merger monthly

Transcription

merger monthly

M&A MARKET ANALYSIS
May
l
2004
MERGER MONTHLY
A Middle-Market Perspective on
U.S. and Transatlantic Mergers & Acquisitions
Table of Contents
General M&A Market Commentary
Page
1
U.S. Middle-Market M&A Deal Statistics
2-3
Feature Article – Companies Continue to
Dismantle Takeover Defenses
4-5
Transaction Spotlight – U-Line Acquired
6-9
European and Transatlantic M&A Overview
10
European Middle-Market M&A Deal Statistics
Transatlantic Middle-Market M&A Deal Statistics
Recent Baird Transactions
Economic Commentary
Baird U.S. Equity Research Coverage
Investment Banking Contact List
11-13
14
15-16
17
18-21
22
M&A MARKET ANALYSIS
STEVEN M. BERNARD, CFA
Director of M&A Market Analysis
sbernard@rwbaird.com
312.609.4936
LAURA J. JANUZIK
M&A Market Analyst
ljanuzik@rwbaird.com
312.609.5451
In This Issue
n
Page
1
Based on data derived from Thomson Financial, the total value of worldwide transactions for the month of April was
$106.2 billion, an increase of 29.0% from the prior year.
n
2-3
In April, the total number of disclosed middle-market transactions fell 6.9%, to 244, although the total disclosed
transaction value increased 69.4%, to $23.3 billion.
n
Feature Article – Companies Continue to Dismantle Takeover Defenses
4-5
With emerging academic evidence indicating that firms that employ strong takeover defense protection outperformed
those with weaker defenses, companies may need to question whether reducing their protection from coercive offers is
in the best interest of all their shareholders.
n
6-9
On April 30, 2004, U-Line announced its successful sale to Linsalata Capital Partners, a Cleveland-based private
equity firm, and members of management. Baird served as exclusive financial advisor to U-Line in conjunction with
this transaction.
n
10
The European and Transatlantic M&A markets remain considerably weaker than that of the United States.
n
11-13
In April, the total number of announced middle-market European transactions was 190, a 21.8% decline from the prior
year with total deal value decreasing 11.7% to $15.3 billion.
n
14
Middle-market transatlantic M&A activity continues to show signs of rebounding. In April, there were 77 announced
middle-market transatlantic transactions, a 3.05% increase from the prior-year period, while total deal value increased
283.8% to $5.1 billion.
n
15-16
A summary of Baird transactions over the past 12 months.
n
Economic Commentary
17
The long awaited recovery in the labor market continues to emerge.
n
18-21
In April, Baird US Equity Research added five and dropped ten companies from coverage and now covers 398
companies. In the past three years Baird has increased the number of companies under coverage by more than 40%.
n
22
The following report has been prepared by the Investment Banking Department of Robert W. Baird & Co. This report
is an overview and analysis of consolidation trends and is not intended to provide investment recommendations on
any specific industry or company. This report may contain information which was previously included in a Baird
Equity Research Report. A complete listing of all companies covered by Baird U.S. Equity Research and applicable
research disclosures can be accessed at http://www.rwbaird.com/researchdisclosure. You can also call 1-800-7922473 or write: R.W. Baird, Equity Research, 24th Floor, 777 E. Wisconsin Avenue, Milwaukee, WI 53202.
Please refer to Appendix – Important Disclosures on page 23.
Software, Miscellaneous Services, Broadcasting,
Leisure/Entertainment and Communications.
The rebound in Global M&A activity appears to have
slowed a bit in April, after a very solid first quarter.
Based on data derived from Thomson Financial, the total
number of worldwide M&A transactions for the month
was 1,640. Although this is was a decline of just 5.4%
from last year, it was a 26.6% sequential decrease from
March and the lowest monthly total in 13 months.
Although the number of deals was down, the total dollar
volume of $106.2 billion represented an increase of
29.0% over last year. The dollar value of transactions
has now exceeded $100 billion for four consecutive
months.
The U.S. middle-market continues to be less robust than
the overall U.S. market. In April, the total number of
disclosed middle-market transactions fell 6.9%, to 244,
although the total disclosed transaction value increased
69.4%, to $23.3 billion. This was the first time in the past
eight months that middle-market activity declined,
although the dollar volume has now posted 11 straight
months of positive comparisons. The primary weakness
has been in the under $100 million segment, where the
number of deals fell almost 20% in April and had
declined in three of the past four months.
In the U.S., there were a total of 671 transactions, a
modest 2.9% decline from the prior year and the first
monthly decline in the past eight months. The total
disclosed dollar value of $49.3 billion represented a
58.6% and was the eighth straight month of higher dollar
volume.
Year-to-date, the number of middle-market transactions
is marginally higher than this time last year. There have
been 1,050 reported transactions, a 1.7% increase over
last year. The dollar volume of transactions, $96.8
billion, is 55.6% ahead of last years total.
Year-to-date, U.S M&A activity has increased at a
double-digit rate for both the number of deals and dollar
volume. There have been a total of 2,929 announced
U.S. transactions, a 12.4% increase over the same
period last year. Transaction volume of $290.6 billion is
156.5% ahead of last year’s total of $113.3 billion and
actually represents nearly one-half of the total
announced volume for ALL of 2003.
Transaction multiples have declined modestly from 2003
levels. For middle-market transactions over the last 12
months, the median enterprise value/EBITDA multiple
was 7.2x compared to 8.2x a year ago and 7.9x for all of
2003.
Worth Noting
●
According to Mergerstat, 23 of the 49 industries tracked
showed an increase in deal activity compared to the
same period last year. The industries that had the
greatest year to date change were Computer,
Year-to-date, through April, there have been a total
of 21 take-private transactions announced, worth
$8.8 billion, compared to 26 transactions announced
worth $883 million at the same time last year.
U.S. Mergers & Acquisitions
# of Deals- Undisclosed
# of Deals - Middle-Market
10,000
5,261
6,100
7,164
8,716
9,967
11,687
13,451
Deal Value
$1,800.0
11,651 11,509
8,234
7,431
8,156
5,000
$1,200.0
2,607
0
2,929
12/92
12/93
12/94
12/95
12/96
12/01
12/02
12/03
4/03
4/04
(YTD) (YTD)
5,261
6,100
7,164
8,716
9,967 11,687 13,451 11,651 11,509 8,234
7,431
8,156
2,607
2,929
17
28
58
81
99
149
186
225
231
135
71
101
26
39
# of Deals - Middle-Market 2,246
2,717
3,265
3,538
4,103
5,265
5,636
4,622
4,583
3,357
3,158
3,284
1,032
1,050
2,998
3,355
3,841
5,097
5,765
6,273
7,629
6,804
6,695
4,742
4,202
4,771
1,549
1,840
Deal Value
$132.9 $211.1 $311.2 $434.9 $618.6 $843.6 $1,637. $1,528. $1,630. $796.4 $465.2 $588.4 $113.3 $290.6
Total
# of Deals - $1.0 billion +
12/97
12/98
12/99
12/00
($ in billions)
$600.0
Deal Value
# of Deals
15,000
$0.0
Source: Thomson Financial and Robert W. Baird & Co. Incorporated M&A Market Analysis.
Note: Middle-market transactions defined as those with a disclosed transaction value of less than $1 billion.
