ConfidentialInformationMemorandum

June30,2011

SampleIndustries,Inc.
(Notarealcompany.)

Preparedby:
JohnSmith,CPA
MiddleMarketBusinessAdvisors
500NorthMichiganAve.
Chicago,IL.60600

ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedor
replicatedinanyformwithouttheexpressandwrittenauthorizationofMiddleMarketBusinessAdvisors.Middle
MarketBusinessAdvisorshasnotmadeanyindependentinvestigation,verificationorauditofanyofthe
informationcontainedinthisMemorandum.MiddleMarketBusinessAdvisorsmakesnorepresentationsor
warranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

TableofContents
DISCLAIMERANDNOTICE

CONFIDENTIALINFORMATIONMEMORANDUM

INTRODUCTION

FINANCIALSNAPSHOT

OWNERSHIPANDHISTORY

NARRATIVEANDDESCRIPTIVEINFORMATION
IndustryOverview
OverviewoftheBusiness
OwnershipandControl
HistoryoftheBusiness
StrategyandBusinessModel
CustomersandCustomerRelationships
ProductsandServices
MarketSegments
CompetitiveOverview
CompanyandProductBrands
SalesandCommunication
IndustryTrends
ManagementandEmployees
OperationsandBusinessProcess
FacilitiesandPremises
VendorsandSupplyChain
InformationSystems
ProprietaryTechnologyandIntellectualProperty
Legal,RegulatoryandEnvironmental

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4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4

FINANCIALPERFORMANCE
HistoricIncomeStatementSummary
Historic&AdjustedEBITDA
AdjustedFreeCashFlow
CompoundAverageGrowthRates(CAGR)
SummaryHistoricalBalanceSheets
SummaryHistoricalStatementsofCashFlows
HistoricalFinancialRatios
KeyBusinessRatiosComparedtoIndustry

5
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5
6
7
7
8
8
11

FINANCIALSTATEMENTPROJECTIONS
ProjectedIncomeStatementSummary
ProjectedEBITDAlessCapitalExpenditures(CapEx)
ProjectedCompoundAverageGrowth(CAGR)

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12
12
13

ACQUISITION&TRANSACTIONINFORMATION

13

ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

DisclaimerandNotice

ConfidentialandPrivateInformation
LegalNotice:Readthisfirstbeforeviewingthisdocument.

ThepurposeofthisConfidentialInformationMemorandum(theMemorandum)istoacquaintandfamiliarize
prospectivebuyerswithaClientofMiddleMarketBusinessAdvisors(theBusinessIntermediary).TheClient
seekstosellallorsubstantiallyallofitsbusinessandrelatedassets.

InordertoproperlyobtainandreadthisMemorandum,youarerequiredtosignaConfidentialityAgreement
thatwasprovidedbytheBusinessIntermediary.ThisMemorandumandanyadditionalinformationprovidedby
theBusinessIntermediaryorcontainedinanyonlineDataRoomareprovidedsubjecttotheConfidentiality
Agreement.

DonotreadthisMemorandumunlessyouhavesignedaConfidentialityAgreementfurnishedbytheBusiness
Intermediary.TheBusinessIntermediary'scontactinformationisprovidedatthebottomofthisnotice.Contact
theBusinessIntermediaryimmediatelyinordertoobtainandsignaConfidentialityAgreementorreturnthis
MemorandumtotheBusinessIntermediary.

ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbe
reproduced,copiedorreplicatedinanyformincludingprintanddigitalmediawithoutthe
expressandwrittenauthorizationoftheBusinessIntermediary.

ThisMemorandumisandatalltimesshallremaintheexclusivepropertyoftheBusiness
Intermediary.

Youareresponsibleforprotectingtheconfidentialityandproprietyoftheinformation
containedinthisMemorandum.ImproperdisclosuremayharmourClientandyouwillbe
heldresponsibleforanydamagesresultingfromanimproperdisclosureonyourpart.

ShoulditbecomenecessarytopresentthisMemorandumtothirdpartiesaspartofaduediligenceinvestigation
ortoobtainfinancing,youshouldadvisethethirdpartiesthatthisMemorandumisconfidentialandthatyou
havesignedaConfidentialityAgreementinordertoobtainit.Youareresponsibleformaintainingand
protectingtheconfidentialityofthisMemorandumandthatobligationextendstoyouremployees,advisors,
representatives,agentsandanyotherthirdpartieswhosubsequentlyreceivethisMemorandumandthe
informationcontainedherein.

