-----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, EvoaBqZy2sDsFkaDLcxYwlHLW53c48QLvnDYqmYYHN1OBbKhxiAVpbjFBEVnItgt bhXGs5Oqp6g6ZOZAEf7NQg== 0000950134-97-006914.txt : 19970923 0000950134-97-006914.hdr.sgml : 19970923 ACCESSION NUMBER: 0000950134-97-006914 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19970919 SROS: NYSE GROUP MEMBERS: CHAPARRAL STEEL COMPANY GROUP MEMBERS: TEXAS INDUSTRIES ACQUISITION GROUP MEMBERS: TEXAS INDUSTRIES INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHAPARRAL STEEL CO CENTRAL INDEX KEY: 0000833226 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 751424624 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: SEC FILE NUMBER: 005-39716 FILM NUMBER: 97683349 BUSINESS ADDRESS: STREET 1: 300 WARD RD CITY: MIDLOTHIAN STATE: TX ZIP: 76065 BUSINESS PHONE: 2147758241 MAIL ADDRESS: STREET 1: 300 WARD RD CITY: MIDLOTHIAN STATE: TX ZIP: 76065 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TEXAS INDUSTRIES INC CENTRAL INDEX KEY: 0000097472 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 750832210 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: SC 13E3 BUSINESS ADDRESS: STREET 1: 1341 W MOCKINGBIRD LN STREET 2: STE 700W CITY: DALLAS STATE: TX ZIP: 75247-6913 BUSINESS PHONE: 2146476700 SC 13E3 1 SCHEDULE 13E-3 - TRANSACTION STATEMENT 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13E-3 Rule 13e-3 Transaction Statement (Pursuant to Section 13(e) of the Securities Exchange Act of 1934) CHAPARRAL STEEL COMPANY (Name of the Issuer) TEXAS INDUSTRIES, INC., TEXAS INDUSTRIES ACQUISITION INC. AND CHAPARRAL STEEL COMPANY (Name of Persons Filing Statement) COMMON SHARES, $.10 PAR VALUE 159422104 (Title of Class of Securities) (Cusip Number of Class of Securities)
ROBERT C. MOORE, ESQ. VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY TEXAS INDUSTRIES, INC. 1341 W. MOCKINGBIRD LANE 7TH FLOOR DALLAS, TEXAS 75247 (972) 647-6740 (Name, address and telephone number of person authorized to receive notices and communications on behalf of the persons filing statement.) Copies To: DAN BUSBEE, ESQ. JOHN D. CAPERS, JR., ESQ. LOCKE PURNELL RAIN HARRELL KING & SPALDING 2200 ROSS AVENUE, SUITE 2200 191 PEACHTREE STREET DALLAS, TEXAS 75201 ATLANTA, GEORGIA 30303-1763 (214) 740-8000 (404) 572-4600
a. [X] The filing of solicitation materials or an information statement subject to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation 14C [17 CRF 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [240.13e-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] CALCULATION OF FILING FEE
TRANSACTION AMOUNT OF VALUATION* FILING FEE** ----------- ------------ $76,300,000 $15,260
- --------------- * Assumes 4,453,963 Common Shares, par value $.10 per share, of Chaparral Steel Company (the "Common Shares") will be converted into the right to receive $15.50 per share in cash. Includes options to purchase Common Shares having a net cash value of $7,263,574. ** The amount of the filing fee, calculated in accordance with 240.0-11 of the Securities Exchange Act of 1934 equals 1/50th of one percent of the transaction value. [X] Check box if any part of the fee is offset as proved Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $15,260 Form or Registration No.: Schedule 14A Filing Party: Chaparral Steel Company Date Filed: September 9, 1997 ================================================================================ 2 INTRODUCTION This Schedule 13E-3 Transaction Statement is being filed by Texas Industries, Inc., a Delaware corporation ("TXI"), TXI Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of TXI ("TXI Acquisition"), and Chaparral Steel Company, a Delaware corporation (the "Company"), and is being filed in connection with an Agreement and Plan of Merger, dated as of July 30, 1997 ("the Merger Agreement") among TXI, TXI Acquisition and the Company. The following cross-reference sheet is supplied pursuant to general instruction F to 13E-3 and shows the location in the preliminary proxy statement filed by the Company with the Securities and Exchange Commission contemporaneously herewith (including all annexes and schedules thereto ("Preliminary Proxy Statement") of the information required to be included in response to the items of this Transaction Statement. The information in the Preliminary Proxy Statement, a copy of which is attached hereto as Exhibit d, are incorporated by reference and the responses to each item are qualified in their entirety by the information contained in the Preliminary Proxy Statement. CROSS-REFERENCE SHEET SHOWING LOCATION IN PRELIMINARY PROXY STATEMENT OF INFORMATION REQUIRED BY ITEMS IN SCHEDULE 13E-3
SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- 1. Issuer and Class of Security Subject to the Transaction Item 1(a)............................................ Cover Page and "The Parties" Item 1(b)............................................ Cover Page and "Introduction-Record Date; Quorum; Required Vote" Item 1(c)............................................ "Market Prices and Dividends" Item 1(d)............................................ "Market Prices and Dividends" Item 1(e)............................................ Not Applicable Item 1(f)............................................ Quarterly Periods 2. Identity and Background Items 2(a) - (d) and (g)............................. Cover Page; "Introduction General;" "-- The Special Meeting;" "The Parties;" and "Management of TXI, TXI Acquisition and the Company" Items 2(e) and (f)................................... Not Applicable 3. Past Contacts, Transactions or Negotiations Item 3(a)(1)......................................... "Special Factors -- Interests of Certain Persons in the Merger" Item 3(a)(2) and (b)................................. "Special Factors -- Background of the Merger" and "-- Certain Litigation" 4. Terms of Transaction Item 4(a)............................................ "Introduction -- Record Date; Quorum; Required Vote;" "Special Factors -- Interests of Certain Persons in the Merger;" and "The Merger" Item 4(b)............................................ "Introduction -- Record Date; Quorum; Required Vote;" "Special Factors -- Interests of Certain Persons in the Merger;" and "The Merger -- General -- Treatment of Shares in the Merger"
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SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- 5. Plans or Proposals of the Issuer or Affiliate Items 5(a) - (g)..................................... "Special Factors -- Background of the Merger;" "-- Purpose and Structure of the Merger;" "-- Plans for the Company After the Merger;" and "-- Interests of Certain Persons in the Merger" 6. Source and Amounts of Funds or Other Consideration Item 6(a)............................................ "The Merger -- Payment for Public Shares; Sources of Funds" Item 6(b)............................................ "Special Factors -- Fees and Expenses" Item 6(c) and (d).................................... "The Merger -- Payment for Public Shares; Sources of Funds" 7. Purpose(s), Alternatives, Reasons and Effects Items 7(a) and (c)................................... "Special Factors -- Background of the Merger" and "-- Purpose and Structure of the Merger" Item 7(b)............................................ "Special Factors -- Background of the Merger" and "-- Purpose and Structure of the Merger" Item 7(d)............................................ "Special Factors -- Background of the Merger;" "-- Plans for the Company After the Merger;" "-- Certain Effects of the Merger;" "-- Certain U.S. Federal Income Tax Consequences;" and "The Merger -- Accounting Treatment" 8. Fairness of the Transaction Item 8(a)............................................ "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company" Item 8(b)............................................ "Special Factors -- Background of the Merger;" "-- Recommendation of the Special Committee and Board of Directors of the Company"; "-- Purpose and Structure of the Merger"; and "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses" Item 8(c)............................................ "Introduction -- Record Date; Quorum; Required Vote" and "The Merger -- General -- Conditions to the Merger; Amendment, Waiver and Termination" Item 8(d)............................................ "Special Factors -- Background of the Merger;" "-- Recommendation of the Special Committee and Board of Directors of the Company;" and "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses"
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SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- Item 8(e)............................................ "Special Factors -- Background of the Merger;" "-- Recommendation of the Special Committee and Board of Directors of the Company" Item 8(f)............................................ Not Applicable 9. Reports, Opinions, Appraisals and Certain Negotiations Items 9(a) - (c)..................................... "Special Factors -- Background of the Merger;" "-- Opinion of Robinson- Humphrey; Summary of Financial Analyses"; and Exhibit (b) 10. Interest in Securities of the Issuer Item 10(a)........................................... "Introduction -- Record Date; Quorum; Required Vote"; "Special Factors -- Interests of Certain Persons in the Merger"; and "Ownership of Common Shares" Item 10(b)........................................... Not Applicable 11. Contracts, Arrangements or Understandings with "Special Factors -- Interests of Certain Respect to the Issuer's Securities................. Persons in the Merger;" "The Merger;" Annex A to the Preliminary Proxy Statement 12. Present Intention and Recommendation of Certain Persons with Regard to the Transaction Items 12(a) - (b).................................... "Introduction -- The Special Meeting" and "-- Record Date; Quorum; Required Vote;" "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company;" and "-- Interests of Certain Persons in the Merger" 13. Other Provisions of the Transaction Item 13(a)........................................... "The Merger -- Dissenters' Rights" and Annex B to the Preliminary Proxy Statement Item 13(b) and (c)................................... Not Applicable 14. Financial Information Item 14(a)........................................... "Selected Consolidated Financial Data of the Company;" "Incorporation of Certain Documents by Reference;" Exhibits (g)(1) and (g)(2) Item 14(b)........................................... Not Applicable 15. Persons and Assets Employed, Retained or Utilized Item 15(a)........................................... "Introduction -- Solicitation of Proxies"
