Exhibit 1 Condensed Operating and Stockholder Information, Robertson Tool Company

(millions of dollars except per-share data)

1998 1999 2000 2001 2002
Operations
Sales $ 48.50 $ 49.10 $ 53.70 $ 54.80 $ 55.30
Cost of Goods $32.60 $33.10 $35.90 $37.20 $37.90
Selling, General and
Administrative Costs $10.70 $11.10 $11.50 $11.90 $12.30
Depreciation Expense $2.00 $2.30 $2.40 $2.30 $2.10
Interest Expense 0.4 0.7 0.8 0.8 0.8
Income Before Taxes $2.80 $1.90 $3.10 $2.60 $2.20
Taxes $1.10 .8 $1.20 $1.00 .9
Net Income $1.70 $1.10 $1.90 $1.60 $1.30

Percentage of Sales
Cost of Goods 67.00% 67.00% 67.00% 68.00% 69.00%
Sell, Gen’l, Admin. 22.00% 23.00% 21.00% 22.00% 22.00%
Operating Income 6.60% 5.30% 7.30% 6.20% 5.40%

Stockholder Information
Earnings Per Share $ 2.91 $ 1.88 $ 3.25 $ 2.74 $ 2.23
Dividends Per Share $1.60 $1.60 $1.60 $1.60 $1.60
Book Value Per Share $49.40 $49.68 $51.33 $52.47 $53.10
Market Price 33-46 35-48 29-41 25-33 23-32
Price/Earnings Ratio 11-16 10-26 9-13 9-12 10-14
Shares Outstanding 584000.00 584000.00 584000.00 584000.00 584000.00
Exhibit 2 Balance Sheet at December 31, 2002, Robertson Tool Company
(millions of dollars)
Assets Liabilities and Net Worth

Cash $1.00 Accounts Payable $2.00

Accounts Receivable $8.00 Other $2.00
Inventories $18.00 Current Liabilities $4.00
Other $1.00 Long-term Debt $12.00
Current Assets $28.00
Net Plant and Equipment $19.00 Net Worth $31.00
Total Assets $47.00 Total $47.00

Collection Period (days) 53.00 Debt as % Capital 28%

Days of Inventory (days) 173.00 Total Assets/Net Worth 1.52
Sales/Total Assets 1.18
Times Interest Earned (X)
EBITDA / Interest (X)
Pre-tax Return on Capital (%)
Debt as % Capital (%)
Number of companies
Exhibit 3 Condensed Operating and Stockholder Information, NDP Corporation
(millions of dollars except per-share data)
1998 1999 2000 2001 2002
Operations
Sales $ 45 $ 97 $ 99 $ 98 $ 100
Net Income $1.97 $3.20 $3.20 $1.13 $2.98

Financial Position
Current Assets $ 25 $ 46 $ 49 $ 41 $ 46
Current Liabilities $6.00 $11.00 $15.00 $10.00 $13.00
Net Working Capital $19.00 $35.00 $34.00 $31.00 $33.00
Long-term Debt $10.00 $18.00 $16.00 $15.00 $17.00
Shareholders’ Equity $21.00 $36.00 $40.00 $41.00 $41.00

Stockholders Information
Earnings Per Share $ .78 $ .61 $ .59 $ .21 $ .54
Dividends Per Share $0.00 $0.00 $0.00 $0.20 $0.00
Book Value Per Share $8.31 $6.86 $7.37 $7.38 $7.45
Market Price 6-17 10-18 7-18 4-10 5-8
Price/Earnings Ratio 8-22 16-30 12-31 19-48 9-15
Shares Outstanding 2525600.00 5245900.00 5430100.00 5510000.00 5501000.00
Times Interest Earned (X)
EBITDA / Interest (X)
Pre-tax Return on Capital (%)
Debt as % Capital (%)
Number of companies
Exhibit 4 ProFormas for Robertson Tool (millions of dollars)
Actual Forecasts
2002 2003 2004 2005 2006 2007 to Infinity

