<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)(3) OF THE SECURITIES EXCHANGE ACT OF 1934)
MAXTOR CORPORATION
(NAME OF ISSUER)
MAXTOR CORPORATION
HYUNDAI ACQUISITION, INC.
HYUNDAI ELECTRONICS AMERICA
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
HYUNDAI HEAVY INDUSTRIES CO., LTD.
HYUNDAI CORPORATION
HYUNDAI MERCHANT MARINE CO., LTD.
(NAME OF PERSONS FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
577729 10 6
(CUSIP NUMBER OF CLASS OF SECURITIES)
<TABLE>
<S> <C>
GLENN H. STEVENS K.S. YOO
MAXTOR CORPORATION CORPORATE PLANNING AND COORDINATION OFFICE
2190 MILLER DRIVE HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
LONGMONT, CO 80501 SAN 136-1, AMI-RE, BUBAL-EUB
(303) 678-2050 ICHON-KUN, KYOUNGKI-DO,
467-860 KOREA
011-82-336-30-2683
</TABLE>
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSONS FILING STATEMENT)
------------------------
COPIES TO:
<TABLE>
<S> <C> <C> <C>
I.H. CHUN BARTLEY C. DEAMER, ESQ. ALAN C. MYERS, ESQ. DIANE HOLT FRANKLE, ESQ.
LEGAL DEPARTMENT LIOR O. NUCHI, ESQ. RICHARD D. PRITZ, ESQ. ERIC GEORGATOS, ESQ.
HYUNDAI ELECTRONICS MCCUTCHEN, DOYLE, SKADDEN, ARPS, SLATE, GRAY CARY WARE &
INDUSTRIES CO., LTD. BROWN & ENERSEN MEAGHER & FLOM FREIDENRICH
66, JEOKSEON-DONG, THREE EMBARCADERO CENTER 919 THIRD AVENUE 400 HAMILTON AVENUE
JONGRO-KU SAN FRANCISCO, CA 94111 NEW YORK, NY 10022 PALO ALTO, CA 94301
SEOUL, KOREA (415) 393-2000 (212) 735-3000 (415) 328-6561
011-82-2-398-4324
</TABLE>
------------------------
THIS STATEMENT IS FILED IN CONNECTION WITH:
<TABLE>
<S> <C>
/ / A. THE FILING OF SOLICITATION MATERIALS OR AN INFORMATION STATEMENT SUBJECT TO REGULATION 14A,
REGULATION 14C OR RULE 13D-3(C) UNDER THE SECURITIES EXCHANGE ACT OF 1934.
/ / B. THE FILING OF A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933.
/X/ C. A TENDER OFFER.
/ / D. NONE OF THE ABOVE.
CHECK THE FOLLOWING BOX IF THE SOLICITING MATERIALS OR INFORMATION STATEMENT REFERRED TO IN
CHECKING BOX (A) ARE PRELIMINARY COPIES: / /
</TABLE>
CALCULATION OF FILING FEE
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<TABLE>
<S> <C>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$278,591,654.80 $55,718.34
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</TABLE>
* For purposes of calculating fee only. This amount assumes the purchase at a
purchase price of $6.70 per Share of 33,542,522 outstanding Shares, 1,773,749
Shares available for issuance under the 1992 ESPP and 6,264,573 Shares
issuable upon conversion of Options. The amount of the filing fee, calculated
in accordance with Regulation 240.0-11 of the Securities Exchange Act of
1934, as amended, equals 1/50th of one percentum of the value of Shares
purchased.
/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 SCHEDULE
AND THE DATE OF ITS FILING.
<TABLE>
<S> <C> <C> <C>
AMOUNT PREVIOUSLY PAID: $55,718.34 FILING PARTIES: HYUNDAI ACQUISITION, INC., HYUNDAI
ELECTRONICS AMERICA, HYUNDAI
ELECTRONICS INDUSTRIES, CO., LTD.,
HYUNDAI HEAVY INDUSTRIES CO., LTD.,
HYUNDAI CORPORATION AND HYUNDAI
MERCHANT MARINE CO., LTD.
FORM OR REGISTRATION NO.: SCHEDULE 14D-1 ISSUER TENDER DATE FILED: NOVEMBER 8, 1995
OFFER STATEMENT
</TABLE>
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<PAGE> 2
INTRODUCTION
This Rule 13E-3 Transaction Statement on Schedule 13E-3 (this "Schedule
13E-3") relates to the offer by Hyundai Acquisition, Inc. (the "Purchaser"), a
Delaware corporation and a wholly owned subsidiary of Hyundai Electronics
America, a California corporation ("Parent"), to purchase any and all
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
Maxtor Corporation, a Delaware corporation (the "Company"), at a price of $6.70
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 8, 1995 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer"). The Offer to Purchase and
the Letter of Transmittal are attached as Exhibits (a)(1) and (a)(2),
respectively, to the Schedule 14D-1 Tender Offer Statement ("Schedule 14D-1")
filed by Parent, the Purchaser, Hyundai Electronics Industries Co., Ltd.
("HEI"), Hyundai Heavy Industries Co., Ltd. ("HHI"), Hyundai Corporation ("HC")
and Hyundai Merchant Marine Co., Ltd. ("HMM") with the Securities and Exchange
Commission (the "SEC") on the date hereof.
The information set forth in the Schedule 14D-1 is incorporated in its
entirety herein by reference and the responses to each item of this Schedule
13E-3 are qualified in their entirety by the provisions of the Schedule 14D-1.
The following is a summary cross-reference sheet pursuant to General Instruction
F of Schedule 13E-3, showing the location in the Schedule 14D-1 and the Offer to
Purchase of information required by Schedule 13E-3. All information in, or
incorporated by reference in, the Schedule 14D-1 or this Schedule 13E-3
concerning Parent, the Purchaser, HEI, HHI, HC or HMM, or actions or events with
respect to any of them, was provided by Parent or the Purchaser, and all
information in, or incorporated by reference in, the Schedule 14D-1 or this
Schedule 13E-3 concerning the Company or its advisors, or action or events with
respect to any of them, was provided by the Company. This Schedule 13E-3 is
filed on behalf of Parent, the Purchaser, HEI, HHI, HC, HMM and the Company (the
issuer of the class of equity securities which is the subject of the Rule 13e-3
transaction).
The class of securities to which this Schedule 13E-3 relates is the Shares,
including the stock purchase rights associated with each Share (which do not
trade separately from the Shares) issued pursuant to the Rights Agreement, dated
as of January 27, 1988, as amended on September 10, 1994 and November 2, 1995.
<TABLE>
<CAPTION>
SCHEDULE 14D-1
SCHEDULE 13E-3 ITEM ITEM CAPTION IN OFFER TO PURCHASE
- ------------------------------------------ ---------------- --------------------------------
<S> <C> <C> <C>
ITEM 1 ISSUER AND CLASS OF SECURITY
SUBJECT TO THE TRANSACTION
(a) Item 1(a) "Introduction"; "The Tender
Offer -- Certain Information
Concerning the Company"
(b) Item 1(b) "Introduction"; "The Tender
Offer -- Certain Information
Concerning the Company"
(c) Item 1(c) "Introduction"; "The Tender
Offer -- Price Range of Shares;
Dividends"
(d) -- "Special Factors -- The Merger
Agreement"; "The Tender
Offer -- Price Range of Shares;
Dividends"; "The Tender
Offer -- Dividends and
Distributions"
(e) -- Not applicable
(f) -- "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
SCHEDULE 14D-1
SCHEDULE 13E-3 ITEM ITEM CAPTION IN OFFER TO PURCHASE
- ------------------------------------------ ---------------- --------------------------------
<S> <C> <C> <C>
ITEM 2 IDENTITY AND BACKGROUND
(a-d, g) Item 2 (a-d, g) "Introduction"; "The Tender
Offer -- Certain Information
Concerning the Company"; "The
Tender Offer -- Certain
Information Concerning Parent
and the Purchaser"; Schedule
I -- Information Concerning the
Directors and Executive Officers
of Parent, the Purchaser and the
Hyundai Shareholders; Schedule
II -- Information Concerning the
Directors and Executive Officers
of the Company
(e-f) Item 2 (e-f)
During the last five years none of the Company, Parent, the Purchaser, HEI, HHI, HC or
HMM nor, to the best knowledge of the Company, Parent, the Purchaser, HEI, HHI, HC or HMM,
the persons listed in Schedule I -- Information Concerning the Directors and Executive
Officers of Parent, the Purchaser and the Hyundai Shareholders and Schedule II -- Information
Concerning the Directors and Executive Officers of the Company of the Offer to Purchase, has
been (i) convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) 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 violation of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws, except as follows:
Kyung Hee Choi. On August 14, 1992, the Criminal District Court, Seoul, Korea, entered a
sentence of 2 1/2 years imprisonment, suspended for 3 years, against Mr. Choi. The related
conviction was based on alleged improper accounting by HMM, resulting in underpayment of its
Korean income tax. Mr. Choi is currently serving a probationary sentence, but no fine or
imprisonment will be imposed against Mr. Choi as long as Mr. Choi does not engage in
activities which led to his conviction during the probationary period. It is expected that Mr.
Choi's probation will be terminated in the near future.
ITEM 3 PAST CONTACTS, TRANSACTIONS OR
NEGOTIATIONS
(a)(1) Item 3(a) "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"; "Special
Factors -- Interests of Certain
Persons in the Transaction";
"The Tender Offer -- Certain
Information Concerning Parent
and the Purchaser"
(a)(2) Item 3(b) "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"; "Special
Factors -- Interests of Certain
Persons in the Transaction";
"The Tender Offer -- Certain
Information Concerning Parent
and the Purchaser"
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
SCHEDULE 14D-1
SCHEDULE 13E-3 ITEM ITEM CAPTION IN OFFER TO PURCHASE
- ------------------------------------------ ---------------- --------------------------------
<S> <C> <C> <C>
(b) -- "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"; "Special
Factors -- Purpose and Structure
of the Transaction"; "Special
Factors -- Plans for the Company
after the Transaction"; "Special
Factors -- Interests of Certain
Persons in the Transaction";
"Special Factors -- The Merger
Agreement"; "The Tender Offer --
Fees and Expenses"
ITEM 4 TERMS OF THE TRANSACTION
(a-b) -- "Introduction"; "Special
Factors"; "The Tender Offer"
ITEM 5 PLANS OR PROPOSALS OF THE ISSUER
OR AFFILIATE
(a-c) Item 5(a-c) "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"; "Special
Factors -- Purpose and Structure
of the Transaction"; "Special
Factors -- Plans for the Company
after the Transaction"; "Special
Factors -- The Merger Agreement"
(d-e) Item 5(d-e) "Introduction"; "Special
Factors -- Purpose and Structure
of the Transaction; Past
Contacts, Transactions and
Negotiations with the Company";
"Special Factors -- Plans for
the Company after the
Transaction"; "Special
Factors -- Certain Effects of
the Transaction"; "Special
Factors -- The Merger
Agreement"; "The Tender Offer --
Effects of the Offer on the
Market for the Shares"; "The
Tender Offer -- Dividends and
Distributions"
(f-g) Item 5(f-g) "Special Factors -- Plans for
the Company after the
Transaction"; "Special
Factors -- Certain Effects of
the Transaction"; "The Tender
Offer -- Effects of the Offer on
the Market for the Shares"
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
SCHEDULE 14D-1
SCHEDULE 13E-3 ITEM ITEM CAPTION IN OFFER TO PURCHASE
- ------------------------------------------ ---------------- --------------------------------
<S> <C> <C> <C>
ITEM 6 SOURCE AND AMOUNT OF FUNDS OR
OTHER CONSIDERATION
(a, c-d) Item 4(a-c) "Special Factors -- Financing
the Transaction"
(b) -- "Special Factors -- Fees and
Expenses"
ITEM 7 PURPOSE(S), ALTERNATIVES,
REASONS AND EFFECTS
(a) Item 5 "Introduction"; "Special
Factors -- Purpose and Structure
of the Transaction"; "Special
Factors -- Plans for the Company
after the Transaction"; "Special
Factors -- The Merger Agreement"
(b) -- "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"
(c) -- "Special Factors -- Background
of the Transaction; Past
Contacts, Transactions and
Negotiations with the Company";
"Special Factors --
Recommendations of the Special
Committee and the Board of
Directors; Fairness of the
Transaction"; "Special
Factors -- Analysis of Financial
Advisor to Parent"; "Special
Factors -- Purpose and Structure
of the Transaction"; "Special
Factors -- Plans for the Company
after the Transaction"
(d) -- "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"; "Special
Factors -- Purpose and Structure
of the Transaction"; "Special
Factors -- Plans for the Company
after the Transaction"; "Special
Factors -- The Merger
Agreement"; "Special Factors --
Certain Effects of the
Transaction"; "Special
Factors -- Certain Federal
Income Tax Consequences"; "The
Tender Offer -- Certain Effects
of the Offer on the Market for
the Shares"
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
SCHEDULE 14D-1
SCHEDULE 13E-3 ITEM ITEM CAPTION IN OFFER TO PURCHASE
- ------------------------------------------ ---------------- --------------------------------
<S> <C> <C> <C>
ITEM 8 FAIRNESS OF THE TRANSACTION
(a-f) -- Cover Page; "Introduction";
"Special Factors -- Background
of the Transaction; Past
Contacts, Transactions and
Negotiations with the Company";
"Special Factors --
Recommendations of the Special
Committee and the Board of
Directors; Fairness of the
Transaction"; "Special
Factors -- Opinion of Financial
Advisor"; "Special
Factors -- Analysis of Financial
Advisor to Parent"; "Special
Factors -- Purpose and Structure
of the Transaction"; "Special
factors -- Plans for the Company
after the Transaction"
ITEM 9 REPORTS, OPINIONS, APPRAISALS
AND CERTAIN NEGOTIATIONS
(a-c) -- "Introduction"; "Special
Factors -- Background of the
Transaction; Past Contacts,
Transactions and Negotiations
with the Company"; "Special
Factors -- Recommendations of
the Special Committee and the
Board of Directors; Fairness of
the Transaction"; "Special
Factors -- Opinion of Financial
Advisor"; "Special
Factors -- Analysis of Financial
Advisor to Parent"; "Special
Factors -- Purpose and Structure
of the Transaction"; "Special
Factors -- Plans for the Company
after the Transaction"; "The
Tender Offer -- Certain
Information Concerning the
Company"
ITEM 10 INTEREST IN SECURITIES OF THE
ISSUER
(a) Item 6(a) "Introduction"; "Special
Factors -- Interests of Certain
Persons in the Transaction";
"The Tender Offer -- Certain
Information Concerning Parent
and the Purchaser"
(b) Item 6(b) None
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
SCHEDULE 14D-1
SCHEDULE 13E-3 ITEM ITEM CAPTION IN OFFER TO PURCHASE
- ------------------------------------------ ---------------- --------------------------------
<S> <C> <C> <C>
ITEM 11 CONTRACTS, ARRANGEMENTS OR Item 7 "Introduction"; "Special
UNDERSTANDINGS WITH RESPECT TO Factors -- Background of the
THE ISSUER'S SECURITIES Transaction; Past Contacts,
Transactions and Negotiations
with the Company"; 'Special
Factors -- Purpose and Structure
of the Transaction"; "Special
Factors -- Plans for the Company
after the Transaction"; "Special
Factors -- Interests of Certain
Persons in the Transaction";
"Special Factors -- The Merger
Agreement"; "Special Factors --
Certain Effects of the
Transaction"; "The Tender
Offer -- Effects of the Offer on
the Market for the Shares"
ITEM 12 PRESENT INTENTION AND
RECOMMENDATION OF CERTAIN
PERSONS WITH REGARD TO THE
TRANSACTION
(a-b) -- "Special Factors -- Background
of the Transaction; Past
Contacts, Transactions and
Negotiations with the Company";
"Special Factors --
Recommendations of the Special
Committee and the Board of
Directors; Fairness of the
Transaction"; "Special
Factors -- Analysis of Financial
Advisor to Parent"; "Special
Factors -- Interests of Certain
Persons in the Transaction"
ITEM 13 OTHER PROVISIONS OF THE
TRANSACTION
(a) -- "Special Factors -- Dissenters'
Rights"; Exhibit IV -- Section
262 of the Delaware General
Corporation Law
(b) -- None
(c) -- Not applicable
ITEM 14 FINANCIAL INFORMATION
(a) -- "The Tender Offer -- Certain
Information Concerning the
Company"; Exhibit
II -- Financial Statements of
the Company
(b) -- Not applicable
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
SCHEDULE 14D-1
SCHEDULE 13E-3 ITEM ITEM CAPTION IN OFFER TO PURCHASE
- ------------------------------------------ ---------------- --------------------------------
<S> <C> <C> <C>
ITEM 15 PERSON OR ASSETS EMPLOYED,
RETAINED OR UTILIZED
(a) -- "Special Factors -- Background
of the Transaction; Past
Contacts, Transactions and
Negotiations with the Company";
"Special Factors -- Purpose and
Structure of the Transaction
"Special Factors -- Plans for
the Company after the
Transaction"
(b) Item 8 "Special Factors -- Background
of the Transaction; Past
Contracts, Transactions and
Negotiations with the Company";
"Special Factors -- Opinion of
Financial Advisor"; "Special
Factors -- Analysis of Financial
Advisor to Parent"; "The Tender
Offer -- Fees and Expenses"
ITEM 16 ADDITIONAL INFORMATION Item 10 Offer to Purchase in its
entirety
ITEM 17 MATERIAL TO BE FILED AS EXHIBITS
(a) None
(b)(1) Opinion of Bear, Stearns & Co. Inc.
(b)(2) Presentation materials prepared by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, presented to senior executives of Parent and HEI on October
23, 1995.
(b)(3) Presentation materials prepared by Bear, Stearns & Co. Inc., presented to
the Special Committee of the Board of Directors of the Company on November 1, 1995.
(c)(1) Agreement and Plan of Merger, dated as of November 2, 1995, by and among
Parent, the Purchaser and the Company.(1)
(c)(2) Stock Purchase Agreement, dated September 10, 1993, among HEI, HHI, HC, HMM
and the Company.(2)
(d)(1) Offer to Purchase, dated November 8, 1995.(3)
(d)(2) Letter of Transmittal.(3)
(d)(3) Notice of Guaranteed Delivery.(3)
(d)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.(3)
(d)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.(3)
(d)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.(3)
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
(d)(7) Summary Advertisement, dated November 8, 1995.(3)
(d)(8) Press Release, dated November 1, 1995, issued by the Company.
(d)(9) Press Release, dated November 3, 1995, issued by the Company.
(e) Rights of Dissenting Stockholders.(4)
(f) None.
(g)(1) Power of Attorney held by J.Y. Kim.
</TABLE>
- ---------------
(1) A copy of which is set forth as Exhibit II to the Offer to Purchase which is
filed as an Exhibit to the Schedule 14D-1 filed by Parent, the Purchaser,
HEI, HHI, HC and HMM with the SEC on November 8, 1995 and incorporated
herein by reference.
