Professional Documents
Culture Documents
MORGAN
JOSEPH
Coupon
Amount
Maturity
Ratings
Price
YTW
Investment
Opinion
8 %
US$388
3/15/04
US $ 28-
NA
Hold
9 1 /4%
US$125
11/15/07
US $28 (*)
NA
Hold
Based upon our analysis of the plan submitted by the unsecured creditors committee on
February 5, 2004, and assumptions contained in this report, we believe that the Notes are
fairly valued in the mid-to high 20s. After comparing Doman with similar publicly-held
companies, we value the solid wood business at 6x average EBITDA over the past 5 years,
which we adjust upwards for a likely relaxation on trade duties currently imposed by the US.
We ascribe a minimal value to the pulp business, which is being split-off and may be sold (or
closed). The Notes will receive 75% of the equity.
A more aggressive valuation is implied by what a group of private equity firms are willing
to invest. This group (listed on page 2) has agreed to invest US$105mm for a 12.5% stake;
based upon this benchmark the bonds would be fairly valued at 46 (implies an 8.5x EBITDA
multiple versus our 6x)
A reorganization plan was submitted by International Forest Products Ltd on 2/26/04. It
offers to buy certain assets for C$280mm in cash, which would leave the unsecured creditors
with the unprofitable pulp business and 20% of the wood business. As the average EBITDA
over the past 5 years of this proposed new Doman is estimated to have been around $0mm,
we believe that this plan holds little appeal for the unsecured creditors.
NOTE: All references in this report are to Canadian dollars unless otherwise specified.
Table 2: Financial Summary
in C$ mm
1997
1998
1999
Sales
Sales growth yoy
EBITDA- Total
Solid wood
Pulp
Interest expense
Interest coverage
Capex
Working capital
Long term debt
736.7
779.2
5.8%
64
87
(35)
105
0.6x
70
222
884
874
12.1%
112
121
(14)
111
1.0x
35
378
1,025
140
140
(49)
69
2.0x
58
284
787
2000
2001
2002
LTM
995
770
635
616
13.9% (22.6%) (17.5%) (3.0%)
167
12
53
(7)
100
37
78
33
(18)
(13)
(26)
(37)
143
173
98
1.2x
0.1x
0.5x
42
44
30
34
395
232
149
124
1,050
1,072
1,061
(*) Including duties levied by the USA on companys export to the USA
Source: Company reports and Morgan Joseph & Co. Inc. estimates
Josephine Shea
212-218-3968
JSHEA@MORGANJOSEPH.COM
The Disclosure section may be found on the last page of this report.
March 9, 2004
Business Description: Founded 50 years ago by Harbanese (Herb) Doman, Doman Industries Ltd is an integrated
Canadian forest products company and the second largest coastal woodland operator in British Columbia. The
companys largest segment is solid wood (67% of LTM sales) and includes timber harvesting, reforestation, forest
management, saw milling logs and lumber manufacturing. Its second segment is pulp production. Through several
timber tenures the company has an allowable annual timber harvest on government owned timberlands of appr. 4.1mm
cubic meters. The provincial government sets a stumpage charge (licensing charge) on all timber harvested. The
companys manufacturing plants consist of six sawmills with a total annual production capacity of 1.1bn board feet of
lumber and 700,000 units of wood chips, two pulp mills with a total annual production capacity of 435,000 air dried
metric tonne (ADMT) of pulp, a lumber remanufacturing plant and log merchandiser.
Table 3: Capital structure and claims
in C$mm
Debt
12% US$160mm Snr Sec Nts
Accrued interest on 12% (est.)
Bank indebtness
Total
3Q03
211.2
31.7
29.7
272.6
4Q03E
211.2
38.0
30.4
279.7
1Q04E
211.2
44.4
23.9 (a)
279.7
3Q03
512.2
165.0
17.9
54.0
24.0
773.0
4Q03E
512.2
165.0
17.9
66.4
28.4
789.8
1Q04E
512.2
165.0
17.9
79.0
32.9
806.9
(a) On balance sheet as of 20 Feb 04 according to Monitor Report filed 2 March, 2004
Source: Company reports and Morgan Joseph & Co. Inc. estimates
CCAA Proceedings
Doman has been under court-ordered protection from creditors since November 2002, when it missed interest payments
on some of its U.S.-dominated notes. Its total debt in Canadian dollars reached $1 billion. On February 12, the Supreme
Court of British Columbia issued an order extending the stay of proceedings to April 5, 2004 to allow time to prepare
and file a plan of compromise and arrangement.
