-----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, TKq6WWO1R93Loc/E2/fM2w76ALNG4pF+3y5MXvgvx1VgskpsrBHDy5/5/nhM2xVY KqIFM/cPOnk5c3xeVgTE8w== 0000913355-96-000032.txt : 19960506 0000913355-96-000032.hdr.sgml : 19960506 ACCESSION NUMBER: 0000913355-96-000032 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960503 SROS: NASD GROUP MEMBERS: FEDDERS CORPORATION GROUP MEMBERS: JOSEPH GIORDANO GROUP MEMBERS: NYCOR INC /DE/ GROUP MEMBERS: S. A. MUSCARNERA GROUP MEMBERS: SAL GIORDANO, JR. GROUP MEMBERS: SALVATORE GIORDANO GROUP MEMBERS: WILLIAM J. BRENNAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NYCOR INC /DE/ CENTRAL INDEX KEY: 0000809066 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 222748564 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-39297 FILM NUMBER: 96555815 BUSINESS ADDRESS: STREET 1: 287 CHILDS RD CITY: BASKING RIDGE STATE: NJ ZIP: 07920 BUSINESS PHONE: 9089538200 MAIL ADDRESS: STREET 1: 287 CHILDS RD CITY: BASKING RIDGE STATE: NJ ZIP: 07920 FORMER COMPANY: FORMER CONFORMED NAME: NYCOR INC/DE DATE OF NAME CHANGE: 19870203 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NYCOR INC /DE/ CENTRAL INDEX KEY: 0000809066 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 222748564 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: 287 CHILDS RD CITY: BASKING RIDGE STATE: NJ ZIP: 07920 BUSINESS PHONE: 9089538200 MAIL ADDRESS: STREET 1: 287 CHILDS RD CITY: BASKING RIDGE STATE: NJ ZIP: 07920 FORMER COMPANY: FORMER CONFORMED NAME: NYCOR INC/DE DATE OF NAME CHANGE: 19870203 SC 13E3/A 1 AMENDMENT NO. 2 TO SCHEDULE 13E-3 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13E-3 RULE 13E-3 TRANSACTION STATEMENT (Pursuant to Section 13(e) of the Securities Exchange Act of 1934) Amendment No. 2 NYCOR, Inc. - ----------------------------------------------------------------------------- (Name of the Issuer) NYCOR, Inc. Fedders Corporation Salvatore Giordano Sal Giordano, Jr. Joseph Giordano William J. Brennan S. A. Muscarnera - ------------------------------------------------------------------------------ (Name of Person(s) Filing Statement) Common Stock, $1 par value Class A Stock, $1 par value - ------------------------------------------------------------------------------ (Title of Class(es) of Securities) 670664 40 8 670664 50 7 - ------------------------------------------------------------------------------ (CUSIP Number of Class(es) of Securities) Kent E. Hansen, Esq. NYCOR, Inc. 287 Childs Road Basking Ridge, New Jersey 07920 (908) 953-8200 Robert N. Edwards, Esq. Fedders Corporation 505 Martinsville Road Liberty Corner, New Jersey 07938-0813 (908) 604-8686 - ------------------------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Person(s) Filing Statement) This statement is filed in connection with (check the appropriate box): 2 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. [X] 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] Calculation of Filing Fee - ------------------------------------------------------------------------------ Transaction valuation* Amount of filing fee $47,376,421 $16,336.36. - ------------------------------------------------------------------------------ * Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933 with respect to the Registration Statement on Form S-4 referred to below. [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 number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $16,336.36 Form or Registration No.: Registration Statement on Form S-4 (No. 333-00483) Filing Party Fedders Corporation Date Filed: January 29, 1996 EXPLANATORY NOTE This Amendment No. 2 to the Schedule 13E-3 filed by NYCOR, Inc., a Delaware corporation ("NYCOR"), Fedders Corporation, a Delaware corporation ("FEDDERS"), and Salvatore Giordano, Sal Giordano, Jr., Joseph Giordano, William J. Brennan and S. A. Muscarnera, individuals who are directors of both NYCOR and Fedders (collectively, the "AFFILIATED DIRECTORS"), which was originally filed on March 13, 1996 and amended by Amendment No. 1 filed April 15, 1996, is being filed for the sole purpose of filing Exhibits (b)(3) and (b)(4) to the Schedule 13E-3. In accordance with a continuing hardship exemption granted on May 1, 1996 pursuant to a request submitted on behalf of NYCOR, Fedders and the Affiliated Directors to the Securities and Exchange Commission on April 17, 1996 and modified on April 24, 1996, portions of Exhibits (b)(3) and (b)(4) to the Schedule 13E-3 have been submitted in paper format under cover of