CUSA TECHNOLOGIES, INC.
986 WEST ATHERTON DRIVE
SALT LAKE CITY, UT. 84123
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 27, 1998
To the Stockholders of CUSA Technologies, Inc.:
A special meeting (the "Special Meeting") of the stockholders ("CTI
Stockholders") of CUSA Technologies, Inc., a Nevada corporation ("CTI"), will be
held on February 27, 1998, at 9:00 a.m., local time, at 986 West Atherton Drive,
Salt Lake City, Utah 84123 for the following purposes:
1. Consider and vote upon a single proposal to adopt and approve an Agreement
and Plan of Merger dated as of November 4, 1997 and amended as of December
31, 1997 ("Merger Agreement"), among CTI, Fiserv, Inc., a Wisconsin
corporation ("Fiserv"), and Fiserv Solutions, Inc., a Wisconsin corporation
("Fiserv Solutions"). Pursuant to the Merger Agreement, (i) CTI will be
merged with and into Fiserv Solutions, with Fiserv Solutions being the
surviving corporation and continuing to exist as a wholly-owned subsidiary
of Fiserv ("Merger"), and (ii) each share of common stock, par value $0.001
per share, of CTI ("CTI Common Stock") outstanding immediately prior to the
consummation of the Merger will be converted into the right to receive such
number of shares of common stock, $.01 par value, of Fiserv ("Fiserv Common
Stock") as shall equal the quotient of (x) CTI Stock Value (as defined
below) divided by (y) an amount equal to the average closing price of
Fiserv Common Stock as reported on the Nasdaq National Market (as reported
in The Wall Street Journal) for the 20 trading days ending on the second
trading day prior to the effective time of the Merger. The term "CTI Stock
Value" shall mean the quotient of (i) the sum of (A) $24,933,500, minus (B)
CTI Merger Costs (as hereinafter defined), plus (C) the product of (I) the
number of outstanding "in-the-money" options ("In-the-Money Options")
issued pursuant to CTI stock option plans (collectively, the "CUSA Option
Plan") times (II) the respective exercise prices of such In-the-Money
Options, divided by (ii) the sum of (A) the number of shares of CTI Common
Stock outstanding immediately prior to the date and time on which the
Merger shall be effective ("Effective Time") plus (B) the number of such
outstanding In-the-Money Options. The term "CTI Merger Costs" shall mean
the aggregate of all accounting (which shall not include regular audit
fees), legal, printing, filing, financial advisory and other fees and
expenses of CTI and Taxes (as defined in the Merger Agreement) assessed in
connection with the transactions contemplated hereby, in each case incurred
or anticipated to be incurred in connection with the Merger, all estimated
and agreed to by the parties two business days prior to the Effective Time.
The CTI Stock Value is expected to be approximately $1.35 per share,
subject to a holdback of shares of Fiserv Common Stock valued at $3,000,000
(approximately $.17 for each share of CTI Common Stock) ("Holdback Shares")
which shall be placed into escrow to cover certain specified and
unspecified liabilities ("Holdback Claims"). The Holdback Shares shall be
distributed to the holders of record as of the Record Date, after the
resolution and reduction for the Holdback Claims, 299 days following the
Effective Time or upon the final resolution of the Holdback Claims. The
parties intend to treat the Merger as a pooling of interests for accounting
purposes. If, prior to the Effective Time, it is determined that the Merger
does not qualify for pooling of interests treatment under generally
accepted accounting principles,
CUSA TECHNOLOGIES, INC. FISERV, INC.
PROXY STATEMENT PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the holders of shares
of common stock, par value $.001 per share ("CTI Common Stock"), of CUSA
Technologies, Inc., a Nevada corporation ("CTI"), in connection with the
solicitation of proxies from CTI stockholders ("CTI Stockholders"), for use at a
special meeting of CTI Stockholders (together with any adjournments or
postponements, the "Special Meeting") to be held at CUSA Technologies Inc., 986
West Atherton Drive, Salt Lake City, Utah 84123 on April __, 1998, at 9:00 a.m.
local time and at any adjournments or postponements thereof.
Only holders of record of shares of CTI Common Stock at the close of
business on February 10, 1998 ("Record Date") are entitled to notice of and to
vote at the Special Meeting. On the Record Date there were 15,289,437 shares of
CTI Common Stock outstanding. This Proxy Statement/Prospectus, the enclosed
Notice of Special Meeting and accompanying proxy card are first being mailed to
CTI Stockholders on or about March __, 1998. This proxy solicitation is made by
the Board of Directors of CTI.
At the Special Meeting, the CTI Stockholders will consider and vote upon a
proposal to approve an Agreement and Plan of Merger dated as of November 4, 1997
and amended as of December 31, 1997 ("Merger Agreement"), among CTI, Fiserv,
Inc., a Wisconsin corporation ("Fiserv"), and Fiserv Solutions, Inc., a
Wisconsin corporation ("Fiserv Solutions"), which is wholly owned by Fiserv.
Pursuant to the Merger Agreement, (i) CTI will be merged with and into Fiserv
Solutions, with Fiserv Solutions being the surviving corporation ("Surviving
Corporation") and continuing to exist as a wholly owned subsidiary of Fiserv
("Merger"), and (ii) each share of CTI Common Stock outstanding immediately
prior to the consummation of the Merger will be converted into the right to
receive such number of shares of common stock, $.01 par value, of Fiserv
("Fiserv Common Stock") as shall equal the quotient of (x) CTI Stock Value (as
defined below) divided by (y) an amount equal to the average closing price of
Fiserv Common Stock as reported on the Nasdaq National Market ("NASDAQ") (as
reported in The Wall Street Journal) for the 20 trading days ending on the
second trading day prior to the effective time of the Merger. The term "CTI
Stock Value" shall mean the quotient of (i) the sum of (A) $24,933,500 (which
represents a negotiated valuation (the "CTI Valuation")), minus (B) CTI Merger
Costs (as hereinafter defined), plus (C) the product of (I) the number of
outstanding "in-the-money" options ("In-the-Money Options") issued pursuant to
CTI stock option plans (collectively, the "CUSA Option Plan") times (II) the
respective exercise prices of such In-the-Money Options, divided by (ii) the sum
of (A) the number of shares of CTI Common Stock outstanding immediately prior to
the Effective Time plus (B) the number of such outstanding In-the-Money Options.