TheBusinessIntermediary,employees,representativesandagentshavenotmadeanyindependent
investigation,verificationorauditofanyoftheinformationcontainedinthisMemorandumandany
representationtothecontraryisnotauthorized.Norepresentationsorwarranties,expressedorimplied,are
maderegardingtheaccuracyorcompletenessoftheinformationcontainedhereinandsuchrepresentations
andwarrantiesbyBusinessIntermediaryarenotauthorized.

ThisMemorandumcontainsstatements,estimatesandprojectionsprovidedbytheClientconcerning
1
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

anticipatedfutureperformance.Suchstatements,estimatesandprojectionsreflectassumptionsbyourClient
concerninganticipatedresults,whichmayormaynotprovetobecorrect.Norepresentations,expressedor
impliedaremadeastotheaccuracyofsuchstatements,estimatesandprojections.

TheBusinessIntermediaryrepresentstheSeller(s).ItisexpresslyunderstoodthattheBusinessIntermediaryis
notanagentorrepresentativeofanyprospectivebuyerorrecipientofthisMemorandumandthattheBusiness
IntermediaryisnotactingandshallnotactasafiduciaryoftheBuyer.

TheBusinessIntermediarydoesnotandshallnotprovidelegal,tax,accountingandriskmanagementadvice.
Prospectivebuyersareadvisedtoseekandobtainthecounselofcompetentprofessionals.

AdditionalInformation:

AllcommunicationregardingthisMemorandumandrequestsforadditionalinformationshouldbedirectedto
theBusinessIntermediary:

JohnSmith,CPA
MiddleMarketBusinessAdvisors
500NorthMichiganAve.
Chicago,IL.60600

2
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

ConfidentialInformationMemorandum
Introduction

ThisConfidentialInformationMemorandumhasbeenpreparedbyJohnSmith,CPA,BusinessIntermediary,in
ordertoacquaintandfamiliarizeprospectivebuyerswiththebusinessandoperationsofSampleIndustries,Inc.
(theCompany).TheinformationcontainedhereinisconfidentialandprovidedsubjecttotheDisclaimerand
Noticeonthepreviouspage.

TheCompanyisprimarilyengagedinthebusinessofSportinggoodsmanufacturinganditssecondarybusiness
activityisAthleticgoodsdistribution.TheapplicableSIC/NAICScodesfortheCompany'sbusinessactivityare
3949/12345.TheCompanydoesbusinessunderthetradenameofSampleSportingEquipment.

FinancialSnapshot
Thefollowingtablesprovideasummaryofkeyincomestatementaccountsforfiscalyear2010andthetrailing
twelvemonthsendingJun2011.

LatestReported
Trailing
IncomeData:
FullYear
TwelveMonths
NetSalesRevenue
NetIncome
AdjustedEBITDA

BalanceSheetData:

$31,541,420
$1,060,590
$3,613,460

$33,034,700
$1,582,448
$4,219,339

MostRecent
Reported

Percentof
TotalAssets

CurrentAssets
$7,509,604
48.38%
FixedAssets(NetofAccumulated)
$5,363,423
34.55%
OtherAssets
$2,649,560
17.07%
TotalAssets
$15,522,587
100.00%

Amoredetailedsummaryoffinancialstatementdataandratioanalysisareincludedlateronalongwithfinancial
statementsfortheaboveperiods(asanaddendum).

3
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

OwnershipandHistory
TheCompanywasestablishedin1989andisorganizedunderthelawsofCalifornia.TheCompanyisstructured
asaCCorporation.

TheCompanyhasengagedMiddleMarketBusinessAdvisorsandamajorityblockofthecontrollinginteresthas
authorizedMiddleMarketBusinessAdvisorstofindabuyerforallorsubstantiallyalloftheCompany'sbusiness
andrelatedassets.