Form SE. In each case, the paper format document contains the legend required by Rule 202(c) of Regulation S-T. ITEM 17. MATERIAL TO BE FILED AS EXHIBITS The following exhibits to this Schedule 13E-3 are hereby filed or are incorporated by reference as indicated: (b)(1) Opinion of TM Capital Corp. (incorporated by reference to Annex C to the Proxy Statement-Prospectus (the "PROXY STATEMENT- PROSPECTUS") included in Amendment No. 3 to the Registration Statement on Form S-4 of Fedders Corporation (No. 333-00483) (the "REGISTRATION STATEMENT")). (b)(2) Opinion of Laidlaw & Co. (incorporated by reference to Annex D to the Proxy Statement-Prospectus). (b)(3) Presentation to the Board of Directors of Fedders by TM Capital Corp. on January 31, 1996. (b)(4) Discussion Materials to the Board of Directors of NYCOR by Laidlaw Equities, Inc. dated February 5, 1996. (c) The Merger Agreement (incorporated by reference to Annex A to the Proxy Statement-Prospectus). (d) The Proxy Statement-Prospectus (incorporated by reference to the Registration Statement). (e) Section 262 of the Delaware General Corporation Law (incorporated by reference to Annex E to the Proxy Statement- Prospectus). 2 SIGNATURES 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. May 3, 1996 NYCOR, Inc. By /S/ KENT E. HANSEN ---------------------- Kent E. Hansen Vice President-Finance and General Counsel FEDDERS CORPORATION By /S/ ROBERT L. LAURENT, JR. ---------------------- Robert L. Laurent, Jr. Executive Vice President /S/ SALVATORE GIORDANO ---------------------- Salvatore Giordano /S/ SAL GIORDANO, JR. ---------------------- Sal Giordano, Jr. /S/ JOSEPH GIORDANO ---------------------- Joseph Giordano /S/ WILLIAM J. BRENNAN ---------------------- William J. Brennan /S/ S. A. MUSCARNERA ---------------------- S. A. Muscarnera EXHIBIT INDEX (b)(1) Opinion of TM Capital Corp. (incorporated by reference to Annex C to the Proxy Statement- Prospectus (the "PROXY STATEMENT-PROSPECTUS") included in Amendment No. 3 to the Registration Statement on Form S-4 of Fedders Corporation (No. 333-00483) (the "REGISTRATION STATEMENT")). (b)(2) Opinion of Laidlaw & Co. (incorporated by reference to Annex D to the Proxy Statement-Prospectus). (b)(3) Presentation to the Board of Directors of Fedders by TM Capital Corp. on January 31, 1996. P* (b)(4) Discussion Materials to the Board of Directors of NYCOR by Laidlaw Equities, Inc. dated February 5, 1996. P* (c) The Merger Agreement (incorporated by reference to Annex A to the Proxy Statement-Prospectus). (d) The Proxy Statement-Prospectus (incorporated by reference to the Registration Statement). (e) Section 262 of the Delaware General Corporation Law (incorporated by reference to Annex E to the Proxy Statement-Prospectus). * Pursuant to a continuing hardship exemption granted by the Securities and Exchange Commission on May 1, 1996, portions of this exhibit have been filed in paper format; the balance of this exhibit is being filed electronically. EX-99.1 2 EXHIBIT (B)(3)_ Exhibit (b)(3) FEDDERS PROPOSED ACQUISITION NYCOR TM CAPITAL CORP. January 31, 1996 FEDDERS CORPORATION TABLE OF CONTENTS SECTION TAB - ----------------------------------------------------------------------------- NYCOR, INC. Consolidated Historical and Projected Financial Information......... I Operating Data by Subsidiary........................................ II Stock Price and Volume History...................................... III FEDDERS CORPORATION Consolidated Historical and Projected Financial Information......... IV Operating Data by Market............................................ V Stock Price and Volume History...................................... VI RELATIVE VALUATION ANALYSIS Pro Forma Contribution Analysis..................................... VII Pro Forma Equity Ownership Analysis.................................VIII NYCOR VALUATION ANALYSIS Analysis of Selected Publicly Traded Comparable Companies........... IX Relative Market Performance Analysis................................ X Selected Merger Transactions........................................ XI Discounted Cash Flow Analysis....................................... XII FEDDERS VALUATION ANALYSIS Analysis of Selected Publicly Traded Comparable Companies...........XIII Relative Market Performance Analysis................................ XIV I II III IV V VI VII VIII IX NYCOR, INC. Selected Publicly Traded Components Manufacturers - ------------------------------------------------------------------------------ BALDOR ELECTRIC COMPANY Baldor manufactures electric motors and drives, as well as speed reducers, industrial grinders, buffers, polishing lathes, stampings, casting and repair parts. Motors and drives are manufactured for general purpose uses and for individual customer requirements and specifications. Marketing of products is conducted throughout the U.S. and in over 55 foreign countries. Custom and stock products are sold directly to original equipment manufacturers. Stock products are also sold to independent distributors for resale, often as replacement components in industrial machinery that is being modernized or upgraded for improved performance. Many of the components used in its products are manufactured by Baldor, including laminations, motor hardware, and aluminum die castings. Baldor's motor manufacturing operations also include machining, stamping, welding, winding, assembling, and finishing operations. FRANKLIN ELECTRIC Franklin Electric is the world's largest manufacturer of submersible electric motors and a leading producer of engineered specialty electric motor products and electronic controls. Franklin's products are sold, through its global team of field sales engineers, throughout the world primarily to original equipment manufacturers. Franklin's submersible motors are used principally for providing the electrical power for water well-pumping systems. The motors are also used in underground gasoline and diesel fuel storage pumping systems, oil wells and wastewater handling systems. Franklin's engineered specialty motor products and electronic controls are used in industrial and consumer products ranging from paint sprayers to livestock feeding equipment and from supermarket check-out belts to soft ice-cream machines. Franklin holds a 97% interest in Oil Dynamics, Inc., a manufacturer of submersible oil pumping systems. MAGNETEK, INC. MagneTek designs, manufactures and markets a broad range of electrical, electronic and industrial products. The Company operates in two business segments. The motors and controls segment manufactures motors and generators, including fractional, integral and medium voltage generators, and electronic adjustable-speed and other drives and drive systems. The ballast and transformer segment includes lighting products, power supplies and transformer products. Lighting products consist of fluorescent ballasts, high-intensity-discharge (HID) ballasts and specialty lines. Transformer products are comprised of electronic power supplies custom designed for business machines and industrial equipment. MagneTek is an industry leader in magnetic fluorescent and HID ballasts. Ballasts are transformers that serve to regulate or alter electrical current in fluorescent and other lighting applications. NYCOR, INC. Selected Publicly Traded Components Manufacturers - ------------------------------------------------------------------------------ TECUMSEH PRODUCTS Tecumseh Products Company is a full-line, independent global manufacturer of hermetic compressors for air-conditioning and refrigeration products, gasoline engines and power train components for lawn and garden applications, and pumps. The Company is one of the largest independent producers of hermetically sealed compressors and is a leading maker of small gasoline engines and power train products used in lawn and garden applications. Compressor products include a broad range of air-conditioning and refrigeration compressors and compressor parts, as well as refrigeration condensing units. Tecumseh's compressor products range from fractional horsepower units used in small refrigerators and dehumidifiers to large units used in commercial air- conditioning applications. The Company also produces an extensive line of pumps. Tecumseh markets its products in over 100 countries around the world. WATSCO, INC. Watsco is the largest independent distributor of residential central air conditioners and related parts and supplies in the U.S. The Company also provides temporary help and permanent placement services. Watsco's primary markets include Florida, Texas, California, Arizona, Nevada and Louisiana. The Company distributes products to over 1,000 local air- conditioning and heating contractors and dealers serving the residential and home-building segments of the market. Manufactured products include a wide variety of electronic and mechanical components for air- conditioning, heating and refrigeration equipment, including line tap and specialty valves, motor