Options that are not "in-the-money" are not being included in the conversion
formula because they have no current value, and including such options would
result in an increase in the Merger consideration for securities which represent
no value. The term "CTI Merger Costs" shall mean the aggregate of all
accounting (which shall not include regular audit fees), legal, printing,
filing, financial advisory and other fees and expenses of CTI and Taxes (as
defined in the Merger Agreement) assessed in connection with the transactions
contemplated hereby, in each case incurred or anticipated to be incurred in
connection with the Merger, all estimated and agreed to by the parties two
business days prior to the date and time on which the Merger shall be effective
("Effective Time"). CTI anticipates that the CTI Merger Costs will be
approximately $100,000. Fiserv will bear its own expenses in connection with
the Merger. The CTI Stock Value is expected to be approximately $1.35 per
share, subject to a holdback of shares of Fiserv Common Stock worth $3,000,000
(approximately $.17 for each share of CTI Common Stock) ("Holdback Shares")
which shall be placed into escrow to cover certain specified and unspecified
liabilities ("Holdback Claims"). The Holdback Shares shall be distributed,
after reduction for the Holdback Claims, 299 days following the Effective Time
or upon the resolution of the Holdback Claims. Accordingly, if all of the
Holdback Claims are resolved in favor of Fiserv, the minimum CTI Stock Value
assessed to the CTI Stockholders would be approximately $1.18. The parties
intend to treat the Merger as a pooling of interests for accounting purposes.
If the Merger does not qualify for pooling of interests treatment under
generally accepted accounting principles, then each outstanding share of the CTI
Common Stock will be converted into the right to receive CTI Stock Value in
cash. The average closing price of Fiserv Common Stock for the 20 trading days
ending two days prior to the mailing of this Proxy Statement/Prospectus was
$_____ per share. A copy of the Merger Agreement is attached as Appendix A to
the accompanying Proxy Statement/Prospectus.
The CTI Valuation of $24,933,500 was determined through a series of arms'
length negotiations between CTI and Fiserv. While recent trading prices were a
factor in the determination of the CTI Valuation, the CTI Valuation was
determined independently of the market price of the CTI Common Stock. The CTI
Valuation represents on the high end (assuming no claims are deducted from the
Holdback) a $0.60 or 80 percent premium, and on the low end (assuming the
maximum amount of claims ($3,000,000) are deducted from the Holdback) $0.42 or
56 percent premium over the $0.75 market price of the CTI Common Stock on
November 3, 1997, the day before the Merger was publicly announced.
No fractional shares of Fiserv Common Stock will be issued in the Merger.
In lieu of any fractional shares, each holder of CTI Common Stock who would
otherwise be entitled to receive a fractional share of Fiserv Common Stock
pursuant to the Merger will be paid an amount in cash, without interest, rounded
to the nearest cent, determined by multiplying (i) the per share closing price
of Fiserv Common Stock as reported on NASDAQ on the date of the Effective Time,
by (ii) the fractional interest to which such holder would otherwise be
entitled. Fiserv will make available to Firstar Trust Company, Milwaukee
("Exchange Agent") the cash necessary for this purpose.
This Proxy Statement/Prospectus also constitutes the Prospectus of Fiserv
with respect to the shares of Fiserv Common Stock to be issued to holders of CTI
Common Stock pursuant to the Merger. Fiserv has filed a Registration Statement
on Form S-4 (together with any amendments thereto, the "Registration
Statement"), of which this Proxy Statement/Prospectus forms a part, with the
Securities and Exchange Commission ("Commission") covering the shares of Fiserv
Common Stock to be issued in connection with the Merger.
See "Risk Factors" beginning on page 11 for a discussion of certain factors
which should be considered in connection with the acquisition of Fiserv Common
Stock.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY CTI OR FISERV. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE THE
SECURITIES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A
PROXY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF THE SECURITIES OFFERED HEREBY SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FISERV OR
CTI SINCE THE DATE HEREOF OR THAT THE INFORMATION SET FORTH OR INCORPORATED BY
REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ALL
INFORMATION HEREIN WITH RESPECT TO FISERV AND FISERV SOLUTIONS HAS BEEN
FURNISHED BY FISERV, AND ALL INFORMATION HEREIN WITH RESPECT TO CTI HAS BEEN
FURNISHED BY CTI.
THE SHARES OF FISERV COMMON STOCK TO BE ISSUED PURSUANT TO THE MERGER
AGREEMENT DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is March __, 1998.
THE SPECIAL MEETING
Date, Time and Place of
Special Meeting.............. April __, 1998 at 9:00 a.m., local time at CTI's
offices at 986 West Atherton Drive, Salt Lake
City, Utah.
Purpose of Special Meeting... To consider and vote upon a proposal to approve
the Merger Agreement, pursuant to which CTI will
merge into Fiserv Solutions, a wholly owned
subsidiary of Fiserv, and Fiserv Solutions will
be the Surviving Corporation and will continue
to exist as a wholly owned subsidiary of Fiserv.
See "The Merger."
Record Date.................. CTI Stockholders of record on February 10, 1998
will be entitled to vote at the Special Meeting.
On February 10, 1998, there were 15,289,437
shares of CTI Common Stock outstanding with each
share of CTI Common Stock entitled to cast one
vote with respect to the proposal to approve the
Merger Agreement.
Quorum; Vote Required........ The presence, in person or by proxy, of the
holders of a majority of the outstanding shares
of CTI Common Stock at the Special Meeting is
necessary to constitute a quorum at the Special
Meeting. Approval of the Merger Agreement
requires the affirmative vote of a majority of
the issued and outstanding shares of CTI Common
Stock. See "The Special Meeting--Matters to be
Considered at the Special Meeting; Quorum and
Vote Required."
