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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1
TO
SCHEDULE 13E-3/A
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
(Name of the Issuer)
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
WANDEL & GOLTERMANN MANAGEMENT HOLDING GMBH
WG MERGER CORP.
(Name of Persons Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
933692105
(CUSIP Number of Class of Securities)
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Persons Filing Statement.)
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GERRY CHASTELET PETER WAGNER PETER WAGNER
PRESIDENT AND CHIEF EXECUTIVE OFFICER PRESIDENT AND CHIEF EXECUTIVE OFFICER PRESIDENT
WANDEL & GOLTERMANN TECHNOLOGIES, INC. WANDEL & GOLTERMANN WG MERGER CORP.
1030 SWABIA COURT MANAGEMENT HOLDING GMBH 1030 SWABIA COURT
RESEARCH TRIANGLE PARK, ARBACHSTRASSE 6 RESEARCH TRIANGLE PARK,
NORTH CAROLINA 27709-3585 D-72800 ENINGEN, FEDERAL NORTH CAROLINA 27709-3585
(919) 941-5730 REPUBLIC OF GERMANY (919) 941-5730
49-7121-86-1700
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WITH COPIES TO:
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BARNEY STEWART, III, ESQ. G. WILLIAM SPEER, ESQ. ALAN C. LEET, ESQ.
MOORE & VAN ALLEN, PLLC POWELL, GOLDSTEIN, FRAZIER & ROGERS & HARDIN
NATIONSBANK CORPORATE CENTER MURPHY LLP 2700 INTERNATIONAL TOWER
100 NORTH TRYON STREET, FLOOR 47 16TH FLOOR 229 PEACHTREE STREET, N.E.
CHARLOTTE, NORTH CAROLINA 28202-4003 191 PEACHTREE STREET, N.E. ATLANTA, GEORGIA 30303
ATLANTA, GEORGIA 30303
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This statement is filed in connection and with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials are preliminary copies. [X]
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CALCULATION OF FILING FEE
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TRANSACTION VALUE* AMOUNT OF FILING FEE
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$ 31,851,023 $6,370
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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.
(1) Amount previously paid: $6,370
(2) Form or Registration No.: Preliminary Proxy Statement, Schedule 14A
(3) Filing party: Wandel & Goltermann Technologies, Inc.
(4) Dates filed: June 1, 1998 and July 23, 1998
* For purposes of calculating the fee only. Assumes purchase of 2,003,209
shares of Common Stock, par value $0.01 per share, of Wandel & Goltermann
Technologies, Inc., a North Carolina corporation ("WGTI"), at $15.90 per
share.
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This Amendment No. 1 to Rule 13e-3 Transaction Statement, as so amended
(the "Statement"), is being filed in connection with the filing by WGTI with
the Securities and Exchange Commission (the "Commission") on July 23, 1998 of a
revised preliminary Proxy Statement on Schedule 14A (and any and all amendments
thereto, the "Proxy Statement") in connection with a special meeting of the
shareholders of WGTI. At such meeting, the shareholders of WGTI will vote upon,
among other things, the adoption of an Agreement and Plan of Merger dated as of
March 28, 1998 (the "Merger Agreement") by and among WGTI, Wandel & Goltermann
Management Holding GmbH, a German limited liability company ("WG Holding"), and
WG Merger Corp., a newly-formed North Carolina corporation that is a
wholly-owned subsidiary of WG Holding ("WGMC"), pursuant to which WGMC will be
merged with and into WGTI.
The following cross reference sheet is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Proxy Statement
of the information required to be included in response to the items of this
Statement. The information in the Schedule 14A which is attached hereto as
Exhibit (d)(3), including all exhibits thereto, is hereby expressly
incorporated herein by reference and the responses to each item are qualified
in their entirety by the provisions of the Proxy Statement.
CROSS REFERENCE SHEET
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ITEM OF
SCHEDULE 13E-3 CAPTION OR LOCATION IN PROXY STATEMENT
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Item 1. Issuer and Class of Security Subject to the Transaction.
(a) Outside Front Cover Page;
"Summary -- Parties to the Merger Transaction."
(b) Outside Front Cover Page;
"Summary -- Record Date and Quorum;"
"Summary -- Market Prices for Common Stock and Dividends;"
"Special Factors -- Market Prices for Common Stock and Dividends;"
"General Information about the Special Meeting -- Record Date and Quorum Requirement."
(c) "Summary -- Market Prices for Common Stock and Dividends;"
"Special Factors -- Market Prices for Common Stock and Dividends."
(d) "Summary -- Market Prices for Common Stock and Dividends;"
"Special Factors -- Market Prices for Common Stock and Dividends."
(e) Not applicable.
(f) "Summary -- Purchases of Common Stock by the Company and WG Holding;"
"Special Factors -- Purchases of Common Stock by the Company and WG Holding."
Item 2. Identity and Background.
(a) - (b) "Summary -- Parties to the Merger Transaction."
(c) - (d) "Summary -- Parties to the Merger Transaction;"
"Business of the Company."
Item 3. Past Contacts, Transactions or Negotiations.
(a)(1) "Special Factors -- Certain Relationships."
(a)(2) "Special Factors -- Background of the Merger;"
"Special Factors -- Interests of Certain Persons in the Merger."
(b) "Summary -- Parties to the Merger Transaction;"
"Special Factors -- Background of the Merger;"
"Business of the Company."
Item 4. Terms of the Transaction.
(a) "Summary -- The Merger;"
"Summary -- Certain Effects of the Merger;"
"Summary -- Conditions to the Merger; Termination; Expenses;"
"Summary -- Rights of Dissenting Shareholders;"
"Summary -- Financing of the Merger;"
"The Merger;"
"Rights of Dissenting Shareholders."
(b) "Summary -- Purpose of the Special Meeting;"
"Summary -- Certain Effects of the Merger;"
"Summary -- Rights of Dissenting Shareholders;"
"Special Factors -- Interests of Certain Persons in the Merger;"
"The Merger;"
"Rights of Dissenting Shareholders;"
Appendix A to the Proxy Statement.
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2
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Item 5. Plans or Proposals of the Issuer or Affiliate.
(a) "Summary -- Parties to the Merger Transaction;"
"Special Factors -- Background of the Merger;"
"Special Factors -- Conduct of the Company's Business after the Merger."
(b) "Special Factors -- Conduct of the Company's Business after the Merger."
(c) "Special Factors -- Conduct of the Company's Business after the Merger;"
"Special Factors -- Interests of Certain Persons in the Merger."
(d) "Summary -- Financing of the Merger;"
"The Merger -- Source of Funds for the Merger."
(e) "Summary -- Certain Effects of the Merger;"
"Special Factors -- Certain Effects of the Merger."
(f) - (g) "Summary -- Certain Effects of the Merger;"
"Special Factors -- Certain Effects of the Merger."
Item 6. Sources and Amount of Funds or Other Consideration.
(a) "Summary -- Financing of the Merger;"
"The Merger -- Source of Funds for the Merger."
(b) "The Merger -- Expenses of the Transaction;"
(c) "Summary -- Financing of the Merger;"
"The Merger -- Source of Funds for the Merger;"
(d) Not applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a) - (c) "Summary -- Purpose and Reasons for the Merger;"
"Special Factors -- Background of the Merger;"
"Special Factors -- The Special Committee's and the Board's Recommendation;"
"Special Factors -- Purpose and Reasons for the Merger;"
"Special Factors -- Opinion of the Special Committee's Financial Advisor;"
"Special Factors -- Position of WG Holding as to Fairness of the Merger."
(d) "Summary -- The Merger;"
"Summary -- Purpose and Reasons for the Merger;"
"Summary -- Certain Effects of the Merger;"
"Summary -- Rights of Dissenting Shareholders;"
"Summary -- Federal Income Tax Consequences;"
"Summary -- Financing of the Merger;"
"Special Factors -- Background of the Merger;"
"Special Factors -- Purpose and Reasons for the Merger;"
"Special Factors -- Interests of Certain Persons in the Merger;"
"Special Factors -- Certain Effects of the Merger;"
"Special Factors -- Conduct of the Company's Business after the Merger;"
"The Merger -- Source of Funds for the Merger;"
"Rights of Dissenting Shareholders;"
"Federal Income Tax Consequences;"
"Certain Forward Looking Information."
Item 8. Fairness of the Transaction.
(a) - (b) "Summary -- The Special Committee's and the Board's Recommendation;"
"Summary -- Opinion of the Special Committee's Financial Advisor;"
"Summary -- Interest of Certain Persons in the Merger;"
"Special Factors -- Background of the Merger;"
"Special Factors -- The Special Committee's and the Board's Recommendation;"
"Special Factors -- Opinion of the Special Committee's Financial Advisor;"
"Special Factors -- Position of WG Holding as to Fairness of the Merger;"
"Special Factors -- Interests of Certain Persons in the Merger."
(c) "Summary -- Vote Required;"
"Special Factors -- The Special Committee's and the Board's Recommendation;"
"General Information about the Special Meeting -- Voting Procedures;"
"The Merger -- Conditions."
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3
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(d) "Summary -- The Special Committee's and the Board's Recommendation;"
"Summary -- Opinion of the Special Committee's Financial Advisor;"
"Special Factors -- Background of the Merger;"
"Special Factors -- The Special Committee's and the Board's Recommendation;"
"Special Factors -- Reports of Special Committee's Financial Advisor;"
"Special Factors -- Opinion of the Special Committee's Financial Advisor;"
"Special Factors -- Interests of Certain Persons in the Merger."
(e) "Summary -- The Special Committee's and the Board's Recommendation;"
"Summary -- Interests of Certain Persons in the Merger;"
"Special Factors -- The Special Committee's and the Board's Recommendation;"
"Special Factors -- Interests of Certain Persons in the Merger."
(f) None.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a) - (b) "Summary -- Opinion of the Special Committee's Financial Advisor;"
"Special Factors -- Background of the Merger;"
"Special Factors -- The Special Committee's and the Board's Recommendation;"
"Special Factors -- Reports of Special Committee's Financial Advisor;"
"Special Factors -- Opinion of the Special Committee's Financial Advisor;"
"Special Factors -- Position of WG Holding as to Fairness of the Merger;"
Appendix B to the Proxy Statement.
(c) "Special Factors -- Reports of Special Committee's Financial Advisor;"
"Special Factors -- Opinion of the Special Committee's Financial Advisor;"
"Special Factors -- Position of WG Holding as to Fairness of the Merger."
Item 10. Interest in Securities of the Issuer.
(a) "Special Factors -- Interests of Certain Persons in the Merger;"
"Principal Shareholders and Stock Ownership of Management."
(b) None.
Item 11. Contracts, Arrangements or Understandings With Respect to the Issuer's Securities.
"Summary -- Vote Required;"
"Special Factors -- Interests of Certain Persons in the Merger;"
"General Information About the Special Meeting -- Proxy Solicitation;"
"General Information About the Special Meeting -- Voting and Revocation of Proxies;"
"The Merger -- Source of Funds for the Merger."
Item 12. Present Intention and Recommendation of Certain Persons With Regard to the Transaction.
(a) - (b) "Summary -- Vote Required;"
"Summary -- The Special Committee's and the Board's Recommendation;"
"Special Factors -- The Special Committee's and the Board's Recommendation;"
"Special Factors -- Position of WG Holding as to Fairness of the Merger."
Item 13. Other Provisions of the Transaction.
(a) "Summary -- Rights of Dissenting Shareholders;"
"Rights of Dissenting Shareholders;"
Appendix C to the Proxy Statement.
(b) - (c) Not applicable.
Item 14. Financial Information.
(a) Company's Financial Statements accompanying the Proxy Statement;
"Summary -- Summary of Selected Financial Data;"
"Selected Financial Data."
(b) Not applicable.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) "Special Factors -- Interests of Certain Parties in the Merger;"
"General Information about the Special Meeting -- Proxy Solicitation;"
"The Merger -- Expenses of the Transaction."
(b) Not applicable.
Item 16. Additional Information.
The Proxy Statement and the Financial Statements and Appendices attached thereto.
Item 17. Materials to be Filed as Exhibits.
(a) English Translation of Loan Agreement between Wandel & Goltermann Management Holding GmbH and
a syndicate of Banks of which Commerzbank AG, Frankfurt, Germany, serves as agent (Summary and
German version filed as Exhibit (a) to this Statement, which was filed June 1, 1998).
</TABLE>
4
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<S> <C>
Investment Banking Presentation to the Special Committee of the Board of Directors of Wandel &
(b)(1) Goltermann Technologies, Inc., dated March 28, 1998, by The Robinson-Humphrey Company (filed as
Exhibit(b)(1)to this Statement, which was filed June 1, 1998).
(b)(2) Opinion of The Robinson-Humphrey Company, LLC dated March 28, 1998 (included as Appendix B to
the preliminary Proxy Statement, which is filed herewith as Exhibit (d)(3)).
(b)(3) Discussion Materials Relative to Wandel & Goltermann Technologies, Inc. dated December 23, 1997 by
Broadview Associates (filed as Exhibit(b)(3)to this Statement, which was filed June 1, 1998).
(b)(4) Discussion Materials: Valuation of Wandel & Goltermann Technologies, Inc. dated March 11, 1998 by
Broadview Associates (filed as Exhibit(b)(4)to this Statement, which was filed June 1, 1998).
(b)(5) Investment Banking Presentation to the Special Committee of the Board of Directors of Wandel &
Goltermann Technologies, Inc., dated January 20, 1998, by The Robinson-Humphrey Company.
(b)(6) Investment Banking Presentation to the Special Committee of the Board of Directors of Wandel &
Goltermann Technologies, Inc., dated March 10, 1998, by The Robinson-Humphrey Company.
(c) Agreement and Plan of Merger by and among Wandel & Goltermann Technologies, Inc. Wandel &
Goltermann Management Holding GmbH and WG Merger Corp., dated March 28, 1998 (included as
Appendix A to the preliminary Proxy Statement, which is filed herewith as Exhibit (d)(3)).
(d)(1) Preliminary copy of Letter to Shareholders.
(d)(2) Preliminary copy of Notice of Special Meeting of Shareholders.
(d)(3) Preliminary Proxy Statement.
(d)(4) Form of Proxy.
(e) Chapter 55, Article 13 of the General Statutes of North Carolina (included as Appendix C to the
preliminary Proxy Statement, which is filed herewith as Exhibit (d)(3)).
(f) Not applicable.
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The information set forth on the outside front cover page to the Proxy
Statement and in the section entitled "Summary -- Parties to the Merger
Transaction" of the Proxy Statement is incorporated herein by reference.
(b) The information set forth on the outside front cover page to the Proxy
Statement and in the sections entitled "Summary -- Record Date and Quorum," "
- -- Market Prices of Common Stock and Dividends, "Special Factors -- Market
Prices of Common Stock and Dividends" and "General Information about the
Special Meeting -- Record Date and Quorum Requirement" of the Proxy Statement
is incorporated herein by reference.
(c) The information set forth in the sections entitled "Summary -- Market
Prices of Common Stock and Dividends" and "Special Factors -- Market Prices of
Common Stock and Dividends" of the Proxy Statement is herein incorporated by
reference.
(d) The information set forth in the sections entitled "Summary -- Market
Prices of Common Stock and Dividends" and "Special Factors -- Market Prices of
Common Stock and Dividends" of the Proxy Statement is herein incorporated by
reference.
(e) Not applicable.
(f) The information set forth in the sections entitled "Summary --
Purchases of Common Stock by the Company and WG Holding" and "Special Factors
- -- Purchases of Common Stock by the Company and WG Holding" of the Proxy
Statement is herein incorporated by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (b) This statement is being filed by WGTI, WG Holding and WGMC. The
information set forth in the sections entitled "Summary -- Parties to the
Merger Transaction" of the Proxy Statement is herein incorporated by reference.
(c) - (d) The information set forth in the sections entitled "Summary --
Parties to the Merger Transaction" and "Business of the Company" of the Proxy
Statement is incorporated herein by reference.
(e) - (f) None of WGTI, WG Holding, WGMC or any of the directors and
executive officers of WGTI, WG Holding and WGMC during the past five years (i)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining further
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
5
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)(1) The information set forth in the section entitled "Special Factors
- -- Certain Relationships" of the Proxy Statement is incorporated herein by
reference.
(a)(2) The information set forth in the sections entitled "Special Factors
- -- Background of the Merger" and " -- Interests of Certain Persons in the
Merger" of the Proxy Statement is incorporated herein by reference.
(b) The information set forth in the sections entitled "Summary -- Parties
to the Merger Transaction," "Special Factors -- Background of the Merger" and
"Business of the Company" of the Proxy Statement is incorporated herein by
reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the sections entitled "Summary -- The
Merger," " -- Certain Effects of the Merger;" " -- Conditions to the Merger;
Termination; Expenses," " -- Rights of Dissenting Shareholders," " -- Financing
of the Merger," "The Merger" and "Rights of Dissenting Shareholders" of the
Proxy Statement and in Appendix A to the Proxy Statement is incorporated herein
by reference.
(b) The information set forth in the sections entitled "Summary -- Purpose
of the Special Meeting," " -- Certain Effects of the Merger," " -- Rights of
Dissenting Shareholders," "Special Factors -- Interests of Certain Persons in
the Merger," "The Merger" and "Rights of Dissenting Shareholders" of the Proxy
Statement is incorporated herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) The information set forth in the sections entitled " Summary --
Parties to the Merger Transaction," "Special Factors -- Background of the
Merger" and " -- Conduct of the Company's Business after the Merger" of the
Proxy Statement is incorporated herein by reference.
(b) The information set forth in the section entitled "Special Factors --
Conduct of the Company's Business after the Merger" of the Proxy Statement
incorporated herein by reference.
(c) The information set forth in the sections entitled "Special Factors --
Conduct of the Company's Business after the Merger" and " -- Interests of
Certain Persons in the Merger" of the Proxy Statement is incorporated herein by
reference.
(d) The information set forth in the sections entitled "Summary --
Financing of the Merger" and "The Merger -- Source of Funds for the Merger" of
the Proxy Statement is incorporated herein by reference.
(e) The information set forth in the sections entitled "Summary -- Certain
Effects of the Merger" and "Special Factors -- Certain Effects of the Merger"
of the Proxy Statement is incorporated herein by reference.
(f) - (g) The information set forth in the sections entitled "Summary --
Certain Effects of the Merger" and "Special Factors -- Certain Effects of the
Merger" of the Proxy Statement is incorporated herein by reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the sections entitled "Summary --
Financing of the Merger" and "The Merger -- Source of Funds for the Merger" of
the Proxy Statement is incorporated herein by reference.
(b) The information set forth in the section entitled "The Merger --
Expenses of the Transaction" of the Proxy Statement is incorporated herein by
reference.
(c) The information set forth in the sections entitled "Summary --
Financing of the Merger" and "The Merger -- Source of Funds for the Merger" of
the Proxy Statement is incorporated herein by reference.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) - (c) The information set forth in the sections entitled "Summary --
Purpose and Reasons for the Merger," "Special Factors -- Background of the
Merger," " -- The Special Committee's and the Board's Recommendation," " --
Purpose and Reasons for the Merger," " -- Opinion of the Special Committee's
Financial Advisor" and " -- Position of WG Holding as to Fairness of the
Merger" of the Proxy Statement is incorporated herein by reference.
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(d) The information set forth in the sections entitled "Summary -- The
Merger," " -- Purpose and Reasons for the Merger," " -- Certain Effects of the
Merger," " -- Rights of Dissenting Shareholders," " -- Federal Income Tax
Consequences," " -- Financing of the Merger," "Special Factors -- Background of
the Merger," " -- Purpose and Reasons for the Merger," " -- Interests of
Certain Persons in the Merger," " -- Certain Effects of the Merger," " --
Conduct of the Company's Business after the Merger," "The Merger -- Source of
Funds for the Merger," "Rights of Dissenting Shareholders," "Federal Income Tax
Consequences" and "Certain Forward Looking Information" of the Proxy Statement
is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) - (b) The information set forth in the sections entitled "Summary --
The Special Committee's and the Board's Recommendation," " -- Opinion of the
Special Committee's Financial Advisor," " -- Interest of Certain Persons in the
Merger," "Special Factors -- Background of the Merger," " -- The Special
Committee's and the Board's Recommendation," " -- Opinion of the Special
Committee's Financial Advisor," " -- Position of WG Holding as to Fairness of
the Merger" and " -- Interests of Certain Persons in the Merger" of the Proxy
Statement is incorporated hereby reference.
(c) The information set forth in the sections entitled "Summary -- Vote
Required," "Special Factors -- The Special Committee's and the Board's
Recommendation," "General Information about the Special Meeting -- Voting
Procedures" and "The Merger -- Conditions" of the Proxy Statement is
incorporated herein by reference.
(d) The information set forth in the sections entitled "Summary -- The
Special Committee's and the Board's Recommendation," " -- Opinion of the
Special Committee's Financial Advisor," "Special Factors -- Background of the
Merger," " -- The Special Committee's and the Board's Recommendation," " --
Reports of Special Committee's Financial Advisor," " -- Opinion of the Special
Committee's Financial Advisor" and " -- Interests of Certain Persons in the
Merger" of the Proxy Statement is incorporated herein by reference.
(e) The information set forth in the sections entitled "Summary -- The
Special Committee's and the Board's Recommendation," " -- Interests of Certain
Persons in the Merger," "Special Factors -- The Special Committee's and the
Board's Recommendation" and " -- Interests of Certain Persons in the Merger" of
the Proxy Statement is incorporated herein by reference.
(f) None.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) - (b) The information set forth in the sections entitled "Summary --
Opinion of the Special Committee's Financial Advisor," "Special Factors --
Background of the Merger," " -- The Special Committee's and the Board's
Recommendation," " -- Reports of Special Committee's Financial Advisor," " --
Opinion of the Special Committee's Financial Advisor" and " -- Position of WG
Holding as to Fairness of the Merger" of the Proxy Statement and in Appendix B
to the Proxy Statement is incorporated herein by reference.
(c) The information set forth in the sections "Special Factors -- Reports
of Special Committee's Financial Advisor," " -- Opinion of the Special
Committee's Financial Advisor" and " -- Position of WG Holding as to Fairness
of the Merger" of the Proxy Statement is incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The information set forth in the sections entitled "Special Factors --
Interests of Certain Persons in the Merger" and "Principal Shareholders and
Stock Ownership of Management" of the Proxy Statement is incorporated herein by
reference.
(b) None.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth in the sections entitled "Summary -- Vote
Required," "Special Factors -- Interests of Certain Persons in the Merger,"
"General Information about the Special Meeting -- Proxy Solicitation," " --
Voting and Revocation of Proxies" and "The Merger -- Source of Funds for the
Merger" of the Proxy Statement is incorporated herein by reference.
7
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ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) - (b) The information set forth in the sections entitled "Summary --
Vote Required," " -- The Special Committee's and the Board's Recommendation,"
"Special Factors -- The Special Committee's and the Board's Recommendation" and
" -- Position of WG Holding as to Fairness of the Merger" of the Proxy
Statement is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in the sections entitled "Summary -- Rights
of Dissenting Shareholders" and "Rights of Dissenting Shareholders" of the
Proxy Statement and in Appendix C to the Proxy Statement is incorporated herein
by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in the sections entitled "Summary --
Selected Financial Data" and "Selected Financial Data" of the Proxy Statement
and in the Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997 and the
Unaudited Consolidated Financial Statements included in the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1998, which are
incorporated by reference in the Proxy Statement, is incorporated herein by
reference.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The information set forth in the sections entitled "Special Factors --
Interests of Certain Persons in the Merger," "General Information about the
Special Meeting -- Proxy Solicitation," and "The Merger -- Expenses of the
Transaction" of the Proxy Statement is incorporated herein by reference.
(b) Not applicable.
ITEM 16. ADDITIONAL INFORMATION.
The entirety of the Proxy Statement, including the Financial Statements
and Appendices attached thereto, is incorporated herein by reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
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(a) English Translation of Loan Agreement between Wandel & Goltermann Management Holding GmbH
and a syndicate of Banks of which Commerzbank AG, Frankfurt, Germany, serves as agent (Summary
and German version filed as Exhibit (a) to this Statement, which was filed June 1, 1998).
(b)(1) Investment Banking Presentation to the Special Committee of the Board of Directors of Wandel &
Goltermann Technologies, Inc., dated March 28, 1998, by The Robinson-Humphrey Company (filed as
Exhibit(b)(1) to this Statement, which was filed June 1, 1998).
(b)(2) Opinion of The Robinson-Humphrey Company, LLC dated March 28, 1998 (included as Appendix B
to the preliminary Proxy Statement, which is filed herewith as Exhibit (d)(3)).
(b)(3) Discussion Materials Relative to Wandel & Goltermann Technologies, Inc. dated December 23, 1997
by Broadview Associates (filed as Exhibit (b)(3) to this Statement, which was filed June 1, 1998).
(b)(4) Discussion Materials: Valuation of Wandel & Goltermann Technologies, Inc. dated March 11, 1998 by
Broadview Associates (filed as Exhibit (b)(4) to this Statement, which was filed June 1, 1998).
(b)(5) Investment Banking Presentation to the Special Committee of the Board of Directors of Wandel &
Goltermann Technologies, Inc., dated January 20, 1998, by The Robinson-Humphrey Company.
(b)(6) Investment Banking Presentation to the Special Committee of the Board of Directors of Wandel &
Goltermann Technologies, Inc., dated March 10, 1998, by The Robinson-Humphrey Company.
(c) Agreement and Plan of Merger by and among Wandel & Goltermann Technologies, Inc. Wandel &
Goltermann Management Holding GmbH and WG Merger Corp., dated March 28, 1998 (included as
Appendix A to the preliminary Proxy Statement, which is filed herewith as Exhibit (d)(3)).
(d)(1) Preliminary copy of Letter to Shareholders.
(d)(2) Preliminary copy of Notice of Special Meeting of Shareholders.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
(d)(3) Preliminary Proxy Statement.
(d)(4) Form of Proxy.
(e) Chapter 55, Article 13 of the General Statutes of North Carolina (included as Appendix C to the
preliminary Proxy Statement, which is filed herewith as Exhibit (d)(3)).
(f) Not applicable.
</TABLE>
9
<PAGE>
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: July 23, 1998
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
By: /s/ GERRY CHASTELET
-------------------------------------
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
WANDEL & GOLTERMANN MANAGEMENT HOLDING
GMBH
By: /s/ PETER WAGNER
-------------------------------------
MANAGING DIRECTOR
WG MERGER CORP.
By: /s/ PETER WAGNER
-------------------------------------
PRESIDENT
10
LOAN AGREEMENT BETWEEN
WANDEL & GOLTERMANN MANAGEMENT HOLDING GMBH
AND A SYNDICATE OF BANKS OF WHICH
COMMERZBANK, FRANKFURT, GERMANY
SERVES AS AGENT
COLLATERAL POOLING AGREEMENT
The following agreement is entered into
by and between
1. Commerzbank AG, Reutlingen Branch
(hereinafter the "Pool Manager")
2. Baden-Wurttembergische Bank AG, Reutlingen Branch
3. Deutsche Bank AG, Reutlingen Branch
4. Kreissparkasse Reutlingen
5. Landesgirokasse Stuttgart
6. Stuttgarter Bank AG
(hereinafter referred to collectively as the "Banks" and individually
as a "Bank").
(Section Mark) 1
CREDITS
(1) The Banks have business relationships with the following firms
Wandel & Goltermann Management Holding GmbH, Einigen
(hereinafter the "Firm" or "WGMH" )
and
Wandel & Goltermann GmbH & Co. Elektronische Messtechnik,
Einigen (hereinafter the "Firm" or "WGR")
(hereinafter collectively referred to as the "Firms")
and have granted or will grant to both Firms the bank lines of credit
listed below, the Firms being jointly and severally liable and each
bank acting independently and on the basis of its respective General
Business Terms:
Commerzbank DM 50,000,000.00
BW Bank DM 30,000,000.00
Deutsche Bank DM 90,000,000.00
Kreissparkasse DM 10,000,000.00
Landesgirokasse DM 25,000,000.00
Stuttgarter Bank DM 25,000,000.00
Total DM 170,000.000.00
The line of credit from the Landesgirokasse is a loan facility which,
as the Banks are aware from Point 2 of the letter of the
Landesgirokasse to WGMH dated July 8, 1997, will be made available in
two tranches in the amounts of DM 18,000,000 and DM 7,000,000. As
regards performance of
<PAGE>
-2-
balance equalization (ss. 7) and distribution of proceeds (ss. 8) - and
only in this respect - the tranches of the loan facility already made
available to the Firm as of the date in question will constitute the
controlling line of credit of the Landesgirokasse.
THE CREDIT FUNDS THAT HAVE BEEN EXTENDED PURSUANT TO THE LOAN FACILITY
LISTED ABOVE ARE TO BE USED EXCLUSIVELY FOR FINANCING OPERATING FUNDS
AND NOT FOR ACQUISITIONS - SHOULD THEY EXCEED THE CASH FLOW OF THE
PREVIOUS YEAR.
(2) The Firms shall be entitled to draw on the cash lines of credit listed
above under (1) in the form of guarantee credits, discount credits,
acceptance credits and Eurocredits, if so provided by the credit
agreements. A draw on the cash lines of credit in the form of
Eurocredits shall also be permitted by means of credit/surety order at
the Banks' foreign affiliates or subsidiaries or at other intermediary
institutions (hereinafter collectively referred to as the "Intermediary
Credit Institutions"). The agreements made between the Banks regarding
pooled collateral shall apply to the Intermediary Credit Institutions
in these cases also, with the proviso that their rights and obligations
must be safeguarded by the respective Bank in a fiduciary capacity.
The cash lines of credit listed under (1) above can also be used to set
up special lines in favor of companies in the Wandel & Goltermann Group
against credit/surety order of the Firms to the domestic and foreign
affiliates and subsidiaries of the Banks. Through their affiliates and
subsidiaries where such special lines are set up, the Banks shall
endeavor to individually secure their claims against the WG Group
companies under the respective special lines. Provided the lines are
secured, each respective Bank's claims against the WG Group company in
question under such special lines will only be considered in the
distribution of proceeds under ss. 8 to the extent of any shortfall
remaining after sale of the collateral posted by the WG Group
companies. If such shortfall is not determined until after proceeds
have been distributed under ss. 8, the procedure under ss. 8 (5) shall
be followed.
(3) The Firms shall be entitled to independently access lines of credit and
credits, subject to the provision in No. (5). The Banks shall be
exclusively and directly entitled to the receivables arising from the
credits granted by them.
(4) The Banks mutually agree to maintain the lines of credit for the term
of this Agreement and not to reduce and delete them except by mutual
agreement. This shall not apply to credits granted outside the pool.
(5) In addition, Commerzbank has made a redeemable loan available to WGR,
in the original amount of DM 15,000,000, pursuant to a credit agreement
dated March 24, 1994. This loan has been guaranteed up to 66.66%
(deficiency guarantee) by the LAKRA Landeskreditbank Baden-Wurttemberg
at the request of the State of Baden-Wurttemberg by a declaration on
December 1, 1993. It is unanimously agreed that the credit risk in the
amount of 33.34% that is not covered by this deficiency guarantee
(originally corresponding to DM 5,000,000) shall be allocated among the
Banks as follows:
Commerzbank 29.42% (originally corresponding to DM 1,471,000.00)
BW Bank 17.65% (originally corresponding to DM 882,500.00)
Deutsche Bank 17.65% (originally corresponding to DM 882,500.00)
Kreissparkasse 5.68% (originally corresponding to DM 294,000.00)
Landesgirokasse 14.70% (originally corresponding to DM 735,000.00)
Stuttgarter Bank 14.70% (originally corresponding to DM 735,000.00)
100.00% (originally corresponding to DM 5,000,000.00)
<PAGE>
-3-
The other Banks hereby guarantee, each in the amount of its share of
risk indicated above, excluding joint and several liability, upon
request of WGR to Commerzbank, the portion of Commerzbank's claims
against WGR under the above-mentioned redeemable loan that is not
guaranteed by the LAKRA. These guarantee assumptions shall take place
as a charge against the lines of credit listed in ss. 1 (1) for the
respective guaranteeing bank.
All Pool Banks are familiar with the guarantee declaration dated
December 1, 1993, as well as the commitment letter of LAKRA dated
December 1, 1993 (including the special guarantee provisions therein),
and the General Terms and Conditions for Guarantees of the State of
Baden-Wurttemberg.
(Section Mark) 2
COLLATERAL
(1) WGMH has furnished the following collateral or will immediately furnish
said collateral on an equal-ranking basis in favor of the Pool Manager
as well as each individual Bank:
a) positive declaration, and at the special request of the Pool
Manager, a pledge of all limited partnership interests in Wandel &
Goltermann GmbH & Co. Elektronische Messtechnik with a par value
of DM 13,000,000 (corresponding to 100%),
b) positive declaration, and at the special request of the Pool
Manager, a pledge of all shares in Wandel & Goltermann GmbH & Co.
CTS S.A. (France) with a par value of FRF 11,930,000.00
(corresponding to 100%),
c) negative declaration, of the type standard in banking practice,
with respect to all shares in Wandel & Goltermann Technologies
Inc. (USA) currently held and to be acquired in future,
d) positive declaration, and at the special request of the Pool
Manager, a pledge of all shares in Wandel & Goltermann Management
Ltd. (Great Britain) with a par value of GBP 3,000,000.00
(corresponding to 100%),
e) positive declaration, and at the special request of the Pool
Manager, a pledge of all shares in Wandel & Goltermann
Vertriebsholding GmbH with a par value of DM 50,000 (corresponding
to 100%),
f) pledge of trademarks held at present and in future.
(2) WGMH has furnished the following collateral or will immediately furnish
said collateral to the Pool Manager:
a) assignment of claims against licensees arising from licenses that
have been/will be granted on the basis of the pledged trademarks
(see (1) f) above).
(3) WGMH has furnished the following collateral or will immediately furnish
said collateral to the Pool Manager:
a) DM 30,000,000 in mortgages on various properties in Eningen
(Eningen real-estate register, Book 13, BV No. 3, 7, 9, 19, 22, 28
and 30; Book 4224, BV No. 2, 6-9; Book 5334, BV No. 1-3, 5, 6),
b) security interest in repayment claims with respect to senior
mortgages,
<PAGE>
-4-
c) security interest in all warehouse inventory, including raw
materials and supplies per agreement dated April 28, 1994,
d) security interest in all existing and future receivables from
merchandise deliveries and services per agreement dated August 24,
1993,
e) security interest in claims against licensees arising from
licenses that have been/will be granted on the basis of pledged
patents (see (4) a) below).
(4) WGR has furnished the following collateral or will immediately furnish
said collateral on an equal-ranking basis in favor of the Pool Manager
as well as each individual Bank:
a) pledge of domestic and foreign patents held at present and in the
future.
(5) It is agreed as of now that any further collateral that any Bank may
receive in future for any of the lines of credit listed in ss. 1 (1)
shall be included in this Pooling Agreement.
(6) It is agreed as of now that any further collateral that any Bank may
receive in future for any further credits that it may grant to the
Firms shall be included in this Pooling Agreement. Proceeds of sales
shall first be used to pay back these additional credits.
(7) WGMH and WGR shall be obligated to notify the Banks before furnishing
collateral to third parties. This shall not apply to reservations of
ownership by suppliers that are standard in the industry or to the lien
and security interests furnished on the basis of the General Business
Terms of the credit institutions.
(Section Mark) 3
PURPOSE OF SECURITY
(1) The collateral furnished by WGMH under ss. 2 (1) and (2), as well as
any additional collateral that may be furnished by WGMH and included in
this Pooling Agreement under ss. 2 (5) and (6), shall be used to secure
all existing, future and contingent claims that are owed by the Firms
to the Banks (with their all domestic and foreign business locations)
arising from the respective bank-related business relationship, or owed
to the Intermediary Credit Institutions arising from the granting of
credits per ss. 1 (1, 2). The collateral shall also be used to secure
LAKRA's claims against WGR under the deficiency guarantee mentioned in
ss. 1 (5).
(2) The collateral furnished by WGR per ss. 2 (3) a), b), c), d), e), (4)
a), as well as any additional collateral that may be furnished by WGR
and included in this Pooling Agreement per ss. 2 (5) and (6), shall be
used to secure, on an equal-ranking basis, all existing, future and
contingent claims that
- are owed to the Banks by the Firms under the credit grants pursuant
to (section mark) 1 (1, 2),
- are owed to the Pool Manager by WGR under the redeemable loan
pursuant to (section mark) 1 (5),
- are owed to LAKRA by WGR under the deficiency guarantee mentioned in
(section mark) 1 (5),
- are owed to the other Banks by WGR under the guarantee assumed under
(section mark) 1 (5).
(3) The collateral pursuant to ss. 2 (3) a), b), c), d), e), (4) a) shall
then be used to secure all existing, future and contingent claims owed
to the Banks by the Firms arising from excess balances of the lines of
credit under ss. 1 (1), as well as by WGR under the other
banking-related business relationship.
(4) If WGMH and/or WGR have assumed liability for obligations of any other
customer of the respective Bank (e.g., as guarantor), the respective
collateral shall secure the debt arising from
<PAGE>
-5-
the assumption of liability only upon maturity thereof, and only if
WGMH and/or WGR is simultaneously the party furnishing the security.
(Section Mark) 4
RELEASE OF COLLATERAL
(1) After satisfaction of their claims secured per ss. 3, the Banks shall
be required to return the collateral included in this Pooling Agreement
to the respective party that furnished it and to surrender any surplus
proceeds, provided the collateral has not been levied on. This shall
not apply if the Banks are obligated to transfer collateral/sales
proceeds to a third party (e.g., a guarantor which has satisfied one or
more Banks).
(2) The Banks are obligated as of now to release pool collateral in whole
or in part upon request, if and provided that the value that can be
realized from the pool collateral exceeds 120% of the secured claims of
the Banks for a period that is not merely temporary. The value of the
collateral that can be realized shall be determined by the provisions
of the individual security agreements; in the absence of such
provisions, the value shall be determined from the type of collateral
in question.
(3) The stipulations on coverage limits and release obligations contained
in the individual security agreements shall be supplemented by the
foregoing provisions for the term of this Pooling Agreement.
(Section Mark) 5
FIDUCIARY RELATIONSHIP/ADMINISTRATION OF COLLATERAL
(1) The Pool Manager shall simultaneously act as fiduciary for the other
Banks, and in this capacity shall administer and if necessary sell the
collateral included in this Agreement. The Pool Manager shall also
administer and sell the accessory rights mentioned in ss. 2 (1) a), b),
c), d), e), f), (4) a) (lien rights) as pool collateral in the name and
on behalf of the other Banks. In addition to the Banks holding the
collateral, the Pool Manager shall have the right but not the
obligation to exercise all control and administration rights in its own
name. Release or partial release of collateral shall require the
consent of the Banks. In the scope of a release obligation per ss. 4
(2), such consent shall be necessary only for the choice of collateral
to be released.
(2) Upon request of the other Banks, the Pool Manager shall send copies of
the agreements relating to collateral held by the Pool Manager to such
Banks, for examination under their own responsibility. The other Banks
shall notify the Pool Manager without delay of any objections, so that
a mutually-acceptable provision can be agreed to among the Banks. If
collateral is held by a Bank other than the Pool Manager, the foregoing
provision shall apply analogously.
(3) The Banks shall authorize the Pool Manager to issue and accept all
declarations necessary for the furnishing, administration and sale of
collateral, including in its own name, and to undertake all necessary
or appropriate negotiations. The Pool Manager shall be exempt from the
restrictions of ss. 181 of the German Civil Code with respect to all
actions taken on the basis of this Agreement.
(4) The Pool Manager or any Bank holding collateral shall not transfer
administration of the collateral to another fiduciary unless approved
by the other Banks. The respective fiduciary shall be exempt from the
restrictions of ss. 181 of the German Civil Code.
<PAGE>
-6-
(Section Mark) 6
SALE
(1) The Pool Manager shall sell the collateral mentioned in ss. 2 in its
own name, but for the account of the Banks. Any collateral not held by
the Pool Manager shall be sold by the respective holding Bank by
approval of the Pool Manager for the account of the other Banks.
(2) The Banks shall mutually decide as to whether and when collateral will
be sold. In emergency situations the Pool Manager shall make the
decision alone according to its due discretion; in this case the Pool
Manager shall advise the other Banks without delay of the measures
taken.
(3) The Banks shall observe the prerequisites for sale contained in the
individual security agreements.
(Section Mark) 7
BALANCE EQUALIZATION
(1) As far as possible, the Firms shall make pro rata use of the lines of
credit listed inss.1 (1).
(2) At the irrevocable request of the Firms, the Banks shall be obligated,
in the event of a sale under ss. 6, to bring their credit receivables
not exceeding the cash lines of credit per ss. 1 (1) to such a level by
appropriate transfers that credit is available in the same ratio as
said cash lines of credit for all Banks. The individual Banks shall
then be required to set off any deposits to non-earmarked accounts of
both Firms first of all against their credit receivables under the cash
lines of credit mentioned in ss. 1 (1). Charges arising from debit and
check returns shall be added to the receivables that can be taken into
consideration in the scope of balance equalization. This shall not
apply if the cash lines of credit listed in ss. 1 (1) are exceeded
hereby.
(3) If a cash line of credit has been granted as a mixed line, receivables
arising from bill discounting and charged thereto shall be deemed a
draw only to the extent that there is a deficit. Receivables arising
from acceptance and surety credits as well as from opened letters of
credit shall be deemed a draw on the line of credit only if payments
were made in this regard by the Pool Banks.
(4) The closing date for balance equalization shall be the effective date
of a resolution to initiate the sales actions per ss. 6 (2) sentence 1
or in urgent situations the earliest receipt by one of the other Banks
of notice from the Pool Manager regarding initiation of sales actions
pursuant to ss. 6 (2) sentence 2.
(5) If the principles for calculating the balance equalization should
change after it is implemented (e.g., by set-off of further deposits or
payments from sureties), the balances shall be equalized again.
(6) If legal reasons prevent the balance equalization from being effective
as to the Firms or third parties, the Banks shall be obligated among
themselves to bring about a corresponding result, in which case it
shall be immaterial which of the Firms has accepted the credit funds
with their joint and several liability.
(Section Mark) 8
DISTRIBUTION OF PROCEEDS
(1) The proceeds from sale of the collateral posted by WGMH (ss.2 (1), (2),
(5), (6)) shall be used in the following ranking order:
<PAGE>
-7-
a) to pay the costs, any taxes and other expenses generated by the
administration and sale of the collateral as well as the Pool
Manager's fee (ss. 9);
b) to pay claims that
- are owed to the Banks by the Firms arising from the credit
grants per ss. 1 (1, 2),
- are owed to the Pool Manager by WGR arising from the redeemable
loan per ss. 1 (5),
- are owed to LAKRA by WGR arising from the indemnity guarantee
mentioned in ss. 1 (5),
- are owed to the other Banks by WGR arising from their guarantee
assumptions per ss. 1 (5),
to be effected on an equal-ranking basis in proportion to the
respective claims. For claims arising from the credit grants per
ss. 1 (1, 2), the amount of the respective availment of credit
after application of the balance equalization per ss. 7 shall be
the determining criterion, but only those receivables which do not
exceed the lines of credit listed in ss. 1 (1) shall be used as
basis for calculating the allocation formula.
c) to pay the claims of the Banks whose lines of credit perss.1 (1)
have been exceeded, to be effected on an equal-ranking basis in
proportion to the surpluses;
d) to pay the claims of the Banks arising from additionally granted
credits, on an equal-ranking basis in proportion to the draw on
the additional credits, provided they were not attributable to the
proceeds of sale of the collateral furnished separately therefor
(ss. 2 (6));
e) to pay the Banks' other claims against WGMH arising from the
banking-related business relationship, on an equal-ranking basis
in proportion to the other claims.
(2) The proceeds from sale of the collateral posted by WGR perss.2 (3) a),
b), c), d), e), (4) a), (5), (6) shall be used in the following ranking
order:
a) to pay the costs, any taxes and other expenses incurred by
administration and sale of the collateral as well as the Pool
Manager's fee (ss. 9);
b) to pay the claims that
- are owed to the Banks by the Firms arising from the credit
grants per ss. 1 (1, 2),
- are owed to the Pool Manager by WGR arising from the redeemable
loan per ss. 1 (5),
- are owed to LAKRA by WGR arising from the indemnity guarantee
mentioned in ss. 1 (5),
- are owed to the other Banks by WGR arising from their guarantee
assumptions per ss. 1 (5),
to be effected on an equal-ranking basis in proportion to the
respective claims. For claims arising from the credit grants per
ss. 1 (1, 2), the amount of the respective availment of credit
after application of the balance equalization per ss. 7 shall be
the determining criterion, but only those receivables which do not
exceed the lines of credit listed in ss. 1 (1) shall be used as
basis for calculating the allocation formula.
c) to pay the claims owed to the Banks by the Firms arising from
excess balances of the lines of credit under ss. 1 (1), as well as
by WGR under the other banking-related business relationship, to
be effected on an equal-ranking basis in proportion to the
surpluses;
(3) Proceeds that are no longer needed shall be remitted to the respective
party furnishing security, unless the Banks are obligated to transfer
such proceeds to a third party that has satisfied one or more Banks
(e.g., a guarantor).
(4) The existence of a draw on discount, surety and acceptance credits or
on opened letters of credit shall be determined in accordance with ss.
7 (3).
(5) If the amount of the receivables to be taken into consideration has not
yet been established as of the date of distribution of proceeds, they
shall be left out of consideration for the time being when
<PAGE>
-8-
the ratio of participation in the sales proceeds is determined. Only
once these amounts have been established conclusively shall a final
calculation of the participation ratio be made. Any changes in the
proceeds owed to the individual parties to the agreement that may
result shall be offset against each other, even if payments in this
respect have already been made.
(6) The Banks shall have the right to amend the allocation formula at any
time.
(Section Mark) 9
COSTS, TAXES, REMUNERATION
(1) All costs and taxes arising from this Collateral Pooling Agreement and
incurred by the Pool Manager or by any Bank holding collateral,
especially in connection with administration as well as any sale of
collateral, shall be charged to the Firms.
In return for performing its duties arising from this Agreement, the
Pool Manager shall have a claim against the Firm to an annual fee of
0.25% of the lines of credit under ss. 1 (1) and (5), plus the
statutory VAT tax imposed thereon. For the calendar year in which the
agreement is entered into, this fee shall become due in the amount of a
full calendar year as soon as the agreement is entered into, while for
subsequent calendar years it shall be due in advance on the first
business day of the calendar year in question.
(2) If the costs and taxes are not paid by WGMH, they shall be absorbed by
the Banks in proportion to the lines of credit listed inss.1.
(Section Mark) 10
NOTIFICATION/INFORMATION
(1) The Pool Manager shall notify the other Banks of the status of
processing according to its due discretion. The Banks shall make
available to the Pool Manager the information necessary for this
purpose.
(2) The Banks shall notify each other whenever facts come to light that
could permanently jeopardize recovery of the credits listed in ss. 1.
(3) At the request of any one Bank, each Bank shall be obligated to provide
the other Banks with information on its claims against the Firm and on
the collateral, inasmuch as they relate to this Agreement and the
performance hereof.
(4) In this regard, the Firm and the other parties furnishing security
exempt the Banks from the obligation of bank secrecy.
(Section Mark) 11
TERM AND TERMINATION
(1) This Pooling Agreement is entered into for an indefinite period of
time.
(2) Each Pool Bank shall have the right to terminate the Agreement at the
end of a calendar year, but not before December 31, 1999, by giving
three months' notice. Compliance with the notice period shall be
determined by the date of receipt of the termination letter by the Pool
Manager. If the Pool Manager gives notice of termination, compliance
with the period of notice shall be determined by the date of receipt of
the termination letter by the other Banks. The earliest date of receipt
shall be
<PAGE>
-9-
decisive. As soon as termination becomes effective, the Bank in
question shall resign from the Pool. The Pool shall be continued by the
other Banks.
