EX-99.(C)(3) 3 a51927a2exv99wxcyx3y.htm EXHIBIT (C)(3) exv99wxcyx3y
EXHIBIT (c)(3)
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Discussion Materials Regarding Project Arrow February 6, 2009

 


 

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I. BACKGROUND AND KEY CONSIDERATIONS Background FMV has been engaged to provide certain financial services to the Special Committee of the Board of Directors (“Special Committee”) of En Pointe Technologies, Inc. (the “Company”) in connection with a potential Transaction (as hereinafter defined). We understand that the Special Committee has been formed to respond to a potential offer to acquire the Company from an affiliate of the Company (“Buyer”). Such potential transaction or an alternative transaction involving the acquisition of the Company is referred to hereinafter as a “Transaction.” In connection with the Transaction, FMV has been retained to: « provide financial analysis regarding the Company which may include ranges of indicative valuations of the Company’s common stock; and at the request of the Special Committee, render an opinion (“Opinion” hereinafter) to the Special Committee as to the fairness, from a financial point of view, to the Company or its stockholders (other than the Buyer), as applicable, of the Transaction consideration to be received by it or them in connection with the Transaction. Previously, FMV has provided the Special Committee with financial analyses and ranges of indicative valuations of the Company’s common stock. The Special Committee has now requested that we render our Opinion, and that the Opinion be based on an assumed share price of $3.20 (“Transaction Consideration” hereinafter). Accordingly, the purpose of this presentation is to summarize our financial analyses and value indications for the Company’s common stock relative to the assumed Transaction Consideration of $3.20 per share. Key Considerations In performing our analyses of the Company, we have considered the following key issues: Excess Cash & Securities from En Pointe Global Services, LLC (“EPGS”) Sale — We have treated all cash and marketable securities as non-operating in nature. Thus, we have added the value of cash and marketable securities of the Company to that of the remaining operations of the Company. In quantifying the value of the stock hi Allied Digital Services Limited (“Allied”), we have considered the remainder of a one-year lock-up period in such stock (pursuant to the terms of the Purchase Agreement), its block size, and the trading volume of Allied. 2

 


 

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L BACKGROUND AND KEY CONSIDERATIONS (Cont.) Other Non-Operating Items — We have treated the amounts owed to the Company from EPGS, the $2 million to be received from Allied, and several investments in securities as non-operating in nature. Thus, we have added the value of these items to that of the operations of the Company. Company’s 19.5 Percent Interest in EPGS — In order to quantify the value of the 19.5 percent interest in EPGS, we performed a valuation of EPGS, considering market data and the implied value of the aforementioned transaction. We have added the value of the minority interest in EPGS to that of the operations of the Company. « 70 Percent Interest in Ovex — We have performed a separate valuation of Ovex Technologies (Private) Limited (“Ovex”) in order to eliminate the value of a 30 percent interest therein not owned by the Company. Interest in Premier — The Company owned 6,313 shares of 12,347 shares of convertible preferred stock outstanding in Premier BPO, Inc. (“Premier”) with a liquidation preference of $100 per share. In addition, the Company owns 30 percent of the common stock of Premier. Premier’s financials are consolidated into those of the Company. Accordingly, we have performed a valuation of Premier in order to eliminate the value of the interest not owned by the Company. « Assumed Sale of EPGS is Complete — For the purposes of our analysis, we have assumed that the sale of EPGS will be completed without any interruption based on the terms outlined the Limited Liability Purchase Agreement dated July 9, 2008 regarding the sale of EPGS (“Purchase Agreement”). 3

 


 