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SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- Item 15(b)........................................... "Introduction -- Solicitation of Proxies;" "Special Factors -- Background of the Merger;" "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses;" "TXI's Financial Advisors;" and "Special Factors -- Fees and Expenses" 16. Additional Information............................... Preliminary Proxy Statement in its entirety 17. Material to be Filed as Exhibits..................... Separately filed with this Schedule 13E-3
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION (a) The name of the issuer of the class of equity security subject to the Rule 13e-3 transaction is Chaparral Steel Company and the address of its principle executive offices is 300 Ward Road, Midlothian, Texas 76065-9651. (b) The relevant information set forth on the Cover Page of the Preliminary Proxy Statement and under the caption "Introduction -- Record Date; Quorum and Required Vote" is incorporated here and by reference. (c) The relevant information set forth under the caption "Market Prices and Dividends" is incorporated herein by reference. (d) The relevant information set forth under the caption "Market Prices and Dividends" is incorporated herein by reference. (e) Not Applicable. (f)
AMOUNT OF COMMON RANGE OF AVERAGE QUARTERLY PERIODS(1) SHARES PURCHASED PRICES PAID PURCHASE PRICE -------------------- ---------------- -------------- -------------- FISCAL 1996 First Quarter................................... 0 -- -- Second Quarter.................................. 651,800 $9.50 -- $10.00 $ 9.77 Third Quarter................................... 0 -- -- Fourth Quarter(2)............................... 454,700 $13.375 $13.375 FISCAL 1997 First Quarter(2)................................ 349,100 $10.75 $10.75 Second Quarter.................................. 0 -- -- Third Quarter................................... 0 -- -- Fourth Quarter.................................. 0 -- --
- --------------- (1) The information set forth in this table reflects purchases of the Common Shares made by the Company since the commencement of the Company's second full fiscal year preceding the date of this Schedule 13E-3. (2) Only one purchase transaction occurred during such quarterly period. 5 6 ITEM 2. IDENTITY AND BACKGROUND (a) - (d) and (g). This Transaction Statement is being filed by TXI, TXI Acquisition and the Company (the Company being the issuer.) The following information set forth on the Cover Page of the Preliminary Proxy Statement and set forth under the captions "Introduction -- General," "-- The Special Meeting," "The Parties" and "Management of TXI, TXI Acquisition and the Company" is incorporated herein by reference. (e) and (f). During the last 5 years, none of TXI, TXI Acquisition and the Company or, to the best of the knowledge of TXI, TXI Acquisition or the Company, any of the persons listed under the caption "Management of TXI, TXI Acquisition and the Company" (i) has been convicted in a criminal proceeding (excluding traffic violations or some other misdemeanors), or (ii) was or is a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting activates subject to, federal or state securities laws or finding any violations of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS. (a)(1). The relevant information set forth under the caption "Special Factors -- Interests of Certain Persons in the Merger" is incorporated herein by reference. (a)(2) and (b). The relevant information set forth under the captions "Special Factors -- Background of the Merger" and "-- Certain Litigation" is incorporated herein by reference. ITEM 4. TERMS OF THE TRANSACTION. (a) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Interests of Certain Persons in the Merger" and "The Merger" are incorporated herein by reference. (b) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Interests of Certain Persons in the Merger" and "The Merger -- General -- Treatment of Shares in the Merger" is incorporated herein by reference. ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE. (a) -- (g) The relevant information set forth under the captions "Special Factors -- Background of the Merger"; "-- Plans for the Company After the Merger," "-- Purpose and Structure of the Merger" and "-- Interests of Certain Persons in the Merger" is incorporated herein by reference. ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The relevant information set forth under the captions "The Merger -- Payment for Public Shares; Sources of Funds" and "Special Factors -- Fees and Expenses" is incorporated herein by reference. (b) The relevant information set forth under the caption "Special Factors -- Fees and Expenses" is incorporated herein by reference. (c) and (d) The relevant information set forth under the caption "The Merger -- Payment for Public Shares; Sources of Funds" is incorporated herein by reference. ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS. (a) and (c). The relevant information set forth under the captions "Special Factors -- Background of the Merger" and "-- Purpose and Structure of the Merger" is incorporated herein by reference. (b) The relevant information set forth under the caption "Special Factors -- Background of the Merger" and "-- Purpose and Structure of the Merger" is incorporated herein by reference. 6 7 (d) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Plans for the Company After the Merger," "-- Certain Effects of the Merger," "-- Certain U.S. Federal Income Tax Consequences" and "The Merger -- Accounting Treatment" is incorporated herein by reference. ITEM 8. FAIRNESS OF THE TRANSACTION. (a) The relevant information set forth under the captions "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company" is incorporated herein by reference. (b) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company"; "-- Purpose and Structure of the Merger", and "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses" is incorporated herein by reference. (c) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote" and "The Merger -- General -- Conditions to the Merger; Amendment, Waiver and Termination" is incorporated herein by reference. (d) The relevant information set forth under the caption "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company" and "Opinion of Robinson-Humphrey; Summary of Financial Analyses" is incorporated herein by reference. (e) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company" is incorporated herein by reference. (f) Not Applicable. ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS (a) - (c) The relevant information set forth under the captions "Special Factors -- Background of the Merger", and "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses" and an Exhibit (b)(1) to this Transaction Statement is incorporated herein by reference. ITEM 10. INTEREST IN SECURITIES OF THE ISSUER. (a) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Interests of Certain Persons in the Merger" and "Ownership of Common Shares" is incorporated herein by reference. (b) Not applicable. ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S SECURITIES The relevant information set forth under the captions "Special Factors -- Interests of Certain Persons in the Merger," "The Merger" and Annex A to the Preliminary Proxy Statement is incorporated herein by reference. ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO THE TRANSACTION. (a) and (b). The relevant information set forth under the captions "Introduction -- The Special Meeting," "-- Record Date; Quorum; Required Vote," "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company" and "Interests of Certain Persons in the Merger" is incorporated herein by reference. 7 8 ITEM 13. OTHER PROVISIONS OF THE TRANSACTION. (a) The relevant information set forth under the caption "The Merger -- Dissenters' Rights" and in Annex B to the Preliminary Proxy Statement is incorporated herein by reference. (b) and (c). Not applicable. ITEM 14. FINANCIAL INFORMATION. (a) The relevant information set forth under the caption "Selected Consolidated Financial Data of the Company" in the Preliminary Proxy Statement is incorporated herein by reference. Pursuant to Instruction D and Instruction F to Schedule 13E-3, the following are incorporated by reference: (i) The "Consolidated Financial Statements" from the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 (copies of which are filed as Exhibit (g)(1) to this Transaction Statement); and (ii) Part I, "Financial Information," Item 1, "Consolidated Financial Statements" from the Company's quarterly report on Form 10-Q for the fiscal quarter ended August 31, 1997 (copies of which are filed as Exhibit (g)(2) to this Transaction Statement.) (b) Not applicable. ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED. (a) and (b). The relevant information set forth under the captions "Introduction -- Solicitation of Proxies", "Special Factors -- Fees and Expenses"; "-- Background of the Merger", "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses" and "TXI's Financial Advisor" is incorporated herein by reference. ITEM 16. ADDITIONAL INFORMATION. The information set forth in the Preliminary Proxy Statement is incorporated herein by reference in its entirety. 8 9 ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NUMBER DESCRIPTION ------- ----------- (a) -- Not Applicable. (b)(1) -- Fairness Opinion of The Robinson-Humphrey Company, Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (b)(2) -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on June 20, 1997. (b)(3) -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on July 29, 1997. (c) -- Agreement and Plan of Merger dated as of July 30, 1997 among Chaparral Steel Company, Texas Industries, Inc. and TXI Acquisition Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (d) -- The Preliminary Proxy Statement (incorporated by reference to the Preliminary Proxy Statement). (e) -- Dissenters' Rights (incorporated by reference to Annex B to the Preliminary Proxy Statement). (f) -- Not Applicable. (g)(1) -- Consolidated Financial Statements (incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997). (g)(2) -- Part I, "Financial Information," Item 1,"Consolidated Financial Statements" (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 1997).
