<PAGE> 1
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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)
BIC CORPORATION
(NAME OF ISSUER)
SOCIETE BIC S.A., BIC MERGER CORPORATION,
BRUNO BICH, AS VOTING TRUSTEE,
AND BIC CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON SHARES, $1.00 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
(CUSIP NUMBER OF CLASS OF SECURITIES)
THOMAS M. KELLEHER, ESQ.
GENERAL COUNSEL AND SECRETARY
BIC CORPORATION
500 BIC DRIVE
MILFORD, CT 06460
(203) 783-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF PERSONS FILING STATEMENT)
COPIES TO:
<TABLE>
<S> <C> <C>
MARIE-AIMEE BICH-DUFOUR ANDREW L. SOMMER PETER D. LYONS
VICE PRESIDENT AND SECRETARY DEBEVOISE & PLIMPTON SHEARMAN & STERLING
SOCIETE BIC S.A. 875 THIRD AVENUE 599 LEXINGTON AVENUE
9, RUE PETIT NEW YORK, NY 10022 NEW YORK, NY 10022
92110 CLICHY FRANCE (212) 909-6000 (212) 848-4000
011-331-45-19-52-00
</TABLE>
This statement is filed in connection with (check the appropriate box):
i. /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 CFR 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [sec.
240.13e-3(c)] under the Securities Exchange Act of 1934.
ii. / / The filing of a registration statement under the Securities Act of
1933.
iii. / / A tender offer.
iv. / / 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
<TABLE>
<S> <C>
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</TABLE>
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
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$218,878,038................................................................ $43,775.61
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</TABLE>
* 5,404,396 Common Shares, par value $1.00 per share, of BIC Corporation (the
"Common Shares") to be converted into the right to receive $40.50 per share
in cash.
** The amount of the filing fee, calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934 equals 1/50th of one per
cent of the transaction value.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement, number or the form
or Schedule and the date of its filing.
Amount Previously Paid: $43,775.61
Form or Registration No.: Schedule 14A
Filing Party: BIC Corporation
Date Filed: August 25, 1995
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<PAGE> 2
INTRODUCTION
This Schedule 13E-3 Transaction Statement (the "Statement") is being filed
by Societe BIC S.A., a societe anonyme organized under the laws of the Republic
of France ("Parent"), BIC Merger Corporation ("Mergeco"), a New York corporation
and a majority-owned subsidiary of Parent, Bruno Bich, as voting trustee (the
"Voting Trustee") pursuant to the Voting Trust Agreement, dated as of February
5, 1991, by and among the Company, Parent, Marcel L. Bich, Neil A. Pollio, Bruno
Bich and Francois Bich (as amended, the "Voting Trust Agreement") and BIC
Corporation, a New York corporation (the "Company") in connection with an
Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger
Agreement"), by and among Parent, Mergeco, the Company and Bruno Bich, as Voting
Trustee.
The following Cross Reference Sheet is supplied pursuant to General
Instruction F to Schedule 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, the
"Preliminary Proxy Statement") of the information required to be included in
response to the items of this Statement. The information in the Preliminary
Proxy Statement, a copy of which is attached hereto as Exhibit (d)(1), is hereby
expressly incorporated by reference and the responses to each item are qualified
in their entirety by the provisions of the Preliminary Proxy Statement.
i
<PAGE> 3
CROSS REFERENCE SHEET SHOWING LOCATION IN
PRELIMINARY PROXY STATEMENT OF INFORMATION
REQUIRED BY ITEMS IN SCHEDULE 13E-3
<TABLE>
<CAPTION>
LOCATION IN PRELIMINARY
SCHEDULE 13E-3 ITEM PROXY STATEMENT
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
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).................................. "Transactions by Certain Persons in Common
Shares"
2. Identity and Background
Items 2(a)-(d) and (g)..................... Cover Page; "Introduction -- General" and
"-- The Special Meeting"; "The Parties";
and "Management of Parent, Mergeco and the
Company"
Items 2(e) and (f)......................... Not applicable
3. Past Contacts, Transactions or Negotiations
Item 3(a)(1)............................... "Special Factors -- Interest 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"; and "The Merger"
Item 4(b).................................. "Introduction -- Record Date; Quorum;
Required Vote"; "Special
Factors -- Interest of Certain Persons in
the Merger"; and "The Merger --
General -- Treatment of Shares in the
Merger"
5. Plans or Proposals of the Issuer or
Affiliate
Items 5(a)-(g)............................. "Special Factors -- Certain Effects of the
Merger"; "-- Plans for the Company After
the Merger", and "-- Interest 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).......................... Not applicable
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"
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
LOCATION IN PRELIMINARY
SCHEDULE 13E-3 ITEM PROXY STATEMENT
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
Item 7(d).................................. "Special Factors -- Background of the
Merger," "-- Certain Effects of the
Merger"; "-- Plans for the Company After
the Merger" and "-- Certain U.S. Federal
Income Tax Consequences"; and "The
Merger -- Accounting Treatment"
8. Fairness of the Transaction
Item 8(a).................................. "Special Factors -- Recommendations of the
Special Committee and Board of Directors of
the Company; Fairness of the Merger"
Item 8(b).................................. "Special Factors -- Background of the
Merger," "-- Recommendations of the Special
Committee and Board of Directors of the
Company; Fairness of the Merger,"; "--
Purpose and Structure of the Merger"; and
"-- Opinion of Goldman, Sachs & Co.;
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," "-- Recommendations of the Special
Committee and Board of Directors of the
Company; Fairness of the Merger" and "--
Opinion of Goldman, Sachs & Co.; Summary of
Financial Analyses"
Item 8(e).................................. "Special Factors -- Background of the
Merger"
Item 8(f).................................. Not applicable
9. Reports, Opinions, Appraisals and Certain
Negotiations
Items 9(a)-(c)............................. "Special Factors -- Background of the
Merger" and "-- Opinion of Goldman, Sachs &
Co.; Summary of Financial Analyses";
Exhibit(b)(1)
10. Interest in Securities of the Issuer.......
Item 10(a)................................. "Introduction -- Record Date; Quorum;
Required Vote"; "Special
Factors -- Interest of Certain Persons in
the Merger"; and "Ownership of Common
Shares"
Item 10(b)................................. "Transactions by Certain Persons in Common
Shares"
11. Contracts, Arrangements or Understandings
with Respect to the Issuer's Securities.... "Special Factors -- Interest of Certain
Persons in the Merger -- Voting Trust
Agreement"; "The Merger"; Annex A to the
Preliminary Proxy Statement; and
Exhibit(c)(2), (c)(3) and (c)(4)
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";
and "Special Factors -- Recommendations of
the Special Committee and Board of
Directors of the Company; Fairness of the
Merger" and "-- Interest of Certain Persons
in the Merger"
13. Other Provisions of the Transaction
Item 13(a)................................. "The Merger -- Dissenters' Rights" and
Annex C to the Preliminary Proxy Statement
Items 13(b) and (c)........................ Not applicable
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
LOCATION IN PRELIMINARY
SCHEDULE 13E-3 ITEM PROXY STATEMENT
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
14. Financial Information
Item 14(a)................................. "Selected Consolidated Financial Data of
the Company"; Exhibits (g)(1) and (g)(2)
Item 14(b)................................. Not applicable
15. Persons and Assets Employed, Retained
or Utilized
Items 15(a) and (b)........................ "Introduction -- Solicitation of Proxies";
"Special Factors -- Fees and Expenses";
"-- Background of the Merger"; and
"-- Opinion of Goldman, Sachs & Co.;
Summary of Financial Analyses"
16. Additional Information..................... Preliminary Proxy Statement in its entirety
17. Material to be Filed as Exhibits........... Separately included herewith
</TABLE>
iv
<PAGE> 6
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The name of the issuer of the class of equity security which is the
subject of the Rule 13e-3 transaction is BIC Corporation and the address of its
principal executive offices is 500 BIC Drive, Milford, CT 06460. All cross
references in this Statement refer to captions in the Preliminary Proxy
Statement.
(b) The relevant information set forth on the Cover Page of the Preliminary
Proxy Statement and under the caption "Introduction -- Record Date; Quorum;
Required Vote" is incorporated herein by reference.
(c) The relevant information set forth under the caption "Market Price and
Dividends" is incorporated herein by reference.
(d) The relevant information set forth under the caption "Market Price and
Dividends" is incorporated herein by reference.
(e) Not Applicable.
(f) The relevant information set forth in "Transactions by Certain Persons
in Common Shares" is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by Parent, Mergeco, Bruno
Bich, as Voting Trustee, and the Company (the last being the issuer of the
subject security). The relevant information set forth on the Cover Page of the
Preliminary Proxy Statement and set forth under the captions
"Introduction -- General" and "-- the Special Meeting," "The Parties" and
"Management of Parent, Mergeco and the Company" is incorporated herein by
reference.
(e) and (f) During the last 5 years, none of Parent, Mergeco, the Voting
Trustee and the Company or, to the best of Parent's, Mergeco's, the Voting
Trustee's or the Company's knowledge, any of the persons listed in "Management
of Parent, Mergeco and the Company" (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was 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 future violations of, or prohibiting activities
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 -- Interest 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" and "The Merger" is
incorporated herein by reference.
(b) The relevant information set forth under the captions
"Introduction -- Record Date; Quorum; Required Vote," "Special
Factors -- Interest 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 caption "Special
Factors -- Certain Effects of the Merger"; "-- Plans for the Company After the
Merger" and "-- Interest of Certain Persons in the Merger" is incorporated
herein by reference.
1
<PAGE> 7
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a) The relevant information set forth under the caption "The
Merger -- Payment for Public Shares; Sources of Funds" 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) Not applicable.
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" is incorporated herein by reference.
(d) The relevant information set forth under the captions "Special
Factors -- Background of the Merger," "-- Certain Effects of the Merger",
"-- Plans for Company After the Merger" and "-- 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; Fairness of the Merger" 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; Fairness of the Merger,"
"-- Purpose and Structure of the Merger", and "-- Opinion of Goldman, Sachs &
Co.; 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 -- Conditions to the Merger; Amendment, Waiver and Termination" is
incorporated herein by reference.
(d) 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; Fairness of the Merger", and
"-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses" is
incorporated herein by reference.
(e) The relevant information set forth under the caption "Special
Factors -- Background of the Merger" 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 Goldman, Sachs & Co.;
Summary of Financial Analyses" and in Exhibit (b)(1) to this 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 -- Interest of Certain Persons in the Merger" and "Ownership of Common
Shares" is incorporated herein by reference.
2
<PAGE> 8
(b) The relevant information set forth in "Transactions by Certain Persons
in Common Shares" is incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The relevant information set forth under the captions "Special
Factors -- Interest of Certain Persons in the Merger" and "The Merger" and in
Annex A to the Preliminary Proxy Statement is incorporated herein by reference,
and pursuant to Instruction D to Schedule 13E-3, the Voting Trust Agreement,
dated as of February 5, 1991, by and among the Company, Parent, Marcel L. Bich,
Neil Pollio, Bruno Bich and Francois Bich, as amended February 3, 1992, for the
purpose of naming Alexander Alexiades as successor voting trustee and the
Amendment to Voting Trust Agreement, dated July 5, 1995, 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 -- Recommendations of the Special Committee and Board of
Directors; Fairness of the Merger" and "-- Interest of Certain Persons in the
Merger" is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The relevant information set forth under the caption "The
Merger -- Dissenters' Rights" and in Annex C 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 by reference herein and, pursuant to Instruction D to Schedule
13E-3, the following are incorporated by reference herein: (i) the "Consolidated
Financial Statements and Financial Statement Schedules" from the Company's
Annual Report on Form 10-K for the fiscal year ended January 1, 1995 (copies of
which is filed as Exhibit (g)(1) to this Statement); and (ii) Part I, "Financial
Information," Item 1, "Condensed Consolidated Financial Statements" from the
Company's Quarterly Report on Form 10-Q for the quarter ended July 2, 1995
(copies of which is filed as Exhibit (g)(2) to this 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 Goldman, Sachs & Co.;
Summary of Financial Analyses" 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.
3
<PAGE> 9
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a) Not applicable.
(b)(1) Form of opinion of Goldman, Sachs & Co. is incorporated by reference from
Annex B to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto.
(b)(2) A report by Goldman, Sachs & Co. to the Special Committee, dated August 15,
1995, on certain financial analyses.
(b)(3) A report by Donaldson, Lufkin & Jenrette Securities Corporation to Parent,
dated June 22, 1995, on certain financial analyses.
(b)(4) A report by Donaldson, Lufkin & Jenrette Securities Corporation to Parent,
dated July 10, 1995, on certain financial analyses.
(c)(1) Agreement and Plan of Merger, dated as of August 15, 1995, by and among
Parent, Mergeco, the Company and Bruno Bich, as Voting Trustee, is
incorporated by reference from Annex A to the Preliminary Proxy Statement
filed as Exhibit (d)(1) hereto.
(c)(2) Voting Trust Agreement, dated as of February 5, 1991, by and among the
Company, Parent, Marcel L. Bich, Neil Pollio, Bruno Bich and Francois Bich.
(c)(3) Amendment to Voting Trust Agreement, dated as of February 3, 1992, by and
among the Company, Parent, Marcel L. Bich, Bruno Bich, Francois Bich and
Alexander Alexiades.
(c)(4) Amendment No. 2 to Voting Trust Agreement, dated as of July 5, 1993, by and
among the Company, Parent, Marcel L. Bich, Bruno Bich, Alexander Alexiades
and Bermuda Trust Company Limited.
(d)(1) Preliminary Proxy Statement of the Company for the Special Meeting of
Shareholders of the Company.
(e)(1) Statement of appraisal rights is incorporated by reference from Annex C to
the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto.
(f) Not applicable.
(g)(1) Consolidated Financial Statements and Financial Statement Schedules from
the Company's Annual Report on Form 10-K for the fiscal year ended January
1, 1995.
(g)(2) Part I, "Financial Information," Item 1, "Condensed Consolidated Financial
Statements" from the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 2, 1995.
</TABLE>
4
<PAGE> 10
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
BIC CORPORATION
Date: August 28, 1995 By: /s/ THOMAS M. KELLEHER
------------------------------------
Name: Thomas M. Kelleher, Esq.
Title: General Counsel and
Secretary
<PAGE> 11
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
SOCIETE BIC S.A.
Date: August 28, 1995 By: /s/ BRUNO BICH
------------------------------------
Name: Bruno Bich
Title: Chairman of the Board and
President
<PAGE> 12
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
BRUNO BICH, AS VOTING TRUSTEE
Date: August 28, 1995 By: /s/ BRUNO BICH
------------------------------------
Name: Bruno Bich
Title: as voting trustee pursuant
to the Voting Trust
Agreement
<PAGE> 13
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
BIC MERGER CORPORATION
Date: August 28, 1995 By: /s/ BRUNO BICH
------------------------------------
Name: Bruno Bich
Title: President and Treasurer
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION COPY
- ------- ------------------------------------------------------------------------- ------------
<S> <C> <C>
(a) Not applicable.
(b)(1) Form of Opinion of Goldman, Sachs & Co. is incorporated by reference from
Annex B to the Preliminary Proxy Statement filed as Exhibit (d)(1)
hereto.
(b)(2) A report by Goldman, Sachs & Co. to the Special Committee, dated August
15, 1995, on certain financial analyses.
(b)(3) A report by Donaldson, Lufkin & Jenrette Securities Corporation to
Parent, dated June 22, 1995, on certain financial analyses.
(b)(4) A report by Donaldson, Lufkin & Jenrette Securities Corporation to
Parent, dated July 10, 1995, on certain financial analyses.
(c)(1) Agreement and Plan of Merger, dated as of August 15, 1993, among the
Company, Parent, Mergeco and Bruno Bich, as voting trustee, is
incorporated by reference from Annex A to the Preliminary Proxy Statement
filed as Exhibit (d)(1) hereto.
(c)(2) Voting Trust Agreement, dated as of February 5, 1991, by and among the
Company, Parent, Marcel L. Bich, Neil Pollio, Bruno Bich and Francois
Bich.
(c)(3) Amendment to Voting Trust Agreement, dated as of February 3, 1992, by and
among the Company, Parent, Marcel L. Bich, Bruno Bich, Francois Bich and
Alexander Alexiades.
(c)(4) Amendment No. 2 to Voting Trust Agreement, dated as of July 5, 1993, by
and among the Company, Parent, Marcel L. Bich, Bruno Bich, Alexander
Alexiades and Bermuda Trust Company Limited.
(d)(1) Preliminary Proxy Statement of the Company for the Special Meeting of
Shareholders of the Company.
(e)(1) Statement of appraisal rights is incorporated by reference from Annex C
to the Preliminary Proxy Statement filed as Exhibit (d)(1) hereto.
(f) Not applicable.
(g)(1) Consolidated Financial Statements and Financial Statement Schedules from
the Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1995.
(g)(2) Part I, "Financial Information," Item 1, "Condensed Consolidated
Financial Statements" from the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended July 2, 1995.
</TABLE>
<PAGE> 1
Exhibit (b)(2)
PROJECT ROLLERBALL
DISCUSSION EXHIBITS
Prepared by
Goldman, Sachs & Co.
August 15, 1995
<PAGE> 2
TABLE OF EXHIBITS
<TABLE>
<S> <C>
Summary Analysis of Rollerball 1
Valuation Analysis
Historical Trading Ranges and Ownership Analysis 2
Review of Selected Public Companies 3
Comparable Consumer Product Industry Transactions 4
Projections 5
Discounted Cash Flow 6
Discounted Value of Future Stock Price and Distributions 7
Leverage Recapitalization 8
Leveraged Buyout Analysis 9
Buyer's Break-even Analysis 10
Valuation Summary 11
Appendix
Alternative Projections A
</TABLE>
<PAGE> 3
SUMMARY OF ANALYST VIEWS ON ROLLERBALL
ANALYSTS' EARNINGS ESTIMATES
<TABLE>
<CAPTION>
FIRST CALL(a) ROLLERBALL MANAGEMENT
-------------------------------------------- --------------------------------------------
ESTIMATE P/E FORECAST(b) P/E
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
1995E $2.43 14.8x/16.0x $2.40 14.1x/15.3x
1996E 2.45 14.6 /15.8 -- --
</TABLE>
<TABLE>
<CAPTION>
1995E 1996E
-------------------------------------------- --------------------------------------------
PREVIOUS CURRENT PREVIOUS CURRENT
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
PRUDENTIAL SECURITIES $2.25 $2.35 -- $2.45
SMITH BARNEY 2.45 2.50 -- --
</TABLE>
(a) Median estimates. P/E based on pre-announcement price of $35.88 / August 4,
1995 price of $38.88.
(b) Current Forecast. Original 1995 Budget $2.55.
SUMMARY OF ANALYST COMMENTARY
- - Rollerball only can sell its products in the United States, Canada, Mexico,
the Caribbean, and Central America. Unlike other consumer products
companies, it cannot market in Africa, Asia, Europe, or Latin America below
Panama.
- - We would liquidate shares at any premium over Parent's $36.50 offer -
Downgrading Rollerball to sell.
- PRUDENTIAL SECURITIES, MAY 1995
- - Rollerball is poised to capitalize on its low-cost manufacturing capability,
coupled with the prospect for strong margin expansion.
- - The company stands to be a significant beneficiary of the
soon-to-be-implemented federal requirement that all disposable lighters sold
in the U.S. be "child resistant."
- - The Company [has the] potential to leverage up its disposable razor business
by moving customers to higher price-point products.
- SMITH BARNEY, APRIL 1994
<PAGE> 4
Statement of Income -- Rollerball
(dollars in millions, except for per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------- LTM Ending
1991 1992 1993 1994 June 30, 1995
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 369.2 $ 417.4 $ 439.3 $ 475.1 $ 490.9
Cost of Goods Sold (209.8) (225.8) (235.8) (242.5) (254.3)
------ ------ ------ ------ ------
Gross Profit 159.4 191.6 203.5 232.7 236.7
Advertising, SG&A, R&D (114.2) (126.4) (133.7) (145.5) (147.0)
------ ------ ------ ------ ------
INCOME FROM OPERATIONS 45.2 65.1 69.8 87.2 89.6
Other Income - Net 1.4 2.2 4.2 0.0 2.3
------ ------ ------ ------ ------
Income before Taxes, NOL Credit,
Change in Accounting 46.6 67.3 74.0 87.2 92.0
Provision for Income Taxes (19.6) (27.3) (29.2) (35.6) (37.7)
Income before NOL Credit,
Change in Accounting 27.0 39.9 44.8 51.6 54.3
NOL Utilization 1.0 -- -- -- --
Change in Accounting -- -- (9.8) (0.6) --
------ ------ ------ ------ ------
Net Income $ 28.1 $ 39.9 $ 35.0 $ 51.0 $ 54.3
====== ====== ====== ====== ======
EPS $ 1.16 $ 1.70 $ 1.48 $ 2.17 $ 2.30
EBITDA $ 58.7 $ 80.8 $ 90.7 $ 111.0 $ 113.4(a)
Dividends per share $ 0.56 $ 1.06(b) $ 0.72 $ 0.80 $ 0.86
GROWTH AND MARGIN ANALYSIS
Revenue Growth 12.2% 13.0% 5.3% 8.2% 6.5%
Gross Margin 43.2 45.9 46.9 49.2 48.2
Operating Margin 12.2 15.6 15.9 18.4 18.3
Net Margin 7.6 9.6 8.0 10.7 10.9
Dividend Payout Ratio 48.3 62.4 48.7 36.9 37.4
</TABLE>
(a) Estimate.
(b) Includes special dividend of $0.50 per share.
<PAGE> 5
BALANCE SHEET -- ROLLERBALL
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- LTM ENDING
1992 1993 1994 JUNE 30, 1995
------ ------ ------ -------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 25.2 $ 24.1 $ 48.1 $ 65.9
Receivables 50.8 52.0 62.9 122.4
Inventories 58.5 59.4 54.4 56.8
Other 27.5 30.4 29.1 31.4
------ ------ ------ ------
Total Current Assets 162.1 165.0 194.4 267.5
Property, Plant and Equipment -- Net 119.1 140.3 132.6 129.9
Other Assets 27.2 29.9 31.7 34.3
------ ----- ------ ------
TOTAL $308.5 $336.2 $358.7 $440.8
====== ====== ====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Bank Borrowings $ 7.7 $ 6.7 -- --
Payables 21.7 21.2 $ 18.9 $ 56.5
Accrued Expenses 61.2 60.8 67.7 97.1
------ ------ ------ ------
Total Current Liabilities 90.6 88.8 86.6 153.6
Non-Current Liabilities 8.5 20.8 24.1 25.7
Shareholders' Equity 209.4 226.7 247.9 261.4
------ ------ ------ ------
TOTAL $308.5 $336.2 $358.7 $440.8
====== ====== ====== ======
</TABLE>
<PAGE> 6
CASH FLOW STATEMENT - ROLLERBALL
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------- LTM Ending
1991 1992 1993 1994 March 31, 1995
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net Income $ 28.1 $ 39.9 $ 35.0 $ 51.0 $ 53.1
Depreciation & Amortization 13.5 15.7 20.9 23.8 24.3
Decrease/(Increase) in Working Capital 2.5 (1.6) (6.7) (2.4) (0.8)
Other 1.1 (6.3) 11.2 2.0 6.3
------- ------- ------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 45.2 47.7 60.4 74.4 82.9
Cash Flows From Investing Activities
Purchases of Property, Plant and Eqpt - Net (24.4) (43.9) (40.5) (20.5) (19.1)
Purchases of Trademarks and Patents (0.5) (0.8) (0.7) (0.8) (0.8)
Purchase of Wite-Out Products, Inc. -- (19.3) -- (2.0) (2.0)
Deferred Charges 0.2 (2.0) (1.9) 0.1 (2.3)
------- ------- ------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (24.7) (66.1) (43.1) (23.2) (24.2)
NET CASH PROVIDED BY OPERATING &
INVESTING ACTIVITIES 20.5 (18.4) 17.3 51.2 58.7
------- ------- ------- ------- -------
Cash Flows From Financing Activities
Net Increase (Decrease) in Bank Borrowings -- 7.7 (0.9) (6.7) (9.0)
Dividends Paid (13.5) (25.0)(a) (17.0) (18.8) (19.6)
Purchase of Treasury Stock (9.2) -- -- -- --
------- ------- ------- ------- -------
NET CASH USED IN FINANCING ACTIVITIES (22.7) (17.3) (17.8) (25.6) (10.6)
Effect of Exchange Rate Changes on Cash (0.2) (0.6) (0.6) (1.7) (2.3)
------- ------- ------- ------- -------
INCREASE (DECREASE) IN CASH (2.4) (36.4) (1.1) 24.0 45.9
Beginning Cash 63.8 61.5 25.2 24.1 17.8
------- ------- ------- ------- -------
ENDING CASH $ 61.5 $ 25.2 $ 24.1 $ 48.1 $ 63.7
======== ======= ======= ======= =======
</TABLE>
(a) Includes special dividend of $0.50 per share, or $11.8 million.<PAGE> 7
ROLLERBALL (BIC CORPORATION)
MONTHLY COMMON STOCK PRICE & TRADING VOLUME HISTORY
[GRAPH 1]
Monthly January 31, 1995 to July 31, 1995
<PAGE> 8
ROLLERBALL
WEEKLY COMMON STOCK PRICE & TRADING VOLUME HISTORY
[GRAPH 2]
Weekly 1/15/90 to 8/4/95<PAGE> 9
ROLLERBALL
DAILY COMMON STOCK PRICE & TRADING VOLUME HISTORY
[GRAPH 3]
Daily 8/4/94 to 8/4/95<PAGE> 10
ROLLERBALL
MONTHLY PRICE TO EARNINGS RATIO
[GRAPH 4]
Monthly 1/92 to 5/95
<PAGE> 11
ROLLERBALL
COMMON SHARES TRADED AT SPECIFIC PRICES
[GRAPH 5]
Based On Closing Prices From 5/18/94 to 5/18/95<PAGE> 12
ROLLERBALL
COMMON SHARES TRADED AT SPECIFIC PRICES
[GRAPH 6]
Based On Closing Prices From 5/19/95 to 8/4/95
<PAGE> 13
WEEKLY INDEXED COMMON STOCK PRICE HISTORY
[GRAPH 7]
Weekly 1/5/90 to 8/4/95
Rollerball indexed against Marquis (Societe BIC, S.A.), Gillette Co. and a
composite of Rollerball, Marquis and Gillette Co.
<PAGE> 14
DAILY INDEXED COMMON STOCK PRICE HISTORY
[GRAPH 8]
Daily 8/4/94 to 8/4/95
Rollerball indexed against Marquis, Gillette Co. and a composite of Rollerball,
Marquis and Gillette Co.
<PAGE> 15
DAILY COMMON STOCK PRICE HISTORY
[GRAPH 9]
Daily 8/4/94 to 8/4/95
Rollerball in French Francs and U.S. Dollars.
<PAGE> 16
TOP TEN INSTITUTIONAL HOLDERS
<TABLE>
<CAPTION>
SHARES YEARLY CHANGE IN SHARES HELD
HELD %(a) QTR. OF INIT. INITIAL ----------------------------------------
INSTITUTION 3/95 OUTSTANDING ACQ. HOLDINGS 1991 1992 1993 1994 1995
- ---------- ---- ----------- ---- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Putnam Investment Mgmt 589,800 11.3% 6/93 310,200 0 0 36,400 550,100 3,300
Quest Advisory Co 343,100 6.6 12/88 16,600 (5,000) 16,100 0 241,700 2,200
Ohio State Teach Flet Sys 300,000 5.8 3/90 43,300 37,900 33,300 56,100 0 0
Mass Mutual Life Insur 286,600 5.5 9/89 8,300 (77,200) 84,200 74,800 359,000 0
College Retire Equities 195,900 3.8 12/88 66,400 34,900 101,300 (6,700) 0 0
Wells Fargo Inst. Tr Na 150,797 2.9 12/88 162,660 10,400 60,593 (82,621) (12,812) (5,000)
Ruane Cunniff & Co 150,421 2.9 12/88 334,760 (47,900) 21,270 (9,900) (2,559) (1,200)
Bankers Trust N Y Group 109,500 2.1 12/88 8,500 (100) 66,900 36,000 (1,500) 0
Calif State Teachers Ret 85,008 1.6 12/93 83,608 0 0 82,174 1,434 0
Travelers Inc 78,543 1.5 6/94 64,288 0 0 0 82,391 4,811
Total 2,289,669 44.0
</TABLE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES SHARES SHARES
HELD HELD HELD HELD HELD
INSTITUTION 12/90 12/91 12/92 12/93 12/94
- ------------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Putnam Investment Mgmt 0 0 0 36,400 586,500
Quest Advisory Co 88,100 83,100 99,200 99,200 340,900
Ohio State Teach Flet Sys 172,700 210,600 243,900 300,000 300,000
Mass Mutual Life Insur 168,900 91,700 175,900 250,700 286,600
College Retire Equities 66,400 101,300 202,600 195,900 195,900
Wells Fargo Inst. Tr Na 180,237 190,637 251,230 168,609 155,797
Ruane Cunniff & Co 190,710 142,610 164,080 154,180 151,621
Bankers Trust N Y Group 23,700 23,600 90,500 126,500 111,000
Calif State Teachers Ret 0 0 0 82,174 83,608
Travelers Inc 0 0 0 0 73,732
Total 890,747 843,747 1,227,410 1,413,663 2,285,658
</TABLE>
(a) % of shares not held by Societe BIC SA, the Bich family,
or BIC officers and directors.
<PAGE> 17
ROLLERBALL - COMMON STOCK COMPARISON
<TABLE>
<CAPTION>
HISTORICAL 5-YEAR
LTM MARGIN CAGR PROJECTED
SHARE % OF -------------------- ----------------- 5-YEAR
PRICE AS OF 52-WEEK MARKET ENTERPRISE DEBT TO NET NET EPS
8/11/95 HIGH CAP VALUE TOTAL CAP EBITDA EBIT INCOME REVENUE INCOME CAGR (b)
----------- ------- ------ ---------- --------- ------ ---- ------ ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Safety Razor $ 9.88 68.1 % $ 119 $ 228 82.3 % 18.7 % 15.1 % 5.9 % 7.6 % N/A 13.5 %
American Business Products 19.50 95.1 312 372 36.4 10.5 7.5 3.6 7.8 9.2 % 12.0
A.T. Cross 15.88 92.0 262 187 0.0 15.6 12.0 6.0 (3.3) (17.7)% 5.0
Avery Dennison 39.25 89.7 2,092 2,569 38.6 11.4 7.7 4.0 2.7 82.3 13.5
Black & Decker 30.75 92.1 2,620 5,124 69.2 11.8 7.7 2.6 2.1 22.1 12.0
Dixon Ticonderoga 7.88 70.8 25 67 73.8 10.7 8.1 2.4 N/A N/A N/A
Duracell 44.63 94.2 5,234 5,590 24.1 23.7 19.3 11.4 8.7 107.6 17.0
Gillette 43.25 93.8 19,167 20,122 31.3 23.7 20.2 11.7 7.5 14.7 16.0
Hunt Manufacturing 15.13 89.0 242 239 3.2 12.2 9.4 6.0 7.7 (1.4) N/A
Newell 25.75 97.6 4,067 4,701 38.6 20.3 17.1 9.1 12.7 9.8 15.0
Pentech International 2.50 40.0 27 44 42.3 13.7 12.2 6.4 15.3 0.0 N/A
Premark 51.50 94.1 3,135 3,442 32.3 13.5 9.7 6.7 5.2 35.1 15.0
Rubbermaid 30.38 88.7 4,887 4,850 4.0 20.2 16.0 10.3 7.9 10.0 14.0
Sunbeam Oster 16.75 64.4 1,370 1,533 26.0 18.7 15.7 9.0 N/A N/A 17.0
MEDIAN 34.0 % 14.6 % 12.1 % 6.2 % 7.6 % 10.0 % 14.0 %
ROLLERBALL OFFER PRICE $ 40.50 101.9 % $ 954 888 0.0 % 23.1 % 18.3 % 11.0 % 8.3 % 17.7 % 12.5 %
ROLLERBALL PRE-OFFER PRICE 35.88 90.3 845 779 0.0 23.1 18.3 11.0 8.3 17.7 12.5
ROLLERBALL 6 MO AVG (a) 30.85 77.6 727 661 0.0 23.1 18.3 11.0 8.3 17.7 12.5
Marquis (c) 840 FF 100.0 % 11,609 FF 10,002 FF 5.7 % 24.7 % 17.7 % 11.0 % 4.6 % 22.3 % 12.0 %
</TABLE>
FOOTNOTES
(a) Using average price for six months prior to the announcement.
(b) First Call estimates as of 8/11/95.
(c) Current exchange rate of 4.94FF/$1.
<PAGE> 18
ROLLERBALL -- COMMON STOCK COMPARISON
<TABLE>
<CAPTION>
MULTIPLE OF ENTERPRISE VALUE P/E RATIOS CURRENT
--------------------------------- --------------- ---------
LTM REV. LTM EBIT LTM EBITDA 1995E 1996E DIV YIELD
-------- -------- ---------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
American Safety Razor 1.1x 7.4x 6.0x 9.9x 8.6x 0.0%
American Business Products 0.6 8.5 6.1 134.5 12.2 2.9
A.T. Cross 1.1 8.8 6.8 19.8 15.9 4.0
Avery Dennison 0.9 11.2 7.6 15.1 13.1 2.8
Black & Decker 1.0 12.4 8.1 15.8 13.4 1.3
Dixon Ticonderoga 0.7 8.7 6.6 N/A N/A 0.0
Duracell 2.8 14.3 11.6 21.6 17.9 2.3
Gillette 3.2 16.0 13.6 23.4 20.4 1.2
Hunt Manufacturing 0.8 8.6 6.7 12.6 11.3 2.5
Newell 2.1 12.6 10.6 17.8 15.5 1.6
Pentech International 0.7 6.0 5.3 6.3 5.0 0.0
Premark 1.0 10.1 7.3 12.9 11.7 1.6
Rubbermaid 2.2 13.5 10.7 23.4 19.6 1.6
Sunbeam Oster 1.3 8.0 6.7 16.8 12.9 0.2
MEDIAN 1.0x 9.5x 7.0x 16.8x 13.1x 1.6%
ROLLERBALL OFFER PRICE 1.8x 9.9x 7.8x 16.7x 16.5x 2.3%
ROLLERBALL PRE-OFFER PRICE 1.6 8.7 6.9 14.8 14.6 2.6
ROLLERBALL 6 MO AVG (a) 1.3 7.4 5.8 12.7 12.6 3.0
Marquis 1.6x 8.8x 6.3x 18.2x 15.3x 2.1%
</TABLE>
<PAGE> 19
SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE
PRODUCTS ACQUISITIONS
(dollars in millions)
<TABLE>
<CAPTION>
Multiples of
Levered ---------------------------------
Date Target Acquiror Consideration Sales(a) EBIT(a) Net Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 Woolite Carpet Cleaner (of Reckitt & Playtex N.A. N.A. N.A. N.A.
Pending Colman plc)
Kolynos (American Home Products) Colgate-Palmolive $1,040 3.6x 13.4x N.A.
Odol SAIC (Argentina) Colgate-Palmolive 80 2.1 N.A. 19.8
- ----------------------------------------------------------------------------------------------------------------------------------
1994 L&F Products Inc. - Household Reckitt & Colman, PLC 1,550 2.0 11.7 N.A.
(Eastman Kodak Co.)
L&F Products Inc. - D-I-Y (Eastman Forstmann, Lillie & Co. 700 2.0 10.6 N.A.
Kodak Co.)
Neutrogena Corp. Johnson & Johnson 915 3.3 22.4 37.5x
Giorgio Beverly Hills Procter & Gamble 145 0.9 5.2 N.A.
Guerlain Louis Vuitton Moet-Hennessy 772 2.0 14.2 22.1
Muehiens Wella N.A. N.A. N.A. N.A.
European Personal Care Brands Colgate-Palmolive N.A. N.A. N.A. N.A.
(of S.C. Johnson)
Prince Matchabelli Fragrance Parfums de Couer N.A. N.A. N.A. N.A.
Brands (of Unilever)
- -----------------------------------------------------------------------------------------------------------------------------------
1993 Curel and Soft Sense (of S.C. Bausch & Lomb N.A. N.A. N.A. N.A.
Johnson)
Yves St. Laurent(b) Elf Sanoli 634 1.6x 9.7x 15.0x
Renuzit (of S.C. Johnson) Dial N.A. N.A. N.A. N.A.
Endust/Behold (of S.C. Johnson) Sara Lee N.A. N.A. N.A. N.A.
Parker Pen Holdings Gillette 488 1.7 8.6 14.7
Agree and Halsa (of S.C. Johnson) Dep Corp. 45 0.7 N.A. N.A.
Redken L'Oreal N.A. N.A. N.A. N.A.
Johnson Products IVAX Corp. 67 1.6 8.4 14.0
UK brands of SmithKline Beecham Sara Lee 320 1.3 6.5 N.A.
Wilkinson Sword (of Eemland Warner-Lambert 142 0.8 19.7 N.A.
Holdings)
- -----------------------------------------------------------------------------------------------------------------------------------
1992 Coty Benckiser 440 1.6 N.A. N.A.
Mennen Colgate-Palmolive 645(c) 1.3 N.A. N.A.
Nobel Consumer Products Business Henkel 698 1.8 13.4 N.A.
The Drackell Company (of BMS) S.C. Johnson 1,150 2.0 14.1 N.A.
Globol (of BP) Jeyes Group 36(d) 0.6 8.0 N.A.
- -----------------------------------------------------------------------------------------------------------------------------------
1991 Playtex Family Products Sara Lee 250(e) 3.1x 10.7x N.A.
Plax International Colgate-Palmolive 105 1.5 N.A. N.A.
- -----------------------------------------------------------------------------------------------------------------------------------
Continued on next page
</TABLE>
<PAGE> 20
SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE
PRODUCTS ACQUISITIONS
(dollars in millions) Continued
<TABLE>
<CAPTION>
Multiples of
Levered ----------------------------
Date Target Acquiror Consideration Sales(a) EBIT(a) Net Inc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Max Factor & Belrix Procter & Gamble 1,025 1.3 N.A. N.A.
La Prairie Beiersdorf 45 N.A. N.A. N.A.
U.S. Cosmetics of Germaine Benckiser 40 1.0 N.A. N.A.
Monteil
Murphy Phoenix Colgate-Palmolive 121 3.1 22.4 N.A.
Sanford Corp. Newell Companies 593 4.1 16.0 26.6
Stuart-Hall Corp. Newell Companies 11 N.A. N.A. N.A.
W.T. Rogers Company Newell Companies 57 1.6 14.8 26.5
18 office products companies (of the Alco Standard Corp. 99 0.6 N.A. N.A.
Hillman Company
Chambers & Co. Johann Froeschels LYRA-Bleistill- N.A. N.A. N.A. N.A.
Fabrik
R. Dummert Staedller Mars N.A. N.A. N.A. N.A.
Koninklijke TALENS (of Akzo) Sakura Color Products N.A. N.A. N.A. N.A.
- -------------------------------------------------------------------------------------------------------------------------------
1990 Gillette's European Skin & Haircare Nobel 107 0.8 N.A. N.A.
Margaret Astor & Lancaster Benckiser 358 0.8 10.5 N.A.
Yardley & Lentheric Old Bond Street 181 1.2 N.A. N.A.
Maybelline Wasserstein Perella 300 1.0 N.A. N.A.
Shulton's Men's Toiletries Procter & Gamble 370 1.3 N.A. N.A.
Vipont Pharmaceutical Colgate-Palmolive 90 2.2 18.6 30.4
Parfums Stern Sanoli 210 1.7 N.A. N.A.
Household business of American Clorox 465 2.0 N.A. N.A.
Cyanamid
Boyle-Midway Reckill & Colman 1,250 1.9 16.1 25.4
Javex Colgate Palmolive 173 2.1 14.1 N.A.
Eldon Industries, Inc. Rubbermaid Inc. 222 1.9 14.9 25.0
Dennison Manufacturing Company Avery International Corporation 497 0.8 11.6 20.5
Knoll International, Inc. Westinghouse Electric Corporation 112 .6 N.A. N.A.
Art and Graphics Division (of Reekitt Beckers 103 1.6 N.A. N.A.
and Coleman)
Esselte Business Systems, Inc. Esselte AB 221 0.9 9.1 17.2
Graphic Arts Group (of Bunzl) Hunt Manufacturing 36 N.A. N.A. N.A.
GEHA Werke Pelikan N.A. N.A. N.A. N.A.
- -------------------------------------------------------------------------------------------------------------------------------
1989 Noxell Procter & Gamble 1,342 2.3 16.0 24.9
Faberge & Elizabeth Arden Unilever 1,550 1.9 17.0 N.A.
Calvin Klein Cosmetics Unilever 370 1.9 22.1 32.2
Rimmel & Chicago Unilever 120 1.6 N.A. N.A.
Goldwell Kao 190 1.1 N.A. N.A.
- -------------------------------------------------------------------------------------------------------------------------------
Continued on next page
</TABLE>
<PAGE> 21
SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE
PRODUCTS ACQUISITIONS
(dollars in millions) Continued
<TABLE>
<CAPTION>
MULTIPLES OF
LEVERED ----------------------------
DATE TARGET ACQUIROR CONSIDERATION SALES(a) EBIT(a) NET INC
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
European household business of Dow 45 0.5 N.A. N.A.
First Brands
Camp Fabrica de Jabones Benckiser 297 1.5 22.5 48.5
The Gunlocke Company (of LADD HON Industries, Inc. 34 0.6 N.A. N.A.
Furniture, Inc.)
Nodaway Valley Co. William Blair Leveraged Capital 27 0.8 9.1 15.9
Fund and William J. White
Craft World International Sterling Group Inc. 21 N.A. N.A. N.A.
Rockaway Corporation Ascom Holding AG 109 2.4 14.9 24.2
- ------------------------------------------------------------------------------------------------------------------------------
1988 Vitabath Minnetonka 39 2.2 9.4 15.3
Playtex Investor Group 683 4.0 12.7 31.6
Redken Paula Kent Meehan 50 0.7 10.0 19.9
Zolos International Shiseido 342 2.5 N.A. N.A.
John O. Butler Sunstar 161 3.3 16.3 30.5
Andrew Jergens Kao 300 1.7 22.7 N.A.
Nelsen Procter & Gamble 56 1.3 13.1 24.3
Mira Lanza Benckiser 339 1.2 18.1 50.0
Finpanigal Benckiser 127 N.A. N.A. N.A.
Certain Parts of Cotelle Colgate Palmolive 150 N.A N.A N.A.
Parker Pen Pentland Industries 330 1.5 N.A N.A.
Allied-Egry and Walton Printing Allied Acquisition, Inc. (affiliate 51 0.4 N.A. 29.3
Company of SCM Corporation of Halson Associates)
(sub of Hanson plc)
Sterling Plastics Company (of Sanford Corporation 36 1.6 10.8 N.A.
Borden, Inc.)
National Pen and Pencil Company Dixon Ticonderoga Company 6 1.0 N.A. N.A.
(of UST Enterprises, Inc.)
Cheshire, Inc. (sub of Xerox Videojet Systems International, Inc. 21 N.A. N.A. N.A.
Corporation)
McKesson Office Products Division SDC Distributing Corp. 42 N.A. N.A. N.A.
(of McKesson Corporation)
Drawing Office and Photgraphic James River Corporation of Virginia 43 0.4 N.A. N.A.
Papers Business of Wiggins
Teape Group (sub of B.A.T.
Industries, plc)
Looart Press, Inc. (sub of Deluxe Check Printers, Incorporated 179 1.4 N.A. 13.3
Primerica Corporation)
- ------------------------------------------------------------------------------------------------------------------------------
1987 Akzo Consumer Products Sara Lee 615 0.9 13.7 24.2
Consumer Division of Ecolab Benckiser 243 1.1 N.A. 47.4
- ------------------------------------------------------------------------------------------------------------------------------
Continued on next page
</TABLE>
<PAGE> 22
SUMMARY OF RECENT CONSUMER PRODUCTS AND OFFICE
PRODUCTS ACQUISITIONS
(dollars in millions) Continued
<TABLE>
<CAPTION>
Multiples of
Levered ----------------------------
Date Target Acquiror Consideration Sales(a) EBIT(a) Net Inc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Blendax Procter & Gamble 367 1.1 15.2 38.6
Liquid soap business of the
Minnetonka Corporation Colgate-Palmolive 61 1.0 N.A. N.A.
Bain de Soleil (of Revlon) Procter & Gamble 85 N.A. N.A. N.A.
Elizabeth Arden (of Eli Lilly) Faberge 751 1.6 25.4 54.4
Lamaur Inc. Dow Chemical 180 1.4 23.9 40.7
Nicholas Kiwi Australasia Sara Lee 206 2.0 12.2 23.6
Revlon MacAndrews & Forbes 778 1.4 5.9 21.2
Jeffrey Martin DEP Corp 73 1.1 31.0 81.1
Chesebrough-Ponds Unilever 3,095 1.3 13.9 20.9
Berol Corporation Empire Pencil Corporation 50 0.8 7.4 45.8
ACCO World Corporation American Brands, Inc. 606 2.5 13.6 25.9
Shealer Eaton (of Textron,Inc.) Gefinor S.A. 135 1.0 12.7 N.A.
Mallat Lefranc & Bourgeois N.A. N.A. N.A. N.A.
S.T. DuPont (sub of the Gillette Dickson Too Holding Company Ltd. 52 1.1 N.A. N.A.
Company)
ACCO-World's Stapler business Hunt Manufacturing N.A. N.A. N.A. N.A.
Royal Sovreign's Marker business Abelscot Group 7 N.A. N.A. N.A.
(of DRG)
Waterman S.A. The Gillette Company 40 0.9 6.6 18.6
EMF Corporation B.T. USA, Inc. 13 1.6 12.5 10.9
Knoll International, Inc. Hansac, Inc. (sub of General Felt 28 1.0 12.6 22.2
Industries, Inc.)
Mean 1.6x 14.1x 28.3x
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on levered consideration
(b) Assume transaction if for 100% of total equity. Numbers based on 1991
financials. Analysts estimated 1992 results were 30%-50% below 1991
results
(c) Adjusted for $35 million sales price allocation to paper products business.
(d) Based on a acquisition of 75% stake for 28.0 million (exchange rate of
1.48).
(e) Based on acquisition of a 25% stake for $62.5 million.
<PAGE> 23
ROLLERBALL SUMMARY FINANCIAL PERFORMANCE
MANAGEMENT PROJECTIONS -- ALTERNATIVE CASES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Management Estimate
18.3% Operating Margin 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E
- ---------------------- ---- ---- ---- ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $377.2 $426.8 $444.2 $475.2 $513.8 $533.2 $567.9 $605.1 $645.1
EBIT $ 47.9 $ 65.1 $ 69.8 $ 87.2 $ 94.3 $ 97.8 $104.2 $111.0 $118.3
Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
</TABLE>
<TABLE>
<CAPTION>
2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004
----- ----- ----- ----- ----- --------- ---------
<C> <C> <C> <C> <C> <C> <C>
$686.4 $730.7 $778.2 $829.2 $884.0 8.0% 6.5% CAGR
$125.9 $134.0 $142.6 $152.1 $162.2 18.4% 6.5% CAGR
18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average
</TABLE>
<TABLE>
<CAPTION>
18.3% Operating Margin/
Lower Stationery Growth 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E
- ---------------------- ---- ---- ---- ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $377.2 $426.8 $444.2 $475.2 $506.6 $516.9 $541.3 $567.0 $594.0
EBIT $ 47.9 $ 65.1 $ 69.8 $ 87.2 $ 92.9 $ 94.8 $ 99.3 $104.0 $109.0
Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
</TABLE>
<TABLE>
<CAPTION>
2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004
----- ----- ----- ----- ----- --------- ---------
<C> <C> <C> <C> <C> <C> <C>
$620.8 $648.8 $678.3 $709.1 $741.5 7.7% 4.6% CAGR
$113.9 $119.0 $124.4 $130.1 $136.0 18.0% 4.6% CAGR
18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average
</TABLE>
<PAGE> 24
DISCOUNTED CASH FLOW ANALYSIS
COMPARISON OF ALTERNATIVE CASES
(Equity value per share)
<TABLE>
<CAPTION>
MANAGEMENT ESTIMATE WITH 18.3% OPERATING MARGIN 18.3 OPERATING MARGIN/LOWER STATIONERY GROWTH
TERMINAL EBITDA MULTIPLE/ TERMINAL EBITDA MULTIPLE/
TERMINAL EBIT MULTIPLE TERMINAL EBIT MULTIPLE
----------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------- ---------------------------------------------
6.6x 7.4x 8.3x 9.1x 9.9x 6.6x 7.4x 8.3x 9.1x 9.9x
----------------------------------------------- ---------------------------------------------
8.0x 9.0x 10.0x 11.0x 12.0x 8.0x 9.0x 10.0x 11.0x 12.0x
----------------------------------------------- ---------------------------------------------
Discount Rate Discount Rate
11.0% $35.92 $38.35 $40.77 $43.19 $45.62 11.0% $32.66 $34.69 $36.73 $38.76 $40.79
12.0% $33.60 $35.82 $38.03 $40.25 $42.46 12.0% $30.63 $32.49 $34.35 $36.21 $38.07
13.0% $31.48 $33.51 $35.53 $37.56 $39.59 13.0% $28.77 $30.48 $32.18 $33.88 $35.58
/TABLE
<PAGE> 25
PRESENT VALUE OF FUTURE STOCK PRICE AND CASH PAID TO SHAREHOLDERS
MANAGEMENT PROJECTIONS - 18.3% OPERATING MARGIN
(BASED ON HYPOTHETICAL RECAPITALIZATION AND CONSTANT PAYOUT RATIO)
<TABLE>
<CAPTION>
PRO FORMA END OF HOLDING PERIOD 1995 1996 1997 1998 1999 2000
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MANAGEMENT PROJECTED EPS $ 2.40 $ 2.49 $ 2.65 $ 2.83 $ 3.01 $ 3.21
Interest Expense(a) (0.31) (0.31) (0.31) (0.31) (0.31) (0.31)
Interest Earned(b) 0.00 0.08 0.09 0.09 0.10 0.10
ADJUSTED EPS 2.09 2.26 2.44 2.62 2.81 3.00
PRESENT VALUE OF STOCK PRICE(c)
P/E on Next Year's Earnings
10 x $22.62 $21.57 $20.48 $19.45 $18.42
12 27.14 25.88 24.58 23.34 22.11
14 31.67 30.20 28.68 27.23 25.79
16 36.19 34.51 32.78 31.12 29.47
ESTIMATED DIVIDENDS(d) $ 0.92 $ 0.81 $ 0.88 $ 0.94 $ 1.01
SPECIAL RECAPITALIZATION DIVIDEND (e) $ 8.22
PRESENT VALUE OF DIVIDENDS(d) $ 9.14 $ 9.86 $10.55 $11.20 $11.82
TOTAL VALUE OF STOCK PRICE AND DIVIDENDS
P/E on Next Year's Earnings
10 x $31.76 $31.43 $31.03 $30.65 $30.24
12 36.29 35.75 35.13 34.54 33.93
14 40.81 40.06 39.23 38.43 37.61
16 45.33 44.37 43.33 42.32 41.30
Cash on Balance Sheet $ 1.59 $ 1.87 $ 1.96 $ 2.05 $ 2.13
- ------------------------------------ --------------------------------------------------
</TABLE>
(a) Assumes $150 Debt, 8% interest rate and 40% tax rate.
(b) Assumes 8% interest rate on previous year cash balance and 40% tax rate.
(c) Applies 13.0% discount rate to dividends and share price appreciation.
(d) Based on 1995 dividend of $0.92 per share and constant rate 36% thereafter.
(d) Applies 13.0% discount rate to dividends and share price appreciation.
(e) Comprised of $150 million of new debt and $44 million in excess cash on
balance sheet.
<PAGE> 26
PRESENT VALUE OF FUTURE STOCK PRICE AND CASH PAID TO SHAREHOLDERS
MANAGEMENT PROJECTIONS - 18.3% OPERATING MARGIN/LOWER STATIONERY GROWTH
(BASED ON HYPOTHETICAL RECAPITALIZATION AND CONSTANT PAYOUT RATIO)
<TABLE>
<CAPTION>
PRO FORMA END OF HOLDING PERIOD 1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Projected EPS $ 2.37 $ 2.41 $ 2.53 $ 2.65 $ 2.78 $ 2.90
Interest Expense (a) (0.31) (0.31) (0.31) (0.31) (0.31) (0.31)
Interest Earned (b) 0.00 0.08 0.10 0.10 0.10 0.11
ADJUSTED EPS 2.06 2.19 2.32 2.44 2.57 2.70
PRESENT VALUE OF STOCK PRICE (c)
P/E on Next Year's Earnings
10x $21.89 $20.56 $19.13 $17.82 $16.56
12 26.27 24.68 22.95 21.39 19.87
14 30.65 28.79 26.78 24.95 23.18
16 35.03 32.90 30.61 28.52 26.49
ESTIMATED DIVIDENDS (d) $ 0.92 $ 0.79 $ 0.84 $ 0.88 $ 0.93
SPECIAL RECAPITALIZATION DIVIDEND (e) $ 8.22
PRESENT VALUE OF DIVIDENDS (d) $ 9.14 $ 9.84 $10.49 $11.10 $11.67
TOTAL VALUE OF STOCK PRICE AND DIVIDENDS
P/E on Next Year's Earnings
10x $31.04 $30.40 $29.62 $28.93 $28.23
12 35.41 34.52 33.45 32.49 31.54
14 39.79 38.63 37.27 36.06 34.85
16 44.17 42.74 41.10 39.62 38.17
Cash on Balance Sheet $ 1.67 $ 2.09 $ 2.07 $2.13 $2.20
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes $150 Debt, 8% interest rate and 40% tax rate.
(b) Assumes 8% interest rate on previous year cash balance and 40% tax rate.
(c) Applies 13.0% discount rate to dividends and share price appreciation.
(d) Based on 1995 dividend of $0.92 per share and constant payout rate of 36%
thereafter.
(d) Applies 13.0% discount rate to dividends and share price appreciation.
(e) Comprised of $150 million of new debt and $44 million in excess cash on
balance sheet.