Irrevocable Proxy............ Richard N. Beckstrand, the controlling
stockholder, chief executive officer and
chairman of the Board of Directors of CTI
("Majority Stockholder"), has granted an
irrevocable proxy in favor of approval of the
Merger Agreement to the Board of Directors of
Fiserv, thereby assuring that the Merger
Agreement, and therefore the Merger, will be
approved by CTI Stockholders, subject to the
exercise of dissenter's rights of appraisal by
any CTI Stockholder electing to do so.
THE MERGER
Effect of the Merger......... The Merger Agreement (attached as Appendix A to
this Proxy Statement/Prospectus) provides for
the merger of CTI with and into Fiserv
Solutions, a wholly owned subsidiary of Fiserv,
with Fiserv Solutions as the Surviving
Corporation which will continue to exist as a
wholly owned subsidiary of Fiserv. It is
presently contemplated that the Effective Time
of the Merger will be April __, 1998 or such
other date as the parties may agree. See "The
Merger."
Merger Consideration......... Each outstanding share of CTI Common Stock will
be converted into the right to receive such
number of shares of Fiserv Common Stock as shall
equal the Conversion Ratio, which is defined as
the quotient of (x) the CTI Stock Value divided
by (y) an amount equal to the average closing
price of Fiserv Common Stock as reported on
NASDAQ (as reported in The Wall Street Journal)
for the 20 trading days ending on the second
trading day prior to the Effective
-2-
Time ("Average Fiserv Stock Price"). The CTI
StockValue is expected to be approximately
$1.35, subject to an aggregate holdback
("Holdback") of Fiserv Common Stock valued at
$3,000,000 (approximately $0.17 per share of CTI
Common Stock) ("Holdback Shares") which shall be
placed into escrow to cover certain specified
liabilities to the extent they exceed $825,067
and non-customer claims which relate to events
occurring or actions taken prior the Effective
Time which are raised within 289 days following
the Effective Time ("Holdback Claims"). The
Holdback Shares shall be distributed, after
reduction for the Holdback Claims, in one or
more portions on the later of 299 days following
the Effective Time or the final resolution of
the Holdback Claims. Accordingly, if all of the
Holdback Claims are resolved in favor of Fiserv,
the minimum CTI Stock Value assessed to the CTI
Stockholders would be approximately $1.18. The
parties intend to treat the Merger as a pooling
of interests for accounting purposes. If the
Merger does not qualify for pooling of interests
treatment under generally accepted accounting
principles, then each outstanding share of CTI
Common Stock will be converted into the right to
receive the CTI Stock Value in cash. The
average closing price of Fiserv Common Stock for
the 20 trading days ending two days prior to the
mailing of this Proxy Statement/Prospectus was
$_____ per share. See "The Merger--The Merger
Agreement," "The Merger--Merger Considerations
and "The Merger--Holdback." No fractional
shares of Fiserv Common Stock will be issued in
the Merger. In lieu of any fractional shares,
each holder of CTI Common Stock who would
otherwise be entitled to receive a fractional
share of Fiserv Common Stock pursuant to the
Merger will be paid an amount in cash, without
interest, rounded to the nearest cent,
determined by multiplying (i) the per share
closing price of Fiserv Common Stock as reported
on NASDAQ on the date of the Effective Time, by
(ii) the fractional interest to which such
holder would otherwise be entitled. Fiserv will
make available to the Exchange Agent the cash
necessary for this purpose.
Set forth below are examples of the conversion
of CTI Common Stock into Fiserv Common Stock
based upon varying assumptions:
(i) based on the above-referenced average
closing price of Fiserv Common Stock of
$_______ per share, and assuming a
Holdback of $1,500,000 (equal to 50
percent of Holdback Shares and
approximately $.09 per share of CTI Common
Stock), Fiserv would issue one share of
Fiserv Common Stock in exchange for
_______ shares of CTI Common Stock;
(ii) based on an average closing price of
Fiserv Common Stock of $_______ per share
and assuming the same Holdback, Fiserv
would issue one share of Fiserv Common
Stock for each _____ shares of CTI Common
Stock; and
(iii) based on an average closing price of
Fiserv Common Stock of $_______ per share
and assuming the same Holdback, Fiserv
would issue one share of Fiserv Common
Stock for each _____ shares of CTI Common
Stock.
-3-
CTI Stockholders may call CTI's Investor
Relations Department at (800) 367-2872 to
request information with regards to the Merger,
including up to date information regarding the
Exchange Ratio.
Holdback..................... Receipt of the Merger Consideration is subject
to an aggregate holdback of the Holdback Shares
in respect of the Holdback Claims to be
distributed in one or more portions upon the
later of 299 days after the Effective Time or
the resolution of the Holdback Claims. See "The
Merger--The Merger Agreement," "The Merger--
Merger Consideration," "The Merger--Holdback"
and Appendix A--Agreement and Plan of Merger.
Recommendation of CTI's Board
of Directors................. The Board of Directors of CTI believes that the
Merger is desirable and in the best interests of
CTI Stockholders and, accordingly, unanimously
recommends that the CTI Stockholders vote in
favor of the approval of the Merger Agreement.
The Board of Directors' recommendation is based
upon a number of factors discussed in this Proxy
Statement/ Prospectus and upon the opinion of
Houlihan Valuation Advisors ("HVA") referred to
below. See "The Merger--Background and Reasons
for the Merger," "The Merger--Recommendation of
the Board of Directors of CTI," "The Merger--
Opinion of CTI's Financial Advisor" and Appendix
B.
Opinion of CTI's Financial
Advisor...................... As of November 4, 1997, HVA rendered its opinion
to the Board of Directors of CTI to the effect
that, as of such date, the aggregate
consideration to be received by CTI Stockholders
pursuant to the Merger is fair, from a financial
point of view, to such holders. The full text of
the written opinion of HVA, confirmed as of the
date of this Proxy Statement/Prospectus, which
sets forth the assumptions made, matters
considered and limitations on the review
undertaken, is attached as Appendix B to this
Proxy Statement/Prospectus and should be read
carefully in its entirety. HVA's opinion is
directed only to the fairness of the aggregate
consideration from a financial point of view,
does not address any other aspect of the Merger
or related transactions and does not constitute
a recommendation to any Stockholder as to how
such Stockholder should vote at the Special
Meeting. See "The Merger--Opinion of CTI's
Financial Advisor" and Appendix B.
