-----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, EoWw76/xUWqLTyMgFlFMI9JtbfNwISj35CVOaPn/PjDH+9HZN8B4gxqJcmF9pQ0j z0IIcAjT/WVShSDBOI5w+A== 0000897069-03-000615.txt : 20030604 0000897069-03-000615.hdr.sgml : 20030604 20030604093422 ACCESSION NUMBER: 0000897069-03-000615 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20030604 GROUP MEMBERS: ALAN J. KASTELIC GROUP MEMBERS: WILLIAM B. FINNERAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EDISON CONTROLS CORP CENTRAL INDEX KEY: 0000795968 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 222716367 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-38971 FILM NUMBER: 03731287 BUSINESS ADDRESS: STREET 1: 777 MARITIME DRIVE STREET 2: PO BOX 308 CITY: PORT WASHINGTON STATE: WI ZIP: 53074-0308 BUSINESS PHONE: 2622686800 MAIL ADDRESS: STREET 1: W60 N151 CARDINAL AVE. STREET 2: PO BOX 326 CITY: CEDARBURG STATE: WI ZIP: 53012 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EDISON CONTROLS CORP CENTRAL INDEX KEY: 0000795968 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 222716367 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: 777 MARITIME DRIVE STREET 2: PO BOX 308 CITY: PORT WASHINGTON STATE: WI ZIP: 53074-0308 BUSINESS PHONE: 2622686800 MAIL ADDRESS: STREET 1: W60 N151 CARDINAL AVE. STREET 2: PO BOX 326 CITY: CEDARBURG STATE: WI ZIP: 53012 SC 13E3/A 1 sdc438.txt AMENDMENT 1 TO 13E-3 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- AMENDMENT NO. 1 TO SCHEDULE 13E-3 RULE 13e-3. TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934 ----------------------- EDISON CONTROL CORPORATION (Name of the Issuer) EDISON CONTROL CORPORATION WILLIAM B. FINNERAN ALAN J. KASTELIC (Name of Persons Filing Statement) COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 280883 10 9 (CUSIP Number of Class of Securities) ----------------------- EDISON CONTROL CORPORATION 777 MARITIME DRIVE P.O. BOX 308 PORT WASHINGTON, WISCONSIN 53074-0308 TELEPHONE (262) 268-6800 (Name, Address and Telephone Number of Persons Authorized to Receive Notice and Communications on Behalf of Persons Filing Statement) This statement is filed in connection with (check the appropriate box): a. [X] 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. 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: [X] Check the following box if the filing is a final amendment reporting the results of the transaction: [ ] CALCULATION OF FILING FEE Transaction Valuation* Amount of Filing Fee** ---------------------- ---------------------- $3,421,486 $685 * The transaction valuation was based upon (i) the product of 474,950 shares of Edison Control Corporation Common Stock at a per share price of $7.00 and (ii) the termination of options to purchase 27,334 shares of Common Stock at an aggregate cost of $96,836. ** The amount of the filing fee, calculated in accordance with Rule 0-11(b) of the Securities Exchange Act of 1934, equals 1/50th of 1% of the transaction valuation. [X] Check the box if any part of the fee is offset as provided by Rule 0-11(a) (2) of the Securities Exchange Act of 1934 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: $685 Form or Registration No.: Schedule 14A Filing Party: Edison Control Corporation Date Filed: April 24, 2003 2 INTRODUCTION This Amendment No. 1 to Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") is being filed by (i) Edison Control Corporation, a New Jersey corporation ("EDCO"), the issuer of the equity securities that are the subject of the Rule 13e-3 transaction, (ii) William B. Finneran, a natural person and beneficial owner of approximately 67% of EDCO's outstanding common stock (the "Majority Shareholder"), and (iii) Alan J. Kastelic, a natural person and beneficial owner of approximately 4% of EDCO's outstanding common stock. EDCO is submitting to its shareholders a proposal to take the company private through the adoption of an amendment to EDCO's Certificate of Incorporation providing for a one-for-66,666 reverse stock split of EDCO's common stock. Shareholders holding less than one share after the reverse stock split will be entitled to receive a cash payment of $7.00 per pre-split share in lieu of any fractional shares. This reverse stock split proposal is part of a proposed "going private" transaction and is upon the terms and subject to the conditions of a revised preliminary proxy statement filed concurrently with this Amendment No. 1 to Schedule 13E-3 ("Proxy Statement"). The EDCO Board of Directors is soliciting proxies from shareholders of EDCO in connection with the reverse stock split pursuant to the Proxy Statement. The information in the Proxy Statement, including all annexes and exhibits thereto, is expressly incorporated by reference herein in its entirety and responses to each item herein are qualified in their entirety by the information contained in the Proxy Statement and the annexes and exhibits thereto. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Proxy Statement. Item 1. Summary Term Sheet Regulation M-A The information set forth in the Proxy Statement under the Item 1001 caption "Summary Term Sheet" is incorporated herein by reference. Item 2. Subject Company Information Regulation M-A Item 1002 (a) Name and Address. The information set forth in the Proxy Statement under the caption "Questions and Answers About the Reverse Stock Split" is incorporated herein by reference. (b) Securities. The information set forth in the Proxy Statement under the caption "The Special Meeting - Record Date" is incorporated herein by reference. (c)-(d) Trading Market and Price; Dividends. The information set forth in the Proxy Statement under the caption "Special Factors - Price Range of Common Stock and Dividends; Related Shareholder Matters" is incorporated herein by reference. (e) Prior Public Offerings. None. (f) Prior Stock Purchases. The information set forth in the Proxy Statement under the caption "Other Matters - Transactions in Capital Stock by Certain Persons" is incorporated herein by reference. 3 Item 3. Identity and Background of the Filing Person Regulation M-A Item 1003 (a)-(c) Name and Address; Business and Background of Entities; Business and Background of Natural Persons. Edison Control Corporation is a corporation organized under the laws of the State of New Jersey. The principal executive offices of Edison Control Corporation are located at 777 Maritime Drive, Port Washington, Wisconsin 53704-0308. The telephone number is (262) 268-6800. Directors and Executive Officers of Edison Control Corporation. The table below sets forth for each of the directors and executive officers of Edison Control Corporation their respective present principal occupation or employment, the name and principal business of the corporation or other organization in which such occupation or employment is conducted and the five-year employment history of each such director and executive officer. Each person identified below is a United States citizen. Each person's principal address and business telephone number is c/o Edison Control Corporation, 777 Maritime Drive, P.O. Box 308, Port Washington, Wisconsin 53074-0308, (262) 268-6800. Present Principal Occupation or Employment and Material Name Positions Held During The Past Five Years - ---- ------------------------------------------------------- William B. Finneran Mr. Finneran is a Managing Director of Wachovia Securities, an investment-banking firm. Prior to joining Wachovia in 1999, Mr. Finneran was a Managing Director at CIBC Oppenheimer Corp., an investment-banking firm, and had been employed with Oppenheimer since 1972. Mr. Finneran is a Director of National Planning Association, a non-profit advisory board. He serves on the Board of Villanova University and is a former Board Member of Covenant House and Operation Smile, non-profit charitable institutions. Mr. Finneran also currently serves on the Executive Committee of the New York Archdiocesan Patrons Program. Robert L. Cooney Mr. Cooney is a partner of Cooney & Co., a financial consulting firm which he founded in February 1997. Mr. Cooney was a Managing Director-Equity Capital Markets at Credit Suisse First Boston from 1977 to January 1997. Mr. Cooney also serves as a director of Equity One, Inc., a NYSE-listed real estate investment trust located in Miami, Florida. Alan J. Kastelic Mr. Kastelic was appointed President and Chief Executive Officer of Edison Control Corporation in June 1998 and President and Chief Executive Officer of Construction Forms in June 1996 when the Company acquired Construction Forms. Mr. Kastelic had previously been Executive Vice President and Chief Operating Officer of Construction Forms, which he joined in 1977. Prior to joining Construction Forms, Mr. Kastelic was Manufacturing Manager at Badger Dynamics and Chief Cost Accountant, Material Control Manager and Manager of Manufacturing at the PCM division of Koehring Corporation. 