding provided by in the amount of $ million. (Being finalized by SCC)	Shareholders Meeting	<TBD>		Revised 2000⁽³⁾ Revenues ($47.1) EBITDA⁽³⁾ ($8.1) EBIT⁽³⁾ ($6.7)	Multiples⁽¹⁾ 0.77x 4.5x 5.4x
Due diligence on Health Power is substantially complete. SCC expects to finalize this by , 2000.	Closing	<TBD>			Multiples⁽¹⁾ 0.77x 4.5x 5.4x
Subject to antitrust approval (HSR)
			(1)	Based on a Total Gross Consideration of $36.25 million.
			(2)	Based on projections provided by management and included in the Confidential Offering Memorandum.
			(3)	Management revised financial information on February 2, 2000 and updated the financial information on May 2, 2000.

Valuation Analysis

Equity Purchase Price Calculation

HPWR Equity Purchase Price Calculation

				Adjustments ⁽¹⁾


Total Gross Consideration:	$	36,250,000

Adjustments:
Management Change of Control Payments ⁽²⁾	($	4,742,727	)
Net Debt (estimated at time of closing to be $2,750,996) ⁽³⁾	($	2,750,996	)
Payment of Stock Options	($	471,163	)
Transaction Expenses (estimate @ closing) ⁽⁴⁾	($	1,125,000	)

Net Adjustments:	($	9,089,886	)

Estimated Equity Value Purchase Price	$	27,160,164
Approx. Shares and Options Outstanding at Closing		3,887,785

Estimated Equity Value Purchase Price Per Share	$	6.98


Note:	(1)	All figures provided by management of the Company.
	(2)	Assumes that Management receives change of control payments of $4.743mm at the closing of the transaction.
	(3)	Assumes net debt level of $2.751mm million at closing, as indicated by Management.
	(4)	As indicated by Management.

Alternative Valuation Methods Employed

[FLOW CHART APPEARS HERE]

Discounted Cash Flow Analysis Ÿ Present value of projected unlevered free cash flows "Inherent" value of businesses	DCF Issues Ÿ Financial forecasts developed by management Ÿ Discount rate Ÿ Terminal value

		Valuation Reference Range Ÿ Analysis weighted toward DCF Analysis Ÿ Compcos and Compaqs do not internalize working capital issues
Comparable Company Analysis Ÿ "Public" Market Value Based on trading value of comparable companies relative to appropriate benchmarks	Compco Issues Ÿ Quality of comparables Ÿ Based upon Public Data


Comparable Acquisition Analysis Ÿ "Private" Market Valuation Values based on multiples paid for comparable companies in acquisition transactions	Compaq Issues Ÿ Quality of comparables Ÿ Availability of data Ÿ Consistency of Accounting Ÿ Impacted by deal-specific issues (i.e., synergies)

HPWR Operating Performance & Projections


HPWR Operating Performance and Projections (Dollars in millions)



	Raymond James Confidential Offering Memorandum		HPWR Management Presentation		HPWR Management Estimates as of 5/2/00 ⁽²⁾		Figures Utilized by Raymond James
Revenues ^{(1) / (2)}
1999Actual	$	37,047	$	37,047	$	38,262	$	38,262
2000E	$	49,516	$	49,516	$	47,093	$	47,093
2001E	$	53,071	$	53,071	$	50,564	$	50,564
2002E		N/A		N/A	$	56,184	$	56,184
2003E		N/A		N/A	$	59,485	$	59,485
2004E		N/A		N/A	$	64,243	$	64,243

EBITDA ^{(1) / (2)}

1999Actual	$	7,170	$	7,170	$	4,626	$	4,626
2000E	$	9,671	$	9,671	$	8,128	$	8,128
2001E	$	10,883	$	10,883	$	9,634	$	9,634
2002E		N/A		N/A	$	12,312	$	12,312
2003E		N/A		N/A	$	13,200	$	13,200
2004E		N/A		N/A	$	13,945	$	13,945

EBIT ^{(1) / (2)}

1999 Actual	$	5,764	$	5,764	$	3,220	$	3,220
2000E	$	8,347	$	8,347	$	6,650	$	6,650
2001E	$	9,560	$	9,560	$	8,357	$	8,357
2002E		N/A		N/A	$	11,035	$	11,035
2003E		N/A		N/A	$	11,923	$	11,923
2004E		N/A		N/A	$	12,668	$	12,668

                    (1)      EBITDA and EBIT for 2000-2004 were derived by Raymond James utilizing projections from the Company's senior
                              management.
                    (2)      1999 Financial figures are actual for the columns entitled HPWR Management Estimates as of 5/2/00 and Figures Utilized
                             by Raymond James.

Valuation Summary of HPWR

*(Dollars in millions)*

	IMPLIED ENTERPRISE VALUE

VALUATION METHOD	RANGE					MEAN		MEDIAN


*Comparable Public Companies*
Sales	$	7.7	–	$	160.8	$	53.6	$	30.6
EBITDA	$	11.5	–	$	87.9	$	37.7	$	35.0
EBIT	$	11.8	–	$	173.4	$	52.8	$	39.4
1999 Net Income	$	7.8	–	$	37.7	$	23.4	$	23.6
2000 Net Income	$	22.1	–	$	70.8	$	42.3	$	30.9

*Discounted Cash Flow*
Values from DCF Matrix	$	27.6	–	$	36.1	$	31.3	$	31.3

*Precedent M&A Transactions*
Sales	$	15.3	–	$	287.0	$	65.0	$	45.9
EBITDA	$	18.0	–	$	96.1	$	52.9	$	43.2

(1) Mean of DCF Matrix represents a 17% discount rate and a 4.2 multiple of 2004 EBITDA.

