-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Esp8qp2tQdojIe8u0HVowu0w5hEWhbmMgjFW7St94UURvL76QqIokpDmUxMKtIQH PZIwZElQw7zg2qdLtbw7rg== 0000927016-98-000226.txt : 19980128 0000927016-98-000226.hdr.sgml : 19980128 ACCESSION NUMBER: 0000927016-98-000226 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980127 SROS: NYSE GROUP MEMBERS: CDRD MERGER CORP GROUP MEMBERS: CLAYTON DUBILIER & RICE FUND V LP GROUP MEMBERS: DYNATECH CORP GROUP MEMBERS: KLINE ALLAN M GROUP MEMBERS: PEELER JOHN R GROUP MEMBERS: RENO JOHN F SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042258582 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: SEC FILE NUMBER: 005-30020 FILM NUMBER: 98513962 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042258582 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13E3 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 SC 13E3 1 FORM SC 13E3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 13E-3 RULE 13E-3 TRANSACTION STATEMENT (PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934) DYNATECH CORPORATION _____________________________________________ (Name of the Issuer) DYNATECH CORPORATION, JOHN F. RENO, ALLAN M. KLINE, JOHN R. PEELER, CDRD MERGER CORPORATION AND CLAYTON, DUBILIER & RICE FUND V LIMITED PARTNERSHIP ______________________________________________ (Names of Person(s) Filing Statement) COMMON STOCK, $.20 PAR VALUE ______________________________________________ (Title of Class of Securities) 268138104 ______________________________________________ (CUSIP Number of Class of Securities)
John F. Reno Franci J. Blassberg Dwight W. Quayle Peter B. Tarr Chairman, President and Chief Debevoise & Plimpton Ropes & Gray Hale and Dorr LLP Executive Officer 875 Third Avenue One International Place 60 State Street Dynatech Corporation New York, NY 10022 Boston, MA 02110 Boston, MA 02109 3 New England Executive Park (212) 909-6000 (617) 951-7000 (617) 526-6000 Burlington, MA 01803 (781) 272-6100
_______________________________________________ (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications on Behalf of Person(s) Filing Statement) This statement is filed in connection with (check the appropriate box): / / a. The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. [X] b. The filing of a registration statement under the Securities Act of 1933. / / c. A tender offer. / / d. None of the above. / / Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: CALCULATION OF FILING FEE - -------------------------------------------------------------------- | Transaction Value* | Amount of Filing Fee | | $785,168,258.13 | $157,034.00 | - -------------------------------------------------------------------- * The amount of the Transaction Value calculated in accordance with Rule 0-11(b)(2) under the Securities Exchange Act of 1934, as amended, equals the aggregate market value of the shares of Common Stock being acquired. [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: $6,202.00 Form or Registration No.: Registration Statement on Form S-4 Filing Party: Dynatech Corporation Date Filed: January 27, 1998 -2- INTRODUCTION This Rule 13e-3 Transaction Statement (the "Statement") relates to the Agreement and Plan of Merger dated as of December 20, 1997 (the "Merger Agreement") between Dynatech Corporation, a Massachusetts corporation ("Dynatech" or the "Company") and CDRD Merger Corporation, a Delaware corporation ("MergerCo"). A copy of the Merger Agreement is attached as Appendix A to the Proxy Statement/Prospectus filed by the Company (the "Proxy Statement") and is attached hereto as Exhibit (c)(1). The Merger Agreement provides, among other things, for the merger of MergerCo into the Company (the "Merger") with the Company continuing as the surviving corporation (the "Surviving Corporation"). In the Merger, (i) each outstanding share of common stock, par value $0.20 per share (the "Common Stock"), of the Company will be converted into the right to receive $47.75 in cash and 0.5 shares of common stock, no par value, of the Surviving Corporation (the "Recapitalized Common Stock") (except that any shares held by MergerCo or held in the Company's treasury will be canceled and any Stockholder who properly dissents from the Merger will be entitled to appraisal rights under Massachusetts law); and (ii) each outstanding share of common stock, $.01 par value per share, of MergerCo ("MergerCo Common Stock") will be converted into one share of Recapitalized Common Stock. Immediately prior to the Merger, (a) John F. Reno, Chairman, President and Chief Executive Officer, together with two family trusts established by Mr. Reno, will contribute 40,804 shares of Common Stock to MergerCo in exchange for 799,758 shares of MergerCo Common Stock and (b ) Clayton, Dubilier & Rice Fund V Limited Partnership ("CDR Fund V") will purchase 110,790,770 shares of MergerCo Common Stock for approximately $277 million. In the Merger, all such shares of MergerCo Common Stock will be converted into Recapitalized Common Stock as described above. As a result of the Merger and these related transactions, immediately following the Merger, (x) CDR Fund V will own approximately 92.3% of the outstanding Recapitalized Common Stock, (y) the stockholders of the Company prior to the Merger other than Mr. Reno and his family trusts, will own approximately 7% of the outstanding Recapitalized Common Stock and (z) Mr. Reno (together with his family trusts) will own approximately 0.7% of the outstanding Recapitalized Common Stock. The following cross reference sheet shows the location of certain information in the Proxy Statement/Registration Statement (the "Proxy Statement") relating to the Merger filed by the Company with the Securities and Exchange Commission. The information in the Proxy Statement, including all appendices thereto, is hereby expressly incorporated herein by reference and the responses to each item of this Statement are qualified in their entirety by the provisions of the Proxy Statement. The Proxy Statement will be completed and, if appropriate, amended prior to the time it is first sent or given to stockholders. This Statement will be amended to reflect such completion or amendment of the Proxy Statement. -3- Cross Reference Sheet (Pursuant to General Instruction F to Schedule 13E-3) Schedule 13E-3 Item Number and Caption Location in the Proxy Statement - ----------------------- ------------------------------- Item 1. Issuer and Class of Security Subject to the Transaction. (a) Front page of Proxy Statement and "The Company" (b) Front page of Proxy Statement, "Market Prices of Common Stock" and "The Special Meeting -- Record Date and Voting." (c), (d) and (f) "Market Prices of Common Stock." (e) Not applicable. Item 2. Identity and Background. (a) - (d) and (g) "Additional Information," "The Company," "Management" and "MergerCo, CDR Fund V and CDR." (e) and (f) Not applicable. Item 3. Past Contracts, Transactions or Negotiations. (a) and (b) "Special Factors -- Background of the Merger," "-- Opinion of Financial Advisor," and " -- Interests of Certain Persons in the Merger." Item 4. Terms of the Transaction. (a) and (b) "Special Factors -- Interests of Certain Persons in the Merger," "The Merger and the Merger Agreement," "Certain Relationships and Related Transactions" and "Merger Financings." -4- Item 5. Plans or Proposals of the Issuer or Affiliate. (a), (b) and (e) Not applicable. (c) "Recapitalized Common Stock Following the Merger," "Special Factors -- Interests of Certain Persons in the Merger," "Risk Factors -- Control by CDR Fund V," "Certain Relationships and Related Transactions" and "Management" (d) "Management Discussion & Analysis-- Capital Resources and Liquidity," "Risk Factors -- Substantial Leverage; Liquidity," "Pro Forma Capitalization," "Ratio of Earnings to Fixed Charges," "Merger Financings" and "Unaudited Pro Forma Condensed Consolidated Financial Statements." (f) and (g) "Risk Factors -- Delisting of Common Stock on the New York Stock Exchange" and " --Termination of Exchange Act Reporting." Item 6. Source and Amount of Funds or Other Consideration. (a) and (c) "Management Discussion & Analysis --Capital Resources and Liquidity" and "Merger Financings" (b) "Fees and Expenses" (d) Not applicable. Item 7. Purpose(s), Alternatives, Reasons and Effects. (a), (b) and (c) "Summary -- Special Factors," "Special Factors -- Background of the Merger," "-- Recommendation of Board; Reasons for the Merger" and "-- Opinion of Financial Advisor." -5- (d) "Special Factors -- Certain Effects of the Merger," "-- Material Federal Income Tax Consequences," "--Interests of Certain Persons in the Merger" "Unaudited Pro Forma Condensed Consolidated Financial Statements" and "Certain Relationships and Related Transactions." Item 8. Fairness of the Transaction (a), (b), (d) and (e) "Special Factors -- Background of the Merger," "-- Recommendation of Board; Reasons for the Merger" and "-- Opinion of Financial Advisor." (c) "Special Factors -- Recommendation of Board; Reasons for the Merger" and "The Special Meeting -- Vote Required; Revocability of Proxies" (f) Not applicable. Item 9. Reports, Opinions, Appraisals and Certain Negotiations. (a) and (b) "Special Factors -- Background of the Merger" and "-- Opinion of Financial Advisor" and "Appendix B -- Merrill Lynch Opinon." (c) Not applicable. Item 10. Interest in Securities of the Issuer. (a) "Security Ownership of Certain Beneficial Owners and Management." (b) "Market Prices of Common Stock." Item 11. Contracts, Arrangements or "Special Meeting -- Vote Required; Understandings with Respect Revocability of Proxies," "Special to the Issuer's Securities Factors --Interests of Certain Persons in the Merger;" "Certain Relationships and Related Transactions" and "The Merger and the Merger Agreement -- Effect on Stock Options and Employee Benefit Matters." -6- Item 12. Present Intention and Recommendation of Certain Persons with Regard to the Transaction. (a) and (b) "Special Meeting -- Vote Required; Revocability of Proxies," "Special Factors --Recommendation of Board; Reasons for the Merger" and "--Interests of Certain Persons in the Merger." Item 13. Other Provisions of the Transaction. (a) "Appraisal Rights." (b) and (c) Not applicable. Item 14. Financial Information. (a) "Financial Statements," "Selected Historical Consolidated Financial Data," "Ratio of Earnings to Fixed Charges, "Income (Earnings) Per Share" and "Book Value Per Share." (b) "Unaudited Pro Forma Condensed Consolidated Financial Statements," "Ratio of Earnings to Fixed Charges," "Income (Earnings) Per Share" and "Book Value Per Share." Item 15. Persons and Assets Employed, Retained or Utilized. (a) "Certain Relationships and Related Transactions," "Special Factors -- Interests of Certain Persons in the Merger" and "Management." (b) "The Special Meeting - Solicitation of Proxies." Item 16. Additional Information Not applicable. -7- SCHEDULE 13E ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION. (a) The issuer of the class of equity securities which is the subject of this Statement is Dynatech Corporation, whose principal executive office is located at 3 New England Executive Park, Burlington, MA 01803-5087. The information set forth in the Section "The Company" of the Proxy Statement is incorporated herein by reference. (b) The title of the equity securities which are the subject of the Rule 13e-3 transaction is common stock, par value $0.20 per share ("Common Stock"), and approximately 16,852,774 shares of such Common Stock were outstanding as of December 31, 1997. Dynatech had approximately 985 stockholders of record as of December 31, 1997. The information set forth in the Section "Market Prices of Common Stock" and "The Special Meeting --Record Date and Voting" of the Proxy Statement is incorporated herein by reference. (c), (d) and (f). The information set forth in the Section "Market Prices of Common Stock" of the Proxy Statement is incorporated herein by reference. Neither MergerCo nor CDR Fund V have purchased any shares of Common Stock since the commencement of Dynatech's second full fiscal year preceding the date hereof. (e). Not applicable. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g). This Statement is being filed jointly by (i) Dynatech Corporation, the issuer of the class of equity securities which is the subject of this Rule 13e-3 transaction, (ii) John F. Reno, Allan M. Kline and John R. Peeler (iii) MergerCo and (iv) CDR Fund V. The information set forth in the Sections "Additional Information," "The Company," "Management" and "MergerCo, CDR Fund V and CDR" of the Proxy Statement is incorporated herein by reference. (e) and (f). None of the persons or entities with respect to whom information is required by this item was, during the last five years, convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was 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 further violations of, or prohibiting activities, subject to, federal or state securities laws or finding of any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS. (a) and (b). The information set forth in the Sections "Special Factors -- Background of the Merger," "--Opinion of Financial Advisor" and "-- Interests of Certain Persons in the Merger," of the Proxy Statement is incorporated herein by reference. ITEM 4. TERMS OF THE TRANSACTION. (a) and (b). The information set forth in the Sections "Special Factors -- Interests of Certain Persons in the Merger," "The Merger and the Merger Agreement," "Certain Relationships and Related Transactions" and "Merger Financings" of the Proxy Statement is incorporated herein by reference. ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE (a) (b) and (e). Not applicable. -8- (c). The information set forth in the Sections "Recapitalized Common Stock Following the Merger," "Special Factors -- Interests of Certain Persons in the Merger," "Risk Factors -- Control by CDR Fund V," "Certain Relationships and Related Transactions" and "Management" of the Proxy Statement is incorporated herein by reference. (d). The information set forth in the Sections "Management Discussion & Analysis -- Capital Resources and Liquidity," "Risk Factors -- Substantial Leverage; Liquidity," "Pro Forma Capitalization," "Ratio of Earnings to Fixed Charges," "Merger Financings" and "Unaudited Proforma Consolidated Financial Statements" of the Proxy Statement is incorporated herein by reference. (f) and (g) The information set forth in the Sections "Risk Factors -- Delisting of Common Stock on the New York Stock Exchange," and "-- Termination of Exchange Act Reporting" of the Proxy Statement is incorporated herein by reference. ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS. (a) and (c). The information set forth in the Sections "Management Discussion & Analysis -- Capital Resources and Liquidity" and "Merger Financings" of the Proxy Statement is incorporated herein by reference. No plans or arrangements to finance or repay any borrowings used in connection with the Merger have been made. (b). The information set forth in the Section "Fees and Expenses" of the Proxy Statement is incorporated herein by reference. (d). Not applicable. ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS. (a), (b) and (c). The information set forth in Sections "Summary --Special Factors," "Special Factors -- Background of the Merger," "--Recommendation of Board; Reasons for the Merger" and ""-- Opinion of Financial Adviser" of the Proxy Statement is incorporated herein by reference. (d). The information set forth in Sections "Special Factors -- Certain Effects of the Merger," "-- Material Federal Income Tax Consequences," "-- Interests of Certain Persons in the Merger," "Unaudited Pro Forma Condensed Consolidated Financial Statements" and "Certain Relationships and Related Transactions" of the Proxy Statement is incorporated herein by reference. ITEM 8. FAIRNESS OF THE TRANSACTION. (a), (b), (d) and (e). The information set forth in Sections "Special Factors -- Background of the Merger, " "-- Recommendation of Board; Reasons for the Merger" and "-- Opinion of Financial Advisor" of the Proxy Statement is incorporated herein by reference. John F. Reno, Chairman of the Board of Directors of Dynatech, did not attend or vote at the meeting of the Board of Directors at which the Merger was approved due to his participation with CDR Fund V in the proposed merger transaction. (c). The information set forth in the Section "Special Factors -- Recommendation of the Board of Directors; Reasons for the Merger" and "The Special Meeting --Vote Required; Revocability of Proxies" of the Proxy Statement is incorporated herein by reference. (f). No such offer has been received. -9- ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS (a) and (b). The information set forth in the Sections "Special Factors - - - Background of the Merger," "--Opinion of Financial Advisor," and "Appendix B - Merrill Lynch Opinion" of the Proxy Statement is incorporated herein by reference. (c). The Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated December 20, 1997, is included in the information to be circulated to Stockholders and shall also be made available for inspection and copying at the principal executive offices of the Company during its regular business hours by any interested Stockholder of the Company or his or its representative who has been designated in writing. At the written request of such Stockholder, a copy of such opinion will be sent, at the Stockholder's expense, to such Stockholder or his or its representative. The information set forth in Exhibit (b)(2) and (b)(3) to this Statement will be made available for inspection and copying at the principal executive offices of the Company by any interested Stockholder of the Company or his or its representative who has been designated in writing. At the written request of such a Stockholder, a copy of that Exhibit will be sent, at the Stockholder's expense, to such Stockholder or his or its representatives. ITEM 10. INTEREST IN SECURITIES OF THE ISSUER (a). The information set forth in the Section "Summary - Security Ownership of Certain Beneficial Owners and Management" of the Proxy Statement is incorporated herein by reference. (b). The information set forth in the Section "Market Prices of Common Stock" of the Proxy Statement is incorporated herein by reference. ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S SECURITIES. The information set forth in the Sections "Special Meeting -- Vote Required; Revocability of Proxies," "Special Factors -- Interests of Certain Persons in the Merger," "Certain Relationships and Related Transactions" and "The Merger and the Merger Agreement -- Effect on Stock Options and Employee Benefit Matters" of the Proxy Statement is incorporated herein by reference. ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO THE TRANSACTION (a) and (b). The information set forth in the Sections "Special Meeting -- Vote Required; Revocability of Proxies," "Special Factors -- Recommendation of Board; Reasons for the Merger" and "-- Interests of Certain Persons in the Merger" of the Proxy Statement is incorporated herein by reference. ITEM 13. OTHER PROVISIONS OF THE TRANSACTION (a). The information set forth in the Section "Appraisal Rights" of the Proxy Statement is incorporated herein by reference. (b) and (c). Not applicable. ITEM 14. FINANCIAL INFORMATION (a). The information set forth in the Sections "Financial Statements," "Selected Historical Consolidated Financial Data," "Ratio of Earnings to Fixed Charges," "Income (Earnings) Per Share" and "Book Value Per Share" of the Proxy Statement is incorporated herein by reference. -10- (b). The information set forth in the Section "Unaudited Pro Forma Condensed Consolidated Financial Statements," "Ratio of Earnings to Fixed Charges," "Income (Earnings) Per Share" and "Book Value Per Share" of the Proxy Statement is incorporated herein by reference. ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED (a). The information set forth in the Sections "Certain Relationships and Related Transactions," "Special Factors -- Interests of Certain Persons in the Merger" and "Management" of the Proxy Statement is incorporated herein by reference. (b). The information set forth in the Section "The Special Meeting -- Solicitation of Proxies" of the Proxy Statement is incorporated herein by reference. ITEM 16. ADDITIONAL INFORMATION None. ITEM 17. MATERIAL TO BE FILED AS EXHIBITS Exhibit Description (b)(1) Fairness Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated dated December 20, 1997 is attached as Appendix B to Proxy Statement (Exhibit (d)). (b)(2) Materials presented to the Board on December 12, 1997 by Merrill Lynch, Pierce, Fenner & Smith Incorporated, as advisor to the Special Committee (excluding Appendix). (b)(3) Materials presented to the Board on December 20, 1997 by Merrill Lynch, Pierre, Fenner & Smith Incorporated, as advisor to the Special Committee. (c)(1) Agreement and Plan of Merger dated as of December 20, 1997 by and between Dynatech and MergerCo is attached as Appendix A to Proxy Statement (Exhibit (d)). (d) Proxy Statement. (e) Sections 85 through 98 of the Massachusetts Business Corporation Law relating to appraisal rights is attached as Appendix D to Proxy Statement (Exhibit (d)). -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 as of January 27, 1998. DYNATECH CORPORATION By: /s/ John F. Reno --------------------------------- Name : John F. Reno Title: Chairman, President and Chief Executive Officer /s/ John F. Reno --------------------------------- John F. Reno /s/ Allan M. Kline --------------------------------- Allan M. Kline /s/ John R. Peeler --------------------------------- John R. Peeler CDRD MERGER CORPORATION By: /s/ Joseph L. Rice, III --------------------------------- Name : Joseph L. Rice, III Title: Vice President and Treasurer CLAYTON, DUBILIER & RICE FUND V LIMITED PARTNERSHIP By: CD&R Associates V Limited Partnership, the General Partner By: CD&R Investment Associates, Inc., its managing general partner. By: /s/ Joseph L. Rice, III ---------------------------------- Name: Joseph L. Rice, III Title: President -12- EX-99.B2 2 MATERIALS PRESENTED TO THE BOARD ON 12-DEC-1997 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. - -------------------------------------------------------------------------------- Confidential Presentation to The Board of Directors of WINCHESTER Corporation December 12, 1997 Table of Contents - -------------------------------------------------------------------------------- A. Overview of Proposed Transaction B. Overview of WINCHESTER C. Overview of Projections D. WINCHESTER Market Performance E. Premium Analysis F. Valuation of WINCHESTER - Public Comparables Analysis - Acquisition Comparables Analysis - Discounted Cash Flow Analysis G. Leveraged Buyout Analysis Exhibit A - -------------------------------------------------------------------------------- Overview of Proposed Transaction - -------------------------------------------------------------------------------- Overview of the Proposed Transaction - -------------------------------------------------------------------------------- . Offer price of $43.00 - $45.00 per WINCHESTER share . Fully diluted Offer Value for WINCHESTER equity of $819 - $870 million (based on 19.0 million shares) . Transaction Value of $730 - $768 million (based on estimated adjusted net debt of $89 million as of November 30, 1997) . Recapitalization accounting treatment (no goodwill created), with management and employees to own a significant portion of WINCHESTER's equity post-transaction 1 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of the Proposed Transaction - -------------------------------------------------------------------------------- Summary Multiples (dollars in millions, except per share)
------------------------------------------------------------ Per Share Offer Price $43.00 - $45.00 Fully Diluted Shares/(a)/ 19.0 --------------- Offer Value $819 - $857 =============== Plus: Adjusted Net Debt/(b)/ ($89.0) --------------- Transaction Value $730 - $768 =============== - ------------------------------------------------------------------------------ Closing Offer Date Price Premium ----------------------- ----------------- -------------------- 12/11/97 $35.19 22.2% - 27.9% 12/05/97 37.38 15.0% - 20.4% 11/4/97 35.44 21.3% - 27.0% 52-week High (1/15/97) 54.50 (21.1%) - (17.4%) 52-week Low (2/12/97) 27.00 59.3% - 66.7% 52-week Average 37.34 15.2% - 20.5% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Offer Value Per Share as a Multiple of EPS: - -------------------------------------------------------------------------------- LTM 1997/(c)/ 1998/(c)/ - ------------------------- ------------------------- ---------------------------- 18.5x - 19.4x [**] [**] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Transation Value as a Multilple of - -------------------------------------------------------------------------------- EBITDA/(d)/ EBIT/(d)/ - ------------------------------------ --------------------------------------- LTM 1998E LTM 1998E - -------------- --------------------- -------------------- ------------------ 8.6x - 9.1x [**] 10.9x - 11.4x [**] - --------------------------------------------------------------------------------
- --------------- (a) Based on 16.9 million shares outstanding plus 2.1 million options. (b) Based on estimated total debt at November 30, 1997 of $1.3 million less cash of $33.2 million and less option proceeds of $57.1 million. (c) Projections are based on WINCHESTER Management estimates and calendarized to December year end. (d) LTM numbers as of 9/30/97. Fiscal year ended 3/31/98. 2 Exhibit B - -------------------------------------------------------------------------------- Overview of WINCHESTER - -------------------------------------------------------------------------------- Overview of WINCHESTER - -------------------------------------------------------------------------------- Public Market Overview (Dollars in Millions, Except Per Share Data)
- -------------------------------------------------------------------------------- Market Value and Capitalization - -------------------------------------------------------------------------------- WINCHESTER current Market Price 11-Dec-97 $35.19 52 Week High 55.00 52 Week Low 27.00 Shares Outstanding (MM)/(a)/ 16.872 ---------- Market Value $593.7 Plus: Total Debt/(a)/ 21.3 Less: Cash/(a)/ (43.5) --------- Market Capitalization $571.5 ========== 5-Year I/B/E/S Estimate EPS Growth Rate 18.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Historical and Forward Trading Multiples - -------------------------------------------------------------------------------- Market Price as a Multiple of: Market Capitalization ---------------------- as a Multiple of: First Call -------------------------------------------------------- Year Sales EBITDA EBIT EPS Est./(b)/ - ------------------ -------------- ------------- --------------------- ---------------------- LTM September-97 1.37x 7.Ox 8.8x 15.8x Mar-98 1.19 6.4 7.8 14.1 Actual/Projected Financial Results - --------------------- LTM September-97 $415.74 $81.77 $64.65 $2.23 Mar-98 481.50 88.60 73.10 2.50 - --------------------------------------------------------------------------------
- --------------- (a) Source: 1OQ Report dated 9/30/97. (b) Source EPS Estimates from First Call as of 12/10/97. 3 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of WINCHESTER - -------------------------------------------------------------------------------- Research Analysts Outlook
EPS Date of Estimates/(1)/ ------------------------------------ Firm Last Update 1998 1999 Recommendation - ------------------------------------ ------------------------ --------------- ------------------- ------------------- Merrill Lynch 11/1/97 $2.55 $2.90 Neutral Schroder 10/17/97 2.48 2.88 Perform in Line Jefferies & Co. 11/7/97 2.45 2.91 -- SoundView Pinancial 10/14/97 2.50 3.12 -- CAGR/(2)/ --------- Mean First Call Est. $2.50 $2.95 18.0% IBES EPS Growth Rate -- -- 18.0% September Forecast [**] [**] [**] November Update [**] [**] [**]