NarrativeandDescriptiveInformation
Whenpresentinganactualcompanyforsale,youwouldincludedescriptiveinformationaboutthebusiness.
ThereportgeneratedbyDealSensePlusincludessectionheadingsforthetopicsthataretypicallyrequiredby
prospectivebuyers.Thesesectionheadings(topics)arelistedbelow:

IndustryOverview
OverviewoftheBusiness
OwnershipandControl
HistoryoftheBusiness
StrategyandBusinessModel
CustomersandCustomerRelationships
ProductsandServices
MarketSegments
CompetitiveOverview
CompanyandProductBrands
SalesandCommunication
IndustryTrends
ManagementandEmployees
OperationsandBusinessProcess
FacilitiesandPremises
VendorsandSupplyChain
InformationSystems
ProprietaryTechnologyandIntellectualProperty
Legal,RegulatoryandEnvironmental
4
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

FinancialPerformance
HistoricIncomeStatementSummary
Thefollowingtablepresentsthelast5yearsofincomestatementaccountgroupsalongwiththeirrespective
percentageoftotalrevenues.Thelatesthistoricincomestatementisforfiscalyear2010:

2006

2007

2008

2009

2010

NetSalesRevenue

25,302,860 26,494,580 28,043,400 29,219,270 31,541,420

TotalCostofGoodsSold

20,165,679 21,681,757 22,263,336 22,943,789 23,870,297

GrossProfit
%ofRevenue
TotalSellingExpenses

5,137,181
20.30%

4,812,823
18.17%

5,780,064
20.61%

6,275,481
21.48%

7,671,123
24.32%

749,750

813,180

917,500

997,500

1,316,990

TotalGeneral&AdministrativeExpenses

3,037,730

2,486,432

3,319,075

3,616,368

4,129,399

IncomeFromOperations
%ofRevenue

1,349,701
5.33%

1,513,211
5.71%

1,543,489
5.50%

1,661,613
5.69%

2,224,734
7.05%

TotalOtherRevenuesandExpenses

(623,774)

(613,150)

(563,153)

(533,769)

(486,062)

725,927
2.87%

900,061
3.40%

980,336
3.50%

1,127,844
3.86%

1,738,672
5.51%

IncomeBeforeTaxes
%ofRevenue
TotalIncomeTaxes

283,111

351,024

382,331

439,859

678,082

NetIncome
%ofRevenue

442,816
1.75%

549,037
2.07%

598,005
2.13%

687,985
2.35%

1,060,590
3.36%

Historic&AdjustedEBITDA
EarningsBeforeInterestTaxesDepreciationandAmortization(EBITDA)havebeenadjustednontransferable
andnonrecurringincome/expendituresaswellasdiscretionaryexpensesinordertobetterreflectthe
economiclevelofearnings.Theseadjustmentsaresummarizedbelowbyincomestatementaccountgroupso
theycanbetracedtothefinancialstatementsforverificationpurposes:

2006

2007

2008

2009

2010

2,377,930

2,694,760

2,903,970

3,065,364

3,453,460

Nonoperatingincome

(20,000)

(30,000)

(40,000)

(50,000)

(60,000)

Totalincomeadjustments

(20,000)

(30,000)

(40,000)

(50,000)

(60,000)

(50,000)

(75,000)

(100,000)

(125,000)

(150,000)

(5,000)

(5,000)

(10,000)

(15,000)

(20,000)

(10,000)

(20,000)

(30,000)

(40,000)

(50,000)

HistoricEBITDA:
EarningsBeforeInterest,Depr.&Amort.(EBITDA)

Add/(deduct)incomeadjustments:

Add/(deduct)expenseadjustments:
Officer/Owner'sCompensation
Travel&entertainment
Less:Nonoperatingexpense

5
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

Totalexpenseadjustments

(65,000)

(100,000)

(140,000)

(180,000)

(220,000)

TotalAdjustments

45,000

70,000

100,000

130,000

160,000

AdjustedEBITDA

2,422,930

2,764,760

3,003,970

3,195,364

3,613,460

2006

2007
1,513,211
80,000
1,593,211
541,692
1,051,519
1,120,139
929,999
378,300

2008
1,543,489
110,000
1,653,489
562,186
1,091,303
1,266,711
930,000
278,050

2009
1,661,613
140,000
1,801,613
612,548
1,189,065
1,289,091
2,180,000
99,570

2010
2,224,734
170,000
2,394,734
814,210
1,580,524
1,110,806
929,999
338,500

863,359

1,149,964

198,586

1,422,831

AdjustedFreeCashFlow

Historicincomefromoperations
Totaloperatingadjustments
Adjustedoperatingincome
Less:Taxbasedonselectedtaxrate
Equals:Adjustedaftertaxincomefromoperations
Plus:Depr.&amort.fromoperations(netoftax)
Less:Fixedassetpurchases
Less:Changesinnetworkingcapital
AdjustedFreecashflow

Taxesarecalculatedbaseduponincomefromoperationsusinganeffectivetaxrateof34.00%.