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· I. BACKGROUND AND KEY CONSIDERATIONS (Cont.) Due Diligence Performed In connection with the Opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. Among other things, we have: « visited the Company’s headquarters; met with the Company’s Chief Executive Officer and Chief Financial Officer to discuss the operations, financial condition, future prospects and projected operations and performance of the Company, and it subsidiaries Ovex and Premier; « analyzed audited financial statements of the Company for the fiscal years ended (“FYE”) September 30, 2003 through 2008; and year-to-date internal financial statements of the Company for the three months ended December 31, 2008 and December 31,2007; « reviewed the Company’s quarterly projections from FYE 2008 through FYE 2011; reviewed internal financial statements of Ovex for the fiscal years ended June 30, 2004 through 2006; the fiscal years ended September 30, 2007 and September 30, 2008; and for the three months ended December 31, 2008; reviewed internal financial statements of Premier for the fiscal years ended September 30, 2005 through 2008; and for the three months ended December 31, 2008; reviewed internal financial statements of EPGS for the three months ended September 30, 2008 and three months ended December 31,2008; reviewed Company board presentations dated March 2006, March 2007, and March 2008; « reviewed the Company’s list of options outstanding as of September 10, 2008; reviewed organization charts, bylaws, and articles of incorporation documents of the Company, Ovex, and Premier; reviewed the Company’s Series A Convertible Preferred Stock Subscription Agreement in Premier dated October 31, 2004;

 


 

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I. BACKGROUND AND KEY CONSIDERATIONS (Cont.) Due Diligence Performed (Cont.) reviewed the Company’s credit line agreement with IBM dated March 18, 2008; reviewed documents relating to the sale of EPGS to Allied Digital Services Limited, including: (i) Limited Liability Company Interest Purchase Agreement, dated July 9, 2009; (ii) Escrow Agreement, dated July 9, 2008; (iii) First Amendment to the Limited Liability Company Interest Purchase Agreement, dated December 1, 2008; and (iv) Second Amendment to the Limited Liability Company Interest Purchase Agreement, dated January 7, 2009; reviewed certain public filings of the Company from June 6,1996 through January 28, 2009; « reviewed publicly available financial and other data for certain companies that we deem comparable to the Company; and » conducted other studies, analyses and inquiries, as we have deemed appropriate. For purposes of this analysis, FMV has not: independently verified the accuracy or completeness of all the financial and other information either publicly available or made available by the Company; or independently verified the accuracy or completeness of third-party research and data. 5

 


 

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II. VALUATION SUMMARY Indicative Valuation Ranges ($OOOs Omitted Except Per-Share Values) Aggregate Value Aggregate Minority Valuation Methods Indications Per Share 3 Value Indications Per Share3 Core Operations Low High Low High Low High Low High Guideline Public Companies Methodl 5,999 — 12,993 0.74 — 1.57 4,799 — 10,784 0.59 — 1.30 Industry Acquisitions Method ! 5,999 — 17,583 0.74 — 2.12 4,799 — 14,594 0.59 — 1.76 Discounted Cash Flow Method1 8,429 — 11,663 1.04 — 1.41 6,743 — 9,680 0.83 — 1.17 Value Indications of the Core Operations1 5,999 — 17,583 0.74 — 2.12 4,799 — 14,594 0.59 — 1.76 Cash 9,687 - 9,687 1.19 — 1.17 7,750 — 8,040 0.95 — 0.97 Value of Allied Stock 2,775 — 2,973 0.34 — 0.36 2,220 - 2,468 0.27 — 0.30 Non-Operating Assets2 6,447 — 6,447 0.79 — 0.78 5,158 — 5,351 0.63 - 0.65 Total4 $24,908 — $36,690 $3.06 — $4.43 $19,927 — $30,453 $2.45 — $3.68 Transaction Consideration $3.20 Value indications of the core operations include: (i) the Company’s existing operations; (ii) proceeds from exercise of options; (in) 19.5 percent interest in EPGS; (iv) ownership interest in Ovex; (v) ownership interest in Premier; and excludes: (i) cash and marketable securities; (ii) value of Allied stock; and (iii) non-operating assets. 2 Non-Operating Assets include: (i) amounts due from EPGS of $3.936 million; (ii) stock in California Republic Bank (OTC:CRPB); (iii) stock in BoomJ, Inc. (OTC:BOMJ); and (iv) $2 million due from ADSL. * Diluted common shares total 8,129 for the low indications and 8,279 for the high indications. Some totals may not add due to rounding. 6

 


 

