Transcript Project E
Project E-Storm Page 1 Operation E-Storm Executive Summary Long term growth in the electronic commerce market, complimentary vision, common customer targets, and recent equity market movement has created an excellent opportunity to assess a merger between Hurricane and Tornado Attractive Potential Synergies Mission/Goals - both companies are taking very similar paths in their standalone plans Products - broader portfolio increases addressable market prospects for growth Markets/Customers - broader vertical industry presence; could be #1 or #2 in North America Operating Efficiency - Significant new revenue and cost saving opportunities Various Deal Structures Possible, two have the potential to be successful Option A - Tornado acquires Hurricane in a stock transaction Option B - Earthquake acquires Hurricane and then merges it with Tornado Option C - Hurricane acquires Tornado and Earthquake brings additional Hurricane shares to reach majority ownership Preliminary analysis shows NEWCo. is well positioned for global leadership and the deal could be attractive NewCo - US$218 million sales, 1,400+ employees, 85% Revenues in the Americas, 10% Revenue in Europe, 5% Revenue in Asia, no debt, $160 million cash on balance sheet. NewCo is well positioned when benchmarked against Woody Shareholder value growth is likely to accelerate after the transaction Valuation premiums can result in attractive earnings accretion potential, depending on the deal structure Current stock prices for Earthquake/Tornado in an advantageous position for a transaction Need to agree on next steps Page 2 Operation E-Storm Mission, Goals & Objectives Hurricane Mission - To make electronic commerce pervasive worldwide Key Strategies focus on B-2-B ECommerce solutions, especially large and mid-sized companies focus on trading community and content vs. software applications and tools prepare for the EC acceleration in late 1999 to 2000 50% of all revenue will be recurring by year end 1999 increase customer support per customer leverage installed 40,000+ customer base Key Milestones Tornado Mission - leading global provider of network-centric B-2-B electronic commerce solutions that offer both best of breed EC infrastructure and transaction processing services. Key Strategies formed strategic alliance with Baan - 11/8/98 acquired ACQUION & MACTEC’s Material Management Division Won AS/400 Ecommerce Showcase Product Excellence Award Acquired Premenos and SupplyTech acquired EDI Works! To expand its Ecommerce outsourcing business focus on creating communities that support an entire supply chain offer high value, mission critical, and hard to replace solutions expand globally to rapidly achieve worldwide industrial strength status measurably impact the client’s business via increased revenue, lower cost, and increased customer satisfaction Key Milestones created as a result of a major merger - September 1, 1998 selected by Compaq to provide payment engine for new Internet Commerce initiative certified by the automotive industry to provide ANXZ services to their suppliers selected by Microsoft to provide payment gateway for new Site Server 3.0 Similar Mission and Strategy! Page 3 Operation E-Storm Markets & Customers Hurricane Geographical Presence - Number of Employees or Distributors USA Canada Rest of the Americas Europe Asia 860 emp, Y- distr. 5-10 emp, Y- distr. 10-15 emp, Y- distr. 150 emp, Y-distr. 0 emp, Y- distr. Tornado 45 emp.; Y - distr. 400 - 450 emp;Y - distr. none none None Vertical Industry Currently Served (Y/N) Automotive Banking & Financial Services Construction Government Oil & Gas Retail/Consumer Goods Sports & Leisure Telecom & Utilities Trade & Transportation Y N N Y Y Y N Y Y Y Y Y Y N N Y Y Y Customer Segments Served (no of customers) large (greater than $500M in sales) medium (less than $500M, greater than $50M) small (less than $50M) 5% 20% 75% 1%-2% 8%-9% 90% Synergistic Geographic Markets, Industry Verticals & Customer Segments! Page 4 Operation E-Storm Products Hurricane Traditional E-Commerce - Product List PC Trusted Link Mid-Range Mainframe Network Emerging E-Commerce - Product List Order Management Logistics Internet-Enabled Ecommere Security - Product List Firewalls & VPNs Certificates Trusted Link Tornado Commerce STX EDI/400 STX/MainFrame ECXpert MessageWay Network, Net Access, Web Hosting, Web Serving, IVAS, INP, Templar AIBN, BEBN, Web Dev TotalNet, Web Hosting, Advantage Internet, ANX, BuyWay Procurement, Outsourcing @Commerce TrackPro @Commerce Express, Templar EdiKIt PrimeFactors OnWatch Payments & Processing - Product List Bill Payment Bill Presentment CAN-ACT Bell Direct Bill Processing Significant Product Rationalization Synergies! Page 5 Operation E-Storm 1998(E) Financials Hurricane* Tornado Dollars in Millions ($US) Revenue Software Software Maintenance -- recurring Network Services -- recurring Professional Services Other Total Gross Profit (Gross Margin %) Operating Profit (Operating Margin%) Customers Employees $52 $24 $36 $25 $ 5 $142 $6 $45 $25 $76 72% 30% - 40% 17% negative 45,000+ 1,000+ 400 - 500 (adjusted for Bell resources) *Source: CIBC Oppenheimer Efficiency Ratios Revenue per employee Sales & Marketing % of Sales Product Development % of Sales G&A % of Sales Gross Margin Breakdown Software % Services% Network Infrastructure $150,000 $170,000 20.2% >35% 8.8% >12% 16.6% >25% 91.0% 62.3% Sourced from Sprint Sourced from Earthquake Economy of Scale and Operating Efficiency Synergies Exist! Page 6 THIS IS ONLY A PARTIAL VIEW OF THE FULL DOCUMENT. THE REMAINING PAGES ARE INTENTIONALLY NOT SHOWN. THEY ARE SHOWN ONLY IN THE MEMBERS DOWNLOAD AREA. HOW TO CRUSH IT – DELIVER A+ WORK 1. 2. 3. 4. 5. 6. 7. 8. 9. Download the full unrestricted template(s) from the members area a. Use more than one template alternative to cover all the angles b. Cut and paste from each to produce one unique to your situation Determine the thought areas that are critical for delivering excellence For the “excellence areas” do a competitive benchmarking assessment by using the market research and market intelligence tools a. State of the industry – current status and trends b. State of the competition – existing, new, and those in related markets c. State of your company – get honest internal and external views From analysis of the data in #3, develop alternative options a. Out of the box thinking – use the creativity tools to generate unique ideas b. Test them and get input and feedback – use the collaboration tools to add value from others with different perspectives c. Narrow down to the best option for the “excellence areas” Complete the template using the best “narrowed” down option Develop eye catching reports that communicate your results very well and cause reviewers to be awed by its quality a. Use the designer power point graphics b. Use the designer excel charts Ask for help at any point in the process – contact us online or offline. Present your report and receive praise for its comprehensiveness and creativity. You are now viewed as different from the pack. Get bigger rewards, be in demand, and field better opportunities. Use the personal growth tools to get the edge.