(3) In the case of termination pursuant to paragraph (2), allocation of the
collateral shall be subject to special arrangements between the Banks.
The Firms and any third party granting security shall be obligated to
cooperate in transfer of collateral to the extent legally necessary. If
requested even by only one of the Banks, a balance equalization per the
provision of ss. 7 shall be undertaken as of the date of resignation of
the terminating Bank, with its participation.
(Section Mark) 12
PLACE OF PERFORMANCE, VENUE AND GOVERNING LAW
(1) Stuttgart is agreed as the place of performance and venue for all
obligations arising from this Agreement.
(2) This Agreement shall be subject to the law of the Federal Republic of
Germany.
(Section Mark) 13
CHANGES AND ADDITIONS TO THE AGREEMENT
(1) Changes and additions to this Agreement must be in writing in order to
be effective. The same shall apply to a waiver of this formal
requirement. No subsidiary agreements have been made.
(2) This Agreement remain in effect in the event of a change of
shareholders or change of the legal form of the Firms.
(Section Mark) 14
SEVERABILITY
Should any one or several of the provisions of this Agreement prove to be
legally invalid or unenforceable, the effectiveness of the other provisions
shall not be affected thereby. The parties to the Agreement shall replace any
ineffective or unenforceable provisions by a provision that corresponds to the
economic intent and approaches the content of the provisions to be replaced as
closely as possible. An analogous remedy shall apply with respect to any matters
as to which this Agreement is silent.
[each bank name below imprinted by rubber stamp
and accompanied by 2 signatures]
<TABLE>
<CAPTION>
<S> <C>
REUTLINGEN, 6 NOVEMBER 1997 COMMERZBANK
(place/date) REUTLINGEN BRANCH
---------------------------
(Commerzbank)
REUTLINGEN, 10 NOVEMBER 1997 BADEN-WURTTEMBERG BANK AG
----------------------------- Reutlingen Branch
(place/date) ---------------------------
(BW-Bank)
REUTLINGEN, 10 NOVEMBER 1997 Deutsche Bank Aktiengesellschaft
----------------------------- ---------------------------
(place/date) Reutlingen Branch
(Deutsche Bank)
<PAGE>
-10-
REUTLINGEN, [ILLEGIBLE] 1997 Kreissparkasse Reutlingen
----------------------------- [Reutlingen District Savings Bank]
(place/date) --------------------------------
(Kreissparkasse)
STUTTGARR, 11 NOVEMBER 1997 Landesgirokasse
----------------------------- Public Bank and Regional Clearinghouse
(place/date) --------------------------------
(Landesgirokasse)
STUTTGARR, 11 NOVEMBER 1997 Stuttgarter Bank AG
----------------------------- P.O. Box 104441, D-70069 Stuttgart
(place/date) Tel: [illegible]
--------------------------------
(Stuttgarter Bank)
</TABLE>
We, Wandel & Goltermann Management Holding GmbH and Wandel & Goltermann GmbH &
Co. Elektronische Messtechnik, agree to all obligations under this Agreement
relating to use and otherwise consent thereto; this includes in particular the
provisions in ss. 3 (Purpose of Security), ss. 7 (Balance Equalization), ss. 9
(Costs) and ss. 10 (Notification).
<TABLE>
<CAPTION>
<S> <C>
[each company name below imprinted by rubber stamp]
REUTLINGEN, 6 NOVEMBER 1997 Wandel & Goltermann
---------------------------- Management Holding GmbH
(place/date) P.O. Box 1262, 72795 Eningen u.A.
[street address illegible]
[2 signatures]
----------------------------------------------
(Wandel & Goltermann Management Holding GmbH)
REUTLINGEN, 6 NOVEMBER 1997 Wandel & Goltermann GmbH & Co.
----------------------------
(place/date) Elektronische Messtechnik
P.O. Box 1262, 72795 Eningen u.A.
[street address illegible]
[1 signatures]
-----------------------------------------------
(Wandel & Goltermann Management Holding GmbH)
</TABLE>
Investment Banking Presentation
to
The Special Committee of
the Board of Directors of
Wandel & Goltermann Technologies, Inc.
January 20, 1998
The Robinson-Humphrey Company
Investment Bankers Since 1894
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
================================================================================
I. Transaction Overview
II. Historical Financial Review
III. Historical Stock Price Performance and Trading Range
IV. Ownership Analysis
V. Projected Financial Review
VI. Market Comparison of Selected Public Companies and Implied Valuation
Analysis
VII. Discounted Cash Flow Analysis
VIII. Analysis of Selected Merger and Acquisition Transactions and Implied
Valuation Analysis
IX. Analysis of Premiums for Minority Interest Acquisitions in Going
Private Transactions and Implied Valuation Analysis
- --------------------------------------------------------------------------------
THE ROBINSON-HUMPHREY COMPANY
<PAGE>
- --------------------------------------------------------------------------------
Transaction Overview
================================================================================
o On November 19, 1997, Wandel & Goltermann Technologies, Inc. ("WGTI" or the
"Company") announced that Wandel and Goltermann Management Holding GmbH
("WG Holding") had informed WGTI's Board of Directors that it was
considering various strategic transactions which involved or affected the
Company and its minority shareholders, including a merger of the Company
with one or more affiliates of WG Holding or a transaction in which WG
Holding would acquire all of the common stock of the Company not currently
held by WG Holding.
o WG Holding currently holds 3,285,600 shares of WGTI, representing 62.1% of
WGTI's 5,287,778 shares of common stock outstanding. Since WGTI's initial
public offering in April 1994, WG Holding has acquired 285,600 shares of
WGTI's common stock in open market transactions.
o On January 9, 1997, WG Holding proposed to acquire the outstanding WGTI
shares currently held by persons other than WG Holding for a purchase price
of $13.00 per share in cash, or $26.0 million in aggregate consideration
(excluding the net value of currently outstanding in-the-money options).
The aggregate consideration to be paid in the proposed transaction,
including the net value of currently outstanding in-the-money options, is
$26.8 million.
o WG Holding proposes to structure the transaction as a merger whereby a
newly-formed, wholly-owned subsidiary of WG Holding would merge with and
into WGTI.
o The proposed purchase price of $13.00 per share represents a 30.0% premium
to WGTI's closing stock price on November 18, 1997 (one day prior to WGTI's
announcement that WG Holding was considering various strategic transactions
involving WGTI) and a 3.0% premium to WGTI's closing stock price on January
9, 1998 (the last sale price for WGTI's common stock prior to receipt of WG
Holding's proposal to acquire the outstanding shares of WGTI held by
persons other than WG Holding).
- --------------------------------------------------------------------------------
THE ROBINSON-HUMPHREY COMPANY
<PAGE>
The Robinson-Humphrey Company, L.L.C
Project TroubleShooter
Analysis of Proposed Transaction
- --------------------------------------------------------------------------------
Purchase Fully-Diluted Transaction Pro Forma Total
Price Per Shares Equity Net Transaction
Share Outstanding (1) Value Debt (2) Value
----- --------------- ----------- --------- -----------
$l3.00 x 5,347 = $69,508 ($7,395) $62,112
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------- ---------------------------------------------------------
Transaction Equity Value as a Multiple of: Total Transaction Value as a Multiple of:
- --------------------------------------------------------------------- ---------------------------------------------------------
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
1997 1998(3) l999 1997 1998(3) 1999
---- ------- ---- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Net Income NM x 31.6 x 13.6 x Revenues 1.14 x 0.90 x 0.69 x
EBITDA 35.1 14.8 7.l
EBIT NM 25.9 9.9
Pro Forma
Book Value (4) 2.9 x
- --------------------------------------------------------------------- ---------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------- ---------------------------------------------------------
Transaction Equity Value as a Multiple of: Total Transaction Value as a Multiple of:
- --------------------------------------------------------------------- ---------------------------------------------------------
Calendar Calendar Calendar Calendar Calendar Calendar
1997 1998 (3) 1999 1997 1998(3) 1999
---- -------- ---- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Net Income NM x 21.7 x 12.6 x Revenues 1.16 x 0.84 x 0.64 x
EBITDA NM 10.8 6.4
EBIT NM 16.3 9.0
- --------------------------------------------------------------------- --------------------------------------------------------------
</TABLE>
Stock Price Prior To 11/19/97
-----------------------------
1 Day 1 Week 4 Weeks
----- ------ -------
Actual Value $l0.00 $9.50 $10.50
Premiumn at $13 per Share 30.0% 36.8% 23.8%
Footnotes:
(1) Includes 5,287,778 shares outstanding plus common stock equivalents from
275,025 options at a weighted average exercise price of $10.213 calculated
using the treasury stock method. The options used in the calculation are
the total amount of options whose exercise price was below the $13 offer.
(2) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions to be
completed in January 1998.
(3) Excludes $6.3 million in purchased technology write-downs.
(4) Adjusted by $6.3 million for contemplated write-downs of purchased
technology in the first quarter of calendar 1998.
(5) Assumes announcement date on November 19, 1997.
<PAGE>
The Robinson-Humphrey Company, L.L.C
Project TroubleShooter
Historical Balance Sheet Information
(In Thousands, Except for Per Share Amounts)
<TABLE>
<CAPTION>
As of September 30, December 31, 1997
--------------------------------- ----------------------
1995 1996 1997 Actual Pro Forma
---- ---- ---- ------ ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 5,374 $ 10,286 $ 13,329 $ 13,395 $ 7,395[1]
Accounts Receivable:
Nonaffiliates 5,378 8,148 7,038 5,870 5,870
Affiliates 3,934 5,068 3,964 6,226 6,226
Income Tax Receivable 1,464 720 1,367 363 363
Inventories 6,616 4,695 5,596 5,630 5,630
Deferred Tax Assets 1,946 1,079 1,448 1,585 1,585
Other Current Assets 395 349 927 849 849
-------- -------- -------- -------- --------
Total Current Assets $ 25,107 $ 30,345 $ 33,669 $ 33,918 $ 27,918
Property and Equipment
Machinery and Equipment 4,189 4,401 4,614 4,667 4,667
Furniture and Fixtures 5,764 5,186 5,993 6,151 6,151
-------- -------- -------- -------- --------
9,953 9,587 10,607 1O,818 10,818
Accumulated Depreciation (6,213) (6,323) (7,721) (8,008) (8,008)
-------- -------- -------- -------- --------
3,740 3,264 2,886 2.810 2,810
Other Assets 497 689 737 718 1,018[1]
-------- -------- -------- -------- --------
Total Assets $ 29,344 $ 34,298 $ 37,292 $37,446 $31,746
======== ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable:
Nonaffiliates $ 1,579 $ 1,327 $ 1,530 $ 1,085 $ 1,085
Affiliates 258 950 1,789 2,856 2,856
Accrued Compensation 1,683 1,855 1,467 1,412 1,412
Other Accrued Liabilities 1,470 1,344 1,847 1,843 1,843
-------- -------- -------- -------- --------
Total Current Liabilites $ 4,990 $ 5,476 $ 6,633 $ 7,196 $ 7,196
Shareholders' Equity:
Common Stock 52 52 53 53 53
Additional Paid-in Capital 25,740 25,056 26,468 26,470 26,470
Retained Earnings (Accumulated Deficit) (1,438) 3,714 4,138 3,727 (2,573)[1]
-------- -------- -------- -------- --------
24,354 28,822 30,659 30,250 23,950
-------- -------- -------- -------- --------
Total Liabilities and Shareholders' Equity $ 29,344 $ 34,298 $ 37,292 $ 37,446 $ 31,146
======== ======== ======== ======== ========
</TABLE>
[1] Assumes $6.0 million paid in cash for technology acquisitions with a
purchased technolgy write-off of $6.3 million with the difference going
into goodwill under other assets.
<PAGE>
Project TroubleShooter
High-Low-Close Volume
Weekly: 4/8/94 to 01/15/98
(chart appears here with plot points)
<TABLE>
<S> <C>
PROJECT TROUBLESHOOTER
HISTORICAL STOCK TRADING DATA
TS2 WEEK VOLUME HIGH LOW CLOSE
---- ------ ---- --- -----
34432 4/8/94 0.9526 $11.50 $10.25 $10.88
34439 4/15/94 0.5476 11.13 10.50 10.50
34446 4/22/94 0.1244 10.75 10.50 10.50
34453 4/29/94 0.0722 10.75 10.50 10.50
34460 5/6/94 0.0534 11.38 10.50 11.00
34467 5/13/94 0.0550 11.25 10.75 10.75
34474 5/20/94 0.1385 11.00 10.50 10.50
34481 5/27/94 0.1141 11.00 10.50 10.88
34488 6/3/94 0.0472 10.88 10.50 10.63
34495 6/10/94 0.0096 10.88 10.63 10.88
34502 6/17/94 0.1911 10.75 10.25 10.38
34509 6/24/94 0.1987 10.75 10.00 10.38
34516 7/1/94 0.1291 10.50 9.50 9.63
34523 7/8/94 0.0323 10.00 9.63 9.63
34530 7/15/94 0.0174 9.88 9.63 9.63
34537 7/22/94 0.0258 9.88 9.63 9.63
34544 7/29/94 0.0041 9.88 9.63 9.63
34551 8/5/94 0.0402 9.63 8.63 8.88
34558 8/12/94 0.0975 9.13 8.38 9.00
34565 8/19/94 0.0328 9.13 8.88 8.88
34572 8/26/94 0.3222 10.50 9.00 9.88
34579 9/2/94 0.1248 11.00 10.00 10.75
34586 9/9/94 0.1256 11.25 10.63 11.00
34593 9/16/94 0.3663 12.25 11.00 12.25
34600 9/23/94 0.2412 12.25 11.75 12.13
34607 9/30/94 0.0576 12.13 11.75 12.00
34614 10/7/94 0.0989 12.13 11.63 11.63
34621 10/14/94 0.0155 12.00 11.63 11.63
34628 10/21/94 0.4562 14.38 11.88 13.75
34635 10/28/94 0.1462 14.13 13.13 13.50
34642 11/4/94 0.0884 13.88 13.13 13.38
34649 11/11/94 0.0780 14.63 13.13 14.63
34656 11/18/94 0.3437 16.13 14.50 14.88
34663 11/25/94 0.0367 15.25 14.25 14.50
34670 12/2/94 0.0532 14.38 14.00 14.00
34677 12/9/94 0.2129 14.25 13.50 13.50
34684 12/16/94 0.0153 14.00 13.50 13.50
34691 12/23/94 0.0084 13.50 13.00 13.00
<PAGE>
TS2 WEEK VOLUME HIGH LOW CLOSE
---- ------ ---- --- -----
34698 12/30/94 0.0267 13.06 12.75 12.75
34705 1/6/95 0.0127 13.25 12.88 12.88
34712 1/13/95 0.3261 13.25 12.63 12.75
34719 1/20/95 0.0595 13.00 12.25 12.25
34726 1/27/95 0.2593 12.88 12.00 12.88
34733 2/3/95 0.3126 13.13 12.75 12.75
34740 2/10/95 0.3366 13.13 12.75 12.75
34747 2/17/95 0.5171 14.38 12.75 14.38
34754 2/24/95 0.1444 16.00 14.00 15.88
34761 3/3/95 0.1218 17.25 15.50 16.50
34768 3/10/95 0.1688 16.88 16.38 16.63
34775 3/17/95 0.1538 16.88 16.38 16.88
34782 3/24/95 0.0323 16.88 16.38 16.50
34789 3/31/95 0.0842 17.38 16.13 16.13
34796 4/7/95 0.2667 16.38 14.63 15.13
34803 4/14/95 0.0914 14.88 14.63 14.63
34810 4/21/95 0.0311 14.88 14.25 14.25
34817 4/28/95 0.0427 14.63 14.25 14.25
34824 5/5/95 0.3191 18.38 14.25 18.38
34831 5/12/95 0.2399 20.75 18.13 20.50
34838 5/19/95 0.1327 20.75 17.38 18.13
34845 5/26/95 0.0490 18.75 17.75 18.75
34852 6/2/95 0.0139 18.75 17.50 17.50
34859 6/9/95 0.0131 18.00 17.50 17.50
34866 6/16/95 0.1727 18.00 14.25 15.25
34873 6/23/95 0.7590 13.75 10.25 10.59
34880 6/30/95 0.1769 11.25 10.25 11.00
34887 7/7/95 0.0511 11.00 10.50 10.63
34894 7/14/95 0.1698 11.00 10.00 10.13
34901 7/21/95 0.4005 13.00 10.00 11.00
34908 7/28/95 0.2097 12.25 10.25 11.00
34915 8/4/95 0.1759 12.75 10.75 12.50
34922 8/11/95 0.1514 13.50 12.25 12.25
<PAGE>
TS2 WEEK VOLUME HIGH LOW CLOSE
---- ------ ---- --- -----
34929 8/18/95 0.0523 12.50 12.00 12.00
34936 8/25/95 0.0864 12.50 11.25 12.25
34943 9/1/95 0.0165 12.25 11.50 11.50
34950 9/8/95 0.0162 12.00 11.50 12.00
34957 9/15/95 0.2689 12.88 11.50 12.13
34964 9/22/95 0.3483 12.38 11.75 12.13
34971 9/29/95 0.0862 11.88 9.75 10.25
34978 10/6/95 0.0447 10.50 9.75 10.00
34985 10/13/95 0.0334 10.25 9.75 10.25
34992 10/20/95 0.1646 10.50 9.75 10.00
34999 10/27/95 0.0539 10.50 10.00 10.00
35006 11/3/95 0.0282 10.25 9.75 10.00
35013 11/10/95 0.0284 10.00 9.50 10.00
35020 11/17/95 0.1926 10.00 9.00 9.50
35027 11/24/95 0.0829 10.00 9.50 9.50
35034 12/1/95 0.8198 10.00 9.50 10.00
35041 12/8/95 0.3045 12.75 10.00 12.75
35048 12/15/95 0.3239 13.25 10.75 11.25
35055 12/22/95 0.0982 11.50 10.50 11.00
35062 12/29/95 0.0871 11.50 10.50 10.63
35069 1/5/96 0.0767 11.00 10.00 10.38
35076 1/12/96 0.0573 10.75 9.75 9.75
35083 1/19/96 0.0346 10.50 9.75 10.00
35090 1/26/96 0.0208 10.75 10.00 10.63
35097 2/2/96 0.1126 12.75 9.00 9.63
35104 2/9/96 0.2075 12.00 9.00 11.25
35111 2/16/96 0.0527 11.50 10.50 10.63
35118 2/23/96 0.0627 10.75 9.75 10.13
35125 3/1/96 0.5326 13.00 9.75 12.00
35132 3/8/96 0.1745 13.13 11.75 12.75
35139 3/15/96 0.3168 13.88 11.38 13.00
35146 3/22/96 0.2216 16.00 12.88 14.88
35153 3/29/96 0.1834 16.88 14.38 16.38
35160 4/5/96 0.1024 17.38 15.13 16.00
35167 4/12/96 0.0990 16.25 14.88 15.25
35174 4/19/96 0.1180 16.63 15.13 16.00
35181 4/26/96 0.4714 19.00 16.00 16.88
35188 5/3/96 0.0557 17.50 16.25 16.50
35195 5/10/96 0.1329 16.88 14.13 16.63
35202 5/17/96 0.1600 18.25 16.88 18.00
35209 5/24/96 0.1904 19.00 17.75 19.00
35216 5/31/96 0.1769 19.75 18.00 18.50
<PAGE>
TS2 WEEK VOLUME HIGH LOW CLOSE
---- ------ ---- --- -----
35223 6/7/96 0.1282 19.00 16.50 17.50
35230 6/14/96 0.1333 18.00 15.25 16.50
35237 6/21/96 0.0803 16.25 15.00 15.75
35244 6/28/96 0.0517 17.00 15.75 16.50
35251 7/5/96 0.0190 16.88 15.25 15.50
35258 7/12/96 0.0369 16.00 14.75 14.88
35265 7/19/96 0.0371 15.00 13.25 14.25
35272 7/26/96 0.0547 15.25 13.75 14.13
35279 8/2/96 0.1203 17.50 13.50 14.00
35286 8/9/96 0.0881 14.75 13.25 13.75
35293 8/16/96 0.0372 14.50 13.75 14.50
35300 8/23/96 0.0838 15.50 13.75 14.50
35307 8/30/96 0.0418 15.75 14.25 15.63
35314 9/6/96 0.2103 15.75 15.00 15.00
35321 9/13/96 0.0921 16.50 15.00 15.38
35328 9/20/96 0.1536 16.75 15.00 16.63
35335 9/27/96 0.4078 19.75 16.50 18.50
35342 10/4/96 0.3260 22.00 18.50 21.75
35349 10/11/96 0.1008 21.75 20.50 21.25
35356 10/18/96 0.3416 23.75 20.50 21.00
35363 10/25/96 0.1196 22.00 20.25 20.38
35370 11/1/96 0.0408 21.00 19.25 19.25
35377 11/8/96 0.1088 21.00 17.25 20.25
35384 11/15/96 0.1753 22.50 19.50 20.75
35391 11/22/96 0.0989 21.00 19.25 20.00
35398 11/29/96 0.1291 21.75 19.25 21.13
35405 12/6/96 0.3385 23.75 21.00 23.00
35412 12/13/96 0.4744 29.75 23.00 29.75
35419 12/20/96 0.2526 31.50 25.75 29.25
35426 12/27/96 0.0683 30.25 28.25 29.50
35433 1/3/97 0.2336 30.00 25.00 28.56
35440 1/10/97 0.1059 30.00 26.75 27.25
35447 1/17/97 0.0964 30.25 27.25 28.50
35454 1/24/97 0.0954 30.00 26.25 26.75
35461 1/31/97 0.1530 28.75 26.25 26.25
35468 2/7/97 0.1454 27.00 25.75 25.81
35475 2/14/97 0.1528 26.75 23.50 24.75
35482 2/21/97 0.1668 24.75 23.50 23.50
35489 2/28/97 0.0676 24.00 22.75 23.50
35496 3/7/97 0.1667 23.50 21.50 22.88
35503 3/14/97 0.0569 24.00 22.50 22.75
35510 3/21/97 0.0698 24.00 21.00 21.00
35517 3/28/97 0.0613 22.50 18.75 21.38
<PAGE>
TS2 WEEK VOLUME HIGH LOW CLOSE
---- ------ ---- --- -----
35524 4/4/97 0.6941 23.75 9.50 12.00
35531 4/11/97 0.3344 12.25 10.00 11.00
35538 4/18/97 0.1479 11.50 10.63 10.63
35545 4/25/97 0.1040 11.88 10.63 11.25
35552 5/2/97 0.1480 13.25 10.75 13.25
35559 5/9/97 0.2046 14.00 12.00 12.63
35566 5/16/97 0.1118 13.50 12.13 13.38
35573 5/23/97 0.1098 14.13 12.00 12.00
35580 5/30/97 0.0623 12.63 11.50 12.50
35587 6/6/97 0.0521 12.75 12.00 12.38
35594 6/13/97 0.0710 12.63 12.13 12.25
35601 6/20/97 0.9762 12.50 8.50 9.13
35608 6/27/97 0.6583 9.63 9.00 9.13
35615 7/4/97 0.0530 9.38 8.88 9.06
35622 7/11/97 0.1854 9.88 9.06 9.75
35629 7/18/97 0.5494 10.25 9.38 9.63
35636 7/25/97 0.0790 9.75 9.25 9.25
35643 8/1/97 0.0824 10.25 9.25 10.00
35643 8/1/97 0.0824 10.25 9.25 10.00
35650 8/8/97 0.1345 11.13 9.75 10.75
35657 8/15/97 0.0731 11.88 10.75 11.38
35664 8/22/97 0.1492 13.25 11.38 12.13
35671 8/29/97 0.0949 12.25 10.38 10.75
35678 9/5/97 0.0567 12.13 11.00 11.38
35685 9/12/97 0.0347 11.75 11.00 11.00
35692 9/19/97 0.0692 12.38 11.00 11.75
35699 9/26/97 0.3088 12.00 9.50 10.06
35706 10/3/97 0.0539 10.25 9.94 10.00
35713 10/10/97 0.0502 10.50 9.88 10.13
35720 10/17/97 0.0433 10.63 10.13 10.38
<PAGE>
TS2 WEEK VOLUME HIGH LOW CLOSE
---- ------ ---- --- -----
35727 10/24/97 0.1711 10.63 10.00 10.31
35734 10/31/97 0.0855 10.25 8.50 9.38
35741 11/7/97 0.0322 10.06 9.25 9.75
35748 11/14/97 0.0340 10.38 9.38 9.38
35755 11/21/97 0.1943 13.75 9.38 12.75
35762 11/28/97 0.0359 12.75 11.88 12.25
35769 12/5/97 0.0601 12.75 12.13 12.44
35776 12/12/97 0.0516 12.75 11.75 12.13
35783 12/19/97 0.0406 12.50 12.13 12.25
35790 12/26/97 0.1259 13.50 12.25 13.13
35797 1/2/98 0.0970 13.38 13.13 13.13
35804 1/9/98 0.0571 13.38 12.38 12.63
35811 1/16/98 0.1825 13.13 12.75 12.75
35818 1/23/98 0.1360 12.88 12.63 12.75
35825 1/30/98 0.0471 12.88 12.63 12.75
35832 2/6/98 0.0655 12.88 12.69 12.81
35839 2/13/98 0.0592 12.88 12.75 12.75
35846 2/20/98 0.0190 12.81 12.69 12.81
35853 2/27/98 0.0372 12.88 12.69 12.75
35860 3/6/98 0.1134 13.25 12.69 13.13
35867 3/13/98 0.1844 13.13 12.88 12.88
35874 3/20/98 0.3626 15.63 12.88 15.25
35881 3/27/98 0.0647 15.50 15.13 15.25
35888 4/3/98 0.0438 15.50 15.25 15.44
35895 4/10/98 0.0224 15.50 15.31 15.38
35902 4/17/98 0.0605 15.63 15.31 15.38
35909 4/24/98 0.0201 15.56 15.31 15.38
35916 5/1/98 0.0715 15.44 15.00 15.13
35923 5/8/98 0.0359 15.31 15.13 15.25
35930 5/15/98 0.0065 15.25 15.13 15.19
35937 5/22/98 0.0186 15.25 15.00 15.00
35944 5/29/98 0.0103 15.06 14.88 14.88
35951 6/5/98 0.0141 15.50 15.00 15.38
35958 6/12/98 0.0374 15.38 15.00 15.00
35965 6/19/98 0.0137 15.25 15.00 15.00
35972 6/26/98 0.0065 15.25 15.00 15.06
35979 7/3/98 0.0080 15.13 15.06 15.06
35986 7/10/98 0.0215 15.25 15.00 15.00
35993 7/17/98 0.0135 15.13 14.88 14.88
</TABLE>
<PAGE>
Project TroubleShooter
High-Low-Close Volume
Daily: 1/1/97 to 01/15/98
(chart appears here with plot points)
<TABLE>
<S> <C>
Project TroubleShooter
Historical Stock Trading Data
TS1 Date Volume High Low Close
--- ---- ------ ---- --- -----
35431 1/1/97 0.0000 $30.00 $29.25 $29.25
35432 1/2/97 0.0825 30.00 25.00 27.00
35433 1/3/97 0.1366 29.50 25.00 28.56
35436 1/6/97 0.0508 30.00 28.00 28.63
35437 1/7/97 0.0108 28.75 27.50 27.50
35438 1/8/97 0.0060 28.25 27.50 28.25
35439 1/9/97 0.0192 28.00 27.00 27.63
35440 1/10/97 0.0191 28.25 26.75 27.25
35443 1/13/97 0.0264 29.00 27.25 29.00
35444 1/14/97 0.0473 30.25 28.50 29.25
35445 1/15/97 0.0099 29.75 28.00 29.50
35446 1/16/97 0.0036 30.00 28.50 30.00
35447 1/17/97 0.0092 30.00 28.50 28.50
35450 1/20/97 0.0024 30.00 28.50 28.50
35451 1/21/97 0.0219 29.00 27.25 27.25
35452 1/22/97 0.0314 28.50 26.25 26.50
35453 1/23/97 0.0208 28.25 26.25 27.50
35454 1/24/97 0.0189 28.25 26.25 26.75
35457 1/27/97 0.0299 28.00 26.50 27.13
35458 1/28/97 0.0346 28.75 27.25 27.63
35459 1/29/97 0.0109 28.50 26.25 27.50
35460 1/30/97 0.0612 27.50 26.25 27.00
35461 1/31/97 0.0164 27.25 26.25 26.25
35464 2/3/97 0.0276 27.00 26.00 27.00
35465 2/4/97 0.0538 27.00 26.00 27.00
35466 2/5/97 0.0112 27.00 25.75 25.75
35467 2/6/97 0.0372 26.50 25.75 26.00
35468 2/7/97 0.0156 26.75 25.75 25.81
35471 2/10/97 0.0063 26.75 25.75 25.75
35472 2/11/97 0.0713 26.13 23.50 24.00
35473 2/12/97 0.0325 24.75 23.75 23.75
35474 2/13/97 0.0358 24.75 23.50 24.50
35475 2/14/97 0.0069 24.75 24.00 24.75
35478 2/17/97 0.0000 24.75 24.00 24.75
35479 2/18/97 0.0049 24.75 24.00 24.00
35480 2/19/97 0.0021 24.75 24.00 24.00
35481 2/20/97 0.1355 24.50 23.50 23.50
35482 2/21/97 0.0243 24.25 23.50 23.50
35485 2/24/97 0.0089 24.00 22.75 23.75
35486 2/25/97 0.0355 24.00 22.75 24.00
35487 2/26/97 0.0043 24.00 22.75 23.50
35488 2/27/97 0.0003 22.75 22.75 22.75
35489 2/28/97 0.0186 24.00 22.75 23.50
35492 3/3/97 0.1332 23.25 21.50 21.50
35493 3/4/97 0.0090 22.75 21.50 22.75
35494 3/5/97 0.0162 22.75 21.75 22.75
35495 3/6/97 0.0078 23.50 22.50 22.88
<PAGE>
TS1 Date Volume High Low Close
--- ---- ------ ---- --- -----
35496 3/7/97 0.0005 23.50 22.75 22.88
35499 3/10/97 0.0192 23.50 22.75 22.88
35500 3/11/97 0.0191 23.19 22.75 22.75
35501 3/12/97 0.0066 23.50 22.63 23.50
35502 3/13/97 0.0042 23.25 22.50 22.50
35503 3/14/97 0.0078 24.00 22.50 22.75
35506 3/17/97 0.0394 24.00 22.00 22.25
35507 3/18/97 0.0215 22.75 21.50 21.50
35508 3/19/97 0.0038 22.50 21.00 22.25
35509 3/20/97 0.0033 22.50 21.25 22.00
35510 3/21/97 0.0018 22.25 21.00 21.00
35513 3/24/97 0.0283 22.50 18.75 20.25
35514 3/25/97 0.0105 20.50 19.50 20.00
35515 3/26/97 0.0162 20.50 19.50 20.50
35516 3/27/97 0.0063 21.50 20.50 21.38
35517 3/28/97 0.0000 21.50 20.50 21.38
35520 3/31/97 0.0226 22.25 20.25 22.00
35521 4/1/97 0.0112 22.50 21.38 21.38
35522 4/2/97 0.4025 23.75 9.50 10.75
35523 4/3/97 0.1665 12.75 10.38 11.88
35524 4/4/97 0.0913 12.75 11.50 12.00
35527 4/7/97 0.0775 12.25 11.25 11.88
35528 4/8/97 0.1511 11.88 10.00 10.75
35529 4/9/97 0.0385 11.25 10.63 10.88
35530 4/10/97 0.0347 11.25 10.75 11.00
35531 4/11/97 0.0326 11.25 10.75 11.00
35534 4/14/97 0.0142 11.25 10.63 11.25
35535 4/15/97 0.0395 11.38 10.63 11.38
35536 4/16/97 0.0518 11.50 11.13 11.13
35537 4/17/97 0.0270 11.50 10.63 11.00
35538 4/18/97 0.0154 11.25 10.63 10.63
35541 4/21/97 0.0219 11.25 10.63 10.75
35542 4/22/97 0.0365 11.50 10.88 11.13
35543 4/23/97 0.0106 11.50 10.75 11.50
35544 4/24/97 0.0331 11.88 10.75 11.25
35545 4/25/97 0.0019 11.25 10.75 11.25
35548 4/28/97 0.0031 11.25 10.75 10.75
35549 4/29/97 0.0596 12.75 11.75 11.75
35550 4/30/97 0.0575 12.50 11.50 12.38
35551 5/1/97 0.0045 12.50 11.88 12.50
35552 5/2/97 0.0233 13.25 12.00 13.25
35555 5/5/97 0.0286 13.75 13.38 13.75
35556 5/6/97 0.0087 14.00 13.38 13.75
35557 5/7/97 0.0250 14.00 13.13 13.75
35558 5/8/97 0.1375 13.75 12.00 12.38
35559 5/9/97 0.0048 12.63 12.25 12.63
35562 5/12/97 0.0163 13.00 12.25 12.63
35563 5/13/97 0.0192 12.75 12.13 12.25
35564 5/14/97 0.0038 12.88 12.25 12.88
35565 5/15/97 0.0399 12.88 12.25 12.50
35566 5/16/97 0.0326 13.50 13.00 13.38
35569 5/19/97 0.0177 14.13 13.13 13.75
35570 5/20/97 0.0074 14.00 13.00 13.00
35571 5/21/97 0.0464 13.75 12.38 12.38
35572 5/22/97 0.0288 12.63 12.13 12.50
35573 5/23/97 0.0095 12.50 12.00 12.00
35576 5/26/97 0.0000 12.50 12.00 12.00
35577 5/27/97 0.0092 12.50 11.50 12.06
35578 5/28/97 0.0124 12.50 12.00 12.50
35579 5/29/97 0.0334 12.63 12.25 12.38
35580 5/30/97 0.0073 12.63 12.00 12.50
35583 6/2/97 0.0081 12.75 12.25 12.44
35584 6/3/97 0.0068 12.63 12.63 12.63
35585 6/4/97 0.0143 12.63 12.19 12.63
35586 6/5/97 0.0118 12.63 12.19 12.25
35587 6/6/97 0.0111 12.38 12.00 12.38
35590 6/9/97 0.0038 12.38 12.13 12.25
35591 6/10/97 0.0045 12.38 12.13 12.13
35592 6/11/97 0.0198 12.63 12.13 12.25
35593 6/12/97 0.0309 12.63 12.25 12.31
35594 6/13/97 0.0120 12.63 12.25 12.25
35597 6/16/97 0.0446 12.50 12.00 12.00
35598 6/17/97 0.0272 12.00 11.50 11.75
35599 6/18/97 0.0136 11.88 11.38 11.38
35600 6/19/97 0.6439 11.63 8.50 9.00
35601 6/20/97 0.2469 9.50 9.00 9.13
35604 6/23/97 0.1950 9.63 9.00 9.38
35605 6/24/97 0.0751 9.63 9.25 9.63
35606 6/25/97 0.0970 9.63 9.38 9.50
35607 6/26/97 0.0831 9.50 9.00 9.25
35608 6/27/97 0.2081 9.38 9.00 9.13
<PAGE>
TS1 Date Volume High Low Close
--- ---- ------ ---- --- -----
35611 6/30/97 0.0253 9.38 8.88 9.13
35612 7/1/97 0.0070 9.13 8.88 8.88
35613 7/2/97 0.0107 9.25 8.94 9.25
35614 7/3/97 0.0100 9.38 9.06 9.06
35615 7/4/97 0.0000 9.38 9.06 9.06
35618 7/7/97 0.0447 9.63 9.06 9.38
35619 7/8/97 0.0468 9.75 9.38 9.75
35620 7/9/97 0.0215 9.75 9.50 9.50
35621 7/10/97 0.0498 9.75 9.38 9.63
35622 7/11/97 0.0226 9.88 9.50 9.75
35625 7/14/97 0.0326 10.13 9.75 10.00
35626 7/15/97 0.0267 10.25 9.75 9.88
35627 7/16/97 0.4096 10.13 9.38 9.63
35628 7/17/97 0.0597 9.88 9.38 9.63
35629 7/18/97 0.0208 9.63 9.38 9.63
35632 7/21/97 0.0213 9.63 9.25 9.25
35633 7/22/97 0.0073 9.75 9.38 9.38
35634 7/23/97 0.0198 9.75 9.38 9.50
35635 7/24/97 0.0077 9.75 9.25 9.50
35636 7/25/97 0.0229 9.75 9.25 9.25
35639 7/28/97 0.0081 9.75 9.25 9.25
35640 7/29/97 0.0327 10.25 9.38 9.88
35641 7/30/97 0.0183 10.25 9.88 10.13
35642 7/31/97 0.0154 10.25 9.88 9.88
35643 8/1/97 0.0079 10.00 9.88 10.00
35646 8/4/97 0.0422 10.25 9.75 10.00
35647 8/5/97 0.0141 10.38 9.88 10.13
35648 8/6/97 0.0353 11.00 9.88 10.94
35649 8/7/97 0.0326 11.13 10.50 10.53
35650 8/8/97 0.0103 11.00 10.50 10.75
35653 8/11/97 0.0030 11.00 10.75 11.00
35654 8/12/97 0.0182 11.19 10.81 11.00
35655 8/13/97 0.0228 11.88 10.88 11.50
35656 8/14/97 0.0099 11.88 11.38 11.50
35657 8/15/97 0.0192 11.88 11.38 11.38
35660 8/18/97 0.0205 11.63 11.38 11.50
35661 8/19/97 0.0336 12.56 11.50 12.38
35662 8/20/97 0.0322 13.25 12.75 12.75
35663 8/21/97 0.0207 13.25 12.75 12.75
35664 8/22/97 0.0422 13.00 11.88 12.13
35667 8/25/97 0.0054 12.25 11.63 12.00
35668 8/26/97 0.0431 12.00 10.38 10.88
35669 8/27/97 0.0293 11.38 10.50 11.13
35670 8/28/97 0.0120 11.38 10.75 11.00
35671 8/29/97 0.0051 11.13 10.75 10.75
35674 9/1/97 0.0000 11.13 10.75 10.75
35675 9/2/97 0.0199 12.00 11.00 11.50
35676 9/3/97 0.0192 12.00 11.25 11.50
35677 9/4/97 0.0089 11.75 11.63 11.63
<PAGE>
TS1 Date Volume High Low Close
--- ---- ------ ---- --- -----
35678 9/5/97 0.0087 12.13 11.38 11.38
35681 9/8/97 0.0039 11.75 11.13 11.25
35682 9/9/97 0.0159 11.75 11.00 11.50
35683 9/10/97 0.0044 11.44 11.00 11.25
35684 9/11/97 0.0054 11.25 11.00 11.25
35685 9/12/97 0.0051 11.25 11.00 11.00
35688 9/15/97 0.0144 12.00 11.00 12.00
35689 9/16/97 0.0127 12.38 11.75 11.75
35690 9/17/97 0.0221 12.38 11.63 11.75
35691 9/18/97 0.0069 11.88 11.63 11.88
35692 9/19/97 0.0131 11.88 11.38 11.75
35695 9/22/97 0.0186 12.00 11.63 11.75
35696 9/23/97 0.2219 10.25 9.50 10.13
35697 9/24/97 0.0389 10.50 9.88 10.25
35698 9/25/97 0.0123 10.38 10.00 10.38
35699 9/26/97 0.0171 10.38 10.06 10.06
35702 9/29/97 0.0162 10.25 10.00 10.00
35703 9/30/97 0.0141 10.25 9.94 9.94
35704 10/1/97 0.0050 10.25 9.94 9.94
35705 10/2/97 0.0066 10.13 9.94 9.94
35706 10/3/97 0.0120 10.13 9.94 10.00
35709 10/6/97 0.0169 10.25 9.94 10.25
35710 10/7/97 0.0044 10.25 10.00 10.00
35711 10/8/97 0.0193 10.38 9.88 10.38
35712 10/9/97 0.0075 10.50 10.13 10.13
35713 10/10/97 0.0021 10.19 10.13 10.13
35716 10/13/97 0.0046 10.25 10.13 10.25
35717 10/14/97 0.0099 10.63 10.38 10.38
35718 10/15/97 0.0062 10.63 10.38 10.63
35719 10/16/97 0.0051 10.63 10.38 10.38
35720 10/17/97 0.0175 10.50 10.25 10.38
35723 10/20/97 0.0050 10.50 10.25 10.25
35724 10/21/97 0.0097 10.63 10.25 10.63
35725 10/22/97 0.0106 10.63 10.38 10.50
35726 10/23/97 0.0491 10.50 10.00 10.13
35727 10/24/97 0.0967 10.63 10.13 10.31
35730 10/27/97 0.0025 10.06 10.06 10.06
35731 10/28/97 0.0432 10.06 8.50 10.00
35732 10/29/97 0.0106 10.25 9.88 9.88
35733 10/30/97 0.0062 10.13 9.88 9.88
35734 10/31/97 0.0230 9.88 9.25 9.38
35737 11/3/97 0.0109 10.00 9.25 9.50
35738 11/4/97 0.0024 10.00 9.25 9.50
35739 11/5/97 0.0051 10.00 9.50 9.50
35740 11/6/97 0.0103 10.06 9.50 9.75
35741 11/7/97 0.0035 9.75 9.63 9.75
35744 11/10/97 0.0004 9.75 9.75 9.75
35745 11/11/97 0.0190 10.38 9.75 9.94
35746 11/12/97 0.0107 10.00 9.50 9.50
35747 11/13/97 0.0025 9.50 9.38 9.38
35748 11/14/97 0.0014 10.00 9.38 9.38
35751 11/17/97 0.0070 10.13 9.38 9.75
35752 11/18/97 0.0165 10.25 10.00 10.00
35753 11/19/97 0.0603 12.00 10.63 11.81
35754 11/20/97 0.0918 13.75 12.50 12.75
35755 11/21/97 0.0187 13.25 12.38 12.75
35758 11/24/97 0.0129 12.75 11.88 12.00
35759 11/25/97 0.0119 12.75 12.00 12.50
35760 11/26/97 0.0100 12.75 12.25 12.25
35761 11/27/97 0.0000 12.75 12.25 12.25
35762 11/28/97 0.0011 12.50 12.25 12.25
35765 12/1/97 0.0188 12.63 12.25 12.63
35766 12/2/97 0.0063 12.63 12.25 12.25
<PAGE>
TS1 Date Volume High Low Close
--- ---- ------ ---- --- -----
35767 12/3/97 0.0127 12.50 12.13 12.50
35768 12/4/97 0.0124 12.75 12.13 12.75
35769 12/5/97 0.0099 12.75 12.44 12.44
35772 12/8/97 0.0027 12.56 12.13 12.13
35773 12/9/97 0.0088 12.50 12.13 12.50
35774 12/10/97 0.0151 12.75 12.25 12.25
35775 12/11/97 0.0176 12.25 11.75 12.00
35776 12/12/97 0.0074 12.38 11.88 12.13
35779 12/15/97 0.0209 12.50 12.13 12.50
35780 12/16/97 0.0023 12.50 12.25 12.50
35781 12/17/97 0.0051 12.50 12.13 12.38
35782 12/18/97 0.0034 12.50 12.25 12.38
35783 12/19/97 0.0089 12.44 12.25 12.25
35786 12/22/97 0.0577 12.50 12.25 12.50
35787 12/23/97 0.0348 13.50 12.38 13.38
35788 12/24/97 0.0049 13.38 13.13 13.25
35789 12/25/97 0.0000 13.38 13.13 13.25
35790 12/26/97 0.0285 13.44 13.13 13.13
35793 12/29/97 0.0379 13.31 13.13 13.13
35794 12/30/97 0.0385 13.31 13.13 13.13
35795 12/31/97 0.0173 13.38 13.13 13.13
35796 1/1/98 0.0000 13.38 13.13 13.13
35797 1/2/98 0.0033 13.38 13.13 13.13
35800 1/5/98 0.0056 13.25 13.13 13.13
35801 1/6/98 0.0129 13.25 13.13 13.13
35802 1/7/98 0.0042 13.38 13.13 13.38
35803 1/8/98 0.0118 13.38 12.75 12.88
35804 1/9/98 0.0226 12.88 12.38 12.63
35807 1/12/98 0.0637 13.13 12.75 12.75
35808 1/13/98 0.0117 12.88 12.75 12.75
35809 1/14/98 0.0106 13.00 12.75 12.81
35810 1/15/98 0.0625 12.81 12.75 12.81
</TABLE>
<PAGE>
Project TroubleShooter
Close Price Index Comparison
Weekly: 4/8/94 to 01/15/98
(chart appears here with plot points)
<TABLE>
<S> <C>
93369210 Nasdaq 198 Wandel & Nasdaq
TS2 TS231 00000129
34432 10.875 748.7188 1 1 1
34439 10.5 727.9688 0.965517 0.972286 0.943465
34446 10.5 722.5625 0.965517 0.965065 0.979914
34453 10.5 733.8438 0.965517 0.980133 1.075745
34460 11 732.875 1.011494 0.978839 1.03487
34467 10.75 716.9063 0.988506 0.957511 0.984922
34474 10.5 726.6875 0.965517 0.970575 0.991043
34481 10.875 733.125 1 0.979173 0.969505
34488 10.625 742.375 0.977011 0.991527 0.976853
34495 10.875 734.25 1 0.980675 0.93704
34502 10.375 729.3438 0.954023 0.974122 0.908671
34509 10.375 693.7813 0.954023 0.926625 0.909699
34516 9.625 706.8438 0.885057 0.944071 0.951686
34523 9.625 707.4688 0.885057 0.944906 0.990607
34530 9.625 721.375 0.885057 0.963479 1.018472
34537 9.625 716.6875 0.885057 0.957219 0.96741
34544 9.625 722.1563 0.885057 0.964523 0.968051
34551 8.875 718.6563 0.816092 0.959848 0.983031
34558 9 731.625 0.827586 0.977169 0.989157
34565 8.875 742.4375 0.816092 0.991611 1.021327
34572 9.875 762.9375 0.908046 1.018991 1.059242
34579 10.75 759.2188 0.988506 1.014024 1.072184
34586 11 763.7188 1.011494 1.020034 1.072917
34593 12.25 777.9063 1.126437 1.038983 1.139732
34600 12.125 757.25 1.114943 1.011394 1.124906
34607 12 764.2813 1.103448 1.020786 1.130565
34614 11.625 749.9688 1.068966 1.00167 1.16118
34621 11.625 767.0938 1.068966 1.024542 1.247849
34628 13.75 765.375 1.264368 1.022246 1.261674
34635 13.5 776.1563 1.241379 1.036646 1.277047
34642 13.375 766.0938 1.229885 1.023206 1.3016
34649 14.625 762.125 1.344828 1.017906 1.252152
34656 14.875 764.6563 1.367816 1.021286 1.281881
34663 14.5 742.5313 1.333333 0.991736 1.225519
34670 14 745.0313 1.287356 0.995075 1.247237
34677 13.5 719.0625 1.241379 0.960391 1.196017
34684 13.5 729.0625 1.241379 0.973747 1.222982
34691 13 739.3125 1.195402 0.987437 1.265739
34698 12.75 751.9688 1.172414 1.004341 1.298273
34705 12.875 749.6875 1.183908 1.001294 1.29738
34712 12.75 762.1563 1.172414 1.017947 1.344257
34719 12.25 762.0625 1.126437 1.017822 1.384171
34726 12.875 758.9063 1.183908 1.013607 1.314256
34733 12.75 772.0625 1.172414 1.031178 1.318046
34740 12.75 790.4375 1.172414 1.05572 1.360383
34747 14.375 786.9688 1.321839 1.051087 1.414733
34754 15.875 791.0938 1.45977 1.056597 1.426718
