EX-12.(C)(3) 14 a2065957zex-12_c3.txt EXHIBIT 12(C)(3) November 6, 2001 -------------------------------------------------------------------------------- THERMO ELECTRON CORPORATION Discussion on [SPECTRA LOGO] Spectra-Physics 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. RECENT EVENTS =============================================================================== ------------------- 8/21/01 Thermo Electron announces that it plans to take its Spectra-Physics subsidiary private at a cash price of $20/share. It expects to initiate a cash offer by the end of September ------------------- ------------------- 9/11/01 World Trade Center and Pentagon terrorist attacks ------------------- ------------------- 9/26/01 Thermo Electron announces that it is delaying the commencement of its cash tender offer for shares of its subsidiary Spectra-Physics in order to analyze the impact on Spectra-Physics due to the worsening economic conditions associated with the recent terrorist attacks ------------------- ------------------- 10/31/01 JPMorgan internal Fairness Committee meeting ------------------- ------------------- 11/06/01 Thermo Electron Executive Committee of the Board of Directors meeting -------------------
1 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 26.8% fully diluted
ILLUSTRATIVE PURCHASE PRICES PURCHASE PRICE (PER SHARE) $14.00 $16.00 $18.00 ----------------------------------------------------------------------------------------------------------------------- Implied transaction value(1) $274 $310 $346 Implied equity value(1) 241 278 314 Equity value of minority stake(2) 54 64 74
(1) Based on 16.7MM common shares, 1.5 MM options with an average strike price of $9.19; net debt of $32MM as of 9/30/01 (2) Fully diluted value net of option proceeds, based on 13.3MM TMO shares Note: SPLI stand-alone case estimates based on TMO management projections 2 ANALYSIS AT VARIOUS PRICES =============================================================================== PRICES DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE PRICES
Current(1) Range of prices Price per share $17.11 $14.00 $16.00 $18.00 Equity value $298 $241 $278 $314 Firm value 330 274 310 346 ---------- ---------- ---------- ---------- Minority stake value $70 $54 $64 $74 IMPLIED MULTIPLES FV/2001 sales 1.5x 1.3x 1.4x 1.6x FV/2002 sales 1.5 1.3 1.4 1.6 FV/2001 EBITDA 30.9x 25.6x 29.0x 32.4x FV/2002 EBITDA 15.9 13.2 15.0 16.7 FV/2001 EBIT NM NM NM NM FV/2002 EBIT 67.1 55.6 63.0 70.4 P/E 2001 NM NM NM NM P/E 2002 108.2 88.5 101.1 113.8
Key financials Net debt(2) Shares outstanding 2001E(3) 2002E(3) Total debt $40 Shares outstanding 16.7 --------------------- Cash 7 Options 1.5 Sales $214 $214 ---------- Average strike $9.19 EBITDA 11 21 Net debt $32 Fully diluted shares 17.4 EBIT (2) 5 Cash net income (1) 3 Cash EPS ($0.08) $0.16
(1) Price as of 10/29/01 (2) Net debt as of 9/30/01 (3) Stand-alone case based on TMO management projections 3 RELATIVE SHARE PRICE PERFORMANCE =============================================================================== INDEXED TO SPLI SHARE PRICE
Optical Industrial % return SPLI peers(1) laser peers2 NASDAQ -------------------- ------------ ----------- --------------- ------------ LTM (50%) (84%) (71%) (47%) Last 3 months (12%) (44%) (20%) (16%) Last 6 months (8%) (64%) (45%) (20%) -------------------- ------------ ----------- --------------- ------------
[LINE GRAPH] (1) Optical peers include: Avanex, Bookham, Corning, Finisar, JDS Uniphase, Luminent, New Focus, OCPI and Oplink (2) Industrial laser pees include: Coherent, GSI Lumonics and Newport 4 RECENT SHARE PRICE PERFORMANCE =============================================================================== AUGUST 2001 - PRESENT ------------------------------- CUMULATIVE VOL. (THS) -------------------------------
DATE SHARES % FLOAT ------------------------------- 8/21 2,424 72% 9/11 1,124 33% 9/26 550 16% -------------------------------
[BAR GRAPH] Source: IDD 5 PREMIA ANALYSIS AT VARIOUS ILLUSTRATIVE PRICES =============================================================================== PRICES DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY
Illustrative purchase prices ------------------------------------------------------------------------------------------- SPLI prices $14.00 $16.00 $18.00 --------------------------------------------------------------------------------- 1-day prior to offer $13.69 2% 17% 31% Current $17.11 (18%) (6%) 5% 1-week prior $17.34 (19%) (8%) 4% 9/10/01 $20.70 (32%) (23%) (13%) ------------------------------
Note: As of close 10/29/01 Source: IDD 6 HISTORICAL SHARES TRADED ANALYSIS =============================================================================== SHARES TRADED PERFORMANCE
-------------------------------- -------------------------------- SINCE 8/20/01 Avg. daily vol. 53.1Ths ONE-YEAR Avg. daily vol. 24.2Ths Total shares traded 2.4MM Total shares traded 6.0MM % of total(1) 15% % of total(1) 36% % of float(2) 72% % of float(2) 178% -------------------------------- --------------------------------
[BAR GRAPHS] Price range Volume in range (MM) Cumulative shares traded (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 10/29/01 Source: Financial Database Services 7 SUMMARY VALUATION =============================================================================== PRICES DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY
SUMMARY VALUATION ----------------- ---------------- $ PER SHARE REVISED VALUATION AUGUST VALUATION ----------------- ---------------- Price Price 10/29/01 8/13/01 $17.11 $17.63 ----------------- ----------------
[CHART] 8 SPLI 2001 FORECAST REVISIONS =============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY STAND-ALONE CASE; $ MILLIONS
3 + 9 forecast 6 + 6 forecast 9 + 3 forecast 2001 OP (April 2001) (July 2001) (October 2001) Actual Actual (November 2000) Cumulative Cumulative Cumulative Cumulative Cumulative Projection %(DELTA) %(DELTA) %(DELTA) Actual $(DELTA) %(DELTA) --------------- -------------- -------------- --------------- --------- ----------- ---------- Bookings Q1 $52 - - - $58 $7 13% Q2 64 (6%) - - 55 (9) (14%) Q3 70 0% (23%) - 48 (21) (31%) Q4 74 14% (6%) (24%) - - - ----------------------------------------------------------------------------------------------------------------- 2001 $260 5% (9%) (16%) - - - Revenues Q1 $55 - - - $55 ($1) (1%) Q2 64 (14%) - - 55 (10) (15%) Q3 70 (10%) (24%) - 49 (20) (29%) Q4 74 (3%) (10%) (24%) - - - ----------------------------------------------------------------------------------------------------------------- 2001 $263 (7%) (13%) (18%) - - - EBITA Q1 $0 - - - $1 $1 350% Q2 3 (104%) - - 1 (2) (75%) Q3 6 (20%) (127%) - (3) (9) (162%) Q4 8 2% (30%) (101%) - - - ----------------------------------------------------------------------------------------------------------------- 2001 $17 (18%) (65%) (111%) - - -
Note: All changes are cumulative from November 2001 operating plan projections; SPLI stand-alone case estimates based on TMO management projections 9 SPLI ASSUMPTIONS - REVISED STAND-ALONE CASE =============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS
Current forecast 2001E 2002E 2003E 2004E 2005E 2006E --------------- --------------- ---------------- --------------- --------------- --------------- Revenues Base $206 $206 $231 $258 $289 $324 % growth 14% 0% 12% 12% 12% 12% Telecom 8 8 16 22 31 44 % growth 48% 0% 100% 40% 40% 40% --------------- --------------- ---------------- --------------- --------------- --------------- Total $214 $214 $247 $281 $321 $368 % growth 14.9% 0.0% 15.3% 13.8% 14.2% 14.7% EBIT Consolidated ($2) $5 $13 $22 $28 $33 % margin (0.9%) 2.3% 5.4% 8.0% 8.6% 9.0% EBITA Consolidated ($1) $6 $14 $23 $28 $34 % margin (0.6%) 2.6% 5.7% 8.2% 8.8% 9.2% EBITDA Consolidated $11 $21 $30 $40 $46 $52 % margin 5.0% 9.7% 12.1% 14.1% 14.2% 14.1%
Note: SPLI estimates based on TMO management projections 10 SPLI ASSUMPTIONS - AUGUST STAND-ALONE CASE =============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS
August forecast 2001E 2002E 2003E 2004E 2005E 2006E -------------- --------------- ---------------- --------------- --------------- --------------- Revenues Base $207 $228 $251 $276 $303 $333 % growth 14% 10% 10% 10% 10% 10% Telecom 16 18 19 21 23 26 % growth 196% 10% 10% 10% 10% 10% -------------- --------------- ---------------- --------------- --------------- --------------- Total $223 $245 $270 $297 $327 $359 % growth 19.8% 10.0% 10.0% 10.0% 10.0% 10.0% EBIT Consolidated $1 $8 $16 $23 $29 $35 % margin 0.3% 3.4% 5.8% 7.6% 8.7% 9.7% EBITA Consolidated $3 $10 $18 $25 $30 $37 % margin 1.1% 4.2% 6.5% 8.3% 9.3% 10.3% EBITDA Consolidated $15 $25 $33 $41 $48 $55 % margin 6.6% 10.4% 12.4% 13.8% 14.6% 15.3%
Note: SPLI estimates based on TMO management projections 11 STAND-ALONE CASE COMPARISON =============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS
2001E 2002E 2003E 2004E 2005E 2006E --------------- --------------- ---------------- --------------- --------------- --------------- Revenues Base - current $206 $206 $231 $258 $289 $324 Base - August 207 228 251 276 303 333 --------------- --------------- ---------------- --------------- --------------- --------------- Delta ($1) ($22) ($20) ($18) ($14) ($9) Telecom - current $8 $8 $16 $22 $31 $44 Telecom - August 16 18 19 21 23 26 --------------- --------------- ---------------- --------------- --------------- --------------- Delta ($8) ($10) ($3) $1 $8 $18 EBIT Consolidated - current ($2) $5 $13 $22 $28 $33 Consolidated - August 1 8 16 23 29 35 --------------- --------------- ---------------- --------------- --------------- --------------- Delta ($3) ($3) ($3) ($1) ($1) ($2) EBITA Consolidated - current ($1) $6 $14 $23 $28 $34 Consolidated - August 3 10 18 25 30 37 --------------- --------------- ---------------- --------------- --------------- --------------- Delta ($4) ($4) ($4) ($2) ($2) ($3) EBITDA Consolidated - current $11 $21 $30 $40 $46 $52 Consolidated - August 15 25 33 41 48 55 --------------- --------------- ---------------- --------------- --------------- --------------- Delta ($4) ($4) ($3) ($1) ($2) ($3)
Note: SPLI estimates based on TMO management projections 12 SPLI DCF COMPARISON - STAND-ALONE CASE ============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA
Current forecast ------------------------------------------- -------------------------------------------- Firm value Equity value per share ------------------------------------------- -------------------------------------------- EBITDA exit multiple EBITDA exit multiple ------------------------------------------- -------------------------------------------- 7.5x 8.0 x 8.5 x 7.5x 8.0 x 8.5 x ------------------------------------------- -------------------------------------------- 10% $256 $272 $288 10% $13.03 $13.92 $14.80 WACC 11% 245 260 276 WACC 11% 12.43 13.28 14.12 12% 235 249 264 12% 11.86 12.67 13.48
August forecast ------------------------------------------- -------------------------------------------- Firm value Equity value per share ------------------------------------------- -------------------------------------------- EBITDA exit multiple EBITDA exit multiple ------------------------------------------- -------------------------------------------- 7.5x 8.0 x 8.5 x 7.5x 8.0 x 8.5 x ------------------------------------------- -------------------------------------------- 10% $275 $292 $309 10% $14.35 $15.29 $16.23 WACC 11% 263 280 296 WACC 11% 13.70 14.59 15.49 12% 252 268 283 12% 13.08 13.94 14.79
Note: SPLI estimates based on TMO management projections 13 SPLI ASSUMPTIONS - REVISED SPIN-IN CASE ============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS
CURRENT FORECAST 2001E 2002E 2003E 2004E 2005E 2006E REVENUES Base $206 $206 $231 $258 $289 $324 % growth 14% 0% 12% 12% 12% 12% Telecom 8 8 16 22 31 44 % growth 48% 0% 100% 40% 40% 40% --------------- --------------- ---------------- --------------- --------------- --------------- Total $214 $214 $247 $281 $321 $368 % growth 14.9% 0.0% 15.3% 13.8% 14.2% 14.7% EBIT Consolidated ($2) $12 $21 $30 $36 $42 % margin (0.9%) 5.6% 8.4% 10.8% 11.2% 11.4% EBITA Consolidated ($1) $13 $21 $31 $37 $43 % margin (0.6%) 5.9% 8.7% 11.0% 11.4% 11.6% EBITDA Consolidated $11 $28 $37 $48 $54 $61 % margin 5.0% 13.0% 15.1% 16.9% 16.8% 16.5%