4 Present Principal Occupation or Employment and Material Name Positions Held During The Past Five Years - ---- ------------------------------------------------------- William C. Scott Mr. Scott was the Chairman and Chief Executive Officer of Panavision Inc. from 1988 to 1999, a leading designer and manufacturer of high-precision film camera systems for the motion picture and television industries. From 1972 until 1987, Mr. Scott was President and Chief Operating Officer of Western Pacific Industries Inc., a manufacturer of industrial products. Prior to 1972, Mr. Scott was a Group Vice President of Cordura Corporation (a business information company) for three years and Vice President of Booz, Allen & Hamilton (a management-consulting firm) for five years. He is currently a director of Audio Visual Services Corporation and of Vari-Lite, Inc. Gregory L. Skaar Mr. Skaar was appointed Chief Financial Officer on February 20, 2003. Mr. Skaar is also the Chief Financial Officer of Construction Forms, our wholly-owned subsidiary. He served as our Corporate Controller from 1997 to February 20, 2003. From 1991 to 1997, Mr. Skaar was with the Cooper Power Systems Division of Cooper Industries where he served as a Product Line Controller. From 1985 to 1991 he was employed by the international accounting firm of Deloitte & Touche LLP. Neither Mr. Finneran nor Mr. Kastelic has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a judicial or administrative proceeding resulting in a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violations of such laws. To the knowledge of EDCO, during the last five years, none of Messrs. Cooney, Scott or Skaar has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a judicial or administrative proceeding resulting in a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violations of such laws. Item 4. Terms of the Transaction Regulation M-A Item 1004 (a)(1) Tender Offers. Not applicable. (a)(2)(i) Transaction Description. The information set forth in the Proxy Statement under the caption "Questions and Answers About the Reverse Stock Split" is incorporated herein by reference. (a)(2)(ii) Consideration. The information set forth in the Proxy Statement under the captions "Summary Term Sheet," "Special Factors - Background of the Reverse Stock Split" and "Special Factors - Messrs. Finneran and Kastelic's Position as to the Fairness of the Reverse Stock Split" is incorporated herein by reference. 5 (a)(2)(iii) Reasons for Transaction. The information set forth in the Proxy Statement under the captions "Special Factors - Recommendation of the Special Committee and Our Board of Directors," "Special Factors - Position of the Special Committee and Our Board of Directors as to the Fairness of the Reverse Stock Split," "Special Factors - Messrs. Finneran and Kastelic's Position as to the Fairness of the Reverse Stock Split" and "Special Factors - Purpose of and Reasons for the Reverse Stock Split" is incorporated herein by reference. (a)(2)(iv) Vote Required for Approval. The information set forth in the Proxy Statement under the caption "The Special Meeting - Voting Rights; Vote Required for Approval" is incorporated herein by reference. (a)(2)(v) Differences in the Rights of Security Holders. The information set forth in the Proxy Statement under the caption "Special Factors - Effects of the Reverse Stock Split" is incorporated herein by reference. (a)(2)(vi) Accounting Treatment. Not applicable. (a)(2)(vii) Income Tax Consequences. The information set forth in the Proxy Statement under the caption "Special Factors - Material U.S. Federal Income Tax Consequences of the Reverse Stock Split to Our Shareholders" is incorporated herein by reference. (b) Purchases. The information set forth in the Proxy Statement under the caption "Special Factors - Interests of Directors and Executive Officers in the Reverse Stock Split" in incorporated herein by reference. (c) Different Terms. The information set forth in the Proxy Statement under the caption "Special Factors - Effects of the Reverse Stock Split" is incorporated herein by reference. (d) Appraisal Rights. The information set forth in the Proxy Statement under the captions "Summary Term Sheet" and "The Special Meeting - Voting Rights; Vote Required for Approval" is incorporated herein by reference. (e) Provisions for Unaffiliated Security Holders. The information set forth in the Proxy Statement under the caption "Other Matters - Where You Can Find More Information" is incorporated herein by reference. (f) Eligibility for Listing or Trading. Not applicable. Item 5. Past Contacts, Transactions, Negotiations and Agreements Regulation M-A Item 1005 (a)(1)-(a)(2) Transactions with EDCO; Transactions with Officers, Directors and Affiliates of EDCO . The information set forth in the Proxy Statement under the caption "Other Matters - Other Transactions" is incorporated herein by reference. (b)-(c), (e) Significant Corporate Events; Negotiations or Contacts. None. 6 (e) Agreements Involving the Subject Company's Securities. The information set forth in the Proxy Statement under the caption "Interests of Directors and Executive Officers in the Reverse Stock Split" is incorporated herein by reference. Item 6. Purposes of the Transaction and Plans or Proposals Regulation M-A Item 1006 (b) Use of Securities Acquired. Not applicable. (c)(1)-(8) Plans. The information set forth in the Proxy Statement under the caption "Special Factors - Plans or Proposals After the Reverse Stock Split" is incorporated herein by reference. Item 7. Purposes, Alternatives, Reasons and Effects Regulation M-A Item 1013 (a) Purposes. The information set forth in the Proxy Statement under the caption "Special Factors - Purpose of and Reasons for the Reverse Stock Split" is incorporated herein by reference. (b) Alternatives. The information set forth in the Proxy Statement under the caption "Special Factors - Alternatives to the Reverse Stock Split" is incorporated herein by reference. (c) Reasons. The information set forth in the Proxy Statement under the caption "Special Factors - Purpose of and Reasons for the Reverse Stock Split" is incorporated herein by reference. (d) Effects. The information set forth in the Proxy Statement under the captions "Special Factors - Effects of the Reverse Stock Split," "Special Factors - Advantages of the Reverse Stock Split," "Special Factors - Disadvantages of the Reverse Stock Split" and "Special Factors - Material U.S. Federal Income Tax Consequences of the Reverse Stock Split" is incorporated herein by reference. Item 8. Fairness of the Transaction Regulation M-A Item 1014 (a) Fairness. The information set forth in the Proxy Statement under the captions "Special Factors -Recommendations of the Special Committee and Our Board of Directors" and "Special Factors - Messrs. Finneran and Kastelic's Position as to the Fairness of the Reverse Stock Split" is incorporated herein by reference. (b) Factors Considered in Determining Fairness. The information set forth in the Proxy Statement under the captions "Special Factors - Position of the Special Committee and Our Board of Directors as to the Fairness of the Reverse Stock Split," "Special Factors - Messrs. Finneran and Kastelic's Position as to the Fairness of the Reverse Stock Split," "Special Factors - Opinion of Schroeder & Co.," and "Special Factors - Purpose of and Reasons for the Reverse Stock Split" is incorporated herein by reference. 7 (c) Approval of Security Holders. The information set forth in the Proxy Statement under "The Special Meeting - Voting Rights; Vote Required for Approval" is incorporated herein by reference. (d) Unaffiliated Representative. The information set forth in the Proxy Statement under the captions "Special Factors - Background of the Reverse Stock Split" and "Position of the Special Committee and Our Board of Directors as to the Fairness of the Reverse Stock Split" is incorporated herein by reference. (e) Approval of Directors. The information set forth in the Proxy Statement under the captions "Special Factors - Background of the Reverse Stock Split," and "Special Factors - Special Committee's Position as to the Fairness of the Reverse Stock Split" is incorporated herein by reference. (f) Other Offers. None. Item 9. Reports, Opinions, Appraisals and Negotiations Regulation M-A Item 1015 (a)-(c) Report, Opinion or Appraisal; Preparer and Summary of the Report, Opinion or Appraisal; Availability of Documents. The information set forth in the Proxy Statement under the captions "Special Factors - Opinion of Schroeder & Co.," "Special Factors - Position of the Special Committee and Our Board of Directors as to the Fairness of the Reverse Stock Split," and "Special Factors - Messrs. Finneran and Kastelic's Position as to the Fairness of the Reverse Stock Split," is incorporated herein by reference. The full text of the written opinion of Schroeder & Co., dated April 1, 2003, is attached to the Proxy Statement as Exhibit (C) thereto and is incorporated herein by reference. The written materials presented by Schroeder & Co. to the Edison Control Corporation Special Committee are set forth as Exhibit (C) hereto and are incorporated herein by reference. Item 10. Source and Amounts of Funds or Other Consideration Regulation M-A Item 1007 (a)-(d) Source of Funds; Conditions; Expenses; Borrowed Funds. The information set forth in the Proxy Statement under the