1
Number of Deals
2003
Deal Value
2004
($ in millions)
% Change
APRIL
2003
2004
$4,404
$6,283
$3,054
$13,741
$17,335
**
$31,076
$4,580
$11,187
$7,505
$23,273
$26,028
**
$49,300
4.0%
78.1%
145.8%
69.4%
50.1%
$17,088
$31,468
$13,609
$62,165
$51,142
**
$113,307
$18,603
$45,467
$32,686
$96,755
$193,848
**
$290,603
8.9%
44.5%
140.2%
55.6%
279.0%
$52,708
$106,751
$58,402
$217,861
$228,306
**
$446,167
$56,056
$144,027
$86,598
$286,681
$478,985
**
$765,666
% Change
APRIL
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
228
30
4
262
9
420
691
184
49
11
244
9
418
671
(19.3%)
63.3%
175.0%
(6.9%)
0.0%
(0.5%)
(2.9%)
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
858
154
20
1,032
26
1,549
2,607
793
209
48
1,050
39
1,840
2,929
(7.6%)
35.7%
140.0%
1.7%
50.0%
18.8%
12.4%
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
2,558
511
86
3,155
75
4,371
7,601
2,501
673
128
3,302
114
5,062
8,478
(2.2%)
31.7%
48.8%
4.7%
52.0%
15.8%
11.5%
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
YTD
58.6%
YTD
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
LTM
156.5%
LTM
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
6.4%
34.9%
48.3%
31.6%
109.8%
71.6%
U.S. Middle-Market Enterprise Value to Median EBITDA Multiples
Transaction Size
1993
1994
1995
1996
1997
1998
1999
2000
2001
<$100M
$100M-$499M
$500M-$1,000M
Middle Market
9.2x
8.8x
7.9x
8.9x
9.6x
9.9x
11.4x
9.8x
7.9x
9.7x
9.5x
8.9x
8.9x
10.5x
10.4x
9.8x
9.4x
10.9x
11.8x
10.7x
8.2x
10.4x
9.1x
9.6x
8.3x
9.6x
9.9x
9.2x
6.5x
8.7x
6.5x
7.7x
6.5x
8.7x
6.5x
7.7x
2002
5.6x
8.4x
10.9x
7.0x
2003
7.4x
8.7x
11.5x
7.9x
4/04
(LTM)
7.2x
8.8x
10.0x
7.9x
U.S. Middle-Market Enterprise Value to Median EBIT Multiples
Transaction Size
1993
1994
1995
<$100M
$100M-$499M
$500M-$1,000M
Middle Market
10.7x
12.0x
11.8x
11.4x
12.2x
13.2x
16.8x
13.4x
12.5x
13.3x
12.5x
12.7x
1996
11.7x
13.0x
13.1x
12.3x
1997
12.6x
13.6x
14.7x
13.4x
1998
11.2x
13.4x
14.5x
12.8x
1999
11.5x
12.3x
13.4x
12.5x
2000
8.8x
11.3x
9.2x
9.8x
2001
8.8x
11.3x
9.2x
9.8x
2002
8.3x
11.3x
13.9x
10.7x
2003
10.1x
10.8x
14.8x
10.7x
4/04
(LTM)
12.4x
10.9x
14.1x
11.6x
U.S. Middle-Market Enterprise Value to Median Revenue Multiples
Transaction Size
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
4/04
(LTM)
<$100M
$100M-$499M
$500M-$1,000M
Middle Market
2.2x
2.4x
1.6x
2.2x
2.5x
1.7x
2.3x
2.1x
1.1x
1.4x
2.1x
1.2x
1.4x
1.7x
2.0x
1.5x
1.2x
1.8x
2.1x
1.6x
1.0x
1.6x
2.4x
1.4x
1.1x
1.5x
2.2x
1.4x
0.9x
1.5x
1.8x
1.2x
0.9x
1.5x
1.8x
1.2x
0.8x
1.6x
2.2x
1.1x
0.8x
1.5x
2.4x
1.1x
1.0x
1.6x
2.1x
1.1x
2
U.S. Middle-Market Median Acquisition Premiums
1-Week Premium
4-Week Premium
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
12/92
12/93
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
4/04
1-Week Premium
37.0%
33.3%
27.4%
27.7%
26.8%
26.3%
29.9%
34.8%
36.8%
36.8%
32.6%
28.6%
22.8%
4-Week Premium
40.0%
37.3%
32.8%
35.8%
31.8%
30.0%
34.5%
43.0%
41.7%
41.7%
36.1%
32.0%
27.3%
U.S. Middle-Market M&A Transaction Composition (By Number of Deals)
# of Deals
Other
Subsidiary
Public
Private
100.0%
75.0%
50.0%
25.0%
0.0%
Private
Public
Subsidiary
Other
12/92
12/93
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
4/03
(YTD)
4/04
(YTD)
910
1,175
1,462
1,555
1,852
2,581
2,803
2,221
2,253
1,366
1,209
1,196
361
453
255
304
435
484
521
648
707
706
637
534
455
470
140
134
1,034
1,189
1,304
1,447
1,663
1,957
2,051
1,622
1,606
1,399
1,418
1,481
496
441
48
49
64
52
67
79
75
73
87
58
76
77
35
22
U.S. Middle-Market M&A Payment Method (By Number of Deals)
# of Deals
Other
Cash/Stock
Stock
Cash
100.0%
75.0%
50.0%
25.0%
0.0%
12/92
12/93
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
4/03
(YTD)
4/04
(YTD)
Cash
1,229
1,552
1,821
2,111
2,442
3,181
3,599
2,912
2,618
2,124
2,223
2,421
804
757
Stock
338
452
516
612
687
838
850
786
891
480
287
252
86
101
Cash/Stock
201
270
433
353
518
720
671
575
700
442
370
329
76
133
Other
479
443
495
462
456
526
516
349
374
311
278
203
66
59
3
Feature Article – Companies Continue To Dismantle Takeover Defenses
Are They Throwing the Baby Out with the
Bathwater?
We would like to thank Tom Quinn, Chief Operating
Officer of TrueCourse for providing this article. For more
information, visit www.SharkRepellent.net
U.S. public companies continued to respond to
considerable shareholder pressure to comply with the
new perceived best practices in good corporate
governance during the first quarter. They continued the
trend of removing their structural takeover defenses that
began last year. It appears that to some companies, the
immediate threat of shareholder activists exceeds the
threat posed by potential raiders. However, with
emerging academic evidence indicating that firms that
employ strong takeover defense protection outperformed
those with weaker defenses, companies may need to
question whether reducing their protection from coercive
offers is in the best interest of all their shareholders.
We observed this trend by measuring the relative
takeover defense protection of approximately 4,000 U.S.
public firms. In order to measure the overall takeover
defense protection level, we used our proprietary Bullet
Proof Rating. This measurement is a weighted index that
takes into account provisions and procedural items that
contribute to defending against hostile takeovers. The
ratings are based on a scale of 0 to 10, with 10
indicating the strongest takeover defenses. We found
that the average takeover defense protection of
companies in the S&P 500 fell 1.41% to 5.61 in the first
quarter of 2004, while the average level of takeover
defense protection of companies in the S&P 400 only
declined by .04 points to 6.16. The average Bullet Proof
Rating of companies that completed IPOs in the first
quarter actually increased to 4.04 from a low of 3.36 in
2003.
Composite
Index
DJIA
Nasdaq-100
S&P 500
Fortune 500
IPOs
Bullet
Proof
Rating
2002
Bullet
Proof
Rating
2003
3.38
4.90
5.93
5.79
4.93
3.17
4.65
5.69
5.68
3.36
Bullet
Proof
Rating
Q1 2004
2.89
4.58
5.61
5.55
4.04
Percent
Change
2002 to
Q1
(14.50)
(6.53)
(5.40)
(4.15)
(18.05)
Source: TrueCourse
The overall decrease in takeover defense protection was
driven primarily by companies switching to annually
elected boards from staggered board elections – where
each director commonly stands for election every three
years and elections are held for only one-third of the
board in a given year. The proportion of companies that
went public in 2003 with a classified board fell
dramatically to 49.3% from 82% in 2002. However, the
proportion of firms going public in the first quarter with a
classified board increased to 57.58%. The overall
decrease was also impacted by companies redeeming
shareholder rights plans or “poison pills” as well as
removing supermajority vote requirements for approving
mergers.
Proportion Of S&P 400 With Defense Provisions In Place
Defense Provision
S&P 400
2003
S&P 400
Q1 2004
Classified Board with Staggered Terms
Supermajority Vote for Mergers
Poison Pill In Force
67.76
28.21
64.00
67.59
27.39
63.50
Source: TrueCourse
Pfizer, Inc., which was the largest company with a
poison pill in force, dramatically reduced their structural
defenses over the last two years. In October, the
company announced they would accelerate the
expiration date of their shareholder rights plan to
January 1, 2004 from October 2007. In the press release
announcing the Board's decision to eliminate the rights
plan, Pfizer stated the decision to end the provision
moves them further into the vanguard of progressive
corporate governance reform. The action is designed to
comply with recognized best practices of corporate
governance. It is important to note, with a market cap
over $250 billion, Pfizer doesn’t face significant risk from
opportunistic raiders, so reducing their defenses will put
them in line with other mega caps. However, smaller cap
firms need to judge if the public relations benefit of being
perceived as being in line with today’s version of good
corporate governance exceeds the additional risks of
reducing their protection from coercive offers.
Shareholder Proposals
The number of shareholder proposals to redeem or
require a shareholder vote on poison pills continued to
soar in 2003 with 103 proposals, up 186% since 2001
when only 36 proposals were made. In many cases, the
issue is really a referendum on management
performance and not about poison pills at all – more
than a fifth (20.4%) of all companies that had a poison
pill proxy proposal, did not even have a pill.
4
Feature Article – Companies Continue To Dismantle Takeover Defenses
Proposal Breakdown
Pass
Fail
Poison Pill Original Adoptions by Quarter
Pending
Not Voted On
Totals
80
60
# of Adoptions
80
60
40
57
54
53
56
53
46
44
50
37
40
35
39
24
30
17
20
20
13
10
20
Source: TrueCourse
% Shares Out
42.6
% Yes/No
59.758.8
58.057.2
60.0
Q1 2004
Q4 2003
Q3 2003
Q2 2003
Q1 2003
Q4 2002
Q3 2002
Q2 2002
Q1 2002
Q4 2001
Q3 2001
Source: TrueCourse
Average Level of Support
70.0
Q2 2001
2004
Q1 2001
2003
Q4 2000
2002
Q3 2000
2001
Q2 2000
0
0
Q1 2000
# of Proposals
100
%
64 66
70
120
50.0
73
42.2
% Votes Cast
59.557.8
41.3
57.856.2
42.1
40.0
30.0
20.0
10.0
0.0
2001
2002
2003
2004
Source: TrueCourse
Poison Pill Adoptions
The rate of new adoptions of shareholder rights plans
or poison pills fell to a ten-year low in 2003. Only 99 U.S.
companies adopted new plans in 2003, down 42.11%
from 2002 and the lowest level since 74 plans were
adopted back in 1993. New adoptions in the first quarter
fell by 66.67% compared to the first quarter of 2003.
One company that bucked the trend and increased their
takeover defenses in 2003 was Siebel Systems, Inc.
Siebel adopted a poison pill and increased their Bullet
Proof Rating to 9.25 from 5.25. Siebel Systems is a rival
of Oracle Corp, which launched a hostile bid for
PeopleSoft on June 6, 2003. If PeopleSoft had not
prepared itself by adopting effective takeover defenses,
it’s unclear if Oracle would have significantly raised its
original bid of $16 per share. At this point, the raised bid
means an extra $1.2 billion for PeopleSoft's
shareholders if a deal is completed. PeopleSoft vs.
Oracle is a clear example of the potential benefits that
shareholders and other constituencies such as
customers and employees can derive from effective
takeover defenses. Google also braved investor criticism
and structured their pending IPO with a dual class
structure to allow the founders to continue to exercise
the control that has helped to make the firm so
successful.
Ironically, just as companies have started to scale back
their defenses, new academic research has found that
companies that have poison pills and other takeover
defenses outperformed companies that did not employ
these structural defenses over 3, 5 and 10 year periods.
This latest study was completed by Georgia State
University and was sponsored by Institutional
Shareholder Services (ISS). Clearly, effective takeover
defenses and good corporate governance are both
positively related to superior corporate performance.
Good governance and effective takeover defenses are
not necessarily mutually exclusive. Companies need to
carefully evaluate the long-term costs of changing their
corporate structures to meet today’s fleeting notion of
good corporate governance.
