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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-3/A
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
AMENDMENT NO. 1
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AMWAY ASIA PACIFIC LTD.
(Name of Issuer)
NEW AAP LIMITED
APPLE HOLD CO., L.P.
AMWAY ASIA PACIFIC LTD.
(Names of Persons Filing Statement)
COMMON STOCK, $0.01 PAR VALUE PER SHARE
(Title of Class of Securities)
G0352M 10 8
(CUSIP Number of Class of Securities)
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CRAIG N. MEURLIN, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
AMWAY CORPORATION
7575 FULTON STREET EAST
ADA, MICHIGAN 49355
(616) 787-6000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person(s) Filing Statement)
------------------------
COPY TO:
THOMAS C. DANIELS, ESQ.
JONES, DAY, REAVIS & POGUE
NORTH POINT
901 LAKESIDE AVENUE
CLEVELAND, OHIO 44114
(216) 586-3939
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This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C or Rule 13e-3(c) [sec. 240.13e-3(c)]
under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
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CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
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TRANSACTION VALUATION AMOUNT OF FILING FEE
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<S> <C>
$152,971,740.00 $30,595.00
</TABLE>
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[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C>
AMOUNT PREVIOUSLY PAID: $30,595.00 FILING PARTY: New AAP Limited
FORM OR REGISTRATION NO: SCHEDULE
14D-1 DATE FILED: November 18, 1999
</TABLE>
Page 1 of 12 Pages
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This Transaction Statement on Schedule 13E-3, filed on November 18, 1999
(the "Schedule 13E-3"), relating to the offer by New AAP Limited, a Bermuda
corporation ("New AAP"), to purchase all outstanding shares of the Common Stock,
par value $.01 per share (the "Common Stock"), of Amway Asia Pacific Ltd., a
Bermuda corporation (the "Company"), that are beneficially owned by the
shareholders of the Company, is hereby amended and supplemented as set forth in
this Amendment No. 1. Capitalized terms used but not defined herein have the
meanings assigned to them in the Schedule 14D-1 of Purchaser filed with the
Securities and Exchange Commission on November 18, 1999, as amended by Amendment
No. 1 on December 13, 1999.
ITEM 2. IDENTITY AND BACKGROUND.
The information set forth in Item 2 is hereby amended to read as follows:
(a)-(d), (g) This Statement is filed by New AAP, Apple Hold Co., L.P. and
the Company. Apple Hold Co., L.P., a limited partnership organized under the
laws of Bermuda ("Hold Co."), is the parent of New AAP. Hold Co. was formed in
November 1999 for the principal purpose of facilitating New AAP's acquisition of
all of the outstanding shares of the Company and has no prior operating history.
The principal executive offices of Hold Co. are currently located at One East
First Street, Suite 1600, Reno, Nevada 89501. Hold Co. does not have any
significant assets or liabilities and it has not engaged in activities other
than those incidental to its formation and capitalization, its execution of the
Amalgamation Agreement and preparation for the Offer. The general partner of
Hold Co. is AP New Co., LLC, a Nevada limited liability company ("AP New Co.").
AP New Co. is managed by Craig N. Meurlin and Lawrence M. Call. The business
address for each of the managers of AP New Co. is 7575 Fulton Street, East, Ada,
Michigan 49355. Messrs. Meurlin and Call are U.S. citizens.
Craig N. Meurlin, age 47, has been a manager of AP New Co. since its
formation in September 1999. Mr. Meurlin has also been Vice President, General
Counsel and Assistant Secretary of Amway Asia Pacific Ltd. since 1993. Mr.
Meurlin is Senior Vice President, General Counsel and Secretary of Amway and has
held such positions since 1993. Prior to that, Mr. Meurlin was a partner in the
law firm of Jones, Day, Reavis & Pogue. Mr. Meurlin holds a Bachelors of Arts
Degree from the University of Vermont and a Juris Doctor from the University of
Virginia.
Lawrence M. Call, age 57, has been a manager of AP New Co. since its
formation in September 1999. Mr. Call has also been Vice President of Amway Asia
Pacific Ltd. since its formation in 1993. Mr. Call served as Chief Financial
Officer and Treasurer of Amway Asia Pacific Ltd. until July 1, 1999. He has also
served as Chief Financial Officer of Amway since 1991. Prior to joining Amway,
Mr. Call had been Treasurer of PPG Industries, a manufacturer of flat glass,
fiberglass, coatings, resins industrial and special chemicals, since 1984.
Before becoming Treasurer of PPG Industries, he had held various other financial
control positions with PPG Industries. Prior to that, Mr. Call spent 15 years in
public accounting with Deloitte, Haskins and Sells (the predecessor to Deloitte
and Touche). He is a Certified Public Accountant and holds a Bachelor's Degree
from Loyola University.
The information set forth in "The Offer - Certain Information Regarding
Purchaser" and "The Offer - Certain Information Regarding AAP" in the Offer to
Purchase and in Schedule I - "PURCHASER DIRECTORS; AAP EXECUTIVE OFFICERS AND
DIRECTORS" thereto is incorporated herein by reference. For purposes of this
Amendment No. 1 to the Schedule 14D-1, all references to Purchaser shall mean,
collectively, New AAP Limited and Apple Hold Co., L.P.
(e)-(f) During the past five years, none of Purchaser's or the Company's
officers or directors (i) have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors); or (ii) were a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding were or are subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 4. TERMS OF THE TRANSACTION.
The information set forth in Item 4 is hereby amended as follows:
(a) The information set forth on the cover page of the Offer to Purchase
and in "Introduction," "The Offer - Number of Shares; Expiration and Extension
of Offer," "The Offer - Procedure for Tendering Shares," "The
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Offer - Withdrawal Rights," "The Offer- Acceptance for Payment of Shares and
Payment of Purchase Price," "The Offer - Market Information; Exchange Rates;
Dividends and Dividend Policy," "The Offer - Certain Legal Matters; Regulatory
Approvals," "The Offer- Extension of Offer; Termination; Amendments," "The Offer
- - Fees and Expenses" and "The Offer - Miscellaneous" in the Offer to Purchase is
incorporated herein by reference. The phrase "upon the terms and subject to the
conditions of the Offer" in the first sentence of the first paragraph on page 3
of the Offer to Purchase, the first sentence of "The Offer - Number of Shares;
Expiration and Extension of Offer," the first sentence of "The Offer - Procedure
for Tendering Shares - Tender Constitutes an Agreement" and the first sentence
of "The Offer - Acceptance for Payment of Shares and Payment of Purchase Price,"
shall hereinafter read "upon the terms relating to the tender offer process as
described herein."
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
The information set forth in Item 9 is hereby amended to read as follows:
(a)-(c) The information set forth in "Special Factors - Background of the
Offer; Recommendation of the Special Committee and the Disinterested Directors;
Reasons for the Recommendation; Opinion of the Financial Advisor to the Special
Committee" and in Schedule II to the Offer to Purchase is incorporated herein by
reference.
Pursuant to an engagement letter dated September 1, 1999 ("The Letter
Agreement"), Morgan Stanley & Co. Incorporated ("Morgan Stanley") was engaged as
financial advisor to ALAP Hold Co., Ltd. and Apple Hold Co., Ltd. (together "The
Holdcos") in connection with the cash tender offers for the outstanding public
shares of Amway Japan Limited and Amway Asia Pacific Ltd., collectively "The
Companies." At a meeting on September 21, 1999, Morgan Stanley made a
presentation to The Holdcos regarding certain issues surrounding the
transactions. The purpose of the presentation was to provide guidance on the
process for the cash tender offers and to provide financial advice on the equity
valuation of The Companies but not on the fairness of the consideration that
might be offered for shares of either of The Companies. For the purposes of the
presentation, Morgan Stanley:
- reviewed certain publicly available financial statements and other
information of The Companies;
- reviewed certain internal financial statements and other financial
and operating data concerning The Companies prepared by the management of
The Companies;
- analyzed certain financial projections prepared by the management of
The Companies;
- discussed the past and current operations and financial condition
and the prospects of The Companies with senior executives of The Companies;
- reviewed the reported prices and trading activity for the common
stock of The Companies;
- compared the financial performance of The Companies and the prices
and trading activity of the common stock with that of certain other
comparable publicly-traded companies and their securities;
- reviewed other transactions (mostly in the United States) in which a
majority shareholder acquired all of the outstanding minority shares.
Morgan Stanley assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by Morgan Stanley. With
respect to the financial projections, Morgan Stanley assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of The Companies. Morgan
Stanley did not make any independent valuation or appraisal of the assets or
liabilities of The Companies. Its analysis was necessarily based on economic,
market and other conditions as in effect on, and the information made available
to it as of, September 20, 1999.
Based on financial analysis including comparable company analysis,
discounted cash flow analysis and analysis of precedent transactions, it
discussed a per share offer of $15.00 for Amway Asia Pacific Ltd. and Y1,450 for
Amway Japan Limited. For further detail, please reference Exhibit (b)(3) to this
Schedule 13E-3.
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The preparation of the presentation was a complex process and is not
necessarily susceptible to a partial analysis or summary description. In its
presentation, Morgan Stanley considered the results of all of its analyses as a
whole and did not attribute any particular weight to any particular analysis or
factor. Furthermore, Morgan Stanley believes that selecting any portion of its
analyses, without considering all analyses, would create an incomplete view of
the process underlying its presentation. In addition, Morgan Stanley may have
given various analyses and factors more or less weight than other analyses and
factors and may have deemed various assumptions more or less probable than other
assumptions, so that the ranges of valuations resulting from any particular
analysis described above should not be taken to be Morgan Stanley's view of the
actual value of The Companies.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to the industry performance, general business and economic conditions
and other matters, many of which are beyond the control of The Companies. Any
estimates contained in Morgan Stanley's analysis are not necessarily indicative
of future results or actual values, which may be significantly more or less
favorable than suggested by such estimates. The analyses do not purport to be
appraisals or to reflect the prices at which The Companies might actually trade
in a public market or in a private sale or merger transaction.
Morgan Stanley provided advice to The Holdcos during negotiations; however,
Morgan Stanley did not recommend any specific consideration to The Companies or
that any specific consideration constituted the only appropriate consideration
for the transactions. In addition, as described above, Morgan Stanley's
presentation to The Holdcos was one of the many factors taken into consideration
by The Holdcos in making their decisions to proceed with the transactions. The
presentation did not contain and Morgan Stanley did not delivery any opinion
relating to the fairness of the consideration offered for the shares of either
of the Companies.
Consequently, the Morgan Stanley analyses as described above should not be
viewed as determinative of the opinion of The Holdcos with respect to the value
of The Companies or the fairness of the consideration offered. The purchase
price for all of the outstanding publicly traded shares of each of The Companies
was determined through arm's-length negotiations between The Holdcos and The
Companies and was approved by The Companies' respective Boards of Directors.
The Holdcos engaged Morgan Stanley to advise it on strategic alternatives
and to provide Morgan Stanley's advice because of its experience and expertise.
Morgan Stanley is an internationally recognized investment banking and advisory
firm. Morgan Stanley, as part of its investment banking business, is continually
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwriting, competitive bidding, secondary
distributions of listed and unlisted securities, private placements and
valuation for estate, corporate and other purposes.
Pursuant to The Letter Agreement, Morgan Stanley provided financial
advisory services in connection with the transaction, and The Holdcos agreed to
pay Morgan Stanley a customary fee in connection therewith. The Holdcos have
also agreed to reimburse Morgan Stanley for its expenses incurred in performing
its services. In addition, The Holdcos have agreed to indemnify Morgan Stanley
and its affiliates, their respective directors, officers, agents and employees,
and each person, if any, controlling Morgan Stanley or any of its affiliates
against certain liabilities and expenses, including certain liabilities under
the federal securities laws related to or arising out of Morgan Stanley's
engagement and any related transactions.
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The following is a summary of financial projections provided to financial
advisors:
AMWAY ASIA PACIFIC FINANCIAL PROJECTIONS
KEY ASSUMPTIONS
- The projections were updated in October to reflect any changes in the
outlook for each region in light of fourth quarter FY1999 results
- FY2000 figures have been produced on a bottom-up, product-by-product,
cost item-by-cost item basis by local management of each affiliate
according to the annual budgeting process
- FY2001-FY2004 figures for each affiliate have been produced in the
ordinary course of business. FY2000 plan is extrapolated, using
year-on-year net sales growth and margin ratios as key drivers. Foreign
exchange rates and effective tax rates are assumed constant post FY2000.
The projections are prepared based on extensive consultations with each
local management as to their operating environments, as well as
reflecting historical experience in other affiliates worldwide
- FY2000-FY2004 figures (in US$ terms) assume a steady recovery from 1998/9
economic downturn with no fundamental changes in distributor base,
product line, cost structure, regulatory environment
- Australia: 8% recovery in net sales in 2000, steady growth thereafter
(2.2% CAGR), regaining pre-decline 1998 levels in 2004. EBIT margin
erodes to 7.6% in 2003 but recovers to 8.8% in 2004.
- New Zealand: 7% recovery in net sales in 2000, steady growth
thereafter (5.0% CAGR) but still 20% down on pre-decline 1997 levels
in 2004. EBIT margin increases from 0.6% in 2000 to 2.7% in 2004.
- Malaysia: 8% recovery in net sales in 2000, steady growth thereafter
(5.0% CAGR) but still 19% down on pre-decline 1997 levels in 2004.
EBIT margin declines slightly from 13.6% in 2000 to 13.0% in 2004.
- Thailand: 12% recovery in net sales in 2000, steady growth thereafter
(6.9% CAGR) but still 28% down on pre-decline 1997 levels in 2004.
EBIT margin increases slightly from 6.8% in 2000 to 7.9% in 2004.
- Hong Kong: 10% recovery in net sales in 2000, steady growth thereafter
(6.0% CAGR), regaining pre-decline 1997 levels in 2004. EBIT margin
improves from -2.0% in 2000 to 1.5% in 2004.
- Taiwan: continuing decline in net sales in 2000, flat in 2001. Steady
recovery thereafter (4.5% CAGR) but still down 21% on pre-decline 1997
levels in 2004. EBIT margin kept largely constant around 5.5%.
- China: 115% recovery in net sales in 2000, steady recovery thereafter
(12.5% CAGR). Pre-decline 1997 levels only regained in 2004. EBIT
margin declines from 7.3% in 2000 to 6.5% in 2004.
- No significant capital expenditures are assumed beyond China and
recurring maintenance items. Working capital requirement largely flat.
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EXCHANGE RATE ASSUMPTIONS
<TABLE>
<CAPTION>
FY97 FY98 FY99 FY2000-04
------ ------ ------ ---------
<S> <C> <C> <C> <C>
Australian Dollar..................................... 1.293 1.519 1.575 1.493
New Zealand Dollar.................................... 1.452 1.751 1.882 1.818
Malaysian Ringgit..................................... 2.531 3.714 3.800 3.800
Thai Baht............................................. 26.463 41.317 37.360 38.000
China Renminbi........................................ 8.296 8.281 8.278 8.300
Hong Kong Dollar...................................... 7.739 7.743 7.751 7.800
Taiwan Dollar......................................... 27.652 32.391 32.655 33.300
</TABLE>
Source: Amway Asia Pacific Ltd.
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AMWAY ASIA PACIFIC HISTORICAL AND PROJECTED
INCOME STATEMENT
(US$ IN MILLIONS)
<TABLE>
<CAPTION>
AUGUST 31,
--------------------------------------------------------------------- 2000-2004
1997A 1998A 1999A 2000E 2001E 2002E 2003E 2004E CAGR
------ ------ ------ ------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales
Australia............................. 121.8 124.2 107.4 115.6 119.1 119.1 122.5 126.0 2.2%
New Zealand........................... 29.3 22.7 17.9 19.2 20.8 21.6 22.5 23.4 5.0%
China................................. 178.0 68.3 55.5 120.0 138.0 151.8 167.0 192.0 12.5%
Taiwan................................ 164.8 141.9 122.6 114.1 114.1 118.1 124.0 130.2 3.4%
Hong Kong............................. 34.4 31.4 25.5 28.0 29.4 30.8 33.0 35.3 6.0%
Malaysia.............................. 135.2 94.7 83.5 90.0 94.5 99.2 104.2 109.4 5.0%
Thailand.............................. 181.6 104.3 89.2 100.0 110.0 115.5 121.3 130.4 6.9%
------ ------ ------ ------ ------ ------ ------ ------ ----
Net Sales............................... 845.2 587.6 501.5 586.9 625.8 656.2 694.5 746.6 6.2%
Total Cost of Sales................... (313.3) (257.2) (216.5) (251.0) (265.4) (277.6) (293.0) (313.7) 5.7%
------ ------ ------ ------ ------ ------ ------ ------ ----
Gross Profit............................ 531.9 330.4 285.0 336.0 360.4 378.6 401.4 432.9 6.5%
------ ------ ------ ------ ------ ------ ------ ------ ----
Total Operating Expenses................ (383.3) (305.1) (258.7) (293.5) (311.8) (331.2) (352.5) (376.9) 6.5%
------ ------ ------ ------ ------ ------ ------ ------ ----
EBIT.................................... 148.6 25.3 26.3 42.5 48.6 47.4 48.9 56.1 7.2%
Other Income -- Net................... 24.9 11.0 7.4 3.8 3.5 5.4 5.3 5.6
Interest Expense...................... (0.2) (1.3) (0.9) (0.8) 0.0 0.0 0.0 0.0
Income Before MI & Taxes.............. 173.3 35.0 32.8 45.5 52.1 52.8 54.2 61.6 7.9%
------ ------ ------ ------ ------ ------ ------ ------ ----
Income Taxes.......................... (54.9) (23.5) (13.3) (14.7) (15.3) (15.8) (16.8) (18.9)
Minority Interest..................... (14.3) (10.0) (7.1) (4.8) (5.0) (5.1) (5.2) (5.4)
Net Income............................ 104.0 1.5 12.5 26.1 31.8 31.8 32.2 37.3 9.3%
====== ====== ====== ====== ====== ====== ====== ====== ====
Depreciation............................ 13.0 13.5 12.8 13.3 14.5 16.9 17.9 20.0
Decrease in WC.......................... 25.9 (6.8) 6.5 13.0 11.7 14.9 16.6 13.6
CapEx................................... (27.8) (33.1) (13.0) (15.6) (20.0) (16.5) (16.9) (15.8)
Net Sales Growth........................ (30.5)% (14.6)% 17.0% 6.6% 4.8% 5.8% 7.5%
Gross Margin............................ 62.9% 56.2% 56.8% 57.2% 57.6% 57.7% 57.8% 58.0%
EBIT Margin............................. 17.6% 4.3% 5.2% 7.2% 7.8% 7.2% 7.0% 7.5%
Depreciation / Sales.................... 1.5% 2.3% 2.5% 2.3% 2.3% 2.6% 2.6% 2.7%
CapEx / Dep............................. 2.1x 2.5x 1.0x 1.2x 1.4x 1.0x 0.9x 0.8x
</TABLE>
Source: 2000-4E estimates from Amway Asia Pacific Ltd.
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ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD
TO THE TRANSACTION.