captions "Special Factors - Source and Amount of Funds" and "Special Factors - Fees and Expenses of the Reverse Stock Split" is incorporated herein by reference. Item 11. Interest in Securities of the Subject Company Regulation M-A Item 1008 (a) Securities Ownership. The information set forth in the Proxy Statement under the caption "Other Matters - Security Ownership of Specified Beneficial Owners and Management" is incorporated herein by reference. (b)(1)-(5) Securities Transactions. None. 8 Item 12. The Solicitation or Recommendations Regulation M-A Item 1012 (d) Intent to Tender or Vote in a Going-Private Transaction. The information set forth in the Proxy Statement under the caption "The Special Meeting - Voting Rights; Vote Required for Approval" is incorporated herein by reference. (e) Recommendations of Others. The information set forth in the Proxy Statement under the captions "Special Factors - Background of the Reverse Stock Split," "Special Factors - Recommendations of the Special Committee and Our Board of Directors," and "Special Factors - Messrs. Finneran and Kastelic's Position as to the Fairness of the Reverse Stock Split" is incorporated herein by reference. Item 13. Financial Statements Regulation M-A Item 1010 (a) Financial Information. The information set forth in the Proxy Statement under the captions "Other Matters - Independent Auditors" and "Consolidated Financial Statements," as well as in "Exhibit G: Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Exhibit H: Quantitative and Qualitative Disclosures About Market Risk" is incorporated herein by reference. (b) Pro Forma Information. The information set forth in the Proxy Statement under "Exhibit E: Fiscal 2002 Going Private Pro Forma Analysis" is incorporated herein by reference. (c) Summary Information. Not applicable. Item 14. Persons/Assets, Retained, Employed, Compensated or Used Regulation M-A Item 1009 (a)-(b) Solicitations or Recommendations; Employees and Corporate Assets. The information set forth in the Proxy Statement under the captions "Special Factors - Background of the Reverse Stock Split," "Special Factors - Opinion of Schroeder & Co.," "Special Factors - Position of the Special Committee and Our Board of Directors as to the Fairness of the Reverse Stock Split," "Special Factors - Messrs. Finneran and Kastelic's Position as to the Fairness of the Reverse Stock Split," "The Special Meeting - Solicitation of Proxies" is incorporated herein by reference. Item 15. Additional Information Regulation M-A Item 1011 (b) Other Material Information. The information set forth in the Proxy Statement, including all annexes and exhibits thereto, is incorporated herein by reference. 9 Item 16. Exhibits Regulation M-A Item 1016 (a)(1) Proxy Statement filed with the Securities and Exchange Commission on June 4, 2003 (incorporated herein by reference to the Proxy Statement). (a)(2) Letter dated March 4, 2003, from Mr. William B. Finneran and Mr. Alan J. Kastelic, regarding the reverse stock split proposal, attached as Exhibit A to the Proxy Statement (incorporated herein by reference to the Proxy Statement). (a)(3) Press Release of Edison Control Corporation, dated March 12, 2003 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K of Edison Control Corporation dated March 12, 2003). (a)(4) Press Release of Edison Control Corporation, dated April 2, 2003 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of Edison Control Corporation dated April 2, 2003). (a)(5) Press Release of Edison Control Corporation, dated April 9, 2003 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of Edison Control Corporation dated April 9, 2003). (b) Term Sheet from LaSalle National Bank Association, regarding financing for the reverse stock split.* (c)(1) Opinion of Schroeder & Co., attached as Exhibit C to the Proxy Statement (incorporated herein by reference to the Proxy Statement). (c)(2) Materials presented by Schroeder & Co. to the Special Committee of the Board of Directors of Edison Control Corporation. * Previously filed. 