<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13e-3 TRANSACTION STATEMENT
UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934
CEM CORPORATION
(NAME OF THE ISSUER)
CEM CORPORATION
MICHAEL J. COLLINS
(NAME OF PERSONS FILING STATEMENT)
COMMON STOCK, PAR VALUE $.05 PER SHARE
(TITLE OF CLASS OF SECURITIES)
125165100
(CUSIP NUMBER OF CLASS OF SECURITIES)
MICHAEL J. COLLINS
MJC Acquisition Corporation
3100 Smith Farm Road
P.O. Box 200
Matthews, North Carolina 28106
(704) 821-7015
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF PERSONS FILING STATEMENT)
WITH COPIES TO:
STEPHEN M. LYNCH ROY L. SMART, III
Robinson, Bradshaw & Hinson, P.A. Parker, Poe, Adams & Bernstein LLP
101 North Tryon Street, Suite 1900 201 South College Street, Suite 2500
Charlotte, North Carolina 28246 Charlotte, North Carolina 28244
(704) 377-8355 (704) 372-9000
<PAGE> 2
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
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: [X]
Check the following box if the filing is a final amendment reporting the results
of the transaction: [ ]
CALCULATION OF FILING FEE
AMOUNT OF
TRANSACTION VALUE* FILING FEE
------------------ ----------
$29,119,612 $5,824
- ----------------
* For purposes of calculating the fee only. Assumes purchase of 2,580,285
shares of Common Stock, par value $.05 per share, of CEM Corporation at
$11.15 per share and payment of $349,434 for in-the-money unexercised
options to purchase Common Stock of CEM Corporation.
Check the box if any of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of
its filing. [X]
Amount previously paid: $5,824
Form or registration no.: Preliminary Proxy Statement on Schedule 14A
Filing party: CEM Corporation
Date filed: February 24, 2000
<PAGE> 3
This Rule 13e-3 Transaction Statement (the "Statement") is being filed
in connection with the filing by CEM Corporation ("CEM") with the Securities and
Exchange Commission (the "Commission") on February 24, 2000 of a preliminary
Proxy Statement on Schedule 14A (the "Proxy Statement") in connection with a
special meeting of CEM's shareholders. At such meeting, CEM's shareholders will
be asked to vote to adopt and approve an Agreement and Plan of Merger dated as
of December 29, 1999 (the "Merger Agreement") by and between CEM, MJC
Acquisition Corporation, a North Carolina corporation ("MJC Acquisition"), and
Michael J. Collins. Under the Merger Agreement, MJC Acquisition will be merged
with and into CEM and CEM will be the surviving corporation. MJC Holdings
Corporation, a North Carolina corporation ("MJC Holdings"), is the sole
shareholder of MJC Acquisition Corporation. Mr. Collins, the Chief Executive
Officer, President and a director of CEM, currently owns all of the outstanding
shares, and upon completion of the merger will own approximately 94 percent of
the outstanding shares, of MJC Holdings. As a result of the merger, CEM will
become a wholly owned subsidiary of MJC Holdings and CEM's shareholders will be
entitled to receive $11.15 per share in cash for their shares of CEM common
stock.
The information in the Proxy Statement, including all appendices
thereto, is hereby expressly incorporated herein by reference and contains all
information required in response to the items of this Statement, except that it
does not include all of the exhibits listed below. The Proxy Statement will be
completed and, if appropriate, amended prior to the time it is first sent or
given to CEM's shareholders. This Statement will be amended to reflect such
completion or amendment of the Proxy Statement.
ITEM 16. EXHIBITS.
(a)(1) Preliminary copy of Letter to Shareholders, incorporated by
reference to Schedule 14A filed by CEM Corporation on February
24, 2000.
(a)(2) Preliminary copy of Notice of Special Meeting of Shareholders,
incorporated by reference to Schedule 14A filed by CEM
Corporation on February 24, 2000.
(a)(3) Preliminary Proxy Statement, incorporated by reference to
Schedule 14A filed by CEM Corporation on February 24, 2000.
(a)(4) Form of Proxy, incorporated by reference to Schedule 14A filed
by CEM Corporation on February 24, 2000.
(a)(5) Press Release issued by CEM dated December 29, 1999.
(b) Commitment letter agreement dated December 28, 1999 by and
between Michael J. Collins and Banc of America Commercial
Finance Corporation, incorporated by reference to Exhibit 2 to
Amendment No. 2 to Schedule 13D/A of Michael J. Collins with
respect to the common stock of CEM Corporation filed on
January 4, 2000.
(c)(1) Opinion of Brookwood Associates, Inc. dated December 29, 1999
(included as Appendix B to the preliminary Proxy Statement,
which is filed herewith as Exhibit (a)(3)).
<PAGE> 4
(c)(2) Financial analysis materials prepared by Brookwood Associates,
Inc. in connection with its presentation to the special
committee of CEM's board of directors on October 29, 1999,
portions of which were subsequently provided to one other
member of the board of directors.
(c)(3) Financial analysis presentation materials prepared by Wachovia
Securities, Inc. in connection with providing its valuation
analysis to Michael J. Collins on September 30, 1999.
(d) Agreement and Plan of Merger dated as of December 29, 1999
among CEM Corporation, MJC Acquisition Corporation and Michael
J. Collins (included as Appendix A to the preliminary Proxy
Statement, which is filed herewith as Exhibit (a)(3)).
(f) Not applicable.
(g) Not applicable.
2
<PAGE> 5
SIGNATURES
After due inquiry and to the best of our knowledge and belief, each of
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: February 24, 2000.
CEM CORPORATION
By: /s/ RICHARD N. DECKER
--------------------------------
Name: Richard N. Decker
Title: Secretary
/s/ MICHAEL J. COLLINS
-----------------------------------
Michael J. Collins
3
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
(a)(1) Preliminary copy of Letter to Shareholders, incorporated by
reference to Schedule 14A filed by CEM Corporation on February
24, 2000.
(a)(2) Preliminary copy of Notice of Special Meeting of Shareholders,
incorporated by reference to Schedule 14A filed by CEM
Corporation on February 24, 2000.
(a)(3) Preliminary Proxy Statement, incorporated by reference to
Schedule 14A filed by CEM Corporation on February 24, 2000.
(a)(4) Form of Proxy, incorporated by reference to Schedule 14A filed
by CEM Corporation on February 24, 2000.
(a)(5) Press Release issued by CEM dated December 29, 1999.
(b) Commitment letter agreement dated December 28, 1999 by and
between Michael J. Collins and Banc of America Commercial
Finance Corporation, incorporated by reference to Exhibit 2 to
Amendment No. 2 to Schedule 13D/A of Michael J. Collins with
respect to the common stock of CEM Corporation filed on
January 4, 2000.
(c)(1) Opinion of Brookwood Associates, Inc. dated December 29, 1999
(included as Appendix B to the preliminary Proxy Statement,
which is filed herewith as Exhibit (a)(3)).
(c)(2) Financial analysis materials prepared by Brookwood Associates,
Inc. in connection with its presentation to the special
committee of CEM's board of directors on October 29, 1999,
portions of which were subsequently provided to one other
member of the board of directors.
(c)(3) Financial analysis presentation materials prepared by Wachovia
Securities, Inc. in connection with providing its valuation
analysis to Michael J. Collins on September 30, 1999.
(d) Agreement and Plan of Merger dated as of December 29, 1999
among CEM Corporation, MJC Acquisition Corporation and Michael
J. Collins (included as Appendix A to the preliminary Proxy
Statement, which is filed herewith as Exhibit (a)(3)).
</TABLE>
4
<PAGE> 1
Exhibit (a)(5)
Press release issued by CEM dated December 29, 1999
CEM AGREES TO BE ACQUIRED BY CEO
CHARLOTTE, N.C.--(BUSINESS WIRE)--Dec. 29, 1999--CEM Corporation
(Nasdaq/NM:CEMX) and Michael J. Collins, its President and Chief Executive
Officer, announced today that they had entered into a merger agreement pursuant
to which Mr. Collins would acquire all of the Company's outstanding shares not
owned by him at a price of $11.15 per share in cash. This price represents a 94%
premium to the closing price of CEM common stock on October 18, 1999, the day
the Company announced Mr. Collins' first acquisition proposal, and a 32% premium
to the CEM's closing stock price of $8.4375 on December 29, 1999. The $11.15
price is also 33% greater than the $8.40 per share price initially proposed by
Mr. Collins in October.
A Special Committee of the Board of Directors of CEM, which was appointed to
consider the transaction and assess other strategic alternatives, has received
the opinion of Brookwood Associates, Inc., its financial advisor, that, subject
to the assumptions and limitations set forth in its opinion, the $11.15 per
share cash consideration to be received by the shareholders of CEM pursuant to
the merger is fair from a financial point of view to such shareholders.
The transaction is subject to approval by CEM's shareholders and to certain
other customary conditions. The Company currently believes that the shareholder
vote and the closing of the transaction (if approved by the shareholders) could
occur early in the Company's fourth fiscal quarter (the second calendar
quarter).
The transaction is not subject to any financing contingency. Mr. Collins has
accepted a commitment from Banc of America Commercial Finance Corporation to
provide the necessary financing, which commitment was arranged for Mr.
Collins by his financial advisor, Wachovia Securities, Inc.
Ronald A. Norelli, Chairman of CEM's Board of Directors and a member of the
Special Committee, stated, "With the help of Brookwood Associates, we looked at
a number of alternatives in considering Mike's transaction. His offer was the
best alternative, and it's clearly in the best interests of the shareholders."
Mr. Collins added, "I am pleased my offer was accepted by the Board and will be
recommended to the shareholders. I believe this is a win-win situation for the
shareholders and the Company. It will create substantial shareholder value with
a sizeable premium.
"Given CEM's size and today's dynamics in the public arena, it is appropriate
for CEM to once again be a private company. I continue to be excited about the
opportunities for CEM as a private company with our new financial partner Bank
of America. I look forward to the challenges ahead and am confident CEM will
remain a leading company in our industry," Collins continued.
The affirmative vote of holders of 66 2/3% of CEM's outstanding common stock is
needed to approve the transaction. Mr. Collins beneficially owns in excess of
15% of the outstanding common stock of CEM. CEM manufactures microwave-based
instrumentation for testing and analysis. The Company's products are used
worldwide in the general analytical laboratory market, and in many manufacturing
industries, including food and chemical processing.
CONTACT:
CEM Corporation
Michael J. Collins, 704/821-7015
or
Ronald A. Norelli, 704/376-5484
<PAGE> 1
PROJECT MICROWAVE
BROOKWOOD ASSOCIATES, INC.
------------------
INVESTMENT BANKERS
October 29, 1999
<PAGE> 2
CEM CORPORATION, INC.
================================================================================
------------------------------------
UPDATE ON DUE DILIGENCE AND ANALYSIS
------------------------------------
VALUATION ANALYSIS & ISSUES
REVIEW OF MIKE COLLINS' PROPOSAL
ANALYSIS OF STRATEGIC ALTERNATIVES
SUMMARY
EXHIBITS
- --------------------------------------------------------------------------------
1
<PAGE> 3
DUE DILIGENCE
================================================================================
- - Brookwood has met with CEM managers:
- Mike Collins (3);
- Richard Decker & Jean Moore (2);
- Phone conversations with Richard Decker & Jean Moore; and
- One meeting each with Ed King and Ken Corliss.
- - Brookwood has reviewed relevant company information:
- Brookwood information requests;
- Wachovia Securities information requests; and
- Summary projections provided by Mike Collins.
- --------------------------------------------------------------------------------
Update on Due Diligence and Analysis
2
<PAGE> 4
DUE DILIGENCE
================================================================================
- - Brookwood has reviewed the following industry information:
- Industry Reports
- Strategic Directions International, Inc. - "Sample
Preparation Techniques: A Plethora of Market
Development Opportunities" (July, 1999).
- Frost & Sullivan - "World Process Analytical
Instruments Market" (1996).
- K.C. Associates, Inc. - "The Market Book, The
Worldwide Analytical Instrument Market Study" (1996).
- Infocom, Ltd. - "M&A in the Lab Equipment and Analytical
Instruments Industries: 1994-1998" with a supplement through
September 1999.
- Industry trade magazines & websites
- Industry participant information, including:
- SEC filings;
- Wall Street research reports; and
- Company websites.
- --------------------------------------------------------------------------------
Update on Due Diligence and Analysis
3
<PAGE> 5
DUE DILIGENCE
================================================================================
- - Due diligence that Brookwood has not yet completed:
- Valuation analysis
- Downside LBO case - need asset collateral value in
order to develop reliable downside case.
- Prospect list is approximately 90% complete.
- --------------------------------------------------------------------------------
Update on Due Diligence and Analysis
4
<PAGE> 6
STATUS OF ANALYSIS
================================================================================
- - Valuation methods included in this presentation:
- Review of historical stock price and volume
- Comparison to public companies
- Comparison to relevant mergers and acquisitions
- Discounted cash flow analysis
- Leveraged buyout analysis
- - Brookwood has also:
- Analyzed strategic alternatives for CEM;
- Reviewed Mike Collins' proposal; and
- Identified other prospective buyers for CEM.
- --------------------------------------------------------------------------------
Update on Due Diligence and Analysis
5
<PAGE> 7
CEM CORPORATION, INC.
================================================================================
UPDATE ON DUE DILIGENCE AND ANALYSIS
------------------------------------
VALUATION ANALYSIS & ISSUES
------------------------------------
REVIEW OF MIKE COLLINS' PROPOSAL
ANALYSIS OF STRATEGIC ALTERNATIVES
SUMMARY
EXHIBITS
- --------------------------------------------------------------------------------
6
<PAGE> 8
INTRODUCTION
================================================================================
- - The valuation of CEM Corporation ("CEM" or the "Company") is based on
publicly available information and information provided to Brookwood
Associates, Inc. by CEM and Mike Collins without independent
verification.
- - Brookwood's valuation may be modified by new information, including:
- Changes in market conditions; and
- Company opportunities and risks not presently incorporated
into management's financial projections.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
7
<PAGE> 9
INTRODUCTION
================================================================================
- - In valuing CEM, Brookwood has utilized current and historical
financial results to develop:
- Comparison to publicly held comparable companies; and
- Comparison to recent merger and acquisition comparables.
- - Brookwood has utilized projections of future performance provided by
Mike Collins and sensitivity analysis of those projections as the
primary basis for:
- Discounted cash flow analysis; and
- Leveraged buyout analysis.
- - Brookwood valuation is before Special Committee-related expenses and
assumes a September 30, 1999 closing date.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
8
<PAGE> 10
SUMMARY FINANCIAL RESULTS
================================================================================
- - CEM's historical financial results and Michael Collins' base case
financial projections used in valuing the Company.
(Dollars in thousands)
<TABLE>
<CAPTION>
HISTORICAL PROJECTED
------------------------------------------------- ----------------------------------------------------
1995 1996 1997 1998 1999 2000(2) 2001 2002 2003 2004
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 31,611 31,477 30,075 32,362 32,077 33,681 37,049 40,754 44,829 44,829
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Cost of Goods Sold (13,341) (13,096) (13,481) (15,030) (15,110) (15,697) (17,082) (18,586) (20,220) (20,220)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
GROSS PROFIT 18,270 18,381 16,594 17,332 16,967 17,984 19,967 22,168 24,609 24,609
Gross Margin % of Sales 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.9% 54.4% 54.9% 54.9%
Operating
Expenses(1) (12,864) (13,193) (13,100) (13,023) (13,021) (13,472) (14,619) (16,081) (17,689) (17,689)
OPERATING CASH FLOW 5,406 5,188 3,494 4,309 3,946 4,512 5,348 6,087 6,920 6,920
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(1) Excludes depreciation.
(2) CEM reported first quarter sales of $7.4 million, slightly less than
the budgeted $7.6 million. Operating expenses of $3.4 million were less
than the budgeted $3.6 million. Net income for the first quarter was
$374 thousand versus the projected $314 thousand.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
9
<PAGE> 11
STOCK PERFORMANCE
================================================================================
[GRAPH -- CEM stock price and estimated trading volume
from October 18, 1997 through October 18, 1999]
- - Last 12 months weighted average price per share: $ 7.65
- - Last 24 months weighted average price per share: (1) $ 10.29
(1) Daily closing stock price weighted by daily volume through October 18,
1999.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
10
<PAGE> 12
STOCK PERFORMANCE
================================================================================
TOTAL VOLUME BY PRICE RANGE
(JANUARY 1, 1998 - OCTOBER 18, 1999)
[GRAPH -- histogram of CEM common stock price and volume for
the period January 1, 1998 through October 18, 1999
The chart shows the estimated stock trading volumes by stock price ranges
with the volume levels shown separately from non-company repurchase volume.]
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
11
<PAGE> 13
STOCK BUYBACK SUMMARY
================================================================================
- - From January, 1998 to July 29, 1999, CEM bought back over 460,000
shares
- - During that period the weighted average price of the stock
repurchased was $12.12
- - The total amount of cash spent repurchasing shares was over $5.5
million
- - The range of prices was from $7.125 to $13.548
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
12
<PAGE> 14
PUBLIC COMPANY COMPARISON
================================================================================
- - Brookwood has identified seven (7) publicly held comparable
companies, based primarily on the following criteria:
- Types of products and market focus;
- Financial characteristics; and
- Market position.
- - A summary description of the publicly held comparable companies
follows:
ISCO, INC. - Isco designs, manufactures, and markets products
worldwide which are used to monitor compliance with water
quality regulations and are used in a variety of research and
testing laboratories to monitor product quality. Isco is
estimated to be the worldwide leader in the field of
supercritical fluid extraction and has an estimated market
share of 40 percent which accounts for nearly 40 percent of
ISCO's revenue. Isco had LTM sales of $51 million and is
traded on the NASDAQ.
O. I. CORPORATION - O.I. develops, manufactures, markets and services
products for the analytical instruments markets, including
sample preparation, detection, measurement and monitoring
instruments used to analyze chemical compounds. In the Liquid
Liquid Extraction market, O.I. is one of the top three
companies, but is far behind the leaders in terms of market
share. The company is also a top ten supplier in the digestion
market. The company's customers include various government
agencies and public and private research institutions in the
U.S. O.I. had 1998 sales of $23.7 million and trades on the
NASDAQ.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
13
<PAGE> 15
PUBLIC COMPANY COMPARISON
================================================================================
AMETEK, INC. - Ametek is organized into two business segments -
Electromechanical and Electronic Instruments. The Electronic
Instruments Group is a leading manufacturer of advanced
monitoring, testing, calibrating and display instruments sold
to the aerospace, process and heavy vehicle industries. The
Company focuses on niche markets and has a significant market
share for many of its products. Ametek had 1998 sales of $927
million and is traded on the New York Stock Exchange.
METTLER-TOLEDO INTERNATIONAl - Mettler is the world's largest
manufacturer and marketer of weighing instruments for use in
laboratory, industrial and food retailing applications. The
company estimates at least 80 percent of its product sales are
from products that are the global leaders in their segment.
Mettler had 1998 sales of $936 million and is traded on the
New York Stock Exchange.
DIONEX CORPORATION - Dionex develops, manufactures, sells and services
ion and HPLC chromatography systems and related products. The
company's products are used in environmental analysis and by
the pharmaceutical, life science, biotechnology,
petrochemical, power generation and electronic industries.
Dionex pioneered ion chromatography and has an estimated 75-80
percent share of the $160 million IC market. Dionex had 1998
sales of $151 million and is traded on the NASDAQ.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
14
<PAGE> 16
PUBLIC COMPANY COMPARISON
================================================================================
VARIAN, INC. - Varian manufactures, sells, and services a variety of
scientific instruments for analyzing chemical substances
including metals, inorganic materials, organic compounds,
polymers, natural substances, and biochemicals. The company
serves the environmental laboratories, pharmaceutical and
chemical industries, chemical, life science, and academic
research markets, government laboratories and specific areas
of the health care industry. Varian had 1998 sales of $558
million and is traded on the NASDAQ.
THERMOQUEST CORPORATION - ThermoQuest manufactures mass spectrometers,
liquid and gas chromatographs, and equipment for the
preparation and preservation of chemical samples. The company
sells primarily to the pharmaceutical, environmental,
industrial/chemical, food and beverage, and forensic sciences
markets. The company is one of the leading manufactures of
mass spectrometers, one of the top competitors in the sample
preparation market of centrifuges and is considered a top ten
player in the SFE market. ThermoQuest had 1998 sales of $434
million and is traded on the American Stock Exchange.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
15
<PAGE> 17
PUBLIC COMPANY COMPARISON
=======================================================================
<TABLE>
<CAPTION>
Slower Growth Faster Growth
----------------------- --------------------
<S> <C> <C>
Low-cap Ametek, Inc. Dionex Corporation
Companies Mettler-Toledo Varian, Inc.
ThermoQuest Corporation
Micro-cap Isco, Inc.
Companies O.I. Corporation
</TABLE>
1. Ibbotson defines "Low-cap" companies as those with market
capitalization between $252 and $918 million.
2. Ibbotson defines "Micro-cap" companies as those with market
capitalization less than $252 million.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
16
<PAGE> 18
PUBLIC COMPANY COMPARISON
================================================================================
- - Average daily trading volumes for CEM and comparable public companies:
[GRAPH -- estimated average stock trading volumes for CEM and
the Comparable Public Companies in dollars and shares]
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
17
<PAGE> 19
PUBLIC COMPANY COMPARISON
================================================================================
($ in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Comparable Companies(1)
----------------------------------------------
Size CEM Corporation Median Range Comments
- ---- --------------- ---------- -------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Latest Twelve Months Net Sales $32,077 $440,915 $25,010 - $984,737 Smaller in size.
Latest Twelve Months OCF 3,946 52,669 (324) - 143,334
Total Assets - Most Recent 28,556 424,945 19,631 - 806,892
Net Worth - Most Recent 22,095 95,738 14,783 - 421,045
Balance Sheet Data (Most Recent Date)
- -------------------------------------
Current Ratio 3.6x 1.8x 1.1x - 3.5x Greater balance
Quick Ratio 2.7 1.5 0.7 - 2.4 sheet
Total Liab. to Stockholders' Equity 0.3 0.5 0.3 - 9.1 liquidity.
Five Year Growth
- ----------------
Sales 0.4% 6.6% 4.6% - 18.0% Slower growth.
Operating Cash Flow (7.6) 10.9 (99.3) - 42.4
Operating Cash Flow Margin
- --------------------------
Latest Twelve Months 12.3% 12.5% (0.6)% - 30.5% Similar margins.
Three-Year Average 13.8 11.3 (0.6) - 28.8
Market Valuation (as of 10/27/99 except CEM)
- --------------------------------------------
Total Market Value of Equity $17,500 $534,827 $13,565 - $1,160,509
Total Market Value as % of Book Value 79.2% 284.7% 55.4% - 1,457.5%
P/E Ratio
- Current 8.7x 21.7x 8.9x - 92.4x
- Based on Current Fiscal Year Estimate 8.7 17.5 7.6 - 56.7
- Based on Next Fiscal Year Estimate N/A 19.1 6.9 - 27.7
Total Adjusted Market Value $8,966 $585,035 $11,059 - $1,498,592
Total Adjusted MV / L12M Sales 0.3x 1.0x 0.4x - 5.8x
Total Adjusted MV / L12M Operating Income 3.4 12.9 5.1 - 26.5
Total Adjusted MV / L12M Operating Cash Flow 2.3 9.3 4.1 - 19.1
Total Adj. MV / (L12M OCF - 3 Yr. Avg. Capex) 3.2 12.3 5.7 - 28.3
</TABLE>
Footnote:
- ---------
(1) The comparable companies utilized in calculation of median include: Isco,
Inc., O. I. Corporation, Ametek, Inc., Mettler-Toledo International, Dionex
Corporation and Thermoquest Corporation.
(2) Utilized CEM stock price of $5.75 prior to announcement, all others updated
as of October 27, 1999.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
18
<PAGE> 20
PUBLIC COMPANY COMPARISON
================================================================================
SUMMARY VALUATION INFORMATION
<TABLE>
<CAPTION>
($ in Thousands) Range of Valuation Multiples
------------------------------------------ Implied Adjusted Market Value
Nearest Median of Nearest -----------------------------
Capitalization Rate CEM Low Multiple(1) All Multiples High Multiple(2) Low Median High
- -------------------------------------------- ------- -------------- ------------- ---------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Adjusted MV / L12M Sales $32,077 1.0 x 1.0 x 1.0 x $32,483 $32,858 $33,230
Total Adjusted MV / L12M Operating Income $ 2,647 8.8 x 12.9 x 16.9 x $23,368 $34,059 $44,750
Total Adjusted MV / L12M Operating Cash Flow $ 3,946 6.5 x 9.3 x 12.2 x $25,723 $36,858 $47,994
Range of Adj. Market Values $23,368 $34,059 $47,994
Plus: Net Cash(3) $ 8,543 $ 8,543 $ 8,543
------- ------- -------
RANGE OF EQUITY VALUES(4) $31,911 $42,602 $56,537
==========================================================================
</TABLE>
(1) Nearest low multiple refers to that which is the closest to the median
multiple and smaller.
(2) Nearest high multiple refers to that which is the closest to the median
multiple and larger.
(3) Net cash as of June 30, 1999 plus EBITDA less estimated capital
expenditures for the quarter ended September 30, 1999.
(4) Based on review of 1998 Mergerstat data, discount for size and premium for
change in control are approximately equal to one another.
THE RANGE OF EQUITY VALUES BASED ON THIS COMPARISON IS $31.9 TO $56.5,
WITH A MEDIAN OF VALUE FOR CEM OF $42.6 MILLION.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
19
<PAGE> 21
MERGER & ACQUISITION COMPARABLES
================================================================================
- - In the selection of merger and acquisition comparables, Brookwood reviewed:
- M&A trends and all M&A transactions presented in the AII report covering
the period 1994 to 1998; and
- All M&A transactions included in the AII supplement covering the period
January, 1999 to September, 1999.
- - From this list, Brookwood identified those M&A transactions with available
information that were most similar to CEM, emphasizing the target companies':
- Product and market focus; and
- Financial characteristics.
- - Those M&A transactions selected are generally larger than CEM, as many of the
financial characteristics of smaller transactions are not reported.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
20
<PAGE> 22
MERGER & ACQUISITION COMPARABLES
================================================================================
- - Of announced transactions researched, Brookwood's review identified nine
comparable transactions that disclosed financial information sufficient to
provide valuation guidance.
PERKIN-ELMER'S ANALYTICAL INSTRUMENTS DIVISION - The division, a world leader in
analytical instruments, develops, manufactures and markets analytical
instruments for a wide range of industries. The division had 1998 fiscal year
sales of $569 million and was acquired by EG&G for $425 million in May of
1999. The acquisition was treated as a purchase transaction.
INSTRON CORPORATION - Instron designs, manufactures, markets, and services
materials testing systems. The company is a leading producer of static
(electromechanical), dynamic (servohydraulic), hardness and impact testing
systems. Principal markets are industry, educational institutions and
governments. Instron had 1998 sales of $183 million and was taken private by
Kirtland Capital Partners for $170 million in August of 1999.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
21
<PAGE> 23
MERGER & ACQUISITION COMPARABLES
================================================================================
HACH COMPANY - Hach designs, manufactures, markets, and services laboratory
instruments, process analyzers, test kits and their associated consumables.
The company's products analyze the chemical content and other properties of
water and other aqueous solutions. These products are sold to municipal water
and wastewater utilities, chemical manufacturers, commercial analytical
laboratories, and government agencies. Hach had revenues of approximately
$140 million and was acquired by Danaher Corp for $325 million in July of
1999. The transaction was treated as a pooling of interests.
GELMAN SCIENCES INC. - Gelman designs, manufactures and markets a broad
line of specialty microfiltration products for the separation and
purification of liquids and gases. Gelman's products are marketed worldwide
for scientific and industrial applications. Gelman was acquired by Pall for
$275 million in February of 1997. The transaction was treated as a pooling of
interests.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
22
<PAGE> 24
MERGER & ACQUISITION COMPARABLES
================================================================================
PACKARD BIOSCIENCE COMPANY - Packard is a leading developer, manufacturer and
marketer of analytical instruments for detecting radioactive materials,
bioanalytical spectrometers, microplate readers and related products and
services for use in the drug discovery and molecular biology segments of the
life sciences industry and in the nuclear instrumentation industry. Packard
had sales of $184 million and was taken private at approximately $290 million
with management retaining 31% of the equity. The transaction was led by
Stonington Partners and closed in March of 1997.
ORION RESEARCH INC. - Orion manufactures electrode-based chemical-measurement
products that determine the quality of a wide variety of substances and are
used in the agricultural, biomedical research, food processing, and
pharmaceutical industries. The company had sales of $53 million and was
acquired by Thermedics Detection, Inc. from Thermedics for $66 million in May
of 1998.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
23
<PAGE> 25
MERGER & ACQUISITION COMPARABLES
================================================================================
VARLEN CORPORATION - PETROLEUM ANALYZERS DIVISION - The division designs,
manufactures and markets analytical instruments used in petroleum refineries,
and by transporters and end-users of petroleum products. The division
maintains a leading position in this global market. The division had sales of
$39.2 million and was sold to Roper Industries in June of 1999 for
$39.5 million.
MICRION CORPORATION - Micrion is a world leader in the design, manufacture and
marketing of Focused Ion Beam (FIB) systems for use in the design,
fabrication and testing of semiconductor, data storage and other high
technology products. Micrion had sales of $50.7 million and was acquired by
FEI Company in August of 1999 for $68.5 million.
INDUSTRIAL SCIENTIFIC CORPORATION - ISC designs, manufactures, markets, and
services portable gas monitors for industrial use. The instruments are used
by individuals to assess the risk of asphyxiation, poisoning and explosion
under industrial settings. The company had sales of $43.5 million and was
taken private by the CEO and his family for $96 million in May of 1999.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
24
<PAGE> 26
MERGER & ACQUISITION COMPARABLES
================================================================================
<TABLE>
<CAPTION>
COMPARABLE TARGET COMPANIES(1)
---------------------------------------------
CEM Median Range Comments
---------- --------- -------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Size Prior to Acquisition
- -------------------------
Sales $32,077 $113,057 $39,200 - $578,262 Smaller in size.
Operating Income 2,647 10,727 (4,660) - 41,103
Operating Cash Flow 3,946 17,781 (2,707) 56,487
Net Income 2,036 7,929 2,309 - 30,566
Three-Year Growth
- -----------------
Sales 1.4 % 7.2 % (7.2)% - 17.6% Slower growth.
Operating Income (14.1) 0.9 (36.1) - 20.8
Net Income (8.7) (6.4) (10.1) - 21.5
Operating Income Margin
- -----------------------
Three-Year Average 10.2 % 11.0 % 4.6 % - 16.9% Comparable margins.
Balance Sheet Data
- ------------------
Current Ratio 3.6 x 2.5 x 1.9 x - 6.2x More liquidity.
Quick Ratio 2.7 1.6 1.2 - 5.4
Long-Term Debt to Stockholders' Equity 0.8 % 9.2 % 0.0 % - 63.3%
Total Liabilities to Stockholders' Equity 0.3 x 0.8 x 0.2 x - 1.4x
Acquisition Data
- ----------------
Total Value of Common Equity N/A $151,663 $39,500 - $425,000
Price / L12M Net Income N/A 15.8 x 10.2 x - 99.8x
Adjusted Market Value N/A $160,003 $38,500 - $425,000
---------------------------------------------
Adj. MV / L12M Sales N/A 1.5 x 0.7 x - 2.7x
Adj. MV / L12M Operating Income N/A 10.0 6.0 - 32.5
Adj. MV / L12M Operating Cash Flow N/A 7.5 5.1 - 19.3
---------------------------------------------
</TABLE>
Footnote:
- ---------
(1) The comparable target companies utilized in calculating median numbers
include: Hach Company, PE Instruments Division, Instron Corp., Gelman
Sciences, Inc., the Petroleum Analyzers Division of Varlen Instruments,
Orion Research, Inc., Packard Bioscience Corp., Micrion Corp. and
Industrial Scientific, Inc.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
25
<PAGE> 27
MERGER & ACQUISITION COMPARABLES
================================================================================
SUMMARY VALUATION INFORMATION
<TABLE>
<CAPTION>
($ in Thousands) Range of Valuation Multiples
-------------------------------------------- Implied Adjusted Market Value
Nearest Median of Nearest -----------------------------
Capitalization Rate CEM Low Multiple(1) All Multiples High Multiple(2) Low Median High
- --------------------------------------------- -------- ------------- ------------ ----------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Adjusted MV / L12M Sales $32,077 1.2 x 1.5 x 1.5 x $38,804 $46,729 $48,715
Total Adjusted MV / L12M Operating Income $2,647 9.6 x 10.0 x 10.7 x $25,477 $26,424 $28,233
Total Adjusted MV / L12M Operating Cash Flow $3,946 7.0 x 7.5 x 7.6 x $27,559 $29,689 $30,037
Range of Adj. Market Values $25,477 $29,689 $48,715
Plus: Net Cash(3) $ 8,543 $ 8,543 $ 8,543
------- -------- -------
RANGE OF EQUITY VALUES $34,020 $38,232 $57,258
============================================================================
</TABLE>
(1) Nearest low multiple refers to that which is the closest to the median
multiple and smaller.
(2) Nearest high multiple refers to that which is the closest to the median
multiple and larger.
(3) Net cash as of June 30, 1999 plus EBITDA less estimated capital expenditures
for the quarter ended September 30, 1999.
THE RANGE OF EQUITY VALUES BASED ON THIS COMPARISON IS $34.0 TO $57.3,
WITH A MEDIAN OF VALUE FOR CEM OF $38.2 MILLION.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
26
<PAGE> 28
PROJECTED FINANCIAL RESULTS
================================================================================
- - Brookwood has analyzed Mike Collins' projections and developed downside and
upside financial projections.
- - The primary assumptions for Mike Collins' base case projections
- FY2000 results are projected to be modestly below the FY2000 budget.
- Q1 FY 2000 operating income was $113k ahead of budget.
- Revenue is projected to grow at a 10% annual rate in FY2001-FY2003.
- Near term revenue growth from SMART, MARS X & Clean Star
- Longer term revenue growth from R&D efforts in 2H FY2000 - FY2002.
- Gross margins are expected to improve by approximately 0.5% per year to
54.9% in FY2003.
- Operating expenses are expected to grow at a slightly slower rate than
revenue, moving from 40% of revenue in FY2000 to 39.5% in FY2003.
- Projected operating expenses appear to have some cushion, in part
related to expense savings from the absence of public company status
and restructuring of European operations.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
27
<PAGE> 29
PROJECTED FINANCIAL RESULTS
================================================================================
- - Mike Collins has said that he has not developed alternative projection
scenarios and that his projections are not supported by product level
projections or other cost detail.
- - Brookwood has assumed that FY2004 is flat with FY2003 and has adjusted
depreciation assumptions based on discussions with Richard Decker.
- - Overall, Brookwood views Mike Collins' revenue projections to be aggressive
and his cost projections to be conservative.
- - Brookwood's upside case is based upon Collins' base case plus incremental
revenue and profit from the bacteria product beginning in 2002.
- - Brookwood's downside case assumes:
- Average annual revenue growth of approximately 4% per year;
- Modest growth in gross margins; and
- Tighter control of operating expenses.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
28
<PAGE> 30
SCENARIO - BASE CASE
================================================================================
- - Based on Mike Collins' projections through 2003.
(Dollars in thousands)
<TABLE>
<CAPTION>
HISTORICAL PROJECTIONS
--------------------------- ------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004
------------- ------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues 32,362 100% 32,077 100% 33,681 100% 37,049 100% 40,754 100% 44,830 100% 44,830 100%
Cost of Goods Sold 15,030 46% 15,110 47% 15,697 47% 17,082 46% 18,586 46% 20,220 45% 20,220 45%
------ ------ ------ ------ ------ ------ ------
Gross Profit 17,332 54% 16,967 53% 17,984 53% 19,967 54% 22,168 54% 24,610 55% 24,610 55%
Operating Expenses 14,283 44% 14,321 45% 14,608 43% 15,638 42% 17,050 42% 18,620 42% 18,695 42%
------ ------ ------ ------ ------ ------ ------
Operating Income 3,049 9% 2,646 8% 3,376 10% 4,329 12% 5,118 13% 5,989 13% 5,914 13%
Plus: Depreciation 1,261 4% 1,299 4% 1,136 3% 1,019 3% 969 2% 931 2% 1,006 2%
------ ------ ------ ------ ------ ------ ------
Operating Cash Flow 4,310 13% 3,945 12% 4,512 13% 5,348 14% 6,087 15% 6,920 15% 6,920 15%
====== ====== ====== ====== ====== ====== ======
Growth Rates:
- ------------
Revenue n/a -0.9% 5.0% 10.0% 10.0% 10.0% 0.0%
Cost of Goods Sold n/a 0.5% 3.9% 8.8% 8.8% 8.8% 0.0%
Gross Profit n/a -2.1% 6.0% 11.0% 11.0% 11.0% 0.0%
Operating Expenses
(ex. dep) n/a 0.0% 3.5% 8.5% 10.0% 10.0% 0.0%
Operating Income n/a -13.2% 27.6% 28.2% 18.2% 17.0% -1.3%
Operating Cash Flow n/a -8.5% 14.4% 18.5% 13.8% 13.7% 0.0%
</TABLE>
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
29
<PAGE> 31
SCENARIO - UPSIDE CASE
================================================================================
- - The bacteria product is assumed to be licensed in return for royalties of
$1.0 million in 2002, $2.0 million in 2003, and $2.2 million in 2004 with no
additional expenses.
- - All other assumptions are in line with the base case.
(Dollars in thousands)
<TABLE>
<CAPTION>
HISTORICAL PROJECTIONS
--------------------------- ---------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004
------------ ------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues 32,362 100% 32,077 100% 33,681 100% 37,049 100% 40,754 98% 44,830 96% 44,830 95%
Bacteria License Royalty -- 0% -- 0% -- 0% -- 0% 1,000 2% 2,000 4% 2,200 5%
------ ------ ------ ------ ------ ------ ------
Total Revenues 32,362 100% 32,077 100% 33,681 100% 37,049 100% 41,754 100% 46,830 100% 47,030 100%
Cost of Goods Sold 15,030 46% 15,110 47% 15,697 47% 17,083 46% 18,586 45% 20,220 43% 20,220 43%
------ ------ ------ ------ ------ ------ ------
Gross Profit 17,332 54% 16,967 53% 17,984 53% 19,967 54% 23,168 55% 26,610 57% 26,810 57%
Operating Expenses 14,283 44% 14,320 45% 14,608 43% 15,638 42% 17,050 41% 18,620 40% 18,695 40%
Operating Income 3,049 9% 2,647 8% 3,376 10% 4,329 12% 6,118 15% 7,990 17% 8,115 17%
Plus: Depreciation 1,261 4% 1,299 4% 1,136 3% 1,019 3% 969 2% 931 2% 1,006 2%
------ ------ ------ ------ ------ ------ ------
Operating Cash Flow 4,310 13% 3,946 12% 4,512 13% 5,348 14% 7,087 17% 8,921 19% 9,121 19%
====== ====== ====== ====== ====== ====== ======
Growth Rates:
- ------------
Revenue n/a -0.9% 5.0% 10.0% 12.7% 12.2% 0.4%
Cost of Goods Sold n/a 0.5% 3.9% 8.8% 8.8% 8.8% 0.0%
Gross Profit n/a -2.1% 6.0% 11.0% 16.0% 14.9% 0.8%
Operating Expenses
(ex. dep.) n/a 0.0% 3.5% 8.5% 10.0% 10.0% 0.0%
Operating Income n/a -13.2% 27.5% 28.2% 41.3% 30.6% 1.6%
Operating Cash Flow n/a -8.4% 14.3% 18.5% 32.5% 25.9% 2.2%
</TABLE>
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
30
<PAGE> 32
SCENARIO - DOWNSIDE CASE
================================================================================
- - Slower growth, modest gross margin improvement and tighter management of
operating expenses.
(Dollars in thousands)
<TABLE>
<CAPTION>
HISTORICAL PROJECTIONS
------------------------------ -----------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004
-------------- --------------- -------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues 32,362 100% 32,077 100% 33,681 100% 35,365 100% 35,365 100% 37,134 100% 38,990 100%
Cost of Goods Sold 15,030 46% 15,110 47% 15,697 47% 16,370 46% 16,370 46% 17,086 46% 17,831 46%
Gross Profit 17,332 54% 16,967 53% 17,984 53% 18,995 54% 18,995 54% 20,048 54% 21,159 54%
Operating Expenses 14,283 44% 14,320 45% 14,608 43% 14,913 42% 15,174 43% 15,638 42% 16,121 41%
Operating Income 3,049 9% 2,647 8% 3,376 10% 4,082 12% 3,821 11% 4,409 12% 5,039 13%
Plus: Depreciation 1,261 4% 1,299 4% 1,136 3% 1,019 3% 969 3% 931 3% 1,006 3%
------ ------ ------ ------ ------ ------ ------
Operating Cash Flow 4,310 13% 3,946 12% 4,512 13% 5,101 14% 4,790 14% 5,340 14% 6,045 16%
====== ====== ====== ====== ====== ====== ==== ======
Growth Rates:
- -------------
Revenue n/a -0.9% 5.0% 5.0% 0.0% 5.0% 5.0%
Cost of Goods Sold n/a 0.5% 3.9% 4.3% 0.0% 4.4% 4.4%
Gross Profit n/a -2.1% 6.0% 5.6% 0.0% 5.5% 5.5%
Operating Expenses
(ex. dep) n/a 0.0% 3.5% 3.1% 2.2% 3.5% 2.8%
Operating Income n/a -13.2% 27.5% 20.9% -6.4% 15.4% 14.3%
Operating Cash Flow n/a -8.4% 14.3% 13.0% -6.1% 11.5% 13.2%
</TABLE>
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
31
<PAGE> 33
DISCOUNTED CASH FLOW ANALYSIS
================================================================================
- - Value is determined by discounting cash flows using a weighted average cost
of capital.
- - This valuation analysis is an approach often taken by strategic buyers.
- - Cost of capital was estimated based upon SIC code specific beta (risk factor)
and capital structure (debt to equity) published by Ibbotson.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
32
<PAGE> 34
DISCOUNTED CASH FLOW ANALYSIS
- --------------------------------------------------------------------------------
CALCULATION OF WEIGHTED AVERAGE COST OF CAPITAL (WACC)
<TABLE>
<S> <C> <C>
Cost of Equity Footnotes:
----------
Risk Free Rate(1) 6.16% (1) Yield on the 5-year U.S. Government Bond as of 10/27/99.
----- (2) Based on Ibbotson & Associates 1999 Yearbook.
Risk Premium for Equities(2) 8.40 (3) Based on the median beta for all companies with SIC code 3826.
Specific Industry Risk Factor(3) 0.72 (4) Risk Premium for Equities x Specific Industry Risk Factor.
----- (5) Industry Specific Risk Premium for Equities + Small Size Company Premium.
Industry Specific Risk Premium for (6) Risk Free Rate + Total Premium for Equities.
Equities(4) 6.05 (7) After Tax Cost at Prime Rate defined as: (Prime + 1) x (1 - Tax Rate).
Small Size Company Premium(2) 2.60 (8) Based on median debt to equity weighting for all companies with SIC code
----- 3826.
Total Premium for Equities(5) 8.65
-----
Cost of Equity(6) 14.81
Weighting(8) 93.3
-----
Weighted Average Cost of Equity 13.82%
=====
Cost of Debt
After Tax Cost at Prime Rate(7) 6.29%
Weighting(8) 6.7
-----
Weighted Average Cost of Debt 0.42%
=====
WEIGHTED AVERAGE COST OF CAPITAL 14.24%
==============================================
</TABLE>
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
33
<PAGE> 35
DISCOUNTED CASH FLOW ANALYSIS
================================================================================
<TABLE>
<CAPTION>
EQUITY VALUE ($ MILLIONS) SHARE VALUE ($)
------------------------------------------------ -----------------------------------------------
DOWNSIDE CASE BASE CASE UPSIDE CASE DOWNSIDE CASE BASE CASE UPSIDE CASE
---------------- --------- ---------------- --------------- --------- ----------------
16.00% 14.00% 14.00% 14.00% 12.00% 16.00% 14.00% 14.00% 14.00% 12.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RANGE OF TERMINAL
VALUE MULTIPLES 5.0 x 32.4 34.2 37.4 44.9 47.8 10.56 11.09 12.01 14.20 15.03
6.0 x 35.3 37.3 41.0 49.6 53.0 11.42 12.01 13.06 15.56 16.52
7.0 x 38.2 40.5 44.5 54.4 58.2 12.25 12.92 14.09 16.92 18.01
</TABLE>
THE RANGE OF EQUITY VALUES BASED ON THIS COMPARISON IS $32.4 TO $58.2,
WITH A MEDIAN OF VALUE FOR CEM OF $41.0 MILLION.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
34
<PAGE> 36
LBO VALUATION
================================================================================
- - Analysis assumes a capital structure that a financial purchaser might apply
to CEM and still provide acceptable returns to the providers of capital.
- - Based on Mike Collins' financial projections and sensitivity analysis shown
above.
- - In order to refine the LBO and analyze the downside case LBO valuation
Brookwood needs to receive asset appraisals to more accurately assess CEM's
asset "borrowing base."
- These appraisals are expected to be completed this week.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
35
<PAGE> 37
LBO BASE CASE ASSUMPTIONS
================================================================================
- - Collateral Value/Advance Rates for revolver and "A" term
- Accounts Receivable 80% on US/Can. & LC backed
0% on remainder
- Inventory 70% on finished goods
40% on WIP & raw
- Real Estate $2.5 million borrowing base (BB)
- PPE 50% advance on $2 million BB
- - Senior "B" Term
- Stretch beyond collateral less than 25% of total senior facility.
- 50% of projected CAPEX can be financed.
- - Mezzanine
- Junior capital provider will have to have confidence in CEM's projections.
================================================================================
Valuation Analysis & Issues
36
<PAGE> 38
LBO VALUATION
================================================================================
BASE CASE LBO VALUATION
<TABLE>
<CAPTION>
Uses Amount % Total Sources Amount % Total 5-Year Returns
- -------------------------------- ------- ------- ------------------------------- ------- ------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Purchase Price of Equity(1) $30,587 133.1% Term A (real estate) $ 2,000 8.7%
Purchase of Options 179 0.8% Term B (equipment and cash flow) $ 5,000 21.8%
Transaction Costs 750 3.3% Revolving Facility $ 5,156 22.4%
Repayment of Existing Debt 1,239 5.4% Mezzanine debt 6,000 26.1% 27.3% - 20% warrants
Plus: Required Cash (Excess)(2) (9,773) -42.5%
------- -----
Management Equity(3) 4,825 21.0% 41.9 - 80% ownership
------- -----
Total $22,982 100.0% $22,982 100.0%
======= ===== ======= ======
</TABLE>
(1) Price per share $10.05, 3,043,443 shares outstanding as of 9/8/99.
(2) Cash as of June 30, 1999 plus EBITDA less estimated capital expenditures for
the quarter ended September 30, 1999.
(3) Michael Collins: 480,142 shares as of 9/8/99.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
37
<PAGE> 39
LBO VALUATION
================================================================================
UPSIDE CASE LBO VALUATION
<TABLE>
<CAPTION>
Uses Amount % Total Sources Amount % Total 5-Year Returns
- ------------------------------ ------- ------- -------------------------------- ------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Purchase Price of Equity(1) $32,717 129.4% Term A (real estate) $ 2,000 7.9%
Purchase of Options 342 1.4% Term B (equipment and cash flow) 5,000 19.8%
Transaction Costs 750 3.0% Revolving Facility 5,114 20.2%
Repayment of Existing Debt 1,239 4.9% Mezzanine debt 6,000 23.7% 31.2% - 20.0%
warrants
Plus: Required Cash (Excess)(2) (9,773) -38.7% Preferred Stock 2,000 0.079 35.1% - 12.5%
------- ----- ------- ------ ownership
Management Equity(3) 5,162 20.4% 44.6% - 67.5%
------- ------ ownership
Total $25,275 100.0% $25,275 100.0%
======= ===== ======= =====
</TABLE>
(1) Price per share $10.75, 3,043,443 shares outstanding as of 9/8/99.
(2) Cash as of June 30, 1999 plus EBITDA less estimated capital expenditures for
the quarter ended September 30, 1999.
(3) Michael Collins: 480,142 shares as of 9/8/99.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
38
<PAGE> 40
LBO VALUATION ISSUES
================================================================================
PLUSES MINUSES
- - Great market share - Difficult collateral
- - Not capital intensive - Small size of cash flow
- - High margins - Low growth
- - Limited cyclicality - No ready CEO successor
and no sponsor group
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
39
<PAGE> 41
VALUATION SUMMARY
================================================================================
<TABLE>
<CAPTION>
(Dollars in millions, per share data) Median Adjusted Market Value
Per Share as a Multiple of Fiscal 1999
Equity Valuation Range Equity Valuation Range -----------------------------------
-------------------------- -------------------------- Operating Operating
Valuation Method Low Median High Low Median High Revenue Income Cash Flow
- -------------------------------- -------------------------- --------------------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Public Company Comparison $ 31.9 $ 42.6 $ 56.5 $ 10.40 $ 13.53 $ 17.53 1.1x 12.9x 8.6x
Merger & Acquisition Comparables 34.0 38.2 57.3 11.33 12.27 17.19 0.9x 11.2x 7.5x
Discounted Cash Flow Analysis 32.4 41.0 58.2 10.56 13.06 18.01 1.0x 12.2x 8.2x
Leveraged Buyout Analysis N/A 30.8 33.1 N/A 10.05 10.75 0.7x 8.4x 5.6x
</TABLE>
Note: Valuation estimates do not include fees and expenses of the Special
Committee and its legal and financial advisors.
- - THE EQUITY VALUATION RANGE FOR CEM BASED ON THE VALUATION APPROACHES ABOVE IS
$30.8 TO $58.2 MILLION OR $10.05 TO $17.53 PER SHARE.
- - BROOKWOOD BELIEVES THAT CEM'S EQUITY VALUE RANGE IS AT THE LOWER END OF THE
BROADER RANGE, PROBABLY IN THE $29 TO $42 MILLION RANGE OR APPROXIMATELY
$9.50 TO $13.40 PER SHARE.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
40
<PAGE> 42
VALUATION ISSUES
================================================================================
- - General
- Current focus on small, maturing markets
- Growth potential from new products
- Limited proprietary technology
- Potential for CEM to be managed with a greater focus on profits
- Management's willingness to facilitate a sale
- - Low end of valuation range likely to be defined by LBO valuation
- - High end of valuation range sensitive to:
- Level of interest by prospective strategic buyers;
- Split in market focus between PC and lab markets;
- Synergies with prospective buyers;
- Ability to acquire CEM in a pooling transaction; and
- Possible use of stock to purchase CEM.
- --------------------------------------------------------------------------------
Valuation Analysis & Issues
41
<PAGE> 43
CEM CORPORATION, INC.
================================================================================
UPDATE ON DUE DILIGENCE AND ANALYSIS
VALUATION ANALYSIS & ISSUES
------------------------------------
REVIEW OF MIKE COLLINS' PROPOSAL
------------------------------------
ANALYSIS OF STRATEGIC ALTERNATIVES
SUMMARY
EXHIBITS
- --------------------------------------------------------------------------------
42
<PAGE> 44
REVIEW OF MIKE COLLINS' PROPOSAL
================================================================================
- - Analysis of Mike Collins' offer of $8.40 per share:
<TABLE>
<CAPTION>
- Valuation multiples Collins Instron
------- -------
<S> <C> <C>
- Operating Income (LTM) 6.44 x 10.67 x
- Operating Cash Flow (LTM) 4.32 x 6.94 x
</TABLE>
<TABLE>
<CAPTION>
- Comparison to stock price Collins CEM
------- ---
<S> <C> <C>
- Immediately prior to offer 46% premium to $ 5.75
- Weighted last twelve months 10% premium to $ 7.65
- Weighted last twenty-four months 18% discount to $10.29
</TABLE>
- --------------------------------------------------------------------------------
Review of Mike Collins' Proposal
43
<PAGE> 45
REVIEW OF MIKE COLLINS' PROPOSAL
================================================================================
- - It appears that Mike Collins misunderstood the calculation of valuation
multiples regarding his offer.
- - Primarily due to the difficult collateral, the absence of a sponsor group
and CEM's lack of growth, it appears that Collins is unlikely to
substantially exceed the low end of the valuation range.
- --------------------------------------------------------------------------------
Review of Mike Collins' Proposal
44
<PAGE> 46
CEM CORPORATION, INC.
================================================================================
UPDATE ON DUE DILIGENCE AND ANALYSIS
VALUATION ANALYSIS & ISSUES
REVIEW OF MIKE COLLINS' PROPOSAL
------------------------------------
ANALYSIS OF STRATEGIC ALTERNATIVES
------------------------------------
SUMMARY
EXHIBITS
- --------------------------------------------------------------------------------
45
<PAGE> 47
ANALYSIS OF STRATEGIC ALTERNATIVES
================================================================================
- - Continue as sub-micro cap public company
- Neither the shareholders nor the Company are currently benefiting from
CEM being publicly traded.
- - Effect a leveraged recapitalization
- Capital gains rate for tendering shareholders.
- Dutch auction gives shareholders the option to get their target price.
- Likely to diminish the liquidity of CEM's stock.
- Remaining shareholders may be worse off than in a sale.
- - Pursue an acquisition program
- Mike Collins has said he sees no near term acquisition opportunities,
perhaps other than Milestone.
- To achieve size necessary to obtain and sustain Wall Street focus
would require a very aggressive acquisition program.
- --------------------------------------------------------------------------------
Analysis of Strategic Alternatives
46
<PAGE> 48
ANALYSIS OF STRATEGIC ALTERNATIVES
================================================================================
- - Pursue a sale of the Company
- Endeavor to negotiate best deal with Mike Collins
- His proposal is low and his ability to exceed the low end of the
value range is probably limited.
- Deal with "Optimum" uniquely
- Level of interest expressed to date is not pre-emptive.
- Approach selected strategic and financial buyers
- Maximizes opportunity to achieve best value.
- Process needs to move quickly.
- Senior management support is important.
- Wait two or three quarters
- Possibly better timing for Thermo and PE.
- Risks of interim business disruption at CEM and other potential
negative industry or Company issues.
- --------------------------------------------------------------------------------
Analysis of Strategic Alternatives
47
<PAGE> 49
PROSPECTIVE STRATEGIC BUYERS
================================================================================
- - Spectroscopy companies: - Instrument distributors:
- Agilent Technologies - Fisher Scientific
- PerkinElmer, Inc. International, Inc.
(formerly EG&G, Inc) - VWR
- Shamatsu - Other lab equipment:
- Thermo Instrument - Beckman Coulter
- Varian, Inc. - Dionex Corporation
- Foss A/S
- - Niche industrial companies: - Leco, Inc.
- Ametek, Inc. - Metrohm
- Bowthorpe - Mettler Toledo
- Danaher Corporation - Pall Corporation
- Illinois Toolworks - Sartorius AG
- United Dominion Industries - Waters Corporation
- --------------------------------------------------------------------------------
Analysis of Strategic Alternatives
48
<PAGE> 50
OTHER PROSPECTIVE BUYERS
================================================================================
- - Private equity groups:
- Bachow & Associates - KB Partners
- FCP Investors, Inc. - Kirtland Capital Partners
- Greylock - Matrix Partners
- H.I.G. Capital - Morgenthaler
Management - Stonington Partners
- Industrial Growth - Summit Partners
Partners
- --------------------------------------------------------------------------------
Analysis of Strategic Alternatives
49
<PAGE> 51
CEM CORPORATION, INC.
================================================================================
UPDATE ON DUE DILIGENCE AND ANALYSIS
VALUATION ANALYSIS & ISSUES
REVIEW OF MIKE COLLINS' PROPOSAL
ANALYSIS OF STRATEGIC ALTERNATIVES
------------------------------------
SUMMARY
------------------------------------
EXHIBITS
- --------------------------------------------------------------------------------
50
<PAGE> 52
SUMMARY
================================================================================
- - LBO valuation is the lowest available option, so it is sensible to pursue a
strategic sale.
- - Press release has resulted in contact from two strategic buyers.
- - We see no compelling reason to deal exclusively with one party.
- - Therefore, we recommend that the Special Committee:
- Defer any further evaluation of Mike Collins' proposal;
- Quickly contact likely prospective buyers; and
- If the marketing process results in no interest or interest below $11
per share, recommence discussions with Mike Collins.
- --------------------------------------------------------------------------------
51
<PAGE> 53
CEM CORPORATION, INC.
================================================================================
UPDATE ON DUE DILIGENCE AND ANALYSIS
VALUATION ANALYSIS & ISSUES
REVIEW OF MIKE COLLINS' PROPOSAL
ANALYSIS OF STRATEGIC ALTERNATIVES
SUMMARY
------------------------------------
EXHIBITS
------------------------------------
- --------------------------------------------------------------------------------
52
<PAGE> 54
INDEX OF EXHIBITS
================================================================================
EXHIBIT 1 - CEM Balance Sheets as of September 30, 1995-1999
EXHIBIT 2 - CEM Pertinent Balance Sheet Statistics as of September 30,
1995-1999
EXHIBIT 3 - CEM Capitalization Tables as of September 30, 1995-1999
EXHIBIT 4 - CEM Income Statements for the Years Ended September 30, 1995-1999
EXHIBIT 5 - CEM Pertinent Income Statement Statistics for the Years Ended
September 30, 1995-1999
EXHIBIT 6 - Financial Data and Statistics Pertaining to the Comparable
Public Companies
EXHIBIT 7 - Financial Data and Statistics Pertaining to the Relevant Mergers
and Acquisitions
EXHIBIT 8 - Discounted Cash Flow Analysis and Worksheets
EXHIBIT 9 - Leveraged Buyout Analysis and Worksheets
EXHIBIT 10 - Merger and Acquisition Activity, Jan. 1997 - Sept. 1999
- --------------------------------------------------------------------------------
Exhibits
53
<PAGE> 55
BALANCE SHEETS EXHIBIT 1
AS OF JUNE 30, 1995 - 1999
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1995 1996 1997 1998 1999
- ------ ---------------- ------------------ ------------------ ---------------- -----------------
Amount % Amount % Amount % Amount % Amount %
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current Assets
--------------
Cash $ 6,078 22.8% $ 5,932 21.5% $ 8,933 30.6% $ 6,163 21.8% $ 9,127 32.0%
Accounts Receivable 6,733 25.3 7,061 25.6 5,990 20.5 6,616 23.4 6,634 23.2
Inventory 4,997 18.7 5,639 20.4 5,139 17.6 5,675 20.1 5,335 18.7
Prepaid Expenses & Other 658 2.5 679 2.5 742 2.5 488 1.7 964 3.4
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total Current Assets 18,466 69.3 19,311 70.0 20,804 71.2 18,942 66.9 22,060 77.3
-------------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Fixed Assets
------------
Fixed Assets, Gross 9,934 37.3 10,405 37.7 10,278 35.2 10,741 38.0 11,440 40.1
Less: Accumulated
Depreciation 4,066 15.3 4,836 17.5 4,982 17.1 5,816 20.6 6,456 22.6
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Fixed Assets, Net 5,868 22.0 5,569 20.2 5,296 18.1 4,925 17.4 4,984 17.5
----------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Other Assets
------------
Intangibles 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Other 2,319 8.7 2,704 9.8 3,114 10.7 4,431 15.7 1,512 5.3
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total Other Assets 2,319 8.7 2,704 9.8 3,114 10.7 4,431 15.7 1,512 5.3
------------------ ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
TOTAL ASSETS $26,653 100.0% $27,584 100.0% $29,214 100.0% $28,298 100.0 $28,556 100.0%
------------ ======= ===== ======= ===== ======= ===== ======= ===== ======= =====
LIABILITIES & STOCKHOLDERS'
EQUITY
---------------------------
Current Liabilities
-------------------
Current Maturities
of LTD $ 12 0.0% $ 63 0.2% $ 67 0.2% $ 92 0.3% 1,066 3.7%
Accounts Payable 1,003 3.8 990 3.6 1,095 3.7 1,491 5.3 1,318 4.6
Accrued Liabilities 3,037 11.4 2,079 7.5 2,443 8.4 2,933 10.4 3,172 11.1
Other 367 1.4 630 2.3 790 2.7 790 2.8 605 2.1
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total Current
Liabilities 4,419 16.6 3,762 13.6 4,395 15.0 5,306 18.8 6,161 21.6
------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Other Noncurrent 64 0.2 54 0.2 110 0.4 96 0.3 127 0.4
---------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Long-Term Debt 1,578 5.9 1,417 5.1 1,229 4.2 1,177 4.2 173 0.6
- -------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total Liabilities 6,061 22.7 5,233 19.0 5,734 19.6 6,579 23.2 6,461 22.6
----------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Stockholders' Equity
--------------------
Common Stock 181 0.7 178 0.6 174 0.6 159 0.6 152 0.5
Preferred Stock 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Paid in Capital in
Excess of Par 313 1.2 0 0.0 0 0.0 0 0.0 0 0.0
Retained Earnings 20,098 75.4 22,173 80.4 23,306 79.8 21,560 76.2 21,943 76.8
Treasury Stock 0 0.0 0 0.0 0 0.0 0 0.0 N/A 0.0
-------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total Stockholders'
Equity 20,592 77.3 22,351 81.0 23,480 80.4 21,719 76.8 22,095 77.4
------------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
TOTAL LIAB. & S/E $26,653 100.0% $27,584 100.0% $29,214 100.0% $28,298 100.0% $28,556 100.0%
----------------- ======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
<PAGE> 56
PERTINENT BALANCE SHEET STATISTICS EXHIBIT 2
AS OF JUNE 30, 1995 - 1999
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Working Capital $7,981 $9,680 $7,543 $7,565 $7,838
Net Quick Assets $2,984 $4,041 $2,404 $1,890 $2,503
Current Ratio 2.8x 3.6x 2.7x 2.5x 2.5x
Quick Ratio 1.7x 2.1x 1.6x 1.4x 1.5x
Working Capital Turnover 4.0x 3.3x 4.0x 4.3x 4.1x
Accounts Receivable Turnover 4.7x 4.5x 5.0x 4.9x 4.8x
Accounts Receivable in Days 78 82 73 75 75
Accounts Payable Turnover 13.3x 13.2x 12.3x 10.1x 11.5x
Accounts Payable in Days 27 28 30 36 11.5
Inventory Turnover 2.7x 2.3x 2.6x 2.6x 2.8x
Inventory in Days 137 157 139 138 129
Fixed Asset Turnover 5.4x 5.7x 5.7x 6.6x 6.4x
Total Asset Turnover 1.2x 1.1x 1.0x 1.1x 1.1x
Long-Term Debt/Net Worth 7.7% 6.3% 5.2% 5.4% 0.8%
Total Interest Bearing Debt/Net Worth 7.7 6.6 5.5 5.8 5.6
Total Liabilities/Net Worth 29.4 23.4 24.4 30.3 29.2
Fixed Assets/Net Worth 28.5 24.9 22.6 22.7 22.6
Before-Tax Return on Assets 18.4% 16.4% 9.2% 12.5% 10.4%
Before-Tax Return on Capital 22.0 19.0 10.9 15.4 13.3
Before-Tax Return on Equity 23.8 20.2 11.5 16.3 13.5
Before-Tax Return on Sales 15.5 14.4 9.0 10.9 9.3
After-Tax Return on Assets 11.9% 10.5% 6.3% 8.6% 7.1%
After-Tax Return on Capital 14.3 12.2 7.4 10.5 9.1
After-Tax Return on Equity 15.4 13.0 7.8 11.2 9.2
After-Tax Return on Sales 10.1 9.2 6.1 7.5 6.3
</TABLE>
<PAGE> 57
CAPITALIZATION TABLES EXHIBIT 3
AS OF JUNE 30, 1995 - 1999
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
--------------- ---------------- --------------- ---------------- ----------------
Amount % Amount % Amount % Amount % Amount %
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current Liabilities
- -------------------
Current Maturities of LTD $ 12 0.1% $ 63 0.3% $ 67 0.3% $ 92 0.4% $ 1,066 4.8%
Accounts Payable 1,003 4.5 990 4.2 1,095 4.4 1,491 6.5 1,318 5.9
Accrued Liabilities 3,037 13.7 2,079 8.7 2,443 9.8 2,933 12.8 3,172 14.2
Other 367 1.7 630 2.6 790 3.2 790 3.4 605 2.7
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total Current Liabilities $ 4,419 19.9% $ 3,762 15.8% $ 4,395 17.7% $ 5,306 23.1% $ 6,161 27.5%
------------------------- ======= ===== ======= ===== ======= ===== ======= ===== ======= =====
CAPITALIZATION:
- ---------------
Other Noncurrent $ 64 0.3% $ 54 0.2% $ 110 0.4% $ 96 0.4% $ 127 0.6%
- ---------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Long-Term Debt
- --------------
Term note @ 9.25%, exp. 2000 1,447 6.5 1,313 5.5 1,146 4.6 1,106 4.8 113 0.5
Mortgage Note @ 7.4%, exp. 2006 131 0.6 106 0.4 83 0.3 70 0.3 60 0.3
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Long-Term Debt 1,578 7.1 1,417 5.9 1,229 5.0 1,177 5.1 173 0.8
-------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Stockholders' Equity
- --------------------
Common Stock 181 0.8 178 0.7 174 0.7 159 0.7 152 0.7
Paid in Capital in Excess of Par 313 1.4 0 0.0 0 0.0 0 0.0 0 0.0
Retained Earnings 20,098 90.4 22,173 93.1 23,306 93.9 21,560 93.8 21,943 98.0
Treasury Stock 0 0.0 0 0.0 0 0.0 0 0.0 N/A N/A
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total Stockholders' Equity 20,592 92.6 22,351 93.8 23,480 94.6 21,719 94.5 22,095 98.7
-------------------------- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
TOTAL CAPITALIZATION $22,234 100.0% $23,822 100.0% $24,819 100.0% $22,992 100.0% $22,395 100.0%
-------------------- ======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
<PAGE> 58
INCOME STATEMENTS EXHIBIT 4
FOR THE YEARS ENDED JUNE 30, 1995 - 1999
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
------------------ -------------------- ------------------- ------------------- -----------------
Amount % Amount % Amount % Amount % Amount %
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ 31,611 100.0% $ 31,477 100.0% $ 30,075 100.0% $ 32,362 100.0% $ 32,077 100.0%
Cost of Goods Sold 13,341 42.2 13,096 41.6 13,481 44.8 15,030 46.4 15,110 47.1
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Gross Profit 18,270 57.8 18,381 58.4 16,594 55.2 17,332 53.6 16,967 52.9
Operating Expenses(1) 13,791 43.6 14,245 45.3 14,216 47.3 14,283 44.1 14,320 44.6
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Operating Income 4,479 14.2 4,136 13.1 2,378 7.9 3,049 9.4 2,647 8.3
Other (Income)
Expense, Net (129) (0.4) 58 0.2 130 0.4 62 0.2 99 0.3
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
EBIT 4,608 14.6 4,078 13.0 2,248 7.5 2,987 9.2 2,548 7.9
Interest Expense (283) (0.9) (441) (1.4) (454) (1.5) (547) (1.7) (426) (1.3)
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Earnings Before Taxes 4,891 15.5 4,519 14.4 2,702 9.0 3,534 10.9 2,974 9.3
Provision for Taxes 1,712 5.4 1,611 5.1 865 2.9 1,110 3.4 938 2.9
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Net Income $ 3,179 10.1% $ 2,908 9.2% $ 1,837 6.1% $ 2,424 7.5% $ 2,036 6.3%
======== ==== ======== ==== ======== ==== ======== ==== ======== ====
Operating Cash Flow $ 5,406 17.1% $ 5,188 16.5% $ 3,494 11.6% $ 4,310 13.3% $ 3,946 12.3%
Depreciation &
Amortization 927 2.9 1,052 3.3 1,116 3.7 1,261 3.9 1,299 4.0
Capital Expenditures 1,028 3.3 1,013 3.2 1,165 3.9 1,119 3.5 1,447 4.5
Cash Dividends 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Total Rental Expense 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Interest Coverage -- (16.3)x -- (9.2)x -- (5.0)x -- (5.5)x -- (6.0)x
Fixed Charge Coverage -- (16.3)x -- (9.2)x -- (5.0)x -- (5.5)x -- (6.0)x
</TABLE>
1. Does not take into account private company savings.
<PAGE> 59
PERTINENT INCOME STATEMENT STATISTICS Exhibit 5
FOR THE YEARS ENDED JUNE 30, 1995 - 1999 Page 1 of 2
($ in Thousands)
<TABLE>
<CAPTION>
Net Sales Amount % Inc. (Dec.) % Revenue Operating Income Amount % Inc. (Dec.) % Revenue
- --------- ------ ------------- --------- ----------------- ------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $31,611 8.9 % 100.0 % 1995 $4,479 10.6 % 14.2 %
1996 31,477 (0.4) 100.0 1996 4,136 (7.7) 13.1
1997 30,075 (4.5) 100.0 1997 2,378 (42.5) 7.9
1998 32,362 7.6 100.0 1998 3,049 28.2 9.4
1999 32,077 (0.9) 100.0 1999 2,647 (13.2) 8.3
Compound Growth Rate 0.4 % Compound Growth Rate (12.3)%
- ------------------------------------------------------------ -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Cost of Goods Sold Amount % Inc. (Dec.) % Revenue Other (Inc.) Exp., Net Amount % Inc. (Dec.) % Revenue
- ------------------ ------ ------------- --------- ---------------------- ------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $13,341 11.2 % 42.2 % 1995 $(129) N/M % (0.4)%
1996 13,096 (1.8) 41.6 1996 58 N/M 0.2
1997 13,481 2.9 44.8 1997 130 124.1 0.4
1998 15,030 11.5 46.4 1998 62 (52.3) 0.2
1999 15,110 0.5 47.1 1999 99 59.7 0.3
Compound Growth Rate 3.2 % Compound Growth Rate N/M %
- ------------------------------------------------------------ -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Profit Amount % Inc. (Dec.) % Revenue EBIT Amount % Inc. (Dec.) % Revenue
- ------------ ------ ------------- --------- ---- ------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $18,270 7.2 % 57.8 % 1995 $4,608 17.4 % 14.6 %
1996 18,381 0.6 58.4 1996 4,078 (11.5) 13.0
1997 16,594 (9.7) 55.2 1997 2,248 (44.9) 7.5
1998 17,332 4.4 53.6 1998 2,987 32.9 9.2
1999 16,967 (2.1) 52.9 1999 2,548 (14.7) 7.9
Compound Growth Rate (1.8)% Compound Growth Rate (13.8)%
- ------------------------------------------------------------ -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Operating Expenses(1) Amount % Inc. (Dec.) % Revenue Interest Expense Amount % Inc. (Dec.) % Revenue
- --------------------- ------ ------------- --------- ---------------- ------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $13,791 6.2 % 43.6 % 1995 $(283) N/M % (0.9)%
1996 14,245 3.3 45.3 1996 (441) N/M (1.4)
1997 14,216 (0.2) 47.3 1997 (454) N/M (1.5)
1998 14,283 0.5 44.1 1998 (547) N/M (1.7)
1999 14,320 0.3 44.6 1999 (426) N/M (1.3)
Compound Growth Rate 0.9 % Compound Growth Rate N/M %
- ------------------------------------------------------------ -----------------------------------------------------------------
</TABLE>
<PAGE> 60
PERTINENT INCOME STATEMENT STATISTICS Exhibit 5
FOR THE YEARS ENDED JUNE 30, 1995 - 1999 Page 2 of 2
($ in Thousands)
<TABLE>
<CAPTION>
Earnings Before Taxes Amount % Inc. (Dec.) % Revenue Depr. & Amort. Amount % Inc. (Dec.) % OCF
- --------------------- ------ ------------- --------- -------------- ------ ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $4,891 18.3% 15.5% 1995 $ 927 (7.6)% 17.1%
1996 4,519 (7.6) 14.4 1996 1,052 13.5 20.3
1997 2,702 (40.2) 9.0 1997 1,116 6.1 31.9
1998 3,534 30.8 10.9 1998 1,261 13.0 29.3
1999 2,974 (15.8) 9.3 1999 1,299 3.0 32.9
Compound Growth Rate (11.7)% Compound Growth Rate 8.8%
- ---------------------------------------------------------------- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Provision for Taxes Amount % Inc. (Dec.) % of EBT Capital Expenditures Amount % Inc. (Dec.) % Depr.
- ------------------- ------ ------------- -------- -------------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $1,712 27.5% 35.0% 1995 $1,028 7.7% 110.9%
1996 1,611 (5.9) 35.6 1996 1,013 (1.5) 96.3
1997 865 (46.3) 32.0 1997 1,165 15.0 104.4
1998 1,110 28.3 31.4 1998 1,119 (3.9) 88.7
1999 938 (15.5) 31.5 1999 1,447 29.3 111.4
Compound Growth Rate (14.0)% Compound Growth Rate 8.9%
- ----------------------------------------------------------------- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Net Income Amount % Inc. (Dec.) % Revenue Cash Dividends Amount % Inc. (Dec.) % Payout
- ---------- ------ ------------- -------- -------------- ------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $3,179 13.9% 10.1% 1995 $0 N/M% 0.0%
1996 2,908 (8.5) 9.2 1996 0 N/M 0.0
1997 1,837 (36.8) 6.1 1997 0 N/M 0.0
1998 2,424 32.0 7.5 1998 0 N/M 0.0
1999 2,036 (16.0) 6.3 1999 0 N/M 0.0
Compound Growth Rate (10.5)% Compound Growth Rate N/M%
- ------------------------------------------------------------------- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Operating Cash Flow Amount % Inc. (Dec.) % Revenue Total Rental Expense Amount % Inc. (Dec.) % Revenue
- -------------------- ------ ------------- --------- ------------------- ------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $5,406 8.8% 17.1% 1995 $0 N/M% 0.0%
1996 5,188 (4.0) 16.5 1996 0 N/M 0.0
1997 3,494 (32.7) 11.6 1997 0 N/M 0.0
1998 4,310 23.4 13.3 1998 0 N/M 0.0
1999 3,946 (8.4) 12.3 1999 0 N/M 0.0
Compound Growth Rate (7.6)% Compound Growth Rate N/M%
- ------------------------------------------------------------------- --------------------------------------------------------------
</TABLE>
<PAGE> 61
EXHIBIT 6
PAGE 1 OF 10
-------------------------------------------------------------
PROJECT MICROWAVE
SUMMARY OF COMPARISON TO SELECTED PUBLICLY HELD COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
-------------------------------------------------------------
<TABLE>
<CAPTION>
($ in Thousands, Except Per Share Amounts)
Comparable Companies (*)
-----------------------------------------------
Size CEM Corporation Median Range
- ---- ----------------- -------- -------------------------------
<S> <C> <C> <C> <C>
Latest Twelve Months Net Sales $32,077 $440,915 $984,737 -- $25,010
Latest Twelve Months OCF 3,946 52,669 143,334 -- (324)
Total Assets - Most Recent 28,556 424,945 806,892 -- 19,631
Net Worth - Most Recent 22,095 95,738 421,045 -- 14,783
Five-Year Growth
- ----------------
Sales 0.4% 6.6% 18.0% -- 4.6%
Operating Income (12.3) 15.3 31.2 -- 8.3
Operating Cash Flow (7.6) 10.9 42.4 -- (99.3)
Net Income (10.5) 17.8 29.2 -- 4.2
Operating Income Margin
- -----------------------
Latest Twelve Months 8.3% 9.0% 28.3% -- (5.4)%
Three-Year Average 8.5 8.7 26.9 -- (5.5)
1998 9.4 10.0 28.0 -- (5.2)
1997 7.9 6.9 27.3 -- 0.0
1996 13.1 9.3 25.4 -- (11.4)
OCF Margin
- ----------
Latest Twelve Months 12.3% 12.5% 30.5% -- (0.6)%
Three-Year Average 12.4 11.3 28.8 -- (0.6)
1998 13.3 12.4 29.7 -- 0.6
1997 11.6 9.6 29.1 -- 5.5
1996 16.5 12.1 27.6 -- (7.8)
Net Income Margin
- -----------------
Latest Twelve Months 6.3% 6.5% 20.5% -- (3.2)%
Three-Year Average 6.6 6.4 18.5 -- (7.4)
1998 7.5 6.3 19.0 -- (2.5)
1997 6.1 5.9 18.5 -- (2.7)
1996 9.2 6.9 18.0 -- (17.0)
Return on Assets (After-Tax)
- ----------------------------
Three-Year Average 8.5% 6.5% 23.4% -- (8.1)%
1998 8.6 6.7 26.7 -- (2.4)
1997 6.3 7.0 22.2 -- (3.2)
1996 10.5 5.9 21.2 -- (18.7)
Return on Common Equity (After-Tax)
- -----------------------------------
Three-Year Average 10.7% 10.9% 44.9% -- (420.2)%
1998 11.2 12.4 69.9 -- (2.8)
1997 7.8 9.4 31.6 -- (94.1)
1996 13.0 11.0 33.3 -- (1,163.6)
Balance Sheet Data (Most Recent Date)
- -------------------------------------
Current Ratio 3.6x 1.8x 3.5x -- 1.1x
Quick Ratio 2.7 1.5 2.4 -- 0.7
Long-Term Debt to Stockholders' Equity 0.0 0.2 3.8 -- 0.0
Total Liab. to Stockholders' Equity 0.3 0.5 9.1 -- 0.3
Interest Coverage 1998 5.8 4.1 0.0 -- 0.0
Long-Term Debt to OCF 0.0 1.0 2.5 -- 0.0
Avg. Capex / Avg. Sales 3.8% 3.5% 10.9% -- 1.4%
Market Valuation (as of 10/27/99)
- ---------------------------------
Total Market Value $17,500 $534,827 $1,160,509 -- $13,565
Total Market Value as % of Book Value 79.2% 284.7% 1,457.5% -- 55.4%
P/E Ratio - Current 8.7x 21.7x 92.4x -- 8.9x
- Based on Current Fiscal Year Estimate 8.7 17.5 56.7 -- 7.6
- Based on Next Fiscal Year Estimate N/A 19.1 27.7 -- 6.9
Total Adjusted Market Value $8,966 $585,035 $1,498,592 -- $11,059
Total Adjusted MV / L12M Sales 0.3x 1.0x 5.8x -- 0.4x
Total Adjusted MV / L12M Operating Income 3.4 12.9 26.5 -- 5.1
Total Adjusted MV / L12M Operating Cash Flow 2.3 9.3 19.1 -- 4.1
Total Adj. MV / (L12M OCF - 3 Yr. Avg. Capex) 3.2 12.3 28.3 -- 5.7
</TABLE>
Footnote:
- ---------
(1) The comparable companies utilized in calculation of median include: Isco,
Inc., O. I. Corporation, Ametek, Inc., Mettler-Toledo International, Dionex
Corporation and Thermoquest Corporation.
<PAGE> 62
EXHIBIT 6
PAGE 2 OF 10
-------------------------------------------------------------
PROJECT MICROWAVE
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
-------------------------------------------------------------
<TABLE>
<CAPTION>
CEM Corporation Isco, Inc. O. I. Corporation Ametek, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Business Description Develops, manufactures, Designs, manufactures Develops, manufactures, Global manufacturer
sells and services and markets products markets and services of electric motors
microwave-based used to monitor water products for the analytical and electronic
instrumentation for quality regulations and instruments markets, instruments.
testing, analysis and are used in a variety of including sample
process control in research and testing preparation, detection,
analytical laboratory and laboratories and by measurement and monitoring
industrial markets. industries to monitor instruments.
product quality.
- -----------------------------------------------------------------------------------------------------------------------------------
Exchange (Ticker) NASD (CEMX) NASD (ISKO) NASD (OICO) NYSE (AME)
- -----------------------------------------------------------------------------------------------------------------------------------
Latest Annual Data June 30, 1999 July 31, 1998 December 31, 1998 December 31, 1998
Latest Quarterly Data June 30, 1999 April 30, 1999 June 30, 1999 June 30, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------
MARKET VALUATION (AS OF 10/27/99)
- -----------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Market Price per Share
Current $ 5.7500 $ 4.1250 $ 4.2500 $19.3125
1999 Range 5.5000 -- 10.1250 4.0312 -- 6.6250 3.6250 -- 7.0000 16.3564 -- 25.6103
1998 Range 8.7500 -- 13.7500 4.0596 -- 9.2315 4.0000 -- 6.4375 15.5673 -- 30.8558
- -----------------------------------------------------------------------------------------------------------------------------------
Total Shares Outstanding 3,043 5,644 3,192 32,429
Total Market Value of Common Equity $ 17,500 $ 23,281 $ 13,565 $626,281
Total Market Value as a % of Book Value 79.2% 55.4% 91.8% 319.3%
P/E Ratio - Latest Twelve Months Data 8.7x N/Mx 8.9x 14.9x
- Based on Current Fiscal Year Estimate 8.7x N/Ax 7.6x 10.5x
- Based on Next Fiscal Year Estimate(*) N/Ax N/Ax 6.9x 9.4x
Total Adj. Market Value $ 8,966 $ 24,842 $ 11,059 $934,355
Total Adj. Market Value/L12M Sales 0.28x 0.49x 0.44x 1.04x
Total Adj. MV/L12M Operating Income 3.4x N/Ax 5.1x 8.8x
Total Adj. MV/L12M Operating Cash Flow(**) 2.27x N/Ax 4.1x 6.5x
Total Adj. MV/(L12M OCF - 3 Yr. Avg. Capex) 3.2x N/Ax 6.7x 9.2x
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Footnotes:
(*) Based on the Institutional Brokers Estimate System (I/B/E/S).
(**) Operating Cash Flow is defined as operating income plus depreciation
and amortization.
<PAGE> 63
EXHIBIT 6
PAGE 3 OF 10
-----------------------------------------------------------------------
PROJECT MICROWAVE
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
-----------------------------------------------------------------------
- -----------------------
INCOME STATEMENT DATA
- -----------------------
<TABLE>
<CAPTION>
CEM Corporation Isco, Inc. O. I. Corporation Ametek, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales
Latest 12 Months $32,077 $50,912 $25,010 $901,937
1998 32,362 47,912 23,684 927,474
1997 30,075 40,733 21,630 847,761
1996 31,477 39,981 20,156 800,011
1995 31,611 41,784 17,942 837,490
1994 29,040 38,706 18,356 774,738
- ---------------------------------------------------------------------------------------------------------------------------------
Gross Profit (% of Sales)
Latest 12 Months $16,967/ 52.9% $26,868/ 52.8% $11,326/ 45.3% $184,857/ 20.5%
1998 17,332/ 53.6 26,345/ 55.0 10,919/ 46.1 186,545/ 20.1
1997 16,594/ 55.2 22,760/ 55.9 10,076/ 46.6 159,013/ 18.8
1996 18,381/ 58.4 22,191/ 55.5 10,080/ 50.0 147,163/ 18.4
1995 18,270/ 57.8 24,606/ 58.9 8,702/ 48.5 164,088/ 19.6
1994 17,041/ 58.7 22,971/ 59.3 8,221/ 44.8 146,272/ 18.9
- ---------------------------------------------------------------------------------------------------------------------------------
Operating Expenses (% of Sales)
Latest 12 Months $14,320/ 44.6% $29,624/ 58.2% $ 9,175/ 36.7% $ 79,020/ 8.8%
1998 14,283/ 44.1 28,855/ 60.2 8,552/ 36.1 82,089/ 8.9
1997 14,216/ 47.3 22,748/ 55.8 8,577/ 39.7 67,058/ 7.9
1996 14,245/ 45.3 20,554/ 51.4 8,215/ 40.8 64,320/ 8.0
1995 13,791/ 43.6 20,898/ 50.0 7,449/ 41.5 74,790/ 8.9
1994 12,991/ 44.7 19,211/ 49.6 6,498/ 35.4 70,980/ 9.2
- ---------------------------------------------------------------------------------------------------------------------------------
Operating Income (% of Sales)
Latest 12 Months $2,647/ 8.3% $(2,756)/ (5.4)% $ 2,151/ 8.6% $105,837/ 11.7%
1998 3,049/ 9.4 (2,510)/ (5.2) 2,367/ 10.0 104,456/ 11.3
1997 2,378/ 7.9 12/ 0.0 1,499/ 6.9 91,955/ 10.8
1996 4,136/ 13.1 1,637/ 4.1 1,864/ 9.3 82,843/ 10.4
1995 4,479/ 14.2 3,708/ 8.9 1,253/ 7.0 89,298/ 10.7
1994 4,050/ 13.9 3,760/ 9.7 1,723/ 9.4 75,292/ 9.7
- ---------------------------------------------------------------------------------------------------------------------------------
Operating Cash Flow (% of Sales)
Latest 12 Months $3,946/ 12.3% $ (324)/ (0.6)% $ 2,672/ 10.7% $143,334/ 15.9%
1998 4,310/ 13.3 274/ 0.6 2,778/ 11.7 142,825/ 15.4
1997 3,494/ 11.6 2,246/ 5.5 2,069/ 9.6 124,821/ 14.7
1996 5,188/ 16.5 3,568/ 8.9 2,441/ 12.1 117,749/ 14.7
1995 5,406/ 17.1 5,810/ 13.9 1,700/ 9.5 123,759/ 14.8
1994 4,971/ 17.1 5,705/ 14.7 2,123/ 11.6 110,761/ 14.3
- ---------------------------------------------------------------------------------------------------------------------------------
Net Income (% of Sales)
Latest 12 Months $2,036/ 6.3% $(1,654)/ (3.2)% $ 1,636/ 6.5% $ 58,356/ 6.5%
1998 2,424/ 7.5 (1,197)/ (2.5) 1,822/ 7.7 58,469/ 6.3
1997 1,837/ 6.1 1,326/ 3.3 1,441/ 6.7 50,264/ 5.9
1996 2,908/ 9.2 2,739/ 6.9 1,904/ 9.4 43,062/ 5.4
1995 3,179/ 10.1 3,574/ 8.6 1,308/ 7.3 43,757/ 5.2
1994 2,791/ 9.6 3,479/ 9.0 1,545/ 8.4 36,619/ 4.7
- ---------------------------------------------------------------------------------------------------------------------------------
Growth:
(Most Recent Year/5 yr. CAGR)
Sales (0.9)/ 0.4% 17.6/ 5.5% 9.5/ 6.6% 9.4/ 4.6%
Operating Income (13.2)/ (12.3) N/A/ N/A 57.9/ 8.3 13.6/ 8.5
Operating Cash Flow (8.4)/ (7.6) (99.3)/ (99.3) 34.3/ 7.0 14.4/ 6.6
Net Income (16.0)/ (10.5) N/A/ N/A 26.4/ 4.2 16.3/ 12.4
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 64
PROJECT MICROWAVE EXHIBIT 6
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES PAGE 4 OF 10
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
---------------------------------
BALANCE SHEET DATA
---------------------------------
<TABLE>
<CAPTION>
CEM O.I.
Corporation Isco, Inc. Corporation Ametek, Inc.
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Assets - Most Recent Date $28,556 $53,455 $19,631 $747,541
-1998 28,298 49,617 18,829 699,825
-1997 29,214 46,708 19,100 555,203
-1996 27,584 46,704 19,186 537,915
----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity - Most Recent Date $22,095 $42,028 $14,783 $196,128
-1998 21,719 42,806 14,744 174,049
-1997 23,480 42,480 15,284 159,047
-1996 22,351 42,002 14,961 129,498
----------------------------------------------------------------------------------------------------------------------------------
Return on Assets and
Return on Common Equity ROA ROCE ROA ROCE ROA ROCE ROA ROCE
-1998 8.6% 11.2% (2.4)% (2.8)% 9.7% 12.4% 8.4% 33.6%
-1997 6.3 7.8 2.8 3.1 7.5 9.4 9.1 31.6
-1996 10.5 13.0 5.9 6.5 9.9 12.7 8.0 33.3
----------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY, LEVERAGE, AND COVERAGE RATIOS
Current Ratio - Most Recent Date 3.6x 3.5x 2.6x 1.1x
Quick Ratio - Most Recent Date 2.7 2.0 1.7 0.7
LTD / SH Equity - Most Recent Date 0.01x 0.10x 0.00x 1.16x
Third-Party Debt / SH Equity - Most Recent Date 0.06 0.13 0.00 1.66
Total Liabilities / SH Equity - Most Recent Date 0.29 0.27 0.33 2.81
LTD / OCF - Most Recent Date 0.04x N/Mx 0.00x 1.58x
Third Party Debt / OCF - Most Recent Date 0.31 N/M 0.00 2.28
Interest Coverage - 1998 N/Ax #DIV/0!x N/Ax 4.6x
Fixed Charge Coverage - 1998 N/A #DIV/0! N/A 4.6
Avg. Capex / Avg. Sales 3.8% 10.9% 4.5% 4.8%
----------------------------------------------------------------------------------------------------------------------------------
CAPITAL STRUCTURE
Short-Term Debt $1,066 4.7% $1,170 2.5% $ 0 0.0% $ 99,418 20.4%
========= ====== ======== ====== ======= ======= ======== =====
Long-Term Debt $173 0.8% $4,238 9.2% $ 0 0.0% $226,701 46.6%
--------- ------ -------- ------ ------- ------- -------- -----
Noncurrent Liabilities 471 2.1 0 0.0 214 1.4 63,764 13.1
--------- ------ -------- ------ ------- ------- -------- -----
Stockholders' Equity
Preferred Stock 0 0.0 0 0.0 0 0.0 0 0.0
Common Stock 22,095 97.2 42,028 90.8 14,783 98.6 196,128 40.3
--------- ------ -------- ------ ------- ------- -------- -----
Total Stockholders' Equity 22,095 97.2 42,028 90.8 14,783 98.6 196,128 40.3
--------- ------ -------- ------ ------- ------- -------- -----
Total Capitalization $22,739 100.0% $46,266 100.0% $14,997 100.0% $486,593 100.0%
========= ====== ======== ====== ======= ======= ======== =====
</TABLE>
<PAGE> 65
EXHIBIT 6
PAGE 5 OF 10
---------------------------------------------------------------
PROJECT MICROWAVE
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
---------------------------------------------------------------
<TABLE>
<CAPTION>
Name of Company CEM Corporation Mettler-Toledo International Dionex Corporation Varian, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Business Description Develops, manufactures, sells, Engaged in the manufacturing Designs, manufactures, Manufacturers
and services microwave-based and marketing of weighing markets and serves scientific
instrumentation for testing, instruments used in chromatography systems, instruments and
analysis and process control laboratory, industrial and sample preparation vacuum technologies,
in analytical laboratory and food retailing applications. devices and products serving life
industrial markets. that are used by science, health
chemists to isolate care, chemical,
and quantify the environmental, and
components of complex industrial
chemical mixtures. customers.
- ----------------------------------------------------------------------------------------------------------------------------------
Where Traded (Ticker) NASD (CEMX) NYSE (MTD) NASD (DNEX) NASD (VARI)
- ----------------------------------------------------------------------------------------------------------------------------------
Latest Annual Data June 30, 1999 December 31, 1998 June 30, 1999 December 31, 1998
Latest Quarterly Data June 30, 1999 June 30, 1999 June 30, 1999 June 30, 1999
- ----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------
MARKET VALUATION (AS OF 10/27/99)
- -------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Market Price per Share
Current $5.7500 $ 30.1875 $45.7500 $17.5625
1999 Range 5.5000 -- 10.1250 19.6250 -- 30.5000 32.0000 -- 51.0000 8.2500 -- 18.0625
1998 Range 5.5000 -- 10.1250 16.2500 -- 28.9375 18.7500 -- 39.6250 N/A -- N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Total Shares Outstanding 3,043 38,443 22.200 30.453
Total Market Value of Common Equity $17,500 $1,160,509 $1,015,639 $534,827
Total Market Value as a % of Book Value 79.2% 1,457.5% 1,060.9 % 284.7 %
P/E Ratio - Latest Twelve Months Data 8.7x 28.5x 35.7 x 92.4 x
- Based on Current Fiscal Year
Estimate(*) 8.7x 22.7x 27.7 x 19.7 x
- Based on Next Fiscal Year
Estimate(*) N/Ax 19.1x 5.02 x 1.01 x
Total Adj. Market Value $8,966 $1,498,592 $1,006.009 $585,035
Total Adj. Market Value / L12M Sales 0.28x 1.52x
Total Adj. MV / L12M Operating Income 3.4x 16.9x 20.6 x 26.5 x
Total Adj. MV / L12M Operating Cash
Flow (**) 2.3x 12.2x 19.1 x 14.8 x
Total Adj. MV / (L12M OCF - 3 Yr. Avg.
Capex) 3.2x 15.4x 20.5 x 28.3 x
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Footnotes:
(*) Based on the Institutional Brokers Estimate System (I/B/E/S).
(**) Operating Cash Flow is defined as operating income plus depreciation and
amortization.
<PAGE> 66
PROJECT MICROWAVE EXHIBIT 6
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES PAGE 6 OF 10
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- -----------------------------------
INCOME STATEMENT DATA
- -----------------------------------
<TABLE>
<CAPTION>
Mettler-Toledo
CEM Corporation International Dionex Corporation Varian, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales
Latest 12 Months $32,077 $984,737 $172,940 $577,720
1998 32,362 935,658 150,513 557,770
1997 30,075 878,415 142,053 541,946
1996 31,477 849,133 133,004 504,394
1995 31,611 850,415 120,024 459,400
1994 29,040 769,136 109,526 425,700
- -----------------------------------------------------------------------------------------------------------------------------------
Gross Profit (% of Sales)
Latest 12 Months $16,967/ 52.9% $438,176/ 44.5% $117,724/ 68.1% $215,427/ 37.3%
1998 17,332/ 53.6 415,468/ 44.4 103,123/ 68.5 221,383/ 39.7
1997 16,594/ 55.2 384,935/ 43.8 98,595/ 69.4 211,101/ 39.0
1996 18,381/ 58.4 317,074/ 37.3 91,598/ 68.9 193,641/ 38.4
1995 18,270/ 57.8 342,326/ 40.3 81,596/ 68.0 N/A/ N/A
1994 17,041/ 58.7 307,507/ 40.0 74,374/ 67.9 N/A/ N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses (% of Sales)
Latest 12 Months $14,320/ 44.6% $349,534/ 35.5% $ 68,786/ 39.8% $193,310/ 33.5%
1998 14,283/ 44.1 332,098/ 35.5 60,973/ 40.5 182,219/ 32.7
1997 14,216/ 47.3 344,129/ 39.2 59,865/ 42.1 184,299/ 34.0
1996 14,245/ 45.3 413,586/ 48.7 57,817/ 43.5 182,194/ 36.1
1995 13,791/ 43.6 305,634/ 35.9 53,901/ 44.9 N/A/ N/A
1994 12,991/ 44.7 279,409/ 36.3 49,472/ 45.2 N/A/ N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Income (% of Sales)
Latest 12 Months $2,647/ 8.3% $ 88,642/ 9.0% $ 48,938/ 28.3% $22,117/ 3.8%
1998 3,049/ 9.4 83,370/ 8.9 42,150/ 28.0 39,164/ 7.0
1997 2,378/ 7.9 40,806/ 4.6 38,730/ 27.3 26,802/ 4.9
1996 4,136/ 13.1 (96,512)/ (11.4) 33,781/ 25.4 11,447/ 2.3
1995 4,479/ 14.2 36,692/ 4.3 27,695/ 23.1 N/A/ N/A
1994 4,050/ 13.9 28,098/ 3.7 24,902/ 22.7 N/A/ N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Cash Flow (% of Sales)
Latest 12 Months $3,946/ 12.3% $123,212/ 12.5% $ 52,669/ 30.5% $39,658/ 6.9%
1998 4,310/ 13.3 115,596/ 12.4 44,693/ 29.7 56,705/ 10.2
1997 3,494/ 11.6 72,641/ 8.3 41,314/ 29.1 46,251/ 8.5
1996 5,188/ 16.5 (65,859)/ (7.8) 36,647/ 27.6 27,422/ 5.4
1995 5,406/ 17.1 70,055/ 8.2 30,310/ 25.3 N/A/ N/A
1994 4,971/ 17.1 28,098/ 3.7 27,397/ 25.0 N/A/ N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (% of Sales)
Latest 12 Months $2,036/ 6.3% $ 40,922/ 4.2% $ 35,417/ 20.5% $16,847/ 2.9%
1998 2,424/ 7.5 37,625/ 4.0 28,650/ 19.0 23,428/ 4.2
1997 1,837/ 6.1 (23,909)/ (2.7) 26,227/ 18.5 14,205/ 2.6
1996 2,908/ 9.2 (144,585)/ (17.0) 23,963/ 18.0 6,170/ 1.2
1995 3,179/ 10.1 18,254/ 2.1 21,942/ 18.3 2,000/ 0.4
1994 2,791/ 9.6 13,484/ 1.8 17,042/ 15.6 10,300/ 2.4
- -----------------------------------------------------------------------------------------------------------------------------------
Growth:
(Most Recent Year / 5 yr. CAGR)
Sales (0.9)/ 0.4% 6.5/ 5.0% 14.9/ 9.6% 2.9/ 7.0%
Operating Income (13.2)/ (12.3) 104.3/ 31.2 16.1/ 15.3 46.1/ N/A
Operating Cash Flow (8.4)/ (7.6) 59.1/ 42.4 17.8/ 14.8 22.6/ N/A
Net Income (16.0)/ (10.5) N/A/ 29.2 23.6/ 12.7 64.9/ 22.8
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
PROJECT MICROWAVE EXHIBIT 6
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES PAGE 7 OF 10
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- -----------------------------------
BALANCE SHEET DATA
- -----------------------------------
CEM Mettler-Toledo Varian,.
Corporation International Dionex Corporation Inc
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Assets - Most Recent Date $28,556 $806,892 $ 146,674 $424,945
-1998 28,298 820,441 107,259 404,099
-1997 29,214 749,313 118,163 357,906
-1996 27,584 771,888 113,186 301,000
- -----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity - Most Recent Date $22,095 $ 79,625 $ 95,738 $187,866
-1998 21,719 53,835 70,689 243,467
-1997 23,480 25,399 84,163 203,296
-1996 22,351 12,426 82,204 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Return on Assets and
Return on Common Equity ROA ROCE ROA ROCE ROA ROCE ROA ROCE
-1998 8.6% 11.2% 4.6% 69.9% 26.7% 40.5% 5.8 % 9.6%
-1997 6.3 7.8 (3.2) (94.1) 22.2 31.2 4.0 7.0
-1996 10.5 13.0 (18.7) (1,163.6) 21.2 29.2 2.0 N/M
- -----------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY, LEVERAGE, AND COVERAGE RATIOS
Current Ratio - Most Recent Date 3.6x 1.2x 1.8x 1.6 x
Quick Ratio - Most Recent Date 2.7 0.8 1.5 1.2
LTD/SH Equity - Most Recent Date 0.01x 3.81x 0.01x 0.26 x
Third-Party Debt/SH Equity - Most Recent Date 0.06 4.41 0.02 0.39
Total Liabilities/SH Equity - Most Recent Date 0.29 9.13 0.53 1.26
LTD/OCF - Most Recent Date 0.04x 2.46x 0.02x 1.25 x
Third Party Debt/OCF - Most Recent Date 0.31 2.85 0.03 1.86
Interest Coverage - 1998 N/Ax 3.6x N/Ax N/A x
Fixed Charge Coverage - 1998 N/A 3.6 N/A N/A
Avg. Capex/Avg. Sales 3.8% 2.9% 2.6% 3.5%
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL STRUCTURE
Short-Term Debt $ 1,066 4.7% $ 48,051 9.5% $ 796 0.8% $ 24,050 9.6%
======= ====== ======== ========= ========= ====== ======== =====
Long-Term Debt $ 173 0.8% $303,435 59.7% $ 990 0.9% $ 49,517 19.8%
------- ------ -------- --------- --------- ------ -------- -----
Noncurrent Liabilities 471 2.1 124,985 24.6 $ 8,506 8.1 12,365 5.0
------- ------ -------- --------- --------- ------ -------- -----
Stockholders' Equity
Preferred Stock 0 0.0 0 0.0 0 0.0 0 0.0
Common Stock 22,095 97.2 79,625 15.7 95,738 91.0 187,866 75.2
------- ------ -------- --------- --------- ------ -------- -----
Total Stockholders' Equity 22,095 97.2 79,625 15.7 95,738 91.0 187,866 75.2
------- ------ -------- --------- --------- ------ -------- -----
Total Capitalization $22,739 100.0% $508,045 100.0% $ 105,234 100.0% $249,748 100.0%
======= ====== ======== ========= ========= ====== ======== =====
</TABLE>
<PAGE> 68
EXHIBIT 6
PAGE 8 OF 10
------------------------------------------------------------
PROJECT MICROWAVE
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Company CEM Corporation Thermoquest Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
Business Description Develops, manufacturers, sells and Develops and distributes mass
services microwave-based spectrometers, liquid
instrumentation for testing, chromatographs & gas
analysis and process control in chromatographs used primarily in
analytical laboratory and industrial analyzing chemical compounds at
markets. ultratrace levels.
- -----------------------------------------------------------------------------------------------------------------------------------
Where Traded (Ticker) NASD (CEMX) AMSE (TMQ)
- ----------------------------------------------------------------------------------------------------------------------------------
Latest Annual Data June 30, 1999 December 31, 1998
Latest Quarterly Data June 30, 1999 June 30, 1999
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------
MARKET VALUATION (as of 10/27/99)
- ----------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Market Price per Share
Current $5.7500 10.3750
1999 Range 5.5000 - 10.1250 9.8750 - 14.5000
1998 Range 5.5000 - 10.1250 6.4375 - 19.9531
- ----------------------------------------------------------------------------------------------------------------------------------
Total Shares Outstanding 3,043 50,573
Total Market Value of Common Equity $17,500 $524,696
Total Market Value as a % of Book Value 79.2% 124.6%
P/E Ratio - Latest Twelve Months Data 8.7x 13.5x
- Based on Current Fiscal Year Estimate (*) 8.7x 12.2x
- Based on Next Fiscal Year Estimate (*) N/Ax N/Ax
Total Adj. Market Value $8,966 $451,648
Total Adj. Market Value / L12M Sales 0.28x 1.02x
Total Adj. MV / L12M Operating Income 3.4x 6.5x
Total Adj. MV / L12M Operating Cash Flow (**) 2.3x 5.3x
Total Adj. MV / (L12M OCF - 3 Yr. Avg. Capex) 3.2x 5.7x
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Footnotes:
(*) Based on the Institutional Brokers Estimate System (I/B/E/S).
(**) Operating Cash Flow is defined as operating income plus
depreciation and amortization.
<PAGE> 69
EXHIBIT 6
PAGE 9 OF 10
------------------------------------------------------------
PROJECT MICROWAVE
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------
INCOME STATEMENT DATA
- -------------------------
CEM Corporation Thermoquest Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales
Latest 12 Months $32,077 $440,915
1998 32,362 433,684
1997 30,075 438,863
1996 31,477 313,793
1995 31,611 241,909
1994 29,040 223,396
- ----------------------------------------------------------------------------------------------------------------------------------
Gross Profit (% of Sales)
Latest 12 Months $16,967/ 52.9% $209,676/ 47.6%
1998 17,332/ 53.6 208,327/ 48.0
1997 16,594/ 55.2 208,903/ 47.6
1996 18,381/ 58.4 146,355/ 46.6
1995 18,270/ 57.8 121,185/ 50.1
1994 17,041/ 58.7 110,799/ 49.6
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses (% of Sales)
Latest 12 Months $14,320/ 44.6 % $139,923/ 31.7%
1998 14,283/ 44.1 138,909/ 32.0
1997 14,216/ 47.3 135,922/ 31.0
1996 14,245/ 45.3 99,192/ 31.6
1995 13,791/ 43.6 84,010/ 34.7
1994 12,991/ 44.7 77,317/ 34.6
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income (% of Sales)
Latest 12 Months $2,647/ 8.3% $69,753/ 15.8%
1998 3,049/ 9.4 69,418/ 16.0
1997 2,378/ 7.9 72,981/ 16.6
1996 4,136/ 13.1 47,163/ 15.0
1995 4,479/ 14.2 37,175/ 15.4
1994 4,050/ 13.9 33,482/ 15.0
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Cash Flow (% of Sales)
Latest 12 Months $3,946/ 12.3% $84,627/ 19.2%
1998 4,310/ 13.3 84,426/ 19.5
1997 3,494/ 11.6 87,266/ 19.9
1996 5,188/ 16.5 56,766/ 18.1
1995 5,406/ 17.1 45,572/ 18.8
1994 4,971/ 17.1 41,872/ 18.7
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income (% of Sales)
Latest 12 Months $2,036/ 6.3% $44,012/ 10.0%
1998 2,424/ 7.5 43,410/ 10.0
1997 1,837/ 6.1 41,805/ 9.5
1996 2,908/ 9.2 28,023/ 8.9
1995 3,179/ 10.1 21,002/ 8.7
1994 2,791/ 9.6 18,526/ 8.3
- ----------------------------------------------------------------------------------------------------------------------------------
Growth:
(Most Recent Full Fiscal Year / 5 yr. CAGR)
Sales 7.6/ 2.7% (1.2)/ 18.0%
Operating Income 28.2/ (6.9) (4.9)/ 20.0
Operating Cash Flow 23.4/ (3.5) (3.3)/ 19.2
Net Income 32.0/ (3.5) 3.8 / 23.7
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 70
EXHIBIT 6
PAGE 10 OF 10
------------------------------------------------------------
PROJECT MICROWAVE
COMPARISON TO SELECTED PUBLICLY HELD COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------
BALANCE SHEET DATA
- ---------------------------
<S> <C> <C>
CEM Corporation Thermoquest Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets - Most Recent Date $28,556 $624,986
-1998 28,298 643,242
-1997 29,214 595,626
-1996 27,584 535,070
- ----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity - Most Recent Date $22,095 $421,045
-1998 21,719 417,001
-1997 23,480 370,779
-1996 22,351 303,014
- ----------------------------------------------------------------------------------------------------------------------------------
Return on Assets and
Return on Common Equity ROA ROCE ROA ROCE
-1998 8.6% 11.2% 6.7% 10.4%
-1997 6.3 7.8 7.0 11.3
-1996 10.5 13.0 5.2 9.2
- ----------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY, LEVERAGE, AND COVERAGE RATIOS
- ----------------------------------------
Current Ratio - Most Recent Date 3.6x 3.0x
Quick Ratio - Most Recent Date 2.7 2.4
LTD / SH Equity - Most Recent Date 0.01x 0.16x
Third-Party Debt / SH Equity - Most Recent Date 0.06 0.17
Total Liabilities / SH Equity - Most Recent Date 0.29 0.48
LTD / OCF - Most Recent Date 0.04x 0.80x
Third Party Debt / OCF - Most Recent Date 0.31 0.86
Interest Coverage - 1998 N/Ax 11.4x
Fixed Charge Coverage - 1998 N/A 11.4
Avg. Capex / Avg. Sales 3.8% 1.4%
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL STRUCTURE
- -----------------
Short-Term Debt $1,066 4.7% $5,025 1.0%
============ ========= =========== =======
Long-Term Debt $173 0.8% $67,781 13.1%
------------ --------- ----------- -------
Noncurrent Liabilities 471 2.1 29,101 5.6
------------ --------- ------------ -------
Stockholders' Equity
Preferred Stock 0 0.0 0 0.0
Common Stock 22,095 97.2 421,045 81.3
------------ --------- ------------ -------
Total Stockholders' Equity 22,095 97.2 421,045 81.3
------------ --------- ------------ -------
Total Capitalization $22,739 100.0% $517,927 100.0%
============ ========= ============ =======
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 71
EXHIBIT 7
PAGE 1 OF 6
PROJECT MICROWAVE
SUMMARY OF ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Comparable Target Companies(*)
--------------------------------------------------------
CEM Median Range
------- -------- -------------------------------
<S> <C> <C> <C> <C> <C>
Size Prior to Acquisition
- -------------------------
Sales $32,077 $113,057 $39,200 -- $578,262
Operating Income 2,647 10,727 (4,660) -- 41,103
Operating Cash Flow 3,946 17,781 (2,707) 56,487
Net Income 2,036 7,929 2,309 -- 30,566
Total Assets 28,556 94,258 43,881 -- 329,341
Total Stockholders' Equity 22,095 58,083 29,028 -- 138,744
Three-Year Growth
- -----------------
Sales 1.4% 7.2% (7.2)% -- 17.6%
Operating Income (14.1) 0.9 (36.1) -- 20.8
Net Income (8.7) (6.4) (10.1) -- 21.5
Year-to-Year Interim Growth
- ---------------------------
Sales (0.9)% 4.3% (26.9)% -- 41.0%
Operating Income (13.2) 7.2 (59.4) -- 30.4
Net Income (16.0) 8.5 (25.2) -- 35.4
Operating Income Margin
- -----------------------
Three-Year Average 10.2% 11.0% 4.6% -- 16.9%
One Year Prior to Acq. 9.4 10.2 (4.3) -- 18.4
Two Years Prior 7.9 12.6 8.1 -- 15.2
Three Years Prior 13.1 12.4 7.2 -- 21.5
Net Income Margin
- -----------------
Three-Year Average 7.6% 8.5% 3.9% -- 12.3%
One Year Prior to Acq. 7.5 7.1 2.9 -- 14.7
Two Years Prior 6.1 8.7 4.6 -- 10.3
Three Years Prior 9.2 9.8 4.2 -- 12.2
Return on Assets (After-Tax)
- ----------------------------
Three-Year Average 8.5% 14.5% 8.1% -- 12.4%
One Year Prior to Acq. 8.6 8.5 3.4 -- 13.7
Two Years Prior 6.3 8.1 5.6 -- 12.5
Three Years Prior 10.5 11.4 11.3 -- 8.1
Return on Equity (After-Tax)
- ----------------------------
Three-Year Average 10.8% 14.5% 12.8% -- 20.5%
One Year Prior to Acq. 11.2 12.8 6.7 -- 39.0
Two Years Prior 8.2 11.6 9.4 -- 21.9
Three Years Prior 13.0 8.1 14.8 -- 8.1
Balance Sheet Data
- ------------------
Current Ratio 3.6x 2.5x 1.9x -- 6.2x
Quick Ratio 2.7 1.6 1.2 -- 5.4
Long-Term Debt to Stockholders' Equity 0.8% 9.2% 0.0% -- 63.3%
Total Liabilities to Stockholders' Equity 0.3x 0.8x 0.2x -- 1.4x
Cash Flow to Cur. Mat. 3.7 18.8 (1.0) -- 294.5
Acquisition Data
- ----------------
Total Value of Common Equity N/A $151,663 $39,500 -- $425,000
Premium over Common Stock Price N/A N/A% N/A% -- N/A%
Premium over Common Book Value N/A 188.4 23.9 -- 598.1
Price / L12M Net Income N/A 15.8x 10.2x -- 99.8x
Adjusted Market Value N/A $160,003 $38,500 -- $425,000
Adj. MV / L12M Sales N/A 1.5x 0.7x -- 2.7x
Adj. MV / L12M Operating Income N/A 10.0 6.0 -- 32.5
Adj. MV / L12M Operating Cash Flow N/A 7.5 5.1 -- 19.3
</TABLE>
Footnote:
(1) The comparable target companies utilized in calculation of median include:
Hach Company, PE Instruments Division, Instron Corp., Gelman Sciences,
Inc., the Petroleum Analyzers Division of Varlen Instruments, Orion
Research, Inc., Packard Bioscience Corp., Micrion Corp. and Industrial
Scientific, Inc.
<PAGE> 72
PROJECT MICROWAVE EXHIBIT 7
ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS PAGE 2 OF 6
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Company Description CEM PE Instruments Hach Co.
------------------------------------ ---------------------------------- ------------------------------------
<S> <C> <C> <C>
Develops, manufactures, sells, and Develops, manufactures and Designs, manufactures, markets,
services microwave-based markets analytical instruments for and services laboratory
instrumentation for testing, a wide range of industries. The instruments, process analyzers, test
analysis and process control in acquisition was treated as a kits and their associated
analytical laboratory and industrial purchase transaction. consumables. The transaction was
markets. treated as a pooling of interests.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Acquisition Data
- ----------------
Total Value of Common Equity N/A $425,000 $341,761
Premium over Common Stock Price N/A N/M% N/M%
Premium over Common Book Value N/A 206.3% 598.1%
Price / L12M Net Income N/A 13.9x 37.0x
Adjusted Market Value N/A $425,000 $366,508
Adj. MV / L12M Sales N/A 0.73x 2.67x
Adj. MV / L12M Operating Income N/A 10.34x 21.22x
Adj. MV / L12M Operating Cash Flow N/A 7.52x 15.18x
Acquiring Company EG&G Inc. Danaher Corp.
Completion Date May 28, 1999 July 14, 1999
Size Prior to Acquisition
- -------------------------
Total Assets $28,556 $329,341 $102,144
Total Stockholders' Equity 22,095 138,744 48,958
Sales 32,077 578,262 137,023
Operating Income 2,647 41,103 17,274
Operating Cash Flow 3,946 56,487 24,151
Net Income 2,036 30,566 9,240
Year-to-Date / Three-Year Growth
- --------------------------------
Sales (0.9)/ 1.4% (1.9)/N/A% 9.5/ 5.9%
Operating Income (13.2)/(14.1) (5.8)/N/A 7.2/ 0.9
Net Income (16.0)/ (8.7) (23.2)/N/A 1.6/(10.1)
Operating Income Margin
- -----------------------
Three-Year Average 10.2% N/A% 13.6%
One Year Prior to Acq. 9.4 7.4 12.7
Two Years Prior 7.9 N/A 14.2
Three Years Prior 13.1 N/A 14.0
Net Income Margin
- -----------------
Three-Year Average 7.6% N/A% 9.1%
One Year Prior to Acq. 7.5 6.8 7.1
Two Years Prior 6.1 N/A 10.3
Three Years Prior 9.2 N/A 9.8
After-Tax Return on Common Equity
- ---------------------------------
Three-Year Average 10.8% N/A% N/A%
One Year Prior to Acq. 11.2 39.0 9.8
Two Years Prior 8.2 N/A 14.0
Three Years Prior 13.0 N/A N/A
After-Tax Return on Assets
- --------------------------
Three-Year Average 8.5% N/A% N/A%
One Year Prior to Acq. 8.6 12.2 8.9
Two Years Prior 6.3 N/A 11.8
Three Years Prior 10.5 N/A N/A
Balance Sheet Data - Most Recent
- --------------------------------
Current / Quick Ratios 3.6/2.7x 2.0/1.2x 3.6/2.5x
Long-Term Debt to SE 0.8% 0.0% 63.3%
Total Liabilities to SE 0.3x 1.4x 1.1x
Interest Coverage N/Ax N/Mx 8.8x
Oper. Cash Flow to Cur. Mat. /
Total Third-Party Debt 3.7/3.2x N/M/N/Mx 294.5/0.8x
</TABLE>
<PAGE> 73
PROJECT MICROWAVE EXHIBIT 7
ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS PAGE 3 OF 6
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Company Description CEM Instron Gelman Sciences
- ------------------- -------------------------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
Develops, manufactures, sells, and Designs, manufactures, markets, Designs, manufactures and
services microwave-based and services materials testing markets a broad line of specialty
instrumentation for testing, systems. The company was taken microfiltration products for the
analysis and process control in private. separation and purification of
analytical laboratory and industrial liquids and gases. The transaction
markets. was treated as a pooling of
interests.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Acquisition Data
- ----------------
Total Value of Common Equity N/A $151,663 $233,357
Premium over Common Stock Price N/A N/M% (14.6)%
Premium over Common Book Value N/A 84.5% 270.1%
Price / L12M Net Income N/A 16.5x 99.8x
Adjusted Market Value N/A $160,003 $232,538
Adj. MV / L12M Sales N/A 0.75x 2.06x
Adj. MV / L12M Operating Income N/A 10.67x 32.50x
Adj. MV / L12M Operating Cash Flow N/A 6.94x 19.33x
Acquiring Company Kirtland Capital/Management Pall Corporation
Completion Date September 29, 1999 February, 1997
Size Prior to Acquisition
- -------------------------
Total Assets $28,556 $152,591 $ 86,372
Stockholders' Equity 22,095 82,190 63,051
Sales 32,077 212,404 113,057
Operating Income 2,647 15,001 7,156
Operating Cash Flow 3,946 23,070 12,028
Net Income 2,036 9,197 2,338
Year-to-Date / Three-Year Growth
- --------------------------------
Sales (0.9)/ 1.4% 41.0/ 9.3% 3.7/ 8.6%
Operating Income (13.2)/(14.1) 7.3/ 15.5 (59.4)/(1.4)
Net Income (16.0)/ (8.7) (25.2)/(8.5) N/M/ 20.2
Operating Income Margin
- -----------------------
Three-Year Average 10.2% 7.7% 9.3%
One Year Prior to Acq. 9.4 8.0 7.9
Two Years Prior 7.9 8.1 10.5
Three Years Prior 13.1 7.2 9.5
Net Income Margin
- -----------------
Three-Year Average 7.6% 3.9% 6.0%
One Year Prior to Acq. 7.5 2.9 6.4
Two Years Prior 6.1 4.6 6.4
Three Years Prior 9.2 4.2 5.2
After-Tax Return on Common Equity
- ---------------------------------
Three-Year Average 10.8% N/A% N/A%
One Year Prior to Acq. 11.2 6.7 11.0
Two Years Prior 8.2 10.8 11.3
Three Years Prior 13.0 N/A N/A
After-Tax Return on Assets
- --------------------------
Three-Year Average 8.5% N/A% N/A%
One Year Prior to Acq. 8.6 3.4 8.1
Two Years Prior 6.3 6.0 8.1
Three Years Prior 10.5 N/A N/A
Balance Sheet Data - Most Recent
- --------------------------------
Current / Quick Ratios 3.6/2.7x 1.9/ 1.2x 4.1/ 3.2x
Long-Term Debt to SE 0.8% 8.1% 12.4%
Total Liabilities to SE 0.3x 0.9x 0.4x
Interest Coverage N/Ax 30.4x 0.1x
Oper. Cash Flow to Cur. Mat. /
Total Third-Party Debt 3.7/3.2x 2.3/ 1.4x 75.6/ 1.5x
</TABLE>
<PAGE> 74
PROJECT MICROWAVE EXHIBIT 7
ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS PAGE 4 OF 6
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Company Description CEM Petroleum Analyzers Division Orion Research, Inc.
- ------------------- ------------------------------------ ---------------------------------- ----------------------------------
<S> <C> <C> <C>
Develops, manufactures, sells, and Part of Varlen Corp.'s Instruments Manufactures electrochemistry
services microwave-based Division. Designs, manufactures systems that are used primarily in
instrumentation for testing and markets analytical instruments the environmental, food, beverage,
analysis and process control in used in petroleum refineries, and chemical, biomedical research and
analytical laboratory and industrial by transporters and end-users of pharmaceutical industries.
markets. petroleum products.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Acquisition Data
- ----------------
Total Value of Common Equity N/A $39,500 $65,797
Premium over Common Stock Price N/A N/M% N/M%
Premium over Common Book Value N/A N/A% 23.9%
Price / L12M Net Income N/A N/Mx 10.2x
Adjusted Market Value N/A $38,500 $64,180
Adj. MV / L12M Sales N/A 0.98x 1.21x
Adj. MV / L12M Operating Income N/A 9.63x 5.98x
Adj. MV / L12M Operating Cash Flow N/A N/Ax 5.14x
Acquiring Company Roper Industries Thermedics Detection, Inc.
Completion Date June 21, 1999 May 6, 1998
Size Prior to Acquisition
- -------------------------
Total Assets $28,556 N/A $61,570
Stockholders' Equity 22,095 N/A 53,114
Sales 32,077 39,200 53,054
Operating Income 2,647 4,000 10,727
Operating Cash Flow 3,946 N/A 12,492
Net Income 2,036 N/A 6,436
Year-to-Date / Three-Year Growth
- --------------------------------
Sales (0.9)/ 1.4% 3.4/ (7.2)% 4.3/ 4.8%
Operating Income (13.2)/(14.1) (14.9)/(36.1) 30.4/(3.8)
Net Income (16.0)/ (8.7) N/M/N/A 30.4/(6.4)
Operating Income Margin
Three-Year Average 10.2% 14.7% 16.9%
One Year Prior to Acq. 9.4 10.2 16.2
Two Years Prior 7.9 12.4 15.2
Three Years Prior 13.1 21.5 19.2
Net Income Margin
- -----------------
Three-Year Average 7.6% N/A% 10.4%
One Year Prior to Acq. 7.5 N/A 9.7
Two Years Prior 6.1 N/A 9.3
Three Years Prior 9.2 N/A 12.2
After-Tax Return on Common Equity
- ---------------------------------
Three-Year Average 10.8% N/A% N/A%
One Year Prior to Acq. 11.2 N/A N/A
Two Years Prior 8.2 N/A N/A
Three Years Prior 13.0 N/A N/A
After-Tax Return on Assets
- --------------------------
Three-Year Average 8.5% N/A% 12.4%
One Year Prior to Acq. 8.6 N/A 7.9
Two Years Prior 6.3 N/A 7.0
Three Years Prior 10.5 N/A 22.4
Balance Sheet Data - Most Recent
- --------------------------------
Current / Quick Ratios 3.6/2.7x N/A/N/Ax 2.1/1.3x
Long-Term Debt to SE 0.8% N/M% 0.0%
Total Liabilities to SE 0.3x N/Mx 0.2x
Interest Coverage N/Ax N/Mx N/Mx
Oper. Cash Flow to Cur. Mat. /
Total Third-Party Debt 3.7/3.2x N/M/N/Mx N/M/N/Mx
</TABLE>
<PAGE> 75
PROJECT MICROWAVE EXHIBIT 7
ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS PAGE 5 OF 6
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Company Description CEM Packard Bioscience Co. Micrion Corp.
- ------------------- ------------------------------------ --------------------------------- ------------------------------------
<S> <C> <C> <C>
Develops, manufactures, sells, Develops, manufactures and Manufactures and markets focused-
and services microwave-based markets analytical instruments ion-beam (FIB) systems that are
instrumentation for testing, for use in the life sciences and used in the design, fabrication and
analysis and process control in nuclear instrumentation industries. testing of semiconductor
analytical laboratory and industrial The company was recapitalized. integrated circuits (ICs) and other
markets. high technology devices.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Acquisition Data
- ----------------
Total Value of Common Equity N/A $297,800 $68,501
Premium over Common Stock Price N/A N/M% N/M%
Premium over Common Book Value N/A 269.5% 136.0%
Price / L12M Net Income N/A 15.1x 29.7x
Adjusted Market Value N/A $279,466 $73,842
Adj. MV / L12M Sales N/A 1.52x 1.46x
Adj. MV / L12M Operating Income N/A 8.85x N/Mx
Adj. MV / L12M Operating Cash Flow N/A 7.61x N/Mx
Acquiring Company Stonington Partners FEI
Completion Date March 4, 1997 August 16, 1999
Size Prior to Acquisition
- -------------------------
Total Assets $28,556 $137,925 $52,258
Stockholders' Equity 22,095 80,593 29,028
Sales 32,077 184,018 50,688
Operating Income 2,647 31,579 (4,660)
Operating Cash Flow 3,946 36,714 (2,707)
Net Income 2,036 19,778 2,309
Year-to-Date / Three-Year Growth
- --------------------------------
Sales (0.9)/ 1.4% 8.8/ 3.9% (26.9)/17.6%
Operating Income (13.2)/(14.1) 27.6/20.8 N/M/ N/M
Net Income (16.0)/ (8.7) 35.4/ 7.0 N/M/ (9.5)
Operating Income Margin
- -----------------------
Three-Year Average 10.2% 12.8% 4.6%
One Year Prior to Acq. 9.4 14.6 (4.3)
Two Years Prior 7.9 12.9 8.9
Three Years Prior 13.1 10.8 9.1
Net Income Margin
- -----------------
Three-Year Average 7.6% 8.5% 8.1%
One Year Prior to Acq. 7.5 8.6 7.0
Two Years Prior 6.1 8.7 5.4
Three Years Prior 9.2 8.1 11.9
After-Tax Return on Common Equity
- ---------------------------------
Three-Year Average 10.8% 20.5% 12.8%
One Year Prior to Acq. 11.2 20.2 12.8
Two Years Prior 8.2 21.9 9.4
Three Years Prior 13.0 19.4 16.0
After-Tax Return on Assets
- --------------------------
Three-Year Average 8.5% 12.0% 8.1%
One Year Prior to Acq. 8.6 12.1 7.4
Two Years Prior 6.3 12.5 5.6
Three Years Prior 10.5 11.3 11.3
Balance Sheet Data - Most Recent
- --------------------------------
Current / Quick Ratios 3.6/2.7x 2.2/ 1.8x 2.8/ 1.5x
Long-Term Debt to SE 0.8% 2.5% 18.4%
Total Liabilities to SE 0.3x 0.7x 0.8x
Interest Coverage N/Ax 267.3x N/Mx
Oper. Cash Flow to Cur. Mat. /
Total Third-Party Debt 3.7/3.2x 8.4/ 12.8x (1.0)/ N/Mx
</TABLE>
<PAGE> 76
PROJECT MICROWAVE EXHIBIT 7
ANALYSIS OF SELECTED MERGERS AND ACQUISITIONS PAGE 6 OF 6
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Company Description CEM Industrial Scientific
- ------------------- ------------------------------------ -----------------------------------
<S> <C> <C>
Develops, manufactures, sells, and Designs, manufactures, markets,
services microwave-based and services instruments for
instrumentation for testing, detecting, measuring and
analysis and process control in monitoring a wide variety of gases.
analytical laboratory and industrial The company was taken private.
markets.
</TABLE>
<TABLE>
<S> <C> <C>
Acquisition Data
- ----------------
Total Value of Common Equity N/A $96,303
Premium over Common Stock Price N/A N/M%
Premium over Common Book Value N/A 170.6%
Price / L12M Net Income N/A 14.5x
Adjusted Market Value N/A $76,420
Adj. MV / L12M Sales N/A 1.76x
Adj. MV / L12M Operating Income N/A 8.51x
Adj. MV / L12M Operating Cash Flow N/A 6.98x
Acquiring Company Industrial Scientific Acquisition Corp.
Completion Date May 21, 1999
Size Prior to Acquisition
- -------------------------
Total Assets $28,556 $43,881
Stockholders' Equity 22,095 35,592
Sales 32,077 43,519
Operating Income 2,647 8,982
Operating Cash Flow 3,946 10,942
Net Income 2,036 6,661
Year-to-Date / Three-Year Growth
- --------------------------------
Sales (0.9)/ 1.4% 8.7/ 9.4%
Operating Income (13.2)/(14.1) 27.7/16.3
Net Income (16.0)/ (8.7) 15.4/21.5
Operating Income Margin
- -----------------------
Three-Year Average 10.2% 16.2%
One Year Prior to Acq. 9.4 18.4
Two Years Prior 7.9 13.9
Three Years Prior 13.1 16.3
Net Income Margin
- -----------------
Three-Year Average 7.6% 12.3%
One Year Prior to Acq. 7.5 14.7
Two Years Prior 6.1 10.2
Three Years Prior 9.2 11.9
After-Tax Return on Common Equity
- ---------------------------------
Three-Year Average 10.8% 14.5%
One Year Prior to Acq. 11.2 16.9
Two Years Prior 8.2 12.0
Three Years Prior 13.0 14.8
After-Tax Return on Assets
- --------------------------
Three-Year Average 8.5% 11.6%
One Year Prior to Acq. 8.6 13.7
Two Years Prior 6.3 9.5
Three Years Prior 10.5 11.5
Balance Sheet Data - Most Recent
- --------------------------------
Current / Quick Ratios 3.6/2.7x 6.2/5.4x
Long-Term Debt to SE 0.8% 10.3%
Total Liabilities to SE 0.3x 0.2x
Interest Coverage N/Ax 61.1x
Oper. Cash Flow to Cur. Mat. /
Total Third-Party Debt 3.7/3.2x 29.2/2.7x
</TABLE>
<PAGE> 77
EXHIBIT 8
Page 1 of 3
PROJECT MICROWAVE
DISCOUNTED CASH FLOW ANALYSIS
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
INCOME STATEMENT: HISTORICAL PROJECTED
------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $31,611 $31,477 $30,075 $ 32,362 $32,077 $ 33,681 $37,049 $40,754 $44,829 $44,829
Cost of Goods Sold 13,341 13,096 13,481 15,030 15,110 15,697 17,082 18,586 20,220 20,220
------------------------------------------------------------------------------------------
Gross Profit 18,270 18,381 16,594 17,332 16,967 17,984 19,967 22,168 24,609 24,609
Operating Expenses 13,791 14,245 14,216 14,284 14,320 14,608 15,638 17,050 18,620 18,695
Pro Forma Private Company Savings (270) (270) (270) (270) (270) 0 0 0 0 0
------------------------------------------------------------------------------------------
Operating Income 4,749 4,406 2,648 3,318 2,917 3,376 4,329 5,118 5,989 5,914
Other (Income) Expense, Net 0 0 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------
EBIT 4,749 4,406 2,648 3,318 2,917 3,376 4,329 5,118 5,989 5,914
Provision for Taxes 32.0% 1,520 1,410 847 1,062 933 1,080 1,385 1,638 1,917 1,893
------------------------------------------------------------------------------------------
UNLEVERED NET INCOME $ 3,229 $ 2,996 $ 1,801 $ 2,256 $ 1,984 $ 2,296 $ 2,944 $ 3,480 $ 4,073 $ 4,022
==========================================================================================
Plus: Depreciation & Amortization $ 927 $ 1,052 $ 1,116 $ 1,261 $ 1,299 $ 1,136 $ 1,019 $ 969 $ 931 $ 1,006
Less: Capital Expenditures 1,028 1,013 1,165 1,119 1,447 800 800 800 800 800
Less: Incremental Working Capital Needs N/A 1,648 (2,141) (3) 365 (415) 630 692 759 0
------------------------------------------------------------------------------------------
UNLEVERED FREE CASH FLOW N/A $ 1,387 $ 3,893 $ 2,401 $ 1,471 $ 3,046 $ 2,532 $ 2,957 $ 3,445 $ 4,228
==========================================================================================
OPERATING ASSUMPTIONS:
Net Sales Growth N/A - 0.4% -4.5% 7.6% - 0.9% 5.0% 10.0% 10.0% 10.0% 0.0%
Gross Profit as % of Sales 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.9% 54.4% 54.9% 54.9%
Operating Expenses as % of Sales 43.6% 45.3% 47.3% 44.1% 44.6% 43.4% 42.2% 41.8% 41.5% 41.7%
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
PROJECT MICROWAVE EXHIBIT 8
DISCOUNTED CASH FLOW ANALYSIS PAGE 2 OF 3
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
Range of Terminal Operating Cash Flow Multiples
Discount ----------------------------------------------------------------
Rate 5.0 x 5.5 x 6.0 x 6.5 x 7.0 x
- ---------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12.00% $11,432 $11,432 $11,432 $11,432 $11,432 Present Value of Cash Flows
19,634 21,597 23,560 25,524 27,487 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- ------- -------
$39,599 $41,562 $43,526 $45,489 $47,453 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======= =======
$13.01 $13.66 $14.30 $14.95 $15.59 Price per share (3,043,443 shares) as of 9/8/99
1.0x 1.0x 1.1x 1.2x 1.2x As a Multiple of 1999 Sales
10.6 11.3 12.0 12.7 13.3 As a Multiple of 1999 Operating Income
7.4 7.8 8.3 8.8 9.2 As a Multiple of 1999 Operating Cash Flow
14.00% $10,852 $10,852 $10,852 $10,852 $10,852 Present Value of Cash Flows
17,971 19,768 21,565 23,362 25,159 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- ------- -------
$37,357 $39,154 $40,951 $42,748 $44,545 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======= =======
$12.27 $12.86 $13.46 $14.05 $14.64 Price per share (3,043,443 shares) as of 9/8/99
0.9x 1.0x 1.0x 1.1x 1.1x As a Multiple of 1999 Sales
9.9 10.5 11.1 11.7 12.3 As a Multiple of 1999 Operating Income
6.8 7.3 7.7 8.1 8.5 As a Multiple of 1999 Operating Cash Flow
16.00% $10,318 $10,318 $10,318 $10,318 $10,318 Present Value of Cash Flows
16,474 18,121 19,769 21,416 23,064 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- ------- -------
$35,326 $36,973 $38,621 $40,268 $41,916 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======= =======
$11.61 $12.15 $12.69 $13.23 $13.77 Price per share (3,043,443 shares) as of 9/8/99
0.8x 0.9x 0.9x 1.0x 1.0x As a Multiple of 1999 Sales
9.2 9.7 10.3 10.9 11.4 As a Multiple of 1999 Operating Income
6.4 6.7 7.1 7.5 7.9 As a Multiple of 1999 Operating Cash Flow
18.00% $9,825 $9,825 $9,825 $9,825 $9,825 Present Value of Cash Flows
15,124 16,637 18,149 19,662 21,174 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- ------- -------
$33,483 $34,996 $36,508 $38,021 $39,533 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======= =======
$11.00 $11.50 $12.00 $12.49 $12.99 Price per share (3,043,443 shares) as of 9/8/99
0.8x 0.8x 0.9x 0.9x 1.0x As a Multiple of 1999 Sales
8.6 9.1 9.6 10.1 10.6 As a Multiple of 1999 Operating Income
5.9 6.3 6.6 7.0 7.4 As a Multiple of 1999 Operating Cash Flow
</TABLE>
Footnote:
1. Assumes an additional $646M cash from operations for the first quarter of
fiscal year 2000.
<PAGE> 79
EXHIBIT 8
Page 3 of 3
<TABLE>
<CAPTION>
WORKING CAPITAL ANALYSIS: HISTORICAL PROJECTED
----------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $6,733 $ 7,061 $ 5,990 $ 6,616 $ 6,634 $ 5,131 $5,644 $6,208 $6,829 $6,829
Days of Sales 77.7 81.9 72.7 74.6 75.5 55.6 55.6 55.6 55.6 55.6
Increase (Decrease) N/A 328 (1,071) 626 18 (1,503) 513 564 621 0
Inventories $4,997 $ 5,639 $ 5,139 $ 5,675 $ 5,335 $ 5,806 $6,318 $6,874 $7,479 $7,479
Days of COGS 136.7 157.2 139.1 137.8 128.9 135.0 135.0 135.0 135.0 135.0
Increase (Decrease) N/A 642 (500) 536 (340) 471 512 556 604 0
Prepaid Expenses and Other $ 658 $ 679 $ 742 $ 488 $ 964 $ 964 $ 964 $ 964 $ 964 $ 964
As a % of Sales 2.1% 2.2% 2.5% 1.5% 3.0% 2.9% 2.6% 2.4% 2.2% 2.2%
Increase (Decrease) N/A 21 63 (254) 476 0 0 0 0 0
Accounts Payable $1,003 $ 990 $ 1,095 $ 1,491 $ 1,318 $ 1,158 $1,260 $1,371 $1,492 $1,492
Days of COGS 27.4 27.6 29.6 36.2 31.8 26.9 26.9 26.9 26.9 26.9
Increase (Decrease) N/A (13) 105 396 (173) (160) 102 111 121 0
Accrued Liabilities $3,179 $ 2,317 $ 2,728 $ 3,238 $ 3,433 $ 3,017 $3,283 $3,572 $3,886 $3,886
As a % of COGS 23.8% 17.7% 20.2% 21.5% 22.7% 19.2% 19.2% 19.2% 19.2% 19.2%
Increase (Decrease) N/A (862) 411 510 195 (416) 266 289 314 0
Other Current Liabilities $ 237 $ 455 $ 572 $ 577 $ 344 $ 302 $ 329 $ 358 $ 389 $ 389
Days of COGS 6.5 12.7 15.5 14.0 8.3 7.0 7.0 7.0 7.0 7.0
Increase (Decrease) N/A 218 117 5 (233) (42) 27 29 31 0
- -----------------------------------------------------------------------------------------------------------------------------------
Total Incremental Working Capital
Needs N/A $ 1,648 ($2,141) $ (3) $ 365 $ (415) $ 630 $ 692 $ 759 $ 0
===================================================================================================================================
</TABLE>
<PAGE> 80
EXHIBIT 8
PAGE 1 OF 3
PROJECT MICROWAVE
DISCOUNTED CASH FLOW ANALYSIS
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PROJECTED
-------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT:
- -----------------
Net Sales $31,611 $31,477 $30,075 $32,362 $32,077 $33,681 $37,049 $40,754 $44,829 $44,829
Cost of Goods Sold 13,341 13,096 13,481 15,030 15,110 15,697 17,082 18,586 20,220 20,220
--------------------------------------------------------------------------------------------
Gross Profit 18,270 18,381 16,594 17,332 16,967 17,984 19,967 22,168 24,609 24,809
Operating Expenses 13,791 14,245 14,216 14,284 14,320 14,608 15,638 17,050 18,620 18,695
Pro Forma Private Company Savings (270) (270) (270) (270) (270) 0 0 0 0 0
--------------------------------------------------------------------------------------------
Operating Income 4,749 4,406 2,648 3,318 2,917 3,376 4,329 5,118 5,989 5,914
Other (Income) Expense, Net 0 0 0 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------
EBIT 4,749 4,406 2,648 3,318 2,917 3,376 4,329 5,118 5,989 5,914
Provision for Taxes 32.0% 1,520 1,410 847 1,062 933 1,080 1,385 1,638 1,917 1,893
--------------------------------------------------------------------------------------------
UNLEVERED NET INCOME $ 3,229 $ 2,996 $1,801 $2,256 $ 1,984 $ 2,296 $ 2,944 $ 3,480 $ 4,073 $ 4,022
============================================================================================
Plus: Depreciation & Amortization $ 927 $ 1,052 $1,116 $ 1,261 $ 1,299 $ 1,136 $ 1,019 $ 969 $ 931 $ 1,006
Less: Capital Expenditures 1,028 1,013 1,165 1,119 1,447 800 800 800 800 800
Less: Incremental Working Capital
Needs N/A 1,648 (2,141) (3) 365 (415) 630 692 759 0
--------------------------------------------------------------------------------------------
UNLEVERED FREE CASH FLOW N/A $ 1,387 $3,893 $ 2,401 $ 1,471 $ 3,046 $ 2,532 $ 2,957 $ 3,445 $ 4,228
============================================================================================
OPERATING ASSUMPTIONS:
- ----------------------
Net Sales Growth N/A -0.4% -4.5% 7.6% -0.9% 5.0% 10.0% 10.0% 10.0% 0.0%
Gross Profit as % of Sales 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.9% 54.5% 54.9% 54.9%
Operating Expenses as % of Sales 43.6% 45.3% 47.3% 44.1% 44.6% 43.4% 42.2% 41.8% 41.5% 41.7%
</TABLE>
<PAGE> 81
PROJECT MICROWAVE EXHIBIT 8
DISCOUNTED CASH FLOW ANALYSIS PAGE 2 OF 3
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Range of Terminal Operating Cash Flow Multiples
Discount --------------------------------------------------------
Rate 5.0 x 5.5 x 6.0 x 6.5 x 7.0x
- ---------- --------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12.00% $ 11,432 $ 11,432 $ 11,432 $11,432 $11,432 Present Value of Cash Flows
19,634 21,597 23,560 25,524 27,487 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
-------- -------- -------- ------- -------
$ 39,599 $ 41,562 $ 43,526 $45,489 $47,453 TOTAL PRESENT VALUE OF EQUITY
======== ======== ======== ======== =======
$ 13.01 $ 13.66 $ 14.30 $ 14.95 $ 15.59 Price per share (3,043,443 shares) as of 9/8/99
1.0x 1.0x 1.1x 1.2x 1.2x As a Multiple of 1999 Sales
10.6 11.3 12.0 12.7 13.3 As a Multiple of 1999 Operating Income
7.4 7.8 8.3 8.8 9.2 As a Multiple of 1999 Operating Cash Flow
14.00% $ 10,852 $ 10,852 $ 10,852 $10,852 $10,852 Present Value of Cash Flows
17,971 19,768 21,565 23,362 25,159 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
-------- -------- -------- ------- -------
$ 37,357 $ 39,154 $ 40,951 $42,748 $44,545 TOTAL PRESENT VALUE OF EQUITY
======== ======== ======== ======= =======
$ 12.27 $ 12.86 $ 13.46 $ 14.05 $ 14.64 Price per share (3,043,443 shares) as of 9/8/99
0.9x 1.0x 1.0x 1.1x 1.1x As a Multiple of 1999 Sales
9.9 10.5 11.1 11.7 12.3 As a Multiple of 1999 Operating Income
6.8 7.3 7.7 8.1 8.5 As a Multiple of 1999 Operating Cash Flow
16.00% $ 10,318 $ 10,318 $ 10,318 $10,318 $10,318 Present Value of Cash Flows
16,474 18,121 19,769 21,416 23,064 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
-------- -------- -------- ------- -------
$ 35,326 $ 36,973 $ 38,621 $40,268 $41,916 TOTAL PRESENT VALUE OF EQUITY
======== ======== ======== ======= =======
$ 11.61 $ 12.15 $ 12.69 $ 13.23 $ 13.77 Price per share (3,043,443 shares) as of 9/8/99
0.8x 0.9x 0.9x 1.0x 1.0x As a Multiple of 1999 Sales
9.2 9.7 10.3 10.9 11.4 As a Multiple of 1999 Operating Income
6.4 6.7 7.1 7.5 7.9 As a Multiple of 1999 Operating Cash Flow
18.00% $ 9,825 $ 9,825 $ 9,825 $ 9,825 $ 9,825 Present Value of Cash Flows
15,124 16,637 18,149 19,662 21,174 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
-------- -------- -------- ------- -------
$ 33,483 $ 34,996 $ 36,508 $38,021 $39,533 TOTAL PRESENT VALUE OF EQUITY
======== ======== ======== ======= =======
$ 11.00 $ 11.50 $ 12.00 $ 12.49 $ 12.99 Price per share (3,043,443 shares) as of 9/8/99
0.8x 0.8x 0.9x 0.9x 1.0x As a Multiple of 1999 Sales
8.6 9.1 9.6 10.1 10.6 As a Multiple of 1999 Operating Income
5.9 6.3 6.6 7.0 7.4 As a Multiple of 1999 Operating Cash Flow
</TABLE>
Footnote:
(1) Assumes an additional $646M cash from operations for the first quarter of
fiscal year 2000.
<PAGE> 82
EXHIBIT 8
PAGE 3 OF 3
PROJECT MICROWAVE
DISCOUNTED CASH FLOW ANALYSIS
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PROJECTED
---------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WORKING CAPITAL ANALYSIS:
Accounts Receivable $6,733 $7,061 $ 5,990 $6,616 $6,634 $ 5,131 $5,644 $6,208 $6,829 $6,829
Days of Sales 77.7 81.9 72.7 74.6 75.5 55.6 55.6 55.6 55.6 55.6
Increase (Decrease) N/A 328 (1,071) 626 18 (1,503) 513 564 621 0
Inventories $4,997 $5,639 $ 5,139 $5,675 $5,335 $ 5,806 $6,318 $6,874 $7,479 $7,479
Days of COGS 136.7 157.2 139.1 137.8 128.9 135.0 135.0 135.0 135.0 135.0
Increase (Decrease) N/A 642 (500) 536 (340) 471 512 556 604 0
Prepaid Expenses and Other $658 $ 679 $ 742 $488 $964 $964 $964 $ 964 $964 $964
As a % of Sales 2.1% 2.2% 2.5% 1.5% 3.0% 2.9% 2.6% 2.4% 2.2% 2.2%
Increase (Decrease) N/A 21 63 (254) 476 0 0 0 0 0
Accounts Payable $1,003 $ 990 $ 1,095 $1,491 $1,318 $ 1,158 $1,260 $1,371 $1,492 $1,492
Days of COGS 27.4 27.6 29.6 36.2 31.8 26.9 26.9 26.9 26.9 26.9
Increase (Decrease) N/A (13) 105 396 (173) (160) 102 111 121 0
Accrued Liabilities $3,179 $2,317 $ 2,728 $3,238 $3,433 $ 3,017 $ 3,283 $3,572 $3,886 $3,886
As a % of COGS 23.8% 17.7% 20.2% 21.5% 22.7% 19.2% 19.2% 19.2% 19.2% 19.2%
Increase (Decrease) N/A (862) 411 510 195 (416) 266 289 314 0
Other Current Liabilities $ 237 $ 455 $ 572 $ 577 $ 344 $ 302 $ 329 $ 358 $ 389 $ 389
Days of COGS 6.5 12.7 15.5 14.0 8.3 7.0 7.0 7.0 7.0 7.0
Increase (Decrease) N/A 218 117 5 (233) (42) 27 29 31 0
---------------------------------------------------------------------------------------------
Total Incremental Working Capital
Needs N/A $1,648 $(2,141) $ (3) $ 365 $ (415) $ 630 $ 692 $ 759 $ 0
=============================================================================================
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
PROJECT MICROWAVE EXHIBIT 8
DISCOUNTED CASH FLOW ANALYSIS PAGE 1 OF 3
DOWNSIDE CASE
($ IN THOUSANDS)
INCOME STATEMENT: HISTORICAL PROJECTED
--------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ 31,611 $31,477 $ 30,075 $ 32,362 $32,077 $33,681 $35,365 $35,365 $37,133 $38,990
Cost of Goods Sold 13,341 13,096 13,481 15,030 15,110 15,697 16,370 16,370 17,086 17,831
Gross Profit 18,270 18,381 16,594 17,332 16,967 17,984 18,995 18,995 20,047 21,159
Operating Expenses 13,791 14,245 14,216 14,284 14,320 14,608 14,913 15,174 15,638 16,121
Pro Forma Private Company Savings (270) (270) (270) (270) (270) 0 0 0 0 0
Operating Income 4,749 4,406 2,648 3,318 2,917 3,376 4,081 3,821 4,409 5,038
Other (Income) Expense, Net 0 0 0 0 0 0 0 0 0 0
EBIT 4,749 4,406 2,648 3,318 2,917 3,376 4,081 3,821 4,409 5,038
Provision for Taxes 32.0% 1,520 1,410 847 1,062 933 1,080 1,306 1,223 1,411 1,612
UNLEVERED NET INCOME $ 3,229 $ 2,996 $ 1,801 $ 2,256 $ 1,984 $ 2,296 $ 2,775 $ 2,598 $ 2,998 $ 3,426
Plus: Depreciation & Amortization $ 927 $ 1,052 $ 1,116 $ 1,261 $ 1,299 $ 1,136 $ 1,019 $ 969 $ 931 $ 1,006
Less: Capital Expenditures 1,028 1,013 1,165 1,119 1,447 800 800 800 800 800
Less: Incremental Working Capital
Needs N/A 1,648 (2,141) (3) 365 (415) 314 0 330 346
UNLEVERED FREE CASH FLOW N/A $ 1,387 $ 3,893 $ 2,401 $ 1,471 $ 3,046 $ 2,681 $ 2,767 $ 2,799 $ 3,286
OPERATING ASSUMPTIONS:
Net Sales Growth N/A -0.4% -4.5% 7.6% -0.9% 5.0% 5.0% 0.0% 5.0% 5.0%
Gross Profit as % of Sales 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.7% 53.7% 54.0% 54.3%
Operating Expenses as % of Sales 43.6% 45.3% 47.3% 44.1% 44.6% 43.4% 42.2% 42.9% 42.1% 41.3%
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
PROJECT MICROWAVE Exhibit 8
DISCOUNTED CASH FLOW ANALYSIS Page 2 of 3
DOWNSIDE CASE
($ in Thousands)
Range of Terminal Operating Cash Flow Multiples
Discount ---------------------------------------------------------------
Rate 5.0 x 5.5 x 6.0 x 6.5 x 7.0 x
- ---------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12.00% $10,470 $10,470 $10,470 $ 10,470 $ 10,470 Present Value of Cash Flows
17,149 18,864 20,578 22,293 24,008 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- -------- ---------
$36,153 $37,868 $39,583 $ 41,297 $ 43,012 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======== =========
$ 11.88 $ 12.44 $ 13.01 $ 13.57 $14.13 Price per share (3,043,443 shares) as of 9/8/99
0.9x 0.9x 1.0x 1.0 x 1.1x As a Multiple of 1999 Sales
9.5 10.1 10.6 11.2 11.8 As a Multiple of 1999 Operating Income
6.6 7.0 7.4 7.8 8.2 As a Multiple of 1999 Operating Cash Flow
14.00% $ 9,967 $ 9,967 $ 9,967 $ 9,967 $ 9,967 Present Value of Cash Flows
15,696 17,266 18,836 20,405 21,975 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- -------- ---------
$34,197 $35,767 $37,336 $ 38,906 $ 40,475 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======== =========
$ 11.24 $ 11.75 $ 12.27 $ 12.78 $ 13.30 Price per share (3,043,443 shares) as of 9/8/99
0.8x 0.8x 0.9x 0.9x 1.0x As a Multiple of 1999 Sales
8.8 9.3 9.9 10.4 11.0 As a Multiple of 1999 Operating Income
6.1 6.5 6.8 7.2 7.6 As a Multiple of 1999 Operating Cash Flow
16.00% $ 9,502 $9,502 $9,502 $ 9,502 $ 9,502 Present Value of Cash Flows
14,389 15,828 17,267 18,706 20,145 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- -------- ---------
$32,425 $33,864 $35,302 $ 36,741 $ 38,180 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======== =========
$ 10.65 $ 11.13 $ 11.60 $ 12.07 $ 12.55 Price per share (3,043,443 shares) as of 9/8/99
0.7x 0.8x 0.8x 0.9x 0.9x As a Multiple of 1999 Sales
8.2 8.7 9.2 9.7 10.2 As a Multiple of 1999 Operating Income
5.7 6.0 6.3 6.7 7.0 As a Multiple of 1999 Operating Cash Flow
18.00% $ 9,071 $ 9,071 $ 9,071 $ 9,071 $ 9,071 Present Value of Cash Flows
13,210 14,531 15,852 17,173 18,494 Present Value of Terminal Residual Value
8,534 8,534 8,534 8,534 8,534 Less: Debt Outstanding (less excess cash)(1)
------- ------- ------- -------- ---------
$30,815 $32,136 $33,457 $ 34,778 $ 36,100 TOTAL PRESENT VALUE OF EQUITY
======= ======= ======= ======== =========
$ 10.13 $ 10.56 $ 10.99 $ 11.43 $ 11.86 Price per share (3,043,443 shares) as of 9/8/99
0.7x 0.7x 0.8x 0.8x 0.9x As a Multiple of 1999 Sales
7.6 8.1 8.5 9.0 9.4 As a Multiple of 1999 Operating Income
5.3 5.6 5.9 6.2 6.5 As a Multiple of 1999 Operating Cash FlowA
</TABLE>
Footnote:
1. Assumes an additional $646M cash from operations for the first quarter of
fiscal year 2000.
<PAGE> 85
PROJECT MICROWAVE EXHIBIT 8
DISCOUNTED CASH FLOW ANALYSIS PAGE 3 OF 3
DOWNSIDE CASE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
WORKING CAPITAL ANALYSIS: HISTORICAL PROJECTED
----------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounts Receivable $6,733 $ 7,061 $ 5,990 $ 6,616 $ 6,634 $ 5,131 $5,387 $5,387 $5,656 $5,939
Days of Sales 77.7 81.9 72.7 74.6 75.5 55.6 55.6 55.6 55.6 55.6
Increase (Decrease) N/A 328 (1,071) 626 18 (1,503) 257 0 269 283
Inventories $4,997 $ 5,639 $ 5,139 $ 5,675 $ 5,335 $ 5,806 $6,055 $6,055 $6,319 $6,595
Days of COGS 136.7 157.2 139.1 137.8 128.9 135.0 135.0 135.0 135.0 135.0
Increase (Decrease) N/A 642 (500) 536 (340) 471 249 0 265 275
Prepaid Expenses and Other $ 658 $ 679 $ 742 $ 488 $ 964 $ 964 $ 964 $ 964 $ 964 $ 964
As a % of Sales 2.1% 2.2% 2.5% 1.5% 3.0% 2.9% 2.7% 2.7% 2.6% 2.5%
Increase (Decrease) N/A 21 63 (254) 476 0 0 0 0 0
Accounts Payable $1,003 $ 990 $ 1,095 $ 1,491 $ 1,318 $ 1,158 $1,208 $1,208 $1,261 $1,316
Days of COGS 27.4 27.6 29.6 36.2 31.8 26.9 26.9 26.9 26.9 26.9
Increase (Decrease) N/A (13) 105 396 (173) (160) 50 0 53 55
Accrued Liabilities $3,179 $ 2,317 $ 2,728 $ 3,238 $ 3,433 $ 3,017 $3,146 $3,146 $3,283 $3,427
As a % of COGS 23.8% 17.7% 20.2% 21.5% 22.7% 19.2% 19.2% 19.2% 19.2% 19.2%
Increase (Decrease) N/A (862) 411 510 195 (416) 129 0 138 143
Other Current Liabilities $ 237 $ 455 $ 572 $ 577 $ 344 $ 302 $ 315 $ 315 $ 329 $ 343
Days of COGS 6.5 12.7 15.5 14.0 8.3 7.0 7.0 7.0 7.0 7.0
Increase (Decrease) N/A 218 117 5 (233) (42) 13 0 14 14
----------------------------------------------------------------------------------------------
Total Incremental Working Capital
Needs N?A $ 1,648 $(2,141) $ (3) $ 365 $ $ (415) $ 314 $ 0 $ 330 $ 346
==============================================================================================
</TABLE>
<PAGE> 86
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 1 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<S> <C>
PURCHASE ASSUMPTIONS:
Purchase Price / Share $ 10.05
Number of Shares (000's) as of 9/8/99 3,043
--------
Purchase Price of Equity $ 30,587
Purchase of Options 179
Transaction Costs 750
Repayment of Existing Debt 1,239
Non-Compete Agreement 0
Purchase of Preferred Stock 0
Plus: Required Cash (Excess) (9,773)
Less: Asset Sales 0
--------
Financing Requirements $ 22,982
Purchase Multiples:
Multiple of 1999 EBITDA 5.45x
Multiple of 1999 EBITA 7.88x
Multiple of 2000 EBITDA 5.09x
Multiple of 2000 EBITA 6.81x
</TABLE>
<TABLE>
<CAPTION>
CAPITALIZATION:
% Common
Amount % Total Equity
------------------------------------------
<S> <C> <C> <C>
Senior Term Loan A (real estate) $ 2,000 8.7% 0.0%
Revolving Facility 5,156 22.4% 0.0%
Senior Term Loan B (equipment and cash flow) 5,000 21.8% 0.0%
n/a 0 0.0% 0.0%
-----------------------------------------
Total Senior Debt 12,156 52.9% 0.0%
Mezzanine debt 6,000 26.1% 20.0%
n/a 0 0.0% 0.0%
-----------------------------------------
Total Debt 18,156 79.0% 20.0%
Preferred Stock 0 0.0% 0.0%
Management Equity(1) 4,825 21.0% 80.0%
Investor Equity 0 0.0% 0.0%
-----------------------------------------
Total Capitalization $22,982 100.0% 100.0%
=========================================
</TABLE>
1. Michael Collins: 480,142 shares, 24,750 options as of 9/8/99
<TABLE>
<S> <C>
CALCULATION OF INTANGIBLES:
Purchase Price of Equity $ 30,766
Less: Book Value 22,741
--------
Goodwill 8,025
Years of Amortization 25
--------
Annual Goodwill Expense $ 321
Non-Compete Agreement $ 0
Years of Amortization 15
--------
Annual Non-Compete
Amortization $ 0
Transaction Costs $ 750
Years of Amortization 5
--------
Annual Trans. - Debt Exp $ 150
</TABLE>
<TABLE>
<CAPTION>
Historical - June 30, Projected - June 30,
----------------------------------------------------------------------------------
OPERATING ASSUMPTIONS: 1995 1996 1997 1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SALES GROWTH: N/A -0.4% -4.5% 7.6% -0.9% 5.0% 10.0% 10.0% 10.0%
COGS GROWTH: N/A -1.8% 2.9% 11.5% 0.5% 3.9% 8.8% 8.8% 8.8%
GM AS % OF SALES: 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.9% 54.4% 54.9%
GM AS % OF SALES GROWTH: N/A 0.6% -9.7% 4.4% -2.1% 6.0% 11.0% 11.0% 11.0%
OPERATING EXPENSES GROWTH(1): N/A 2.6% -0.7% -0.6% 0.0% 3.5% 8.5% 10.0% 10.0%
OPERATING EXPENSES % OF SALES: 39.8% 41.1% 42.7% 39.4% 39.8% 40.0% 39.5% 39.5% 39.5%
EBITDA Margin 17.1% 16.5% 12.5% 14.1% 13.1% 13.4% 14.4% 14.9% 15.4%
EBITDA Growth N/A -4.0% -27.4% 21.7% -7.9% 7.0% 18.5% 13.8% 13.7%
CAPITAL EXPENDITURES $1,028 $1,013 $1,165 $1,119 $1,447 $ 800 $ 800 $ 800 $ 800
DEPRECIATION $ 927 $1,052 $1,116 $1,261 $1,299 $1,136 $1,019 $ 969 $ 931
WORKING CAPITAL ASSUMPTIONS:
Accounts Rec. (Days of Sales)(2) 77.7 81.9 72.7 74.6 75.5 55.6 55.6 55.6 55.6
Inventory Days(2) 136.7 157.2 139.1 137.8 128.9 135.0 135.0 135.0 135.0
Accounts Payable (Days of COGS)(3) 27.4 27.6 29.6 36.2 31.8 26.9 26.9 26.9 26.9
Accrued Payroll and Benefits (Days of COGS)(3) 38.5 15.9 24.8 27.1 23.0 19.4 19.4 19.4 19.4
Deferred Income (Days of COGS)(3) 30.1 30.6 28.1 31.1 33.9 28.6 28.6 28.6 28.6
Income Taxes Payable (Days of COGS)(3) 14.6 11.4 13.2 13.1 19.8 16.7 16.7 16.7 16.7
Warranty Reserve (Days of COGS)(3) 3.9 4.9 5.9 5.2 6.3 5.3 5.3 5.3 5.3
Other Current Liabilities (Days of COGS)(3) 6.5 12.7 15.5 14.0 8.3 7.0 7.0 7.0 7.0
Current Liabilities (Days of COGS)(3) 120.9 104.9 119.0 128.9 123.1 104.1 104.1 104.1 104.1
<CAPTION>
Projected - June 30,
-----------------------------------------------------
OPERATING ASSUMPTIONS: 2004 2005 2006 2007 2008 2009
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SALES GROWTH: 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
COGS GROWTH: 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
GM AS % OF SALES: 54.9% 54.9% 54.9% 54.9% 54.9% 54.9%
GM AS % OF SALES GROWTH: 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
OPERATING EXPENSES GROWTH(1): 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
OPERATING EXPENSES % OF SALES: 39.5% 39.5% 39.5% 39.5% 39.5% 39.5%
EBITDA Margin 15.4% 15.4% 15.4% 15.4% 15.4% 15.4%
EBITDA Growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
CAPITAL EXPENDITURES $ 800 $ 800 $ 800 $ 800 $ 800 $ 800
DEPRECIATION $1,006 $ 900 $ 800 $ 800 $ 800 $ 800
WORKING CAPITAL ASSUMPTIONS:
Accounts Rec. (Days of Sales)(2) 55.6 55.6 55.6 55.6 55.6 55.6
Inventory Days(2) 135.0 135.0 135.0 135.0 135.0 135.0
Accounts Payable (Days of COGS)(3) 26.9 26.9 26.9 26.9 26.9 26.9
Accrued Payroll and Benefits (Days of COGS)(3) 19.4 19.4 19.4 19.4 19.4 19.4
Deferred Income (Days of COGS)(3) 28.6 28.6 28.6 28.6 28.6 28.6
Income Taxes Payable (Days of COGS)(3) 16.7 16.7 16.7 16.7 16.7 16.7
Warranty Reserve (Days of COGS)(3) 5.3 5.3 5.3 5.3 5.3 5.3
Other Current Liabilities (Days of COGS)(3) 7.0 7.0 7.0 7.0 7.0 7.0
Current Liabilities (Days of COGS)(3) 104.1 104.1 104.1 104.1 104.1 104.1
</TABLE>
1. Assumes savings from lack of SEC filings will lower Operating Expenses
as a percent of Total Revenues for the fiscal years 2000 and 2001.
2. Due to the seasonality of the business, projections are based on the
average monthly Accounts Receivable and Inventory balances for the
fiscal year ending 1999, ($5,137 and $6,058 respectively), less
projected reductions from the 2000 Business Plan of $250 and $470
respectively.
3. Due to the seasonality of the business, projections are based on the
average monthly Current Liabilities balance for the fiscal year ending
1999 which was $4,309. The components of Current Liabilities (AP,
Accruals, etc.) were allocated based on proportional balances as of
June 30, 1999, since the monthly balances were not available.
<PAGE> 87
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 1a of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
SOURCES AND USES OF FUNDS:
<TABLE>
<CAPTION>
% Common % Pref. Total
Equity Equity Cash Total Contingent
SOURCES OF FUNDS: Amount % Total Owned Owned Coupon Coupon Coupon
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Term A (real estate) $2,000 8.7% 0.0% 0.0% 9.75% 9.75% 9.75%
Term B (equipment and cash flow 5,000 21.8% 0.0% 0.0% 10.25% 10.25% 10.25%
Revolving Facility 5,156 22.4% 0.0% 0.0% 9.25% 9.25% 9.25%
n/a 0 0.0% 0.0% 0.0% 0.00% 0.00% 0.00%
Mezzanine Financing 6,000 26.1% 20.0% 0.0% 13.00% 13.00% 13.00%
n/a 0 0.0% 0.0% 0.0% 0.00% 0.00% 0.00%
Preferred Stock 0 0.0% 0.0% 100.0% 0.00% 35.00% 35.00%
Management Equity(1) 4,825 21.0% 80.0% 0.0% 0.00% 0.00% 0.00%
Investor Equity 0 0.0% 0.0% 0.0% 0.00% 0.00% 0.00%
Asset Sales 0 0.0%
-------------------------
$22,982 100.0% 100.0%
=========================
1. Michael Collins: 480,142 shares, 24,750 options as of 9/8/99
</TABLE>
<TABLE>
<CAPTION>
USES OF FUNDS: Amount
--------
<S> <C>
Purchase Stock $ 30,587
Purchase Options 179
Refinance Existing Third Party Debt 1,239
Redeem Accrued Dividends 0
Non-Compete Agreement 0
Other B 0
Other C 0
Transaction Costs 750
Required Cash (Excess) (9,773)
--------
Total Uses of Funds $ 22,982
========
</TABLE>
<TABLE>
<CAPTION>
RETURNS TO INVESTORS:
Multiple of EBITDA
--------------------------------------------
5.00 5.50 6.00 6.50 7.00
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Terminal Value $27,927 $31,387 $34,847 $38,307 $41,767
% of Projected Value 80.1% 90.1% 100.0% 109.9% 119.9%
</TABLE>
<TABLE>
<CAPTION>
Internal Rate of Return
------------------------------------------
Senior Subordinated Debt (Based on a $0 total equity investment)
% Common % Pref.
<S> <C> <C> <C> <C> <C> <C> <C>
(0=Warrants, 1=Equity Strip) 0 0
Sr. Sub. W/Equity or Warrants: 15.0% 0.0% 22.6% 23.6% 24.5% 25.3% 26.2%
----
20.0% 0.0% 25.1% 26.2% 27.3% 28.4% 29.4%
----
25.0% 0.0% 27.3% 28.6% 29.9% 31.1% 32.3%
Junior Subordinated Debt 0.0% 0.0% 0.0% 0.0% 0.0%
Preferred Stock 0.0% 0.0% 0.0% 0.0% 0.0%
Investor Equity 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
----
Total Management Equity 80.0% 0.0% 35.9% 39.1% 42.0% 44.7% 47.3%
----
</TABLE>
<TABLE>
<CAPTION>
CREDIT STATISTICS:
1998 1999 2000 2001
--------------------------------
<S> <C> <C> <C> <C>
EBITA/PF Senior Interest 3.04 2.67 3.09 4.67
EBITA/PF Total Interest 1.77 1.56 1.80 2.54
EBITDA/PF Total Cash Interest 2.45 2.25 2.41 3.13
EBITDA/PF Total Int. 2.45 2.25 2.41 3.13
EBITDA-PF Capex/PF Total Int. 2.23 2.04 2.20 2.90
EBITDA-PF Capex/PF Debt Ser. 1.36 1.24 1.34 1.70
Senior Debt/EBITDA-PF Capex 0.30 3.19 2.51 1.79
Total Debt/EBITDA-PF Capex 0.30 4.76 3.97 3.01
</TABLE>
1. Unfinancible pro forma capex is assumed to be $400M per year.
<PAGE> 88
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 2 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
OPENING BALANCE SHEET ADJUSTMENTS: Adjustments Pro Forma
--------------------------------------------------------
6/30/99 Debits Credits 6/30/99
------- ----------------- -------
<S> <C> <C> <C> <C>
Cash and Cash Equivalents(1) $ 9,773 $ 0 $ 9,773 $ 0
Short-term Investments 0 0 0 0
Accounts Receivable 6,634 0 0 6,634
Parts and Raw Materials 3,104 0 0 3,104
Work-in-progress and Finished Goods 2,231 0 0 2,231
------- -------
Inventories-Total 5,335 0 0 5,335
Deferred Taxes 351 0 0 351
Other Current Assets 613 0 0 613
------- -------
Current Assets 22,706 0 9,773 12,933
Long-Term Investments 113 0 0 113
Investment in Affiliate 363 0 0 363
PP&E Net 4,984 0 0 4,984
Other Assets 1,036 0 0 1,036
New Goodwill 0 8,025 0 8,025
Unamortized Non-Compete Agreement 0 0 0 0
Unamortized Tran. Costs 0 750 0 750
------- -------
Total Assets $29,202 $ 8,775 $ 9,773 $28,204
======= =======
Notes Pay. & Curr. Mat. of LTD $ 1,066 $ 1,066 $ 0 $ 0
Accounts Payable 1,318 0 0 1,318
Accrued Payroll and Benefits 951 0 0 951
Deferred Income 1,402 0 0 1,402
Income Taxes Payable 819 0 0 819
Warranty Reserve 261 0 0 261
Other Current Liabilities 344 0 0 344
------- -------
Current Liabilities 6,161 1,066 0 5,095
Deferred Taxes 127 0 0 127
0
Senior Term Loan A (real estate) 173 173 2,000 2,000
Revolving Facility 0 0 5,156 5,156
Senior Term Loan B (equipment and cash flow) 0 0 5,000 5,000
n/a 0 0 0 0
Mezzanine debt 0 0 6,000 6,000
n/a 0 0 0 0
Preferred Stock 0 0 0 0
Stockholders' Equity(1) 22,741 22,741 4,825 4,825
------- -------
Total Liabilities & Equity $29,202 $23,980 $22,982 $28,204
======= =======
</TABLE>
1. Assumes an additional $646M cash from operations for the first quarter
of fiscal year 2000.
<PAGE> 89
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 3 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
INCOME STATEMENT:
Historical - June 30, Projected - June 30,
-------------------------------------------- -------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003
-------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $31,611 $31,477 $30,075 $32,362 $32,077 $33,681 $37,049 $40,754 $44,829
Cost of Goods Sold 13,341 13,096 13,481 15,030 15,110 15,697 17,082 18,586 20,220
-----------------------------------------------------------------------------------
Gross Profit 18,270 18,381 16,594 17,332 16,967 17,984 19,967 22,168 24,609
Gross Margin % of Sales 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.9% 54.4% 54.9%
Operating Expenses (excl depr) 12,864 13,193 13,100 13,023 13,021 13,472 $14,619 $16,081 $17,689
Pro Forma Private Company Savings (270) (270) (270) (270) (270) 0 0 0 0
-----------------------------------------------------------------------------------
EBITDA 5,406 5,188 3,764 4,579 4,216 4,512 5,348 6,087 6,920
EBITDA Margin % of Sales 17.1% 16.5% 12.5% 14.1% 13.1% 13.4% 14.4% 14.9% 15.4%
-----------------------------------------------------------------------------------
Depreciation 927 1,052 1,116 1,261 1,299 1,136 1,019 969 931
-----------------------------------------------------------------------------------
EBITA 4,479 4,136 2,648 3,318 2,917 3,376 4,329 5,118 5,989
EBITA Margin % Sales 14.2% 13.1% 8.8% 10.3% 9.1% 10.0% 11.7% 12.6% 13.4%
-----------------------------------------------------------------------------------
Amort. of Old Goodwill 0 0 0 0 0 0 0 0 0
Amort. of Other 0 0 0 0 0 0 0 0 0
Amort. of Goodwill 0 0 0 0 0 321 321 321 321
Amort. of Non-Compete Agreement 0 0 0 0 0 0 0 0 0
Amort. of Tran. Costs 0 0 0 0 0 150 150 150 150
-----------------------------------------------------------------------------------
Earnings Before Int. & Taxes 4,479 4,136 2,648 3,318 2,917 2,905 3,858 4,647 5,518
EBIT Margin 14.2% 13.1% 8.8% 10.3% 9.1% 8.6% 10.4% 11.4% 12.3%
-----------------------------------------------------------------------------------
Cash Interest Expense:
Term Loan A (real estate) 0 0 0 0 0 185 166 146 127
Revolving Facility 0 0 0 0 0 462 442 418 342
Term Loan B (equipment and cash flow) 0 0 0 0 0 445 320 191 60
n/a 0 0 0 0 0 0 0 0 0
Mezzanine Financing 0 0 0 0 0 780 780 780 780
n/a 0 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------
Total Cash Interest Expense(1) 0 0 0 0 0 1,872 1,707 1,535 1,309
Non Cash Interest Expense 0 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------
Total Interest Expense 0 0 0 0 0 1,872 1,707 1,535 1,309
-----------------------------------------------------------------------------------
Other Income (Expense) 412 383 324 485 326 30 30 30 30
-----------------------------------------------------------------------------------
Earnings Before Taxes 4,891 4,519 2,972 3,803 3,243 1,063 2,181 3,141 4,240
Provision for Taxes @ 32% 1,712 1,611 865 1,110 938 443 801 1,108 1,459
-----------------------------------------------------------------------------------
Net Income 3,179 2,908 2,107 2,693 2,305 620 1,380 2,033 2,780
Extraordinary Items 0 0 0 0 0 0 0 0 0
Preferred Dividends 0 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------
Addition to Retained Earnings $ 3,179 $ 2,908 $ 2,107 $ 2,693 $ 2,305 $ 620 $ 1,380 $ 2,033 $ 2,780
===================================================================================
<CAPTION>
Projected - June 30,
------------------------------------------------------
2004 2005 2006 2007 2008 2009
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $44,829 $44,829 $44,829 $44,829 $44,829 $44,829
Cost of Goods Sold 20,220 20,220 20,220 20,220 20,220 20,220
------------------------------------------------------
Gross Profit 24,609 24,609 24,609 24,609 24,609 24,609
Gross Margin % of Sales 54.9% 54.9% 54.9% 54.9% 54.9% 54.9%
Operating Expenses (excl depr) $17,689 $17,689 $17,689 $17,689 $17,689 $17,689
Pro Forma Private Company Savings 0 0 0 0 0 0
------------------------------------------------------
EBITDA 6,920 6,920 6,920 6,920 6,920 6,920
EBITDA Margin % of Sales 15.4% 15.4% 15.4% 15.4% 15.4% 15.4%
------------------------------------------------------
Depreciation 1,006 900 800 800 800 800
------------------------------------------------------
EBITA 5,914 6,020 6,120 6,120 6,120 6,120
EBITA Margin % Sales 13.2% 13.4% 13.7% 13.7% 13.7% 13.7%
------------------------------------------------------
Amort. of Old Goodwill 0 0 0 0 0 0
Amort. of Other 0 0 0 0 0 0
Amort. of Goodwill 321 321 321 321 321 321
Amort. of Non-Compete Agreement 0 0 0 0 0 0
Amort. of Tran. Costs 150 0 0 0 0 0
------------------------------------------------------
Earnings Before Int. & Taxes 5,443 5,699 5,799 5,799 5,799 5,799
EBIT Margin 12.1% 12.7% 12.9% 12.9% 12.9% 12.9%
------------------------------------------------------
Cash Interest Expense:
Term Loan A (real estate) 107 88 68 49 29 10
Revolving Facility 142 0 0 0 0 0
Term Loan B (equipment and cash flow) 0 0 0 0 0 0
n/a 0 0 0 0 0 0
Mezzanine Financing 780 780 780 780 520 260
n/a 0 0 0 0 0 0
------------------------------------------------------
Total Cash Interest Expense(1) 1,029 868 848 829 549 270
Non Cash Interest Expense 0 0 0 0 0 0
------------------------------------------------------
Total Interest Expense 1,029 868 848 829 549 270
------------------------------------------------------
Other Income (Expense) 30 30 30 30 30 30
------------------------------------------------------
Earnings Before Taxes 4,444 4,861 4,981 5,000 5,280 5,559
Provision for Taxes @ 32% 1,525 1,658 1,697 1,703 1,792 1,882
------------------------------------------------------
Net Income 2,919 3,203 3,284 3,298 3,488 3,678
Extraordinary Items 0 0 0 0 0 0
Preferred Dividends 0 0 0 0 0 0
------------------------------------------------------
Addition to Retained Earnings $ 2,919 $ 3,203 $ 3,284 $ 3,298 $3,488 $3,678
======================================================
</TABLE>
<PAGE> 90
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 4 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
CASH FLOW STATEMENT:
Historical - June 30, Projected - June 30,
-----------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Addition to Retained Earnings $ 3,179 $ 2,908 $ 2,107 $ 2,693 $ 2,305 $ 620 $ 1,380 $ 2,033 $ 2,780
+ Depreciation 927 1,052 1,116 1,261 1,299 1,136 1,019 969 931
+ Amort. of Old Goodwill 0 0 0 0 0 0 0 0 0
+ Amort. of Other 0 0 0 0 0 0 0 0 0
+ Amort. of Goodwill 0 0 0 0 0 321 321 321 321
+ Amort. of Non-Compete 0 0 0 0 0 0 0 0 0
+ Amort. of Tran. Costs 0 0 0 0 0 150 150 150 150
+ Change in LT Investments N/A 7 6 (1,099) 3,004 0 0 0 0
+ Change in Investment in Affiliate N/A 0 (250) (75) (38) 0 0 0 0
+ Change in Other Assets N/A (392) (166) (143) (47) 0 0 0 0
+ Change in Deferred Taxes N/A (10) 56 (14) 31 0 0 0 0
+ Non Cash Interest Expense 0 0 0 0 0 0 0 0 0
+ PIK Dividends Accrued 0 0 0 0 0 0 0 0 0
- Capital Expenditures (1,028) (1,013) (1,165) (1,119) (1,447) (800) (800) (800) (800)
- Changes in W/C N/A (1,711) 2,137 (22) (273) 415 (630) (692) (759)
-----------------------------------------------------------------------------------
Cash Flow Available For Debt N/A 841 3,841 1,482 4,834 1,841 1,440 1,982 2,623
- Scheduled Debt Retirement 0 0 0 0 0 (1,200) (1,200) (1,200) (1,200)
- Additions to Cash & Seas. W/C 0 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------
Cash Flow Available to Retire Term B N/A 841 3,841 1,482 4,834 641 240 782 1,423
- Additional Term B Retirement(1) 0 0 0 0 0 (321) (120) (391) (168)
Cash Flow Available To
-----------------------------------------------------------------------------------
Retire Additional Debt N/A $ 841 $ 3,841 $ 1,482 $ 4,834 $ 321 $ 120 $ 391 $ 1,255
===================================================================================
<CAPTION>
Projected - June 30,
-------------------------------------------------------
2004 2005 2006 2007 2008 2009
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Addition to Retained Earnings $ 2,919 $ 3,203 $ 3,284 $ 3,298 $ 3,488 $ 3,678
+ Depreciation 1,006 900 800 800 800 800
+ Amort. of Old Goodwill 0 0 0 0 0 0
+ Amort. of Other 0 0 0 0 0 0
+ Amort. of Goodwill 321 321 321 321 321 321
+ Amort. of Non-Compete 0 0 0 0 0 0
+ Amort. of Tran. Costs 150 0 0 0 0 0
+ Change in LT Investments 0 0 0 0 0 0
+ Change in Investment in Affiliate 0 0 0 0 0 0
+ Change in Other Assets 0 0 0 0 0 0
+ Change in Deferred Taxes 0 0 0 0 0 0
+ Non Cash Interest Expense 0 0 0 0 0 0
+ PIK Dividends Accrued 0 0 0 0 0 0
- Capital Expenditures (800) (800) (800) (800) (800) (800)
- Changes in W/C 0 0 0 0 0 0
------------------------------------------------------
Cash Flow Available For Debt 3,596 3,624 3,605 3,619 3,809 3,999
- Scheduled Debt Retirement (200) (200) (200) (2,200) (2,200) (2,200)
- Additions to Cash & Seas. W/C 0 0 0 0 0 0
------------------------------------------------------
Cash Flow Available to Retire Term B 3,396 3,424 3,405 1,419 1,609 1,799
- Additional Term B Retirement(1) 0 0 0 0 0 0
Cash Flow Available To
------------------------------------------------------
Retire Additional Debt $ 3,396 $ 3,424 $ 3,405 $ 1,419 $ 1,609 $ 1,799
======================================================
</TABLE>
1. Additional retirement of the Term B loan using 50% of excess cash
<PAGE> 91
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 5 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
At Closing Projected - June 30,
-----------------------------------------------------
AMORTIZATION SCHEDULES: 6/30/99 2000 2001 2002 2003 2004
-----------------------------------------------------
Senior Term Loan A (real estate): Pay down term loan with excess cash once revolver paid off (Y/N)? N
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance $ 0 $2,000 $1,800 $1,600 $1,400 $1,200
Stated Coupon 0.00% 9.75% 9.75% 9.75% 9.75% 9.75%
Total Interest Expense $ 0 $ 185 $ 166 $ 146 $ 127 $ 107
Scheduled Amortization 0 200 200 200 200 200
Additional Prepayments 0 0 0 0 0 0
Ending Balance 2,000 1,800 1,600 1,400 1,200 1,000
Scheduled Amortization 5.5 Years Avg. Life 10.0% 10.0% 10.0% 10.0% 10.0%
Revolving Facility:
Available on Accounts Rec.(1) 42.1% $2,793 $2,160 $2,376 $2,614 $2,875 $2,875
Available on Inventory(2) 52.5% 2,803 3,051 3,320 3,612 3,930 3,930
Total Availability 5,596 5,211 5,696 6,226 6,805 6,805
Usage (End. Bal.) As A % Of Availability 92.1% 92.8% 82.8% 69.5% 45.1% 0.0%
Beginning Bal. $ 0 $5,156 $4,836 $4,716 $4,325 $3,070
Stated Coupon 0.00% 9.25% 9.25% 9.25% 9.25% 9.25%
Total Interest Expense $ 0 $ 462 $ 442 $ 418 $ 342 $ 142
Retirements (Additions) 1999 Avg. Excess 0 321 120 391 1,255 3,070
Ending Balance W/C Requirement: $0 5,156 4,836 4,716 4,325 3,070 0
Unused Availability 440 375 980 1,901 3,734 6,805
Senior Term Loan B (equipment and cash flow):
Beginning Balance $ 0 $5,000 $3,679 $2,559 $1,168 $ 0
Stated Coupon 0.00% 10.25% 10.25% 10.25% 10.25% 10.25%
Total Interest Expense $ 0 $ 445 $ 320 $191 $ 60 $ 0
Scheduled Amortization 0 1,000 1,000 1,000 1,000 0
Additional Prepayments 0 321 120 391 168 0
Ending Balance 5,000 3,679 2,559 1,168 0 0
Amortization 2.5 Years Avg. Life 20.0% 20.0% 20.0% 20.0% 20.0%
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Scheduled Amortization 0 0 0 0 0 0
Additional Prepayments 0 0 0 0 0 0
Ending Balance 0 0 0 0 0 0
Amortization 0.0% 0.0% 0.0% 0.0% 0.0%
<CAPTION>
Projected - June 30,
------------------------------------------------------------------
AMORTIZATION SCHEDULES: 2005 2006 2007 2008 2009
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Senior Term Loan A (real estate):
Beginning Balance $1,000 $ 800 $ 600 $ 400 $ 200
Stated Coupon 9.75% 9.75% 9.75% 9.75% 9.75%
Total Interest Expense $ 88 $ 68 $ 49 $ 29 $ 10
Scheduled Amortization 200 200 200 200 200
Additional Prepayments 0 0 0 0 0
Ending Balance 800 600 400 200 0
Scheduled Amortization 10.0% 10.0% 10.0% 10.0% 10.0%
Revolving Facility:
Available on Accounts Rec.(1) $2,875 $2,875 $2,875 $2,875 $2,875
Available on Inventory(2) 3,930 3,930 3,930 3,930 3,930
Total Availability 6,805 6,805 6,805 6,805 6,805
Usage (End. Bal.) As A % Of Availability 0.0% 0.0% 0.0% 0.0% 0.0%
Beginning Bal $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 9.25% 9.25% 9.25% 9.25% 9.25%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Retirements (Additions) 0 0 0 0 0
Ending Balance 0 0 0 0 0
Unused Availability 6,805 6,805 6,805 6,805 6,805
Senior Term Loan B (equipment and cash flow):
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 10.25% 10.25% 10.25% 10.25% 10.25%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Scheduled Amortization 0 0 0 0 0
Additional Prepayments 0 0 0 0 0
Ending Balance 0 0 0 0 0
Amortization 0.0% 0.0% 0.0% 0.0% 0.0%
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Scheduled Amortization 0 0 0 0 0
Additional Prepayments 0 0 0 0 0
Ending Balance 0 0 0 0 0
Amortization 0.0% 0.0% 0.0% 0.0% 0.0%
</TABLE>
1. Availability based on 80% advance rates on US & Canadian receivables
and those foreign receivables that are backed by a letter of credit.
The remaining receivables were deemed ineligible.
2. Availability based on 40% advanced against raw materials and 70%
advanced against work in progress and finished goods.
<PAGE> 92
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 6 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
At Closing Projected - June 30,
-------------------------------------------------------------------
AMORTIZATION SCHEDULES: 6/30/99 2000 2001 2002 2003 2004
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mezzanine debt:
Beginning Balance $ 0 $6,000 $6,000 $6,000 $6,000 $6,000
Stated Coupon 0.00% 13.00% 13.00% 13.00% 13.00% 13.00%
Total Interest Expense $ 0 $ 780 $ 780 $ 780 $ 780 $ 780
Cash Coupon 0.00% 13.00% 13.00% 13.00% 13.00% 13.00%
Cash Interest Expense $ 0 $ 780 $ 780 $ 780 $ 780 $ 780
Non Cash Interest Expense Accrued 0 0 0 0 0 0
Scheduled Amortization 0 0 0 0 0 0
Additional Prepayments 0 0 0 0 0 0
Ending Balance 9.0 Years Avg. Life 6,000 6,000 6,000 6,000 6,000 6,000
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Non Cash Interest Expense Accrued 0 0 0 0 0 0
Scheduled Amortization 0 0 0 0 0 0
Ending Balance 0 0 0 0 0 0
Preferred Stock:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 35.00% 35.00% 35.00% 35.00% 35.00%
Total Dividend $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Dividend $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
PIK Dividend Accrued 0 0 0 0 0 0
Scheduled Redemption 0 0 0 0 0 0
Ending Balance 0 0 0 0 0 0
<CAPTION>
Projected - June 30,
------------------------------------------------------
AMORTIZATION SCHEDULES: 2005 2006 2007 2008 2009
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mezzanine debt:
Beginning Balance $6,000 $6,000 $6,000 $4,000 $2,000
Stated Coupon 13.00% 13.00% 13.00% 13.00% 13.00%
Total Interest Expense $ 780 $ 780 $ 780 $ 520 $ 260
Cash Coupon 13.00% 13.00% 13.00% 13.00% 13.00%
Cash Interest Expense $ 780 $ 780 $ 780 $ 520 $ 260
Non Cash Interest Expense Accrued 0 0 0 0 0
Scheduled Amortization 0 0 2,000 2,000 2,000
Additional Prepayments 0 0 0 0 0
Ending Balance 6,000 6,000 4,000 2,000 0
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Non Cash Interest Expense Accrued 0 0 0 0 0
Scheduled Amortization 0 0 0 0 0
Ending Balance 0 0 0 0 0
Preferred Stock:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 35.00% 35.00% 35.00% 35.00% 35.00%
Total Dividend $ 0 $ 0 $ 0 $ 0 $ 0
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Dividend $ 0 $ 0 $ 0 $ 0 $ 0
PIK Dividend Accrued 0 0 0 0 0
Scheduled Redemption 0 0 0 0 0
Ending Balance 0 0 0 0 0
</TABLE>
<PAGE> 93
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 7 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
COVERAGE: Historical - June 30, 0 Projected - June 30,
-------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EBIT/Pro Forma Senior Interest 3.79 2.42 3.04 2.67 2.66 4.16 6.15 10.44 21.84
EBIT/Pro Forma Total Cash Interest 2.21 1.41 1.77 1.56 1.55 2.26 3.03 4.22 5.29
EBIT/Pro Forma Total Interest 2.21 1.41 1.77 1.56 1.55 2.26 3.03 4.22 5.29
-------------------------------------------------------------------------------
EBITA/Pro Forma Senior Interest 3.79 2.42 3.04 2.67 3.09 4.67 6.77 11.33 23.73
EBITA/Pro Forma Total Cash Interest 2.21 1.41 1.77 1.56 1.80 2.54 3.33 4.58 5.75
EBITA/Pro Forma Total Interest 2.21 1.41 1.77 1.56 1.80 2.54 3.33 4.58 5.75
-------------------------------------------------------------------------------
EBITDA/Pro Forma Senior Interest 4.75 3.45 4.19 3.86 4.13 5.77 8.06 13.09 27.76
EBITDA/Pro Forma Total Cash Int. 2.77 2.01 2.45 2.25 2.41 3.13 3.96 5.29 6.72
EBITDA/Pro Forma Total Int. 2.77 2.01 2.45 2.25 2.41 3.13 3.96 5.29 6.72
EBITDA/Pro Forma Total Int. + Dividends 2.77 2.01 2.45 2.25 2.41 3.13 3.96 5.29 6.72
-------------------------------------------------------------------------------
EBITDA-PF Capex/Pro Forma Total Int. 2.56 1.80 2.23 2.04 2.20 2.90 3.70 4.98 6.33
EBITDA-PF Capex/Pro Forma Debt Service 1.56 1.09 1.36 1.24 1.34 1.70 2.08 2.60 5.30
EBITDA-PF Capex/Pro Forma Debt Service + Div. 1.56 1.09 1.36 1.24 1.34 1.70 2.08 2.60 5.30
-------------------------------------------------------------------------------
Senior Debt/EBITDA 0.29 0.34 0.28 2.88 2.29 1.66 1.13 0.62 0.14
Total Debt/EBITDA 0.29 0.34 0.28 4.31 3.62 2.78 2.12 1.48 1.01
Senior Debt/EBITDA-PF Capex 0.31 0.39 0.30 3.19 2.51 1.79 1.21 0.65 0.15
Total Debt/EBITDA-PF Capex 0.31 0.39 0.30 4.76 3.97 3.01 2.27 1.58 1.07
<CAPTION>
COVERAGE: Projected - June 30,
------------------------------------------
2005 2006 2007 2008 2009
------------------------------------------
<S> <C> <C> <C> <C> <C>
EBIT/Pro Forma Senior Interest 64.95 84.97 118.96 198.26 594.79
EBIT/Pro Forma Total Cash Interest 6.57 6.84 7.00 10.56 21.50
EBIT/Pro Forma Total Interest 6.57 6.84 7.00 10.56 21.50
------------------------------------------
EBITA/Pro Forma Senior Interest 68.61 89.67 125.54 209.24 627.71
EBITA/Pro Forma Total Cash Interest 6.94 7.22 7.38 11.14 22.69
EBITA/Pro Forma Total Interest 6.94 7.22 7.38 11.14 22.69
------------------------------------------
EBITDA/Pro Forma Senior Interest 78.86 101.40 141.95 236.59 709.77
EBITDA/Pro Forma Total Cash Int. 7.97 8.16 8.35 12.60 25.65
EBITDA/Pro Forma Total Int. 7.97 8.16 8.35 12.60 25.65
EBITDA/Pro Forma Total Int. + Dividends 7.97 8.16 8.35 12.60 25.65
------------------------------------------
EBITDA-PF Capex/Pro Forma Total Int. 7.51 7.69 7.87 11.87 24.17
EBITDA-PF Capex/Pro Forma Debt Service 6.11 6.22 2.15 2.37 2.64
EBITDA-PF Capex/Pro Forma Debt Service + Div. 6.11 6.22 2.15 2.37 2.64
------------------------------------------
Senior Debt/EBITDA 0.12 0.09 0.06 0.03 0.00
Total Debt/EBITDA 0.98 0.95 0.64 0.32 0.00
Senior Debt/EBITDA-PF Capex 0.12 0.09 0.06 0.03 0.00
Total Debt/EBITDA-PF Capex 1.04 1.01 0.67 0.34 0.00
</TABLE>
1. Unfinancible pro forma capex is assumed to be $400M per year.
<TABLE>
<CAPTION>
Pro Forma
At Closing
-------------------------------------------------------------------
CAPITALIZATION: 6/30/99 2000 2001 2002 2003 2004
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Minimum Cash Balance Required $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Minimum Average Excess Seasonal W/C 0 0 0 0 0 0
Additions To Cash & Avg. Excess Seasonal W/C 0 0 0 0 0 0
Cash Flow Available to Repay Additional Debt 0 321 120 391 1,255 3,396
Additional Debt Repaid 0 321 120 391 1,255 3,070
-------------------------------------------------------------------
Excess Cash Flow 0 0 0 0 0 326
Cumulative Excess Cash 0 0 0 0 0 326
Outstanding Balances:
Senior Term Loan A (real estate) $ 2,000 $ 1,800 $ 1,600 $ 1,400 $ 1,200 $ 1,000
Revolving Facility 5,156 4,836 4,716 4,325 3,070 0
Senior Term Loan B (equipment and cash flow) 5,000 3,679 2,559 1,168 0 0
n/a 0 0 0 0 0 0
Total Senior Debt 12,156 10,315 8,875 6,893 4,270 1,000
Mezzanine debt 6,000 6,000 6,000 6,000 6,000 6,000
n/a 0 0 0 0 0 0
Total Debt 18,156 16,315 14,875 12,893 10,270 7,000
Preferred Stock 0 0 0 0 0 0
Common Stock 4,825 5,445 6,825 8,859 11,639 14,558
<CAPTION>
-------------------------------------------------------
CAPITALIZATION: 2005 2006 2007 2008 2009
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Minimum Cash Balance Required $ 0 $ 0 $ 0 $ 0 $ 0
Minimum Average Excess Seasonal W/C 0 0 0 0 0
Additions To Cash & Avg. Excess Seasonal W/C 0 0 0 0 0
Cash Flow Available to Repay Additional Debt 3,424 3,405 1,419 1,609 1,799
Additional Debt Repaid 0 0 0 0 0
-------------------------------------------------------
Excess Cash Flow 3,424 3,405 1,419 1,609 1,799
Cumulative Excess Cash 3,750 7,155 8,574 10,183 11,981
Outstanding Balances:
Senior Term Loan A (real estate) $ 800 $ 600 $ 400 $ 200 $ 0
Revolving Facility 0 0 0 0 0
Senior Term Loan B (equipment and cash flow) 0 0 0 0 0
n/a 0 0 0 0 0
Total Senior Debt 800 600 400 200 0
Mezzanine debt 6,000 6,000 4,000 2,000 0
n/a 0 0 0 0 0
Total Debt 6,800 6,600 4,400 2,200 0
Preferred Stock 0 0 0 0 0
Common Stock 17,761 21,046 24,343 27,831 31,509
</TABLE>
<PAGE> 94
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 8 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
PROJECTED BALANCE SHEET: Historical - June 30, At Closing
--------------------------------------------------------------
1995 1996 1997 1998 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and Equivalents $ 6,078 $ 5,932 $ 8,933 $ 6,163 $ 0
Trade Receivables, Net 6,733 7,061 5,990 6,616 6,634
Inventories 4,997 5,639 5,139 5,675 5,335
Deferred Taxes 415 254 357 231 351
Other Current Assets 243 425 385 257 613
--------------------------------------------------------------
Current Assets 18,466 19,311 20,804 18,942 12,933
Long-Term Investments 2,031 2,024 2,018 3,117 113
Investment in Affiliate 0 0 250 325 363
PP&E Net 5,868 5,569 5,296 4,925 4,984
Other Assets 288 680 846 989 1,036
New Goodwill 0 0 0 0 8,025
Unamortized Non-Compete Agreement 0 0 0 0 0
Unamortized Tran. Costs 0 0 0 0 750
--------------------------------------------------------------
Total Assets $26,653 $ 27,584 $ 29,214 $ 28,298 $ 28,204
==============================================================
Notes Pay. & Curr. Mat. of LTD $ 0 $ 63 $ 67 $ 92 $ 0
Accounts Payable 1,003 990 1,095 1,491 1,318
Accrued Payroll and Benefits 1,406 571 916 1,115 951
Deferred Income 1,099 1,098 1,039 1,280 1,402
Income Taxes Payable 532 410 488 538 819
Warranty Reserve 142 175 218 213 261
Other Current Liabilities 237 455 572 577 344
--------------------------------------------------------------
Current Liabilities 4,419 3,762 4,395 5,306 5,095
Minority Interest 0 0 0 0 0
Deferred Taxes 64 54 110 96 127
Senior Term Loan A (real estate) 1,578 1,417 1,229 1,177 2,000
Revolving Facility 0 0 0 0 5,156
Senior Term Loan B (equipment and cash flow) 0 0 0 0 5,000
n/a 0 0 0 0 0
Mezzanine debt 0 0 0 0 6,000
n/a 0 0 0 0 0
Preferred Stock 0 0 0 0 0
Stockholders' Equity 20,592 22,351 23,480 21,719 4,825
--------------------------------------------------------------
Total Liabilities & Equity $26,653 $ 27,584 $ 29,214 $ 28,298 $ 28,204
==============================================================
CHANGES IN WORKING CAPITAL:
Uses:
Accounts Receivable N/A 328 (1,071) 626 18
Inventories N/A 642 (500) 536 (340)
Deferred Taxes N/A (161) 103 (126) 120
Other Current Assets N/A 182 (40) (128) 356
Sources:
Accounts Payable N/A 13 (105) (396) 173
Accrued Payroll and Benefits N/A 835 (345) (199) 164
Deferred Income N/A 1 59 (241) (122)
Income Taxes Payable N/A 122 (78) (50) (281)
Warranty Reserve N/A (33) (43) 5 (48)
Other Current Liabilities N/A (218) (117) (5) 233
--------------------------------------------------------------
Total Inc. (Decr.) in Wkg. Cap N/A $ 1,711 ($ 2,137) $ 22 $ 273
==============================================================
<CAPTION>
PROJECTED BALANCE SHEET: Projected - June 30,
---------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash and Equivalents $ 0 $ (0) $ 0 $ (0) $ 326 $ 3,750
Trade Receivables, Net 5,131 5,644 6,208 6,829 6,829 6,829
Inventories 5,806 6,318 6,874 7,479 7,479 7,479
Deferred Taxes 351 351 351 351 351 351
Other Current Assets 613 613 613 613 613 613
---------------------------------------------------------------------------
Current Assets 11,900 12,926 14,046 15,271 15,597 19,021
Long-Term Investments 113 113 113 113 113 113
Investment in Affiliate 363 363 363 363 363 363
PP&E Net 4,648 4,429 4,260 4,129 3,923 3,823
Other Assets 1,036 1,036 1,036 1,036 1,036 1,036
New Goodwill 7,704 7,383 7,062 6,741 6,420 6,099
Unamortized Non-Compete Agreement 0 0 0 0 0 0
Unamortized Tran. Costs 600 450 300 150 0 0
---------------------------------------------------------------------------
Total Assets $ 26,364 $ 26,699 $ 27,180 $ 27,803 $27,452 $30,455
===========================================================================
Notes Pay. & Curr. Mat. of LTD $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Accounts Payable 1,158 1,260 1,371 1,492 1,492 1,492
Accrued Payroll and Benefits 836 909 989 1,076 1,076 1,076
Deferred Income 1,232 1,341 1,459 1,587 1,587 1,587
Income Taxes Payable 720 783 852 927 927 927
Warranty Reserve 229 250 272 295 295 295
Other Current Liabilities 302 329 358 389 389 389
---------------------------------------------------------------------------
Current Liabilities 4,477 4,872 5,301 5,767 5,767 5,767
Minority Interest 0 0 0 0 0 0
Deferred Taxes 127 127 127 127 127 127
Senior Term Loan A (real estate) 1,800 1,600 1,400 1,200 1,000 800
Revolving Facility 4,836 4,716 4,325 3,070 0 0
Senior Term Loan B (equipment and cash flow) 3,679 2,559 1,168 0 0 0
n/a 0 0 0 0 0 0
Mezzanine debt 6,000 6,000 6,000 6,000 6,000 6,000
n/a 0 0 0 0 0 0
Preferred Stock 0 0 0 0 0 0
Stockholders' Equity 5,445 6,825 8,859 11,639 14,558 17,761
---------------------------------------------------------------------------
Total Liabilities & Equity $ 26,364 $ 26,699 $ 27,180 $ 27,803 $27,452 $30,455
===========================================================================
CHANGES IN WORKING CAPITAL:
Uses:
Accounts Receivable (1,503) 513 564 621 0 0
Inventories 471 512 556 604 0 0
Deferred Taxes 0 0 0 0 0 0
Other Current Assets 0 0 0 0 0 0
Sources:
Accounts Payable 160 (102) (111) (121) 0 0
Accrued Payroll and Benefits 115 (74) (80) (87) 0 0
Deferred Income 170 (109) (118) (128) 0 0
Income Taxes Payable 99 (63) (69) (75) 0 0
Warranty Reserve 32 (20) (22) (24) 0 0
Other Current Liabilities 42 (27) (29) (31) 0 0
---------------------------------------------------------------------------
Total Inc. (Decr.) in Wkg. Cap $ (415) $ 630 $ 692 $ 759 $ 0 $ 0
===========================================================================
<CAPTION>
PROJECTED BALANCE SHEET: Projected - June 30,
-------------------------------------------
2006 2007 2008 2009
-------------------------------------------
<S> <C> <C> <C> <C>
Cash and Equivalents $ 7,155 $ 8,574 $10,183 $11,981
Trade Receivables, Net 6,829 6,829 6,829 6,829
Inventories 7,479 7,479 7,479 7,479
Deferred Taxes 351 351 351 351
Other Current Assets 613 613 613 613
-------------------------------------------
Current Assets 22,427 23,845 25,454 27,253
Long-Term Investments 113 113 113 113
Investment in Affiliate 363 363 363 363
PP&E Net 3,823 3,823 3,823 3,823
Other Assets 1,036 1,036 1,036 1,036
New Goodwill 5,778 5,457 5,136 4,815
Unamortized Non-Compete Agreement 0 0 0 0
Unamortized Tran. Costs 0 0 0 0
-------------------------------------------
Total Assets $33,540 $34,637 $35,925 $37,403
===========================================
Notes Pay. & Curr. Mat. of LTD $ 0 $ 0 $ 0 $ 0
Accounts Payable 1,492 1,492 1,492 1,492
Accrued Payroll and Benefits 1,076 1,076 1,076 1,076
Deferred Income 1,587 1,587 1,587 1,587
Income Taxes Payable 927 927 927 927
Warranty Reserve 295 295 295 295
Other Current Liabilities 389 389 389 389
-------------------------------------------
Current Liabilities 5,767 5,767 5,767 5,767
Minority Interest 0 0 0 0
Deferred Taxes 127 127 127 127
Senior Term Loan A (real estate) 600 400 200 0
Revolving Facility 0 0 0 0
Senior Term Loan B (equipment and cash flow) 0 0 0 0
n/a 0 0 0 0
Mezzanine debt 6,000 4,000 2,000 0
n/a 0 0 0 0
Preferred Stock 0 0 0 0
Stockholders' Equity 21,046 24,343 27,831 31,509
-------------------------------------------
Total Liabilities & Equity $33,540 $34,637 $35,925 $37,403
===========================================
CHANGES IN WORKING CAPITAL:
Uses:
Accounts Receivable 0 0 0 0
Inventories 0 0 0 0
Deferred Taxes 0 0 0 0
Other Current Assets 0 0 0 0
Sources:
Accounts Payable 0 0 0 0
Accrued Payroll and Benefits 0 0 0 0
Deferred Income 0 0 0 0
Income Taxes Payable 0 0 0 0
Warranty Reserve 0 0 0 0
Other Current Liabilities 0 0 0 0
-------------------------------------------
Total Inc. (Decr.) in Wkg. Cap $ 0 $ 0 $ 0 $ 0
===========================================
</TABLE>
<PAGE> 95
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 9 of 9
MANAGEMENT PROJECTIONS
($ IN THOUSANDS)
<TABLE>
<S> <C> <C> <C> <C> <C>
CALCULATION OF RETURNS TO INVESTORS:
NET TERMINAL VALUE:
2004 EBITDA $ 6,920 $ 6,920 $ 6,920 $ 6,920 $ 6,920
Terminal Multiple 5.00 5.50 6.00 6.50 7.00
------------------------------------------------------------------
Terminal Value 34,601 38,061 41,521 44,981 48,441
Less: 2004 Outstanding Balances
Senior Term Loan A (real estate) 1,000 1,000 1,000 1,000 1,000
Revolving Facility 0 0 0 0 0
Senior Term Loan B (equipment and cash flow) 0 0 0 0 0
n/a 0 0 0 0 0
Mezzanine debt 6,000 6,000 6,000 6,000 6,000
n/a 0 0 0 0 0
Preferred Stock 0 0 0 0 0
Plus: 2004 Excess Cash 326 326 326 326 326
------------------------------------------------------------------
Net Terminal Value $27,927 $31,387 $34,847 $38,307 $41,767
==================================================================
</TABLE>
<TABLE>
<CAPTION>
At
CASH FLOWS TO INVESTORS: Closing Year 1 Year 2 Year 3 Year 4 Year 5 IRR
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mezzanine 20.0% 5.00 (5,880) 780 780 780 780 12,365 25.07%
Mezzanine 20.0% 5.50 (5,880) 780 780 780 780 13,057 26.21%
Mezzanine 20.0% 6.00 (5,880) 780 780 780 780 13,749 27.31%
Mezzanine 20.0% 6.50 (5,880) 780 780 780 780 14,441 28.37%
Mezzanine 20.0% 7.00 (5,880) 780 780 780 780 15,133 29.39%
Preferred Stock 0.0% 5.00 0 0 0 0 0 0 0.00%
Preferred Stock 0.0% 5.50 0 0 0 0 0 0 0.00%
Preferred Stock 0.0% 6.00 0 0 0 0 0 0 0.00%
Preferred Stock 0.0% 6.50 0 0 0 0 0 0 0.00%
Preferred Stock 0.0% 7.00 0 0 0 0 0 0 0.00%
Management Equity 80.0% 5.00 (4,825) 0 0 0 0 22,342 35.87%
Management Equity 80.0% 5.50 (4,825) 0 0 0 0 25,110 39.08%
Management Equity 80.0% 6.00 (4,825) 0 0 0 0 27,878 42.02%
Management Equity 80.0% 6.50 (4,825) 0 0 0 0 30,646 44.73%
Management Equity 80.0% 7.00 (4,825) 0 0 0 0 33,414 47.26%
Investor Equity 0.0% 5.00 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 5.50 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 6.00 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 6.50 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 7.00 0 0 0 0 0 0 0.00%
</TABLE>
<PAGE> 96
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 1 of 9
UPSIDE CASE
($ IN THOUSANDS)
PURCHASE ASSUMPTIONS:
<TABLE>
<S> <C>
Purchase Price / Share $10.75
Number of Shares (000's) as of 9/8/99 3,043
-------
Purchase Price of Equity $32,717
Purchase of Options 342
Transaction Costs 750
Repayment of Existing Debt 1,239
Non-Compete Agreement 0
Purchase of Preferred Stock 0
Plus: Required Cash (Excess) (9,773)
Less: Asset Sales 0
-------
Financing Requirements $25,275
Purchase Multiples:
Multiple of 1999 EBITDA 6.00x
Multiple of 1999 EBITA 8.66x
Multiple of 2000 EBITDA 5.60x
Multiple of 2000 EBITA 7.49x
</TABLE>
CAPITALIZATION:
<TABLE>
<CAPTION>
% Common
Amount % Total Equity
-------------------------------------
<S> <C> <C> <C>
Senior Term Loan A (real estate) $ 2,000 7.9% 0.0%
Revolving Facility 5,114 20.2% 0.0%
Senior Term Loan B (equipment and cash flow) 5,000 19.8% 0.0%
n/a 0 0.0% 0.0%
-------------------------------------
Total Senior Debt 12,114 47.9% 0.0%
Mezzanine debt 6,000 23.7% 20.0%
n/a 0 0.0% 0.0%
-------------------------------------
Total Debt 18,114 71.7% 20.0%
Preferred Stock 2,000 7.9% 0.0%
Management Equity(1) 5,162 20.4% 80.0%
Investor Equity 0 0.0% 0.0%
-------------------------------------
Total Capitalization $ 25,275 100.0% 100.0%
=====================================
</TABLE>
1. Michael Collins: 480,142 shares, 24,750 options as of 9/8/99
CALCULATION OF INTANGIBLES:
<TABLE>
<S> <C>
Purchase Price of Equity $33,059
Less: Book Value 22,741
---------
Goodwill 10,318
Years of Amortization 25
---------
Annual Goodwill Expense $413
Non-Compete Agreement $0
Years of Amortization 15
---------
Annual Non-Compete
Amortization $0
Transaction Costs $750
Years of Amortization 5
---------
Annual Trans. - Debt Exp. $150
</TABLE>
<TABLE>
<CAPTION>
Historical - June 30, Projected - June 30,
----------------------------------------------------------------------------
OPERATING ASSUMPTIONS: 1995 1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SALES GROWTH: N/A -0.4% -4.5% 7.6% -0.9% 5.0% 10.0% 12.7%
COGS GROWTH: N/A -1.8% 2.9% 11.5% 0.5% 3.9% 8.8% 8.8%
GM AS % OF SALES: 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.9% 55.5%
GM AS % OF SALES GROWTH: N/A 0.6% -9.7% 4.4% -2.1% 6.0% 11.0% 16.0%
OPERATING EXPENSES GROWTH (1): N/A 2.6% -0.7% -0.6% 0.0% 3.5% 8.5% 10.0%
OPERATING EXPENSES % OF SALES: 39.8% 41.1% 42.7% 39.4% 39.8% 40.0% 39.5% 38.5%
EBITDA Margin 17.1% 16.5% 12.5% 14.1% 13.1% 13.4% 14.4% 17.0%
EBITDA Growth N/A -4.0% -27.4% 21.7% -7.9% 7.0% 18.5% 32.5%
CAPITAL EXPENDITURES $1,028 $1,013 $1,165 $1,119 $1,447 $ 800 $ 800 $ 800
DEPRECIATION $ 927 $1,052 $1,116 $1,261 $1,299 $1,136 $1,019 $ 969
WORKING CAPITAL ASSUMPTIONS:
Accounts Rec. (Days of Sales)(2) 77.7 81.9 72.7 74.6 75.5 55.6 55.6 55.6
Inventory Days(2) 136.7 157.2 139.1 137.8 128.9 135.0 135.0 135.0
Accounts Payable (Days of COGS)(3) 27.4 27.6 29.6 36.2 31.8 26.9 26.9 26.9
Accrued Payroll and Benefits (Days of COGS)(3) 38.5 15.9 24.8 27.1 23.0 19.4 19.4 19.4
Deferred Income (Days of COGS)(3) 30.1 30.6 28.1 31.1 33.9 28.6 28.6 28.6
Income Taxes Payable (Days of COGS)(3) 14.6 11.4 13.2 13.1 19.8 16.7 16.7 16.7
Warranty Reserve (Days of COGS)(3) 3.9 4.9 5.9 5.2 6.3 5.3 5.3 5.3
Other Current Liabilities (Days of COGS)(3) 6.5 12.7 15.5 14.0 8.3 7.0 7.0 7.0
Current Liabilities (Days of COGS)(3) 120.9 104.9 119.0 128.9 123.1 104.1 104.1 104.1
<CAPTION>
Projected - June 30,
-------------------------------------------------------------------
OPERATING ASSUMPTIONS: 2003 2004 2005 2006 2007 2008 2009
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SALES GROWTH: 12.2% 0.4% 0.0% 0.0% 0.0% 0.0% 0.0%
COGS GROWTH: 8.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
GM AS % OF SALES: 56.8% 57.0% 57.0% 57.0% 57.0% 57.0% 57.0%
GM AS % OF SALES GROWTH: 14.9% 0.8% 0.0% 0.0% 0.0% 0.0% 0.0%
OPERATING EXPENSES GROWTH (1): 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
OPERATING EXPENSES % OF SALES: 37.8% 37.6% 37.6% 37.6% 37.6% 37.6% 37.6%
EBITDA Margin 19.0% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4%
EBITDA Growth 25.9% 2.2% 0.0% 0.0% 0.0% 0.0% 0.0%
CAPITAL EXPENDITURES $ 800 $ 800 $ 800 $ 800 $ 800 $ 800 $ 800
DEPRECIATION $ 931 $1,006 $ 900 $ 800 $ 800 $ 800 $ 800
WORKING CAPITAL ASSUMPTIONS:
Accounts Rec. (Days of Sales)(2) 55.6 55.6 55.6 55.6 55.6 55.6 55.6
Inventory Days (2) 135.0 135.0 135.0 135.0 135.0 135.0 135.0
Accounts Payable (Days of COGS)(3) 26.9 26.9 26.9 26.9 26.9 26.9 26.9
Accrued Payroll and Benefits (Days of COGS)(3) 19.4 19.4 19.4 19.4 19.4 19.4 19.4
Deferred Income (Days of COGS)(3) 28.6 28.6 28.6 28.6 28.6 28.6 28.6
Income Taxes Payable (Days of COGS)(3) 16.7 16.7 16.7 16.7 16.7 16.7 16.7
Warranty Reserve (Days of COGS)(3) 5.3 5.3 5.3 5.3 5.3 5.3 5.3
Other Current Liabilities (Days of COGS)(3) 7.0 7.0 7.0 7.0 7.0 7.0 7.0
Current Liabilities (Days of COGS)(3) 104.1 104.1 104.1 104.1 104.1 104.1 104.1
</TABLE>
1. Assumes savings from lack of SEC filings will lower Operating Expenses as
a percent of Total Revenues for the fiscal years 2000 and 2001.
2. Due to the seasonality of the business, projections are based on the
average monthly Accounts Receivable and Inventory balances for the fiscal
year ending 1999, ($5,137 and $6,058 respectively), less projected
reductions from the 2000 Business Plan of $250 and $470 respectively.
3. Due to the seasonality of the business, projections are based on the
average monthly Current Liabilities balance for the fiscal year ending
1999 which was $4,309. The components of Current Liabilities (AP,
Accruals, etc.) were allocated based on proportional balances as of June
30, 1999, since the monthly balances were not available.
<PAGE> 97
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 1a of 9
UPSIDE CASE
($ IN THOUSANDS)
SOURCES AND USES OF FUNDS:
<TABLE>
<CAPTION>
% Common % Pref. Total
Equity Equity Cash Total Contingent
SOURCES OF FUNDS: Amount % Total Owned Owned Coupon Coupon Coupon
- ---------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Senior Term Loan A (real estate) $2,000 7.9% 0.0% 0.0% 9.75% 9.75% 9.75%
Senior Term Loan B (equipment and cash flow) 5,000 19.8% 0.0% 0.0% 10.25% 10.25% 10.25%
Revolving Facility 5,114 20.2% 0.0% 0.0% 9.25% 9.25% 9.25%
n/a 0 0.0% 0.0% 0.0% 0.00% 0.00% 0.00%
Mezzanine debt 6,000 23.7% 20.0% 0.0% 13.00% 13.00% 13.00%
n/a 0 0.0% 0.0% 0.0% 0.00% 0.00% 0.00%
Preferred Stock 2,000 7.9% 0.0% 100.0% 0.00% 35.00% 35.00%
Management Equity (1) 5,162 20.4% 80.0% 0.0% 0.00% 0.00% 0.00%
Investor Equity 0 0.0% 0.0% 0.0% 0.00% 0.00% 0.00%
Asset Sales 0 0.0%
----------------------------
Total Sources of Funds $25,275 100.0% 100.0%
============================
</TABLE>
1. Michael Collins: 480,142 shares, 24,750 options as of 9/8/99
<TABLE>
<CAPTION>
USES OF FUNDS: Amount
- -------------- ----------
<S> <C>
Purchase Stock $32,717
Purchase Options 342
Refinance Existing Third Party Debt 1,239
Redeem Accrued Dividends 0
Non-Compete Agreement 0
Other B 0
Other C 0
Transaction Costs 750
Required Cash (Excess) (9,773)
----------
Total Uses of Funds $25,275
==========
</TABLE>
RETURNS TO INVESTORS:
<TABLE>
<CAPTION>
Multiple of EBITDA
-----------------------------------------------
5.00 5.50 6.00 6.50 7.00
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Terminal Value $32,302 $36,862 $41,422 $45,982 $50,542
% of Projected Value 78.0% 89.0% 100.0% 111.0% 122.0%
</TABLE>
<TABLE>
<CAPTION>
Internal Rate of Return
--------------------------------------------
Senior Subordinated Debt (Based on a $0 total equity investment)
% Common % Pref.
<S> <C> <C> <C> <C> <C> <C> <C>
(0=Warrants, 1=Equity Strip) 0 0
Sr. Sub. W/Equity or Warrants: 15.0% 0.0% 23.8% 25.0% 26.1% 27.2% 28.2%
20.0% 0.0% 26.5% 27.9% 29.3% 30.6% 31.8%
25.0% 0.0% 29.0% 30.6% 32.2% 33.6% 35.0%
Junior Subordinated Debt 0.0% 0.0% 0.0% 0.0% 0.0%
Preferred Stock 38.1% 38.1% 38.1% 38.1% 38.1%
Investor Equity 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Management Equity 80.0% 0.0% 38.0% 41.7% 45.0% 48.1% 50.9%
Management's Blended Return (Based on a $5,162 total equity investment)
%Equity: 75.0% 0.0% 27.6% 31.0% 34.1% 36.9% 39.6%
80.0% 0.0% 29.3% 32.7% 35.9% 38.7% 41.4%
85.0% 0.0% 30.8% 34.3% 37.5% 40.4% 43.1%
</TABLE>
PRIVATE COMPANY SAVINGS: $270
CREDIT STATISTICS:
<TABLE>
<CAPTION>
1998 1999 2000 2001
--------------------------------
<S> <C> <C> <C> <C>
EBITA/PF Senior Interest 3.05 2.68 3.10 4.69
EBITA/PF Total Interest 1.78 1.56 1.81 2.54
EBITDA/PF Total Cash Interest 2.45 2.26 2.42 3.14
EBITDA/PF Total Int. 2.45 2.26 2.42 3.14
EBITDA-PF Capex/PF Total Int. 2.24 2.04 2.20 2.91
EBITDA-PF Capex/PF Debt Ser. 1.36 1.24 1.34 1.70
Senior Debt/EBITDA-PF Capex(1) 0.30 3.17 2.50 1.78
Total Debt/EBITDA-PF Capex(1) 0.30 4.75 3.96 3.00
</TABLE>
1. Unfinancible pro forma capex is assumed to be $400M per year.
<PAGE> 98
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 2 of 9
UPSIDE CASE
($ IN THOUSANDS)
OPENING BALANCE SHEET ADJUSTMENTS:
<TABLE>
<CAPTION>
Adjustments Pro Forma
Adjustments Pro Forma
------------------------------------------------------------
6/30/99 Debits Credits 6/30/99
-------- ------------------ --------
<S> <C> <C> <C> <C>
Cash and Cash Equivalents (1) $ 9,773 $ 0 $ 9,773 $0
Short-term Investments 0 0 0 0
Accounts Receivable 6,634 0 0 6,634
Parts and Raw Materials 3,104 0 0 3,104
Work-in-progress and Finished Goods 2,231 0 0 2,231
-------- ------------------ --------
Inventories-Total 5,335 0 0 5,335
Deferred Taxes 351 0 0 351
Other Current Assets 613 0 0 613
-------- ------------------ --------
Current Assets 22,706 0 9,773 12,933
Long-Term Investments 113 0 0 113
Investment in Affiliate 363 0 0 363
PP&E Net 4,984 0 0 4,984
Other Assets 1,036 0 0 1,036
New Goodwill 0 10,318 0 10,318
Unamortized Non-Compete Agreement 0 0 0 0
Unamortized Tran. Costs 0 750 0 750
-------- ------------------ --------
Total Assets $ 29,202 $ 11,068 $ 9,773 $ 30,497
======== ================== ========
Notes Pay. & Curr. Mat. of LTD $ 1,066 $ $1,066 $0 $0
Accounts Payable 1,318 0 0 1,318
Accrued Payroll and Benefits 951 0 0 951
Deferred Income 1,402 0 0 1,402
Income Taxes Payable 819 0 0 819
Warranty Reserve 261 0 0 261
Other Current Liabilities 344 0 0 344
-------- ------------------ --------
Current Liabilities 6,161 1,066 0 5,095
Deferred Taxes 127 0 0 127
0
Senior Term Loan A (real estate) 173 173 2,000 2,000
Revolving Facility 0 0 5,114 5,114
Senior Term Loan B (equipment and cash flow) 0 0 5,000 5,000
n/a 0 0 0 0
Mezzanine debt 0 0 6,000 6,000
n/a 0 0 0 0
Preferred Stock 0 0 2,000 2,000
Stockholders' Equity (1) 22,741 22,741 5,162 5,162
-------- ------------------ --------
Total Liabilities & Equity $ 29,202 $ 23,980 $25,275 $ 30,497
======== ================== ========
</TABLE>
1. Assumes an additional $646M cash from operations for the first quarter of
fiscal year 2000.
<PAGE> 99
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 3 of 9
UPSIDE CASE
($ IN THOUSANDS)
INCOME STATEMENT:
<TABLE>
<CAPTION>
Historical - June 30, Projected - June 30,
------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $31,611 $31,477 $30,075 $32,362 $32,077 $33,681 $37,049 $41,754
Cost of Goods Sold 13,341 13,096 13,481 15,030 15,110 15,697 17,082 18,586
------------------------------------------------------------------------------------
Gross Profit 18,270 18,381 16,594 17,332 16,967 17,984 19,967 23,168
Gross Margin % of Sales 57.8% 58.4% 55.2% 53.6% 52.9% 53.4% 53.9% 55.5%
Operating Expenses (excl depr) 12,864 13,193 13,100 13,023 13,021 13,472 $14,619 $16,081
Pro Forma Private Company Savings (270) (270) (270) (270) (270) 0 0 0
------------------------------------------------------------------------------------
EBITDA 5,406 5,188 3,764 4,579 4,216 4,512 5,348 7,087
EBITDA Margin % of Sales 17.1% 16.5% 12.5% 14.1% 13.1% 13.4% 14.4% 17.0%
------------------------------------------------------------------------------------
Depreciation 927 1,052 1,116 1,261 1,299 1,136 1,019 969
------------------------------------------------------------------------------------
EBITA 4,479 4,136 2,648 3,318 2,917 3,376 4,329 6,118
EBITA Margin % Sales 14.2% 13.1% 8.8% 10.3% 9.1% 10.0% 11.7% 14.7%
------------------------------------------------------------------------------------
Amort. of Old Goodwill 0 0 0 0 0 0 0 0
Amort. of Other 0 0 0 0 0 0 0 0
Amort. of Goodwill 0 0 0 0 0 413 413 413
Amort. of Non-Compete Agreement 0 0 0 0 0 0 0 0
Amort. of Tran. Costs 0 0 0 0 0 150 150 150
------------------------------------------------------------------------------------
Earnings Before Int. & Taxes 4,479 4,136 2,648 3,318 2,917 2,813 3,766 5,555
EBIT Margin 14.2% 13.1% 8.8% 10.3% 9.1% 8.4% 10.2% 13.3%
Cash Interest Expense: ------------------------------------------------------------------------------------
Senior Term Loan A (real estate) 0 0 0 0 0 185 166 146
Revolving Facility 0 0 0 0 0 458 438 401
Senior Term Loan B (equipment and cash flow) 0 0 0 0 0 445 320 177
n/a 0 0 0 0 0 0 0 0
Mezzanine debt 0 0 0 0 0 780 780 780
n/a 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------
Total Cash Interest Expense 0 0 0 0 0 1,868 1,703 1,504
Non Cash Interest Expense 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------
Total Interest Expense 0 0 0 0 0 1,868 1,703 1,504
------------------------------------------------------------------------------------
Other Income (Expense) 412 383 324 485 326 30 30 30
------------------------------------------------------------------------------------
Earnings Before Taxes 4,891 4,519 2,972 3,803 3,243 975 2,093 4,081
Provision for Taxes @ 32% 1,712 1,611 865 1,110 938 444 802 1,438
------------------------------------------------------------------------------------
Net Income 3,179 2,908 2,107 2,693 2,305 531 1,291 2,643
Extraordinary Items 0 0 0 0 0 0 0 0
Preferred Dividends 0 0 0 0 0 761 1,051 1,451
------------------------------------------------------------------------------------
Addition to Retained Earnings $ 3,179 $ 2,908 $ 2,107 $ 2,693 $ 2,305 ($ 230) $ 240 $ 1,192
====================================================================================
<CAPTION>
Projected - June 30,
------------------------------------------------------------------------
2003 2004 2005 2006 2007 2008 2009
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $46,829 $47,029 $47,029 $47,029 $47,029 $47,029 $47,029
Cost of Goods Sold 20,220 20,220 20,220 20,220 20,220 20,220 20,220
-------------------------------------------------------------------------
Gross Profit 26,609 26,809 26,809 26,809 26,809 26,809 26,809
Gross Margin % of Sales 56.8% 57.0% 57.0% 57.0% 57.0% 57.0% 57.0%
Operating Expenses (excl depr) $17,689 $17,689 $17,689 $17,689 $17,689 $17,689 $17,689
Pro Forma Private Company Savings 0 0 0 0 0 0 0
-------------------------------------------------------------------------
EBITDA 8,920 9,120 9,120 9,120 9,120 9,120 9,120
EBITDA Margin % of Sales 19.0% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4%
-------------------------------------------------------------------------
Depreciation 931 1,006 900 800 800 800 800
-------------------------------------------------------------------------
EBITA 7,989 8,114 8,220 8,320 8,320 8,320 8,320
EBITA Margin % Sales 17.1% 17.3% 17.5% 17.7% 17.7% 17.7% 17.7%
-------------------------------------------------------------------------
Amort. of Old Goodwill 0 0 0 0 0 0 0
Amort. of Other 0 0 0 0 0 0 0
Amort. of Goodwill 413 413 413 413 413 413 413
Amort. of Non-Compete Agreement 0 0 0 0 0 0 0
Amort. of Tran. Costs 150 150 0 0 0 0 0
-------------------------------------------------------------------------
Earnings Before Int. & Taxes 7,426 7,551 7,807 7,907 7,907 7,907 7,907
EBIT Margin 15.9% 16.1% 16.6% 16.8% 16.8% 16.8% 16.8%
-------------------------------------------------------------------------
Cash Interest Expense:
Senior Term Loan A (real estate) 127 107 88 68 49 29 10
Revolving Facility 240 55 0 0 0 0 0
Senior Term Loan B (equipment and cash flow) 46 0 0 0 0 0 0
n/a 0 0 0 0 0 0 0
Mezzanine debt 780 780 780 780 780 520 260
n/a 0 0 0 0 0 0 0
-------------------------------------------------------------------------
Total Cash Interest Expense(1) 1,193 942 868 848 829 549 270
Non Cash Interest Expense 0 0 0 0 0 0 0
-------------------------------------------------------------------------
Total Interest Expense 1,193 942 868 848 829 549 270
-------------------------------------------------------------------------
Other Income (Expense) 30 30 30 30 30 30 30
-------------------------------------------------------------------------
Earnings Before Taxes 6,264 6,639 6,969 7,089 7,108 7,388 7,667
Provision for Taxes @ 32% 2,136 2,257 2,362 2,401 2,407 2,496 2,586
-------------------------------------------------------------------------
Net Income 4,127 4,383 4,607 4,688 4,702 4,892 5,082
Extraordinary Items 0 0 0 0 0 0 0
Preferred Dividends 2,003 2,766 3,819 5,272 7,279 10,049 13,874
-------------------------------------------------------------------------
Addition to Retained Earnings $ 2,124 $ 1,617 $ 789 ($ 584) ($2,577) ($5,157) ($8,792)
-------------------------------------------------------------------------
</TABLE>
<PAGE> 100
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 4 of 9
UPSIDE CASE
($ IN THOUSANDS)
CASH FLOW STATEMENT:
<TABLE>
<CAPTION>
Historical - June 30, Projected - June 30,
------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Addition to Retained Earnings $ 3,179 $ 2,908 $ 2,107 $ 2,693 $ 2,305 $(230) $ 240 $ 1,192
+ Depreciation 927 1,052 1,116 1,261 1,299 1,136 1,019 969
+ Amort. of Old Goodwill 0 0 0 0 0 0 0 0
+ Amort. of Other 0 0 0 0 0 0 0 0
+ Amort. of Goodwill 0 0 0 0 0 413 413 413
+ Amort. of Non-Compete 0 0 0 0 0 0 0 0
+ Amort. of Tran. Costs 0 0 0 0 0 150 150 150
+ Change in LT Investments N/A 7 6 (1,099) 3,004 0 0 0
+ Change in Investment in Affiliate N/A 0 (250) (75) (38) 0 0 0
+ Change in Other Assets N/A (392) (166) (143) (47) 0 0 0
+ Change in Deferred Taxes N/A (10) 56 (14) 31 0 0 0
+ Non Cash Interest Expense 0 0 0 0 0 0 0 0
+ PIK Dividends Accrued 0 0 0 0 0 761 1,051 1,451
- Capital Expenditures (1,028) (1,013) (1,165) (1,119) (1,447) (800) (800) (800)
- Changes in W/C N/A (1,711) 2,137 (22) (273) 415 (630) (844)
------------------------------------------------------------------------------------
Cash Flow Available For Debt N/A 841 3,841 1,482 4,834 1,844 1,443 2,531
- Scheduled Debt Retirement 0 0 0 0 0 (1,200) (1,200) (1,200)
- Additions to Cash & Seas. W/C 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------
Cash Flow Available to Retire Term B N/A 841 3,841 1,482 4,834 644 243 1,331
- Additional Term B Retirement1 0 0 0 0 0 (322) (121) (665)
Cash Flow Available To
----------------------------------------------------------------------------------------
Retire Additional Debt N/A $ 841 $ 3,841 $ 1,482 $ 4,834 $ 322 $ 121 $ 665
========================================================================================
<CAPTION>
Projected - June 30,
-------------------------------------------------------------------------
2003 2004 2005 2006 2007 2008 2009
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Addition to Retained Earnings $ 2,124 $ 1,617 $ 789 $(584) $(2,577) $(5,157) $(8,792)
+ Depreciation 931 1,006 900 800 800 800 800
+ Amort. of Old Goodwill 0 0 0 0 0 0 0
+ Amort. of Other 0 0 0 0 0 0 0
+ Amort. of Goodwill 413 413 413 413 413 413 413
+ Amort. of Non-Compete 0 0 0 0 0 0 0
+ Amort. of Tran. Costs 150 150 0 0 0 0 0
+ Change in LT Investments 0 0 0 0 0 0 0
+ Change in Investment in Affiliate 0 0 0 0 0 0 0
+ Change in Other Assets 0 0 0 0 0 0 0
+ Change in Deferred Taxes 0 0 0 0 0 0 0
+ Non Cash Interest Expense 0 0 0 0 0 0 0
+ PIK Dividends Accrued 2,003 2,766 3,819 5,272 7,279 10,049 13,874
- Capital Expenditures (800) (800) (800) (800) (800) (800) (800)
- Changes in W/C (911) (30) 0 0 0 0 0
--------------------------------------------------------------------------
Cash Flow Available For Debt 3,910 5,121 5,120 5,101 5,114 5,304 5,495
- Scheduled Debt Retirement (1,091) (200) (200) (200) (2,200) (2,200) (2,200)
- Additions to Cash & Seas. W/C 0 0 0 0 0 0 0
--------------------------------------------------------------------------
Cash Flow Available to Retire Term B 2,818 4,921 4,920 4,901 2,914 3,104 3,295
- Additional Term B Retirement1 0 0 0 0 0 0 0
Cash Flow Available To
--------------------------------------------------------------------------
Retire Additional Debt $ 2,818 $ 4,921 $ 4,920 $ 4,901 $ 2,914 $ 3,104 $ 3,295
==========================================================================
</TABLE>
1. Additional retirement of the Term B loan using 50% of excess cash
<PAGE> 101
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 5 of 9
UPSIDE CASE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
At Closing
------------------------------------------------
AMORTIZATION SCHEDULES: 6/30/99 2000 2001 2002 2003
- ----------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
Senior Term Loan A (real estate): Pay down term loan with excess cash once revolver paid off (Y/N)? N
Beginning Balance $ 0 $2,000 $1,800 $1,600 $1,400
Stated Coupon 0.00% 9.75% 9.75% 9.75% 9.75%
Total Interest Expense $ 0 $ 185 $ 166 $ 146 $ 127
Scheduled Amortization 0 200 200 200 200
Additional Prepayments 0 0 0 0 0
Ending Balance 2,000 1,800 1,600 1,400 1,200
Scheduled Amortization 5.5 Years Avg. Life 10.0% 10.0% 10.0% 10.0%
Revolving Facility:
Available on Accounts Rec.(1) 42.1% $2,793 $2,160 $2,376 $2,678 $3,003
Available on Inventory (2) 52.5% 2,803 3,051 3,320 3,612 3,930
Total Availability 5,596 5,211 5,696 6,290 6,933
Usage (End. Bal.) As A % Of Availability 91.4% 92.0% 82.0% 63.7% 17.1%
Beginning Bal. $ 0 $5,114 $4,792 $4,670 $4,005
Stated Coupon 0.00% 9.25% 9.25% 9.25% 9.25%
Total Interest Expense $ 0 $ 458 $ 438 $ 401 $ 240
Retirements (Additions) 1999 Avg. Excess 0 322 121 665 2,818
Ending Balance W/C Requirement: $0 5,114 4,792 4,670 4,005 1,186
Unused Availability 483 419 1,026 2,285 5,746
Senior Term Loan B (equipment and cash flow): Pay down term loan with 50% excess cash?
Beginning Balance $ 0 $5,000 $3,678 $2,556 $ 891
Stated Coupon 0.00% 10.25% 10.25% 10.25% 10.25%
Total Interest Expense $ 0 $ 445 $ 320 $ 177 $ 46
Scheduled Amortization 0 1,000 1,000 1,000 891
Additional Prepayments 0 322 121 665 0
Ending Balance 5,000 3,678 2,556 891 0
Amortization 2.4 Years Avg. Life 20.0% 20.0% 20.0% 20.0%
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Scheduled Amortization 0 0 0 0 0
Additional Prepayments 0 0 0 0 0
Ending Balance 0 0 0 0 0
Amortization 0.0% 0.0% 0.0% 0.0%
<CAPTION>
Projected - June 30,
-------------------------------------------------------
AMORTIZATION SCHEDULES: 2004 2005 2006 2007 2008 2009
- ----------------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Senior Term Loan A (real estate): Pay down term loan with excess cash once revolver paid off (Y/N)? N
Beginning Balance $1,200 $1,000 $ 800 $ 600 $ 400 $ 200
Stated Coupon 9.75% 9.75% 9.75% 9.75% 9.75% 9.75%
Total Interest Expense $ 107 $ 88 $ 68 $ 49 $ 29 $ 10
Scheduled Amortization 200 200 200 200 200 200
Additional Prepayments 0 0 0 0 0 0
Ending Balance 1,000 800 600 400 200 0
Scheduled Amortization 5.5 Years Avg. Life 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Revolving Facility:
Available on Accounts Rec.(1) 42.1% $3,016 $3,016 $3,016 $3,016 $3,016 $3,016
Available on Inventory (2) 52.5% 3,930 3,930 3,930 3,930 3,930 3,930
Total Availability 6,946 6,946 6,946 6,946 6,946 6,946
Usage (End. Bal.) As A % Of Availability 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Beginning Bal. $1,186 $ 0 $ 0 $ 0 $ 0 $0
Stated Coupon 9.25% 9.25% 9.25% 9.25% 9.25% 9.25%
Total Interest Expense $ 55 $ 0 $ 0 $ 0 $ 0 $ 0
Retirements (Additions) 1999 Avg. Excess 1,186 0 0 0 0 0
Ending Balance W/C Requirement: 0 0 0 0 0 0
Unused Availability 6,946 6,946 6,946 6,946 6,946 6,946
Senior Term Loan B (equipment and cash flow): Pay down Yerm loan with 50% excess cash?
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 10.25% 10.25% 10.25% 10.25% 10.25% 10.25%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Scheduled Amortization 0 0 0 0 0 0
Additional Prepayments 0 0 0 0 0 0
Ending Balance 0 0 0 0 0 0
Amortization 2.4 Years Avg. Life 20.0% 0.0% 0.0% 0.0% 0.0% 0.0%
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Scheduled Amortization 0 0 0 0 0 0
Additional Prepayments 0 0 0 0 0 0
Ending Balance 0 0 0 0 0 0
Amortization 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
</TABLE>
<PAGE> 102
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 6 of 9
UPSIDE CASE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
AMORTIZATION SCHEDULES:
- -----------------------
Pro Forma
At Closing Projected - June 30,
--------------------------------------------------------------------
6/30/99 2000 2001 2002 2003 2004
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mezzanine debt:
Beginning Balance $ 0 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000
Stated Coupon 0.00% 13.00% 13.00% 13.00% 13.00% 13.00%
Total Interest Expense $ 0 $ 780 $ 780 $ 780 $ 780 $ 780
Cash Coupon 0.00% 13.00% 13.00% 13.00% 13.00% 13.00%
Cash Interest Expense $ 0 $ 780 $ 780 $ 780 $ 780 $ 780
Non Cash Interest Expense Accrued 0 0 0 0 0 0
Scheduled Amortization 0 0 0 0 0 0
Additional Prepayments 0 0 0 0 0 0
Ending Balance 9.0 Years Avg. Life 6,000 6,000 6,000 6,000 6,000 6,000
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Non Cash Interest Expense Accrued 0 0 0 0 0 0
Scheduled Amortization 0 0 0 0 0 0
Ending Balance 0 0 0 0 0 0
Preferred Stock:
Beginning Balance $ 0 $ 2,000 $ 2,761 $ 3,812 $ 5,263 $ 7,267
Stated Coupon 0.00% 35.00% 35.00% 35.00% 35.00% 35.00%
Total Dividend $ 0 $ 761 $ 1,051 $ 1,451 $ 2,003 $ 2,766
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Dividend $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
PIK Dividend Accrued 0 761 1,051 1,451 2,003 2,766
Scheduled Redemption 0 0 0 0 0 0
Ending Balance 2,000 2,761 3,812 5,263 7,267 10,032
<CAPTION>
Projected - June 30,
----------------------------------------------------------
AMORTIZATION SCHEDULES: 2005 2006 2007 2008 2009
- ----------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mezzanine debt:
Beginning Balance $ 6,000 $ 6,000 $ 6,000 $ 4,000 $ 2,000
Stated Coupon 13.00% 13.00% 13.00% 13.00% 13.00%
Total Interest Expense $ 780 $ 780 $ 780 $ 520 $ 260
Cash Coupon 13.00% 13.00% 13.00% 13.00% 13.00%
Cash Interest Expense $ 780 $ 780 $ 780 $ 520 $ 260
Non Cash Interest Expense Accrued 0 0 0 0 0
Scheduled Amortization 0 0 2,000 2,000 2,000
Additional Prepayments 0 0 0 0 0
Ending Balance 9.0 Years Avg. Life 6,000 6,000 4,000 2,000 0
n/a:
Beginning Balance $ 0 $ 0 $ 0 $ 0 $ 0
Stated Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Total Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0
Non Cash Interest Expense Accrued 0 0 0 0 0
Scheduled Amortization 0 0 0 0 0
Ending Balance 0 0 0 0 0
Preferred Stock:
Beginning Balance $10,032 $13,851 $19,123 $26,402 $36,451
Stated Coupon 35.00% 35.00% 35.00% 35.00% 35.00%
Total Dividend $ 3,819 $ 5,272 $ 7,279 $10,049 $13,874
Cash Coupon 0.00% 0.00% 0.00% 0.00% 0.00%
Cash Dividend $ 0 $ 0 $ 0 $ 0 $ 0
PIK Dividend Accrued 3,819 5,272 7,279 10,049 13,874
Scheduled Redemption 0 0 0 0 0
Ending Balance 13,851 19,123 26,402 36,451 50,325
</TABLE>
<PAGE> 103
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 7 of 9
UPSIDE CASE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
COVERAGE: Historical - June 30,
--------- ---------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EBIT/Pro Forma Senior Interest 3.80 2.43 3.05 2.68 2.59 4.08 7.67 18.00
EBIT/Pro Forma Total Cash Interest 2.21 1.42 1.78 1.56 1.51 2.21 3.69 6.23
EBIT/Pro Forma Total Interest 2.21 1.42 1.78 1.56 1.51 2.21 3.69 6.23
---------------------------------------------------------------------------
EBITA/Pro Forma Senior Interest 3.80 2.43 3.05 2.68 3.10 4.69 8.45 19.37
EBITA/Pro Forma Total Cash Interest 2.21 1.42 1.78 1.56 1.81 2.54 4.07 6.70
EBITA/Pro Forma Total Interest 2.21 1.42 1.78 1.56 1.81 2.54 4.07 6.70
---------------------------------------------------------------------------
EBITDA/Pro Forma Senior Interest 4.77 3.46 4.21 3.87 4.15 5.79 9.79 21.62
EBITDA/Pro Forma Total Cash Int. 2.78 2.01 2.45 2.26 2.42 3.14 4.71 7.48
EBITDA/Pro Forma Total Int. 2.78 2.01 2.45 2.26 2.42 3.14 4.71 7.48
EBITDA/Pro Forma Total Int. + Dividends 1.97 1.43 1.74 1.60 1.72 1.94 2.40 2.79
---------------------------------------------------------------------------
EBITDA-PF Capex/Pro Forma Total Int. 2.56 1.80 2.24 2.04 2.20 2.91 4.45 7.14
EBITDA-PF Capex/Pro Forma Debt Service 1.56 1.10 1.36 1.24 1.34 1.70 2.47 3.73
EBITDA-PF Capex/Pro Forma Debt Service + Div. 1.25 0.88 1.09 1.00 1.07 1.25 1.61 1.99
---------------------------------------------------------------------------
Senior Debt/EBITDA 0.29 0.34 0.28 2.87 2.28 1.65 0.89 0.27
Total Debt/EBITDA 0.29 0.34 0.28 4.30 3.61 2.77 1.74 0.94
Senior Debt/EBITDA-PF Capex 0.31 0.39 0.30 3.17 2.50 1.78 0.94 0.28
Total Debt/EBITDA-PF Capex 0.31 0.39 0.30 4.75 3.96 3.00 1.84 0.98
<CAPTION>
COVERAGE: Projected - June 30,
--------- -----------------------------------------------------
2004 2005 2006 2007 2008 2009
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EBIT/Pro Forma Senior Interest 46.58 88.97 115.86 162.20 270.33 811.00
EBIT/Pro Forma Total Cash Interest 8.02 9.00 9.32 9.54 14.40 29.31
EBIT/Pro Forma Total Interest 8.02 9.00 9.32 9.54 14.40 29.31
-----------------------------------------------------
EBITA/Pro Forma Senior Interest 50.05 93.67 121.90 170.67 284.44 853.33
EBITA/Pro Forma Total Cash Interest 8.61 9.47 9.81 10.04 15.15 30.84
EBITA/Pro Forma Total Interest 8.61 9.47 9.81 10.04 15.15 30.84
-----------------------------------------------------
EBITDA/Pro Forma Senior Interest 56.25 103.93 133.63 187.08 311.79 935.38
EBITDA/Pro Forma Total Cash Int. 9.68 10.51 10.75 11.00 16.60 33.81
EBITDA/Pro Forma Total Int. 9.68 10.51 10.75 11.00 16.60 33.81
EBITDA/Pro Forma Total Int. + Dividends 2.46 1.95 1.49 1.12 0.86 0.64
-----------------------------------------------------
EBITDA-PF Capex/Pro Forma Total Int. 9.26 10.05 10.28 10.52 15.88 32.33
EBITDA-PF Capex/Pro Forma Debt Service 7.63 8.17 8.32 2.88 3.17 3.53
EBITDA-PF Capex/Pro Forma Debt Service + Div. 2.23 1.78 1.38 0.85 0.68 0.53
-----------------------------------------------------
Senior Debt/EBITDA 0.11 0.09 0.07 0.04 0.02 0.00
Total Debt/EBITDA 0.77 0.75 0.72 0.48 0.24 0.00
Senior Debt/EBITDA-PF Capex 0.11 0.09 0.07 0.05 0.02 0.00
Total Debt/EBITDA-PF Capex 0.80 0.78 0.76 0.50 0.25 0.00
</TABLE>
1. Unfinancible pro forma capex is assumed to be $400M per year.
<TABLE>
<CAPTION>
Pro Forma
At Closing
--------------------------------------------------------------------
CAPITALIZATION: 6/30/99 2000 2001 2002 2003 2004
- -------------- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Minimum Cash Balance Required $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Minimum Average Excess Seasonal W/C 0 0 0 0 0 0
Additions To Cash & Avg. Excess Seasonal W/C 0 0 0 0 0 0
Cash Flow Available to Repay Additional Debt 0 322 121 665 2,818 4,921
Additional Debt Repaid 0 322 121 665 2,818 1,186
--------------------------------------------------------------------
Excess Cash Flow 0 0 0 0 0 3,734
Cumulative Excess Cash 0 0 0 0 0 3,734
Outstanding Balances:
Senior Term Loan A (real estate) $ 2,000 $ 1,800 $ 1,600 $ 1,400 $ 1,200 $ 1,000
Revolving Facility 5,114 4,792 4,670 4,005 1,186 0
Senior Term Loan B (equipment and cash flow) 5,000 3,678 2,556 891 0 0
n/a 0 0 0 0 0 0
Total Senior Debt 12,114 10,269 8,827 6,296 2,386 1,000
Mezzanine debt 6,000 6,000 6,000 6,000 6,000 6,000
n/a 0 0 0 0 0 0
Total Debt 18,114 16,269 14,827 12,296 8,386 7,000
Preferred Stock 2,000 2,761 3,812 5,263 7,267 10,032
Common Stock 5,162 4,931 5,172 6,364 8,487 10,104
<CAPTION>
----------------------------------------------------------
CAPITALIZATION: 2005 2006 2007 2008 2009
- -------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Minimum Cash Balance Required $ 0 $ 0 $ 0 $ 0 $ 0
Minimum Average Excess Seasonal W/C 0 0 0 0 0
Additions To Cash & Avg. Excess Seasonal W/C 0 0 0 0 0
Cash Flow Available to Repay Additional Debt 4,920 4,901 2,914 3,104 3,295
Additional Debt Repaid 0 0 0 0 0
----------------------------------------------------------
Excess Cash Flow 4,920 4,901 2,914 3,104 3,295
Cumulative Excess Cash 8,654 13,555 16,470 19,574 22,869
Outstanding Balances:
Senior Term Loan A (real estate) $ 800 $ 600 $ 400 $ 200 $ 0
Revolving Facility 0 0 0 0 0
Senior Term Loan B (equipment and cash flow) 0 0 0 0 0
n/a 0 0 0 0 0
Total Senior Debt 800 600 400 200 0
Mezzanine debt 6,000 6,000 4,000 2,000 0
n/a 0 0 0 0 0
Total Debt 6,800 6,600 4,400 2,200 0
Preferred Stock 13,851 19,123 26,402 36,451 50,325
Common Stock 10,893 10,309 7,732 2,574 (6,218)
</TABLE>
<PAGE> 104
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 8 of 9
UPSIDE CASE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
PROJECTED BALANCE SHEET: Historical - June 30, At Closing
- ------------------------ ----------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and Equivalents $ 6,078 $ 5,932 $ 8,933 $ 6,163 $ 0 $ 0 $ (0) $ 0
Trade Receivables, Net 6,733 7,061 5,990 6,616 6,634 5,131 5,644 6,360
Inventories 4,997 5,639 5,139 5,675 5,335 5,806 6,318 6,874
Deferred Taxes 415 254 357 231 351 351 351 351
Other Current Assets 243 425 385 257 613 613 613 613
----------------------------------------------------------------------
Current Assets 18,466 19,311 20,804 18,942 12,933 11,900 12,926 14,199
Long-Term Investments 2,031 2,024 2,018 3,117 113 113 113 113
Investment in Affiliate 0 0 250 325 363 363 363 363
PP&E Net 5,868 5,569 5,296 4,925 4,984 4,648 4,429 4,260
Other Assets 288 680 846 989 1,036 1,036 1,036 1,036
New Goodwill 0 0 0 0 10,318 9,905 9,493 9,080
Unamortized Non-Compete Agreement 0 0 0 0 0 0 0 0
Unamortized Tran. Costs 0 0 0 0 750 600 450 300
----------------------------------------------------------------------
Total Assets $26,653 $27,584 $29,214 $28,298 $30,497 $28,566 $28,809 $29,351
======================================================================
Notes Pay. & Curr. Mat. of LTD $ 0 $ 63 $ 67 $ 92 $ 0 $ 0 $ 0 $ 0
Accounts Payable 1,003 990 1,095 1,491 1,318 1,158 1,260 1,371
Accrued Payroll and Benefits 1,406 571 916 1,115 951 836 909 989
Deferred Income 1,099 1,098 1,039 1,280 1,402 1,232 1,341 1,459
Income Taxes Payable 532 410 488 538 819 720 783 852
Warranty Reserve 142 175 218 213 261 229 250 272
Other Current Liabilities 237 455 572 577 344 302 329 358
----------------------------------------------------------------------
Current Liabilities 4,419 3,762 4,395 5,306 5,095 4,477 4,872 5,301
Minority Interest 0 0 0 0 0 0 0 0
Deferred Taxes 64 54 110 96 127 127 127 127
Senior Term Loan A (real estate) 1,578 1,417 1,229 1,177 2,000 1,800 1,600 1,400
Revolving Facility 0 0 0 0 5,114 4,792 4,670 4,005
Senior Term Loan B (equipment and cash flow) 0 0 0 0 5,000 3,678 2,556 891
n/a 0 0 0 0 0 0 0 0
Mezzanine debt 0 0 0 0 6,000 6,000 6,000 6,000
n/a 0 0 0 0 0 0 0 0
Preferred Stock 0 0 0 0 2,000 2,761 3,812 5,263
Stockholders' Equity 20,592 22,351 23,480 21,719 5,162 4,931 5,172 6,364
----------------------------------------------------------------------
Total Liabilities & Equity $26,653 $27,584 $29,214 $28,298 $30,497 $28,566 $28,809 $29,351
======================================================================
CHANGES IN WORKING CAPITAL:
- ---------------------------
Uses:
Accounts Receivable N/A 328 (1,071) 626 18 (1,503) 513 717
Inventories N/A 642 (500) 536 (340) 471 512 556
Deferred Taxes N/A (161) 103 (126) 120 0 0 0
Other Current Assets N/A 182 (40) (128) 356 0 0 0
Sources:
Accounts Payable N/A 13 (105) (396) 173 160 (102) (111)
Accrued Payroll and Benefits N/A 835 (345) (199) 164 115 (74) (80)
Deferred Income N/A 1 59 (241) (122) 170 (109) (118)
Income Taxes Payable N/A 122 (78) (50) (281) 99 (63) (69)
Warranty Reserve N/A (33) (43) 5 (48) 32 (20) (22)
Other Current Liabilities N/A (218) (117) (5) 233 42 (27) (29)
-----------------------------------------------------------------------
Total Inc. (Decr.) in Wkg. Cap N/A $ 1,711 $(2,137) $ 22 $ 273 $ (415) $ 630 $ 844
=======================================================================
<CAPTION>
PROJECTED BALANCE SHEET: Projected - June 30,
- ------------------------ -------------------------------------------------------------
2003 2004 2005 2006 2007 2008 2009
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and Equivalents $ (0) $ 3,734 $ 8,654 $13,555 $16,470 $19,574 $22,869
Trade Receivables, Net 7,133 7,164 7,164 7,164 7,164 7,164 7,164
Inventories 7,479 7,479 7,479 7,479 7,479 7,479 7,479
Deferred Taxes 351 351 351 351 351 351 351
Other Current Assets 613 613 613 613 613 613 613
-------------------------------------------------------------
Current Assets 15,576 19,341 24,261 29,162 32,076 35,181 38,475
Long-Term Investments 113 113 113 113 113 113 113
Investment in Affiliate 363 363 363 363 363 363 363
PP&E Net 4,129 3,923 3,823 3,823 3,823 3,823 3,823
Other Assets 1,036 1,036 1,036 1,036 1,036 1,036 1,036
New Goodwill 8,667 8,255 7,842 7,429 7,016 6,604 6,191
Unamortized Non-Compete Agreement 0 0 0 0 0 0 0
Unamortized Tran. Costs 150 0 0 0 0 0 0
-------------------------------------------------------------
Total Assets $30,034 $33,030 $37,438 $41,926 $44,428 $47,120 $50,001
=============================================================
Notes Pay. & Curr. Mat. of LTD $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Accounts Payable 1,492 1,492 1,492 1,492 1,492 1,492 1,492
Accrued Payroll and Benefits 1,076 1,076 1,076 1,076 1,076 1,076 1,076
Deferred Income 1,587 1,587 1,587 1,587 1,587 1,587 1,587
Income Taxes Payable 927 927 927 927 927 927 927
Warranty Reserve 295 295 295 295 295 295 295
Other Current Liabilities 389 389 389 389 389 389 389
-------------------------------------------------------------
Current Liabilities 5,767 5,767 5,767 5,767 5,767 5,767 5,767
Minority Interest 0 0 0 0 0 0 0
Deferred Taxes 127 127 127 127 127 127 127
Senior Term Loan A (real estate) 1,200 1,000 800 600 400 200 0
Revolving Facility 1,186 0 0 0 0 0 0
Senior Term Loan B (equipment and cash flow) 0 0 0 0 0 0 0
n/a 0 0 0 0 0 0 0
Mezzanine debt 6,000 6,000 6,000 6,000 4,000 2,000 0
n/a 0 0 0 0 0 0 0
Preferred Stock 7,267 10,032 13,851 19,123 26,402 36,451 50,325
Stockholders' Equity 8,487 10,104 10,893 10,309 7,732 2,574 (6,218)
-------------------------------------------------------------
Total Liabilities & Equity $30,034 $33,030 $37,438 $41,926 $44,428 $47,120 $50,001
=============================================================
CHANGES IN WORKING CAPITAL:
- ---------------------------
Uses:
Accounts Receivable 773 30 0 0 0 0 0
Inventories 604 0 0 0 0 0 0
Deferred Taxes 0 0 0 0 0 0 0
Other Current Assets 0 0 0 0 0 0 0
Sources:
Accounts Payable (121) 0 0 0 0 0 0
Accrued Payroll and Benefits (87) 0 0 0 0 0 0
Deferred Income (128) 0 0 0 0 0 0
Income Taxes Payable (75) 0 0 0 0 0 0
Warranty Reserve (24) 0 0 0 0 0 0
Other Current Liabilities (31) 0 0 0 0 0 0
-------------------------------------------------------------
Total Inc. (Decr.) in Wkg. Cap $ 911 $ 30 $ 0 $ 0 $ 0 $ 0 $ 0
=============================================================
</TABLE>
<PAGE> 105
PROJECT MICROWAVE Exhibit 9
LEVERAGED BUYOUT ANALYSIS Page 9 of 9
UPSIDE CASE
($ IN THOUSANDS)
CALCULATION OF RETURNS TO INVESTORS:
- ------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
NET TERMINAL VALUE:
2004 EBITDA $ 9,120 $ 9,120 $ 9,120 $ 9,120 $ 9,120
Terminal Multiple 5.00 5.50 6.00 6.50 7.00
---------------------------------------------------
Terminal Value 45,600 50,160 54,720 59,280 63,840
Less: 2004 Outstanding Balances
Senior Term Loan A (real estate) 1,000 1,000 1,000 1,000 1,000
Revolving Facility 0 0 0 0 0
Senior Term Loan B (equipment and cash 0low) 0 0 0 0
n/a 0 0 0 0 0
Mezzanine debt 6,000 6,000 6,000 6,000 6,000
n/a 0 0 0 0 0
Preferred Stock 10,032 10,032 10,032 10,032 10,032
Plus: 2004 Excess Cash 3,734 3,734 3,734 3,734 3,734
---------------------------------------------------
Net Terminal Value $32,302 $36,862 $41,422 $45,982 $50,542
===================================================
</TABLE>
<TABLE>
<CAPTION>
At
CASH FLOWS TO INVESTORS: Closing Year 1 Year 2 Year 3 Year 4 Year 5 IRR
--------------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mezzanine 20.0% 5.00 (5,880) 780 780 780 780 13,240 26.51%
Mezzanine 20.0% 5.50 (5,880) 780 780 780 780 14,152 27.93%
Mezzanine 20.0% 6.00 (5,880) 780 780 780 780 15,064 29.29%
Mezzanine 20.0% 6.50 (5,880) 780 780 780 780 15,976 30.59%
Mezzanine 20.0% 7.00 (5,880) 780 780 780 780 16,888 31.83%
Preferred Stock 0.0% 5.00 (2,000) 0 0 0 0 10,032 38.06%
Preferred Stock 0.0% 5.50 (2,000) 0 0 0 0 10,032 38.06%
Preferred Stock 0.0% 6.00 (2,000) 0 0 0 0 10,032 38.06%
Preferred Stock 0.0% 6.50 (2,000) 0 0 0 0 10,032 38.06%
Preferred Stock 0.0% 7.00 (2,000) 0 0 0 0 10,032 38.06%
Management Equity 80.0% 5.00 (5,162) 0 0 0 0 25,841 38.01%
Management Equity 80.0% 5.50 (5,162) 0 0 0 0 29,489 41.70%
Management Equity 80.0% 6.00 (5,162) 0 0 0 0 33,137 45.05%
Management Equity 80.0% 6.50 (5,162) 0 0 0 0 36,785 48.11%
Management Equity 80.0% 7.00 (5,162) 0 0 0 0 40,433 50.94%
Investor Equity 0.0% 5.00 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 5.50 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 6.00 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 6.50 0 0 0 0 0 0 0.00%
Investor Equity 0.0% 7.00 0 0 0 0 0 0 0.00%
</TABLE>
<PAGE> 106
EXHIBIT 10
PAGE 1 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
----------------------------------------------------------------------------- -------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oct-99 Vivid Technologies Inc 23 (4.8) Mftrs. auto. explosives EG&G 62.8
detection systems
Oct-99 Furon Co. (US) 480 Norton Corp. (US) 620.0
Oct-99 Promedix.com (US) Chemdex Corp. (US) ~419
Sep-99 Bran + Luebbe GmbH (DE) 130 United Dominion
Industries, Ltd. (US)
Sep-99 Clark Electromedical
Instruments (UK) Harvard Apparatus,
Inc. (US)
Sep-99 Clontech Laboratories Inc. Becton Dickinson & 200.0
Co.(US)
Sep-99 Fiberchem Inc. (US) Intrex Data
Communications (CA)
Sep-99 Genetic Microsystems 23 Affymetrix Inc. (US) 120.0
Inc. (US)
Sep-99 Handar subsidiary of 9 Vaisala Oyj (FI)
TSI Inc. (US)
Sep-99 Jaguar ESI/TOF-MS technology Leco Corp. 2.6
from Sensar Corp. (US)
Sep-99 Matrix Technologies Corp. (US) 23 Sybron International
Corp. (US)
Sep-99 Stem Corp. (UK) 2 Barnstead Thermolyne,
a subsidiary of Sybron.
Sep-99 Systems Sales Assocs. Inc. 8 Erie Scientific, a
subsidiary of Sybron
Sep-99 TSI Inc. (US) JJF Group, Inc. (US) 157.0
Aug-99 Stem Corp Ltd 2 Sybron International Aug-99
Corp
Aug-99 AGA (SW) Linde (DE) 3.9b
Aug-99 Anatec, part of the Protech
Division of Buhler (CH) 5 Buchi Labortechnik (CH) L7.15b
Aug-99 BOC Group (UK) Air Liquide (FR) and Air
Products & Chemicals (US)
Aug-99 Cambridge Mol. Tech. Ltd. (UK) Whatman plc. (UK) L4m
Aug-99 Charles Evans & Assocs. (US) High Voltage
Engineering (US)
Aug-99 Cytogenetic imaging instrument Applied Imaging (US)
business from Vysis (US)
Aug-99 Denver Instrument (US) 18 Sartorius (DE)
Aug-99 K&M Electronics from Derlan (CA) 21 ITT Industries (US)
Aug-99 Scitec Automation Holdings (CH) Zymark (US)
Aug-99 Thru-Put Systems (US) 3 ThermoQuest (US)
Aug-99 Tri-Gas (US) Matheson Gas Products(US)
Aug-99 FEI (US)
</TABLE>
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PAGE 2 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
------------------------------------------------------------------------------ -------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jul-99 Environmental Technologies 20 Smiths Industries (UK) 14m
Group (UK)
Jul-99 Filtrak (DE) Sartorius (DE)
Jul-99 G. Cussons Holdings (UK) Trident Analytical (UK) L10.5m
Jul-99 Leica Mikroscopi (NO) 5 Tamro Medlab (FI)
Jul-99 Scientific detector products 12 Burle Industries (US) 8.5m
business of Galileo Corp (US) Sartorius (DE)
Jul-99 Vivascience, Life
Purification Technologies (UK)
Jun-99 Pacific Monolithics 35 Mftrs indus. instr. Hybrid Networks Inc 17.5
for measurement/
display/control
Jun-99 Atlantic Antibodies (US) 2 Strategic Diagnostics(US) 3m
Jun-99 Auburn International (US) Oxford Instruments (UK) 4.5m
Jun-99 Daniel Industries (US) Emerson Electric (US) 460m
Jun-99 Eclipse Tech. Software Alpha Technologies (US)
Services (NL)
Jun-99 Endogen (US) 10 Perbio Science (SW) 13.6m
Jun-99 Environmental Systems Corp.(US) 23 in 1998 TSI (US)
Jun-99 FMC Bioproducts (US) 24 Cambrex (US) 38m
Jun-99 Industrial Scientific Corp.(US) ISC Acquisition Corp (US)
Jun-99 Micrion (US) 55 FEI (US) 67m
Jun-99 Microgenics 35 Sybron (US)
Jun-99 Novex (US) 23 Invitrogen (US) >50m
Jun-99 Centronic Inc Thermo Electron Corp
Jun-99 Paster Sanofi Diagnostics (US) 210 Bio-Rad Labs (US) ~210m
Jun-99 PE Corp. Analytical Division (US) 600 EG&G (US) 425m
Jun-99 Polymicro Technologies (US) Keystone Capital (US) 15.0
Jun-99 Semivac (US) Pfeiffer Vacuum (DE)
Jun-99 Chrompack International BV Varian Associates Inc
Jun-99 Servomex (UK) Fairey Group (UK) L 19.1
Jun-99 ThermoSpectra (US) Thermo Instrument 19m
Systems (US)
Jun-99 Varlen Instruments division 38 Roper Industries (US) 38.7m
of Varlen Corp. (US)
Jun-99 VWR Scientific Products (US) Merck KGaA (DE) 625m
</TABLE>
<PAGE> 108
EXHIBIT 10
PAGE 3 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
----------------------------------------------------------------------------- -------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
May-99 Corning Inc - Non- Thermo Electron Corp L 4.0
Telecommunications Optical
Filter Business
May-99 Amdel Ltd. (AU) Metrika Systems Corp.(US) >8
May-99 Bioprocessing Corp. Ltd. 4 Millipore Corp. (US) 19.7 milion
May-99 Bodenseewerk Perkin-Elmer SICK AG (DE)
GmbH (DE)
May-99 Corning Inc. (US) Whatman plc (UK) 9.8
May-99 Daniel Industries, Inc. (US) 283 Emerson Electric Co.(US) 460.0
May-99 Elsag-Bailey's Applied 50 Siemens AG (DE)
Automation Division (US)
May-99 Environmental Systems Corp.(US) TSI Inc. (US)
May-99 Full control of it's Chinese Mettler-Toledo
join venture in Changzhou International Inc.(CH)
May-99 Instron Corp. (US) 230 Kirtland Capital 170.0
Partners (US)
May-99 Nycomed Pharma Nordic Capital 275.0
May-99 PCP Inc. (West Palm Beach, FL) -1 SAES Getters Group (IT)
May-99 Prochrom SA (FR) Novasep SAS FR)
May-99 Servomex plc (UK) Fairey Group plc (UK) 31.0
May-99 Skatron Instruments AS (NO) 4 Molecular Devices 7.0
Corp.(US)
May-99 Thermospectra Corp. (US) Thermo Instrument 19.0
Systems Inc. (US)
Apr-99 Hach Co 137 Danaher Corp 313.0 Jul-99
Apr-99 Arizona Instrument Corp. (US) National Environment
Service Co. (US)
Apr-99 AS Pihl (NO) 1 Tamro Medlab (FI)
Apr-99 BioSepra Inc. Life Technologies, 12.0
Inc. (US)
Apr-99 Charles Evans & Assocs. (US) High Voltage Engineering
Corp. (US)
Apr-99 Hach Co. (US) 140 Danaher Corp. (US) 325.0
Apr-99 Owens-Illinois Inc. (US) DEM65 Gerresheimer Glas AG (DE)
Apr-99 Prochrom SA (FR) Dr. Henri Colin and
Dr. Pierre Hilaireau
(Founders)
Apr-99 RdH Laborchemikalien Sigma-Aldrich Corp. (US)
GmbH &Co. (DE)
Apr-99 Reliance Glass Works Inc. SP Industries Inc. (US)
Apr-99 Tillquist Analys AB (SE) 15 Bie & Berntsen A/S (DK)
</TABLE>
<PAGE> 109
EXHIBIT 10
PAGE 4 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
------------------------------------------------------------------------------ ------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mar-99 Konelab Oy / Clids Oy 25 Mftrs. clinical Thermo Electron Corp 10.6 Mar-99
chemistry analyzers
Mar-99 Bio-Orbit Oy (FI) 27 Thermo Bioanalysis 882,000.0
Corp. (US)
Mar-99 DSP Technology 24 4.2 Mftrs. indus. instr. MTS Systems Corp 24.7 Jun-99
engine and
powertrain testing.
Mar-99 HTI Bio-Products Inc. (US) 6 Strategic Diagnostics
Inc. (US) >8.1
Mar-99 Industrial Scientific Corp. (US) ISC Acquisition Corp.(US) 26.0
Mar-99 Konelab Oy (FI) and CLIDS Oy (FI) 27 Thermo Bioanalysis 18.1
Corp. (US)
Mar-99 Erich Jaeger GmbH Thermo Electron Corp
Mar-99 Optometrics (UK) 1 John Barton, John Henson 160,000.0
(Management buy-in team)
Mar-99 Perkin-Elmer Coporation - 569 27.6 Mftrs. analytical EG&G 425.0 May-99
Instruments Division instr.
Mar-99 Perkin-Elmer Corp. (US) 570 EG&G Inc. (US) 425.0
Mar-99 Phamacia Biotech 20 Harvard Apparatus
(Biochrom) Ltd. (UK) Inc. (US)
Mar-99 TexSEM Laboratories Inc. (US) EDAX Inc. (US)
Mar-99 US Filter Corp. (US) Vivendi SA (FR) 6.2 billion
Mar-99 11 Canberra Industries (US) 9.5
Feb-99 Opticon Corp 3 Thermo Electron Corp 2.0 Feb-99
Feb-99 ChemiCorp International Inc. (CA) IDS Intelligent
Detection Systems
Inc. (CA)
Feb-99 Corning OCA Corp. (US) 7 Thermo Vision Corp. (US) 4.0
Feb-99 General Analysis (US) 4 OI Corp. (US)
Feb-99 Giralt (ES) 4 PACISA (ES)
Feb-99 Gresham Scientific Web Link Medical
Feb-99 Nalge Process Technologies (US) Norton Performance
Plastics Corp. (US)
Feb-99 Opticon Corp. (US) 3 Thermo Vision Corp. (US) 2.0
Feb-99 Packard BioScience Co. (US) 4 Whatman Inc. (US) 11.0
Feb-99 Premier Technologies (RSA) The Scientific
Group (RSA)
Feb-99 Softron GmbH (DE) Dionex Corp. (US) 25.0
Feb-99 Spectra-Physics AB (SE) 432 Thermo Instrument
Systems Inc. (US) 355.0
Feb-99 Swiss Lab Technologies (RSA) The Scientific Group
(RSA)
</TABLE>
<PAGE> 110
EXHIBIT 10
PAGE 5 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
------------------------------------------------------------------------------ ------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jan-99 Palomar Technologies Inc - Star Mftrs. laser diode arrays Coherent Inc 65.0 Apr-99
Medical Technologies and systems for medical
and indus. applications
Jan-99 Affinity Chromatography (UK) Prometic Life Sciences C2.9m
(CA)
Jan-99 Angewandte Gentechnologie 2 Hybaid GmbH unit of
Systeme (DE) Thermo Bioanalysis (US)
Jan-99 Bio-Test AS (NO) Bie & Berntsen (DK)
Jan-99 BTR (UK) Siebe (UK)
Jan-99 CN Biosciences EM Industries (US) 150m
Jan-99 Dr. Hans Boekels (DE) 15 Sartorius (DE)
Jan-99 Elsag Bailey Process ABB Asea Brown 2.1billion
Automation Boveri (SZ)
Jan-99 Elution Solutions Biotage (US)
Jan-99 Genosys Biotechnologies (US) Sigma-Aldrich (US) 39.5m
Jan-99 Giralt SA (SP) 3 PACISA (SP)
Jan-99 Laboratory Devices (US) Sybron International(US)
Jan-99 Life Science Resources 6 EG&G (US)
Jan-99 Molecular BioProducts (US) 19 Sybron International(US)
Jan-99 Polycon Analysensysteme and Spectro Analytical (DE)
Polycon Laborautomation (DE)
Jan-99 Scientific Resources Inc. (US) 5 Sybron International(US)
Jan-99 Scientific Resources Inc. (US) 5 Sybron International(US)
Jan-99 SFC business from Sensar/ Selerity Technologies(US)
Larson-Davis (US)
Jan-99 Siantek (Taiwan) Foxboro Far East Pte.
Ltd.
Jan-99 Spectra-Physics (SW) 432 Thermo Instrument 355m
Systems (US)
Jan-99 Spectruma Analytik 2 Spectro Analytical
Instruments (DE)
Jan-99 Spectruma Analytik (DE) 2 Spectro Analytical (DE)
Jan-99 Unit Instruments (US) US Filter (US)
</TABLE>
<PAGE> 111
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PAGE 6 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
------------------------------------------------------------------------------ -------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec-98 Angewandte Gentechnologie 2 Thermo Electron Corp 1.9 Dec-98
Systeme GmbH
Dec-98 Inframetrics Inc 55 3.4 Mftrs. thermal imaging FLIR Systems Inc 45.0 Mar-99
and measurement systems
Dec-98 HTI Bio-Products Inc 6 0.5 Mftr of antibody prod. Strategic Diagnostics Inc 12.4 Mar-99
and svcs
Dec-98 Bioblock Scientific SA 72 10.6 Distributor of scientific Fisher Scientific 109.4 Dec-98
instr. and laboratory
material
Dec-98 Industrial Data Systems Engineering consulting to
co's w/ oil/gas pipelines Roper Industries Inc
Dec-98 Pasteur Sanofi Diagnostics S.A. 330 Mftrs. immunological Bio-Rad Laboratories 210.0
assays and systems
Dec-98 Bioblock Scientific (FR) 150 Fisher Scientific (US) -
Dec-98 Europa Scientific (UK) PDZ Group Ltd. (UK)
Dec-98 Lab Connections (US) Mocon (US)
Dec-98 Orbisphere (SZ) 53 Environment'l Instrum. 54.0
Group Ltd. (UK)
Nov-98 Analect Instruments Inc. (US) Orbital Sciences Corp.(US)
Oct-98 Lumen Technologies Inc 94 (12.2) EG&G 194.3 Jan-99
Oct-98 American Nuclear Systems (US) 11 Princeton-Gamma Tech Inc.
(US)
Oct-98 Elsag Bailey Process Asea Brown Boveri Ltd. 2,100.0
Automation (NL) (SZ)
Oct-98 Softron GmbH (DE) Dionex Corp. (US)
Oct-98 TopoMetrix Corp. (US) 12 ThermoSpectra Corp. (US) 8.0
Sep-98 ITT Industries Inc - 20 Danaher Corp Sep-98
Pomona Electronics
Sep-98 Welch Allyn Inc - Thermo Electron Corp
Grason-Stadler Inc
Sep-98 Phase Separations GC Jones Chromatography Ltd.
business (UK) (UK)
Sep-98 Rheo SA (FR) Gebruder Haake GmbH (DE) 33.0
Sep-98 Sampling Syringes of
Unimetrics Corp. (US) J&W Scientific Inc. (US)
Aug-98 Dr. Bruno Lange GmbH (DE) 60 Danaher Corp. (US)
Aug-98 Gebruder Haake GmbH (DE) 40 Thermo Optek Corp. (US) 33.0
Aug-98 Heraeus Instruments GmbH (DE) Sorvall Products LP (US)
Aug-98 Lab-Line Instruments Inc. (US) 23 Sybron's Barnstead
Thermolyne (US)
Aug-98 Molecular Dynamics Inc. (US) 56 Nycomed Amersham plc 256.0
(US), APB
Aug-98 Science Kit Group (SZ) 65 VWR Scientific Products 110.0
Corp. (US)
Aug-98 Scintag Inc. (US) 5 Thermo Optek Corp. (US) 4.0
</TABLE>
<PAGE> 112
EXHIBIT 10
PAGE 7 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
------------------------------------------------------------------------------ --------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jul-98 Asoma Instruments Inc. (US) Spectro Analytical
Instruments GmbH (DE)
Jul-98 Bohdan Automation Inc. (US) 10 Mettler Toledo
International Inc. (US)
Jul-98 Laminaire Corp Systems contracts with Thermo Mizer
pharmaceutical and chiller Environmental Corp
control industries
Jul-98 Electrothermal Engineering Sybron's Barnstead
Ltd. (UK) Thermolyne Corp. (US)
Jul-98 MSA's Baseline Industries 5 Questar Corp. (US)
Inc. (US)
Jul-98 SWO Polymertechnik GmbH (DE) 2 Gebruder Haake GmbH (DE)
Jul-98 Trace Analytical Inc. (US) 9 SAES Getters Group (IT) 8.0
Jun-98 Eichrom Industries Inc. (US) Gary Comer Inc. (US)
Jun-98 Membrex Inc. (US) Osmonics Inc. (US)
Jun-98 Rosys AG (SZ) Qiagen NV (NL) 15.8
Jun-98 Waters India Pvt. Ltd. (IN) Waters Corp. (US)
May-98 Honeywell Inc - Data 34 Mftrs. computerized meas. Thermo Electron Corp 29.0 Jul-98
Measurement Corp systems for flat metal
processing
May-98 Kontron Instruments SpA (IT) Lionheart Technologies
Inc. (US)
Apr-98 Fluke Corp 441 Mftrs. compact electronic Danaher Corp 704.0 Jul-98
test tools.
Apr-98 Chrompack International (NL) Varian Assocs. Inc.
(US)
Apr-98 Elemental Microanalysis (UK) Cathodeon Holdings Ltd.
(UK)
Apr-98 Life Science International 70 Thermo Bioanalysis Corp. 95.0
Clinical Products (US) (US)
Apr-98 Orion Research Inc. (US) 53 Thermedics Detection Inc. 57.0
(US)
Apr-98 Photometrics Ltd. (US) 23 Roper Industries Inc. 36.2
(US)
Apr-98 Setaram (FR) KEP Holding (FR)
Mar-98 MicroVision Corp 14 Develops information Electro Scientific 42.2 Feb-99
display technologies Industries Inc
Mar-98 Acton Research Corp. (US) 10 Roper Industries Inc.(US) 11.0
Mar-98 Amray Inc. (US) 30 KLA-Tencor Corp. (US)
Mar-98 Graseby's product
monitoring line (UK) Thermo Electron Corp.(US) 74.0
Mar-98 Micromet Instruments Inc. (US) Tytronics Inc. (US)
Mar-98 Micron Separations Inc. (US) 6 Osmonics Inc. (US)
Mar-98 MTI Analytical Instruments 6 Hewlett-Packard Co. (US)
Inc. (US)
</TABLE>
<PAGE> 113
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PAGE 8 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
------------------------------------------------------------------------------ ---------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Feb-98 Digital Instruments Inc. (US) 51 Veeco Instruments Inc. (US) 155.0
Feb-98 EDAX International (US) Advent International plc (UK)
Feb-98 Microanalytics Instruments 17 Mocon (US)
Corp. (US)
Feb-98 Micron Separations (US) 10 Osmonics (US) 13.5
Feb-98 Pacific Scientific Co. (US) Danaher Corp. (US) 460.0
Feb-98 PBA Technology Ltd. (UK) Bio Image (US)
Jan-98 TI Group PLC - Belfab 27 Edge-welded EG&G 45.0 Apr-98
bellows for
semiconductors
Jan-98 ETP Pty. Ltd. (AU) SGE International Pty. Ltd. (AU)
Jan-98 Sartorius Biotech (IN) Sartorius AG (DE)
Jan-98 Tecan AG (SZ) 99 Perkin-Elmer Corp. (US)
Jan-98 PerSeptive Biosystems (US) 97 Perkin-Elmer (US) 360m
Jan-98 PerSeptive Biosystems Inc. (US) - Perkin-Elmer Corp. (US) 360m
Dec-97 Elsag Bailey NV - Fluid Data Inc 13 Gas sampling Thermo Electron Corp 8.5 Dec-97
systems &
chromatographs
Dec-97 Canberra (US) 184 Stonington Partners (US) 103.0
Dec-97 Environmental Test Systems (US) 12 Hach (US) 16.0
Dec-97 MBO from GLT 2 Gresham Scientific (UK)
Dec-97 Nicolet Instrument Corp Thermo Electron Corp
Dec-97 Nimbus Medical Inc Thermo Electron Corp
Dec-97 Protean (UK) L81.0 Culligan (US) 105.0
Dec-97 Nord Est SA Thermo Electron Corp
Dec-97 Nord Est SA Thermo Trex Corp
Dec-97 Tecan (CH) 99 Perkin-Elmer (US)
Nov-97 Applied Science Group (NL) 2 Alltech (Europe) (BE)
Nov-97 Boston Advanced Technology's Varlen (US) 5.2
petroleum analyzer line (US)
Nov-97 Coulter (US) 700 Beckman (US) 1,150.0
Nov-97 Kontron's image analysis Carl Zeiss (DE)
division
Nov-97 Laboratory Systems (AU) TUSC (AU)
Nov-97 Lida (US) 7 Nalge Nunc (US)
Nov-97 Oriel Corp Thermo Electron Corp
Nov-97 Molecular Informatics (US) Perkin-Elmer (US)
Nov-97 Olin Instruments (US) Gow-Mac (US)
</TABLE>
<PAGE> 114
EXHIBIT 10
PAGE 9 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
--------------------------------------------------------------------- -------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nov-97 Pacific Power Source Corp Thermo Electron Corp
Nov-97 Pacific Scientific Co Danaher Corp
Nov-97 Scotlab (UK) L2.6 Anachem (UK)
Nov-97 Spectro (DE) 80 German Equity Partners (NL)
Oct-97 Activon (AU) - Selby (AU) -
Oct-97 De Spatel (NL) 3 Merck (DE)
Oct-97 FDC (from Hull) (US) 24 SP Industries (US)
Oct-97 LabSales (from Whatman) Bel-Art Products (US) 1.0
Oct-97 MBO (from Bowthorpe) L5.0 Penny & Giles (UK) 4.8
Oct-97 Micromass (UK) (from Schroder Ventures) 91 Waters (US) 188.0
Oct-97 Siemens AXS (DE) 50 Bruker (DE)
Oct-97 Sorvall (US) 168 Heraeus (DE)
Oct-97 Petrotech Inc Roper Industries Inc
Oct-97 Tescan (Czech Republic) LEO EM (UK)
Sep-97 Beijing Rayleigh Analytical CNY Beijing Analytical Instruments
Instruments (CN) 1,200 Factory (CN)
Sep-97 Centronics (US) Thermo Vision (US) 3.8
Sep-97 Chase Instruments (US) 24 Erie Scientific (part of
Sybron) (US)
Sep-97 Princeton Instruments Roper Industries Inc
Sep-97 Conductus' NMR probe business (US) Bruker (DE)
Sep-97 ESI Flufrance (FR) 5 Jouan (FR)
Sep-97 Euro Biosystems (UK) (from Optometrics) Columbia Biosciences (US) 0.2
Sep-97 ISA (FR) 90 Horiba (JP)
Sep-97 Puritan-Bennett Corp Thermo Electron Corp
Sep-97 Physical Electronics (US) (from Chase 70 High Voltage Electronics (US)
Capital)
Sep-97 RCC Industrial Electronics Pty Ltd Thermo Electron Corp
Sep-97 Sarasep (US) & Interaction Cetac (US)
Chromatography (US)
Sep-97 Scienta (SE) (from Seiko) Gammadata (SE)
Sep-97 Remediation Technologies, Inc Thermo Remediation Inc
</TABLE>
<PAGE> 115
EXHIBIT 10
PAGE 10 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION DEAL
------------------------------------------------------------------------------------- --------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER VALUE CLOSED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aug-97 Micrion Corp 51 (3.6) Mftrs. focused-ion-beam Philips Electronics NV 53.3 Aug-99
systems
Aug-97 Testec Mftrs. capacitors for Electro Scientific 21.4 Jan-99
measurement, display, and Industries Inc
control
Aug-97 National Controls Corporation Mftrs. electronic AMETEK Inc 29.0 Jan-99
instr. and controls for
foodservice equipment
Aug-97 Avondale (UK) Pipettes UK (UK)
Aug-97 Fisher Scientific (US) 2,140 Thomas H. Lee (US) 1,000.0
Aug-97 Labsystems KK (JP) (from Thermo
Instrument) Thermo BioAnalysis (US) 5.9
Aug-97 Normandie Labo (FR) 6 Analis (BE)
Aug-97 Prior Lab Supplies (UK) Jencons (UK)
Aug-97 YMC (US) 7 Waters (US) 9.0
Jul-97 Constellation Capital Partners LLC -
Gems Sensors 75 Danaher Corp Aug-97
Jul-97 Gems Sensors 75 Danaher Corp Aug-97
Jul-97 BioPhotonics (US) Bio Image (US)
Jul-97 Hypersil & LSI's Lab. Products Group
(Forma, IEC and Savant) 135 ThermoQuest 167.0
Jul-97 Hyseq (US) PE (SE) 5.0
Jul-97 Integrated Separation Systems (US) 2 Sybron's Erie Scientific
(US)
Jul-97 Linkage Genetics (US) PE (SE) 1.4
Jul-97 Neslab (US) (from Thermo Instrument) 65 ThermoSpectra (US) 77.0
Jul-97 Nordic Sensor Technologies (SE) Novare Kapital (SE) 5.0
Jul-97 Protein Databases (US) selling
all of its assets Bio-Rad (US) 1.0
Jul-97 R&D Separations and Humonics (US) 3 J&W Scientific (US)
Jul-97 Spectronic Instruments (US)
(from Thermo Instrument) 30 Thermo Optek (US) 41.0
Jul-97 VG Systems (UK) (from Thermo 62 Thermo Optek (US) 49.0
Instrument)
Jul-97 Wyko (US) 8.2 Q197 Veeco (US) 87.0
</TABLE>
<PAGE> 116
EXHIBIT 10
PAGE 11 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION
----------------------------------------------------------------------------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION ACQUIRER
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jun-97 Varlen Corp - Varlen Instruments Division 38 Mftrs. petroleum analysis Roper Industries Inc
for the petrochemical and
oil & gas mkts.
Jun-97 Chemagnetics NMR line (from Otsuka
Electronics USA) 8 Varian (US)
Jun-97 Pharmacia Biotech (SE) L430.0 Amersham International (UK)
Jun-97 RdH Laborchemikalien (DE) 40 Sigma-Aldrich (US)
Jun-97 Remainder of Faust Group (DE) DEM92 Merck (DE)
cal96
Jun-97 Signal Analytics (US) 2 CSP Inc (US)
May-97 Dynatup (US) (from GRC) 4 Instron (US)
May-97 Ealing Electro-Optics (UK) from 600
Group PLC (UK) 8 Coherent Inc (US)
May-97 Graseby Electro-Optics Inc (US) &
Graseby Infrared Ltd (UK) 5 EG & G Judson Infrared Inc (US)
May-97 Horizon Technologies International Pte
Ltd Fisher Scientific
May-97 Labsystems (FI) & Hybaid (UK) (from
Thermo Instrument) 71 Thermo BioAnalysis (US)
May-97 National Scientific (US) 10 Nalge Nunc International (US)
May-97 Perstorp Analytical (SE) 68 Foss Electric (DK)
May-97 Princeton Instruments (US) 34 Roper Industries (US)
Apr-97 Laboratory Microsystems (US) (from
Instron) Axiom (US)
Apr-97 Matec Corp. (US) AcoustoSizer product line Colloidal Dynamics Pty. Ltd. (AU)
Apr-97 Monitor Group (US) (from ISC) L.B. Foster (US)
Apr-97 NEN Life Science Products (US) (from
Dupont) 110 Genstar Capital LLC (US)
Apr-97 Nippon Intermed (JP) 10 Nalge Nunc International (US)
Mar-97 Park Scientific (US) 15 ThermoSpectra (US)
Mar-97 Burleigh Instruments (UK) MD Scitech (UK)
Mar-97 LSI (UK) L230.0 Thermo Instrument (US)
Mar-97 Winiger (CH) Fisher Scientific (US)
<CAPTION>
TARGET INFORMATION DEAL
----------------------------------------------------------------------------------
ANNC'D NAME VALUE CLOSED
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jun-97 Varlen Corp - Varlen Instruments Division 38.7 Jun-99
Jun-97 Chemagnetics NMR line (from Otsuka Electronics USA)
Jun-97 Pharmacia Biotech (SE)
Jun-97 RdH Laborchemikalien (DE)
Jun-97 Remainder of Faust Group (DE)
Jun-97 Signal Analytics (US) 2.1
May-97 Dynatup (US) (from GRC)
May-97 Ealing Electro-Optics (UK) from 600 Group PLC (UK) 9.5
May-97 Graseby Electro-Optics Inc (US) & Graseby Infrared Ltd (UK) 3.1
May-97 Horizon Technologies International Pte Ltd
May-97 Labsystems (FI) & Hybaid (UK) (from Thermo Instrument) 102.5
May-97 National Scientific (US)
May-97 Perstorp Analytical (SE)
May-97 Princeton Instruments (US) 40.4
Apr-97 Laboratory Microsystems (US) (from Instron)
Apr-97 Matec Corp. (US) AcoustoSizer product line 0.3
Apr-97 Monitor Group (US) (from ISC)
Apr-97 NEN Life Science Products (US) (from Dupont)
Apr-97 Nippon Intermed (JP)
Mar-97 Park Scientific (US) 17m
Mar-97 Burleigh Instruments (UK)
Mar-97 LSI (UK) 378.0
Mar-97 Winiger (CH)
</TABLE>
<PAGE> 117
EXHIBIT 10
PAGE 12 OF 12
RECENT M&A ACTIVITY
(Dollars in millions unless indicated)
<TABLE>
<CAPTION>
TARGET INFORMATION
----------------------------------------------------------------------------
ANNC'D NAME REVENUE EDITDA DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Feb-97 Trelleborg AB - Svedala Autometrics Division
Feb-97 Western Research unit of BOVAR, Inc. Manufacturers instrumentation for
indus. process contro
Feb-97 AstroCam & AstroScan (UK)
Feb-97 Comar (US) Coar : 75
cal96;
Sun 7.5
cal96
Feb-97 Elbit-ATI process NMR business (IL)
Feb-97 Spectra Instruments (US) 8
Feb-97 Teknivent (US)
Jan-97 Park Scientific Instruments Inc 15
Jan-97 Life Sciences International PLC
Jan-97 PerSeptive Biosystems 100 9.6 Mftrs. instrumentation systems for biomolecules
Jan-97 Burdick & Jackson (US) (from Dade International) 40
Jan-97 Burnfield (UK) L45.6
cal95
Jan-97 Casa Rocas (MX) 17
Jan-97 Gresham-CamScan from GLT (UK) L1.3
Jan-97 KMF Laborchemie (DE) 35
Jan-97 Montec (UK) L7.8
Jan-97 Rockland Technologies (US) 12
Jan-97 Sagian's robotics division (US) 11
Jan-97 SP Industries LP (US) - Scientific Group from Trivest 46
Group from Trivest
<CAPTION>
TARGET INFORMATION DEAL
--------------------------------------------------------- ---------------------
ANNC'D NAME ACQUIRER VALUE CLOSED
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Feb-97 Trelleborg AB - Svedala Autometrics Division Thermo Electron Corp Feb-97
Feb-97 Western Research unit of BOVAR, Inc. Ametek 11.0 Apr-98
Feb-97 AstroCam & AstroScan (UK) Life Science Resources (UK)
Feb-97 Comar (US) Sun International (US)
Feb-97 Elbit-ATI process NMR business (IL) Siebe Control Systems (US) 2.1
Feb-97 Spectra Instruments (US) Leda-Mass (UK)
Feb-97 Teknivent (US) Prolab Resources (US)
Jan-97 Park Scientific Instruments Inc Thermo Electron Corp 17.0 Mar-97
Jan-97 Life Sciences International PLC Thermo Electron Corp 393.8 Mar-97
Jan-97 PerSeptive Biosystems Perkin-Elmer Corp 265.6 Jan-98
Jan-97 Burdick & Jackson (US) (from Dade International) AlliedSignal (US)
Jan-97 Burnfield (UK) Fairey (UK) 60.0
Jan-97 Casa Rocas (MX) Fisher Scientific (US)
Jan-97 Gresham-CamScan from GLT (UK) CamScan Analytical (UK)
Jan-97 KMF Laborchemie (DE) Merck (DE)
Jan-97 Montec (UK) Servomex (UK) 3.8
Jan-97 Rockland Technologies (US) HP (US)
Jan-97 Sagian's robotics division (US) Beckman (US)
Jan-97 SP Industries LP (US) - Scientific Group from Trivest SP Industries (US)
</TABLE>
<PAGE> 1
Exhibit (c)(3)
Financial analysis presentation materials prepared by Wachovia Securities, Inc.
in connection with providing its valuation analysis to Michael J. Collins on
September 30, 1999
CEM CORPORATION
($ IN THOUSANDS)
ASSUMPTIONS (AS OF JUNE 30, 1999)
- ---------------------------------
Sales $32,077
EBITDA 3,946
Cash and Equivalents 9,127
Debt 1,239
Net Debt (7,888)
Outstanding Shares 3,076
Share Price as of 9/28/99 6.75
<TABLE>
<CAPTION>
CEM VALUATION
--------------------------
SALES EBITDA SALES EBITDA
----- ------ -------- -------
<S> <C> <C> <C> <C> <C>
PUBLIC COMPS
- ------------
Direct Comps (1) 0.55x 4.68x $ 17,722 $ 18,468
Less Net Debt 7,888 7,888
Equity Value $ 25,610 $ 26,356
Resulting Share Price $ 8.33 $ 8.57
Premium to current share price 23.4% 27.0%
Instrument Companies (2) 0.60x 5.74x 19,208 22,649
Less Net Debt 7,888 7,888
Equity Value $ 27,096 $ 30,537
Resulting Share Price $ 8.81 $ 9.93
Premium to current share price 30.5% 47.1%
MERGERS AND ACQUISITIONS
- ------------------------
Instron Corporation (KIRTLAND CAPITAL ACQUIRING) 0.78x 6.79x 24,896 26,804
Size discount 20.0% (4,979) (5,361)
Adjusted Enterprise Value 19,916 21,443
Less Net Debt 7,888 7,888
Equity Value $ 27,804 $ 29,331
Resulting Share Price $ 9.04 $ 9.54
Premium to current share price 33.9% 41.3%
DISCOUNTED CASH FLOW 3.0X 4.0X 5.0X
- --------------------
19% 16,835 20,128 23,421
20% 16,276 19,434 22,592
21% 15,743 18,772 21,802
Equity Value (less Net Debt) 24,723 28,016 31,309
24,164 27,322 30,480
23,631 26,660 29,690
Resulting Share Price $8.04 $ 9.11 $ 10.18
$7.86 $ 8.88 $ 9.91
$7.68 $ 8.67 $ 9.65
Premium to current share price 19.1% 34.9% 50.8%
16.4% 31.6% 46.8%
13.8% 28.4% 43.0%
</TABLE>
<PAGE> 2
(1) Includes ISN, ISKO and OICO. ISN stock price data is as of May 6, 1999. May
6, 1999 is the day prior to Kirtland Capital Partners' announcement to buy
ISN for $22 a share.
(2) Comparable in general product and sales. Includes GIGA, VIZ, RHEM, ITC,
LIFF and SCMS.
2