5
Client Company
U-Line Corporation
Headquarters
Brown Deer, WI
Acquiring Company
Linsalata Capital Partners
Headquarters
Mayfield Heights, OH
Other Acquiring
Investors
Members of U-Line management
Industry Sector
Manufacturing – Consumer
Transaction
On April 30, 2004, U-Line announced its successful sale to Linsalata Capital Partners, a
Cleveland-based private equity firm, and members of management. Baird served as
exclusive financial advisor to U-Line in conjunction with this transaction.
Client Company
Description
U-Line, founded in 1962 and located in suburban Milwaukee, is the leading innovator and
manufacturer of upscale, built-in, undercounter refrigeration appliances, including ice makers,
Combo® ice maker/refrigerators, Wine Captain® wine storage appliances, refrigerators,
refrigerated drawers and refrigerator/freezers. Products are offered in two product categories:
the Échelon Series and Origins Series. U-Line’s appliances are used in a growing number of
residential applications, including kitchens, wet bars, indoor/outdoor patios, master bedrooms
and home offices. The Company also selectively targets other consumer markets, such as
marine yachts and recreational vehicles, as well as light commercial markets. U-Line’s
products are sold nationwide through a network of leading distributors and dealers. For
information on U-Line and its products, visit www.u-line.com.
Acquiring Company
Description
Located in the Cleveland suburb of Mayfield Heights, Ohio, Linsalata Capital Partners was
founded in 1984 and has combined its strong financial capabilities with extensive operational
experience to accelerate the growth of middle-market companies. Over the past 20 years,
Linsalata Capital Partners has completed 64 acquisitions of middle-market companies. The
company’s portfolio is currently comprised of 12 companies that represent a spectrum of
industries, including: building products, plastic products, distribution/converting, automotive
products, business services, and direct marketing.
Industry Overview
The built-in, undercounter refrigeration category in the United States in 2002 was estimated to
be 126,800 units (Appliance Magazine, September 2003) and has historically grown at
approximately 5% annually (in terms of sales dollars).
Excluded from the built-in,
undercounter refrigeration category is the clear ice maker category, which in the United States
is estimated to be in excess of 40,000 units annually and has historically grown at
approximately 5% annually. It is believed that the demand for undercounter products is in the
early stages in terms of market exposure, positioning the industry for increased growth.
Current trends influencing the industry include innovative design and product development,
strong home sales, increased status of high-end home appliances, changing lifestyles and
demographics, increased residential uses, and expanding light commercial applications.
The residential applications for undercounter appliances include ice makers, refrigerators,
combination ice maker/refrigerators, refrigerator/freezers and wine storage units. There are
vastly different levels of quality and product features between these built-in applications and
freestanding, compact refrigerators. Freestanding, compact refrigerators are typically found in
small living quarters, such as dorm rooms, and are known for having a lower level of quality
and fewer performance features. In comparison, built-in undercounter ice making and
refrigeration appliances are highly engineered products that incorporate specific upscale
features for the end consumer’s kitchen, wet bar, indoor/outdoor patio, master bedroom or
6
Transaction Spotlight – Linsalata Acquires U-Line
Industry Overview
(continued)
home office.
Transaction Overview
On April 30, 2004, U-Line announced its successful sale to Linsalata Capital Partners, a
Cleveland-based private equity firm, and members of management. Terms of the transaction
were undisclosed. U-Line’s current management team will remain in place and no changes
will be made to U-Line’s business model or product distribution channels. The Company’s
headquarters and manufacturing facility will remain based in Brown Deer, Wisconsin. U-Line
will become the 12th platform company in Linsalata Capital Partners’ current portfolio.
Light commercial undercounter ice making and refrigeration appliances are ideal for
applications that do not require full-size refrigeration. Light commercial applications include
stadium luxury skyboxes, upscale hotels, professional offices and healthcare facilities. Marine
Yacht and RV OEMs offer undercounter ice making and refrigeration appliances as both
standard and upgrade options. Many products are designed specifically for certain marine
yacht and RV models. Consumers also seek to upgrade, replace or retrofit interior cabinets
on marine yachts and RVs in the aftermarket or to replace original installations.
For more information, please contact Steve Booth at 414.298.7661 or Jim Case at
312.609.4914
7
Household Consumer Durables Transaction Activity Since 1993
($ in billions)
# Deals – Undisclosed
# Deals – Disclosed
150
Total Deal Value
$120.0
133
96
100
50
Median Deal Size (Mil)
47
107
97
94
$100.0
96
$80.0
64
59
$60.0
47
45
0
$40.0
14
19
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2003
(YTD)
2004
(YTD)
# Deals – Total
47
59
96
97
107
133
94
96
45
64
47
14
19
# Deals – Disclosed
18
26
43
45
54
60
45
38
21
31
23
9
12
29
33
53
52
53
73
49
58
24
33
24
5
7
Total Deal Value
$0.9
$2.0
$2.0
$11.4
$5.0
$17.2
$7.2
$6.0
$2.5
$4.3
$3.7
$1.7
$1.8
Median Deal Size (Mil)
$21.2
$20.9
$22.0
$30.0
$52.1
$24.7
$90.0
$55.7
$11.8
$23.9
$44.1
$65.0
$98.6
# Deals – Undisclosed
$20.0
$0.0
Source: Thomson Financial and Robert W. Baird & Co. Incorporated M&A Market Analysis
Note: YTD through March 31.
Median Valuation Multiples*
Public Market
Revenue
EBITDA
EBIT
2004E PE
2005E PE
1.0x
8.8
11.2
15.5
13.2
M&A Market
Revenue
EBITDA
EBIT
0.9x
8.4
10.9
* Based on the limited information provided in the disclosed data.
8
Transaction Spotlight – Linsalata Acquires U-Line
Selected Recent Transactions
Date
Announced
1/23/2004
12/1/2003
8/12/2003
7/23/2003
7/16/2003
6/12/2003
5/31/2003
3/17/2003
2/21/2003
1/6/2003
12/17/2002
11/21/2002
10/23/2002
10/7/2002
8/26/2002
3/4/2002
12/24/2001
11/16/2001
7/31/2001
6/22/2001
5/2/2001
4/5/2001
10/6/2000
10/2/2000
9/11/2000
5/31/2000
5/23/2000
5/4/2000
4/18/2000
3/6/2000
1/14/2000
7/2/1999
6/24/1999
4/22/1999
4/12/1999
1/15/1999
8/18/1998
7/10/1998
5/8/1998
4/28/1998
4/22/1998
3/2/1998
3/2/1998
12/3/1997
6/19/1997
Target
New England Pottery Co Inc
Gemco Ware Inc
Country Nests
Regal Ware Inc-West Bend House
Yates Ltd-Consumer Garden and
Woodstream Corp
Studio RTA
Oreck Corp
Acorn Products Inc
Royal Leerdam
Royal Appliance Manufacturing
American Saw & Mfg Co
Snapper Inc
West Bend Co-Premiere Cookware
Spear & Jackson(US Industries)
American Tool Cos Inc
True Temper Hardware
Deere & Co-Homelite Consumer
Garden Way Inc(GWI Holdings)
d-Scan Inc
Pifco Holdings PLC
Progressive Furniture Inc
Murray Inc,Hayter Ltd(Tomkins)
M Kamenstein Inc
Mikasa Inc
Delco International Inc
Sakura Inc
Facom SA(Strafor-Facom SA)
Ryobi Outdoor Products Mexico
Rohr-Bush GmbH & Co
Tvilum-Scanbirk
Dillen Products Cos
International Comfort Products
Sandvik Saws and Tools AB
Meadowcraft Inc
Jade Range
Polyhedron Holdings PLC
SMC Microwave Products Co Ltd
Black & Decker Corp-Household
Hein-Werner Corp
Home Interiors & Gifts Inc
Signature Brands USA Inc
Corning-Consumer Housewares Op
Spear & Jackson PLC
Precision Twist Drill Co
Acquiror
Central Garden & Pet Co
Lifetime Hoan Corp
Opus Inc
Focus Products Group LLC
Scotts Australia Pty Ltd
Investor Group
Sauder Woodworking
American Sec Capital Partners
Oaktree Capital Management LLC
Libbey Inc
TechTronic Industries Co Ltd
Newell Rubbermaid Inc
Simplicity Manufacturing Inc
Regal Ware Inc
Megapro Tools Inc
Newell Rubbermaid Inc
Wind Point Partners
TechTronics Industries Co
MTD Products Inc
Masco Corp
Salton Inc
Sauder Woodworking
Summersong Investment Inc
Lifetime Hoan Corp
JG Durand Industries SA
Oneida Ltd
Oneida Ltd
Fimalac SA
MTD Products Inc
Bush Industries Inc
Masco Corp
Myers Industries Inc
Carrier Corp
Snap-On Inc
Investor Group (MWI Acquisition Company)
Maytag Corp
American Tool Cos Inc
Whirlpool Corp
Windmere-Durable Holdings (Applica)
Snap-On Inc
Hicks, Muse, Tate & Furst
Sunbeam Corp
Borden Inc(Kohlberg Kravis)
US Industries Inc
Sandvik AB
Transaction Value ($ Mil)
$69.0
N/A
N/A
N/A
26.9
100.0
N/A
270.0
42.5
44.1
137.2
450.0
73.3
N/A
N/A
419.0
165.0
N/A
44.0
N/A
52.3
N/A
220.9
N/A
369.6
59.4
40.0
38.9
73.0
N/A
N/A
50.0
731.7
393.7
53.2
20.0
75.4
60.3
315.0
32.4
920.0
246.7
603.0
107.5
N/A
9
European M&A Overview
Transatlantic M&A Overview
European M&A activity remains considerably weaker
than that of the United States. In April, the total number
of announced European transactions was 484, a 19.9%
decline from the prior year while the total dollar value of
European transactions was $30.3 billion, a decline of
20.2% from last year. This was the lowest monthly total
in the past seven months and is the second consecutive
month of double digit declines in the dollar value of
transactions.
Middle-market transatlantic M&A activity continues to
show signs of rebounding. In April, there were a total of
77 announced middle-market transatlantic transactions,
a 30.5% increase from the prior year period and was the
sixth monthly increase in the past eight months.
