Exhibit 1 Condensed Operating and Stockholder Information, Robertson Tool Company
(millions of dollars except per-share data)
1998 1999 2000 2001 2002
Operations
Sales $ 48.5 $ 49.1 $ 53.7 $ 54.8 $ 55.3
Cost of Goods 32.6 33.1 35.9 37.2 37.9 68.54%
Selling, General and
Administrative Costs 10.7 11.1 11.5 11.9 12.3 22.24%
Depreciation Expense 2.0 2.3 2.4 2.3 2.1 3.80%
Interest Expense .4 .7 .8 .8 .8 1.45%
Income Before Taxes 2.8 1.9 3.1 2.6 2.2 3.98% 0.392857 0.421053
Taxes 1.1 .8 1.2 1.0 .9 1.63%
Net Income $1.7 $1.1 $1.9 $1.6 $1.3 2.35%
O/P Income 3.201 2.6023 3.9201 3.3976 2.9862
Percentage of Sales
Cost of Goods 67% 67% 67% 68% 69%
Sell, Genl, Admin. 22% 23% 21% 22% 22%
Operating Income 6.6% 5.3% 7.3% 6.2% 5.4%
Stockholder Information
Earnings Per Share $ 2.91 $ 1.88 $ 3.25 $ 2.74 $ 2.23
Dividends Per Share 1.60 1.60 1.60 1.60 1.60
Book Value Per Share 49.40 49.68 51.33 52.47 53.10
Market Price 33-46 35-48 29-41 25-33 23-32
Price/Earnings Ratio 11-16 10-26 9-13 9-12 10-14
Shares Outstanding 584,000 584,000 584,000 584,000 584,000
0.387097 0.384615 0.409091 0.409091
Exhibit 2 Balance Sheet at December 31, 2002, Robertson Tool Company
(millions of dollars)
Assets Liabilities and Net Worth
$ Amount
Cash $ 1 Accounts Payable $ 2
Accounts Receivable 8 Other 2
Inventories 18 Current Liabilities 4
Other 1 Long-term Debt 12
Current Assets 28
Net Plant and Equipment 19 Net Worth 31
Total Assets $ 47 Total $ 47
Collection Period (days) 53 Debt as % Capital 28%
Days of Inventory (days) 173 Total Assets/Net Worth 1.52
Sales/Total Assets 1.18
Exhibit 3 Condensed Operating and Stockholder Information, NDP Corporation
(millions of dollars except per-share data)
1998 1999 2000 2001 2002
Operations
Sales $ 45 $ 97 $ 99 $ 98 $ 100
Net Income 1.97 3.20 3.20 1.13 2.98
Financial Position
Current Assets $ 25 $ 46 $ 49 $ 41 $ 46
Current Liabilities 6 11 15 10 13
Net Working Capital 19 35 34 31 33
Long-term Debt 10 18 16 15 17
Shareholders Equity 21 36 40 41 41
Stockholders Information
Earnings Per Share $ .78 $ .61 $ .59 $ .21 $ .54
Dividends Per Share 0 0 0 0.20 0
Book Value Per Share 8.31 6.86 7.37 7.38 7.45
Market Price 6-17 10-18 7-18 4-10 5-8
Price/Earnings Ratio 8-22 16-30 12-31 19-48 9-15
Shares Outstanding 2,525,600 5,245,900 5,430,100 5,510,000 5,501,000
Exhibit 4 ProFormas for Robertson Tool (millions of dollars)
Actual Forecasts
2002 2003 2004 2005 2006 2007 to Infinity
Sales $ 55.3 $ 58.6 $ 62.1 $ 65.9 $ 69.8 $ 69.8
Cost of Goods 37.9 39.8 41.6 43.5 45.4 45.4
Gross Profit 17.4 18.8 20.5 22.4 24.4 24.4
Sell & Admin 12.3 12.3 12.4 12.5 13.3 13.3
Depreciation 2.1 2.3 2.5 2.7 2.9 2.9