34761 16.5 798.7813 1.517241 1.066864 1.393376
34768 16.625 802.2188 1.528736 1.071455 1.36876
34775 16.875 808.3438 1.551724 1.079636 1.425676
34782 16.5 818.6563 1.517241 1.09341 1.485969
34789 16.125 817.2188 1.482759 1.09149 1.337567
34796 15.125 814.6875 1.390805 1.088109 1.341085
34803 14.625 832.625 1.344828 1.112066 1.391787
34810 14.25 823.4375 1.310345 1.099795 1.427245
34817 14.25 843.9688 1.310345 1.127217 1.440185
34824 18.375 843.5313 1.689655 1.126633 1.368494
34831 20.5 858.9375 1.885057 1.14721 1.437557
34838 18.125 864.5625 1.666667 1.154723 1.401126
34845 18.75 871.875 1.724138 1.164489 1.397536
34852 17.5 872.9688 1.609195 1.16595 1.39801
34859 17.5 884.375 1.609195 1.181185 1.373846
34866 15.25 908.6563 1.402299 1.213615 1.441303
34873 10.59375 938.875 0.974138 1.253976 1.525524
34880 11 933.4375 1.011494 1.246713 1.517227
34887 10.625 969.75 0.977011 1.295213 1.574121
34894 10.125 999.3438 0.931034 1.334739 1.634033
34901 11 961.7813 1.011494 1.284569 1.565793
34908 11 1005.281 1.011494 1.342669 1.639251
34915 12.5 991.125 1.149425 1.323761 1.559525
34922 12.25 1004.125 1.126437 1.341124 1.540297
34929 12 1031.25 1.103448 1.377353 1.655228
34936 12.25 1019.969 1.126437 1.362286 1.598463
34943 11.5 1019.469 1.057471 1.361618 1.539019
34950 12 1060 1.103448 1.415752 1.638809
34957 12.125 1051.125 1.114943 1.403898 1.663789
34964 12.125 1053.375 1.114943 1.406903 1.749951
34971 10.25 1043.563 0.942529 1.393798 1.750482
34978 10 1012.031 0.91954 1.351684 1.691466
34985 10.25 1018.375 0.942529 1.360157 1.701104
34992 10 1039.5 0.91954 1.388372 1.740177
34999 10 1025.563 0.91954 1.369757 1.803217
35006 10 1065.688 0.91954 1.423348 1.837241
35013 10 1063.875 0.91954 1.420927 1.880298
35020 9.5 1045 0.873563 1.395718 1.795236
35027 9.5 1030.188 0.873563 1.375934 1.715365
35034 10 1055.313 0.91954 1.409491 1.741165
35041 12.75 1062.438 1.172414 1.419007 1.779616
35048 11.25 1030.5 1.034483 1.376351 1.632933
35055 11 1046.875 1.011494 1.398222 1.699188
35062 10.625 1052.125 0.977011 1.405234 1.633773
35069 10.375 1033.5 0.954023 1.380358 1.539051
35076 9.75 1008.219 0.896552 1.346592 1.504647
35083 10 1018.438 0.91954 1.36024 1.482344
35090 10.625 1040.938 0.977011 1.390292 1.657184
35097 9.625 1072.125 0.885057 1.431946 1.684647
35104 11.25 1094.625 1.034483 1.461998 1.716242
35111 10.625 1090.688 0.977011 1.456739 1.787834
35118 10.125 1117.813 0.931034 1.492967 1.890849
35125 12 1086.063 1.103448 1.450561 1.752613
35132 12.75 1063.75 1.172414 1.42076 1.619028
35139 13 1099.563 1.195402 1.468592 1.73169
35146 14.875 1102.25 1.367816 1.472182 1.746238
35153 16.375 1101.375 1.505747 1.471013 1.656038
35160 16 1118.188 1.471264 1.493468 1.700236
35167 15.25 1100.938 1.402299 1.470429 1.652555
35174 16 1138.688 1.471264 1.520848 1.744537
35181 16.875 1186.875 1.551724 1.585208 1.886917
35188 16.5 1184.625 1.517241 1.582203 1.79243
35195 16.625 1202.75 1.528736 1.606411 1.858919
35202 18 1241.875 1.655172 1.658667 1.927008
35209 19 1247.813 1.747126 1.666597 1.856492
35216 18.5 1243.438 1.701149 1.660754 1.836486
35223 17.5 1229.75 1.609195 1.642473 1.892825
35230 16.5 1213.188 1.517241 1.620351 1.808847
35237 15.75 1175.438 1.448276 1.569932 1.823014
35244 16.5 1185 1.517241 1.582704 1.855776
35251 15.5 1158.375 1.425287 1.547143 1.785149
35258 14.875 1103.5 1.367816 1.473851 1.624055
35265 14.25 1097.688 1.310345 1.466088 1.659462
35272 14.125 1079.438 1.298851 1.441713 1.689472
35279 14 1124.938 1.287356 1.502483 1.78603
35286 13.75 1137.25 1.264368 1.518928 1.793858
35293 14.5 1133.625 1.333333 1.514087 1.742361
35300 14.5 1143.063 1.333333 1.526691 1.735125
35307 15.625 1141.5 1.436782 1.524605 1.724226
35314 15 1139.375 1.37931 1.521766 1.729266
35321 15.375 1188.688 1.413793 1.587629 1.808873
35328 16.625 1219.688 1.528736 1.629033 1.899305
35335 18.5 1230.063 1.701149 1.64289 1.905592
35342 21.75 1247.563 2 1.666263 1.855595
35349 21.25 1248.25 1.954023 1.667181 1.929846
35356 21 1242.5 1.931034 1.659502 1.945784
35363 20.375 1222.625 1.873563 1.632956 1.848022
35370 19.25 1221.75 1.770115 1.631788 1.802504
35377 20.25 1257.5 1.862069 1.679536 1.854761
35384 20.75 1261.813 1.908046 1.685296 1.972627
35391 20 1274.375 1.83908 1.702074 2.012714
35398 21.125 1292.625 1.942529 1.726449 2.082073
35405 23 1287.688 2.114943 1.719855 2.123977
35412 29.75 1284.938 2.735632 1.716182 2.002871
35419 29.25 1288.563 2.689655 1.721023 2.057771
35426 29.5 1291.375 2.712644 1.72478 2.019228
35433 28.5625 1310.688 2.626437 1.750574 2.072227
35440 27.25 1332 2.505747 1.779039 2.168049
35447 28.5 1349.063 2.62069 1.801828 2.136777
35454 26.75 1363.813 2.45977 1.821528 2.194794
35461 26.25 1379.875 2.413793 1.842982 2.215387
35468 25.8125 1355.188 2.373563 1.810009 2.003693
35475 24.75 1367.188 2.275862 1.826036 2.044998
35482 23.5 1334.313 2.16092 1.782128 2.04056
35489 23.5 1309 2.16092 1.74832 1.879004
35496 22.875 1311.813 2.103448 1.752076 1.923042
35503 22.75 1293 2.091954 1.72695 1.878248
35510 21 1254.063 1.931034 1.674945 1.867958
35517 21.375 1249.5 1.965517 1.668851 1.858906
35524 12 1236.75 1.103448 1.651822 1.847545
35531 11 1206.875 1.011494 1.61192 1.75578
35538 10.625 1222.563 0.977011 1.632873 1.740953
35545 11.25 1209.313 1.034483 1.615176 1.770658
35552 13.25 1305.313 1.218391 1.743395 2.005394
35559 12.625 1335.063 1.16092 1.78313 2.05784
35566 13.375 1340.75 1.229885 1.790726 2.065591
35573 12 1389.75 1.103448 1.856171 2.071094
35580 12.5 1400.313 1.149425 1.870278 2.108593
35587 12.375 1404.813 1.137931 1.876289 2.125849
35594 12.25 1423 1.126437 1.90058 2.131366
35601 9.125 1447.125 0.83908 1.932802 2.179098
35608 9.125 1438.125 0.83908 1.920781 2.172483
35615 9.0625 1467.625 0.833333 1.960182 2.287206
35622 9.75 1502.625 0.896552 2.006929 2.402999
35629 9.625 1548 0.885057 2.067532 2.594974
35636 9.25 1569.563 0.850575 2.096331 2.493978
35643 10 1594.313 0.91954 2.129388 2.540194
35650 10.75 1598.5 0.988506 2.134981 2.534692
35657 11.375 1562 1.045977 2.086231 2.424741
35664 12.125 1598.688 1.114943 2.135231 2.417677
35671 10.75 1587.313 0.988506 2.120038 2.408105
35678 11.375 1635.75 1.045977 2.184732 2.433356
35685 11 1649.313 1.011494 2.202847 2.516089
35692 11.75 1680.375 1.08046 2.244334 2.630896
35699 10.0625 1682.25 0.925287 2.246838 2.575359
35706 10 1715.875 0.91954 2.291748 2.618558
35713 10.125 1739 0.931034 2.322635 2.736254
35720 10.375 1666.875 0.954023 2.226303 2.441474
35727 10.3125 1650.938 0.948276 2.205017 2.413931
35734 9.375 1593.625 0.862069 2.128469 2.329303
35741 9.75 1602.375 0.896552 2.140156 2.402945
35748 9.375 1583.5 0.862069 2.114946 2.376803
35755 12.75 1620.75 1.172414 2.164698 2.440166
35762 12.25 1600.563 1.126437 2.137735 2.349282
35769 12.4375 1633.875 1.143678 2.182228 2.435145
35776 12.125 1536.563 1.114943 2.052256 2.137744
35783 12.25 1524.75 1.126437 2.036479 2.147368
35790 13.125 1511.375 1.206897 2.018615 2.147855
35797 13.125 1581.5 1.206897 2.112275 2.278063
35804 12.625 1503.25 1.16092 2.007763 2.172267
</TABLE>
<PAGE>
Project TroubleShooter
Close Price Index Comparison
Historical Data
Network
Date TroubleShooter Nasdaq Composite
--------- ------------- ------ ---------
4/8/94 $10.88 748.72 12.23
4/15/94 10.50 727.97 11.53
4/22/94 10.50 722.56 11.98
4/29/94 10.50 733.84 13.15
5/6/94 11.00 732.88 12.65
5/13/94 10.75 716.91 12.04
5/20/94 10.50 726.69 12.12
5/27/94 10.88 733.13 11.85
6/3/94 10.63 742.38 11.94
6/10/94 10.88 734.25 11.46
6/17/94 10.38 729.34 11.11
6/24/94 10.38 693.78 11.12
7/1/94 9.63 706.84 11.63
7/8/94 9.63 707.47 12.11
7/15/94 9.63 721.38 12.45
7/22/94 9.63 716.69 11.83
7/29/94 9.63 722.16 11.83
8/5/94 8.88 718.66 12.02
8/12/94 9.00 731.63 12.09
8/19/94 8.88 742.44 12.49
8/26/94 9.88 762.94 12.95
9/2/94 10.75 759.22 13.11
9/9/94 11.00 763.72 13.12
9/16/94 12.25 777.91 13.93
9/23/94 12.13 757.25 13.75
9/30/94 12.00 764.28 13.82
10/7/94 11.63 749.97 14.20
10/14/94 11.63 767.09 15.26
10/21/94 13.75 765.38 15.42
10/28/94 13.50 776.16 15.61
11/4/94 13.38 766.09 15.91
11/11/94 14.63 762.13 15.31
11/18/94 14.88 764.66 15.67
11/25/94 14.50 742.53 14.98
12/2/94 14.00 745.03 15.25
12/9/94 13.50 719.06 14.62
12/16/94 13.50 729.06 14.95
12/23/94 13.00 739.31 15.47
<PAGE>
Network
Date TroubleShooter Nasdaq Composite
--------- ------------- ------ ---------
12/30/94 12.75 751.97 15.87
1/6/95 12.88 749.69 15.86
1/13/95 12.75 762.16 16.43
1/20/95 12.25 762.06 16.92
1/27/95 12.88 758.91 16.07
2/3/95 12.75 772.06 16.11
2/10/95 12.75 790.44 16.63
2/17/95 14.38 786.97 17.30
2/24/95 15.88 791.09 17.44
3/3/95 16.50 798.78 17.03
3/10/95 16.63 802.22 16.73
3/17/95 16.88 808.34 17.43
3/24/95 16.50 818.66 18.17
3/31/95 16.13 817.22 16.35
4/7/95 15.13 814.69 16.39
4/14/95 14.63 832.63 17.01
4/21/95 14.25 823.44 17.45
4/28/95 14.25 843.97 17.61
5/5/95 18.38 843.53 16.73
5/12/95 20.50 858.94 17.57
5/19/95 18.13 864.56 17.13
5/26/95 18.75 871.88 17.09
6/2/95 17.50 872.97 17.09
6/9/95 17.50 884.38 16.80
6/16/95 15.25 908.66 17.62
6/23/95 10.59 938.88 18.65
6/30/95 11.00 933.44 18.55
7/7/95 10.63 969.75 19.24
7/14/95 10.13 999.34 19.98
7/21/95 11.00 961.78 19.14
7/28/95 11.00 1005.28 20.04
8/4/95 12.50 991.13 19.07
8/11/95 12.25 1004.13 18.83
8/18/95 12.00 1031.25 20.24
8/25/95 12.25 1019.97 19.54
9/1/95 11.50 1019.47 18.81
9/8/95 12.00 1060.00 20.03
9/15/95 12.13 1051.13 20.34
9/22/95 12.13 1053.38 21.39
9/29/95 10.25 1043.56 21.40
10/6/95 10.00 1012.03 20.68
10/13/95 10.25 1018.38 20.80
10/20/95 10.00 1039.50 21.27
10/27/95 10.00 1025.56 22.04
11/3/95 10.00 1065.69 22.46
11/10/95 10.00 1063.88 22.99
11/17/95 9.50 1045.00 21.95
11/24/95 9.50 1030.19 20.97
12/1/95 10.00 1055.31 21.29
12/8/95 12.75 1062.44 21.76
12/15/95 11.25 1030.50 19.96
12/22/95 11.00 1046.88 20.77
<PAGE>
Network
Date TroubleShooter Nasdaq Composite
--------- ------------- ------ ---------
12/29/95 10.63 1052.13 19.97
1/5/96 10.38 1033.50 18.82
1/12/96 9.75 1008.22 18.39
1/19/96 10.00 1018.44 18.12
1/26/96 10.63 1040.94 20.26
2/2/96 9.63 1072.13 20.60
2/9/96 11.25 1094.63 20.98
2/16/96 10.63 1090.69 21.86
2/23/96 10.13 1117.81 23.12
3/1/96 12.00 1086.06 21.43
3/8/96 12.75 1063.75 19.79
3/15/96 13.00 1099.56 21.17
3/22/96 14.88 1102.25 21.35
3/29/96 16.38 1101.38 20.25
4/5/96 16.00 1118.19 20.79
4/12/96 15.25 1100.94 20.20
4/19/96 16.00 1138.69 21.33
4/26/96 16.88 1186.88 23.07
5/3/96 16.50 1184.63 21.91
5/10/96 16.63 1202.75 22.73
5/17/96 18.00 1241.88 23.56
5/24/96 19.00 1247.81 22.70
5/31/96 18.50 1243.44 22.45
6/7/96 17.50 1229.75 23.14
6/14/96 16.50 1213.19 22.11
6/21/96 15.75 1175.44 22.29
6/28/96 16.50 1185.00 22.69
7/5/96 15.50 1158.38 21.82
7/12/96 14.88 1103.50 19.85
7/19/96 14.25 1097.69 20.29
7/26/96 14.13 1079.44 20.65
8/2/96 14.00 1124.94 21.83
8/9/96 13.75 1137.25 21.93
8/16/96 14.50 1133.63 21.30
8/23/96 14.50 1143.06 21.21
8/30/96 15.63 1141.50 21.08
9/6/96 15.00 1139.38 21.14
9/13/96 15.38 1188.69 22.11
9/20/96 16.63 1219.69 23.22
9/27/96 18.50 1230.06 23.30
10/4/96 21.75 1247.56 22.68
10/11/96 21.25 1248.25 23.59
10/18/96 21.00 1242.50 23.79
10/25/96 20.38 1222.63 22.59
11/1/96 19.25 1221.75 22.04
11/8/96 20.25 1257.50 22.67
11/15/96 20.75 1261.81 24.12
11/22/96 20.00 1274.38 24.61
11/29/96 21.13 1292.63 25.45
12/6/96 23.00 1287.69 25.97
<PAGE>
Network
Date TroubleShooter Nasdaq Composite
--------- ------------- ------ ---------
12/13/96 29.75 1284.94 24.49
12/20/96 29.25 1288.56 25.16
12/27/96 29.50 1291.38 24.69
1/3/97 28.56 1310.69 25.33
1/10/97 27.25 1332.00 26.50
1/17/97 28.50 1349.06 26.12
1/24/97 26.75 1363.81 26.83
1/31/97 26.25 1379.88 27.08
2/7/97 25.81 1355.19 24.50
2/14/97 24.75 1367.19 25.00
2/21/97 23.50 1334.31 24.95
2/28/97 23.50 1309.00 22.97
3/7/97 22.88 1311.81 23.51
3/14/97 22.75 1293.00 22.96
3/21/97 21.00 1254.06 22.84
3/28/97 21.38 1249.50 22.73
4/4/97 12.00 1236.75 22.59
4/11/97 11.00 1206.88 21.46
4/18/97 10.63 1222.56 21.28
4/25/97 11.25 1209.31 21.65
5/2/97 13.25 1305.31 24.52
5/9/97 12.63 1335.06 25.16
5/16/97 13.38 1340.75 25.25
5/23/97 12.00 1389.75 25.32
5/30/97 12.50 1400.31 25.78
6/6/97 12.38 1404.81 25.99
6/13/97 12.25 1423.00 26.06
6/20/97 9.13 1447.13 26.64
6/27/97 9.13 1438.13 26.56
7/4/97 9.06 1467.63 27.96
7/11/97 9.75 1502.63 29.38
7/18/97 9.63 1548.00 31.72
7/25/97 9.25 1569.56 30.49
8/1/97 10.00 1594.31 31.05
8/8/97 10.75 1598.50 30.99
8/15/97 11.38 1562.00 29.64
8/22/97 12.13 1598.69 29.56
8/29/97 10.75 1587.31 29.44
9/5/97 11.38 1635.75 29.75
9/12/97 11.00 1649.31 30.76
9/19/97 11.75 1680.38 32.16
9/26/97 10.06 1682.25 31.48
10/3/97 10.00 1715.88 32.01
10/10/97 10.13 1739.00 33.45
10/17/97 10.38 1666.88 29.85
10/24/97 10.31 1650.94 29.51
10/31/97 9.38 1593.63 28.48
11/7/97 9.75 1602.38 29.38
11/14/97 9.38 1583.50 29.06
11/21/97 12.75 1620.75 29.83
11/28/97 12.25 1600.56 28.72
12/5/97 12.44 1633.88 29.77
12/12/97 12.13 1536.56 26.13
12/19/97 12.25 1524.75 26.25
12/26/97 13.13 1511.38 26.26
1/2/98 13.13 1581.50 27.85
1/9/98 12.63 1503.25 26.56
<PAGE>
Project TroubleShooter
Close Price Index Comparison
Daily: 1/1/97 to 01/15/98
(chart appears here with plot points)
<TABLE>
<S> <C>
9336921010 Nasdaq 273 Wandel & Nasdaq
TS1 TS131 00000129
35431 1 1 1
35432 0.923077 0.992012 0.993785
35433 0.976496 1.01525 1.040292
35436 0.978632 1.019655 1.068849
35437 0.940171 1.028466 1.083249
35438 0.965812 1.022754 1.06125
35439 0.944444 1.027256 1.067495
35440 0.931624 1.031758 1.088397
35443 0.991453 1.030935 1.081823
35444 1 1.042893 1.078145
35445 1.008547 1.03292 1.071968
35446 1.025641 1.038391 1.074574
35447 0.974359 1.044975 1.072698
35450 0.974359 1.056739 1.074568
35451 0.931624 1.066615 1.113908
35452 0.905983 1.075184 1.139335
35453 0.940171 1.06768 1.113137
35454 0.91453 1.0564 1.101823
35457 0.92735 1.04788 1.089223
35458 0.944444 1.04909 1.088486
35459 0.940171 1.049719 1.095527
35460 0.923077 1.061967 1.114871
35461 0.897436 1.068842 1.112161
35464 0.923077 1.065889 1.111087
35465 0.923077 1.064098 1.098264
35466 0.880342 1.044491 1.075994
35467 0.888889 1.042893 0.989722
35468 0.882479 1.049719 1.005887
35471 0.880342 1.034324 0.989723
35472 0.820513 1.031371 0.99556
35473 0.811966 1.052624 0.999833
35474 0.837607 1.061822 1.017299
35475 0.846154 1.059014 1.026623
35478 0.846154 1.059014 1.026623
35479 0.820513 1.057949 1.029667
35480 0.820513 1.057756 1.041246
35481 0.803419 1.043668 1.019403
35482 0.803419 1.03355 1.024395
35485 0.811966 1.041876 1.008832
35486 0.820513 1.04391 1.010986
35487 0.803419 1.038391 0.99016
35488 0.777778 1.016799 0.949594
35489 0.803419 1.013943 0.943291
35492 0.735043 1.015637 0.956968
35493 0.777778 1.02043 0.977308
35494 0.777778 1.029483 1.006716
35495 0.782051 1.018929 0.985582
35496 0.782051 1.016121 0.965399
35499 0.782051 1.024593 0.960199
35500 0.777778 1.019946 0.95271
35501 0.803419 1.010167 0.931975
35502 0.769231 1.001743 0.931166
35503 0.777778 1.001549 0.942911
35506 0.760684 0.991044 0.930749
35507 0.735043 0.983201 0.932688
35508 0.760684 0.967709 0.906135
35509 0.752137 0.975407 0.913131
35510 0.717949 0.971388 0.937746
35513 0.692308 0.962529 0.93982
35514 0.683761 0.966741 0.92934
35515 0.700855 0.983007 0.931591
35516 0.730769 0.967854 0.933202
35517 0.730769 0.967854 0.933202
35520 0.752137 0.946359 0.909666
35521 0.730769 0.942632 0.889247
35522 0.367521 0.930287 0.884949
35523 0.405983 0.940163 0.881416
35524 0.410256 0.957978 0.927498
35527 0.405983 0.969258 0.940449
35528 0.367521 0.973954 0.929521
35529 0.371795 0.967806 0.906836
35530 0.376068 0.957204 0.903126
35531 0.376068 0.934837 0.881431
35534 0.384615 0.942244 0.874078
35535 0.388889 0.939485 0.894864
35536 0.380342 0.937452 0.889273
35537 0.376068 0.942729 0.867846
35538 0.363248 0.946989 0.873988
35541 0.367521 0.932562 0.852314
35542 0.380342 0.939388 0.890154
35543 0.393162 0.950523 0.890755
35544 0.384615 0.951297 0.892885
35545 0.384615 0.936725 0.8889
35548 0.367521 0.94268 0.889009
35549 0.401709 0.962529 0.931271
35550 0.423077 0.976569 0.954325
35551 0.42735 0.984121 0.951119
35552 0.452991 1.011086 1.006741
35555 0.470085 1.037374 1.061521
35556 0.470085 1.028902 1.029477
35557 0.470085 1.024739 1.011819
35558 0.423077 1.030838 1.018245
35559 0.431624 1.034131 1.03307
35562 0.431624 1.041199 1.073865
35563 0.418803 1.032969 1.048936
35564 0.440171 1.034518 1.059279
35565 0.42735 1.04846 1.095856
35566 0.457265 1.038536 1.036961
35569 0.470085 1.046669 1.034839
35570 0.444444 1.056448 1.045782
35571 0.423077 1.064098 1.052373
35572 0.42735 1.063178 1.025323
35573 0.410256 1.076491 1.039724
35576 0.410256 1.076491 1.039724
35577 0.412393 1.091547 1.070898
35578 0.42735 1.092322 1.06435
35579 0.423077 1.086803 1.049727
35580 0.42735 1.084673 1.058548
35583 0.425214 1.088158 1.067925
35584 0.431624 1.072763 1.045444
35585 0.431624 1.068697 1.036072
35586 0.418803 1.076733 1.02716
35587 0.423077 1.088158 1.067211
35590 0.418803 1.093774 1.075773
35591 0.41453 1.085738 1.055134
35592 0.418803 1.090531 1.058354
35593 0.42094 1.093193 1.051284
35594 0.418803 1.102246 1.069981
35597 0.410256 1.109169 1.0769
35598 0.401709 1.117835 1.083428
35599 0.388889 1.109557 1.064592
35600 0.307692 1.120933 1.07662
35601 0.311966 1.120933 1.093943
35604 0.320513 1.111009 1.08549
35605 0.32906 1.125048 1.102539
35606 0.324786 1.120256 1.094447
35607 0.316239 1.112607 1.082085
35608 0.311966 1.113962 1.090623
35611 0.311966 1.117012 1.11068
35612 0.303419 1.114059 1.101596
35613 0.316239 1.127517 1.133575
35614 0.309829 1.136813 1.148216
35615 0.309829 1.136813 1.148216
35618 0.320513 1.139233 1.138666
35619 0.333333 1.150368 1.157315
35620 0.324786 1.15153 1.176219
35621 0.32906 1.15487 1.173719
35622 0.333333 1.163923 1.206345
35625 0.34188 1.180383 1.272057
35626 0.337607 1.19452 1.303255
35627 0.32906 1.224342 1.333924
35628 0.32906 1.21524 1.294242
35629 0.32906 1.19907 1.30272
35632 0.316239 1.189969 1.297385
35633 0.320513 1.211367 1.271847
35634 0.324786 1.214272 1.252693
35635 0.324786 1.215434 1.242305
35636 0.316239 1.215773 1.252018
35639 0.316239 1.211077 1.236584
35640 0.337607 1.217903 1.247482
35641 0.346154 1.230054 1.285483
35642 0.337607 1.234557 1.297751
35643 0.34188 1.234944 1.275219
35646 0.34188 1.243561 1.30681
35647 0.346154 1.255713 1.32606
35648 0.373932 1.262926 1.320766
35649 0.360043 1.258085 1.292711
35650 0.367521 1.238187 1.272457
35653 0.376068 1.229086 1.273055
35654 0.376068 1.220953 1.270281
35655 0.393162 1.226472 1.267678
35656 0.393162 1.229038 1.267327
35657 0.388889 1.209915 1.21726
35660 0.393162 1.215724 1.201096
35661 0.423077 1.239882 1.21636
35662 0.435897 1.26157 1.242395
35663 0.435897 1.245062 1.226968
35664 0.41453 1.238333 1.213714
35667 0.410256 1.24056 1.21946
35668 0.371795 1.23262 1.210556
35669 0.380342 1.235912 1.214721
35670 0.376068 1.224874 1.207856
35671 0.367521 1.229522 1.208909
35674 0.367521 1.229522 1.208909
35675 0.393162 1.25334 1.230208
35676 0.393162 1.253486 1.215586
35677 0.397436 1.258424 1.208536
35678 0.388889 1.267041 1.221585
35681 0.384615 1.274497 1.246761
35682 0.393162 1.28292 1.277532
35683 0.384615 1.269752 1.275962
35684 0.384615 1.270236 1.259824
35685 0.376068 1.277546 1.263118
35688 0.410256 1.266412 1.275731
35689 0.401709 1.292506 1.312682
35690 0.401709 1.29086 1.272597
35691 0.405983 1.293571 1.301658
35692 0.401709 1.301607 1.320753
35695 0.401709 1.308627 1.315685
35696 0.346154 1.314775 1.318977
35697 0.350427 1.307078 1.31961
35698 0.354701 1.300445 1.303562
35699 0.344017 1.30306 1.292873
35702 0.34188 1.312936 1.297134
35703 0.339744 1.305722 1.297186
35704 0.339744 1.309305 1.283194
35705 0.339744 1.318697 1.300599
35706 0.34188 1.329105 1.314559
35709 0.350427 1.333801 1.352447
35710 0.34188 1.345662 1.38121
35711 0.354701 1.349148 1.380885
35712 0.346154 1.352343 1.37668
35713 0.346154 1.347018 1.373645
35716 0.350427 1.349438 1.388751
35717 0.354701 1.342273 1.374883
35718 0.363248 1.334915 1.356254
35719 0.354701 1.316567 1.2458
35720 0.354701 1.29115 1.225661
35723 0.350427 1.305529 1.256008
35724 0.363248 1.32654 1.281284
35725 0.358974 1.323054 1.287999
35726 0.346154 1.294539 1.264048
35727 0.352564 1.278805 1.211833
35730 0.344017 1.187258 1.13433
35731 0.34188 1.241673 1.197265
35732 0.337607 1.241479 1.179802
35733 0.337607 1.21645 1.152772
35734 0.320513 1.234411 1.169349
35737 0.324786 1.262587 1.218925
35738 0.324786 1.263459 1.232925
35739 0.324786 1.268251 1.242152
35740 0.333333 1.257504 1.229586
35741 0.333333 1.241189 1.206318
35744 0.333333 1.232184 1.194665
35745 0.339744 1.227634 1.185855
35746 0.324786 1.194181 1.138293
35747 0.320513 1.207785 1.148394
35748 0.320513 1.226569 1.193194
35751 0.333333 1.25029 1.225008
35752 0.34188 1.239688 1.187722
35753 0.403846 1.240318 1.187421
35754 0.435897 1.259924 1.224553
35755 0.435897 1.255422 1.225004
35758 0.410256 1.22928 1.177074
35759 0.42735 1.230877 1.177467
35760 0.418803 1.235089 1.170499
35761 0.418803 1.235089 1.170499
35762 0.418803 1.239785 1.179379
35765 0.431624 1.261716 1.234896
35766 0.418803 1.244287 1.20448
35767 0.42735 1.251065 1.202302
35768 0.435897 1.249758 1.16566
35769 0.425214 1.265589 1.222483
35772 0.41453 1.279289 1.218096
35773 0.42735 1.255277 1.176388
35774 0.418803 1.236735 1.139843
35775 0.410256 1.207252 1.099787
35776 0.41453 1.190211 1.073183
35779 0.42735 1.190211 1.080173
35780 0.42735 1.202943 1.13582
35781 0.423077 1.198586 1.112921
35782 0.423077 1.179851 1.074132
35783 0.418803 1.181061 1.078014
35786 0.42735 1.186725 1.110992
35787 0.457265 1.169588 1.071903
35788 0.452991 1.161503 1.067276
35789 0.452991 1.161503 1.067276
35790 0.448718 1.170701 1.078259
35793 0.448718 1.190889 1.103979
35794 0.448718 1.212239 1.120555
35795 0.448718 1.216402 1.12418
35796 0.448718 1.216402 1.12418
35797 0.448718 1.225019 1.143626
35800 0.448718 1.234799 1.162484
35801 0.448718 1.223954 1.158921
35802 0.457265 1.209673 1.153299
35803 0.440171 1.204928 1.147423
35804 0.431624 1.164407 1.090514
35807 0.435897 1.167748 1.082851
35808 0.435897 1.194132 1.121648
35809 0.438034 1.199651 1.116869
35810 0.438034 1.198344 1.104614
<CAPTION>
9336921010 Nasdaq
TS1 TS131 00000129 03818110 20618610 25385510 42823610 64093810 87910110 87913110
35431 5.5 n.a. n.a. 49.54445 29.33333 3.9375 33.44521
35432 5.5 n.a. n.a. 49.6677 29 4.125 32.71105
35433 6.75 n.a. n.a. 51.14664 30.625 4.78125 33.36364
35436 6.9375 n.a. n.a. 53.2418 31.5 4.9375 33.52679
35437 7.5 n.a. n.a. 53.73478 32.16667 4.96875 33.52679
35438 7.375 n.a. n.a. 52.37909 31 4.9375 33.52679
35439 7.25 n.a. n.a. 52.25584 31.83333 5.03125 33.60836
35440 7.25 n.a. n.a. 53.2418 33.16667 5.09375 33.77151
35443 6.875 n.a. n.a. 53.85802 32.25 4.96875 33.77151
35444 7.375 n.a. n.a. 53.2418 32 4.96875 33.68993
35445 7.375 n.a. n.a. 53.61153 31.33333 4.90625 33.29724
35446 7.375 n.a. n.a. 53.61153 32.5 4.875 32.47912
35447 7.5 n.a. n.a. 53.2418 32.33334 4.8125 32.72456
35450 7.4375 n.a. n.a. 52.50233 33.5 4.59375 32.80637
35451 7.5 n.a. n.a. 53.2418 37.5 4.5 32.88818
35452 7.875 n.a. n.a. 52.99531 40.58334 4.875 32.39731
35453 7.625 n.a. n.a. 51.26988 39.16667 4.75 32.72456
35454 7.625 n.a. n.a. 51.14664 38.33334 4.65625 32.39731
35457 7.75 n.a. n.a. 50.53041 37.75 4.6875 31.90644
35458 7 n.a. n.a. 50.03743 38.58334 4.84375 32.07006
35459 7 n.a. n.a. 50.65366 38.75 5 31.98825
35460 7 n.a. n.a. 52.74882 38.5 4.9375 32.56093
35461 7 n.a. n.a. 51.8861 38.83334 5.21875 32.47912
35464 7.25 n.a. n.a. 51.39312 38.20834 5.546875 32.88818
35465 6.75 n.a. n.a. 51.26988 37.5 5.5625 32.64275
35466 7 n.a. n.a. 50.03743 35.83334 5.5 32.64275
35467 7.125 n.a. 12.75 50.53041 36.66667 5.46875 32.07006
35468 6.5 n.a. 12.5625 51.14664 39.58334 5.4375 31.74282
35471 6.75 n.a. 12 48.43525 40 5.4375 31.98825
35472 6.125 n.a. 12 50.03743 39.33334 5.734375 32.23369
35473 6.25 n.a. 12.125 50.03743 40 5.6875 31.98825
35474 6.875 n.a. 12 49.91418 41.58334 5.625 32.64275
35475 7.25 n.a. 12 49.6677 43 5.6875 32.39731
35478 7.25 n.a. 12 49.6677 43 5.6875 32.39731
35479 7.1875 n.a. 12 51.45475 41.83334 5.65625 32.3155
35480 7.125 n.a. 10.375 55.95319 40.625 5.5 32.56093
35481 6.875 n.a. 9.375 55.09047 39.91667 5.375 32.3155
35482 7.125 n.a. 9.75 54.96723 40 5.4375 32.39731
35485 7 n.a. 9.625 55.7067 37.16667 5.34375 32.56093
35486 6.875 n.a. 9.3125 58.1716 35.75 5.375 32.23369
35487 6.9375 n.a. 8.75 58.04835 33.16667 5.375 32.39731
35488 6.75 n.a. 8.75 56.07643 29.75 5.1875 32.23369
35489 7 n.a. 8 55.33696 30.58333 5 31.90644
35492 6.875 n.a. 7.875 56.07643 32.16667 4.84375 31.98825
35493 6.625 n.a. 8.5 56.69266 34.16667 4.90625 31.90644
35494 6.625 n.a. 8.5 57.55537 36.83334 4.9375 32.64275
35495 6.625 n.a. 8.75 57.06239 34.41667 5 32.15188
35496 7 n.a. 8 55.33696 32.75 5 32.96999
35499 6.625 n.a. 7.75 55.7067 32 5 33.21542
35500 6.75 n.a. 8 54.59749 31.79167 5.09375 32.96999
35501 6.1875 n.a. 7.75 53.85802 30.33333 5.15625 32.88818
35502 5.75 n.a. 7.5 54.84398 29.91667 5.15625 32.88818
35503 5.625 n.a. 7.875 54.59749 31.33333 5.125 33.21542
35506 5 n.a. 8.5 54.84398 29.75 5.09375 32.80637
35507 5.5 n.a. 9 55.21372 28.5 5.09375 32.96999
35508 5.5 n.a. 8.625 54.59749 25.66667 4.875 33.13361
35509 5.625 n.a. 8 56.19968 26.66667 4.53125 32.39731
35510 5.625 n.a. 8.5 56.07643 28.66667 4.6875 33.46086
35513 5.125 n.a. 8.25 56.195 29 5.125 33.62448
35514 5 n.a. 7.75 55.33046 29.08333 5 33.62448
35515 5.3125 n.a. 7.625 55.08345 29.66667 4.96875 33.46086
35516 5.25 n.a. 7.625 54.34241 30.95833 5.125 33.0518
35517 5.25 n.a. 7.625 54.34241 30.95833 5.125 33.0518
35520 5.25 n.a. 7.625 52.73684 29.5 4.75 33.0518
35521 4.75 n.a. 7.25 51.62529 28.16667 5.25 32.88818
35522 4.75 n.a. 7.375 50.01972 28.75 5.4375 32.96999
35523 4.25 n.a. 7.125 50.01972 29.41667 5.25 32.72456
35524 4.625 n.a. 7.375 52.11932 32.58334 5.4375 33.37905
35527 4.625 n.a. 7.25 51.87231 33.375 5.4375 34.85165
35528 4.5 n.a. 6.875 52.36633 31.91667 5.46875 34.68803
35529 4.25 n.a. 6.625 50.88426 30.95833 5.40625 34.37627
35530 4.1875 n.a. 7.25 49.5257 30.83333 5.375 34.78648
35531 4.125 n.a. 7.25 49.03168 29.08333 5.25 34.04809
35534 4.5 n.a. 7.25 49.03168 28.20833 5.25 33.47379
35535 4.5 n.a. 7.5 49.5257 29.45833 5.0625 34.70444
35536 4.125 n.a. 7.5 49.89622 28.58333 5.125 34.70444
35537 4.125 n.a. 4.1875 50.26674 28.25 5.1875 34.78648
35538 4.125 n.a. 4.25 49.27869 29.79167 5.46875 34.78648
35541 4.0625 n.a. 4.25 48.41415 28.33333 5.34375 34.13013
35542 4.5 n.a. 4.625 49.89622 31.83333 5.40625 33.80196
35543 4.25 n.a. 4.625 48.78467 32.70834 5.40625 34.37627
35544 4 n.a. 4.5 49.64921 32.41667 5.4375 34.45831
35545 4.25 n.a. 4.625 48.90817 32.08334 5.71875 34.29422
35548 4.125 n.a. 4.625 48.66116 32.66667 5.6875 34.13013
35549 4 n.a. 4.875 51.00777 34.66667 5.75 35.77101
35550 3.875 n.a. 5.25 51.87231 37.16667 5.75 35.52488
35551 4 n.a. 5.0625 51.62529 37 6.25 35.03262
35552 5.375 n.a. 5.125 53.72489 40 6.28125 36.59144
35555 6.25 n.a. 6.25 54.58942 43.29167 7.0625 37.65801
35556 6.25 n.a. 6.03125 53.60138 40.25 6.875 37.41188
35557 6.125 n.a. 6.125 53.10736 38.75 6.8125 36.91962
35558 6.25 n.a. 6.125 52.24282 39.66667 7 37.49392
35559 6.5 n.a. 6.125 53.47787 39.75 7.1875 37.90414
35562 6.75 n.a. 6.125 56.195 42.08334 7.4375 38.31436
35563 7 n.a. 6 55.57747 40.5 6.9375 37.24779
35564 7.375 n.a. 6.875 55.94799 39.375 6.96875 38.23232
35565 7.375 n.a. 7.125 58.17109 41.5 6.8125 39.1348
35566 7.1875 n.a. 7.375 52.11932 40.33334 6.59375 37.90414
35569 7.1875 n.a. 7 52.24282 39.70834 6.75 38.31436
35570 7.25 n.a. 7.125 52.24282 41.41667 6.78125 37.98618
35571 6.625 n.a. 7.0625 53.35437 42.16667 7.0625 37.49392
35572 6.25 n.a. 7.25 51.99581 40.29167 7.1875 36.83757
35573 6.375 n.a. 7.25 51.99581 42.08334 7.375 36.83757
35576 6.375 n.a. 7.25 51.99581 42.08334 7.375 36.83757
35577 6.375 n.a. 7.0625 52.73684 45.66667 7.21875 37.41188
35578 6.25 n.a. 7.25 52.48983 44.625 7.40625 37.49392
35579 6.125 n.a. 7.25 51.62529 43.33334 7.46875 37.57597
35580 6.25 n.a. 7.25 50.88426 43.875 8.75 37.65801
35583 7.5 n.a. 7 52.36633 43.08334 8.59375 37.49392
35584 7.4375 n.a. 7.25 51.25478 41.5 8.0625 37.24779
35585 8.375 n.a. 7.25 51.00777 39.66667 8 37.08371
35586 8.25 n.a. 7.125 50.26674 39 8.109375 37.32984
35587 8.375 n.a. 7.0625 51.62529 42.33334 9.125 37.41188
35590 8.5625 n.a. 7.25 52.73684 41.75 9.0625 37.8221
35591 9 n.a. 8.125 51.87231 39.20834 8.46875 37.49392
35592 8.8125 n.a. 8.875 51.50179 39.66667 8.78125 37.00166
35593 8.375 n.a. 8.75 51.87231 38.70834 8.734375 37.16575
35594 8.5 n.a. 8.75 52.61334 40 9.0625 37.41188
35597 7.875 n.a. 8.75 52.50436 41.16667 9.3125 37.74006
35598 8.375 n.a. 8.125 53.24735 41.91667 9.0625 37.57597
35599 8 n.a. 8.125 52.50436 40.83334 8.921875 37.16575
35600 7.75 n.a. 8.5 53.37118 41.08334 9.4375 37.16575
35601 7.5 n.a. 8.75 54.48566 42.5 9.4375 37.16575
35604 7.625 n.a. 8.5 53.61884 41.41667 9.375 38.06823
35605 7 n.a. 9 54.85715 41.83334 9.1875 39.21684
35606 8 n.a. 8.25 54.17608 41.375 8.8125 39.29888
35607 7.75 n.a. 8.25 53.49501 41.25 8.71875 38.64253
35608 7.75 n.a. 8.25 54.05225 41.16667 9 39.1348
35611 7.75 n.a. 8.75 55.47631 42.08334 8.84375 39.38092
35612 8.25 n.a. 8.75 54.36183 41.08334 8.84375 39.66808
35613 8.125 n.a. 8.375 54.79524 44.5 8.8125 41.0218
35614 8.25 n.a. 8.375 55.8478 44.41667 9.40625 41.47304
35615 8.25 n.a. 8.375 55.8478 44.41667 9.40625 41.47304
35618 8.34375 n.a. 8.125 56.34313 43.16667 9.25 41.14486
35619 8.25 n.a. 8.125 57.20995 43.45834 10.82813 41.22691
35620 8.5 n.a. 8.375 57.45761 45.5 11.03125 40.99663
35621 8.25 n.a. 8 57.76719 45.83334 10.8125 40.83215
35622 8.375 n.a. 8.25 60.42955 47.16667 11.25 40.79103
35625 8.5 n.a. 10.25 64.45406 49.25 11.34375 42.06575
35626 9.125 n.a. 10.125 67.61176 49.58334 11.5 42.47695
35627 9.75 n.a. 10.5 68.23091 51.83334 11.90625 42.68255
35628 8.75 n.a. 9.75 65.87812 50.375 11.875 42.47695
35629 8.625 n.a. 11.625 64.51598 51.66667 11.96875 41.94239
35632 8.25 n.a. 11.875 64.26831 51.5 11.6875 41.98351
35633 8.125 n.a. 12 65.44471 46.5 11.65625 42.10687
35634 8.125 n.a. 12 65.19704 44 11.6875 42.02463
35635 8.125 n.a. 11.5 64.2064 41.5 14.07813 42.10687
35636 8.25 n.a. 11.75 64.88747 41.41667 14.8125 41.81903
35639 8.0625 n.a. 12.125 65.63046 40 13.57813 41.28447
35640 7.9375 n.a. 12.75 65.56854 41.25 13.52344 41.24335
35641 8.375 n.a. 13.25 67.17834 42.41667 15.15625 41.44895
35642 8.1875 n.a. 12.625 69.34539 43.45834 15.375 40.62655
35643 8.25 n.a. 12.25 68.29282 42 14.90625 40.62655
35646 8.25 n.a. 12.25 69.03581 44.83334 15.78125 40.79103
35647 8 n.a. 13 69.84071 46.16667 15.75 40.99663
35648 8 n.a. 12.75 69.71688 45.91667 15.3125 41.28447
35649 8 n.a. 12.375 69.09772 44.125 14.32813 40.95551
35650 8.25 n.a. 11.75 68.41666 42.79167 14.375 40.33871
35653 8.125 n.a. 11.875 68.10708 42.45834 15.1875 40.25647
35654 8.125 n.a. 11.8125 67.48792 42.33334 15.21875 40.62655
35655 8.1875 n.a. 11.625 67.24026 42.625 15.125 40.42095
35656 8 n.a. 11.84375 69.22156 41.58334 14.39063 40.13311
35657 8.125 n.a. 12.3125 65.44471 39.41667 14.23438 38.32383
35660 7.875 n.a. 12.375 63.21575 37.25 15.46875 39.31071
35661 8.125 n.a. 13.46875 64.02065 38.58334 15.65625 37.87151
35662 8.375 n.a. 14.25 64.33023 40.16667 16.125 38.28271
35663 8.25 n.a. 14.875 63.4015 39.5 15.95313 37.29583
35664 8.375 n.a. 15 63.27766 36.66667 16.3125 37.70704
35667 8.125 n.a. 15 62.03936 38.58334 16.3125 38.11823
35668 8.0625 n.a. 15 61.79169 38.16667 16.4375 37.41919
35669 8 n.a. 15.625 61.91552 38 17.71875 36.22672
35670 7.75 n.a. 15.625 60.49147 37.75 18.1875 36.67904
35671 7.875 n.a. 15.375 60.92488 37.75 18.15625 36.55567
35674 7.875 n.a. 15.375 60.92488 37.75 18.15625 36.55567
35675 7.75 n.a. 15.125 62.53468 37.91667 19.25 37.17247
35676 7.125 n.a. 14.75 63.27766 36.70834 18.25 37.50143
35677 7 n.a. 14.75 64.08257 35.5 17.625 37.62479
35678 6.875 n.a. 15 64.45406 35.91667 18.125 38.11823
35681 7.5625 n.a. 14.875 65.8162 37.70834 18.375 37.83039
35682 8.0625 n.a. 14.5 66.86877 39.66667 18.625 38.94063
35683 8.5 n.a. 14.375 66.31152 39.95834 17.9375 39.35183
35684 8.25 n.a. 14.75 65.50662 38.91667 17.21875 39.43407
35685 8.4375 n.a. 16 66.37344 38.75 15.5625 39.43407
35688 8.5 n.a. 16.625 64.63981 38 18.29688 40.33871
35689 8.34375 n.a. 16.375 67.24026 39 19.84375 40.99663
35690 7.75 n.a. 15.9375 66.37344 36 18.84375 41.03775
35691 8 n.a. 17 66.55919 35.33334 18.96875 44.32735
35692 7.8125 n.a. 17.5 68.29282 35.75 19.625 43.99839
35695 7.75 n.a. 17.375 69.11426 34.54167 19.5 43.95727
35696 7.625 n.a. 17.25 69.98283 35.58334 18.9375 43.34047
35697 7.25 n.a. 16.5 70.9755 35.91667 18.5 43.66943
35698 7.625 n.a. 16.625 71.03754 33 17.6875 44.49183
35699 7.6875 n.a. 15 70.72733 33.5 17.375 44.61519
35702 7.625 n.a. 15.75 69.4865 34.5 17.46875 44.69743
35703 7.5 n.a. 16.25 69.05222 35.33334 17.03125 44.36847
35704 7.5625 n.a. 16.25 67.87342 34.91667 17.21875 43.66943
35705 7.8125 n.a. 16.625 70.04488 34.66667 16.96875 43.91615
35706 8 n.a. 16.25 69.4865 36.625 18.125 43.58719
35709 9.375 n.a. 16.8125 69.61059 39.91667 17.9375 43.95727
35710 8.875 n.a. 17 69.4865 42.5 19.5 44.45071
35711 9.4375 n.a. 17.125 68.99017 42.16667 19.375 44.67035
35712 9.9375 n.a. 17.375 68.12159 42.25 19.25 44.21622
35713 9.25 n.a. 17.625 67.62526 42.91667 19.15625 44.13364
35716 10.25 n.a. 16.875 67.93546 44.25 19.59375 44.00979
35717 11.625 n.a. 17 67.56322 39.875 21.0625 43.76208
35718 11.1875 n.a. 16.625 67.37709 39.08334 20.75 43.14281
35719 10.25 20.625 16.0625 64.89543 37.58334 20.21875 42.72996
35720 10.375 19.375 17.25 64.02685 35.83334 20.25 41.82169
35723 10.375 19.125 18.6875 65.70197 36.25 21.9375 42.02811
35724 10.375 22.75 18.875 66.44647 36.66667 21.4375 41.86297
35725 10.875 21.125 19.625 66.38443 35.95834 23.5625 42.02811
35726 10.75 20.625 20 64.58522 35.79167 22.5625 41.16113
35727 10 17.25 19.875 63.40643 34.41667 21.25 40.37671
35730 8.625 15.75 18.375 59.06353 32.33334 20.65625 38.56017
35731 8.75 18.875 18 62.78602 34.25 21.79688 39.63358
35732 8.375 19 18.3125 61.17294 34 20.70313 39.55101
35733 9 18 17.875 60.24232 32.91667 19.5 38.97302
35734 9 17.75 18.25 61.17294 33.16667 20.9375 39.05559
35737 8.75 19.25 19 63.03419 34.9375 22.1875 40.62442
35738 8.5 19.5 19.125 63.96481 35.08334 23.125 40.87213
35739 8.625 19.25 19.5 64.46114 35.29167 23 41.61526
35740 8.875 19 19.75 63.15827 35.41667 22.28125 41.11984
35741 8.375 19.9375 19.25 61.48315 34.58334 22.0625 39.94322
35744 8.125 19.875 19.09375 60.05619 33.75 22 40.74827
35745 8.3125 21.375 19 59.12557 33.95834 19.8125 40.56249
35746 8 20.4375 18.75 58.31903 31.33333 17.875 39.32394
35747 7.5 21.46875 19.5 59.6219 30.25 18.34375 39.07623
35748 7.375 21.5 19.375 61.17294 32.41667 20.5 41.05791
35751 8.25 23.25 19.625 61.79335 32.41667 21.375 42.11068
35752 7.75 21.9375 19.375 61.17294 30.83333 19.71875 41.67719
35753 7 22.125 19.625 60.67661 30.75 20.25 41.98682