- --------------- (1) Fiscal years ended March 31. (2) 5- year EPS growth rate for First Call and I/B/E/S; 4- year CAGR for September Forecast and November Update. 4 Exhibit C - -------------------------------------------------------------------------------- Overview of Projections - -------------------------------------------------------------------------------- Overview of Projections - -------------------------------------------------------------------------------- Due Diligence In the course of its due diligence, Merrill Lynch: . met and participated in calls with management regarding WINCHESTER . reviewed publicly available information regarding WINCHESTER, including financials and research reports . reviewed internal management reports, financial forecasts and the budget plans . reviewed strategic plans for many businesses . met with Merrill Lynch's research analyst, Joe Bellace . met with the potential acquiror and CSFB to review WINCHESTER . participated in a telephonic Board of Directors meeting . reviewed WINCHESTER's tax and accounting policies and issues 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Business Review TTC --- . Consistently [**] . Currently ahead of plan . Major initiative in international markets; however, may face tough competition . Expect gross margins to fall . More rapid growth in [**] which carry lower margins than [**] . International sales also carry lower margins . Several financial plans . [**] Strategic Plan . September Forecast . Cases prepared for WINCHESTER - Target - Goal - Conservative . November Update . Significant revision in outlook since preparation of [**] Strategic Plan . Attempting to [**] 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Business Review ICS --- . Currently performing [**] . French operations performing [**] . [**] leading to lower margins ITRONIX ------- . Currently at [**] . [**] . Several management changes recently . Need to [**] . superior product, [**] . [**] competition . [**] 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Business Review AIRSHOW ------- . [**] market position . Performs [**] . Higher content per plane than when only a map business a few years ago . Strong product development . [**] growth opportunities DA VINCI -------- . [**] market position . [**] plan . [**] business . [**] potential 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Business Review COMCOTEC -------- . [**] financial performance has been [**] . [**] DATA VIEWS ---------- . Currently [**] . Management change recently . Trying to [**] with the expectation to [**] PARALLAX -------- . Expected to be closed down or sold by year end 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - WINCHESTER (dollars in millions, except per share data)
For the Year Ended March 31, ---------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR -------- -------- -------- -------- -------- -------- Sales September Forecast [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA September Forecast [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] EPS September Forecast [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------------------ 1993-1997 1993 1994 1995 1996 1997 CAGR ---------- ---------- ---------- ---------- --------- ---------- Sales $190.0 $199.6 $243.1 $355.9 $426.2 22.4% % Growth - 5.1% 21.8% 46.4% 19.8% EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - TTC (dollars in millions, except per share data) For the Year Ended March 31, ---------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR -------- -------- -------- -------- -------- ---------- Sales September Forecast [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] [**] Strategic Plan [**] [**] [**] % Growth [**] [**] [**] EBITA September Forecast [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] [**] Strategic Plan [**] [**] [**] % Growth [**] [**] [**] For the Year Ended March 31, ---------------------------------------------------------------------------- 1993-1997 1993 1994 1995 1996 1997 CAGR -------- -------- -------- -------- -------- ---------- Sales $114.3 $116.1 $143.1 $172.0 $211.3 16.6% % Growth - 1.6% 23.2% 20.2% 22.8% EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - ICS (dollars in millions, except per share data)
For the Year Ended March 31, ------------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales September Forecast [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA September Forecast [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------------------- 1993-1997 1993 1994 1995 1996 1997 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales $27.9 $36.6 $44.8 $57.9 $60.5 21.3% % Growth - 31.2% 22.4% 29.3% 4.5% EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - ITRONIX (dollars in millions, except per share data)
For the Year Ended March 31, ------------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales September Forecast [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA September Forecast [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------------------- 1993-1997 1993 1994 1995 1996 1997 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales - - - $62.8 $81.6 NM % Growth - - - - 29.9% EBITA - - - [**] [**] [**] Margin - - - [**] [**]
13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - AIRSHOW (dollars in millions, except per share data)
For the Year Ended March 31, ------------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales September Forecast [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA September Forecast [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------------------- 1993-1997 1993 1994 1995 1996 1997 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales [**] [**] [**] [**] [**] [**] % Growth - [**] [**] [**] [**] EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
14 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - DA VINCI (dollars in millions, except per share data)
For the Year Ended March 31, ------------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales September Forecast [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA September Forecast [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] November Update [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------------------- 1993-1997 1993 1994 1995 1996 1997 CAGR ------------ ------------ ------------ ------------ ------------ ------------- Sales [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
15 Exhibit D - -------------------------------------------------------------------------------- WINCHESTER Market Performance - -------------------------------------------------------------------------------- WINCHESTER Market Performance - -------------------------------------------------------------------------------- One-Year Price Performance
----------------------------------------------------------------------------- Average High Average Low Daily Volume ----------------- --------- ----------------- ------------- 3-month $47.31 (10/10/97) $38.62 $34.00 (10/27/97) 112,197 6-month 47.31 (10/10/97) 38.30 34.00 (10/27/97) 138,646 12-month 54.50 (1/15/97) 37.34 27.00 (2/12/97) 161,923 ------------------------------------------------------------------------------
[GRAPH indicating stock price from 12/11/96 to 12/11/97 appears here] 16 WINCHESTER Market Performance ================================================================================ Analysis of One-Year Trading Volume Percent of Volume Which Traded in Stock Price Range [GRAPH indicating percent of trading volume which traded in stock price range from $28 to $55 in ranges of $3 increments APPEARS HERE] Percent of Volume Which Traded Below Stock Price [GRAPH indicating percent of trading volume which traded below stock price APPEARS HERE] 17 WINCHESTER Market Performance - -------------------------------------------------------------------------------- Three-Year Price Performance
- -------------------------------------------------------------------------------- High Average Low Daily Volume ----------------- ---------- ----------------- ------------ 3-month $47.31 (10/10/97) $38.62 $34.00 (10/27/97) 112,197 6-month 47.31 (10/10/97) 38.30 34.00 (10/27/97) 138,646 12-month 54.50 (01/15/97) 37.34 27.00 (02/12/97) 161,923 3-year 58.00 (11/14/96) 29.04 13.56 (12/05/94) 191,156 - --------------------------------------------------------------------------------
[GRAPH indicating stock price from 12/11/96 to 12/11/97 APPEARS HERE] 18 WINCHESTER Market Performance ================================================================================ Analysis of Three-Year Trading Volume Percent of Volume Which Traded in Stock Price Range [GRAPH indicating percent of trading volume which traded in stock price range from $14 to $59 in ranges of $5 increments APPEARS HERE] Percent of Volume Which Traded Below Stock Price [GRAPH indicating percent of trading volume which traded below stock price APPEARS HERE] 19 Valuation of WINCHESTER - -------------------------------------------------------------------------------- One-Year Indexed Price Performance [GRAPH indicating one-year indexed price performance APPEARS HERE] 20 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Three-Year Indexed Price Performance [GRAPH indicating three-year indexed price performance APPEARS HERE] 21 Exhibit E - -------------------------------------------------------------------------------- Premium Analysis - -------------------------------------------------------------------------------- Premium Analysis - -------------------------------------------------------------------------------- 1997 Transactions/1/
---------------------------------------------- Premium --------------------------------- Offer 1 Day 1 Week 4 Weeks --------- --------- ---------- ----------- $43.00 22.2% 15.0% 21.3% $44.00 25.0% 17.7% 24.2% $45.00 27.9% 20.4% 27.0% ----------------------------------------------
1 Day 1 Week 4 Weeks All 25.2% 29.6% 35.6% Cash 22.2% 25.2% 27.6% Stock 27.0% 32.3% 37.5% Cash-and-Stock 24.2% 28.7% 38.4%
Prior to Announcement Date - ----------------------- Source: Securities Data Company. (1) For deals greater than $250 million in value from 1/1/97 to 12/8/97. 22 Exhibit F - -------------------------------------------------------------------------------- Valuation of WINCHESTER - -------------------------------------------------------------------------------- Valuation of WINCHESTER - -------------------------------------------------------------------------------- Summary Valuation [GRAPH INDICATING PER SHARE VALUE APPEARS HERE] --------------- Note: Figures exclude one-time charges. 23 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Public Comparables Analysis (dollars in millions) [GRAPH INDICATING PER SHARE VALUE BASED ON PUBLIC COMPARABLES ANALYSIS APPEARS HERE]
1997E 1998E LTM LTM 1998 EPS EPS EBITDA EBIT P/E/GROWTH - -------------------------------------------------------------------------------- Multiples High 17.0x 14.5x 8.5x 10.5x 85% Range Low 15.0 12.5 7.5 9.0 75% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- WINCHESTER Statistics: $2.34 $3.01 $81.8 $64.6 18% - --------------------------------------------------------------------------------
- --------------- Note: Figures exclude one-time charges. - -------------------------------------------------------------------------------- 24 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Public Comparables Analysis (dollars in millions, except per share data)
Equity Value Market Capitalization as a Multiple of as a Multiple of Share Total Total Net Income ------------------------- Price at Equity Market -------------------- LTM LTM 12/11/97 Value Cap. 1997E 1998E EBIT EBITDA -------- --------- -------- --------- --------- ---------- ---------- Teradyne $30.188 $ 2,518.4 $ 2,220.7 20.0x 10.7x 20.6x (a) 13.5x (a) Tektronix 38.000 1,282.9 1,306.6 15.4 13.3 8.0 5.8 Tekelec 31.000 799.3 741.2 51.7 (a) 38.8 (a) 42.3 (a) 33.6 (a) Genrad 24.875 678.8 667.7 20.6 16.8 19.9 (a) 16.1 (a) Digital Lightwave 18.125 478.0 444.5 106.6 (a) 35.5 (a) 446.6 (a) 293.0 (a) Fluke Corporation 22.875 419.4 379.1 14.1 12.0 8.2 6.2 Telxon 22.813 361.5 441.7 29.6 (a) 18.7 -51.4 (a) 24.0 (a) LeCroy 37.125 254.5 233.3 24.8 (a) 20.3 (a) 15.3 12.6 (a) Zygo Corporation 18.500 201.9 177.8 14.2 11.3 8.4 7.4 IFR Systems 22.000 120.4 121.1 16.1 12.9 10.0 8.0 Thermospectra 9.438 145.2 214.4 17.8 12.4 17.3 (a) 11.6 Integrated Measurement Systems 17.750 133.2 108.5 22.2 (a) 16.6 12.1 8.5 Applied Digital Access 7.125 89.5 75.9 -31.0 (a) 79.2 (a) -14.0 (a) -28.8 (a) ---------------------------------------------------------------- Mean 16.9x 13.9x 10.3x 7.9x Median 16.1 12.9 9.2 7.7 ---------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- WINCHESTER (b) $35.188 $593.7 $ 571.5 15.0x 11.7x 8.8x 7.0x - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- WINCHESTER $42.000 $ 708.6 $ 686.4 17.9x 14.0x 10.6x 8.4x WINCHESTER 45.000 759.2 737.0 19.2 15.0 11.4 9.0 WINCHESTER 47.000 793.0 770.7 20.1 15.6 11.9 9.4 WINCHESTER 50.000 843.6 821.4 21.4 16.6 12.7 10.0 WINCHESTER 52.000 877.3 855.1 22.2 17.3 13.2 10.5 - ----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------- (a) Excluded from mean and median calculations. (b) WINCHESTER numbers based on November Update case. 25 Valuation of WINCHESTER - -------------------------------------------------------------------------------- P/E to Growth Rate Analysis (dollars in millions, except per share data
1998 P/E I/B/E/S 1997 P/E 1998 P/E to Growth Rate 5-Yr Growth Rate -------- -------- -------------- ---------------- Teradyne 20.0x 10.7x 53.3% 20.0% Tektronix 15.4 13.3 88.6% 15.0% Tekelec 51.7 38.8 86.1% 45.0% Genrad 20.6 16.8 73.1% 23.0% Digital Lightwave 106.6 35.5 71.1% 50.0% Fluke Corporation 14.1 12.0 79.8% 15.0% Telxon 29.6 18.7 93.5% 20.0% LeCroy 24.8 20.3 81.1% 25.0% Zygo Corporation 14.2 11.3 40.5% 28.0% IFR Systems 16.1 12.9 51.5% 25.0% Thermospectra 17.8 12.4 49.7% 25.0% Integrated Measurement Systems 22.2 16.6 66.4% 25.0% Applied Digital Access -31.0 79.2 239.9% 33.0% ---------------------------------------------------------------------------- Companies with Mean 19.9x 14.3x 77.7% 18.6% Growth Rates of less than 25% Median 20.0 13.3 79.8% 20.0% ---------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------ WINCHESTER 15.0x 11.7x 64.9% 18.0% - ------------------------------------------------------------------------------------------------------------ Stock Price - ------------------------------------------------------------------------------------------------------------ WINCHESTER $42.000 17.9x 14.0x 77.5% 18.0% WINCHESTER 45.000 19.2 15.0 83.1% 18.0% WINCHESTER 47.000 20.1 15.6 86.7% 18.0% WINCHESTER 50.000 21.4 16.6 92.3% 18.0% WINCHESTER 52.000 22.2 17.3 96.0% 18.0% - ------------------------------------------------------------------------------------------------------------
26 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Acquisition Comparables Analysis (dollars in millions) [GRAPH INDICATING PER SHARE VALUE BASED ON ACQUISITION COMPARABLES ANALYSIS APPEARS HERE]