Valuation Summary of HPWR

(Dollars in millions)

TOTAL
CONSIDERATION
AS A MULTIPLE
OF 1999 ACTUAL

TOTAL
CONSIDERATION
AS A MULTIPLE
OF 2000E⁽¹⁾

METHODOLOGY

TOTAL GROSS
CONSIDERATION
REFERENCE
RANGE⁽²⁾

EQUITY
REFERENCE
RANGE⁽²⁾

EQUITY
REFERENCE
RANGE⁽²⁾ / SHARE

NET
SALES
($38.3)

EBITDA
($4.6)

EBIT
($3.2)

NET
SALES
($47.1)

EBITDA
($8.1)

EBIT
($6.7)

Proposed Consideration

$36.25

$27.16

$6.98

0.9x

7.9x

11.3x

0.8x

4.5x

5.4x

Discounted Cash Flow⁽³⁾

$36.7 - $45.2

$27.6 - $36.1

$7.10 - $9.29

1.0x - 1.2x

8.0x - 9.8x

11.5x - 14.1x

0.8x - 1.0x

4.5x - 5.6x

5.5x - 6.7x

Comparable Companies

$32.1 - $41.9

$23.0 - $32.8

$5.91 - $8.44

0.8x - 1.1x

7.0x - 9.1x

10.0x - 13.1x

0.7x - 0.9x

4.0x - 5.2x

4.8x - 6.3x

Comparable Acquisitions ⁽⁴⁾

$44.6 - $59.0

$35.5 - $49.9

$9.13 - $12.84

1.2x - 1.5x

9.7x - 12.8x

13.9x - 18.4x

0.9x - 1.3x

5.5x - 7.3x

6.6x - 8.8x

Reference Range Avg.

$37.8 - $48.7

$28.7 - $39.6

$7.38 - $10.19

1.0x - 1.2x

8.2x - 10.6x

11.8x - 15.2x

0.8x - 1.1x

4.7x - 6.0x

5.6x - 7.3x

Less: Net Debt⁽²⁾

($9.1) - ($9.1)

Equity Ref. Range
$28.7 - $39.6

$7.38 - $10.19


				TOTAL CONSIDERATION AS A MULTIPLE OF 1999 ACTUAL	TOTAL CONSIDERATION AS A MULTIPLE OF 2000E⁽¹⁾
METHODOLOGY	TOTAL GROSS CONSIDERATION REFERENCE RANGE⁽²⁾	EQUITY REFERENCE RANGE⁽²⁾	EQUITY REFERENCE RANGE⁽²⁾ / SHARE	NET SALES ($38.3)	EBITDA ($4.6)	EBIT ($3.2)	NET SALES ($47.1)	EBITDA ($8.1)	EBIT ($6.7)


Proposed Consideration	$36.25	$27.16	$6.98	0.9x	7.9x	11.3x	0.8x	4.5x	5.4x

Discounted Cash Flow⁽³⁾	$36.7 - $45.2	$27.6 - $36.1	$7.10 - $9.29	1.0x - 1.2x	8.0x - 9.8x	11.5x - 14.1x	0.8x - 1.0x	4.5x - 5.6x	5.5x - 6.7x
Comparable Companies	$32.1 - $41.9	$23.0 - $32.8	$5.91 - $8.44	0.8x - 1.1x	7.0x - 9.1x	10.0x - 13.1x	0.7x - 0.9x	4.0x - 5.2x	4.8x - 6.3x
Comparable Acquisitions ⁽⁴⁾	$44.6 - $59.0	$35.5 - $49.9	$9.13 - $12.84	1.2x - 1.5x	9.7x - 12.8x	13.9x - 18.4x	0.9x - 1.3x	5.5x - 7.3x	6.6x - 8.8x

Reference Range Avg.	$37.8 - $48.7	$28.7 - $39.6	$7.38 - $10.19	1.0x - 1.2x	8.2x - 10.6x	11.8x - 15.2x	0.8x - 1.1x	4.7x - 6.0x	5.6x - 7.3x

Less: Net Debt⁽²⁾	($9.1) - ($9.1)


Equity Ref. Range	$28.7 - $39.6		$7.38 - $10.19

(1) For the year ended December 31. Projections were provided by the management of the Company on 2/2/00 and then revised on 5/2/00.

(2) Assumes net debt (debt less cash) of $2.751 million at the closing as indicated by Management, Management Change of Control Contracts due at the closing of the transaction of $4.743 million, Option Payments of $.471mm and Transactions Expenses of $1.125 million. Financial projections are based on information provided by Company management. Also assumes 3,887,785 total shares outstanding.

(3) Assumes a terminal value multiple of 4.0x - 4.4x and a discount rate of 15.0%-19.0%

(4) Range utilizes the Mean and Median Multiples from the Analysis

Discounted Cash Flow Analysis

The discounted cash flow analysis is based upon 2000-2004 forecasts provided by the management of Health Power. These forecasts were initially put together completed in August, 1999 and subsequently updated in February, 2000 and finalized for purposes of this presentation in May, 2000.

Discounted Cash Flow Analysis
(Dollars in millions)


Total Consideration Reference Range		$36.7		—	$45.2
Equity Value Reference Range⁽¹⁾		$27.6		—	$36.1
Per Share Value Reference Range⁽¹⁾		$7.10		—	$9.29
Discount Rate		15.0	%	—	19.0	%
Terminal Value EBITDA Multiple		4.0x		—	4.4x

Multiple of 12/31/99A:

Revenues	$38.2	1.0x			1.2x
EBITDA	$ 4.6	8.0x			9.8x
EBIT	$ 3.2	11.5x			14.1x

Multiple of 12/31/00E: ⁽²⁾

Revenues	$47.1	0.8x			1.0x
EBITDA	$ 8.1	4.5x			5.6x
EBIT	$ 6.7	5.5x			6.7x


(1)	Assumes net debt (debt less cash) of $2.751 million at the closing as indicated by management, Management Change of Control Contracts due at the closing of the transaction of $4.743 million, Option Payments of $.471million and Transaction Expenses of $1.125 million. Financial projections are based on information provided by Company management. Also assumes 3,887,785 total shares outstanding.


(2)	Revised projections were provided by HPWR’s management on 2/2/00 and updated on May 2, 2000.

Comparable Company Analysis

As comparable public companies, publicly traded companies within the same industry with operations similar to HPWR were chosen, including health care cost containment companies.

Comparable Companies Valuation Summary
*(Dollars in millions)*

	COMPANY DATA	MULTIPLE RANGE ⁽¹⁾⁽³⁾			IMPLIED TOTAL CONSIDERATION REFERENCE RANGE			IMPLIED EQUITY REFERENCE RANGE⁽²⁾			IMPLIED EQUITY REFERENCE RANGE⁽²⁾ /SHARE
1999Actual Sales	$38.2	0.8	—	1.4	$30.6	—	$53.5	$21.5	—	$44.4	$ 5.53—$11.42
1999Actual EBITDA	$ 4.6	7.6	—	8.2	$35.0	—	$37.7	$25.9	—	$28.6	$ 6.66—$ 7.35
1999Actual EBIT	$ 3.2	12.3	—	16.5	$39.4	—	$52.8	$30.3	—	$43.7	$ 7.79—$11.24
1999Actual Earnings	$ 4.5	13.8	—	13.9	$62.5	—	$63.0	$53.4	—	$53.9	$13.74—$13.86
1999Adjusted Earnings⁽³⁾	$ 1.7	13.8	—	13.9	$23.5	—	$23.6	$14.4	—	$14.5	$ 3.70—$ 3.73


Reference Range⁽⁴⁾	(1999 Average)				$32.1	—	$41.9	$23.0	—	$32.8	$ 5.91—$ 8.44

(1)

Multiple Range consists of the Median and the Mean.