The information set forth in Item 12(a) is hereby amended to read as
follows:
(a) The information set forth in "Introduction" and "The Offer - Interests
of Certain Persons" in the Offer to Purchase is incorporated herein by
reference. In addition, Purchaser has been informed by the Principal
Shareholders that they will not tender their Shares in response to the Offer
(other than 1,128,580 Shares owned by certain charitable foundations established
by certain of the Principal Shareholders).
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
The information in Item 17 is hereby amended by adding the following
exhibits:
<TABLE>
<S> <C> <C>
(a) (1) Form of Senior Bank Financing Commitment Letter, among New
AAP, Hold Co., ALAP Hold Co., Ltd., N.A.J. Co., Ltd., Amway
Corporation and Morgan Guaranty Trust Company of New York,
Tokyo Branch, dated November 15, 1999 (incorporated herein
by reference to Exhibit (b)(1) of the Schedule 14D-1 of New
AAP Limited and Apple Hold Co., L.P. filed with the
Commission on November 18, 1999 and amended on December 13,
1999 (the "Schedule 14D-1")).*
(2) Form of Term Sheet Regarding the Credit Facility
(incorporated herein by reference to Exhibit (b)(2) of the
Schedule 14D-1).*
(b) (1) Form of Fairness Opinion of Goldman, Sachs & Co., dated
November 15, 1999.*
(2) Presentation Materials of Goldman Sachs & Co., dated
November 15, 1999.
(3) Presentation Materials of Morgan Stanley & Co. Incorporated,
dated September 21, 1999.
(c) (1) Form of Tender Offer and Amalgamation Agreement, dated
November 15, 1999 among the Company, New AAP and Hold Co.
(incorporated herein by reference to Exhibit (c)(1) of the
Schedule 14D-1).*
(2) Form of Shareholder and Voting Agreement, by and among New
AAP, Hold Co. and Certain Shareholders of the Company, dated
as of November 15, 1999 (incorporated herein by reference to
Exhibit (c)(2) of the Schedule 14D-1).*
(d) (1) Form of Offer to Purchase, dated November 18, 1999
(incorporated herein by reference to Exhibit (a)(1) of the
Schedule 14D-1).*
(2) Form of Letter of Transmittal (incorporated herein by
reference to Exhibit (a)(2) of the Schedule 14D-1).*
(3) Form of Notice of Guaranteed Delivery (incorporated herein
by reference to Exhibit (a)(3) of the Schedule 14D-1).*
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (incorporated herein by
reference to Exhibit (a)(4) of the Schedule 14D-1).*
(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(incorporated herein by reference to Exhibit (a)(5) of the
Schedule 14D-1).*
(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 (incorporated
herein by reference to Exhibit (a)(6) of the Schedule
14D-1).*
(7) Form of Letter to the Company's Holders of Common Stock
(incorporated herein by reference to Exhibit (a)(7) of the
Schedule 14D-1).*
(8) Form of Press Release "Amway Asia Pacific's Principal
Shareholders to Commence Tender Offer for Outstanding Public
Shares" issued by the Company and the Principal Shareholders
on November 15, 1999 (incorporated herein by reference to
Exhibit (a)(8) of the Schedule 14D-1).*
</TABLE>
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<TABLE>
<S> <C> <C>
(9) Form of Communications to Amway Distributors, dated November
15, 1999 (incorporated herein by reference to Exhibit (a)(9)
of the Schedule 14D-1).*
(10) Form of Tender Offer Announcement to Amway Management and
Employees, dated November 15, 1999 (incorporated herein by
reference to Exhibit (a)(10) of the Schedule 14D-1).*
(11) Form of Press Release "Amway Asia Pacific's Principal
Shareholders Commence Tender Offer For Outstanding Public
Shares" issued by the Company and the Public Shareholders on
November 18, 1999 (incorporated herein by reference to
Exhibit (a)(11) of the Schedule 14D-1).*
(12) Form of Summary Advertisement published on November 18, 1999
(incorporated herein by reference to Exhibit (a)(12) of the
Schedule 14D-1).*
(13) Form of Trustee Direction Form from the 401(k) Trustee
(incorporated herein by reference to Exhibit (a)(13) of the
Schedule 14D-1).*
(14) Form of Letter to Participants of the 401(k) Plan
(incorporated herein by reference to Exhibit (a)(14) of the
Schedule 14D-1).*
(e) Not applicable.
(f) Not applicable.
(g) Consent of KPMG LLP (incorporated herein by reference to
Exhibit (g) of the Schedule 14D-1).*
(h) Power of Attorney for New AAP (incorporated herein by
reference to Exhibit (h) of the Schedule 14D-1).*
</TABLE>
- ---------------
* Previously filed as exhibits to the Transaction Statement on Schedule 13E-3
filed by New AAP on November 18, 1999.
9
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: December 13, 1999 NEW AAP LIMITED
By: /s/ CRAIG N. MEURLIN
------------------------------------
Name: Craig N. Meurlin
Title: Vice President, Assistant
Secretary
APPLE HOLD CO., L.P.
By: AP NEW CO., LLC, as general
partner
By: /s/ CRAIG N. MEURLIN
------------------------------------
Name: Craig N. Meurlin
Title: Manager
AMWAY ASIA PACIFIC LTD.
By: /s/ CRAIG N. MEURLIN
------------------------------------
Name: Craig N. Meurlin
Title: Vice President, General
Counsel
and Assistant Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
(a) (1) Form of Senior Bank Financing Commitment Letter, among New
AAP, Hold Co., ALAP Hold Co., Ltd., N.A.J. Co., Ltd., Amway
Corporation and Morgan Guaranty Trust Company of New York,
Tokyo Branch, dated November 15, 1999 (incorporated herein
by reference to Exhibit (b)(1) of the Schedule 14D-1 of New
AAP Limited and Apple Hold Co., L.P. filed with the
Commission on November 18, 1999 and amended on December 13,
1999 (the "Schedule 14D-1")).*
(2) Form of Term Sheet Regarding the Credit Facility
(incorporated herein by reference to Exhibit (b)(2) of the
Schedule 14D-1).*
(b) (1) Form of Fairness Opinion of Goldman, Sachs & Co., dated
November 15, 1999.*
(2) Presentation Materials of Goldman Sachs & Co., dated
November 15, 1999.
(3) Presentation Materials of Morgan Stanley & Co. Incorporated,
dated September 21, 1999.
(c) (1) Form of Tender Offer and Amalgamation Agreement, dated
November 15, 1999 among the Company, New AAP and Hold Co.
(incorporated herein by reference to Exhibit (c)(1) of the
Schedule 14D-1).*
(2) Form of Shareholder and Voting Agreement, by and among New
AAP, Hold Co. and Certain Shareholders of the Company, dated
as of November 15, 1999 (incorporated herein by reference to
Exhibit (c)(2) of the Schedule 14D-1).*
(d) (1) Form of Offer to Purchase, dated November 18, 1999
(incorporated herein by reference to Exhibit (a)(1) of the
Schedule 14D-1).*
(2) Form of Letter of Transmittal (incorporated herein by
reference to Exhibit (a)(2) of the Schedule 14D-1).*
(3) Form of Notice of Guaranteed Delivery (incorporated herein
by reference to Exhibit (a)(3) of the Schedule 14D-1).*
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (incorporated herein by
reference to Exhibit (a)(4) of the Schedule 14D-1).*
(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(incorporated herein by reference to Exhibit (a)(5) of the
Schedule 14D-1).*
(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 (incorporated
herein by reference to Exhibit (a)(6) of the Schedule
14D-1).*
(7) Form of Letter to the Company's Holders of Common Stock
(incorporated herein by reference to Exhibit (a)(7) of the
Schedule 14D-1).*
(8) Form of Press Release "Amway Asia Pacific's Principal
Shareholders to Commence Tender Offer for Outstanding Public
Shares" issued by the Company and the Principal Shareholders
on November 15, 1999 (incorporated herein by reference to
Exhibit (a)(8) of the Schedule 14D-1).*
(9) Form of Communications to Amway Distributors, dated November
15, 1999 (incorporated herein by reference to Exhibit (a)(9)
of the Schedule 14D-1).*
(10) Form of Tender Offer Announcement to Amway Management and
Employees, dated November 15, 1999 (incorporated herein by
reference to Exhibit (a)(10) of the Schedule 14D-1).*
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
(11) Form of Press Release "Amway Asia Pacific's Principal
Shareholders Commence Tender Offer For Outstanding Public
Shares" issued by the Company and the Public Shareholders on
November 18, 1999 (incorporated herein by reference to
Exhibit (a)(11) of the Schedule 14D-1).*
(12) Form of Summary Advertisement published on November 18, 1999
(incorporated herein by reference to Exhibit (a)(12) of the
Schedule 14D-1).*
(13) Form of Trustee Direction Form from the 401(k) Trustee
(incorporated herein by reference to Exhibit (a)(13) of the
Schedule 14D-1).*
(14) Form of Letter to Participants of the 401(k) Plan
(incorporated herein by reference to Exhibit (a)(14) of the
Schedule 14D-1).*
(e) Not applicable.
(f) Not applicable.
(g) Consent of KPMG LLP (incorporated herein by reference to
Exhibit (g) of the Schedule 14D-1).*
(h) Power of Attorney for New AAP (incorporated herein by
reference to Exhibit (h) of the Schedule 14D-1).*
</TABLE>
- ---------------
* Previously filed as exhibits to the Transaction Statement on Schedule 13E-3
filed by New AAP on November 18, 1999.
12
<PAGE> 1
Exhibit (b)(2)
HIGHLY CONFIDENTIAL
-------------------
PROJECT APPLE
PRESENTATION TO THE SPECIAL COMMITTEE
GOLDMAN, SACHS & CO.
GOLDMAN SACHS (ASIA) L.L.C.
NOVEMBER 12, 1999
[GOLDMAN SACHS LOGO]
<PAGE> 2
TABLE OF EXHIBITS
<TABLE>
<CAPTION>
------------------------
EXHIBIT
------------------------
<S> <C>
TRANSACTION SUMMARY 1
OVERVIEW OF APPLE 2
PUBLIC MARKET VALUATION 3
PRIVATE MARKET VALUATION 4
ANALYSIS OF PREMIA PAID IN SELECTED TENDER OFFERS AND MINORITY BIDS 5
DISCOUNTED CASH FLOW ANALYSIS 6
------------------------
APPENDIX
------------------------
DETAILED FINANCIALS A
</TABLE>
[GOLDMAN SACHS LOGO]
<PAGE> 3
TAB 1
<PAGE> 4
TRANSACTION SUMMARY
APPLE
PURCHASER: - New AAP Limited ("Purchaser") is a company
incorporated under the laws of Bermuda. It is a
wholly-owned subsidiary of Apple Hold Co. L.P.
("Hold Co"), a Bermuda limited partnership
controlled by the principal shareholders of
Apple (the "Principal Shareholders")
TENDER OFFER PRICE: - $18.00 per share, in cash
KEY STEPS: - Purchaser, Hold Co and Apple will enter into a
Tender Offer and Amalgamation Agreement
- Tender Offer will remain open for 30 days
- The Principal Shareholders will not tender but
instead will transfer their shares in Apple to
Hold Co
-- Principal Shareholders own approximately
84.9% of the shares
-- An additional 2% of shares are owned by
charitable foundations established by the
Principal Shareholders - these will be
tendered in the Tender Offer
ADDITIONAL TRANSACTIONS: - Following the Tender Offer, Apple will either be
merged with and into Purchaser or outstanding
shares in Apple will be compulsorily acquired,
in each case for the Tender Offer Price in cash
- The shares will be de-listed from the NYSE and
Australian Stock Exchange Limited
CONDITIONS: - None
EXPECTED FINANCING: - Morgan Guaranty bank facility
OTHER MATTERS: - Principal Shareholders will not sell their
shares to any third party
[GOLDMAN SACHS LOGO]
<PAGE> 5
APPLE SUMMARY OF OFFER
(US$ IN MILLIONS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
CURRENT PRICE AS OF NOVEMBER 10, 1999
CURRENT PRICE INITIAL OFFER REVISED OFFER
<S> <C> <C> <C> <C> <C>
Premium to Market Price 0.0 % 34.1 % 55.7 %
Purchase Price Per Share $ 11.56 $ 15.50 $ 18.00
Premium to 52-week Average 7.4 % 43.9 % 67.2 %
Increase from Initial Offer 16.1 %
Number of Shares Outstanding (MM) (a) 56.4 56.4 56.4
Number of Shares to be Purchased (MM): 15.1% 8.5 8.5 8.5
Transaction Size ($MM) 98.3 131.7 153.0
Implied Equity Consideration - Basic 652.6 874.9 1,016.0
Implied Equity Consideration - Options (b) 0.0 0.0 0.0
-------------------------------------------------
EQUITY CONSIDERATION - DILUTED (b) 652.6 874.9 1,016.0
Net Debt (incl. Minority Interest) (c) 15.7 15.7 15.7
ENTERPRISE VALUE 668.3 890.5 1,031.6
EV MULTIPLE OF SALES (d) FY 1999A $ 501.5 1.3 x 1.8 x 2.1 x
FY 2000E $ 586.9 1.1 1.5 1.8
FY 2001E $ 625.8 1.1 1.4 1.6
EV MULTIPLE OF EBITDA (d) FY 1999A $ 39.1 17.1 x 22.8 x 26.4 x
FY 2000E $ 55.8 12.0 16.0 18.5
FY 2001E $ 63.0 10.6 14.1 16.4
EV MULTIPLE OF EBIT (d) FY 1999A $ 26.3 25.4 x 33.8 x 39.2 x
FY 2000E $ 42.5 15.7 21.0 24.3
FY 2001E $ 48.6 13.8 18.3 21.2
EQUITY MULTIPLE OF NET INCOME (d) FY 1999A $ 12.5 52.3 x 70.1 x 81.4 x
FY 2000E $ 26.1 25.0 33.6 39.0
FY 2001E $ 31.8 20.5 27.5 31.9
PREMIUM TO:
52-Week High $14.44 (19.9)% 7.3 % 24.7 %
All-Time High 49.50 (76.6) (68.7) (63.6)
52-Week Low 7.13 62.3 117.5 152.6
</TABLE>
(a) As of August 31, 1999.
(b) Assumes 0.3 million options outstanding with a weighted average strike
price of $34.54. All are out of the money.
(c) Assumes net debt of $(103.8) million and minority interest in Mango of
$119.5 million as of November 10, 1999. Calculated at current market
value.
(d) FY2000-4E estimates by Acorn in conjunction with Apple
<PAGE> 6
TAB 2
<PAGE> 7
SWOT ANALYSIS
APPLE
[GOLDMAN SACHS LOGO]
- --------------------------------------------------------------------------------
STRENGTHS
- --------------------------------------------------------------------------------
- - Dynamic marketplace with potential for high growth, particularly in China
- - One of the longest established, largest direct selling company in each
region with powerful sales force
- - Well-recognized brand name, and strong reputation for high quality products
commanding premium pricing
- - Owner families provide strong culture which transcend regional differences
and act as unifying element
- - Strong local management teams
- - Distributors setting up "second business" abroad (e.g. HK and Taiwanese
distributors in China) act as flow of expertise and best practice between
regions
- - Low cost base in most regions
- - Low product return rates
- - Healthy balance sheet with little fixed assets/capex needs except in China
- --------------------------------------------------------------------------------
WEAKNESSES
- --------------------------------------------------------------------------------
- - Sustained recession resulting in:
-- Consumers being more selective in purchases and passing on high-ticket
items
-- Shrinking distributor force due to poor new application and renewal
rates
-- Foreign exchange fluctuations impacting gross margin as only partially
"hedged" and increased purchasing costs cannot entirely be passed
through to consumers
- - Suffers from poor public image of multi-level direct selling in general
- - High dependence on China for growth but ban on all direct selling activity
in 1998 derailed strategy
- - Mature businesses with aging image in Australia, New Zealand, HK and Taiwan
- - Complex distributor system inherently difficult to control and monitor,
exposing it to potential abuses
- - Dependent on a small number of distributor leaders (HK and Taiwan suffered
when its distributor leaders focused on China and neglected their local
development)
- - High cost of sourcing from Ada, Michigan
- --------------------------------------------------------------------------------
OPPORTUNITIES
- --------------------------------------------------------------------------------
- - Economic recovery throughout the region
- - Recovering the initial growth potential in China by quickly adapting to
regulatory needs
- - Strong foundation from which to expand further in the region
- - Initiating internet strategy in maturer markets as growth opportunity
- - Scope for further product launches targeted specifically to the local
markets, including alliances with other brands
- - Further scope to increase sponsorship activity in each region (China,
Malaysia and Thailand still at growth stage, while in other more saturated
markets new generation of distributor leaders are being cultivated)
- - Further cost cutting
- --------------------------------------------------------------------------------
THREATS
- --------------------------------------------------------------------------------
- - Continued recessionary environment
- - The current recession may have fundamentally altered consumer mentality
towards a more commoditized environment
- - Continued uncertainty in China
- - Increased competition from multi-national and local:
-- Direct selling companies competing for distributors
-- Consumer products manufacturers competing for end users
- - Abuse by other direct selling companies tarnishing industry's, and hence
Apple's, image
- - Vulnerable to unexpected attacks by the public and any ensuing regulatory
tightening
- - Continuing need to adapt business model to changes in environment
- - Need to establish appropriate infrastructure to support , manage and control
rapid expansion, particularly in China
<PAGE> 8
RECENT EVENTS
APPLE
Apple's share price
has been negatively
impacted by the [ANNOTATED SHARE PRICE GRAPH]
Asian crisis and the
ban on direct selling
in China
[GOLDMAN SACHS LOGO]
Source: Mueller; news runs
<PAGE> 9
[GOLDMAN SACHS LOGO]
SUMMARY OF HISTORICAL FINANCIALS
APPLE
-------------------------------------------------------------------
SALES
-------------------------------------------------------------------
[Graph of 1995-2000E Sales and Year-on-Year Sales Growth]
1995-2000E CAGR: (4.0)%
-------------------------------------------------------------------
GROSS PROFIT
-------------------------------------------------------------------
[Graph of 1995-2000E Gross Profit and Gross Margin]
1995-2000E CAGR: (5.4)%
-------------------------------------------------------------------
EBIT
-------------------------------------------------------------------
[Graph of 1995-2000E EBIT and EBIT Margin]
1995-2000E CAGR: (19.8)%
-------------------------------------------------------------------
Net Income
-------------------------------------------------------------------
[Graph of 1995-2000E Net Income and Net Margin]
1995-2000E CAGR: (21.9)%
Source: 20-F, FY2000E estimates from Acorn in conjunction with Apple
<PAGE> 10
[GOLDMAN SACHS LOGO]
SHARE PRICE HISTORY
APPLE
-------------------------------------------------------------------
Since IPO (a)
-------------------------------------------------------------------
[Graph of closing stock price and volume traded]
-------------------------------------------------------------------
Three Years (b)
-------------------------------------------------------------------
[Graph of closing stock price and volume traded]
-------------------------------------------------------------------
One Year (c)
-------------------------------------------------------------------
[Graph of closing stock price and volume traded]
-------------------------------------------------------------------
Six Months (d)
-------------------------------------------------------------------
[Graph of closing stock price and volume traded]
Source: Mueller
(a) Plotted monthly from 12/17/1993 to 10/29/1999
(b) Plotted weekly from 11/1/1996 to 10/29/1999
(c) Plotted daily from 10/29/1998 to 10/29/1999
(d) Plotted daily from 4/29/1999 to 10/29/1999
<PAGE> 11
SHARES TRADED AT VARIOUS PRICES (a)
APPLE
(US$)
[SINCE IPO (b) BAR CHART] [THREE YEARS (c) BAR CHART]
[ONE YEAR (d) BAR CHART] [SIX MONTHS (e) BAR CHART]
% OF 1999 YTD TRADING VOLUME
[PIE CHART]
Source: Mueller
(a) NYSE only.