LTM LTM LTM Net Income EBITDA EBIT - -------------------------------------------------------------------------------- Multiples High 21.0X 9.5X 12.5X Range: Low 19.0 8.5 11.5 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- WINCHESTER Statistics: $40.9 $84.6 $67.2 - --------------------------------------------------------------------------------
------------------------ Note: Figures exclude one-time charges. 27 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Acquisition Comparables Analysis (dollars in millions)
Offer Transaction Date: Target: Acquiror: Value Value/(a)/ ----------- --------------------------- --------------------------------- ------------- ---------------- 11-Jun-97 Wavetek DLJ and Leonard Green 198.8 198.8 18-Dec-96 Itronix Dynatech 65.8 66.9 6-Sep-95 Megatest Teradyne 266.7 278.4 22-Jul-94 Keptel ANTEC 89.2 84.5 21-Mar-90 Wiltron Anritsu 180.0 180.0
Offer Value to: Transaction Value to: --------------- ------------------------ Date: Target: Acquiror: LTM Net Inc. LTM EBITDA LTM EBIT ----------- --------------------------- --------------------------------- --------------- ---------- -------- 11-Jun-97 Wavetek DLJ and Leonard Green 20.4 8.9 10.4 18-Dec-96 Itronix Dynatech 20.2 8.9 11.7 6-Sep-95 Megatest Teradyne NM NM NM 22-Jul-94 Keptel ANTEC 20.4 8.8 11.8 21-Mar-90 Wiltron Anritsu 20.0 NA 15.0 ----------------------------------------------------- Mean 20.3x 8.9x 12.2x Median 20.3 8.9 11.7 -----------------------------------------------------
- ----------------------------- (a) Transaction Value = Offer Value + Preferred Equity + Long Term Debt + Short Term Debt + Minority Interest - Cash & Marketable Securities - Exercisable Options Proceeds. (b) Exclusion from mean and median calculations. 28 Confidential Materials omitted and filed separately with the securities and Exchange Commission. Asterisks denote omissions. Valuation of WINCHESTER - -------------------------------------------------------------------------------- Acquisition Valuation Matrix (dollars in millions, except per share data)
Offer Price Per Share Transaction Value As a Multiple of: As a Multiple of: ----------------------------------------------- --------------------- EBITDA EBIT EPS Offer Offer Transaction --------------------- -------------------- --------------------- Price Value (a) Value (b) LTM 1998E (c) LTM 1998E (c) LTM 1998E (c) -------- --------- --------- ------ --------- ------ --------- ------- --------- ------------------------------------------------------------------------- $84.6 [**] $67.2 [**] $2.32 [**] ------------------------------------------------------------------------- $43.00 $818.8 $729.9 8.6x [**] 10.9x [**] 18.5x [**] 44.00 837.9 $748.9 8.9 [**] 11.2 [**] 19.0 [**] 45.00 856.9 $768.0 9.1 [**] 11.4 [**] 19.4 [**] 46.00 876.0 $787.0 9.3 [**] 11.7 [**] 19.8 [**] 47.00 895.0 $806.1 9.5 [**] 12.0 [**] 20.3 [**] 48.00 914.1 $825.1 9.8 [**] 12.3 [**] 20.7 [**] 49.00 933.1 $844.1 10.0 [**] 12.6 [**] 21.1 [**] 50.00 952.2 $863.2 10.2 [**] 12.9 [**] 21.6 [**] 51.00 971.2 $882.2 10.4 [**] 13.1 [**] 22.0 [**] 52.00 990.2 $901.3 10.7 [**] 13.4 [**] 22.4 [**] 53.00 1,009.3 $920.3 10.9 [**] 13.7 [**] 22.8 [**]
- -------------------------------------------------- (a) Based on 19.043 million hilly diluted shares. (b) Transaction value equals offer value plus net debt of ($31.9) million as of November 30, 1997 and assumed option proceeds of ($57.1) million. (c) Based on November Update case. 29 Confidential Materials omitted and filed separately with the securities and Exchange Commission. Asterisks denote omissions. Valuation of WINCHESTER - -------------------------------------------------------------------------------- DCF Analysis September Forecast ------------------------------ Equity Value per share at Terminal Value multiple of 2002 EBITDA /(a)/
Discount Rate 7.Ox 8.Ox 9.Ox ---------------------------------------------------- 11.5% [**] [**] [**] 12.5% [**] [**] [**] 13.5% [**] [**] [**] ----------------------------------------------------
November Update ------------------------------ Equity Value per share at Terminal Value Multiple of 2002 EBITDA /(b)/
Discount Rate 7.Ox 8.Ox 9.Ox ---------------------------------------------------- 11.5% [**] [**] [**] 12.5% [**] [**] [**] 13.5% [**] [**] [**] ----------------------------------------------------
- ------------------------------ (a) Discounted - years based on 2002 EBITDA of [**] million. (b) Discounted - years based on 2002 EBITDA of [**] million. 30 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Valuation of WINCHESTER September Base Case - -------------------------------------------------------------------------------- Discounted Cash Flow Analysis (dollars in millions, except per share data)
PV of Terminal Value PV of Free + Multiple of 2002 EBITDA (b) = Enterprise Value Cash Flows -------------------------------------- ------------------------------------- Discount Rate ('99-02) (a) 7.Ox 8.0x 9.0x 7.Ox 8.0x 9.0x ------------- ------------ ------------------------------------- ------------------------------------- 11.5% $133.5 [**] [**] [**] [**] [**] [**] 12.0% 132.0 [**] [**] [**] [**] [**] [**] 12.5% 130.6 [**] [**] [**] [**] [**] [**] 13.0% 129.1 [**] [**] [**] [**] [**] [**] 13.5% 127.7 [**] [**] [**] [**] [**] [**] Equity Value Per Share at Terminal Value Multiple Total Equity Value of 2002 EBITDA (c) Net Debt (a) ------------------------------------- ------------------------------------- Discount Rate - 3/31/98 = 7.Ox 8.0x 9.0x 7.Ox 8.0x 9.0x ------------- ----------- ------------------------------------- ------------------------------------- 11.5% ($104.6) $810.4 $892.1 $973.9 [**] [**] [**] 12.0% (104.6) 798.7 879.0 959.3 [**] [**] [**] 12.5% (104.6) 787.4 866.2 945.1 [**] [**] [**] 13.0% (104.6) 776.2 853.7 931.2 [**] [**] [**] 13.5% (104.6) 765.3 841.5 917.6 [**] [**] [**]
- --------------- (a) Present values discounted to March 31, 1998. (b) Discounted 4 years based on 2002 EBITDA of [**] Million. (c) Based on 19.0 million fully-diluted shares. Option proceeds are included in net debt. 31 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Valuation of WINCHESTER November Update Case - -------------------------------------------------------------------------------- Discounted Cash Flow Analysis (dollars in millions, except per share data)
PV of Terminal Value PV of Free + Multiple of 2002 EBITDA (b) = Enterprise Value Cash Flows --------------------------------------- ---------------------------------- Discount Rate ('99-02) (a) 7.Ox 8.0x 9.0x 7.Ox 8.0x 9.0x ------------- ------------ --------------------------------------- ---------------------------------- 11.5% $163.5 [**] [**] [**] [**] [**] [**] 12.0% 161.6 [**] [**] [**] [**] [**] [**] 12.5% 159.8 [**] [**] [**] [**] [**] [**] 13.0% 158.1 [**] [**] [**] [**] [**] [**] 13.5% 156.3 [**] [**] [**] [**] [**] [**] Equity Value Per Share at Terminal Value Multiple Total Equity Value of 2002 EBITDA (c) Net Debt (a) ----------------------------------- ---------------------------------- Discount Rate - 3/31/98 = 7.Ox 8.0x 9.0x 7.Ox 8.0x 9.0x ------------- ------------ ----------------------------------- ---------------------------------- 11.5% ($104.8) $944.0 $1,040.6 $1,137.1 [**] [**] [**] 12.0% (104.8) 930.2 1,025.0 1,119.9 [**] [**] [**] 12.5% (104.8) 916.7 1,009.9 1,103.0 [**] [**] [**] 13.0% (104.8) 903.5 995.0 1,086.5 [**] [**] [**] 13.5% (104.8) 890.5 980.4 1,070.3 [**] [**] [**] ----------------------------------- ----------------------------------
- ---------------------- (a) Present values discounted to March 31, 1998. (b) Discounted 4 years based on 2002 EBITDA of [**] Million. (c) Based on 19.0 million fully-diluted shares. Option proceeds are included in net debt. Exhibit G - -------------------------------------------------------------------------------- Leveraged Buyout Analysis - -------------------------------------------------------------------------------- Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Leveraged Buyout Analysis - -------------------------------------------------------------------------------- (dollars in millions) ------------------------------------------------------------------ Constraints ------------------------------------------------------------------ . Total Deb/LTM EBITDA [**] . Bank Debt/LTM EBITDA [**] . Maximum Bank Deb Repayment Period 7 years . Minimum Equity Investment % 25% ------------------------------------------------------------------ --------------------------- Note: LTM EBITDA as of 3/31/98 of [**] for September Forecast and [**] for November Update. 33 Confidential Materials omitted and filed seaparately with the Securities and Exchange Commission. Asterisks denote omissions. Leveraged Buyout Analysis September Forecast - -------------------------------------------------------------------------------- IRR Analysis
------------------------------ ------------------------------ ------------------------------- 2000 2001 2002 ------------------------------ ------------------------------- ------------------------------- Acquisition Price EBITDA EBITDA EBITDA ------------------------------ ------------------------------- ------------------------------- $45.00 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x --------- --------- -------- --------- -------- -------- ---------- --------- -------- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E ------------------------------ ------------------------------- ------------------------------- 15x 16.5x 18x 15x 16.5x 18x 15x 16.5x 18x ------------------------------ ------------------------------- ------------------------------- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA ------------------------------ ------------------------------ ------------------------------ $47.50 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x --------- --------- -------- --------- --------- --------- ---------- ---------- --------- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E ------------------------------ ------------------------------ ------------------------------ 15x 16.5x 18x 15x 16.5x 18x 15x 16.5x 18x --------- --------- -------- --------- --------- -------- --------- --------- -------- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA ------------------------------ ------------------------------ ------------------------------ $50.00 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x --------- --------- -------- --------- --------- -------- --------- --------- -------- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E ------------------------------ ------------------------------ ------------------------------ 15x 16.5x 18x 15x 16.5x 18x 15x 16.5x 18x --------- --------- -------- --------- --------- -------- --------- --------- -------- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA ------------------------------ ------------------------------ ------------------------------ $52.50 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x --------- --------- -------- --------- --------- -------- --------- --------- -------- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E ------------------------------ ------------------------------ ------------------------------ 15x 6.5x 18x 15x 16.5x 18x 15x 16.5x 18x --------- --------- -------- --------- --------- -------- --------- --------- -------- [**] [**] [**] [**] [**] [**] [**] [**] [**]
- -------------------------------------------------------------------------------- 34 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Leveraged Buyout Analysis November Update - -------------------------------------------------------------------------------- IRR Analysis
----------------- ---------------- ----------------- 2000 2001 2002 ----------------- ---------------- ----------------- Acquisition Price EBITDA EBITDA EBITDA -------------------------- --------------------------- --------------------------- $45.00 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E ------------------------- --------------------------- -------------------------- 15x 16.5x 18x 15x 16.5x 18x 15x 16.5x 18x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA -------------------------- --------------------------- --------------------------- $47.50 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E -------------------------- --------------------------- --------------------------- 15x 16.5x 18x 15x 16.5x 18x 15x 16.5x 18x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA -------------------------- --------------------------- --------------------------- $50.00 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E -------------------------- --------------------------- --------------------------- 15x 16.5x 18x 15x 16.5x 18x 15x 16.5x 18x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA -------------------------- --------------------------- --------------------------- $52.50 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] P/E P/E P/E -------------------------- --------------------------- --------------------------- 15x 16.5x 18x 15x 16.5x 18x 15x 16.5x 18x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**]
- -------------------------------------------------------------------------------- 35 EX-99.B3 3 MATERIALS PRESENTED TO THE BOARD ON 20-DEC-1997 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ---------------------------------------------- Confidential Presentation to The Board of Directors of WINCHESTER Corporation December 20, 1997 Table of Contents - -------------------------------------------------------------------------------- A. Overview of the Proposed Transaction B. Overview of WINCHESTER C. Overview of Projections D. WINCHESTER Market Performance E. Premium Analysis F. Valuation of WINCHESTER - Public Comparables Analysis - Acquisition Comparables Analysis - Discounted Cash Flow Analysis G. Leveraged Buyout Analysis H. Break-up Fee Schedules Exhibit A - -------------------------------------------------------------------------------- Overview of the Proposed Transaction - -------------------------------------------------------------------------------- Overview of the Proposed Transaction - -------------------------------------------------------------------------------- . Preliminary offer price of $43.00 - $45.00 per WINCHESTER share . Final offer price of $49.00 per WINCHESTER share . $47.75 in cash (97.4%) . $1.25 in stock of the recapitalized company (2.6%) . Fully diluted Offer Value for WINCHESTER equity of $930 million (based on 19.0 million shares) . Transaction Value of $842 million (based on estimated adjusted net debt of $88 million as of November 30, 1997) . Recapitalization accounting treatment (no goodwill created), with management and employees to own a significant portion of WINCHESTER's equity post-transaction . WINCHESTER public shareholders retain approximately 7.0% of the pro forma primary equity (approximately 5.3% on a diluted basis) 1 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of the Proposed Transaction - -------------------------------------------------------------------------------- Transaction Financing and Pro Forma Ownership (a) Acquisition Price = $49/share