35754 7.4375 22.0625 22.5 62.41377 31.79167 20.98438 41.55333
35755 7.375 21.90625 22.9375 63.15827 30.70833 20.5 42.23453
35758 7.0625 21.375 21.75 61.35907 29.79167 18.625 40.68635
35759 7.0625 21.96875 21.125 61.23498 29.70833 18.1875 41.42948
35760 7.125 21.65625 20.5 60.24232 30.41667 18.46875 41.11984
35761 7.125 21.65625 20.5 60.24232 30.41667 18.46875 41.11984
35762 7 21.875 20.5 60.67661 30.5 18.9375 41.55333
35765 7 21.625 23 62.28969 34.66667 20 41.9249
35766 6.75 22.15625 21 61.23498 34.25 18.5625 41.36755
35767 7 21.25 20.75 62.9101 34.25 17.48438 41.30562
35768 7.375 19 18.25 62.78602 32.91667 17.9375 40.43864
35769 8.375 19.875 21 67.25301 31.83333 18.5625 41.4914
35772 8.5 19.375 19.75 66.01218 33.66667 19.21875 41.11984
35773 8 18.8125 18.1875 64.08889 33.625 17.9375 39.88129
35774 7.5 16.625 19 63.28235 33 16.5625 38.3331
35775 7.125 17.125 18.125 60.61457 31.33333 15.5 37.6519
35776 6.4375 18 16.25 60.49048 30.16667 14.5625 37.03263
35779 6.3125 19 16 60.80069 30.58333 13.96875 37.46612
35780 6.3125 20 17.0625 62.72398 32.625 16.3125 38.58081
35781 6.25 19.125 16 62.72398 32.70834 15.75 37.15648
35782 6.125 19 13.875 61.54519 31.08333 14.75 36.72299
35783 5.625 18.625 13.4375 60.86273 31.95833 16.59375 36.66106
35786 5.5 19.25 14.25 62.80535 33.58334 16.40625 37.58997
35787 5.25 19 13 60.318 32.25 15.4375 37.46612
35788 5.375 19 12.75 59.63399 32.58334 15.0625 37.52805
35789 5.375 19 12.75 59.63399 32.58334 15.0625 37.52805
35790 5.25 19 12.875 60.06927 33.33334 15.6875 37.58997
35793 5 21 13.25 60.62892 33.66667 16.125 38.51889
35794 5.3125 21 13.5 61.25076 34.9375 16 39.01431
35795 5.875 20.75 13.125 62.05914 35.25 15.25 39.32394
35796 5.875 20.75 13.125 62.05914 35.25 15.25 39.32394
35797 6.0625 19.875 13.875 64.23557 35.66667 16.21875 39.01431
35800 6.75 19.25 15.3125 63.80028 35.66667 17.6875 39.69551
35801 6.5 18.5 15.75 63.98683 36.25 16.625 39.94322
35802 7.5 18 15 64.54649 35.16667 16.75 39.63358
35803 7.5625 17.5 14.6875 64.8574 34.41667 16.9375 39.63358
35804 7.375 15.75 13.125 61.68604 33.25 16.375 38.3331
35807 7.3125 15.125 13.25 61.87259 31.33333 15.875 39.81936
35808 7.6875 15.875 13.75 63.55155 33.33334 16.875 40.129
35809 8.125 17.125 12.9375 62.68098 32.58334 16.5625 40.37247
35810 8 16.875 12.625 63.67591 32.70834 15.59375 38.81969
</TABLE>
<PAGE>
The Robinson-Humphrey Company, LLC
Project TroubleShooter
Close Price Index Comparison
Historical Data
Network
Date TroubleShooter Nasdaq Composite
---- -------------- ------ ---------
1/1/97 $29.25 1291.00 24.35
1/2/97 27.00 1280.69 24.20
1/3/97 28.56 1310.69 25.33
1/6/97 28.63 1316.38 26.03
1/7/97 27.50 1327.75 26.38
1/8/97 28.25 1320.38 25.84
1/9/97 27.63 1326.19 26.00
1/10/97 27.25 1332.00 26.50
1/13/97 29.00 1330.94 26.34
1/14/97 29.25 1346.38 26.26
1/15/97 29.50 1333.50 26.10
1/16/97 30.00 1340.56 26.17
1/17/97 28.50 1349.06 26.12
1/20/97 28.50 1364.25 26.17
1/21/97 27.25 1377.00 27.13
1/22/97 26.50 1388.06 27.75
1/23/97 27.50 1378.38 27.11
1/24/97 26.75 1363.81 26.83
1/27/97 27.13 1352.81 26.52
1/28/97 27.63 1354.38 26.51
1/29/97 27.50 1355.19 26.68
1/30/97 27.00 1371.00 27.15
1/31/97 26.25 1379.88 27.08
2/3/97 27.00 1376.06 27.06
2/4/97 27.00 1373.75 26.75
2/5/97 25.75 1348.44 26.20
2/6/97 26.00 1346.38 24.10
2/7/97 25.81 1355.19 24.50
2/10/97 25.75 1335.31 24.10
2/11/97 24.00 1331.50 24.24
2/12/97 23.75 1358.94 24.35
2/13/97 24.50 1370.81 24.77
2/14/97 24.75 1367.19 25.00
2/17/97 24.75 1367.19 25.00
2/18/97 24.00 1365.81 25.07
2/19/97 24.00 1365.56 25.36
2/20/97 23.50 1347.38 24.82
2/21/97 23.50 1334.31 24.95
2/24/97 23.75 1345.06 24.57
2/25/97 24.00 1347.69 24.62
2/26/97 23.50 1340.56 24.11
2/27/97 22.75 1312.69 23.12
2/28/97 23.50 1309.00 22.97
3/3/97 21.50 1311.19 23.30
3/4/97 22.75 1317.38 23.80
3/5/97 22.75 1329.06 24.52
3/6/97 22.88 1315.44 24.00
3/7/97 22.88 1311.81 23.51
3/10/97 22.88 1322.75 23.38
3/11/97 22.75 1316.75 23.20
3/12/97 23.50 1304.13 22.70
3/13/97 22.50 1293.25 22.68
3/14/97 22.75 1293.00 22.96
3/17/97 22.25 1279.44 22.67
3/18/97 21.50 1269.31 22.71
3/19/97 22.25 1249.31 22.07
3/20/97 22.00 1259.25 22.24
3/21/97 21.00 1254.06 22.84
3/24/97 20.25 1242.63 22.89
3/25/97 20.00 1248.06 22.63
3/26/97 20.50 1269.06 22.69
3/27/97 21.38 1249.50 22.73
3/28/97 21.38 1249.50 22.73
3/31/97 22.00 1221.75 22.15
4/1/97 21.38 1216.94 21.66
4/2/97 10.75 1201.00 21.55
4/3/97 11.88 1213.75 21.46
4/4/97 12.00 1236.75 22.59
4/7/97 11.88 1251.31 22.90
4/8/97 10.75 1257.38 22.64
4/9/97 10.88 1249.44 22.08
4/10/97 11.00 1235.75 21.99
4/11/97 11.00 1206.88 21.46
4/14/97 11.25 1216.44 21.29
4/15/97 11.38 1212.88 21.79
4/16/97 11.13 1210.25 21.66
4/17/97 11.00 1217.06 21.13
4/18/97 10.63 1222.56 21.28
4/21/97 10.75 1203.94 20.76
4/22/97 11.13 1212.75 21.68
4/23/97 11.50 1227.13 21.69
4/24/97 11.25 1228.13 21.74
4/25/97 11.25 1209.31 21.65
4/28/97 10.75 1217.00 21.65
4/29/97 11.75 1242.63 22.68
4/30/97 12.38 1260.75 23.24
5/1/97 12.50 1270.50 23.16
5/2/97 13.25 1305.31 24.52
5/5/97 13.75 1339.25 25.85
5/6/97 13.75 1328.31 25.07
5/7/97 13.75 1322.94 24.64
5/8/97 12.38 1330.81 24.80
5/9/97 12.63 1335.06 25.16
5/12/97 12.63 1344.19 26.15
5/13/97 12.25 1333.56 25.54
5/14/97 12.88 1335.56 25.80
5/15/97 12.50 1353.56 26.69
5/16/97 13.38 1340.75 25.25
5/19/97 13.75 1351.25 25.20
5/20/97 13.00 1363.88 25.47
5/21/97 12.38 1373.75 25.63
5/22/97 12.50 1372.56 24.97
5/23/97 12.00 1389.75 25.32
5/26/97 12.00 1389.75 25.32
5/27/97 12.06 1409.19 26.08
5/28/97 12.50 1410.19 25.92
5/29/97 12.38 1403.06 25.56
5/30/97 12.50 1400.31 25.78
6/2/97 12.44 1404.81 26.01
6/3/97 12.63 1384.94 25.46
6/4/97 12.63 1379.69 25.23
6/5/97 12.25 1390.06 25.01
6/6/97 12.38 1404.81 25.99
6/9/97 12.25 1412.06 26.20
6/10/97 12.13 1401.69 25.69
6/11/97 12.25 1407.88 25.77
6/12/97 12.31 1411.31 25.60
6/13/97 12.25 1423.00 26.06
6/16/97 12.00 1431.94 26.22
6/17/97 11.75 1443.13 26.38
6/18/97 11.38 1432.44 25.93
6/19/97 9.00 1447.13 26.22
6/20/97 9.13 1447.13 26.64
6/23/97 9.38 1434.31 26.43
6/24/97 9.63 1452.44 26.85
6/25/97 9.50 1446.25 26.65
6/26/97 9.25 1436.38 26.35
6/27/97 9.13 1438.13 26.56
6/30/97 9.13 1442.06 27.05
7/1/97 8.88 1438.25 26.83
7/2/97 9.25 1455.63 27.60
7/3/97 9.06 1467.63 27.96
7/4/97 9.06 1467.63 27.96
7/7/97 9.38 1470.75 27.73
7/8/97 9.75 1485.13 28.18
7/9/97 9.50 1486.63 28.64
7/10/97 9.63 1490.94 28.58
7/11/97 9.75 1502.63 29.38
7/14/97 10.00 1523.88 30.98
7/15/97 9.88 1542.13 31.74
7/16/97 9.63 1580.63 32.48
7/17/97 9.63 1568.88 31.52
7/18/97 9.63 1548.00 31.72
7/21/97 9.25 1536.25 31.59
7/22/97 9.38 1563.88 30.97
7/23/97 9.50 1567.63 30.51
7/24/97 9.50 1569.13 30.25
7/25/97 9.25 1569.56 30.49
7/28/97 9.25 1563.50 30.11
7/29/97 9.88 1572.31 30.38
7/30/97 10.13 1588.00 31.30
7/31/97 9.88 1593.81 31.60
8/1/97 10.00 1594.31 31.05
8/4/97 10.00 1605.44 31.82
8/5/97 10.13 1621.13 32.29
8/6/97 10.94 1630.44 32.16
8/7/97 10.53 1624.19 31.48
8/8/97 10.75 1598.50 30.99
8/11/97 11.00 1586.75 31.00
8/12/97 11.00 1576.25 30.93
8/13/97 11.50 1583.38 30.87
8/14/97 11.50 1586.69 30.86
8/15/97 11.38 1562.00 29.64
8/18/97 11.50 1569.50 29.25
8/19/97 12.38 1600.69 29.62
8/20/97 12.75 1628.69 30.25
8/21/97 12.75 1607.38 29.88
8/22/97 12.13 1598.69 29.56
8/25/97 12.00 1601.56 29.70
8/26/97 10.88 1591.31 29.48
8/27/97 11.13 1595.56 29.58
8/28/97 11.00 1581.31 29.41
8/29/97 10.75 1587.31 29.44
9/1/97 10.75 1587.31 29.44
9/2/97 11.50 1618.06 29.96
9/3/97 11.50 1618.25 29.60
9/4/97 11.63 1624.63 29.43
9/5/97 11.38 1635.75 29.75
9/8/97 11.25 1645.38 30.36
9/9/97 11.50 1656.25 31.11
9/10/97 11.25 1639.25 31.07
9/11/97 11.25 1639.88 30.68
9/12/97 11.00 1649.31 30.76
9/15/97 12.00 1634.94 31.07
9/16/97 11.75 1668.63 31.97
9/17/97 11.75 1666.50 30.99
9/18/97 11.88 1670.00 31.70
9/19/97 11.75 1680.38 32.16
9/22/97 11.75 1689.44 32.04
9/23/97 10.13 1697.38 32.12
9/24/97 10.25 1687.44 32.14
9/25/97 10.38 1678.88 31.74
9/26/97 10.06 1682.25 31.48
9/29/97 10.00 1695.00 31.59
9/30/97 9.94 1685.69 31.59
10/1/97 9.94 1690.31 31.25
10/2/97 9.94 1702.44 31.67
10/3/97 10.00 1715.88 32.01
10/6/97 10.25 1721.94 32.93
10/7/97 10.00 1737.25 33.64
10/8/97 10.38 1741.75 33.63
10/9/97 10.13 1745.88 33.53
10/10/97 10.13 1739.00 33.45
10/13/97 10.25 1742.13 33.82
10/14/97 10.38 1732.88 33.48
10/15/97 10.63 1723.38 33.03
10/16/97 10.38 1699.69 30.34
10/17/97 10.38 1666.88 29.85
10/20/97 10.25 1685.44 30.59
10/21/97 10.63 1712.56 31.20
10/22/97 10.50 1708.06 31.37
10/23/97 10.13 1671.25 30.78
10/24/97 10.31 1650.94 29.51
10/27/97 10.06 1532.75 27.62
10/28/97 10.00 1603.00 29.16
10/29/97 9.88 1602.75 28.73
10/30/97 9.88 1570.44 28.07
10/31/97 9.38 1593.63 28.48
11/3/97 9.50 1630.00 29.68
11/4/97 9.50 1631.13 30.02
11/5/97 9.50 1637.31 30.25
11/6/97 9.75 1623.44 29.94
11/7/97 9.75 1602.38 29.38
11/10/97 9.75 1590.75 29.09
11/11/97 9.94 1584.88 28.88
11/12/97 9.50 1541.69 27.72
11/13/97 9.38 1559.25 27.97
11/14/97 9.38 1583.50 29.06
11/17/97 9.75 1614.13 29.83
11/18/97 10.00 1600.44 28.92
11/19/97 11.81 1601.25 28.92
11/20/97 12.75 1626.56 29.82
11/21/97 12.75 1620.75 29.83
11/24/97 12.00 1587.00 28.66
11/25/97 12.50 1589.06 28.67
11/26/97 12.25 1594.50 28.50
11/27/97 12.25 1594.50 28.50
11/28/97 12.25 1600.56 28.72
12/1/97 12.63 1628.88 30.07
12/2/97 12.25 1606.38 29.33
12/3/97 12.50 1615.13 29.28
12/4/97 12.75 1613.44 28.39
12/5/97 12.44 1633.88 29.77
12/8/97 12.13 1651.56 29.66
12/9/97 12.50 1620.56 28.65
12/10/97 12.25 1596.63 27.76
12/11/97 12.00 1558.56 26.78
12/12/97 12.13 1536.56 26.13
12/15/97 12.50 1536.56 26.30
12/16/97 12.50 1553.00 27.66
12/17/97 12.38 1547.38 27.10
12/18/97 12.38 1523.19 26.16
12/19/97 12.25 1524.75 26.25
12/22/97 12.50 1532.06 27.05
12/23/97 13.38 1509.94 26.10
12/24/97 13.25 1499.50 25.99
12/25/97 13.25 1499.50 25.99
12/26/97 13.13 1511.38 26.26
12/29/97 13.13 1537.44 26.88
12/30/97 13.13 1565.00 27.29
12/31/97 13.13 1570.38 27.38
1/1/98 13.13 1570.38 27.38
1/2/98 13.13 1581.50 27.85
1/5/98 13.13 1594.13 28.31
1/6/98 13.13 1580.13 28.22
1/7/98 13.38 1561.69 28.09
1/8/98 12.88 1555.56 27.94
1/9/98 12.63 1503.25 26.56
1/12/98 12.75 1507.56 26.37
1/13/98 12.75 1541.63 27.31
1/14/98 12.81 1548.75 27.20
1/15/98 12.81 1547.06 26.90
<PAGE>
Project TroubleShooter
Volume Distribution by Price Range
Weekly: 4/8/94 to 01/15/98
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Percent
Traded
-------
8 to 12.4 51.08%
12.4 to 16.8 27.60%
16.8 to 21.2 11.43%
21.2 to 25.6 4.64%
25.6 to 30 5.25%
<PAGE>
Project TroubleShooter
Volume Distribution by Price Range
Daily: 1/1/97 to 01/15/98
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Percent
Traded
-------
8 to 12.4 70.27%
12.4 to 16.8 10.49%
16.8 to 21.2 0.68%
21.2 to 25.6 8.62%
25.6 to 30 9.89%
<PAGE>
The Robinson-Humphrey Company, LLC
TroubleShooter
Shareholder Ownership Analysis
================================================================================
Number of As a Percent
Shares of Total
------ --------
Total Shares Outstanding [1] 5,346,739 100.0%
Institutional Ownership:
WELLINGTON MANAGEMENT 471,100 8.8%
HATHAWAY & ASSOCIATES 250,000 4.7%
DIMENSIONAL FUND ADVS 175,400 3.3%
ARDEN GROUP INC 24,050 0.4%
TRAVELERS INC 14,450 0.3%
BRANDY WINE ASSET MGMT 12,700 0.2%
WORLD ASSET MANAGEMENT 4,400 0.1%
---------
Total Institutional Holdings 952,100 17.8%
Insider Ownership:
RICHARD E. POSPISIL 3,500 0.1%
GERRY CHASTELET 32,458 0.6%
SIDNEY TOPOL 12,467 0.2%
E. JAY BOWERS 8,883 0.2%
JOHN T. GOEHRKE 7,850 0.1%
ADELBERT KUTHE 9,375 0.2%
--------- -----
Total Insider Holdings 74,533 1.4%
WG Holding 3,285,600 61.5%
Total Retail Holdings ("Float") 1,034,506 19.3%
- --------------------------------------------------------------------------------
TroubleShooter
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Institutions 17.8%
Insiders 1.4%
Retail Float 19.3%
WG Holding 61.5%
- --------------------------------------------------------------------------------
- -----------------
SOURCE: CDA SPECTRUM CORP. AND 10-K.
[1] Includes actual shares outstanding plus common stock equivalents resulting
from options using the treasury stock method.
<PAGE>
The Robinson-Humphrey Company, LLC
Project TroubleShooter
Projected Income Statement Information
With Technology Acquisitions
(In Thousands, Except for Per Share Amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended September 30,
---------------------------------------------------
1998 1999 2000 2001
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Nonaffiliates $39,700 $56,000 $74,400 $96,700
Affiliates 29,300 34,500 44,200 53,500
--------- --------- --------- ---------
Total Revenues 69,000 90,500 118,600 150,200
% Revenue Growth 26.7% 31.2% 31.0% 26.6%
Cost of Revenues 30,400 40,200 52,800 66.200
--------- --------- --------- ---------
Gross Profit 38,600 50,300 65,800 84,000
Gross Profit Margin % 55.9% 55.6% 55.5% 55.9%
Selling, General, and Administrative Expenses 23,600 28,500 35,900 45,000
Product Development Expenses 12,600 15,500 18,500 20,300
Purchased Technology Write-off 6,300 0 0 0
--------- --------- --------- ---------
Operating Income (Loss) (3.900) 6,300 11,400 18,700
Operating Income Margin % (5.7%) 7.0% 9.6% 12.5%
Interest Income 300 500 800 1,200
--------- --------- --------- ---------
Income (Loss) Before Income Taxes (3,600) 6,800 12,200 19,900
Provision for Income Taxes (500) (1,700) (3,300) (5,400)
--------- --------- --------- ---------
Net Income ($4,100) $5,100 $8,900 $14,500
========= ========= ========= =========
Net Income Margin % (5.9%) 5.6% 7.5% 9.7%
Per Share Data:
Net Income ($0.78) $0.96 $1.68 $2.46
========= ========= ========= =========
Net Income Excluding
Purchased Technology Write-off $0.42 $0.96 $1.68 $2.46
========= ========= ========= =========
</TABLE>
<PAGE>
The Robinson-Humphrey Company, LLC
Project TroubleShooter
Projected Quarterly Income Statement Information
With Technology Acquisitions
(In Thousands, Except for Per Share Amounts)
<TABLE>
<CAPTION>
Fiscal 1998 Fiscal 1999
----------------------------------------------- ---------------------------------------------
First Second Third Fourth First Second Third Fourth
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Nonaffiliates $7,809 $9,500 $10,800 $11,700 $12,000 $13,700 $14,500 $15,800
Affilaites 6,542 6,800 7,700 8,300 7,300 8,100 8,900 10,200
-------- -------- -------- -------- -------- -------- -------- --------
Total Revenues 14,351 16,300 18,500 20,000 19,300 21,800 23,400 26,000
Cost of Revenues 7,477 7,300 7,900 8,100 8,700 9,700 10,300 11,500
-------- -------- -------- -------- -------- -------- -------- --------
Gross Profit 6,874 9,000 10,600 11,900 10,600 12,100 13,100 14,500
Gross Profit Margin % 47.9% 55.2% 57.3% 59.5% 54.9% 55.5% 56.0% 55.8%
Selling, General, and
Administrative Expenses 4,997 5,700 6,100 6,700 6,300 6,800 7,400 8,000
Product Development Expenses 2,604 3,200 3,300 3,400 3,600 3,800 3,900 4,200
Purchased Technology Write-off 0 6,300 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Operating Income (Loss) (728) (6,200) 1,200 1,800 700 1,500 1,800 2,300
Operating Income Margin % (5.1%) (38.0%) 6.5% 9.0% 3.6% 6.9% 7.7% 8.8%
Interest Income 188 0 0 100 200 100 100 100
Foreign Currency Gains (Losses) 26 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Income Before Income Taxes (513) (6,200) 1,200 1,900 900 1,600 1,900 2,400
Benefit from (Provision for)
Income Taxes 103 0 (300) (400) (200) (400) (500) (600)
-------- -------- -------- -------- -------- -------- -------- --------
Net Income ($411) ($6,200) $900 $1,500 $700 $1,200 $1,400 $1,800
======== ======== ======== ======== ======== ======== ======== ========
Net Income Margin % (2.9%) (38.0%) 4.9% 7.5% 3.6% 5.5% 6.0% 6.9%
Per Share Data:
Net Income ($0.08) ($1.16) $0.17 $0.29 $0.13 $0.23 $0.27 $0.34
======== ======== ======== ======== ======== ======== ======== ========
Net Income Excluding
Purchased Technology
Write-off ($0.08) $0.02 $0.17 $0.29 $0.13 $0.23 $0.27 $0.34
======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
Fiscal 2000
-----------------------------------------------
First Second Third Fourth
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Nonaffiliates $15,700 $18,000 $19,500 $21,200
Affilaites 9,800 10,500 11,500 12,400
-------- -------- -------- --------
Total Revenues 25,500 28,500 31,000 33,600
Cost of Revenues 11,500 12,700 13,600 15,000
-------- -------- -------- --------
Gross Profit 14,000 15,800 17,400 18,600
Gross Profit Margin % 54.9% 55.4% 56.1% 55.4%
Selling, General, and
Administrative Expenses 8,300 8,600 9,300 9,700
Product Development Expenses 4,400 4,500 4,700 4,900
Purchased Technology Write-off 0 0 0 0
-------- -------- -------- --------
Operating Income (Loss) 1,300 2,700 3,400 4,000
Operating Income Margin % 5.1% 9.5% 11.0% 11.9%
Interest Income 200 200 200 200
Foreign Currency Gains (Losses) 0 0 0 0
-------- -------- -------- --------
Income Before Income Taxes 1,500 2,900 3,600 4,200
Benefit from (Provision for)
Income Taxes (400) (800) (1,000) (1,100)
-------- -------- -------- --------
Net Income $1,100 $2,100 $2,600 $3,100
======== ======== ======== ========
Net Income Margin % 4.3% 7.4% 8.4% 9.2%
Per Share Data:
Net Income $0.21 $0.40 $0.49 $0.58
======== ======== ======== ========
Net Income Excluding
Purchased Technology
Write-off $0.21 $0.40 $0.49 $0.58
======== ======== ======== ========
</TABLE>
<PAGE>
The Robinson-Humphrey Company LLC
Project TroubleShooter
Market Comparison of Selected Public Network Solutions Companies
----------------------------------------------------------------
<TABLE>
<CAPTION>
Earnings Per Share[1]
-----------------------
52 Week Market Calendar
Latest ------------ Price % of -----------------------
Ticker Exchange Company FYE Filing High Low 1/15/98 High 1997 1998 1999
- ------ -------- ------- --- ------ ---- --- ------- ----- ---- ---- ----
Network Analysis Companies
- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADAX OTC Applied Digital Access, Inc DC 9/97 $11.87 $3.62 $8.13 68.4% ($0.22) $0.09 $0.40
CCRD OTC Concord Communications Inc DC 9/97 24.68 14.62 17.13 69.4% (0.03) 0.30 0.62
DIGL OTC Digital Lightwave Inc DC 9/97 23.75 3.25 12.94 54.5% 0.17 0.51 NA
HWP NYSE Hewlett-Packard OC 7/97 72.93 48.12 63.00 86.4% 2.96 3.61 3.92 F
NETA OTC Network Associates [2] DC 9/97 78.50 36.50 49.00 62.4% 1.75 2.43 NA
RDCMF OTC RADCOM Ltd DC 9/97 11.87 6.00 6.38 53.7% 0.07 0.41 0.75
TKLC OTC Tekelec DC 9/97 49.37 8.50 33.13 67.1% 0.60 0.80 1.08
TEK NYSE Tektronix Inc MY 8/97 46.43 32.18 40.63 87.5% 2.48 2.85 NA
-----------------------------------------------------------------------------------------------------------------------------
AVERAGE 68.7%
=============================================================================================================================
Network Management Companies
- ----------------------------
DYT NYSE Dynatech Corp [3] MR 9/97 55.00 27.00 36.75 66.8% 2.34 2.94 NA
FLK NYSE Fluke Corp AP 10/97 29.93 21.12 23.63 78.9% 1.62 1.91 NA
GEN NYSE GenRad, Inc DC 9/97 34.00 11.87 26.50 77.9% 1.21 1.48 1.87
KEI NYSE Keithley Instruments, Inc SP 9/97 12.37 7.62 9.13 73.8% 0.10 F 0.58 F NA
MIST OTC MicroTest Inc DC 9/97 10.37 3.37 5.56 53.6% 0.02 0.50 NA
OSII OTC Objective Systems
Integrators Inc JE 9/97 16.50 3.37 9.75 59.1% (0.99) (0.02) NA
RFTX NYSE Retix DC 9/97 7.62 3.37 4.66 61.1% NA NA NA
TCSI OTC TCSI Corporation DC 9/97 9.00 4.37 8.56 95.1% (0.10) 0.05 0.35
TER NYSE Teradyne Inc DC 9/97 59.18 23.87 32.94 55.7% 1.50 2.70 3.10
Network Equipment Providers
- ---------------------------
BAY NYSE Bay Networks Inc JE 9/97 41.87 15.37 28.56 68.2% 0.73 1.38 NA
CS NYSE Cabletron Systems Inc FB 8/97 46.50 12.62 14.25 30.6% 1.34 0.85 NA
CSCO OTC Cisco Systems Inc JL 10/97 60.62 30.18 57.00 94.0% 1.53 1.95 NA
COMS OTC 3COM Corp MY 8/97 78.25 24.00 32.69 41.8% 1.40 1.27 NA
-------------------------------------------------------------------------------------------------------------------
COMBINED AVERAGE 67.0%
===================================================================================================================
TroubleShooter SP 12/97 $30.25 $8.50 $12.81 42.4% ($0.29) $0.63[4] $1.04
<CAPTION>
Price/Earnings Ratio
----------------------
Ticker Exchange Company 5 Yr Calendar
- ------ -------- ------- Growth ----------------------- Shares Market Book Market/
Rate[1] 1997 1998 1999 Outstanding Cap'n Value Book
Network Analysis Companies ------- ---- ---- ---- ----------- ----- ----- ----
- -------------------------- (MM) ($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADAX OTC Applied Digital Access, Inc 40.0% NM x 90.3 * 20.3 x 12,561 $102.1 $36.8 2.8 x
CCRD OTC Concord Communications Inc NA NM 57.1 27.6 11,941 204.5 25.6 8.0
DIGL OTC Digital Lightwave Inc 50.0% 76.1 25.4 NA 26,372 341.2 46.6 7.3
HWP NYSE Hewlett-Packard 15.0% 21.3 17.5 16.1 1,040,118 65,527.4 15,227.0 4.3
NETA OTC Network Associates [2] 49.0% 28.0 20.2 NA 68,923 3,377.2 418.2 8.1
RDCMF OTC RADCOM Ltd NA 91.1 * 15.5 8.5 9,596 61.2 24.1 2.5
TKLC OTC Tekelec 50.0% 55.2 41.4 30.7 25,784 854.1 92.6 9.2
TEK NYSE Tektronix Inc 15.0% 16.4 14.3 NM 50,640 2,057.2 789.1 2.6
-------------------------------------------------------------------------------------------------------------------
AVERAGE 36.5% 39.4 x 27.3 x 20.6 x 5.6 x
===================================================================================================================
Network Management Companies
- ----------------------------
DYT NYSE Dynatech Corp [3] 28.0% 15.7 12.5 NA 16,872 620.0 176.3 3.5
FLK NYSE Fluke Corp 15.0% 14.6 12.4 NA 18,335 433.2 216.9 2.0
GEN NYSE GenRad, Inc NA 21.9 17.9 14.2 27,288 723.1 100.3 7.2
KEI NYSE Keithley Instruments, Inc NA 91.3 15.7 NA 7,671 70.0 32.7 2.1
MIST OTC MicroTest Inc 30.0% 278.1 * 11.1 NA 8,202 45.6 31.5 1.4
OSII OTC Objective Systems NA NM NM NM 33,222 323.9 78.8 4.1
Integrators Inc
RFTX NYSE Retix 25.0% NA NA NA 22,664 105.5 10.1 10.4
TCSI OTC TCSI Corporation 30.0% NM 171.3 * 24.5 21,942 187.9 74.3 2.5
TER NYSE Teradyne Inc 20.0% 22.0 12.2 10.6 83,425 2,747.8 915.7 3.0
Network Equipment Providers
- ---------------------------
BAY NYSE Bay Networks Inc 25.0% 39.1 20.7 NA 211,590 6,043.5 1,364.3 4.4
CS NYSE Cabletron Systems Inc 20.0% 10.6 16.8 NA 157,985 2,251.3 1,214.4 1.9
CSCO OTC Cisco Systems Inc 30.0% 37.3 29.2 NA 676,454 38,557.9 4,803.4 8.0
COMS OTC 3COM Corp 29.0% 23.3 25.7 NM 345,949 11,308.2 2,307.2 4.9
-------------------------------------------------------------------------------------------------------------------
COMBINED AVERAGE 29.4% 32.1 x 21.5 x 19.1 x 4.8%
===================================================================================================================
TroubleShooter 20.0% NM x 20.3 x 12.3 x 5,288 $67.7 $240[4] 2.8 x
</TABLE>
NA - Not Available. NM - Not Meaningful. * - excluded from average.
F - Fiscal Year End Estimate.
- ----------
[1] Earnings estimates are from First Call as of January 15, 1998 except for
KEI which is from Bloomberg and TroubleShooter which was provided by the
Company.
[2] Formerly McAfee Associates prior to merger with Network General.
[3] Valuation based on closing price (12/19/97) prior to
the announcement of the acquisition.
[4] Excludes $6.3 million contemplated write-off of purchased technology in
calendar 1998 estimate. Balance sheet data is pro forma for write-off.
<PAGE>
The Robinson-Humphrey Company, LLC
<TABLE>
<CAPTION>
Project TroubleShooter
Market Comparison of Selected Public Network Solutions Companies
----------------------------------------------------------------
LTM
Total Total Total ------------------------------ Operating EBITDA
Company Debt Cash Firm Value[1] Revenues Op. Inc. EBITDA Margin Margin
- ------- ---- ---- ------------- -------- ------- ------ ------ ------
($MM) ($MM) ($MM) ($MM) ($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Network Analysis Companies
Applied Digital Access, Inc. $0.0 $13.6 $88.5 $29.6 ($5.4) ($2.6) NM NM
Concord Communications Inc. 1.4 28.9 177.0 16.2 (2.1) (1.6) NM NM
Digital Lightwave Inc. 0.1 33.5 307.8 18.2 1.0 1.4 5.5% 7.6%
Hewlett-Packard 2,835.0 2,795.0 65,567.4 41,253.0 4,087.0 5,558.0 9.9% 13.5%
Network Associates[2] 0.0 269.2 3,108.0 577.8 185.8 203.3 32.2% 35.2%
RADCOM Ltd. 0.8 8.7 53.3 17.4 (1.6) (1.1) NM NM
Tekelec 0.0 46.1 808.0 105.8 17.5 22.0 16.6% 20.8%
Tektronix Inc. 157.2 133.5 2,080.9 1,981.2 170.5 232.2 8.6% 11.7%
----------------------------------------------------------------------------------------------------
AVERAGE 14.5% 17.8%
====================================================================================================
Network Management Companies
Dynatech Corp.[3] 21.3 43.5 597.8 415.7 64.0 81.1 15.4% 19.5%
Fluke Corp. 0.9 41.2 392.8 439.3 46.1 60.8 10.5% 13.8%
GenRad, Inc. 8.7 22.6 709.2 221.1 33.5 41.6 15.2% 18.8%
Keithley Instruments, Inc. 17.5 1.7 85.7 123.3 3.1 7.2 2.5% 5.8%
Micro Test Inc. 0.0 7.7 37.9 49.1 2.2 4.1 4.5% 8.3%
Objective Systems Integrators Inc. 0.0 37.9 286.0 41.6 (45.1) (39.3) NM NM
Retix 0.0 10.2 95.3 25.8 (11.0) (9.0) NM NM
TCSI Corporation 0.0 51.6 136.2 39.2 (11.2) (6.4) NM NM
Teradyne Inc. 22.6 168.4 2,602.0 1,115.9 107.6 164.7 9.6% 14.8%
Network Equipment Providers
Bay Networks Inc. 110.7 826.6 5,327.6 2,171.7 118.0 266.6 5.4% 12.3%
Cabletron Systems Inc. 0.0 365.3 1,885.9 1,476.1 371.5 430.9 25.2% 29.2%
Cisco Systems Inc. 0.0 1,826.6 36,731.3 6,874.1 1,789.4 2,025.4 26.0% 29.5%
3COM Corp 151.8 1,008.5 10,451.5 3,497.9 594.8 741.3 17.0% 21.2%
----------------------------------------------------------------------------------------------------
COMBINED AVERAGE 13.6% 17.5%
====================================================================================================
TroubleShooter $0.0 $7.4[4] $60.4 $53.4 ($2.5) ($0.8) NM NM
<CAPTION>
3 Year CAGR
Firm Value to: ---------------------
------------------------------------ Net
Company Revenues Op. Inc. EBITDA Revenue Income
- ------- -------- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C>
Network Analysis Companies
Applied Digital Access, Inc. 2.99x NMx NMx -17.2% NM
Concord Communications Inc. 10.95* NM NM 48.9% NM
Digital Lightwave Inc. 16.95* 309.3* 224.3* NM NM
Hewlett-Packard 1.59 16.0 11.8 24.0% 27.2%
Netowrk Associates[2] 5.38 16.7 15.3 48.0% 62.9%
RADCOM Ltd. 3.07 NM NM 108.9% NM
Tekelec 7.64* 46.1 36.7 8.6% NM
Tektronix Inc. 1.05 12.2 9.0 13.8% 18.6%
--------------------------------------------------------------------------------------
AVERAGE 2.82x 22.8x 18.2x 33.6% 36.2%
======================================================================================
Network Management Companies
Dynatech Corp.[3] 1.44 9.3 7.4 22.1% 52.0%
Fluke Corp. 0.89 8.5 6.5 6.1% 25.1%
GenRad, Inc. 3.21 21.1 17.1 11.4% 114.3%
Keithley Instruments, Inc. 0.70 27.4 12.0 6.1% -50.8%*
Micro Test Inc. 0.77 17.0 9.3 12.9% 23.2%
Objective Systems Integrators Inc. 6.88* NM NM 19.8% NM
Retix 3.70 NM NM -27.4% NM
TCSI Corporation 3.48 NM NM 22.2% NM
Teradyne Inc. 2.33 24.2 15.8 22.7% 10.7%
Network Equipment Providers
Bay Networks Inc. 2.45 45.2 20.0 22.1% -30.4%
Cabletron Systems Inc. 1.28 5.1 4.4 29.9% 24.2%
Cisco Systems Inc. 5.34 20.5 18.1 69.8% 51.6%
3COM Corp 2.99 17.6 14.1 40.5% 42.2%
--------------------------------------------------------------------------------------
COMBINED AVERAGE 2.51x 20.5x 14.1x 24.7% 35.1%
======================================================================================
TroubleShooter 1.13x NMx NMx 9.7% -36.0%
</TABLE>
NA-Not Available NM-Not Meaningful *-excluded from average
[1] Firm value equals market capitalization plus debt minus cash.
[2] Pro forma for merger with Network General.
[3] Valuation based on closing price (12/19/97) prior to the announcement of
the recapitalization.
[4] Pro forma for contemplated $6.3 million in cash used to fund Technology
acquisitions.
<PAGE>
<TABLE>
<CAPTION>
The Robinson-Humphrey Company, LLC 1/16/98
Project TroubleShooter
Implied Valuation Analysis Utilizing Average of Network Analysis Companies
--------------------------------------------------------------------------
(Dollars in Thousands)
Network Analysis Companies Average Multiple
----------------------------------------------------------------------------
TroubleShooter's Price / Price / Price /
Valuation Parameter Value Calendar 1997 Net Income Calendar 1998 Net Income Calendar l999 Net Income
------------------- ----- ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C>
Calendar 1997 Net Income ($l,317) 39.4 x
Calendar 1998 Net Income(1) 3,200 27.3 x
Calendar 1999 Net Income 5,500 20.6 x
Pro Forma 12/31/97 Book Value(1) 23,950
<CAPTION>
Network Analysis Companies Average Multiple
------------------------------------------------------------------
TroubleShooter's Firm Value (2) / Firm Value (2) / Firm Value (2) /
Valuation Parameter Value LTM Revenues LTM EBITDA LTM EBIT
------------------- ----- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Calendar 1997 Revenues $53,351 2.82 X
Calendar 1997 EBITDA (783) 18.2 x
Calendar 1997 EBIT (2,485) 22.8 x
<CAPTION>
========= ==========
Implied
------------- Implied Equity
Price / Equity Value Per
Valuation Parameter Book Value Value Share (4)
------------------- ---------- ----- ---------
<S> <C> <C> <C>
Calendar 1997 Net Income NM NM
Calendar 1998 Net Income(1) 87,411 16.35
Calendar 1999 Net Income 113,494 21.23
Pro Forma 12/31/97 Book Value(1) 5.6 x 134,162 25.09
<CAPTION>
Less
Valuation Parameter Net Debt (3)
------------------- ------------
<S> <C> <C> <C>
Calendar 1997 Revenues ($7,395) $l57,613 $29.48
Calendar 1997 EBITDA (7,395) NM NM
Calendar 1997 EBIT (7,395) NM NM
========= ==========
---------------------------------------------
Average $70,387 $13.16
Median $87,441 $16.35
High $l57,6l3 $29.48
Low $0 $O.00
=============================================
</TABLE>
- ----------
* Excluded from the average.
(1) Based on projections including technology acquisitions and excludes $6.3
million in purchased technology write-downs for fiscal 1998. Book value is
adjusted for write-downs.
(2) Firm value equals market capitalization plus total debt and preferred stock
minus cash and marketable securities.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions to be
completed in January 1998.
(4) Assummes 5,346,739 shares outstanding (including options using the treasury
stock method).
<PAGE>
The Robinson-Humphrey Company, LLC 1/16/98
<TABLE>
Project TroubleShooter
Implied Valuation Analysis Utilizing Combined Average Of Network Solutions Companies
------------------------------------------------------------------------------------
(Dollars in Thousands)
<CAPTION>
Combined Average Multiple
----------------------------------------------------------------------------
TroubleShooter's Price / Price / Price /
Valuation Parameter Value Calendar 1997 Net Income Calendar 1998 Net Income Calendar l999 Net Income
------------------- ----- ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C>
Calendar 1997 Net Income ($l,317) 32.1 x
Calendar 1998 Net Income(1) 3,200 21.5 x
Calendar 1999 Net Income 5,500 19.1 x
Pro Forma 12/31/97 Book Value(1) 23,950
<CAPTION>
Combined Average Multiple
------------------------------------------------------------------
TroubleShooter's Firm Value (2) / Firm Value (2) / Firm Value (2) /
Valuation Parameter Value LTM Revenues LTM EBITDA LTM EBIT
------------------- ----- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Calendar 1997 Revenues $53,351 2.51 X
Calendar 1997 EBITDA (783) 14.1 x
Calendar 1997 EBIT (2,485) 20.5 x
<CAPTION>
========= ==========
Implied
------------- Implied Equity
Price / Equity Value Per
Valuation Parameter Book Value Value Share (4)
------------------- ---------- ----- ---------
<S> <C> <C> <C>
Calendar 1997 Net Income NM NM
Calendar 1998 Net Income(1) 68,807 12.87
Calendar 1999 Net Income 104,800 19.60
Pro Forma 12/31/97 Book Value(1) 4.8 x 114,536 21.42
<CAPTION>
Less
Valuation Parameter Net Debt (3)
------------------- ------------
<S> <C> <C> <C>
Calendar 1997 Revenues ($7,395) $l41,274 $26.42
Calendar 1997 EBITDA (7,395) NM NM
Calendar 1997 EBIT (7,395) NM NM
========= ==========
---------------------------------------------
Average $61,345 $11.47
Median $68,807 $12.87
High $l41,274 $26.42
Low $0 $0.00
=============================================
</TABLE>
- ----------
* Excluded from the average.
(1) Based on projections including technology acquisitions and excludes $6.3
million in purchased technology write-downs for fiscal 1998. Book value is
adjusted for write-downs.
(2) Firm value equals market capitalization plus total debt and preferred stock
minus cash and marketable securities.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions to be
completed in January 1998.
(4) Assummes 5,346,739 shares outstanding (including options using the treasury
stock method).
<PAGE>
The Robinson-Humphrey Company, LLC
<TABLE>
Project TroubleShooter
Forward Multiple Comparison
---------------------------
<CAPTION>
Calendar 1998[1] Calendar 1999 [1] Firm Value/Cal.1998
--------------------- ------------------ -------------------
Market Net Firm Operating Operating Operating
Cap'n Debt Value Revenues Income Revenues Income Revenues Income
----- ---- ----- -------- ------ -------- ------ -------- ------
Company ($MM) ($MM) ($MM) ($MM) ($MM) ($MM) ($MM)
- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Applied Digital Access, Inc. $102.1 ($13.6) $88.5 $51.8 $1.6 $68.3 $7.5 1.71 x 56.4 *
Cisco Systems Inc. 38,557.9 (1,826.6) 36,731.3 9,500.1 3,033.1 NA NA 3.87 12.1
Concord Communications Inc. 204.5 (27.5) 177.0 NA NA NA NA NA NA
Digital Lightwave Inc. 341.2 (33.4) 307.8 NA NA NA NA NA NA
Fluke Corp. 433.2 (40.3) 392.8 503.0 [2] 59.5 [2] NA NA 0.78 6.6
Network Associates 3,377.2 (269.2) 3,108.0 805.0 280.8 NA NA 3.86 11.1
RADCOM Ltd. 61.2 (7.8) 53.3 NA NA NA NA NA NA
TCSI Corporation 187.9 (51.6) 136.2 NA NA NA NA NA NA
Tekelec 854.1 (46.1) 808.0 159.8 35.6 214.5 47.8 5.06 22.7
--------------------------------------
Average 3.05 x 13.1 x
Medium 3.86 x 12.1 x
--------------------------------------
TroubleShooter [3] $67.7 ($7.4) $60.4 74.1 $3.8 $96.7 $6.9 0.81 x 15.9 x
<CAPTION>
Firm Value/Cal. 1999
--------------------
Operating
Revenues Income
-------- ------
Company
- -------
<S> <C> <C>
Applied Digital Access, Inc. 1.30 x 11.8 x
Cisco Systems Inc. NA NA
Concord Communications Inc. NA NA
Digital Lightwave Inc. NA NA
Fluke Corp. NA NA
Network Associates NA NA
RADCOM Ltd. NA NA
TCSI Corporation NA NA
Tekelec 3.77 16.9
------------------
2.53 x 14.3 x
2.53 x 14.3 x
------------------
TroubleShooter [3] 0.62 x 8.7 x
</TABLE>
- ----------------
* Excluded from the average
[1] Projections for ADAX provided by Robinson-Humphrey as of 10/15/97.