(2) Filed as an Exhibit to the Schedule 13D filed by HEI, HHI, HC and HMM with
the SEC on February 14, 1994 and incorporated herein by reference.
(3) Filed as an Exhibit to the Schedule 14D-1 filed by Parent, the Purchaser,
HEI, HHI, HC and HMM with the SEC on November 8, 1995 and incorporated
herein by reference.
(4) As set forth in "Special Factors -- Dissenters' Rights" and in Exhibit
IV -- Section 262 of the Delaware General Corporation Law of the Offer to
Purchase which is filed as an Exhibit to the Schedule 14D-1 filed by Parent,
the Purchaser, HEI, HHI, HC and HMM with the SEC on November 8, 1995 and
incorporated herein by reference.
<PAGE> 10
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-3 is true, complete and
correct.
Dated: November 8, 1995 HYUNDAI ACQUISITION, INC.
By: /s/ Y.H. Kim
-------------------------------------
Name: Y.H. Kim
Title: President and Chief Executive
Officer
HYUNDAI ELECTRONICS AMERICA
By: /s/ Y.H. Kim
-------------------------------------
Name: Y.H. Kim
Title: President and Chief Executive
Officer
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
By: /s/ J.Y. Kim
------------------------------------
Name: J.Y. Kim
Title: President and Chief Executive
Officer
HYUNDAI HEAVY INDUSTRIES CO., LTD.
By: /s/ J.Y. Kim
------------------------------------
Name: J.Y. Kim
Title: Attorney-in-fact
(pursuant to Power of Attorney
filed herewith)
HYUNDAI CORPORATION
By: /s/ J.Y. Kim
-----------------------------------
Name: J.Y. Kim
Title: Attorney-in-fact
(pursuant to Power of Attorney
filed herewith)
HYUNDAI MERCHANT MARINE CO., LTD.
By: /s/ J.Y. Kim
----------------------------------
Name: J.Y. Kim
Title: Attorney-in-fact
(pursuant to Power of Attorney
filed herewith)
MAXTOR CORPORATION
By: /s/ Glenn H. Stevens
---------------------------------
Name: Glenn H. Stevens
Title: Vice President, General
Counsel and Secretary
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT DESCRIPTION NUMBER
- --------- -------------------------------------------------------------------------- ------
<S> <C> <C>
(b)(1) Opinion of Bear, Stearns & Co. Inc.
(b)(2) Presentation materials prepared by Merrill Lynch, Pierce, Fenner & Smith
Incorporated presented to senior executives of Parent and HEI on October
23, 1995.
(b)(3) Presentation materials prepared by Bear, Stearns & Co. Inc., presented to
the Special Committee of the Board of Directors of the Company on November
1, 1995.
(d)(8) Press Release, dated November 1, 1995, issued by the Company.
(d)(9) Press Release, dated November 3, 1995, issued by the Company.
(g)(1) Power of Attorney held by J.Y. Kim.
</TABLE>
<PAGE> 1
EXHIBIT I
LOGO BEAR, STEARNS & CO. INC.
CITICORP CENTER
ONE SANSOME STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 772-2900
ATLANTA - BOSTON
CHICAGO - DALLAS - LOS ANGELES
NEW YORK - SAN FRANCISCO
FRANKFURT - GENEVA - HONG KONG
LONDON - PARIS - TOKYO
November 1, 1995
Special Committee of the Board of Directors
Maxtor Corporation
211 River Oaks Parkway
San Jose, CA 95134
Attention: Mr. Charles Hill
Chairmain of the Special Committee
Dear Sirs:
We understand that Maxtor Corporation ("Maxtor") has received an offer from
Hyundai Electronics America ("HEA") to acquire all of the outstanding shares of
the Common Stock of Maxtor (the "Shares") which Hyundai Electronics Industries
Co., Ltd., together with its affilitates, does not already own. You have
provided us with the Agreement and Plan of Merger in substantially final form
(the "Merger Agreement") among Maxtor, HEA and a wholly-owned subsidiary of HEA
("Subsidiary"). As more fully described in the Merger Agreement, Subsidiary (i)
would promptly commence a tender offer to purchase all Shares for $6.70 per
share in cash and (ii) as promptly thereafter as practicable would merge with
Maxtor, and each outstanding Share not previously tendered would be converted
into the right to receive $6.70 in cash (collectively, the "Transaction").
You have asked us to render our opinion as to whether the Transaction is fair,
from a financial point of view, to the shareholders of Maxtor (other than the
holders of Class A Common Stock of Maxtor).
In the course of our analyses for rendering this opinion, we have:
1. reviewed the Merger Agreement;
2. reviewed Maxtor's Annual Reports to Shareholders and Annual
Reports on Form 10-K for the fiscal years ended March 31, 1993
through 1995, and its Quarterly Report on Form 10-Q for the
period ended July 1, 1995;
3. reviewed certain operating and financial information,
including projections, provided to us by management relating
to Maxtor's business and prospects;
<PAGE> 2
4. met with certain members of Maxtor's senior management to
discuss its operations, historical financial statements and
future prospects;
5. visited Maxtor's facilities in San Jose, California;
6. reviewed the historical prices and trading volume of the
common shares of Maxtor;
7. reviewed publicly available financial data and stock market
performance data of companies which we deemed generally
comparable to Maxtor;
8. reviewed the terms of recent acquisitions of companies which
we deemed generally comparable to Maxtor; and
9. conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
In the course of our review, we have relied upon and assumed the accuracy and
completeness of the financial and other information provided to us by Maxtor.
With respect to Maxtor's projected financial results, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of Maxtor as to its expected future
performance. We have not assumed any responsibility for the information or
projections provided to us, and we have further relied upon the assurances of
the management of Maxtor that it is unaware of any facts that would make the
information or projections provided to us incomplete or misleading. In arriving
at our opinion, we have not performed or obtained any independent appraisal of
the assets of Maxtor. Our opinion is necessarily based on economic, market and
other conditions, and the information made available to us, as of the date
hereof.
Based on the foregoing, it is our opinion that the Transaction is fair, from a
financial point of view, to the shareholders of Maxtor (other than the holders
of Class A Common Stock of Maxtor).
We have acted as financial advisor to the Special Committee of Maxtor's Board of
Directors in connection with the Transaction and will receive a fee for such
services, payment of a significant portion of which is contingent upon the
consummation of the Transaction.
Very truly yours,
BEAR, STEARNS & CO. INC.
LOGO
By: /s/ G. Matthews
------------------------------------
Managing Director
<PAGE> 1
CONFIDENTIAL
------------
----------------------------------------
Presentation to
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
Project Eagle
October 23, 1995
<PAGE> 2
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Introduction ............................................... 1
Stock Price Performance..................................... 2
Summary Financial Analysis ................................. 3
</TABLE>
<PAGE> 3
- --------------------------------------------------------------------------------
INTRODUCTION
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<PAGE> 4
INTRODUCTION
- --------------------------------------------------------------------------------
- Basis and Background of Presentation
- Current price of Eagle reflects Tiger support
- Market expects Tiger to continue to support customer and vendor
relationships, and fund future capacity expansion
- Except for sales multiples, comparable company multiples are not
relevant
- Eagle does not have historical or future growth as comparable
companies
- Eagle does not have margins as comparable companies
- Eagle does not have competitive market position as comparable
companies
- Eagle's projections relying heavily on the success of new product
introduction
- Further commitment of financial resources necessary for Eagle's success
in the future
- Vertical integration required to stay competitive
- Funding of capital expenditures for plants in Thailand and Singapore
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<PAGE> 5
INTRODUCTION
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KEY ISSUES FOR FUTURE SUCCESS/SURVIVAL OF EAGLE
- Successful execution of product introductions
- Success of product positioning and pricing strategy
- Ability to secure sufficient component supplies - media, IC, head
- Ability to reduce operating expense from historical level
- Future financial liquidity
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INTRODUCTION
- --------------------------------------------------------------------------------
WORLDWIDE NON-CAPTIVE UNIT MARKET SHARE*
<TABLE>
<CAPTION>
1993 1994 1995
Total = 39.2 MM Units Total = 68.5 MM Units Total = 90.8 MM Units
<S> <C> <C> <C>
Quantum 23.1% 24.9% 25.3%
Seagate 21.8% 20.6% 21.5%
> 42.6% > 37.6% > 35.3%
Conner 20.8% 17.0% 13.8%
Western Digital 11.2% 13.9% 13.6%
Maxtor 10.9% 7.3% 7.9%
Other 12.2% 16.3% 17.9%
</TABLE>
Source: IDC
* Includes 1.x", 2.4", 3.5", 5.25"
HDDs, all capacities.
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STOCK PRICE PERFORMANCE
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<PAGE> 8
EAGLE WEEKLY STOCK PRICE AND TRADING VOLUME
- --------------------------------------------------------------------------------
From 10/19/90 to 10/20/95
Five year weekly stock price and trading volume graph for Eagle (Maxtor
Corporation) vs. the S&P 500 for October 19, 1990 through October 20, 1995.
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<PAGE> 9
EAGLE DAILY STOCK PRICE AND TRADING VOLUME
- --------------------------------------------------------------------------------
From 10/21/94 to 10/20/95
One year daily stock price and trading volume graph for Eagle (Maxtor
Corporation) vs. the S&P 500 for October 21, 1994 through October 20, 1995.
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<PAGE> 10
EAGLE VS. SELECTED COMPANIES
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WEEKLY CLOSING PRICE PERFORMANCE
FROM 10/19/90 TO 10/20/95
Five year weekly indexed stock price graph comparing Eagle (Maxtor
Corporation) against Conner Peripherals, Inc., Seagate Technology, Inc.,
Western Digital Corp. and Quantum Corporation for October 19, 1990 through
October 20, 1995.
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<PAGE> 11
EAGLE VS. SELECTED COMPANIES
- --------------------------------------------------------------------------------
Daily Closing Price Performance
From 10/21/94 to 10/20/95
One year daily indexed stock price graph comparing Eagle (Maxtor Corporation)
against Conner Peripherals, Inc., Seagate Technology, Inc., Western Digital
Corp., and Quantum Corporation for October 21, 1994 through October 20, 1995.
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<PAGE> 12
ANALYSIS OF TRADING VOLUME
- -------------------------------------------------------------------------------
BASED ON CLOSING PRICES FROM 7/22/95 TO 10/22/95
PERCENT OF VOLUME WHICH TRADED IN STOCK PRICE RANGE
<TABLE>
<CAPTION>
(Shares Traded (000's)
<S> <C> <C> <C> <C> <C> <C> <C>
4-4.3 4.3-4.6 4.6-4.9 4.9-5.2 5.2-5.5 5.5-5.8 5.8-6.1
21.54% 18.68% 18.63% 15.81% 14.16% 2.29% 8.90%
5,666 4,912 4,902 4,158 3,724 602 2,341
</TABLE>
PERCENT OF VOLUME WHICH TRADED BELOW STOCK PRICE RANGE
<TABLE>
<CAPTION>
Cumulative Shares
Traded (000's)
<S> <C> <C> <C> <C> <C> <C> <C>
4.300 4.600 4.900 5.200 5.500 5.800 6.100
21.54% 40.22% 58.85% 74.66% 88.81% 91.10% 100.00%
5,666 10,578 15,480 19,637 23,361 23,963 26,304
</TABLE>
Closing Stock Price
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<PAGE> 13
ANALYSIS OF TRADING VOLUME
- -------------------------------------------------------------------------------
BASED ON CLOSING PRICES FROM 10/22/94 TO 10/22/95
PERCENT OF VOLUME WHICH TRADED IN STOCK PRICE RANGE
<TABLE>
<CAPTION>
(Shares Traded (000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.44-3.84 3.84-4.24 4.24-4.64 4.64-5.04 5.04-5.44 5.44-5.84 5.84-6.24 6.24-6.64 6.64-7.04
3.50% 9.24% 16.35% 16.26% 17.33% 15.15% 9.80% 9.13% 3.25%
3,511 9,277 16,407 16,324 17,393 15,209 9,833 9,162 3,261
</TABLE>
PERCENT OF VOLUME WHICH TRADED BELOW STOCK PRICE RANGE
<TABLE>
<CAPTION>
Cumulative Shares
Traded (000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.838 4.238 4.638 5.038 5.438 5.838 6.238 6.638 7.038
3.50% 12.74% 29.09% 45.35% 62.68% 77.83% 87.62% 96.75% 100.00%
3,511 12,788 29,196 45,520 62,913 78,122 87,955 97,116 100,378
</TABLE>
Closing Stock Price
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<PAGE> 14
OWNERSHIP PROFILE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL
PRIMARY % OF PRIMARY SHARES % OF POTENTIAL
SHARES OWNERSHIP HELD OWNERSHIP
----------- ------------ ----------- ----------------
<S> <C> <C> <C> <C>
INSIDERS(a)
All directors and Officers as a Group 13,154 0.0% 13,154 0.0%
Options(a) -- -- 1,382,957 2.3%
---------- ---- ---------- -----
TOTAL INSIDERS 13,154 0.0% 1,396,111 2.4%
TIGER 19,480,000 36.8% 19,480,000 33.0%
INSTITUTIONS(b)
Wisconsin Investment Board 2,964,500 5.6% 2,964,500 5.0%
Capital Guardian Trust 1,438,000 2.7% 1,438,000 2.4%
Capital Research & Mgmt 1,300,000 2.5% 1,300,000 2.2%
McKee CS & Co Inc 785,950 1.5% 785,950 1.3%
Wells Fargo 600,944 1.1% 600,944 1.0%
Bankers Trust 532,830 1.0% 532,830 0.9%
College Retirement Equities 486,500 0.9% 486,500 0.8%
Dimensional Fund Advisors 445,600 0.8% 445,600 0.8%
Mellon Bank Corporation 432,451 0.8% 432,451 0.7%
Invesco Funds Group Inc 400,000 0.8% 400,000 0.7%
---------- ---- ---------- -----
Total Top 10 Institutions 9,386,775 17.7% 9,386,775 15.9%
---------- ---- ---------- -----
Other Institutions 3,055,300 5.8% 3,055,300 5.2%
Total Institutions 12,442,075 23.5% 12,442,075 21.0%
---------- ---- ---------- -----
Other Public Stockholders 21,029,436 39.7% 21,029,436 35.6%
TOTAL PRIMARY SHARES OUTSTANDING(c) 52,964,665 100.0% 52,964,665 89.6%
========== ---------- -----
Options Outstanding(d) 4,770,008 8.1%
TOTAL POTENTIAL SHARES OUTSTANDING(e) 59,117,630 100.0%
========== =====
</TABLE>
- ----------------------------------------------
(a) As stated in proxy statement dated March 25, 1995.
(b) Source: Spectrum from 13(f)'s dated October 1995.
(c) As of June 30, 1995. Source: Company form 10-Q.
(d) Source: 10-K dated December 31, 1994.
(e) Primary shares outstanding plus options available for insiders plus options
outstanding.
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SUMMARY FINANCIAL ANALYSIS
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<PAGE> 16
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
Historic and Projected Financial Performance
Dollars in Millions
<TABLE>
<CAPTION>
LTM LTM
HISTORIC YEAR ENDED MARCH 31, JUNE 30,(1) SEPT. 30,(1) PROJECTED YEAR ENDED MARCH 31,(2)
-------------------------------------- ----------- ------------ --------------------------------------
1992 1993 1994 1995 1995 1995 1996 1997 1998(3)
---- ---- ---- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SALES $1,037.5 $1,442.5 $1,152.6 $906.8 $1,004.4 $1,087.6 $1,485.8 $3,347.3 $4,263.1
% GROWTH -- 39.0% (20.1%) (21.3%) -- -- 63.9% 125.3% 27.4%
GROSS MARGIN $189.0 $265.1 ($52.4) $56.1 $62.0 $78.7 $105.0 $403.6 $564.3
% MARGIN 18.2% 18.4% (4.5%) 6.2% 6.2% 7.2% 7.1% 12.1% 13.2%
% GROWTH -- 40.2% (119.8%) (207.1%) -- -- 87.1% 284.3% 39.8%
EBITDA $67.5 $116.0 ($142.6) ($51.4) ($53.9) ($29.9) ($4.7) $205.5 $292.2
% MARGIN 6.5% 8.0% (12.4%) (5.7%) (5.4%) (2.8%) (0.2%) 5.8% 6.8%
% GROWTH -- 71.9% (222.9%) (64.0%) -- -- (93.9%) NM 56.1%
EBIT $12.3 $54.0 ($228.4) ($86.2) ($87.1) ($65.4) ($43.8) $142.1 $218.1
% MARGIN 1.2% 3.7% (19.8%) (9.5%) (8.7%) (6.0%) (2.9%) 4.2% 5.1%
% GROWTH -- 338.6% (523.3%) (62.2%) -- -- NM NM 53.5%
NET INCOME $7.1 $46.1 ($250.8) ($85.8) ($87.4) ($73.7) ($49.8) $102.0 $166.4
% MARGIN 0.7% 3.2% (21.8%) (9.5%) (8.7%) (6.8%) (3.4%) 3.0% 3.9%
% GROWTH -- 545.0% (643.8%) (65.8%) -- -- NM NM 63.2%
CAP EX $36.8 $91.7 $29.7 $32.6 $49.9 $63.0 $76.8 $103.7 $52.6
% OF SALES 3.6% 6.4% 2.6% 3.6% 5.0% 5.8% 5.2% 3.1% 1.2%
DEPR. & AMORT. $55.2 $62.0 $85.9 $34.9 $33.2 $35.5 $39.1 $63.4 $74.0
% OF SALES 5.3% 4.3% 7.4% 3.8% 3.3% 3.3% 2.6% 1.9% 1.7%
CASH FLOW $30.7 $24.3 ($172.3) ($84.0) ($103.8) ($93.0) ($81.5) $101.8 $239.6
</TABLE>
- ------------------------------------------
(1) Includes cash flow items for quarter ended December 24, 1994 assumed to
occur equally by quarter.
(2) Financial Projections provided by Eagle.
(3) First three quarters of Fiscal year 1998 provided by Eagle, the fourth
quarter is (1/4) of 1998 calendar projections which keep margins constant
with 1997 figures.