(2)
Assumes net debt (debt less cash) of $2.751 million at closing as indicated by Management, Management Change of Control Contracts due at the closing of the transactions of $4.743 million, Option Payments of $.471 million and Transaction Expenses of $1.125 million. Financial projections are based on information provided by Company management. Also assumes 3,887,785 total shares outstanding.

(3)

1999 Actual Earnings include a one time tax benefit related to a reverse of valuation allowance of approximately $2.8 million.

(4)

1999 Actual Earnings figures not utilized for purpose of reference range.

Comparable Acquisitions Analysis


Summary of Comparable Acquisitions Analysis (Dollars in millions)
	COMPANY DATA	MULTIPLE RANGE(1)			IMPLIED TOTAL CONSIDERATION REFERENCE RANGE			IMPLIED EQUITY REFERENCE RANGE ⁽²⁾			IMPLIED EQUITY REFERENCE RANGE ⁽²⁾ /SHARE

1999 Actual Sales	$38.2	1.2	—	1.7	$45.9	—	$65.1	$36.8	—	$56.0	$9.47 — $14.41
1999 Actual EBITDA	$4.6	9.4	—	11.5	$43.2	—	$52.9	$34.1	—	$43.8	$8.77 — $11.26





Reference Range:	(1999 Average)				$44.6	—	$59.0	$35.5	—	$49.9	$9.13 — $12.84

(1)		Multiple Range consists of the Median and the Mean.
(2)		Assumes net debt (debt less cash) of $2.751 million at closing as indicated by management, Management Change of Control Contracts due at the closing of the transaction of $4.743 million, option payments of $.471 million and Transaction Expenses of $1.125 million. Financial Projects are based on information provided by Company Management. Also assumes 3,887,785 total shares outstanding.

Stock Premium Analysis

Recent Acquisitions
Offer Price Premium to Stock Price Prior to Announcement

Target	Acquiror	Date Announced	Offer Price	Type of Consideration	Prior to Transaction Announcements
					30 Business Days				60 Business Days			90 Business Days
					Premium			Price	Premium		Price	Premium		Price
United Payors & United Providers	BCE Emergis, Inc.	2/7/00	$27.00	Cash		66.80	%	$16.19	80.00	%	$15.00	57.66	%	$17.13
Sheridan Healthcare Inc.	Management & Vestar Capital Partners	3/25/99	$ 9.25	Cash/Debt		15.63	%	$ 8.00	32.14	%	$ 7.00	25.42	%	$ 7.38
Concentra Managed Care, Inc.	Welsh, Carson, Anderson & Stowe	3/3/99	$16.50	Stock/Debt		50.00	%	$11.00	45.05	%	$11.38	50.00	%	$11.00
Compdent Corporaiton	Goldner Thoma, TA Associates & NMS	7/28/98	$15.00	Cash		17.65	%	$12.75	12.15	%	$13.38	-4.00	%	$15.63
MedCath Inc.	Kohlberg, Kravis & Roberts, Welsh Carson	3/13/98	$19.00	Cash		44.76	%	$13.13	24.59	%	$15.25	20.63	%	$15.75
United Dental Care, Inc.	Protective Life Corp	3/11/98	$ 9.31	Cash/Stock		-19.91	%	$11.63	-19.91	%	$11.63	-31.67	%	$13.63
Emcare Holdings Inc.	Laidlaw Inc.	7/30/97	$38.00	Cash/Debt		16.03	%	$32.75	29.91	%	$29.25	37.56	%	$27.63
Value Health Inc.	Columbia/HCA Healthcare Corporation	1/15/97	$20.50	Cash		13.89	%	$18.00	13.10	%	$18.13	35.54	%	$15.13


			Average			25.60	%		27.13	%		23.89	%
			Median			16.84	%		27.25	%		30.48	%
			Low			-19.91	%		-19.91	%		-31.67	%
			High			66.80	%		80.00	%		57.66	%

Health Power, Inc.	Security Capital Corporation	TBD	$6.98	Cash		93.89	%	$3.60	118.81	%	$3.19	140.69	%	$2.90

Health Power, Inc.
Stock Premium Analysis
Summary as of May 3, 2000

[CHART APPEARS HERE]


	Average HPWR Stock Price		Average HPWR Offer Price		Average HPWR Premium
Last 10 days	$	3.06	$	6.98	128.1%
Last 30 days	$	3.60	$	6.98	93.9%
Last 60 days	$	3.19	$	6.98	118.8%
Last 90 days	$	2.90	$	6.98	140.7%
Last 180 days	$	2.37	$	6.98	94.5%

Health Power, Inc.
Stock Premium Analysis
Last 10 Days as of May 3, 2000

[GRAPH APPEARS HERE]

	4/17/00	4/18/00	4/19/00	4/20/00	4/25/00	4/26/00	4/27/00	4/28/00	5/1/00	5/2/00
—Stock Price	3	3	3	3	3.25	2.875	3.25	3.25	3	3
—Purchase Price	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98

—Stock Price —Purchase Price

Health Power, Inc.
Stock Premium Analysis
Last 30 Days as of May 3, 2000

[GRAPH APPEARS HERE]

	3/20/00	3/22/00	3/23/00	3/27/00	3/29/00	3/30/00	4/3/00	4/5/00	4/6/00	4/10/00	4/12/00	4/13/00	4/17/00	4/19/00	4/20/00	4/26/00	4/28/00	5/1/00
— Stock Price	3.625	3.5	3.5	4	4.5	4.5	4.375	4.375	4.375	3.25	3	3	3	3	3	2.875	3.25	3
— Purchase Price	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98


— Stock Price — Purchase Price

Health Power, Inc.
Stock Premium Analysis
Last 60 Days as of May 3, 2000

[GRAPH APPEARS HERE]