European acquisitions of U.S. targets totaled 21
transactions, a 4.5% increase. There were 56 U.S.
acquisitions of European targets, a 51.4% increase from
the prior year and represented 72.7% of the total
volume.
Year-to-date, the number of announced European
transactions fell 1.4%, to 2,565 while the transaction
dollar volume rose 25.2%, to $202.7 billion.
M&A activity in the European middle-market has been
equally sluggish. In April, the total number of announced
middle-market European transactions was 190, a 21.8%
decline from the prior year and a 37% sequential decline
from March. Middle-market transaction dollar volume
declined 11.7%, to $15.3 billion, the lowest monthly total
in the past eight months.
Year-to-date, there have been a total of 954 announced
transactions, a 0.8% increase over the same period last
year. Total year-to-date dollar volume is $74.0 billion, an
18.2% increase.
Year-to-date, there have been 305 announced
transactions, a 9.7% increase over the prior year period.
The acquisition of U.S. targets totaled 97 announced
transactions, flat with last year, while the acquisition of
European targets has risen 14.9%, to 208. European
targets currently account for 68.2% of the transactions
this year.
The total dollar value of disclosed middle-market
transatlantic acquisitions in April was $5.1 billion, an
increase of 283.8% and was heavily weighted towards
the acquisition of European targets. The dollar volume of
U.S. acquisitions of European targets was $4.6 billion in
the month, a 394.3% increase over last year. The dollar
value of European acquisitions of U.S. targets totaled
just $0.5 billion, a 23.3% increase and represented less
than 10% of the total dollar volume.
Year-to-date, the total dollar value of middle-market
transatlantic transactions is $16.6 billion, an increase of
81.1%. Dollar volume for U.S. acquisitions of European
targets represented 83.8% of the total, or $13.9 billion.
This represents a 150.8% increase from the year-ago
period. The dollar value of European acquisitions of U.S.
targets totals just $2.7 billion, a 25.9% decline from the
prior year and represents just 16.2% of the total year-todate volume.
10
European Mergers & Acquisitions
# of Deals - Middle-Market
10,000
12,297
6,922
6,279
6,991
8,500
7,773
8,527
Deal Value
13,958
$1,600.0
11,041
9,773
8,524
$1,200.0
8,481
$800.0
5,000
2,602
0
12/00
12/01
12/02
4/03
4/04
12/03
(YTD) (YTD)
12/93
12/94
12/95
12/96
12/97
12/98
6,922
6,279
6,991
8,500
7,773
8,527
9,773 12,297 13,958 11,041 8,524
17
18
25
44
53
69
108
168
202
93
# of Deals - Middle-Market 2,030
2,053
2,418
2,676
2,662
3,363
3,950
4,466
4,854
4,875
4,208
4,548
5,780
5,058
5,095
5,715
7,663
8,902
Deal Value
$112.3 $119.6 $143.1 $254.5 $294.0 $437.2 $696.8 $1,373. $1,196. $558.3 $473.1 $456.9 $161.9 $202.7
12/99
2,565
12/92
Total
($ in billions)
8,481
2,602
2,565
96
82
24
26
3,704
3,011
3,163
946
954
7,244
5,417
5,236
1,632
1,585
$400.0
Deal Value
# of Deals
15,000
$0.0
Number of Deals
2003
Deal Value
2004
% Change
APRIL
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
204
30
9
243
5
356
604
146
37
7
190
8
286
484
(28.4%)
23.3%
(22.2%)
(21.8%)
60.0%
(19.7%)
(19.9%)
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
789
131
26
946
24
1,632
2,602
758
161
35
954
26
1,585
2,565
(3.9%)
22.9%
34.6%
0.8%
8.3%
(2.9%)
(1.4%)
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
2004
% Change
$3,580
$7,315
$6,394
$17,289
$20,739
**
$38,028
$2,938
$7,070
$5,253
$15,261
$15,075
**
$30,335
(17.9%)
(3.4%)
(17.8%)
(11.7%)
(27.3%)
$14,817
$30,090
$17,701
$62,608
$99,261
**
$161,869
$13,730
$36,104
$24,187
$74,021
$128,657
**
$202,678
(7.3%)
20.0%
36.6%
18.2%
29.6%
2,394
468
83
2,945
89
5,131
8,165
2,598
473
100
3,171
84
5,189
8,444
8.5%
1.1%
20.5%
7.7%
(5.6%)
1.1%
3.4%
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
$42,508
$108,022
$58,500
$209,029
$273,863
**
$482,892
$47,362
$105,696
$68,408
$221,465
$276,204
**
$497,669
11.4%
(2.2%)
16.9%
5.9%
0.9%
(20.2%)
YTD
LTM
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
2003
APRIL
YTD
<$100M
$100M-$499M
$500M-$1,000M
Total Middle Market
>$1,000M
Undisclosed
Total
($ in millions)
25.2%
LTM
3.1%
11
European Middle-Market Enterprise Value to Median EBITDA Multiples
Transaction Size
1993
1994
1995
1996
1997
1998
1999
2000
<$100M
$100M-$499M
$500M-$1,000M
Middle Market
7.1x
7.1x
7.8x
7.2x
7.7x
8.7x
9.5x
8.1x
7.8x
9.6x
12.6x
8.8x
8.0x
8.6x
10.6x
8.6x
7.5x
8.4x
12.2x
8.3x
7.7x
8.5x
10.1x
8.1x
6.2x
8.9x
9.6x
7.8x
6.0x
9.0x
8.3x
7.0x
2001
2002
2003
4/04
(LTM)
7.5x
9.5x
8.2x
8.0x
6.6x
9.5x
7.5x
7.2x
7.0x
9.0x
8.7x
7.8x
2002
2003
4/04
(LTM)
7.4x
9.1x
10.7x
8.1x
European Middle-Market Enterprise Value to Median EBIT Multiples
Transaction Size
1993
1994
1995
<$100M
$100M-$499M
$500M-$1,000M
Middle Market
8.5x
11.4x
9.8x
9.6x
9.3x
13.1x
15.9x
10.4x
11.3x
12.4x
15.0x
11.8x
1996
12.1x
11.8x
15.1x
12.5x
1997
10.9x
10.7x
14.0x
11.0x
1998
9.8x
12.0x
13.6x
10.7x
1999
9.3x
12.1x
14.1x
10.9x
2000
8.8x
12.0x
10.5x
10.2x
2001
9.1x
12.6x
15.4x
10.8x
9.8x
11.9x
13.3x
11.1x
9.0x
11.0x
12.5x
10.3x
9.5x
12.4x
12.9x
11.0x
European Middle-Market Enterprise Value to Median Revenue Multiples
Transaction Size
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
4/04
(LTM)
<$100M
$100M-$499M
$500M-$1,000M
Middle Market
0.7x
0.7x
1.2x
0.7x
0.9x
1.0x
1.4x
0.9x
0.9x
1.5x
2.1x
1.0x
0.9x
1.6x
1.1x
0.9x
0.7x
1.0x
2.0x
0.9x
0.8x
1.2x
1.6x
1.0x
0.8x
1.3x
2.0x
0.9x
0.6x
1.3x
1.5x
0.8x
0.7x
1.5x
1.6x
1.1x
0.6x
1.0x
0.6x
0.7x
0.7x
1.2x
1.7x
0.9x
0.7x
1.1x
1.6x
0.9x
European Middle-Market Median Acquisition Premiums
1-Week Premium
4-Week Premium
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
4/04
(LTM)
20.3%
8.9%
26.0%
23.8%
29.5%
33.4%
31.3%
26.6%
21.9%
19.1%
15.0%
11.1%
17.4%
11.3%
32.5%
30.1%
32.1%
32.5%
37.2%
31.3%
25.0%
23.3%
17.7%
14.4%
12/92
12/93
1-Week Premium
20.0%
4-Week Premium
22.6%
12
European Middle-Market M&A Transaction Composition (By Number of Deals)
Other
Subsidiary
Public
Private
% of Transactions
100.0%
75.0%
50.0%
25.0%
0.0%
12/92
12/93
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
4/03
(YTD)
4/04
(YTD)
Private
702
722
973
1,070
1,071
1,366
1,674
1,791
2,089
1,486
1,130
1,077
334
362
Public
189
187
243
304
287
349
441
615
604
473
386
407
130
101
1,011
1,031
1,072
1,113
1,146
1,487
1,685
1,810
1,930
1,568
1,366
1,447
428
448
128
113
130
189
158
161
150
250
232
178
129
149
54
43
Subsidiary
Other
European Middle-Market M&A Payment Method (By Number of Deals)
Other
Cash/Stock
Stock
Cash
% of Transactions
100.0%
75.0%
50.0%
25.0%
0.0%
12/92
12/93
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
3/03
(YTD)
3/04
(YTD)
Cash
1,639
1,609
1,889
2,118
2,028
2,683
3,281
3,638
3,626
2,875
2,562
2,738
636
642
Stock
91
107
118
138
136
163
180
207
414
221
125
123
22
39
Cash/Stock
147
180
228
219
264
308
283
344
512
345
178
123
25
45
Other
153
157
183
201
234
209
206
277
303
264
146
96
21
28
13
U.S. Targets – Disclosed
U.S. Targets – Undisclosed
European Targets – Disclosed
European Targets – Undisclosed
U.S. Deal Value
European Deal Value
1,200
1,040
893
890
1,000
816
719
709
800
596
443 598
363
588
495
477 278518
465
600
462
286
368
261
400
297
198
97 181
163
200 142
0
12/92
89
53
139
229
$2.8
$7.4
.