EBIT 3.0 4.2 5.6 7.2 8.2 8.2
Tax @ 40% 1.2 1.7 2.2 2.9 3.3 3.3
EBIAT $ 1.8 $ 2.5 $ 3.4 $ 4.3 $ 4.9 $ 4.9
CoGS % Sales 69% 68% 67% 66% 65% 65%
Sell & Admin % Sales 22% 21% 20% 19% 19% 19%
Net Plant & Equip @
Beginning of Year $ 19.0 $ 20.7 $ 21.7 $ 22.6 $ 23.5
Capital Expenditures (4.0) (3.5) (3.6) (3.8) (2.9)
Depreciation Expense 2.3 2.5 2.7 2.9 2.9
Net Plant & Equip @
End of Year $ 20.7 $ 21.7 $ 22.6 $ 23.5 $ 23.5
Exhibit 5 Five-Year Forecast of Monmouth, Inc. Earnings, Excluding Robertson Tool
(millions of dollars except per-share data)
2003 2004 2005 2006 2007
Net Income $ 11.0 $ 11.9 $ 12.8 $ 13.8 $ 15.0
Shares Outstanding (mil) 4.21 4.21 4.21 4.21 4.21
Earnings Per Share $ 2.61 $ 2.83 $ 3.04 $ 3.27 $ 3.56
Exhibit 6 Selected Financial Information on Quasi-Comparable Firms, 2002
Actuant Corp. Briggs & Idex Corp. Lincoln Electric Snap On Inc. Stanley Works Robertson Tool
Stratton Co.
Collection Period (days) 55 77 47 61 96 77 53
Inventory % Sales 12% 18% 13% 17% 18% 16% 33%
Operating Margin % Sales 17% 13% 20% 15% 10% 15% 5%
Return on Capital 21% 9% 10% 12% 11% 14% 4%
Times Interest Earned 3.8 3.2 7.1 11.5 7.8 9.3 3.5
Debt % Capital D/E Equity%cap.
balance sheet 98% 52% 30% 27% 29% 40% 28% 0.388889
values 0.37 0.587302
market values 29% 37% 20% 17% 19% 24% 0.63
Bond Rating BB- BB+ BBB - A+ A -
Value of Firm ($ mil) $ 712 $ 1,443 $ 1,191 $ 1,145 $ 1,861 $ 3,014 $ 29
EBIAT ($ mil) 55 119 98 90 129 234 1.80
EBIAT Multiple 12.8 12.1 12.2 12.7 14.4 12.9 16.1
Share Price $ 42 $ 42 $ 29 $ 22 $ 26 $ 27 $ 30
Earnings Per Share 2.80 3.20 2.00 1.78 1.80 2.32 2.32
Price/Earnings 15.0 13.1 14.5 12.4 14.4 11.6 13.5
Equity Beta 1.00 1.00 1.00 .75 1.05 .95 Tax 40%
Asset Beta .71 .63 .80 .63 .85 .73 0.73 Beta
Levered 0.98047619
Exhibit 7 Information on United States Capital Markets
I. Interest Rates in May 2003
30-Year U.S. U.S. Corporate Bonds Rated
Treasury Bonds AA A BBB BB
4.10% 4.52% 5.07% 6.07% 7.96%
Rf B levered (mkt premium)
Re
II. Estimated Market Risk Premium = 5.5% over 30-Year U.S. Treasury Bonds = 6.07% + 0.980476 5.50%
= 11.4626%
NN Rd = 7.87%
III. Median Values of Key Ratios by Standard & Poors Rating Category Rwacc 8.97%
AAA AA A BBB BB B BBB
Robertson
Times Interest Earned (X) 27.3 18.0 10.4 5.9 3.4 1.5 3.5
EBITDA / Interest (X) 31.0 21.4 12.8 7.6 4.6 2.3 6.375
Pre-tax Return on Capital (%) 25.2 25.4 19.7 15.1 12.5 8.8
Debt as % Capital (%) 12.6 36.1 38.4 43.7 51.9 74.9 37%
Number of companies 6 15 118 213 297 345
IV. Debt and Times Interest Earned Ratios for Selected Industries
AAA AA A BBB BB
Food Processing
Debt % Capital 44% - 51% 54% 53%