(b) From 12/17/1993 to 10/29/1999.
(c) From 11/1/1996 to 10/29/1999.
(d) From 10/29/1998 to 10/29/1999.
(e) From 4/29/1999 to 10/29/1999.
[GOLDMAN SACHS LOGO]
<PAGE> 12
HISTORICAL RELATIVE STOCK PRICE PERFORMANCE
APPLE
Asian Direct Marketing Index
- ----------------------------
Mango
Cosway
US Direct Marketing Index
- -------------------------
Avon
Herbalife
Nu Skin
Rexall Sundown
Thomas Nelson
Tupperware
Japanese Direct Marketing Index
- -------------------------------
Avon Japan
Ivy Cosmetics
Juniper
Noevir
Shaklee Japan
HangSeng Index
- --------------
Apple
- -----
-------------------------------------------------------------------
Since IPO (a)
-------------------------------------------------------------------
[Graph of Asian Direct Marketing Index, US Direct Marketing Index,
Japanese Direct Marketing Index, Hang Seng Index, and Apple relative
price performance]
-------------------------------------------------------------------
Three Years (b)
-------------------------------------------------------------------
[Graph of Asian Direct Marketing Index, US Direct Marketing Index,
Japanese Direct Marketing Index, Hang Seng Index, and Apple relative
price performance]
-------------------------------------------------------------------
One Year (c)
-------------------------------------------------------------------
[Graph of Asian Direct Marketing Index, US Direct Marketing Index,
Japanese Direct Marketing Index, Hang Seng Index, and Apple relative
price performance]
-------------------------------------------------------------------
Six Months (d)
-------------------------------------------------------------------
[Graph of Asian Direct Marketing Index, US Direct Marketing Index,
Japanese Direct Marketing Index, Hang Seng Index, and Apple relative
price performance]
Source: Mueller
(a) Plotted monthly, from 12/17/1993 to 10/29/1999.
(b) Plotted weekly, from 11/1/1996 to 10/29/1999.
(c) Plotted daily, from 10/29/1998 to 10/29/1999.
(d) Plotted daily, from 4/29/1999 to 10/29/1999.
[GOLDMAN SACHS LOGO]
<PAGE> 13
SUMMARY OF RESEARCH COMMENTS
APPLE
<TABLE>
<CAPTION>
SHARE
COMPANY PRICE EPS RATING COMMENTS
DATE
- -------------- ---------------- ------------ -------------- --------------- --------------------------------------------------------
<S> <C> <C> <C> <C> <C>
7/9/1999 Oscar Gruss $13-7/16 $0.46 Buy - Rating was upgraded to Buy from Long-Term
(FY2000E) Accumulate on the back of strong third quarter
earnings
- EPS estimates were increased from $0.41 to 0.46
based on expected strong sales growth for China and
Malaysia
- The China Business Revitalization Program has been
successful and dramatic growth in China is
projected. Stabilization of the Malaysian currency
and the receipt of three-year direct selling
license translate into stronger sales in that
country
- Cost reduction programs will help improve other
markets
- -------------- ---------------- ------------ -------------- --------------- --------------------------------------------------------
7/7/1999 Merrill Lynch $13-3/16 $0.50 Long-Term - EPS estimates were increased from $0.35 to $0.50
& Co (FY2000E) Accumulate in 2000. The increases were primarily due to the
emerging Asian economic recovery, continued
revitalization in China and improvement in other
markets
- The shares remain rated Neutral for the
intermediate term based on price
- -------------- ---------------- ------------ -------------- --------------- --------------------------------------------------------
2/2/1998 Morgan Stanley 18 N.A. Neutral - Operations in China plagued by difficult
Dean Witter regulatory environment and change in company's
product return policy
- Gross margins under pressure as Asian currencies
weaken against the dollar
- Infrastructure costs in China not being adequately
supported by sales
</TABLE>
[GOLDMAN SACHS LOGO]
<PAGE> 14
MACROECONOMIC ENVIRONMENT (a)
ASIA
[Graph of Year-on-Year GDP growth rate 1995-2003E for China, Malaysia, Thailand,
Hong Kong, Taiwan, Australia, New Zealand]
(a) Data plotted yearly.
Source: Latest EIU reports (7/8/1999 - 10/1/1999), except for 1999E and 2000E
estimates, where GS Research (10/14/1999) was used
[GOLDMAN SACHS LOGO]
<PAGE> 15
ASIAN CURRENCY EXCHANGE RATE HISTORY
VS. US$
[Graph of China Renminbi, Hong Kong Dollar, Taiwan Dollar, Malaysian
Ringgitt, New Zealand Dollar, Thailand Baht, Australian Dollar vs.
US$ 1997-2001E]
Source: Historical data from Datastream, projections for 12/31/1999 and
12/31/2000 from GS Research (10/14/1999), 12/31/2001 and 12/31/2002 from EIU
reports (7/8/1999-10/1/1999)
[GOLDMAN SACHS LOGO]
<PAGE> 16
[GOLDMAN SACHS LOGO]
DISTRIBUTOR FORCE AND PRODUCTIVITY ANALYSIS
APPLE
-------------------------------------------------------------------
No. of Distributors (1)
-------------------------------------------------------------------
[Graph of number of distributors in Taiwan, Malaysia, Thailand,
Australia, China, Hong Kong, New Zealand 1994-1999]
Total Distributors CAGR: 3.0%
-------------------------------------------------------------------
Distributor Productivity (1)
-------------------------------------------------------------------
[Graph of net sales per distributor in Taiwan, Malaysia, Thailand,
Australia, China, Hong Kong, New Zealand 1994-1999]
Total Productivity CAGR: (7.4)%
(1) All CAGR figures based on 5 years except China 3 years.
<PAGE> 17
TAB 3
<PAGE> 18
[GOLDMAN SACHS LOGO]
COMPARISON OF SELECTED COMPANIES
DIRECT SALES
(US$ in millions, except per share data)
Market Data as of 11/10/99
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Enterprise Value
% of 3 Basic Equity Levered LTM Margins (b) Multiples of LTM (b)
% of 52 Year High Market Market ----------------- ---------------------------
Company Week High Price Cap Cap EBITDA EBIT Sales EBITDA EBIT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Apple (a) 80.1% 23.4% $ 653 $ 545 7.8% 5.2% 1.1x 13.9 x 20.7x
US Direct Sales Companies
- -------------------------
Avon (d) 51.2 51.2 7,498 7,941 13.4 11.9 1.5 11.3 12.7
Nu Skin 43.4 35.4 361 349 20.7 16.8 0.4 1.8 2.3
Tupperware (e) 73.8 34.4 1,084 1,417 17.5 11.5 1.3 7.7 11.7
Thomas Nelson 70.5 63.7 140 237 12.1 8.7 0.9 7.4 10.3
Herbalife 87.3 36.4 381 273 5.2 4.2 0.2 3.1 3.8
Rexall Sundown 48.2 28.3 704 713 19.6 17.5 1.2 6.2 6.9
Nature's Sunshine 39.8 24.7 124 99 13.6 11.8 0.3 2.5 2.9
USANA 41.0 32.4 94 92 15.8 13.2 0.8 5.1 6.0
- -----------------------------------------------------------------------------------------------------------------------------------
Mean 14.7% 12.0% 0.8x 5.6x 7.1x
Median 14.7 11.9 0.8 5.6 6.5
- -----------------------------------------------------------------------------------------------------------------------------------
Asian Direct Sales Companies
- ----------------------------
Cosway Corp. Berhad 63.4 34.0 163 410 7.8 5.3 1.1 14.3 21.0
Mango 95.4 52.5 244 243 14.2 13.6 2.9 20.7 21.6
- -----------------------------------------------------------------------------------------------------------------------------------
Mean 11.0 % 9.4 % 2.0 x 17.5 x 21.3 x
Median 11.0 9.4 2.0 17.5 21.3
- -----------------------------------------------------------------------------------------------------------------------------------
Japanese Direct Sales Companies
- -------------------------------
Juniper 68.3 20.5 1,324 1,118 15.5 14.1 0.8 5.3 5.8
Avon Japan 73.7 62.3 144 140 4.1 1.8 0.5 11.5 26.4
Ivy Cosmetics 68.1 59.1 41 32 19.8 16.7 0.6 3.0 3.6
Noevir 69.0 41.9 400 280 7.4 4.1 0.7 10.1 18.4
Shaklee Japan 80.6 54.9 238 170 13.7 13.6 1.5 10.6 10.7
- -----------------------------------------------------------------------------------------------------------------------------------
Mean 12.1 % 10.0 % 0.8 x 8.1 x 13.0 x
Median 13.7 13.6 0.7 10.1 10.7
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Calendarized
P/E Multiples (c) 5-Yr Est.
------------------ EPS P/E to Growth Dividend
Company 2000E 2001E Growth (c) (f) 2000E 2001E Yield
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Apple (a) 46.3 x 17.8 x 17.5 % 2.6 x 1.0 x N.A.
US Direct Sales Companies
- -------------------------
Avon (d) 15.5 12.6 14.0 1.1 0.9 2.5
Nu Skin 8.5 7.1 20.0 0.4 0.4 N.A.
Tupperware (e) 10.8 9.7 11.0 1.0 0.9 4.7
Thomas Nelson 10.2 9.1 12.5 0.8 0.7 1.6
Herbalife 8.1 N.A. N.A. N.A. N.A. 4.5
Rexall Sundown 10.0 1.5 15.0 0.7 0.1 N.A.
Nature's Sunshine 6.5 5.7 N.A. N.A. N.A. 1.8
USANA 11.2 8.2 N.A. N.A. N.A. N.A.
- --------------------------------------------------------------------------------------------------------------------------------
Mean 10.1 x 7.7 x 14.5 % 0.8 x 0.6 x 3.0 %
Median 10.1 8.2 14.0 0.8 0.7 2.5
- --------------------------------------------------------------------------------------------------------------------------------
Asian Direct Sales Companies
- ----------------------------
Cosway Corp. Berhad N.A. N.A. N.A. N.A. N.A. 1.6
Mango 19.2 15.9 6.0 3.2 2.7 2.7
- --------------------------------------------------------------------------------------------------------------------------------
Mean 19.2 x 15.9 x 6.0 % 3.2 x 2.7 x 2.2 %
Median 19.2 15.9 6.0 3.2 2.7 2.2
- --------------------------------------------------------------------------------------------------------------------------------
Japanese Direct Sales Companies
- -------------------------------
Juniper 16.2 15.3 2.0 8.1 7.7 10.3
Avon Japan 30.4 N.A. N.A. N.A. N.A. 2.8
Ivy Cosmetics 8.7 N.A. 15.0 0.6 N.A. 1.8
Noevir 32.5 N.A. 17.6 1.8 N.A. 1.7
Shaklee Japan 29.1 N.A. 2.0 14.6 N.A. 3.1
- --------------------------------------------------------------------------------------------------------------------------------
Mean 23.4 x 15.3 x 9.2 % 6.3 x 7.7 x 3.9 %
Median 29.1 15.3 8.5 5.0 7.7 2.8
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
5-yr Non-US Sales Asian as
Sales as % of % of Total
Company ROCE CAGR Total Sales
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Apple (a) 8.5 % (3.9)% 100.0 % 100.0 %
US Direct Sales Companies
- -------------------------
Avon (d) 1.9 6.3 60.7 12.4
Nu Skin 42.4 52.5 99.1 88.2
Tupperware (e) 55.6 (1.6) 84.8 21.1
Thomas Nelson 8.1 12.8 N.A. N.A.
Herbalife 25.8 18.9 70.7 43.8
Rexall Sundown 28.3 41.6 N.A. N.A.
Nature's Sunshine 29.9 18.4 36.8 3.7
USANA 35.0 99.3 45.1 16.2
- -------------------------------------------------------------------------------------------------
Mean 28.4 % 31.0 % 66.2 % 30.9 %
Median 29.1 18.6 65.7 18.7
- -------------------------------------------------------------------------------------------------
Asian Direct Sales Companies
- ----------------------------
Cosway Corp. Berhad (0.3) 16.4
Mango 18.5 9.4
- -------------------------------------------------------------------------------------------------
Mean 9.1 % 12.9 %
Median 9.1 12.9
- -------------------------------------------------------------------------------------------------
Japanese Direct Sales Companies
- -------------------------------
Juniper 17.8 (1.8)
Avon Japan 5.0 8.6
Ivy Cosmetics 9.7 1.9
Noevir 3.0 (3.4)
Shaklee Japan 6.4 (4.8)
- -------------------------------------------------------------------------------------------------
Mean 8.4 % 0.1 %
Median 6.4 (1.8)
- -------------------------------------------------------------------------------------------------
</TABLE>
(a) Financial Statement data as of 08/31/1999.
(b) Financial statement data as of latest twelve months available.
(c) Source: IBES estimates as of 11/10/99. Asia and Japan marketing companies
not calendarized.
(d) Excludes $105.2m and $70.5m in restructuring charges in 1999 & 1998
respectively.
(e) Excludes $15m re-engineering charge in 1998.
(f) Juniper growth estimate from Merrill Lynch Report dated 10/15/1999.
<PAGE> 19
[GOLDMAN SACHS LOGO]
SELECTED PERFORMANCE BENCHMARKS
DIRECT MARKETING COMPANIES
[HISTORICAL SALES GROWTH 5 YEAR CAGR CHART] [LTM GROSS AND EBIT MARGIN CHART]
[PROJECTED 5 YEAR EPS GROWTH RATE CHART] [LTM RETURN ON COMMON EQUITY CHART]
Source: Historical figures from company reports; projected 5 year EPS growth
rates from IBES.
<PAGE> 20
[GOLDMAN SACHS LOGO]
APPLE HISTORICAL PERFORMANCE
[EV MULITPLE OF TRAILING EBIT (a) CHART]
[PRICE MULTIPLE OF ONE YEAR FORWARD EPS (b) CHART]
[DIVIDEND YIELD (c) CHART]
(a) Multiple of immediately preceding fiscal year EBIT. Weekly closing price,
except current week for close 11/10/99.
(b) IBES one year forward EPS estimates. Weekly closing price, except current
week for close 11/10/99.
(c) In US$ yield calculated on daily closing price.
Source: Factset
<PAGE> 21
[GOLDMAN SACHS LOGO]
FUTURE TRADING RANGE ANALYSIS
APPLE
[GRAPH]
Source: EPS projections from Acorn in conjunction with Apple
<PAGE> 22
FUTURE TRADING RANGE SENSITIVITY ANALYSIS (a)
APPLE
Hypothetical Share Price Today if Exit in 4 Years at:
Various Exit Forward P/E Multiples and Expected Returns (b)
<TABLE>
<CAPTION>
EXIT FWD P/E MULTIPLE IN 4 YEARS
-------------------------------------------------------------------
15x 20x 25x 30x 35x
<S> <C> <C> <C> <C> <C> <C>
16.0% 5.87 7.82 9.78 11.74 13.69
EXPECTED 14.0% 6.30 8.40 10.50 12.60 14.70
EQUITY 12.0% 6.77 9.03 11.28 13.54 15.80
RETURN 10.0% 7.29 9.71 12.14 14.57 17.00
8.0% 7.85 10.47 13.08 15.70 18.32
</TABLE>
Various Incremental FY2004E EPS and Expected Returns (b)(c)
<TABLE>
<CAPTION>
INCREMENTAL FY2004E EPS
-------------------------------------------------------------------
(20.0)% (10.0)% 0.0 % 10.0 % 20.0 %
<S> <C> <C> <C> <C> <C> <C>
16.0% 7.82 8.80 9.78 10.76 11.74
EXPECTED 14.0% 8.40 9.45 10.50 11.55 12.60
EQUITY 12.0% 9.03 10.15 11.28 12.41 13.54
RETURN 10.0% 9.71 10.93 12.14 13.36 14.57
8.0% 10.47 11.78 13.08 14.39 15.70
</TABLE>
(a) Assumes expected return for shareholders comprise dividend yield and share
price appreciation
(b) Assumes 2% dividend yield, consistent with dividend yield of selected
comparable publicly listed companies
(c) Assumes 25x forward P/E at time of exit
Source: FY2004E forecasts from Acorn in conjunction with Apple
[GOLDMAN SACHS LOGO]
<PAGE> 23
TAB 4
<PAGE> 24
[GOLDMAN SACHS LOGO]
MH MILLENNIUM ACQUISITION OF HERBALIFE
SEPTEMBER 17, 1999
- --------------------------------------------------------------------------------
BACKGROUND (a)
- --------------------------------------------------------------------------------
- - MH Millennium Acquisition, a subsidiary of MH Millennium Holdings, tendered
for all outstanding shares of Herbalife it does not already own. The Tender
was effective on September 17, 1999 until October 15, 1999, however was
extended at the same price until November 24, 1999. The initial proposal of
$12.50 on August 11, 1999 was rejected by the Special Committee as being
unfair
- - The purchaser is the Company's founder, CEO, President and Chairman Mark
Hughes, who owns 100% of MH Millennium Holdings which beneficially owns
55.4% and 59.0% of outstanding Herbalife Class A and B Shares respectively
- - Herbalife is a network marketing company that sells a wide range of weight
management products, food and dietary products worldwide. Number of
worldwide distributors is 750,000. Japan accounted for 32% of 1998 sales
- - The motive for transaction was the deterioration in Herbalife's share
price, which was considered undervalued by the Company. Management wanted
the freedom to invest in long-term markets
- - Marketplace reaction (b): "Institutional shareholders who stood by founder
Mark Hughes . . . are crying foul over his plan
to take the company private." "I think the $17
price is ridiculous. The only ones making money
on this stock are insiders." - Richard Todaro,
Kennedy Capital Management
- --------------------------------------------------------------------------------
SUMMARY FINANCIALS (a)
- --------------------------------------------------------------------------------
Financial Year ended December 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(US$mm) 1997 1998 LTM 9/1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail Sales 1,490.7 1,644.8 1,746.1
Y-on-Y Growth (%) 24.2 10.3 7.6
Gross Profit 1,285.6 1,414.0 1,501.6
Gross Margin (%) 86.2 85.97 86.0
EBIT 86.0 78.3 83.0
Margin (%) 5.8 4.8 4.8
Net Income 54.7 48.5 50.8
Margin (%) 3.7 3.0 2.9
Net Debt (118.6) (100.9) (129.5)(d)
Fully Diluted EPS 1.72 1.60 1.30
</TABLE>
- --------------------------------------------------------------------------------
TRANSACTION SUMMARY (a)
- --------------------------------------------------------------------------------
Current Price of Tender: $17.00 Initial Price (non-public): $12.50
# of Shares Tendered for: Class A: 4.3m Class B: 7.3m
% of Total Shares O/S 42.9% 39.5%
Transaction Size (c): ($) 267.8m
Implied Equity Consideration (c): ($) 543.0m
Implied Enterprise Value (c) (d): ($) 415.5m
<TABLE>
<CAPTION>
Multiple of Premium (Class A/B)
- ---------------------------------------- -----------------------------------
<S> <C> <C> <C>
LTM Retail Sales: 0.2x 1 Day Prior: 39/84%
LTM EBIT: 5.0x 52 wk High: (41)/(38)%
LTM Net Income: 10.7x 52 wk Low: 127/183%
2000E Net Income (e) 10.3x
</TABLE>
- --------------------------------------------------------------------------------
5 YEAR SHARE PRICE PERFORMANCE (f)
- --------------------------------------------------------------------------------
[5 YEAR SHARE PRICE PERFORMANCE CHART]
(a) Source: Company filings (10K, 10Q, SC 14D1, LTM from unaudited company
release).
