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Laser Technology Inc – ‘SC 13E3/A’ on 11/24/03 re: Laser Technology Inc – EX-99.2

On:  Monday, 11/24/03, at 5:23pm ET   ·   Accession #:  1206774-3-861   ·   File #:  5-43058

Previous ‘SC 13E3’:  ‘SC 13E3/A’ on 11/13/03   ·   Latest ‘SC 13E3’:  This Filing

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/24/03  Laser Technology Inc              SC 13E3/A              3:68K  Laser Technology Inc              DG3/FA

Amendment to Tender-Offer Statement — Going-Private Transaction   —   Schedule 13E-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13E3/A   Amendment to Tender-Offer Statement --                11     48K 
                          Going-Private Transaction                              
 2: EX-99.1     Miscellaneous Exhibit                                 27     56K 
 3: EX-99.2     Miscellaneous Exhibit                                 23     39K 


EX-99.2   —   Miscellaneous Exhibit

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CONFIDENTIAL Laser Technology, Inc. Presentation to The Special Committee Evaluation of Offers February 24, 2003
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Table of Contents Page ---- 3 4 6 7 9 10 12 13 14 15 16 17 18 20 21 2
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The Offers o Received offers to purchase LTI from: - The Williams Group - Public Safety Equipment o Received offer from Richton International to invest $3.0 MM in LTI o Decatur Electronics has not made a revised offer and is not expected to either. 3
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The Williams Offer o Amended its offer as follows: - Increased offer for all non-cash assets and liabilities from $3.75MM to $4.75MM; when combined with Company's cash position of $4.1MM equates to total offer of $8.9MM. - Amended its 13D filing and offer to include Kama-Tech which owns 176,100 common shares; the Group collectively owns 1,654,427 shares, which is equal to approximately 30.2% of the outstanding shares. - Requires minimum dividend of $1.55 per share in scenario where LTI retains approx. $350,000 in cash (before deal expenses) and a shell to consummate an acquisition. Will also accept liquidating dividend of $1.60 per share. - Other key elements: o No financing contingency o Complete due diligence within 10 days 4
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PSE Offer o Key elements: - Offer to purchase stock for $1.65 per share (including stock options) either through a merger or cash tender if insider group will agree in advance to tender their shares. Also willing to restructure offer as an asset purchase. - $1.65 offer equivalent to $9.1MM for Company and $5.0MM for non-cash assets and liabilities - No financing contingency - 3-4 weeks to complete confirmatory due diligence - 60 day exclusivity period with break-up fee equal to reimbursement of expenses if Company accepts a Superior Bid - Conditioned upon execution of employment agreements with key personnel. - Requires receipt of all necessary consents and approvals (including the Bushnell Performance Optics licensing agreement and other material contracts) - Requires final PSE Parent Company ( ) Board approval 5
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Richton International Offer o Proposes to invest $3.0MM in LTI common stock as follows: - 650,000 shares of Class B common stock with super majority voting rights equal to 10 votes per share for $3.00 per share (=$2MM); - 825,000 shares of Class A common stock having one vote per share for $1.27 per share (=$1MM). - Pro forma for the investment, Richton would have a 64% voting interest and a 21% economic interest in the Company. - The 21% economic interest acquired for $3MM values the existing business, including the cash, at approximately $9MM which is approximately the same value as the other offers. - Requires 60 days to complete due diligence and wants exclusivity during such time. 6