Times Interest Earned 7.9 - 6.7 4.3 2.9
Electrical Equipment
Debt % Capital - - 36% 48% 72%
Times Interest Earned - - 7.3 3.2 1.6
Electric Utilities
Debt % Capital - 46% 54% 57% 73%
Times Interest Earned - 4.0 3.4 2.7 2.0
Robertson Corporation
Discounted Cash Flow Analysis
Operating Scenario 1
Mid Year Convention Y Historical Period CAGR
1998 1999 2000 2001 ('98-'01) 2002
Sales $ 48.5 $ 49.1 $ 53.7 $ 54.8 3.10% $ 55.3
% Growth NA 1.24% 9.37% 2.05% 0.91%
Cost of Goods 32.6 33.1 35.9 37.2 37.9
Gross Profit $ 15.90 $ 16.00 $ 17.80 $ 17.60 2.57% 17.4
% Margin 32.78% 32.59% 33.15% 32.12% 31.46%
Selling, General and 10.7 11.1 11.5 11.9 12.3
EBITDA 5.2 4.9 6.3 ### 2.32% 5.1
%Margin 10.7% 10.0% 11.7% 10.4% 9.2%
Depreciation Expense 2 2.3 2.4 2.3 2.1
EBIT 3.2 2.6 3.9 ### 1.53% 3
%Margin 6.6% 5.3% 7.3% 6.2% 5.4%
Taxes 1.28 1.04 1.56 1.36 1.2
EBIAT 1.92 1.56 2.34 2.04 1.53% 1.8
Plus:Depreciation and amort. 2 2.3 2.4 2.3 2.1
Less: Capital Expenditures
Less:Inc.(dec.) in NWC
Unlevered FCF
WACC 8.97%
Discount Period
Discount Factor
PV of FCF
Enterprise Value Implied equity Value and Share Price
Cumulative PV of FCF $ 8.23 Enterprize Value
Less:Total Debt
Terminal Value Less: Preferred Stock
Terminal Year EBITDA 11.1 Less: Non Controlling Interest
Exit Multiple 2.86x Plus: Cash and Cash Equivalents
Terminal Value 31.746
Discount Factor 0.650827 Implied Equity Value
PV of terminal Value $ 20.66
% of Enterprize Value 72% Fully Diluted Shares Outstanding
Enterprise Value $ 28.90 Implied Share Price
Enterprise Value
Exit Multiple
$ 28.90 1.9x 2.4x 2.9x 3.4x 3.9x
WACC
8.0%
8.5%
WACC
9.0%
9.5%
10.0%
Implied Share Price
Exit Multiple
$ 28.93 1.9x 2.4x 2.9x 3.4x 3.9x
8.0%
8.5%
WACC
9.0%
9.5%
10.0%
Projection Period CAGR
2003 2004 2005 2006
$ 58.6 $ 62.1 $ 65.9 $ 69.8 4.47%
5.97% 5.97% 6.12% 5.92%
39.8 41.6 43.5 45.4
$ 18.80 $ 20.50 $ 22.40 $ 24.40 6.74%
32.08% 33.01% 33.99% 34.96%
12.3 12.4 12.5 13.3
6.5 8.1 ### 11.1 14.31%
11.1% 13.0% 15.0% 15.9%
2.3 2.5 2.7 2.9
4.2 5.6 ### 8.2 18.21%
7.2% 9.0% 10.9% 11.7%
1.68 2.24 2.88 3.28
2.52 3.36 4.32 4.92 18.21%
2.3 2.5 2.7 2.9
-4 -3.5 -3.6 -3.8
$ 0.82 $ 2.36 $ 3.42 $ 4.02
1 2 3 4 5
0.917684 0.8421435 0.772821 0.709206 0.6508265
$ 0.75 $ 1.99 $ 2.64 $ 2.85
and Share Price Implied Perpetuity Growth
$ 28.90 Terminal Value FCF $ 2.85
-12 WACC 9%
- Terminal Value 31.746
-
h Equivalents $ 1 Implied Perpetuity -0.01%
Growth Rate
$ 16.90 Implied EV/EBITDA
Enterprize Value $ 28.90
s Outstanding 0.5840 LTM EBITDA $ 5.10
$ 28.93 Implied EV/EBITDA 5.666x
Implied Perpetuity Growth Rate
Exit Multiple
-0.01% 1.9x 2.4x 2.9x 3.4x 3.9x
WACC
8.0%
8.5%
WACC 9.0%
9.5%
10.0%