U.S. Targets – Disclosed
U.S. Targets – Undisclosed
European Targets – Disclosed
European Targets – Undisclosed
U.S. Deal Value
European Deal Value
12/93
92
71
142
323
$4.4
$8.0
12/94
123
75
168
327
$10.4
$9.4
12/95
156
105
178
418
$11.0
$11.8
12/96
154
132
223
496
$13.2
$18.8
12/97
210
153
314
579
$20.0
$25.1
12/98
232
230
380
660
$27.6
$30.6
12/99
299
289
319
571
$38.0
$32.9
12/00
362
347
273
543
$40.7
$28.7
12/01
232
211
221
377
$19.7
$24.1
12/02
162
135
186
291
$12.2
$21.2
4/03
(YTD)
48
49
61
120
$3.6
$5.5
12/03
137
141
209
309
$9.8
$19.6
($ in billions)
$50.0
$40.0
$30.0
$20.0
208
97
$10.0
Deal Value
# of Deals
Trans-Atlantic M&A by Number of Deals and Dollar Volume
$0.0
4/04
(YTD)
45
52
80
128
$2.7
$13.9
Middle-Market Segments
U.S. Targets
($ in millions)
European Targets
2003
2004
2003
2004
22
$392
21
$483
37
$924
56
$4,567
97
$3,608
97
$2,674
181
$5,533
208
$13,877
281
$10,421
278
$8,853
502
$20,140
545
$27,894
8.9x
6.0
0.7
10.3x
13.1
0.9
7.9x
7.4
0.5
8.6x
11.7
1.4
Month
Number of Deals
Value of Deals
Year-to-Date
Number of Deals
Value of Deals
LTM
Number of Deals
Value of Deals
Median Purchase Price Multiples (LTM)
Enterprise Value / EBITDA
Enterprise Value / EBIT
Enterprise Value / Revenue
U.S./Europe Cross-Border Middle-Market Median Acquisition Premiums
U.S. Target Premiums 1-Week
European Target Premiums 1-Week
80.0%
60.0%
40.0%
20.0%
0.0%
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
4/04 (LTM)
21.5%
36.4%
30.2%
39.1%
35.0%
33.3%
48.3%
54.0%
58.1%
29.8%
28.6%
31.9%
38.6%
58.8%
37.8%
37.8%
37.4%
63.7%
63.2%
26.6%
35.8%
29.3%
21.4%
16.7%
24.4%
44.5%
38.8%
36.9%
54.8%
31.1%
18.3%
21.1%
21.1%
31.8%
26.6%
23.4%
35.9%
40.5%
46.3%
49.5%
40.1%
24.8%
32.5%
31.3%
14
Date
Announced
*
**
***
Baird Client
Client Description
Transaction Description
Deal Value
($ in millions)
**
Industry
4/30/2004
U-Line Corporation
Manufacturer of built-in, undercounter
ice makers, ice maker/refrigerators,
wine storage appliances, refrigerators,
refrigerated drawers and
refrigerator/freezers
Sale to Linsalata Capital Partners and
Management
4/22/2004
ReloAction
Provider of relocation services to the
corporate sector
Sale to Exult, a comprehensive HR
provider
***
HR Outsourcing
4/21/2004
Robert W. Baird & Co.
Incorporated
Full service investment bank
Acquisition of Northwestern Mutual's
equity interest in Baird
***
Financial
4/5/2004
PTI Advanced Filtration
Inc. and PTI Technologies
Limited (ESCO
Technologies Inc.)
Manufacturer of filtration products
Sale to domnick hunter group plc, a
manufacturer of filtration, purification,
and separation products
$18.0
Filtration
4/5/2004
Brady Corporation
Provides identification solutions
Acquisition of EMED Co., Inc., a direct
marketer and manufacturer of
identification products
3/31/2004
APW Ltd.
Electro-Mechanical Systems company
Divestiture of Wright Line, LLC, a
manufacturer of office furniture and
technical enclosures solutions
3/21/2004
Molecular Devices
Corporation
Supplier of bioanalytical measurement
systems
Acquisition of Axon Instruments, Inc., a
manufacturer of electronic
instrumentation equipment and
software
3/15/2004
Newell Rubbermaid Inc.
Manufacturer and marketer of
consumer products
Divestiture of Three Businesses Burnes(R) Picture Frame, Anchor(R)
Glass and Mirro(R) Cookware to an
affiliate of Cerberus Capital
Management
$310.0
Consumer
Products
3/8/2004
Biomet Inc.
Manufacturer of musculoskeletal
products
Acquisition of Interpore International
Inc., a manufacturer of orthopedic
medical devices
*$265.6
Medical
Technology
1/19/2004
Forever Broadcasting plc
Owner and operator of radiobroadcasting stations
Sale to Wireless Group PLC, a national
media company
$14.6
Broadcasting
1/5/2004
MAXRAD, Inc.
Develops antennas for a variety of
systems
Sale to PCTEL, Inc., a provider of
wireless connectivity products and test
tools
$20.0
Communications
12/10/2003
Manpower Inc.
Offers staffing and workforce
management solutions
Acquisition of Right Management
Consultants, a provider of career
transition and organizational services
$600.6
12/8/2003
Pfleiderer AG
Provider of systems for wood panels
and surface finishes, railway sleeper
technology, and other infrastructure
poles and towers
Sale of MORALT Tischerplatten to
Certina Holding AG
12/2/2003
Hall Kinion & Associates,
Inc.
Offers professional placement services
Merger with Kforce Inc., a provider of
specialty staffing services
*$77.1
Staffing
11/26/2003
North Coast Energy, Inc.
Exploration and production of gas & oil
Sale to EXCO Resources, Inc., who
develops gas & oil properties
$202.0
Energy - oil & gas
11/18/2003
Nursing Homes of the City
of Kiel "Kieler Betreuungsund Pflegedienste GmbH"
Owner and manager of nursing homes
Sale to Senator Group, an operator of
nursing homes
**
Nursing Homes
11/5/2003
SPSS Inc.
Provider of predictive analytic
computer and software solutions
Fairness opinion on acquisition of
DataDistilleries, a software developer
**
Software
*$190.0
**
*$107.0
**
Consumer
Appliances
Direct Marketing
Office Furniture
Life Sciences
Instrumentation
Staffing
Construction
Material
Announced and pending transactions.
Closed transactions with undisclosed value.
Announced and pending transactions with undisclosed value.
15
Date
Announced
*
**
***
Baird Client
Client Description
Transaction Description
10/30/2003
Xyron, Inc.
Manufacturer of adhesive, laminate,
and image transfer products
Fairness opinion on sale to Esselte
Corporation, a manufacturer of office
products and supplies
10/28/2003
Spring Group - IT Training
Provider of recruitment, staffing, and
training services in the UK
Sale to Vidyah Inc.
10/15/2003
Landis Plastics, Inc.
Manufacturer of injection molded and
thermoformed plastic products
9/30/2003
9/26/2003
Deal Value
($ in millions)
**
Industry
Office Supplies
***
IT Training
Sale to Berry Plastics Corporation, a
manufacturer of plastic packaging
products
$228.0
Plastics
Packaging
Sale of Juice Brighton and a 35%
stake in Splash FM to a consortium
**
Broadcasting
Sale of Juice Liverpool to Absolute
Radio UK Limited
**
Broadcasting
9/2/2003
Directfit, Inc.
Provider of employment matching
services for the IT industry
Sale to Teksystems, Inc., a provider of
staffing and other consulting services
for the IT and communications sectors
**
IT Staffing
7/28/2003
Roto Zip Tool Corporation
Manufacturer of power tools and
accessories
Sale to Robert Bosch Tool
Corporation, a manufacturer of power
tools
**
Hardware and
Tools
6/26/2003
IDS Group
Provider of software and other services
for the leasing and wholesale finance
industries
Sale to Twins Acquisition Group Inc.
$42.5
Leasing Software
Services
6/16/2003
EDO Corporation
Provider of military products and
services
Acquisition of Emblem Group Limited,
a developer of defense solutions
$25.6
Defense/
Aerospace
6/16/2003
Simula Inc.
Supplier of human safety and survival
systems
Sale of Automotive Safety Devices
Division to The Zodiac Group
$14.3
Safety Systems
6/4/2003
Spring Group plc
Provider of recruitment, staffing, and
training services in the UK
Acquisition of Best International Group
plc, a staffing solutions company
$20.0
IT Staffing
6/3/2003
Wisconsin United for
Health Foundation, Inc.
Offers group health insurance and
healthcare services
Advisory for Sale of Interest in Cobalt
Corporation to WellPoint Health
Networks Inc., a managed healthcare
company
$932.0
Healthcare
Services
5/8/2003
PCTEL, Inc.
Provider of wireless connectivity
products and test tools
Sale of HSP modem products line to
Conexant Systems, Inc., a developer
of semiconductor system solutions
$19.0
Software
Announced and pending transactions.
Closed transactions with undisclosed value.
Announced and pending transactions with undisclosed value.
16
Economic Commentary
Economy:
Stock Market:
The long-awaited recovery in the labor market continues
to emerge. The April employment report showed that
non-farm payrolls rose by 288,000 in the month and
revisions to the February and March data added another
66,000 jobs. Based on the revised data, the
manufacturing sector added jobs in February for the first
time in 43 months. According to the household survey,
the unemployment rate fell in April to 5.6% (on an unrounded basis, the lowest level since October 2001).
Data for early May showed initial jobless claims falling to
their lowest level in nearly four years. Wages grew more
than expected in April, suggesting that a portion of the
recent surge in corporate profits is making its way to
consumers.
After rallying in late March and early April, the stock
markets weakened over the course of April, ending the
month near their lowest levels of the year. For the
month, the S&P 500 fell 1.7% (after rising 2.2% in the
first week of April, it fell 3.8% over the remainder of the
month). The NASDAQ was down 3.7% for the month
and Dow Jones Industrial Average fell 1.3%. Weakness
intensified in early May, with the major indexes slipping
to their lowest levels of the year. Strengthening
economic data (which has raised concern that the Fed
will begin raising interest rates), the deterioration of
conditions in Iraq, and a weakening of the broad market
have contributed to the declines in the major indexes.
Based on the initial estimate, Real GDP grew at a 4.2%
annual rate in the first quarter of 2004, up slightly from
the fourth quarter of 2003 (4.1%) but well below
expectations (of about 5.0% growth). The initial estimate
largely ignored data for the month of March (data for the
final month of the quarter is usually ignored in the initial
“advance” estimate). Given that the March data mostly
exceeded expectations, subsequent GDP estimates will
likely show upward revisions to first-quarter growth. We
continue to expect that activity will moderate somewhat
over the course of the year, with Real GDP growing
4.0% to 4.5% in 2004. The primary source of growth is
expected to continue to shift away from the consumer
sector and towards the business sector.
