EX-12.(C)(2) 13 a2065957zex-12_c2.txt EXHIBIT 12(C)(2) August 20, 2001 -------------------------------------------------------------------------------- THERMO ELECTRON CORPORATION DISCUSSION ON [SPECTRA LOGO] SPECTRA-PHYSICS [JPMORGAN LOGO] This presentation was prepared exclusively for the benefit and internal use of Thermo Electron Corporation in order to indicate, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure to any other party. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by JPMorgan. Neither this presentation nor any of its contents may be used for any other purpose without the prior written consent of JPMorgan. The information in this presentation is based upon management forecasts and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of Thermo Electron Corporation or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of Thermo Electron Corporation. JPMorgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging, financial advisory and other investment banking activities are performed by JPMorgan Securities Inc., the JPMorgan division of Chase Securities Inc. and their securities affiliates, and lending, derivatives and other commercial banking activities are performed by Morgan Guaranty Trust Company of New York, The Chase Manhattan Bank and their banking affiliates. JPMorgan deal team members may be employees of any of the foregoing entities. AGENDA =============================================================================== ------------------------------------------------------------------------------- o OVERVIEW ------------------------------------------------------------------------------- o Equity market overview o Valuation analysis o Minority spin-in analysis o Shareholder considerations 1 TIMELINE ===============================================================================
KEY DATES KEY EVENTS ------------------ ------------------------------------------------------------------------------------------- 1997 Oct-1997 o Laser and Optics Group of Spectra-Physics AB prepared for IPO Dec-1997 o Public offering of Laser and Optics Group (renamed Spectra-Physics Lasers, Inc.) completed with 2.4MM shares at $10 per share Jan-1998 o Over-allotment of 360,000 shares sold o Spectra-Physics AB indirectly owns 80% of SPLI stock Feb-1999 o Thermo Instrument Systems acquired Spectra-Physics AB and indirect ownership of 79% interest in SPLI Jan-2000 o Thermo Instrument Systems spun-in by Thermo Electron Corporation Today o Thermo Electron owns 13.3MM shares (79.8%) of SPLI through Spectra-Physics AB, a wholly-owned subsidiary of Thermo Electron 2002 Feb-2002 o Delaware 203 restriction expires ------------------ -------------------------------------------------------------------------------------------
2 SPIN-IN PUBLIC MINORITY: PROS AND CONS =============================================================================== Pros o Increase investment in optical segment - 100% ownership and complete control of SPLI - Retain high-growth business within Thermo portfolio o Eliminate costs of public minority o Opportunity to combine Thermo's optical businesses with SPLI o Further clarifying of TMO story Cons o Significant employee retention issues - Difficult to retain scarce optical engineering talent without focused currency o Lack of separate public currency to grow the business through acquisition o Tender offer may not be successful o Could be slightly dilutive to Thermo's earnings in the absence of synergies 3 SUMMARY OF ILLUSTRATIVE TRANSACTION =============================================================================== PRICES DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA Acquirer Thermo Electron Corporation Target Spectra-Physics Consideration Cash Minority stake purchased 20.2% basic 26.3% fully diluted
ILLUSTRATIVE PURCHASE PRICES PURCHASE PRICE (PER SHARE) $15.00 $17.50 $20.00 -------------------------------------------- ------------------ ------------------ -------------- Implied transaction value(1) $287 $333 $378 Implied equity value(1) 259 305 350 Equity value of minority stake(2) 59 71 84 -------------------------------------------- ------------------ ------------------ --------------