ChangesintheNetWorkingCapitalComponentofFreeCashFlow

WorkingCapitalconsistsoftotalcurrentassets.NetWorkingCapitalisthedifferencebetweencurrentassets
andcurrentliabilities.ThefollowingtablepresentsChangesinNetWorkingCapital,whichisacomponentof
theFreeCashFlowcalculation.Changesincashandcashequivalentsalongwiththecurrentportionofinterest
bearingdebthavebeenexcludedtoarriveatFreeCashFlow.

2006

2007

2008

2009

2010

AccountsReceivable
Inventory
OtherCurrentAssets
CurrentAssets*

2,004,300
2,000,000
133,960
4,138,260

2,027,370
2,370,000
141,440
4,538,810

1,987,130
2,685,000
145,780
4,817,910

2,220,890
2,765,000
138,540
5,124,430

2,285,390
2,815,000
142,390
5,242,780

AccountsPayable
TaxesPayable
OtherCurrentLiabilities
CurrentLiabilities*

1,297,600
324,500
323,700
1,945,800

1,311,800
335,750
320,500
1,968,050

1,303,850
334,750
330,500
1,969,100

1,424,150
389,400
362,500
2,176,050

1,368,000
267,900
320,000
1,955,900

NetWorkingCapital
%ofRevenue
AverageNetWorkingCapital%ofRevenue

2,192,460
8.66%
9.81%

2,570,760
9.70%
9.18%

2,848,810
10.16%
9.51%

2,948,380
10.09%
9.65%

3,286,880
10.42%
9.81%

378,300

278,050

99,570

338,500

ChangeinNetWorkingCapital

*Pleasenoteinthetableabove,CashandCashEquivalentshavebeendeducedfromCurrentAssets.Also,
ShortTermNotesPayableaswellasanyCurrentPortionofLongTermNotesPayablehavebeendeductedfrom
CurrentLiabilities.

6
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.


CompoundAverageGrowthRates(CAGR)
TheCompoundAverageGrowthRates(CAGRs)arebaseduponhistoricfinancialstatementdataandAdjusted
EBITDAforthelast5yearsaspresentedinthefollowingschedule.CAGRiscalculatedforeachyearasthetotal
growthfromthebaseperiod(i.e.,thefirsthistoricyear)dividedbythenumberofyearsfromthebaseperiod.
ThegrowthratesarecalculatedforNetSalesRevenue,NetIncome,AdjustedEBITDAandAdjustedFreeCash
FlowsTIConayeartoyearbasis.

Historic
NetSales

Adjusted
AdjustedFree
Year
Revenue
NetIncome
EBITDA
CashFlowTIC
2006

2007
4.71%
23.99%
14.11%

2008
5.28%
16.21%
11.35%
33.20%
2009
4.91%
15.82%
9.66%
52.04%
2010
5.66%
24.40%
10.51%
18.12%

SummaryHistoricalBalanceSheets
AsummaryofthemainaccountgroupsbalancesfromtheCompany'sbalancesheetsforthelast5yearsfollows.
Thelatestbalancesheetwaspreparedasoftheendoffiscalyear2010.