<PAGE> 27
ROLLERBALL - HYPOTHETICAL LEVERAGED RECAPITALIZATION
MANAGEMENT PROJECTION - 18.3% OPERATING MARGIN SCENARIO
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
Aggregate Valuation: Per Share
---------
<S> <C> <C> <C>
Dividend to Existing Shareholders $625 $26.50
Stub Equity 250-340 $10.50-14.50
-------- ------------
$875-965 $37.00-41.00
Multiple of 1995E EBIT (levered): 9.6x
Multiple of 1995E EBITD (levered): 7.5x
</TABLE>
<TABLE>
<CAPTION>
Sources of Funds Current Interest Rate Uses of Funds
<S> <C> <C> <C> <C>
Senior Term Loan $200 8.0% Dividend to Shareholders $625
Subordinated Debt 406 11.0 Transactions Costs 25
Excess Cash 44 8.0 ----
---- $650
$650
</TABLE>
<TABLE>
<CAPTION>
Capitalization Market % Book %
<S> <C> <C> <C> <C>
Senior Term Loan $200 22% $200 98%
Subordinated Debt 406 45 406 198
Common Equity 294(a) 33 (401) (196)
--- --- ----- -----
Total Capitalization 900 100% 205 100%
</TABLE>
<TABLE>
<CAPTION>
Coverage Ratios
<S> <C>
EBITDA less Capex:
1995E 1.5x
1996E 1.6
1997E 1.8
1998E 1.9
(a) Assumes P/E of 14 times 1995 EPS
</TABLE>
Assumes
- -------
- - Net Working Capital = 16.7% of Sales
- - Capital Expenditures = Depreciation<PAGE> 28
ROLLERBALL - HYPOTHETICAL LEVERAGED RECAPITALIZATION
MANAGEMENT PROJECTION - 18.3% OPERATING MARGIN SCENARIO
(DOLLARS AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
CASH AVAILABLE TO SERVICE PRINCIPAL REPAYMENT CUMULATIVE CASH PERCENTAGE OF SENIOR DEBT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
2000E Year 6 $112 56%
2001E Year 7 155 78
2002E Year 8 205 103
</TABLE>
<TABLE>
<CAPTION>
PRICE APPRECIATION
1995 STUB 2000 STUB PRICE APPRECIATION CAGR WITH EXIT
EQUITY RETURN VALUATION VALUATION CAGR MULTIPLE OF 16X
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EPS Multiple
12.0x $10.68 $22.44 16% 23%
14.0x 12.46 26.18 16% 19%
16.0x 14.24 29.92 16% 16%
</TABLE>
<PAGE> 29
ROLLERBALL LBO ANALYSIS SUMMARY -- ILLUSTRATIVE
MANAGEMENT PROJECTIONS -- 18.3% OPERATING MARGIN SCENARIO
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
Per Share
---------
<S> <C> <C> <C>
Aggregate Consideration: $825 $35.00
Multiple of 1995E EBIT (levered): 8.6x
Multiple of 1995E EBITD (levered: 6.7x
</TABLE>
<TABLE>
<CAPTION>
Sources of Funds Current Interest Rate Uses of Funds
- --------------- --------------------- ------------
<S> <C> <C>
Senior Term Loan $200 8.0% Common Stock $825
Subordinated Debt 406 11.0 Transactions Costs 25
Common Equity 200 -- ----
Excess Cash 44 8.0% $850
----
$850
</TABLE>
<TABLE>
<CAPTION>
Coverage Ratios:
<S> <C>
EBITDA less Capex:
1995E 1.5x
1996E 1.6
1997E 1.8
1998E 1.9
</TABLE>
<TABLE>
<CAPTION>
Cash Available to Service Principal Repayment Cumulative Cash Percentage of Senior Debt
<S> <C> <C>
2000E YEAR 6 $112 56%
2001E YEAR 7 155 78
2002E YEAR 8 205 103
</TABLE>
<TABLE>
<CAPTION>
Equity Returns
Exit in year 2000 (Year 6) at
<S> <C>
6.0x EBITDA 16%
9.0x EBITDA 30
12.0x EBITDA 39
</TABLE>
An LBO could be structured at approximately $35 per share which meets market
requirements with respect to interst coverage, debt repayment schedules and
equity returns.
Assumes
- - Net Working Captial = 16.7% of Sales
- - Capital Expenditures = Depreciation
<PAGE> 30
PROJECT ROLLERBALL
PARENT COMPANY ACCRETION/DILUTION
ASSUMING CURRENT EXCHANGE RATES
<TABLE>
<CAPTION>
ASSUMPTIONS
- ---------------------------------------------------------------
<S> <C> <C>
5.3 Public shares (MM) 22.3%
23.6 Total shares (MM)
13.2 Parent shares (MM)
FF 295.6 Book value equity (FF MM)
39.50% Parent tax rate
7.00% Parent return on cash balances
40 Goodwill amortization period
4.94 FF/$ Exchange rate
$5.00 Transaction related fees ($ MM)
</TABLE>
<TABLE>
<CAPTION>
1996
PROJECTED EARNINGS BREAK-EVEN BREAK-EVEN BREAK-EVEN BREAK-EVEN
ROLLERBALL ACQUIRED BY FF CONSIDERATION EQUITY EQUITY STOCK
EARNINGS PARENT EARNINGS (FF) PRICE (FF) PRICE ($) PRICE ($)
---------- ----------- -------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
18.3% Operating Margin $58.7 $13.1 FF 64.7 FF 1070.1 FF 1045.4 $211.6 $40.26
18.3% Operating Margin/
Lower Stationery Growth $56.9 $12.7 FF 62.7 FF 1040.7 FF 1016.0 $205.6 $39.13
</TABLE>
<TABLE>
<CAPTION>
ANALYST TRANSACTION AT $40.50 PER SHARE
PROJECTED ---------------------------------------------------------------- PARENT
PARENT 1996 EARNINGS INTEREST PARENT PROFIT PARENT EPS ACCRETION/
EPS ACQUIRED COST GOODWILL IMPACT IMPACT (DILUTION)
--------- ------------- -------- -------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
18.3% Operating Margin FF 55.2 FF 64.7 FF -45.6 FF -19.5 -FF 0.4 -FF 0.03 (0.1%)
18.3% Operating Margin/
Lower Stationery Growth FF 55.2 FF 62.7 FF -45.6 FF -19.5 -FF 2.4 -FF 0.18 (0.3%)
</TABLE>
<PAGE> 31
ANALYSIS AT OFFER PRICE
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C>
Sale Price $40.50
Implied Total Equity Consideration $954.1
Implied Total Levered Consideration(a) $890.4
- -----------------------------------------------------------------------
MULTIPLES OF SALES (LEVERED)
1994 $475.1 1.87 x
LTM 490.9 1.81
1995 E 513.8 1.73
1996 E 533.2 1.67
MULTIPLES OF EBITDA (LEVERED)
1994 $111.0 8.02 x
LTM 113.4 7.85
1995 E 120.0 7.42
1996 E 124.5 7.15
MULTIPLES OF EBIT (LEVERED)
1994 $ 87.2 10.21 x
LTM 89.6 9.94
1995 E 94.3 9.44
1996 E 97.8 9.10
MULTIPLIES OF NET INCOME
1994 $ 51.0 18.71 x
LTM 54.3 17.57
1995 E 56.6 16.87
1996 E 58.7 16.26
PREMIUM TO BOOK $249.0 283.2%
TRANSACTION COSTS
Interest Expenses(b) $45.8
Purchase Accounting(c) 17.6
-----
Total Transaction Costs(d) 63.4
- ---------------------------------------------- -----
</TABLE>
(a) Aggregate consideration plus debt less cash and cash equivalents.
(b) Assumes 8.0% interest and 40% tax rate.
(c) Assumes 40 year amortization of goodwill.
(d) Rollerball would have to generate this level of net income in order for the
transaction to be accretive to acquiror's earnings.
<PAGE> 32
ROLLERBALL SUMMARY FINANCIAL PERFORMANCE
MANAGEMENT PROJECTIONS - ALTERNATIVE CASES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Management Estimate
18.3% Operating Margin 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E
- ---------------------- ---- ---- ---- ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $377.2 $426.8 $444.2 $475.2 $513.8 $533.2 $567.9 $605.1 $645.1
EBIT $47.9 $65.1 $69.8 $87.2 $94.3 $97.8 $104.2 $111.0 $118.3
Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004
---- ---- ---- ---- ----- --------- ---------
<C> <C> <C> <C> <C> <C> <C> <C>
$686.4 $730.7 $778.2 $829.2 $884.0 8.0% 6.5% CAGR
$125.9 $134.0 $142.8 $152.1 $162.2 18.4% 6.5% CAGR
18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average
18.3% Operating Margin/
Lower Stationery Growth 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E
- ----------------------- ---- ---- ---- ---- ----- ----- ----- ----- -----
Revenues $377.2 $426.8 $444.2 $475.2 $506.6 $516.9 $541.3 $567.0 $594.0
EBIT $47.9 $65.1 $69.8 $87.2 $92.9 $94.8 $99.3 $104.0 $109.0
Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004
---- ---- ---- ---- ----- --------- ---------
$620.8 $648.8 $678.3 $709.1 $741.5 7.7% 4.6% CAGR
$113.9 $119.0 $124.4 $130.1 $136.0 18.0% 4.6% CAGR
18.3% 18.3% 18.3% 18.3% 18.3% 16.1% 18.3% average
Base Case Sales with
Operating Margin Increases 1991 1992 1993 1994 1995E 1996E 1997E 1998E 1999E
- -------------------------- ---- ---- ---- ---- ----- ----- ----- ----- -----
Revenues $377.2 $426.8 $444.2 $475.2 $513.8 $533.2 $567.9 $605.1 $645.1
EBIT $47.9 $65.1 $69.8 $87.2 $99.6 $106.0 $116.7 $128.2 $140.6
Operating Profit Margin 12.7% 15.3% 15.7% 18.3% 19.4% 19.9% 20.5% 21.2% 21.8%
2000E 2001E 2002E 2003E 2004E 1991-1995 1996-2004
---- ---- ---- ---- ----- --------- ---------
$686.4 $730.7 $778.2 $829.2 $884.0 8.0% 6.5% CAGR
$152.9 $165.2 $178.4 $192.7 $208.1 20.1% 6.5% CAGR
22.3% 22.6% 22.9% 23.2% 23.5% 16.3% 22.0% average
</TABLE>
<PAGE> 1
Exhibit (b)(3)
PRESENTATION TO
SOCIETE BIC
JUNE 22, 1995
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
<PAGE> 2
BIC
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
OVERVIEW OF PROPOSAL .................................................. 1
COMPANY OVERVIEW ...................................................... 2
RECENT TRADING PERFORMANCE AND TRADING COMPARISONS .................... 3
VALUATION ANALYSIS .................................................... 4
EXHIBITS
- --------
COMPARABLE COMPANY ANALYSIS ........................................... 5
ANALYSIS OF PREMIUMS PAID IN MINORITY TRANSACTIONS .................... 6
ACCRETION/DILUTION ANALYSIS ........................................... 7
</TABLE>
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
<PAGE> 3
BIC
- --------------------------------------------------------------------------------
OVERVIEW OF PROPOSAL
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
<PAGE> 4
BIC
- --------------------------------------------------------------------------------
OVERVIEW OF PROPOSAL
- On May 19, 1995, Societe BIC offered $36.50 per share to acquire the 22%
(5.2 million shares) of BIC Corp. that is not owned by Societe BIC or the
Bich family.
- The offer price represents an approximately 20% premium over BIC
Corp.'s average trading price of $30.80, for the six months prior to
the announcement.
- The offer represents a 16% premium over BIC Corp.'s closing share
price of $31.50 on April 20, 1995, one month prior to the
announcement.
- The offer price of $36.50 per share represents a 12.3% premium over
the highest trading price of BIC Corp. stock ($32.50) during the 52
weeks ended April 20, 1995, one month prior to the announcement.
- The 7.0x multiple of EBITDA implied in the $36.50 offer represents a
premium valuation for a low/moderate growth, mature business.
- The proposed transaction does not constitute a change of control
transaction.
- The implied transaction multiples exceed the average trading multiples of
the most comparable companies. The average multiples represent the best
proxy for valuation, since no one company is directly comparable.
<TABLE>
<CAPTION>
VALUATION
AVG. OF IMPLIED BY
OFFER PRICE COMPARABLE COMPARABLE
AT $36.50 UNIVERSE UNIVERSE
----------- ---------- ----------
<S> <C> <C> <C>
LTM Revenue .................. 1.6x 1.1x $ 25.20
LTM EBITDA ................... 7.0 6.7 $ 35.42
LTM EBIT ..................... 8.8 8.8 $ 36.58
LTM E.P.S .................... 16.2 15.5 $ 34.77
1995E Adj. E.P.S ............. 15.3 15.0 $ 35.64
----------------------------
Average $ 33.52
----------------------------
</TABLE>
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 5
BIC
- --------------------------------------------------------------------------------
FACTORS IMPACTING VALUATION
- "[BIC Corp.] is an atypical company with no stock market equivalent,"
Cheuvreux de Virieu Indosuez Capital Research.
- In recent years, BIC Corp. has achieved earnings growth in excess of
revenue growth due to an effective capital expenditure program and
productivity improvements. However,
- Earnings resulting from productivity improvements tend to be regarded
as less sustainable and are thus valued at a lower multiple by the
market than earnings related to increased revenues.
- BIC Corp. sells mature products in competitive and mature markets.
<TABLE>
<CAPTION>
1994 REVENUE 1994 OPERATING PROFIT
-------------------- ---------------------
OUTSIDE OF OUTSIDE OF
U.S. U.S. U.S. U.S.
----- ---------- ---- ----------
<S> <C> <C> <C> <C>
Total................ 82.7% 17.3% 85.1% 14.9%
</TABLE>
- In the absence of new products, BIC Corp.'s growth rate is likely to
slow and its market share is likely to shrink.
- Due to the significantly larger size of its principal competitor, BIC
Corp. is unable to match that competitor's expenditures on advertising,
sales promotion and research and development.
- Over time this is likely to reduce growth rates and market share.
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
-2-
<PAGE> 6
BIC
- --------------------------------------------------------------------------------
RATIONALE OF THE PROPOSED TRANSACTION
- The transaction will allow BIC Group to compete more effectively on a
global basis as one unified entity.
- Minimize potential conflicts of interest
- Simplify allocation of business opportunities
- Given the competitiveness of BIC Corp.'s mature product lines, BIC Corp.
needs to optimize its cost structure at all levels.
- Eliminate U.S. reporting function
- Integrate certain administrative and support functions
- Economies of scale
- The stock of BIC Corp. has never had the liquidity or multiple that could
have made an attractive alternative source of financing for the BIC
Group.
- The currently favorable currency exchange rate creates an opportunity to
pay an attractive premium to public shareholders in a transaction which
is break-even/non-dilutive for Societe BIC, despite the incurrence of
goodwill and other transaction expenses.
<TABLE>
<CAPTION>
$35.50 $36.50 $37.50
------ ------ ------
<S> <C> <C> <C>
1994 ACCRETION (DILUTION) 0.0% (0.3)% (0.6)%
</TABLE>
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
-3-
<PAGE> 7
BIC
- --------------------------------------------------------------------------------
COMPANY OVERVIEW
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
-3-
<PAGE> 8
BIC
- --------------------------------------------------------------------------------
OVERVIEW
($ in millions)
- BIC Corp. is a leading manufacturer of writing instruments, lighters and
shavers under the BIC trademark.
<TABLE>
<CAPTION>
1994 1995B
----------------------- ---------------------
Revenue $ % of Total $ % of Total
- ------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Writing Instruments ....... $256.8 54% $276.9 54%
Lighters .................. 108.9 23% 115.1 22%
Shavers ................... 105.4 22% 116.3 23%
------ --- ------ ---
Total Revenues ........ $475.2 100% $513.8 100%
Operating Profit
- ----------------
Writing Instruments ....... $ 47.6 55% $ 57.0 57%
Margin % .............. 18.5% 20.6%
Lighters .................. 10.7 12% 11.9 12%
Margin % .............. 9.8% 10.3%
Shavers ................... 29.3 34% 30.9 31%
Margin % .............. 27.7% 26.6%
------ --- ------ ---
Operating Profit .... $ 87.2 100% 92.9* 100%
Margin % .......... 18.4% 18.1%
</TABLE>
- BIC Corp.'s significant shareholders are as follows:
<TABLE>
<CAPTION>
No. of Shares % of Total
------------- ----------
<S> <C> <C>
Societe BIC ........................ 14,829,836 62.9%
B. Bich family ..................... 2,933,606 12.5
F. Bich ............................ 541,406 2.3
Public Shareholders ................ 5,254,396 22.3
------------ -----
Total ......................... 23,559,244 100.0%
========== =====
</TABLE>
- ---------------------------
* Reflect $6.7 million pretax increase in cost of goods resulting from
currency exchange rate fluctuations.
DLJ
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DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 9
BIC
- --------------------------------------------------------------------------------
OVERVIEW (CONT'D)
- Sales outside of the U.S. are limited due to lack of trademarks.
<TABLE>
<CAPTION>
1994 REVENUE 1994 OPERATING PROFIT
--------------------------- -------------------------
OUTSIDE OF OUTSIDE OF
U.S. SALES U.S. U.S. U.S.
---------- ---------- ----- ----------
<S> <C> <C> <C> <C>
All products ............ 82.7% 17.3% 85.1% 14.9%
Stationery .............. 78.8% 21.2% 81.4% 18.6%
Lighters ................ 85.1% 14.9% 71.0% 29.0%
Shavers ................. 90.0% 10.0% 96.4% 3.6%
</TABLE>
- Lack of established distribution outside of U.S., Mexico and Canada will
also preclude further international expansion.
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 10
BIC
- --------------------------------------------------------------------------------
FACTORS IMPACTING VALUATION
<TABLE>
<CAPTION>
POSITIVE NEGATIVE
------------------------------------------------- ----------------------------------------------
<S> <C> <C>
Stationery/Writing Instruments - No. 1 U.S. market share position in units - Papermate (Gillette) has leading
- Continued growth potential in Soft Feel market share in $'s and is
extension of core "stick pen" line increasing its focus on this division
- Growth in advertising specialty sales - Very slow growth in overall category
- Sales growth to "mass" office product retailers - Recent decline in growth of Wavelength
products
- Incomplete product line focused on lower
price points
- Core stick pen business is only marginally
profitable due to competition with
Papermate, Newell (Faber-Castell),
Scripto-Tokai, and others
- Limited trademark availability in higher
growth, international markets
- Due to Papermate's aggressiveness, limited
success to-date with Wite Out line
---------------------------------------------------------------------------------------------------
Lighters - Strong U.S. market share - Product liability issues
- Patented child resistant products - Uncertain growth prospects due to product
dumping by inexpensive imports
- Low growth category
- Cigarette-related taint
</TABLE>
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 11
BIC
- --------------------------------------------------------------------------------
FACTORS IMPACTING VALUATION (CONT'D)
<TABLE>
<CAPTION>
POSITIVE NEGATIVE
---------------------------------------------------- ----------------------------------------------
<S> <C> <C>
Shavers - High margin category - Consumer shift away from single blade
- Strong market share in single blade disposable disposable and toward "systems"
- Growth opportunities in twin blade category - Strong competitors (Gillette and Warner
- Successfully used pricing umbrella of Gillette and Lambert (Schick)) with significantly larger
Schick in recent years advertising, promotion, R&D and capex budget
- Limited opportunity for further increased
prices
- Lack of innovative technology
- No shaving "systems" or new/unique
products offering near term
- Does not have "lubristrip" technology
- Twin blade product has no competitive
advantage
- Products generally focused on lowest price
and margin categories in shavers
-----------------------------------------------------------------------------------------------------------
Sport - Strong market share - Money losing operation
- Insignificant revenue contribution
</TABLE>
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 12
BIC
- --------------------------------------------------------------------------------
FACTORS IMPACTING VALUATION (CONT'D)
<TABLE>
<CAPTION>
POSITIVE NEGATIVE
------------------------------------------------- ----------------------------------------------
<S> <C> <C>
International Opportunities - Low cost Mexican manufacturing facilities - BIC ownership of trademarks precludes
international expansion beyond Canada,
Mexico, Guatemala and the Caribbean
- U.S. market with 83% of the Company's
overall sales is the most competitive market
for the Company's products
</TABLE>
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 13
BIC
- --------------------------------------------------------------------------------
FACTORS IMPACTING VALUATION (CONT'D)
<TABLE>
<CAPTION>
POSITIVE NEGATIVE
------------------------------------------------- ----------------------------------------------
<S> <C> <C>
Corporate - Distribution synergies between product lines in - French currency exposure
retail channels - Small size relative to certain competitors
- Focus on margin improvements have fueled - Lower revenue base and gross margins do
earnings growth not allow for large advertising/promotion
- Productivity budget and new product experimentation
- Cost reductions - Lower CAPEX
- Conn. grants and expense reduction - Low overall growth rate due to mature
- Union concessions product lines and difficulty developing new
- Production optimization products and making upward shift in product
- Significant capital investment over the past 3 mix
years have been made to achieve state-of-the-art - Shareholders pay less for earnings resulting
production from cost savings than for earnings
resulting from revenue growth, because
earnings growth from cost savings is less
likely to be sustained
- As Gillette's stationery business approaches
$1 billion, it will become a larger focus
and result in greater competition
</TABLE>
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 14
BIC
- --------------------------------------------------------------------------------
BIC CORP. FINANCIAL SUMMARY
($ IN MILLIONS)
<TABLE>
<CAPTION>
Q1 YTD - 5/31
---------------- ----------------
1991 1992 1993 1994 1995B 1994 1995 1994 1995
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Stationery Products ...................... $187.9 $220.0 $235.4 $256.8 $276.9 $ 50.8 $ 56.8
% growth ........................... 23.0% 17.1% 7.0% 16.7% 17.6% - 11.8%
Lighters ................................. 98.5 103.5 103.5 108.9 115.1 24.9 29.1
% growth ........................... 5.5% 5.2% 0.0% 5.2% 11.2% - 16.9%
Shavers .................................. 84.5 97.3 99.9 105.4 116.3 26.2 26.6
% growth ........................... 8.7% 15.2% 2.7% 8.3% 16.4% - 1.4%
Other .................................... 5.3 5.9 5.3 4.1 5.5 0.9 1.1
% growth ........................... (4.3)% 12.8% (10.2)% (31.4)% 2.8% - 15.5%
------ ------ ------ ------ ------ ------ ------
Total Revenue ...................... $376.1 $426.8 $444.2 $475.2 $513.8 $102.8 $113.5 204.8 218.7
% growth ....................... 14.2% 13.5% 4.1% 11.3% 15.7% - 10.4% - 6.8%
Operating Income
Stationery Products ...................... $ 27.8 $ 33.4 $ 35.8 $ 47.6 $ 57.0 $ 6.9 $ 11.2
% Margin ........................... 14.8% 15.2% 15.2% 18.5% 20.6% 13.7% 19.6%
Lighters ................................. 3.6 8.0 10.6 10.7 11.9 2.1 1.0
% Margin ........................... 3.6% 7.7% 10.2% 9.8% 10.3% 8.5% 3.5%
Shavers .................................. 16.9 23.6 23.5 29.2 30.9 7.0 7.3
% Margin ........................... 20.1% 24.2% 23.5% 27.7% 26.6% 26.6% 27.6%
Other .................................... (0.3) (0.2) 0.0 (0.4) (0.2) (0.1) (0.3)
% Margin ........................... (6.0)% (3.0)% (0.1)% (9.9)% (4.0)% (12.4%) (31.6%)
------ ------ ------ ------ ------ ------ ------
Total Operating Income ............. $ 47.9 $ 65.1 $ 69.8 $ 87.2 $ 92.9* $ 15.9 $ 19.2 $ 32.3 $ 35.7
% Margin ....................... 12.8% 15.2% 15.7% 18.3% 18.1% 15.5% 16.9% 15.8% 16.3%
EBITDA ..................................... $ 61.5 $ 80.5 $ 90.7 $111.0 $118.1* $ 16.9 $ 20.3
% Margin ................................. 16.4% 18.9% 20.4% 23.4% 22.9% 16.5% 17.9%
Net Income ................................. $ 28.1 $ 39.9 $ 44.8 $ 51.6 $ 56.2* $ 9.7 $ 11.2 $ 19.1 $ 21.3
% Margin ................................. 7.5% 9.4% 10.1% 10.9% 11.7% 9.5% 9.8% 9.3% 9.7%
Earnings per Share ......................... $ 1.19 $ 1.70 $ 1.90 $ 2.19 $ 2.38* $ 0.41 $ 0.47
% growth ................................. 28.8% 42.3% 12.1% 29.3% 8.7% - 14.6%
</TABLE>
- ---------------
*Reflect $6.7 million pretax increase in cost of goods sold resulting from
currency exchange rate fluctuations.
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<PAGE> 15
BIC
- --------------------------------------------------------------------------------
BIC CORP. TEN-YEAR FINANCIAL HISTORY
<TABLE>
<CAPTION>
12
MONTHS 5-YEAR 10-YEAR
ENDED
12/85 12/86 12/87 12/88 12/89 12/90 12/91 12/92 12/93 12/94 3/95 CAGR CAGR
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales ........ $262.7 $267.6 $290.6 $294.9 $330.3 $329.2 $369.2 $417.4 $439.3 $475.1 $485.8 9.6% 6.8%
% growth ....... - 1.9% 8.6% 1.5% 12.0% (0.3%) 12.2% 13.1% 5.2% 8.1% -
Operating Income . 47.6 52.3 51.1 41.3 39.4 38.7 45.2 65.1 69.8 87.2 90.4 22.5% 7.0%
% margin ....... 18.1% 19.5% 17.6% 14.0% 11.9% 11.8% 12.2% 15.6% 15.9% 18.4% 18.6%
Net Income ....... 23.5 23.7 28.7 26.8 23.0 22.4 27.0 39.9 44.8 51.6 53.1 23.2% 9.1%
% margin ....... 8.9% 8.9% 9.9% 9.1% 7.0% 6.8% 7.3% 9.6% 10.2% 10.9% 10.9%
Earnings per Share $ 0.97 $ 0.98 $ 1.18 $ 1.10 $ 0.95 $ 0.92 $ 1.12 $ 1.70 $ 1.90 $ 2.19 $ 2.25
</TABLE>
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BIC
- --------------------------------------------------------------------------------
BIC CORP. VS. GILLETTE:
STATIONERY SEGMENT GROWTH RATES
($ in Millions)
[GRAPH 1]
For years 1990-1994 DLJ
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DONALDSON, LUFKIN & JENRETTE
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BIC
- --------------------------------------------------------------------------------
BIC CORP. VS. GILLETTE:
SHAVERS SEGMENT GROWTH RATES
($ in Millions)
[GRAPH 2]
For years 1990-1994 DLJ
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 18
BIC
- --------------------------------------------------------------------------------
RECENT TRADING PERFORMANCE AND
TRADING COMPARISONS
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DONALDSON, LUFKIN & JENRETTE
<PAGE> 19
BIC
- --------------------------------------------------------------------------------
BIC CORP.
PRICE/VOLUME ANALYSIS
MAY 14, 1993 THROUGH PRESENT
[GRAPH 3]
[GRAPH 4]
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BIC
- --------------------------------------------------------------------------------
BIC CORP. VS. BIC S.A.
RELATIVE STOCK PRICE COMPARISON
MAY 14, 1993 THROUGH PRESENT
[GRAPH 5]
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BIC
- --------------------------------------------------------------------------------
BIC CORP. VS. CONSUMER DISPOSABLES INDEX VS. S&P 400
RELATIVE STOCK PRICE COMPARISON
MAY 14, 1993 THROUGH PRESENT
[GRAPH 6]
[Consumer Disposable Index includes: Gillette Company, BIC S.A., American Safety
Razor, A.T. Cross Company, Pentech International Inc., Dixon Ticonderoga
Company, American Business Products; Hunt Manufacturing and Avery Dennison
Corp.]
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BIC
- --------------------------------------------------------------------------------
PRICE/EARNINGS RATIO: BIC CORP. VS. AMERICAN SAFETY RAZOR
DECEMBER 1993 THROUGH MAY 1995
[GRAPH 7]
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<PAGE> 23
BIC
- --------------------------------------------------------------------------------
PRICE/EARNINGS RATIO: BIC CORP. VS. GILLETTE
MAY 1993 THROUGH MAY 1995
[GRAPH 8]
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<PAGE> 24
BIC
- --------------------------------------------------------------------------------
PRICE/EARNINGS RATIO: BIC CORP. VS. A.T. CROSS
JUNE 1994 THROUGH MAY 1995
[GRAPH 9]
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<PAGE> 25
BIC
- --------------------------------------------------------------------------------
VALUATION ANALYSIS
DLJ
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<PAGE> 26
<TABLE>
<CAPTION>
BIC
- -----------------------------------------------------------------------------------------------------------------------------
SUMMARY VALUATION
COMPARABLE COMPANIES
LTM SOCIETE
VALUATION PARAMETERS RESULTS AVERAGE VALUATION BIC VALUATION
------------------------------ ------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Price / LTM EPS $2.25 15.5x $34.77 18.4x $41.49
Price / 1995 EPS $2.38 15.0x $35.64 16.6x $39.39
Price / 1996 EPS $2.45 13.8x $33.69 14.2x $34.88
Enterprise Value LTM Revenues $485.8 1.1x $25.20 1.3x $29.21
Enterprise Value /LTM EBDAIT $114.2 6.7x $35.42 5.4x $28.89
Enterprise Value / LTM EBIT $90.4 8.8x $36.58 7.2x $30.52
-------------------------------------------------------
Average $33.55 $34.06
-------------------------------------------------------
</TABLE>
PREMIUMS PAID
<TABLE>
<CAPTION>
52-WEEK HIGH
1 MONTH 52-WEEK 52-WEEK UP TO MONTH
PRIOR AVERAGE HIGH PRIOR AVERAGE
------- ------- ------- ----------- -------
<S> <C> <C> <C> <C> <C>
BIC Corp. Price $31.50 $31.38 $37.50 $32.50
Average Premium 29.8% 23.9% (1.7)% 3.6% ------
Implied Price $40.89 $38.87 $36.86 $33.67 $37.57
------
Median Premium 23.7% 16.2% (4.6)% 2.1% ------
Implied Price $38.97 $36.46 $35.79 $33.20 $36.11
------
</TABLE>
<TABLE>
IMPACT ON SOCIETE BIC
<S> <C> <C> <C> <C>
$35.50 $36.50 $37.50
------ ------ ------
1994 Accretion/Dilution 0.0% (0.3)% (0.6)%
</TABLE>
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<PAGE> 27
BIC
- --------------------------------------------------------------------------------
PUBLICLY TRADED COMPARABLE COMPANY VALUATION ANALYSIS
($ in millions, except per share data)
NOTES: - No true comparable company exists for BIC Corp., a domestic U.S.,
disposable consumer products company.
- Included in the comparable universe is Gillette, a much larger,
international company with better growth prospects and a
significantly higher valuation than BIC Corp. Gillette's multiple
is based on the results of its consumer products and razor
business and not on its stationery business.
- A valuation based on Societe BIC's multiples is inappropriate
because Societe BIC has more brand name recognition in its
markets than BIC Corp., competes in more attractive markets than
BIC Corp. and has more global presence than BIC Corp.
- The offer is superior in value to the average trading multiples of
the comparable companies.
<TABLE>
<CAPTION>
MULTIPLES OF
COMPARABLE COMPANIES (1)
LTM OFFER PRICE ----------------------------
VALUATION PARAMETERS RESULTS AT $36.50 AVG. HIGH LOW SOCIETE BIC
-------------------- --------- ----------- ----- ----- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
Price / LTM EPS(2) $2.25 16.2x 15.5x 27.0x 6.3x 18.4x
Price / 1995 EPS(2) $2.38(3) 15.3x 15.0x 24.1x 5.8x 16.6x
Price / 1996 EPS(2) $2.45(4) 14.9x 13.8x 20.8x 9.3x 14.2x
Enterprise Value(5) / LTM Revenues $485.8 1.6x 1.1x 3.2x 0.4x 1.3x
Enterprise Value(5) / LTM EBDAIT 114.2 7.0x 6.7x 13.6x 3.7x 5.4x
Enterprise Value(5) / LTM EBIT 90.4 8.8x 8.8x 16.0x 4.1x 7.2xx
</TABLE>
(1) Comparable Companies include Societe BIC, Gillette Company, American
Safety Razor, A.T. Cross Co., Pentech International, Dixon Ticonderoga
Co, American Business Products, Hunt Manufacturing, and Avery Dennison.
(2) Stock price as of 6/23/95.
(3) Company estimate, adjusted for estimate of the impact of the decline of the
dollar relative to the French franc.
(4) Source: Prudential Securities report dated May 4, 1995.
(5) Enterprise Value equals market price of common stock multiplied by the
number of common shares outstanding plus total debt less cash.
DLJ
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- 2 -
<PAGE> 28
BIC
- --------------------------------------------------------------------------------
PREMIUMS PAID
NOTES:
- - Of the 38 minority transactions consummated since 1990, 23 (60.5%) had
a premium of less than 30% and 13 (34.2%) had a premium of less than 20%.
<TABLE>
<CAPTION>
PREMIUM OF OFFER OVER STOCK PRICE PRIOR TO ANNOUNCEMENT
----------------------------------------------------------------
52 WEEK HIGH
FROM MONTH
PRIOR TO
1 MONTH 52 WEEK AVG. 52 WEEK HIGH ANNOUNCEMENT
-------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
BIC Corp. Price .................. $31.50 $31.38 $37.50 $32.50
Offer Price (5/18/95) ............ $36.50 $36.50 $36.50 $36.50
Premium .......................... 15.9% 16.3% (2.6%) 12.3%
Median Premium ................... 23.7% 16.2% (4.6%) 2.1%
Implied Price .................... $38.97 $36.46 $35.79 $33.20
====== ====== ====== ======
Average Premium .................. 29.8% 23.9% (1.7%) 3.6%
Implied Price .................... $40.89 $38.87 $36.86 $33.67
====== ====== ====== ======
</TABLE>
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<PAGE> 29
BIC
- --------------------------------------------------------------------------------
AVERAGE PREMIUMS PAID IN 38 SELECTED MINORITY SQUEEZE-OUT
TRANSACTIONS 1990-PRESENT
[Graph 10]
DLJ
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 30
BIC
- --------------------------------------------------------------------------------
DISTRIBUTION OF PREMIUMS PAID VS. PRICE ONE MONTH PRIOR TO
ANNOUNCEMENT IN 38 SELECTED MINORITY SQUEEZE-OUT
TRANSACTIONS 1990-PRESENT
[Graph 11]
DLJ
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DONALDSON, LUFKIN & JENRETTE
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<PAGE> 31
BIC
- --------------------------------------------------------------------------------
ANALYSIS OF PREMIUMS PAID
IN MINORITY TRANSACTIONS
DLJ
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DONALDSON, LUFKIN & JENRETTE
<PAGE> 32
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
Ticker
Symbol of Date Final Percent
Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fleet Mortgage Group Inc / FLG 12/28/94 Offer: $20.00 cash for each share not $20.00 19.0%
Fleet Financial Group Inc already owned
Pacific Telecom Inc / PTCM 11/02/94 Offer: $28.00 cash for each share not $28.00 13.0%
PacifiCorp already owned.
Contel Cellular Inc. / CCXLA 09/08/94 Offer: $22.50 cash for each share not $22.50 10.0%
GTE Corp. already owned
Castle & Cooke Homes Inc / CKI 08/24/94 Earlier, Dole completed a tender offer to $15.75 17.2%
Dole Food Co Inc acquire the remaining 17% stake in CC
which it did not already own for an
amended $15.75 in cash per share (vs.
and original $14) by accepting 5.019
mil shares, 16.6% of CC's total shares
outstanding.
North Canadian Oils / NCD 08/16/94 Offer: $13.25 CD for each share not $13.25 47.6%
Norcen Energy Resources already owned
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock Premium to Stock Premium to Stock Premium to Stock
Value of Price 3 months Price One Month Price One Week Price One Day
Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fleet Mortgage Group Inc / $188.1 4.6% 23.1% 21.2% 19.4%
Fleet Financial Group Inc
Pacific Telecom Inc / $148.4 33.3% 13.1% 15.5% 15.5%
PacifiCorp
Contel Cellular Inc. / $224.0 36.4% 23.2% 24.1% 26.8%
GTE Corp.
Castle & Cooke Homes Inc / $81.5 29.9% 51.9% 41.6% 35.5%
Dole Food Co Inc
North Canadian Oils / $122.0 41.3% 68.2% 63.1% 68.3%
Norcen Energy Resources
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock
Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week
Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid-
Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fleet Mortgage Group Inc / 22.5% -2.4% 45.5% 2.5% Cash Merger
Fleet Financial Group Inc
Pacific Telecom Inc / 17.0% 6.7% 17.9% 1.8% Cash Merger
PacifiCorp
Contel Cellular Inc. / 32.8% -4.3% 38.5% -7.8% Cash Merger
GTE Corp.
Castle & Cooke Homes Inc / 23.7% 0.0% 16.7% -1.6% Cash Tender
Dole Food Co Inc
North Canadian Oils / 51.4% 37.7% 51.4% -2.8% Cash Merger
Norcen Energy Resources
</TABLE>
<PAGE> 33
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
Ticker
Symbol of Date Final Percent
Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Intergroup Healthcare Corp / IGHC 07/29/94 Foundation Health (FH) acquired the $71.03 37.4%
Foundation Health Corp remaining 3.6 mil. common shares, or
37.4% of Intergroup Healthcare (IH) it
did not already own for $255.7 mil in
common stock
Chemical Waste Management Inc / CHW 07/28/94 WMX Technologies acquired the $8.85 21.4%
WMX Technologies Inc remaining 44.9 mil common shares, or
21.4% it did not already own in
Chemical Waste Management (CWM)
in a transacton valued at an amended
$397.365 mil.
Ogden Projects Inc (Ogden Corp) OPI 06/06/94 Ogden (OG) acquired the remaining $19.34 15.8%
/ Ogden Corp 15.8% of Ogden Projects (OP) that it
did not already own in a stock swap
merger valued at an amended $110.25
mil.
Enquirer/Star Group Inc. / ENQ 04/28/94 Offer: $17.50 cash for 43.0% of each $17.50 43.0%
MacFadden Holdings Inc. & share not already owned.
Boston Ventures L.P.
Foxmeyer Corp. / FOX 03/01/94 Offer: Exchange of $14.75 in principal $14.75 19.4%
National Intergroup Inc. amount of $81.3MM new issue of
8.25% senior notes due 2004 for each
share not already owned.
Scripps Howard Broadcasting Co / SCRP 02/17/94 EW Scripps (EW), a 77.6% subsidiary $79.93 14.0%
EW Scripps (Edward Scripps Tr) of EW Scripps Trust, offered to acquire
the remaining 14% interest in Scripps
Howard Broadcasting (SHB), that it did
not already own, in a transaction valued
at $115.92 mil.
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock Premium to Stock Premium to Stock Premium to Stock
Value of Price 3 months Price One Month Price One Week Price One Day
Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Intergroup Healthcare Corp / $255.7 58.3% 61.4% 90.7% 49.5%
Foundation Health Corp
Chemical Waste Management Inc / $397.4 7.3% 1.1% 10.6% 10.6%
WMX Technologies Inc
Ogden Projects Inc (Ogden Corp) $110.3 25.8% 20.5% 25.8% 11.3%
/ Ogden Corp
Enquirer/Star Group Inc. / $636.0 -7.3% 2.2% 16.7% 20.7%
MacFadden Holdings Inc. &
Boston Ventures L.P.
Foxmeyer Corp. / $81.3 8.3% 13.5% -5.6% -6.3%
National Intergroup Inc.
Scripps Howard Broadcasting Co / $115.9 12.6% 12.3% 6.4% 1.8%
EW Scripps (Edward Scripps Tr)
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock
Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week
Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid-
Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Intergroup Healthcare Corp / 69.4% 20.4% 40.0% -21.9% Stock Tender
Foundation Health Corp
Chemical Waste Management Inc / 1.4% -21.3% -17.7% 24.3% Cash Tender
WMX Technologies Inc
Ogden Projects Inc (Ogden Corp) 14.2% -19.0% 24.8% 23.4% Stock Tender
/ Ogden Corp
Enquirer/Star Group Inc. / 7.5% -7.3% -5.4% 8.6% Cash Merger
MacFadden Holdings Inc. &
Boston Ventures L.P.
Foxmeyer Corp. / -2.3% -6.3% 13.5% 9.3% Cash Merger
National Intergroup Inc.
Scripps Howard Broadcasting Co / 13.6% -4.8% 12.6% 5.1% Stock Tender
EW Scripps (Edward Scripps Tr)
</TABLE>
<PAGE> 34
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
Ticker
Symbol of Date Final Percent
Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Holnam Inc (Holdernam Inc) / HLN 01/07/94 Holderbank Financiere Glarus (HFG) $7.60 5.0%
Holderbank Financiere Glarus acquired the remaining 5%, or about 6.8
mil common shares, that it did not
already own in Holnam, a unit of the
Holdernam subsidiary of HFG
Southeastern Public Service Co. / SPV 11/22/93 Offer: Exchange 2,691,822 shares of $20.54 29.0%
Triarc Companies, Inc. Class A common stock, or about .8 of a
Triarc share for each publicly held
Southeastern share.
West Point-Pepperell Inc / WPM 09/20/93 Offer: $46 cash per share not already $46.00 5.0%
Valley Fashions Corp owned.
Southeastern Public Service Co / SSPS 04/26/93 Triarc Cos, formerly known as DWG, $25.60 29.0%
DWG Corp (Triarc Companies Inc) acquired the remaining 29%, or 3.36
mil. common shares, in its Southeastern
Public Service (SP) unit for a revised
$86.14 mil.
Brand Cos Inc. / BRAN 11/13/92 Offer: One share of $18.75 cash per $18.75 44.0%
Chemical Waste Management Inc. share not already owned.
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock Premium to Stock Premium to Stock Premium to Stock
Value of Price 3 months Price One Month Price One Week Price One Day
Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Holnam Inc (Holdernam Inc) / $51.7 52.0% 7.4% 14.7% 12.6%
Holderbank Financiere Glarus
Southeastern Public Service Co. / $69.0 10.3% -4.6% -9.0% -4.7%
Triarc Companies, Inc.
West Point-Pepperell Inc / $46.0 -5.2% 4.3% -8.0% -7.8%
Valley Fashions Corp
Southeastern Public Service Co / $86.1 -18.7% -4.6% -20.0% -19.1%
DWG Corp (Triarc Companies Inc)
Brand Cos Inc. / $185.0 27.1% 7.1% 7.1% 4.9%
Chemical Waste Management Inc.
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock
Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week
Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid-
Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Holnam Inc (Holdernam Inc) / 73.8% -0.3% 60.0% -4.6% Cash Tender
Holderbank Financiere Glarus
Southeastern Public Service Co. / 22.7% -17.4% 40.4% 19.3% Stock Merger
Triarc Companies, Inc.
West Point-Pepperell Inc / 0.0% -8.0% -5.6% 9.2% Cash Merger
Valley Fashions Corp
Southeastern Public Service Co / -17.2% -20.0% -13.6% -36.0% Stock Tender
DWG Corp (Triarc Companies Inc)
Brand Cos Inc. / 13.2% 4.9% 25.0% -20.0% Cash Merger
Chemical Waste Management Inc.
</TABLE>
<PAGE> 35
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
Ticker
Symbol of Date Final Percent
Acquired / Acquiror Name Acquired Announced Transaction Terms Price/share Purchased
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PHLCORP Inc / PHX 08/17/92 Leucadia National (LN), a unit of $25.78 36.9%
Leucadia National Corp Unitah National, acquired the remaining
36.9%, or 5,428,127 shares, of
PHLCORP that it did not already own
for $139.94 mil in LN common stock.
Loral Aerospace Corp / Loral Corp LORA 07/01/92 6.15 mil shs com/41% stock interest $32.24 41.0%
Grace Energy Corp. / GEG 03/02/92 Original Offer: 64MM cash for the $19.00 17.0%
W.R. Grace & Co. remaining 17% of the company not
already owned. Offer later raised to
$77.3MM.
Unocal Exploration Corp / UXC 02/24/92 Unocal acquired the remaining 10.08 $11.66 4.0%
Unocal Corp mil common shares, or 4%, of Unocal
Exploration that it did not already own
in a stock swap valued at $117.5 mil.
American Television & Commun / ATCMA 10/16/91 Time Warner (TW) acquired the $82.50 18.0%
Time Warner remaining 18% of American Television
& Communications (ATC) that it did
not already own for $82.50 per share or
$1,699.5 mil.
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock Premium to Stock Premium to Stock Premium to Stock
Value of Price 3 months Price One Month Price One Week Price One Day
Acquired / Acquiror Name Deal ($mil) Prior to Announc't Prior to Announc't Prior to Announc't Prior to Announc't
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PHLCORP Inc / $139.9 32.2% 28.9% 15.2% 15.2%
Leucadia National Corp
Loral Aerospace Corp / Loral Corp $198.3 2.3% 3.6% 1.9% 0.0%
Grace Energy Corp. / $77.3 33.3% 60.0% 58.3% 31.0%
W.R. Grace & Co.
Unocal Exploration Corp / $117.5 9.7% 22.9% 16.6% 18.1%
Unocal Corp
American Television & Commun / $1,699.5 96.4% 88.6% 70.1% 66.7%
Time Warner
</TABLE>
<TABLE>
<CAPTION>
Premium to Stock
Premium to Stock Premium to Stock Premium to Stock Price vs. 52 Week
Price vs. 52 Week Price vs. 52 Week Price vs. 6 Month High Excluding Consid-
Acquired / Acquiror Name Average Prior High prior Before Price Previous Month eration Structure
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PHLCORP Inc / 31.6% 13.9% 19.9% -8.4% Stock Tender
Leucadia National Corp
Loral Aerospace Corp / Loral Corp -5.5% -6.4% -0.8% -30.0% Cash Merger
Grace Energy Corp. / 26.5% 3.4% 13.4% -3.3% Cash Merger
W.R. Grace & Co.
Unocal Exploration Corp / 10.1% -2.8% -12.8% 2.9% Stock Tender
Unocal Corp
American Television & Commun / 100.3% 66.7% 82.3% -42.1% Cash Tender
Time Warner
</TABLE>
<PAGE> 36
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
TICKER
SYMBOL OF DATE FINAL PERCENT
ACQUIRED / ACQUIROR NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Arkla Exploration Co / ARK 9/18/91 Arkla acquired the remaining 18%, $15.44 18.0%
Arkla Inc or 5,999,400 common shares, of Arkla
Exploration that it did not already own
in a sweetened stock swap tender offer
valued at $92.6 mil.
Metcalf & Eddy Cos Inc / METC 3/1/91 Air & Water Technologies acquired the $19.26 18.0%
Air & Water Technologies remaining 18% of Metcalf & Eddy that
Corp it did not already own in a stock swap
valued at $50.99 mil. Air & Water
offered .875 shares of its common stock
for each of the 2,648,880 shares of
Metcalf traded publicly.
Hamilton Oil Corp. / HAML 2/6/91 $40 cash per share for the 49.9% not $40.00 49.9%
Broken Hill Proprietary already owned. (Shareholders can elect
Co. to receive cash or the equivalent value
in American Depository Shares
representing ordinary shares of Broken
Hill.)
US West Newvector Group US WNA 11/12/90 Original Offer: 0.95 US West shares $44.00 19.0%
Inc. / US West per Newvector share. Revised Offer:
1.14 US West shares for each of the
19% US West Newvector not already
owned. (Exchange ratio based on $44
value of consideration.)
ERC Environmental & ERCE 10/23/90 Original Offer: $14.75 cash per share. $15.13 32.0%
Energy Services Co. Inc. / Revised Offer: $15.13 cash for the 32%
Ogden Corp. of shares not already owned.
<CAPTION>
PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK
VALUE OF PRICE 3 MONTHS PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY
ACQUIRED / ACQUIROR NAME DEAL ($MIL) PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Arkla Exploration Co / $92.6 -3.5% 30.0% 0.4% 1.2%
Arkla Inc
Metcalf & Eddy Cos Inc / $51.0 51.1% 24.2% 22.3% 22.3%
Air & Water Technologies
Corp
Hamilton Oil Corp. / $530.0 16.8% 21.2% 19.4% 18.5%
Broken Hill Proprietary
Co.
US West Newvector Group $350.0 67.6% 80.0% 68.4% 44.3%
Inc. / US West
ERC Environmental & $45.4 40.7% 26.1% 49.4% 37.5%
Energy Services Co. Inc. /
Ogden Corp.
<CAPTION>
PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PRICE VS. 52 WEEK
PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH HIGH EXCLUDING CONSID-
ACQUIRED / ACQUIROR NAME AVERAGE PRIOR HIGH PRIOR BEFORE PRICE PREVIOUS MONTH ERATION STRUCTURE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Arkla Exploration Co / -9.5% -28.6% 14.4% 32.8% Stock Tender
Arkla Inc
Metcalf & Eddy Cos Inc / 0.4% -38.4% 45.4% 62.3% Stock Tender
Air & Water Technologies
Corp
Hamilton Oil Corp. / 15.5% -8.6% -8.6% 9.4% Cash Merger
Broken Hill Proprietary
Co.
US West Newvector Group 36.1% 3.5% 36.4% -3.4% Stock Merger
Inc. / US West
ERC Environmental & 42.4% 37.5% 44.1% -7.5% Cash Merger
Energy Services Co. Inc. /
Ogden Corp.
</TABLE>
5
<PAGE> 37
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
TICKER
SYMBOL OF DATE FINAL PERCENT
ACQUIRED / ACQUIROR NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Western Gas Processors WGR 10/8/90 Western Gas Resources acquired the $12.75 48.0%
Ltd / Western Gas remaining 10,222,957 common limited
Resources Inc partnership units, or the 48% of Western
Gas Processors, that it did not already
own, for the same number of Western
Gas Resources common shares.
Sizzler Restaurants SIZZ 9/11/90 1.25 shares of "New Collins" for each of $22.03 34.0%
International Inc. / Collins the 34% Sizzler already owned.
Foods Closing contingent upon completion of
sale of domestic Kentucky Fried
Chicken and other operations to
Pepsico.
Freeport-McMoRan Oil & FMP 7/31/90 Exchange of stock valuing Freeport @ $10.50 18.5%
Gas Co./ Freeport- $10.50/share. Freeport will be valued at
McMoRan Inc. an average of the composite tape closing
prices for the last 10 trading days prior
to the formal Freeport Shareholder
approval.
Caesars New Jersey Inc. / CJN 7/19/90 $22 cash per share tender offer for the $22.00 13.4%
Caesars World Inc. 2,175,945 outstanding shares.
TVX Broadcast Group Inc. TVXGC 7/12/90 Paramount Communications, formerly $9.50 21.0%
/ Paramount Gulf & Western, acquired the remaining
Communications Inc. 21% of TVX Broadcast Group, a unit of
Salomon, for a sweetened $9.50 per
share.
Mack Trucks Inc / Renault MACK US 7/6/90 Renault Vehicules Industriels, a unit of $8.78 40.0%
Vehicles Industrials France's Regie Nationale des Usines
Renault, acquired the 40% of Mack
Trucks it did not own.
DST Systems Inc. / Kansas DSTS 5/25/90 Initial offer of $14 cash per share. Most $15.85 12.9%
City Southern Industries, recent is $15.85 cash per share.
Inc.
<CAPTION>
PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK
VALUE OF PRICE 3 MONTHS PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY
ACQUIRED / ACQUIROR NAME DEAL ($MIL) PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Western Gas Processors $130.3 -8.9% -12.5% -15.0% -16.4%
Ltd / Western Gas
Resources Inc
Sizzler Restaurants $122.0 3.7% 26.1% 37.7% 31.5%
International Inc. / Collins
Foods
Freeport-McMoRan Oil & $241.0 27.3% 42.5% 40.0% 31.3%
Gas Co./ Freeport-
McMoRan Inc.
Caesars New Jersey Inc. / $63.9 40.8% 34.5% 39.7% 36.4%
Caesars World Inc.
TVX Broadcast Group Inc. $61.4 130.3% 85.4% 94.9% 26.7%
/ Paramount
Communications Inc.
Mack Trucks Inc / Renault $103.7 32.5% 22.0% 71.3% 67.2%
Vehicles Industrials
DST Systems Inc. / Kansas $39.0 60.5% 54.6% 24.3% 5.7%
City Southern Industries,
Inc.
<CAPTION>
PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PRICE VS. 52 WEEK
PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH HIGH EXCLUDING CONSID-
ACQUIRED / ACQUIROR NAME AVERAGE PRIOR HIGH PRIOR BEFORE PRICE PREVIOUS MONTH ERATION STRUCTURE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Western Gas Processors -14.3% -16.4% -8.9% 4.9% Stock Tender
Ltd / Western Gas
Resources Inc
Sizzler Restaurants 11.1% -5.8% 25.9% 6.1% Stock Merger
International Inc. / Collins
Foods
Freeport-McMoRan Oil & 7.7% -16.0% 10.5% 22.3% Stock Merger
Gas Co./ Freeport-
McMoRan Inc.
Caesars New Jersey Inc. / 11.3% -21.4% 36.4% 29.0% Cash Tender
Caesars World Inc.
TVX Broadcast Group Inc. 127.7% 26.7% 130.3% -44.7% Cash Merger
/ Paramount
Communications Inc.
Mack Trucks Inc / Renault 15.5% -26.8% 59.6% 46.6% Cash Tender
Vehicles Industrials
DST Systems Inc. / Kansas 35.5% 5.7% 37.8% -8.5% Cash Merger
City Southern Industries,
Inc.
</TABLE>
6
<PAGE> 38
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
TICKER
SYMBOL OF DATE FINAL PERCENT
ACQUIRED / ACQUIROR NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Capital ACA 5/9/90 Original Terms: 0.3 Primerica shares $11.50 17.4%
Management & Research for each American Capital share.
Inc. / Primerica Corp. Revised Offer: Either 0.32 Primerica
(formerly American Can share of $11.50 in cash per share for the
Co.) 17.4% share not already owned.
LPL Technologies, Inc. / LPLI 3/19/90 Revised Terms: $25 cash for the 20% $25.00 49.0%
Cheshire Acquisition of LPL's shares that are publicly traded;
Group for the 29% balance of LPL shares not
owned by Cheshire, $17 in cash plus one
share of 12% cumulative redeemable
preferred stock with a stated value of $8
per share.
