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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
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SYRATECH CORPORATION
(Name of the Issuer)
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SYRATECH CORPORATION
LEONARD FLORENCE
THOMAS H. LEE
THL TRANSACTION I CORP.
(Name of Person(s) Filing Statement)
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Syratech Common Stock, par value $0.01 per share
(Title of Class of Securities)
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871824108
(CUSIP Number of Class of Securities)
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Syratech Corporation THL Transaction I Corp.
175 McClellan Highway c/o Thomas H. Lee Company
East Boston, Massachusetts 02128 75 State Street, 26th Floor
Boston, Massachusetts 02109
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person(s) Filing Statement)
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Copies to:
James L. Purcell, Esq. James Westra, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison Hutchins, Wheeler & Dittmar
1285 Avenue of the Americas 101 Federal Street
New York, New York 10019 Boston Massachusetts 02110
(212) 373-3342 (617) 951-6600
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This Statement is filed in connection with:
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 material or information statement
referred to in checking box (a) are preliminary copies: /x/
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CUSIP 871824108 SCHEDULE 13E-3
INTRODUCTION
This statement is being filed by Syratech Corporation ("Syratech" or the
"Company"), Thomas H. Lee, THL Transaction I Corporation ("THL I"), a
corporation that has been organized by Thomas H. Lee Company, and Leonard
Florence in connection with the proposed merger (the "Merger") of THL I with and
into Syratech pursuant to a Restated Agreement and Plan of Merger, dated as of
November 27, 1996, effective as of October 23, 1996 and amended on January__,
1996 (the "Merger Agreement"). The Merger Agreement provides, among other
things, that each share of Syratech common stock, par value $0.01 per share
("Syratech Common Stock"), (other than (i) shares of Syratech Common Stock held
by Syratech or any wholly owned subsidiary thereof, which will be canceled and
retired and (ii) shares of Syratech Common Stock the holders of which have duly
perfected their appraisal rights) will be entitled, at the election of the
stockholder thereof and subject to the terms described herein and in the
Syratech Proxy Statement/Prospectus (as amended, the "Proxy Statement/
Prospectus") and the Registration Statement on Form S-4 (as amended, the
"Registration Statement") filed by Syratech with the Securities and Exchange
Commission ("SEC") on November 26, 1996, as amended by Amendment No. 1 to the
Proxy Statement/Prospectus and the Registration Statement filed with the SEC on
the date hereof, either (a) to receive $32 in cash or (b) to retain one fully
paid and nonassessable share of Syratech Common Stock. The right to retain
Syratech Common Stock will be limited in the case of each stockholder (other
than any person listed as an executive officer in Syratech's 1996 Proxy
Statement (each a "Management Stockholder")) to 35%, and in the case of each
Management Stockholder(other than Leonard Florence) to 25%, of such
stockholder's shares of Syratech Common Stock. In addition, because no more than
an aggregate of 781,250 shares of Syratech Common Stock may be retained by
existing Syratech stockholders(other than Management Stockholders), the right to
retain shares of Syratech Common Stock may be subject to proration, as set forth
in the Merger Agreement and described in the Proxy Statement/Prospectus and the
Registration Statement.
The following cross reference sheet is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Proxy
Statement/Prospectus of the information required to be included in response to
items of this Statement. The information in the Proxy Statement/Prospectus and
the Registration Statement, including all exhibits thereto, is hereby expressly
incorporated herein by reference and the responses to each item are qualified in
their entirety by the provisions of the Proxy Statement/Prospectus and the
Registration Statement. All information in, or incorporated by reference in, the
Proxy Statement/Prospectus, the Registration Statement or this Statement
concerning Syratech or its advisors, or actions or events with respect to any of
them, was provided by Syratech, all information in, or incorporated by reference
in, the Proxy Statement/Prospectus, the Registration Statement or this Statement
concerning Mr. Florence, or actions or events with respect to him, was provided
by Mr. Florence, all information in, or incorporated by reference in, the
Proxy Statement/Prospectus or this Statement concerning THL I or its advisors,
or actions or events with respect to any of them, was provided by THL I and all
information in, or incorporated by reference in, the Proxy Statement/Prospectus
or this Statement concerning Mr. Lee, or actions or events with respect to him,
was provided by Mr. Lee.
<PAGE> 3
CROSS REFERENCE SHEET
PURSUANT TO INSTRUCTION F
OF SCHEDULE 13E-3
ITEM NUMBER AND LOCATION OR CAPTION IN PROXY
HEADING STATEMENT/PROSPECTUS OR
REGISTRATION STATEMENT
Item 1. Issuer and Class of
Securities subject to the
Transaction
subpart 1(c) "SUMMARY--Price of Syratech Common Stock"
Item 2. Identity and Background
subparts 2(a) - (d) and (g) "SCHEDULE I--Certain Information Regarding
THL Transaction I Corp and Thomas H. Lee
Company"
Item 3. Past Contacts,
Transactions or Negotiations
subpart (a) "THE MERGER--Background of the Merger"
subpart (b) "THE MERGER--Interest of Certain Persons
in the Merger" and "--Employment Agreements"
Item 4. Terms of the Transactions
subpart (a) "THE MERGER--Merger Consideration",
"--Non-Cash Election", "--Non-Cash Election
Procedure", "--Conversion/Retention of
Shares; Procedure for Exchange of
Certificates" and "--Conditions to
Consummation of the Merger" and "CERTAIN
PROVISIONS OF THE MERGER AGREEMENT"
subpart (b) "THE MERGER--Interests of Certain Persons
in the Merger" and "--Employment
Agreements"
Item 5. Plans or Proposals of the
Issuer or Affiliate
subpart (c) "THE MERGER--Employment Agreements" and
"CERTAIN PROVISIONS OF THE MERGER
AGREEMENT--Board of Directors and Officers
of the Company Following the Merger"
subpart (d) "SUMMARY--The Merger, Effect of the
Merger", "THE MERGER--NYSE De-listing" and
"--Merger Financings" and "DESCRIPTION OF
SYRATECH CAPITAL STOCK--Syratech Common
Stock Following the Merger"
subpart (f) and (g) "SPECIAL FACTORS/RISK FACTORS--Delisting,
Loss of Liquidity"
<PAGE> 4
ITEM NUMBER AND LOCATION OR CAPTION IN PROXY
HEADING STATEMENT/PROSPECTUS OR REGISTRATION
STATEMENT
Item 6. Source and Amount of
Funds or Other Consideration
subpart (a) "THE MERGER -- Merger Consideration" and
"-- Merger Financings"
subpart (b) "THE SPECIAL MEETING -- Solicitation of
Proxies" and "CERTAIN PROVISIONS OF THE
MERGER AGREEMENT -- Expenses and Certain
Required Payments"
subpart (c) "THE MERGER -- Merger Financing" and
Exhibit (a).
Item 7. Purpose(s), Alternatives,
Reasons and Effects
subparts (a) - (c) "SPECIAL FACTORS/RISK FACTORS" and
"THE MERGER -- Background of the Merger"
and "-- Recommendation of the Board;
Reasons for the Merger"
subpart (d) "SPECIAL FACTORS/RISK FACTORS -- Control
by the Thomas H. Lee Company",
"-- Delisting; Loss of Liquidity;
Reporting Obligations", "-- Federal
Income Tax Consequences",
"-- Substantial Leverage; Stockholders'
Deficit; Liquidity" and "-- Potential
Dilution of Syratech", "THE MERGER --
Background of the Merger", "-- Reasons
for the Merger; Recommendation of the
Board", "--NYSE De-Listing" and "--
Resale of Syratech Common Stock
Following the Merger" and "PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL
INFORMATION"
Item 8. Fairness of the Transaction
subparts (a), (b), (d) and (e) "SPECIAL FACTORS/RISK FACTORS" and
"THE MERGER -- Background of the
Merger", "-- Reasons for Merger:
Recommendation of the Board" and
"-- Opinion of the Financial Advisor"
subpart (c) "SPECIAL FACTORS/RISK FACTORS" and "THE
SPECIAL MEETING -- Record Date; Stock
Entitled to Vote; Quorum"
Item 9. Reports, Opinions,
Appraisals and Certain
Negotiations
subparts (a) and (b) "SPECIAL FACTORS/RISK FACTORS" and "THE
MERGER -- Background to the Merger",
"-- Opinion of Financial Advisor" and
"-- Information Concerning the
Financial Advisor" and "ANNEX II Opinion
of Merrill Lynch & Co. dated October 23,
1996"
2
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ITEM NUMBER AND LOCATION OR CAPTION IN PROXY
HEADING STATEMENT/PROSPECTUS OR REGISTRATION
STATEMENT
subpart (c) "SPECIAL FACTORS/RISK FACTORS" and
"ANNEX II Opinion of Merrill Lynch & Co. dated
October 23, 1996"
Item 10. Interest in
Securities of the Issuer
subpart (a) "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT."
Item 11. Contracts, "ANNEX I Restated Agreement and Plan of Merger"
Arrangements or Understandings and Amendment of Agreement and Plan of Merger
with Respect to Issuer's and "THE MERGER -- Interests of Certain Persons
Securities in the Merger" and "--Employment Agreements"
Item 12. Present Intention
and Recommendation of Certain
Persons with Regard to the
Transaction
subpart (a) "THE SPECIAL MEETING -- Required Votes"
subpart (b) "THE MERGER -- Background of the Merger" and
"--Reasons for the Merger; Recommendation of
the Board"
Item 13. Other Provisions of
the Transaction
subpart (a) "DISSENTING STOCKHOLDERS' RIGHTS" and
"ANNEX III -- Excerpts from Delaware General
Corporation Law Relating to Dissenters' Rights"
Item 14. Financial Information
subpart (a) "SUMMARY -- Selected Consolidated Historical
Financial Data of Syratech Corporation" and
"SYRATECH CORPORATION CONSOLIDATED FINANCIAL
STATEMENTS"
subpart (b) "SUMMARY -- Selected Pro Forma Consolidated
Financial Data of Syratech Corporation" and
"PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS"
Item 15. Persons and Assets
Employed, Retained or Utilized
subpart (a) "THE SPECIAL MEETING -- Solicitation of Proxies"
and "THE MERGER -- Background of the Merger"
and "--Interests of Certain Persons in the
Merger"
subpart (b) "THE SPECIAL MEETING -- Solicitation of Proxies"
and "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT -- Expenses and Certain Required
Payments"
3
<PAGE> 6
SCHEDULE 13E-3
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The issuer of the class of equity securities which is the subject
of the Rule 13e-3 transaction is Syratech Corporation ("Syratech" or the
"Company"). Syratech's principal executive office is located at 175 McClellan
Highway, East Boston, Massachusetts 02128-9114.
(b) The title of the equity securities which are the subject of the
Rule 13e-3 transaction is Common Stock, par value $0.01 per share ("Common
Stock"), and approximately 8,676,631 shares of such Common Stock were
outstanding on September 30, 1996. Syratech had approximately 1,485
stockholders of record on September 30, 1996.
(c) The information set forth under "SUMMARY--Price of Syratech Common
Stock" in the Proxy Statement/Prospectus is incorporated herein by reference.
(d) Syratech has never declared or paid any cash dividends on its
Common Stock. The Merger Agreement prohibits Syratech from paying dividends
without THL I's consent. Also, the Company's Loan Agreements restrict the
amount of any payment of cash dividends in any year to 33-1/3% of net income
for the prior year.
(e) Not applicable.
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(f) On December 29, 1995, Syratech effectively purchased 3,064,751
shares of Syratech Common Stock from affiliates of Katy Industries, Inc. for
$52,054,000 or approximately $17 per share.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g). This statement is being filed by Syratech (the issuer
of the class of equity securities which is the subject of the Rule 13e-3
transaction); Leonard Florence, Chairman, President and CEO of Syratech
Corporation, 175 McClellan Highway, East Boston, MA, Company Director; Thomas H.
Lee, President of the Thomas H. Lee Company, 75 State Street, 26th Floor,
Boston, MA, and a Company Director; and THL I of 75 State Street, 26th Floor,
Boston, MA. The information set forth in the Section "Proposal No. 1--ELECTION
OF DIRECTORS" of Syratech's 1996 Proxy Statement, as incorporated by reference
into the Proxy Statement/ Prospectus, and "SCHEDULE I--Certain Information
Regarding THL Transaction I Corp and Thomas H. Lee Company" of the Proxy
Statement/Prospectus are incorporated herein by reference.
(e) and (f). During the last five years, neither the Company nor THL I,
to the best of their knowledge, any of their respective directors or executive
officers nor Leonard Florence nor Thomas H. Lee, (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining any further violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
(g) All of the directors and officers of Syratech and THL I,
respectively, and Thomas H. Lee and Leonard Florence are citizens of the
United States of America.
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) The information set forth in the Section "THE MERGER--Background of
the Merger" and "THE MERGER--Interest of Certain Persons in the Merger" and
"--Employment Agreements" of the Proxy Statement/Prospectus is incorporated
herein by reference.
(b) The information set forth in the Sections "THE MERGER--Interests of
Certain Persons in the Merger" and "--Employment Agreements" of the Proxy
Statement/Prospectus is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) and (b). The information set forth in the Sections "THE MERGER
- --Merger Consideration", "--Non-Cash Election", "--Non-Cash Election Procedure",
"--Conversion/Retention of Shares; Procedures for Exchange of Certificates" and
"--Conditions to the Consummation of the Merger" and "CERTAIN PROVISIONS OF THE
MERGER AGREEMENT" of the Proxy Statement/Prospectus is incorporated herein by
reference.
(b) The information set forth in the Sections "THE MERGER--Interests of
Certain Persons in the Merger" and "--Employment Agreements" of the Proxy
Statement/Prospectus is incorporated herein by reference.
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ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a), (b) and (e) Not Applicable.
(c) The information set forth in the Sections "THE MERGER --
Employment Agreements" and "CERTAIN PROVISIONS OF THE MERGER AGREEMENT -- Board
of Directors and Officers of the Company Following the Merger" of the Proxy
Statement/Prospectus is incorporated herein by reference.
(d) The information set forth in the Sections "SUMMARY -- The Merger",
"-- Effect of the Merger", "THE MERGER -- NYSE Delisting" and "-- Merger
Financing" and "DESCRIPTION OF SYRATECH CAPITAL STOCK -- Syratech Common Stock
Following the Merger" of the Proxy Statement/Prospectus is incorporated herein
by reference.
(f)-(g) The information set forth in the Section "SPECIAL FACTORS/RISK
FACTORS -- Delisting; Loss of Liquidity" of the Proxy Statement/Prospectus is
incorporated herein by reference.
7
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ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Sections "THE MERGER--Merger
Consideration" and "--Merger Financings" of the Proxy Statement/Prospectus is
incorporated herein by reference.
(b) The information set forth in the Sections "THE SPECIAL MEETING--
Solicitation of Proxies" and "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--
Expenses and Certain Required Payments" of the Proxy Statement/Prospectus is
incorporated herein by reference. The following have also been incurred or are
estimated to be incurred in connection with this transaction:
(i) Filing/Registration Fees*................. $55,531
(ii) HSR Act Fees..............................[ ]
(iii) Legal Fees*...............................[ ]
(iv) Accounting Fees*..........................[ ]
(v) Appraisal Fees*...........................[ ]
(vi) Solicitation Expenses*....................[ ]
(vii) Printing Fees*............................[ ]
* To be paid by the Company.
(c) The information set forth in the Section "THE MERGER--Merger
Financings" of the Proxy Statement/Prospectus and in the Commitment Letter
attached as Exhibit (a) to the filed Schedule 13E-3 are incorporated herein by
reference.
(d) Not Applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a)-(c) The information set forth in the Sections "SPECIAL FACTORS/RISK
FACTORS" and "THE MERGER--Background of the Merger", "--Reasons for the Merger;
Recommendation of the Board" and "--Opinion of Company's Financial
8
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Advisor" and "ANNEX II--Opinion of Merrill Lynch & Co." of the Proxy
Statement/Prospectus is incorporated herein by reference.
(d) The information set forth in the Sections "SPECIAL FACTORS/RISK
FACTORS--Control by the Thomas H. Lee Company", "--Delisting; Loss of
Liquidity", "--Federal Income Tax Consequences", "--Substantial Leverage;
Stockholders' Deficit; Liquidity" and "--Potential Dilution of Syratech
Stockholders," "THE MERGER--Background of the Merger", "--Reasons for the
Merger; Recommendation of the Board", "--NYSE De-Listing" and "--Resale of
Syratech Common Stock Following the Merger" and "PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS" of the Proxy Statement/Prospectus is
incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a), (b), (d) and (e). The information set forth in the Sections
"SPECIAL FACTORS/RISK FACTORS" and "THE MERGER--Background of the Merger",
"--Reasons for Merger; Recommendation of the Board" and "--Opinion of
Financial Advisor" of the Proxy Statement/Prospectus is incorporated herein by
reference.
(c) The information set forth in the Sections "SPECIAL FACTORS/RISK
FACTORS" and "THE SPECIAL MEETING--Record Date; Stock Entitled to Vote; Quorum"
of the Proxy Statement/Prospectus is incorporated herein by reference.
9
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(f) Not Applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) and (b). The information set forth in the Sections "SPECIAL
FACTORS/RISK FACTORS" and "THE MERGER--Background of the Merger", "--Opinion of
Financial Advisor" and "--Information Concerning the Company's Financial
Advisor" and "ANNEX II Opinion of Merrill Lynch & Co. dated October 23, 1996"
of the Proxy Statement/Prospectus is incorporated herein by reference.
(c) The Opinion of Merrill Lynch & Co., dated October 23, 1996, is
included in the information to be circulated to stockholders and shall also be
made available for inspection and copying at the principal executive offices of
the Company during its regular business hours by any interested equity security
holder of the Company or his representative who has been designated in writing.