(b) Source: LA Times dated September 16,1999.
(c) Includes purchase of options.
(d) Net debt from 6/1999 10-Q, latest available.
(e) IBES Estimates.
(f) Source: Muller.
<PAGE> 25
[GOLDMAN SACHS LOGO]
INDUSTRI KAPITAL & JOCHNICK FAMILY ACQUISITION OF ORIFLAME
SEPTEMBER 7, 1999
- --------------------------------------------------------------------------------
Background
- --------------------------------------------------------------------------------
- - MBO bid by Oriflame Trading, a unit of Oriflame International will lead to
control by both the Industri Kapital Group and the Jochnick family. The two
groups launched a tender offer for 49.73m shares at 265p for a 27.7%
premium on the undisturbed market price. The stock delisted from the LSE on
10/14/1999
- - The bidders are the founding Jochnick family and the Anglo-Swedish private
equity group, Industri Kapitol. Each will own 50% of the ensuing privately
held corporation
- - A strong motivating factor for the tender offer was the need for the family
to be able to build a strong distribution system in those countries where
the economy was in depression
- - Oriflame International is a direct seller in 52 countries with over 750,000
distributors. It is one of the leading direct selling cosmetics companies
in the world. Oriflame utilizes retail outlets and pharmacies for some of
its brand name items
- - Oriflame has limited exposure to Asian Pacific countries, with a
distributor sales force only in Malaysia and Indonesia. Shelved plans to
grow presence in Asia until economic upturn begins
- --------------------------------------------------------------------------------
FINANCIALS (c)
- --------------------------------------------------------------------------------
FISCAL YEAR ENDING DEC. 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(GBPmm) 1997 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales 252.8 233.1
Y-on-Y Growth (%) 9.2 (7.8)
Gross Profit 176.6 162.3
Gross Margin (%) 69.9 69.6
EBIT 43.0 30.2
Margin (%) 17.0 13.0
Net Income 32.0 16.8
Margin (%) 12.7 7.2
Net Debt 3.1 24.7
EPS (Fully Diluted) 30.9 16.5
</TABLE>
- --------------------------------------------------------------------------------
Transaction Summary (a)(b)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Price: 265p
# of Shares Tendered for: 49.7m
% of Total Shares O/S 50.1%
Transaction Size: (GBP) 131.8m
Implied Equity Consideration: (GBP) 265.5m
Implied Enterprise Value: (GBP) 290.1m
</TABLE>
<TABLE>
<CAPTION>
Multiple of Latest FYE Premium
- ---------------------------------------- -----------------------------------
<S> <C> <C> <C>
Sales: 1.2x Undisturbed 28%
Price:
EBIT: 9.6x 52 wk High: 0%
Net Income: 15.8x 52 wk Low: 121%
2000E Net Income: 12.6x
</TABLE>
- --------------------------------------------------------------------------------
5 YEAR SHARE PRICE PERFORMANCE (d)
- --------------------------------------------------------------------------------
[5 YEAR SHARE PRICE PERFORMANCE CHART]
(a) All data in UK Pounds except per share, which is in pence; FDSO = 100.17MM
(b) IBES estimates.
(c) Financial data based on company reports as of calendar year end; 1998 before
discontinued operations; 1997 before merger costs; LTM not meaningful due to
insufficient disclosure of interim effects of discontinued operations
(d) Source: Mueller.
(e) Bloomberg.
<PAGE> 26
[GOLDMAN SACHS LOGO]
AVON INTERNATIONAL OPERATIONS TOB FOR AVON PRODUCTS
SEPTEMBER 14, 1992
- --------------------------------------------------------------------------------
Background
- --------------------------------------------------------------------------------
- - On September 14, 1992, Avon International Operations Inc., a subsidiary of
Avon (US), commenced a TOB to acquire shares it did not already own in Avon
Products Co., Ltd.
- - The buyer already held 60% of the outstanding common stock in Avon Products
Co., Ltd.
- - Although the purchase price was set at a 20% premium to the market price,
Avon International Operations Inc. was able to purchase only 5,757,000
shares, or approximately 42% of the shares it had tendered for
- - The primary reason for the lack of success was that many of the investors
had initially bought into the stock at prices significantly higher than the
offer price
- --------------------------------------------------------------------------------
Summary Financials (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Ymm) 11/1990 11/1991
-------- --------
<S> <C> <C>
Sales 39,382 40,885
Y-on-Y Growth (%) (1.9) (3.8)
Gross Profit 7,809 8,101
Margin (19.8) (19.8)
EBIT 3,685 3,708
Margin (9.4) (9.1)
Net Income 2,041 1,542
Margin (5.2) (3.8)
Net Debt 11,630 9,811
EPS 15.02 11.35
</TABLE>
- --------------------------------------------------------------------------------
Transaction Summery (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Ymm)
<S> <C>
Offer Price: (Y)560
# of Shares Tendered for: 13.6m (up to 20m)
% of Total Shares O/S: 20% (up to 29.4%)
Transaction Size: (Y)7,616m
Implied Equity Consideration: (Y)38,080m
Implied Enterprise Value: (Y)47,891m
</TABLE>
<TABLE>
<CAPTION>
Multiple of Premium
- ------------------------------------------ --------------------------------
<S> <C> <C> <C>
FY 1991 Sales (x): 1.1x 1 Day Prior: 19.1%
FY 1991 EBIT: 12.9x 52 wk High: (27.9)%
FY 1991 Net Income: 24.7x 52 wk Low: 60.0%
FY 1992E Net Income: 22.4x
</TABLE>
- --------------------------------------------------------------------------------
5 Year Share Price Performance (b)
- --------------------------------------------------------------------------------
[5 Year Share Price Performance (b) Chart]
(a) Source: SDC, Japan Company Handbook, company disclosure material.
(b) Source: Nikkei-Needs Database.
<PAGE> 27
TAB 5
<PAGE> 28
[GOLDMAN SACHS LOGO]
PREMIA PAID IN RECENT ASIAN TENDER OFFERS
INCLUDES AUSTRALIA AND NEW ZEALAND (a)(b)(c)
[PREMIA PAID IN RECENT ASIAN TENDER OFFERS CHART]
[Mean: 23.0%]
[Median: 18.2%]
(a) Australia and New Zealand represent 75.6% of total deals.
(b) Premiums calculated to closing price 1 day prior to announcement.
(c) For deals where data available.
Source: SDC; last 5 years
<PAGE> 29
PREMIA PAID IN RECENT ASIAN TENDER OFFERS
EXCLUDES AUSTRALIA AND NEW ZEALAND (a) (b) (c)
[PREMIA PAID IN RECENT ASIAN TENDER OFFERS CHART]
[Mean 8.6%]
[Median 6.1%]
(a) Includes India, Indonesia, Hong Kong, Malaysia, Philippines, Singapore
and Thailand.
(b) Premiums calculated to closing price one day prior to announcement.
(c) For deals where data available.
Source: SDC, last 5 years
[GOLDMAN SACHS LOGO]
<PAGE> 30
PREMIA PAID IN SELECTED JAPANESE TENDER OFFERS
<TABLE>
<CAPTION>
Announcement Target Buyer Offer Price Premium*
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9/9/1999 Toho Rayon Teijin 7.8%
2/16/1999 Apollo Electronics Rohm 44.1%
11/10/1998 Komatsu Zenoah Komatsu 23.0%
11/2/1998 Torii Pharmaceutical Japan Tabacco 7.2%
10/16/1998 Tensho Electric Sanko 95.2%
8/31/1998 Daihatsu Co., Ltd. Toyota Motor Corp. 6.8%
4/21/1998 Japan Marine Technologies Ltd. TI Group PLC 56.8%
- ---------------------------------------------------------------------------------------------------------------------------
4/17/1998 NCR Japan Ltd. NCR Holdings Ltd. 26.5%
- ---------------------------------------------------------------------------------------------------------------------------
4/2/1998 Biotech K.K. Showa Denko K.K. 3.3%
11/26/1997 Unidux corp. Kanematsu Corp. 72.8%
9/24/1996 Royal Electric Co., Ltd. Ono Warehouse Co., Ltd. 14.0%
3/23/1993 Sakura Rubber Co., Ltd. Management 4.7%
Average 30.2%
Median 18.5%
</TABLE>
* Premium over closing price 1 day prior to announcement.
Source: Press reports
[GOLDMAN SACHS LOGO]
<PAGE> 31
PREMIA PAID IN RECENT US TENDER OFFERS (a) (b)
[PREMIA PAID IN RECENT US TENDER OFFERS CHART]
[Mean: 29.2%]
[Median: 33.5%]
(a) Premium calculated to closing price 1 day prior to announcement.
(b) For deals where data available.
Source: SDC; all US tender offers launched since 10/1994
[GOLDMAN SACHS LOGO]
<PAGE> 32
[GOLDMAN SACHS LOGO]
COMPARISON OF SELECTED MINORITY BUYOUTS (a)
[PREMIUM OF INITIAL VS. CLOSING STOCK PRICE ONE DAY PRIOR TO ANNOUNCEMENT CHART]
Mean: 17.4%
Median: 14.3%
Herbalife A: 2.0%(b)
Herbalife B: 35.1%(b)
[PERCENT INCREASE IN FINAL PRICE VS. INITIAL BID CHART]
Mean: 10.9%
Median: 8.5%
Herbalife: 36.0%
Herbalife: 36.0%
[PREMIUM OF FINAL PRICE VS. CLOSING STOCK PRICE ONE DAY PRIOR TO ANNOUNCEMENT]
Mean: 26.0%
Median: 21.4%
Herbalife: 38.8%(c)
Herbalife: 83.8%(c)
(a) Represents transactions in excess of $100 million from 1989 to 1999
where the acquiror had in excess of approximately 50% ownership prior
to transaction and increased to 100% ownership.
(b) Based on offer price of $12.50 per share. This initial offer was
non-public.
(c) Based on offer price of $17 per share.
Source: SDC
<PAGE> 33
TAB 6
<PAGE> 34
APPLE DISCOUNTED CASH FLOW ANALYSIS
KEY ASSUMPTIONS
- - All financial projections have been provided by the SEC Reporting and
Investor Relations Group within Acorn, which provides central financial
services (financial reporting, strategic planning) to Apple under the
Support Services Agreement
- - The projections were updated in October to reflect any changes in the
outlook for each region in light of fourth quarter FY1999 results
- - FY2000 figures have been produced on a bottom-up, product-by-product, cost
item-by-cost item basis by local management of each affiliate according to
the annual budgeting process
- - FY2001-FY2004 figures for each affiliate have been produced in the ordinary
course of business by the SEC Reporting and Investor Relations Group, in
conjunction with local management. FY2000 plan is extrapolated, using
year-on-year net sales growth and margin ratios as key drivers. Foreign
exchange rates and effective tax rates are assumed constant post FY2000.
The Group extensively consults with each local management as to their
operating environments, as well as reflecting Acorn's historical experience
in other affiliates worldwide
- - FY2000-FY2004 figures (in US$ terms) assume a steady recovery from 1998/9
economic downturn with no fundamental changes in distributor base, product
line, cost structure, regulatory environment
- Australia: 8% recovery in net sales in 2000, steady growth thereafter
(2.2% CAGR), regaining pre-decline 1998 levels in 2004. EBIT margin
erodes to 7.6% in 2003 but recovers to 8.8% in 2004.
- New Zealand: 7% recovery in net sales in 2000, steady growth thereafter
(5.0% CAGR) but still 20% down on pre-decline 1997 levels in 2004. EBIT
margin increases from 0.6% in 2000 to 2.7% in 2004.
- Malaysia: 8% recovery in net sales in 2000, steady growth thereafter
(5.0% CAGR) but still 19% down on pre-decline 1997 levels in 2004. EBIT
margin declines slightly from 13.6% in 2000 to 13.0% in 2004.
- Thailand: 12% recovery in net sales in 2000, steady growth thereafter
(6.9% CAGR) but still 28% down on pre-decline 1997 levels in 2004. EBIT
margin increases slightly from 6.8% in 2000 to 7.9% in 2004.
- Hong Kong: 10% recovery in net sales in 2000, steady growth thereafter
(6.0% CAGR), regaining pre-decline 1997 levels in 2004. EBIT margin
improves from -2.0% in 2000 to 1.5% in 2004.
- Taiwan: continuing decline in net sales in 2000, flat in 2001. Steady
recovery thereafter (4.5% CAGR) but still down 21% on pre-decline 1997
levels in 2004. EBIT margin kept largely constant around 5.5%.
- China: sharp recovery in net sales in 2000, steady recovery thereafter
(12.5% CAGR). Pre-decline1997 levels only regained in 2004. EBIT margin
declines from 7.3% in 2000 to 6.5% in 2004.
- - No significant capex is assumed beyond China and recurring maintenance
items. Working capital requirement largely flat
[GOLDMAN SACHS LOGO]
<PAGE> 35
EXCHANGE RATE ASSUMPTIONS
<TABLE>
<CAPTION>
FY97 FY98 FY99 FY2000-04
- ----------------------------------- ------------------------ ------------------------ ------------------------ ---------------------
<S> <C> <C> <C> <C>
Australian Dollar 1.293 1.519 1.575 1.493
New Zealand Dollar 1.452 1.751 1.882 1.818
Malaysian Ringgit 2.531 3.714 3.800 3.800
Thai Baht 26.463 41.317 37.360 38.000
China Renminbi 8.296 8.281 8.278 8.300
Hong Kong Dollar 7.739 7.743 7.751 7.800
Taiwan Dollar 27.652 32.391 32.655 33.300
- ----------------------------------- ------------------------ ------------------------ ------------------------ ---------------------
</TABLE>
Source: Acorn in conjunction with Apple
[GOLDMAN SACHS LOGO]
<PAGE> 36
ASIAN ECONOMIC OUTLOOK
China
- -----
- - China's GDP grew 7.4% for the first nine months of the year on the back of
strong exports recovery (to Asia and the EU)
- - Fears of RMB devaluation have been allayed with the wide trade surplus and
stronger economic growth
- - Current fiscal and monetary measures can go a long way to bolstering
domestic demand
Hong Kong
- ---------
- - Slow recovery ahead with GDP forecast at 0.6% this year, led by external
sector and public fixed investment
- - Weaker domestic demand and low inflation in China will lead to continued
consumer price deflation
- - Lack of exchange rate flexibility will drive a price adjustment if Hong
Kong's competitiveness is to remain intact
Taiwan
- ------
- - Optimistic export outlook with the absence of OECD slowdown and regional
recovery, especially with its competitive high-tech industry
- - Slow relaxation of credit conditions will make domestic demand pick-up
higher than the current average market expectations
- - Trade figures show that earthquake did not significantly slow growth
Malaysia
- --------
- - Economic unpredictability and fears about political instability are in
retreat
- - Slow increases in inflation reflect improved economic activity
- - Loose monetary and fiscal policies have been main drivers for economic
demand
- - Softening exchange controls signal rebound
Thailand
- --------
- - The economy has bottomed and is on path to recovery
- - There is evidence of broad-based domestic demand recovery which is
bolstered by a brighter export outlook
- - Last month, private consumption and investment also posted positive
year-on-year growth for the first time in two years
- - Bank of Thailand policy has stabilized the baht and kept interest rates
low, which should increase the overall level of consumer confidence
Australia/New Zealand
- ---------------------
- - Economy has been remarkably resilient to the Asian economic crisis, and
stable GDP growth is expected to continue
- - Private consumption is growing at an annual rate of almost 5%, close to the
all time high, and retail sales are running at 7%
Source: GS Research (July 1, 1999 - October 14, 1999)
[GOLDMAN SACHS LOGO]
<PAGE> 37
APPLE DISCOUNTED CASH FLOW ANALYSIS
MANAGEMENT CASE
(US$ IN MILLIONS)
<TABLE>
<CAPTION>
August 31, 2000-2004
1997A 1998A 1999A 2000E 2001E 2002E 2003E 2004E CAGR
----- ----- ----- ----- ----- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales
Australia 121.8 124.2 107.4 115.6 119.1 119.1 122.5 126.0 2.2%
New Zealand 29.3 22.7 17.9 19.2 20.8 21.6 22.5 23.4 5.0%
China 178.0 68.3 55.5 120.0 138.0 151.8 167.0 192.0 12.5%
Taiwan 164.8 141.9 122.6 114.1 114.1 118.1 124.0 130.2 3.4%
Hong Kong 34.4 31.4 25.5 28.0 29.4 30.8 33.0 35.3 6.0%
Malaysia 135.2 94.7 83.5 90.0 94.5 99.2 104.2 109.4 5.0%
Thailand 181.6 104.3 89.2 100.0 110.0 115.5 121.3 130.4 6.9%
------------------------------------------------------------------------------------------ ------
Net Sales 845.2 587.6 501.5 586.9 625.8 656.2 694.5 746.6 6.2%
Total Cost of Sales (313.3) (257.2) (216.5) (251.0) (265.4) (277.6) (293.0) (313.7) 5.7%
------------------------------------------------------------------------------------------ ------
Gross Profit 531.9 330.4 285.0 336.0 360.4 378.6 401.4 432.9 6.5%
------------------------------------------------------------------------------------------
Total Operating Expenses (383.3) (305.1) (258.7) (293.5) (311.8) (331.2) (352.5) (376.9) 6.5%
------------------------------------------------------------------------------------------ ------
EBIT 148.6 25.3 26.3 42.5 48.6 47.4 48.9 56.1 7.2%
Taxes (54.91) (23.51) (13.29) (13.69) (14.27) (14.18) (15.18) (17.20)
------------------------------------------------------------------------------------------
EBIAT 93.7 1.8 13.0 28.8 34.3 33.2 33.7 38.9 7.8%
add: Depreciation 13.0 13.5 12.8 13.3 14.5 16.9 17.9 20.0
add: Decrease in WC 25.9 (6.8) 6.5 13.0 11.7 14.9 16.6 13.6
less: CapEx (27.8) (33.1) (13.0) (15.6) (20.0) (16.5) (16.9) (15.8)
Unlevered Free Cash Flow 104.7 (24.6) 19.4 39.6 40.4 48.5 51.3 56.6 9.4%
Net Sales Growth (30.5)% (14.6)% 17.0% 6.6% 4.8% 5.8% 7.5%
Gross Margin 62.9% 56.2% 56.8% 57.2% 57.6% 57.7% 57.8% 58.0%
EBIT Margin 17.6% 4.3% 5.2% 7.2% 7.8% 7.2% 7.0% 7.5%
Depreciation / Sales 1.5% 2.3% 2.5% 2.3% 2.3% 2.6% 2.6% 2.7%
CapEx / Dep 2.1 x 2.4 x 1.0 x 1.2 x 1.4 x 1.0 x 0.9 x 0.8 x
</TABLE>
Source:
2000-4E estimates from Acorn in conjunction with Apple.
