Operating and Stockholder Information of ROBERTSON TOOL COMPANY

operatons 1998 1999
sales 48.5 49.1
COGS 32.6 33.1
SGA 10.7 11.1
depreciation 2 2.3
interest expenses 0.4 0.7
income before tax 2.8 1.9
taxes 1.1 0.8
net income 1.7 1.1

percentage of sales
COGS 0.67 0.67
SGA 0.22 0.23
operating income 0.066 0.053

Stockholder Information $ $
EPS 2.91 1.88
DPS 1.6 1.6
book value per share 49.4 49.68
market price 33-34 35-48
P/E 11-16- 10-26-
shares outstanding 584000 584000

BALANCE SHEET OF ROBERTSON Tool company, 2002
Million Dollar
ASSETs
cash 1
A/R 8
inventories 18
other 1
current assets 28

net plant & equipement 19
total assets 47

collection period 53dys
days of inventory 173 days
sales/total assets 1.176596
dabt as percentage os capital 0.27907
total assets/net worth 1.516129
PRO-FORMA FOR ROBERSON TOOL BY Messrs, Vincent & Rudd
Actual FORECASTS
2002 2003 2004
CoGS % of sales 0.69 0.68 0.67
S&GA % sales 0.22 0.21 0.2

growth of sales 0.059675

sales 55.3 58.6 62.09693
COGS 38.157 39.848 41.60494
S&GA 12.166 12.306 12.41939
depreciation 2.1 2.3 2.5
EBIT 2.877 4.146 5.5726
tax@40% 1.1508 1.6584 2.22904
EBIAT 1.7262 2.4876 3.34356
Interest 0.8
Adjustment of Interest (0.8 million) 1.2462 2.0076 2.86356
Net Plant & Equipment in beginning of the year 19 20.7
Capital Expenses 4 3.5
Depreciation 2.3 2.5
net plat at the end of the year 20.7 21.7

Five Year Forecast of Monmouth Inc exluding Roberson Tool
2003 2004
net income (million dollar) 11 11.9
shares outstanding (million) 4.21 4.21
EPS 2.612827 2.826603

NWC of Robertson 2002 2003 2004
non cash CA 27
CL 4
NWC 23 12.91637 13.68715
NWC to sales 0.220416 projected to reduce to comparable compan
change of NWC -10.0836 0.770778
other Non cash WC 5 (9-4)
sales for 2002 55.3
other Non cash WC/sales 0.090416
comparable comp. Inve/sales 0.13
total 0.220416
WACC
debt 0.28
equity 0.72 0.066667
cost of debt 0.066667 BBB after tax K
cost of debt at present of Robertson (.8/12) 0.066667 same to BBB firm
risk premium 0.06
tax 0.4
risk free 0.041 30yr TB
beta 1 as of BBB
cost of equity 0.101
WACC 0.08392
Terminal Growth rate 0.02

FREE CASH FLOW OF Robertson Tool 2002 2003 2004
sales 55.3 58.6 62.09693
COGS 38.157 39.848 41.60494
S&GA 12.166 12.306 12.41939
depreciation 2.1 2.3 2.5
EBIT 2.877 4.146 5.5726
tax@40% 1.1508 1.6584 2.22904
EBIAT 1.7262 2.4876 3.34356
add Depreciation 2.1 2.3 2.5
cash flow from operation 3.8262 4.7876 5.84356
Less increase NWC -10.0836 0.770778
less capex 4 3.5
free cash flow (FCF) 10.87123 1.572782
10.87123 1.572782
Terminal value
PV at WACC Rate 10.02955 1.338672
PV of terminal value
Total PV 61.46104
Debt outstanding 12
Value of equity 49.46104
Outstanding shares 0.584
Per share of Robertson 84.69356 At 2% Terminal Growth Rate, Pric

Maximum No. of Share Calculation
2003 2004
1 projected net income of Monmouth given 11 11.9
2 projected net income after tax of Roberson 2.0076 2.86356

3 projected Monmouth net income cmbined (1+2) 13.0076 14.76356
4 projected Monmouth EPS without Robertson given 2.61 2.83
Max no. of shares of Monmouth shares after
5 merger without diluting Monmouth EPS (3/4) 4.983755 5.216806
6 Monmouth shares current have (No) given 4.21 4.21

Max no. of shares of Monmouth can be issued to
7 Robertson without diluting its EPS (5-6) 0.773755 1.006806
8 No.of Robertson shares outstanding 0.584 0.584

No of Monmouth shares that could be offered for
one share of Robertson without diluting
9 Monmouth's EPS (Exchange ratio) 1.324923 1.723982

If Monmouth Share as $24, the Exchange ratio
10 translates into price per share of Robertson stock. 24 31.79814 41.37558

May be exchange ratio will be between 2.15 to
2.35 t make price more than $50 as suggested by
11 Simmons
Million Dollar
2000 2001 2002
53.7 54.8 55.3
35.9 37.2 37.9
11.5 11.9 12.3
2.4 2.3 2.1
0.8 0.8 0.8
3.1 2.6 2.2
1.2 1 0.9
1.9 1.6 1.3

0.67 0.68 0.69
0.21 0.22 0.22
0.073 0.062 0.054

$ $ $
3.25 2.74 2.23
1.6 1.6 1.6
51.33 52.47 53.1
29-41 25-33 23-32
9-13- 9-12- 10-14-
584000 584000 584000

Liabilities
A/P 2
other 2
current liabilities 4
long term debt 12 0.066667

net worth 31

total 47
2005 2006 2007 to Infinity
0.66 0.65 0.65
0.19 0.19 0.19

Million Dollar
2007
65.80253 69.72926 73.89032
43.42967 45.32402 48.02871
12.50248 13.24856 14.03916
2.7 2.9 2.9
7.170379 8.256682 8.922451
2.868152 3.302673 3.568981
4.302228 4.954009 5.353471

3.822228 4.474009 4.873471
21.7 22.6 23.5
3.6 3.8 2.9
2.7 2.9 2.9
22.6 23.5 23.5

2005 2006 2007
12.8 13.8 15
4.21 4.21 4.21
3.04038 3.27791 3.562945

2005 2006 2007

14.50392 15.36944 16.2866
to reduce to comparable companies (BBB) Inve/sales to 13% + its own other CA to sales as the Inventory for Robertson is higher
0.816774 0.865514 0.917164

6

0.04
same to BBB firm
Million
2005 2006 2007 2008
65.80253 69.72926 69.72926
43.42967 45.32402 45.32402
12.50248 13.24856 13.24856
2.7 2.9 2.9
7.170379 8.256682 8.256682
2.868152 3.302673 3.302673
4.302228 4.954009 4.954009
2.7 2.9 2.9
7.002228 7.854009 7.854009
0.816774 0.865514 0.917164
3.6 3.8 2.9
2.585454 3.188495 4.036846
2.585454 3.188495 4.036846 4.117582
64.41775
2.030229 2.309919 2.698087
43.05458

At 2% Terminal Growth Rate, Price per share= $84.69

2005 2006 2007
12.8 13.8 15
3.822228 4.474009 4.873471

16.62223 18.27401 19.87347
3.04 3.27 3.56

5.467838 5.588382 5.582436
4.21 4.21 4.21

1.257838 1.378382 1.372436
0.584 0.584 0.584

2.153832 2.360243 2.350061

51.69197 56.64584 56.40146
or Robertson is higher