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<PAGE> 17
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
OTHER ASSUMED LIABILITIES AND REQUIRED COMMITMENTS
- $100 million 5 3/4% Convertible Subordinated Debentures
- Tiger guarantee on $100 million unsecured revolving credit line
arranged September 1995 renewable every year up to three years
- Need for future capital expenditures -- $40-$70 million in the next
two quarters
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<PAGE> 18
COMPARABLE FINANCIAL ANALYSIS OF SELECTED HDD COMPANIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SALES GROWTH GROSS MARGIN
------------------------------------------------- ----------------------------------------------
COMPANY 1992 1993 1994 1995E 1996E 1992 1993 1994 1995E 1996E
- -------------------------- --------- -------- -------- ------- --------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONNER PERIPHERALS, INC. (1) 40.0% (3.9%) 9.9% 9.8% 9.4% 20.5% 11.1% 19.8% 16.7% 24.1%
MAXTOR CORPORATION (2) 39.0% (20.1%) (21.3%) NA NA 18.4% (4.5%) 6.2% NA NA
QUANTUM CORP. (3) 50.5% 25.6% 58.0% 55.9% 13.5% 19.0% 11.2% 16.7% 15.4% 16.8%
SEAGATE TECHNOLOGY, INC. (4) 5.9% 15.0% 29.7% 18.0% 21.1% 22.1% 20.1% 20.5% 20.5% 20.5%
WESTERN DIGITAL CORP. (5) 30.6% 25.7% 38.4% 9.2% (12.2%) 14.9% 20.6% 18.5% 17.5% 19.2%
HIGH 50.5% 25.7% 58.0% 55.9% 21.1% 22.1% 20.6% 20.5% 20.5% 24.1%
MEDIAN 39.0% 15.0% 29.7% 13.9% 11.4% 19.0% 11.2% 18.5% 17.1% 19.9%
LOW 5.9% (20.1%) (21.3%) 9.2% (12.2%) 14.9% (4.5%) 6.2% 15.4% 16.8%
</TABLE>
<TABLE>
<CAPTION>
EBIT MARGIN NET INCOME MARGIN
------------------------------------------------- ----------------------------------------------
COMPANY 1992 1993 1994 1995E 1996E 1992 1993 1994 1995E 1996E
- -------------------------- --------- -------- -------- ------- --------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONNER PERIPHERALS, INC. (1) 9.4% (5.0%) 5.6% 3.6% 5.8% 6.6% (4.0%) 3.0% 2.0% 3.4%
MAXTOR CORPORATION (2) 3.7% (19.8%) (9.5%) NA NA 3.2% (21.8%) (9.5%) NA NA
QUANTUM CORP. (3) 8.8% 1.6% 6.9% 4.0% 5.1% 5.5% 0.9% 4.1% 2.3% 3.1%
SEAGATE TECHNOLOGY, INC. (4) 9.3% 8.9% 9.8% 9.7% 9.9% 6.8% 6.4% 6.7% 6.6% 6.7%
WESTERN DIGITAL CORP. (5) (0.8%) 6.0% 6.2% 5.6% 6.4% (2.0%) 4.8% 5.8% 4.2% 4.8%
HIGH 9.4% 8.9% 9.8% 9.7% 9.9% 6.8% 6.4% 6.7% 6.6% 6.7%
MEDIAN 8.8% 1.6% 6.2% 4.8% 6.1% 5.5% 0.9% 4.1% 3.3% 4.1%
LOW (0.8%) (19.8%) (9.5%) 3.6% 5.1% (2.0%) (21.8%) (9.5%) 2.0% 3.1%
</TABLE>
(3) Source: First Call estimates as of October 13, 1995 for Net Income. Paine
Webber Research Report dated August 28, 1995 for margins.
(4) Source: First Call Estimates for Net Income as of October 16, 1995.
Margins from Salomon Brothers Research Report dated July 19,1995.
(5) Source: First Call estimates as of October 12, 1995 for Net Income. Margins
from Salomon Research dated July 31, 1995.
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COMPARABLE FINANCIAL ANALYSIS OF SELECTED HDD COMPANIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DAYS A/R INVENTORY DAYS A/P WC AS % DEBT/ EBITDA/ EBIT WEIGHTED AVG. LTM SALES/
COMPANY OUT. TURNOVER OUT. OF SALES TOTAL CAP. INT. EXPENSE INT. EXPENSE INTEREST RATE EMPLOYEE
- ------------------------ -------- --------- -------- -------- ---------- ------------ ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONNER PERIPHERALS, INC. 57.6 8.4x 41.6 16.1% 34.5% 3.6x 1.4x 7.7% $233,610
MAXTOR CORPORATION 47.5 2.0x 58.4 4.9% 43.8% NM NM 6.5% $140,867
QUANTUM CORP. 54.7 7.8x 51.0 12.7% 26.2% 8.7x 6.3x 7.0% $493,936
SEAGATE TECHNOLOGY, INC. 45.6 9.1x 46.6 10.9% 13.4% 20.0x 13.4x 6.0% $ 69,840
WESTERN DIGITAL CORP. 52.0 17.6x 52.6 7.2% 0.0% 43.8x 33.0x NA $278,654
HIGH 57.6 17.6x 58.4 16.1% 43.8% 43.8x 33.0x 7.7% $493,936
MEDIAN 52.0 8.4x 51.0 10.9% 26.2% 14.4x 9.9x 6.8% $233,610
LOW 45.6 2.0x 41.6 4.9% 0.0% 3.6x 1.4x 6.0% $ 69,840
</TABLE>
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<PAGE> 20
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
Dollars in Millions
<TABLE>
<CAPTION>
REFERENCE
ENTERPRISE IMPLIED MULTIPLES REFERENCE EQUITY
VALUE RANGE OF LTM (1) RANGE
-------------------- ----------------- ---------------------------------------------------------------
TOTAL NET SALES TOTAL PER SHARE PREMIUM
-------------------- ----------------- -------------------- ------------------ --------------------
<S> <C> <C> <C> <C> <C>
CURRENT PUBLIC
MARKET VALUE -- -- $ 277.3 - -- 0.26x -- -- $ 225.4 - -- $ 4.25 - -- 0.0%
COMPARABLE COMPANIES $282.8 -- $ 402.4 0.26x -- 0.37x $124.2 -- $ 243.8 $2.34 -- $ 4.60 (44.9%) -- 8.1%
DISCOUNTED CASH FLOW
EAGLE CASE $882.7 -- $1,455.7 0.81x -- 1.34x $724.1 -- $1,297.1 $13.65 -- $24.45 221.1% -- 475.2%
SENSITIVITY 1 $385.7 -- $ 603.3 0.35x -- 0.55x $227.1 -- $ 444.7 $4.28 -- $ 8.38 0.7% -- 97.2%
SENSITIVITY 2 ($31.6) -- ($22.7) -0.03x -- -0.02x ($190.2) -- ($181.3) ($3.58) -- ($3.42) (184.3%) -- (180.4%)
COMPARABLE ACQUISITIONS $293.7 -- $ 587.3 0.27x -- 0.54x $135.1 -- $ 428.7 $2.55 -- $ 8.08 (40.1%) -- 90.1%
PREMIUM ANALYSIS $442.7 -- $ 454.0 0.41x -- 0.42x $284.1 -- $ 295.4 $5.36 -- $ 5.57 26.0% -- 31.0%
<CAPTION>
IMPLIED MULTIPLES OF
NET INCOME (2)
--------------------
1996E
--------------------
<S> <C>
CURRENT PUBLIC
MARKET VALUE 17.2x
COMPARABLE COMPANIES 9.4x
DISCOUNTED CASH FLOW
EAGLE CASE 54.6x
SENSITIVITY 1 17.1x
SENSITIVITY 2 -14.3x
COMPARABLE ACQUISITIONS 10.2x
PREMIUM ANALYSIS 21.4x
</TABLE>
- ----------------------------------------------------------------
(1) LTM Sales as of September 30, 1995 of $1087.6 Million.
(2) Based on First Call estimates of $13.26 for 1996E Net Income.
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SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
COMPARABLE PUBLICLY TRADED COMPANIES
Dollars in Millions
<TABLE>
<CAPTION>
COMPARABLE CO. IMPLIED ENTERPRISE IMPLIED EQUITY
EAGLE MULTIPLE RANGE VALUATION RANGE VALUATION RANGE(1)
--------- -------------- ------------------ ------------------
<S> <C> <C> <C> <C>
LTM Net Sales
June Qtr $1,004.4 0.26x - 0.37x $261.1 - $371.6 $209.0 - $319.5
September Qtr $1,087.6 0.26x - 0.37x $282.8 - $402.4 $124.2 - $243.8
Current Multiple 0.28x
<CAPTION>
IMPLIED EQUITY
VALUATION RANGE PREMIUM TO CASH PAID BY
PER SHARE(2) CURRENT MARKET TIGER(3)
--------------- --------------- ---------------
<S> <C> <C> <C>
LTM Net Sales
June Qtr $3.94 - $6.02 (7.3%) - 41.7% $132.3 - $202.2
September Qtr $2.34 - $4.60 (44.9%) - 8.1% $ 78.6 - $154.3
Current Multiple
</TABLE>
- -------------------------
(1) Assumes net debt of $158.6 MM as of September 30, 1995. Net debt of $52.1
as of June 30, 1995.
(2) Assumes fully diluted shares of 53.0 million.
(3) Assumes 36.7% ownership on a fully diluted basis.
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<PAGE> 22
ANALYSIS OF SELECTED HDD COMPANIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MULTIPLES MARKET VALUE AS A MULTIPLE OF
-------------------------------------
PERCENT OF MARKET ENTERPRISE CAL. CAL. LTM LFQ
STOCK PRICE 52 WEEK VALUE VALUE LTM 1995 1996 CASH COMMON
COMPANY 10/20/95 HIGH - LOW (IN MIL) (IN MIL) EPS EPS (1) EPS (1) FLOW EQUITY
- ------------------------ ------------ -------------- -------- ---------- ----- ------- ------- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONNER PERIPHERALS, INC. 18 1/2 94.9% - 205.6% $1,009 $1,155 27.5x 19.1x 12.9x 6.7x 2.7x
QUANTUM CORP. 20 1/8 70.6% - 146.4% $1,098 $1,318 11.7x 9.0x 6.0x 6.8x 1.8x
SEAGATE TECHNOLOGY, INC. 46 3/8 93.9% - 202.7% $3,551 $2,855 13.1x 10.2x 8.2x 7.1x 2.3x
WESTERN DIGITAL CORP. 16 3/4 75.7% - 127.6% $ 855 $ 547 6.8x 8.8x 8.6x 5.2x 1.8x
HIGH 94.9% - 205.6% 27.5x 19.1x 12.9x 7.1x 2.7x
MEDIAN 84.8% - 174.5% 12.4x 9.6x 8.4x 6.7x 2.1x
LOW 70.6% - 127.6% 6.8x 8.8x 6.0x 5.2x 1.8x
EAGLE 4 1/4 58.6% - 161.9% $ 225 $277 NM NM 17.2x NM 6.7x
<CAPTION>
MARKET MULTIPLES ENTERPRISE VALUE AS A MULTIPLE OF
----------------------------------------
LTM LTM LTM 1995E 1996E
COMPANY REVENUE EBITDA EBIT EBIT(2) EBIT(2)
- ------------------------ ------- ------ ----- -------- ------
<S> <C> <C> <C> <C> <C>
CONNER PERIPHERALS, INC. 0.48x 7.41x 19.2x 11.9x 8.6x
QUANTUM CORP. 0.37x 5.47x 7.6x 6.3x 4.3x
SEAGATE TECHNOLOGY, INC. 0.63x 4.34x 6.4x 5.5x 4.4x
WESTERN DIGITAL CORP. 0.26x 3.10x 4.1x 4.2x 4.2x
HIGH 0.63x 7.41x 19.2x 11.9x 8.6x
MEDIAN 0.42x 4.90x 7.0x 5.9x 4.4x
LOW 0.26x 3.10x 4.1x 4.2x 4.2x
EAGLE 0.28x NM NM NM 13.5x
</TABLE>
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ANALYSIS OF SELECTED HDD COMPANIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATING MARGINS
3-YEAR CAGR LTM MARGINS EPS GROWTH
------------------------------ ----------------------------------------- -------------------------
NET GROSS RESEARCH & NET 3 YEAR 5 YEAR
COMPANY REVENUE EBITDA EBIT INCOME MARGIN DEVELOPMENT EBITDA EBIT INCOME HISTORICAL PROJECTED(1)
- ------------------------ ------- ------ ----- ------ ------ ----------- ------ ---- ------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONNER PERIPHERALS, INC. 13.9% 8.2% 1.7% -7.8% 17.1% 5.7% 6.5% 2.5% 1.3% -6.1% 14.0%
QUANTUM CORP. 44.0% 40.6% 46.0% 43.9% 15.1% 5.5% 6.7% 4.8% 2.6% 34.1% 17.4%
SEAGATE TECHNOLOGY, INC. 16.4% 24.7% 46.8% 51.2% 20.5% 4.8% 14.5% 9.8% 6.7% 40.9% 17.0%
WESTERN DIGITAL CORP. 31.4% NM NM NM 18.5% 6.1% 8.3% 6.2% 5.8% NM 17.8%
HIGH 44.0% 40.6% 46.8% 51.2% 20.5% 6.1% 14.5% 9.8% 6.7% 40.9% 17.8%
MEDIAN 23.9% 24.7% 46.0% 43.9% 17.8% 5.6% 7.5% 5.5% 4.2% 34.1% 17.2%
LOW 13.9% 8.2% 1.7% -7.8% 15.1% 4.8% 6.5% 2.5% 1.3% -6.1% 14.0%
EAGLE -4.4% NM NM NM 6.2% 6.9% NM NM NM NM 10.2%
</TABLE>
- ----------------------------------
(1) Source: First Call.
-18-
[MERRILL LYNCH LOGO]
<PAGE> 24
ANALYSIS OF SELECTED HDD COMPANIES
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
(DOLLARS IN MM, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
REVENUE EBITDA EBIT NET INCOME EPS
------------------ --------------- --------------- ---------------- ---------------- LATEST
LATEST LATEST LATEST LATEST LATEST AVAILABLE
COMPANY LTM(1) 10-K LTM(1) 10-K LTM(1) 10-K LTM(1) 10-K LTM(1) 10-K 10-K
- ----------------------- -------- -------- ------- ------- ------- ------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONNER PERIPHERALS, INC $2,403.8 $2,365.2 $155.8 $225.2 $ 60.2 $133.5 $ 32.0 $ 70.4 $0.67 $1.24 31-Dec-94
QUANTUM CORP $3,584.0 $3,368.0 $241.0 $287.3 $173.1 $234.0 $ 94.4 $139.7 $1.71 $2.50 31-Mar-95
SEAGATE TECHNOLOGY, INC $4,539.6 $4,539.6 $658.3 $658.3 $443.0 $443.0 $304.8 $304.8 3.55 3.55 30-Jun-95
WESTERN DIGITAL CORP $2,130.9 $2,130.9 $176.6 $176.6 $133.0 $133.0 $123.3 $123.3 2.47 2.47 30-Jun-95
EAGLE $1,004.4 $906.8 ($53.9) ($51.4) ($87.1) ($86.2) ($87.4) ($85.8) (1.70) (1.70) 31-Mar-95
</TABLE>
- --------------------------------
(1) Source: Latest available financials.
-19-
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<PAGE> 25
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS
<TABLE>
<CAPTION>
Dollars in Millions
COMPARABLE ACQ. IMPLIED ENTERPRISE IMPLIED EQUITY
EAGLE MULTIPLE RANGE VALUATION RANGE VALUATION RANGE
-------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
LTM Net Sales
September Qtr $1,087.6 0.27x - 0.54x $293.7 - $587.3 $135.1 - $428.7
<CAPTION>
IMPLIED EQUITY PREMIUM TO
VALUATION RANGE(1) CURRENT CASH PAID BY
PER SHARE MARKET PRICE TIGER(2)
------------------ --------------- --------------
<S> <C> <C> <C>
LTM Net Sales
September Qtr $2.55 - $8.08 (40.1%) - 90.1% $85.5 - $271.3
</TABLE>
(1) Assumes net debt of $158.6 MM as of September 30, 1995 and $52.2 MM as of
June 30, 1995. Fully diluted shares of 53.0 million.
(2) Assumes 36.7% ownership on a fully diluted basis.
-20-
[MERRILL LYNCH LOGO]
<PAGE> 26
ANALYSIS OF SELECTED ACQUISITIONS IN THE HARD DISK DRIVE SECTOR
- --------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DATE DATE TARGET BUSINESS
ANNOUNCED EFFECTIVE TARGET ACQUIROR DESCRIPTION/COMMENTS
- --------- --------- ------------------ --------------------- --------------------------------------
<S> <C> <C> <C> <C>
9/20/95 Pending Conner Peripherals Seagate Technology Designs and produces hard drive
disks.
7/19/94 10/03/94 Digital Equipment Quantum Corp. Manufactures magnetic disks, digital
Corp.- Disk Drive linear tape drives, solid-state disk
Division and thin film head disk drives.
8/19/93 2/03/94 Maxtor Corp. Hyundai Electronics Manufactures computer disk drives.
Industries Co. Ltd. Acquired a 40% interest.
<CAPTION>
OFFER VALUE TO: TRANSACTION VALUE TO:
---------------------- -------------------------
LTM LTM
DATE OFFER TRANS. NET CASH BOOK LTM LTM LTM
ANNOUNCED VALUE VALUE INCOME FLOW(a) VALUE EBITDA EBIT SALES(c)
- --------- -------- -------- ------ ------- ----- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9/20/95 $1,300.5 $1,303.2 30.2x 9.2x 2.5x 10.1x 14.0x 0.54x
7/19/94 $ 360.0 NA NA NA NA NA NA 0.48x
8/19/93 $ 150.0 $ 150.0 NM 25.4x 2.5x 22.3x NM 0.27x
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
SUMMARY:
MAXIMUM(b) 30.2x 25.4x 2.5x 22.3x 14.0x 0.54x
MEAN(b) 30.2x 17.3x 2.5x 16.2x 14.0x 0.43x
MEDIAN(b) 30.2x 17.3x 2.5x 16.2x 14.0x 0.48x
MINIMUM(b) 30.2x 9.2x 2.5x 10.1x 14.0x 0.27x
</TABLE>
- --------------------------------------------------------------------------------
(a) Cash Flow equals net income plus depreciation and amortization plus change
in deferred taxes.
(b) Summary excludes numbers with * and numbers that are NM.