Sales $ 55.3 $ 58.6 $ 62.1 $ 65.9 $ 69.8 $ 69.8

Cost of Goods $37.90 $39.80 $41.60 $43.50 $45.40 $45.40
Gross Profit $17.40 $18.80 $20.50 $22.40 $24.40 $24.40
Sell & Admin $12.30 $12.30 $12.40 $12.50 $13.30 $13.30
Depreciation $2.10 $2.30 $2.50 $2.70 $2.90 $2.90
EBIT $3.00 $4.20 $5.60 $7.20 $8.20 $8.20
Tax @ 40% 1.20 1.70 2.20 2.90 3.30 3.30
EBIAT $ 1.8 $ 2.5 $ 3.4 $ 4.3 $ 4.9 $ 4.9

CoGS % Sales 69% 68% 67% 66% 65% 65%

Sell & Admin % Sales 22% 21% 20% 19% 19% 19%

Net Plant & Equip @

Beginning of Year $ 19.0 $ 20.7 $ 21.7 $ 22.6 $ 23.5
Capital Expenditures (4.0) (3.5) (3.6) (3.8) (2.9)
Depreciation Expense $2.30 $2.50 $2.70 $2.90 $2.90
Net Plant & Equip @
End of Year $ 20.7 $ 21.7 $ 22.6 $ 23.5 $ 23.5
NPE ( Net plant and equipment) 1.70 1.00 0.90 0.9 0.00
Exhibit 5 Five-Year Forecast of Monmouth, Inc. Earnings, Excluding Robertson Tool
(millions of dollars except per-share data)
2003 2004 2005 2006 2007

Net Income $ 11.00 $ 11.90 $ 12.80 $ 13.80 $ 15.00

Shares Outstanding (mil) 4.21 4.21 4.21 4.21 4.21
Earnings Per Share 2.61 $ 2.83 $ 3.04 $ 3.27 $ 3.56
Exhibit 6 Selected Financial Information on Quasi-Comparable Firms, 2002
Actuant Corp. Briggs & Idex Corp. Lincoln Electric Snap On Inc. Stanley Works Robertson Tool
Stratton Co.

Collection Period (days) 55.00 77.00 47.00 61.00 96.00 77.00 53.00
Inventory % Sales 12% 18% 13% 17% 18% 16% 33%

Operating Margin % Sales 17% 13% 20% 15% 10% 15% 5%

Return on Capital 21% 9% 10% 12% 11% 14% 4%

Times Interest Earned 3.80 3.20 7.10 11.50 7.80 9.30 3.50
Debt % Capital
· balance sheet values 98% 52% 30% 27% 29% 40% 28%
· market values 29% 37% 20% 17% 19% 24% 37%
Bond Rating BB- BB+ BBB - A+ A -

Value of Firm ($ mil) $ 712 $ 1,443 $ 1,191 $ 1,145 $ 1,861 $ 3,014 $ 29

EBIAT ($ mil) 55 119 98 90 129 234 1.80
EBIAT Multiple 12.8 12.1 12.2 12.7 14.4 12.9 16.1

Share Price $ 42 $ 42 $ 29 $ 22 $ 26 $ 27 $ 30
Earnings Per Share $2.80 $3.20 $2.00 $1.78 $1.80 $2.32 $2.32
Price/Earnings $15.00 $13.10 $14.50 $12.40 $14.40 $11.60 $13.50
Equity Beta 1.00 1.00 1.00 .75 1.05 .95
Asset Beta .71 .63 .80 .63 .85 .73
Exhibit 7 Information on United States Capital Markets
I. Interest Rates in May 2003
30-Year U.S. U.S. Corporate Bonds Rated
Treasury Bonds AA A BBB BB
4.10% 4.52% 5.07% 6.07% 7.96%

