30
industry research MERGERS & ACQUISITIONS HOUSEWARES & HOUSEHOLD PRODUCTS Summer 2001 Steven M. Bernard, CFA M&A Research 312-920-2147 Investment Banking Contacts Steven P. Cesinger Los Angeles 310-231-7111 Douglas J. Lawson Chicago 312-920-2139 Michael R. Dillahunt Minneapolis 612-303-6337

MERGERS & ACQUISITIONS - Piper Jaffray · industry research MERGERS & ACQUISITIONS HOUSEWARES & HOUSEHOLD PRODUCTS Summer 2001 Steven M. Bernard, CFA M&A Research 312-920-2147 Investment

  • Upload
    lehuong

  • View
    236

  • Download
    0

Embed Size (px)

Citation preview

i n d u s t r y r e s e a r c h

MERGERS & ACQUISITIONS

HOUSEWARES & HOUSEHOLDPRODUCTS

Summer 2001

Steven M. Bernard, CFAM&A Research

312-920-2147

Investment Banking Contacts

Steven P. CesingerLos Angeles

310-231-7111

Douglas J. LawsonChicago

312-920-2139

Michael R. DillahuntMinneapolis

612-303-6337

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 1

Not FDIC insured

No bank guarantee

May lose value

Housewares is a nearly $70 billion U.S. industry ($250 billion worldwide) which hashistorically had very low barriers to entry. As a result, the sector is extremely fragmentedwith several thousand companies. Very few firms have more than $1 billion in revenues.We expect the increasing concentration and power of the large retail chains to driveconsolidation of this industry.

The housewares companies need scale to effectively serve the growing needs of retailers,particularly the large mass merchants. Retailers are reducing the number of vendors andpartnering with those that are value added, not just offering the lowest prices. Thesevalue-added services include a broad product portfolio, merchandising programs, in-storepromotions, just in time inventory, category and inventory management, efficientdistribution, and customer service. We believe that the best way for companies to developthese attributes is through business combinations.

Acquisitions can help companies gain shelf space, add recognizable brand-name products,leverage manufacturing, marketing, and distribution costs, and expand their geographicpresence. As companies continue to expand through acquisitions, they gain leverage withthe retailers and achieve better long-term pricing flexibility and operating efficiencies,leading to improved margins and cash flow. We believe that this improved profitability willhelp attract new capital and increase investor interest in the sector, leading to highervaluations. While the larger strategic acquirers have led this consolidation, many financialbuyers have established platforms in the housewares sector, recognizing the consolidationopportunities.

As evidence of this consolidation trend, there have been approximately 200 reportedtransactions in the housewares sector since 1997. The number of deals increased slightly in2000 after a sharp drop in 1999. However, transaction multiples dropped significantly in2000, coming in at 8.3x EBIT and 6.6x EBITDA. We believe that these low transactionvalues as well as low public company valuations will also generate increased M&Aactivity. If current valuations do not improve, we believe that private equity firms arepoised to step up their activity in the sector. Either way, we expect consolidation to remaina big part of the industry over the next several years as companies build successfulplatforms to ensure profitability and in some cases, survival.

E X E C U T I V E S U M M A R Y

H O U S E W A R E S T R A N S A C T I O N S

Source: Securities Data Corporation and U.S. Bancorp Piper Jaffray M&A Research

0

10

20

30

40

50

60

70

80

1997 1998 1999 2000

Nu

mb

er o

f dea

ls

0x

2x

4x

6x

8x

10x

12x

EB

ITD

A

Mu

ltip

le

Transactions EBITDA

Summer 2001

2 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

T A B L E O F C O N T E N T S

Part I: The Changing Industry Structure ................................................................... 3• Industry Overview ..................................................................................... 3• Distribution Channel Dynamics ................................................................. 5• Impact of Retail Consolidation .................................................................. 7• Global Expansion ...................................................................................... 8• Shifting Demographics ............................................................................... 9• Economic Cycles ..................................................................................... 10• Recent Operating Performance ................................................................ 11

Part II: The Need for Industry Consolidation ........................................................... 13• Economies of Scale .................................................................................. 13• Strategic Acquirers .................................................................................. 13• Private Equity Platforms .......................................................................... 14

Part III: What Acquirers are Looking For.................................................................. 16• Brand Names and Strong Market Share .................................................... 16• Product Innovation and Pricing Flexibility ................................................ 16• Efficient Manufacturing ........................................................................... 17• Customer Diversification ......................................................................... 18

Part IV: Housewares Industry M&A Analysis ........................................................... 19• General M&A Outlook ........................................................................... 19• Transaction Activity ................................................................................ 19• Transaction Multiples .............................................................................. 20• Public Company Valuations ..................................................................... 22

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 3

Industry Overview

PART I: THE CHANGING INDUSTRY STRUCTURE

The housewares industry is a very large and nearly all-encompassing segment of consumerproducts, ranging from small electric appliances to serving ware to decorative items suchas candles. Although diverse, these products share many similar characteristics: they aregenerally mass produced and distributed through mass retail channels, do not suffer fromobsolescence, are not subject to significant changes in fads or fashion, and tend to have afairly predictable replacement demand. Our definition of the industry is similar to that ofthe International Housewares Association (IHA), which is shown in Exhibit I.

According to the latest industry data, total U.S. housewares expenditures reached nearly$67 billion in 1999 and have grown over the past five years at an annual rate of 3.6%, agrowth rate that is roughly the same as consumer spending. This dollar amount equates toan average expenditure of $623 per American household, more than what was spent oneither dairy products ($310 per household), fruits and vegetables ($485 per household), oreducation ($595 per household).

Summer 2001

4 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

1 9 9 9 U . S . H O U S E W A R E S E X P E N D I T U R E S(Total Expenditures In Millions)

Exhibit I

Source: U.S. Department of Labor/ Bureau of Labor Statistics Consumer Expenditures Study for 1998

Total Expenditures Avg Annual % ChgExpenditures per Household Last 5 Yrs

FURNITURE $6,848.9 $63.9 6.3%

infants 1,123.9 10.5 13.3

outdoor 1,429.9 13.3 5.1

occasional 4,295.2 40.1 5.4

APPLIANCES $6,463.7 $60.3 4.5%

electric floor cleaning 1,920.8 17.9 7.2

misc. household appliances 823.4 7.7 56.8

small electric kitchen 1,901.0 17.7 1.7

other appliances 832.2 7.8 2.8

microwaves 986.3 9.2 0.9

HOUSEWARES $4,340.3 $40.5 0.0%

china & other 1,164.6 10.9 2.3

glassware 887.2 8.3 1.9

other 1,009.4 9.4 5.4

nonelectric cookware 1,279.1 11.9 (1.2)

MISC. HOUSEHOLD EQUIPMENT $38,055.4 $355.1 3.7%

window coverings 1,995.7 18.6 10.0

infant equipment 1,010.5 9.4 9.5

laundry & cleaning equipment 1,181.1 11.0 2.7

outdoor equipment 2,274.2 21.2 64.8

lamps and lighting 1,163.5 10.9 (16.3)

household decorative 16,042.5 149.7 5.1

telephone and accessories 4,341.4 40.6 11.8

office furniture for home use 1,334.1 12.5 75.6

closet and storage 1,090.9 10.2 6.8

other hardware 1,380.4 12.9 (2.4)

misc. household equip. & parts 4,488.9 41.9 0.2

other 1,752.5 16.4 2.5

PERSONAL CARE PRODUCTS $11,040.6 $103.0 3.8%

hair care products 6,284.3 58.7 4.5

oral hygiene 2,519.6 23.5 1.8

shaving needs 1,399.1 13.1 2.8

electric personal care 837.7 7.8 17.6

TOTAL EXPENDITURES $66,700.0 $623.0 3.6%

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 5

Despite being a large and mature industry, the housewares industry remains highlyfragmented. There is an estimated 2,000 to 3,000 companies competing in the housewaresindustry, including approximately 1,500 firms registered as members of the IHA. There areonly a handful of companies that generate sales in excess of $1 billion; probably more thanhalf generate less than $50 million in revenues. With this degree of fragmentation, theindustry likely sacrifices operating efficiency.

Given the high level of competition and greater demands by the retailers, we expectconsolidation to lead to the emergence of several dominant competitors. Most companiesare narrowly focused in a particular niche, such as electric kitchen appliances or tabletopproducts. We believe that to be successful in the future, companies will need to own abroad portfolio of products, covering multiple segments and price points. This breadthwill help make a company more important to the retailer as well as diversify its base ofbusiness.

In contrast to the housewares industry, the major appliances segment is much moreconcentrated. There are just five manufacturers of both laundry equipment anddishwashers and 15 manufacturers of refrigeration/room air equipment. We believe thatthis degree of concentration has resulted in a more stable operating environment withgreater efficiencies. While we doubt that the housewares segment will reach this level ofconcentration, the comparison does illustrate the potential for further consolidation.

There have historically been minimal barriers to entering the housewares sector,particularly given the ability to source low cost product overseas. The large number ofcompanies in the industry offering similar products provides evidence. However, webelieve that the increasing influence of the large retailers will create a significant barrier toentry as they limit the number of companies that they work with to those that have both abroad product line and the financial resources to support the retailer’s needs. Theserequirements will result in fewer successful companies and make it very difficult for a newcompetitor to enter the market and generate enough volume to be profitable, given thealready mature nature of the industry.