At the written request of such a security holder, a copy of that opinion will be
sent, at the security holder's expense, to such security holder or his
representative. The information set forth in "Exhibit (b)(2)" to this Schedule
will be made available for inspection and copying at the principal executive
offices of the Company by any interested equity security holder of the Company
or his representative who has been designated in writing. At the written request
of such a security holder, a copy of that Exhibit will be sent, at the security
holder's expense, to such security holder or his representative.
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ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The information set forth in the Section "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" of the Proxy Statement/Prospectus is
incorporated herein by reference. On , 1997, neither Thomas H Lee nor
THL I owned any Syratech Common Stock.
(b) None
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth in the Sections "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT" and "THE MERGER -- Background of the Merger", "-- Interests of
Certain Persons in the Merger" and "-- Employment Agreements" of the Proxy
Statement/Prospectus is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) The information set forth in the Section "THE SPECIAL
MEETING -- Required Votes" of the Proxy Statement/Prospectus is incorporated
herein by reference.
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(b) The information set forth in the Sections "THE MERGER -- Background of
the Merger" and "-- Reasons for the Merger; Recommendation of the Board" of the
Proxy Statement/Prospectus is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in the Section "DISSENTING STOCKHOLDERS'
RIGHTS" and "ANNEX III -- Excerpts from Delaware General Corporation Law
Relating to Dissenters' Rights" of the Proxy Statement/Prospectus is
incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION
(a) The information set forth in the Sections "SUMMARY -- Selected
Consolidated Historical Financial Data of Syratech Corporation" and "SYRATECH
CORPORATION CONSOLIDATED FINANCIAL STATEMENTS" of the Proxy Statement/
Prospectus is incorporated herein by reference.
12
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(b) The information set forth in the Sections "SUMMARY -- Selected Pro
Forma Consolidated Financial Data of Syratech Corporation" and "PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS" of the Proxy Statement/Prospectus
is incorporated herein by reference.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The information set forth in Sections "THE SPECIAL
MEETING -- Solicitation of Proxies" and "THE MERGER -- Background of the Merger"
and "-- Interests of Certain Persons in the Merger" of the Proxy Statement/
Prospectus is incorporated herein by reference.
(b) The information set forth in Sections "THE SPECIAL MEETING --
Solicitation of Proxies" and "CERTAIN PROVISIONS OF THE MERGER AGREEMENT --
Expenses and Certain Required Payments" of the Proxy Statement/Prospectus is
incorporated herein by reference.
ITEM 16. ADDITIONAL INFORMATION.
Additional information is set forth in the Proxy Statement/Prospectus
attached as Exhibit (d) to the Schedule 13E-3 and incorporated herein by
reference in its entirety.
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ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ----------------------------------------------------------------------------------
<S> <C>
*(a) Commitment letter dated addressed to THL I by NationsBank, N.A.
and NationsBanc Capital Markets, Inc.
*(b)(1) Fairness Opinion of Merrill Lynch & Co dated October 23, 1996.
(b)(2) Materials presented to the Board by Merrill Lynch & Co, as adviser to the Special
Committee.
*(c)(1) Form of Restated Agreement and Plan of Merger dated as of November 27, 1996,
effective as of October 23, 1996 between Syratech and THL I (the "Merger Agreement").
**(c)(2) Amendment to the Merger Agreement.
*(d) Syratech Proxy Statement.
*(e) Excerpts from Delaware General Corporation Law Relating to Dissenters' Rights are
attached to Exhibit (d).
* Previously filed.
** to be filed by Amendment
</TABLE>
14
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SIGNATURES
AFTER REASONABLE INQUIRY AND TO THE BEST OF THE UNDERSIGNEDS' KNOWLEDGE
AND BELIEF, THE UNDERSIGNED CERTIFY THAT THE INFORMATION SET FORTH IN THIS
STATEMENT IS TRUE, COMPLETE AND CORRECT.
SYRATECH CORPORATION
/s/ FAYE A. FLORENCE
By: _________________________
Name: Faye A. Florence
Title: Vice President, General
Counsel and Secretary
THL TRANSACTION I CORP.
/s/ SCOTT A. SCHOEN
By: _________________________
Name: Scott A. Schoen
Title: President
/s/ LEONARD FLORENCE
_________________________
Leonard Florence
/s/ THOMAS H. LEE
_________________________
Thomas H. Lee
Dated: January 16, 1997
15
<PAGE> 1
The following material was compiled on a confidential basis for use
solely by the Special Committee of the Board of Directors of Syratech
Corporation (the "Company") in evaluating a potential transaction involving
Thomas H. Lee Company or its affiliates and not with a view to public disclosure
or filing thereof under the Securities Act of 1933 or the Securities Exchange
Act of 1934 (the "Federal Securities Laws"). This material was prepared for a
specific use by specific persons and was not prepared to conform with any
disclosure standards under the Federal Securities Laws. Neither Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") nor any of its officers,
directors, employees, affiliates, advisors, agents or representatives warrants
the accuracy or completeness of any of the material which follows. Nothing
contained in the accompanying material is, or shall be relied upon as, a promise
or representation as to the past, present or future.
It should be understood that any estimates, valuations and/or
projections contained in the accompanying material relating to the Company were
prepared or derived from information supplied by the Company and that Merrill
Lynch has not assumed any responsibility for independent verification of any
such estimates, valuations and/or projections. Accordingly, no representation
or warranty can be or is made by Merrill Lynch as to the accuracy or
achievability of any such estimates, valuations and/or projections.
<PAGE> 2
CONFIDENTIAL
- --------------------------------------------------------------------------------
PRESENTATION TO
THE SPECIAL COMMITTEE OF
THE BOARD OF DIRECTORS OF
SILVER CORPORATION
OCTOBER 21, 1996
<PAGE> 3
PROJECT SILVER
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
1. Summary of Offer
2. Public Market Valuation Considerations
3. SILVER Management Projections
4. SILVER Stock Price Performance
5. SILVER Valuation Analysis
Appendix
A. Public Comparables Analysis
B. Comparable Acquisitions Analysis
C. Discounted Cash Flow Analysis
D. Leveraged Buyout Analysis
E. Strategic Acquiror Pro Forma Analyses
F. SILVER Shareholder Profile
[Merrill Lynch Logo]____________________________________________________________
<PAGE> 4
[Section Break]
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- --------------------------------------------------------------------------------
SUMMARY OF OFFER
- --------------------------------------------------------------------------------
<PAGE> 6
PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
Summary of Offer Value
(dollars in millions, except per share)
<S> <C>
T.H. Lee Offer Price Per Share $ 32
Shares Outstanding (a) 8.676
Options Outstanding (a) 0.338
------
OFFER VALUE $288.4
Plus: Average Debt Outstanding (b) 37.6
Less: Average Cash Balance (c) (6.2)
Less: Option Proceeds @
Avg. Exercise Price of $12.38 (d) (4.2)
------
TRANSACTION VALUE $315.6
======
<FN>
- ----------------
(a) As of June 30, 1996. Source: Form S-3 draft dated 9/12/96.
(b) Average 1996 seasonal working capital borrowings, as provided by management.
(c) Average 1996 cash balances, as provided by management.
(d) Mid-point of exercise price range. Source: Form S-3 draft dated 9/12/96.
</TABLE>
[Merrill Lynch Logo]____________________________________________________________
1-1
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PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
SUMMARY OF OFFER MULTIPLES
(dollars in millions, except per share)
<S> <C>
T.H. Lee Offer Price $32.00
------------------------------------------------------------
Premium to 10/18/96 Price ($26.25) 21.9%
Premium to 10/14/96 Price ($23.625) 35.4%
Premium to 20 Day Average to 9/24/96 36.7%
Offer Price/1996E EPS 17.1x
Offer Price/1997E EPS 11.3x
------------------------------------------------------------
Transaction Value $315.6
------------------------------------------------------------
Transaction Value/1996E EBITDA 9.9x
Transaction Value/1997E EBITDA 7.1x
Transaction Value/1996E EBIT 11.5x
Transaction Value/1997E EBIT 8.1x
Transaction Value/1996E Sales 1.12x
Transaction Value/1997E Sales 0.97x
------------------------------------------------------------
</TABLE>
[Merrill Lynch Logo]____________________________________________________________
1-2
<PAGE> 8
PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
Summary of Trading Multiples
(millions, except per share)
<S> <C>
SILVER Price Per Share (10/18/96) $26.25
52 Week High $27.63
52 Week Low $19.75
Shares Outstanding (a) 8.676
Market Value $227.7
Plus: Average Debt Outstanding (b) 37.6
Less: Average Cash Balance (c)
(6.2)
------
Market Capitalization $259.1 (e)
======
<CAPTION>
Market Value as Multiple of: (d) Market Capitalization as Multiple of: (d)(e)
-------------------------------- --------------------------------------------
<S> <C> <C> <C>
1996E EPS 14.0x 1996E EBITDA 8.1x
1997E EPS 9.2x 1997E EBITDA 5.9x
1996E EBIT 9.4x
1997E EBIT 6.7x
1996E Sales 0.92x
1997E Sales 0.79x
<FN>
(a) As of June 30, 1996. Source: Form S-3 draft dated 9/12/96.
(b) Average 1996 seasonal working capital borrowings, as provided by management.
(c) Average 1996 cash balances, as provided by management.
(d) Based on projections presented to Merrill Lynch on October 1, 1996.
(e) As of 6/30/96, total debt was $56.4 MM and cash balances were $3.4 MM. Current market capitalization
based on actual net debt is therefore $280.7 MM resulting in a 1996E EBITDA multiple of 8.8x and a
1997E EBITDA multiple of 6.3x.
</TABLE>
[Merrill Lynch Logo]____________________________________________________________
1-3
<PAGE> 9
[Section Break]
<PAGE> 10
- -------------------------------------------------------------------------------
PUBLIC MARKET VALUATION CONSIDERATIONS
- -------------------------------------------------------------------------------
<PAGE> 11
PROJECT SILVER
- -------------------------------------------------------------------------------
PUBLIC MARKET VALUATION CONSIDERATIONS
At its current stock price of $26.25, SILVER is undervalued by the market. The
following factors contribute to SILVER's low valuation:
[Bullet] Small public float. Insiders hold 42% and institutions hold 40%.
SILVER SHAREHOLDERS PROFILE
---------------------------
[Pie Chart]
Insiders 42%
Public 18%
Institutions 40%
[Bullet] Average daily volume was only 5,705 shares over the past 20 days.
[Bullet] Lack of research coverage. Last research report by C.L. King dated
July 26, 1996. No major Wall Street firm covers SILVER.
[Bullet] Limited interaction with investment community, therefore limited
opportunity to tell SILVER's "story".
[Bullet] Low growth industry. No true "pure play" comparable among publicly
traded companies.
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2-1
<PAGE> 12
PROJECT SILVER
- -------------------------------------------------------------------------------
PUBLIC MARKET VALUATION CONSIDERATIONS (cont'd)
[Bullet] Significant growth opportunities exist that may not be factored
into SILVER's stock price:
[Triangle bullet] integration of recent acquisitions: Rauch, Silvestri,
C.J. Vander, Farberware
[Triangle bullet] expanded distribution
[Triangle bullet] new product introduction
[Triangle bullet] continued investment in technology and productivity
[Triangle bullet] additional acquisitions
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2-2
<PAGE> 13
PROJECT SILVER
- -------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
[LINE CHART]
1996E P/E
23.0x
---
---
21.0x Rubbermaid
19.0x Newell
---
---
Tupperware ---
17.0x ---
15.0x American Greetings
---
--- ---
CSS Industries --- --- SILVER
---
13.0x --- Ekco
--- --- Stanhome
---
Libbey --- ---
11.0x Lifetime Hoan --- ---
--- Oneida Dept. 56
---
9.0x
7.0x
5.0x
8% 10% 12% 14% 16% 18% 20%
5 YEAR EPS GROWTH RATE(a)
-------------
(a) Source: IBES
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2-3
<PAGE> 14
PROJECT SILVER
- --------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
[BAR CHART]
<TABLE>
1996 P/E / 5 Year Est. EPS Growth
<S> <C> <C>
2.00x
Rubbermaid 1.73x
1.50x CSS
Industries 1.38x
Newell 1.25x
Tupperware American
Greetings 1.23x
1.15x
Oneida 1.10x
Ekco
Group 1.03x
1.00x
Libbey 0.99x
Lifetime
Hoan 0.96x
Dept. 56 0.90x
Stanhome 0.87x
SILVER 0.72x
0.50x
0.00x
</TABLE>
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2-4
<PAGE> 15
SECTION BREAK
<PAGE> 16
- --------------------------------------------------------------------------------
SILVER MANAGEMENT PROJECTIONS
- --------------------------------------------------------------------------------
<PAGE> 17
PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
Summary of SILVER Management Projections(a)
(dollars in millions, except per share)
<CAPTION>
HISTORICAL
FYE DECEMBER 31, PRO FORMA(b) PROJECTED FYE DECEMBER 31,
---------------- FYE ------------------------------------------------ 1996-2001
1994 1995 1996E 1997(c) 1998 1999 2000 2001 CAGR
------ ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $147.3 $169.5 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1 11.9%
% Growth -- 15.1% 66.6% 15.7% 12.5% 11.0% 10.5% 10.0%
Gross Profit 42.7 49.7 79.4 95.1 106.6 118.8 131.7 145.4 12.9%
Gross Margin 29.0% 29.3% 28.1% 29.1% 29.0% 29.1% 29.2% 29.3%
Selling & Administrative
Expenses 31.6 34.2 54.5 58.8 66.2 73.5 81.2 89.3 10.4%
% of Sales 21.5% 20.2% 19.3% 18.0% 18.0% 18.0% 18.0% 18.0%
EBITDA 14.3 18.7 32.0 44.2 49.2 54.7 60.5 67.2 16.0%
EBITDA Margin 9.7% 11.0% 11.3% 13.5% 13.4% 13.4% 13.4% 13.5%
EBIT 11.1 15.4 27.5 38.8 43.4 48.3 53.5 59.6 16.7%
EBIT Margin 7.5% 9.1% 9.7% 11.9% 11.8% 11.8% 11.9% 12.0%
Net Income $ 7.9 $ 13.2 $ 16.4 $ 25.0 $ 28.0 $ 31.3 $ 35.3 $ 39.9 19.5%
Net Income Margin 5.3% 7.8% 5.8% 7.6% 7.6% 7.7% 7.8% 8.0%
EPS $ 1.69 $ 3.91 $ 1.87 $ 2.84 $ 3.19 $ 3.56 $ 4.01 $ 4.54 19.5%
EPS Growth -- 134.4% -52.3% 52.2% 12.2% 11.8% 12.7% 13.1%
Depreciation & Amortization $ 3.3 $ 3.3 $ 4.5 $ 5.4 $ 5.8 $ 6.4 $ 7.0 $ 7.6
Capital Expenditures(d) (2.6) (2.7) (17.8) (20.8) (5.6) (6.1) (6.7) (7.4)
Change In Working Capital 24.1 (10.1) (38.7) (11.1) (15.6) (14.2) (14.1) (13.9)
------ ------ ------ ------ ------ ------ ------ ------
Net Cash Flow $ 32.6 $ 3.7 $(35.6) $ (1.5) $ 12.6 $ 17.4 $ 21.4 $ 26.3
<FN>
- -----------------
(a) SILVER management projections presented to Merrill Lynch on October 1, 1996.
(b) Pro forma for the acquisition of Rauch, Silvestri, C.J. Vander and Farberware. Excludes gain on Farberware transaction
of $11.9 million and sales of Farberware inventory of $6.0 million, but includes $2.6 million of Farberware licensing
royalties.
(c) Adjusted to exclude $0.25 million of Farberware inventory sales.
(d) 1996 and 1997 Capital Expenditures include the construction of a West Coast distribution facility, expansion of
SILVER's East Boston facility, machinery and equipment for Rauch and C.J. Vander and a building for C.J. Vander.