Projections for CSCO provided by Prudential Securities as of 11/21/97.
Projections for Fluke provided by Smith Barney as of 9/11/97. Projections
for Network Associates provided by Alex Brown as of 12/1/97. Projections
for Tekelec provided by Cruttendon Roth as of 10/24/97.
[2] Based on estimates for fiscal 1999.
[3] Based on projections including technology acquisitions and excludes $6.3
million in purchased technology write-downs in calendar 1998.
<PAGE>
<TABLE>
<CAPTION>
The Robinson-Humphrey Company, LLC 1/16/98
Project TroubleShooter
Implied Valuation Analysis Utilizing Forward Multiples
------------------------------------------------------
(Dollars in Thousands)
Average Multiple ------- ---------
--------------------------------------------------------------------------- Implied
Firm Value(2)/ Firm Value(2)/ Firm Value(2)/ Firm Value(2)/ Implied Equity
TroubleShooter's Cal. '98 Cal. '98 Cal. '99 Cal. '99 Less Equity Value Per
Valuation Parameter Value Revenues EBIT Revenues EBIT Net Debt(3) Value Share(4)
- ------------------- ---------------- -------------- -------------- -------------- -------------- ----------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar 1998
Revenues $74,100 3.05 x ($7,395) $233,739 $43.72
Calendar 1998
EBIT 3,800 13.1 x (7,395) 57,221 10.70
Calendar 1999
Revenues 96,700 2.53 x (7,395) 252,200 47.17
Calendar 1999
EBIT 6,900 14.3 x (7,395) 106,331 19.89
-------- --------
-------------------------------------
Average $162,373 $30.37
Median $170,035 $31.80
High $252,200 $47.17
Low $57,221 $10.70
-------------------------------------
</TABLE>
- ----------------
* Excluded from the average.
(1) Based on projections including technology acquisitions and excludes $6.3
million in purchased technology write-downs.
(2) Firm value equals market capitalization plus total debt and preferred stock
minus cash and marketable securities.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions to be
completed in January 1998.
(4) Assumes 5,346,739 shares outstanding (including options using the treasury
stock method).
<PAGE>
<TABLE>
<CAPTION>
The Robinson-Humphrey Company, LLC 16-Jan-98
11:07 AM
Project TroubleShooter
Discounted Cash Flow Analysis
<S> <C> <C> <C>
Weighted Average Cost of Capital Analysis:
- ------------------------------------------
=====================================================
Cost of Equity WEIGHTED AVERAGE COST OF CAPITAL
- --------------------------------------------------------------- =====================================================
Current Beta 1.97(1) Midpoint 20.00%
Market Risk Premium for Equity 7.23%(2) =====================================================
Current Yield of 30 Year Treasury Bond (01/08/97) 5.74%
=====================================================
=============================================================== CAPITALIZATION
Cost of Equity 20.00%(3) =====================================================
===============================================================
Debt/Total Equity/Total Debt/Market
Cost of Debt Capital Capital Equity
- --------------------------------------------------------------- ---------- ------------ -----------
Pre-tax Cost of Debt 8.25%(4) 0.00% 100.00% 0.00%
Corporate Tax Rate 38.00% =====================================================
=============================================================== =====================================================
After-tax Cost of Debt 5.12% BETA SENSITIVITY ANALYSIS
=============================================================== =====================================================
Weighted Average Cost of Capital Assumed Beta Cost of Equity WACC
- --------------------------------------------------------------- ------------ -------------- ----
1.87 19.28% 19.28%
Cost of Equity 20.00% 1.92 19.64% 19.64%
After-tax Cost of Debt 5.12% 1.97 20.00% 20.00%
Total Debt ($000) $0 2.02 20.37% 20.37%
Stockholders' Equity ($000)(5) $30,659 2.07 20.73% 20.73%
Current Market Equity ($000) $66,420 =====================================================
Debt/Market Equity 0.00%
Debt/Total Capitol 0.00%
===============================================================
Weighted Average Cost of Capital 20.00%
===============================================================
</TABLE>
- ----------
(1) Estimated by Robinson-Humphrey.
(2) Risk Premium represents the difference between the annual rate of return
from 1926 to 1990 for the Standard & Poor's Composite Index (12.13%) and
the yield of 20 year U.S. Treasury bonds (4.90%).
(3) Cost of Relevered Equity equals the rate of return on the 30 year Treasury
Bond + (Relevered Beta * Market Risk Premium).
(4) Equal to the Company's historical long-term debt rate.
(5) Pro Forma as of 12/31/97.
<PAGE>
The Robinson-Humphrey Company, LLC
<TABLE>
<CAPTION>
Project TroubleShooter
Projected Cash Flows
(Dollars in Thousands)
====================================================================================================================================
Sept. Sept. Sept. Sept. Sept. Sept. Terminal
Projections Used In Valuations: 1997 1998(1) 1999(1) 2000(1) 2001(1) 2002(2) Value
- ------------------------------- ---- ------- ------- ------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues (2)
Non-Affiliates $29,001 $39,700 $56,000 $74,400 $96,700 $116,040 $116,040
Affiliates 25,454 29,300 34,500 44,200 53,500 64,200 64,200
------- ------- ------- ------- ------- -------- --------
Total Revenues 54,455 69,000 90,500 118,600 150,200 180,240 180,240
Costs of Sales 24,381 30,400 40,200 52,800 66,200 79,440 79,440
------- ------- ------- ------- ------- -------- --------
Gross Profit 30,074 38,600 50,300 65,800 84,000 100,800 100,800
Gross Margin 55.2% 55.9% 55.6% 55.5% 55.9% 55.9% 55.9%
Expenses
Selling 9,000 10,600 12,800 17,000 21,000 25,200 25,200
Marketing 5,700 7,200 8,800 11,000 13,800 16,560 16,560
Administrative 3,300 4,100 4,500 5,000 6,500 7,800 7,800
Corporate/Trademark 1,360 1,700 2,400 2,900 3,700 4,440 4,440
------- ------- ------- ------- ------- -------- --------
Total SG&A 19,360 23,600 28,500 35,900 45,000 54,000 54,000
Development 10,712 12,600 15,500 18,500 20,300 24,360 24,360
Total Operating Expenses 30,072 36,200 44,000 54,400 65,300 78,360 78,360
Operating Expenses 55.2% 52.5% 48.6% 45.9% 43.5% 43.5% 43.5%
Operating Income(EBIT)(2) 2 2,400 6,300 11,400 18,700 22,440 22,440
Inc Taxes 0 444 1,575 3,078 5,075 6,090 6,090
------- ------- ------- ------- ------- -------- --------
After Tax Operating Income $2 $1,956 $4,725 $8,322 $13,625 $16,350 $16,350
Operating Margin 0.0% 4.9% 8.4% 11.2% 14.1% 14.1% 14.1%
CASH SOURCES
After Tax Operating Income $2 $1,956 $4,725 $8,322 $13,625 $16,350 $16,350
Depreciation and Amortization(3) 1,766 1,779 2,500 3,700 4,300 5,160 5,160
Other Cash Sources 0 0 0 0 0 0 0
------- ------- ------- ------- ------- -------- --------
TOTAL SOURCES $1,768 $3,735 $7,225 $12,022 $17,925 $21,510 $21,510
======= ======= ======= ======= ======= ======== ========
CASH USES
Capital Expenditures(4) $1,144 $2,779 $3,000 $4,000 $4,600 $5,520 $5,520
Increase in Current Assets Except Cash 281 1,660 3,500 5,000 10,200 7,800 7,800
Increase in Current Liabilities Except Debt 1,157 2,067 1,500 1,800 3,500 3,100 3,100
Increase/(Decrease) in Net Working Capital (876) (407) 2,000 3,200 6,700 4,700 4,700
Other Cash Uses 0 0 0 0 0 0 0
------- ------- ------- ------- ------- -------- --------
TOTAL USES $268 $2,372 $5,000 $7,200 $11,300 $10,220 $10,220
======= ======= ======= ======= ======= ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
FREE CASH FLOW $1,363 $2,225 $4,822 $6,625 $11,290 $11,290
====================================================================================================================================
<CAPTION>
--------------------------------------------------------------------------
Discount Rate (WACC) Present Value of Cash Flows
--------------------------------------------------------------------------
<S> <C>
15.00% $15,437
17.50% $14,258
20.00% $13,202
22.50% $12,251
25.00% $11,395
27.50% $10,620
--------------------------------------------------------------------------
</TABLE>
(1) Income statement projections, depreciation and amortization, capital
expenditures and working captial projections through fiscal 2001 (assuming
technology acquisitions) provided by the Company as of January 8, 1998.
(2) Revenues from fiscal 2002 are assumed to grow 20.0% per year with constant
operating margins.
(3) Depreciation and amortization is equal to the increase in accumulated
depreciation and is a constant percentage of revenues in fiscal 2002.
(4) Capital expenditures are equal to the increase in property and equipment
and are a constant percentage of revenues in fiscal 2002.
<PAGE>
The Robinson-Humphrey Company, LLC
Project TroubleShooter
EBIT Multiple Methodology
(Dollars in Thousands)
================================================================================
SUMMARY:
- --------------------------------------------------------------------------------
WACC 20.00%
Multiple 8.00
EBIT Terminal Value $22,440
Present Value of Cash Flows $14,462
Present Value of Terminal Value $79,017
--------
Total Value $93,479
========
Plus: Cash (1) $7,395
Less: Debt $0
--------
Equity VAlue $100,874
========
Equity Value per share $18.87
================================================================================
(1) Pro Forma as of 12/31/97.
<TABLE>
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted Average Cost of Capital (WACC) 15.00% 17.50% 20.00% 22.50% 25.00% 27.50%
- -------------------------------------------------------------------------------------------------------------------------------
Present Value of Cash Flows: $16,554 $15,456 $14,462 $13,560 $12,740 $11,992
- -------------------------------------------------------------------------------------------------------------------------------
Present Value of Terminal Value:
6.0 x $71,772 $65,151 $59,263 $54,011 $49,318 $45,113
7.0 $83,733 $76,010 $69,140 $63,013 $57,537 $52,632
Multiple 8.0 $95,695 $86,869 $79,017 $72,015 $65,757 $60,151
9.0 $107,657 $97,727 $88,894 $81,017 $73,977 $67,670
10.0 $119,619 $108,586 $98,771 $90,019 $82,196 $75,189
11.0 $131,581 $119,444 $108,648 $99,021 $90,416 $82,708
- -------------------------------------------------------------------------------------------------------------------------------
Total Value
6.0 x $88,326 $80,607 $73,724 $67,571 $62,058 $57,106
7.0 $100,288 $91,466 $83,601 $76,573 $70,277 $64,625
Multiple 8.0 $112,250 $102,324 $93,479 $85,575 $78,497 $72,143
9.0 $124,212 $113,183 $103,356 $94,577 $86,717 $79,662
10.0 $136,174 $124,042 $113,233 $103,579 $94,936 $87,181
11.0 $148,135 $134,900 $123,110 $112,581 $103,156 $94,700
- -------------------------------------------------------------------------------------------------------------------------------
Equity Value
6.0 x $95,721 $88,003 $81,120 $74,967 $69,453 $64,501
7.0 $107,683 $98,861 $90,997 $83,969 $77,673 $72,020
Multiple 8.0 $119,645 $109,702 $100,874 $92,971 $85,892 $79,539
9.0 $131,607 $120,578 $110,751 $101,973 $94,112 $87,058
10.0 $143,569 $131,437 $120,628 $110,974 $102,332 $94,577
11.0 $155,531 $142,296 $130,505 $119,976 $110,551 $102,096
- -------------------------------------------------------------------------------------------------------------------------------
Implied Total Value/Fiscal 1998 EBIT Multiple:
6.0 x 36.8 x 33.6 x 30.7 x 28.2 x 25.9 x 23.8 x
7.0 41.8 31.1 34.8 31.9 29.3 26.9
Multiple 8.0 46.8 42.6 38.9 35.7 32.7 30.1
9.0 51.8 47.2 43.1 39.4 36.1 33.2
10.0 56.7 51.7 47.2 43.2 39.6 36.3
11.0 61.7 56.2 51.3 46.9 43.0 39.5
===============================================================================================================================
</TABLE>
<PAGE>
The Robinson-Humphrey Company, LLC
Project TroubleShooter
EBIT Multiple Methodology
(Dollars in Thousands)
================================================================================
SUMMARY:
- --------------------------------------------------------------------------------
WACC 20.00%
Multiple 6.0
EBIT Terminal Value $27,600
Present Value of Cash Flows $14,462
Present Value of Terminal Value $72,890
-------
Total Value $87,352
=======
Plus: Cash (1) $7,395
Less: Debt $0
-------
Equity Value $94,747
=======
Equity Value per share $17.72
================================================================================
(1) Pro Forma as of 12/31/97.
<TABLE>
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted Average Cost of Capital (WACC) 15.00% 17.50% 20.00% 22.50% 25.00% 27.50%
- -------------------------------------------------------------------------------------------------------------------------------
Present Value of Cash Flows: $16,554 $15,456 $14,462 $13,560 $12,740 $11,992
- -------------------------------------------------------------------------------------------------------------------------------
Present Value of Terminal Value:
4.0 x $58,850 $53,422 $48,593 $44,287 $40,439 $36,991
4.5 $66,206 $60,100 $54,667 $49,823 $45,494 $41,615
5.0 $73,563 $66,777 $60,741 $55,359 $50,549 $46,239
5.5 $80,919 $73,455 $66,816 $60,895 $55,603 $50,863
Multiple 6.0 $88,275 $80,133 $72,890 $66,431 $60,658 $55,487
6.5 $95,631 $86,811 $78,964 $71,967 $65,713 $60,111
7.0 $102,988 $93,488 $85,038 $77,503 $70,768 $64,735
- -------------------------------------------------------------------------------------------------------------------------------
Total Value
4.0 x $75,404 $68,878 $63,055 $57,847 $53,179 $48,984
4.5 $82,761 $75,555 $69,129 $63,383 $58,234 $53,608
5.0 $90,117 $82,233 $75,203 $68,919 $63,288 $58,231
5.5 $97,473 $88,911 $81,277 $74,455 $68,343 $62,855
Multiple 6.0 $104,829 $95,589 $87,352 $79,991 $73,398 $67,479
6.5 $112,186 $102,266 $93,426 $85,527 $78,453 $72,103
7.0 $119,542 $108,944 $99,500 $91,063 $83,508 $76,727
- -------------------------------------------------------------------------------------------------------------------------------
Equity Value
4.0 x $82,800 $76,273 $70,450 $65,243 $60,574 $56,379
4.5 $90,156 $82,951 $76,525 $70,779 $65,629 $61,003
5.0 $97,512 $89,629 $82,599 $76,315 $70,684 $65,627
5.5 $104,869 $96,306 $88,673 $81,851 $75,739 $70,251
Multiple 6.0 $112,225 $102,984 $94,747 $87,387 $80,794 $74,875
6.5 $119,581 $109,662 $100,821 $92,923 $85,849 $79,499
7.0 $126,937 $116,340 $106,895 $98,548 $90,903 $84,123
- -------------------------------------------------------------------------------------------------------------------------------
Implied Total Value/Fiscal 1998 EBIT Multiple:
4.0 x 18.0 x 16.5 x 15.1 x 13.8 x 12.7 x 11.7 x
4.5 19.8 18.1 16.5 15.2 13.9 12.8
5.0 21.6 19.7 18.0 16.5 15.1 13.9
5.5 23.3 21.3 19.4 17.8 16.4 15.0
Multiple 6.0 25.1 22.9 20.9 19.1 17.6 16.1
6.5 26.8 24.5 22.4 20.5 18.8 17.3
7.0 28.6 26.1 23.8 21.8 20.0 18.4
===============================================================================================================================
</TABLE>
<PAGE>
The Robinson-Humphrey Company LLC
Project TroubleShooter
Terminal Free Cash Flow Methodology
(Dollars in Thousands)
================================================================================
SUMMARY:
- --------------------------------------------------------------------------------
WACC: 20.00%
Terminal Growth Rate: 7.00%
Present Value of Cash Flows: $14,462
Present Value of Terminal Value: $38,211
-------
Total Value: $52,673
=======
Plus: Cash (1) $7,395
Less: Debt $0
-------
Equity Value: $60,068
=======
Equity Value per share $11.23
================================================================================
(1) Pro Forma as of 12/31/97.)
<TABLE>
<CAPTION>
====================================================================================================================================
Weighted Average Cost of Capital (WACC) 15.00% 17.50% 20.00% 22.50% 25.00% 27.50%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Present Value of Cash Flows $16,554 $15,456 $14,462 $13,560 $12,740 $11,992
- ------------------------------------------------------------------------------------------------------------------------------------
Present Value of Terminal Value:
6.0% $66,833 $47,485 $35,483 $27,440 $21,760 $17,591
6.5% $70,762 $49,643 $36,796 $28,297 $22,348 $18,009
Growth rate 7.0% $75,182 $52,005 $38,211 $29,210 $22,968 $18,448
7.5% $80,191 $54,604 $39,739 $30,183 $23,624 $18,910
8.0% $85,915 $57,477 $41,394 $31,224 $24,319 $19,394
- ------------------------------------------------------------------------------------------------------------------------------------
Total Value:
6.0% $83,387 $62,941 $49,944 $41,000 $34,500 $29,583
6.5% $87,316 $65,098 $51,258 $41,857 $35,088 $30,002
Growth rate 7.0% $91,736 $67,461 $52,673 $42,770 $35,708 $30,441
7.5% $96,745 $70,060 $54,201 $43,743 $36,364 $30,902
8.0% $102,469 $72,933 $55,856 $44,784 $37,059 $31,387
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Value:
6.0% $90,783 $70,336 $57,340 $48,396 $41,895 $36,978
6.5% $94,712 $72,494 $58,654 $49,253 $42,483 $37,397
Growth rate 7.0% $99,132 $74,857 $60,068 $50,165 $43,104 $37,836
7.5% $104,141 $77,456 $61,596 $41,139 $43,760 $38,297
8.0% $109,865 $80,328 $63,251 $52,179 $44,454 $38,782
- ------------------------------------------------------------------------------------------------------------------------------------
Implied Total Value/Fiscal 1998 EBIT Multiple:
6.0% 34.7x 26.2x 20.8x 17.1x 14.4x 12.3x
6.5% 36.4 27.1 21.4 17.4 14.6 12.5
Growth rate 7.0% 38.2 27.1 21.9 17.8 14.9 12.7
7.5% 40.3 29.2 22.6 18.2 15.2 12.9
8.0% 42.7 30.4 23.3 18.7 15.4 13.1
====================================================================================================================================
</TABLE>
<PAGE>
The Robinson-Humphrey Company LLC
<TABLE>
<CAPTION>
Project TroubleShooter
Working Capital Assumptions
(Dollars in Thousands)
====================================================================================================================================
Sept. Sept. Sept. Sept. Sept. Sept. Sept.
BALANCE SHEET DATA[1] 1996 1997 1998 1999 2000 2001 2002
<S> <C> <C> <C> <C> <C> <C> <C>
Current Assets less Cash and Equivalents
Receivables (Nonaffiliates)(2) $8,148 $7,038 $7,500 $9,500 $12,000 $18,000 $21,600
Receivables (Affiliates)(2) 5,068 3,964 6,000 6,500 8,000 9,000 10,800
Inventories(3) 4,695 5,596 5,900 6,500 7,300 9,500 11,440
Deferred Tax Assets 1,079 1,448 1,700 1,700 1,700 1,700 1,700
Other Current Assets(4) 1,069 2,294 900 1,300 1,500 2,500 3,000
-------- -------- -------- -------- -------- -------- --------
20,059 20,340 22,000 25,500 30,500 40,700 48,500
Current Liabilities less Current Debt
Accounts Payable (Nonaffiliates)(5) $1,327 $1,530 $2,000 $2,500 $3,000 $4,500 $5,400
Accounts Payable (Affiliates)(5) 950 1,789 2,000 2,200 2,500 4,000 4,800
Accrued Compensation(5) 1,855 1,467 2,300 2,500 3,000 3,000 3,600
Other Current Liabilities 1,344 1,847 2,400 3,000 3,500 4,000 4,800
-------- -------- -------- -------- -------- -------- --------
5,476 6,633 8,700 10,200 12,000 15,500 18,600
Working Capital Less Cash and
Equivalents and Current Debt $14,583 $13,707 $13,300 $15,300 $18,500 $25,200 $29,900
- ------------------------------------------------------------------------------------------------------------------------------------
Change in Net Working Capital ($876) ($407) $2,000 $3,200 $6,700 $4,700
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Projections for fiscal 1998 through 2001 provided by the Company.
(2) Fiscal 2002 Receivables are assumed to remain a constant percentage of
Revenues.
(3) Fiscal 2002 Inventories and Other Current Liabilities are assumed to
remain a constant percentage of Revenues.
(4) Fiscal 2002 Other Current Assets assumed to remain a constant percentage of
Revenues.
(5) Fiscal 2002 Accounts Payable and Accrued Expenses assumed to remain a
constant percentage of Cost of Sales.
<PAGE>
The Robinson-Humphrey Company LLC
<TABLE>
<CAPTION>
Project TroubleShooter
Transaction Multiple Analysis for
Selected Mergers and Axquisitions in the Network Solutions Industry Since 1/1/94
Date Date
Effective Announced Target Target Business Description Acquiror
- --------- --------- ------ --------------------------- --------
<S> <C> <C> <C> <C>
03/30/94 01/25/94 Brightwork Development Develop LAN mgmt software McAfee Associates Inc
02/13/95 11/14/94 Powersoft Corp Develop software Sybase Inc
02/28/95 02/28/95 Extension Technology Corp Dvlp digital network software Microcom Inc
08/31/95 05/30/95 Saber Software Corp[4] Dvlp PC network mgmt software McAfee Associates Inc
10/30/95 06/22/95 Frame Technology Corp Develop publishing software Adobe Systems Inc
08/15/95 08/15/95 Hotware Inc Develop netowrking software Microtest Inc
03/04/96 01/31/96 Tivoli Systems Inc Dvlp systems mgmt software IBM Corp
02/20/96 02/20/96 Synergistic Solutions Inc Develop software Dynatech Corp
03/25/96 03/07/96 Vycor Corp Dvlp integrated network syss McAfee Associates Inc
08/01/96 04/29/96 Continuum Co Inc Develop computer software Computer Sciences Corp
09/03/96 08/19/96 FSA Corp Pvd security commun services McAfee Associates Inc
12/31/96 12/18/96 Itronix Corp (Telxon Corp) Mnfr electric measuring equip Dynatech Corp
06/26/97 04/10/97 Microcom, Inc. Mnfr data comm products Compaq Computer Corp.
04/01/97 04/01/97 3DV Technology Develop computer software Network General Corp
06/12/97 02/26/97 US Robotics Corp Mnfr commun products systems 3Com Corp
06/30/97 03/31/97 Cascade Communications Corp Mnfr frame relays Ascend Communications Inc
08/30/97 07/30/97 Cinco Networks Inc Develop utilities software Network General Corp
12/09/97 09/12/97 Unison Software Inc Develop Network mgmt software Tivoli Systems Inc (IBM Corp)
12/01/97 10/13/97 Network General Corp Pvd computer sys design svcs McAfee Associates Inc
12/22/97 Dynatech Corp Mnfr test analysis products Investor Group
<CAPTION>
Equity Value as a Multiple of:
------------------------------ Firm Value as a Multiple of:
Transaction Book Net Transaction -------------------------------------
Equity Value Value Income Firm Value[1] Revenues EBITDA[2] EBIT[3]
------------ ----- ------ ------------- -------- --------- -------
($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C>
$10.3 6.5x 24.6x $10.0 1.36x NAx 14.0x
827.7 13.0 63.7 790.8 7.39 36.2 41.8
NA NA NA NA NA NA NA
61.0 4.1 85.0* 51.7 2.43 NA 66.6*
460.0 8.0 50.0 414.1 5.01 22.4 30.7
0.5 NA NA NA NA NA NA
743.0 17.3* 306.7* 712.7 16.78* 144.8* 213.3*
NA NA NA NA NA NA NA
9.0 NA NA NA NA NA NA
1,300.0 11.7 52.1 1,299.0 2.60 19.0 29.2
22.2 NA NA NA NA NA NA
65.0 11.5 31.5 67.7 1.08 12.2 17.9
262.0 2.4 55.9 267.5 1.52 14.6 29.4
20.0 NA NA NA NA NA NA
7,346.8 8.5 26.2 7,425.0 2.98 15.8[5] 16.9
2,603.3 10.8 34.8 2,472.6 6.59 18.6 21.3
27.0 NA NA NA NA NA NA
179.5 5.8 33.3 156.9 3.68 19.2 20.2
918.5 6.0 27.5 823.7 3.21 12.6 15.5
826.7 4.7 21.1 804.5 1.94 9.9 12.6
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE 7.7x 38.2x 3.32x 18.0x 22.7x
MEDIAN 8.0x 34.8x 2.98x 18.6x 21.3x
==========================================================================================================================
</TABLE>
- ----------
*Excluded from the average.
NM-Not Meaningful
NA-Not Available
[1] Firm value equals equity value plus debt assumed minus cash and marketable
securities, if desired.
[2] EBITDA equals operating income before interest, taxes, depreciation and
amortization.
[3] EBIT equals operating income before interest and taxes.
[4] Equals annualized numbers from six months ended June 30, 1995.
[5] Includes annual depreciation and amortization only.
<PAGE>
<TABLE>
<CAPTION>
The Robinson-Humphrey Company LLC 1/16/98
Project TroubleShooter
Implied Valuation Analysis Utilizing Network Solution M&A Transaction Multiples
(Dollars in Thousands)
Implied
Average Multiple Equity
----------------------------------- Implied Value
TroubleShooter's Equity Value/ Equity Value/ Equity Per
Valuation Parameter Value LTM Net Income Book Value Share(4)
- ------------------- ----- -------------- ---- ----- --------
<S> <C> <C> <C> <C> <C>
Calendar 1997 Net Income ($1,317) 38.2x NM NM
Pro Forma 12/31/97
Book Value(1) 23,950 7.7x $185,421 $34.68
<CAPTION>
Implied
Average Multiple Equity
--------------------------------------------------- Implied Value
TroubleShooter's Firm Value(2)/ Firm Value(2)/ Firm Value(2)/ Less Equity Per
Valuation Parameter Value LTM Revenues LTM EBITDA LTM EBIT Net Debt(3) Value Share(4)
- ------------------- ----- ------------ ---------- -------- ----------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Calendar 1997 Revenues $53,351 3.32x ($7,395) $184,293 $34.47
Calendar 1997 EBITDA (783) 18.0x (7,395) NM NM
Calendar 1997 EBUT (2,485) 22.7x (7,395) NM NM
--------------------------------
Average: $73,943 $13.83
High: $185,421 $34.68
Low: $0 $0.00
--------------------------------
</TABLE>
- ----------
* Excluded from average.
(1) Adjusted $6.3 million for contemplated write-downs of purchased technology.
(2) Firm value equals equity value plus debt assumed minus cash and marketable
securities, if desired.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions to be
completed in January 1998.
(4) Assumes 5,346,739 shares outstanding (includes outstanding options using
the treasury stock method).
<PAGE>
The Robinson-Humphrey Company, LLC
Project TroubleShooter
Selected M&A Transaction Premiums and Forward PE Multiples for
Public Network Solutions Companies Since 1/1/94
<TABLE>
<CAPTION>
Premium
1 Day
Price Current Forward Prior To
Date Date Per Year Year Announcement
Announced Effective Target Acquiror Share PE (1) PE (1) Date
- --------- --------- ------ -------- ----- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
02/13/95 11/14/94 Powersoft Corp Sybase Inc $77.40 66.7 x* 47.5 x* 26.1%
10/30/95 06/22/95 Frame Technology Corp Adobe Systems Inc 32.95 37.4 29.2 25.5
03/04/96 01/31/96 Tivoli Systems Inc IBM Corp 47.50 182.7 * 101.1* 25.8
08/01/96 04/29/96 Continuum Co Inc Computer Sciences Corp 61.72 34.9 29.0 36.0
06/12/97 02/26/97 US Robotics Corp 3Com Corp 68.50 20.9 15.7 11.4
06/30/97 03/31/97 Cascade Communications Corp Ascend Communications Inc 36.40 45.5 29.6 28.3
12/09/97 09/12/97 Unison Software Inc Tivoli Systems Inc (IBM Corp) 15.00 25.9 20.5 9.1*
06/26/97 04/10/97 Microcom Inc Compaq Computer Corp 16.25 54.2 20.3 54.8
12/01/97 10/13/97 Network General Corp McAfee Associates Inc. 24.98 33.3 24.3 19.6
12/22/97 Dynatech Corp Investor Group 47.75 20.4 15.9 29.9
---------------------------------------------
AVERAGE 34.1x 23.1x 28.6%
MEDIAN 36.2 26.6 26.0
=============================================
<CAPTION>
Premium Premium
1 Week 4 Weeks
Prior To Prior To
Date Announcement Announcement
Announce Date Date
- -------- ---- ----
<S> <C> <C>
02/13/95 22.4% 33.2%
10/30/95 18.7 49.8
03/04/96 25.0 41.8
08/01/96 35.6 45.2
06/12/97 13.2 0.4*
06/30/97 46.7 21.1
12/09/97 25.0 22.4
06/26/97 91.2* 35.4
12/01/97 25.3 42.7
37.2 29.9
----------------------------
27.7% 35.7%
25.1 34.3
============================
</TABLE>
- ----------
Source: Securities Data Company, Inc.
* - excluded from average
(1) Current and forward year EPS projections provided by IBES. Multiples based
on price per share offered to the target at the time of the announcement.
<PAGE>
The Robinson-Humphrey Company, LLC
1/15/98
<TABLE>
<CAPTION>
Project TroubleShooter
Implied Valuation Analysis Utilizing Network Solution M&A Premiums and Forward PE Multiples
Projections With Technology Acquisitions
(Dollars in Thousands)
========
========= Implied
Average Multiple Implied Equity
-------------------------------- Equity Value
TroubleShooter's Price/ Price/ Value Per
Valuation Parameter Value Current Yr EPS Forward Yr EPS ------- Share(1)
- ------------------------------- --------------- -------------- -------------- -------
<S> <C> <C> <C> <C> <C>
Fiscal 1998 EPS Estimate(1) $0.42 34.1 x $76,493 $14.31
Fiscal 1999 EPS Estimate $0.96 23.1 x 118,347 22.13
<CAPTION>
Average Multiple
--------------------------------------------------------
TroubleShooter's Premium One Day Premium One Week Premium Four Weeks
Valuation Parameter Value Prior to Ann. Prior to Ann. Prior to Ann.
------------------ --------------- --------------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Price One Day Prior to
Announcement(3) $10.00 28.6% $68,764 $12.86
Price One Week Prior to
Announcement(3) 9.50 27.7% 64,854 12.13
Price Four Weeks Prior to
Announcement(3) 10.50 35.7 % 76,198 14.25
======== ========
---------------------------------------
Average: $80,931 $15.14
Median: $76,l98 $14.25
High: $118,347 $22.13
Low: $64,854 $12.l3
=======================================
</TABLE>
- ----------
* Excluded from average.
(1) Excludes $6.3 million in purchased technology write-downs.
(2) Assumes 5,346,739 shares outstanding (includes outstanding options using
treasury stock method).
(3) Assumes announcement date on November 19, 1997.
<PAGE>
The Robinson-Humphrey Company, LLC
<TABLE>
<CAPTION>
Project TroubleShooter
Selected M&A Transaction Premiums for Minority Interest Acquisitions in Going Private Transactions
1/1/92 - 12/31/97
Date Acquiror Target Target Business Description
- ---- -------- ------ ---------------------------
<S> <C> <C> <C>
06/25/92 Katy Holdings Katy Industries Inc Mnfr industrial machinerey
07/14/92 WR Grace & Co Grace Engery Corp Contract drilling, oilfield scv
07/29/92 Investor Group Fretter Inc Home appliances, electronics
01/04/93 Investor Group United Medical Corp Whl medical supplies
02/19/93 National Mutual Insurance Co Celina Financial Corp Insurance agents
03/08/93 Dundee Bancorp International Avalon Corp (Corona Corp) Oil and gas exploration,prodn
05/07/93 New Marvel Holdings Inc Marvel Entertainment Group Inc Publish comic books
08/12/93 REMEC Inc Humphrey Inc Mnfr, precision instruments
09/01/93 Investor Group Forum Group Inc Own, operate nursing homes
04/28/94 Investor Group Enquirer/Star Group Inc Publish tabloid newspapers
09/13/94 Investor Group LDB Corp Mnfr moblie homes; whl carpets
11/15/94 Freeman Spogli & Co Koll Management Services (Koll) Real estate management svcs
03/15/95 LinPac Mouldings Ltd Ropak Corp Manufacture plastic containers
03/24/95 Dole Food Co Inc Castle & Cooke Homes Inc Real estate development firm
04/28/95 Fleet Financial Group Inc. MA Fleet Mortgage Group Inc Mortgage bank; holding company
05/19/95 BIC SA Bic Corp(BIC SA) Mnfr writing instruments
08/02/95 Club Mediterranee SA Club Med Inc Operate vacation resorts
08/25/95 Berkshire Hathaway Inc. GEICO Corp Insurance and financial svcs
08/30/95 Investor Group Syms Corp Own, op men's clothing store
09/26/95 SCOR SCOR US Corp(SCOR SA) Reinsurance holding company
10/02/95 Genzyme Corp IG Laboratories Inc Operate medical laboraties
11/06/95 Investor Group NPC International Inc Own and operate restaurants
12/11/95 COBE Laboratories(Gambro AB) REN Corp-USA(COBE Labs Inc) Own,op kidney dialysis centers
03/29/96 Equity Holdings Ltd Great American Mgmt & Invt Inc Invt advice and financial svcs
05/27/96 Novartis AG Sy Stemix Inc (Sandoz AG) Mnfr, dvlp celluar processes
06/21/96 Seaboard Acquistion Partners Seaboard Oil Co Oil and gas exploration, prodn
09/17/96 Chemed Corp Roto-Rooter Inc(Chemed Corp) Provide, plumbing services, prod
09/30/96 CUS Acquisition Inc Customedix Corp Mnfr, dental, medical products
10/03/96 Electromagnetic Sciences LXE Radio control devices
10/10/96 Renco Group Inc WCI Steel Inc(Renco Group Inc) Manufacture steel
11/13/96 Monsanto Co Calgene Inc Own and operate greenhouse
11/20/96 Andrews Group Inc Toy Biz Inc Mnfr games and toys
11/27/96 JW Childs Equity Partners LP Central Tractor Farm & Country Own, op tractor, hardware stores
01/21/97 Mafco Holdings Inc Mafco Consolidated Grp(Mafco) Mnfr cosmetics, beauty products
<CAPTION>
Premium Premium Premiu
1 Day 1 Week 1 Week
Value of Price Prior To Prior To Prior To
Transaction Percent Per Announcement Announcement Announcement
Date ($MM) Sought Share Date Date Date
- ---- ----- ------ ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
06/25/92 $190.047 48.1% $25.75 53.7% 51.5% 46.1%
07/14/92 628.696 16.6% 19.00 24.6 21.6 7.8
07/29/92 102.182 24.0% 4.00 77.8 100.0 52.4
01/04/93 19.473 48.0% 9.50 49.0 52.0 49.0
02/19/93 7.482 44.4% 5.80 16.0 36.5 36.5
03/08/93 38.999 16.5% 3.75 42.9 42.9 50.0
05/07/93 738.858 20.7% 30.00 53.8 42.9 58.9
08/12/93 10.302 48.5% 6.00 18.5 14.3 45.5
09/01/93 245.530 35.7% 3.62 106.9 70.4 106.9
04/28/94 1067.888 43.0% 17.50 20.7 20.7 7.7
09/13/94 17.766 31.0% 7.50 42.9 42.9 42.9
11/15/94 109.062 48.0% 33.20 107.5 107.5 114.2
03/15/95 79.638 45.2% 11.00 4.8 6.0 4.8
03/24/95 525.031 18.3% 15.75 35.5 41.6 55.6
04/28/95 1742.003 19.0% 20.00 19.4 18.5 18.5
05/19/95 906.058 22.0% 40.50 13.3 12.5 28.6
08/02/95 503.609 33.0% 32.00 41.4 39.9 44.6
08/25/95 5441.824 47.6% 70.00 25.6 23.1 25.3
08/30/95 160.687 22.0% 8.75 11.1 9.4 25.0
09/26/95 386.745 20.0% 15.25 37.1 35.6 38.6
10/02/95 71.294 34.9% 7.00 43.6 86.7 143.5
11/06/95 298.189 38.0% 9.00 44.0 44.0 33.3
12/11/95 388.346 48.4% 20.00 27.0 20.3 26.0
03/29/96 746.409 12.1% 50.00 2.6 4.2 3.6
05/27/96 401.596 26.3% 19.50 4.7 69.6 59.2
06/21/96 10.769 29.0% 9.75 11.4 11.4 39.3
09/17/96 220.326 45.1% 41.00 12.3 12.3 11.2
09/30/96 15.103 45.4% 2.38 22.6 26.7 5.6
10/03/96 13.500 28.0% 13.13 22.1 14.1 19.3
10/10/96 437.182 15.5% 10.00 17.6 29.0 77.8
11/13/96 584.080 9.4% 8.00 64.1 80.3 39.1
11/20/96 452.237 33.0% 22.50 29.5 25.9 20.0
11/27/96 169.606 34.6% 14.25 17.5 17.5 18.8
01/21/97 980.318 15.0% 33.50 23.5 23.5 27.6
</TABLE>
<PAGE>
The Robinson-Humphrey Company, LLC
<TABLE>
<CAPTION>
Project TroubleShooter
Selected M&A Transaction Premiums for Minority Interest Acquisitions in Going Private Transactions
1/1/92 - 12/31/97
Date Acquiror Target Target Business Description
- ---- -------- ------ ---------------------------
<S> <C> <C> <C>
01/24/97 National Patent Development General Physics Corp Provide training services
07/15/97 Anthem Inc Acordia Inc(Anthem Inc) Pvd insurance brokerage svcs
09/05/97 Gold Kist Golden Poultry Company Poultry Processing
12/16/97 Orion Capital Corp Guaranty National Corp Insurance company
Pending Texas Industries Inc Chaparral Steel Co Mnfr primary steel products
<CAPTION>
Premium Premium Premium
1 Day 1 Week 4 Weeks
Value of Price Prior To Prior To Prior To
Transaction Percent Per Announcement Announcement Announcement
Date ($MM) Sought Share Date Date Date
- ---- ----- ------ ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
01/24/97 70.360 48.0% 5.10 16.6 31.6 36.0
07/15/97 633.961 39.2% 40.00 12.7 11.5 26.0
09/05/97 230.600 25.5% 14.25 28.1 31.0 29.5
12/16/97 647.411 22.7% 36.00 10.8 23.9 27.7
Pending 519.310 18.7% 15.50 20.4 25.3 29.2
--------------------------------------------------------------------------------
Average: 31.3% 31.6% 35.3% 39.3%
Median: 31.0% 23.5% 26.7% 33.3%
High: 48.5% 107.5% 107.5% 143.5%
Low: 9.4% 2.6% 4.2% 3.6%
================================================================================
</TABLE>
- ----------
Source: Securities Data Company, Inc.
<PAGE>
The Robinson-Humphrey Company, LLC
<TABLE>
<CAPTION>
Project TroubleShooter
Implied Valuation Analysis Utilizing Selected Premiums From Minority Interest/Going Private Transactions
(Dollars in Thousands)
========
========= Implied
Average Premium Implied Equity
-------------------------------------------------------- Equity Value
TroubleShooter's 1 Day 1 Week 4 Weeks Value Per
Valuation Parameter(1) Value Prior to Ann. Prior to Ann. Prior to Ann. ------- Share(2)
--------------------- --------------- --------------- --------------- ------------------- -------
<S> <C> <C> <C> <C> <C> <C>
Stock Price 1 Day Prior to
Announcement $10.00 31.6% $70,378 $13.16
Stock Price 1 Week Prior to
Announcement 9.50 35.3% 68,746 12.86
Stock Price 4 Weeks Prior to
Announcement 10.50 39.3% 78,188 14.62
======== =======
----------------------------------------
Average: $72,437 $13.55
Median: $70,378 $13.16
High: $78,188 $14.62
Low: $68,746 $12.86
========================================
</TABLE>
- ----------
* Excluded from the unweighted average.
(1) Press release announcing potential acquisition was made November 19, 1997.
(2) Assumes 5,346,739 shares outstanding (includes outstanding options under
treasury stock method).
EXHIBIT 99
EXHIBIT (b)(6)
<PAGE>
Investment Banking Presentation
to
THE SPECIAL COMMITTEE OF
THE BOARD OF DIRECTORS OF
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
March 10, 1998
THE ROBINSON-HUMPHREY COMPANY
Investment Bankers Since 1894
<PAGE>
- --------------------------------------------------------------------------------
Introduction and Methodology
- --------------------------------------------------------------------------------
o The special committee of the Board of Directors of Wandel & Goltermann
Technologies, Inc. ("WGTI") has asked Robinson-Humphrey to provide
information to the Special Committee in connection with its evaluation of
the proposal for the acquisition of WGTI shares currently held by persons
other than Wandel & Goltermann Management Holding GmbH ("WG Holding").
o In evaluating a per share purchase price range for the shares of WGTI
currently held by persons other than WG Holding, Robinson-Humphrey
conducted, among other analyses, a
(i) Review of the industry and the competitive climate in which WGTI
operates, and its competitive position;
(ii) Review of the business, historical financial performance and
future prospects of WGTI;
(iii) Review of the historical and current market prices and trading
patterns of the Common Stock of WGTI;
(iv) Review and analysis of the market prices of securities of, and
financial data of, other companies engaged in similar businesses
as WGTI;
(v) Review and analysis of prices and premiums paid in, and other
terms of, other recent "going private" acquisition transactions;
and a
(vi) Discounted cash flow analysis of WGTI.
o Robinson-Humphrey also held discussions with members of the senior
management of WGTI regarding the Company's past and current business
operations, financial condition and future prospects.
o Robinson-Humphrey relied without independent verification upon the accuracy
and completeness of all of the financial and other information reviewed by
it for purposes of its analysis. Robinson-Humphrey assumed that the
financial forecasts of WGTI were reasonably prepared on a basis reflecting
the best current available estimates and judgements of WGTI's senior
management as to the future financial performance of WGTI.
o See attached Exhibit A for the historical and projected financial
statements Robinson-Humphrey used in its analysis.
-1-
<PAGE>
- --------------------------------------------------------------------------------
Summary of Selected Comparable Company Analysis
- --------------------------------------------------------------------------------
o Robinson-Humphrey reviewed and compared certain financial, operating and
stock market information of WGTI and two comparable groups of publicly
traded companies in the Network Solutions industry.
o The "Network Analysis" publicly-traded companies included in our analysis
were Applied Digital Access, Concord Communications, Digital Lightwave,
Hewlett-Packard, Network Associates, RADCOM, Tekelec and Tektronix. The
"Network Management and Equipment" publicly-traded companies included in our
analysis include the "Network Analysis" companies plus Dynatech, Fluke,
GenRad, Keithley Instruments, MicroTest, Objective Systems Integrators,
Retix, TCSI, Teradyne, Bay Networks, Cabletron, Cisco and 3Com.
o Robinson-Humphrey calculated current market price as a multiple of book
value and as a multiple of estimated earnings per share ("EPS") for calendar
1998 and 1999. The EPS estimates were based on the mean of publicly
available earnings estimates made by research analysts as provided by First
Call Investor Service. In addition, Robinson-Humphrey calculated firm value
(market capitalization plus debt minus cash) to calendar 1997 revenues for
each of the publicly traded companies.
o Robinson-Humphrey averaged the multiples of the comparable companies in
order to apply these multiples to WGTI's values. To accurately reflect
average values for statistical purposes, Robinson-Humphrey excluded certain
outlying values that differed from the relative groupings of the other
values. Robinson-Humphrey believes that these outlying values for certain
companies reflect temporary market aberrations that can skew mean values.
o With respect to the "Network Analysis" companies, the estimated calendar
1998 price/earnings ratios ranged from 87.9x to 10.0x, with an average of
31.8x, thus implying a value of $19.63 per share for WGTI. The estimated
calendar 1999 price/earnings ratios ranged from 43.3x to 10.5x, with an
average of 24.1x, thus implying a value of $24.75 per share for WGTI. The
current market value to book value multiples ranged from 12.7x to 1.8x, with
an average of 6.1x, thus implying a value of $27.13 per share for WGTI. The
firm value to calendar 1997 revenue multiples ranged from 7.53x to 1.08x,
with an average of 3.11x, thus implying a value of $32.39 per share for
WGTI.
-2-
<PAGE>
- --------------------------------------------------------------------------------
Summary of Selected Comparable Company Analysis
- --------------------------------------------------------------------------------
o With respect to the "Network Management and Equipment" companies, the
estimated calendar 1998 price/earnings ratios ranged from 87.9x to 10.0x,
with an average of 24.5x, thus implying a value of $15.10 per share for
WGTI. The estimated calendar 1999 price/earnings ratios ranged from 43.5x to
10.5x, with an average of 21.9x, thus implying a value of $22.52 per share
for WGTI. The current market value to book value multiples ranged from
12.7x to 1.5x, with an average of 5.2x, thus implying a value of $23.09 per
share for WGTI. The firm value to calendar 1997 revenue multiples ranged
from 7.53x to 0.61x, with an average of 2.68x, thus implying a value of
$28.08 per share for WGTI.
o See attached Exhibit B for the implied valuation averages Robinson-Humphrey
used in its analysis.
-3-
<PAGE>
- --------------------------------------------------------------------------------
Summary of Selected Mergers and Acquisitions
- --------------------------------------------------------------------------------
o Robinson-Humphrey reviewed and compared 21 selected recent mergers and
acquisitions in the network solutions industry, including (i) Bay Network's
proposed acquisition of Netsation; (ii) Clayton Dubilier's proposed
acquisition of Dynatech; (iii) McAfee Associates' acquisition of Network
General; (iv) Tivoli Systems' acquisition of Unison Software; (v) Network
General's acquisition of Cinco Networks; (vi) Ascend's acquisition of
Cascade; (vii) 3Com's acquisition of US Robotics; (viii) Network General's
acquisition of 3DV Technology; (ix) Compaq's acquisition of Microcom; (x)
Dynatech's acquisition of Itronix; (xi) McAfee Associates' acquisition of
FSA; (xii) Computer Sciences' acquisition of Continuum; (xiii) McAfee
Associates' acquisition of Vycor; (xiv) Dynatech's acquisition of
Synergistic Solutions; (xv) IBM's acquisition of Tivoli Systems; (xvi)
Microtest's acquisition of Hotware; (xvii) Adobe's acquisition of Frame
Technology; (xviii) McAfee Associates' acquisition of Saber Software; (xix)
Microcom's acquisition of Extension Technology; (xx) Sybase's acquisition of
Powersoft; and (xxi) McAfee Associates' acquisition of Brightwork
Development.
o For these selected mergers and acquisitions, Robinson-Humphrey calculated
purchase price as a multiple of book value and firm value as a multiple of
latest twelve months revenues. The purchase price to book value multiples
ranged from 13.0x to 2.4x, with an average of 7.7x, thus implying a value of
$34.68 per share for WGTI. The firm value to latest twelve months revenues
multiples ranged from 7.39x to 1.08x, with an average of 3.32x, thus
implying a value of $34.47 per share for WGTI.
o Robinson-Humphrey also specifically focused on the multiples to book value
and latest twelve months revenues for the recent acquisition by McAfee
Associates of Network General and the proposed acquisition by Clayton
Dubilier of Dynatech. These two acquisitions involved companies (Network
General and Dynatech) which are competitors of WGTI. The purchase price to
book value multiples for these two transactions ranged from 6.0x to 4.7x,
with an average of 5.3x, thus implying a value of $23.90 per share for WGTI.