compressor protectors, liquid sight glasses and warm air controls. The Dunhill Personnel System division provides both permanent and temporary personnel services to businesses, professional and service organizations, and government agencies. X XI NYCOR, INC. Selected Comparable Merger Transactions - ------------------------------------------------------------------------------ WELBILT CORPORATION ACQUIRED BY BERISFORD INTERNATIONAL PLC Berisford International acquired 100% of outstanding shares of the Welbilt Corporation through a merger valued at $451.9 million. Berisford acquired 4.3 million common shares, representing 46.7% of total shares outstanding, from Kohlberg & Co. for a cash price of $30.00 per share, or $129.4 million. Berisford acquired the remaining 53.2% of Welbilt, representing 4.9 million shares, for $33.75 in cash per share, for a total of $165.4 million. Berisford's assumption of $157.1 million in Welbilt liabilities was also part of the transaction. Welbilt manufactures and wholesales food service, heating and air-conditioning equipment as well as household appliances. REXNORD CORPORATION ACQUIRED BY BTR DUNLOP HOLDINGS INC. BTR Dunlop Holdings Inc., a wholly owned subsidiary of the U.K. firm BTR PLC, merged with Rexnord Corporation through a transaction valued at $813.7 million. BTR acquired each share of Rexnord common stock for $22.50 in cash per share, in addition to the assumption of $403.00 million of Rexnord debt. The Fairchild Corporation, with a 43.9% stake in Rexnord, as well as an institutional investor with a 6.0% stake, both divested their shares at the $22.50 cash price per share offered by BTR. Rexnord manufactures ball and roller bearings and industrial power transmission equipment including sprockets, speed changers, electromagnetic brakes and clutches. DESIGNATRONICS, INC. ACQUIRED BY DYSON, DYSON & DUNN INC. Dyson, Dyson & Dunn, a privately held investment company, purchased a 100% stake in Designatronics, Inc. by acquiring all 3.0 million shares outstanding at a cash price per share of $6.00, in a transaction valued at $17.7 million. Designatronics manufactures speed changers, industrial high-speed drives and gears, electronic coils, transformers and inductors, as well as household audio and video equipment. MR. COFFEE, INC. ACQUIRED BY HEALTH O METER PRODUCTS Health o meter Products acquired all outstanding common stock of Mr. Coffee for a cash price per share of $15.50 for a total value of $154.7 million. The value of the transaction included options to purchase 531,286 shares of common stock with a value of $15.50 per share less an average exercise price of $5.79. Mr. Coffee manufactures electric drip coffee makers. RELIANCE ELECTRIC CO. ACQUIRED BY ROCKWELL INTERNATIONAL CORPORATION Rockwell International acquired all Class A and Class B common shares of Reliance Electric for a cash price per share of $31.00. The transaction also included the purchase of all Reliance Electric Class C shares for $83.95 per share bringing the total acquisition value of Reliance common stock to $1.6 billion. Reliance Electric manufactures electric motors and generators, electric drives, industrial controls, programmable controllers, mechanical power transmission equipment, and specialty telecommunications equipment. XII XIII FEDDERS CORPORATION Selected Publicly Traded Household Appliance Manufacturers - ------------------------------------------------------------------------------ DURACRAFT CORP. Duracraft develops, manufactures and markets branded consumer household products. The Company's current product line consists of home comfort products in five major product areas: humidifiers, heaters, fans, air cleaners and vaporizers. Products are distributed through major retailers throughout the U.S. and Canada including Sears, Kmart, Wal- Mart, Target, Sam's Club, Ames, Service Merchandise, Builder's Square, Lowe's and PriceCostco. MAYTAG CORP. Maytag is engaged in two industry segments: appliances and vending equipment. Home appliances include laundry equipment, gas and electric ranges, refrigerators, freezers, dishwashers, food waste disposals and floor care products. Important trademarks include Maytag, Magic Chef, Admiral, Jenn-Air, Hardwick, Norge and Hoover. Maytag's products are sold to all major market segments, including the replacement market, the commercial laundry market, the new home and apartment building market, the manufactured housing market, the recreational vehicle market, the private-label market, and the