Small Business Exchange, ltd 
Exclusive Listing Précis—Confidential  Office Machines Distributor 
 
Company Profile:


The company is an established distributor and service provider for new and used office machines with a broad customer base.  It has successfully served Rhode Island and southeastern Massachusetts for over thirty years. With fiscal 1999 revenues of over $2,500,000 and steadily improving gross margins, the company has continuously returned approximately $90,000 to $160,000 in salary, perquisites and discretionary (pre-tax/pre-interest) cash flow to the part-time working owner.
Operating Overview:


The company services over 800 locations under maintenance contracts and has an active customer list of over 4,000 machine locations that have been serviced on a time and materials basis within the past 5 years.  It also has a major, exclusive, customer relationship that has been maintained for over 20 years, and is currently one of the top three “National Accounts” of a leading manufacturer, having established itself as the “Number One Facsimile Dealer in the Northeast Territory”.  The company’s ongoing relationships with this customer and manufacturer have been exceptional.  The company participates in computer maintenance network offered by its primary vendor that is “state of the art”.  It maintains 24 hour, 7 day a week communications with all installed fax machines that automatically notify the company in advance of machine supply shortages, preventive maintenance, and sales opportunities.  The primary commercial market includes a major retail chain and the business offices of various companies, institutions and municipalities that mostly purchase (and require service for) new and refurbished fax machines, copiers, adding machines, and computer printers.  Fax machines comprise the vast majority of transactions.The company relies mostly on its longevity, competitive pricing, and long-established reputation for quality and service for new and continued business relationships.
Strategic Opportunities:


Current ownership has diverse interests and is seeking a lifestyle change.  Normally, entry into this local market requires substantial expenditures in inventory, equipment, facilities, and working capital.  However, this turnkey opportunity provides immediate, cost-effective access to this market niche for a Strategic Buyer.  An out-of-state entity could capitalize on the commanding presence currently maintained by the company in its home territory, add a major manufacturer to its product line in its home region(s), expand this company’s current product line or increase existing sales in synergistic products.  Increased sales of copy machines, office and machine supplies, and computer printers offer some of the more obvious opportunities.  Alternatively, a local competitor could add a major customer and manufacturer to its product line and more economically leverage its own maintenance staff and overhead costs against a more highly concentrated customer base.

Financial History and Projections (000's):
* See below for explanation 
Fiscal Year Ended August 31st
DESCRIPTION
1999
1997
1996
Net Sales 
$2,545.3
$986.2
$723.8
Gross Profit:
$426.8
$353.9
$280.7
Tech & Mach Maint Exps (1) *
$167.9
$208.6
$152.3
Occup. & Office Expenses (2) *
$131.6
$112.4
$97.4
Non-Recurring & Discr. Exps (3) *
$48.4
$57.4
$21.5
ODCF—BITDA (4) *
$163.4
$92.2
$89.7
AGM-AROE (5) *
$394.4
$338.2
$260.4
Explanation of Codes:
(1)  Technician and Machine Maintenance Expenses are included in Operating Expenses and Cost of Sales. Buyers should consider what portion, if any, of these expenses are redundant, and therefore would be eliminated through consolidation or streamlining of operations.
 
(2)  Occupancy and Office Expenses are included in Operating Expenses.  Buyers should consider what portion, if any, of these expenses are redundant, and therefore would be eliminated through consolidation or streamlining of operations.
 
(3)  Non-recurring and Discretionary Expenses represent expenses incurred on a one-time basis that were eliminated in subsequent years, or alternatively are expenses incurred that are optional or discretionary in nature.  They are not considered necessary or vital to the business on an ongoing basis and are likely to be eliminated by a new owner.
 
(4)  ODCF-BITDA is Owner Discretionary Cash Flow before Interest, Income Taxes, Depreciation and Amortization.
 
(5)  AGM-AROE represents what management considers Gross Margin Available to a new owner after only recurring, variable operating and maintenance expenses have been deducted.  It starts with ODCF-BITDA and assumes that a new owner will eliminate all Non-recurring and Discretionary Expenses, 75% of all Overhead and Occupancy Costs and 50% of Technician Expenses.