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II. VALUATION SUMMARY (Cont.) Premiums Over Per-Sharc Value Indications Transaction Range of Per-Share Value Indications Consideration $3.06 — $4.43 $3.20 Trading Period Average Closing Implied Premium — Implied Premium — (As of 2/4/2009) Stock Price Low High Implied Premium 1 Trading Day $0.79 287.9% 461.0% 305.1% Trading Days $0.73 322.1% 510.5% 340.8% 30 Trading Days $0.72 327.0% 517.6% 345.9% 3 Months $0.73 320.8% 508.6% 339.4% Months $1.23 149.3% 260.5% 160.3% lYear “ $1.83 67.8% 142.7% 75.2% 1 Year-High $2.83 8.3% 56.6% 13.1% 1 Year-Low $0.56 447.2% 691.4% 471.4% Minority Per-Share Value Indications: $2.45 — $3.68 Trading Period Average Closing Implied Premium - Implied Premium — (As of 2/4/2009) Stock Price Low High 1 Trading Day $0.79 210.3% 365.6% Trading Days $0.73 237.7% 406.7% 30 Trading Days $0.72 241.6% 412.6% 3 Months $0.73 236.6% 405.1% Months $1.23 99.4% 199.2% 1 Year $1.83 34.2% 101.4% 1 Year-High $2.83 -13.4% 30.0% 1 Year — Low $0.56 337.8% 556.9%

 


 

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III. HISTORICAL FINANCIAL PERFORMANCE Historical Balance Sheets (SOOOs Omitted) Historical Financial Statements (Including Services Business) Un-Audited I “ I I I As of September 30, As of September 30, December 31, 2003 2004 2005 2006 2007 2008 2008 ASSETS Current Assets: Cash $3,218 $16,072 $6,903 $10,240 $6,000 S3.691 9,677 Restricted Cash 70 71 72 74 76 10 10 Short-Term Cash Investments 0000 1,000 0 0 Accounts Receivable, Net 35,123 31,571 40,916 46,417 61,391 35,448 35,568 Inventories, Net 5,746 7,105 10,367 4,201 8,768 5,858 6,805 Prepaid Expenses and Other Current Assets 413 578 764 1,067 1,548 1,294 1,569 Due from Affiliates 0 0 0 0 0 0___0___Total Current Assets 44,570 55,397 59,022 61,999 78,783 46,301 53,630 Net Property and Equipment 5,988 5,346 3,070 2,765 5,022 4,202 4,289 Intangible Assets 606 512 589 1,232 1,785 1,189 782 Due from Affiliates’ 000000 0 Investment in Affiliate 000000 0 Receivable from Escrow 000000 0 Other Assets’ 491 177 215 242 416 2,742 2,140 Total Assets S51,655 $61,432 $62,896 $66,238 $86,006 $54,434 $60.840 LIABILITIES & SHAREHOLDERS’ EQUITY ^—"™"""™"^~™""™~^^""™1"™™"^^——___—^_ Current Liabilities: Accounts Payable S12.642 $13,971 $18,444 $19,105 $19,034 $15,817 $22,230 Short-Term Borrowings & Curr. L.T. Debt 183 236 400 346 2,450 375 705 Borrowings Under Floor Plan Line of Credit 11,326 18,309 16,824 15,673 30,314 7,840 9,069 Accrued Liabilities 000000 9,841 Accrued Taxes and Other Liabilities 501 838 2,038 4,214 3,782 4,522 5,958 Accrued Employee Compensation and Benefits 2,540 2,406 3,409 3,684 4,264 5,389 0 Other Accrued Liabilities 2,169 1,681 935 2,112 1,913 4,409 0 Deferred Income 477 77 908 368 582 1.355 0___Total Current Liabilities 29,838 37,518 42,958 45,502 62,339 39,707 47,803 Capital Lease Obligations 5,138 4,965 584 238 447 475 428 Other Long-Term Liabilities 253 663 0 0 0 0 0 Noncontrolling Interest 0 308 903 1,487 1,957 1,962 1,943 Total Liabilities 35,229 43,454 44,445 47,227 64,743 42,144 50,174 Total Shareholders’Equity’ 16,426 17,978 18,451 19,011 21,263 12,290 10,666 Total Liab. & Shareholders’Equity $51,655 S61.432 $62,896 $66,238 $86,006 $54,434 $60,840 We removed the impaired book value of Allied stock ($3.896 million), book value of 19.5 percent interest InEPGS ($1.866 million), book value of investments in two companies ($860,000) from Other Assets; removed due from affiliates ($3.936 million); and re-classified debt for Ovex from Accrued Taxes and Other Liabilities to Short-Term Borrowings & Current Portion of Long-Term Debt. Adjustments to the balance sheet total $10.558 million. 8