10 SIGNATURE After due inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: June 4, 2003 EDISON CONTROL CORPORATION By: /s/ Alan J. Kastelic ------------------------------------ Name: Alan J. Kastelic Title: President and Chief Executive Officer By: /s/ William B. Finneran ------------------------------------ Name: William B. Finneran By: /s/ Alan J. Kastelic ------------------------------------ Name: Alan J. Kastelic 11 EXHIBIT INDEX Regulation M-A (a)(1) Proxy Statement filed with the Securities and Exchange Commission on June 4, 2003 (incorporated herein by reference to the Proxy Statement). (a)(2) Letter dated March 4, 2003, from Mr. William B. Finneran and Mr. Alan J. Kastelic, regarding the reverse stock split proposal, attached as Exhibit A to the Proxy Statement (incorporated herein by reference to the Proxy Statement). (a)(3) Press Release of Edison Control Corporation, dated March 12, 2003 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K of Edison Control Corporation dated March 12, 2003). (a)(4) Press Release of Edison Control Corporation, dated April 2, 2003 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of Edison Control Corporation dated April 2, 2003). (a)(5) Press Release of Edison Control Corporation, dated April 9, 2003 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of Edison Control Corporation dated April 9, 2003). (b) Term Sheet from LaSalle National Bank Association, regarding financing for the reverse stock split.* (c)(1) Opinion of Schroeder & Co., attached as Exhibit C to the Proxy Statement (incorporated herein by reference to the Proxy Statement). (c)(2) Materials presented by Schroeder & Co. to the Special Committee of the Board of Directors of Edison Control Corporation. * Previously filed 12 EX-99.(C)(2) 3 sdc438b.txt MATERIALS PRESENTED BY SCHROEDER & CO. Exhibit (c)(2) MARKET COMPARABLES Shares Outstanding Company Current Price P/E Ratio Avg Daily Volume (000's) - ------- ------------- --------- ---------------- --------------- AP $ 12.97 24.5 5,100 9,632 GRC $ 19.90 19.0 4,700 8,541 IEX $ 29.20 17.5 213,700 32,510 TII $ 24.65 12.30 33,000 17,130 SGR $ 10.10 4.5 596,300 37,730 LSS $ 21.10 Def. 685,300 28,380 WEB $ 3.10 10.3 1,300 7,082 MVK $ 18.71 233.9 402,606 40,940 NWPX $ 12.05 8.8 10,100 6,549 IR $ 38.56 14.2 1,026,000 169,200 CMCO $ 1.60 Def. 43,500 14,900 TEX $ 12.62 Def. 270,400 47,400 ASTE $ 5.75 Def. 75,000 19,680 OSK $ 61.69 17.2 107,200 17,060 EDCO $ 6.10 9.2 N/A 1,639 (Float:440,710) COMPARABLE CHARACTERISTICS P/E: After elimination of MVK(P/E: 233.9) and stocks with deficit earnings, the average P/E ratio of the group is 13.14. Without AP(P/E: 24.5) and SGR(P/E: 4.5), the average P/E ratio is 12.75. AVERAGE SHARES OUTSTANDING: 32,600,000 AVERAGE DAILY TRADING VOL.: 248,157 Without 3 outliers at either extremes 144,438 CONCLUSIONS: Given EDCO's non-existent trading volume and low shares outstanding and negligible float, a P/E ratio of 7 to 8 would be more likely against the comparable group's average of approximately 13. 13 DISCOUNTED CASH FLOW ANALYSIS* Fiscal Year Ending January 31 (000's)
Terminal 2004 2005 2006 2007 2008 Period ------- ------- ------- ------- ------- -------- Net Revenues $28,800 $23,944 $29,233 $29,526 $29,821 $30,716 Operating Income $ 3,935 $ 4,473 $ 4,647 $ 4,723 $ 4,799 $ 4,937 Cash Flow $ 1,019 $ 2,638 $ 2,686 $ 2,731 $ 2,776 $ 2,653 PV Factor at 12% 0.9449 0.8437 0.7533 0.6726 0.6005 Discounted Cash Flow $ 963 $ 2,226 $ 2,023 $ 1,837 $ 1,667 (000's) Terminal Value: EBITDA $4,025 x5 ------- $20,125 Present Value Factor 0.6005 ------- $12,085 Sum of the Discounted Cash Flows $8,716 Terminal Value $20,801 ------- Less: Net Debt $2,802 ------- Fair Market Value of Equity $17,999 Per Share $7.95
* After the discounted cash flow analysis was distributed to the special committee, but prior to the time that the special committee discussed the analysis, it was brought to the committee's attention that certain of the numbers in the chart were incorrect. Specifically, the special committee was advised that (i) the cash flow number for 2004 should have been $2,109 (instead of $1,019), thus resulting in a discounted cash flow value of $1,908 (instead of $963), and (ii) the cash flow number for the terminal period should have been $5,935 (instead of $2,653) with a discount factor of 0.5362, thus resulting in a discounted cash flow value of $3,182. Based on 5 times EBITDA and a 25% discount, the discounted cash flow analysis thus yielded a per share price of $7.55. 