The Tech/Comm M&A Weekly U.S. Bancorp Piper Jaffray's Technology Group - Investment Bankers / M&A Advisors August 12, 2002 Selected Technology M&A Transactions (Approximate valuations, $ in millions) Trans. Ent. LTM EV / 1-Week Date Target / Advisor Acquiror / Advisor Value Value Sales Sales Premium Universe Comments 08/06/02 Nobel Learning Communities / Legg Mason Investor Group $110.7 $108.8 $154.6 0.7x 40.9% Learning Services Nobel Learning sells the Company to a group led by some of its management and 2 private equity firms. 08/06/02 INTERLINQ Software / DA Davidson Harland Financial Solutions $33.1 $23.3 $17.0 1.4x 161.5% Technology and Business Services Provider of technology that helps organizations effectively manage information-intensive transactions. Selected Communications M&A Transactions (Approximate valuations, $ in millions) Trans. Ent. LTM EV / 1-Week Date Target / Advisor Acquiror / Advisor Value Value Sales Sales Premium Universe Comments 08/12/02 SpeedFam-IPEC Novellus $265.9 $220.0 $119.2 1.8x 78.5% Optical & Electronic Manufacturing Tech. Acquisition provides Novellus an entry into the chemical mechanical planarization systems business. 08/09/02 Global Crossing Hutchison Whampoa/Singapore Tech. $250.0 NA NA NA NA Communications Services Bankruptcy courts approved the $250 million package to sell a 61.5% stake in the Company. 08/05/02 2C Computing Avocent $22.8 NA NA NA NA Computer Hardware & Semiconductors Developer of digital extension technology enabling remote use of personal computers. M&A Spotlight Transactions 8/6/02 - Nobel Learning Communities, Inc. (Nasdaq: NLCI), a leading for-profit provider of education and school management services for the 8/12/02 - Novellus Systems Inc. (Nasdaq: NVLS) said it will acquire all the outstanding shares of SpeedFam-IPEC in pre-elementary through 12th grade market, announced that it has entered into a definitive agreement to be acquired by a newly formed corporation a stock-for-stock merger and assume all of SpeedFam-IPEC's (Nasdaq: SFAM) convertible notes and debt. organized by certain senior management of Nobel Learning Communities, Inc., Gryphon Partners II, L.P. and Cadigan Investment Partners. Each share of SpeedFam-IPEC common stock outstanding will be converted into 0.1818 share of Novellus common stock Nobel will continue to operate under its current name and operating structure. on a fixed-exchange ratio basis, the companies said. The 6-1/4 percent convertible subordinated notes are due 2004 and total The agreement provides that, other than as to certain shares owned by members of management, the acquiror will pay $7.75 in cash for each outstanding $115 million, the companies said in a press release. share of the Company's common stock and that the Company's outstanding stock options will be converted into the right to receive a cash payment equal to The transaction will be accounted for using the purchase method of accounting and is expected to close sometime during the the value of such options. The purchase price represents approximately a thirty-two percent (32%) premium over the closing market price of the Company's fourth quarter 2002 following a SpeedFam-IPEC shareholder vote. On an earnings per share basis, the transaction is expected to common stock on August 5, 2002. The aggregate value of the transaction, including the amount of debt to be assumed, is approximately $110 million. be accretive in the third quarter 2003. The Company's Board of Directors, acting upon the unanimous recommendation of the Special Committee of the Board comprised of three disinterested Novellus said the acquisition gives it an entry into the growing market for chemical mechanical planarization systems, a directors, approved the transaction. In reaching its decision, the Special Committee and the Board received a fairness opinion from the Company's financial critical enabling technology as the industry moves toward copper damascene manufacturing process. SpeedFam makes these advisor, Legg Mason Wood Walker, Inc. chemical maechanical planarization systems. Novellus said SpeedFam's next-generation orbital, hard-platen Momentum and Jack Clegg, Chairman and Chief Executive Officer of Nobel Learning Communities, Inc. said, "We are delighted to announce the proposed merger. We Momnentum300 CMP tools offer CMP technology for the most advanced copper interconnects. believe that the $7.75 all cash offer provides an attractive price for our stockholders, especially in the current economic environment. We are also pleased that “The growing complexity of semiconductor manufacturing, provides challenges and opportunities for semiconductor the Gryphon/Cadigan group shares our commitment to provide quality education, products and services to our students and to continue