-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BuzlRREA6D095BegB82rC92tMZvwxcGyMkRS805q9MKVAcu+0vtHKIduOFNX37V8 tM06qKDJz7UULEFH9BkfYA== 0000950123-95-002456.txt : 19950830 0000950123-95-002456.hdr.sgml : 19950830 ACCESSION NUMBER: 0000950123-95-002456 CONFORMED SUBMISSION TYPE: PRE13E3 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19950828 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BIC CORP CENTRAL INDEX KEY: 0000011975 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 060735597 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE13E3 SEC ACT: 1934 Act SEC FILE NUMBER: 005-12083 FILM NUMBER: 95567899 BUSINESS ADDRESS: STREET 1: 500 BIC DR CITY: MILFORD STATE: CT ZIP: 06460 BUSINESS PHONE: 2037832000 MAIL ADDRESS: STREET 1: 500 BIC DRIVE CITY: MILFORD STATE: CT ZIP: 06460 FORMER COMPANY: FORMER CONFORMED NAME: BIC PEN CORP DATE OF NAME CHANGE: 19820607 FORMER COMPANY: FORMER CONFORMED NAME: WATERMAN BIC PEN CORP DATE OF NAME CHANGE: 19720113 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BIC CORP CENTRAL INDEX KEY: 0000011975 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 060735597 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE13E3 BUSINESS ADDRESS: STREET 1: 500 BIC DR CITY: MILFORD STATE: CT ZIP: 06460 BUSINESS PHONE: 2037832000 MAIL ADDRESS: STREET 1: 500 BIC DRIVE CITY: MILFORD STATE: CT ZIP: 06460 FORMER COMPANY: FORMER CONFORMED NAME: BIC PEN CORP DATE OF NAME CHANGE: 19820607 FORMER COMPANY: FORMER CONFORMED NAME: WATERMAN BIC PEN CORP DATE OF NAME CHANGE: 19720113 PRE13E3 1 SCHEDULE 13E-3 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13E-3 RULE 13E-3 TRANSACTION STATEMENT (PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934) BIC CORPORATION (NAME OF ISSUER) SOCIETE BIC S.A., BIC MERGER CORPORATION, BRUNO BICH, AS VOTING TRUSTEE, AND BIC CORPORATION (NAME OF PERSON(S) FILING STATEMENT) COMMON SHARES, $1.00 PAR VALUE (TITLE OF CLASS OF SECURITIES) (CUSIP NUMBER OF CLASS OF SECURITIES) THOMAS M. KELLEHER, ESQ. GENERAL COUNSEL AND SECRETARY BIC CORPORATION 500 BIC DRIVE MILFORD, CT 06460 (203) 783-2000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSONS FILING STATEMENT) COPIES TO: MARIE-AIMEE BICH-DUFOUR ANDREW L. SOMMER PETER D. LYONS VICE PRESIDENT AND SECRETARY DEBEVOISE & PLIMPTON SHEARMAN & STERLING SOCIETE BIC S.A. 875 THIRD AVENUE 599 LEXINGTON AVENUE 9, RUE PETIT NEW YORK, NY 10022 NEW YORK, NY 10022 92110 CLICHY FRANCE (212) 909-6000 (212) 848-4000 011-331-45-19-52-00
This statement is filed in connection with (check the appropriate box): i. /X/ The filing of solicitation materials or an information statement subject to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation 14C [17 CFR 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [sec. 240.13e-3(c)] under the Securities Exchange Act of 1934. ii. / / The filing of a registration statement under the Securities Act of 1933. iii. / / A tender offer. iv. / / None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: /X/ CALCULATION OF FILING FEE - ------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE** - ------------------------------------------------------------------------------------------------------------- $218,878,038................................................................ $43,775.61 - ------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------
* 5,404,396 Common Shares, par value $1.00 per share, of BIC Corporation (the "Common Shares") to be converted into the right to receive $40.50 per share in cash. ** The amount of the filing fee, calculated in accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934 equals 1/50th of one per cent of the transaction value. /X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement, number or the form or Schedule and the date of its filing. Amount Previously Paid: $43,775.61 Form or Registration No.: Schedule 14A Filing Party: BIC Corporation Date Filed: August 25, 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INTRODUCTION This Schedule 13E-3 Transaction Statement (the "Statement") is being filed by Societe BIC S.A., a societe anonyme organized under the laws of the Republic of France ("Parent"), BIC Merger Corporation ("Mergeco"), a New York corporation and a majority-owned subsidiary of Parent, Bruno Bich, as voting trustee (the "Voting Trustee") pursuant to the Voting Trust Agreement, dated as of February 5, 1991, by and among the Company, Parent, Marcel L. Bich, Neil A. Pollio, Bruno Bich and Francois Bich (as amended, the "Voting Trust Agreement") and BIC Corporation, a New York corporation (the "Company") in connection with an Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger Agreement"), by and among Parent, Mergeco, the Company and Bruno Bich, as Voting Trustee. The following Cross Reference Sheet is supplied pursuant to General Instruction F to Schedule 13E-3 and shows the location in the preliminary proxy statement filed by the Company with the Securities and Exchange Commission contemporaneously herewith (including all annexes and schedules thereto, the "Preliminary Proxy Statement") of the information required to be included in response to the items of this Statement. The information in the Preliminary Proxy Statement, a copy of which is attached hereto as Exhibit (d)(1), is hereby expressly incorporated by reference and the responses to each item are qualified in their entirety by the provisions of the Preliminary Proxy Statement. i 3 CROSS REFERENCE SHEET SHOWING LOCATION IN PRELIMINARY PROXY STATEMENT OF INFORMATION REQUIRED BY ITEMS IN SCHEDULE 13E-3
LOCATION IN PRELIMINARY SCHEDULE 13E-3 ITEM PROXY STATEMENT - ------------------------------------------------- ------------------------------------------- 1. Issuer and Class of Security Subject to the Transaction Item 1(a).................................. Cover Page and "The Parties" Item 1(b).................................. Cover Page and "Introduction -- Record Date; Quorum; Required Vote" Item 1(c).................................. "Market Prices and Dividends" Item 1(d).................................. "Market Prices and Dividends" Item 1(e).................................. Not applicable Item 1(f).................................. "Transactions by Certain Persons in Common Shares" 2. Identity and Background Items 2(a)-(d) and (g)..................... Cover Page; "Introduction -- General" and "-- The Special Meeting"; "The Parties"; and "Management of Parent, Mergeco and the Company" Items 2(e) and (f)......................... Not applicable 3. Past Contacts, Transactions or Negotiations Item 3(a)(1)............................... "Special Factors -- Interest of Certain Persons in the Merger" Item 3(a)(2) and (b)....................... "Special Factors -- Background of the Merger" and "-- Certain Litigation" 4. Terms of Transaction Item 4(a).................................. "Introduction -- Record Date; Quorum; Required Vote"; and "The Merger" Item 4(b).................................. "Introduction -- Record Date; Quorum; Required Vote"; "Special Factors -- Interest of Certain Persons in the Merger"; and "The Merger -- General -- Treatment of Shares in the Merger" 5. Plans or Proposals of the Issuer or Affiliate Items 5(a)-(g)............................. "Special Factors -- Certain Effects of the Merger"; "-- Plans for the Company After the Merger", and "-- Interest of Certain Persons in the Merger" 6. Source and Amounts of Funds or Other Consideration Item 6(a).................................. "The Merger -- Payment for Public Shares; Sources of Funds" Item 6(b).................................. "Special Factors -- Fees and Expenses" Item 6(c) and (d).......................... Not applicable 7. Purpose(s), Alternatives, Reasons and Effects Items 7(a) and (c)......................... "Special Factors -- Background of the Merger" and "-- Purpose and Structure of the Merger" Item 7(b).................................. "Special Factors -- Background of the Merger"
ii 4
LOCATION IN PRELIMINARY SCHEDULE 13E-3 ITEM PROXY STATEMENT - ------------------------------------------------- ------------------------------------------- Item 7(d).................................. "Special Factors -- Background of the Merger," "-- Certain Effects of the Merger"; "-- Plans for the Company After the Merger" and "-- Certain U.S. Federal Income Tax Consequences"; and "The Merger -- Accounting Treatment" 8. Fairness of the Transaction Item 8(a).................................. "Special Factors -- Recommendations of the Special Committee and Board of Directors of the Company; Fairness of the Merger" Item 8(b).................................. "Special Factors -- Background of the Merger," "-- Recommendations of the Special Committee and Board of Directors of the Company; Fairness of the Merger,"; "-- Purpose and Structure of the Merger"; and "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" Item 8(c).................................. "Introduction -- Record Date; Quorum; Required Vote"; and "The Merger -- General -- Conditions to the Merger; Amendment, Waiver and Termination" Item 8(d).................................. "Special Factors -- Background of the Merger," "-- Recommendations of the Special Committee and Board of Directors of the Company; Fairness of the Merger" and "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" Item 8(e).................................. "Special Factors -- Background of the Merger" Item 8(f).................................. Not applicable 9. Reports, Opinions, Appraisals and Certain Negotiations Items 9(a)-(c)............................. "Special Factors -- Background of the Merger" and "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses"; Exhibit(b)(1) 10. Interest in Securities of the Issuer....... Item 10(a)................................. "Introduction -- Record Date; Quorum; Required Vote"; "Special Factors -- Interest of Certain Persons in the Merger"; and "Ownership of Common Shares" Item 10(b)................................. "Transactions by Certain Persons in Common Shares" 11. Contracts, Arrangements or Understandings with Respect to the Issuer's Securities.... "Special Factors -- Interest of Certain Persons in the Merger -- Voting Trust Agreement"; "The Merger"; Annex A to the Preliminary Proxy Statement; and Exhibit(c)(2), (c)(3) and (c)(4) 12. Present Intention and Recommendation of Certain Persons with Regard to the Transaction Items 12(a)-(b)............................ "Introduction -- The Special Meeting" and "-- Record Date; Quorum; Required Vote"; and "Special Factors -- Recommendations of the Special Committee and Board of Directors of the Company; Fairness of the Merger" and "-- Interest of Certain Persons in the Merger" 13. Other Provisions of the Transaction Item 13(a)................................. "The Merger -- Dissenters' Rights" and Annex C to the Preliminary Proxy Statement Items 13(b) and (c)........................ Not applicable
iii 5
LOCATION IN PRELIMINARY SCHEDULE 13E-3 ITEM PROXY STATEMENT - ------------------------------------------------- ------------------------------------------- 14. Financial Information Item 14(a)................................. "Selected Consolidated Financial Data of the Company"; Exhibits (g)(1) and (g)(2) Item 14(b)................................. Not applicable 15. Persons and Assets Employed, Retained or Utilized Items 15(a) and (b)........................ "Introduction -- Solicitation of Proxies"; "Special Factors -- Fees and Expenses"; "-- Background of the Merger"; and "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" 16. Additional Information..................... Preliminary Proxy Statement in its entirety 17. Material to be Filed as Exhibits........... Separately included herewith
iv 6 ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION. (a) The name of the issuer of the class of equity security which is the subject of the Rule 13e-3 transaction is BIC Corporation and the address of its principal executive offices is 500 BIC Drive, Milford, CT 06460. All cross references in this Statement refer to captions in the Preliminary Proxy Statement. (b) The relevant information set forth on the Cover Page of the Preliminary Proxy Statement and under the caption "Introduction -- Record Date; Quorum; Required Vote" is incorporated herein by reference. (c) The relevant information set forth under the caption "Market Price and Dividends" is incorporated herein by reference. (d) The relevant information set forth under the caption "Market Price and Dividends" is incorporated herein by reference. (e) Not Applicable. (f) The relevant information set forth in "Transactions by Certain Persons in Common Shares" is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement is being filed by Parent, Mergeco, Bruno Bich, as Voting Trustee, and the Company (the last being the issuer of the subject security). The relevant information set forth on the Cover Page of the Preliminary Proxy Statement and set forth under the captions "Introduction -- General" and "-- the Special Meeting," "The Parties" and "Management of Parent, Mergeco and the Company" is incorporated herein by reference. (e) and (f) During the last 5 years, none of Parent, Mergeco, the Voting Trustee and the Company or, to the best of Parent's, Mergeco's, the Voting Trustee's or the Company's knowledge, any of the persons listed in "Management of Parent, Mergeco and the Company" (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violations of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS. (a)(1) The relevant information set forth under the caption "Special Factors -- Interest of Certain Persons in the Merger" is incorporated herein by reference. (a)(2) and (b) The relevant information set forth under the captions "Special Factors -- Background of the Merger" and "-- Certain Litigation" is incorporated herein by reference. ITEM 4. TERMS OF THE TRANSACTION. (a) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote" and "The Merger" is incorporated herein by reference. (b) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Interest of Certain Persons in the Merger," and "The Merger -- General -- Treatment of Shares in the Merger" is incorporated herein by reference. ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE. (a)-(g) The relevant information set forth under the caption "Special Factors -- Certain Effects of the Merger"; "-- Plans for the Company After the Merger" and "-- Interest of Certain Persons in the Merger" is incorporated herein by reference. 1 7 ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION. (a) The relevant information set forth under the caption "The Merger -- Payment for Public Shares; Sources of Funds" is incorporated herein by reference. (b) The relevant information set forth under the caption "Special Factors -- Fees and Expenses" is incorporated herein by reference. (c) and (d) Not applicable. ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS. (a) and (c) The relevant information set forth under the captions "Special Factors -- Background of the Merger" and "-- Purpose and Structure of the Merger" is incorporated herein by reference. (b) The relevant information set forth under the caption "Special Factors -- Background of the Merger" is incorporated herein by reference. (d) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Certain Effects of the Merger", "-- Plans for Company After the Merger" and "-- Certain U.S. Federal Income Tax Consequences" and "The Merger -- Accounting Treatment" is incorporated herein by reference. ITEM 8. FAIRNESS OF THE TRANSACTION. (a) The relevant information set forth under the captions "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" is incorporated herein by reference. (b) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger," "-- Purpose and Structure of the Merger", and "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" is incorporated herein by reference. (c) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," and "The Merger -- Conditions to the Merger; Amendment, Waiver and Termination" is incorporated herein by reference. (d) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger", and "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" is incorporated herein by reference. (e) The relevant information set forth under the caption "Special Factors -- Background of the Merger" is incorporated herein by reference. (f) Not applicable. ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS. (a)-(c) The relevant information set forth under the captions "Special Factors -- Background of the Merger", and "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" and in Exhibit (b)(1) to this Statement is incorporated herein by reference. ITEM 10. INTEREST IN SECURITIES OF THE ISSUER. (a) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote"; "Special Factors -- Interest of Certain Persons in the Merger" and "Ownership of Common Shares" is incorporated herein by reference. 2 8 (b) The relevant information set forth in "Transactions by Certain Persons in Common Shares" is incorporated herein by reference. ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S SECURITIES. The relevant information set forth under the captions "Special Factors -- Interest of Certain Persons in the Merger" and "The Merger" and in Annex A to the Preliminary Proxy Statement is incorporated herein by reference, and pursuant to Instruction D to Schedule 13E-3, the Voting Trust Agreement, dated as of February 5, 1991, by and among the Company, Parent, Marcel L. Bich, Neil Pollio, Bruno Bich and Francois Bich, as amended February 3, 1992, for the purpose of naming Alexander Alexiades as successor voting trustee and the Amendment to Voting Trust Agreement, dated July 5, 1995, is incorporated herein by reference. ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO THE TRANSACTION. (a) and (b) The relevant information set forth under the captions "Introduction -- The Special Meeting"; "-- Record Date; Quorum; Required Vote"; "Special Factors -- Recommendations of the Special Committee and Board of Directors; Fairness of the Merger" and "-- Interest of Certain Persons in the Merger" is incorporated herein by reference. ITEM 13. OTHER PROVISIONS OF THE TRANSACTION. (a) The relevant information set forth under the caption "The Merger -- Dissenters' Rights" and in Annex C to the Preliminary Proxy Statement is incorporated herein by reference. (b) and (c) Not applicable. ITEM 14. FINANCIAL INFORMATION. (a) The relevant information set forth under the caption "Selected Consolidated Financial Data of the Company" in the Preliminary Proxy Statement is incorporated by reference herein and, pursuant to Instruction D to Schedule 13E-3, the following are incorporated by reference herein: (i) the "Consolidated Financial Statements and Financial Statement Schedules" from the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1995 (copies of which is filed as Exhibit (g)(1) to this Statement); and (ii) Part I, "Financial Information," Item 1, "Condensed Consolidated Financial Statements" from the Company's Quarterly Report on Form 10-Q for the quarter ended July 2, 1995 (copies of which is filed as Exhibit (g)(2) to this Statement). (b) Not applicable. ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED. (a) and (b) The relevant information set forth under the captions "Introduction -- Solicitation of Proxies", "Special Factors -- Fees and Expenses"; "-- Background of the Merger", "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" is incorporated herein by reference. ITEM 16. ADDITIONAL INFORMATION. The information set forth in the Preliminary Proxy Statement is incorporated herein by reference in its entirety. 3 9 ITEM 17. MATERIAL TO BE FILED AS EXHIBITS. (a) Not applicable. (b)(1) Form of opinion of Goldman, Sachs & Co. is incorporated by reference from Annex B to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto. (b)(2) A report by Goldman, Sachs & Co. to the Special Committee, dated August 15, 1995, on certain financial analyses. (b)(3) A report by Donaldson, Lufkin & Jenrette Securities Corporation to Parent, dated June 22, 1995, on certain financial analyses. (b)(4) A report by Donaldson, Lufkin & Jenrette Securities Corporation to Parent, dated July 10, 1995, on certain financial analyses. (c)(1) Agreement and Plan of Merger, dated as of August 15, 1995, by and among Parent, Mergeco, the Company and Bruno Bich, as Voting Trustee, is incorporated by reference from Annex A to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto. (c)(2) Voting Trust Agreement, dated as of February 5, 1991, by and among the Company, Parent, Marcel L. Bich, Neil Pollio, Bruno Bich and Francois Bich. (c)(3) Amendment to Voting Trust Agreement, dated as of February 3, 1992, by and among the Company, Parent, Marcel L. Bich, Bruno Bich, Francois Bich and Alexander Alexiades. (c)(4) Amendment No. 2 to Voting Trust Agreement, dated as of July 5, 1993, by and among the Company, Parent, Marcel L. Bich, Bruno Bich, Alexander Alexiades and Bermuda Trust Company Limited. (d)(1) Preliminary Proxy Statement of the Company for the Special Meeting of Shareholders of the Company. (e)(1) Statement of appraisal rights is incorporated by reference from Annex C to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto. (f) Not applicable. (g)(1) Consolidated Financial Statements and Financial Statement Schedules from the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1995. (g)(2) Part I, "Financial Information," Item 1, "Condensed Consolidated Financial Statements" from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 1995.
4 10 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. BIC CORPORATION Date: August 28, 1995 By: /s/ THOMAS M. KELLEHER ------------------------------------ Name: Thomas M. Kelleher, Esq. Title: General Counsel and Secretary 11 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. SOCIETE BIC S.A. Date: August 28, 1995 By: /s/ BRUNO BICH ------------------------------------ Name: Bruno Bich Title: Chairman of the Board and President 12 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. BRUNO BICH, AS VOTING TRUSTEE Date: August 28, 1995 By: /s/ BRUNO BICH ------------------------------------ Name: Bruno Bich Title: as voting trustee pursuant to the Voting Trust Agreement 13 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. BIC MERGER CORPORATION Date: August 28, 1995 By: /s/ BRUNO BICH ------------------------------------ Name: Bruno Bich Title: President and Treasurer 14 EXHIBIT INDEX
PAGE IN SEQUENTIALLY NUMBERED EXHIBIT DESCRIPTION COPY - ------- ------------------------------------------------------------------------- ------------ (a) Not applicable. (b)(1) Form of Opinion of Goldman, Sachs & Co. is incorporated by reference from Annex B to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto. (b)(2) A report by Goldman, Sachs & Co. to the Special Committee, dated August 15, 1995, on certain financial analyses. (b)(3) A report by Donaldson, Lufkin & Jenrette Securities Corporation to Parent, dated June 22, 1995, on certain financial analyses. (b)(4) A report by Donaldson, Lufkin & Jenrette Securities Corporation to Parent, dated July 10, 1995, on certain financial analyses. (c)(1) Agreement and Plan of Merger, dated as of August 15, 1993, among the Company, Parent, Mergeco and Bruno Bich, as voting trustee, is incorporated by reference from Annex A to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto. (c)(2) Voting Trust Agreement, dated as of February 5, 1991, by and among the Company, Parent, Marcel L. Bich, Neil Pollio, Bruno Bich and Francois Bich. (c)(3) Amendment to Voting Trust Agreement, dated as of February 3, 1992, by and among the Company, Parent, Marcel L. Bich, Bruno Bich, Francois Bich and Alexander Alexiades. (c)(4) Amendment No. 2 to Voting Trust Agreement, dated as of July 5, 1993, by and among the Company, Parent, Marcel L. Bich, Bruno Bich, Alexander Alexiades and Bermuda Trust Company Limited. (d)(1) Preliminary Proxy Statement of the Company for the Special Meeting of Shareholders of the Company. (e)(1) Statement of appraisal rights is incorporated by reference from Annex C to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto. (f) Not applicable. (g)(1) Consolidated Financial Statements and Financial Statement Schedules from the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1995. (g)(2) Part I, "Financial Information," Item 1, "Condensed Consolidated Financial Statements" from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 1995.
EX-99.B2 2 GOLDMAN, SACHS & CO. REPORT 1 Exhibit (b)(2) PROJECT ROLLERBALL DISCUSSION EXHIBITS Prepared by Goldman, Sachs & Co. August 15, 1995 2 TABLE OF EXHIBITS Summary Analysis of Rollerball 1 Valuation Analysis Historical Trading Ranges and Ownership Analysis 2 Review of Selected Public Companies 3 Comparable Consumer Product Industry Transactions 4 Projections 5 Discounted Cash Flow 6 Discounted Value of Future Stock Price and Distributions 7 Leverage Recapitalization 8 Leveraged Buyout Analysis 9 Buyer's Break-even Analysis 10 Valuation Summary 11 Appendix Alternative Projections A
3 SUMMARY OF ANALYST VIEWS ON ROLLERBALL ANALYSTS' EARNINGS ESTIMATES
FIRST CALL(a) ROLLERBALL MANAGEMENT -------------------------------------------- -------------------------------------------- ESTIMATE P/E FORECAST(b) P/E -------------------- -------------------- -------------------- -------------------- 1995E $2.43 14.8x/16.0x $2.40 14.1x/15.3x 1996E 2.45 14.6 /15.8 -- --
1995E 1996E -------------------------------------------- -------------------------------------------- PREVIOUS CURRENT PREVIOUS CURRENT -------------------- -------------------- -------------------- -------------------- PRUDENTIAL SECURITIES $2.25 $2.35 -- $2.45 SMITH BARNEY 2.45 2.50 -- --
(a) Median estimates. P/E based on pre-announcement price of $35.88 / August 4, 1995 price of $38.88. (b) Current Forecast. Original 1995 Budget $2.55. SUMMARY OF ANALYST COMMENTARY - - Rollerball only can sell its products in the United States, Canada, Mexico, the Caribbean, and Central America. Unlike other consumer products companies, it cannot market in Africa, Asia, Europe, or Latin America below Panama. - - We would liquidate shares at any premium over Parent's $36.50 offer - Downgrading Rollerball to sell. - PRUDENTIAL SECURITIES, MAY 1995 - - Rollerball is poised to capitalize on its low-cost manufacturing capability, coupled with the prospect for strong margin expansion. - - The company stands to be a significant beneficiary of the soon-to-be-implemented federal requirement that all disposable lighters sold in the U.S. be "child resistant." - - The Company [has the] potential to leverage up its disposable razor business by moving customers to higher price-point products. - SMITH BARNEY, APRIL 1994 4 Statement of Income -- Rollerball (dollars in millions, except for per share data)
Year Ended December 31, ---------------------------------------------- LTM Ending 1991 1992 1993 1994 June 30, 1995 ---- ---- ---- ---- ------------- Net sales $ 369.2 $ 417.4 $ 439.3 $ 475.1 $ 490.9 Cost of Goods Sold (209.8) (225.8) (235.8) (242.5) (254.3) ------ ------ ------ ------ ------ Gross Profit 159.4 191.6 203.5 232.7 236.7 Advertising, SG&A, R&D (114.2) (126.4) (133.7) (145.5) (147.0) ------ ------ ------ ------ ------ INCOME FROM OPERATIONS 45.2 65.1 69.8 87.2 89.6 Other Income - Net 1.4 2.2 4.2 0.0 2.3 ------ ------ ------ ------ ------ Income before Taxes, NOL Credit, Change in Accounting 46.6 67.3 74.0 87.2 92.0 Provision for Income Taxes (19.6) (27.3) (29.2) (35.6) (37.7) Income before NOL Credit, Change in Accounting 27.0 39.9 44.8 51.6 54.3 NOL Utilization 1.0 -- -- -- -- Change in Accounting -- -- (9.8) (0.6) -- ------ ------ ------ ------ ------ Net Income $ 28.1 $ 39.9 $ 35.0 $ 51.0 $ 54.3 ====== ====== ====== ====== ====== EPS $ 1.16 $ 1.70 $ 1.48 $ 2.17 $ 2.30 EBITDA $ 58.7 $ 80.8 $ 90.7 $ 111.0 $ 113.4(a) Dividends per share $ 0.56 $ 1.06(b) $ 0.72 $ 0.80 $ 0.86 GROWTH AND MARGIN ANALYSIS Revenue Growth 12.2% 13.0% 5.3% 8.2% 6.5% Gross Margin 43.2 45.9 46.9 49.2 48.2 Operating Margin 12.2 15.6 15.9 18.4 18.3 Net Margin 7.6 9.6 8.0 10.7 10.9 Dividend Payout Ratio 48.3 62.4 48.7 36.9 37.4
(a) Estimate. (b) Includes special dividend of $0.50 per share. 5 BALANCE SHEET -- ROLLERBALL (DOLLARS IN MILLIONS)
DECEMBER 31, --------------------------- LTM ENDING 1992 1993 1994 JUNE 30, 1995 ------ ------ ------ ------------- ASSETS Current Assets Cash $ 25.2 $ 24.1 $ 48.1 $ 65.9 Receivables 50.8 52.0 62.9 122.4 Inventories 58.5 59.4 54.4 56.8 Other 27.5 30.4 29.1 31.4 ------ ------ ------ ------ Total Current Assets 162.1 165.0 194.4 267.5 Property, Plant and Equipment -- Net 119.1 140.3 132.6 129.9 Other Assets 27.2 29.9 31.7 34.3 ------ ----- ------ ------ TOTAL $308.5 $336.2 $358.7 $440.8 ====== ====== ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Bank Borrowings $ 7.7 $ 6.7 -- -- Payables 21.7 21.2 $ 18.9 $ 56.5 Accrued Expenses 61.2 60.8 67.7 97.1 ------ ------ ------ ------ Total Current Liabilities 90.6 88.8 86.6 153.6 Non-Current Liabilities 8.5 20.8 24.1 25.7 Shareholders' Equity 209.4 226.7 247.9 261.4 ------ ------ ------ ------ TOTAL $308.5 $336.2 $358.7 $440.8 ====== ====== ====== ======
6 CASH FLOW STATEMENT - ROLLERBALL (DOLLARS IN MILLIONS)
Years Ended December 31, --------------------------------- LTM Ending 1991 1992 1993 1994 March 31, 1995 ---- ---- ---- ---- -------------- Cash Flows From Operating Activities Net Income $ 28.1 $ 39.9 $ 35.0 $ 51.0 $ 53.1 Depreciation & Amortization 13.5 15.7 20.9 23.8 24.3 Decrease/(Increase) in Working Capital 2.5 (1.6) (6.7) (2.4) (0.8) Other 1.1 (6.3) 11.2 2.0 6.3 ------- ------- ------- ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 45.2 47.7 60.4 74.4 82.9 Cash Flows From Investing Activities Purchases of Property, Plant and Eqpt - Net (24.4) (43.9) (40.5) (20.5) (19.1) Purchases of Trademarks and Patents (0.5) (0.8) (0.7) (0.8) (0.8) Purchase of Wite-Out Products, Inc. -- (19.3) -- (2.0) (2.0) Deferred Charges 0.2 (2.0) (1.9) 0.1 (2.3) ------- ------- ------- ------- ------- NET CASH USED IN INVESTING ACTIVITIES (24.7) (66.1) (43.1) (23.2) (24.2) NET CASH PROVIDED BY OPERATING & INVESTING ACTIVITIES 20.5 (18.4) 17.3 51.2 58.7 ------- ------- ------- ------- ------- Cash Flows From Financing Activities Net Increase (Decrease) in Bank Borrowings -- 7.7 (0.9) (6.7) (9.0) Dividends Paid (13.5) (25.0)(a) (17.0) (18.8) (19.6) Purchase of Treasury Stock (9.2) -- -- -- -- ------- ------- ------- ------- ------- NET CASH USED IN FINANCING ACTIVITIES (22.7) (17.3) (17.8) (25.6) (10.6) Effect of Exchange Rate Changes on Cash (0.2) (0.6) (0.6) (1.7) (2.3) ------- ------- ------- ------- ------- INCREASE (DECREASE) IN CASH (2.4) (36.4) (1.1) 24.0 45.9 Beginning Cash 63.8 61.5 25.2 24.1 17.8 ------- ------- ------- ------- ------- ENDING CASH $ 61.5 $ 25.2 $ 24.1 $ 48.1 $ 63.7 ======== ======= ======= ======= =======
(a) Includes special dividend of $0.50 per share, or $11.8 million. 7 ROLLERBALL (BIC CORPORATION) MONTHLY COMMON STOCK PRICE & TRADING VOLUME HISTORY [GRAPH 1] Monthly January 31, 1995 to July 31, 1995 8 ROLLERBALL WEEKLY COMMON STOCK PRICE & TRADING VOLUME HISTORY [GRAPH 2] Weekly 1/15/90 to 8/4/95 9 ROLLERBALL DAILY COMMON STOCK PRICE & TRADING VOLUME HISTORY [GRAPH 3] Daily 8/4/94 to 8/4/95 10 ROLLERBALL MONTHLY PRICE TO EARNINGS RATIO [GRAPH 4] Monthly 1/92 to 5/95 11 ROLLERBALL COMMON SHARES TRADED AT SPECIFIC PRICES [GRAPH 5] Based On Closing Prices From 5/18/94 to 5/18/95 12 ROLLERBALL COMMON SHARES TRADED AT SPECIFIC PRICES [GRAPH 6] Based On Closing Prices From 5/19/95 to 8/4/95 13 WEEKLY INDEXED COMMON STOCK PRICE HISTORY [GRAPH 7] Weekly 1/5/90 to 8/4/95 Rollerball indexed against Marquis (Societe BIC, S.A.), Gillette Co. and a composite of Rollerball, Marquis and Gillette Co. 14 DAILY INDEXED COMMON STOCK PRICE HISTORY [GRAPH 8] Daily 8/4/94 to 8/4/95 Rollerball indexed against Marquis, Gillette Co. and a composite of Rollerball, Marquis and Gillette Co. 15 DAILY COMMON STOCK PRICE HISTORY [GRAPH 9] Daily 8/4/94 to 8/4/95 Rollerball in French Francs and U.S. Dollars. 16 TOP TEN INSTITUTIONAL HOLDERS
SHARES YEARLY CHANGE IN SHARES HELD HELD %(a) QTR. OF INIT. INITIAL ---------------------------------------- INSTITUTION 3/95 OUTSTANDING ACQ. HOLDINGS 1991 1992 1993 1994 1995 - ---------- ---- ----------- ---- -------- ---- ---- ---- ---- ---- Putnam Investment Mgmt 589,800 11.3% 6/93 310,200 0 0 36,400 550,100 3,300 Quest Advisory Co 343,100 6.6 12/88 16,600 (5,000) 16,100 0 241,700 2,200 Ohio State Teach Flet Sys 300,000 5.8 3/90 43,300 37,900 33,300 56,100 0 0 Mass Mutual Life Insur 286,600 5.5 9/89 8,300 (77,200) 84,200 74,800 359,000 0 College Retire Equities 195,900 3.8 12/88 66,400 34,900 101,300 (6,700) 0 0 Wells Fargo Inst. Tr Na 150,797 2.9 12/88 162,660 10,400 60,593 (82,621) (12,812) (5,000) Ruane Cunniff & Co 150,421 2.9 12/88 334,760 (47,900) 21,270 (9,900) (2,559) (1,200) Bankers Trust N Y Group 109,500 2.1 12/88 8,500 (100) 66,900 36,000 (1,500) 0 Calif State Teachers Ret 85,008 1.6 12/93 83,608 0 0 82,174 1,434 0 Travelers Inc 78,543 1.5 6/94 64,288 0 0 0 82,391 4,811 Total 2,289,669 44.0
SHARES SHARES SHARES SHARES SHARES HELD HELD HELD HELD HELD INSTITUTION 12/90 12/91 12/92 12/93 12/94 - ------------ ----- ----- ----- ----- ----- Putnam Investment Mgmt 0 0 0 36,400 586,500 Quest Advisory Co 88,100 83,100 99,200 99,200 340,900 Ohio State Teach Flet Sys 172,700 210,600 243,900 300,000 300,000 Mass Mutual Life Insur 168,900 91,700 175,900 250,700 286,600 College Retire Equities 66,400 101,300 202,600 195,900 195,900 Wells Fargo Inst. Tr Na 180,237 190,637 251,230 168,609 155,797 Ruane Cunniff & Co 190,710 142,610 164,080 154,180 151,621 Bankers Trust N Y Group 23,700 23,600 90,500 126,500 111,000 Calif State Teachers Ret 0 0 0 82,174 83,608 Travelers Inc 0 0 0 0 73,732 Total 890,747 843,747 1,227,410 1,413,663 2,285,658
(a) % of shares not held by Societe BIC SA, the Bich family, or BIC officers and directors. 17 ROLLERBALL - COMMON STOCK COMPARISON
HISTORICAL 5-YEAR LTM MARGIN CAGR PROJECTED SHARE % OF -------------------- ----------------- 5-YEAR PRICE AS OF 52-WEEK MARKET ENTERPRISE DEBT TO NET NET EPS 8/11/95 HIGH CAP VALUE TOTAL CAP EBITDA EBIT INCOME REVENUE INCOME CAGR (b) ----------- ------- ------ ---------- --------- ------ ---- ------ ------- ------ ---------- American Safety Razor $ 9.88 68.1 % $ 119 $ 228 82.3 % 18.7 % 15.1 % 5.9 % 7.6 % N/A 13.5 % American Business Products 19.50 95.1 312 372 36.4 10.5 7.5 3.6 7.8 9.2 % 12.0 A.T. Cross 15.88 92.0 262 187 0.0 15.6 12.0 6.0 (3.3) (17.7)% 5.0 Avery Dennison 39.25 89.7 2,092 2,569 38.6 11.4 7.7 4.0 2.7 82.3 13.5 Black & Decker 30.75 92.1 2,620 5,124 69.2 11.8 7.7 2.6 2.1 22.1 12.0 Dixon Ticonderoga 7.88 70.8 25 67 73.8 10.7 8.1 2.4 N/A N/A N/A Duracell 44.63 94.2 5,234 5,590 24.1 23.7 19.3 11.4 8.7 107.6 17.0 Gillette 43.25 93.8 19,167 20,122 31.3 23.7 20.2 11.7 7.5 14.7 16.0 Hunt Manufacturing 15.13 89.0 242 239 3.2 12.2 9.4 6.0 7.7 (1.4) N/A Newell 25.75 97.6 4,067 4,701 38.6 20.3 17.1 9.1 12.7 9.8 15.0 Pentech International 2.50 40.0 27 44 42.3 13.7 12.2 6.4 15.3 0.0 N/A Premark 51.50 94.1 3,135 3,442 32.3 13.5 9.7 6.7 5.2 35.1 15.0 Rubbermaid 30.38 88.7 4,887 4,850 4.0 20.2 16.0 10.3 7.9 10.0 14.0 Sunbeam Oster 16.75 64.4 1,370 1,533 26.0 18.7 15.7 9.0 N/A N/A 17.0 MEDIAN 34.0 % 14.6 % 12.1 % 6.2 % 7.6 % 10.0 % 14.0 % ROLLERBALL OFFER PRICE $ 40.50 101.9 % $ 954 888 0.0 % 23.1 % 18.3 % 11.0 % 8.3 % 17.7 % 12.5 % ROLLERBALL PRE-OFFER PRICE 35.88 90.3 845 779 0.0 23.1 18.3 11.0 8.3 17.7 12.5 ROLLERBALL 6 MO AVG (a) 30.85 77.6 727 661 0.0 23.1 18.3 11.0 8.3 17.7 12.5 Marquis (c) 840 FF 100.0 % 11,609 FF 10,002 FF 5.7 % 24.7 % 17.7 % 11.0 % 4.6 % 22.3 % 12.0 %
FOOTNOTES (a) Using average price for six months prior to the announcement. (b) First Call estimates as of 8/11/95. (c) Current exchange rate of 4.94FF/$1. 18 ROLLERBALL -- COMMON STOCK COMPARISON
MULTIPLE OF ENTERPRISE VALUE P/E RATIOS CURRENT --------------------------------- --------------- --------- LTM REV. LTM EBIT LTM EBITDA 1995E 1996E DIV YIELD -------- -------- ---------- ----- ----- --------- American Safety Razor 1.1x 7.4x 6.0x 9.9x 8.6x 0.0% American Business Products 0.6 8.5 6.1 134.5 12.2 2.9 A.T. Cross 1.1 8.8 6.8 19.8 15.9 4.0 Avery Dennison 0.9 11.2 7.6 15.1 13.1 2.8 Black & Decker 1.0 12.4 8.1 15.8 13.4 1.3 Dixon Ticonderoga 0.7 8.7 6.6 N/A N/A 0.0 Duracell 2.8 14.3 11.6 21.6 17.9 2.3 Gillette 3.2 16.0 13.6 23.4 20.4 1.2 Hunt Manufacturing 0.8 8.6 6.7 12.6 11.3 2.5 Newell 2.1 12.6 10.6 17.8 15.5 1.6 Pentech International 0.7 6.0 5.3 6.3 5.0 0.0 Premark 1.0 10.1 7.3 12.9 11.7 1.6 Rubbermaid 2.2 13.5 10.7 23.4 19.6 1.6 Sunbeam Oster 1.3 8.0 6.7 16.8 12.9 0.2 MEDIAN 1.0x 9.5x 7.0x 16.8x 13.1x 1.6% ROLLERBALL OFFER PRICE 1.8x 9.9x 7.8x 16.7x 16.5x 2.3% ROLLERBALL PRE-OFFER PRICE 1.6 8.7 6.9 14.8 14.6 2.6 ROLLERBALL 6 MO AVG (a) 1.3 7.4 5.8 12.7 12.6 3.0 Marquis 1.6x 8.8x 6.3x 18.2x 15.3x 2.1%
19 SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE PRODUCTS ACQUISITIONS (dollars in millions)
Multiples of Levered --------------------------------- Date Target Acquiror Consideration Sales(a) EBIT(a) Net Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 1995 Woolite Carpet Cleaner (of Reckitt & Playtex N.A. N.A. N.A. N.A. Pending Colman plc) Kolynos (American Home Products) Colgate-Palmolive $1,040 3.6x 13.4x N.A. Odol SAIC (Argentina) Colgate-Palmolive 80 2.1 N.A. 19.8 - ---------------------------------------------------------------------------------------------------------------------------------- 1994 L&F Products Inc. - Household Reckitt & Colman, PLC 1,550 2.0 11.7 N.A. (Eastman Kodak Co.) L&F Products Inc. - D-I-Y (Eastman Forstmann, Lillie & Co. 700 2.0 10.6 N.A. Kodak Co.) Neutrogena Corp. Johnson & Johnson 915 3.3 22.4 37.5x Giorgio Beverly Hills Procter & Gamble 145 0.9 5.2 N.A. Guerlain Louis Vuitton Moet-Hennessy 772 2.0 14.2 22.1 Muehiens Wella N.A. N.A. N.A. N.A. European Personal Care Brands Colgate-Palmolive N.A. N.A. N.A. N.A. (of S.C. Johnson) Prince Matchabelli Fragrance Parfums de Couer N.A. N.A. N.A. N.A. Brands (of Unilever) - ----------------------------------------------------------------------------------------------------------------------------------- 1993 Curel and Soft Sense (of S.C. Bausch & Lomb N.A. N.A. N.A. N.A. Johnson) Yves St. Laurent(b) Elf Sanoli 634 1.6x 9.7x 15.0x Renuzit (of S.C. Johnson) Dial N.A. N.A. N.A. N.A. Endust/Behold (of S.C. Johnson) Sara Lee N.A. N.A. N.A. N.A. Parker Pen Holdings Gillette 488 1.7 8.6 14.7 Agree and Halsa (of S.C. Johnson) Dep Corp. 45 0.7 N.A. N.A. Redken L'Oreal N.A. N.A. N.A. N.A. Johnson Products IVAX Corp. 67 1.6 8.4 14.0 UK brands of SmithKline Beecham Sara Lee 320 1.3 6.5 N.A. Wilkinson Sword (of Eemland Warner-Lambert 142 0.8 19.7 N.A. Holdings) - ----------------------------------------------------------------------------------------------------------------------------------- 1992 Coty Benckiser 440 1.6 N.A. N.A. Mennen Colgate-Palmolive 645(c) 1.3 N.A. N.A. Nobel Consumer Products Business Henkel 698 1.8 13.4 N.A. The Drackell Company (of BMS) S.C. Johnson 1,150 2.0 14.1 N.A. Globol (of BP) Jeyes Group 36(d) 0.6 8.0 N.A. - ----------------------------------------------------------------------------------------------------------------------------------- 1991 Playtex Family Products Sara Lee 250(e) 3.1x 10.7x N.A. Plax International Colgate-Palmolive 105 1.5 N.A. N.A. - ----------------------------------------------------------------------------------------------------------------------------------- Continued on next page
20 SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE PRODUCTS ACQUISITIONS (dollars in millions) Continued
Multiples of Levered ---------------------------- Date Target Acquiror Consideration Sales(a) EBIT(a) Net Inc - ------------------------------------------------------------------------------------------------------------------------------ Max Factor & Belrix Procter & Gamble 1,025 1.3 N.A. N.A. La Prairie Beiersdorf 45 N.A. N.A. N.A. U.S. Cosmetics of Germaine Benckiser 40 1.0 N.A. N.A. Monteil Murphy Phoenix Colgate-Palmolive 121 3.1 22.4 N.A. Sanford Corp. Newell Companies 593 4.1 16.0 26.6 Stuart-Hall Corp. Newell Companies 11 N.A. N.A. N.A. W.T. Rogers Company Newell Companies 57 1.6 14.8 26.5 18 office products companies (of the Alco Standard Corp. 99 0.6 N.A. N.A. Hillman Company Chambers & Co. Johann Froeschels LYRA-Bleistill- N.A. N.A. N.A. N.A. Fabrik R. Dummert Staedller Mars N.A. N.A. N.A. N.A. Koninklijke TALENS (of Akzo) Sakura Color Products N.A. N.A. N.A. N.A. - ------------------------------------------------------------------------------------------------------------------------------- 1990 Gillette's European Skin & Haircare Nobel 107 0.8 N.A. N.A. Margaret Astor & Lancaster Benckiser 358 0.8 10.5 N.A. Yardley & Lentheric Old Bond Street 181 1.2 N.A. N.A. Maybelline Wasserstein Perella 300 1.0 N.A. N.A. Shulton's Men's Toiletries Procter & Gamble 370 1.3 N.A. N.A. Vipont Pharmaceutical Colgate-Palmolive 90 2.2 18.6 30.4 Parfums Stern Sanoli 210 1.7 N.A. N.A. Household business of American Clorox 465 2.0 N.A. N.A. Cyanamid Boyle-Midway Reckill & Colman 1,250 1.9 16.1 25.4 Javex Colgate Palmolive 173 2.1 14.1 N.A. Eldon Industries, Inc. Rubbermaid Inc. 222 1.9 14.9 25.0 Dennison Manufacturing Company Avery International Corporation 497 0.8 11.6 20.5 Knoll International, Inc. Westinghouse Electric Corporation 112 .6 N.A. N.A. Art and Graphics Division (of Reekitt Beckers 103 1.6 N.A. N.A. and Coleman) Esselte Business Systems, Inc. Esselte AB 221 0.9 9.1 17.2 Graphic Arts Group (of Bunzl) Hunt Manufacturing 36 N.A. N.A. N.A. GEHA Werke Pelikan N.A. N.A. N.A. N.A. - ------------------------------------------------------------------------------------------------------------------------------- 1989 Noxell Procter & Gamble 1,342 2.3 16.0 24.9 Faberge & Elizabeth Arden Unilever 1,550 1.9 17.0 N.A. Calvin Klein Cosmetics Unilever 370 1.9 22.1 32.2 Rimmel & Chicago Unilever 120 1.6 N.A. N.A. Goldwell Kao 190 1.1 N.A. N.A. - ------------------------------------------------------------------------------------------------------------------------------- Continued on next page
21 SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE PRODUCTS ACQUISITIONS (dollars in millions) Continued
MULTIPLES OF LEVERED ---------------------------- DATE TARGET ACQUIROR CONSIDERATION SALES(a) EBIT(a) NET INC - ------------------------------------------------------------------------------------------------------------------------------ European household business of Dow 45 0.5 N.A. N.A. First Brands Camp Fabrica de Jabones Benckiser 297 1.5 22.5 48.5 The Gunlocke Company (of LADD HON Industries, Inc. 34 0.6 N.A. N.A. Furniture, Inc.) Nodaway Valley Co. William Blair Leveraged Capital 27 0.8 9.1 15.9 Fund and William J. White Craft World International Sterling Group Inc. 21 N.A. N.A. N.A. Rockaway Corporation Ascom Holding AG 109 2.4 14.9 24.2 - ------------------------------------------------------------------------------------------------------------------------------ 1988 Vitabath Minnetonka 39 2.2 9.4 15.3 Playtex Investor Group 683 4.0 12.7 31.6 Redken Paula Kent Meehan 50 0.7 10.0 19.9 Zolos International Shiseido 342 2.5 N.A. N.A. John O. Butler Sunstar 161 3.3 16.3 30.5 Andrew Jergens Kao 300 1.7 22.7 N.A. Nelsen Procter & Gamble 56 1.3 13.1 24.3 Mira Lanza Benckiser 339 1.2 18.1 50.0 Finpanigal Benckiser 127 N.A. N.A. N.A. Certain Parts of Cotelle Colgate Palmolive 150 N.A N.A N.A. Parker Pen Pentland Industries 330 1.5 N.A N.A. Allied-Egry and Walton Printing Allied Acquisition, Inc. (affiliate 51 0.4 N.A. 29.3 Company of SCM Corporation of Halson Associates) (sub of Hanson plc) Sterling Plastics Company (of Sanford Corporation 36 1.6 10.8 N.A. Borden, Inc.) National Pen and Pencil Company Dixon Ticonderoga Company 6 1.0 N.A. N.A. (of UST Enterprises, Inc.) Cheshire, Inc. (sub of Xerox Videojet Systems International, Inc. 21 N.A. N.A. N.A. Corporation) McKesson Office Products Division SDC Distributing Corp. 42 N.A. N.A. N.A. (of McKesson Corporation) Drawing Office and Photgraphic James River Corporation of Virginia 43 0.4 N.A. N.A. Papers Business of Wiggins Teape Group (sub of B.A.T. Industries, plc) Looart Press, Inc. (sub of Deluxe Check Printers, Incorporated 179 1.4 N.A. 13.3 Primerica Corporation) - ------------------------------------------------------------------------------------------------------------------------------ 1987 Akzo Consumer Products Sara Lee 615 0.9 13.7 24.2 Consumer Division of Ecolab Benckiser 243 1.1 N.A. 47.4 - ------------------------------------------------------------------------------------------------------------------------------ Continued on next page
22 SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE PRODUCTS ACQUISITIONS (dollars in millions) Continued
Multiples of Levered ---------------------------- Date Target Acquiror Consideration Sales(a) EBIT(a) Net Inc - ------------------------------------------------------------------------------------------------------------------------------ Blendax Procter & Gamble 367 1.1 15.2 38.6 Liquid soap business of the Minnetonka Corporation Colgate-Palmolive 61 1.0 N.A. N.A. Bain de Soleil (of Revlon) Procter & Gamble 85 N.A. N.A. N.A. Elizabeth Arden (of Eli Lilly) Faberge 751 1.6 25.4 54.4 Lamaur Inc. Dow Chemical 180 1.4 23.9 40.7 Nicholas Kiwi Australasia Sara Lee 206 2.0 12.2 23.6 Revlon MacAndrews & Forbes 778 1.4 5.9 21.2 Jeffrey Martin DEP Corp 73 1.1 31.0 81.1 Chesebrough-Ponds Unilever 3,095 1.3 13.9 20.9 Berol Corporation Empire Pencil Corporation 50 0.8 7.4 45.8 ACCO World Corporation American Brands, Inc. 606 2.5 13.6 25.9 Shealer Eaton (of Textron,Inc.) Gefinor S.A. 135 1.0 12.7 N.A. Mallat Lefranc & Bourgeois N.A. N.A. N.A. N.A. S.T. DuPont (sub of the Gillette Dickson Too Holding Company Ltd. 52 1.1 N.A. N.A. Company) ACCO-World's Stapler business Hunt Manufacturing N.A. N.A. N.A. N.A. Royal Sovreign's Marker business Abelscot Group 7 N.A. N.A. N.A. (of DRG) Waterman S.A. The Gillette Company 40 0.9 6.6 18.6 EMF Corporation B.T. USA, Inc. 13 1.6 12.5 10.9 Knoll International, Inc. Hansac, Inc. (sub of General Felt 28 1.0 12.6 22.2 Industries, Inc.) Mean 1.6x 14.1x 28.3x - ------------------------------------------------------------------------------------------------------------------------------
(a) Based on levered consideration (b) Assume transaction if for 100% of total equity. Numbers based on 1991 financials. Analysts estimated 1992 results were 30%-50% below 1991 results (c) Adjusted for $35 million sales price allocation to paper products business. (d) Based on a acquisition of 75% stake for 28.0 million (exchange rate of 1.48). (e) Based on acquisition of a 25% stake for $62.5 million. 23 ROLLERBALL SUMMARY FINANCIAL PERFORMANCE MANAGEMENT PROJECTIONS -- ALTERNATIVE CASES (DOLLARS IN MILLIONS)
Management Estimate 18.3% Operating Margin 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E - ---------------------- ---- ---- ---- ---- ----- ----- ----- ----- ----- Revenues $377.2 $426.8 $444.2 $475.2 $513.8 $533.2 $567.9 $605.1 $645.1 EBIT $ 47.9 $ 65.1 $ 69.8 $ 87.2 $ 94.3 $ 97.8 $104.2 $111.0 $118.3 Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004 ----- ----- ----- ----- ----- --------- --------- $686.4 $730.7 $778.2 $829.2 $884.0 8.0% 6.5% CAGR $125.9 $134.0 $142.6 $152.1 $162.2 18.4% 6.5% CAGR 18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average
18.3% Operating Margin/ Lower Stationery Growth 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E - ---------------------- ---- ---- ---- ---- ----- ----- ----- ----- ----- Revenues $377.2 $426.8 $444.2 $475.2 $506.6 $516.9 $541.3 $567.0 $594.0 EBIT $ 47.9 $ 65.1 $ 69.8 $ 87.2 $ 92.9 $ 94.8 $ 99.3 $104.0 $109.0 Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004 ----- ----- ----- ----- ----- --------- --------- $620.8 $648.8 $678.3 $709.1 $741.5 7.7% 4.6% CAGR $113.9 $119.0 $124.4 $130.1 $136.0 18.0% 4.6% CAGR 18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average
24 DISCOUNTED CASH FLOW ANALYSIS COMPARISON OF ALTERNATIVE CASES (Equity value per share)
MANAGEMENT ESTIMATE WITH 18.3% OPERATING MARGIN 18.3 OPERATING MARGIN/LOWER STATIONERY GROWTH TERMINAL EBITDA MULTIPLE/ TERMINAL EBITDA MULTIPLE/ TERMINAL EBIT MULTIPLE TERMINAL EBIT MULTIPLE ----------------------------------------------- --------------------------------------------- ----------------------------------------------- --------------------------------------------- 6.6x 7.4x 8.3x 9.1x 9.9x 6.6x 7.4x 8.3x 9.1x 9.9x ----------------------------------------------- --------------------------------------------- 8.0x 9.0x 10.0x 11.0x 12.0x 8.0x 9.0x 10.0x 11.0x 12.0x ----------------------------------------------- --------------------------------------------- Discount Rate Discount Rate 11.0% $35.92 $38.35 $40.77 $43.19 $45.62 11.0% $32.66 $34.69 $36.73 $38.76 $40.79 12.0% $33.60 $35.82 $38.03 $40.25 $42.46 12.0% $30.63 $32.49 $34.35 $36.21 $38.07 13.0% $31.48 $33.51 $35.53 $37.56 $39.59 13.0% $28.77 $30.48 $32.18 $33.88 $35.58 /TABLE 25 PRESENT VALUE OF FUTURE STOCK PRICE AND CASH PAID TO SHAREHOLDERS MANAGEMENT PROJECTIONS - 18.3% OPERATING MARGIN (BASED ON HYPOTHETICAL RECAPITALIZATION AND CONSTANT PAYOUT RATIO)
PRO FORMA END OF HOLDING PERIOD 1995 1996 1997 1998 1999 2000 - ------------------------------------------------------------------------------------------------------------ MANAGEMENT PROJECTED EPS $ 2.40 $ 2.49 $ 2.65 $ 2.83 $ 3.01 $ 3.21 Interest Expense(a) (0.31) (0.31) (0.31) (0.31) (0.31) (0.31) Interest Earned(b) 0.00 0.08 0.09 0.09 0.10 0.10 ADJUSTED EPS 2.09 2.26 2.44 2.62 2.81 3.00 PRESENT VALUE OF STOCK PRICE(c) P/E on Next Year's Earnings 10 x $22.62 $21.57 $20.48 $19.45 $18.42 12 27.14 25.88 24.58 23.34 22.11 14 31.67 30.20 28.68 27.23 25.79 16 36.19 34.51 32.78 31.12 29.47 ESTIMATED DIVIDENDS(d) $ 0.92 $ 0.81 $ 0.88 $ 0.94 $ 1.01 SPECIAL RECAPITALIZATION DIVIDEND (e) $ 8.22 PRESENT VALUE OF DIVIDENDS(d) $ 9.14 $ 9.86 $10.55 $11.20 $11.82 TOTAL VALUE OF STOCK PRICE AND DIVIDENDS P/E on Next Year's Earnings 10 x $31.76 $31.43 $31.03 $30.65 $30.24 12 36.29 35.75 35.13 34.54 33.93 14 40.81 40.06 39.23 38.43 37.61 16 45.33 44.37 43.33 42.32 41.30 Cash on Balance Sheet $ 1.59 $ 1.87 $ 1.96 $ 2.05 $ 2.13 - ------------------------------------ --------------------------------------------------
(a) Assumes $150 Debt, 8% interest rate and 40% tax rate. (b) Assumes 8% interest rate on previous year cash balance and 40% tax rate. (c) Applies 13.0% discount rate to dividends and share price appreciation. (d) Based on 1995 dividend of $0.92 per share and constant rate 36% thereafter. (d) Applies 13.0% discount rate to dividends and share price appreciation. (e) Comprised of $150 million of new debt and $44 million in excess cash on balance sheet. 26 PRESENT VALUE OF FUTURE STOCK PRICE AND CASH PAID TO SHAREHOLDERS MANAGEMENT PROJECTIONS - 18.3% OPERATING MARGIN/LOWER STATIONERY GROWTH (BASED ON HYPOTHETICAL RECAPITALIZATION AND CONSTANT PAYOUT RATIO)
PRO FORMA END OF HOLDING PERIOD 1995 1996 1997 1998 1999 2000 - -------------------------------------------------------------------------------------------- Management Projected EPS $ 2.37 $ 2.41 $ 2.53 $ 2.65 $ 2.78 $ 2.90 Interest Expense (a) (0.31) (0.31) (0.31) (0.31) (0.31) (0.31) Interest Earned (b) 0.00 0.08 0.10 0.10 0.10 0.11 ADJUSTED EPS 2.06 2.19 2.32 2.44 2.57 2.70 PRESENT VALUE OF STOCK PRICE (c) P/E on Next Year's Earnings 10x $21.89 $20.56 $19.13 $17.82 $16.56 12 26.27 24.68 22.95 21.39 19.87 14 30.65 28.79 26.78 24.95 23.18 16 35.03 32.90 30.61 28.52 26.49 ESTIMATED DIVIDENDS (d) $ 0.92 $ 0.79 $ 0.84 $ 0.88 $ 0.93 SPECIAL RECAPITALIZATION DIVIDEND (e) $ 8.22 PRESENT VALUE OF DIVIDENDS (d) $ 9.14 $ 9.84 $10.49 $11.10 $11.67 TOTAL VALUE OF STOCK PRICE AND DIVIDENDS P/E on Next Year's Earnings 10x $31.04 $30.40 $29.62 $28.93 $28.23 12 35.41 34.52 33.45 32.49 31.54 14 39.79 38.63 37.27 36.06 34.85 16 44.17 42.74 41.10 39.62 38.17 Cash on Balance Sheet $ 1.67 $ 2.09 $ 2.07 $2.13 $2.20 - ----------------------------------------------------------------------------------------------
(a) Assumes $150 Debt, 8% interest rate and 40% tax rate. (b) Assumes 8% interest rate on previous year cash balance and 40% tax rate. (c) Applies 13.0% discount rate to dividends and share price appreciation. (d) Based on 1995 dividend of $0.92 per share and constant payout rate of 36% thereafter. (d) Applies 13.0% discount rate to dividends and share price appreciation. (e) Comprised of $150 million of new debt and $44 million in excess cash on balance sheet. 27 ROLLERBALL - HYPOTHETICAL LEVERAGED RECAPITALIZATION MANAGEMENT PROJECTION - 18.3% OPERATING MARGIN SCENARIO (DOLLAR AMOUNTS IN MILLIONS)
Aggregate Valuation: Per Share --------- Dividend to Existing Shareholders $625 $26.50 Stub Equity 250-340 $10.50-14.50 -------- ------------ $875-965 $37.00-41.00 Multiple of 1995E EBIT (levered): 9.6x Multiple of 1995E EBITD (levered): 7.5x
Sources of Funds Current Interest Rate Uses of Funds Senior Term Loan $200 8.0% Dividend to Shareholders $625 Subordinated Debt 406 11.0 Transactions Costs 25 Excess Cash 44 8.0 ---- ---- $650 $650
Capitalization Market % Book % Senior Term Loan $200 22% $200 98% Subordinated Debt 406 45 406 198 Common Equity 294(a) 33 (401) (196) --- --- ----- ----- Total Capitalization 900 100% 205 100%
Coverage Ratios EBITDA less Capex: 1995E 1.5x 1996E 1.6 1997E 1.8 1998E 1.9 (a) Assumes P/E of 14 times 1995 EPS
Assumes - ------- - - Net Working Capital = 16.7% of Sales - - Capital Expenditures = Depreciation 28 ROLLERBALL - HYPOTHETICAL LEVERAGED RECAPITALIZATION MANAGEMENT PROJECTION - 18.3% OPERATING MARGIN SCENARIO (DOLLARS AMOUNTS IN MILLIONS)
CASH AVAILABLE TO SERVICE PRINCIPAL REPAYMENT CUMULATIVE CASH PERCENTAGE OF SENIOR DEBT - --------------------------------------------------------------------------------------------------------- 2000E Year 6 $112 56% 2001E Year 7 155 78 2002E Year 8 205 103
PRICE APPRECIATION 1995 STUB 2000 STUB PRICE APPRECIATION CAGR WITH EXIT EQUITY RETURN VALUATION VALUATION CAGR MULTIPLE OF 16X - ----------------------------------------------------------------------------------------------------- EPS Multiple 12.0x $10.68 $22.44 16% 23% 14.0x 12.46 26.18 16% 19% 16.0x 14.24 29.92 16% 16%
29 ROLLERBALL LBO ANALYSIS SUMMARY -- ILLUSTRATIVE MANAGEMENT PROJECTIONS -- 18.3% OPERATING MARGIN SCENARIO (DOLLAR AMOUNTS IN MILLIONS)
Per Share --------- Aggregate Consideration: $825 $35.00 Multiple of 1995E EBIT (levered): 8.6x Multiple of 1995E EBITD (levered: 6.7x
Sources of Funds Current Interest Rate Uses of Funds - --------------- --------------------- ------------ Senior Term Loan $200 8.0% Common Stock $825 Subordinated Debt 406 11.0 Transactions Costs 25 Common Equity 200 -- ---- Excess Cash 44 8.0% $850 ---- $850
Coverage Ratios: EBITDA less Capex: 1995E 1.5x 1996E 1.6 1997E 1.8 1998E 1.9
Cash Available to Service Principal Repayment Cumulative Cash Percentage of Senior Debt 2000E YEAR 6 $112 56% 2001E YEAR 7 155 78 2002E YEAR 8 205 103
Equity Returns Exit in year 2000 (Year 6) at 6.0x EBITDA 16% 9.0x EBITDA 30 12.0x EBITDA 39
An LBO could be structured at approximately $35 per share which meets market requirements with respect to interst coverage, debt repayment schedules and equity returns. Assumes - - Net Working Captial = 16.7% of Sales - - Capital Expenditures = Depreciation 30 PROJECT ROLLERBALL PARENT COMPANY ACCRETION/DILUTION ASSUMING CURRENT EXCHANGE RATES
ASSUMPTIONS - --------------------------------------------------------------- 5.3 Public shares (MM) 22.3% 23.6 Total shares (MM) 13.2 Parent shares (MM) FF 295.6 Book value equity (FF MM) 39.50% Parent tax rate 7.00% Parent return on cash balances 40 Goodwill amortization period 4.94 FF/$ Exchange rate $5.00 Transaction related fees ($ MM)
1996 PROJECTED EARNINGS BREAK-EVEN BREAK-EVEN BREAK-EVEN BREAK-EVEN ROLLERBALL ACQUIRED BY FF CONSIDERATION EQUITY EQUITY STOCK EARNINGS PARENT EARNINGS (FF) PRICE (FF) PRICE ($) PRICE ($) ---------- ----------- -------- ------------- ---------- ---------- ---------- 18.3% Operating Margin $58.7 $13.1 FF 64.7 FF 1070.1 FF 1045.4 $211.6 $40.26 18.3% Operating Margin/ Lower Stationery Growth $56.9 $12.7 FF 62.7 FF 1040.7 FF 1016.0 $205.6 $39.13
ANALYST TRANSACTION AT $40.50 PER SHARE PROJECTED ---------------------------------------------------------------- PARENT PARENT 1996 EARNINGS INTEREST PARENT PROFIT PARENT EPS ACCRETION/ EPS ACQUIRED COST GOODWILL IMPACT IMPACT (DILUTION) --------- ------------- -------- -------- ------------- ---------- ---------- 18.3% Operating Margin FF 55.2 FF 64.7 FF -45.6 FF -19.5 -FF 0.4 -FF 0.03 (0.1%) 18.3% Operating Margin/ Lower Stationery Growth FF 55.2 FF 62.7 FF -45.6 FF -19.5 -FF 2.4 -FF 0.18 (0.3%)
31 ANALYSIS AT OFFER PRICE (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Sale Price $40.50 Implied Total Equity Consideration $954.1 Implied Total Levered Consideration(a) $890.4 - ----------------------------------------------------------------------- MULTIPLES OF SALES (LEVERED) 1994 $475.1 1.87 x LTM 490.9 1.81 1995 E 513.8 1.73 1996 E 533.2 1.67 MULTIPLES OF EBITDA (LEVERED) 1994 $111.0 8.02 x LTM 113.4 7.85 1995 E 120.0 7.42 1996 E 124.5 7.15 MULTIPLES OF EBIT (LEVERED) 1994 $ 87.2 10.21 x LTM 89.6 9.94 1995 E 94.3 9.44 1996 E 97.8 9.10 MULTIPLIES OF NET INCOME 1994 $ 51.0 18.71 x LTM 54.3 17.57 1995 E 56.6 16.87 1996 E 58.7 16.26 PREMIUM TO BOOK $249.0 283.2% TRANSACTION COSTS Interest Expenses(b) $45.8 Purchase Accounting(c) 17.6 ----- Total Transaction Costs(d) 63.4 - ---------------------------------------------- -----
(a) Aggregate consideration plus debt less cash and cash equivalents. (b) Assumes 8.0% interest and 40% tax rate. (c) Assumes 40 year amortization of goodwill. (d) Rollerball would have to generate this level of net income in order for the transaction to be accretive to acquiror's earnings. 32 ROLLERBALL SUMMARY FINANCIAL PERFORMANCE MANAGEMENT PROJECTIONS - ALTERNATIVE CASES (DOLLARS IN MILLIONS)
Management Estimate 18.3% Operating Margin 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E - ---------------------- ---- ---- ---- ---- ----- ----- ----- ----- ----- Revenues $377.2 $426.8 $444.2 $475.2 $513.8 $533.2 $567.9 $605.1 $645.1 EBIT $47.9 $65.1 $69.8 $87.2 $94.3 $97.8 $104.2 $111.0 $118.3 Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3% 2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004 ---- ---- ---- ---- ----- --------- --------- $686.4 $730.7 $778.2 $829.2 $884.0 8.0% 6.5% CAGR $125.9 $134.0 $142.8 $152.1 $162.2 18.4% 6.5% CAGR 18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average 18.3% Operating Margin/ Lower Stationery Growth 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E - ----------------------- ---- ---- ---- ---- ----- ----- ----- ----- ----- Revenues $377.2 $426.8 $444.2 $475.2 $506.6 $516.9 $541.3 $567.0 $594.0 EBIT $47.9 $65.1 $69.8 $87.2 $92.9 $94.8 $99.3 $104.0 $109.0 Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3% 2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004 ---- ---- ---- ---- ----- --------- --------- $620.8 $648.8 $678.3 $709.1 $741.5 7.7% 4.6% CAGR $113.9 $119.0 $124.4 $130.1 $136.0 18.0% 4.6% CAGR 18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average Base Case Sales with Operating Margin Increases 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E - -------------------------- ---- ---- ---- ---- ----- ----- ----- ----- ----- Revenues $377.2 $426.8 $444.2 $475.2 $513.8 $533.2 $567.9 $605.1 $645.1 EBIT $47.9 $65.1 $69.8 $87.2 $99.6 $106.0 $116.7 $128.2 $140.6 Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 19.4% 19.9% 20.5% 21.2% 21.8% 2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004 ---- ---- ---- ---- ----- --------- --------- $686.4 $730.7 $778.2 $829.2 $884.0 8.0% 6.5% CAGR $152.9 $165.2 $178.4 $192.7 $208.1 20.1% 6.5% CAGR 22.3% 22.6% 22.9% 23.2% 23.5% 16.3% 22.0% average
EX-99.B3 3 DONALDSON, LUFKIN REPORT DATED JUNE 22, 1995 1 Exhibit (b)(3) PRESENTATION TO SOCIETE BIC JUNE 22, 1995 DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE 2 BIC - -------------------------------------------------------------------------------- TABLE OF CONTENTS
EXHIBIT OVERVIEW OF PROPOSAL .................................................. 1 COMPANY OVERVIEW ...................................................... 2 RECENT TRADING PERFORMANCE AND TRADING COMPARISONS .................... 3 VALUATION ANALYSIS .................................................... 4 EXHIBITS - -------- COMPARABLE COMPANY ANALYSIS ........................................... 5 ANALYSIS OF PREMIUMS PAID IN MINORITY TRANSACTIONS .................... 6 ACCRETION/DILUTION ANALYSIS ........................................... 7
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE 3 BIC - -------------------------------------------------------------------------------- OVERVIEW OF PROPOSAL DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE 4 BIC - -------------------------------------------------------------------------------- OVERVIEW OF PROPOSAL - On May 19, 1995, Societe BIC offered $36.50 per share to acquire the 22% (5.2 million shares) of BIC Corp. that is not owned by Societe BIC or the Bich family. - The offer price represents an approximately 20% premium over BIC Corp.'s average trading price of $30.80, for the six months prior to the announcement. - The offer represents a 16% premium over BIC Corp.'s closing share price of $31.50 on April 20, 1995, one month prior to the announcement. - The offer price of $36.50 per share represents a 12.3% premium over the highest trading price of BIC Corp. stock ($32.50) during the 52 weeks ended April 20, 1995, one month prior to the announcement. - The 7.0x multiple of EBITDA implied in the $36.50 offer represents a premium valuation for a low/moderate growth, mature business. - The proposed transaction does not constitute a change of control transaction. - The implied transaction multiples exceed the average trading multiples of the most comparable companies. The average multiples represent the best proxy for valuation, since no one company is directly comparable.