Interest Rates:
The bond yields continued to move higher in April and
into early May as the bond markets increasingly expect
the Fed to begin raising interest rates sooner rather than
later. The yield on the 10-year T-Note rose from 3.85%
at the end of March to 4.50% at the end of April, and has
added another 29 basis points (to yield 4.79%) in early
May. Following the recent better-than-expected
employment data and higher-than-expected inflation
data, the Fed is now expected to raise rates as soon as
June, with the bulk of the uncertainty now focusing on
whether it will be a 25 or 50 basis point increase. Bond
yields have likely reached the upper edge of their nearterm range and are likely to move back towards the
4.25% to 4.50% range over the next six months.
Bruce A. Bittles
Director of Investment Strategy
615.341.7114
William A. Delwiche
Associate – Investment Strategy
414.298.7802
17
In April Baird US Equity Research added five and
dropped 10 companies from coverage and now covers
398 companies. These companies have a median and
average market capitalization of $1.7 billion and $6.7
billion, respectively. In the past three years Baird has
increased the number of companies under coverage by
more than 40%.
In April there were 23 investment rating upgrades and 10
downgrades.
In April there were 172 upward and 77 downward
adjustments to current- year (generally calendar 2004)
earnings estimates. There were 140 upward and 60
downward revisions to forward- year (generally calendar
2005) earnings estimates. This is the most positive ratio
of upward to downward revisions in more than three
years, reflecting the strength of first quarter earnings.
In addition to comprehensive research reports on
individual companies followed by Baird analysts, Baird
publications include industry-specific monthly reports.
To access any of these reports please click on the
appropriate link.
Monthly Reports
Sector: Automotive
<http://www.rwbaird.com/docs/yourreports/cruisin.pdf>
Sector: Business Process Outsourcing
<http://www.rwbaird.com/docs/yourreports/financialbytes.pdf>
Sector: Diversified Industrial & Machinery
<http://www.rwbaird.com/docs/yourreports/movinmetal.pdf>
Sector: Enterprise Application Software
<http://www.rwbaird.com/docs/yourreports/enterpriseappsindustry.pdf>
Sector: Human Capital Services
<http://www.rwbaird.com/docs/yourreports/HCSMAP.pdf>
Sector: IT Distribution Services
<http://www.rwbaird.com/docs/yourreports/Channel1.pdf>
Sector: Life Sciences
<http://www.rwbaird.com/docs/yourreports/lifeline.pdf>
Sector: Technology Services
<http://www.rwbaird.com/docs/yourreports/InSite.pdf>
Sector: Utilities
<http://www.rwbaird.com/docs/yourreports/utilitymonthly.pdf>
Sector: Wireless Communications
<http://www.rwbaird.com/docs/yourreports/spectrum.pdf>
18
Company
Symbol
Marketing & CRM Services
ACXM
AD
POS
CMLS
CVG
HHS
IPG
JRN
LAMR
RHD
SYKE
TTEC
VCI
WSTC
Facility Services
Aramark Corporation
Cintas Corporation
G&K Services, Inc.
UniFirst Corporation
Volume Services America Holdings
RMK
CTAS
GKSRA
UNF
CVP
Financial Technology Services
Advent Software, Inc.
Affiliated Computer Services
BISYS Group, Inc.
Certegy Inc.
DST Systems, Inc.
FactSet Research Systems, Inc.
Fiserv, Inc.
Investors Financial
Jack Henry & Associates
National Processing, Inc.
SEI Investment Company
SunGard Data Systems Inc.
ADVS
ACS
BSG
CEY
DST
FDS
FISV
IFIN
JKHY
NAP
SEIC
SDS
Human Capital Services
Administaff, Inc.
Automatic Data Processing
Ceridian Corporation
Choice Point, Inc.
Exult, Inc.
Hall, Kinion & Assoc. Inc.
Heidrick & Struggles International
Hewitt Associates, Inc.
Hudson Highland Group, Inc.
Kforce Inc.
Korn/Ferry International
Manpower Inc.
Monster Worldwide, Inc.
MPS Group, Inc
Paychex Inc.
Resources Connection, Inc.
Robert Half International
Symbol
Human Capital Services
BUSINESS SERVICES
Acxiom Corporation
ADVO, Inc.
Catalina Marketing Corporation
Cumulus Media, Inc.
Convergys Corporation
Harte-Hanks, Inc.
Interpublic Group of Cos., Inc.
Journal Communications, Inc.
Lamar Advertising Company
R.H. Donnelly Corporation
Sykes Enterprises, Inc.
TeleTech Holdings, Inc.
Valassis Communications, Inc.
West Corporation
Company
ASF
ADP
CEN
CPS
EXLT
HAKI
HSII
HEW
HHGP
KFRC
KFY
MAN
MNST
MPS
PAYX
RECN
RHI
Spherion Corporation
TALX Corporation
Watson Wyatt & Company
AXE
BBOX
CDWC
GISX
NSIT
PCCC
TECD
IT Services
Accenture Ltd
BearingPoint, Inc.
Braun Consulting, Inc.
CIBER, Inc.
Computer Sciences Corporation
Covansys
DiamondCluster International
Electronic Data Systems Corp.
First Consulting Group, Inc.
Iron Mountain
Keane, Inc.
Perot Systems Corp.
PRG-Schultz International
CAN
BE
BRNC
CBR
CSC
CVNS
DTPI
EDS
FCGI
IRM
KEA
PER
PRGX
COMMUNICATIONS
Integrated Communications Providers
ALLTEL Corporation
Bell South Corporation
Cincinnati Bell, Inc.
Knology, Inc.
SBC Communications, Inc
Telephone & Data Systems, Inc.
Verizon Communications, Inc.
AT
BLS
CBB
KNOL
SBC
TDS
VZ
Network Technology
ADC Telecommunications, Inc.
Advanced Fibre Communications
Andrew Corporation
Cisco Systems, Inc.
Foundry Networks, Inc.
Juniper Networks, Inc.
Lucent Technologies, Inc.
Nortel Networks Corporation
Powerwave Technologies, Inc.
STRATOS Lightwave, Inc.
Tekelec
Tellabs Inc.
TESSCO Technologies Inc.
Tollgrade Communications Inc.
Westell Technologies, Inc.
Symbol
Software and Support
SFN
TALX
WW
IT Distribution/IT Reseller Channel
Anixter International, Inc.
Black Box Corporation
CDW Computer Centers, Inc.
Global Imaging Systems, Inc.
Insight Enterprises, Inc.
PC Connection, Inc.
Tech Data Corporation
Company
ADCT
AFCI
ANDW
CSCO
FDRY
JNPR
LU
NT
PWAV
STLW
TKLC
TLAB
TESS
TLGD
WSTL
Lightbridge, Inc.
LTBG
Wireless Carriers
AT&T Wireless Group
Nextel Communications, Inc.
Nextel Partners, Inc.
Triton PCS, Inc.
United States Cellular Corp.
AWE
NXTL
NXTP
TPC
USM
CONSUMER
Consumer Products
Harley-Davidson, Inc.
Marcus Corporation
Newell Rubbermaid, Inc.
RC2 Corporation
HDI
MCS
NWL
RCRC
Retail
99 Cents Only Stores
Dollar General Corporation
Dollar Tree Stores, Inc.
Family Dollar Stores, Inc.
Fred’s, Inc.
Kohl’s Corporation
PETCO Animal Supplies, Inc.
PETsMART, Inc.
Target Corporation
Tractor Supply Company
NDN
DG
DLTR
FDO
FRED
KSS
PETC
PETM
TGT
TSCO
Select Growth
Acuity Brands, Inc
American Medical Security Grp, Inc.
Arctic Cat, Inc.
Banta Corporation
Genlyte Group, Incorporated
HON INDUSTRIES Inc.
LKQ Corporation
LSI Industries, Inc.
Midwest Air Group, Inc.
Monaco Coach Corp.
Polaris Industries, Inc.
RPM, Inc.
Thor Industries
Winnebago Industries, Inc.
AYI
AMZ
ACAT
BN
GLYT
HNI
LKQX
LYTS
MEH
MNC
PII
RPM
THO
WGO
ENERGY
E&P/Oil Services
Apache Corporation
BJ Services Company
ChevronTexaco Corporation
Exxon Mobil Corporation
GlobalSantaFe Corporation
Marathon Oil Corporation
APA
BJS
CVX
XOM
GSF
MRO
19
Company
Symbol
E&P/Oil Services (cont’d)
Nabors Industries, Ltd.
Oceaneering International
Offshore Logistics, Inc.
ConocoPhillips
Powell Industries, Inc.
Pride International Inc.
Rowan Cos Inc.
Schlumberger Limited
Smith International, Inc.
Stewart & Stevenson, Inc.
NBR
OII
OLG
COP
POWL
PDE
RDC
SLB
SII
SVC
Utilities
ALLETE
Alliant Energy Corporation
Aquila, Inc.
Chesapeake Utilities Corp.
FPL Group, Inc.
Hawaiian Electric Industries
MDU Resources Group Inc.
NUI Corporation
Nicor Inc.
NiSource, Inc.
Otter Tail Corporation
Progress Energy, Inc.
TECO Energy, Inc.
Vectren Corporation
Wisconsin Energy Corporation
WPS Resources Corporation
Xcel Energy Inc.
ALE
LNT
ILA
CPK
FPL
HE
MDU
NUI
GAS
NI
OTTR
PGN
TE
VVC
WEC
WPS
XEL
INDUSTRIAL
Automotive
American Axle & Mfg
ArvinMeritor, Inc.
BorgWarner, Inc.
Dana Corporation
Delphi Corporation
Dura Automotive Systems Inc.
Gentex Corporation
Harman International Industries, Inc.
Johnson Controls, Inc.