Plan of reorganization filed by unsecured creditors
On February 5, the unsecured creditors filed a plan of reorg with the courts. Below we have summarized key points:
Sale of pulp assets: The proposed restructuring segregates the principal operating assets into two new
corporate groups. One group, Lumberco, will hold all of the solid wood related businesses, assets (book
value net PPE C$291mm) and timber tenures; and a second group, Pulpco, will hold only the pulp assets (net
book value PPE C$194mm). Some of these pulp assets may be disposed of or discontinued. Pulpco will issue a
term promissory note to Lumberco, in a principal amount to be determined, and will grant to Lumberco a
security interest covering all of the property and assets of Pulpco.
Equity for unsecured creditors: The unsecured creditors will accept shares of Lumberco in exchange for
their debts. The plan will leave unsecured creditors with 75% of the equity as well as a pro rate share of
warrants issued by Lumberco. For our valuation estimates see next page.
Paydown of Secured creditors: The plan obliges the company to pay off Doman's existing US $160mm
secured bondholders. This will be financed through:
a. A private placement of US$110.5mm in senior secured notes (15% interest per annum with an option to defer
up to one-half of the interest payable) and the issuance of 12.5% of the equity in Lumberco for US $105mm.
The private placement group consists of Tricap (Brascan Asset Management), certain Merrill Lynch
Investment Managers funds, and two other investment management groups Amaranth LLC and Quadrangle
Group LLC.
March 9, 2004
b. The issuance of warrants to the unsecured creditors group. The warrants will entitle this group to acquire units
consisting of additional common shares of Lumberco (up to the remaining 12.5% of shares outstanding) and
secured bonds (up to US$110.5mm with the same indenture as the $110.5mm Secured Notes of the Private
Placement Group). The private placement group will provide a standby commitment in respect of the warrants.
The members agree to purchase all units not otherwise acquired.
New C$100mm credit facility: Lumberco will establish a credit facility of at least C$100mm, less the amount
of any working capital facility established by Pulpco.
Doman family loses equity holding: The term sheet confirms that the founding Doman family will not have
any stake in the company. We believe that this is a positive step forward for creditors in the restructuring of the
company. (See page 7).
12.5%
138.6
105
Distribution of equity value per US $1,000 face of 8 3/4% Snr Uns Nts:
in Canadian $
in US $
Source: Company reports and Morgan Joseph & Co. Inc. estimates
75.0%
831.6
630
100.0%
1,109
840
$609
$462
in C$mm
Sales
EBITDA
(EBITDA less Duties)
EBITDA margin
1997
474.7
139.8
139.8
29.5%
1998
546.2
86.8
86.8
15.9%
1999
611.6
120.9
120.9
19.8%
2000
573.9
99.9
99.9
17.4%
2001
532.0
49.1
36.7
9.2%
2002
LTM
463.7 411.5
86.9
69.8
78.3
32.8
18.7% 17.0%
Source: Company reports and Morgan Joseph & Co. Inc. estimates
In order to calculate the return to the 8 % Senior Unsecured Notes, we first looked at comparable companies in the
solid wood segment. Table 6 shows that other Canadian producers also have suffered substantially from the US duties
that have been levied since 2002. The average EBITDA over the past 5 years is considerably higher than EBITDA in
2003. We believe that these producers are actually trading closer to historical EBITDA numbers than to 2003 EBITDA
results. We believe Lumberco to be most similar to International Forest Products as the other companies have around
33% of their sales in pulp & paper. We consider this company to be weaker than Lumberco as reflected in its lower 5-
March 9, 2004
year average EBITDA margin of 11% against 17% of Lumberco. Therefore we consider that an EBITDA multiple of
6x is a reasonable base case scenario and of 5x a downside case (table 8).
Taking a 6x EBITDA multiple and applying it to the average EBITDA of C$73.7mm of the solid wood division, we
arrive at an enterprise value of C$442mm (see table 8). To calculate the shareholders equity, we add the expected cash
balance C$160mm (see table 7) and subtract the new senior secured notes (US$221mm=C$292mm) and an estimated
draw down of $10mm on the C$100mm credit facility. This adds to a value of C$300mm in shareholders equity. With
the unsecured creditors receiving 75% of the common stock, the 8 3/4% Senior Unsecured Notes end up with 59% of
this amount. The equity distribution would be US $211 per US $1,000 of 8 % Senior Unsecured Notes.