Distribution ChannelDynamics

Housewares manufacturers continue to distribute the vast majority of their productsdirectly through retail channels. Just 11% of the total volume is sold through wholesalechannels, a number that has remained relatively constant over the past several years.Changes in the makeup of the retail distribution channel are having a material impact onthe way that most manufacturers compete going forward. The main issues driving thischange are the rise of the power retailers, retailer consolidation, and the development ofthe Internet. Retailer consolidation in all segments, including drug, food, and massretailers has created retailing giants that now have the mass and size to dictate terms ofpayments, ordering, inventory management, and warehousing, etc.

For ease of analysis, the 14 direct-to-retail channels are usually grouped into four mainclusters based on size, as shown in Exhibit II.

The Big Three, which consists of discount stores, department stores, and specialty stores,currently dominates housewares distribution, with 52% of total sales. These channelsrepresent the traditional dominant channels of distribution. While the percentage of sales

Summer 2001

6 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

from this channel has remained relatively stable, the makeup within the category hasshifted. In just two years, the discount store/supercenter category has added three fullpercentage points to its market share, accounting for 32% of the total, while traditionaldepartment stores and specialty stores have each lost market share. This change haslargely been the result of the growth and success of Wal-Mart (#), Kmart (#), andTarget (#), as several other major discounters have gone bankrupt, including Venture,Ames, Caldor, Montgomery Wards, and Bradlees. Specialty chains increased their overallsales of houswares through growth concepts such as Bed, Bath & Beyond and Pier 1Imports (#) but gave up share as a group.

The Big Three is extremely important to the level of sales of housewares products,particularly, Wal-Mart, Kmart and Target. Each of these chains generates approximately10% of its sales in housewares products and has seen an increase in the level of totalhousewares sales. The supercenter concept is the fastest-growing segment within retail.The top three discount chains currently operate more than 800 supercenter stores in theUnited States and the number is expected to double over the next five years. We believethat this will benefit the top housewares companies as they hitch their growth to this rapidexpansion, particularly as Wal-Mart looks to expand its retailing success overseas.

The next group, the Middle Five, includes alternative formats that distribute non-houseware products. These include hardware stores/home centers, supermarkets,warehouse clubs, drug stores, and catalog showrooms and in total represent 28% of thetotal housewares volume. These chains, particularly hardware stores and homecenters aresuccessfully expanding their presence into the housewares arena. Supermarkets have beenthe fastest growing segment in this group, registering a 14% increase in housewares sales.This increase is the result of the supermarkets offering a broader product line to competewith the supercenters. Housewares products generate significantly higher gross marginsthan food, improving overall profitability for the supermarkets. While this segment islarge and growing, it does not yet have the volume of the Big Three and therefore does notyet have the same degree of bargaining power as the Big Three.

The smallest segment is Virtual Retailers, with approximately 5% of the market. Thiscategory includes sales through nontraditional retailers such as mail-order catalogs,infomercials, direct response, and the Internet. Total Internet sales were likely much higherthan indicated in Exhibit II because they do not include online sales made by the chainstores on their Web sites. It is difficult to gauge the total level of housewares sales takingplace online, as most traditional retailers do not report this information.

We believe that the Internet will not likely benefit manufacturers very much in the nearterm as the retailers currently handle most online sales. Retailers view direct distributionby the manufacturers as potential competition, and many vendors do not wish to risklosing their largest customers. Most manufacturers also lack the fulfillment anddistribution capabilities necessary to service small, individual orders. Therefore, even asonline retail sales continue to grow, we do not expect them to become a meaningfulproportion of houseware company sales. Currently, most manufacturers use the Internetfor corporate investor relations, product information, building brand awareness, anddealer information. However, one potential area of benefit is logistics, which could helpreduce costs for things such as customer tracking, electronic payment, and inventorymanagement. In addition, the Internet does provide an alternative distribution channel forsmaller manufacturers that are not able to serve the large chains.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 7

Exhibit II

1 9 9 9 U . S . H O U S E W A R E S I N D U S T R Y(Dollars in Millions)

(Direct-to-Retail Channels Only*)

* Does not include wholesale channelThe Big Three: Represents the traditional, dominant channels of housewares distribution.The Middle Five: Includes alternative formats that successfully distribute non-housewares and are expanding into housewares categories.Niche Players: Typically distribute a limited number of housewares categories within a tightly focused retail environment.Virtual Retailers: Includes retailers selling housewares product without a traditional brick-and-mortar store.Source: U.S. Department of Labor / Bureau of Labor Statistics Consumer Expenditures Study for 1998

Housewares Channel Direct-to-Retail Annual Chg Annual ChgDistribution Channel Sales Penetration Channel Sales Housewares Sales

The Big Three

Discount Stores/Supercenters $19,023.4 32.0%

Department Stores 5,933.0 10.0

Specialty Stores 5,903.2 9.9

The Middle Five

Hardware Stores/Home Centers 5,102.2 8.6

Supermarkets 4,273.0 7.2

Warehouse Clubs 2,808.3 4.7

Drug Stores 2,745.1 4.6

Catalog Showrooms 1,693.3 2.9

Niche Players

Gourmet/Gift Stores 2,390.1 4.0

Variety/One-Price Stores 2,339.9 3.9

Home Furnishing/Appliance Stores 1,243.6 2.1

Virtual Retailers

Direct to End-User 1,752.3 2.9

Third-Party Mail Order Catalogs 1,314.4 2.2

Other $2,884.9 4.9%

TOTAL $59,406.6 100.0%

Impact of RetailConsolidation

The rapid consolidation across virtually all segments of retailing has resulted in theemergence of a handful of dominant retailers in each channel. The rapid rise of powerretailers like Wal-Mart and Target has resulted in fewer but more dominant chains. Thesechains not only have been able to leverage their purchasing power to lower costs, but alsohave shifted a large amount of financial and operational responsibility back to themanufacturers for such tasks as inventory management and warehousing. This shift hasnot only reduced margins but also required a greater investment in working capital andinvestment in computer technology. We do not see any change in this scenario, and it willlikely lead to the elimination of many underperforming, undercapitalized firms and willcontribute to additional consolidation.

Summer 2001

8 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

Global Expansion The worldwide housewares industry is estimated at approximately $250 billion and manycompanies are focused on increasing their share of this market. In fact, even the namechange last year of Corning Consumer Products to World Kitchen indicates the industryfocus on global opportunities. There are significant opportunities in the developedcountries, such as Western Europe, as well as faster growing emerging markets like Asiaand Latin America. The fact that many of these markets are also highly fragmented addsto the opportunity. We believe that domestic companies with a strong product line butlimited international capabilities will become attractive acquisition targets for thosecompanies with international distribution.

The European housewares market has seen an active market for acquisitions due to itslarge size ($68.9 billion), economic wealth, and similar retail distribution. As U.S. retailerssuch as Wal-Mart have been expanding in Europe, U.S. housewares companies have beenactive acquirers of European companies in order to service these accounts. Examples ofthis geographic expansion include Newell’s acquisitions in Europe and Blyth’s acquisitionof several European candle companies.

While areas such as Latin America, Eastern Europe, and the Middle East have a similar

In fact, it is likely that the retailer consolidation will continue to accelerate. For example,Portugal’s top five retailers generate over 95% of all retail sales, while in the United Statesthe top 15 generate approximately 40%. Retailers are consolidating not only within theirown borders but outside of their borders as well. Globally, the top 100 retailers generate23% of all retail sales. The top 15 global retailers generate almost one-third of their salesoutside of their home market. A number of U.S. companies have been aggressivelyexpanding internationally, including Wal-Mart, Costco, QVC, and Williams-Sonoma.Conversely, many international companies have been expanding their presence in theUnited States, including Royal Ahold, Carrefour, and IKEA.

Given the fragmented nature of the industry, retailers have often been able to pit onemanufacturer against another, resulting in aggressive pricing, rebating, and tradepromotions. While this helped move product, it has likely suppressed overall profitabilitywithin the industry. The retailers are no longer satisfied with suppliers that only offer thelowest price; they want to partner with companies that are value-added. Retailers arelooking to improve efficiencies by choosing vendors that have the financial resources andinfrastructure to meet the increased demands for customer service, merchandising, andfulfillment. This has required companies to invest a significant amount of money toimprove MIS systems, customer service, distribution, and inventory managementcapabilities. As a result, most major manufacturers are now tied directly into the retailer’scomputer system, allowing them to more efficiently monitor sales and manage inventoryand production levels through just-in-time delivery. Several leading companies have beenable to take advantage of this and further strengthen their relationships with the retailer byhelping to manage inventory at customer locations and even take over categorymanagement, assisting in product selection, merchandising programs, and in-store support.These programs benefit both the retailer and manufacturer by improving sales andmargins through a more profitable product mix and reduction in inventory.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 9

population base as North America, housewares sales in each of these regions are wellbelow $10 billion. Given this potential, it is not surprising that there has been an increasein acquisitions in these markets. Emerging markets represent approximately 80% of theworld population and offers significantly better growth rates. These regions are benefitingfrom a growing middle class where consumers are spending more, tastes are convergingand consumers have become more accessible. Emerging markets account for 44% of theworld economy and where growth in per capita income and spending is expected toincrease faster than that of developed countries. Latin America and Southeast Asia areexpected to be among the most attractive emerging market regions, given the current lowmarket penetration of housewares products.