household/commercial floor care market. Most products are sold directly to dealers and through independent distributors, mass merchandisers and large national department stores. Dixie-Narco produces soft-drink vending equipment and money changers. Its products are sold to all major bottlers. Maycor Appliance Parts and Service Co. provides consolidated service and parts distribution for most of Maytag's appliance brands. Maytag International Inc. handles the sales of appliances and licensing of certain home appliance brands in markets outside of North America. Maytag Financial Services provides financing programs to certain customers in North America. MESTEK, INC. Mestek, Inc. is engaged in the following businesses: the manufacture of heating, ventilating and air-conditioning (HVAC) equipment; computer software development and systems design; and the production of coil- handling equipment. Through the Reed division, the company manufactures and distributes HVAC products, including residential, commercial and industrial heat distribution products, gas-fired heating and ventilating equipment, louver and damper equipment, commercial and residential gas- and oil-fired boilers, air-conditioning units and related products used in air distribution. Reed sells its products through 350 independent representatives throughout the U.S. and Canada, which in turn sell to contractors and end-users in the construction industry. MSC, Inc. is a wholly owned subsidiary engaged in computer processing and systems development in order to serve specific industry needs, such as third- party billing, inventory control, financial reporting and telephone usage tracking. MSC, Inc. designs computer software, supplies hardware, installs systems and produces ongoing support services. The Cooper- Weymouth, Peterson division manufactures various types and sizes of coil-handling devices such as metal coil straighteners and equipment used to feed metal from coils into metal stamping or shaping equipment. FEDDERS CORPORATION Selected Publicly Traded Household Appliance Manufacturers - ------------------------------------------------------------------------------ WHIRLPOOL CORP. Whirlpool manufactures a full line of household appliances and other products for home and commercial use. Products are manufactured in 12 countries and marketed in more than 120 worldwide. Major appliance products include home laundry equipment; home refrigeration and room air-conditioning equipment; and various other appliances, including dishwashers and cooking equipment. Whirlpool Financial Corp. provides financing primarily for distributors and dealers that market products manufactured by the Company. Major brands in the U.S. include Whirlpool, KitchenAid, Roper, Estate, and Coolerators. Sales made to Sears are mainly under the Kenmore and Whirlpool names. Major brands in Canada are Inglis, Admiral, Speed Queen, Estate, Roper, Whirlpool and KitchenAid. Sales made by Whirlpool Europe, B.V. are under the Algor, Bauknecht, Fides, Ignis, Laden, and Whirlpool brand names. YORK INTERNATIONAL York is a full-line manufacturer of heating, ventilating, air- conditioning and refrigeration products. Products are sold in 20 countries through over 700 sales and distribution centers. Products fall into three main categories: commercial, including heating, air- conditioning, process cooling and thermal storage equipment for commercial applications in stores, buildings, malls, manufacturing plants, airports and ships; residential, consisting of central air- conditioning and heat pumps, furnaces and hermetic compressors; and refrigeration and gas compression equipment, for use in food, beverage, chemical and petrochemical processing. Residential products are marketed throughout the U.S. and internationally through 43 exclusive distributors, 10 company-owned distribution centers, and more than 200 nonexclusive distributors and wholesalers. Other products are marketed directly to contractors, distributors, architects, engineers and building owners. XIV EX-99.2 3 EXHIBIT (B)(4) Exhibit (b)(4) STRICTLY CONFIDENTIAL Discussion Materials NYCOR, Inc. February 5, 1996 Laidlaw Equities, Inc. TABLE OF CONTENTS TAB --- Background and Valuation Process.......................................... 1 Stock Price History ...................................................... 2 Stock Price Premium Analysis ............................................. 3 Comparable Trading Valuation ............................................. 