EX-99.CIV 16 a2028461zex-99_civ.txt EXHIBIT 99(C)(IV) EXHIBIT 99.(c)(iv) Project Auto October 14, 2000 [LOGO OF DEUTSCHE BANC ALEX. BROWN] PROJECT AUTO The information contained in this presentation was obtained solely from SATURN management and from public sources. Deutsche Banc Alex. Brown has used and relied upon such information in the preparation of this presentation and does not assume responsibility for independent verification of any such information, and makes no representation or warranty with respect to the accuracy or completeness of such information. This presentation has been prepared for use by the Special Committee of the Board of Directors of SATURN only. This presentation is prepared as of October 14, 2000 and reflects information made available to us prior to such date. It does not include information regarding all of the assessments made by Deutsche Banc Alex. Brown in arriving at its conclusions. [LOGO OF DEUTSCHE BANC ALEX. BROWN] CONTENTS Section ------- 1 Review of the process 2 Overview of the transaction 3 Overview of SATURN 4 Valuation based on selected public companies 5 Valuation based on selected M&A transactions - Selected medical device and equipment transactions - Selected health care leveraged recapitalization transactions 6 Premiums paid analysis 7 Discounted cash flow analysis 8 Appendix [LOGO OF DEUTSCHE BANC ALEX. BROWN] SECTION 1 Review of the process [LOGO OF DEUTSCHE BANC ALEX. BROWN] REVIEW OF THE PROCESS
POTENTIAL ACQUIRORS - CONTACT INFORMATION --------------------------------------------------------------------------------------------------------------------------------- INVITED TO DETAILED INITIAL MEETING CONFIDENTIALITY PARTICIPATE IN DUE INITIAL WITH AGREEMENT INDICATION OF TARGETED DILIGENCE FINAL DISCUSSIONS MANAGEMENT SIGNED INTEREST PROCESS REVIEW OFFER STRATEGIC BUYERS ----------------------------- Strategic #1 - Strategic #2 - Strategic #3 - FINANCIAL BUYERS ----------------------------- Vestar Capital Partners / Park Avenue Equity Partners - - - - - - - Financial #2 - - - - Financial #3 - Financial #4 - - - - Financial #5 - - Financial #6 - - - - - - TOTAL 8 5 4 5 2 2 1
[LOGO OF DEUTSCHE BANC ALEX. BROWN] 2 REVIEW OF THE PROCESS
PRICE PER SHARE FIRST ROUND PROPOSALS INDICATION LEVEL ---------------------------- ---------------- Vestar Capital Partners / $10.00 Park Avenue Equity Partners Financial #6 $8.00 - $10.00 Financial #4 $7.00 - $8.00 Financial #2 $6.50 - $7.00 SECOND ROUND PROPOSALS ---------------------------- Vestar Capital Partners / $9.50 Park Avenue Equity Partners Strategic #3(1) $10.00 - $12.00 THIRD ROUND PROPOSALS ---------------------------- Vestar Capital Partners / $10.00 Park Avenue Equity Partners
-------------------------- (1) Preliminary unsolicited indication of interest. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 3 SECTION 2 Overview of the transaction [LOGO OF DEUTSCHE BANC ALEX. BROWN] OVERVIEW OF THE TRANSACTION Consideration: $10.00 per share in cash Structure: Leveraged recapitalization; tender offer Accounting treatment: Purchase Tax treatment: Taxable Break-up fees: $10.0 million (including up to $4.0 million of expense reimbursement), or 2.8% of the enterprise value, payable by SATURN under certain circumstances Key conditions to closing: Funding by financing sources Hart-Scott-Rodino clearance No material adverse change Funding source(s): Deutsche Bank Securities Inc. Co-managers to be determined
[LOGO OF DEUTSCHE BANC ALEX. BROWN] 5 OVERVIEW OF THE TRANSACTION ($ in millions, except per share data) PURCHASE PRICE PER SHARE $10.00 Shares outstanding: Shares outstanding(a) 22.4 In-the-money options outstanding(a)(b) 4.2 --------- Total shares outstanding 26.6 TOTAL IMPLIED EQUITY PURCHASE PRICE $265.7 Less: in-the-money option proceeds(a)(b) ($20.6) --------- NET EQUITY PURCHASE PRICE $245.1 Plus: total debt(c) $149.1 Less: total cash(c)(d) ($34.9) --------- ENTERPRISE PURCHASE PRICE $359.3 =========
----------------------- (A) SOURCE: SATURN MANAGEMENT AS OF 10/1/00. (B) BASED ON PURCHASE PRICE OF $10.00 PER SHARE AND IN-THE-MONEY OPTIONS WITH A WEIGHTED AVERAGE EXERCISE PRICE OF $4.89 PER SHARE. (C) AS OF 6/30/00. (D) INCLUDES $15.0 MILLION IN AFTER-TAX PROCEEDS FROM SALE OF PARKER BATH DIVISION. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 6 OVERVIEW OF THE TRANSACTION ($ in millions, except per share data)
TRANSACTION SATURN MULTIPLES -------- ----------- ENTERPRISE VALUE MULTIPLES: LTM revenues $628.0 0.6x LTM EBITDA(a) $50.9 7.1x LTM EBIT(a) $25.7 14.0x EQUITY VALUE MULTIPLES: LTM earnings per share(b) $0.30 33.0x CY 2000 earnings per share(c) $0.35 28.6x CY 2000 earnings per share as adjusted(d)(e) $0.36 27.6x CY 2001 earnings per share(c) $0.41 24.4x CY 2001 earnings per share as adjusted(d)(e) $1.12 9.0x PREMIUM TO MARKET: One day prior (10/12/00) $6.25 60.0% One month prior (9/13/00) $5.75 73.9%
------------------------ NOTE: LTM AS OF 6/30/00. EXCLUDES PARKER BATH DIVISION. (A) EXCLUDES $4.5 MILLION IN NON-RECURRING RESTRUCTURING CHARGES. (B) EXCLUDES NON-RECURRING RESTRUCTURING CHARGES OF $4.5 MILLION AND NON-RECURRING CHARGES OF $0.5 MILLION TAXED AT A 40.0% TAX RATE. (C) WALL STREET ANALYST ESTIMATES. (D) SATURN MANAGEMENT ESTIMATES. EXCLUDES NON-RECURRING CHARGES TAXED AT A 40.0% TAX RATE. (E) FY 2001 TAXED AT SATURN MANAGEMENT'S EFFECTIVE TAX RATE. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 7 SECTION 3 Overview of SATURN [LOGO OF DEUTSCHE BANC ALEX. BROWN] SATURN PRICE AND VOLUME GRAPH 1/1/96 to present [GRAPHIC OMITTED] [LOGO OF DEUTSCHE BANC ALEX. BROWN] 9 SATURN PRICE AND VOLUME GRAPH 1/1/98 to present [GRAPHIC OMITTED] [LOGO OF DEUTSCHE BANC ALEX. BROWN] 10 NEGATIVE EVENTS IN THE HEALTH CARE SERVICES SECTOR 1/1/98 to present [GRAPHIC OMITTED] ------------------------ (a) Includes Apria Healthcare Group, Columbia HCA Healthcare Corp., Genesis Health Ventures Inc., HEALTHSOUTH Corp., Integrated Health Services Inc., Mariner Post-Acute Network Inc., Mckesson HBOC Inc., Caremark Rx, Inc. (fka MedPartners, Inc.) and Oxford Health Plans, Inc. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 11 RELATIVE STOCK PRICE PERFORMANCE 1/1/98 to present [GRAPHIC OMITTED] S&P 500 (41.6%) Selected public companies (-7.3%) SATURN (-58.7%) ------------------------ Note: Selected public companies include: Arrow, CONMED, Hillenbrand, Invacare and Respironics. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 12 SATURN VOLUME AT PRICES GRAPH 1/1/99 to present [BAR GRAPH] Total Volume 21.6 million Turnover (% of float (a)): ---------------------- (a) Source: Bloomberg as of 10/13/00 (b) Refers to specified price or any decimal value of that price. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 13 FY 2000E REVENUE ANALYSIS [PIE CHART] FY 2000E revenues = $633.6 Home health group - North America 41% Home health group - Europe 26% Respiratory 18% DynaVox 3% Continuing care group 6% Corona 6% ----------------- Source: SATURN management. Excludes Parker Bath division and intercompany adjustments. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 14 DIVISIONAL PERFORMANCE ANALYSIS ($ in millions)