Shifting Demographics Overall demand for consumer products is closely correlated to the number of households,which is, in turn, a function of population growth. The U.S. population of 270 million hasincreased only approximately 1% annually over the past 20 years. This has led to astagnant number of new household formations.

Housewares is not a growth sector, but there are definitely several demographic trends thatare generating superior growth in certain segments. Companies that are able to recognizeand address these changing demographics are more likely to maintain shelf space andachieve better profitability. Households headed by 45-54 year olds will soon become thelargest age category, followed by 35-44 year olds. These two groups tend to spend moreon luxury items and extra features that should help demand. The new Ergo line ofproducts developed by Applica, designed specifically for the aging population is anexample. In addition, the trend toward bigger homes (today’s average new home is 40%larger than in 1990) should also benefit demand. Another example of favorabledemographics is the opportunity to develop products designed to accommodate today’sdouble-income households; this group is often willing to pay a premium for features thatadd to their lifestyle convenience.

ADVANTAGES OF GLOBALIZATION DISADVANTAGES OF GLOBALIZATION

• Access to faster growing markets • Different cultures, tastes• Increased importance to retailers • Lower per capita spending• Diversified revenue base • Development of an infrastructure• Potential to lower manufacturing costs to handle a worldwide business• Greater access to raw materials - Staffing• Uniform packaging - Manufacturing • Coordinated marketing launches - Transportation• Ability to sell more upscale, • Multiple currencies higher margined products • Impact of currency fluctuations on profitability

Summer 2001

10 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

Economic Cycles We believe that the housewares industry can be considered a “ defensive” , noncyclicalindustry. These products are staples in virtually every home and are usually replaced whenworn-out or broken. The most significant driver of demand is the replacement of existingproduct, which accounts for approximately 75% of all appliance purchases. A certainamount of replacement demand is built in given the limited life span of most products.Another sizable component of the market is the gift market, estimated to be 10% of thetotal market, representing approximately $6.5 billion to $7.0 billion. In some instances,such as for tabletop products, gifts account for almost 50% of sales in the segment.

The U.S. economy, although showing signs of weakening, continues to expand, rewardingconsumers with additional spending opportunities. Stock market gains (althoughdiminished), and relatively low interest rates have led to increased consumer spending.These factors are having a positive impact on housing starts and remodeling, both ofwhich are favorable for the housewares industry. A stronger economy would allowconsumers to trade up to a higher price point or name brand product, helping overallprofitability.

Exhibit III illustrates that overall consumer spending for furniture and householdequipment increased at a significantly faster rate than the overall GDP, personalconsumption expenditures, and retail sales. Even during the economic downturn in theearly 1990s, household expenditures still managed to outpace overall economic expansion.

H I S T O R I C A L H O U S E W A R E S S A L E S

Exhibit III

75

100

125

150

175

200

225

250

275

Dec

-89

Dec

-90

Dec

-91

Dec

-92

Dec

-93

Dec

-94

Dec

-95

Dec

-96

Dec

-97

Dec

-98

Dec

-99

Dec

-00

Ind

ex=1

00

Retail Sales Gross domestic product

Personal consumption expenditures Furniture and household equipment sales

Source: U.S. Government statistics, U.S. Bancorp Piper Jaffray M&A research

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 11

Recent OperatingPerformance

The dominance of the large retailers and the ample supply of competing products havelimited the ability to pass on price increases. The manufacturers have not been able toreduce operating costs and improve productivity enough to offset increased costs, erodinggross margins and profitability. This decline in profitability has caused many smallcompanies to go out of business. One potential benefit of an economic slowdown wouldbe the likelihood that many of the operating costs, such as raw materials and labor, woulddecline.

Although 2000 ended with a slowdown in consumer spending, the industry turned in adecent performance with respect to overall demand levels, which increased year-over-year.

• NPD INTELECT reported that the small appliance category rose 7.6% in units and6.9% in dollars compared to 1999. In fact, sales increased mid to high single digits ineach quarter in both units and dollars. We believe that these results are most likely dueto the lower price points on smaller appliances than for the major appliances, which sawa less robust result in 2000 compared to 1999.

The current economic environment may lead to longer replacement cycles and may alsodiscourage consumers from trading up to higher-priced models. We therefore believe thatit is important for companies to have a broad product line with multiple price points,which can help insulate a company from changes in the economic cycle. One of thequickest ways for a company to achieve this is through acquisitions.

A strong U.S. dollar, particularly relative to Asian and Latin American currencies, can havea negative impact on industry pricing. Many of these countries are significant producersof housewares products and as demand in those countries declines, there is a sharpincrease in U.S imports. We also expect that their low cost production capabilities willcontinue to result in a high level of imports potentially keeping up the pricing pressure.

Q U A R T E R L Y A P P L I A N C E S A L E S(% Change 2000 vs. 1999)

Exhibit IV

����������������������������������������������������������� ������������������� ���������������� � ����� �

�� ���� ���� ���� ������ ��� ��� ���� ����� ��� ��� ����! ����!�� ��� ��� ��� ���!"�� ���� ���� ���� #����

Source: NPD INTELECT

Summer 2001

12 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

• Consumer remodeling expenditures increased 2.7% in 2000, totaling $102 billion. Thereis a high degree of correlation as remodeling often entails replacing and/or upgradingexisting housewares and furnishings.

• Overall U.S. appliance shipments increased relative to 1999, according to Appliancemagazine. Major appliance shipments increased 2.8%, to 84.22 million units, smallportable appliances increased 1.5% to 105.5 million units, and video electronicsincreased 11.9%.

A N N U A L F A C T O R Y S H I P M E N T S

Exhibit V

Source: Appliance Magazine

47 49 47 51 55 58

97 96 101 96104 106

0

20

40

60

80

100

120

140

160

180

1995 1996 1997 1998 1999 2000

Year

Mill

ion

s o

f un

its

Major Appliances Small Appliances

Unfortunately, this moderate increase in sales was more than offset by sharply higheroperating expenses, negatively impacting industry profitability. Virtually everything thatcould go wrong did, including sharply higher raw material prices (plastic resins andcorrugated packaging), higher energy costs, a tight labor market, poor internationalprofitability due to the weak euro, and bad debt exposure to bankrupt retailers. We do notbelieve there is a significant amount of exposure remaining as many of the weaker chainshave already folded.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 13

Economies of Scale It is becoming more important for companies to be able to meet the needs of the retailers,requiring both greater financial resources and sufficient operating scale. Companies mustalso have the ability to serve the international growth plans of the retailer and provide highlevels of customer support and service. The ability to provide a broad product portfolioaugmented with new products and line extensions is important to maintaining shelf spaceand allow the retailer to have one-stop shopping from a limited number of suppliers.Adding the necessary corporate infrastructure and computer systems can be a veryexpensive proposition in which many smaller companies may not wish to invest. As aresult, we believe that a number of these companies will likely see the need to become partof a larger entity, creating additional acquisition opportunities.

Unlike some other consolidating industries that have a handful of large, dominant firmsdriving consolidation, there has been broad participation in the consumer product area.While a number of firms have been active, very few can be viewed as leadingconsolidators. There has also been wide participation among private equity firms. Whilemany companies have concentrated on acquisitions within their particular niche, very fewhave yet to build a broad product portfolio along the lines of the household productsgiants like Colgate and Procter & Gamble.

PART II: THE NEED FOR INDUSTRY CONSOLIDATION

Strategic Acquirers The leading consolidator in the housewares sector is Newell Rubbermaid, which has builta multibillion-dollar company through an aggressive acquisition strategy. In addition, theCompany has one of the broadest product offerings in the industry, with a focus onhousehold products, hardware, home furnishings, and office products. Newell’s firststrategy for growing sales and earnings is through acquisitions. Its goal is to grow salesthrough acquisitions by an average annual rate of 10% of prior-year sales. Newelltypically acquires companies with product lines that have the No. 1 or No. 2 position inthe markets in which they compete; the product lines are of the low-tech variety with along product life cycle and are marketed and distributed through mass merchandisers. Thetypical acquired company also has underperformed in its business segment but has thepotential to reach Newell’s operating income target of 15% after being fully integrated. Inaddition to acquiring entirely new product lines, the Company also uses acquisitions toround out existing businesses and fill gaps in its product offering, add new customers anddistribution channels, expand shelf space for the Company’s products with existingcustomers, and improve operational efficiencies through shared resources. The Companyhas recently focused on adding companies to its existing product lines, particularly homedécor companies in Europe and the Gillette stationery business, which was added to itsSanford writing instrument line.

We believe that consolidation in the housewares industry will result in many morecompanies that look like Newell Rubbermaid.

Summer 2001

14 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

Salton, Inc. is another company that has been aggressive in building its platform throughacquisitions. The Company has used the tremendous cash flow generated from its GeorgeForeman Grill line to broaden its portfolio of products and push annual revenues to exceed$800 million. The Company’s focus is on businesses or brands that 1) offer expansion intorelated or existing categories, 2) can be marketed through its existing distributionchannels, or 3) provide a platform for growth into new distribution channels. With thehousewares industry still highly fragmented, we believe there remain many businesses orbrands that would fit into Salton’s plan. The Company has recently completed thefollowing acquisitions:

• Toastmaster, a manufacturer and marketer of kitchen and small appliances and timeproducts;

• certain assets of Sasaki, Inc., a leading designer of high-quality tabletop products andaccessories for the home;

• Sonex International Corporation, a designer and distributor of electrically operatedtoothbrushes which employ ultra high-frequency sonic waves for cleaning;

• certain assets and intellectual property of The Stiffel Company, a designer of lamps andrelated products;

• The Relaxor® brand business and certain inventory, including personal massagers andother personal care items.