Management and Operations of
CTI after the Merger......... Following the Merger, CTI will be merged with
and into Fiserv Solutions, a wholly owned
subsidiary of Fiserv, which will be the
Surviving Corporation. George D. Dalton,
Chairman of the Board of Fiserv, Leslie M. Muma,
Vice Chairman and President of Fiserv, Donald F.
Dillon, Vice Chairman of Fiserv, and Kenneth R.
Jensen, Senior Executive Vice President and
Chief Financial Officer of Fiserv, will remain
the directors of the Surviving Corporation. All
other persons who will become the officers of
the Surviving Corporation are currently officers
and directors of Fiserv. Information about such
persons is incorporated by reference to Fiserv's
Annual Report on Form 10-K for the year ended
December 31, 1996. Fiserv intends to operate the
Surviving Corporation as an independent
subsidiary after the Merger and has no present
intention to move or consolidate any of the
operations of the Surviving Corporation or its
subsidiaries or to change the name of any of its
subsidiaries. See "The Merger--Management and
Operations of CTI Following the Merger."
-4-
Comparative Per Share Data of Fiserv and CTI
Presented below is historical comparative per share data of Fiserv and CTI
for earnings from continuing operations, cash dividends and net book value. Also
presented below are the equivalent per share amounts for CTI which adjust the
historical Fiserv amounts to reflect the exchange ratio of Fiserv shares for CTI
shares contemplated in the Merger. For the purposes of the comparison below, the
exchange ratio was assumed to be 0.028 shares of Fiserv Common Stock for each
share of CTI Common Stock. Pro forma amounts for Fiserv have been omitted
because the effects of the Merger on Fiserv's earnings from continuing
operations and net book value per share are not significant.
Fiserv, Inc.
As of and for the
Year Ended December 31,
-----------------------------
1995(1) 1996 1997
------- ------ ------
Per share data:
Net income (loss) - diluted.. $(0.93) $ 1.53 $ 1.70
Cash dividends............... 0 0 0
Book value................... $ 9.92 $11.72 $14.26
Cusa Technologies, Inc.
As of and for the
As of and for the six months ended
Year ended June 30, December 31,
------------------------- -----------------
1995 1996 1997 1997
----- ------ ------ ------
(unaudited)
Per share data:
Earnings (loss) from continuing operations.... $0.12 $(1.10) $ 0.04 $ 0.08
Earnings adjusted for the exchange ratio (2).. 0.03 (0.03) 0.04 0.04
Cash dividends................................ 0 0 0 0
Cash dividends adjusted for
exchange ratio (2).......................... 0 0 0 0
Book value per common share................... $1.17 $(0.70) $(0.13) $(0.05)
Book value per common share adjusted for the
exchange ratio (2).......................... - - 0.33 0.37
- ---------------------
(1) The per share values for Fiserv as of and for the year ended December 31,
1995 include certain charges related to the acquisition of Information
Technology, Inc. ("ITI"). The charges are a pre-tax special, one-time,
non-cash charge of $173 million to expense the purchased ITI Premier II
research and development and a pre-tax charge of $9.9 million for the
accelerated amortization of the completed ITI Premier I software. The
combined after tax charge was $109.6 million ($2.18 per share). Net income
and net income per share before such charges were $63.7 million and $1.27,
respectively.
(2) Fiserv amounts multiplied by 0.028, the assumed exchange ratio using a
Fiserv share value of $48. The actual exchange ratio may be different, as
it will be determined using the Average Fiserv Stock Value.
-10-
RISK FACTORS
The following factors should be considered carefully by CTI Stockholders in
connection with voting on the Merger and the receipt of Fiserv Common Stock by
CTI Stockholders as a result thereof. These factors should be considered in
conjunction with the other information included or incorporated by reference in
this Proxy Statement/Prospectus.
Average Market Prices will Differ from Actual Market Price
In considering whether to approve the Merger Agreement, CTI Stockholders
should consider the following: (i) the Conversion Ratio will be determined based
upon the Average Fiserv Stock Price; (ii) the price of Fiserv Common Stock at
the Effective Time can be expected to vary from the Average Fiserv Stock Price
as well as from the prices as of the date of this Proxy Statement/Prospectus and
the date on which CTI Stockholders vote on the Merger Agreement due to changes
in the business, operations or prospects of Fiserv, market assessments on the
likelihood that the Merger will be consummated and the time thereof, general
market and economic conditions, and other factors, and (iii) the price of Fiserv
Common Stock after the Effective Time can be expected to vary due to changes in
the business, operations or prospects of Fiserv, market assessments of the
Merger, general market and economic conditions, and other factors. See
"Summary--The Merger" and "Comparative Market Prices and Dividends."
Non-Solicitation Provisions may have a Deterrent Effect
CTI agreed that from the execution of the definitive agreement until March
31, 1998, subject to its fiduciary obligations, it will not solicit, directly or
indirectly, any proposal or offer to acquire all or any significant part of its
business and properties or its capital stock (a "CTI Acquisition Proposal").
These provisions in the Merger Agreement may have the effect of discouraging an
attempt by a third party to engage in certain acquisition transactions with CTI.
See "The Merger--The Merger Agreement" and "The Merger--No Solicitation."
Possibility that the CTI Stockholders Could Realize Greater Value if CTI Were to
Continue as a Separate Entity
In the past year, CTI's management has elected to focus its efforts on the
credit union software business. Since this change in focus, the results from
operations have improved significantly. Management expects a continuing
improvement in CTI's results of operations. The potential increase in
shareholder value which might result from increased revenues and income from
continuing operations may not be fully reflected in the exchange value of the
Fiserv Common Stock received by CTI Stockholders.
Potential for Deduction of Claims from the Holdback
The Merger Agreement provides for a Holdback of Fiserv Common Stock worth
$3,000,000 in respect of certain specified liabilities to the extent that such
liabilities exceed $825,067 and non customer claims which are raised within 289
days following the Effective Time. There is a possibility that some or all of
the $3,000,000 could be used to satisfy the Holdback Claims. Assuming that all
of the Holdback Shares were used to cover the Holdback Claims, the Merger
Consideration per share of CTI Common Stock would be reduced from an estimated
$1.35 to $1.18.