Fiscal year ended June 30, 2000 ------------------------------- Revenue EBIT --------------------- ---------------------------- Division Revenue % of Total EBIT(a) % of Total Margin -------- ------- ---------- ------- ---------- ------ HHG U.S. Homecare $316.9 50.0% $28.5 56.3% 9.0% Canada 17.8 2.8% 1.5 0.2% 8.3% Australia 5.3 0.8% 0.6 0.1% 10.6% ------ ------ ------- ----- ----- DIVISION TOTAL $340.0 53.7% $30.5 60.3% 9.0% CONTINUING CARE - U.S. $ 38.4 6.1% ($ 2.9) -5.7% NM DYNAVOX $ 20.0 3.1% $ 3.9 7.6% 19.4% NORTHERN EUROPE Sunmed Ltd. $ 84.7 13.4% $ 8.2 16.3% 9.7% Spain 17.7 2.8% 5.0 9.9% 28.3% Norsk Rehab 21.6 3.4% 1.2 2.3% 5.4% Sweden 5.2 0.8% (0.6) -1.2% NM Benelux 22.1 3.5% 0.8 1.7% 3.8% BV Distribution 0.0 0.0% (0.0) -0.1% NM ------ ------ ------- ----- ----- DIVISION TOTAL $151.4 23.9% $14.6 28.9% 9.7% FRANCE $ 36.4 5.7% ($ 1.8) -3.5% NM CENTRAL EUROPE Germany $ 38.4 6.1% $ 6.1 12.0% 15.8% Italy 5.7 0.9% 0.2 0.3% 3.0% Switzerland 3.4 0.5% (0.0) 0.0% NM ------ ------ ------- ------ ----- DIVISION TOTAL $ 47.4 7.5% $ 6.2 12.3% 13.1% ------ ------ ------- ------ ----- TOTAL DIVISIONAL $633.6 100.0% $50.6 100.0% 8.0% ====== ====== ======= ====== =====
---------------------- SOURCE: SATURN MANAGEMENT. EXCLUDES PARKER BATH DIVISION AND INTERCOMPANY ADJUSTMENTS. (a) BEFORE CORPORATE OVERHEAD ALLOCATION. SEVERAL OF SATURN'S DIVISIONS HAVE HISTORICALLY UNDERPERFORMED [LOGO OF DEUTSCHE BANC ALEX. BROWN] 15 SUMMARY OF SATURN'S QUARTERLY EARNINGS PER SHARE
Wall Street Actual Quarter mean above/(below) ended estimate Actual estimate ------------ ------------------------- ----------------- --------------- Jun-00 $0.08 $0.08 -- Mar-00 $0.11 $0.01 ($0.10) Dec-99 $0.08 $0.05 ($0.03) Sep-99 $0.05 $0.07 $0.02 Jun-99 ($0.02) $0.04 $0.06 Mar-99 $0.11 $0.08 ($0.03) Dec-98 $0.17 $0.08 ($0.09) Sep-98 $0.14 $0.16 $0.02 Jun-98 ($0.13) ($0.05) $0.08 Mar-98 $0.00 $0.00 --
----------------------------------- SOURCE: FIRST CALL [LOGO OF DEUTSCHE BANC ALEX. BROWN] 16 EPS ESTIMATE REVISION ANALYSIS
EPS estimates(1) -------------------- Date of estimates FY 1999 FY 2000 --------- ------- ------- 7/1/97 $1.15 -- 8/21/97 $1.25 -- 1/22/98 $1.00 -- 7/7/98 $0.85 $1.10 1/21/99 $0.62 $0.90 3/25/99 $0.49 $0.75
--------------------- (1) SOURCE: WALL STREET RESEARCH. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 17 MANAGEMENT MODEL ASSUMPTIONS - Pro forma to exclude both historical and projected Parker Bath division results - $16.5 million in FY 2000 revenues - $1.4 million in FY 2000 EBIT - Revenue assumptions: - historical 3-year CAGR is (0.9%) - management model projected 6-year CAGR is 5.0% - EBITDA margin (excluding restructuring charges) assumptions: - LTM EBITDA margin is 8.1% - management model 2005 projected EBITDA margin is 17.4% - 85% - 90% of historical and projected capital expenditures consist of maintenance expenses [LOGO OF DEUTSCHE BANC ALEX. BROWN] 18 SUMMARY SATURN HISTORICAL AND PROJECTED INCOME STATEMENTS ($ in millions, except per share data)
Fiscal year ended June 30, -------------------------------------------------------------------------- 1998A(1) 1999A(2) 2000A 2001E 2002E 2003E 2004E 2005E -------- -------- ----- ----- ----- ----- ----- ----- TOTAL REVENUE.............................. $639.3 $641.9 $628.0 $641.7 $668.0 $710.3 $754.8 $803.1 Cost of sales............................ 441.3 450.1 438.1 443.8 453.0 479.8 509.5 542.1 -------- -------- ------ ------ ------ ------ ------ ------ GROSS PROFIT............................... 198.1 191.8 189.9 197.9 215.0 230.5 245.3 261.1 Division operating expenses.............. 135.1 119.9 110.5 107.4 97.2 90.4 91.4 96.5 Corporate SG&A........................... 0.0 0.0 9.6 8.6 8.2 8.7 9.3 9.9 Research & development................... 17.9 21.1 18.9 18.5 13.7 13.1 13.9 14.8 Restructuring charges.................... 0.0 0.0 4.5 26.5 7.9 0.0 0.0 0.0 Other expense (income)................... (5.6) 2.3 0.0 0.0 0.0 0.0 0.0 0.0 -------- -------- ------ ------ ------ ------ ------ ------ EBITDA..................................... 50.6 48.5 46.4 36.9 87.9 118.3 130.7 140.0 Depreciation............................. 15.2 15.8 15.8 15.7 18.4 19.6 19.4 19.7 Amortization............................. 8.4 8.6 9.4 8.1 8.1 8.1 8.1 8.1 -------- -------- ------ ------ ------ ------ ------ ------ EBIT....................................... 27.0 24.1 21.2 13.1 61.4 90.5 103.2 112.1 Interest expense......................... 15.2 16.5 16.1 13.3 12.9 9.4 7.6 5.2 Interest income/other income............. (4.5) (5.1) (3.4) (3.0) (2.9) (3.4) (5.3) (6.6) -------- -------- ------ ------ ------ ------ ------ ------ PRE-TAX INCOME............................. 16.3 12.8 8.4 2.7 51.4 84.4 100.8 113.5 Income taxes............................. 6.2 5.6 4.3 3.2 22.7 35.9 42.5 47.5 -------- -------- ------ ------ ------ ------ ------ ------ Net income................................. $ 10.1 $ 7.2 $ 4.1 ($ 0.5) $ 28.7 $ 48.5 $ 58.4 $ 66.0 ======== ======== ====== ====== ====== ====== ====== ====== Fully diluted wtd. avg shares outstanding. 22.0 22.3 22.5 23.1 24.7 25.6 25.7 25.8 EPS........................................ $ 0.46 $ 0.32 $ 0.18 ($0.02) $ 1.16 $ 1.89 $ 2.27 $ 2.55 ADJUSTED EPS(3)............................ $ 0.46 $ 0.32 $ 0.30 $0.67 $ 1.35 $ 1.89 $ 2.27 $ 2.55 ----------------------------------------------------------------------------------------------------------------------- GROWTH RATES: Total revenue............................ -- 0.4% -2.2% 2.2% 4.1% 6.3% 6.3% 6.4% EBITDA................................... -- -4.2% -4.4% -20.4% 138.3% 34.5% 10.5% 7.1% EPS...................................... -- -29.6% -43.4% NM NM 62.9% 19.8% 12.6% Adjusted EPS(3).......................... -- -29.6% -6.3% 120.3% 103.0% 39.8% 19.8% 12.6% MARGINS (% OF REVENUES): Gross profit............................. 31.0% 29.9% 30.2% 30.8% 32.2% 32.5% 32.5% 32.5% EBITDA................................... 7.9% 7.6% 7.4% 5.8% 13.2% 16.7% 17.3% 17.4% EPS...................................... 4.2% 3.8% 3.4% 2.0% 9.2% 12.7% 13.7% 14.0% Net Income............................... 1.6% 1.1% 0.7% -0.1% 4.3% 6.8% 7.7% 8.2%