(1) Based on 16.7MM common shares, 1.5 MM options with an average strike price of $9.19; net debt of $28MM as of 6/30/01 (2) Fully diluted value net of option proceeds, based on 13.3MM TMO shares 4 AGENDA =============================================================================== o Overview o EQUITY MARKET OVERVIEW o Valuation analysis o Minority spin-in analysis o Shareholder considerations 5 PUBLIC MARKET OVERVIEW =============================================================================== $ MILLIONS, EXCEPT PER SHARE DATA
Public market overview Stock price(1) $17.63 52-week high $72.25 52-week low $13.25 Shares outstanding 16.7 Options 1.5 Average strike price $9.19 Fully diluted shares 17.4 Market capitalization $307 Net debt(2) 28 ----------- Firm value $335
Transaction multiples 2001E(3) 2002E(3) --------------------------------------------------------------------------------------------------------------------- Revenues $223 $245 EBITDA 15 25 EBIT 1 8 FV/revenues 1.5x 1.4x FV/EBITDA 22.8 13.2 FV/EBIT NM 39.9 P/E NM 50.8
(1) As of close 8/13/01 (2) As of 6/30/01 (3) Stand-alone case based on TMO management projections Note: Totals may not sum due to rounding 6 ANALYSIS AT VARIOUS PRICES =============================================================================== PRICES DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS EXCEPT PER SHARE PRICES
Current(1) Range of prices Price per share $17.63 $15.00 $17.50 $20.00 Equity value $307 $259 $305 $350 Firm value 335 287 333 378 ---------- ---------- ---------- ---------- Minority stake value $72 $59 $71 $84 IMPLIED MULTIPLES FV/2001 sales 1.5x 1.3x 1.5x 1.7x FV/2002 sales 1.4 1.2 1.4 1.5 FV/2001 EBITDA 22.8x 19.5x 22.6x 25.7x FV/2002 EBITDA 13.2 11.3 13.1 14.9 FV/2001 EBIT NM NM NM NM FV/2002 EBIT 39.9 34.2 39.6 45.0 P/E 2001 NM NM NM NM P/E 2002 50.8 43.3 50.5 57.7
Key financials Net debt(2) Shares outstanding 2001E(3) 2002E(3) --------------------- Total debt $37 Shares outstanding 16.7 Sales $223 $245 Cash 9 Options 1.5 EBITDA 15 25 ----------- Average strike $9.19 EBIT 1 8 Net debt $28 Fully diluted shares 17.4 Cash net income 1 6 Cash EPS $0.08 $0.35
(1) Price as of 8/13/01 (2) Net Debt as of 6/30/01 (3) Stand-alone case based on TMO management projections 7 RELATIVE SHARE PRICE PERFORMANCE =============================================================================== INDEXED TO SPLI SHARE PRICE [Line Chart]
Optical Industrial % return SPLI peers(1) laser peers(2) NASDAQ -------------------- ------------ ----------- ------------- ---------- LTM (75%) (77%) (75%) (48%) Last 3 months (3%) (50%) (38%) (8%) Last 6 months (35%) (72%) (56%) (21%) -------------------- ------------ ----------- --------------- ------------
(1) Optical peers include: Avanex, Bookham, Corning, Finisar, JDS Uniphase, Luminent, New Focus, OCP and Oplink (2) Industrial laser fees include: Coherent, GSI Lumonics and Newport 8 RECENT SHARE PRICE PERFORMANCE =============================================================================== APRIL 2001 - PRESENT [CHART] Source:IDD 9 COMPARABLE SHARE PERFORMANCE ===============================================================================
Relative returns(1) 1 month 3 month 6 month 1 year 2 year Since IPO ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ SPLI (25%) (3%) (35%) (75%) 119% 44% ------------------------------------------------------------------------------------------------------------------------------------ EMERGING OPTICAL COMPONENTS Alliance Fiber Optic Products (41%) (65%) (75%) NM NM (76%) Avanex Corp. 4% (54%) (80%) (94%) NM (96%) Bookham Technology PLC 9% (51%) (81%) (96%) NM (95%) Luminent Inc. (19%) (44%) (71%) NM NM (78%) New Focus Inc. (22%) (66%) (87%) (96%) NM (90%) Oplink Communications Inc. (39%) (65%) (84%) NM NM (94%) Optical Communication Prods. (30%) (45%) (51%) NM