2DisclaimerThe materials contained in this announcement are neither an offer to purchase nor a solicitation of an offer to sell shares of Amazys and is not a substitute for the prospectus and proxy statement and other documents that X-Rite will file with the SEC. At the time the expected exchange offer is commenced, X-Rite will file exchange offer materials and other documents with the U.S. Securities and Exchange Commission (“SEC”), including a prospectus in an S-4 Registration Statement, and will also file exchange offer materials with the Swiss Takeover Board. The exchange offer materials will contain important information, which should be read carefully before any decision is made with respect to the exchange offer. The exchange offer materials and certain other offer documents will be made available to all stockholders of Amazys at no expense to them. The exchange offer materials will also be available for free at the SEC's website at Amazys stockholders are urged to read the relevant exchange offer documents when they become available, as well as any amendments or supplements to those documents, because they will contain important information that stockholders should consider before making any decision regarding tendering their shares.In addition, the issuance of X-Rite common stock in connection in connection with the proposed transaction will be submitted to X-Rite shareholders for their consideration, and X-Rite will file with the SEC a proxy statement to be used by X-Rite to solicit its shareholders' approval of the proposed issuance of stock, as well as other relevant documents concerning the proposed transaction. The definitive proxy statement will be sent to the shareholders of X- Rite seeking their approval of the proposed issuance of stock. You will be able to obtain a free copy of the proxy statement, as well as other filings containing information about X-Rite, at the SEC's Internet site (http://www.sec.gov). Shareholders of X-Rite are urged to read the proxy statement regarding the proposed issuance of stock and any other relevant documents filed with the SEC when they become available, as well as any amendments or supplements to those documents, because they will contain important information.X-Rite and its directors, officers and other members of its management and employees also may be soliciting proxies from X-Rite stockholders in connection with the vote of X-Rite shareholders referenced above. Information regarding those participants will be included in Part III of the Company's Annual Report on Form 10-K for the 2005 fiscal year of the company. Copies of this filing will be available at the SEC's website. Additional information regarding the interests of those participants may be obtained by reading the proxy statement regarding the proposed transaction when it becomes available.Copies of the proxy statement and the SEC filings of X-Rite that will be incorporated by reference in the proxy statement and the registration statement can also be obtained when available, without charge, by directing a request to: Barb Linderman at
3DisclaimerNeither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the information contained in this release.Safe Harbor StatementThese materials contain forward-looking statements based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “model,” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, the risk that X-Rite’s and Amazys’ businesses will not be integrated successfully; the challenges of integration and restructuring associated with the transaction or other acquisitions, and the challenges of achieving anticipated synergies; costs related to the transaction; the failure of the X-Rite shareholders to approve the issuance of common stock in connection with the transaction; the possibility that the market for the sale of certain products and services may not develop as expected; X-Rite’s ability to manage its international operations; the risk that the process of reconciling Amazys financial information to U.S. GAAP could result in changes to Amazys’ financial statements that adversely impact the X-Rite’s pro forma estimates regarding the transaction; the existence or enactment of adverse U.S. and foreign government regulation; the risk that the development of products and services may not proceed as planned; adverse general domestic and international economic conditions including interest rate and currency exchange rate fluctuations; the difficulty of efficiently managing the company’s cost structure for capital expenditures, materials and overhead, as well as operating expenses such as wages and benefits due to the vertical integration of the company’s manufacturing processes; the possibility that the transaction or other contemplated acquisitions may not close; the impact of competitive products or technologies and competitive pricing pressures; potential business disruptions; the economic downturn in the U.S. economy; and other risks that are described from time to time in X-Rite's Securities and Exchange Commission reports. Readers of this information are cautioned not to place undue reliance on these forward-looking statements, since, while we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in these materials. We undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
4Disclaimer Non-GAAP Financial Measures In addition to the results reported in accordance with generally accepted accounting principles (GAAP) within thispresentation, X-Rite may reference certain information, which is considered non-GAAP financial measures. Managementbelieves that these non-GAAP financial measures are useful to both management and its investors in their analysis of theCompany's underlying business and operating performance. Management also uses this information for operationalplanning and decision-making purposes. Non-GAAP financial measures should not be considered a substitute for anyGAAP measure. Additionally, non-GAAP financial measures as presented by X-Rite may not be comparable to similarlytitled measures reported by other companies.