------------------------------------- SOURCE: SATURN MANAGEMENT. EXCLUDES PARKER BATH DIVISION AND ASSUMES TRANSACTION OCCURRED 1/1/97. (1) EXCLUDES NON-RECURRING CHARGES. FULLY TAXED PRE-TAX AT A 40.0% TAX RATE DUE TO PRE-TAX LOSS BEFORE EXCLUSION OF NON-RECURRING CHARGES. (2) EXCLUDES NON-RECURRING CHARGES TAXED AT A 40.0% TAX RATE. (3) ADJUSTED EPS EXCLUDES NON-RECURRING RESTRUCTURING CHARGES OF $4.5 MILLION IN FY 2000, $26.5 MILLION IN FY 2001 AND $7.9 MILLION IN FY 2002 TAXED AT A 40.0% TAX RATE. PROJECTED 6-YEAR REVENUE CAGR OF 5.0% VS. A HISTORICAL 3-YEAR REVENUE CAGR OF (0.9%) PROJECTED 2005 EBITDA MARGIN OF 17.4% VS. A LTM EBITDA MARGIN (EXCLUDING RESTRUCTURING CHARGES) OF 8.1% PROFITABILITY TARGETS PREDICATED ON SUCCESSFUL RESTRUCTURING PROGRAM AND IMPLEMENTATION OF A GLOBAL IT SYSTEM [LOGO OF DEUTSCHE BANC ALEX. BROWN] 19 SECTION 4 VALUATION BASED ON SELECTED PUBLIC COMPANIES [LOGO OF DEUTSCHE BANC ALEX. BROWN] VALUATION BASED ON SELECTED PUBLIC COMPANIES [BAR GRAPH] NOTE: EXCLUDES PARKER BATH DIVISION. SELECTED PUBLIC COMPANIES INCLUDE: ARROW, CONMED, HILLENBRAND, INVACARE AND RESPIRONICS. (a) LTM AS OF 6/30/00. EXCLUDES NON-RECURRING CHARGES. (b) WALL STREET ANALYST ESTIMATES. (c) SATURN MANAGEMENT ESTIMATES EXCLUDING RESTRUCTURING CHARGES TAXED AT A 40.0% TAX RATE. FY 2001 TAXED AT SATURN MANAGEMENT'S EFFECTIVE TAX RATE. MEAN HISTORICAL 3-YEAR REVENUE CAGR FOR SELECTED PUBLIC COMPANIES OF 19.9% VS. SATURN'S HISTORICAL 3-YEAR REVENUE CAGR OF (0.9%) MEAN LTM EBITDA MARGIN FOR SELECTED PUBLIC COMPANIES OF 21.2% VS. SATURN'S LTM EBITDA MARGIN OF 8.1% MEAN HISTORICAL 3-YEAR NET INCOME CAGR FOR SELECTED PUBLIC COMPANIES OF 11.1% VS. SATURN'S HISTORICAL 3-YEAR NET INCOME CAGR OF (36.2%) [LOGO OF DEUTSCHE BANC ALEX. BROWN] 21 VALUATION BASED ON SELECTED PUBLIC COMPANIES ($ in millions, except per share data)
IMPLIED PRICE PER SHARE BASED ON MULTIPLES SATURN OF SELECTED MEDICAL DEVICE COMPANIES ------------------------------------------ STATISTICS MEAN RANGE ---------- ------- ------- Valuation based on latest twelve months statistics (a) (b) ----------------------------------------------------------- LTM revenues $628.0 NM NM - NM LTM EBITDA $ 50.9 $13.53 $8.14 - $15.48 LTM EBIT $ 25.7 $ 8.63 $4.12 - $11.11 LTM net income $ 6.8 $ 5.21 $2.57 - $ 6.51 Valuation based on projected statistics ---------------------------------------- Cal. 2000 net income (c) $ 7.9 $ 5.65 $3.84 - $ 6.95 Cal. 2000 net income as adjusted (d) $ 8.2 $ 5.87 $3.99 - $ 7.22 Cal. 2001 net income (c) $ 9.6 $ 5.98 $3.95 - $ 6.94 Cal. 2001 net income as adjusted (d) $ 27.1 $15.00 $10.41- $17.16
--------------------------------------- NOTE: EXCLUDES PARKER BATH DIVISION. (a) IMPLIED VALUATION BASED ON REVENUES, EBITDA AND EBIT IS ADJUSTED BY ADDING CASH OF $34.9 MILLION AND SUBTRACTING DEBT OF $149.1 MILLION. (b) LTM AS OF 6/30/00. EXCLUDES NON-RECURRING CHARGES. (c) WALL STREET ANALYST ESTIMATES. (d) SATURN MANAGEMENT ESTIMATES EXCLUDING RESTRUCTURING CHARGES TAXED AT A 40.0% TAX RATE. FY 2001 TAXED AT SATURN MANAGEMENT'S EFFECTIVE TAX RATE. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 22 VALUATION BASED ON SELECTED PUBLIC COMPANIES ($ in millions)
SATURN Selected medical device ---------- Transaction company multiples ----------------------------- Statistics multiples (a) Mean Range ---------- ------------- ------- --------------- Valuation based on latest twelve months statistics (b) (c) ---------------------------------------------------------- LTM revenues $628.0 0.6 x NM NM - NM LTM EBITDA $ 50.9 7.1 x 8.9 x 5.9 x - 9.9 x LTM EBIT $ 25.7 14.0 x 12.2 x 8.0 x - 14.9 x LTM net income $ 6.8 36.0 x 17.1 x 8.5 x - 21.4 x Valuation based on projected statistics --------------------------------------- Cal. 2000 net income (d) $ 7.9 31.1 x 16.0 x 10.9 x - 19.7 x Cal. 2000 net income as adjusted (e) $ 8.2 29.9 x 16.0 x 10.9 x - 19.7 x Cal. 2001 net income (d) $ 9.6 25.6 x 14.0 x 9.2 x - 16.2 x Cal. 2001 net income as adjusted (e) $ 27.1 9.0 x 14.0 x 9.2 x - 16.2 x
---------------------------------- NOTE: EXCLUDES PARKER BATH DIVISION. (a) ASSUMES A PURCHASE PRICE OF $10.00 PER SHARE. (b) IMPLIED VALUATION BASED ON REVENUES, EBITDA AND EBIT IS ADJUSTED BY ADDING CASH OF $34.9 MILLION AND SUBTRACTING DEBT OF $149.1 MILLION. (c) LTM AS OF 6/30/00. EXCLUDES NON-RECURRING CHARGES. (d) WALL STREET ANALYST ESTIMATES. (e) SATURN MANAGEMENT ESTIMATES EXCLUDING RESTRUCTURING CHARGES TAXED AT A 40.0% TAX RATE. FY 2001 TAXED AT SATURN MANAGEMENT'S EFFECTIVE TAX RATE. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 23 SECTION 5 VALUATION BASED ON SELECTED M&A TRANSACTIONS [LOGO OF DEUTSCHE BANC ALEX. BROWN] SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS [LOGO OF DEUTSCHE BANC ALEX. BROWN] VALUATION BASED ON SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS MEAN HISTORICAL 3-YEAR REVENUE CAGR FOR SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS OF 6.7% VS. SATURN'S HISTORICAL 3- YEAR REVENUE CAGR OF (0.9%) Implied price per share MEAN LTM EBITDA MARGIN FOR SELECTED [BAR GRAPH] MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS OF 16.4% VS. SATURN'S LTM EBITDA MARGIN OF 8.1% MEAN HISTORICAL 3-YEAR NET INCOME CAGR FOR SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS OF 23.5% VS. SATURN'S HISTORICAL 3-YEAR NET INCOME CAGR OF (36.2%) ----------------- Note: Excludes Parker Bath division. See Appendix for selected medical device and equipment transactions. (a) LTM as of 6/30/00. Excludes non-recurring charges. (b) Wall Street analyst FY 2001 estimate. (c) FY 2001 SATURN management estimates excluding restructuring charges taxed at a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 26 VALUATION BASED ON SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS ($ in millions, except per share data)
IMPLIED PRICE PER SHARE BASED ON SELECTED TRANSACTIONS ------------------------------ SATURN STATISTICS MEAN RANGE ---------- ------ ----------------- Valuation based on latest twelve months (a) (b) ----------------------------------------------- LTM revenues $628.0 NM NM - NM LTM EBITDA $50.9 $18.13 $14.49 - $22.12 LTM EBIT $25.7 $10.89 $3.98 - $16.99 LTM net income $6.8 $7.27 $3.46 - $11.23 Valuation based on projected statistics --------------------------------------- Forward net income (c) $9.2 $8.06 $6.95 - $9.95 Forward net income as adjusted (d) $15.4 $12.51 $10.81 - $15.69
--------------------------- Note: Excludes Parker Bath division. (a) Implied valuation based on revenues, EBITDA and EBIT is adjusted by adding cash of $34.9 million and subtracting debt of $149.1 million. (b) LTM as of 6/30/00. Excludes non-recurring charges. (c) Wall Street analyst FY 2001 estimate. (d) FY 2001 SATURN management estimates excluding restructuring charges taxed at a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 27 VALUATION BASED ON SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS ($ in millions)