<PAGE> 38
Apple Discounted Cash Flow Analysis
Management Case
(US$ in Millions except per share data)
<TABLE>
<CAPTION>
August 31,
2000E 2001E 2002E 2003E 2004E
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
UNLEVERED FCF (a) 39.6 40.4 48.5 51.3 56.6
NPV (b) 179.0 26%
PV OF TERMINAL VALUE (c) 512.1 74%
---------
ENTERPRISE VALUE 691.12
LESS: MINORITY INTEREST IN MANGO (d) 119.5
LESS: NET DEBT (e) (103.8)
---------
EQUITY VALUE 675.4
PER SHARE (f) $ 11.97
</TABLE>
(a) 2000-4E projections from Acorn in conjunction with Apple.
(b) Assumes mid-year discounting convention; discounted to Novemeber 30, 1999.
Assumes Discount Rate equals 12.0%
(c) Terminal Value calculated using multiple of LTM EBIT; (15.0x)
(d) Minority interest in Mango valued at market price as of 11/10/1999
(e) As of August 31, 1999
(f) Assumes 56.4MM shares outstanding
[GOLDMAN SACHS LOGO]
<PAGE> 39
Apple Discounted Cash Flow Analysis
Sensitivity Analysis -- Country Projected Financial Projections (a)
($US in millions, except per share data)
FINANCIAL SENSITIVITIES
<TABLE>
<CAPTION>
ENTERPRISE VALUE
Terminal Multiple of 2004E EBIT
-----------------------------------------------------------
10.0 x 12.5 x 15.0 x 17.5 x 20.0 x
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10.0% 437 529 621 714 806
Discount 11.0% 418 507 596 685 773
Rate 12.0% 401 486 572 657 742
13.0% 384 466 548 631 713
14.0% 368 447 526 605 684
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EQUITY VALUE PER SHARE (b) (c)
Terminal Multiple of 2004E EBIT
-----------------------------------------------------------
10.0 x 12.5 x 15.0 x 17.5 x 20.0 x
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10.0% 9.58 11.21 12.85 14.48 16.12
Discount 11.0% 9.25 10.82 12.40 13.97 15.54
Rate 12.0% 8.94 10.45 11.97 13.48 14.99
13.0% 8.65 10.10 11.56 13.01 14.46
14.0% 8.36 9.76 11.16 12.56 13.96
-----------------------------------------------------------
---------------------------------------------------------------------------------------
</TABLE>
BUSINESS SENSITIVITIES
<TABLE>
<CAPTION>
ENTERPRISE VALUE (d)
Change in Consolidated Sales Growth
-----------------------------------------------------------
-5.0% -2.5% 0.0% 2.5% 5.0%
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-2.0% 309 353 400 452 508
Change in -1.0% 379 430 486 547 614
EBIT 0.0% 448 507 572 642 719
Margin 1.0% 517 584 657 738 825
2.0% 586 661 743 833 930
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EQUITY VALUE PER SHARE (b) (c) (d)
Change in Consolidated Sales Growth
-----------------------------------------------------------
-5.0% -2.5% 0.0% 2.5% 5.0%
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-2.0% 7.32 8.09 8.93 9.85 10.85
Change in -1.0% 8.55 9.45 10.45 11.53 12.72
EBIT 0.0% 9.77 10.82 11.97 13.22 14.59
Margin 1.0% 11.00 12.19 13.49 14.91 16.45
2.0% 12.22 13.55 15.01 16.59 18.32
-----------------------------------------------------------
</TABLE>
(a) Projections developed by Acorn in conjunction with Apple
(b) Assumes net debt of ($104) million as of November, 1999. Minority
interest in Mango valued at market as of 11/10/1999
(c) Assumes 56.4 million primary shares outstanding.
(d) Assumes a 12.0% discount rate and a 15.0x EBIT terminal multiple.
<PAGE> 40
APPLE DISCOUNTED CASH FLOW ANALYSIS
REGIONAL GROWTH SCENARIOS -- COUNTRY PROJECTED FINANCIAL PROJECTIONS (a)
($US IN MILLIONS, EXCEPT PER SHARE DATA)
FINANCIAL SENSITIVITIES
<TABLE>
<CAPTION>
ENTERPRISE VALUE
Change in China Sales Growth
--------------------------------------------------------------
-10.0% -5.0% 0.0% 5.0% 10.0%
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-2.0% 358 377 400 427 460
Change in -1.0% 436 459 486 518 556
EBIT 0.0% 514 540 572 609 653
Margin 1.0% 592 622 657 700 750
2.0% 670 703 743 790 846
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EQUITY VALUE PER SHARE (b) (c)
Change in China Sales Growth
------------------------------------------------------------------
-10.0% -5.0% 0.0% 5.0% 10.0%
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-2.0% 8.18 8.52 8.93 9.41 9.98
Change in -1.0% 9.57 9.97 10.45 11.02 11.70
EBIT 0.0% 10.95 11.41 11.97 12.63 13.41
Margin 1.0% 12.33 12.86 13.49 14.23 15.12
2.0% 13.72 14.30 15.01 15.84 16.83
------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
BUSINESS SENSITIVITIES
<TABLE>
<CAPTION>
ENTERPRISE VALUE (d)
Change in Thailand Malaysia Sales Growth
--------------------------------------------------------------
-5.0% -2.5% 0.0% 2.5% 5.0%
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-2.0% 370 384 400 417 436
Change in -1.0% 450 467 486 506 529
EBIT 0.0% 530 550 572 595 621
Margin 1.0% 611 633 657 684 713
2.0% 691 716 743 773 806
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EQUITY VALUE PER SHARE (b) (c) (d)
Change in Thailand Malaysia Sales Growth
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-5.0% -2.5% 0.0% 2.5% 5.0%
------------------------------------------------------------------
-2.0% 8.39 8.65 8.93 9.23 9.57
Change in -1.0% 9.82 10.12 10.45 10.81 11.21
EBIT 0.0% 11.24 11.59 11.97 12.38 12.84
Margin 1.0% 12.66 13.05 13.49 13.96 14.48
2.0% 14.08 14.52 15.01 15.53 16.11
------------------------------------------------------------------
</TABLE>
(a) Projections developed by Acorn in conjunction with Apple
(b) Assumes net debt of ($104) million as of November, 1999. Minority
interest in Mango valued at market as of 11/10/1999
(c) Assumes 56.4 million primary shares outstanding.
(d) Assumes a 12.0% discount rate and a 15.0x EBIT terminal multiple.
<PAGE> 41
TAB A
<PAGE> 42
APPLE HISTORICAL FINANCIAL OVERVIEW
PROFIT AND LOSS STATEMENT
<TABLE>
<CAPTION>
Years ended August 31, CAGR
(US$ millions) 1995 1996 1997 1998 1999 95-99
------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $718.3 $716.8 $845.2 $587.6 $501.5 -8.6%
Cost of Sales $274.0 $269.4 $313.3 $257.2 $216.5 -5.7%
------------------------------------------------------------- -------------
Gross Profit $444.3 $447.4 $531.9 $330.4 $285.0 -10.5%
Operating Expenses
Distributor Incentives 187.9 186.1 219.1 157.0 128.8 -9.0%
Distribution Expenses 37.8 40.8 49.7 45.2 37.8 0.0%
Selling and Administrative Expenses 90.8 93.4 114.5 102.8 92.1 0.3%
------------------------------------------------------------- -------------
Total Operating Expenses 316.6 320.2 383.3 305.1 258.7 -4.9%
Operating Income 127.8 127.1 148.6 25.3 26.3 -32.6%
Other Income-Net 12.5 19.8 24.7 9.7 6.5 -15.1%
------------------------------------------------------------- -------------
Income Before Taxes and Minority Interest 140.3 146.9 173.3 35.0 32.8 -30.4%
Income Before Minority Interest 95.3 91.2 118.4 11.5 19.5 -32.7%
Minority Interest 5.4 9.0 14.4 10.0 7.1 6.8%
------------------------------------------------------------- -------------
Net Income $89.9 $82.2 $104.0 $1.5 $12.5 -39.0%
Basic Earnings per Share $1.50 $1.37 $1.76 $0.03 $0.22 -38.0%
Dividends per Share $0.64 $1.02 $0.84 $0.88 $0.00
Common Size Analysis
Cost of Sales 38.1% 37.6% 37.1% 43.8% 43.2%
Gross Profit 61.9% 62.4% 62.9% 56.2% 56.8%
Operating Income 17.8% 17.7% 17.6% 4.3% 5.2%
Net Income 12.5% 11.5% 12.3% 0.2% 2.5%
Year-on-Year Growth Rates
Net Sales -0.2% 17.9% -30.5% -14.7%
Gross Profit 0.7% 18.9% -37.9% -13.7%
Net Income -8.5% 26.5% -98.6% 758.6%
</TABLE>
Source: 20-F
[GOLDMAN SACHS LOGO]
<PAGE> 43
APPLE HISTORICAL FINANCIAL OVERVIEW
CASH FLOW STATEMENT
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
(US$ millions) 1995 1996 1997 1998 1999
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income 89.9 82.2 104.0 1.5 12.5
Depreciation and Amortization 9.6 10.9 13.0 13.5 12.8
Deferred Income Taxes (2.6) 4.5 (4.9) (2.7) (1.5)
Loss (Gain) on Sale or Disposal of Property and Equipment 0.1 0.0 (0.0) 1.6 1.3
Loss (Gain) on Sales of Investments 0.0 0.0 0.0 (0.6) (0.6)
Changes in Accounts Receivable 7.3 (2.4) (7.5) (7.9) 8.4
Changes in Inventories (5.1) 17.3 (32.0) 18.2 17.3
Changes in Prepaid Expenses and Other Current Assets (2.0) 10.1 (5.7) 3.0 12.1
Changes in Accounts Payable (31.5) 4.8 46.8 (18.9) (20.4)
Changes in Accrued Expenses and Income Taxes 37.2 17.1 10.6 (15.1) (15.3)
Changes in Distributor Deposits 0.0 4.3 (1.6) (4.0) 0.3
Other 11.6 8.0 23.2 21.4 6.2
---------------------------------------------------------
Net Cash Provided by Operating Activities 114.5 156.9 146.0 9.8 33.1
Cash Flows From Investing Activities:
Capital Expenditures (22.7) (10.0) (28.5) (33.2) (13.0)
Proceeds From Sale of Equipment 0.5 0.4 0.7 0.4 0.4
Purchases of Short-Term Investments (203.9) (35.4) (98.6) (80.9) (26.8)
Proceeds From Maturity of Investments 199.5 85.4 78.3 115.9 18.7
Purchases of Available for Sale Investments 0.0 0.0 0.0 0.0 (9.3)
Proceeds From the Sale of Available for Sale Investments 0.0 0.0 0.0 1.6 5.1
Issuance of Note Receivable 0.0 0.0 (1.1) 0.0 (0.1)
Payments Received on Notes Receivable 0.0 0.0 0.0 0.3 0.0
---------------------------------------------------------
Net Cash Provided by (Used In) Investing Activities (26.6) 40.4 (49.3) 4.2 (25.1)
Cash Flows From Financing Activities:
Net Short-Term Borrowings 0.0 0.0 0.0 18.5 (8.3)
Principal Payments on Notes Payable and Capital Lease Obligations (9.0) (9.0) (27.6) 0.0 0.0
Dividends Paid to Shareholders (38.4) (61.2) (49.7) (49.7) 0.0
Dividends Paid by Subsidaries to Minority Shareholders 0.0 (3.6) (3.1) (6.0) (11.3)
Proceeds From Issuance of Common Stock 0.5 0.2 1.9 0.0 0.0
Purchase of Common Stock for Retirement 0.0 0.0 (150.8) 0.0 0.0
Amway (Malaysia) Purchase of Common Stock 0.0 0.0 0.0 (2.1) 0.0
Net Cash Received From Acquisition of Amway (B) Sdn. Bhd. 0.0 1.8 0.0 0.0 0.0
Proceeds From Issuance of Amway (Malaysia) Common Stock 21.2 33.3 0.0 0.0 0.0
Investment in Subsidiary by Minority Shareholder 0.0 0.0 0.0 0.0 2.2
---------------------------------------------------------
Net Cash Provided by (Used In) Financing Activities (25.7) (38.5) (229.3) (39.2) (17.4)
Effect of Exchange Rate Changes on Cash (1.6) 1.0 (20.2) (25.5) 3.9
Net Increase (Decrease) in Cash and Cash Equivalents 60.6 159.8 (152.8) (50.8) (5.5)
</TABLE>
Source: 20-F
[GOLDMAN SACHS LOGO]
<PAGE> 44
APPLE HISTORICAL FINANCIAL OVERVIEW
BALANCE SHEET
<TABLE>
<CAPTION>
(US$ millions) AS AT 31 AUGUST,
1997 1998 1999
-----------------------------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents 207.9 157.2 151.6
Short-Term Investments 48.6 0.1 10.4
Accounts Receivables, Net of Allowance for Doubtful Accounts 18.0 21.3 14.0
Inventories 106.2 75.1 62.1
Prepaid Expenses and Other Current Assets 28.9 23.2 12.4
-----------------------------------
Total Current Assets 409.7 276.9 250.5
Property, Plant and Equipment, Net 94.6 104.3 104.5
Other Assets 15.9 5.8 11.0
Total Assets 520.1 387.1 366.1
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 85.6 59.8 41.4
Short-Term Borrowings 0.0 18.6 10.3
Accured Expenses and Income Taxes 128.0 92.2 80.7
Distributor Deposits 9.6 4.3 5.0
-----------------------------------
Total Current Liabilities 223.2 174.8 137.3
Deferred Income Taxes 1.1 0.2 0.5
Total Liabilities 224.3 175.0 137.8
Minority Interests 43.4 36.0 33.9
Shareholders' Equity:
Common Stock 0.6 0.6 0.6
Additional Paid-in Capital 79.6 79.2 79.2
Unrealized Gain on Marketable Equity Securities 0.6 0.0 0.0
Cumulative Foreign Currency Translation Adjustments -17.0 -44.2 -38.4
Retained Earnings 188.7 140.5 153.0
-----------------------------------
Total Shareholders' Equity 252.5 176.1 194.4
Total Liabilities and Shareholders' Equity 520.1 387.1 366.1
</TABLE>
Source: 20-F
<PAGE> 1
Exhibit (b)(3)
[GRAPHIC]
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Discussion Materials
September 21, 1999
MORGAN STANLEY DEAN WITTER
<PAGE> 2
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Table of Contents
SECTION I EXECUTIVE SUMMARY
SECTION II STOCK PRICE PERFORMANCE
SECTION III PROJECTIONS AND DISCOUNTED CASH FLOW ANALYSIS
SECTION IV PRECEDENT TRANSACTIONS
SECTION V SHAREHOLDING AND TRADING ANALYSIS
SECTION VI ADDITIONAL PRICING CONSIDERATIONS
APPENDICES A SUMMARY TIMETABLE
B COMPARABLE COMPANY ANALYSIS
C PRECEDENT JAPANESE TRANSACTIONS
<PAGE> 3
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY
BACKGROUND
----------
- We have been asked to provide our views as to the appropriate price
that the families should be prepared to pay to acquire all of the
publicly held shares of Apple and Juniper
- We have reviewed forecasts for Apple and Juniper
-- based on the review of the forecasts and discussions with the
Apple and Juniper management teams, we believe the projections
have been prepared on a reasonable basis and reflect
management's best estimate of the future financial results of
Apple and Juniper
- Based on these forecasts, we have performed discounted cash flow
("DCF") analyses for both Apple and Juniper
- We have examined the trading performance of other publicly traded
companies that operate businesses similar to Apple and Juniper
- We have reviewed other transactions in which a majority shareholder
acquires all of the outstanding minority shares over the past
decade; most of those transactions have occurred in the United
States
- We have examined the trading prices and volume of Apple and Juniper
shares over the past several years
- We have examined the estimate of additional cash flow synergies
available to the families following the completion of Project
Powerhouse
- Acorn management has also outlined the strategies and financial
benefits of taking Apple and Juniper private as a precursor to a
potential public offering of a more comprehensive set of Acorn
assets
<PAGE> 4
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY (CONTINUED)
PRELIMINARY CONCLUSIONS
- -----------------------
- - The discounted cash flow analysis leads us to conclude that the Apple and
Juniper shares are trading at values in line with their DCF value
- - To acquire shares in the tender offer, the families will need to pay a
meaningful premium over the current trading prices
- - To justify paying a premium, the families must be willing to share a
portion of any expected financial benefits (i.e., synergies) derived from
taking the entities private
- - Morgan Stanley believes the families should be willing to share a
substantial portion of these benefits because of the overriding strategic
value of a Mothership transaction and the value which can be unlocked from
other Acorn assets
- - Additionally, the families should seek to pay a price that mitigates, to
the extent possible, negative reaction from shareholders and the press.
However, it is highly likely that some degree of negative
reaction/publicity will occur because of the nature of the transaction
-- there is greater likelihood of a negative reaction to the Juniper
transaction because even a price which is at a substantial premium
to the market is well below the IPO price and the prices where
secondary offerings were completed several years ago
<PAGE> 5
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY (CONTINUED)
RECOMMENDATION
- --------------
- - We recommend that the families make an initial offer that represents
roughly a 30% premium over the current trading prices for Apple and
Juniper. That premium is consistent with the median premia paid in similar
transactions since 1987. Specifically, we recommend per share offer prices
of:
Apple - $15.00, a 27.7% premium to the current price of $11.75
Juniper - 1450 YEN, a 33.0% premium to the current price of 1090 YEN
- - It is important to note that Apple shares have not closed above $15 per
share since July 31, 1998 and Juniper shares have not closed above 1450
YEN since August 26, 1998
EXPECTATION
- -----------
- - We would expect that the Apple and Juniper Boards, along with their
financial advisors, will argue that a higher price should be paid. Our
strategy is to maintain flexibility to increase the offer prices if
circumstances dictate that to be advisable.
<PAGE> 6
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
SECTION II
STOCK PERFORMANCE
- - Both Apple and Juniper stocks are well below their all-time highs
- - The stocks have underperformed broad market indices as well as a composite
of comparable companies
<PAGE> 7
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Stock Price Performance for Apple
Since IPO
Graph displaying daily share price and trading volume of Amway Asia Pacific from
December 15, 1993 to September 17, 1999. Exhibit highlights the current price of
$11.75, 52-week high of $14.44 and 52-week low of $7.13.