</TABLE>
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-------------------------------------------------------------
3-1
<PAGE> 18
- --------------------------------------------------------------------------------
SILVER STOCK PRICE PERFORMANCE
- --------------------------------------------------------------------------------
<PAGE> 19
PROJECT SILVER
- --------------------------------------------------------------------------------
Daily Stock Price and Trading Volume from 10/18/95 to 10/18/96
[Graphic]
[Graphic]
[MERRILL LYNCH LOGO]
-------------------------------------------------------------
4-1
<PAGE> 20
PROJECT SILVER
- --------------------------------------------------------------------------------
Weekly Stock Price and Trading Volume from 12/18/92 to 10/18/96
[Graphic]
[Graphic]
[MERRILL LYNCH LOGO]
-------------------------------------------------------------
4-2
<PAGE> 21
PROJECT SILVER
- --------------------------------------------------------------------------------
Analysis of Trading Volume, from 10/18/95 to 10/18/96
[Graphic]
[Graphic]
- --------------------------------------------------------------------------------
4-3
<PAGE> 22
- --------------------------------------------------------------------------------
SILVER VALUATION ANALYSIS
- --------------------------------------------------------------------------------
<PAGE> 23
PROJECT SILVER
- --------------------------------------------------------------------------------
SILVER Valuation Summary
<TABLE>
[Bar Graph]
<CAPTION> $35
Merrill Lynch Reference Range T.H. Lee Offer Price Current Price
<S> <C> <C>
$30 $32 $26.25
<CAPTION>
-------------------------------------------------------------------------------------------------------
90%-110% 6x-8x Financing
10.5x-12x 1996 P/E to 9x-11x Terminal EBITDA; and 1997E
1997 EPS 5 Yr 1996 EBITDA 11.0%-12.0% Return EPS
of $2.84 Growth Rate of $32MM Discount Rate Constraints Breakeven
-------------------------------------------------------------------------------------------------------
P/E To Strategic
Silver Public Growth Comparable Maximum Acquiror
52 Week Comparables Rate Acquisitions LBO Pro Forma
High/low Analysis Analysis Analysis DCF Analysis Analysis
-------- ----------- -------- ------------ --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SILVER Value Per Share $27.63-19.75 $34-$30 $40-$33 $36-$29 $39-$28 $33-$30 $50-$28
</TABLE>
[Merrill Lynch Logo]____________________________________________________________
5-1
<PAGE> 24
PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
ACQUISITION PRICING MATRIX
(dollars in millions, except per share data)
<CAPTION>
OFFER VALUE AS MULTIPLE OF:
----------------------------------------------------------
OFFER OFFER OFFER NET TRANSACTION 1996E 1996E 1997E 1996E 1996E
PRICE PREMIUM VALUE DEBT (A) VALUE NET INCOME EPS EPS CASH FLOW BOOK VALUE
----- ------- ----- -------- ----------- ---------- ----- ----- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$26.250 0.0% 236.6 $27.2 $263.8 13.7x 14.0x 9.2x 10.9x 1.36x
28.000 6.7% 252.4 $27.2 279.6 14.6 15.0 9.9 11.6 1.46
30.000 14.3% 270.4 $27.2 297.6 15.6 16.0 10.6 12.4 1.56
-----------------------------------------------------------------------------------------------------------------------
32.000 21.9% 288.5 $27.2 315.7 16.7 17.1 11.3 13.2 1.66
-----------------------------------------------------------------------------------------------------------------------
34.000 29.5% 306.5 $27.2 333.7 17.7 18.2 12.0 14.1 1.77
36.000 37.1% 324.5 $27.2 351.7 18.8 19.3 12.7 14.9 1.87
38.000 44.8% 342.6 $27.2 369.8 19.8 20.3 13.4 15.7 1.98
40.000 52.4% 360.6 $27.2 387.8 20.8 21.4 14.1 16.5 2.08
42.000 60.0% 378.6 $27.2 405.8 21.9 22.5 14.8 17.4 2.18
44.000 67.6% 396.6 $27.2 423.8 22.9 23.5 15.5 18.2 2.29
<CAPTION>
TRANSACTION VALUE AS MULTIPLE OF:
--------------------------------
1996E 1996E 1996E
SALES EBITDA EBIT
----- ------ -----
<C> <C> <C>
0.93x 8.2x 9.6x
0.99 8.7 10.2
1.05 9.3 10.8
----------------------------
1.12 9.9 11.5
----------------------------
1.18 10.4 12.1
1.25 11.0 12.8
1.31 11.6 13.4
1.37 12.1 14.1
1.44 12.7 14.8
1.50 13.2 15.4
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
SILVER 1996E(b) Data $17.3 $1.87 $2.84 $21.8 $173.4 $282.4 $32.0 $27.5
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Mean Public Comparable Multiples 16.6x 14.2x 12.4x 9.6x 2.01x 1.36x 8.0x 10.8x
Mean Acquisition Comparable Multiples 15.8x -- -- -- 3.36x 1.00x 8.7x 12.3x
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Based on estimated net debt as of December 31, 1996, calculated as follows:
Average Seasonal Working Capital Borrowings $37.6 million
Less: Average Cash Balances (6.2)
Less: Options Proceeds (4.2)
Net Debt $27.2 million
(b) Pro forma for Rauch, Silvestri, C.J. Vander and Farberware acquisitions
</TABLE>
5-2
<PAGE> 25
PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
Public Comparables Analysis(1)
<CAPTION>
[Bar Graph]
1996 P/E(2)
<S> <C>
T.H. Lee Offer Price 17.1x
<CAPTION>
American CSS Lifetime
Rubbermaid Newell Tupperware SILVER(3) Greetings Industries Ekco Stanhome Libbey Dept.56 Hoan Oneida
- ---------- ------ ---------- --------- --------- ---------- ---- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
22.4x 18.7x 17.2x 14.0x 13.8x 13.8x 13.4x 12.2x 11.9x 11.7x 11.6x 9.9x
<CAPTION>
[Bar Graph]
1997 P/E(2)
<S> <C>
T.H. Lee Offer Price 11.3x
<CAPTION>
American CSS Lifetime General
Rubbermaid Ekco Newell Tupperware Greetings Industries Libbey Dept.56 Stanhome Hoan Housewares SILVER(3) Oneida
- ---------- ---- ------ ---------- --------- ---------- ------ ------- -------- -------- ---------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18.3x 17.0x 16.2x 15.2x 12.3x 11.5x 10.4x 10.3x 10.3x 9.6x 9.3x 9.2x 8.0x
<FN>
- --------------------
(1) Earnings estimates from First Call and calendarized to December year-ends, except for Oneida which is from Zack's and is for a
January year-end.
(2) General Housewares has a projected loss in 1996.
(3) SILVER estimates from the Company, and 1996 is pro forma for the Rauch and Farberware transactions.
</TABLE>
[Merrill Lynch Logo]____________________________________________________________
5-3
<PAGE> 26
PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
Public Comparables Analysis
<CAPTION>
[Bar Graph]
1996E EBITDA Multiples
<S> <C>
T.H. Lee Offer Price 9.9x
<CAPTION>
American Lifetime CSS General
Tupperware Newell Rubbermaid SILVER(3) Greetings Dept.56 Libbey Stanhome Hoan Industries Housewares Ekco
- ---------- ------ ---------- --------- --------- ------- ------ -------- -------- ---------- ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10.3x 9.5x 8.3x 8.1x 7.4x 7.3x 6.6x 6.4x 6.1x 5.7x 4.3x 3.9x
<FN>
- ---------------------
(a) EBITDA estimates are from research reports, and where not provided, depreciation and amortization are LTM; data for Oneida not
available.
(b) Based on SILVER 1996E pro forma EBITDA.
</TABLE>
[Merrill Lynch Logo]____________________________________________________________
5-4
<PAGE> 27
PROJECT SILVER
- -------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
[LINE CHART]
1996E P/E
23.0x
---
---
21.0x Rubbermaid
19.0x Newell T.H. Lee
--- Offer Price
Tupperware --- --- 17.1
17.0x ---
15.0x American Greetings
---
--- ---
CSS Industries --- --- SILVER
---
13.0x --- Ekco
--- --- Stanhome
---
Libbey --- ---
11.0x Lifetime Hoan --- ---
--- Oneida Dept. 56
---
9.0x
7.0x
5.0x
8% 10% 12% 14% 16% 18% 20%
5 YEAR EPS GROWTH RATE(a)
-------------
(a) Source: IBES.
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5-5
<PAGE> 28
PROJECT SILVER
- -------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
<TABLE>
<CAPTION>
1996 P/E
5 YEAR TO 5 YEAR
EST. EPS EST. EPS
1996 P/E GROWTH GROWTH
-------- -------- ------
<S> <C> <C> <C> <C>
LARGE CAPITALIZATION
--------------------
AMERICAN GREETINGS 13.8x 12% 1.15x
NEWELL CO. 18.7 15% 1.25
RUBBERMAID INCORPORATED 22.4 13% 1.73
TUPPERWARE CORP. 17.2 14% 1.23
-------------------------------------------
MEAN 18.1x 14% 1.34x
MEDIAN 18.0 14% 1.24
-------------------------------------------
SMALL CAPITALIZATION
--------------------
CSS INDUSTRIES INC. 13.8x 10% 1.38x
DEPARTMENT 56, INC. 11.7 13% 0.90
EKCO GROUP INC. 13.4 13% 1.03
GENERAL HOUSEWARES(a) NM 13% NM
LIBBEY INC. 11.9 12% 0.99
LIFETIME HOAN CORP. 11.6 12% 0.96
ONEIDA LTD. 9.9 9% 1.10
STANHOME INC. 12.2 14% 0.87
-------------------------------------------
MEAN 12.1x 12% 1.03x
MEDIAN 11.9 13% 0.99
-------------------------------------------
SILVER(b) 14.0x 19% 0.72x
- ----------
<FN>
(a) General Housewares has a projected loss in 1996.
(b) 1996-2001 CAGR.
</TABLE>
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5-6
<PAGE> 29
PROJECT SILVER
- --------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
<TABLE>
<CAPTION>
<C> <C> <C>
SILVER 5 Year Estimated EPS Growth Rate(a) 19.4%
Comparable P/E to Growth Rate(b) 90% -- 110%
Estimated 1996E P/E 17.5x -- 21.3x
SILVER 1996E EPS(a) $1.87
-----------------------------------------------------------------------
VALUE PER SILVER SHARE $32.65 $39.91
-----------------------------------------------------------------------
- --------
<FN>
(a) Based on management projections.
(b) Based on 1996 P/E to 5 year growth rate ratios of CSS Industries,
Department 56, Ekco Group, Libbey, Lifetime Hoan, Oneida, and Stanhome.
</TABLE>
[MERRILL LYNCH LOGO]-----------------------------------------------------------
5-7
<PAGE> 30
PROJECT SILVER
- --------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS ANALYSIS
[BAR CHART]
<TABLE>
<CAPTION>
LTM EBITDA MULTIPLE
<S> <C>
Newell Co./Holson Burnes Group Inc. 11.1x
General Housewares Corp./OXO International LP 9.7x
Newell Co./Intercraft Industries Corp. 9.2x
Ekco Group Inc./Frem Corp. 8.1x
Libbey Inc./Syracuse China Corp. (The Pfaltzgraff Co.) 7.6x
Paper Magic Group/Spearhead Industries Inc. 6.6x
T.H. Lee Offer Price(a) 9.9x
- ---------
<FN>
(a) Based on 1996E EBITDA.
</TABLE>
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5-8
<PAGE> 31
PROJECT SILVER
- --------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS ANALYSIS
[BAR CHART]
<TABLE>
<CAPTION>
LTM SALES MULTIPLE
<S> <C>
Glacier Holdings Inc./Stylemaster Inc. 1.71x
SILVER/Rauch Industries Inc. 1.61x
General Housewares Corp./OXO International LP 1.39x
Newell Co./Intercraft Industries Corp. 1.24x
Ekco Group Inc./Frem Corp. 1.14x
Libbey Inc./Syracuse China Corp. (The Pfaltzgraff Co.) 1.10x
General Housewares Corp./Olfa Products Corp.,
Walter Absil Co. Ltd. 0.91x
Brown-Forman Corp./Dansk International Designs Ltd. 0.80x
Paper Magic Group/Spearhead Industries Inc. 0.64x
Newell Co./Holson Burnes Group Inc. 0.60x
Frederick Cooper PLC/Bonny Products Inc.
(American Brands Inc.) 0.46x
James River Corp. of Virginia/Mennen Co-Paper Products Business
(Colgate-Palmolive Co.) 0.40x
T.H. Lee Offer Price(a) 1.12x
- ---------
<FN>
(a) Based on 1996E Sales
</TABLE>
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5-9
<PAGE> 32
PROJECT SILVER
- -------------------------------------------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
[LINE GRAPH]
<TABLE>
<CAPTION>
----------------------
EBITDA MULTIPLE METHOD
----------------------
Value per SILVER Share
<S> <C> <C> <C>
Discount Rate 10.5% 11.5% 12.5%
6x LTM EBITDA $30.33 $27.54
$33.39
8x LTM EBITDA $39.73 $36.13
T.H. Lee Offer Price $32
</TABLE>
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5-10
<PAGE> 33
PROJECT SILVER
- --------------------------------------------------------------------------------
MAXIMUM LBO ANALYSIS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
HYPOTHETICAL CONSTRAINTS
-----------------------------------------------------------------------
<S> <C>
[Bullet] 1996 EBITDA/Interest Coverage 1.6x
[Bullet] Minimum 5 Year Return on Equity 20%
[Bullet] Maximum Bank Debt Repayment Period 7 years
[Bullet] Minimum Equity Investment 20%
-----------------------------------------------------------------------
-----------------------------------------------------------------------
RESULTS
-----------------------------------------------------------------------
<S> <C> <C>
[Bullet] Offer Value for Equity $32 per
share
[Bullet] Capital Structure
8.5% Bank Term Loan $ 40MM 13%
7.5% Working Capital Revolver $ 43MM 14%
11.5% Senior Subordinated Notes $100MM 33%
13.0% PIK Preferred $ 50MM 17%
Common Equity $ 67MM 22%
-----------------------------------------------------------------------
</TABLE>
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5-11
<PAGE> 34
PROJECT SILVER
- -------------------------------------------------------------------------------
<TABLE>
POTENTIAL STRATEGIC ACQUIROR PRO FORMA ANALYSIS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
1997E EPS (a)
BREAKEVEN PURCHASE PRICE
EST. ------------------------
NET DEBT/ BORROWING CASH STOCK
POTENTIAL ACQUIROR MKT. CAP. 1997E P/E MKT. CAP. RATE PURCHASE POOLING
- ------------------ --------- --------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
American Greetings $2,645.3 12.3x 15.9% 7% $46 $34
CSS Industries, Inc. 267.5 11.5 6.8 9 39 32
Department 56, Inc. 648.2 10.3 16.1 9 39 28
Newell Co. 5,782.5 16.2 16.3 7 46 45
Rubbermaid Inc. 3,820.8 18.3 5.9 7 46 50
Stanhome Inc. 599.9 10.3 17.6 9 39 29
Tupperware Corp. 3,105.8 15.2 6.2 7 46 42
- ------------
<FN>
(a) Assumes no synergies or cost savings.
</TABLE>
<PAGE> 35
SECTION BREAK
<PAGE> 36
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
<PAGE> 37
- --------------------------------------------------------------------------------
PUBLIC COMPARABLES ANALYSIS
- --------------------------------------------------------------------------------
<PAGE> 38
PROJECT SILVER
Analysis of Selected Companies
<TABLE>
Comparative Multiples and Imputed Values
----------------------------------------
(dollar amounts in millions except per share data)
<CAPTION>
MARKET MULTIPLE ANALYSIS FOR SELECTED INDUSTRY COMPARABLES
- ------------------------------------------------------------------------------------------------------------------------------------
---MARKET CAP. AS A
---MARKET VALUE AS A MULTIPLE OF:---- MULTIPLE OF:--- 1996 P/E/
LTM 1996 1997 LTM LFQ 1996 5-YR.
PRICE MARKET MARKET NET TO EPS EPS CASH COMMON LTM LTM LTM EBITDA EST. EPS
COMPANIES 18-OCT-96 SHARES VALUE CAP.(a) COMMON EST.(b) EST.(b) FLOW(c) EQUITY EBITDA EBIT SALES EST.(f) GROWTH
- --------------- --------- ------ ------ -------- ------ ------- ------- ------- ------ ------ ----- ----- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN
GREETING-CL A $29.75 74.8 $2,224.1 $2,645.3 15.9x 13.8x 12.3x 12.5x 1.78x 8.5x 11.1x 1.32x 7.4x 1.15x
CSS INDS INC 23.25 10.7 249.3 267.5 26.6 13.8 11.5 33.8 1.66 8.7 11.9 0.90 5.7 1.38
DEPARTMENT 56,
INC.-SER A 25.25 21.5 544.1 648.2 10.2 11.7 10.3 9.3 3.03 6.2 6.7 2.51 7.3 0.90
EKCO GROUP INC. 3.97 18.5 69.4 202.2 20.2 13.4 17.0 2.5 0.53 4.6 8.9 0.75 3.9 1.03
GENERAL
HOUSEWARES 9.75 4.1 39.5 68.0 80.2 NM 9.3 8.2 0.84 7.6 16.2 0.60 4.3 NM
LIBBEY INC. 25.00 15.0 375.8 613.7 11.9 11.9 10.4 7.6 NM 7.0 9.1 1.56 6.6 0.99
LIFETIME HOAN
CORP 9.13 11.3 102.9 114.9 14.5 11.6 9.6 12.9 1.58 8.6 9.4 1.33 6.1 0.96
NEWELL CO. 30.50 158.8 4,842.9 5,782.5 20.9 18.7 16.2 11.1 3.58 10.5 13.2 2.16 9.5 1.25
ONEIDA LTD 14.88 11.1 165.3 285.3 10.0 9.9 8.0 5.2 1.53 5.6 8.0 0.57 #N/A 1.10
RUBBERMAID
INCORPORATED 24.00 149.8 3,594.4 3,820.8 22.2 22.4 18.3 13.7 3.69 10.1 13.8 1.64 8.3 1.73
STANHOME INC. 27.63 17.9 494.4 599.9 12.6 12.2 10.3 10.2 1.92 7.0 7.8 0.72 6.4 0.87
TUPPERWARE
CORP. 46.88 62.1 2,912.9 3,105.8 17.1 17.2 15.2 12.4 11.89* 10.9 13.9 2.24 10.3 1.23
MAXIMUM(d) 26.x 22.4x 18.3x 13.7x 3.96 10.9x 16.2x 2.51x 10.3x 1.73x
MEAN(d) 16.6 14.2 12.4 9.6 2.01 8.0 10.8 1.36 6.9 1.14
MEDIAN(d) 15.9 13.4 10.9 10.2 1.72 8.1 10.2 1.32 6.6 1.10
MINUMUN(d) 10.0 9.9 8.0 2.5 0.53 4.6 6.7 0.57 3.9 0.87
SILVER(e) $26.25 8.7 $ 227.8 $ 259.0 13.2x 14.0x 9.2x 10.4x 1.31x 8.1x 9.4x 0.92x 8.1x 0.72
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Market Capitalization = Market Value + Preferred Equity at Liquidation Value (Incl. Redeemable) + Short-Term Debt + Long-Term
Debt + Minority Interest - Cash & Marketable Securities
(b) Earnings Estimates were obtained from First Call and were calendarized to December year-ends, except Oneida which is from Zacks
and is for a January year-end and SILVER which is from the Company
(c) Cash Flow = Income Available to Common + Depreciation, Depletion & Amortization + Deferred Taxes - Unremitted Earnings Of
Unconsolidated Subsidiaries
(d) Summary Multiples exclude numbers that are Negative, Not Available, Not Meaningful, and (*) figures
(e) Data for SILVER is 1996 estimaated pro forma to include the acquisition of Rauch, to exclude Farberware transaction gains of
$11.9 million and sales of Farberware inventory of $6.0 million, but to include licensing royalties of $2.6 million; market
capitalization includes average working capital revolver balance of $37.6 million net of average cash balance of $6.2 million
(f) EBITDA estimates are from research reports, and where not provided, depreciation and amortization are LTM; data for Oneida not
available and data for SILVER is from company projections for the year ended 31-Dec-96
</TABLE>
A-1
<PAGE> 39
PROJECT SILVER
Analysis of Selected Companies
<TABLE>
Comparative Multiples and Imputed Values
----------------------------------------
(dollar amounts in millions except per share data)
<CAPTION>
SUMMARY DATA FOR SELECTED INDUSTRY COMPARABLES
- ------------------------------------------------------------------------------------------------------------------------------------
--52 WEEK LTM 1996 1997 LTM LSQ 1996 5-YR.