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Transaction Statement is true, complete and correct. TEXAS INDUSTRIES, INC. By: /s/ Robert D. Rogers -------------------------------- Title: President ----------------------------- Date: September 19, 1997 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Transaction Statement is true, complete and correct. TXI ACQUISITION INC. By: /s/ Robert D. Rogers -------------------------------- Title: President ----------------------------- Date: September 19, 1997 9 10 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Transaction Statement is true, complete and correct. CHAPARRAL STEEL COMPANY By: /s/ Gordon E. Forward -------------------------------- Title: President ----------------------------- Date: September 19, 1997 10 11 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- (a) -- Not Applicable. (b)(1) -- Fairness Opinion of The Robinson-Humphrey Company, Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (b)(2) -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on June 20, 1997. (b)(3) -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on July 29, 1997. (c) -- Agreement and Plan of Merger dated as of July 30, 1997 among Chaparral Steel Company, Texas Industries, Inc. and TXI Acquisition Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (d) -- The Preliminary Proxy Statement (incorporated by reference to the Preliminary Proxy Statement). (e) -- Dissenters' Rights (incorporated by reference to Annex B to the Preliminary Proxy Statement). (f) -- Not Applicable. (g)(1) -- Consolidated Financial Statements (incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997). (g)(2) -- Part I, "Financial Information," Item 1,"Consolidated Financial Statements" (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 1997).
11 EX-99.(B)(2) 2 PRESENTATION MATERIALS 6/20/97 1 EXHIBIT (b)(2) INVESTMENT BANKING PRESENTATION TO THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF CHAPARRAL STEEL COMPANY JUNE 20, 1997 THE ROBINSON-HUMPHREY COMPANY, INC. INVESTMENT BANKERS SINCE 1894 2 TABLE OF CONTENTS - ------------------------------------------------------------------------------- I. MARKET COMPARISON OF SELECTED PUBLIC COMPANIES AND IMPLIED VALUATION ANALYSIS II. DISCOUNTED CASH FLOW MODEL III. ANALYSIS OF PREMIUMS FOR MINORITY INTEREST ACQUISITIONS IN GOING PRIVATE TRANSACTIONS IV. ADJUSTED BOOK VALUE ANALYSIS V. VALUATION BASED ON ANNUAL TONS CAPACITY VI. DILUTION ANALYSIS VII. ANALYSIS OF PROJECTED EARNINGS VIII. RETURNS ANALYSIS BASED ON INITIAL PURCHASE AT IPO 3 The Robinson-Humphrey Company, Inc. PROJECT GIRDER MARKET COMPARISON OF SELECTED PUBLIC COMPANIES
EARNINGS PER SHARE [1] MARKET PRICES AS ---------------------- LATEST 52 WEEK PRICE % OF CAL. CAL. TICKER EXCHANGE COMPANY FYE FILING HIGH LOW 6/18/97 HIGH LTM 1997 1998 - ------ -------- ------- --- ------ ---- --- ------- ---- --- ---- ---- MINIMILL STEEL COMPANIES - ------------------------ BIR NYSE Birmingham Steel Corp. JE 3/97 $22.00 $14.12 $16.25 73.9% $0.59 $0.82 $1.69 CMC NYSE Commercial Metals Co. AU 2/97 33.50 27.12 31.38 93.7% 2.72 2.79 3.55 IPS NYSE IPSCO Inc. (in US$) DC 12/96 32.37 21.12 31.50 97.3% 2.27 2.52 3.43 KESI OTC Kentucky Electric Steel SP 3/97 8.62 4.12 5.75 66.7% (0.73) 0.00 0.65 LUC NYSE Lukens Inc. DC 3/97 26.12 13.50 19.13 73.2% (0.78) 0.24 1.42 NSS NYSE NS Group, Inc. SP 3/97 9.25 2.50 9.25 100.0% (0.23) NA NA NWSW OTC Northwestern Steel & Wire JL 1/97 7.12 2.12 2.63 36.9% (0.14) (0.11) (0.12) NUE OTC Nucor Corporation DC 3/97 59.50 44.75 56.75 95.4% 2.97 3.41 3.89 OS NYSE Oregon Steel Mills, Inc. DC 3/97 22.50 12.50 21.25 94.4% 0.96 1.09 1.61 NX NYSE Quanex Corporation OC 1/97 29.50 19.37 29.38 99.6% 2.23 2.51 3.21 F RESC OTC Roanoke Electric Steel OC 1/97 17.75 11.75 16.25 91.5% 1.87 2.09 2.25 F SCHN OTC Schnitzer Steel Industries AU 2/97 31.25 22.00 25.50 81.6% 1.39 1.78 2.26 SWVA OTC Steel Co. of West Virginia DC 3/97 10.75 5.25 9.75 90.7% 0.48 0.95 1.16 STLD OTC Steel Dynamics Inc. DC 3/97 25.37 16.50 22.00 86.7% 0.49 0.98 1.56 -------------------------------------------------------------------------------------------------------------------------- AVERAGE 84.4% MEDIAN 91.1% ========================================================================================================================== GIRDER MY 5/97 $15.37 $10.50 $15.00 97.6% $1.41 $1.43 $1.46 PRICE/EARNINGS RATIO ------------------------- CAL. CAL. SHARES MARKET BOOK MARKET/ TICKER EXCHANGE COMPANY LTM 1997 1998 OUTSTANDING CAP'N VALUE BOOK - ------ ------- ------- --- ---- ---- ----------- ------- ------- ------- MINIMILL STEEL COMPANIES (MM) ($MM) ($MM) - ------------------------ BIR NYSE Birmingham Steel Corp. 27.5 X 19.8 X 9.6 X 29.678 $482.3 $ 472.9 1.0 X CMC NYSE Commercial Metals Co. 11.5 11.2 8.8 15.293 479.8 352.0 1.4 IPS NYSE IPSCO Inc. (in US$) 13.9 12.5 9.2 27.104 853.8 585.5 1.5 KESI OTC Kentucky Electric Steel NM NM 8.8 4.623 26.6 33.7 0.8 LUC NYSE Lukens Inc. NM 79.7 * 13.5 14.940 285.7 238.5 1.2 NSS NYSE NS Group, Inc. NM NA NA 13.866 128.3 59.1 2.2 NWSW OTC Northwestern Steel & Wire NM NM NM 24.509 64.3 97.4 0.7 NUE OTC Nucor Corporation 19.1 16.6 14.6 87.852 4,985.6 1,666.9 3.0 OS NYSE Oregon Steel Mills, Inc. 22.1 19.5 13.2 25.693 546.0 356.2 1.5 NX NYSE Quanex Corporation 13.2 11.7 9.2 13.678 401.8 200.5 2.0 RESC OTC Roanoke Electric Steel 8.7 7.8 7.2 7.492 121.7 95.4 1.3 SCHN OTC Schnitzer Steel Industries 18.3 14.3 11.3 10.348 263.9 226.9 1.2 SWVA OTC Steel Co. of West Virginia 20.3 10.3 8.4 5.991 58.4 50.6 1.2 STLD OTC Steel Dynamics Inc. 44.9 * 22.4 14.1 47.853 1,052.8 279.3 3.8 * ----------------------------------------------------------------------------------------------------------------- AVERAGE 17.2 x 14.6 x 10.7 x 1.4 x MEDIAN 18.7 x 14.3 x 9.4 x 1.3 x ================================================================================================================= GIRDER 10.6 x 10.5 x 10.3 x 28.404 $ 426.1 $ 326.3 1.3 x
- ------------------------------------------------ * Excluded from average. F - Fiscal Year Estimate. NA - Not Available NM - Not Meaningful [1] Estimates are from the First Call Research Network dated 6/18/97. 4 The Robinson-Humphrey Company, Inc. PROJECT GIRDER MARKET COMPARISON OF SELECTED PUBLIC COMPANIES
LTM TOTAL TOTAL TOTAL --------------------------------- EBIT EBITDA COMPANY DEBT CASH FIRM VALUE[1] REVENUES EBIT EBITDA MARGIN MARGIN - ------- ----- ---- ------------- -------- ---- ------ ------ ------ ($MM) ($MM) ($MM) ($MM) ($MM) ($MM) MINIMILL STEEL COMPANIES - ------------------------ Birmingham Steel Corp. $518.5 $ 1.8 $ 998.0 $ 932.2 $ 49.6 [2] $ 93.0 [2] 5.3% 10.0% Commercial Metals Co. 214.0 15.3 678.5 2,270.7 81.0 123.1 3.6% 5.4% IPSCO Inc. (in US$) 285.3 167.8 971.4 595.6 91.6 105.9 15.4% 17.8% Kentucky Electric Steel 30.2 0.1 56.7 96.5 (6.7) (3.4) (6.9%) (3.5%) Lukens Inc. 262.7 9.1 539.3 954.3 5.1 54.6 0.5% 5.7% NS Group, Inc. 166.2 19.8 274.7 431.6 23.4 42.0 5.4% 9.7% Northwestern Steel & Wire 195.8 0.7 259.5 639.9 19.2 45.0 3.0% 7.0% Nucor Corporation 188.2 168.4 5,005.4 3,781.4 409.2 602.3 10.8% 15.9% Oregon Steel Mills, Inc. 347.6 7.8 885.8 67.07 49.8 78.9 7.4% 11.7% Quanex Corporation 284.5 37.2 649.0 939.5 69.1 108.9 7.4% 11.6% Roanoke Electric Steel 36.0 11.2 146.5 246.2 24.1 32.9 9.8% 13.3% Schnitzer Steel Industries 108.1 6.9 365.0 344.3 23.5 39.2 6.8% 11.4% Steel Co. of West Virginia 17.5 0.0 75.9 93.1 5.9 12.8 6.4% 13.8% Steel Dynamics Inc. 206.4 48.2 1,211.0 318.4 42.7 64.2 13.4% 20.2% ---------------------------------------------------------------------------------------------------------------- AVERAGE 6.3% 10.7% MEDIAN 6.6% 11.5% ================================================================================================================ GIRDER $ 65.0 $ 14.3 $ 476.8 $ 616.7 $ 69.8 $103.0 11.3% 16.7% 3 YEAR CAGR FIRM VALUE TO: ------------------ ------------------------------------- NET COMPANY REVENUES EBIT EBITDA REVENUE INCOME - ------- -------- ---- ------ -------- ------ MINIMILL STEEL COMPANIES - ------------------------ Birmingham Steel Corp. 1.07 X 20.1 X 10.7 x 8.8% NM Commercial Metals Co. 0.30 8.4 5.5 18.1% 32.6% IPSCO Inc. (in US$) 1.63 10.6 9.2 (2.6%) 20.1% Kentucky Electric Steel 0.59 NM NM (2.1%) NM Lukens Inc. 0.57 106.3* 9.9 1.2% NM NS Group, Inc. 0.64 11.8 6.5 16.2% NM Northwestern Steel & Wire 0.41 13.5 5.8 4.7% 43.7% Nucor Corporation 1.32 12.2 8.3 10.7% 4.6% Oregon Steel Mills, Inc. 1.32 17.8 11.2 (4.0%) NM Quanex Corporation 0.69 9.4 6.0 13.2% 32.1% Roanoke Electric Steel 0.60 6.1 4.5 6.8% 14.0% Schnitzer Steel Industries 1.06 15.5 9.3 13.9% 39.3% Steel Co. of West Virginia 0.82 12.8 5.9 (12.4%) NM Steel Dynamics Inc. 3.80 * 28.3 * 18.8 * NM NM ---------------------------------------------------------------------------- AVERAGE 0.85 X 12.6 x 7.7 x 5.6% 26.6% MEDIAN 0.75 x 12.8 x 8.3 x 6.8% 32.1% ============================================================================ GIRDER 0.77 X 6.8 x 4.6 x 7.7% 43.2%
- ------------------------------------- * Excluded from average. NA - Not applicable NM - Not Meaningful [1] Firm value equals market capitalization plus total debt and preferred stock minus cash and marketable securities. [2] Excludes $11.6 million loss provision on mill modernization. 5 PROJECT GIRDER IMPLIED VALUATION ANALYSIS UTILIZING SELECTED PUBLIC COMPANIES UNIVERSE (DOLLARS IN THOUSANDS)
AVERAGE MINIMILL STEEL COMPANIES MULTIPLES ---------------------------------------------------------------------------------- VALUATION CSM PRICE PRICE/ PRICE/ PRICE/ PARAMETER VALUE LTM EARNINGS CAL. 1997 EARNINGS CAL. 1997 EARNINGS BOOK - --------- ----- ------------- ---------------------- ------------------ ------ LTM Earnings $40.2 17.2 x Fiscal 1998 Earnings $61.8 14.6 x Fiscal 1999 Earnings $65.2 10.7 x Book Value at May 31, 1997 $326.3 1.4 x AVERAGE MINIMOILL STEEL COMPANIES MULTIPLES --------------------------------------------------------------- IMPLIED VALUATION CSM FIRM VALUE/ FIRM/VALUE FIRM/VALUE FIRM TOTAL DEBT PARAMETER VALUE LTM REVENUES LTM EBITDA LTM EBIT VALUE LESS CASH [1] - --------- ----- ------------ ---------- ---------- ------ ------------- LTM Revenues $616.7 0.85 x $521.7 $50.7 LTM EBITDA $103.0 7.7 X $796.3 $50.7 LTM EBIT $ 69.8 12.6 X $877.2 $50.7 IMPLIED IMPLIED EQUITY VALUATION EQUITY VALUE PARAMETER VALUE PER SHARE - --------- ------- --------- LTM Earnings $690.7 $24.32 Fiscal 1998 Earnings $903.1 $31.80 Fiscal 1999 Earnings $695.0 $24.47 Book Value at May 31, 1997 $471.3 $16.59 VALUATION PARAMETER - --------- LTM Revenues $471.0 $16.58 LTM EBITDA $745.6 $26.25 LTM EBIT $826.4 $29.10 AVERAGE $686.2 $24.16 ========================================= MEDIAN $695.0 $24.47 =========================================