Shearson Lehman Hutton / SLH 3/2/90 Original terms: 0.426 American $12.90 39.0%
American Express Co. Express shares per Shearson share.
Revised Terms: 0.48 American Express
shares valued at $26.875 for the 39% of
Shearson shares not already owned.
POP Radio Corp. / POPX 2/26/90 $20.50 cash for the 44% of shares not $20.50 44.0%
Heritage Media Corp. already owned.
Copperweld Corp. / Imetal COS 1/24/90 In metal acquired the remaining 44.3% $17.00 44.4%
S.A. of Copperweld that it did not already
own for $17 per share in cash, or
$78.026 mil., an increase from its
earlier offer of $15.50 per share in cash,
or $71.141 mil. The revised offer was
announced in January 1990.
=======================================================================
Averages $24.3 26.5%
Medians $19.1 20.2%
Number of deals 38 38
=======================================================================
<CAPTION>
PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK
VALUE OF PRICE 3 MONTHS PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY
ACQUIRED / ACQUIROR NAME DEAL ($MIL) PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Capital $50.7 27.8% 36.0% 35.3% 37.3%
Management & Research
Inc. / Primerica Corp.
(formerly American Can
Co.)
LPL Technologies, Inc. / $25.1 58.7% 44.9% 53.8% 28.2%
Cheshire Acquisition
Group
Shearson Lehman Hutton / $361.2 -15.4% 9.8% 18.6% -0.8%
American Express Co.
POP Radio Corp. / $40.0 51.9% 70.7% 41.4% 20.6%
Heritage Media Corp.
Copperweld Corp. / Imetal $78.0 19.3% 33.3% 44.7% 47.8%
S.A.
============================================================================================================================
$195.2 28.7% 29.8% 29.0% 21.3%
$113.1 27.5% 23.7% 23.2% 20.0%
38 38 38 38 38
============================================================================================================================
<CAPTION>
PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK PRICE VS. 52 WEEK
PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH HIGH EXCLUDING CONSID-
ACQUIRED / ACQUIROR NAME AVERAGE PRIOR HIGH PRIOR BEFORE PRICE PREVIOUS MONTH ERATION STRUCTURE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Capital 31.0% 24.3% 35.3% -13.0% Cash Tender
Management & Research
Inc. / Primerica Corp.
(formerly American Can
Co.)
LPL Technologies, Inc. / 66.2% 12.4% 42.9% -26.0% Cash Merger
Cheshire Acquisition
Group
Shearson Lehman Hutton / -27.7% -45.4% -44.2% 82.2% Stock Merger
American Express Co.
POP Radio Corp. / 17.6% -18.0% 34.4% 22.0% Cash Merger
Heritage Media Corp.
Copperweld Corp. / Imetal 35.3% 17.2% 23.6% -5.9% Cash Tender
S.A.
==========================================================================================================
23.9% -1.7% 25.3% 3.6%
16.2% -4.6% 24.9% 2.1%
38 38 38 38
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
ONE MONTH BEFORE STATISTICS ONE MONTH BEFORE 6 MONTHS BEFORE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Max premium paid: 88.6% 82.3%
Min premium paid: -4.6% -17.7%
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CASH DEALS (INCLUDES NOTES)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Number of Deals: 24 24
Average: 33.2% 32.1%
Av. (Exc. High & Low) 32.1% 29.9%
Max: 88.6% 130.3%
</TABLE>
7
<PAGE> 39
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
CASH DEALS (INCLUDES NOTES)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Min: 1.1% -17.7%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STOCK DEALS
- ------------------------------------------------------------------------------------
<S> <C> <C>
Number of Deals: 14 14
Average: 24.1% 13.6%
Av. (Exc. High & Low) 22.5% 13.5%
Max: 80.0% 45.4%
Min: -12.5% -44.2%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERCENT PURCHASED IN CASH DEALS
- ----------------------------------------------------------------------------------------------
1 MONTH
PERCENT PREMIUM 6 MONTH PREMIUM 1 MONTH # OF DEALS 6 MONTH # OF DEALS
<S> <C> <C> <C> <C>
5-10% 5.9% 27.2% 2 2
10-20% 39.8% 33.7% 10 10
20-30% 43.3% 56.3% 2 2
30-40% 24.1% 44.1% 2 2
40-50% 31.4% 24.7% 8 8
- ----------------------------------------------------------------------------------------------
Average all cash deals 33.2% 32.9%
- ----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 40
PREMIUMS PAID IN SELECTED MINORITY SQUEEZE OUT TRANSACTIONS
1990-PRESENT
<TABLE>
<CAPTION>
ACQUIRED/ TICKER PREMIUM TO STOCK
ACQUIROR SYMBOL OF DATE FINAL PERCENT VALUE OF PRICE 3 MONTHS
NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRICE/SHARE PURCHASED DEAL ($MIL) PRIOR TO ANNOUNC'T
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C> <C> <C> <C>
BIC Corp. Stock Price $31.38
Price Implied by Average $40.38
Price Implied by Median $40.01
===================================================================================================================================
<CAPTION>
ACQUIRED/ TICKER PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK
ACQUIROR SYMBOL OF DATE PRICE ONE MONTH PRICE ONE WEEK PRICE ONE DAY
NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T PRIOR TO ANNOUNC'T
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BIC Corp. Stock Price $31.50 $36.13 $35.75
Price Implied by Average $40.89 $46.62 $43.36
Price Implied by Median $38.97 $44.51 $42.90
===================================================================================================================================
<CAPTION>
ACQUIRED/ TICKER PREMIUM TO STOCK PREMIUM TO STOCK PREMIUM TO STOCK
ACQUIROR SYMBOL OF DATE PRICE VS. 52 WEEK PRICE VS. 52 WEEK PRICE VS. 6 MONTH
NAME ACQUIRED ANNOUNCED TRANSACTION TERMS AVERAGE PRIOR HIGH PRIOR BEFORE PRICE
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BIC Corp. Stock Price $31.38 $37.50 $27.13
Price Implied by Average $38.87 $36.86 $33.99
Price Implied by Median $36.46 $35.79 $33.88
====================================================================================================================================
<CAPTION>
PREMIUM TO STOCK
ACQUIRED/ TICKER PRICE VS. 52 WEEK
ACQUIROR SYMBOL OF DATE HIGH EXCLUDING
NAME ACQUIRED ANNOUNCED TRANSACTION TERMS PREVIOUS MONTH CONSIDERATION STRUCTURE
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BIC Corp. Stock Price $32.50
Price Implied by Average $33.67
Price Implied by Median $33.20
===================================================================================================================================
</TABLE>
<PAGE> 41
BIC
- --------------------------------------------------------------------------------
DISCOUNTED CASH FLOW
DLJ
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
<PAGE> 42
DISCOUNTED CASH FLOW RESULTS - 5 YEAR EXIT
GOLDMAN CASE WITH CONSTANT MARGINS
Assumptions:
Consolidated
1) operating margins constant at 1994 levels
<TABLE>
<CAPTION>
-------------------------------------------------------------------
VALUE PER SHARE
-------------------------------------------------------------------
TERMINAL MULTIPLE OF 1999 EBITDA
-------------------------------------------------------------------
6.0x 6.5x 7.0x 7.5x 8.0x
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9.0% $36.03 $38.10 $40.17 $42.23 $44.30
DISCOUNT 10.0% $34.70 $36.67 $38.65 $40.62 $42.60
RATE 11.0% $33.43 $35.32 $37.21 $39.10 $40.99
12.0% $32.23 $34.04 $35.84 $37.65 $39.45
13.0% $31.09 $32.82 $34.54 $36.27 $38.00
</TABLE>
GOLDMAN CASE WITH REDUCED GROWTH AND CONSTANT MARGINS
Assumption:
Stationery
1) 3% unit and 2% price increases per year
Consolidated
1) operating margins constant at 1994 levels
<TABLE>
<CAPTION>
---------------------------------------------------------------
VALUE PER SHARE
---------------------------------------------------------------
TERMINAL MULTIPLE OF 1999 EBITDA
---------------------------------------------------------------
6.0x 6.5x 7.0x 7.5x 8.0x
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9.0% $34.16 $36.08 $38.00 $39.92 $41.84
10.0% $32.91 $34.75 $36.58 $38.42 $40.25
DISCOUNT 11.0% $31.73 $33.48 $35.23 $36.99 $38.74
RATE 12.0% $30.60 $32.28 $33.95 $35.63 $37.31
13.0% $29.53 $31.14 $32.74 $34.34 $35.95
</TABLE>
GOLDMAN CASE
Assumptions:
Stationery
1) 4.5% unit and 3.5% price increases per year
Lighters
1) 2% unit and 0% price increases per year
Shavers
1) 1.5% unit and 4% price increases per year beginning in 1996
2) Introduction of Product X
<TABLE>
<CAPTION>
--------------------------------------------------------------
VALUE PER SHARE
--------------------------------------------------------------
TERMINAL MULTIPLE OF 1999 EBITDA
---------------------------------------------------------------
6.0x 6.5x 7.0x 7.5x 8.0x
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9.0% $40.94 $43.31 $45.69 $48.06 $50.44
DISCOUNT 10.0% $39.40 $41.67 $43.94 $46.21 $48.48
RATE 11.0% $37.94 $40.11 $42.28 $44.45 $46.62
12.0% $36.56 $38.63 $40.71 $42.78 $44.86
13.0% $35.25 $37.23 $39.21 $41.20 $43.18
</TABLE>
<PAGE> 43
BIC
- --------------------------------------------------------------------------------
ACCRETION/DILUTION ANALYSIS
DLJ
- --------------------------------------------------------------------------------
<PAGE> 44
ACCRETION/DILUTION ANALYSIS
- --------------------------------------------------------------------------------
TRANSACTION ASSUMPTIONS
- -- Minority interest other than Bich Family acquired at a price of $36.50.
- -- Transaction funded with cash on hand of 1.0 billion FFr, consisting of
purchase price and expenses at an exchange rate of 5.05 FFr/US$.
- -- Cash assumed to generate interest income at 7.0% per annum.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma Income Statements
Pro Forma Pro Forma
1994A Adjustments 1994A 1995 (1) Adjustments 1995 (1)
------- ----------- ------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues 6,399.6 6,399.6 6,570.0 6,570.0
EBIT 1,076.4 1,076.4 1,100.0 1,100.0
Interest Income (73.0) 70.0 (2) (3.0) (140.0) 70.0 (2) (70.0)
Goodwill 0.0 17.6 (3) 17.6 0.0 17.6 (3) 17.6
------- ------- ------- -------
Pre-tax Income 1,149.3 1,061.7 1,240.0 1,152.4
Taxes 445.7 (27.3)(4) 418.4 483.0 (20.7)(5) 462.3
Minority Interest 122.8 (57.3)(6) 65.5 112.0 (67.8)(6) 44.2
------- ------- ------- -------
Net Income 580.8 577.8 645.0 645.9
======= ======= ======= =======
Earnings per Share 41.92 41.80 46.70 46.72
======= ======= ======= =======
Accretion (Dilution) % -0.3% 0.0%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Offer Price Current Market Price
----------- --------------------
<S> <C> <C>
$36.50 $39.50
1995 Accretion (Dilution) % 0.0% -0.7%
</TABLE>
- --------------------------------------------------------------------------------
- -------------------------
(1) Source: Indosuez Capital Equity Research report dated April 18, 1995.
(2) Reduction in interest income on 1.0 billion FFr purchase price at 7.0% per
annum.
(3) Goodwill based on an excess of purchase price of 1.0 billion FFr over
minority interest of 295.6 million FFr amortizable over 40 years.
(4) Assumes a 39% average tax rate.
(5) Assumes a 39.50% average tax rate.
(6) Minority interest reduced for the acquisition of all public shares
excluding Bich Family.
Page 1
<PAGE> 1
Exhibit (b)(4)
- --------------------------------------------------------------------------------
DISCUSSION MATERIALS FOR
PROJECT POINT
JULY 10, 1995
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 2
PROJECT POINT
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
COMPARABLE COMPANY ANALYSIS . . . . . . . . . . . . . . . . . . . . . . 1
PREMIUMS PAID ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . 2
CHANGE OF CONTROL TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . 3
DISCOUNTED CASH FLOW ANALYSIS . . . . . . . . . . . . . . . . . . . . . 4
PRESENT VALUE OF FUTURE STOCK PRICES AND DIVIDENDS PAID . . . . . . . . 5
LEVERAGED RECAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . 6
LBO ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SUMMARY / CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 3
<PAGE> 4
PROJECT POINT
- --------------------------------------------------------------------------------
COMPARABLE COMPANY ANALYSIS
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 5
PROJECT POINT
- --------------------------------------------------------------------------------
FACTORS INFLUENCING COMPARABILITY
<TABLE>
<CAPTION>
LEADING CONSUMER PRODUCTS COMPANIES BIC CORPORATION
----------------------------------------------------------- ---------------------------------------------
<S> <C> <C>
1. Diversification 1. Not Diversified
- Worldwide presence - Domestic U.S. presence
- Full line of product offerings in numerous markets - Limited product lines
2. Large Size 2. Middle Market
- Market capitalization in excess of $2.0 billion - Market capitalization of $850 million
- Revenues in excess of $2.0 billion - Revenue of $485 million
3. Large Advertising and R&D Expenditures 3. Minimal Advertising and R&D Expenditures
4. Sustainable Revenue Growth 4. Limited Sources of Revenue Growth
- New product introductions - No new products
- Acquisitions - No acquisitions
- New geographic markets - No new markets
5. Market and Price Leadership 5. Commodity Products at Low Price Points
6. Success in Acquisitions 6. No Acquisition Track Record
- Proven ability to leverage distribution strength
- Proven ability to improve acquired companies
7. Breadth of Manufacturing and Marketing Experience 7. Expertise Limited to Plastic Products
</TABLE>
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 6
PROJECT POINT
- --------------------------------------------------------------------------------
COMPARATIVE MARGIN ANALYSIS
- - BIC Corp's core writing instruments business has comparable margins to the
writing instruments companies included in the DLJ comparable company
universe (BIC Corporation Writing Instruments, Hunt Mfg., Pentech, and Dixon
Ticonderoga).
[GRAPH]
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-3-
<PAGE> 7
PROJECT POINT
- --------------------------------------------------------------------------------
COMPARATIVE P/E RATIOS
December 31, 1993 through Present
- - BIC Corp. has historically traded below the universe of Consumer Products
Companies presented.
[GRAPH]
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-4-
<PAGE> 8
PROJECT POINT
- --------------------------------------------------------------------------------
COMPARATIVE PRICE & P/E RATIOS
December 1993 Through Present
- - BIC Corp.'s valuation has been comparable to or exceeded by RAZR, PNTK,
DXT and HUN.
[GRAPH]
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-5-
<PAGE> 9
PROJECT POINT
- --------------------------------------------------------------------------------
COMPARABLE COMPANY COMPOSITES
DLJ UNIVERSE
<TABLE>
<CAPTION>
DLJ PEN AND RAZOR COMPOSITE BEST COMPARABLE COMPANY
--------------------------------------------- -----------------------------------------------
<S> <C>
Societe Bic Societe Bic
Gillette Company
American Safety Razor
A. T. Cross Co.
Pentech International
Dixon Ticonderoga
American Business Products
Hunt Manufacturing
Avery Dennison
</TABLE>
COMPROMISE UNIVERSE
<TABLE>
<CAPTION>
COMBINED COMPOSITE STAPLES U.S.A. MOST COMPARABLE COMPANIES
------------------------------------------- ----------------------------------------- -------------------------------------
<S> <C> <C>
Societe Bic American Safety Razor Societe BIC
Gillette Pentech International Newell (GS)
American Safety Razor Hunt Manufacturing
A. T. Cross Co. Newell (GS)
Pentech International Rubbermaid (GS)
Dixon Ticonderoga
American Business Products
Hunt Manufacturing
Avery Dennison
Duracell (GS)
Newell (GS)
Rubbermaid (GS)
</TABLE>
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-6-
<PAGE> 10
PROJECT POINT
- --------------------------------------------------------------------------------
SUMMARY VALUATION
DLJ Universe
<TABLE>
<CAPTION>
BIC CORP. SOCIETE
VALUATION PARAMETERS RESULTS AVERAGE(1) VALUATION BIC VALUATION
- -------------------------------- -------- ---------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Price / 1995 EPS $ 2.38 15.0x $35.76 17.6x $41.79
Price / 1996 EPS $ 2.45 13.6x $33.32 15.1x $37.00
Enterprise Value / LTM Revenues $485.8 1.1x $25.25 1.4x $31.31
Enterprise Value / LTM EBDAIT $114.2 6.8x $35.51 5.8x $30.96
Enterprise Value / LTM EBIT $ 90.4 8.9x $36.70 7.8x $32.71
----------------------------------------------------------
Average $33.31 $34.75
----------------------------------------------------------
</TABLE>
Compromise Universe
<TABLE>
<CAPTION>
BIC CORP. COMBINED STAPLES
VALUATION PARAMETERS RESULTS COMPOSITE(2) VALUATION U.S.A.(3) VALUATION
- ------------------------------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Price / 1995 EPS $ 2.38 16.4x $39.08 13.7x $32.65
Price / 1996 EPS $ 2.45 14.8x $36.33 13.4x $32.84
Enterprise Value / LTM Revenues $485.8 1.4x $30.90 1.3x $29.58
Enterprise Value / LTM EBDAIT $114.2 7.6x $39.65 7.4x $38.41
Enterprise Value / LTM EBIT $ 90.4 9.8x $40.21 9.1x $37.61
--------------------------------------------------------------------------
Average $37.23 $34.22
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MOST
COMPARABLE
VALUATION PARAMETERS COMPANIES(4) VALUATION
- ------------------------------- ------------ ---------
<S> <C> <C>
Price / 1995 EPS 17.0x $40.39
Price / 1996 EPS 14.7x $36.03
Enterprise Value / LTM Revenues 1.6x $36.56
Enterprise Value / LTM EBDAIT 7.6x $39.43
Enterprise Value / LTM EBIT 9.5x $39.03
--------------------------
$38.29
--------------------------
</TABLE>
__________________________________
(1) Comparable Companies include Societe BIC, Gillette Company, American
Safety Razor, A.T. Cross Co., Pentech International, Dixon Ticonderoga Co,
American Business Products, Hunt Manufacturing, and Avery Dennison.
(2) Comparable companies include Societe BIC, Gillette, American Safety Razor,
A.T. Cross, Pentech International, Dixon Ticonderoga, American Business
Products, Hunt Manufacturing, Avery Dennison, Duracell International,
Rubbermaid and Newell.
(3) Comparable companies include Rubbermaid, Newell, American Safety Razor,
Pentech International, and Hunt Manufacturing.
(4) Comparable companies include Society Bic and Newell.
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETT
-7-
<PAGE> 11
<PAGE> 12
PROJECT POINT
- --------------------------------------------------------------------------------
PREMIUMS PAID ANALYSIS
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 13
PROJECT POINT
- --------------------------------------------------------------------------------
MINORITY INTEREST PREMIUMS PAID ANALYSIS
- - Of the 38 minority transactions consummated since 1990, 23 (60.5%) had a
premium of less than 30% and 13 (34.2%) had a premium of less than 20%.
<TABLE>
<CAPTION>
PREMIUM PAID OVER STOCK PRICE PRIOR TO ANNOUNCEMENT
------------------------------------------------------------------------------------------------
52 WEEK HIGH
UP TO ONE MONTH PRIOR TO
1 MONTH 52 WEEK AVG. 52 WEEK HIGH ANNOUNCEMENT
------- ------------ ------------ ------------------------
<S> <C> <C> <C> <C>
BIC Corp. Price. . . . . . $31.50 $31.38 $37.50 $32.50
Offer Price (5/18/95). . . $36.50 $36.50 $36.50 $36.50
Premium . . . . . . . . . 15.9% 16.3% (2.6%) 12.3%
---------------------------------------------------------------------------------------
Median Premium(1). . . . . 23.7% 16.2% (4.6%) 2.1%
Implied Price . . . . . . $38.97 $36.46 $35.79 $33.20
====== ====== ====== ======
---------------------------------------------------------------------------------------
Average Premium(1) . . . . 29.8% 23.9% (1.7%) 3.6%
Implied Price . . . . . . $40.89 $38.87 $36.86 $33.67
====== ====== ====== ======
</TABLE>
__________________________________
(1) Based on minority transactions from 1990 to date.
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 14
<PAGE> 15
PROJECT POINT
- --------------------------------------------------------------------------------
CHANGE OF CONTROL TRANSACTIONS
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 16
PROJECT POINT
- --------------------------------------------------------------------------------
APPLICABLE CHANGE OF CONTROL TRANSACTIONS
- Of the change of control transactions presented, the following
transactions are similar to the business of BIC Corp.
- These transactions, however, include significant synergies, cost
cutting opportunities, productivity improvements and a change of
control, all of which are not applicable to the proposed
transaction.
<TABLE>
<CAPTION> TRANSACTION MULTIPLES OF
----------- -------------------------------------
YEAR TARGET ACQUIROR SIZE REVENUES EBIT NET INCOME
---- ------------------------ ---------------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1992 Parker Pen Gillette $330 1.8x 9.2x 14.6x
1993 Wilkinson Sword Warner-Lambert 142 0.8x NM(1) NA
1992 Wite-Out BIC Corp. 20 1.7x 6.7x 11.3x
1991 Sanford Corp. Newell Companies 593 4.0x 18.4x 25.7x
1991 Stuart Hall Newell Companies 114 0.8x NM NM
1990 Dennison Manufacturing Avery International 674 1.7x 14.2x 23.5x
1990 Esselte Business Systems Esselte AB 221 0.9x 9.1x 17.2x
1989 W.T. Rogers Company Newell Companies 57 1.6x 14.8x 26.5x
1988 Parker Pen Pentland Industries 330 1.5x NA NA
1987 Berol Corporation Empire Pencil Corp. 50 0.8x 7.4x NM
1987 Waterman S.A. Gillette 40 0.9x 6.6x 18.6x
-------------------------------------------------------------------------------------
Median 1.5x 9.2x 18.6x
Valuation Implied by BIC Corp.
Results $33.64 $37.83 $41.93
-------------------------------------------------------------------------------------
</TABLE>
__________________________________
(1) Not meaningful indicates operating results close to or below zero.
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 17
<PAGE> 18
PROJECT POINT
- --------------------------------------------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 19
DISCOUNTED CASH FLOW RESULTS - 5 YEAR EXIT
CASE 1B: CASE 1A GROWTH RATES WITH CONSTANT MARGINS
Assumptions:
Consolidated
1) operating margins constant at 1994 levels
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
VALUE PER SHARE
- ---------------------------------------------------------------------------
TERMINAL MULTIPLE OF 1999 EBIT
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8.0x 8.5x 9.0x 9.5x 10.0x 8.8x
- ---------------------------------------------------------------------------
Discount 11.0% $33.77 $35.26 $36.75 $38.24 $39.73 $36.15
Rate 13.0% $31.32 $32.69 $34.05 $35.41 $36.78 $33.50
- ---------------------------------------------------------------------------
Implied EBITDA Exit Multiple 6.3x 6.7x 7.1x 7.5x 7.9x 6.9x
</TABLE>
CASE 1A
Assumptions:
Stationery
1) 4.5% unit and 3.5% price increases per year
Lighters
1) 2% unit and 0% price increases per year
Shavers
1) 1.5% unit and 4% price increases per year beginning in 1996
2) Introduction of Product X
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
VALUE PER SHARE
- ---------------------------------------------------------------
TERMINAL MULTIPLE OF 1999 EBIT
- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8.0x 8.5x 9.0x 9.5x 10.0x 8.8x
- ---------------------------------------------------------------
Discount 11.0% $39.40 $41.17 $42.94 $44.71 $46.48 $42.23
Rate 13.0% $36.51 $38.13 $39.75 $41.37 $42.98 $39.10
- ---------------------------------------------------------------
6.3x 6.7x 7.1x 7.5x 7.9x 6.9x
</TABLE>
CASE 1C: CASE 1A WITH LESS AGGRESSIVE GROWTH RATES AND CONSTANT MARGINS
Assumptions:
Stationery
1) 3% unit and 2% price increases per year
Consolidated
1) operating margins constant at 1994 levels
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
VALUE PER SHARE
- ---------------------------------------------------------------------------
TERMINAL MULTIPLE OF 1999 EBIT
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8.0x 8.5x 9.0x 9.5x 10.0x 8.8x
- ---------------------------------------------------------------------------
Discount 11.0% $31.98 $33.36 $34.74 $36.13 $37.51 $34.19
Rate 13.0% $29.69 $30.95 $32.22 $33.48 $34.75 $31.71
- ---------------------------------------------------------------------------
Implied EBITDA Exit Multiple 6.3x 6.7x 7.1x 7.5x 7.9x 6.9x
</TABLE>
<PAGE> 20
<PAGE> 21
PROJECT POINT
- --------------------------------------------------------------------------------
PRESENT VALUE OF FUTURE STOCK PRICES
AND DIVIDENDS PAID
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 22
PROJECT POINT
- --------------------------------------------------------------------------------
PRESENT VALUE OF FUTURE STOCK PRICES AND CASH PAID TO SHAREHOLDERS
Based on "Case 1B"
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
----- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Constant Margin Net Income $ 54.8 $ 60.7 $ 64.6 $ 68.9 $ 73.4 $78.1
Shares Outstanding 23.6 23.6 23.6 23.6 23.6 23.6
------ ------ ------ ------ ----- -----
CONSTANT MARGIN EPS $ 2.33 $ 2.58 $ 2.74 $ 2.92 $ 3.12 $3.32
Interest Expense(1) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($0.31)
Interest Income(2) $ 0.00 $ 0.07 $ 0.12 $ 0.17 $ 0.22 $0.27
------ ------ ------ ------ ------ -----
Adjusted EPS $ 2.02 $ 2.34 $ 2.56 $ 2.79 $ 3.03 $3.28
Growth % - 16.0% 9.1% 8.9% 8.6% 8.3%
PRESENT VALUE OF STOCK PRICE(3) P/E
P/E on Next Year EPS 10x $22.01 $21.25 $20.49 $19.69 $18.87
12 $26.42 $25.50 $24.59 $23.63 $22.65
14 $30.82 $29.75 $28.68 $27.57 $26.42
16 $35.22 $34.01 $32.78 $31.51 $30.20
Estimated Dividends(4) $ 0.92 $ 0.84 $ 0.92 $ 1.00 $ 1.09
Special Recap Dividend(5) $ 8.22
Growth % - (8.3%) 8.9% 8.8% 8.5%
Present Value of Dividends (3) $ 8.58 $ 9.28 $ 9.96 $10.61 $11.24
TOTAL VALUE OF STOCK PRICE AND DIVIDENDS
P/E on Next Year EPS 10x $30.60 $30.54 $30.45 $30.30 $30.11
12 $35.00 $34.79 $34.55 $34.24 $33.88
14 $39.40 $39.04 $38.64 $38.18 $37.66
16 $43.80 $43.29 $42.74 $42.12 $41.43
Cash on Balance Sheet Per Share $ 1.53 $ 2.53 $ 3.48 $ 4.50 $ 5.58
</TABLE>
__________________________________
(1) Assumes $150 million debt, 8% interest rate and 40% tax rate.
(2) Assumes 8% interest rate on previous year's cash balance and 40% tax rate.
(3) Applies a 6.5% discount rate for 1995 and a 13% annual discount rate
thereafter to dividends and future stock price.
(4) Based on 1995 dividend of $0.92 and constant payout ratio of 36%
thereafter.
(5) Comprised of $150 million of new debt and $44 million of excess cash.
- ---------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 23
PROJECT POINT
- --------------------------------------------------------------------------------
PRESENT VALUE OF FUTURE STOCK PRICES AND CASH PAID TO SHAREHOLDERS
Based on "Case 1C"
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Constant Margin Net Income $ 54.8 $ 59.7 $ 62.4 $ 65.2 $ 68.4 $ 71.2
Shares Outstanding 23.6 23.6 23.6 23.6 23.6 23.6
------ ------ ------ ------ ------ ------
CONSTANT MARGIN EPS $ 2.33 $ 2.53 $ 2.65 $ 2.77 $ 2.89 $ 3.02
Interest Expense(1) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31) ($ 0.31)
Interest Income(2) $ 0.00 $ 0.07 $ 0.12 $ 0.17 $ 0.21 $ 0.26
------ ------ ------ ------ ------ ------
Adjusted EPS $ 2.02 $ 2.30 $ 2.47 $ 2.63 $ 2.80 $ 2.29
Growth % - 13.9% 7.1% 6.7% 6.4% 6.4%
PRESENT VALUE OF STOCK PRICE(3) P/E
P/E on Next Year EPS 10x $21.62 $20.49 $19.34 $18.22 $17.15
12 $25.94 $24.58 $23.21 $21.86 $20.58
14 $30.26 $28.68 $27.07 $25.51 $24.01
16 $34.58 $32.78 $30.94 $29.15 $27.44
Estimated Dividends(4) $ 0.92 $ 0.84 $ 0.92 $ 1.00 $ 1.09
Special Recap Dividend(5) $ 8.22
Growth % - (8.3%) 8.9% 8.8% 8.5%
Present Value of Dividends (3) $ 8.58 $ 9.28 $ 9.96 $10.61 $11.24
TOTAL VALUE OF STOCK PRICE AND DIVIDENDS
P/E on Next Year EPS 10x $30.20 $29.77 $29.30 $28.83 $28.39
12 $34.52 $33.87 $33.17 $32.47 $31.82
14 $38.84 $37.96 $37.03 $36.12 $35.25
16 $43.17 $42.06 $40.90 $39.76 $38.68
Cash on Balance Sheet Per Share $ 1.53 $ 2.55 $ 3.50 $ 4.47 $ 5.46
</TABLE>
__________________________________
(1) Assumes $150 million debt, 8% interest rate and 40% tax rate.
(2) Assumes 8% interest rate on previous year's cash balance and 40% tax rate.
(3) Applies a 6.5% discount rate for 1995 and a 13% annual discount rate
thereafter to dividends and future stock price.
(4) Based on 1995 dividend of $0.92 and constant payout ratio of 36%
thereafter.
(5) Comprised of $150 million of new debt and $44 million of excess cash.
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETT
-2-
<PAGE> 24
<PAGE> 25
PROJECT POINT
- --------------------------------------------------------------------------------
LEVERAGED RECAPITALIZATION
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 26
PROJECT POINT
- --------------------------------------------------------------------------------
LEVERAGED RECAPITALIZATION SUMMARY ANALYSIS
- Leveraged Recapitalization assumptions:
- Conservative base case assumptions
- Debt/1995 EBITDA = 5.0x (may require 5.0x Debt / LTM EBITDA)
- Bank debt repaid in 5-7 years under all scenarios
- EBITDA-CAPX/Interest reaching 2.0x within two years
- "Hypothetical Leveraged Recapitalization" appears aggressive:
1) - "Case 1A" projections represent an upside case
- Debt/1995 EBITDA = 5.6x
- Bank debt repaid in Year 8
- EBITDA-CAPX/Interest reaches 2.0x in third year
2) Stub P/E multiples do not take into account excessive leverage
3) Results based on "Case 1A" projections
4) Aggressive interest rate assumptions.
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 27
<PAGE> 28
PROJECT POINT
- --------------------------------------------------------------------------------
LEVERAGED RECAPITALIZATION SUMMARY ANALYSIS (CONT'D)
- Leveraged Recap based on "Case 1B" projections
1) 5.0x Debt/1995 EBITDA reduces dividend from $30.50 to $26.42
2) Stub equity future values will be as follows:
<TABLE>
<CAPTION>
1995 2000
------ ------
<S> <C> <C>
FY+1 E.P.S. $ 1.05 $ 2.33
8x $ 8.42 $18.62
10 10.52 23.27
12 12.62 27.93
</TABLE>
-)These assumptions imply a value of $34.84 - $39.04 per share
- Leveraged Recap based on "Case 1C" projections
1) 5.0 Debt/1995 EBITDA reduces dividend from $30.50 to $26.42
2) Stub equity future values will be as follows:
<TABLE>
<CAPTION>
1995 2000
----- ------
<S> <C> <C>
FY+1 E.P.S. $ 1.01 $ 1.94
8x $ 8.08 $15.50
10 10.11 19.38
12 12.13 23.25
</TABLE>
-)These assumptions imply a value of $34.50 - $38.55 per share
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-2-
<PAGE> 29
<PAGE> 30
PROJECT POINT
- --------------------------------------------------------------------------------
LBO ANALYSIS
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 31
PROJECT POINT
- --------------------------------------------------------------------------------
LBO ANALYSIS SUMMARY
- LBO assumptions:
- Conservative base case assumptions
- Debt/1995 EBITDA = 5.0x (may require 5.0x Debt/LTM EBITDA)
- Bank debt repaid in 5-7 years under all scenarios
- EBITDA-CAPX/Interest reaching 2.0x within two years
- Expected returns approaching 35% IRR's
- "Illustrative Rollerball LBO Analysis Summary" appears aggressive:
1) - "Case 1A" projections represent an upside case.
- Debt/1995 EBITDA = 5.6x
- Bank debt repaid in Year 8
- EBITDA-CAPX/Interest reaches 2.0x in third year
2) Returns are light:
EXIT IRR NOTE
------------------- ---------- -----------------------------------
6.0x EBITDA 19%
9.0x EBITDA 34% 9.0x is an aggressive exit multiple
3) Aggressive interest rate assumptions.
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-1-
<PAGE> 32
PROJECT POINT
- --------------------------------------------------------------------------------
LBO ANALYSIS SUMMARY (CONT'D)
- LBO based on "Case 1B" projections
1) 5.0x Debt/1995 EBITDA reduces leverage by $100 million or
approximately $4.25 per share.
2) Equity contribution of $125 million yields returns of 35%,
before dilution, at a 7.5x EBITDA exit.
-) These assumptions imply an LBO valuation of $31.45 per share.
- LBO based on "Case 1C" projections
1) 5.0x Debt/1995 EBITDA reduces leverage by $100 million or
approximately $4.25 per share.
2) Equity contribution of $105 million yields returns of 35%, before
dilution, at a 7.5x EBITDA exit.
-) These assumptions imply an LBO valuation of $30.60 per share.
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-2-
<PAGE> 33
<PAGE> 34
PROJECT POINT
- --------------------------------------------------------------------------------
SUMMARY / CONCLUSIONS
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
<PAGE> 35
ACCRETION/DILUTION ANALYSIS
TRANSACTION ASSUMPTIONS
- -- Minority interest other than Bich Family acquired at a price of $36.50.
- -- Transaction funded with cash on hand of 1.0 billion FFr, consisting of
purchase price and expenses at an exchange rate of 5.05 FFr/US$.
- -- Cash assumed to generate interest income at 7.0% per annum.
<TABLE>
<CAPTION>
PRO FORMA INCOME STATEMENTS
PRO FORMA PRO FORMA
1994A ADJUSTMENTS 1994A 1995 (1) ADJUSTMENTS 1995 (1)
----------- ----------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues 6,399.6 6,399.6 6,570.0 6,570.0
EBIT 1,076.4 1,076.4 1,100.0 1,100.0
Interest Income (73.0) 70.0 (2) (3.0) (140.0) 70.0 (2) (70.0)
Goodwill 0.0 17.6 (3) 17.6 0.0 17.6 (3) 17.6
------- ------- ------- -------
Pre-tax Income 1,149.3 1,061.7 1,240.0 1,152.4
Taxes 445.7 (27.3)(4) 418.4 483.0 (20.7)(5) 462.3
Minority Interest 122.8 (57.3)(6) 65.5 112.0 (67.8)(6) 44.2
------- ------- ------- -------
Net Income 580.8 577.8 645.0 645.9
======= ======= ======= =======
Earnings per Share 41.92 41.80 46.70 46.72
======= ======= ======= =======
Accretion (Dilution)% -0.3% 0.0%
</TABLE>
- -------------------------------------------------------------------------------
Offer Price Current Market Price
----------- --------------------
$36.50 $39.50
------ ------
1995 Accretion (Dilution)% 0.0% -0.7%
- -------------------------------------------------------------------------------
_____________________________
(1) Source: Indosuez Capital Equity Research report dated April 18, 1995.
(2) Reduction in interest income on 1.0 billion FFr purchase price at 7.0% per
annum.
(3) Goodwill based on an excess of purchase price of 1.0 billion FFr over
minority interest of 295.6 million FFr amortizable over 40 years.
(4) Assumes a 39% average tax rate.
(5) Assumes a 39.50% average tax rate.
(6) Minority interest reduced for the acquisition of all public shares excluding
Bich Family.
Page 1
<PAGE> 36
PROJECT POINT
- --------------------------------------------------------------------------------
SUMMARY / CONCLUSIONS
- The Offer Price of $36.50 is clearly within the range of fairness.
- Valuation Summary:
<TABLE>
<CAPTION>
LOW HIGH
------ ------
<S> <C> <C> <C>
Comparable Companies . . . . . . . . $33.31 _ $38.29
Change of Control Transactions . . . 33.64 _ 41.93
Premiums . . . . . . . . . . . . . . 33.20 _ 38.97
Discounted Cash Flow Analysis . . . . 31.98 _ 39.73
------ ------
Average . . . . . . . . . . $33.03 - $39.73
</TABLE>
- The Offer Price of $36.50 is also supported by the theoretical
valuation implied by the "Present Value of Future Stock Prices
and Dividends Paid," Leveraged Buyout and Leveraged
Recapitalization analyses.
- The Offer Price of $36.50 represents a 20% premium over the BIC
Corp. average trading price for the 180 days prior to the offer.
- The transaction is dilutive to Societe BIC at any price in excess
of $36.50.
- Any increase in the offer price will have to be made up by
additional consolidated earnings.
- ----------------------------------------------------------------------[DLJ LOGO]
DONALDSON, LUFKIN & JENRETTE
-2-
<PAGE> 1
Exhibit (c)(2)
VOTING TRUST AGREEMENT
THIS AGREEMENT, dated as of this 5th day of February 1991, by and among
SOCIETE BIC, a corporation organized and existing under the laws of France,
having its principal place of business at 3 Impasse des Cailloux, Clichy 92
(France), party of the first part; MARCEL L. BICH, of 80 Rue de Chezy, Neuilly
s/Seine (France), party of the second part; NEIL A. POLLIO of 687 East Drive,
Oradell, New Jersey, party of the third part; BRUNO BICH of 100 Clapboard
Ridge Road, Greenwich, Connecticut, party of the fourth part; FRANCOIS BICH, of
5 Square de Chezy, 92200 Neuilly s/Seine (France), party of the fifth part; and
BIC CORPORATION, a New York corporation, having its principal place of business
at 500 BIC Drive in Milford, Connecticut.
W I T N E S S E T H :
WHEREAS, Societe Bic, Marcel L. Bich and Francois Bich are shareholders
of BIC Corporation (hereinafter sometimes collectively referred to as the
Shareholders), and
WHEREAS, the parties hereto are desirous to secure the continuity and
stability of policy and management of BIC Corporation, and Marcel L. Bich and
Bruno Bich as voting trustees and Neil A. Pollio as successor voting trustee
have consented to act hereunder, and
1
<PAGE> 2
WHEREAS, the Shareholders of each of them deem it to be in their best
interest to assign, transfer and vest the voting power of all the shares of BIC
Corporation now or hereafter held by them in the voting trustees and their
successor in accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, it is agreed as follows:
1) The Shareholders agree to deposit with the Voting Trustees the
certificates for shares of BIC Corporation owned by them, to wit:
Societe Bic 7,414,918 shares
Marcel L. Bich 641,406 shares
Francois Bich 200,000 shares
of BIC Corporation duly endorsed for transfer to the Voting Trustees or with
stock powers duly executed, with all transfer tax stamps affixed, if required.
Said certificates of shares shall be surrendered by the Voting Trustees to BIC
Corporation and cancelled and new certificates therefor shall be issued to and
held by the Voting Trustees in their names as such voting trustees, subject to
the terms of this Agreement.
2) Promptly after the deposit of certificates for shares by the
Shareholders with the Voting Trustee as provided in paragraph 1 hereof, the
Voting Trustees shall issue and deliver to each of the Shareholders voting
trust certificates in the form set forth in Exhibit A annexed hereto, the terms
of which exhibit are herein incorporated by reference, for the shares
deposited with
2
<PAGE> 3
and transferred to the Voting Trustees. The voting trust certificates issued
pursuant to the provisions hereof shall be transferable only on the books of
the Voting Trustees, as provided in the voting trust certificate and upon
surrender thereof. Until the voting trust certificate is transferred in
accordance with the terms and conditions set forth in such certificate, the
Voting Trustees may treat the registered holder of any voting trust
certificate as the owner thereof for all purposes.
The transfer books may be closed by the Voting Trustees for a
reasonable time prior to the payment or distribution of any dividend, as well as
at any other time or for any purpose when deemed by the Voting Trustees to be
desirable.
3) Should any voting trust certificate be mutilated or be lost,
destroyed or stolen, the Voting Trustees may, in their uncontrolled discretion,
issue and deliver in exchange therefor and upon cancellation of the mutilated
voting trust certificate or in lieu of the lost, destroyed or stolen voting
trust certificate a new voting trust certificate representing the same number
of shares, upon production of evidence of such loss, destruction or theft,
satisfactory to the Voting Trustees and upon receipt of indemnity satisfactory
to them.
4) The Voting Trustees shall receive and hold, subject to the terms of
this Agreement, certificates for common shares of BIC Corporation as well as
any preferred shares entitled to vote issued by way of dividend, split-up,
reorganization, merger,
3
<PAGE> 4
consolidation or any other change or adjustment upon or with respect to the
shares deposited hereunder and shall issue and deliver voting trust
certificates therefor to the registered holders of voting trust certificates
according to the books of the Voting Trustees.
5) The Voting Trustees shall distribute all cash dividends declared
and paid on the shares held by them hereunder and any other securities not
entitled to vote declared and delivered on the shares held by them hereunder to
the registered holders of the voting trust certificates in proportion to their
respective interest therein as shown on the books of the Voting Trustees.
6) In the event any shares or other securities of BIC Corporation are
offered for subscription to the holders of the shares held by the Voting
Trustees, the Voting Trustees shall promptly upon receipt of notice of said
offer mail a copy thereof to each registered voting trust certificate holder.
Provided the Voting Trustees receive in due time a request from such registered
voting certificate holders to subscribe for such shares or other securities
together with a certified or cashiers' check for the requisite sum of money for
the subscription of such shares or other securities, the Voting Trustees shall
make such subscription and payment and, upon receipt from BIC Corporation of
the certificates for shares or other securities so subscribed for, the Voting
Trustees shall issue to such holders a voting trust certificate in respect
thereof, if the same are common or transferred shares entitled to vote of BIC
corporation, but if the
4
<PAGE> 5
same are securities other than common shares or such preferred shares, the
Voting Trustees shall deliver such securities to the registered voting
certificate holder on whose behalf the subscription was made by them.
7) The Voting Trustees shall have the exclusive right to vote the
shares held by them or to give written consents in lieu of voting thereon,
subject to the provisions of the Certificate of Incorporation of BIC
Corporation and the amendments thereof, in person or by proxy, at any and all
meetings of the shareholders of BIC Corporation, for whatever purpose called or
held, and in any and all proceedings, whether at a meeting of the shareholders
or otherwise, wherein the vote or written consent of shareholders may be
required or authorized by law.
8) Marcel L. Bich, as one of the voting trustees shall have full
authority, when present in person in the United States, to exercise alone the
rights to vote as provided in paragraph 7 hereof. Unless Marcel L. Bich gives
notice to Bruno Bich that he will be present in the United States at the time
of the holding of a shareholders meeting, the right to vote as provided in
paragraph 7 hereof shall be exercised solely by Bruno Bich as the Voting
Trustee. Any written consent referred to in paragraph 7 shall be given jointly
by the Voting Trustees.
9) Each of the Voting Trustees may, at any time, resign by mailing
to the registered holders of the voting trust certificates and the other Voting
Trustee, unless at the time of resignation there is only one Voting Trustee,
a written notice of
5
<PAGE> 6
resignation to take effect 10 days thereafter or upon prior
acceptance thereof by the registered holders of the voting trust
certificates and by the other Voting Trustee if there is one in office
at that time.
10) In the event of resignation or death of Marcel L. Bich
as Voting Trustee, Bruno Bich shall be the sole Voting Trustee. In the event of
resignation or death of Bruno Bich as sole Voting Trustee, Neil A. Pollio shall
be the sole successor Voting Trustee. In the event of resignation or death of
Neil A. Pollio, his successor Voting Trustee shall be such person as Neil A.
Pollio shall designate in writing by notice mailed to the registered holders of
the voting certificates and to BIC Corporation, while acting as Voting Trustee.
In the event Neil A. Pollio shall fail to designate his successor as Voting
Trustee prior to the effective date of his resignation or death, the Voting
Trustee shall be such person as shall serve as ancillary executor or
administrator in the State of New York of the estate of Marcel L. Bich or such
person as may be designated by such ancillary executor or administrator.
11) The successor Voting Trustee shall have the same rights, powers
and privileges as the Voting Trustees.
12) This Agreement shall become effective upon the date hereof and
continue in effect for a period of ten (10) years from such date, subject to
the provisions of paragraphs 13 and 14 hereof.
<PAGE> 7
13) This Agreement may be terminated prior to the expiration of its
term by the execution by all the Voting Trustees or their successor, and not
otherwise, of a declaration of termination filed with BIC Corporation and
mailed to all the holders of voting trust certificates.
No shares held by the Voting Trustees hereunder may be withdrawn by any
holder of a voting trust certificate except with the written consent of all the
Voting Trustees or of their successor Voting Trustee filed with BIC Corporation.
14) This Agreement may be renewed for one or several ten-year periods
or for such other term as may be permitted by law, by the written consent of
all or some of the then voting trust certificate holders desiring to extend and
renew this Agreement, provided such consent is given within the time provided
by law in that respect and provided, further; that if only some of the then
voting trust certificate holders execute a written consent for the renewal of
this Agreement, this Agreement so renewed will be effective only as to such
holders of voting trust certificates as shall have executed such written
consent.
15) Upon the termination of this Agreement or upon the withdrawal of
shares from the voting trust as provided in paragraph 13 hereof, the Voting
Trustees, in exchange for and upon surrender of the voting trust certificates,
shall deliver to the respective holders thereof or with respect to shares so
withdrawn, as the case may be, certificates for shares of BIC Corporation duly
endorsed or with stock powers duly executed,
7
<PAGE> 8
provided, however, that prior to delivery of such certificates, the holders of
the voting trust certificates shall deposit with the Voting Trustees the cost
of any stamp tax or other tax payable in connection with the transfer of shares.
16) The Voting Trustees shall serve without compensation. They shall,
however, have the right to incur and pay such reasonable expenses and charges
and to employ such counsel as they may deem necessary and proper in the
performance of their duties hereunder. Any such charge or expenses incurred
shall be charged pro rata to the holders of the voting trust certificates and
each of such holders agrees to assure and pay his pro rata share of such
charges and expenses.
17) Neither the Voting Trustees nor a successor Voting Trustee shall be
liable by reason of any matter or thing in any way arising out of or in
relation to this Agreement, except for such damage as the registered holders of
voting trust certificates may sustain by reason of the willful malfeasance or
gross negligence of the Voting Trustees.
18) No Voting Trustee shall be required to give a bond or other
security for the faithful performance of his duties as such.
19) A Voting Trustee may act as a director or officer of BIC
Corporation or of any of its subsidiaries and serve as consultant or advisor or
attorney of, or in any other capacity for, BIC Corporation or any of its
subsidiaries and shall in no way be disqualified for voting the stock held by
him as Voting
8
<PAGE> 9
Trustee in favor of his own election as such director or officer or for serving
in any other capacity for BIC Corporation or any of its subsidiaries or for the
ratification or approval of any agreement between BIC Corporation or any of its
subsidiaries and himself or for voting with respect to any compensation to be
paid to him for his services.
20) Nothing herein contained shall disqualify any Voting Trustee from
dealing or contracting with BIC Corporation or any of its subsidiaries with
respect to any matter or thing whatsoever. Any firm of which a Voting Trustee
may be a member and any corporation of which a Voting Trustee may be a
shareholder, director or officer may deal and contract with BIC Corporation or
any of its subsidiaries with respect to any matter or thing and be or become
interested in a matter or transaction in which BIC Corporation or any of its
subsidiaries or to any shareholder thereof for any profit realized by, from or
through any transaction or contract by reason of the fact that he or any firm or
corporation of which he is a member, director or officer is interested in such
transaction or contract.
21) Any and all common shares of BIC Corporation hereafter acquired by
any and all the Shareholders shall be assigned to the Voting Trustees under
this Agreement.
22) The words "Voting Trustees" and "Voting Trustee" shall mean the
Voting Trustees named herein and their successor or successors.
9
<PAGE> 10
23) Any notice by one of the Voting Trustees to the other or any notice
to, or communication with, the holders of the voting trust certificates shall
be deemed sufficiently given or made if addressed by registered or certified
mail (or, should such holders be abroad, by registered airmail) at the address
set forth below to the Voting Trustees and to the holders of voting
certificates at their respective addresses appearing on the transfer book of
the Voting Trustees or to such other addresses as may be specified from time to
time by written notice to the Voting Trustees by such holders. Any notice to
the Voting Trustees hereunder shall be addressed to the Voting Trustees, c/o
Phillips, Nizer, Benjamin, Krim & Ballon, 11 West 52nd Street, New York, New
York 10019-6167, or such other address as may be designated by the Voting
Trustees by notice mailed to the holders of the voting trust certificates. Such
notice shall be mailed by registered mail, or if mailed outside of the United
States, by registered airmail.
24) This Agreement may be executed in counterparts and each shall be
deemed to be an original. It expresses the entire Agreement between the parties
and may not be changed or modified except in writing executed by all voting
trust certificate holders and the Voting Trustees then in office.
25) This Agreement shall be governed in all respects by the laws of the
State of New York and shall be construed and interpreted in accordance with
said laws.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and affixed their seal on the day and year first-above written.
SOCIETE BIC
By /s/ MARCEL L. BICH
-------------------------------
Marcel L. Bich
/s/ MARCEL L. BICH
----------------------------------
Marcel L. Bich
/s/ BRUNO BICH
----------------------------------
Bruno Bich
/s/ NEIL A. POLLIO
----------------------------------
Neil A. Pollio
/s/ FRANCOIS BICH
----------------------------------
Francois Bich
BIC CORPORATION
BY /s/ BRUNO BICH
------------------------------
Bruno Bich
11
<PAGE> 12
VOTING TRUST CERTIFICATE
EXHIBIT A
WE, MARCEL L. BICH, and BRUNO BICH, voting trustees of the shares of
the BIC Corporation, under a voting trust agreement dated February 5, 1991,
having received certain shares of said corporation pursuant to said agreement,
and which agreement the holder hereof, by accepting this certificate, ratifies,
adopts, and assents to, hereby certify that will be
entitled to receive a certificate for shares of said BIC
Corporation, of the par value of $1 each, on the expiration of the voting trust
agreement, and in the meantime shall be entitled to receive payments equal to
any dividends that may be collected by the undersigned trustees upon a like
number of such shares held by them under the terms of the trust agreement
aforesaid.
This certificate is transferable only on the record of voting trust
certificate holders of the undersigned trustees, by the registered holder in
person or by his duly authorized attorney, and the holder hereof, by accepting
this certificate, manifests his consent that the undersigned trustees may treat
the registered holder hereof as the true owner for all purposes, except the
delivery of share certificates, which delivery shall not be made without the
surrender hereof.
<PAGE> 13
IN WITNESS WHEREOF, the said voting trustees have caused this
certificate to be signed this _________________ day of_______________
1991.
______________________
Voting Trustee
______________________
Voting Trustee
_____________________
Witness
<PAGE> 1
Exhibit (c)(3)
AMENDMENT #1
AMENDMENT TO VOTING TRUST AGREEMENT
THIS AMENDMENT, dated as of the 3rd day of February, 1992, by and among
SOCIETE BIC, a corporation organized and existing under the laws of France,
having its principal place of business at 8 Impasse des Cailloux, Clichy 92
(France); MARCEL L. BICH, an individual residing at 80 Rue de Chezy, Neuilly
s/Seine (France); FRANCOIS BICH, an individual residing at 5 Square de Chezy,
92200 Neuilly s/Seine (France); BRUNO BICH, an individual residing at 100
Clapboard Ridge Road, Greenwich, Connecticut; ALEXANDER ALEXIADES, an
individual residing at 14 Seymour Road, Woodbridge, Connecticut; and BIC
CORPORATION, a New York corporation, having its principal place of business at
500 BIC Drive, Milford, Connecticut.
W I T N E S S E T H:
WHEREAS, Societe BIC, Marcel L. Bich and Francois Bich are shareholders
of BIC Corporation (hereinafter sometimes collectively referred to as the
"Shareholders"); and
WHEREAS, the Shareholders have previously entered into a Voting Trust
Agreement, dated February 5, 1991, to secure the continuity and stability of
policy and management of BIC Corporation and Marcel L. Bich and Bruno Bich as
Voting Trustees and Neil A. Pollio as successor Voting Trustee have previously
consented to act thereunder; and
WHEREAS, the Shareholders and the Voting Trustees now desire to amend
the Voting Trust Agreement to appoint a new successor Voting Trustee.
<PAGE> 2
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, it is agreed as follows:
The Voting Trust Agreement, dated February 5, 1991, is hereby amended
as follows:
1. Paragraph 10 is hereby amended to read as follows:
10) In the event of resignation or death of Marcel L. Bich as Voting
Trustee, Bruno Bich shall be the sole Voting Trustee. In the event of
resignation or death of Bruno Bich as Voting Trustee, Marcel L. Bich shall be
the sole Voting Trustee. In the event of resignation or death of Marcel L. Bich
or Bruno Bich as sole Voting Trustee, Alexander Alexiades shall be the sole
successor Voting Trustee. In the event of resignation or death of Alexander
Alexiades, his successor Voting Trustee shall be the executor of the estate of
the Voting Trustee who immediately preceded Alexander Alexiades as Voting
Trustee.