II. Estimated Market Risk Premium = 6% over 30-Year U.S. Treasury Bonds

III. Median Values of Key Ratios by Standard & Poors’ Rating Category
AAA AA A BBB BB B

Times Interest Earned (X) 27.30 18.00 10.40 5.90 3.40 1.50
EBITDA / Interest (X) 31.00 21.40 12.80 7.60 4.60 2.30
Pre-tax Return on Capital (%) 25.20 25.40 19.70 15.10 12.50 8.80
Debt as % Capital (%) 12.60 36.10 38.40 43.70 51.90 74.90
Number of companies 6.00 15.00 118.00 213.00 297.00 345.00

IV. Debt and Times Interest Earned Ratios for Selected Industries
AAA AA A BBB BB

Food Processing
Debt % Capital 44% - 51% 54% 53%
Times Interest Earned 7.9 - 6.7 4.3 2.9
Electrical Equipment
Debt % Capital - - 36% 48% 72%
Times Interest Earned - - 7.3 3.2 1.6
Electric Utilities
Debt % Capital - 46% 54% 57% 73%
Times Interest Earned - 4.0 3.4 2.7 2.0
1

5
6
What are the sources of value creation in target company(Robertson Tools)

Robertson tool company has a very strong brand value and is one of the largest manufacturers in few products, which would increase the cash flows for the company a
opportunities to grow in different markets and expand its market share.
Robertson's COGS could be reduced from 69% of sales to 65%. The high COGS was because Robertson tried to seel to every market segment which increased inventory
manufacturing efficiency.
Removal of sales and advertising duplication will decrease selling, general and admin expenses from 22% of sales to 19%.

As of now, industrial market contributed to 75% of Robertson's sales and the rest came from the consumer market, whereas Monmouth had the exact opposite propor
products are complements of each other, there can be increase in sales of Monmouth products in the industrial markets and of Robertson products in consumer marke
Robertson's distribution system is a great asset to Monmouth. They had 48 direct sales people and 28 sales engineers who marketed Robertson products to 2100 whol
Robertson held a 50% market share in clamps and vices and a 9% market share in scissors in shears and would bring in good reputation.
Exhibit 4 ProFormas for Robertson Tool (millions of dollars)
Actual
2002 2003 2004

Sales $55.30 $58.60 $62.10

Cost of Goods 37.90 39.80 41.60
Gross Profit 17.40 18.80 20.50
Sell & Admin 12.30 12.30 12.40
Depreciation 2.10 2.30 2.50
EBIT 3.00 4.20 5.60
Tax @ 40% 1.20 1.70 2.20
EBIAT $1.80 $2.50 $3.40

CoGS % Sales 69% 68% 67%

Sell & Admin % Sales 22% 21% 20%

Net Plant & Equip @

Beginning of Year $19.00 $20.70
Capital Expenditures -$4.00 -$3.50
Depreciation Expense $2.30 $2.50
Net Plant & Equip @
End of Year $20.70 $21.70
Net investment 1.7 1

OFCF 3.1 4.9

Terminal Value @2% growth rate 2%
Total Value 3.1 4.9
Period 1 2
Present Value of cash flows 2.86 4.18
Present value of cashflow $ 106.90
Midyear adjustment factor 1.04
Value of firm $ 111.33

Value of firm $ 106.90

Value of firm with mid year adjustment $ 111.33

Value of debt $ 12.00

Value of equity $ 99.33
Shares outstanding(million) 0.58
Share value by EV DCF method $ 170.09
MULTIPLES METHOD
EBIAT Multiple ( Average of Given Compnies) $12.85
Value based on current EBIAT $23.13
Total Outstanding Shares of Robertson Tools 0.58
Value per Share $39.61 of 2002
Average EBIAT during Forecast $4.00
Value on Current EBIAT $51.40
Value per Share $88.01
Value based on 2003 values $32.13
Total Value per Share $55.01