RANGE-- NET TO EPS EPS CASH COMMON LTM LTM LTM EBITDA EST. EPS CFY LTM
COMPANIES TICKER HIGH LOW COMMON EST.(a) EST.(a) FLOW(b) EQUITY EBITDA EBIT SALES EST.(d) GROWTH ENDS ENDED
- --------------- ------ ------ ------ ------ ------- ------- ------- ------- ------ ------ -------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN
GREETING-CL A AGREA $33.00 $23.50 $140.0 $ 2.15 $2.42 $178.2 $1,251.4 $310.9 $239.3 $2,011.5 $357.9 12% Feb-97 May-96
CSS INDS INC CSS 25.75 20.50 9.4 1.69 2.03 7.4 149.9 30.6 22.4 297.4 47.2 10% Dec-96 Jun-96
DEPARTMENT 56,
INC.-SER A DFS 48.00 19.50 53.2 2.16 2.45 58.5 179.9 103.8 96.9 258.5 89.3 13% Dec-96 Jun-96
EKCO GROUP INC. EKO 6.38 3.75 3.4 0.28 0.22 27.9 130.0 43.7 22.7 270.4 51.5 13% Dec-96 Jun-96
GENERAL
HOUSEWARES GHW 14.13 7.88 0.5 (0.48) 1.05 4.8 47.0 8.9 4.2 113.5 15.7 13% Dec-96 Jun-96
LIBBEY INC. LBY 28.38 19.75 31.5 2.10 2.40 49.4 (36.6) 87.6 67.1 393.0 92.9 12% Dec-96 Jun-96
LIFETIME HOAN
CORP LCUT 11.25 8.00 7.1 0.79 0.95 8.0 65.1 13.3 12.2 86.5 18.8 12% Dec-96 Jun-96
NEWELL CO. NWL 32.50 23.38 232.2 1.63 1.88 435.3 1,345.3 548.8 437.4 2,673.8 607.4 15% Dec-96 Jun-96
ONEIDA LTD OCQ 18.88 14.38 16.5 1.50 1.85 31.9 107.8 51.1 35.5 504.7 #N/A 9% Jan-97 Jul-96
RUBBERMAID
INCORPORATED RBD 30.38 22.13 161.9 1.07 1.31 261.8 973.5 376.8 277.0 2,329.7 458.8 13% Dec-96 Jun-96
STANHOME INC. STH 32.63 25.38 39.3 2.26 2.67 48.2 257.8 85.7 76.8 836.6 94.3 14% Dec-96 Jun-96
TUPPERWARE
CORP. TUP 49.88 38.25 169.9 2.72 3.09 235.4 245.0 284.7 223.6 1,386.2 302.1 14% Dec-96 Jun-96
SILVER(e) $27.63 $19.75 $ 17.3 $1.87 $2.84 $ 21.8 $ 173.4 $ 32.0 $ 27.5 $ 282.4 $ 32.0 19% DEC-96 DEC-96
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Earnings Estimates were obtained from First Call and were calendarized to December year-ends, except Oneida which is from Zacks
and is for a January year-end and SILVER which is from the Company
(b) Cash Flow = Income Available to Common + Depreciation, Depletion & Amortization + Deferred Taxes - Unremitted Earnings Of
Unconsolidated Subsidiaries
(c) Data for SILVER is 1996 estimaated pro forma to include the acquisition of Rauch, to exclude Farberware transaction gains of
$11.9 million and sales of Farberware inventory of $6.0 million, but to include licensing royalties of $2.6 million; market
capitalization includes average working capital revolver balance of $37.6 million net of average cash balance of $6.2 million
(d) EBITDA estimates are from research reports, and where not provided, depreciation and amortization are LTM; data for Oneida not
available and data for SILVER is from company projections for the year ended 31-Dec-96
</TABLE>
A-2
<PAGE> 40
- --------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS ANALYSIS
- --------------------------------------------------------------------------------
<PAGE> 41
PROJECT SILVER
- --------------------------------------------------------------------------------
<TABLE>
ANALYSIS OF SELECTED HOUSEWARES INDUSTRY ACQUISITIONS
(Dollars in Millions, Except Per Share)
<CAPTION>
Announcement
Date Target & Description
- ------------ ----------------------------------------------------------------------------------------------------------
<S> <C>
11-Dec-95 Holson Burnes Group Inc
- Manufactures and markets photo albums and picture frames
7-Dec-95 Rauch Industries Inc
- Manufactures and distributes Christmas decorations, primarily glass and satin Christmas tree ornaments
2-Nov-95 Bonny Products Inc (American Brands Inc)
- Manufactures non-electrical kitchen tools and utensils
11-May-95 Syracuse China Corp (The Pfaltzgraff Co)
- Manufactures ceramic dinnerware, mainly for the foodservice industry
4-Oct-94 Olfa Products Corp, Walter Absil Co Ltd
- Wholesale distributor of cutting tools and accessories for the hobby, craft, hardware and fabric markets
3-Feb-93 Stylemaster Inc
- Manufacturer and marketer of proprietary plastic housewares and supplies, and supplier to Glacier Water
30-Oct-92 OXO International LP
- Marketer of kitchen tools under the Good Grips, Prime and Plus brand names
8-Sep-92 Intercraft Industries Corp
- Manufactures and wholesales picture and mirror frames
20-Jul-92 Mennen Co-Paper Products Business (Colgate-Palmolive Co)
- Manufactures party paper products, tablecloth cutlery and tableware products
13-Nov-91 Frem Corp
- Manufactures and markets injection molded housewares products
10-Jul-91 Spearhead Industries Inc
- Designs, assembles and markets consumer items for Easter and Halloween, and a line of toy products
20-May-91 Dansk International Designs Ltd
- Manufactures tabletop, houseware, and giftware items
<CAPTION>
Offer Value as Multiple of: Transaction Value as Multiple of:
--------------------------- ---------------------------------
Offer Transaction LTM LFQ LTM LTM LTM
Acquiror Value(a) Value(b) Net Income Book Value Sales EBITDA EBIT
- ------------------------------- -------- ----------- ---------- ---------- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Newell Co $ 36.7 $ 82.9 10.8x 1.13x 0.60x 11.1x 18.3x
Syratech Corp 50.3 82.7 NM 1.69 1.61 NM NM
Frederick Cooper PLC 6.0 6.0 5.1 1.22 0.46 N/A N/A
Libbey Inc 40.7 40.6 NM 1.80 1.10 7.6 12.7
General Housewares Corp 13.8 15.1 NM 2.69 0.91 NM NM
Glacier Holdings Inc 2.0 9.6 NM NM 1.71 NM NM
General Housewares Corp 6.3 6.4 20.2 6.16 1.39 9.7 11.0
Newell Co 184.7 184.7 21.5 2.91 1.24 9.2 12.9
James River Corp of Virginia 40.0 40.0 N/A N/A 0.40 N/A N/A
Ekco Group Inc 26.5 32.7 19.1 9.71 1.14 8.1 10.7
Paper Magic Group 13.5 17.5 18.1 2.95 0.64 6.6 8.3
Brown-Forman Corp 66.0 86.0 N/A 3.30 0.80 N/A N/A
-------------------------------------------------------------------
Maximum 21.5x 9.71x 1.71x 11.1x 18.3x
Mean 15.8 3.36 1.00 8.7 12.3
Median 18.6 2.80 1.00 8.6 11.9
Minimum 5.1 1.13 0.40 6.6 8.3
-------------------------------------------------------------------
<FN>
(a) Offer Value = Offer Price per Share x (Shares Outstanding plus Exercisable Options Outstanding)
(b) Transaction Value = Offer Value + Liquidation Value of Preferred Stock + Short Term Debt + Long Term Debt + Minority Interest -
Cash & Equivalents - Exercisable Options Proceeds
</TABLE>
<PAGE> 42
[Section Break]
<PAGE> 43
- --------------------------------------------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
- --------------------------------------------------------------------------------
<PAGE> 44
PROJECT SILVER
<TABLE>
DISCOUNTED CASH FLOW ANALYSIS - EBITDA MULTIPLE METHOD
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
Fiscal Year Ended December 31, Projected Fiscal Year Ended December 31, (a)
----------------------------------- --------------------------------------------
1993 1994 1995 1996E 1997 1998 1999 2000 2001
----------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $122.7 $147.3 $169.5 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1
EBITDA 13.4 14.3 18.7 32.0 44.2 49.2 54.7 60.5 67.2
Less: Depreciation (3.1) (3.3) (3.3) (4.3) (5.2) (5.6) (6.2) (6.8) (7.4)
----------------------------------- --------------------------------------------
EBITDA 10.3 11.1 15.4 27.7 39.0 43.6 48.5 53.7 59.7
Less: Taxes @ 35.0% (3.6) (3.9) (5.4) (9.7) (13.7) (15.3) (17.0) (18.8) (20.9)
----------------------------------- --------------------------------------------
Tax-effected EBITDA 6.7 7.2 10.0 18.0 25.4 28.4 31.5 34.9 38.8
Plus: Depreciation 5.2 5.6 6.2 6.8 7.4
Plus: Deferred Taxes 0.0 0.0 0.0 0.0 0.0
Less: Capital Expenditures (20.8) (5.6) (6.1) (6.7) (7.4)
Less: Changes in Working Capital (12.1) (15.8) (14.4) (14.4) (14.1)
--------------------------------------------
Free Cash Flow ($2.3) $12.6 $17.1 $20.6 $24.7
Free Cash Flow Growth Rate -546.1% -647.8% 36.1% 20.1% 20.2%
<CAPTION>
-------------- --------------------------- ---------------------------
A + B = C
-------------- --------------------------- ---------------------------
PV of Terminal Value as a Terminal Value as a
Discounted (b) Multiple of 2001 EBITDA (c) Firm Value % of Firm Value
Cash Flows --------------------------- --------------------------- --------------------------------
Discount Rate (1997-2001) 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x
- ------------- -------------- --------------------------- --------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10.5% $49.8 $244.7 $285.5 $326.3 $294.5 $335.2 $376.0 83.1% 85.2% 86.8%
11.0% 48.9 239.2 279.1 319.0 288.2 328.0 367.9 83.0% 85.1% 86.7%
11.5% 48.1 233.9 272.9 311.9 282.0 321.0 360.0 82.9% 85.0% 86.6%
12.0% 47.3 228.8 266.9 305.0 276.1 314.2 352.3 82.9% 84.9% 86.6%
12.5% 46.5 223.7 261.0 298.3 270.2 307.5 344.8 82.8% 84.9% 86.5%
--------------------------------
<CAPTION>
-------------- ---------------------------
D = E
-------------- ---------------------------
Total Equity Value Value Per Share (e) Equivalent Perpetual Growth Rate
Net Debt --------------------------- --------------------------- --------------------------------
Discount Rate 12/31/96(d) 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x
- ------------- -------------- --------------------------- --------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10.5% $31.3 $263.2 $304.0 $344.7 $30.33 $35.03 $39.73 4.1% 5.0% 5.6%
11.0% 31.3 256.9 296.8 336.6 29.61 34.20 38.80 4.6% 5.5% 6.1%
11.5% 31.3 250.7 289.7 328.7 28.90 33.39 37.89 5.1% 5.9% 6.6%
12.0% 31.3 244.8 282.9 321.0 28.21 32.60 37.00 5.5% 6.4% 7.1%
12.5% 31.3 239.0 276.2 313.5 27.54 31.84 36.13 6.0% 6.9% 7.6%
--------------------------- --------------------------------
<FN>
- ------------------------------------------------------
(a) Projections are from SILVER management.
(b) Present values are calculated as of 12/31/96.
(c) Discounted 5 years; based on 2001 EBITDA of $67.2 million.
(d) Represents average seasonal working capital revolver balance net of average cash balance for 1996.
(e) Based on 8.7 million shares currently outstanding.
</TABLE>
C-1
<PAGE> 45
<TABLE>
PROJECT SILVER
ANALYSIS OF COST OF CAPITAL
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------
MACROECONOMIC ASSUMPTIONS:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Three Month Treasury Bill (at 10/19/96) 5.09% Estimated Future Market Return(b) 14.19%
Thirty Year Government Bond (at 10/19/96) 6.79% Estimated Future Risk Free Rate(c) 5.39%
Historical Spread Between Long Bond & Bill(a) 1.40% Estimated Market Risk Premium 8.80%
Historical Spread Between Long Bond & S&P500(a) 7.40%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------
INDUSTRY BETA ANALYSIS:
- ------------------------------------------------------------------------------------------------------------------------------------
LEVERED BV NET DEBT/ DEBT/ MARGINAL UNLEVERED LEVERED UNLEVERED
COMPARABLE COMPANIES BETA(d) MKT. CAP. EQUITY TAX RATE BETA(e) COST OF CAPITAL COST OF CAPITAL
- -------------------- ------- ----------- ------- -------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
American Greetings 0.80 15.9% 18.9% 39.0% 0.72 12.4% 11.7%
CSS Industries Inc. 0.53 6.8% 7.3% 39.0% 0.51 10.1% 9.9%
Department 56, Inc. 0.70 16.1% 19.1% 39.0% 0.63 11.6% 10.9%
Ekco Group, Inc. 1.19 65.7% 191.4% 39.0% 0.55 15.9% 10.2%
General Housewares 0.60 41.9% 72.1% 39.0% 0.42 10.7% 9.1%
Libbey Inc. 0.83 38.8% 63.3% 39.0% 0.60 12.7% 10.7%
Lifetime Hoan Corp. 0.82 10.4% 11.7% 39.0% 0.77 12.6% 12.1%
Newell Co. 0.96 16.3% 19.4% 39.0% 0.86 13.8% 12.9%
Oneida Ltd. 0.83 42.1% 72.6% 39.0% 0.58 12.7% 10.5%
Rubbermaid Inc. 1.27 5.9% 6.3% 39.0% 1.22 16.6% 16.2%
Stanhome Inc. 0.44 17.6% 21.3% 39.0% 0.39 9.3% 8.8%
---- ---- ---- ----
AVERAGE INDUSTRY COST OF CAPITAL 25.2% 39.0% 0.66 11.2%
SILVER COST OF CAPITAL 0.52 12.1% 13.7% 39.0% 0.48 10.0% 9.6%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------
TARGET WACC CALCULATION:
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIMAL OPTIMAL PRE-TAX LEVERED BETA ASSUMING
DEBT/ DEBT/ SPREAD TO 30-YR LONG TERM UNLEVERED BETA OF COST OF TARGET
CAPITALIZATION EQUITY TREASURIES (BP) COST OF DEBT 0.66 LEVERED EQUITY WACC
-------------- ------ --------------- ------------ --------------------- -------------- ------
<S> <C> <C> <C> <C> <C> <C>
0.0% 0.0% 100.0 7.8% 0.66 11.2% 11.2%
10.0% 11.1% 125.0 8.0% 0.70 11.6% 10.9%
20.0% 25.0% 150.0 8.3% 0.76 12.1% 10.7%
30.0% 42.9% 175.0 8.5% 0.83 12.7% 10.4%
40.0% 66.7% 200.0 8.8% 0.92 13.5% 10.3%
50.0% 100.0% 300.0 9.8% 1.06 14.7% 10.3%
60.0% 150.0% 400.0 10.8% 1.26 16.5% 10.5%
70.0% 233.3% 500.0 11.8% 1.59 19.4% 10.9%
80.0% 400.0% 600.0 12.8% 2.26 25.3% 11.3%
90.0% 900.0% 700.0 13.8% 4.26 42.9% 11.9%
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------
<FN>
(a) Source: Ibbottson & Sinquefield 1996 Yearbook.
(b) Thirty year government bond yield plus the historical spread between the long bond and the S&P 500.
(c) Thirty year government bond yield less the historical spread between the long bond and the three month bill.
(d) Source: Merrill Lynch Securities Risk Evaluation Book dated September 1996.
(e) Unlevered beta equals Levered Beta/(1 + (Debt/Equity) * (1 - Tax Rate). Assumes beta of debt equals zero.