Sources Amount Percent Uses Amount Percent - ------- ------ ------- ---- ------ ------- Existing Cash Balances $20.4 2.3% Option Proceeds 27.5 3.1% Fees (Financing + Advisory) $40.0 4.5% Bank Debt 290.4 32.6% Refinance Existing Debt 0.2 0.0% Subordinated Debt 275.0 30.9% Options to be cashed out 46.8 5.3% CD&R Investment 276.9 31.1% Share Repurchase 803.1 90.2% --------------------- --------------------- Total Sources $890.2 100.0% Total Uses $890.2 100.0% Share Repurchase Calculation: Credit Statistics (b) - ----------------------------- --------------------- Primary Shares Outstanding 16.86 Bank Debt $290.4 Options Outstanding 2.13 Multiple of LTM EBITDA [**] -------- Total Debt $565.4 Total Diluted Shares Outstanding 18.99 Multiple of LTM EBITDA [**] Less: Options "Rolled Over" 1.17 Public Shares "Rolled Over" 0.43 Management Shares "Rolled Over" 0.04 Options to be Cashed Out 0.96 -------- Net Shares to be Repurchased 16.39 ======== Pro Forma Ownership Primary Shares Options Diluted Shares - ------------------- ------------------- ------------------ ------------------- Shares % Shares % Shares % ------------------- ------------------ ------------------- Public 0.43 7.0% - 0.0% 0.43 5.3% Management 0.04 0.7% 1.97 100.0% 2.01 24.9% CD&R 5.65 92.3% - 0.0% 5.65 69.8% -------------------- ------------------ -------------------- 6.12 100.0% 1.97 100.0% 8.09 100.0% ==================== ================== ====================
a) Source: Management and CD&R. b) Based on Management estimate of LTM EBITDA of [**] as of 3/31/98. 2 Overview of the Proposed Transaction - -------------------------------------------------------------------------------- Summary Multiples (dollars in millions, except per share)
-------------------------------------------------- Closing Offer Date Price Premium --------------------------------------------- --------------------- ----------- ------------ Per Share Offer Price $49.00 12/18/97 $35.50 38.0% Fully Diluted Shares (a) 19.0 12/12/97 35.13 39.5% ---------- 11/21/97 38.19 28.3% Offer Value $930 52-week High (1/15) 54.50 (10.1%) ========== 52-week Low (2/28,3/24) 28.00 75.0% Plus: Adjusted Net Debt (b) ($88) 52-week Average 37.16 31.9% ---------- -------------------------------------------------- Transaction Value $842 ========== ---------------------------------------------
---------------------------------------------------------------- Offer Value Per Shares as a Multiple of EPS: ---------------------------------------------------------------- LTM 1997E(c) 1998E(c) ------------ -------------------- -------------------- 21.1x 20.9x 17.3x ---------------------------------------------------------------- ---------------------------------------------------------------- Transaction Value as a Multiple of ---------------------------------------------------------------- EBITDA(d) EBIT(d) ---------------------------------------------------------------- LTM 1998E LTM 1998E ------- --------- ------- --------- 10.0 9.5x 12.5x 11.5x ----------------------------------------------------------------
- ------------------------ (a) Based on 16.9 million shares outstanding plus 2.1 million options. (b) Based on estimated total debt at November 30, 1997 of $1.3 million less cash of $33.2 million and less option proceeds of $56.2 million. (c) Projections are based on First Call estimates as of December 18, 1997 and calendarized to December year end. (d) LTM numbers as of 11/30/97. Fiscal year ended 3/31/98. 3 Exhibit B - -------------------------------------------------------------------------------- Overview of WINCHESTER - -------------------------------------------------------------------------------- Overview of WINCHESTER - -------------------------------------------------------------------------------- Public Market Overview (Dollars in Millions, Except Per Share Data)
----------------------------------------------------------------- Market Value and Capitalization ----------------------------------------------------------------- WINCHESTER Current Market Price 18-Dec-97 $35.50 52 Week High (Intraday) 55.00 52 Week Low (Intraday) 27.00 Shares Outstanding (MM)/(a)/ 16.872 --------- Market Value $598.9 Plus: Total Debt/(a)/ 21.3 Less: Cash/(a)/ (43.5) --------- Market Capitalization $576.7 ========= 5-Year I/B/E/S Estimate EPS Growth Rate 18.0% -----------------------------------------------------------------
- -------------------------------------------------------------------------------------- Historical and Forward Trading Multiples - -------------------------------------------------------------------------------------- Market Price Market Capitalization as a Multiple of: as a Multiple of: ----------------- ---------------------------------------- First Call Year Sales EBITDA EBIT EPS Est./(b)/ - ----------------- --------- -------- -------- ----------------- LTM September-97 1.39x 7.1x 8.9x 15.9x Mar-98 1.22 6.5 7.9 14.2 Mar-99 --- --- --- 12.0 Actual/Projected Financial Results - ------------------ LTM September-97 $415.74 $81.77 $64.65 $2.23 Mar-98 472.70 88.60 73.20 2.50 Mar-99 --- --- --- 2.95 - --------------------------------------------------------------------------------------
- ------------------------------ (a) Source: 10Q Report dated 9/30/97. (b) Source: EPS Estimates from First Call as of 12/18/97. 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of WINCHESTER - -------------------------------------------------------------------------------- Research Analysts Outlook
EPS Estimates/(1)/ Date of ----------------------------- Firm Last Update 1998 1999 Recommendation - ------------------------------- ------------- ---------- ---------- -------------------------- Merrill Lynch 12/1/97 $2.55 $2.90 Neutral Schroders 12/1/97 2.48 2.88 Perform in Line Jefferies & Co. 12/8/97 2.45 2.91 -- SoundView Financial 10/14/97 2.50 3.12 -- CAGR/(2)/ ---- Mean First Call Est. $2.50 $2.95 21.0% IBES EPS Growth Rate -- -- 18.0% Management Case - No Repurchase [**] [**] [**] Adjusted Case - No Repurchase [**] [**] [**] Management Case - Repurchase/(3)/ [**] [**] [**] Adjusted Case - Repurchase/(3)/ [**] [**] [**]
- -------------------------------------- (1) Fiscal years ended March 31. (2) 5-year EPS growth rate for First Call as of December 18, 1997 and I/B/E/S; 4-year CAGR for Management case and Adjusted Case. (3) Assumes excess cash used to repurchase stock at 20x multiple of prior year's EPS Minimum cash balance equals $10 million. - -------------------------------------------------------------------------------- 5 Exhibit C - -------------------------------------------------------------------------------- Overview of Projections - -------------------------------------------------------------------------------- Overview of Projections - -------------------------------------------------------------------------------- Due Diligence In the course of its due diligence, Merrill Lynch: . met and participated in calls with management regarding WINCHESTER . reviewed publicly available information regarding WINCHESTER, including financials and research reports . reviewed internal management reports, financial forecasts and the budget plans . reviewed strategic plans for many businesses . met with Merrill Lynch's research analyst, Joe Bellace . met with the potential acquiror and CSFB to review WINCHESTER . performed on-site due diligence with TTC senior management . participated in meetings of the Board of Directors . reviewed WINCHESTER's tax and accounting policies and issues 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omission. Overview of Projections - -------------------------------------------------------------------------------- Business Review TTC --- . Consistently [**] . Currently ahead of plan . Major initiative in international markets; however, may face tough competition . Expect gross margins to fall . More rapid growth in [**], which carry lower margins than [**] . International sales also carry lower margins . Several financial plans . [**] Strategic Plan . September Forecast . Cases prepared for WINCHESTER -- Target -- Goal -- Conservation . November Update (Management Case) . Significant revision in outlook since preparation of [**] Strategic Plan . Attempting to [**] 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Business Review ICS - --- . Currently performing [**] . French operations performing [**] . [**] leading to lower margins ITRONIX - ------- . Currently at [**] . [**] . Several management changes recently . Need to [**] . superior product, [**] . [**] competition . [**] 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Business Review AIRSHOW ------- . [**] market position . Performs [**] . FY98 - Original Plan = [**] . FY98 - November Revision = [**] . Higher content per plan than when only a map business a few years ago . Strong product development . [**] growth opportunities DA VINCI -------- . [**] market position . [**] plan . [**] business . [**] potential 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Business Review COMCOTEC -------- . [**] financial performance has been [**] . [**] DATA VIEWS ---------- . Currently [**] . Management change recently . Trying to [**] with the expectation to [**] PARALLAX -------- . Expected to be closed down or sold by year end 10
Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------------------------------------------- Projections Summary - WINCHESTER (dollars in millions, except per share data) For the Year Ended March 31, ----------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR -------- -------- -------- -------- -------- --------- Sales Management Case $472.7 $531.0 $568.8 $642.8 $726.1 [**] % Growth 10.9% 12.3% 7.1% 13.0% 13.0% Adjusted Case $472.7 $530.8 $574.3 $653.7 $744.4 [**] % Growth 10.9% 12.3% 8.2% 13.8% 13.9% EBITA Management Case $ 78.9 $ 82.5 $ 88.7 $100.0 $112.8 [**] Margin 16.7% 15.5% 15.6% 15.6% 15.5% Adjusted Case $ 78.9 $ 91.3 $104.5 $121.3 $141.7 [**] Margin 16.7% 17.2% 18.2% 18.6% 19.0% EPS Management Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] [**] For the Year Ended March 31, ----------------------------------------------------------------------- 1993-1997 Historical 1993 1994 1995 1996 (a) 1997 (a) CAGR - ---------- -------- -------- -------- -------- -------- ----------- Sales $190.0 $199.6 $243.1 $355.9 $426.2 22.4% % Growth --- 5.1% 21.8% 46.4% 19.8% EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
a) 1997 and 1996 include Pro Forma performance for Itronix 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - TTC (dollars in millions, except per share data)
For the Year Ended March 31, ------------------------------------------------------------------ 1998-2002 1998 1999 2000 2001 2002 CAGR ------ ------ ------ ------ ------ --------- Sales Management case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Target Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Goal Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Conservative Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] May Strategic Plan [**] [**] [**] % Growth [**] [**] [**] EBITA Management Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Target Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Goal Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Conservative Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] May Strategic Plan [**] [**] [**] Margin [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------ 1993-1997 Historical 1993 1994 1995 1996 1997 CAGR - ---------- ------ ------ ------ ------ ------ --------- Sales $114.3 $116.1 $143.1 $172.0 $211.3 16.6% % Growth 1.6% 23.2% 20.2% 22.8% EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- EBITA Variance Analysis for TTC
Calculation for 1998 TTC Sales Forecast - ----------------------------------------------------------------------------------------------------- Bookings FY 1997 FY 1998 -------------------- -------------------- YTD [**] [**] [**] [**] Full Year (Implied for 1998) [**] [**] Sales Q1-Q3 (Projected for 1998) (a) [**] [**] [**] [**] Pull Year (Implied for 1998) [**] [**] - ----------------------------------------------------------------------------------------------------- Average [**] ===================================================================================================== Calculation for TTC S, G & A as a % of Sales - ---------------------------------------------------------------------------------------------------- ------------------------- Historical Performance 1995 1996 1997 Forecast CAGR CAGR 1998 (a) 1995-1997 1995-1998 ----------------------------------------- ------------------------- Total Sales $143.1 $172.0 $211.3 [**] 21.5% [**] Sales, general & administrative expenses [**] [**] [**] [**] [**] [**] Sales, general & administrative expenses as a % of sales [**] [**] [**] [**] [**] [**] ----------------------------------------- -------------------------
Note: S, G & A as a % of sales shows a [**] over the last 3 years a) 1998 Forecast provided by Winchester Management 13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- EBITA Variance Analysis for TTC
---------------------------------------------------- ------------ Management Case vs. Adjusted Case 1998 1999 2000 2001 2002 CAGR 1998-2002 ---------------------------------------------------- ------------ Sales [**] [**] [**] [**] [**] [**] Gross Profit [**] [**] [**] [**] [**] [**] Product Development [**] [**] [**] [**] [**] [**] Sales, general & administrative expenses [**] [**] [**] [**] [**] [**] ----------------------------------------------------- EBITA [**] [**] [**] [**] [**] [**] Sales, general & administrative expenses as a % of sales [**] [**] [**] [**] [**] [**]
Note: Assumes S, G&A as a % of sales falls by [**] per annum beginning with 1999 Forecast.