Table 6: Comparable public companies in solid wood segment
in C $ mm, FY 2003
Sales
EBITDA
EBITDA margin
Average EBITDA over 5 years
Average EBITDA over 5 years margin
Market cap
Net debt
TEV
TEV/EBITDA
TEV/average EBITDA
Tembec
2,805
47
1.7%
348
12.4%
931
1,670
2,601
53.2x
7.5x
West
Fraser
Canfor
1,508
2,095
151
113
10.0%
5.4%
324
222
21.5%
10.6%
1,533
1,145
35
747
1,568
1,892
9.7x
15.9x
4.8x
8.5x
Canadian
International
Forest
Products
603
4
0.7%
68
11.3%
331
13
344
nm
5.0x
Deltic
Timber
178
37
20.9%
32
18%
540
153
693
18.6x
21.8x
USA
Source: Company reports and Morgan Joseph & Co. Inc. estimates
Source of cash
Cash on balance sheet
New debt: US$221mm Snr Sec Nts
New equity: private placement group 12.5%
Use of cash
Repayment of US $160mm Snr Sec Nts
Repayment of accrued interest on 12% (est.)
Bank debt
4Q03E
15.0
291.7
138.6
445.4
1Q04E
8.7 (a)
291.7
138.6
439.1
211.2
38.0
30.4
279.7
211.2
44.4
23.9 (a)
279.4
165.7
159.6
March 9, 2004
Table 8: Scenario analysis of Lumberco equity value per $1,000 face 8 % Senior Notes
Downside
Case
Base
Case
Upside
Case
Average EBITDA (including duties) over past 5 years (solid wood division)
Multiple
Total enterprise value Lumberco
73.7
5.0x
368.6
73.7
6.0x
442.3
73.7
7.0x
516.0
369
160
(292)
(10)
226.5
442
160
(292)
(10)
300.2
516
160
(292)
(10)
374.0
169.9
225.2
280.5
806.9
806.9
806.9
512.2
79.0
591.2
512.2
79.0
591.2
512.2
79.0
591.2
$211
$160
$279
$211
$348
$263
85.3
5.0x
426.6
85.3
6.0x
511.9
85.3
7.0x
597.2
213
277
341
$264
$200
$344
$260
$423
$321
March 9, 2004
the U.S. Department of Commerce and the U.S. International Trade Commission. The duties are payable in cash and
have been imposed on companies shipping softwood lumber to the U.S.
For Doman Industries the combined duties total 27.22%. Because the company sells over 60% of its lumber into the
U.S. market and because its sales include high value cedar and other non-commodity grade lumber, the impact of these
duties is substantial. The cost in 2002 was approximately $22.3 million and for the nine months ending September 2003
$27.4mm. We believe, however, that a settlement is imminent and most likely will reflect a similar quota system as the
expired SLA. In this scenario, we believe that we can use the 5-year average EBITDA excluding the duties paid over
the past 3 years. This would lift the 5-year EBITDA to C$85.3mm. With an EBITDA multiple of 5x the equity
distribution in US$ would be US $200 per US $1,000 of 8 % Senior Unsecured Notes and using a 6x EBITDA
multiple this would be C$260.
Nafta and WTO side with the USA: Canadian producers did receive a setback on February 16th as a World Trade
Organization appeals panel reversed an earlier ruling that said U.S. special duties on Canadian lumber were illegal. The
panel agreed with U.S. claims lumber from state-owned lands in Canada can be unfairly subsidized if provincial
governments sell the wood at below-market price. It stressed, however, that Washington still would have to carry out
more extensive investigations before it could justify imposing duties on some imports of logs. NAFTA ruled on March
5th that the US correctly calculated its tariffs on imports of Canadian lumber. It rejected a complaint by Canada,
weakening the bargaining position of the Canadian government further.
Value of Pulpco
Description of assets: The company owns and operates a northern bleached softwood kraft pulp (NBSK) pulp mill on
the mainland of British Columbia near Squamish (Vancouver) (275,000 ADMT capacity) and a dissolving sulphite
pulp mill near Port Alice on Vancouver Island (160,000 ADMT). Both mills are located on the coast with easy access
to water transportation. Fibre for the Squamish pulp mill comes from wood chips produced by the companys sawmills
and log merchandiser while Port Alice processes pulp logs through its own wood room. In the last five years,
approximately C$30.1 million was expended to upgrade the Port Alice pulp mill. A majority of these capital
expenditures were incurred in 1998, when a C$23.5 million project was completed. In the same period, $8.8mm was
expended at the Squamish mill.