(c) In cases where transaction value not available, multiple calculated based on
offer value
-21-
[MERRILL LYNCH LOGO]
<PAGE> 27
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
DCF Cases
================================================================================
1. EAGLE CASE Per Eagle Projections
2. SENSITIVITY 1: Reduce revenue by $65 million/qr., gross margin by
$45 million/qr., and EBIT by $25 million/qr. from
Eagle Case for 1996 and 1997, grow 1998-2000 at IDC
projected industry growth rate
3. SENSITIVITY 2: Volume reduced by 40% in new products; EBIT margin
adjusted to reflect SG&A, R&D and other operating
expenses based on historical performance
================================================================================
-22-
[MERRILL LYNCH LOGO]
<PAGE> 28
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
DCF VALUATION ASSUMPTIONS - EAGLE CASE
Dollars in Millions
- -----------------------------
VOLUME & REVENUE
- - Volumes as provided by Eagle including timing and amounts for 1996 and 1997
- - Revenues in 1Q 1996 reflect media supply risk as given by Eagle
- - Pricing as provided by Eagle for 1996 and 1997
- - Revenue Grown at IDC industry projected revenue growth rates for all
capacities and form factors for 1997-1999; 1999 growth rate held constant for
2000
- - Resulting Sales Growth rates for calendar years as follows:
<TABLE>
<CAPTION>
Actual Projected
----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(28.0%) 40.4% 129.5% 47.1% 18.2% 14.8% 14.9%
</TABLE>
- - IMS revenue as provided by Eagle
- -----------------------------
GROSS MARGINS
- - Gross Margin taken as provided by Eagle for 1996 and 1997; held constant at
1997 rates for 1998 through 2000
- - Resulting Gross Margins based on calendar year as follows:
<TABLE>
<CAPTION>
Actual Projected
----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6.6% 6.4% 11.7% 12.5% 12.5% 12.5% 12.4%
</TABLE>
- -----------------------------
SELLING, GENERAL &
ADMIN. EXPENSES
- - SG&A as provided by Eagle for 1996 and 1997 and held constant 1998-2000
- - Resulting SG&A (excluding Research & Development) as a % of sales as follows
<TABLE>
<CAPTION>
Actual Projected
----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9.1% 6.3% 3.8% 3.9% 3.9% 3.9% 3.9%
</TABLE>
- -----------------------------
RESEARCH & DEVELOPMENT
- - Research & Development as a % of sales:
<TABLE>
<CAPTION>
Actual Projected
----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6.6% 6.7% 3.9% 3.7% 3.7% 3.7% 3.7%
</TABLE>
-23-
[MERRILL LYNCH LOGO]
<PAGE> 29
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
DCF VALUATION ASSUMPTIONS - EAGLE CASE
- -----------------------------
CASH FLOW ITEMS
- - Capital Expenditures provided by Eagle as follows:
<TABLE>
<CAPTION>
Actual Projected
----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
%/Sales 2.6% 5.8% 3.9% 1.2% 1.2% 1.2% 1.2%
</TABLE>
- - Working Capital provided for Eagle as a % of sales:
<TABLE>
<CAPTION>
Actual Projected
----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
%/Sales (1.4%) 5.0% 4.2% 3.3% 3.3% 3.3% 3.3%
</TABLE>
-24-
[MERRILL LYNCH LOGO]
<PAGE> 30
DISCOUNTED CASH FLOW ANALYSIS EAGLE CASE
- --------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical Calendar Year, Projected Calendar Year,
------------------------------------ -----------------------------------------------------------
UNLEVERED FREE CASH FLOWS 1993 1994 1995 1996 1997 1998 1999 2000
- ---------------------------- ------------------------------------ -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $1,237.8 $891.3 $1,251.7 $2,873.1 $4,225.6 $4,992.9 $5,734.3 $6,587.0
EBITDA -- -- (45.3) 172.0 275.1 324.7 359.6 399.5
EBIT (258.6) (81.5) (82.4) 114.6 205.4 242.3 277.2 317.1
Less: Taxes @ 20% 51.7 16.3 16.5 (22.9) (41.1) (48.5) (55.4) (63.4)
------------------------------------ -----------------------------------------------------------
After Tax EBIT (206.9) (65.2) (65.9) 91.7 164.3 193.9 221.8 253.7
Plus: Depreciation -- -- 37.1 57.4 69.7 82.4 82.4 82.4
Less: Capital Expenditures -- -- (73.0) (112.2) (49.5) (58.5) (67.2) (77.2)
(Incr.) Decr. in
Non-Cash WC -- -- (74.5) (58.5) (17.1) (25.0) (24.1) (27.8)
==================================== ===========================================================
Unlevered Free Cash Flow -- -- ($176.3) ($21.6) $167.4 $192.8 $212.8 $231.1
==================================== ===========================================================
Terminal EBIT (Year 2000) $317.1
============
</TABLE>
<TABLE>
<CAPTION>
PRESENT VALUE CALCULATION BASED ON EBIT EXIT MULTIPLE
====================================================================================================================================
------------ ----------------------------------- ------------------------------------------------- ----------
A + B = C - D
------------ ----------------------------------- ------------------------------------------------- ----------
Present Value of Present Value of
Discounted Terminal Value as Multiple Enterprise Value as Multiple
Unlevered of 2000 EBIT of 2000 EBIT
Discount Cash Flow ----------------------------------- ------------------------------------------------ Net
Rate 1996-2000 4.0x 5.0x 6.0x 7.0x 4.0x 5.0x 6.0x 7.0x Debt(b)
- --------- ------------ ----------------------------------- ------------------------------------------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.0% $443.2 $578.6 $723.2 $867.8 $1,012.5 $1,021.7 $1,166.4 $1,311.0 $1,455.7 $158.6
18.0% 430.1 554.5 693.1 831.7 970.3 984.5 1,123.1 1,261.7 1,400.4 158.6
19.0% 417.4 531.5 664.4 797.3 930.2 949.0 1,081.9 1,214.8 1,347.7 158.6
20.0% 405.3 509.8 637.2 764.7 892.1 915.1 1,042.5 1,170.0 1,297.4 158.6
21.0% 393.7 489.0 611.3 733.6 855.8 882.7 1,005.0 1,127.3 1,249.5 158.6
<CAPTION>
------------------------------------- ------------------------------------ ----------------------------------
= E F G
------------------------------------- ------------------------------------ ----------------------------------
Premium (Discount)
Present Value of Equity Equity Value Per Fully-Diluted Share Eagle Price $4.25
Discount ------------------------------------- ------------------------------------ ----------------------------------
Rate 4.0x 5.0x 6.0x 7.0x 4.0x 5.0x 6.0x 7.0x 4.0x 5.0x 6.0x 7.0x
- --------- ------------------------------------- ------------------------------------ ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.0% $863.1 $1,007.8 $1,152.4 $1,297.1 $16.28 $19.01 $21.73 $24.46 283% 347% 411% 476%
18.0% 825.9 964.5 1,103.1 1,241.8 15.58 18.19 20.80 23.42 266% 328% 389% 451%
19.0% 790.4 923.3 1,056.2 1,189.1 14.91 17.41 19.92 22.42 251% 310% 369% 428%
20.0% 756.5 883.9 1,011.4 1,138.8 14.27 16.67 19.07 21.48 236% 292% 349% 405%
21.0% 724.1 846.4 968.7 1,090.9 13.66 15.96 18.27 20.57 221% 276% 330% 384%
</TABLE>
- ---------------
(a) 1996-1997 projections based on Eagle's "Management case" Projections. Cash
flows discounted back to December 31, 1995.
(b) Net debt equals total debt less cash. Figures obtained from CQ3 1995
balance sheet.
-25-
[MERRILL LYNCH LOGO]
<PAGE> 31
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
DCF VALUATION ASSUMPTIONS - SENSITIVITY 1
Dollars in Millions
- ------------------------------------
VOLUME & REVENUE
- - Based on Eagle case modified to reflect historical performance against
projections
- - Revenue reduced by $65 million/qtr. vs. Eagle case
- - Revenue growth rates shown as follows:
<TABLE>
<CAPTION>
Actual Projected
- ----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- ----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(28.0%) 40.4% 108.8% 51.8% 18.2% 14.8% 14.9%
</TABLE>
- ------------------------------------
EBIT MARGIN
- - EBIT reduced by $25 million/qtr. for 1995 and 1996 vs. Eagle case; resulting
EBIT margins as follows:
<TABLE>
<CAPTION>
Actual Projected
- ----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- ----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(8.3%) (6.6%) 0.6% 2.7% 2.7% 2.7% 2.6%
</TABLE>
- ------------------------------------
CASH FLOW ITEMS
- - Capital Expenditures in 1996 and 1997 assumed at same % of sales as in Eagle
case
<TABLE>
<CAPTION>
Actual Projected
- ----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- ----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2.6% 5.8% 3.9% 1.2% 1.2% 1.2% 1.2%
</TABLE>
- - Working Capital assumed at same % of sales as Eagle case
<TABLE>
<CAPTION>
Actual Projected
- ----------------------- ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- ----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(1.4%) 5.0% 4.2% 3.3% 3.3% 3.3% 3.3%
</TABLE>
-26-
[MERRILL LYNCH LOGO]
<PAGE> 32
DISCOUNTED CASH FLOW ANALYSIS SENSITIVITY 1
- --------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical Calendar Year, Projected Calendar Year,
------------------------------ -------------------------------------------------------
UNLEVERED FREE CASH FLOWS 1993 1994 1995 1996 1997 1998 1999 2000
- -------------------------------- ------------------------------ -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $1,237.8 $891.3 $1,251.7 $2,613.1 $3,965.6 $4,685.7 $5,381.5 $6,181.7
EBITDA -- -- (45.3) 66.8 170.8 201.8 220.2 240.8
EBIT (258.6) (81.5) (82.4) 14.6 105.4 124.5 142.9 163.5
Less: Taxes @20% 51.7 16.3 16.5 (2.9) (21.1) (24.9) (28.6) (32.7)
------------------------------ -------------------------------------------------------
After Tax EBIT (206.9) (65.2) (65.9) 11.7 84.3 99.6 114.3 130.8
Plus: Depreciation -- -- 37.1 52.2 65.4 77.3 77.3 77.3
Less: Capital Expenditures -- -- (73.0) (102.0) (46.5) (54.9) (63.0) (72.4)
(Incr.) Decr.
in Non-Cash WC -- -- (74.5) (47.6) (19.5) (23.4) (22.7) (26.1)
------------------------------ -------------------------------------------------------
Unlevered Free Cash Flow -- -- ($176.3) ($85.8) $83.8 $98.6 $105.9 $109.6
============================== =======================================================
Terminal EBIT (Year 2000) $163.5
==========
</TABLE>
<TABLE>
<CAPTION>
PRESENT VALUE CALCULATION BASED ON EBIT EXIT MULTIPLE
====================================================================================================================================
----------- ------------------------------ ------------------------------ --------
A + B = C - D
----------- ------------------------------ ------------------------------ --------
Present Value of Present Value of
Discounted Terminal Value as Multiple Enterprise Value as Multiple
Unlevered of 2000 EBIT of 2000 EBIT Net
Discount Cash Flow ------------------------------ ------------------------------
Rate 1996-2000 4.00x 5.00x 6.00x 4.00x 5.00x 6.00x Debt(b)
- ----------- ----------- ------------------------------ ------------------------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
17.0% $155.9 $298.2 $372.8 $447.4 $454.2 $528.7 $603.3 $158.6
18.0% 150.0 285.8 357.3 428.7 435.8 507.3 578.7 158.6
19.0% 144.3 274.0 342.5 411.0 418.3 486.8 555.3 158.6
20.0% 138.9 262.8 328.5 394.2 401.6 467.3 533.0 158.6
21.0% 133.6 252.1 315.1 378.1 385.7 448.8 511.8 158.6
<CAPTION>
------------------------------ ------------------------------ --------------------------
= E F G
------------------------------ ------------------------------ --------------------------
Equity Value Per Premium (Discount)
Present Value of Equity Fully-Diluted Share Eagle Price $4.25
Discount ------------------------------ ------------------------------ --------------------------
Rate 4.00x 5.00x 6.00x 4.00x 5.00x 6.00x 4.00x 5.00x 6.00x
- ----------- ------------------------------ ------------------------------ --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.0% $295.6 $370.1 $444.7 $5.57 $6.98 $8.39 31.2% 64.2% 97.3%
18.0% 277.2 348.7 420.1 5.23 6.58 7.92 23.0% 54.7% 86.4%
19.0% 259.7 328.2 396.7 4.90 6.19 7.48 15.2% 45.6% 76.0%
20.0% 243.0 308.7 374.4 4.58 5.82 7.06 7.8% 37.0% 66.1%
21.0% 227.1 290.2 353.2 4.28 5.47 6.66 0.8% 28.7% 56.7%
</TABLE>
- ---------------
(a) 1996-1997 projections based on "Sensitivity 1" Projections. Cash flows
discounted back to December 31, 1995.
(b) Net debt equals total debt less cash. Figures obtained from CQ3 1995
balance sheet.
-27-
[MERRILL LYNCH LOGO]
<PAGE> 33
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
DCF VALUATION ASSUMPTIONS - SENSITIVITY 2
Dollars in Millions
- -----------------------------
VOLUME & REVENUE
- - Volumes adjusted from Eagle case for 1996 and 1997; volumes for all new
products decreased by 40% in quarter of introduction; product ramp-up
retained
- - Pricing as provided by Eagle for 1996 and 1997
- - Revenue grown at IDC industry projected revenue growth rates for all
capacities and form factors for 1997-1999; held constant for 2000
- - Resulting Sales Growth Rate as follows:
<TABLE>
<CAPTION>
Actual Projected
- -------------------------- ---------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- -------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(28.0%) 40.4% 56.6% 36.3% 18.3% 15.1% 15.1%
</TABLE>
- - IMS revenue as provided by Eagle
- -----------------------------
GROSS MARGINS
- - Resulting Gross Margins as follows:
<TABLE>
<CAPTION>
Actual Projected
- -------------------------- ---------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- -------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6.6% 6.4% 11.0% 11.9% 11.9% 11.8% 11.8%
</TABLE>
- -----------------------------
SELLING, GENERAL &
ADMIN. EXPENSES
- - Sales & Marketing increased as a % of sales vs. Eagle provided numbers to
reflect historic performance
- - G&A and Bad Debt expense same as Eagle case
- - Resulting SG&A (excluding R&D) as a % of sales as follows:
<TABLE>
<CAPTION>
Actual Projected
- -------------------------- ---------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- -------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9.1% 6.3% 5.1% 5.1% 5.1% 5.1% 5.1%
</TABLE>
- -----------------------------
RESEARCH & DEVELOPMENT
- - R&D assumed at same level as 1994 actual results
<TABLE>
<CAPTION>
Actual Projected
- -------------------------- ---------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- -------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6.6% 6.7% 6.5% 6.5% 6.5% 6.5% 6.5%
</TABLE>
-28-
[MERRILL LYNCH LOGO]
<PAGE> 34
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
DCF VALUATION ASSUMPTIONS - SENSITIVITY 2
- -----------------------------
CASH FLOW ITEMS
- - Capital Expenditures in 1996 and 1997 assumed at same % of sales as in Eagle
case
<TABLE>
<CAPTION>
Actual Projected
- -------------------------- ---------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- -------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2.6% 5.8% 3.9% 1.2% 1.2% 1.2% 1.2%
</TABLE>
- - Working Capital assumed at same % of sales as Eagle case
<TABLE>
<CAPTION>
Actual Projected
- -------------------------- ---------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
- -------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(1.4%) 5.0% 4.2% 3.3% 3.3% 3.3% 3.3%
</TABLE>
-29-
[MERRILL LYNCH LOGO]
<PAGE> 35
DISCOUNTED CASH FLOW ANALYSIS SENSITIVITY 2
- --------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical Calendar Year, Projected Calendar Year,
------------------------------- -------------------------------------------------------
UNLEVERED FREE CASH FLOWS 1993 1994 1995 1996 1997 1998 1999 2000
- ---------------------------------------- ------------------------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $1,237.8 $891.3 $1,251.7 $1,959.7 $2,670.6 $3,158.0 $3,635.2 $4,185.6
EBITDA -- -- (45.3) 28.1 51.2 60.3 60.6 60.7
EBIT (258.6) (81.5) (82.4) (11.0) 7.2 8.2 8.5 8.6
Less: Taxes @ 20% 51.7 16.3 16.5 2.2 (1.4) (1.6) (1.7) (1.7)
------------------------------- -------------------------------------------------------
After Tax EBIT (206.9) (65.2) (65.9) (8.8) 5.8 6.6 6.8 6.9
Plus: Depreciation -- -- 37.1 39.1 44.1 52.1 52.1 52.1
Less: Capital Expenditures -- -- (73.0) (76.5) (31.3) (37.0) (42.6) (49.0)
(Incr.) Decr. in Non-Cash WC -- -- (74.5) (20.2) (4.8) (15.9) (15.5) (17.9)
=============================== =======================================================
Unlevered Free Cash Flow -- -- ($176.3) ($66.4) $13.8 $5.8 $0.8 ($8.0)
=============================== =======================================================
Terminal EBIT (Year 2000) $8.6
==========
</TABLE>
PRESENT VALUE CALCULATION BASED ON EBIT EXIT MULTIPLE
================================================================================
<TABLE>
<CAPTION>
------------ ----------------------------------- ---------------------------------- ----------
A + B = C - D
------------ ----------------------------------- ---------------------------------- ----------
Present Value of Present Value of
Discounted Terminal Value as Multiple Enterprise Value as Multiple
Unlevered of 2000 EBIT of 2000 EBIT
Discount Cash Flow ----------------------------------- ---------------------------------- Net
Rate 1996-2000 4.0x 5.0x 6.0x 4.0x 5.0x 6.0x Debt(b)
- ---------- ------------ ----------------------------------- ---------------------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
17.0% ($46.3) $15.7 $19.7 $23.6 ($30.6) ($26.6) ($22.7) $158.6
18.0% (45.9) 15.1 18.8 22.6 (30.9) (27.1) (23.3) 158.6
19.0% (45.6) 14.4 18.1 21.7 (31.1) (27.5) (23.9) 158.6
20.0% (45.2) 13.9 17.3 20.8 (31.4) (27.9) (24.4) 158.6
21.0% (44.9) 13.3 16.6 19.9 (31.6) (28.3) (25.0) 158.6
<CAPTION>
----------------------------------- ---------------------------------- ----------------------------
= E F G
----------------------------------- ---------------------------------- ----------------------------
Equity Value Per Premium (Discount)
Present Value of Equity Fully-Diluted Share Eagle Price $4.25
Discount ----------------------------------- ---------------------------------- ----------------------------
Rate 4.0x 5.0x 6.0x 4.0x 5.0x 6.0x 4.0x 5.0x 6.0x
- ---------- ----------------------------------- ---------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.0% ($189.2) ($185.2) ($181.3) ($3.57) ($3.49) ($3.42) (183.9%) (182.2%) (180.4%)
18.0% (189.5) (185.7) (181.9) (3.57) (3.50) (3.43) (184.1%) (182.4%) (180.7%)
19.0% (189.7) (186.1) (182.5) (3.58) (3.51) (3.44) (184.2%) (182.6%) (181.0%)
20.0% (190.0) (186.5) (183.0) (3.58) (3.52) (3.45) (184.3%) (182.8%) (181.2%)
21.0% (190.2) (186.9) (183.6) (3.59) (3.52) (3.46) (184.4%) (182.9%) (181.5%)
</TABLE>
- --------------------------
(a) 1996-1997 projections based on Eagle's "Sensitivity 2" Projections. Cash
flows discounted back to December 31, 1995.
(b) Net debt equals total debt less cash. Figures obtained from CQ3 1995 balance
sheet.