14 Valuation Matters Estimated EBITDA as of January 31, 2003 EBITDA $ 4,213,398 Multiple 5x ---------------- Enterprise Value $21,066,990 Less: Net Debt $ 2,802,060 ---------------- Enterprise Equity Value $18,264,930 $ 8.07/share Discount 25% $ 6.05/share EBITDA as of January 31, 2002 EBITDA $ 5,899,453 Multiple 5x ---------------- Enterprise Value $29,497,265 Less: Net Debt $ 2,802,060 ---------------- Enterprise Equity Value $26,695,205 $ 11.80/share Discount 25% $7.67/share 15 M&A Middle-market analysis EBITDA Multiple Analysis Total M&A transactions in the U.S. market declined 17.5% in 2002. During the same period, middle-market transactions ($1 billion or less) were down 9.3%. Transactions of less than $100 million were off off approximately 8%. (Exhibit 1) EXHIBIT 1: The left side y-axis shows the number of deals, ranging from 0 to 6,000, in intervals of 2,000. The right side y-axis shows total deal value, ranging from $0 to $600 billion, in intervals of $100 billion. The x-axis shows the years 1997-2002. The source of the graph is Thompson Financial and Robert W. Baird & Co. (Estimated) Number of Deals Deal Value --------------- ------------ 1997 5255 $400 billion 1998 5636 $410 billion 1999 4622 $415 billion 2000 4672 $412 billion 2001 3346 $250 billion 2002 3036 $240 billion U.S. Middle Market Enterprise Value to Median EBITDA Multiples Middle-market median acquisition mutiples have fallen from 10.7 times EBITDA in 1997 to 6.7 at the end of 2002. Multiples for this segment are now at their lowest point in a decade. For transactions of less than $100 million, the median EBITDA multiple currently is 5.7. (Exhibit 2 and Tables A and B) EXHIBIT 2: The y-axis shows EBITDA multiples, ranging from 0.0 to 12.0, in intervals of 2.0. The x-axis shows the years 1997-2002. The source of the graph is Thompson Financial and Robert W. Baird & Co. EBITDA Mutiple -------------- 1997 10.7 1998 9.6 1999 9.2 2000 8.0 2001 7.6 2002 6.7 16 Table A: U.S. Middle-Market M&A Deal Statistics
Middle-Market Segments Middle-Market Total ---------------------- ------------------- < $100M $100M - $499M $500M - $1,000M $0M-$1,000M Jan. 2002 Jan. 2003 Jan. 2002 Jan. 2003 Jan. 2002 Jan. 2003 Jan. 2002 Jan. 2003 --------- --------- --------- --------- --------- --------- --------- --------- Month - ----- Number of Deals 214 161 34 29 5 6 253 196 Value of Deals $ 3,973 $ 3,653 $ 7,474 $ 5,141 $ 3,181 $ 4,532 $ 14,527 $ 13,325 Year-to-Date Number of Deals 214 161 34 29 5 6 253 196 Value of Deals $ 3,973 $ 3,653 $ 7,474 $ 5,141 $ 3,181 $ 4,532 $ 14,527 $ 13,325 LTM - --- Number of Deals 2,653 2,433 532 528 99 97 3,284 3,058 Value of Deals $ 53,803 $ 51,131 $114,949 $110,952 $ 58,910 $ 56,623 $237,661 $228,705 Median Purchase Price Multiples (LTM) - --------------- Enterprise Value/EBITDA 6.5x 5.7x 8.7x 8.6x 6.6x 11.0x 7.6x 6.9x Enterprise Value/EBIT 8.8 7.6 11.6 11.5 9.0 13.1 9.7 10.7 Enterprise Value/Revenue 0.9 0.8 1.6 1.4 1.3 2.7 1.1 1.1 Thompson Financial and Robert W. Baird & Co. Incorporated M&A Research
17 GRAPH: U.S. Middle-Market Median Acquisition Premiums. The y-axis shows acquisition premiums, ranging from 20.0% to 50.0%, in intervals of 10.0%. The x-axis shows December 1992 through December 2002, annually, as well as January 2003 (LTM). There are two lines on the graph. The first line plots 1-week premiums while the second line plots 4-week premiums. The source of the graph is Thompson Financial and Robert W. Baird & Co. Incorporated M&A Research.
1/03 12/92 12/93 12/94 12/95 12/96 12/97 12/98 12/99 12/00 12/01 12/02 (LTM) ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- 1-week premium 37% 33.3% 27.8% 27.4% 26.7% 27.0% 29.9% 34.8% 36.8% 36.4% 31.9% 31.1% 4-week premium 40% 37.3% 32.9% 35.6% 31.7% 30.4% 34.5% 43.0% 44.2% 41.5% 33.6% 31.6%
GRAPH: U.S. Middle-Market Enterprise Value to Median EBITDA Multiples. The y-axis shows EBITDA multiples, ranging from 0.0x to 15.0 times, in intervals of 5.0x. The x-axis shows December 1992 through December 2002, annually, as well as January 2003 (LTM). There are four bars for each date: deals less than $100M; deals between $100M-$499M; deals between $500M-$1,000M; and the total middle-market. The source of the graph is Thompson Financial and Robert W. Baird & Co. Incorporated M&A Research.
1/03 12/92 12/93 12/94 12/95 12/96 12/97 12/98 12/99 12/00 12/01 12/02 (LTM) ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- < $100M 6.6x 9.2x 9.6x 7.9x 8.9x 9.4x 8.2x 8.3x 6.6x 6.5x 5.7x 5.7x $100M- $499M 7.6 8.8 9.9 9.7 10.7 11.0 10.4 9.6 8.8 8.6 8.3 8.6 $500M- $1,000M 8.5 7.9 11.4 9.5 10.4 11.8 9.1 9.9 9.7 6.6 9.8 11.0 Total Middle- Market 7.0 8.9 9.8 8.8 9.8 10.7 9.6 9.2 8.0 7.6 6.8 6.9
18 Table B: Transatlantic Middle-Market M&A Deal Statistics GRAPH: Transatlantic M&A by Number of Deals and Dollar Volume. The left side y-axis shows the number of deals, ranging from 0 to 1,200, in intervals of 200. The right side y-axis shows deal value, ranging from $0.0 to $60.0 billion, in intervals of $20.0 billion. The x-axis shows December 1992 through December 2002, annually, as well as January 2003 (LTM). The source of the graph is Thompson Financial and Robert W. Baird & Co. Incorporated M&A Research.