 


 

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·^ja^i3 III. fflSTORICAL FINANCIAL PERFORMANCE (Cont.) Income Statements ($OOOs Omitted) Historical Financial Statements (Including Services Business) I ‘ “ I Twelve Months Ended September 30, Annualized Projected LTMDec. 31, Ql Ql Calendar Year 2003 2004 2005 2006 2007 2008 2008 Dec. 31, 2008 Dec. 31. 2008 2009 Product Revenue $252,493 $236,707 $279,325 5276,736 $299,335 $260,004 $238,249 $52,393 $209,571 $215,779 Service Revenue 37.318 42.527 49.007 46,997 47.791 40,458 30,218 2.494 9.977 13,571 Total Revenue 289,811 279,234 328,332 323,733 347,126 300,462 268,467 54,887 219,548 229,350 Product Cost of Sales 233,059 219,125 258,516 253,765 274,128 233,291 211,722 46,353 185,411 188,962 Service Cost of Sales 20,712 25,633 34,758 30.318 29,447 23.332 17,974 1,708 6,830 8,904 Total Cost of Sales 253,771 244,758 293,274 284,083 303,575 256,623 229,695 48,060 192,241 197,867 GrossProfit 36,040 34,476 35,058 39,650 43,551 43,839 38,772 6,827 27,307 31,484 Operating Expenses: Selling and Marketing Expenses 27,556 22,930 25,792 28,337 30,565 37,615 33,717 4,930 19,720 20,843 General and Administrative Expenses 9.998 10,047 10.143 11.098 11.871 15.054 14,346 2.368 9.471 9,293 Total Operating Expenses 37,554 32,977 35,935 39,435 42,436 52,669 48,063 7,298 29,191 30,136 Operating Income (1,514) 1,499 (877) 215 1,115 (8,830) (9,291) (471) (1,884) 1,348 Interest Expense 871 749 260 82 318 241 203 37 147 108 Interest & Dividend (Income) 0000000000 Other Expense (Income) (238) (646) (91) (36) (79) 182 230 (13) (53) 241 Pretax Income (2,147) 1,396 (1,046) 169 876 (9,253) (9,724) (495) (1,979) 999 Income Taxes (Credit) (859) 558 (418) 68 350 (3.701) (3,889) (198) (791) 399 Net Income ($1,288) $838 ($628) $101 $526 ($5,552) ($5,834) ($297) ($1,187) $599 EBIT (1,276) 2,145 (786) 251 1,194 (9,012) (9,473) (458) (1,831) 1,107 EBITDA 512 4,029 324 1,742 3,686 (6,334) (6,980) 54 217 1,632 EBITDA/Reveirae 0.2% 1.4% 0.1% 0.5% 1.1% (2.1%) (2.6%) 0.1% 0.1% 0.7% Depreciation & Amort Expense 1,788 1,884 1,110 1,491 2,492 2,678 2,493 512 2,048 525 Capital Expenditures 227 765 1,999 904 2,849 2,366 1,819 476 1,904 200 Income Statement Adjustments: Actual Special Charges 393 000000000 Adjusted Special Charges 0 0 0 0 0 0 0 0 0 0___Actual Interest & Dividend (Income) 0 0 (266) (263) (615) (295) (211) (57) (228) (26) Adjusted Interest & Dividend (Income) 0 0 0 0 0 0 0 0 0 0___Actual Oiler Expense (Income)1 (238) (646) (644) (36) (79) (14,708) (14,660) (13) (53) 241 Adjusted Other Expense (Income)’ (238) (646) (91) (36) (79) 182 230 (13) (53) 241 Actual Income Taxes 0 131 21 42 (203) 2,148 2,143 102 102 120 Adjusted Income Taxes to 40 percent (859) 558 (418) 68 350 (3.701) (3,889) (198) (791) 399 Total Adjustment to Pretax Income $393 $0 ($819) ($263) ($615) ($15,185) ($15,101) ($57) ($228) ($26) Other Expense (Income) has been adjusted to remove gain on sale of assets and impairment of investment. 9