SELECTED MEDICAL DEVICE AND EQUIPMENT SATURN MERGERS AND ACQUISITIONS ---------------------------------- ------------------------------------- TRANSACTION STATISTICS MULTIPLES (A) MEAN RANGE ---------- ------------- ---------- --------------- Valuation based on latest twelve months (b) (c) ----------------------------------------------- LTM revenues $628.0 0.6 x NM NM - NM LTM EBITDA $50.9 7.1 x 11.4 x 9.4 x - 13.6 x LTM EBIT $25.7 14.0 x 14.7 x 7.9 x - 21.4 x LTM net income $6.8 36.0 x 23.9 x 11.4 x - 40.1 x Valuation based on projected statistics --------------------------------------- Forward net income (d) $9.2 26.7 x 20.0 x 16.9 x - 25.8 x Forward net income as adjusted (e) $15.4 15.9 x 20.0 x 16.9 x - 25.8 x
--------------------------- Note: Excludes Parker Bath division. (a) Assumes a purchase price of $10.00 per share. (b) Implied valuation based on revenues, EBITDA and EBIT is adjusted by adding cash of $34.9 million and subtracting debt of $149.1 million. (c) LTM as of 6/30/00. Excludes non-recurring charges. (d) Wall Street analyst FY 2001 estimate. (e) FY 2001 SATURN management estimates excluding restructuring charges taxed at a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 28 SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS [LOGO OF DEUTSCHE BANC ALEX. BROWN] VALUATION BASED ON SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS MEAN HISTORICAL 3-YEAR REVENUE CAGR FOR SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS OF 21.9% VS. SATURN'S HISTORICAL 3-YEAR MEAN CAGR OF (0.9%) IMPLIED PRICE PER SHARE MEAN LTM EBITDA MARGIN FOR SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION [BAR GRAPH] TRANSACTIONS OF 20.3% VS. SATURN'S LTM EBITDA MARGIN OF 8.1% MEAN HISTORICAL 3-YEAR NET INCOME CAGR FOR SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS OF 16.1% VS. SATURN'S HISTORICAL 3-YEAR NET INCOME CAGR OF (36.2%) ----------------- Note: Excludes Parker Bath division. See Appendix for selected health care leveraged recapitalization transactions. (a) LTM as of 6/30/00. Excludes non-recurring charges. (b) Wall Street analyst FY 2001 estimate. (c) FY 2001 SATURN management estimates excluding non-recurring charges taxed at a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 30 VALUATION BASED ON SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS ($ in millions, except per share data)
IMPLIED PRICE PER SHARE BASED ON SELECTED TRANSACTIONS -------------------------------- SATURN STATISTICS MEAN RANGE ---------- ------ ---------------- Valuation based on latest twelve months (a) (b) ----------------------------------------------- LTM revenues $628.0 NM NM - NM LTM EBITDA $50.9 $11.95 $7.59 - $17.04 LTM EBIT $25.7 $7.06 $2.58 - $10.07 LTM net income $6.8 $5.14 $2.98 - $6.96 Valuation based on projected statistics --------------------------------------- Forward net income (c) $9.2 $5.51 $3.82 - $7.36 Forward net income as adjusted (d) $15.4 $8.88 $6.42 - $11.36
--------------------------- Note: Excludes Parker Bath division. (a) Implied valuation based on revenues, EBITDA and EBIT is adjusted by adding cash of $34.9 million and subtracting debt of $149.1 million. (b) LTM as of 6/30/00. Excludes non-recurring charges. (c) Wall Street analyst FY 2001 estimate. (d) FY 2001 SATURN management estimates excluding restructuring charges taxed at a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 31 VALUATION BASED ON SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS ($ in millions)
SELECTED HEALTH CARE LEVERAGED SATURN RECAPITALIZATIONS ------------------------------ ------------------------------ TRANSACTION STATISTICS MULTIPLES (A) MEAN RANGE ---------- ------------- ------- ----------------- Valuation based on latest twelve months (b) (c) ----------------------------------------------- LTM revenues $628.0 0.6 x NM NM - NM LTM EBITDA $50.9 7.1 x 8.0 x 5.6 x - 10.8 x LTM EBIT $25.7 14.0 x 10.6 x 6.7 x - 13.8 x LTM net income $6.8 36.0 x 16.9 x 9.8 x - 22.9 x Valuation based on projected statistics --------------------------------------- Forward net income (d) $9.2 26.7 x 13.4 x 9.3 x - 17.9 x Forward net income as adjusted (e) $15.4 15.9 x 13.4 x 9.3 x - 17.9 x
--------------------------- Note: Excludes Parker Bath division. (a) Assumes a purchase price of $10.00 per share. (b) Implied valuation based on revenues, EBITDA and EBIT is adjusted by adding cash of $34.9 million and subtracting debt of $149.1 million. (c) LTM as of 6/30/00. Excludes non-recurring charges. (d) Wall Street analyst FY 2001 estimate. (e) FY 2001 SATURN management estimates excluding restructuring charges taxed at a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 32 SECTION 6 PREMIUMS PAID ANALYSIS [LOGO OF DEUTSCHE BANC ALEX. BROWN] VALUATION BASED ON PREMIUMS PAID Implied price per share [BAR GRAPH] ------------------ Note: Implied prices per share based on mean premium. (a) Source: Securities Data Company. Includes completed change-of-control transactions with deal enterprise values between $100 million and $500 million from 1/1/98 to present. (b) Selected transactions inlcude medical device and equipment company transactions highlighted in the Appendix. (c) Selected transactions includes health care leveraged recapitalization transactions highlighted in the Appendix. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 34 VALUATION BASED ON PREMIUMS PAID
PREMIUM IMPLIED PRICE PER SHARE SATURN ---------------------------------- ---------------------------------- PRICE MEAN RANGE MEAN RANGE ------- -------- ------------------- -------- ----------------- SELECTED MERGER AND ACQUISITION TRANSACTIONS (527) ----------------------------------------------------------------------------------------------------------------------- One day prior (10/12/00) $6.25 34.9% 0.4% - 132.4% $8.43 $6.28 - $14.53 One month prior (9/13/00) $5.75 50.8% 0.5% - 253.8% $8.67 $5.78 - $20.35 ----------------------------------------------------------------------------------------------------------------------- SELECTED HEALTH CARE MERGER AND ACQUISITION TRANSACTIONS (54) ----------------------------------------------------------------------------------------------------------------------- One day prior (10/12/00) $6.25 30.5% 2.2% - 101.7% $8.16 $6.39 - $12.61 One month prior (9/13/00) $5.75 51.4% 3.2% - 118.2% $8.71 $5.93 - $12.55 ----------------------------------------------------------------------------------------------------------------------- SELECTED HEALTH CARE MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS (10) ----------------------------------------------------------------------------------------------------------------------- One day prior (10/12/00) $6.25 23.2% (9.0%) - 42.3% $7.70 $5.69 - $8.89 One month prior (9/13/00) $5.75 46.7% (8.0%) - 89.5% $8.43 $5.29 - $10.90 ----------------------------------------------------------------------------------------------------------------------- SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS (6) ----------------------------------------------------------------------------------------------------------------------- One day prior (10/12/00) $6.25 44.0% 8.8% - 129.2% $9.00 $6.80 - $14.32 One month prior (9/13/00) $5.75 53.4% 17.5% - 140.4% $8.82 $6.75 - $13.82 -----------------------------------------------------------------------------------------------------------------------