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Williams and Public Safety Offer Comparisons [Enlarge/Download Table] Williams Group Public Safety =================================================================================================================================== Offer for business $4.75MM plus required dividend of $1.65 per share including stock options $1.55/share, or $1.60 if Company elects not to retain shell. Form Purchase assets, assume all Prefer merger but will consider either liabilities and dividend proceeds a (a) cash tender if insider group will agree to tender in advance or (b) purchase of assets Financing Contingency None None Due Dligence 10 days 3-4 weeks Exclusivity None 60 days, plus break-up fee equal to reimbursement of expenses if Superior Deal accepted after execution of Letter of Intent Other Conditions Def. Agreement Def. Agreement No material adverse change No debt other than customary Approval of Britax Board Execution of employment agreements Deadline Offer good until 2-24 =================================================================================================================================== 7
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Recent Financial Performance o Q1 '03 revenues were $400,000 less than budgeted but slightly ahead of last year's results. o Jan '03 revenues were $530,000 vs. budget of $1.4MM. o The decline in revenues from budget of $1.3MM through the first four months of FY'03 causes concern over the ability of the Company to achieve the budgeted FY'03 revenue increase vs.r FY '02 of $2.5MM and the associated increase in adjusted EBITDA from $926,000 to $1.7MM. 8
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Q2 '03 Results and Forecast Actual Budget Jan Jan 2003 2003 Change =============================================================================== Revenues: --------- Traffic $238 $902 ($664) Survey 91 360 (268) Other 200 139 62 ---- ----- ----- Total 530 1,400 (871) COGS: ----- Materials NA NA NA Labor NA NA NA Overhead NA NA NA ---- ----- ----- Total 265 658 (393) Gross Margin 264 742 (478) Royalty Income 0 0 0 Operating Expenses: ------------------- Marketing 54 56 (2) Sales 157 247 (90) R&D 129 121 8 Finance/Admin. (1) 110 89 21 IT 9 11 (3) HR 13 9 4 Executive 56 47 9 ---- ----- ----- Total Operating Expenses 528 579 (52) Income (Loss) from Operations (263) 163 (426) =============================================================================== 9
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Q2 '03 Results and Forecast Actual Budget Jan Jan 2003 2003 Change ================================================================================ Other Income / Expenses: ------------------------ Restructuring & Litigation $0 $0 $0 Other 6 7 (1) ----- ---- ----- Total 6 7 (1) Pre-Tax Income (Loss) (258) 169 (427) Taxes (Benefit) (93) 61 (154) ----- ---- ----- Net Income ($165) $108 ($273) Other: ----- EBITDA (2) ($228) $199 ($427) Capital Expenditures NA NA NA ================================================================================ (1) Includes depreciation and amortization expenses. (2) Excluding restructuring, litigation and other income/expenses. 10
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Pro Forma EBITDA o Due to certain non-recurring expense items incurred in '02 and budgeted for '03 combined with certain cost reductions implemented in '02, a valuation based on EBITDA multiples requires that certain pro forma adjustments be made for the foregoing to derive a normalized EBITDA. o Accordingly, we have adjusted EBITDA figures as follows: 2002 Q1 '02 Q1 '03 LTM 2003E ---- ------ ------ --- ----- EBITDA as reported ($41) ($54) $135 $148 $1,491 Adjustments: Litigation Expense 600 150 41 491 0 Inventory Writedown 200 50 0 150 0 Rent Reduction 167 42 (16) 109 (65) Special Committee 0 0 95 95 250 ----- --- --- ----- ----- 967 242 120 845 185 Pro Forma EBITDA 926 187 254 993 1,676 Plus: Public Cos. Expense 350 88 88 350 350 ----- --- --- ----- ----- Adjusted Pro Forma EBITDA 1,276 275 342 1,343 2,026 11
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Book Value as of 12-31-02 o The book value of the operating business of LTI, excluding $4.1 MM of cash and $0.2MM deferred tax benefit, is as follows: Assets: Liabilities: A/R $1.8 Accounts Payable $0.6 Inventory 3.0 Accrued Expenses 0.3 Prepaid Expense 0.1 ---- PPE 0.5 $0.9 Intangibles 1.0 ---- $6.4 Adjusted Book Value (1) $5.5 (1) Represents $1.00 per share o The total book value of LTI is $9.8 MM or $1.80 per share. 12
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Litigation Update Asia Optical / Nikon -------------------- o In the settlement discussion hearing on Dec. 4th, AO increased its settlement offer from $325,000 to $700,000, which was rejected by LTI. o LTI is seeking $1.6 MM for past due royalties and legal expenses plus 3% royalties going forward. o A jury trial to be held in Denver is scheduled for April 15th, 2003 and would cost LTI approximately $300,000 in additional legal expenses. o The Company discovered that the amounts owed for past royalties is approximately 50% of the $1MM originally estimated. o During the pre-trial hearing on Friday Feb. 21, settlement discussions resumed and LTI is expected to make a counter offer shortly. 13