2. Paragraph 23 is hereby amended to read as follows:
23) Any notice by one of the Voting Trustees to the other or any
notice to, or communication with, the holders of the voting trust certificates
shall be deemed sufficiently given or made if addressed by registered or
certified mail (or, should such holders be abroad, by registered airmail) at
the address set forth below to the Voting Trustees and to the holders of voting
certificates at their respective addresses appearing on the transfer book of
the Voting Trustees or to such other addresses as may be specified from time to
time by written notice to the Voting Trustees by such holders. Any notice to
the Voting Trustees hereunder shall be
2
<PAGE> 3
addressed to the Voting Trustees, c/o Legal Department, BIC Corporation, 500
BIC Drive, Milford, Connecticut 06460, or such other address as may be
designated by the Voting Trustees by notice mailed to the holders of the voting
trust certificates. Such notice shall be mailed by registered mail, or if
mailed outside of the United States, by registered airmail.
3. To the extent not amended or revised by this Amendment, the
terms of the Voting Trust Agreement shall remain in full force and effect. If
any of the terms of this Amendment and the Voting Trust Agreement are
inconsistent, the terms of this Amendment shall govern.
4. This Amendment shall be governed, in all respects, by the laws
of the State of New York and shall be construed and interpreted in accordance
with said laws.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and affixed their seal on the day and year first-above written.
SOCIETE BIC
/s/ MARCEL L. BICH By: /s/ MARCEL L. BICH
- ------------------------------ ---------------------------
Marcel L. Bich Marcel L. Bich
/s/ FRANCOIS BICH
- ------------------------------
Francois Bich BIC CORPORATION
/s/ BRUNO BICH By: /s/ BRUNO BICH
- ------------------------------ ---------------------------
Bruno Bich Bruno Bich
/s/ ALEXANDER ALEXIADES
- ------------------------------
Alexander Alexiades
3
<PAGE> 1
Exhibit (c)(4)
AMENDMENT #2
AMENDMENT #2 TO VOTING TRUST AGREEMENT
THIS AMENDMENT, dated as of the 5th day of July, 1993, by and among SOCIETE
BIC, S.A., a corporation organized and existing under the laws of France,
having its principal place of business at 8 Impasse des Cailloux, Clichy
(France); MARCEL L. BICH, an individual residing at 5 Square de Chezy, 92200
Neuilly s/Seine (France); BRUNO BICH, an individual residing at 100 Clapboard
Ridge Road, Greenwich, Connecticut; ALEXANDER ALEXIADES, an individual residing
at 14 Seymour Road, Woodbridge, Connecticut; BERMUDA TRUST COMPANY LIMITED, a
corporation organized and existing under the laws of Bermuda, having its
principal place of business at 6 Front Street, Hamilton, Bermuda; and BIC
CORPORATION, a New York corporation, having its principal place of business at
500 BIC Drive, Milford, Connecticut.
W I T N E S S E T H:
WHEREAS, Societe BIC, Marcel L. Bich and Francois Bich as shareholders
of BIC Corporation have previously entered into a Voting Trust Agreement, dated
February 5, 1991, to secure the continuity and stability of policy and
management of BIC Corporation and Marcel L. Bich and Bruno Bich as Voting
Trustees and Alexander Alexiades as successor Voting Trustee have previously
consented to act thereunder; and
WHEREAS, pursuant to the request of Marcel L. Bich, Bruno Bich as a
shareholder of BIC Corporation now desires to deposit certain
<PAGE> 2
of his shares of BIC Corporation with the Voting Trustees pursuant to the terms
of the Voting Trust Agreement dated February 5, 1991, as previously amended.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, it is agreed as follows:
The Voting Trust Agreement, dated February 5, 1991, as amended, is
hereby further amended as follows:
1. Share amounts have been adjusted to reflect the two-for-one stock
split paid on December 15, 1992.
2. Paragraph 1) is hereby amended to add the following:
a) Bruno Bich agrees to deposit with the Voting Trustees the
certificates for shares of BIC Corporation owned by him,
to wit:
Bruno Bich.................1,400,000
of BIC Corporation duly endorsed for transfer to the Voting Trustees or with
stock powers duly executed, with all transfer tax stamps affixed, if required.
Said certificates of shares shall be surrendered by the Voting Trustees to BIC
Corporation and canceled and new certificates therefor shall be issued to and
held by the Voting Trustees in their names as such voting trustees, subject to
the terms of this Agreement.
<PAGE> 3
3. To the extent not amended or revised by this Amendment #2, the terms of
the Voting Trust Agreement as previously amended shall remain in full force and
effect. If any of the terms of this Amendment #2 and the Voting Trust Agreement
as previously amended are inconsistent, the terms of this Amendment #2 shall
govern.
4. This Amendment #2 shall be governed, in all respects, by the laws of
the State of New York and shall be construed and interpreted in accordance with
said laws.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
affixed their seal on the day and year first-above written.
SOCIETE, BIC S.A.
/s/ MARCEL L. BICH By: /s/ MARCEL L. BICH
- ----------------------------------- -----------------------------------
Marcel L. Bich Marcel L. Bich
/s/ FRANCOIS BICH
- ----------------------------------- BIC CORPORATION
Francois Bich
By: /s/ BRUNO BICH
-----------------------------------
Bruno Bich
/s/ BRUNO BICH
- -----------------------------------
Bruno Bich
BERMUDA TRUST COMPANY LTD.
/s/ ALEXANDER ALEXIADES By: /s/ KAY McCULLOCH
- ---------------------------------- -----------------------------------
Alexander Alexiades Kay McCulloch
Private Banking Officer
3
<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY
STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BIC CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BIC CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Shares, $1.00 par value per share
(2) Aggregate number of securities to which transaction applies: 5,404,396
Common Shares
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $40.50
(4) Proposed maximum aggregate value of transaction:(1. $218,878,038
Total fee paid(1): $43,775.61
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
- ---------------
(1. The filing fee assumes that 5,404,396 Common Shares will be converted into
the right to receive $40.50 in cash per share in the merger described in
preliminary proxy materials filed herewith. The amount of the filing fee,
calculated in accordance with Exchange Act Rule 0-11(c)(1), equals 1/50th
of one percent of such proposed cash payment.
<PAGE> 2
[PRELIMINARY COPY]
CORPORATION
LOGO
500 BIC DRIVE - MILFORD, CONNECTICUT 06460 - (203) 783-2000
BRUNO BICH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
September , 1995
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
BIC Corporation (the "Special Meeting") to be held at the [Trumbull Marriott
Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], on ,
October , 1995, at [10:00] a.m., local time.
At the Special Meeting you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger, dated as of
August 15, 1995 (the "Merger Agreement"), pursuant to which BIC Merger
Corporation ("Mergeco"), a New York corporation and a majority-owned subsidiary
of Societe BIC S.A. ("Parent"), will be merged (the "Merger") with and into BIC
Corporation (the "Company"). The Company will be the surviving corporation in
the Merger and the entire equity interest in the Company will be owned by Parent
and the other shareholders of Mergeco. If the Merger is consummated, each
outstanding common share, par value $1.00 per share, of the Company (the "Common
Shares"), except those shares owned by Parent and the other shareholders of
Mergeco (the "Public Shares," and the holders thereof, the "Public
Shareholders") or by shareholders who perfect their dissenters' rights in
accordance with the New York Business Corporation Law, will be converted into
the right to receive $40.50 per share in cash, without interest. Under the terms
of the Merger Agreement, the Company will not pay the regular quarterly cash
dividend otherwise payable on October 30, 1995, even if the Merger is
consummated subsequent to such date.
Enclosed with this letter is a Notice of Special Meeting, Proxy Statement,
Proxy Card and return envelope. I urge you to read the enclosed material
carefully.
YOUR BOARD OF DIRECTORS, BASED UPON THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS CONSISTING OF THREE PERSONS WHO ARE
NOT DIRECTORS, OFFICERS OR EMPLOYEES OF PARENT OR OFFICERS OR EMPLOYEES OF THE
COMPANY (THE "SPECIAL COMMITTEE"), HAS UNANIMOUSLY APPROVED THE MERGER, AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
In arriving at its recommendation, your Board of Directors gave careful
consideration to a number of factors described in the accompanying Proxy
Statement, including, among other things, a recommendation of the Special
Committee and the opinion of Goldman, Sachs & Co., the financial advisor to the
Special Committee, that the $40.50 in cash per Public Share to be received by
the Public Shareholders pursuant to the Merger Agreement is fair to such Public
Shareholders. THE FULL TEXT OF SUCH OPINION IS ATTACHED AS ANNEX B TO THE PROXY
STATEMENT AND SHAREHOLDERS ARE URGED TO READ IT IN ITS ENTIRETY.
Pursuant to the New York Business Corporation Law, the affirmative vote of
holders of at least 66 2/3% of all of the outstanding Common Shares is required
to approve the Merger. The Voting Trustee, who exercises voting power over
Common Shares owned by the shareholders of Mergeco constituting 76% of the
outstanding shares has agreed, pursuant to the Merger Agreement, to vote such
Common Shares in favor of the approval and adoption of the Merger Agreement.
HOWEVER, THE MERGER AGREEMENT PROVIDES THAT IT IS A CONDITION TO THE
CONSUMMATION OF THE MERGER THAT THE MERGER AGREEMENT BE APPROVED AND ADOPTED BY
THE HOLDERS OF AT LEAST A MAJORITY OF THE PUBLIC SHARES OF THE COMPANY ACTUALLY
VOTED, IN PERSON OR BY PROXY (EXCLUDING ABSTENTIONS), AT THE SPECIAL MEETING.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the accompanying Proxy Card and return
it in the enclosed prepaid envelope as soon as possible. If you attend the
Special Meeting, you may vote your shares in person, even if you have previously
submitted a Proxy Card.
Your continued support of and interest in BIC Corporation is greatly
appreciated.
Sincerely,
Bruno Bich
Chairman of the Board
and Chief Executive Officer
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
<PAGE> 3
[PRELIMINARY COPY]
LOGO
BIC CORPORATION
500 BIC DRIVE
MILFORD, CT 06460
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER , 1995
To the Shareholders of BIC Corporation:
Notice is hereby given that a Special Meeting of Shareholders of BIC
Corporation (the "Company") will be held at the [Trumbull Marriott Merritt
Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], on , October
, 1995 at [10:00] a.m., local time (the "Special Meeting"), for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger
Agreement"), pursuant to which BIC Merger Corporation ("Mergeco"), a New
York corporation and a majority-owned subsidiary of Societe BIC S.A., a
societe anonyme organized under the laws of the Republic of France
("Parent"), will be merged with and into the Company (the "Merger"). The
Company will be the surviving corporation in the Merger and the entire
equity interest in the Company will be owned by Parent and the other
shareholders of Mergeco. As a result of the Merger, each outstanding common
share, par value $1.00 per share, of the Company (the "Common Shares"),
except those shares owned by Parent and the other shareholders of Mergeco
(the "Public Shares," and the holders thereof, the "Public Shareholders")
and by shareholders who perfect their dissenters' rights in accordance with
the New York Business Corporation Law (the "NYBCL"), would be converted
into the right to receive $40.50 in cash, without interest, all as more
fully described in the accompanying Proxy Statement. Under the terms of the
Merger Agreement, the Company will not pay the regular quarterly cash
dividend otherwise payable on October 30, 1995, even if the Merger is
consummated subsequent to such date.
2. To transact such other business as may properly be brought before
the Special Meeting or any adjournments or postponements thereof.
Only holders of the Common Shares of record at the close of business on
, 1995 are entitled to notice of and to vote at the Special Meeting.
Each Common Share outstanding on such date is entitled to one vote at the
Special Meeting.
If the Merger is consummated, the shareholders of the Company who dissent
from the proposed Merger and comply with the requirements of Section 623 of the
NYBCL will have the right to receive payment in cash of the fair value of their
Common Shares. See "The Merger -- Dissenters' Rights" in the accompanying Proxy
Statement and Annex C thereto for a statement of the rights of dissenting
shareholders and a description of the procedures required to be followed to
obtain the fair value of the Common Shares.
Pursuant to the NYBCL, the affirmative vote of holders of at least 66 2/3%
of all of the outstanding Common Shares is required to approve the Merger. The
Voting Trustee, who exercises voting power over Common Shares owned by the
shareholders of Mergeco constituting 76% of the outstanding shares has agreed,
pursuant to the Merger Agreement, to vote such Common Shares in favor of the
approval and adoption of the Merger Agreement. HOWEVER, THE MERGER AGREEMENT
PROVIDES THAT IT IS A CONDITION TO THE CONSUMMATION OF THE MERGER THAT THE
MERGER AGREEMENT BE APPROVED AND ADOPTED BY THE HOLDERS OF AT LEAST A MAJORITY
OF THE PUBLIC SHARES OF THE COMPANY ACTUALLY VOTED, IN PERSON OR BY PROXY
(EXCLUDING ABSTENTIONS), AT THE SPECIAL MEETING.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF COMMON SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE WITHOUT
DELAY. ANY SHAREHOLDER PRESENT AT THE SPECIAL MEETING MAY VOTE PERSONALLY ON
EACH MATTER BROUGHT BEFORE THE SPECIAL MEETING AND ANY PROXY GIVEN BY A
SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors,
Thomas M. Kelleher
General Counsel and Secretary
Milford, Connecticut
September , 1995
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE> 4
[PRELIMINARY COPY]
LOGO
PROXY STATEMENT
BIC CORPORATION
500 BIC DRIVE
MILFORD, CONNECTICUT 06460
------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER , 1995
------------------------
This Proxy Statement is being furnished to the shareholders of BIC
Corporation, a New York corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors") from holders of outstanding common shares, par value $1.00 per
share, of the Company (the "Common Shares"), for use at a Special Meeting of
Shareholders of the Company to be held on , October , 1995 at [10:00]
a.m., local time, at the [Trumbull Marriott Merritt Parkway, 180 Hawley Lane,
Trumbull, Connecticut 06611], and at any adjournments or postponements thereof
(the "Special Meeting"). This Proxy Statement and the related proxy card are
first being mailed to shareholders on or about September , 1995.
At the Special Meeting, holders of the Common Shares on the applicable
record date will consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger
Agreement"), pursuant to which: (a) BIC Merger Corporation ("Mergeco"), a New
York corporation and a majority owned subsidiary of Societe BIC S.A. ("Parent"),
a societe anonyme organized under the laws of the Republic of France, will be
merged with and into the Company (the "Merger"), and the entire equity interest
in the Company, as the surviving corporation in the Merger, will be owned by
Parent and the other shareholders of Mergeco; and (b) each Common Share that is
outstanding at the effective time of the Merger, other than Public Shares held
by Parent and the other shareholders of Mergeco (the "Public Shares") or Common
Shares in respect of which dissenters' rights have been perfected, will be
converted into the right to receive $40.50 per share in cash, without interest.
Common Shares held by Parent and the other shareholders of Mergeco will be
cancelled without consideration.
Pursuant to the New York Business Corporation Law ("NYBCL"), the
affirmative vote of holders of at least 66 2/3% of all of the outstanding Common
Shares is required to approve the Merger. The Voting Trustee, who exercises
voting power over Common Shares owned by the shareholders of Mergeco
constituting 76% (as hereinafter defined) of the outstanding shares has agreed,
pursuant to the Merger Agreement, to vote such Common Shares in favor of the
approval and adoption of the Merger Agreement. The Voting Trustee can cause the
Merger to be approved for purposes of the NYBCL without the vote of any of the
shareholders of the Company. However, the Merger Agreement provides that it is a
condition to the consummation of the Merger that the Merger Agreement be
approved and adopted by the holders of at least a majority of the Public Shares
of the Company actually voted, in person or by proxy (excluding abstentions), at
the Special Meeting. There can be no assurance that the conditions to the Merger
will be satisfied, or where permissible, waived or that the Merger will be
consummated. For further information concerning the terms and conditions of the
Merger, see "The Merger -- General."
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OTHER PERSON.
All information contained in this Proxy Statement relating to Parent,
Mergeco and their affiliates (other than the Company) has been supplied by
Parent for inclusion herein and has not been independently verified by the
Company.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Special Meeting. Execution of the
accompanying proxy, however, confers on the designated proxyholders
discretionary authority to vote the Common Shares covered thereby in accordance
with their best judgment on such other business, if any, that may properly come
before, and all matters incident to the conduct of, the Special Meeting or any
adjournments or postponements thereof.
------------------------
The date of this Proxy Statement is September , 1995
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................................................................... 1
INTRODUCTION.......................................................................... 8
General............................................................................. 8
The Special Meeting................................................................. 8
Record Date; Quorum; Required Vote.................................................. 8
Proxies............................................................................. 9
Solicitation of Proxies............................................................. 9
THE PARTIES........................................................................... 10
The Company......................................................................... 10
Parent.............................................................................. 10
Mergeco............................................................................. 10
SPECIAL FACTORS....................................................................... 10
Background of the Merger............................................................ 10
Purpose and Structure of the Merger................................................. 16
Recommendation of the Special Committee and Board of Directors of the Company;
Fairness of the Merger........................................................... 17
Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses...................... 19
Certain Financial Projections....................................................... 26
Plans for the Company After the Merger.............................................. 28
Interest of Certain Persons in the Merger........................................... 28
Certain Effects of the Merger....................................................... 31
Certain Litigation.................................................................. 32
Certain U.S. Federal Income Tax Consequences........................................ 32
Fees and Expenses................................................................... 33
THE MERGER............................................................................ 34
General............................................................................. 34
Accounting Treatment................................................................ 38
Payment for Public Shares; Sources of Funds......................................... 38
Dissenters' Rights.................................................................. 38
MARKET PRICES AND DIVIDENDS........................................................... 40
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY................................... 41
OWNERSHIP OF COMMON SHARES............................................................ 42
Security Ownership of Certain Beneficial Owners..................................... 42
Security Ownership of Directors and Executive Officers of the Company............... 43
Security Ownership of Directors and Officers of Parent and Mergeco.................. 43
TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES...................................... 43
MANAGEMENT OF PARENT, MERGECO AND THE COMPANY......................................... 44
Directors and Executive Officers of Parent.......................................... 44
Directors and Executive Officers of Mergeco......................................... 44
Directors and Executive Officers of the Company..................................... 45
INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 46
SHAREHOLDER PROPOSALS................................................................. 46
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 46
AVAILABLE INFORMATION................................................................. 47
MISCELLANEOUS......................................................................... 47
ANNEX A -- Agreement and Plan of Merger
ANNEX B -- Opinion of Goldman, Sachs & Co.
ANNEX C -- Section 623 of the New York Business Corporation Law
</TABLE>
i
<PAGE> 6
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Proxy Statement (the "Proxy Statement"). This summary is not intended to
be a complete description of the matters covered in this Proxy Statement and is
subject to and qualified in its entirety by reference to the more detailed
information contained elsewhere in this Proxy Statement, including the Annexes
hereto and the documents incorporated by reference herein. Capitalized terms
used but not defined in this Summary shall have the meanings ascribed to them
elsewhere in this Proxy Statement. Shareholders are urged to read carefully the
entire Proxy Statement, including the Annexes.
THE PARTIES
The Company. The Company focuses on the manufacture and sale of
high-quality, low-cost consumer products. These products include stationery
products, lighters and shavers. Through its wholly-owned subsidiary, BIC Sport
U.S.A. Inc., the Company also distributes sailboards which are purchased from a
subsidiary of Parent. While most of the Company's operations are conducted in
the United States, operations are also conducted through wholly-owned
subsidiaries at other locations in North and Central America. The Company was
incorporated in 1958 in New York. The Company's principal executive offices are
located at 500 BIC Drive, Milford, Connecticut 06460, and its telephone number
is (203) 783-2000.
Parent. Parent, a societe anonyme organized under the laws of the Republic
of France ("France"), is a worldwide organization, based in France, engaged
primarily in the business of selling and marketing high-quality, low-cost
consumer products such as stationery products, lighters and shavers. Through its
wholly-owned subsidiary, Conte, Parent manufactures and sells stationery
products such as pencils, coloring crayons, markers, felt pens and other office
and school supplies. Through its wholly-owned subsidiary, Guy Laroche, Parent
also conducts fashion operations. Parent's principal executive offices are
located at 9, rue Petit 92110 Clichy, France, and its telephone number is (011)
(331) 45-19-52-00.
Mergeco. Mergeco is a New York corporation recently organized by Parent
for the purpose of effecting the Merger pursuant to which Mergeco will be merged
with and into the Company. It has no material assets and has not engaged in any
activities except in connection with the Merger. The shareholders of Mergeco are
Parent, Bruno Bich and certain other members of the Bich family (the "Mergeco
Shareholders"). Mergeco's address is c/o BIC Corporation, 500 BIC Drive,
Milford, Connecticut 06460, and its telephone number is (203) 783-2000.
THE SPECIAL MEETING
Time, Date and Place. A Special Meeting of shareholders of the Company
will be held on , October , 1995 at [10:00] a.m., local time, at the
[Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut
06611] (the "Special Meeting").
Purpose of the Special Meeting. The purpose of the Special Meeting is to
consider and vote upon a proposal to approve and adopt the Merger Agreement, a
copy of which is attached to this Proxy Statement as Annex A. See
"Introduction -- The Special Meeting."
Record Date; Quorum. The close of business on , 1995 (the
"Record Date") has been fixed as the record date for determining holders of
Common Shares entitled to vote at the Special Meeting. Each Common Share
outstanding on such date is entitled to one vote at the Special Meeting. As of
the Record Date, 23,559,244 Common Shares were outstanding and held of record by
holders. The presence, in person or by proxy, of the holders of a
majority of the Common Shares entitled to vote at the Special Meeting is
necessary to constitute a quorum for the transaction of business at the Special
Meeting. See "Introduction -- Record Date; Quorum; Required Vote."
Required Vote. Pursuant to the New York Business Corporation Law (the
"NYBCL"), the affirmative vote of holders of at least 66 2/3% of all of the
Common Shares is required to approve and adopt the Merger Agreement. The Voting
Trustee (as hereinafter defined), who exercises voting power over Common Shares
owned by the Mergeco Shareholders constituting 76% of the Common Shares has
agreed, pursuant to
<PAGE> 7
the Merger Agreement, to vote such Common Shares in favor of the approval and
adoption of the Merger Agreement. The Voting Trustee can cause the Merger
Agreement to be approved and adopted for purposes of the NYBCL without the vote
of any other shareholder of the Company. However, the Merger Agreement provides
that it is a condition to the consummation of the Merger that the Merger
Agreement be approved and adopted by the holders of at least a majority of the
Public Shares (as hereinafter defined) actually voted, in person or by proxy
(excluding abstentions), at the Special Meeting. See "Introduction -- Record
Date; Quorum; Required Vote" and "The Merger -- General -- Conditions to the
Merger; Amendment, Waiver and Termination."
Proxies. A proxy card is enclosed for use at the Special Meeting. A proxy
may be revoked at any time prior to its exercise at the Special Meeting. Common
Shares represented by properly executed proxies received at or prior to the
Special Meeting and which have not been revoked will be voted in accordance with
the instructions indicated therein. If no instructions are indicated on a
properly executed proxy, such proxy will be voted FOR approval and adoption of
the Merger Agreement. See "Introduction -- Proxies."
SPECIAL FACTORS
Background of the Merger. For a description of the events leading to the
approval and adoption of the Merger Agreement by the Company's Board of
Directors, see "Special Factors -- Background of the Merger."
Purpose and Structure of the Merger. Parent's purpose for the Merger is to
acquire all of the remaining equity interest in the Company not currently owned
by the Mergeco Shareholders for the reasons described in "Special
Factors -- Purpose and Structure of the Merger." The acquisition of the equity
interest represented by the Common Shares outstanding as of the Effective Time
(as hereinafter defined) and not currently owned by the Mergeco Shareholders
(the "Public Shares") from the holders of such shares (the "Public
Shareholders") is structured as a cash merger in order to transfer ownership of
that equity interest to Parent in a single transaction. See "Special
Factors -- Purpose and Structure of the Merger."
Recommendation of the Special Committee and Board of Directors; Fairness of
the Merger. A special committee (the "Special Committee") of three directors of
the Company who are not directors, officers or employees of Parent or officers
or employees of the Company concluded, and based on such conclusion the Board of
Directors of the Company (the "Board of Directors") concluded, that the terms of
the Merger are fair to, and in the best interests of, the Public Shareholders.
Accordingly, the Board of Directors, based upon the unanimous recommendation of
the Special Committee, has unanimously approved and adopted the Merger
Agreement. The Special Committee and the Board of Directors recommend a vote FOR
approval and adoption of the Merger Agreement. For a discussion of the factors
considered by the Special Committee and the Board of Directors in making their
recommendations, see "Special Factors -- Recommendation of the Special Committee
and Board of Directors of the Company; Fairness of the Merger."
Opinion of Financial Advisor. On August 15, 1995, Goldman Sachs delivered
its written opinion to the Special Committee that as of such date the $40.50 per
Public Share to be received by the Public Shareholders in the Merger is fair to
the Public Shareholders. The full text of the written opinion of Goldman Sachs,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with the opinion, is attached hereto as Annex B
and is incorporated herein by reference. Holders of Public Shares are urged to,
and should, read such opinion in its entirety. See "Special Factors -- Opinion
of Goldman, Sachs & Co.; Summary of Financial Analyses."
Plans for the Company after the Merger. Except as indicated in this Proxy
Statement, Parent does not have any present plans or proposals which relate to
or would result in an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries or any material change in the Company's capitalization or any other
material changes in the Company's corporate structure or business or the
composition of the Board of Directors or management. See "Special
Factors -- Plans for the Company after the Merger."
2
<PAGE> 8
Interest of Certain Persons in the Merger. In considering the
recommendations of the Special Committee and of the Board of Directors with
respect to the Merger, the Public Shareholders should be aware that certain
officers and directors have certain interests summarized below that present
actual or potential conflicts of interest in connection with the Merger. For a
more detailed discussion of such interests, see "Special Factors -- Interest of
Certain Persons in the Merger." The Special Committee and the Board of Directors
were aware of potential or actual conflicts of interest and considered them
along with other matters described under "Special Factors -- Recommendation of
the Special Committee and Board of Directors of the Company; Fairness of the
Merger."
As of the date of this Proxy Statement, the Mergeco Shareholders owned an
aggregate of 18,154,848 Common Shares, representing approximately 77% of the
outstanding Common Shares on that date. Bruno Bich, as voting trustee (the
"Voting Trustee"), exercises voting power over 17,912,648 of such shares,
including all Common Shares owned by Parent, pursuant to a Voting Trust
Agreement, dated as of February 5, 1991, by and among the Company, Parent, the
Voting Trustee and certain other parties (as amended, the "Voting Trust
Agreement"). The Mergeco Shareholders other than Parent own an additional
242,200 Common Shares not subject to the Voting Trust Agreement. See "Special
Factors -- Interest of Certain Persons in the Merger -- Voting Trust Agreement."
As of July 31, 1995, the directors and executive officers of the Company (other
than Bruno Bich) owned an aggregate of 42,811 Public Shares. See "Ownership of
Common Shares -- Security Ownership of Directors and Executive Officers of the
Company."
Bruno Bich, Chairman of the Board and Chief Executive Officer of the
Company, is also Chairman of the Board and Chief Executive Officer of Parent. On
August 17 and 18, 1995, Bruno Bich sold in market transactions an aggregate of
150,000 Common Shares not subject to the Voting Trust Agreement for $39.50 per
share, or an aggregate of approximately $5.9 million. See "Transactions by
Certain Persons in Common Shares."
Each member of the Special Committee will be paid $20,000 for serving
thereon. This compensation was authorized by the Board of Directors in order to
compensate the members thereof for the significant additional time commitment
that would be required of them in connection with fulfilling their duties and
responsibilities as members of the Special Committee and is payable without
regard to whether the Special Committee approved the Merger or whether the
Merger is consummated.
For a discussion of certain agreements by Parent with respect to
indemnification of, and insurance for, directors and officers of the Company,
see "The Merger -- General -- Indemnification and Insurance."
For a description of current relationships and certain transactions among
Parent, the Voting Trustee and the Company, see "Special Factors -- Interest of
Certain Persons in the Merger."
Certain Effects of the Merger. Upon consummation of the Merger, each
Public Share, other than shares as to which dissenters' rights have been
perfected under the NYBCL ("Dissenting Shares"), will be converted into the
right to receive $40.50 in cash, without interest. The Public Shareholders will
cease to have any ownership interest in the Company or rights as shareholders.
The Public Shareholders will no longer benefit from any increases in the value
of the Company and will no longer bear the risk of any decreases in value of the
Company.
Following the Merger, Parent, which currently owns approximately 63% of the
outstanding Common Shares, will own approximately 86% of the surviving
corporation's outstanding common shares, and the other Mergeco Shareholders, who
currently own approximately 14% of the outstanding Common Shares, will own
approximately 14% of the surviving corporation's outstanding common shares.
As a result of the Merger, the Company will be privately held and there
will be no public market for the Common Shares. Upon consummation of the Merger,
the Common Shares will cease to be quoted on the New York Stock Exchange
("NYSE"), the registration of the Common Shares under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), will be terminated and such shares
will no longer constitute "margin securities" under the rules of the Board of
Governors of the Federal Reserve System.
3
<PAGE> 9
Certain Litigation. On May 19, 1995 and May 22, 1995, various litigation
was commenced against the Company by shareholders of the Company in New York and
Connecticut state courts. These actions, purportedly named as class actions on
behalf of all Public Shareholders, varyingly named the Company, its directors,
certain of its officers and Parent as defendants. In these actions, plaintiffs
alleged that the defendants breached their fiduciary duties to plaintiffs and
the Company's other Public Shareholders in connection with Parent's proposal to
acquire the Public Shares for $36.50 per share.
The parties to these actions have reached an agreement in principle to
settle all such actions with prejudice, based on the terms of the Merger. The
settlement is subject to negotiation of a stipulation of settlement and approval
by the court following notice to the Public Shareholders. In connection with the
proposed settlement, the plaintiffs intend to apply for an award of attorneys'
fees and litigation expenses in the amount of $487,500. The defendants have
agreed not to oppose this application.
The defendants have denied, and continue to deny, that they have committed
or have threatened to commit any violation of law or breaches of duty to the
plaintiffs or the purported class. The defendants have agreed to the proposed
settlement because, among other reasons, such settlement would eliminate the
burden and expense of further litigation and would facilitate the consummation
of a transaction that they believe to be in the best interests of the Company
and the Public Shareholders.
Certain U.S. Federal Income Tax Consequences. The receipt of cash for
Public Shares pursuant to the Merger will be a taxable transaction for U.S.
federal income tax purposes and may be a taxable transaction for foreign, state
and local income tax purposes as well. Public Shareholders should consult their
own tax advisors regarding the U.S. federal income tax consequences of the
Merger, as well as any tax consequences under the laws of any state or other
jurisdiction. The Company will not recognize any gain or loss as a result of the
Merger for U.S. federal income tax purposes. See "Special Factors -- Certain
Federal Income Tax Consequences."
THE MERGER
General. Upon consummation of the Merger, Mergeco will be merged with and
into the Company and the Company will be the surviving corporation (the
"Surviving Corporation"). The Surviving Corporation will succeed to all the
rights and obligations of the Company and Mergeco. See "The Merger -- General."
Effective Time of Merger. Pursuant to the Merger Agreement, the Effective
Time will occur upon the filing of a certificate of merger by the New York
Department of State. See "The Merger -- General -- Effective Time of Merger."
Treatment of Shares in the Merger. At the Effective Time: (a) each Common
Share outstanding immediately prior to the Effective Time, except for (i) Common
Shares then owned by the Mergeco Shareholders and (ii) Dissenting Shares, shall
be converted into the right to receive $40.50 in cash, payable to the holder
thereof, without interest thereon, upon surrender of the certificate
representing such Common Share and (b) each Common Share outstanding immediately
prior to the Effective Time which is then owned by the Mergeco Shareholders
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be canceled and retired and cease to exist, without any conversion
thereof.
Each of the Mergeco Shareholders currently owns one Mergeco common share
for each Common Share expected to be owned by such Mergeco Shareholder at the
Effective Time. Immediately prior to the Effective Time, Parent will be issued
Mergeco preferred shares equal in number to the number of Public Shares
outstanding immediately prior to the Effective Time, in exchange for a payment
to Mergeco of an amount equal to the aggregate consideration payable to the
Public Shareholders in the Merger (other than Public Shareholders who exercise
dissenters' rights).
Each Mergeco common and preferred share outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and exchangeable for one fully
paid and non-assessable common share of the Surviving Corporation. See "The
Merger -- General -- Treatment of Shares in the Merger" and "-- Dissenters'
Rights."
4
<PAGE> 10
Exchange of Share Certificates. Promptly after the Effective Time, the
Surviving Corporation shall cause Mellon Securities Transfer Services, as Paying
Agent (the "Paying Agent"), to mail to each holder of record as of the Effective
Time (other than the Mergeco Shareholders) of an outstanding certificate or
certificates for Common Shares, a letter of transmittal and instructions for use
in effecting the surrender of such certificates for payment in accordance with
the Merger Agreement. Upon surrender to the Paying Agent of a certificate,
together with a duly executed letter of transmittal, the holder thereof shall be
entitled to receive cash in an amount equal to the product of the number of
Common Shares represented by such certificate and $40.50 in cash, without
interest thereon (the "Merger Consideration"), less any applicable withholding
tax, and such certificate shall then be canceled.
Until surrendered pursuant to the procedures described above, each
certificate (other than certificates representing Common Shares owned by the
Mergeco Shareholders and certificates representing Dissenting Shares), shall
represent for all purposes solely the right to receive the Merger Consideration
multiplied by the number of Common Shares evidenced by such certificate. See
"The Merger -- General -- Exchange of Share Certificates." SHAREHOLDERS OF THE
COMPANY SHOULD NOT SEND ANY SHARE CERTIFICATES WITH THEIR PROXY CARDS.
Conditions to the Merger; Amendment, Waiver and Termination. Pursuant to
the Merger Agreement, the obligations of each of Parent, Mergeco, the Voting
Trustee and the Company to effect the Merger are subject to the condition that
the proposal to approve and adopt the Merger Agreement at the Special Meeting
shall have received the affirmative vote of the holders of at least a majority
of the Public Shares actually voted, in person or by proxy, on such proposal
(excluding abstentions), and to certain additional conditions set forth in the
Merger Agreement. The parties to the Merger Agreement may each, pursuant to the
terms of the Merger Agreement, waive satisfaction of any of the conditions to
its obligations under the Merger Agreement; provided, however, that any waiver
by the Company must be approved by the Special Committee. The Merger Agreement
may be amended at any time by written agreement of the parties; provided, that
following approval by the Company's shareholders, no amendment may be made that
reduces the Merger Consideration or otherwise materially and adversely affects
the Public Shareholders without approval of at least a majority of the Public
Shares, and that any amendment must be approved on behalf of the Company by the
Special Committee. In certain circumstances the Merger Agreement may be
terminated at any time prior to the Effective Time, either before or after
approval by the shareholders of the Company. See "The Merger --
General -- Conditions to the Merger; Amendment, Waiver and Termination."
Sources of Funds. It is currently expected that approximately $219 million
will be required to pay the Merger Consideration to the Public Shareholders
(assuming no such holder exercises dissenters' rights) and approximately
$ will be required to pay the expenses of Parent and Mergeco in connection
with the Merger, and that such funds will be furnished from available general
funds of Parent. It is currently expected that approximately $ million
will be required to pay the expenses of the Company and that such funds will be
furnished from available general funds of the Company. See "The
Merger -- Sources of Funds" and "Special Factors -- Fees and Expenses."
Accounting Treatment. The Merger will be accounted for as a "purchase" as
such term is used under generally accepted accounting principles for accounting
and financial reporting purposes. See "The Merger -- Accounting Treatment."
Regulatory Approvals. No federal or state regulatory approvals are
required to be obtained, nor any regulatory requirements complied with, in
connection with consummation of the Merger by any party to the Merger Agreement,
except for the requirements of the NYBCL in connection with shareholder
approvals and consummation of the Merger, and the requirements of federal
securities law. See "The Merger -- General -- Representations and Warranties."
Dissenters' Rights. In connection with the Merger, the Public Shareholders
will be entitled to seek payment in cash of the fair value of their Common
Shares under Section 623 of the NYBCL ("Section 623"), subject to their
satisfaction of the conditions for dissenters' rights established by Section
623. Section 623 is set forth in full in Annex C hereto. See "The
Merger -- Dissenters' Rights."
5
<PAGE> 11
MARKET PRICES OF AND DIVIDENDS ON THE COMMON SHARES
The Common Shares are traded on the NYSE under the symbol "BIC."
The following table sets forth, for the calendar periods indicated, the
high and low sales prices per Common Share, as quoted on the NYSE.
<TABLE>
<CAPTION>
SALES PRICES
PER COMMON
SHARE
--------------
CALENDAR PERIODS HIGH LOW
--------------------------------------------------------------------- ---- ---
<S> <C> <C>
1993
First Quarter........................................................ $41 $30 7/8
Second Quarter....................................................... 33 7/8 26
Third Quarter........................................................ 31 3/8 27
Fourth Quarter....................................................... 33 5/8 27
1994
First Quarter........................................................ $31 7/8 $28
Second Quarter....................................................... 29 1/4 26 1/2
Third Quarter........................................................ 30 7/8 28
Fourth Quarter....................................................... 30 25 5/8
1995
First Quarter........................................................ $32 3/4 $28 1/4
Second Quarter....................................................... 39 3/8 30 5/8
Third Quarter (through September ).................................
</TABLE>
On May 18, 1995, the day prior to public announcement of Parent's original
merger proposal, the closing price of the Common Shares on the NYSE was $35 3/4
per share. On August 15, 1995, the day before the Merger Agreement was publicly
announced, the closing price of the Common Shares on the NYSE was $39 1/4 per
share. On September , 1995, the closing price of the Common Shares on the NYSE
was $ per share. HOLDERS OF COMMON SHARES ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THEIR SHARES.
Under the terms of the Merger Agreement, the Company will not pay the
regular quarterly cash dividend otherwise payable on October 30, 1995, even if
the Merger is consummated subsequent to such date. Although there can be no
assurance as to whether the proposed transaction will be effected, it is
currently anticipated that the Merger will be completed in late October or early
November of 1995.
6
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
Certain selected consolidated historical financial data of the Company is
set forth below and under "Selected Consolidated Financial Data of the Company."
The selected financial data at July 2, 1995 and July 3, 1994 and for the six
month periods then ended is unaudited but includes, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
operations and the financial position at and for each of the interim periods
presented. Operating results for the six months ended July 2, 1995 are not
necessarily indicative of the results to be expected for the full year. The
selected financial data should be read in conjunction with the Consolidated
Financial Statements of the Company, related notes and other financial
information incorporated by reference into this Proxy Statement.
BIC CORPORATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------- AT END OF OR FOR FISCAL YEARS
JULY 2, JULY 3, ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(U.S. DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales.......................... $257,413 $241,616 $475,118 $439,311 $417,377 $369,171 $329,246
Income before income taxes,
extraordinary credit and
cumulative effect of changes in
accounting principles............ $ 48,234 43,486 87,207 73,986 67,278 46,616 41,067
Net income......................... 28,622 25,357 51,021 34,964 39,935 28,059 24,055
Ratio of earnings to fixed
charges(1)....................... -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Per share:(2)
Income before extraordinary
credit and cumulative effect of
changes in accounting
principles..................... 1.21 1.10 2.19 1.90 1.70 1.12 0.92
Net income....................... 1.21 1.08 2.17 1.48 1.70 1.16 0.99
Cash dividends................... 0.46 0.40 0.80 0.72 1.06 0.56 1.06
BALANCE SHEET DATA
Working capital.................... 123,116 93,157 107,816 77,232 71,469 106,284 111,624
Long-term debt..................... 0 0 0 0 0 0 0
Total assets....................... 440,573 386,164 358,687 336,216 308,466 280,205 257,107
Total assets less research and
development and excess of assets
acquired over book value......... 428,683 372,575 345,947 321,778 292,329 280,205 257,107
Shareholders' equity............... 261,447 240,638 247,917 226,688 209,366 195,515 190,187
Book value per share............... 11.10 10.21 10.52 9.62 8.89 8.30 7.85
</TABLE>
- ---------------
(1) The Company had no fixed charges in any of the periods presented.
(2) Per share amounts have been retroactively restated to reflect the 1992 share
split effected in the form of a 100% share dividend. Cash dividends per
share represent the total dividends paid each year. The 1992 and 1990
dividends included a special cash dividend of $0.50 per share.
7
<PAGE> 13
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to holders of the outstanding
common shares, par value $1.00 per share (the "Common Shares"), of BIC
Corporation (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company (the "Board of Directors") for use at a
Special Meeting of Shareholders of the Company to be held on , October
, 1995, at [10:00] a.m., local time, at [the Trumbull Marriott Merritt
Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], including any
adjournments or postponements thereof (the "Special Meeting") .
THE SPECIAL MEETING
At the Special Meeting, holders of Common Shares will consider and vote
upon a proposal to approve and adopt an Agreement and Plan of Merger, dated as
of August 15, 1995 (the "Merger Agreement"), pursuant to which: (a) BIC Merger
Corporation ("Mergeco"), a New York corporation and a majority owned subsidiary
of Societe BIC S.A., a societe anonyme organized under the laws of the Republic
of France ("Parent"), will be merged with and into the Company (the "Merger"),
and the entire equity interest in the Company, as the surviving corporation in
the Merger, will be owned by Parent and the other shareholders of Mergeco; and
(b) each Common Share that is outstanding at the effective time of the Merger
(the "Effective Time"), other than Common Shares held by Parent and other
shareholders of Mergeco (the "Public Shares") or Public Shares in respect of
which dissenters' rights have been perfected, will be converted into the right
to receive $40.50 per share in cash, without interest (the "Merger
Consideration"). Common Shares held by Parent and the other shareholders of
Mergeco will be cancelled without consideration. Acting on the unanimous
recommendation of a special committee (the "Special Committee"), the Board of
Directors has unanimously approved and adopted the Merger Agreement. The Special
Committee and the Board of Directors unanimously recommend that shareholders
vote FOR approval and adoption of the Merger Agreement.
RECORD DATE; QUORUM; REQUIRED VOTE
The close of business on , 1995 (the "Record Date") has been
fixed as the record date for determining holders of Common Shares entitled to
vote at the Special Meeting. Each Common Share outstanding on such date is
entitled to one vote at the Special Meeting. As of the Record Date, 23,559,244
Common Shares were outstanding and held of record by approximately holders.
The presence, in person or by proxy, of the holders of a majority of the
outstanding Common Shares entitled to vote at the Special Meeting is necessary
to constitute a quorum for the transaction of business at the Special Meeting.
Pursuant to the New York Business Corporation Law (the "NYBCL"), the
affirmative vote of holders of at least 66 2/3% of all of the outstanding Common
Shares is required to approve and adopt the Merger Agreement. The Voting Trustee
(as hereinafter defined), who exercises voting power over Common Shares owned by
the shareholders of Mergeco constituting 76% of the outstanding shares has
agreed, pursuant to the Merger Agreement, to vote such Common Shares in favor of
the approval and adoption of the Merger Agreement. The Voting Trustee can cause
the Merger Agreement to be approved and adopted for purposes of the NYBCL
without the vote of any other shareholder of the Company. However, the Merger
Agreement provides that it is a condition to the consummation of the Merger that
the Merger Agreement be approved and adopted by the holders of at least a
majority of the Public Shares of the Company actually voted, in person or by
proxy (excluding abstentions), at the Special Meeting. For additional
information regarding the Common Shares owned by the Mergeco Shareholders and
the Company's directors and executive officers, see "Special Factors -- Interest
of Certain Persons in the Merger" and "Ownership of Common Shares."
Under the rules of the New York Stock Exchange (the "NYSE"), the proposal
to approve and adopt the Merger Agreement is considered a "non-discretionary
item" as to which brokerage firms may not vote in their discretion on behalf of
their clients if such clients have not furnished voting instructions.
Abstentions will (a)
8
<PAGE> 14
be considered in determining the presence of a quorum at the Special Meeting,
(b) will have the practical effect of a vote against approval and adoption of
the Merger Agreement for purposes of the vote required by the NYBCL since it
would be one less vote for such approval and (c) pursuant to the terms of the
Merger Agreement, will not be considered in determining whether a majority of
the Public Shares actually voted have voted in favor of the approval and
adoption of the Merger Agreement.
PROXIES
Common Shares represented by properly executed proxies received at or prior
to the Special Meeting and which have not been revoked will be voted in
accordance with the instructions indicated thereon. If no instructions are
indicated on a properly executed proxy, such proxies will be voted FOR approval
and adoption of the Merger Agreement.
A shareholder who has given a proxy may revoke such proxy at any time prior
to its exercise at the Special Meeting by (i) giving written notice of
revocation to the Secretary of the Company, (ii) properly submitting to the
Company a duly executed proxy bearing a later date, or (iii) attending the
Special Meeting and voting in person. Attendance at the Special Meeting will not
in and of itself revoke a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: BIC Corporation, 500 BIC Drive, Milford, CT 06460, Attention: Thomas M.
Kelleher, General Counsel and Secretary.
If the Special Meeting is adjourned or postponed for any purpose, at any
subsequent reconvening of the Special Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other matter at a previous meeting.
SHAREHOLDERS SHOULD NOT SEND ANY SHARE CERTIFICATES WITH THEIR PROXY CARDS.
IF THE MERGER IS CONSUMMATED, THE PROCEDURE FOR THE EXCHANGE OF CERTIFICATES
REPRESENTING COMMON SHARES WILL BE AS SET FORTH IN THIS PROXY STATEMENT. SEE
"THE MERGER -- GENERAL -- EXCHANGE OF SHARE CERTIFICATES."
SOLICITATION OF PROXIES
The cost of solicitation of the shareholders of the Company will be paid by
the Company. Such cost will include the reimbursement of banks, brokerage firms,
nominees, fiduciaries and custodians for the expenses of forwarding solicitation
materials to beneficial owners of shares. In addition to the solicitation of
proxies by use of mail, the directors, officers and employees of the Company,
may solicit proxies personally or by telephone, telegraph or facsimile
transmission. Such directors, officers and employees will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection therewith. In addition, the Company has retained
D.F. King & Co. Inc. to assist in soliciting proxies and to provide materials to
banks, brokerage firms, nominees, fiduciaries and other custodians. For such
services, the Company will pay to D.F. King & Co. Inc. a fee of approximately
$10,000, plus expenses.
9
<PAGE> 15
THE PARTIES
THE COMPANY
Incorporated in New York in 1958, the Company's primary focus is on the
manufacture and sale of high-quality, low-cost consumer products. These products
include stationery products, lighters and shavers. Through its wholly-owned
subsidiary BIC Sport U.S.A. Inc., the Company also distributes sailboards which
are purchased from a subsidiary of Parent. While most of the Company's
operations are conducted in the United States, operations are also conducted
through wholly-owned subsidiaries at other locations in North and Central
America. The Company's principal executive offices are located at 500 BIC Drive,
Milford, Connecticut 06460, and its telephone number is (203) 783-2000.
PARENT
Parent, a societe anonyme organized under the laws of the Republic of
France ("France"), is a worldwide organization, based in France, engaged
primarily in the business of selling and marketing high-quality, low-cost
consumer products such as stationery products, lighters and shavers. Through its
wholly-owned subsidiary, Conte, Parent manufactures and sells stationery
products such as pencils, coloring crayons, markers, felt pens and other office
and school supplies. Through its wholly-owned subsidiary, Guy Laroche, Parent
also conducts fashion operations. Parent's principal executive offices are
located at 9, rue Petit 92110 Clichy, France, and its telephone number is (011)
(331) 45-19-52-00.
MERGECO
Mergeco is a corporation recently organized by Parent for the purpose of
effecting the Merger. It has no material assets and has not engaged in any
activities except in connection with the Merger. The shareholders of Mergeco are
Parent, Bruno Bich and certain other members of the Bich family (the "Mergeco
Shareholders"). Mergeco's address is c/o BIC Corporation, 500 BIC Drive,
Milford, Connecticut 06460 and its telephone number is (203) 783-2000.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
Parent organized the Company in 1958 to conduct Parent's operations in
North America. An initial public offering (the "IPO") of Common Shares
representing approximately 22% of the Common Shares then outstanding was
undertaken in September 1971. In connection with the IPO, and since that time,
the Company, Parent, certain members of the Bich family and others who owned
Common Shares and certain other parties entered into successive ten year voting
trust agreements with the Company, and Parent entered into various other
agreements with the Company to define the ongoing relationship between them. For
a description of such agreements, see "-- Interest of Certain Persons in the
Merger."
Parent has from time to time considered the possibility of acquiring all of
the outstanding Public Shares of the Company, among other reasons, to facilitate
the closer integration of the Company's operations with the global operations of
the BIC group. See "-- Purpose and Structure of the Merger." During the winter
of 1994-1995, Mr. Bruno Bich, the Chairman of the Board and Chief Executive
Officer of Parent, and the Chairman of the Board and Chief Executive Officer of
the Company, discussed with certain senior officers of the Company Parent's
possible interest in considering an acquisition of all of the outstanding Public
Shares at a future time.
Pursuant to an engagement letter dated April 28, 1995, Parent retained
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to assist Parent in
evaluating a possible acquisition of the Public Shares and to render financial
advisory and investment banking services to Parent in the event that Parent
determined to do so. During the first two weeks of May, 1995, DLJ reviewed
certain public and non-public information with respect to the Company and also
discussed with certain members of the Company's management the business and
financial condition and prospects of the Company. After discussions with DLJ in
mid-May, Parent's senior management determined to recommend to Parent's Board of
Directors that Parent offer to acquire all of the outstanding Public Shares.
10
<PAGE> 16
At a special meeting of Parent's Board of Directors held in Paris on May
18, 1995, Bruno Bich reviewed with Parent's Board of Directors senior
management's proposal to acquire the outstanding Public Shares. Parent's
management reviewed the trading performance of the Common Shares over the past
several years and the relative value of the French franc compared to the U.S.
dollar during that period. Parent's management also reviewed the potential
advantages to be gained in operating flexibility and efficiencies from a
possible acquisition of the portion of the Company not already owned by Parent
and the other Mergeco Shareholders. See "-- Purpose and Structure of the
Merger." After discussing these matters, Parent's Board of Directors approved
the making of a proposal to acquire, in a cash merger, all of the outstanding
Public Shares at $36.50 per share (the "Proposal") and delegated to Mr. Bich the
authority to determine and negotiate the terms of a transaction, subject to
final approval by Parent's Board of Directors.
Later that day, Mr. Bich contacted the other members of the Company's Board
of Directors, as well as Raymond Winter, the Company's President and Chief
Operating Officer, Robert L. Macdonald, the Company's Vice President -- Finance
and Treasurer and Thomas M. Kelleher, the Company's General Counsel and
Secretary, and informed them that Parent would publicly announce the Proposal
the following day.
On May 19, 1995, Parent delivered to each member of the Board of Directors
a letter, the text of which was as follows:
May 19, 1995
Board of Directors of BIC Corporation
Gentlemen:
I am pleased to offer, on behalf of Societe BIC S.A. and certain
members of the Bich family, to acquire the equity interest represented by
all of the outstanding Common Shares (the "Public Shares") of BIC
Corporation not currently owned by Societe BIC S.A. and such Bich family
members. The principal terms are as follows:
1. The transaction would be a cash merger in which each holder of a
Public Share would receive U.S. $36.50 per share, or an aggregate of
approximately $192 million based on the number of Public Shares
outstanding as of February 15, 1995.
2. Consummation of the acquisition would be subject, among other
things, to (i) approval of the Board of Directors of BIC Corporation,
(ii) receipt of satisfactory confirmation from French tax authorities
regarding the French tax consequences of the transaction, and (iii)
other conditions customary in a transaction of this type.
3. We anticipate that, upon completion of the acquisition, Societe
BIC S.A. will seek to cause BIC Corporation Common Shares to be delisted
from trading on the New York Stock Exchange and to cause deregistration
of the Common Shares with the Securities and Exchange Commission.
We believe that our offer is a fair one that will benefit BIC
Corporation and its public shareholders. The proposed acquisition price is
equivalent to a 20% premium over the average closing price of BIC Common
Shares on the New York Stock Exchange over the 180 trading days ended May
18, 1995.
We wish to make it clear that we are not interested under any
circumstances in selling our interest in BIC Corporation and that there is
thus no prospect of a sale of a controlling interest to a third party.
We understand that you may wish to deliberate on this offer through a
special committee of independent directors and that such committee may wish
to retain its own advisors to assist in those deliberations. We invite your
representatives to meet with our advisors to discuss this proposal at your
earliest convenience.
11
<PAGE> 17
We hope you will give this proposal your prompt attention. We reserve
the right to amend or withdraw this proposal at any time in our discretion.
Sincerely,
Societe BIC S.A.
/s/ BRUNO BICH
Bruno Bich
Chairman and Chief Executive Officer
On May 19, 1995, prior to the opening of the Paris Bourse and the NYSE,
Parent also issued the following press release in Paris:
"SOCIETE BIC S.A. PROPOSES TO BUY PUBLIC INTEREST
IN ITS BIC CORPORATION SUBSIDIARY FOR $36.50 PER SHARE
Clichy, France, Societe BIC S.A. today announced a proposal to acquire
all of the equity interests in its BIC Corporation subsidiary (NYSE:BIC)
not currently owned by Societe BIC S.A. and members of the Bich family.
Under the proposed transaction, the public shareholders of BIC
Corporation would receive $36.50 a share in cash, or an aggregate of
approximately $192 millions for the 5,254,396 shares held by the public.
BIC Corporation has outstanding 23,559,244 shares of Common Stock, of which
Societe BIC S.A. and members of the Bich family own 18,304,848 shares, or
approximately 78%.
The offer is subject to the approval of the Board of Directors of BIC
Corporation, receipt of satisfactory confirmation from French tax
authorities regarding the French tax consequences of the transaction, and
other conditions customary in a transaction of this type.
The offer also noted that the proposed acquisition price is equivalent
to an approximately 20% premium over the average closing price of BIC
Corporation common stock on the NYSE over the 180 trading days ended May
18, 1995."
On May 23, 1995, a special meeting of the Board of Directors was held. All
directors, including Mr. Bich, were present, in person or by videoconference
facilities. At the special meeting, Mr. Bich outlined the terms of the Proposal
and Parent's reasons for proceeding with a transaction. See "-- Purpose and
Structure of the Merger." The Board then approved the creation of the Special
Committee, consisting of Robert E. Allen, David W. Heleniak and Antoine G.
