<SEQUENCE>4

<FILENAME>file004.txt

<DESCRIPTION>PRESENTATION MATERIALS, DATED MAY 4, 2001 PREPARED

<TEXT>



<PAGE>











                                  CONFIDENTIAL

                                FAIRNESS OPINION







                            PREPARED EXCLUSIVELY FOR







                               SPECIAL COMMITTEE

                             THE BOARD OF DIRECTORS







                             SPECIALTY CATALOG CORP.









                             BURNHAM SECURITIES INC.





MAY 4, 2001                                               RICHARD LEWISOHN, III

                                                       SENIOR MANAGING DIRECTOR



                                                                    CALVIN CHIN

                                                                      ASSOCIATE



                                                             ROBERT GERSTENFELD

                                                                      ASSOCIATE

<PAGE>







                                TABLE OF CONTENTS



TAB

---

1.   SUMMARY



         COMPANY OVERVIEW



2.   VALUATION ANALYSIS



         PREFACE



         METHODOLOGY



         MARKET MULTIPLE ANALYSIS

         COMPARABLE TRANSACTIONS MULTIPLE

         DISCOUNTED CASH FLOW

         STOCK BUYBACK



3.   VALUATION ESTIMATES



4.   MARKET MULTIPLE



     DESCRIPTION OF COMPARABLE COMPANIES

     COMPANY PROFILES



5.   COMPARABLE TRANSACTIONS MULTIPLE



6.   DISCOUNTED CASH FLOW



7.   STOCK BUYBACK



8.   VALUATION SUMMARY



9.   KEY CONSIDERATIONS AND CONCLUSION



EXHIBITS

--------

A.   STOCK CHART AND TRADING HISTORY



B.   LETTER OF ENGAGEMENT



C.   FAIRNESS OPINION



D.   COMPANY ANNUAL REPORT FOR THE YEAR ENDING DECEMBER 31, 2000 (INSERTION)





<PAGE>







                                     SUMMARY

As of April 30, 2001 Burnham Securities Inc. ("Burnham") was engaged by the

Independent Committee of the Board of Directors of Specialty Catalog Corp. ("SC"

or the "Company") to render a fairness opinion with regard to the contemplated

acquisition for cash ($3.75 per share) by an entity formed by Mr. Guy Naggar and

certain other shareholders of the Company (the "Purchaser") of all the

outstanding shares of the Company not presently owned by Mr. Naggar and such

other shareholders (the "Proposed Transaction").



Specialty Catalog targets niche consumer categories, primarily via direct

marketing. SC Direct, its principal operating subsidiary in the United States,

is the leading retailer of women's wigs and hairpieces in the U.S. Daxbourne

International ("Daxbourne"), acquired by SC in 1997, is a leading United Kingdom

retailer and wholesaler of women's wigs and hairpieces. SC Publishing, another

subsidiary of SC Direct, sells continuing education courses to nurses and CPA's.

In September, 1999 it acquired Maryland-based American Healthcare Institute, a

sponsor of approximately 600 continuing education seminars annually for nurses

and other medical professionals.



Financial Summary



The Company's 10K for the year ended 12/30/00 reflected annual revenues of $60.9

million as compared with $54.5 million for the previous year. Operating income

rose 27.1% to $2.86 million as compared with $2.25 million a year earlier.

Overall, the firm had fully diluted net earnings of $1.1 million, or $0.25 per

share on 4,530,750 common shares outstanding, versus net income of $799,486, or

$0.17 per share on 4,684,874 common shares outstanding in the prior period.



As reported by the Company on April 25, first quarter results compared favorably

with the initial three months of fiscal 2000. Revenues rose de minimisly to

$16.5 million from $16.1 million. However, cost cutting efforts lowered

operating expenses by 8% which resulted in operating income of $930,000 versus

$149,000 last year. Net income after taxes and adjustments was $240,000, or $

0.09, compared with a loss of one cent in 2000.



The improved results this year were a function of reduced operating expense

ratios and lower merchandise return rates in SC's estimable wig and hairpiece

entity, Paula Young, as well as a more focused advertising budget. The Company's

Afro-American catalog, Especially Yours, generated improved results, while SC's

British subsidiary, benefiting from the recent acquisition of the Company's

European licensee, increased its EBITDA contribution by 15%. American Healthcare

Institute, Inc. ("AHI"), one of SC's continuing education schools, was burdened

with re-location expenses to South Easton, MA of $200,000. From a balance sheet

perspective, as of 4/1/01, SC's Shareholder Equity rose year-to-year by $1.3

million to $9 million, or $2.00 per share.



Due to the recent restructuring of the Company's financing accommodations with

its bank, SC reflected a positive working capital of $1.6 million versus last

year's deficit of $3.3 million, a meaningful improvement year-to-year.

Notwithstanding this improvement, it appears that SC will require additional

capital if it is to profitably sustain a growing level of sales in the future.