NM (63%) Stratos Lightwave Inc. (37%) (42%) (48%) (84%) NM (84%) MEDIAN (26%) (53%) (78%) (95%) NM (87%) ESTABLISHED OPTICAL COMPONENTS Alcatel Optronics (5%) (66%) (82%) NM NM (88%) Corning Inc. 15% (29%) (61%) (82%) (26%) NM Finisar Corp. (27%) (53%) (56%) (63%) NM (66%) JDS Uniphase (19%) (59%) (78%) (93%) (59%) NM MEDIAN (12%) (56%) (70%) (82%) (42%) (77%) INDUSTRIAL LASER Coherent Inc. 0% (8%) (20%) (47%) 89% NM GSI Lumonics Inc. 0% (13%) (25%) (63%) 91% 57% Newport Corp. (9%) (50%) (67%) (81%) 363% NM MEDIAN 0% (13%) (25%) (63%) 91% 57% ------------------------------------------------------------------------------------------------------------------------------------ MEDIAN (19%) (51%) (71%) (83%) 89% (84%) ------------------------------------------------------------------------------------------------------------------------------------
(1) As of close 6/10/01 10 PREMIA ANALYSIS AT VARIOUS ILLUSTRATIVE PRICES =============================================================================== PRICES DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY
Illustrative purchase prices ----------------------------------------------------------------------------------------------------------- SPLI prices $15.00 $17.50 $20.00 ----------------------------------------------------------------------------------------------------------- 1-day prior(1) $18.00 (17%) (3%) 11% 1-week prior $18.46 (19%) (5%) 8% 1-month prior $24.09 (38%) (27%) (17%) 3-months prior $20.90 (28%) (16%) (4%) -----------------
(1) Source: IDD Note: As of close 8/13/01 11 HISTORICAL SHARES TRADED ANALYSIS =============================================================================== SHARES TRADED PERFORMANCE ONE-YEAR Avg. daily vol. 20.8Ths Total shares traded 5.3MM % of total(1) 16% % of float(2) 78%
[CHART] Price range $5-21 $21-37 $37-53 $53-69 $69-85 $85-101 Volume in range (MM) 1.4 1.7 0.9 0.8 0.3 0.0 Cumulative shares traded 27.5% 59.7% 77.7% 93.9% 100.0% 100.0%
Three-year Avg. daily vol. 41.4Ths Total shares traded 31.4MM % of total(1) 94% % of float(2) 467%
[CHART] Price range $5-21 $21-37 $37-53 $53-69 $69-85 $85-101 Volume in range (MM) 8.7 5.4 8.6 2.7 3.0 3.1 Cumulative shares traded 27.6% 44.7% 71.9% 80.6% 90.2% 100.0%
(1) Based on 16.7 million common shares outstanding (2) Based on 16.7 million common shares outstanding less 13.3 million Thermo Electron shares held Note: As of 8/10/01 Source: Financial Database Services 12 VOLUME TRADING ANALYSIS =============================================================================== LIQUIDITY HAS DECREASED AS SHARE PRICE HAS TRENDED TO CURRENT TRADING LEVEL DAILY AVERAGE TRADING VOLUME ('000) High $12.00 $10.88 $12.88 $28.00 $94.88 $72.88 $100.00 $57.00 $41.25 $24.30 $25.00 Low $7.00 $6.69 $7.63 $8.31 $31.38 $36.00 $46.69 $19.81 $15.00 $13.25 $17.63
[CHART] Source: Bloomberg 13 AGENDA ============================================================================== o Overview o Equity market overview o VALUATION ANALYSIS o Minority spin-in analysis o Shareholder considerations 14 SUMMARY VALUATION ================================================================================ PRICES DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY SUMMARY VALUATION $ per share Current price 8/13/01 $17.63 Discounted cash flow [CHART] - Stand-alone case - Spin-in case Trading multiples 52-week range 15 SUMMARY FINANCIALS - STAND-ALONE CASE ================================================================================ $ MILLIONS
SUMMARY FINANCIALS 2001E 2002E 2003E 2004E 2005E 2006E REVENUE Base $207 $228 $251 $276 $303 $333 % GROWTH 10% 10% 10% 10% 10% Telecom 16 18 19 21 23 26 % GROWTH 10% 10% 10% 10% 10% Consolidated $223 $245 $270 $297 $327 $359 % GROWTH 10% 10% 10% 10% 10% EBIT Consolidated $1 $8 $16 $23 $29 $35 % MARGIN 0% 4% 6% 8% 9% 10% EBITDA Consolidated $15 $25 $33 $41 $48 $55 % MARGIN 7% 10% 12% 14% 15% 15%