Treuille, the three directors of the Company who are not directors, officers or
employees of Parent or officers or employees of the Company. The Special
Committee was authorized to review, evaluate and negotiate the terms of the
Proposal with Parent and its representatives and to make a recommendation to the
full Board of Directors concerning the Proposal. See "-- Interest of Certain
Persons in the Merger" for a description of certain relationships between
members of the Special Committee and the Company and Mr. Bich and his family.
The Board of Directors also authorized the Special Committee to retain
independent legal and financial advisors.
12
<PAGE> 18
On May 23, 1995, following the special Board of Directors meeting, the
Company issued the following press release:
"BIC CORPORATION ANNOUNCES FORMATION OF
SPECIAL COMMITTEE TO CONSIDER
PARENT'S BUY-OUT PROPOSAL
May 23, 1995 -- BIC Corporation today announced that its Board of
Directors had met and appointed a special committee consisting of three
independent directors to evaluate the buy-out proposal made last week by
BIC's French parent, Societe BIC S.A. Under the proposal, Societe BIC would
acquire in a cash merger the 5,254,396 shares of BIC Corporation common
stock not currently owned by Societe BIC or members of the Bich family for
$36.50 per share. The proposed acquisition, which has an aggregate value of
approximately $192 million, is subject, among other conditions, to approval
by BIC Corporation's Board of Directors. The BIC Corporation Board of
Directors noted that no assurance could be given as to whether or not any
transaction will occur or as to the timing or terms of any transaction."
On May 24, 1995, the Special Committee retained Goldman, Sachs & Co.
("Goldman Sachs") as independent financial advisor to the Special Committee and
Shearman & Sterling (a law firm of which Mr. Heleniak is a partner) as
independent legal advisor. For a description of the terms of the engagement of
Goldman Sachs and certain information concerning Goldman Sachs, see "-- Opinion
of Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co."
Goldman Sachs was authorized to analyze the Proposal and, after consultation
with the Company's senior management, to begin to determine whether it would be
in a position to render an opinion as to the fairness of the consideration to be
received by the Public Shareholders.
On May 26, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During this organizational meeting, Goldman Sachs
discussed its preliminary timetable for conducting financial due diligence of
the Company.
From May 26, 1995 through June 12, 1995, members of the Special Committee
and its financial advisor reviewed certain public and non-public information
with respect to the Company. During this period, Goldman Sachs and Mr. Allen,
Chairman of the Special Committee, and the other members of the Special
Committee, also discussed the business and financial condition and prospects of
the Company with members of the senior management of the Company and Goldman
Sachs visited various manufacturing facilities of the Company.
On June 12, 1995, Debevoise & Plimpton, special counsel to Parent,
delivered to Shearman & Sterling a proposed merger agreement containing further
details of the Proposal.
On June 13, 1995, the Special Committee met with representatives of Goldman
Sachs and of Shearman & Sterling. During such meeting, representatives Shearman
& Sterling explained the legal responsibilities of the members of the Special
Committee and the legal principles applicable to actions taken by the Special
Committee with respect to the Proposal and representatives Goldman Sachs
described the financial due diligence performed by Goldman Sachs to date and
certain preliminary valuation analyses performed by Goldman Sachs. The Special
Committee directed Goldman Sachs to perform additional financial due diligence.
During the period from June 14 through June 26, 1995, representatives of
Goldman Sachs continued their due diligence, including further discussions with
senior management of the Company, including Mr. Bich, to discuss the Company's
business, financial condition and prospects. In the course of those discussions,
the Company's management emphasized that the Company did not, in the ordinary
course of its business, make forecasts or projections as to future sales,
earnings or other income statement data, cash flows or balance sheet and
financial position information, other than certain information contained in the
Company's annual budget relating solely to the fiscal year covered by such
budget (which budget is generally not made publicly available). While noting
that the Company's management does not prepare long-term projections in the
ordinary course, the Special Committee directed Goldman Sachs to work with the
Company's manage-
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ment in order to complete Goldman Sachs' financial analyses, using projections
to be developed by the Company's management solely to assist the Special
Committee and Goldman Sachs in evaluating the fairness of the consideration to
be received by the Public Shareholders in the proposed merger. Mr. Allen
participated in certain of these discussions held at the offices of the Company
on June 15, 1995. The final versions of these management projections (the
"Financial Projections"), and the assumptions underlying the preliminary and
final versions, are summarized in "-- Certain Financial Projections."
On June 21, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During such meeting, representatives of Goldman
Sachs discussed preliminary versions of the Financial Projections with the
members of the Special Committee. It was noted by Goldman Sachs that the
Company's management was still working to refine the assumptions underlying the
Financial Projections and that they represented only preliminary estimates.
Representatives of Goldman Sachs also described certain preliminary valuation
analyses prepared by Goldman Sachs utilizing, among other things, the
preliminary versions of the Financial Projections. The Special Committee
directed Goldman Sachs to hold further discussions with senior management of the
Company concerning such preliminary versions.
On June 23, 1995, representatives of Goldman Sachs met with representatives
of DLJ to discuss the preliminary versions of the Financial Projections. Mr.
Bich participated in this meeting by telephone, and expressed reservations about
certain of the assumptions underlying these preliminary versions.
On June 26, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During such meeting, representatives of Goldman
Sachs updated the Special Committee on discussions with management of the
Company concerning the preliminary versions of the Financial Projections. It was
agreed that more work remained to be done and the Special Committee again
directed Goldman Sachs to hold further discussions with senior management of the
Company concerning such preliminary versions.
On June 28, 1995, representatives of Goldman Sachs and DLJ met in New York
to discuss the valuation methodologies and assumptions used by DLJ in analyzing
the Proposal price and to provide Goldman Sachs with the benefit of such
information prior to the meeting of the Special Committee planned for the
following day.
On June 29, 1995, the Special Committee met with representatives of Goldman
Sachs and of Shearman & Sterling. During such meeting, representatives of
Goldman Sachs discussed with the Special Committee the valuation methodologies
and assumptions utilized by DLJ in analyzing the adequacy of the Proposal price.
Representatives of Goldman Sachs also described certain valuation analyses
prepared by Goldman Sachs utilizing, among other things, the preliminary
versions of the Financial Projections. The Special Committee authorized Goldman
Sachs to discuss with DLJ Goldman Sachs' valuation analyses. Likewise, Parent
instructed DLJ to discuss with Goldman Sachs DLJ's valuation analyses, in an
effort to develop a mutually agreeable basis for valuation of the Public Shares.
The next day, representatives of Goldman Sachs met with representatives of
DLJ to share with DLJ the valuation methodologies utilized by Goldman Sachs.
Representatives of DLJ and Goldman Sachs also discussed the areas of
disagreement between their valuation analyses but the meeting ended without
resolution of these differences.
On July 10, 1995, representatives of DLJ presented to representatives of
Goldman Sachs and Parent a report containing DLJ's valuation analyses. See
"-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Donaldson,
Lufkin & Jenrette Securities Corporation -- July Report."
On July 11, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. At such meeting, representatives of Goldman Sachs
described recent meetings and conversations between representatives of Goldman
Sachs and DLJ. The Special Committee authorized Goldman Sachs to conduct further
discussions with DLJ concerning valuation issues.
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<PAGE> 20
On July 12, 1995, the Special Committee met with representatives of
Shearman & Sterling. During such meeting, representatives of Shearman & Sterling
updated the Special Committee on recent contacts between representatives of
Goldman Sachs and representatives of DLJ concerning their respective valuation
analyses.
On July 19, 1995, Mr. Bich and representatives of DLJ were invited to meet
with the Special Committee and Goldman Sachs in New York. At the meeting, the
parties continued to discuss the valuation issues identified in the prior
meetings between DLJ and Goldman Sachs. In particular, Mr. Bich and DLJ
suggested that certain assumptions contained in the preliminary versions of the
Financial Projections (specifically, those on which the "Upside Case" was based
(see "-- Certain Financial Projections")), which were utilized by Goldman Sachs'
in preparing its valuation analyses, were too aggressive. Mr. Bich observed
that, in his opinion: (i) all or nearly all of the productivity improvements and
operational efficiencies that could be implemented to improve the Company's
operating results had already been implemented; (ii) future revenue growth would
likely be more difficult due to an absence of significant new products, the
absence of opportunities for geographic expansion into faster-growing foreign
markets and pricing pressures on its commodity products; (iii) the Company was
not, in fact, comparable to certain of the companies identified as peers by
Goldman Sachs, in that it lacked a worldwide distribution network, had limited
product lines, and had much smaller advertising and research and development
budgets than such companies. The meeting ended without resolution of the
valuation issues separating Parent and the Special Committee.
On July 24, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During such meeting, representatives of Goldman
Sachs reported to the Special Committee concerning recent discussions between
representatives of Goldman Sachs and DLJ. Mr. Allen then reported to the other
members of the Special Committee concerning discussions between him and a
representative of DLJ concerning the status of discussions between Parent and
the Special Committee. The Special Committee authorized Goldman Sachs to
continue discussions with DLJ.
Over the course of the next two weeks, Parent and the Special Committee,
through their financial advisors, continued their discussions of valuation
issues related to the Proposal. These discussions resulted in sufficient
progress that it was agreed that a meeting between Mr. Bich and Mr. Allen would
be useful in resolving the remaining issues separating the two sides in the
negotiation.
On August 4, 1995, Mr. Allen met with Mr. Bich in Paris. During the course
of a meeting which lasted several hours, the parties came substantially closer
to agreeing upon the price and other terms of a modified proposal.
On August 6, 1995, the Special Committee met with representatives of
Goldman Sachs and Shearman & Sterling. During such meeting, Mr. Allen described
his August 4 meeting in Paris with Mr. Bich. After discussion, the Special
Committee authorized Mr. Allen to pursue further negotiations with Mr. Bich
aimed at arriving at a mutually acceptable price. The Special Committee also
indicated to Goldman Sachs that it should prepare financial analyses based upon
the First Case and the Second Case described under "-- Certain Financial
Projections."
On August 7, 1995, Mr. Allen telephoned Mr. Bich from New York. During this
conversation, Messrs. Allen and Bich discussed an offer of $40.50 per Public
Share, subject to approval by the entire Special Committee, receipt by the
Special Committee of a written opinion from Goldman Sachs that such
consideration would be fair to the Public Shareholders and agreement on the
terms of a definitive merger agreement. Over the course of the next two days,
the parties held several telephone conversations to clarify the terms of the
proposed offer, during which they agreed that the Company would not pay the
regular quarterly cash dividend otherwise payable on October 30, 1995, even if
the Merger was consummated subsequent to such date.
On August 10, 1995, on instructions of the parties, Debevoise & Plimpton
and Shearman & Sterling met to begin negotiation of a definitive merger
agreement.
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The parties continued to negotiate the final terms of the proposed offer
and definitive merger agreement for the next five days. On August 15, 1995, the
Special Committee met with representatives of Goldman Sachs and Shearman &
Sterling. Goldman Sachs rendered its written opinion to the Special Committee
that, as of such date, the $40.50 per Public Share to be received by the Public
Shareholders in the Merger was fair to the Public Shareholders. See "Special
Factors -- Opinion of Goldman, Sachs & Co.; Summary of Financial
Analyses -- Goldman, Sachs & Co." Shearman & Sterling reviewed the principal
terms and conditions of the Merger Agreement. After a full discussion, the
Special Committee determined that the terms of the Merger and the Merger
Agreement were fair to, and in the best interests of, the Public Shareholders.
The Special Committee then unanimously recommended to the Board of Directors
that it approve and adopt the Merger Agreement and unanimously recommended to
the Public Shareholders that such shareholders vote to approve and adopt the
Merger Agreement.
At a Board of Directors meeting immediately following the meeting of the
Special Committee, the Board of Directors unanimously determined that the Merger
was fair to, and in the best interests of, the Company and its shareholders,
approved and adopted the Merger Agreement, and recommended that its shareholders
vote to approve and adopt the Merger Agreement.
Prior to the opening of the Paris Bourse and the NYSE on August 16, 1995,
the Company and Parent issued a joint press release regarding the execution and
delivery of the Merger Agreement. The full text of the joint press release
follows:
"BIC CORPORATION AND SOCIETE BIC S.A.
ANNOUNCE AGREEMENT ON CASH MERGER
AT $40.50 PER SHARE
Milford, CT; Clichy, France, August 16, 1995 -- BIC Corporation
(NYSE:BIC) and its French parent, Societe BIC S.A., jointly announced today
that they have executed a definitive merger agreement pertaining to Societe
BIC S.A.'s previously announced proposal to acquire from public
shareholders the approximately 22% of BIC Corporation's Common Shares not
currently owned by Societe BIC S.A. and the Bich family. Under the
agreement, Societe BIC S.A. will acquire in the merger the publicly held
shares of BIC Corporation for a price of $40.50 per share in cash, or an
aggregate of approximately $219 million.
The merger agreement was approved and adopted by the Board of
Directors of BIC Corporation following the unanimous recommendation of the
merger by a special committee of independent directors. Goldman, Sachs &
Co. has served as financial advisor to the special committee.
The transaction, which will be financed out of Societe BIC's cash
position, is subject to certain customary conditions including approval of
a majority of the publicly held shares actually voted at a special meeting
of shareholders which will be called to consider the merger.
Although there can be no assurance as to whether the proposed
transaction will be effected, it is currently anticipated that the merger
will be completed in late October or early November of 1995. Under the
terms of the Merger Agreement, BIC Corporation will not pay the regularly
scheduled cash dividend payable on October 30, 1995, even if the merger is
consummated subsequent to such date.
BIC Corporation, headquartered in Milford, Connecticut, is a leading
U.S. manufacturer and distributor of stationery products, lighters and
shavers. 1994 sales were $475 million."
PURPOSE AND STRUCTURE OF THE MERGER
Parent's purpose for the Merger is to acquire all of the equity interest in
the Company represented by the Public Shares for the reasons described below.
The Board of Directors will, pursuant to the Merger Agreement, call the Special
Meeting to vote to approve and adopt the Merger Agreement. In the Merger, each
Public Share will be converted into the right to receive an amount in cash equal
to $40.50, without interest.
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<PAGE> 22
In determining to acquire the Public Shares at this time, Parent focused on
a number of factors. The Merger, if consummated, will simplify allocation of
business opportunities between the Company and Parent and its other affiliates,
particularly with regard to geographic expansion, while eliminating potential
conflicts of interest with the Company's minority Public Shareholders. In recent
times, the increasingly global nature of the BIC group's markets and the
character of its competitors and customers have required more unified worldwide
strategies and product policies, under unified management, in order to compete
more effectively. Parent believes the three principal markets in which the
Company competes (stationery products, lighters and shavers) are mature and
highly competitive markets in the United States. Due to the significantly larger
size of its principal competitors, the Company currently is unable to match
those competitors' expenditures on advertising, sales promotion, research and
development and capital projects. In addition, the Company possesses limited
trademarks and consequently has limited presence in higher growth markets
outside North America.
Accordingly, Parent has from time to time considered the possible
acquisition of the Public Shares of the Company, balancing the increasing need
for closer integration of the BIC group against continuing public ownership of
the Company. As the growth and globalization of the BIC group's global
competitors have become more pronounced, Parent has concluded that the
inevitable constraints in integrating its United States operations, together
with the need to continue to devote management attention to ensure that the
interests of the Public Shareholders are scrupulously observed in the course of
further integration of the Company into the BIC group, make it desirable for
Parent to acquire all of the Public Shares.
If consummated, the Merger will also terminate the Company's public status,
which Parent believes has not provided benefits that justify, as a business
matter, maintenance of that status. The Common Shares have never become, as was
originally intended, an attractive currency for acquisitions because of the thin
trading market for such shares. Moreover, Parent does not believe the Company
needs independent access to the capital markets, because sufficient funding, if
and when required, is available through Parent (which is a public company in
France). Parent also believes delisting of the Common Shares may improve overall
access to the capital markets for Parent by providing a single focus for public
investment.
Terminating the Company's public status will eliminate significant
compliance costs associated with such status (including stock exchange listing
fees and the costs of preparing reports and other information required pursuant
to the Exchange Act), thereby furthering the Company's ongoing cost-cutting
efforts (to which much of the Company's recent improvement in operating results
is due). Following consummation of the Merger, the Company will be able to
eliminate the time, expense and energy incurred in connection with stock
transfers, dividends, proxy notices, annual reports, compliance with the
Exchange Act and attendant legal issues. The Merger also promises additional
efficiencies in addition to the elimination of such compliance costs, including
increased sharing of management and technological expertise and economies of
scale resulting from centralized procurement of raw materials.
The acquisition of the Public Shares has been structured as a cash merger
in order to provide a prompt and orderly transfer of ownership of the equity
interest represented by Public Shares to Parent. Parent believes the current
time is an opportune one to acquire the entire remaining equity interest in the
Company, as the recent strength of the French franc against the U.S. dollar
allows Parent to offer Public Shareholders what it believes to be an attractive
premium for their Public Shares.
RECOMMENDATION OF THE SPECIAL COMMITTEE AND BOARD OF DIRECTORS OF THE COMPANY;
FAIRNESS OF THE MERGER
At a meeting held on August 15, 1995, the Special Committee unanimously
determined to recommend that the Board of Directors approve and adopt the Merger
Agreement and that the Board of Directors recommend to the Public Shareholders
that such shareholders vote to approve and adopt the Merger Agreement,
unanimously determined to recommend to the Public Shareholders that such
shareholders vote to approve and adopt the Merger Agreement and unanimously
determined that the terms of the Merger are fair to, and in the best interests
of, the Public Shareholders. At a meeting held immediately thereafter, at which
all of the directors of the Company were present, based on the unanimous
recommendation of the Special Committee, the Board of Directors unanimously
approved and adopted the Merger Agreement, unanimously
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determined to recommend to the Public Shareholders that they vote to approve and
adopt the Merger Agreement and unanimously determined that the terms of the
Merger are fair to, and in the best interests of, the Company and its
shareholders. See "Special Factors -- Background of the Merger."
The Special Committee. In determining to recommend to the Board of
Directors that it approve and adopt the Merger Agreement, and in determining, to
date, the fairness of the terms of the Merger, the Special Committee considered
the following factors, each of which, in the Special Committee's view, supported
the Special Committee's determination to recommend the Merger.
(i) the financial condition, assets, results of operations, business
and prospects of the Company, and the risks inherent in achieving those
prospects, including the belief of management of the Company, as expressed
to the Special Committee and which the Special Committee found to be
reasonable, that (a) all or nearly all of the productivity improvements and
operational efficiencies that could be implemented to improve the Company's
operating results had already been implemented and (b) future revenue
growth would likely be more difficult due to (i) pressure on margins for
the Company's commodity products due to the trend toward concentration of
buying power in retailers of the Company's products, (ii) the absence of
significant new Company products, (iii) the absence of opportunities for
geographic expansion and (iv) the difficulty of the Company, to date, in
identifying significant acquisition opportunities;
(ii) the terms and conditions of the Merger Agreement, including the
amount and form of consideration, the nature of the parties'
representations, warranties, covenants and agreements, and the limited
number of conditions to the obligations of Parent and Mergeco under the
Merger Agreement, such that a closing would not be jeopardized despite even
material adverse changes in the Company's financial condition, operating
results or business;
(iii) the condition to the consummation of the Merger (which is not
otherwise required by the NYBCL or the Company's Restated Certificate of
Incorporation or By-laws) that the Merger receive the affirmative vote of
the holders of at least a majority of the Public Shares actually voted, in
person or by proxy (excluding abstentions), at the Special Meeting;
(iv) the history of the negotiations with respect to the Merger
Consideration that, among other things, led to an increase in Parent's
offer from $36.50 to $40.50 per Public Share, and the belief of the members
of the Special Committee that $40.50 per Public Share was the best price
that could be obtained from Parent;
(v) the fact that the $40.50 per share to be received by the Public
Shareholders in the Merger represented a premium of approximately 35.1%
over the reported average closing price of the Common Shares during the one
year period ending on May 18, 1995, the last full trading day before the
public announcement of Parent's initial Proposal;
(vi) the opinion of Goldman Sachs as to the fairness of the $40.50 per
Public Share to be received by the Public Shareholders and the analyses
presented to the Special Committee by Goldman Sachs (see "-- Opinion of
Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs &
Co.");
(vii) stock price and trading volume history of the Common Shares and
the fact that such shares are thinly traded;
(viii) the unwillingness of Parent to consider a sale of the Company,
to spin off its ownership interest in the Company or to engage in other
alternative transactions with respect to the Company (as a result of which
the Special Committee did not solicit third party bids for the Company);
and
(ix) the availability of dissenters' rights under the NYBCL to
dissenting Public Shareholders in the Merger.
In light of the number and variety of factors the Special Committee
considered in connection with its evaluation of the Merger, the Special
Committee did not find it practicable to assign relative weights to the
foregoing factors, and, accordingly, the Special Committee did not do so.
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Although the Special Committee did consider historical trading prices of
the Common Shares, the Special Committee did not consider trading prices of the
Common Shares for the period following the announcement of the Proposal because
it believed that such prices reflected anticipation of the possibility of the
purchase of the Public Shares by Parent. The Special Committee did consider the
going concern value of the Company as reflected in Goldman Sachs' discounted
cash flow analysis and Goldman Sachs' analysis of the premium to the Company's
book value implied by the amount of the Merger Consideration (see "-- Opinion of
Goldman Sachs, & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co.").
The Special Committee necessarily consulted with Goldman Sachs during the
course of its work and analysis of the financial evaluation of the Company and
of the Proposal. The Special Committee believed that Goldman Sachs' analysis was
reasonable.
The Special Committee believes that the Merger is procedurally fair
because: (i) the Special Committee consisted of disinterested directors
appointed to represent the interests of, and to negotiate on an arm's length
basis with Parent on behalf of, the Public Shareholders; (ii) the Special
Committee retained and was advised by independent legal counsel; (iii) the
Special Committee retained Goldman Sachs as independent financial advisor to
assist it in evaluating the Proposal; and (iv) the condition to the consummation
of the Merger that the proposal to approve and adopt the Merger Agreement
receive the affirmative vote of the holders of at least a majority of the Public
Shares actually voted, in person or by proxy (excluding abstentions), on such
proposal. In addition, the Special Committee believes that the Merger is
procedurally fair because the $40.50 per Public Share price and the other terms
and conditions of the Merger Agreement resulted from active arm's length
bargaining between the Special Committee and Parent.
The Board of Directors of the Company. The Board of Directors has
unanimously determined, following the unanimous recommendation of the Special
Committee, that the Merger is fair to, and in the best interests of, the Company
and its shareholders, has approved and adopted the Merger Agreement, and
recommends that such holders vote to approve and adopt the Merger Agreement.
Parent and Voting Trustee. Neither Parent nor the Voting Trustee had any
involvement in the Special Committee's evaluation of the fairness of the Merger
to the Public Shareholders and did not undertake any formal evaluation of their
own as to the fairness to the Public Shareholders. However, Parent and the
Voting Trustee considered the advice of DLJ, Parent's financial advisor,
regarding, among other things, historical market prices for the Common Shares
(and the fact that the Merger Consideration is substantially more than the
trading prices of the Common Shares before Parent proposed the Merger),
valuations of other selected companies, the range of premiums paid in selected
minority buyouts since 1990, discounted cash flow analyses and the all cash
consideration. Parent and the Voting Trustee also considered the fact that the
Special Committee had received the written opinion of Goldman Sachs addressed to
the Special Committee to the effect that, as of the date thereof, the $40.50 per
Public Share to be received by the Public Shareholders in the Merger is fair to
the Public Shareholders and the fact that Parent determined such price on an
arm's length basis with the Special Committee, assisted by the Special
Committee's independent legal and financial advisors. Parent and the Voting
Trustee believe that these factors, when considered together, provide a
reasonable basis for Parent and the Voting Trustee to believe, as they do, that
the Merger is fair to the Public Shareholders. Parent and the Voting Trustee did
not attach specific relative weights to the factors considered in reaching their
views as to fairness.
OPINION OF GOLDMAN, SACHS & CO.; SUMMARY OF FINANCIAL ANALYSES
GOLDMAN, SACHS & CO. On August 15, 1995, Goldman Sachs delivered its
written opinion to the Special Committee that as of the date of such opinion the
$40.50 per Public Share to be received by the Public Shareholders in the Merger
is fair to the Public Shareholders.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED AUGUST 15,
1995, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
ANNEX B TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS
OF COMMON SHARES ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
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A copy of the Goldman Sachs financial analysis discussed below has been
filed as an exhibit to the Schedule 13E-3 Transaction Statement (the "Schedule
13E-3") filed with the Securities and Exchange Commission (the "SEC") with
respect to the Merger, may be inspected and copied, and obtained by mail, from
the SEC as set forth in "Available Information" and will be made available for
inspection and copying at the principal executive offices of the Company at 500
BIC Drive, Milford, CT 06460 during regular business hours by any interested
shareholder of the Company or his or her representative who has been so
designated in writing.
In connection with its opinion, Goldman Sachs reviewed, among other things,
the Merger Agreement; the Annual Reports to shareholders and Annual Reports on
Form 10-K of the Company for each of the last five fiscal years ended January 1,
1995; certain interim reports to shareholders and Quarterly Reports on Form
10-Q; certain other communications from the Company to its shareholders; and
certain internal financial analyses and forecasts for the Company. Goldman Sachs
also held discussions with members of the senior management of the Company and
of Parent regarding the Company's past and current business operations,
financial condition and future prospects. In addition, Goldman Sachs reviewed
the reported price and trading activity for the Common Shares, compared certain
financial and stock market information for the Company with similar information
for certain other companies the securities of which are publicly traded,
reviewed the financial terms of certain recent business combinations, and
performed such other studies and analyses as it considered appropriate.
Goldman Sachs relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by it for
purposes of its opinion. In that regard, with respect to the Financial
Projections, which the Special Committee instructed Goldman Sachs to use for the
purposes of its analysis, Goldman Sachs assumed that such projections were
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the Company's senior management as to the future financial
performance of the Company. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and Goldman Sachs has not been furnished with any
such evaluation or appraisal. Goldman Sachs relied, with the Special Committee's
permission, on statements made by management of Parent indicating that Parent
would not consent to a transaction involving a sale or recapitalization of the
Company, and Goldman Sachs was not requested or authorized to solicit, and did
not solicit, interest from any party with respect to an acquisition of the
outstanding Public Shares, the Company or its constituent businesses. Finally,
Goldman Sachs has been informed by Parent, and has relied with the Special
Committee's permission on such information, that Parent does not currently
intend to pursue a sale or recapitalization of the Company or its subsidiaries
after consummating the Merger pursuant to the Merger Agreement.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its written opinion to the Special
Committee on August 15, 1995, attached hereto as Annex B.
Historical Stock Trading Analysis. Goldman Sachs reviewed the historical
trading prices for the Public Shares. Such review indicated that the $40.50 per
Public Share in cash, without interest thereon (representing the Merger
Consideration to be received by the Public Shareholders in the Merger),
represented a premium to the average trading value of the Public Shares during
the one year period ending on May 18, 1995 (the last full trading day before the
date of public announcement of the Proposal) of 35.1%, with 40.3% of the public
float traded in such period.
Selected Companies Analysis. Goldman Sachs reviewed and compared certain
financial information relating to the Company to corresponding financial
information, ratios and public market multiples for the following 15 publicly
traded corporations: American Safety Razor; American Business Products; A.T.
Cross; Avery Dennison; Black & Decker; Dixon Ticonderoga; Duracell; Gillette
Co.; Hunt Manufacturing; Newell Co.; Pentech International; Premark; Rubbermaid;
Sunbeam Oster; and Parent (the "Selected Companies"). Representatives of Goldman
Sachs advised the Special Committee that there are no companies directly
comparable to the Company and the analysis had to be considered in light of that
qualification. Goldman Sachs calculated and compared various financial multiples
and ratios. The multiples of the Company were calculated using the following two
prices: a price of $35.88 per Public Share, representing the closing price of
the Public Shares on the NYSE on May 18, 1995; and a price of $30.85 per Public
Share, representing the
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average closing price on the NYSE during the six-month period from December 17,
1994 through May 17, 1995. The multiples and ratios for the Company and for each
of the Selected Companies were based on the most recent publicly available
information. With respect to the Selected Companies, Goldman Sachs considered
levered market capitalization (i.e., market value of common equity plus
estimated market value of debt less cash) as a multiple of the latest twelve
months' ("LTM") revenue; LTM earnings before interest, taxes, depreciation and
amortization ("EBITDA"); and as a multiple of LTM earnings before interest and
taxes ("EBIT"). Goldman Sachs' analyses of the Selected Companies indicated
levered multiples of LTM revenue that ranged from 0.6x to 3.2x, with a median of
1.0x, compared to 1.6x at $35.88 per Public Share and 1.3x at $30.85 per Public
Share for the Company; LTM EBITDA that ranged from 5.3x to 13.6x, with a median
of 7.0x, compared to LTM EBITDA of 6.9x at $35.88 per Public Share and 5.8x at
$30.85 per Public Share for the Company; and LTM EBIT that ranged from 6.0x to
16.0x, with a median of 9.5x, compared to 8.7x at $35.88 per Public Share and
7.4x at $30.85 per Public Share for the Company. Goldman Sachs also considered
for the Selected Companies LTM EBITDA margins, which ranged from 10.5% to 24.7%,
with a median of 14.6%, compared to 23.1% for the Company; LTM EBIT margins,
which ranged from 7.5% to 20.2%, with a median of 12.1%, compared to 18.3% for
the Company; and LTM net income margins, which ranged from 2.4% to 11.7%, with a
median of 6.2%, compared to 11.0% for the Company. Goldman Sachs also considered
for the Selected Companies estimated calendar year 1995 and 1996 price/earnings
("P/E") ratios, which ranged from 6.3x to 134.5x for estimated calendar year
1995, with a median of 16.8x, and 5.0x to 20.4x for estimated calendar year
1996, with a median of 13.1x, compared to 14.8x and 14.6x at $35.88 per Public
Share, respectively, and 12.7x and 12.6x at $30.85 per Public Share,
respectively, for the Company; five-year compound annual growth rate ("CAGR") of
revenues for the five fiscal years ending in 1995 ranging from (3.3)% to 15.3%,
with a median of 7.6%, compared to 8.3% for the Company; five-year CAGR of net
income for the five fiscal years ending in 1994 ranging from (17.7)% to 107.6%,
with a median of 10.0%, compared to 17.7% for the Company; projected five-year
CAGR of earnings per share (based on First Call estimates as of August 11, 1995)
ranging from 5.0% to 17.0%, with a median of 14.0%, compared to 12.5% for the
Company; and debt to total capitalization ratios, which ranged from 0.0% to
82.3%, with a median of 34.4%, compared to 0.0% for the Company. The review also
indicated that the percentage of the 52-week high trading prices ranged from
40.0% to 100.0%, compared to 101.9% at $40.50 per Public Share, 90.3% at $35.88
per Public Share and 77.6% at $30.85 per Public Share for the Company and that
the current dividend yield for the Selected Companies ranged from 0.0% to 4.0%,
with a median of 1.6%, compared to 2.6% at $35.88 per Public Share and 3.0% at
$30.85 per Public Share for the Company.
Analysis of Merger Consideration. Goldman Sachs calculated the value for
the levered aggregate consideration to be received in the Merger based upon the
$40.50 per Public Share to be received by the Public Shareholders, plus debt and
minus cash and cash equivalents of the Company. Those calculations yielded a
levered aggregate consideration value of $890.4 million, excluding interest
expenses and transaction costs. The multiples and ratios for the Company were
based on information provided by the Company's management. Goldman Sachs
considered the levered aggregate consideration as a multiple of actual 1994 and
LTM sales, EBITDA, EBIT and net income of the Company. Goldman Sachs' analyses
indicated levered aggregate consideration multiples of actual 1994 sales of
1.87x and LTM sales of 1.81x, multiples of actual 1994 EBITDA of 8.02x and LTM
EBITDA of 7.85x, multiples of actual 1994 EBIT of 10.21x and LTM EBIT of 9.94x
and multiples of actual 1994 net income of 18.71x and LTM net income of 17.57x.
Goldman Sachs also considered the levered aggregate consideration as a multiple
of estimated 1995 and 1996 sales, EBITDA, EBIT and net income of the Company.
Goldman Sachs' analyses indicated levered aggregate consideration multiples of
estimated 1995 sales of 1.73x and estimated 1996 sales of 1.67x, multiples of
estimated 1995 EBITDA of 7.42x and estimated 1996 EBITDA of 7.15x, multiples of
estimated 1995 EBIT of 9.44x and estimated 1996 EBIT of 9.10x and multiples of
estimated 1995 net income of 16.87x and estimated 1996 net income of 16.26x. The
review also indicated a percentage of the levered aggregate consideration as a
premium to the book value per Public Share of 283.2%.
Discounted Cash Flow Analysis. Goldman Sachs performed a discounted cash
flow analysis based on the First Case and the Second Case Financial Projections.
See "-- Background of the Merger" and "-- Certain Financial Projections."
Goldman Sachs calculated a net present value of free projected cash flows for
the calendar years from 1995 through 2004 using discount rates ranging from
11.0% to 13.0%. Goldman
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<PAGE> 27
Sachs calculated the Company's terminal values based on multiples ranging from
6.6x to 9.9x projected EBITDA for calendar year 2004 and 8.0x to 12.0x projected
EBIT for calendar year 2004. These terminal values were then discounted to
present value using discount rates from 11.0% to 13.0%. Those discount rates and
terminal values produced implied per share values based on the First Case
Financial Projections ranging from $31.48 per Public Share to $45.62 per Public
Share and implied per share values based on the Second Case Financial
Projections ranging from $28.77 to $40.79 per Public Share.
Selected Transactions Analysis. Goldman Sachs analyzed certain information
relating to selected transactions in the consumer products and office products
industry since 1987 (the "Selected Transactions"). Such analysis indicated that
for the Selected Transactions levered aggregate consideration as a multiple of
(A) LTM sales ranged from 0.4x to 4.1x, with a mean of 1.6x, compared to 1.8x
for the levered aggregate consideration to be received in the Merger, (B) LTM
net income ranged from 10.9x to 81.1x, with a mean of 28.3x, compared to 17.6x
for the levered aggregate consideration to be received in the Merger, and (C)
LTM EBIT ranged from 5.9x to 31.0x, with a mean of 14.3x, compared to 9.9x for
the levered aggregate consideration to be received in the Merger. Goldman Sachs
indicated to the Special Committee that, for many of the specific transactions,
the information with respect to the various categories was not publicly
available.
Breakeven Return Analysis. Goldman Sachs computed a breakeven return
analysis based on the earnings of the Company to be acquired by Parent in the
Merger. The breakeven return analysis was computed based on 1996 projected
earnings for the Company using the First Case and the Second Case in order to
ascertain (A) the break-even per Common Share price that would have to be paid
by Parent and (B) the percentage of accretion or dilution to earnings per share
("EPS") that Parent would realize based on analysts' projected EPS for Parent.
Those analyses, based on various assumptions, including an exchange rate of 4.94
French francs to one U.S. dollar, $5.0 million in transaction related fees,
Parent tax rates of 39.5% and goodwill amortization periods of 40 years,
estimated that (A) the break-even price to be paid by Parent for each Public
Share is $40.26 under the First Case and $39.13 under the Second Case, compared
to the $40.50 per Public Share to be received by the Public Shareholders in the
Merger, and (B) the percentage of dilution to projected EPS realized by Parent
upon paying the $40.50 per Public Share to be received by the Public
Shareholders in the Merger is 0.1% under the First Case and 0.3% under the
Second Case.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is identical to the
Company or Parent or the contemplated transaction. The analyses were prepared
solely for purposes of Goldman Sachs providing its opinion to the Special
Committee as to the fairness of the $40.50 per Public Share to be received by
the Public Shareholders in the Merger and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of the Company,
Parent, Goldman Sachs or any other person assumes responsibility if future
results are materially different from those forecast.
As described above, Goldman Sachs' opinion to the Special Committee was one
of many factors taken into consideration by the Special Committee in making its
determination to approve the Merger Agreement. The foregoing summary does not
purport to be a complete description of the analysis performed by Goldman Sachs
and is qualified by reference to the written opinion of Goldman Sachs set forth
in Annex B hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. The Special Committee
selected Goldman Sachs as
22
<PAGE> 28
financial advisor to the Special Committee because it is a nationally recognized
investment banking firm that has substantial experience in transactions similar
to the Merger.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may, from time to
time, effect transactions and hold positions in the securities or options on
securities of the Company and/or Parent for its own account and for the account
of customers.
Pursuant to a letter agreement dated May 24, 1995 (the "Engagement
Letter"), the Company engaged Goldman Sachs to act as the Special Committee's
financial advisor in connection with the contemplated transaction. Pursuant to
the terms of the Engagement Letter, it was agreed that the Company would pay
Goldman Sachs a fee in connection with the rendering of its opinion of $800,000.
It was further agreed that the Company would reimburse Goldman Sachs for its
reasonable out-of-pocket expenses, including attorney's fees, and indemnify
Goldman Sachs against certain liabilities, including certain liabilities under
the federal securities laws.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION. As more fully
described under " -- Background of the Merger", DLJ was retained by Parent to
act solely as Parent's financial advisor (and not the advisor to or agent of any
other person), in connection with the Proposal and the Merger and other matters
arising in connection therewith pursuant to an engagement letter, dated as of
April 28, 1995, between Parent and DLJ. DLJ was not requested to, and did not,
render any opinion (oral or written) or advice concerning the fairness of the
Merger Consideration to the Public Shareholders or to any other party (including
Parent). Parent chose DLJ as its financial advisor based upon DLJ's reputation
as a leading investment banking firm.
Copies of the DLJ Materials (as defined below) have been filed as exhibits
to the Schedule 13E-3 filed with the SEC with respect to the Merger and may be
inspected and copied, and may be obtained by mail, from the SEC as set forth in
"Available Information" and will be made available for inspection and copying at
the principal executive offices of the Company at 500 BIC Drive, Milford, CT
06460, during regular business hours, by any interested shareholder of the
Company or his or her representative who has been so designated in writing.
June Report. On June 22, 1995, DLJ delivered to Parent a written
presentation (the "June Report" and, together with the July Report (as
hereinafter defined), the "DLJ Materials") regarding the Company's business and
prospects, and containing valuations of the Public Shares using a variety of
different methodologies. In formulating the DLJ Materials, DLJ, among other
things: reviewed certain publicly available documents and certain other
information, including preliminary versions of the Financial Projections (see
"-- Certain Financial Projections"); held discussions with senior executive
officers of the Company and Parent; visited facilities of the Company;
considered business trends in the business segments in which the Company
operates; reviewed public information with respect to certain other acquisitions
involving other companies in such business segments; reviewed public information
with respect to acquisition of minority interests; calculated valuations of the
Public Shares using selected publicly traded company information, premiums paid
in other minority interest acquisitions, and discounted cash flow analyses; and
considered, among other things, such other information, financial studies,
analyses and investigations and financial, economic and market criteria as it
deemed relevant.
Overview. The June Report was prefaced by an overview, wherein DLJ noted:
that the Proposal price reflected a premium to recent trading prices for the
Public Shares; that the transaction did not constitute a change in control
transaction; that the Company sells mature products in competitive and mature
markets; that the Proposal price implied trading multiples in excess of the
average multiple of the selected companies listed below; that the Company's
recent earnings growth in excess of revenue growth was driven by an effective
capital expenditure program and productivity improvements, and earnings from
productivity improvements tend to be regarded as less sustainable; and that the
Company is unable to match the marketing and advertising investments of its
principal competitors. As a result, the Company's growth rate and market shares
were likely to decline over time.
Selected Company Analysis. DLJ compared the Proposal to the recent trading
prices for a number of selected public companies, including Parent, The Gillette
Company, American Safety Razor, A.T. Cross Co.,
23
<PAGE> 29
Pentech International Inc., Dixon Ticonderoga Co., American Business Products,
Hunt Manufacturing Co. and Avery Dennison Corporation, by expressing the
Proposal price and each of such selected company's recent trading prices as
multiples of several financial criteria. DLJ advised Parent that there are no
companies directly comparable to the Company and the analysis had to be
considered in light of that qualification. DLJ believed the comparison to
trading prices of issuers not currently the subject of an acquisition was
relevant because the Proposal did not involve a change in control of the
Company.
The financial criteria included: price as a multiple of LTM EPS (where the
Proposal price of $36.50 represented a multiple of 16.2x, as compared to the
selected company average of 15.5x (the latter implying a per Public Share value
of $34.77)); price as a multiple of estimated 1995 EPS (where the Proposal price
of $36.50 represented a multiple of 15.3x, as compared to the selected company
average of 15.0x (the latter implying a per Public Share value of $35.64));
price as a multiple of estimated 1996 EPS (where the Proposal price of $36.50
represented a multiple of 14.9x, as compared to the selected company average of
13.8x (the latter implying a per Public Share value of $33.69)); "enterprise
value" (market price of all outstanding Common Shares, plus total Company debt,
less cash) as a multiple of LTM revenues (where the Proposal price of $36.50
represented a multiple of 1.6x, as compared to the selected company average of
1.1x (the latter implying a per Public Share value of $25.20)); enterprise value
as a multiple of LTM EBITDA (where the Proposal price of $36.50 represented a
multiple of 7.0x, as compared to the selected company average of 6.7x (the
latter implying a per Public Share value of $35.42)); and enterprise value as a
multiple of LTM EBIT (where the Proposal price of $36.50 represented a multiple
of 8.8x, and equaled the selected company average (and implying a per Public
Share value of $36.58)). The Proposal price exceeded the average of the per
Public Share values ($33.55) implied by the selected company financial criteria.
In the June Report, DLJ also included a valuation based on Parent's multiples
but concluded that Parent had more brand name recognition in its markets than
the Company, and, with its global presence, Parent competed in markets with more
potential than the Company's markets. DLJ believed the average of multiples
derived from the selected companies represented the best proxy for valuation,
since no one company surveyed was directly comparable to the Company.
Premium Analysis. The DLJ Materials contain a comparison of the premium
represented by the Proposal price to premiums offered in comparable acquisitions
of minority shareholdings during the last five years. DLJ found that, of 38
minority transactions surveyed since 1990, 23 had a premium of less than 30%,
while 13 had a premium of less than 20%. The Proposal price of $36.50
represented: a 15.9% premium to the market price one month prior to
announcement, as compared to median and average premiums of 23.7% and 29.8%,
respectively (implying per Public Share prices of $38.97 and $40.89,
respectively); a premium of 16.3% to the 52-week average trading price of the
Common Shares, as compared to median and average premiums of 16.2% and 23.9%,
respectively (implying per Public Share prices of $36.46 and $38.87,
respectively); a discount of 2.6% to the high trading price over the preceding
52 weeks, as compared to median and average discounts of 4.6% and 1.7% (implying
per Public Share prices of $35.79 and $36.86, respectively); and a 12.3% premium
to the high trading price in the 52 weeks preceding the date one month prior to
the announcement date, as compared to median and average premiums of 2.1% and
3.6% (implying per Public Share prices of $33.20 and $33.67, respectively).
Discounted Cash Flow Analysis. DLJ prepared three matrices of future per
Public Share values, based on the Upside Case, the First Case and the Second
Case contained in the Financial Projections, with a terminal multiple of
projected 1999 EBITDA and using various discount rates. See "-- Certain
Financial Projections". Each matrix assumed terminal enterprise value/EBITDA
multiples of 6.0x to 8.0x and discount rates of 9%x to 13%. In the Upside Case
matrix, this analysis indicated a low per Public Share value of $35.25, assuming
the lowest multiple and the highest discount rate, and a high per Public Share
value of $50.44, assuming the highest multiple and the lowest discount rate. The
First Case indicated a low per Public Share value of $31.09, assuming the lowest
multiple and the highest discount rate, and a high per Public Share value of
$44.30, assuming the highest multiple and the lowest discount rate. The Second
Case analysis indicated a low per Public Share value of $29.53, assuming the
lowest multiple and the highest discount rate, and a high per Public Share value
of $41.84, assuming the highest multiple and the lowest discount rate.
24
<PAGE> 30
Accretion/Dilution Analysis. The DLJ Materials also contained an analysis
of the Merger's accretive/ dilutive impact, on a pro forma basis, on Parent's
1994 and estimated 1995 EPS, based on a number of assumptions, including, among
other things, currency exchange rates, the actual performance of the Company and
prevailing interest rates.
July Report. On July 10, 1995, DLJ furnished to Parent and Goldman Sachs
its July Report, which was prepared in response to certain illustrative
financial analyses prepared by Goldman Sachs, based on the preliminary version
of the Financial Projections, and provided to DLJ in the context of the
negotiations. The July Report reiterated, and in some cases modified, certain of
the valuation analyses contained in the June Report (e.g., selected companies,
premiums paid and discounted cash flow analyses), and discussed the alternative
valuations presented by Goldman Sachs (e.g., change of control transactions,
present value of future stock prices and dividends paid, leveraged
recapitalization and leveraged buyout analyses).
Selected Companies. The July Report contains an analysis of the factors
influencing the choices of companies to be included in the universe of selected
companies. Based on a review of these factors, DLJ added to the selected
companies analysis contained in the June Report a compromise universe of three
additional populations: a "combined composite" population, consisting of the
selected companies included in the original survey, plus three companies
identified by Goldman Sachs -- Duracell International, Rubbermaid and Newell; a
"staples U.S.A." population, consisting of Rubbermaid, Newell, American Safety
Razor, Pentech International and Hunt Manufacturing; and a pair of "most
comparable companies" -- Parent and Newell. The "combined composite" population
yielded multiples of price/1995 EPS, price/1996 EPS, enterprise value/LTM
revenues, enterprise value/LTM EBITDA and enterprise value/LTM EBIT that
indicated per Public Share values that ranged from $30.90 to $40.21 (with an
average of $37.23); the "staples U.S.A." population multiples implied per Public
Share values ranging between $29.58 and $38.41 (with an average of $34.22); and
the "most comparable companies" population multiples implied per Public Share
values ranging from $36.03 to $40.39 (with an average of $38.29). The July
Report distinguishes some of the selected companies from the Company, which is
not diversified, is smaller than certain competitors, has a smaller budget for
advertising and research and development expenditures and has limited sources of
revenue growth. In addition, the July Report noted that, based on price/earnings
ratios, the Common Shares had traditionally traded below certain of the selected
companies.
Change of Control Analysis. The July Report studied a number of change in
control transactions involving other consumer products companies identified by
Goldman Sachs (including, among others, Parker Pen, Wilkinson Sword, Berol
Corporation and Waterman S.A.) over the past several years, analyzing
acquisition prices as multiples of the acquired companies' revenues, EBIT and
net income. This analysis implied per Public Share values ranging from $33.64 to
$41.93. The July Report notes that the precedent change of control transactions
involved significant synergies, cost cutting opportunities, productivity
improvements and a change of control, all of which are not applicable to the
proposed transaction.
Discounted Cash Flow Analyses. Again utilizing the Upside Case, the First
Case and the Second Case, DLJ analyzed terminal enterprise value/EBIT multiples
ranging from 8.0x to 10.0x, which implied (at 11.0% and 13.0% discount rates)
per Public Share values ranging from $36.51 to $46.48 (in the Upside Case),
$31.32 to $39.73 (in the First Case) and $29.69 to $37.51 (in the Second Case).
Using terminal multiples of 8.8x (which represented the multiple implied by the
Proposal price of $36.50), and the same discount rates, the Upside Case implied
per Public Share values of $39.10 to $42.33, the First Case implied per Public
Share values of $33.50 to $36.15 and the Second Case implied values of $31.71 to
$34.19.
Present Value of Future Stock Prices and Dividends. The July Report
contains a present valuation (based on the First Case and the Second Case) of
future stock prices in the years 1995 through 1999 (derived by multiplying
forecast future EPS by P/E multiples ranging from 10x to 16x), together with the
present value of regular cash dividends and a special "recapitalization"
dividend, assumed to be financed by new borrowings and excess cash. Depending on
the year and price/earnings multiple selected, the present value of future stock
prices for the Public Shares were estimated to range from $30.11 to $43.80 in
the First Case and $28.39 to $43.17 in the Second Case.
25
<PAGE> 31
Leveraged Recapitalization Analysis. In the July Report, DLJ considered
certain leveraged recapitalization analyses performed by Goldman Sachs. As an
alternative, DLJ performed leveraged recapitalization analyses that yielded
implied per Public Share values of between $34.84 and $39.04 (in the First Case)
and $34.50 and $38.55 (in the Second Case).
Leveraged Buyout Analysis. The July Report also contains a leveraged
buyout analysis. By increasing the threshold rate of return required on the
initial equity investment, reducing the leverage factor and applying the
analysis to the First and Second Cases, DLJ derived indicative per Public Share
values of $31.45 and $30.60, respectively.
Accretion/Dilution Analysis. The July Report also contains an analysis of
the impact of the Merger on Parent's 1995 EPS based on certain assumptions,
including, among other things, currency exchange rates, the actual performance
of the Company and prevailing interest rates.
DLJ has stated to Parent that, in its view, the DLJ Materials are not
necessarily susceptible to partial analysis or summary description. In addition,
DLJ has advised Parent that selecting portions of the DLJ Materials or of the
summary set forth above, without considering the analyses as a whole, could
create an incomplete view of the processes underlying DLJ's analyses. No company
or transaction used in the above analyses as a comparison is identical to the
Company or the contemplated transaction. The DLJ Materials were prepared solely
for the purposes described above and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon projected future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of Parent, the Company
or DLJ or any other person assumes responsibility if future results are
materially different from those projected. The foregoing summary does not
purport to be a complete description of the DLJ Materials and its qualified by
reference to the DLJ Materials which are filed as exhibits to the Schedule
13E-3.
In the course of its investigation DLJ relied upon, and assumed the
accuracy and completeness of, publicly available information and the financial
and other information provided by the Company, but DLJ did not assume any
responsibility for independent verification for any of the foregoing
information. The DLJ Materials were based on preliminary versions of the
Financial Projections (see "-- Certain Financial Projections"), which were in
material respects identical to the final versions thereof. In addition, DLJ did
not make an independent evaluation or appraisal of the assets of the Company,
nor was DLJ furnished with any such evaluation or appraisals. The DLJ Materials
were based on facts and circumstances existing and disclosed to DLJ on the date
such materials were presented to Parent.
DLJ provides a full range of financial, advisory and brokerage services and
in the course of its normal trading activities may from time to time effect
transactions and hold positions in the securities or options on securities of
the Company and/or Parent for its own account and for the account of customers.
DLJ is acting as financial advisor to Parent in connection with the Merger.
Pursuant to the Parent's April 28, 1995 letter agreement, Parent has agreed to
pay DLJ a retainer fee of $250,000, and additional consideration of $1,125,000
(against which the retainer fee will be credited), payable upon acquisition, by
merger or in another form of business combination, of a majority of the Public
Shares, provided, that if Parent acquires less than 80% of the Public Shares,
such additional compensation shall equal $1,125,000 times the percentage of
Public Shares acquired, less the retainer fee. Parent has also agreed to
reimburse DLJ for its reasonable out-of-pocket expenses incurred (including the
reasonable fees and disbursements of its counsel) and to indemnify DLJ against
certain liabilities, including certain liabilities under the federal securities
laws.
CERTAIN FINANCIAL PROJECTIONS
At the direction of the Special Committee, in the course of their analysis
of the Company, representatives of Goldman Sachs discussed with senior
management of the Company, including Mr. Bich, the Company's business, financial
condition and prospects. See "-- Background of the Merger." In the course of
those discussions, the Company's management emphasized that the Company did not,
in the ordinary course of its
26
<PAGE> 32
business, make forecasts or projections as to future sales, earnings or other
income statement data, cash flows or balance sheet and financial position
information, other than certain information contained in the Company's annual
budget relating solely to the fiscal year covered by such budget (which budget
is generally not made publicly available). While noting that the Company's
management does not prepare long-term projections in the ordinary course, the
Special Committee directed Goldman Sachs to work with the Company's management
in order to complete Goldman Sachs' financial analyses, using projections to be
developed by the Company's management solely to assist the Special Committee and
Goldman Sachs in evaluating the fairness of the consideration to be received by
the Public Shareholders in the proposed merger, which projections were based
upon a variety of estimates and assumptions. The Financial Projections,
consisting of a First Case, a Second Case and an Upside Case, are summarized
below. In the course of further discussions between management of the Company,
DLJ, Goldman Sachs and members of the Special Committee, management of the
Company indicated that, subject to the various caveats expressed below relating
to the Financial Projections, it was management's belief that the future
operating performance of the Company would most probably fall between the First
Case and Second Case.
These three Financial Projections are summarized below:
FIRST CASE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $513.8 $533.2 $567.9 $605.1 $645.1 $686.4
EBIT........................... 94.3 97.8 104.2 111.0 118.3 125.9
Operating Profit Margin........ 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
</TABLE>
SECOND CASE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $506.6 $516.9 $541.3 $567.0 $594.0 $620.8
EBIT........................... 92.9 94.8 99.3 104.0 109.0 113.9
Operating Profit Margin........ 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
</TABLE>
UPSIDE CASE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $513.8 $533.2 $567.9 $605.1 $645.1 $686.4
EBIT........................... 99.6 106.0 116.7 128.2 140.6 152.9
Operating Profit Margin........ 19.4% 19.9% 20.5% 21.2% 21.8% 22.3%
</TABLE>
The First Case assumed that the Company's consolidated operating margins
remained constant at 1994 levels. The Second Case was based on assumptions that
the Company's consolidated operating margins remained constant at 1994 levels,
while growth in stationery products sales was reduced (to annual increases of
3.0% in units and 2.0% in price, commencing in 1996). The Upside Case assumed
4.5% unit and 3.5% price increases for stationery products, annual 2.0% unit and
0% price increases for lighters and (commencing in 1996) annual 1.5% unit and
4.0% price increases for shavers.