VALUATION AVG. OF IMPLIED BY OFFER PRICE COMPARABLE COMPARABLE AT $36.50 UNIVERSE UNIVERSE ----------- ---------- ---------- LTM Revenue .................. 1.6x 1.1x $ 25.20 LTM EBITDA ................... 7.0 6.7 $ 35.42 LTM EBIT ..................... 8.8 8.8 $ 36.58 LTM E.P.S .................... 16.2 15.5 $ 34.77 1995E Adj. E.P.S ............. 15.3 15.0 $ 35.64 ---------------------------- Average $ 33.52 ----------------------------
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -1- 5 BIC - -------------------------------------------------------------------------------- FACTORS IMPACTING VALUATION - "[BIC Corp.] is an atypical company with no stock market equivalent," Cheuvreux de Virieu Indosuez Capital Research. - In recent years, BIC Corp. has achieved earnings growth in excess of revenue growth due to an effective capital expenditure program and productivity improvements. However, - Earnings resulting from productivity improvements tend to be regarded as less sustainable and are thus valued at a lower multiple by the market than earnings related to increased revenues. - BIC Corp. sells mature products in competitive and mature markets.
1994 REVENUE 1994 OPERATING PROFIT -------------------- --------------------- OUTSIDE OF OUTSIDE OF U.S. U.S. U.S. U.S. ----- ---------- ---- ---------- Total................ 82.7% 17.3% 85.1% 14.9%
- In the absence of new products, BIC Corp.'s growth rate is likely to slow and its market share is likely to shrink. - Due to the significantly larger size of its principal competitor, BIC Corp. is unable to match that competitor's expenditures on advertising, sales promotion and research and development. - Over time this is likely to reduce growth rates and market share. DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -2- 6 BIC - -------------------------------------------------------------------------------- RATIONALE OF THE PROPOSED TRANSACTION - The transaction will allow BIC Group to compete more effectively on a global basis as one unified entity. - Minimize potential conflicts of interest - Simplify allocation of business opportunities - Given the competitiveness of BIC Corp.'s mature product lines, BIC Corp. needs to optimize its cost structure at all levels. - Eliminate U.S. reporting function - Integrate certain administrative and support functions - Economies of scale - The stock of BIC Corp. has never had the liquidity or multiple that could have made an attractive alternative source of financing for the BIC Group. - The currently favorable currency exchange rate creates an opportunity to pay an attractive premium to public shareholders in a transaction which is break-even/non-dilutive for Societe BIC, despite the incurrence of goodwill and other transaction expenses.
$35.50 $36.50 $37.50 ------ ------ ------ 1994 ACCRETION (DILUTION) 0.0% (0.3)% (0.6)%
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -3- 7 BIC - -------------------------------------------------------------------------------- COMPANY OVERVIEW DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -3- 8 BIC - -------------------------------------------------------------------------------- OVERVIEW ($ in millions) - BIC Corp. is a leading manufacturer of writing instruments, lighters and shavers under the BIC trademark.
1994 1995B ----------------------- --------------------- Revenue $ % of Total $ % of Total - ------- ------ ---------- ------ ---------- Writing Instruments ....... $256.8 54% $276.9 54% Lighters .................. 108.9 23% 115.1 22% Shavers ................... 105.4 22% 116.3 23% ------ --- ------ --- Total Revenues ........ $475.2 100% $513.8 100% Operating Profit - ---------------- Writing Instruments ....... $ 47.6 55% $ 57.0 57% Margin % .............. 18.5% 20.6% Lighters .................. 10.7 12% 11.9 12% Margin % .............. 9.8% 10.3% Shavers ................... 29.3 34% 30.9 31% Margin % .............. 27.7% 26.6% ------ --- ------ --- Operating Profit .... $ 87.2 100% 92.9* 100% Margin % .......... 18.4% 18.1%
- BIC Corp.'s significant shareholders are as follows:
No. of Shares % of Total ------------- ---------- Societe BIC ........................ 14,829,836 62.9% B. Bich family ..................... 2,933,606 12.5 F. Bich ............................ 541,406 2.3 Public Shareholders ................ 5,254,396 22.3 ------------ ----- Total ......................... 23,559,244 100.0% ========== =====
- --------------------------- * Reflect $6.7 million pretax increase in cost of goods resulting from currency exchange rate fluctuations. DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -1- 9 BIC - -------------------------------------------------------------------------------- OVERVIEW (CONT'D) - Sales outside of the U.S. are limited due to lack of trademarks.
1994 REVENUE 1994 OPERATING PROFIT --------------------------- ------------------------- OUTSIDE OF OUTSIDE OF U.S. SALES U.S. U.S. U.S. ---------- ---------- ----- ---------- All products ............ 82.7% 17.3% 85.1% 14.9% Stationery .............. 78.8% 21.2% 81.4% 18.6% Lighters ................ 85.1% 14.9% 71.0% 29.0% Shavers ................. 90.0% 10.0% 96.4% 3.6%
- Lack of established distribution outside of U.S., Mexico and Canada will also preclude further international expansion. DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -2- 10 BIC - -------------------------------------------------------------------------------- FACTORS IMPACTING VALUATION
POSITIVE NEGATIVE ------------------------------------------------- ---------------------------------------------- Stationery/Writing Instruments - No. 1 U.S. market share position in units - Papermate (Gillette) has leading - Continued growth potential in Soft Feel market share in $'s and is extension of core "stick pen" line increasing its focus on this division - Growth in advertising specialty sales - Very slow growth in overall category - Sales growth to "mass" office product retailers - Recent decline in growth of Wavelength products - Incomplete product line focused on lower price points - Core stick pen business is only marginally profitable due to competition with Papermate, Newell (Faber-Castell), Scripto-Tokai, and others - Limited trademark availability in higher growth, international markets - Due to Papermate's aggressiveness, limited success to-date with Wite Out line --------------------------------------------------------------------------------------------------- Lighters - Strong U.S. market share - Product liability issues - Patented child resistant products - Uncertain growth prospects due to product dumping by inexpensive imports - Low growth category - Cigarette-related taint
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -3- 11 BIC - -------------------------------------------------------------------------------- FACTORS IMPACTING VALUATION (CONT'D)
POSITIVE NEGATIVE ---------------------------------------------------- ---------------------------------------------- Shavers - High margin category - Consumer shift away from single blade - Strong market share in single blade disposable disposable and toward "systems" - Growth opportunities in twin blade category - Strong competitors (Gillette and Warner - Successfully used pricing umbrella of Gillette and Lambert (Schick)) with significantly larger Schick in recent years advertising, promotion, R&D and capex budget - Limited opportunity for further increased prices - Lack of innovative technology - No shaving "systems" or new/unique products offering near term - Does not have "lubristrip" technology - Twin blade product has no competitive advantage - Products generally focused on lowest price and margin categories in shavers ----------------------------------------------------------------------------------------------------------- Sport - Strong market share - Money losing operation - Insignificant revenue contribution
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -4- 12 BIC - -------------------------------------------------------------------------------- FACTORS IMPACTING VALUATION (CONT'D)
POSITIVE NEGATIVE ------------------------------------------------- ---------------------------------------------- International Opportunities - Low cost Mexican manufacturing facilities - BIC ownership of trademarks precludes international expansion beyond Canada, Mexico, Guatemala and the Caribbean - U.S. market with 83% of the Company's overall sales is the most competitive market for the Company's products
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -5- 13 BIC - -------------------------------------------------------------------------------- FACTORS IMPACTING VALUATION (CONT'D)
POSITIVE NEGATIVE ------------------------------------------------- ---------------------------------------------- Corporate - Distribution synergies between product lines in - French currency exposure retail channels - Small size relative to certain competitors - Focus on margin improvements have fueled - Lower revenue base and gross margins do earnings growth not allow for large advertising/promotion - Productivity budget and new product experimentation - Cost reductions - Lower CAPEX - Conn. grants and expense reduction - Low overall growth rate due to mature - Union concessions product lines and difficulty developing new - Production optimization products and making upward shift in product - Significant capital investment over the past 3 mix years have been made to achieve state-of-the-art - Shareholders pay less for earnings resulting production from cost savings than for earnings resulting from revenue growth, because earnings growth from cost savings is less likely to be sustained - As Gillette's stationery business approaches $1 billion, it will become a larger focus and result in greater competition
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -6- 14 BIC - -------------------------------------------------------------------------------- BIC CORP. FINANCIAL SUMMARY ($ IN MILLIONS)
Q1 YTD - 5/31 ---------------- ---------------- 1991 1992 1993 1994 1995B 1994 1995 1994 1995 ------ ------ ------ ------ ------ ------ ------ ------ ------ Revenue Stationery Products ...................... $187.9 $220.0 $235.4 $256.8 $276.9 $ 50.8 $ 56.8 % growth ........................... 23.0% 17.1% 7.0% 16.7% 17.6% - 11.8% Lighters ................................. 98.5 103.5 103.5 108.9 115.1 24.9 29.1 % growth ........................... 5.5% 5.2% 0.0% 5.2% 11.2% - 16.9% Shavers .................................. 84.5 97.3 99.9 105.4 116.3 26.2 26.6 % growth ........................... 8.7% 15.2% 2.7% 8.3% 16.4% - 1.4% Other .................................... 5.3 5.9 5.3 4.1 5.5 0.9 1.1 % growth ........................... (4.3)% 12.8% (10.2)% (31.4)% 2.8% - 15.5% ------ ------ ------ ------ ------ ------ ------ Total Revenue ...................... $376.1 $426.8 $444.2 $475.2 $513.8 $102.8 $113.5 204.8 218.7 % growth ....................... 14.2% 13.5% 4.1% 11.3% 15.7% - 10.4% - 6.8% Operating Income Stationery Products ...................... $ 27.8 $ 33.4 $ 35.8 $ 47.6 $ 57.0 $ 6.9 $ 11.2 % Margin ........................... 14.8% 15.2% 15.2% 18.5% 20.6% 13.7% 19.6% Lighters ................................. 3.6 8.0 10.6 10.7 11.9 2.1 1.0 % Margin ........................... 3.6% 7.7% 10.2% 9.8% 10.3% 8.5% 3.5% Shavers .................................. 16.9 23.6 23.5 29.2 30.9 7.0 7.3 % Margin ........................... 20.1% 24.2% 23.5% 27.7% 26.6% 26.6% 27.6% Other .................................... (0.3) (0.2) 0.0 (0.4) (0.2) (0.1) (0.3) % Margin ........................... (6.0)% (3.0)% (0.1)% (9.9)% (4.0)% (12.4%) (31.6%) ------ ------ ------ ------ ------ ------ ------ Total Operating Income ............. $ 47.9 $ 65.1 $ 69.8 $ 87.2 $ 92.9* $ 15.9 $ 19.2 $ 32.3 $ 35.7 % Margin ....................... 12.8% 15.2% 15.7% 18.3% 18.1% 15.5% 16.9% 15.8% 16.3% EBITDA ..................................... $ 61.5 $ 80.5 $ 90.7 $111.0 $118.1* $ 16.9 $ 20.3 % Margin ................................. 16.4% 18.9% 20.4% 23.4% 22.9% 16.5% 17.9% Net Income ................................. $ 28.1 $ 39.9 $ 44.8 $ 51.6 $ 56.2* $ 9.7 $ 11.2 $ 19.1 $ 21.3 % Margin ................................. 7.5% 9.4% 10.1% 10.9% 11.7% 9.5% 9.8% 9.3% 9.7% Earnings per Share ......................... $ 1.19 $ 1.70 $ 1.90 $ 2.19 $ 2.38* $ 0.41 $ 0.47 % growth ................................. 28.8% 42.3% 12.1% 29.3% 8.7% - 14.6%
- --------------- *Reflect $6.7 million pretax increase in cost of goods sold resulting from currency exchange rate fluctuations. DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -7- 15 BIC - -------------------------------------------------------------------------------- BIC CORP. TEN-YEAR FINANCIAL HISTORY
12 MONTHS 5-YEAR 10-YEAR ENDED 12/85 12/86 12/87 12/88 12/89 12/90 12/91 12/92 12/93 12/94 3/95 CAGR CAGR ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------- Net Sales ........ $262.7 $267.6 $290.6 $294.9 $330.3 $329.2 $369.2 $417.4 $439.3 $475.1 $485.8 9.6% 6.8% % growth ....... - 1.9% 8.6% 1.5% 12.0% (0.3%) 12.2% 13.1% 5.2% 8.1% - Operating Income . 47.6 52.3 51.1 41.3 39.4 38.7 45.2 65.1 69.8 87.2 90.4 22.5% 7.0% % margin ....... 18.1% 19.5% 17.6% 14.0% 11.9% 11.8% 12.2% 15.6% 15.9% 18.4% 18.6% Net Income ....... 23.5 23.7 28.7 26.8 23.0 22.4 27.0 39.9 44.8 51.6 53.1 23.2% 9.1% % margin ....... 8.9% 8.9% 9.9% 9.1% 7.0% 6.8% 7.3% 9.6% 10.2% 10.9% 10.9% Earnings per Share $ 0.97 $ 0.98 $ 1.18 $ 1.10 $ 0.95 $ 0.92 $ 1.12 $ 1.70 $ 1.90 $ 2.19 $ 2.25
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -8- 16 BIC - -------------------------------------------------------------------------------- BIC CORP. VS. GILLETTE: STATIONERY SEGMENT GROWTH RATES ($ in Millions) [GRAPH 1] For years 1990-1994 DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -9- 17 BIC - -------------------------------------------------------------------------------- BIC CORP. VS. GILLETTE: SHAVERS SEGMENT GROWTH RATES ($ in Millions) [GRAPH 2] For years 1990-1994 DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -10- 18 BIC - -------------------------------------------------------------------------------- RECENT TRADING PERFORMANCE AND TRADING COMPARISONS DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE 19 BIC - -------------------------------------------------------------------------------- BIC CORP. PRICE/VOLUME ANALYSIS MAY 14, 1993 THROUGH PRESENT [GRAPH 3] [GRAPH 4] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -1- 20 BIC - -------------------------------------------------------------------------------- BIC CORP. VS. BIC S.A. RELATIVE STOCK PRICE COMPARISON MAY 14, 1993 THROUGH PRESENT [GRAPH 5] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -2- 21 BIC - -------------------------------------------------------------------------------- BIC CORP. VS. CONSUMER DISPOSABLES INDEX VS. S&P 400 RELATIVE STOCK PRICE COMPARISON MAY 14, 1993 THROUGH PRESENT [GRAPH 6] [Consumer Disposable Index includes: Gillette Company, BIC S.A., American Safety Razor, A.T. Cross Company, Pentech International Inc., Dixon Ticonderoga Company, American Business Products; Hunt Manufacturing and Avery Dennison Corp.] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE -3- 22 BIC - -------------------------------------------------------------------------------- PRICE/EARNINGS RATIO: BIC CORP. VS. AMERICAN SAFETY RAZOR DECEMBER 1993 THROUGH MAY 1995 [GRAPH 7] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 4 - 23 BIC - -------------------------------------------------------------------------------- PRICE/EARNINGS RATIO: BIC CORP. VS. GILLETTE MAY 1993 THROUGH MAY 1995 [GRAPH 8] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 5 - 24 BIC - -------------------------------------------------------------------------------- PRICE/EARNINGS RATIO: BIC CORP. VS. A.T. CROSS JUNE 1994 THROUGH MAY 1995 [GRAPH 9] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 6 - 25 BIC - -------------------------------------------------------------------------------- VALUATION ANALYSIS DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE 26
BIC - ----------------------------------------------------------------------------------------------------------------------------- SUMMARY VALUATION COMPARABLE COMPANIES LTM SOCIETE VALUATION PARAMETERS RESULTS AVERAGE VALUATION BIC VALUATION ------------------------------ ------- ------- --------- ------- --------- Price / LTM EPS $2.25 15.5x $34.77 18.4x $41.49 Price / 1995 EPS $2.38 15.0x $35.64 16.6x $39.39 Price / 1996 EPS $2.45 13.8x $33.69 14.2x $34.88 Enterprise Value LTM Revenues $485.8 1.1x $25.20 1.3x $29.21 Enterprise Value /LTM EBDAIT $114.2 6.7x $35.42 5.4x $28.89 Enterprise Value / LTM EBIT $90.4 8.8x $36.58 7.2x $30.52 ------------------------------------------------------- Average $33.55 $34.06 -------------------------------------------------------
PREMIUMS PAID
52-WEEK HIGH 1 MONTH 52-WEEK 52-WEEK UP TO MONTH PRIOR AVERAGE HIGH PRIOR AVERAGE ------- ------- ------- ----------- ------- BIC Corp. Price $31.50 $31.38 $37.50 $32.50 Average Premium 29.8% 23.9% (1.7)% 3.6% ------ Implied Price $40.89 $38.87 $36.86 $33.67 $37.57 ------ Median Premium 23.7% 16.2% (4.6)% 2.1% ------ Implied Price $38.97 $36.46 $35.79 $33.20 $36.11 ------
IMPACT ON SOCIETE BIC $35.50 $36.50 $37.50 ------ ------ ------ 1994 Accretion/Dilution 0.0% (0.3)% (0.6)%
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 1 - 27 BIC - -------------------------------------------------------------------------------- PUBLICLY TRADED COMPARABLE COMPANY VALUATION ANALYSIS ($ in millions, except per share data) NOTES: - No true comparable company exists for BIC Corp., a domestic U.S., disposable consumer products company. - Included in the comparable universe is Gillette, a much larger, international company with better growth prospects and a significantly higher valuation than BIC Corp. Gillette's multiple is based on the results of its consumer products and razor business and not on its stationery business. - A valuation based on Societe BIC's multiples is inappropriate because Societe BIC has more brand name recognition in its markets than BIC Corp., competes in more attractive markets than BIC Corp. and has more global presence than BIC Corp. - The offer is superior in value to the average trading multiples of the comparable companies.
MULTIPLES OF COMPARABLE COMPANIES (1) LTM OFFER PRICE ---------------------------- VALUATION PARAMETERS RESULTS AT $36.50 AVG. HIGH LOW SOCIETE BIC -------------------- --------- ----------- ----- ----- ---- ----------- Price / LTM EPS(2) $2.25 16.2x 15.5x 27.0x 6.3x 18.4x Price / 1995 EPS(2) $2.38(3) 15.3x 15.0x 24.1x 5.8x 16.6x Price / 1996 EPS(2) $2.45(4) 14.9x 13.8x 20.8x 9.3x 14.2x Enterprise Value(5) / LTM Revenues $485.8 1.6x 1.1x 3.2x 0.4x 1.3x Enterprise Value(5) / LTM EBDAIT 114.2 7.0x 6.7x 13.6x 3.7x 5.4x Enterprise Value(5) / LTM EBIT 90.4 8.8x 8.8x 16.0x 4.1x 7.2xx
(1) Comparable Companies include Societe BIC, Gillette Company, American Safety Razor, A.T. Cross Co., Pentech International, Dixon Ticonderoga Co, American Business Products, Hunt Manufacturing, and Avery Dennison. (2) Stock price as of 6/23/95. (3) Company estimate, adjusted for estimate of the impact of the decline of the dollar relative to the French franc. (4) Source: Prudential Securities report dated May 4, 1995. (5) Enterprise Value equals market price of common stock multiplied by the number of common shares outstanding plus total debt less cash. DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 2 - 28 BIC - -------------------------------------------------------------------------------- PREMIUMS PAID NOTES: - - Of the 38 minority transactions consummated since 1990, 23 (60.5%) had a premium of less than 30% and 13 (34.2%) had a premium of less than 20%.
PREMIUM OF OFFER OVER STOCK PRICE PRIOR TO ANNOUNCEMENT ---------------------------------------------------------------- 52 WEEK HIGH FROM MONTH PRIOR TO 1 MONTH 52 WEEK AVG. 52 WEEK HIGH ANNOUNCEMENT -------- ------------ ------------ ------------ BIC Corp. Price .................. $31.50 $31.38 $37.50 $32.50 Offer Price (5/18/95) ............ $36.50 $36.50 $36.50 $36.50 Premium .......................... 15.9% 16.3% (2.6%) 12.3% Median Premium ................... 23.7% 16.2% (4.6%) 2.1% Implied Price .................... $38.97 $36.46 $35.79 $33.20 ====== ====== ====== ====== Average Premium .................. 29.8% 23.9% (1.7%) 3.6% Implied Price .................... $40.89 $38.87 $36.86 $33.67 ====== ====== ====== ======
DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 3 - 29 BIC - -------------------------------------------------------------------------------- AVERAGE PREMIUMS PAID IN 38 SELECTED MINORITY SQUEEZE-OUT TRANSACTIONS 1990-PRESENT [Graph 10] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 4 - 30 BIC - -------------------------------------------------------------------------------- DISTRIBUTION OF PREMIUMS PAID VS. PRICE ONE MONTH PRIOR TO ANNOUNCEMENT IN 38 SELECTED MINORITY SQUEEZE-OUT TRANSACTIONS 1990-PRESENT [Graph 11] DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE - 5 - 31 BIC - -------------------------------------------------------------------------------- ANALYSIS OF PREMIUMS PAID IN MINORITY TRANSACTIONS DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE 32 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
Ticker Symbol of Date Final Percent Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased - --------------------------------------------------------------------------------------------------------------------------------- Fleet Mortgage Group Inc / FLG 12/28/94 Offer: $20.00 cash for each share not $20.00 19.0% Fleet Financial Group Inc already owned Pacific Telecom Inc / PTCM 11/02/94 Offer: $28.00 cash for each share not $28.00 13.0% PacifiCorp already owned. Contel Cellular Inc. / CCXLA 09/08/94 Offer: $22.50 cash for each share not $22.50 10.0% GTE Corp. already owned Castle & Cooke Homes Inc / CKI 08/24/94 Earlier, Dole completed a tender offer to $15.75 17.2% Dole Food Co Inc acquire the remaining 17% stake in CC which it did not already own for an amended $15.75 in cash per share (vs. and original $14) by accepting 5.019 mil shares, 16.6% of CC's total shares outstanding. North Canadian Oils / NCD 08/16/94 Offer: $13.25 CD for each share not $13.25 47.6% Norcen Energy Resources already owned
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Value of Price 3 months Price One Month Price One Week Price One Day Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't - ---------------------------------------------------------------------------------------------------------------------------------- Fleet Mortgage Group Inc / $188.1 4.6% 23.1% 21.2% 19.4% Fleet Financial Group Inc Pacific Telecom Inc / $148.4 33.3% 13.1% 15.5% 15.5% PacifiCorp Contel Cellular Inc. / $224.0 36.4% 23.2% 24.1% 26.8% GTE Corp. Castle & Cooke Homes Inc / $81.5 29.9% 51.9% 41.6% 35.5% Dole Food Co Inc North Canadian Oils / $122.0 41.3% 68.2% 63.1% 68.3% Norcen Energy Resources
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid- Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure - ------------------------------------------------------------------------------------------------------------------------------------ Fleet Mortgage Group Inc / 22.5% -2.4% 45.5% 2.5% Cash Merger Fleet Financial Group Inc Pacific Telecom Inc / 17.0% 6.7% 17.9% 1.8% Cash Merger PacifiCorp Contel Cellular Inc. / 32.8% -4.3% 38.5% -7.8% Cash Merger GTE Corp. Castle & Cooke Homes Inc / 23.7% 0.0% 16.7% -1.6% Cash Tender Dole Food Co Inc North Canadian Oils / 51.4% 37.7% 51.4% -2.8% Cash Merger Norcen Energy Resources
33 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
Ticker Symbol of Date Final Percent Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased - ---------------------------------------------------------------------------------------------------------------------------- Intergroup Healthcare Corp / IGHC 07/29/94 Foundation Health (FH) acquired the $71.03 37.4% Foundation Health Corp remaining 3.6 mil. common shares, or 37.4% of Intergroup Healthcare (IH) it did not already own for $255.7 mil in common stock Chemical Waste Management Inc / CHW 07/28/94 WMX Technologies acquired the $8.85 21.4% WMX Technologies Inc remaining 44.9 mil common shares, or 21.4% it did not already own in Chemical Waste Management (CWM) in a transacton valued at an amended $397.365 mil. Ogden Projects Inc (Ogden Corp) OPI 06/06/94 Ogden (OG) acquired the remaining $19.34 15.8% / Ogden Corp 15.8% of Ogden Projects (OP) that it did not already own in a stock swap merger valued at an amended $110.25 mil. Enquirer/Star Group Inc. / ENQ 04/28/94 Offer: $17.50 cash for 43.0% of each $17.50 43.0% MacFadden Holdings Inc. & share not already owned. Boston Ventures L.P. Foxmeyer Corp. / FOX 03/01/94 Offer: Exchange of $14.75 in principal $14.75 19.4% National Intergroup Inc. amount of $81.3MM new issue of 8.25% senior notes due 2004 for each share not already owned. Scripps Howard Broadcasting Co / SCRP 02/17/94 EW Scripps (EW), a 77.6% subsidiary $79.93 14.0% EW Scripps (Edward Scripps Tr) of EW Scripps Trust, offered to acquire the remaining 14% interest in Scripps Howard Broadcasting (SHB), that it did not already own, in a transaction valued at $115.92 mil.
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Value of Price 3 months Price One Month Price One Week Price One Day Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't - ------------------------------------------------------------------------------------------------------------------------------------ Intergroup Healthcare Corp / $255.7 58.3% 61.4% 90.7% 49.5% Foundation Health Corp Chemical Waste Management Inc / $397.4 7.3% 1.1% 10.6% 10.6% WMX Technologies Inc Ogden Projects Inc (Ogden Corp) $110.3 25.8% 20.5% 25.8% 11.3% / Ogden Corp Enquirer/Star Group Inc. / $636.0 -7.3% 2.2% 16.7% 20.7% MacFadden Holdings Inc. & Boston Ventures L.P. Foxmeyer Corp. / $81.3 8.3% 13.5% -5.6% -6.3% National Intergroup Inc. Scripps Howard Broadcasting Co / $115.9 12.6% 12.3% 6.4% 1.8% EW Scripps (Edward Scripps Tr)
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid- Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure - ------------------------------------------------------------------------------------------------------------------------------------ Intergroup Healthcare Corp / 69.4% 20.4% 40.0% -21.9% Stock Tender Foundation Health Corp Chemical Waste Management Inc / 1.4% -21.3% -17.7% 24.3% Cash Tender WMX Technologies Inc Ogden Projects Inc (Ogden Corp) 14.2% -19.0% 24.8% 23.4% Stock Tender / Ogden Corp Enquirer/Star Group Inc. / 7.5% -7.3% -5.4% 8.6% Cash Merger MacFadden Holdings Inc. & Boston Ventures L.P. Foxmeyer Corp. / -2.3% -6.3% 13.5% 9.3% Cash Merger National Intergroup Inc. Scripps Howard Broadcasting Co / 13.6% -4.8% 12.6% 5.1% Stock Tender EW Scripps (Edward Scripps Tr)
34 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
Ticker Symbol of Date Final Percent Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased - ---------------------------------------------------------------------------------------------------------------------------- Holnam Inc (Holdernam Inc) / HLN 01/07/94 Holderbank Financiere Glarus (HFG) $7.60 5.0% Holderbank Financiere Glarus acquired the remaining 5%, or about 6.8 mil common shares, that it did not already own in Holnam, a unit of the Holdernam subsidiary of HFG Southeastern Public Service Co. / SPV 11/22/93 Offer: Exchange 2,691,822 shares of $20.54 29.0% Triarc Companies, Inc. Class A common stock, or about .8 of a Triarc share for each publicly held Southeastern share. West Point-Pepperell Inc / WPM 09/20/93 Offer: $46 cash per share not already $46.00 5.0% Valley Fashions Corp owned. Southeastern Public Service Co / SSPS 04/26/93 Triarc Cos, formerly known as DWG, $25.60 29.0% DWG Corp (Triarc Companies Inc) acquired the remaining 29%, or 3.36 mil. common shares, in its Southeastern Public Service (SP) unit for a revised $86.14 mil. Brand Cos Inc. / BRAN 11/13/92 Offer: One share of $18.75 cash per $18.75 44.0% Chemical Waste Management Inc. share not already owned.
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Value of Price 3 months Price One Month Price One Week Price One Day Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't - ------------------------------------------------------------------------------------------------------------------------------------ Holnam Inc (Holdernam Inc) / $51.7 52.0% 7.4% 14.7% 12.6% Holderbank Financiere Glarus Southeastern Public Service Co. / $69.0 10.3% -4.6% -9.0% -4.7% Triarc Companies, Inc. West Point-Pepperell Inc / $46.0 -5.2% 4.3% -8.0% -7.8% Valley Fashions Corp Southeastern Public Service Co / $86.1 -18.7% -4.6% -20.0% -19.1% DWG Corp (Triarc Companies Inc) Brand Cos Inc. / $185.0 27.1% 7.1% 7.1% 4.9% Chemical Waste Management Inc.
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid- Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure - ------------------------------------------------------------------------------------------------------------------------------------ Holnam Inc (Holdernam Inc) / 73.8% -0.3% 60.0% -4.6% Cash Tender Holderbank Financiere Glarus Southeastern Public Service Co. / 22.7% -17.4% 40.4% 19.3% Stock Merger Triarc Companies, Inc. West Point-Pepperell Inc / 0.0% -8.0% -5.6% 9.2% Cash Merger Valley Fashions Corp Southeastern Public Service Co / -17.2% -20.0% -13.6% -36.0% Stock Tender DWG Corp (Triarc Companies Inc) Brand Cos Inc. / 13.2% 4.9% 25.0% -20.0% Cash Merger Chemical Waste Management Inc.
35 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
Ticker Symbol of Date Final Percent Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased - ---------------------------------------------------------------------------------------------------------------------------- PHLCORP Inc / PHX 08/17/92 Leucadia National (LN), a unit of $25.78 36.9% Leucadia National Corp Unitah National, acquired the remaining 36.9%, or 5,428,127 shares, of PHLCORP that it did not already own for $139.94 mil in LN common stock. Loral Aerospace Corp / Loral Corp LORA 07/01/92 6.15 mil shs com/41% stock interest $32.24 41.0% Grace Energy Corp. / GEG 03/02/92 Original Offer: 64MM cash for the $19.00 17.0% W.R. Grace & Co. remaining 17% of the company not already owned. Offer later raised to $77.3MM. Unocal Exploration Corp / UXC 02/24/92 Unocal acquired the remaining 10.08 $11.66 4.0% Unocal Corp mil common shares, or 4%, of Unocal Exploration that it did not already own in a stock swap valued at $117.5 mil. American Television & Commun / ATCMA 10/16/91 Time Warner (TW) acquired the $82.50 18.0% Time Warner remaining 18% of American Television & Communications (ATC) that it did not already own for $82.50 per share or $1,699.5 mil.
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Value of Price 3 months Price One Month Price One Week Price One Day Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't - ------------------------------------------------------------------------------------------------------------------------------------ PHLCORP Inc / $139.9 32.2% 28.9% 15.2% 15.2% Leucadia National Corp Loral Aerospace Corp / Loral Corp $198.3 2.3% 3.6% 1.9% 0.0% Grace Energy Corp. / $77.3 33.3% 60.0% 58.3% 31.0% W.R. Grace & Co. Unocal Exploration Corp / $117.5 9.7% 22.9% 16.6% 18.1% Unocal Corp American Television & Commun / $1,699.5 96.4% 88.6% 70.1% 66.7% Time Warner
Premium to Stock Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid- Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure - ------------------------------------------------------------------------------------------------------------------------------------ PHLCORP Inc / 31.6% 13.9% 19.9% -8.4% Stock Tender Leucadia National Corp Loral Aerospace Corp / Loral Corp -5.5% -6.4% -0.8% -30.0% Cash Merger Grace Energy Corp. / 26.5% 3.4% 13.4% -3.3% Cash Merger W.R. Grace & Co. Unocal Exploration Corp / 10.1% -2.8% -12.8% 2.9% Stock Tender Unocal Corp American Television & Commun / 100.3% 66.7% 82.3% -42.1% Cash Tender Time Warner
36 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
TICKER SYMBOL OF DATE FINAL PERCENT ACQUIRED / ACQUIROR NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED - ---------------------------------------------------------------------------------------------------------------------------------- Arkla Exploration Co / ARK 9/18/91 Arkla acquired the remaining 18%, $15.44 18.0% Arkla Inc or 5,999,400 common shares, of Arkla Exploration that it did not already own in a sweetened stock swap tender offer valued at $92.6 mil. Metcalf & Eddy Cos Inc / METC 3/1/91 Air & Water Technologies acquired the $19.26 18.0% Air & Water Technologies remaining 18% of Metcalf & Eddy that Corp it did not already own in a stock swap valued at $50.99 mil. Air & Water offered .875 shares of its common stock for each of the 2,648,880 shares of Metcalf traded publicly. Hamilton Oil Corp. / HAML 2/6/91 $40 cash per share for the 49.9% not $40.00 49.9% Broken Hill Proprietary already owned. (Shareholders can elect Co. to receive cash or the equivalent value in American Depository Shares representing ordinary shares of Broken Hill.) US West Newvector Group US WNA 11/12/90 Original Offer: 0.95 US West shares $44.00 19.0% Inc. / US West per Newvector share. Revised Offer: 1.14 US West shares for each of the 19% US West Newvector not already owned. (Exchange ratio based on $44 value of consideration.) ERC Environmental & ERCE 10/23/90 Original Offer: $14.75 cash per share. $15.13 32.0% Energy Services Co. Inc. / Revised Offer: $15.13 cash for the 32% Ogden Corp. of shares not already owned. PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK VALUE OF PRICE 3 MONTHS PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY ACQUIRED / ACQUIROR NAME DEAL ($MIL) PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T - ------------------------------------------------------------------------------------------------------------------------------ Arkla Exploration Co / $92.6 -3.5% 30.0% 0.4% 1.2% Arkla Inc Metcalf & Eddy Cos Inc / $51.0 51.1% 24.2% 22.3% 22.3% Air & Water Technologies Corp Hamilton Oil Corp. / $530.0 16.8% 21.2% 19.4% 18.5% Broken Hill Proprietary Co. US West Newvector Group $350.0 67.6% 80.0% 68.4% 44.3% Inc. / US West ERC Environmental & $45.4 40.7% 26.1% 49.4% 37.5% Energy Services Co. Inc. / Ogden Corp. PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH HIGH EXCLUDING CONSID- ACQUIRED / ACQUIROR NAME AVERAGE PRIOR HIGH PRIOR BEFORE PRICE PREVIOUS MONTH ERATION STRUCTURE - --------------------------------------------------------------------------------------------------------------------------------- Arkla Exploration Co / -9.5% -28.6% 14.4% 32.8% Stock Tender Arkla Inc Metcalf & Eddy Cos Inc / 0.4% -38.4% 45.4% 62.3% Stock Tender Air & Water Technologies Corp Hamilton Oil Corp. / 15.5% -8.6% -8.6% 9.4% Cash Merger Broken Hill Proprietary Co. US West Newvector Group 36.1% 3.5% 36.4% -3.4% Stock Merger Inc. / US West ERC Environmental & 42.4% 37.5% 44.1% -7.5% Cash Merger Energy Services Co. Inc. / Ogden Corp.
5 37 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
TICKER SYMBOL OF DATE FINAL PERCENT ACQUIRED / ACQUIROR NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED - --------------------------------------------------------------------------------------------------------------------------- Western Gas Processors WGR 10/8/90 Western Gas Resources acquired the $12.75 48.0% Ltd / Western Gas remaining 10,222,957 common limited Resources Inc partnership units, or the 48% of Western Gas Processors, that it did not already own, for the same number of Western Gas Resources common shares. Sizzler Restaurants SIZZ 9/11/90 1.25 shares of "New Collins" for each of $22.03 34.0% International Inc. / Collins the 34% Sizzler already owned. Foods Closing contingent upon completion of sale of domestic Kentucky Fried Chicken and other operations to Pepsico. Freeport-McMoRan Oil & FMP 7/31/90 Exchange of stock valuing Freeport @ $10.50 18.5% Gas Co./ Freeport- $10.50/share. Freeport will be valued at McMoRan Inc. an average of the composite tape closing prices for the last 10 trading days prior to the formal Freeport Shareholder approval. Caesars New Jersey Inc. / CJN 7/19/90 $22 cash per share tender offer for the $22.00 13.4% Caesars World Inc. 2,175,945 outstanding shares. TVX Broadcast Group Inc. TVXGC 7/12/90 Paramount Communications, formerly $9.50 21.0% / Paramount Gulf & Western, acquired the remaining Communications Inc. 21% of TVX Broadcast Group, a unit of Salomon, for a sweetened $9.50 per share. Mack Trucks Inc / Renault MACK US 7/6/90 Renault Vehicules Industriels, a unit of $8.78 40.0% Vehicles Industrials France's Regie Nationale des Usines Renault, acquired the 40% of Mack Trucks it did not own. DST Systems Inc. / Kansas DSTS 5/25/90 Initial offer of $14 cash per share. Most $15.85 12.9% City Southern Industries, recent is $15.85 cash per share. Inc. PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK VALUE OF PRICE 3 MONTHS PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY ACQUIRED / ACQUIROR NAME DEAL ($MIL) PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T - ------------------------------------------------------------------------------------------------------------------------------ Western Gas Processors $130.3 -8.9% -12.5% -15.0% -16.4% Ltd / Western Gas Resources Inc Sizzler Restaurants $122.0 3.7% 26.1% 37.7% 31.5% International Inc. / Collins Foods Freeport-McMoRan Oil & $241.0 27.3% 42.5% 40.0% 31.3% Gas Co./ Freeport- McMoRan Inc. Caesars New Jersey Inc. / $63.9 40.8% 34.5% 39.7% 36.4% Caesars World Inc. TVX Broadcast Group Inc. $61.4 130.3% 85.4% 94.9% 26.7% / Paramount Communications Inc. Mack Trucks Inc / Renault $103.7 32.5% 22.0% 71.3% 67.2% Vehicles Industrials DST Systems Inc. / Kansas $39.0 60.5% 54.6% 24.3% 5.7% City Southern Industries, Inc. PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH HIGH EXCLUDING CONSID- ACQUIRED / ACQUIROR NAME AVERAGE PRIOR HIGH PRIOR BEFORE PRICE PREVIOUS MONTH ERATION STRUCTURE - ---------------------------------------------------------------------------------------------------------------------------------- Western Gas Processors -14.3% -16.4% -8.9% 4.9% Stock Tender Ltd / Western Gas Resources Inc Sizzler Restaurants 11.1% -5.8% 25.9% 6.1% Stock Merger International Inc. / Collins Foods Freeport-McMoRan Oil & 7.7% -16.0% 10.5% 22.3% Stock Merger Gas Co./ Freeport- McMoRan Inc. Caesars New Jersey Inc. / 11.3% -21.4% 36.4% 29.0% Cash Tender Caesars World Inc. TVX Broadcast Group Inc. 127.7% 26.7% 130.3% -44.7% Cash Merger / Paramount Communications Inc. Mack Trucks Inc / Renault 15.5% -26.8% 59.6% 46.6% Cash Tender Vehicles Industrials DST Systems Inc. / Kansas 35.5% 5.7% 37.8% -8.5% Cash Merger City Southern Industries, Inc.