C-2
</TABLE>
<PAGE> 46
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 47
- --------------------------------------------------------------------------------
LEVERAGED BUYOUT ANALYSIS
- --------------------------------------------------------------------------------
<PAGE> 48
PROJECT SILVER
<TABLE>
LBO ANALYSIS - TRANSACTION SUMMARY
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SOURCES: AMOUNT PERCENT INTEREST RATE OWNERSHIP TERM POINTS FEES
- -------- ------ ------- ------------- --------- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Existing Cash Balances $ 0.0 0.0% 6.00%
Option Proceeds 4.2 1.4%
Working Capital Revolver (a) 42.7 14.1% 7.50% 0.0% 7 2.5% $3.5
Bank Debt (Term Loan) 40.0 13.2% 8.50% 0.0% 10 2.5% 1.0
Senior Sub. Debentures 100.0 32.9% 11.50% 0.0% 10 3.0% 3.0
PIK Preferred 50.0 16.5% 13.00% 0.0% 7 0.0% 0.0
Seller Rollover Equity 16.7 5.5% 25.0%
T.H. Lee Common Equity 50.0 16.5% 75.0%
------ ------ ------ ----
Total Sources $303.6 100.0% 100.0% $7.5
USES:
- -----
Refinance Debt $ 1.8 ------------------------------------------------------------
Financing Fees 7.5 8.7 total shares outstanding
Transaction Expenses @ 2.0% 5.8 0.3 exerc. options outst. ex. @ $12.38 per share
Purchase of Equity @ $32.00 per share 288.5 ---
Total Uses $303.6 9.0 fully diluted shares outstanding
- -----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------- ------------------------------------------------------
<CAPTION>
GOODWILL CALCULATION: (b) INTEREST CONVERAGE SUMMARY:
- ------------------------- ---------------------------
1996E 1997 1998
----- ---- ----
<S> <C> <C> <C> <C> <C>
Purchase Price $0.0 EBITDA / Total Interest 1.6x 2.1x 2.3x
Existing Goodwill -- EBITDA-CAPX/Tot. Int. 0.7x 1.1x 2.1x
Non-Financing Transaction Expenses -- EBITDA-Norm. CAPX/Tot. 1.3x 1.9x 2.1x
Less: Book Value Acquired (incl. option proceeds) 0.0 EBIT / Total Interest -- 1.9x 2.0x
Goodwill $0.0 Tot. Funded Debt / EBITD 5.7x 4.4x 4.0x
Amortization Period 40 Funded Sr. Debt / EBITDA 1.2x 2.2x 2.0x
Annual Goodwill Amortization $0.0 Tot. Cmtd. Debt / EBITDA 8.6x 5.8x 5.4x
- ---------------------------------------------------------- Cmtd. Sr. Debt / EBITDA 4.1x 3.6x 3.4x
- ---------------------------------------------------------- Cumulative Bank Debt Pay -- -16.7% -17.6%
Tender Price / 1996 EPS(c) 17.1x ------------------------------------------------------
Tender Price / 1997 EPS(c) 11.3x
- ----------------------------------------------------------
- ---------------------------------------------------------- ------------------------------------------------------
<CAPTION>
MULTIPLE ANALYSIS: TV 12/31/96 Adj. TV 12/31/96(d) RETURNS SUMMARY:
- ------------------ ----------- ------------------- ----------------
3 YEAR 4 YEAR 5 YEAR
------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Transaction Value $284.2 $315.6 EBITDA Multiple:
TV / 1996E EBITDA 8.9x 9.9x ----------------
TV / 1997 EBITDA 6.4x 7.1x 6.0x -16.7% 0.9% 10.2%
TV / 1996E EBIT 10.3x 11.5x 7.0x 11.8% 18.1% 21.3%
TV / 1997 EBIT 7.3x 8.1x 8.0x 30.4% 29.9% 29.5%
- ---------------------------------------------------------- -------------------------------------------------------
<FN>
(a) Assumes $140.0 million of availablity
(b) Assumes recap accounting.
(c) Earnings estimates of $1.87 for 1996 and $2.84 for 1997 are from SILVER management.
(d) Includes average working capital revolver balance of $37.6 million net average cash balance of $6.2 million for 1996.
</TABLE>
D-1
<PAGE> 49
PROJECT SILVER
<TABLE>
OWNERSHIP ANALYSIS
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
PRE-TRANSACTION PRICE PER POST-TRANSACTION EFFECTIVE
NUMBER SHARE GROSS CASH FULLY DILUTED NUMBER NEW EQUITY PRICE PER
OF SHARES % RECEIVED RECEIVED OF SHARES % INVESTMENT NEW SHARE
---------------------- --------------------- --------------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leonard Florence 2,875,600 32.9% $32.00 $ 91.4 2,000,000 20.0% $13.3 $6.67
All Other Insiders 785,725 9.1% 32.00 25.1 500,000 5.0% 3.3 6.67
Thomas H. Lee 0 0.0% 32.00 0.0 7,500,000 75.0% 50.0 6.67
Public 5,033,306 58.0% 32.00 161.1 0 0.0% 0.0 --
--------- ----- ------ ------ ---------- ----- ----- -----
Total 8,676,631 100.0% $32.00 $277.7 10,000,000 100.0% $66.7 $6.67
========= ===== ====== ====== ========== ===== ===== =====
<CAPTION>
NET CASH
RECEIVED/
PROMOTE (INVESTED)
--------- ----------
<S> <C> <C>
Leonard Florence 0.0% $ 78.1
All Other Insiders 0.0% 21.8
Thomas H. Lee 0.0% (50.0)
Public -- 161.1
-- ------
Total -- $211.0
=== ======
</TABLE>
D-2
<PAGE> 50
PROJECT SILVER
<TABLE>
CONSOLIDATED INCOME STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, PROJECTED FISCAL YEAR ENDED DECEMBER 31, (a)
------------------------------------ ----------------------------------------------
1993 1994 1995 1996E(b) 1997 1998 1999 2000 2001
------------------------------------ ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $122.7 $147.3 $169.5 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1
Cost of Sales 84.6 104.6 119.8 203.0 231.8 261.1 289.4 319.3 350.7
------------------------------------ ----------------------------------------------
Gross Profit $ 38.0 $ 42.7 $ 49.7 $ 79.4 $ 95.1 $106.6 $118.8 $131.7 $145.4
Selling & Administrative 27.7 31.6 34.2 54.4 58.8 62.2 73.5 81.2 89.3
LBO Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Income (Expense) 0.0 0.0 0.0 2.6 2.6 3.0 3.0 3.0 3.5
------------------------------------ ----------------------------------------------
EBIT 10.3 11.1 15.4 27.5 38.8 43.4 48.3 53.5 59.6
Interest Income (0.1) (0.1) (4.9) (0.6) (0.1) (0.1) (0.1) (0.1) (0.1)
Working Capital Revolver Interest Expense 0.0 0.0 0.0 0.0 3.8 4.5 4.7 4.6 4.4
Bank Debt (Term Loan) Interest Expense 0.0 0.0 0.0 0.0 3.3 3.1 2.8 2.4 1.8
Seasonal Revolver Interest Expense 0.9 0.6 0.3 2.9 1.5 1.7 1.9 2.1 2.3
Senior Sub. Debentures Interest Expense 0.0 0.0 0.0 0.0 11.5 11.5 11.5 11.5 11.5
Capital Leases Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Amortization of Financing Fees 0.0 0.0 0.0 0.0 0.5 0.5 0.5 0.5 0.5
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Interest Expense 0.9 0.5 (4.6) 2.3 20.5 21.2 21.2 20.9 20.3
Pretax Income 9.4 10.6 20.0 25.2 18.4 22.3 27.1 32.6 39.3
Taxes 2.4 2.8 6.9 8.9 6.5 7.9 9.6 11.5 13.8
PIK Preferred Dividends 0.0 0.0 0.0 0.0 6.5 7.3 8.3 9.4 10.6
------------------------------------ ----------------------------------------------
Net Income $ 7.1 $ 7.9 $ 13.2 $ 16.4 $ 5.4 $ 7.1 $ 9.2 $ 11.7 $ 14.9
==================================== ==============================================
EBIT 10.3 11.1 15.4 27.5 38.8 43.4 48.3 53.5 59.6
Depreciation 3.1 3.3 3.3 4.3 5.2 5.6 6.2 6.8 7.4
Old Goodwill Amortization 0.0 0.0 0.0 0.1 0.2 0.2 0.2 0.2 0.2
LBO Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------------------------------------ ----------------------------------------------
EBITDA 13.4 14.3 18.7 32.0 44.2 49.2 54.7 60.5 67.2
Revenue Growth -- 20.1% 15.1% 66.6% 15.7% 12.5% 11.0% 10.5% 10.0%
Gross Margin 31.0% 29.0% 29.3% 28.1% 29.1% 29.0% 29.1% 29.2% 29.3%
Selling & Administrative (% Sales) 26.6% 21.5% 20.2% 19.3% 18.0% 18.0% 18.0% 18.0% 18.0%
EBITDA Margin 10.9% 9.7% 11.0% 11.3% 13.5% 13.4% 13.4% 13.4% 13.5%
Depreciation (% of Net PP&E) 4.4% 10.7% 11.0% 6.4% 6.2% 6.7% 7.4% 8.1% 8.9%
Tax Rate 25.3% 26.0% 34.2% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
- ------------
<FN>
(a) Projections are from SILVER management.
(b) 1996E excludes gain on Farberware transaction of $11.9 million and sales of Farberware inventory of $6.0 million, but includes
$2.6 million of pro forma Farberware licensing royalties (included in other income).
D-3
</TABLE>
<PAGE> 51
<TABLE>
PROJECT SILVER
INCOME STATEMENTS BY DIVISION
- --------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
Fiscal Year Ended December 31, Projected Fiscal Year Ended December 31, (a)
------------------------------------------ -------------------------------------------------------
1994 1995 1996(b) 1996E 1997 1998 1999 2000 2001
------------------------------------------ -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wallace
Sales $ 29.6 $ 26.9 $ 30.6 $ 30.6 $ 33.0 $ 34.3 $ 35.1 $ 35.9 $ 36.8
Sales Growth - -9.0% 13.4% 13.4% 8.0% 3.9% 2.3% 2.4% 2.3%
Cost of Sales 22.4 17.0 19.6 19.6 20.9 21.8 22.3 22.8 23.3
------------------------------------------ -------------------------------------------------------
Gross Profit $ 7.2 $ 10.0 $ 10.9 $ 10.9 $ 12.1 $ 12.5 $ 12.8 $ 13.1 $ 13.4
Gross Margin 24.5% 37.1% 35.7% 35.7% 36.5% 36.5% 36.5% 36.5% 36.5%
Towle
Sales $ 22.8 $ 20.8 $ 23.5 $ 23.5 $ 25.4 $ 26.4 $ 27.0 $ 27.6 $ 28.3
Sales Growth - -8.9% 13.0% 13.0% 8.0% 4.0% 2.3% 2.4% 2.3%
Cost of Sales 14.1 12.8 13.3 13.3 14.5 15.0 15.4 15.7 16.1
------------------------------------------ -------------------------------------------------------
Gross Profit $ 8.7 $ 8.0 $ 10.2 $ 10.2 $ 10.9 $ 11.4 $ 11.6 $ 11.9 $ 12.2
Gross Margin 38.1% 38.2% 43.4% 43.4% 43.1% 43.1% 43.1% 43.1% 43.1%
Hong Kong
Sales $ 33.0 $ 46.6 $ 57.2 $ 57.2 $ 65.7 $ 76.6 $ 87.9 $ 99.2 $111.5
Sales Growth - 41.0% 22.7% 22.7% 15.0% 16.6% 14.7% 12.9% 12.4%
Cost of Sales 22.9 32.2 39.7 39.7 45.1 53.3 61.1 69.0 77.5
------------------------------------------ -------------------------------------------------------
Gross Profit $ 10.2 $ 14.3 $ 17.5 $ 17.5 $ 20.6 $ 23.4 $ 26.8 $ 30.3 $ 34.0
Gross Margin 30.8% 30.8% 30.5% 30.5% 31.4% 30.5% 30.5% 30.5% 30.5%
LFA
Sales $ 61.4 $ 75.2 $ 87.1 $ 87.1 $100.2 $114.3 $128.9 $144.1 $159.2
Sales Growth - 22.4% 15.8% 15.8% 15.0% 14.1% 12.7% 11.8% 10.5%
Cost of Sales 48.9 57.8 67.1 67.1 76.5 90.3 101.8 113.8 125.8
------------------------------------------ -------------------------------------------------------
Gross Profit $ 12.6 $ 17.4 $ 20.0 $ 20.0 $ 23.7 $ 24.0 $ 27.1 $ 30.3 $ 33.4
Gross Margin 20.5% 23.1% 22.9% 22.9% 23.6% 21.0% 21.0% 21.0% 21.0%
Rauch
Sales - - - $ 60.2 $ 66.6 $ 74.4 $ 81.8 $ 90.0 $ 98.5
Sales Growth - - - - 10.6% 11.7% 9.9% 10.0% 9.5%
Cost of Sales - - - 47.7 51.9 54.2 58.7 63.6 68.8
------------------------------------------ -------------------------------------------------------
Gross Profit - - - $ 12.5 $ 14.6 $ 20.1 $ 23.1 $ 26.4 $ 29.7
Gross Margin - - - 20.7% 22.0% 27.1% 28.2% 29.3% 30.2%
Silvestri
Sales - - - $ 19.3 $ 30.0 $ 35.0 $ 40.1 $ 46.1 $ 52.9
Sales Growth - - - - 55.8% 16.6% 14.7% 14.8% 14.8%
Cost of Sales - - - 12.6 19.2 22.3 25.6 29.4 33.8
------------------------------------------ -------------------------------------------------------
Gross Profit - - - $ 6.6 $ 10.8 $ 12.6 $ 14.5 $ 16.6 $ 19.1
Gross Margin - - - 34.4% 36.1% 36.1% 36.1% 36.1% 36.1%
C.J. Vander
Sales - - - $ 4.7 $ 6.0 $ 6.7 $ 7.4 $ 8.1 $ 8.9
Sales Growth - - - - 28.5% 11.7% 10.0% 10.0% 10.0%
Cost of Sales - - - 2.9 3.7 4.1 4.5 4.9 5.4
------------------------------------------ -------------------------------------------------------
Gross Profit - - - $ 1.8 $ 2.3 $ 2.6 $2.9 $ 3.2 $ 3.5
Gross Margin - - - 38.0% 39.0% 39.0% 39.0% 39.0% 39.0%
Gonsolidated
Sales $146.9 $169.5 $198.3 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1
Sales Growth - 15.4% 17.0% 66.6% 15.7% 12.5% 11.0% 10.5% 10.0%
Cost of Sales 108.2 119.8 139.8 203.0 231.8 261.1 289.4 319.3 350.7
------------------------------------------ -------------------------------------------------------
Gross Profit $ 38.7 $ 49.7 $ 58.5 $ 79.4 $ 95.1 $106.6 $118.8 $131.7 $145.4
Gross Margin 26.3% 29.3% 29.5% 28.1% 29.1% 29.0% 29.1% 29.2% 29.3%
<FN>
- ----------------
(a) Projections are from SILVER management.
(b) Shows only organic growth.
</TABLE>
D-4
<PAGE> 52
<TABLE>
PROJECT SILVER
CONSOLIDATED BALANCE SHEET AND CASH FLOW STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
Fiscal Year Ended December 31, Projected Fiscal Year Ended December 31,(a)
------------------------------------ Pro Forma -------------------------------------------
1993 1994 1995 1996E 12/31/96 1997 1998 1999 2000 2001
------------------------------------ --------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and Equivalents $ 3.8 $ 1.9 $109.1 $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9
Net Working Capital 76.9 52.8 62.9 119.1 119.1 131.2 147.0 161.4 175.8 189.9
PP&E 68.7 30.7 29.6 68.1 68.1 83.7 83.7 83.6 83.6 83.6
Other Assets 0.9 0.6 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.2
Net Assets of Discontinued Operations 0.0 85.9 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Deferred Financing Fees 0.0 0.0 0.0 0.0 7.5 7.0 6.6 6.1 5.7 5.2
Old Goodwill 0.0 0.0 0.0 0.0 6.0 5.8 5.6 5.4 5.2 5.0
LBO Goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------------------------------------ --------- -------------------------------------------
Total Assets $150.3 $171.8 $203.7 $195.6 $203.1 $230.1 $245.1 $258.8 $272.5 $285.9
==================================== ========= ===========================================
Working Capital Revolver $ 9.9 $ 15.4 $ 51.7 $ 1.8 $ 42.7 58.5 62.3 62.2 60.4 56.2
Bank Debt (Term Loan) 0.0 0.0 0.0 0.0 40.0 38.0 35.0 31.0 25.0 17.0
Senior Sub. Debentures 0.0 0.0 0.0 0.0 100.0 100.0 100.0 100.0 100.0 100.0
Capital Leases 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Liabilities 9.5 4.3 5.4 20.3 20.3 21.6 21.5 21.8 22.0 22.3
PIK Preferred 0.0 0.0 0.0 0.0 50.0 56.5 63.8 72.1 81.5 92.1
Common Equity 131.0 152.1 146.6 173.4 (49.9) (49.9) (49.9) (49.9) (49.9) (49.9)
Retained Earnings 0.0 0.0 0.0 0.0 0.0 5.4 12.4 21.7 33.4 48.3
------------------------------------ --------- -------------------------------------------
Total Liabilities and Equity $150.3 $171.8 $203.7 $195.6 $203.1 $230.1 $245.1 $258.8 $272.5 $285.9
==================================== ========= ===========================================
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 5.4 $ 7.1 $ 9.2 $ 11.7 $ 14.9
Depreciation 3.1 3.3 3.3 4.3 5.2 5.6 6.2 6.8 7.4
Amortization of Financing Fees 0.5 0.5 0.5 0.5 0.5
Old Goodwill Amortization 0.1 0.2 0.2 0.2 0.2 0.2
LBO Goodwill Amortization 0.0 0.0 0.0 0.0 0.0
Non-Cash Interest/Dividends 6.5 7.3 8.3 9.4 10.6
Change in Working Capital 24.1 (10.1) (56.2) (12.1) (15.8) (14.4) (14.4) (14.1)
Capital Expenditures (2.8) (2.6) (2.7) (17.8) (20.8) (5.6) (6.1) (6.7) (7.4)
Change in Other Assets/Liabilities 1.3 (0.0) 0.3 0.3 0.3
-------------------------------------------
Free Cash Flow (13.8) (0.7) 4.1 7.7 12.3
Required Debt Amortization (2.0) (3.0) (4.0) (6.0) (8.0)
Amortization of Capital Leases 0.0 0.0 0.0 0.0 0.0
-------------------------------------------
Cash Flow Available for Debt Paydown (15.8) (3.7) 0.1 1.7 4.3
Debt Paydown 15.8 3.7 (0.1) (1.7) (4.3)
-------------------------------------------
Increase in Cash Balances 0.0 0.0 0.0 0.0 0.0
Beginning Balance 1.9 1.9 1.9 1.9 1.9
-------------------------------------------
Ending Balance $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9
- ------------------------------------------------------------------------------------------------------------------------------------
Net Working Capital (% of Sales) 62.6% 35.8% 37.1% 42.2% 40.1% 40.0% 39.6% 39.0% 38.3%
Change in NWC/Change in Sales -- 97.8% -45.4% -49.8% -27.2% -38.7% -35.7% -33.5% -31.4%
CAPX (% of Sales) 23% 1.8% 1.6% 6.3% 6.4% 1.5% 1.5% 1.5% 1.5%
CAPX (% of Net PP&E) 4.0% 8.5% 9.1% 26.1% 24.8% 6.6% 7.3% 8.1% 8.9%
Depreciation (% of Sales) 2.5% 2.2% 1.9% 1.5% 1.6% 1.5% 1.5% 1.5% 1.5%
Depreciation (% of Net PP&E) 4.4% 10.7% 11.0% 6.4% 6.2% 6.7% 7.4% 8.1% 8.9%
Normalized CAPX $ 5.0 $ 5.0 $ 5.0 $ 5.0 $ 5.0 $ 5.0
<FN>
- --------------------
(a) Projections are from SILVER management.