THE FOREGOING INFORMATION WAS NOT PREPARED WITH A VIEW TOWARD COMPLIANCE
WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING FORWARD-LOOKING INFORMATION OR GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND WAS NOT REVIEWED BY INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY OR PARENT. THE FINANCIAL PROJECTIONS WERE PREPARED
SOLELY FOR THE PURPOSE OF ASSISTING THE SPECIAL COMMITTEE AND ITS FINANCIAL
ADVISOR, GOLDMAN SACHS, IN EVALUATING THE FAIRNESS OF THE CONSIDERATION TO BE
RECEIVED BY THE PUBLIC SHAREHOLDERS IN CONNECTION WITH THE PROPOSAL AND THE
MERGER AND WERE BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS, SOME (BUT NOT
ALL) OF WHICH ARE SET FORTH ABOVE. THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE
FINANCIAL PROJECTIONS INVOLVED JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS,
FUTURE ECONOMIC, COMPETITIVE, REGULATORY AND FINANCIAL MARKET CONDITIONS AND
FUTURE BUSINESS DECISIONS WHICH MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT
TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE AND REGULATORY UNCERTAINTIES, ALL
OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF
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<PAGE> 33
THE COMPANY. WHILE THE COMPANY BELIEVES THESE ESTIMATES AND ASSUMPTIONS TO HAVE
BEEN REASONABLE, THERE CAN BE NO ASSURANCE THAT THE FINANCIAL PROJECTIONS WILL
BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. IN LIGHT
OF THE UNCERTAINTIES INHERENT IN FORWARD-LOOKING INFORMATION OF ANY KIND, AND
THE COMPANY'S LACK OF EXPERIENCE IN FINANCIAL FORECASTING, THE INCLUSION OF THE
FINANCIAL PROJECTIONS SHOULD NOT BE REGARDED AS AN INDICATION THAT PARENT, THE
COMPANY, THEIR RESPECTIVE FINANCIAL ADVISORS OR ANYONE WHO RECEIVED THIS
INFORMATION CONSIDERED OR CONSIDERS IT A RELIABLE PREDICTOR OF FUTURE OPERATING
RESULTS AND THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH. ADDITIONALLY, THE
FINANCIAL PROJECTIONS DO NOT REFLECT REVISED PROSPECTS FOR THE COMPANY'S
BUSINESSES, CHANGES IN GENERAL BUSINESS AND ECONOMIC CONDITIONS, OR ANY OTHER
TRANSACTION OR EVENT THAT HAS OCCURRED OR THAT MAY OCCUR AND THAT WAS NOT
ANTICIPATED AT THE TIME SUCH INFORMATION WAS PREPARED. NONE OF THE COMPANY,
PARENT, THEIR RESPECTIVE FINANCIAL ADVISORS OR ANY OTHER PARTY ASSUMES
RESPONSIBILITY FOR THE ACCURACY, REASONABLENESS, VALIDITY OR COMPLETENESS OF THE
FINANCIAL PROJECTIONS. THE COMPANY DOES NOT INTEND TO UPDATE OR SUPPLEMENT THIS
INFORMATION.
PLANS FOR THE COMPANY AFTER THE MERGER
Except as indicated in this Proxy Statement, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or any other material changes in
the Company's corporate structure or business or the composition of the Board of
Directors or management.
Upon consummation of the Merger, Parent intends to retain the Company as a
partially-owned or wholly-owned subsidiary of Parent. Parent anticipates that
the assets, business and operations of the Company will be continued
substantially as they are currently being conducted. Management of Parent may,
however, cause the Company to make such changes as are deemed appropriate and
intends to continue to review the Company and its assets, businesses,
operations, properties, policies, corporate structure, capitalization and
management and consider if any changes would be desirable in light of the
circumstances then existing. In addition, Parent intends to continue to review
the business of the Company and identify synergies and cost savings. See
"-- Interest of Certain Persons in the Merger."
INTEREST OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of the Company,
the shareholders of the Company should be aware that certain officers and
directors of the Company have certain interests in the Merger, including those
referred to below, that present actual or potential conflicts of interest in
connection with the Merger. The Special Committee and the Board of Directors
were aware of these potential or actual conflicts of interest and considered
them along with other matters described under "-- Recommendation of the Special
Committee and Board of Directors of the Company; Fairness of the Merger."
Common Share Ownership. Bruno Bich, who is the Chairman of the Board and
Chief Executive Officer of Parent, is the Chairman of the Board and Chief
Executive Officer of the Company. Mr. Bich was present and voted at meetings of
the Board held on May 23, 1995 and August 15, 1995. See "-- Background of the
Merger." As of the date of this Proxy Statement, the Mergeco Shareholders owned
an aggregate of 18,154,848 Common Shares, representing approximately 77% of the
Common Shares outstanding on that date. Bruno Bich, as Voting Trustee, exercises
voting power over 17,912,648 of such shares pursuant to the Voting Trust
Agreement, including all Common Shares owned by Parent. The Mergeco Shareholders
other than Parent own an additional 242,200 Common Shares not subject to the
Voting Trust Agreement. See "-- Voting Trust Agreement." The Merger Agreement
provides that, at the Effective Time of the Merger, all Common Shares then
beneficially owned by the Mergeco Shareholders will be cancelled without the
payment of any consideration therefor. On August 17 and 18, 1995, Bruno Bich
sold in market transactions an aggregate of
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<PAGE> 34
150,000 Common Shares not subject to the Voting Trust Agreement for $39.50 per
share, or an aggregate of approximately $5.9 million. See "Transactions by
Certain Persons in Common Shares".
As of July 31, 1995, the executive officers and directors of the Company
(other than Bruno Bich) owned an aggregate of 42,811 Public Shares, constituting
less than 1% of the total number of Common Shares then outstanding. Such
individuals have informed Parent that they intend to vote all of their Public
Shares in favor of the Merger. If the Merger is consummated, such persons will
receive an aggregate of approximately $1.73 million for their Public Shares.
The following table sets forth, as of July 31, 1995, the number of Public
Shares owned by, and the aggregate amounts to be received by, each executive
officer and director of the Company who owns any Public Shares (other than Bruno
Bich) pursuant to the Merger. Other than the individuals named below, no
executive officer or director of the Company owns any Public Shares.
<TABLE>
<CAPTION>
DIRECTOR/ NUMBER OF AMOUNT TO BE
EXECUTIVE OFFICER PUBLIC SHARES(A) RECEIVED
------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Alexander Alexiades.................................... 24,000 $972,000
Director; retired Vice President and Treasurer
Robert E. Allen........................................ 2,000 81,000
Director
David W. Heleniak...................................... 1,000 40,500
Director
Antoine G. Treuille.................................... 1,200 48,600
Director
Raymond Winter......................................... 5,664(a) 229,392
President and Chief Operating Officer; Director
Al D'Addario........................................... 1,574 63,747
Vice President -- Manufacturing
Robert L. Macdonald.................................... 2,788(a) 112,914
Vice President -- Finance and Treasurer
James K. Palmer........................................ 2,779(a) 112,550
Director, Sales and Marketing
Thomas M. Kelleher..................................... 1,374(a) 55,647
General Counsel and Secretary
Jack Teague............................................ 432(a) 17,496
General Manager, Special Markets Division
</TABLE>
- ---------------
(a) Represents all Common Shares held as of July 31, 1995, including holdings
through the Company's 401(k) Plan.
Directors and Officers. Pursuant to the Merger Agreement, the directors
and officers of the Company will remain the directors and officers,
respectively, of the Surviving Corporation. Robert Macdonald, Vice
President -- Finance and Treasurer of the Company, has accepted (effective
October 1, 1995) the position of chief financial officer of Parent. Mr.
Alexiades represented the Company in various trade association matters in 1994,
for which he received $20,000.
Special Committee. Each member of the Board of Directors who was not, and
is not at the present time, an employee of the Company, or an affiliate of
Parent, serves on the Special Committee. Each member of the Special Committee
will be paid $20,000 for serving on the Special Committee. This compensation was
authorized by the Board of Directors of the Company in order to compensate the
members thereof for the significant additional time commitment that would be
required of them in connection with fulfilling their duties and responsibilities
as members of the Special Committee and is payable without regard to whether the
Special Committee approved the Merger or whether the Merger is consummated.
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<PAGE> 35
Each member of the Special Committee received $30,000 in 1994 for his
service as a director. Shearman & Sterling, a law firm of which Mr. Heleniak is
a partner, serves as the Special Committee's legal advisor in connection with
the Merger, for which it expects to receive fees of approximately $250,000.
Shearman & Sterling has, from time to time, done work for Bruno Bich, as well as
for the Company, for which it has received customary compensation. An investment
banking firm with which Mr. Treuille was at the time affiliated performed
certain advisory services for the Company in 1991 for which it received
customary compensation. In addition, Mr. Allen is Managing Director of Redding
Consultants, Inc., which was paid $67,914 in 1994 for marketing strategy
assistance performed for the Company.
Indemnification and Insurance. Parent has also agreed in the Merger
Agreement, subject to certain limitations, that for a period of six years after
the Effective Time, Parent shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless the present and former officers, directors,
employees and agents of the Company and its subsidiaries (collectively, the
"Indemnified Parties") from and against, and pay or reimburse the Indemnified
Parties for, all losses, obligations, expenses, claims, damages or liabilities
(whether or not resulting from third-party claims and including interest,
penalties, out-of-pocket expenses and attorneys' fees incurred in the
investigation or defense of any of the same or in asserting any of their rights
under the Merger Agreement) resulting from or arising out of actions or
omissions occurring on or prior to the Effective Time (including, without
limitation, the transactions contemplated by the Merger Agreement) to the full
extent permitted or required under applicable law and, in the case of
indemnification by the Surviving Corporation, to the fullest extent permitted
under the By-Laws of the Company in effect on the date of the Merger Agreement
(which provisions shall not be amended in any manner which adversely affects any
Indemnified Party for a period of six years), including provisions relating to
advances of expenses incurred in the defense of any action or suit. The Merger
Agreement further provides, subject to certain limitations, that for not less
than four years after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, maintain in effect directors' and officers' liability
insurance covering the Indemnified Parties who are currently covered by the
Company's existing directors' and officers' liability insurance, on terms and
conditions no less favorable to such directors and officers than those in effect
on the date of the Merger Agreement. See "The
Merger -- General -- Indemnification and Insurance."
Certain Agreements. Parent and certain of its affiliates are parties to
various contractual arrangements with the Company and certain of the Company's
affiliates. Because of Parent's control over the Company's operations, these
agreements were not the result of arm's length negotiations among independent
parties. Set forth below are summaries of certain of these arrangements. This
summary of the Voting Trust Agreement is qualified in its entirety by reference
to the copy filed with the SEC as an exhibit to the Schedule 13E-3 and
incorporated herein by this reference. Such agreement may be examined and copies
may be obtained at the place and in the manner set forth under "Available
Information."
Voting Trust Agreement. The Voting Trust Agreement was executed on
February 5, 1991, and amended on February 3, 1992 and July 5, 1993. The purpose
of the Voting Trust Agreement is to secure the continuity and stability of
policy and management of the Company. Marcel L. Bich and Bruno Bich were named
the voting trustees and Neil A. Pollio was named the sole successor voting
trustee. Since the death of Marcel L. Bich in May 1994, and in accordance with
the Voting Trust Agreement, Bruno Bich has been the sole Voting Trustee. Since
the death of Neil A. Pollio in 1991, Alexander Alexiades has served as sole
successor voting trustee.
Pursuant to the Voting Trust Agreement, the Participating Shareholders
deposited with the Voting Trustees the certificates for Common Shares owned by
them. The Participating Shareholders were issued voting trust certificates for
the Common Shares deposited with and transferred to the Voting Trustee. The
Participating Shareholders are entitled to all cash dividends declared and paid
on the Common Shares they deposited with the Voting Trustee, while the Voting
Trustee has the exclusive right to vote such Common Shares.
As of the Record Date, Bruno Bich, as Voting Trustee, exercised voting
control over 17,912,648 Common Shares (representing approximately 76.0% of the
outstanding Common Shares), of which (i) 14,829,836 Common Shares (representing
approximately 62.9% of the outstanding Common Shares) were beneficially
30
<PAGE> 36
owned by Parent, (ii) 2,541,406 Common Shares (representing approximately 10.8%
of the outstanding Common Shares) were beneficially owned by Bruno Bich and
trusts for the benefit of himself and members of his family, and (iii) 541,406
Common Shares (representing approximately 2.3% of the outstanding Common Shares)
were beneficially owned by Francois Bich. For additional information, see
"Ownership of Common Shares -- Security Ownership of Certain Beneficial Owners."
Technology Sharing and Mutual Purchasing Agreement. Under the terms of an
agreement dated June 30, 1971 (as amended, the "Agreement"), the Company and
Parent (which is engaged in substantially the same business as the Company) are
obligated to furnish each other information with respect to technological
improvements, whether patentable or otherwise, at no cost to the recipient. This
portion of the Agreement represents the formalization of the arrangement which
has prevailed between the parties since the Company's formation. In addition,
the Agreement provides that the Company and Parent shall be entitled, but shall
not be required, to purchase machinery, equipment and products from each other
at a price not greater than 120%, and raw materials at a price not greater than
110%, of the cost thereof. The Agreement was renewed in 1991 for an additional
term of five years. Pursuant to the terms of the Agreement, the Company's
purchases from and sales to Parent and its affiliates during 1994 aggregated
approximately $41.1 million and $12.4 million, respectively. In 1993, the
Company's purchases from and sales to Parent and its affiliates aggregated
approximately $42.2 million and $11.4 million, respectively. In the first half
of 1995, such purchases and sales aggregated $25.6 million and $7.3 million,
respectively.
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, the entire equity interest of the Company will
be owned by the Mergeco Shareholders. Therefore, following the Merger, the
Public Shareholders will no longer benefit from any increases in the value of
the Company and will no longer bear the risk of any decreases in the value of
the Company. In addition, following the Merger, the interest of Parent in the
Company's net book value and net income will increase to approximately 86% from
a current level of approximately 63% while the other shareholders of Mergeco
will continue to hold an interest of approximately 14%. Following the Merger, in
dollar terms, Parent's interest in 1994 fiscal year end net book value will
increase to $213.1 million from $156.1 million and its interest in 1994 fiscal
year net income will increase to $43.9 million from $32.1 million. Following the
Merger, the Mergeco Shareholders will benefit from any increases in the value of
the Company and also bear the risk of any decreases in the value of the Company.
The Public Shareholders will have no continuing interest in the Company
following the Merger. As a result, the Common Shares will no longer meet the
requirements of the NYSE for continued listing and will, therefore, be delisted
from the NYSE.
According to published guidelines, the Common Shares will no longer be
eligible for listing on the NYSE when, among other things, the number of record
holders of at least 100 Common Shares falls below 1,200, the number of publicly
held Common Shares (exclusive of holdings of officers, directors and their
families and other concentrated holdings of 10% or more ("NYSE Excluded
Holdings")) falls below 600,000 or the aggregate market value of publicly held
Common Shares (exclusive of NYSE Excluded Holdings) falls below $5,000,000.
The Common Shares currently constitute "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Common Shares. As a result of
the Merger, the Common Shares will no longer constitute "margin securities" for
purposes of the margin regulations of the Federal Reserve Board and therefore
will no longer constitute eligible collateral for credit extended by brokers.
The Common Shares are currently registered as a class of securities under
the Exchange Act. Registration of the Common Shares under the Exchange Act may
be terminated upon application of the Company to the SEC if the Common Shares
are not listed on a national securities exchange or quoted on NASDAQ and the re
are fewer than 300 record holders of the Public Shares. Termination of
registration of the Public Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to its
shareholders and to the SEC and would make certain provisions of the
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<PAGE> 37
Exchange Act, such as the short-swing trading provisions of Section 16(b), the
requirement of furnishing a proxy statement in connection with shareholders'
meetings pursuant to Section 14(a), and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer applicable
to the Company. If registration of the Common Shares under the Exchange Act is
terminated, the Common Shares would no longer be eligible for NYSE listing. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. It is the present intention of the Parent to seek to cause the Company
to make an application for the termination of the registration of the Common
Shares under the Exchange Act as soon as practicable after the Effective Time of
the Merger.
CERTAIN LITIGATION
Beginning on May 19, 1995, four actions were filed in the Supreme Court of
the State of New York, County of New York (the "Court"), by shareholders of the
Company. These actions, purportedly brought as class actions on behalf of all
Public Shareholders, named the Company, its directors, certain of its officers
and Parent as defendants, alleging that they breached their fiduciary duties to
plaintiffs and the other Public Shareholders in connection with Parent's
proposal to acquire the Public Shares for $36.50 per share. A stipulation and
order consolidating these four actions (the "Consolidation Order") under the
caption In re BIC Corp. Shareholders Litigation, Consolidated Index No.
112626/95, was signed by the parties on or about June 23, 1995, and submitted to
the Court. The Consolidation Order has not yet been entered. The Consolidated
Order provides that the defendants need not respond to the four original
complaints. The Consolidation Order further provides that plaintiffs shall file
a Consolidated and Amended Complaint after entry of the Consolidation Order.
Another action asserting similar claims on behalf of the same purported
class, entitled Rosenzweig v. BIC Corp., et al., was filed in the Connecticut
Superior Court, Judicial District of Ansonia/Milford on May 22, 1995. In
addition, another similar purported class action, entitled Kahn v. Societe BIC
S.A., et al., Index No. 01785, which names only Parent and Bruno Bich as
defendants, was filed on May 19, 1995 in the Supreme Court of the State of New
York, County of Queens. The time for defendants to respond to the complaints in
these actions has not expired.
The parties to these actions have reached an agreement in principle to
settle all such actions with prejudice, based on the terms of the Merger. The
settlement is subject to negotiation of a stipulation of settlement and approval
by the Court following notice to the Public Shareholders. In connection with the
proposed settlement, the plaintiffs intend to apply for an award of attorneys'
fees and litigation expenses in the amount of $487,500. The defendants have
agreed not to oppose this application.
The defendants have denied, and continue to deny, that they have committed
or have threatened to commit any violation of law or breaches of duty to the
plaintiffs or the purported class. The defendants have agreed to the proposed
settlement because, among other reasons, such settlement would eliminate the
burden and expense of further litigation and would facilitate the consummation
of a transaction that they believe to be in the best interests of the Company
and the Public Shareholders.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material federal income tax
consequences of the Merger to the holders of the Public Shares and to the
Company under the law in effect as of the date hereof. The following discussion
is for general information only, and may not apply to particular categories of
holders, such as financial institutions, broker-dealers and tax-exempt entities.
ALL HOLDERS OF THE PUBLIC SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
TAX CONSEQUENCES OF THE MERGER TO THEM WITH SPECIFIC REFERENCE TO THEIR
PARTICULAR TAX SITUATIONS, INCLUDING SUCH TAX CONSEQUENCES UNDER STATE, LOCAL
AND FOREIGN TAX LAWS.
The exchange of Public Shares for cash in connection with the Merger will
be a taxable transaction to the relevant Public Shareholder for federal income
tax purposes. In general, such Public Shareholder will recognize gain or loss in
an amount equal to the difference between the cash received and such Public
Shareholder's tax basis in such Public Shares. Such gain or loss will be a
capital gain or loss if such Public
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<PAGE> 38
Shareholder has held such Public Shares as capital assets within the meaning of
section 1221 of the Internal Revenue Code of 1986, as amended. Such capital gain
or loss will be a long-term capital gain or loss if such Public Shareholder has
held such Public Shares for more than one year as of the date of exchange. There
are certain limitations on the deductibility of capital losses. A Public
Shareholder who also owns, directly or by attribution, stock of Parent as of the
date of exchange should consult such Public Shareholder's own tax advisor
regarding the possibility that the cash received will be treated as a dividend.
Legislative proposals have been recently introduced in Congress to reduce
effective tax rates applicable to net long-term capital gains and to limit
further the deductibility of long-term capital losses. The proposals would apply
generally to transactions entered into after December 31, 1994. If the proposals
were enacted into law, long-term capital gains from the exchange of Public
Shares in the Merger would generally be taxed at reduced effective tax rates and
long-term capital losses from the exchange of Public Shares in the Merger would
be subject to further limitations on deductibility. However, it is not clear
whether the proposals will be enacted, and, if enacted, whether the proposals
will apply with respect to the exchange of Public Shares in the Merger.
Cash received in exchange for Public Shares in the Merger may be subject to
a backup withholding tax at a rate of 31%, unless the relevant Public
Shareholder is an exempt recipient or complies with certain identification
procedures.
The Company will not recognize gain or loss as a result of the Merger for
federal income tax purposes.
FEES AND EXPENSES
Estimated fees and expenses incurred or to be incurred by the Company in
connection with the Merger are approximately as follows:
<TABLE>
<S> <C>
Investment banking fees and expenses......................... $
Legal fees and expenses......................................
SEC filing fee...............................................
Printing and mailing fees....................................
Proxy Solicitation Agent fees................................
Paying Agent fees............................................
Special Committee fees.......................................
Miscellaneous expenses.......................................
----------
Total..............................................
=========
</TABLE>
The above fees and expenses do not include any fees and expenses that may
be payable to the attorneys for the plaintiffs as described in "-- Certain
Litigation." For information regarding Goldman Sachs' engagement by the Special
Committee , see "-- Opinion of Goldman, Sachs & Co.; Summary of Financial
Analyses -- Goldman, Sachs & Co.".
Estimated fees and expenses incurred or to be incurred by Parent in
connection with the Merger are investment banking fees and expenses of
$1,125,000, legal fees and expenses of $ and miscellaneous fees of
$ (including one half of the SEC filing fee and the printing fees
referenced above). For information regarding DLJ's engagement by Parent, see
"-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Donaldson,
Lufkin & Jenrette Securities Corporation."
Neither Parent nor the Company will pay any fees or commissions to any
broker or dealer or any other person (other than Goldman Sachs, DLJ, the Proxy
Solicitation Agent, and the Paying Agent) for soliciting Public Shares pursuant
to the Merger. Brokers, dealers, commercial banks and trust companies will, upon
request, be reimbursed by the Company for reasonable and necessary costs and
expenses incurred by them in forwarding materials to their customers.
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<PAGE> 39
THE MERGER
GENERAL
The following is a summary of the Merger Agreement. All references to and
summaries of the Merger Agreement in this Proxy Statement are qualified in their
entirety by reference to the Merger Agreement, a copy of which is attached
hereto as Annex A.
The Merger. The Merger Agreement provides for the merger of Mergeco with
and into the Company. The Company will be the Surviving Corporation and it will
continue its corporate existence under the laws of the State of New York. At the
Effective Time, the separate corporate existence of Mergeco shall cease. The
Surviving Corporation shall possess all the rights, privileges, immunities,
powers and purposes of Mergeco and the Company and shall assume and become
liable for all liabilities, obligations and penalties of the Company and
Mergeco.
Effective Time of Merger. The Effective Time will occur upon the filing of
the Certificate of Merger by the New York Department of State. The Certificate
of Merger will be filed as soon as practicable after requisite approval and
adoption of the Merger Agreement and the Merger by the shareholders of the
Company at the Special Meeting are obtained and the other conditions precedent
to the consummation of the Merger have been satisfied, or if permissible,
waived. See "-- Conditions of the Merger; Amendments, Waiver, and Termination."
Treatment of Shares in the Merger. At the Effective Time: (a) each Common
Share outstanding immediately prior to the Effective Time, except for (i) Common
Shares then owned by the Mergeco Shareholders and (ii) Dissenting Shares, shall
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive the Merger Consideration, upon
surrender of the certificate representing such Common Share; and (b) each Common
Share outstanding immediately prior to the Effective Time which is then owned by
the Mergeco Shareholders shall, by virtue of the Merger and without any action
on the part of the holder thereof, be canceled and retired and cease to exist,
without any conversion thereof.
Holders of Common Shares who do not vote in favor of the Merger at the
Special Meeting and who shall have properly elected to dissent in the manner
provided in Section 623 shall be entitled to payment of the fair value of their
Public Shares in accordance with the provisions of Section 623. See
"-- Dissenters' Rights."
Each Mergeco common and preferred share issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and exchangeable for
one fully paid and non-assessable common share of the Surviving Corporation.
Exchange of Share Certificates. The Parent has designated Mellon
Securities Transfer Services to act as the Paying Agent under the Merger
Agreement. Prior to the Effective Time, Parent shall, or Parent shall cause
Mergeco to, deposit in trust with the Paying Agent, cash in an aggregate amount
equal to the product of: (x) the number of Common Shares outstanding immediately
prior to the Effective Time (other than Common Shares owned by the Mergeco
Shareholders or Dissenting Shares); and (y) the Merger Consideration (such
amount being hereinafter referred to as the "Exchange Fund"). The Paying Agent
shall, pursuant to irrevocable instructions, make the payments provided for
under the Merger Agreement out of the Exchange Fund.
Promptly after the Effective Time, the Surviving Corporation shall cause
the Paying Agent to mail to each holder of record as of the Effective Time
(other than the Mergeco Shareholders) of an outstanding certificate or
certificates for Common Shares (the "Certificates"), a letter of transmittal and
instructions for use in effecting the surrender of such certificates for payment
in accordance with the Merger Agreement. Upon the surrender to the Paying Agent
of a Certificate, together with a duly executed letter of transmittal, the
holder thereof shall be entitled to receive cash in an amount equal to the
product of the number of Common Shares represented by such Certificate and the
Merger Consideration, less any applicable withholding tax, and such Certificate
shall then be canceled.
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<PAGE> 40
Until surrendered pursuant to the procedures described above, each
Certificate (other than Certificates representing Common Shares owned by the
Mergeco Shareholders and Certificates representing Dissenting Shares) shall
represent for all purposes the right to receive the Merger Consideration in cash
multiplied by the number of Common Shares evidenced by such Certificate, without
any interest thereon.
After the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of Common Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for an amount in cash equal to the Merger Consideration multiplied
by the number of Common Shares evidenced by such Certificate, without any
interest thereon.
Any portion of the Exchange Fund which remains unclaimed by the
shareholders of the Company for 180 days after the Effective Time (including any
interest, dividends, earnings or distributions received with respect thereto)
shall be repaid to the Surviving Corporation, upon demand. Any shareholders of
the Company who have not theretofore complied with the procedures set forth
above shall thereafter look only to the Surviving Corporation for payment of
their claim for the Merger Consideration per Common Share, without any interest
thereon, but shall have no greater rights against the Surviving Corporation than
may be accorded to general creditors of the Surviving Corporation under New York
law. Notwithstanding the foregoing, neither the Paying Agent nor any party to
the Merger Agreement shall be liable to any holder of certificates formerly
representing Common Shares for any amount to be paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Treatment of Employee Stock Plans. The Company will take all actions
necessary to amend the Company's Local 134 Employees' Share Purchase Plan,
401(k) Savings and Investment Plan and a non-contributory 401(k) plan for
certain unionized employees of the Company on or prior to the Effective Time to
delete as an investment option thereunder purchases of Common Shares.
Withholding Rights. Pursuant to the Merger Agreement, Parent, Mergeco, the
Surviving Corporation and the Paying Agent shall be entitled to deduct and
withhold from the amounts payable to any holder of Common Shares such amounts as
Parent, Mergeco, the Surviving Corporation or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under applicable
tax law. To the extent that amounts are so deducted and withheld by Parent,
Mergeco, the Surviving Corporation or the Paying Agent, such amounts shall be
treated for all purposes of the Merger Agreement as having been paid to the
relevant holder of Common Shares.
Conditions to the Merger; Amendment, Waiver and Termination. Pursuant to
the Merger Agreement, the obligations of each of Parent, Mergeco, the Voting
Trustee and the Company, to effect the Merger are subject to the following
conditions: (a) the proposal to approve and adopt the Merger Agreement at the
Special Meeting shall have received the affirmative vote of the holders of at
least a majority of the Public Shares actually voted, in person or by proxy
(excluding abstentions), on such proposal, (b) the absence of (i) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States or France or (ii) a commencement of a war, armed hostilities or
other international or national calamity directly involving the United States or
France which has a material adverse effect on the general economic conditions in
the United States or France (other than the commencement of war or armed
hostilities in the Republic of Bosnia-Herzegovina), (c) the absence of any
effective statute, rule, regulation, a temporary, preliminary or permanent order
or injunction prohibiting consummation of the Merger or imposing material
limitations on the ability of the Mergeco Shareholders effectively to exercise
full rights of ownership with respect to the Common Shares and (d) the approval
and adoption of the Merger Agreement by the holders of the requisite number of
Common Shares in accordance with the NYBCL and Restated Certificate of
Incorporation and By-Laws of the Company. In addition: (a) the obligations of
Parent, Mergeco and the Voting Trustee to effect the Merger are subject to (i)
the accuracy of the representations and warranties made by the Company in the
Merger Agreement as of the date thereof and as of the Effective Time (except for
representations and warranties which address matters as of a particular date
which must be accurate as of such date), and (ii) the performance by the Company
in all material respects of the obligations required to be performed by the
Company prior to the Effective Time; and (b) the obligations of the Company to
effect the
35
<PAGE> 41
Merger are subject to (x) the accuracy of the representations and warranties
made by Parent and Mergeco in the Merger Agreement as of the date thereof and as
of the Effective Time (except for representations and warranties which address
matters as of a particular date which must be accurate as of such date), and (y)
the performance by Parent and Mergeco in all material respects of the
obligations required to be performed by Parent or Mergeco, as the case may be,
prior to the Effective Time.
The Parent or the Company, respectively, may waive the satisfaction of any
obligation, covenant, agreement or condition under the Merger Agreement on
behalf of Parent or Mergeco, on the one hand, or the Company, on the other,
provided that the waiver of any of the Company's rights under the Merger
Agreement requires the approval of the Special Committee.
The Merger Agreement may be amended by written agreement of Parent,
Mergeco, the Voting Trustee and the Company at any time prior to the Effective
Time, provided that (a) after the Merger Agreement is adopted by the Company's
shareholders, no such amendment shall be made that reduces the amount or changes
the form of Merger Consideration or otherwise materially and adversely affects
the rights of the Public Shareholders without the further approval of at least a
majority of the Public Shares actually voted, in person or by proxy (excluding
abstentions), on such proposal and (b) the approval of the Special Committee is
required for any amendment of the Merger Agreement and any extension by the
Company of the time for the performance of any obligations or other acts of
Parent or Mergeco.
The Merger Agreement may be terminated at any time prior to the Effective
Time, either before or after approval by the shareholders of the Company by: (a)
mutual consent of the respective Boards of Directors of Parent and Mergeco and
the Board of Directors, provided that the Special Committee shall have approved
such termination; (b) action of either of the respective Boards of Directors of
Parent and Mergeco or the Board of Directors if, without the fault of the
terminating party, the Merger shall not have been consummated on or prior to
January 31, 1996; (c) action of the respective Boards of Directors of Parent and
Mergeco, if the Board of Directors shall have withdrawn or modified in a manner
adverse to Mergeco its approval or recommendation of the Merger, the Merger
Agreement or the transactions contemplated thereby; or (d) action of either of
the respective Boards of Directors of Parent and Mergeco or the Board of
Directors, if any court of competent jurisdiction in the United States or other
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, permanently enjoining or
otherwise prohibiting the Merger, and such order, decree, ruling or other action
shall have become final and non-appealable.
The Merger Agreement provides that in the event of its termination, no
party thereto will have any liability or further obligation to any other party
to the Merger Agreement, provided that any termination shall be without
prejudice to the rights of any party to the Merger Agreement arising out of
breach by any other party of any covenant or agreement contained in the Merger
Agreement, and provided further, that certain obligations under the Merger
Agreement shall survive any termination.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the Company to Parent and Mergeco, including
with respect to the following matters: (i) the due organization and valid
existence of the Company and its subsidiaries and similar corporate matters;
(ii) the capitalization of the Company and its subsidiaries; (iii) the due
authorization, execution and delivery of the Merger Agreement, its binding
effect on the Company, and the Board of Directors and Special Committee's
recommendation of the Merger to the Public Shareholders; (iv) regulatory filings
and approvals, and the lack of conflicts between the Merger Agreement and the
transactions contemplated thereby with the Company's Restated Certificate of
Incorporation or By-Laws, any contract to which it or its subsidiaries are
parties, or any law, rule, regulation, order, writ, injunction or decree binding
upon the Company or its subsidiaries; (v) the accuracy of the Company's SEC
filings, its financial statements and the absence of undisclosed liabilities;
(vi) the vote required to approve the Merger under the NYBCL; (vii) the accuracy
of the information provided by the Company for inclusion in this Proxy Statement
and the Schedule 13E-3; (viii) the opinion of Goldman Sachs; and (ix) the
absence of any brokers or finders (other than Goldman Sachs). Such
representations and warranties are subject, in certain cases, to specified
exceptions and qualifications.
36
<PAGE> 42
The Merger Agreement also contains representations and warranties of Parent
and Mergeco to the Company, including with respect to the following matters: (i)
the due organization and valid existence of each of Parent and Mergeco and
similar corporate matters; (ii) the capitalization of Mergeco; (iii) the due
authorization, execution and delivery of the Merger Agreement by Parent, Mergeco
and the Voting Trustee, and its binding effect on such parties; (iv) regulatory
filings and approvals, and the absence of conflicts of the Merger Agreement and
the transactions contemplated thereby with the charter or by-laws (or equivalent
documents) of each of Parent and Mergeco, or the Voting Trust Agreement, or with
any contract binding upon Parent, Mergeco or the Voting Trustee, or with any
law, rule, regulation, order, writ, injunction or decree binding upon any of
such parties; (v) Parent's and Mergeco's access to cash funds sufficient to
consummate the transactions contemplated by the Merger Agreement; (vi) the
formation and absence of prior activities of Mergeco; (vii) the accuracy of the
information provided by Parent or Mergeco for inclusion in this Proxy Statement
and the Schedule 13E-3; and (viii) the absence of brokers and finders (other
than DLJ). Such representations and warranties are subject, in certain cases, to
specified exceptions and qualifications.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, neither the Company nor any of its
subsidiaries, subject to certain exceptions, may declare, set aside or pay any
dividend or other distribution in respect of its capital stock, provided that
the Board of Directors may declare dividends in respect of its capital stock if
the Merger has not been consummated by December 31, 1995.
Certain Agreements. The Merger Agreement provides that the Company will as
soon as practicable: (i) acting through its Board of Directors, and subject to
the fiduciary duties thereof and applicable law, call and convene the Special
Meeting, (ii) prepare and file with the SEC a preliminary proxy statement and
mail the definitive proxy statement to its shareholders, and (iii) subject to
the fiduciary duties under applicable law of the Company's directors, use its
best efforts to obtain the necessary approvals by its shareholders of the Merger
Agreement and the transactions contemplated thereby. The Merger Agreement
provides that the proxy statement will include the respective recommendations of
the Board of Directors to the shareholders of the Company and of the Special
Committee to the Public Shareholders in favor of the adoption and approval of
the Merger Agreement and the transactions contemplated thereby. Notwithstanding
any other provision of the Merger Agreement to the contrary, if the Board of
Directors or the Special Committee determines, in good faith in the exercise of
its fiduciary duties under applicable law, to withdraw, modify or amend its
recommendation in favor of the Merger, such withdrawal, modification or
amendment will not constitute a breach of the Merger Agreement.
Pursuant to the Merger Agreement, the Company, Parent and Mergeco will
together prepare and file the Schedule 13E-3 under the Exchange Act. Parent,
Mergeco and the Company will each furnish all information concerning it, its
affiliates and certain other persons required to be included in the Proxy
Statement and the Schedule 13E-3 and respond promptly to any comments made by
the SEC with respect thereto.
Parent has agreed in the Merger Agreement that it will: (i) as soon as
practicable after the date thereof, cause the Merger Agreement to be approved by
the requisite vote of the Mergeco Shareholders; and (ii) cause Mergeco to
perform its obligations under the Merger Agreement. The Merger Agreement also
prohibits Mergeco from engaging in any business or activity other than in
connection with the Merger.
Best Efforts. Pursuant to the Merger Agreement, each of the parties will
use its best efforts to take, or cause to be taken, all appropriate actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable law or otherwise to consummate the Merger, including obtaining the
necessary consents of third parties and governmental authorities.
Indemnification and Insurance. Parent has agreed in the Merger Agreement,
subject to certain limitations, that for a period of six years after the
Effective Time, Parent shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless the "Indemnified Parties" (as defined) from
and against, and pay or reimburse the Indemnified Parties for, all losses,
obligations, expenses, claims, damages or liabilities (whether or not resulting
from third-party claims and including interest, penalties, out-of-pocket
expenses and attorneys' fees incurred in the investigation or defense of any of
the same or in asserting any of their rights under the Merger Agreement)
resulting from or arising out of actions or omissions occurring on or
37
<PAGE> 43
prior to the Effective Time (including, without limitation, the transactions
contemplated by the Merger Agreement) to the full extent permitted or required
under applicable law and, in the case of indemnification by the Surviving
Corporation, to the fullest extent permitted under the By-Laws of the Company in
effect on the date of the Merger Agreement (which provisions cannot be amended
in any manner which adversely affects any Indemnified Party for a period of six
years), including provisions relating to advances of expenses incurred in the
defense of any action or suit.
The Merger Agreement further provides that for not less than four years
after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, maintain in effect directors' and officers' liability insurance
covering the Indemnified Parties who are currently covered by the Company's
existing directors' and officers' liability insurance, on terms and conditions
no less favorable to such directors and officers than those in effect on the
date of the Merger Agreement, provided that Parent or the Surviving Corporation
are not required to expend in any one year an amount in excess of 200% of the
annual premiums currently paid by the Company for such insurance.
ACCOUNTING TREATMENT
The Merger will be accounted for under the "purchase" method of accounting
whereby the purchase price will be allocated among the Company's assets and
liabilities based on the fair market value of the assets acquired and
liabilities assumed.
PAYMENT FOR PUBLIC SHARES; SOURCES OF FUNDS
Approximately $219 million will be required to pay the Merger Consideration
to the holders of all Public Shares outstanding at the Effective Time (assuming
no such holder perfects its dissenters' rights) and it is expected that
approximately $ will be required to pay the expenses of Parent and Mergeco
in connection with the Merger. Such funds will be furnished from available
general funds of Parent. It is currently expected that approximately $
million will be required to pay the expenses of the Company. Such funds will be
furnished from available general funds of the Company. See "Special
Factors -- Fees and Expenses."
DISSENTERS' RIGHTS
Shareholders who do not vote in favor of approval and adoption of the
Merger Agreement may have the right to seek payment in cash of the fair value of
their Common Shares by complying with the requirements of Section 623 of the
NYBCL. Failure of a shareholder to strictly adhere to the requirements of
Section 623 will result in the loss of such shareholder's dissenter's rights.
A dissenting shareholder must, before the taking of the vote on the Merger
Agreement, file with the Company a written objection. The objection must
include: a notice of the dissenting shareholder's election to dissent; the
shareholder's name and residence address; the number of shares as to which the
shareholder dissents; and a demand for payment of the fair value of such shares
if the Merger is effected. The written objection should be delivered to BIC
Corporation, 500 BIC Drive, Milford, Connecticut 06460, Attention: Thomas M.
Kelleher, General Counsel and Secretary, prior to the Special Meeting. To
effectively exercise dissenters' rights, such shareholder may not vote any of
his, her or its shares for the Merger Agreement. Within 10 days after the vote
of shareholders authorizing the Merger Agreement and the Merger, the Company
must give written notice of such authorization to each dissenting shareholder.
Within 20 days after the giving of such notice, any shareholder who elects to
dissent must file with the Company a written notice of such election, stating
such shareholder's name and residence address, the number of Common Shares as to
which dissent is made and a demand for payment of the fair value of such shares.
Such dissenting shareholder may not dissent as to less than all Common Shares
beneficially owned by the shareholder. Upon consummation of the Merger, a
dissenting shareholder shall cease to have any of the rights of a shareholder,
except the right to be paid the fair value of the dissenting shareholder's
shares, and any other rights under Section 623. At the time of filing the notice
of election of dissent or within one month thereafter, such shareholder must
submit certificates representing all such Common Shares to the Company or its
transfer agent. Failure to submit the certificates may result in the loss of
such shareholder's dissenter's rights. Within 15 days after the
38
<PAGE> 44
expiration of the period within which shareholders may file their notices of
election to dissent, or within 15 days after consummation of the Merger,
whichever is later (but not later than 90 days after the shareholders' vote
authorizing the Merger), the Company must make a written offer (which, if the
Merger has not been consummated, may be conditioned upon such consummation) to
each such dissenting shareholder who has filed such notice of election to pay
for the Common Shares at a specified price which the Company considers to be
their fair value. If the Company and the dissenting shareholder are unable to
agree as to such fair value, Section 623 provides for judicial determination of
fair value. A vote AGAINST approval and adoption of the Merger Agreement does
not constitute the written objection required to be filed by a dissenting
shareholder. Failure by a shareholder to vote AGAINST approval and adoption of
the Merger Agreement, however, will not constitute a waiver of rights under
Section 623 provided that a written objection has been properly filed and such
shareholder has not voted any of his, her or its shares FOR the approval and
adoption of the Merger Agreement.
The foregoing does not purport to be a complete statement of the provisions
of Section 623 and is qualified in its entirety by reference to such section,
which is reproduced in full as Annex C to this Proxy Statement.
THE PROVISIONS OF SECTION 623 ARE COMPLEX AND TECHNICAL IN NATURE.
SHAREHOLDERS DESIRING TO EXERCISE DISSENTERS' RIGHTS MAY WISH TO CONSULT
COUNSEL, SINCE THE FAILURE TO COMPLY STRICTLY WITH THESE PROVISIONS WILL RESULT
IN THE LOSS OF THEIR DISSENTERS' RIGHTS.
39
<PAGE> 45
MARKET PRICES AND DIVIDENDS
The Common Shares are traded on the NYSE under the symbol "BIC." The
Company paid quarterly cash dividends totaling $1.06 in 1990, $0.56 in 1991,
$1.06 in 1992, $.72 in 1993, $.80 in 1994 and $.46 through the second quarter of
1995. During the first quarter of 1995 the Board of Directors voted an increase
in the regular quarterly dividend from $.20 per Common Share to $0.23 per Common
Share.
Under the terms of the Merger Agreement, the Company will not pay the
regular quarterly cash dividend otherwise payable on October 30, 1995, even if
the Merger is consummated subsequent to such date. See "The
Merger -- General -- Conduct of Business Pending the Merger." Although there can
be no assurance as to whether the proposed transaction will be effected, it is
currently anticipated that the Merger will be completed in late October or early
November of 1995.
The following table sets forth, for the calendar periods indicated, the
high and low sales prices per Common Share, as quoted on the NYSE.
<TABLE>
<CAPTION>
SALES PRICES
PER COMMON
SHARE
--------------
CALENDAR PERIODS HIGH LOW
--------------------------------------------------------------------- ---- ---
<S> <C> <C>
1993
First Quarter........................................................ $41 $30 7/8
Second Quarter....................................................... 33 7/8 26
Third Quarter........................................................ 31 3/8 27
Fourth Quarter....................................................... 33 5/8 27
1994
First Quarter........................................................ $31 7/8 $28
Second Quarter....................................................... 29 1/4 26 1/2
Third Quarter........................................................ 30 7/8 28
Fourth Quarter....................................................... 30 25 5/8
1995
First Quarter........................................................ $32 3/4 $28 1/4
Second Quarter....................................................... 39 3/8 30 5/8
Third Quarter (through September ).................................
</TABLE>
On May 18, 1995, the last full trading day prior to the public announcement
of the Proposal, the last reported sale price per Common Share on the NYSE was
$35 3/4. On August 15, 1995, the last full trading day prior to the public
announcement that the parties had entered into the Merger Agreement, the last
reported sale price per Common Share on the NYSE was $39 1/4. On September ,
1995, the last reported sale price per Common Shares on the NYSE was
$ . HOLDERS OF COMMON SHARES ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE COMMON SHARES.
40
<PAGE> 46
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The following table sets forth selected consolidated historical financial
data of the Company. The selected financial data should be read in conjunction
with the Consolidated Financial Statements of the Company, related notes and
other financial information incorporated by reference into this Proxy Statement.
The selected financial data at July 2, 1995 and July 3, 1994 and for the six
month periods then ended is unaudited but includes, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
operations and the financial position at and for each of the interim periods
presented. Operating results for the six months ended July 2, 1995 are not
necessarily indicative of the results to be expected for the full year. The
following summary is qualified in its entirety by reference to such financial
statements, related notes and other financial information.
BIC CORPORATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------- AT END OF OR FOR FISCAL YEARS
JULY 2, JULY 3, ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(U.S. DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales.......................... $257,413 $241,616 $475,118 $439,311 $417,377 $369,171 $329,246
Income before income taxes,
extraordinary credit and
cumulative effect of changes in
accounting principles............ 48,234 43,486 87,207 73,986 67,278 46,616 41,067
Net income......................... 28,622 25,357 51,021 34,964 39,935 28,059 24,055
Ratio of earnings to fixed
charges(1)....................... -- -- -- -- -- -- --
Per share:(2)
Income before extraordinary
credit and cumulative effect of
changes in accounting
principles..................... 1.21 1.10 2.19 1.90 1.70 1.12 0.92
Net income....................... 1.21 1.08 2.17 1.48 1.70 1.16 0.99
Cash dividends................... 0.46 0.40 0.80 0.72 1.06 0.56 1.06
BALANCE SHEET DATA
Working Capital.................... 123,116 93,157 107,816 77,232 71,469 106,284 111,624
Long-term debt..................... 0 0 0 0 0 0 0
Total assets....................... 440,573 386,164 358,687 336,216 308,466 280,205 257,107
Total assets less research and
development and excess of assets
acquired over book value......... 428,683 372,575 345,947 321,778 292,329 280,205 257,107
Shareholders' equity............... 261,447 240,638 247,917 226,688 209,366 195,515 190,187
Book value per share............... 11.10 10.21 10.52 9.62 8.89 8.30 7.85
</TABLE>
- ---------------
(1) The Company had no fixed charges in any of the periods presented.
(2) Per share amounts have been retroactively restated to reflect the 1992 share
split effected in the form of a 100% share dividend. Cash dividends per
share represent the total dividends paid each year. The 1992 and 1990
dividends included a special cash dividend of $0.50 per share.
41
<PAGE> 47
OWNERSHIP OF COMMON SHARES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of the date of this
Proxy Statement concerning the beneficial ownership of Common Shares by each
person known by the Company to own more than 5% of its Common Shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
--------------------- ----------------- --------
<S> <C> <C>
Bruno Bich.............................................. 18,154,848(1) 77.1%
BIC Corporation
Milford, Connecticut
Societe BIC S.A. ....................................... 14,829,836(2) 62.9%
9, rue Petit
92110 Clichy, France
</TABLE>
- ---------------
(1) Includes:
(a) 14,829,836 shares owned by Parent subject to the Voting Trust Agreement
. See "Special Factors -- Interest of Certain Persons in the
Merger -- Voting Trust Agreement;"
(b) 2,400,000 shares which are subject to the Voting Trust Agreement and an
additional 117,480 shares not subject to the Voting Trust Agreement,
all of which are owned indirectly by Bruno Bich, in trust for the
benefit of Bruno Bich and his family;
(c) 541,406 shares which are subject to the Voting Trust Agreement, owned
directly by Francois Bich, a brother of Bruno Bich;
(d) 141,406 shares which are subject to the Voting Trust Agreement, owned
directly by Bruno Bich;
(e) 67,200 shares which are owned indirectly by Bruno Bich, in trust for
the benefit of Bruno Bich's minor children;
(f) 55,500 shares which are not subject to the Voting Trust Agreement, held
in the name of Bruno Bich's minor children; and
(g) 2,020 shares which are not subject to the Voting Trust Agreement, owned
directly by Bruno Bich.
With the exception of the 2,541,406 shares subject to the Voting Trust
Agreement (the sum of the shares subject to the Voting Trust Agreement
identified in clauses (b) and (d)), Bruno Bich's interest in all other
shares subject to the Voting Trust Agreement arises solely from his being
Voting Trustee under the Voting Trust Agreement and he disclaims any
beneficial interest in such shares.
(2) Common Shares held by Parent subject to the Voting Trust Agreement.
42
<PAGE> 48
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information as of July 31, 1995,
with respect to the number of Common Shares of the Company owned by each
director and executive officer of the Company (other than Bruno Bich, whose
ownership of Common Shares is described above) and all directors and officers as
a group. Each individual has sole power to vote and sole power to dispose of all
of his Common Shares.
<TABLE>
<CAPTION>
NAME OF AMOUNT OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(A) CLASS
-------------------------------------------------------- -------------------- ----------
<S> <C> <C>
Alexander Alexiades..................................... 24,000 *
Robert E. Allen......................................... 2,000 *
David W. Heleniak....................................... 1,000 *
Antoine G. Treuille..................................... 1,200 *
Raymond Winter.......................................... 5,664 *
Robert L. Macdonald..................................... 2,788 *
Al D'Addario............................................ 1,574 *
James K. Palmer......................................... 2,779 *
Thomas M. Kelleher...................................... 1,374 *
Jack Teague............................................. 432 *
Directors and Executive Officers as a group (10 persons,
excluding Bruno Bich)................................. 42,811 *
</TABLE>
- ---------------
(a) Represents all Common Shares held as of July 31, 1995, including holdings
through the Company's 401(k) Plan.
* Each individual has stock holdings of less than 1%.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS OF PARENT AND MERGECO
As set forth in "Interest of Certain Persons in the Merger," certain
directors and executive officers of the Company are also directors and executive
officers of Parent and Mergeco. With the exception of the ownership of the
Common Shares by certain of such persons set forth in "Ownership of Common
Shares -- Security Ownership of Directors and Executive Officers of the
Company," no director or executive officer of Parent or Mergeco owns any Common
Shares.
TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES
On August 17 and 18, 1995, Bruno Bich sold in market transactions an
aggregate of 150,000 Common Shares not subject to the Voting Trust Agreement for
$39.50 per share, or an aggregate of approximately $5.9 million. Certain
executive officers of the Company are participants in the Company's 401(k)
Savings and Investment Plan (the "401(k) Plan") and allocate some or all of
their contributions under such plan towards purchases of Common Shares for their
accounts. As of July 31, 1995, participants in the 401(k) Plan beneficially
owned an aggregate of 200,103 Common Shares. Participants in a noncontributory
401(k) Plan for certain unionized employees of the Company (the "Employee Plan")
owned as of such date an aggregate of 150,951 Common Shares. Fleet Bank, as
trustee under the 401(k) Plan, purchased in market transactions 1,795 Common
Shares for $39.375 per share on July 6, 1995, 2,000 Common Shares for $39.00 per
share on July 25, 1995, 1,755 Common Shares for $39.125 per share on July 27,
1995 and 1,274 Common Shares for $39.00 per share on August 9, 1995. Fleet Bank,
as trustee under the Employee Plan, purchased in market transactions 1,200
Common Shares for $39.00 per share on July 5, 1995, 951 Common Shares for
$38.875 per share on August 2, 1995 and 892 Common Shares for $39.00 per share
on August 8, 1995. Except as set forth above, since June 28, 1995, 60 days prior
to the filing of the Schedule 13E-3, none of Parent, the Company, Mergeco, the
Voting Trustee, any majority-owned subsidiary thereof, any director or executive
officer thereof, and no pension, profit-sharing or similar plan of Parent, the
Company or Mergeco has effected any purchases or sales of Common Shares. In
addition, none of Parent, the Company, the Voting Trustee or Mergeco has
purchased any Common Shares since January 1, 1993.
43
<PAGE> 49
MANAGEMENT OF PARENT, MERGECO AND THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
Set forth below is the name and business address of each person who is a
director or executive officer of Parent, the present principal occupation or
employment of each such person and the name, principal business and address of
the corporation or other organization in which such occupation or employment of
each such person is conducted and the material occupations, positions, offices
and employment and the name, principal business and address of any corporation
or other organization in which any material occupation, position, office or
employment of each such person was held during the last five years. Unless
otherwise indicated, the address of each such person is and has been for the
past five years that of the Parent at 9, rue Petit 92110 Clichy, France. Unless
otherwise indicated, each person listed below is a citizen of France.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ------------------------------------------------------------
<S> <C>
Bruno Bich.................... Chairman of the Board and Chief Executive Officer since May
1993. Director since June 1986. Chairman of the Board and
Chief Executive Officer of the Company since January 8,
1992. President and Chief Executive Officer of the Company
from 1983 to 1992. Director of the Company since 1971.
Citizen of France and the United States.
Edouard Buffard............... Director since September 1954. Executive Vice President
since September 1972.
Claude Bich................... Director and Executive Vice President since June 1973.
Francois Bich................. Director since September 1977. Executive Vice-President
since May 1978.
Marie-Aimee Bich-Dufour....... Executive Vice-President since March 1995. Member of the
Paris Bar and practising avocat, Cabinet Vaisse Lardin et
Associes, 51 avenue Montaigne, 75008 Paris, France, from
January 1983 to February 1995.
Jacques-Henri Delaage......... Chief Financial Officer for more than five years.
Gaston Pirlot................. Director since May 1995. Director of European Affairs since
January 1995. Chairman of the Board of Conte, 6 rue Gerhard
Hansen, 62205 Boulogne, Sur Mer, France, since November
1992. Director of BIC BENELUX, Chaussee de Huecht, 55 1030
Bruxelles, Belgium, since March 1987. Citizen of Belgium.
Jean-Claude d'Entreves........ Director of International Development since April 1995.
Deputy Chief Executive Officer, September 1989 to May 1991.
Chairman and Chief Executive Officer of BIC Italia, Casella
Postale 13056, 20010 Milan, Italy, from May 1991 to March
1995. Citizen of Italy and the United Kingdom.
Charles de Menthon............ Export Manager for more than five years.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF MERGECO
Set forth below is the name of each person who is a director or executive
officer of Mergeco. The present principal occupation or employment of each such
person, their five year employment history, their citizenship and their business
address is set forth above under "-- Directors and Executive Officers of
Parent".
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- ----------------------------------- --------------------------------------------------------
<S> <C>
Bruno Bich......................... Director; President and Treasurer; Chief Executive
Officer.
Marie-Aimee Bich-Dufour............ Director; Vice President and Secretary.
Gaston Pirlot...................... Director.
</TABLE>
44
<PAGE> 50
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is the name and business address of each person who is a
director or executive officer of the Company and, unless disclosed elsewhere
herein, the present principal occupation or employment of each such person and
the name, principal business and address of the corporation or other
organization in which such occupation or employment of each such person is
conducted and the material occupation, positions, offices and employment and the
name, principal business and address of any corporation or other organization in
which any material occupational position, office or employment of each such
person was held during the last five years. Unless otherwise indicated, the
business address of each such person is, and has been for the past five years,
that of the Company at 500 BIC Drive, Milford, CT 06460. Unless otherwise
indicated, each person listed below is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Alexander Alexiades................ Vice President and Treasurer from 1973 to March 1993.