6 38 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
TICKER SYMBOL OF DATE FINAL PERCENT ACQUIRED / ACQUIROR NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED - ---------------------------------------------------------------------------------------------------------------------------- American Capital ACA 5/9/90 Original Terms: 0.3 Primerica shares $11.50 17.4% Management & Research for each American Capital share. Inc. / Primerica Corp. Revised Offer: Either 0.32 Primerica (formerly American Can share of $11.50 in cash per share for the Co.) 17.4% share not already owned. LPL Technologies, Inc. / LPLI 3/19/90 Revised Terms: $25 cash for the 20% $25.00 49.0% Cheshire Acquisition of LPL's shares that are publicly traded; Group for the 29% balance of LPL shares not owned by Cheshire, $17 in cash plus one share of 12% cumulative redeemable preferred stock with a stated value of $8 per share. Shearson Lehman Hutton / SLH 3/2/90 Original terms: 0.426 American $12.90 39.0% American Express Co. Express shares per Shearson share. Revised Terms: 0.48 American Express shares valued at $26.875 for the 39% of Shearson shares not already owned. POP Radio Corp. / POPX 2/26/90 $20.50 cash for the 44% of shares not $20.50 44.0% Heritage Media Corp. already owned. Copperweld Corp. / Imetal COS 1/24/90 In metal acquired the remaining 44.3% $17.00 44.4% S.A. of Copperweld that it did not already own for $17 per share in cash, or $78.026 mil., an increase from its earlier offer of $15.50 per share in cash, or $71.141 mil. The revised offer was announced in January 1990. ======================================================================= Averages $24.3 26.5% Medians $19.1 20.2% Number of deals 38 38 ======================================================================= PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK VALUE OF PRICE 3 MONTHS PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY ACQUIRED / ACQUIROR NAME DEAL ($MIL) PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T - ---------------------------------------------------------------------------------------------------------------------------- American Capital $50.7 27.8% 36.0% 35.3% 37.3% Management & Research Inc. / Primerica Corp. (formerly American Can Co.) LPL Technologies, Inc. / $25.1 58.7% 44.9% 53.8% 28.2% Cheshire Acquisition Group Shearson Lehman Hutton / $361.2 -15.4% 9.8% 18.6% -0.8% American Express Co. POP Radio Corp. / $40.0 51.9% 70.7% 41.4% 20.6% Heritage Media Corp. Copperweld Corp. / Imetal $78.0 19.3% 33.3% 44.7% 47.8% S.A. ============================================================================================================================ $195.2 28.7% 29.8% 29.0% 21.3% $113.1 27.5% 23.7% 23.2% 20.0% 38 38 38 38 38 ============================================================================================================================ PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH HIGH EXCLUDING CONSID- ACQUIRED / ACQUIROR NAME AVERAGE PRIOR HIGH PRIOR BEFORE PRICE PREVIOUS MONTH ERATION STRUCTURE - -------------------------------------------------------------------------------------------------------------------------------- American Capital 31.0% 24.3% 35.3% -13.0% Cash Tender Management & Research Inc. / Primerica Corp. (formerly American Can Co.) LPL Technologies, Inc. / 66.2% 12.4% 42.9% -26.0% Cash Merger Cheshire Acquisition Group Shearson Lehman Hutton / -27.7% -45.4% -44.2% 82.2% Stock Merger American Express Co. POP Radio Corp. / 17.6% -18.0% 34.4% 22.0% Cash Merger Heritage Media Corp. Copperweld Corp. / Imetal 35.3% 17.2% 23.6% -5.9% Cash Tender S.A. ========================================================================================================== 23.9% -1.7% 25.3% 3.6% 16.2% -4.6% 24.9% 2.1% 38 38 38 38 ==========================================================================================================
ONE MONTH BEFORE STATISTICS ONE MONTH BEFORE 6 MONTHS BEFORE - ------------------------------------------------------------------------------------------ Max premium paid: 88.6% 82.3% Min premium paid: -4.6% -17.7% - ------------------------------------------------------------------------------------------
CASH DEALS (INCLUDES NOTES) - ----------------------------------------------------------------------------------------- Number of Deals: 24 24 Average: 33.2% 32.1% Av. (Exc. High & Low) 32.1% 29.9% Max: 88.6% 130.3%
7 39 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
CASH DEALS (INCLUDES NOTES) - ------------------------------------------------------------------------------------ Min: 1.1% -17.7% - ------------------------------------------------------------------------------------
STOCK DEALS - ------------------------------------------------------------------------------------ Number of Deals: 14 14 Average: 24.1% 13.6% Av. (Exc. High & Low) 22.5% 13.5% Max: 80.0% 45.4% Min: -12.5% -44.2% - ------------------------------------------------------------------------------------
PERCENT PURCHASED IN CASH DEALS - ---------------------------------------------------------------------------------------------- 1 MONTH PERCENT PREMIUM 6 MONTH PREMIUM 1 MONTH # OF DEALS 6 MONTH # OF DEALS 5-10% 5.9% 27.2% 2 2 10-20% 39.8% 33.7% 10 10 20-30% 43.3% 56.3% 2 2 30-40% 24.1% 44.1% 2 2 40-50% 31.4% 24.7% 8 8 - ---------------------------------------------------------------------------------------------- Average all cash deals 33.2% 32.9% - ----------------------------------------------------------------------------------------------
8 40 PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS 1990-PRESENT
ACQUIRED/ TICKER PREMIUM TO STOCK ACQUIROR SYMBOL OF DATE FINAL PERCENT VALUE OF PRICE 3 MONTHS NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED DEAL ($MIL) PRIOR TO ANNOUNC'T - ------------------------------------------------------------------------------------------------------------------------------------ ==================================================================================================================================== BIC Corp. Stock Price $31.38 Price Implied by Average $40.38 Price Implied by Median $40.01 =================================================================================================================================== ACQUIRED/ TICKER PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK ACQUIROR SYMBOL OF DATE PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T - ------------------------------------------------------------------------------------------------------------------------------------ ==================================================================================================================================== BIC Corp. Stock Price $31.50 $36.13 $35.75 Price Implied by Average $40.89 $46.62 $43.36 Price Implied by Median $38.97 $44.51 $42.90 =================================================================================================================================== ACQUIRED/ TICKER PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK ACQUIROR SYMBOL OF DATE PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH NAME ACQUIRED ANNOUNCED TRANSACTION TERMS AVERAGE PRIOR HIGH PRIOR BEFORE PRICE - ------------------------------------------------------------------------------------------------------------------------------------ ==================================================================================================================================== BIC Corp. Stock Price $31.38 $37.50 $27.13 Price Implied by Average $38.87 $36.86 $33.99 Price Implied by Median $36.46 $35.79 $33.88 ==================================================================================================================================== PREMIUM TO STOCK ACQUIRED/ TICKER PRICE VS. 52 WEEK ACQUIROR SYMBOL OF DATE HIGH EXCLUDING NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PREVIOUS MONTH CONSIDERATION STRUCTURE - ------------------------------------------------------------------------------------------------------------------------------------ ==================================================================================================================================== BIC Corp. Stock Price $32.50 Price Implied by Average $33.67 Price Implied by Median $33.20 ===================================================================================================================================
41 BIC - -------------------------------------------------------------------------------- DISCOUNTED CASH FLOW DLJ - -------------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE 42 DISCOUNTED CASH FLOW RESULTS - 5 YEAR EXIT GOLDMAN CASE WITH CONSTANT MARGINS Assumptions: Consolidated 1) operating margins constant at 1994 levels
------------------------------------------------------------------- VALUE PER SHARE ------------------------------------------------------------------- TERMINAL MULTIPLE OF 1999 EBITDA ------------------------------------------------------------------- 6.0x 6.5x 7.0x 7.5x 8.0x ------------------------------------------------------------------- 9.0% $36.03 $38.10 $40.17 $42.23 $44.30 DISCOUNT 10.0% $34.70 $36.67 $38.65 $40.62 $42.60 RATE 11.0% $33.43 $35.32 $37.21 $39.10 $40.99 12.0% $32.23 $34.04 $35.84 $37.65 $39.45 13.0% $31.09 $32.82 $34.54 $36.27 $38.00
GOLDMAN CASE WITH REDUCED GROWTH AND CONSTANT MARGINS Assumption: Stationery 1) 3% unit and 2% price increases per year Consolidated 1) operating margins constant at 1994 levels
--------------------------------------------------------------- VALUE PER SHARE --------------------------------------------------------------- TERMINAL MULTIPLE OF 1999 EBITDA --------------------------------------------------------------- 6.0x 6.5x 7.0x 7.5x 8.0x --------------------------------------------------------------- 9.0% $34.16 $36.08 $38.00 $39.92 $41.84 10.0% $32.91 $34.75 $36.58 $38.42 $40.25 DISCOUNT 11.0% $31.73 $33.48 $35.23 $36.99 $38.74 RATE 12.0% $30.60 $32.28 $33.95 $35.63 $37.31 13.0% $29.53 $31.14 $32.74 $34.34 $35.95
GOLDMAN CASE Assumptions: Stationery 1) 4.5% unit and 3.5% price increases per year Lighters 1) 2% unit and 0% price increases per year Shavers 1) 1.5% unit and 4% price increases per year beginning in 1996 2) Introduction of Product X
-------------------------------------------------------------- VALUE PER SHARE -------------------------------------------------------------- TERMINAL MULTIPLE OF 1999 EBITDA --------------------------------------------------------------- 6.0x 6.5x 7.0x 7.5x 8.0x --------------------------------------------------------------- 9.0% $40.94 $43.31 $45.69 $48.06 $50.44 DISCOUNT 10.0% $39.40 $41.67 $43.94 $46.21 $48.48 RATE 11.0% $37.94 $40.11 $42.28 $44.45 $46.62 12.0% $36.56 $38.63 $40.71 $42.78 $44.86 13.0% $35.25 $37.23 $39.21 $41.20 $43.18
43 BIC - -------------------------------------------------------------------------------- ACCRETION/DILUTION ANALYSIS DLJ - -------------------------------------------------------------------------------- 44 ACCRETION/DILUTION ANALYSIS - -------------------------------------------------------------------------------- TRANSACTION ASSUMPTIONS - -- Minority interest other than Bich Family acquired at a price of $36.50. - -- Transaction funded with cash on hand of 1.0 billion FFr, consisting of purchase price and expenses at an exchange rate of 5.05 FFr/US$. - -- Cash assumed to generate interest income at 7.0% per annum. - --------------------------------------------------------------------------------
Pro Forma Income Statements Pro Forma Pro Forma 1994A Adjustments 1994A 1995 (1) Adjustments 1995 (1) ------- ----------- ------- --------- ----------- -------- Revenues 6,399.6 6,399.6 6,570.0 6,570.0 EBIT 1,076.4 1,076.4 1,100.0 1,100.0 Interest Income (73.0) 70.0 (2) (3.0) (140.0) 70.0 (2) (70.0) Goodwill 0.0 17.6 (3) 17.6 0.0 17.6 (3) 17.6 ------- ------- ------- ------- Pre-tax Income 1,149.3 1,061.7 1,240.0 1,152.4 Taxes 445.7 (27.3)(4) 418.4 483.0 (20.7)(5) 462.3 Minority Interest 122.8 (57.3)(6) 65.5 112.0 (67.8)(6) 44.2 ------- ------- ------- ------- Net Income 580.8 577.8 645.0 645.9 ======= ======= ======= ======= Earnings per Share 41.92 41.80 46.70 46.72 ======= ======= ======= ======= Accretion (Dilution) % -0.3% 0.0%
- --------------------------------------------------------------------------------
Offer Price Current Market Price ----------- -------------------- $36.50 $39.50 1995 Accretion (Dilution) % 0.0% -0.7%
- -------------------------------------------------------------------------------- - ------------------------- (1) Source: Indosuez Capital Equity Research report dated April 18, 1995. (2) Reduction in interest income on 1.0 billion FFr purchase price at 7.0% per annum. (3) Goodwill based on an excess of purchase price of 1.0 billion FFr over minority interest of 295.6 million FFr amortizable over 40 years. (4) Assumes a 39% average tax rate. (5) Assumes a 39.50% average tax rate. (6) Minority interest reduced for the acquisition of all public shares excluding Bich Family. Page 1 EX-99.B4 4 DONALDSON, LUFKIN REPORT DATED JULY 10,1995 1 Exhibit (b)(4) - -------------------------------------------------------------------------------- DISCUSSION MATERIALS FOR PROJECT POINT JULY 10, 1995 - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 2 PROJECT POINT - -------------------------------------------------------------------------------- TABLE OF CONTENTS
EXHIBIT COMPARABLE COMPANY ANALYSIS . . . . . . . . . . . . . . . . . . . . . . 1 PREMIUMS PAID ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . 2 CHANGE OF CONTROL TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . 3 DISCOUNTED CASH FLOW ANALYSIS . . . . . . . . . . . . . . . . . . . . . 4 PRESENT VALUE OF FUTURE STOCK PRICES AND DIVIDENDS PAID . . . . . . . . 5 LEVERAGED RECAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . 6 LBO ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SUMMARY / CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . 8
- ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 3 4 PROJECT POINT - -------------------------------------------------------------------------------- COMPARABLE COMPANY ANALYSIS - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 5 PROJECT POINT - -------------------------------------------------------------------------------- FACTORS INFLUENCING COMPARABILITY
LEADING CONSUMER PRODUCTS COMPANIES BIC CORPORATION ----------------------------------------------------------- --------------------------------------------- 1. Diversification 1. Not Diversified - Worldwide presence - Domestic U.S. presence - Full line of product offerings in numerous markets - Limited product lines 2. Large Size 2. Middle Market - Market capitalization in excess of $2.0 billion - Market capitalization of $850 million - Revenues in excess of $2.0 billion - Revenue of $485 million 3. Large Advertising and R&D Expenditures 3. Minimal Advertising and R&D Expenditures 4. Sustainable Revenue Growth 4. Limited Sources of Revenue Growth - New product introductions - No new products - Acquisitions - No acquisitions - New geographic markets - No new markets 5. Market and Price Leadership 5. Commodity Products at Low Price Points 6. Success in Acquisitions 6. No Acquisition Track Record - Proven ability to leverage distribution strength - Proven ability to improve acquired companies 7. Breadth of Manufacturing and Marketing Experience 7. Expertise Limited to Plastic Products
- ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -1- 6 PROJECT POINT - -------------------------------------------------------------------------------- COMPARATIVE MARGIN ANALYSIS - - BIC Corp's core writing instruments business has comparable margins to the writing instruments companies included in the DLJ comparable company universe (BIC Corporation Writing Instruments, Hunt Mfg., Pentech, and Dixon Ticonderoga). [GRAPH] - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -3- 7 PROJECT POINT - -------------------------------------------------------------------------------- COMPARATIVE P/E RATIOS December 31, 1993 through Present - - BIC Corp. has historically traded below the universe of Consumer Products Companies presented. [GRAPH] - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -4- 8 PROJECT POINT - -------------------------------------------------------------------------------- COMPARATIVE PRICE & P/E RATIOS December 1993 Through Present - - BIC Corp.'s valuation has been comparable to or exceeded by RAZR, PNTK, DXT and HUN. [GRAPH] - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -5- 9 PROJECT POINT - -------------------------------------------------------------------------------- COMPARABLE COMPANY COMPOSITES DLJ UNIVERSE
DLJ PEN AND RAZOR COMPOSITE BEST COMPARABLE COMPANY --------------------------------------------- ----------------------------------------------- Societe Bic Societe Bic Gillette Company American Safety Razor A. T. Cross Co. Pentech International Dixon Ticonderoga American Business Products Hunt Manufacturing Avery Dennison
COMPROMISE UNIVERSE
COMBINED COMPOSITE STAPLES U.S.A. MOST COMPARABLE COMPANIES ------------------------------------------- ----------------------------------------- ------------------------------------- Societe Bic American Safety Razor Societe BIC Gillette Pentech International Newell (GS) American Safety Razor Hunt Manufacturing A. T. Cross Co. Newell (GS) Pentech International Rubbermaid (GS) Dixon Ticonderoga American Business Products Hunt Manufacturing Avery Dennison Duracell (GS) Newell (GS) Rubbermaid (GS)
- ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -6- 10 PROJECT POINT - -------------------------------------------------------------------------------- SUMMARY VALUATION DLJ Universe
BIC CORP. SOCIETE VALUATION PARAMETERS RESULTS AVERAGE(1) VALUATION BIC VALUATION - -------------------------------- -------- ---------- --------- ------- --------- Price / 1995 EPS $ 2.38 15.0x $35.76 17.6x $41.79 Price / 1996 EPS $ 2.45 13.6x $33.32 15.1x $37.00 Enterprise Value / LTM Revenues $485.8 1.1x $25.25 1.4x $31.31 Enterprise Value / LTM EBDAIT $114.2 6.8x $35.51 5.8x $30.96 Enterprise Value / LTM EBIT $ 90.4 8.9x $36.70 7.8x $32.71 ---------------------------------------------------------- Average $33.31 $34.75 ----------------------------------------------------------
Compromise Universe
BIC CORP. COMBINED STAPLES VALUATION PARAMETERS RESULTS COMPOSITE(2) VALUATION U.S.A.(3) VALUATION - ------------------------------- --------- ------------ --------- --------- --------- Price / 1995 EPS $ 2.38 16.4x $39.08 13.7x $32.65 Price / 1996 EPS $ 2.45 14.8x $36.33 13.4x $32.84 Enterprise Value / LTM Revenues $485.8 1.4x $30.90 1.3x $29.58 Enterprise Value / LTM EBDAIT $114.2 7.6x $39.65 7.4x $38.41 Enterprise Value / LTM EBIT $ 90.4 9.8x $40.21 9.1x $37.61 -------------------------------------------------------------------------- Average $37.23 $34.22 --------------------------------------------------------------------------
MOST COMPARABLE VALUATION PARAMETERS COMPANIES(4) VALUATION - ------------------------------- ------------ --------- Price / 1995 EPS 17.0x $40.39 Price / 1996 EPS 14.7x $36.03 Enterprise Value / LTM Revenues 1.6x $36.56 Enterprise Value / LTM EBDAIT 7.6x $39.43 Enterprise Value / LTM EBIT 9.5x $39.03 -------------------------- $38.29 --------------------------
__________________________________ (1) Comparable Companies include Societe BIC, Gillette Company, American Safety Razor, A.T. Cross Co., Pentech International, Dixon Ticonderoga Co, American Business Products, Hunt Manufacturing, and Avery Dennison. (2) Comparable companies include Societe BIC, Gillette, American Safety Razor, A.T. Cross, Pentech International, Dixon Ticonderoga, American Business Products, Hunt Manufacturing, Avery Dennison, Duracell International, Rubbermaid and Newell. (3) Comparable companies include Rubbermaid, Newell, American Safety Razor, Pentech International, and Hunt Manufacturing. (4) Comparable companies include Society Bic and Newell. - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETT -7- 11 12 PROJECT POINT - -------------------------------------------------------------------------------- PREMIUMS PAID ANALYSIS - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 13 PROJECT POINT - -------------------------------------------------------------------------------- MINORITY INTEREST PREMIUMS PAID ANALYSIS - - Of the 38 minority transactions consummated since 1990, 23 (60.5%) had a premium of less than 30% and 13 (34.2%) had a premium of less than 20%.
PREMIUM PAID OVER STOCK PRICE PRIOR TO ANNOUNCEMENT ------------------------------------------------------------------------------------------------ 52 WEEK HIGH UP TO ONE MONTH PRIOR TO 1 MONTH 52 WEEK AVG. 52 WEEK HIGH ANNOUNCEMENT ------- ------------ ------------ ------------------------ BIC Corp. Price. . . . . . $31.50 $31.38 $37.50 $32.50 Offer Price (5/18/95). . . $36.50 $36.50 $36.50 $36.50 Premium . . . . . . . . . 15.9% 16.3% (2.6%) 12.3% --------------------------------------------------------------------------------------- Median Premium(1). . . . . 23.7% 16.2% (4.6%) 2.1% Implied Price . . . . . . $38.97 $36.46 $35.79 $33.20 ====== ====== ====== ====== --------------------------------------------------------------------------------------- Average Premium(1) . . . . 29.8% 23.9% (1.7%) 3.6% Implied Price . . . . . . $40.89 $38.87 $36.86 $33.67 ====== ====== ====== ======
__________________________________ (1) Based on minority transactions from 1990 to date. - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -1- 14 15 PROJECT POINT - -------------------------------------------------------------------------------- CHANGE OF CONTROL TRANSACTIONS - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 16 PROJECT POINT - -------------------------------------------------------------------------------- APPLICABLE CHANGE OF CONTROL TRANSACTIONS - Of the change of control transactions presented, the following transactions are similar to the business of BIC Corp. - These transactions, however, include significant synergies, cost cutting opportunities, productivity improvements and a change of control, all of which are not applicable to the proposed transaction.
TRANSACTION MULTIPLES OF ----------- ------------------------------------- YEAR TARGET ACQUIROR SIZE REVENUES EBIT NET INCOME ---- ------------------------ ---------------------- ----------- ---------- ---------- ---------- 1992 Parker Pen Gillette $330 1.8x 9.2x 14.6x 1993 Wilkinson Sword Warner-Lambert 142 0.8x NM(1) NA 1992 Wite-Out BIC Corp. 20 1.7x 6.7x 11.3x 1991 Sanford Corp. Newell Companies 593 4.0x 18.4x 25.7x 1991 Stuart Hall Newell Companies 114 0.8x NM NM 1990 Dennison Manufacturing Avery International 674 1.7x 14.2x 23.5x 1990 Esselte Business Systems Esselte AB 221 0.9x 9.1x 17.2x 1989 W.T. Rogers Company Newell Companies 57 1.6x 14.8x 26.5x 1988 Parker Pen Pentland Industries 330 1.5x NA NA 1987 Berol Corporation Empire Pencil Corp. 50 0.8x 7.4x NM 1987 Waterman S.A. Gillette 40 0.9x 6.6x 18.6x ------------------------------------------------------------------------------------- Median 1.5x 9.2x 18.6x Valuation Implied by BIC Corp. Results $33.64 $37.83 $41.93 -------------------------------------------------------------------------------------
__________________________________ (1) Not meaningful indicates operating results close to or below zero. - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -1- 17 18 PROJECT POINT - -------------------------------------------------------------------------------- DISCOUNTED CASH FLOW ANALYSIS - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 19 DISCOUNTED CASH FLOW RESULTS - 5 YEAR EXIT CASE 1B: CASE 1A GROWTH RATES WITH CONSTANT MARGINS Assumptions: Consolidated 1) operating margins constant at 1994 levels
- --------------------------------------------------------------------------- VALUE PER SHARE - --------------------------------------------------------------------------- TERMINAL MULTIPLE OF 1999 EBIT - --------------------------------------------------------------------------- 8.0x 8.5x 9.0x 9.5x 10.0x 8.8x - --------------------------------------------------------------------------- Discount 11.0% $33.77 $35.26 $36.75 $38.24 $39.73 $36.15 Rate 13.0% $31.32 $32.69 $34.05 $35.41 $36.78 $33.50 - --------------------------------------------------------------------------- Implied EBITDA Exit Multiple 6.3x 6.7x 7.1x 7.5x 7.9x 6.9x
CASE 1A Assumptions: Stationery 1) 4.5% unit and 3.5% price increases per year Lighters 1) 2% unit and 0% price increases per year Shavers 1) 1.5% unit and 4% price increases per year beginning in 1996 2) Introduction of Product X
- --------------------------------------------------------------- VALUE PER SHARE - --------------------------------------------------------------- TERMINAL MULTIPLE OF 1999 EBIT - --------------------------------------------------------------- 8.0x 8.5x 9.0x 9.5x 10.0x 8.8x - --------------------------------------------------------------- Discount 11.0% $39.40 $41.17 $42.94 $44.71 $46.48 $42.23 Rate 13.0% $36.51 $38.13 $39.75 $41.37 $42.98 $39.10 - --------------------------------------------------------------- 6.3x 6.7x 7.1x 7.5x 7.9x 6.9x
CASE 1C: CASE 1A WITH LESS AGGRESSIVE GROWTH RATES AND CONSTANT MARGINS Assumptions: Stationery 1) 3% unit and 2% price increases per year Consolidated 1) operating margins constant at 1994 levels
- --------------------------------------------------------------------------- VALUE PER SHARE - --------------------------------------------------------------------------- TERMINAL MULTIPLE OF 1999 EBIT - --------------------------------------------------------------------------- 8.0x 8.5x 9.0x 9.5x 10.0x 8.8x - --------------------------------------------------------------------------- Discount 11.0% $31.98 $33.36 $34.74 $36.13 $37.51 $34.19 Rate 13.0% $29.69 $30.95 $32.22 $33.48 $34.75 $31.71 - --------------------------------------------------------------------------- Implied EBITDA Exit Multiple 6.3x 6.7x 7.1x 7.5x 7.9x 6.9x
20 21 PROJECT POINT - -------------------------------------------------------------------------------- PRESENT VALUE OF FUTURE STOCK PRICES AND DIVIDENDS PAID - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 22 PROJECT POINT - -------------------------------------------------------------------------------- PRESENT VALUE OF FUTURE STOCK PRICES AND CASH PAID TO SHAREHOLDERS Based on "Case 1B"
1995 1996 1997 1998 1999 2000 ----- ------ ----- ----- ----- ----- Constant Margin Net Income $ 54.8 $ 60.7 $ 64.6 $ 68.9 $ 73.4 $78.1 Shares Outstanding 23.6 23.6 23.6 23.6 23.6 23.6 ------ ------ ------ ------ ----- ----- CONSTANT MARGIN EPS $ 2.33 $ 2.58 $ 2.74 $ 2.92 $ 3.12 $3.32 Interest Expense(1) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($0.31) Interest Income(2) $ 0.00 $ 0.07 $ 0.12 $ 0.17 $ 0.22 $0.27 ------ ------ ------ ------ ------ ----- Adjusted EPS $ 2.02 $ 2.34 $ 2.56 $ 2.79 $ 3.03 $3.28 Growth % - 16.0% 9.1% 8.9% 8.6% 8.3% PRESENT VALUE OF STOCK PRICE(3) P/E P/E on Next Year EPS 10x $22.01 $21.25 $20.49 $19.69 $18.87 12 $26.42 $25.50 $24.59 $23.63 $22.65 14 $30.82 $29.75 $28.68 $27.57 $26.42 16 $35.22 $34.01 $32.78 $31.51 $30.20 Estimated Dividends(4) $ 0.92 $ 0.84 $ 0.92 $ 1.00 $ 1.09 Special Recap Dividend(5) $ 8.22 Growth % - (8.3%) 8.9% 8.8% 8.5% Present Value of Dividends (3) $ 8.58 $ 9.28 $ 9.96 $10.61 $11.24 TOTAL VALUE OF STOCK PRICE AND DIVIDENDS P/E on Next Year EPS 10x $30.60 $30.54 $30.45 $30.30 $30.11 12 $35.00 $34.79 $34.55 $34.24 $33.88 14 $39.40 $39.04 $38.64 $38.18 $37.66 16 $43.80 $43.29 $42.74 $42.12 $41.43 Cash on Balance Sheet Per Share $ 1.53 $ 2.53 $ 3.48 $ 4.50 $ 5.58
__________________________________ (1) Assumes $150 million debt, 8% interest rate and 40% tax rate. (2) Assumes 8% interest rate on previous year's cash balance and 40% tax rate. (3) Applies a 6.5% discount rate for 1995 and a 13% annual discount rate thereafter to dividends and future stock price. (4) Based on 1995 dividend of $0.92 and constant payout ratio of 36% thereafter. (5) Comprised of $150 million of new debt and $44 million of excess cash. - ---------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -1- 23 PROJECT POINT - -------------------------------------------------------------------------------- PRESENT VALUE OF FUTURE STOCK PRICES AND CASH PAID TO SHAREHOLDERS Based on "Case 1C"
1995 1996 1997 1998 1999 2000 ----- ----- ----- ----- ----- ----- Constant Margin Net Income $ 54.8 $ 59.7 $ 62.4 $ 65.2 $ 68.4 $ 71.2 Shares Outstanding 23.6 23.6 23.6 23.6 23.6 23.6 ------ ------ ------ ------ ------ ------ CONSTANT MARGIN EPS $ 2.33 $ 2.53 $ 2.65 $ 2.77 $ 2.89 $ 3.02 Interest Expense(1) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) Interest Income(2) $ 0.00 $ 0.07 $ 0.12 $ 0.17 $ 0.21 $ 0.26 ------ ------ ------ ------ ------ ------ Adjusted EPS $ 2.02 $ 2.30 $ 2.47 $ 2.63 $ 2.80 $ 2.29 Growth % - 13.9% 7.1% 6.7% 6.4% 6.4% PRESENT VALUE OF STOCK PRICE(3) P/E P/E on Next Year EPS 10x $21.62 $20.49 $19.34 $18.22 $17.15 12 $25.94 $24.58 $23.21 $21.86 $20.58 14 $30.26 $28.68 $27.07 $25.51 $24.01 16 $34.58 $32.78 $30.94 $29.15 $27.44 Estimated Dividends(4) $ 0.92 $ 0.84 $ 0.92 $ 1.00 $ 1.09 Special Recap Dividend(5) $ 8.22 Growth % - (8.3%) 8.9% 8.8% 8.5% Present Value of Dividends (3) $ 8.58 $ 9.28 $ 9.96 $10.61 $11.24 TOTAL VALUE OF STOCK PRICE AND DIVIDENDS P/E on Next Year EPS 10x $30.20 $29.77 $29.30 $28.83 $28.39 12 $34.52 $33.87 $33.17 $32.47 $31.82 14 $38.84 $37.96 $37.03 $36.12 $35.25 16 $43.17 $42.06 $40.90 $39.76 $38.68 Cash on Balance Sheet Per Share $ 1.53 $ 2.55 $ 3.50 $ 4.47 $ 5.46
__________________________________ (1) Assumes $150 million debt, 8% interest rate and 40% tax rate. (2) Assumes 8% interest rate on previous year's cash balance and 40% tax rate. (3) Applies a 6.5% discount rate for 1995 and a 13% annual discount rate thereafter to dividends and future stock price. (4) Based on 1995 dividend of $0.92 and constant payout ratio of 36% thereafter. (5) Comprised of $150 million of new debt and $44 million of excess cash. - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETT -2- 24 25 PROJECT POINT - -------------------------------------------------------------------------------- LEVERAGED RECAPITALIZATION - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 26 PROJECT POINT - -------------------------------------------------------------------------------- LEVERAGED RECAPITALIZATION SUMMARY ANALYSIS - Leveraged Recapitalization assumptions: - Conservative base case assumptions - Debt/1995 EBITDA = 5.0x (may require 5.0x Debt / LTM EBITDA) - Bank debt repaid in 5-7 years under all scenarios - EBITDA-CAPX/Interest reaching 2.0x within two years - "Hypothetical Leveraged Recapitalization" appears aggressive: 1) - "Case 1A" projections represent an upside case - Debt/1995 EBITDA = 5.6x - Bank debt repaid in Year 8 - EBITDA-CAPX/Interest reaches 2.0x in third year 2) Stub P/E multiples do not take into account excessive leverage 3) Results based on "Case 1A" projections 4) Aggressive interest rate assumptions. - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -1- 27 28 PROJECT POINT - -------------------------------------------------------------------------------- LEVERAGED RECAPITALIZATION SUMMARY ANALYSIS (CONT'D) - Leveraged Recap based on "Case 1B" projections 1) 5.0x Debt/1995 EBITDA reduces dividend from $30.50 to $26.42 2) Stub equity future values will be as follows:
1995 2000 ------ ------ FY+1 E.P.S. $ 1.05 $ 2.33 8x $ 8.42 $18.62 10 10.52 23.27 12 12.62 27.93
-)These assumptions imply a value of $34.84 - $39.04 per share - Leveraged Recap based on "Case 1C" projections 1) 5.0 Debt/1995 EBITDA reduces dividend from $30.50 to $26.42 2) Stub equity future values will be as follows:
1995 2000 ----- ------ FY+1 E.P.S. $ 1.01 $ 1.94 8x $ 8.08 $15.50 10 10.11 19.38 12 12.13 23.25
-)These assumptions imply a value of $34.50 - $38.55 per share - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -2- 29 30 PROJECT POINT - -------------------------------------------------------------------------------- LBO ANALYSIS - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 31 PROJECT POINT - -------------------------------------------------------------------------------- LBO ANALYSIS SUMMARY - LBO assumptions: - Conservative base case assumptions - Debt/1995 EBITDA = 5.0x (may require 5.0x Debt/LTM EBITDA) - Bank debt repaid in 5-7 years under all scenarios - EBITDA-CAPX/Interest reaching 2.0x within two years - Expected returns approaching 35% IRR's - "Illustrative Rollerball LBO Analysis Summary" appears aggressive: 1) - "Case 1A" projections represent an upside case. - Debt/1995 EBITDA = 5.6x - Bank debt repaid in Year 8 - EBITDA-CAPX/Interest reaches 2.0x in third year 2) Returns are light: EXIT IRR NOTE ------------------- ---------- ----------------------------------- 6.0x EBITDA 19% 9.0x EBITDA 34% 9.0x is an aggressive exit multiple 3) Aggressive interest rate assumptions. - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -1- 32 PROJECT POINT - -------------------------------------------------------------------------------- LBO ANALYSIS SUMMARY (CONT'D) - LBO based on "Case 1B" projections 1) 5.0x Debt/1995 EBITDA reduces leverage by $100 million or approximately $4.25 per share. 2) Equity contribution of $125 million yields returns of 35%, before dilution, at a 7.5x EBITDA exit. -) These assumptions imply an LBO valuation of $31.45 per share. - LBO based on "Case 1C" projections 1) 5.0x Debt/1995 EBITDA reduces leverage by $100 million or approximately $4.25 per share. 2) Equity contribution of $105 million yields returns of 35%, before dilution, at a 7.5x EBITDA exit. -) These assumptions imply an LBO valuation of $30.60 per share. - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -2- 33 34 PROJECT POINT - -------------------------------------------------------------------------------- SUMMARY / CONCLUSIONS - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE 35 ACCRETION/DILUTION ANALYSIS TRANSACTION ASSUMPTIONS - -- Minority interest other than Bich Family acquired at a price of $36.50. - -- Transaction funded with cash on hand of 1.0 billion FFr, consisting of purchase price and expenses at an exchange rate of 5.05 FFr/US$. - -- Cash assumed to generate interest income at 7.0% per annum.
PRO FORMA INCOME STATEMENTS PRO FORMA PRO FORMA 1994A ADJUSTMENTS 1994A 1995 (1) ADJUSTMENTS 1995 (1) ----------- ----------- ----------- ------------- ------------- ----------- Revenues 6,399.6 6,399.6 6,570.0 6,570.0 EBIT 1,076.4 1,076.4 1,100.0 1,100.0 Interest Income (73.0) 70.0 (2) (3.0) (140.0) 70.0 (2) (70.0) Goodwill 0.0 17.6 (3) 17.6 0.0 17.6 (3) 17.6 ------- ------- ------- ------- Pre-tax Income 1,149.3 1,061.7 1,240.0 1,152.4 Taxes 445.7 (27.3)(4) 418.4 483.0 (20.7)(5) 462.3 Minority Interest 122.8 (57.3)(6) 65.5 112.0 (67.8)(6) 44.2 ------- ------- ------- ------- Net Income 580.8 577.8 645.0 645.9 ======= ======= ======= ======= Earnings per Share 41.92 41.80 46.70 46.72 ======= ======= ======= ======= Accretion (Dilution)% -0.3% 0.0%
- ------------------------------------------------------------------------------- Offer Price Current Market Price ----------- -------------------- $36.50 $39.50 ------ ------ 1995 Accretion (Dilution)% 0.0% -0.7% - ------------------------------------------------------------------------------- _____________________________ (1) Source: Indosuez Capital Equity Research report dated April 18, 1995. (2) Reduction in interest income on 1.0 billion FFr purchase price at 7.0% per annum. (3) Goodwill based on an excess of purchase price of 1.0 billion FFr over minority interest of 295.6 million FFr amortizable over 40 years. (4) Assumes a 39% average tax rate. (5) Assumes a 39.50% average tax rate. (6) Minority interest reduced for the acquisition of all public shares excluding Bich Family. Page 1 36 PROJECT POINT - -------------------------------------------------------------------------------- SUMMARY / CONCLUSIONS - The Offer Price of $36.50 is clearly within the range of fairness. - Valuation Summary:
LOW HIGH ------ ------ Comparable Companies . . . . . . . . $33.31 _ $38.29 Change of Control Transactions . . . 33.64 _ 41.93 Premiums . . . . . . . . . . . . . . 33.20 _ 38.97 Discounted Cash Flow Analysis . . . . 31.98 _ 39.73 ------ ------ Average . . . . . . . . . . $33.03 - $39.73
- The Offer Price of $36.50 is also supported by the theoretical valuation implied by the "Present Value of Future Stock Prices and Dividends Paid," Leveraged Buyout and Leveraged Recapitalization analyses. - The Offer Price of $36.50 represents a 20% premium over the BIC Corp. average trading price for the 180 days prior to the offer. - The transaction is dilutive to Societe BIC at any price in excess of $36.50. - Any increase in the offer price will have to be made up by additional consolidated earnings. - ----------------------------------------------------------------------[DLJ LOGO] DONALDSON, LUFKIN & JENRETTE -2- EX-99.C2 5 VOTING TRUST AGREEMENT 1 Exhibit (c)(2) VOTING TRUST AGREEMENT THIS AGREEMENT, dated as of this 5th day of February 1991, by and among SOCIETE BIC, a corporation organized and existing under the laws of France, having its principal place of business at 3 Impasse des Cailloux, Clichy 92 (France), party of the first part; MARCEL L. BICH, of 80 Rue de Chezy, Neuilly s/Seine (France), party of the second part; NEIL A. POLLIO of 687 East Drive, Oradell, New Jersey, party of the third part; BRUNO BICH of 100 Clapboard Ridge Road, Greenwich, Connecticut, party of the fourth part; FRANCOIS BICH, of 5 Square de Chezy, 92200 Neuilly s/Seine (France), party of the fifth part; and BIC CORPORATION, a New York corporation, having its principal place of business at 500 BIC Drive in Milford, Connecticut. W I T N E S S E T H : WHEREAS, Societe Bic, Marcel L. Bich and Francois Bich are shareholders of BIC Corporation (hereinafter sometimes collectively referred to as the Shareholders), and WHEREAS, the parties hereto are desirous to secure the continuity and stability of policy and management of BIC Corporation, and Marcel L. Bich and Bruno Bich as voting trustees and Neil A. Pollio as successor voting trustee have consented to act hereunder, and 1 2 WHEREAS, the Shareholders of each of them deem it to be in their best interest to assign, transfer and vest the voting power of all the shares of BIC Corporation now or hereafter held by them in the voting trustees and their successor in accordance with the terms of this Agreement; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein contained, it is agreed as follows: 1) The Shareholders agree to deposit with the Voting Trustees the certificates for shares of BIC Corporation owned by them, to wit: Societe Bic 7,414,918 shares Marcel L. Bich 641,406 shares Francois Bich 200,000 shares of BIC Corporation duly endorsed for transfer to the Voting Trustees or with stock powers duly executed, with all transfer tax stamps affixed, if required. Said certificates of shares shall be surrendered by the Voting Trustees to BIC Corporation and cancelled and new certificates therefor shall be issued to and held by the Voting Trustees in their names as such voting trustees, subject to the terms of this Agreement. 2) Promptly after the deposit of certificates for shares by the Shareholders with the Voting Trustee as provided in paragraph 1 hereof, the Voting Trustees shall issue and deliver to each of the Shareholders voting trust certificates in the form set forth in Exhibit A annexed hereto, the terms of which exhibit are herein incorporated by reference, for the shares deposited with 2 3 and transferred to the Voting Trustees. The voting trust certificates issued pursuant to the provisions hereof shall be transferable only on the books of the Voting Trustees, as provided in the voting trust certificate and upon surrender thereof. Until the voting trust certificate is transferred in accordance with the terms and conditions set forth in such certificate, the Voting Trustees may treat the registered holder of any voting trust certificate as the owner thereof for all purposes. The transfer books may be closed by the Voting Trustees for a reasonable time prior to the payment or distribution of any dividend, as well as at any other time or for any purpose when deemed by the Voting Trustees to be desirable. 3) Should any voting trust certificate be mutilated or be lost, destroyed or stolen, the Voting Trustees may, in their uncontrolled discretion, issue and deliver in exchange therefor and upon cancellation of the mutilated voting trust certificate or in lieu of the lost, destroyed or stolen voting trust certificate a new voting trust certificate representing the same number of shares, upon production of evidence of such loss, destruction or theft, satisfactory to the Voting Trustees and upon receipt of indemnity satisfactory to them. 4) The Voting Trustees shall receive and hold, subject to the terms of this Agreement, certificates for common shares of BIC Corporation as well as any preferred shares entitled to vote issued by way of dividend, split-up, reorganization, merger, 3 4 consolidation or any other change or adjustment upon or with respect to the shares deposited hereunder and shall issue and deliver voting trust certificates therefor to the registered holders of voting trust certificates according to the books of the Voting Trustees. 5) The Voting Trustees shall distribute all cash dividends declared and paid on the shares held by them hereunder and any other securities not entitled to vote declared and delivered on the shares held by them hereunder to the registered holders of the voting trust certificates in proportion to their respective interest therein as shown on the books of the Voting Trustees. 6) In the event any shares or other securities of BIC Corporation are offered for subscription to the holders of the shares held by the Voting Trustees, the Voting Trustees shall promptly upon receipt of notice of said offer mail a copy thereof to each registered voting trust certificate holder. Provided the Voting Trustees receive in due time a request from such registered voting certificate holders to subscribe for such shares or other securities together with a certified or cashiers' check for the requisite sum of money for the subscription of such shares or other securities, the Voting Trustees shall make such subscription and payment and, upon receipt from BIC Corporation of the certificates for shares or other securities so subscribed for, the Voting Trustees shall issue to such holders a voting trust certificate in respect thereof, if the same are common or transferred shares entitled to vote of BIC corporation, but if the 4 5 same are securities other than common shares or such preferred shares, the Voting Trustees shall deliver such securities to the registered voting certificate holder on whose behalf the subscription was made by them. 7) The Voting Trustees shall have the exclusive right to vote the shares held by them or to give written consents in lieu of voting thereon, subject to the provisions of the Certificate of Incorporation of BIC Corporation and the amendments thereof, in person or by proxy, at any and all meetings of the shareholders of BIC Corporation, for whatever purpose called or held, and in any and all proceedings, whether at a meeting of the shareholders or otherwise, wherein the vote or written consent of shareholders may be required or authorized by law. 8) Marcel L. Bich, as one of the voting trustees shall have full authority, when present in person in the United States, to exercise alone the rights to vote as provided in paragraph 7 hereof. Unless Marcel L. Bich gives notice to Bruno Bich that he will be present in the United States at the time of the holding of a shareholders meeting, the right to vote as provided in paragraph 7 hereof shall be exercised solely by Bruno Bich as the Voting Trustee. Any written consent referred to in paragraph 7 shall be given jointly by the Voting Trustees. 9) Each of the Voting Trustees may, at any time, resign by mailing to the registered holders of the voting trust certificates and the other Voting Trustee, unless at the time of resignation there is only one Voting Trustee, a written notice of 5 6 resignation to take effect 10 days thereafter or upon prior acceptance thereof by the registered holders of the voting trust certificates and by the other Voting Trustee if there is one in office at that time. 10) In the event of resignation or death of Marcel L. Bich as Voting Trustee, Bruno Bich shall be the sole Voting Trustee. In the event of resignation or death of Bruno Bich as sole Voting Trustee, Neil A. Pollio shall be the sole successor Voting Trustee. In the event of resignation or death of Neil A. Pollio, his successor Voting Trustee shall be such person as Neil A. Pollio shall designate in writing by notice mailed to the registered holders of the voting certificates and to BIC Corporation, while acting as Voting Trustee. In the event Neil A. Pollio shall fail to designate his successor as Voting Trustee prior to the effective date of his resignation or death, the Voting Trustee shall be such person as shall serve as ancillary executor or administrator in the State of New York of the estate of Marcel L. Bich or such person as may be designated by such ancillary executor or administrator. 11) The successor Voting Trustee shall have the same rights, powers and privileges as the Voting Trustees. 12) This Agreement shall become effective upon the date hereof and continue in effect for a period of ten (10) years from such date, subject to the provisions of paragraphs 13 and 14 hereof. 7 13) This Agreement may be terminated prior to the expiration of its term by the execution by all the Voting Trustees or their successor, and not otherwise, of a declaration of termination filed with BIC Corporation and mailed to all the holders of voting trust certificates. No shares held by the Voting Trustees hereunder may be withdrawn by any holder of a voting trust certificate except with the written consent of all the Voting Trustees or of their successor Voting Trustee filed with BIC Corporation. 14) This Agreement may be renewed for one or several ten-year periods or for such other term as may be permitted by law, by the written consent of all or some of the then voting trust certificate holders desiring to extend and renew this Agreement, provided such consent is given within the time provided by law in that respect and provided, further; that if only some of the then voting trust certificate holders execute a written consent for the renewal of this Agreement, this Agreement so renewed will be effective only as to such holders of voting trust certificates as shall have executed such written consent. 15) Upon the termination of this Agreement or upon the withdrawal of shares from the voting trust as provided in paragraph 13 hereof, the Voting Trustees, in exchange for and upon surrender of the voting trust certificates, shall deliver to the respective holders thereof or with respect to shares so withdrawn, as the case may be, certificates for shares of BIC Corporation duly endorsed or with stock powers duly executed, 7 8 provided, however, that prior to delivery of such certificates, the holders of the voting trust certificates shall deposit with the Voting Trustees the cost of any stamp tax or other tax payable in connection with the transfer of shares. 16) The Voting Trustees shall serve without compensation. They shall, however, have the right to incur and pay such reasonable expenses and charges and to employ such counsel as they may deem necessary and proper in the performance of their duties hereunder. Any such charge or expenses incurred shall be charged pro rata to the holders of the voting trust certificates and each of such holders agrees to assure and pay his pro rata share of such charges and expenses. 17) Neither the Voting Trustees nor a successor Voting Trustee shall be liable by reason of any matter or thing in any way arising out of or in relation to this Agreement, except for such damage as the registered holders of voting trust certificates may sustain by reason of the willful malfeasance or gross negligence of the Voting Trustees. 18) No Voting Trustee shall be required to give a bond or other security for the faithful performance of his duties as such. 19) A Voting Trustee may act as a director or officer of BIC Corporation or of any of its subsidiaries and serve as consultant or advisor or attorney of, or in any other capacity for, BIC Corporation or any of its subsidiaries and shall in no way be disqualified for voting the stock held by him as Voting 8 9 Trustee in favor of his own election as such director or officer or for serving in any other capacity for BIC Corporation or any of its subsidiaries or for the ratification or approval of any agreement between BIC Corporation or any of its subsidiaries and himself or for voting with respect to any compensation to be paid to him for his services. 20) Nothing herein contained shall disqualify any Voting Trustee from dealing or contracting with BIC Corporation or any of its subsidiaries with respect to any matter or thing whatsoever. Any firm of which a Voting Trustee may be a member and any corporation of which a Voting Trustee may be a shareholder, director or officer may deal and contract with BIC Corporation or any of its subsidiaries with respect to any matter or thing and be or become interested in a matter or transaction in which BIC Corporation or any of its subsidiaries or to any shareholder thereof for any profit realized by, from or through any transaction or contract by reason of the fact that he or any firm or corporation of which he is a member, director or officer is interested in such transaction or contract. 21) Any and all common shares of BIC Corporation hereafter acquired by any and all the Shareholders shall be assigned to the Voting Trustees under this Agreement. 22) The words "Voting Trustees" and "Voting Trustee" shall mean the Voting Trustees named herein and their successor or successors. 9 10 23) Any notice by one of the Voting Trustees to the other or any notice to, or communication with, the holders of the voting trust certificates shall be deemed sufficiently given or made if addressed by registered or certified mail (or, should such holders be abroad, by registered airmail) at the address set forth below to the Voting Trustees and to the holders of voting certificates at their respective addresses appearing on the transfer book of the Voting Trustees or to such other addresses as may be specified from time to time by written notice to the Voting Trustees by such holders. Any notice to the Voting Trustees hereunder shall be addressed to the Voting Trustees, c/o Phillips, Nizer, Benjamin, Krim & Ballon, 11 West 52nd Street, New York, New York 10019-6167, or such other address as may be designated by the Voting Trustees by notice mailed to the holders of the voting trust certificates. Such notice shall be mailed by registered mail, or if mailed outside of the United States, by registered airmail. 24) This Agreement may be executed in counterparts and each shall be deemed to be an original. It expresses the entire Agreement between the parties and may not be changed or modified except in writing executed by all voting trust certificate holders and the Voting Trustees then in office. 25) This Agreement shall be governed in all respects by the laws of the State of New York and shall be construed and interpreted in accordance with said laws. 10 11 IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and affixed their seal on the day and year first-above written. SOCIETE BIC By /s/ MARCEL L. BICH ------------------------------- Marcel L. Bich /s/ MARCEL L. BICH ---------------------------------- Marcel L. Bich /s/ BRUNO BICH ---------------------------------- Bruno Bich /s/ NEIL A. POLLIO ---------------------------------- Neil A. Pollio /s/ FRANCOIS BICH ---------------------------------- Francois Bich BIC CORPORATION BY /s/ BRUNO BICH ------------------------------ Bruno Bich 11 12 VOTING TRUST CERTIFICATE EXHIBIT A WE, MARCEL L. BICH, and BRUNO BICH, voting trustees of the shares of the BIC Corporation, under a voting trust agreement dated February 5, 1991, having received certain shares of said corporation pursuant to said agreement, and which agreement the holder hereof, by accepting this certificate, ratifies, adopts, and assents to, hereby certify that will be entitled to receive a certificate for shares of said BIC Corporation, of the par value of $1 each, on the expiration of the voting trust agreement, and in the meantime shall be entitled to receive payments equal to any dividends that may be collected by the undersigned trustees upon a like number of such shares held by them under the terms of the trust agreement aforesaid. This certificate is transferable only on the record of voting trust certificate holders of the undersigned trustees, by the registered holder in person or by his duly authorized attorney, and the holder hereof, by accepting this certificate, manifests his consent that the undersigned trustees may treat the registered holder hereof as the true owner for all purposes, except the delivery of share certificates, which delivery shall not be made without the surrender hereof. 13 IN WITNESS WHEREOF, the said voting trustees have caused this certificate to be signed this _________________ day of_______________ 1991. ______________________ Voting Trustee ______________________ Voting Trustee _____________________ Witness EX-99.C3 6 AMENDMENT TO VOTING TRUST AGREEMENT 1 Exhibit (c)(3) AMENDMENT #1 AMENDMENT TO VOTING TRUST AGREEMENT THIS AMENDMENT, dated as of the 3rd day of February, 1992, by and among SOCIETE BIC, a corporation organized and existing under the laws of France, having its principal place of business at 8 Impasse des Cailloux, Clichy 92 (France); MARCEL L. BICH, an individual residing at 80 Rue de Chezy, Neuilly s/Seine (France); FRANCOIS BICH, an individual residing at 5 Square de Chezy, 92200 Neuilly s/Seine (France); BRUNO BICH, an individual residing at 100 Clapboard Ridge Road, Greenwich, Connecticut; ALEXANDER ALEXIADES, an individual residing at 14 Seymour Road, Woodbridge, Connecticut; and BIC CORPORATION, a New York corporation, having its principal place of business at 500 BIC Drive, Milford, Connecticut. W I T N E S S E T H: WHEREAS, Societe BIC, Marcel L. Bich and Francois Bich are shareholders of BIC Corporation (hereinafter sometimes collectively referred to as the "Shareholders"); and WHEREAS, the Shareholders have previously entered into a Voting Trust Agreement, dated February 5, 1991, to secure the continuity and stability of policy and management of BIC Corporation and Marcel L. Bich and Bruno Bich as Voting Trustees and Neil A. Pollio as successor Voting Trustee have previously consented to act thereunder; and WHEREAS, the Shareholders and the Voting Trustees now desire to amend the Voting Trust Agreement to appoint a new successor Voting Trustee. 2 NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein contained, it is agreed as follows: The Voting Trust Agreement, dated February 5, 1991, is hereby amended as follows: 1. Paragraph 10 is hereby amended to read as follows: 10) In the event of resignation or death of Marcel L. Bich as Voting Trustee, Bruno Bich shall be the sole Voting Trustee. In the event of resignation or death of Bruno Bich as Voting Trustee, Marcel L. Bich shall be the sole Voting Trustee. In the event of resignation or death of Marcel L. Bich or Bruno Bich as sole Voting Trustee, Alexander Alexiades shall be the sole successor Voting Trustee. In the event of resignation or death of Alexander Alexiades, his successor Voting Trustee shall be the executor of the estate of the Voting Trustee who immediately preceded Alexander Alexiades as Voting Trustee. 2. Paragraph 23 is hereby amended to read as follows: 23) Any notice by one of the Voting Trustees to the other or any notice to, or communication with, the holders of the voting trust certificates shall be deemed sufficiently given or made if addressed by registered or certified mail (or, should such holders be abroad, by registered airmail) at the address set forth below to the Voting Trustees and to the holders of voting certificates at their respective addresses appearing on the transfer book of the Voting Trustees or to such other addresses as may be specified from time to time by written notice to the Voting Trustees by such holders. Any notice to the Voting Trustees hereunder shall be 2 3 addressed to the Voting Trustees, c/o Legal Department, BIC Corporation, 500 BIC Drive, Milford, Connecticut 06460, or such other address as may be designated by the Voting Trustees by notice mailed to the holders of the voting trust certificates. Such notice shall be mailed by registered mail, or if mailed outside of the United States, by registered airmail. 3. To the extent not amended or revised by this Amendment, the terms of the Voting Trust Agreement shall remain in full force and effect. If any of the terms of this Amendment and the Voting Trust Agreement are inconsistent, the terms of this Amendment shall govern. 4. This Amendment shall be governed, in all respects, by the laws of the State of New York and shall be construed and interpreted in accordance with said laws. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and affixed their seal on the day and year first-above written. SOCIETE BIC /s/ MARCEL L. BICH By: /s/ MARCEL L. BICH - ------------------------------ --------------------------- Marcel L. Bich Marcel L. Bich /s/ FRANCOIS BICH - ------------------------------ Francois Bich BIC CORPORATION /s/ BRUNO BICH By: /s/ BRUNO BICH - ------------------------------ --------------------------- Bruno Bich Bruno Bich /s/ ALEXANDER ALEXIADES - ------------------------------ Alexander Alexiades 3 EX-99.C4 7 AMENDMENT NO. 2 TO VOTING TRUST AGREEMENT 1 Exhibit (c)(4) AMENDMENT #2 AMENDMENT #2 TO VOTING TRUST AGREEMENT THIS AMENDMENT, dated as of the 5th day of July, 1993, by and among SOCIETE BIC, S.A., a corporation organized and existing under the laws of France, having its principal place of business at 8 Impasse des Cailloux, Clichy (France); MARCEL L. BICH, an individual residing at 5 Square de Chezy, 92200 Neuilly s/Seine (France); BRUNO BICH, an individual residing at 100 Clapboard Ridge Road, Greenwich, Connecticut; ALEXANDER ALEXIADES, an individual residing at 14 Seymour Road, Woodbridge, Connecticut; BERMUDA TRUST COMPANY LIMITED, a corporation organized and existing under the laws of Bermuda, having its principal place of business at 6 Front Street, Hamilton, Bermuda; and BIC CORPORATION, a New York corporation, having its principal place of business at 500 BIC Drive, Milford, Connecticut. W I T N E S S E T H: WHEREAS, Societe BIC, Marcel L. Bich and Francois Bich as shareholders of BIC Corporation have previously entered into a Voting Trust Agreement, dated February 5, 1991, to secure the continuity and stability of policy and management of BIC Corporation and Marcel L. Bich and Bruno Bich as Voting Trustees and Alexander Alexiades as successor Voting Trustee have previously consented to act thereunder; and WHEREAS, pursuant to the request of Marcel L. Bich, Bruno Bich as a shareholder of BIC Corporation now desires to deposit certain 2 of his shares of BIC Corporation with the Voting Trustees pursuant to the terms of the Voting Trust Agreement dated February 5, 1991, as previously amended. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein contained, it is agreed as follows: The Voting Trust Agreement, dated February 5, 1991, as amended, is hereby further amended as follows: 1. Share amounts have been adjusted to reflect the two-for-one stock split paid on December 15, 1992. 2. Paragraph 1) is hereby amended to add the following: a) Bruno Bich agrees to deposit with the Voting Trustees the certificates for shares of BIC Corporation owned by him, to wit: Bruno Bich.................1,400,000 of BIC Corporation duly endorsed for transfer to the Voting Trustees or with stock powers duly executed, with all transfer tax stamps affixed, if required. Said certificates of shares shall be surrendered by the Voting Trustees to BIC Corporation and canceled and new certificates therefor shall be issued to and held by the Voting Trustees in their names as such voting trustees, subject to the terms of this Agreement. 3 3. To the extent not amended or revised by this Amendment #2, the terms of the Voting Trust Agreement as previously amended shall remain in full force and effect. If any of the terms of this Amendment #2 and the Voting Trust Agreement as previously amended are inconsistent, the terms of this Amendment #2 shall govern. 4. This Amendment #2 shall be governed, in all respects, by the laws of the State of New York and shall be construed and interpreted in accordance with said laws. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and affixed their seal on the day and year first-above written. SOCIETE, BIC S.A. /s/ MARCEL L. BICH By: /s/ MARCEL L. BICH - ----------------------------------- ----------------------------------- Marcel L. Bich Marcel L. Bich /s/ FRANCOIS BICH - ----------------------------------- BIC CORPORATION Francois Bich By: /s/ BRUNO BICH ----------------------------------- Bruno Bich /s/ BRUNO BICH - ----------------------------------- Bruno Bich BERMUDA TRUST COMPANY LTD. /s/ ALEXANDER ALEXIADES By: /s/ KAY McCULLOCH - ---------------------------------- ----------------------------------- Alexander Alexiades Kay McCulloch Private Banking Officer 3 EX-99.D1 8 PRELIMINARY PROXY STATEMENT 1 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: /X/ Preliminary Proxy Statement / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BIC CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) BIC CORPORATION - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): / / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). /X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: Common Shares, $1.00 par value per share (2) Aggregate number of securities to which transaction applies: 5,404,396 Common Shares (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: $40.50 (4) Proposed maximum aggregate value of transaction:(1. $218,878,038 Total fee paid(1): $43,775.61 / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: (2) Form, schedule or registration statement no.: (3) Filing party: (4) Date filed: - --------------- (1. The filing fee assumes that 5,404,396 Common Shares will be converted into the right to receive $40.50 in cash per share in the merger described in preliminary proxy materials filed herewith. The amount of the filing fee, calculated in accordance with Exchange Act Rule 0-11(c)(1), equals 1/50th of one percent of such proposed cash payment. 2 [PRELIMINARY COPY] CORPORATION LOGO 500 BIC DRIVE - MILFORD, CONNECTICUT 06460 - (203) 783-2000 BRUNO BICH CHAIRMAN AND CHIEF EXECUTIVE OFFICER September , 1995 Dear Fellow Shareholder: You are cordially invited to attend a Special Meeting of Shareholders of BIC Corporation (the "Special Meeting") to be held at the [Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], on , October , 1995, at [10:00] a.m., local time. At the Special Meeting you will be asked to consider and vote upon a proposal to approve and adopt an Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger Agreement"), pursuant to which BIC Merger Corporation ("Mergeco"), a New York corporation and a majority-owned subsidiary of Societe BIC S.A. ("Parent"), will be merged (the "Merger") with and into BIC Corporation (the "Company"). The Company will be the surviving corporation in the Merger and the entire equity interest in the Company will be owned by Parent and the other shareholders of Mergeco. If the Merger is consummated, each outstanding common share, par value $1.00 per share, of the Company (the "Common Shares"), except those shares owned by Parent and the other shareholders of Mergeco (the "Public Shares," and the holders thereof, the "Public Shareholders") or by shareholders who perfect their dissenters' rights in accordance with the New York Business Corporation Law, will be converted into the right to receive $40.50 per share in cash, without interest. Under the terms of the Merger Agreement, the Company will not pay the regular quarterly cash dividend otherwise payable on October 30, 1995, even if the Merger is consummated subsequent to such date. Enclosed with this letter is a Notice of Special Meeting, Proxy Statement, Proxy Card and return envelope. I urge you to read the enclosed material carefully. YOUR BOARD OF DIRECTORS, BASED UPON THE UNANIMOUS RECOMMENDATION OF A SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS CONSISTING OF THREE PERSONS WHO ARE NOT DIRECTORS, OFFICERS OR EMPLOYEES OF PARENT OR OFFICERS OR EMPLOYEES OF THE COMPANY (THE "SPECIAL COMMITTEE"), HAS UNANIMOUSLY APPROVED THE MERGER, AND RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. In arriving at its recommendation, your Board of Directors gave careful consideration to a number of factors described in the accompanying Proxy Statement, including, among other things, a recommendation of the Special Committee and the opinion of Goldman, Sachs & Co., the financial advisor to the Special Committee, that the $40.50 in cash per Public Share to be received by the Public Shareholders pursuant to the Merger Agreement is fair to such Public Shareholders. THE FULL TEXT OF SUCH OPINION IS ATTACHED AS ANNEX B TO THE PROXY STATEMENT AND SHAREHOLDERS ARE URGED TO READ IT IN ITS ENTIRETY. Pursuant to the New York Business Corporation Law, the affirmative vote of holders of at least 66 2/3% of all of the outstanding Common Shares is required to approve the Merger. The Voting Trustee, who exercises voting power over Common Shares owned by the shareholders of Mergeco constituting 76% of the outstanding shares has agreed, pursuant to the Merger Agreement, to vote such Common Shares in favor of the approval and adoption of the Merger Agreement. HOWEVER, THE MERGER AGREEMENT PROVIDES THAT IT IS A CONDITION TO THE CONSUMMATION OF THE MERGER THAT THE MERGER AGREEMENT BE APPROVED AND ADOPTED BY THE HOLDERS OF AT LEAST A MAJORITY OF THE PUBLIC SHARES OF THE COMPANY ACTUALLY VOTED, IN PERSON OR BY PROXY (EXCLUDING ABSTENTIONS), AT THE SPECIAL MEETING. YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Special Meeting, please complete, sign and date the accompanying Proxy Card and return it in the enclosed prepaid envelope as soon as possible. If you attend the Special Meeting, you may vote your shares in person, even if you have previously submitted a Proxy Card. Your continued support of and interest in BIC Corporation is greatly appreciated. Sincerely, Bruno Bich Chairman of the Board and Chief Executive Officer THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 3 [PRELIMINARY COPY] LOGO BIC CORPORATION 500 BIC DRIVE MILFORD, CT 06460 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER , 1995 To the Shareholders of BIC Corporation: Notice is hereby given that a Special Meeting of Shareholders of BIC Corporation (the "Company") will be held at the [Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], on , October , 1995 at [10:00] a.m., local time (the "Special Meeting"), for the following purposes: 1. To consider and vote upon a proposal to approve and adopt an Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger Agreement"), pursuant to which BIC Merger Corporation ("Mergeco"), a New York corporation and a majority-owned subsidiary of Societe BIC S.A., a societe anonyme organized under the laws of the Republic of France ("Parent"), will be merged with and into the Company (the "Merger"). The Company will be the surviving corporation in the Merger and the entire equity interest in the Company will be owned by Parent and the other shareholders of Mergeco. As a result of the Merger, each outstanding common share, par value $1.00 per share, of the Company (the "Common Shares"), except those shares owned by Parent and the other shareholders of Mergeco (the "Public Shares," and the holders thereof, the "Public Shareholders") and by shareholders who perfect their dissenters' rights in accordance with the New York Business Corporation Law (the "NYBCL"), would be converted into the right to receive $40.50 in cash, without interest, all as more fully described in the accompanying Proxy Statement. Under the terms of the Merger Agreement, the Company will not pay the regular quarterly cash dividend otherwise payable on October 30, 1995, even if the Merger is consummated subsequent to such date. 2. To transact such other business as may properly be brought before the Special Meeting or any adjournments or postponements thereof. Only holders of the Common Shares of record at the close of business on , 1995 are entitled to notice of and to vote at the Special Meeting. Each Common Share outstanding on such date is entitled to one vote at the Special Meeting. If the Merger is consummated, the shareholders of the Company who dissent from the proposed Merger and comply with the requirements of Section 623 of the NYBCL will have the right to receive payment in cash of the fair value of their Common Shares. See "The Merger -- Dissenters' Rights" in the accompanying Proxy Statement and Annex C thereto for a statement of the rights of dissenting shareholders and a description of the procedures required to be followed to obtain the fair value of the Common Shares. Pursuant to the NYBCL, the affirmative vote of holders of at least 66 2/3% of all of the outstanding Common Shares is required to approve the Merger. The Voting Trustee, who exercises voting power over Common Shares owned by the shareholders of Mergeco constituting 76% of the outstanding shares has agreed, pursuant to the Merger Agreement, to vote such Common Shares in favor of the approval and adoption of the Merger Agreement. HOWEVER, THE MERGER AGREEMENT PROVIDES THAT IT IS A CONDITION TO THE CONSUMMATION OF THE MERGER THAT THE MERGER AGREEMENT BE APPROVED AND ADOPTED BY THE HOLDERS OF AT LEAST A MAJORITY OF THE PUBLIC SHARES OF THE COMPANY ACTUALLY VOTED, IN PERSON OR BY PROXY (EXCLUDING ABSTENTIONS), AT THE SPECIAL MEETING. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF COMMON SHARES YOU OWN. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE WITHOUT DELAY. ANY SHAREHOLDER PRESENT AT THE SPECIAL MEETING MAY VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE SPECIAL MEETING AND ANY PROXY GIVEN BY A SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. By Order of the Board of Directors, Thomas M. Kelleher General Counsel and Secretary Milford, Connecticut September , 1995 PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME. 4 [PRELIMINARY COPY] LOGO PROXY STATEMENT BIC CORPORATION 500 BIC DRIVE MILFORD, CONNECTICUT 06460 ------------------------ SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER , 1995 ------------------------ This Proxy Statement is being furnished to the shareholders of BIC Corporation, a New York corporation (the "Company"), in connection with the solicitation of proxies by the Board of Directors of the Company (the "Board of Directors") from holders of outstanding common shares, par value $1.00 per share, of the Company (the "Common Shares"), for use at a Special Meeting of Shareholders of the Company to be held on , October , 1995 at [10:00] a.m., local time, at the [Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], and at any adjournments or postponements thereof (the "Special Meeting"). This Proxy Statement and the related proxy card are first being mailed to shareholders on or about September , 1995. At the Special Meeting, holders of the Common Shares on the applicable record date will consider and vote upon a proposal to approve and adopt an Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger Agreement"), pursuant to which: (a) BIC Merger Corporation ("Mergeco"), a New York corporation and a majority owned subsidiary of Societe BIC S.A. ("Parent"), a societe anonyme organized under the laws of the Republic of France, will be merged with and into the Company (the "Merger"), and the entire equity interest in the Company, as the surviving corporation in the Merger, will be owned by Parent and the other shareholders of Mergeco; and (b) each Common Share that is outstanding at the effective time of the Merger, other than Public Shares held by Parent and the other shareholders of Mergeco (the "Public Shares") or Common Shares in respect of which dissenters' rights have been perfected, will be converted into the right to receive $40.50 per share in cash, without interest. Common Shares held by Parent and the other shareholders of Mergeco will be cancelled without consideration. Pursuant to the New York Business Corporation Law ("NYBCL"), the affirmative vote of holders of at least 66 2/3% of all of the outstanding Common Shares is required to approve the Merger. The Voting Trustee, who exercises voting power over Common Shares owned by the shareholders of Mergeco constituting 76% (as hereinafter defined) of the outstanding shares has agreed, pursuant to the Merger Agreement, to vote such Common Shares in favor of the approval and adoption of the Merger Agreement. The Voting Trustee can cause the Merger to be approved for purposes of the NYBCL without the vote of any of the shareholders of the Company. However, the Merger Agreement provides that it is a condition to the consummation of the Merger that the Merger Agreement be approved and adopted by the holders of at least a majority of the Public Shares of the Company actually voted, in person or by proxy (excluding abstentions), at the Special Meeting. There can be no assurance that the conditions to the Merger will be satisfied, or where permissible, waived or that the Merger will be consummated. For further information concerning the terms and conditions of the Merger, see "The Merger -- General." NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION WITH THE SOLICITATION OF PROXIES MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. All information contained in this Proxy Statement relating to Parent, Mergeco and their affiliates (other than the Company) has been supplied by Parent for inclusion herein and has not been independently verified by the Company. The Board of Directors knows of no additional matters that will be presented for consideration at the Special Meeting. Execution of the accompanying proxy, however, confers on the designated proxyholders discretionary authority to vote the Common Shares covered thereby in accordance with their best judgment on such other business, if any, that may properly come before, and all matters incident to the conduct of, the Special Meeting or any adjournments or postponements thereof. ------------------------ The date of this Proxy Statement is September , 1995 5 TABLE OF CONTENTS