Operational performance: the companys pulp operations have suffered losses in seven of the past eight years (see
table 9). Strong international competition, excess capacity, low pulp prices, a weak US economy and a strong Canadian
dollar have all contributed to the more recent worsening trend. In February major producers implemented price
increases of US$30/tonne for NBSK pulp. A sustained strengthening of the US economy and growth in the magazine
and newspaper business might aid a recovery in pulp prices and thus financial performance of Domans pulp division.
Value of assets: the net book value of the pulp mills is C$194mm. In light of the negative operating performance of
both mills as well as an extensive overcapacity in the industry, we believe these assets are fairly valued in a range of 0
to 10% of net book value. The high end of the range would add 2 points to the recovery value.
Table 9: Financial summary Pulp division
in C$mm
Sales
Sales growth yoy
EBITDA
EBITDA margin
1996
233
(48.6)
-20.9%
1997
262
12%
4.6
1.8%
1998
233
-11%
(34.6)
-14.8%
1999
262
12%
(13.6)
-5.2%
2000
382
46%
(17.8)
-4.7%
2001
238
-38%
(12.7)
-5.3%
2002
LTM
172
205
-28%
19%
(25.5) (36.9)
-14.9% -18.0%
March 9, 2004
Risks
Management uncertainties
The plan did not address whether the unsecured creditors committee and the private placement group expect to replace
existing management. We believe that discord between the founder Harbanese Doman and his son Jaspaul (Rick)
Doman, who has been managing the company for the past couple of years, most likely exacerbated the difficult market
environment the company has been experiencing. A new team would give the company credibility in its restructuring
efforts.
Forest Revitalization Act leading to 20% decline in annual allowable cut
The Forest Revitalization Amendments, which came into effect on March 31, 2003, are expected to result in a
reduction of approximately 685,000 m3 of the companys existing annual allowable cut or 16% of the companys total
available cut. The Forest Revitalization Act requires all licensees to surrender 20% of their annual allowable cut
(AAC) attributable to Crown land within tree farm licenses (TFL), 20% of the AAC attributable to forest licenses (FL)
and 20% of the unreverted area found within TLs found outside of TFLs (see for explanation of TFLs and TLs
appendix on page 8). The handover has to occur within three years in return for compensation according to criteria to
be prescribed by the Provincial Government.
First Nations Land Rights
First Nations have claimed aboriginal title or other rights in substantial portions of land in British Columbia including
areas where the companys timber tenures and operations are situated. Following a positive ruling by the Supreme
Court of Canada on aboriginal land rights in 1992, the governments of Canada and British Columbia have been
negotiating with 122 Indian Tribes on outstanding claims. Approximately 30 of the 36 First Nations with traditional
territories covering the companys timber tenures are engaged in these negotiations. Current Provincial Government
policy requires that forest management and operating plans take into account and not infringe aboriginal rights and
provide for consultation with aboriginal groups. This policy is reflected in the terms of the Companys timber tenures
which provide that the Ministry of Forests may refuse to issue cutting permits in respect of a timber tenure if a court
determines the forestry operation would interfere with aboriginal rights. The company has continued to develop
working relationships with many First Nations and has entered into timber harvesting, silviculture, planning and other
capacity building arrangements. The issues surrounding aboriginal title and rights are not likely to be resolved by the
Provincial Government in the near future.
Stumpage charge reform
The Provincial Government assesses a stumpage or license fee charge on all Crown timber harvested. Stumpage
charges fluctuate based upon the Provincial Governments revenue targets, the quality and species of timber harvested,
harvesting technology, the companys operating costs and other factors. Following the difficult market environment for
timber and pulp producers and several companies having declared bankruptcy, the BC government announced its
intention to adopt a market-based timber pricing on January 16, 2004. An often-mentioned complaint has been that the
system does not sufficiently take into account the differences in quality of the timber or in the cost of harvesting.
Nevertheless, the stumpage and royalty cost per cubic meter charged to Duncan Industries have actually been declining
over the past years (see table 8). It begs the question how much lower the stumpage charges could go.