<PAGE> 8
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Apple Indexed Stock Price Performance
September 17, 1997 to September 17, 1999
Graph displaying indexed share price performance for Amway Asia Pacific from
September 17, 1997 to September 17, 1999. Graph compares Amway Asia Pacific
share price performance to the S&P 500, the Hang Seng Index and a market
capitalization weighted index of comparable companies including: Avon Products,
Blyth, Enesco Group, Fingerhut, Land's End, Nature's Sunshine, Newell
Rubbermaid, Nu Skin and Tupperware. Exhibit highlights the following rates of
return over the time period specified:
Amway Asia Pacific: (61.6%)
S&P 500: 41.6%
Hang Sang Index: (6.4%)
Comparable Companies: 3.4%
Note:(1) Comparable Companies include Avon Products, Blyth, Enesco Group,
Fingerhut, Land's End, Nature's Sunshine, Newell Rubbermaid, Nu Skin,
and Tupperware
<PAGE> 9
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Stock Price Performance for Juniper
Since IPO
Graph displaying daily share price and trading volume for Amway Japan from June
6, 1991 to September 17, 1999. Exhibit highlights the current price of Yen
1,090, 52-week high of Yen 1420 and 52-week low of Yen 915.
<PAGE> 10
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Juniper Indexed Stock Price Performance
September 17, 1997 to September 17, 1999
Graph displaying indexed share price performance for Amway Japan From September
17, 1997 to September 17, 1999. Graph compares Amway Japan share price
performance to the Nikkei Index, S&P 500, and a market capitalization weighted
index of Japanese comparable companies including: Senshukai, Cecile, Nissen,
Mutow, Charle, Shaklee, and Avon Products. Exhibit highlights the following
rates of return over the time period specified:
Note: (1) Japanese Comparable Companies include:
Catalog Sales Companies - Senshukai, Cecile, Nissen, Mutow
Direct Sales Companies - Charle, Shaklee, Avon Products
<PAGE> 11
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Section III
PROJECTIONS AND DISCOUNTED CASH FLOW ANALYSIS
- - Our discounted cash flow analysis is based on the projections provided by
management
- - For the Apple DCF, we used a weighted average cost of capital range of
10-12%
- - For the Juniper DCF, we used a weighted average cost of capital range of
9-11%
- - Using these projections and discount rates produces values for Apple and
Juniper in line with current prices
<PAGE> 12
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Overview of Apple Historical and Projected Financials
GRAPH 5
<TABLE>
<CAPTION>
OVERVIEW OF APPLE HISTORICAL AND PROJECTED FINANCIALS
- ----------------------------------------------------------------------------------------------------------------------
ACTUAL PROJECTED
---------------------------------------------------------------- --------------------------------
1995 1996 1997 1998 1999 2000
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales ($MM) 718.3 716.8 845.2 587.6 497.6 582.9
% Growth 0.2% 17.9% (30.5%) (15.3%) 17.2%
EBITDA ($MM) 138.0 137.3 161.6 38.8 33.4 53.3
% Margin 19.2% 19.2% 19.1% 6.6% 6.7% 9.1%
OVERVIEW OF APPLE HISTORICAL AND PROJECTED FINANCIALS
- ---------------------------------------------------------------------------------
PROJECTED
-----------------------------------------------
2001 2002 2003
-------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sales ($MM) 626.6 661.6 700.7
% Growth 7.5% 5.6% 5.9%
EBITDA ($MM) 63.9 65.3 68.6
% Margin 10.2% 9.9% 9.8%
</TABLE>
Note: (1) Based on management projections.
<PAGE> 13
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Overview of Juniper Historical and Projected Financials
GRAPH 6
<TABLE>
<CAPTION>
OVERVIEW OF JUNIPER HISTORICAL AND PROJECTED FINANCIALS
ACTUAL PROJECTED
---------------------------------------------------------------- -------------------------------
1995 1996 1997 1998 1999 2000
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales ((Y)Bn) 178.0 212.2 203.4 184.5 153.5 150.0
% Growth 19.2% (4.2%) (5.4%) (16.8%) (2.3%)
EBITDA ((Y)Bn) 51.2 62.5 49.5 32.9 20.9 18.3
% Margin 28.7% 29.5% 24.3% 6.6% 13.6% 12.2%
OVERVIEW OF JUNIPER HISTORICAL AND PROJECTED FINANCIALS
PROJECTED
-------------------------------------------------
2001 2002 2003
--------------- -------------- ---------------
<S> <C> <C> <C>
Sales ((Y)Bn) 155.3 160.7 166.3
% Growth 3.5% 3.5% 3.5%
EBITDA ((Y)Bn) 21.4 23.2 25.1
% Margin 13.8% 14.5% 15.1%
</TABLE>
Note: (1) Based on management projections that assume an exchange rate of 120
YEN/ $.
<PAGE> 14
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
10-Year DCF
($MM, except per share amounts)
<TABLE>
<CAPTION>
APPLE TOTAL COMPANY
- -------------------
Valuation Matrix as of October 1, 1999
- -------------------- -------------------------------- -------------------------------- --------------------------------
EXIT EBITDA MULTIPLE 7.5 8.5 9.5
-------------------------------- -------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DISCOUNT RATE 10.0% 11.0% 12.0% 10.0% 11.0% 12.0% 10.0% 11.0% 12.0%
PV of 1st Year Cash Flow $ 21.9 $ 21.8 $ 21.7 $ 21.9 $ 21.8 $ 21.7 $ 21.9 $ 21.8 $ 21.7
PV of Cash Flows 2 Through 10 270.2 257.7 246.0 270.2 257.7 246.0 270.2 257.7 246.0
Terminal Value 805.3 805.3 805.3 912.7 912.7 912.7 1,020.1 1,020.1 1,020.1
Implied EBIT Multiple 10.4 10.4 10.4 11.8 11.8 11.8 13.2 13.2 13.2
Implied Perpetual Growth Rate 1.3% 2.2% 3.1% 2.3% 3.2% 4.1% 3.1% 4.0% 4.9%
PV of Terminal Value 313.0 286.1 261.7 354.7 324.2 296.6 396.4 362.4 331.5
AGGREGATE VALUE 605.0 565.6 529.4 646.7 603.7 564.3 688.5 641.8 599.2
Less Total Debt & Preferred Stock 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Less Minority Interest 114.5 114.5 114.5 114.5 114.5 114.5 114.5 114.5 114.5
Plus Cash 137.3 137.3 137.3 137.3 137.3 137.3 137.3 137.3 137.3
Plus Option Proceeds 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EQUITY VALUE $ 627.8 $ 588.4 $ 552.3 $ 669.6 $ 626.5 $ 587.2 $ 711.3 $ 664.7 $ 622.1
EQUITY VALUE PER SHARE $ 11.12 $ 10.42 $ 9.78 $ 11.86 $ 11.10 $ 10.40 $ 12.60 $ 11.78 $ 11.02
% Value in Terminus 51.7% 50.6% 49.4% 54.8% 53.7% 52.6% 57.6% 56.5% 55.3%
% Value in Cash Flows 48.3% 49.4% 50.6% 45.2% 46.3% 47.4% 42.4% 43.5% 44.7%
-------------------------------------------
Equity Value $588.4 -- $664.7
Equity Value Per Share $10.42 -- $11.78
-------------------------------------------
---------
Current Price $11.75
---------
<FN>
(1) Minority interest calculated as 49% of Malaysian current market
capitalization of $234MM.
</TABLE>
<PAGE> 15
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
10-Year DCF - Perpetual Growth Rate
($MM, except per share amounts)
<TABLE>
<CAPTION>
JUNIPER TOTAL COMPANY
- ---------------------
VALUATION MATRIX AS OF OCTOBER 1, 1999
- --------------------- -------------------------------- --------------------------------- --------------------------------
PERPETUAL GROWTH RATE 1.0% 2.0% 3.0%
-------------------------------- --------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DISCOUNT RATE 9.0% 10.0% 11.0% 9.0% 10.0% 11.0% 9.0% 10.0% 11.0%
PV of 1st Year Cash Flow $ 44.7 $ 44.6 $ 44.4 $ 44.7 $ 44.6 $ 44.4 $ 44.7 $ 44.6 $ 44.4
PV of Cash Flows 2 Through 10 644.4 615.4 588.3 644.4 615.4 588.3 644.4 615.4 588.3
Terminal Value 1,673.3 1,494.2 1,350.8 1,931.3 1,697.6 1,515.8 2,275.2 1,959.1 1,722.0
Implied EBITDA Multiple 6.4 5.8 5.2 7.4 6.5 5.8 8.8 7.5 6.6
Implied EBIT Multiple 7.1 6.3 5.7 8.2 7.2 6.4 9.6 8.3 7.3
PV of Terminal Value 711.9 580.7 479.9 821.7 659.7 538.5 968.0 761.3 611.8
AGGREGATE VALUE 1,401.0 1,240.6 1,112.6 1,510.8 1,319.7 1,171.2 1,657.1 1,421.3 1,244.5
Less Total Debt & Preferred Stock 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Plus Cash 169.7 169.7 169.7 169.7 169.7 169.7 169.7 169.7 169.7
Plus Option Proceeds 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EQUITY VALUE $ 1,570.7 $ 1,410.4 $ 1,282.3 $ 1,680.5 $ 1,489.4 $ 1,340.9 $ 1,826.8 $ 1,591.0 $ 1,414.2
EQUITY VALUE PER SHARE $ 10.89 $ 9.78 $ 8.89 $ 11.65 $ 10.32 $ 9.29 $ 12.66 $ 11.03 $ 9.80
% Value in Terminus 50.8% 46.8% 43.1% 54.4% 50.0% 46.0% 58.4% 53.6% 49.2%
% Value in Cash Flows 49.2% 53.2% 56.9% 45.6% 50.0% 54.0% 41.6% 46.4% 50.8%
--------------------------------------
Equity Value $1,410.4 -- $1,591.0
$ Per Share $9.78 -- $11.03
Yen Per Share (1) 1,045 -- 1,179
--------------------------------------
------
Current Price (Yen Per Share) (1) 1,090
------
<FN>
(1) Based on an exchange rate of 107 Yen per USD.
</TABLE>
<PAGE> 16
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Section IV
PRECEDENT TRANSACTIONS
- - Precedent transactions, where a principal shareholder acquires all of the
outstanding minority shares, consist primarily of U.S. based transactions
and have been done at an average 28% premium to the unaffected stock
price
- - Only a few public precedent transactions have occurred in Japan
- - In a recent and relevant transaction, the founder of Herbalife has
offered to repurchase the outstanding minority interest private at a 42%
premium to the Class A (voting) share price
<PAGE> 17
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Summary of Precedent Transactions
Premium to Unaffected Price (1)
[GRAPH]
[Median
1987 to Date
28%]
1987-1990 1991-1993 1994-1996 1997-1999 YTD
- --------- --------- --------- -------------
33% 20% 26% 28%
Note: (1) Represents median tender offer price for transactions during the
specified period as a premium to the market price one month prior to
announcement.
<PAGE> 18
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Section IV (continued)
JAPANESE CASE STUDIES
- - There are a limited number of precedent transactions in Japan
- - The sample size makes it difficult to draw any meaningful conclusions
- - Three deals (NCR Japan, Japan Marine Technologies and SDS Biotech) were
all cash tender offers
- - The most recent transactions, involving three Sony subsidiaries, involved
a stock for stock offer
- - The premiums paid over unaffected market prices have ranged from 12% to
62%
<PAGE> 19
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Herbalife International Case Study
TRANSACTION BACKGROUND
- - On September 14, 1999, CEO Mark Hughes announced the intention to repurchase
the remaining 46% of Class A shares and 42% of Class B shares which he did
not already own.
- - Herbalife stock had been under significant pressure due to Russian exposure,
Asian uncertainty, currency risks and negative publicity associated with
specific herbal products. Hughes was disappointed in the stock's performance
and taking the company private seemed like a logical next step.
- - In February of 1997, the stock had foundered after Hughes had indicated the
desire to sell 1/4 of his shareholdings in a DECS security. This sale of the
stock was not completed and the stock rebounded soon thereafter.
- - The Company recapitalized with a new Class B non-voting stock in December of
1997, the same year the stock reached its all-time high at $37 3/8, a 120%
premium to the $17 repurchase price.
<TABLE>
<CAPTION>
PRICE VOLUME GRAPHS
(Price) Class A (Millions)
7/8/1987 12/12/1989 5/20/1992 10/26/1994 4/4/1997 9/15/1999
-------- ---------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
(Price) Class B (Millions)
12/15/1997 4/23/1998 8/27/1998 1/4/1999 5/11/1999 9/15/1999
---------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
<CAPTION>
KEY VALUATION STATISTICS
Equity Value (MM) (1): $561.0
Aggregate Value(2): $428.3
LTM 1999E
--- -----
<S> <C> <C>
Agg. Val/Sales 0.52 0.51x
Agg. Val/EBITDA 5.2x 4.2x
Agg. Val/EBIT 6.4x 4.9x
P/E NR 9.2x
<FN>
(1) Includes options (net of exercise proceeds).
(2) Aggregate value defined as equity market value plus debt and minority
interest less cash.
<CAPTION>
KEY TRADING STATISTICS
Class A Class B
------- -------
<S> <C> <C>
Total Shares Outstanding (MM) 9.982 18.605
Average Daily Trading Volume (1) 47,152 91,419
Unaffected Premium (2) 38.1% 76.6%
Premium to Prior Day 41.7% 85.7%
Discount to All Time High (54.5%) (36.4%)
<FN>
(1) Average over last 4 weeks.
(2) Unaffected premium defined as stock price
one month prior.
</TABLE>
<PAGE> 20
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Section V
Shareholding and Trading Analysis
- - Institutional shareholders comprise approximately 18% of the Apple public
float and 19% of the Juniper public float
- - Institutional investors appear to be largely value investors
- - The balance of shares are held by retail investors
- - Historical price/volume analysis is often used to try to assess the
shareholders' basis in the stock
- - Since July 1, 1998, shares representing greater than 100% of the
outstanding float have traded in both Apple and Juniper shares
- - Since July 1, 1998, 100% of the trading in Apple shares occurred below
$16 and 100% of the trading in Juniper shares occurred below the 1650 YEN
level
<PAGE> 21
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- -----------------------------------------------------------------------------------------------------------------------------------
Apple Analysis of Institutional Shareholdings
TOTAL ASSETS UNDER CURRENT CUMULATIVE % REPORT
INSTITUTION EQUITY ORIENTATION MANAGEMENT CHANGE HOLDINGS % FLOAT OF FLOAT DATE
- ---------------------------------- -------------------- ----------- --------- ----------- ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
PPM America Inc. Value 29.8 1,117,000 1,117,000 13.2% 13.2% 6/30/99
Cazenove Unit Trust Management Ltd. n/a n/a (30,000) 81,100 1.0% 14.2% 11/30/98
Fidelity Management & Research Co. Growth, Value, Income 433.8 52,000 52,000 0.6% 14.8% 6/30/99
World Asset Management Index 9.9 0 42,400 0.5% 15.3% 6/30/99
Comerica Bank - Detroit Growth n/a (400) 41,800 0.5% 15.8% 6/30/99
Prudential Securities Inc. n/a n/a (26,000) 26,600 0.3% 16.1% 6/30/99
Smith Barney Asset Management Growth, Value 13.0 (2,632) 26,567 0.3% 16.4% 6/30/99
GAMCO Investors, Inc. Value 5.4 24,000 24,000 0.3% 16.7% 6/30/99
Van Kampen n/a n/a 0 22,742 0.3% 16.9% 6/30/99
C. Blair Asset Management, L.P. n/a n/a 20,500 20,500 0.2% 17.2% 6/30/99
Caxton Associates, L.L.C n/a n/a (11,300) 14,800 0.2% 17.4% 6/30/99
Old Kent Bank (MI) Value, Growth 10.4 12,020 12,020 0.1% 17.5% 6/30/99
Banco Fonder n/a n/a 0 12,000 0.1% 17.6% 3/31/99
Global Assets Advisors, Inc. n/a 0.0 10,000 10,000 0.1% 17.8% 6/30/98
Morgan Stanley Dean Witter Growth, Value n/a (7,100) 8,200 0.1% 17.9% 6/30/99
INVESCO Capital Management Inc. Value, Income 43.8 (12,000) 3,000 0.0% 17.9% 6/30/99
Westport Resources Management, Inc. Growth,Value 0.1 (500) 2,600 0.0% 17.9% 12/31/98
Mercantile Bank, N.A Value 0.3 0 2,000 0.0% 17.9% 6/30/99
Legg Mason Wood Walker, Inc. Value n/a 600 1,000 0.0% 18.0% 6/30/99
Fleet Investment Advisors (Mass) Growth, Income, Index 42.2 0 570 0.0% 18.0% 6/30/99
Bear, Stearns Asset Management Inc. Value n/a 0 300 0.0% 18.0% 6/30/99
Total Institutional Holdings 1,032,760 1,521,199 18.0%
========= ---------
Other Holdings 6,944,801 82.0%
--------- ----
Total Public Float 8,466,000 100.0%
========= =====
<FN>
Summary of Latest 13F Reports
7 Institutions increased holdings, of which 6 were new investors or first time
filers
17 Institutions decreased holdings, of which 8 eliminated their positions
6 Institutions held their positions.
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Juniper (OTC) Analysis of Institutional Shareholdings
Total Assets
Under Current Cumulative % Report
Institution Equity Orientation Management Change Holdings % Float of Float Date
- ---------------------------------- -------------------- ---------- ------ --------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Harris Associates L.P. Value 9.6 (236,400) 1,630,300 4.8% 4.8% 9/30/98
INVESCO Asset Management (Japan) Growth n/a (201,060) 755,810 2.2% 7.0% 2/28/99
New Jersey Division of Investment n/a n/a 0 683,300 2.0% 9.0% 9/30/98
Foreign & Colonial Management Ltd. Growth 34.0 250,000 350,000 1.0% 10.0% 12/31/98
INVESCO Asset Management Ltd. Growth n/a 26,400 323,900 0.9% 11.0% 9/30/98
Schroder Investment Mgmt. (Jpn) Ltd. n/a n/a (86,000) 251,000 0.7% 11.7% 2/28/99
ING Investment Management (Neth.) n/a n/a 56,000 192,500 0.6% 12.3% 12/31/98
Global Asset Management (UK) Ltd. n/a n/a (266,000) 171,700 0.5% 12.8% 6/30/99
Merrill Lynch Asset Management (US) Value 212.9 (155,700) 89,600 0.3% 13.0% 1/31/99
Kokusai Asset Management Co., Ltd. n/a n/a (1,000) 54,000 0.2% 13.2% 3/31/99
Nikko Asset Management Co., Ltd. n/a n/a (15,000) 51,000 0.1% 13.3% 2/28/99
Fidelity Management & Research Co. Growth, Value, Income 433.8 (193,300) 36,600 0.1% 13.4% 4/30/99