[LOGO OF DEUTSCHE BANC ALEX. BROWN] 35 SECTION 7 Discounted cash flow analysis [LOGO OF DEUTSCHE BANC ALEX. BROWN] SATURN DISCOUNTED CASH FLOW ANALYSIS Implied price per share BASED ON SATURN [BAR GRAPH] MANAGEMENT PROJECTIONS UTILIZING A WACC BASED ON CURRENT SATURN CAPITAL STRUCTURE AND SELECTED PUBLIC COMPANIES' BETAS PROJECTED 6-YEAR REVENUE CAGR OF 5.0% VS. A HISTORICAL 3-YEAR REVENUE CAGR OF (0.9%) PROJECTED 2005 EBITDA ------------------ MARGIN OF 17.4% VS. A Source: SATURN management estimates LTM EBITDA MARGIN Note: Excludes Parker Bath division (EXCLUDING RESTRUCTURING CHARGES) OF 8.1% PROFITABILITY TARGETS PREDICATED ON SUCCESSFUL RESTRUCTURING PROGRAM AND IMPLEMENTATION OF A GLOBAL IT SYSTEM [LOGO OF DEUTSCHE BANC ALEX. BROWN] 37 SATURN DISCOUNTED CASH FLOW ANALYSIS ($ in millions, except per share data)
Fiscal year ended June 30, ------------------------------------------------------ 2001E 2002E 2003E 2004E 2005E ------- ------- ------- ------- ------- Revenue $641.7 $668.0 $710.3 $754.8 $803.1 Growth rate 2.2% 4.1% 6.3% 6.3% 6.4% EBITDA 63.4 95.8 118.3 130.7 140.0 EBITDA margin 9.9% 14.3% 16.7% 17.3% 17.4% Restructuring charges 26.5 7.9 -- -- -- Adjusted EBITDA 36.9 87.9 118.3 130.7 140.0 Adjusted EBITDA margin 5.8% 13.2% 16.7% 17.3% 17.4% Adjusted EBIT 13.1 61.4 90.5 103.2 112.1 EBIT margin 2.0% 9.2% 12.7% 13.7% 14.0% Adjusted EBIT after tax(a) 7.8 36.8 54.3 61.9 67.3 plus: depreciation & amortization 23.8 26.5 27.8 27.5 27.9 less: use of non-cash working capital 36.2 2.3 (6.9) 0.8 2.0 less: capital expenditures 23.3 30.6 18.0 18.2 18.3 ------- ------- ------- ------- ------- Unlevered free cash flow ($27.9) $30.5 $71.0 $70.5 $74.8 ======= ======= ======= ======= =======
PV cash PV of terminal value as of 6/30/00 Less: Discount flows as of multiple of 2005 EBITDA ($140.0 million) net debt Implied equity valuation rate 6/30/00 6.5x 7.5x 8.5x 6/30/00 6.5x 7.5x 8.5x -------- ----------- -------- -------- -------- -------- ------ ------ ----- 12.0% $137.2 $516.2 $595.6 $675.1 ($114.3) $539.2 $618.6 $698.0 14.0% $127.6 $472.5 $545.2 $617.9 ($114.3) $485.8 $558.5 $631.2 16.0% $118.7 $433.2 $499.8 $566.4 ($114.3) $437.6 $504.2 $570.9
Discount Implied equity valuation per share rate 6.5x 7.5x 8.5x -------- ------ ------ ----- 12.0% $20.75 $23.59 $26.42 14.0% $18.84 $21.44 $24.03 16.0% $17.12 $19.50 $21.88 Based on SATURN management projections utilizing a WACC based on current SATURN capital structure and selected public companies' betas Projected 6-year revenue CAGR of 5.0% vs. a historical 3-year revenue CAGR of (0.9%) Projected 2005 EBITDA margin of 17.4% vs. a LTM EBITDA margin (excluding restructuring charges) of 8.1% Profitability targets predicated on successful restructuring program and implementation of a global IT system
------------------------ Source: SATURN management. Note: Excludes Parker Bath division. (a) Assumes a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 38 SATURN DISCOUNTED CASH FLOW ANALYSIS Adjusted model (Implied price per share) [BAR GRAPH] Based on discussions with SATURN management utilizing a WACC based on current SATURN capital structure and selected public companies' betas. Projected 6-year revenue CAGR of 0.0% vs. a historical 3-year revenue CAGR of (0.9%) Projected 2005 EBITDA margin of 11.7% vs. a LTM EBITDA margin (excluding restructuring charges) of 8.1% Profitability targets predicated on moderate success of restructuring program and implementation of a global IT system. --------------- Source: Based on discussions with SATURN management. Note: Excludes Parker Bath division. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 39 SATURN DISCOUNTED CASH FLOW ANALYSIS Adjusted model ($ in millions, except per share data)
Fiscal year ended June 30, -------------------------------------------------------- 2001E 2002E 2003E 2004E 2005E --------- --------- --------- --------- --------- Revenue $628.0 $628.0 $628.0 $628.0 $628.0 Growth rate 0.0% 0.0% 0.0% 0.0% 0.0% EBITDA 63.4 67.8 70.3 72.2 73.5 EBITDA margin 10.1% 10.8% 11.2% 11.5% 11.7% Restructuring charges 26.5 7.9 -- -- -- Adjusted EBITDA 36.9 59.9 70.3 72.2 73.5 Adjusted EBITDA margin 5.9% 9.5% 11.2% 11.5% 11.7% Adjusted EBIT 13.7 33.9 43.3 45.5 46.2 EBIT margin 2.2% 5.4% 6.9% 7.3% 7.4% Adjusted EBIT after tax(a) 8.2 20.3 26.0 27.3 27.7 plus: depreciation & amortization 23.2 26.1 27.0 26.7 27.3 less: use of non-cash working capital 9.6 0.5 0.1 0.2 0.2 less: capital expenditures 24.2 23.2 21.4 18.2 18.3 --------- --------- --------- --------- --------- Unlevered free cash flow ($2.3) $22.6 $31.5 $35.6 $36.5 ========= ========= ========= ========= =========
PV cash PV of terminal value as of 6/30/00 Less: Discount flows as of multiple of 2005 EBITDA ($73.5 million) net debt Implied equity valuation rate 6/30/00 6.5x 7.5x 8.5x 6/30/00 6.5x 7.5x 8.5x -------- ----------- -------- -------- -------- -------- ------ ------ ----- 12.0% $81.8 $271.0 $312.7 $354.4 ($114.3) $238.5 $280.2 $321.9 14.0% $76.7 $248.0 $286.2 $324.4 ($114.3) $210.5 $248.7 $286.8 16.0% $72.1 $227.4 $262.4 $297.4 ($114.3) $185.2 $220.2 $255.2
Discount Implied equity valuation per share rate 6.5x 7.5x 8.5x -------- ------ ------ ------ 12.0% $10.01 $11.50 $12.99 14.0% $9.01 $10.38 $11.74 16.0% $8.11 $9.36 $10.61 Based on discussions with SATURN management utilizing a WACC based on current SATURN capital structure and selected public companies' betas. Projected 6-year revenue CAGR of 0.0% vs. a historical 3-year revenue CAGR of (0.9%) Projected 2005 EBITDA margin of 11.7% vs. a LTM EBITDA margin (excluding restructuring charges) of 8.1% Profitability targets predicated on moderate success of restructuring program and implementation of a global IT system.