5Discussion Topics Industry and Company Overview Amazys Acquisition Financial Information and Key Management
7What is the Color Industry? Solutions across workflows that:Capture color data – sensorManage color information – software + databaseDeliver enhanced value through cost reductions, quality enhancements and speed to marketColor is everywhere – touches 90% of the physical worldPaint matching at Home DepotShade matching for teeth at dentistColor quality for photographic printsColor QC for plastics, textiles, etc.Color consistency for WSJPaint matching in auto refinishing
8Overview of the Size of Color Markets UniverseLarge and ExpandingConsumer Color, Enterprise Color ManagementUniverse: Where color market will go as technology becomes more affordable.New and Emerging: Companies with internal color solutions or in color market space as a non-competitor.Traditional: Current color market competitorsNew and Emerging$1 Billion–$1.5 Billion6–8% growthTraditional$500M to $1 Billion3–5% growth
9Global Colormetrics Companies Industry OverviewGlobal Colormetrics Companies($ in millions) Headquarters 2005 Sales Market ShareUSA $ %SwitzerlandSwitzerlandJapanGermanyTotal Top 5 Sales $ %Estimated Market Size $1, %(Amazys)
11Company Overview Founded 1958 1915 Headquarters Grandville, MI Regensdorf, SwitzerlandEmployees ~650 ~400Patents and applicationsProducts and SKUs 5, ,000+Customers 4,000+ 3,500+Enterprise Value2 $250M $267MFY2005 Revenue / EBITDA $130.9M / $21.9M $115.0M / $17.3MRevenue by Product LineGeographic ConcentrationOther 14%Graphic Arts 41%Industrial 36%Graphic Arts 64%Retail 21%Industrial 25%Asia 15%Asia 21%Americas 60%Americas 31%Europe 25%Europe 49%1 Based on exchange rate of CHF/USD 1.289:1.000.2 Based on share price of $12.81 and $86.75 for X-Rite and Amazys, respectively.
12Geographic Overview Revenue Breakdown1 X-Rite Amazys Combined Americas 60% 31% 47%Europe 25% 49% 36%Asia 15% 21% 18%X-Rite Amazys CombinedOrange: Distribution network of combined entityNote: Dots represent locations of the combined entity.1 As of 12/31/2004.
13Graphic Arts 2005 PF Revenues of $127.7mm (52% of total) Current SituationLargest and most competitive businessTechnology life cycle is 2 to 3 years for imaging and 5 to 7 years for printingMarkets and ApplicationsImaging – Displays / Digital Printing / Photography / Prepress and CreativesTraditional Printing – Commercial and PackageKey Revenue Growth DriversShift from analog to digitalOEM / embedded solutionsCore StrategyCapitalize on our market position and global capabilities to deliver solutions in key markets that:Address growing demands for automated integrated color control needsSpan the entire work flow beginning with image creation/capture through final production (e.g. printing)Reduce operating cost and increase productivity and qualityFocus on large strategic partnersPro Forma 2005 RevenuesOther 7.3%X-Rite Graphic Arts 21.8%Retail 10.9%Industrial 29.8%Amazys Graphic Arts 30.1%
14Industrial 2005 PF Revenues of $73.4mm (30% of total) Current Situation2nd Fastest growing businessMajority of business outside North AmericaFocused on growing business in ChinaHighest gross margin, highest cost-to-serveMarket ApplicationsOEM Tier 1 automotive process control & QCPlastics, textiles QC, ink and dye formulationDigital color management of global supply chainKey Revenue Growth DriversGlobalization of customers and supply chainsNew product innovationCore StrategyCapitalize on our market position and global capabilities to deliver solutions in key markets that:Address growing demands for automated integrated color control needsManage processes and data across specific work flow processing from specification through productionReduce operating cost and increase productivity and qualityPro Forma 2005 RevenuesOther 7.3%Retail 10.9%Graphic Arts 51.9%Amazys Industrial 16.7%X-Rite Industrial 13.2%
15Retail 2005PF Revenues of $26.9mm (11% of total) Current Situation Fastest growing segmentNo close competitorOpportunity to extend Retail business into EuropeMarketsPaint matchingHome décorKey Revenue Growth DriversDIY growthConsumer “nesting” trend and macro demographicsHyper-competitive retail marketsCore StrategyCapitalize on our strong North American market position and global capabilities to deliver solutions in key markets that:Address growing demands from retailers for product and POS differentiationReduce operating costs, enhance sales volumes and customer experiencePro Forma 2005 RevenuesOther 7.3%Retail 10.9%Graphic Arts 51.9%Industrial 29.8%