Several companies have focused on consolidating globally a particular niche, such asOneida’s three acquisitions last year of competing tabletop companies, which broadenedits product offering and helped solidify its position in Europe. By acquiring subsidiaries,entering into strategic distributorship arrangements, and expanding its own tablewarelines, the Company has diversified into the manufacture and distribution of commercialand retail china dinnerware and the distribution of other tableware and gift items, mostnotably crystal and glass stemware, barware, and giftware.

Another example of a company taking this approach is Blyth, Inc., which has aggressivelyexpanded through acquisitions so that it is now the largest company engaged in the design,manufacture, marketing, and distribution of home fragrance products, including scentedcandles, potpourri, and environmental fragrance products.

Private Equity Platforms We believe smaller companies and private equity investors can also execute successfulconsolidation strategies in this sector. The housewares industry has many characteristicsthat make it attractive to financial buyers. The industry is highly fragmented withthousands of small companies, offering significant consolidation opportunities. There are alimited number of large dominant industry participants, minimizing the likelihood ofexpensive bidding wars. The product cycle is fairly stable, resulting in predictable cashflows which can be used for debt service.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 15

We see opportunities for intermediate consolidators, focusing on building scale byassembling a group of smaller entities in a narrow niche. The ultimate exit strategy wouldbe to combine with a larger firm seeking to fill this void in its geographic coverage orproduct line.

Another current opportunity is in orphan brands, a strategy that has been particularlysuccessful in several other industries, including pharmaceuticals and food. Given themassive size of many international companies, there are often small brands or productlines that have been neglected and which have lost market share as the parent focuses onlyon those areas which offer sizable global capabilities. We believe that there will be moretransactions similar to the recent move by The Shansby Group, which formed a newcompany to acquire the Cinch and Spic and Span brands from Procter & Gamble.

The following table provides a summary sketch of some of the more active private equityparticipants and their focus in the industry.

P R I V A T E E Q U I T Y P A R T I C I P A N T S & P L A T F O R M S

Exhibit VI

*Primarily institutional end marketSource: U.S. Bancorp Piper Jaffray M&A research

Private Equity Firm Portfolio Company Portfolio company business description

Bain Capital Totes Manufacturer and distributor of umbrellas and rubber footwear.Bain Capital Midwest of Cannon Falls Inc. Marketer and distributor of seasonal giftware.Banc One Equity Capital Taylor Environmental Instruments, L.P. Manufactures and distributes consumer and industrial thermometers. Berkshire Partners The Holmes Group, Inc. Manufacturer of kitchen and home portable heaters and fans.Brockway Moran & Partners Dynamic Cooking Systems Inc. Manufacturer of outdoor/indoor barbecue grills and professional ranges/ovens.Capital Resource Partners Spir-It Inc.* Customized molded plastic stirrers, cutlery, and straws.Centre Partners Salton, Inc. Designer and marketer of branded kitchen, home and personal care appliances.Charterhouse Group International, Inc. United Design Corp. Designer and manufacturer of hand crafted picture frames and giftware.Chartwell Investments Playcore Holdings Manufacture playground equipment.Citicorp Venture Capital, Ltd. BDK Holdings, Inc. Manufactures decorative kitchen and bath ensambles.Citicorp Venture Capital, Ltd. Glenoit Corporation Manufactures home furnishing, including kitchen and bath rugs.Citicorp Venture Capital, Ltd. Conso International Corporation Manufactures of patterns for the home sewing apparel, crafts and home decoration.Engles Urso Fullmer Capital Corp/ACS Electrolux LLC Manufactures vacuum cleaners.Fenway Partners Simmons Co. Manufactures mattresses box springs and water beds.Fenway Partners DCI Holdings Home décor products and artificial flowers.Forstmann Little & Co. The Yankee Candle Co., Inc. Manufactures candlesGeneral Electric Asset Management Hunter Fan Co. Manufactures electric ceiling fans, light fixtures, air purifiers and humidifiers.Goldner Hawn Johnson & Morrison Claire Sprayway Packaged cleaning products.Haas Wheat & Partners Playtex Products, Inc. Infant care products.Hoffman & Company Progressive International Corp. Manufactures kitchen cooking utensils.J.W. Childs Associates American Safety Razor Co. Manufactures shaving blades and razor blade hand tools.Kohlberg Kravis Roberts (KKR) World Kitchen Inc. (Borden) Manufactures branded housewares, Corning, Ecko & OXO brandsKRG Capital Partners Case Logic Lifestyle-oriented accessory products for the audio, computer, photo/video, etc.Leonard Green & Partners Intercontinental Art, Inc Manufactures high quality mid-priced framed prints and artwork. Mason Wells WPC Brands, Inc. Branded outdoor protection products, including RepelNorwest Equity Partners InSTEP Juvenile products, such as babystrollers, safety gates, etc.Prospect Partners Excello Ltd. Manufacturer of home products including kitchen textiles.Saunders Karp & Megrue Targus Group International Manufactures pouch-style totes to multi-compartment luggage.Saunders Karp & Megrue Giftware Holdings Designer of high quality giftware, stationary and decorative accessories.The Shansby Group Spic 'n Span Manufactures cleaning products.The Shansby Group Medtech Branded personal care products, including Cutex, Heet & Compound WStonebridge Partners O-Cedar Brands Manufacturer of residential cleaning tools such as mops and broomSun Capital Partners, Inc. Carolina Mirror Manufactures decorative mirrors and framed art products.Swander Pace Capital Minami International Corporation Manufactures holiday lighting products. Trivest, Inc Dyno Corporation Packages and distributes miscellaneous housewares (sewing notions, etc.)Trivest, Inc Jet Plastics, Inc.* Manufactures disposable plastic cutlery, tumblers, dinnerware and drinking straws.Vestar Capital Partners, Inc. Remington Manufactures mens' and ladies' shavers, grooming and personal care products.

Summer 2001

16 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

PART III: WHAT ACQUIRERS ARE LOOKING FOR

Brand Names and StrongMarket Share

A company with a leading brand name and strong market share has a better opportunityto maintain and even expand shelf space at the retail level. The housewares industry stillcontains some of the most recognizable brand names, such as Rubbermaid, Black &Decker, Sunbeam and Anchor Hocking. A highly recognizable brand name still carriesconsumer loyalty (although not quite to the extent that it did several years ago). Strongbrand names help foster an image of high quality and reputation that leads to increasedconsumer loyalty and demand. A high-quality, recognizable brand name can often help amanufacturer gain clout with retailers This recognition should lead to more prominentdisplay at the retail level, allowing the company to schedule longer production runs,helping to improve profitability. In addition, a brand name can usually command apremium price, leading to greater margins that can then be deployed in incrementaladvertising or research and development, further enhancing the brand. Finally, a brandname can be leveraged into ancillary products, helping create a family of products underthe same brand name.

The industry survivors possess certain qualities necessary to earn partner status with theircustomers, maintain consistent profitability, attract additional capital and achievecontinued growth. Acquirers will place a premium value on companies that have some orall of these characteristics already in place. In a consolidating industry, we believe thatthese attributes are critical to creating value.

Product Innovation andPricing Flexibility

The housewares industry is mature, and it is increasingly difficult to develop truly new,revolutionary products. A study by Marketing Intelligence Service of New York foundthat just 5.8% of the new products introduced in 1997 were innovative, down from 7.2%in 1996. Successful companies must continue to improve existing products and add newfeatures or conveniences. Given the intense competition, without new features and lineextensions, it is virtually impossible for companies to pass through much more than aminimal price increase, if they are able to raise prices at all. This innovation does nothappen accidentally, and is usually the result of an investment by a company in researchand development, engineering, marketing and consumer focus groups. Companies thathave a history of innovation may be highly desirable to companies that have strongmanufacturing and marketing capabilities but lack innovative new products.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 17

Efficient Manufacturing The production of most housewares products is not very capital intensive once a facility isoperational, although it does require some ongoing investment in tools, dies, and othermanufacturing equipment. Most facilities are highly automated and have high fixed costsrequiring long production runs to maximize efficiencies. Historically, many companiesowned domestic facilities that did not have enough captive volume to be competitive withoverseas production, which benefited from lower labor and overhead costs and generatedlarge production runs by contracting their services to many different vendors. As a result,many domestic facilities have closed and production has been moved overseas.

The ability to reduce costs by eliminating costly domestic production has been the majorfactor driving a number of deals, particularly with small electrical appliances, which havemore components and require a greater amount of labor. Applica’s acquisition of Black &Decker’s appliance division and Salton’s acquisition of Toastmaster are examples of dealswhich were successful due to the ability to eliminate domestic production. Severalcompanies, such as Helen of Troy and Salton (prior to the Toastmaster acquisition) do noteven own any manufacturing facilities and believe that it is more efficient to sourceproduct and avoid the costly overhead associated with owning a factory. They prefer tofocus on sales and marketing, and as a result, these companies generally have higher grossmargins, some of which is offset by higher marketing and distribution costs. We believethat the trend will continue toward outsourcing for the more labor-intensive products.There are companies such as Newell Rubbermaid that have proven that a well-rundomestic plant can compete effectively, although it has recently indicated that it may movesome production overseas in an effort to reduce costs.