Note: SPLI estimates based on TMO management projections 14 SPLI ASSUMPTIONS - AUGUST SPIN-IN CASE ============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS
AUGUST FORECAST 2001E 2002E 2003E 2004E 2005E 2006E REVENUES Base $207 $228 $251 $276 $303 $333 % growth 14% 10% 10% 10% 10% 10% Telecom 16 18 19 21 23 26 % growth 196% 10% 10% 10% 10% 10% --------------- --------------- ---------------- --------------- --------------- --------------- Total $223 $245 $270 $297 $327 $359 % growth 19.8% 10.0% 10.0% 10.0% 10.0% 10.0% EBIT Consolidated $1 $15 $23 $31 $37 $44 % margin 0.3% 6.3% 8.6% 10.3% 11.3% 12.2% EBITA Consolidated $3 $17 $25 $32 $39 $46 % margin 1.1% 7.1% 9.3% 10.9% 11.9% 12.8% EBITDA Consolidated $15 $32 $41 $49 $56 $64 % margin 6.6% 13.2% 15.2% 16.5% 17.1% 17.8%
Note: SPLI estimates based on TMO management projections 15 SPIN-IN CASE COMPARISON ============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS
2001E 2002E 2003E 2004E 2005E 2006E REVENUES Base - current $206 $206 $231 $258 $289 $324 Base - August 207 228 251 276 303 333 --------------- --------------- --------------- --------------- --------------- --------------- Delta ($1) ($22) ($20) ($18) ($14) ($9) Telecom - current $8 $8 $16 $22 $31 $44 Telecom - August 16 18 19 21 23 26 --------------- --------------- --------------- --------------- --------------- --------------- Delta ($8) ($10) ($3) $1 $8 $18 EBIT Consolidated - current ($2) $12 $21 $30 $36 $42 Consolidated - August 1 15 23 31 37 44 --------------- --------------- --------------- --------------- --------------- --------------- Delta ($3) ($3) ($2) ($1) ($1) ($2) EBITA Consolidated - current ($1) $13 $21 $31 $37 $43 Consolidated - August 3 17 25 32 39 46 --------------- --------------- --------------- --------------- --------------- --------------- Delta ($4) ($5) ($4) ($1) ($2) ($3) EBITDA Consolidated - current $11 $28 $37 $48 $54 $61 Consolidated - August 15 32 41 49 56 64 --------------- --------------- --------------- --------------- --------------- --------------- Delta ($4) ($4) ($4) ($1) ($2) ($3)
Note: SPLI estimates based on TMO management projections 16 SPLI DCF COMPARISON - SPIN-IN CASE ============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA CURRENT FORECAST
------------------------------------------- -------------------------------------------- FIRM VALUE EQUITY VALUE PER SHARE ------------------------------------------- -------------------------------------------- EBITDA EXIT MULTIPLE EBITDA EXIT MULTIPLE ------------------------------------------- -------------------------------------------- 7.5x 8.0x 8.5x 7.5x 8.0x 8.5x ------------------------------------------- -------------------------------------------- 10% $322 $341 $359 10% $16.65 $17.68 $18.72 WACC 11% 308 326 344 WACC 11% 15.91 16.90 17.89 12% 296 313 330 12% 15.22 16.16 17.11
AUGUST FORECAST
------------------------------------------- -------------------------------------------- FIRM VALUE EQUITY VALUE PER SHARE ------------------------------------------- -------------------------------------------- EBITDA EXIT MULTIPLE EBITDA EXIT MULTIPLE ------------------------------------------- -------------------------------------------- 7.5x 8.0x 8.5x 7.5x 8.0x 8.5x ------------------------------------------- -------------------------------------------- 10% $351 $371 $391 10% $18.52 $19.61 $20.70 WACC 11% 337 356 375 WACC 11% 17.74 18.78 19.82 12% 323 341 359 12% 16.99 17.99 18.98