16Other Businesses Revenue 2005PF Revenues of $18.0mm (7% of total)Medical/Dental (2% of Revenue)Existing shade taking device is industry standardNew dental product planned for 2006 global releaseFuture upsidesLight (5% of Revenue)Labsphere and Optronik businesses are non-coreOther Businesses RevenuePro Forma 2005 RevenuesLight 5.1%Dental 2.2%Retail 10.9%Graphic Arts 51.9%Industrial 29.8%
17Research and Development Investment in engineering will continue to drive future growthPatents and Applications2001 Low 20s%2003 Low 30s%%2007E 45%+X-RiteAmazysX-Rite Key Metric% of Revenue from New ProductsX-RiteAmazysTotal
19Strategic RationaleCreates a market leader in the color management industryEconomies of scale expected to result in high synergy potential achievable over three yearsCombined annual operational cost savings potential of $25 million in year threeGross margin target of 63 percent in year threeEPS accretive expected in year twoAccelerated technology innovation expectedPooling of R&D resources may accelerate innovation ratesExtended market opportunityPooling of resources helps the company to address new markets and geographiesOne of the strongest talent pools in the industryThe acquisition creates a market leader, enhances shareholder value and sets the foundation for long-term growth
20Excellent Strategic Fit X-RiteStrong presence in Americas and AsiaLeader in the automotive, retail and pressroom marketsStrong strategic partnershipsXerox, KomoriDemonstrated growth and profitabilityManufacturing and operational strengthsHigh growth in retail businessAmazysStrong presence in EuropeLeader in graphic arts, visual evaluation solutions and web-based color communicationStrong strategic partnershipsHeidelberg, HPDemonstrated growth and profitabilityComplementary technological innovationHigh growth in digital imaging business
21Combined Company Highlights Industry leader in key marketsDiversified geographic revenue streamsDiversified customer and market revenue streamsOne customer above 5 percent of revenuesLarge patent portfolio200+ existing patents and applicationsStraightforward business modelTechnology investments drive growth – estimated at 10 to 12 percent annually going forwardHigh margin products expected to be derived from key platformsEconomic synergies are easily identifiedExpect modest capital expenditure requirementsExpect rapid debt repayment in two to five years, driving down leverage significantly
22Synergies Summary by Cost Area Estimated SynergiesOverviewSynergies Summary by Cost AreaSynergies primarily based on cost savingsIn-depth analysis of synergies has been performedPlanned restructuring charge of $20 million in year oneTotal estimated annual cost synergies of $25 million by year threeNPV of synergies and restructuring charge is approximately 75 CHF per shareAnnual Synergies Projected by year 3ManufacturingSelling & MarketingEngineering & R&DGeneral & AdminTotal Annual Synergies$9.0 m$5.5 m$5.0 m$25.0 m
23Integration StatusLeadership teams are working closely and are aligned on all integration mattersIntegration management is in place and is operating in high gear post-announcementSynergy targets are well defined and plans are in place to timely capture the targetsSignificant progress has been made in product integration planning. Much of the learning and process will be duplicated with the other integration teams
25Transaction SummaryBusiness combination, supported by both Boards of DirectorsOffer to Amazys shareholdersOffer price per share: CHF 77 plus 2.11 X-Rite sharesTotal estimated purchase price $300 millionConditions of the offerX-Rite shareholder approval70% acceptance level from Amazys shareholdersRegulatory approvalsListing on Nasdaq with dual listing on Swiss ExchangeFinancingAcquisition financing package of $220 million committed by Goldman SachsBoard CompositionNine member Board, comprised of six members from X-Rite and three members from Amazys.Management teamSenior Management team comprised of talent from both companiesMichael C. Ferrara will remain CEO, Thomas J. Vacchiano, Jr. will be named President and COO, Mary E. Chowning will remain CFO, and Dr. Francis Lamy will be named CTO.