Nomura Asset Management Co., Ltd. n/a n/a (20,000) 33,000 0.1% 13.5% 7/31/98
Templeton Investment Mgmt. Co. (HK) n/a n/a 26,400 33,000 0.1% 13.6% 12/31/98
Fidelity Investments Japan Ltd. Growth n/a (197,400) 31,700 0.1% 13.7% 10/31/98
Dresdner RCM Global Asia Ltd. n/a n/a 22,000 29,000 0.1% 13.8% 9/15/98
Clay Finlay Inc. Growth n/a (26,700) 23,000 0.1% 13.9% 6/30/98
Victoire Asset Management n/a n/a (20,000) 22,000 0.1% 14.0% 6/30/99
Lazard Asset Management (US) Value 35.4 12,000 21,000 0.1% 14.0% 3/31/98
Aberdeen Asset Management (Asia) Ltd n/a n/a (26,700) 9,300 0.0% 14.0% 6/19/98
SPARX Asset Management Co., Ltd. n/a n/a (30,700) 6,500 0.0% 14.1% 12/31/98
Schroder Investment Management (UK) n/a n/a (74,300) 6,000 0.0% 14.1% 2/15/99
Citibank Global Asset Management Growth 71.0 (17,829) 2,968 0.0% 14.1% 12/31/98
Rothschild Asset Management (UK) Value 4.1 0 2,000 0.0% 14.1% 3/31/99
NPI n/a n/a (4,600) 2,000 0.0% 14.1% 1/21/99
Universal Investment Trust Mgmt. Co. n/a n/a (8,000) 2,000 0.0% 14.1% 3/15/98
Fidelity Investment Services Ltd. Growth n/a (500) 1,600 0.0% 14.1% 10/31/97
Donaldson Lufkin & Jenrette, Inc. n/a n/a 200 200 0.0% 14.1% 6/30/99
Top Institutions (1,188,189) 4,814,978 14.1%
Remaining Institutions (621,460) 0 0.0%
---------- ---------- ------
Total Institutional Holdings (1,809,649) 4,814,978 14.1%
==========
Other Holdings 29,315,022 85.9%
---------- ------
Total Public Float 34,130,000 100.0%
========== ======
<FN>
Summary of Latest 13F Reports
7 Institutions increased holdings, of which 1 were new investors or first time
filers
31 Institutions decreased holdings, of which 12 eliminated their
positions
2 Institutions held their positions.
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Juniper (ADS) Analysis of Institutional Shareholdings
Total Assets
Under Current Cumulative % Report
Institution Equity Orientation Management Change Holdings % Float of Float Date
- ------------------------------------ ---------------------- ---------- ------ -------- ------- ----------- ------
<S> <C> <C> <C> <C> <C>
Orbis Investment Management Ltd. Value 0.6 46,300 1,479,100 2.2% <C> <C>
Capital Research & Management Co. Growth, Value 177.5 (50) 581,250 0.9% 2.2% 6/30/99
Fidelity Management & Research Co. Growth, Value, Income 433.8 105,000 355,000 0.5% 3.0% 6/30/99
Royce & Associates, Inc. Value 2.0 0 234,500 0.3% 3.5% 6/30/99
MacKay-Shields Financial Corporation Growth, Value 22.2 0 227,148 0.3% 3.9% 6/30/99
World Asset Management Index 9.9 0 212,104 0.3% 4.2% 6/30/99
JMG Capital Partners, L.P. n/a n/a 108,749 108,749 0.2% 4.5% 6/30/99
Financial & Investment Management n/a n/a (3,855) 78,245 0.1% 4.7% 3/31/99
Merrill Lynch Capital Markets Growth n/a 603 73,787 0.1% 4.8% 6/30/99
Global Assets Advisors, Inc. n/a 0.0 64,300 64,300 0.1% 4.9% 6/30/99
Boston Partners Asset Management Value 6.3 18,400 46,100 0.1% 5.0% 6/30/98
GAMCO Investors, Inc. Value 5.4 5,000 35,641 0.1% 5.1% 6/30/99
Shufro, Rose & Co., LLC Income n/a (900) 26,574 0.0% 5.1% 6/30/99
Goldman Sachs Asset Management (US) Growth, Value 77.8 0 12,500 0.0% 5.2% 6/30/99
Connor Clark & Company Ltd. n/a n/a 12,000 12,000 0.0% 5.2% 6/30/99
Old Kent Bank (MI) Value, Growth 10.4 11,250 11,250 0.0% 5.2% 6/30/99
The Northern Trust Company Value, Growth 124.3 10,000 10,000 0.0% 5.2% 6/30/99
5.2% 6/30/99
Top Institutions 376,797 3,568,248 5.2%
Remaining Institutions (878,945) 0 0.0%
-------- ---------- ------
Total Institutional Holdings (502,148) 3,568,248 5.2%
========
Other Holdings 64,691,752 94.8%
---------- ------
Public Float 68,260,000 100.0%
========== ======
<FN>
Summary of Latest 13F Reports
10 Institutions increased holdings, of which 5 were new investors or first time
filers
12 Institutions decreased holdings, of which 9 eliminated their positions
4 Institutions held their positions.
Index funds representing 5.9% of Total Institutional Shares Outstanding.
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Historical Price / Volume Analysis - Apple (1)
Percentage of Share Traded Below a Specified Price
Price 1994 1995 1996 1997-1H 1997-2H 1998-1H 1998-2H 1999YTD 1994 to Date
----- ---- ---- ---- ------- ------- ------- ------- ------- ------------
($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 100.0% -- -- 100.0% 100.0% -- -- -- 100.0%
45 98.2% 100.0% 100.0% 72.1% 97.0% -- -- -- 96.5%
40 83.3% 87.7% 85.2% 17.9% 82.8% -- -- -- 82.0%
35 44.3% 44.8% 70.9% 0.0% 68.5% -- -- -- 56.8%
30 18.9% 1.6% 27.1% -- 52.5% -- -- -- 33.5%
25 0.0% 0.0% 0.0% -- 28.1% 100.0% -- -- 14.7%
20 -- -- -- -- 12.3% 80.6% -- -- 11.8%
19 -- -- -- -- 9.1% 71.5% -- -- 11.0%
18 -- -- -- -- 3.6% 67.1% -- -- 9.8%
17 -- -- -- -- 0.0% 57.2% -- -- 9.1%
16 -- -- -- -- -- 44.9% 100.0% -- 8.1%
15 -- -- -- -- -- 39.0% 85.6% 100.0% 7.4%
14 -- -- -- -- -- 17.2% 57.3% 90.2% 5.5%
13 -- -- -- -- -- 6.0% 55.2% 66.5% 4.2%
12 -- -- -- -- -- 2.5% 42.9% 43.3% 3.1%
11 -- -- -- -- -- 0.0% 39.1% 39.9% 2.5%
10 -- -- -- -- -- -- 24.2% 28.2% 1.6%
9 -- -- -- -- -- -- 6.7% 24.7% 1.1%
8 -- -- -- -- -- -- 0.0% 3.0% 0.6%
7 -- -- -- -- -- -- -- 0.0% 0.0%
- --------------------------------------------------------------------------------------------------------------------------------
% of Total Shares
Publicly Traded (2) 216.4% 107.5% 83.7% 56.5% 114.4% 80.5% 86.2% 65.1% 810.4%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Last Date Traded
Price at or Above Price
----- -----------------
($)
<S> <C>
50 1/21/1997
45 7/11/1997
40 7/24/1997
35 8/27/1997
30 10/14/1997
25 10/24/1997
20 3/11/1998
19 3/20/1998
18 3/25/1998
17 4/21/1998
16 7/23/1998
15 7/31/1998
14 7/29/1999
13 9/7/1999
12 9/13/1999
11 9/17/1999
10 9/17/1999
9 9/17/1999
8 9/17/1999
7 9/17/1999
</TABLE>
Note : (1) Using volume weighted closing prices as of 9/17/99.
(2) Based on public float of 8.5MM shares outstanding.
<PAGE> 25
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Historical Price / Volume Analysis - Juniper (OTC)(1)
Percentage of Share Traded Below a Specified Price
Price 1994 1995 1996 1997-1H 1997-2H 1998-1H 1998-2H 1999YTD
----- ---- ---- ---- ------- ------- ------- ------- -------
(YEN)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5500 -- -- 100.0% -- -- -- -- --
5000 100.0% 100.0% 62.2% 100.0% -- -- -- --
4500 83.0% 93.9% 14.1% 94.1% -- -- -- --
4000 67.9% 58.4% 4.6% 74.4% 100.0% -- -- --
3500 36.6% 31.9% 0.0% 31.4% 65.8% -- -- --
3000 4.0% 8.2% -- 0.0% 26.9% 100.0% -- --
2500 0.0% 0.0% -- -- 17.7% 88.3% -- --
2400 -- -- -- -- 10.8% 76.6% -- --
2300 -- -- -- -- 5.6% 65.9% -- --
2200 -- -- -- -- 0.0% 64.5% -- --
2100 -- -- -- -- -- 59.1% -- --
2000 -- -- -- -- -- 46.9% -- --
1900 -- -- -- -- -- 32.4% -- --
1800 -- -- -- -- -- 25.1% -- --
1700 -- -- -- -- -- 17.4% 100.0% --
1600 -- -- -- -- -- 9.0% 91.5% --
1500 -- -- -- -- -- 4.0% 69.1% --
1400 -- -- -- -- -- 0.0% 49.3% 100.0%
1300 -- -- -- -- -- -- 40.6% 95.2%
1200 -- -- -- -- -- -- 22.1% 52.4%
1100 -- -- -- -- -- -- 11.9% 28.3%
1000 -- -- -- -- -- -- 5.6% 0.0%
900 -- -- -- -- -- -- 0.0% --
- ------------------------------------------------------------------------------------------------------------------------------------
% of Total Shares
Publicly Traded (2) 36.6% 108.5% 72.7% 37.5% 18.8% 22.0% 29.7% 63.0%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Last Date Trade
Price 1994 to Date at or Above Price
----- ------------ -----------------
(YEN)
<S> <C> <C>
5500 100.0% 7/31/1996
5000 90.1% 8/21/1996
4500 74.3% 6/13/1997
4000 56.4% 6/20/1997
3500 35.9% 10/27/1997
3000 20.8% 11/16/1997
2500 15.7% 3/5/1998
2400 14.3% 3/9/1998
2300 13.8% 3/16/1998
2200 13.4% 3/17/1998
2100 13.0% 3/23/1998
2000 12.3% 4/9/1998
1900 11.7% 4/22/1998
1800 11.4% 5/20/1998
1700 11.0% 6/5/1998
1600 10.5% 8/12/1998
1500 9.5% 8/25/1998
1400 9.0% 11/5/1998
1300 8.2% 8/24/1999
1200 4.2% 9/3/1999
1100 2.4% 9/16/1999
1000 0.1% 9/17/1999
900 0.0% 9/17/1999
- ------------------------------------
% of Total Shares
Publicly Traded (2) 299.1%
- ------------------------------------
<FN>
Note : (1) Using volume weighted closing prices as of 9/17/99.
(2) 1999YTD based on public float of 34.1MM shares outstanding. Prior
years based on 24.7MM shares outstanding.
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Historical Price / Volume Analysis -- Juniper (ADS) (1)
Percentage of Share Traded Below a Specified Price
Price 1994 1995 1996 1997-1H 1997-2H 1998-1H 1998-2H 1999YTD 1994 to Date
----- ---- ---- ---- ------- ------- ------- ------- ------- ------------
($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
26 -- -- 100.0% -- -- -- -- -- 100.0%
25 -- -- 96.9% 100.0% -- -- -- -- 98.4%
24 -- -- 74.4% 94.1% -- -- -- -- 94.7%
23 -- 100.0% 63.9% 74.4% -- -- -- -- 93.0%
22 -- 95.1% 44.5% 31.4% -- -- -- -- 88.3%
21 -- 89.8% 27.6% 0.0% 100.0% -- -- -- 84.4%
20 -- 75.1% 15.5% -- 96.9% -- -- -- 78.9%
19 100.0% 57.8% 9.6% -- 93.8% -- -- -- 72.3%
18 75.4% 35.1% 6.8% -- 73.4% -- -- -- 54.2%
17 56.8% 27.0% 3.0% -- 56.9% -- -- -- 48.8%
16 16.6% 16.9% 0.0% -- 50.4% -- -- -- 37.0%
15 2.9% 6.2% -- -- 48.7% -- -- -- 30.1%
14 0.0% 0.0% -- -- 43.8% -- -- -- 26.4%
13 -- -- -- -- 31.7% -- -- -- 25.0%
12 -- -- -- -- 3.6% 100.0% -- -- 24.9%
11 -- -- -- -- 0.0% 96.8% -- -- 24.4%
10 -- -- -- -- -- 88.1% -- -- 22.7%
9 -- -- -- -- -- 73.8% -- -- 19.8%
8 -- -- -- -- -- 61.9% -- -- 18.7%
7 -- -- -- -- -- 37.5% 100.0% -- 16.8%
6 -- -- -- -- -- 14.5% 82.6% 100.0% 14.4%
5 -- -- -- -- -- 0.0% 27.9% 26.9% 4.6%
4 -- -- -- -- 1.9% 0.0% 4.0%
3 -- -- -- -- -- -- 0.0% -- 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
% of Total Shares
Publicly Traded (2) 16.8% 11.2% 11.3% 10.2% 7.9% 11.4% 16.8% 14.9% 77.0%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Last Date Trade
Price at or Above Price
----- -----------------
($)
<S> <C>
26 5/1/1996
25 7/2/1996
24 8/1/1996
23 8/26/1996
22 9/19/1996
21 11/12/1996
20 6/13/1997
19 6/16/1997
18 6/16/1997
17 7/3/1997
16 7/31/1997
15 10/20/1997
14 10/27/1997
13 11/5/1997
12 11/7/1997
11 2/12/1998
10 3/3/1998
9 3/16/1998
8 4/13/1998
7 5/12/1998
6 1/15/1999
5 9/17/1999
4 9/17/1999
3 9/17/1999
Note : (1) Using volume weighted closing prices as of 9/17/99.
(2) 1999YTD based on public float of 68.2MM ADS equivalents. Prior
years based on 24.7MM shares outstanding.
</TABLE>
<PAGE> 27
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Section VI
PRICING CONSIDERATIONS
- - Determining the appropriate value to pay to Apple and Juniper
shareholders will be a function of the intrinsic value of the entities
and the value of expected synergies that may be realized
<PAGE> 28
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Relative Premium Analysis
Juniper
- ------------------------------------------------------------------------------------------------------------------------------------
Last Date Total Volume % of
Purchase 1 Month 2 Month 3 Month 6 Month 1 Year 2 Year Stock Closed Public Float Since
Price Current Price Average Average Average Average Average Average At or Above Last Day Traded
----- ------------- ------- ------- ------- ------- ------- ------- ----------- ------------------
(Yen) 1090 1197 1209 1213 1183 1191 1700
----- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1400 28.4% 16.9% 15.8% 15.4% 18.3% 17.5% (17.6%) 11/25/98 87.2%
1450 33.0% 21.1% 19.9% 19.5% 22.6% 21.7% (14.7%) 8/26/98 102.0%
1500 37.6% 25.3% 24.1% 23.7% 26.8% 25.9% (11.8%) 8/25/98 102.1%
1600 46.8% 33.6% 32.3% 31.9% 35.3% 34.3% (5.9%) 8/12/98 104.9%
1700 56.0% 42.0% 40.6% 40.1% 43.7% 42.7% 0.0% 6/5/98 119.1%
1800 65.1% 50.3% 48.9% 48.4% 52.2% 51.1% 5.9% 5/20/98 121.2%
1900 74.3% 58.7% 57.1% 56.6% 60.6% 59.5% 11.8% 4/22/98 124.5%
2000 83.5% 67.0% 65.4% 64.9% 69.1% 67.9% 17.7% 4/9/98 126.2%
Apple
- ------------------------------------------------------------------------------------------------------------------------------------
Last Date Total Volume % of
Purchase 1 Month 2 Month 3 Month 6 Month 1 Year 2 Year Stock Closed Public Float Since
Price Current Price Average Average Average Average Average Average At or Above Last Day Traded
----- ------------- ------- ------- ------- ------- ------- ------- ----------- ------------------
($) $11.75 $12.58 $13.03 $12.83 $11.17 $10.45 $14.18
----- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$15.00 27.7% 19.2% 15.1% 16.9% 34.3% 43.6% 5.8% 7/31/98 117.2%
16.00 36.2% 27.2% 22.7% 24.7% 43.3% 53.1% 12.9% 7/23/98 123.9%
17.00 44.7% 35.1% 30.4% 32.5% 52.2% 62.7% 19.9% 4/21/98 192.6%
18.00 53.2% 43.1% 38.1% 40.3% 61.2% 72.3% 27.0% 3/25/98 201.9%
19.00 61.7% 51.0% 45.8% 48.1% 70.2% 81.8% 34.0% 3/20/98 202.6%
20.00 70.2% 59.0% 53.4% 55.9% 79.1% 91.4% 41.1% 3/11/98 205.4%
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Cost to Effect Powerhouse (1)
09/17 Closing Price Public Float (Thousands)
------------------- ------------------------
Apple $11.75 8,466
Juniper 1090 YEN 34,130
APPLE
TENDER PRICE JUNIPER TENDER PRICE
- --------------------------------------------------------------------------------------------------------------
1400 YEN 1500 YEN 1600 YEN 1700 YEN 1800 YEN 1900 YEN 2000 YEN
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$14.00 $565.6 $597.5 $629.4 $661.4 $693.3 $725.2 $757.2
15.00 574.0 606.0 637.9 669.8 701.8 733.7 765.6
16.00 582.5 614.4 646.4 678.3 710.2 742.2 774.1
17.00 591.0 622.9 654.8 686.8 718.7 750.6 782.6
18.00 599.4 631.4 663.3 695.2 727.2 759.1 791.0
19.00 607.9 639.8 671.8 703.7 735.6 767.6 799.5
20.00 616.4 648.3 680.2 712.2 744.1 776.0 808.0
<FN>
(1) Based on an exchange rate of 106.9 Yen per USD.