Lear Corporation
Magna International, Inc.
Methode Electronics Inc.
Stoneridge, Inc.
STRATTEC SECURITY CORP.
Superior Industries
Tenneco Automotive, Inc.
Tower Automotive Inc.
Visteon Corporation
AXL
ARM
BWA
DCN
DPH
DRRA
GNTX
HAR
JCI
LEA
MGA
METH
SRI
STRT
SUP
TEN
TWR
VC
Company
Symbol
Company
Symbol
Diversified Industrial & Machinery
Transportation/Logistics
Actuant Corporation
Caterpillar Inc.
Deere & Company
Dover Corporation
Gehl Company
Illinois Tool Works Inc.
Ingersoll-Rand Company
Manitowoc Company Inc.
Nordson Corporation
Oshkosh Truck Corporation
Parker Hannifin Corporation
Sun Hydraulics Corporation
Terex Corporation
ATU
CAT
DE
DOV
GEHL
ITW
IR
MTW
NDSN
OSK
PH
SNHY
TEX
C.H. Robinson Worldwide Inc.
CNF, Inc.
EGL Inc.
Expeditors Intl. of Washington, Inc
FedEx Corporation
Forward Air Corporation
JB Hunt Transport Services Inc.
Landstar Systems Inc.
Pacer International, Inc.
Ryder System, Inc.
Swift Transportation Co. Inc.
United Parcel Service
Uti Worldwide, Inc.
Werner Enterprises
APCC
B
BEIQ
CLS
GDI
NX
SYPR
WNC
WGOV
TECHNOLOGY
General Industrial
American Power Conversion
Barnes Group, Inc.
BEI Technologies
Carlisle Companies, Inc.
Gardner Denver, Inc.
Quanex Corporation
Sypris Solutions, Inc.
Wabash National Corporation
Woodward Governor Company
Industrial Distribution
Airgas, Inc.
Fastenal Company
Grainger, W.W., Inc.
Hughes Supply Inc.
MSC Industrial Direct Co.
Watsco, Inc.
ARG
FAST
GWW
HUG
MSM
WSO
Process Controls
A.O. Smith Corporation
Briggs & Stratton Corp
CIRCOR International, Inc.
Emerson Electric Co.
Flowserve Corporation
Franklin Electric Co., Inc.
Graco Inc.
IDEX Corporation
ITT Industries, Inc.
Regal-Beloit Corporation
Robbins & Myers, Inc.
Roper Industries, Inc.
Tecumseh Products Co.
Thomas Industries Inc.
Watts Water Technologies, Inc.
AOS
BGG
CIR
EMR
FLS
FELE
GGG
IEX
ITT
RBC
RBN
ROP
TECUA
TII
WTS
CHRW
CNF
EAGL
EXPD
FDX
FWRD
JBHT
LSTR
PACR
R
SWFT
UPS
UTIW
WERN
Data Storage and Services
Adaptec, Inc.
Advanced Digital Information
Brocade Communications
Dot Hill Systems Corp.
EMC Corporation
Emulex Corporation
Imation Corporation
Maxtor Corporation
McData Corporation
Network Appliance, Inc.
Overland Storage, Inc.
Qlogic Corporation
Quantum Corporation
Seagate Technology
Storage Technology Corporation
Veritas Software Corporation
Western Digital Corporation
ADPT
ADIC
BRCD
HILL
EMC
ELX
IMN
MXO
MCDT
NTAP
OVRL
QLGC
DSS
STX
STK
VRTSE
WDC
Desktop & Infrastructure Software
Adobe Systems Inc.
BEA Systems, Inc
Borland Software Corporation
Citrix Systems, Inc.
FileNET Corp.
Getty Images, Inc
Macromedia Inc.
Mercury Interactive Corporation
Novell, Inc.
RSA Security Inc.
VeriSign Inc.
WebEx Communications, Inc.
ADBE
BEAS
BORL
CTXS
FILE
GYI
MACR
MERQ
NOVL
RSAS
VRSN
WEBX
Diversified Industrial
Modine Manufacturing Co.
Snap-on Incorporated
MODI
SNA
20
Company
Symbol
EMS & Electronics
Benchmark Electronics, Inc.
Celestica Inc.
Flextronics Int’l. Ltd.
Jabil Circuit, Inc.
Littelfuse Inc.
Plexus Corporation
Sanmina-SCI Corporation
Solectron Corp.
BHE
CLS
FLEX
JBL
LFUS
PLXS
SANM
SLR
Enterprise Application Software
Aspen Technology, Inc.
Business Objects S.A.
Cognos Incorporated
Fair Isaac Corporation
Hyperion Solutions Corporation
Kronos, Inc.
Lawson Software, Inc.
Manhattan Associates, Inc.
Manugistics Group Inc.
People Soft, Inc
SAP AG
Siebel Systems, Inc.
SPSS, Inc.
AZPN
BOBJ
COGN
FIC
HYSL
KRON
LWSN
MANH
MANU
PSFT
SAP
SEBL
SPSSE
Process Technology
Agilent Technologies, Inc.
AMETEK, Inc.
BHA Group Holdings, Inc.
Badger Meter, Inc.
CLARCOR, Inc.
Cognex Corporation
CUNO Incorporated
Danaher Corporation
Donaldson Company, Inc.
ESCO Technologies Inc.
Ionics, Incorporated
Mettler-Toledo Int’l, Inc.
National Instruments Corp.
Pall Corporation
Rockwell Automation Inc.
Tektronix, Inc.
Tetra Tech, Inc.
A
AME
BHAG
BMI
CLC
CGNX
CUNO
DHR
DCI
ESE
ION
MTD
NATI
PLL
ROK
TEK
TTEK
Supply Chain Technology
Avocent Corp.
Brady Corporation
CTS Corporation
Diebold, Inc.
Fargo Electronics, Inc.
NCR Corporation
Plantronics, Inc.
ScanSource, Inc.
Symbol Technologies, Inc.
UNOVA, Inc.
Zebra Technologies
AVCT
BRC
CTS
DBD
FRGO
NCR
PLT
SCSC
SBL
UNA
ZBRA
Company
Symbol
HEALTHCARE/LIFE SCIENCES
Biotechnology
Amgen, Inc.
Bone Care International, Inc.
Celgene Corporation
Genentech, Inc.
Genzyme Corporation
Human Genome Sciences, Inc.
ICOS Corp.
MGI Pharma, Inc.
Millenium Pharmaceuticals, Inc.
NeoPharm, Inc
Tercica, Inc.
Transkargotic Therapies, Inc.
AMGN
BCII
CELG
DNA
GENZ
HGSI
ICOS
MOGN
MLNM
NEOL
TRCA
TKTX
Distribution & Services
AmerisourceBergen Corporation
Cardinal Health, Inc.
Covance Inc.
D&K Healthcare Resources, Inc.
ICON plc
Inveresk Research Group, Inc.
IMS Health Incorporated
McKesson Corporation
Owens & Minor, Inc.
PAREXEL International Corp.
Pharmaceutical Product Development
PSS World Medical, Inc.
ABC
CAH
CVD
DKHR
ICLR
IRGI
RX
MCK
OMI
PRXL
PPDI
PSSI
Life Sciences
Affymetrix, Inc.
Apogent Technologies Inc.
Applied Biosystems Group
Beckman Coulter, Inc.
Becton, Dickson and Company
Bio-Rad Laboratories, Inc.
Bruker BioSciences
Celera Genomics
Charles River Laboratories
Dade Behring Holdings, Inc.
Dionex Corporation
Fisher Scientific International Inc.
Gen-Probe Inc.
Illumina, Inc.
Immucor Inc.
Invitrogen Corporation
Luminex Corporation
Millipore Corporation
Molecular Devices Corporation
PerkinElmer, Inc.
QIAGEN N.V.
Sigma-Aldrich Corporation
TECHNE Corp.
Thermo Electron Corporation
Third Wave Technologies
Varian, Inc.
Waters Corporation
AFFX
AOT
ABI
BEC
BDX
BIO
BRKR
CRA
CRL
DADE
DNEX
FSH
GPRO
ILMN
BLUD
IVGN
LMNX
MIL
MDCC
PKI
QGENF
SIAL
TECH
TMO
TWTI
VARI
WAT
Company
Symbol
Medical Technology
Bausch & Lomb Incorporated
Biomet Inc.
The Cooper Companies
DENTSPLY International Inc.
Exactech, Inc.
Henry Schein, Inc.
Ocular Sciences, Inc.
Patterson Dental Company
SOLA International, Inc.
Stryker Corporation
Sybron Dental Specialties
Wright Medical Group, Inc.
Young Innovations Inc.
Zimmer Holdings, Inc.
BOL
BMET
COO
XRAY
EXAC
HSIC
OCLR
PDCO
SOL
SYK
SYD
WMGI
YDNT
ZMH
FINANCIALS
Financial Institutions
Anchor Bancorp WI Inc.
Associated Banc-Corp
CharterOne
Citizens Banking Corp.
Comerica, Inc.
Fifth Third Bancorp
First Federal Capital Corp.
FirstMerit Corporation
Huntington Bancshares
Key Corp.
MAF Bancorp Inc.
Marshall & Ilsley Corp.
MGIC Investment Corporation
National City Corp.
Northern Trust Corporation
Republic Bancorp Inc.
TCF Financial Corp
U.S. Bancorp
Wells Fargo & Co.