PAGE ---- SUMMARY............................................................................... 1 INTRODUCTION.......................................................................... 8 General............................................................................. 8 The Special Meeting................................................................. 8 Record Date; Quorum; Required Vote.................................................. 8 Proxies............................................................................. 9 Solicitation of Proxies............................................................. 9 THE PARTIES........................................................................... 10 The Company......................................................................... 10 Parent.............................................................................. 10 Mergeco............................................................................. 10 SPECIAL FACTORS....................................................................... 10 Background of the Merger............................................................ 10 Purpose and Structure of the Merger................................................. 16 Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger........................................................... 17 Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses...................... 19 Certain Financial Projections....................................................... 26 Plans for the Company After the Merger.............................................. 28 Interest of Certain Persons in the Merger........................................... 28 Certain Effects of the Merger....................................................... 31 Certain Litigation.................................................................. 32 Certain U.S. Federal Income Tax Consequences........................................ 32 Fees and Expenses................................................................... 33 THE MERGER............................................................................ 34 General............................................................................. 34 Accounting Treatment................................................................ 38 Payment for Public Shares; Sources of Funds......................................... 38 Dissenters' Rights.................................................................. 38 MARKET PRICES AND DIVIDENDS........................................................... 40 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY................................... 41 OWNERSHIP OF COMMON SHARES............................................................ 42 Security Ownership of Certain Beneficial Owners..................................... 42 Security Ownership of Directors and Executive Officers of the Company............... 43 Security Ownership of Directors and Officers of Parent and Mergeco.................. 43 TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES...................................... 43 MANAGEMENT OF PARENT, MERGECO AND THE COMPANY......................................... 44 Directors and Executive Officers of Parent.......................................... 44 Directors and Executive Officers of Mergeco......................................... 44 Directors and Executive Officers of the Company..................................... 45 INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 46 SHAREHOLDER PROPOSALS................................................................. 46 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 46 AVAILABLE INFORMATION................................................................. 47 MISCELLANEOUS......................................................................... 47 ANNEX A -- Agreement and Plan of Merger ANNEX B -- Opinion of Goldman, Sachs & Co. ANNEX C -- Section 623 of the New York Business Corporation Law
i 6 SUMMARY The following is a brief summary of certain information contained elsewhere in this Proxy Statement (the "Proxy Statement"). This summary is not intended to be a complete description of the matters covered in this Proxy Statement and is subject to and qualified in its entirety by reference to the more detailed information contained elsewhere in this Proxy Statement, including the Annexes hereto and the documents incorporated by reference herein. Capitalized terms used but not defined in this Summary shall have the meanings ascribed to them elsewhere in this Proxy Statement. Shareholders are urged to read carefully the entire Proxy Statement, including the Annexes. THE PARTIES The Company. The Company focuses on the manufacture and sale of high-quality, low-cost consumer products. These products include stationery products, lighters and shavers. Through its wholly-owned subsidiary, BIC Sport U.S.A. Inc., the Company also distributes sailboards which are purchased from a subsidiary of Parent. While most of the Company's operations are conducted in the United States, operations are also conducted through wholly-owned subsidiaries at other locations in North and Central America. The Company was incorporated in 1958 in New York. The Company's principal executive offices are located at 500 BIC Drive, Milford, Connecticut 06460, and its telephone number is (203) 783-2000. Parent. Parent, a societe anonyme organized under the laws of the Republic of France ("France"), is a worldwide organization, based in France, engaged primarily in the business of selling and marketing high-quality, low-cost consumer products such as stationery products, lighters and shavers. Through its wholly-owned subsidiary, Conte, Parent manufactures and sells stationery products such as pencils, coloring crayons, markers, felt pens and other office and school supplies. Through its wholly-owned subsidiary, Guy Laroche, Parent also conducts fashion operations. Parent's principal executive offices are located at 9, rue Petit 92110 Clichy, France, and its telephone number is (011) (331) 45-19-52-00. Mergeco. Mergeco is a New York corporation recently organized by Parent for the purpose of effecting the Merger pursuant to which Mergeco will be merged with and into the Company. It has no material assets and has not engaged in any activities except in connection with the Merger. The shareholders of Mergeco are Parent, Bruno Bich and certain other members of the Bich family (the "Mergeco Shareholders"). Mergeco's address is c/o BIC Corporation, 500 BIC Drive, Milford, Connecticut 06460, and its telephone number is (203) 783-2000. THE SPECIAL MEETING Time, Date and Place. A Special Meeting of shareholders of the Company will be held on , October , 1995 at [10:00] a.m., local time, at the [Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611] (the "Special Meeting"). Purpose of the Special Meeting. The purpose of the Special Meeting is to consider and vote upon a proposal to approve and adopt the Merger Agreement, a copy of which is attached to this Proxy Statement as Annex A. See "Introduction -- The Special Meeting." Record Date; Quorum. The close of business on , 1995 (the "Record Date") has been fixed as the record date for determining holders of Common Shares entitled to vote at the Special Meeting. Each Common Share outstanding on such date is entitled to one vote at the Special Meeting. As of the Record Date, 23,559,244 Common Shares were outstanding and held of record by holders. The presence, in person or by proxy, of the holders of a majority of the Common Shares entitled to vote at the Special Meeting is necessary to constitute a quorum for the transaction of business at the Special Meeting. See "Introduction -- Record Date; Quorum; Required Vote." Required Vote. Pursuant to the New York Business Corporation Law (the "NYBCL"), the affirmative vote of holders of at least 66 2/3% of all of the Common Shares is required to approve and adopt the Merger Agreement. The Voting Trustee (as hereinafter defined), who exercises voting power over Common Shares owned by the Mergeco Shareholders constituting 76% of the Common Shares has agreed, pursuant to 7 the Merger Agreement, to vote such Common Shares in favor of the approval and adoption of the Merger Agreement. The Voting Trustee can cause the Merger Agreement to be approved and adopted for purposes of the NYBCL without the vote of any other shareholder of the Company. However, the Merger Agreement provides that it is a condition to the consummation of the Merger that the Merger Agreement be approved and adopted by the holders of at least a majority of the Public Shares (as hereinafter defined) actually voted, in person or by proxy (excluding abstentions), at the Special Meeting. See "Introduction -- Record Date; Quorum; Required Vote" and "The Merger -- General -- Conditions to the Merger; Amendment, Waiver and Termination." Proxies. A proxy card is enclosed for use at the Special Meeting. A proxy may be revoked at any time prior to its exercise at the Special Meeting. Common Shares represented by properly executed proxies received at or prior to the Special Meeting and which have not been revoked will be voted in accordance with the instructions indicated therein. If no instructions are indicated on a properly executed proxy, such proxy will be voted FOR approval and adoption of the Merger Agreement. See "Introduction -- Proxies." SPECIAL FACTORS Background of the Merger. For a description of the events leading to the approval and adoption of the Merger Agreement by the Company's Board of Directors, see "Special Factors -- Background of the Merger." Purpose and Structure of the Merger. Parent's purpose for the Merger is to acquire all of the remaining equity interest in the Company not currently owned by the Mergeco Shareholders for the reasons described in "Special Factors -- Purpose and Structure of the Merger." The acquisition of the equity interest represented by the Common Shares outstanding as of the Effective Time (as hereinafter defined) and not currently owned by the Mergeco Shareholders (the "Public Shares") from the holders of such shares (the "Public Shareholders") is structured as a cash merger in order to transfer ownership of that equity interest to Parent in a single transaction. See "Special Factors -- Purpose and Structure of the Merger." Recommendation of the Special Committee and Board of Directors; Fairness of the Merger. A special committee (the "Special Committee") of three directors of the Company who are not directors, officers or employees of Parent or officers or employees of the Company concluded, and based on such conclusion the Board of Directors of the Company (the "Board of Directors") concluded, that the terms of the Merger are fair to, and in the best interests of, the Public Shareholders. Accordingly, the Board of Directors, based upon the unanimous recommendation of the Special Committee, has unanimously approved and adopted the Merger Agreement. The Special Committee and the Board of Directors recommend a vote FOR approval and adoption of the Merger Agreement. For a discussion of the factors considered by the Special Committee and the Board of Directors in making their recommendations, see "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger." Opinion of Financial Advisor. On August 15, 1995, Goldman Sachs delivered its written opinion to the Special Committee that as of such date the $40.50 per Public Share to be received by the Public Shareholders in the Merger is fair to the Public Shareholders. The full text of the written opinion of Goldman Sachs, which sets forth assumptions made, matters considered and limitations on the review undertaken in connection with the opinion, is attached hereto as Annex B and is incorporated herein by reference. Holders of Public Shares are urged to, and should, read such opinion in its entirety. See "Special Factors -- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses." Plans for the Company after the Merger. Except as indicated in this Proxy Statement, Parent does not have any present plans or proposals which relate to or would result in an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, a sale or transfer of a material amount of assets of the Company or any of its subsidiaries or any material change in the Company's capitalization or any other material changes in the Company's corporate structure or business or the composition of the Board of Directors or management. See "Special Factors -- Plans for the Company after the Merger." 2 8 Interest of Certain Persons in the Merger. In considering the recommendations of the Special Committee and of the Board of Directors with respect to the Merger, the Public Shareholders should be aware that certain officers and directors have certain interests summarized below that present actual or potential conflicts of interest in connection with the Merger. For a more detailed discussion of such interests, see "Special Factors -- Interest of Certain Persons in the Merger." The Special Committee and the Board of Directors were aware of potential or actual conflicts of interest and considered them along with other matters described under "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger." As of the date of this Proxy Statement, the Mergeco Shareholders owned an aggregate of 18,154,848 Common Shares, representing approximately 77% of the outstanding Common Shares on that date. Bruno Bich, as voting trustee (the "Voting Trustee"), exercises voting power over 17,912,648 of such shares, including all Common Shares owned by Parent, pursuant to a Voting Trust Agreement, dated as of February 5, 1991, by and among the Company, Parent, the Voting Trustee and certain other parties (as amended, the "Voting Trust Agreement"). The Mergeco Shareholders other than Parent own an additional 242,200 Common Shares not subject to the Voting Trust Agreement. See "Special Factors -- Interest of Certain Persons in the Merger -- Voting Trust Agreement." As of July 31, 1995, the directors and executive officers of the Company (other than Bruno Bich) owned an aggregate of 42,811 Public Shares. See "Ownership of Common Shares -- Security Ownership of Directors and Executive Officers of the Company." Bruno Bich, Chairman of the Board and Chief Executive Officer of the Company, is also Chairman of the Board and Chief Executive Officer of Parent. On August 17 and 18, 1995, Bruno Bich sold in market transactions an aggregate of 150,000 Common Shares not subject to the Voting Trust Agreement for $39.50 per share, or an aggregate of approximately $5.9 million. See "Transactions by Certain Persons in Common Shares." Each member of the Special Committee will be paid $20,000 for serving thereon. This compensation was authorized by the Board of Directors in order to compensate the members thereof for the significant additional time commitment that would be required of them in connection with fulfilling their duties and responsibilities as members of the Special Committee and is payable without regard to whether the Special Committee approved the Merger or whether the Merger is consummated. For a discussion of certain agreements by Parent with respect to indemnification of, and insurance for, directors and officers of the Company, see "The Merger -- General -- Indemnification and Insurance." For a description of current relationships and certain transactions among Parent, the Voting Trustee and the Company, see "Special Factors -- Interest of Certain Persons in the Merger." Certain Effects of the Merger. Upon consummation of the Merger, each Public Share, other than shares as to which dissenters' rights have been perfected under the NYBCL ("Dissenting Shares"), will be converted into the right to receive $40.50 in cash, without interest. The Public Shareholders will cease to have any ownership interest in the Company or rights as shareholders. The Public Shareholders will no longer benefit from any increases in the value of the Company and will no longer bear the risk of any decreases in value of the Company. Following the Merger, Parent, which currently owns approximately 63% of the outstanding Common Shares, will own approximately 86% of the surviving corporation's outstanding common shares, and the other Mergeco Shareholders, who currently own approximately 14% of the outstanding Common Shares, will own approximately 14% of the surviving corporation's outstanding common shares. As a result of the Merger, the Company will be privately held and there will be no public market for the Common Shares. Upon consummation of the Merger, the Common Shares will cease to be quoted on the New York Stock Exchange ("NYSE"), the registration of the Common Shares under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), will be terminated and such shares will no longer constitute "margin securities" under the rules of the Board of Governors of the Federal Reserve System. 3 9 Certain Litigation. On May 19, 1995 and May 22, 1995, various litigation was commenced against the Company by shareholders of the Company in New York and Connecticut state courts. These actions, purportedly named as class actions on behalf of all Public Shareholders, varyingly named the Company, its directors, certain of its officers and Parent as defendants. In these actions, plaintiffs alleged that the defendants breached their fiduciary duties to plaintiffs and the Company's other Public Shareholders in connection with Parent's proposal to acquire the Public Shares for $36.50 per share. The parties to these actions have reached an agreement in principle to settle all such actions with prejudice, based on the terms of the Merger. The settlement is subject to negotiation of a stipulation of settlement and approval by the court following notice to the Public Shareholders. In connection with the proposed settlement, the plaintiffs intend to apply for an award of attorneys' fees and litigation expenses in the amount of $487,500. The defendants have agreed not to oppose this application. The defendants have denied, and continue to deny, that they have committed or have threatened to commit any violation of law or breaches of duty to the plaintiffs or the purported class. The defendants have agreed to the proposed settlement because, among other reasons, such settlement would eliminate the burden and expense of further litigation and would facilitate the consummation of a transaction that they believe to be in the best interests of the Company and the Public Shareholders. Certain U.S. Federal Income Tax Consequences. The receipt of cash for Public Shares pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes and may be a taxable transaction for foreign, state and local income tax purposes as well. Public Shareholders should consult their own tax advisors regarding the U.S. federal income tax consequences of the Merger, as well as any tax consequences under the laws of any state or other jurisdiction. The Company will not recognize any gain or loss as a result of the Merger for U.S. federal income tax purposes. See "Special Factors -- Certain Federal Income Tax Consequences." THE MERGER General. Upon consummation of the Merger, Mergeco will be merged with and into the Company and the Company will be the surviving corporation (the "Surviving Corporation"). The Surviving Corporation will succeed to all the rights and obligations of the Company and Mergeco. See "The Merger -- General." Effective Time of Merger. Pursuant to the Merger Agreement, the Effective Time will occur upon the filing of a certificate of merger by the New York Department of State. See "The Merger -- General -- Effective Time of Merger." Treatment of Shares in the Merger. At the Effective Time: (a) each Common Share outstanding immediately prior to the Effective Time, except for (i) Common Shares then owned by the Mergeco Shareholders and (ii) Dissenting Shares, shall be converted into the right to receive $40.50 in cash, payable to the holder thereof, without interest thereon, upon surrender of the certificate representing such Common Share and (b) each Common Share outstanding immediately prior to the Effective Time which is then owned by the Mergeco Shareholders shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and retired and cease to exist, without any conversion thereof. Each of the Mergeco Shareholders currently owns one Mergeco common share for each Common Share expected to be owned by such Mergeco Shareholder at the Effective Time. Immediately prior to the Effective Time, Parent will be issued Mergeco preferred shares equal in number to the number of Public Shares outstanding immediately prior to the Effective Time, in exchange for a payment to Mergeco of an amount equal to the aggregate consideration payable to the Public Shareholders in the Merger (other than Public Shareholders who exercise dissenters' rights). Each Mergeco common and preferred share outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and exchangeable for one fully paid and non-assessable common share of the Surviving Corporation. See "The Merger -- General -- Treatment of Shares in the Merger" and "-- Dissenters' Rights." 4 10 Exchange of Share Certificates. Promptly after the Effective Time, the Surviving Corporation shall cause Mellon Securities Transfer Services, as Paying Agent (the "Paying Agent"), to mail to each holder of record as of the Effective Time (other than the Mergeco Shareholders) of an outstanding certificate or certificates for Common Shares, a letter of transmittal and instructions for use in effecting the surrender of such certificates for payment in accordance with the Merger Agreement. Upon surrender to the Paying Agent of a certificate, together with a duly executed letter of transmittal, the holder thereof shall be entitled to receive cash in an amount equal to the product of the number of Common Shares represented by such certificate and $40.50 in cash, without interest thereon (the "Merger Consideration"), less any applicable withholding tax, and such certificate shall then be canceled. Until surrendered pursuant to the procedures described above, each certificate (other than certificates representing Common Shares owned by the Mergeco Shareholders and certificates representing Dissenting Shares), shall represent for all purposes solely the right to receive the Merger Consideration multiplied by the number of Common Shares evidenced by such certificate. See "The Merger -- General -- Exchange of Share Certificates." SHAREHOLDERS OF THE COMPANY SHOULD NOT SEND ANY SHARE CERTIFICATES WITH THEIR PROXY CARDS. Conditions to the Merger; Amendment, Waiver and Termination. Pursuant to the Merger Agreement, the obligations of each of Parent, Mergeco, the Voting Trustee and the Company to effect the Merger are subject to the condition that the proposal to approve and adopt the Merger Agreement at the Special Meeting shall have received the affirmative vote of the holders of at least a majority of the Public Shares actually voted, in person or by proxy, on such proposal (excluding abstentions), and to certain additional conditions set forth in the Merger Agreement. The parties to the Merger Agreement may each, pursuant to the terms of the Merger Agreement, waive satisfaction of any of the conditions to its obligations under the Merger Agreement; provided, however, that any waiver by the Company must be approved by the Special Committee. The Merger Agreement may be amended at any time by written agreement of the parties; provided, that following approval by the Company's shareholders, no amendment may be made that reduces the Merger Consideration or otherwise materially and adversely affects the Public Shareholders without approval of at least a majority of the Public Shares, and that any amendment must be approved on behalf of the Company by the Special Committee. In certain circumstances the Merger Agreement may be terminated at any time prior to the Effective Time, either before or after approval by the shareholders of the Company. See "The Merger -- General -- Conditions to the Merger; Amendment, Waiver and Termination." Sources of Funds. It is currently expected that approximately $219 million will be required to pay the Merger Consideration to the Public Shareholders (assuming no such holder exercises dissenters' rights) and approximately $ will be required to pay the expenses of Parent and Mergeco in connection with the Merger, and that such funds will be furnished from available general funds of Parent. It is currently expected that approximately $ million will be required to pay the expenses of the Company and that such funds will be furnished from available general funds of the Company. See "The Merger -- Sources of Funds" and "Special Factors -- Fees and Expenses." Accounting Treatment. The Merger will be accounted for as a "purchase" as such term is used under generally accepted accounting principles for accounting and financial reporting purposes. See "The Merger -- Accounting Treatment." Regulatory Approvals. No federal or state regulatory approvals are required to be obtained, nor any regulatory requirements complied with, in connection with consummation of the Merger by any party to the Merger Agreement, except for the requirements of the NYBCL in connection with shareholder approvals and consummation of the Merger, and the requirements of federal securities law. See "The Merger -- General -- Representations and Warranties." Dissenters' Rights. In connection with the Merger, the Public Shareholders will be entitled to seek payment in cash of the fair value of their Common Shares under Section 623 of the NYBCL ("Section 623"), subject to their satisfaction of the conditions for dissenters' rights established by Section 623. Section 623 is set forth in full in Annex C hereto. See "The Merger -- Dissenters' Rights." 5 11 MARKET PRICES OF AND DIVIDENDS ON THE COMMON SHARES The Common Shares are traded on the NYSE under the symbol "BIC." The following table sets forth, for the calendar periods indicated, the high and low sales prices per Common Share, as quoted on the NYSE.
SALES PRICES PER COMMON SHARE -------------- CALENDAR PERIODS HIGH LOW --------------------------------------------------------------------- ---- --- 1993 First Quarter........................................................ $41 $30 7/8 Second Quarter....................................................... 33 7/8 26 Third Quarter........................................................ 31 3/8 27 Fourth Quarter....................................................... 33 5/8 27 1994 First Quarter........................................................ $31 7/8 $28 Second Quarter....................................................... 29 1/4 26 1/2 Third Quarter........................................................ 30 7/8 28 Fourth Quarter....................................................... 30 25 5/8 1995 First Quarter........................................................ $32 3/4 $28 1/4 Second Quarter....................................................... 39 3/8 30 5/8 Third Quarter (through September ).................................
On May 18, 1995, the day prior to public announcement of Parent's original merger proposal, the closing price of the Common Shares on the NYSE was $35 3/4 per share. On August 15, 1995, the day before the Merger Agreement was publicly announced, the closing price of the Common Shares on the NYSE was $39 1/4 per share. On September , 1995, the closing price of the Common Shares on the NYSE was $ per share. HOLDERS OF COMMON SHARES ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THEIR SHARES. Under the terms of the Merger Agreement, the Company will not pay the regular quarterly cash dividend otherwise payable on October 30, 1995, even if the Merger is consummated subsequent to such date. Although there can be no assurance as to whether the proposed transaction will be effected, it is currently anticipated that the Merger will be completed in late October or early November of 1995. 6 12 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY Certain selected consolidated historical financial data of the Company is set forth below and under "Selected Consolidated Financial Data of the Company." The selected financial data at July 2, 1995 and July 3, 1994 and for the six month periods then ended is unaudited but includes, in the opinion of management, all adjustments necessary for a fair presentation of the results of operations and the financial position at and for each of the interim periods presented. Operating results for the six months ended July 2, 1995 are not necessarily indicative of the results to be expected for the full year. The selected financial data should be read in conjunction with the Consolidated Financial Statements of the Company, related notes and other financial information incorporated by reference into this Proxy Statement. BIC CORPORATION
SIX MONTHS ENDED ------------------- AT END OF OR FOR FISCAL YEARS JULY 2, JULY 3, ---------------------------------------------------- 1995 1994 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- -------- -------- (UNAUDITED) (U.S. DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS) INCOME STATEMENT DATA Net sales.......................... $257,413 $241,616 $475,118 $439,311 $417,377 $369,171 $329,246 Income before income taxes, extraordinary credit and cumulative effect of changes in accounting principles............ $ 48,234 43,486 87,207 73,986 67,278 46,616 41,067 Net income......................... 28,622 25,357 51,021 34,964 39,935 28,059 24,055 Ratio of earnings to fixed charges(1)....................... -- -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- Per share:(2) Income before extraordinary credit and cumulative effect of changes in accounting principles..................... 1.21 1.10 2.19 1.90 1.70 1.12 0.92 Net income....................... 1.21 1.08 2.17 1.48 1.70 1.16 0.99 Cash dividends................... 0.46 0.40 0.80 0.72 1.06 0.56 1.06 BALANCE SHEET DATA Working capital.................... 123,116 93,157 107,816 77,232 71,469 106,284 111,624 Long-term debt..................... 0 0 0 0 0 0 0 Total assets....................... 440,573 386,164 358,687 336,216 308,466 280,205 257,107 Total assets less research and development and excess of assets acquired over book value......... 428,683 372,575 345,947 321,778 292,329 280,205 257,107 Shareholders' equity............... 261,447 240,638 247,917 226,688 209,366 195,515 190,187 Book value per share............... 11.10 10.21 10.52 9.62 8.89 8.30 7.85
- --------------- (1) The Company had no fixed charges in any of the periods presented. (2) Per share amounts have been retroactively restated to reflect the 1992 share split effected in the form of a 100% share dividend. Cash dividends per share represent the total dividends paid each year. The 1992 and 1990 dividends included a special cash dividend of $0.50 per share. 7 13 INTRODUCTION GENERAL This Proxy Statement is being furnished to holders of the outstanding common shares, par value $1.00 per share (the "Common Shares"), of BIC Corporation (the "Company") in connection with the solicitation of proxies by the Board of Directors of the Company (the "Board of Directors") for use at a Special Meeting of Shareholders of the Company to be held on , October , 1995, at [10:00] a.m., local time, at [the Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], including any adjournments or postponements thereof (the "Special Meeting") . THE SPECIAL MEETING At the Special Meeting, holders of Common Shares will consider and vote upon a proposal to approve and adopt an Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger Agreement"), pursuant to which: (a) BIC Merger Corporation ("Mergeco"), a New York corporation and a majority owned subsidiary of Societe BIC S.A., a societe anonyme organized under the laws of the Republic of France ("Parent"), will be merged with and into the Company (the "Merger"), and the entire equity interest in the Company, as the surviving corporation in the Merger, will be owned by Parent and the other shareholders of Mergeco; and (b) each Common Share that is outstanding at the effective time of the Merger (the "Effective Time"), other than Common Shares held by Parent and other shareholders of Mergeco (the "Public Shares") or Public Shares in respect of which dissenters' rights have been perfected, will be converted into the right to receive $40.50 per share in cash, without interest (the "Merger Consideration"). Common Shares held by Parent and the other shareholders of Mergeco will be cancelled without consideration. Acting on the unanimous recommendation of a special committee (the "Special Committee"), the Board of Directors has unanimously approved and adopted the Merger Agreement. The Special Committee and the Board of Directors unanimously recommend that shareholders vote FOR approval and adoption of the Merger Agreement. RECORD DATE; QUORUM; REQUIRED VOTE The close of business on , 1995 (the "Record Date") has been fixed as the record date for determining holders of Common Shares entitled to vote at the Special Meeting. Each Common Share outstanding on such date is entitled to one vote at the Special Meeting. As of the Record Date, 23,559,244 Common Shares were outstanding and held of record by approximately holders. The presence, in person or by proxy, of the holders of a majority of the outstanding Common Shares entitled to vote at the Special Meeting is necessary to constitute a quorum for the transaction of business at the Special Meeting. Pursuant to the New York Business Corporation Law (the "NYBCL"), the affirmative vote of holders of at least 66 2/3% of all of the outstanding Common Shares is required to approve and adopt the Merger Agreement. The Voting Trustee (as hereinafter defined), who exercises voting power over Common Shares owned by the shareholders of Mergeco constituting 76% of the outstanding shares has agreed, pursuant to the Merger Agreement, to vote such Common Shares in favor of the approval and adoption of the Merger Agreement. The Voting Trustee can cause the Merger Agreement to be approved and adopted for purposes of the NYBCL without the vote of any other shareholder of the Company. However, the Merger Agreement provides that it is a condition to the consummation of the Merger that the Merger Agreement be approved and adopted by the holders of at least a majority of the Public Shares of the Company actually voted, in person or by proxy (excluding abstentions), at the Special Meeting. For additional information regarding the Common Shares owned by the Mergeco Shareholders and the Company's directors and executive officers, see "Special Factors -- Interest of Certain Persons in the Merger" and "Ownership of Common Shares." Under the rules of the New York Stock Exchange (the "NYSE"), the proposal to approve and adopt the Merger Agreement is considered a "non-discretionary item" as to which brokerage firms may not vote in their discretion on behalf of their clients if such clients have not furnished voting instructions. Abstentions will (a) 8 14 be considered in determining the presence of a quorum at the Special Meeting, (b) will have the practical effect of a vote against approval and adoption of the Merger Agreement for purposes of the vote required by the NYBCL since it would be one less vote for such approval and (c) pursuant to the terms of the Merger Agreement, will not be considered in determining whether a majority of the Public Shares actually voted have voted in favor of the approval and adoption of the Merger Agreement. PROXIES Common Shares represented by properly executed proxies received at or prior to the Special Meeting and which have not been revoked will be voted in accordance with the instructions indicated thereon. If no instructions are indicated on a properly executed proxy, such proxies will be voted FOR approval and adoption of the Merger Agreement. A shareholder who has given a proxy may revoke such proxy at any time prior to its exercise at the Special Meeting by (i) giving written notice of revocation to the Secretary of the Company, (ii) properly submitting to the Company a duly executed proxy bearing a later date, or (iii) attending the Special Meeting and voting in person. Attendance at the Special Meeting will not in and of itself revoke a proxy. All written notices of revocation and other communications with respect to revocation of proxies should be addressed as follows: BIC Corporation, 500 BIC Drive, Milford, CT 06460, Attention: Thomas M. Kelleher, General Counsel and Secretary. If the Special Meeting is adjourned or postponed for any purpose, at any subsequent reconvening of the Special Meeting, all proxies will be voted in the same manner as such proxies would have been voted at the original convening of the meeting (except for any proxies which have theretofore effectively been revoked or withdrawn), notwithstanding that they may have been effectively voted on the same or any other matter at a previous meeting. SHAREHOLDERS SHOULD NOT SEND ANY SHARE CERTIFICATES WITH THEIR PROXY CARDS. IF THE MERGER IS CONSUMMATED, THE PROCEDURE FOR THE EXCHANGE OF CERTIFICATES REPRESENTING COMMON SHARES WILL BE AS SET FORTH IN THIS PROXY STATEMENT. SEE "THE MERGER -- GENERAL -- EXCHANGE OF SHARE CERTIFICATES." SOLICITATION OF PROXIES The cost of solicitation of the shareholders of the Company will be paid by the Company. Such cost will include the reimbursement of banks, brokerage firms, nominees, fiduciaries and custodians for the expenses of forwarding solicitation materials to beneficial owners of shares. In addition to the solicitation of proxies by use of mail, the directors, officers and employees of the Company, may solicit proxies personally or by telephone, telegraph or facsimile transmission. Such directors, officers and employees will not be additionally compensated for such solicitation but may be reimbursed for out-of-pocket expenses incurred in connection therewith. In addition, the Company has retained D.F. King & Co. Inc. to assist in soliciting proxies and to provide materials to banks, brokerage firms, nominees, fiduciaries and other custodians. For such services, the Company will pay to D.F. King & Co. Inc. a fee of approximately $10,000, plus expenses. 9 15 THE PARTIES THE COMPANY Incorporated in New York in 1958, the Company's primary focus is on the manufacture and sale of high-quality, low-cost consumer products. These products include stationery products, lighters and shavers. Through its wholly-owned subsidiary BIC Sport U.S.A. Inc., the Company also distributes sailboards which are purchased from a subsidiary of Parent. While most of the Company's operations are conducted in the United States, operations are also conducted through wholly-owned subsidiaries at other locations in North and Central America. The Company's principal executive offices are located at 500 BIC Drive, Milford, Connecticut 06460, and its telephone number is (203) 783-2000. PARENT Parent, a societe anonyme organized under the laws of the Republic of France ("France"), is a worldwide organization, based in France, engaged primarily in the business of selling and marketing high-quality, low-cost consumer products such as stationery products, lighters and shavers. Through its wholly-owned subsidiary, Conte, Parent manufactures and sells stationery products such as pencils, coloring crayons, markers, felt pens and other office and school supplies. Through its wholly-owned subsidiary, Guy Laroche, Parent also conducts fashion operations. Parent's principal executive offices are located at 9, rue Petit 92110 Clichy, France, and its telephone number is (011) (331) 45-19-52-00. MERGECO Mergeco is a corporation recently organized by Parent for the purpose of effecting the Merger. It has no material assets and has not engaged in any activities except in connection with the Merger. The shareholders of Mergeco are Parent, Bruno Bich and certain other members of the Bich family (the "Mergeco Shareholders"). Mergeco's address is c/o BIC Corporation, 500 BIC Drive, Milford, Connecticut 06460 and its telephone number is (203) 783-2000. SPECIAL FACTORS BACKGROUND OF THE MERGER Parent organized the Company in 1958 to conduct Parent's operations in North America. An initial public offering (the "IPO") of Common Shares representing approximately 22% of the Common Shares then outstanding was undertaken in September 1971. In connection with the IPO, and since that time, the Company, Parent, certain members of the Bich family and others who owned Common Shares and certain other parties entered into successive ten year voting trust agreements with the Company, and Parent entered into various other agreements with the Company to define the ongoing relationship between them. For a description of such agreements, see "-- Interest of Certain Persons in the Merger." Parent has from time to time considered the possibility of acquiring all of the outstanding Public Shares of the Company, among other reasons, to facilitate the closer integration of the Company's operations with the global operations of the BIC group. See "-- Purpose and Structure of the Merger." During the winter of 1994-1995, Mr. Bruno Bich, the Chairman of the Board and Chief Executive Officer of Parent, and the Chairman of the Board and Chief Executive Officer of the Company, discussed with certain senior officers of the Company Parent's possible interest in considering an acquisition of all of the outstanding Public Shares at a future time. Pursuant to an engagement letter dated April 28, 1995, Parent retained Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to assist Parent in evaluating a possible acquisition of the Public Shares and to render financial advisory and investment banking services to Parent in the event that Parent determined to do so. During the first two weeks of May, 1995, DLJ reviewed certain public and non-public information with respect to the Company and also discussed with certain members of the Company's management the business and financial condition and prospects of the Company. After discussions with DLJ in mid-May, Parent's senior management determined to recommend to Parent's Board of Directors that Parent offer to acquire all of the outstanding Public Shares. 10 16 At a special meeting of Parent's Board of Directors held in Paris on May 18, 1995, Bruno Bich reviewed with Parent's Board of Directors senior management's proposal to acquire the outstanding Public Shares. Parent's management reviewed the trading performance of the Common Shares over the past several years and the relative value of the French franc compared to the U.S. dollar during that period. Parent's management also reviewed the potential advantages to be gained in operating flexibility and efficiencies from a possible acquisition of the portion of the Company not already owned by Parent and the other Mergeco Shareholders. See "-- Purpose and Structure of the Merger." After discussing these matters, Parent's Board of Directors approved the making of a proposal to acquire, in a cash merger, all of the outstanding Public Shares at $36.50 per share (the "Proposal") and delegated to Mr. Bich the authority to determine and negotiate the terms of a transaction, subject to final approval by Parent's Board of Directors. Later that day, Mr. Bich contacted the other members of the Company's Board of Directors, as well as Raymond Winter, the Company's President and Chief Operating Officer, Robert L. Macdonald, the Company's Vice President -- Finance and Treasurer and Thomas M. Kelleher, the Company's General Counsel and Secretary, and informed them that Parent would publicly announce the Proposal the following day. On May 19, 1995, Parent delivered to each member of the Board of Directors a letter, the text of which was as follows: May 19, 1995 Board of Directors of BIC Corporation Gentlemen: I am pleased to offer, on behalf of Societe BIC S.A. and certain members of the Bich family, to acquire the equity interest represented by all of the outstanding Common Shares (the "Public Shares") of BIC Corporation not currently owned by Societe BIC S.A. and such Bich family members. The principal terms are as follows: 1. The transaction would be a cash merger in which each holder of a Public Share would receive U.S. $36.50 per share, or an aggregate of approximately $192 million based on the number of Public Shares outstanding as of February 15, 1995. 2. Consummation of the acquisition would be subject, among other things, to (i) approval of the Board of Directors of BIC Corporation, (ii) receipt of satisfactory confirmation from French tax authorities regarding the French tax consequences of the transaction, and (iii) other conditions customary in a transaction of this type. 3. We anticipate that, upon completion of the acquisition, Societe BIC S.A. will seek to cause BIC Corporation Common Shares to be delisted from trading on the New York Stock Exchange and to cause deregistration of the Common Shares with the Securities and Exchange Commission. We believe that our offer is a fair one that will benefit BIC Corporation and its public shareholders. The proposed acquisition price is equivalent to a 20% premium over the average closing price of BIC Common Shares on the New York Stock Exchange over the 180 trading days ended May 18, 1995. We wish to make it clear that we are not interested under any circumstances in selling our interest in BIC Corporation and that there is thus no prospect of a sale of a controlling interest to a third party. We understand that you may wish to deliberate on this offer through a special committee of independent directors and that such committee may wish to retain its own advisors to assist in those deliberations. We invite your representatives to meet with our advisors to discuss this proposal at your earliest convenience. 11 17 We hope you will give this proposal your prompt attention. We reserve the right to amend or withdraw this proposal at any time in our discretion. Sincerely, Societe BIC S.A. /s/ BRUNO BICH Bruno Bich Chairman and Chief Executive Officer On May 19, 1995, prior to the opening of the Paris Bourse and the NYSE, Parent also issued the following press release in Paris: "SOCIETE BIC S.A. PROPOSES TO BUY PUBLIC INTEREST IN ITS BIC CORPORATION SUBSIDIARY FOR $36.50 PER SHARE Clichy, France, Societe BIC S.A. today announced a proposal to acquire all of the equity interests in its BIC Corporation subsidiary (NYSE:BIC) not currently owned by Societe BIC S.A. and members of the Bich family. Under the proposed transaction, the public shareholders of BIC Corporation would receive $36.50 a share in cash, or an aggregate of approximately $192 millions for the 5,254,396 shares held by the public. BIC Corporation has outstanding 23,559,244 shares of Common Stock, of which Societe BIC S.A. and members of the Bich family own 18,304,848 shares, or approximately 78%. The offer is subject to the approval of the Board of Directors of BIC Corporation, receipt of satisfactory confirmation from French tax authorities regarding the French tax consequences of the transaction, and other conditions customary in a transaction of this type. The offer also noted that the proposed acquisition price is equivalent to an approximately 20% premium over the average closing price of BIC Corporation common stock on the NYSE over the 180 trading days ended May 18, 1995." On May 23, 1995, a special meeting of the Board of Directors was held. All directors, including Mr. Bich, were present, in person or by videoconference facilities. At the special meeting, Mr. Bich outlined the terms of the Proposal and Parent's reasons for proceeding with a transaction. See "-- Purpose and Structure of the Merger." The Board then approved the creation of the Special Committee, consisting of Robert E. Allen, David W. Heleniak and Antoine G. Treuille, the three directors of the Company who are not directors, officers or employees of Parent or officers or employees of the Company. The Special Committee was authorized to review, evaluate and negotiate the terms of the Proposal with Parent and its representatives and to make a recommendation to the full Board of Directors concerning the Proposal. See "-- Interest of Certain Persons in the Merger" for a description of certain relationships between members of the Special Committee and the Company and Mr. Bich and his family. The Board of Directors also authorized the Special Committee to retain independent legal and financial advisors. 12 18 On May 23, 1995, following the special Board of Directors meeting, the Company issued the following press release: "BIC CORPORATION ANNOUNCES FORMATION OF SPECIAL COMMITTEE TO CONSIDER PARENT'S BUY-OUT PROPOSAL May 23, 1995 -- BIC Corporation today announced that its Board of Directors had met and appointed a special committee consisting of three independent directors to evaluate the buy-out proposal made last week by BIC's French parent, Societe BIC S.A. Under the proposal, Societe BIC would acquire in a cash merger the 5,254,396 shares of BIC Corporation common stock not currently owned by Societe BIC or members of the Bich family for $36.50 per share. The proposed acquisition, which has an aggregate value of approximately $192 million, is subject, among other conditions, to approval by BIC Corporation's Board of Directors. The BIC Corporation Board of Directors noted that no assurance could be given as to whether or not any transaction will occur or as to the timing or terms of any transaction." On May 24, 1995, the Special Committee retained Goldman, Sachs & Co. ("Goldman Sachs") as independent financial advisor to the Special Committee and Shearman & Sterling (a law firm of which Mr. Heleniak is a partner) as independent legal advisor. For a description of the terms of the engagement of Goldman Sachs and certain information concerning Goldman Sachs, see "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co." Goldman Sachs was authorized to analyze the Proposal and, after consultation with the Company's senior management, to begin to determine whether it would be in a position to render an opinion as to the fairness of the consideration to be received by the Public Shareholders. On May 26, 1995, the Special Committee met with representatives of Goldman Sachs and Shearman & Sterling. During this organizational meeting, Goldman Sachs discussed its preliminary timetable for conducting financial due diligence of the Company. From May 26, 1995 through June 12, 1995, members of the Special Committee and its financial advisor reviewed certain public and non-public information with respect to the Company. During this period, Goldman Sachs and Mr. Allen, Chairman of the Special Committee, and the other members of the Special Committee, also discussed the business and financial condition and prospects of the Company with members of the senior management of the Company and Goldman Sachs visited various manufacturing facilities of the Company. On June 12, 1995, Debevoise & Plimpton, special counsel to Parent, delivered to Shearman & Sterling a proposed merger agreement containing further details of the Proposal. On June 13, 1995, the Special Committee met with representatives of Goldman Sachs and of Shearman & Sterling. During such meeting, representatives Shearman & Sterling explained the legal responsibilities of the members of the Special Committee and the legal principles applicable to actions taken by the Special Committee with respect to the Proposal and representatives Goldman Sachs described the financial due diligence performed by Goldman Sachs to date and certain preliminary valuation analyses performed by Goldman Sachs. The Special Committee directed Goldman Sachs to perform additional financial due diligence. During the period from June 14 through June 26, 1995, representatives of Goldman Sachs continued their due diligence, including further discussions with senior management of the Company, including Mr. Bich, to discuss the Company's business, financial condition and prospects. In the course of those discussions, the Company's management emphasized that the Company did not, in the ordinary course of its business, make forecasts or projections as to future sales, earnings or other income statement data, cash flows or balance sheet and financial position information, other than certain information contained in the Company's annual budget relating solely to the fiscal year covered by such budget (which budget is generally not made publicly available). While noting that the Company's management does not prepare long-term projections in the ordinary course, the Special Committee directed Goldman Sachs to work with the Company's manage- 13 19 ment in order to complete Goldman Sachs' financial analyses, using projections to be developed by the Company's management solely to assist the Special Committee and Goldman Sachs in evaluating the fairness of the consideration to be received by the Public Shareholders in the proposed merger. Mr. Allen participated in certain of these discussions held at the offices of the Company on June 15, 1995. The final versions of these management projections (the "Financial Projections"), and the assumptions underlying the preliminary and final versions, are summarized in "-- Certain Financial Projections." On June 21, 1995, the Special Committee met with representatives of Goldman Sachs and Shearman & Sterling. During such meeting, representatives of Goldman Sachs discussed preliminary versions of the Financial Projections with the members of the Special Committee. It was noted by Goldman Sachs that the Company's management was still working to refine the assumptions underlying the Financial Projections and that they represented only preliminary estimates. Representatives of Goldman Sachs also described certain preliminary valuation analyses prepared by Goldman Sachs utilizing, among other things, the preliminary versions of the Financial Projections. The Special Committee directed Goldman Sachs to hold further discussions with senior management of the Company concerning such preliminary versions. On June 23, 1995, representatives of Goldman Sachs met with representatives of DLJ to discuss the preliminary versions of the Financial Projections. Mr. Bich participated in this meeting by telephone, and expressed reservations about certain of the assumptions underlying these preliminary versions. On June 26, 1995, the Special Committee met with representatives of Goldman Sachs and Shearman & Sterling. During such meeting, representatives of Goldman Sachs updated the Special Committee on discussions with management of the Company concerning the preliminary versions of the Financial Projections. It was agreed that more work remained to be done and the Special Committee again directed Goldman Sachs to hold further discussions with senior management of the Company concerning such preliminary versions. On June 28, 1995, representatives of Goldman Sachs and DLJ met in New York to discuss the valuation methodologies and assumptions used by DLJ in analyzing the Proposal price and to provide Goldman Sachs with the benefit of such information prior to the meeting of the Special Committee planned for the following day. On June 29, 1995, the Special Committee met with representatives of Goldman Sachs and of Shearman & Sterling. During such meeting, representatives of Goldman Sachs discussed with the Special Committee the valuation methodologies and assumptions utilized by DLJ in analyzing the adequacy of the Proposal price. Representatives of Goldman Sachs also described certain valuation analyses prepared by Goldman Sachs utilizing, among other things, the preliminary versions of the Financial Projections. The Special Committee authorized Goldman Sachs to discuss with DLJ Goldman Sachs' valuation analyses. Likewise, Parent instructed DLJ to discuss with Goldman Sachs DLJ's valuation analyses, in an effort to develop a mutually agreeable basis for valuation of the Public Shares. The next day, representatives of Goldman Sachs met with representatives of DLJ to share with DLJ the valuation methodologies utilized by Goldman Sachs. Representatives of DLJ and Goldman Sachs also discussed the areas of disagreement between their valuation analyses but the meeting ended without resolution of these differences. On July 10, 1995, representatives of DLJ presented to representatives of Goldman Sachs and Parent a report containing DLJ's valuation analyses. See "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Donaldson, Lufkin & Jenrette Securities Corporation -- July Report." On July 11, 1995, the Special Committee met with representatives of Goldman Sachs and Shearman & Sterling. At such meeting, representatives of Goldman Sachs described recent meetings and conversations between representatives of Goldman Sachs and DLJ. The Special Committee authorized Goldman Sachs to conduct further discussions with DLJ concerning valuation issues. 