JOHN R. BOKEN - ZOLFO COOPER, LLC BUYING AND SELLING A COMPANY IN AN UNPREDICTABLE ECONOMY HOW TO OPTIMIZE PRICE AND LIQUIDITY IN A BUYER’S MARKET ACCOUNTING ISSUES PRESENTED BY: JOHN R. BOKEN - ZOLFO COOPER, LLC JULY 17, 2002

CURRENT UNPREDICTABLE ECONOMIC ENVIRONMENT Has Resulted in Capital and Financing Constraints Has Exposed Certain Fallacies of Traditional GAAP Measures Has Stretched Capabilities of Many Management Teams Has Created Valuation and Viability Concerns for Many Businesses John R. Boken Zolfo Cooper, LLC Copyright-Zolfo Cooper, LLC 2002

KEYS TO SURVIVING THIS CYCLE Increased Emphasis on Cash and Liquidity Effective Responses to Early Signs of Trouble Planning and Execution Making and Implementing Tough Decisions on Timely Basis John R. Boken Zolfo Cooper, LLC Copyright-Zolfo Cooper, LLC 2002

SHORT-TERM MANAGEMENT ACTION STEPS Establish Formalized, Detailed Cash Forecasting Process Understand and manage cash/liquidity “cushion” Evaluate steady-state and downside scenarios Integrate Cash Forecasting and Monitoring into Management Processes Utilize cash forecasts in day-to-day decision–making John R. Boken Zolfo Cooper, LLC Copyright-Zolfo Cooper, LLC 2002

SHORT-TERM MANAGEMENT ACTION STEPS Emphasize Operating Fundamentals First, Revenue Growth Afterwards Profitability by division, product, and customer Re-evaluate fixed, variable, and overhead costs Review and challenge productivity measures and labor costs Identify Where to Generate “Internal” Cash Seek incremental external financing or capital after exhausting internal sources John R. Boken Zolfo Cooper, LLC Copyright-Zolfo Cooper, LLC 2002

A FEW KEY QUESTIONS THAT BOARDS SHOULD CONSIDER ASKING MANAGEMENT What are the specific operating performance measures that management is using? Why are these measures the “right” ones to ensure viability and success? What is the company’s cash/liquidity position and what “cushion” exists relative to the management forecasts? What specific measures and processes are in place to manage liquidity? Can the company effectively compete and create or preserve value for shareholders in a no-growth or downsized scenario? John R. Boken Zolfo Cooper, LLC Copyright-Zolfo Cooper, LLC 2002