 


 

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^5:^^^^ IV. STOCK ANALYSIS Stock Trading History 20,000 -i r $9 Dec. 1,2006: Company announced Q4 2006 and FYE ___. ,,, .,,,,___,, 2006results ‘^ST”* J^72007: ***** .. $8 \ X announced Q12007 court approved merger of *6 i ^s^ results. Ovex Technologies Ltd. I and Ovex. Pakistan Ltd. I / “$7 15,000 B- -f- , \\ / July 10,2008: Company so Id I |[Hf / majority interest in EPOS (services “ *° L f >^ business) to Allied Digital Services, ‘w’ [T y ,^ Aug. 3,2007: Company Ltc| ,, o I if i I announced Q3 2007 ‘ —$5 -g S- Pjl, fr (itf1!), results. I ^ | 10,000 ^ J£ —, JM| —^ u S L /Pk AW ‘ 4f/^ I Dec. 15,2008: —$4’! ^ fe- L viil b’^ I I Company announced U W ft iwJ1 ^fr lii I I FYE2008results. TV L Sept 19,2006: Company entered into [*** ‘r ‘ fflv \ “~~***^>i an agreement to acquire 70% interest in H. ‘ \ Ovex Technologies Ltd. and Ovex Pt ^ PakiStanUd 10

 


 

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IV. STOCK ANALYSIS (Cont.) Stock Trading History (ConU Stock and Trading Analysis ENPT Exchange Nasdaq Ticker ENPT Equity Analyst Coverage 0 Total Shares Outstanding (MM) 7.16 Stock Price as of February 4, 2009 $0.79 Market Value of Equity (MM) $5.7 Total Public Float (MM) 5.42 % of Total Shares Outstanding 75.8% Institutional Holdings (MM) 0.89 % of Total Shares Outstanding 12.4% % of Total Public Float 16.4% No. of Institutional Holders 14 Largest Holders — % of Total Outstanding: ‘ Ahmed, Zubair 8.97% Din, Attiazaz 8.13% Din, Medina M. 6.79% Average Daily Trading Volume (MM) 2 0.0109 % of Total Shares Outstanding 0.152% % of Total Public Float 0.201% Implied Daily Liquidity ($MM)3 $0.0086 1 Per Capital IQ. Average daily trading volume calculations are based on the trailing 52 weeks. Average Daily Volume x Current Price. 11

 


 