Note: Based on TMO management projections 16 DISCOUNTED CASH FLOW VALUATION SUMMARY - STAND-ALONE CASE ================================================================================ DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA
CAGR/ DISCOUNTED CASH FLOW VALUATION 2002E 2003E 2004E 2005E 2006E AVERAGE Sales $245 $270 $297 $327 $359 10% % GROWTH 10% 10% 10% 10% 10% 10% EBITDA 25 33 41 48 55 21% % MARGIN 10% 12% 14% 15% 15% 13% EBIT 8 16 23 29 35 43% % MARGIN 3% 6% 8% 9% 10% 7% EBIAT 4 9 13 16 20 47% + Depreciation and amortization 17 18 18 19 20 - Increase in NWI 9 10 11 12 13 - Capital expenditures 12 14 15 17 18 ------------------------------------------------------------------------ FCF $1 $3 $6 $8 $10
FIRM VALUE
DISCOUNT EBITDA MULTIPLE RATE 7.5x 8.0x 8.5x ------------------------------- 10.0% $275 $292 $309 11.0% 263 280 296 12.0% 252 268 283
EQUITY VALUE(1)
DISCOUNT EBITDA MULTIPLE RATE 7.5x 8.0x 8.5x ------------------------------- 10.0% $14.35 $15.29 $16.23 11.0% 13.70 14.59 15.49 12.0% 13.08 13.94 14.79
(1) Assumes net debt of $28 million as of 6/30/01; 16.7MM common shares, 1.5MM options with an average strike price of $9.19 Note: Based on TMO management projections; valuation as of January 1, 2002 17 SENSITIVITY ANALYSIS - STAND-ALONE CASE DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY FIRM VALUE ($ MILLIONS)
SALES GROWTH AVERAGE EBITDA MARGIN FOR THE PERIOD 2002 - 2006 ------------------- ----------------- ------------------------------------------------------------------------------------- 5-YR AVG. CAGR 10% 11% 12% 13% 14% 15% 16% ------------------- ----------------- --------- -------- ------------------ ---------- -------------- ------ -------------- $273 8% $190 $211 $233 $254 $275 $297 $318 ---------- 300 10% 208 232 256 280 304 328 351 ---------- 328 12% 228 254 281 308 335 361 388
EQUITY VALUE ($ PER SHARE)
SALES GROWTH AVERAGE EBITDA MARGIN FOR THE PERIOD 2002-2006 ------------------- ----------------- ------------------------------------------------------------------------------------------- 5-YR. AVG. CAGR 10% 11% 12% 13% 14% 15% 16% ------------------- ----------------- -------- -------- ----------------- ----------- ------------- -------------- -------------- $273 8% $9.67 $10.84 $12.01 $13.18 $14.36 $15.53 $16.70 ----------- 300 10% 10.65 11.97 13.28 14.59 15.91 17.22 18.54 ----------- 328 12% 11.73 13.20 14.67 16.14 17.61 19.08 20.55
Note: Based on TMO management projections; discount rate of 11% and terminal EBITDA multiple of 8.0x, net debt of $28 million as of 6/30/01; 16.7MM common shares, 1.5MM options with an average strike price of $9.19 18 SUMMARY FINANCIALS - SPIN-IN CASE ================================================================================ $ MILLIONS
SUMMARY FINANCIALS 2001E 2002E 2003E 2004E 2005E 2006E Revenue Base $207 $228 $251 $276 $303 $333 % GROWTH 10% 10% 10% 10% 10% Telecom 16 18 19 21 23 26 % GROWTH 10% 10% 10% 10% 10% Consolidated $223 $245 $270 $297 $327 $359 % GROWTH 10% 10% 10% 10% 10% EBIT Consolidated $1 $15 $23 $31 $37 $44 % MARGIN 0% 7% 9% 11% 12% 13% EBITDA Consolidated $15 $32 $41 $49 $56 $64 % MARGIN 7% 13% 15% 16% 17% 18%
Note: Based on TMO management projections 19 DISCOUNTED CASH FLOW VALUATION SUMMARY - SPIN-IN CASE ================================================================================ DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA
CAGR/ Discounted cash flow valuation 2002E 2003E 2004E 2005E 2006E average Sales $245 $270 $297 $327 $359 10% % GROWTH 10% 10% 10% 10% 10% 10% EBITDA 32 41 49 56 64 18% % MARGIN 13% 15% 16% 17% 18% 16% EBIT 15 23 31 37 44 30% % MARGIN 6% 9% 10% 11% 12% 10% EBIAT 8 13 18 21 26 32% + Depreciation and amortization 17 18 18 19 20 - Increase in NWI 2 1 10 11 12 - Capital expenditures 12 14 15 17 18 -------------------------------------------------------------------- FCF $11 $17 $11 $13 $16
---------------------------------------------- Firm value ---------------------------------------------- Discount EBITDA multiple rate 7.5x 8.0x 8.5x ------------------------------- 10.0% $351 $371 $391 11.0% 337 356 375 12.0% 323 341 359