ASSETS
TotalCurrentAssets

2006

2007

2008

2009

2010

4,956,423

5,427,189

6,388,104

7,147,785

7,509,604

NetFixedAssets

5,142,852

4,962,042

4,634,661

5,534,900

5,363,423

TotalLongTermInvestments

3,904,180

3,583,210

3,672,670

2,204,390

1,651,210

NetIntangibleAssets

245,670

236,340

227,010

217,680

208,350

TotalOtherNoncurrentAssets

550,000

710,000

770,000

780,000

790,000

TotalAssets

14,799,125 14,918,781 15,692,445 15,884,755 15,522,587

LIABILITIES&STOCKHOLDERS'EQUITY
TotalCurrentLiabilities

2,475,964

2,643,420

2,804,881

3,236,123

3,101,758

TotalLongTermDebt

6,177,995

5,908,225

5,976,625

5,458,061

4,710,722

27,000

27,000

27,000

27,000

27,000

8,680,959

8,578,645

8,808,506

8,721,184

7,839,480

Preferredstock
Commonstock
Retainedearnings

800,000
2,780,000
2,538,166

800,000
2,780,000
2,760,136

850,000
3,000,000
3,033,939

850,000
3,000,000
3,313,571

850,000
3,000,000
3,833,107

TotalStockholders'Equity

6,118,166

6,340,136

6,883,939

7,163,571

7,683,107

TotalOtherLongTermLiabilities
TotalLiabilities
Stockholders'Equity:

TotalLiabilities&Stockholders'Equity

14,799,125 14,918,781 15,692,445 15,884,755 15,522,587

7
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

SummaryHistoricalStatementsofCashFlows
TheHistoricalStatementsofCashFlowsforthelast5yearspresentedbelowinsummaryformat.

2006

2007

2008

2009

2010

981,516

NetCashFlowFromOperations

862,646

1,430,146

1,600,486

NetCashFlowFromInvestments

(633,999) (1,046,000)

(740,000)

(406,999)

NetCashFlowFromFinancing

(438,081)

189,579

(686,075) (1,184,348)

NetCashFlow

(90,564)

6,225

4,071

9,139

CashatBeginningofYear

313,943

223,379

229,604

233,675

CashatEndofYear

223,379

229,604

233,675

242,814

TheCashFlowsAvailabletoEquityHolderspresentedbelowshowstheimpactofchangesinequityaccountson
NetCashFlow.ThecalculationofCashFlowsAvailabletoEquityHoldersstartswithNetCashFlowfromthe
HistoricalStatementsofCashFlowsandaddsbackthechangesintheequityanddividendaccounts.Theresult
representstheamountofcashflowsthatareavailabletoequityholders.

NetCashFlow

(90,564)

6,225

4,071

9,139

Plus:Preferreddividends

80,000

80,000

85,000

85,000

85,000

Plus:Commondividends

227,450

247,067

239,202

323,353

456,054

Changeinpreferredstock

(50,000)

Changeincommonstock

(220,000)

Totalcashflowsavailabletoequityholders

236,503

60,427

412,424

550,193

HistoricalFinancialRatios
Atimeseriesofvariousbusinessandfinancialratioshavebeencalculatedfromeachyear'shistoricfinancial
statements.TheseratiosmeasuretheCompany'sliquiditypositions,coveragecapacity,leverage/capitalization,
operatingefficiencyandequityperformance.

Thekeydatapointsusedtopreparetheseratiosaresummarizedinthefollowingtable:

SourceDataforRatioAnalysis:

IncomeandExpenseData:

Sales
CostofSales
GrossMargin

OfficerSalary
NonOfficerWages
TotalWages

Research&Development
TotalGeneral&AdministrativeExpense

2006
2007
2008
2009
2010
25,302,860 26,494,580 28,043,400 29,219,270 31,541,420
20,165,679 21,681,757 22,263,336 22,943,789 23,870,297
5,137,181 4,812,823 5,780,064 6,275,481 7,671,123
350,000
400,000
450,000
500,000
550,000
10,640,000 10,685,000 11,564,000 11,809,500 12,618,400
10,990,000 11,085,000 12,014,000 12,309,500 13,168,400
0
3,037,730

0
2,486,432

0
3,319,075

0
3,616,368

0
4,129,399

8
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

TotalOperatingExp.(COGS+SellingExp.+G&AExp.)