ABCW
ASBC
CF
CBCF
CMA
FITB
FTFC
FMER
HBAN
KEY
MAFB
MI
MTG
NCC
NTRS
RBNC
TCB
USB
WFC
21
Terrance P. Maxwell
Head of Investment Banking
414.765.3529
tmaxwell@rwbaird.com
John A. Fordham †
Chairman of Baird International
011.44.207.667.8438
jfordham@rwbaird.com
Business Services
Consumer & Industrial
Technology/
Communications
Richard F. Waid
Vice Chairman
404.240.5791
rwaid@rwbaird.com
Health Care
Adrian P. Hadden
Director
011.44.207.667.8428
ahadden@rwbaird.com
Steven G. Booth
Managing Director
414.298.7661
sbooth@rwbaird.com
C. Christopher Coetzee
Managing Director
312.609.4913
ccoetzee@rwbaird.com
Jeffrey A. Fink
Managing Director
312.609.4991
jfink@rwbaird.com
Peter S. Kies
Managing Director
414.765.7262
pkies@rwbaird.com
James L. Case
Managing Director
312.609.4914
jcase@rwbaird.com
Joel A. Cohen
Director
312.609.4924
jcohen@rwbaird.com
Paul T. Rogalski
Managing Director
312.609.4912
progalski@rwbaird.com
Nicholas J. Naylor †
Director
011.44.207.667.8419
nnaylor@rwbaird.com
Stephen B. Guy
Director
414.765.7247
sguy@rwbaird.com
Shaun H. Dobson †
Managing Director
011.44.207.667.8416
sdobson@rwbaird.com
Jeffrey A. Stevens
Director
312.609.4981
jstevens@rwbaird.com
Brenton H. Rupple, Jr.
Managing Director
414.765.7245
brupple@rwbaird.com
Thomas E. Lange
Managing Director
813.273.8248
tlange@rwbaird.com
Thomas E. Lange
Managing Director
813.273.8248
tlange@rwbaird.com
Robert C. Harrod
Vice President
312.609.5475
rharrod@rwbaird.com
Breton A. Schoch
Managing Director
312.609.4965
bschoch@rwbaird.com
Christopher C. McMahon
Managing Director
312.609.4983
cmcmahon@rwbaird.com
Dominick P. Zarcone
Managing Director
414.298.7660
nzarcone@rwbaird.com
Judith G. Scott
Managing Director
414.765.3657
jscott@rwbaird.com
Paul T. Rogalski
Managing Director
312.609.4912
progalski@rwbaird.com
James Wellesley Wesley †
Managing Director
011.44.207.667.8251
jwesley@rwbaird.com
Nicholas R. Sealy †
Managing Director
011.44.207.667.8370
nsealy@rwbaird.com
Dominick P. Zarcone
Managing Director
414.298.7660
nzarcone@rwbaird.com
David M. Silver
Director
011.44.207.667.8216
dsilver@rwbaird.com
†
†
Energy
Richard F. Waid
Vice Chairman
404.240.5791
rwaid@rwbaird.com
John R. Lanza
Vice President
414.298.7669
jlanza@rwbaird.com
Equity Capital Markets
Lance R. Lange
Director
414.765.7079
llange@rwbaird.com
Financial Sponsors
C. Christopher Coetzee
Co-Head of U.S. M&A
312.609.4913
ccoetzee@rwbaird.com
Joel A. Cohen
Director
312.609.4924
jcohen@rwbaird.com
David M. Wierman
Director
312.609.4926
dwierman@rwbaird.com
Mergers & Acquisitions
Steven G. Booth
Co-Head of Investment Banking
Head of Global M&A
414.298.7661
sbooth@rwbaird.com
John A. Fordham †
Managing Director
Head of International M&A
011.44.207.667.8438
jfordham@rwbaird.com
Christopher C. McMahon
Managing Director
Head of U.S. M&A
312.609.4983
cmcmahon@rwbaird.com
James E. Hoffman
Managing Director
Associate Director of U.S. M&A
312.609.4960
jhoffman@rwbaird.com
Steven M. Bernard, CFA
Director of M&A Market Analysis
312.609.4936
sbernard@rwbaird.com
HBB Capital Advisers*
Dr. Michael Bauer
Managing Director
011.49.89.89.06.46.10
michael.bauer@hbb-capital.com
Bernhard Zeller
Managing Director
011.49.69.713.7676.10
bernhard.zeller@hbb-capital.com
Karl-Heinz Denk
Director
011.49.89.89.06.46.17
karl-heinz.denk@hbb-capital.com
Volker C. Riebel
Director
011.49.69.713.7676.21
volker.riebel@hbb-capital.com
Michael Wolff
Director
011.49.69.713.7676.41
michael.wolff@hbb-capital.com
†
Robert W. Baird Limited is authorized and regulated by the Financial Services Authority and is a member of the London Stock Exchange.
* HBB Capital Advisers GmbH is a joint venture affiliate with offices in Frankfurt and Munich.
22
Appendix – Important Disclosures
Robert W. Baird & Co. and/or its affiliates expect to receive or intend to seek investment banking related compensation from the
company or companies mentioned in this report within the next three months.
Baird prohibits analysts from owning stock in companies they cover.
ADDITIONAL INFORMATION ON COMPANIES MENTIONED HEREIN IS AVAILABLE UPON REQUEST
Copyright 2004 Robert W. Baird & Co. Incorporated
Investment Ratings: Outperform (O) - Expected to outperform on a total return, risk-adjusted basis the broader U.S. equity
market over the next 12 months. Neutral (N) - Expected to perform in line with the broader U.S. equity market over the next 12
months. Underperform (U) - Expected to underperform on a total return, risk-adjusted basis the broader U.S. equity market over
the next 12 months.
Risk Ratings: L - Lower Risk - Higher-quality companies for investors seeking capital appreciation or income with an emphasis
on safety. Company characteristics may include: stable earnings, conservative balance sheets, and an established history of
revenue and earnings. A - Average Risk - Growth situations for investors seeking capital appreciation with an emphasis on
safety. Company characteristics may include: moderate volatility, modest balance-sheet leverage, and stable patterns of revenue
and earnings. H - Higher Risk - Higher-growth situations appropriate for investors seeking capital appreciation with the
acceptance of risk. Company characteristics may include: higher balance-sheet leverage, dynamic business environments, and
higher levels of earnings and price volatility. S - Speculative Risk - High-growth situations appropriate only for investors willing to
accept a high degree of volatility and risk. Company characteristics may include: unpredictable earnings, small capitalization,
aggressive growth strategies, rapidly changing market dynamics, high leverage, extreme price volatility and unknown competitive
challenges.
Distribution of Investment Ratings: As of April 30, 2004, Baird U.S. Equity Research covered 398 companies, with 50% rated
Outperform, 48% rated Neutral and 2% rated Underperform. Within these rating categories, 17% of Outperform-rated, 6% of
Neutral-rated and 12% of Underperform-rated companies have compensated Baird for investment banking services in the past 12
months and/or Baird managed or co-managed a public offering of securities for these companies in the past 12 months.
Analyst Compensation: Analyst compensation is based on: 1) The correlation between the analyst’s recommendations and stock
price performance; 2) Ratings and direct feedback from our investing clients, our sales force and from independent rating services;
and 3) The analyst’s productivity, including the quality of the analyst’s research and the analyst’s contribution to the growth and
development of our overall research effort.
Baird’s Research Oversight Committee, comprised of representatives from our Private Client, Institutional, Legal & Compliance,
and Research departments, is responsible for establishing these compensation guidelines and for reviewing and approving senior
analyst compensation. Analyst contribution to our investment banking business is not a factor in determining analyst
compensation.
Analyst Certification: The senior research analyst(s) certifies that the views expressed in this research report and/or financial
model accurately reflect such senior analyst's personal views about the subject securities or issuers and that no part of his or her
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in the research
report.
This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here
reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be
reliable, but we cannot guarantee the accuracy. Publication of this document in the United Kingdom is directed at, and is only
made available to, authorized persons and other persons falling within COB 3.2.5(1) (b) of the FSA Handbook, and may not be
distributed to private clients. Issued in the United Kingdom by Robert W. Baird Limited, which has an office at Mint House 77
Mansell Street, London, E1 8AF, and is a company authorized and regulated by the Financial Services Authority and is a member
of the London Stock Exchange. The Dow Jones Industrial Average, S&P 500, S&P 400 and Russell 2000 are unmanaged
common stock indices used to measure and report performance of various sectors of the stock market; direct investment in indices
is not available.
A complete listing of all companies covered by Baird U.S. Equity Research and applicable research disclosures can be accessed
at <http://www.rwbaird.com/researchdisclosure>. You can also call 1-800-792-2473 or write: R.W. Baird, Equity Research, 24th
Floor, 777 E. Wisconsin Avenue, Milwaukee, WI 53202.
23
ROBERT W. BAIRD & CO.
www.rwbaird.com
800.RWBAIRD
Capital Markets and Private Equity Office Locations
Atlanta
Monarch Tower
Suite 1740
3424 Peachtree Road NE
Atlanta, GA 30325
800.914.8827
Chicago
Suite 2100
227 West Monroe Street
Chicago, IL 60606
800.799.5770
Frankfurt*
Schumannstrasse 4-6
60325 Frankfurt am Main
Germany
011.49.69.71.37.67.60
Hamburg
Haus am Hafen
Steinhöft 5-7
20459 Hamburg
Germany
011.49.40.37.48.02.10
London
5th Floor
Walsingham House
35 Seething Lane
London EC3N 4AH
UK
011.44.207.488.1212
Madison
Suite 172
510 Charmany Drive
Madison, WI 53719
608.441.2900
Manchester
3rd Floor
Brazennose House West
Brazennose Street
Manchester M2 5BP
UK
011.44.161.236.6600
Milwaukee
777 East Wisconsin Avenue
Milwaukee, WI 53202
888.224.7326
Munich*
Maximilianstrasse 40
80539 Munich
Germany
011.49.89.89.06.46.0
Nashville
Suite 1000
2525 West End Avenue
Nashville, TN 37203
888.454.4981
Philadelphia
Suite 300
565 East Swedesford Road
Wayne, PA 19087
610.225.6516
Tampa
Suite 2900
401 East Jackson Street
Tampa, FL 33602
888.238.2672
*Joint Venture Affiliate
London
Mint House
77 Mansell Street
London E1 8AF
UK
011.44.207.488.1212
Robert W. Baird & Co. Incorporated
Member NYSE and other principal exchanges. Member SIPC. © 2004
Robert W. Baird Limited is authorized and regulated by the Financial Services Authority and is a member of
the London Stock Exchange.
© 2004 Robert W. Baird & Co. Incorporated.

merger monthly

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