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V. VALUATION INDICATIONS Valuation Indications (SOOOs Omitted Except Per-Share Values) Diluted Operating Add: Proceeds Add: 19.5% Less: 30% Add: Value of Add: Non- Common Value from Exercise of Interest in Interest in Less: Stock in Premier Restricted Stock Operating Value Shares Price Per Valuation Methods Indications Options EPGS Ovex Owned by Outside S/H Add: Cash (Allied) Assets ‘ Indications Outstanding Share Guideline Public Companies Method — Low $3,760 1,771 1,324 (372) (484) 9,687 2,775 6,447 24,908 8,129 S3.06 Guideline Public Companies Method -High $10,330 2,278 1,624 (519) (719) 9,687 2,973 6,447 32,100 8,279 $3.88 Industry Acquisitions Method-Low $3,760 1,771 1,324 (372) (484) 9,687 2,775 6,447 24,908 8,129 $3.06 Industry Acquisitions Method — High $14,920 2,278 1,624 (519) (719) 9,687 2,973 6,447 36,690 8,279 $4.43 Discounted Cash Flow Method-Low $6,190 1,771 1,324 (372) (484) 9,687 2,775 6,447 27,338 8,129 $3.36 Discounted Cash Flow Method-High $9,000 2,278 1,624 (519) (719) 9,687 2,973 6,447 30,770 8,279 $3.72 Operating Value Indication — Low $3,760 ~ 1,771 ~~ 1,324 (372) (484) 9,687 2,775 ~~~ 6,447 24,908 8,129 $3.06 Operating Value Indication — High $14,920 2,278 1.624 (519) (719) 9,687 2,973 6,447 36,690 8.279 $4.43 Implied Multiples Range of Operating Value Indications $3,760 $4,876 $5,992 $7,108 $8,224 $9,340 $10,456 $11,572 $12,688 $13,804 $14,920 Implied Price/Book Value 1.8x 2.3x 2.8x 3.3x 3.8x 4.4x 4.9x 5.4x 5.9x 6.5x 7.0x Implied EV/EBITDA 2.3x 3.0x 3.7x 4.4x 5.0x 5.7x 6.4x 7.1x 7.8x 8.5x 9.1x Implied EV/Revenue 0.02x 0.02x 0.03x 0.03x 0.04x 0.04x 0.05x 0.05x 0.06x 0.06x 0.07x Range of Aggregate Value Indications $24,908 $26,087 $27,265 $28,443 $29,621 $30,799 $31,978 $33,156 $34,334 $35,512 $36,690 Implied Price/Book Value 1.2x 1.2x 1.3x 1.3x 1.4x 1.4x 1.5x 1.5x 1.6x 1.7x 1.7x Implied EV/EBITDA 7.5x 7.9x 8.2x 8.6x 8.9x 9.3x 9.6x lO.Ox 10.3x 10.7x ll.Ox Implied EV/Revemie 0.09x O.lOx O.lOx O.lOx O.llx O.llx 0.12x 0.12x 0.13x 0.13x 0.14x 1 Non-Operating Assets include: (i) amounts due from EPGS of $3.936 million; (ii) stock in California Republic Bank (OTCiCRPB); (Hi) stock in BoomJ, Inc. (OTC:BOMJ); and $2 million due from ADSL. 12

 


 

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V. VALUATION INDICATIONS (Cont.) Guideline Public Companies Method ($OOOs Omitted) Less: Times: Interest- Representative Range of Capitalization Bearing Valuation Approach Level Muliples Debtl Range of Value Indications EV/EBITDA2 $1,632 3.00 — 3.50 $1,134 $3,762 - $4,578 EV/Revenue3 $229,350 0.04 — 0.05 $1,134 $8,040 — $10,334 Range of Value Indications (rounded) | $3,760 — $10,330 | Excludes interest-free inventory financing. EBITDA based on calendar year 2009 Management projections (excludes public company costs). * Revenue based on calendar year 2009 Management projections. 13

 


 

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-^^^^^—— -f V. VALUATION INDICATIONS (Cont.) Capitalization Multiples of Guideline Public Companies Enterprise Value to EBITDA2 ,,,,.,., . Next Fiscal Latest 12 Fiscal Year Public Companies Year Months End 3-Year Avg 5-Year Avg GTSICorp. NA 5.7 8.1 NM 7.8 Insight Enterprises, Inc. 3.8 3.0 2.9 3.7 4.6 PC Connection, Inc. 4.2 2.6 2.4 3.4 3.8 PC Mall, Inc. 4.0 3.2 3.6 6.0 7.3 Systemax, Inc. NA 2.8 2.7 3.9 5.0 Softchoice Corp. 2.4 2.6 2.2 3.2 3.7 Pomeroy IT Solutions, Inc.1 NA 1.7 NM 1.7 1.2 Range 2.4 1.7 2.2 1.7 1.2 4.2 5.7 8.1 6.0 7.8 Mean 3.6 3.1 3.6 3.7 4.8 Median 3.9 2.8 2.8 3.6 4.6 Enterprise Value to Revenue2 . Next Fiscal Latest 12 Fiscal Year ___ Year Months End 3-Year Avg 5-Year Avg GTSICorp. NA 0.09 0.10 0.09 0.08 Insight Enterprises, Inc. 0.11 0.10 0.10 0.13 0.15 PC Connection, Inc. 0.06 0.06 0.06 0.07 0.07 PC Mall, Inc. 0.08 0.08 0.09 0.09 0.10 Systemax, Inc. NA 0.10 0.11 0.12 0.14 Softchoice Corp. 0.08 0.08 0.13 0.12 0.13 Pomeroy IT Solutions, Inc. NA 0.03 0.03 0.03 0.03 Range 0.06 0.03 0.03 0.03 0.03 0.11 0.10 0.13 0.13 0.15 Mean 0.08 0.08 0.09 0.09 0.10 Median 0.08 0.08 0.10 0.09 0.10 1 Normalized based on Pomeroy’s latest two quarterly performances. o Enterprise Value excludes cash and interest-free inventory^financing debt. 14

