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[XXXXXX & ASSOCIATES, INC. LETTERHEAD]
December 19, 1995
Board of Directors
SCS/Compute, Inc.
0000 Xxxxxx Xxxxxxxxxx Xxxxx
Xx. Xxxxx, XX 00000
Members of the Board:
We understand that Thomson U.S. Holdings, Inc. ("Thomson"), SCS Subsidiary,
Inc. ("Subsidiary"), and Xxxxxx X. Xxxxx, Xx. ("Xxxxx") are to enter into a
Stock Purchase Agreement (the "Stock Agreement") dated December 19, 1995 for
the purchase by Subsidiary of all of the shares of common stock owned directly
by Xxxxx at a purchase price of $6.75 per share, and further that Xxxxxxx,
Subsidiary and SCS/Compute, Inc. ("SCS") are to enter into an Agreement and
Plan of Merger (the "Agreement") dated December 19, 1995 pursuant to which
Subsidiary will make a cash tender offer for the balance of SCS's outstanding
common stock not subject to the Stock Agreement at a purchase price of $6.75
per share, and Subsidiary will subsequently merge with and into SCS, with each
issued and outstanding share of Common Stock of SCS not purchased in the tender
offer or pursuant to the Stock Agreement converting into the right to receive
$6.75 per share in cash (the "Proposed Transaction"). The terms and conditions
of the Proposed Transaction are set forth in more detail in the Agreement.
We have been requested by SCS to render our opinion with respect to the
fairness, from a financial point of view, to SCS's stockholders of the
consideration to be received in the Proposed Transaction. Our opinion does not
in any manner address SCS's underlying business decision to proceed with or
effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) all publicly
available information concerning SCS which we believe to be relevant to our
inquiry, including its Form 10-K dated January 31, 1995 and its draft Form 10-Q
dated October 31, 1995; (2) financial and operating information with respect to
the business, operations and prospects of SCS furnished to us by SCS
(including, without limitations, projections for the fiscal years 1995-2000
prepared by management of SCS); (3) a trading history of SCS's common stock and
a comparison of that trading history with those of other companies, which we
deemed relevant; (4) a comparison of the historical financial results and
present financial condition of SCS with those of other companies which we
deemed relevant; (5) an analysis of the Computer Software and Services
industries; and (6) an analysis of sale transactions in the Software Industry
during 1995. In addition, we have had discussions with the management of SCS
concerning its business, operations, assets, financial condition and prospects
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and undertook such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without assuming
any responsibility for independent verification of such information and have
further relied upon the assurances of management of SCS that they are not aware
of any facts that would make such information inaccurate or misleading. For
purposes of our analysis, we also reviewed the financial projections of SCS
which, upon advice of SCS, we assumed were reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the
management of SCS as to the future financial performance of SCS. In arriving at
our opinion, we have not conducted a physical inspection of the properties and
facilities of SCS and have not made nor obtained any evaluations or appraisals
of the assets or liabilities of SCS. Our opinion is necessarily based upon
market, economic and other conditions as they exist on, and can be evaluated as
of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the date
hereof that, from a financial point of view, the consideration to be received
in the Proposed Transaction is fair to the stockholders of SCS.
We have acted as financial advisor to SCS in connection with the Proposed
Transaction and will receive a fee for the rendering of this opinion. In
addition, SCS has agreed to indemnify us for certain liabilities which may
arise out of the rendering of this opinion.
This opinion is for the use and benefit of the Board of Directors of SCS. This
opinion is not intended to be and does not constitute a recommendation to any
stockholder of the Company as to whether to accept the consideration to be
offered to such stockholder in connection with the Proposed Transaction.
Very truly yours,
XXXXXX & ASSOCIATES, INC.
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President
A Private Investment Banking Firm
0000 Xxxxxxxxxx Xxxxxx - Xxxxx 000 - Xx. Xxxxx, XX 00000 - (000) 000-0000 -
(000) 000-0000 Fax