1996
2,363
70,501
29.8
1997
1998
1999
2000
2001
2002
2,337
2,707
3,354
3,431
3,081
3,032
70,049 70,549 84,785 86,747 56,719 60,297
30.0
26.1
25.3
25.3
18.4
19.9
March 9, 2004
(21.3)
251.5
18.4
21.3
123.8
(2.9)
0.0
375.3
Source: Company reports and Morgan Joseph & Co. Inc. estimates
Since we estimate that there is little value in the pulp assets and the operations have been loss-making for over 5 years,
there seems little value for the unsecured creditors in this plan. Two thirds approval of Domans unsecured creditors is
required. On February 27, Doman Industries already received a letter from Bennett Jones Llp, counsel to some of the
unsecured noteholders. It stated that significantly more than 50% of the holders of Dom unsecured bonds, and likely
as much as two-thirds in value of the total have now reviewed the terms of the Interfor proposal and find it wholly
unacceptable and would be opposed. We believe there is little merit in the plan and expect the plan in its current
format to be rejected.
Appendix
Explanation of Lumberco tenures
More than 90% of all forest resources in British Columbia are owned by the Province and administered by the Ministry
of Forests. Rights to harvest timber are granted by the Ministry of Forests in the form of timber tenures:
Tree Farm License (TFL): is an area-based timber tenure granted for a term of 25 years that is replaceable every
five years for a further 25 year term, subject to satisfactory performance by the licensee of its forest management
obligations as determined by the Ministry of Forests. Over 74% of the Companys allowable annual cut (AAC) is
derived from its three TFLs: TFL Nos. 6, 19 and 25. TFL Nos. 6 and 19 were replaced in 2000 and 2001,
respectively, for 25 year terms. TFL No. 25 was replaced in 1999 for a 25-year term.
Forest License (FL): Other timberland areas are organized into timber supply areas. FLs are issued within each
TSA with the AAC being determined at the TSA level and the overall harvest for the TSA managed by the
Ministry of forests on a sustained yield basis. FLs are volume-based tenures, which authorize a specified volume of
March 9, 2004
timber to be cut within a specific TSA. FLs have a term of 15 years and are generally replaceable every five years
for a term of 15 years, subject to satisfactory performance by the licensee of its forest management obligations as
determined by the Ministry of Forests. The company has seven FLs, two of which are located in the Mid Coast
TSA, and the remaining five are located in the Kingcome, Strathcona, Soo, Fraser and Sunshine Coast TSAs. All
of the Companys FLs were replaced in 1998 for 15-year terms.
Tree License (TL): The company also holds and harvests timber from 144 TLs, covering an area of 86,000 hectares
and containing more than 24 million cubic metres of mature timber. The terms of the Companys TLs within its
TFLs (126) coincide with the terms of the TFLs in which they are incorporated. Those TLs which are outside of
the companys TFLs (18) expire at varying dates ranging from 2005 to 2016.
March 9, 2004
in C $ mm
Total Sales
Solid wood
Pulp
1Q00
251
154
98
2Q00
145
100
3Q00
231
128
102
4Q00
228
147
81
1Q01
220
125
95
2Q01
215
150
65
3Q01
174
138
36
4Q01
161
118
43
1Q02
132
103
29
2Q02
158
123
36
3Q02
176
120
56
4Q02
169
119
51
1Q03
149
99
51
2Q03
139
94
45
3Q03
159
101
58
LTM
616
412
205
EBITDA
46
Solid Wood
33
Duties expensed on softwood
(adjusted EBITDA)
Pulp
14
60
40
22
(1)
39
27
14
7
11
20
21
23
14
7
8
20
(8)
1
18
5
23
(16)
(13)
(9)
8
(1)
(2)
(3)
7
0
7
(9)
23
33
4
23
(7)
21
19
9
28
5
13
19
10
29
(7)
15
20
9
29
(4)
(26)
(5)
9
4
(20)
(10)
(2)
10
9
(7)
(7)
33
27
41
(30)
10
10
11
24
Capex
Wood
Sales
Lumber (MMFBM)
Logs (km3)
By-products
Production Volume
Lumber (MMFBM)
Logs (km3)
Prices
Lumber (MMFBM)
Logs (km3)
114
32
8
103
34
8
102
21
6
100
40
8
95
24
6
104
41
6
86
47
5
70
45
4
86
11
5
92
26
5
77
38
5
66
48
4
61
32
5
63
26
5
73
22
6
197
81
16
219
666
300
1,296
150
404
203
1,065
143
