Blue Dot.: We have purchased 40 companies with an annual run rate of $227 million. Companies under Letter of Intent (LOI) total an additional 18 with an annual run rate of $79 million. Net income margin is approximately 4.5 percent. We will cover 21 states and 35 markets when the LOI companies are closed.

PM: Please summarize Blue Dot.'s market strategy.

Blue Dot.: Blue Dot. offers a wide range of services to residential and light commercial customers in both the service and replacement and new installation segments of the heating, air conditioning and plumbing industries. We believe that we can maximize growth and enhance our long-term position in these industries by participating in both segments.

We believe the service and replacement segment is particularly attractive, and will receive a significant amount of management focus due to the recurring nature of the work because it offers higher margins due to customers' demands for immediate, convenient and reliable services.

Blue Dot. also participates in the new installation segment so we can benefit from larger revenue projects, increased purchasing economies, the evening of seasonal work flows and the development of a database of future service and replacement customers. In addition, over time

Blue Dot. will add other types of related products and services as they evolve through customer demands, in tandem with deregulation of the energy and telecommunication markets.

PM: Consolidation seems to be progressing much faster in the commercial-industrial-institutional market sectors than in residential/light commercial. GroupMAC, for one, started out pretty much as a residential consolidator, but now seems more interested in the larger arena. Will we see Blue Dot. expanding into large commercial-industrial markets as well?

Blue Dot.: No. Our primary focus will remain on the residential/light commercial markets.

PM: Are you looking with equal interest at HVAC, plumbing and electrical contractors, or does one of those sectors look more attractive to you?

Blue Dot.: Our initial focus is on HVAC and plumbing contractors. While a few of our acquired companies offer residential and light commercial electrical services, we are not actively soliciting this business at the present time.

PM: Do you see new construction work as merely an adjunct to BlueDot.'s service orientation, or would you consider acquiring firms that are entirely or predominantly construction firms?

Blue Dot.: In general, we see this as an adjunct to the service and replacement business. We expect new construction to remain a significant factor in Blue Dot.'s business mix in the range of 20 percent to 30 percent, for the reasons stated in the response to question No. 2. We have not purchased any business that was 100 percent construction, nor are we likely to.

PM: What criteria do you look for in an acquisition candidate?

Blue Dot.: The three most important criteria that we look for are management, management, management. Beyond that, they neeed to be a growing, profitable company located in a major market, with good operating profit margins. Also, their business mix needs to be supportive of Blue Dot.'s overall strategy.

PM: What do you see to be Blue Dot.'s competitive edge vis-a-vis the other PHC industry consolidatorsÉ

A. as someone a contractor should consider selling to, and

B. as an operating company?

Blue Dot.: We believe that Blue Dot. has a superior market strategy and the ability to execute it; certain aspects we consider to be proprietary.

A major differentiating factor for us is that we are backed by a 75-year-old NYSE company that has made a long-term commitment to our industries. NorthWestern Corp. is a rapidly growing, diversified services and solutions company that has made a substantial investment in Blue Dot., and will remain a stabilizing influence for the foreseeable future. Said another way, Blue Dot. is here to stay and has the financial resources to go the long haul.

Importantly for our companies, the senior management staff has substantial experience in the service in the HVAC, plumbing and related services business. Our management team is not a group of professional consolidators, rather they know and understand how to operate and grow a service business.

PM: How does your status as a utility company subsidiary benefit Blue Dot. in the marketplace?

Blue Dot.: As mentioned earlier, NorthWestern Corp. is our strategic partner and financial sponsor. It should be pointed out that NorthWestern Corp. is not a utility, but a diversified service and solutions company. NorthWestern does own a small utility company that services customers in South Dakota and Nebraska. Of the $2 billion of pro forma revenue in 1998, only $146 million, or 7.3 percent, was related to the small utility company that NorthWestern owns.

PM: Tell us what role you think utility companies in general will play in the increasingly consolidated PHC marketplace.

Blue Dot.: We think that utility companies will become more active in acquiring heating, air conditioning and plumbing companies in their respective marketplaces. Some of the larger utilities may attempt a national consolidation. We think these non-traditional competitors will play an increasing role. We welcome these non-traditional competitors, as long as the playing field remains level without cross-subsidization.