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Litigation Update (Cont'd) Bushnell -------- o Bushnell has sued LTI for $350,000 for overcharging for the ASIC chip. o LTI has sued Bushnell for $1,041,000 for past due royalties on crossover sales and overcharges on certain product purchases. o Bushnell has indicated it is unwilling to discuss this matter until the ownership of LTI has been resolved. 14
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Value of Williams Offer o The Williams Group offer of $4.75MM for the assets and liabilities, excluding cash, of the LTI business as a multiple of Adjusted Book Value and Pro Forma EBITDA is as follows: o Adjusted Book Value: 0.9x o Pro Forma '02 EBITDA: 5.1x o Pro Forma LTM EBITDA: 4.8x o Pro Forma '03 EBITDA: 2.8x o Excluding the $350,000 cost of being a public company, which the buyer would not incur, the offer represents the following multiple of Adjusted Pro Forma EBITDA: o Adjusted Pro Forma '02 EBITDA: 3.7x o Adjusted Pro Forma LTM EBITDA: 3.5x o Adjusted Pro Forma '03 EBITDA: 2.3x 15
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Value of Public Safety Equipment Offer o The Public Safety offer to purchase all the outstanding shares for $1.65 per share is equal to $9.1 MM, and excluding the $4.1 MM in cash as of 12-31-02, values the business at $5.0 MM. o Because the PSE offer is structured to include an offer for the cash, the value being offered when expressed as a multiple of Book Value and EBITDA appears to be higher than that of Williams even though they value the operating business just slightly higher. o Public Safety's offer as a multiple of LTI's Book Value, and Pro Forma EBITDA is as follows: Amount Multiple ------ -------- LTI Book Value (12-31-02) $9,798 0.9x Pro Forma '02 EBITDA 926 9.7x Pro Forma LTM EBITDA 993 9.1x Pro Forma '03 EBITDA 1,676 5.4x 16
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Conclusion o All three offers value the Company at approximately the same level. o The offers represents a slight but immaterial discount to the $1.77 per share value that we had targeted in our December presentation as being a level that we would deem to be fair. o We believe that both the Williams and PSE offers can be increased slightly through further negotiation. o Both the Williams and PSE offers are attractive in that there is no financing contingency. o The Richton offer while valuing the business at fair value does not provide shareholders the$1.60- $1.65 in cash today that the other offers provide nor does it guarantee the shareholders that the LTI stock will trade at such levels in the marketplace after such an investment. o The $1.65 offers represent a 37.5% premium to the 2-21-03 closing stock price of $1.20, and a 50% premium to the original offer of $1.10 per share 17
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Conclusion (cont'd) o Other factors to consider in determining next steps: - Timing: Potential AO settlement and impact on offers. - Size of Williams Group shareholdings vs. voting percentages required for shareholder approval. - Process: Proceed to Definitive Agreement or Letter of Intent - Form of Transaction: o Sale of assets - With liquidating dividend - Dividend substantially all assets but retain small amount of cash and shell Sale of stock Merger Tender Offer 18
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Recommendation o Tell both parties: - Offers are about the same - Company in discussions regarding an AO settlement and that any amount of settlement agreed to during the process will be added to the value of the offer for the benefit of the LTI shareholders - Ask them to reconsider increasing their offers and reducing contingencies in order to help the Committee determine whether to proceed with one or both parties until a definitive agreement is executed. 19