4 Comparable Transaction Valuation ......................................... 5 Discounted Cash Flow Analysis ............................................ 6 APPENDIX ................................................................. 7 Comparable Trading Analysis Selected Comparable Transaction Analysis NYCOR Stand-Alone Discounted Cash Flow Analysis Convertible Preferred Stock Analysis BACKGROUND The Board of Directors of NYCOR, Inc. ("NYCOR") has retained Equities, Inc. ("Laidlaw") to render an opinion regarding the fairness of NYCOR's merger agreement (the "Merger Agreement") with Fedders Corporation ("Fedders"). The fairness opinion of Laidlaw addresses only the fairness to NYCOR from a financial point of view of the consideration (as defined below) proposed to be paid by Fedders pursuant to the merger offer and does not constitute a recommendation to any NYCOR shareholder as to how such shareholder should vote concerning the merger. The consideration was determined through negotiations between NYCOR and Fedders. The Laidlaw opinion does not constitute a recommendation to any NYCOR shareholder in respect of such shareholder's decision whether to vote in favor of the proposed Merger Agreement. For purposes of its opinion, Laidlaw defined the consideration to be paid for each share of NYCOR Common Stock, Class A Stock or Class B Stock as either (i) such number of shares of Fedders Class A Stock representing $6.25 if the market value of the Fedders Class A Stock is equal to or greater than $6.25 per share on the date of the Merger; or (ii) one share of newly issued Fedders Convertible Preferred Stock. If issued, each share of Fedders Convertible Preferred Stock (i) will be convertible into one share of Fedders Class A Stock; (ii) may be called for redemption by Fedders at any time at the redemption price of $6.25, plus unpaid dividends to the dividend payment date next preceding the date of redemption, in cash or in equivalent value of Fedders Class A Stock; and (iii) shall have such other rights and preferences expected to support an initial market value of $6.25 per share. Although the precise terms of the Fedders Convertible Preferred Stock will not be set until the business day before the effective date of the Merger, and only if the closing price of the Fedders Class A Stock is below $6.25, Laidlaw was informed that it is currently contemplated that the Fedders Convertible Preferred Stock will have (i) an annual dividend rate of 6.5%; and (ii) a liquidation preference of $6.25 per share, plus unpaid dividends to the dividend payment date next preceding such liquidation (the "Proposed Terms"), and our opinion is based on the Proposed Terms. In aggregate, the purchase price for the Common Stock, Class A Stock and Class B Stock of NYCOR is assumed to be $47,275,000. Total transaction value is assumed to be $70,275,000, including the conversion of NYCOR Preferred Stock at $20.00 per share into $23,000,000 face amount of NYCOR 8 1/2 % convertible subordinated debentures due 2012. Laidlaw believes that its analyses must be considered as a whole and that selecting portions of its analyses or portions of the factors considered by it, without considering all analyses and factors, could create an incomplete view of the evaluation process underlying its opinion. In its analysis, Laidlaw made numerous assumptions with respect to NYCOR and Fedders, industry performance, general business, regulatory, economic, market and financial condition and other matters, many of which are beyond the control of NYCOR and Fedders. The estimates contained in such analyses are not necessarily indicative of actual values or of future results or values, which may be significantly more or less favorable than those suggested by such analyses. In addition, analyses relating to the value of business or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, because such estimates of actual values or future results or values are inherently subject to substantial uncertainty, Laidlaw assumes no responsibility for their accuracy. VALUATION PROCESS In arriving at its opinion, Laidlaw (1) reviewed certain publicly available business and financial information relating to NYCOR and Fedders, (2) reviewed the Merger Agreement between Fedders and NYCOR, (3) reviewed certain other information, including financial forecasts for NYCOR and Fedders, provided by each company, (4) met with management of both companies to discuss the businesses and prospects of NYCOR and Fedders, their respective projected