- -------------------------------------------------- * Excluded from average and median. [1] Cash and debt as may 31, 1997. 6 PROJECT GIRDER Purchase Price Matrix Based on EBITDA Multiples - ------------------------------------------------------------------------------- (Dollars in Millions) LTM EBITDA $103.0 Latest Net Debt $ 50.7 Shares 28.4 ============================
EBITDA Multiple ---------------------------------------------------------------------------------------------- 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 ---------------------------------------------------------------------------------------------- Equity Value $361.2 $412.7 $464.2 $515.6 $567.1 $618.6 $670.1 $721.6 $773.1 Equity Value per Share $12.72 $14.53 $16.34 $18.15 $19.97 $21.78 $23.59 $25.40 $27.22
7 Chaparral Steel Co Price and Volume Daily: 01/01/96 to 06/18/97 [GRAPH] TICKER SYMBOL: CSM CUSIP NUMBER: 15942210 8 The Robinson-Humphrey Company, Inc. PROJECT GIRDER PROJECTED EBITDA MARGIN ASSUMPTIONS - -------------------------------------------------------------------------------
PROJECTED FISCAL YEAR ENDING MAY 31, ---------------------------------------------------------------------------------------- 1998 1999 2000 2001 2002 2003 ----- ---- ---- ---- ---- ---- CASE 1 19.3% 20.0% 19.1% 21.5% 23.2% 25.0% CASE 2 16.9% 17.8% 17.3% 19.2% 21.0% 23.0% CASE 3 19.3% 20.0% 20.2% 22.4% 24.9% 28.0% CASE 4 12.9% 13.8% 13.0% 14.9% 16.9% 18.9% CASE 5 16.5% 17.9% 17.5% 19.6% 22.0% 24.1% CASE 6 16.5% 17.9% 12.4% 14.7% 17.1% 19.3% ==================================================================================================================== HISTORICAL 10 YEAR AVG. 15.8% 15.8% 15.8% 15.8% 15.8% 15.8%
9 The Robinson-Humphrey Company, Inc. PROJECT GIRDER PROJECTED CASH FLOWS FORECAST FOR FISCAL YEARS 1998 - 2003 - -------------------------------------------------------------------------------
HISTORICAL PROJECTED FISCAL YEAR ENDING MAY 31, ---------------------------------------- PROJECTIONS USED IN VALUATION (DOLLARS IN THOUSANDS): 1997 1998 1999 2000 - --------------------------------------------------- --------- -------- -------- -------- Sales $616,676 $705,569 $704,917 $ 957,727 Percent Change 14.4% -0.1% 35.9% Cost of Sales 484,367 518,309 508,958 709,129 -------- -------- -------- -------- Gross Profit 132,309 187,259 195,959 248,597 Gross Margin 21.5% 26.5% 27.8% 26.0% Operating Expenses 62,350 82,183 87,240 117,,311 Operating Income 69,959 105,076 108,719 131,286 Operating Margin 11.3% 14.9% 15.4% 13.7% Income Taxes 31,072 44,975 46,505 55,983 -------- -------- -------- -------- Effective Tax Rate 44.4% 42.8% 42.8% 42.6% After-Tax Operating Income $ 38,887 $ 60,101 $ 62,214 $ 75,303 After-Tax Operating Margin 6.3% 8.5% 8.8% 7.9% CASH SOURCES: After-Tax Operating Income $ 38,887 $ 60,101 $ 62,214 $ 75,303 Depreciation & Amortization 33,153 31,082 32,098 51,292 Deferred Income Taxes & Other Credits (1,467) (1,592) 6,042 25,292 -------- -------- -------- -------- TOTAL SOURCES $ 70,573 $ 89,591 $100,354 $151,887 ======== ======== ======== ======== CASH USES: Capital Expenditures $ 33,776 $ 95,000 $277,000 $127,492 Increase/(Decrease) in Net Working Capital 23,894 (3,344) (696) 36,715 -------- -------- -------- -------- TOTAL USES $ 57,670 $ 91,656 $276,304 $164,207 ======== ======== ======== ======== FREE CASH FLOW $ 12,903 ($ 2,065) ($175,959) ($ 12,320) ========================================================= PROJECTED YEARS ENDING MAY 31, ---------------------------------------- Projections Used in Valuation (Dollars in Thousands): 2001 2002 2003 ---------- ----------- ---------- Sales $1,081,029 $1,155,406 $1,224,321 Percent Change 12.9% 6.9% 6.0% Cost of Sales 784,322 813,939 839,330 ---------- ----------- ---------- Gross Profit 296,706 341,467 384,991 Gross Margin 27.4% 29.6% 31.4% Operating Expenses 123,120 124,245 123,958 Operating Income 173,586 217,222 261,033 Operating Margin 16.1% 18.8% 21.3% Income Taxes 73,749 92,076 110,477 ---------- ----------- ---------- Effective Tax Rate 42.5% 42.4% 42.3% After-Tax Operating Income $ 99,837 $ 125,146 $ 150,556 After-Tax Operating Margin 9.2% 10.8% 12.3% CASH SOURCES: After-Tax Operating Income $ 99,837 $ 125,146 $ 150,556 Depreciation & Amortization 54,665 50,909 46,609 Deferred Income Taxes & Other Credits 22,269 28,270 17,936 ---------- ----------- ---------- TOTAL SOURCES $ 176,771 $ 204,325 $ 215,101 ========== ============ ========== CASH USES: Capital Expenditures $ 57,491 $ 40,000 $ 40,000 Increase/(Decrease) in Net Working Capital 14,983 5,982 6,020 ---------- ----------- ---------- TOTAL USES $ 72,474 $ 45,982 $ 46,020 ========== =========== ========== FREE CASH FLOW $ 104,297 $ 158,343 $ 169,081 ==========================================
10 PROJECT GIRDER COST AND REVENUE ASSUMPTIONS FORECAST FOR FISCAL YEARS 1998-2003
1998 1999 2000 2001 2002 2003 ------------ ------------ ------------ ------------ ------------ ------------ TONS OF STEEL SOLD Bar Products 493,000 450,000 480,000 525,000 525,000 525,000 Structural Products 1,231,400 1,250,000 1,320,000 1,350,000 1,350,000 1,350,000 Castelite 10,945 15,000 20,000 20,000 20,000 20,000 Star 2000 34,107 40,000 40,000 40,000 40,000 40,000 Structural Mill-East 0 0 500,000 700,000 850,000 1,000,000 Star 2000-East 0 0 12,000 16,000 20,000 24,000 ------------ ------------ ------------ ------------ ------------ ------------ Total 1,769,452 1,755,000 2,372,000 2,651,000 2,805,000 2,959,000 NET SELLING PRICE Bar Products 351.68 351.75 353.09 365.35 377.14 377.14 Structural Products 400.13 398.80 398.75 398.73 398.73 398.73 Castelite 850.00 850.00 850.00 850.00 850.00 850.00 Star 2000 884.49 884.49 884.49 884.49 884.49 884.49 Structual Mill-East 0.00 0.00 397.80 406.29 410.65 414.43 Star 2000-East 0.00 0.00 884.49 884.49 884.49 884.49 COST OF SALES Bar Products 287.68 289.06 289.43 289.43 289.43 289.43 Structual Products 286.00 280.00 280.00 280.00 280.00 280.00 Castelite 806.00 715.00 715.00 715.00 715.00 715.00 Star 2000 453.90 453.90 453.90 453.90 453.90 453.90 Structural Mill-East 0.00 0.00 325.40 306.61 285.24 266.03 Star 2000-East 0.00 0.00 453.90 453.90 453.90 453.90
11 PROJECT GIRDER WORKING CAPITAL ASSUMPTIONS FORECAST FOR FISCAL YEARS 1998 - 2003 (DOLLARS IN THOUSANDS) - --------------------------------------------------------------------------------
HISTORICAL PROJECTED YEARS ENDING MAY 31, ----------------- ------------------------------- 1996 1997 1998 1999 2000 -------- -------- --------- --------- -------- BLANCE SHEET DATA Current Assets less Cash and Equivalents Accounts Receivable $ 49,530 $ 66,266 $ 69,845 $ 69,750 $ 94,737 Inventory 121,791 131,034 132,880 130,721 168,760 Prepaid Expenses 7,757 9,218 8,500 8,500 11,000 -------- -------- --------- --------- -------- 179,078 206,518 211,225 208,971 274,497 Current Liabilities less Current Debt Accounts Payable $ 34,131 $ 31,466 $ 37,419 $ 36,743 $ 56,100 Accrued Expenses 14,470 20,681 22,779 21,897 31,351 -------- -------- --------- --------- -------- 48,601 52,147 60,198 58,640 87,451 Working Capital Less Cash and Equivalents and Current Debt $130,477 $154,371 $ 151,027 $ 150,331 $187,046 CHANGE IN NET WORKING CAPITAL $ 23,894 $ (3,344) $ (696) $ 36,715 Accounts Receivable as a % of Sales 10.7% 9.9% 9.9% 9.9% Days Receivable 39.2 36.1 36.1 36.1 Inventory as a % of Cost of Goods Sold 27.1% 25.6% 25.7% 23.8% Inventory Turns 3.7 3.9 3.9 4.2 Accounts Payable as a % of Cost of Goods Sold 6.5% 7.2% 7.2% 7.9% Days Payable 23.7 26.4 26.4 289.9 PROJECTED YEARS ENDED MAY 31, ---------------------------------- 2001 2002 2003 -------- -------- ---------- BLANCE SHEET DATA Current Assets less Cash and Equivalents Accounts Receivable $106,873 $114,159 $ 120,937 Inventory 183,300 189,007 193,874 Prepaid Expenses 11,000 11,000 11,000 -------- -------- ---------- 301,173 314,166 325,811 Current Liabilities less Current Debt Accounts Payable $ 63,097 66,099 68,673 Accrued Expenses 36,047 40,056 43,107 -------- -------- ---------- 99,144 106,155 111,780 Working Capital Less Cash and Equivalents and Current Debt $202,029 $208,011 $ 214,031 CHANGE IN NET WORKING CAPITAL $ 14,983 $ 5,982 $ 6,020 Accounts Receivable as a % of Sales 9.9% 9.9% 9.9% Days Receivable 36.1 36.1 36.1 Inventory as a % of Cost of Goods Sold 23.4% 23.2% 23.1% Inventory Turns 4.3 4.3 4.3 Accounts Payable as a % of Cost of Goods Sold 8.0% 8.1% 8.2% Days Payable 29.4 29.6 29.9
12 The Robinson-Humphrey Company, Inc. PROJECT GIRDER EBITDA MULTIPLE METHODOLOGY FORECAST FOR FISCAL YEARS 1998 - 2003 (DOLLARS IN THOUSANDS)
SUMMARY Discount Rate: 21.00% Multiple: 5.5 EBITDA Terminal Value: $307,642 Present Value of Cash Flows: $ 34,741 Present Value of Terminal Value: $539,133 -------- Total Value: $573,875 ======== Plus: Cash $ 14,291 Less: Debt $ 64,999 -------- Equity Value: $523,167 ======== EQUITY VALUE PER SHARE: $ 18.43
Present Value of Cash Flows: $ 44,609 $ 39,520 $ 34,741 $ 30,254 $ 26,040 Present Value of Terminal Value: 4.0 x $433,335 $412,115 $392,097 $373,204 $355,365 4.5 $487,502 $463,629 $441,109 $419,855 $399,786 5.0 $541,669 $515,143 $490,121 $466,505 $444,207 Multiple 5.5 $595,836 $566,658 $539,133 $513,156 $488,627 6.0 $650,003 $618,172 $588,145 $559,806 $533,048 6.5 $704,170 $669,686 $637,157 $606,457 $577,469 7.0 $758,336 $721,201 $686,170 $653,108 $621,889 Total Value: 4.0 x $477,944 $451,634 $426,838 $403,458 $381,405 4.5 $532,110 $503,149 $475,850 $450,109 $425,825 5.0 $586,277 $554,663 $524,862 $496,759 $470,246 Multiple 5.5 $640,444 $606,177 $573,875 $543,410 $514,667 6.0 $694,611 $657,692 $622,887 $590,060 $559,087 6.5 $748,778 $709,206 $671,899 $636,711 $603,508 7.0 $802,945 $760,720 $720,911 $683,362 $647,929 Equity Value: 4.0 x $427,236 $400,926 $376,130 $352,750 $330,697 4.5 $481,402 $452,441 $425,142 $399,401 $375,117 5.0 $535,569 $503,955 $474,154 $446,051 $419,538 Multiple 5.5 $589,736 $555,469 $523,167 $492,702 $463,959 6.0 $643,903 $606,984 $572,179 $539,352 $508,379 6.5 $698,070 $658,498 $621,191 $586,003 $552,800 7.0 $752,237 $710,012 $670,203 $632,654 $597,221 Equity Value Per Share: 4.0 x $ 15.05 $ 14.12 $ 13.25 $ 12.43 $ 11.65 4.5 $ 16.96 $ 15.94 $ 14.98 $ 14.07 $ 13.21 5.0 $ 18.87 $ 17.75 $ 16.70 $ 15.71 $ 14.78 Multiple 5.5 $ 20.78 $ 19.57 $ 18.43 $ 17.36 $ 16.34 6.0 $ 22.68 $ 21.38 $ 20.16 $ 19.00 $ 17.91 6.5 $ 24.59 $ 23.20 $ 21.88 $ 20.64 $ 19.47 7.0 $ 26.50 $ 25.01 $ 23.61 $ 22.29 $ 21.04 Implied Total Value/Fiscal 1997 EBITDA Multiple: 4.0 x 4.6 x 4.4 x 4.1 x 3.9 x 3.7 x 4.5 5.2 x 5.9 4.6 4.4 4.1 5.0 5.7 5.4 5.1 4.8 4.6 Multiple 5.5 6.2 5.9 5.6 5.3 5.0 6.0 6.7 6.4 6.0 5.7 5.4 6.5 7.3 6.9 6.5 6.2 5.9 7.0 7.8 7.4 7.0 6.6 6.3