While not necessarily considered necessities, the penetration rates of basic housewaresproducts like toasters, pots and pans, and hairdryers are extremely high. Therefore, thetotal quantity does not vary materially according to whether the economy is doing well.However, the quality of the product purchased may vary based on the economy, asconsumers are more selective with their disposable income. Consumers are likely to bemore price-sensitive, trading up and down between a premium priced brand name productand a private label or store brand product. Most successful companies are able to takeadvantage of this shift by offering products and prices across a wide spectrum, withdifferent products geared to different price points. To help achieve this mix, it isimperative that the companies continue to update their products with new features andhave access to efficient, low-cost manufacturing capabilities. While a manufacturer willrealize lower margins on opening price point products, it still allows the company tomaintain capacity utilization and distribution costs. Industry consolidation will also havethe added benefit of fewer competitors discounting prices to gain market share and shelfspace.

Summer 2001

18 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

Customer Diversification A broad product portfolio allows a company to address multiple distribution channels,giving it greater exposure to the consumer. Acquisitions can be more effective by addingadditional products into existing channels of distribution. Customer diversification isequally important. Most companies want to show sales to the Big Three as a way tovalidate their product lines, but there is a risk of having this group dominating thecompany’s revenue base. A heavy reliance on sales to a limited number of customers willlikely lead to a lower valuation in the event of a sale of the company. Many companies areentering non-traditional distribution channels in an effort to diversify.

Geographic diversification is also important as it helps to minimize risk and increases theability to partner with the global retailers. Having a global business helps reduce theexposure to economic cycles in any one particular region. Larger companies that havebroad geographic coverage and fully integrated design and production capabilities have agreater ability to mitigate adverse pricing trends and are able to take advantage ofdifferent labor rates and raw material prices around the world.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 19

PART IV: HOUSEWARES INDUSTRY M&A ANALYSIS

General M&A Outlook In our Middle Market M&A Outlook 2000 (December 2000) report, we indicated thatmany of the principal drivers of the strong M&A market in recent years would continue tobe a major force in the future. These factors include:

• Industry consolidation• Globalization• Implementation of common technology• Strong macroeconomic environment• High stock market valuations• Low cost and availability of credit• Growth in private equity capital

However, our outlook is tempered by the fact that the debt market has tightenedsignificantly. Leveraged financing is the lifeblood of private equity transactions. Given theunprecedented level of private equity activity in recent years, tighter credit will have amore pronounced impact on M&A activity than usual. The M&A market is alsosusceptible to what appears to be a slowdown in U.S. economic growth and stock marketvolatility.

Providing a floor to the M&A market is the continuing appetite of strategic players togrow through acquisitions. Although a sluggish stock market dampens their enthusiasm,many public corporations are still valued at high multiples on a historical basis and havehealthy balance sheets. The M&A market may be further supported by recently proposedchanges to purchase accounting rules, which, if implemented, will substantially reduce thedrag on earnings associated with goodwill. This will enable corporate acquirers to pursueacquisitions more aggressively, while meeting the objective that a transaction be accretiveto earnings.

Transaction Activity We believe that the current market is still conducive to acquisition activity, particularlygiven the low valuation of many companies in the housewares industry. The pace ofacquisitions has been fairly steady over the past couple of years due to the large number ofavailable companies and a favorable situation in the capital markets (low interest rates andhigh stock prices). Although not unique to the housewares industry, this environment ledto some questionable deals and possibly excessive valuations that have likely played a partin recent financial difficulties. The problems experienced by Newell’s purchase ofRubbermaid and Sunbeam’s aggressive acquisition binge may temper aggressive bidding inthe future.

Summer 2001

20 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

We expect to see an increase in opportunistic transactions. This will be prompted by thefact that in many cases it will be more advantageous to buy a competitor than to invest indeveloping a product internally. Acquisitions give the buyer immediate shelf space andeliminate costly development and launch costs. Given the fundamental shift in theindustry caused by the emerging domination of the retailers, we believe that the biggermanufacturers will get bigger as the smaller niche players will be forced to merge orcontinue to see a decline in business. It is also likely that the acquisition premiums will bemodest, as most of the housewares companies do not have excessively high valuations tosupport aggressive acquisition prices.

We also expect to see an increase in divestitures as companies continue to fine-tune theiroperating strategies. Examples of this are Gillette’s sale of its paper and stationery business,the unsuccessful attempt to sell its kitchen appliance division, and the rumored sale byNewell Rubbermaid of several under-performing divisions. We believe that there could bea further increase product line divestitures as companies continue to streamline operationsby eliminating lines that no longer have a strategic fit, are too small, or are not profitablefor the current owner. Household products companies such as Procter & Gamble andUnilever are good examples of companies that continually restructure their productportfolios. Recently, Clorox announced that it will continue to review possibledivestitures, given the Company’s reduced earnings outlook.

There have been very few blockbuster deals, primarily because there are very few largecompanies in the industry. Most of the acquisitions are small add-on acquisitions, whichbring product extensions, new distribution channels, or geographic expansion. Some ofthe larger, blockbuster (at least for this industry) deals have been those in which theacquired company is operated as a separate division and economies are achieved byleveraging overhead. Examples of this are Newell’s purchase of Rubbermaid and Applica’spurchase of the Black & Decker household products group.

Transaction Multiples We have compiled a list of transactions over each of the past four years and found thatthere has been significant activity, with a total of 196 transactions in the housewarescategory and 237 transactions in the household products/personal care area. Forcompetitive reasons, financial data was often not available, but we believe that Exhibit VIIshows a representative picture of the current state of the market, particularly looking atthe overall running total data. We believe that the number of transactions is significantlyhigher than what we were able to capture due to the broad definition of consumer productcompanies and the fact that many small transactions do not get reported.

While the number of deals in the housewares sector rose slightly in 2000, the transactionmultiples declined dramatically due to many factors, including the slowing capital marketsand concerns about industry profitability. Based on our research, the average transactiontook place at roughly 1.0x revenue, 6.9x EBITDA, and 8.8x EBIT. These valuations arebelow the average over the past four years, when multiples paid were 1.0x revenue, 7.7xEBITDA, and 11.1x EBIT. Given the large number of companies in the industry, acompany must be able to bring additional value to the table, not just the standardoperating synergies, in order to receive a premium valuation.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 21

P R E M I U M V A L U E D R I V E R S

• Strong marketing capabilities• History of product innovation and design• Efficient manufacturing capabilities• International distribution• Strong brand name recognition• Market share in a faster-growing segment

Examples of this are Procter & Gamble’s purchase of Recovery Engineering, anunprofitable but fast growing manufacture of water filter systems, as well as the purchaseof Rubbermaid by Newell and of Culligan by U.S. Filter Corporation.

Transaction multiples for the household products/personal care sector actually increasedfrom 1999 to 2000. In 2000, we found 59 transactions which took place at 0.9x revenues,12.5x EBIT, and 8.8x EBITDA. These multiples were very close to the typical valuationlevels observed during the past four years. We believe that these multiples are higher thanthose in the housewares sector due to the companies’ products having lower price pointsand recurring use, making them less susceptible to an economic slowdown.

T R A N S A C T I O N M U L T I P L E SMedian Values

(Dollars In Millions)

Exhibit VII

Source: Appliance Magazine

����������

�������� ��� ����������������������������� ���� �������� ��� ����

�� ������ ���$ ���$ ���$���� �� ����� ��� ���� ������ �� ���� ��� ���� ������� �� ���� ��� ��� ���������������� ��� ����� ��� ���� ���

���������������������������� ���

�������� ��� ����������������������������� ���� �������� ��� ����

�� ����� ���$ ����$ ���$���� �� ���� ���$ ��� ������ �� ���� ��� ���� ������� �� ���� ��� �� ����������������� !� �"��� ���� ��� � �

Summer 2001

22 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

We believe that the pace of acquisitions will remain brisk continue as companies seek toachieve critical mass and expand their presence in international markets. The payoff forachieving critical mass and economies of scale with an international presence can be quitedramatic. As shown in Exhibit VIII, the larger multinational, multibillion-dollar companiescommand significantly greater valuations than the smaller, less diversified companies. Webelieve that this discrepancy will become a major factor in driving additional industryconsolidation.

V A L U A T I O N S F O R M E G A C O R P O R A T I O N S

Exhibit VIII

Source: Factset

��� ��������� ������� ������� !!" � #������ ����� ���� ����� #� ������

%����� ����� ����� ���$ ���$ ���$&����'�(��) ��� ��� ��� ��� ���*��+� ��� ��� ���� ��� ��������� ��� ��� ��� ��� ���#$����� ���� ��"%� ��!� � � %��

��� ��������� ������� ������� !!" � #������ ����� ���� ����� #� ������

,����$ ���-��� ���-��� ���$ ���$ ����$,��.�� ���-��� ���������-��� ���� ��� ����/����� ��-��� ���������-��� ���� ��� ����01��2344����+ ���-��� ���������-��� ��� ��� ����#$����� ���&"�% ��&% ���� � � �"�

Public CompanyValuations

The weak industry profitability has had a major impact on the valuation of the publiclytraded consumer product companies. Negative earnings announcements from largeconsumer product companies like Maytag, Newell Rubbermaid, Gillette and Sunbeamhave kept investors on the sidelines for nearly all consumer product companies, regardlessof their outlook. Another factor may be the decline in analyst coverage of the sector, asmany firms reduced or eliminated their consumer coverage given the poor performance oflate and lack of underwriting potential. In fact, the housewares group has an average ofjust 4.5 analysts per company, with almost half of the names having just a single analyst.The household products group is only slightly more active, with an average of 6.4 analystsper company.