14 20 On July 12, 1995, the Special Committee met with representatives of Shearman & Sterling. During such meeting, representatives of Shearman & Sterling updated the Special Committee on recent contacts between representatives of Goldman Sachs and representatives of DLJ concerning their respective valuation analyses. On July 19, 1995, Mr. Bich and representatives of DLJ were invited to meet with the Special Committee and Goldman Sachs in New York. At the meeting, the parties continued to discuss the valuation issues identified in the prior meetings between DLJ and Goldman Sachs. In particular, Mr. Bich and DLJ suggested that certain assumptions contained in the preliminary versions of the Financial Projections (specifically, those on which the "Upside Case" was based (see "-- Certain Financial Projections")), which were utilized by Goldman Sachs' in preparing its valuation analyses, were too aggressive. Mr. Bich observed that, in his opinion: (i) all or nearly all of the productivity improvements and operational efficiencies that could be implemented to improve the Company's operating results had already been implemented; (ii) future revenue growth would likely be more difficult due to an absence of significant new products, the absence of opportunities for geographic expansion into faster-growing foreign markets and pricing pressures on its commodity products; (iii) the Company was not, in fact, comparable to certain of the companies identified as peers by Goldman Sachs, in that it lacked a worldwide distribution network, had limited product lines, and had much smaller advertising and research and development budgets than such companies. The meeting ended without resolution of the valuation issues separating Parent and the Special Committee. On July 24, 1995, the Special Committee met with representatives of Goldman Sachs and Shearman & Sterling. During such meeting, representatives of Goldman Sachs reported to the Special Committee concerning recent discussions between representatives of Goldman Sachs and DLJ. Mr. Allen then reported to the other members of the Special Committee concerning discussions between him and a representative of DLJ concerning the status of discussions between Parent and the Special Committee. The Special Committee authorized Goldman Sachs to continue discussions with DLJ. Over the course of the next two weeks, Parent and the Special Committee, through their financial advisors, continued their discussions of valuation issues related to the Proposal. These discussions resulted in sufficient progress that it was agreed that a meeting between Mr. Bich and Mr. Allen would be useful in resolving the remaining issues separating the two sides in the negotiation. On August 4, 1995, Mr. Allen met with Mr. Bich in Paris. During the course of a meeting which lasted several hours, the parties came substantially closer to agreeing upon the price and other terms of a modified proposal. On August 6, 1995, the Special Committee met with representatives of Goldman Sachs and Shearman & Sterling. During such meeting, Mr. Allen described his August 4 meeting in Paris with Mr. Bich. After discussion, the Special Committee authorized Mr. Allen to pursue further negotiations with Mr. Bich aimed at arriving at a mutually acceptable price. The Special Committee also indicated to Goldman Sachs that it should prepare financial analyses based upon the First Case and the Second Case described under "-- Certain Financial Projections." On August 7, 1995, Mr. Allen telephoned Mr. Bich from New York. During this conversation, Messrs. Allen and Bich discussed an offer of $40.50 per Public Share, subject to approval by the entire Special Committee, receipt by the Special Committee of a written opinion from Goldman Sachs that such consideration would be fair to the Public Shareholders and agreement on the terms of a definitive merger agreement. Over the course of the next two days, the parties held several telephone conversations to clarify the terms of the proposed offer, during which they agreed that the Company would not pay the regular quarterly cash dividend otherwise payable on October 30, 1995, even if the Merger was consummated subsequent to such date. On August 10, 1995, on instructions of the parties, Debevoise & Plimpton and Shearman & Sterling met to begin negotiation of a definitive merger agreement. 15 21 The parties continued to negotiate the final terms of the proposed offer and definitive merger agreement for the next five days. On August 15, 1995, the Special Committee met with representatives of Goldman Sachs and Shearman & Sterling. Goldman Sachs rendered its written opinion to the Special Committee that, as of such date, the $40.50 per Public Share to be received by the Public Shareholders in the Merger was fair to the Public Shareholders. See "Special Factors -- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co." Shearman & Sterling reviewed the principal terms and conditions of the Merger Agreement. After a full discussion, the Special Committee determined that the terms of the Merger and the Merger Agreement were fair to, and in the best interests of, the Public Shareholders. The Special Committee then unanimously recommended to the Board of Directors that it approve and adopt the Merger Agreement and unanimously recommended to the Public Shareholders that such shareholders vote to approve and adopt the Merger Agreement. At a Board of Directors meeting immediately following the meeting of the Special Committee, the Board of Directors unanimously determined that the Merger was fair to, and in the best interests of, the Company and its shareholders, approved and adopted the Merger Agreement, and recommended that its shareholders vote to approve and adopt the Merger Agreement. Prior to the opening of the Paris Bourse and the NYSE on August 16, 1995, the Company and Parent issued a joint press release regarding the execution and delivery of the Merger Agreement. The full text of the joint press release follows: "BIC CORPORATION AND SOCIETE BIC S.A. ANNOUNCE AGREEMENT ON CASH MERGER AT $40.50 PER SHARE Milford, CT; Clichy, France, August 16, 1995 -- BIC Corporation (NYSE:BIC) and its French parent, Societe BIC S.A., jointly announced today that they have executed a definitive merger agreement pertaining to Societe BIC S.A.'s previously announced proposal to acquire from public shareholders the approximately 22% of BIC Corporation's Common Shares not currently owned by Societe BIC S.A. and the Bich family. Under the agreement, Societe BIC S.A. will acquire in the merger the publicly held shares of BIC Corporation for a price of $40.50 per share in cash, or an aggregate of approximately $219 million. The merger agreement was approved and adopted by the Board of Directors of BIC Corporation following the unanimous recommendation of the merger by a special committee of independent directors. Goldman, Sachs & Co. has served as financial advisor to the special committee. The transaction, which will be financed out of Societe BIC's cash position, is subject to certain customary conditions including approval of a majority of the publicly held shares actually voted at a special meeting of shareholders which will be called to consider the merger. Although there can be no assurance as to whether the proposed transaction will be effected, it is currently anticipated that the merger will be completed in late October or early November of 1995. Under the terms of the Merger Agreement, BIC Corporation will not pay the regularly scheduled cash dividend payable on October 30, 1995, even if the merger is consummated subsequent to such date. BIC Corporation, headquartered in Milford, Connecticut, is a leading U.S. manufacturer and distributor of stationery products, lighters and shavers. 1994 sales were $475 million." PURPOSE AND STRUCTURE OF THE MERGER Parent's purpose for the Merger is to acquire all of the equity interest in the Company represented by the Public Shares for the reasons described below. The Board of Directors will, pursuant to the Merger Agreement, call the Special Meeting to vote to approve and adopt the Merger Agreement. In the Merger, each Public Share will be converted into the right to receive an amount in cash equal to $40.50, without interest. 16 22 In determining to acquire the Public Shares at this time, Parent focused on a number of factors. The Merger, if consummated, will simplify allocation of business opportunities between the Company and Parent and its other affiliates, particularly with regard to geographic expansion, while eliminating potential conflicts of interest with the Company's minority Public Shareholders. In recent times, the increasingly global nature of the BIC group's markets and the character of its competitors and customers have required more unified worldwide strategies and product policies, under unified management, in order to compete more effectively. Parent believes the three principal markets in which the Company competes (stationery products, lighters and shavers) are mature and highly competitive markets in the United States. Due to the significantly larger size of its principal competitors, the Company currently is unable to match those competitors' expenditures on advertising, sales promotion, research and development and capital projects. In addition, the Company possesses limited trademarks and consequently has limited presence in higher growth markets outside North America. Accordingly, Parent has from time to time considered the possible acquisition of the Public Shares of the Company, balancing the increasing need for closer integration of the BIC group against continuing public ownership of the Company. As the growth and globalization of the BIC group's global competitors have become more pronounced, Parent has concluded that the inevitable constraints in integrating its United States operations, together with the need to continue to devote management attention to ensure that the interests of the Public Shareholders are scrupulously observed in the course of further integration of the Company into the BIC group, make it desirable for Parent to acquire all of the Public Shares. If consummated, the Merger will also terminate the Company's public status, which Parent believes has not provided benefits that justify, as a business matter, maintenance of that status. The Common Shares have never become, as was originally intended, an attractive currency for acquisitions because of the thin trading market for such shares. Moreover, Parent does not believe the Company needs independent access to the capital markets, because sufficient funding, if and when required, is available through Parent (which is a public company in France). Parent also believes delisting of the Common Shares may improve overall access to the capital markets for Parent by providing a single focus for public investment. Terminating the Company's public status will eliminate significant compliance costs associated with such status (including stock exchange listing fees and the costs of preparing reports and other information required pursuant to the Exchange Act), thereby furthering the Company's ongoing cost-cutting efforts (to which much of the Company's recent improvement in operating results is due). Following consummation of the Merger, the Company will be able to eliminate the time, expense and energy incurred in connection with stock transfers, dividends, proxy notices, annual reports, compliance with the Exchange Act and attendant legal issues. The Merger also promises additional efficiencies in addition to the elimination of such compliance costs, including increased sharing of management and technological expertise and economies of scale resulting from centralized procurement of raw materials. The acquisition of the Public Shares has been structured as a cash merger in order to provide a prompt and orderly transfer of ownership of the equity interest represented by Public Shares to Parent. Parent believes the current time is an opportune one to acquire the entire remaining equity interest in the Company, as the recent strength of the French franc against the U.S. dollar allows Parent to offer Public Shareholders what it believes to be an attractive premium for their Public Shares. RECOMMENDATION OF THE SPECIAL COMMITTEE AND BOARD OF DIRECTORS OF THE COMPANY; FAIRNESS OF THE MERGER At a meeting held on August 15, 1995, the Special Committee unanimously determined to recommend that the Board of Directors approve and adopt the Merger Agreement and that the Board of Directors recommend to the Public Shareholders that such shareholders vote to approve and adopt the Merger Agreement, unanimously determined to recommend to the Public Shareholders that such shareholders vote to approve and adopt the Merger Agreement and unanimously determined that the terms of the Merger are fair to, and in the best interests of, the Public Shareholders. At a meeting held immediately thereafter, at which all of the directors of the Company were present, based on the unanimous recommendation of the Special Committee, the Board of Directors unanimously approved and adopted the Merger Agreement, unanimously 17 23 determined to recommend to the Public Shareholders that they vote to approve and adopt the Merger Agreement and unanimously determined that the terms of the Merger are fair to, and in the best interests of, the Company and its shareholders. See "Special Factors -- Background of the Merger." The Special Committee. In determining to recommend to the Board of Directors that it approve and adopt the Merger Agreement, and in determining, to date, the fairness of the terms of the Merger, the Special Committee considered the following factors, each of which, in the Special Committee's view, supported the Special Committee's determination to recommend the Merger. (i) the financial condition, assets, results of operations, business and prospects of the Company, and the risks inherent in achieving those prospects, including the belief of management of the Company, as expressed to the Special Committee and which the Special Committee found to be reasonable, that (a) all or nearly all of the productivity improvements and operational efficiencies that could be implemented to improve the Company's operating results had already been implemented and (b) future revenue growth would likely be more difficult due to (i) pressure on margins for the Company's commodity products due to the trend toward concentration of buying power in retailers of the Company's products, (ii) the absence of significant new Company products, (iii) the absence of opportunities for geographic expansion and (iv) the difficulty of the Company, to date, in identifying significant acquisition opportunities; (ii) the terms and conditions of the Merger Agreement, including the amount and form of consideration, the nature of the parties' representations, warranties, covenants and agreements, and the limited number of conditions to the obligations of Parent and Mergeco under the Merger Agreement, such that a closing would not be jeopardized despite even material adverse changes in the Company's financial condition, operating results or business; (iii) the condition to the consummation of the Merger (which is not otherwise required by the NYBCL or the Company's Restated Certificate of Incorporation or By-laws) that the Merger receive the affirmative vote of the holders of at least a majority of the Public Shares actually voted, in person or by proxy (excluding abstentions), at the Special Meeting; (iv) the history of the negotiations with respect to the Merger Consideration that, among other things, led to an increase in Parent's offer from $36.50 to $40.50 per Public Share, and the belief of the members of the Special Committee that $40.50 per Public Share was the best price that could be obtained from Parent; (v) the fact that the $40.50 per share to be received by the Public Shareholders in the Merger represented a premium of approximately 35.1% over the reported average closing price of the Common Shares during the one year period ending on May 18, 1995, the last full trading day before the public announcement of Parent's initial Proposal; (vi) the opinion of Goldman Sachs as to the fairness of the $40.50 per Public Share to be received by the Public Shareholders and the analyses presented to the Special Committee by Goldman Sachs (see "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co."); (vii) stock price and trading volume history of the Common Shares and the fact that such shares are thinly traded; (viii) the unwillingness of Parent to consider a sale of the Company, to spin off its ownership interest in the Company or to engage in other alternative transactions with respect to the Company (as a result of which the Special Committee did not solicit third party bids for the Company); and (ix) the availability of dissenters' rights under the NYBCL to dissenting Public Shareholders in the Merger. In light of the number and variety of factors the Special Committee considered in connection with its evaluation of the Merger, the Special Committee did not find it practicable to assign relative weights to the foregoing factors, and, accordingly, the Special Committee did not do so. 18 24 Although the Special Committee did consider historical trading prices of the Common Shares, the Special Committee did not consider trading prices of the Common Shares for the period following the announcement of the Proposal because it believed that such prices reflected anticipation of the possibility of the purchase of the Public Shares by Parent. The Special Committee did consider the going concern value of the Company as reflected in Goldman Sachs' discounted cash flow analysis and Goldman Sachs' analysis of the premium to the Company's book value implied by the amount of the Merger Consideration (see "-- Opinion of Goldman Sachs, & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co."). The Special Committee necessarily consulted with Goldman Sachs during the course of its work and analysis of the financial evaluation of the Company and of the Proposal. The Special Committee believed that Goldman Sachs' analysis was reasonable. The Special Committee believes that the Merger is procedurally fair because: (i) the Special Committee consisted of disinterested directors appointed to represent the interests of, and to negotiate on an arm's length basis with Parent on behalf of, the Public Shareholders; (ii) the Special Committee retained and was advised by independent legal counsel; (iii) the Special Committee retained Goldman Sachs as independent financial advisor to assist it in evaluating the Proposal; and (iv) the condition to the consummation of the Merger that the proposal to approve and adopt the Merger Agreement receive the affirmative vote of the holders of at least a majority of the Public Shares actually voted, in person or by proxy (excluding abstentions), on such proposal. In addition, the Special Committee believes that the Merger is procedurally fair because the $40.50 per Public Share price and the other terms and conditions of the Merger Agreement resulted from active arm's length bargaining between the Special Committee and Parent. The Board of Directors of the Company. The Board of Directors has unanimously determined, following the unanimous recommendation of the Special Committee, that the Merger is fair to, and in the best interests of, the Company and its shareholders, has approved and adopted the Merger Agreement, and recommends that such holders vote to approve and adopt the Merger Agreement. Parent and Voting Trustee. Neither Parent nor the Voting Trustee had any involvement in the Special Committee's evaluation of the fairness of the Merger to the Public Shareholders and did not undertake any formal evaluation of their own as to the fairness to the Public Shareholders. However, Parent and the Voting Trustee considered the advice of DLJ, Parent's financial advisor, regarding, among other things, historical market prices for the Common Shares (and the fact that the Merger Consideration is substantially more than the trading prices of the Common Shares before Parent proposed the Merger), valuations of other selected companies, the range of premiums paid in selected minority buyouts since 1990, discounted cash flow analyses and the all cash consideration. Parent and the Voting Trustee also considered the fact that the Special Committee had received the written opinion of Goldman Sachs addressed to the Special Committee to the effect that, as of the date thereof, the $40.50 per Public Share to be received by the Public Shareholders in the Merger is fair to the Public Shareholders and the fact that Parent determined such price on an arm's length basis with the Special Committee, assisted by the Special Committee's independent legal and financial advisors. Parent and the Voting Trustee believe that these factors, when considered together, provide a reasonable basis for Parent and the Voting Trustee to believe, as they do, that the Merger is fair to the Public Shareholders. Parent and the Voting Trustee did not attach specific relative weights to the factors considered in reaching their views as to fairness. OPINION OF GOLDMAN, SACHS & CO.; SUMMARY OF FINANCIAL ANALYSES GOLDMAN, SACHS & CO. On August 15, 1995, Goldman Sachs delivered its written opinion to the Special Committee that as of the date of such opinion the $40.50 per Public Share to be received by the Public Shareholders in the Merger is fair to the Public Shareholders. THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED AUGUST 15, 1995, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS ANNEX B TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF COMMON SHARES ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. 19 25 A copy of the Goldman Sachs financial analysis discussed below has been filed as an exhibit to the Schedule 13E-3 Transaction Statement (the "Schedule 13E-3") filed with the Securities and Exchange Commission (the "SEC") with respect to the Merger, may be inspected and copied, and obtained by mail, from the SEC as set forth in "Available Information" and will be made available for inspection and copying at the principal executive offices of the Company at 500 BIC Drive, Milford, CT 06460 during regular business hours by any interested shareholder of the Company or his or her representative who has been so designated in writing. In connection with its opinion, Goldman Sachs reviewed, among other things, the Merger Agreement; the Annual Reports to shareholders and Annual Reports on Form 10-K of the Company for each of the last five fiscal years ended January 1, 1995; certain interim reports to shareholders and Quarterly Reports on Form 10-Q; certain other communications from the Company to its shareholders; and certain internal financial analyses and forecasts for the Company. Goldman Sachs also held discussions with members of the senior management of the Company and of Parent regarding the Company's past and current business operations, financial condition and future prospects. In addition, Goldman Sachs reviewed the reported price and trading activity for the Common Shares, compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations, and performed such other studies and analyses as it considered appropriate. Goldman Sachs relied without independent verification upon the accuracy and completeness of all of the financial and other information reviewed by it for purposes of its opinion. In that regard, with respect to the Financial Projections, which the Special Committee instructed Goldman Sachs to use for the purposes of its analysis, Goldman Sachs assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Company's senior management as to the future financial performance of the Company. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities of the Company or any of its subsidiaries and Goldman Sachs has not been furnished with any such evaluation or appraisal. Goldman Sachs relied, with the Special Committee's permission, on statements made by management of Parent indicating that Parent would not consent to a transaction involving a sale or recapitalization of the Company, and Goldman Sachs was not requested or authorized to solicit, and did not solicit, interest from any party with respect to an acquisition of the outstanding Public Shares, the Company or its constituent businesses. Finally, Goldman Sachs has been informed by Parent, and has relied with the Special Committee's permission on such information, that Parent does not currently intend to pursue a sale or recapitalization of the Company or its subsidiaries after consummating the Merger pursuant to the Merger Agreement. The following is a summary of certain of the financial analyses used by Goldman Sachs in connection with providing its written opinion to the Special Committee on August 15, 1995, attached hereto as Annex B. Historical Stock Trading Analysis. Goldman Sachs reviewed the historical trading prices for the Public Shares. Such review indicated that the $40.50 per Public Share in cash, without interest thereon (representing the Merger Consideration to be received by the Public Shareholders in the Merger), represented a premium to the average trading value of the Public Shares during the one year period ending on May 18, 1995 (the last full trading day before the date of public announcement of the Proposal) of 35.1%, with 40.3% of the public float traded in such period. Selected Companies Analysis. Goldman Sachs reviewed and compared certain financial information relating to the Company to corresponding financial information, ratios and public market multiples for the following 15 publicly traded corporations: American Safety Razor; American Business Products; A.T. Cross; Avery Dennison; Black & Decker; Dixon Ticonderoga; Duracell; Gillette Co.; Hunt Manufacturing; Newell Co.; Pentech International; Premark; Rubbermaid; Sunbeam Oster; and Parent (the "Selected Companies"). Representatives of Goldman Sachs advised the Special Committee that there are no companies directly comparable to the Company and the analysis had to be considered in light of that qualification. Goldman Sachs calculated and compared various financial multiples and ratios. The multiples of the Company were calculated using the following two prices: a price of $35.88 per Public Share, representing the closing price of the Public Shares on the NYSE on May 18, 1995; and a price of $30.85 per Public Share, representing the 20 26 average closing price on the NYSE during the six-month period from December 17, 1994 through May 17, 1995. The multiples and ratios for the Company and for each of the Selected Companies were based on the most recent publicly available information. With respect to the Selected Companies, Goldman Sachs considered levered market capitalization (i.e., market value of common equity plus estimated market value of debt less cash) as a multiple of the latest twelve months' ("LTM") revenue; LTM earnings before interest, taxes, depreciation and amortization ("EBITDA"); and as a multiple of LTM earnings before interest and taxes ("EBIT"). Goldman Sachs' analyses of the Selected Companies indicated levered multiples of LTM revenue that ranged from 0.6x to 3.2x, with a median of 1.0x, compared to 1.6x at $35.88 per Public Share and 1.3x at $30.85 per Public Share for the Company; LTM EBITDA that ranged from 5.3x to 13.6x, with a median of 7.0x, compared to LTM EBITDA of 6.9x at $35.88 per Public Share and 5.8x at $30.85 per Public Share for the Company; and LTM EBIT that ranged from 6.0x to 16.0x, with a median of 9.5x, compared to 8.7x at $35.88 per Public Share and 7.4x at $30.85 per Public Share for the Company. Goldman Sachs also considered for the Selected Companies LTM EBITDA margins, which ranged from 10.5% to 24.7%, with a median of 14.6%, compared to 23.1% for the Company; LTM EBIT margins, which ranged from 7.5% to 20.2%, with a median of 12.1%, compared to 18.3% for the Company; and LTM net income margins, which ranged from 2.4% to 11.7%, with a median of 6.2%, compared to 11.0% for the Company. Goldman Sachs also considered for the Selected Companies estimated calendar year 1995 and 1996 price/earnings ("P/E") ratios, which ranged from 6.3x to 134.5x for estimated calendar year 1995, with a median of 16.8x, and 5.0x to 20.4x for estimated calendar year 1996, with a median of 13.1x, compared to 14.8x and 14.6x at $35.88 per Public Share, respectively, and 12.7x and 12.6x at $30.85 per Public Share, respectively, for the Company; five-year compound annual growth rate ("CAGR") of revenues for the five fiscal years ending in 1995 ranging from (3.3)% to 15.3%, with a median of 7.6%, compared to 8.3% for the Company; five-year CAGR of net income for the five fiscal years ending in 1994 ranging from (17.7)% to 107.6%, with a median of 10.0%, compared to 17.7% for the Company; projected five-year CAGR of earnings per share (based on First Call estimates as of August 11, 1995) ranging from 5.0% to 17.0%, with a median of 14.0%, compared to 12.5% for the Company; and debt to total capitalization ratios, which ranged from 0.0% to 82.3%, with a median of 34.4%, compared to 0.0% for the Company. The review also indicated that the percentage of the 52-week high trading prices ranged from 40.0% to 100.0%, compared to 101.9% at $40.50 per Public Share, 90.3% at $35.88 per Public Share and 77.6% at $30.85 per Public Share for the Company and that the current dividend yield for the Selected Companies ranged from 0.0% to 4.0%, with a median of 1.6%, compared to 2.6% at $35.88 per Public Share and 3.0% at $30.85 per Public Share for the Company. Analysis of Merger Consideration. Goldman Sachs calculated the value for the levered aggregate consideration to be received in the Merger based upon the $40.50 per Public Share to be received by the Public Shareholders, plus debt and minus cash and cash equivalents of the Company. Those calculations yielded a levered aggregate consideration value of $890.4 million, excluding interest expenses and transaction costs. The multiples and ratios for the Company were based on information provided by the Company's management. Goldman Sachs considered the levered aggregate consideration as a multiple of actual 1994 and LTM sales, EBITDA, EBIT and net income of the Company. Goldman Sachs' analyses indicated levered aggregate consideration multiples of actual 1994 sales of 1.87x and LTM sales of 1.81x, multiples of actual 1994 EBITDA of 8.02x and LTM EBITDA of 7.85x, multiples of actual 1994 EBIT of 10.21x and LTM EBIT of 9.94x and multiples of actual 1994 net income of 18.71x and LTM net income of 17.57x. Goldman Sachs also considered the levered aggregate consideration as a multiple of estimated 1995 and 1996 sales, EBITDA, EBIT and net income of the Company. Goldman Sachs' analyses indicated levered aggregate consideration multiples of estimated 1995 sales of 1.73x and estimated 1996 sales of 1.67x, multiples of estimated 1995 EBITDA of 7.42x and estimated 1996 EBITDA of 7.15x, multiples of estimated 1995 EBIT of 9.44x and estimated 1996 EBIT of 9.10x and multiples of estimated 1995 net income of 16.87x and estimated 1996 net income of 16.26x. The review also indicated a percentage of the levered aggregate consideration as a premium to the book value per Public Share of 283.2%. Discounted Cash Flow Analysis. Goldman Sachs performed a discounted cash flow analysis based on the First Case and the Second Case Financial Projections. See "-- Background of the Merger" and "-- Certain Financial Projections." Goldman Sachs calculated a net present value of free projected cash flows for the calendar years from 1995 through 2004 using discount rates ranging from 11.0% to 13.0%. Goldman 21 27 Sachs calculated the Company's terminal values based on multiples ranging from 6.6x to 9.9x projected EBITDA for calendar year 2004 and 8.0x to 12.0x projected EBIT for calendar year 2004. These terminal values were then discounted to present value using discount rates from 11.0% to 13.0%. Those discount rates and terminal values produced implied per share values based on the First Case Financial Projections ranging from $31.48 per Public Share to $45.62 per Public Share and implied per share values based on the Second Case Financial Projections ranging from $28.77 to $40.79 per Public Share. Selected Transactions Analysis. Goldman Sachs analyzed certain information relating to selected transactions in the consumer products and office products industry since 1987 (the "Selected Transactions"). Such analysis indicated that for the Selected Transactions levered aggregate consideration as a multiple of (A) LTM sales ranged from 0.4x to 4.1x, with a mean of 1.6x, compared to 1.8x for the levered aggregate consideration to be received in the Merger, (B) LTM net income ranged from 10.9x to 81.1x, with a mean of 28.3x, compared to 17.6x for the levered aggregate consideration to be received in the Merger, and (C) LTM EBIT ranged from 5.9x to 31.0x, with a mean of 14.3x, compared to 9.9x for the levered aggregate consideration to be received in the Merger. Goldman Sachs indicated to the Special Committee that, for many of the specific transactions, the information with respect to the various categories was not publicly available. Breakeven Return Analysis. Goldman Sachs computed a breakeven return analysis based on the earnings of the Company to be acquired by Parent in the Merger. The breakeven return analysis was computed based on 1996 projected earnings for the Company using the First Case and the Second Case in order to ascertain (A) the break-even per Common Share price that would have to be paid by Parent and (B) the percentage of accretion or dilution to earnings per share ("EPS") that Parent would realize based on analysts' projected EPS for Parent. Those analyses, based on various assumptions, including an exchange rate of 4.94 French francs to one U.S. dollar, $5.0 million in transaction related fees, Parent tax rates of 39.5% and goodwill amortization periods of 40 years, estimated that (A) the break-even price to be paid by Parent for each Public Share is $40.26 under the First Case and $39.13 under the Second Case, compared to the $40.50 per Public Share to be received by the Public Shareholders in the Merger, and (B) the percentage of dilution to projected EPS realized by Parent upon paying the $40.50 per Public Share to be received by the Public Shareholders in the Merger is 0.1% under the First Case and 0.3% under the Second Case. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs' opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all such analyses. No company or transaction used in the above analyses as a comparison is identical to the Company or Parent or the contemplated transaction. The analyses were prepared solely for purposes of Goldman Sachs providing its opinion to the Special Committee as to the fairness of the $40.50 per Public Share to be received by the Public Shareholders in the Merger and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because such analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of the Company, Parent, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast. As described above, Goldman Sachs' opinion to the Special Committee was one of many factors taken into consideration by the Special Committee in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analysis performed by Goldman Sachs and is qualified by reference to the written opinion of Goldman Sachs set forth in Annex B hereto. Goldman Sachs, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. The Special Committee selected Goldman Sachs as 22 28 financial advisor to the Special Committee because it is a nationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Goldman Sachs provides a full range of financial, advisory and brokerage services and in the course of its normal trading activities may, from time to time, effect transactions and hold positions in the securities or options on securities of the Company and/or Parent for its own account and for the account of customers. Pursuant to a letter agreement dated May 24, 1995 (the "Engagement Letter"), the Company engaged Goldman Sachs to act as the Special Committee's financial advisor in connection with the contemplated transaction. Pursuant to the terms of the Engagement Letter, it was agreed that the Company would pay Goldman Sachs a fee in connection with the rendering of its opinion of $800,000. It was further agreed that the Company would reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including attorney's fees, and indemnify Goldman Sachs against certain liabilities, including certain liabilities under the federal securities laws. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION. As more fully described under " -- Background of the Merger", DLJ was retained by Parent to act solely as Parent's financial advisor (and not the advisor to or agent of any other person), in connection with the Proposal and the Merger and other matters arising in connection therewith pursuant to an engagement letter, dated as of April 28, 1995, between Parent and DLJ. DLJ was not requested to, and did not, render any opinion (oral or written) or advice concerning the fairness of the Merger Consideration to the Public Shareholders or to any other party (including Parent). Parent chose DLJ as its financial advisor based upon DLJ's reputation as a leading investment banking firm. Copies of the DLJ Materials (as defined below) have been filed as exhibits to the Schedule 13E-3 filed with the SEC with respect to the Merger and may be inspected and copied, and may be obtained by mail, from the SEC as set forth in "Available Information" and will be made available for inspection and copying at the principal executive offices of the Company at 500 BIC Drive, Milford, CT 06460, during regular business hours, by any interested shareholder of the Company or his or her representative who has been so designated in writing. June Report. On June 22, 1995, DLJ delivered to Parent a written presentation (the "June Report" and, together with the July Report (as hereinafter defined), the "DLJ Materials") regarding the Company's business and prospects, and containing valuations of the Public Shares using a variety of different methodologies. In formulating the DLJ Materials, DLJ, among other things: reviewed certain publicly available documents and certain other information, including preliminary versions of the Financial Projections (see "-- Certain Financial Projections"); held discussions with senior executive officers of the Company and Parent; visited facilities of the Company; considered business trends in the business segments in which the Company operates; reviewed public information with respect to certain other acquisitions involving other companies in such business segments; reviewed public information with respect to acquisition of minority interests; calculated valuations of the Public Shares using selected publicly traded company information, premiums paid in other minority interest acquisitions, and discounted cash flow analyses; and considered, among other things, such other information, financial studies, analyses and investigations and financial, economic and market criteria as it deemed relevant. Overview. The June Report was prefaced by an overview, wherein DLJ noted: that the Proposal price reflected a premium to recent trading prices for the Public Shares; that the transaction did not constitute a change in control transaction; that the Company sells mature products in competitive and mature markets; that the Proposal price implied trading multiples in excess of the average multiple of the selected companies listed below; that the Company's recent earnings growth in excess of revenue growth was driven by an effective capital expenditure program and productivity improvements, and earnings from productivity improvements tend to be regarded as less sustainable; and that the Company is unable to match the marketing and advertising investments of its principal competitors. As a result, the Company's growth rate and market shares were likely to decline over time. Selected Company Analysis. DLJ compared the Proposal to the recent trading prices for a number of selected public companies, including Parent, The Gillette Company, American Safety Razor, A.T. Cross Co., 23 29 Pentech International Inc., Dixon Ticonderoga Co., American Business Products, Hunt Manufacturing Co. and Avery Dennison Corporation, by expressing the Proposal price and each of such selected company's recent trading prices as multiples of several financial criteria. DLJ advised Parent that there are no companies directly comparable to the Company and the analysis had to be considered in light of that qualification. DLJ believed the comparison to trading prices of issuers not currently the subject of an acquisition was relevant because the Proposal did not involve a change in control of the Company. The financial criteria included: price as a multiple of LTM EPS (where the Proposal price of $36.50 represented a multiple of 16.2x, as compared to the selected company average of 15.5x (the latter implying a per Public Share value of $34.77)); price as a multiple of estimated 1995 EPS (where the Proposal price of $36.50 represented a multiple of 15.3x, as compared to the selected company average of 15.0x (the latter implying a per Public Share value of $35.64)); price as a multiple of estimated 1996 EPS (where the Proposal price of $36.50 represented a multiple of 14.9x, as compared to the selected company average of 13.8x (the latter implying a per Public Share value of $33.69)); "enterprise value" (market price of all outstanding Common Shares, plus total Company debt, less cash) as a multiple of LTM revenues (where the Proposal price of $36.50 represented a multiple of 1.6x, as compared to the selected company average of 1.1x (the latter implying a per Public Share value of $25.20)); enterprise value as a multiple of LTM EBITDA (where the Proposal price of $36.50 represented a multiple of 7.0x, as compared to the selected company average of 6.7x (the latter implying a per Public Share value of $35.42)); and enterprise value as a multiple of LTM EBIT (where the Proposal price of $36.50 represented a multiple of 8.8x, and equaled the selected company average (and implying a per Public Share value of $36.58)). The Proposal price exceeded the average of the per Public Share values ($33.55) implied by the selected company financial criteria. In the June Report, DLJ also included a valuation based on Parent's multiples but concluded that Parent had more brand name recognition in its markets than the Company, and, with its global presence, Parent competed in markets with more potential than the Company's markets. DLJ believed the average of multiples derived from the selected companies represented the best proxy for valuation, since no one company surveyed was directly comparable to the Company. Premium Analysis. The DLJ Materials contain a comparison of the premium represented by the Proposal price to premiums offered in comparable acquisitions of minority shareholdings during the last five years. DLJ found that, of 38 minority transactions surveyed since 1990, 23 had a premium of less than 30%, while 13 had a premium of less than 20%. The Proposal price of $36.50 represented: a 15.9% premium to the market price one month prior to announcement, as compared to median and average premiums of 23.7% and 29.8%, respectively (implying per Public Share prices of $38.97 and $40.89, respectively); a premium of 16.3% to the 52-week average trading price of the Common Shares, as compared to median and average premiums of 16.2% and 23.9%, respectively (implying per Public Share prices of $36.46 and $38.87, respectively); a discount of 2.6% to the high trading price over the preceding 52 weeks, as compared to median and average discounts of 4.6% and 1.7% (implying per Public Share prices of $35.79 and $36.86, respectively); and a 12.3% premium to the high trading price in the 52 weeks preceding the date one month prior to the announcement date, as compared to median and average premiums of 2.1% and 3.6% (implying per Public Share prices of $33.20 and $33.67, respectively). Discounted Cash Flow Analysis. DLJ prepared three matrices of future per Public Share values, based on the Upside Case, the First Case and the Second Case contained in the Financial Projections, with a terminal multiple of projected 1999 EBITDA and using various discount rates. See "-- Certain Financial Projections". Each matrix assumed terminal enterprise value/EBITDA multiples of 6.0x to 8.0x and discount rates of 9%x to 13%. In the Upside Case matrix, this analysis indicated a low per Public Share value of $35.25, assuming the lowest multiple and the highest discount rate, and a high per Public Share value of $50.44, assuming the highest multiple and the lowest discount rate. The First Case indicated a low per Public Share value of $31.09, assuming the lowest multiple and the highest discount rate, and a high per Public Share value of $44.30, assuming the highest multiple and the lowest discount rate. The Second Case analysis indicated a low per Public Share value of $29.53, assuming the lowest multiple and the highest discount rate, and a high per Public Share value of $41.84, assuming the highest multiple and the lowest discount rate. 24 30 Accretion/Dilution Analysis. The DLJ Materials also contained an analysis of the Merger's accretive/ dilutive impact, on a pro forma basis, on Parent's 1994 and estimated 1995 EPS, based on a number of assumptions, including, among other things, currency exchange rates, the actual performance of the Company and prevailing interest rates. July Report. On July 10, 1995, DLJ furnished to Parent and Goldman Sachs its July Report, which was prepared in response to certain illustrative financial analyses prepared by Goldman Sachs, based on the preliminary version of the Financial Projections, and provided to DLJ in the context of the negotiations. The July Report reiterated, and in some cases modified, certain of the valuation analyses contained in the June Report (e.g., selected companies, premiums paid and discounted cash flow analyses), and discussed the alternative valuations presented by Goldman Sachs (e.g., change of control transactions, present value of future stock prices and dividends paid, leveraged recapitalization and leveraged buyout analyses). Selected Companies. The July Report contains an analysis of the factors influencing the choices of companies to be included in the universe of selected companies. Based on a review of these factors, DLJ added to the selected companies analysis contained in the June Report a compromise universe of three additional populations: a "combined composite" population, consisting of the selected companies included in the original survey, plus three companies identified by Goldman Sachs -- Duracell International, Rubbermaid and Newell; a "staples U.S.A." population, consisting of Rubbermaid, Newell, American Safety Razor, Pentech International and Hunt Manufacturing; and a pair of "most comparable companies" -- Parent and Newell. The "combined composite" population yielded multiples of price/1995 EPS, price/1996 EPS, enterprise value/LTM revenues, enterprise value/LTM EBITDA and enterprise value/LTM EBIT that indicated per Public Share values that ranged from $30.90 to $40.21 (with an average of $37.23); the "staples U.S.A." population multiples implied per Public Share values ranging between $29.58 and $38.41 (with an average of $34.22); and the "most comparable companies" population multiples implied per Public Share values ranging from $36.03 to $40.39 (with an average of $38.29). The July Report distinguishes some of the selected companies from the Company, which is not diversified, is smaller than certain competitors, has a smaller budget for advertising and research and development expenditures and has limited sources of revenue growth. In addition, the July Report noted that, based on price/earnings ratios, the Common Shares had traditionally traded below certain of the selected companies. Change of Control Analysis. The July Report studied a number of change in control transactions involving other consumer products companies identified by Goldman Sachs (including, among others, Parker Pen, Wilkinson Sword, Berol Corporation and Waterman S.A.) over the past several years, analyzing acquisition prices as multiples of the acquired companies' revenues, EBIT and net income. This analysis implied per Public Share values ranging from $33.64 to $41.93. The July Report notes that the precedent change of control transactions involved significant synergies, cost cutting opportunities, productivity improvements and a change of control, all of which are not applicable to the proposed transaction. Discounted Cash Flow Analyses. Again utilizing the Upside Case, the First Case and the Second Case, DLJ analyzed terminal enterprise value/EBIT multiples ranging from 8.0x to 10.0x, which implied (at 11.0% and 13.0% discount rates) per Public Share values ranging from $36.51 to $46.48 (in the Upside Case), $31.32 to $39.73 (in the First Case) and $29.69 to $37.51 (in the Second Case). Using terminal multiples of 8.8x (which represented the multiple implied by the Proposal price of $36.50), and the same discount rates, the Upside Case implied per Public Share values of $39.10 to $42.33, the First Case implied per Public Share values of $33.50 to $36.15 and the Second Case implied values of $31.71 to $34.19. Present Value of Future Stock Prices and Dividends. The July Report contains a present valuation (based on the First Case and the Second Case) of future stock prices in the years 1995 through 1999 (derived by multiplying forecast future EPS by P/E multiples ranging from 10x to 16x), together with the present value of regular cash dividends and a special "recapitalization" dividend, assumed to be financed by new borrowings and excess cash. Depending on the year and price/earnings multiple selected, the present value of future stock prices for the Public Shares were estimated to range from $30.11 to $43.80 in the First Case and $28.39 to $43.17 in the Second Case. 25 31 Leveraged Recapitalization Analysis. In the July Report, DLJ considered certain leveraged recapitalization analyses performed by Goldman Sachs. As an alternative, DLJ performed leveraged recapitalization analyses that yielded implied per Public Share values of between $34.84 and $39.04 (in the First Case) and $34.50 and $38.55 (in the Second Case). Leveraged Buyout Analysis. The July Report also contains a leveraged buyout analysis. By increasing the threshold rate of return required on the initial equity investment, reducing the leverage factor and applying the analysis to the First and Second Cases, DLJ derived indicative per Public Share values of $31.45 and $30.60, respectively. Accretion/Dilution Analysis. The July Report also contains an analysis of the impact of the Merger on Parent's 1995 EPS based on certain assumptions, including, among other things, currency exchange rates, the actual performance of the Company and prevailing interest rates. DLJ has stated to Parent that, in its view, the DLJ Materials are not necessarily susceptible to partial analysis or summary description. In addition, DLJ has advised Parent that selecting portions of the DLJ Materials or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying DLJ's analyses. No company or transaction used in the above analyses as a comparison is identical to the Company or the contemplated transaction. The DLJ Materials were prepared solely for the purposes described above and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon projected future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because such analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Parent, the Company or DLJ or any other person assumes responsibility if future results are materially different from those projected. The foregoing summary does not purport to be a complete description of the DLJ Materials and its qualified by reference to the DLJ Materials which are filed as exhibits to the Schedule 13E-3. In the course of its investigation DLJ relied upon, and assumed the accuracy and completeness of, publicly available information and the financial and other information provided by the Company, but DLJ did not assume any responsibility for independent verification for any of the foregoing information. The DLJ Materials were based on preliminary versions of the Financial Projections (see "-- Certain Financial Projections"), which were in material respects identical to the final versions thereof. In addition, DLJ did not make an independent evaluation or appraisal of the assets of the Company, nor was DLJ furnished with any such evaluation or appraisals. The DLJ Materials were based on facts and circumstances existing and disclosed to DLJ on the date such materials were presented to Parent. DLJ provides a full range of financial, advisory and brokerage services and in the course of its normal trading activities may from time to time effect transactions and hold positions in the securities or options on securities of the Company and/or Parent for its own account and for the account of customers. DLJ is acting as financial advisor to Parent in connection with the Merger. Pursuant to the Parent's April 28, 1995 letter agreement, Parent has agreed to pay DLJ a retainer fee of $250,000, and additional consideration of $1,125,000 (against which the retainer fee will be credited), payable upon acquisition, by merger or in another form of business combination, of a majority of the Public Shares, provided, that if Parent acquires less than 80% of the Public Shares, such additional compensation shall equal $1,125,000 times the percentage of Public Shares acquired, less the retainer fee. Parent has also agreed to reimburse DLJ for its reasonable out-of-pocket expenses incurred (including the reasonable fees and disbursements of its counsel) and to indemnify DLJ against certain liabilities, including certain liabilities under the federal securities laws. CERTAIN FINANCIAL PROJECTIONS At the direction of the Special Committee, in the course of their analysis of the Company, representatives of Goldman Sachs discussed with senior management of the Company, including Mr. Bich, the Company's business, financial condition and prospects. See "-- Background of the Merger." In the course of those discussions, the Company's management emphasized that the Company did not, in the ordinary course of its 26 32 business, make forecasts or projections as to future sales, earnings or other income statement data, cash flows or balance sheet and financial position information, other than certain information contained in the Company's annual budget relating solely to the fiscal year covered by such budget (which budget is generally not made publicly available). While noting that the Company's management does not prepare long-term projections in the ordinary course, the Special Committee directed Goldman Sachs to work with the Company's management in order to complete Goldman Sachs' financial analyses, using projections to be developed by the Company's management solely to assist the Special Committee and Goldman Sachs in evaluating the fairness of the consideration to be received by the Public Shareholders in the proposed merger, which projections were based upon a variety of estimates and assumptions. The Financial Projections, consisting of a First Case, a Second Case and an Upside Case, are summarized below. In the course of further discussions between management of the Company, DLJ, Goldman Sachs and members of the Special Committee, management of the Company indicated that, subject to the various caveats expressed below relating to the Financial Projections, it was management's belief that the future operating performance of the Company would most probably fall between the First Case and Second Case. These three Financial Projections are summarized below: FIRST CASE
YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1995 1996 1997 1998 1999 2000 ------ ------ ------ ------ ------ ------ (U.S. DOLLARS IN MILLIONS) Revenues....................... $513.8 $533.2 $567.9 $605.1 $645.1 $686.4 EBIT........................... 94.3 97.8 104.2 111.0 118.3 125.9 Operating Profit Margin........ 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
SECOND CASE
YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1995 1996 1997 1998 1999 2000 ------ ------ ------ ------ ------ ------ (U.S. DOLLARS IN MILLIONS) Revenues....................... $506.6 $516.9 $541.3 $567.0 $594.0 $620.8 EBIT........................... 92.9 94.8 99.3 104.0 109.0 113.9 Operating Profit Margin........ 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
UPSIDE CASE
YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1995 1996 1997 1998 1999 2000 ------ ------ ------ ------ ------ ------ (U.S. DOLLARS IN MILLIONS) Revenues....................... $513.8 $533.2 $567.9 $605.1 $645.1 $686.4 EBIT........................... 99.6 106.0 116.7 128.2 140.6 152.9 Operating Profit Margin........ 19.4% 19.9% 20.5% 21.2% 21.8% 22.3%
The First Case assumed that the Company's consolidated operating margins remained constant at 1994 levels. The Second Case was based on assumptions that the Company's consolidated operating margins remained constant at 1994 levels, while growth in stationery products sales was reduced (to annual increases of 3.0% in units and 2.0% in price, commencing in 1996). The Upside Case assumed 4.5% unit and 3.5% price increases for stationery products, annual 2.0% unit and 0% price increases for lighters and (commencing in 1996) annual 1.5% unit and 4.0% price increases for shavers. THE FOREGOING INFORMATION WAS NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING FORWARD-LOOKING INFORMATION OR GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND WAS NOT REVIEWED BY INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY OR PARENT. THE FINANCIAL PROJECTIONS WERE PREPARED SOLELY FOR THE PURPOSE OF ASSISTING THE SPECIAL COMMITTEE AND ITS FINANCIAL ADVISOR, GOLDMAN SACHS, IN EVALUATING THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED BY THE PUBLIC SHAREHOLDERS IN CONNECTION WITH THE PROPOSAL AND THE MERGER AND WERE BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS, SOME (BUT NOT ALL) OF WHICH ARE SET FORTH ABOVE. THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS INVOLVED JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE, REGULATORY AND FINANCIAL MARKET CONDITIONS AND FUTURE BUSINESS DECISIONS WHICH MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE AND REGULATORY UNCERTAINTIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF 27 33 THE COMPANY. WHILE THE COMPANY BELIEVES THESE ESTIMATES AND ASSUMPTIONS TO HAVE BEEN REASONABLE, THERE CAN BE NO ASSURANCE THAT THE FINANCIAL PROJECTIONS WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. IN LIGHT OF THE UNCERTAINTIES INHERENT IN FORWARD-LOOKING INFORMATION OF ANY KIND, AND THE COMPANY'S LACK OF EXPERIENCE IN FINANCIAL FORECASTING, THE INCLUSION OF THE FINANCIAL PROJECTIONS SHOULD NOT BE REGARDED AS AN INDICATION THAT PARENT, THE COMPANY, THEIR RESPECTIVE FINANCIAL ADVISORS OR ANYONE WHO RECEIVED THIS INFORMATION CONSIDERED OR CONSIDERS IT A RELIABLE PREDICTOR OF FUTURE OPERATING RESULTS AND THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH. ADDITIONALLY, THE FINANCIAL PROJECTIONS DO NOT REFLECT REVISED PROSPECTS FOR THE COMPANY'S BUSINESSES, CHANGES IN GENERAL BUSINESS AND ECONOMIC CONDITIONS, OR ANY OTHER TRANSACTION OR EVENT THAT HAS OCCURRED OR THAT MAY OCCUR AND THAT WAS NOT ANTICIPATED AT THE TIME SUCH INFORMATION WAS PREPARED. NONE OF THE COMPANY, PARENT, THEIR RESPECTIVE FINANCIAL ADVISORS OR ANY OTHER PARTY ASSUMES RESPONSIBILITY FOR THE ACCURACY, REASONABLENESS, VALIDITY OR COMPLETENESS OF THE FINANCIAL PROJECTIONS. THE COMPANY DOES NOT INTEND TO UPDATE OR SUPPLEMENT THIS INFORMATION. PLANS FOR THE COMPANY AFTER THE MERGER Except as indicated in this Proxy Statement, Parent does not have any present plans or proposals which relate to or would result in an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, a sale or transfer of a material amount of assets of the Company or any of its subsidiaries or any material change in the Company's capitalization or any other material changes in the Company's corporate structure or business or the composition of the Board of Directors or management. Upon consummation of the Merger, Parent intends to retain the Company as a partially-owned or wholly-owned subsidiary of Parent. Parent anticipates that the assets, business and operations of the Company will be continued substantially as they are currently being conducted. Management of Parent may, however, cause the Company to make such changes as are deemed appropriate and intends to continue to review the Company and its assets, businesses, operations, properties, policies, corporate structure, capitalization and management and consider if any changes would be desirable in light of the circumstances then existing. In addition, Parent intends to continue to review the business of the Company and identify synergies and cost savings. See "-- Interest of Certain Persons in the Merger." INTEREST OF CERTAIN PERSONS IN THE MERGER In considering the recommendation of the Board of Directors of the Company, the shareholders of the Company should be aware that certain officers and directors of the Company have certain interests in the Merger, including those referred to below, that present actual or potential conflicts of interest in connection with the Merger. The Special Committee and the Board of Directors were aware of these potential or actual conflicts of interest and considered them along with other matters described under "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger." Common Share Ownership. Bruno Bich, who is the Chairman of the Board and Chief Executive Officer of Parent, is the Chairman of the Board and Chief Executive Officer of the Company. Mr. Bich was present and voted at meetings of the Board held on May 23, 1995 and August 15, 1995. See "-- Background of the Merger." As of the date of this Proxy Statement, the Mergeco Shareholders owned an aggregate of 18,154,848 Common Shares, representing approximately 77% of the Common Shares outstanding on that date. Bruno Bich, as Voting Trustee, exercises voting power over 17,912,648 of such shares pursuant to the Voting Trust Agreement, including all Common Shares owned by Parent. The Mergeco Shareholders other than Parent own an additional 242,200 Common Shares not subject to the Voting Trust Agreement. See "-- Voting Trust Agreement." The Merger Agreement provides that, at the Effective Time of the Merger, all Common Shares then beneficially owned by the Mergeco Shareholders will be cancelled without the payment of any consideration therefor. On August 17 and 18, 1995, Bruno Bich sold in market transactions an aggregate of 28 34 150,000 Common Shares not subject to the Voting Trust Agreement for $39.50 per share, or an aggregate of approximately $5.9 million. See "Transactions by Certain Persons in Common Shares". As of July 31, 1995, the executive officers and directors of the Company (other than Bruno Bich) owned an aggregate of 42,811 Public Shares, constituting less than 1% of the total number of Common Shares then outstanding. Such individuals have informed Parent that they intend to vote all of their Public Shares in favor of the Merger. If the Merger is consummated, such persons will receive an aggregate of approximately $1.73 million for their Public Shares. The following table sets forth, as of July 31, 1995, the number of Public Shares owned by, and the aggregate amounts to be received by, each executive officer and director of the Company who owns any Public Shares (other than Bruno Bich) pursuant to the Merger. Other than the individuals named below, no executive officer or director of the Company owns any Public Shares.