</TABLE>
<PAGE> 53
\
<TABLE>
PROJECT SILVER
WORKING CAPITAL
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, PROJECTED FISCAL YEAR ENDED DECEMBER 31,(a)
------------------------------ PRO FORMA ------------------------------------------------------
1994 1995 1996E 12/31/96 1997 1998 1999 2000 2001
------------------------------ --------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Accounts Receivable $28.2 $31.9 $ 73.4 $ 73.4 $ 78.6 $ 88.4 $ 98.1 $108.4 $119.3
Inventory 40.3 41.2 68.2 68.2 73.5 82.7 91.7 101.4 111.5
Prepaids & Other 0.2 1.6 2.0 2.0 1.9 2.1 2.2 2.3 2.5
Deferred Taxes 3.0 5.1 4.0 4.0 4.1 4.1 4.1 4.1 4.1
------------------------------ --------- ------------------------------------------------------
71.7 79.8 147.6 147.6 158.1 177.3 196.2 216.2 237.4
Liabilities
Accounts Payable 7.6 6.4 9.2 9.2 10.3 11.5 12.8 14.2 15.6
Accrued Liabilities 2.7 4.4 10.5 10.5 7.5 8.7 10.1 11.7 13.4
Accrued Compensation 3.2 2.5 3.2 3.2 3.5 3.7 3.9 4.1 4.3
Accrued Advertising 1.6 2.0 3.0 3.0 2.4 2.8 3.2 3.7 4.3
Taxes Payble 3.8 1.5 2.7 2.7 3.2 3.6 4.8 6.8 9.9
------------------------------ --------- ------------------------------------------------------
18.9 16.9 28.5 28.5 26.9 30.3 34.8 40.4 47.5
Net Working Capital 52.8 62.9 119.1 119.1 131.2 147.0 161.4 175.8 189.9
Accounts Receivable (% Sales) 19.2% 18.8% 26.0% 26.0% 24.0% 24.0% 24.0% 24.0% 24.0%
Inventory (% Sales) 27.4% 24.3% 24.1% 24.1% 22.5% 22.5% 22.5% 22.5% 22.5%
Prepaids & Other (% Sales) 0.1% 0.9% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5%
Deferred Taxes (% Sales) 2.0% 3.0% 1.4% 1.4% 1.3% 1.1% 1.0% 0.9% 0.8%
Accounts Payable (% Sales) 5.2% 3.8% 3.2% 3.2% 3.1% 3.1% 3.1% 3.1% 3.1%
Accrued Liabilities (% Sales) 1.8% 2.6% 3.7% 3.7% 2.3% 2.4% 2.5% 2.6% 2.7%
Accrued Compensation (% Sales) 2.1% 1.5% 1.1% 1.1% 1.1% 1.0% 0.9% 0.9% 0.9%
Accrued Advertising (% Sales) 1.1% 1.2% 1.1% 1.1% 0.7% 0.8% 0.8% 0.8% 0.9%
Taxes Payable (% Sales) 2.6% 0.9% 1.0% 1.0% 1.0% 1.0% 1.2% 1.5% 2.0%
Net Working Capital (% Sales) 12.8% 9.9% 42.2% 42.2% 40.1% 40.0% 39.6% 39.0% 38.3%
<FN>
- ------------------
(a) Projections are from SILVER management.
</TABLE>
<PAGE> 54
<TABLE>
PROJECT SILVER
CALCULATION OF WORKING CAPITAL REVOLVER
- -------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
PROJECTED FISCAL YEAR ENDED DECEMBER 31, (a)
---------------------------------------------------
1996E 1997 1998 1999 2000 2001
---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Accounts Receivable
Qtr 1 $ 28.1 $ 37.6 $ 42.3 $ 47.0 $ 51.9 $ 57.1
Qtr 2 56.4 38.5 43.4 48.1 53.2 58.5
Qtr 3 119.0 106.8 120.2 133.4 147.4 162.2
Qtr 4 73.4 78.6 88.4 98.1 108.4 119.3
Inventory
Qtr 1 $ 68.7 $ 87.0 $ 97.8 $108.6 $120.0 $132.0
Qtr 2 109.1 109.3 123.0 136.5 150.8 165.9
Qtr 3 114.0 101.4 114.1 126.6 139.9 153.9
Qtr 4 68.2 73.5 82.7 91.7 101.4 111.5
Net Work Capital (including cash)
Qtr 1 $ 93.5 $114.1 $128.4 $142.5 $157.4 $173.2
Qtr 2 90.1 111.6 125.6 139.4 154.0 169.4
Qtr 3 119.6 122.5 137.8 153.0 169.0 185.9
Qtr 4 119.3 130.0 146.2 162.3 179.3 197.3
Borrowing Base
(75% of Accounts Receivable + 50% of Inventory
Qtr 1 $ 55.4 $ 71.7 $ 80.6 $ 89.5 $ 98.9 $108.8
Qtr 2 96.9 83.5 94.0 104.3 115.3 126.8
Qtr 3 146.2 130.8 147.2 163.4 180.5 198.6
Qtr 4 89.2 95.7 107.6 119.5 132.0 145.2
Working Capital Revolver Outstanding
Qtr 1 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Qtr 2 56.4 19.5 21.9 24.4 26.9 29.6
Qtr 3 92.2 61.1 68.8 76.3 84.4 92.8
Qtr 4 1.8 2.7 3.0 3.3 3.7 4.0
Interest Expense @ 7.895% 7.500% 7.500% 7.500% 7.500% 7.500%
Qtr 1 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Qtr 2 1.1 0.4 0.4 0.4 0.5 0.5
Qtr 3 1.8 1.1 1.3 1.4 1.5 1.7
Qtr 4 0.0 0.0 0.1 0.1 0.1 0.1
---------------------------------------------------
Total $ 2.9 $ 1.5 $ 1.7 $ 1.9 $ 2.1 $ 2.3
Average Working Capital Revolver Balance $ 37.6 $ 20.8 $ 23.4 $ 26.0 $ 28.7 $ 31.6
Cash Balance
Qtr 1 $ 11.5 $ 1.0
Qtr 2 3.4 1.0
Qtr 3 7.9 1.0
Qtr 4 1.9 1.0
Average Cash Balance $ 6.2
<FN>
- ----------------------
(a) Projections are from SILVER management.
</TABLE>
<PAGE> 55
PROJECT SILVER
<TABLE>
FINANCIAL RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, PROJECTED FISCAL YEAR ENDED DECEMBER 31,(a)
------------------------------------ -----------------------------------------------
1993 1994 1995 1996E 1997 1998 1999 2000 2001
------------------------------------ -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITALIZATION
- --------------
Senior Debt $ 40.0 $ 40.0 $ 40.0 $ 40.0 $ 96.5 $ 97.3 $ 93.2 $ 85.4 $ 73.2
Other Debt 142.7 142.7 142.7 142.7 100.0 100.0 100.0 100.0 100.0
------------------------------------ -----------------------------------------------
Total Debt 182.7 182.7 182.7 182.7 196.5 197.3 193.2 185.4 173.2
Less: Cash (1.9) (1.9) (1.9) (1.9) (1.9) (1.9) (1.9) (1.9) (1.9)
------------------------------------ -----------------------------------------------
Net Debt 180.8 180.8 180.8 180.8 194.6 195.4 191.2 183.5 171.2
Book Equity + Preferred 0.1 0.1 0.1 0.1 11.9 26.3 43.9 65.0 90.5
Total Capitalization 182.8 182.8 182.8 182.8 208.5 223.6 237.1 250.5 263.6
Working Capital Revolver Committed $ 92.2 $ 92.2 $ 92.2 $ 92.2 $ 61.1 $ 68.8 $ 76.3 $ 84.4 $ 92.8
- ------------------------------------------------------------------------------------------------------------------------------------
COVERAGE RATIOS:
- ----------------
Total Interest Expense $ 20.6 20.6 $ 20.6 $ 20.6 $ 20.6 $ 21.3 $ 21.3 $ 21.0 $ 20.4
Net Interest Expense + Pfd. Divs. 27.0 27.0 27.0 27.0 27.0 28.5 29.5 30.3 30.9
EBITDA $ 13.4 $ 14.3 $18.7 $ 32.0 $ 44.2 $ 49.2 $ 54.7 $ 60.5 $ 67.2
vs. Total Interest 0.6x 0.7x 0.9x 1.6x 2.1x 2.3x 2.6x 2.9x 3.3x
vs. Net Interest + Pfd. Divs. 0.5x 0.5x 0.7x 1.2x 1.6x 1.7x 1.9x 2.0x 2.2x
EBITDA - CAPX $ 10.6 $ 11.7 $ 16.0 $ 14.2 $ 23.4 $ 43.7 $ 48.5 $ 53.7 $ 59.8
vs. Total Interest 0.5x 0.6x 0.8x 0.7x 1.1x 21.x 2.3x 2.6x 2.9x
vs. Net Interest + Pfd. Divs. 0.4x 0.4x 0.6x 0.5x 0.9x 1.5x 1.6x 1.8x 1.9x
EBITDA - Norm. CAPX(b) $ 10.6 $ 11.7 $ 16.0 $ 27.0 $ 39.2 $ 44.2 $ 49.7 $55.5 $ 62.2
vs. Total Interest 0.5x 0.6x 0.8x 1.3x 1.9x 2.1x 2.3x 2.6x 3.0x
vs. Net Interest + Pfd. Divs. 0.4x 0.4x 0.6x 1.0x 1.5x 1.6x 1.7x 1.8x 2.0x
EBIT -- -- -- -- $ 38.8 $ 43.4 $ 48.3 $ 53.5 $ 59.6
vs. Total Interest -- -- -- -- 1.9x 2.0x 2.3x 2.5x 2.9x
vs. Net Interest + Pfd. Divs. -- -- -- -- 1.4x 1.5x 1.6x 1.8x 1.9x
- ------------------------------------------------------------------------------------------------------------------------------------
LEVERAGE RATIOS:
- ----------------
Total Funded Debt/Total Capitalization 100.0% 100.0% 100.0% 100.0% 94.3% 88.2% 81.5% 74.0% 65.7%
Net Funded Debt/Total Capitalization 98.9% 98.9% 98.9% 98.9% 93.3% 87.3% 80.7% 73.3% 64.9%
Total Funded Debt/Equity -- -- -- -- 1645.7% 748.8% 440.1% 285.2% 191.4%
Net Funded Debt/Equity -- -- -- -- 1629.4% 741.4% 435.7% 282.2% 189.3%
Total Funded Debt/EBITDA 13.7x 12.7x 9.8x 5.7x 4.4X 4.0x 3.5x 3.1x 2.6x
Net Funded Debt/EBITDA 13.5x 12.6x 9.7x 5.6x 4.4x 4.0x 3.5x 3.0x 2.5x
Funded Senior Debt/EBITDA 3.0x 2.8x 2.1x 1.2x 2.2x 2.0x 1.7x 1.4x 1.1x
Total Committed Debt/EBITDA 20.6x 19.2x 14.7x 8.6x 5.8x 5.4x 4.9x 4.5x 4.0x
Committed Senior Debt/EBITDA 9.9x 9.2x 7.1x 4.1x 3.6x 3.4x 3.1x 2.8x 2.5x
Cumulative Bank Debt Paydown -- -- -- -- -16.7% -17.6% -12.7% -3.3% 11.5%
<FN>
- ------------------------------------
(a) Projections are from SILVER management.
(b) 1996-2001 adjusted to reflect Normalized CAPX = $5.0 million.
</TABLE>
D-8
<PAGE> 56
PROJECT SILVER
<TABLE>
RETURN ANALYSIS
- ----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
PROJECTED FISCAL YEAR ENDED DECEMBER 31, (a)
------- ----------------------------------------------
1996E 1997 1998 1999 2000 2001
------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA $ 32.0 $ 44.2 $ 49.2 $ 54.7 $ 60.5 $ 67.2
Firm Value [at] EBITDA Multiple of:
6.0x 192.0 265.4 295.4 327.9 362.8 403.1
7.0x 224.0 309.6 344.7 382.6 423.3 470.3
8.0x 256.0 353.8 393.9 437.2 483.8 537.5
Less: Net Debt (180.8) (194.6) (195.4) (191.2) (183.5) (171.2)
Less: Avg. Wkg. Capital Revolver (37.6) (20.8) (23.4) (26.0) (28.7) (31.6)
Less: PIK Preferred (50.0) (56.5) (63.8) (72.1) (81.5) (92.1)
Equity Value [at] EBITDA Multiple of:
6.0x (26.3) (6.6) 12.8 38.5 69.1 108.2
7.0x 5.7 37.7 62.1 93.2 129.6 175.4
8.0x 37.7 81.9 111.3 147.8 190.0 242.6
Initial Equity Investment $ 50.0
Ownership 75.0% 75.0% 75.0% 75.0% 75.0% 75.0%
- ----------------------------------------------------------------------------------------------------------------------
Equity Return [at] EBITDA Multiple of:
6.0x #N/A #NUM! -56.2% -16.7% 0.9% 10.2%
7.0x #N/A -43.5% -3.5% 11.8% 18.1% 21.3%
8.0x #N/A 22.9% 29.2% 30.4% 29.9% 29.5%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
SENIOR SUB. DEBENTURES RETURNS
Equity Ownership 0.0%
-------
IRR
-------
6.0x #VALUE! (100.0) 11.5 11.5 11.5 11.5 11.5
7.0x #VALUE! (100.0) 11.5 11.5 11.5 11.5 11.5
8.0x #VALUE! (100.0) 11.5 11.5 11.5 11.5 11.5
- ----------------------------------------------------------------------------------------------------------------------
PIK PREFERRED RETURNS
Equity Ownership 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
-------
IRR
-------
6.0x 13.0% (50.0) 0.0 0.0 0.0 0.0 92.1
7.0x 13.0% (50.0) 0.0 0.0 0.0 0.0 92.1
8.0x 13.0% (50.0) 0.0 0.0 0.0 0.0 92.1
-------
- -------------
<FN>
(a) Projections are from SILVER management.
D-9
</TABLE>
<PAGE> 57
- --------------------------------------------------------------------------------
STRATEGIC ACQUIROR PRO FORMA ANALYSES
- --------------------------------------------------------------------------------
<PAGE> 58
<TABLE>
----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
- --------------------------------------------------------------------------------
AMERICAN GREETINGS ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
American Greetings Stock Price@ 19-Oct-96 $29.75
SILVER Stock Price@ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
American Greetings 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing American Greetings Shares 74.758
Pro Forma American Greetings Shares 74.758
Transaction Expenses $10.0
American Greetings Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
American Greetings Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
AMERICAN GREETINGS SILVER COMBINED
MAY-96 JUN-96 ADJUSTMENTS MAY-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $43.0 $6.2 $0.0 $49.2
Total Debt 464.2 37.6 242.4 744.3
----- ---- -----
Net Debt 421.2 31.4 695.1
Equity 1,251.4 155.5 (155.5) 0.0 1,251.4
Total Capitalization 1,751.6 193.1 1,995.7
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 27.1% 19.5% 37.3%
NET DEBT/TOTAL CAP. 24.6% 16.3% 34.8%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
AMERICAN GREETINGS
Projected American Greetings Standalone EPS $2.15 $2.42 $2.71
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (17.0) (17.0) (17.0)
--------------------------
Total Pre-Tax Acquisition Adjustments ($19.3) ($19.3) ($19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (10.4) (10.4) (10.4)
--------------------------
Total After-Tax Acquisition Adjustments ($12.7) ($12.7) ($12.7)
PRO FORMA EPS CALCULATION
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
--------------------------
Pro Forma Combined Net Income $164.3 $192.9 $217.6
Pro Forma Combined Shares Outstanding 74.758 74.758 74.758
Pro Forma EPS $2.20 $2.58 $2.91
Projected American Greetings Standalone EPS $2.15 $2.42 $2.71
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.05 $0.16 $0.20
% PICK-UP (DILUTION) 2.2% 6.6% 7.4%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($5.8) ($19.6) ($24.6)
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
0% $26.25 2.2% 6.6% 7.4%
10% 28.88 1.2% 5.7% 6.6%
20% 31.50 0.2% 4.8% 5.8%
30% 34.13 (0.8%) 4.0% 5.0%
40% 36.75 (1.8%) 3.1% 4.2%
50% 39.38 (2.8%) 2.2% 3.4%
60% 42.00 (3.8%) 1.3% 2.7%
70% 44.63 (4.8%) 0.4% 1.9%
80% 47.25 (5.8%) (0.5%) 1.1%
90% 49.88 (6.8%) (1.4%) 0.3%
100% 52.50 (7.8%) (2.2%) (0.5%)
- --------------------------------------------------------------------------------
</TABLE>
E-1
<PAGE> 59
PROJECT SILVER 0% CASH
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- -------------------------------------------------------------------------------
(dollars in millions, except per share)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
AMERICAN GREETINGS ACQUIRES SILVER
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
KEY ASSUMPTIONS
- -------------------------------------------------------------------------------
<S> <C> <C>
American Greetings Stock Price[at] 19-OCt-96 $ 29.75
SILVER Stock Price@ 19-OCt-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus: Existing Net Debt $ 31.4
Less: Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
American Greetings 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill - Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.882
Existing American Greetings Shares 74.758
Pro Forma American Greetings Shares 82.571
Transaction Expenses $ 10.0
American Greetings Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
American Greetings Ownership of New Entity 90.5%
SILVER Ownership of New Entity 9.5%
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -------------------------------------------------------------------------------
AMERCIAN GREETINGS SILVER
- -------------------------------------------------------------------------------
<CAPTION>
COMBINED
MAY-96 JUN-96 ADJUSTMENTS MAY-96
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 43.0 $ 6.2 $(10.0) $ 39.2
Total Debt 464.2 37.6 0.0 501.8
-------- ------ --------
Net Debt 421.2 31.4 462.6
Equity 1,251.4 155.5 0.0 (10.0) 1,396.9
Total Capitalization 1,715.6 193.1 1,898.7
- -------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 27.1% 19.5% 26.4%
NET DEBT/TOTAL CAP. 24.6% 16.3% 24.4%
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
DILUTION ANALYSIS
- -------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C>
AMERICAN GREETINGS
Projected American Greetings Standalone EPS $ 2.15 $ 2.42 $ 2.71
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total Pre-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total After-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
PRO FORMA EPS CALCULATION
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Aqcuisition Adjustments 0.0 0.0 0.0
------------------------
Pro Forma Combined Net Income $177.0 $205.6 $230.3
Pro Forma Combined Shares Outstanding 82.571 82.571 82.571
Pro Forma EPS $ 2.14 $ 2.49 $ 2.79
Projected American Greetings Standalone EPS $ 2.15 $ 2.42 $ 2.71
- -------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $(0.01) $ 0.07 $ 0.08
% PICK-UP (DILUTION) (0.3%) 2.9% 2.9%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ 0.9 $ (9.4) $(10.7)
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 (0.3%) 2.9% 2.9%
10% 28.88 (1.3%) 1.9% 1.9%
20% 31.50 (2.2%) 0.9% 1.0%
30% 34.13 (3.1%) (0.0%) 0.0%
40% 36.75 (4.0%) (0.9%) (0.9%)
50% 39.38 (4.9%) (1.9%) (1.8%)
60% 42.00 (5.8%) (2.8%) (2.7%)
70% 44.63 (6.6%) (3.6%) (3.6%)
80% 47.25 (7.5%) (4.5%) (4.5%)
90% 49.88 (8.3%) (5.3%) (5.3%)
100% 52.50 (9.1%) (6.2%) (6.1%)
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 60
-----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CSS INDUSTRIES INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
CSS Industries Inc Stock Price @ 20-Oct-96 $ 23.25
SILVER Stock Price @ 20-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
CSS Industries Inc 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill - Incl. Transaction Exp. $ 93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing CSS Industries Inc Shares 10.722
Pro Forma CSS Industries Inc Shares 10.722
Transaction Expresses $ 10.0
CSS Industries Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
CSS Industries Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
CSS INDUSTRIES INC SILVER
<CAPTION>
COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 3.4 $ 6.2 $ 0.0 $ 9.6
Total Debt 21.5 37.6 242.4 301.6
------ ------ ------
Net Debt 18.2 31.4 292.0
Equity 149.9 155.5 (155.5) 0.0 149.9
Total Capitalization 171.4 193.1 451.4
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 12.6% 19.5% 66.8%
NET DEBT/NET CAP. 10.6% 16.3% 64.7%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C>
CSS INDUSTRIES INC
Projected CSS Industries Inc Standalone EPS $ 1.69 $ 2.03 $ 2.23
Projected CSS Industries Inc Standalone Net Income $ 18.1 $ 21.8 $ 23.9
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (21.8) (21.8) (21.8)
------------------------
Total Pre-Tax Acquisition Adjustments ($24.1) ($24.1) ($24.1)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (13.3) (13.3) (13.3)
------------------------
Total After-Tax Acquisition Adjustments ($15.6) ($15.6) ($15.6)
PRO FORMA EPS CALCULATION
Projected CSS Industries Inc Standalone Net Income $ 18.1 $ 21.8 $ 23.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Aqcuisition Adjustments (15.6) (15.6) (15.6)
-------------------------
Pro Forma Combined Net Income $ 18.7 $ 30.8 $ 36.0
Pro Forma Combined Shares Outstanding 10.722 10.722 10.722
Pro Forma EPS $ 1.75 $ 2.87 $ 3.36
Projected CSS Industries Inc Standalone EPS $ 1.69 $ 2.03 $ 2.23
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.06 $ 0.84 $ 1.12
% PICK-UP (DILUTION) 3.3% 41.4% 50.3%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (1.0) $(14.8) $(19.7)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 3.3% 41.4% 50.3%
10% 28.88 (7.2%) 32.7% 42.4%
20% 31.50 (17.6%) 24.0% 34.5%
30% 34.13 (28.0%) 15.3% 26.6%
40% 36.75 (38.5%) 6.6% 18.7%
50% 39.38 (48.9%) (2.1%) 10.8%
60% 42.00 (59.3%) (10.7%) 2.9%
70% 44.63 (69.8%) (19.4%) (5.0%)
80% 47.25 (80.2%) (28.1%) (12.9%)
90% 49.88 (90.7%) (36.8%) (20.8%)
100% 52.50 (101.1%) (45.5%) (28.7%)
- --------------------------------------------------------------------------------
</TABLE>
E-3
<PAGE> 61
<TABLE>
-----------
PROJECT SILVER 0% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
- --------------------------------------------------------------------------------
CSS INDUSTRIES INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
CSS Industries Inc Stock Price@ 20-Oct-96 $23.25
SILVER Stock Price@ 20-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
------
Total Fully-Dilited Shares 9.014
Office Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
CSS Industries Inc 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 1.129
Existing CSS Industries Inc Shares 10.722
Pro Forma CSS Industries Inc Shares 20.719
Transaction Expenses $10.0
CSS Industries Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
CSS Industries Inc Ownership of New Entity 51.7%
SILVER Ownership of New Entity 48.3%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
CSS INDUSTRIES INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS MAY-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $3.4 $6.2 ($10.0) ($0.4)
Total Debt 21.5 37.6 0.0 59.1
----- ---- -----
Net Debt 18.2 31.4 59.6
Equity 149.9 155.5 0.0 (10.0) 295.4
Total Capitalization 171.4 193.1 354.5
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 12.6% 19.5% 16.7%
NET DEBT/TOTAL CAP. 10.6% 16.3% 16.8%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
CSS INDUSTRIES INC
Projected CSS Industries Inc Standalone EPS $1.69 $2.03 $2.23
Projected CSS Industries Inc Standalone Net Income $18.1 $21.8 $23.9
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 9.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 9.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected CSS Industries Inc Standalone Net Income $18.1 $21.8 $23.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $34.3 $46.4 $51.6
Pro Forma Combined Shares Outstanding 20.719 20.719 20.719
Pro Forma EPS $1.66 $2.24 $2.49
Projected CSS Industries Inc Standalone EPS $1.69 $2.03 $2.23
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) ($0.03) $0.21 $0.26
% PICK-UP (DILUTION) (1.9%) 10.3% 11.6%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $1.1 ($7.1) ($8.8)
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
0% $26.25 (1.9%) 10.3% 11.6%
10% 28.88 (6.5%) 5.2% 6.3%
20% 31.50 (10.7%) 0.5% 1.6%
30% 34.13 (14.5%) (3.8%) (2.8%)
40% 36.75 (18.0%) (7.8%) (6.8%)
50% 39.38 (21.3%) (11.4%) (10.4%)
60% 42.00 (24.2%) (14.8%) (13.8%)
70% 44.63 (27.0%) (17.9%) (17.0%)
80% 47.25 (29.6%) (20.8%) (19.9%)
90% 49.88 (32.0%) (23.5%) (22.6%)
100% 52.50 (34.2%) (26.0%) (25.2%)
- --------------------------------------------------------------------------------
</TABLE>
E-4
<PAGE> 62
-----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEPARTMENT 56, INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Department 56, Inc Stock Price @ 19-Oct-96 $ 25.25
SILVER Stock Price @ 19-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Department 56, Inc 1996E P/E Multiple 11.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Department 56, Inc Shares 21.550
Pro Forma Department 56, Inc Shares 21.550
Transaction Expenses $ 10.0
Department 56, Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Department 56, Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
<CAPTION>
DEPARTMENT 56, INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 2.8 $ 6.2 $ 0.0 $ 9.0
Total Debt 106.9 37.6 242.4 386.9
------ ------ ------
Net Debt 104.1 31.4 377.9
Equity 179.9 155.5 (155.5) 0.0 179.9
Total Capitalization 286.8 193.1 566.8
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 37.3% 19.5% 68.3%
NET DEBT/TOTAL CAP. 36.3% 16.3% 66.7%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C>
DEPARTMENT 56, INC
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (21.8) (21.8) (21.8)
-------------------------
Total Pre-Tax Acquisition Adjustments $(24.1) $(24.1) $(24.1)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (13.3) (13.3) (13.3)
-------------------------
Total After-Tax Acquisition Adjustments $(15.6) $(15.6) $(15.6)
PRO FORMA EPS CALCULATION
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (15.6) (15.6) (15.6)
-------------------------
Pro Forma Combined Net Income $ 47.1 $ 61.8 $ 71.7
Pro Forma Combined Shares Outstanding 21.550 21.550 21.550
Pro Forma EPS $ 2.19 $ 2.87 $ 3.33
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.03 $ 0.42 $ 0.56
% PICK-UP (DILUTION) 1.3% 17.1% 20.2%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (1.0) $(14.8) $(19.7)
- --------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 1.3% 17.1% 20.2%
10% 28.88 (2.8%) 13.5% 17.0%
20% 31.50 (6.9%) 9.9% 13.8%
30% 34.13 (10.9%) 6.3% 10.7%
40% 36.75 (15.0%) 2.7% 7.5%
50% 39.38 (19.0%) (0.8%) 4.3%
60% 42.00 (23.1%) (4.4%) 1.2%
70% 44.63 (27.2%) (8.0%) (2.0%)
80% 47.25 (31.2%) (11.6%) (5.2%)
90% 49.88 (35.3%) (15.2%) (8.3%)
100% 52.50 (39.3%) (18.8%) (11.5%)
- --------------------------------------------------------------------------------
</TABLE>
E-5
<PAGE> 63
-----------
PROJECT SILVER 0% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEPARTMENT 56, INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Department 56, Inc Stock Price @ 19-Oct-96 $ 25.25
SILVER Stock Price @ 19-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Department 56, Inc 1996E P/E Multiple 11.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 0.0
Goodwill Amortization Period 40
Exchange Ratio 1.040
Existing Department 56, Inc Shares 21.550
Pro Forma Department 56, Inc Shares 30.755
Transaction Expenses $ 10.0
Department 56, Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Department 56, Inc Ownership of New Entity 70.1%
SILVER Ownership of New Entity 29.9%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
<CAPTION>
DEPARTMENT 56, INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 2.8 $ 6.2 $(10.0) $ (1.0)
Total Debt 106.9 37.6 0.0 144.5
------ ------ ------
Net Debt 104.1 31.4 145.5
Equity 179.9 155.5 0.0 (10.0) 325.3
Total Capitalization 286.8 193.1 469.9
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 37.3% 19.5% 30.8%
NET DEBT/TOTAL CAP. 36.3% 16.3% 31.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
DILUTION ANALYSIS
- -------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C>
DEPARTMENT 56, INC
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% 0.0 0.0 0.0
------------------------
Total Pre-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% 0.0 0.0 0.0
------------------------
Total After-Tax Acquisition Adjustments $ 0.0 0.0 0.0
PRO FORMA EPS CALCULATION
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
-------------------------
Pro Forma Combined Net Income $ 62.8 $ 77.4 $ 87.3
Pro Forma Combined Shares Outstanding 30.755 30.755 30.755
Pro Forma EPS $ 2.04 $ 2.52 $ 2.84
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $(0.12) $ 0.07 $ 0.07
% PICK-UP (DILUTION) (5.5%) 2.8% 2.6%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ 6.0 $ (3.4) $ (3.6)
- --------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 (5.5%) 2.8% 2.6%
10% 28.88 (8.3%) (0.3%) (0.5%)
20% 31.50 (10.9%) (3.1%) (3.3%)
30% 34.13 (13.4%) (5.8%) (6.0%)
40% 36.75 (15.8%) (8.4%) (8.6%)
50% 39.38 (18.0%) (10.8%) (11.0%)
60% 42.00 (20.1%) (13.1%) (13.3%)
70% 44.63 (22.1%) (15.3%) (15.5%)
80% 47.25 (24.0%) (17.4%) (17.5%)
90% 49.88 (25.8%) (19.3%) (19.5%)
100% 52.50 (27.6%) (21.2%) (21.4%)
- -------------------------------------------------------------------------------
</TABLE>
E-6
<PAGE> 64
<TABLE>
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
- --------------------------------------------------------------------------------
NEWELL CO ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Newell Co Stock Price@ 19-Oct-96 $30.50
SILVER Stock Price@ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Newell Co 1996E P/E Multiple 18.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Newell Co Shares 158.784
Pro Forma Newell Co Shares 158.784
Transaction Expenses $10.0
Newell Co Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Newell Co Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
NEWELL CO SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $45.5 $6.2 $0.0 $51.7
Total Debt 985.1 37.6 242.4 1,265.2
----- ---- -----
Net Debt 939.6 31.4 1,213.5
Equity 1,354.3 155.5 (155.5) 0.0 1,354.3
Total Capitalization 2,339.4 193.1 2,619.5
- ----------------------------------------------------------------------------------------------
Total Debt/Total Cap. 42.1% 19.5% 48.3%
Net Debt/Total Cap. 40.2% 16.3% 46.3%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
NEWELL CO
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (17.0) (17.0) (17.0)
--------------------------
Total Pre-Tax Acquisition Adjustments ($19.3) ($19.3) ($19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (10.4) (10.4) (10.4)
--------------------------
Total After-Tax Acquisition Adjustments ($12.7) ($12.7) ($12.7)
PRO FORMA EPS CALCULATION
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
--------------------------
Pro Forma Combined Net Income $262.4 $310.5 $358.3
Pro Forma Combined Shares Outstanding 158,784 158,784 158,784
Pro Forma EPS $1.65 $1.96 $2.26
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.02 $0.08 $0.09
% PICK-UP (DILUTION) 1.4% 4.0% 4.4%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($5.8) ($19.6) ($24.6)
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
0% $26.25 1.4% 4.0% 4.4%
10% 28.88 0.8% 3.5% 3.9%
20% 31.50 0.1% 2.9% 3.4%
30% 34.13 (0.5%) 2.4% 3.0%
40% 36.75 (1.1%) 1.9% 2.5%
50% 39.38 (1.7%) 1.3% 2.0%
60% 42.00 (2.3%) 0.8% 1.6%
70% 44.63 (3.0%) 0.3% 1.1%
80% 47.25 (3.6%) (0.3%) 0.6%
90% 49.88 (4.2%) (0.8%) 0.2%
100% 52.50 (4.8%) (1.4%) (0.3%)
- --------------------------------------------------------------------------------
</TABLE>
E-7
<PAGE> 65
<TABLE>
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
NEWELL CO ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Newell Co Stock Price @ 19-Oct-96 $30.50
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Newell Co 1996E P/E Multiple 18.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.861
Existing Newell Co Shares 158.784
Pro Forma Newell Co Shares 166.405
Transaction Expenses $10.0
Newell Co Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Newell Co Ownership of New Entity 95.4%
SILVER Ownership of New Entity 4.6%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
NEWELL CO SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $45.5 $6.2 ($10.0) $41.7
Total Debt 985.1 37.6 0.0 1,022.7
----- ---- -------
Net Debt 939.6 31.4 981.0
Equity 1,354.3 155.5 0.0 (10.0) 1,499.8
Total Capitalization 2,339.4 193.1 2,522.5
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 42.1% 19.5% 40.5%
NET DEBT/TOTAL CAP. 40.2% 16.3% 38.9%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
NEWELL CO
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $275.0 $323.2 $371.0
Pro Forma Combined Shares Outstanding 166.405 166.405 166.405
Pro Forma EPS $1.65 $1.94 $2.23
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.02 $0.68 $0.07
% PICK-UP (DILUTION) 1.4% 3.3% 3.1%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($6.2) ($16.9) ($18.4)
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 1.4% 3.3% 3.1%
10% 28.88 0.9% 2.8% 2.6%
20% 31.50 0.5% 2.3% 2.2%
30% 34.13 0.0%) 1.9% 1.7%
40% 36.75 (0.5%) 1.4% 1.2%
50% 39.38 (0.9%) 0.9% 0.8%
60% 42.00 (1.4%) 0.5% 0.3%
70% 44.63 (1.8%) 0.0% (0.1%)
80% 47.25 (2.2%) (0.4%) 0.6%
90% 49.88 (2.7%) (0.9%) (1.0%)
100% 52.50 (3.1%) (1.3%) (1.5%)
- --------------------------------------------------------------------------------
</TABLE>
E-8
<PAGE> 66
-----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<TABLE>
- --------------------------------------------------------------------------------
RUBBERMAID INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Rubbermaid Inc Stock Price @ 20-Oct-96 $ 24.00
SILVER Stock Price @ 20-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Rubbermaid Inc 1996E P/E Multiple 22.4x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Rubbermaid Inc Shares 149.768
Pro Forma Rubbermaid Inc Shares 149.768
Transaction Expenses $ 10.0
Rubbermaid Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Rubbermaid Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
<CAPTION>
RUBBERMAID INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 33.0 $ 6.2 $ 0.0 $ 39.2
Total Debt 259.4 37.6 242.4 539.5
------- ------ -------
Net Debt 226.4 31.4 500.2
Equity 973.5 155.5 (155.5) 0.0 973.5
Total Capitalization 1,232.9 193.1 1,513.0
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 21.0% 19.5% 35.7%
NET DEBT/TOTAL CAP. 18.4% 16.3% 33.1%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C>
RUBBERMAID INC
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (17.0) (17.0) (17.0)
-------------------------
Total Pre-Tax Acquisition Adjustments $ (19.3) $(19.3) $ (19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (10.4) (10.4) (10.4)
-------------------------
Total After-Tax Acquisition Adjustments $ (12.7) $(12.7) $ (12.7)
PRO FORMA EPS CALCULATION
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
-------------------------
Pro Forma Combined Net Income $ 163.8 $ 208.2 $ 236.7
Pro Forma Combined Shares Outstanding 149.768 149.768 149.768
Pro Forma EPS $ 1.09 $ 1.39 $ 1.58
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.02 $ 0.08 $ 0.10
% PICK-UP (DILUTION) 2.2% 6.1% 6.8%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (5.8) $ (19.6) $ (24.6)
- --------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 2.2% 6.1% 6.8%
10% 28.88 1.2% 5.3% 6.0%
20% 31.50 0.2% 4.5% 5.3%
30% 34.13 (0.8%) 3.6% 4.6%
40% 36.75 (1.8%) 2.8% 3.9%
50% 39.38 (2.8%) 2.0% 3.2%
60% 42.00 (3.8%) 1.2% 2.4%
70% 44.63 (4.8%) 0.4% 1.7%
80% 47.25 (5.8%) (0.4%) 1.0%
90% 49.88 (6.8%) (1.3%) 0.3%
100% 52.50 (7.8%) (2.1%) (0.5%)
- -------------------------------------------------------------------------------
</TABLE>
E-9
<PAGE> 67
-----------
PROJECT SILVER 0% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<TABLE>
- --------------------------------------------------------------------------------
RUBBERMAID INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Rubbermaid Inc Stock Price @ 20-Oct-96 $ 24.00
SILVER Stock Price @ 20-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Rubbermaid Inc 1996E P/E Multiple 22.4x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 0.0
Goodwill Amortization Period 40
Exchange Ratio 1.094
Existing Rubbermaid Inc Shares 149.768
Pro Forma Rubbermaid Inc Shares 159.453
Transaction Expenses $ 10.0
Rubbermaid Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Rubbermaid Inc Ownership of New Entity 93.9%
SILVER Ownership of New Entity 6.1%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
<CAPTION>
RUBBERMAID INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 33.0 $ 6.2 $(10.0) $ 29.2
Total Debt 259.4 37.6 0.0 297.0
Net Debt 226.4 31.4 267.8
Equity 973.5 155.5 0.0 (10.0) 1.119.0
Total Capitalization 1,232.9 193.1 1,416.0
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 21.0% 19.5% 21.0%
NET DEBT/TOTAL CAP. 18.4% 16.3% 18.9%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C>
RUBBERMAID INC
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total Pre-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total After-Tax Acquisition Adjustments $ 0.0 0.0 0.0
PRO FORMA EPS CALCULATION
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
-------------------------
Pro Forma Combined Net Income $ 176.5 $ 220.8 $ 249.4
Pro Forma Combined Shares Outstanding 159.453 159.453 159.453
Pro Forma EPS $ 1.11 $ 1.38 $ 1.56
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.04 $ 0.07 $ 0.08
% PICK-UP (DILUTION) 3.4% 5.7% 5.7%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (9.6) $ (19.6) $ (21.9)
- --------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 3.4% 5.7% 5.7%
10% 28.88 2.8% 5.1% 5.0%
20% 31.50 2.2% 4.4% 4.4%
30% 34.13 1.6% 3.8% 3.7%
40% 36.75 0.9% 3.2% 3.1%
50% 39.38 0.3%) 2.6% 2.5%
60% 42.00 (0.3%) 1.9% 1.9%
70% 44.63 (0.9%) 1.3% 1.3%
80% 47.25 (1.4%) 0.7% 0.7%
90% 49.88 (2.0%) 0.1% 0.1%
100% 52.50 (2.6%) (0.4%) (0.5%)
- -------------------------------------------------------------------------------
</TABLE>
E-10
<PAGE> 68
<TABLE>
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
STANHOME INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Stanhome Inc Stock Price @ 19-Oct-96 $27.63
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Stanhome Inc 1996E P/E Multiple 12.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Stanhome Inc Shares 17.898
Pro Forma Stanhome Inc Shares 17.898
Transaction Expenses $10.0
Stanhome Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Stanhome Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
STANHOME INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $20.5 $6.2 $0.0 $26.7
Total Debt 126.0 37.6 242.4 406.0
----- ---- -----
Net Debt 105.5 31.4 379.3
Equity 257.8 155.5 (155.5) 0.0 257.8
Total Capitalization 383.7 193.1 663.8
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 32.8% 19.5% 61.2%
NET DEBT/TOTAL CAP. 27.5% 16.3% 57.1%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
STANHOME INC
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (21.8) (21.8) (21.8)
--------------------------
Total Pre-Tax Acquisition Adjustments ($24.1) ($24.1) ($24.1)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (13.3) (13.3) (13.3)
--------------------------
Total After-Tax Acquisition Adjustments ($15.6) ($15.6) ($15.6)
PRO FORMA EPS CALCULATION
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (15.6) (15.6) (15.6)
--------------------------
Pro Forma Combined Net Income $41.0 $56.8 $66.5
Pro Forma Combined Shares Outstanding 17.898 17.898 17.898
Pro Forma EPS $2.29 $3.17 $3.72
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.03 $0.50 $0.67
% PICK-UP (DILUTION) 1.5% 18.8% 22.1%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($1.0) ($14.8) ($19.7)
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 1.5% 18.8% 22.1%
10% 28.88 (3.2%) 14.9% 18.6%
20% 31.50 (7.9%) 10.9% 15.2%
30% 34.13 (12.6%) 7.0% 11.7%
40% 36.75 (17.2%) 3.0% 8.2%
50% 39.38 (21.9%) 0.9% 4.8%
60% 42.00 (26.6%) (4.9%) 1.3%
70% 44.63 (31.3%) (8.8%) (2.2%)
80% 47.25 (35.9%) (12.8%) (5.7%)
90% 49.88 (40.6%) (16.8%) (9.1%)
100% 52.50 (45.3%) (20.7%) (12.6%)
- --------------------------------------------------------------------------------
</TABLE>
E-11
<PAGE> 69
<TABLE>
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
- --------------------------------------------------------------------------------
STANHOME INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Stanhome Inc Stock Price @ 19-Oct-96 $27.63
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Stanhome Inc 1996E P/E Multiple 12.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.950
Existing Stanhome Inc Shares 17.898
Pro Forma Stanhome Inc Shares 26.312
Transaction Expenses $10.0
Stanhome Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Stanhome Inc Ownership of New Entity 68.0%
SILVER Ownership of New Entity 32.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
STANHOME INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $20.5 $6.2 ($10.0) $16.7
Total Debt 126.0 37.6 0.0 163.6
----- ---- -----
Net Debt 105.5 31.4 146.9
Equity 257.8 155.5 0.0 (10.0) 403.3
Total Capitalization 383.7 193.1 566.8
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 32.8% 19.5% 28.9%
NET DEBT/TOTAL CAP. 27.5% 16.3% 25.9%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
STANHOME INC
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 9.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $56.7 $72.4 $82.2
Pro Forma Combined Shares Outstanding 26.312 26.312 26.312
Pro Forma EPS $2.15 $2.75 $3.12
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) ($0.11) $0.08 $0.08
% PICK-UP (DILUTION) (4.7%) 3.1% 2.6%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $4.6 ($3.6) ($3.4)
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 (4.7%) 3.1% 2.6%
10% 28.88 (7.7%) (0.2%) (0.7%)
20% 31.50 (10.5%) (3.2%) (3.7%)
30% 34.13 (13.2%) (6.1%) (6.5%)
40% 36.75 (15.7%) (8.8%) (9.2%)
50% 39.38 (18.0%) (11.3%) (11.8%)
60% 42.00 (20.3%) (13.8%) (14.2%)
70% 44.63 (22.4%) (16.0%) (16.5%)
80% 47.25 (24.4%) (18.2%) (18.6%)
90% 49.88 (26.3%) (20.3%) (20.7%)
100% 52.50 (28.1%) (22.2%) (22.6%)
- --------------------------------------------------------------------------------
</TABLE>
E-12
<PAGE> 70
<TABLE>
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
- --------------------------------------------------------------------------------
TUPPERWARE CORP ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Tupperware Corp Stock Price @ 19-Oct-96 $46.88
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total fully-Diluted Shares 9.014
Office Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Tupperware Corp 1996E P/E Multiple 17.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Tupperware Corp Shares 62.142
Pro Forma Tupperware Corp Shares 62.142
Transaction Expenses $10.0
Tupperware Corp Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Tupperware Corp Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
TUPPERWARE CORP SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $94.2 $6.2 $0.0 $100.4
Total Debt 287.1 37.6 242.4 567.1
----- ---- -----
Net Debt 192.9 31.4 466.7
Equity 245.8 155.5 (155.5) 0.0 245.0
Total Capitalization 532.1 193.1 812.1
- ----------------------------------------------------------------------------------------------
Total Debt/Total Cap. 54.0% 19.5% 69.8%
Net Debt/Total Cap. 36.3% 16.3% 57.5%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
TUPPERWARE CORP
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (17.0) (17.0) (17.0)
--------------------------
Total Pre-Tax Acquisition Adjustments ($19.3) ($19.3) ($19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (10.4) (10.4) (10.4)
--------------------------
Total After-Tax Acquisition Adjustments ($12.7) ($12.7) ($12.7)
PRO FORMA EPS CALCULATION
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
--------------------------
Pro Forma Combined Net Income $172.6 $204.0 $233.9
Pro Forma Combined Shares Outstanding 62.142 62.142 62.142
Pro Forma EPS $2.78 $3.28 $3.76
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.06 $0.19 $0.24
% PICK-UP (DILUTION) 2.1% 6.2% 6.9%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($5.8) ($19.6) ($24.6)
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 2.1% 6.2% 6.9%
10% 28.88 1.2% 5.4% 6.1%
20% 31.50 0.2% 4.6% 5.4%
30% 34.13 (0.7%) 3.7% 4.7%
40% 36.75 (1.7%) 2.9% 3.9%
50% 39.38 (2.6%) 2.1% 3.2%
60% 42.00 (3.6%) (1.2%) 2.5%
70% 44.63 (4.5%) 0.4% 1.7%
80% 47.25 (5.5%) (0.4%) 1.0%
90% 49.88 (6.4%) (1.3%) 0.3%
100% 52.50 (7.4%) (2.1%) (0.5%)
- --------------------------------------------------------------------------------
</TABLE>
E-13
<PAGE> 71
<TABLE>
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
<CAPTION>
- --------------------------------------------------------------------------------
TUPPERWARE CORP ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
<S> <C> <C>
Tupperware Corp Stock Price @ 19-Oct-96 $46.88
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total fully-Diluted Shares 9.014
Office Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Tupperware Corp 1996E P/E Multiple 17.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.560
Existing Tupperware Corp Shares 62.142
Pro Forma Tupperware Corp Shares 67.101
Transaction Expenses $10.0
Tupperware Corp Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Tupperware Corp Ownership of New Entity 92.6%
SILVER Ownership of New Entity 7.4%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
<CAPTION>
TUPPERWARE CORP SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $94.2 $6.2 ($10.0) $90.4
Total Debt 287.1 37.6 0.0 324.7
----- ---- -----
Net Debt 192.9 31.4 234.3
Equity 245.8 155.5 0.0 (10.0) 390.5
Total Capitalization 532.1 193.1 715.2
- ----------------------------------------------------------------------------------------------
Total Debt/Total Cap. 54.0% 19.5% 45.4%
Net Debt/Total Cap. 36.3% 16.3% 32.8%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
<CAPTION>
1996E 1997E 1998E
----- ----- -----
<S> <C> <C> <C> <C>
TUPPERWARE CORP
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $185.3 $216.7 $246.6
Pro Forma Combined Shares Outstanding 67.101 67.101 67.101
Pro Forma EPS $2.76 $3.23 $3.67
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.04 $0.14 $0.15
% PICK-UP (DILUTION) 1.5% 4.5% 4.3%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($4.5) ($15.3) ($16.7)
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
<CAPTION>
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
<S> <C> <C> <C> <C>
0% $26.25 1.5% 4.5% 4.3%
10% 28.88 0.7% 3.7% 3.5%
20% 31.50 (0.0%) 2.9% 2.8%
30% 34.13 (0.7%) 2.2% 2.0%
40% 36.75 (1.5%) 1.4% 1.3%
50% 39.38 (2.2%) 0.7% 0.5%
60% 42.00 (2.9%) (0.0%) 0.2%
70% 44.63 (3.6%) (0.7%) (0.2%)
80% 47.25 (4.3%) (1.4%) (1.6%)
90% 49.88 (4.9%) (2.1%) (2.3%)
100% 52.50 (5.6%) (2.8%) (3.0%)
- --------------------------------------------------------------------------------
</TABLE>
E-14
<PAGE> 72
- --------------------------------------------------------------------------------
SILVER SHAREHOLDER PROFILE
- --------------------------------------------------------------------------------
<PAGE> 73
<TABLE>
PROJECT SILVER
SHAREHOLDER PROFILE
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Number of % of % of
Shares Primary Fully Diluted
Held (mm) Ownership Ownership
<S> <C> <C> <C>
5% Institutional Shareholders (a)
Gabelli Funds, Inc. & Related Entities 0.900 10.4% 10.0%
Neuberger & Berman 0.400 4.6% 4.4%
Fidelity Management and Research Corp. 0.379 4.4% 4.2%
----- ----- -----
TOTAL 5% SHAREHOLDERS 1.679 19.4% 18.6%
Other Insstitutional Holders (b)
LGT Asset Management Inc. 0.412 4.7% 4.6%
Artisan Partners Ltd. 0.391 4.5% 4.3%
Northern Trust Corp. 0.181 2.1% 4.3%
TCW Group Inc. 0.163 1.9% 1.8%
Barclays Bank PLC 0.129 1.5% 1.4%
PaineWebber Group Inc. 0.100 1.2% 1.1%
Breau Capital Management Inc. 0.074 0.9% 0.8%
----- ----- -----
SUBTOTAL - TOP TEN INSTITUTIONAL HOLDERS 3.128 36.1% 34.7%
Other 0.364 4.2% 4.0%
----- ----- -----
TOTAL INSTITUTIONAL HOLDINGS 3.492 40.3% 38.7%
Management and Directors (a)
Leonard Florence - Chairman, President, CEO and Director 2.858 32.9% 31.7%
Melvin L. Levine - VP of Purchasing and Director 0.202 2.3% 2.2%
Alan R. Kanter - VP of Sales 0.182 2.1% 2.0%
Other Insiders 0.401 4.6% 4.5%
----- ----- -----
TOTAL MANAGEMENT AND DIRECTOR HOLDINGS 3.643 42.0% 40.4%
Other/Public 1.541 17.8% 17.1%
----- ----- -----
TOTAL PRIMARY SHARES OUTSTANDING (a) 8.676 100.0% 96.3%
----- =====
Options Outstanding (a) 0.338 3.7%
----- -----
TOTAL FULLY DILUTED SHARES OUTSTANDING 9.014 100.0%
===== =====
<FN>
- -----------------------------------------
(a) Source: Draft of Form S-3 dated September 6, 1996
(b) Source: CDA/Spectrum Report for the quarter ended June 30, 1996
</TABLE>