	2/4/00	2/9/00	2/15/00	2/18/00	2/24/00	3/1/00	3/6/00	3/9/00	3/15/00	3/20/00	3/23/00	3/29/00	4/3/00	4/6/00	4/12/00	4/17/00	4/20/00	4/28/00
— Stock Price	2.625	3	3	3	2.688	2.188	2.25	2.5	3	3.625	3.5	4.5	4.375	4.375	3	3	3	3.25
— Purchase Price	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98


— Stock Price — Purchase Price

Health Power, Inc.
Stock Premium Analysis
Last 90 Days as of May 3, 2000

[GRAPH APPEARS HERE]

	12/22/99	12/30/99	1/6/00	1/13/00	1/21/00	1/28/00	2/4/00	2/11/00	2/18/00	2/28/00	3/6/00	3/13/00	3/20/00	3/27/00	4/3/00	4/10/00	4/17/00	4/26/00
— Stock Price	1.375	1.688	1.75	1.813	3.063	3.375	2.625	3	3	2.188	2.25	3.25	3.625	4	4.375	3.25	3	2.875
— Purchase Price	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98


— Stock Price — Purchase Price

Health Power, Inc.
Stock Premium Analysis
Last 180 Days as of May 3, 2000

[GRAPH APPEARS HERE]

	8/13/99	8/27/99	9/10/99	9/23/99	10/6/99	10/19/99	11/1/99	11/12/99	11/26/99	12/9/99	12/22/99	1/5/00	1/19/00	2/1/00	2/14/0	2/28/00	3/10/00	3/23/00	4/5/00	4/18/00
—Stock Price	2.25	2.5	2.375	1.875	2.063	2	0.875	1.625	1.5	1.375	1.375	1.75	3.75	2.688	3	2.188	3	3.5	4.375	3
—Purchase Price	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98	6.98

— Stock Price — Purchase Price

Raymond James & Associates, Inc.

CompManagement, Inc. — Management Projections

TABLE OF CONTENTS

Page
1		Executive Summary
2		Income Statement
3		Balance Sheet
4		Cash Flow Statement
5		Stand Alone Discounted Cash Flow Analysis
6		Multiple Analysis
7		IRR Analysis

CompManagement, Inc. - Management Projections
Executive Summary

Confidential

Historical

Projected

12/31/97

12/31/98

12/31/99

12/31/00

12/31/01

12/31/02

12/31/03

12/31/04

Income Statement Assumptions

Sales Growth

N/A

12.1
%
53.9
%
23.1
%
7.4
%
11.1
%
5.9
%
8.0
%

COGS Margin

49.2
%
54.3
%
59.5
%
58.5
%
57.6
%
57.4
%
57.2
%
57.6
%

Gross Profit Margin

50.8
%
45.7
%
40.5
%
41.5
%
42.4
%
42.6
%
42.8
%
42.4
%

SG&A Margin

23.2
%
29.5
%
28.4
%
24.3
%
23.3
%
20.7
%
20.6
%
20.7
%

EBIT Margin

26.7
%
14.6
%
8.4
%
14.1
%
16.5
%
19.6
%
20.0
%
19.7
%

EBITDA Margin

27.6
%
16.2
%
12.1
%
17.3
%
19.1
%
21.9
%
22.2
%
21.7
%

EBITDA Growth

N/A

-34.2
%
14.7
%
75.7

18.5
%
27.8
%
7.2
%
5.6
%

Net Income

5,644

3,351

4,535

3,809

4,799

6,352

6,867

7,299

Net Income Margin

25.4
%
13.5
%
11.9
%
8.1
%
9.5
%
11.3
%
11.5
%
11.4
%

Net Income Growth

N/A

-40.6
%
35.3
%
-16.0
%
26.0
%
32.4

8.1
%
6.3
%

Capital Expenditure Assumptions

Total Capital Expenditures
$
0
$
0
$
1,061
$
850
$
850
$
850
$
850
$
850

Total Depreciation Expense
$
214
$
406
$
981
$
951
$
750
$
750
$
750
$
750

Balance Sheet Assumptions

Accounts Receivable (Days of Sales)

0.0

83.3

39.1

44.2

45.0

45.0

45.0

45.0

Inventories (Days of COGS)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Prepaid Expenses (% of Sales)

0.0
%
1.3
%
1.1
%
1.1
%
1.1
%
1.1
%
1.1
%
1.1
%

Accounts Payable (Days COGS)

0.0

35.8

16.4

13.4

13.4

13.4

13.4

13.4

Accrued Expenses (Days COGS)

0.0

4.3

15.3

15.3

15.3

15.3

15.3

15.3

Stand-Alone Discounted Cash Flow Per Share

Stand-Alone Enterprise Value

$

40,720

$

10.5

Shareholder Value

$

32,902

$

8.1

Fully Diluted Shares Outstanding

3,888

Multiple of EBIT

12.6x

6.1x

Multiple of EBITDA

8.8x

5.0x

Multiple of Sales

1.1x

0.9x

Confidential		CompManagement, Inc. — Management Projections Income Statement
		Historical									Projected
		12/31/97			12/31/98			12/31/99			12/31/00		12/31/01		12/31/02		12/31/03		12/31/04
Net Sales	$	22,183		$	24,862		$	38,262		$	47,093	$	50,564	$	56,184	$	59,485	$	64,243
Cost of Goods Sold (Excluding D&A)	$	10,907		$	13,495		$	22,760		$	27,543	$	29,147	$	32,250	$	34,036	$	36,976

Gross Profit	$	11,276		$	11,367		$	15,502		$	19,550	$	21,417	$	23,934	$	25,449	$	27,267
SG&A Expense (Excluding D&A)	$	5,149		$	7,334		$	10,876		$	11,422	$	11,783	$	11,622	$	12,249	$	13,322
Adjustments to Management EBITDA	$	0		$	0		$	0		$	0	$	0	$	0	$	0	$	0

EBITDA	$	6,127		$	4,033		$	4,626		$	8,128	$	9,634	$	12,312	$	13,200	$	13,945

Depreciation Expense	$	214		$	406		$	981		$	951	$	750	$	750	$	750	$	750
Amortization of Existing Intangibles	$	0		$	0		$	425		$	527	$	527	$	527	$	527	$	527

Total Depreciation & Amortization	$	214		$	406		$	1,406		$	1,478	$	1,277	$	1,277	$	1,277	$	1,277