-30-
[MERRILL LYNCH LOGO]
<PAGE> 36
SUMMARY FINANCIAL ANALYSIS
- --------------------------------------------------------------------------------
MINORITY STAKE HOLDERS ACQUIRING A MAJORITY POSITION 1988-PRESENT
<TABLE>
<CAPTION>
Percentage of Shares
Date --------------------
Ann. Target Acquiror Deal Value Held Acquired
- -------- -------------------------------- ------------------------------- ---------- ------ --------
<S> <C> <C> <C> <C> <C>
2/27/95 CCP Insurance Inc Conseco Inc $273.7 48.0% 51.9%
2/22/95 Preferred Entertainment Inc People's Choice TV Corp 56.3 22.7% 77.3%
1/9/95 Pyramid Technology Corp Siemens Nixdorf Info AG 214.4 17.6% 82.4%
11/16/94 National Gypsum Co Delcor Inc(Golden Eagle Ind) 937.6 19.5% 80.5%
9/14/94 Petrolane Inc(QFB Partners) AmeriGas Inc(UGI Corp) 109.6 34.8% 65.2%
6/29/94 Santa Fe Pacific Corp Burlington Northern Inc 3747.5 36.6% 63.4%
3/9/94 Dr Pepper/Seven-Up Cos Inc Cadbury Schweppes PLC 2366.5 22.7% 77.3%
9/22/93 Travelers Corp Primerica Corp 3955.9 24.1% 75.9%
6/14/93 Goody Products Inc Newell Co 144.8 11.7% 88.2%
11/13/92 Brand Cos Inc Rust International Inc 185.0 55.9% 44.1%
9/9/92 American Fructose Corp American Maize-Products Co 130.3 42.6% 57.3%
9/4/92 Carriage Industries Inc Dixie Yarns Inc 59.5 44.2% 55.8%
8/25/92 American Funeral Services Corp Service Corp International 51.4 30.3% 69.7%
11/27/89 Apple Bancorp Inc Apple Merger Corp 169.6 30.4% 69.3%
4/10/89 Scotty's Inc GB-Inno-BM SA 146.4 41.3% 58.7%
3/23/89 Chelsea Industries Inc Investor Group 51.3 34.1% 65.4%
3/15/89 Pittway Corp Standard Shares Inc 76.8 50.1% 49.9%
11/16/88 FGIC Corp General Electric Capital Corp 431.0 36.7% 63.3%
8/2/88 Harvard Industries Inc Harvard Acquisition Corp 302.8 38.9% 61.1%
5/10/88 First Boston Inc Credit Suisse First Boston 1100.0 46.4% 53.6%
<CAPTION>
Price Per Premium to Announcement Date:
Date -----------------------------
Ann. Share One Day One Week One Month
- -------- --------- ------- -------- ---------
<S> <C> <C> <C> <C>
2/27/95 23.25 20.0% 30.1% 23.2%
2/22/95 16.15 (29.0%) (24.9%) (14.4%)
1/9/95 16.00 30.6% 23.1% 43.8%
11/16/94 54.00 64.9% 58.8% 54.3%
9/14/94 16.00 48.8% 50.6% 45.5%
6/29/94 29.57 46.0% 36.0% 25.8%
3/9/94 33.00 33.3% 36.1% 30.7%
9/22/93 36.99 2.8% 2.8% 7.2%
6/14/93 24.75 34.7% 38.5% 45.6%
11/13/92 18.75 4.9% 13.6% 4.9%
9/9/92 25.50 21.4% 23.6% 29.1%
9/4/92 13.25 32.5% 37.7% 32.5%
8/25/92 15.00 27.7% 20.0% 30.4%
11/27/89 38.00 3.8% 3.4% 5.2%
4/10/89 16.50 37.5% 37.5% 34.7%
3/23/89 29.50 62.8% 68.6% 65.0%
3/15/89 33.50 (67.0%) (67.2%) (66.6%)
11/16/88 24.00 29.7% 30.6% 30.6%
8/2/88 13.00 55.2% 89.1% 89.1%
5/10/88 52.50 85.8% 101.0% 113.2%
1988 TO PRESENT:
MAXIMUM 85.8% 101.0% 113.2%
MEAN 27.3% 30.5% 31.5%
MEDIAN 31.6% 33.3% 30.7%
MINIMUM (67.0%) (67.2%) (66.6%)
1992 TO PRESENT:
MAXIMUM 64.9% 58.8% 54.3%
MEAN 26.0% 26.6% 27.6%
MEDIAN 30.6% 30.1% 30.4%
MINIMUM (29.0%) (24.9%) (14.4%)
</TABLE>
-31-
[MERRILL LYNCH LOGO]
<PAGE> 1
PROJECT EAGLE
PRESENTATION TO THE SPECIAL COMMITTEE
OF THE BOARD OF DIRECTORS
BEAR, STEARNS & CO. INC.
NOVEMBER 1, 1995
BEAR STEARNS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
I Summary Financial Information
II Summary Valuation Analysis
- Conner Peripherals Acquisition
- Digital Equipment Disk Drive Acquisition
- Other Comparable Acquisitions
- Comparable Publicly Traded Companies
III Multiple and Premium Analysis
IV Price and Volume Analysis
EXHIBITS
A Control Premium Analysis of Selected Comparable Publicly Traded Companies
B Survey of Selected Comparable Publicly Traded Companies
C Survey of Comparable Acquisitions
D Premium Analysis of Selected Acquisitions of Remaining Interests
</TABLE>
BEAR STEARNS
<PAGE> 3
PROJECT EAGLE
SECTION I
SUMMARY FINANCIAL INFORMATION
BEAR STEARNS
<PAGE> 4
PROJECT EAGLE
SUMMARY FINANCIAL INFORMATION
KEY FINANCIAL STATISTICS
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<S> <C>
Latest Twelve Months EPS(1)................................................... $ (1.63)
Projected Calendar 1995 EPS................................................... $ (1.45)
Projected Calendar 1996 EPS................................................... $0.50-$1.00
Latest Twelve Months Revenue(1)............................................... $1,111.4
Latest Twelve Months EBITDA(1)(2)............................................. (41.7)
Latest Twelve Months EBIT(1).................................................. (75.7)
Cash and Cash Equivalents(3).................................................. $19.4
Total Debt(3)................................................................. 175.4
Available Credit Capacity(3).................................................. 48.0
</TABLE>
- ---------------
(1) Latest twelve months data is for the period ended September 30, 1995.
(2) Defined as earnings before interest, taxes, depreciation and amortization.
(3) As of September 30, 1995.
BEAR STEARNS Page 2
<PAGE> 5
PROJECT EAGLE
SUMMARY FINANCIAL INFORMATION
HISTORICAL QUARTERLY FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
6/26/93 9/25/93 12/25/93 3/26/94 6/25/94
-------- -------- --------- -------- --------
(1)
<S> <C> <C> <C> <C> <C>
Revenue............................................. $260.574 $313.546 $ 318.098 $260.397 $218.310
Cost of revenue..................................... 278.583 323.999 371.731 230.701 194.286
-------- -------- -------- -------- --------
Gross margin........................................ (18.009) (10.453) (53.633) 29.696 24.024
Operating expenses:
Research and development........................... 30.676 26.684 25.751 14.057 14.036
Selling, general and administrative................ 20.575 19.662 19.849 18.768 21.045
Restructuring/Other................................ 0.000 0.000 19.500 0.000 0.000
-------- -------- -------- -------- --------
Total operating expenses............................ 51.251 46.346 65.100 32.825 35.081
-------- -------- -------- -------- --------
Income (loss) from operations....................... (69.260) (56.799) (118.733) (3.129) (11.057)
Interest expense.................................... (3.099) (2.743) (2.228) (2.017) (1.971)
Interest income..................................... 0.680 0.419 0.156 1.028 1.439
Minority interest in loss of joint venture.......... 0.000 0.000 0.000 0.000 0.000
-------- -------- -------- -------- --------
Income (loss) before income taxes................... (71.679) (59.123) (120.805) (4.118) (11.589)
Provision for income taxes.......................... 0.500 0.500 0.500 0.364 0.600
-------- -------- -------- -------- --------
Net income (loss)................................... $(72.179) $(59.623) $(121.305) $ (4.482) $(12.189)
======== ======== ======== ======== ========
Fully diluted income (loss) per share............... $ (2.50) $ (2.02) $ (4.12) $ (0.11) $ (0.24)
======== ======== ======== ======== ========
Operating income (loss) excl. non-recurring items... $(69.260) $(56.799) $ (30.333) $ (3.129) $(11.057)
<CAPTION>
9/24/94 12/24/94 3/25/95 7/1/95 9/30/95
-------- -------- -------- -------- --------
(2) (3)
<S> <C> <C> <C> <C> <C>
Revenue............................................. $174.368 $238.174 $275.947 $315.894 $281.406
Cost of revenue..................................... 191.064 216.846 248.473 286.033 281.359
-------- -------- -------- -------- --------
Gross margin........................................ (16.696) 21.328 27.474 29.861 0.047
Operating expenses:
Research and development........................... 14.589 15.791 16.353 22.791 21.847
Selling, general and administrative................ 21.437 20.078 19.040 18.976 19.486
Restructuring/Other................................ 0.000 0.000 (10.213) 0.000 0.000
-------- -------- -------- -------- --------
Total operating expenses............................ 36.026 35.869 25.180 41.767 41.333
-------- -------- -------- -------- --------
Income (loss) from operations....................... (52.722) (14.541) 2.294 (11.906) (41.286)
Interest expense.................................... (2.445) (2.083) (1.880) (1.820) (2.511)
Interest income..................................... 1.050 0.789 0.938 0.552 0.107
Minority interest in loss of joint venture.......... 0.000 0.000 0.000 0.000 0.000
-------- -------- -------- -------- --------
Income (loss) before income taxes................... (54.117) (15.835) 1.352 (13.174) (43.690)
Provision for income taxes.......................... 0.600 0.600 0.233 0.653 0.798
-------- -------- -------- -------- --------
Net income (loss)................................... $(54.717) $(16.435) $ 1.119 $(13.827) $(44.488)
======== ======== ======== ======== ========
Fully diluted income (loss) per share............... $ (1.09) $ (0.32) $ 0.02 $ (0.27) $ (0.84)
======== ======== ======== ======== ========
Operating income (loss) excl. non-recurring items... $(34.722) $(14.541) $ (7.919) $(11.906) $(41.286)
</TABLE>
- ---------------
(1) Includes special charges of $68.9 million in cost of revenue and a
restructuring charge of $19.5 million.
(2) Includes one-time charge of approximately $18 million in cost of revenue.
(3) Net income includes $10.213 million related to the gain on sale of the
Company's interest in Maxoptix Corporation.
BEAR STEARNS Page 3
<PAGE> 6
PROJECT EAGLE
SUMMARY FINANCIAL INFORMATION
HISTORICAL QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
AS A % OF REVENUES:
6/26/93 9/25/93 12/25/93 3/26/94 6/25/94
------- ------- -------- ------- -------
(1)
<S> <C> <C> <C> <C> <C>
Revenue..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue............................. 106.9% 103.3% 116.9% 88.6% 89.0%
------- ------- -------- ------- -------
Gross margin................................ (6.9%) (3.3%) (16.9%) 11.4% 11.0%
Operating expenses:
Research and development... .............. 11.8% 8.5% 8.1% 5.4% 6.4%
Selling, general and administrative....... 7.9% 6.3% 6.2% 7.2% 9.6%
Restructuring/Other....................... 0.0% 0.0% 6.1% 0.0% 0.0%
------- ------- -------- ------- -------
Total operating expenses.................... 19.7% 14.8% 20.5% 12.6% 16.1%
------- ------- -------- ------- -------
Income (loss) from operations............... (26.6%) (18.1%) (37.3%) (1.2%) (5.1%)
Interest expense............................ (1.2%) (0.9%) (0.7%) (0.8%) (0.9%)
Interest income............................. 0.3% 0.1% 0.0% 0.4% 0.7%
Minority interest in loss of joint venture.. 0.0% 0.0% 0.0% 0.0% 0.0%
------- ------- -------- ------- -------
Income (loss) before income taxes........... (27.5%) (18.9%) (38.0%) (1.6%) (5.3%)
Provision forincome taxes................... 0.2% 0.2% 0.2% 0.1% 0.3%
------- ------- -------- ------- -------
Net income (loss)........................... (27.7%) (19.0%) (38.1%) (1.7%) (5.6%)
======= ======= ======== ======= =======
<CAPTION>
9/24/94 12/24/94 3/25/95 7/1/95 9/30/95
-------- -------- ------- ------ -------
(2) (3)
<S> <C> <C> <C> <C> <C>
Revenue..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue............................. 109.6% 91.0% 90.0% 90.5% 100.0%
------- -------- ------- ------- -------
Gross margin................................ (9.6%) 9.0% 10.0% 9.5% 0.0%
Operating expenses:
Research and development... .............. 8.4% 6.6% 5.9% 7.2% 7.8%
Selling, general and administrative...... 12.3% 8.4% 6.9% 6.0% 6.9%
Restructuring/Other....................... 0.0% 0.0% (3.7%) 0.0% 0.0%
------- -------- ------- ------- -------
Total operating expenses.................... 20.7% 15.1% 9.1% 13.2% 14.7%
------- -------- ------- ------- -------
Income (loss) from operations............... (30.2%) (6.1%) 0.8% (3.8%) (14.7%)
Interest expense............................ (1.4%) (0.9%) (0.7%) (0.6%) (0.9%)
Interest income............................. 0.6% 0.3% 0.3% 0.2% 0.0%
Minority interest in loss of joint venture.. 0.0% 0.0% 0.0% 0.0% 0.0%
------- -------- ------- ------- -------
Income (loss) before income taxes........... (31.0%) (6.6%) 0.5% (4.2%) (15.5%)
Provision forincome taxes................... 0.3% 0.3% 0.1% 0.2% 0.3%
------- -------- ------- ------- -------
Net income (loss)........................... (31.4%) (6.9%) 0.4% (4.4%) (15.8%)
======= ======== ======= ======= =======
</TABLE>
- ---------------
(1) Includes special charges of $68.9 million in cost of revenue and a
restructuring charge of $19.5 million.
(2) Includes one-time charge of approximately $18 million in cost of revenue.
(3) Net income includes $10.213 million related to the gain on sale of the
Company's interest in Maxoptix Corporation.
BEAR STEARNS Page 4
<PAGE> 7
PROJECT EAGLE
SUMMARY FINANCIAL INFORMATION
HISTORICAL AND PROJECTED QUARTERLY FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDING
------------------------------------
9/30/95 A 12/31/95 E 3/31/96 E
--------- ---------- ---------
<S> <C> <C> <C>
Revenue....................................................... $ 281.4 $353.4 $ 422.4
Cost of revenue............................................... 281.4 322.6 381.3
------- -------- -------
Gross profit.................................................. 0.0 30.8 41.1
Operating expenses:
Research and development.................................... 21.8 23.3 23.9
Selling, general and administrative......................... 19.5 22.7 23.6
------- -------- -------
Total operating expenses...................................... 41.3 46.0 47.5
------- -------- -------
Income (loss) from operations................................. (41.3) (15.2) (6.4)
Other expense, net............................................ 2.4 3.0 1.8
------- -------- -------
Income (loss) before income taxes............................. (43.7) (18.2) (8.2)
Provision for income taxes.................................... 0.8 0.6 0.6
------- -------- -------
Net income (loss)............................................. $ (44.5) $(18.8) $ (8.8)
======= ======== =======
Fully diluted income (loss) per share......................... $ (0.84) $(0.35) $ (0.17)
Revenue Growth
Year/Year................................................... 48.4% 53.1%
Sequential.................................................. 25.6% 19.5%
Gross margin.................................................. 0.0% 8.7% 9.7%
Cash.......................................................... $ 19.4 $ 6.0 $ 6.0
Working capital borrowings.................................... 72.0 88.5 88.1
Remaining capacity............................................ 48.0 31.5 31.9
Accounts receivable........................................... $ 141.4 $156.0 $ 190.1
Inventory..................................................... 143.2 115.0 131.3
</TABLE>
BEAR STEARNS Page 5
<PAGE> 8
PROJECT EAGLE
SUMMARY FINANCIAL INFORMATION
RECENT ACTUAL VERSUS PLAN DATA -- REVENUE
(IN MILLIONS)
<TABLE>
<CAPTION>
REVENUE
-------------------------------------------------------------------
VARIANCE VARIANCE
--------------- ----------------
ACTUAL PLAN(1) $ % PLAN(2) $ %
------ ------- ------ ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
9/94............................ $174.4 $209.8 $(35.4) -17% $281.3 $(106.9) -38%
12/94........................... 238.2 217.6 20.6 9% 279.4 (41.2) -15%
3/95............................ 275.9 300.3 (24.4) -8% 341.8 (65.9) -19%
6/95............................ 315.9 350.2 (34.3) -10% 333.8 (17.9) -5%
9/95............................ 281.4 362.4 (81.0) -22% 369.7 (88.3) -24%
12/95........................... NA 353.4 NA 400.9 NA
</TABLE>
- ---------------
(1) Represents plan completed one month prior to the quarter.
(2) Represents plan completed four months prior to the quarter.
BEAR STEARNS Page 6
<PAGE> 9
PROJECT EAGLE
SUMMARY FINANCIAL INFORMATION
RECENT ACTUAL VERSUS PLAN DATA -- GROSS PROFIT
(IN MILLIONS)
<TABLE>
<CAPTION>
GROSS PROFIT
--------------------------------------------------------------------
VARIANCE VARIANCE
---------------- ----------------
ACTUAL PLAN(1) $ % PLAN(2) $ %
------ ------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
9/94.......................... $(16.7) $ 7.2 $(23.9) -332% $35.2 $(51.9) -147%
12/94.......................... 21.3 15.3 6.0 39% 26.1 (4.8) -18%
3/95.......................... 27.5 35.6 (8.1) -23% 46.0 (18.5) -40%
6/95.......................... 29.9 48.2 (18.3) -38% 47.7 (17.8) -37%
9/95.......................... 0.0 14.5 (14.5) -100% 53.9 (53.9) -100%
12/95.......................... NA 30.8 NA 8.6 NA
</TABLE>
- ---------------
(1) Represents plan completed one month prior to the quarter.
(2) Represents plan completed four months prior to the quarter.
BEAR STEARNS Page 7
<PAGE> 10
PROJECT EAGLE
SUMMARY FINANCIAL INFORMATION
RECENT ACTUAL VERSUS PLAN DATA -- PRETAX INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
PRETAX INCOME
--------------------------------------------------------------------
VARIANCE VARIANCE
---------------- ----------------
ACTUAL PLAN(1) $ % PLAN(2) $ %
------ ------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
9/94.......................... $(54.1) $(30.0) $(24.1) 80% $ (2.2) $(51.9) 2359%
12/94.......................... (15.8) (21.3) 5.5 -26% (10.7) (5.1) 48%
3/95.......................... 1.4 (1.5) 2.9 -193% 7.6 (6.2) -82%
6/95.......................... (13.2) 7.5 (20.7) -276% 6.3 (19.5) -310%
9/95.......................... (43.7) (31.5) (12.2) 39% 13.3 (57.0) -429%
12/95.......................... NA (18.2) NA (38.4) NA
</TABLE>
- ---------------
(1) Represents plan completed one month prior to the quarter.