01/02 1/03 12/92 12/93 12/94 12/95 12/96 12/97 12/98 12/99 12/00 12/01 12/02 YTD (LTM) ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- U.S. Targets - Disclosed 89 92 123 156 154 210 232 299 361 229 161 23 9 U.S. Targets - Undisclosed 53 71 75 105 132 153 230 289 348 212 136 9 7 European Targets - - Disclosed 139 142 168 178 223 314 380 319 272 220 183 11 15 European Targets - - Undisclosed 223 323 327 418 496 579 680 571 543 379 286 23 22 U.S. Deal Value $2.8 $4.4 $10.4 $11.0 $13.2 $20.0 $27.6 $38.0 $40.7 $19.6 $12.6 $1.3 $0.7 European Deal Value $7.4 $8.0 $9.4 $11.8 $18.8 $25.1 $30.6 $32.9 $28.3 $24.7 $21.6 $2.0 $1.4
19 CHART: Middle-Market Segments. -------------------- -------------------- U.S. Targets European Targets -------------------- -------------------- 2002 2003 2002 2003 -------- -------- -------- -------- Month - ----- Number of Deals 32 16 34 37 Value of Deals $1,281 $740 $1,988 $1,359 Year-to-Date - ------------ Number of Deals 32 16 34 37 Value of Deals $1,281 $740 $1,988 $1,359 LTM - --- Number of Deals 435 282 570 477 Value of Deals $18,900 $12,058 $23,540 $20,981 Median Purchase Price Multiples (LTM) - --------------- Enterprise Value/EBITDA 9.1x 5.4x 12.5x 6.8x Enterprise Value/EBIT 12.2 7.9 9.6 8.9 Enterprise Value/Revenue 1.1 0.6 1.2 0.6 -------------------- ------------------- Thompson Financial and Robert W. Baird & Co. Incorporated M&A Research. 20 GRAPHIC: U.S./Europe Cross-Border Middle-Market Median Acquisition Premiums. The y-axis shows the premium percentage, ranging from 0.0% to 80.0%, in intervals of 20.0%. The x-axis shows December 1994 through December 2002, annually, as well as January 2003 (LTM). The source of the graph is Thompson Financial and Robert W. Baird & Co. Incorporated M&A Research.
01/03 12/94 12/95 12/96 12/97 12/98 12/99 12/00 12/01 12/02 (LTM) ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- U.S. Target Premiums - 1 week 21.5% 36.4% 30.2% 39.1% 35.0% 33.3% 48.3% 50.9% 58.1% 51.6% U.S. Target Premiums - 4 week 31.9% 38.6% 58.8% 37.8% 37.8% 37.4% 63.7% 61.3% 26.6% 26.1% European Target Premiums - 1 week 21.4% 16.7% 24.4% 44.5% 38.8% 36.9% 54.8% 29.8% 18.3% 18.1% European Target Premiums - 4 week 31.8% 26.6% 23.4% 35.9% 40.5% 46.3% 49.5% 32.6% 24.8% 22.5%
Leverage Multiples The lower level of activity reflects both a tighter debt market and depressed valuations. Debt multiples were at 2.7 times EBITDA at the end of 2002 versus an average of 3.6 times in 1997; equity portions have risen to 41% of total capitalization in 2002, nearly double the 20% average ten years ago and 30% five years ago. (Exhibit 3) EXHIBIT 3: The y-axis shows EBITDA multiples, ranging from 0.0 to 6.0, in multiples of 2.0. The x-axis shows the years 1997-1991, as well as the period from January 1, 2002 to September 30, 2002. The source of the graph is Standard & Poor's Leveraged Commentary & Data. Senior Debt, as a Other Debt, as a Total Debt, as a Multiple of EBITDA Multiple of EBIDTA Multiple of EBITDA ------------------ ------------------ ------------------ 1997 3.6 2.1 5.7 1998 3.5 1.8 5.3 1999 3.3 1.2 4.5 2000 3.2 1.2 4.4 2001 2.7 0.8 3.5 Through 9/30/2002 2.7 1.0 3.7 21 -----END PRIVACY-ENHANCED MESSAGE-----