The S&P Housewares Index fell 14% in 2000, underperforming the S&P 500 Index,which fell just over 10%. In fact, the industry has underperformed both the S&P 500 andthe group of personal care/household products companies for virtually the entire period ofthe past two years, as shown in Exhibit IX. We believe that this underperformance,resulting in low valuations, has made the industry further vulnerable to consolidation.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 23

Source: Factset

C O N S U M E R R E L A T I V E P R I C EWeekly Relative Price Performance

1/2/98 to 3/30/01

(For a list of companies included in these indices, please refer to Exhibit X on page 26)

Exhibit IX

However, it seems that the tide may have turned with respect to years ofunderperforming the overall market. As shown in Exhibit IX, the average priceperformance year-to-date for the group, through March 31st, is actually up 5.8%,compared to a 12.1% decline for the S&P 500 and 6.8% decline for the Russell 2000index. We believe that this performance is a result of the stocks already havingexperienced a significant decline over the past two years and the view that thesecompanies are profitable and generate positive cash flow, giving them a defensive naturein this market. The household products group is also outperforming the overall market,with an average gain of 4.8% YTD.

Despite this recent positive performance, many companies are now selling at extremelylow valuations. In fact, many companies are currently trading at valuation levels that arebelow recent transaction multiples. Overall, the average company in the housewaresgroup is trading at just 0.8x revenue and 5.5x its enterprise value to EBITDA. Inaddition, the price/earnings ratio averages just 10.0x estimated 2001 earnings and 8.8xestimated earnings for 2002. These are well below the estimated multiples for theStandard & Poor’s 500 Index, which is trading at 19.6x and 18.5x estimated 2001 and2002 earnings. The household products/personal care group is selling at a slightly greatervaluation although several companies here, too, are selling below the transactionmultiples of the past several years.

40

60

80

100

120

140

160

180

1/02/98 4/03/98 7/02/98 10/02/98 12/31/98 4/01/99 7/02/99 10/01/99 12/31/99 3/31/00 6/30/00 9/29/00 12/29/00 3/30/01

Date

Pri

ce =

100

on

12/

31/9

7

Housewares Companies Household Goods & Personal Care S&P 500 Composite

12/31/98 Close S&P 500: 126.67Personal Care: 111.05Housewares: 91.75

12/31/99 Close S&P 500: 151.40Personal Care: 134.72Housewares: 90.76

12/29/00 Close S&P 500: 136.05Personal Care: 110.51Housewares: 67.20

S&P 500 Close: 119.57

Personal Care Close: 91.84

Housewares Close: 71.50

Summer 2001

24 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

These low valuations may spur an increase in the pace of acquisitions as it is unlikely thatvaluations will remain this low. However, these low valuations may limit largertransactions due to the potential for earnings dilution. Given Wall Street’s focus onearnings growth, acquisitions will likely be limited to those that are non-dilutive. Thepending change in accounting for M&A goodwill may help offset some of this concern.Also, many companies still have under leveraged balance sheets that can be used to fundacquisitions; the median debt to total capital ratio in our public company universe is just31%.

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 25

N O T E S

Some or all of the following hedges may pertain: (#)U.S. Bancorp Piper Jaffray Inc. makes a market in the company’s securities. (~)A U.S. Bancorp Piper Jaffray Inc.officer, director, or other employee is a director and/or officer of the company. (@)Within the past three years, U.S. Bancorp Piper Jaffray Inc. was managingunderwriter of an offering of, or dealer manager of a tender offer for, the company’s securities or securities of an affiliate. Additional information is available uponrequest.

Summer 2001

26 | Housewares & Household Products U.S. Bancorp Piper Jaffray M&A Research

Exhibit X

P U B L I C C O M P A N Y V A L U A T I O N S

Source: Factset and U.S. Bancorp Piper Jaffray M&A research

Housewares CompaniesClosing 52 Week 52 Week YTD Price Shares Mkt LTD/Total Enterprise Avg. % Op.

Name Ticker Price High Low % Change (Mil.) Cap. (Mil.) Capital Value (Mil.) ROE Margins

Acorn Products Inc. ACRN $0.75 $1.69 $0.25 140.00% 6.1 $4.5 24.2% $42.9 (38.5%) (3.7%)Applica Inc. APN 6.20 16.50 3.00 27.18 23.1 143.1 44.5 418.7 (6.4) 5.9Black & Decker Corp. BDK 36.75 46.95 27.56 (6.37) 80.3 2,952.6 53.6 4,066.7 37.8 11.5Craftmade International Inc. CRFT 7.28 8.75 4.00 3.10 5.9 42.9 34.2 65.6 22.1 11.1Department 56 Inc. DFS 8.90 15.88 7.44 (22.38) 13.4 119.3 42.3 279.8 14.0 30.7Electrolux Ab -Adr ELUX 26.75 40.00 21.94 4.39 183.1 4,897.5 32.7 6,524.2 16.2 6.6Enesco Group Inc. ENC 6.66 13.44 3.81 41.66 13.6 90.5 0.0 126.8 9.9 6.1Fedders Corp. FJC 5.60 6.25 3.38 21.08 32.2 180.5 62.2 340.3 14.8 11.4Fortune Brands Inc. FO 34.40 35.19 19.19 14.67 153.5 5,280.7 35.0 7,226.8 (5.7) 13.7Fantom Technologies Inc. FTMTF 4.19 10.69 2.50 52.27 9.1 38.2 0.0 44.5 (13.7) (7.3)Global-Tech Appliances Inc. GAI 4.67 6.88 3.25 20.52 12.1 56.7 0.6 4.7 8.4 6.4Helen Of Troy Corp. Ltd. HELE 5.63 7.88 4.00 15.38 28.3 159.1 20.2 212.6 3.3 6.0Home Products International Inc. HPII 1.16 12.00 1.00 (33.93) 7.3 8.4 107.2 233.2 NM 13.2Lancaster Colony Corp. LANC 29.06 32.50 18.50 3.56 37.7 1,095.7 0.6 1,108.8 21.6 14.0Libbey Inc. LBY 29.86 33.56 26.31 (1.70) 15.3 455.5 53.2 632.1 41.6 17.0Lifetime Hoan Corp. LCUT 4.69 8.70 4.50 (35.34) 10.5 49.4 0.0 67.7 6.4 7.6Maytag Corp. MYG 32.25 42.44 25.00 (0.19) 76.2 2,458.7 74.6 3,705.8 61.9 11.0National Presto Industries Inc. NPK 29.95 35.19 29.06 (2.40) 6.9 207.7 0.0 9.2 8.2 14.9Newell Rubbermaid Inc. NWL 26.50 29.50 18.25 16.48 266.6 7,064.9 53.5 10,084.3 16.4 12.9Oneida Ltd. OCQ 15.95 20.00 10.06 (14.07) 16.4 261.1 69.6 582.1 (1.0) 13.9Water Pik Technologies Inc. PIK 7.10 9.69 5.75 1.43 9.9 70.4 35.7 104.1 16.5 8.6Royal Appliance Mfg Co. RAM 3.90 6.88 3.44 (2.50) 13.7 53.5 61.0 101.5 15.7 3.1Salton Inc. SFP 15.20 49.81 14.90 (26.53) 15.5 235.6 48.3 590.3 40.7 19.4Sunbeam Corporation SOC 0.09 4.25 0.07 (72.48) 107.4 9.2 139.2 2,416.7 NM (2.1)Stanley Works SWK 32.95 38.35 18.44 5.65 86.0 2,832.4 25.2 3,275.9 26.4 11.3Tupperware Corp. TUP 23.86 26.00 15.50 16.75 57.8 1,378.0 70.2 1,717.0 77.2 13.7Waterford Wedgwood Plc -Adr WATFZ 10.00 13.00 8.75 (9.09) 73.2 732.2 58.6 1,105.9 24.8 9.3Whirlpool Corp. WHR 49.99 68.31 31.50 4.83 66.3 3,312.6 32.1 4,983.6 20.7 7.8

Average 5.8% $1,221.1 42.1% 19.1% 9.8%

Household Goods & Personal CareClosing 52 Week 52 Week YTD Price Shares Mkt LTD/Total Enterprise Avg. % Op.