performance, the strategic importance of NYCOR to Fedders, and the benefits expected to be achieved through the combination of the operations of NYCOR and Fedders, (5) considered certain financial and stock market data of NYCOR and Fedders and compared such data with similar data for other publicly held companies in businesses similar to those of NYCOR and Fedders, (6) considered the financial terms of certain other business combinations and other transactions which recently have been effected, and (7) considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which Laidlaw deemed relevant. In connection with its review, Laidlaw did not assume any responsibility for independent verification of the foregoing information and relied on its being complete and accurate in all material respects. With respect to the financial forecasts, Laidlaw assumed that such forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of management of NYCOR and Fedders as to the future financial performance of NYCOR and Fedders. In addition, Laidlaw did not make an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of NYCOR or Fedders, nor was Laidlaw furnished with any such evaluations or appraisals. Laidlaw's opinion is necessarily based upon financial, economic, market and other conditions as they existed and could be evaluated on the date of its opinion. Laidlaw does not express any opinion as to the prices at which Fedders Class A Stock or Convertible Preferred Stock will trade subsequent to a merger. Laidlaw estimated NYCOR's value using the following methodologies, which are discussed in greater detail in this report: STOCK PRICE HISTORY. The historic market price per common share of NYCOR was compared to the price per common share contemplated in the Merger Agreement. STOCK PREMIUM ANALYSIS. The market premium for NYCOR common stock for one day, one week and four weeks prior to the announcement was compared to stock premiums for other public merger and acquisition transactions announced since the beginning of 1995. COMPARABLE TRADING VALUATION. Valuations of publicly traded comparable companies as multiples of operating results were compared to the market valuation of NYCOR as a multiple of its operating results. COMPARABLE TRANSACTION VALUATION. Multiples of operating results to transaction value for recent transactions of comparable companies were compared to multiples of NYCOR operating results to the consideration contemplated in the Merger Agreement. STAND-ALONE DISCOUNTED CASH FLOW. Estimates of future cash flows for NYCOR on a stand-alone basis were discounted back to present value for comparison to the consideration contemplated in the Merger Agreement. OTHER CONSIDERATIONS. Laidlaw considered employing other methodologies in its valuation of NYCOR but chose to use only those methodologies listed above for several reasons. Several unique characteristics of NYCOR render certain analyses, such as a pro forma projected earnings analysis or a leveraged buyout analysis, less insightful in developing a valuation. These factors include: * an extremely high level of sales under a long-term contract with one customer (Fedders), which increases business risk and reduces the attractiveness of NYCOR to potential suitors, who might currently compete with Fedders, or to potential lenders. * high volatility of demand for air-conditioners due to climatic variations and seasonality, which might reduce the attractiveness of NYCOR to potential suitors in other industries. * difficulty in obtaining financing for NYCOR operations due to the concentration and volatility of sales, which would make a leveraged buyout of NYCOR impractical. CONVERTIBLE PREFERRED STOCK. The terms of publicly traded convertible preferred stocks, including conversion premium, dividend rate and other factors for a sample of public companies with a variety of ratings, were compared to the terms contemplated for the Fedders Convertible Preferred Stock. COMPARABLE TRADING VALUATION Laidlaw reviewed and compared certain actual and forecasted financial and operating information of NYCOR with comparable information for other publicly traded companies in the refrigeration, heating and cooling industries. Laidlaw selected these companies based on the companies' primary line of business, size relative to NYCOR and relative financial performance, and it calculated recent trading multiples of net earnings, EBIT and revenues to equity value. All forecasted sales, EBIT and net income multiples for the