------------------------ Source: Based on discussions with SATURN management. Note: Excludes Parker Bath division. (a) Assumes a 40.0% tax rate. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 40 SECTION 8 Appendix [LOGO OF DEUTSCHE BANC ALEX. BROWN] Overview of the acquirors [LOGO OF DEUTSCHE BANC ALEX. BROWN] OVERVIEW OF VESTAR CAPITAL PARTNERS - Leading investment firm specializing in management buyouts, recapitalizations and growth capital investments - Firm founded in 1988 by members of First Boston's Management Buyout Group - Currently manages a committed equity capital pool of approximately $4 billion with the ability to invest as much as $500 million in any transaction - Since the firm's founding, Vestar Capital Partners has completed over 30 investments with a total value of approximately $10 billion - Historical and current health care investments include: Sheridan Healthcare, Super D Drugs and Aearo Corporation [LOGO OF DEUTSCHE BANC ALEX. BROWN] 43 OVERVIEW OF PARK AVENUE EQUITY PARTNERS, L.P. - Park Avenue Equity Partners, L.P. focuses on equity and equity-linked investments in middle-market companies - Park Avenue Equity Partners, L.P. manages a $100 million private equity fund - Park Avenue Equity Partners, L.P. targets North American companies with annual revenues between $25 million to $250 million - Investment size typically ranges from $10 million to $25 million of equity plus co-investment - Current portfolio companies include: Systech Retail Systems, Premier Health Exchange LLC / Medibuy.com, W.R. Hambrecht + Co. and Netrex Capital Group [LOGO OF DEUTSCHE BANC ALEX. BROWN] 44 Selected public companies [LOGO OF DEUTSCHE BANC ALEX. BROWN] SELECTED PUBLIC COMPANIES ($ in millions, except per share data)
Valuation Benchmarks ------------------------------------------------------------------ Market Statistics Enterprise Value as ------------------------------- a Multiple of LTM Equity Value as a Multiple of Stock Price Equity Enterprise ------------------------- -------------------------------------- Company 10/13/00 Value Value Revenues EBITDA EBIT Trailing EPS Cal '00 EPS Cal '01 EPS -------------------- ----------- -------- ---------- -------- ------ ------ ------------ ----------- ----------- Arrow International, Inc. $37.47 $834.5 $893.5 2.8 x 9.6 x 12.2 x 17.8 x 16.7 x 15.4 x CONMED Corporation $14.38 $220.6 $597.4 1.5 x 5.9 x 8.0 x 8.5 x 10.9 x 9.2 x Hillenbrand Industries, Inc. $44.25 $2,767.0 $2,922.0 1.4 x 9.2 x 13.3 x 21.4 x 18.0 x 16.0 x Invacare Corporation $29.63 $936.6 $1,351.1 1.4 x 9.9 x 12.7 x 16.9 x 14.9 x 12.9 x Respironics, Inc. $18.94 $649.3 $739.2 2.0 x 9.8 x 14.9 x 21.1 x 19.7 x 16.2 x ----------------------------------------------------------------------------------------------------------------------------------- MEAN: 1.8 x 8.9 x 12.2 x 17.1 x 16.0 x 14.0 x ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- SATURN(1) $6.38 $148.9 $263.1 0.4 x 5.2 x 10.3 x 21.1 x 20.2 x 13.4 x -----------------------------------------------------------------------------------------------------------------------------------
Growth Rates -------------------------------------------------------------------- Margins (LTM) 3-year CAGR(2) Projected Calendar Year EPS ------------------------------ -------------------- --------------------------------- 2001 P/E to Gross Net Company Revenues Net Income 1999 - 2000 2000 - 2001 I/B/E/S Growth Rate Margin EBITDA EBIT Income ------------------------- -------- ---------- ----------- ----------- ------- ----------- ------ ------ ------ ------ Arrow International, Inc. 9.7% 9.4% 61.9% 8.6% 13.2% 116.7% 53.1% 29.5% 23.1% 15.1% CONMED Corporation 64.2% 31.1% -25.4% 18.2% 14.3% 64.4% 52.2% 25.9% 19.0% 6.7% Hillenbrand Industries, Inc. 7.4% -2.9% 10.6% 11.9% 11.8% 136.0% 37.4% 15.8% 10.9% 6.6% Invacare Corporation 15.9% 11.8% 20.6% 15.1% 15.3% 84.6% 31.4% 14.0% 11.0% 5.5% Respironics, Inc. 2.3% 6.2% 3.8% 21.9% 16.3% 99.3% 46.6% 20.5% 13.4% 7.3% ----------------------------------------------------------------------------------------------------------------------------------- MEAN: 19.9% 11.1% 14.3% 15.1% 14.2% 100.2% 44.1% 21.2% 15.5% 8.2% ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- SATURN(1) -0.9% -36.2% -48.8% 50.8% 10.0% 134.2% 30.2% 8.1% 4.1% 1.1% -----------------------------------------------------------------------------------------------------------------------------------
------------------------ (1) Calendar 2000 and 2001 EPS and growth rate based on I/B/E/S estimates. Excludes Parker Bath division. Outstanding shares and options per SATURN management as of 10/1/00. (2) Represents historical fiscal year information as reported excluding non-recurring charges. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 46 SELECTED PUBLIC COMPANIES ($ in millions, except per share data)
Market Statistics Balance Sheet Data ====================================================== ============================================ Stock Price 52-Week Price Change Price as a % Cash and Total ------------- Company 10/13/00 High Low 12 Months of High Equivalents Assets Total Debt Book Value --------------------------- -------- ------ ------ ------------- ------------- ----------- --------- ---------- ---------- Arrow International, Inc. $37.47 $40.13 $25.44 41.4% 93.4% $3.9 $383.0 $63.0 $279.5 CONMED Corporation $14.38 $32.00 $12.00 -46.8% 44.9% $3.4 $669.6 $380.2 $222.4 Hillenbrand Industries, Inc. $44.25 $46.38 $27.06 60.2% 95.4% $206.0 $4,473.0 $361.0 $758.0 Invacare Corporation $29.63 $32.50 $17.44 37.8% 91.2% $16.4 $954.9 $430.9 $335.4 Respironics, Inc. $18.94 $19.13 $7.50 122.0% 99.0% $19.6 $353.0 $109.5 $191.1 ---------------------------------------------------------------------------------------------------------------------------------- Mean: 42.9% 84.8% ---------------------------------------------------------------------------------------------------------------------------------- SATURN(1) $6.38 $7.13 $3.75 10.9% 89.5% $34.9 $524.4 $149.1 $248.0 ----------------------------------------------------------------------------------------------------------------------------------