Adjusted Sales, general & administrative expenses as a % of sales [**] [**] [**] [**] [**] [**] Adjusted Sales, general & administrative expenses [**] [**] [**] [**] [**] - ----------------------------------------------------------------------------------------------------------------------- Sales, general & administrative expenses variance [**] [**] [**] [**] [**] - ----------------------------------------------------------------------------------------------------------------------- Adjusted EBITA Margin [**] [**] [**] [**] [**] Incremental Sales Analysis (Adjusted Case vs. Management Case) [**] [**] [**] [**] [**] - ----------------------------------------------------------------------------------------------------------------------- lncremental EBITA on Incremental Sales [**] [**] [**] [**] [**] - ----------------------------------------------------------------------------------------------------------------------- Revised EBITA [**] [**] [**] [**] [**] [**] =====================================================
14 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Management Case/May Strat Plan Reconciliation - --------------------------------------------------------------------------------
FY'98 FY'99 FY'00 Item Impact Impact Impact Comments - --------------------------------------- ---------- ---------- ---------- ------------------------------------ [**] Order [**] [**] [**] [**] Orders [**] [**] [**] [**] [**] [**] [**] [**] Telco Residential [**] [**] [**] [**] Slip in [**] deployment [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] Taking longer than expected [**] [**] [**] [**] [**] Strat plan had [**] market estimates [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] Board was told this when presented by J. Peeler Adjustments to Strategic Plan Forecasts [**] [**] [**] [**] Strat Plan Forecasts [**] [**] [**] Adjusted [**] Plan [**] [**] [**] November Management Forecast [**] [**] [**]
Source: TTC management. - -------------------------------------------------------------------------------- 15 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary -- ICS (dollars in millions, except per share data)
For the Year Ended March 31, ------------------------------------------------------------------ 1998-2002 1998 1999 2000 2001 2002 CAGR -------- -------- -------- -------- -------- ----------- Sales Management Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA Management Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------- 1993-1997 Historical 1993 1994 1995 1996 1997 CAGR - ---------- -------- -------- -------- -------- -------- --------- Sales $27.9 $36.6 $44.8 $57.9 $60.5 21.4% % Growth --- 31.2% 22.4% 29.3% 4.5% EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
16 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - ITRONIX (dollars in millions, except per share data)
For the Year Ended March 31, ------------------------------------------------------------------------------ 1998 - 2002 1998 1999 2000 2001 2002 CAGR -------- -------- -------- -------- -------- ----------- Sales Management Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA Management Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ------------------------------------------------------------------------------ 1993-1997 Historical 1993 1994 1995 1996 (a) 1997 (a) CAGR - ---------- -------- -------- -------- -------- -------- ----------- Sales ---- ---- ---- $62.8 $81.6 NM % Growth ---- ---- ---- ---- 29.9% EBITA ---- ---- ---- [**] [**] [**] Margin ---- ---- ---- [**] [**]
a) 1997 and 1996 include Pro Forma performance for Itronix 17 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - AIRSHOW (dollars in millions, except per share data)
For the Year Ended March 31, ---------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR ------ ------ ------ ------ ------ ----------- Sales Management Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA Management Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ---------------------------------------------------------------------------- 1993-1997 Historical 1993 1994 1995 1996 1997 CAGR - ---------- ------ ------ ------ ------ ------ ----------- Sales [**] [**] [**] [**] [**] [**] % Growth --- [**] [**] [**] [**] EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
18 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Overview of Projections - -------------------------------------------------------------------------------- Projections Summary - DA VINCI (dollars in millions, except per share data)
For the Year Ended March 31, --------------------------------------------------------------------------------- 1998-2002 1998 1999 2000 2001 2002 CAGR -------- -------- -------- -------- -------- --------- Sales Management Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] % Growth [**] [**] [**] [**] [**] EBITA Management Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] Adjusted Case [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**] For the Year Ended March 31, ---------------------------------------------------------------------------------- 1993-1997 Historical 1993 1994 1995 1996 1997 CAGR - ---------- -------- -------- -------- -------- -------- --------- Sales [**] [**] [**] [**] [**] [**] % Growth ---- [**] [**] [**] [**] EBITA [**] [**] [**] [**] [**] [**] Margin [**] [**] [**] [**] [**]
19 Exhibit D - -------------------------------------------------------------------------------- WINCHESTER Market Performance - -------------------------------------------------------------------------------- WINCHESTER Market Performance - -------------------------------------------------------------------------------- One-Year Price Performance
----------------------------------------------------------------------------------------- Average High Average Low Daily Volume ---------------- ----------- ------------------- ------------------ 3-month $47.31 (10/10) $38.22 $34.00 (10/27) 104,582 6-month 47.31 (10/10) 38.08 34.00 (10/27) 134,499 12-month 54.50 (1/15) 37.16 28.00 (2/28,3/24) 154,220 -----------------------------------------------------------------------------------------
[GRAPH Indicating Stock Price From 12/11/96 To 12/11/97 APPEARS HERE] 20 WINCHESTER Market Performance - -------------------------------------------------------------------------------- Analysis of One-Year Trading Volume Percent of Volume Which Traded in Stock Price Range [GRAPH INDICATING PERCENT OF TRADING VOLUME WHICH TRADED IN STOCK PRICE FROM $28 TO $55 IN RANGES OF $3 INCREMENTS APPEARS HERE] Percent of Volume Which Traded Below Stock Price [GRAPH INDICATING PERCENT OF TRADING VOLUME WHICH TRADED BELOW STOCK PRICE APPEARS HERE] 21 WINCHESTER Market Performance - -------------------------------------------------------------------------------- Three-Year Price Performance
- -------------------------------------------------------------------------------- Average High Average Low Daily Volume ------------------ -------- ------------------- ------------ 3-month $47.31 (10/10) $38.22 $34.00 (10/27) 104,582 6-month 47.31 (10/10) 38.08 34.00 (10/27) 134,499 12-month 54.50 (1/15) 37.16 28.00 (2/28,3/24) 154,220 3-year 58.00 (11/14/96) 29.32 14.00 (10/10/95) 189,485 - --------------------------------------------------------------------------------
[GRAPH INDICATING STOCK PRICE FROM 12/19/94 TO 12/18/97 APPEARS HERE] 22 WINCHESTER Market Performance - -------------------------------------------------------------------------------- Analysis of Three-Year Trading Volume Percent of Volume Which Traded in Stock Price Range [GRAPH INDICATING PERCENT OF TRADING VOLUME WHICH TRADED IN STOCK PRICE RANGE FROM $14 TO $59 IN RANGES OF $5 INCREMENTS APPEARS HERE] Percent of Volume Which Traded Below Stock Price [GRAPH INDICATING PERCENT OF TRADING VOLUME WHICH TRADED BELOW STOCK PRICE APPEARS HERE] 23 WINCHESTER Market Performance - -------------------------------------------------------------------------------- One-Year Indexed Price Performance [GRAPH INDICATING ONE-YEAR INDEXED PRICE PERFORMANCE APPEARS HERE] 24 WINCHESTER Market Performance - -------------------------------------------------------------------------------- Three-Year Indexed Price Performance [GRAPH INDICATING THREE-YEAR INDEXED PRICE PERFORMANCE APPEARS HERE] 25 Exhibit E - -------------------------------------------------------------------------------- Premium Analysis - -------------------------------------------------------------------------------- Premium Analysis - -------------------------------------------------------------------------------- 1997 Transactions/(1)/
1 Day 1 Week 4 Weeks All 25.4% 29.7% 35.9% Cash 22.4% 25.1% 28.3% Stock 27.0% 32.2% 37.8% Cash-and-Stock 24.2% 28.7% 38.7% Premium @$49 38.0% 39.5% 28.3%
Prior to Announcement Date --------------- Source: Securities Data Company. (1) For announced, but not withdrawn, and completed deals greater than $250 million in value from 1/1/97 to 12/18/97. 26 Exhibit F - -------------------------------------------------------------------------------- Valuation of WINCHESTER - -------------------------------------------------------------------------------- Valuation of WINCHESTER - -------------------------------------------------------------------------------- Summary Valuation [GRAPH INDICATING PER SHARE VALUE APPEARS HERE] - --------------------- Note: Figures exclude one-time charges 27 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Public Comparable Analysis (dollars in millions) [GRAPH INDICATING PER SHARE VALUE BASED ON PUBLIC COMPARABLES ANALYSIS APPEARS HERE]
1997E 1998E LTM LTM 1998 EPS(a) EPS(a) EBITDA EBIT P/E/GROWTH - -------------------------------------------------------------------------------- Multiples High 17.5x 14.0x 8.0x 10.5x 85% Range Low 15.5 12.0 7.0 8.5 75% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- WINCHESTER Statistics: $2.34 $2.84 $81.8 $64.6 18% - --------------------------------------------------------------------------------
- ---------------- Note: Figures excluded one-time charges. (a) EPS estimates calendarized and based on First Call. LTM as of 9/30/97. 28 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Public Comparables Analysis (dollars in millions, except per share data)
Equity Value Market Capitalization as a Multiple of as a Multiple of Share Total Total CY Net Income (a) ----------------------- Price at Equity Market ------------------------- LTM LTM 12/18/97 Value Cap. 1997E 1998E EBIT EBITDA -------- --------- --------- --------- --------- ------- -------- Teradyne $30.563 $ 2,549.7 $ 2,252.0 20.4x 11.1x 20.9x (b) 13.6x (b) Tektronix 37.063 1,251.2 1,274.9 14.9 13.0 7.8 5.7 Tekelec 29.500 760.6 702.5 49.2 (b) 36.9 (b) 40.0 (b) 31.9 (b) Genrad 24.875 678.8 667.7 20.6 16.8 19.9 (b) 16.1 (b) Digital Lightwave 13.875 365.9 332.4 81.6 (b) 27.2 (b) 334.0 (b) 219.1 (b) Fluke Corporation 22.563 413.7 373.4 13.9 11.8 8.1 6.1 Telxon 22.000 348.6 428.8 28.6 (b) 18.0 -49.9 (b) 23.3 (b) LeCroy 29.125 199.6 178.5 19.4 15.8 11.7 9.7 Zygo Corporation 14.750 161.0 136.9 11.3 9.0 6.4 5.7 IFR Systems 17.063 93.4 94.1 12.5 10.0 7.8 6.2 Thermospectra 9.000 138.5 207.6 19.1 12.7 16.8 11.2 Integrated Measurement Systems 16.938 127.1 102.4 21.2 (b) 15.8 11.4 8.0 Applied Digital Access 6.125 76.9 63.4 -27.8 (b) 68.1 (b) -11.7 (b) -24.0 (b) ----------------------------------------------------------------- Mean 16.5x 13.4x 10.0x 7.5x Median 17.0 12.8 8.1 6.2 ----------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- WINCHESTER $35.500 $ 598.9 $ 576.7 15.2x 12.5x 8.9x 7.1x - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- WINCHESTER $45.000 $ 759.2 $ 737.0 19.2x 15.8x 11.4x 9.0x WINCHESTER 47.000 793.0 770.7 20.1 16.5 11.9 9.4 WINCHESTER 49.000 826.7 804.5 20.9 17.3 12.4 9.8 WINCHESTER 51.000 860.5 838.2 21.8 18.0 13.0 10.3 WINCHESTER 53.000 894.2 872.0 22.6 18.7 13.5 10.7 - -------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------- (a) Based on First Call estimates as of December 18, 1997. (b) Excluded from mean and median calculations 29 Valuation of WINCHESTER - -------------------------------------------------------------------------------- P/E to Growth Rate Analysis (dollars in millions, except per share data)