Name Ticker Price High Low % Change (Mil.) Cap. (Mil.) Capital Value (Mil.) ROE Margins

Alberto-Culver Co. ACV $39.66 $43.50 $23.00 (7.36%) 56.4 $2,236.1 33.3% $2,461.9 7.4% 7.4%Allou Health & Beauty ALU 3.50 8.25 3.13 9.80 6.8 23.9 12.5 222.3 8.2 5.2Avon Products AVP 39.99 49.75 27.88 (16.47) 238.2 9,524.1 117.5 10,666.0 NM 13.8Blyth Inc. BTH 23.05 33.88 21.06 (4.46) 44.7 1,030.5 31.7 1,240.8 20.1 14.9Carter-Wallace Inc. CAR 24.91 34.50 17.38 (25.62) 45.3 1,127.4 11.3 1,014.8 12.5 10.0Central Garden & Pet Co. CENT 8.50 13.00 6.44 23.64 18.3 155.8 25.9 479.6 (2.1) 4.0Church & Dwight Inc. CHD 21.73 24.99 15.19 (2.34) 38.4 834.0 7.9 843.4 14.5 9.3Chattem Inc. CHTT 8.69 16.00 4.50 54.44 8.9 77.0 89.0 280.1 (6.7) 17.9Clorox Co. CLX 31.45 48.63 28.38 (11.41) 236.3 7,430.8 19.4 8,549.8 23.5 17.9Colgate-Palmolive Co. CL 55.26 65.69 42.50 (14.39) 572.2 31,621.8 63.0 34,357.5 63.4 17.2Dial Corporation DL 12.50 15.75 9.88 13.64 94.9 1,186.3 61.5 1,774.6 (3.1) 7.7Lauder Estee Cos. Inc. EL 36.42 54.31 33.18 (16.87) 238.1 8,671.0 19.7 9,028.2 21.6 12.2Energizer Hldgs Inc. ENR 25.00 27.55 14.81 16.96 95.6 2,388.8 33.4 2,881.9 17.6 16.9Gillette Co. G 31.17 41.69 27.13 (13.72) 1,053.0 32,822.0 44.9 37,335.0 30.2 22.4Inter Parfums Inc. IPAR 10.63 11.13 6.88 18.88 11.7 124.0 2.5 105.1 12.0 11.3First Years Inc. KIDD 9.56 12.38 6.81 18.60 9.4 89.5 0.0 71.4 15.0 11.8Lvmh Moet Hennessy -Adr LVMHY 10.06 18.00 9.13 (22.97) 242.6 2,441.1 39.3 9,682.9 10.5 18.1Nu Skin Enterprises NUS 8.50 8.94 4.25 60.00 84.9 721.6 18.8 758.9 18.3 14.5Procter & Gamble Co. PG 62.60 79.31 53.25 (20.19) 1,299.9 81,373.7 43.6 92,481.7 28.1 16.4Playtex Products Inc. PYX 9.19 14.00 7.94 (4.52) 61.0 560.3 106.2 1,551.3 NM 19.7Pennzoil-Quaker State Co. PZL 14.00 14.70 9.00 8.74 78.4 1,097.9 60.4 2,329.7 0.7 6.0Elizabeth Arden Inc. RDEN 17.00 18.25 6.50 40.93 13.2 224.7 64.4 408.4 19.0 12.1Revlon Inc. REV 4.61 9.75 3.50 (7.06) 51.4 236.8 339.5 1,870.5 NM (9.3)Rayovac Corp. ROV 17.45 29.13 11.69 23.00 27.9 486.0 77.7 783.1 32.8 12.2Scotts Company SMG 38.05 43.90 28.25 3.01 28.1 1,069.2 70.0 2,130.0 12.6 11.6Tristar Corp. TSAR 4.50 6.38 3.13 (11.11) 16.8 75.5 28.5 108.5 13.8 6.7U S Home & Garden Inc. USHG 1.03 5.00 0.81 3.13 17.8 18.3 64.5 95.5 (8.6) (0.7)Wd-40 Co. WDFC 20.00 23.00 18.00 2.89 15.4 308.7 15.5 318.5 38.7 20.4Yankee Candle Inc. YCC 13.17 25.94 10.00 19.05 54.5 717.9 54.8 925.3 52.3 29.8

Average 4.8% $6,506.0 53.7% 17.7% 12.3%

Summer 2001

U.S. Bancorp Piper Jaffray M&A Research Housewares & Household Products | 27

LTMBook Price/ LTM Net Value/ EBITDA EBITDA/ Value/ 2000 2001 P/E RatioValue Book Sales (Mil.) Sales (Mil.) Sales EBITDA 1998 1999 2000 2001E 2002E vs. 1999 vs. 2000 2001 2002

$11.83 3.4x $2,314.9 1.1x 227.0 9.8% 10.8x 1.37$ 1.51$ 1.72$ 1.90$ 2.14$ 13.91% 10.47% 20.87x 18.53x11.91 0.3 541.4 0.4 29.5 5.5 7.5 0.72 0.87 0.97 0.88 1.06 11.49 (9.28) 3.98 3.30(0.91) NM 5714.6 1.9 872.8 15.3 12.2 1.48 1.64 1.88 2.09 2.35 14.63 11.17 19.13 17.029.44 2.4 1197.2 1.0 163.3 13.6 7.6 1.17 1.50 1.89 2.00 2.15 26.00 5.82 11.53 10.729.20 2.7 773.7 1.3 122.3 15.8 8.3 0.59 0.62 0.94 NA NA 51.61 NA NA NA

25.06 0.3 1349.3 0.4 82.2 6.1 5.8 1.35 1.12 0.77 1.30 NA (31.25) 68.83 6.54 NA6.11 3.6 795.7 1.1 102.4 12.9 8.2 0.72 1.03 1.20 1.29 1.43 16.50 7.50 16.84 15.205.20 1.7 247.3 1.1 60.6 24.5 4.6 1.25 2.41 1.47 0.67 0.86 (39.00) (54.42) 12.97 10.106.86 4.6 4071.0 2.1 982.0 24.1 8.7 1.46 1.63 1.75 1.60 1.63 7.36 (8.57) 19.66 19.292.73 20.3 9357.9 3.7 1,760.0 18.8 19.5 1.30 1.47 1.70 1.90 2.13 15.65 11.76 29.08 25.943.10 4.0 1638.5 1.1 123.3 7.5 14.4 1.02 1.17 0.51 0.58 0.63 (56.41) 13.73 21.55 19.845.58 6.5 4507.3 2.0 707.3 15.7 12.8 0.89 1.03 1.20 1.33 1.50 16.50 10.83 27.38 24.287.73 3.2 1799.4 1.6 255.3 14.2 11.3 NA 1.22 1.69 1.45 1.71 38.52 (14.20) 17.24 14.621.83 17.1 9295.0 4.0 2,641.0 28.4 14.1 1.25 1.13 1.18 1.24 1.39 4.42 5.08 25.14 22.424.43 2.4 101.6 1.0 14.5 14.2 7.3 0.35 0.40 0.51 0.56 NA 27.50 9.80 18.97 NA5.90 1.6 133.5 0.5 14.5 10.9 4.9 0.98 0.95 0.90 0.95 NA (5.26) 5.56 10.07 NA4.50 2.2 10872.2 0.9 1,910.0 17.6 5.1 0.21 0.31 0.32 0.37 NA 3.23 15.63 27.20 NA4.32 2.0 879.8 0.9 90.4 10.3 8.4 1.49 0.99 0.72 0.77 0.85 (27.27) 6.94 11.04 10.009.76 6.4 39595.0 2.3 9,176.0 23.2 10.1 2.56 2.85 2.95 3.10 3.35 3.51 5.08 20.19 18.69

(0.92) NM 831.3 1.9 170.3 20.5 9.1 0.57 0.72 0.58 0.62 0.69 (19.44) 6.90 14.82 13.3210.50 1.3 2270.6 1.0 281.8 12.4 8.3 0.27 0.46 0.63 0.97 1.15 36.96 53.97 14.43 12.17

6.21 2.7 386.3 1.1 59.5 15.4 6.9 0.76 0.75 0.99 1.55 2.50 32.00 56.57 10.97 6.80(21.70) NM 1491.6 1.3 20.7 1.4 NM 0.17 (6.03) (1.43) (1.21) NA NA NA -3.81 NA

2.82 6.2 675.1 1.2 102.7 15.2 7.6 0.74 1.04 1.32 1.30 1.56 26.92 (1.52) 13.42 11.1915.46 2.5 1765.4 1.2 235.9 13.4 9.0 1.20 2.08 2.25 2.83 3.27 8.17 25.78 13.45 11.64

0.02 215.8 55.5 2.0 5.8 10.4 18.8 (0.12) (0.06) 0.02 NA NA NA NA NA NA2.13 0.5 87.0 1.1 6.9 7.9 13.9 0.31 0.14 (0.07) (0.05) 0.05 NA NA NA 20.633.22 6.2 149.7 2.1 34.3 22.9 9.3 1.40 1.41 1.33 1.31 1.40 (5.67) (1.50) 15.27 14.291.93 6.8 338.8 2.7 89.5 26.4 10.3 0.45 0.66 0.80 1.00 1.22 21.21 25.00 13.17 10.80

12.6x 1.5x 15.0% 9.8x 6.8% 10.3% 15.8x 15.0x

EPS% Change

LTMBook Price/ LTM Net Value/ EBITDA EBITDA/ Value/ 2000 2001 P/E RatioValue Book Sales (Mil.) Sales (Mil.) Sales EBITDA 1998 1999 2000 2001E 2002E vs. 1999 vs. 2000 2001 2002

$3.68 0.2x $116.6 0.4x ($2.5) (2.2%) (16.9x) 0.20$ (1.22)$ (2.31)$ NA NA NA NA NA NA14.06 0.4 748.8 0.6 83.5 11.2 5.0 0.57 1.04 0.50 $0.69 $0.98 (51.9%) 38% 9.0x 6.3x