Operating Data (LTM) EPS Estimates Capitalization =========================================== =============== ========================================= Gross Net Calendar Total Debt/ Total Debt/ Total Debt/ -------------- Company Revenues Profit EBITDA EBIT Income 2000 2001 Book Value Capitalization EBITDA ------------------------- -------- -------- -------- ------- -------- ------- ------ ------------ --------------- ----------- Arrow International, Inc. $316.3 $168.0 $93.5 $73.0 $47.7 $2.24 $2.43 22.5% 18.4% 0.7 x CONMED Corporation $390.2 $203.7 $101.2 $74.3 $26.2 $1.32 $1.56 171.0% 63.1% 3.8 x Hillenbrand Industries, Inc. $2,024.0 $756.0 $319.0 $220.0 $132.8 $2.47 $2.76 47.6% 32.3% 1.1 x Invacare Corporation $970.5 $304.9 $135.9 $106.6 $53.8 $1.99 $2.29 128.5% 56.2% 3.2 x Respironics, Inc. $368.2 $171.7 $75.6 $49.5 $27.0 $0.96 $1.17 57.3% 36.4% 1.4 x ----------------------------------------------------------------------------------------------------------------------------------- Mean: 85.4% 41.3% 2.0 x ----------------------------------------------------------------------------------------------------------------------------------- SATURN(1) $628.0 $189.9 $50.9 $25.7 $6.8 $0.32 $0.48 60.1% 37.5% 2.9 x -----------------------------------------------------------------------------------------------------------------------------------
-------------------------- (1) Calendar 2000 and 2001 EPS and growth rate based on I/B/E/S estimates. Excludes Parker Bath division. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 47 SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS [LOGO OF DEUTSCHE BANC ALEX. BROWN] SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS ($ in thousands)
Enterprise Purchase Price Equity Enterprise as a Multiple of LTM: -------------------------- Date Target Purchase Purchase Ann. Acquiror Price Price (a) Revenue EBITDA EBIT ---------- ---------------------------------- -------- ---------- ------- ------- ------ 07/01/1999 Scandinavian Mobility (b) $145,045 $136,281 1.1 x 9.4 x 11.8 x Invacare Corporation 10/07/1997 Bear Medical (Allied Healthcare) (c) $37,500 $37,500 1.3 x NA NA Thermo Electron Corporation 10/03/1997 Kinetic Concepts, Inc. (d) $856,583 $818,707 2.9 x 9.9 x 13.3 x Richard C. Blum and Fremont Partners 09/08/1997 Fuqua Enterprises, Inc. $176,800 $230,711 1.0 x 13.6 x 18.0 x Graham-Field Health Products, Inc. 09/04/1997 Tecnol Medical Products Inc. $407,758 $407,814 2.7 x 11.4 x 14.2 x Kimberly Clark Corp. 09/10/1996 Aequitron Medical, Inc. $59,746 $58,891 1.5 x 11.9 x 15.7 x Nellcor Puritan Bennett, Inc. 08/26/1996 LIFECARE International, Inc. $50,000 $62,300 1.9 x 9.9 x 15.2 x Respironics, Inc. 08/14/1996 Everest & Jennings International Ltd. $20,150 $106,885 1.5 x NM NM Graham-Field Health Products, Inc. 07/27/1995 Bird Medical Technologies, Inc. (e) $61,692 $76,998 1.5 x 13.4 x 21.4 x Thermo Electron Corporation 03/01/1995 Corona SA $36,332 $38,730 1.2 x NA 7.9 x Sunrise Medical Inc. ------------------------------------------------------------------ Mean: $185,161 $197,482 1.7 x 11.4 x 14.7 x Median: $61,692 $91,942 1.5 x 11.4 x 14.7 x ------------------------------------------------------------------ Low: $20,150 $37,500 1.0 x 9.4 x 7.9 x High: $856,583 $818,707 2.9 x 13.6 x 21.4 x ------------------------------------------------------------------
Equity Purchase Price as a Multiple of: Premium to Market ----------------------------------------- ---------------------- Date Target Trailing Forward Book Day Month Ann. Acquiror Net Income Net Income Value Prior Prior ---------- ---------------------------------- ------------ ----------- ------- ------- ------- 07/01/1999 Scandinavian Mobility (b) 17.0 x NA 3.5 x 40.1% 78.0% Invacare Corporation 10/07/1997 Bear Medical (Allied Healthcare) (c) NA NA NA NA NA Thermo Electron Corporation 10/03/1997 Kinetic Concepts, Inc. (d) 20.4 x 18.7 x 3.8 x 3.4% 2.7% Richard C. Blum and Fremont Partners 09/08/1997 Fuqua Enterprises, Inc. 26.1 x NA 1.9 x 42.3% 69.6% Graham-Field Health Products, Inc. 09/04/1997 Tecnol Medical Products Inc. 23.5 x 16.9 x 3.0 x -9.0% -8.0% Kimberly Clark Corp. 09/10/1996 Aequitron Medical, Inc. 24.8 x 19.9 x 3.6 x 22.9% 48.3% Nellcor Puritan Bennett, Inc. 08/26/1996 LIFECARE International, Inc. 28.0 x 18.5 x NA NA NA Respironics, Inc. 08/14/1996 Everest & Jennings International Ltd. NM NA NM NM NM Graham-Field Health Products, Inc. 07/27/1995 Bird Medical Technologies, Inc. (e) 40.1 x 25.8 x 3.3 x 39.5% 89.5% Thermo Electron Corporation 03/01/1995 Corona SA 11.4 x NA 5.0 x NA NA Sunrise Medical Inc. --------------------------------------------------------------------------------- Mean: 23.9 x 20.0 x 3.4 x 23.2% 46.7% Median: 24.2 x 18.7 x 3.5 x 31.2% 58.9% --------------------------------------------------------------------------------- Low: 11.4 x 16.9 x 1.9 x -9.0% -8.0% High: 40.1 x 25.8 x 5.0 x 42.3% 89.5% ---------------------------------------------------------------------------------
-------------------------------------------------------------------------------- (a) Defined as Equity Purchase Price plus debt less cash and cash equivalents. (b) Source: Wall Street research. No public transaction SEC documents available. (c) Source: Press release dated 10/7/97. (d) One day and one month prior price as of 5/1/97 and 4/1/97, respectively. (e) Premiums based on prices one day prior and one month prior to original Thermo Electron bid on 06/09/95. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 49 SELECTED MEDICAL DEVICE AND EQUIPMENT TRANSACTIONS ($ in thousands)