EBIT	$	5,913		$	3,627		$	3,220		$	6,650	$	8,357	$	11,035	$	11,923	$	12,668

Existing Interest Expense	$	324		$	311		$	224		$	83	$	83	$	83	$	83	$	83
Revolver Interest Expense	$	0		$	0		$	0		$	0	$	0	$	0	$	0	$	0
Interest (Income)	$	0		$	0		$	0		$	0	$	0	$	0	$	0	$	0
Other (Income), Expense	$	- (55	)	$	- (35	)	$	0		$	0	$	0	$	0	$	0	$	0

Pretax Income	$	5,644		$	3,351		$	2,996		$	6,567	$	8,274	$	10,952	$	11,840	$	12,585
Income Taxes	$	0		$	0		$	-(1,539	)	$	2,758	$	3,475	$	4,600	$	4,973	$	5,286

Net Income	$	5,644		$	3,351		$	4,535		$	3,809	$	4,799	$	6,352	$	6,867	$	7,299


Extraordinary Items	$	0		$	0		$	0		$	0	$	0	$	0	$	0	$	0
Preferred Dividends	$	0		$	0		$	0
Common Dividends	$	0		$	0		$	0		$	0	$	0	$	0	$	0	$	0

Change in Net Worth	$	5,644		$	3,351		$	4,535		$	3,809	$	4,799	$	6,352	$	6,867	$	7,299

Shares Outstanding		0.0			3,850			3,850			3,850		3,850		3,850		3,850		3,850
EPS		N/A		$	0.87		$	1.18			0.99		1.25		1.65		1.78		1.90

Confidential

CompManagement, Inc. - Management Projections
Balance Sheet

Historical
Projected

Assets
12/31/97
12/31/98
12/31/99

12/31/00

12/31/01

12/31/02

12/31/03

12/31/04

Cash

$

0

$

8,714

$

7,315

$

8,948

$

10,113

$

11,237

$

11,897

$

12,849

Excess Cash

0

0

0

0

2,481

8,861

15,919

23,332

Accounts Receivable

0

5,671

4,094

5,706

6,234

6,927

7,334

7,920

Inventories

0

0

0

0

0

0

0

0

Prepaid Expenses

0

321

422

519

558

620

656

709

Other Current Assets

0

0

0

0

0

0

0

0

     Total Current Assets

$

0

$

14,706

$

11,831

$

15,173

$

19,385

$

27,645

$

35,805

$

44,810

Gross Property, Plant, and Equipment
$
0

$

2,931

$

3,889

$

4,739

$

5,589

$

6,439

$

7,289

$

$8,139

Accumulated Depreciation

0

0

0

951

1,701

2,451

3,201

3,951

     Net Property, Plant and
     Equipment

$

0

$

2,931

$

3,889

$

3,788

$

3,888

$

3,988

$

4,088

$

$4,188

Deferred Tax Asset

$

0

$

0

$

2,155

$

100

$

100

$

100

$

100

$

100

Other Assets

0

47

54

54

54

54

54

54

Existing Intangibles

0

5,526

9,511

8,984

8,457

7,930

7,403

6,876

Total Assets

$

0

$

23,210

$

27,440

$

28,099

$

31,884

$

39,717

$

47,450

$

56,028

Liabilities & Shareholder Equity

Accounts Payable

$

0

$

1,323

$

1,020

$

1,008

$

1,067

$

1,181

$

1,246

$

1,354

Accrued Expenses

0

160

956

1,157

1,224

1,355

1,430

1,553

Current Portion of Long-Term Debt

0

0

3,000

0

0

0

0

0

Deferred Revenue 0
11,166

10,528

10,360

11,124

12,360

13,087

14,133

22%

     Total Current Liabilities

$

0

$

12,649

$

15,504

$

12,526

$

13,415

$

14,896

$

15,762

$

17,040

Existing Long-Term Debt

$

0

$

5,527

$

1,851

$

0

$

0

$

0

$

0

$

0

Revolver

0

0

0

1,904

0

0

0

0

Deferred Tax Liability

0

222

224

0

0

0

0

Other Long-Term Liabilities

0

0

0

0

0

0

0

0

     Total Liabilities

$

0

$

18,398

$

17,579

$

14,430

$

13,415

$

14,896

$

15,762

$

17,040

Minority Interest

$

0

$

0

$

0

$

0

$

0

$

0

$

0

$

0

Common Stock

$

0

$

1

$

1

$

9,861

$

9,861

$

9,861

$

9,861

$

9,861

Additional Paid in Capital

0

0

0

0

0

0

0

0

Other

0

0

0

0

0

0

0

0

Retained Earnings

0

4,811

9,860

3,809

8,608

14,960

21,827

29,126

     Total Shareholder Equity

$

0

$

4,812

$

9,861

$

13,670

$

18,469

$

24,821

$

31,688

$

38,987

Total Liabilities & Shareholder Equity

$

0

$

23,210

$

27,440

$

28,099

$

31,884

$

39,717

$

47,450

$

56,028

Balance Test

$

0

$

0

$

0

$

0

$

0

$

0

$

0

$

0

Confidential

CompManagement, Inc. — Management Projections
Cash Flow Statement

Projected

    12/31/00

     12/31/01
     12/31/02
     12/31/03
     12/31/04

Net Income
$
  3,809
$
  4,799
$
  6,352
$
6,867
$
7,299

Plus:     Depreciation

951

750

750

750

750

Amortization of Existing Intangibles

527

527

527

527

527

Net Deferred Tax Increase, (Decrease)

1,831

0

0

0

0




Total Cash Provided by Operations
   $
  7,118
  $
  6,076
  $
  7,629
   $
8,144
$
8,576

Less: Required Cash (Increase), Decrease
$
(1,633 )
$
(1,165 )
$
(1,124 )
$
  (660 )
$
(952 )

Accounts Receivable — Trade (Increase), Decrease

(1,612 )

(528 )

(693 )

(407 )

(587 )

Inventories (Increase), Decrease

0

0

0

0

0

Prepaid Expenses (Increase), Decrease

(97 )

(38 )

(62 )

(36 )

(52 )

Other Current Assets (Increase), Decrease

0

0

0

0

0

Plus: Accounts Payable Increase, (Decrease)

(12 )

59

114

65

108

Accrued Expenses Increase, (Decrease)

201

67

130

75

123

Other Current Liabilities Increase, (Decrease)

(168 )

764

1,236

726

1,047




Total Working Capital Sources, (Uses)
$
(3,321 )
$
   (841 )
$
    (399 )
$
  (237 )
$
(313 )

Net Cash Provided By (Used in) Operations
$
  3,797
$
  5,235
$
  7,231
$
7,907
$
8,263