comparable companies were based on information contained in equity research reports. The equity values of the comparable companies used in the foregoing analyses were based on stock prices as of January 23, 1996. All financial estimates for NYCOR for the 1996 fiscal year were based on certain operating and financial forecasts provided by NYCOR management. Laidlaw determined that the relevant ranges of multiples for the comparable companies are: Industry Market PE Multiples NYCOR Averages --------- ----- ---------- Earnings LTM(1) High 16.6x S&P 17.2 Mean 10.7x NM NASDAQ 35.6 Low 8.1x Earnings 1996E(1) High 13.3x Mean 9.7x 16.1x Low 8.3x EBIT LTM High 8.5x Mean 6.1x NM Low 4.3x Revenues LTM High 0.8x Mean 0.6x 0.9x Low 0.3x (1) Earnings attributable to common stock after deduction of preferred dividends, last twelve months (LTM). The purchase price of $47.3 for the common equity and $23.0 for the preferred equity of NYCOR implies an equity value of 0.9x LTM revenues, above the comparable public companies. Multiples of LTM results for net income and EBIT for NYCOR are not meaningful due to losses. The purchase price of $6.25 per share for the common equity of NYCOR implies a purchase price multiple of 16.1x forecast 1996 earnings, representing a premium compared to other similar public companies. COMPARABLE TRANSACTION VALUATION Using publicly available information, Laidlaw has analyzed the purchase prices and multiples paid in several transactions involving businesses in the same or a similar industry as the Company. Upon analysis of comparable transactions, Laidlaw finds the relevant range of multiples of comparable company performance to transaction values to be: Parameter Range Of Multiples Average --------- ------------------ ------- (1) Sales 0.4x to 1.5x 0.9x (2) EBITDA 9.1x to 10.1x 9.7x (3) EBIT 11.8x to 36.0x 19.0x (4) Net Income 30.4x to 61.8x 43.2x Using the mean multiples derived by the analysis described above, Laidlaw compared the NYCOR transaction value as a multiple of NYCOR fiscal 1995 financial results. Precedent transactions would imply a value for NYCOR as follows: Parameter 1995 Implied Value -------------- ------------- (1) Sales $71 million (2) EBITDA $21 million (3) EBIT NM (4) Net Income NM These compare to the estimated total equity value of $70.3 million, including $47.3 for the common equity and $23.0 million for the preferred equity of NYCOR. DISCOUNTED CASH FLOW ANALYSIS Laidlaw analyzed the ongoing business of NYCOR using discounted cash flow analysis to estimate the enterprise value of NYCOR for comparison to the value of the proposed transaction with Fedders. OPERATING ASSUMPTIONS: Due to the volatility of air-conditioner demand, neither Fedders nor NYCOR management believes that accurate forecasts of demand and pricing can be made beyond the period of one year. This volatility of demand is due in large part to variation in weather: unseasonably hot weather spurs excess demand for air-conditioners while unseasonably cool weather reduces demand. This climatic variability is offset, to some extent, by recent growth in sales to markets outside the United States. To determine the present value of potential future cash flows for NYCOR without the benefit of long-range management forecasts, Laidlaw used historic operating results and one-year forecasts provided by the management of NYCOR as a predictor for future operating results to develop a discounted cash flow scenario. Therefore, operating assumptions used by Laidlaw in its discounted cash flow analysis may not accurately reflect the operations of NYCOR and/or Fedders in the future. Actual results achieved by the combined company may vary from forecasted results, and the variations may be material. Laidlaw calculated an equity value for NYCOR based upon the present value of NYCOR's 10-year stream of forecasted free cash flows and fiscal year 2006 terminal value. The fiscal year 2006 terminal value was calculated as a perpetuity of the estimated rate of return on invested capital. In conducting its analysis, Laidlaw relied on certain assumptions relating to sales growth, operating margins and capital expenditures of NYCOR's businesses provided by NYCOR management. For the 10-year forecast, Laidlaw applied a discount rate of 13% to future cash flows. This analysis resulted in a per share valuation of $5.99 for NYCOR Common Stock based on Laidlaw operating assumptions, which may or may not reflect actual future operations. APPENDIX -----END PRIVACY-ENHANCED MESSAGE-----