Note: SPLI estimates based on TMO management projections 17 INDUSTRY LASER TRADING COMPARABLES ============================================================================== $ MILLIONS, EXCEPT PER SHARE DATA FIRM VALUE ---------------------------------------- REVENUE EBITDA P/E ---------------------------------------- ------------------- MARKET FIRM COMPANY PRICE(1) % 52-WEEK HIGH VALUE VALUE 2001E 2002E 2001E 2002E 2001E 2002E -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- Spectra-Physics $17.11 37% $298 $330 1.5x 1.5x 30.9x 15.9x NM 108.2x -------------------------------------------------------------------------------------------------------------------------------- Coherent Inc.2 $28.70 53% $847 $723 1.5x 1.7x 9.9x 12.0x 23.7x 37.3x GSI Lumonics $7.76 47% 318 225 0.9 1.3 NM NM NM NM Newport Corp $16.36 13% 627 376 1.2 1.4 8.7 14.9 22.1 45.4 -------------------------------------------------------------------------------------------------------------------------------- MEDIAN 1.2x 1.4x 9.3x 13.4x 22.9x 41.4x --------------------------------------------------------------------------------------------------------------------------------
(1) As of close 10/29/01 (2) Pro forma for public equity holdings and disposal of Medical segment; based on most recent equity research (Robertson Stephens 10/25/01) with EPS of $1.21 and $0.77 in 2001 and 2002 respectively vs. I/B/E/S EPS estimates of $1.21 and $1.14 in 2001 and 2002 respectively Notes: SPLI stand-alone estimates based on TMO management projections; all others based on company filings, equity research and IBES estimates 18 COMPARABLE SHARE PERFORMANCE ============================================================================== 8/20 8/13 (1-DAY PRIOR TO OFFER/ 9/10 (BOARD BOOK DATA) BOARD MEETING) (1-DAY PRIOR TO TERRORIST ATTACKS) ------------------------------- ------------------------------------ -------------------------------------------- % CHANGE IMPLIED PRICE(1) % CHANGE IMPLIED PRICE(1) % CHANGE IMPLIED PRICE(1) ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ SPLI (3%) $19.41 25% $25.00 (17%) $16.53 ------------------------------------------------------------------------------------------------------------------------------------ TMO 1% $20.13 4% $20.82 1% $20.25 DJIA (11%) 17.80 (10%) 17.96 (3%) 19.30 S&P 500 (9%) 18.10 (8%) 18.41 (1%) 19.74 NASDAQ (14%) 17.15 (10%) 18.07 0% 20.05 INDUSTRIAL LASER Coherent Inc. (18%) $16.33 (20%) $16.04 (14%) $17.27 GSI Lumonics Inc. (8%) 18.43 (3%) 19.35 (4%) 19.28 Newport Corp. (25%) 15.01 (11%) 17.81 11% 22.12 MEDIAN (18%) $16.33 (11%) $17.81 (4%) $19.28
(1) Based on original offer price of $20.00 per share Note: As of close 10/29/01 19 IMPLIED VALUATION - COHERENT ============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS, EXCEPT PER SHARE DATA
2002E STAND-ALONE CASE 2002E SPIN-IN CASE IMPLIED STREET LATEST BROKERAGE REPORT(1) IMPLIED STREET LATEST BROKERAGE REPORT(1) SPLI revenue $214 $214 Coherent FV/revenue 1.7x 1.7x Implied firm value NA 371 NA 371 Implied equity value 338 338 EQUITY VALUE PER SHARE $19.44 $19.44 SPLI EBITDA $21 $21 $28 $28 Coherent FV/EBITDA 9.4x 12.0x 9.4x 12.0x Implied firm value 194 248 260 332 Implied equity value 162 216 227 300 EQUITY VALUE PER SHARE $9.29 $12.41 $13.06 $17.23 SPLI EPS $0.16 $0.16 $0.40 $0.40 Coherent P/E 25.2x 37.3x 25.2x 37.3x Equity value per share $3.98 $5.90 $10.06 $14.89
(1) Based on Robertson Stephens equity research 10/25/01 with EPS of $1.21 and $0.77 in 2001 and 2002 respectively vs. I/B/E/S EPS estimates of $1.21 and $1.14 in 2001 and 2002 respectively Note: SPLI estimates based on TMO management projections; Based on $32MM 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 20 ILLUSTRATIVE PRO-FORMA ANALYSIS ============================================================================== DISPLAYED FOR ILLUSTRATIVE PURPOSES ONLY $ MILLIONS 2002 ACCRETION/(DILUTION) TO TMO
STAND-ALONE CASE PURCHASE PRICE SPLI EPS $14.00 $16.00 $18.00 --------------------------------------------------------- $0.10 (0.7%) (0.8%) (1.0%) $0.16 (0.5%) (0.7%) (0.9%) $0.25 (0.3%) (0.5%) (0.7%) Equity value $241 $278 $314 Minority purchase cost 54 64 74
SPIN-IN CASE PURCHASE PRICE $14.00 $16.00 $18.00 --------------------------------------------------------- $0.30 (0.2%) (0.4%) (0.6%) $0.40 (0.0%) (0.2%) (0.3%) $0.50 0.2% 0.1% (0.1%) $241 $278 $314 54 64 74
Note: Assumes TMO cash net income of $181MM in 2002, SPLI stand-alone and spin-off cash EPS of $0.17 and $0.41 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 21