23,953,159 24,981,369 26,499,911 27,557,657 29,316,686

EarningsData:
NetOperatingIncome
EBITDA
EBIT
EBT
NetIncomeAfterTax

1,349,701
2,377,930
1,404,361
725,927
442,816

1,513,211
2,694,760
1,574,621
900,061
549,037

1,543,489
2,903,970
1,637,259
980,336
598,005

1,661,613
3,065,364
1,776,273
1,127,844
687,985

2,224,734
3,453,460
2,342,654
1,738,672
1,060,590

(90,564)
981,516
156,313
810,559

6,225
862,646
800,477
1,077,364

4,071
1,430,146
(681,766)
106,186

9,139
1,600,486
156,343
1,310,631

CashFlowData:
NetCashFlow
CashfromOperations
FreeCashFlowavailabletoEquity(FCFE)
FreeCashFlowavailabletoTIC(FCFTIC)

BalanceSheetData:
Cash&Equivalents
AccountsReceivable
Inventory
WorkingCapital
NetFixedAssets
NetIntangibleAssets
TotalAssets
Tradeaccountspayable
TotalCurrentLiabilities
TotalLiabilities

818,163
888,379 1,570,194 2,023,355 2,266,824
2,004,300 2,027,370 1,987,130 2,220,890 2,285,390
2,000,000 2,370,000 2,685,000 2,765,000 2,815,000
2,480,459 2,783,769 3,583,223 3,911,662 4,407,846
5,142,852 4,962,042 4,634,661 5,534,900 5,363,423
245,670
236,340
227,010
217,680
208,350
14,799,125 14,918,781 15,692,445 15,884,755 15,522,587
1,233,100 1,240,800 1,228,350 1,329,650 1,294,600
2,475,964 2,643,420 2,804,881 3,236,123 3,101,758
8,680,959 8,578,645 8,808,506 8,721,184 7,839,480

InvestedCapitalData:
TotalInterestBearingDebt
TotalEquity
TotalInvestedCapital(TIC)

6,708,159 6,583,595 6,812,406 6,518,134 5,856,580

6,118,166 6,340,136 6,883,939 7,163,571 7,683,107
12,826,325 12,923,731 13,696,345 13,681,705 13,539,687

Thefollowingratioshavebeencalculatedusingtheabovedata:

2006

2007

2008

2009

2010

LiquidityRatios:

Thefollowingliquidityratiosmeasuretheshorttermabilityofacompanytomeetitsmaturingobligations.

Current
Quick
Accountsreceivableturnover
Days'receivable
Inventoryturnover
Days'inventory
Accountspayableturnover
Days'payable
Workingcapitalturnover
Inventoryasa%ofTotalcurrentassets

2.00
1.14
12.62
28.52
10.08
35.70
16.35
22.01
10.20
40.35%

2.05
1.10
13.07
27.55
9.15
39.35
17.47
20.60
9.52
43.67%

2.28
1.27
14.11
25.51
8.29
43.42
18.12
19.86
7.83
42.03%

2.21
1.31
13.16
27.36
8.30
43.38
17.26
20.86
7.47
38.68%

2.42
1.47
13.80
26.08
8.48
42.45
18.44
19.52
7.16
37.49%

9
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preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

Totalcurrentassetsasa%ofTotalassets

33.49%

36.38%

40.71%

45.00%

48.38%

CoverageRatios:

Thefollowingcoverageratiosmeasurethedegreeofprotectionforlongtermcreditorsandinvestorsandthe
marginbywhichcertainobligationsofacompanycanbemet.

Timesinterestearned
Currentportionoflongtermdebtcoverage
Principal&Interestcoverage
Preferreddividendcoverage

2.07
2.67
2.07
5.54

2.33
2.47
1.79
6.86

2.49
2.23
5.81
7.04

2.74
1.87
1.57
8.09

3.88
1.89
1.39
12.48

Leverage/CapitalizationRatios:

Thefollowingleverage/capitalizationratiosmeasuretheamountofacompany'soperationsthatarefinanced
fromdebtversusfinancedfromequity.

FixedassetstoTangiblenetworth
TotaldebttoTangiblenetworth
ShorttermdebttoTotaldebt
ShorttermdebttoNetworth
TotaldebttoTotalassets

0.88
1.48
28.52%
40.47%
58.66%

0.81
1.41
30.81%
41.69%
57.50%

0.70
1.32
31.84%
40.75%
56.13%

0.80
1.26
37.11%
45.17%
54.90%

0.72
1.05
39.57%
40.37%
50.50%

OperatingRatios:

Thefollowingoperatingratiosmeasuretheefficiencyandproductivityofacompanyusingtheresourcesthat
areavailableandthereturnsonsalesandinvestments.