778
144
947
160
1,079
107
277
128
417
137
840
161
782
136
993
166
618
141
754
143
472
450
1,844
639
149
627
163
586
140
604
154
549
158
503
146
548
146
510
144
519
144
530
141
542
154
497
177
497
156
410
157
444
129
Pulp
Sales
98
100
102
81
95
65
36
43
29
36
56
51
51
45
58
154
Prices in US $ per ADMT
834
928
975
935
840
753
791
715
722
630
701
595
615
622
644
Production Volume
NBSK (ADMT)
70,267 64,830 67,020 63,428 68,100 47,562
0 48,389 28,343 33,143 71,064 73,114 69,932 61,749 59,462 191,143
Sulphite (ADMT)
41,125 39,253 40,695 37,732 37,051 40,423 17,588 22,097 11,418 15,089 10,958 12,457 16,441
0 23,010 39,451
Source: Company reports
10
TELEPHONE 212.218.3701
FACSIMILE 212.218.3705
Sales
NAME
TITLE
MATTHEW STEDMAN
MANAGING DIRECTOR,
DIRECTOR OF SALES
VICE PRESIDENT, SALES
SENIOR VICE PRESIDENT, SALES
SENIOR VICE PRESIDENT, SALES
SENIOR VICEPRESIDENT, SALES
VICEPRESIDENT, SALES
SENIOR VICE PRESIDENT, SALES
SENIOR VICE PRESIDENT, SALES
MSTEDMAN@MORGANJOSEPH.COM
NAME
TITLE
JAMES TUMULTY
MANAGING DIRECTOR,
DIRECTOR OF TRADING
MANAGING DIRECTOR, TRADING
MANAGING DIRECTOR, TRADING
VICE PRESIDENT, TRADING
JTUMULTY@MORGANJOSEPH.COM
NAME
TITLE
HOWARD GOLDBERG
MANAGING DIRECTOR,
DIRECTOR OF RESEARCH
VICE PRESIDENT, RESEARCH
VICE PRESIDENT, RESEARCH
HGOLDBERG@MORGANJOSEPH.COM
GREGORY BEHLING
LAURENCE BERGER
CONNELL BYRNE
TEE FAIRCLOTH
KEVIN MCDONALD
CHARLES PEOS
DAVID WEISS
GBEHLING@MORGANJOSEPH.COM
LBERGER@MORGANJOSEPH.COM
CBYRNE@MORGANJOSEPH.COM
TFAIRCLOTH@MORGANJOSEPH.COM
KMCDONALD@MORGANJOSEPH.COM
CPEOS@MORGANJOSEPH.COM
DWEISS@MORGANJOSEPH.COM
Trading
MICHAEL CAPPA
KERRY STEIN
TODD SEPSICK
MCAPPA@MORGANJOSEPH.COM
KSTEIN@MORGANJOSEPH.COM
TSEPSICK@MORGANJOSEPH.COM
Research
JOSEPHINE SHEA
GLENN ZAHN
JSHEA@MORGANJOSEPH.COM
GZAHN@MORGANJOSEPH.COM
Administration
NAME
VANESSA DOOLEY
VDOOLEY@MORGANJOSEPH.COM
I, Josephine Shea, the author of this research report, certify that the views expressed in this report accurately reflect
my personal views about the subject securities and issuers, and no part of my compensation was, is, or will be
directly or indirectly tied to the specific recommendations or views contained in this research report.
The information contained herein is based upon sources believed to be reliable but is not guaranteed by us and is not
considered to be all-inclusive. It is not to be construed as an offer or the solicitation of an offer to sell or buy the
securities mentioned herein. Morgan Joseph & Co. Inc., its affiliates, shareholders, officers, staff, and/or members of
their families, may have a position in the securities mentioned herein, and, before or after your receipt of this report,
may make or recommend purchases and/or sales for their own accounts or for the accounts of other customers of the
Firm from time to time in the open market or otherwise. Opinions expressed are our present opinions only and are
subject to change without notice. Morgan Joseph & Co. Inc. is under no obligation to provide updates to the opinions or
information provided herein. Additional information is available upon request.
Research analyst compensation is dependent, in part, upon investment banking revenues received by Morgan Joseph
& Co. Inc.
Morgan Joseph & Co. Inc. may receive or intends to seek compensation for investment banking services from the
subject company.
All prices are indications only, and are subject to change without notice. Prices are informational in nature only, and
are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or debt referred
to herein. Investors in securities referenced herein should understand that statements regarding future prospects
might not be realized. Investors should note that income from such securities, if any, may fluctuate and that each
securitys price or value may rise or fall. Accordingly, investors may receive fewer funds than originally invested. Past
performance is not necessarily a guide to future performance.
Copyright 2004 by Morgan Joseph & Co. Inc.