The firm value to latest twelve months revenues multiples ranged from 3.21x
to 1.94x, with an average of 2.57x, thus implying a value of $27.07 per
share for WGTI.
o See attached Exhibit C for the implied valuation averages Robinson-Humphrey
used in its analysis.
-4-
<PAGE>
- --------------------------------------------------------------------------------
Summary of Discounted Cash Flow Analysis
- --------------------------------------------------------------------------------
o Robinson-Humphrey performed a discounted cash flow analysis using detailed
projections developed by the Company for fiscal 1998 through fiscal 2001 as
the financial extension of its strategic planning process. It should be
noted that WG Holding was actively involved in this process and has approved
the validity of these projections.
o Robinson-Humphrey calculated a net present value of free cash flows (defined
as earnings before interest after taxes plus depreciation and amortization
less capital expenditures and any increase in net working capital) for
fiscal 1998 through 2002 using discount rates ranging from 15% to 27.5%.
Robinson-Humphrey calculated the Company's terminal values in fiscal 2002
based on multiples of fiscal 2002 projected EBIT ranging from 6.0x to 11.0x.
o Using a discount rate of 20% and a terminal value multiple of 8.0x fiscal
2002 EBIT, the discounted cash flow analysis provides a valuation of $18.89
per share for WGTI.
o See attached Exhibit D for the discounted cash flow analysis
Robinson-Humphrey used in its analysis.
-5-
<PAGE>
Exhibit A
Page 1
<TABLE>
<CAPTION>
<S> <C>
Project TroubleShooter
Historical Income Statement Information
(In Thousands, Except for Per Share Amounts)
Fiscal Year Ended September 30,
-----------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ---- ----
Revenues:
Nonaffiliates $ 7,485 $10,421 $11,387 $14,438 $18,005 $21,785 $23,658 $33,186 $29,001
Affiliates 6,881 6,659 9,211 12,768 15,080 18,387 21,604 25,900 25,454
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Revenues 14,366 17,080 20,598 27,206 33,085 40,172 45,262 59,086 54,455
% Revenue Growth - 18.9% 20.6% 32.1% 21.6% 21.4% 12.7% 30.5% (7.8%)
Cost of Revenues 10,300 9,977 10,440 10,569 12,176 12,731 16,576 23,234 24,381
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross Profit 4,066 7,103 10,158 16,637 20.909 27,441 28,686 35,852 30,074
Gross Profit Margin % 28.3% 41.6% 49.3% 61.2% 63.2% 68.3% 63.4% 60.7% 55.2%
Selling, General, and
Administrative Expenses 4,216 5,166 5,633 8,506 10,603 12,984 15,872 18,934 19,360
Product Development Expenses 2,963 3,414 3,504 5,033 6,545 9,059 10,469 9,804 10,712
Restructuring Change 0 0 0 0 0 0 1,279 0 0
------- ------- ------- ------- ------- ------- ------- ------- ------
Operating Income (Loss) (3,113) (1,477) 1,021 3,098 3,761 5,398 1,066 7,114 2
Operating Income Margin% (21.7%) (8.6%) 5.0% 11.4% 11.4% 13.4% 2.4% 12.0% 0.0%
Interest Expense (626) (834) (1,032) (688) (779) (460) 0 0 0
Interest Income 0 63 16 0 274 295 313 350 639
Foreign currency (74) (614) 491 34 498 213 (245) (104) (217)
Gains (Losses) ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Continuing
Operations Before
Income Taxes (3,813) (2,862) 496 2,444 3,754 5,446 1,134 7,360 424
Benefit from (Provisions
for) Income Taxes 89 188 0 1,103 867 (2,124) (98) (2,208) 0
------- ------- ------- ------- ------- ------- ------- -------- -------
Income (Loss) from
Continuing Operations (3,724) (2,674) 496 3,547 4,621 3,322 1,036 5,152 424
Income (Loss)from
Discontinued Operations 856 314 (3,885) (1,795) 135 204 0 0 0
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income ($2,868) ($2,360) ($3,389) $1,752 $4,756 $3,526 $1,036 $5,152 $424
======== ======= ======== ======= ======= ======== ======== ======= =======
Net Income Margin % (20.0%) (13.8%) (16.5%) 6.4% 14.4% 8.8% 2.3% 8.7% 0.8%
Per Share Data:
Income (Loss) from
Continuing Operations ($1.47) ($0.82) $0.15 $0.93 $1.23 $0.76 $0.20 $0.98 $0.08
======== ======== ======== ======= ======= ======== ======== ======= =======
Net Income ($1.13) ($0.72) ($1.04) $0.47 $1.27 $0.80 $0.20 $0.98 $0.08
======== ======== ======== ======= ======= ======== ======== ======= =======
Weighted Average Number
of Common Shares
Outstanding $2,537 3,264 3,265 3,750 3,750 4,398 5,245 5,231 5,359
======== ======== ======== ======= ======= ======== ======== ======= =======
</TABLE>
<PAGE>
Exhibit A
Page 2
<TABLE>
<CAPTION>
<S> <C>
Project TroubleShooter
Historical Income Statement Information
(In Thousands, Except for Per Share Amounts)
Fiscal 1995
-------------------------------------------
First Second Third Fourth
----- ------ ----- ------
Revenues:
Nonaffiliates $6,420 $5,735 $5,728 $6,225
Affiliates 5,396 5,881 5,106 5,221
- ---------- ------- ------- ------- -------
Total Revenues 11,816 11,616 10,384 11,446
Cost of Revenues 3,683 3,451 3,995 5,447
------- ------- ------- -------
Gross Profit 8,133 8,165 6,389 5,999
Gross Profit Margin % 68.8% 70.3% 61.5% 52.4%
Selling, General, and
Administrative Expenses 3,660 3,941 3,717 4,554
Product Development Expenses 2,379 2,519 2,642 2,929
Restructuring Charge 0 0 0 1,279
------- ------- ------- -------
Operating Income (Loss) 2,094 1,705 30 (2,763)
Operating Income Margin % 17.7% 14.7% 0.3% (24.1%)
Interest Income 93 80 68 72
Foreign Currency Gains(Losses) 83 (338) (24) 34
------- ------- ------- -------
Income Before Income Taxes 2,270 1,447 74 (2,657)
Benefit from (Provision for)
Income Taxes (726) (463) (23) 1,114
------- ------- ------- -------
Net Income $1,544 $984 $51 ($1,543)
======= ======= ======= =======
Net Income Margin % 13.1% 8.5% 0.5% (13.5%)
Earnings Per Share $0.30 $0.19 $0.01 ($0.39)
======= ======= ======= =======
Weighted Average Number of
Common Shares Outstanding 5,226 5,243 5,260 5,237
======= ======= ======= =======
<CAPTION>
Fiscal 1996
------------------------------------------
First Second Third Fourth
----- ------ ----- ------
Revenues:
Nonaffiliates $7,172 $8,154 $8,895 $8,965
Affiliates 6,291 6,342 6,528 6,739
- ---------- ------- ------- ------- -------
Total Revenues 13,463 14,496 15,423 15,704
Cost of Revenues 5,412 5,649 6,243 5,930
------- ------- ------- -------
Gross Profit 8,051 8,847 9,180 9,774
Gross Profit Margin % 59.8% 61.0% 59.5% 62.2%
Selling, General, and
Administrative Expenses 4,631 4,667 4,528 5,108
Product Development Expenses 2,621 2,413 2,445 2,325
Restructuring Charge 0 0 0 0
------- ------- ------- -------
Operating Income (Loss) 799 1,767 2,207 2,341
Operating Income Margin % 5.9% 12.2% 14.3% 14.9%
Interest Income 53 60 79 158
Foreign Currency Gains(Losses) (21) (93) (46) 56
------- ------- ------- -------
Income Before Income Taxes 831 1,734 2,240 2,555
Benefit from (Provision for)
Income Taxes (266) (553) (719) (670)
------- ------- ------- -------
Net Income $565 $1,181 $1,521 $1,885
======= ======= ======= =======
Net Income Margin % 4.2% 8.1% 9.9% 12.0%
Earnings Per Share $0.11 $0.23 $0.29 $0.36
======= ======= ======= =======
Weighted Average Number of
Common Shares Outstanding 5,218 5,155 5,275 5,273
======= ======= ======= =======
<CAPTION>
Fiscal
Fiscal 1997 1998
---------------------------------------------------
First Second Third Fourth First
----- ------ ----- ------ -----
Revenues:
Nonaffiliates $6,482 $7,247 $8,581 $6,691 $7,809
Affiliates 8,973 7,095 4,639 4,747 6,542
------- ------- ------- ------- -------
Total Revenues 15,455 14,342 13,220 11,438 14,351
Cost of Revenues 6,112 6,260 5,587 6,422 7,477
------- ------- ------- ------- -------
Gross Profit 9,343 8,082 7,633 5,016 6,874
Gross Profit Margin % 60.5% 56.4% 57.7% 43.9% 47.9%
Setting, General, and
Administrative Expenses 5,134 4,673 4,937 4,616 4,998
Product Development Expenses 2,450 2,482 2,686 3,094 2,604
Restructuring Charge 0 0 0 0 0
------- ------- ------- ------- -------
Operating Income (Loss) 1,759 927 10 (2,694) (728)
Operating Income Margin % 11.4% 6.5% 0.1% (23.6%) (5.1%)
Interest Income 148 172 155 164 188
Foreign Currency Gains(Losses) (7) (263) (19) 72 26
------- ------- ------- ------- -------
Income Before Income Taxes 1,900 836 146 (2,458) (514)
Benefit from (Provision for)
Income Taxes (570) (251) (44) 865 103
------- ------- ------- ------- -------
Net Income $1,330 $585 $102 ($1,593) ($411)
======= ======= ======= ======= =======
Net Income Margin % 8.6% 4.1% 0.8% (13.9%) (2.9%)
Earnings Per Share $0.25 $0.11 $0.02 ($0.30) ($0.08)
======= ======= ======= ======= =======
Weighted Average Number of
Common Shares Outstanding 5,361 5,427 5,285 5,274 5,277
======= ======= ======= ======= =======
</TABLE>
<PAGE>
Exhibit A
Page 3
<TABLE>
<CAPTION>
<S> <C>
Project TroubleShooter
Historical Balance Sheet Information
(In Thousands, Except for Per Share Amounts)
As of September 30, December 31, 1997
----------------------------- -----------------------
ASSETS 1995 1996 1997 Actual Pro Forms
------- -------- ------- --------- ----------
Current Assets:
Cash and Cash Equivalents $5,374 $10,286 $13,329 $13,395 $7,395 [1]
Accounts Receivable:
Nonaffiliates 5,378 8,148 7,038 5,870 5,870
Affiliates 3,934 5,068 3,964 6,226 6,226
Income Tax Receivable 1,464 720 1,367 363 363
Inventories 6,616 4,695 5,596 5,630 5,630
Deferred Tax Assets 1,946 1,079 1,448 1,585 1,585
Other Current Assets 395 349 927 849 849
------- -------- ------- --------- ----------
Total Current Assets $25,107 $30,345 $33,669 $33,918 $27,918
Property and Equipment
Machinery and Equipment 4,189 4,401 4,614 4,667 4,667
Furniture and Fixtures 5,764 5,186 5,993 6,151 6,151
------- -------- ------- --------- ----------
9,953 9,587 10,607 10,818 10,818
Accumulated Depreciation (6,213) (6,323) (7,721) (8,008) (8,008)
------- -------- ------- --------- ----------
3,740 3,264 2,886 2,810 2,810
Other Assets 497 689 737 718 1,018 [1]
------- -------- ------- --------- ----------
Total Assets $29,344 $34,298 $37,292 $37,446 $31,746
======= ======== ======= ========= ==========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Accounts Payable:
Nonaffiliates $1,579 $1,327 $1,530 $1,085 $1,085
Affiliates 258 950 1,789 2,856 2,856
Accrued Compensation 1,683 1,855 1,467 1,412 1,412
Other Accrued Liabilities 1,470 1,344 1,847 1,843 1,843
------- -------- ------- --------- ----------
Total Current Liabilities $4,990 $5,476 $6,633 $7,196 $7,196
Shareholders' Equity:
Common Stock 52 52 53 53 53
Additional Paid-in Capital 25,740 25,056 26,468 26,470 26,470
Retained Earnings
(Accumlated Deficit) (1,438) 3,714 4,138 3,727 (2,573)[1]
------- -------- ------- --------- ----------
24,354 28,822 30,659 30,250 23,950
------- -------- ------- --------- ----------
Total Liabilities and
Shareholders' Equity $29,344 $34,298 $37,292 $37,446 $31,146
======= ======== ======= ========= ==========
[1]Assumes $6.0 million paid in cash for technology acquisitions (Tinwald and Network Intelligence) with
a purchased technology write-off of $6.3 million with the difference going into goodwill under other assets.
</TABLE>
<PAGE>
Exhibit A
Page 4
Project TroubleShooter
Projected Income Statement Information
With Technology Acquisitions
(In Thousands, Except for Per Share Amounts)
Fiscal Year Ended September 30,
--------------------------------------------
1998 1999 2000 2001
-------- ------- -------- -------
Revenues:
Nonaffiliates $39,700 $56,000 $74,400 $96,700
Affiliates 29,100 34,500 44,200 53,500
-------- ------- -------- -------
Total Revenues 68,800 90,500 118,600 150,200
%Revenue Growth 26.3% 31.5% 31.0% 26.6%
Cost of Revenues 30,700 40,200 52,800 66,200
-------- ------- -------- -------
Gross Profit 38,100 50,300 65,800 84,000
Gross Profit Margin % 55.4% 55.6% 55.5% 55.9%
Selling, General, and
Administrative Expenses 23,300 28,500 35,900 45,000
Product Development Expenses 12,300 15,500 18,500 20,300
Purchased Technology Write-off 6,300 0 0 0
-------- ------- -------- -------
Operating Income (Loss) (3,800) 6,300 11,400 18,700
Operating Income Margin % (5.5%) 7.0% 9.6% 12.5%
Interest Income 300 500 800 1,200
Income (Loss) Before -------- ------- -------- -------
Income Taxes (3,500) 6,800 12,200 19,900
Provision for Income Taxes (500) (1,700) (3,300) (5,400)
-------- ------- -------- -------
Net Income ($4,000) $5,100 $8,900 $14,500
======== ======== ======== ========
Net Income Margin % (5.8%) 5.6% 7.5% 9.7%
Per Share Data:
Net Income ($0.76) $0.96 $1.68 $2.46
======== ======== ======== ========
Net Income Excluding
Purchase Technology Write-Off $0.44 $0.96 $1.68 $2.46
======== ======== ======== ========
<PAGE>
Exhibit A
Page 5
<TABLE>
<CAPTION>
<S> <C>
Project TroubleShooter
Project Quarterly Income Statement Information
with Technology Acquisitions
(In Thousands, Except for Per Share Amounts)
Fiscal 1998
----------------------------------------
First Second Third Fourth
----- ------ ----- ------
Revenues:
Nonaffiliates $7,809 $9,400 $10,800 $11,700
Affiliates 6,542 6,500 7,700 8,300
------- ------- ------- -------
Total Revenues 14,351 15,900 18,500 20,000
Cost of Revenues 7,477 7,200 7,900 8,100
------- ------- ------- -------
Gross Profit 6,874 8,700 10,600 11,900
Gross Profit Margin % 47.9% 54.7% 57.3% 59.5%
Selling, General, and
Administrative Expenses 4,997 5,500 6,100 6,700
Product Development Expenses 2,604 3,000 3,300 3,400
Purchased Technology Write-Off 0 6,300 0 0
------- ------- ------- -------
Operating Income (Loss) (728) (6,100) 1,200 1,800
Operating Income Margin % (5.1%) (38.4%) 6.5% 9.0%
Interest Income 188 0 0 100
Foreign Currency Gains(Losses) (26) 0 0 0
------- ------- ------- -------
Income Before Income Taxes (513) (6,100) 1,200 1,900
Benefit from (Provision for)
Income Taxes 103 0 (300) (400)
------- ------- ------- -------
Net Income ($411) ($6,100) $900 $1,500
======= ======= ======= =======
Net Income Margin % (2.9%) (38.4%) 4.9% 7.5%
Per Share Data:
Net Income ($0.08) ($1.14) $0.17 $0.29
======= ======= ======= =======
Net Income Excluding ($0.08) $0.04 $0.17 $0.29
Purchased Technology Write-off ======= ======= ======= =======
<CAPTION>
Fiscal 1999
----------------------------------------
First Second Third Fourth
----- ------ ----- ------
Revenues:
Nonaffiliates $12,000 $13,700 $14,500 $15,800
Affiliates 7,300 8,100 8,900 10,200
------- ------- ------- -------
Total Revenues 19,300 21,800 23,400 26,000
Cost of Revenues 8,700 9,700 10,300 11,500
------- ------- ------- -------
Gross Profit 10,600 12,100 13,100 14,500
Gross Profit Margin % 54.9% 55.5% 56.0% 55.8%
Selling, General, and
Administrative Expenses 6,300 6,800 7,400 8,000
Product Development Expenses 3,600 3,800 3,900 4,200
Purchased Technology Write-Off 0 0 0 0
------- ------- ------- -------
Operating Income (Loss) 700 1,500 1,800 2,300
Operating Income Margin % 3.6% 6.9% 7.7% 8.8%
Interest Income 200 100 100 100
Foreign Currency Gains(Losses) 0 0 0 0
------- ------- ------- -------
Income Before Income Taxes 900 1,600 1,900 2,400
Benefit from (Provision for)
Income Taxes (200) (400) (500) (600)
------- ------- ------- -------
Net Income $700 $1,200 $1,400 $1,800
======= ======= ======= =======
Net Income Margin % 3.6% 5.5% 6.0% 6.9%
Per Share Data:
Net Income $0.13 $0.23 $0.27 $0.34
======= ======= ======= =======
Net Income Excluding $0.13 $0.23 $0.27 $0.34
Purchased Technology Write-off ======= ======= ======= =======
<CAPTION>
Fiscal 2000
----------------------------------------
First Second Third Fourth
----- ------ ----- ------
Revenues:
Nonaffiliates $15,700 $18,000 $19,500 $21,200
Affiliates 9,800 10,500 11,500 12,400
------- ------- ------- -------
Total Revenues 25,500 28,500 31,000 33,600
Cost of Revenues 11,500 12,700 13,600 15,000
------- ------- ------- -------
Gross Profit 14,000 15,800 17,400 18,600
Gross Profit Margin % 54.9% 55.4% 56.1% 55.4%
Selling, General, and
Administrative Expenses 8,300 8,600 9,300 9,700
Product Development Expenses 4,400 4,500 4,700 4,900
Purchased Technology Write-Off 0 0 0 0
------- ------- ------- -------
Operating Income (Loss) 1,300 2,700 3,400 4,000
Operating Income Margin % 5.1% 9.5% 11.0% 11.9%
Interest Income 200 200 200 200
Foreign Currency Gains(Losses) 0 0 0 0
------- ------- ------- -------
Income Before Income Taxes 1,500 2,900 3,600 4,200
Benefit from (Provision for)
Income Taxes (400) (800) (1,000) (1,100)
------- ------- ------- -------
Net Income $1,100 $2,100 $2,600 $3,100
======= ======= ======= =======
Net Income Margin % 4.3% 7.4% 8.4% 9.2%
Per Share Data:
Net Income $0.21 $0.40 $0.49 $0.58
======= ======= ======= =======
Net Income Excluding $0.21 $0.40 $0.49 $0.58
Purchased Technology Write-off ======= ======= ======= =======
</TABLE>
<PAGE>
The Robinson-Humphrey Company, LLC Exhibit B
Page 1
Project TroubleShooter
Implied Valuation Analysis Utilizing Average of Network
Analysis Companies
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Network Analysis Companies Average Multiple
-----------------------------------------------------------------------
TroubleShooter's Price/ Price/ Price/
Valuation Parameter Value Calendar 1998 Net Income Calendar 1999 Net Income Book Value
- ----------------------- ----------------- ------------------------ ------------------------- ----------
Calendar 1998 Net Income(1) $3,300 31.8 x
Calendar 1999 Net Income 5,500 24.1 x
Pro Forma 12/31/97 Book Value(1)23,950 6.1 x
Network Analysis Companies Average Multiple
-------------------------------------------
TroubleShooter's Firm Value(2)/ Less
Valuation Paramenter Value LTM Revenues Net Debt(3)
- ----------------------- ---------------- -------------------- ------------------
Calendar 1997 Revenues $53,351 3.11 x (7,395)
</TABLE>
Implied
Implied Equity
Equity Value
Value Per Share (4)
-------- -------------
$104,949 $19.63
132,322 24.75
145,055 27.13
$173,175 $32.39
- ------------------------------------------
Average $138,875 $25.97
Median $138,689 $25.94
High $173,175 $32.39
Low $104,949 $19.63
- --------------------------
*Excluded from the average
(1) Based on projections including technology acquisitions and excludes $6.3
million in purchased technology write-downs for fiscal 1998. Book value is
adjusted for write-downs.
(2) Firm value equals market capitalization plus total debt and preferred stock
minus cash and marketable securities.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions (Tinwald
and Network Intelligence) to be completed in the second quarter of fiscal
1998.
(4) Assumes 5,346,739 shares outstanding (including options using the
treasury stock method).
<PAGE>
The Robinson-Humphrey Company, LLC
Exhibit B
Page 2
Project TroubleShooter
Implied Valuation Analysis Utilizing Combined Average of Network Management
and Equipment Companies
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C>
Combined Average Multiple
----------------------------------------------------------------------------
TroubleShooter's Price/ Price/ Price/
Valuation Parameter Value Calendar 1998 Net Income Calendar 1999 Net Income Book Value
- ------------------------ ----------------- -------------------------- ------------------------ --------------
Calendar 1998 Net Income(1) $3,300 24.5 x
Calendar 1999 Net Income 5,500 21.9 x
Pro Forma 12/31/97 Book Value(1) 23,950 5.2 x
Combined Average Multiple
---------------------------------
TroubleShooter's Firm Value(2)/ Less
Valuation Paramenter Value LTM Revenues Net Debt(3)
- ---------------------- ----------------- --------------- ------------
Calendar 1997 Revenues $53,351 2.68 x ($7,395)
</TABLE>
Implied
Implied Equity
Equity Value
Value Per Share (4)
-------- -------------
$80,731 $15.10
120,388 22.52
123,458 23.09
$150,162 $28.08
- ----------------------------------------
Average $118,685 $22.20
Median $121,923 $22.80
High $150,162 $28.08
Low $ 80,731 $15.10
- ------------------------------
*Excluded from average
(1) Based on projections including technology acquisitions and excludes $6.3
million in purchased technology write-downs for fiscal 1998. Book value is
adjusted for write-downs.
(2) Firm value equals market capitalization plus total debt and preferred stock
minus cash and marketable securities.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions (Tinwald
and Network Intelligence) to be completed in the second quarter of fiscal
1998.
(4) Assumes 5,346,739 shares outstanding (including options using the
treasury stock method).
<PAGE>
The Robinson-Humphrey Company, LLC
Exhibit C
Page 1
Project TroubleShooter
Implied Valuation Analysis Utilizing Network Solution M&A Transaction Multiples
-------------------------------------------------------------------------------
(Dollars in Thousands)
TroubleShooter's Average Multiple
-----------------
Valuation Parameter Value Equity Value/Book
- -------------------- ----------------- ------------------------------
Pro Forma 12/31/97
Book Value (1) 23,950 7.7 x
Average Multiple
--------------------------------
TroubleShooter's Firm Value(2)/ Less
Valuation Parameter Value LTM Revenues Net Debt(3)
- ----------------------- ---------------- --------------- -------------
Calendar 1997 Revenues $53,351 3.32 x ($7,395)
Implied
Implied Equity
Equity Value
Value Per Share (4)
------- -----------
$185,421 $34.68
$184,293 $34.47
- ----------------------------------------
Average: $184,857 $34.57
High: $185,421 $34.68
Low: $184,293 $34.47
- -----------------------------
*Excluded from average.
(1) Adjusted $6.3 million for contemplated write-downs of purchased technology.
(2) Firm value equals equity value plus debt assumed minus cash and marketable
securities, if disclosed.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions (Tinwald
and Network Intelligence) to be completed in the second quarter of fiscal
1998.
(4) Assumes 5,346,739 shares outstanding (includes outstanding options using the
treasury stock method).
<PAGE>
The Robinson-Humphrey Company, LLC
Exhibit C
Page 2
Project TroubleShooter
Implied Valuation Analysis Utilizing Network General and
Dynatech Transaction Multiples
----------------------------------------------------------------
(Dollars in Thousands)
TroubleShooter's Equity Value/
Valuation Parameter Value Book
- -------------------- ----------------- ----------------
Pro Forma 12/31/97
Book Value (1) 23,950 5.3 x
TroubleShooter's Firm Value(2)/ Less
Valuation Parameter Value LTM Revenues Net Debt(3)
- ----------------------- ---------------- ------------------ -------------
Calendar 1997 Revenues $53,351 2.57 x ($7,395)
Implied
Implied Equity
Equity Value
Value Per Share (4)
------- -----------
$127,780 $23.90
$144,717 $27.07
- ----------------------------------------
Average: $136,249 $25.48
High: $144,717 $27.07
Low: $127,780 $23,90
- -----------------------------
*Excluded from average
(1) Adjusted $6.3 million for contemplated write-downs of purchased technology.
(2) Firm value equals equity value plus debt assumed minus cash and marketable
securities, if disclosed.
(3) Net debt equals debt plus preferred stock less cash and marketable
securities. Assumes cash outlay of $6.0 million for acquisitions (Tinwald
and Network Intelligence) to be completed in the second quarter of fiscal
1998.
(4) Assumes 5,346,739 shares outstanding (includes outstanding options using the
treasury stock method).
<PAGE>
PROJECT TROUBLESHOOTER
EBIT MULTIPLE METHODOLOGY FOR DISCOUNTED CASH FLOW ANALYSIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------
SUMMARY:
- -----------------------------------------------
WACC: 20.00%
Multiple: 8.00
EBIT Terminal Value: $22,440
Present Value of Cash Flows: $14,540
Present Value of Terminal Value: $79,045
----------
Total Value: $93,585
==========
Plus: Cash (1) $7,395
Less: Debt $0
----------
Equity Value $100,980
==========
Equity Value per share $18.89
- -----------------------------------------------
</TABLE>
(1) Pro Forma as of 12/31/97.
<PAGE>
PROJECT TROUBLESHOOTER
EBIT MULTIPLE METHODOLOGY FOR DISCOUNTED CASH FLOW ANALYSIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------
Weighted Average Cost of Capital (WACC) 15.00% 17.50% 20.00% 22.50% 25.00% 27.50%
- -------------------------------------------------------------------------------------------------------------------------
Present Value of Cash Flows: $16,635 $15,535 $14,540 $13,637 $12,816 $12,067
- -------------------------------------------------------------------------------------------------------------------------
Present Value of Terminal Value:
6.0 x $71,798 $65,175 $59,284 $54,030 $49,335 $45,129
7.0 $83,765 $76,038 $69,165 $63,035 $57,557 $52,650
Multiple 8.0 $95,731 $86,900 $79,045 $72,041 $65,780 $60,171
9.0 $107,698 $97,763 $88,926 $81,046 $74,002 $67,693
10.0 $119,664 $108,626 $98,806 $90,051 $82,225 $75,214
11.0 $131,631 $119,488 $108,687 $99,056 $90,447 $82,736
- -------------------------------------------------------------------------------------------------------------------------
Total Value:
6.0 x $88,433 $80,710 $73,824 $67,667 $62,151 $57,196
7.0 $100,400 $91,573 $83,704 $76,672 $70,373 $64,717
Multiple: 8.0 $112,366 $102,435 $93,585 $85,677 $78,596 $72,239
9.0 $124,332 $113,298 $103,466 $94,683 $86,818 $79,760
10.0 $136,299 $124,161 $113,346 $103,688 $95,041 $87,282
11.0 $148,265 $135,023 $123,227 $112,693 $103,263 $94,803
- -------------------------------------------------------------------------------------------------------------------------
Equity Value:
6.0 x $95,829 $88,106 $81,219 $75,063 $69,546 $64,591
7.0 $107,795 $98,968 $91,100 $84,068 $77,769 $72,113
Multiple: 8.0 $119,761 $109,831 $100,980 $93,073 $85,991 $79,634
9.0 $131,728 $120,694 $110,861 $102,078 $94,214 $87,156
10.0 $143,694 $131,556 $120,742 $111,083 $102,436 $94,677
11.0 $155,661 $142,419 $130,622 $120,088 $110,658 $102,198
- -------------------------------------------------------------------------------------------------------------------------
Implied Total Value/Fiscal 1998 EBIT Multiple:
6.0 x 35.4 x 32.3 x 29.5 x 27.1 x 24.9 x 22.9 x
7.0 40.2 36.6 33.5 30.7 28.1 25.9
Multiple: 8.0 44.9 41.0 37.4 34.3 31.4 28.9
9.0 49.7 45.3 41.4 37.9 34.7 31.9
10.0 54.5 49.7 45.3 41.5 38.0 34.9
11.0 59.3 54.0 49.3 45.1 41.3 37.9
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
1030 Swabia Court
Research Triangle Park, North Carolina 27709-3585
July , 1998
To the Shareholders of Wandel & Goltermann Technologies, Inc.:
On behalf of the Board of Directors of Wandel & Goltermann Technologies,
Inc. (the "Company"), it is my pleasure to invite you to attend a Special
Meeting of Shareholders of the Company (the "Special Meeting") to be held on
August , 1998 at 10:00 a.m. local time, at .
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve an Agreement and Plan of Merger (the "Merger Agreement")
dated as of March 28, 1998, among the Company, Wandel & Goltermann Management
Holding GmbH ("WG Holding") and WG Merger Corp., a wholly-owned subsidiary of
WG Holding, pursuant to which, (i) WG Merger Corp. will be merged with and into
the Company, (ii) each outstanding share of the common stock of WG Merger Corp.
will be converted into one outstanding share of the common stock of the Company
and (iii) each share of the Company's outstanding common stock (the "Common
Stock") (other than shares owned by WG Holding and shares held by dissenting
shareholders) will be converted into the right to receive $15.90 in cash (the
"Merger"). A copy of the Merger Agreement is included as Appendix A to the
accompanying Proxy Statement. As a result of the Merger, WG Holding will
acquire all of the outstanding shares of Common Stock not already owned by WG
Holding, and the public shareholders of the Company will no longer have an
equity interest in the Company.
A special committee of directors of the Company (the "Special Committee"),
consisting of two directors who are neither employees of the Company nor
employees or directors of WG Holding or WG Merger Corp., has reviewed and
considered the terms of the Merger Agreement and the Merger and has recommended
that the Board of Directors approve the Merger Agreement. In addition, The
Robinson-Humphrey Company, LLC ("Robinson-Humphrey"), the Special Committee's
financial advisor in connection with the Merger, has rendered its opinion that
the cash merger consideration of $15.90 per share is fair, from a financial
point of view, to the shareholders of the Company (other than WG Holding). The
written opinion of Robinson-Humphrey, dated March 28, 1998, is attached as
Appendix B to the accompanying Proxy Statement and should be read carefully and
in its entirety by the shareholders. The Board of Directors has unanimously
approved the Merger Agreement and believes that the terms of the Merger are in
the best interests of the Company and its shareholders and fair to the
Company's public shareholders. On behalf of the Board of Directors, I recommend
that you vote FOR approval of the Merger Agreement.
Completion of the Merger is subject to certain conditions, including
approval of the Merger Agreement by the holders of a majority the outstanding
Common Stock. WG Holding, which owns approximately 62% of the outstanding
Common Stock, has advised the Company that it intends to vote its shares of
Common Stock in favor of the Merger Agreement, which will assure approval of
the Merger Agreement at the Special Meeting. The Merger is expected to be
completed promptly after the Special Meeting, provided all of such conditions
have been satisfied or waived by the parties.
The enclosed Notice of Meeting and Proxy Statement provide you with a
summary of the Merger and additional information about the parties involved and
their interests in the Merger. I encourage you to read and consider carefully
the information contained in the Proxy Statement.
Whether or not you plan to attend the meeting, you are urged to complete,
sign and promptly return the enclosed proxy card to assure that your shares
will be voted at the meeting. If you attend the Special Meeting, you may revoke
your proxy and vote in person if you choose, even if you have returned your
proxy card.
Sincerely,
GERRY CHASTELET
President and Chief Executive Officer
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
----------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST , 1998
----------------------------------------------------------------------
To Our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the
"Special Meeting") of Wandel & Goltermann Technologies, Inc., a North Carolina
corporation (the "Company"), will be held on August , 1998 at 10:00 a.m., local
time, at , for the following purposes:
(1) To consider and vote on a proposal to approve an Agreement and Plan of
Merger pursuant to which WG Merger Corp. ("WGMC"), a newly-formed North
Carolina corporation that is a wholly-owned subsidiary of Wandel &
Goltermann Management Holding GmbH, a German limited liability company ("WG
Holding"), will be merged with and into the Company and each outstanding
share of the Company's common stock (other than shares held by WG Holding
and shares held by shareholders who have properly perfected their
dissenters' rights) will be converted into the right to receive $15.90 in
cash. A copy of the Agreement and Plan of Merger dated as of March 28, 1998
is attached as Appendix A to and is described in the accompanying Proxy
Statement.
(2) To consider and act upon such other matters as may properly come before
the Special Meeting.
The Board of Directors has determined that only holders of the Company's
common stock of record at the close of business on July , 1998, are entitled to
notice of, and to vote at, the Special Meeting.
By Order of the Board of
Directors
BERT KUTHE,
Vice President-Finance and
Secretary
YOUR VOTE IS IMPORTANT
If you are unable to attend the meeting, please date, sign and return the
accompanying proxy card promptly in the enclosed envelope which requires no
postage if mailed in the United States. Please do not send in any share
certificates at this time. Upon approval of the Merger, you will be sent
instructions regarding the procedures to exchange your share certificates for
the consideration to be paid.
Any shareholder (other than WG Holding) will have the right to dissent from the
consummation of the transactions contemplated by the Agreement and Plan of
Merger and to receive payment of the "fair value" of his or her shares upon
compliance with the procedures set forth in Chapter 55, Article 13 of the
General Statutes of North Carolina. See "RIGHTS OF DISSENTING SHAREHOLDERS" in
the accompanying Proxy Statement and the full text of Chapter 55, Article 13
which is attached as Appendix C to and is described in the accompanying Proxy
Statement.
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
1030 Swabia Court
Research Triangle Park, North Carolina 27709-3585
---------------
PROXY STATEMENT
---------------
This Proxy Statement is being furnished to the shareholders of Wandel &
Goltermann Technologies, Inc., a North Carolina corporation (the "Company"), in
connection with the solicitation by its Board of Directors (the "Board") of
proxies to be used at a Special Meeting of Shareholders (the "Special Meeting")
to be held on August , 1998 at 10:00 a.m. (local time) at
, and at any adjournment or adjournments thereof.
At the Special Meeting, the shareholders of the Company will be asked to
consider and vote on a proposal to approve an Agreement and Plan of Merger (the
"Merger Agreement") dated as of March 28, 1998, among the Company, Wandel &
Goltermann Management Holding GmbH, a German limited liability company ("WG
Holding") and WG Merger Corp., a newly formed North Carolina corporation that
is wholly-owned by WG Holding ("WGMC"), which is attached to this Proxy
Statement as Appendix A. Pursuant to the Merger Agreement, (i) WGMC will be
merged with and into the Company, (ii) each outstanding share of the common
stock of WGMC will be converted into one outstanding share of the common stock
of the Company and (iii) each outstanding share of common stock, $.01 par
value, of the Company (the "Common Stock"), other than shares held by WG
Holding and shares held by shareholders who are entitled to and who have
perfected their dissenters' rights, will be canceled and converted
automatically into the right to receive $15.90 in cash, payable to the holder
thereof, without interest (the "Merger"). As a result of the Merger, WG Holding
will acquire all of the outstanding shares of Common Stock not already owned by
WG Holding, and the Company's other shareholders (the "Public Shareholders")
will no longer have an equity interest in the Company. On July 15, 1998, the
closing price of the Common Stock as reported by NASDAQ was $15.00 per share.
A special committee of directors of the Company (the "Special Committee"),
consisting of two directors who are neither employees of the Company nor
employees or directors of WG Holding or WGMC, reviewed and considered the terms
of the Merger, determined that the Merger is in the best interests of the
Company and its shareholders and fair to the Public Shareholders and
recommended that the Board approve the Merger Agreement. The Board has
unanimously approved the Merger Agreement, has determined that the Merger is in
the best interests of the Company and its shareholders and fair to the Public
Shareholders and recommends that the shareholders vote FOR the approval of the
Merger Agreement. The Special Committee's recommendation and the Board's
approval and recommendation were based on a number of factors described in this
Proxy Statement, including the opinion of The Robinson-Humphrey Company, LLC
("Robinson-Humphrey"), the financial advisor to the Special Committee, dated
the date of the Merger Agreement, that the cash consideration to be received by
the Public Shareholders pursuant to the Merger is fair, from a financial point
of view, to such shareholders. The opinion of Robinson-Humphrey is included as
Appendix B to this Proxy Statement and should be read in its entirety.
Completion of the Merger is subject to certain conditions, including
approval of the Merger Agreement by the holders of a majority of the
outstanding Common Stock. WG Holding, which owns approximately 62% of the
Company's outstanding Common Stock, has advised the Company that it intends to
vote its shares of Common Stock in favor of the Merger Agreement, which will
assure approval of the Merger Agreement at the Special Meeting. The Merger is
expected to be completed promptly after the Special Meeting, provided all other
conditions have been satisfied or waived by the parties.
This Proxy Statement, the Notice of Special Meeting and the enclosed proxy
card, are first being mailed to shareholders of the Company on or about July ,
1998.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRE-SENTATION TO THE CONTRARY
IS UNLAWFUL.
The date of this Proxy Statement is July , 1998.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION ............................................. iii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ................... iii
SUMMARY ........................................................... 1
Date, Time and Place of the Special Meeting ..................... 1
Purpose of the Special Meeting .................................. 1
Record Date and Quorum .......................................... 1
Vote Required ................................................... 1
Parties to the Merger Transaction ............................... 1
The Merger ...................................................... 2
Effective Time of the Merger and Payment for Shares ............. 2
Purpose and Reasons for the Merger .............................. 3
The Special Committee's and the Board's Recommendation .......... 3
Opinion of the Special Committee's Financial Advisor ............ 3
Interests of Certain Persons in the Merger ...................... 3
Certain Litigation .............................................. 3
Certain Effects of the Merger ................................... 4
Rights of Dissenting Shareholders ............................... 4
Conditions to the Merger; Termination; Expenses ................. 4
Federal Income Tax Consequences ................................. 5
Financing of the Merger ......................................... 5
Market Prices of Common Stock and Dividends ..................... 5
Purchases of Common Stock by the Company and WG Holding ......... 5
Selected Financial Data ......................................... 5
SPECIAL FACTORS ................................................... 7
Background of the Merger ........................................ 7
The Special Committee's and the Board's Recommendation .......... 12
Reports of Special Committee's Financial Advisor................. 15
Opinion of the Special Committee's Financial Advisor ............ 19
Position of WG Holding as to Fairness of the Merger ............. 23
Purpose and Reasons for the Merger .............................. 28
Interests of Certain Persons in the Merger ...................... 29
Market Prices of Common Stock and Dividends ..................... 31
Purchases of Common Stock by the Company and WG Holding ......... 31
Certain Relationships ........................................... 31
Certain Litigation .............................................. 32
Certain Effects of the Merger ................................... 32
Conduct of the Company's Business after the Merger .............. 33
Certain Forward Looking Information ............................. 33
GENERAL INFORMATION ABOUT THE SPECIAL MEETING ..................... 34
Proxy Solicitation .............................................. 34
Record Date and Quorum Requirement .............................. 34
Voting Procedures ............................................... 34
Voting and Revocation of Proxies ................................ 34
THE MERGER ........................................................ 34
Effective Time .................................................. 35
</TABLE>
i
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<TABLE>
<S> <C>
Conversion of Securities ............................................... 35
Termination of the Company Stock Options ............................... 35
Transfer of Shares ..................................................... 35
Conditions ............................................................. 35
Representations and Warranties ......................................... 36
Covenants .............................................................. 37
Indemnification ........................................................ 37
Expenses ............................................................... 37
Termination, Amendment and Waiver ...................................... 37
Source of Funds for the Merger. ........................................ 37
Expenses of the Transaction ............................................ 38
RIGHTS OF DISSENTING SHAREHOLDERS ........................................ 38
FEDERAL INCOME TAX CONSEQUENCES .......................................... 40
BUSINESS OF THE COMPANY .................................................. 41
General ................................................................ 41
Recent Acquisitions .................................................... 41
Year 2000 .............................................................. 41
SELECTED FINANCIAL DATA .................................................. 42
CERTAIN FORWARD LOOKING INFORMATION ...................................... 43
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT ................. 46
SHAREHOLDER PROPOSALS .................................................... 47
INDEPENDENT AUDITORS ..................................................... 47
OTHER MATTERS ............................................................ 47
APPENDICES
APPENDIX A -- Agreement and Plan of Merger ............................... A-1
APPENDIX B -- Opinion of The Robinson-Humphrey Company, LLC .............. B-1
APPENDIX C -- Chapter 55, Article 13 of the General Statutes of North
Carolina ............................................................ C-1
</TABLE>
ii
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements, and other information filed with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington D.C. 20549 and at the
following Regional Offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.
Judiciary Plaza, Washington, D.C. 20549. The Commission maintains a World Wide
Web site on the Internet at http:// www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission, including the Company. The same
information is also available on the Internet at http:// www.FreeEDGAR.com.
The Company and WG Holding have filed a Schedule 13E-3 with the Commission
with respect to the transactions contemplated by the Merger Agreement. As
permitted by the rules and regulations of the Commission, this Proxy Statement
omits certain information contained in the Schedule 13E-3 and the exhibits
thereto. The Schedule 13E-3, including any amendments and exhibits filed or
incorporated by reference as a part thereof, is available for inspection or
copying as set forth above. Statements contained in this Proxy Statement or in
any document incorporated herein by reference as to the contents of any
contract or other document referred to herein or therein are not necessarily
complete and in each instance reference is made to such contract or other
document filed as an exhibit to the Schedule 13E-3 or such other document, and
each such statement shall be deemed qualified in its entirety by such
reference.
No person has been authorized to give any information or make any
representation in connection with the solicitation of proxies made hereby other
than those contained or incorporated by reference in this Proxy Statement, and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company, WG Holding or WGMC. The delivery of this
Proxy Statement shall not, under any circumstances, create any implication that
there has been no change in the affairs of the Company since the date hereof or
that the information contained or incorporated by reference herein is correct
as of any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the
Company (File No. 0-25176) pursuant to the Exchange Act are incorporated herein
by this reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997 (as amended);
2. The Company's Current Report on Form 8-K dated January 27, 1998.
3. The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1997.
4. The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15 (d) of the Exchange Act subsequent to the date
hereof and prior to the date of the Special Meeting are hereby incorporated by
reference into this Proxy Statement and shall be deemed a part hereof from the
date of filing such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Proxy Statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement.
This Proxy Statement incorporates documents by reference which are not
presented herein or delivered herewith. Such documents (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference)
are available, without charge, to any person, including any beneficial owner,
to whom this Proxy Statement is delivered, on written or oral request to the
Company at 1030 Swabia Court, P.O. Box 13585, Research Triangle Park, North
Carolina 27709-3585, (telephone number (919) 941-5730), Attention: Bert Kuthe,
Secretary. Such documents will be provided to such person by first class mail
or other equally prompt means within one business day of receipt of such
request. In order to ensure delivery of the documents prior to the Special
Meeting, requests should be received by August , 1998.
iii
<PAGE>
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement. Reference is made to, and this Summary is
qualified in its entirety by, the more detailed information contained elsewhere
or incorporated by reference in this Proxy Statement. Shareholders are urged to
read this Proxy Statement and its appendices in their entirety before voting.
Date, Time and Place of the Special Meeting
The Special Meeting of Shareholders of the Company will be held on August
, 1998, at 10:00 a.m., local time, at .
Purpose of the Special Meeting
At the Special Meeting, the shareholders of the Company will be asked to
consider and vote on a proposal to approve the Merger Agreement, which is
attached to this Proxy Statement as Appendix A, pursuant to which (i) WGMC will
be merged with and into the Company, (ii) each outstanding share of the common
stock of WGMC will be converted into one outstanding share of the common stock
of the Company and (iii) each outstanding share of Common Stock, other than
shares held by WG Holding and shareholders who are entitled to and who have
perfected their Dissenters' Rights (as defined below), will be converted
automatically into the right to receive $15.90 in cash payable to the holders
thereof, without interest (the "Cash Merger Consideration"). As a result of the
Merger, WG Holding will acquire all of the outstanding shares of Common Stock
not already owned by WG Holding, and the Public Shareholders will no longer
have an equity interest in the Company. See "The Merger."
Record Date and Quorum
The Board of Directors of the Company (the "Board") has fixed the close of
business on July , 1998 as the record date (the "Record Date") for the
determination of shareholders entitled to notice of, and to vote at, the
Special Meeting and any postponements or adjournments thereof. Each holder of
record of Common Stock at the close of business on the Record Date is entitled
to one vote for each share then held on each matter submitted to a vote of
shareholders. At the close of business on the Record Date, there were 5,288,809
shares of Common Stock outstanding. The holders of a majority of the
outstanding shares entitled to vote at the Special Meeting must be present in
person or represented by proxy to constitute a quorum for the transaction of
business at the Special Meeting. See "General Information About the Special
Meeting."
Vote Required
Under North Carolina law, the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Special Meeting is required to approve the Merger Agreement. Thus, a failure to
vote or a vote to abstain will have the same legal effect as a vote cast
against approval. In addition, brokers who hold shares of Common Stock as
nominees will not have discretionary authority to vote such shares in the
absence of instructions from the beneficial owners. See "General Information
About the Special Meeting -- Voting Procedures." Approval of the Merger
Agreement does not require approval by a majority of the Public Shareholders
voting as a separate group. See "Special Factors -- The Special Committee's and
the Board's Recommendation."
As of the Record Date, WG Holding owned approximately 62% of the
outstanding shares of Common Stock. WG Holding has advised the Company that it
intends to vote its shares of Common Stock in favor of the Merger Agreement
which will assure approval of the Merger Agreement. The Company has also been
advised that directors and executive officers of the Company, who owned an
aggregate of 13,738 shares of Common Stock on the Record Date, intend to vote
their shares in favor of the Merger Agreement.
Parties to the Merger Transaction
The Company
The Company develops, manufactures, markets and supports test,
measurement, diagnostic and monitoring products for local and wide area data
networks. The Company's network analysis products, which primarily consist of
the Domino and DA-3x product families, enable customers to analyze and solve
interoperability and performance problems across all the
1
<PAGE>
principal configurations of network topologies and communication protocols. In
the United States, the Company also markets specialized test, measurement and
monitoring instruments primarily for use by operators of telecommunication and
data transmission systems. These products are primarily purchased for resale
from the foreign manufacturing affiliates of WG Holding.
The Company's major customers include AT&T, Cisco Systems, Deutsche
Telekom, Embratel, GTE, IBM, Lufthansa, MCI, Nortel, NCR, Telecom Italia,
Qualcomm and various U.S. governmental agencies.