PM: What is your best estimate for an IPO timetable, which Blue Dot. postponed last year in view of dim prospects for IPOs on Wall Street?

Blue Dot.: We are ready to go public as soon as the IPO market for great, small cap companies opens up. We don't know when that may be, but we continue to monitor the situation closely. We currently have an unused $135 million credit facility available to fuel acquisitions and growth in the foreseeable future. As previously stated, NorthWestern remains commited to our strategy and continues to fund acqusitions.

PM: Stock performance of all the public consolidators has been unimpressive to downright lousy over the last year or so. Why do you think Wall Street is not reacting more enthusiastically to the PHC industry consolidation movement?

Blue Dot.: The industry is young and the markets have not been kind to any of the small cap companies. In addition, some of the public companies have not been able to achieve their expected results. This has led to disappointment by Wall Street analysts, which has transferred to the industry in total. Over time, however, as the industry is fundamentally sound and growing, the operating results will improve and the stock prices should firm up as long-term track records are established.

PM: Most industry observers scratched their heads in bemusement when you changed your name from ServiCenter to Blue Dot. (myself included). I know you did extensive market research to come up with it. Tell us why you think it's an effective name for a service company.

Blue Dot.: Watch and see. Nike, Xerox, Häagen-Dazs, Lucent, etc. have all done fine. So will we. It just takes getting used to.

PM: How quickly will you phase in the Blue Dot. name for companies acquired?

Blue Dot.: The rebranding strategy is based upon a number of complex factors, generally to happen over a three- to five-year period.

PM: What, if any, programs do you have underway or planned for service technician training and management training?

Blue Dot.: We have recently hired a vice president of Management Development, whose primary responsibility will be to create a comprehensive development curriculum for Blue Dot. With regard to service technician training, each location is currently responsible for this process. We expect to bring corporate resources to bear later this year to enhance training on a consistent national basis.

PM: Have you established any preferred provider or group-buying arrangements with any vendors yet? If so, please name them.

Blue Dot.: We have established certain preferred provider relationships with the major equipment manufacturers and various parts suppliers.

PM: Do you encourage your acquired companies to continue belonging to trade assocations such as PHCC, ACCA, NECA, etc., or do you intend to have them withdraw?

Blue Dot.: All of our companies are members of ACCA and PHCC. We support these organizations as raising the bar of our industries. We do ask that the acquired companies withdraw from their MIX groups, as we consider some of the Blue Dot. systems and information proprietary.

PM: What is your assessment of ServiceMaster's recent purchase of ARS? Do you think we'll see any other "super-consolidations" in the near future?

Blue Dot.: ARS was a consolidation of many solid companies. ServiceMaster will need to take time to restore the company to its potential. We have confidence that ServiceMaster has the ability to improve ARS, and we welcome good competitors to improve the analysts' perception of the industry. Judging by the changes and their rapidity in our industry, I would not rule out consolidation of consolidators.

PM: Mr. Johnson, as a former Roto-Rooter executive, please assess that company's strengths and weaknesses as you see them in a consolidated marketplace.

Blue Dot.: I think that Roto-Rooter is a great company. I do not think that it is appropriate for me to comment on their strengths and weaknesses.

PM: Please tell us where you see Blue Dot. in five years. Please also comment about what the increasingly consolidated PHC marketplace will look like then.

Blue Dot.: In five years, Blue Dot. should be one of the top three players in the consolidating heating, a/c and plumbing markets.

Consolidation activity will continue for the next 15-plus years, as it has in other consolidated industries. New players will emerge and others will die. The winners and the losers will be differentiated by their strategy and quality of execution.

PM: Will small, independent service companies still be viable in the years to come?

Blue Dot.: We believe that there will always be room for the independent contractor. Historically, in other consolidating industries, independents make up about two-thirds of the industry participants. We would not expect our industry to be any different.

PM: Please comment on any other issue I may have neglected that you feel is important to the industry or about Blue Dot..

Blue Dot.: Entrance by the equipment manufacturers into the service and installation side of our industry will create a new set of competitors.

It will be interesting to see how the consolidators and the independent contractors react to their suppliers becoming competitors and whether this is a viable strategy for the manufacturers in the long term.