DIRECTOR/ NUMBER OF AMOUNT TO BE EXECUTIVE OFFICER PUBLIC SHARES(A) RECEIVED ------------------------------------------------------- ---------------- ------------ Alexander Alexiades.................................... 24,000 $972,000 Director; retired Vice President and Treasurer Robert E. Allen........................................ 2,000 81,000 Director David W. Heleniak...................................... 1,000 40,500 Director Antoine G. Treuille.................................... 1,200 48,600 Director Raymond Winter......................................... 5,664(a) 229,392 President and Chief Operating Officer; Director Al D'Addario........................................... 1,574 63,747 Vice President -- Manufacturing Robert L. Macdonald.................................... 2,788(a) 112,914 Vice President -- Finance and Treasurer James K. Palmer........................................ 2,779(a) 112,550 Director, Sales and Marketing Thomas M. Kelleher..................................... 1,374(a) 55,647 General Counsel and Secretary Jack Teague............................................ 432(a) 17,496 General Manager, Special Markets Division
- --------------- (a) Represents all Common Shares held as of July 31, 1995, including holdings through the Company's 401(k) Plan. Directors and Officers. Pursuant to the Merger Agreement, the directors and officers of the Company will remain the directors and officers, respectively, of the Surviving Corporation. Robert Macdonald, Vice President -- Finance and Treasurer of the Company, has accepted (effective October 1, 1995) the position of chief financial officer of Parent. Mr. Alexiades represented the Company in various trade association matters in 1994, for which he received $20,000. Special Committee. Each member of the Board of Directors who was not, and is not at the present time, an employee of the Company, or an affiliate of Parent, serves on the Special Committee. Each member of the Special Committee will be paid $20,000 for serving on the Special Committee. This compensation was authorized by the Board of Directors of the Company in order to compensate the members thereof for the significant additional time commitment that would be required of them in connection with fulfilling their duties and responsibilities as members of the Special Committee and is payable without regard to whether the Special Committee approved the Merger or whether the Merger is consummated. 29 35 Each member of the Special Committee received $30,000 in 1994 for his service as a director. Shearman & Sterling, a law firm of which Mr. Heleniak is a partner, serves as the Special Committee's legal advisor in connection with the Merger, for which it expects to receive fees of approximately $250,000. Shearman & Sterling has, from time to time, done work for Bruno Bich, as well as for the Company, for which it has received customary compensation. An investment banking firm with which Mr. Treuille was at the time affiliated performed certain advisory services for the Company in 1991 for which it received customary compensation. In addition, Mr. Allen is Managing Director of Redding Consultants, Inc., which was paid $67,914 in 1994 for marketing strategy assistance performed for the Company. Indemnification and Insurance. Parent has also agreed in the Merger Agreement, subject to certain limitations, that for a period of six years after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, indemnify, defend and hold harmless the present and former officers, directors, employees and agents of the Company and its subsidiaries (collectively, the "Indemnified Parties") from and against, and pay or reimburse the Indemnified Parties for, all losses, obligations, expenses, claims, damages or liabilities (whether or not resulting from third-party claims and including interest, penalties, out-of-pocket expenses and attorneys' fees incurred in the investigation or defense of any of the same or in asserting any of their rights under the Merger Agreement) resulting from or arising out of actions or omissions occurring on or prior to the Effective Time (including, without limitation, the transactions contemplated by the Merger Agreement) to the full extent permitted or required under applicable law and, in the case of indemnification by the Surviving Corporation, to the fullest extent permitted under the By-Laws of the Company in effect on the date of the Merger Agreement (which provisions shall not be amended in any manner which adversely affects any Indemnified Party for a period of six years), including provisions relating to advances of expenses incurred in the defense of any action or suit. The Merger Agreement further provides, subject to certain limitations, that for not less than four years after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, maintain in effect directors' and officers' liability insurance covering the Indemnified Parties who are currently covered by the Company's existing directors' and officers' liability insurance, on terms and conditions no less favorable to such directors and officers than those in effect on the date of the Merger Agreement. See "The Merger -- General -- Indemnification and Insurance." Certain Agreements. Parent and certain of its affiliates are parties to various contractual arrangements with the Company and certain of the Company's affiliates. Because of Parent's control over the Company's operations, these agreements were not the result of arm's length negotiations among independent parties. Set forth below are summaries of certain of these arrangements. This summary of the Voting Trust Agreement is qualified in its entirety by reference to the copy filed with the SEC as an exhibit to the Schedule 13E-3 and incorporated herein by this reference. Such agreement may be examined and copies may be obtained at the place and in the manner set forth under "Available Information." Voting Trust Agreement. The Voting Trust Agreement was executed on February 5, 1991, and amended on February 3, 1992 and July 5, 1993. The purpose of the Voting Trust Agreement is to secure the continuity and stability of policy and management of the Company. Marcel L. Bich and Bruno Bich were named the voting trustees and Neil A. Pollio was named the sole successor voting trustee. Since the death of Marcel L. Bich in May 1994, and in accordance with the Voting Trust Agreement, Bruno Bich has been the sole Voting Trustee. Since the death of Neil A. Pollio in 1991, Alexander Alexiades has served as sole successor voting trustee. Pursuant to the Voting Trust Agreement, the Participating Shareholders deposited with the Voting Trustees the certificates for Common Shares owned by them. The Participating Shareholders were issued voting trust certificates for the Common Shares deposited with and transferred to the Voting Trustee. The Participating Shareholders are entitled to all cash dividends declared and paid on the Common Shares they deposited with the Voting Trustee, while the Voting Trustee has the exclusive right to vote such Common Shares. As of the Record Date, Bruno Bich, as Voting Trustee, exercised voting control over 17,912,648 Common Shares (representing approximately 76.0% of the outstanding Common Shares), of which (i) 14,829,836 Common Shares (representing approximately 62.9% of the outstanding Common Shares) were beneficially 30 36 owned by Parent, (ii) 2,541,406 Common Shares (representing approximately 10.8% of the outstanding Common Shares) were beneficially owned by Bruno Bich and trusts for the benefit of himself and members of his family, and (iii) 541,406 Common Shares (representing approximately 2.3% of the outstanding Common Shares) were beneficially owned by Francois Bich. For additional information, see "Ownership of Common Shares -- Security Ownership of Certain Beneficial Owners." Technology Sharing and Mutual Purchasing Agreement. Under the terms of an agreement dated June 30, 1971 (as amended, the "Agreement"), the Company and Parent (which is engaged in substantially the same business as the Company) are obligated to furnish each other information with respect to technological improvements, whether patentable or otherwise, at no cost to the recipient. This portion of the Agreement represents the formalization of the arrangement which has prevailed between the parties since the Company's formation. In addition, the Agreement provides that the Company and Parent shall be entitled, but shall not be required, to purchase machinery, equipment and products from each other at a price not greater than 120%, and raw materials at a price not greater than 110%, of the cost thereof. The Agreement was renewed in 1991 for an additional term of five years. Pursuant to the terms of the Agreement, the Company's purchases from and sales to Parent and its affiliates during 1994 aggregated approximately $41.1 million and $12.4 million, respectively. In 1993, the Company's purchases from and sales to Parent and its affiliates aggregated approximately $42.2 million and $11.4 million, respectively. In the first half of 1995, such purchases and sales aggregated $25.6 million and $7.3 million, respectively. CERTAIN EFFECTS OF THE MERGER As a result of the Merger, the entire equity interest of the Company will be owned by the Mergeco Shareholders. Therefore, following the Merger, the Public Shareholders will no longer benefit from any increases in the value of the Company and will no longer bear the risk of any decreases in the value of the Company. In addition, following the Merger, the interest of Parent in the Company's net book value and net income will increase to approximately 86% from a current level of approximately 63% while the other shareholders of Mergeco will continue to hold an interest of approximately 14%. Following the Merger, in dollar terms, Parent's interest in 1994 fiscal year end net book value will increase to $213.1 million from $156.1 million and its interest in 1994 fiscal year net income will increase to $43.9 million from $32.1 million. Following the Merger, the Mergeco Shareholders will benefit from any increases in the value of the Company and also bear the risk of any decreases in the value of the Company. The Public Shareholders will have no continuing interest in the Company following the Merger. As a result, the Common Shares will no longer meet the requirements of the NYSE for continued listing and will, therefore, be delisted from the NYSE. According to published guidelines, the Common Shares will no longer be eligible for listing on the NYSE when, among other things, the number of record holders of at least 100 Common Shares falls below 1,200, the number of publicly held Common Shares (exclusive of holdings of officers, directors and their families and other concentrated holdings of 10% or more ("NYSE Excluded Holdings")) falls below 600,000 or the aggregate market value of publicly held Common Shares (exclusive of NYSE Excluded Holdings) falls below $5,000,000. The Common Shares currently constitute "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Common Shares. As a result of the Merger, the Common Shares will no longer constitute "margin securities" for purposes of the margin regulations of the Federal Reserve Board and therefore will no longer constitute eligible collateral for credit extended by brokers. The Common Shares are currently registered as a class of securities under the Exchange Act. Registration of the Common Shares under the Exchange Act may be terminated upon application of the Company to the SEC if the Common Shares are not listed on a national securities exchange or quoted on NASDAQ and the re are fewer than 300 record holders of the Public Shares. Termination of registration of the Public Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its shareholders and to the SEC and would make certain provisions of the 31 37 Exchange Act, such as the short-swing trading provisions of Section 16(b), the requirement of furnishing a proxy statement in connection with shareholders' meetings pursuant to Section 14(a), and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Company. If registration of the Common Shares under the Exchange Act is terminated, the Common Shares would no longer be eligible for NYSE listing. In addition, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended. It is the present intention of the Parent to seek to cause the Company to make an application for the termination of the registration of the Common Shares under the Exchange Act as soon as practicable after the Effective Time of the Merger. CERTAIN LITIGATION Beginning on May 19, 1995, four actions were filed in the Supreme Court of the State of New York, County of New York (the "Court"), by shareholders of the Company. These actions, purportedly brought as class actions on behalf of all Public Shareholders, named the Company, its directors, certain of its officers and Parent as defendants, alleging that they breached their fiduciary duties to plaintiffs and the other Public Shareholders in connection with Parent's proposal to acquire the Public Shares for $36.50 per share. A stipulation and order consolidating these four actions (the "Consolidation Order") under the caption In re BIC Corp. Shareholders Litigation, Consolidated Index No. 112626/95, was signed by the parties on or about June 23, 1995, and submitted to the Court. The Consolidation Order has not yet been entered. The Consolidated Order provides that the defendants need not respond to the four original complaints. The Consolidation Order further provides that plaintiffs shall file a Consolidated and Amended Complaint after entry of the Consolidation Order. Another action asserting similar claims on behalf of the same purported class, entitled Rosenzweig v. BIC Corp., et al., was filed in the Connecticut Superior Court, Judicial District of Ansonia/Milford on May 22, 1995. In addition, another similar purported class action, entitled Kahn v. Societe BIC S.A., et al., Index No. 01785, which names only Parent and Bruno Bich as defendants, was filed on May 19, 1995 in the Supreme Court of the State of New York, County of Queens. The time for defendants to respond to the complaints in these actions has not expired. The parties to these actions have reached an agreement in principle to settle all such actions with prejudice, based on the terms of the Merger. The settlement is subject to negotiation of a stipulation of settlement and approval by the Court following notice to the Public Shareholders. In connection with the proposed settlement, the plaintiffs intend to apply for an award of attorneys' fees and litigation expenses in the amount of $487,500. The defendants have agreed not to oppose this application. The defendants have denied, and continue to deny, that they have committed or have threatened to commit any violation of law or breaches of duty to the plaintiffs or the purported class. The defendants have agreed to the proposed settlement because, among other reasons, such settlement would eliminate the burden and expense of further litigation and would facilitate the consummation of a transaction that they believe to be in the best interests of the Company and the Public Shareholders. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of the material federal income tax consequences of the Merger to the holders of the Public Shares and to the Company under the law in effect as of the date hereof. The following discussion is for general information only, and may not apply to particular categories of holders, such as financial institutions, broker-dealers and tax-exempt entities. ALL HOLDERS OF THE PUBLIC SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE MERGER TO THEM WITH SPECIFIC REFERENCE TO THEIR PARTICULAR TAX SITUATIONS, INCLUDING SUCH TAX CONSEQUENCES UNDER STATE, LOCAL AND FOREIGN TAX LAWS. The exchange of Public Shares for cash in connection with the Merger will be a taxable transaction to the relevant Public Shareholder for federal income tax purposes. In general, such Public Shareholder will recognize gain or loss in an amount equal to the difference between the cash received and such Public Shareholder's tax basis in such Public Shares. Such gain or loss will be a capital gain or loss if such Public 32 38 Shareholder has held such Public Shares as capital assets within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended. Such capital gain or loss will be a long-term capital gain or loss if such Public Shareholder has held such Public Shares for more than one year as of the date of exchange. There are certain limitations on the deductibility of capital losses. A Public Shareholder who also owns, directly or by attribution, stock of Parent as of the date of exchange should consult such Public Shareholder's own tax advisor regarding the possibility that the cash received will be treated as a dividend. Legislative proposals have been recently introduced in Congress to reduce effective tax rates applicable to net long-term capital gains and to limit further the deductibility of long-term capital losses. The proposals would apply generally to transactions entered into after December 31, 1994. If the proposals were enacted into law, long-term capital gains from the exchange of Public Shares in the Merger would generally be taxed at reduced effective tax rates and long-term capital losses from the exchange of Public Shares in the Merger would be subject to further limitations on deductibility. However, it is not clear whether the proposals will be enacted, and, if enacted, whether the proposals will apply with respect to the exchange of Public Shares in the Merger. Cash received in exchange for Public Shares in the Merger may be subject to a backup withholding tax at a rate of 31%, unless the relevant Public Shareholder is an exempt recipient or complies with certain identification procedures. The Company will not recognize gain or loss as a result of the Merger for federal income tax purposes. FEES AND EXPENSES Estimated fees and expenses incurred or to be incurred by the Company in connection with the Merger are approximately as follows: Investment banking fees and expenses......................... $ Legal fees and expenses...................................... SEC filing fee............................................... Printing and mailing fees.................................... Proxy Solicitation Agent fees................................ Paying Agent fees............................................ Special Committee fees....................................... Miscellaneous expenses....................................... ---------- Total.............................................. =========
The above fees and expenses do not include any fees and expenses that may be payable to the attorneys for the plaintiffs as described in "-- Certain Litigation." For information regarding Goldman Sachs' engagement by the Special Committee , see "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co.". Estimated fees and expenses incurred or to be incurred by Parent in connection with the Merger are investment banking fees and expenses of $1,125,000, legal fees and expenses of $ and miscellaneous fees of $ (including one half of the SEC filing fee and the printing fees referenced above). For information regarding DLJ's engagement by Parent, see "-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Donaldson, Lufkin & Jenrette Securities Corporation." Neither Parent nor the Company will pay any fees or commissions to any broker or dealer or any other person (other than Goldman Sachs, DLJ, the Proxy Solicitation Agent, and the Paying Agent) for soliciting Public Shares pursuant to the Merger. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Company for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. 33 39 THE MERGER GENERAL The following is a summary of the Merger Agreement. All references to and summaries of the Merger Agreement in this Proxy Statement are qualified in their entirety by reference to the Merger Agreement, a copy of which is attached hereto as Annex A. The Merger. The Merger Agreement provides for the merger of Mergeco with and into the Company. The Company will be the Surviving Corporation and it will continue its corporate existence under the laws of the State of New York. At the Effective Time, the separate corporate existence of Mergeco shall cease. The Surviving Corporation shall possess all the rights, privileges, immunities, powers and purposes of Mergeco and the Company and shall assume and become liable for all liabilities, obligations and penalties of the Company and Mergeco. Effective Time of Merger. The Effective Time will occur upon the filing of the Certificate of Merger by the New York Department of State. The Certificate of Merger will be filed as soon as practicable after requisite approval and adoption of the Merger Agreement and the Merger by the shareholders of the Company at the Special Meeting are obtained and the other conditions precedent to the consummation of the Merger have been satisfied, or if permissible, waived. See "-- Conditions of the Merger; Amendments, Waiver, and Termination." Treatment of Shares in the Merger. At the Effective Time: (a) each Common Share outstanding immediately prior to the Effective Time, except for (i) Common Shares then owned by the Mergeco Shareholders and (ii) Dissenting Shares, shall by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Merger Consideration, upon surrender of the certificate representing such Common Share; and (b) each Common Share outstanding immediately prior to the Effective Time which is then owned by the Mergeco Shareholders shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and retired and cease to exist, without any conversion thereof. Holders of Common Shares who do not vote in favor of the Merger at the Special Meeting and who shall have properly elected to dissent in the manner provided in Section 623 shall be entitled to payment of the fair value of their Public Shares in accordance with the provisions of Section 623. See "-- Dissenters' Rights." Each Mergeco common and preferred share issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and exchangeable for one fully paid and non-assessable common share of the Surviving Corporation. Exchange of Share Certificates. The Parent has designated Mellon Securities Transfer Services to act as the Paying Agent under the Merger Agreement. Prior to the Effective Time, Parent shall, or Parent shall cause Mergeco to, deposit in trust with the Paying Agent, cash in an aggregate amount equal to the product of: (x) the number of Common Shares outstanding immediately prior to the Effective Time (other than Common Shares owned by the Mergeco Shareholders or Dissenting Shares); and (y) the Merger Consideration (such amount being hereinafter referred to as the "Exchange Fund"). The Paying Agent shall, pursuant to irrevocable instructions, make the payments provided for under the Merger Agreement out of the Exchange Fund. Promptly after the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail to each holder of record as of the Effective Time (other than the Mergeco Shareholders) of an outstanding certificate or certificates for Common Shares (the "Certificates"), a letter of transmittal and instructions for use in effecting the surrender of such certificates for payment in accordance with the Merger Agreement. Upon the surrender to the Paying Agent of a Certificate, together with a duly executed letter of transmittal, the holder thereof shall be entitled to receive cash in an amount equal to the product of the number of Common Shares represented by such Certificate and the Merger Consideration, less any applicable withholding tax, and such Certificate shall then be canceled. 34 40 Until surrendered pursuant to the procedures described above, each Certificate (other than Certificates representing Common Shares owned by the Mergeco Shareholders and Certificates representing Dissenting Shares) shall represent for all purposes the right to receive the Merger Consideration in cash multiplied by the number of Common Shares evidenced by such Certificate, without any interest thereon. After the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of Common Shares which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation, they shall be canceled and exchanged for an amount in cash equal to the Merger Consideration multiplied by the number of Common Shares evidenced by such Certificate, without any interest thereon. Any portion of the Exchange Fund which remains unclaimed by the shareholders of the Company for 180 days after the Effective Time (including any interest, dividends, earnings or distributions received with respect thereto) shall be repaid to the Surviving Corporation, upon demand. Any shareholders of the Company who have not theretofore complied with the procedures set forth above shall thereafter look only to the Surviving Corporation for payment of their claim for the Merger Consideration per Common Share, without any interest thereon, but shall have no greater rights against the Surviving Corporation than may be accorded to general creditors of the Surviving Corporation under New York law. Notwithstanding the foregoing, neither the Paying Agent nor any party to the Merger Agreement shall be liable to any holder of certificates formerly representing Common Shares for any amount to be paid to a public official pursuant to any applicable abandoned property, escheat or similar law. Treatment of Employee Stock Plans. The Company will take all actions necessary to amend the Company's Local 134 Employees' Share Purchase Plan, 401(k) Savings and Investment Plan and a non-contributory 401(k) plan for certain unionized employees of the Company on or prior to the Effective Time to delete as an investment option thereunder purchases of Common Shares. Withholding Rights. Pursuant to the Merger Agreement, Parent, Mergeco, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the amounts payable to any holder of Common Shares such amounts as Parent, Mergeco, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under applicable tax law. To the extent that amounts are so deducted and withheld by Parent, Mergeco, the Surviving Corporation or the Paying Agent, such amounts shall be treated for all purposes of the Merger Agreement as having been paid to the relevant holder of Common Shares. Conditions to the Merger; Amendment, Waiver and Termination. Pursuant to the Merger Agreement, the obligations of each of Parent, Mergeco, the Voting Trustee and the Company, to effect the Merger are subject to the following conditions: (a) the proposal to approve and adopt the Merger Agreement at the Special Meeting shall have received the affirmative vote of the holders of at least a majority of the Public Shares actually voted, in person or by proxy (excluding abstentions), on such proposal, (b) the absence of (i) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or France or (ii) a commencement of a war, armed hostilities or other international or national calamity directly involving the United States or France which has a material adverse effect on the general economic conditions in the United States or France (other than the commencement of war or armed hostilities in the Republic of Bosnia-Herzegovina), (c) the absence of any effective statute, rule, regulation, a temporary, preliminary or permanent order or injunction prohibiting consummation of the Merger or imposing material limitations on the ability of the Mergeco Shareholders effectively to exercise full rights of ownership with respect to the Common Shares and (d) the approval and adoption of the Merger Agreement by the holders of the requisite number of Common Shares in accordance with the NYBCL and Restated Certificate of Incorporation and By-Laws of the Company. In addition: (a) the obligations of Parent, Mergeco and the Voting Trustee to effect the Merger are subject to (i) the accuracy of the representations and warranties made by the Company in the Merger Agreement as of the date thereof and as of the Effective Time (except for representations and warranties which address matters as of a particular date which must be accurate as of such date), and (ii) the performance by the Company in all material respects of the obligations required to be performed by the Company prior to the Effective Time; and (b) the obligations of the Company to effect the 35 41 Merger are subject to (x) the accuracy of the representations and warranties made by Parent and Mergeco in the Merger Agreement as of the date thereof and as of the Effective Time (except for representations and warranties which address matters as of a particular date which must be accurate as of such date), and (y) the performance by Parent and Mergeco in all material respects of the obligations required to be performed by Parent or Mergeco, as the case may be, prior to the Effective Time. The Parent or the Company, respectively, may waive the satisfaction of any obligation, covenant, agreement or condition under the Merger Agreement on behalf of Parent or Mergeco, on the one hand, or the Company, on the other, provided that the waiver of any of the Company's rights under the Merger Agreement requires the approval of the Special Committee. The Merger Agreement may be amended by written agreement of Parent, Mergeco, the Voting Trustee and the Company at any time prior to the Effective Time, provided that (a) after the Merger Agreement is adopted by the Company's shareholders, no such amendment shall be made that reduces the amount or changes the form of Merger Consideration or otherwise materially and adversely affects the rights of the Public Shareholders without the further approval of at least a majority of the Public Shares actually voted, in person or by proxy (excluding abstentions), on such proposal and (b) the approval of the Special Committee is required for any amendment of the Merger Agreement and any extension by the Company of the time for the performance of any obligations or other acts of Parent or Mergeco. The Merger Agreement may be terminated at any time prior to the Effective Time, either before or after approval by the shareholders of the Company by: (a) mutual consent of the respective Boards of Directors of Parent and Mergeco and the Board of Directors, provided that the Special Committee shall have approved such termination; (b) action of either of the respective Boards of Directors of Parent and Mergeco or the Board of Directors if, without the fault of the terminating party, the Merger shall not have been consummated on or prior to January 31, 1996; (c) action of the respective Boards of Directors of Parent and Mergeco, if the Board of Directors shall have withdrawn or modified in a manner adverse to Mergeco its approval or recommendation of the Merger, the Merger Agreement or the transactions contemplated thereby; or (d) action of either of the respective Boards of Directors of Parent and Mergeco or the Board of Directors, if any court of competent jurisdiction in the United States or other governmental agency of competent jurisdiction shall have issued an order, decree or ruling or taken any other action restraining, permanently enjoining or otherwise prohibiting the Merger, and such order, decree, ruling or other action shall have become final and non-appealable. The Merger Agreement provides that in the event of its termination, no party thereto will have any liability or further obligation to any other party to the Merger Agreement, provided that any termination shall be without prejudice to the rights of any party to the Merger Agreement arising out of breach by any other party of any covenant or agreement contained in the Merger Agreement, and provided further, that certain obligations under the Merger Agreement shall survive any termination. Representations and Warranties. The Merger Agreement contains various representations and warranties of the Company to Parent and Mergeco, including with respect to the following matters: (i) the due organization and valid existence of the Company and its subsidiaries and similar corporate matters; (ii) the capitalization of the Company and its subsidiaries; (iii) the due authorization, execution and delivery of the Merger Agreement, its binding effect on the Company, and the Board of Directors and Special Committee's recommendation of the Merger to the Public Shareholders; (iv) regulatory filings and approvals, and the lack of conflicts between the Merger Agreement and the transactions contemplated thereby with the Company's Restated Certificate of Incorporation or By-Laws, any contract to which it or its subsidiaries are parties, or any law, rule, regulation, order, writ, injunction or decree binding upon the Company or its subsidiaries; (v) the accuracy of the Company's SEC filings, its financial statements and the absence of undisclosed liabilities; (vi) the vote required to approve the Merger under the NYBCL; (vii) the accuracy of the information provided by the Company for inclusion in this Proxy Statement and the Schedule 13E-3; (viii) the opinion of Goldman Sachs; and (ix) the absence of any brokers or finders (other than Goldman Sachs). Such representations and warranties are subject, in certain cases, to specified exceptions and qualifications. 36 42 The Merger Agreement also contains representations and warranties of Parent and Mergeco to the Company, including with respect to the following matters: (i) the due organization and valid existence of each of Parent and Mergeco and similar corporate matters; (ii) the capitalization of Mergeco; (iii) the due authorization, execution and delivery of the Merger Agreement by Parent, Mergeco and the Voting Trustee, and its binding effect on such parties; (iv) regulatory filings and approvals, and the absence of conflicts of the Merger Agreement and the transactions contemplated thereby with the charter or by-laws (or equivalent documents) of each of Parent and Mergeco, or the Voting Trust Agreement, or with any contract binding upon Parent, Mergeco or the Voting Trustee, or with any law, rule, regulation, order, writ, injunction or decree binding upon any of such parties; (v) Parent's and Mergeco's access to cash funds sufficient to consummate the transactions contemplated by the Merger Agreement; (vi) the formation and absence of prior activities of Mergeco; (vii) the accuracy of the information provided by Parent or Mergeco for inclusion in this Proxy Statement and the Schedule 13E-3; and (viii) the absence of brokers and finders (other than DLJ). Such representations and warranties are subject, in certain cases, to specified exceptions and qualifications. Conduct of Business Pending the Merger. Pursuant to the Merger Agreement, from the date thereof to the Effective Time, neither the Company nor any of its subsidiaries, subject to certain exceptions, may declare, set aside or pay any dividend or other distribution in respect of its capital stock, provided that the Board of Directors may declare dividends in respect of its capital stock if the Merger has not been consummated by December 31, 1995. Certain Agreements. The Merger Agreement provides that the Company will as soon as practicable: (i) acting through its Board of Directors, and subject to the fiduciary duties thereof and applicable law, call and convene the Special Meeting, (ii) prepare and file with the SEC a preliminary proxy statement and mail the definitive proxy statement to its shareholders, and (iii) subject to the fiduciary duties under applicable law of the Company's directors, use its best efforts to obtain the necessary approvals by its shareholders of the Merger Agreement and the transactions contemplated thereby. The Merger Agreement provides that the proxy statement will include the respective recommendations of the Board of Directors to the shareholders of the Company and of the Special Committee to the Public Shareholders in favor of the adoption and approval of the Merger Agreement and the transactions contemplated thereby. Notwithstanding any other provision of the Merger Agreement to the contrary, if the Board of Directors or the Special Committee determines, in good faith in the exercise of its fiduciary duties under applicable law, to withdraw, modify or amend its recommendation in favor of the Merger, such withdrawal, modification or amendment will not constitute a breach of the Merger Agreement. Pursuant to the Merger Agreement, the Company, Parent and Mergeco will together prepare and file the Schedule 13E-3 under the Exchange Act. Parent, Mergeco and the Company will each furnish all information concerning it, its affiliates and certain other persons required to be included in the Proxy Statement and the Schedule 13E-3 and respond promptly to any comments made by the SEC with respect thereto. Parent has agreed in the Merger Agreement that it will: (i) as soon as practicable after the date thereof, cause the Merger Agreement to be approved by the requisite vote of the Mergeco Shareholders; and (ii) cause Mergeco to perform its obligations under the Merger Agreement. The Merger Agreement also prohibits Mergeco from engaging in any business or activity other than in connection with the Merger. Best Efforts. Pursuant to the Merger Agreement, each of the parties will use its best efforts to take, or cause to be taken, all appropriate actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable law or otherwise to consummate the Merger, including obtaining the necessary consents of third parties and governmental authorities. Indemnification and Insurance. Parent has agreed in the Merger Agreement, subject to certain limitations, that for a period of six years after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, indemnify, defend and hold harmless the "Indemnified Parties" (as defined) from and against, and pay or reimburse the Indemnified Parties for, all losses, obligations, expenses, claims, damages or liabilities (whether or not resulting from third-party claims and including interest, penalties, out-of-pocket expenses and attorneys' fees incurred in the investigation or defense of any of the same or in asserting any of their rights under the Merger Agreement) resulting from or arising out of actions or omissions occurring on or 37 43 prior to the Effective Time (including, without limitation, the transactions contemplated by the Merger Agreement) to the full extent permitted or required under applicable law and, in the case of indemnification by the Surviving Corporation, to the fullest extent permitted under the By-Laws of the Company in effect on the date of the Merger Agreement (which provisions cannot be amended in any manner which adversely affects any Indemnified Party for a period of six years), including provisions relating to advances of expenses incurred in the defense of any action or suit. The Merger Agreement further provides that for not less than four years after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, maintain in effect directors' and officers' liability insurance covering the Indemnified Parties who are currently covered by the Company's existing directors' and officers' liability insurance, on terms and conditions no less favorable to such directors and officers than those in effect on the date of the Merger Agreement, provided that Parent or the Surviving Corporation are not required to expend in any one year an amount in excess of 200% of the annual premiums currently paid by the Company for such insurance. ACCOUNTING TREATMENT The Merger will be accounted for under the "purchase" method of accounting whereby the purchase price will be allocated among the Company's assets and liabilities based on the fair market value of the assets acquired and liabilities assumed. PAYMENT FOR PUBLIC SHARES; SOURCES OF FUNDS Approximately $219 million will be required to pay the Merger Consideration to the holders of all Public Shares outstanding at the Effective Time (assuming no such holder perfects its dissenters' rights) and it is expected that approximately $ will be required to pay the expenses of Parent and Mergeco in connection with the Merger. Such funds will be furnished from available general funds of Parent. It is currently expected that approximately $ million will be required to pay the expenses of the Company. Such funds will be furnished from available general funds of the Company. See "Special Factors -- Fees and Expenses." DISSENTERS' RIGHTS Shareholders who do not vote in favor of approval and adoption of the Merger Agreement may have the right to seek payment in cash of the fair value of their Common Shares by complying with the requirements of Section 623 of the NYBCL. Failure of a shareholder to strictly adhere to the requirements of Section 623 will result in the loss of such shareholder's dissenter's rights. A dissenting shareholder must, before the taking of the vote on the Merger Agreement, file with the Company a written objection. The objection must include: a notice of the dissenting shareholder's election to dissent; the shareholder's name and residence address; the number of shares as to which the shareholder dissents; and a demand for payment of the fair value of such shares if the Merger is effected. The written objection should be delivered to BIC Corporation, 500 BIC Drive, Milford, Connecticut 06460, Attention: Thomas M. Kelleher, General Counsel and Secretary, prior to the Special Meeting. To effectively exercise dissenters' rights, such shareholder may not vote any of his, her or its shares for the Merger Agreement. Within 10 days after the vote of shareholders authorizing the Merger Agreement and the Merger, the Company must give written notice of such authorization to each dissenting shareholder. Within 20 days after the giving of such notice, any shareholder who elects to dissent must file with the Company a written notice of such election, stating such shareholder's name and residence address, the number of Common Shares as to which dissent is made and a demand for payment of the fair value of such shares. Such dissenting shareholder may not dissent as to less than all Common Shares beneficially owned by the shareholder. Upon consummation of the Merger, a dissenting shareholder shall cease to have any of the rights of a shareholder, except the right to be paid the fair value of the dissenting shareholder's shares, and any other rights under Section 623. At the time of filing the notice of election of dissent or within one month thereafter, such shareholder must submit certificates representing all such Common Shares to the Company or its transfer agent. Failure to submit the certificates may result in the loss of such shareholder's dissenter's rights. Within 15 days after the 38 44 expiration of the period within which shareholders may file their notices of election to dissent, or within 15 days after consummation of the Merger, whichever is later (but not later than 90 days after the shareholders' vote authorizing the Merger), the Company must make a written offer (which, if the Merger has not been consummated, may be conditioned upon such consummation) to each such dissenting shareholder who has filed such notice of election to pay for the Common Shares at a specified price which the Company considers to be their fair value. If the Company and the dissenting shareholder are unable to agree as to such fair value, Section 623 provides for judicial determination of fair value. A vote AGAINST approval and adoption of the Merger Agreement does not constitute the written objection required to be filed by a dissenting shareholder. Failure by a shareholder to vote AGAINST approval and adoption of the Merger Agreement, however, will not constitute a waiver of rights under Section 623 provided that a written objection has been properly filed and such shareholder has not voted any of his, her or its shares FOR the approval and adoption of the Merger Agreement. The foregoing does not purport to be a complete statement of the provisions of Section 623 and is qualified in its entirety by reference to such section, which is reproduced in full as Annex C to this Proxy Statement. THE PROVISIONS OF SECTION 623 ARE COMPLEX AND TECHNICAL IN NATURE. SHAREHOLDERS DESIRING TO EXERCISE DISSENTERS' RIGHTS MAY WISH TO CONSULT COUNSEL, SINCE THE FAILURE TO COMPLY STRICTLY WITH THESE PROVISIONS WILL RESULT IN THE LOSS OF THEIR DISSENTERS' RIGHTS. 39 45 MARKET PRICES AND DIVIDENDS The Common Shares are traded on the NYSE under the symbol "BIC." The Company paid quarterly cash dividends totaling $1.06 in 1990, $0.56 in 1991, $1.06 in 1992, $.72 in 1993, $.80 in 1994 and $.46 through the second quarter of 1995. During the first quarter of 1995 the Board of Directors voted an increase in the regular quarterly dividend from $.20 per Common Share to $0.23 per Common Share. Under the terms of the Merger Agreement, the Company will not pay the regular quarterly cash dividend otherwise payable on October 30, 1995, even if the Merger is consummated subsequent to such date. See "The Merger -- General -- Conduct of Business Pending the Merger." Although there can be no assurance as to whether the proposed transaction will be effected, it is currently anticipated that the Merger will be completed in late October or early November of 1995. The following table sets forth, for the calendar periods indicated, the high and low sales prices per Common Share, as quoted on the NYSE.
SALES PRICES PER COMMON SHARE -------------- CALENDAR PERIODS HIGH LOW --------------------------------------------------------------------- ---- --- 1993 First Quarter........................................................ $41 $30 7/8 Second Quarter....................................................... 33 7/8 26 Third Quarter........................................................ 31 3/8 27 Fourth Quarter....................................................... 33 5/8 27 1994 First Quarter........................................................ $31 7/8 $28 Second Quarter....................................................... 29 1/4 26 1/2 Third Quarter........................................................ 30 7/8 28 Fourth Quarter....................................................... 30 25 5/8 1995 First Quarter........................................................ $32 3/4 $28 1/4 Second Quarter....................................................... 39 3/8 30 5/8 Third Quarter (through September ).................................
On May 18, 1995, the last full trading day prior to the public announcement of the Proposal, the last reported sale price per Common Share on the NYSE was $35 3/4. On August 15, 1995, the last full trading day prior to the public announcement that the parties had entered into the Merger Agreement, the last reported sale price per Common Share on the NYSE was $39 1/4. On September , 1995, the last reported sale price per Common Shares on the NYSE was $ . HOLDERS OF COMMON SHARES ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON SHARES. 40 46 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY The following table sets forth selected consolidated historical financial data of the Company. The selected financial data should be read in conjunction with the Consolidated Financial Statements of the Company, related notes and other financial information incorporated by reference into this Proxy Statement. The selected financial data at July 2, 1995 and July 3, 1994 and for the six month periods then ended is unaudited but includes, in the opinion of management, all adjustments necessary for a fair presentation of the results of operations and the financial position at and for each of the interim periods presented. Operating results for the six months ended July 2, 1995 are not necessarily indicative of the results to be expected for the full year. The following summary is qualified in its entirety by reference to such financial statements, related notes and other financial information. BIC CORPORATION
SIX MONTHS ENDED ------------------- AT END OF OR FOR FISCAL YEARS JULY 2, JULY 3, ---------------------------------------------------- 1995 1994 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- -------- -------- (UNAUDITED) (U.S. DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS) INCOME STATEMENT DATA Net sales.......................... $257,413 $241,616 $475,118 $439,311 $417,377 $369,171 $329,246 Income before income taxes, extraordinary credit and cumulative effect of changes in accounting principles............ 48,234 43,486 87,207 73,986 67,278 46,616 41,067 Net income......................... 28,622 25,357 51,021 34,964 39,935 28,059 24,055 Ratio of earnings to fixed charges(1)....................... -- -- -- -- -- -- -- Per share:(2) Income before extraordinary credit and cumulative effect of changes in accounting principles..................... 1.21 1.10 2.19 1.90 1.70 1.12 0.92 Net income....................... 1.21 1.08 2.17 1.48 1.70 1.16 0.99 Cash dividends................... 0.46 0.40 0.80 0.72 1.06 0.56 1.06 BALANCE SHEET DATA Working Capital.................... 123,116 93,157 107,816 77,232 71,469 106,284 111,624 Long-term debt..................... 0 0 0 0 0 0 0 Total assets....................... 440,573 386,164 358,687 336,216 308,466 280,205 257,107 Total assets less research and development and excess of assets acquired over book value......... 428,683 372,575 345,947 321,778 292,329 280,205 257,107 Shareholders' equity............... 261,447 240,638 247,917 226,688 209,366 195,515 190,187 Book value per share............... 11.10 10.21 10.52 9.62 8.89 8.30 7.85
- --------------- (1) The Company had no fixed charges in any of the periods presented. (2) Per share amounts have been retroactively restated to reflect the 1992 share split effected in the form of a 100% share dividend. Cash dividends per share represent the total dividends paid each year. The 1992 and 1990 dividends included a special cash dividend of $0.50 per share. 41 47 OWNERSHIP OF COMMON SHARES SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth certain information as of the date of this Proxy Statement concerning the beneficial ownership of Common Shares by each person known by the Company to own more than 5% of its Common Shares.
AMOUNT AND NATURE NAME AND ADDRESS OF BENEFICIAL PERCENT OF BENEFICIAL OWNER OWNERSHIP OF CLASS --------------------- ----------------- -------- Bruno Bich.............................................. 18,154,848(1) 77.1% BIC Corporation Milford, Connecticut Societe BIC S.A. ....................................... 14,829,836(2) 62.9% 9, rue Petit 92110 Clichy, France
- --------------- (1) Includes: (a) 14,829,836 shares owned by Parent subject to the Voting Trust Agreement . See "Special Factors -- Interest of Certain Persons in the Merger -- Voting Trust Agreement;" (b) 2,400,000 shares which are subject to the Voting Trust Agreement and an additional 117,480 shares not subject to the Voting Trust Agreement, all of which are owned indirectly by Bruno Bich, in trust for the benefit of Bruno Bich and his family; (c) 541,406 shares which are subject to the Voting Trust Agreement, owned directly by Francois Bich, a brother of Bruno Bich; (d) 141,406 shares which are subject to the Voting Trust Agreement, owned directly by Bruno Bich; (e) 67,200 shares which are owned indirectly by Bruno Bich, in trust for the benefit of Bruno Bich's minor children; (f) 55,500 shares which are not subject to the Voting Trust Agreement, held in the name of Bruno Bich's minor children; and (g) 2,020 shares which are not subject to the Voting Trust Agreement, owned directly by Bruno Bich. With the exception of the 2,541,406 shares subject to the Voting Trust Agreement (the sum of the shares subject to the Voting Trust Agreement identified in clauses (b) and (d)), Bruno Bich's interest in all other shares subject to the Voting Trust Agreement arises solely from his being Voting Trustee under the Voting Trust Agreement and he disclaims any beneficial interest in such shares. (2) Common Shares held by Parent subject to the Voting Trust Agreement. 42 48 SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The following table sets forth certain information as of July 31, 1995, with respect to the number of Common Shares of the Company owned by each director and executive officer of the Company (other than Bruno Bich, whose ownership of Common Shares is described above) and all directors and officers as a group. Each individual has sole power to vote and sole power to dispose of all of his Common Shares.
NAME OF AMOUNT OF BENEFICIAL PERCENT OF BENEFICIAL OWNER OWNERSHIP(A) CLASS -------------------------------------------------------- -------------------- ---------- Alexander Alexiades..................................... 24,000 * Robert E. Allen......................................... 2,000 * David W. Heleniak....................................... 1,000 * Antoine G. Treuille..................................... 1,200 * Raymond Winter.......................................... 5,664 * Robert L. Macdonald..................................... 2,788 * Al D'Addario............................................ 1,574 * James K. Palmer......................................... 2,779 * Thomas M. Kelleher...................................... 1,374 * Jack Teague............................................. 432 * Directors and Executive Officers as a group (10 persons, excluding Bruno Bich)................................. 42,811 *
- --------------- (a) Represents all Common Shares held as of July 31, 1995, including holdings through the Company's 401(k) Plan. * Each individual has stock holdings of less than 1%. SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS OF PARENT AND MERGECO As set forth in "Interest of Certain Persons in the Merger," certain directors and executive officers of the Company are also directors and executive officers of Parent and Mergeco. With the exception of the ownership of the Common Shares by certain of such persons set forth in "Ownership of Common Shares -- Security Ownership of Directors and Executive Officers of the Company," no director or executive officer of Parent or Mergeco owns any Common Shares. TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES On August 17 and 18, 1995, Bruno Bich sold in market transactions an aggregate of 150,000 Common Shares not subject to the Voting Trust Agreement for $39.50 per share, or an aggregate of approximately $5.9 million. Certain executive officers of the Company are participants in the Company's 401(k) Savings and Investment Plan (the "401(k) Plan") and allocate some or all of their contributions under such plan towards purchases of Common Shares for their accounts. As of July 31, 1995, participants in the 401(k) Plan beneficially owned an aggregate of 200,103 Common Shares. Participants in a noncontributory 401(k) Plan for certain unionized employees of the Company (the "Employee Plan") owned as of such date an aggregate of 150,951 Common Shares. Fleet Bank, as trustee under the 401(k) Plan, purchased in market transactions 1,795 Common Shares for $39.375 per share on July 6, 1995, 2,000 Common Shares for $39.00 per share on July 25, 1995, 1,755 Common Shares for $39.125 per share on July 27, 1995 and 1,274 Common Shares for $39.00 per share on August 9, 1995. Fleet Bank, as trustee under the Employee Plan, purchased in market transactions 1,200 Common Shares for $39.00 per share on July 5, 1995, 951 Common Shares for $38.875 per share on August 2, 1995 and 892 Common Shares for $39.00 per share on August 8, 1995. Except as set forth above, since June 28, 1995, 60 days prior to the filing of the Schedule 13E-3, none of Parent, the Company, Mergeco, the Voting Trustee, any majority-owned subsidiary thereof, any director or executive officer thereof, and no pension, profit-sharing or similar plan of Parent, the Company or Mergeco has effected any purchases or sales of Common Shares. In addition, none of Parent, the Company, the Voting Trustee or Mergeco has purchased any Common Shares since January 1, 1993. 43 49 MANAGEMENT OF PARENT, MERGECO AND THE COMPANY DIRECTORS AND EXECUTIVE OFFICERS OF PARENT Set forth below is the name and business address of each person who is a director or executive officer of Parent, the present principal occupation or employment of each such person and the name, principal business and address of the corporation or other organization in which such occupation or employment of each such person is conducted and the material occupations, positions, offices and employment and the name, principal business and address of any corporation or other organization in which any material occupation, position, office or employment of each such person was held during the last five years. Unless otherwise indicated, the address of each such person is and has been for the past five years that of the Parent at 9, rue Petit 92110 Clichy, France. Unless otherwise indicated, each person listed below is a citizen of France.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------ ------------------------------------------------------------ Bruno Bich.................... Chairman of the Board and Chief Executive Officer since May 1993. Director since June 1986. Chairman of the Board and Chief Executive Officer of the Company since January 8, 1992. President and Chief Executive Officer of the Company from 1983 to 1992. Director of the Company since 1971. Citizen of France and the United States. Edouard Buffard............... Director since September 1954. Executive Vice President since September 1972. Claude Bich................... Director and Executive Vice President since June 1973. Francois Bich................. Director since September 1977. Executive Vice-President since May 1978. Marie-Aimee Bich-Dufour....... Executive Vice-President since March 1995. Member of the Paris Bar and practising avocat, Cabinet Vaisse Lardin et Associes, 51 avenue Montaigne, 75008 Paris, France, from January 1983 to February 1995. Jacques-Henri Delaage......... Chief Financial Officer for more than five years. Gaston Pirlot................. Director since May 1995. Director of European Affairs since January 1995. Chairman of the Board of Conte, 6 rue Gerhard Hansen, 62205 Boulogne, Sur Mer, France, since November 1992. Director of BIC BENELUX, Chaussee de Huecht, 55 1030 Bruxelles, Belgium, since March 1987. Citizen of Belgium. Jean-Claude d'Entreves........ Director of International Development since April 1995. Deputy Chief Executive Officer, September 1989 to May 1991. Chairman and Chief Executive Officer of BIC Italia, Casella Postale 13056, 20010 Milan, Italy, from May 1991 to March 1995. Citizen of Italy and the United Kingdom. Charles de Menthon............ Export Manager for more than five years.
DIRECTORS AND EXECUTIVE OFFICERS OF MERGECO Set forth below is the name of each person who is a director or executive officer of Mergeco. The present principal occupation or employment of each such person, their five year employment history, their citizenship and their business address is set forth above under "-- Directors and Executive Officers of Parent".
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT - ----------------------------------- -------------------------------------------------------- Bruno Bich......................... Director; President and Treasurer; Chief Executive Officer. Marie-Aimee Bich-Dufour............ Director; Vice President and Secretary. Gaston Pirlot...................... Director.
44 50 DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY Set forth below is the name and business address of each person who is a director or executive officer of the Company and, unless disclosed elsewhere herein, the present principal occupation or employment of each such person and the name, principal business and address of the corporation or other organization in which such occupation or employment of each such person is conducted and the material occupation, positions, offices and employment and the name, principal business and address of any corporation or other organization in which any material occupational position, office or employment of each such person was held during the last five years. Unless otherwise indicated, the business address of each such person is, and has been for the past five years, that of the Company at 500 BIC Drive, Milford, CT 06460. Unless otherwise indicated, each person listed below is a citizen of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND NAME FIVE-YEAR EMPLOYMENT HISTORY - ----------------------------------- -------------------------------------------------------- Alexander Alexiades................ Vice President and Treasurer from 1973 to March 1993. Director since 1971. Robert E. Allen.................... Managing Director with the consulting firm of Redding Consultants, Inc., 11 Grumman Hill, Wilton, CT, since 1982. Director since 1992. Bruno Bich......................... Chairman of the Board and Chief Executive Officer since 1992. President and Chief Executive Officer from 1983 to 1992. Director since 1971. Chairman of the Board and Chief Executive Officer of Societe BIC S.A. since June 1993. Director since 1986. Citizen of France and the United States. Al D'Addario....................... Vice President -- Manufacturing, since September 1993. Manager -- Manufacturing from January 1992 to September 1993. Plant Manager -- Lighter/Shaver from October 1991 to January 1992. Plant Manager -- Lighters from January 1989 to October 1991. David W. Heleniak.................. Partner with the law firm of Shearman & Sterling, 599 Lexington Avenue, New York, NY 10022 since 1981. Director since 1992. Thomas M. Kelleher................. General Counsel and Secretary since 1994. Corporate Counsel and Secretary from 1992 to 1994. Corporate Counsel and Assistant Secretary from 1988 to 1992. Robert L. Macdonald................ Vice President-Finance and Treasurer since 1993. Controller from 1990 to 1993. Citizen of the United Kingdom. Antoine G. Treuille................ Senior Vice President with the investment firm of Desai Capital Management, Inc., 540 Madison Avenue, New York, NY, since 1992. Executive Vice President with the investment firm of Entrecanales Inc., 767 Fifth Avenue, New York, NY, from 1985 to 1992. Director since 1992. Raymond Winter..................... President and Chief Operating Officer since 1992. Vice President -- Sales & Marketing from 1985 to 1986 and 1991 to 1992. President of BIC Inc., 155 Oakdale Rd., Downsview, Ontario, Canada, from 1986 to 1994. Director since 1992. Citizen of Canada.