Less: Total Capital Expenditures
$
    (850 )
$
    (850 )
$
    (850 )
$
(850 )
$
  (850 )

Other Assets (Increase), Decrease

0

0

0

0

0




Net Cash Provided By (Used in) Investing
$
    (850 )
$
   (850 )
$
    (850 )
$
  (850 )
$
(850 )

Minority Interest
$
       0
$
     0
$
        0
$
    0
$
      0

Extraordinary Items

0

0

0

0

0

Common Dividends

0

0

0

0

0




Net Cash Provided By (Used in) Financing
$
        0
$
        0
$
       0
$
    0
$
      0

Net Cash Flow
$
  2,947
$
  4,385
$
  6,381
$
7,057
$
7,413

Excess Cash Swept to Reduce Revolver

(2,947 )

(4,385 )

(6,381 )

(7,057 )

(7,413 )

Additions to, (Repayment) of Revolver

(2,947 )

0

0

0

0

Increase (Decrease) in Excess Cash Balance

0

4,385

6,381

7,057

7,413

Ending Excess Cash Balance

0

2,481

8,861

15,919

23,332

Ending Revolver Balance
$
  1,904
$
        0
$
        0
$
      0
$
      0

Confidential

CompManagement, Inc. — Management Projections

Stand Alone Discounted Cash Flow Analysis

Stand Alone Free Cash Flow

	12/31/00			12/31/01			12/31/02			12/31/03			12/31/04
EBITDA	$	8,128		$	9,634		$	12,312		$	13,200		$	13,945
Less: Depreciation & Amortization Expense		(1,478	)		(1,277	)		(1,277	)		(1,277	)		(1,277	)

Taxable Operating Profit	$	6,650		$	8,357		$	11,035		$	11,923		$	12,668
Less: Income Taxes		(2,793	)		(3,510	)		(4,635	)		(5,008	)		(5,321	)

Cash From Operations	$	3,857		$	4,847		$	6,400		$	6,915		$	7,347
Plus: Depreciation & Amortization Expense		1,478			1,277			1,277			1,277			1,277
Less: Working Capital Needs		(3,321	)		(841	)		(399	)		(237	)		(313	)
Less: Capital Expenditures		(850	)		(850	)		(850	)		(850	)		(850	)

Free Cash Flow	$	1,164		$	4,433		$	6,429		$	7,105		$	7,462

Stand Alone Terminal Value

Discount Rate	17.00	%
Terminal EBITA Multiple	4.20	x
Terminal Value (Year 5 Cash Flow Capitalized)	$55,419

Shares Outstanding

Common Shares Outstanding		3,888
Options Outstanding		0

Fully Diluted Shares Outstanding		3,888

Stand Alone Valuation

Cumulative Present Value of Cash Flows	$	15,442
Plus: Present Value of Terminal Value		25,277

Stand Alone Enterprise Value	$	40,720
Less: Market Value of Debt	($	2,751	)
Less: Management Change of Control Payments	($	4,743	)
Less: Option Payments & Transaction Expenses	($	1,596	)

Shareholder Value	$	31,630

Shareholder Value per Diluted Share	$	8.14

Shareholder Value Sensitivity Analysis


Discount Rate	4.00x		4.20x		4.40x
	Sh. Value	Per Share	Sh. Value	Per Share	Sh. Value	Per Share
15.00%	$33,515	$8.62	$34,827	$8.96	$36,139	$9.29
16.00%	$31,933	$8.21	$33,189	$8.54	$34,446	$8.86
17.00%	$30,426	$7.83	$31,630	$8.14	$32,833	$8.45
18.00%	$28,990	$7.46	$30,144	$7.75	$31,297	$8.05
19.00%	$27,621	$7.10	$28,727	$7.39	$29,833	$7.67

CompManagement, Inc. - Management Projections

Confidential
Multiple Analysis

EBIT

EBITDA

Sales

Offer for

Management, Inc. - Management Projections

Value/EBIT

Value/EBITDA

Value/Sales

1999

2000

1999

2000
1999

2000

1999

2000

1999

2000

1999

2000

$
3,220
$
6,650
$
4,626
$
8,128
$
38,262

$

47,093

$

22,905

7.1x

3.4x

5.0x

2.8x

0.6x

0.5x

$
3,220
$
6,650
$
4,626
$
8,128
$
38,262

$

47,093

$

30,540

9.5x

4.6x

6.6x

3.8x

0.8x

0.6x

$
3,220
$
6,650
$
4,626
$
8,128
$
38,262

$

47,093

$

40,720

12.6x

6.1x

8.8x

5.0x

1.1x

0.9x

$
3,220
$
6,650
$
4,626
$
8,128
$
38,262

$

47,093

$

50,899

15.8x

7.7x

11.0x

6.3x

1.3x

1.1x

$
3,220
$
6,650
$
4,626
$
8,128
$
38,262

$

47,093

$

63,624

19.8x

9.6x

13.8x

7.8x

1.7x

1.4x

Trading Multiples for Selected Comparable Companies — Health Power, Inc.

Company	Head Quarters		4/26/00 Stock Price⁽¹⁾		52 Week High Price		52 Week Low Price		Market Value of Equity ($MM)⁽¹⁾		Net Debt ($MM)			Enterprise Value ($MM)		LTM Sales ($MM)		LTM Operating Margin ($MM)					LTM EBITDA Margin ($MM)

HEALTH CARE COST CONTAINMENT COMPANIES
American Dental Partners, Inc. (ADPI)	MA	$	7.19	$	13.38	$	5.75	$	51.3	$	41.5		$	92.8	$	117.4	$	12.5		10.6	%	$	18.7		15.9	%
CorVel Corporation (CRVL)	CA	$	27.13	$	29.00	$	16.94	$	213.0	$	( 9.0	)	$	204.0	$	181.3	$	18.7		10.3	%	$	25.2		13.9	%
First Health Group Corp. (FHCC)	IL	$	30.19	$	32.63	$	14.56	$	1,429.3	$	204.4		$	1,633.7	$	458.5	$	125.3		27.3	%	$	154.7		33.7	%
HealthPlan Services Corporation (HPS)	FL	$	2.88	$	10.19	$	2.31	$	39.3	$	95.8		$	135.1	$	277.4	$	2.5		0.9	%	$	19.2		6.9	%
Health Risk Management, Inc. (HRMI)	MN	$	5.75	$	11.50	$	4.38	$	26.8	$	5.4		$	32.2	$	148.8	$	2.3		1.5	%	$	12.9		8.7	%
HealthStar Corp. (PPOS)	AZ	$	2.94	$	12.75	$	1.50	$	12.2	$	1.2		$	13.4	$	14.1	$	( 0.6	)	(3.9	%)	$	0.7		5.0	%
Orthodontic Centers of America, Inc. (OCA)	FL	$	18.50	$	21.38	$	10.81	$	894.7	$	50.0		$	944.8	$	226.3	$	76.9		34.0	%	$	89.2		39.4	%
Pediatrix Medical Group, Inc. (PDX)	FL	$	7.38	$	2.89	$	6.00	$	115.2	$	49.9		$	165.2	$	227.0	$	45.0		19.8	%	$	57.1		25.1	%
Transcend Services Inc. (TRCR)	GA	$	3.28	$	10.00	$	1.25	$	14.2	$	1.0		$	15.2	$	47.3	$	(7.4	)	(15.6	%)	$	( 7.2	)	(15.2	%)

