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ANNEX II
[Croft & Xxxxxx Letterhead]
December 17, 1996
Board of Directors
American Studios, Inc.
00000 Xxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
To the Members of the Board:
We understand that American Studios, Inc. (the "Company"), PCA
International, Inc. (the "Acquiror") and PCA Acquisition Corp. (the
"Purchaser"), a wholly-owned subsidiary of the Acquiror, propose to enter into
an Agreement and Plan of Merger (the "Agreement") pursuant to which the
Purchaser will make a tender offer (the "Offer") for all shares of the Company's
common stock, par value $.001 per share (the "Shares"), at $2.50 per Share, net
to the seller in cash. The Offer is expected to commence not later than five
business days after the public announcement of the execution of the Agreement.
The Agreement also provides that, following consummation of the Offer, the
Purchaser will be merged with and into the Company in a transaction (the
"Merger") in which each remaining Share will be converted into the right to
receive $2.50 in cash.
You have asked us whether, in our opinion, the proposed cash consideration
to be received by the holders of the Shares in the Offer and the Merger is fair
to such shareholders from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed publicly available information concerning the Company
which we believe to be relevant to our analysis;
(2) Reviewed certain information, including financial and operating
information with respect to the business, operations and prospects of the
Company, furnished to us by the Company;
(3) Conducted discussions with members of senior management of the
Company concerning its business, operations and prospects;
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(4) Reviewed the historical market prices and trading activity for the
Shares and compared them with those of certain publicly-traded companies
which we deemed to be reasonably similar to the Company;
(5) Compared the results of operations and present financial condition
of the Company with those of certain publicly-traded companies which we
deemed to be reasonably similar to the Company;
(6) Compared the proposed financial terms of the transactions
contemplated by the Agreement with the financial terms of certain other
mergers and acquisitions which we deemed to be relevant;
(7) Performed certain financial analyses with respect to the Company's
projected future operating performance, including a discounted cash flow
analysis;
(8) Reviewed the final execution draft of the Agreement; and
(9) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed necessary.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company,
and, although we have discussed such information with management, we have not
independently verified such information. With respect to the financial forecasts
for the years 1997 through 2000 furnished by the Company, we have assumed that
they have been reasonably prepared and reflect the best currently available
estimates and judgment of the Company's management as to the expected future
financial performance of the Company. We have not conducted a physical
inspection of the properties and facilities of the Company, and we have not made
nor obtained any evaluations or appraisals of the assets or liabilities of the
Company. In addition, you have not authorized us to solicit, and we have not
solicited, any indications of interest from any third party with respect to the
purchase of all or a part of the Company's business. Our opinion is necessarily
based upon market, economic and other conditions as they exist and can be
evaluated as of the date of this letter.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent. We hereby consent to the inclusion of this letter in the
regulatory filings required in connection with the Offer and the Merger,
including Schedule 14D-9 and the proxy statement to be filed in connection with
the Board's recommendation regarding the Offer and the Merger. This opinion is
not intended to be and shall not constitute a recommendation to any shareholder
of the Company as to whether to tender Shares pursuant to the Offer.
We have acted as financial advisor to the Company in connection with the
proposed transaction and will receive a fee for our services which is in part
contingent upon the consummation of the proposed transaction. In addition, the
Company has agreed to indemnify us for certain liabilities arising out of the
rendering of this opinion.
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On the basis of, and subject to the foregoing, we are of the opinion as of
the date hereof that the proposed cash consideration to be received by the
holders of the Shares pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view.
Very truly yours,
/s/ CROFT & XXXXXX LLC
CROFT & XXXXXX LLC
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[The Xxxxxxxx-Xxxxxxxx Company, Inc. Letterhead]
December 17, 1996
Board of Directors
American Studios, Inc.
00000 Xxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
To the Members of the Board:
We understand that American Studios, Inc. (the "Company"), PCA
International, Inc. (the "Acquiror") and PCA Acquisition Corp. (the
"Purchaser"), a wholly owned subsidiary of the Acquiror, propose to enter into
an Agreement and Plan of Merger (the "Agreement") pursuant to which the
Purchaser will make a tender offer (the "Offer") for all shares of the Company's
common stock, par value $.001 per share (the "Shares"), at $2.50 per Share, net
to the seller in cash. The Offer is expected to commence not later than five
business days after the public announcement of the execution of the Agreement.
The Agreement also provides that, following consummation of the Offer, the
Purchaser will be merged with and into the Company in a transaction (the
"Merger") in which each remaining Share will be converted into the right to
receive $2.50 in cash.
You have asked us whether, in our opinion, the proposed cash consideration
to be received by the holders of the Shares in the Offer and the Merger is fair
to such shareholders from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed publicly available information concerning the Company
which we believe to be relevant to our analysis;
(2) Reviewed certain information, including financial and operating
information with respect to the business, operations and prospects of the
Company, furnished to us by the Company;
(3) Conducted discussions with members of senior management of the
Company concerning its business, operations and prospects;
(4) Reviewed the historical market prices and trading activity for the
Shares and compared them with those of certain publicly traded companies
which we deemed to be reasonably similar to the Company;
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(5) Compared the results of operations and present financial condition
of the Company with those of certain publicly traded companies which we
deemed to be reasonably similar to the Company;
(6) Compared the proposed financial terms of the transactions
contemplated by the Agreement with the financial terms of certain other
mergers and acquisitions which we deemed to be relevant;
(7) Performed certain financial analyses with respect to the Company's
projected future operating performance, including a discounted cash flow
analysis;
(8) Reviewed the final execution draft of the Agreement; and
(9) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed necessary.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company,
and, although we have discussed such information with management, we have not
independently verified such information. With respect to the financial forecasts
for the years 1997 through 2000 furnished by the Company, we have assumed that
they have been reasonably prepared and reflect the best currently available
estimates and judgment of the Company's management as to the expected future
financial performance of the Company. We have not conducted a physical
inspection of the properties and facilities of the Company, and we have not made
nor obtained any evaluations or appraisals of the assets or liabilities of the
Company. In addition, you have not authorized us to solicit, and we have not
solicited, any indications of interest from any third party with respect to the
purchase of all or a part of the Company's business. Our opinion is necessarily
based upon market, economic and other conditions as they exist and can be
evaluated as of the date of this letter.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent. We hereby consent to the inclusion of this letter in the
regulatory filings required in connection with the Offer and the Merger,
including Schedule 14D-9 and the proxy statement to be filed in connection with
the Board's recommendation regarding the Offer and the Merger. This opinion is
not intended to be and shall not constitute a recommendation to any shareholder
of the Company as to whether to tender Shares pursuant to the Offer.
We have acted as financial advisor to the Company in connection with the
proposed transaction and will receive a fee for our services which is in part
contingent upon the consummation of the proposed transaction. In addition, the
Company has agreed to indemnify us for certain liabilities arising out of the
rendering of this opinion. The Xxxxxxxx-Xxxxxxxx Company, Inc. has provided
investment banking services for the Company in the past and has received
customary fees for these services. In the ordinary course of business, The
Xxxxxxxx-Xxxxxxxx Company, Inc. actively trades in the common stock of the
Company for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
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On the basis of, and subject to the foregoing, we are of the opinion as of
the date hereof that the proposed cash consideration to be received by the
holders of the Shares pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view.
Very truly yours,
/s/ THE XXXXXXXX-XXXXXXXX COMPANY, INC.
THE XXXXXXXX-XXXXXXXX COMPANY, INC.
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