Fluctuation of Market Price of Fiserv Common Stock
As noted in "Summary--Comparative Share and Dividend Information and Market
Prices," the Market Value of Fiserv Common Stock has varied between $32 3/4 and
$55 1/16 per share since January 1, 1997. To the extent the Average Fiserv
Stock Price increases prior to the Effective Time, CTI Stockholders will receive
fewer shares of Fiserv Common Stock pursuant to the Conversion Ratio.
Conversely, to the extent the Average Fiserv Stock Price decreases prior to the
Effective Time, CTI Stockholders will receive a greater number of shares of
Fiserv Common Stock pursuant to the Conversion Ratio. See "The Merger--Merger
Consideration."
-11-
separate existence and corporate organization of CTI shall cease, and Fiserv
Solutions shall succeed, insofar as permitted by Nevada law, to all rights,
assets, liabilities and obligations of CTI.
It is presently contemplated that the Effective Time will be April __, 1998
or such other date as the parties may agree.
Merger Consideration
In the Merger, each outstanding share of CTI Common Stock will be converted
into the right to receive such number of shares of Fiserv Common Stock as shall
equal the Conversion Ratio, which is defined as the quotient of (x) the CTI
Stock Value divided by (y) the Average Fiserv Stock Price. The CTI Stock Value
is expected to be approximately $1.35 per share, subject to the Holdback Shares
which shall be placed into escrow to cover the Holdback Claims. The Holdback
Shares shall be distributed, after reduction for the Holdback Claims, in one or
more portions on the later of 299 days following the Effective Time or the final
resolution of the Holdback Claims. The parties intend to treat the Merger as a
pooling of interests for accounting purposes. If the Merger does not qualify
for pooling of interests treatment under generally accepted accounting
principles, then each outstanding share of CTI Common Stock will be converted
into the right to receive the CTI Stock Value in cash. Assuming an Average
Fiserv Stock Price of $______ (which is the average closing price of Fiserv
Common Stock as reported on NASDAQ for the 20 trading days ended February ___,
1998), the Merger would result in the present CTI Stockholders owning
approximately one percent of the Fiserv Common Stock subject to the Holdback.
Assuming an Average Fiserv Stock Price of $42.00, the Merger would result in the
present CTI Stockholders owning approximately _____ percent of the Fiserv Common
Stock, and assuming an Average Fiserv Stock Price of $62.00, the Merger would
result in the present CTI Stockholders owning approximately ____ percent of the
Fiserv Common Stock, in each case subject to the Holdback.
No fractional shares of Fiserv Common Stock will be issued in the Merger.
In lieu of any fractional shares, each holder of CTI Common Stock who would
otherwise be entitled to receive a fractional share of Fiserv Common Stock
pursuant to the Merger will be paid an amount in cash, without interest, rounded
to the nearest cent, determined by multiplying (i) the per share closing price
of Fiserv Common Stock as reported on the NASDAQ on the date of the Effective
Time, by (ii) the fractional interest to which such holder would otherwise be
entitled. Fiserv will make available to the Exchange Agent the cash necessary
for this purpose.
In the event it is determined that the transaction cannot be treated as a
"pooling-of-interests" under generally accepted accounting principles, the
consideration to be paid to the CTI Stockholders shall be payable in cash,
without interest and the Merger will not be treated as a tax-free
reorganization.
Holdback
Receipt of the Merger Consideration is subject to the Holdback of the
Holdback Shares in respect of all damages to and liabilities of Fiserv or Fiserv
Solutions, as the case may be, (including without limitation those re sulting
from or relating to demands, claims, actions or causes of action, assessments or
other losses, costs and expenses directly relating thereto, interest and
penalties thereon and reasonable attorneys' fees and expenses in respect
thereof) by reason of or resulting from: (i) Specified Liabilities (as
hereinafter defined) to the extent that they exceed $825,067; and (ii) any other
actions, suits or proceedings which were not disclosed and would have been
required to be disclosed in the Disclosure Schedule to the Merger Agreement if
known at the Effective Time related to events occurring or actions taken on or
prior to the Effective Time but not related to client contractual obligations
with respect to continuing operations; which amounts, or such lesser amounts as
shall be payable following reduction of such amount by claims made against
Fiserv Solutions, less any and all counterclaims or insurance proceeds which are
available to Fiserv Solutions or CTI with respect to clauses (i) and (ii), shall
be payable to the CTI Stockholders on the first anniversary of the Effective
Time, provided, however, that any claims still outstanding at the first
anniversary of the Effective Time will be resolved as soon as practicable. The
Representatives (as hereinafter defined), acting in consultation with the senior
management of Fiserv Solutions, shall resolve all claims presented with respect
to clauses (i) and (ii) and shall have the authority to utilize $1,500,000 of
the Holdback Shares in the resolution of such claims, provided, however, that to
the extent such claims exceed $1,500,000 they shall be resolved by the senior
management of Fiserv Solutions, acting in consultation with the Representatives.
In no event shall the actual damages chargeable by Fiserv or Fiserv Solutions
for claims arising pursuant to clauses (i) and (ii) exceed $3,000,000 in
aggregate and (I) of items considered "specific contingencies" under a "pooling
of interests" exceed ten percent of CTI Stock Value, or (II) of items considered
"general contingencies" under a "pooling of interests"
-23-
(x) exceed ten percent of the CTI Stock Value or (y) be resolved after one year
after the Effective Time. The term "Specified Liabilities" shall mean all
amounts to be paid or received (but not including interest) with respect thereto
after June 30, 1997 for the following: (w) all liabilities net of all assets of
discontinued operations, which as of June 30, 1997 were estimated to equal
$304,464; (x) all Taxes associated with the sale of discontinued operations and
all other Taxes payable for the periods ended June 30, 1997, which as of June
30, 1997 were estimated to equal $597,000; (y) any actions, suits or proceedings
listed in the Disclosure Schedule for subsection 5.01(l) of the Merger Agreement
which as of June 30, 1997 were estimated to equal $5,000; and (z) other possible
liabilities associated with clauses (w) and (x), which as of June 30, 1997 were
estimated to equal $18,603. Notwithstanding the foregoing, in no event shall
CTI be liable for any claim which is not raised on or before the day which is
289 days after the Effective Time.