Equity Enterprise Date Target Purchase Purchase Margins 3-year CAGR (b) --------------------------- -------------------- Ann. Acquiror Price Price (a) EBITDA EBIT Net Income Revenues Net Income ---------- ------------------------------ -------- ----------- ------- ------- ---------- -------- ---------- 07/01/1999 Scandinavian Mobility (c) $145,045 $136,281 11.8% 9.4% 6.9% -9.8% -19.6% Invacare Corporation 10/07/1997 Bear Medical (Allied Healthcare) (d) $37,500 $37,500 NA NA NA NA NA Thermo Electron Corporation 10/03/1997 Kinetic Concepts, Inc. $856,583 $818,707 28.8% 21.4% 14.7% 0.0% 67.4% Richard C. Blum and Fremont Partners 09/08/1997 Fuqua Enterprises, Inc. $176,800 $230,711 7.7% 5.8% 3.0% 24.0% 17.4% Graham-Field Health Products, Inc. 09/04/1997 Tecnol Medical Products Inc. $407,758 $407,814 23.8% 19.1% 11.5% 9.4% -1.6% Kimberly Clark Corp. 09/10/1996 Aequitron Medical, Inc. $59,746 $58,891 12.9% 9.7% 6.3% 20.9% 73.2% Nellcor Puritan Bennett, Inc. 08/26/1996 LIFECARE International, Inc. $50,000 $62,300 19.1% 12.4% 5.4% 9.1% 4.1% Respironics, Inc. 08/14/1996 Everest & Jennings International Ltd. $20,150 $106,885 NM NM NM -11.1% NM Graham-Field Health Products, Inc. 07/27/1995 Bird Medical Technologies, Inc. $61,692 $76,998 11.0% 6.9% 3.0% 10.8% NM Thermo Electron Corporation 03/01/1995 Corona SA $36,332 $38,730 NA 15.6% 10.2% NA NA Sunrise Medical Inc. -------------------------------------------------------------------------------------------- Mean: $185,161 $197,482 16.4% 12.5% 7.6% 6.7% 23.5% Median: $60,719 $91,942 12.9% 11.1% 6.6% 9.3% 10.8% -------------------------------------------------------------------------------------------- Low: $20,150 $37,500 7.7% 5.8% 3.0% -11.1% -19.6% High: $856,583 $818,707 28.8% 21.4% 14.7% 24.0% 73.2% --------------------------------------------------------------------------------------------
--------------------------------------------------------------------- (a) Defined as Equity Purchase Price plus debt less cash and cash equivalents. (b) Represents historical fiscal year information as reported excluding non-recurring charges before transaction occurred. (c) Source: Wall Street research. No public transaction SEC documents available. (d) Source: Press release dated 10/7/97. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 50 Selected health care leveraged recapitalization transactions [LOGO OF DEUTSCHE BANC ALEX. BROWN] SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS ($ IN THOUSANDS)
Enterprise Purchase Price Equity Enterprise as a Multiple of LTM: Date Target Purchase Purchase ------------------------------------ Ann. Acquiror Price Price (a) Revenue EBITDA EBIT ---------- ----------------------------------- -------- ---------- ------- ------ ------ 09/14/1999 Alliance Imaging, Inc. $337,912 $886,411 3.0 x 6.9 x 12.1 x Kohlberg Kravis Roberts & Co. 06/14/1999 Physicians Specialty Corp. $100,951 $110,957 1.4 x 8.7 x 10.8 x TA MergerCo Inc. 05/25/1999 Unilab Corporation $281,567 $378,155 1.7 x 10.8 x 13.8 x Kelso & Company 03/25/1999 Sheridan Healthcare $66,265 $134,606 1.2 x 7.0 x 9.1 x Vestar/Sheridan Holdings 03/12/1999 Team Health, Inc. (b) $325,700 $324,772 0.6 x 5.6 x 6.7 x Madison Dearborn Partners, Inc. 03/03/1999 Concentra Managed Care, Inc. $780,352 $998,799 1.6 x 8.7 x 11.2 x WCAS (c) Mean: $315,458 $472,283 1.6 x 8.0 x 10.6 x Median: $303,634 $351,464 1.5 x 7.9 x 11.0 x Low: $66,265 $110,957 0.6 x 5.6 x 6.7 x High: $780,352 $998,799 3.0 x 10.8 x 13.8 x Equity Purchase Price as a Multiple of: Premium to Market ------------------------------------ ------------------------ Date Target Trailing Forward Book Day Month Ann. Acquiror Net Income Net Income Value Prior Prior ---------- ----------------------------------- ---------- ---------- ----- ------- -------- 09/14/1999 Alliance Imaging, Inc. 22.9 x NA NM 129.2% 140.4% Kohlberg Kravis Roberts & Co. 06/14/1999 Physicians Specialty Corp. 16.5 x 11.1 x 2.0 x 20.0% 21.7% TA MergerCo Inc. 05/25/1999 Unilab Corporation 20.6 x 15.5 x NM 20.0% 46.3% Kelso & Company 03/25/1999 Sheridan Healthcare 9.8 x 9.3 x 1.3 x 8.8% 17.5% Vestar/Sheridan Holdings 03/12/1999 Team Health, Inc. (b) 12.9 x NA 3.3 x NA NA Madison Dearborn Partners, Inc. 03/03/1999 Concentra Managed Care, Inc. 18.4 x 17.9 x 3.3 x 41.9% 41.2% WCAS (c) Mean: 16.9 x 13.4 x 2.5 x 44.0% 53.4% Median: 17.5 x 13.3 x 2.6 x 20.0% 41.2% Low: 9.8 x 9.3 x 1.3 x 8.8% 17.5% High: 22.9 x 17.9 x 3.3 x 129.2% 140.4%
------------------------- (a) Defined as Equity Purchase Price plus debt less cash and cash equivalents. (b) Deal closed on March 12, 1999. (c) Represents Welsh, Carson, Anderson & Stowe VIII, L.P. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 52 SELECTED HEALTH CARE LEVERAGED RECAPITALIZATION TRANSACTIONS ($ in thousands)
Equity Enterprise Date Target Purchase Purchase Margins 3- year CAGR (b) ------------------------------ ---------------------- Ann. Acquiror Price Price (a) EBITDA EBIT Net Income Revenues Net Income ---------- --------------------------------- -------- ----------- ------- ------- ----------- --------- ------------ 09/14/1999 Alliance Imaging, Inc. $337,912 $886,411 43.6% 24.8% 5.0% 70.6% -11.3% Kohlberg Kravis Roberts & Co. 06/14/1999 Physicians Specialty Corp. $100,951 $110,957 16.6% 13.3% 7.9% 9.6% NM TA MergerCo Inc. 05/25/1999 Unilab Corporation $281,567 $378,155 15.4% 12.1% 6.0% 2.9% NM Kelso & Company 03/25/1999 Sheridan Healthcare $66,265 $134,606 16.9% 13.1% 6.0% 10.4% 44.0% Vestar/Sheridan Holdings 03/12/1999 Team Health, Inc. (c) $325,700 $324,772 10.6% 8.9% 4.6% 9.1% 10.0% Madison Dearborn Partners, Inc. 03/03/1999 Concentra Managed Care, Inc. $780,352 $998,799 18.6% 14.4% 6.9% 28.6% 21.7% WCAS (d) ------------------------------------------------------------------------------------------ Mean: $315,458 $472,283 20.3% 14.4% 6.1% 21.9% 16.1% Median: $303,634 $351,464 16.8% 13.2% 6.0% 10.0% 15.9% ------------------------------------------------------------------------------------------ Low: $66,265 $110,957 10.6% 8.9% 4.6% 2.9% -11.3% High: $780,352 $998,799 43.6% 24.8% 7.9% 70.6% 44.0% ------------------------------------------------------------------------------------------
------------------------------------------------------------------- (a) Defined as Equity Purchase Price plus debt less cash and cash equivalents. (b) Represents historical fiscal year information as reported excluding non-recurring charges before transaction occurred. (c) Deal closed on March 12, 1999. (d) Represents Welsh, Carson, Anderson & Stowe VIII, L.P. [LOGO OF DEUTSCHE BANC ALEX. BROWN] 53