PercentreturnonTangiblenetworth
PercentreturnonTotalassets
NetsalestoNetfixedassets
NetsalestoTotalassets
PercentDepr.,Amort.toNetsales
PercentOfficersalariestoNetsales
Fixedassetturnover
TotalsalestoNetworth
PercentOperatingcost
PercentNetprofit
Revenuegrowthpercentage

12.36%
4.91%
4.92
1.71
3.85%
1.38%
5.00
4.21
47.89%
1.75%

14.75%
6.03%
5.34
1.78
4.23%
1.51%
5.45
4.26
47.59%
2.07%
5.01%

14.73%
6.25%
6.05
1.79
4.52%
1.60%
6.14
4.13
47.66%
2.13%
5.26%

16.24%
7.10%
5.28
1.84
4.41%
1.71%
5.36
4.14
47.29%
2.35%
4.40%

23.26%
11.20%
5.88
2.03
3.52%
1.74%
6.03
4.21
46.46%
3.36%
8.89%

EquityRatios:

Thefollowingequityratiosmeasuretheperformanceofassetsandearningsinrelationtocommonand
preferredequity.
10
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preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.


NetbookvaluepershareofPreferredstock
NetbookvaluepershareofCommonstock
Percentearningspayout
Percentearningsretention
DividendsperCommonshare
Simpleearningspershare

5.87
0.63
62.69%
37.31%
0.03
0.05

6.10
0.66
52.68%
47.32%
0.03
0.06

6.66
0.73
46.63%
53.37%
0.03
0.06

6.95
0.76
53.63%
46.37%
0.04
0.08

7.47
0.83
46.75%
53.25%
0.06
0.12

KeyBusinessRatiosComparedtoIndustry
TheCompany'sfinancialratioshavebeencalculatedfromthemosthistoricfinancialstatementshavebeen
comparedtocomposite,industryfinancialratios.

ThesourcefortheindustrydataisRMAAnnualStatementStudiesusingNAICSCodenumber339920.The
industrydataiscategorizedbySalessizeof$25MM..Thedateofthisindustryinformationis2010with49
differentcompaniescontainedinthesample.

Althoughindustrystatisticsareausefulsourceofgeneralanalyticaldata,therecanbesignificantvariationinthe
reportingpracticesandoperationalmethodsofcompanieswithinagivenindustry.Therefore,industrystatistics
asusedthroughoutthisreportshouldnotberegardedasabsolutenormsorstandards.

Business
2010

Industry
2010

2.4211
1.4676
13.8013
8.4797
18.4384
7.1557

2.0
0.9
7.8
4.1
12.6
5.5

3.8787
1.8950

3.5
6.7

0.7175
1.0488

0.4
1.2

23.2606%
11.2009%
5.8808
2.0320
3.5217%
1.7437%

16.4%
5.5%
13.5
1.8
2.0%
0.0%

LiquidityRatios:
Currentratio
Quickratio
Accountsreceivableturnover
Inventoryturnover
Accountspayableturnover
Workingcapitalturnover

CoverageRatios:
Timesinterestearned
Currentportionoflongtermdebtcoverageratio

Leverage/CapitalizationRatios:
FixedassetstoTangiblenetworth
TotaldebttoTangiblenetworth

OperatingRatios:
PercentreturnonTangiblenetworth
PercentreturnonTotalassets
NetsalestoNetfixedassets
NetsalestoTotalassets
PercentDepr.,Amort.toNetsales
PercentOfficersalariestoNetsales

11
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preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

FinancialStatementProjections
Inordertopresentmanagement'sinternalexpectationsonfutureperformance,thisConfidentialInformation
Memorandumincludesasummarizedprojectedincomestatementfor5years.Theassumptionsforthese
projectionswereprovidedbytheClientconcerninganticipatedfutureperformance.Theassumptionsandthe
anticipatedresultsmayormaynotprovetobecorrect.Norepresentations,expressedorimplied,aremadeas
totheaccuracyofsuchstatements,estimatesandprojections.

Theseprojectionsdonotconsideranysynergiesoreconomiesofscalethatwouldresultfromatransactionwith
aspecificbuyer.