As described above, if all of the Holdback Claims are resolved in favor of
Fiserv, the value received by CTI Stockholders will be approximately $1.18 per
share of CTI Common Stock. If there are no Holdback Claims or if all Holdback
Claims are resolved in favor of CTI, the value received by CTI Stockholders will
be approximately $1.35 per share of CTI Common Stock.
No later than 299 days subsequent to the Effective Time, Fiserv Solutions
shall deliver to a group of persons consisting of the Majority Stockholder,
Jonathan S. Beckstrand, David J. Rank and Mark Scott (collectively,
"Representatives") a list of all items subject to the Holdback, including the
Specified Liabilities, and the total claims relating to each item ("Holdback
Schedule"). If the Representatives dispute the correctness of the Holdback
Schedule, the Merger Agreement provides a mechanism for resolution of any
dispute, by an independent accounting firm if necessary. Within three business
days following final agreement on the contents of the Holdback Schedule, the
Escrow Agent shall return to Fiserv a number of shares, valued at the Effective
Time, of Fiserv Common Stock equal to the total claims listed on the Holdback
Schedule and/or deliver the remaining shares of Fiserv Common Stock to the CTI
Stockholders hereunder in accordance with previously received instructions of
the CTI Stockholders. Notwithstanding the foregoing, the Representatives may
elect, with respect to any item listed on the Holdback Schedule considered a
"specific contingency" under a "pooling of interests" that has not been finally
determined (a "Deferred Delivery Item"), to defer the return of shares from the
escrow to Fiserv relating to that portion of the "specific contingency" not so
determined until final determination thereof. The parties anticipate that such
specific contingencies will be resolved within a period of one year from final
agreement on the contents of the Holdback Schedule, but there can be no
assurance that such contingencies will be resolved within that time frame. A
number of shares of Fiserv Common Stock having a value equal to all "specific
contingencies" up to a maximum of 10 percent of the Merger consideration shall
be retained by the Escrow Agent until such "specific contingencies" shall have
been resolved. At the Effective Time, the Holdback Shares shall be issued to
the Escrow Agent. Upon final determination of the total claims relating to
each item of the Holdback Schedule, the Representatives and Fiserv shall (1)
instruct the Escrow Agent and the Exchange Agent to distribute to the CTI
Stockholders shares of Fiserv Common Stock or cash representing fractional
shares in an amount equal to the Holdback Shares valued at the Effective Time
less the total claims for all items listed on the Holdback Schedule and (2)
return Fiserv Common Stock to Fiserv valued at the Effective Time, in the amount
of the sum of the total claims relating to items listed on the Holdback Schedule
which are in respect of "general contingencies" or are in respect of "specific
contingencies" which are not Deferred Delivery Item. The Escrow Agent shall
continue to hold in Escrow an amount of Fiserv Common Stock equal to the sum of
the claims listed on the Holdback Schedule for each Deferred Delivery Item.
Upon resolution of the claims relating to all Deferred Delivery Items, the
Representatives shall instruct the Escrow Agent and the Exchange Agent to
distribute to the CTI Stockholders shares of Fiserv Common Stock or cash
representing fractional shares in an amount equal to the Holdback Shares which
remained in Escrow in respect of the Deferred Delivery Items less an amount of
Fiserv Common Stock ("Deferred Delivery Item Returned Stock"), valued at the
Effective Time, equal to the total damages which relate to the Deferred Delivery
Items and return the Deferred Delivery Item Returned Stock to Fiserv. Within 15
days of the Effective Time, the Representatives shall receive a one-time payment
of $10,000 each in consideration for their services hereunder. Fiserv Solutions
shall be responsible for all costs associated with the escrow, including the fee
of the Escrow Agent which is estimated to be $3,000. See Appendix A -
Agreement and Plan of Merger.
-24-
If, as of the Effective Time, Fiserv is not satisfied that the Merger can
be accounted for as a "pooling of interests" for accounting purposes, then
Fiserv may either elect to proceed with the Merger as a Tax-Free Reorganization
and account for the Merger under the purchase method of accounting or change the
Merger consideration from all stock to all cash and the Merger will not be
treated as a Tax-Free Reorganization. If the Merger is not a Tax-Free
Reorganization, the principal Federal income tax consequences, under currently
applicable law, would be as follows: (i) no gain or loss would be recognized by
Fiserv or CTI as a result of the Merger; (ii) gain or loss would be recognized
by the holders of CTI Common Stock upon the exchange of their CTI Common Stock
for Fiserv Common Stock or cash; (iii) the tax basis of Fiserv Common Stock to
be received by the holders of CTI Common Stock in the Merger would be the fair
market value of such Fiserv Common Stock as of the Effective Time; and (iv) the
holding period of Fiserv Common Stock to be received by the holders of CTI
Common Stock pursuant to the Merger would begin the day after the Effective
Time.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
IT DOES NOT ADDRESS EVERY ASPECT OF THE FEDERAL INCOME TAX LAWS THAT MAY BE
RELEVANT TO THE HOLDERS OF CTI COMMON STOCK IN LIGHT OF THEIR PERSONAL
CIRCUMSTANCES OR TO CERTAIN TYPES OF HOLDERS SUBJECT TO SPECIAL TAX TREATMENT
AND IS GENERALLY LIMITED TO PERSONS WHO HOLD CTI COMMON STOCK AS A CAPITAL
ASSET. IN ADDITION, IT DOES NOT DISCUSS ANY STATE, LOCAL OR FOREIGN OR OTHER
FEDERAL TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY
EXISTING PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS
THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE
FOREGOING ARE SUBJECT TO CHANGE RETROACTIVELY AS WELL AS PROSPECTIVELY AND ANY
SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION. EACH CTI
STOCKHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO HIM OR HER, INCLUDING THE APPLICATION AND EFFECT
OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
Conversion of Options to Purchase CTI Common Stock
At the Effective Time, each holder of an option to purchase shares of CTI
Common Stock (each, an "Option") granted under CTI's Directors' Stock Option
Plan or 1993 Stock Option Plan, 1995 Stock Option Plan or Non Statutory Stock
Option Plan (collectively, the "Option Plans") then outstanding will be assumed
by Fiserv and will be deemed to constitute an option to purchase, on the same
terms and conditions as were applicable under such Option at the Effective Time,
that number of shares of Fiserv Common Stock (with any fractional share of
Fiserv Common Stock being disregarded) equal to the product of the Conversion
Ratio and the number of shares of CTI Common Stock subject to such Option, at a
price per share (rounded up to the nearest full cent) equal to the exercise
price for the shares of CTI Common Stock subject to such Option divided by the
Conversion Ratio. All Options outstanding at the date of the approval of the
Merger Agreement by the CTI Stockholders will either be exercisable, or will
accelerate and become fully vested and exercisable upon such approval of the
Merger by the CTI Stockholders. As of June 30, 1997, Options to purchase
2,002,994 shares of CTI Common Stock were outstanding under the Option Plans at
exercise prices ranging from $1.00 to $6.00.