 


 

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V. VALUATION INDICATIONS (Cont.) Industry Acquisitions Method ($00 Os) Transaction Transaction EV/ EV/ Acquired Company Bate Acquirer Value Revenue EBITDA EBITDA Revenue Commentary Zones,lnc. 30-Dec-OS InvestorGroup led by FirozLalji 84,733 698,917 20,869 4.1 0.12 Based on $7.00 per share offer, 30-day go-shop period expired on September 4, 2008; Qfier price was lowered from$8.65 on November 7,2008 in order to reflect changed economic conditions. Electronic Data Systems Corporation 26-Aug-08 Hewlett-Packard Co. 12,745,346 22,449,000 2,992,500 4.3 0.57 Provides IT and BPO services; Gross profit margin of 13.9% reflects strong dependence on services. Catence, LLC1 l-Apr-08 Insight Enterprises, Inc. 160,000 NA NA 7.7 0.40 Deal price includes $35 million eamout; Implied EBITDAmargin of 5.7%; 2007 ACE awards: #1 fastest growing private company in Arizona. Optimus Solutions, LLC 3-Jan-OS Softcho ice Corp. 39,543 140,000 NA NA 0.28 IT infrastructure (networking, storage, application development, etc.) solutions and services; 2006 revenue growth of 33%. Software Plus Ltd. ll-Dec-07 Softchoice Corp. 44,977 198,000 NA NA 0.23 Providerof primarily higher margin software products (Adobe, Citrix, Corel, Microsoft, etc.). ASAP Software Express, Inc. 9-Nov-07 Dell, Inc. 351,000 992,000 38,000 9.2 0.35 Providerof higher margin software products; 3.8% EBITDA margin; Global presence. CDW Corporation 12-Oct-07 VH Holdings, Inc. 6,713,874 7,455,342 535,780 12.5 0.90 EBITDA margin of 7.2% and revenue growth of 10%. CompuCom Systems, Inc.1 3-Oct-07 Court Square Capital Partners 628,000 NA NA 7.0 0.40 Greater than 50% of revenue is high-margin service revenue; Business stabilized since the technology bust; 2004 EBITDA margin of 2.4%. SARCOM.Inc. 17-Sep-07 PCMall, Inc. 54,181 264,809 8,308 6.5 OJ20 LTM revenue growth of 14%; 3.1% EBITDA margin. PCWholesale 28-Feb-07 Synnex Corporation 30,000 224,000 NA NA 0.13 Focus on end-of-life and refurbished equipment; Purchases equipment from manufacturers and sell to VARs. Access Distribution GE1 31-Deo-06 AvneLInc. 427,693 NA NA 6.0 0.20 Focus on complex computing with innovative solutions (network security, storage, and software); Implied EBITDA margin of 3.8%. CompuCom Systems, Inc. l-Oct-04 Platinum Equity 131,133 1,389,061 33,015 4.0 0.09 Strong decline; Decelerating from a 3-year CAGR revenue decline of 19%to an LTM revenue decline of 5%. Median 6.3 0.23 Mean 6.1 0.27 Representative Times: Range of Earnings Capitalization Less: Interest- Valuation Approach Levd Multiples Bearing Debt Range of Value Indications EV/EBrrDA2 $1,632 3.0 — 4.0 $1,134 $3,762 — $5,393 EWRevenue3 $229,350 0.05 — 0.07 $1,134 $10,334 — $14,921 Range of Value Indications (rounded) | $3.760 $14.920 I 1 EBITDA and Revenue multiples referenced from the Zones, Inc. proxy, filed on September 4, 2008. EBITDA based on calendar year 2009 Management projections (excludes public company costs). -1 Revenue based on calendar year 2009 Management projections. TS