13 The Robinson-Humphrey Company, Inc. PROJECT GIRDER SELECTED M&A TRANSACTION PREMIUMS FOR MINORITY INTEREST ACQUISITIONS IN GOING PRIVATE TRANSACTIONS 1/1/92 - 6/18/97
VALUE OF PRICE TRANSACTION PERCENT PER DATE ACQUIROR TARGET TARGET BUSINESS DESCRIPTION ($MM) SOUGHT SHARE - -------- ------------- ------ --------------------------- ------- ------ ------- 06/25/92 Katy Holdings Katy Industries, INc. Mnfr industrial machinery 190.047 48.1% 25.75 07/29/92 Investor Group Fretter Inc Home appliances, electronics 102.182 24.0% 4.00 01/04/93 Investor Group United Medical Corp Whl medical supplies 19.473 48.0% 9.50 02/19/93 National Mutual Insurance Co. Celina Financial Corp Insurance Agents 7.482 44.4% 5.80 08/12/93 REMEC Inc Humphrey Inc Mnfr precision instruments 10.302 48.5% 6.00 04/28/94 Investor Group Enquirer/Star Group Inc Publish tabloid newspapers 1067.888 43.0% 17.50 09/13/94 Investor Group LDB Corp Mnfr mobile homes; whl carpets 17.766 31.0% 7.50 11/15/94 Freeman Spogli & Co Koll Management Services(Koll) Real estate management svcs 109.062 48.0% 33.20 03/15/95 LinPac Mouldings Ltd Ropak Corp Manufacture plastic containers 79.638 45.2% 11.00 05/19/95 BIC SA Bic Corp (BIC SA) Mnfr writing instruments 906.058 22.0% 40.50 08/25/95 Berkshire Hathaway Inc. GEICO Corp. Insurance and financial svcs 5441.824 47.6% 70.00 08/30/95 Investor Group Syms Corp Own, op men's clothing store 160.687 22.0% 8.75 09/26/95 SCOR SCOR US Corp (SCOR SA) Reinsurance holding company 386.745 20.0% 15.25 11/06/95 Investor Group NPC International Inc Own and operate restaurants 298.189 38.0% 9.00 03/29/96 Equity Holdings Ltd Great American Mgmt & Invt Inc Invt advice and financial svcs 746.409 12.1% 50.00 05/27/96 Novartis AG SyStemix Inc (Sandoz AG) Mnfr, dvlp cellular processes 401.596 26.3% 19.50 06/21/96 Seaboard Acquisition Partners Seaboard Oil Co Oil and gas exploration, prodn 10.769 29.0% 9.75 10/03/96 Electromagnetic Sciences LXE Radio control devices 13.500 28.0% 13.13 10/10/96 Renco Group Inc WCI Steel Inc(Renco Group Inc) Manufacture steel 437.182 15.5% 10.00 11/20/96 Andrews Group Inc Toy Biz Inc Mnfr games and toys 452.237 33.0% 22.50 11/27/96 JW Childs Equity Partners LP Central Tractor Farm & Country Own, op tractor, hardware stores 169.606 34.6% 14.25 01/21/97 Mafco Holdings Inc Mafco Consolidated Grp(Mafco) Mnfr cosmetics, beauty products 980.318 15.0% 33.50 Pending Gold Kist Golden Poultry Company Poultry Processing 230.600 25.5% 14.25 AVERAGE 32.6% MEDIAN 31.0%
PREMIUM PREMIUM 1 DAY 1 WEEK PRIOR TO PRIOR TO ANNOUNCEMENT ANNOUNCEMENT DATE ACQUIROR TARGET TARGET BUSINESS DESCRIPTION DATE DATE - -------- ------------- ------ --------------------------- ------------ ----------- 06/25/92 Katy Holdings Katy Industries, INc. Mnfr industrial machinery 53.7% 51.5% 07/29/92 Investor Group Fretter Inc Home appliances, electronics 77.8 100.0 01/04/93 Investor Group United Medical Corp Whl medical supplies 49.0 52.0 02/19/93 National Mutual Insurance Co. Celina Financial Corp Insurance Agents 16.0 36.5 08/12/93 REMEC Inc Humphrey Inc Mnfr precision instruments 18.5 14.3 04/28/94 Investor Group Enquirer/Star Group Inc Publish tabloid newspapers 20.7 20.7 09/13/94 Investor Group LDB Corp Mnfr mobile homes; whl carpets 42.9 42.9 11/15/94 Freeman Spogli & Co Koll Management Services(Koll) Real estate management svcs 107.5 107.5 03/15/95 LinPac Mouldings Ltd Ropak Corp Manufacture plastic containers 4.8 6.0 05/19/95 BIC SA Bic Corp (BIC SA) Mnfr writing instruments 13.3 12.5 08/25/95 Berkshire Hathaway Inc. GEICO Corp. Insurance and financial svcs 25.6 23.1 08/30/95 Investor Group Syms Corp Own, op men's clothing store 11.1 9.4 09/26/95 SCOR SCOR US Corp (SCOR SA) Reinsurance holding company 37.1 35.6 11/06/95 Investor Group NPC International Inc Own and operate restaurants 44.0 44.0 03/29/96 Equity Holdings Ltd Great American Mgmt & Invt Inc Invt advice and financial svcs 2.6 4.2 05/27/96 Novartis AG SyStemix Inc (Sandoz AG) Mnfr, dvlp cellular processes 4.7 69.6 06/21/96 Seaboard Acquisition Partners Seaboard Oil Co Oil and gas exploration, prodn 11.4 11.4 10/03/96 Electromagnetic Sciences LXE Radio control devices 22.1 14.1 10/10/96 Renco Group Inc WCI Steel Inc(Renco Group Inc) Manufacture steel 17.6 29.0 11/20/96 Andrews Group Inc Toy Biz Inc Mnfr games and toys 29.5 25.9 11/27/96 JW Childs Equity Partners LP Central Tractor Farm & Country Own, op tractor, hardware stores 17.5 17.5 01/21/97 Mafco Holdings Inc Mafco Consolidated Grp(Mafco) Mnfr cosmetics, beauty products 23.5 23.5 Pending Gold Kist Golden Poultry Company Poultry Processing 28.1 31.0 AVERAGE 29.5 34.0 MEDIAN 22.1 25.9
PREMIUM 4 WEEKS PRIOR TO ANNOUNCEMENT DATE ACQUIROR TARGET TARGET BUSINESS DESCRIPTION DATE - -------- ------------- ------ --------------------------- ------------ 06/25/92 Katy Holdings Katy Industries, INc. Mnfr industrial machinery 46.1% 07/29/92 Investor Group Fretter Inc Home appliances, electronics 52.4 01/04/93 Investor Group United Medical Corp Whl medical supplies 49.0 02/19/93 National Mutual Insurance Co. Celina Financial Corp Insurance Agents 36.5 08/12/93 REMEC Inc Humphrey Inc Mnfr precision instruments 45.5 04/28/94 Investor Group Enquirer/Star Group Inc Publish tabloid newspapers 7.7 09/13/94 Investor Group LDB Corp Mnfr mobile homes; whl carpets 42.9 11/15/94 Freeman Spogli & Co Koll Management Services(Koll) Real estate management svcs 114.2 03/15/95 LinPac Mouldings Ltd Ropak Corp Manufacture plastic containers 4.8 05/19/95 BIC SA Bic Corp (BIC SA) Mnfr writing instruments 28.6 08/25/95 Berkshire Hathaway Inc. GEICO Corp. Insurance and financial svcs 25.3 08/30/95 Investor Group Syms Corp Own, op men's clothing store 25.0 09/26/95 SCOR SCOR US Corp (SCOR SA) Reinsurance holding company 38.6 11/06/95 Investor Group NPC International Inc Own and operate restaurants 33.3 03/29/96 Equity Holdings Ltd Great American Mgmt & Invt Inc Invt advice and financial svcs 3.6 05/27/96 Novartis AG SyStemix Inc (Sandoz AG) Mnfr, dvlp cellular processes 59.2 06/21/96 Seaboard Acquisition Partners Seaboard Oil Co Oil and gas exploration, prodn 39.3 10/03/96 Electromagnetic Sciences LXE Radio control devices 19.3 10/10/96 Renco Group Inc WCI Steel Inc(Renco Group Inc) Manufacture steel 77.8 11/20/96 Andrews Group Inc Toy Biz Inc Mnfr games and toys 20.0 11/27/96 JW Childs Equity Partners LP Central Tractor Farm & Country Own, op tractor, hardware stores 18.8 01/21/97 Mafco Holdings Inc Mafco Consolidated Grp(Mafco) Mnfr cosmetics, beauty products 27.6 Pending Gold Kist Golden Poultry Company Poultry Processing 29.5 AVERAGE 36.7% MEDIAN 33.3%
Source: Securities Data Company, Inc. 14 The Robinson-Humphrey Company, Inc. PROJECT GIRDER IMPLIED VALUATION ANALYSIS UTILIZING SELECTED PREMIUMS FROM MINORITY INTEREST/GOING PRIVATE TRANSACTIONS (DOLLARS IN THOUSANDS)
AVERAGE PREMIUM ----------------------------------------------------- GIRDER IMPORTANCE 1 DAY PRIOR 1 WEEK PRIOR 4 WEEKS PRIOR VALUATION PARAMETER [1] VALUE WEIGHTING TO ANNOUNCEMENT TO ANNOUNCEMENT TO ANNOUNCEMENT - --------------------------------------------- ---------- -------------- --------------- -------------- --------------- Stock Price 1 Day Prior to Announcement $12.88 35.0% 29.5 % Stock Price 1 Week Prior to Announcement 12.38 35.0% 34.0% Stock Price 4 Weeks Prior to Announcement 11.63 30.0% 36.7% Implied Equity Implied Value Equity Per VALUATION PARAMETER [1] Value Share [1] - --------------------------------------------- ----------- ------------ Stock Price 1 Day Prior to Announcement $473,656 $16.68 Stock Price 1 Week Prior to Announcement 471,040 16.58 Stock Price 4 Weeks Prior to Announcement 451,510 15.90 Weighted Average: $466,097 $16.41 Unweighted Average: $465,402 $16.39 =============================================================
- --------------------------- * Excluded from the unweighted average. [1] Announcement of merger discussions occurred on 5/22/97. 15 The Robinson-Humphrey Company, Inc. PROJECT GIRDER ADJUSTED BOOK VALUE ANALYSIS - ------------------------------------------------------------------------------- INPUTS 5/31/97 Tangible Book Value [1] $267,779 5/31/97 Shares 28,404 5/31/97 Accumulated $308,539 Depreciation ============================================================================================================
Percent of Accumulated Depreciation Added Back ----------------------------------------------------------------------------- 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% ============================================================================= Tangible Book Value [1] $267,779 $267,779 $267,779 $267,779 $267,779 $267,779 Depreciation Add-Back 231,269 246,687 262,105 277,523 292,941 308,359 ----------------------------------------------------------------------------- Adjusted Book Value $499,048 $514,466 $529,884 $545,302 $560,720 $576,138 ============================================================================= Adjusted B.V. per Share $ 17.57 $ 18.11 $ 18.66 $ 19.20 $ 19.74 $ 20.28 =============================================================================
- -------------------------------------- [1] Excludes goodwill, commissioning costs and other assets of $58.5 million. 16 The Robinson-Humphrey Company, Inc. PROJECT GIRDER VALUATION ANALYSIS USING ANNUAL TONS CAPACITY - ------------------------------------------------------------------------------- (Dollars in Millions)
NEW STEEL PLANT CONSTRUCTIONS - ----------------------------- Tons/Yr. $/ $MM 000s Ton ------- ----------- -------- Steel Dynamics-Butler, Indianan $290.0 1,400 $207.14 IPSCO-Muscatine, Iowa $360.0 1,300 $276.92 Nucor Berkeley $525.0 1,800 $291.67 Gallatin Steel $410.0 1,200 $341.67 CHAPARRAL-STRUCTURAL MILL EAST $390.0 1,000 $390.00 -------- AVERAGE $301.48 =========================================
IMPLIED VALUATION USING AVERAGE $MM/TON
Girder Tons/Yr. $/ . Firm Net Equity Per 000s x Ton = Value - Debt = Value or Share 1,605 $301.48 $483,831 $50,708 $433,123 $15.25 =========================================================================================================
17 The Robinson-Humphrey Company, Inc. PROJECT GIRDER DILUTION ANALYSIS BASED ON LTM FINANCIALS - -------------------------------------------------------------------------- (Dollars in Millions)