CY CY 1998 P/E I/B/E/S 1997 P/E 1998 P/E to Growth Rate 5-Yr Growth Rate -------- -------- -------------- ---------------- Teradyne 20.4x 11.1x 55.6% 20.0% Tektronix 14.9 13.0 87.7% 15.0% Tekelec 49.2 36.9 81.9% 45.0% Genrad 20.6 16.8 73.1% 23.0% Digital Lightwave 81.6 27.2 54.4% 50.0% Fluke Corporation 13.9 11.8 78.8% 15.0% Telxon 28.6 18.0 90.2% 20.6% LeCroy 19.4 15.8 63.3% 25.0% Zygo Corporation 11.3 9.0 23.3% 28.0% IFR Systems 12.5 10.0 39.9% 25.0%(a) Thermospectra 19.1 12.7 50.7% 25.0% Integrated Measurement Systems 21.2 15.8 63.3% 25.0% Applied Digital Access -27.8 68.1 206.2% 33.0% ------------------------------------------------------------------- Companies with Mean 19.7x 14.2x 76.9% 18.6% Growth Rates of less than 25% Median 20.4 13.0 78.8% 20.0% ------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- WINCHESTER 15.2x 12.5x 69.4% 18.0% - -------------------------------------------------------------------------------------------------- Stock Price - -------------------------------------------------------------------------------------------------- WINCHESTER $45.000 19.2x 15.8x 88.0% 18.0% WINCHESTER 47.000 20.1 16.5 91.9% 18.0% WINCHESTER 49.000 20.9 17.3 95.9% 18.0% WINCHESTER 51.000 21.8 18.0 99.8% 18.0% WINCHESTER 53.000 22.6 18.7 103.7% 18.0% - --------------------------------------------------------------------------------------------------
- ------------------------------------------ Note: I/B/E/S growth rates as of November 20, 1997. (a) Based on First Call estimate as of 12/18/97. Valuation of WINCHESTER - -------------------------------------------------------------------------------- Acquisition Comparables Analysis (dollars in millions) [GRAPH INDICATING PER SHARE VALUE BASED ON ACQUISITION COMPARABLES ANALYSIS APPEARS HERE]
LTM LTM LTM Net Income EBITDA EBIT - -------------------------------------------------------------------------------- Multiples High 22.5x 11.0x 14.0x Range: Low 20.5 9.0 12.0 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- WINCHESTER Statistics: $40.9 $84.6 $67.2 - --------------------------------------------------------------------------------
--------------- Note: Figures exclude one-time charges. LTM figures as of 11/30/97. 31 Valuation of WINCHESTER - -------------------------------------------------------------------------------- Acquisition Comparables Analysis (dollars in millions)
Announcement Offer Date: Target: Acquiror: Value/(a)/ ------------ ---------------- --------------------- ---------- 13-Oct-97 Network General McAfee Associates $ 1,268.8 11-Jun-97 Wavetek DLJ and Leonard Green 198.8 18-Dec-96 Itronix Dynatech 65.8 6-Sep-95 Megatest Teradyne 266.7 22-Jul-94 Keptel ANTEC 89.2 21-Mar-90 Wiltron Anritsu 180.0 Offer Value to: Transaction Value to: Transaction --------------- ----------------------- Value/(b)/ LTM Net Inc. LTM EBITDA LTM EBIT ------------ --------------- ---------- --------- $1,169.1 31.3x 18.0x 22.2x 198.8 20.4 8.9 10.4 66.9 20.2 8.9 11.7 278.4 NM NM NM 84.5 20.4 8.8 11.8 180.0 20.0 NA 15.0 ------------------------------------------------ Mean 22.5x 11.1x 14.2x Median 20.4 8.9 11.8 ------------------------------------------------
- --------------------------------- (a) Offer value is based on fully diluted shares, net of option proceeds. (b) Transaction Value = Offer Value + Preferred Equity + Long Term Debt + Short Term Debt + Minority Interest-Cash & Marketable Securities. 32 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
Valuation of WINCHESTER - ----------------------------------------------------------------------------------------------------------------------------------- Acquisition Valuation Matrix (dollars in millions, except per share data) Offer Price Per Share Transaction Value As a Multiple of: As a Multiple of: --------------------------------------------------- --------------------- EBITDA EBIT EPS Offer Offer Transaction --------------------- -------------------- --------------------- Price Value (a) Value (b) LTM 1998E (c) LTM 1998E (c) LTM 1998E (c) ----- --------- --------- ------ --------- ----- ---------- ------ ----------- -------------------------------------------------------------------------------- $84.6 [**] $67.2 [**] $2.32 [**] -------------------------------------------------------------------------------- $43.00 $816.4 $728.4 8.6x [**] 10.8x [**] 18.5x [**] 44.00 835.4 $747.4 8.8 [**] 11.1 [**] 19.0 [**] 45.00 854.4 $766.4 9.1 [**] 11.4 [**] 19.4 [**] 46.00 873.4 $785.4 9.3 [**] 11.7 [**] 19.8 [**] 47.00 892.4 $804.3 9.5 [**] 12.0 [**] 20.3 [**] 48.00 911.4 $823.3 9.7 [**] 12.3 [**] 20.7 [**] - -------------------------------------------------------------------------------------------------------------------------------- 49.00 930.4 $842.3 10.0 [**] 12.5 [**] 21.1 [**] - -------------------------------------------------------------------------------------------------------------------------------- 50.00 949.4 $861.3 10.2 [**] 12.8 [**] 21.6 [**] 51.00 968.3 $880.3 10.4 [**] 13.1 [**] 22.0 [**] 52.00 987.3 $899.3 10.6 [**] 13.4 [**] 22.4 [**] 53.00 1,006.3 $918.3 10.9 [**] 13.7 [**] 22.8 [**] - -----------------------------------------------------------
Note: LTM numbers as of 11/30/97. (a) Based on 18.987 million fully diluted shares. (b) Transaction value equals offer value plus net debt of ($31.9) million as of November 30, 1997 and assumed option proceeds of ($56.2) million. (c) Based on management projections for year ended 3/31/98. 33 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Valuation of WINCHESTER - -------------------------------------------------------------------------------- DCF Analysis (a)
Management Case Adjusted Case ---------------------------------------- ---------------------------------------- Equity Value per share at Terminal Value Equity Value per share at Terminal Value multiple of 2002 EBITDA/(b)/ multiple of 2002 EBITDA/(c)/ Discount Rate 7.0x 8.0x 9.0x 7.0x 8.0x 9.0x ---------------------------------------- ---------------------------------------- 11.5% [**] [**] [**] [**] [**] [**] 12.5% [**] [**] [**] [**] [**] [**] 13.5% [**] [**] [**] [**] [**] [**] ---------------------------------------- ----------------------------------------
- ------------------------------------ (a) Present values discounted to March 31, 1998. (b) Discounted 4 years based on 2002 EBITDA of $[****] million. (c) Discounted 4 years based on 2002 EBITDA of $[****] million. 34 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Valuation of WINCHESTER Management Case - -------------------------------------------------------------------------------- Discounted Cash Flow Analysis (dollars in millions, except per share data)
PV of Terminal Value PV of Free + Multiple of 2002 EBITDA (b) = Enterprise Value Cash Flows ---------------------------------- --------------------------------- Discount Rate ('99-02) (a) 7.0x 8.0x 9.0x 7.0x 8.0x 9.0x - ------------- ------------ ---------------------------------- --------------------------------- 11.5% $140.1 $[**] $[**] $[**] $[**] $[**] $[**] 12.0% 138.5 [**] [**] [**] [**] [**] [**] 12.5% 137.0 [**] [**] [**] [**] [**] [**] 13.0% 135.5 [**] [**] [**] [**] [**] [**] 13.5% 134.1 [**] [**] [**] [**] [**] [**] Equity Value Per Share at Terminal Value Multiple Total Equity Value of 2002 EBITDA (c) Net Debt --------------------------------- --------------------------------- Discount Rate - 3/31/98 = 7.0x 8.0x 9.0x 7.0x 8.0x 9.0x - ------------- ---------- --------------------------------- --------------------------------- 11.5% ($103.5) $815.9 $897.7 $979.4 $[**] $[**] $[**] 12.0% (103.5) 804.2 884.6 964.9 [**] [**] [**] 12.5% (103.5) 792.8 871.7 950.6 [**] [**] [**] 13.0% (103.5) 781.6 859.1 936.6 [**] [**] [**] 13.5% (103.5) 770.7 846.8 922.9 [**] [**] [**] --------------------------------- ---------------------------------
- -------------------- (a) Present values discounted to March 31, 1998. (b) Discounted 4 years based on 2002 EBITDA of $[**] Million. (c) Based on 19.0 million fully-diluted shares. Option proceeds are included in net debt. 35 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Valuation of WINCHESTER Adjusted Case - -------------------------------------------------------------------------------- Discounted Cash Flow Analysis (dollars in millions, except per share data)
PV of Terminal Value PV of Free + Multiple of 2002 EBITDA (b) = Enterprise Value Cash Flows ----------------------------------- ----------------------------------- Discount Rate ('99-02) (a) 7.0x 8.0x 9.0x 7.0x 8.0x 9.0x - ------------- ------------ ----------------------------------- ----------------------------------- 11.5% $170.5 $[**] $[**] $[**] $[**] $[**] $[**] 12.0% 168.6 [**] [**] [**] [**] [**] [**] 12.5% 166.7 [**] [**] [**] [**] [**] [**] 13.0% 164.8 [**] [**] [**] [**] [**] [**] 13.5% 163.0 [**] [**] [**] [**] [**] [**] Equity Value Per Share at Terminal Value Multiple Total Equity Value of 2002 EBITDA (c) Net Debt ----------------------------------- ----------------------------------- Discount Rate - 3/31/98 = 7.0x 8.0x 9.0x 7.0x 8.0x 9.0x - ------------- ------------ ----------------------------------- ----------------------------------- 11.5% ($103.5) $977.0 $1,077.4 $1,177.8 $[**] $[**] $[**] 12.0% (103.5) 962.6 1,061.3 1,159.9 [**] [**] [**] 12.5% (103.5) 948.5 1,045.4 1,142.3 [**] [**] [**] 13.0% (103.5) 934.8 1,030.0 1,125.2 [**] [**] [**] 13.5% (103.5) 921.3 1,014.8 1,108.4 [**] [**] [**] ----------------------------------- -----------------------------------
- ------------------------ (a) Present values discounted to March 31, 1998. (b) Discounted 4 years based on 2002 EBITDA of $[**] Million. (c) Based on 19.0 million fully-diluted shares. Option proceeds are included in net debt. 36 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks Valuation of WINCHESTER denote omissions. - -------------------------------------------------------------------------------- Break-up Analysis (a) Break-even analysis for Strategic Buyer of Selected Divisions at 3/31/99 (dollars in millions)