To an extent, fiscal year 2000 and the first quarter of this year have been a

period of transition and repositioning for SC. In the fourth quarter of 1999,

the Company discontinued a product line, Paula's Hatbox, and incurred a pre-tax

write-off of $730,000. Also, a newly installed MIS, that was scheduled to be

operational late in 1999, did not become functional until the first quarter







<PAGE>



of 2000. In addition, the Company had to absorb almost $700,000 of expenses due

to a proposed acquisition of SC at $5 per share that terminated in the first

quarter of 2000. Furthermore, the Company expended significant resources in its

unsuccessful attempt to acquire Hair Club for Men. Notwithstanding the

aforementioned, SC functioned with a CEO-in-name-only until July, 2000 when Mr.

Joseph Grabowski was hired to shepherd the corporation. Pre-tax recruiting and

severance costs of $500,000 were incurred. Also, in December of 2000, the

Company entered into a $12.25 million credit agreement with Fleet National Bank,

for the purpose of refinancing its existing senior debt and to provide for

corporate working capital needs.



Under Mr. Grabowski's stewardship, SC has implemented a specific set of programs

to stem the tide of returns which were occurring in excess of 50% on certain

product lines last Fall. Also, Wigs by Paula, the Company's flagship catalogue,

de-emphasized "beauty, fashion and fun" and took on a more focused, hard-hitting

approach that produced commendable fourth quarter results. Fixed salary overhead

was diminished by 14%; AHI was relocated to South Easton (in early 2001); and,

as noted earlier, a more flexible credit line was negotiated with SC's bank.



In undertaking our analysis as to the fairness of the Proposed Transaction, we

have relied on traditional valuation techniques, conducted other financial

studies and analyses and performed such other investigations and took into

account such other factors as we deemed necessary or appropriate for purposes of

the opinion expressed herein, including:



1.   publicly available information concerning SC since 12/31/95;



2.   certain financial statements and other financial and operating data

     concerning SC prepared by the management of the Company;



3.   certain financial projections prepared by the management of SC with regard

     to its business prospects;



4.   discussing the past and current operations and financial condition and the

     prospects of SC with senior executives of SC;



5.   visiting the South Easton, MA facility of SC and engaging in discussions

     with management;



6.   comparing the financial performance of SC and the prices and trading

     activity of SC Common Stock with that of certain other comparable

     publicly-traded companies and their securities;



7.   comparing the Proposed Transaction with other transactions involving

     public and private companies that we deemed to be comparable;



8.   the average price per share paid by SC for the 144,000 shares purchased in

     the open market in 1999 and 2000;



9.   analyzing transactions concluded by SC (Daxbourne and AHI);



10.  the dearth of interest in acquiring SC by 53 candidates less than two

     years ago and the failed acquisition of the Company last year;



11.  the potential consequences to SC shareholders if the notice to delist SC

     shares from NASDAQ were to become effective; and



12.  the public announcements and filings relating to the Proposed Transaction

     and the drafts of the Merger Agreement as they became available and

     certain related documents.





<PAGE>







                               VALUATION ANALYSIS



PREFACE



The following analyses are based upon information provided to us by the

management of SC. Certain other information regarding comparable companies has

been obtained through publicly available databases. We have reviewed

management's projections without adjustments and have relied upon such

projections without independent verification. We believe that management's view

of its business plans and forecasts are realistic and achievable, presuming that

their assumptions come to pass. Our valuation is based upon economic, market and

financial information available as of the date of our fairness opinion.



METHODOLOGY



The following is a brief description of the methods used to estimate the

valuation range fairness of the consideration to be received by the shareholders

of SC.



1.  MARKET MULTIPLE ANALYSIS



This method utilizes certain market information from selected comparable

companies that are in comparable businesses and have similar sales levels,

growth prospects and overall profit margins.



Based on generally accepted measures of value in the public equity markets, the

following market valuation parameters were used:



  o    Price to Sales

  o    Enterprise Value to EBITDA

  o    Price to Earnings

  o    Price to Cash Flow

  o    Price to Book



Each market parameter (or "multiple") is calculated and represents an average of

comparable companies that is adjusted and normalized for market extremes. In

order to make the multiples meaningful, certain multiples are mathematically

adjusted to smooth out companies for which the values may be unrealistically

high or low. This can occur during periods of extreme market optimism or

pessimism.



2.  COMPARABLE TRANSACTIONS MULTIPLE



This method is based on a review of comparable transactions in the

catalog/specialty distributor industry over a two-year period. These

transactions provide us with a better picture of how companies were actually

valued by market participants with regard to the size, structure, and value

based on the implied and explicit multiples. These transactions were based on

the actual considerations paid for a comparable business or segment thereof. The

following multiples are generally accepted as meaningful in the marketplace:



  o    Total Invested Capital to Revenues





<PAGE>



  o    Total Invested Capital to EBITDA



Deal equity is defined as the cash or shares offered for the targeted company in

a proposed or completed transaction. The total invested capital represents the

total amount of capital including debt and equity offered in the deal.



Each market parameter (or "multiple") is calculated and represents an average of

comparable transactions that is adjusted for marketplace conditions based on

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC