EXHIBIT (c)(3)
Confidential
================================================================================
PROJECT HARBOR
Presentation to the Special Cmmittee
FAIRNESS OPINION
August 1, 2000
================================================================================
McDonald
Investments
[graphic omitted]
<PAGE>
Title Section
Executive Summary 1
Equity Affiliate Investment Analysis 2
Historical Stock Trading Analysis 3
Premium Paid Analysis 4
Comparable Public Company Analysis 5
Discounted Cash Flow / Economic Profit Analysis 6
Comparable Merger & Acquisition Analysis 7
McDonald
Investments Sum-of-the-Parts Analysis 8
[graphic omitted]
Industrial Leverage Buyout Analysis 9
Manufacturing
Group Appendix 10
<PAGE>
Executive Summary
[graphic omitted]
McDonald
Investments
[graphic omitted]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Executive Summary
================================================================================
o MascoTech, Inc. (the Company or MascoTech) has five operating segments
involving the manufacture and sale of the following:
o Specialty Metal Formed Products (Forming Segment)- Precision products,
principally engine and drivetrain components and subassemblies, generally
produced using advanced metalworking technologies with significant
proprietary content for the transportation industry.
o Towing Systems (Towing Segment) - Vehicle hitches, jacks, winches couplers
and related towing accessories.
o Specialty Fasteners (Fasteners Segment) - Cold formed fasteners and related
metallurgical processing.
o Specialty Packaging and Sealing Products (Packaging Segment) - Industrial
container closures, pressurized gas cylinders and metallic and nonmetallic
gaskets.
o Specialty Industrial Products - (Specialty Segment) Specialty drills,
cutters and specialized metal finishing services, and flame-retardant
facings and jacketings and pressure-sensitive tapes.
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Industrial Manufacturing Group 1 McDonald Investment [Logo]
<PAGE>
Confidential
Executive Summary
================================================================================
Current Offer from Heartland Industrial Partners LLC. (Heartland)
Per Share Amounts
---------------------------------
o Cash Offer to Public Shareholders $16.90 [1]
[1] Excluding Saturn Electronics & Engineering, Inc. (Saturn)
Note:
o Assume Announcement Date of 7/28/00 for all of our analysis.
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Industrial Manufacturing Group 2 McDonald Investment [Logo]
<PAGE>
Equity Affiliate Investments Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Equity Affiliate Investments Analysis
================================================================================
o Citicorp Venture Capital, Ltd. (CVC) has offered $125 million for all
equity affiliate investments excluding Saturn Electronics. CVC's offer
includes:
-- Titan International
-- Delco Remy International
-- Tower Warrants
-- MSX International
-- Advanced Accessory Systems
-- American Commercial Plastics
-- Qualitor
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Industrial Manufacturing Group 3 McDonald Investment [Logo]
<PAGE>
Confidential
Equity Affiliate Investments Analysis
================================================================================
o Saturn is scheduled to price their IPO the week of August 11th. The
proceeds distribution schedule has been agreed upon as follows:
-- Heartland will receive the first $18 million of proceeds.
-- MascoTech shareholders will receive the next $22 million of proceeds
-- Heartland will receive the next $16.7 million of proceeds.
-- All proceeds exceeding $56.7 million will be shared as follows:
o 60% to MascoTech shareholders
o 40% to Heartland
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Industrial Manufacturing Group 4 McDonald Investment [Logo]
<PAGE>
Confidential
Equity Affiliate Investments Analysis
================================================================================
o Estimated Proceeds for Sale of Equity Affiliate Investments
Estimated Equity Affiliates Proceeds[1] Estimated Saturn Proceeds to MascoTech
--------------------------------------- --------------------------------------
Current Offer $125.0 Proceeds from Saturn IPO[2] $22.0
Proceeds from Secondary Sale[3] 20.9
------
Tax Basis 66.5 Total Proceeds $42.9
------
Gain(Loss) 58.5 Shares Outstanding[4] 47.1
Taxes 23.4 Per Share $0.91
------
After-Tax Proceeds $101.6
Note:
--------------------------------------------------------------------------------
[1] Offer for All Affiliate Investments Excluding Saturn Electronics by CVC
[2] Assumes $11.00 Offering Price and Over-Allotment Shares Exercised
[3] Illiquidity Discount of 35% Applied to Estimated Market Value
[4] Fully Diluted Shares @ $16.90 47.1
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Industrial Manufacturing Group 5 McDonald Investment [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Equity Affiliate Investments Analysis
====================================================================================================
o Estimated Saturn Valuation Based on Current S1 Filing
Filing Price Range $10.00 $11.00 $12.00 Filing Price Range $10.00 $11.00 $12.00
--------------------------------------------- ----------------------------------------------------
IPO Proceeds Secondary Proceeds
--------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares Being Offered 4.3 4.3 4.3 Shares Post-Offering 5.5 5.5 5.5
Over-Allotment Shares 1.0 1.0 1.0 Total Value 54.6 60.0 65.5
----- ----- ------
Total 5.3 5.3 5.3 Illiquidity Discount 35.0% 35.0% 35.0%
Gross Proceeds $53.3 $58.6 $63.9 Discounted Value 35.5 39.0 42.6
Gross Spread of 7.0% 3.7 4.1 4.5 Heartland Proceeds 9.2 4.2 0.0
Expenses 2.0 2.0 2.0
----- ------ ------
Shared Proceeds 26.3 34.8 42.6
Net Proceeds 47.5 52.5 57.4
MascoTech Proceeds - 60% 15.8 20.9 25.5
Heartland Proceeds 18.0 18.0 18.0 Heartland Proceeds - 40% 10.5 13.9 17.0
MascoTech Proceeds 22.0 22.0 22.0
Heartland Proceeds 7.5 12.5 16.7 MascoTech Secondary Proceeds 15.8 20.9 25.5
Heartland Secondary Proceeds 19.7 18.1 17.0
Shared Proceeds 0.0 0.0 0.7
Total MascoTech Proceeds $37.8 $42.9 $ 48.0
MascoTech Proceeds - 60% 0.0 0.0 0.4
Heartland Proceeds - 40% 0.0 0.0 0.3 Total Heartland Proceeds 45.2 48.6 52.0
MascoTech IPO Proceeds 22.0 22.0 22.4 Total Proceeds from Saturn $83.0 $91.5 $100.0
Heartland IPO Proceeds 25.5 30.5 35.0
Note:
------------------------------------------------------------------------------------------------------
Gross Spread of 7.0%
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Industrial Manufacturing Group 6 McDonald Investment [Logo]
</TABLE>
<PAGE>
Historical Stock Trading Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Historical Stock Trading Analysis
================================================================================
o McDonald Investments reviewed the closing per-share market prices of
MascoTech's common stock over the following time periods:
-- One Month
-- Three Months
-- Six Months
-- Twelve Months
-- Three Years
-- Five Years
o McDonald Investments calculated the total return to stockholders,
including dividends, for the prior year, three years, and five years for
MascoTech, Inc., the S&P500, and the Automotive OEM Supplier Group.
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Industrial Manufacturing Group 7 McDonald Investment [Logo]
<PAGE>
Confidential
Historical Stock Trading Analysis
================================================================================
MascoTech, Inc.
-----------------------------------------------------------------------
Summary of Price and Volume - Five Years
Average Daily Close
Average Daily ------------------
Period Close Volume High Low
--------------------- ------- ------- ------ -----
Lastest Month $11.22 118,845 $11.75 $10.50
Last 3 Months 11.81 90,334 14.31 10.50
Last 6 Months 12.11 82,676 14.50 10.50
Last 12 Months 13.31 78,355 17.50 10.50
Last 3 Years 16.98 125,060 26.25 10.10
Last 5 Years 16.26 115,481 26.25 10.25
==============================================================================
Note:
-------------------------------------------------------------------------
Current Offer of $16.90 per Share
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Industrial Manufacturing Group 8 McDonald Investment [Logo]
<PAGE>
Confidential
Historical Stock Trading Analysis
================================================================================
Volume Distribution by Closing Price - One Year History
Daily Closing % of Total % of Total
Price per Share Days Days Volume Volume
---------------- ---- ---------- ---------- ----------
0.00 to 9.90 0 0.0% 0 0.0%
9.90 to 10.90 6 2.4% 691,000 3.5%
10.90 to 11.90 64 25.1% 6,278,300 31.5%
11.90 to 12.90 73 28.6% 5,166,600 25.9%
12.90 to 13.90 35 13.7% 3,507,700 17.6%
13.90 to 14.90 17 6.7% 1,099,500 5.5%
14.90 to 15.90 7 2.7% 372,600 1.9%
15.90 to 16.90 42 16.5% 2,048,300 10.3%
16.90 to 17.90 11 4.3% 764,500 3.8%
17.90 to 18.90 0 0.0% 0 0.0%
18.90 to 19.90 0 0.0% 0 0.0%
19.90 < 0 0.0% 0 0.0%
Proposed Transaction Price of $16.90 per Share
Total Trading Volume Below Proposed Price per Share - 96.2%
Total Trading Volume Above Proposed Price per Share - 3.8%
Total Trading Day Below Proposed Price per Share - 95.7%
Total Trading Day Above Proposed Price per Share - 4.3%
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Industrial Manufacturing Group 9 McDonald Investment [Logo]
<PAGE>
Confidential
Historical Stock Trading Analysis
================================================================================
Volume Distribution by Closing Price - Three Year History
Daily Closing % of Total % of Total
Price per Share Days Days Volume Volume
---------------- ---- ---------- ---------- ----------
0.00 to 9.90 0 0.0% 0 0.0%
9.90 to 10.90 6 1.1% 691,000 1.2%
10.90 to 11.90 64 11.4% 6,278,300 11.2%
11.90 to 12.90 73 13.1% 5,166,600 9.2%
12.90 to 13.90 35 6.3% 3,507,700 6.3%
13.90 to 14.90 39 7.0% 3,544,300 6.3%
14.90 to 15.90 72 12.9% 8,634,400 15.4%
15.90 to 16.90 132 23.6% 11,992,400 21.4%
16.90 to 17.90 60 10.7% 6,107,800 10.9%
17.90 to 18.90 4 0.7% 1,203,400 2.1%
18.90 to 19.90 9 1.6% 1,310,400 2.3%
19.90 < 65 11.6% 7,569,400 13.5%
Proposed Transaction Price of $16.90 per Share
Total Trading Volume Below Proposed Price per Share - 71.1%
Total Trading Volume Above Proposed Price per Share - 28.9%
Total Trading Day Below Proposed Price per Share - 75.3%
Total Trading Day Above Proposed Price per Share - 24.7%
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Industrial Manufacturing Group 10 McDonald Investment [Logo]
<PAGE>
Confidential
Historical Stock Trading Analysis
================================================================================
Volume Distribution by Closing Price - Three Year History
Daily Closing % of Total % of Total
Price per Share Days Days Volume Volume
---------------- ---- ---------- ---------- ----------
0.00 to 9.90 0 0.0% 0 0.0%
9.90 to 10.90 72 5.7% 4,837,300 3.3%
10.90 to 11.90 97 7.7% 8,690,200 6.0%
11.90 to 12.90 120 9.5% 7,867,600 5.4%
12.90 to 13.90 115 9.1% 8,429,500 5.8%
13.90 to 14.90 106 8.4% 6,836,400 4.7%
14.90 to 15.90 104 8.2% 11,340,300 7.8%
15.90 to 16.90 172 13.6% 15,332,300 10.5%
16.90 to 17.90 83 6.6% 11,106,700 7.6%
17.90 to 18.90 56 4.4% 8,153,500 5.6%
18.90 to 19.90 78 6.2% 14,349,800 9.8%
19.90 < 261 20.6% 49,023,900 33.6%
Proposed Transaction Price of $16.90 per Share
Total Trading Volume Below Proposed Price per Share - 43.4%
Total Trading Volume Above Proposed Price per Share - 56.6%
Total Trading Day Below Proposed Price per Share - 62.2%
Total Trading Day Above Proposed Price per Share - 37.8%
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Industrial Manufacturing Group 11 McDonald Investment [Logo]
<PAGE>
Confidential
Historical Stock Trading Analysis
================================================================================
Premium Over Latest Twelve Months
-----------------------------------------------------------------
Weighted Proposed
Average Price
Period Closing Price Per Share Premium
--------------------- ------------- --------- --------
Lastest Month $11.24 $16.90 50.4%
Last 3 Months 11.68 16.90 44.7%
Last 6 Months 11.99 16.90 41.0%
Last 12 Months 12.93 16.90 30.7%
==================================================================
Note:
-------------------------------------------------------------------------
Weighted Average on Daily Trading Volume
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Industrial Manufacturing Group 12 McDonald Investment [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Historical Stock Trading Analysis
========================================================================================================================
TOTAL SHARE PRICE RETURN (INCLUDING DIVIDENDS) - AUTOMOTIVE GROUP
Closing Closing Price as of
Price @ ---------------------------------------------------- LTM 3 Year 5 Year
Company 7/28/00 7/28/99 7/28/98 7/28/97 7/28/96 7/28/95 Return Return Return
-------------------------- -------- -------- -------- -------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ArvinMeritor Inc $ 15.19 $ 32.92 $ 28.50 NA NA NA -52.2% NA NA
BorgWarner Inc 33.38 52.75 47.50 55.69 34.38 32.75 -35.3% -36.6% 11.1%
Modine Mfg Co 26.34 32.56 33.25 30.13 26.25 31.25 -16.2% -4.0% -3.2%
Tower Automotive Inc 11.75 25.44 23.63 21.13 12.38 7.00 -53.8% -44.4% 67.9%
Superior Industries Int'l 29.50 28.00 26.25 27.00 23.38 35.13 6.7% 12.9% -11.9%
American Axle & Mfg Hldgs 14.88 15.94 NA NA NA NA -6.7% NA NA
Hayes Lemmerz Int'l Inc 13.88 29.38 36.25 28.50 14.88 NA -52.8% -51.3% NA
Intermet Corp 7.03 11.13 19.88 16.50 12.13 10.13 -35.4% -54.5% -24.2%
Simpson Industries 7.75 12.31 12.63 10.38 9.38 11.13 -33.8% -13.7% -12.4%
------------------------------------------------------------------------------------------------------------------------
Comparable Public
Company Average -31.0% -27.4% 4.5%
Comparable Public
Company Median -35.3% -36.6% -7.6%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
S&P500 1,419.9 1,365.4 1,130.2 936.5 635.9 562.9 4.0% 51.6% 152.2%
------------------------------------------------------------------------------------------------------------------------
MascoTech, Inc. 11.56 16.69 22.63 21.25 13.00 13.00 -28.8% -41.2% -1.0%
Relation to Median Return Above Below Above
Relation to S&P500 Below Below Below
MascoTech Inc. (with Premium) 16.90 16.69 22.63 21.25 13.00 13.00 2.7% -17.1% 37.9%
Relation to Median Return Above Above Above
Relation to S&P500 Below Below Below
Note:
------------------------------------------------------------------------------------------------------------------------
Simple return between two dates, with dividends added to the ending price. Dividends are based on the dividend ex-date.
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Industrial Manufacturing Group 13 McDonald Investment [Logo]
</TABLE>
<PAGE>
Premium Paid Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Premium Paid Analysis
================================================================================
o McDonald reviewed the purchase paid per share and recent target company
closing prices in 6 public company merger & acquisition transactions
completed since 1/1/99 in the automotive and transportation equipment
industry for which relevant information was available and which involved
consideration between $250 and $2,500 million. For each of the companies
involved in the transactions, McDonald examined the closing stock price
one day prior to announcement date, one week prior to announcement date,
and four weeks prior to announcement date, in order to calculate the
premium paid over the closing stock price at those points in time.
Stock Premium:
---------------------------------------------
1 Day 1 Week 4 Weeks
Prior To Prior To Prior To
Announcement Announcement Announcement
---------------------------------------------
Median per Analysis 35.7% 48.0% 66.4%
-----------------------------------------------------------------------
MascoTech, Inc. with
Premium 46.2% 50.2% 56.3%
Relation to Median Return Above Above Below
-----------------------------------------------------------------------
Note:
--------------------------------------------------------------------------------
[1] Assumed Announcement Date of July 28, 2000 with an Offer per Share of $16.90
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Industrial Manufacturing Group 14 McDonald Investment [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Premium Paid Analysis
========================================================================================================================
PREMIUM PAID ANALYSIS
AUTOMOTIVE AND TRANSPORTATION EQUIPMENT INDUSTRY
TIME PERIOD: 1/1/99 TO CURRENT
DEAL SIZE [ENTERPRISE VALUE]: $250 TO $2,500 MILLION
Premium Prior to Announced Date
Enterprise -----------------------------------
Date Target Name Acquiror Name Value 1 Day 1 Week 4 Weeks
------ ---------------------- ----------------------- ---------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
May-00 Mark IV Industries [1] BC Partners $2,112.5 22.4% 25.8% 32.7%
Nov-99 Standard Products Co. Cooper Tire & Rubber 762.7 46.0% 54.9% 35.8%
Jul-00 Detroit Diesel DaimlerChrysler AG 648.8 7.6% 35.3% 77.8%
Apr-99 Walbro Corp TI Group PLC 548.2 62.4% 102.5% 122.2%
Jan-99 Excel Industries Inc. Dura Automotive Systems 495.5 25.4% 41.0% 55.1%
Jan-99 Adwest Automotive Dura Automotive Systems 293.1 104.1% 109.8% 108.3%
---------------------------------------------------------------------------------
Average $ 810.1 44.6% 61.6% 72.0%
Median 598.5 35.7% 48.0% 66.4%
High 2,112.5 104.1% 109.8% 122.2%
Low 293.1 7.6% 25.8% 32.7%
---------------------------------------------------------------------------------
Note:
------------------------------------------------------------------------------------------------------------------------
Source: Securities Data Company; Mergerstat; Company Reports; McDonald Investments
[1] Assume Announcement Date of 1/19/00 - Announced Hiring of Financial Advisor to Review Strategic Alternatives
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Industrial Manufacturing Group 15 McDonald Investment [Logo]
</TABLE>
<PAGE>
Comparable Public Company Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Comparable Public Company Analysis
================================================================================
o McDonald reviewed and compared the financial performance of MascoTech,
Inc. to the financial performance of nine publicly-traded companies that
McDonald believed were comparable in certain respects to the Company.
These nine publicly-traded companies are U.S. based automotive suppliers
with significant exposure to the original equipment manufacturer market
(OEM), each with an equity market capitalization of less than $1.1
billion. An Automotive Comparable Group (the Comparable Companies) was
chosen because of the Company's significant exposure to this sector. The
comparable companies include:
ARM ArvinMeritor Inc
BWA BorgWarner Inc
MODI Modine Mfg Co
TWR Tower Automotive Inc
SUP Superior Industries Int'l
AXL American Axle & Mfg Hldgs
HAZ Hayes Lemmerz Int'l Inc
INMT Intermet Corp
SMPS Simpson Industries
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Industrial Manufacturing Group 16 McDonald Investment [Logo]
<PAGE>
Confidential
Comparable Public Company Analysis
================================================================================
o McDonald calculated the ratio of each Comparable Company's enterprise
value (market capitalization less cash and equity in affiliates plus debt,
preferred stock, and minority interest) to that company's sales, EBIT,
EBITDA and invested capital for its latest twelve months (LTM). McDonald
then applied the median of each of such ratios to MascoTech's sales, EBIT,
EBITDA and invested capital for the latest twelve months to calculate
implied prices per share for the Company's common stock
o In addition, McDonald calculated the ratio of stock prices of each
Comparable Companies to that company's earnings per share (EPS) for the
latest twelve months and projected earnings per share for calendar 2000.
McDonald then applied the median of the 2000P ratio to the Company's
projected earnings per share for calendar year 2000 to calculate the
implied price per share for the Company's common stock.
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Industrial Manufacturing Group 17 McDonald Investment [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Comparable Public Company Analysis
====================================================================================================================================
COMPARABLE PUBLIC COMPANY ANALYSIS - AUTOMOTIVE OEM GROUP
Enterprise Value as a Multiple of
------------------------------------- Equity Value as a LTM
LTM Multiple of Leverage
------------------------------------- ------------------ ----------
Latest Invested LTM 2000P EBITDA Total Debt
Ticker Company Quarter Sales EBITDA EBIT Capital EPS EPS Margins to EBITDA
------ ------- ------- ----- ------ ---- -------- ------ ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ARM ArvinMeritor Inc [1] 3/00 0.3x 3.0x 4.4x 0.8x NA 4.0x 10.6% 2.0x
BWA BorgWarner Inc 6/00 0.6x 3.9x 5.9x 0.7x 6.2x 5.9x 15.4% 2.2x
MODI Modine Mfg Co 6/00 0.8x 6.6x 9.3x 1.3x 12.2x NA 12.0% 1.4x
TWR Tower Automotive Inc 6/00 0.6x 4.2x 6.1x 0.7x 5.0x 4.9x 15.3% 2.8x
SUP Superior Industries Int'l 6/00 1.1x 4.6x 5.7x 2.3x 10.2x 9.9x 23.3% 0.0x
AXL American Axle & Mfg Hldgs 3/00 0.5x 4.1x 5.5x 1.1x 5.9x 5.5x 11.3% 2.2x
HAZ Hayes Lemmerz Int'l Inc 4/00 0.9x 5.1x 7.8x 0.9x 6.7x 6.7x 17.3% 4.2x
INMT Intermet Corp 6/00 0.6x 4.1x 5.5x 0.8x 4.8x 4.3x 14.6% 3.0x
SMPS Simpson Industries 6/00 0.5x 3.9x 6.6x 0.9x 6.7x 6.7x 12.3% 1.9x
------------------------------------------------------------------------------------------------------------------------------------
Average 0.6x 4.4x 6.3x 1.1x 7.2x 6.0x 14.7% 2.2x
Median 0.6x 4.1x 5.9x 0.9x 6.4x 5.7x 14.6% 2.2x
High 1.1x 6.6x 9.3x 2.3x 12.2x 9.9x 23.3% 4.2x
Low 0.3x 3.0x 4.4x 0.7x 4.8x 4.0x 10.6% 0.0x
------------------------------------------------------------------------------------------------------------------------------------
Note:
------------------------------------------------------------------------------------------------------------------------------------
Source: FactSet Research Systems Inc.; COMPUSTAT; Company Reports
[1] Pro-Forma to reflect the merger of equals between Meritor Automotive and Arvin Industries
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Industrial Manufacturing Group 18 McDonald Investment [Logo]
</TABLE>
<PAGE>
Confidential
Comparable Public Company Analysis
================================================================================
o Valuation Summary
Median Implied Implied
Comparable Enterprise Price Per
Comparable Public Companies Multiple Value Share
------------------------------- ----------- ---------- ---------
Multiple of Sales 0.6x $1,025.2 NM
Multiple of EBIT 5.9x 1,305.7 NM
Multiple of EBITDA 4.1x 1,242.8 NM
Multiple of Invested Capital 0.9x 1,589.3 7.99
Multiple of 2000P EPS 5.7x 1,905.8 14.71
Average $1,413.7 $11.35
Note:
-----------------------------------------------------------------------------
NM - Not Meaningful Due to Excessive Leverage
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Industrial Manufacturing Group 19 McDonald Investment [Logo]
<PAGE>
Discounted Cash Flow / Economic Profit Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Discounted Cash Flow / Economic Profit Analysis
================================================================================
o Discounted cash flow analysis is a traditional valuation methodology used
to derive a valuation of a corporate entity by discounting to the present
its future expected cash flows. McDonald performed a discounted cash flow
analysis of the Company based upon financial projections for the years
2000 to 2004 which were provided by management.
o Economic profit analysis is a valuation methodology used to derive a
valuation of a corporate entity by discounting to the present its future
expected economic profit. McDonald performed an economic profit analysis
of the Company based upon financial projections for the years 2000 to 2004
which were provided by management.
o In estimating the company's weighted average cost of capital (WACC),
McDonald performed analysis consistent with the Capital Asset Pricing
Model. Based on the median Automotive Comparable Group unlevered beta and
target debt to capital ratio, McDonald calculated a WACC of 12.6% and a
target debt to capital ratio of 30%.
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Industrial Manufacturing Group 20 McDonald Investment [Logo]
<PAGE>
Confidential
Discounted Cash Flow / Economic Profit Analysis
================================================================================
o Valuation Summary
Assumptions
-----------------------------------------
Terminal Growth 1.0%
Long Term ROIC 12.6%
WACC 12.6%
Enterprise Value Enterprise Value to LTM EBITDA
-------------------------------------- ---------------------------------
Terminal Growth Terminal Growth
----------------------------- ----------------------------
W 0.5% 1.0% 1.5% W 0.5% 1.0% 1.5%
A 12.1% $1,892.3 $1,898.2 $1,904.0 A 12.1% 6.2x 6.3x 6.3x
C 12.6% 1,815.1 1,820.6 1,826.2 C 12.6% 6.0x 6.0x 6.0x
C 13.1% 1,743.9 1,749.1 1,754.3 C 13.1% 5.8x 5.8x 5.8x
-------------------------------------- ---------------------------------
IMPLIED VALUATION RANGE OF IMPLIED EBITDA MULTIPLE OF
$1,743.9 to $1,904.0 5.8x to 6.3x
-------------------------------------- ---------------------------------
Price Per Share
-----------------------------------------------------------
Terminal Growth
------------------------------------
W 0.5% 1.0% 1.5%
A 12.1% $14.43 $14.55 $14.68
C 12.6% 12.79 12.90 13.02
C 13.1% 11.28 11.39 11.50
-----------------------------------------------------------
IMPLIED VALUATION RANGE OF $11.28 to $14.68
------------------------------------------------------------
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Industrial Manufacturing Group 21 McDonald Investment [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Discounted Cash Flow / Economic Profit Analysis
========================================================================================================================
Projections for the Period Ending December 31,
---------------------------------------------------------------------------------------
2000 2001 2002 2003 2004
---------------- ---------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
EBIT $230.1 $280.0 $317.2 $349.4 $377.7
Cash Taxes @ 40.0% 92.0 112.0 126.9 139.8 151.1
Change in Deferred Taxes 32.7 21.0 15.9 14.9 10.2
------ ------ ------ ------ ------
NOPAT 170.8 189.0 206.2 224.5 236.8
Net Investment
---------------------------
Change in Working Capital 4.0 (11.8) (17.8) (20.1) (22.9)
Capital Expenditures (99.9) (106.4) (105.4) (100.0) (106.7)
Change in Other Assets 0.0 0.0 0.0 0.0 0.0
Depreciation & Amortization 90.8 96.8 102.0 107.1 112.3
------ ------ ------ ------ ------
Net Investment (5.1) (21.4) (21.2) (13.0) (17.3)
Free Cash Flow (FCF) 165.7 167.6 185.0 211.5 219.5
Discount Factor 0.9426 0.8374 0.7439 0.6609 0.5872
Present Value of FCF 156.1 140.3 137.6 139.8 128.9
------------------------------------------------------
Assumptions Valuation
--------------------------- ------------------------------------------------------
Terminal Growth (g) 1.0% Total PV of FCF $ 702.7
Long Term ROIC 12.6% PV of Terminal Value 1,117.9
---------
WACC 12.6% Enterprise Value $1,820.6
Equity Affiliates 101.6
Net Debt 1,314.1
---------
Equity Value 608.1
Per Share $ 12.90
------------------------------------------------------
Note:
------------------------------------------------------------------------------------------------------------------------
TV=[NOPAT T+1 *(1-g/ROIC)]/WACC-g......if ROIC=WACC then TV=NOPAT T+1/WACC
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Industrial Manufacturing Group 22 McDonald Investment [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Discounted Cash Flow / Economic Profit Analysis
====================================================================================================================================
Actual for the Period Ending December 31, Projections for the Period Ending December 31,
----------------------------------------- ----------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004
----- --------- --------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Return on Invested Capital - 9.1% 9.3% 9.3% 9.6% 10.6% 11.4% 12.3% 12.9%
WACC - 12.6% 12.6% 12.6% 12.6% 12.6% 12.6% 12.6% 12.6%
---- -------- -------- -------- -------- -------- -------- -------- ------
Spread - -3.5% -3.2% -3.4% -3.0% -2.0% -1.1% -0.3% 0.3%
Beginning Capital - $1,359.5 $1,387.7 $1,459.0 $1,779.0 $1,784.1 $1,805.5 $1,826.7 $1,839.7
Economic Profit - (47.4) (44.3) (49.5) (52.7) (35.1) (20.6) (5.0) 5.7
Change in Economic Profit 3.1 (5.2) (3.2) 17.5 14.6 15.6 10.6
Discount Factor 0.9426 0.8374 0.7439 0.6609 0.5872
PV of Economic Profit (49.7) (29.4) (15.3) (3.3) 3.3
-----------------------------------------------
Valuation Summary
-----------------------------------------------
Total PV of Economic Profit ($94.3)
PV of Terminal Value 27.5
--------
Premium/(Discount) (66.8)
Capital [1] 1,887.4
--------
Enterprise Value $1,820.6
Equity Affiliates 101.6
Net Debt 1,314.1
--------
Equity Value $ 608.12
Per Share $ 12.90
----------------------------------------------------
Note:
------------------------------------------------------------------------------------------------------------------------------------
TV=EP T+1/WACC + [NOPAT T+1 *(g/ROIC)/(ROIC - WACC)]/WACC*(WACC - g)......if ROIC=WACC, then TV=EP T+1/WACC
------------------------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 23 McDonald Investment [Logo]
</TABLE>
<PAGE>
Comparable Merger & Acquisition Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Comparable Merger & Acquisition Analysis
===============================================================================
o McDonald reviewed certain financial data and the purchase prices paid in
12 merger & acquisition transactions completed since 1/1/99 in the
automotive and transportation equipment industry for which relevant
information was available and which involved consideration between $250
and $2,500 million.
o McDonald calculated the ratio of the enterprise value to the target
company's LTM sales, LTM EBIT and LTM EBITDA and applied the median
transaction multiple to the Company's LTM results.
o Valuation Summary:
Median Implied Implied
Transaction Enterprise Price Per
Comparable M&S Transactions Multiple Value Share
--------------------------- ----------- ---------- ---------
Multiple of Sales 0.8x $1,354.6 $ 3.02
Multiple of EBIT 10.4x 2,312.8 23.35
Multiple of EBITDA 6.4x 1,931.1 15.25
Average $1,866.2 $13.87
--------------------------------------------------------------------------------
Industrial Manufacturing Group 24 McDonald Investments [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Comparable Merger & Acquisition Analysis
=======================================================================================================================
M&A TRANSACTIONS
AUTOMATIVE TRANSPORTATION AND EQUIPMENT INDUSTRY
TIME PERIOD: 1/1/99 TO CURRENT
DEAL SIZE [ENTERPRISE VALUE]: $250 TO $2,500 MILLION
Enterprise Value to
Enterprise ---------------------
Date Target Name Acquiror Name Value Sales EBIT EBITDA
------ ----------------------------------- ----------------------------------- ---------- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Mar-99 United Technologies Automotive Lear Corporation $2,300.0 0.8x 12.6x 7.5x
May-00 Mark IV Industries BC Partners 2,112.5 1.0x 10.4x 7.2x
Nov-99 TRW - Lucas Diesel Fuel Injection Delphi Automative Systems 871.0 0.8x 7.6x 5.9x
Nov-99 Standard Products Co. Cooper Tire & Rubber 762.7 0.7x 11.7x 6.4x
Jul-00 Detroit Diesel DaimlerChrysler AG 648.8 0.3x 7.7x 4.8x
Apr-99 Walbro Corp TI Group PLC 548.2 0.8x 13.2x 7.1x
Jan-99 Excel Industries Inc. Dura Automotive Systems 495.5 0.5x 19.3x 8.3x
Jan-99 Adwest Automotive Dura Automotive Systems 293.1 0.7x 8.4x 5.8x
Jun-99 Active Tool & Manufacturing Co. Tower Automotive Inc. 317.5 1.0x NA NA
Aug-99 Eaton Corp - Fluid Power Division Borg-Warner Automotive Inc. 310.0 1.6x NA NA
Feb-99 Mark IV - Purolator Filter Unit Arvin Industries 270.0 0.8x NA NA
Jan-00 Invensys Plc - Siebe Automotive Cooper Tire & Rubber 250.3 0.6x 7.4x 5.4x
Average $ 765.0 0.8x 10.9x 6.5x
Median 521.8 0.8x 10.4x 6.4x
High 2,300.0 1.6x 19.3x 8.3x
Low 250.3 0.3x 7.4x 4.8x
Note:
---------
Source: Securities Data Company; Mergerstat; Company Reports; McDonald Investments
-----------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 25 McDonald Investments [Logo]
</TABLE>
<PAGE>
Sum-of-the-Parts Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Sum-of-the-Parts Analysis
===============================================================================
o McDonald Investments estimated the value of MascoTech by calculating the
implied value of its different business segments and then added these
values to arrive at a value for the consolidated entity. The following
methodologies were utilized:
- Comparable Public Company Analysis
- Discounted Cash Flow and Economic Profit Analysis
o McDonald performed such analysis as it allows for the different business
segments of a company to be valued consistently with its respective
comparable group. This methodology is also commonly employed by Wall
Street research analysts as one, among other, valuation measurements.
-------------------------------------------------------------------------------
Industrial Manufacturing Group 26 McDonald Investments [Logo]
<PAGE>
Confidential
Sum-of-the-Parts Analysis
===============================================================================
o The following companies were used in the Sum-of-the-Parts Comparable
Public Company Analysis and WACC calculations:
o Forming Segment: Automotive Comparable Group
o Fastener Segment: SPS Technologies Inc; Barnes Group Inc; Penn Engr & Mfg
Corp; Fairchild Corp; Transtechnology Corp
o Towing Segment:Miller Industries Inc; Lund Int'l Hldgs Inc; Edelbrock Corp
o Packaging Segment: Worthington Industries; AptarGroup Inc; Chicago Bridge
& Iron Co; Chart Industries
o Specialty Segment: Milacron Inc; Kennametal Inc; UNOVA Inc; Regal Beloit;
L.S. Starrett Co
-------------------------------------------------------------------------------
Industrial Manufacturing Group 27 McDonald Investments [Logo]
<PAGE>
Confidential
Sum-of-the-Parts Analysis
===============================================================================
o Business Segment Valuation Multiples and WACC,
Comparable Group Median Results
---------------------------------------------
Enterprise Value as a Mulitple of
----------------------------------
Invested
Business Segment Sales EBIT EBITDA Capital WACC[1]
----------------- ----- ---- ------ -------- -------
Forming Segment 0.6x 5.9x 4.1x 0.9x 12.6%
Specialty Segment 0.6x 6.4x 4.9x 0.8x 12.2%
Towing Segment 0.5x 9.3x 5.9x 0.7x 11.5%
Packaging Segment 1.0x 9.1x 6.0x 1.1x 11.1%
Fastener Segment 1.0x 10.6x 7.2x 1.2x 11.3%
Note:
---------
[1] Calculated based on the Median Comparable Unlevered Beta and Target Debt to
Capital Ratio
-------------------------------------------------------------------------------
Industrial Manufacturing Group 28 McDonald Investments [Logo]
<PAGE>
Confidential
Sum-of-the-Parts Analysis
===============================================================================
o Valuation Summary
Implied Implied
Enterprise Price Per
Comparable Public Companies Value Share
------------------------------- ---------- ---------
Multiple of Sales $1,178.1 NM
Multiple of EBIT 1,692.6 10.19
Multiple of EBITDA 1,570.3 7.59
Multiple of Invested Capital 1,700.8 10.36
Average $1,535.4 $ 9.38
Implied Implied
Discounted Cash Flow/Economic Enterprise Price Per
Profit Value Share
------------------------------- ---------- ---------
Base Case $1,961.2 $15.89
Sensitivity Analysis - High 2,056.1 17.90
Sensitivity Analysis - Low 1,874.2 14.04
Average $1,963.8 $15.94
Note:
---------
NM - Not Meaningful Due to Excessive Leverage
Sensivity Analysis Run by Adjusting the WACC and the Terminal Growth Rate
-------------------------------------------------------------------------------
Industrial Manufacturing Group 29 McDonald Investments [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Sum-of-the-Parts Analysis
==================================================================================================================
o Comparable Public Company Summary
Implied Implied
Enterprise % of Enterprise % of
Multiple of Sales Value Total Multiple of Sales Value Total
-------------------------- ---------- ----- ------------------------- ---------- -----
<S> <C> <C> <C> <C>
Forming Segment $ 517.8 44.0% Forming Segment $ 628.5 37.1%
Fastener Segment 240.8 20.4% Fastener Segment 306.8 18.1%
Towing Segment 136.1 11.6% Towing Segment 348.7 20.6%
Packaging Segment 219.9 18.7% Packaging Segment 338.8 20.0%
Specialty Segment 63.5 5.4% Specialty Segment 69.8 4.1%
-------- ----- -------- -----
Consolidated Value $1,178.1 100.0% Consolidated Value $1,692.6 100.0%
------------------------------------------------- ------------------------------------------------
Implied Price per Share NM Implied Price per Share $ 10.19
Implied Implied
Enterprise % of Multiple of Enterprise % of
Multiple of EBITDA Value Total Invested Capital Value Total
-------------------------- ---------- ----- ------------------------- ---------- -----
Forming Segment $ 595.4 50.5% Forming Segment $ 555.8 32.8%
Fastener Segment 300.9 25.5% Fastener Segment 381.4 22.5%
Towing Segment 281.7 23.9% Towing Segment 203.0 12.0%
Packaging Segment 314.1 26.7% Packaging Segment 444.7 26.3%
Specialty Segment 78.2 6.6% Specialty Segment 115.9 6.8%
-------- ----- -------- -----
Consolidated Value $1,570.3 133.3% Consolidated Value $1,700.8 100.5%
------------------------------------------------- ------------------------------------------------
Implied Price per Share $ 7.59 Implied Price per Share $ 10.36
------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 30 Donald Investments [Logo]
</TABLE>
<PAGE>
Confidential
Sum-of-the-Parts Analysis
================================================================================
o Discounted Cash Flow/Economic Profit Summary
Implied
Enterprise % of
Base Case Value Total
-------------------------- ---------- ------
Forming Segment $ 845.7 43.1%
Fastener Segment 273.9 14.0%
Towing Segment 347.4 17.7%
Packaging Segment 379.6 19.4%
Specialty Segment 114.6 5.8%
-------- -----
Consolidated Value $1,961.2 100.0%
--------------------------------------------------
Implied Price per Share $ 15.89
<TABLE>
<CAPTION>
Implied Implied
Enterprise % of Enterprise % of
Sensitivity Analysis - High Value Total Sensitivity Analysis - Low Value Total
--------------------------- ---------- ----- -------------------------- ---------- -----
<S> <C> <C> <C> <C>
Forming Segment $ 885.8 43.1% Forming Segment $ 808.7 41.2%
Fastener Segment 287.2 14.0% Fastener Segment 261.7 13.3%
Towing Segment 364.9 17.7% Towing Segment 331.4 16.9%
Packaging Segment 398.3 19.4% Packaging Segment 362.6 18.5%
Specialty Segment 119.9 5.8% Specialty Segment 109.7 5.6%
-------- ----- -------- -----
Consolidated Value $2,056.1 100.0% Consolidated Value $1,874.2 95.6%
-------------------------------------------------- --------------------------------------------------
Implied Price per Share $ 17.90 Implied Price per Share $ 14.04
</TABLE>
-------------------------------------------------------------------------------
Industrial Manufacturing Group 31 McDonald Investments [Logo]
<PAGE>
Leveraged Buyout Analysis
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
Confidential
Leveraged Buyout Analysis
===============================================================================
o McDonald Investments performed a leveraged buyout analysis of MascoTech as
a means of establishing the value of the Company assuming the sale of the
Company to a typical financial buyer. A leveraged buyout ("LBO") involves
the acquisition or recapitalization of a company financed primarily by
incurring indebtedness that is serviced by the post-LBO operating cash
flow of the company.
o The following assumptions were used:
- Senior Debt to EBITDA not greater than 3.75x
- Total Debt to EBITDA not greater than 4.75x
- Required return to equity investors between 30% and 35%
- Required return to subordinated debt investors between 19% and 21%
- Required return to preferred equity investors between 22% and 29%
o Our LBO analysis is based on a similar financing structure as Heartland's
current proposal.
-------------------------------------------------------------------------------
Industrial Manufacturing Group 32 McDonald Investments [Logo]
<PAGE>
<TABLE>
<CAPTION>
Confidential
Leveraged Buyout Analysis
===========================================================================================================================
Purchase Price $2,077.0
Per Share $ 16.75
Sources Uses Ownership Analysis
------------------------------------------- ---------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity Affiliates Proceeds - $ 101.6 Retire Revolving Credit $ 907.5 Carried Equity
Revolving Credit 9.6% 133.9 Retire Senior Term Loan 0.0 Interest Investment
Senior Term Debt - A 9.6% 400.0 Retire Subordinated Debt 305.0 -------- ----------
Senior Term Debt - B 10.3% 600.0 Cash to Shareholders 789.5 Management 0.0% 16.9%
Subordinated Debt 12.0% 300.0 Other 0.0 Equity Investor 0.0% 71.6%
Preferred Equity 7.0% 35.0 Transaction Expenses 75.0 Equity Ownership
Management Equity - 96.5 -------- ----------------
Equity Investor - 410.0 Management Equity 16.9%
-------- Equity Investor 71.6%
Preferred Equity 3.5%
Total Sources 2,077.0 Total Uses $2,077.0 Subordinated Debt 8.0%
------------------------------------------- ---------------------------------- ----------------------------------------
Key Credit Ratios Valuation Ownership & IRR (Exit Multiple of 7.0x)
------------------------------------------- ---------------------------------- ----------------------------------------
LTM 2000 Enterprise Value $2,077.0 % IRR
----- ------ Plus: Other 0.0 ------- ---------
Senior Debt to EBITDA 3.73x 3.35x Less: Total Debt 1,314.1 Senior Bank Debt 0.0% NA
Total Debt to EBITDA 4.72x 4.28x Less: Expenses 75.0 Subordinated Debt 8.0% 20.8%
Senior Debt to Cash Flow 5.57x 4.86x Plus: Cash Proceeds from Preferred Equity 3.5% 24.4%
Total Debt to Cash Flow 7.04x 6.22x Affiliates 101.6 Management Equity 16.9% 34.1%
EBITDA to Cash Interest 2.04x 2.20x -------- Equity Investor 71.6% 34.1%
EBITDA to Fixed Charges 1.41x 1.51x Equity Value 789.5 -----
Cash Flow to Fixed Charges 0.94x 1.04x Total Shares 47.1
Per Share $ 16.75
EV/LTM EBITDA 6.8x Total 100.0%
------------------------------------------- ---------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Basis Other Data:
Points ----------------------------------------
Debt Over Libor Rate Debt Amortization Goodwill Amortization 30 Years
-------------------- ---------- ---- ---------------------------------- Transaction Amortization 5 Years
Amortization Rate Tax Rate 38.0%
------------ ---- Marketable Security Rate 0.0%
Revolving Credit 275 9.6% - - Recapitalization Accounting Yes Sale of
Senior Term Debt - A 275 9.6% 6.0 6.0 Years Goodwill Tax Status No -------
Senior Term Debt - B 350 10.3% 7.0 8.0 Years Assets
Subordinated Debt - 12.0% - - LTM EBITDA 303.6
-------------------------------------------------------------------------------- -----------------------------------------
Senior Term Debt - B PIK Int No Cash Year - 2000 ($7.3) Current Management Ownership
Flow 2001 (92.2) -----------------------------------------
Senior Term Debt - B PIK Yrs 0.0 After 2002 (54.9) Management Ownership - Shares 18.0
Financing 2003 (13.1) Management Ownership - Value $301.6
Three Month Libor 6.8% Activities 2004 11.6 Management Roll-Over - % 32.0%
Management Participation Yes
-------------------------------------------------------------------------------- -----------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 33 McDonald Investments [Logo]
</TABLE>
<PAGE>
Fastener Segment
[graphic omitted]
McDonald
Investments
[Logo]
Industrial
Manufacturing
Group
<PAGE>
<TABLE>
<CAPTION>
Confidential
Fastener Segment
==============================================================================================================================
COMPARABLE PUBLIC COMPANY ANALYSIS
Enterprise Value as a Multiple of Equity Value as
----------------------------------- a Multiple of LTM
LTM --------------- Leverage
----------------------------------- LTM 2000P ----------
Latest Invested --------------- EBITDA Total Debt
Ticker Company Quarter Sales EBITDA EBIT Capital EPS EPS Margins to EBITDA
-------- ------------------------- ------- ----- ------ ---- -------- --- ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ARM ArvinMeritor Inc [1] 3/00 0.3x 3.0x 4.4x 0.8x NA 4.0x 10.6% 2.0x
BWA BorgWarner Inc 6/00 0.6x 3.9x 5.9x 0.7x 6.2x 5.9x 15.4% 2.2x
MODI Modine Mfg Co 6/00 0.8x 6.6x 9.3x 1.3x 12.2x NA 12.0% 1.4x
TWR Tower Automotive Inc 6/00 0.6x 4.2x 6.1x 0.7x 5.0x 4.9x 15.3% 2.8x
SUP Superior Industries Int'l 6/00 1.1x 4.6x 5.7x 2.3x 10.2x 9.9x 23.3% 0.0x
AXL American Axle & Mfg Hldgs 3/00 0.5x 4.1x 5.5x 1.1x 5.9x 5.5x 11.3% 2.2x
HAZ Hayes Lemmerz Int'l Inc 4/00 0.9x 5.1x 7.8x 0.9x 6.7x 6.7x 17.3% 4.2x
INMT Intermet Corp 6/00 0.6x 4.1x 5.5x 0.8x 4.8x 4.3x 14.6% 3.0x
SMPS Simpson Industries 6/00 0.5x 3.9x 6.6x 0.9x 6.7x 6.7x 12.3% 1.9x
Average 0.6x 4.4x 6.3x 1.1x 7.2x 6.0x 14.7% 2.2x
Median 0.6x 4.1x 5.9x 0.9x 6.4x 5.7x 14.6% 2.2x
High 1.1x 6.6x 9.3x 2.3x 12.2x 9.9x 23.3% 4.2x
Low 0.3x 3.0x 4.4x 0.7x 4.8x 4.0x 10.6% 0.0x
Note:
---------
Source: FactSet Research Systems Inc.; COMPUSTAT; Company Reports
[1] Pro-Forma to reflect the merger of equals between Meritor Automotive and Arvin Industries
-------------------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 34 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Fastener Segment
===========================================================================================================================
COMPARABLE PUBLIC COMPANY ANALYSIS
Equity Value as
Enterprise Value as a Multiple of a Multiple of LTM
LTM --------------- Leverage
----------------------------------- LTM 2000P ----------
Latest Invested ------ ----- EBITDA Total Debt
Ticker Company Quarter Sales EBITDA EBIT Capital EPS EPS Margins to EBITDA
-------- --------------------- ------- ----- ------ ---- -------- ----- ----- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ST SPS Technologies Inc 6/00 1.0x 7.2x 10.3x 1.3x 11.8x 12.1x 13.9% 2.6x
B Barnes Group Inc 6/00 0.8x 6.7x 10.9x 1.2x 12.5x NA 12.2% 2.9x
PNN Penn Engr & Mfg Corp 3/00 1.4x 7.9x 10.6x 1.7x 15.8x 12.6x 17.1% 0.4x
FA Fairchild Corp 3/00 0.8x 10.2x 38.5x 0.5x NM NA 8.1% 9.9x
TT Transtechnology Corp 6/00 1.0x 5.9x 8.4x 0.8x 6.8x 7.0x 17.5% 4.8x
Average 1.0x 7.6x 15.7x 1.1x 11.7x 10.6x 13.8% 4.1x
Median 1.0x 7.2x 10.6x 1.2x 12.2x 12.1x 13.9% 2.9x
High 1.4x 10.2x 38.5x 1.7x 15.8x 12.6x 17.5% 9.9x
Low 0.8x 5.9x 8.4x 0.5x 6.8x 7.0x 8.1% 0.4x
Note:
---------
Source: FactSet Research Systems Inc.; COMPUSTAT; Company Reports
---------------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 35 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Towing Segment
===========================================================================================================================
COMPARABLE PUBLIC COMPANY ANALYSIS
Equity Value as
Enterprise Value as a Multiple of a Multiple of LTM
LTM ---------------- Leverage
----------------------------------- LTM 2000P ----------
Latest Invested --- ----- EBITDA Total Debt
Ticker Company Quarter Sales EBITDA EBIT Capital EPS EPS Margins to EBITDA
-------- --------------------- ------- ----- ------ ---- -------- ----- ----- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MLR Miller Industries Inc 1/00 0.3x 5.9x 11.3x 0.6x NM 5.7x 5.4% 4.3x
LUND Lund Int'l Hldgs Inc 3/00 0.7x 6.6x 9.3x 0.7x NM NA 10.9% 4.9x
EDEL Edelbrock Corp 3/00 0.5x 3.0x 4.4x 0.7x 6.7x 6.4x 15.0% 0.1x
Average 0.5x 5.2x 8.3x 0.7x 6.7x 6.0x 10.5% 3.1x
Median 0.5x 5.9x 9.3x 0.7x 6.7x 6.0x 10.9% 4.3x
High 0.7x 6.6x 11.3x 0.7x 6.7x 6.4x 15.0% 4.9x
Low 0.3x 3.0x 4.4x 0.6x 6.7x 5.7x 5.4% 0.1x
Note:
---------
Source: FactSet Research Systems Inc.; COMPUSTAT; Company Reports
---------------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 36 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Packaging Segment
===========================================================================================================================
COMPARABLE PUBLIC COMPANY ANALYSIS
Equity Value as a
Enterprise Value as a Multiple of Multiple of LTM
LTM ----------------- Leverage
----------------------------------- LTM 2000P ----------
Latest Invested ----- ----- EBITDA Total Debt
Ticker Company Quarter Sales EBITDA EBIT Capital EPS EPS Margins to EBITDA
-------- --------------------- ------- ----- ------ ---- -------- ----- ----- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WOR Worthington Industries 5/00 0.7x 5.8x 8.2x 1.0x 9.7x 9.3x 12.3% 2.2x
ATR AptarGroup Inc 6/00 1.3x 6.2x 9.9x 1.6x 13.9x 13.4x 21.4% 1.5x
CBI Chicago Bridge & Iron Co 3/00 0.3x 4.3x 7.3x 0.9x 8.9x 7.1x 6.4% 1.4x
CTI Chart Industries Inc 3/00 1.3x 9.1x 16.4x 1.2x NM 26.8x 14.0% 6.2x
Average 0.9x 6.3x 10.5x 1.2x 10.8x 14.2x 13.5% 2.8x
Median 1.0x 6.0x 9.1x 1.1x 9.7x 11.3x 13.1% 1.9x
High 1.3x 9.1x 16.4x 1.6x 13.9x 26.8x 21.4% 6.2x
Low 0.3x 4.3x 7.3x 0.9x 8.9x 7.1x 6.4% 1.4x