 


 

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V. VALUATION INDICATIONS (Cont.) Discounted Cash Flow Method ($OOOs) 9 Months, FYE Sep. 30, FYE Sep. 30, FREE CASH FLOW 2009 2010 2011 Debt-Free Net Income 498 1,063 1,753 Depreciation & Amortization 394 538 552 Changes in Working Capital (4,402) 543 (492) Capital Expenditures 0 (200) (200) Free Cash Flow (3,510) 1,943 1,613 Years to Receipt of Cash Flow (Mid-Year Convention) 0.38 1.25 2.25 Present Value (WACC) Factor @ 16.0% 0.9459 0.8311 0.7165 Present Value of Annual Cash Flow (3,320) 1,615 1,156 Sum of PV of Cash Flows (3 years) (549) Terminal EBITDA 3,474 Present Value of Terminal Value 9,243 Exit EBITDA Multiple 4.0 Total Present Value 8,694 | Terminal Value 13,895 PV Factor 0.6652 EV Value Indication for Operations 8,694 |pVof Terminal Value 9,243 Less: Interest-Bearing Debt (Excludes Inventory Financing) 1,134 Equity Value Indication for Operations 7,560 Range of Value Indications: | $6,190 — $9,0001 Enterprise Value Sensitivity Table 3.0 x 3.5x 4.0 x 4.5 x 5.0 x 14.0% 5,648 6,860 8,072 9,284 10,496 15.0% 5,445J 6,629 7,812 8,995| 10,178 16.0% 5,249 6,405 7,560 8,715 9,871 17.0% 5,059| 6,188 7,316 8,445| 9,573 18.0% 4,875 5,977 7,080 8,182 9,285 16

 


 

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^ g’J3 V. VALUATION INDICATIONS (Cont.) Valuation of Allied Restricted Stock Block Size of Subject Shares 745,000 745,000 Share Price as of 2/5/09 (in Rupees) 260 260 Market Value of Subject Shares 193,737,250 193,737,250 Exchange Rate to $ at 2/5/09 0.02046 0.02046 Market Value of 745,000 Shares ($OOOs) $3,964 $3,964 Discount (Restricted Stock + Large Block) 30.0% 25.0% Restricted Stock Value of ADS ($OOOs) $2,775 $2,973 17

 


 

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V. VALUATION INDICATIONS (Cont.) Valuation of EPGS ($OOOs) Range of Value Indications Valuation Methods Low — High Guideline Public Companies Method $6,525 — $8,700 Industry Acquisition Method 9,790 — 11,970 Prior Transaction Method 15,869 — 16,115 Range of Value Indications $10,728 $12,262 Less: DuetoENPT 3,936 3,936 Range of Value Indications $6,792 $8,326 ENPT Minority Stake — 19.5% Interest $1,324 $1,624 18

 


 

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V. VALUATION INDICATIONS (Cont.) Valuation of Ovex ($00 Os) Range of Value Indications Valuation Methods Low High Guideline Public Companies Method $1,110 — $1,600 Industry Acquisition Method 1,360 — 1,850 Range of Value Indications (rounded) $1,240 $1,730 Value Indication of 30% Interest in Ovex $372 $519 19

 


 

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^"^^»^___* V. VALUATION INDICATIONS (Cont.) Valuation of Premier ($OOOs) Range of Value Indications Valuation Method Low High Guideline Public Companies Method $990 — $1,400 Industry Acquisition Method 990 — 1,400 Range of Value Indications (rounded) $990 $1,400 Less: Indicated value of Stock Owned by Outside S/H1 484 719 Stock Owned by the Company $506 $681 The preferred stock liquidation preference totals $1,234,700, which exceeds the low value indication of $990,000. For the high value indication, -we allocated value to the preferred shareholders up to the liquidation preference and allocated the remaining value to common shareholders in proportion to their ownership in common shares ($1,400,000 — $1,234,700 = $165,300 * 70% owned by outside shareholder = $115,710 + 48.9% of $1,234,700 liquidation preference = $603,400 = $719,110). 20