26Purchase Price Summary Total number of Amazys shares mFixed exchange rateEstimated Value of X-Rite share $13.00Cash portion of consideration (77 CHF per share) $206 mEquity portion of consideration (2.11 X-Rite shares per share) $94 mEstimated acquisition related costs $18 mTotal $318 m1 $40 million revolver.
27Goldman Sachs Debt Structure Revolver (working capital and acquisitions) $40 mFirst Lien Term loan (Amazys purchase) $120 mSecond Lien Term loan (Amazys purchase) $60 mTotal $220 m
28Sources and Uses at Closing ($ in millions)SourcesUsesCash $44.0Revolver 0.01st Lien Term Loan 120.02nd Lien Term Loan 60.0New X-Rite Equity 94.0Total Sources of Funds $318.0Cash on Balance Sheet $10.0Purchase Amazys EquityEstimated Fees and Expenses 18.0Total Uses of Funds $318.0$40 m revolver available for working capital needs and small acquisitions
29Timetable Indicative timetable for public tender offer Pre-AnnouncementOffer prospectus publishedS-4 Filing EffectiveInitial offer period closesAdditional acceptance period closesX-Rite shareholder meetingSettlementDelisting of Amazys shares on Swiss ExchangeJanuary 31March 24May 5May 23June 13June 30July 5Fall 2006
31X-Rite and Amazys – Historical Revenues and EBITDA ($ in millions)X-RiteAmazysEBITDAX-RiteAmazys
32Key Management Team Members Michael C. Ferrara, CEOMichael has served as CEO of X-Rite since June Prior to that, he was CEO of Marine Optical Group, a Boston-based worldwide design and marketing company in the eyewear business, and N.I. World Trade, an international marketing and distribution company. Following close, Michael will remain CEO.Thomas J. Vacchiano, Jr., President & COOTom is currently President and CEO of Amazys. Before joining Amazys as its’ CEO in late 2000, Tom was President and CEO of Xerox Engineering Systems (XES), a $400 million subsidiary of Xerox and a part of Xerox New Enterprises. Following close, Tom will assume the role of President & COO of the combined company, and is the intended successor of Michael C. Ferrara, subject to approval by the Board of Directors.Mary E. Chowning, CFOMary joined X-Rite in 2003 as CFO. Previously, she was a co-founder, General Partner and CFO for the Wind River Environmental Companies, a large non-hazardous residential and commercial liquid waste hauler. Prior to Wind River, she spent fourteen years in public accounting with Arthur Andersen and is a Certified Public Accountant. Following close, Mary will remain the CFO.Dr. Francis Lamy, CTOFrancis is currently Executive VP and CTO for Amazys, managing the company's strategy, innovation and business development functions. Francis architected and executed Amazys' transformation from an instrument manufacturer to a solution provider. Following close, he will assume the role of CTO of the combined company.