On January 27, 1998, the Company acquired for an initial payment of $5
million the outstanding capital stock of Tinwald Networking Technologies, Inc.
("Tinwald"), a Canadian-based developer of the LinkView family of software
analysis tools. On March , 1998, the Company acquired for an initial payment of
$1.25 million the assets of Network Intelligence, Inc. ("Network
Intelligence"), a California-based developer of network performance management
software. With respect to both acquisitions, the Company has agreed to certain
additional payments upon the satisfaction of certain contingencies.
The principal executive offices of the Company are located at 1030 Swabia
Court, Research Triangle Park, North Carolina 27709-3585. The Company's
telephone number is (919) 941-5730. See "Business of the Company."
WG Holding
WG Holding is a privately-held German limited liability company that,
through its various manufacturing and sales affiliates, develops, manufactures,
markets and distributes on a worldwide basis communications test measuring
equipment. WG Holding owns approximately 62% of the Company's outstanding
Common Stock. Prior to the Company's initial public offering in April 1994, the
Company was a wholly-owned subsidiary of a predecessor to WG Holding.
On June 15, 1998, WG Holding and Wavetek Corporation, a privately owned
global designer, manufacturer and distributor of a broad range of electronic
test instruments, jointly announced that they had entered into an agreement to
merge the companies. See "Special Factors -- Conduct of the Company's Business
After the Merger."
The principal executive offices of WG Holding are located at Arbachstra-e
6, D-72800 Eningen, Federal Republic of Germany. WG Holding's telephone number
is 49-7121-86-1700.
WGMC
WGMC is a newly-formed North Carolina corporation that is a wholly-owned
subsidiary of WG Holding organized for the sole purpose of effecting the Merger
and has not conducted any business. The principal executive offices of WGMC are
located 1030 Swabia Court, Research Triangle Park, North Carolina 27709-3585.
WGMC's telephone number is 919-941-5730.
The Merger
The Merger Agreement provides that subject to satisfaction of certain
conditions, WGMC will be merged with and into the Company, and that following
the Merger, the separate existence of WGMC will cease and the Company will
continue as the surviving corporation and a wholly-owned subsidiary of WG
Holding. At the effective time of the Merger, which will be the date and time
of filing of Articles of Merger with the Secretary of State of the State of
North Carolina or at such later time as is specified in the Articles of Merger
(the "Effective Time"), and subject to the terms and conditions set forth in
the Merger Agreement, each share of issued and outstanding Common Stock (other
than shares held by WG Holding and shares as to which Dissenters' Rights (as
defined below) are properly perfected and not withdrawn) will, by virtue of the
Merger, be converted into the right to receive the Cash Merger Consideration.
As a result of the Merger, the Company's Common Stock will no longer be
publicly traded and will be 100% owned by WG Holding. See "The Merger."
Effective Time of the Merger and Payment for Shares
The Effective Time is currently expected to occur as soon as practicable
after the Special Meeting, subject to approval of the Merger Agreement at the
Special Meeting and satisfaction or waiver of the terms and conditions of the
Merger Agreement. See "The Merger -- Conditions." Detailed instructions with
regard to the surrender of share certificates, together with a letter of
transmittal, will be forwarded to shareholders by First Union National Bank
(the "Disbursing Agent") promptly following the Effective Time. Shareholders
should not submit their certificates to the Disbursing Agent until they have
received these materials. The Disbursing Agent will send payment for shares to
shareholders as promptly as practical following receipt by the Disbursing Agent
of their certificates and other required documents. No interest will be paid or
accrued on the cash payable upon the surrender of certificates. See "The Merger
- -- Conversion of Securities." Shareholders should not send any share
certificates at this time.
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Purpose and Reasons for the Merger
The purpose of the Merger is to enable WG Holding, which currently owns
approximately 62% of the outstanding Common Stock, to acquire 100% of the
ownership of the Company pursuant to a transaction in which the Public
Shareholders will receive $15.90 per share. The Board believes that the
respective long-term business objectives of the Company and WG Holding can best
be achieved by more closely coordinating the activities and operations of the
Wandel & Goltermann affiliated group of companies. By aligning the interest and
ownership of the Company and the other Wandel & Goltermann affiliated
companies, internationally coordinated programs for research and development,
product manufacturing, marketing and sales may be implemented. In addition, the
integration of the Company's operations with WG Holding's other manufacturing
and sales affiliates is expected to eliminate potential conflicts of interest
that now exist among the Company and other WG Holding affiliates related to
access to proprietary information and the allocation of the benefits, through
licensing agreements and other arrangements, of proprietary product
developments. The integration of the Company, as a private enterprise, into WG
Holding is also expected to provide the Company with access to greater
financial and technical resources that will permit the Company to better meet
the competitive demands of its industry.
The Special Committee's and the Board's Recommendation
The Special Committee, at a meeting of the Board held on March 28, 1998,
unanimously recommended that the Board approve, and the Board unanimously
approved, the Merger Agreement. The Board has determined that the Merger
Agreement is in the best interests of the Company and its shareholders and is
fair to the Public Shareholders and recommends that the Public Shareholders
vote FOR the approval of the Merger Agreement. In making its recommendation to
the Board, the Special Committee determined that the Merger Agreement is
substantively and procedurally fair to the Public Shareholders, and the Board
adopted the analyses and conclusions of the Special Committee in making its
recommendation to the Public Shareholders to approve the Merger Agreement. For
a discussion of the factors considered by the Special Committee and adopted by
the Board in reaching their recommendation and determination, see "Special
Factors -- Background of the Merger," " -- The Special Committee's and the
Board's Recommendation," and " -- Opinion of the Special Committee's Financial
Advisor."
Opinion of the Special Committee's Financial Advisor
Robinson-Humphrey was engaged by the Special Committee to act as its
financial advisor in connection with the Merger. Robinson-Humphrey has
delivered its written opinion, dated March 28, 1998 to the Special Committee to
the effect that the consideration to be received by the Public Shareholders
pursuant to the Merger is fair to such shareholders from a financial point of
view. No limitations were imposed on Robinson-Humphrey by the Special Committee
or the Company with respect to the investigations made or procedures followed
by Robinson-Humphrey in rendering its opinion. The full text of
Robinson-Humphrey's opinion, including the procedures followed, the matters
considered and the assumptions made by Robinson-Humphrey, is included as
Appendix B to this Proxy Statement and should be read in its entirety. The
opinion of Robinson-Humphrey included in this Proxy Statement does not
constitute a recommendation as to how any holder of shares should vote with
respect to the Merger Agreement. Pursuant to the terms of Robinson-Humphrey's
engagement, the Company has paid Robinson-Humphrey a fee of $250,000. For a
description of Robinson-Humphrey's opinion and of the terms of its engagement
by the Special Committee, see "Special Factors -- Opinion of the Special
Committee's Financial Advisor."
Interests of Certain Persons in the Merger
In considering the recommendation of the Special Committee and the Board
with respect to the Merger Agreement, shareholders should be aware that WG
Holding and certain members of the Board and of management of the Company have
certain interests which may give rise to potential conflicts of interest in
connection with the Merger. The Special Committee and the Board were aware of
these interests and considered them, among other factors, in approving the
Merger Agreement. See "Special Factors -- Interests of Certain Persons in the
Merger" and " -- The Special Committee's and the Board's Recommendation."
Certain Litigation
Shortly after the Company publicly announced that it had received an offer
from WG Holding to acquire the shares of Common Stock held by the Public
Shareholders for $13.00 per share (the "WG Holding Proposal"), five alleged
class actions were filed by five different shareholders in the Superior Court
of Durham County, North Carolina (the "Shareholder Litigation"). The defendants
are the Company, its directors and, in certain of the actions, WG Holding.
Among other allegations,
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the complaints allege that the defendants breached and will breach their
fiduciary duties to the Company's minority shareholders because the WG Holding
Proposal of $13.00 per share is "unfair and grossly inadequate and, if
accepted, will usurp the Company's future growth and prospects for the benefit
of the defendants." The Company, WG Holding and the individual defendants who
are currently directors of the Company believe that the complaints are without
merit and intend to contest the lawsuits vigorously. See "Special Factors --
Certain Litigation" and " -- The Special Committee's and the Board's
Recommendation."
Certain Effects of the Merger
As a result of the Merger, the entire equity interest in the Company will
be owned by WG Holding. Following the Merger, the Public Shareholders will no
longer have any interest in, and will not be shareholders of the Company and,
accordingly, will not participate in the Company's future earnings and growth.
Instead, each such holder of Common Stock (other than WG Holding) will have the
right to receive the Cash Merger Consideration for each share held (other than
shares in respect of which Dissenters' Rights (as defined below) have been
perfected). WG Holding will be the sole beneficiary of any future earnings and
growth of the Company and will have the ability to benefit from any corporate
opportunities that may be pursued by the Company in the future. WG Holding will
also bear the risk of any decreases in the value of the Company. See "Special
Factors -- Certain Effects of the Merger" and "Certain Forward Looking
Information."
In addition, the Common Stock will no longer be traded on the NASDAQ
National Market and price quotations with respect to sales of shares in the
public market will no longer be available. The registration of the Common Stock
under the Exchange Act will terminate, and this termination will eliminate the
Company's obligation to file periodic financial and other information with the
SEC and will make certain provisions of the Exchange Act inapplicable. See
"Special Factors -- Certain Effects of the Merger."
Rights of Dissenting Shareholders
Any shareholder of the Company who does not vote in favor of the proposal
to approve the Merger Agreement and who complies strictly with the applicable
provisions of Article 13 of Chapter 55 of the North Carolina General Statutes
("Article 13") has the right to dissent and be paid cash for the "fair value"
for such holder's shares of Common Stock ("Dissenters' Rights"). The applicable
provisions of Article 13 are attached to this Proxy Statement as Appendix C. To
perfect Dissenters' Rights with respect to the Merger, a shareholder must
follow the procedures set forth therein precisely. Those procedures are
summarized in this Proxy Statement under "Rights of Dissenting Shareholders."
Shares of Common Stock held by persons properly exercising Dissenters'
Rights (the "Dissenting Shares") will not be converted into the Cash Merger
Consideration in the Merger and after the Effective Time will represent only
the right to receive such consideration as is determined to be due such
dissenting shareholder pursuant to Article 13. If after the Effective Time any
dissenting shareholder fails to perfect or loses such right to payment or
appraisal under Article 13, each share of Common Stock of such shareholder
shall be treated as a share that had been converted as of the Effective Time
into the right to receive the Cash Merger Consideration.
Conditions to the Merger; Termination; Expenses
Each party's obligation to effect the Merger is subject to the
satisfaction or waiver of a number of conditions, including, without
limitation, (i) the approval of the Merger Agreement by the holders of a
majority of the outstanding shares of Common Stock; (ii) the absence of any
injunction or similar order prohibiting or restricting the consummation of the
Merger; (iii) the receipt of all other required authorizations, consents and
approvals; and (iv) the material correctness of all representations and
warranties of the parties to the Merger Agreement. See "The Merger --
Conditions." Even if the shareholders approve the Merger Agreement, there can
be no assurance that the Merger will be consummated.
At any time prior to the Effective Time, the Merger Agreement may be
terminated by the mutual consent of the Board and WG Holding. In addition, any
of the parties may terminate the Merger Agreement prior to the Effective Time
if (i) the Merger is not completed by October 31, 1998, (ii) the requisite
approval by the shareholders of the Company has not been obtained, or (iii) a
court or other governmental entity permanently enjoins, restrains or prohibits
any of the parties from completing the Merger and such action is final and
non-appealable. See "The Merger -- Termination, Amendment and Waiver."
Each of WG Holding and the Company has agreed to pay its own costs and
expenses in connection with the Merger whether or not the Merger is
consummated. See "The Merger -- Expenses."
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Federal Income Tax Consequences
The receipt of the Cash Merger Consideration by holders of Common Stock
pursuant to the Merger will be a taxable transaction for federal income tax
purposes. For a more detailed discussion of the federal income tax consequences
of the Merger, see "Federal Income Tax Consequences." Shareholders who will
receive the Cash Merger Consideration are urged to consult their tax advisors
to determine the effect of the Merger on such holders under federal, state,
local and foreign tax laws.
Financing of the Merger
It is estimated that approximately $35 million will be required to
consummate the Merger and pay related fees and expenses. This sum will be
provided by a capital contribution of approximately $35 million to the Company
by WG Holding prior to the consummation of the Merger. The funds to be
contributed to the Company by WG Holding will be borrowed under credit
facilities established by WG Holding with a syndicate of foreign banks. See
"The Merger -- Source of Funds for the Merger."
Market Prices of Common Stock and Dividends
The Common Stock is traded on the NASDAQ National Market (symbol: WGTI).
The following table sets forth the high and low closing prices of the Common
Stock for each quarterly period for the two most recent fiscal years and the
first three quarters of the current fiscal year.
<TABLE>
<CAPTION>
Fiscal Year Ended September 30,
---------------------------------------------------------------------
1996 1997 1998
---------------------- ----------------------- ----------------------
High Low High Low High Low
----------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
First Quarter .......... $ 13.25 $ 9.00 $ 31.50 $ 17.25 $ 13.75 $ 8.50
Second Quarter ......... 16.88 9.00 30.25 18.75 15.63 12.38
Third Quarter .......... 19.75 14.13 23.75 8.50 15.88 14.88
Fourth Quarter ......... 19.75 13.25 13.25 8.88
</TABLE>
On November 18, 1997, the last trading day prior to the announcement by
the Company of the formation of the Special Committee in anticipation of
receiving a possible proposal from WG Holding to acquire the outstanding Common
Stock not owned by WG Holding, the closing price per share of Common Stock as
reported by NASDAQ was $10.00. On January 9, 1998, the last trading day prior
to the announcement by the Company that WG Holding had submitted a proposal to
acquire, through a merger, all of the outstanding Common Stock of the Company
(other than the shares held by WG Holding) for a cash price of $13.00 per
share, the closing price per share of Common Stock reported by NASDAQ was
$12.63. On March 17, 1998, the last trading day prior to the announcement by
the Company that the Special Committee and WG Holding had reached an agreement
in principle on a cash price of $15.90 per share for the acquisition of the
shares of Common Stock not owned by WG Holding, the closing price per share of
Common Stock reported by NASDAQ was $13.13. On March 27, 1998, the last trading
day prior to the announcement of the execution of the Merger Agreement, the
closing price per share of Common Stock as reported by NASDAQ was $15.25. On
July , 1998, the last trading day prior to printing of this Proxy Statement,
the closing price per share of Common Stock as reported by NASDAQ was $ .
On July , 1998, the Company had approximately 1,300 shareholders, of which
approximately 49 were record holders of Common Stock.
The Company has never paid any cash dividends on its Common Stock. Under
the Merger Agreement, the Company has agreed not to pay any dividends on the
Common Stock prior to the Effective Time.
Purchases of Common Stock by the Company and WG Holding
Since October 1, 1995, the Company has purchased 100,000 shares of Common
Stock and WG Holding has purchased 351,600 shares of Common Stock. See "Special
Factors -- Purchases of Common Stock by the Company and WG Holding."
Selected Financial Data
The following table sets forth selected historical combined and
consolidated financial data of the Company for each of the five fiscal years
ended September 30, 1997, which are derived from the audited combined and
consolidated financial
5
<PAGE>
statements of the Company. The combined and consolidated financial statements
for the five fiscal years ended September 30, 1997 have been audited by Arthur
Andersen LLP, independent auditors. The historical results of operations of the
Company for the six month periods ended March 31, 1997 and 1998 and the
historical financial position of the Company as of March 31, 1998 are derived
from unaudited consolidated financial statements included in the Company's Form
10-Q Quarterly Report for the three months ended March 31, 1998, incorporated
herein by reference. The unaudited consolidated financial statements include
all adjustments, consisting of normal recurring accruals, which the Company
considers necessary for a fair presentation of the consolidated financial
position and consolidated results of operations for these periods. The data are
qualified by reference to, and should be read in conjunction with, the
Consolidated Financial Statements, related Notes and other financial
information included in the Company's Form 10-K Annual Report for the year
ended September 30, 1997, incorporated by reference herein.
<TABLE>
<CAPTION>
Six Months Ended March
Fiscal Year Ended September 30, 31,
------------------------------------------------------ -----------------------
1997 1996 1995 1994 1993 1998 1997
---------- ---------- ---------- ---------- ---------- ------------ ----------
(In thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues:
Nonaffiliates .......................... $29,001 $ 33,186 $23,658 $ 21,785 $18,005 $ 15,556 $13,729
Affiliates ............................. 25,454 25,900 21,604 18,387 15,080 11,262 16,068
------- -------- ------- -------- ------- -------- -------
Total revenues ....................... 54,455 59,086 45,262 40,172 33,085 26,818 29,797
Cost of revenues ........................ 24,381 23,234 16,576 12,731 12,176 13,931 12,372
------- -------- ------- -------- ------- -------- -------
Gross profit ......................... 30,074 35,852 28,686 27,441 20,909 12,887 17,425
Selling, general & admin. expenses ...... 19,360 18,934 15,872 12,984 10,603 9,395 9,807
Product development expenses ............ 10,712 9,804 10,469 9,059 6,545 5,791 4,932
Restructuring charges ................... -- -- 1,279 -- -- -- --
Acquired in-process research and
development and other non-recurring
charges ................................ -- -- -- -- -- 5,825 --
------- -------- ------- -------- ------- -------- -------
Operating income (loss) .............. 2 7,114 1,006 5,398 3,761 (8,124) 2,686
Interest expense ........................ -- -- -- (460) (779) -- --
Interest income ......................... 639 350 313 295 274 285 320
Foreign currency gains (losses) ......... (271) (104) (245) 213 498 34 (270)
------- -------- ------- -------- ------- -------- -------
Income (loss) before income taxes ...... 424 7,360 1,134 5,446 3,754 (7,805) 2,736
Benefit from (provision for) income
taxes .................................. -- (2,208) (98) (2,124) 867 779 (821)
------- -------- ------- -------- ------- -------- -------
Income from continuing operations ....... 424 5,152 1,036 3,322 4,621 (7,026) 1,915
Income from discontinued operations ..... -- -- -- 204 135 -- --
------- -------- ------- -------- ------- -------- -------
Net income (loss) .................... $ 424 $ 5,152 $ 1,036 $ 3,526 $ 4,756 $ (7,026) $ 1,915
======= ======== ======= ======== ======= ======== =======
Per Share Data:
Net income (loss) per share (assuming
dilution) .............................. $ 0.08 $ 0.98 $ 0.20 $ 0.80 $ 1.27 $ (1.33) $ 0.35
Weighted average number of common
shares outstanding (assuming
dilution) .............................. 5,359 5,231 5,245 4,398 3,750 5,274 5,395
</TABLE>
<TABLE>
<CAPTION>
As of September 30,
-----------------------------------------------------
1997 1996 1995 1994 1993 As of March 31, 1998
---------- ---------- ---------- ---------- --------- ---------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital ................................ $27,036 $24,869 $20,117 $20,041 $ 6,569 $19,986
Total assets ................................... 37,292 34,298 29,344 28,272 20,381 30,300
Short-term debt, including current maturities
of long-term debt ............................. -- -- -- -- 5,978 --
Long-term debt ................................. -- -- -- -- 4,370 --
Shareholders' equity ........................... 30,659 28,822 24,354 23,113 5,303 23,976
</TABLE>
<TABLE>
<CAPTION>
As of
--------------------------------------
September 30, 1997 March 31, 1998
-------------------- ---------------
<S> <C> <C>
Book Value Per Share ......... $ 5.83 $ 4.53
</TABLE>
6
<PAGE>
SPECIAL FACTORS
Background of the Merger
Prior to its initial public offering ("IPO") in April 1994, the Company
was a wholly-owned subsidiary of a predecessor of WG Holding. Since the IPO, WG
Holding (and its predecessors), directly or through subsidiaries, have acquired
and disposed of shares of Common Stock in market transactions but WG Holding
has always owned a majority of the outstanding Common Stock. As of the Record
Date, WG Holding beneficially owned approximately 62% of the outstanding Common
Stock.
Among the worldwide operations of WG Holding, the Company is the only
entity controlled either directly or indirectly by WG Holding that has public
shareholders holding a minority equity interest. During 1997, WG Holding, as
part of its long-term strategic planning process, began considering its options
relating to its investment in the Company. In particular, WG Holding began
considering the possibility of acquiring the equity interest in the Company not
already owned by WG Holding. In considering this possibility, WG Holding
concluded that by acquiring all of the outstanding Common Stock: (i) the
interests of the Company and the other WG Holding affiliated companies would be
fully aligned, (ii) a more streamlined and integrated management and operating
structure would be possible, and (iii) conflicts of interest that might arise
in managing the operations of the WG Holding affiliated group of companies
would be eliminated.
During a Board meeting on November 18, 1997, Peter Wagner, a director of
the Company and then the Chief Operating Officer and a Managing Director of WG
Holding, advised the Board that WG Holding was considering the possibility of
making a proposal to the Company pursuant to which WG Holding would seek to
acquire all of the Company's outstanding Common Stock held by the Public
Shareholders. Following receipt of this advice, the Board determined that a
proposal from WG Holding might involve a transaction in which WG Holding had
interests that are in addition to, or different from, the interests of the
Public Shareholders. Accordingly, pursuant to resolutions adopted on November
18, 1997 (the "Special Committee Formation Resolutions"), the Board created the
Special Committee and appointed Sidney Topol and Richard E. Pospisil to serve
as members, with Mr. Topol serving as Chairman. Neither of these directors is
an employee of the Company or an employee or director of WG Holding or WGMC.
The Special Committee was authorized to consider, review, evaluate and
recommend to the Board what actions, if any, should be taken with respect to a
proposal that might be received from WG Holding and to engage in negotiations
with WG Holding with respect to any such proposal. Upon formation of the
Special Committee, the Company issued a press release on November 18, 1997
announcing that WG Holding had informed the Board that it was considering
various strategic transactions, certain of which might involve the Company and
the Public Shareholders, including, as one of the alternatives, a merger of the
Company with one or more affiliates of WG Holding or a transaction in which WG
Holding would acquire all of the Common Stock held by the Public Shareholders.
The press release announced that, while WG Holding had made no proposal at such
time and no assurance was given that any proposal would be made, the Board had
formed the Special Committee to review and consider any proposal that might be
made by WG Holding.
Shortly after its formation and as authorized by the Special Committee
Formation Resolutions, the Special Committee retained Powell, Goldstein, Frazer
& Murphy LLP ("Powell, Goldstein") as its legal counsel. Thereafter, the
Special Committee and its legal counsel discussed the procedures to be followed
in considering and responding to a proposal from WG Holding. As part of this
discussion, Powell, Goldstein advised the Special Committee as to the Special
Committee's legal responsibilities and the legal principles applicable to, and
the legal consequences of, actions taken by the Special Committee with respect
to a proposal from WG Holding. Because WG Holding owned approximately 62% of
the outstanding Common Stock and Mr. Wagner had advised the Board on November
18, 1997 that WG Holding would not be in favor of a sale of the Company or its
assets to a third party, the Special Committee concluded that finding an
alternative acquirer for the Company was unlikely, and that an all cash
transaction proposed by WG Holding, provided an acceptable price could be
achieved, would be the best option for the Company and the Public Shareholders.
Pursuant to the Special Committee Formation Resolutions authorizing the
Special Committee to retain a financial advisor, the Special Committee then
requested three nationally-recognized investment banking firms to make
proposals to serve as the financial advisor to the Special Committee. The
Special Committee received written proposals from these three investment
banking firms and the members of the Special Committee reviewed such proposals.
After a review and discussion of the proposals, on December 24, 1997, the
Special Committee unanimously selected Robinson-Humphrey to provide financial
advisory services to and to assist the Special Committee in its consideration
and evaluation of any proposal that might be received from WG Holding to
acquire the shares of the Company's outstanding Common Stock held by the Public
Shareholders. In addition, Robinson-Humphrey agreed, if requested by the
Special Committee, to render its opinion with respect to the fairness, from a
financial point of view, to the Public Shareholders of the consideration to be
received as part of any
7
<PAGE>
such proposal. The Special Committee selected Robinson-Humphrey as the
financial advisor to the Special Committee primarily because of
Robinson-Humphrey's knowledge of the Company and its industry, but also on the
basis of its experience in performing advisory and solicitation services with
respect to "going private" and other merger and acquisition transactions. Prior
to its engagement by the Special Committee, Robinson-Humphrey had served as the
managing underwriter of the Company's IPO and received customary fees for such
services. In the ordinary course of its business, Robinson-Humphrey has also
traded in the Common Stock for its own account as a market maker and executed
transactions in the Common Stock for the account of its customers.
Robinson-Humphrey has not represented or provided financial advisory,
underwriting or other services to WG Holding or any of its other affiliates.
The Special Committee requested that Robinson-Humphrey begin to assemble
information regarding the Company and other comparable companies in
anticipation of the Special Committee receiving a proposal from WG Holding.
On December 5, 1997, WG Holding retained the investment banking firm of
Broadview Associates ("Broadview") as its financial advisor in connection with
WG Holding's consideration of its options regarding the Company. On December
12, 1997, Broadview notified Mr. Chastelet, the Company's Chief Executive
Officer, that Broadview had been engaged by WG Holding, requested that the
Company begin to assemble information about the Company for Broadview to
consider, and requested a meeting with representatives of the Company's
management team to review and discuss the Company's operations, financial
condition and prospects. In response to Broadview's request, the Company
furnished to Broadview, among other information relating to the Company,
preliminary financial forecasts prepared by the Company's management for the
fiscal years 1998 through 2000 with and without taking into account the
potential effects of the proposed acquisitions of Tinwald and Network
Intelligence (the "Preliminary Forecasts").
On December 18, 1997, representatives of Broadview met with the Company's
management team, including Mr. Chastelet, Bert Kuthe, the Company's Chief
Financial Officer and others, to discuss the Company's operations, financial
condition and prospects. During this meeting, the Company provided Broadview
with the Preliminary Forecasts.
On December 23, 1997, Broadview submitted a report to WG Holding (the
"December Broadview Report") to assist WG Holding in evaluating a possible
transaction pursuant to which WG Holding would acquire the remaining equity in
the Company not owned by WG Holding. See " -- Position of WG Holding as to
Fairness of the Merger -- Reports of WG Holding's Financial Advisor." In
connection with the December Broadview Report, Broadview reviewed the Company's
filings with the Commission, the Company's share price history and current
market rating, equity research reports on the Company, other publicly available
information on the Company, information gathered during Broadview's discussions
with the Company's management team, information on publicly-traded competitors,
information on transactions involving comparable target companies, and
information on comparable minority buy-backs. In preparing the December
Broadview Report, Broadview used the Preliminary Forecasts without
consideration of the Tinwald and Network Intelligence acquisitions based on
Broadview's conclusion that these acquisitions were in too early a stage to
assess their likely outcome. The December Broadview Report included discussion
materials on the Company's business and financial outlook and a number of
separate analyses and included a range of values for WG Holding to consider in
connection with any offer to acquire the remaining equity of the Company. The
range recommended by Broadview was $12.00-$13.50 per share. See " -- Position
of WG Holding as to Fairness of the Merger -- Reports of WG Holding's Financial
Advisor."
During December 1997 and January 1998, Robinson-Humphrey reviewed certain
financial and other information concerning the Company which it obtained from
the Company and from independent sources. On January 5, 1998, Robinson-Humphrey
met with the management team of the Company at the Company's offices to review
the Company's business, historical financial statements and future business
prospects at this meeting, the Company provided Robinson-Humphrey with
projected income statements prepared by the Company's management for the fiscal
years 1998 through 2001 which took into account the estimated effects of the
Tinwald and Network Intelligence acquisitions (the "Base Income Projections").
On January 9, 1998, the Special Committee met and received a report from
Powell, Goldstein that, pursuant to conversations with representatives of
Rogers & Hardin, legal counsel to WG Holding, it was expected that WG Holding
would submit a written proposal to acquire the outstanding Common Stock held by
the Public Shareholders in the near future. During that meeting, the members of
the Special Committee discussed the fact that the Company expected to complete
the Tinwald and Network Intelligence acquisitions in the near future and
discussed the possible impact these acquisitions might have on the Company and
the market price of the Company's Common Stock.
On January 9, 1998, the Special Committee received a written proposal from
WG Holding to acquire, through a merger, all of the outstanding Common Stock of
the Company held by the Public Shareholders at a cash price of $13.00 per share
(the "WG Holding Proposal").
8
<PAGE>
On January 12, 1998, the Company issued a press release that disclosed the
WG Holding Proposal and also stated that the WG Holding Proposal had been
referred to the Special Committee for review and evaluation.
On January 13, 1998, the Special Committee held a meeting to discuss the
WG Holding Proposal and to determine the actions which should be taken in
response to the WG Holding Proposal. Representatives of Powell, Goldstein and
Robinson-Humphrey participated in the meeting. Robinson-Humphrey reported that
although Robinson-Humphrey had begun to assemble information regarding the
Company, other comparable publicly-traded companies and comparable merger and
acquisition transactions in anticipation of receiving the WG Holding Proposal,
Robinson-Humphrey was not in a position to provide an evaluation of the WG
Holding Proposal at that time, but expected to be able to do so shortly. The
Special Committee and Robinson-Humphrey discussed the process which
Robinson-Humphrey would undergo in order to advise the Special Committee
concerning the WG Holding Proposal.
On January 14, 1998, Broadview received from the Company a copy of the
signed Memorandum of Understanding relating to the Company's acquisition of
Tinwald and the Base Income Projections.
On January 20, 1998, the Special Committee held a meeting in which
representatives of Powell, Goldstein and Robinson-Humphrey participated. At the
January 20 meeting, Robinson-Humphrey provided the Special Committee with a
report outlining its preliminary analysis of the Company (the
"Robinson-Humphrey January Report"). See " -- Reports of Special Committee's
Financial Advisor." During the January 20, 1998 meeting, Robinson-Humphrey
stressed that its analysis of the Company was an ongoing process and that the
information then provided to the Special Committee was very preliminary in
nature. Robinson-Humphrey discussed with the Special Committee the results of
its preliminary analysis and the valuation methodologies employed by
Robinson-Humphrey, which included a comparison to comparable publicly-traded
companies, an analysis of comparable merger and acquisition transactions, an
analysis of premiums paid for minority interest acquisitions in going private
transactions and a discounted cash flow analysis based on the Base Income
Projections. The Special Committee questioned Robinson-Humphrey concerning the
assumptions made in connection with its preliminary analysis and the facts on
which the assumptions were based. Following its discussions with
Robinson-Humphrey, the Special Committee noted that much of Robinson-Humphrey's
analysis was based upon the Base Income Projections. After further discussion,
it was observed that it would be desirable if a meeting could be held with
Messrs. Chastelet and Kuthe to discuss the Base Income Projections considered
by Robinson-Humphrey in its preliminary analysis, the assumptions underlying
them and the support for such assumptions, in order to permit the Special
Committee and Robinson-Humphrey, working together, to reach a better
understanding of the Base Income Projections and the risks associated with
their attainability.
On February 3, 1998, the members of the Special Committee and
representatives of Robinson-Humphrey met with five members of the Company's
management team, including Messrs. Chastelet and Kuthe. At that meeting, the
Base Income Projections, the assumptions underlying such projections and the
support for such projections were discussed in detail, and additional
information was provided to Robinson-Humphrey and the Special Committee
relevant to Robinson-Humphrey's analysis of the Company. After the meeting with
the Company's management team, the Special Committee met with representatives
of Powell, Goldstein and Robinson-Humphrey. The information provided by Messrs.
Chastelet and Kuthe and other members of management was discussed and
Robinson-Humphrey advised the Special Committee of the range of values which it
believed was supported by such information and other information which
Robinson-Humphrey deemed relevant and considered. Based upon this discussion
and solely for the purpose of presenting a counter proposal and initiating
negotiations with WG Holding, the Special Committee determined to advise WG
Holding that it was prepared to recommend favorably an acquisition of the
Common Stock held by the Public Shareholders at a price in a range of $19.00 to
$23.00 per share. This price range per share was communicated by Powell,
Goldstein to Rogers & Hardin on February 5, 1998. The Special Committee did not
request Robinson-Humphrey to provide, and Robinson-Humphrey did not provide, a
range of prices per share within which it could render a fairness opinion nor a
price per share below which Robinson-Humphrey would be unable to render a
favorable fairness opinion.
On February 12, 1998, Broadview and Robinson-Humphrey discussed via
telephone certain principles and methodologies underlying the valuation of the
Company. Broadview explained that in connection with its valuation it had used
the Preliminary Forecasts without taking into account the effects of the
Tinwald and Network Intelligence acquisitions. Robinson-Humphrey indicated that
its valuation did reflect the estimated effects of these acquisitions, as well
as the Company's revised business and financial outlook as reflected in the
Base Income Projections.
Thereafter, the members of the Special Committee learned, through various
sources, including information provided by Robinson-Humphrey based upon its
conversations with representatives of Broadview, that although WG Holding had
access to the Base Income Projections, the projections actually relied upon by
WG Holding and Broadview in developing the WG
9
<PAGE>
Holding Proposal may have differed from the Base Income Projections. In an
effort to provide Broadview with an opportunity to receive the same information
that had been provided to Robinson-Humphrey and the Special Committee, a
meeting was arranged at the Company among representatives of Broadview and
management of the Company. A representative of Robinson-Humphrey also attended
the meeting, which took place on February 24, 1998.
At this meeting, Broadview and the Company's management team discussed the
financial and operational outlook for the Company. In particular, Broadview
obtained additional information regarding the financial impact of the
acquisition of Tinwald, the timing and strategy of the Company's new product
launches necessary to sustain the growth forecasted by management, and the
Company's ongoing negotiations to acquire Network Intelligence. At this
meeting, the Company's management discussed with Broadview the Base Income
Projections and the underlying assumptions. The Company also provided Broadview
with detailed historical, year-to-date and projected financial data, including
statistics related to revenue and profitability by product as well as the
Company's order book.
Following the February 24 meeting, WG Holding and Broadview jointly
reviewed the information provided to Broadview. Based on the historical data
provided by the Company, Broadview performed sensitivity analyses with respect
to the Base Income Projections. As a result of these analyses and Broadview's
and WG Holding's review of the information provided by the Company, the Base
Income Projections were adjusted by WG Holding and Broadview to reflect their
belief that (i) trends in actual monthly financial results through January 1998
did not support the Base Income Projections, (ii) expenditures in connection
with establishing a sales and marketing infrastructure for the launch of new
software oriented products would likely exceed those included in the Base
Income Projections, (iii) expenditures relating to research and development
would likely exceed those included in the Base Income Projections and (iv) the
timing of new product launches would not sustain the forecasted growth
reflected in the Base Income Projections. Based on these contingencies,
qualified with the assistance of WG Holding, Broadview adjusted the Base Income
Projections to take into account these contingencies (the "Adjusted Income
Projections").
After the February 24 meeting, the Special Committee scheduled a meeting
for March 11, 1998, to be held at the offices of Powell, Goldstein and to be
attended by the available directors of the Company and representatives of
Powell, Goldstein, Rogers & Hardin and Moore & Van Allen, PLLC, counsel for the
Company ("Moore & Van Allen"). The purpose of the meeting was to allow the
members of the Special Committee to negotiate with representatives of WG
Holding concerning the price per share contained in the WG Holding Proposal.
On March 6, 1998, the Special Committee met with representatives of
Robinson-Humphrey and representatives of Powell, Goldstein. Robinson-Humphrey
reported to the Special Committee concerning the February 24 meeting among
Broadview and management of the Company, which had been attended by a
representative of Robinson-Humphrey. The Special Committee determined, based on
the discussions which took place at the March 6, 1998 meeting, that it would
follow a strategy of commencing negotiations with WG Holding regarding the
price per share of Common Stock to be paid by WG Holding, recognizing that,
based on the lack of an affirmative response from WG Holding to the Special
Committee's initial counter proposal of $19.00 to $23.00 per share, a lower
price probably would have to be agreed to in order for an agreement to be
reached with WG Holding. The Special Committee determined that, in the initial
stage of such negotiations, it would advise WG Holding that it continued to
believe a purchase price in the range of $19.00 to $23.00 per share was
appropriate in order possibly to elicit a counter proposal from WG Holding. The
Special Committee was advised by Robinson-Humphrey that it was prepared to
support a price of less than $19.00 per share as being fair, from a financial
point of view, to the Public Shareholders, although no particular minimum price
was discussed. The members of the Special Committee then discussed the agenda
for the March 11 meeting and asked Robinson-Humphrey to prepare a report that
contained a summary and selective analyses (the "Robinson-Humphrey March
Report") which the Special Committee could use in its negotiations with WG
Holding at that meeting.
On March 9, 1998 Broadview submitted additional discussion materials (the
"March Broadview Report") to WG Holding which discussed the most recent
information and summarized the results of various valuation analyses based on
the Adjusted Income Projections. The March Broadview Report included a number
of analyses which separately reviewed the analyses included in the December
Broadview Report. On March 10, 1998, Rogers & Hardin provided a copy of the
March Broadview Report to Powell, Goldstein. The March Broadview Report
contained a range of values from $7.34 to $15.82 per share for the Common Stock
held by the Public Shareholders. See " -- Position of WG Holding as to Fairness
of the Merger -- Reports of WG Holding's Financial Advisor."
On March 10, 1998, the Special Committee provided WG Holding with a copy
of the Robinson-Humphrey March Report prepared for the Special Committee. The
Robinson-Humphrey March Report contained a range of values from $15.10
10
<PAGE>
to $34.68 per share for the Common Stock held by the Public Shareholders based
on the Base Income Projections and selective analyses used by Robinson-Humphrey
in that report. See " -- Reports of Special Committee's Financial Advisor."
All of the directors of the Company (except Messrs. Wandel and Simmross),
Mr. Kuthe and representatives of Powell, Goldstein, Rogers & Hardin and Moore &
Van Allen attended the meeting on March 11, 1998. During this meeting Messrs.
Chastelet and Kuthe summarized the basis for the Base Income Projections and
the principal underlying assumptions. Representatives of WG Holding advised the
meeting participants that WG Holding did not believe that the Base Income
Projections would be attained by the Company, that WG Holding had discounted
such projections, and explained the basis used for WG Holding's adjustments to
the Base Income Projections. WG Holding made available to the directors the
Adjusted Income Projections and a copy of the March Broadview Report prepared
for WG Holding by Broadview based upon such projections. The Special Committee
delivered to the directors a copy of the Robinson-Humphrey March Report.
Discussions occurred regarding the Base Income Projections and the Adjusted
Income Projections and the respective valuation methodologies used by
Robinson-Humphrey and Broadview. The meeting was recessed on several occasions
to permit Messrs. Wagner and Schmid, as representatives of WG Holding, and its
legal counsel, and the Special Committee, and its legal counsel, to meet
separately to evaluate the status of the discussions. After a separate
conference between the members of the Special Committee and Messrs. Wagner and
Schmid, the meeting was reconvened and the Special Committee advised WG Holding
that the Special Committee was prepared to recommend a price of $17.50 per
share, based upon (i) the Special Committee's belief after discussions with
representatives of WG Holding, that WG Holding would not pay a higher price and
(ii) the Special Committee's belief, based in part on the verbal advice of
Robinson-Humphrey, that such price was fair. Mr. Wagner replied on behalf of WG
Holding that $17.50 per share was not acceptable, but WG Holding would be
prepared to pay $15.82 per share if such an offer would allow the parties to
promptly conclude the price negotiations. After a brief discussion, WG Holding
and the Special Committee determined that further discussions at that time
would not be productive and the meeting adjourned.
After the March 11 meeting, the Special Committee asked Robinson-Humphrey
to prepare a set of income projections representing an average of the Base
Income Projections and the Adjusted Income Projections in order to allow
Robinson-Humphrey and Broadview to analyze a version of the Company's
projections representing a balanced approach between the Base Income
Projections and the Adjusted Income Projections. The projections prepared by
Robinson-Humphrey (the "Average Income Projections") were provided to Broadview
and the Special Committee. On several occasions after March 11,
Robinson-Humphrey and Broadview had discussions concerning the Average Income
Projections, the impact of utilizing the Average Income Projections on the
valuation methodologies employed by Robinson-Humphrey and Broadview and certain
other matters regarding the valuation of the Company's shares and the
assumptions that each financial advisor made in connection with their
respective valuations. The matters discussed included the most recent
information about the Company's business situation, the financial forecasts
used in the valuations, the selection of publicly traded companies as
comparables and the selection of transactions involving comparable target
companies as merger and acquisition transaction comparables.
During the same time period, Mr. Pospisil, acting on behalf of the Special
Committee, had several telephone conversations with representatives of WG
Holding in an effort to determine if WG Holding would increase the price per
share which it had offered during the March 11 meeting. During these
discussions, representatives of WG Holding advised Mr. Pospisil that WG Holding
was prepared to pay $15.90 per share but that, if this was not promptly
accepted by the Special Committee, WG Holding would withdraw its offer and
abandon its efforts to acquire the shares of Common Stock held by the Public
Shareholders. On March 17, 1998, Mr. Pospisil advised Mr. Topol and Powell,
Goldstein of the new price per share offered by WG Holding and the position
taken by WG Holding concerning its offer. The Special Committee and Powell,
Goldstein inquired of Robinson-Humphrey whether it could issue a fairness
opinion with respect to a price of $15.90 per share and Robinson-Humphrey
advised the Special Committee that it was prepared to do so. Mr. Pospisil
advised representatives of WG Holding that the Special Committee would agree to
a price of $15.90 per share. A meeting of the Board of Directors of the Company
was scheduled for March 18, 1998.
On March 18, 1998, the Board held a telephonic meeting in which all of the
directors participated. Also participating were Mr. Kuthe and representatives
of Moore & Van Allen, Rogers & Hardin and Powell, Goldstein. Mr. Topol, as
Chairman of the Special Committee, reported that the Special Committee had
concluded that a cash price of $15.90 per share of Common Stock was fair to the
Public Shareholders in connection with the merger transaction proposal received
from WG Holding. Mr. Wagner, on behalf of WG Holding, confirmed that WG Holding
had agreed to the cash price of $15.90 per share. Mr. Topol reported that
Robinson-Humphrey had orally confirmed to the Special Committee that, in its
opinion, the cash price of $15.90 per share was fair to the Public Shareholders
from a financial point of view. Representatives from each of the Special
Committee and WG Holding noted that their willingness to support the $15.90
price per share was subject
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to reaching agreement on the terms of a definitive Merger Agreement. The
Company issued a press release on March 18, 1998 announcing the agreement as to
price reached between the Special Committee and WG Holding.
A special meeting of the Board was held on March 28, 1998 at the offices
of Powell, Goldstein. All of the members of the Board were present. Also
present at the meeting were Mr. Kuthe and representatives of Robinson-Humphrey,
Moore & Van Allen, Powell, Goldstein, and Rogers & Hardin. Prior to the
meeting, the Board members were furnished a copy of the Merger Agreement and
the Investment Banking Presentation of Robinson-Humphrey dated March 28 1998,
containing the analyses conducted by Robinson-Humphrey supporting its opinion
that the Cash Merger Consideration was fair, from a financial point of view, to
the Public Shareholders (the "Robinson-Humphrey Evaluation Report"). At the
meeting:
(a) A representative of Rogers & Hardin reviewed with the Board the
principal terms of the Merger Agreement and the Board considered the amount
and sources of funding to consummate the merger and other transactions
contemplated by the Merger Agreement;
(b) Each director disclosed the nature and extent of any direct or
indirect interest that he had in the proposed merger transaction after
being advised by counsel to the Company of the director conflict of
interest provisions of the North Carolina Business Corporation Act;
(c) The Board determined, upon the advice of a representative of Moore &
Van Allen, that Messrs. Topol and Pospisil did not have a direct or
indirect interest in WG Holding, WGMC or any other affiliate of WG Holding
(other than as a result of their service as a director of the Company) and
that their interests in the proposed merger and the transactions
contemplated by the Merger Agreement were aligned with the interests of the
Public Shareholders and the holders of outstanding options under the
Company's stock option plans;
(d) Mr. Topol provided the Board with a report of the activities of the
Special Committee from the time of its formation in November 1997 to March
28, 1998, which report summarized the activities of the Special Committee
as discussed above;
(e) Mr. Topol summarized the principal reasons (which are set forth under
"The Special Committee's and the Board's Recommendation -- Special
Committee") why the Special Committee was recommending approval of the
Merger Agreement as fair to the Public Shareholders and advised the Board
that the Special Committee recommended approval of the Merger Agreement;
(f) A representative of Robinson-Humphrey made a presentation to the
Board explaining the Robinson-Humphrey Evaluation Report and read the
fairness opinion that Robinson-Humphrey had prepared for the Special
Committee (see Appendix B to this Proxy Statement), noting that
Robinson-Humphrey's fairness opinion was also being provided for the
benefit of the Board;
(g) Members of the Board discussed the reasons why, in their view, it was
in the best interests of the Company and the Public Shareholders to approve
the Merger Agreement and proceed with the proposed merger (which reasons
are summarized below under " -- Purpose and Reasons for the Merger"); and
(h) Based on their consideration of the foregoing, the Board adopted
resolutions that determined that the Merger Agreement and the Merger and
other transactions contemplated by the Merger Agreement were in the best
interests of the Company and its shareholders and that the terms of the
Merger Agreement, including the Cash Merger Consideration, were fair to the
Public Shareholders, approved the Merger Agreement and recommended that the
Merger Agreement be approved by the Company's shareholders.
Prior to the presentation of the Robinson-Humphrey Evaluation Report to
the Board, the members of the Special Committee met privately with
representatives of Robinson-Humphrey and Powell, Goldstein to review and
discuss the Robinson-Humphrey Evaluation Report.