(2) Represents plan completed four months prior to the quarter.
BEAR STEARNS Page 8
<PAGE> 11
PROJECT EAGLE
SECTION II
SUMMARY VALUATION ANALYSIS
BEAR STEARNS
<PAGE> 12
PROJECT EAGLE
SUMMARY VALUATION ANALYSIS
IMPLIED VALUATION BASED ON CONNER PERIPHERALS ACQUISITION
<TABLE>
<CAPTION>
ACQUISITION OF CONNER PERIPHERALS
----------------------------------------------
MAXTOR'S
MAXTOR'S IMPLIED IMPLIED EQUITY
EQUITY VALUE VALUE PER
MULTIPLE ($MM) SHARE(3)
-------- ---------------- --------------
<S> <C> <C> <C>
VALUATION:
Purchase Price to:
LTM EPS.......................................... 39.4x NM NM
Calendar 1995 EPS................................ 23.2x NM NM
Calendar 1996 EPS(1)............................. 15.9x $443.1 - $911.1 $7.95 - $15.90
Transaction Value(2) to:
LTM Revenue...................................... 0.54x $469.0 $7.97
LTM EBITDA....................................... 8.4x NM NM
LTM EBIT......................................... 21.9x NM NM
HEI OFFER:............................................ $369.5 $6.70
</TABLE>
- ---------------
(1) Represents low and high end of Maxtor management's projected earnings range
($0.50 to $1.00 per share).
(2) Defined as purchase price of common equity (including options) plus book
value of total debt less cash and equivalents.
(3) Equity value per share is calculated on a fully diluted basis using the
treasury stock method.
BEAR STEARNS Page 10
<PAGE> 13
PROJECT EAGLE
SUMMARY VALUATION ANALYSIS
IMPLIED VALUATION BASED ON DIGITAL EQUIPMENT DISK DRIVE BUSINESS ACQUISITION
<TABLE>
<CAPTION>
ACQUISITION OF DIGITAL'S DISK DRIVE BUSINESS
----------------------------------------------
MAXTOR'S
MAXTOR'S IMPLIED IMPLIED EQUITY
EQUITY VALUE VALUE PER
MULTIPLE ($MM) SHARE(3)
-------- ---------------- --------------
<S> <C> <C> <C>
VALUATION:
Purchase Price to:
LTM EPS.......................................... NM NM NM
Calendar 1995 EPS................................ NA NA NA
Calendar 1996 EPS(1)............................. NA NA NA
Transaction Value(2) to:
LTM Revenue...................................... 0.45x $368.9 $ 6.27
LTM EBITDA....................................... NA NM NM
LTM EBIT......................................... NM NM NM
HEI OFFER:............................................ $369.5 $ 6.70
</TABLE>
- ---------------
(1) Represents low and high end of Maxtor management's projected earnings range
($0.50 to $1.00 per share).
(2) Defined as purchase price of common equity (including options) plus book
value of total debt less cash and equivalents.
(3) Equity value per share is calculated on a fully diluted basis using the
treasury stock method.
BEAR STEARNS Page 11
<PAGE> 14
PROJECT EAGLE
SUMMARY VALUATION ANALYSIS
IMPLIED VALUATION BASED ON OTHER COMPARABLE ACQUISITIONS
<TABLE>
<CAPTION>
COMPARABLE ACQUISITIONS AS A GROUP
----------------------------------------------
MAXTOR'S
MAXTOR'S IMPLIED IMPLIED EQUITY
EQUITY VALUE VALUE PER
MULTIPLE ($MM) SHARE(3)
-------- ---------------- --------------
<S> <C> <C> <C>
VALUATION:
Purchase Price to:
LTM EPS.......................................... 17.2x NM NM
Calendar 1995 EPS................................ 15.8x NA NA
Calendar 1996 EPS(1)............................. 9.2x $245.9 - $516.7 $4.60 - $9.20
Transaction Value(2) to:
LTM Revenue...................................... 0.77x $724.6 $12.31
LTM EBITDA....................................... 6.7x NM NM
LTM EBIT......................................... 12.4x NM NM
HEI OFFER:............................................ $369.5 $6.70
</TABLE>
- ---------------
(1) Represents low and high end of Maxtor management's projected earnings range
($0.50 to $1.00 per share).
(2) Defined as purchase price of common equity (including options) plus book
value of total debt less cash and equivalents.
(3) Equity value per share is calculated on a fully diluted basis using the
treasury stock method.
BEAR STEARNS Page 12
<PAGE> 15
PROJECT EAGLE
SUMMARY VALUATION ANALYSIS
IMPLIED VALUATION BASED ON COMPARABLE PUBLICLY TRADED COMPANIES
<TABLE>
<CAPTION>
COMPARABLE PUBLICLY TRADED COMPANIES AS A GROUP
------------------------------------------------
MAXTOR'S
MAXTOR'S IMPLIED IMPLIED EQUITY
EQUITY VALUE VALUE PER
MULTIPLE ($MM) SHARE(3)
-------- ---------------- --------------
<S> <C> <C> <C>
VALUATION:
Purchase Price to:
LTM EPS........................................ 11.1x NM NM
Calendar 1995 EPS.............................. 10.7x NA NA
Calendar 1996 EPS(1)........................... 7.2x $187.1 - $399.0 $3.60 - $7.20
Transaction Value(2) to:
LTM Revenue.................................... 0.35x $257.8 $4.38
LTM EBITDA..................................... 4.5x NM NM
LTM EBIT....................................... 6.3x NM NM
HEI OFFER:.......................................... $369.5 $6.70
</TABLE>
- ---------------
(1) Represents low and high end of Maxtor management's projected earnings range
($0.50 to $1.00 per share).
(2) Defined as purchase price of common equity (including options) plus book
value of total debt less cash and equivalents.
(3) Equity value per share is calculated on a fully diluted basis using the
treasury stock method.
BEAR STEARNS Page 13
<PAGE> 16
PROJECT EAGLE
SECTION III
MULTIPLE AND PREMIUM ANALYSIS
BEAR STEARNS
<PAGE> 17
PROJECT EAGLE
MULTIPLE AND PREMIUM ANALYSIS
VALUATION SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
PRICE PER SHARE
---------------------------------------
$5.00 $5.50 $6.00 $6.50
------ ------ ------ ------
($ IN MILLIONS, EXCEPT SHARE PRICES)
<S> <C> <C> <C> <C> <C>
PREMIUM OVER:
Stock Price 10/25/95(1)........... $ 4.69 6.7% 17.3% 28.0% 38.7%
52 Week High Closing Price........ 7.00 -28.6% -21.4% -14.3% -7.1%
52 Week Low Closing Price......... 3.63 37.9% 51.7% 65.5% 79.3%
Average -- Last 30 days(2)........ 4.51 10.9% 22.0% 33.0% 44.1%
EQUITY VALUE(3)..................... $269.5 $298.9 $328.3 $357.8
+Total Debt......................... $175.4 $175.4 $175.4 $175.4
- -Cash............................... (19.4) (19.4) (19.4) (19.4)
------ ------ ------ ------
Enterprise value.................... $425.5 $455.0 $484.4 $513.8
PRICE AS A MULTIPLE OF:
LTM EPS........................... $ (1.63) NM NM NM NM
Calendar 1995 EPS................. (1.45) NM NM NM NM
Calendar 1996 EPS(4).............. 0.50 10.0x 11.0x 12.0x 13.0x
Calendar 1996 EPS(5).............. 1.00 5.0x 5.5x 6.0x 6.5x
Tangible Book Value............... $ (9.2) NM NM NM NM
ENTERPRISE VALUE AS A MULTIPLE OF:
LTM Revenue....................... $1,111.4 0.38x 0.41x 0.44x 0.46x
LTM EBITDA........................ (41.7) NM NM NM NM
LTM EBIT.......................... (75.7) NM NM NM NM
<CAPTION>
PRICE PER SHARE
--------------------------------------------------
$6.70 $7.00 $7.50 $8.00 $8.50
------ ------ ------ ------ ------
($ IN MILLIONS, EXCEPT SHARE PRICES)
<S> <C> <C> <C> <C> <C>
PREMIUM OVER:
Stock Price 10/25/95(1)........... 42.9% 49.3% 60.0% 70.7% 81.3%
52 Week High Closing Price........ -4.3% 0.0% 7.1% 14.3% 21.4%
52 Week Low Closing Price......... 84.6% 93.1% 106.9% 120.7% 134.5%
Average -- Last 30 days(2)........ 48.6% 55.2% 66.3% 77.4% 88.5%
EQUITY VALUE(3)..................... $369.5 $387.2 $416.6 $446.1 $475.5
+Total Debt......................... $175.4 $175.4 $175.4 $175.4 $175.4
- -Cash............................... (19.4) (19.4) (19.4) (19.4) (19.4)
------ ------ ------ ------ ------
Enterprise value.................... $525.6 $543.3 $572.7 $602.1 $631.6
PRICE AS A MULTIPLE OF:
LTM EPS........................... NM NM NM NM NM
Calendar 1995 EPS................. NM NM NM NM NM
Calendar 1996 EPS(4).............. 13.4x 14.0x 15.0x 16.0x 17.0x
Calendar 1996 EPS(5).............. 6.7x 7.0x 7.5x 8.0x 8.5x
Tangible Book Value............... NM NM NM NM NM
ENTERPRISE VALUE AS A MULTIPLE OF:
LTM Revenue....................... 0.47x 0.49x 0.52x 0.54x 0.57x
LTM EBITDA........................ NM NM NM NM NM
LTM EBIT.......................... NM NM NM NM NM
</TABLE>
- ---------------
(1) Represents price on the day prior to the first public disclosure that
discussions regarding an acquisition were underway.
(2) Represents average price for the thirty days prior to October 26, 1995.
(3) Based on 53.0 million shares outstanding at September 30, 1995 and 5.9
million shares underlying options at November 1, 1995. Reflects proceeds of
$24.9 million from assumed options exercise (average exercise price =
$4.24).
(4) Represents the low end of Eagle's management projection.
(5) Represents the high end of Eagle's management projection.
BEAR STEARNS Page 15
<PAGE> 18
PROJECT EAGLE
MULTIPLE AND PREMIUM ANALYSIS
PREMIUM ANALYSIS
<TABLE>
<CAPTION>
AVERAGE OF AVERAGE OF
OFFER COMPARABLE REMAINING
PRICE STORAGE INTEREST
PREMIUM(3) ACQUISITIONS(4) ACQUISITIONS(5)
---------- --------------- ---------------
<S> <C> <C> <C> <C>
Maxtor's Common Stock Closing Price Prior to:
Acquisition Announcement Date(1):
One Trading Day Prior................... $4.69 42.9% 46.0% 25.6%
Ten Trading Days Prior.................. $4.19 60.0% 59.0% 43.5%
Thirty Trading Days Prior............... $5.31 26.1% 53.0% 47.5%
Manufacturing Sale Announcement Date(2):
One Trading Day Prior................... $6.00 11.7% 46.0% 25.6%
Ten Trading Days Prior.................. $5.38 24.7% 59.0% 43.5%
Thirty Trading Days Prior............... $4.50 48.9% 53.0% 47.5%
</TABLE>
- ---------------
(1) The public disclosure that discussions regarding an acquisition of Maxtor by
HEI occurred on October 26, 1995.
(2) The public disclosure that Maxtor and HEI had reached an agreement regarding
the sale of manufacturing assets occurred after the market closed on
September 19, 1995.
(3) Based on HEI's offer price of $6.70 per share.
(4) Based on four public company acquisitions: Conner/Seagate,
Read-Rite/Sunward, Archive/Conner and Cipher Data/Archive.
(5) Based on thirteen acquisitions of remaining interests.
BEAR STEARNS Page 16
<PAGE> 19
PROJECT EAGLE
SECTION IV
PRICE AND VOLUME ANALYSIS
BEAR STEARNS
<PAGE> 20
PROJECT EAGLE
PRICE AND VOLUME ANALYSIS
MAXTOR COMMON STOCK
PRICE AND VOLUME ANALYSIS
MONTHLY: JANUARY 1990 TO OCTOBER 1995
Monthly stock price and trading volume graph for Maxtor Corporation for
the period between January 1990 and October 1995.
BEAR STEARNS Page 18
<PAGE> 21
PROJECT EAGLE
PRICE AND VOLUME ANALYSIS
MAXTOR COMMON STOCK
PRICE AND VOLUME ANALYSIS
WEEKLY: JANUARY 1, 1994 TO OCTOBER 30, 1995
Weekly stock price and trading volume graph for Maxtor Corporation for the
period between January 7, 1994 and October 30, 1995
BEAR STEARNS Page 19
<PAGE> 22
PROJECT EAGLE
PRICE AND VOLUME ANALYSIS
MAXTOR COMMON STOCK
PRICE AND VOLUME ANALYSIS
DAILY: JANUARY 1, 1995 TO OCTOBER 30, 1995
Daily stock price and trading volume graph for Maxtor Corporation for the
period between January 2, 1995 and October 30, 1995
BEAR STEARNS Page 20
<PAGE> 23
PROJECT EAGLE
PRICE AND VOLUME ANALYSIS
MAXTOR COMMON STOCK
TRADED VOLUME ANALYSIS
JANUARY 3, 1994 TO OCTOBER 30, 1995
Shares Traded at Various Prices graph for Maxtor Corporation for the period
between January 3, 1994 and October 30, 1995.
BEAR STEARNS Page 21
<PAGE> 24
PROJECT EAGLE
PRICE AND VOLUME ANALYSIS
MAXTOR COMMON STOCK
TRADED VOLUME ANALYSIS
JANUARY 3, 1995 TO OCTOBER 30, 1995
Shares traded at various prices graph for Maxtor Corporation for the
period between January 3, 1995 and October 30, 1995.
BEAR STEARNS Page 22
<PAGE> 25
PROJECT EAGLE
EXHIBIT A
CONTROL PREMIUM ANALYSIS OF SELECTED
COMPARABLE PUBLICLY TRADED COMPANIES
BEAR STEARNS
<PAGE> 26
PROJECT EAGLE
CONTROL PREMIUM ANALYSIS OF SELECTED COMPARABLE PUBLICLY TRADED
COMPANIES
ASSUMED 50% CONTROL PREMIUM
<TABLE>
<CAPTION>
Western
Micropolis Quantum Seagate Digital
Corporation Corporation Technology Corporation
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
MARKET DATA
Ticker Symbol MLIS QNTM SEG WDC
Current Price (10/30/95) $4.125 $17.375 $46.625 $15.750
50.00% Premium to Current Price
Market Value (millions) $96.2 $1,346.4 $5,034.8 $1,196.6
Enterprise Value (millions) 147.6 1,660.5 4,338.6 954.7
Harmonic
Mean High Low
Ratio of Premium Price to: -----------------------------
Estimated Calendar 1996 EPS NM 8.1x 12.8x 13.2x 10.8x 13.2x 8.1x
Estimated Calendar 1995 EPS NM 16.7 14.7 16.8 16.0 16.8 14.7
Latest Twelve Months EPS NM 24.4 18.0 12.0 16.7 24.4 12.0
Ratio of Premium Enterprise Value to:
LTM Net Revenue 0.53x 0.42x 0.96x 0.43x 0.53x 0.96x 0.42x
LTM EBITDA NM 8.8 6.6 6.6 7.2 8.8 6.6
LTM EBIT NM 11.4 9.8 9.4 10.1 11.4 9.4
</TABLE>
BEAR STEARNS Page 24
<PAGE> 27
PROJECT EAGLE
CONTROL PREMIUM ANALYSIS OF SELECTED COMPARABLE PUBLICLY TRADED
COMPANIES
ASSUMED 40% CONTROL PREMIUM
<TABLE>
<CAPTION>
Western
Micropolis Quantum Seagate Digital
Corporation Corporation Technology Corporation
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
MARKET DATA
Ticker Symbol MLIS QNTM SEG WDC
Current Price (10/30/95) $4.125 $17.375 $46.625 $15.750
40.00% Premium to Current Price
Market Value (millions) $89.8 $1,256.7 $4,699.2 $1,116.8
Enterprise Value (millions) 141.2 1,570.8 4,003.0 874.9
Harmonic
Mean High Low
Ratio of Premium Price to: -----------------------------
Estimated Calendar 1996 EPS NM 7.6x 11.9x 12.3x 10.1x 12.3x 7.6x
Estimated Calendar 1995 EPS NM 15.6 13.7 15.6 14.9 15.6 13.7
Latest Twelve Months EPS NM 22.7 16.8 11.2 15.6 22.7 11.2
Ratio of Premium Enterprise Value to:
LTM Net Revenue 0.51x 0.40x 0.88x 0.39x 0.49x 0.88x 0.39x
LTM EBITDA NM 8.3 6.1 6.0 6.7 8.3 6.0
LTM EBIT NM 10.8 9.0 8.6 9.4 10.8 8.6
</TABLE>
BEAR STEARNS Page 25
<PAGE> 28
PROJECT EAGLE
CONTROL PREMIUM ANALYSIS OF SELECTED COMPARABLE PUBLICLY TRADED
COMPANIES
ASSUMED 30% CONTROL PREMIUM
<TABLE>
<CAPTION>
Western
Micropolis Quantum Seagate Digital
Corporation Corporation Technology Corporation
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
MARKET DATA
Ticker Symbol MLIS QNTM SEG WDC
Current Price (10/30/95) $4.125 $17.375 $46.625 $15.750
30.00% Premium to Current Price
Market Value (millions) $83.4 $1,166.9 $4,363.5 $1,037.0
Enterprise Value (millions) 134.7 1,481.0 3,667.3 795.2
Harmonic
Mean High Low
Ratio of Premium Price to: -----------------------------
Estimated Calendar 1996 EPS NM 7.0x 11.1x 11.4x 9.4x 11.4x 7.0x
Estimated Calendar 1995 EPS NM 14.5 12.7 14.5 13.8 14.5 12.7
Latest Twelve Months EPS NM 21.1 15.6 10.4 14.5 21.1 10.4
Ratio of Premium Enterprise Value to:
LTM Net Revenue 0.49x 0.38x 0.81x 0.36x 0.46x 0.81x 0.36x
LTM EBITDA NM 7.8 5.6 5.5 6.1 7.8 5.5
LTM EBIT NM 10.2 8.3 7.8 8.7 10.2 7.8
</TABLE>
BEAR STEARNS Page 26
<PAGE> 29
PROJECT EAGLE
EXHIBIT B
SURVEY OF SELECTED COMPARABLE
PUBLICLY TRADED COMPANIES
BEAR STEARNS
<PAGE> 30
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
SUMMARY MARKET TRADING, VALUATION AND CAPITALIZATION STATISTICS FOR THE LATEST
TWELVE MONTHS AND PROJECTED PERIODS
<TABLE>
<CAPTION>
Earnings Per Share(a) Price/EPS(a)
Latest Latest Closing ----------------------------- --------------------------
Fiscal 12 Months Price 1995 Cal. 1996 Cal. 1995 Cal. 1996 Cal.