Conditions to the Merger
The obligations of Fiserv and CTI to consummate the Merger are subject to
the fulfillment or waiver (where permissible) of certain conditions, including:
(i) obtaining the approval of the CTI Stockholders; (ii) approval for quotation
on NASDAQ, subject to official notice of issuance, of the Fiserv Common Stock to
be issued in connection with the Merger; (iii) the effectiveness of the
Registration Statement of which this Proxy Statement/Prospectus is a part; (iv)
no order being entered in any action or proceeding or other legal restraint or
prohibition preventing the consummation of the Merger; (v) the receipt by each
party of various legal opinions and other certificates, consents, reports and
approvals from the other parties to the Merger and from third parties; (vi) the
accuracy in all material respects of the representations and warranties of each
party and compliance with or the waiver of all covenants and conditions by each
party; (vii) the redemption by CTI of the CTI's 1994 Series Preferred Stock in
accordance with its terms; (viii) the exercise, by the Majority Stockholder of
options to purchase 1,000,000 shares of CTI Common Stock at a price of $1.00 per
share; (ix) the completion of the previously planned disposition of CTI's
surgery center business units; (x) the owners of no more than 5 percent of the
CTI Common Stock shall have exercised Dissenters Rights in connection with the
transaction contemplated by the Merger Agreement; and (xi) the receipt by the
CTI
-27-
November 4, 1997
To The Board of Directors of CUSA Technologies, Inc.
986 West Atherton Drive
Salt Lake City, UT 84123
Re: Fairness Opinion - Proposed Merger of CUSA Technologies, Inc. with FISERV,
-----------------------------------------------------------------------------
Inc.
----
Gentlemen:
Houlihan Valuation Advisors ("HVA") has been retained by the Board of Directors
of CUSA Technologies, Inc. ("CTI" or "the Company") to issue a fairness opinion
for the proposed merger ("Transaction") between CTI and Fiserv, Inc. ("Fiserv").
The fairness opinion ("the Opinion") is issued from a financial point of view
from the perspective of the public shareholders of CTI. It is anticipated by
Company management that the Transaction will close in early February 1998. The
Opinion is as of November 4, 1997 and is valid as of that date. Circumstances
could change which would render this opinion invalid as of the actual closing
date. To be valid as of the closing date, the Opinion will have to be reviewed
and updated by HVA.
The Agreement and Plan of Merger among Fiserv, Inc., Fiserv Solutions, Inc.
("Fiserv Solutions") and CTI Technologies dated November 4, 1997 ("the Merger"),
provides for the acquisition of the Company by Fiserv in an all-stock
transaction valued at $24,873,500 ("the Transaction"). Under the terms of the
Agreement, Fiserv will acquire all of the outstanding shares of the Company
(18,451,599) for $1.348 per share, subject to a "holdback" of an amount of
Fiserv shares worth $3.0 million. The "holdback" shares will be placed in
escrow in respect to any claims arising from certain contingencies. At the close
of the transaction, each outstanding share of CTI common stock will be converted
into the right to receive such number of shares of Fiserv common stock as shall
equal the quotient of the CTI common stock value divided by an amount equal to
the average closing price of Fiserv common stock as reported on the National
Market System by NASDAQ for the 20 business days ending on the second business
day prior to the closing.
Based on the terms of the transaction and estimates of closing costs provided by
CTI management, the CTI shares are valued at $1.348 prior to any allowance for
holdbacks. If the full amount of the agreed upon holdback for contingent
liabilities of $3.0 million is absorbed by claims against the holdback, the net
value of CTI common stock is $1.185 per share. As of November 4, 1997 CTI
management estimated that the likely claim against the holdback will be in the
range of $200,000, resulting in a net transaction value per CTI share of $1.337
per share.
The Transaction will be accounted for as a pooling of interests. The terms of
the Merger are more fully set forth in the Merger Agreement.
B-1
In delivering this opinion, HVA has completed the following tasks:
. Reviewed CTI Annual Reports to Stockholders for the fiscal years ended
June 30, 1996 and 1997 on Form 10-K filed with the Securities and
Exchange Commission (the "SEC")
. Reviewed Fiserv Annual Reports on Form 10-K filed with the SEC for the
fiscal years ended December 31, 1996 and 1995
. Reviewed Fiserv Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997 filed with the
SEC
. Reviewed CTI's audited Consolidated Financial Statements for years ended
June 30, 1997, 1996 and 1995.