Note:
---------
Source: FactSet Research Systems Inc.; COMPUSTAT; Company Reports
---------------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 37 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Specialty Segment
===========================================================================================================================
COMPARABLE PUBLIC COMPANY ANALYSIS
Equity Value as
Enterprise Value as a Multiple of a Multiple of LTM
LTM ----------------- Leverage
----------------------------------- LTM 2000P ----------
Latest Invested ------ ----- EBITDA Total Debt
Ticker Company Quarter Sales EBITDA EBIT Capital EPS EPS Margins to EBITDA
-------- --------------------- ------- ----- ------ ---- -------- ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MZ Milacron Inc 6/00 0.6x 4.4x 6.1x 0.8x 7.0x 6.6x 13.3% 2.3x
KMT Kennametal Inc 6/00 0.8x 5.4x 8.5x 0.9x 11.2x 10.2x 14.8% 2.7x
UNA UNOVA Inc 6/00 0.4x 6.8x 16.2x 0.6x 38.8x NM 5.6% 3.2x
RBC Regal Beloit 3/00 0.8x 4.9x 6.4x 1.1x 8.7x 8.6x 17.2% 1.5x
SCX L.S. Starrett Co 3/00 0.5x 3.6x 5.7x 0.5x 8.7x NA 12.9% 0.3x
Average 0.6x 5.0x 8.6x 0.8x 14.9x 8.5x 12.8% 2.0x
Median 0.6x 4.9x 6.4x 0.8x 8.7x 8.6x 13.3% 2.3x
High 0.8x 6.8x 16.2x 1.1x 38.8x 10.2x 17.2% 3.2x
Low 0.4x 3.6x 5.7x 0.5x 7.0x 6.6x 5.6% 0.3x
Note:
---------
Source: FactSet Research Systems Inc.; COMPUSTAT; Company Reports
---------------------------------------------------------------------------------------------------------------------------
Industrial Manufacturing Group 38 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Forming Segment
=======================================================================================
DISCOUNTED CASH FLOW/ECONOMIC PROFIT SENSITIVITY ANALYSIS
Free Cash Flow Assumptions
----------------------------------
Terminal Growth 2.5%
Long Term ROIC 12.6%
WACC 12.6%
Enterprise Value Enterprise Value to LTM EBITDA
----------------------------------- ------------------------------
Terminal Growth Terminal Growth
------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
W 2.0% 2.5% 3.0% W 2.0% 2.5% 3.0%
------------------------- ------------------
A 12.1% $880.2 $883.0 $885.8 A 12.1% 6.1x 6.1x 6.1x
C 12.6% 843.0 845.7 848.3 C 12.6% 5.8x 5.8x 5.8x
C 13.1% 808.7 811.2 813.7 C 13.1% 5.6x 5.6x 5.6x
IMPLIED VALUATION RANGE OF $808.7 to $885.8 IMPLIED EBITDA MULTIPLE OF 5.6x to 6.1x
-------------------------------------------------------------------------------------------
Industrial Manufacturing Group 39 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Fastener Segment
=======================================================================================
DISCOUNTED CASH FLOW/ECONOMIC PROFIT SENSITIVITY ANALYSIS
Free Cash Flow Assumptions
----------------------------------
Terminal Growth 0.5%
Long Term ROIC 11.3%
WACC 11.3%
Enterprise Value Enterprise Value to LTM EBITDA
----------------------------------- ------------------------------
Terminal Growth Terminal Growth
------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
W 0.0% 0.5% 1.0% W 0.0% 0.5% 1.0%
------------------------- ------------------
A 10.8% $285.4 $286.3 $287.2 A 10.8% 6.8x 6.8x 6.9x
C 11.3% 273.0 273.9 274.7 C 11.3% 6.5x 6.5x 6.6x
C 11.8% 261.7 262.5 263.3 C 11.8% 6.3x 6.3x 6.3x
IMPLIED VALUATION RANGE OF $261.7 to $287.2 IMPLIED EBITDA MULTIPLE OF 6.3x to 6.9x
-------------------------------------------------------------------------------------------
Industrial Manufacturing Group 40 McDonald Investments [Logo]
</TABLE>
<PAGE>
Confidential
Towing Segment
================================================================================
DISCOUNTED CASH FLOW/ECONOMIC PROFIT SENSITIVITY ANALYSIS
Free Cash Flow Assumptions
----------------------------------
Terminal Growth 1.0%
Long Term ROIC 11.5%
WACC 11.5%
<TABLE>
Enterprise Value Enterprise Value to LTM EBITDA
----------------------------------- ------------------------------
Terminal Growth Terminal Growth
------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
W 0.5% 1.0% 1.5% W 0.5% 1.0% 1.5%
------------------------- ------------------
A 11.0% $362.6 $363.7 $364.9 A 11.0% 7.6x 7.6x 7.6x
C 11.5% 346.3 347.4 348.5 C 11.5% 7.2x 7.3x 7.3x
C 12.0% 331.4 332.5 333.5 C 12.0% 6.9x 6.9x 7.0x
IMPLIED VALUATION RANGE OF $331.4 to $364.9 IMPLIED EBITDA MULTIPLE OF 6.9x to 7.6x
-------------------------------------------------------------------------------------------
Industrial Manufacturing Group 41 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Packaging Segment
=======================================================================================
DISCOUNTED CASH FLOW/ECONOMIC PROFIT SENSITIVITY ANALYSIS
Free Cash Flow Assumptions
----------------------------------
Terminal Growth 0.5%
Long Term ROIC 11.1%
WACC 11.1%
Enterprise Value Enterprise Value to LTM EBITDA
----------------------------------- ------------------------------
Terminal Growth Terminal Growth
------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
W 0.0% 0.5% 1.0% W 0.0% 0.5% 1.0%
------------------------- ------------------
A 10.6% $395.8 $397.0 $398.3 A 10.6% 7.5x 7.5x 7.6x
C 11.1% 378.5 379.6 380.8 C 11.1% 7.2x 7.2x 7.2x
C 11.6% 362.6 363.7 364.8 C 11.6% 6.9x 6.9x 6.9x
IMPLIED VALUATION RANGE OF $362.6 to $398.3 IMPLIED EBITDA MULTIPLE OF 6.9x to 7.6x
-------------------------------------------------------------------------------------------
Industrial Manufacturing Group 42 McDonald Investments [Logo]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Confidential
Specialty Segment
====================================================================================
DISCOUNTED CASH FLOW/ECONOMIC PROFIT SENSITIVITY ANALYSIS
Free Cash Flow Assumptions
----------------------------------
Terminal Growth 0.5%
Long Term ROIC 12.2%
WACC 12.2%
Enterprise Value Enterprise Value to LTM EBITDA
----------------------------------- ------------------------------
Terminal Growth Terminal Growth
------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
W 0.0% 0.5% 1.0% W 0.0% 0.5% 1.0%
------------------------- ------------------
A 11.7% $119.2 $119.6 $119.9 A 11.7% 7.4x 7.5x 7.5x
C 12.2% 114.2 114.6 114.9 C 12.2% 7.1x 7.2x 7.2x
C 12.7% 109.7 110.0 110.4 C 12.7% 6.8x 6.9x 6.9x
IMPLIED VALUATION RANGE OF $109.7 to $119.9 IMPLIED EBITDA MULTIPLE OF 6.8x to 7.5x
-------------------------------------------------------------------------------------------
Industrial Manufacturing Group 43 McDonald Investments [Logo]
</TABLE>