Company Year End Ended 10/30/95 LTM Estimate Estimate LTM Estimate Estimate
------- -------- --------- -------- ------ -------- --------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maxtor Corporation 3/25/95 9/24/95 $ 6.700 ($1.63) ($1.45) $0.50 NM NM 13.4x
-------- ------- ------- ------ ------ ------ ---- ---- ----
Micropolis Corporation 12/30/94 9/29/95 4.125 (3.51) (3.53) ($0.20) NM NM NM
Conner Peripherals, Inc. 12/31/94 9/30/95 18.250 0.62 0.98 1.47 29.5 18.6 12.4
Quantum Corporation 3/31/95 10/1/95 17.375 1.07 1.56 3.21 16.2 11.1 5.4
Seagate Technology, Inc. 6/30/95 6/30/95 46.625 3.89 4.77 5.48 12.0 9.8 8.5
Western Digital Corporation 7/1/95 9/30/95 15.750 1.97 1.41 1.79 8.0 11.2 8.8
-------- ------- ------- ------ ------ ------ ---- ---- ----
High (Exc. Maxtor and Conner) 16.2x 11.2x 8.8x
Median (Exc. Maxtor and Conner) 12.0 11.1 8.5
Harmonic Mean
(Exc. Maxtor and Conner) 11.1 10.7 7.2
Low (Exc. Maxtor and Conner) 8.0 9.8 5.4
</TABLE>
<TABLE>
<CAPTION> Enterprise Val.
Book Latest Market Value/ as a Multiple of(e)
Value Shares ----------------------- Enter- ----------------------------
Common Outstanding Market LTM Cash Tangible prise LTM LTM LTM
Company Equity (millions) Value(b) Flow(c) Book Val.(d) Val.(e) Revenues EBIT(f) EBITDA(g)
------- ------ ----------- -------- ------- ------------ -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maxtor Corporation ($9.2) 52.974 $369.4 NM NM $525.5 0.47x NM NM
------- ------ ------- --- --- ------- ---- ---- ---
Micropolis Corporation 32.5 15.547 64.1 NM 2.0 115.5 0.42 NM NM
Conner Peripherals, Inc. 383.7 53.353 973.7 7.0 2.8 1,158.6 0.46 20.6x 7.6x
Quantum Corporation 653.1 51.661 897.6 8.9 1.6 1,211.7 0.31 8.3 6.4
Seagate Technology, Inc. 1,541.8 71.990 3,356.5 6.3 2.5 2,660.4 0.59 6.0 4.0
Western Digital Corporation 461.8 50.648 797.7 5.8 1.8 555.8 0.25 5.3 3.8
------- ------ ------- --- --- ------- ---- --- ---
High (Exc. Maxtor and Conner) 8.9x 2.5x 0.59x 8.3x 6.4x
Median (Exc. Maxtor and Conner) 6.3 1.9 0.36 6.0 4.0
Harmonic Mean
(Exc. Maxtor and Conner) 6.7 1.9 0.35 6.3 4.5
Low (Exc. Maxtor and Conner) 5.8 1.6 0.25 5.3 3.8
</TABLE>
BEAR STEARNS Page 28
<PAGE> 31
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
SUMMARY MARKET TRADING, VALUATION AND CAPITALIZATION STATISTICS FOR THE LATEST
TWELVE MONTHS AND PROJECTED PERIODS
<TABLE>
<CAPTION>
Revenues Gross Profit S,G&A R&D
-------------------------------- ---------------- ---------------- -------------------
Company LTM LTM Growth CAGR (h) $ % of Rev. $ % of Rev. $ % of Rev.
------- -------- --------- -------- ---- -------- ----- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maxtor $1,111.4 14.4% (20.3)% $ 78.7 7.1% $ 77.9 7.0% $ 76.8 6.9%
-------- ---- ----- ------ --- ------ --- ------ ----
Micropolis Corporation 277.4 (15.7) (6.6) 37.5 13.5 44.6 16.1 44.5 16.0
Conner Peripherals, Inc. 2,531.5 7.8 2.8 414.3 16.4 213.7 8.4 135.4 5.4
Quantum Corporation 3,922.4 50.3 40.9 556.9 14.2 189.0 4.8 222.4 5.7
Seagate Technology, Inc. 4,539.6 29.7 22.1 931.9 20.5 268.9 5.9 220.0 4.8
Western Digital Corporation 2,224.4 29.4 31.9 377.1 17.0 133.0 6.0 142.8 6.4
-------- ---- ---- ----- ---- ------ ---- ------ ----
High (Exc. Maxtor) 50.3% 40.9% 20.5% 16.1% 16.0%
Median (Exc. Maxtor) 29.4 22.1 16.4 6.0 5.7
Low (Exc. Maxtor) (15.7) (6.6) 13.5 4.8 4.8
</TABLE>
<TABLE>
<CAPTION>
Operating Income Net Income EBIT (f)
------------------------- ----------------------- ----------------------
Company $ % of Rev. $ % of Rev. $ % of Rev.
------- ------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Maxtor ($75.7) (6.8)% ($83.8) (7.5)% ($75.7) (6.8)%
------ ----- ------ ----- ------ ------
Micropolis Corporation (51.7) (18.6) (54.1) (19.5) (51.7) (18.6)
Conner Peripherals, Inc. 65.1 2.6 32.9 1.3 56.3 2.2
Quantum Corporation 145.5 3.7 57.1 1.5 145.5 3.7
Seagate Technology, Inc. 443.0 9.8 335.4 7.4 447.1 9.8
Western Digital Corporation 101.3 4.6 96.9 4.4 104.4 4.7
------ ----- ------ ----- ------ -----
High (Exc. Maxtor) 9.8% 7.4% 9.8%
Median (Exc. Maxtor) 3.7 1.5 3.7
Low (Exc. Maxtor) (18.6) (19.5) (18.6)
</TABLE>
BEAR STEARNS Page 29
<PAGE> 32
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
SUMMARY MARKET TRADING, VALUATION AND CAPITALIZATION STATISTICS FOR THE LATEST
TWELVE MONTHS AND PROJECTED PERIODS
<TABLE>
<CAPTION>
Cash Accounts Receivable Inventory Accounts Payable
------------------ -------------------- ------------------- -------------------
Latest % of Latest Avg. Days Latest Avg. Inv. Latest Avg. Days
Company Balance Revenues Balance Receivable Balance Turns Balance Payable
------- ------- -------- ------- ---------- ------- --------- ------- ---------
<C> <C> <C> <C> <C> <C> <C> <C>
Maxtor $ 16.9 1.5% $141.4 38 $143.2 8.2x $161.4 49
------- ---- ------ -- ------ ---- ------ --
Micropolis Corporation 37.3 13.5 45.0 65 53.8 4.6 40.9 64
Conner Peripherals, Inc. 349.5 13.8 418.4 51 265.4 7.5 259.6 34
Quantum Corporation 158.8 4.0 666.5 51 482.3 9.9 529.7 46
Seagate Technology, Inc. 1,246.6 27.5 567.7 39 395.8 9.8 460.2 42
Western Digital Corporation 241.9 10.9 319.1 46 147.1 15.2 288.9 48
------- ---- ------ -- ------ ---- ------ --
High (Exc. Maxtor) 27.5% 65 15.2x 64
Median (Exc. Maxtor) 13.5 51 9.8 46
Low (Exc. Maxtor) 4.0 39 4.6 34
</TABLE>
<TABLE>
<CAPTION>
Net Working Capital Total Debt
--------------------- ----------------------
Latest Avg. NWC Latest % of
Company Balance % of Rev. Balance Total Cap.
------- ------- --------- ------- ----------
<C> <C> <C> <C>
Maxtor $ 68.9 3.2% $175.4 105.6%
------ ---- ------ -----
Micropolis Corporation 34.5 15.1 88.7 73.2
Conner Peripherals, Inc. 412.8 14.9 531.0 57.8
Quantum Corporation 523.2 10.2 472.9 42.0
Seagate Technology, Inc. 299.1 5.6 550.4 26.3
Western Digital Corporation 101.6 3.7 0.0 0.0
------ ---- ------ -----
High (Exc. Maxtor) 15.1% 73.2%
Median (Exc. Maxtor) 10.2 42.0
Low (Exc. Maxtor) 3.7 0.0
</TABLE>
BEAR STEARNS Page 30
<PAGE> 33
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
Footnotes
______________
Note: Data adjusted to exclude extraordinary and non-recurring items.
LTM: Latest Twelve Months; NA: Not Available; NM: Not Meaningful
(a) Source of E.P.S. estimates: First Call median estimates (October 27, 1995).
(b) Market value = Share Price * Latest Shares Outstanding.
(c) Funds from Operations (Cash Flow) = Net Income + Depreciation and
Amortization + Other Non-cash Items.
(d) Tangible Book Value = Book Value of Total Shareholders' Equity -
Liquidation Value of Preferred Equity - Intangible Assets.
(e) Enterprise Value = Market Value + Preferred Equity + Minority Interest +
Total Debt - Cash and Cash Equivalents.
(f) EBIT: Earnings Before Interest and Taxes.
(g) EBITDA: Earnings Before Interest, Taxes and Depreciation and Amortization.
(h) Compound Annual Growth Rate for the latest three fiscal years.
(i) Return on Equity = Net Income/Average Book Value of Shareholders' Equity.
(j) Return on Assets = EBIT/Average Balance of Total Assets.
(k) Free Cash Flow = Funds from Operations + Cash Effects of Changes in Net
Working Capital - Capital Expenditures.
BEAR STEARNS Page 31
<PAGE> 34
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
RANKING TABLES
<TABLE>
<CAPTION>
Price/LTM EPS Price/Calendar 1995 EPS Price/Calendar 1996 EPS
------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Conner Peripherals, Inc. 29.5x Conner Peripherals, Inc. 18.6x Maxtor Corporation 13.4
Quantum Corporation 16.2 Western Digital Corporation 11.2 Conner Peripherals, Inc. 12.4
Seagate Technology, Inc. 12.0 Quantum Corporation 11.1 Western Digital Corporation 8.8
Western Digital Corporation 8.0 Seagate Technology, Inc. 9.8 Seagate Technology, Inc. 8.5
Micropolis Corporation NM Micropolis Corporation NM Quantum Corporation 5.4
Maxtor Corporation NM Maxtor Corporation NM Micropolis Corporation NM
Harmonic Mean Harmonic Mean Harmonic Mean
(Excl. Maxtor and Conner) 11.1x (Excl. Maxtor and Conner) 10.7x (Excl. Maxtor and Conner) 7.2x
</TABLE>
<TABLE>
<CAPTION>
Enterprise Value/Revenue Enterprise Value/EBITDA Enterprise Value/EBIT
------------------------ ----------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Seagate Technology, Inc. 0.59x Conner Peripherals, Inc. 7.6x Conner Peripherals, Inc. 20.6x
Maxtor Corporation 0.47 Quantum Corporation 6.4 Quantum Corporation 8.3
Conner Peripherals, Inc. 0.46 Seagate Technology, Inc. 4.0 Seagate Technology, Inc. 6.0
Micropolis Corporation 0.42 Western Digital Corporation 3.8 Western Digital Corporation 5.3
Quantum Corporation 0.31 Micropolis Corporation NM Micropolis Corporation NM
Western Digital Corporation 0.25 Maxtor Corporation NM Maxtor Corporation NM
Harmonic Mean Harmonic Mean Harmonic Mean
(Excl. Maxtor and Conner) 0.35x (Excl. Maxtor and Conner) 4.5x (Excl. Maxtor and Conner) 6.3x
</TABLE>
BEAR STEARNS Page 32
<PAGE> 35
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
RANKING TABLES
<TABLE>
<CAPTION>
LTM Revenue (Millions) LTM Gross Profit (Millions) LTM EBITDA (Millions)
---------------------- --------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Seagate Technology, Inc. $4,539.6 Seagate Technology, Inc. $931.9 Seagate Technology, Inc. $662.5
Quantum Corporation 3,922.4 Quantum Corporation 556.9 Quantum Corporation 189.4
Conner Peripherals, Inc. 2,531.5 Conner Peripherals, Inc. 414.3 Conner Peripherals, Inc. 151.8
Western Digital Corporation 2,224.4 Western Digital Corporation 377.1 Western Digital Corporation 148.0
Maxtor Corporation 1,111.4 Maxtor Corporation 78.7 Micropolis Corporation (29.0)
Micropolis Corporation 277.4 Micropolis Corporation 37.5 Maxtor Corporation (41.7)
LTM EBIT (Millions) LTM Pretax Income (Millions) LTM Net Income (Millions)
------------------- ---------------------------- -------------------------
Seagate Technology, Inc. $447.1 Seagate Technology, Inc. $479.7 Seagate Technology, Inc. $335.4
Quantum Corporation 145.5 Quantum Corporation 119.9 Western Digital Corporation 96.9
Western Digital Corporation 104.4 Western Digital Corporation 114.0 Quantum Corporation 57.1
Conner Peripherals, Inc. 56.3 Conner Peripherals, Inc. 49.5 Conner Peripherals, Inc. 32.9
Micropolis Corporation (51.7) Micropolis Corporation (55.2) Micropolis Corporation (54.1)
Maxtor Corporation (75.7) Maxtor Corporation (81.6) Maxtor Corporation (83.8)
</TABLE>
BEAR STEARNS Page 33
<PAGE> 36
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
RANKING TABLES
<TABLE>
<CAPTION>
2-Year Revenue CAGR LTM Gross Margin LTM EBITDA Margin
------------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Quantum Corporation 40.9% Seagate Technology, Inc. 20.5% Seagate Technology, Inc. 14.6%
Western Digital Corporation 31.9% Western Digital Corporation 17.0% Western Digital Corporation 6.7%
Seagate Technology, Inc. 22.1% Conner Peripherals, Inc. 16.4% Conner Peripherals, Inc. 6.0%
Conner Peripherals, Inc. 2.8% Quantum Corporation 14.2% Quantum Corporation 4.8%
Micropolis Corporation NM Micropolis Corporation 13.5% Maxtor Corporation NM
Maxtor Corporation NM Maxtor Corporation 7.1% Micropolis Corporation NM
----- ----- -----
Mean (Excl. Maxtor) 24.4% Mean (Excl. Maxtor) 16.3% Mean (Excl. Maxtor) 8.0%
LTM EBIT Margin LTM Pretax Margin LTM Net Margin
--------------- ----------------- --------------
Seagate Technology, Inc. 9.8% Seagate Technology, Inc. 10.6% Seagate Technology, Inc. 7.4%
Western Digital Corporation 4.7% Western Digital Corporation 5.1% Western Digital Corporation 4.4%
Quantum Corporation 3.7% Quantum Corporation 3.1% Quantum Corporation 1.5%
Conner Peripherals, Inc. 2.2% Conner Peripherals, Inc. 2.0% Conner Peripherals, Inc. 1.3%
Maxtor Corporation NM Maxtor Corporation NM Maxtor Corporation NM
Micropolis Corporation NM Micropolis Corporation NM Micropolis Corporation NM
----- ----- -----
Mean (Excl. Maxtor) 5.1% Mean (Excl. Maxtor) 5.2% Mean (Excl. Maxtor) 3.6%
</TABLE>
BEAR STEARNS Page 34
<PAGE> 37
PROJECT EAGLE
SURVEY OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
RANKING TABLES
<TABLE>
<CAPTION>
Market Value (Millions) Enterprise Value (Millions) LTM Return on Equity
----------------------- --------------------------- --------------------
<S> <C> <C> <C> <C> <C>
Seagate Technology, Inc. $3,356.5 Seagate Technology, Inc. $2,660.4 Western Digital Corporation 24.6%
Conner Peripherals, Inc. 973.7 Quantum Corporation 1,211.7 Seagate Technology, Inc. 23.4%
Quantum Corporation 897.6 Conner Peripherals, Inc. 1,158.6 Conner Peripherals, Inc. 9.8%
Western Digital Corporation 797.7 Western Digital Corporation 555.8 Quantum Corporation 9.7%
Maxtor Corporation 369.4 Maxtor Corporation 525.5 Micropolis Corporation NM
Micropolis Corporation 64.1 Micropolis Corporation 115.5 Maxtor Corporation NM
-----
Mean (Excl. Maxtor) 16.9%
</TABLE>
<TABLE>
<CAPTION>
LTM Return on Assets Total Debt/Total Capitalization Cash (Millions)
-------------------- ------------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Seagate Technology, Inc. 14.3% Western Digital Corporation 0.0% Seagate Technology, Inc. $1,246.6
Western Digital Corporation 13.3% Seagate Technology, Inc. 26.3% Conner Peripherals, Inc. 349.5
Quantum Corporation 9.7% Quantum Corporation 42.0% Western Digital Corporation 241.9
Conner Peripherals, Inc. 3.8% Conner Peripherals, Inc. 57.8% Quantum Corporation 158.8
Maxtor Corporation NM Micropolis Corporation 73.2% Micropolis Corporation 37.3
Micropolis Corporation NM Maxtor Corporation 105.6% Maxtor Corporation 19.4
----- ------
Mean (Excl. Maxtor) 10.3% Mean (Excl. Maxtor) 39.9%
</TABLE>
<TABLE>
<CAPTION>
Cash as a % of LTM Revenue Current Ratio Quick Ratio
-------------------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Seagate Technology, Inc. 27.5% Conner Peripherals, Inc. 2.7x Seagate Technology, Inc. 2.0x
Conner Peripherals, Inc. 13.8% Seagate Technology, Inc. 2.7 Conner Peripherals, Inc. 1.7
Micropolis Corporation 13.5% Micropolis Corporation 2.1 Western Digital Corporation 1.5
Western Digital Corporation 10.9% Western Digital Corporation 1.9 Quantum Corporation 1.4
Quantum Corporation 4.0% Quantum Corporation 1.9 Micropolis Corporation 1.2
Maxtor Corporation 1.5% Maxtor Corporation 1.0 Maxtor Corporation 0.5
----- --- ---
Mean (Excl. Maxtor) 13.9% Mean (Excl. Maxtor) 2.3x Mean (Excl. Maxtor) 1.6x
</TABLE>
BEAR STEARNS Page 35
<PAGE> 38
PROJECT EAGLE
EXHIBIT C
SURVEY OF COMPARABLE ACQUISITIONS
BEAR STEARNS
<PAGE> 39
PROJECT EAGLE
SURVEY OF COMPARABLE ACQUISITIONS
SURVEY OF COMPARABLE ACQUISITIONS
JANUARY 1, 1990 TO OCTOBER 31, 1995
<TABLE>
<CAPTION>
Price of
Equity as a Price as a Enterprise Value
Multiple of Multiple of As a Multiple of
----------- -------------------------- -----------------------------
Tangible
Date Book LTM Current Next LTM LTM LTM
Effective(1) Target Acquiror Value EPS(2) FY EPS FY EPS Revenue EBITDA(3) EBIT(3)
- ------------ -------------------------- ------------------ -------- ------ ------- ------ ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pending Conner Peripherals Seagate Technology 3.5x 39.4x 23.2x 15.9x 0.54x 8.4x 21.9x
10/03/94 Digital Equipment Corp Quantum Corp. 1.1 NM NA NA 0.45 NA NM
08/23/94 Sunward Technologies Read-Rite 4.9 25.4 17.0 7.7 1.04 NA 24.4
12/29/92 Archive(6) Conner Peripherals NM 14.1 18.1 12.2 0.81 5.8 11.2
10/23/92 Colorado Memory Systems(7) Hewlett-Packard NM 11.0 10.4 7.2 1.69 6.3 6.7
12/20/91 Dastek Komag 3.2 15.6 NA NA 1.34 NA 13.2
12/12/91 WangDAT Rexon 5.3 NM NA NA 0.86 NM NM
04/24/90 Cipher Data Products Archive 1.3 NM NM 7.5 0.59 NM NM
High 5.3x 39.4x 23.2x 15.9x 1.69x 8.4x 24.4x
Median 3.4 15.6 17.6 7.7 0.84 6.3 13.2
Harmonic Mean 2.3 17.2 15.8 9.2 0.77 6.7 12.4
Low 1.1 11.0 10.4 7.2 0.45 5.8 6.7
</TABLE>
BEAR STEARNS Page 37
<PAGE> 40
PROJECT EAGLE
ANALYSIS OF COMPARABLE ACQUISITIONS
SURVEY OF COMPARABLE ACQUISITIONS
JANUARY 1, 1990 TO OCTOER 31, 1995
<TABLE>
<CAPTION>
Premium to
Target Price
-----------------
Purchase Purchase Aggregate Number of Trading
Price Price Transaction Days Before
Date Description of Per Of Value Announcement(4)
Effective(1) Target Acquiror Target Share Equity ($mm) 1 10 30
- ------------ ------------------ ------------------ --------------- ------ ------ ------- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pending Conner Peripherals Seagate Technology Mnfr disk drives $20.88 $1157.5 $1303.2 24% 53% 59%(5)
10/03/94 Digital Equipment Corp Quantum Corp. Mnfr disk drives NA 355.2 354.6 NA NA NA
08/23/94 Sunward Technologies Read-Rite Mnfr drive
components 13.46 109.4 114.9 33% 35% 44%
12/29/92 Archive(6) Conner Peripherals Mnfr tape drives 11.25 184.1 295.2 58% 64% 48%
10/23/92 Colorado Memory
Systems(7) Hewlett-Packard Mnfr tape drives 11.00 237.2 248.2 NA NA NA
12/20/91 Dastek Komag Mnfr drive
components NA 48.3 60.2 NA NA NA
12/12/91 WangDAT Rexon Mnfr tape drives NA 12.0 13.2 NA NA NA
04/24/90 Cipher Data Products Archive Mnfr tape drives 8.25 122.5 121.7 69% 83% 61%
High 69% 83% 61%
Median 45% 58% 53%
Mean 46% 59% 53%
Low 24% 35% 44%
</TABLE>
BEAR STEARNS Page 38
<PAGE> 41
PROJECT EAGLE
ANALYSIS OF COMPARABLE ACQUISITIONS
SURVEY OF COMPARABLE ACQUISITIONS
JANUARY 1, 1990 TO OCTOBER 31, 1995
Footnotes:
NA--Not available; NM--Not meaningful.