the Company's equipment manufacturers to deliver production-worthy systems which enable our customers to build high-performance growth." interconnects,” said Richard S. Hill, chairman and chief executive officer of Novellus. “We view CMP as a key manufacturing Jeffrey Ott, Partner of Gryphon Partners II, L.P. stated, "We look forward to working with Jack Clegg, his team and Cadigan Partners in supporting the technology which will have a significant impact on the yield and performance of the interconnect structure. We believe that the expansion of the Company's business, which continues to have a very positive impact on the education of our nation's children." opportunity to interactively optimize the planarization, deposition, and surface preparation for overall performance will give Michael Tokarz, Chairman of Cadigan and former general partner at Kohlberg Kravis Roberts & Co. stated that "the level of experience of the management Novellus a major advantage in extending copper/low-k processes to advanced devices. Additionally, we believe our financial team coupled with the integrity of the Company's mission is what attracted us to commit to this investment." David Luttway, Principal of Cadigan Partners strength and market leadership should benefit SpeedFam-IPEC’s customers and shareholders.” added, "We share the Company's commitment to offering parents the highest quality education choices for their children, and we look forward to maintaining As a member of the Damascus Alliance, SpeedFam-IPEC has been working closely with Novellus on technical issues related the Company's family-like relationship with its employees." to copper damascene integration. “We now have a great opportunity to bring our Momentum 200- and 300-mm products to the The acquisition is expected to be completed during the second quarter of fiscal year 2002/2003 and is subject to approval by a majority of the Company's market with Novellus’ financial and technical horsepower behind us,” said Richard Faubert, president and CEO of SpeedFam- stockholders the availability of certain financing the expiration of the applicable waiting period under the Hart Scott Rodino Act and other customary IPEC. The VC Liquidity Corner (Data provided by VentureSource) Total Trans. Last Capital Raised Date Target / Advisor Acquiror / Advisor Value Post $ Val. Step-up to Date ROIC Universe Venture Capitalist M&A IPO M&A / IPO Split 08/09/02 LearningElements Plato Learning $6.0 NA NA NA NA Learning Services Undisclosed Investors Last Week 5 0 100% / 0% 08/05/02 Flypaper Inc Inclusion Technologies Inc NA NA NA $7.5 NA Application Software Vanguard Venture Partn. Q1 2002 69 5 93% / 7% 08/07/02 Opion Inc-Certain Assets PlanetFeedback NA $17.2 NA $7.2 NA Application Software New Enterprise Assoc. Q2 2002 83 10 89% / 11% 08/07/02 Northstar Photonics - Certain Assets Teem Photonics NA NA NA $23.0 NA Wireline Equipment St. Paul Ventures Q3 2002 25 1 96% / 4% 08/06/02 CG2 Quantum 3D NA NA NA $47.0 NA Security and Design Software JP Morgan Partners YTD 2002 177 16 92% / 8% The Tech/Comm M&A Weekly U.S. Bancorp Piper Jaffray's Technology Group - Investment Bankers / M&A Advisors August 12, 2002 M&A Commentary and Trend Analysis Today's Tech/Comm M&A drivers are different than those at the height of the IT spending boom and the stock market bubble. In the current period of low earnings and restrictive capital markets, companies are inclined to improve profit margins and capital efficiency. We believe these conditions form the principal drivers of Tech/Comm M&A today: 1) back to core competencies, 2) consolidation, and 3) bargain hunting. 1) Back to Core Competencies: - Divestitures: Alcatel/European enterprise distribution and services business, Homestore.com/ConsumerInfo.com, LSI Logic (#)/CDMA and DSL chip businesses(plan to sell), HP/certain mnfr. facilities(in talks), Marconi/Data Systems sub./commerce systems/Lucent (#)/venture capital portfolio, Nortel (#>)/Clarify, ADC Telecom (#>)/cable assets, Lucent (#)/fiber unit/manufacturing plants, @Home/Bluemountain.com, Brokat/Blaze/Gemstone - Acquisitions that leverage core strengths: SunGard Data Systems (#)/Guardian iT Plc, Expedia (#)/Classic Custom Vacations, Digital River (#)/Beyond.com assets, Level 3/McLeod's wholesale dial business, eUniverse/L90, L-3 Communications/PerkinElmer- Detection Systems (x-ray security technologies), yesmail.com/Netcentives (email marketing group), DoubleClick (#>)/L90 assets, Ameritrade/NDB.com, Sanmina/SCI Systems (#), Travelocity.com/WhereTo 2) Consolidation: - Achieve pricing power: Micron/Hynix, Level 3/McLeod's wholesale dial business, Peregrine/Remedy, HP/Compaq (#) - Achieve operating efficiencies: Micron/Hynix, Ameritrade/Datek Online, HP/Compaq, EchoStar/Hughes, E*Trade/Dempsy & Co.,