ASSUMPTIONS Purchase Price per Share $ 15.00 Girder Shares Not Already Owned By Star 4,404 Equity Purchase Price $ 66,056 Pro Rata Book Value $ 50,583 Asset Write-Up Adjustment 0.0% Adjusted Pro Rata Book Value $ 50,583 Goodwill Created $ 15,472 ========================================================================== Star LTM Net Income $ 73,280 ========================================================================== Star LTM Pretax Income $120,885 Plus: Eliminate LTM Girder Minority Int. 7,831 Public Company Expense Savings 500 -------- 8,331 Less: Incremental Interest Expense on Borrowed Funds @ 7.5% 4,954 -------- Pro Forma Pretax Income Before Goodwill Amortization 124,262 Tax Effect @ 39.4% (LTM Effective Tax Rate) 48,935 -------- Pro Forma Net Income Before Goodwill Amortization 75,327 Non-Deductible Goodwill Amortization (15 Years) 1,031 -------- Pro Forma Net Income $ 74,296 ======== ACCRETION/DILUTION 1.4% ==================================================
SENSITIVITY TABLE - -----------------
PURCHASE PRICE ---------------------------------------------- $15.00 $16.00 $17.00 $18.00 $19.00 ------------------------------------------------------ 0.0% 1.4% 0.7% 0.0% (0.6%) (1.3%) ASSET 20.0% 2.3% 1.6% 1.0% 0.3% (0.4%) WRITE-UP 40.0% 3.2% 2.6% 1.9% 1.2% 0.5% ADJUSTMENT 60.0% 4.1% 3.5% 2.8% 2.1% 1.5% 80.0% 5.1% 4.4% 3.7% 3.0% 2.4% 100.0% 6.0% 5.3% 4.6% 4.0% 3.3% ------------------------------------------------------
18 PROJECT GIRDER Analysis of Projected Earnings - --------------------------------------------------------------------------------
Present Equity Projected Assumed 2003 Value Value Probability 2003 P/E Equity Discounted per Weighting Earnings Multiple Value @ 20% Share ----------- ---------- ---------- ------------ ----------- -------- Case 1 25.0% $134,441 11.0 X $1,478,851 $495,264 $17.44 Case 2 25.0% 93,355 11.0 1,026,905 343,908 12.11 Case 3 25.0% 171,056 11.0 1,881,616 630,149 22.19 Case 4 25.0% 58,782 11.0 646,602 216,546 7.62 ------- ------ WEIGHTED AVERAGE $421,467 $14.84 =========================================================
19 The Robinson-Humphrey Company, Inc. PROJECT GIRDER RETURN ANALYSIS BASED ON INITIAL PURCHASE AT IPO - ------------------------------------------------------------------------------- (Dollars in Thousands) IPO Price 7/88 $15.00 =============================
Annual Compounded Rate of Return ---------------------------------------------------- 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% ---------------------------------------------------- Implied 7/97 Price $16.41 $17.03 $19.57 $21.35 $23.27 $25.34 ----------------------------------------------------
EX-99.(B)(3) 3 PRESENTATION MATERIALS - 7/25/97 1 EXHIBIT (b)(3) INVESTMENT BANKING PRESENTATION TO THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF CHAPARRAL STEEL COMPANY JULY 29, 1997 THE ROBINSON-HUMPHREY COMPANY, INC. INVESTMENT BANKERS SINCE 1894 2 TABLE OF CONTENTS - ------------------------------------------------------------------------------- I. MARKET COMPARISON OF SELECTED PUBLIC COMPANIES AND IMPLIED VALUATION ANALYSIS II. DISCOUNTED CASH FLOW MODEL III. ANALYSIS OF PREMIUMS FOR MINORITY INTEREST ACQUISITIONS IN GOING PRIVATE TRANSACTIONS IV. ADJUSTED BOOK VALUE ANALYSIS V. VALUATION BASED ON ANNUAL TONS CAPACITY VI. ANALYSIS OF PROJECTED EARNINGS 3 The Robinson-Humphrey Company, Inc. PROJECT GIRDER MARKET COMPARISON OF SELECTED PUBLIC COMPANIES
Earnings Per Share [1] ----------------------- 52 Week Market Prices as Latest ------------- Price % of Cal. Cal. Ticker Exchange Company FYE Filing High Low 7/25/97 High LTM 1997 1998 - ------ -------- ------- --- ------ ---- --- ------- --------- --- ---- ---- MINIMILL STEEL COMPANIES - ------------------------ BIR NYSE Birmingham Steel Corp. JE 3/97 $22.00 $14.12 $17.94 81.5% $0.59 $0.76 $1.52 CMC NYSE Commercial Metals Co. AU 5/97 33.50 27.12 31.63 94.4% 2.56 2.50 2.81 IPS NYSE IPSCO Inc. (in US$) DC 12/96 43.06 21.12 39.88 92.6% 3.01 3.06 4.23 KESI OTC Kentucky Electric Steel SP 3/97 7.87 4.12 5.50 69.9% (0.73) 0.00 0.65 LUC NYSE Lukens Inc. DC 3/97 22.37 13.50 18.31 81.9% (0.78) 0.18 1.39 NSS NYSE NS Group, Inc. SP 3/97 20.62 2.87 20.50 99.4% (0.24) 1.17 1.55 NWSW OTC Northwestern Steel & Wire JL 4/97 7.12 2.06 2.06 29.0% (0.14) (0.12) (0.01) NUE OTC Nucor Corporation DC 3/97 60.68 44.75 58.81 96.9% 3.17 3.43 3.89 OS NYSE Oregon Steel Mills, Inc. DC 3/97 24.31 13.37 23.44 94.4% 1.08 1.09 1.66 NX NYSE Quanex Corporation OC 4/97 34.12 19.50 31.63 92.7% 2.27 2.43 3.12 F RESC OTC Roanoke Electric Steel OC 4/97 19.00 11.75 19.00 100.0% 1.87 2.09 2.25 F SCHN OTC Schnitzer Steel Industries AU 5/97 31.50 22.00 30.88 98.0% 1.57 2.12 2.65 SWVA OTC Steel Co. of West Virginia DC 3/97 10.87 5.25 10.50 96.6% 0.62 0.95 1.16 STLD OTC Steel Dynamics Inc. DC 3/97 28.75 16.50 25.63 89.1% 0.87 1.00 1.59 -------------------------------------------------------------------------------------------------------------------------- AVERAGE 87.0% -------------------------------------------------------------------------------------------------------------------------- GIRDER MY 5/97 $15.37 $11.00 $15.25 99.2% $1.41 $1.55 $1.47 Price/Earnings Ratio ------------------------- CAL. CAL. SHARES MARKET BOOK MARKET/ Ticker Exchange Company LTM 1997 1998 OUTSTANDING CAP'N VALUE BOOK - ------ ------- ------- --- ---- ---- ----------- ------ ----- ------- (MM) ($MM) ($MM) MINIMILL STEEL COMPANIES - ------------------------ BIR NYSE Birmingham 30.4 * 23.6 * 11.8 X 29.678 $532.3 $ 472.9 1.1 X CMC NYSE Commercial Metals Co. 12.4 12.7 11.3 14.682 464.3 342.1 1.4 IPS NYSE IPSCO Inc. (in US$) 13.2 13.0 9.4 27.104 1,080.8 585.5 1.8 KESI OTC Kentucky Electric Steel NM NM 8.5 4.623 25.4 33.7 0.8 LUC NYSE Lukens Inc. NM 101.7 * 13.2 14.940 273.6 238.5 1.1 NSS NYSE NS Group, Inc. NM 17.5 13.2 13.866 284.3 59.1 4.8 * NWSW OTC Northwestern Steel & Wire NM NM NM 24.517 50.6 96.8 0.5 NUE OTC Nucor Corporation 18.6 17.1 15.1 * 87.852 5,166.8 1,666.9 3.1 * OS NYSE Oregon Steel Mills, Inc. 21.7 * 21.5* 14.1 25.693 602.2 356.2 1.7 NX NYSE Quanex Corporation 13.9 13.0 10.1 13.729 434.2 244.8 1.8 RESC OTC Roanoke Electric Steel 10.2 9.1 8.4 7.501 142.5 98.0 1.5 SCHN OTC Schnitzer Steel Industries 19.7 14.6 11.7 10.183 314.4 232.5 1.4 SWVA OTC Steel Co. of West Virginia 16.9 11.1 9.1 5.991 62.9 50.6 1.2 STLD OTC Steel Dynamics Inc. 29.5 * 25.6 * 16.1 47.853 1,226.2 279.3 4.4 * ----------------------------------------------------------------------------------------------------------------- AVERAGE 15.0 x 13.5 x 11.0 x 1.3 x ================================================================================================================= GIRDER 10.8 x 9.8 x 10.4 x 28.404 $433.2 $ 326.3 1.3 x
- ------------------------------------------------ * Excluded from average. F - Fiscal Year Estimate. NA - Not Available NM - Not Meaningful [1] Estimates are from the First Call Research Network dated 7/25/97. 4 The Robinson-Humphrey Company, Inc. PROJECT GIRDER MARKET COMPARISON OF SELECTED PUBLIC COMPANIES
TOTAL TOTAL TOTAL ------------------------------ EBIT EBITDA COMPANY DEBT CASH FIRM VALUE [1] REVENUES EBIT EBITDA MARGIN MARGIN - ------- ----- ----- -------------- --------- ---- ------ ------ ------ ($MM) ($MM) ($MM) ($MM) ($MM) ($MM) MINIMILL STEEL COMPANIES - ------------------------ Birmingham Stell Corp. $518.5 $1.8 $1,049.0 $ 932.2 $ 49.6 [2] $ 93.0 [2] 5.3% 10.0% Commercial Metals Co. 207.0 14.4 656.9 2,221.2 76.9 119.8 3.5% 5.4% IPSCO Inc. (in US$) 285.3 167.8 1,198.4 595.6 91.6 105.9 15.4% 17.8% Kentucky Electric Steel 30.2 0.1 55.5 96.5 (6.7) (3.4) (6.9%) (3.5%) Lukens Inc. 262.7 9.1 527.2 954.3 5.1 54.6 0.5% 5.7% NS Group, Inc. 166.2 19.8 430.7 431.6 23.4 42.0 5.4% 9.7% Northwestern Steel & Wire 199.2 3.9 245.9 638.4 13.4 39.7 2.1% 6.2% Nucor Corporation 188.2 168.4 5,186.6 3,781.4 409.2 602.3 10.8% 15.9% Oregon Steel Mills, Inc. 347.6 7.8 942.0 672.0 49.8 78.9 7.4% 11.7% Quanex Corporation 214.6 34.8 613.9 982.2 73.9 115.1 7.5% 11.7% Roanoke Electric Steel 34.9 12.2 165.2 249.4 24.2 33.3 9.7% 13.4% Schnitzer Steel Industries 105.4 4.0 415.8 346.7 26.3 42.8 7.6% 12.4% Steel Co. of West Virginia 17.5 0.0 80.4 93.1 5.9 12.8 6.4% 13.8% Steel Dynamics Inc. 206.4 48.2 1,384.5 318.4 42.7 64.2 13.4% 20.2% AVERAGE 6.3% 10.7% ======================================================================================================= GIRDER $65.0 $14.3 $483.9 $616.7 $69.8 $103.0 11.3% 16.7% 3 YEAR CAGR ------------------- FIRM VALUE TO: NET ------------------------------------ REVENUES EBIT EBITDA REVENUE INCOME -------- ---- ------ -------- ------ MINIMILL STEEL COMPANIES - ------------------------ Birmingham Steel Corp. 1.13 x 21.1 * 1.13 x 8.8% NM Commercial Metals Co. 0.30 8.5 5.5 18.1% 32.6% [PSCO Inc. (in US$) 2.01 13.1 11.3 (2.6%) 20.1% Kentucky Electric Steel 0.58 NM NM (2.1%) NM Lukens Inc. 0.55 103.9 * 9.7 1.2% NM NS Group, Inc. 1.00 18.4 10.3 16.2% NM Northwestern Steel & Wire 0.39 18.3 6.2 4.7% 43.7% Nucor Corporation 1.37 12.7 8.6 10.7% 4.6% Oregon Steel Mills, Inc. 1.40 18.9 11.9 (4.0%) NM Quanex Corporation 0.63 8.3 5.3 13.2% 32.1% Roanoke Electric Steel 0.66 6.8 5.0 6.8% 14.0% Schnitzer Steel Industries 1.20 15.8 9.7 13.9% 39.3% Steel Co. of West Virginia 0.86 13.5 6.3 (12.4%) NM Steel Dynamics Inc. 4.35 * 32.4 * 21.5 * NM NM AVERAGE 0.93 x 13.4 x 8.4 x 5.6% 26.6% ===================================================================== GIRDER 0.78 x 6.9 x 4.7 x 7.7% 43.2%
- -------------------------------------- * Excluded from average. NA - Not Available NM - Not Meaningful [1] Firm value equals market capitalization plus total debt and preferred stock minus cash and marketable securities. [2] Excludes $ 11.6 million loss provision on mill modernization. 5 The Robinson-Humphrey Company, Inc. PROJECT GIRDER IMPLIED VALUATION ANALYSIS UTILIZING SELECTED PUBLIC COMPANIES UNIVERSE ----------------------------------------------------------------------- (Dollars in Thousands)