---------------------------------------------- Equity value(1) ---------------------------------------------- Discount EBITDA multiple rate 7.5x 8.0x 8.5x ------------------------------- 10.0% $18.52 $19.61 $20.70 11.0% 17.74 18.78 19.82 12.0% 16.99 17.99 18.98
(1) Assumes net debt of $28 million as of 6/30/01; 16.7MM common shares, 1.5MM options with an average strike price of $9.19 Note: Based on TMO management projections; valuation as of January 1, 2002 20 IMPLIED VALUE TO THERMO ELECTRON ================================================================================ DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA
Stand-alone case Spin-in case Illustrative share price of SPLI(1) $14.59 Illustrative equity value of total SPLI(1) $342 Thermo Electron shares owned 13.3 Minority stake purchase cost(2) ($84) Value of stake $195 Value of stake $258 Value delta $64
(1) Based on TMO management projections; discount rate of 11% and terminal EBITDA multiple of 8.0x; net debt of $28 million as of 6/30/01; 16.7MM common shares, 1.5MM options with an average strike price of $9.19 (2) Based on SPLI share price of $20.00 Note: Totals may not sum due to rounding 21 INDUSTRY LASER TRADING COMPARABLES ================================================================================ $ MILLIONS, EXCEPT PER SHARE DATA
Firm vlue ----------------------------------------- Revenue EBITDA P/E ----------------------------------------- --------------------- % 52-wek Market Firm COMPANY Price(1) high value value 2001E 2002E 2001E 2002E 2001E 2002E ---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- Spectra-Physics $17.63 24% $307 $335 1.5x 1.4x 22.8x 13.2x NM 50.8x ---------------------------------------------------------------------------------------------------------------------------------- Coherent Inc.(2) $35.85 44% $1,046 $871 1.8x 1.6x 13.2x 11.9x 29.6x 28.7x GSI Lumonics $8.42 29% 344 248 0.9 0.9 9.1x 14.2x 27.2 NM Newport Corp $21.80 11% 841 584 1.7 1.6 9.2 8.4 20.2 19.5 ------------------------------------------------------------------------------------------------------------------------------------ MEDIAN 1.7x 1.6x 9.2x 11.9x 27.2x 28.7x ------------------------------------------------------------------------------------------------------------------------------------
(1) As of close 8/13/01 (2) Pro forma for public equity holdings and disposal of Medical segment Notes: SPLI stand-alone projections based on TMO management projections; all others based on company filings, equity research and IBES estimates 22 TRADING MULTIPLE ANALYSIS =============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA
2001E 2002E SPLI revenue $223 $245 Selected multiple range 1.25x 1.75x 1.0x 1.5x Equity value per share(1) $14.54 $20.67 $12.70 $19.45 SPLI EBITDA -- Stand-alone $15 $25 Selected multiple range 9.0x 11.0x 8.0x 10.0x Equity value per share(1) $6.25 $8.01 $10.39 $13.18 SPLI EBITDA -- Spin-in $32 Selected multiple range 8.0x 10.0x Equity value per share $13.47 $17.03 SPLI EPS -- Stand-alone $0.35 Selected multiple range NM 20.0x 26.0x Equity value per share $7.00 $9.02 SPLI EPS -- Spin-in $0.59 Selected multiple range 20.0x 26.0x Equity value per share $11.80 $15.29
(1) Assumes net debt of $28 million; 16.7MM common shares, 1.5MM options with an average strike price of $9.19 23 IMPLIED VALUATION - COHERENT =============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA
Stand-alone case Spin-in case 2001E 2002E 2002E SPLI revenue $223 $245 $245 Coherent FV/revenue 1.8x 1.6x 1.6x Implied firm value $412 $393 $393 Implied equity value $398 $379 $379 -------------------------- -------------------------------- ------------------------------- EQUITY VALUE PER SHARE $21.88 $20.84 $20.84 -------------------------- -------------------------------- ------------------------------- SPLI EBITDA $15 $25 $32 Coherent FV/EBITDA 13.2x 11.9x 11.9x Implied firm value $193 $302 $385 Implied equity value $179 $288 $371 -------------------------- -------------------------------- ------------------------------- EQUITY VALUE PER SHARE $9.86 $15.81 $20.38 -------------------------- -------------------------------- ------------------------------- SPLI EPS $0.35 $0.59 Coherent P/E 28.7x 28.7x -------------------------- -------------------------------- ------------------------------- EQUITY VALUE PER SHARE NM $9.95 $16.86 -------------------------- -------------------------------- -------------------------------