8.62 4.3 4,560.8 0.9 735.3 16.1 5.5 2.95 3.40 3.34 3.58 4.09 (1.8) 7.2 10.3 9.02.72 2.7 89.1 0.7 10.8 12.2 6.1 0.47 0.76 0.63 0.81 0.98 (17.1) 28.6 9.0 7.4

10.48 0.8 234.1 1.2 45.3 19.3 6.2 2.45 2.45 1.99 1.43 NA (18.8) (28.1) 6.2 NA15.22 1.8 13,180.5 0.5 1,094.7 8.3 6.0 2.68 2.68 2.37 2.53 4.00 (11.6) 6.8 10.6 6.7

8.12 0.8 319.9 0.4 (2.7) -0.8 NM 1.45 1.24 0.45 NA NA (63.7) NA NA NA3.08 1.8 418.0 0.8 36.8 8.8 9.3 0.07 0.56 0.57 0.51 0.75 1.8 (10.5) 11.0 7.5

13.85 2.5 5,491.8 1.3 985.0 17.9 7.3 1.67 2.00 2.29 2.50 2.83 14.5 9.2 13.8 12.24.09 1.0 118.1 0.4 (6.4) -5.4 NM 0.75 1.02 0.16 NA NA (84.3) NA NA NA9.46 0.5 104.4 0.0 10.6 10.2 0.4 1.71 0.65 0.76 NA NA 16.9 NA NA NA7.69 0.7 349.7 0.6 30.9 8.8 6.9 0.77 0.96 0.44 0.60 0.69 (54.2) 36.4 9.4 8.2

(1.99) NM 297.0 0.8 16.7 5.6 14.0 1.07 1.48 (0.82) NA NA NA NA NA NA11.87 2.4 1,097.1 1.0 188.9 17.2 5.9 2.22 2.28 2.51 2.58 2.85 10.1 2.8 11.3 10.2

8.74 3.4 446.5 1.4 85.4 19.1 7.4 2.48 2.70 3.01 3.06 3.34 11.5 1.7 9.8 8.97.57 0.6 125.8 0.5 12.8 10.2 5.3 0.98 0.31 0.31 NA NA 0.0 NA NA NA0.28 113.4 4,247.5 0.9 623.2 14.7 5.9 3.05 3.66 2.95 2.58 2.92 (19.4) (12.5) 12.5 11.0

34.77 0.9 116.6 0.1 30.3 26.0 0.3 2.68 2.84 2.16 NA NA (23.9) NA NA NA9.18 2.9 6,934.7 1.5 1,167.8 16.8 8.6 1.66 1.65 1.71 1.71 1.92 3.6 0.0 15.5 13.87.08 2.3 522.0 1.1 58.5 11.2 10.0 1.35 2.15 1.41 2.15 NA (34.4) 52.5 7.4 NA6.73 1.1 296.1 0.4 20.3 6.8 5.1 1.17 1.15 1.05 0.93 1.19 (8.7) (11.4) 7.6 6.02.26 1.7 408.2 0.2 26.8 6.6 3.8 0.12 0.69 0.32 NA NA (53.6) NA NA NA

20.44 0.7 817.6 0.7 180.6 22.1 3.3 0.75 2.37 5.97 4.82 4.93 151.9 (19.3) 3.2 3.1(2.25) (0.0) 2,226.5 1.1 81.5 3.7 NM (7.99) (2.97) NA NA NA NA NA NA NA8.57 3.8 2,748.9 1.2 404.1 14.7 8.1 2.14 2.06 2.22 2.41 2.69 7.8 8.6 13.7 12.22.32 10.3 1,057.9 1.6 176.1 16.6 9.8 1.18 1.58 1.71 1.96 2.14 8.2 14.6 12.2 11.13.77 2.7 1,018.0 1.1 98.0 9.6 11.3 0.85 0.90 0.97 1.13 NA 7.8 16.5 8.8 NA

25.41 2.0 10,325.0 0.5 1,160.0 11.2 4.3 4.06 5.35 5.20 5.34 6.39 (2.8) 2.7 9.4 7.8

6.1x 0.8x 11.3% 6.5x (8.5%) 7.5% 10.0x 8.8x

% ChangeEPS

This material is based on data obtained from sources we deem to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This information is not intended to be used as the primarybasis of investment decisions. Because of individual client requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. It is not a representation byus or an offer or the solicitation of an offer to sell or buy any security. Further, a security described in this publication may not be eligible for solicitation in the states in which the client resides. U.S. Bancorpand its affiliated companies, and their respective officers or employees, or members of their families, may own the securities mentioned and may purchase or sell those securities in the open market or otherwise.In the United Kingdom, this report may only be distributed or passed on to persons of the kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order1996 (as amended by the Financial Services Act 1986 (Investment Advertisements) (exemptions) Order 1997). Securities products and services offered through U.S. Bancorp Piper Jaffray Inc., member ofSIPC and NYSE, Inc., a subsidiary of U.S. Bancorp. http://www.piperjaffray.com(c)2001 U.S. Bancorp Piper Jaffray Inc., 800 Nicollet Mall, Suite 800, Minneapolis, Minnesota 55402-7020 01-0266

M A N U FA C T U R I N G & S E R V I C E S

Steven P. CesingerManaging Director310-478-5678

David P. CrosbyManaging Director612-303-6300

Glenn A. GurtcheffManaging Director612-303-5548

Michael R. MurphyManaging Director312-920-2135

Daniel E. KubesPrincipal612-303-6303

Steven M. Bernard, CFAVice President312-920-2147

Michael R. DillahuntVice President612-303-6337

DistributionElectronics Manufacturing & ServicesFood Distribution & ProcessingMetal FabricationConstruction Materials & Building ProductsConsumer ProductsPlastic ProcessingSpecialty Manufacturing & ServicesTransportation Equipment & ServicesAll Other Related Industrial Sectors

Robert D. FrostVice President612-303-8248

Gregory B. GravesVice President612-303-6355

J. Thomas HalversonVice President612-303-6371

John A. Hogan, Jr.Vice President612-303-6380

Douglas J. LawsonVice President312-920-2139

Michael D. MichauxVice President612-303-6374

William P. WatkinsVice President312-920-2134

Middle Market Mergers & Acquisitions

John (Jeff) F. Turner Daniel J. DonoghueManaging Director Managing DirectorCo-Director Co-Director612-303-6333 312-920-2132

C O N S U M E R

RestaurantsRetailing

Eric J. CremersPrincipal

Investment Banking

Paul D. Grangaard Thomas P. SchnettlerSenior Managing Director Managing DirectorDirector Co-Director612-303-6326 612-303-6339

C O M M U N I C AT I O N S & T E C H N O L O G Y

B2B Information & ServicesBusiness Commerce & SoftwareCable, Media, And EntertainmentCollaborative Enterprise CommerceCommunications & ComputingCommunication ServicesComputer HardwareDigital Infrastructuree-Business Software Solutionse-Financee-Infrastructuree-ServicesInternet Media & MarketingLearning ServicesOptical Manufacturing & Capital EquipmentSemiconductors

David M. JacquinManaging Director415-277-1505

Kyle R. CroweManaging Director612-303-6391

Jason D. HutchinsonManaging Director415-277-1510

Hugh J. HoffmanPrincipal612-303-6319

Steven R. RickmanPrincipal612-303-8569

Eric M. NicholsonVice President612-303-6378

C O N T A C T S

Robert A. DeSutterPrincipal612-303-6392

Daniel J. GulbrandsonVice President612-303-5652

J.P. PeltierVice President612-303-8308

H E A LT H C A R E

BioPharmaceuticalsHealth Care ServicesInformation-Driven Health CareMedical Technology

F I N A N C I A L I N S T I T U T I O N S

Banks & ThriftsFinancial Business ServicesSpecialty Finance

Peter M. GillManaging Director612-303-6312

Securities products and services offered through U.S. Bancorp Piper Jaffray Inc.,member SIPC and NYSE, Inc., a subsidiary of U.S. Bancorp. 2/00

Web Site: http://www.piperjaffray.com | Online Research: http://clientaccess.pjc.com

01-0266

E Q U I T Y C A P I TA L M A R K E T S O F F I C E S

MINNEAPOLISU.S. Bancorp Center800 Nicollet MallSuite 800Minneapolis, MN 55402612-303-6320800-333-6000

MENLO PARK275 MIddlefield RoadSuite A-100Menlo Park, CA 94025650-838-1300800-981-1203

SEATTLE1400 IBM Building1200 Fifth AvenueSeattle, WA 98101206-287-8830800-677-4737

CHICAGO233 South Wacker DriveSuite 3620Chicago, IL 60606312-920-2130800-973-1192

SAN FRANCISCO353 Sacramento StreetSuite 1600San Francisco, CA 94111415-277-1500800-214-0540

NEW YORKThe Chrysler Center58th Floor405 Lexington Ave.New York, NY 10174212-836-4100800-333-6000

LOS ANGELES11111 Santa Monica Blvd.Suite 1210Los Angeles, CA 90025310-231-7100888-466-5542

BOSTON60 State StreetSuite 710Boston, MA 02109800-333-6000

LONDON76 Cannon StreetLondon EC4N 6AEEngland011-44-207-489-9902

GENEVA*31 Boulevard HelvetiqueCH-1211 Geneva 3Switzerland011-41-22-707-8700

TEL AVIV*Harel House, 9th Floor3 Abba Hillel StreetRamat Gan 52522Israel011-972-3-753-2020

* STRATEGIC ALL IANCE