Average Minimill Steel Companies Multiples --------------------------------------------------------------------------- Valuation CSM Price/ Price/ Price/ Price/ Parameter Value LTM Earnings Cal. 1997 Earnings Cal. 1998 Earnings Book - --------- ----- ------------- ------------------ ------------------ ---- LTM Earnings $ 40.2 15.0 x Fiscal 1998 Earnings $ 61.8 13.5 x Fiscal 1999 Earnings $ 65.2 11.0 x Book Value at May 31, 1997 $326.3 1.3 x AVERAGE MINIMILL STEEL COMPANIES MULTIPLES -------------------------------------------------------- IMPLIED VALUATION CSM FIRM VALUE/ FIRM VALUE/ FIRM VALUE/ FIRM TOTAL DEBT PARAMETER VALUE LTM REVENUES LTM EBITDA LTM EBIT VALUE LESS CASH [1] - --------- ----- ------------- ------------------ --------------- ----- ------------- LTM Revenues $616.7 0.93 x $572.4 $50.7 LTM EBITDA $103.0 8.4 x $866.7 $50.7 LTM EBIT $ 69.8 13.4 x $938.8 $50.7 IMPLIED IMPLIED EQUITY EQUITY VALUE VALUE PER SHARE ----- -------- LTM Earnings $601.8 $21.19 Fiscal 1998 Earnings $834.9 $29.39 Fiscal 1999 Earnings $715.9 $25.20 Book Value at May 31, 1997 $423.1 $14.90 LTM Revenues $521.7 $18.37 LTM EBITDA $816.0 $28.73 LTM EBIT $888.1 $31.27 Average $685.9 $24.15 Median $715.9 $25.20
- --------------------------------------- * Excluded from average and median. [1] Cash and debt as May 31, 1997. 6 GIRDER Price and Volume Daily: 12/31/93 to 07/25/97 [Graph] Ticker Symbol: Girder Cusip Number: 15942210 7 GIRDER Volume Distribution by Price Range Daily: 12/31/93 to 07/25/97 [Graph] Ticker Symbol: Girder Cusip Number: 15942210 8 The Robinson-Humphrey Company, Inc. PROJECT GIRDER PROJECTED EBITDA MARGIN ASSUMPTIONS - -------------------------------------------------------------------------------
PROJECTED FISCAL YEAR ENDING MAY 31, --------------------------------------------------- 1998 1999 2000 2001 2002 2003 ---- ---- ---- ---- ---- ---- CASE 1 19.3% 20.0% 19.1% 21.5% 23.2% 25.0% CASE 2 16.9% 17.8% 17.3% 19.2% 21.0% 23.0% CASE 3 19.3% 20.0% 20.2% 22.4% 24.9% 28.0% CASE 4 12.9% 13.8% 13.0% 14.9% 16.9% 18.9% CASE 5 16.5% 17.9% 17.5% 19.6% 22.0% 24.1% CASE 6 16.5% 17.9% 12.4% 14.7% 17.1% 19.3% ======================================================================================== HISTORICAL 10 YEAR AVG. 15.8% 15.8% 15.8% 15.8% 15.8% 15.8%
9 The Robinson-Humphrey Company, Inc. PROJECT GIRDER PROJECTED CASH FLOWS FORECAST FOR FISCAL YEARS 1998 - 2003 - --------------------------------------------------------------------------------
PROJECTED YEARS ENDING MAY 31, HISTORICAL ------------------------------------- PROJECTIONS USED IN VALUATION (DOLLARS IN THOUSANDS): 1997 1998 1999 2000 --------- --------- --------- --------- Sales $ 616,676 $ 705,569 $ 704,917 $ 957,727 Percent Change 14.4% -0.1% 35.9% Cost of Sales 484,367 518,309 508,958 709,129 --------- --------- --------- --------- Gross Profit 132,309 187,259 195,959 248,597 Gross Margin 21.5% 26.5% 27.8% 26.0% Operating Expenses 62,350 82,183 87,240 117,311 Operating Income 69,959 105,076 108,719 131,286 Operating Margin 11.3% 14.9% 15.4% 13.7% Income Taxes 31,072 44,975 46,505 55,983 --------- --------- --------- --------- Effective Tax Rate 44.4% 42.8% 42.8% 42.6% After-Tax Operating Income $ 38,887 $ 60,101 $ 62,214 $ 75,303 After-Tax Operating Margin 6.3% 8.5% 8.8% 7.9% CASH SOURCES: After-Tax Operating Income $ 38,887 $ 60,101 $ 62,214 $ 75,303 Depreciation & Amortization 33,153 31,082 32,098 51,292 Deferred Income Taxes & Other Credits (1,467) (1,592) 6,042 25,292 --------- --------- --------- --------- TOTAL SOURCES $ 70,573 $ 89,591 $ 100,354 $ 151,887 ========= ========= ========= ========= CASH USES: Capital Expenditures $ 33,776 $ 95,000 $ 277,000 $ 127,492 Increase/(Decrease) in Net Working Capital 23,894 (3,344) (696) 36,715 --------- --------- --------- --------- TOTAL USES $ 57,670 $ 91,656 $ 276,304 $ 164,207 ========= ========= ========= ========= FREE CASH FLOW $ 12,903 $ (2,065) $(175,950) $ (12,320) =================================================== PROJECTED YEARS ENDING MAY 31, -------------------------------------- PROJECTIONS USED IN VALUATION (DOLLARS IN THOUSANDS): 2001 2002 2003 ---------- ---------- ---------- Sales $1,081,029 $1,155,406 $1,224,321 Percent Change 12.9% 6.9% 6.0% Cost of Sales 784,322 813,939 839,330 ---------- ---------- ---------- Gross Profit 296,706 341,467 384,991 Gross Margin 27.4% 29.6% 31.4% Operating Expenses 123,120 124,245 123,958 Operating Income 173,586 217,222 261,033 Operating Margin 16.1% 18.8% 21.3% Income Taxes 73,749 92,076 110,477 ---------- ---------- ---------- Effective Tax Rate 42.5% 42.4% 42.3% After-Tax Operating Income $ 99,837 $ 125,146 $ 150,556 After-Tax Operating Margin 9.2% 10.8% 12.3% CASH SOURCES: After-Tax Operating Income $ 99,837 $ 125,146 $ 150,556 Depreciation & Amortization 54,665 50,909 46,609 Deferred Income Taxes & Other Credits 22,269 28,270 17,936 ---------- ---------- ---------- TOTAL SOURCES $ 176,771 $ 204,325 $ 215,101 ========== ========== ========== CASH USES: Capital Expenditures $ 57,491 $ 40,000 $ 40,000 Increase/(Decrease) in Net Working Capital 14,983 5,982 6,020 ---------- ---------- ---------- TOTAL USES $ 72,474 $ 45,982 $ 46,020 ========== ========== ========== FREE CASH FLOW $ 104,297 $ 158,343 $ 169,081 ======================================
10 The Robinson-Humphrey Company, Inc. PROJECT GIRDER COST AND REVENUE ASSUMPTIONS FORECAST FOR FISCAL YEARS 1998 - 2003
1998 1999 2000 2001 2002 2003 --------- --------- --------- --------- --------- --------- TONS OF STEEL SOLD Bar Products 493,000 450,000 480,000 525,000 525,000 525,000 Structural Products 1,231,400 1,250,000 1,320,000 1,350,000 1,350,000 1,350,000 Castelite 10,945 15,000 20,000 20,000 20,000 20,000 Star 2000 34,107 40,000 40,000 40,000 40,000 40,000 Structural Mill - East 0 0 500,000 700,000 850,000 1,000,000 Star 2000 - East 0 0 12,000 16,000 20,000 24,000 --------- --------- --------- --------- --------- --------- Total 1,769,452 1,755,000 2,372,000 2,651,000 2,805,000 2,959,000 NET SELLING PRICE Bar Products 351.68 351.75 353.09 365.35 377.14 377.14 Structural Products 400.13 398.80 398.75 398.73 398.73 398.73 Castelite 850.00 850.00 850.00 850.00 850.00 850.00 Star 2000 884.49 884.49 884.49 884.49 884.49 884.49 Structural Mill - East 0.00 0.00 397.80 406.29 410.65 414.43 Star 2000 - East 0.00 0.00 884.49 884.49 884.49 884.49 COST OF SALES Bar Products 287.68 289.06 289.43 289.48 289.43 289.43 Structural Products 286.00 280.00 280.00 280.00 280.00 280.00 Castelite 806.00 715.00 715.00 715.00 715.00 715.00 Star 2000 453.90 453.90 453.90 453.90 453.90 453.90 Structural Mill - East 0.00 0.00 325.40 306.61 285.24 266.03 Star 2000 - East 0.00 0.00 453.90 453.90 453.90 453.90
11 PROJECT GIRDER WORKING CAPITAL ASSUMPTIONS FORECAST FOR FISCAL YEARS 1998 - 2003 (DOLLARS IN THOUSANDS) - -------------------------------------------------------------------------------
HISTORICAL PROJECTED YEARS ENDING MAY 31, -------------------- ----------------------------------- BALANCE SHEET DATA 1996 1997 1998 1999 2000 -------- --------- --------- -------- -------- Current Assets less Cash and Equivalents Accounts Receivable $ 49,530 $ 66,266 $ 69,845 $ 69,750 $ 94,737 Inventory 121,791 131,034 132,880 130,721 168,760 Prepaid Expenses 7,757 9,218 8,500 8,500 11,000 -------- --------- --------- -------- -------- 179,078 206,518 211,225 208,971 274,497 Current Liabilities less Current Debt Accounts Payable $ 34,131 $ 31,466 $ 37,419 $ 36,743 $ 56,100 Accrued Expenses 14,470 20,681 22,779 21,897 31,351 -------- --------- --------- -------- -------- 48,601 52,147 60,198 58,640 87,451 Working Capital Less Cash and Equivalents and Current Debt $130,477 $ 154,371 $ 151,027 $150,331 $187,046 CHANGE IN NEW WORKING CAPITAL $ 23,894 ($ 3,344) ($ 696) $ 36,715 Accounts Receivable as a % of Sales 10.7% 9.9% 9.9% 9.9% Days Receivable 39.2 36.1 36.1 36.1 Inventory as a % of Cost of Goods Sold 27.1% 25.6% 25.7% 23.8% Inventory Turns 3.7 3.9 3.9 4.2 Accounts Payable as a % of Cost of Goods Sold 6.5% 7.2% 7.2% 7.9% Days Payable 23.7 26.4 26.4 28.9 PROJECTED YEARS ENDING MAY 31, -------------------------------- BALANCE SHEET DATA 2001 2002 2003 -------- -------- -------- Current Assets less Cash and Equivalents Accounts Receivable $106,873 114,159 120,937 Inventory 183,300 189,007 193,874 Prepaid Expenses 11,000 11,000 11,000 -------- -------- -------- 301,173 314,166 325,811 Current Liabilities less Current Debt Accounts Payable $ 63,097 66,099 68,673 Accrued Expenses 36,047 40,056 43,107 -------- -------- -------- 99,144 106,155 111,780 Working Capital Less Cash and Equivalents and Current Debt $202,029 $208,011 $214,031 CHANGE IN NEW WORKING CAPITAL $ 14,983 $ 5,982 $ 6,020 Accounts Receivable as a % of Sales 9.9% 9.9% 9.9% Days Receivable 36.1 36.1 36.1 Inventory as a % of Cost of Goods Sold 23.4% 23.2% 23.1% Inventory Turns 4.3 4.3 4.3 Accounts Payable as a % of Cost of Goods Sold 8.0% 8.1% 8.2% Days Payable 29.4 29.6 29.9
12 The Robinson-Humphrey Company, Inc. PROJECT GIRDER EBITDA MULTIPLE METHODOLOGY FORECAST FOR FISCAL YEARS 1998 - 2003 (DOLLARS IN THOUSANDS)
SUMMARY: Discount Rate: 21.00% Multiple: 4.5 EBITDA Terminal Value: $307,642 Present Value of Cash Flows: $ 34,741 Present Value of Terminal Value: $441,109 -------- Total Value: $475,850 ======== Plus: Cash $ 14,291 Less: Debt $ 64,999 -------- Equity Value: $425,142 ======== EQUITY VALUE PER SHARE: $ 14.98
Discount Rate 19.00% 20.00% 21.00% 22.00% 23.00% Present Value of Cash Flows: $ 44,609 $ 39,520 $ 34,741 $ 30,254 $ 26,040 Present Value of Terminal Value: 3.0 x $325,001 $309,086 $294,073 $279,903 $266,524 3.5 $379,168 $360,600 $343,085 $326,554 $310,945 4.0 $433,335 $412,115 $392,097 $373,204 $355,365 Multiple 4.5 $487,502 $463,629 $441,109 $419,855 $399,786 5.0 $541,669 $515,143 $490,121 $466,505 $444,207 5.5 $595,836 $566,658 $539,133 $513,156 $488,627 6.0 $650,003 $618,172 $588,145 $559,806 $533,048 Total Value: 3.0 x $369,610 $348,606 $328,814 $310,157 $292,563 3.5 $423,777 $400,120 $377,826 $356,808 $336,984 4.0 $477,944 $451,634 $426,838 $403,458 $381,405 Multiple 4.5 $532,110 $503,149 $475,850 $450,109 $425,825 5.0 $586,277 $554,663 $524,862 $496,759 $470,246 5.5 $640,444 $606,177 $573,875 $543,410 $514,667 6.0 $694,611 $657,692 $622,887 $590,060 $559,087 Equity Value: 3.0 x $318,902 $297,898 $278,106 $259,449 $241,855 3.5 $373,069 $349,412 $327,118 $306,100 $286,276 4.0 $427,236 $400,926 $376,130 $352,750 $330,697 Multiple 4.5 $481,402 $452,441 $425,142 $399,401 $375,117 5.0 $535,569 $503,955 $474,154 $446,051 $419,538 5.5 $589,736 $555,469 $523,167 $492,702 $563,959 6.0 $643,903 $606,984 $572,179 $539,352 $508,379 Equity Value Per Share: 3.0 x $ 11.23 $ 10.49 $ 9.80 $ 9.14 $ 8.52 3.5 $ 13.14 $ 12.31 $ 11.52 $ 10.78 $ 10.09 4.0 $ 15.05 $ 14.12 $ 13.25 $ 12.43 $ 11.65 Multiple 4.5 $ 16.96 $ 15.94 $ 14.98 $ 14.07 $ 13.21 5.0 $ 18.87 $ 17.75 $ 16.70 $ 15.71 $ 14.78 5.5 $ 20.78 $ 19.57 $ 18.43 $ 17.36 $ 16.34 6.0 $ 22.68 $ 21.38 $ 20.16 $ 19.00 $ 17.91 Implied Total Value/Fiscal 1997 EBITDA Multiple: 3.0 x 3.6 x 3.4 x 3.2 x 3.0 x 2.8 x 3.5 4.1 x 3.9 3.7 3.5 3.3 4.0 4.6 4.4 4.1 3.9 3.7 Multiple 4.5 5.2 4.9 4.6 4.4 4.1 5.0 5.7 5.4 5.1 4.8 4.6 5.5 6.2 5.9 5.6 5.3 5.0 6.0 6.7 6.4 6.0 5.7 5.4