Industry Sector Average	Mean	9.4	%	14.8	%
	Median	10.3	%	13.9	%
	High	34.0	%	39.4	%
	Low	(15.6	%)	(15.2	%)

(1)	Information obtained from Bloomberg as of 4/27/00

(2)	EPS Estimates provided by I/B/E/S.


Trading Multiples for Selected Comparable Companies - Health Power, Inc.												pg.2
		Enterprise Value Multiples:			Market Value Multiples:		Stock Price as a Multiple of IBES:⁽²⁾
		Sales	EBITDA	Operating Income	Net Income	Book Value	LTM EPS	X	2000 EPS	X	2001 EPS	X
HEALTH CARE COST CONTAINMENT COMPANIES
	American Dental Partners, Inc. (ADPI)	0.8x	5.0x	7.4x	15.4x	1.7x	0.78	9.2x	0.89	8.1x	1.02	7.0x
	CorVel Corporation (CRVL)	1.1x	8.1x	10.9x	17.6x	3.7x	1.41	19.2x	1.46	18.6x	1.69	16.1x
	First Health Group Corp. (FHCC)	3.6x	10.6x	13.0x	23.6x	18.8x	1.36	22.2x	1.64	18.4x	1.93	15.7x
	HealthPlan Services Corporation (HPS)	0.5x	7.0x	54.2x	na	1.6x	na	na	0.50	5.8x	na	na
	Health Risk Management, Inc. (HRMI)	0.2x	2.5x	14.1x	24.6x	0.9x	0.58	9.9x	0.96	6.0x	1.31	4.4x
	HealthStar Corp. (PPOS)	0.9x	19.1x	na	na	1.5x	na	na	na	na	na	na
	Orthodontic Centers of America, Inc. (OCA)	4.2x	10.6x	12.3x	20.6x	3.4x	1.04	17.8x	1.24	14.9x	1.58	11.7x
	Pediatrix Medical Group, Inc. (PDX)	0.7x	2.9x	3.7x	6.6x	0.7x	1.59	4.6x	1.23	6.0x	1.54	4.8x
	Transcend Services Inc. (TRCR)	0.3x	na	na	na	3.7x	na	na	na	na	na	na

	Mean	1.4x	8.2x	16.5x	18.1x	4.0x		13.8x		11.1x		9.9x
	Median	0.8x	7.6x	12.3x	19.1x	1.7x		13.9x		8.1x		9.4x
	High	4.2x	19.1x	54.2x	24.6x	18.8x		22.2x		18.6x		16.1x
	Low	0.2x	2.5x	3.7x	6.6x	0.7x		4.6x		5.8x		4.4x

Summary of Comparable Acquisitions

Summary of Comparable Acquisitions Analysis—Historical Analysis

(Dollars in Millions)

						TC AS A MULTIPLE OF LTM		TC AS A MULTIPLE OF LTM
TRANSACTION DATE	TARGET/ACQUIROR	LTM SALES		TOTAL CONSIDERATION		SALES		EBITDA
3/29/00	United Payors & United Prov / BCE Emergis Inc.	$	108	$	547	5.1	x	11.7	x
11/2/99	Paramedical Testing / Hooper Holmes Inc.	$	83	$	131	1.6	x	N/A
8/18/99	Concentra Managed Care, Inc. / Welsh, Carson, Anderson & Stowe	$	622	$	1,100	1.8	x	15.8	x
6/29/99	PeopleServe, Inc. / Res-Care, Inc.	$	184	$	112	0.6	x	7.6	x
6/18/99	Compdent Corporation / Golder Thoma, TA Associates & NMS	$	173	$	225	1.3	x	8.4	x
5/6/99	Sheridan Healthcare, Inc. / Management & Vestar Capital Partners	$	113	$	75	0.7	x	3.9	x
1/27/99	EMSA Government Services, Inc. / America Services Group, Inc.	$	161	$	67	0.4	x	N/A
9/14/98	United Dental Care, Inc. / Protective Life Corporation	$	167	$	180	1.1	x	N/A
8/3/98	MedCath, Inc. / Kohlberg, Kravis & Roberts, Welsh Carson	$	129	$	228	1.8	x	7.1	x
2/24/98	Preferred Payment Systems, Inc. / Concentra Managed Care	$	35	$	263	7.5	x	20.9	x
11/6/97	GMS Dental Group, Inc. / Gentle Dental Service Corporation	$	42	$	53	1.3	x	N/A
10/10/97	Choicecare Corporation / Humana	$	290	$	245	0.8	x	N/A
9/24/97	Talbert Medical Mgmt Holdings / MedPartners, Inc.	$	430	$	198	0.5	x	N/A
9/3/97	EmCare Holdings, Inc. / Laidlaw, Inc.	$	226	$	340	1.5	x	19.0	x
8/7/97	Value Health, Inc. / Columbia/HCA Healthcare Corporation	$	1,952	$	1,120	0.6	x	9.4	x
6/26/97	InPhyNet Medical Management / MedPartners, Inc.	$	376	$	370	1.0	x	N/A

					High	7.5	x	20.9	x
					Median	1.2	x	9.4	x
					Mean	1.7	x	11.5	x
					Low	0.4	x	3.9	x

Source: Transaction Filings & Securities Data Corporation

(1)		For the year ended December 31. Projections were provided by the management of the Company on 2/2/00 and then revised on 5/2/00.
(2)		Assumes net debt (debt less cash) of $2.751 million at the closing as indicated by Management, Management Change of Control Contracts due at the closing of the transaction of $4.743 million, Option Payments of $.471mm and Transactions Expenses of $1.125 million. Financial projections are based on information provided by Company management. Also assumes 3,887,785 total shares outstanding.
(3)		Assumes a terminal value multiple of 4.0x - 4.4x and a discount rate of 15.0%-19.0%
(4)		Range utilizes the Mean and Median Multiples from the Analysis


(1)	Multiple Range consists of the Median and the Mean.
(2)	Assumes net debt (debt less cash) of $2.751 million at closing as indicated by Management, Management Change of Control Contracts due at the closing of the transactions of $4.743 million, Option Payments of $.471 million and Transaction Expenses of $1.125 million. Financial projections are based on information provided by Company management. Also assumes 3,887,785 total shares outstanding.
(3)	1999 Actual Earnings include a one time tax benefit related to a reverse of valuation allowance of approximately $2.8 million.
(4)	1999 Actual Earnings figures not utilized for purpose of reference range.