Note: Based on $28MM of net debt, 16.7MM common shares and 1.5MM options with an average strike price of $9.19; numbers may not total due to rounding 24 ILLUSTRATIVE PRO-FORMA ANALYSIS =============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS 2002 accretion/(dilution) to TMO
Stand-alone case SPLI Purchase price EPS $15.00 $17.50 $20.00 --------------------------------------------------------- $0.25 (1.0%) (1.2%) (1.4%) $0.35 (0.2%) (0.4%) (0.5%) $0.45 0.7% 0.5% 0.4% Equity value $259 $305 $350 Minority purchase cost 59 71 84
Spin-off case Purchase price $15.00 $17.50 $20.00 --------------------------------------------------------- $0.50 1.2% 1.0% 0.8% $0.59 1.9% 1.7% 1.6% $0.70 2.9% 2.7% 2.5% $259 $305 $350 59 71 84
Note: Assumes TMO cash net income of $200MM in 2002, SPLI stand-alone and spin-off cash EPS of $0.35 and $0.59 in 2002 respectively and 17.4MM (treasury method) shares in 2002; assumes 40% tax rate and 5% financing rate; SPLI estimates based on TMO management projections, TMO estimates based on JPMorgan equity research, assumes 100% cash transaction valued as of January 1, 2002 25 IMPACT OF LITIGATION RISK =============================================================================== o On June 19, 2000, Rockwell filed complaint for patent infringement o Rockwell has not sought injunctive relief since patent has already expired o Trial date set for February 5, 2002 26 AGENDA =============================================================================== o Overview o Equity market overview o Valuation analysis o MINORITY SPIN-IN ANALYSIS o Shareholder considerations 27 PREMIUMS PAID IN PRECEDENT SQUEEZE-OUT TRANSACTIONS =============================================================================== 1988 - present Premiums paid; medians % over stock price one week prior to announcement [CHART] (1) Data for 1993 not shown - only one transaction was executed at a discount of 20% Note: Selected transactions in sample include 150 minority squeeze-out transactions (owner of 50% or more of a U.S. public company acquires the remaining shares for total consideration of $50 million or more); January 1988, March 2001 Source: SDC and JPMorgan research 28 PREMIA ANALYSIS BY SIZE AND FLOAT =============================================================================== Premia(1) paid in minority buy-outs since 1988 [CHART] Buy-outs by size Premia paid (%) Buy-outs by float Premia paid (%) (1) Premia based on stock price one week prior to announcement Source: J.P. Morgan M&A Analysis Group, SDC 29 AGENDA =============================================================================== - Overview - Equity market overview - Valuation analysis - Minority spin-in analysis - SHAREHOLDER CONSIDERATIONS 30 SHAREHOLDER PROFILE =============================================================================== Top 10 institutional investors in SPLI
Institution Style Share pos % of shares out -------------------------------------------------- ------------------------- ------------------------- ------------------------- Taylor Richard K NM 1,100,000 6.6 Kern Capital Management LLC Growth 683,700 4.1 Merrill Lynch & Company Inc. Specialty 500,949 3.0 Dimensional Fund Advisors Inc. Index 211,300 1.3 Pilgrim Baxter & Associates Momentum 205,100 1.2 U.S. Trust Corporation Core Value 116,587 0.7 Vanguard Group, Inc. Index 81,511 0.5 Barclays Global Investors Index 76,589 0.5 John G. Ullman & Associates Inc. Core Value 46,564 0.3 Charles Schwab Investment Management Index 42,200 0.3 Total 3,064,500 18.4
Source: Carson Group as of 3/31/01 31