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Apple Valuation Matrix
($MM)
VALUATION
-------------------------------------------------------------------------------------------------------------------------
Eq. Val. / Agg. Val./
Price Premium Equity Aggregate ---------------------- -----------------
Per Share to Current Value Value 99E NI 00E NI '99E Sales
--------- ---------- ----- ----- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statistics: $11.3 $27.9 $497.6
====================================================================================================================================
$11.75 0.00% $663 $608 58.6 x 23.8 x 1.22 x
$12.00 2.13% $677 $508 59.8 24.3 1.02
$12.50 6.38% $706 $536 62.3 25.3 1.08
$13.00 10.64% $734 $564 64.8 26.3 1.13
$13.50 14.89% $762 $592 67.3 27.3 1.19
$14.00 19.15% $790 $620 69.8 28.3 1.25
$14.50 23.40% $818 $649 72.3 29.3 1.30
$15.00 27.66% $847 $677 74.8 30.4 1.36
$15.50 31.91% $875 $705 77.3 31.4 1.42
$16.00 36.17% $903 $733 79.8 32.4 1.47
$16.50 40.43% $931 $762 82.3 33.4 1.53
$17.00 44.68% $960 $790 84.7 34.4 1.59
$17.50 48.94% $988 $818 87.2 35.4 1.64
$18.00 53.19% $1,016 $846 89.7 36.4 1.70
$18.50 57.45% $1,044 $874 92.2 37.4 1.76
$19.00 61.70% $1,072 $903 94.7 38.4 1.81
$19.50 65.96% $1,101 $931 97.2 39.5 1.87
$20.00 70.21% $1,129 $959 99.7 40.5 1.93
<CAPTION>
VALUATION
-------------------------------------------------------------------------------------------------------------------------
Agg. Val. /
--------------------------------------------------------------------------------------------------
'00E Sales '99E EBITDA '00E EBITDA '99E EBIT '00E EBIT
---------- ----------- ----------- --------- ---------
Statistics: $582.9 $33.4 $53.3 $21.3 $40.0
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
1.04 x 18.2 x 11.4 x 28.5x 15.2x
0.87 15.2 9.5 23.8 12.7
0.92 16.0 10.1 25.1 13.4
0.97 16.9 10.6 26.5 14.1
1.02 17.7 11.1 27.8 14.8
1.06 18.6 11.6 29.1 15.5
1.11 19.4 12.2 30.4 16.2
1.16 20.2 12.7 31.8 16.9
1.21 21.1 13.2 33.1 17.6
1.26 21.9 13.8 34.4 18.3
1.31 22.8 14.3 35.7 19.1
1.35 23.6 14.8 37.1 19.8
1.40 24.5 15.4 38.4 20.5
1.45 25.3 15.9 39.7 21.2
1.50 26.2 16.4 41.0 21.9
1.55 27.0 16.9 42.4 22.6
1.60 27.8 17.5 43.7 23.3
1.65 28.7 18.0 45.0 24.0
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Juniper Valuation Matrix
(Bn YEN)
VALUATION
----------------------------------------------------------------------------------------------
Eq. Val. /
-------------------------
Price Premium Equity Aggregate
Per Share to Current Value Value 99E NI 00E NI
--------- ---------- ----- ----- ------ ------
- ------------------------------------------------------------------------------------------------------------------------------------
Statistics: 9,596 8,531
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1,090 0.00% 157,250 136,883 16.4 x 18.4 x
1,150 5.50% 165,906 145,539 17.3 19.4
1,200 10.09% 173,119 152,752 18.0 20.3
1,250 14.68% 180,333 159,966 18.8 21.1
1,300 19.27% 187,546 167,179 19.5 22.0
1,350 23.85% 194,759 174,392 20.3 22.8
1,400 28.44% 201,972 181,606 21.0 23.7
1,450 33.03% 209,186 188,819 21.8 24.5
1,500 37.61% 216,399 196,032 22.6 25.4
1,550 42.20% 223,612 203,245 23.3 26.2
1,600 46.79% 230,826 210,459 24.1 27.1
1,650 51.38% 238,039 217,672 24.8 27.9
1,700 55.96% 245,252 224,885 25.6 28.8
1,750 60.55% 252,466 232,099 26.3 29.6
1,800 65.14% 259,679 239,312 27.1 30.4
1,850 69.72% 266,892 246,525 27.8 31.3
1,900 74.31% 274,105 253,739 28.6 32.1
1,950 78.90% 281,319 260,952 29.3 33.0
<CAPTION>
VALUATION
------------------------------------------------------------------------------------------------------------------
Agg. Val. /
---------------------------------------------------------------------------------------------
'99E Sales '00E Sales '99E EBITDA '00E EBITDA '99E EBIT '00E EBIT
---------- ---------- ----------- ----------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------------------
Statistics: 153,500 150,000 20,890 18,260 18,790 15,410
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
0.89 x 0.91 x 6.6 x 7.5 x 7.3 x 8.9 x
0.95 0.97 7.0 8.0 7.7 9.4
1.00 1.02 7.3 8.4 8.1 9.9
1.04 1.07 7.7 8.8 8.5 10.4
1.09 1.11 8.0 9.2 8.9 10.8
1.14 1.16 8.3 9.6 9.3 11.3
1.18 1.21 8.7 9.9 9.7 11.8
1.23 1.26 9.0 10.3 10.0 12.3
1.28 1.31 9.4 10.7 10.4 12.7
1.32 1.35 9.7 11.1 10.8 13.2
1.37 1.40 10.1 11.5 11.2 13.7
1.42 1.45 10.4 11.9 11.6 14.1
1.47 1.50 10.8 12.3 12.0 14.6
1.51 1.55 11.1 12.7 12.4 15.1
1.56 1.60 11.5 13.1 12.7 15.5
1.61 1.64 11.8 13.5 13.1 16.0
1.65 1.69 12.1 13.9 13.5 16.5
1.70 1.74 12.5 14.3 13.9 16.9
</TABLE>
<PAGE> 32
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Summary Timeline - Juniper Transaction
Date Activity
- ---- --------
September 21 Decision by families to proceed
September 27 Juniper Board Meeting, retain financial and legal advisors
for Juniper
October 15 Fourth quarter earnings release, negotiations with Juniper
Representatives
October 22, 23 Juniper Board Meeting, approval of proposed transaction
October 25 Public announcement, commencement of tender offer
November 5 Distribute proxy materials for Annual Shareholder Meeting
November 30 Annual Shareholder Meeting
December 8 Accept shares for payment
February 14 Juniper and Japanese Newco Shareholder Meetings to approve
merger of Juniper into Japanese Newco
March 27 Initiate process to deregister and delist in Japan
<PAGE> 33
PROJECT POWERHOUSE
- --------------------------------------------------------------------------------
Summary Timeline - Apple Transaction
Date Activity
September 21 Decision by families to proceed
September 28 Apple Board Meeting, retain financial and legal advisor for
Apple
October 12 Fourth quarter earnings release, negotiations with Apple
Committee ongoing
October 22 Apple Committee and Board Meetings to consider transaction
October 25 Public announcement, commencement of tender offer
December 8 Accept shares for payment
January 10 Apple Shareholder Meeting to approve merger of Apple with
and into Bermuda Newco, initiate process to delist shares on
NYSE and ASE
<PAGE> 34
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Trading Statistics of Selected Comparable Companies (1)
Share Price /
----------------
Market Value Equity / Projected 99E P/E /
Share ---------------------- EPS (3) Book 5-Year 5-Year
Company Price Equity Aggregate (2) 1999E 2000E Value Growth (3) Growth (3)
- ------- ----- ------ ------------- ----- ----- ----- ---------- ----------
(9/17/99) ($MM) ($MM)
DIRECT MARKETERS
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Avon Products $39.938 $10,415 $10,859 23.4 x 20.3 x NM x 15.0% 1.4 x
Blyth Industries 31.125 1,509 1,631 16.8 14.0 4.6 20.0% 0.7
Nature's Sunshine Products 9.438 165 141 8.7 7.6 2.2 NA NA
Nu Skin Enterprises 12.938 1,134 1,122 11.9 10.2 3.9 20.0% 0.5
Tupperware 20.750 1,196 1,529 13.8 12.2 9.3 11.0% 1.1
-------------------------------------------------------------------------------------------------------
MEAN 14.9 x 12.8 x 5.0 x 16.5% 0.9 x
MEDIAN 13.8 12.2 4.3 17.5% 0.9
-------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS
- -----------------
Land's End 59.438 1,792 1,810 30.2 25.6 7.0 15.0% 1.7
Newell Rubbermaid 31.313 8,828 10,889 18.6 14.9 3.3 15.0% 1.0
Enesco Group (5) 16.875 233 264 11.6 9.1 2.1 10.0% 0.9
-------------------------------------------------------------------------------------------------------
MEAN 20.2 x 16.5 x 4.1 x 13.3% 1.2 x
MEDIAN 18.6 14.9 3.3 15.0% 1.0
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
MEAN 16.9 x 14.2 x 4.6 x 15.1% 1.0 x
MEDIAN 15.3 13.1 3.9 15.0% 1.0
-------------------------------------------------------------------------------------------------------
Apple (6) 11.750 663 562 NM 24.1 3.6 17.5% 1.4
Juniper (6) 10.198 1,472 1,302 16.8 16.4 3.2 2.0% 8.2
<CAPTION>
AGGREGATE VALUE (2) /
-----------------------------------------------------------------------------
REVENUES (4) EBITDA (4) EBIT (4)
----------------- ------------------- ---------------- DIVIDEND
COMPANY LTM 1999E LTM 1999E LTM 1999E YIELD
- ------- ----- ------- ------- -------- ----- ----- --------
DIRECT MARKETERS
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Avon Products 2.1 x 2.0 x 15.4 x 13.3 x 17.3 x 14.8 x 1.8%
Blyth Industries 1.8 1.5 10.4 9.1 12.1 10.5 0.0%
Nature's Sunshine Products 0.5 NA 3.6 NA 4.1 NA 1.4%
Nu Skin Enterprises 1.2 1.3 6.3 6.9 7.2 8.1 0.0%
Tupperware 1.5 1.4 8.3 7.9 12.7 12.0 4.2%
----------------------------------------------------------------------------------------
MEAN 1.4 x 1.5 x 8.8 x 9.3 x 10.7 x 11.3 x 1.5%
MEDIAN 1.5 1.5 8.3 8.5 12.1 11.2 1.4%
----------------------------------------------------------------------------------------
CONSUMER PRODUCTS
- -----------------
Land's End 1.3 1.2 18.0 15.3 22.3 18.8 0.0%
Newell Rubbermaid 1.7 1.7 12.7 8.8 15.4 11.5 2.6%
Enesco Group (5) 0.7 0.7 5.9 5.7 7.0 6.5 6.6%
----------------------------------------------------------------------------------------
MEAN 1.2 x 1.2 x 12.2 x 9.9 x 14.9 x 12.3 x 3.1%
MEDIAN 1.3 1.2 12.7 8.8 15.4 11.5 2.6%
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
MEAN 1.3 x 1.4 x 10.1 x 9.6 x 12.3 x 11.7 x 2.1%
MEDIAN 1.4 1.4 9.4 8.8 12.4 11.5 1.6%
----------------------------------------------------------------------------------------
Apple (6) 1.1 1.1 16.8 14.0 26.4 20.4 0.0%
Juniper (6) 1.0 1.0 7.5 7.8 8.3 8.8 9.2%
<FN>
- ---------------------------------
Notes: (1) All financial data is for continuing operations before extraordinary
and non-recurring items and cumulative effect of accounting changes.
(2) Aggregate value defined as equity market value plus total debt, minority
interest and preferred stock at book value less cash & cash equivalents
(3) Median I/B/E/S estimates as of 9/17/99
(4) Estimates based on most recent Value Line and analyst research
(5) Earnings projections based on Value Line.
(6) Projections based on management Juniper EPS based on
Merrill Lynch report dated 7/2/99.
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Trading Statistics for Selected Comparable Companies(1)
Market Equity/
% Change from Market Net Income(3)
Ticker Share Price 52 Week Equity Aggregate ---------------------------
Number Company 36411 High Value Value (2) FY98 FY99E FY00E
------ ------- ----- ---- ----- --------- ---- ----- -----
(YEN) (%) (YEN MM) (YEN MM)
Catalogue Sales
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8165 Senshukai 1,984 YEN -1.0% 94,499 76,496 67.4 x 53.5 x 48.5 x
9937 Cecile 3540 -0.3% 142,839 131,511 NM 51.9 24.8
8248 Nissen 475 -26.9% 11,653 54,764 18.8 20.9 9.0
8005 Mutow 710 -2.7% 19,093 22,227 13.4 23.4 NA
----------------------------------------------
Mean: 33.2 x 37.4 x 27.5 x
Median: 18.8 37.6 24.8
----------------------------------------------
Direct (Door-to-Door) Sales
- ---------------------------
9885 Charle 1,381 -13.7% 29,049 11,537 13.4 x 15.4 x 14.5 x
8205 Shaklee 985 -17.9% 25,531 18,224 30.9 30.0 29.7
4915 Avon Products 280 -12.5% 16,996 16,587 NM 127.3 42.4
----------------------------------------------
Mean: 22.2 x 57.6 x 28.9 x
Median: 22.2 30.0 29.7
----------------------------------------------
----------------------------------------------
Total Mean: 28.8 x 46.1 x 28.2 x
Total Median: 18.8 30.0 27.3
----------------------------------------------
<CAPTION>
PROJECT POWERHOUSE
- ------------------------------------------------------------------------------------------------------------------------------------
Trading Statistics for Selected Comparable Companies(1)
Market Equity/
-------------------- Aggregate Value/ LTM 2 Yrs. Est.
Ticker CE(4) Book ---------------------------------- Earnings
Number Company FY98 Equity EBIT(5) EBITDA(6) Sales Growth (7)
------ ------- ---- ------ ------- --------- ----- ----------
Catalogue Sales
---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
8165 Senshukai 20.2 x 1.4 x 22.3 x 11.4 x 0.5 x 17.9%
9937 Cecile NM 3.5 43.7 32.1 0.8 NM
8248 Nissen 4.4 0.7 29.7 14.2 0.4 44.1%
8005 Mutow 8.6 1.0 14.7 9.7 0.3 NA
----------------------------------------------------------------------------------------------
MEAN: 11.1 x 1.7 x 27.6 x 16.9 x 0.5 x 31.0%
MEDIAN: 8.6 1.2 26.0 12.8 0.4 31.0%
----------------------------------------------------------------------------------------------
Direct (Door-to-Door) Sales
- ---------------------------
9885 Charle 11.8 x 1.1 x 2.5 x 2.4 x 0.2 x -3.8%
8205 Shaklee 20 1.9 10.1 8.0 1.5 NA
4915 Avon Products 29 3.0 28.5 12.6 0.5 NM
----------------------------------------------------------------------------------------------
MEAN: 20.2 x 2.0 x 13.7 x 7.6 x 0.7 x -3.8%
MEDIAN: 19.5 1.9 10.1 8.0 0.5 -3.8%
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
MEAN: 15.6 x 1.8 x 21.7 x 12.9 x 0.6 x 19.4%
MEDIAN: 15.7 1.4 22.3 11.4 0.5 17.9%
----------------------------------------------------------------------------------------------
====================================================================================================================================
<FN>
- -------------------------------------------------
Notes: (1) Source: FY1998 Yuka Shoken Hokokusyo (consolidated except for Cecile, Shaklee, Avon Products)
Fiscal Year ends in 3/99 except for Nissen and Avon Products
(2) Aggregate Value = Market Equity Value + Total Debt - Cash
(3) EPS Estimates from IBES except for Kao which is based on Morgan Stanley Dean Witter Research Estimate
(4) CE = Net Income + Depreciation & Amortization.
(5) EBIT = Recurring Profit + Interest Expense
(6) EBITDA = EBIT + Depreciation & Amortization
</TABLE>
<PAGE> 36
PROJECT JUMPSTART
- --------------------------------------------------------------------------------
TENDER OFFER CASE STUDIES
- --------------------------------------------------------------------------------
NCR JAPAN, INC.
- --------------------------------------------------------------------------------
Business Description
- --------------------
NCR Corporation's largest subsidiary and its only publicly traded regional unit.
NCR Japan is engaged in imports and sales of large computers produced at NCR.
NCR Corporation is a manufacturer of automated teller machines and point-of-sale
terminals. The Company also provides financial transaction services.
NCR Corporation acquired 97.7% of NCR Japan, Ltd.
<TABLE>
<CAPTION>
Transaction Detail Premium Offered Over Market
- -------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
Date of Announcement 4/16/98 Unaffected Day Prior to LTM LTM
Shares Outstanding as of 12/97:220.0MM Price(1) Announcement High Low
Tender Offer Price: 607 YEN ---------- ------------ ------ -----
35.2% 26.5% (37.7)% 69.6%
Initial Ownership Position: 70.0%
Ownership Sought in Tender: 30.0%
</TABLE>
- --------------------------------------------------------------------------------
NCR MARINE TECHNOLOGIES
- --------------------------------------------------------------------------------
Business Description
- --------------------
Japanese Marine Technologies is the Japanese base for TI Group of the United
Kingdom. The Company produces stern tube sealing for ships, waste disposal
handling equipment for nuclear power stations and tilted pad bearing systems for
high speed handling of heavy loads. JMT also imports products from other TI
Group companies.
TI Group acquired 91.3% of Japan Marine Technologies.
<TABLE>
<CAPTION>
Transaction Detail Premium Offered Over Market
- -------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
Date of Announcement 4/20/98 Unaffected Day Prior to LTM LTM
Shares Outstanding as of 12/97 9.8MM Price(1) Announcement High Low
Tender Offer Price: 580 YEN ---------- ------------ ------- -----
62.5% 56.8% (31.3)% 87.1%
Initial Ownership Position: 50.1%
Ownership Sought in Tender: 49.9%
</TABLE>
- --------------------------------------------------------------------------------
NCR JAPAN, INC.
- --------------------------------------------------------------------------------
[STOCK PRICE PERFORMANCE SUMMARY CHART]
- --------------------------------------------------------------------------------
JAPAN MARINE TECHNOLOGIES
- --------------------------------------------------------------------------------
[STOCK PRICE PERFORMANCE SUMMARY CHART]
Notes: (1) Unaffected price represents market price one month prior to
announcement date.
(2) Central Bank in Thailand stopped defending baht's fixed value
against the dollar.
<PAGE> 37
PROJECT JUMPSTART
- --------------------------------------------------------------------------------
TENDER OFFER CASE STUDY - SDS BIOTECH
[CHART]
- --------------------------------------------------------------------------------
TRANSACTION DETAIL
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Summary Tender Offer Terms
- --------------------------
<S> <C>
Date of Announcement: 2/2/98
Date of Completion: 4/23/98
Shares Outstanding as of 12/97: 9.0MM
Tender Offer Price: 1550 YEN
Initial Ownership Position: 33.8%
Ownership Sought in Tender: 66.2%
Ownership Following Tender 97.8%
</TABLE>
Comments
- --------
- -- Novartis' 4.9MM shares accounted for 54.8% of the total shares outstanding
- -- The remaining 11.4% of the shares outstanding were held mainly by Japanese
banks
- --------------------------------------------------------------------------------
PREMIUM PAID
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Premium Offered Over Market
- ---------------------------------------------------------------
Unaffected Day Prior to LTM LTM
Price(1) Announcement High Low
- ------------- ------------ ---- -----
<S> <C> <C> <C>
62.5% 74.2% 5.4% 80.9%
</TABLE>
Notes: (1) Unaffected price represents market price one month prior to
announcement date.
(2) Central Bank in Thailand stopped defending baht's fixed value
against the dollar.
<PAGE> 38
PROJECT JUMPSTART
- --------------------------------------------------------------------------------
SONY CASE STUDY - TRANSACTION OVERVIEW
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Description: - Privatization of three listed subsidiaries, Sony Music Entertainment (SMEJ), Sony Chemicals
Corporation (SC), and Sony Precision Technology (SPT) by Sony
Structure: - 100% stock transaction
- Fixed exchange ratio
-- 0.835 SMEJ share, 0.565 SC share, and 0.203 SPT share for each Sony share
Total Transaction Size: - JPY 330BN ($2.8BN)
Premium: Premium to Marker SMEJ SC SPT
----------------- ---- -- ---
3 Months Before Announcement 29% 2% 14%
1 Month Before Announcement 21% 12% 14%
1 Day Before Announcement 16% 19% 18%
Conditions to Close: - Approval of Sony and subsidiary boards (expected in Oct. 1999)
- Approval of Sony and subsidiary shareholders (expected in Nov. 1999)
- Implementation of the stock-for-stock provision in the revised Commercial Code for 100% stock
transaction.
Expected Closing: - January 2000
</TABLE>