									CompManagement, Inc. - Management Projections Executive Summary
*Confidential*


		Historical										Projected

			12/31/97				12/31/98			12/31/99			12/31/00			12/31/01			12/31/02			12/31/03			12/31/04

Income Statement Assumptions
Sales Growth					N/A			12.1	%		53.9	%		23.1	%		7.4	%		11.1	%		5.9	%		8.0	%
COGS Margin					49.2	%		54.3	%		59.5	%		58.5	%		57.6	%		57.4	%		57.2	%		57.6	%

Gross Profit Margin					50.8	%		45.7	%		40.5	%		41.5	%		42.4	%		42.6	%		42.8	%		42.4	%

SG&A Margin					23.2	%		29.5	%		28.4	%		24.3	%		23.3	%		20.7	%		20.6	%		20.7	%
EBIT Margin					26.7	%		14.6	%		8.4	%		14.1	%		16.5	%		19.6	%		20.0	%		19.7	%
EBITDA Margin					27.6	%		16.2	%		12.1	%		17.3	%		19.1	%		21.9	%		22.2	%		21.7	%
EBITDA Growth					N/A			-34.2	%		14.7	%		75.7			18.5	%		27.8	%		7.2	%		5.6	%
Net Income					5,644			3,351			4,535			3,809			4,799			6,352			6,867			7,299
Net Income Margin					25.4	%		13.5	%		11.9	%		8.1	%		9.5	%		11.3	%		11.5	%		11.4	%
Net Income Growth					N/A			-40.6	%		35.3	%		-16.0	%		26.0	%		32.4			8.1	%		6.3	%

Capital Expenditure Assumptions
Total Capital Expenditures				$	0		$	0		$	1,061		$	850		$	850		$	850		$	850		$	850
Total Depreciation Expense				$	214		$	406		$	981		$	951		$	750		$	750		$	750		$	750

Balance Sheet Assumptions
Accounts Receivable (Days of Sales)					0.0			83.3			39.1			44.2			45.0			45.0			45.0			45.0
Inventories (Days of COGS)					0.0			0.0			0.0			0.0			0.0			0.0			0.0			0.0
Prepaid Expenses (% of Sales)					0.0	%		1.3	%		1.1	%		1.1	%		1.1	%		1.1	%		1.1	%		1.1	%
Accounts Payable (Days COGS)					0.0			35.8			16.4			13.4			13.4			13.4			13.4			13.4
Accrued Expenses (Days COGS)					0.0			4.3			15.3			15.3			15.3			15.3			15.3			15.3

Stand-Alone Discounted Cash Flow				Per Share
Stand-Alone Enterprise Value	$	40,720		$	10.5
Shareholder Value	$	32,902		$	8.1
Fully Diluted Shares Outstanding		3,888
Multiple of EBIT											12.6x			6.1x
Multiple of EBITDA											8.8x			5.0x
Multiple of Sales											1.1x			0.9x


			Projected

		12/31/00				12/31/01			12/31/02			12/31/03			12/31/04
Net Income		$	3,809		$	4,799		$	6,352		$	6,867		$	7,299
Plus:	Depreciation		951			750			750			750			750
	Amortization of Existing Intangibles		527			527			527			527			527
	Net Deferred Tax Increase, (Decrease)		1,831			0			0			0			0

	Total Cash Provided by Operations	$	7,118		$	6,076		$	7,629		$	8,144		$	8,576

Less:	Required Cash (Increase), Decrease	$	(1,633	)	$	(1,165	)	$	(1,124	)	$	(660	)	$	(952	)
	Accounts Receivable — Trade (Increase), Decrease		(1,612	)		(528	)		(693	)		(407	)		(587	)
	Inventories (Increase), Decrease		0			0			0			0			0
	Prepaid Expenses (Increase), Decrease		(97	)		(38	)		(62	)		(36	)		(52	)
	Other Current Assets (Increase), Decrease		0			0			0			0			0
Plus:	Accounts Payable Increase, (Decrease)		(12	)		59			114			65			108
	Accrued Expenses Increase, (Decrease)		201			67			130			75			123
	Other Current Liabilities Increase, (Decrease)		(168	)		764			1,236			726			1,047

	Total Working Capital Sources, (Uses)	$	(3,321	)	$	(841	)	$	(399	)	$	(237	)	$	(313	)

Net Cash Provided By (Used in) Operations		$	3,797		$	5,235		$	7,231		$	7,907		$	8,263

Less:	Total Capital Expenditures	$	(850	)	$	(850	)	$	(850	)	$	(850	)	$	(850	)
	Other Assets (Increase), Decrease		0			0			0			0			0


Net Cash Provided By (Used in) Investing		$	(850	)	$	(850	)	$	(850	)	$	(850	)	$	(850	)

	Minority Interest	$	0		$	0		$	0		$	0		$	0
	Extraordinary Items		0			0			0			0			0
	Common Dividends		0			0			0			0			0


Net Cash Provided By (Used in) Financing		$	0		$	0		$	0		$	0		$	0


Net Cash Flow		$	2,947		$	4,385		$	6,381		$	7,057		$	7,413
Excess Cash Swept to Reduce Revolver			(2,947	)		(4,385	)		(6,381	)		(7,057	)		(7,413	)
Additions to, (Repayment) of Revolver			(2,947	)		0			0			0			0
Increase (Decrease) in Excess Cash Balance			0			4,385			6,381			7,057			7,413
Ending Excess Cash Balance			0			2,481			8,861			15,919			23,332
Ending Revolver Balance		$	1,904		$	0		$	0		$	0		$	0