45 51 INDEPENDENT PUBLIC ACCOUNTANTS The consolidated financial statements and schedules included in the Company's Annual Report on Form 10-K, incorporated by reference in this Proxy Statement, have been audited by Deloitte & Touche LLP, independent public accountants, as stated in their reports with respect thereto. It is expected that representatives of Deloitte & Touche LLP will be present at the Special Meeting, both to respond to appropriate questions of shareholders of the Company and to make a statement if they desire. SHAREHOLDER PROPOSALS Under the NYBCL and the By-Laws of the Company, no other business may be transacted at the Special Meeting. If the Merger is not for any reason consummated, then, in accordance with regulations issued by the SEC, shareholder proposals intended for presentation at the Company's 1996 annual meeting of shareholders must be received by the Secretary of the Company no later than , 1995, if such proposals are to be considered for inclusion in the Company's proxy statement. Proposals should be mailed via certified mail and addressed to Thomas M. Kelleher, General Counsel and Secretary, BIC Corporation, 500 BIC Drive, Milford CT 06460. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by the Company (File No. 001-06832) are incorporated by reference in this Proxy Statement: 1. The Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1995; 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended April 1, 1995 and July 2, 1995; and 3. The Company's Current Reports on Form 8-K filed on May 23, 1995 and August 21, 1995. All documents and reports filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy Statement and prior to the date of the Special Meeting shall be deemed to be incorporated by reference in this Proxy Statement and to be a part hereof from the respective dates of filing of such documents or reports. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Proxy Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Proxy Statement. THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE TO SUCH DOCUMENTS) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, ON WRITTEN OR ORAL REQUEST TO BIC CORPORATION, 500 BIC DRIVE, MILFORD, CONNECTICUT 06460, ATTENTION: THOMAS M. KELLEHER, GENERAL COUNSEL AND SECRETARY, TELEPHONE: (203) 783-2074. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL MEETING, REQUESTS MUST BE RECEIVED BY , 1995. 46 52 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith, files reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities of the SEC at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the SEC located at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material can also be obtained at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy statements and other information can be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. This Proxy Statement includes information required by the SEC to be disclosed pursuant to Rule 13e-3 under the Exchange Act, which governs so-called "going private" transactions by certain issuers or their affiliates. In accordance with that rule, the Company, Parent, Mergeco and Bruno Bich, as Voting Trustee, have filed with the Commission, under the Exchange Act, a Schedule 13E-3 with respect to the Merger. This Proxy Statement does not contain all of the information set forth in the Schedule 13E-3, parts of which are omitted in accordance with the regulations of the SEC. The Schedule 13E-3, and any amendments thereto, including exhibits files as a part thereof, will be available for inspection and copying at the offices of the SEC as set forth above. MISCELLANEOUS Where information contained in this Proxy Statement rests particularly within the knowledge of a person other than the Company, the Company has relied upon information furnished by such person or contained in filings made by such person with the SEC. By Order of the Board of Directors Thomas M. Kelleher General Counsel and Secretary 47 53 ANNEX A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER AMONG SOCIETE BIC, S.A. BIC MERGER CORPORATION, BRUNO BICH, as VOTING TRUSTEE AND BIC CORPORATION Dated as of August 15, 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 54 AGREEMENT AND PLAN OF MERGER TABLE OF CONTENTS (NOT PART OF THE AGREEMENT)
SECTION PAGE - ------- ---- PARTIES............................................................................ A-1 PREAMBLE........................................................................... A-1 ARTICLE I THE MERGER 1.1. The Merger.................................................................... A-1 1.2. Certificate of Incorporation.................................................. A-1 1.3. By-Laws....................................................................... A-1 1.4. Directors and Officers........................................................ A-2 1.5. Effective Time................................................................ A-2 ARTICLE II CONVERSION OF SHARES 2.1. Company Common Shares......................................................... A-2 2.2. Dissenting Shares............................................................. A-2 2.3. Purchaser Common Shares....................................................... A-3 2.4. Exchange of Shares............................................................ A-3 2.5. Employee Stock Plans.......................................................... A-4 2.6. Withholding Rights............................................................ A-4 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 3.1. Organization.................................................................. A-4 3.2. Capitalization................................................................ A-4 3.3. Authorization of this Agreement; Recommendation of Merger..................... A-5 3.4. Governmental Filings; No Conflicts............................................ A-5 3.5. Disclosure and Financial Statements; No Undisclosed Liabilities............... A-6 3.6. Vote Required................................................................. A-6 3.7. Opinion of Financial Advisor.................................................. A-6 3.8. Finders and Investment Bankers................................................ A-6 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGECO 4.1. Organization.................................................................. A-6 4.2. Capitalization................................................................ A-7 4.3. Authorization of this Agreement............................................... A-7 4.4. Governmental Filings; No Violations........................................... A-7 4.5. Financial Ability to Perform.................................................. A-8 4.6. Formation of Mergeco; No Prior Activities..................................... A-8 4.7. Finders and Investment Bankers................................................ A-8
i 55
SECTION PAGE - ------- ---- ARTICLE V COVENANTS 5.1. Conduct of the Business of the Company........................................ A-8 5.2. Activities of Mergeco; Shareholder Approval; Issuance of Mergeco Preferred Shares........................................................................ A-8 5.3. Obligations of Mergeco........................................................ A-8 5.4. Access to Information......................................................... A-9 5.5. Shareholders' Meeting......................................................... A-9 5.6. Proxy Statement and Schedule 13E-3............................................ A-9 5.7. Best Efforts.................................................................. A-10 5.8. Consents...................................................................... A-10 5.9. Public Announcements.......................................................... A-10 5.10. Indemnification............................................................... A-10 5.11. Transfer Taxes................................................................ A-11 ARTICLE VI CLOSING CONDITIONS 6.1. Conditions to the Obligations of Each Party................................... A-12 6.2. Conditions to the Obligations of Parent, Mergeco and the Voting Trustee....... A-12 6.3. Conditions to the Obligations of the Company.................................. A-12 ARTICLE VII CLOSING 7.1. Time and Place................................................................ A-13 7.2. Filings at the Closing........................................................ A-13 ARTICLE VIII TERMINATION AND ABANDONMENT 8.1. Termination................................................................... A-13 8.2. Procedure and Effect of Termination........................................... A-13 ARTICLE IX MISCELLANEOUS 9.1. Amendment and Modification.................................................... A-14 9.2. Waiver of Compliance; Consents................................................ A-14 9.3. Survival of Warranties........................................................ A-14 9.4. Notices....................................................................... A-15 9.5. Assignment; Parties in Interest............................................... A-15 9.6. Expenses...................................................................... A-16 9.7. Specific Performance.......................................................... A-16 9.8. Governing Law................................................................. A-16 9.9. Counterparts.................................................................. A-16 9.10. Interpretation................................................................ A-16 9.11. Entire Agreement.............................................................. A-16
ii 56 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of August 15, 1995, among Societe BIC S.A. ("Parent"), a societe anonyme organized under the laws of France, BIC Merger Corporation ("Mergeco"), a New York corporation more than two-thirds of the outstanding capital stock of which is owned by Parent, solely for purposes of Section 5.5 hereof, Bruno Bich, as voting trustee (the "Voting Trustee") under a voting trust agreement, dated as of February 5, 1991, as amended (the "Voting Trust Agreement"), among Parent, the Company (as hereinafter defined) and the voting trustees and certain shareholders of the Company named therein, and BIC Corporation, a New York corporation (the "Company"). WHEREAS, Parent and the other shareholders of Mergeco own an aggregate of approximately 78% of the shares of common stock, par value $1.00 per share (the "Common Shares") of the Company and have proposed to the Board of Directors of the Company that Parent acquire the remaining Common Shares (the "Public Shares; and the holders thereof; being referred to as the "Public Shareholders"); WHEREAS, the Board of Directors of each of Parent and Mergeco believes it is in the best interest of each of Parent and Mergeco and their respective shareholders, and the Board of Directors of the Company believes it is in the best interest of the Company and its shareholders, to consummate the merger of Mergeco with and into the Company (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement; WHEREAS, a Special Committee of the Board of Directors of the Company (the "Special Committee") has determined that the Merger is fair to, and in the best interests of, the Public Shareholders, and recommended the approval and adoption of this Agreement to the Board of Directors of the Company; and WHEREAS, the Boards of Directors (or equivalent governing bodies) of Parent, Mergeco and the Company have approved and adopted this Agreement and approved the Merger upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE MERGER 1.1. The Merger. (a) As promptly as practicable following the satisfaction or waiver of the conditions set forth in Article VI hereof, and in accordance with the provisions of this Agreement and the provisions of the New York Business Corporation Law (the "NYBCL"), the parties hereto shall cause Mergeco to be merged with and into the Company, and the Company shall be the surviving corporation (hereinafter sometimes called the "Surviving Corporation") and shall continue its corporate existence under the laws of the State of New York. At the Effective Time (as hereinafter defined), the separate corporate existence of Mergeco shall cease. (b) The Merger shall have the effects specified in the NYBCL. The Surviving Corporation shall possess all the rights, privileges, immunities, powers and purposes of Mergeco and the Company and shall assume and become liable for all the liabilities, obligations and penalties of the Company and Mergeco. 1.2. Certificate of Incorporation. The Certificate of Incorporation of the Company in effect immediately prior to the Effective Time shall be the Restated Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with provisions thereof and the NYBCL. 1.3. By-Laws. The By-Laws of the Company in effect immediately prior to the Effective Time shall be the By-Laws of the Surviving Corporation until thereafter amended, altered or repealed as provided therein and the NYBCL. A-1 57 1.4. Directors and Officers. The directors and officers of the Company immediately prior to the Effective Time shall be the directors and officers, respectively, of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and By-Laws of the Surviving Corporation. 1.5. Effective Time. As soon as practicable following the Closing (as defined in Section 7.1 of this Agreement), and provided that this Agreement shall not have been terminated pursuant to Article VIII hereof, the Company and Mergeco will cause a certificate of merger (the "Certificate of Merger"), together with any other documents required by law to effectuate the Merger, to be executed, verified and delivered for filing by the New York Department of State as provided in Section 904 of the NYBCL. The Merger shall become effective on the date on which the Certificate of Merger has been filed by the New York Department of State. The date and time when the Merger shall become effective is herein referred to as the "Effective Time." ARTICLE II CONVERSION OF SHARES 2.1. Company Common Shares. (a) Each Common Share issued and outstanding immediately prior to the Effective Time (except for (i) Common Shares then owned beneficially or of record by the shareholders of Mergeco, (ii) Dissenting Shares (as defined in Section 2.2 hereof) and (iii) Common Shares held in the Company's treasury) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive $40.50 in cash (such cash amount being referred to hereinafter as the "Merger Consideration"), payable to the holder thereof, without interest thereon, upon surrender of the certificate representing such Common Share. (b) Each Common Share issued and outstanding immediately prior to the Effective Time which is then owned beneficially or of record by the shareholders of Mergeco shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and retired and cease to exist, without any conversion thereof. (c) Each Common Share issued and held in the Company's treasury immediately prior to the Effective Time shall, by virtue of the Merger, be canceled and retired and cease to exist, without any conversion thereof. (d) At the Effective Time the holders of certificates representing Common Shares shall cease to have any rights as shareholders of the Company, except such rights, if any, as they may have pursuant to the NYBCL, and, except as aforesaid, their sole right shall be the right to receive cash as aforesaid. 2.2. Dissenting Shares. (a) Notwithstanding anything in this Agreement to the contrary, any Common Shares which are outstanding immediately prior to the Effective Time and which are held by shareholders who have not voted such shares in favor of the approval of the Merger and adoption of this Agreement and who shall have properly elected to dissent in the manner provided in Sections 623 and 910 of the NYBCL ("Dissenting Shares") shall not be converted into or be exchangeable for the right to receive the Merger Consideration, but the holders thereof shall be entitled to payment of the fair value of such shares in accordance with the provisions of Sections 623 and 910 of the NYBCL; provided, however, that in the case of (i) any holder of Dissenting Shares who shall subsequently deliver a written withdrawal of his election to dissent (in accordance with Section 623(e) of the NYBCL), or (ii) any holder who fails to establish his entitlement to dissenters' rights as provided in Sections 623 and 910 of the NYBCL, or (iii) any holder who shall, for any other reason, become ineligible to dissent, each Common Share held by any such holder shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without any interest thereon. (b) The Company shall give Parent (i) prompt written notice of any written election to dissent, withdrawals of any election to dissent and any other documents served pursuant to Sections 623 and 910 of the NYBCL received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to any election to dissent under Sections 623 and 910 of the NYBCL. Except with the prior written A-2 58 consent of Parent, the Company will not voluntarily make any payment with respect to any election to dissent and will not settle or offer to settle any such election. 2.3. Purchaser Common Shares. Each common share, par value $.001 per share (the "Mergeco Common Shares") and each preferred share, par value $.001 per share (the "Mergeco Preferred Shares"; and together with the Mergeco Common Shares; the "Mergeco Shares"), of Mergeco issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and exchangeable for one fully paid and non-assessable common share, par value $1.00 per share ("Surviving Corporation Common Shares"), of the Surviving Corporation. From and after the Effective Time, each outstanding certificate theretofore representing Mergeco Shares shall be deemed for all purposes to evidence ownership of and to represent the same number of Surviving Corporation Common Shares. 2.4. Exchange of Shares. (a) Prior to the Effective Time, Parent shall, or Parent shall cause Mergeco to, deposit in trust with a bank or trust company with offices in New York designated by Parent and reasonably satisfactory to the Company (the "Paying Agent"), cash in an aggregate amount equal to the product of (x) the number of Common Shares issued and outstanding immediately prior to the Effective Time (other than (i) Common Shares owned beneficially or of record by the shareholders of Mergeco, (ii) Dissenting Shares and (iii) Common Shares held in the Company's treasury) and (y) the Merger Consideration (such amount being hereinafter referred to as the "Exchange Fund"). The Paying Agent shall, pursuant to irrevocable instructions, make the payments provided for in Section 2.1(a) of this Agreement out of the Exchange Fund. The Paying Agent shall invest the Exchange Fund as Parent directs, in direct obligations of the United States of America, obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of all principal and interest, commercial paper obligations receiving the highest rating from either Moody's Investors Services, Inc. or Standard & Poor's Corporation, or certificates of deposit, bank repurchase agreements or banker's acceptances of commercial banks with capital exceeding $10 billion. Any net profit resulting from, or interest or income produced by, such investments shall be payable to the Surviving Corporation. Mergeco shall replace any monies lost through any investment made pursuant to this Section 2.4(a) prior to the Effective Time, and the Surviving Corporation shall replace any monies lost through any investment made pursuant to this Section 2.4(a) after the Effective Time. The Exchange Fund shall not be used for any other purpose except as provided in this Agreement. (b) Promptly after the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail to each record holder (other than the shareholders of Mergeco) as of the Effective Time of an outstanding certificate or certificates which immediately prior to the Effective Time represented Common Shares (the "Certificates") a form letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates for payment therefor. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor cash in an amount equal to the product of the number of shares represented by such Certificate and the Merger Consideration, less any applicable withholding tax, and such Certificate shall forthwith be canceled. No interest shall be paid or accrued on the cash payable upon the surrender of the Certificates. If payment is to be made to a person other than the person in whose name the Certificate surrendered is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other tax required by reason of the payment to a person other than the registered holder of the Certificate surrendered or establish to the satisfaction of the Paying Agent and the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 2.4, each Certificate (other than Certificates representing Common Shares owned beneficially or of record by the shareholders of Mergeco, Certificates representing Dissenting Shares in respect of which appraisal rights are perfected and Certificates representing Common Shares held in the Company's treasury) shall represent for all purposes the right to receive the Merger Consideration in cash multiplied by the number of Common Shares evidenced by such Certificate, without any interest thereon. A-3 59 (c) After the Effective Time there shall be no transfers on the stock transfer books of the Surviving Corporation of Common Shares which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation, they shall be canceled and exchanged for cash as provided in this Article II. (d) Any portion of the Exchange Fund which remains unclaimed by the shareholders of the Company for 180 days after the Effective Time (including any interest, dividends, earnings or distributions received with respect thereto) shall be repaid to the Surviving Corporation, upon demand. Any shareholders of the Company who have not theretofore complied with Section 2.4(b) shall thereafter look only to the Surviving Corporation for payment of their claim for the Merger Consideration per Common Share, without any interest thereon, but shall have no greater rights against the Surviving Corporation than may be accorded to general creditors of the Surviving Corporation under New York law. Notwithstanding the foregoing, neither the Paying Agent nor any party hereto shall be liable to any holder of Certificates formerly representing Common Shares for any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar law. 2.5. Employee Stock Plans. The Company shall take all actions necessary to amend the Company's Local 134 Employees' Share Purchase Plan, 401(k) Savings and Investment Plan and a separate, non-contributory 401(k) plan for certain unionized employees of the Company on or prior to the Closing to delete as an investment option thereunder purchases of Common Shares. 2.6. Withholding Rights. Parent, Mergeco, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the amounts payable (including the Merger Consideration) pursuant to this Agreement to any holder of Common Shares such amounts as Parent, Mergeco, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under applicable tax law. To the extent that amounts are so deducted and withheld by Parent, Mergeco, the Surviving Corporation or the Paying Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the relevant holder of Common Shares. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Mergeco as follows: 3.1. Organization. The Company and each of its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not, individually or in the aggregate, have a material adverse effect on the business, condition (financial or otherwise), properties or assets of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). 3.2. Capitalization. The authorized capital stock of the Company consists of (i) 50,000,000 Common Shares, of which, on August 10, 1995, there were 23,559,244 shares issued and outstanding and (ii) 1,000,000 shares of preferred stock, par value $1.00 per share, of which, on August 10, 1995, there were no shares issued and outstanding. All of the Common Shares are entitled to vote on matters submitted to the shareholders of the Company. Except as set forth above, there are no shares of capital stock of the Company authorized, issued or outstanding. All issued and outstanding Common Shares are duly authorized, validly issued, fully paid and nonassessable. Each of the Company's subsidiaries is listed in the Company's Annual Report on Form 10-K for the fiscal year ending January 1, 1995 (the "1994 Form 10-K"), and except as and to the extent set forth in the 1994 Form 10-K, the Company owns directly or indirectly all of the issued and outstanding capital stock of each of its subsidiaries, free and clear of all liens, pledges, security interests, claims or other encumbrances. There are not now, and at the Effective Time there will not be, any existing stock option or similar plans or options, warrants, calls, subscriptions, preemptive rights or other rights or other agreements or commitments whatsoever A-4 60 obligating the Company or any of its subsidiaries to issue, transfer, deliver or sell or cause to be issued, transferred, delivered or sold any additional shares of capital stock of the Company or any of its subsidiaries, or obligating the Company or any of its subsidiaries to grant, extend or enter into any such agreement or commitment. 3.3. Authorization of this Agreement; Recommendation of Merger. (a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and, subject to approval by the shareholders of the Company, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the Company's Board of Directors and, except for the adoption of this Agreement by the shareholders of the Company, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company, and subject only to adoption hereof by its shareholders (and assuming the due authorization, execution and delivery hereof by Parent, Mergeco and the Voting Trustee), this Agreement constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms. (b) The Board of Directors of the Company (at a meeting duly called and held at which a quorum was present) has determined that the Merger is fair to and in the best interests of the shareholders of the Company and has resolved to recommend approval of the Merger and adoption of this Agreement by the shareholders of the Company; provided, however, that such recommendation may be withdrawn, modified or amended to the extent the Company's Board of Directors deems it appropriate to do so in the exercise of its fiduciary duties under applicable law, based upon the advice of independent legal counsel (which may include the Company's regularly engaged legal counsel). (c) The Special Committee has determined that the Merger is fair to, and in the best interests of, the Public Shareholders, and has recommended the approval and adoption of this Agreement to the Board of Directors of the Company and to the Public Shareholders; provided, however, that such recommendation may be withdrawn, modified or amended to the extent that the Special Committee deems it appropriate to do so in the exercise of its fiduciary duties under applicable law, based upon the advice of legal counsel to the Special Committee. 3.4. Governmental Filings; No Conflicts. Except for (a) filings required under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) the filing and recordation of appropriate merger documents as required by the NYBCL and, if applicable, the laws of other states in which the Company is qualified to do business, (c) filings under securities or blue sky laws or takeover statutes of the various states, (d) the listing requirements of the New York Stock Exchange and (e) filings in connection with any applicable transfer or other taxes in any applicable jurisdiction, no filing with, and no permit, authorization, consent or approval of, any public body or authority is necessary for the consummation by the Company of the transactions contemplated by this Agreement, the failure to make or obtain which would have, individually or in the aggregate, a Material Adverse Effect or a material adverse effect on the ability of the Company to consummate the transactions contemplated hereby. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Company with any of the provisions hereof will (i) conflict with or result in any violation of any provision of the Restated Certificate of Incorporation or By-Laws of the Company, (ii) result in a violation or breach of, or constitute a default (or give rise to any right of termination, cancellation or acceleration) under, any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which the Company or any of its subsidiaries is a party or by which any of them or any of their properties or assets is bound or (iii) assuming the truth of the representations and warranties of Parent and Mergeco contained herein and their compliance with all agreements contained herein and assuming the due making or obtaining of all filings, permits, authorizations, consents and approvals referred to in the preceding sentence, violate any statute, rule, regulation, order, injunction, writ or decree of any public body or authority by which the Company or any of its subsidiaries or any of their respective assets or properties is bound, excluding from the foregoing clauses (ii) and (iii) conflicts, violations, breaches or defaults which, either individually or in the aggregate, would not A-5 61 have a Material Adverse Effect or a material adverse effect on the Company's ability to consummate the transactions contemplated hereby. 3.5. Disclosure and Financial Statements; No Undisclosed Liabilities. (a) As of the date of this Agreement, the Company has filed all forms, reports and documents with the Securities and Exchange Commission (the "SEC") since January 1, 1992, required to be filed by it pursuant to the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act") and the Exchange Act and the rules and regulations promulgated thereunder (collectively, the "Disclosure Statements"), all of which have complied in all material respects with all applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. As of the date of this Agreement, none of such Disclosure Statements, at the time filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date of this Agreement, the consolidated balance sheets and the related statements of consolidated income, consolidated cash flows and consolidated retained earnings (including the notes and schedules thereto) of the Company and its subsidiaries contained or incorporated by reference in the Disclosure Statements have been prepared from, and are in accordance with, the books and records of the Company and its consolidated subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and present fairly the consolidated financial position of the Company and its subsidiaries as of their respective dates, and the consolidated results of their operations and their cash flows for the periods presented therein, in conformity with United States generally accepted accounting principles ("GAAP") applied on a consistent basis, except as otherwise noted therein, and subject in the case of quarterly financial statements to normal year-end audit adjustments and except that the quarterly financial statements do not contain all of the footnote disclosures required by GAAP. (b) As of the date of this Agreement, there is no liability of the Company or any subsidiary thereof of any nature, whether absolute, accrued, contingent or otherwise, which, individually or in the aggregate, is material to the Company and its subsidiaries, taken as a whole, other than as disclosed in the Disclosure Statements or incurred in the ordinary course of business since the end of the first quarter of the Company's 1995 fiscal year. 3.6. Vote Required. The affirmative vote of the holders of two-thirds of the outstanding Common Shares is the only vote of the holders of any class or series of capital stock of the Company necessary to approve the Merger under the NYBCL. 3.7. Opinion of Financial Advisor. The Special Committee has received the opinion of Goldman, Sachs & Co. ("Goldman Sachs") dated August 15, 1995 that, as of the date of such opinion, the $40.50 per Common Share in cash to be received by the Public Shareholders pursuant to this Agreement is fair to the Public Shareholders. 3.8. Finders and Investment Bankers. All negotiations relating to this Agreement and the transactions contemplated hereby have been carried on without the intervention of any person acting on behalf of the Company in such manner as to give rise to any valid claim against Parent, Mergeco, the Company or the Surviving Corporation for any broker's or finder's fee or similar compensation, except for Goldman Sachs, whose fees shall be paid by the Company. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGECO Parent and Mergeco each jointly and severally represent and warrant to the Company as follows: 4.1. Organization. Each of Parent and Mergeco is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each has all requisite A-6 62 corporate power and authority to own, lease and operate its properties and to conduct its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not, individually or in the aggregate, have a material adverse effect on the business or financial condition of Parent and its subsidiaries taken as a whole. More than two-thirds of the outstanding Mergeco Shares are owned beneficially and of record by Parent. 4.2. Capitalization. The authorized capital stock of Mergeco on August 10, 1995 consisted of (i) 23,559,294 Mergeco Common Shares, of which there were 18,154,848 shares issued and outstanding, and (ii) 5,254,396 Mergeco Preferred Shares, of which there were no shares issued and outstanding. All of the Mergeco Common Shares are entitled to vote on matters submitted to the shareholders of Mergeco. Except as set forth above, there are no shares of capital stock of Mergeco authorized, issued or outstanding. All issued and outstanding Mergeco Common Shares are duly authorized, validly issued, fully paid and nonassessable. Except as provided in Section 5.2(c), there are not now, and, at the Effective Time there will not be, any existing stock option or similar plans or options, warrants, calls, subscriptions, preemptive rights or other rights or other agreements or commitments whatsoever obligating Mergeco or any of its subsidiaries to issue, transfer, deliver or sell or cause to be issued, transferred, delivered or sold any additional shares of capital stock of Mergeco, or obligating Mergeco to grant, extend or enter into any such agreement or commitment. 4.3. Authorization of this Agreement. (a) Each of Parent and Mergeco has all requisite corporate power and authority to execute and deliver this Agreement and, subject to approval by the shareholders of Mergeco, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the Boards of Directors (or equivalent governing bodies) of Parent and Mergeco, and, except for the adoption of this Agreement by the shareholders of Mergeco, no other corporate proceedings on the part of Parent or Mergeco are necessary to authorize this Agreement or, except as provided in Section 5.2(c), consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent and Mergeco and, in the case of Mergeco subject only to adoption hereof by its shareholders (assuming the due authorization, execution and delivery hereof by the Company) constitutes a valid and binding agreement of each of Parent and Mergeco. (b) The Voting Trustee has all requisite power and authority pursuant to the Voting Trust Agreement to execute and deliver this Agreement and to consummate the transactions on its part to be consummated that are contemplated hereby. The execution and delivery of this Agreement has been duly and validly authorized by the Voting Trustee pursuant to the Voting Trust Agreement, and no further action on the part of the Voting Trustee is necessary to authorize this Agreement or consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Voting Trustee and (assuming the due authorization, execution and delivery hereof by the other parties hereto) constitutes a valid and binding agreement of the Voting Trustee. 4.4. Governmental Filings; No Violations. Except for (a) filings required by the applicable requirements of the Exchange Act, (b) the filing and recordation of appropriate merger documents as required by the NYBCL, (c) filings under the securities or blue sky laws or takeover statutes of the various states and (d) filings in connection with any applicable transfer or other taxes in any applicable jurisdiction, no filing with, and no permit, authorization, consent or approval of, any public body or authority is necessary for the consummation by Parent, Mergeco or the Voting Trustee of the transactions contemplated by this Agreement, the failure to make or obtain which is reasonably likely to impair the ability of Parent, Mergeco or the Voting Trustee to perform their respective obligations hereunder or to consummate the transactions contemplated hereby. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by Parent, Mergeco or the Voting Trustee with any of the provisions hereof will (i) conflict with or result in any violation of any provision of the certificate of incorporation or by-laws (or equivalent governing instruments) of Parent or Mergeco, or the Voting Trust Agreement, (ii) result in a violation or breach of, or constitute a default (or give rise to any right of termination, cancellation or acceleration) under, any note, bond, mortgage, A-7 63 indenture, license, agreement or other instrument or obligation to which any of Parent, Mergeco or the Voting Trustee is a party, or by which it or any of its properties or assets is bound, or (iii) assuming the truth of the representations and warranties of the Company hereunder and its compliance with all agreements contained herein and assuming the due making or obtaining of all filings, permits, authorizations, consents and approvals referred to in the preceding sentence, violate any statute, rule, regulation, order, injunction, writ or decree of any public body or authority by which Parent, Mergeco or the Voting Trustee or any of their respective properties or assets is bound, excluding from the foregoing clauses (ii) and (iii) conflicts, violations, breaches or defaults which, either individually or in the aggregate, are not reasonably likely to impair materially the ability of Parent, Mergeco or the Voting Trustee to perform their respective obligations hereunder or to consummate the transactions contemplated hereby. 4.5. Financial Ability to Perform. Parent and Mergeco presently have, and at the Effective Time will have, cash funds available sufficient to consummate the transactions contemplated by this Agreement and to perform their respective obligations under this Agreement. 4.6. Formation of Mergeco; No Prior Activities. Mergeco was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. As of the date hereof and the Effective Time, except for obligations or liabilities incurred in connection with its incorporation or organization and the transactions contemplated by this Agreement and, except for this Agreement and any other agreements or arrangements contemplated by this Agreement or in furtherance of the transactions contemplated hereby, Mergeco has not and will not have incurred, directly or indirectly, through any subsidiary or affiliate, any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any person. 4.7. Finders and Investment Bankers. All negotiations relating to this Agreement and the transactions contemplated hereby have been carried on without the intervention of any person acting on behalf of Parent or Mergeco in such manner as to give rise to any valid claim against Parent, Mergeco, the Company or the Surviving Corporation for any broker's or finder's fee or similar compensation, except for Donaldson, Lufkin & Jenrette Securities Corporation, whose fees shall be paid by Parent. ARTICLE V COVENANTS 5.1. Conduct of the Business of the Company. During the period from the date of this Agreement to the Effective Time, neither the Company nor any of its subsidiaries will declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, or agree to do any of the foregoing; provided, that (a) if the Merger has not been consummated by December 31, 1995, the Board of Directors of the Company may after such date declare dividends in respect of its capital stock and (b) any of the Company's direct or indirect wholly-owned subsidiaries may declare, set aside or pay any dividend or other distribution with respect to their capital stock. 5.2. Activities of Mergeco; Shareholder Approval; Issuance of Mergeco Preferred Shares. (a) From the date of this Agreement to the Effective Time, Mergeco will not conduct any business or engage in any activities of any nature other than activities in connection with this Agreement or the transactions contemplated hereby. (b) As soon as practicable after the date hereof, Parent shall cause this Agreement to be approved by the requisite vote of the shareholders of Mergeco. (c) Prior to the Effective Time, Mergeco shall issue a number of voting Mergeco Shares equal to the number of Public Shares. 5.3. Obligations of Mergeco. Parent shall take all actions necessary to cause Mergeco to perform its obligations under this Agreement and to consummate the Merger in accordance with the terms and conditions set forth in this Agreement. A-8 64 5.4. Access to Information. Between the date of this Agreement and the Effective Time, during normal business hours, upon reasonable notice and in such a manner as will not unreasonably interfere with the conduct of the business of the Company, the Company will (i) give Parent and its authorized representatives reasonable access to all stores, offices, warehouses and other facilities and to all books and records of the Company and its subsidiaries, (ii) permit Parent and its authorized representatives to make such inspections as it may reasonably require and (iii) cause its officers and those of its subsidiaries to furnish Parent with a copy of each report, schedule and other document filed or received by it during such period pursuant to the requirements of federal and state securities laws and such financial and operating data and other information with respect to the business and properties of the Company and its subsidiaries as Parent may from time to time reasonably request. 5.5. Shareholders' Meeting. As soon as practicable, the Company, acting through its Board of Directors, shall in accordance with applicable law, and subject to the fiduciary duties under applicable law of the Board of Directors (as determined by the Board of Directors in good faith after consultation with independent legal counsel, which may include the Company's regularly engaged legal counsel), take all steps necessary duly to call, give notice of, convene and hold a special meeting of its shareholders (the "Shareholders' Meeting") for the purpose of adopting and approving this Agreement and the transactions contemplated hereby. The notice of such meeting shall contain the information required to be included therein pursuant to the NYBCL. At such meeting, the Voting Trustee will vote, or cause to be voted, all Common Shares then beneficially owned by him on the record date for such meeting, in favor of the approval of the Merger and adoption of this Agreement and the transactions contemplated hereby. 5.6. Proxy Statement and Schedule 13E-3. (a) The Company will as soon as practicable prepare and file with the SEC a proxy statement and a form of proxy, in connection with the vote of the Company's stockholders with respect to the Merger (such proxy statement, together with any amendments thereof or supplements thereto, in each case in the form or forms mailed to the Company's stockholders, being the "Proxy Statement"). The Company, Parent and Mergeco shall together prepare and file a Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") under the Exchange Act. Each of Parent, Mergeco and the Company shall furnish all information concerning it, its affiliates and the holders of its capital stock required to be included in the Proxy Statement and the Schedule 13E-3 and, after consultation with each other, shall respond promptly to any comments made by the SEC with respect to the Proxy Statement and any preliminary version thereof and the Schedule 13E-3. The Company shall cause the Proxy Statement to be mailed to its shareholders at the earliest practicable time. The Proxy Statement shall include the respective recommendations of the Company's Board of Directors to the shareholders of the Company and of the Special Committee to the Public Shareholders, subject to the fiduciary duties under applicable law of the directors of the Company or of the Company's directors constituting the Special Committee (as determined by such directors in good faith after consultation with independent legal counsel, which may include the Company's regularly engaged legal counsel), in favor of the adoption and approval of this Agreement and the transactions contemplated hereby. Subject to the fiduciary duties under applicable law of the Company's directors (as advised by independent legal counsel, which may include the Company's regularly engaged legal counsel), the Company shall use its best efforts to obtain the necessary approvals by its shareholders of this Agreement and the transactions contemplated hereby. Notwithstanding anything to the contrary in this Agreement, if the Board of Directors of the Company or the Special Committee determines, in good faith after consultation with independent legal counsel (which may include the Company's regularly engaged legal counsel) in the exercise of its fiduciary duties under applicable law, to withdraw, modify or amend its recommendation in favor of the Merger, such withdrawal, modification or amendment shall not constitute a breach of this Agreement. (b) The information supplied by the Company for inclusion in the Proxy Statement or the Schedule 13E-3 shall not, at the time the Proxy Statement is mailed, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or, at the time of the Shareholders' Meeting, as then amended or supplemented, or at the Effective Time, omit to state any material fact necessary to correct any statement originally supplied by the Company for inclusion in the Proxy Statement or the Schedule 13E-3 which has become false or misleading. If at any time prior to the Effective A-9 65 Time any event relating to the Company or any of its affiliates, or its, or its affiliates', respective officers, directors or stockholders, should be discovered which should be set forth in an amendment of, or a supplement to, such Proxy Statement or Schedule 13E-3, the Company shall promptly so inform Parent and Mergeco and will furnish all necessary information to Parent and Mergeco relating to such event. All documents that the Company is responsible for filing with the SEC in connection with the transactions contemplated by this Agreement shall comply in all material respects, both as to form and otherwise, with the Exchange Act and the rules and regulations thereunder. (c) The information supplied or to be supplied by Parent or Mergeco for inclusion in the Proxy Statement or the Schedule 13E-3 shall not, at the time the Proxy Statement is mailed, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or, at the time of the Shareholders' Meeting, as then amended or supplemented, or at the Effective Time, omit to state any material fact necessary to correct any statement originally supplied by Parent or Mergeco for inclusion in the Proxy Statement or the Schedule 13E-3 which has become false or misleading. If at any time prior to the Effective Time any event relating to Parent or Mergeco or any of their respective affiliates, or their, or their affiliates', respective officers, directors or stockholders should be discovered which should be set forth in an amendment of, or a supplement to, such Proxy Statement or Schedule 13E-3, Parent or Mergeco, as the case may be, shall promptly so inform the Company and will furnish all necessary information to the Company relating to such event. All documents that Parent and Mergeco are responsible for filing with the SEC in connection with the transactions contemplated by this Agreement shall comply in all material respects, both as to form and otherwise, with the Exchange Act and the rules and regulations thereunder. 5.7. Best Efforts. Subject to the terms and conditions herein provided and the fiduciary duties under applicable law of the directors of the Company or of the Company's directors constituting the Special Committee (as determined by such directors in good faith after consultation with independent legal counsel, which may include the Company's regularly engaged legal counsel), each of the parties hereto agrees to use its best efforts consistent with applicable legal requirements to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary or proper and advisable under applicable laws and regulations to ensure that the conditions set forth in Article VI hereof are satisfied and to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 5.8. Consents. Parent, Mergeco and the Company each shall use their best efforts to obtain all material consents of third parties and governmental authorities, and to make all governmental filings, necessary to the consummation of the transactions contemplated by this Agreement. 5.9. Public Announcements. Parent, Mergeco and the Company will consult with each other before issuing any press release or otherwise making any public statements with respect to the Merger, this Agreement and the transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or by obligations pursuant to any listing agreement with any securities exchange. 5.10. Indemnification. (a) For a period of six years after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, indemnify, defend and hold harmless the present and former officers, directors, employees and agents of the Company and its subsidiaries (collectively, the "Indemnified Parties") from and against, and pay or reimburse the Indemnified Parties for, all losses, obligations, expenses, claims, damages or liabilities (whether or not resulting from third-party claims and including interest, penalties, out- of-pocket expenses and attorneys' fees incurred in the investigation or defense of any of the same or in asserting any of their rights hereunder) resulting from or arising out of actions or omissions occurring on or prior to the Effective Time (including, without limitation, the transactions contemplated by this Agreement) to the full extent permitted or required under applicable law and, in the case of indemnification by the Surviving Corporation, to the fullest extent permitted under the By-Laws of the Company in effect on the date of this Agreement (which provisions shall not be amended in any manner which adversely affects any Indemnified Party for a period of six years), including provisions relating to advances of expenses incurred in A-10 66 the defense of any action or suit; provided that in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification in respect of each such claim shall continue until final disposition of such claim. Without limiting the foregoing, in any case in which approval by the Surviving Corporation is required to effectuate any indemnification, Parent shall cause the Surviving Corporation to direct, at the election of the Indemnified Party, that the determination of any such approval shall be made by independent counsel selected by the Indemnified Party. (b) For not less than four years after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, maintain in effect directors' and officers' liability insurance covering the Indemnified Parties who are currently covered by the Company's existing directors' and officers' liability insurance, on terms and conditions no less favorable to such directors and officers than those in effect on the date hereof; provided that in no event shall Parent or the Surviving Corporation be required to expend in any one year an amount in excess of 200% of the annual premiums currently paid by the Company for such insurance; and, provided, further, that if the annual premiums of such insurance coverage exceed such amount, the Parent shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount. (c) Any Indemnified Party wishing to claim indemnification under Section 5.10(a) shall provide notice to Parent promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit Parent (at Parent's expense) to assume the defense of any claim or any litigation resulting therefrom; provided that (i) counsel for Parent who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, and the Indemnified Party may participate in such defense at such Indemnified Party's expense, and (ii) the omission by any Indemnified Party to give notice as provided herein shall not relieve Parent of its indemnification obligation under this Agreement except to the extent that such omission results in a failure of actual notice to Parent and Parent is materially damaged as a result of such failure to give notice. Parent shall not, in the defense of any such claim or litigation, except with the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. In the event that Parent does not accept the defense of any matter as above provided, or counsel for the Indemnified Parties advises that there are issues which raise conflicts of interest between Parent or the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and Parent or the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided that Parent shall not be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld). In any event, Parent and the Indemnified Parties shall cooperate in the defense of any action or claim subject to this Section 5.10 and the records of each shall be available to the other with respect to such defense. (d) This Section 5.10 is intended for the benefit of and to grant third party rights to the Indemnified Parties whether or not parties to this Agreement and each of the Indemnified Parties shall be entitled to enforce the covenants contained herein. (e) If Parent or the Surviving Corporation or any of their respective successors or assigns (i) reorganizes or consolidates with or merges into any other person and is not the resulting, continuing or surviving corporation or entity of such reorganization, consolidation or merger, or (ii) liquidates, dissolves or transfers all or substantially all of its properties and assets to any person or persons, then, and in such case, proper provision will be made so that the successors and assigns of Parent or the Surviving Corporation assumes all of the obligations of Parent or the Surviving Corporation, as the case may be, set forth in this Section 5.10. 5.11. Transfer Taxes. The Surviving Corporation shall pay any transfer taxes (including any interest and penalties thereon and additions thereto) payable in connection with the Merger and shall be responsible for the preparation and filing of any required tax returns, declarations, reports, schedules, terms and information returns with respect to such transfer taxes. A-11 67 ARTICLE VI CLOSING CONDITIONS 6.1. Conditions to the Obligations of Each Party. The respective obligations of each party hereto to effect the Merger shall be subject to the satisfaction or waiver, at or prior to the Effective Time, of the following conditions: (a) the proposal to approve this Agreement at the Shareholder's Meeting shall have received the affirmative vote of the holders of at least a majority of the Public Shares actually voted, in person or by proxy, on such proposal (excluding abstentions); (b) there shall not have occurred (i) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or France or (ii) a commencement of a war, armed hostilities or other international or national calamity directly involving the United States or France which has a material adverse effect on the general economic conditions in the United States or France (other than the commencement of war or armed hostilities in the Republic of Bosnia-Herzegovina); (c) no statute, rule, regulation, temporary, preliminary or permanent order or injunction shall have been promulgated, enacted, entered, enforced or deemed applicable to the Merger or performance under this Agreement, by any state, federal or foreign government or governmental authority or court or governmental agency of competent jurisdiction and remain in effect that (i) prohibits the consummation of the Merger or (ii) imposes material limitations on the ability of the shareholders of Mergeco effectively to exercise full rights of ownership with respect to the Common Shares; provided, however, that the provisions of this Section 6.1(c) shall not be a condition to the obligations of any party that has directly or indirectly solicited or encouraged any such governmental or judicial action; and (d) this Agreement shall have been approved and adopted by the affirmative vote of the holders of the requisite number of Common Shares in accordance with the Restated Certificate of Incorporation and By-Laws of the Company and the NYBCL. 6.2. Conditions to the Obligations of Parent, Mergeco and the Voting Trustee. The obligations of Parent, Mergeco and the Voting Trustee pursuant to this Agreement to consummate the Merger are also subject to the satisfaction or waiver, at or prior to the Effective Time, of the following additional conditions: (a) the representations and warranties of the Company contained herein shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) as of the date of this Agreement and as of the Closing with the same effect as though all such representations and warranties had been made as of the Closing, except (x) for any such representations and warranties made as of a specified date, which shall be true and correct as of such date, or (y) as expressly contemplated by this Agreement, and Parent shall have received from the Company's President and Chief Operating Officer an officer's certificate to this effect; and (b) each and all of the covenants and agreements of the Company to be performed and complied with pursuant to this Agreement prior to the Closing shall have been duly performed and complied with in all material respects, and Parent shall have received from the Company's President and Chief Operating Officer an officer's certificate to this effect. 6.3. Conditions to the Obligations of the Company. The obligation of the Company pursuant to this Agreement to consummate the Merger is also subject to the satisfaction or waiver, at or prior to the Effective Time, of the following additional conditions: (a) the representations and warranties of Parent and Mergeco contained herein shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) as of the date of this Agreement and as of the Closing with the same effect as though all such representations and warranties had been made as of the Closing, except (x) for any such A-12 68 representations and warranties made as of a specified date, which shall be true and correct as of such date, and (y) as expressly contemplated by this Agreement, and the Company shall have received from Parent and Mergeco officers' certificates to this effect; and (b) each and all of the covenants and agreements of Parent and Mergeco to be performed and complied with pursuant to this Agreement prior to the Closing shall have been duly performed and complied with in all material respects, and the Company shall have received from the Parent and Mergeco officers' certificates to this effect. ARTICLE VII CLOSING 7.1. Time and Place. The closing of the Merger (the "Closing") shall take place at the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New York, as soon as practicable following satisfaction or waiver of the conditions set forth in Article VI. The date on which the Closing actually occurs is herein referred to as the "Closing Date." 7.2. Filings at the Closing. At the Closing, Parent, Mergeco and the Company shall cause the Certificate of Merger, together with any other documents required by law to effectuate the Merger, to be executed, verified and delivered for filing by the New York Department of State as provided by Section 904 of the NYBCL, and shall take any and all other lawful actions and do any and all other lawful things necessary to cause the Merger to become effective. ARTICLE VIII TERMINATION AND ABANDONMENT 8.1. Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval by the shareholders of the Company: (a) by mutual consent of the respective Boards of Directors (or equivalent governing bodies) of Parent and Mergeco and the Board of Directors of the Company; provided, however, that any termination of this Agreement pursuant to this Section 8.1(a) shall require the approval of the Special Committee; (b) by action of either the respective Boards of Directors (or equivalent governing bodies) of Parent and Mergeco or the Board of Directors of the Company if, without the fault of the terminating party, the Merger has not been consummated on or prior to January 31, 1996; (c) by action of the respective Boards of Directors (or equivalent governing bodies) of Parent and Mergeco, if the Board of Directors of the Company shall have withdrawn or modified in a manner adverse to Mergeco its approval or recommendation of the Merger, this Agreement or the transactions contemplated hereby; or (d) by action of either of the respective Boards of Directors (or equivalent governing bodies) of Parent and Mergeco or the Board of Directors of the Company, if any court of competent jurisdiction in the United States or other governmental agency of competent jurisdiction shall have issued an order, decree or ruling or taken any other action restraining, permanently enjoining or otherwise prohibiting the Merger, and such order, decree, ruling or other action shall have become final and non-appealable. 8.2. Procedure and Effect of Termination. In the event of termination and abandonment of the Merger by either Parent and Mergeco or the Company pursuant to Section 8.1, written notice thereof shall forthwith be given to the others, and this Agreement shall terminate and the Merger shall be abandoned, without further action by any of the parties hereto. Mergeco agrees that any termination by Parent shall be conclusively binding upon it, whether given expressly on its behalf or not, and the Company shall have no further obligation with respect to it. If this Agreement is terminated as provided herein, no party hereto shall have any liability or further obligation to any other party to this Agreement, provided that any termination shall be without A-13 69 prejudice to the rights of any party hereto arising out of a breach by any other party of any covenant or agreement contained in this Agreement, and provided, further, that the obligations set forth in this Section 8.2 and Sections 3.8, 4.7, 9.6 and 9.8 shall in any event survive any termination. ARTICLE IX MISCELLANEOUS 9.1. Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of Parent, Mergeco, the Voting Trustee and the Company at any time prior to the Effective Time with respect to any of the terms contained herein, provided, that (a) after this Agreement is adopted by the Company's shareholders pursuant to Section 5.5, no such amendment or modification shall be made that reduces the amount or changes the form of the Merger Consideration or otherwise materially and adversely affects the rights of the Public Shareholders hereunder, without the further approval of the holders of at least a majority of the Public Shares actually voted, in person or by proxy, on such proposal (excluding abstentions) and (b) the approval of the Special Committee shall be required for any amendment or modification of this Agreement, any extension by the Company of the time for the performance of any obligations or other acts of Parent or Mergeco and any waiver of any of the Company's rights under this Agreement. 9.2. Waiver of Compliance; Consents. Any failure of Parent, Mergeco or the Voting Trustee, on the one hand, or the Company, on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by the Company or Parent, respectively, only by a written instrument signed by the party granting such waiver (and if required pursuant to Section 9.1(b), by the Special Committee), but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 9.2. Mergeco hereby agrees that any consent or waiver of compliance given by Parent hereunder shall be conclusively binding upon it, whether given expressly on its behalf or not. 9.3. Survival of Warranties. Each and every representation and warranty made in this Agreement shall expire with, and be terminated and extinguished by, the Merger, or the termination of this Agreement pursuant to Section 8.1. This Section 9.3 shall have no effect upon any other obligation of the parties hereto, whether to be performed before or after the Closing. A-14 70 9.4. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if (a) delivered personally or by overnight courier, (b) mailed by registered or certified mail, return receipt requested, postage prepaid, or (c) transmitted by telecopy, and in each case, addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice; provided that notices of a change of address shall be effective only upon receipt thereof): (a) if to the Parent, Mergeco or the Voting Trustee, to Societe BIC S.A. 9, Rue Petit 92110 Clichy France Telecopy: 011-331-45-19-52-04 Attention: Bruno Bich President Directeur General with a copy to Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Telecopy: 212-909-6836 Attention: Andrew L. Sommer, Esq. (b) if to the Company, to BIC Corporation 500 BIC Drive Milford, Connecticut 06460 Telecopy: 203-783-2108 Attention: Thomas M. Kelleher, Esq. General Counsel and Secretary with a copy to Special Committee of the Board of Directors of BIC Corporation c/o Robert E. Allen Redding Consultants, Inc. 11 Grumman Hill Wilton, Connecticut 06897 Telecopy: 203-762-1185 and to Shearman & Sterling Counsel to the Special Committee of the Board of Directors of BIC Corporation 599 Lexington Avenue New York, New York 10022 Telecopy: 212-848-7179 Attention: Peter Lyons, Esq. Any notice so addressed shall be deemed to be given (x) three business days after being mailed by first-class, registered or certified mail, return receipt requested, postage prepaid and (y) upon delivery, if transmitted by hand delivery, overnight courier or telecopy. 9.5. Assignment; Parties in Interest. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the A-15 71 parties hereto without the prior written consent of the other parties. Except for Section 5.10, which is intended for the benefit of the Indemnified Parties, this Agreement is not intended to confer upon any other person except the parties any rights or remedies under or by reason of this Agreement. 9.6. Expenses. Whether or not the Merger is consummated, all costs and expenses incurred in connection with the Offer, this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses; provided, however, that the allocable share of each of Parent and the Company for all expenses related to printing, filing and mailing the Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Proxy Statement and the Schedule 13E-3 shall be one-half. 9.7. Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. 9.8. Governing Law. This Agreement shall be governed by the laws of the State of New York (regardless of the laws that might otherwise govern under applicable principles of conflicts of law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. 9.9. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.10. Interpretation. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. As used in this Agreement, (i) the term "person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof; (ii) the terms "affiliate" and "associate" shall have the meanings set forth in Rule 12b-2 of the General Rules and Regulations promulgated under the Exchange Act; and (iii) the term "subsidiary" of any specified corporation shall mean any corporation of which the outstanding securities having ordinary voting power to elect a majority of the board of directors are directly or indirectly owned by such specified corporation. 