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Q1 FY '03 Budget [Enlarge/Download Table] Fiscal Year Ended September 30, 2003 ------------------------------------------------------------------------------------------ October November December Q1 Q1 '02 ----------------- ----------------- ----------------- -------------- ------ Actual Budget Actual(1) Budget Actual Budget Actual Budget Actual =========================================================================================================================== Total Revenues $821 $920 $514 $1,088 -- $1,056 -- $3,064 $2,466 Cost of Goods Solds -- 433 -- 511 -- 496 -- 1,440 1,188 Gross Margin -- 487 -- 577 -- 559 -- 1,624 1,278 % Margin 53.0% 53.0% 53.0% 53.0% 51.8% Royalty and Licensing Income -- 0 -- 0 -- 222 -- 222 222 Operating Expenses: ------------------- Marketing -- 64 -- 49 -- 42 -- 155 142 Sales -- 178 -- 187 -- 185 -- 551 570 Research & Development -- 117 -- 117 -- 117 -- 350 328 Finance/Admin -- 101 -- 88 -- 95 -- 284 423 Information Technology -- 15 -- 11 -- 11 -- 37 41 Human Resources -- 11 -- 9 -- 18 -- 38 40 Executive -- 73 -- 249 -- 85 -- 408 141 -- --- -- --- --- Total -- 559 -- 710.5 -- 552 -- 1,822 1,686 Operating Income -- (71) -- (134) -- 229 -- 24 (186) Other Income / Expenses: ------------------------ Restructuring & Litigation 0 0 0 0 0 0 -- 0 0 Other 0 7 0 7 0 7 -- 20 14 - - - - - - -- -- Total 0 7 0 7 0 7 -- 20 14 Pre-Tax Income (Loss) -- (65) -- (127) -- 235 -- 43 (173) Taxes (Benefit) -- (23) -- (46) -- 85 -- 16 (62) Net Income -- ($41) -- ($81) -- $151 -- $28 ($111) Other: ------ EBITDA -- ($37) -- ($100) -- $263 -- $125 ($54) Capital Expenditures -- 0 -- 0 -- 0 -- 0 22 =========================================================================================================================== (1) Revenue figure based on shipment data. 20
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Summary Historical Income Statement [Enlarge/Download Table] Fiscal Year Ended September 30, ------------------------------------------------------------------------------------------ Pro Forma Q1 Q1 2000 2001 2002 Adj. 2002 2002 2003 2003 B ========================================================================================================================== Revenues: --------- Traffic $8,332 $6,957 $7,148 $0 $7,148 $1,653 $1,713 $9,250 Survey 3,877 3,294 2,112 0 2,112 547 687 2,447 Other 511 1,221 1,318 0 1,318 267 245 1,388 --- ----- ----- - ----- --- --- ----- Total 12,720 11,472 10,577 0 10,577 2,466 2,645 13,086 COGS: ----- Materials 4,777 4,441 4,427 (200) 4,227 1,049 NA 4,737 Labor 468 618 416 0 416 107 NA 707 Overhead 557 358 407 (84) 323 32 NA 707 --- --- --- --- --- -- -- --- Total 5,802 5,416 5,249 (284) 4,965 1,188 1,242 6,150 Gross Margin 6,918 6,056 5,328 284 5,612 1,278 1,403 6,935 Royalty Income 959 1,033 998 0 998 222 193 971 Operating Expenses: ------------------- Marketing 730 666 592 0 592 142 115 601 Sales 2,670 2,554 2,333 (33) 2,300 570 523 2,591 R&D 1,275 1,160 1,353 (50) 1,303 328 300 1,431 Finance/Admin. (1) 1,692 1,403 1,690 (600) 1,090 423 314 1,074 IT 132 153 157 0 157 41 37 143 HR 160 157 135 0 135 40 41 121 Executive 701 677 598 0 598 141 237 882 --- --- --- - --- --- --- --- Total Operating Expenses 7,361 6,770 6,858 (683) 6,175 1,686 1,568 6,842 Income (Loss) from Operations 516 319 (532) 967 435 (186) 28 1,064 ========================================================================================================================== 21
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Summary Historical Income Statement (Cont'd) [Enlarge/Download Table] Fiscal Year Ended September 30, --------------------------------------------------------------------------------------- Pro Forma Q1 Q1 2000 2001 2002 Adj. 2002 2002 2003 2003 B ====================================================================================================================== Other Income / Expenses: ------------------------ Restructuring & Litigation $0 $0 $0 $0 $0 $0 $0 $0 Other 59 203 54 0 0 14 11 78 -- --- -- - - -- -- -- Total 59 203 54 0 54.4 14 11 78 Pre-Tax Income (Loss) 575 523 (478) 967 489 (173) 39 1,142 Taxes (Benefit) 234 114 (172) 348 176 (62) 14 411 --- --- ---- --- --- --- -- ---
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Net Income $341 $409 ($306) $619 $313 ($111) $25 $731 Other: ------ EBITDA (2) $1,079 $876 ($41) $967 $926 (54) 135 $1,491 Capital Expenditures 196 190 143 0 143 22 28 549 ======================================================================================================================
(1) Includes depreciation and amortization expenses. (2) Excluding restructuring, litigation and other income/expenses. 22

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