Director since 1971.
Robert E. Allen.................... Managing Director with the consulting firm of Redding
Consultants, Inc., 11 Grumman Hill, Wilton, CT, since
1982. Director since 1992.
Bruno Bich......................... Chairman of the Board and Chief Executive Officer since
1992. President and Chief Executive Officer from 1983 to
1992. Director since 1971. Chairman of the Board and
Chief Executive Officer of Societe BIC S.A. since June
1993. Director since 1986. Citizen of France and the
United States.
Al D'Addario....................... Vice President -- Manufacturing, since September 1993.
Manager -- Manufacturing from January 1992 to September
1993. Plant Manager -- Lighter/Shaver from October 1991
to January 1992. Plant Manager -- Lighters from January
1989 to October 1991.
David W. Heleniak.................. Partner with the law firm of Shearman & Sterling, 599
Lexington Avenue, New York, NY 10022 since 1981.
Director since 1992.
Thomas M. Kelleher................. General Counsel and Secretary since 1994. Corporate
Counsel and Secretary from 1992 to 1994. Corporate
Counsel and Assistant Secretary from 1988 to 1992.
Robert L. Macdonald................ Vice President-Finance and Treasurer since 1993.
Controller from 1990 to 1993. Citizen of the United
Kingdom.
Antoine G. Treuille................ Senior Vice President with the investment firm of Desai
Capital Management, Inc., 540 Madison Avenue, New York,
NY, since 1992. Executive Vice President with the
investment firm of Entrecanales Inc., 767 Fifth Avenue,
New York, NY, from 1985 to 1992. Director since 1992.
Raymond Winter..................... President and Chief Operating Officer since 1992. Vice
President -- Sales & Marketing from 1985 to 1986 and
1991 to 1992. President of BIC Inc., 155 Oakdale Rd.,
Downsview, Ontario, Canada, from 1986 to 1994. Director
since 1992. Citizen of Canada.
</TABLE>
45
<PAGE> 51
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements and schedules included in the
Company's Annual Report on Form 10-K, incorporated by reference in this Proxy
Statement, have been audited by Deloitte & Touche LLP, independent public
accountants, as stated in their reports with respect thereto. It is expected
that representatives of Deloitte & Touche LLP will be present at the Special
Meeting, both to respond to appropriate questions of shareholders of the Company
and to make a statement if they desire.
SHAREHOLDER PROPOSALS
Under the NYBCL and the By-Laws of the Company, no other business may be
transacted at the Special Meeting. If the Merger is not for any reason
consummated, then, in accordance with regulations issued by the SEC, shareholder
proposals intended for presentation at the Company's 1996 annual meeting of
shareholders must be received by the Secretary of the Company no later than
, 1995, if such proposals are to be considered for inclusion in
the Company's proxy statement. Proposals should be mailed via certified mail and
addressed to Thomas M. Kelleher, General Counsel and Secretary, BIC Corporation,
500 BIC Drive, Milford CT 06460.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
001-06832) are incorporated by reference in this Proxy Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1995;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
April 1, 1995 and July 2, 1995; and
3. The Company's Current Reports on Form 8-K filed on May 23, 1995 and
August 21, 1995.
All documents and reports filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Proxy Statement and prior to the date of the Special Meeting shall be deemed to
be incorporated by reference in this Proxy Statement and to be a part hereof
from the respective dates of filing of such documents or reports.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
TO SUCH DOCUMENTS) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, ON WRITTEN OR ORAL
REQUEST TO BIC CORPORATION, 500 BIC DRIVE, MILFORD, CONNECTICUT 06460,
ATTENTION: THOMAS M. KELLEHER, GENERAL COUNSEL AND SECRETARY, TELEPHONE: (203)
783-2074. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL
MEETING, REQUESTS MUST BE RECEIVED BY , 1995.
46
<PAGE> 52
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the SEC. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities of the SEC at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and
at the regional offices of the SEC located at 7 World Trade Center, 13th Floor,
Suite 1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th
Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material
can also be obtained at prescribed rates by writing to the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. In addition, such reports, proxy statements and other information can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Proxy Statement includes information required by the SEC to be
disclosed pursuant to Rule 13e-3 under the Exchange Act, which governs so-called
"going private" transactions by certain issuers or their affiliates. In
accordance with that rule, the Company, Parent, Mergeco and Bruno Bich, as
Voting Trustee, have filed with the Commission, under the Exchange Act, a
Schedule 13E-3 with respect to the Merger. This Proxy Statement does not contain
all of the information set forth in the Schedule 13E-3, parts of which are
omitted in accordance with the regulations of the SEC. The Schedule 13E-3, and
any amendments thereto, including exhibits files as a part thereof, will be
available for inspection and copying at the offices of the SEC as set forth
above.
MISCELLANEOUS
Where information contained in this Proxy Statement rests particularly
within the knowledge of a person other than the Company, the Company has relied
upon information furnished by such person or contained in filings made by such
person with the SEC.
By Order of the Board of Directors
Thomas M. Kelleher
General Counsel and Secretary
47
<PAGE> 53
ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
SOCIETE BIC, S.A.
BIC MERGER CORPORATION,
BRUNO BICH,
as VOTING TRUSTEE
AND
BIC CORPORATION
Dated as of August 15, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 54
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
(NOT PART OF THE AGREEMENT)
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
PARTIES............................................................................ A-1
PREAMBLE........................................................................... A-1
ARTICLE I
THE MERGER
1.1. The Merger.................................................................... A-1
1.2. Certificate of Incorporation.................................................. A-1
1.3. By-Laws....................................................................... A-1
1.4. Directors and Officers........................................................ A-2
1.5. Effective Time................................................................ A-2
ARTICLE II
CONVERSION OF SHARES
2.1. Company Common Shares......................................................... A-2
2.2. Dissenting Shares............................................................. A-2
2.3. Purchaser Common Shares....................................................... A-3
2.4. Exchange of Shares............................................................ A-3
2.5. Employee Stock Plans.......................................................... A-4
2.6. Withholding Rights............................................................ A-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Organization.................................................................. A-4
3.2. Capitalization................................................................ A-4
3.3. Authorization of this Agreement; Recommendation of Merger..................... A-5
3.4. Governmental Filings; No Conflicts............................................ A-5
3.5. Disclosure and Financial Statements; No Undisclosed Liabilities............... A-6
3.6. Vote Required................................................................. A-6
3.7. Opinion of Financial Advisor.................................................. A-6
3.8. Finders and Investment Bankers................................................ A-6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGECO
4.1. Organization.................................................................. A-6
4.2. Capitalization................................................................ A-7
4.3. Authorization of this Agreement............................................... A-7
4.4. Governmental Filings; No Violations........................................... A-7
4.5. Financial Ability to Perform.................................................. A-8
4.6. Formation of Mergeco; No Prior Activities..................................... A-8
4.7. Finders and Investment Bankers................................................ A-8
</TABLE>
i
<PAGE> 55
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
ARTICLE V
COVENANTS
5.1. Conduct of the Business of the Company........................................ A-8
5.2. Activities of Mergeco; Shareholder Approval; Issuance of Mergeco Preferred
Shares........................................................................ A-8
5.3. Obligations of Mergeco........................................................ A-8
5.4. Access to Information......................................................... A-9
5.5. Shareholders' Meeting......................................................... A-9
5.6. Proxy Statement and Schedule 13E-3............................................ A-9
5.7. Best Efforts.................................................................. A-10
5.8. Consents...................................................................... A-10
5.9. Public Announcements.......................................................... A-10
5.10. Indemnification............................................................... A-10
5.11. Transfer Taxes................................................................ A-11
ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions to the Obligations of Each Party................................... A-12
6.2. Conditions to the Obligations of Parent, Mergeco and the Voting Trustee....... A-12
6.3. Conditions to the Obligations of the Company.................................. A-12
ARTICLE VII
CLOSING
7.1. Time and Place................................................................ A-13
7.2. Filings at the Closing........................................................ A-13
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1. Termination................................................................... A-13
8.2. Procedure and Effect of Termination........................................... A-13
ARTICLE IX
MISCELLANEOUS
9.1. Amendment and Modification.................................................... A-14
9.2. Waiver of Compliance; Consents................................................ A-14
9.3. Survival of Warranties........................................................ A-14
9.4. Notices....................................................................... A-15
9.5. Assignment; Parties in Interest............................................... A-15
9.6. Expenses...................................................................... A-16
9.7. Specific Performance.......................................................... A-16
9.8. Governing Law................................................................. A-16
9.9. Counterparts.................................................................. A-16
9.10. Interpretation................................................................ A-16
9.11. Entire Agreement.............................................................. A-16
</TABLE>
ii
<PAGE> 56
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 15, 1995, among Societe
BIC S.A. ("Parent"), a societe anonyme organized under the laws of France, BIC
Merger Corporation ("Mergeco"), a New York corporation more than two-thirds of
the outstanding capital stock of which is owned by Parent, solely for purposes
of Section 5.5 hereof, Bruno Bich, as voting trustee (the "Voting Trustee")
under a voting trust agreement, dated as of February 5, 1991, as amended (the
"Voting Trust Agreement"), among Parent, the Company (as hereinafter defined)
and the voting trustees and certain shareholders of the Company named therein,
and BIC Corporation, a New York corporation (the "Company").
WHEREAS, Parent and the other shareholders of Mergeco own an aggregate of
approximately 78% of the shares of common stock, par value $1.00 per share (the
"Common Shares") of the Company and have proposed to the Board of Directors of
the Company that Parent acquire the remaining Common Shares (the "Public Shares;
and the holders thereof; being referred to as the "Public Shareholders");
WHEREAS, the Board of Directors of each of Parent and Mergeco believes it
is in the best interest of each of Parent and Mergeco and their respective
shareholders, and the Board of Directors of the Company believes it is in the
best interest of the Company and its shareholders, to consummate the merger of
Mergeco with and into the Company (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, a Special Committee of the Board of Directors of the Company (the
"Special Committee") has determined that the Merger is fair to, and in the best
interests of, the Public Shareholders, and recommended the approval and adoption
of this Agreement to the Board of Directors of the Company; and
WHEREAS, the Boards of Directors (or equivalent governing bodies) of
Parent, Mergeco and the Company have approved and adopted this Agreement and
approved the Merger upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the representations, warranties and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. (a) As promptly as practicable following the satisfaction
or waiver of the conditions set forth in Article VI hereof, and in accordance
with the provisions of this Agreement and the provisions of the New York
Business Corporation Law (the "NYBCL"), the parties hereto shall cause Mergeco
to be merged with and into the Company, and the Company shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of New York. At the
Effective Time (as hereinafter defined), the separate corporate existence of
Mergeco shall cease.
(b) The Merger shall have the effects specified in the NYBCL. The Surviving
Corporation shall possess all the rights, privileges, immunities, powers and
purposes of Mergeco and the Company and shall assume and become liable for all
the liabilities, obligations and penalties of the Company and Mergeco.
1.2. Certificate of Incorporation. The Certificate of Incorporation of the
Company in effect immediately prior to the Effective Time shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with provisions thereof and the NYBCL.
1.3. By-Laws. The By-Laws of the Company in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation until
thereafter amended, altered or repealed as provided therein and the NYBCL.
A-1
<PAGE> 57
1.4. Directors and Officers. The directors and officers of the Company
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and By-Laws of the Surviving Corporation.
1.5. Effective Time. As soon as practicable following the Closing (as
defined in Section 7.1 of this Agreement), and provided that this Agreement
shall not have been terminated pursuant to Article VIII hereof, the Company and
Mergeco will cause a certificate of merger (the "Certificate of Merger"),
together with any other documents required by law to effectuate the Merger, to
be executed, verified and delivered for filing by the New York Department of
State as provided in Section 904 of the NYBCL. The Merger shall become effective
on the date on which the Certificate of Merger has been filed by the New York
Department of State. The date and time when the Merger shall become effective is
herein referred to as the "Effective Time."
ARTICLE II
CONVERSION OF SHARES
2.1. Company Common Shares. (a) Each Common Share issued and outstanding
immediately prior to the Effective Time (except for (i) Common Shares then owned
beneficially or of record by the shareholders of Mergeco, (ii) Dissenting Shares
(as defined in Section 2.2 hereof) and (iii) Common Shares held in the Company's
treasury) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive $40.50 in cash (such
cash amount being referred to hereinafter as the "Merger Consideration"),
payable to the holder thereof, without interest thereon, upon surrender of the
certificate representing such Common Share.
(b) Each Common Share issued and outstanding immediately prior to the
Effective Time which is then owned beneficially or of record by the shareholders
of Mergeco shall, by virtue of the Merger and without any action on the part of
the holder thereof, be canceled and retired and cease to exist, without any
conversion thereof.
(c) Each Common Share issued and held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Merger, be canceled and
retired and cease to exist, without any conversion thereof.
(d) At the Effective Time the holders of certificates representing Common
Shares shall cease to have any rights as shareholders of the Company, except
such rights, if any, as they may have pursuant to the NYBCL, and, except as
aforesaid, their sole right shall be the right to receive cash as aforesaid.
2.2. Dissenting Shares. (a) Notwithstanding anything in this Agreement to
the contrary, any Common Shares which are outstanding immediately prior to the
Effective Time and which are held by shareholders who have not voted such shares
in favor of the approval of the Merger and adoption of this Agreement and who
shall have properly elected to dissent in the manner provided in Sections 623
and 910 of the NYBCL ("Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration, but the holders
thereof shall be entitled to payment of the fair value of such shares in
accordance with the provisions of Sections 623 and 910 of the NYBCL; provided,
however, that in the case of (i) any holder of Dissenting Shares who shall
subsequently deliver a written withdrawal of his election to dissent (in
accordance with Section 623(e) of the NYBCL), or (ii) any holder who fails to
establish his entitlement to dissenters' rights as provided in Sections 623 and
910 of the NYBCL, or (iii) any holder who shall, for any other reason, become
ineligible to dissent, each Common Share held by any such holder shall thereupon
be deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the Merger Consideration, without any
interest thereon.
(b) The Company shall give Parent (i) prompt written notice of any written
election to dissent, withdrawals of any election to dissent and any other
documents served pursuant to Sections 623 and 910 of the NYBCL received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to any election to dissent under Sections 623 and 910 of the NYBCL.
Except with the prior written
A-2
<PAGE> 58
consent of Parent, the Company will not voluntarily make any payment with
respect to any election to dissent and will not settle or offer to settle any
such election.
2.3. Purchaser Common Shares. Each common share, par value $.001 per share
(the "Mergeco Common Shares") and each preferred share, par value $.001 per
share (the "Mergeco Preferred Shares"; and together with the Mergeco Common
Shares; the "Mergeco Shares"), of Mergeco issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and exchangeable for
one fully paid and non-assessable common share, par value $1.00 per share
("Surviving Corporation Common Shares"), of the Surviving Corporation. From and
after the Effective Time, each outstanding certificate theretofore representing
Mergeco Shares shall be deemed for all purposes to evidence ownership of and to
represent the same number of Surviving Corporation Common Shares.
2.4. Exchange of Shares. (a) Prior to the Effective Time, Parent shall, or
Parent shall cause Mergeco to, deposit in trust with a bank or trust company
with offices in New York designated by Parent and reasonably satisfactory to the
Company (the "Paying Agent"), cash in an aggregate amount equal to the product
of (x) the number of Common Shares issued and outstanding immediately prior to
the Effective Time (other than (i) Common Shares owned beneficially or of record
by the shareholders of Mergeco, (ii) Dissenting Shares and (iii) Common Shares
held in the Company's treasury) and (y) the Merger Consideration (such amount
being hereinafter referred to as the "Exchange Fund"). The Paying Agent shall,
pursuant to irrevocable instructions, make the payments provided for in Section
2.1(a) of this Agreement out of the Exchange Fund. The Paying Agent shall invest
the Exchange Fund as Parent directs, in direct obligations of the United States
of America, obligations for which the full faith and credit of the United States
of America is pledged to provide for the payment of all principal and interest,
commercial paper obligations receiving the highest rating from either Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial banks
with capital exceeding $10 billion. Any net profit resulting from, or interest
or income produced by, such investments shall be payable to the Surviving
Corporation. Mergeco shall replace any monies lost through any investment made
pursuant to this Section 2.4(a) prior to the Effective Time, and the Surviving
Corporation shall replace any monies lost through any investment made pursuant
to this Section 2.4(a) after the Effective Time. The Exchange Fund shall not be
used for any other purpose except as provided in this Agreement.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Paying Agent to mail to each record holder (other than the
shareholders of Mergeco) as of the Effective Time of an outstanding certificate
or certificates which immediately prior to the Effective Time represented Common
Shares (the "Certificates") a form letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent)
and instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor cash in an amount equal to the
product of the number of shares represented by such Certificate and the Merger
Consideration, less any applicable withholding tax, and such Certificate shall
forthwith be canceled. No interest shall be paid or accrued on the cash payable
upon the surrender of the Certificates. If payment is to be made to a person
other than the person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other tax required by reason
of the payment to a person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Paying Agent and the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.4, each
Certificate (other than Certificates representing Common Shares owned
beneficially or of record by the shareholders of Mergeco, Certificates
representing Dissenting Shares in respect of which appraisal rights are
perfected and Certificates representing Common Shares held in the Company's
treasury) shall represent for all purposes the right to receive the Merger
Consideration in cash multiplied by the number of Common Shares evidenced by
such Certificate, without any interest thereon.
A-3
<PAGE> 59
(c) After the Effective Time there shall be no transfers on the stock
transfer books of the Surviving Corporation of Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for cash as provided in this Article II.
(d) Any portion of the Exchange Fund which remains unclaimed by the
shareholders of the Company for 180 days after the Effective Time (including any
interest, dividends, earnings or distributions received with respect thereto)
shall be repaid to the Surviving Corporation, upon demand. Any shareholders of
the Company who have not theretofore complied with Section 2.4(b) shall
thereafter look only to the Surviving Corporation for payment of their claim for
the Merger Consideration per Common Share, without any interest thereon, but
shall have no greater rights against the Surviving Corporation than may be
accorded to general creditors of the Surviving Corporation under New York law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to any holder of Certificates formerly representing Common
Shares for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
2.5. Employee Stock Plans. The Company shall take all actions necessary to
amend the Company's Local 134 Employees' Share Purchase Plan, 401(k) Savings and
Investment Plan and a separate, non-contributory 401(k) plan for certain
unionized employees of the Company on or prior to the Closing to delete as an
investment option thereunder purchases of Common Shares.
2.6. Withholding Rights. Parent, Mergeco, the Surviving Corporation and
the Paying Agent shall be entitled to deduct and withhold from the amounts
payable (including the Merger Consideration) pursuant to this Agreement to any
holder of Common Shares such amounts as Parent, Mergeco, the Surviving
Corporation or the Paying Agent is required to deduct and withhold with respect
to the making of such payment under applicable tax law. To the extent that
amounts are so deducted and withheld by Parent, Mergeco, the Surviving
Corporation or the Paying Agent, such amounts shall be treated for all purposes
of this Agreement as having been paid to the relevant holder of Common Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Mergeco as follows:
3.1. Organization. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and
to conduct its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or otherwise),
properties or assets of the Company and its subsidiaries taken as a whole
(a "Material Adverse Effect").
3.2. Capitalization. The authorized capital stock of the Company
consists of (i) 50,000,000 Common Shares, of which, on August 10, 1995,
there were 23,559,244 shares issued and outstanding and (ii) 1,000,000
shares of preferred stock, par value $1.00 per share, of which, on August
10, 1995, there were no shares issued and outstanding. All of the Common
Shares are entitled to vote on matters submitted to the shareholders of the
Company. Except as set forth above, there are no shares of capital stock of
the Company authorized, issued or outstanding. All issued and outstanding
Common Shares are duly authorized, validly issued, fully paid and
nonassessable. Each of the Company's subsidiaries is listed in the
Company's Annual Report on Form 10-K for the fiscal year ending January 1,
1995 (the "1994 Form 10-K"), and except as and to the extent set forth in
the 1994 Form 10-K, the Company owns directly or indirectly all of the
issued and outstanding capital stock of each of its subsidiaries, free and
clear of all liens, pledges, security interests, claims or other
encumbrances. There are not now, and at the Effective Time there will not
be, any existing stock option or similar plans or options, warrants, calls,
subscriptions, preemptive rights or other rights or other agreements or
commitments whatsoever
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obligating the Company or any of its subsidiaries to issue, transfer,
deliver or sell or cause to be issued, transferred, delivered or sold any
additional shares of capital stock of the Company or any of its
subsidiaries, or obligating the Company or any of its subsidiaries to
grant, extend or enter into any such agreement or commitment.
3.3. Authorization of this Agreement; Recommendation of
Merger. (a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to approval by the
shareholders of the Company, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized and approved by the Company's Board of Directors and, except for
the adoption of this Agreement by the shareholders of the Company, no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company,
and subject only to adoption hereof by its shareholders (and assuming the
due authorization, execution and delivery hereof by Parent, Mergeco and the
Voting Trustee), this Agreement constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms.
(b) The Board of Directors of the Company (at a meeting duly called
and held at which a quorum was present) has determined that the Merger is
fair to and in the best interests of the shareholders of the Company and
has resolved to recommend approval of the Merger and adoption of this
Agreement by the shareholders of the Company; provided, however, that such
recommendation may be withdrawn, modified or amended to the extent the
Company's Board of Directors deems it appropriate to do so in the exercise
of its fiduciary duties under applicable law, based upon the advice of
independent legal counsel (which may include the Company's regularly
engaged legal counsel).
(c) The Special Committee has determined that the Merger is fair to,
and in the best interests of, the Public Shareholders, and has recommended
the approval and adoption of this Agreement to the Board of Directors of
the Company and to the Public Shareholders; provided, however, that such
recommendation may be withdrawn, modified or amended to the extent that the
Special Committee deems it appropriate to do so in the exercise of its
fiduciary duties under applicable law, based upon the advice of legal
counsel to the Special Committee.
3.4. Governmental Filings; No Conflicts. Except for (a) filings
required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (b) the filing and recordation of appropriate merger
documents as required by the NYBCL and, if applicable, the laws of other
states in which the Company is qualified to do business, (c) filings under
securities or blue sky laws or takeover statutes of the various states, (d)
the listing requirements of the New York Stock Exchange and (e) filings in
connection with any applicable transfer or other taxes in any applicable
jurisdiction, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation
by the Company of the transactions contemplated by this Agreement, the
failure to make or obtain which would have, individually or in the
aggregate, a Material Adverse Effect or a material adverse effect on the
ability of the Company to consummate the transactions contemplated hereby.
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby nor compliance by the Company with
any of the provisions hereof will (i) conflict with or result in any
violation of any provision of the Restated Certificate of Incorporation or
By-Laws of the Company, (ii) result in a violation or breach of, or
constitute a default (or give rise to any right of termination,
cancellation or acceleration) under, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which the Company
or any of its subsidiaries is a party or by which any of them or any of
their properties or assets is bound or (iii) assuming the truth of the
representations and warranties of Parent and Mergeco contained herein and
their compliance with all agreements contained herein and assuming the due
making or obtaining of all filings, permits, authorizations, consents and
approvals referred to in the preceding sentence, violate any statute, rule,
regulation, order, injunction, writ or decree of any public body or
authority by which the Company or any of its subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing
clauses (ii) and (iii) conflicts, violations, breaches or defaults which,
either individually or in the aggregate, would not
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have a Material Adverse Effect or a material adverse effect on the
Company's ability to consummate the transactions contemplated hereby.
3.5. Disclosure and Financial Statements; No Undisclosed
Liabilities. (a) As of the date of this Agreement, the Company has filed
all forms, reports and documents with the Securities and Exchange
Commission (the "SEC") since January 1, 1992, required to be filed by it
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and the Exchange
Act and the rules and regulations promulgated thereunder (collectively, the
"Disclosure Statements"), all of which have complied in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder. As of
the date of this Agreement, none of such Disclosure Statements, at the time
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
As of the date of this Agreement, the consolidated balance sheets and
the related statements of consolidated income, consolidated cash flows and
consolidated retained earnings (including the notes and schedules thereto)
of the Company and its subsidiaries contained or incorporated by reference
in the Disclosure Statements have been prepared from, and are in accordance
with, the books and records of the Company and its consolidated
subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, and present fairly the consolidated financial position of
the Company and its subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for the
periods presented therein, in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis,
except as otherwise noted therein, and subject in the case of quarterly
financial statements to normal year-end audit adjustments and except that
the quarterly financial statements do not contain all of the footnote
disclosures required by GAAP.
(b) As of the date of this Agreement, there is no liability of the
Company or any subsidiary thereof of any nature, whether absolute, accrued,
contingent or otherwise, which, individually or in the aggregate, is
material to the Company and its subsidiaries, taken as a whole, other than
as disclosed in the Disclosure Statements or incurred in the ordinary
course of business since the end of the first quarter of the Company's 1995
fiscal year.
3.6. Vote Required. The affirmative vote of the holders of two-thirds
of the outstanding Common Shares is the only vote of the holders of any
class or series of capital stock of the Company necessary to approve the
Merger under the NYBCL.
3.7. Opinion of Financial Advisor. The Special Committee has received
the opinion of Goldman, Sachs & Co. ("Goldman Sachs") dated August 15, 1995
that, as of the date of such opinion, the $40.50 per Common Share in cash
to be received by the Public Shareholders pursuant to this Agreement is
fair to the Public Shareholders.
3.8. Finders and Investment Bankers. All negotiations relating to
this Agreement and the transactions contemplated hereby have been carried
on without the intervention of any person acting on behalf of the Company
in such manner as to give rise to any valid claim against Parent, Mergeco,
the Company or the Surviving Corporation for any broker's or finder's fee
or similar compensation, except for Goldman Sachs, whose fees shall be paid
by the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGECO
Parent and Mergeco each jointly and severally represent and warrant to the
Company as follows:
4.1. Organization. Each of Parent and Mergeco is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each has all requisite
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corporate power and authority to own, lease and operate its properties and
to conduct its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a material
adverse effect on the business or financial condition of Parent and its
subsidiaries taken as a whole. More than two-thirds of the outstanding
Mergeco Shares are owned beneficially and of record by Parent.
4.2. Capitalization. The authorized capital stock of Mergeco on
August 10, 1995 consisted of (i) 23,559,294 Mergeco Common Shares, of which
there were 18,154,848 shares issued and outstanding, and (ii) 5,254,396
Mergeco Preferred Shares, of which there were no shares issued and
outstanding. All of the Mergeco Common Shares are entitled to vote on
matters submitted to the shareholders of Mergeco. Except as set forth
above, there are no shares of capital stock of Mergeco authorized, issued
or outstanding. All issued and outstanding Mergeco Common Shares are duly
authorized, validly issued, fully paid and nonassessable. Except as
provided in Section 5.2(c), there are not now, and, at the Effective Time
there will not be, any existing stock option or similar plans or options,
warrants, calls, subscriptions, preemptive rights or other rights or other
agreements or commitments whatsoever obligating Mergeco or any of its
subsidiaries to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered or sold any additional shares of capital stock of
Mergeco, or obligating Mergeco to grant, extend or enter into any such
agreement or commitment.
4.3. Authorization of this Agreement. (a) Each of Parent and Mergeco
has all requisite corporate power and authority to execute and deliver this
Agreement and, subject to approval by the shareholders of Mergeco, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized and approved by the Boards of
Directors (or equivalent governing bodies) of Parent and Mergeco, and,
except for the adoption of this Agreement by the shareholders of Mergeco,
no other corporate proceedings on the part of Parent or Mergeco are
necessary to authorize this Agreement or, except as provided in Section
5.2(c), consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by each of Parent and Mergeco
and, in the case of Mergeco subject only to adoption hereof by its
shareholders (assuming the due authorization, execution and delivery hereof
by the Company) constitutes a valid and binding agreement of each of Parent
and Mergeco.
(b) The Voting Trustee has all requisite power and authority pursuant
to the Voting Trust Agreement to execute and deliver this Agreement and to
consummate the transactions on its part to be consummated that are
contemplated hereby. The execution and delivery of this Agreement has been
duly and validly authorized by the Voting Trustee pursuant to the Voting
Trust Agreement, and no further action on the part of the Voting Trustee is
necessary to authorize this Agreement or consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Voting Trustee and (assuming the due authorization,
execution and delivery hereof by the other parties hereto) constitutes a
valid and binding agreement of the Voting Trustee.
4.4. Governmental Filings; No Violations. Except for (a) filings
required by the applicable requirements of the Exchange Act, (b) the filing
and recordation of appropriate merger documents as required by the NYBCL,
(c) filings under the securities or blue sky laws or takeover statutes of
the various states and (d) filings in connection with any applicable
transfer or other taxes in any applicable jurisdiction, no filing with, and
no permit, authorization, consent or approval of, any public body or
authority is necessary for the consummation by Parent, Mergeco or the
Voting Trustee of the transactions contemplated by this Agreement, the
failure to make or obtain which is reasonably likely to impair the ability
of Parent, Mergeco or the Voting Trustee to perform their respective
obligations hereunder or to consummate the transactions contemplated
hereby. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor compliance by
Parent, Mergeco or the Voting Trustee with any of the provisions hereof
will (i) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws (or equivalent governing
instruments) of Parent or Mergeco, or the Voting Trust Agreement, (ii)
result in a violation or breach of, or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under, any note,
bond, mortgage,
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indenture, license, agreement or other instrument or obligation to which
any of Parent, Mergeco or the Voting Trustee is a party, or by which it or
any of its properties or assets is bound, or (iii) assuming the truth of
the representations and warranties of the Company hereunder and its
compliance with all agreements contained herein and assuming the due making
or obtaining of all filings, permits, authorizations, consents and
approvals referred to in the preceding sentence, violate any statute, rule,
regulation, order, injunction, writ or decree of any public body or
authority by which Parent, Mergeco or the Voting Trustee or any of their
respective properties or assets is bound, excluding from the foregoing
clauses (ii) and (iii) conflicts, violations, breaches or defaults which,
either individually or in the aggregate, are not reasonably likely to
impair materially the ability of Parent, Mergeco or the Voting Trustee to
perform their respective obligations hereunder or to consummate the
transactions contemplated hereby.
4.5. Financial Ability to Perform. Parent and Mergeco presently have,
and at the Effective Time will have, cash funds available sufficient to
consummate the transactions contemplated by this Agreement and to perform
their respective obligations under this Agreement.
4.6. Formation of Mergeco; No Prior Activities. Mergeco was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and,
except for this Agreement and any other agreements or arrangements
contemplated by this Agreement or in furtherance of the transactions
contemplated hereby, Mergeco has not and will not have incurred, directly
or indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
4.7. Finders and Investment Bankers. All negotiations relating to
this Agreement and the transactions contemplated hereby have been carried
on without the intervention of any person acting on behalf of Parent or
Mergeco in such manner as to give rise to any valid claim against Parent,
Mergeco, the Company or the Surviving Corporation for any broker's or
finder's fee or similar compensation, except for Donaldson, Lufkin &
Jenrette Securities Corporation, whose fees shall be paid by Parent.
ARTICLE V
COVENANTS
5.1. Conduct of the Business of the Company. During the period from the
date of this Agreement to the Effective Time, neither the Company nor any of its
subsidiaries will declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, or agree to do any of the foregoing; provided, that (a) if
the Merger has not been consummated by December 31, 1995, the Board of Directors
of the Company may after such date declare dividends in respect of its capital
stock and (b) any of the Company's direct or indirect wholly-owned subsidiaries
may declare, set aside or pay any dividend or other distribution with respect to
their capital stock.
5.2. Activities of Mergeco; Shareholder Approval; Issuance of Mergeco
Preferred Shares. (a) From the date of this Agreement to the Effective Time,
Mergeco will not conduct any business or engage in any activities of any nature
other than activities in connection with this Agreement or the transactions
contemplated hereby.
(b) As soon as practicable after the date hereof, Parent shall cause this
Agreement to be approved by the requisite vote of the shareholders of Mergeco.
(c) Prior to the Effective Time, Mergeco shall issue a number of voting
Mergeco Shares equal to the number of Public Shares.
5.3. Obligations of Mergeco. Parent shall take all actions necessary to
cause Mergeco to perform its obligations under this Agreement and to consummate
the Merger in accordance with the terms and conditions set forth in this
Agreement.
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5.4. Access to Information. Between the date of this Agreement and the
Effective Time, during normal business hours, upon reasonable notice and in such
a manner as will not unreasonably interfere with the conduct of the business of
the Company, the Company will (i) give Parent and its authorized representatives
reasonable access to all stores, offices, warehouses and other facilities and to
all books and records of the Company and its subsidiaries, (ii) permit Parent
and its authorized representatives to make such inspections as it may reasonably
require and (iii) cause its officers and those of its subsidiaries to furnish
Parent with a copy of each report, schedule and other document filed or received
by it during such period pursuant to the requirements of federal and state
securities laws and such financial and operating data and other information with
respect to the business and properties of the Company and its subsidiaries as
Parent may from time to time reasonably request.
5.5. Shareholders' Meeting. As soon as practicable, the Company, acting
through its Board of Directors, shall in accordance with applicable law, and
subject to the fiduciary duties under applicable law of the Board of Directors
(as determined by the Board of Directors in good faith after consultation with
independent legal counsel, which may include the Company's regularly engaged
legal counsel), take all steps necessary duly to call, give notice of, convene
and hold a special meeting of its shareholders (the "Shareholders' Meeting") for
the purpose of adopting and approving this Agreement and the transactions
contemplated hereby. The notice of such meeting shall contain the information
required to be included therein pursuant to the NYBCL. At such meeting, the
Voting Trustee will vote, or cause to be voted, all Common Shares then
beneficially owned by him on the record date for such meeting, in favor of the
approval of the Merger and adoption of this Agreement and the transactions
contemplated hereby.
5.6. Proxy Statement and Schedule 13E-3. (a) The Company will as soon as
practicable prepare and file with the SEC a proxy statement and a form of proxy,
in connection with the vote of the Company's stockholders with respect to the
Merger (such proxy statement, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the Company's
stockholders, being the "Proxy Statement"). The Company, Parent and Mergeco
shall together prepare and file a Transaction Statement on Schedule 13E-3 (the
"Schedule 13E-3") under the Exchange Act. Each of Parent, Mergeco and the
Company shall furnish all information concerning it, its affiliates and the
holders of its capital stock required to be included in the Proxy Statement and
the Schedule 13E-3 and, after consultation with each other, shall respond
promptly to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof and the Schedule 13E-3. The Company shall cause
the Proxy Statement to be mailed to its shareholders at the earliest practicable
time. The Proxy Statement shall include the respective recommendations of the
Company's Board of Directors to the shareholders of the Company and of the
Special Committee to the Public Shareholders, subject to the fiduciary duties
under applicable law of the directors of the Company or of the Company's
directors constituting the Special Committee (as determined by such directors in
good faith after consultation with independent legal counsel, which may include
the Company's regularly engaged legal counsel), in favor of the adoption and
approval of this Agreement and the transactions contemplated hereby. Subject to
the fiduciary duties under applicable law of the Company's directors (as advised
by independent legal counsel, which may include the Company's regularly engaged
legal counsel), the Company shall use its best efforts to obtain the necessary
approvals by its shareholders of this Agreement and the transactions
contemplated hereby. Notwithstanding anything to the contrary in this Agreement,
if the Board of Directors of the Company or the Special Committee determines, in
good faith after consultation with independent legal counsel (which may include
the Company's regularly engaged legal counsel) in the exercise of its fiduciary
duties under applicable law, to withdraw, modify or amend its recommendation in
favor of the Merger, such withdrawal, modification or amendment shall not
constitute a breach of this Agreement.
(b) The information supplied by the Company for inclusion in the Proxy
Statement or the Schedule 13E-3 shall not, at the time the Proxy Statement is
mailed, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or, at the time of the Shareholders' Meeting, as then amended or
supplemented, or at the Effective Time, omit to state any material fact
necessary to correct any statement originally supplied by the Company for
inclusion in the Proxy Statement or the Schedule 13E-3 which has become false or
misleading. If at any time prior to the Effective
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Time any event relating to the Company or any of its affiliates, or its, or its
affiliates', respective officers, directors or stockholders, should be
discovered which should be set forth in an amendment of, or a supplement to,
such Proxy Statement or Schedule 13E-3, the Company shall promptly so inform
Parent and Mergeco and will furnish all necessary information to Parent and
Mergeco relating to such event. All documents that the Company is responsible
for filing with the SEC in connection with the transactions contemplated by this
Agreement shall comply in all material respects, both as to form and otherwise,
with the Exchange Act and the rules and regulations thereunder.
(c) The information supplied or to be supplied by Parent or Mergeco for
inclusion in the Proxy Statement or the Schedule 13E-3 shall not, at the time
the Proxy Statement is mailed, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading or, at the time of the Shareholders' Meeting, as
then amended or supplemented, or at the Effective Time, omit to state any
material fact necessary to correct any statement originally supplied by Parent
or Mergeco for inclusion in the Proxy Statement or the Schedule 13E-3 which has
become false or misleading. If at any time prior to the Effective Time any event
relating to Parent or Mergeco or any of their respective affiliates, or their,
or their affiliates', respective officers, directors or stockholders should be
discovered which should be set forth in an amendment of, or a supplement to,
such Proxy Statement or Schedule 13E-3, Parent or Mergeco, as the case may be,
shall promptly so inform the Company and will furnish all necessary information
to the Company relating to such event. All documents that Parent and Mergeco are
responsible for filing with the SEC in connection with the transactions
contemplated by this Agreement shall comply in all material respects, both as to
form and otherwise, with the Exchange Act and the rules and regulations
thereunder.
5.7. Best Efforts. Subject to the terms and conditions herein provided and
the fiduciary duties under applicable law of the directors of the Company or of
the Company's directors constituting the Special Committee (as determined by
such directors in good faith after consultation with independent legal counsel,
which may include the Company's regularly engaged legal counsel), each of the
parties hereto agrees to use its best efforts consistent with applicable legal
requirements to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary or proper and advisable under applicable laws and
regulations to ensure that the conditions set forth in Article VI hereof are
satisfied and to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
5.8. Consents. Parent, Mergeco and the Company each shall use their best
efforts to obtain all material consents of third parties and governmental
authorities, and to make all governmental filings, necessary to the consummation
of the transactions contemplated by this Agreement.
5.9. Public Announcements. Parent, Mergeco and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger, this Agreement and the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
by obligations pursuant to any listing agreement with any securities exchange.
5.10. Indemnification. (a) For a period of six years after the Effective
Time, Parent shall, and shall cause the Surviving Corporation to, indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of the Company and its subsidiaries (collectively, the "Indemnified
Parties") from and against, and pay or reimburse the Indemnified Parties for,
all losses, obligations, expenses, claims, damages or liabilities (whether or
not resulting from third-party claims and including interest, penalties, out-
of-pocket expenses and attorneys' fees incurred in the investigation or defense
of any of the same or in asserting any of their rights hereunder) resulting from
or arising out of actions or omissions occurring on or prior to the Effective
Time (including, without limitation, the transactions contemplated by this
Agreement) to the full extent permitted or required under applicable law and, in
the case of indemnification by the Surviving Corporation, to the fullest extent
permitted under the By-Laws of the Company in effect on the date of this
Agreement (which provisions shall not be amended in any manner which adversely
affects any Indemnified Party for a period of six years), including provisions
relating to advances of expenses incurred in
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the defense of any action or suit; provided that in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification in respect of each such claim shall continue until final
disposition of such claim. Without limiting the foregoing, in any case in which
approval by the Surviving Corporation is required to effectuate any
indemnification, Parent shall cause the Surviving Corporation to direct, at the
election of the Indemnified Party, that the determination of any such approval
shall be made by independent counsel selected by the Indemnified Party.
(b) For not less than four years after the Effective Time, Parent shall,
and shall cause the Surviving Corporation to, maintain in effect directors' and
officers' liability insurance covering the Indemnified Parties who are currently
covered by the Company's existing directors' and officers' liability insurance,
on terms and conditions no less favorable to such directors and officers than
those in effect on the date hereof; provided that in no event shall Parent or
the Surviving Corporation be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by the Company for such
insurance; and, provided, further, that if the annual premiums of such insurance
coverage exceed such amount, the Parent shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding such amount.
(c) Any Indemnified Party wishing to claim indemnification under Section
5.10(a) shall provide notice to Parent promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and the
Indemnified Party shall permit Parent (at Parent's expense) to assume the
defense of any claim or any litigation resulting therefrom; provided that (i)
counsel for Parent who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, and the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
(ii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve Parent of its indemnification obligation under this Agreement
except to the extent that such omission results in a failure of actual notice to
Parent and Parent is materially damaged as a result of such failure to give
notice. Parent shall not, in the defense of any such claim or litigation, except
with the consent of the Indemnified Party, consent to entry of any judgment or
enter into any settlement that provides for injunctive or other nonmonetary
relief affecting the Indemnified Party or that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. In the event that Parent does not accept the defense of any matter
as above provided, or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between Parent or the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Parent or the Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided that Parent shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld). In any event, Parent and the
Indemnified Parties shall cooperate in the defense of any action or claim
subject to this Section 5.10 and the records of each shall be available to the
other with respect to such defense.
(d) This Section 5.10 is intended for the benefit of and to grant third
party rights to the Indemnified Parties whether or not parties to this Agreement
and each of the Indemnified Parties shall be entitled to enforce the covenants
contained herein.
(e) If Parent or the Surviving Corporation or any of their respective
successors or assigns (i) reorganizes or consolidates with or merges into any
other person and is not the resulting, continuing or surviving corporation or
entity of such reorganization, consolidation or merger, or (ii) liquidates,
dissolves or transfers all or substantially all of its properties and assets to
any person or persons, then, and in such case, proper provision will be made so
that the successors and assigns of Parent or the Surviving Corporation assumes
all of the obligations of Parent or the Surviving Corporation, as the case may
be, set forth in this Section 5.10.
5.11. Transfer Taxes. The Surviving Corporation shall pay any transfer
taxes (including any interest and penalties thereon and additions thereto)
payable in connection with the Merger and shall be responsible for the
preparation and filing of any required tax returns, declarations, reports,
schedules, terms and information returns with respect to such transfer taxes.
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ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions to the Obligations of Each Party. The respective
obligations of each party hereto to effect the Merger shall be subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
conditions:
(a) the proposal to approve this Agreement at the Shareholder's
Meeting shall have received the affirmative vote of the holders of at least
a majority of the Public Shares actually voted, in person or by proxy, on
such proposal (excluding abstentions);
(b) there shall not have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or France or (ii) a commencement of a war, armed hostilities or
other international or national calamity directly involving the United
States or France which has a material adverse effect on the general
economic conditions in the United States or France (other than the
commencement of war or armed hostilities in the Republic of
Bosnia-Herzegovina);
(c) no statute, rule, regulation, temporary, preliminary or permanent
order or injunction shall have been promulgated, enacted, entered, enforced
or deemed applicable to the Merger or performance under this Agreement, by
any state, federal or foreign government or governmental authority or court
or governmental agency of competent jurisdiction and remain in effect that
(i) prohibits the consummation of the Merger or (ii) imposes material
limitations on the ability of the shareholders of Mergeco effectively to
exercise full rights of ownership with respect to the Common Shares;
provided, however, that the provisions of this Section 6.1(c) shall not be
a condition to the obligations of any party that has directly or indirectly
solicited or encouraged any such governmental or judicial action; and
(d) this Agreement shall have been approved and adopted by the
affirmative vote of the holders of the requisite number of Common Shares in
accordance with the Restated Certificate of Incorporation and By-Laws of
the Company and the NYBCL.
6.2. Conditions to the Obligations of Parent, Mergeco and the Voting
Trustee. The obligations of Parent, Mergeco and the Voting Trustee pursuant to
this Agreement to consummate the Merger are also subject to the satisfaction or
waiver, at or prior to the Effective Time, of the following additional
conditions:
(a) the representations and warranties of the Company contained herein
shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty
without any materiality qualification) as of the date of this Agreement and
as of the Closing with the same effect as though all such representations
and warranties had been made as of the Closing, except (x) for any such
representations and warranties made as of a specified date, which shall be
true and correct as of such date, or (y) as expressly contemplated by this
Agreement, and Parent shall have received from the Company's President and
Chief Operating Officer an officer's certificate to this effect; and
(b) each and all of the covenants and agreements of the Company to be
performed and complied with pursuant to this Agreement prior to the Closing
shall have been duly performed and complied with in all material respects,
and Parent shall have received from the Company's President and Chief
Operating Officer an officer's certificate to this effect.
6.3. Conditions to the Obligations of the Company. The obligation of the
Company pursuant to this Agreement to consummate the Merger is also subject to
the satisfaction or waiver, at or prior to the Effective Time, of the following
additional conditions:
(a) the representations and warranties of Parent and Mergeco contained
herein shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty
without any materiality qualification) as of the date of this Agreement and
as of the Closing with the same effect as though all such representations
and warranties had been made as of the Closing, except (x) for any such
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representations and warranties made as of a specified date, which shall be
true and correct as of such date, and (y) as expressly contemplated by this
Agreement, and the Company shall have received from Parent and Mergeco
officers' certificates to this effect; and
(b) each and all of the covenants and agreements of Parent and Mergeco
to be performed and complied with pursuant to this Agreement prior to the
Closing shall have been duly performed and complied with in all material
respects, and the Company shall have received from the Parent and Mergeco
officers' certificates to this effect.
ARTICLE VII
CLOSING
7.1. Time and Place. The closing of the Merger (the "Closing") shall take
place at the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New
York, as soon as practicable following satisfaction or waiver of the conditions
set forth in Article VI. The date on which the Closing actually occurs is herein
referred to as the "Closing Date."
7.2. Filings at the Closing. At the Closing, Parent, Mergeco and the
Company shall cause the Certificate of Merger, together with any other documents
required by law to effectuate the Merger, to be executed, verified and delivered
for filing by the New York Department of State as provided by Section 904 of the
NYBCL, and shall take any and all other lawful actions and do any and all other
lawful things necessary to cause the Merger to become effective.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the shareholders of the
Company:
(a) by mutual consent of the respective Boards of Directors (or
equivalent governing bodies) of Parent and Mergeco and the Board of
Directors of the Company; provided, however, that any termination of this
Agreement pursuant to this Section 8.1(a) shall require the approval of the
Special Committee;
(b) by action of either the respective Boards of Directors (or
equivalent governing bodies) of Parent and Mergeco or the Board of
Directors of the Company if, without the fault of the terminating party,
the Merger has not been consummated on or prior to January 31, 1996;
(c) by action of the respective Boards of Directors (or equivalent
governing bodies) of Parent and Mergeco, if the Board of Directors of the
Company shall have withdrawn or modified in a manner adverse to Mergeco its
approval or recommendation of the Merger, this Agreement or the
transactions contemplated hereby; or
(d) by action of either of the respective Boards of Directors (or
equivalent governing bodies) of Parent and Mergeco or the Board of
Directors of the Company, if any court of competent jurisdiction in the
United States or other governmental agency of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action
restraining, permanently enjoining or otherwise prohibiting the Merger, and
such order, decree, ruling or other action shall have become final and
non-appealable.
8.2. Procedure and Effect of Termination. In the event of termination and
abandonment of the Merger by either Parent and Mergeco or the Company pursuant
to Section 8.1, written notice thereof shall forthwith be given to the others,
and this Agreement shall terminate and the Merger shall be abandoned, without
further action by any of the parties hereto. Mergeco agrees that any termination
by Parent shall be conclusively binding upon it, whether given expressly on its
behalf or not, and the Company shall have no further obligation with respect to
it. If this Agreement is terminated as provided herein, no party hereto shall
have any liability or further obligation to any other party to this Agreement,
provided that any termination shall be without
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prejudice to the rights of any party hereto arising out of a breach by any other
party of any covenant or agreement contained in this Agreement, and provided,
further, that the obligations set forth in this Section 8.2 and Sections 3.8,
4.7, 9.6 and 9.8 shall in any event survive any termination.
ARTICLE IX
MISCELLANEOUS
9.1. Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of Parent,
Mergeco, the Voting Trustee and the Company at any time prior to the Effective
Time with respect to any of the terms contained herein, provided, that (a) after
this Agreement is adopted by the Company's shareholders pursuant to Section 5.5,
no such amendment or modification shall be made that reduces the amount or
changes the form of the Merger Consideration or otherwise materially and
adversely affects the rights of the Public Shareholders hereunder, without the
further approval of the holders of at least a majority of the Public Shares
actually voted, in person or by proxy, on such proposal (excluding abstentions)
and (b) the approval of the Special Committee shall be required for any
amendment or modification of this Agreement, any extension by the Company of the
time for the performance of any obligations or other acts of Parent or Mergeco
and any waiver of any of the Company's rights under this Agreement.
9.2. Waiver of Compliance; Consents. Any failure of Parent, Mergeco or the
Voting Trustee, on the one hand, or the Company, on the other hand, to comply
with any obligation, covenant, agreement or condition herein may be waived by
the Company or Parent, respectively, only by a written instrument signed by the
party granting such waiver (and if required pursuant to Section 9.1(b), by the
Special Committee), but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 9.2.
Mergeco hereby agrees that any consent or waiver of compliance given by Parent
hereunder shall be conclusively binding upon it, whether given expressly on its
behalf or not.
9.3. Survival of Warranties. Each and every representation and warranty
made in this Agreement shall expire with, and be terminated and extinguished by,
the Merger, or the termination of this Agreement pursuant to Section 8.1. This
Section 9.3 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Closing.
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9.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if (a) delivered personally or by overnight
courier, (b) mailed by registered or certified mail, return receipt requested,
postage prepaid, or (c) transmitted by telecopy, and in each case, addressed to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof):
(a) if to the Parent, Mergeco or the Voting Trustee, to
Societe BIC S.A.
9, Rue Petit
92110 Clichy
France
Telecopy: 011-331-45-19-52-04
Attention: Bruno Bich
President Directeur General
with a copy to
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: 212-909-6836
Attention: Andrew L. Sommer, Esq.
(b) if to the Company, to
BIC Corporation
500 BIC Drive
Milford, Connecticut 06460
Telecopy: 203-783-2108
Attention: Thomas M. Kelleher, Esq.
General Counsel and Secretary
with a copy to
Special Committee of the Board of Directors of BIC Corporation
c/o Robert E. Allen
Redding Consultants, Inc.
11 Grumman Hill
Wilton, Connecticut 06897
Telecopy: 203-762-1185
and to
Shearman & Sterling
Counsel to the Special Committee of the Board of Directors of BIC
Corporation
599 Lexington Avenue
New York, New York 10022
Telecopy: 212-848-7179
Attention: Peter Lyons, Esq.
Any notice so addressed shall be deemed to be given (x) three business days
after being mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid and (y) upon delivery, if transmitted by hand
delivery, overnight courier or telecopy.
9.5. Assignment; Parties in Interest. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the
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parties hereto without the prior written consent of the other parties. Except
for Section 5.10, which is intended for the benefit of the Indemnified Parties,
this Agreement is not intended to confer upon any other person except the
parties any rights or remedies under or by reason of this Agreement.
9.6. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Offer, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however, that the allocable share of each of Parent and the
Company for all expenses related to printing, filing and mailing the Proxy
Statement and all SEC and other regulatory filing fees incurred in connection
with the Proxy Statement and the Schedule 13E-3 shall be one-half.
9.7. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
9.8. Governing Law. This Agreement shall be governed by the laws of the
State of New York (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
9.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10. Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. As used in this Agreement, (i) the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency
thereof; (ii) the terms "affiliate" and "associate" shall have the meanings set
forth in Rule 12b-2 of the General Rules and Regulations promulgated under the
Exchange Act; and (iii) the term "subsidiary" of any specified corporation shall
mean any corporation of which the outstanding securities having ordinary voting
power to elect a majority of the board of directors are directly or indirectly
owned by such specified corporation.
9.11. Entire Agreement. This Agreement, including the schedules hereto,
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and supersedes all prior agreements and
the understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, Parent, Mergeco, the Voting Trustee and the Company
have caused this Agreement to be signed, by their respective duly authorized
officers or directly, as of the date first above written.
SOCIETE BIC S.A.
By /s/ Bruno Bich
------------------------------------
Name: Bruno Bich
Title: President Directeur General
BIC MERGER CORPORATION
By /s/ Bruno Bich
------------------------------------
Name: Bruno Bich
Title: President
BIC CORPORATION
By /s/ Raymond Winter
------------------------------------
Name: Raymond Winter
Title: President and Chief Operating
Officer
Solely for purposes of Section 5.5:
VOTING TRUSTEE
By /s/ Bruno Bich
-----------------------------------
Name: Bruno Bich
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DRAFT
ANNEX B
[FORM OF GOLDMAN, SACHS & CO. OPINION]
PERSONAL AND CONFIDENTIAL
Special Committee of the Board of Directors
BIC Corporation
500 BIC Drive
Milford, CT 06460
Gentlemen:
You have requested our opinion as to the fairness to the holders, other
than Societe BIC SA ("Societe) and the other stockholders of BIC Merger
Corporation ("Mergeco"), of the outstanding shares of Common Stock, par value
$1.00 per share (the "Common Shares"), of BIC Corporation (the "Company") of the
$40.50 per Common Share in cash to be received by such holders (the "Public
Shareholders") pursuant to the Agreement and Plan of Merger dated as of August
15, 1995, among Societe, Mergeco, Bruno Bich, as Voting Trustee, and the Company
(the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as the financial advisor to the Special
Committee of the Board of Directors of the Company in connection with, and
having participated in certain of the negotiations leading to, the Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Annual Reports to Stockholders and Annual Reports on Form 10-K of
the Company for the five years ended December 31, 1994; certain interim reports
to stockholders and Quarterly Reports on Form 10-Q; certain other communications
from the Company to its stockholders; and certain internal financial analyses
and forecasts for the Company prepared by its management. We also have held
discussions with members of the senior management of the Company and of Societe
regarding the Company's past and current business operations, financial
condition and future prospects. In addition, we have reviewed the reported price
and trading activity for the Common Shares, compared certain financial and stock
market information for the Company with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations, and performed such other studies
and analyses as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In that regard, with respect to certain financial
forecasts for the Company provided to us by senior management of the Company for
purposes of our analysis in connection with this opinion, which you have
instructed us to use for the purposes of our analysis, we have assumed that such
forecasts have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the Company's senior management as to the
future financial performance of the Company. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and we have not been furnished with any such
evaluation or appraisal. We have relied, with your permission, on statements
made by management of Societe indicating that Societe would not consent to a
transaction involving a sale or recapitalization of the Company and we were not
requested or authorized to solicit, and did not solicit, interest from any party
with respect to an acquisition of the outstanding Common Shares, the Company or
its constituent businesses. Finally, we have been informed by Societe, and have
relied with your permission on such information, that Societe does not
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intend to pursue a sale or recapitalization of the Company or its subsidiaries
after consummating the merger pursuant to the Agreement.