9.11. Entire Agreement. This Agreement, including the schedules hereto, embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements and the understandings between the parties with respect to such subject matter. A-16 72 IN WITNESS WHEREOF, Parent, Mergeco, the Voting Trustee and the Company have caused this Agreement to be signed, by their respective duly authorized officers or directly, as of the date first above written. SOCIETE BIC S.A. By /s/ Bruno Bich ------------------------------------ Name: Bruno Bich Title: President Directeur General BIC MERGER CORPORATION By /s/ Bruno Bich ------------------------------------ Name: Bruno Bich Title: President BIC CORPORATION By /s/ Raymond Winter ------------------------------------ Name: Raymond Winter Title: President and Chief Operating Officer Solely for purposes of Section 5.5: VOTING TRUSTEE By /s/ Bruno Bich ----------------------------------- Name: Bruno Bich A-17 73 DRAFT ANNEX B [FORM OF GOLDMAN, SACHS & CO. OPINION] PERSONAL AND CONFIDENTIAL Special Committee of the Board of Directors BIC Corporation 500 BIC Drive Milford, CT 06460 Gentlemen: You have requested our opinion as to the fairness to the holders, other than Societe BIC SA ("Societe) and the other stockholders of BIC Merger Corporation ("Mergeco"), of the outstanding shares of Common Stock, par value $1.00 per share (the "Common Shares"), of BIC Corporation (the "Company") of the $40.50 per Common Share in cash to be received by such holders (the "Public Shareholders") pursuant to the Agreement and Plan of Merger dated as of August 15, 1995, among Societe, Mergeco, Bruno Bich, as Voting Trustee, and the Company (the "Agreement"). Goldman, Sachs & Co., as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. We are familiar with the Company having acted as the financial advisor to the Special Committee of the Board of Directors of the Company in connection with, and having participated in certain of the negotiations leading to, the Agreement. In connection with this opinion, we have reviewed, among other things, the Agreement; the Annual Reports to Stockholders and Annual Reports on Form 10-K of the Company for the five years ended December 31, 1994; certain interim reports to stockholders and Quarterly Reports on Form 10-Q; certain other communications from the Company to its stockholders; and certain internal financial analyses and forecasts for the Company prepared by its management. We also have held discussions with members of the senior management of the Company and of Societe regarding the Company's past and current business operations, financial condition and future prospects. In addition, we have reviewed the reported price and trading activity for the Common Shares, compared certain financial and stock market information for the Company with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations, and performed such other studies and analyses as we considered appropriate. We have relied without independent verification upon the accuracy and completeness of all of the financial and other information reviewed by us for purposes of this opinion. In that regard, with respect to certain financial forecasts for the Company provided to us by senior management of the Company for purposes of our analysis in connection with this opinion, which you have instructed us to use for the purposes of our analysis, we have assumed that such forecasts have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Company's senior management as to the future financial performance of the Company. In addition, we have not made an independent evaluation or appraisal of the assets and liabilities of the Company or any of its subsidiaries and we have not been furnished with any such evaluation or appraisal. We have relied, with your permission, on statements made by management of Societe indicating that Societe would not consent to a transaction involving a sale or recapitalization of the Company and we were not requested or authorized to solicit, and did not solicit, interest from any party with respect to an acquisition of the outstanding Common Shares, the Company or its constituent businesses. Finally, we have been informed by Societe, and have relied with your permission on such information, that Societe does not B-1 74 intend to pursue a sale or recapitalization of the Company or its subsidiaries after consummating the merger pursuant to the Agreement. Based upon and subject to the foregoing and based on such other matters as we consider relevant, it is our opinion that as of the date hereof the $40.50 per Common Share in cash to be received by the Public Shareholders pursuant to the Agreement is fair to the Public Shareholders. Very truly yours, B-2 75 ANNEX C SEC. 623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES (a) A shareholder intending to enforce his right under a section of this chapter to receive payment for his shares if the proposed corporate action referred to the rein is taken shall file with the corporation, before the meeting of shareholders at which the action is submitted to a vote, or at such meeting but before the vote, written objection to the action. The objection shall include a notice of his election to dissent, his name and residence address, the number and classes of shares as to which he dissents and a demand for payment of the fair value of his shares if the action is taken. Such objection is not required from any shareholder to whom the corporation did not give notice of such meeting in accordance with this chapter or where the proposed action is authorized by written consent of shareholders without a meeting. (b) Within ten days after the shareholders' authorization date, which term as used in this section means the date on which the shareholders' vote authorizing such action was taken, or the date on which such consent without a meeting was obtained from the requisite shareholders, the corporation shall give written notice of such authorization or consent by registered mail to each shareholder who filed written objection or from whom written objection was not required, excepting any shareholder who voted for or consented in writing to the proposed action and who thereby is deemed to have elected not to enforce his right to receive payment for his shares. (c) Within twenty days after the giving of notice to him, any shareholder from whom written objection was not required and who elects to dissent shall file with the corporation a written notice of such election, stating his name and residence address, the number and classes of shares as to which he dissents and a demand for payment of the fair value of his shares. Any shareholder who elects to dissent from a merger under section 905 (Merger of subsidiary corporation) or paragraph (c) of section 907 (Merger or consolidation of domestic and foreign corporations) or from a share exchange under paragraph (g) of section 913 (Share exchanges) shall file a written notice of such election to dissent within twenty days after the giving to him of a copy of the plan of merger or exchange or an outline of the material features thereof under section 905 or 913. (d) A shareholder may not dissent as to less than all of the shares, as to which he has a right to dissent, held by him of record, that he owns beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial owner as to less than all of the shares of such owner, as to which such nominee or fiduciary has a right to dissent, held of record by such nominee or fiduciary. (e) Upon consummation of the corporate action, the shareholder shall cease to have any of the rights of a shareholder except the right to be paid the fair value of his shares and any) other rights under this section. A notice of election may be withdrawn by the shareholder at any time prior to his acceptance in writing of an offer made by the corporation, as provided in paragraph (g), but in no case later than sixty days from the date of consummation of the corporate action except that if the corporation fails to make a timely offer, as provided in paragraph (g), the time for withdrawing a notice of election shall be extended until sixty days from the date an offer is made. Upon expiration of such time, withdrawal of a notice of election shall require the written consent of the corporation. In order to be effective, withdrawal of a notice of election must be accompanied by the return to the corporation of any advance payment made to the shareholder as provided in paragraph (g). If a notice of election is withdrawn, or the corporate action is rescinded, or a court shall determine that the shareholder is not entitled to receive payment for his shares, or the shareholder shall otherwise lose his dissenter's rights, he shall not have the right to receive payment for his shares and he shall be reinstated to all his rights as a shareholder as of the consummation of the corporate action, including any intervening preemptive rights and the right to payment of any intervening dividend or other distribution or, if any such rights have expired or any such dividend or distribution other than in cash has been completed, in lieu thereof, at the election of the corporation, the fair value thereof in cash as determined by the board as of the time of such expiration or completion, but without prejudice otherwise to any corporate proceedings that may have been taken in the interim. (f) At the time of filing the notice of election to dissent or within one month thereafter the shareholder of shares represented by certificates shall submit the certificates representing his shares to the corporation, or C-1 76 to its transfer agent, which shall forthwith note conspicuously thereon that a notice of election has been filed and shall return the certificates to the shareholder or other person who submitted them on his behalf. Any shareholder of shares represented by certificates who fails to submit his certificates for such notation as herein specified shall, at the option of the corporation exercised by written notice to him within forty-five days from the date of filing of such notice of election to dissent, lose his dissenter's rights unless a court, for good cause shown, shall otherwise direct. Upon transfer of a certificate bearing such notation, each new certificate issued therefor shall bear a similar notation together with the name of the original dissenting holder of the shares and a transferee shall acquire no rights in the corporation except those which the original dissenting shareholder had at the time of transfer. (g) Within fifteen days after the expiration of the period within which shareholders may file their notices of election to dissent, or within fifteen days after the proposed corporate action is consummated, whichever is later (but in no case later than ninety days from the shareholders' authorization date), the corporation or, in the case of a merger or consolidation, the surviving or new corporation, shall make a written offer by registered mail to each shareholder who has filed such notice of election to pay for his shares at a specified price which the corporation considers to be their fair value. Such offer shall be accompanied by a statement setting forth the aggregate number of shares with respect to which notices of election to dissent have been received and the aggregate number of holders of such shares. If the corporate action has been consummated, such offer shall also be accompanied by (1) advance payment to each such shareholder who has submitted the certificates representing his shares to the corporation, as provided in paragraph (f), of an amount equal to eighty percent of the amount of such offer, or (2) as to each shareholder who has not yet submitted his certificates a statement that advance payment to him of an amount equal to eighty percent of the amount of such offer will be made by the corporation promptly upon submission of his certificates. If the corporate action has not been consummated at the time of the making of the offer, such advance payment or statement as to advance payment shall be sent to each shareholder entitled thereto forthwith upon consummation of the corporate action. Every advance payment or statement as to advance payment shall include advice to the shareholder to the effect that acceptance of such payment does not constitute a waiver of any dissenters' rights. If the corporate action has not been consummated upon the expiration of the ninety day period after the shareholders' authorization date, the offer may be conditioned upon the consummation of such action. Such offer shall be made at the same price per share to all dissenting shareholders of the same class, or if divided into series, of the same series and shall be accompanied by a balance sheet of the corporation whose shares the dissenting shareholder holds as of the latest available date, which shall not be earlier than twelve months before the making of such offer, and a profit and loss statement or statements for not less than a twelve month period ended on the date of such balance sheet or, if the corporation was not in existence throughout such twelve month period, for the portion thereof during which it was in existence. Notwithstanding the foregoing, the corporation shall not be required to furnish a balance sheet or profit and loss statement or statements to any shareholder to whom such balance sheet or profit and loss statement or statements were previously furnished, nor if in connection with obtaining the shareholders' authorization for consent to the proposed corporate action the shareholders were furnished with a proxy or information statement, which included financial statements, pursuant to Regulation 14A or Regulation 14C of the United States Securities and Exchange Commission. If within thirty days after the making of such offer, the corporation making the offer and any shareholder agree upon the price to be paid for his shares, payment therefor shall be made within sixty days after the making of such offer or the consummation of the proposed corporate action, whichever is later, upon the surrender of the certificates for any such shares represented by certificates. (h) The following procedure shall apply if the corporation fails to make such offer within such period of fifteen days, or if it makes the offer and any dissenting shareholder or shareholders fail to agree with it within the period of thirty days thereafter upon the price to be paid for their shares: (1) The corporation shall, within twenty days after the expiration of whichever is applicable of the two periods last mentioned, institute a special proceeding in the supreme court in the judicial district in which the office of the corporation is located to determine the rights of dissenting shareholders and to fix the fair value of their shares. If, in the case of merger or consolidation, the surviving or new corporation is C-2 77 a foreign corporation without an office in this state, such proceeding shall be brought in the county where the office of the domestic corporation, whose shares are to be valued, was located. (2) If the corporation fails to institute such proceeding within such period of twenty days, any dissenting shareholder may institute such proceeding for the same purpose not later than thirty days after the expiration of such twenty day period. If such proceeding is not instituted within such thirty day period, all dissenter's rights shall be lost unless the supreme court, for good cause shown, shall otherwise direct. (3) All dissenting shareholders, excepting those who, as provided in paragraph (g), have agreed with the corporation upon the price to be paid for their shares, shall be made parties to such proceeding, which shall have the effect of an action quasi in rem against their shares. The corporation shall serve a copy of the petition in such proceeding upon each dissenting shareholder who is a resident of this state in the manner provided by law for the service of a summons, and upon each nonresident dissenting shareholder either by registered mail and publication, or in such other manner as is permitted by law. The jurisdiction of the court shall be plenary and exclusive. (4) The court shall determine whether each dissenting shareholder, as to whom the corporation requests the court to make such determination, is entitled to receive payment for his shares. If the corporation does not request any such determination or if the court finds that any dissenting shareholder is so entitled, it shall proceed to fix the value of the shares, which, for the purposes of this section, shall be the fair value as of the close of business on the day prior to the shareholders' authorization date. In fixing the fair value of the shares, the court shall consider the nature of the transaction giving rise to the shareholder's right to receive payment for shares and its effects on the corporation and its shareholders, the concepts and methods then customary in the relevant securities and financial markets for determining fair value of shares of a corporation engaging in a similar transaction under comparable circumstances and all other relevant factors. The court shall determine the fair value of the shares without a jury and without referral to an appraiser or referee. Upon application by the corporation or by any shareholder who is a party to the proceeding, the court may, in its discretion, permit pretrial disclosure, including, but not limited to, disclosure of any expert's reports relating to the fair value of the shares whether or not intended for use at the trial in the proceeding and notwithstanding subdivision (d) of section 3101 of the civil practice law and rules. (5) The final order in the proceeding shall be entered against the corporation in favor of each dissenting shareholder who is a party to the proceeding and is entitled thereto for the value of his shares so determined. (6) The final order shall include an allowance for interest at such rate as the court finds to be equitable, from the date the corporate action was consummated to the date of payment. In determining the rate of interest, the court shall consider all relevant factors, including the rate of interest which the corporation would have had to pay to borrow money during the pendency of the proceeding. If the court finds that the refusal of any shareholder to accept the corporate offer of payment for his shares was arbitrary, vexatious or otherwise not in good faith, no interest shall be allowed to him. (7) Each party to such proceeding shall bear its own costs and expenses, including, the fees and expenses of its counsel and of any experts employed by it. Notwithstanding the foregoing, the court may, in its discretion, apportion and assess all or any part of the costs, expenses and fees incurred by the corporation against any or all of the dissenting shareholders who are parties to the proceeding, including any who have withdrawn their notices of election as provided in paragraph (e), if the court finds that their refusal to accept the corporate offer was arbitrary, vexatious or otherwise not in good faith. The court may, in its discretion, apportion and assess all or any part of the costs, expenses and fees incurred by any or all of the dissenting shareholders who are parties to the proceeding against the corporation if the court finds any of the following: (A) that the fair value of the shares as determined materially exceeds the amount which the corporation offered to pay; (B) that no offer or required advance payment was made by the corporation; (C) that the corporation failed to institute the special proceeding within the period specified therefor; or (D) that the action of the corporation in complying with its obligations as provided C-3 78 in this section was arbitrary, vexatious or otherwise not in good faith. In making any determination as provided in clause (A), the court may consider the dollar amount or the percentage, or both, by which the fair value of the shares as determined exceeds the corporate offer. (8) Within sixty days after final determination of the proceeding, the corporation shall pay to each dissenting shareholder the amount found to be due him, upon surrender of the certificates for any such shares represented by certificates. (i) Shares acquired by the corporation upon the payment of the agreed value therefor or of the amount due under the final order, as provided in this section, shall become treasury shares or be cancelled as provided in section 515 (Reacquired shares), except that, in the case of a merger or consolidation, they may be held and disposed of as the plan of merger or consolidation may otherwise provide. (j) No payment shall be made to a dissenting shareholder under this section at a time when the corporation is insolvent or when such payment would make it insolvent. In such event, the dissenting shareholder shall, at his option: (1) Withdraw his notice of election, which shall in such event be deemed withdrawn with the written consent of the corporation; or (2) Retain his status as a claimant against the corporation and, if it is liquidated, be subordinated to the rights of creditors of the corporation, but have rights superior to the non-dissenting shareholders, and if it is not liquidated, retain his right to be paid for his shares, which right the corporation shall be obliged to satisfy when the restrictions of this paragraph do not apply. (3) The dissenting shareholder shall exercise such option under subparagraph (1) or (2) by written notice filed with the corporation within thirty days after the corporation has given him written notice that payment for his shares cannot be made because of the restrictions of this paragraph. If the dissenting shareholder fails to exercise such option as provided, the corporation shall exercise the option by written notice given to him within twenty days after the expiration of such period of thirty days. (k) The enforcement by a shareholder of his right to receive payment for his shares in the manner provided herein shall exclude the enforcement by such shareholder of any other right to which he might otherwise be entitled by virtue of share ownership, except as provided in paragraph (e), and except that this section shall not exclude the right of such shareholder to bring or maintain an appropriate action to obtain relief on the ground that such corporate action will be or is unlawful or fraudulent as to him. (l) Except as otherwise expressly provided in this section, any notice to be given by a corporation to a shareholder under this section shall be given in the manner provided in section 605 (Notice of meetings of shareholders). (m) This section shall not apply to foreign corporations except as provided in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and foreign corporations). C-4 EX-99.D2 9 FORM OF PROXY CARD 1 [PRELIMINARY COPY] PROXY BIC CORPORATION 401(k) SAVINGS AND INVESTMENT PLAN INSTRUCTIONS FOR SPECIAL MEETING OF SHAREHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT To: Fleet Bank, as Trustee under the BIC Corporation 401(k) Savings and Investment Plan. In connection with the Special Meeting of Shareholders of BIC Corporation (the "Company") to be held on , October , 1995, the undersigned hereby instructs you with respect to voting, in person or by proxy, at such meeting, and all adjournments thereof, all Common Shares of the Company in the undersigned's account in the Plan with respect to which the undersigned is entitled to give you voting instructions. You are instructed to vote upon matters coming before the meeting, and unless contrary direction is indicated, to vote the shares in connection with Proposal 1 as indicated on the reverse side. (Continued from other side) 2 I plan to attend the meeting / / THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL. 1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15, 1995, by and among BIC Corporation (the "Company"), Societe BIC S.A. ("Parent"), a societe anonyme organized under the laws of France, Bruno Bich, as voting trustee and BIC Merger Corporation ("Mergeco"), a New York corporation and a majority owned subsidiary of Parent, and the merger of Mergeco with and into the Company as contemplated thereby. FOR AGAINST ABSTAIN / / / / / / THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE VOTED FOR THE PROPOSAL. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT Dated: , 1995 ------------------------------------- -------------------------------------------------- (Signature of Shareholder) Please sign as name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Joint tenants should both sign. "PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" 3 [PRELIMINARY COPY] PROXY BIC CORPORATION SPECIAL MEETING OF SHAREHOLDERS OCTOBER ___, 1995 The undersigned hereby constitutes and appoints BRUNO BICH, ALEXANDER ALEXIADES and RAYMOND WINTER, and each of them, the attorneys and proxies of the undersigned, with full power of substitution, to vote on behalf of the undersigned all of the Common Shares of BIC Corporation (the "Company") which the undersigned is entitled to vote at the Special Meeting of Shareholders of the Company, to be held at the [Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], on _________, October ___, 1995, at 10:00 a.m., local time, and all adjournments thereof, upon the matters set forth on the reverse side and upon all matters incident to the conduct of the Special Meeting. This proxy revokes all prior proxies given by the undersigned. Receipt of the Notice of Special Meeting and Proxy Statement is hereby acknowledged. (Continued and to be signed and dated on the other side) 4 I plan to attend the meeting / / THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL. 1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15, 1995, by and among BIC Corporation (the "Company"), Societe BIC S.A. ("Parent"), a societe anonyme organized under the laws of France, Bruno Bich, as voting trustee and BIC Merger Corporation ("Mergeco"), a New York corporation and a majority owned subsidiary of Parent, and the merger of Mergeco with and into the Company as contemplated thereby. FOR AGAINST ABSTAIN / / / / / / THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE VOTED FOR THE PROPOSAL. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT Dated: , 1995 ------------------------------------- -------------------------------------------------- (Signature of Shareholder) Please sign as name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Joint tenants should both sign. "PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" 5 [PRELIMINARY COPY] PROXY BIC CORPORATION LOCAL 134 EMPLOYEES SHARE PURCHASE PLAN INSTRUCTIONS FOR SPECIAL MEETING OF SHAREHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT To: Fleet Bank, as Trustee under the BIC Corporation Local 134 Share Purchase Plan. In connection with the Special Meeting of Shareholders of BIC Corporation (the "Company") to be held on , October 19 , 1995, the undersigned hereby instructs you with respect to voting, in person or by proxy, at such meeting, and all adjournments thereof, all Common Shares of the Company in the undersigned's account in the Plan with respect to which the undersigned is entitled to give you voting instructions. You are instructed to vote upon matters coming before the meeting, and unless contrary direction is indicated, to vote the shares in connection with Proposal 1 as indicated on the reverse side. (Continued from other side) 6 I plan to attend the meeting / / THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL. 1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15, 1995, by and among BIC Corporation (the "Company"), Societe BIC S.A. ("Parent"), a societe anonyme organized under the laws of France, Bruno Bich, as voting trustee and BIC Merger Corporation ("Mergeco"), a New York corporation and a majority owned subsidiary of Parent, and the merger of Mergeco with and into the Company as contemplated thereby. FOR AGAINST ABSTAIN / / / / / / THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE VOTED FOR THE PROPOSAL. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT Dated: , 1995 ------------------------------------- -------------------------------------------------- (Signature of Shareholder) Please sign as name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Joint tenants should both sign. "PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" EX-99.G1 10 MEDCHEM FORM 10-K 1 Exhibit (g)(1) [EXCERPTS FROM BIC CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 1, 1995] 2 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES - ------------------------------------------ PAGE Report of Independent Auditors 15 Consolidated Financial Statements: - ---------------------------------- Consolidated Balance Sheets, January 1, 1995 and 16 January 2, 1994 Statements of Consolidated Income for the 1994, 17 1993 and 1992 Fiscal Years Statements of Consolidated Retained Earnings for 17 the 1994, 1993 and 1992 Fiscal Years Statements of Consolidated Cash Flows for the 18 1994, 1993 and 1992 Fiscal Years Notes to Consolidated Financial Statements 19 Consolidated Financial Statement Schedule for the Years Ended January 1, 1995, January 2, 1994 and January 3, 1993: - ------------------------------------------------ II - Consolidated Valuation Accounts 32 All other financial statement schedules have been omitted because the conditions requiring the filing thereof do not exist or because the required information is shown in the consolidated financial statements or notes thereto. 3 (LOGO OF DELOITTE & TOUCHE) REPORT OF INDEPENDENT AUDITORS To the Shareholders of BIC Corporation: We have audited the accompanying consolidated financial statements and related financial statement schedule of BIC Corporation and its subsidiaries (the "Corporation") listed in the preceding Index to Consolidated Financial Statements and Financial Statement Schedule of the Annual Report on Form 10-K of the Corporation for the year ended January 1, 1995. These consolidated financial statements and financial statement schedule are the responsibility of the Corporation's management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BIC Corporation and its subsidiaries at January 1, 1995 and January 2, 1994 and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended January 1, 1995 in conformity with generally accepted accounting principles. Also, in our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects, the information set forth therein. As described in Note 1 to the consolidated financial statements, the Corporation changed its method of accounting for postemployment benefits in 1994 and for postretirement benefits other than pensions in 1993. DELOITTE & TOUCHE LLP New Haven, Connecticut January 27, 1995 4 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- CONSOLIDATED BALANCE SHEETS JANUARY 1, 1995 and JANUARY 2, 1994 - ----------------------------------- (Dollars in thousands, except January 1, January 2, for share data) 1995 1994 - ----------------------------- ---------- ---------- ASSETS: - ------- Current Assets: - --------------- Cash and Cash Equivalents $ 48,091 $ 24,094 Receivables - Trade and Other (Net of Allowance for Doubtful Accounts 1994 - $4,530 and 1993 - $4,084) 62,867 52,019 Inventories 54,363 59,426 Deferred Income Taxes 18,549 16,809 Other 10,575 13,637 -------- -------- Total Current Assets 194,445 165,985 Property, Plant and Equipment - Net 132,553 140,317 Other Assets 31,689 29,914 -------- -------- Total $358,687 $336,216 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: - ------------------------------------- Current Liabilities: - -------------------- Bank Borrowings $ 6,731 Accounts Payable - Trade and Other $ 18,915 21,179 Accrued Expenses: - ----------------- Federal and State Income Taxes 8,526 8,085 Insurance 23,261 22,739 Payroll and Payroll Taxes 7,200 6,108 Other 28,727 23,911 -------- -------- Total Current Liabilities 86,629 88,753 -------- -------- Noncurrent Liabilities: - ----------------------- Postretirement Benefits Other Than Pensions 19,882 17,854 Other 4,259 2,921 -------- -------- Total Noncurrent Liabilities 24,141 20,775 -------- -------- Contingencies and Commitments (See Note 12) - ------------------------------------------- Shareholders' Equity: - --------------------- Preferred Shares ($1 Par Value; Authorized - 1,000,000; No Shares Issued or Outstanding) Common Shares ($1 Par Value; Authorized - 50,000,000; Outstanding - 23,559,244) 23,559 23,559 Retained Earnings 238,076 205,902 Foreign Currency Translation Adjustment (13,718) (2,773) -------- -------- Total Shareholders' Equity 247,917 226,688 -------- -------- Total $358,687 $336,216 ======== ======== See Notes to Consolidated Financial Statements. 5 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- STATEMENTS OF CONSOLIDATED INCOME FOR THE 1994, 1993 AND 1992 FISCAL YEARS - ---------------------------------------- (In thousands, except for per share data) 1994 1993 1992 - ----------------------------------------- ---- ---- ---- Net Sales $475,118 $439,311 $417,377 Cost of Goods Sold 242,457 235,820 225,806 -------- -------- -------- Gross Profit 232,661 203,491 191,571 Advertising, Selling, General and Administrative, Marketing and Research and Development Expenses 145,495 133,732 126,445 -------- -------- -------- Income from Operations 87,166 69,759 65,126 Other Income - Net 41 4,227 2,152 -------- -------- -------- Income Before Income Taxes and Cumulative Effect of Changes in Accounting Principles 87,207 73,986 67,278 Provision for Income Taxes 35,563 29,206 27,343 -------- -------- -------- Income Before Cumulative Effect of Changes in Accounting Principles 51,644 44,780 39,935 Cumulative Effect of Changes in Accounting Principles for: - ------------------------------- Postemployment Benefits, Net of Taxes of $410 (623) Postretirement Benefits Other Than Pensions, Net of Taxes of $6,384 (9,816) -------- -------- -------- Net Income $ 51,021 $ 34,964 $ 39,935 ======== ======== ======== Earnings Per Common Share: Income Before Cumulative Effect of Changes in Accounting Principles $2.19 $1.90 $1.70 Cumulative Effect of Changes in Accounting Principles (0.02) (0.42) -------- -------- -------- Net Income $2.17 $1.48 $1.70 ======== ======== ======== STATEMENTS OF CONSOLIDATED RETAINED EARNINGS FOR THE 1994, 1993 AND 1992 FISCAL YEARS - -------------------------------------------- (In thousands) 1994 1993 1992 - -------------- ---- ---- ---- Balance - Beginning of Year $205,902 $187,900 $183,416 Net Income 51,021 34,964 39,935 Dividends - Cash (18,847) (16,962) (24,973) - Common Share Split Effected in the Form of a 100% Share Dividend (10,478) -------- -------- -------- Balance - End of Year $238,076 $205,902 $187,900 ======== ======== ======== See Notes to Consolidated Financial Statements. 6 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE 1994, 1993 AND 1992 FISCAL YEARS - ---------------------------------------- (In thousands) 1994 1993 1992 - -------------- ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: - ------------------------------------- Net Income $51,021 $34,964 $39,935 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: - ----------------------------------- Depreciation and Amortization 23,801 20,881 15,703 Provision for Losses on Receivables - Trade and Other 1,467 85 2,286 Effects of Foreign Currency Transactions (208) 753 (264) Deferred Income Taxes (2,680) (1,177) 369 Cumulative Effect of Changes in Accounting Principles 623 9,816 Other 2,771 2,063 (354) Changes in Operating Assets and Liabilities: - -------------------------------------------- (Increase) in Receivables - Trade and Other (15,474) (1,915) (4,308) (Increase) Decrease in Inventories 1,538 (1,266) (10,945) (Increase) Decrease in Other Assets 2,566 (778) (477) Increase (Decrease) in Accounts Payable and Accrued Expenses 9,017 (2,790) 5,520 -------- -------- -------- Net Cash Provided by Operating Activities 74,442 60,636 47,465 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: - ------------------------------------- Purchases of Property, Plant and Equipment (21,674) (41,181) (44,908) Proceeds from Sale of Property, Plant and Equipment 1,248 672 965 Purchases of Trademarks and Patents (841) (724) (775) Purchase of Investment (2,000) Purchase of Wite-Out Products, Inc., Net of Cash Acquired (19,307) Deferred Charges, Deposits and Other 60 (2,114) (1,834) -------- -------- -------- Net Cash Used in Investing Activities (23,207) (43,347) (65,859) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: - ------------------------------------- Net Increase (Decrease) in Bank Borrowings (6,716) (878) 7,687 Dividends Paid (18,847) (16,962) (24,973) -------- -------- -------- Net Cash Used in Financing Activities (25,563) (17,840) (17,286) -------- -------- -------- Effect of Exchange Rate Changes on Cash (1,675) (589) (627) -------- -------- -------- Increase (Decrease) in Cash and Cash Equivalents 23,997 (1,140) (36,307) Cash and Cash Equivalents, Beginning of Year 24,094 25,234 61,541 -------- -------- -------- Cash and Cash Equivalents, End of Year $48,091 $24,094 $25,234 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: - -------------------------------------------------- Cash Paid during the Year for: - ------------------------------ Interest $ 907 $ 635 $ 443 ======== ======== ======== Income Taxes $35,678 $34,245 $26,339 ======== ======== ======== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES: - ------------------------------------------------------- In 1992, the Corporation purchased all the capital stock of Wite-Out Products, Inc. for $19,848. Fair Value of Assets Acquired $20,875 Cash Paid (19,848) -------- Liabilities Assumed $ 1,027 ======== See Notes to Consolidated Financial Statements. 7 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: - ------------------------------------------------ A summary of significant accounting policies for BIC Corporation and its subsidiaries (the "Corporation"), manufacturers and distributors of high-quality, low-cost consumer products, is as follows: Consolidation - ------------- The consolidated financial statements include the accounts of BIC Corporation and its subsidiaries. An investment in an affiliated company is accounted for on the equity method. All significant intercompany balances and transactions have been eliminated. Cash and Cash Equivalents - ------------------------- The Corporation's cash management policy is to invest in highly liquid, short-term financial instruments. Cash equivalents consist of U.S. Government obligations, time deposits, overnight securities and other short-term, highly liquid securities with original maturities of three months or less. Inventories - ----------- Inventories are valued at the lower of cost (determined on the first-in, first-out basis) or market. Property, Plant and Equipment - ----------------------------- Property, plant and equipment is recorded at cost. Depreciation, principally on the declining balance method, is provided over the estimated useful lives of the assets as follows: Buildings and improvements 10-50 years Machinery and equipment 3-12 years Expenditures for maintenance and repairs are charged to operations as incurred. Expenditures for betterments and major renewals are capitalized. Costs of assets sold or retired and the related amounts of accumulated depreciation are eliminated from the accounts in the year of disposal and any resulting gains or losses are included in income. Intangibles - ----------- Costs pertaining to goodwill and patents are amortized on the straight-line method over five to seventeen years. Trademarks are amortized over five to forty years. Accrued Expenses - Insurance - ---------------------------- Accrued expenses - insurance represents the estimated costs of known and anticipated claims under the Corporation's product liability (principally relating to its lighters) and workers' compensation insurance policies. For each claim, the Corporation maintains self-insurance up to the estimated amount of the probable claim or the amount of the deductible, whichever is lower. At each financial reporting date, probable claim amounts, individually or in the aggregate, were not expected to materially exceed the deductible. Claims are generally settled within five years of origination. 8 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ Employee Benefit Plans - ---------------------- Substantially all employees in the United States and Canada are covered by defined benefit pension plans. The plans are noncontributory and provide for pension benefits based on average pay and years of service to the Corporation. Funding for the pension plans is based on a review of the specific requirements and an evaluation of the assets and liabilities of each plan. The Corporation has a share purchase plan for substantially all full-time United States unionized employees who elect to participate and a 401(k) Savings and Investment Plan for unionized and non-unionized United States employees. The Corporation's Canadian subsidiary has a Group Registered Retirement Plan for its employees. Some plans provide that the Corporation match a portion of participant contributions. The Corporation provides certain postretirement medical and life insurance benefits for qualifying retired and active unionized and non-unionized employees in the United States. Most retirees outside the United States are covered by government sponsored and administered programs. Effective January 3, 1994, the Corporation adopted SFAS 112, "Employers' Accounting for Postemployment Benefits." This new standard requires that the cost of benefits provided to former or inactive employees be recognized on the accrual basis of accounting. Previously, the Corporation recognized postemployment benefits on a cash basis or at the date the event gave rise to the payment of these benefits. In accordance with the provisions of the Collective Bargaining Agreement between BIC Corporation and Local 134 United Rubber, Cork, Linoleum and Plastic Workers of America, the Corporation provides severance benefits to its unionized employees. The Corporation also provides medical and life insurance benefits to salaried employees receiving long-term disability benefits. The cumulative effect of adopting SFAS 112 was a one-time after-tax charge of $0.6 million, or $0.02 per share. Aside from the one-time effect of the cumulative adjustment, adoption of SFAS 112 was not material to the Corporation's 1994 consolidated results of operations. In 1993, the Corporation adopted Statement of Financial Accounting Standards ("SFAS") 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The Corporation elected to recognize the cumulative effect of this obligation on the immediate recognition basis. The cumulative effect as of January 4, 1993 of adopting SFAS 106 was a one-time after-tax charge of $9.8 million, or $0.42 per share. Aside from the one- time effect of the cumulative adjustment, adoption of SFAS 106 was not material to the Corporation's 1994 and 1993 consolidated results of operations. Foreign Currency - ---------------- Assets and liabilities of certain foreign subsidiaries, whose local currency is the functional currency, are translated at exchange rates in effect at the balance sheet date. Translation gains and losses are not included in the Statements of Consolidated Income, but are accumulated in a separate component of shareholders' equity. Gains and losses from foreign currency transactions are included in the Statements of Consolidated Income. 9 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ Foreign Currency (Continued) - ---------------------------- The Corporation enters into forward exchange contracts denominated in foreign currencies providing protection from currency fluctuations affecting certain inventory and equipment purchase commitments denominated in foreign currencies. Gains and losses associated with these transactions are deferred and included in the determination of the cost of the assets acquired. Income Taxes - ------------ Effective January 4, 1993, the Corporation adopted SFAS 109, "Accounting for Income Taxes." Under SFAS 109, the deferred tax provision is determined under the asset/liability method. Under this method, deferred tax assets and liabilities are recognized based on differences between financial statement and tax bases of assets and liabilities using presently enacted tax rates. There was no material effect on the Corporation's financial position or results of operations by adopting SFAS 109. The Corporation does not provide for Federal or state income taxes on the accumulated earnings and profits of its foreign subsidiaries, to the extent that the current intention of the Corporation is to allow its foreign subsidiaries to reinvest these earnings, or to the extent that any Federal or state taxes attributable to the repatriation of such earnings would be substantially offset by foreign tax credits. Earnings Per Common Share - ------------------------- Earnings per common share are based on the weighted average number of shares outstanding in each year. The weighted average number of shares outstanding was 23,559,244 during 1994, 1993 and 1992. Fiscal Year - ----------- The Corporation's fiscal year is the 52 or 53 weeks ending on the Sunday closest to December 31. Reclassifications - ----------------- The consolidated financial statements for years prior to 1994 have been reclassified to conform with the 1994 financial statement presentation. 2. INVENTORIES: - ----------------- Inventories consist of the following: January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- --------- Work in process, finished stock and packaging materials $46,503 $49,363 Raw materials 7,860 10,063 ---------- --------- Total $54,363 $59,426 ========== ========= 10 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 3. PROPERTY, PLANT AND EQUIPMENT - NET: - ----------------------------------------- Property, plant and equipment - net consists of the following: January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- ---------- Land $ 2,706 $ 2,841 Buildings and improvements 57,722 57,428 Machinery and equipment 204,556 193,234 Construction in progress 18,934 24,742 ---------- ---------- Total 283,918 278,245 Less accumulated depreciation 151,365 137,928 ---------- ---------- Total $132,553 $140,317 ========== ========== 4. OTHER ASSETS: - ------------------ Other assets consist of the following: January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- ---------- Intangibles (net of accumulated amortization 1994 - $7,090 and 1993 - $4,716) $15,658 $17,192 Other 16,031 12,722 ---------- ---------- Total $31,689 $29,914 ========== ========== 5. BANK BORROWINGS: - --------------------- Information with respect to the Corporation's bank borrowings is as follows: January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- ---------- Weighted average interest rate at balance sheet date 6.1% Weighted average interest rate (actual interest expense on bank borrowings divided by average daily outstanding balance) 5.1% 4.3% Unused lines of credit $112,996 $99,711 Standby letters of credit 29,571 35,488 6. OTHER CURRENT LIABILITIES: - ------------------------------- Other current liabilities consist of the following: January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- ---------- Accrued advertising and promotion $17,731 $14,242 Other 10,996 9,669 ---------- ---------- Total $28,727 $23,911 ========== ========== 11 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 7. EMPLOYEE BENEFIT PLANS: - ---------------------------- The Corporation's net periodic pension cost for 1994, 1993 and 1992 is summarized as follows: (In thousands) 1994 1993 1992 - -------------- ------- ------- ------- Service cost - benefits earned during the period $(2,242) $(1,797) $(1,608) Interest cost on projected benefit obligation (4,316) (3,988) (3,641) Actual return on plan assets (2,545) 5,151 6,060 Net amortization and deferral 8,383 107 (1,152) ------- ------- ------- Net periodic pension cost $ (720) $ (527) $ (341) ======= ======= ======= The following table sets forth the funded status at January 1, 1995 and January 2, 1994 of the Corporation's defined benefit pension plans: January 1, January 2, 1995 1994 ---------- ---------- Over- Under- Over- Under- (In thousands) Funded Funded Funded Funded - -------------- ------- ------- ------- ------- Fair value of plan assets $30,924 $24,923 $33,491 $27,425 Projected benefit obligation for services rendered to date (26,319) (31,593) (28,150) (32,173) ------- ------- ------- ------- Excess of plan assets over projected benefit obligation (excess of projected benefit obligation over plan assets) 4,605 (6,670) 5,341 (4,748) Unrecognized net (gain) loss 472 2,747 (252) 2,595 Prior service costs not yet recognized in net periodic pension costs 384 1,014 682 20 Unrecognized net asset (2,239) (533) (2,666) (666) ------- ------- ------- ------- Prepaid pension (pension liability) $ 3,222 $(3,442) $ 3,105 $(2,799) ======= ======= ======= ======= Actuarial present value of benefit obligations: - -------------------------- Vested benefit obligation $20,832 $31,395 $21,822 $31,908 ======= ======= ======= ======= Accumulated benefit obligation $21,691 $31,476 $22,662 $31,993 ======= ======= ======= ======= Prior service costs primarily relate to plan amendments which retroactively increase benefits to plan participants. These costs are recognized in net periodic pension cost over appropriate periods. The following assumptions were used in developing the above benefit obligation amounts: January 1, January 2, 1995 1994 ---------- ---------- Assumed discount rate 8.0% 7.0% Assumed rate of compensation increase 4.0% 4.0% Expected rate of return on plan assets 10.0% 10.0% 12 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 7. EMPLOYEE BENEFIT PLANS (Continued): - ---------------------------------------- The plan assets were invested as follows: January 1, January 2, 1995 1994 ---------- ---------- Equity securities 63.9% 65.0% United States Government securities 12.7 13.7 Cash equivalents and debt securities 23.4 21.3 ---------- ---------- Total 100.0% 100.0% ========== ========== Contributions under the employees share purchase plans, the 401(k) Savings and Investment Plans and the Group Registered Retirement Plan were approximately $857,000, $728,000 and $406,000 in 1994, 1993 and 1992, respectively. 8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: - ------------------------------------------------- The Corporation provides certain postretirement medical and life insurance benefits for qualifying retired and active unionized and non-unionized employees in the United States. Most retirees outside the United States are covered by government sponsored and administered programs. Postretirement benefits are not pre-funded and are paid by the Corporation as incurred. The Corporation's net periodic postretirement benefit cost for 1994 and 1993 included the following components: (In thousands) 1994 1993 - -------------- ---- ---- Service cost - benefits attributed to employee service during the period $1,487 $1,144 Interest cost on accumulated postretirement benefit obligation 1,329 1,338 Unrecognized net loss 63 ------ ------- Net periodic postretirement benefit cost $2,879 $2,482 ====== ====== The following table sets forth the status at January 1, 1995 and January 2, 1994 of postretirement benefits: January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- ---------- Accumulated postretirement benefit obligation: - ---------------------------------------------- Retirees $ 9,088 $ 9,590 Fully eligible active plan participants 2,404 3,507 Other active plan participants 7,399 8,568 -------- -------- 18,891 21,665 Unamortized net gain (loss) 991 (3,811) -------- -------- Total $19,882 $17,854 ======== ======== 13 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued): - ------------------------------------------------------------- For measurement purposes, a 14.0% annual rate of increase in the per capita cost was assumed for 1994 and 1993. The rate was assumed to decrease gradually to 5.5% through the year 2009 and remain at that level thereafter. The discount rate used in determining the accumulated postretirement benefit obligation was 8.0% at January 1, 1995 and 7.0% at January 2, 1994. The unamortized net gain (loss) represents a change in actuarial assumptions (discount rate) that will be amortized over future periods. A 1% increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement benefit obligation as of January 1, 1995 by $2.6 million and the net periodic postretirement benefit cost by $523,000. 9. SHAREHOLDERS' EQUITY: - -------------------------- The Corporation declared and paid cash dividends of $0.80 per share in 1994 and $0.72 per share in 1993. The Corporation increased its regular quarterly dividend from $0.20 per share to $0.23 per share, effective with the dividend payable on February 1, 1995, to shareholders of record on January 18, 1995. In 1993, the Corporation amended its Certificate of Incorporation to increase the number of authorized common shares, $1 par value, from 25,000,000 to 50,000,000 shares. Foreign currency translation adjustments included in shareholders' equity were $(10,945,000), $(680,000), and $(1,111,000) for the fiscal years 1994, 1993 and 1992, respectively. The 1994 translation adjustment was primarily due to the Corporation's Mexican subsidiary recording a $9,500,000 translation loss in shareholders' equity due to the translation effect of the Mexican peso devaluation. 10. OTHER INCOME - NET: - ------------------------ Other income - net consists of the following: (In thousands) 1994 1993 1992 ---- ---- ---- Income (Expense): - ----------------- Interest expense $ (353) $(1,185) $ (447) Interest income 1,202 810 1,480 Net foreign currency gains 222 1,431 689 Miscellaneous - net (1,030) 3,171 430 ------ ------- ------- Total $ 41 $ 4,227 $ 2,152 ====== ======= ======= 14 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 11. INCOME TAXES: - ------------------ The provision (credit) for income taxes consists of the following: (In thousands) 1994 1993 1992 - -------------- ---- ---- ---- Federal: - ------- Current $27,975 $20,896 $18,365 Deferred (2,448) 227 (1,198) ------- ------- ------- Total Federal 25,527 21,123 17,167 ------- ------- ------- Foreign: - -------- Current 5,212 4,016 4,334 Deferred (770) (1,137) 1,567 ------- ------- ------- Total Foreign 4,442 2,879 5,901 ------- ------- ------- State 5,594 5,204 4,275 ------- ------- ------- Total $35,563 $29,206 $27,343 ======= ======= ======= The total income tax provision shown in the Statements of Consolidated Income differed from the total income tax expense as computed by applying the statutory United States Federal ("Federal") income tax rate to income before income taxes and cumulative effect of changes in accounting principles as follows: 1994 1993 1992 ---- ---- ---- Statutory Federal income tax rate 35.0% 35.0% 34.0% Increase due to: - ---------------- Effect of foreign subsidiaries' income tax rates in excess of the statutory Federal tax rate 1.0 State income taxes, net of Federal tax benefit 4.2 4.6 4.2 Other - net 1.6 (0.1) 1.4 ----- ----- ----- Effective income tax rate 40.8% 39.5% 40.6% ===== ===== ===== Federal income taxes have not been provided for on cumulative unremitted earnings of foreign subsidiaries of approximately $5,358,000 at January 1, 1995, $16,076,000 at January 2, 1994 and $14,051,000 at January 3, 1993. The provision for deferred Federal income taxes consists of the following: (In thousands) 1994 1993 1992 - -------------- ---- ---- ---- Tax effect of temporary differences arising from: - --------------------------- Depreciation $ 605 $ (94) $ 387 Insurance (311) 16 (2,757) Accrued compensation (293) (50) 1,073 Postretirement benefits (1,049) (527) 15 Inventory valuation (612) (598) 1,071 Advertising and promotion (1,167) (512) 168 Provision for doubtful accounts (153) 405 (1,073) Other 532 1,587 (82) ------- ------- ------- Total $(2,448) $ 227 $(1,198) ======= ======= ======= The provision for deferred foreign income taxes consists primarily of temporary differences related to the Corporation's Mexican subsidiary's inventory. 15 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ Deferred income taxes at January 1, 1995 and January 2, 1994 consist of the following: January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- ---------- Deferred tax assets: - -------------------- Insurance $ 9,653 $ 9,342 Accrued compensation 1,629 923 Postretirement benefits 8,471 7,445 Inventory valuation 1,225 Advertising and promotion 3,052 1,885 Provision for doubtful accounts 1,726 1,563 Other 331 830 ------- ------- Total 26,087 21,988 ------- ------- Deferred tax liabilities: - ------------------------- Depreciation 6,382 5,720 Inventory valuation 194 ------- ------- Total 6,382 5,914 ------- ------- Net deferred tax asset $19,705 $16,074 ======= ======= At January 1, 1995, current deferred tax assets of $18.5 million and current deferred tax liabilities of $1.3 million were included in Deferred Income Taxes and Accrued Expenses - Other, respectively. In addition, noncurrent deferred tax assets of $2.5 million were included in Other Assets. 12. CONTINGENCIES AND COMMITMENTS: - ----------------------------------- The Corporation has significant contingent liabilities with respect to pending litigation, claims and disputes, principally relating to its lighters, which arise in the ordinary course of its business. In July 1993, the U.S. Environmental Protection Agency ("EPA") issued its final volumetric ranking of Potentially Responsible Parties ("PRPs") for the Solvents Recovery Service of New England ("SRSNE") Superfund Site in Southington, Connecticut. The Corporation has been notified that it is a PRP at the Site and has been ranked, by the EPA, number 192 of a total of 1,659 PRPs. This ranking represents less than 1% of the total volume of waste disposed at the SRSNE Site, with the first 191 PRPs representing 90% of the total volume. The Corporation cannot predict with certainty the total costs of cleanup, the Corporation's share of the total costs, the extent to which contributions will be available from other parties, the amount of time necessary to complete the cleanup, or the availability of insurance coverage. Based on currently available information, the Corporation believes that its share of the ultimate cleanup costs at this Site will not have a material adverse impact on the Corporation's financial position or on its results of operations, if such operations continue at the present level. 16 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 12. CONTINGENCIES AND COMMITMENTS (Continued): - ---------------------------------------------- In November 1992, a state court jury in Creek County, Oklahoma, in a 9 to 3 verdict, awarded $11 million in actual damages and $11 million in punitive damages against the Corporation in connection with a case involving a cigarette lighter. On May 3, 1994, the Court of Appeals of Oklahoma reduced the amount of punitive damages by $8 million. On May 23, 1994, BIC filed a petition for writ of certiorari with the Oklahoma Supreme Court and on July 13, 1994, the Oklahoma Supreme Court denied BIC's petition, thereby concluding this matter. This decision did not have a significant effect on the Corporation's consolidated financial position or on its results of operations. While the ultimate liability with respect to the above matters, including any additional liability not provided for, is not presently determinable, it is the opinion of management, after consultation with counsel to the Corporation, that any liabilities resulting therefrom will not have a material adverse effect on the Corporation's consolidated financial position or on its results of operations if such operations continue at the present level. 13. RELATED PARTY TRANSACTIONS AND BALANCES: - --------------------------------------------- Material transactions and balances with the Corporation's majority shareholder, Societe BIC, S.A. and with other related parties are as follows: (In thousands) 1994 1993 1992 - -------------- ---- ---- ---- Transactions - ------------ Sales to: - --------- Societe BIC, S.A. $ 1,727 $ 1,389 $ 807 Other affiliated companies 10,654 10,017 9,717 Purchases from: - -------------- Societe BIC, S.A. 24,712 25,237 27,151 Other affiliated companies 16,414 16,966 16,820 January 1, January 2, (In thousands) 1995 1994 - -------------- ---------- ---------- Balances - -------- Included in receivables: - ------------------------ Societe BIC, S.A. $ 403 $ 233 Other affiliated companies 3,943 2,787 Employees 51 Included in payables: - --------------------- Societe BIC, S.A. 4,479 6,153 Other affiliated companies 2,601 3,237 17 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 14. FINANCIAL INSTRUMENTS: - --------------------------- The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS 107, "Disclosure about Fair Value of Financial Instruments." The estimated fair value amounts have been determined by the Corporation, using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Corporation could realize in a current market exchange. January 1, 1995 January 2, 1994 --------------- --------------- Carrying Estimated Carrying Estimated or Contract Fair or Contract Fair (In thousands) Amount Value Amount Value - -------------- ----------- --------- ----------- --------- Assets: - ------- Cash and cash equivalents $48,091 $48,091 $24,094 $24,094 Liabilities: - ------------ Bank borrowings 6,731 6,731 Off-balance sheet financial instruments: - ------------------------ Forward foreign currency contracts 23,165 23,384 Unused lines of credit 112,996 See Below 99,711 See Below Standby letters of credit 29,571 See Below 35,488 See Below Cash and Cash Equivalents - ------------------------- The Corporation compared the interest rates of cash equivalents at the contract dates to the prevailing interest rates at January 1, 1995 and January 2, 1994 and determined that there were no significant differences. Therefore, the carrying amounts of these items are a reasonable estimate of their fair value. Bank Borrowings - --------------- Due to the relatively short period of time between the origination of the bank borrowings and their repayments, the carrying amounts approximate their estimated fair value. Forward Foreign Currency Contracts - ---------------------------------- The fair value of foreign currency contracts was the amount as of January 2, 1994 at which contracts with the same date of maturity as existing contracts could be purchased, based on estimates obtained from dealers. Unused Lines of Credit and Standby Letters of Credit - ---------------------------------------------------- There is no annual cost of maintaining the unused lines of credit. The annual cost of maintaining standby letters of credit is estimated based on fees of 1/4% to 3/4% of the amount of the letter of credit, which would be currently charged for similar arrangements. 18 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 15. FOREIGN OPERATIONS: - ------------------------ A summary of information about the Corporation's operations in different geographic areas is as follows (see Note 13 for sales to affiliated companies):
United Other Adjustments & (In thousands) States Canada Mexico Areas Eliminations Consolidated - -------------- -------- -------- -------- -------- ------------- ------------ 1994: - ----- Net sales $405,968 $ 29,678 $ 33,086 $ 6,386 $475,118 Transfers between geographic areas 15,305 212 15,077 105 $(30,699) -------- -------- -------- -------- -------- -------- Total revenues $421,273 $ 29,890 $ 48,163 $ 6,491 $(30,699) $475,118 ======== ======== ======== ======== ======== ======== Income before income taxes and cumulative effect of change in accounting principle $ 74,382 $ 5,039 $ 6,742 $ 1,020 $ 24 $ 87,207 ======== ======== ======== ======== ======== ======== Identifiable assets $313,079 $ 13,932 $ 22,991 $ 8,685 $358,687 ======== ======== ======== ======== ======== ======== 1993: - ----- Net sales $372,459 $ 28,625 $ 32,677 $ 5,550 $439,311 Transfers between geographic areas 16,234 61 11,493 21 $(27,809) -------- -------- -------- -------- -------- -------- Total revenues $388,693 $ 28,686 $ 44,170 $ 5,571 $(27,809) $439,311 ======== ======== ======== ======== ======== ======== Income before income taxes and cumulative effect of change in accounting principle $ 64,716 $ 4,643 $ 4,438 $ 508 $ (319) $ 73,986 ======== ======== ======== ======== ======== ======== Identifiable assets $285,661 $ 10,172 $ 34,269 $ 6,114 $336,216 ======== ======== ======== ======== ======== ======== 1992: - ----- Net sales $351,803 $ 28,947 $ 32,165 $ 4,462 $417,377 Transfers between geographic areas 16,742 3 13,888 225 $(30,858) -------- -------- -------- -------- -------- -------- Total revenues $368,545 $ 28,950 $ 46,053 $ 4,687 $(30,858) $417,377 ======== ======== ======== ======== ======== ======== Income before income taxes and cumulative effect of change in accounting principle $ 53,307 $ 6,742 $ 6,730 $ 929 $ (430) $ 67,278 ======== ======== ======== ======== ======== ======== Identifiable assets $261,605 $ 15,733 $ 25,807 $ 5,321 $308,466 ======== ======== ======== ======== ======== ======== Transfers between geographic areas are generally accounted for at a range of cost to cost plus 10%.
19 BIC CORPORATION AND SUBSIDIARIES - -------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - ------------------------------------------------------ 16. SELECTED QUARTERLY FINANCIAL DATA (Unaudited): - --------------------------------------------------- Net Income Net (Loss) (In thousands except Net Gross Income Per Common for per share data) Sales Profit (Loss)(1),(2) Share (1),(2) - --------------------- ----- ------ ----- ---------- Quarter ended: - -------------- April 3, 1994 $102,777 $49,665 $ 9,091 $ 0.39 July 3, 1994 138,839 68,532 16,266 0.69 October 2, 1994 127,720 64,295 14,794 0.63 January 1, 1995 105,782 50,169 10,870 0.46 - --------------- -------- ------- ------- ------ Quarter ended: - -------------- April 4, 1993 $101,199 $46,173 $ (730) $(0.03) July 4, 1993 124,437 56,356 13,518 0.57 October 3, 1993 123,056 56,999 13,228 0.56 January 2, 1994 90,619 43,963 8,948 0.38 - --------------- -------- ------- ------- ------ ________________________ (1) The quarter ended April 3, 1994 includes a decrease in net earnings for the cumulative effect of a change in accounting for postemployment benefits of $623 or $0.02 per share. (2) The quarter ended April 4, 1993 includes a decrease in net earnings for the cumulative effect of a change in accounting for postretirement benefits other than pensions of $9,816 or $0.42 per share. 20 SCHEDULE II - ----------- BIC CORPORATION AND SUBSIDIARIES - -------------------------------- CONSOLIDATED VALUATION ACCOUNTS FOR THE FISCAL YEARS ENDED JANUARY 1, 1995, JANUARY 2, 1994 AND JANUARY 3, 1993 - ------------------------------------------- Classification Balance Additions (Additions) at Charged Deductions Balance Beginning to Profit from at End (In thousands) of Year and Loss Reserves (1) of Year - -------------- --------- --------- ----------- ------- Allowance for Doubtful Accounts: - -------------------------------- 1994 $4,084 $1,467 $1,021 $4,530 1993 5,076 85 1,077 4,084 1992 2,420 2,286 (370) 5,076 ______________________ (1) Principally accounts written off, less recoveries. EX-99.G2 11 MEDCHEM FORM 10-Q FOR QUARTER ENDED JULY 1, 1995 1 Exhibit (g)(2) [EXCERPTS FROM BIC CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JULY 2, 1995] 2 PART 1. FINANCIAL INFORMATION BIC CORPORATION AND SUBSIDIARIES ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS July 2, January 1, 1995 1995 ------- ---------- ASSETS (Thousands) CURRENT ASSETS: Cash and cash equivalents $ 65,923 $ 48,091 Accounts and notes receivable: Trade - net of allowance for doubtful accounts of $5,131,000 at July 2 and $4,530,000 at January 1 91,260 54,648 Affiliates 5,961 4,358 Other 4,547 3,861 Inventories: Finished goods 25,075 25,804 Work in process 18,472 18,335 Raw materials 10,663 7,860 Packaging materials 2,595 2,364 Other current assets 52,052 29,124 --------- --------- Total current assets 276,548 194,445 --------- --------- PROPERTY, PLANT AND EQUIPMENT - at cost less accumulated depreciation of $158,668,000 at July 2 and $151,365,000 at January 1 129,888 132,553 OTHER ASSETS 34,137 31,689 --------- --------- TOTAL $440,573 $358,687 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Bank borrowings $ 242 $ 0 Accounts payable: Trade 17,480 11,835 Affiliates 11,540 7,080 Accrued expenses 76,286 63,214 Other current liabilities 47,884 4,500 --------- --------- Total current liabilities 153,432 86,629 --------- --------- NONCURRENT LIABILITIES 25,694 24,141 --------- --------- SHAREHOLDERS' EQUITY: Preferred shares ($1 par value; authorized - 1,000,000; no shares issued or outstanding) 0 0 Common shares ($1 par value; authorized - 50,000,000; outstanding 23,559,244) 23,559 23,559 Retained earnings 255,861 238,076 Foreign currency translation adjustment (17,973) (13,718) --------- --------- Total shareholders' equity 261,447 247,917 --------- --------- TOTAL $440,573 $358,687 ========= ========= See Notes to Unaudited Condensed Consolidated Financial Statements. -2- 3 BIC CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994 1995 1994 ---- ---- (Thousands Except Share Data) NET SALES $257,413 $241,616 COST OF GOODS SOLD 135,222 123,419 --------- --------- GROSS PROFIT 122,191 118,197 ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE, MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 74,989 73,463 --------- --------- INCOME FROM OPERATIONS 47,202 44,734 OTHER INCOME (EXPENSE) - NET 1,032 (1,248) --------- --------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 48,234 43,486 PROVISION FOR INCOME TAXES 19,612 17,506 --------- --------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 28,622 25,980 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR POSTEMPLOYMENT BENEFITS, NET OF TAXES OF $410,000 0 (623) --------- --------- NET INCOME 28,622 25,357 RETAINED EARNINGS - BEGINNING OF YEAR 238,076 205,902 DIVIDENDS PAID (PER COMMON SHARE: 1995 - $0.46, 1994 - $0.40) (10,837) (9,424) --------- --------- RETAINED EARNINGS - END OF PERIOD $255,861 $221,835 ========= ========= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244 EARNINGS (LOSS) PER COMMON SHARE: INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $ 1.21 $ 1.10 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 0 (0.02) --------- --------- NET INCOME $ 1.21 $ 1.08 ========= ========= See Notes to Unaudited Condensed Consolidated Financial Statements. -3- 4 BIC CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE FISCAL QUARTERS ENDED JULY 2, 1995 AND JULY 3, 1994 1995 1994 ---- ---- (Thousands Except Share Data) NET SALES $143,935 $138,839 COST OF GOODS SOLD 75,817 70,307 --------- --------- GROSS PROFIT 68,118 68,532 ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE, MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 40,093 39,702 --------- --------- INCOME FROM OPERATIONS 28,025 28,830 OTHER INCOME (EXPENSE) - NET 1,404 (1,275) --------- --------- INCOME BEFORE INCOME TAXES 29,429 27,555 PROVISION FOR INCOME TAXES 11,982 11,289 --------- --------- NET INCOME (PER COMMON SHARE: 1995 - $0.74, 1994 - $0.69) $ 17,447 $ 16,266 ========= ========= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244 See Notes to Unaudited Condensed Consolidated Financial Statements. -4- 5 BIC CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994 1995 1994 ---- ---- (Thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES* $ 18,957 $ 10,688 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (10,643) (13,859) Proceeds from sale of property, plant and equipment 265 697 Deferred charges, deposits and other (2,418) (174) Purchases of trademarks and patents (536) (523) --------- --------- Net cash used in investing activities (13,332) (13,859) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in short term borrowings 22,995 2,746 Dividends paid (10,837) (9,424) --------- --------- Net cash provided by (used in) financing activities 12,158 (6,678) --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 49 (82) --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,832 (9,931) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 48,091 24,094 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 65,923 $ 14,163 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 493 $ 637 ========= ========= Income taxes $ 19,076 $ 17,184 ========= ========= *The 1994 Change in Employers' Accounting for Postemployment Benefits had no effect on cash and cash equivalents. See Notes to Unaudited Condensed Consolidated Financial Statements. -5- 6 BIC CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation --------------------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended July 2, 1995 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1995. Certain items in the 1994 unaudited condensed consolidated financial statements have been reclassified to conform to the 1995 presentation. 2. New Accounting Standards ------------------------ As of January 3, 1994, the Corporation adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." This new standard requires that the cost of benefits provided to former or inactive employees be recognized on the accrual basis of accounting. Previously, the Corporation recognized postemployment benefits on a cash basis or at the date the event gave rise to the payment of these benefits. In accordance with the provisions of the Collective Bargaining Agreement between BIC Corporation and Local 134 United Rubber, Cork, Linoleum and Plastic Workers of America, the Corporation provides severance benefits to its unionized employees. The Corporation also provides medical and life insurance benefits to salaried employees receiving long-term disability benefits. The cumulative effect of this change, net of deferred income tax benefit of $0.4 million, reduced net income by $0.6 million or $0.02 per share, which was reflected in the Corporation's condensed consolidated statement of income for the six months ended July 3, 1994. Also effective January 3, 1994, the Corporation adopted FASB Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts." This Interpretation defines the right of setoff and specifies what conditions must be met to have that right. The Corporation enters into forward exchange contracts denominated in foreign currencies providing protection from foreign currency fluctuations. At July 2, 1995, the Corporation had outstanding $20.6 million of forward exchange contracts, under which the Corporation is required to purchase French francs at an average contract rate of approximately 4.9 French francs to the dollar during 1995. These contracts do not meet the conditions for setoff as set forth in FASB Interpretation No. 39 and accordingly, at July 2, 1995, the Corporation has recorded a current asset and a current liability for the $20.6 million. 3. Bank Borrowings --------------- Bank borrowings totaled $0.2 million at July 2, 1995, which represents borrowings by the Corporation's Mexican subsidiary. These borrowings were repaid during July 1995, with a weighted average interest rate of 47%. -6- 7 BIC CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- The changes in the financial condition of the Corporation between January 1, 1995 and the end of the second fiscal quarter of 1995 reflect normal operations. Accounts and notes receivable were higher at July 2, 1995 as compared to January 1, 1995 due to higher sales levels. The Corporation's current ratio was 1.80 at July 2, 1995 and 2.24 at January 1, 1995. Cash and cash equivalents were $65.9 million at July 2, 1995 as compared to $48.1 million at January 1, 1995. The increase was largely due to the Corporation's French franc loan described below. Other current assets were $52.0 million at July 2, 1995 and $29.1 million at January 1, 1995. The increase was due to the $20.6 million of forward contracts the Corporation had outstanding at July 2, 1995. See Note 2, New Accounting Standards for further discussion. Accounts payable were $29.0 million at July 2, 1995 and $18.9 million at January 1, 1995. The increase was primarily due to the timing of inventory purchases. Accrued expenses were $76.3 million at July 2, 1995 as compared to $63.2 million at January 1, 1995. The increase was due to an increase in accrued insurance associated with general liability and workers' compensation, the timing of payments for advertising campaigns and marketing promotions, and an increase in payroll liability attributable to the timing of payments for bonuses and vacation time. Other current liabilities were $47.9 million at July 2, 1995 and $4.5 million at January 1, 1995. The increase in other current liabilities was partially due to the $20.6 million of forward contracts the Corporation had outstanding. See Note 2, New Accounting Standards for further discussion. The increase was also due to the Corporation borrowing 110 million French francs, or $22.7 million U.S. dollars at July 2, 1995, from its majority shareholder, Societe BIC S.A., in accordance with a certain loan agreement. Under the agreement, Societe BIC S.A. will advance BIC Corporation French francs during 1995. The principal portion of the loan is due in December 1995. Interest on the loan is payable monthly at a rate equal to the Paris Interbank Offered Rate ("PIBOR") in effect at the loan origination date plus 0.15%. At June 30, 1995 the PIBOR was 7.80. The foreign currency translation adjustment included in shareholders' equity was $(18.0) million at July 2, 1995 and $(13.7) million at January 1, 1995. The fluctuation was primarily due to the translation effect associated with the decline in value of the Mexican peso. -7- -----END PRIVACY-ENHANCED MESSAGE-----