. Reviewed CTI's unaudited financial statements for the three months ending
September 30, 1997
. Reviewed CTI's projected income statements for continuing operations for
calendar years ending December 31, 1997 and 1998
. Reviewed the reported market prices and trading activity for CTI common
stock for the period of October 23, 1996 through November 4, 1997
. Reviewed the reported market prices and trading activity for Fiserv
common stock for the period of October 22, 1996 through November 4, 1997
. Reviewed transaction premium data prepared by Houlihan Lokey Howard &
Zukin as presented in Mergerstat Review 1997
. Discussed the financial condition, results of operations, business and
prospects of CTI and Fiserv with the management of each company
. Compared the results of operations and financial condition of CTI and
Fiserv with those of certain other publicly-traded data processing and
software firms that HVA deemed to be reasonably comparable to CTI and
Fiserv, as the case may be
. Reviewed the financial terms of certain recent transactions of CTI common
stock
. Reviewed a copy of the Agreement and Plan of Merger among Fiserv, Inc.,
Fiserv Solutions, Inc. and CTI Technologies, Inc. dated November 4, 1997
. Reviewed an analysis of Fiserv prepared by Edward S. Casco, Jr., CFA and
Stephen E. Kohler of BTAlex Brown Research dated November 14, 1997
In addition to a review of the above described documents, the following
analytical procedures were conducted in arriving at our Opinion:
. HVA met with representatives of the Company at the Company's
administrative offices in Salt Lake City, Utah and conducted discussions
regarding matters pertinent to our analysis. Inquiries were made with
certain officers of the Company who have senior responsibility for
operating matters regarding: (i) the operations, financial
B-2
condition, future prospects and projected operations and performance of
the Company; (ii) whether management is aware of any events or conditions
which might cause any of the assumptions set forth in this Opinion to be
incorrect; and (iii) whether management is aware of any material change
in the Company's assets, financial condition or business outlook since
June 30, 1997, the date of the Company's most recent audited financial
statements, or September 30, 1997, the date of the Company's most recent
internally generated financial statements.
. Certain financial forecasts and accompanying assumptions prepared by
Company management for the calendar years ending December 31, 1997 and
1998 were reviewed, and the assumptions underlying such forecasts were
discussed, with Company management
. Generally recognized financial analysis and valuation procedures were
undertaken to ascertain the financial condition of the Company as well as
to estimate its fair market value
. Performed such other analyses and reviewed and analyzed such other
information as HVA deemed appropriate
In rendering this opinion, HVA did not assume responsibility for independently
verifying, and did not independently verify, any financial or other information
concerning CTI and Fiserv furnished to it by CTI or Fiserv, or the publicly-
available financial and other information regarding CTI, Fiserv and other
software and data processing firms. HVA has assumed that all such information is
accurate and complete. HVA has further relied on assurances of management of CTI
and Fiserv that they are not aware of any facts that would make such financial
or other information relating to such entities inaccurate or misleading.
With respect to financial forecasts for CTI provided to HVA by CTI management,
HVA has assumed, for the purposes of this opinion, that the forecasts have been
reasonably prepared on bases reflecting the best available estimates and
judgments of its management at the time of preparation as to the future
financial performance of CTI. We are unaware of and have not received any
information which would lead us to believe that it was unreasonable to utilize
the aforementioned projections as part of our analysis related to the Opinion.
However, we assume no responsibility for the projections or the assumptions
relating to them.
HVA has assumed that there has been no material change in CTI's assets,
financial condition, results of operations, business or prospects since June 30,
1997 with the noted exception of the subsequent agreement by the Directors of
CTI to sell its surgery centers prior to the Merger. HVA did not undertake an
independent appraisal of the assets or liabilities of CTI nor was HVA furnished
with any such appraisals. HVA's conclusions and opinion are necessarily based
upon economic, market and other conditions and the information made available to
HVA as of the date of this opinion. HVA expresses no opinion on matters of
legal, regulatory, tax or accounting nature related to the Merger.
B-3
We have not been requested to, and did not, solicit third party indications of
interest in acquiring all or any part of the common stock of the Company.
Furthermore, at your request, we have not negotiated the Transaction or advised
you with respect to alternatives to it.
Limiting Conditions
The Opinion is subject to the following limiting conditions:
1. Neither HVA nor its principals have any present or intended interest in CTI
or Fiserve or in any related entities. HVA's fees for the Opinion are based
on professional time and a charge for the Opinion, and are in no way
contingent upon the final conclusions derived.
2. The Opinion is intended only for the specific use and purpose stated
herein. It is intended for no other uses and is not to be copied or given
to unauthorized persons without the direct written consent of HVA. The
Opinion and information contained herein are valid only for the stated
purpose and date of the study, and should in no way be construed to be
investment advice.
3. It is beyond the scope of the Opinion to render any opinion relative to the
solvency or insolvency of CTI or Fiserv either prior to or following the
Transaction. HVA has not been requested to render such an opinion, and
nothing in the Opinion should be construed as such.
4. This engagement is limited to the production of the Opinion and the
conclusions and opinions contained herein. HVA has no obligation to provide
future services (e.g., expert testimony in court or before governmental
agencies) related to the contents of the Opinion unless prior arrangements
for such services have been made.
It is our understanding that CTI's Board of Directors either has had or will
have the opportunity to make their own independent investigation of the
Transaction, and their decision to participate in the Transaction should be
based primarily on such investigation. Delivery of the Opinion to CTI's Board
of Directors is subject to the conditions, limitations and assumptions set forth
in the Opinion.
This Opinion is for the benefit of the Board of Directors of CTI and shall not
be relied upon by others and shall not be published or otherwise used, nor shall
any public references to HVA be made without our written consent. However,
notwithstanding the foregoing, HVA consents to a description of and the
inclusion of the text of its written Opinion in the proxy and prospectus to be
issued in connection with the special meeting of the Company's Stockholders.
This Opinion is not intended to be and does not constitute a recommendation to
any Stockholder as to how such Stockholder should vote with respect to the
Merger.
B-4
Conclusions
Based upon the foregoing and in reliance thereon, it is our opinion that the
proposed Transaction, assuming it is consummated as proposed, is fair from a
financial point of view to the public shareholders of CTI based on the
circumstances existing as of November 4, 1997. HVA reserves the right, in the
event that events or facts subsequent to the date of the Opinion become known
which have a material impact on the value of the Company, to supplement or
withdraw the Opinion prior to the closing date of the Transaction.
HOULIHAN VALUATION ADVISORS
/s/ Frederic L. Jones
- ------------------------------------
Frederic L. Jones, ASA
B-5