Airshow Da Vinci ------- -------- Forward EBITA [**] [**] Interest expense at 7.0% [**] [**] Goodwill at amortization period of 25.0 years [**] [**] Includes in process R&D deduction of 10.0x 1999 R&D for Airshow [**] and Da Vinci [**] Tax Benefit from goodwill at tax rate of 40.5% [**] [**] -------- -------- Pre-tax income effect [**] [**] ----------------------------- Break-even Offer Value [**] [**] After tax proceeds at capital gains rate of 35.0% [**] [**] ----------------------------- Tax Basis (b) [**] [**] Tax leakage [**] [**] Pre-tax value/share (assuming 19.0 million shares) [**] [**] After-tax value/share (assuming 19.0 million shares) [**] [**] Multiple Analysis Airshow (c) Da Vinci (c) Winchester (d) - ----------------- ----------- ------------ -------------- LTM EBITDA [**] [**] [**] After tax proceeds/LTM EBITDA [**] [**] [**] LTM EBITA [**] [**] [**] After tax proceeds/LTM EBITA [**] [**] [**]
- ------------------------------------------------------------------------------ (a) Assumes full deductibility of Goodwill and all cash offer financed at 7.0% (b) Assumes tax basis is equal to book basis, as of 3/99, per Management information. (c) LTM through 3/99. (d) LTM through 11/97. 37 Exhibit G - -------------------------------------------------------------------------------- Leveraged Buyout Analysis - -------------------------------------------------------------------------------- Contidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Leveraged Buyout Analysis - -------------------------------------------------------------------------------- Transaction Financing and Pro Forma Ownership (a) Acquisition Price = $49/share
Sources Amount Percent Uses Amount Percent - ------- ------ ------- ---- ------ ------- Existing Cash Balances $20.4 2.3% Option Proceeds 27.5 3.1% Fees (Financing + Advisory) $40.0 4.5% Bank Debt 290.4 32.6% Refinance Existing Debt 0.2 0.0% Subordinated Debt 275.0 30.9% Options to be cashed out 46.8 5.3% CD&R Investment 276.9 31.1% Share Repurchase 803.1 90.2% ---------------------- ------------------------ Total Sources $890.2 100.0% Total Uses $890.2 100.0% Share Repurchase Calculation: Credit Statistics (b) - ----------------------------- --------------------- Primary Shares Outstanding 16.86 Bank Debt $290.4 Options Outstanding 2.13 Multiple of LTM EBITDA [**] -------- Total Debt $565.4 Total Diluted Shares Outstanding 18.99 Multiple of LTM EBITDA [**] Less: Options "Rolled Over" 1.17 Public Shares "Rolled Over" 0.43 Management Shares "Rolled Over" 0.04 Options to be Cashed Out 0.96 -------- Net Shares to be Repurchased 16.39 ======== Pro Forma Ownership Primary Shares Options Diluted Shares - ------------------- ------------------ ------------------- --------------------- Shares % Shares % Shares % ------------------ ------------------- --------------------- Public 0.43 7.0% - 0.0% 0.43 5.3% Management 0.04 0.7% 1.97 100.0% 2.01 24.9% CD&R 5.65 92.3% - 0.0% 5.65 69.8% ------------------ ------------------- --------------------- 6.12 100.0% 1.97 100.0% 8.09 100.0% ================== =================== =====================
a) Source: Management and CD&R. b) Based on Management estimate of LTM EBITDA of [**] as of 3/31/98. 38 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks Leveraged Buyout Analysis denote omissions. - -------------------------------------------------------------------------------- IRR Analysis (a)
------------- ------------- ------------- 2 Year Return 3 Year Return 4 Year Return ------------- ------------- ------------- Acquisition Price = $49/share Management Case P/E P/E P/E - --------------- --------------------- --------------------- --------------------- 15.0x 16.5x 18.0x 15.0x 16.5x 18.0x 15.0x 16.5x 18.0x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA --------------------- --------------------- --------------------- 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x ---- ---- ---- ---- ---- ---- ---- ---- ---- [**] [**] [**] [**] [**] [**] [**] [**] [**] Adjusted Case P/E P/E P/E - --------------- --------------------- --------------------- --------------------- 15.0x 16.5x 18.0x 15.0x 16.5x 18.0x 15.0x 16.5x 18.0x ----- ----- ----- ----- ----- ----- ----- ----- ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] EBITDA EBITDA EBITDA --------------------- --------------------- --------------------- 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x 8.0x 8.5x 9.0x ---- ---- ---- ---- ---- ---- ---- ---- ---- [**] [**] [**] [**] [**] [**] [**] [**] [**]
a) P/E based on forward 12 month's earnings, EBITDA based on trailing 12 months. [**] growth rate assumed in year 5 for 4 year P/E based returns. 39 Leveraged Buyout Analysis - -------------------------------------------------------------------------------- Recapitalization Stub Price Performance
Closing Offer 1st Day 1st Month 2nd Month Date Target Acquiror Price Close Premium Close Premium Close Premium - ------- ---------- ---------- ------- ------------------- --------------------- --------------------- 5/17/97 Amphenol KKR $26.00 $28.13 8.2% $30.50 17.3% $42.63 63.9% 4/16/97 Syratech Thomas Lee 32.00 32.13 0.4% 32.13 0.4% 32.13 0.4% 8/7/97 DecisionOne DLJ 23.00 27.00 17.4% 27.50 19.6% 29.13 26.6% Closing 6th Month Last Avg. Daily Date Target Acquiror Close Premium Traded (a) Premium Volume - -------- ------------ ----------- ----------------------- ------------------- ---------- 5/17/97 Amphenol KKR $50.06 92.5% $51.44 92.8% 14,298 4/16/97 Syratech Thomas Lee 32.13 0.4% 32.50 1.6% 102 8/7/97 DecisionOne DLJ NA NA 23.00 0.0% 13,544
- ------------------------------ a) As of 2:00 PM on 12/19/97 40 Exhibit H - -------------------------------------------------------------------------------- Break-up Fee Schedules - -------------------------------------------------------------------------------- Project WINCHESTER - -------------------------------------------------------------------------------- Break-up Fees & Expenses Agreed to in Selected LBO and Recap Transactions (dollars in millions)
Maximum Maximum Date Date Offer Break-up Break-up Announced Effective Target Name Acquiror Name Value/(a)/ Fee Expenses - --------- --------- ------------------------ -------------------------- ---------- -------- -------- 08/14/97 Pending Tuesday Morning Madison Dearborn Partners $297.9 $9.8 $2.0 07/21/97 Pending Zilog Texas Pacific Group 399.2 15.0 NA(b) 05/05/97 08/07/97 DecisionOne Holdings DLJ Merchant Banking 639.8 20.9 8.3 03/20/97 06/17/97 Falcon Building Products Investcorp 490.5 20.0 4.0 10/23/96 04/16/97 Syratech Thomas Lee 278.4 6.8 2.3 10/03/96 05/19/97 Amphenol Kohlberg, Kravis & Roberts 1,162.7 37.5 12.5 09/30/96 06/27/97 Belden & Blake Texas Pacific Group 304.3 12.4 NA 08/29/96 11/14/96 Amtrol Cypress Group 210.3 6.5 NA(d) 06/11/96 07/23/96 Community Health Systems Forstmann Little 1,026.0 45.0 15.0 --------------------------------------- Maximum $1,162.7 $45.0 $15.0 Mean 534.3 19.3 7.3 Median 399.2 15.0 6.1 Minimum 210.3 6.5 2.0 --------------------------------------- -------------------------------------------------------------------------------------- WINCHESTER CD&R/Management $826.1 $24.5 $5.0 -------------------------------------------------------------------------------------- Break-up Date Date Maximum Fee Fee & Expenses Announced Effective Target Name Acquiror Name as a % of Offer Value as a % of Offer Value - ---------- ---------- ------------------------ --------------------------- --------------------- --------------------- 08/14/97 Pending Tuesday Morning Madison Dearborn Partners 3.27% 3.94% 07/21/97 Pending Zilog Texas Pacific Group 3.76% 3.76% 05/05/97 08/07/97 DecisionOne Holdings DLJ Merchant Banking 3.27% 4.17%(c) 03/20/97 06/17/97 Falcon Building Products Investcorp 4.08% 4.89% 10/23/96 04/16/97 Syratech Thomas Lee 2.42% 3.23% 10/03/96 05/19/97 Amphenol Kohlberg, Kravis & Roberts 3.23% 4.30% 09/30/96 06/27/97 Belden & Blake Texas Pacific Group 4.08% 4.08% 08/29/96 11/14/96 Amtrol Cypress Group 3.09% 3.09% 06/11/96 07/23/96 Community Health Systems Forstmann Little 4.39% 4.39%(e) ---------------------------------------------------- Maximum 4.39% 4.89% Mean 3.51% 3.98% Median 3.27% 4.08% Minimum 2.42% 3.09% ---------------------------------------------------- --------------------------------------------------------------------------------------------------- WINCHESTER CD&R/Management 2.97% 3.57% ---------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- (a) Offer Value based on primary shares outstanding. (b) All expenses incurred will be borned equally by both parties (c) Termination expenses reduced to $5.75 million in the event that a fee is paid (d) 50% of premium over offer price (e) Fee is reduced by the amount of expenses paid 41
Project WINCHESTER - ------------------------------------------------------------------------------------------------------------------------------------ Break-up Fees Agreed to in Selected Transactions Ranging from $500 million to $1.5 billion from 1996 to Present (dollars in millions) Break-up Maximum Maximum Maximum Fee Fee & Expenses Date Offer Break-up Break-up as a % of as a % of Announced Target Name Acquiror Name Value /(a)/ Fee Expenses Offer Value Offer Value - --------- --------------------------- ------------------------------ ----------- -------- -------- ----------- ----------- 11/21/97 BDM International TRW $875.9 $35.0 $5.0 4.00% 4.57% 10/13/97 Network General McAfee Associates 1,172.4 30.0 NA (d) 2.56% 2.56% 10/10/97 Greenfield Industries Kennametal 621.7 30.0 5.0 4.83% 5.63% 8/18/97 Monterey Resources Texaco 1,150.3 35.0 NA (d) 3.04% 3.04% 7/3/97 Duty Free International BAA 660.7 20.0 4.0 3.03% 3.63% 6/12/97 Giddings & Lewis Thyssen 651.9 20.0 3.0 3.07% 3.53% 5/5/97 Logicon Northrop Grumman 751.1 22.5 3.0 3.00% 3.40% 4/23/97 VeriFone Hewlett-Packard 1,255.1 30.0 NA (c) 2.39% 2.39% 4/21/97 Goulds Pumps ITT Industries 791.1 22.0 2.0 2.78% 2.78% (b) 4/7/97 Mesa Parker & Parsley Petroleum 951.6 45.0 NA (c) 4.73% 4.73% 1/27/97 Measurex Honeywell 565.3 20.0 3.0 3.54% 4.07% 1/23/97 Amphenol Kohlberg, Kravis & Roberts 1,162.7 37.5 12.5 3.23% 4.30% 1/15/97 Value Health Columbia/HCA Healthcare 1,120.1 45.0 NA (c) 4.02% 4.02% 1/14/97 Tencor Instruments KLA Instruments 1,249.8 40.0 NA (d) 3.20% 3.20% 10/28/96 Loctite Henkel 1,308.2 40.0 NA (d) 3.06% 3.06% 8/4/96 FHP International PacificCare Health Systems 1,429.8 45.0 5.0 3.15% 3.50% 6/11/96 Community Health Systems Forstmann Little 1,026.0 45.0 15.0 4.39% 4.39% (b) 6/6/96 Bally Entertainment Hilton Hotels 1,477.6 50.0 5.0 3.38% 3.72% 3/26/96 DeBartolo Realty Simon Property Group 904.9 35.0 NA 3.87% 3.87% 2/7/96 Pyxis Cardinal Health 882.6 28.0 2.0 3.17% 3.40% 8/26/95 Enterra Weatherford International 539.8 20.0 NA 3.71% 3.71% ----------------------------------------------------------------------------- Maximum $1,477.6 $50.0 $15.0 4.83% 5.63% Mean 978.5 33.1 5.4 3.43% 3.69% Median 951.6 35.0 4.5 3.20% 3.63% Minimum 539.8 20.0 2.0 2.39% 2.39% ----------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------- WINCHESTER CD&R/Management $826.1 $24.5 $5.0 2.97% 3.57% -------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------
(a) Offer Value based on primary shares outstanding. (b) Fee is reduced by the amount of expenses paid. (c) Most expenses to be paid by parties incurring such costs. Expenses such as filing fees and mailing and printing of prospectus to be shared equally by both parties. (d) Expenses to be paid by party incurring such costs. 42 -----END PRIVACY-ENHANCED MESSAGE-----