The Special Committee's and the Board's Recommendation
The Special Committee
The Special Committee, in reaching its conclusion that the Merger is fair
to, and in the best interest of, the Public Shareholders, and in determining to
recommend approval of the Merger Agreement to the Board, considered a number of
factors including the following, which were all of the material factors
considered by the Special Committee:
(i) The Special Committee's knowledge of the business, financial
condition, results of operations and prospects of the Company. The members of
the Special Committee took into account the members' knowledge of the Company's
affairs,
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including the present and possible future economic and competitive environment
in which the Company operates its business, which the members believed tended
to support the fairness of the terms of the Merger;
(ii) The terms of the Merger Agreement, including without limitation, the
amount and form of consideration; the nature of the parties' representations,
warranties, covenants and agreements; and the conditions to the obligations of
WG Holding, WGMC and the Company. In this regard, the Special Committee viewed
favorably the fact that the Cash Merger Consideration will result in cash
payments to the Public Shareholders, rather than consideration consisting in
whole or in part of stock or debt of WG Holding and the fact that the Merger
Agreement contained a limited number of representations and warranties by the
Company and a limited number of conditions to the closing of the Merger, thus
making consummation of the transaction more likely than one in which the
agreement imposed more significant conditions to consummation;
(iii) The Special Committee's conclusion, based on the course of the
negotiations, that the Cash Merger Consideration was the highest price
attainable, particularly in light of the fact that, as discussed in (viii)
below, WG Holding was unwilling to consider any third party transactions for
the Company. Accordingly, the Special Committee did not conduct any process to
determine potential interest in such a transaction on the part of any third
party. This conclusion was the result of the Special Committee's negotiations
with WG Holding in an attempt to obtain the highest possible price;
(iv) The fact that the Cash Merger Consideration represented (i) a 59.0%
premium over the last reported sales price of the Common Stock on November 18,
1997, the day immediately preceding the public announcement that WG Holding
might submit the WG Holding Proposal, (ii) a 67.4% premium over the last
reported sales price of the Common Stock one week prior to such date and (iii)
a 51.4% premium over such price four weeks prior to such date, which premiums
tended, in the view of the Special Committee, to support the fairness of the
Cash Merger Consideration to the Public Shareholders;
(v) The oral and written presentations of Robinson-Humphrey to the Special
Committee on January 20, 1998, March 10, 1998 and March 28, 1998, and the
written opinion of Robinson-Humphrey dated March 28, 1998 to the effect that,
as of the date of such opinion and based upon and subject to certain matters
stated in such opinion, the Cash Merger Consideration was fair, from a
financial point of view, to the Public Shareholders. The Special Committee
considered the written opinion of Robinson-Humphrey dated March 28, 1998 to be
significant positive support for the Special Committee's conclusion as to the
fairness of the Cash Merger Consideration to the Public Shareholders. See " --
Opinion of the Special Committee's Financial Advisor." The opinion of
Robinson-Humphrey is attached hereto as Appendix B to this Proxy Statement. The
shareholders of the Company are urged to read such opinion carefully in its
entirety;
(vi) The stock price and trading volume history of the Common Stock and
the fact that such shares are thinly traded. In its analysis, the Special
Committee placed less reliance upon such factors than others discussed herein
because the Special Committee did not believe that historical market prices for
the Common Stock reflected a full and complete understanding of the Company and
its industry and, further, that such prices were reflective of a thin trading
market influenced by small transactions in such stock;
(vii) The fact that the Cash Merger Consideration represents a 3.6
multiple to pro forma book value per share of Common Stock at December 31, 1997
after giving effect to the $6.3 million write-down of purchased technology then
expected to be recorded in the quarter ended March 31, 1998, which the Special
Committee viewed as supporting the fairness of the Cash Merger Consideration to
the Public Shareholders;
(viii) The unwillingness of WG Holding to consider a sale of the Company
or to engage in other alternative transactions with respect to the Company (as
a result of which the Special Committee did not solicit third party bids for
the Company). This position of WG Holding, which the Special Committee
considered to be a negative factor in its evaluation of the fairness of the
Merger, led the Special Committee to conclude that there was no opportunity to
solicit a competitive bid for the Company and that either a mutually
satisfactory agreement between the Company and WG Holding would be reached, or
the offer by WG Holding would be withdrawn, as discussed in (ix) below;
(ix) WG Holding's advice to the Special Committee, which the Special
Committee assumed to be correct, that WG Holding would withdraw its offer of
$15.90 per share of Common Stock and abandon its efforts to acquire the Common
Stock held by the Public Shareholders, if an agreement were not reached at that
price. The Special Committee believed that this circumstance indicated that it
had negotiated the best price that could be obtained in its negotiations with
WG Holding. The Special Committee was also influenced in its decision to accept
a price of $15.90 per share by the likelihood that the trading prices for the
Common Stock would fall to the pre-November 18, 1997 level of approximately
$9.00, and possibly lower, and that the Common Stock might trade in that price
range for an indefinite period of time thereafter. The Special Committee
believed that this possible result if WG Holding's offer were withdrawn tended
to support the Special Committee's conclusion as to the fairness of the Cash
Merger Consideration to the Public Shareholders;
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(x) The Special Committee's view that, inasmuch as the Public Shareholders
represent a minority ownership position in the Company and that the long term
objectives of WG Holding may not be aligned with the interests of the Public
Shareholders, a sale by the Public Shareholders at a fair price was in their
best interests and supports the Special Committee's conclusion as to the
fairness of the Cash Merger Consideration to the Public Shareholders; and
(xi) The availability of Dissenters' Rights to dissenting shareholders in
the Merger, which the Special Committee viewed positively in making its
recommendation inasmuch as any of the Public Shareholders who believe that the
Cash Merger Consideration is unfair may avail themselves of this alternative
method of determining the "fair value" of the Common Stock owned by them. See
"Rights of Dissenting Shareholders."
In light of the number and variety of factors the Special Committee
considered in connection with its evaluation of the Merger, the Special
Committee did not quantify or otherwise attempt to assign relative weights to
the foregoing factors. The Special Committee collectively made its
determination with respect to the Merger Agreement based on the unanimous
conclusion reached by its members that the Merger Agreement, in light of the
factors that each of them individually considered appropriate, is fair to, and
in the best interest of, the Company and the Public Shareholders.
The Special Committeee took note of the fact that the Robinson-Humphrey
opinion dated March 28, 1998 was based primarily on the Average Income
Projections and not the Base Income Projections. The Special Committee believes
that the use of the Average Income Projections, which took into account a
portion of WG Holding's proposed downward adjustments in the Base Income
Projections based on uncertainties relating to timing and market acceptance of
planned new product releases, were reasonable.
Although the Special Committee did consider historical trading prices of
the Common Stock, the Special Committee did not consider trading prices of the
Common Stock for the period following the announcement of the WG Holding
Proposal, because the Special Committee believed that such prices reflected
anticipation of the possibility of the purchase by WG Holding of the Common
Stock held by the Public Shareholders. In addition, the Special Committee did
not consider the Cash Merger Consideration as compared to any implied
liquidation value because the Company is not in a liquidation mode and will be
operated by WG Holding as a going concern following the Merger.
In its evaluation of the Merger, the Special Committee took note of the
interests of various members of the Board. See "Special Factors -- Interests of
Certain Persons in the Merger". The Special Committee believed that all such
interests had been fully disclosed and was of the view that none of such
disclosed interests should affect its conclusion and recommendations with
respect to the Merger.
The Special Committee did not consider the Shareholder Litigation in
evaluating the fairness of the WG Holding Proposal during its deliberations or
negotiations with representatives of WG Holding. The Special Committee believed
that the allegations made in the Shareholder Litigation were unfounded given,
among other things, the fact that such litigation commenced prior to any
substantive consideration of the WG Holding Proposal by the Special Committee,
any discussions between the Special Committee and Robinson-Humphrey regarding
the Company's value, and any negotiations between the Special Committee and
representatives of WG Holding with respect to the WG Holding Proposal. See " --
Certain Litigation." In considering the various prices reflected in the
Robinson-Humphrey January Report and the Robinson-Humphrey March Report that
exceeded $15.90 per share, the Special Committee noted that these prices were
established primarily to facilitate negotiation of an increase in the price
proposed by WG Holding and that such prices did not represent prices at which
the Special Committee could reach an agreement with WG Holding.
The Special Committee believes that the Merger is procedurally fair
because:
(i) The Special Committee consisted of disinterested directors appointed
to represent the interests of, and to negotiate on an independent basis with WG
Holding (as if WG Holding were an unaffiliated third party) on behalf of, the
Company and the Public Shareholders;
(ii) The Special Committee retained and was advised by independent legal
counsel;
(iii) The Special Committee retained Robinson-Humphrey as its independent
financial advisor to assist it in evaluating the proposed Merger; and
(iv) The Cash Merger Consideration and the other terms and conditions of
the Merger resulted from arms length negotiations between the Special Committee
and WG Holding.
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Although the Special Committee considered conditioning the Merger upon
approval of a majority of the votes entitled to be cast by the Public
Shareholders (a "majority of the minority vote"), the Special Committee
determined that in light of the foregoing factors, the Merger is procedurally
fair to the Public Shareholders without a majority of the minority vote.
See "Certain Forward Looking Information" for summaries of the Base Income
Projections, the Adjusted Income Projections and the Average Income
Projections.
The Board
At a special meeting of the Board on March 28, 1998, at which all members
were present, the Board unanimously approved the Merger Agreement, concluded
that the Cash Merger Consideration is fair to the Public Shareholders and
recommended that it be submitted to the Company's shareholders for approval.
The Board recommends that the Public Shareholders approve the Merger Agreement.
In their consideration of the Merger Agreement, the Board adopted the analysis
and conclusions of the Special Committee with respect to the fairness of the
Merger Agreement and believes that the Merger Agreement and the Merger are both
procedurally and substantively fair to the Public Stockholders.
Although all the directors voted in favor of the Merger Agreement at the
March 28 meeting, Messrs. Topol and Pospisil, who also constituted the Special
Committee, were the only disinterested directors who voted in favor of the
Merger Agreement. At this meeting, the Board was advised by a representative of
Moore & Van Allen that the approval of the Merger Agreement by the entire Board
did not affect the validity of the Board's action because the Merger Agreement
was also approved by two disinterested directors who had been fully apprised at
the meeting of the direct or indirect interests in the Merger of the other
directors. See " -- Background of the Merger."
In considering the fairness of the Merger Agreement, the Special Committee
and the Board did not consider the liquidation value of the Company because WG
Holding had advised the Special Committee and the Board that it intended to
continue to operate the Company as a going concern after the Merger. In the
opinion of management, the liquidation value of the Company would be
substantially below the Cash Merger Consideration due to, among other factors,
the Company's limited amount of tangible assets, the cost of disposing of
inventory and the severance expense associated with the termination of
employees.
Reports of Special Committee's Financial Advisor
Robinson-Humphrey January Report
As discussed under " -- Background of the Merger," Robinson-Humphrey
provided the Special Committee with a report on January 20, 1998 that contained
a preliminary analysis of the Company solely for the purpose of enabling the
Special Committee to develop a counterproposal to the WG Holding Proposal and
initiate negotiations with respect to the price to be paid by WG Holding for
the Common Stock held by the Public Shareholders. Robinson-Humphrey's January
Report was very preliminary in nature and the Special Committee was advised by
Robinson-Humphrey that its valuation process was ongoing and that further
analysis would be required to enable Robinson-Humphrey to reach any conclusions
as to the fairness of the price, if any, that might ultimately be acceptable to
WG Holding and the Special Committee. In preparing the Robinson-Humphrey
January Report, Robinson-Humphrey relied upon the accuracy and completeness of
the financial information provided to it up to January 20, 1998 without
independent verification, including in particular the Base Income Projections,
and assumed that the Base Income Projections were reasonably prepared on a
basis reflecting the best currently available estimates and judgments of the
Company's senior management as to the future financial performance of the
Company. The equity values derived by Robinson-Humphrey from the analyses
included in the Robinson-Humphrey January Report were not intended to reflect
and did not reflect Robinson-Humphrey's or the Special Committee's estimate of
the value of the Company as a going concern or of the value of the Common Stock
held by the Public Stockholders. In addition, the Robinson-Humphrey January
Report was not a fairness opinion and Robinson-Humphrey did not render an
opinion, either orally or in writing, to the Special Committee on January 20,
1998 with respect to the fairness of any cash price to be paid for the Common
Stock held by the Public Shareholders.
The following is a summary of the analyses performed by Robinson-Humphrey
in preparing the Robinson-Humphrey January Report:
Historical Stock Price Analysis. Robinson-Humphrey analyzed the prices at
which the Common Stock of the Company traded after its initial public offering
on April 8, 1994. In calendar 1994, the high price was $16.13 and the low price
was $8.38. In calendar 1995, the high price was $20.75 and the low price was
$9.00. In calendar 1996, the high price was $31.50 and the low price was $9.00.
In calendar 1997, the high price was $30.25 and the low price was $8.50. In
calendar 1998, as of January 15, 1998, the high price was $13.38 and the low
price was $12.75. Over the period from April 8, 1994
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to January 15, 1998, Robinson-Humphrey observed that more than 51% of the
outstanding shares were traded in a price range of $8.00 to $12.40. Over the
period from January 1, 1997 to January 15, 1998, Robinson-Humphrey observed
that more than 70% of the outstanding shares were traded in a price range of
$8.00 to $12.40.
Valuation Summary of Selected Comparable Publicly-Traded Companies.
Robinson-Humphrey reviewed and compared certain financial operating and stock
market information of the Company and two groups of publicly-traded companies
in the network solutions industry. The Network Analysis publicly-traded
companies included in Robinson-Humphrey's analysis were Applied Digital Access,
Inc., Concord Communications, Inc., Digital Lightwave, Inc., Hewlett-Packard
Company, Network Associates, Inc. RADCOM Ltd., Tekelec, Inc. and Tektronix,
Inc. The Network Management and Equipment publicly-traded companies included in
Robinson-Humphrey's analysis were Dynatech Corp., Fluke Corp., GenRad, Inc.,
Keithley Instruments, Inc., MicroTest, Inc., Objective Systems Integrators,
Inc., Retix Corp., TCSI Corporation, Teradyne, Inc., Bay Networks, Inc.,
Cabletron Systems, Inc., Cisco Systems, Inc. and 3Com Corp. Robinson-Humphrey
calculated, among other things, current market price as a multiple of: (i) book
value; (ii) estimated calendar 1997 earnings per share ("EPS"); (iii) estimated
calendar 1998 EPS; and (iv) estimated calendar 1999 EPS. The calendar 1997,
1998 and 1999 EPS estimates were based on the mean of publicly available
earnings estimates made by research analysts as provided by First Call Investor
Service. In addition, Robinson-Humphrey calculated for each of the
publicly-traded companies, firm value (market capitalization plus debt minus
cash) as a multiple of: (i) their respective last twelve months revenues; (ii)
latest twelve months EBITDA; and (iii) latest twelve month EBIT.
Robinson-Humphrey averaged the multiples of the publicly-traded comparable
companies in order to apply these multiples to the Company's values. To
accurately reflect average values for statistical purposes, Robinson-Humphrey
excluded certain outlying values that differed from the relative groupings of
the other values. Robinson-Humphrey believes that these outlying values for
certain companies reflect temporary market aberrations that can skew mean
values.
Based on the average of the range of the multiples of the current market
price to estimated calendar year 1998 and 1999 EPS of the Network Analysis
companies, Robinson-Humphrey derived implied equity values of $16.35 per share
and $21.23 per share, respectively, for the Common Stock. Based on the average
of the range of multiples of the current market price to book value of the
Network Analysis companies, Robinson-Humphrey derived an equity value of $25.09
per share for the Common Stock. Because the Company incurred a net loss for
calendar 1997, Robinson-Humphrey determined that applying multiples of the
current market price to calendar year 1997 EPS of the Network Analysis
companies to the Company would not be meaningful. Based on the average of the
range of firm values as a multiple of calendar 1997 revenues of the Network
Analysis companies, Robinson-Humphrey derived an implied equity value of $29.48
per share for the Common Stock. Because the Company did not generate positive
EBITDA or EBIT for calendar 1997, Robinson-Humphrey determined that deriving an
implied equity value for the Common Stock based on these measures of the
Company's performance would not be meaningful.
Discounted Cash Flow Analysis. Robinson-Humphrey performed a discounted
cash flow analysis using the Base Income Projections for the Company for fiscal
years 1998 through 2001. For the purpose of completing the discounted cash flow
analysis, Robinson-Humphrey projected financial results for the Company for
fiscal year 2002, assuming 20% revenue growth from fiscal year 2001 revenue and
margins equivalent to those margins projected by the Company for fiscal year
2001. Using the discounted cash flow analysis, Robinson-Humphrey estimated the
present value of the future cash flows of the Company set forth in these
projections. Robinson-Humphrey calculated the net present value of free cash
flows (defined as earnings before interest after taxes plus depreciation and
amortization less capital expenditures and any increase in net working capital)
for the fiscal years ended September 30, 1998 through 2002 using discount rates
ranging from 15.0% to 27.5%. Robinson-Humphrey calculated the Company's
terminal values in fiscal 2002, based on multiples ranging from 6.0x to 11.0x
projected fiscal 2002 EBIT. Using a discount rate of 20% and a terminal value
of 8.0x projected fiscal 2002 EBIT, the discounted cash flow analysis resulted
in a valuation of $18.87 per share for the Common Stock. Robinson-Humphrey also
calculated the Company's terminal values in fiscal 2002, based on multiples
ranging from 4.0x to 7.0x projected fiscal 2002 EBITDA. Using a discount rate
of 20% and a terminal value of 6.0x projected fiscal 2002 EBITDA, the
discounted cash flow analysis resulted in a valuation of $17.72 per share for
the Common Stock.
Comparable Merger and Acquisition Transaction Analysis. Robinson-Humphrey
reviewed and compared 20 selected mergers and acquisitions in the network
solutions industry in relation to certain financial data of the Company. The
transactions reviewed included: (i) Clayton Dubilier's proposed acquisition of
Dynatech Corp; (ii) McAfee Associates, Inc.'s acquisition of Network General
Corp.; (iii) Tivoli Systems, Inc.'s acquisition of Unison Software; (iv)
Network General Corp.'s acquisition of Cinco Networks, Inc.; (v) Ascend
Communications, Inc.'s acquisition of Cascade Communications Corp.; (vi) 3Com
Corp.'s acquisition of US Robotics Corp.; (vii) Network General Corp.'s
acquisition of 3DV Technology; (viii) Compaq Computer Corp.'s acquisition of
Microcom, Inc.; (ix) Dynatech Corp.'s acquisition of Intronix Corp.;
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(x) McAfee Associates, Inc.'s acquisition of FSA Corp.; (xi) Computer Sciences
Corp.'s acquisition of Continuum Co., Inc.; (xii) McAfee Associates, Inc.'s
acquisition of Vycor Corp.; (xiii) Dynatech Corp.'s acquisition of Snyergistic
Solutions, Inc.; (xiv) IBM Corp's acquisition of Tivoli Systems, Inc.; (xv)
Microtest Inc.'s acquisition of Hotware, Inc.; (xvi) Adobe Systems Inc.'s
acquisition of Frame Technology Corp; (xvii) McAfee Associates, Inc.'s
acquisition of Saber Software Corp.; (xviii) Microcom, Inc.'s acquisition of
Extension Technology Corp.; (xix) Sybase, Inc.'s acquisition of Powersoft
Corp.; and (xx) McAfee Associates, Inc.'s acquisition of Brightwork
Development. Robinson-Humphrey calculated, among other things, equity purchase
price as a multiple of: (i) book value; (ii) historical net income; and (iii)
projected net income, and firm value (equity purchase price plus debt less
cash) as a multiple of: (i) revenues; (ii) EBITDA; and (iii) EBIT. Robinson-
Humphrey also calculated the premiums paid on the closing price of the target's
shares at one day, one week and four weeks, prior to the announcement.
Robinson-Humphrey averaged the multiples for the comparable merger and
acquisition transactions in order to apply these multiples to the Company's
values. To accurately reflect average values for statistical purposes,
Robinson-Humphrey excluded certain outlying values that differed from the
relative groupings of the other values. Robinson-Humphrey believes that these
outlying values for certain companies reflect temporary market aberrations that
can skew mean values.
Applying the foregoing methodology to the Company's pro forma book value
at December 31, 1997 and the Company's calendar 1997 revenues,
Robinson-Humphrey derived implied equity values for the Common Stock of $34.68
per share and $34.47 per share, respectively. Because the Company incurred a
net loss for calendar 1997 and did not generate positive EBITDA or EBIT in
calendar 1997, Robinson-Humphrey determined that applying the foregoing
methodology to these measures of the Company's performance would not be
meaningful.
Minority Interest Buy-Out Analysis. Robinson-Humphrey prepared an analysis
of the premiums paid in 39 pending and completed minority interest acquisitions
by majority interest holders occurring since June 1992. Such transactions were
(i) Texas Industries, Inc./Chaparral Steel Co.; (ii) Orion Capital
Corp./Guaranty National Corp.; (iii) Gold Kist/Golden Poultry Company; (iv)
Anthem, Inc./Accordia, Inc.; (v) National Patent Development/General Physics
Corp.; (vi) Mafco Holdings, Inc./Mafco Consolidated Group; (vii) JW Childs
Equity Partners/Central Tractor Farm & Country; (viii) Andrews Group, Inc./Toy
Biz, Inc.; (ix) Monsanto Co./Calgene, Inc.; (x) Renco Group, Inc./ WCI Steel
Inc.; (xi) Electromagnetic Sciences/LXE, Inc.; (xii) CUS Acquisition,
Inc./Customedix Corp.; (xiii) Chemed Corp./Roto-Rooter, Inc.; (ix) Seaboard
Acquisition Partners/Seaboard Oil Co.; (x) Novartis AG/SyStexix, Inc.; (xi)
Equity Holdings Ltd./Great American Mgmt. & Inv. Inc.; (xii) COBE
Laboratories/REN Corp-USA; (xiii) Investor Group/NCP International; (xiv)
Genzyme Corp./IG Laboratories, Inc.; (xv) SCOR/SCOR US Corp.; (xvi) Investor
Group/Syms Corp.; (xvii) Berkshire Hathaway, Inc./GEICO Corp.; (xviii) Club
Meditarranee SA/Club Med Inc.; (xix) BIC SA/Bic Corp.; (xx) Fleet Financial
Group, Inc./Fleet Mortgage Group, Inc.; (xxi) Dole Food Co., Inc./Castle &
Cooke Homes, Inc.; (xxii) LinPac Mouldings Ltd./Ropak Corp.; (xxiii) Freeman
Spogli & Co./Koll Management Services; (xxvi) Investor Group/LDB Corp.; (xxvii)
Investor Group/Enquirer Star Group, Inc.; (xxviii) Investor Group/Forum Group,
Inc.; (xxix) REMEC, Inc./Humphrey, Inc.; (xxx) New Marvel Holdings, Inc./Marvel
Entertainment Group, Inc.; (xxxi) Dundee Bancorp International/Avalon Corp.;
(xxxii) National Mutual Insurance Co.; (xxxiii) Investor Group/United Medical
Corp.; (xxxiv) Investor Group/Fretter Inc.; (xv) WR Grace & Co./Grace Energy
Corp.; (xvi) Katy Holdings/Katy Industries, Inc.
Robinson-Humphrey considered, among other factors, the percentage of the
target's shares held by the acquirer at the time of the announcement, and the
premiums paid based on the closing price of the target's shares at one day, one
week and four weeks prior to the announcement. Based on the average of the
multiples of the premiums paid in these transactions applied to the closing
price of the Common Stock one day, one week and four weeks prior to the
Company's public announcement on November 19, 1997 that it had formed the
Special Committee in anticipation of receiving a possible proposal from WG
Holding to acquire the Common Stock held by the Public Shareholders,
Robinson-Humphrey derived an implied equity value for the Common Stock of
$13.16 per share, $12.86 per share and $14.62 per share, respectively.
Robinson-Humphrey March Report
As discussed under " -- Background of the Merger," the Special Committee
asked Robinson-Humphrey on March 6, 1998 to prepare a summary and selective
analyses that the Special Committee could use as a negotiating tool in its
discussions with WG Holding at a meeting scheduled on March 11, 1998. In
preparing the Robinson-Humphrey March Report, Robinson-Humphrey relied upon the
accuracy and completeness of the financial information provided to it up to
March 11, 1998 without independent verification, including in particular the
Base Income Projections, and assumed that the Base Income Projections were
reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the Company's senior management as to the future
financial performance of the Company. The summary analyses of the
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Company conducted by Robinson-Humphrey and the equity values derived by
Robinson-Humphrey included in the Robinson-Humphrey March Report were not
intended to reflect and did not reflect Robinson-Humphrey's or the Special
Committee's estimate of the value of the Company or of the Common Stock held by
the Public Shareholders. In addition, the Robinson-Humphrey March Report was
not a fairness opinion, and Robinson-Humphrey did not render an opinion, either
orally or in writing, to the Special Committee on March 11, 1998 with respect
to the fairness of any cash price to be paid for the Common Stock held by the
Public Shareholders.
The following is a summary of the analyses performed by Robinson-Humphrey
in preparing the Robinson-Humphrey March Report.
Summary of Selected Comparable Company Analysis. Robinson-Humphrey
reviewed and compared certain financial, operating and stock market information
of the Company and two comparable groups of publicly traded companies in the
network solutions industry. The "Network Analysis" publicly-traded companies
included in the analysis were Applied Digital Access, Concord Communications,
Digital Lightwave, Hewlett-Packard, Network Associates, RADCOM, Tekelec and
Tektronix. The "Network Management and Equipment" publicly-traded companies
included in the analysis included in the "Network Analysis" companies plus
Dynatech, Gluke, GenRad, Keithley Instruments, MicroTest, Objective Systems
Integrators, Retix, TCSI, Teradyne, Bay Networks, Cabletron, Cisco and 3Com.
Robinson-Humphrey calculated current market price as a multiple of book value
and as a multiple of estimated earnings per share ("EPS") for calendar 1998 and
1999. The EPS estimates were based on the mean of publicly available earnings
estimates made by research analysts as provided by First Call Investor Service.
In addition, Robinson-Humphrey calculated firm value (market capitalization
plus debt minus cash) to calendar 1997 revenues for each of the publicly traded
companies. Robinson-Humphrey averaged the multiples of the comparable companies
in order to apply these multiples to the Company's values. To accurately
reflect average values for statistical purposes, Robinson-Humphrey excluded
certain outlying values that differed form the relative groupings of the other
values.
Based on the average of the range of calendar 1998 and 1999 price/earnings
ratios for the Network Analysis companies, Robinson-Humphrey derived implied
values of $19.63 and $24.75 per share, respectively, for the Common Stock.
Based on the average of the range of market value to book value multiples of
the Network Analysis companies, Robinson-Humphrey derived an implied value of
$27.13 per share for the Common Stock. Based on the average of the range of
firm values to calendar 1997 revenues multiples of the Network Analysis
companies, Robinson-Humphrey derived an implied value of $32.39 per share for
the Common Stock.
Based on the average of the range of estimated calendar 1998 and 1999
price/earnings ratios of the Network Management and Equipment companies,
Robinson-Humphrey derived implied values of $15.10 per share and $22.52 per
share, respectively, for the Common Stock. Based on the average of the range of
current market value to book value multiples of the Network Management and
Equipment companies, Robinson-Humphrey derived an implied value of $23.09 per
share for the Common Stock. Applying the average of the range of firm value to
calendar 1997 revenue multiples of the Network Analysis companies,
Robinson-Humphrey derived an implied value of $28.08 per share for the Common
Stock.
Summary of Selected Mergers and Acquisitions. Robinson-Humphrey reviewed
and compared 21 selected recent mergers and acquisitions in the Network
Solutions industry, including (i) Bay Network's proposed acquisition of
Netsation; (ii) Clayton Dubilier's proposed acquisition of Dynatech; (iii)
McAfee Associates' acquisition of Network General; (iv) Tivoli Systems'
acquisition of Unison Software; (v) Network General's acquisition of Cinco
Networks; (vi) Ascend's acquisition of Cascade; (vii) 3Com's acquisition of US
Robotics; (viii) Network General's acquisition of 3DV Technology; (ix) Compaq's
acquisition of Microcom; (x) Dynatech's acquisition of Itronix; (xi) McAfee
Associates' acquisition of FSA; (xii) Computer Sciences' acquisition of
Continuum; (xiii) McAfee Associates' acquisition of Vycor; (xiv) Dynatech's
acquisition of Synergistic Solutions; (xv) IBM's acquisition of Tivoli Systems;
(xvi) Microtests's acquisition of Hotware; (xvii) Adobe's acquisition of Frame
Technology; (xviii) McAfee Associates' acquisition of Saber Software; (xix)
Microcom's acquisition of Extension Technology; (xx) Sybase's acquisition of
Powersoft; and (xxi) McAfee Associates' acquisition of Brightwork Development.
For these selected mergers and acquisitions, Robinson-Humphrey calculated the
purchase price as a multiple of book value and firm value as a multiple of
latest twelve months revenues. Applying the average of the range of purchase
price to book value multiples, Robinson-Humphrey derived an implied value of
$34.68 per share for the Common Stock. Based on the average of the range of
firm value to latest twelve months revenues, Robinson-Humphrey derived an
implied value of $34.47 per share for the Common Stock.
Robinson-Humphrey also specifically focused on the multiples to book value
and latest twelve months revenues for the recent acquisition by McAfee
Associates of Network General and the proposed acquisition by Clayton Dubilier
of Dynatech. These two transactions involved companies (Network General and
Dynatech) which are competitors of the Company. Based
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on the average of the range of purchase price to book value multiples for these
two transactions, Robinson-Humphrey derived an implied value of $23.90 per
share for the Common Stock. Based on the average of the range of firm value to
latest twelve months revenues multiplies for these transactions,
Robinson-Humphrey derived an implied value of $27.07 per share for the Common
Stock.
Summary of Discounted Cash Flow Analysis. Robinson-Humphrey performed a
discounted cash flow analysis using the Base Income Projections. For purposes
of completing this analysis, Robinson-Humphrey projected financial results for
the Company for fiscal 2002, assuming 20% revenue growth from fiscal 2001 and
margins equivalent to those projected by the Company for fiscal 2001.
Robinson-Humphrey calculated a net present value of free cash flows (defined as
earnings before interest after taxes plus depreciation and amortization less
capital expenditures and any increase in net working capital) for fiscal 1998
through 2002 using discount rates ranging from 15% to 27.5%. Robinson-Humphrey
calculated the Company's terminal values in fiscal 2002 based on multiplies of
fiscal 2002 projected earnings before interest and taxes ("EBIT") ranging from
6.0x to 11.0x. Using a discount rate of 20% and a terminal value multiple of
8.0x fiscal 2002 EBIT, the discounted cash flow analysis produced a valuation
of $18.89 per share for the Common Stock.
The Robinson-Humphrey January Report and the Robinson-Humphrey March
Report are not fairness opinions. The only opinion rendered by
Robinson-Humphrey with respect to the fairness of the Cash Merger Consideration
to the Public Shareholders from a financial standpoint is dated March 28, 1998
and was furnished to the Special Committee and the Board on that date. This
opinion is discussed below under " -- Opinion of the Special Committee's
Financial Advisor."
Copies of the Robinson-Humphrey January Report and the Robinson-Humphrey
March Report have been filed as exhibits to the Schedule 13E-3. See "Available
Information." Such materials are available for inspection and copying at the
principal executive offices of the Company during its regular business hours by
any shareholder or any representative or a shareholder who has been so
designated in writing. A copy of such materials will be provided to any
shareholder or any representative of the shareholder who has been so designated
in writing upon written request and at the expense of the requesting
shareholder or representative.
Opinion of the Special Committee's Financial Advisor
Background
On March 28, 1998, Robinson-Humphrey delivered a written opinion to the
Special Committee to the effect that, as of such date and based upon and
subject to certain matters, the Cash Merger Consideration to be received by the
Public Shareholders of the Company pursuant to the Merger Agreement is fair to
such shareholders from a financial point of view.
The full text of Robinson-Humphrey's opinion, which sets forth the
assumptions made, matters considered and limitations on the review undertaken
in connection with the opinion, is attached hereto as Appendix B. Shareholders
are urged to read the opinion carefully and in its entirety.
Robinson-Humphrey's opinion is directed only to the consideration to be
received by the Public Shareholders in the Merger and does not constitute a
recommendation to any shareholder as to how such shareholder should vote.
Robinson-Humphrey's opinion does not address the likely tax consequences of the
Merger to any Public Shareholder. No limitations were imposed by the Special
Committee, the Company, WG Holding or WGMC with respect to the investigations
made or procedures followed by Robinson-Humphrey in rendering its opinion.
Robinson-Humphrey conducted valuation analyses of the Common Stock and
evaluated the Cash Merger Consideration, but was not asked to and did not
recommend a specific per share price to be paid by WG Holding for the minority
interest in the Company. The summary of Robinson-Humphrey's opinion set forth
in this Proxy Statement is qualified in its entirety by reference to the full
text of such opinion.
In connection with its opinion, Robinson-Humphrey conducted, among other
analyses, (i) a review of certain publicly available information concerning the
Company; (ii) a review of certain internal financial statements and other
financial and operating data concerning the Company prepared by the management
of the Company; (iii) an analysis of certain financial assumptions prepared by
the Company; (iv) a review of the historical and current market prices and
trading patterns of the Common Stock; (v) a review of the historical market
prices and trading activity for the Common Stock and compared them with those
of certain publicly-traded companies engaged in similar businesses as the
Company; (vi) a review of the results of operations and present financial
condition of the Company and compared them with those of certain
publicly-traded companies engaged in similar businesses as the Company; (vii) a
review and analysis of the financial terms of certain merger and acquisition
transactions involving companies engaged in similar businesses as the Company;
(viii) a review and analysis of prices and premiums paid in, and other terms
of, other recent minority buy-out transactions; and (ix) a discounted cash flow
analysis of the Company. Robinson-Humphrey also held discussions with members
of the senior management of the Company regarding the Company's past and
current business operations, financial condition and future prospects.
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Robinson-Humphrey relied without independent verification upon the
accuracy and completeness of all the financial and other information reviewed
by it for purposes of its opinion. In that regard, with respect to the Average
Income Projections which the Special Committee instructed Robinson-Humphrey to
use for purposes of its analyses, Robinson-Humphrey assumed that such forecasts
were reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the Company's senior management as to the future
financial performance of the Company. In addition, Robinson-Humphrey was not
requested or authorized to solicit, and did not solicit, interest from any
party with respect to an acquisition of all or any portion of the outstanding
Common Stock, the Company or its constituent businesses.
The following is a summary of the presentation by Robinson-Humphrey to the
Special Committee and the Board on March 28, 1998 in connection with its March
28, 1998 fairness opinion:
Analysis of the Company
Historical Stock Price Analysis. Robinson-Humphrey analyzed the prices at
which the Common Stock of the Company traded after its initial public offering
on April 8, 1994. In calendar 1994, the high price was $16.13 and the low price
was $8.38. In calendar 1995, the high price was $20.75 and the low price was
$9.00. In calendar 1996, the high price was $31.50 and the low price was $9.00.
In calendar 1997, the high price was $30.25 and the low price was $8.50. In
calendar 1998, as of March 27, 1998 (the last trading day prior to the date of
the opinion), the high price was $15.63 and the low price was $12.38. Over the
period from April 8, 1994 to March 27, 1998, Robinson-Humphrey observed that
more than 49% of the outstanding shares were traded in a price range of $8.00
to $12.40. Over the period from January 1, 1997 to March 27, 1998,
Robinson-Humphrey observed that more than 61% of the outstanding shares were
traded in a price range of $8.00 to $12.40.
Valuation Summary of Selected Comparable Publicly-Traded Companies.
Robinson-Humphrey reviewed and compared certain financial, operating and stock
market information of the Company and two groups of publicly-traded companies
in the network solutions industry. The Network Analysis publicly-traded
companies included in Robinson-Humphrey's analysis were Applied Digital Access,
Inc., Concord Communications, Inc., Digital Lightwave, Inc., Hewlett-Packard
Company, Network Associates, Inc., RADCOM Ltd., Tekelec, Inc. and Tektronix,
Inc. The Network Management and Equipment publicly-traded companies included in
Robinson-Humphrey's analysis were the Network Analysis companies plus Dynatech
Corp., Fluke Corp., GenRad, Inc., Keithley Instruments, Inc., MicroTest, Inc.,
Objective Systems Integrators, Inc., Retix Corp., TCSI Corporation, Teradyne,
Inc., Bay Networks, Inc., Cabletron Systems, Inc., Cisco Systems, Inc. and 3Com
Corp. The Network Analysis publicly-traded companies included in
Robinson-Humphrey's analysis were selected because these companies offer test,
measurement, diagnostic and monitoring products for local and wide area data
networks that compete with the Company's product offerings. Alternatively, the
Network Management and Equipment publicly-traded companies included in
Robinson-Humphrey's analysis were selected because certain of these companies
offer test, measurement and monitoring products for the networking and
telecommunications industries, have financial profiles similar to the Company
and offer a broad range of networking products, an industry in which the
Company also competes.
Robinson-Humphrey calculated, among other things, current market price as
a multiple of: (i) book value; (ii) calendar 1997 earnings per share ("EPS");
(iii) estimated calendar 1998 EPS; and (iv) estimated calendar 1999 EPS. The
calendar 1998 and 1999 EPS estimates were based on the mean of publicly
available earnings estimates made by research analysts as provided by First
Call Investor Service. In addition, Robinson-Humphrey calculated, for each of
the publicly-traded companies, firm value (market capitalization plus debt
minus cash) as a multiple of: (i) calendar 1997 revenues; (ii) calendar 1997
EBITDA; and (iii) calendar 1997 EBIT. Robinson-Humphrey averaged the multiples
of the publicly-traded comparable companies in order to apply these multiples
to the Company's values. To accurately reflect average values for statistical
purposes, Robinson-Humphrey excluded certain outlying values that differed from
the relative groupings of the other values. Robinson-Humphrey believes that
these outlying values for certain companies reflect temporary market
aberrations that can skew mean values.
The calendar 1997 price/earnings ratios for the Network Analysis companies
ranged from 18.9x to 61.1x, with an average of 34.6x. The calendar 1997
price/earnings ratios for the Network Management and Equipment companies ranged
from 11.2x to 137.5x, with an average of 30.1x. Robinson-Humphrey noted that
the Company incurred a net loss in calendar 1997 and therefore its calendar
1997 price/earnings ratio was not meaningful.
The estimated calendar 1998 price/earnings ratios for the Network Analysis
companies ranged from 16.4x to 76.6x, with an average of 33.5x. The estimated
calendar 1998 price/earnings ratios for the Network Management and Equipment
companies ranged from 9.1x to 210.4x, with an average of 27.9x. Based on the
Cash Merger Consideration and using the
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Average Income Projections for the Company, Robinson-Humphrey calculated a
price/earnings multiple of 44.8x for the Company for calendar 1998.
The estimated calendar 1999 price/earnings ratios for the Network Analysis
companies ranged from 9.5x to 37.7x, with an average of 23.3x. The estimated
calendar 1999 price/earnings ratios for the Network Management and Equipment
companies ranged from 9.5x to 37.7x, with an average of 20.7x. Based on the
Cash Merger Consideration and using the Average Income Projections for the
Company, Robinson-Humphrey calculated a price/earnings multiple of 18.3x for
the Company for calendar 1999.
The current market value to book value multiples for the Network Analysis
companies ranged from 2.0x to 11.9x, with an average of 6.0x. The current
market value to book value multiples for the Network Management and Equipment
companies ranged from 1.4x to 12.8x, with an average of 5.3x. Robinson-Humphrey
noted that the Cash Merger Consideration implied a multiple of pro forma book
value of 3.6x for the Company.
The firm value to calendar 1997 revenue multiples for the Network Analysis
companies ranged from 1.18x to 15.85x, with an average of 3.36x. The firm value
to calendar 1997 revenue multiples for the Network Management and Equipment
companies ranged from 0.59x to 15.85x, with an average of 2.79x. Based on the
Cash Merger Consideration, Robinson-Humphrey calculated a firm value to
calendar 1997 revenue multiple of 1.48x for the Company. The firm value to
calendar 1997 EBITDA multiples for the Network Analysis companies ranged from
10.9x to 66.9x, with an average of 22.8x. The firm value to calendar 1997
EBITDA multiples for the Network Management and Equipment companies ranged from
4.7x and 66.9x, with an average of 16.6x. The firm value to calendar 1997 EBIT
multiples for the Network Analysis companies ranged from 14.9x to 92.3x, with
an average of 28.7x. The firm value to calendar 1997 EBIT multiples for the
Network Management and Equipment companies ranged from 6.0x to 92.3x, with an
average of 22.4x. Robinson-Humphrey noted that the Company incurred negative
EBITDA and an operating loss in calendar 1997 and therefore it could not
calculate firm value to calendar 1997 EBITDA or EBIT multiples for the Company.
Discounted Cash Flow Analysis. Robinson-Humphrey performed a discounted
cash flow analysis using the Average Income Projections for the Company for
fiscal years 1998 through 2001. For the purpose of completing the discounted
cash flow analysis, Robinson-Humphrey projected financial results for the
Company for fiscal year 2002, assuming 20% revenue growth from fiscal year 2001
revenue and margins equivalent to those margins projected by the Company for
fiscal year 2001. Using the discounted cash flow analysis, Robinson-Humphrey
estimated the present value of the future cash flows of the Company set forth
in these projections. Robinson-Humphrey calculated the net present value of
free cash flows (defined as earnings before interest after taxes plus
depreciation and amortization less capital expenditures and any increase in net
working capital) for the fiscal years ended September 30, 1998 through 2002
using discount rates ranging from 15.0% to 27.5%. Robinson-Humphrey calculated
the Company's terminal values in fiscal 2002, based on multiples ranging from
6.0x to 11.0x fiscal 2002 EBIT, with a point estimate of 8.0x fiscal 2002 EBIT.
The discounted cash flow analysis using a terminal value of 8.0x fiscal 2002
EBIT yielded a derived equity value of $15.64 per share for the Company.
Robinson-Humphrey also calculated the Company's terminal values in fiscal 2002,
based on multiples ranging from 4.0x to 7.0x fiscal 2002 EBITDA, with a point
estimate of 6.0x fiscal 2002 EBITDA. The discounted cash flow analysis using a
terminal value of 6.0x fiscal 2002 EBITDA yielded a derived equity value of
$14.84 per share for the Company. Robinson-Humphrey further calculated the
Company's terminal values in fiscal 2002, based on annual free cash flow growth
of 6.0% to 8.0%, with a point estimate of 7.0% annual growth of fiscal 2002
free cash flow. The discounted cash flow analysis using 7.0% annual growth of
fiscal 2002 free cash flow yielded a derived equity value of $8.37 per share.
Robinson-Humphrey noted that all three of the mid-point valuations derived
under the discounted cash flow analysis were lower than the Cash Merger
Consideration.
Comparable Merger and Acquisition Transaction Analysis. Robinson-Humphrey
reviewed and compared 21 selected mergers and acquisitions in the network
solutions industry with the Cash Merger Consideration in relation to certain
financial data of the Company. The transactions reviewed, included: (i) Bay
Networks, Inc.'s proposed acquisition of Netsation; (ii) Clayton Dubilier's
proposed acquisition of Dynatech Corp.; (iii) McAfee Associates, Inc.'s
acquisition of Network General Corp.; (iv) Tivoli Systems, Inc.'s acquisition
of Unison Software; (v) Network General Corp.'s acquisition of Cinco Networks,
Inc.; (vi) Ascend Communications, Inc.'s acquisition of Cascade Communications
Corp.; (viii) 3Com Corp.'s acquisition of US Robotics Corp.; (viii) Network
General Corp.'s acquisition of 3DV Technology; (ix) Compaq Computer Corp.'s
acquisition of Microcom, Inc.; (x) Dynatech Corp.'s acquisition of Itronix
Corp.; (xi) McAfee Associates, Inc.'s acquisition of FSA Corp.; (xii) Computer
Sciences Corp.'s acquisition of Continuum Co., Inc.; (xiii) McAfee Associates,
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Inc.'s acquisition of Vycor Corp.; (ixv) Dynatech Corp.'s acquisition of
Synergistic Solutions, Inc.; (xv) IBM Corp.'s acquisition of Tivoli Systems,
Inc.; (xvi) Microtest Inc.'s acquisition of Hotware, Inc.; (xvii) McAfee
Associates, Inc.'s acquisition of Saber Software Corp.; (xix) Microcom, Inc.'s
acquisition of Extension Technology Corp.; (xx) Sybase, Inc.'s acquisition of
Powersoft Corp.; and (xxi) McAfee Associates, Inc.'s acquisition of Brightwork
Development. Robinson-Humphrey calculated, among other things, equity purchase
price as a multiple of: (i) book value; (ii) historical net income; and (iii)
projected net income, and firm value (equity purchase price plus debt less
cash) as a multiple of: (i) revenues; (ii) EBITDA; and (iii) EBIT.
Robinson-Humphrey also calculated the premiums paid on the closing price of the
target's shares at one day, one week and four weeks prior to the announcement.
Robinson-Humphrey averaged the multiples for the comparable merger and
acquisition transactions in order to apply these multiples to the Company's
values. To accurately reflect average values for statistical purposes,
Robinson-Humphrey excluded certain outlying values that differed from the
relative groupings of the other values. Robinson-Humphrey believes that these
outlying values for certain companies reflect temporary market aberrations that
can skew mean values.
The equity purchase price to historical net income multiples ranged from
21.2x to 306.7x, with an average of 38.2x. The firm value to EBITDA multiples
ranged from 9.9x to 144.8x, with an average of 18.0x. The firm value to EBIT
multiples ranged from 12.6x to 213.3x, with an average of 22.7x.
Robinson-Humphrey noted that the Company had negative EBITDA, an operating loss
and a net loss in calendar 1997 and therefore calculations of the Cash Merger
Consideration to these valuation parameters were not meaningful.
The equity purchase price to book value multiples ranged from 2.4x to
17.3x, with an average of 7.7x. Robinson-Humphrey noted that the Cash Merger
Consideration implied a multiple of 3.6x book value for the Company. The firm
value to revenues multiples ranged from 1.08x to 16.78x, with an average of
3.32x. Robinson-Humphrey noted that the Cash Merger Consideration implied a
multiple of 1.48x calendar 1997 revenues for the Company.
The purchase price to estimated current year net income multiples ranged
from 20.4x to 182.7x, with an average of 34.1x. Robinson-Humphrey noted that
the Cash Merger Consideration as a multiple of fiscal 1998 net income under the
Average Income Projections implied a multiple of 68.9x for the Company. The
purchase price to estimated forward year net income multiples ranged from 15.7x
to 101.1x, with an average of 23.1x. Robinson-Humphrey noted that the Cash
Merger Consideration as a multiple of fiscal 1999 net income under the Average
Income Projections implied a multiple of 21.9x for the Company.
Robinson-Humphrey calculated per share premiums at one day, one week and
four weeks prior to announcement, respectively, for ten selected mergers and
acquisitions in the network solutions industry which involved the acquisition
of a publicly traded company. The per share premiums at one day prior to
announcement ranged from 9.1% to 54.8%. The per share premiums at one week
prior to announcement ranged from 13.2% to 91.2%. The per share premiums at
four weeks prior to announcement ranged from 0.4% to 49.8%. Robinson-Humphrey
also calculated average per share premiums of 28.6%, 27.7% and 35.7% at one
day, one week and four weeks prior to announcement, respectively. These
premiums, based on the Company's announcement date of November 19, 1997, imply
per share equity values for the Company of $12.86, $12.13 and $14.25,
respectively, as compared to the Cash Merger Consideration.
Minority Interest Buy-Out Analysis. Robinson-Humphrey prepared an analysis
of the premiums paid in 41 pending and completed minority interest acquisitions
by majority interest holders occurring since June 1992. Such transactions were
(i) Koninklijke KNPBT NV/BT Office Products International, Inc.; (ii) Rayonier
Inc./Rayonier Timberlands LP; (iii) Texas Industries, Inc./Chaparral Steel Co.;
(iv) Orion Capital Corp./Guaranty National Corp.; (v) Gold Kist/Golden Poultry
Company; (vi) Anthem, Inc./Accordia, Inc.; (vii) National Patent
Development/General Physics Corp.; (viii) Mafco Holdings, Inc./Mafco
Consolidated Group; (ix) JW Childs Equity Partners/Central Tractor Farm &
Country; (x) Andrews Group, Inc./Toy Biz, Inc.; (xi) Monsanto Co./Calgene,
Inc.; (xii) Renco Group, Inc./WCI Steel Inc.; (xiii) Electromagnetic Sciences/
LXE, Inc.; (xiv) CUS Acquisition, Inc./Customedix Corp.; (xv) Chemed
Corp./Roto-Rooter, Inc.; (xvi) Seaboard Acquisition Partners/Seaboard Oil Co.;
(xvii) Novartis AG/SyStexix, Inc.; (xviii) Equity Holdings Ltd./Great American
Mgmt & Inv. Inc.; (xix) COBE Laboratories/REN Corp-USA; (xx) Investor Group/NCP
International; (xxi) Genzyme Corp./IG Laboratories, Inc. (xxii) SCOR/SCOR US
Corp.; (xxiii) Investor Group/Syms Corp.; (xxiv) Berkshire Hathaway, Inc./GEICO
Corp.; (xxv) Club Meditarranee SA/Club Med Inc.; (xxvi) BIC SA/Bic Corp.;
(xxvii) Fleet Financial Group, Inc./Fleet Mortgage Group, Inc.; (xxviii) Dole
Food Co., Inc./Castle & Cooke Homes, Inc. (xxix) LinPac Mouldings Ltd./Ropak
Corp.; (xxx) