1. April 8, 2004 Chicago Bar Association Mergers & Acquisitions Subcommittee

2. 2 Valuation Methodologies Current Market Conditions Billow Butler & Company Discussion Topics

3. 3 Public Companies Public Companies Comparable Transactions Comparable Transactions Discounted Cash Flows Discounted Cash Flows Analysis of valuation multiples of comparable publicly-traded companies to gain insight into multiples for privately-held companies. Traditionally, small private companies are acquired at a discount to public multiples. Analysis of valuation multiples implicit in recent acquisitions involving comparable private and public companies. Takes into consideration premiums/discounts for size of transactions. Analysis of future cash flows and residual value discounted to the present using a return on capital rate required by investors; requires the development of a 5-year financial plan. Valuation Methodologies Leveraged Buyout Analysis of the purchase price a financial investor group could pay given various return to investors parameters; heavily dependent on the debt markets; requires the development of a 5-year financial plan.

4. 4 Quality of Earnings  Historical Track Record of Growth & Profitability  Past or Current Trends Benefiting / Impacting the Company  Customer Base Profile; Concentration; Contracts  Quality of Earnings: Persistence / Variability  Achievability of Projected Financial Results  Prospects and Opportunities for Continued Growth  New Product Initiatives  Capacity and Nature of Equipment and Facilities to Accommodate Future Growth

5. 5 Add-Backs  Add-backs are items (normally expenses) that are currently incurred by the company that may not be incurred under the control of a prospective buyer  These may include such discretionary items as:  Above-market executive compensation  Consulting fees paid to investors or investor groups  Family-member compensation  Perquisites: autos, life insurance, travel, etc.  The other category of add-backs includes extraordinary or one-time items, such as the gain on sale of assets, life insurance proceeds, an unusual bad debt write-off, moving expenses, etc.  It is important that each add-back can be tied back to the company’s financial statements

6. 6 Add-Back Schedule 200120022003 Above Market Salaries _______________(name)_______________ Bonus _______________(name)_______________ Perquisites Travel & Entertainment_______________ Auto Expenses_______________ Dues & Subscriptions_______________ Medical Reimbursements_______________ Other_______________ Non-Recurring Charges One-Time Excessive Bad Debt Write-Off_______________ Extraordinary Gain (loss) On Sale of Assets_______________ Other_______________

7. 7 Adjusted Income Statement

8. 8 Public Companies

9. 9 Comparable Transactions

10. 10 Discounted Cash Flows + Calculate Adjusted Free Cash Flow** ** Debt-Free Analysis

11. 11 Discounted Cash Flows

12. 12 Leveraged Buyout  Senior Debt Financing –Senior debt to cash flow of 2.5 – 3.5x –Total debt to cash flow of 3.5 – 4.5x  Mezzanine Financing –Seek total return of 18% – 22% –With or without equity participation  Private Equity Contribution –Attention paid to underperforming portfolio companies –Eager to make new investments –Being pushed to invest up to 35% in equity –Return expectations lowered to 20+%

13. 13 Valuation Summary

14. 14 Reasons for Differing Multiples  Growth opportunities  Strength of management team  Market position  Strength of distribution channels  Industry outlook  Proprietaries, patents, know-how  Customer diversity and tenure  Technical capabilities  Reputation and goodwill  Barriers to entry  Size  Historical revenue growth  Margins relative to peers  Potential synergies  Earnings history  Asset utilization  Asset intensity  Excess capacity  Cash conversion cycle  CAPEX requirements FinancialIntangible Perceived Ability to Generate Future Cash Flow

15. 15 Beauty is in Eye of Beholder

16. 16 Historical Deal Multiples Source: Mergerstat

17. 17 Multiples by Deal Size Source: US Bancorp Piper Jaffray

18. 18 Billow Butler & Company Billow Butler & Company, L.L.C. Billow Butler & Company, L.L.C. is an investment bank dedicated to advising middle market business owners on the sale of their companies. With backgrounds at leading investment and commercial banks, law firms and financial consulting firms, our professionals bring a level of expertise, integrity and professionalism to the middle market that is traditionally only available to owners of larger companies. Our clients are located across the U.S. and typically own companies valued up to $100 million. They are entrepreneurs and private equity groups that intend to sell an entire company or they are larger, public companies that desire to divest a division. But, no matter their size, location or ownership, our clients engage us with a common goal in mind - maximize net proceeds, to ensure transaction closure and achieve the best possible terms with confidentiality, speed and minimal burden on themselves and their corporate staff. Since its inception in 1997, Billow Butler & Company has successfully closed over 25 transactions. Darrell M. Butler Managing Director Mr. Butler has been involved in mergers and acquisitions for more than 13 years, participating in more than 100 transaction assignments ranging in value from $3 million to $200 million. Mr. Butler has spoken before members of the Institute of Management Accountants, the Chicago Bar Association and industry trade associations on topics involving corporate finance and deal-making. Prior to co-founding Billow Butler & Company, he was an accomplished associate/vice president at a leading national investment bank, where he was formally recognized as Top Associate for leading the company in deals closed and fees generated. Mr. Butler spent more than seven years at Arthur Andersen as a financial consultant to Fortune 1000 clients. In addition to earning consistently outstanding marks during his tenure at Andersen, he is proud to have received the Sequoia Award for mentoring in support and development of his staff. He is currently the treasurer of a not-for-profit educational corporation and previously served six years as treasurer of a $1.2 million not-for-profit corporation. Mr. Butler holds an M.B.A. in Financial Management and Strategy from The University of Chicago Graduate School of Business and a B.S. in Finance, with honors, from the University of Illinois-Urbana/Champaign.