(1) Source: Securities Data Company.
(2) From continuing operations, before non-recurring and extraordinary
items, if any, before the cumulative effect of an accounting change, if
any, and fully-diluted if applicable.
(3) From continuing operations and before non-recurring items.
(4) Announcement date for purposes of the premium calculations is assumed to
be the date when the initial offer was made for the target.
(5) Acquisition rumors pushed Conner's stock higher on the day prior to the
announcement of its acquisition by Seagate. The premiums paid relative
to Conner's normalized stock price one, ten and thirty trading days prior
to September 16, 1995 (the date rumors began to circulate) are 40%, 56%
and 59%.
(6) Operating results exclude non-recurring royalty income of $0.13 per share
in the LTM ended October 2, 1992. Depreciation and amortization data is
based on the annualized results for the nine months ended July 3, 1992.
Tangible book value is as of July 3, 1992.
(7) Offering price per common share is estimated. CMS's operating results for
the LTM ended July 30, 1992 excludes royalties payable to related
parties of $18.2 million. Including this amount, the company's operating
income and margin would have been $18.9 million and 12.9%, respectively.
Earnings estimates are for calendar years 1992 and 1993 and exclude the
effect of the company's attempted public offering.
BEAR STEARNS Page 39
<PAGE> 42
PROJECT EAGLE
EXHIBIT D
PREMIUM ANALYSIS OF SELECTED
ACQUISITIONS OF REMAINING INTERESTS
BEAR STEARNS
<PAGE> 43
PROJECT EAGLE
PREMIUM ANALYSIS OF SELECTED ACQUISITIONS OF REMAINING INTERESTS
ACQUISITIONS OF REMAINING INTERESTS
GREATER THAN 20%
JANUARY 1, 1994 TO OCTOBER 30, 1995
<TABLE>
<CAPTION>
Premium Premium
1 day 10 days
prior to prior to Premium
Price announce- announce- 30 days
Date Per Remaining % ment ment prior to
Target Name Acquiror Name Announced Share acquired date date ann. date
- ------------------------------- ----------------------- ----------- ------- ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
MAXTOR CORPORATION HYUNDAI ELECTRONICS 10/26/95 $6.70 63.3 42.9% 60.0% 26.1%
GEICO Corp(Berkshire Hathaway) Berkshire Hathaway Inc 8/25/95 $70.00 49.0 25.6% 24.2% 25.0%
EB Inc(Parkway Co) Parkway Co 6/30/94 17.66 48.7 23.9% 53.6% 53.6%
General Cable(Cie Gen de Eaux) Wassall PLC 5/5/94 6.00 46.3 17.1% 17.1% 17.1%
S & M Co Investor Group 6/9/94 1.43 46.2 -4.7% 20.4% 52.5%
Forum Retirement Partners LP Forum Group Inc 9/25/95 2.83 38.0 41.5% 41.5% 41.5%
LDB Corp Investor Group 9/13/94 7.50 31.0 42.9% 66.7% 53.8%
IG Laboratories Inc Genzyme Corp 2/15/95 7.00 31.0 43.6% 133.3% 133.3%
Sandata Inc Investor Group 3/25/94 2.52 29.1 55.1% 101.6% 83.3%
Mascott Corp DINE LLC 4/13/95 1.55 25.0 3.3% NA NA
Grand Gaming Corp Grand Casinos Inc 7/6/95 5.06 22.2 34.9% 30.6% 44.6%
Bic Corp(BIC SA) BIC SA 5/19/95 40.50 22.0 13.3% 11.3% 29.6%
Chemical Waste Management Inc WMX Technologies Inc 7/28/94 8.85 21.5 10.6% -1.7% 2.6%
SCOR US Corp(SCOR SA) SCOR 9/26/95 14.00 20.0 25.8% 23.1% 33.3%
High 55.1% 133.3% 133.3%
Mean 25.6% 43.5% 47.5%
Low -4.7% -1.7% 2.6%
</TABLE>
BEAR STEARNS Page 41
<PAGE> 1
[MAXTOR(R) LETTERHEAD]
NEWS RELEASE
CONTACT:
Rosanne Ramirez
408-432-4483
MAXTOR SPECIAL COMMITTEE ACCEPTS INCREASED PRICE FOR HYUNDAI ACQUISITION
PROPOSAL
SAN JOSE, CALIF. -- November 1, 1995 -- Maxtor Corporation
(NASDAQ:MXTR) today announced that the Special Committee of the Board of
Directors of Maxtor has unanimously approved an acquisition proposal by Hyundai
Electronics America (HEA) on behalf of Hyundai Electronics Industries Co., Ltd.,
(HEI) to acquire all of the outstanding shares of Maxtor not already owned by
HEI or its affiliates for $6.70 per share. The Special Committee will recommend
the acquisition proposal to Maxtor's Board of Directors, subject to finalization
of a definitive acquisition agreement. Consummation of the acquisition is also
subject to receipt of various governmental approvals and satisfaction of other
normal and customary closing conditions.
Maxtor Corporation develops, manufactures and markets hard disk drives
for desktop and mobile computer systems. Maxtor employs approximately 7,700
people worldwide and has headquarters in San Jose, Calif. Maxtor had sales of
$906.8 million in the fiscal year ended March 1995. For more information on
Maxtor, visit Maxtor's worldwide web site at http://www.maxtor.com.
-30-
<PAGE> 1
[MAXTOR(R) LETTERHEAD]
NEWS RELEASE
FOR RELEASE 5:30AM PACIFIC STANDARD TIME
EDITOR CONTACT:
Carol Cassara
408 432 4567
ANALYST CONTACT:
Rosanne Ramirez
408 432 4483
MAXTOR BOARD OF DIRECTORS ACCEPTS HYUNDAI OFFER
SAN JOSE, CALIF. -- November 3, 1995 -- Maxtor Corporation (NASDAQ:MXTR) today
announced that its Board of Directors yesterday approved the offer by Hyundai
Electronics America (HEA) to acquire all of the outstanding shares of Maxtor not
held by Hyundai Electronics Industries Co., Ltd. or its affiliates for $6.70 per
share, based on the unanimous recommendation by the Special Committee of
Maxtor's Board. Maxtor and HEA have entered into an agreement and plan of merger
providing for a cash tender offer for any and all shares of Maxtor common stock
at $6.70 per share, and a merger following the closing of the tender offer at
the same price.
It is expected that HEA will file tender offer documents with the Securities and
Exchange Commission and distribute them promptly to stockholders.
The acquisition is subject to the approval of both U.S. and Korean governments
and satisfaction of other normal and customary closing conditions. The company
believes that the acquisition will be completed by early 1996.
Maxtor Corporation develops, manufactures and markets hard disk drives for
desktop and mobile computer systems. Maxtor employs approximately 7,700 people
worldwide and has headquarters in San Jose, Calif. Maxtor had sales of $906.8
million in the fiscal year ended March 1995. For more information on Maxtor,
visit Maxtor's worldwide web site at http://www.maxtor.com.
-30-
<PAGE> 1
WOON-HYUN LAW AND NOTARY OFFICE
Registered No. 1994 - 308
NOTARIAL CERTIFICATE
WOON-HYUN LAW AND NOTARY OFFICE
233, NAEJA-DONG, CHONGRO-KU
SEOUL, KOREA
[SEAL]
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That HYUNDAI HEAVY INDUSTRIES CO., LTD., a Korean corporation
("Company"), hereby makes, constitutes and appoints:
JOO-YONG KIM
as its true and lawful attorney in fact for Company and in its name, place and
stead, as its act and deed, and for its use and benefit, to do each and all of
the following:
1. To exercise all voting, consent, approval and other similar rights
of Company with respect to capital stock of Maxtor Corporation, whether such
rights arise by law, charter document, contract or otherwise.
2. To enter into agreements, execute and deliver instruments and take
such other actions as, in each case, such attorney in fact deems advisable
(which shall be conclusively evidenced by his taking such action) for the
purpose of exercising all rights of Company referred to in paragraph 1 above.
3. To execute, file and deliver such reports, schedules, notices and
other documents, and any amendments thereto or other actions relating thereto,
relating to or connected with Maxtor Corporation or capital stock of Maxtor
Corporation as, in each case, such attorney in fact deems advisable (which
shall be conclusively evidenced by his taking such action), including without
limitation one or more Schedules 13D under the Securities Exchange Act of 1934,
as amended, any amendments thereto and any joint filing agreement relating
thereto.
GIVING AND GRANTING unto said attorney in fact full power and authority
to do and perform every act and thing whatsoever incident to the foregoing as
fully to all intents and purposes as Company might or could do for itself,
hereby ratifying and confirming all that such attorney in fact shall lawfully
do or cause to be done by virtue hereof.
<PAGE> 3
IN WITNESS WHEREOF, Purchaser has executed this power this 1st day of
Feb., 1994.
HYUNDAI HEAVY INDUSTRIES CO., LTD.
By: JUNG-KOOK KIM
------------------------------
Jung-Kook Kim
President & Representative Director
<PAGE> 4
Registered No. 1994 - 308
Notarial Certificate
Mr. CHAN - KI, HO
attorney in fact of
MR. JUNG - KOOK, KIM PRESIDENT
OF HYUNDAI HEAVY INDUSTRIES
CO., LTD.
[Korean version not shown]
appeared before me and admitted said
principal's subscription to the attached
POWER OF ATTORNEY
This is hereby attested on this
1ST day of FEB, 1994 at this office
WOON-HYUN LAW AND NOTARY OFFICE
223 NAEJA-DONG, CHONGRO-KU
SEOUL, KOREA
_________________________________ ___________________________________
Attorney-at-Law
This office has been authorized by the Minister of Justice, Republic of Korea,
to act as Notary Public Since Sep. 1, 1979, under Law No. 45-14
<PAGE> 5
WOON-HYUN LAW AND NOTARY OFFICE
Registered No. 1994 - 309
NOTARIAL CERTIFICATE
WOON-HYUN LAW AND NOTARY OFFICE
233, NAEJA-DONG, CHONGRO-KU
SEOUL, KOREA
[SEAL]
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That HYUNDAI CORPORATION, a Korean corporation ("Company"), hereby
makes, constitutes and appoints:
JOO-YONG KIM
as its true and lawful attorney in fact for Company and in its name, place and
stead, as its act and deed, and for its use and benefit, to do each and all of
the following:
1. To exercise all voting, consent, approval and other similar rights
of Company with respect to capital stock of Maxtor Corporation, whether such
rights arise by law, charter document, contract or otherwise.
2. To enter into agreements, execute and deliver instruments and take
such other actions as, in each case, such attorney in fact deems advisable
(which shall be conclusively evidenced by his taking such action) for the
purpose of exercising all rights of Company referred to in paragraph 1 above.
3. To execute, file and deliver such reports, schedules, notices and
other documents, and any amendments thereto or other actions relating thereto,
relating to or connected with Maxtor Corporation or capital stock of Maxtor
Corporation as, in each case, such attorney in fact deems advisable (which
shall be conclusively evidenced by his taking such action), including without
limitation one or more Schedules 13D under the Securities Exchange Act of 1934,
as amended, any amendments thereto and any joint filing agreement relating
thereto.
GIVING AND GRANTING unto said attorney in fact full power and authority
to do and perform every act and thing whatsoever incident to the foregoing as
fully to all intents and purposes as Company might or could do for itself,
hereby ratifying and confirming all that such attorney in fact shall lawfully
do or cause to be done by virtue hereof.
<PAGE> 7
IN WITNESS WHEREOF, Purchaser has executed this power this 1st day of
Feb., 1994.
HYUNDAI CORPORATION
By: SE-YONG PARK
------------------------------
Se-Yong Park
President & Representative Director
<PAGE> 8
Registered No. 1994 - 308
Notarial Certificate
Mr. CHAN - KI, HO
attorney in fact of
MR. SE-YONG, PARK PRESIDENT
OF HYUNDAI CORPORATION
[Korean version not shown]
appeared before me and admitted said
principal's subscription to the attached
POWER OF ATTORNEY
This is hereby attested on this
1ST day of FEB, 1994 at this office
WOON-HYUN LAW AND NOTARY OFFICE
223 NAEJA-DONG, CHONGRO-KU
SEOUL, KOREA
_________________________________ ___________________________________
Attorney-at-Law
This office has been authorized by the Minister of Justice, Republic of Korea,
to act as Notary Public Since Sep. 1, 1979, under Law No. 45-14
<PAGE> 9
WOON-HYUN LAW AND NOTARY OFFICE
Registered No. 1994 - 310
NOTARIAL CERTIFICATE
WOON-HYUN LAW AND NOTARY OFFICE
233, NAEJA-DONG, CHONGRO-KU
SEOUL, KOREA
[SEAL]
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That HYUNADI MERCHANT MARINE CO., LTD., a Korean corporation
("Company"), hereby makes, constitutes and appoints:
JOO-YONG KIM
as its true and lawful attorney in fact for Company and in its name, place and
stead, as its act and deed, and for its use and benefit, to do each and all of
the following:
1. To exercise all voting, consent, approval and other similar rights
of Company with respect to capital stock of Maxtor Corporation, whether such
rights arise by law, charter document, contract or otherwise.
2. To enter into agreements, execute and deliver instruments and take
such other actions as, in each case, such attorney in fact deems advisable
(which shall be conclusively evidenced by his taking such action) for the
purpose of exercising all rights of Company referred to in paragraph 1 above.
3. To execute, file and deliver such reports, schedules, notices and
other documents, and any amendments thereto or other actions relating thereto,
relating to or connected with Maxtor Corporation or capital stock of Maxtor
Corporation as, in each case, such attorney in fact deems advisable (which
shall be conclusively evidenced by his taking such action), including without
limitation one or more Schedules 13D under the Securities Exchange Act of 1934,
as amended, any amendments thereto and any joint filing agreement relating
thereto.
GIVING AND GRANTING unto said attorney in fact full power and authority
to do and perform every act and thing whatsoever incident to the foregoing as
fully to all intents and purposes as Company might or could do for itself,
hereby ratifying and confirming all that such attorney in fact shall lawfully
do or cause to be done by virtue hereof.
<PAGE> 11
IN WITNESS WHEREOF, Purchaser has executed this power this 1st day of
Feb., 1994.
HYUNDAI MERCHANT MARINE CO., LTD.
By: SE-YONG PARK
------------------------------
Se-Yong Park
President & Representative Director
<PAGE> 12
Registered No. 1994 - 310
Notarial Certificate
Mr. CHAN - KI, HO
attorney in fact of
MR. SE - YONG, PARK PRESIDENT
OF HYUNDAI MERCHANT MARINE CO.,
LTD.
[Korean version not shown]
appeared before me and admitted said
principal's subscription to the attached
POWER OF ATTORNEY
This is hereby attested on this
1ST day of FEB, 1994 at this office
WOON-HYUN LAW AND NOTARY OFFICE
223 NAEJA-DONG, CHONGRO-KU
SEOUL, KOREA
_________________________________ ___________________________________
Attorney-at-Law
This office has been authorized by the Minister of Justice, Republic of Korea,
to act as Notary Public Since Sep. 1, 1979, under Law No. 4544