Question 3

The maximum Offer price should be $88.01 for the share of Robertson Tools

Question 4

Calculation of Max no of shares of Monmouth to be issued for each share

of Robertson without diluting expected EPS of Monmouth
Projected Net Income of Monmouth $ 11.00
Projected Net Income of Robertson Err:508
Projecte Net Income of combined entity Err:508
Proj EPS of Monmouth $2.61
Post-acquisition no. of shares without dilution of EPS Err:508
Current no of shares of Monmouth 4.21
FCF from Robertson(million$) #REF!
No of Monmouth share to be boughtback with the above FCF #REF!
Post-buyback no of shares of Monmouth #REF!
Max no of shares that could be issued Err:508
No of outstanding shares of Robertson 0.584
Max no of shares of Monmouth per Robertson share Err:508
Current market price per share of Monmouth 24
Implied value per share of Robertson Err:508

Price per share offered by The Simmons Company 42

Offer by NDP Corporation 5:1 stock deal
Market price of NDP Corp was 10.62, thus implied pricing of 53.1

Expectation of Simmons : Price of atleast 50 per share of Robertson $50

Forecasts
2005 2006 2007 to Infinity

$65.90 $69.80 $69.80

43.50 45.40 45.40
22.40 24.40 24.40
12.50 13.30 13.30
2.70 2.90 2.90
7.20 8.20 8.20
2.90 3.30 3.30
$4.30 $4.90 $4.90

66% 65% 65%

19% 19% 19%

$21.70 $22.60 $23.50

-$3.60 -$3.80 -$2.90
$2.70 $2.90 $2.90

$22.60 $23.50 $23.50

0.9 0.9 0 (assuming net working capital remains same)

6.1 6.9 7.8

126.33 WACC = 8.2978%
6.1 6.9 134.13
3 4 5.00
4.80 5.02 90.04
Robertson tool Company 2002
EBIT $ 3.00
EBITDA $ 5.10
Times Interest Earned (X) 3.75
EBITDA / Interest (X) 6.38
Pre-tax Return on Capital (%) 5.12%
Debt as % Capital (%) 28%

By comparing Value we can say that robertson debt reting is BBB

Corporate Bond rate for BBB 6.07%

Risk free rate 4.10%

Tax Rate 40%

Cost of equity 10.10%
Cost of debt 0.06
total debt
12
Net worth- Equity 31
Debt % 28%
Equity% 72%
WACC ( Discount Factor) 8.297767%
Exhibit 7 Information on United States Capital Markets
I. Interest Rates in May 2003
30-Year U.S. U.S. Corporate Bonds Rated
Treasury Bonds AA A BBB
4.10% 4.52% 5.07% 6.07%

II. Estimated Market Risk Premium = 6% over 30-Year U.S. Treasury Bonds

III. Median Values of Key Ratios by Standard & Poors’ Rating Category
AAA AA A BBB BB B

Times Interest Earned (X) 27.30 18.00 10.40 5.90 3.40 1.50
EBITDA / Interest (X) 31.00 21.40 12.80 7.60 4.60 2.30
Pre-tax Return on Capital (%) 25.20 25.40 19.70 15.10 12.50 8.80

Debt as % Capital (%) 12.60 36.10 38.40 43.70 51.90 74.90

Number of companies 6.00 15.00 118.00 213.00 297.00 345.00

Exhibit 2 Balance Sheet at December 31, 2002, Robertson Tool Company

(millions of dollars)
Assets Liabilities and Net Worth

Cash 1 Accounts Payable 2

Accounts Receivable 8 Other 2
Inventories 18 Current Liabilities 4
Other 1 Long-term Debt 12
Current Assets 28
Net Plant and Equipment 19 Net Worth 31
Total Assets 47 Total 47

Collection Period (days) 53 Debt as % Capital 28%

Days of Inventory (days) 173 Total Assets/Net Worth 1.52
Sales/Total Assets 1.18
ed
BB
7.96%