13 The Robinson-Humphrey Company, Inc. PROJECT GIRDER SELECTED M&A TRANSACTION PREMIUMS FOR MINORITY INTEREST ACQUISITIONS IN GOING PRIVATE TRANSACTIONS 1/1/92 - 7/25/97
VALUE OF PRICE TRANSACTION PERCENT PER DATE ACQUIROR TARGET TARGET BUSINESS DESCRIPTION ($MM) SOUGHT SHARE - -------- ------------- ------ --------------------------- ------- ------ ------- 06/25/92 Katy Holdings Katy Industries, Inc. Mnfr industrial machinery 190.047 48.1% 25.75 07/29/92 Investor Group Fretter Inc Home appliances, electronics 102.182 24.0% 4.00 01/04/93 Investor Group United Medical Corp Whl medical supplies 19.473 48.0% 9.50 02/19/93 National Mutual Insurance Co. Celina Financial Corp Insurance agents 7.482 44.4% 5.80 08/12/93 REMEC Inc Humphrey Inc Mnfr precision instruments 10.302 48.5% 6.00 04/28/94 Investor Group Enquirer/Star Group Inc Publish tabloid newspapers 1067.888 43.0% 17.50 09/13/94 Investor Group LDB Corp Mnfr mobile wholes; whl carpets 17.766 31.0% 7.50 11/15/94 Freeman Spogli & Co Koll Management Services(Koll) Real estate management svcs 109.062 48.0% 33.20 03/15/95 LinPac Mouldings Ltd Ropak Corp Manufacture plastic containers 79.638 45.2% 11.00 05/19/95 BIC SA Bic Corp (BIC SA) Mnfr writing instruments 906.058 22.0% 40.50 08/25/95 Berkshire Hathaway Inc. GEICO Corp. Insurance and financial svcs 5441.824 47.6% 70.00 08/30/95 Investor Group Syms Corp Own, op men's clothing store 160.687 22.0% 8.75 09/26/95 SCOR SCOR US Corp (SCOR SA) Reinsurance holding company 386.745 20.0% 15.25 11/06/95 Investor Group NPC International Inc Own and operate restaurants 298.189 38.0% 9.00 03/29/96 Equity Holdings Ltd Great American Mgmt & Invt Inc Invt advice and financial svcs 746.409 12.1% 50.00 05/27/96 Novartis AG SyStemix Inc (Sandoz AG) Mnfr, dvlp cellular processes 401.596 26.3% 19.50 06/21/96 Seaboard Acquisition Partners Seaboard Oil Co Oil and gas exploration, prodn 10.769 29.0% 9.75 10/03/96 Electromagnetic Sciences LXE Radio control devices 13.500 28.0% 13.13 10/10/96 Renco Group Inc WCI Steel Inc(Renco Group Inc) Manufacture steel 437.182 15.5% 10.00 11/20/96 Andrews Group Inc Toy Biz Inc Mnfr games and toys 452.237 33.0% 22.50 11/27/96 JW Childs Equity Partners LP Central Tractor Farm & Country Own, op tractor, hardware stores 169.606 34.6% 14.25 01/21/97 Mafco Holdings Inc Mafco Consolidated Grp(Mafco) Mnfr cosmetics, beauty products 980.318 15.0% 33.50 Pending Gold Kist Golden Poultry Company Poultry Processing 230.600 25.5% 14.25 AVERAGE 32.6% MEDIAN 31.0% PREMIUM PREMIUM 1 DAY 1 WEEK PRIOR TO PRIOR TO ANNOUNCEMENT ANNOUNCEMENT DATE ACQUIROR TARGET TARGET BUSINESS DESCRIPTION DATE DATE - -------- ------------- ------ --------------------------- ------------ ----------- 06/25/92 Katy Holdings Katy Industries, Inc. Mnfr industrial machinery 53.7% 51.5% 07/29/92 Investor Group Fretter Inc Home appliances, electronics 77.8 100.0 01/04/93 Investor Group United Medical Corp Whl medical supplies 49.0 52.0 02/19/93 National Mutual Insurance Co. Celina Financial Corp Insurance agents 16.0 36.5 08/12/93 REMEC Inc Humphrey Inc Mnfr precision instruments 18.5 14.3 04/28/94 Investor Group Enquirer/Star Group Inc Publish tabloid newspapers 20.7 20.7 09/13/94 Investor Group LDB Corp Mnfr mobile wholes; whl carpets 42.9 42.9 11/15/94 Freeman Spogli & Co Koll Management Services(Koll) Real estate management svcs 107.5 107.5 03/15/95 LinPac Mouldings Ltd Ropak Corp Manufacture plastic containers 4.8 6.0 05/19/95 BIC SA Bic Corp (BIC SA) Mnfr writing instruments 13.3 12.5 08/25/95 Berkshire Hathaway Inc. GEICO Corp. Insurance and financial svcs 25.6 23.1 08/30/95 Investor Group Syms Corp Own, op men's clothing store 11.1 9.4 09/26/95 SCOR SCOR US Corp (SCOR SA) Reinsurance holding company 37.1 35.6 11/06/95 Investor Group NPC International Inc Own and operate restaurants 44.0 44.0 03/29/96 Equity Holdings Ltd Great American Mgmt & Invt Inc Invt advice and financial svcs 2.6 4.2 05/27/96 Novartis AG SyStemix Inc (Sandoz AG) Mnfr, dvlp cellular processes 4.7 69.6 06/21/96 Seaboard Acquisition Partners Seaboard Oil Co Oil and gas exploration, prodn 11.4 11.4 10/03/96 Electromagnetic Sciences LXE Radio control devices 22.1 14.1 10/10/96 Renco Group Inc WCI Steel Inc(Renco Group Inc) Manufacture steel 17.6 29.0 11/20/96 Andrews Group Inc Toy Biz Inc Mnfr games and toys 29.5 25.9 11/27/96 JW Childs Equity Partners LP Central Tractor Farm & Country Own, op tractor, hardware stores 17.5 17.5 01/21/97 Mafco Holdings Inc Mafco Consolidated Grp(Mafco) Mnfr cosmetics, beauty products 23.5 23.5 Pending Gold Kist Golden Poultry Company Poultry Processing 28.1 31.0 AVERAGE 29.5 34.0 MEDIAN 22.1 25.9 PREMIUM 4 WEEKS PRIOR TO ANNOUNCEMENT DATE ACQUIROR TARGET TARGET BUSINESS DESCRIPTION DATE - -------- ------------- ------ --------------------------- ------------ 06/25/92 Katy Holdings Katy Industries, Inc. Mnfr industrial machinery 46.1% 07/29/92 Investor Group Fretter Inc Home appliances, electronics 52.4 01/04/93 Investor Group United Medical Corp Whl medical supplies 49.0 02/19/93 National Mutual Insurance Co. Celina Financial Corp Insurance agents 36.5 08/12/93 REMEC Inc Humphrey Inc Mnfr precision instruments 45.5 04/28/94 Investor Group Enquirer/Star Group Inc Publish tabloid newspapers 7.7 09/13/94 Investor Group LDB Corp Mnfr mobile wholes; whl carpets 42.9 11/15/94 Freeman Spogli & Co Koll Management Services(Koll) Real estate management svcs 114.2 03/15/95 LinPac Mouldings Ltd Ropak Corp Manufacture plastic containers 4.8 05/19/95 BIC SA Bic Corp (BIC SA) Mnfr writing instruments 28.6 08/25/95 Berkshire Hathaway Inc. GEICO Corp. Insurance and financial svcs 25.3 08/30/95 Investor Group Syms Corp Own, op men's clothing store 25.0 09/26/95 SCOR SCOR US Corp (SCOR SA) Reinsurance holding company 38.6 11/06/95 Investor Group NPC International Inc Own and operate restaurants 33.3 03/29/96 Equity Holdings Ltd Great American Mgmt & Invt Inc Invt advice and financial svcs 3.6 05/27/96 Novartis AG SyStemix Inc (Sandoz AG) Mnfr, dvlp cellular processes 59.2 06/21/96 Seaboard Acquisition Partners Seaboard Oil Co Oil and gas exploration, prodn 39.3 10/03/96 Electromagnetic Sciences LXE Radio control devices 19.3 10/10/96 Renco Group Inc WCI Steel Inc(Renco Group Inc) Manufacture steel 77.8 11/20/96 Andrews Group Inc Toy Biz Inc Mnfr games and toys 20.0 11/27/96 JW Childs Equity Partners LP Central Tractor Farm & Country Own, op tractor, hardware stores 18.8 01/21/97 Mafco Holdings Inc Mafco Consolidated Grp(Mafco) Mnfr cosmetics, beauty products 27.6 Pending Gold Kist Golden Poultry Company Poultry Processing 29.5 AVERAGE 36.7% MEDIAN 33.3%
14 The Robinson-Humphrey Company, Inc. PROJECT GIRDER IMPLIED VALUATION ANALYSIS UTILIZING SELECTED PREMIUMS FROM MINORITY INTEREST/GOING PRIVATE TRANSACTIONS (DOLLARS IN THOUSANDS)
MEDIAN PREMIUM ---------------------------------------------------- GIRDER IMPORTANCE 1 DAY PRIOR 1 WEEK PRIOR 4 WEEKS PRIOR VALUATION PARAMETER[1] VALUE WEIGHTING TO ANNOUNCEMENT TO ANNUNCEMENT TO AANOUNCEMENT - ---------------------------------------- --------- ----------- --------------- --------------- ---------------- Stock Price 1 Day Prior to Announcement $12.88 35.0% 22.1% Stock Price 1 Week Prior to Announcement 12.38 35.0% 25.9% Stock Price 4 Weeks Prior to Announcement 11.63 30.0% 33.3% IMPLIED EQUITY IMPLIED VALUE EQUITY PER VALUATION PARAMETER[1] VALUE SHARE[1] - ---------------------------------------- -------- ---------- Stock Price 1 Day Prior to Announcement $446,517 $15.72 Stock Price 1 Week Prior to Announcement 442,533 15.58 Stock Price 4 Weeks Prior to Announcement 440,147 15.50 ======== ====== WEIGHTED AVERAGE: $443,221 $15.60 UNWEIGHTED AVERAGE: $443,066 $15.60 =========================================
- -------------------------- *Excluded from the unweighted average. [1] Announcement of merger discussions occured on 5/22/97. 15 PROJECT GIRDER ADJUSTED BOOK VALUE ANALYSIS - -------------------------------------------------------------------------------- INPUTS 5/31/97 Tangible Book Value[1] $267,779 5/31/97 Shares 28,404 5/31/97 Accumulated Depreciation $308,359 ================================================================================
Percent of Accumulated Depreciation Added Back 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% --------------------------------------------------------------- Tangible Book Value[1] $267,779 $267,779 $267,779 $267,779 $267,779 $267,779 Depreciation Add-Back 154,180 169,597 185,015 200,433 215,851 231,269 -------------------------------------------------------------- Adjusted Book Value $421,959 $437,376 $452,794 $468,212 $483,630 $499,048 ============================================================== Adjusted B.V. per Share $ 14.86 $ 15.40 $ 15.94 $ 16.48 $ 17.03 $ 17.57 ==============================================================
- ------------------------------- [1] Excludes goodwill, commissioning costs and other assets of $58.5 million. 16 The Robinson-Humphrey Company, Inc. PROJECT GIRDER VALUATION ANALYSIS USING ANNUAL TONS CAPACITY - -------------------------------------------------------------------------------- (DOLLARS IN MILLIONS)
NEW STEEL PLANT CONSTRUCTIONS TONS/YR $/ $MM 000s TON ------ ------- -------- Steel Dynamics-Butler, Indiana $290.0 1,400 $207.14 IPSCO-Muscatine, Iowa $360.0 1,300 $276.92 Nucor Berkeley $525.0 1,800 $291.67 Gallatin Steel $410.0 1,200 $341.67 Chaparral-Structural Mill $390.0 1,000 $390.00 ------- AVERAGE $301.48 ============================ IMPLIED VALUATION USING AVERAGE $MM/TON GIRDER TONS/YR. $/ FIRM NET EQUITY PER 000s x TON = VALUE - DEBT = VALUE OR SHARE 1,605 $301.48 $483,831 $50,708 $433,123 $15.25 =============================================================================================
17 PROJECT GIRDER Analysis of Projected Earnings - --------------------------------------------------------------------------------
PRESENT EQUITY PROJECTED ASSUMED 2003 VALUE VALUE PROBABILITY 2003 P/E EQUITY DISCOUNTED PER WEIGHTING EARNINGS MULTIPLE VALUE @20% SHARE ----------- --------- -------- ---------- ---------- ------- Case 1 25.0% $134,441 11.0x $1,478,851 $495,264 $17.44 Case 2 25.0% 93,355 11.0 1,026,905 343,908 12.11 Case 3 25.0% 171,056 11.0 1,881,616 630,149 22.19 Case 4 25.0% 58,782 11.0 646,602 216,546 7.62 -------- ------ WEIGHTED AVERAGE $421,467 $14.84 ======================================================
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