Based upon and subject to the foregoing and based on such other matters as
we consider relevant, it is our opinion that as of the date hereof the $40.50
per Common Share in cash to be received by the Public Shareholders pursuant to
the Agreement is fair to the Public Shareholders.
Very truly yours,
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<PAGE> 75
ANNEX C
SEC. 623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to the rein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at such
meeting but before the vote, written objection to the action. The objection
shall include a notice of his election to dissent, his name and residence
address, the number and classes of shares as to which he dissents and a demand
for payment of the fair value of his shares if the action is taken. Such
objection is not required from any shareholder to whom the corporation did not
give notice of such meeting in accordance with this chapter or where the
proposed action is authorized by written consent of shareholders without a
meeting.
(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall give
written notice of such authorization or consent by registered mail to each
shareholder who filed written objection or from whom written objection was not
required, excepting any shareholder who voted for or consented in writing to the
proposed action and who thereby is deemed to have elected not to enforce his
right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election to
dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner, as to which such nominee
or fiduciary has a right to dissent, held of record by such nominee or
fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any) other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his acceptance
in writing of an offer made by the corporation, as provided in paragraph (g),
but in no case later than sixty days from the date of consummation of the
corporate action except that if the corporation fails to make a timely offer, as
provided in paragraph (g), the time for withdrawing a notice of election shall
be extended until sixty days from the date an offer is made. Upon expiration of
such time, withdrawal of a notice of election shall require the written consent
of the corporation. In order to be effective, withdrawal of a notice of election
must be accompanied by the return to the corporation of any advance payment made
to the shareholder as provided in paragraph (g). If a notice of election is
withdrawn, or the corporate action is rescinded, or a court shall determine that
the shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares and he shall be reinstated to all his
rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion, but
without prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or
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to its transfer agent, which shall forthwith note conspicuously thereon that a
notice of election has been filed and shall return the certificates to the
shareholder or other person who submitted them on his behalf. Any shareholder of
shares represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate bearing
such notation, each new certificate issued therefor shall bear a similar
notation together with the name of the original dissenting holder of the shares
and a transferee shall acquire no rights in the corporation except those which
the original dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later (but
in no case later than ninety days from the shareholders' authorization date),
the corporation or, in the case of a merger or consolidation, the surviving or
new corporation, shall make a written offer by registered mail to each
shareholder who has filed such notice of election to pay for his shares at a
specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment to
each such shareholder who has submitted the certificates representing his shares
to the corporation, as provided in paragraph (f), of an amount equal to eighty
percent of the amount of such offer, or (2) as to each shareholder who has not
yet submitted his certificates a statement that advance payment to him of an
amount equal to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the corporate
action has not been consummated at the time of the making of the offer, such
advance payment or statement as to advance payment shall be sent to each
shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does not
constitute a waiver of any dissenters' rights. If the corporate action has not
been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than a
twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the foregoing,
the corporation shall not be required to furnish a balance sheet or profit and
loss statement or statements to any shareholder to whom such balance sheet or
profit and loss statement or statements were previously furnished, nor if in
connection with obtaining the shareholders' authorization for consent to the
proposed corporate action the shareholders were furnished with a proxy or
information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be paid
for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in which
the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is
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a foreign corporation without an office in this state, such proceeding
shall be brought in the county where the office of the domestic
corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the
fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the date the corporate action
was consummated to the date of payment. In determining the rate of
interest, the court shall consider all relevant factors, including the rate
of interest which the corporation would have had to pay to borrow money
during the pendency of the proceeding. If the court finds that the refusal
of any shareholder to accept the corporate offer of payment for his shares
was arbitrary, vexatious or otherwise not in good faith, no interest shall
be allowed to him.
(7) Each party to such proceeding shall bear its own costs and
expenses, including, the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in
its discretion, apportion and assess all or any part of the costs, expenses
and fees incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer
or required advance payment was made by the corporation; (C) that the
corporation failed to institute the special proceeding within the period
specified therefor; or (D) that the action of the corporation in complying
with its obligations as provided
C-3
<PAGE> 78
in this section was arbitrary, vexatious or otherwise not in good faith. In
making any determination as provided in clause (A), the court may consider
the dollar amount or the percentage, or both, by which the fair value of
the shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificates for any such shares represented
by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it
is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting shareholders,
and if it is not liquidated, retain his right to be paid for his shares,
which right the corporation shall be obliged to satisfy when the
restrictions of this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.
(k) The enforcement by a shareholder of his right to receive payment for
his shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in paragraph (e), and except that this
section shall not exclude the right of such shareholder to bring or maintain an
appropriate action to obtain relief on the ground that such corporate action
will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to
be given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations).
C-4
<PAGE> 1
[PRELIMINARY COPY]
PROXY
BIC CORPORATION 401(k) SAVINGS AND INVESTMENT PLAN
INSTRUCTIONS FOR SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
To: Fleet Bank, as Trustee under the BIC Corporation 401(k) Savings and
Investment Plan.
In connection with the Special Meeting of Shareholders of BIC Corporation (the
"Company") to be held on , October , 1995, the undersigned hereby
instructs you with respect to voting, in person or by proxy, at such meeting,
and all adjournments thereof, all Common Shares of the Company in the
undersigned's account in the Plan with respect to which the undersigned is
entitled to give you voting instructions.
You are instructed to vote upon matters coming before the meeting, and unless
contrary direction is indicated, to vote the shares in connection with Proposal
1 as indicated on the reverse side.
(Continued from other side)
<PAGE> 2
I plan to attend
the meeting
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15,
1995, by and among BIC Corporation (the "Company"), Societe BIC S.A.
("Parent"), a societe anonyme organized under the laws of France, Bruno Bich,
as voting trustee and BIC Merger Corporation ("Mergeco"), a New York
corporation and a majority owned subsidiary of Parent, and the merger of
Mergeco with and into the Company as contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN
DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE
VOTED FOR THE PROPOSAL.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
Dated: , 1995
-------------------------------------
--------------------------------------------------
(Signature of Shareholder)
Please sign as name appears hereon. When signing
as attorney, executor, administrator, trustee or
guardian, please give full title as such. Joint
tenants should both sign.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
<PAGE> 3
[PRELIMINARY COPY]
PROXY
BIC CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER ___, 1995
The undersigned hereby constitutes and appoints BRUNO BICH, ALEXANDER ALEXIADES
and RAYMOND WINTER, and each of them, the attorneys and proxies of the
undersigned, with full power of substitution, to vote on behalf of the
undersigned all of the Common Shares of BIC Corporation (the "Company") which
the undersigned is entitled to vote at the Special Meeting of Shareholders of
the Company, to be held at the [Trumbull Marriott Merritt Parkway, 180 Hawley
Lane, Trumbull, Connecticut 06611], on _________, October ___, 1995, at 10:00
a.m., local time, and all adjournments thereof, upon the matters set forth on
the reverse side and upon all matters incident to the conduct of the Special
Meeting. This proxy revokes all prior proxies given by the undersigned. Receipt
of the Notice of Special Meeting and Proxy Statement is hereby acknowledged.
(Continued and to be signed and dated on the other side)
<PAGE> 4
I plan to attend
the meeting
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15,
1995, by and among BIC Corporation (the "Company"), Societe BIC S.A.
("Parent"), a societe anonyme organized under the laws of France, Bruno Bich,
as voting trustee and BIC Merger Corporation ("Mergeco"), a New York
corporation and a majority owned subsidiary of Parent, and the merger of
Mergeco with and into the Company as contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN
DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE
VOTED FOR THE PROPOSAL.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
Dated: , 1995
-------------------------------------
--------------------------------------------------
(Signature of Shareholder)
Please sign as name appears hereon. When signing
as attorney, executor, administrator, trustee or
guardian, please give full title as such. Joint
tenants should both sign.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
<PAGE> 5
[PRELIMINARY COPY]
PROXY
BIC CORPORATION LOCAL 134 EMPLOYEES SHARE PURCHASE PLAN
INSTRUCTIONS FOR SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
To: Fleet Bank, as Trustee under the BIC Corporation Local 134 Share Purchase
Plan.
In connection with the Special Meeting of Shareholders of BIC Corporation (the
"Company") to be held on , October 19 , 1995, the undersigned hereby
instructs you with respect to voting, in person or by proxy, at such meeting,
and all adjournments thereof, all Common Shares of the Company in the
undersigned's account in the Plan with respect to which the undersigned is
entitled to give you voting instructions.
You are instructed to vote upon matters coming before the meeting, and unless
contrary direction is indicated, to vote the shares in connection with Proposal
1 as indicated on the reverse side.
(Continued from other side)
<PAGE> 6
I plan to attend
the meeting
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15,
1995, by and among BIC Corporation (the "Company"), Societe BIC S.A.
("Parent"), a societe anonyme organized under the laws of France, Bruno Bich,
as voting trustee and BIC Merger Corporation ("Mergeco"), a New York
corporation and a majority owned subsidiary of Parent, and the merger of
Mergeco with and into the Company as contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN
DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE
VOTED FOR THE PROPOSAL.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
Dated: , 1995
-------------------------------------
--------------------------------------------------
(Signature of Shareholder)
Please sign as name appears hereon. When signing
as attorney, executor, administrator, trustee or
guardian, please give full title as such. Joint
tenants should both sign.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
<PAGE> 1
Exhibit (g)(1)
[EXCERPTS FROM
BIC CORPORATION
ANNUAL REPORT ON FORM
10-K FOR THE FISCAL
YEAR ENDED JANUARY 1, 1995]
<PAGE> 2
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
- ------------------------------------------
PAGE
Report of Independent Auditors 15
Consolidated Financial Statements:
- ----------------------------------
Consolidated Balance Sheets, January 1, 1995 and 16
January 2, 1994
Statements of Consolidated Income for the 1994, 17
1993 and 1992 Fiscal Years
Statements of Consolidated Retained Earnings for 17
the 1994, 1993 and 1992 Fiscal Years
Statements of Consolidated Cash Flows for the 18
1994, 1993 and 1992 Fiscal Years
Notes to Consolidated Financial Statements 19
Consolidated Financial Statement Schedule for the
Years Ended January 1, 1995, January 2, 1994
and January 3, 1993:
- ------------------------------------------------
II - Consolidated Valuation Accounts 32
All other financial statement schedules have been omitted
because the conditions requiring the filing thereof do not exist
or because the required information is shown in the consolidated
financial statements or notes thereto.
<PAGE> 3
(LOGO OF DELOITTE & TOUCHE)
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of BIC Corporation:
We have audited the accompanying consolidated financial
statements and related financial statement schedule of BIC
Corporation and its subsidiaries (the "Corporation") listed in
the preceding Index to Consolidated Financial Statements and
Financial Statement Schedule of the Annual Report on Form 10-K of
the Corporation for the year ended January 1, 1995. These
consolidated financial statements and financial statement
schedule are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on the consolidated
financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of BIC
Corporation and its subsidiaries at January 1, 1995 and January
2, 1994 and the consolidated results of their operations and
their cash flows for each of the three fiscal years in the period
ended January 1, 1995 in conformity with generally accepted
accounting principles. Also, in our opinion, such consolidated
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole,
presents fairly in all material respects, the information set
forth therein.
As described in Note 1 to the consolidated financial statements,
the Corporation changed its method of accounting for
postemployment benefits in 1994 and for postretirement benefits
other than pensions in 1993.
DELOITTE & TOUCHE LLP
New Haven, Connecticut
January 27, 1995
<PAGE> 4
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
CONSOLIDATED BALANCE SHEETS
JANUARY 1, 1995 and JANUARY 2, 1994
- -----------------------------------
(Dollars in thousands, except January 1, January 2,
for share data) 1995 1994
- ----------------------------- ---------- ----------
ASSETS:
- -------
Current Assets:
- ---------------
Cash and Cash Equivalents $ 48,091 $ 24,094
Receivables - Trade and Other (Net of
Allowance for Doubtful Accounts 1994 -
$4,530 and 1993 - $4,084) 62,867 52,019
Inventories 54,363 59,426
Deferred Income Taxes 18,549 16,809
Other 10,575 13,637
-------- --------
Total Current Assets 194,445 165,985
Property, Plant and Equipment - Net 132,553 140,317
Other Assets 31,689 29,914
-------- --------
Total $358,687 $336,216
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
- -------------------------------------
Current Liabilities:
- --------------------
Bank Borrowings $ 6,731
Accounts Payable - Trade and Other $ 18,915 21,179
Accrued Expenses:
- -----------------
Federal and State Income Taxes 8,526 8,085
Insurance 23,261 22,739
Payroll and Payroll Taxes 7,200 6,108
Other 28,727 23,911
-------- --------
Total Current Liabilities 86,629 88,753
-------- --------
Noncurrent Liabilities:
- -----------------------
Postretirement Benefits Other Than Pensions 19,882 17,854
Other 4,259 2,921
-------- --------
Total Noncurrent Liabilities 24,141 20,775
-------- --------
Contingencies and Commitments (See Note 12)
- -------------------------------------------
Shareholders' Equity:
- ---------------------
Preferred Shares ($1 Par Value; Authorized
- 1,000,000; No Shares Issued or
Outstanding)
Common Shares ($1 Par Value; Authorized
- 50,000,000; Outstanding - 23,559,244) 23,559 23,559
Retained Earnings 238,076 205,902
Foreign Currency Translation Adjustment (13,718) (2,773)
-------- --------
Total Shareholders' Equity 247,917 226,688
-------- --------
Total $358,687 $336,216
======== ========
See Notes to Consolidated Financial Statements.
<PAGE> 5
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
STATEMENTS OF CONSOLIDATED INCOME
FOR THE 1994, 1993 AND 1992 FISCAL YEARS
- ----------------------------------------
(In thousands, except for per share data) 1994 1993 1992
- ----------------------------------------- ---- ---- ----
Net Sales $475,118 $439,311 $417,377
Cost of Goods Sold 242,457 235,820 225,806
-------- -------- --------
Gross Profit 232,661 203,491 191,571
Advertising, Selling, General and
Administrative, Marketing and Research
and Development Expenses 145,495 133,732 126,445
-------- -------- --------
Income from Operations 87,166 69,759 65,126
Other Income - Net 41 4,227 2,152
-------- -------- --------
Income Before Income Taxes and Cumulative
Effect of Changes in Accounting
Principles 87,207 73,986 67,278
Provision for Income Taxes 35,563 29,206 27,343
-------- -------- --------
Income Before Cumulative Effect of
Changes in Accounting Principles 51,644 44,780 39,935
Cumulative Effect of Changes in
Accounting Principles for:
- -------------------------------
Postemployment Benefits, Net of
Taxes of $410 (623)
Postretirement Benefits Other
Than Pensions, Net of Taxes of
$6,384 (9,816)
-------- -------- --------
Net Income $ 51,021 $ 34,964 $ 39,935
======== ======== ========
Earnings Per Common Share:
Income Before Cumulative Effect of
Changes in Accounting Principles $2.19 $1.90 $1.70
Cumulative Effect of Changes in
Accounting Principles (0.02) (0.42)
-------- -------- --------
Net Income $2.17 $1.48 $1.70
======== ======== ========
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
FOR THE 1994, 1993 AND 1992 FISCAL YEARS
- --------------------------------------------
(In thousands) 1994 1993 1992
- -------------- ---- ---- ----
Balance - Beginning of Year $205,902 $187,900 $183,416
Net Income 51,021 34,964 39,935
Dividends - Cash (18,847) (16,962) (24,973)
- Common Share Split Effected
in the Form of a 100% Share
Dividend (10,478)
-------- -------- --------
Balance - End of Year $238,076 $205,902 $187,900
======== ======== ========
See Notes to Consolidated Financial Statements.
<PAGE> 6
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE 1994, 1993 AND 1992 FISCAL YEARS
- ----------------------------------------
(In thousands) 1994 1993 1992
- -------------- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net Income $51,021 $34,964 $39,935
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
- -----------------------------------
Depreciation and Amortization 23,801 20,881 15,703
Provision for Losses on Receivables
- Trade and Other 1,467 85 2,286
Effects of Foreign Currency Transactions (208) 753 (264)
Deferred Income Taxes (2,680) (1,177) 369
Cumulative Effect of Changes in
Accounting Principles 623 9,816
Other 2,771 2,063 (354)
Changes in Operating Assets and Liabilities:
- --------------------------------------------
(Increase) in Receivables - Trade
and Other (15,474) (1,915) (4,308)
(Increase) Decrease in Inventories 1,538 (1,266) (10,945)
(Increase) Decrease in Other Assets 2,566 (778) (477)
Increase (Decrease) in Accounts
Payable and Accrued Expenses 9,017 (2,790) 5,520
-------- -------- --------
Net Cash Provided by Operating Activities 74,442 60,636 47,465
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Purchases of Property, Plant and
Equipment (21,674) (41,181) (44,908)
Proceeds from Sale of Property,
Plant and Equipment 1,248 672 965
Purchases of Trademarks and Patents (841) (724) (775)
Purchase of Investment (2,000)
Purchase of Wite-Out Products, Inc.,
Net of Cash Acquired (19,307)
Deferred Charges, Deposits and Other 60 (2,114) (1,834)
-------- -------- --------
Net Cash Used in Investing Activities (23,207) (43,347) (65,859)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Net Increase (Decrease) in Bank Borrowings (6,716) (878) 7,687
Dividends Paid (18,847) (16,962) (24,973)
-------- -------- --------
Net Cash Used in Financing Activities (25,563) (17,840) (17,286)
-------- -------- --------
Effect of Exchange Rate Changes on Cash (1,675) (589) (627)
-------- -------- --------
Increase (Decrease) in Cash and Cash
Equivalents 23,997 (1,140) (36,307)
Cash and Cash Equivalents, Beginning
of Year 24,094 25,234 61,541
-------- -------- --------
Cash and Cash Equivalents, End of Year $48,091 $24,094 $25,234
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
- --------------------------------------------------
Cash Paid during the Year for:
- ------------------------------
Interest $ 907 $ 635 $ 443
======== ======== ========
Income Taxes $35,678 $34,245 $26,339
======== ======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
- -------------------------------------------------------
In 1992, the Corporation purchased
all the capital stock of Wite-Out
Products, Inc. for $19,848.
Fair Value of Assets Acquired $20,875
Cash Paid (19,848)
--------
Liabilities Assumed $ 1,027
========
See Notes to Consolidated Financial Statements.
<PAGE> 7
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- ------------------------------------------------
A summary of significant accounting policies for BIC
Corporation and its subsidiaries (the "Corporation"),
manufacturers and distributors of high-quality, low-cost consumer
products, is as follows:
Consolidation
- -------------
The consolidated financial statements include the accounts of
BIC Corporation and its subsidiaries. An investment in an
affiliated company is accounted for on the equity method. All
significant intercompany balances and transactions have been
eliminated.
Cash and Cash Equivalents
- -------------------------
The Corporation's cash management policy is to invest in highly
liquid, short-term financial instruments. Cash equivalents
consist of U.S. Government obligations, time deposits, overnight
securities and other short-term, highly liquid securities with
original maturities of three months or less.
Inventories
- -----------
Inventories are valued at the lower of cost (determined on the
first-in, first-out basis) or market.
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment is recorded at cost.
Depreciation, principally on the declining balance method, is
provided over the estimated useful lives of the assets as
follows:
Buildings and improvements 10-50 years
Machinery and equipment 3-12 years
Expenditures for maintenance and repairs are charged to
operations as incurred. Expenditures for betterments and major
renewals are capitalized. Costs of assets sold or retired and
the related amounts of accumulated depreciation are eliminated
from the accounts in the year of disposal and any resulting gains
or losses are included in income.
Intangibles
- -----------
Costs pertaining to goodwill and patents are amortized on the
straight-line method over five to seventeen years. Trademarks
are amortized over five to forty years.
Accrued Expenses - Insurance
- ----------------------------
Accrued expenses - insurance represents the estimated costs of
known and anticipated claims under the Corporation's product
liability (principally relating to its lighters) and workers'
compensation insurance policies. For each claim, the Corporation
maintains self-insurance up to the estimated amount of the
probable claim or the amount of the deductible, whichever is
lower. At each financial reporting date, probable claim amounts,
individually or in the aggregate, were not expected to materially
exceed the deductible. Claims are generally settled within five
years of origination.
<PAGE> 8
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
Employee Benefit Plans
- ----------------------
Substantially all employees in the United States and Canada are
covered by defined benefit pension plans. The plans are
noncontributory and provide for pension benefits based on average
pay and years of service to the Corporation. Funding for the
pension plans is based on a review of the specific requirements
and an evaluation of the assets and liabilities of each plan.
The Corporation has a share purchase plan for substantially all
full-time United States unionized employees who elect to
participate and a 401(k) Savings and Investment Plan for
unionized and non-unionized United States employees. The
Corporation's Canadian subsidiary has a Group Registered
Retirement Plan for its employees. Some plans provide that the
Corporation match a portion of participant contributions.
The Corporation provides certain postretirement medical and
life insurance benefits for qualifying retired and active
unionized and non-unionized employees in the United States. Most
retirees outside the United States are covered by government
sponsored and administered programs.
Effective January 3, 1994, the Corporation adopted SFAS 112,
"Employers' Accounting for Postemployment Benefits." This new
standard requires that the cost of benefits provided to former or
inactive employees be recognized on the accrual basis of
accounting. Previously, the Corporation recognized postemployment
benefits on a cash basis or at the date the event gave rise to
the payment of these benefits. In accordance with the provisions
of the Collective Bargaining Agreement between BIC Corporation
and Local 134 United Rubber, Cork, Linoleum and Plastic Workers
of America, the Corporation provides severance benefits to its
unionized employees. The Corporation also provides medical and
life insurance benefits to salaried employees receiving long-term
disability benefits. The cumulative effect of adopting SFAS 112
was a one-time after-tax charge of $0.6 million, or $0.02 per
share. Aside from the one-time effect of the cumulative
adjustment, adoption of SFAS 112 was not material to the
Corporation's 1994 consolidated results of operations.
In 1993, the Corporation adopted Statement of Financial
Accounting Standards ("SFAS") 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The Corporation
elected to recognize the cumulative effect of this obligation on
the immediate recognition basis. The cumulative effect as of
January 4, 1993 of adopting SFAS 106 was a one-time after-tax
charge of $9.8 million, or $0.42 per share. Aside from the one-
time effect of the cumulative adjustment, adoption of SFAS 106
was not material to the Corporation's 1994 and 1993 consolidated
results of operations.
Foreign Currency
- ----------------
Assets and liabilities of certain foreign subsidiaries, whose
local currency is the functional currency, are translated at
exchange rates in effect at the balance sheet date. Translation
gains and losses are not included in the Statements of
Consolidated Income, but are accumulated in a separate component
of shareholders' equity. Gains and losses from foreign currency
transactions are included in the Statements of Consolidated
Income.
<PAGE> 9
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
Foreign Currency (Continued)
- ----------------------------
The Corporation enters into forward exchange contracts
denominated in foreign currencies providing protection from
currency fluctuations affecting certain inventory and equipment
purchase commitments denominated in foreign currencies. Gains
and losses associated with these transactions are deferred and
included in the determination of the cost of the assets acquired.
Income Taxes
- ------------
Effective January 4, 1993, the Corporation adopted SFAS 109,
"Accounting for Income Taxes." Under SFAS 109, the deferred tax
provision is determined under the asset/liability method. Under
this method, deferred tax assets and liabilities are recognized
based on differences between financial statement and tax bases of
assets and liabilities using presently enacted tax rates. There
was no material effect on the Corporation's financial position or
results of operations by adopting SFAS 109.
The Corporation does not provide for Federal or state income
taxes on the accumulated earnings and profits of its foreign
subsidiaries, to the extent that the current intention of the
Corporation is to allow its foreign subsidiaries to reinvest
these earnings, or to the extent that any Federal or state taxes
attributable to the repatriation of such earnings would be
substantially offset by foreign tax credits.
Earnings Per Common Share
- -------------------------
Earnings per common share are based on the weighted average
number of shares outstanding in each year. The weighted average
number of shares outstanding was 23,559,244 during 1994, 1993 and
1992.
Fiscal Year
- -----------
The Corporation's fiscal year is the 52 or 53 weeks ending on
the Sunday closest to December 31.
Reclassifications
- -----------------
The consolidated financial statements for years prior to 1994
have been reclassified to conform with the 1994 financial
statement presentation.
2. INVENTORIES:
- -----------------
Inventories consist of the following:
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ---------
Work in process, finished stock
and packaging materials $46,503 $49,363
Raw materials 7,860 10,063
---------- ---------
Total $54,363 $59,426
========== =========
<PAGE> 10
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
3. PROPERTY, PLANT AND EQUIPMENT - NET:
- -----------------------------------------
Property, plant and equipment - net consists of the following:
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
Land $ 2,706 $ 2,841
Buildings and improvements 57,722 57,428
Machinery and equipment 204,556 193,234
Construction in progress 18,934 24,742
---------- ----------
Total 283,918 278,245
Less accumulated depreciation 151,365 137,928
---------- ----------
Total $132,553 $140,317
========== ==========
4. OTHER ASSETS:
- ------------------
Other assets consist of the following:
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
Intangibles (net of accumulated
amortization 1994 - $7,090 and
1993 - $4,716) $15,658 $17,192
Other 16,031 12,722
---------- ----------
Total $31,689 $29,914
========== ==========
5. BANK BORROWINGS:
- ---------------------
Information with respect to the Corporation's bank borrowings
is as follows:
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
Weighted average interest rate
at balance sheet date 6.1%
Weighted average interest rate
(actual interest expense on bank
borrowings divided by average
daily outstanding balance) 5.1% 4.3%
Unused lines of credit $112,996 $99,711
Standby letters of credit 29,571 35,488
6. OTHER CURRENT LIABILITIES:
- -------------------------------
Other current liabilities consist of the following:
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
Accrued advertising and promotion $17,731 $14,242
Other 10,996 9,669
---------- ----------
Total $28,727 $23,911
========== ==========
<PAGE> 11
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
7. EMPLOYEE BENEFIT PLANS:
- ----------------------------
The Corporation's net periodic pension cost for 1994, 1993 and
1992 is summarized as follows:
(In thousands) 1994 1993 1992
- -------------- ------- ------- -------
Service cost - benefits earned during
the period $(2,242) $(1,797) $(1,608)
Interest cost on projected benefit
obligation (4,316) (3,988) (3,641)
Actual return on plan assets (2,545) 5,151 6,060
Net amortization and deferral 8,383 107 (1,152)
------- ------- -------
Net periodic pension cost $ (720) $ (527) $ (341)
======= ======= =======
The following table sets forth the funded status at January 1,
1995 and January 2, 1994 of the Corporation's defined benefit
pension plans:
January 1, January 2,
1995 1994
---------- ----------
Over- Under- Over- Under-
(In thousands) Funded Funded Funded Funded
- -------------- ------- ------- ------- -------
Fair value of plan assets $30,924 $24,923 $33,491 $27,425
Projected benefit
obligation for
services rendered
to date (26,319) (31,593) (28,150) (32,173)
------- ------- ------- -------
Excess of plan assets over
projected benefit
obligation (excess of
projected benefit
obligation over
plan assets) 4,605 (6,670) 5,341 (4,748)
Unrecognized net (gain) loss 472 2,747 (252) 2,595
Prior service costs not
yet recognized in net
periodic pension costs 384 1,014 682 20
Unrecognized net asset (2,239) (533) (2,666) (666)
------- ------- ------- -------
Prepaid pension (pension
liability) $ 3,222 $(3,442) $ 3,105 $(2,799)
======= ======= ======= =======
Actuarial present value of
benefit obligations:
- --------------------------
Vested benefit obligation $20,832 $31,395 $21,822 $31,908
======= ======= ======= =======
Accumulated benefit
obligation $21,691 $31,476 $22,662 $31,993
======= ======= ======= =======
Prior service costs primarily relate to plan amendments which
retroactively increase benefits to plan participants. These
costs are recognized in net periodic pension cost over
appropriate periods.
The following assumptions were used in developing the above
benefit obligation amounts:
January 1, January 2,
1995 1994
---------- ----------
Assumed discount rate 8.0% 7.0%
Assumed rate of compensation increase 4.0% 4.0%
Expected rate of return on plan assets 10.0% 10.0%
<PAGE> 12
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
7. EMPLOYEE BENEFIT PLANS (Continued):
- ----------------------------------------
The plan assets were invested as follows:
January 1, January 2,
1995 1994
---------- ----------
Equity securities 63.9% 65.0%
United States Government securities 12.7 13.7
Cash equivalents and debt securities 23.4 21.3
---------- ----------
Total 100.0% 100.0%
========== ==========
Contributions under the employees share purchase plans, the
401(k) Savings and Investment Plans and the Group Registered
Retirement Plan were approximately $857,000, $728,000 and
$406,000 in 1994, 1993 and 1992, respectively.
8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
- -------------------------------------------------
The Corporation provides certain postretirement medical and
life insurance benefits for qualifying retired and active
unionized and non-unionized employees in the United States. Most
retirees outside the United States are covered by government
sponsored and administered programs. Postretirement benefits are
not pre-funded and are paid by the Corporation as incurred.
The Corporation's net periodic postretirement benefit cost for
1994 and 1993 included the following components:
(In thousands) 1994 1993
- -------------- ---- ----
Service cost - benefits attributed to
employee service during the period $1,487 $1,144
Interest cost on accumulated
postretirement benefit obligation 1,329 1,338
Unrecognized net loss 63
------ -------
Net periodic postretirement
benefit cost $2,879 $2,482
====== ======
The following table sets forth the status at January 1, 1995
and January 2, 1994 of postretirement benefits:
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
Accumulated postretirement benefit obligation:
- ----------------------------------------------
Retirees $ 9,088 $ 9,590
Fully eligible active plan participants 2,404 3,507
Other active plan participants 7,399 8,568
-------- --------
18,891 21,665
Unamortized net gain (loss) 991 (3,811)
-------- --------
Total $19,882 $17,854
======== ========
<PAGE> 13
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued):
- -------------------------------------------------------------
For measurement purposes, a 14.0% annual rate of increase in
the per capita cost was assumed for 1994 and 1993. The rate was
assumed to decrease gradually to 5.5% through the year 2009 and
remain at that level thereafter. The discount rate used in
determining the accumulated postretirement benefit obligation was
8.0% at January 1, 1995 and 7.0% at January 2, 1994. The
unamortized net gain (loss) represents a change in actuarial
assumptions (discount rate) that will be amortized over future
periods.
A 1% increase in the assumed health care cost trend rate for
each year would increase the accumulated postretirement benefit
obligation as of January 1, 1995 by $2.6 million and the net
periodic postretirement benefit cost by $523,000.
9. SHAREHOLDERS' EQUITY:
- --------------------------
The Corporation declared and paid cash dividends of $0.80 per
share in 1994 and $0.72 per share in 1993. The Corporation
increased its regular quarterly dividend from $0.20 per share to
$0.23 per share, effective with the dividend payable on February
1, 1995, to shareholders of record on January 18, 1995.
In 1993, the Corporation amended its Certificate of
Incorporation to increase the number of authorized common shares,
$1 par value, from 25,000,000 to 50,000,000 shares.
Foreign currency translation adjustments included in
shareholders' equity were $(10,945,000), $(680,000), and
$(1,111,000) for the fiscal years 1994, 1993 and 1992,
respectively. The 1994 translation adjustment was primarily due
to the Corporation's Mexican subsidiary recording a $9,500,000
translation loss in shareholders' equity due to the translation
effect of the Mexican peso devaluation.
10. OTHER INCOME - NET:
- ------------------------
Other income - net consists of the following:
(In thousands) 1994 1993 1992
---- ---- ----
Income (Expense):
- -----------------
Interest expense $ (353) $(1,185) $ (447)
Interest income 1,202 810 1,480
Net foreign currency gains 222 1,431 689
Miscellaneous - net (1,030) 3,171 430
------ ------- -------
Total $ 41 $ 4,227 $ 2,152
====== ======= =======
<PAGE> 14
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
11. INCOME TAXES:
- ------------------
The provision (credit) for income taxes consists of the
following:
(In thousands) 1994 1993 1992
- -------------- ---- ---- ----
Federal:
- -------
Current $27,975 $20,896 $18,365
Deferred (2,448) 227 (1,198)
------- ------- -------
Total Federal 25,527 21,123 17,167
------- ------- -------
Foreign:
- --------
Current 5,212 4,016 4,334
Deferred (770) (1,137) 1,567
------- ------- -------
Total Foreign 4,442 2,879 5,901
------- ------- -------
State 5,594 5,204 4,275
------- ------- -------
Total $35,563 $29,206 $27,343
======= ======= =======
The total income tax provision shown in the Statements of
Consolidated Income differed from the total income tax expense as
computed by applying the statutory United States Federal
("Federal") income tax rate to income before income taxes and
cumulative effect of changes in accounting principles as follows:
1994 1993 1992
---- ---- ----
Statutory Federal income tax rate 35.0% 35.0% 34.0%
Increase due to:
- ----------------
Effect of foreign subsidiaries'
income tax rates in excess
of the statutory Federal
tax rate 1.0
State income taxes, net of
Federal tax benefit 4.2 4.6 4.2
Other - net 1.6 (0.1) 1.4
----- ----- -----
Effective income tax rate 40.8% 39.5% 40.6%
===== ===== =====
Federal income taxes have not been provided for on cumulative
unremitted earnings of foreign subsidiaries of approximately
$5,358,000 at January 1, 1995, $16,076,000 at January 2, 1994 and
$14,051,000 at January 3, 1993.
The provision for deferred Federal income taxes consists of the
following:
(In thousands) 1994 1993 1992
- -------------- ---- ---- ----
Tax effect of temporary
differences arising from:
- ---------------------------
Depreciation $ 605 $ (94) $ 387
Insurance (311) 16 (2,757)
Accrued compensation (293) (50) 1,073
Postretirement benefits (1,049) (527) 15
Inventory valuation (612) (598) 1,071
Advertising and promotion (1,167) (512) 168
Provision for doubtful accounts (153) 405 (1,073)
Other 532 1,587 (82)
------- ------- -------
Total $(2,448) $ 227 $(1,198)
======= ======= =======
The provision for deferred foreign income taxes consists
primarily of temporary differences related to the Corporation's
Mexican subsidiary's inventory.
<PAGE> 15
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
Deferred income taxes at January 1, 1995 and January 2, 1994
consist of the following:
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
Deferred tax assets:
- --------------------
Insurance $ 9,653 $ 9,342
Accrued compensation 1,629 923
Postretirement benefits 8,471 7,445
Inventory valuation 1,225
Advertising and promotion 3,052 1,885
Provision for doubtful accounts 1,726 1,563
Other 331 830
------- -------
Total 26,087 21,988
------- -------
Deferred tax liabilities:
- -------------------------
Depreciation 6,382 5,720
Inventory valuation 194
------- -------
Total 6,382 5,914
------- -------
Net deferred tax asset $19,705 $16,074
======= =======
At January 1, 1995, current deferred tax assets of $18.5
million and current deferred tax liabilities of $1.3 million were
included in Deferred Income Taxes and Accrued Expenses - Other,
respectively. In addition, noncurrent deferred tax assets of
$2.5 million were included in Other Assets.
12. CONTINGENCIES AND COMMITMENTS:
- -----------------------------------
The Corporation has significant contingent liabilities with
respect to pending litigation, claims and disputes, principally
relating to its lighters, which arise in the ordinary course of
its business.
In July 1993, the U.S. Environmental Protection Agency ("EPA")
issued its final volumetric ranking of Potentially Responsible
Parties ("PRPs") for the Solvents Recovery Service of New England
("SRSNE") Superfund Site in Southington, Connecticut. The
Corporation has been notified that it is a PRP at the Site and
has been ranked, by the EPA, number 192 of a total of 1,659 PRPs.
This ranking represents less than 1% of the total volume of waste
disposed at the SRSNE Site, with the first 191 PRPs representing
90% of the total volume.
The Corporation cannot predict with certainty the total costs
of cleanup, the Corporation's share of the total costs, the
extent to which contributions will be available from other
parties, the amount of time necessary to complete the cleanup, or
the availability of insurance coverage. Based on currently
available information, the Corporation believes that its share of
the ultimate cleanup costs at this Site will not have a material
adverse impact on the Corporation's financial position or on its
results of operations, if such operations continue at the present
level.
<PAGE> 16
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
12. CONTINGENCIES AND COMMITMENTS (Continued):
- ----------------------------------------------
In November 1992, a state court jury in Creek County, Oklahoma,
in a 9 to 3 verdict, awarded $11 million in actual damages and
$11 million in punitive damages against the Corporation in
connection with a case involving a cigarette lighter. On May 3,
1994, the Court of Appeals of Oklahoma reduced the amount of
punitive damages by $8 million. On May 23, 1994, BIC filed a
petition for writ of certiorari with the Oklahoma Supreme Court
and on July 13, 1994, the Oklahoma Supreme Court denied BIC's
petition, thereby concluding this matter. This decision did not
have a significant effect on the Corporation's consolidated
financial position or on its results of operations.
While the ultimate liability with respect to the above matters,
including any additional liability not provided for, is not
presently determinable, it is the opinion of management, after
consultation with counsel to the Corporation, that any
liabilities resulting therefrom will not have a material adverse
effect on the Corporation's consolidated financial position or on
its results of operations if such operations continue at the
present level.
13. RELATED PARTY TRANSACTIONS AND BALANCES:
- ---------------------------------------------
Material transactions and balances with the Corporation's
majority shareholder, Societe BIC, S.A. and with other related
parties are as follows:
(In thousands) 1994 1993 1992
- -------------- ---- ---- ----
Transactions
- ------------
Sales to:
- ---------
Societe BIC, S.A. $ 1,727 $ 1,389 $ 807
Other affiliated companies 10,654 10,017 9,717
Purchases from:
- --------------
Societe BIC, S.A. 24,712 25,237 27,151
Other affiliated companies 16,414 16,966 16,820
January 1, January 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
Balances
- --------
Included in receivables:
- ------------------------
Societe BIC, S.A. $ 403 $ 233
Other affiliated companies 3,943 2,787
Employees 51
Included in payables:
- ---------------------
Societe BIC, S.A. 4,479 6,153
Other affiliated companies 2,601 3,237
<PAGE> 17
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
14. FINANCIAL INSTRUMENTS:
- ---------------------------
The following disclosure of the estimated fair value of
financial instruments is made in accordance with the requirements
of SFAS 107, "Disclosure about Fair Value of Financial
Instruments." The estimated fair value amounts have been
determined by the Corporation, using available market information
and appropriate valuation methodologies. However, considerable
judgment is necessarily required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts
that the Corporation could realize in a current market exchange.
January 1, 1995 January 2, 1994
--------------- ---------------
Carrying Estimated Carrying Estimated
or Contract Fair or Contract Fair
(In thousands) Amount Value Amount Value
- -------------- ----------- --------- ----------- ---------
Assets:
- -------
Cash and cash
equivalents $48,091 $48,091 $24,094 $24,094
Liabilities:
- ------------
Bank borrowings 6,731 6,731
Off-balance sheet
financial instruments:
- ------------------------
Forward foreign
currency contracts 23,165 23,384
Unused lines of credit 112,996 See Below 99,711 See Below
Standby letters of
credit 29,571 See Below 35,488 See Below
Cash and Cash Equivalents
- -------------------------
The Corporation compared the interest rates of cash equivalents
at the contract dates to the prevailing interest rates at January
1, 1995 and January 2, 1994 and determined that there were no
significant differences. Therefore, the carrying amounts of
these items are a reasonable estimate of their fair value.
Bank Borrowings
- ---------------
Due to the relatively short period of time between the
origination of the bank borrowings and their repayments, the
carrying amounts approximate their estimated fair value.
Forward Foreign Currency Contracts
- ----------------------------------
The fair value of foreign currency contracts was the amount as
of January 2, 1994 at which contracts with the same date of
maturity as existing contracts could be purchased, based on
estimates obtained from dealers.
Unused Lines of Credit and Standby Letters of Credit
- ----------------------------------------------------
There is no annual cost of maintaining the unused lines of
credit. The annual cost of maintaining standby letters of credit
is estimated based on fees of 1/4% to 3/4% of the amount of the
letter of credit, which would be currently charged for similar
arrangements.
<PAGE> 18
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
15. FOREIGN OPERATIONS:
- ------------------------
A summary of information about the Corporation's operations in
different geographic areas is as follows (see Note 13 for sales
to affiliated companies):
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C>
United Other Adjustments &
(In thousands) States Canada Mexico Areas Eliminations Consolidated
- -------------- -------- -------- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1994:
- -----
Net sales $405,968 $ 29,678 $ 33,086 $ 6,386 $475,118
Transfers between
geographic
areas <F1> 15,305 212 15,077 105 $(30,699)
-------- -------- -------- -------- -------- --------
Total revenues $421,273 $ 29,890 $ 48,163 $ 6,491 $(30,699) $475,118
======== ======== ======== ======== ======== ========
Income before
income taxes and
cumulative effect
of change in
accounting
principle $ 74,382 $ 5,039 $ 6,742 $ 1,020 $ 24 $ 87,207
======== ======== ======== ======== ======== ========
Identifiable
assets $313,079 $ 13,932 $ 22,991 $ 8,685 $358,687
======== ======== ======== ======== ======== ========
1993:
- -----
Net sales $372,459 $ 28,625 $ 32,677 $ 5,550 $439,311
Transfers between
geographic
areas <F1> 16,234 61 11,493 21 $(27,809)
-------- -------- -------- -------- -------- --------
Total revenues $388,693 $ 28,686 $ 44,170 $ 5,571 $(27,809) $439,311
======== ======== ======== ======== ======== ========
Income before
income taxes and
cumulative effect
of change in
accounting
principle $ 64,716 $ 4,643 $ 4,438 $ 508 $ (319) $ 73,986
======== ======== ======== ======== ======== ========
Identifiable
assets $285,661 $ 10,172 $ 34,269 $ 6,114 $336,216
======== ======== ======== ======== ======== ========
1992:
- -----
Net sales $351,803 $ 28,947 $ 32,165 $ 4,462 $417,377
Transfers between
geographic
areas <F1> 16,742 3 13,888 225 $(30,858)
-------- -------- -------- -------- -------- --------
Total revenues $368,545 $ 28,950 $ 46,053 $ 4,687 $(30,858) $417,377
======== ======== ======== ======== ======== ========
Income before
income taxes and
cumulative effect
of change in
accounting
principle $ 53,307 $ 6,742 $ 6,730 $ 929 $ (430) $ 67,278
======== ======== ======== ======== ======== ========
Identifiable
assets $261,605 $ 15,733 $ 25,807 $ 5,321 $308,466
======== ======== ======== ======== ======== ========
<FN>
<F1> Transfers between geographic areas are generally accounted for
at a range of cost to cost plus 10%.
<FN>
</TABLE>
<PAGE> 19
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------
16. SELECTED QUARTERLY FINANCIAL DATA (Unaudited):
- ---------------------------------------------------
Net Income
Net (Loss)
(In thousands except Net Gross Income Per Common
for per share data) Sales Profit (Loss)(1),(2) Share (1),(2)
- --------------------- ----- ------ ----- ----------
Quarter ended:
- --------------
April 3, 1994 $102,777 $49,665 $ 9,091 $ 0.39
July 3, 1994 138,839 68,532 16,266 0.69
October 2, 1994 127,720 64,295 14,794 0.63
January 1, 1995 105,782 50,169 10,870 0.46
- --------------- -------- ------- ------- ------
Quarter ended:
- --------------
April 4, 1993 $101,199 $46,173 $ (730) $(0.03)
July 4, 1993 124,437 56,356 13,518 0.57
October 3, 1993 123,056 56,999 13,228 0.56
January 2, 1994 90,619 43,963 8,948 0.38
- --------------- -------- ------- ------- ------
________________________
(1) The quarter ended April 3, 1994 includes a decrease in net
earnings for the cumulative effect of a change in accounting for
postemployment benefits of $623 or $0.02 per share.
(2) The quarter ended April 4, 1993 includes a decrease in net
earnings for the cumulative effect of a change in accounting for
postretirement benefits other than pensions of $9,816 or $0.42
per share.
<PAGE> 20
SCHEDULE II
- -----------
BIC CORPORATION AND SUBSIDIARIES
- --------------------------------
CONSOLIDATED VALUATION ACCOUNTS
FOR THE FISCAL YEARS ENDED JANUARY 1, 1995,
JANUARY 2, 1994 AND JANUARY 3, 1993
- -------------------------------------------
Classification Balance Additions (Additions)
at Charged Deductions Balance
Beginning to Profit from at End
(In thousands) of Year and Loss Reserves (1) of Year
- -------------- --------- --------- ----------- -------
Allowance for Doubtful Accounts:
- --------------------------------
1994 $4,084 $1,467 $1,021 $4,530
1993 5,076 85 1,077 4,084
1992 2,420 2,286 (370) 5,076
______________________
(1) Principally accounts written off, less recoveries.
<PAGE> 1
Exhibit (g)(2)
[EXCERPTS FROM
BIC CORPORATION'S
QUARTERLY REPORT
ON FORM 10-Q FOR
THE FISCAL QUARTER
ENDED JULY 2, 1995]
<PAGE> 2
PART 1. FINANCIAL INFORMATION
BIC CORPORATION AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
July 2, January 1,
1995 1995
------- ----------
ASSETS (Thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 65,923 $ 48,091
Accounts and notes receivable:
Trade - net of allowance for doubtful
accounts of $5,131,000 at July 2 and
$4,530,000 at January 1 91,260 54,648
Affiliates 5,961 4,358
Other 4,547 3,861
Inventories:
Finished goods 25,075 25,804
Work in process 18,472 18,335
Raw materials 10,663 7,860
Packaging materials 2,595 2,364
Other current assets 52,052 29,124
--------- ---------
Total current assets 276,548 194,445
--------- ---------
PROPERTY, PLANT AND EQUIPMENT - at cost less
accumulated depreciation of $158,668,000 at
July 2 and $151,365,000 at January 1 129,888 132,553
OTHER ASSETS 34,137 31,689
--------- ---------
TOTAL $440,573 $358,687
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank borrowings $ 242 $ 0
Accounts payable:
Trade 17,480 11,835
Affiliates 11,540 7,080
Accrued expenses 76,286 63,214
Other current liabilities 47,884 4,500
--------- ---------
Total current liabilities 153,432 86,629
--------- ---------
NONCURRENT LIABILITIES 25,694 24,141
--------- ---------
SHAREHOLDERS' EQUITY:
Preferred shares ($1 par value; authorized -
1,000,000; no shares issued or outstanding) 0 0
Common shares ($1 par value; authorized -
50,000,000; outstanding 23,559,244) 23,559 23,559
Retained earnings 255,861 238,076
Foreign currency translation adjustment (17,973) (13,718)
--------- ---------
Total shareholders' equity 261,447 247,917
--------- ---------
TOTAL $440,573 $358,687
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
-2-
<PAGE> 3
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994
1995 1994
---- ----
(Thousands Except Share Data)
NET SALES $257,413 $241,616
COST OF GOODS SOLD 135,222 123,419
--------- ---------
GROSS PROFIT 122,191 118,197
ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE,
MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 74,989 73,463
--------- ---------
INCOME FROM OPERATIONS 47,202 44,734
OTHER INCOME (EXPENSE) - NET 1,032 (1,248)
--------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 48,234 43,486
PROVISION FOR INCOME TAXES 19,612 17,506
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 28,622 25,980
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR POSTEMPLOYMENT BENEFITS,
NET OF TAXES OF $410,000 0 (623)
--------- ---------
NET INCOME 28,622 25,357
RETAINED EARNINGS - BEGINNING OF YEAR 238,076 205,902
DIVIDENDS PAID (PER COMMON SHARE: 1995 - $0.46,
1994 - $0.40) (10,837) (9,424)
--------- ---------
RETAINED EARNINGS - END OF PERIOD $255,861 $221,835
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244
EARNINGS (LOSS) PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ 1.21 $ 1.10
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 0 (0.02)
--------- ---------
NET INCOME $ 1.21 $ 1.08
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
-3-
<PAGE> 4
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE FISCAL QUARTERS ENDED JULY 2, 1995 AND JULY 3, 1994
1995 1994
---- ----
(Thousands Except Share Data)
NET SALES $143,935 $138,839
COST OF GOODS SOLD 75,817 70,307
--------- ---------
GROSS PROFIT 68,118 68,532
ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE,
MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 40,093 39,702
--------- ---------
INCOME FROM OPERATIONS 28,025 28,830
OTHER INCOME (EXPENSE) - NET 1,404 (1,275)
--------- ---------
INCOME BEFORE INCOME TAXES 29,429 27,555
PROVISION FOR INCOME TAXES 11,982 11,289
--------- ---------
NET INCOME (PER COMMON SHARE: 1995 - $0.74,
1994 - $0.69) $ 17,447 $ 16,266
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244
See Notes to Unaudited Condensed Consolidated Financial Statements.
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<PAGE> 5
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994
1995 1994
---- ----
(Thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES* $ 18,957 $ 10,688
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (10,643) (13,859)
Proceeds from sale of property, plant and
equipment 265 697
Deferred charges, deposits and other (2,418) (174)
Purchases of trademarks and patents (536) (523)
--------- ---------
Net cash used in investing activities (13,332) (13,859)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short term borrowings 22,995 2,746
Dividends paid (10,837) (9,424)
--------- ---------
Net cash provided by (used in)
financing activities 12,158 (6,678)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 49 (82)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,832 (9,931)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 48,091 24,094
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 65,923 $ 14,163
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 493 $ 637
========= =========
Income taxes $ 19,076 $ 17,184
========= =========
*The 1994 Change in Employers' Accounting for Postemployment Benefits had no
effect on cash and cash equivalents.
See Notes to Unaudited Condensed Consolidated Financial Statements.
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<PAGE> 6
BIC CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six-month period ended July 2, 1995 are not
necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 1995. Certain items in the 1994 unaudited
condensed consolidated financial statements have been reclassified to
conform to the 1995 presentation.
2. New Accounting Standards
------------------------
As of January 3, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." This new standard requires that the cost of benefits provided
to former or inactive employees be recognized on the accrual basis of
accounting. Previously, the Corporation recognized postemployment
benefits on a cash basis or at the date the event gave rise to the payment
of these benefits. In accordance with the provisions of the Collective
Bargaining Agreement between BIC Corporation and Local 134 United Rubber,
Cork, Linoleum and Plastic Workers of America, the Corporation provides
severance benefits to its unionized employees. The Corporation also
provides medical and life insurance benefits to salaried employees
receiving long-term disability benefits. The cumulative effect of this
change, net of deferred income tax benefit of $0.4 million, reduced net
income by $0.6 million or $0.02 per share, which was reflected in the
Corporation's condensed consolidated statement of income for the six
months ended July 3, 1994.
Also effective January 3, 1994, the Corporation adopted FASB
Interpretation No. 39, "Offsetting of Amounts Related to Certain
Contracts." This Interpretation defines the right of setoff and specifies
what conditions must be met to have that right. The Corporation enters
into forward exchange contracts denominated in foreign currencies
providing protection from foreign currency fluctuations. At July 2, 1995,
the Corporation had outstanding $20.6 million of forward exchange
contracts, under which the Corporation is required to purchase French
francs at an average contract rate of approximately 4.9 French francs to
the dollar during 1995. These contracts do not meet the conditions for
setoff as set forth in FASB Interpretation No. 39 and accordingly, at July
2, 1995, the Corporation has recorded a current asset and a current
liability for the $20.6 million.
3. Bank Borrowings
---------------
Bank borrowings totaled $0.2 million at July 2, 1995, which represents
borrowings by the Corporation's Mexican subsidiary. These borrowings were
repaid during July 1995, with a weighted average interest rate of 47%.
-6-
<PAGE> 7
BIC CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The changes in the financial condition of the Corporation between January 1,
1995 and the end of the second fiscal quarter of 1995 reflect normal
operations. Accounts and notes receivable were higher at July 2, 1995 as
compared to January 1, 1995 due to higher sales levels. The Corporation's
current ratio was 1.80 at July 2, 1995 and 2.24 at January 1, 1995.
Cash and cash equivalents were $65.9 million at July 2, 1995 as compared to
$48.1 million at January 1, 1995. The increase was largely due to the
Corporation's French franc loan described below.
Other current assets were $52.0 million at July 2, 1995 and $29.1 million at
January 1, 1995. The increase was due to the $20.6 million of forward
contracts the Corporation had outstanding at July 2, 1995. See Note 2, New
Accounting Standards for further discussion.
Accounts payable were $29.0 million at July 2, 1995 and $18.9 million at
January 1, 1995. The increase was primarily due to the timing of inventory
purchases.
Accrued expenses were $76.3 million at July 2, 1995 as compared to $63.2
million at January 1, 1995. The increase was due to an increase in accrued
insurance associated with general liability and workers' compensation, the
timing of payments for advertising campaigns and marketing promotions, and an
increase in payroll liability attributable to the timing of payments for
bonuses and vacation time.
Other current liabilities were $47.9 million at July 2, 1995 and $4.5 million
at January 1, 1995. The increase in other current liabilities was partially
due to the $20.6 million of forward contracts the Corporation had outstanding.
See Note 2, New Accounting Standards for further discussion. The increase was
also due to the Corporation borrowing 110 million French francs, or $22.7
million U.S. dollars at July 2, 1995, from its majority shareholder, Societe
BIC S.A., in accordance with a certain loan agreement. Under the agreement,
Societe BIC S.A. will advance BIC Corporation French francs during 1995. The
principal portion of the loan is due in December 1995. Interest on the loan is
payable monthly at a rate equal to the Paris Interbank Offered Rate ("PIBOR")
in effect at the loan origination date plus 0.15%. At June 30, 1995 the PIBOR
was 7.80.
The foreign currency translation adjustment included in shareholders' equity
was $(18.0) million at July 2, 1995 and $(13.7) million at January 1, 1995.
The fluctuation was primarily due to the translation effect associated with the
decline in value of the Mexican peso.
-7-