ProjectedIncomeStatementSummary

Historic

2011

2012

2013

2014

2015

NetSalesRevenue

31,541,420

33,029,158

34,605,870

36,277,151

38,049,272

39,928,935

TotalCostofGoodsSold

23,870,297

24,002,726

24,996,025

25,785,488

26,838,735

28,138,228

GrossProfit
%ofRevenue

7,671,123
24.32%

9,026,433
27.33%

9,609,846
27.77%

10,491,663
28.92%

11,210,537
29.46%

11,790,707
29.53%

TotalSellingExpenses

1,316,990

1,486,312

1,557,264

1,632,472

1,712,217

1,796,802

TotalGeneral&AdministrativeExpenses

3,959,399

4,565,959

4,433,645

4,230,482

4,258,997

4,465,975

IncomeFromOperations
%ofRevenue

2,394,734
7.59%

2,974,162
9.00%

3,618,936
10.46%

4,628,709
12.76%

5,239,323
13.77%

5,527,930
13.84%

TotalOtherRevenuesandExpenses

(496,062)

(335,596)

(363,472)

(271,591)

(137,659)

(1,038)

IncomeBeforeTaxes
%ofRevenue

1,898,672
6.02%

2,638,566
7.99%

3,255,465
9.41%

4,357,117
12.01%

5,101,665
13.41%

5,526,892
13.84%

740,483

2,638,566

3,255,465

4,357,117

5,101,665

5,526,892

1,158,189
3.67%

1,654,381
5.01%

2,041,176
5.90%

2,731,913
7.53%

3,198,744
8.41%

3,465,361
8.68%

TotalIncomeTaxes
NetIncome
%ofRevenue

ProjectedEBITDAlessCapitalExpenditures(CapEx)
Theaboveprojectionsassumethefollowingcapitalexpenditureswillberequiredinordertokeeppacewith
revenuesandremaincompetitivenessinthemarketplace.EBITDAlessCapitalExpendituresarealsopresented
foreachprojectedyear.

Projected

EBITDA
Year
EBITDA
CapitalExpenditures
lessCapEx

2011
4,767,395
257,500
4,509,895
2012
5,074,391
400,000
4,674,391
2013
5,273,044
400,000
4,873,044
2014
5,503,765
(0)
5,503,765
2015
5,803,674
(0)
5,803,674
12
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.

ProjectedCompoundAverageGrowth(CAGR)
TheCAGRsbasedupontheestimatedprojectedincomestatements.CAGRiscalculatedforeachyearasthe
totalgrowthfromthebaseperiod(i.e.,thefirstprojectedyear)dividedbythenumberofyearsfromthebase
period.ThegrowthratesarecalculatedforNetSalesRevenue,NetIncome,EBITDAandEBITDAminusCapital
Expendituresforeachprojectedyear.

Projected
NetSales

EBITDA
Year
Revenue
NetIncome
EBITDA
lessCapEx

2011

2012
4.77%
23.38%
6.44%
3.65%
2013
4.80%
28.50%
5.17%
3.95%
2014
4.83%
24.58%
4.90%
6.86%
2015
4.86%
20.30%
5.04%
6.51%

Acquisition&TransactionInformation

AssetsAvailableforAcquisition
HistoricalCost
AdjustedValue

AccountsReceivable
$2,500,000
$2,500,000
Inventory
$2,500,000
$2,500,000
FixedAssets
$9,500,000
$9,500,000
IdentifiableIntangibleAssets
$950,000
$950,000

ProposedAcquisitionStructure:AssetPurchase

AskingPrice:
16,500,000
MultipleofEBITDA,latestfullyear
4.57
MultipleofEBITDA,TrailingTwelveMonths
3.91
MultipleofEBITDA,ProjectedYear1
3.46
11.60
MultipleofFreeCashFlow,latestfullyear

Terms:

CashDown:
10,000,000
AssumedLiabilities:
0
SellerFinancing:
6,500,000

13
ThisMemorandumisconfidentialandprivate.Distributionisrestricted.Itmaynotbereproduced,copiedorreplicatedinanyform.The
preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.


Foradditioninformationcontact:

JohnSmith,CPA
MiddleMarketBusinessAdvisors
500NorthMichiganAve.
Chicago,IL.60600

14
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preparerhasnotmadeanyindependentinvestigation,verificationorauditoftheinformationcontainedinthisMemorandumandmakes
norepresentationsorwarranties,expressedorimplied,regardingtheaccuracyorcompletenessoftheinformationcontainedherein.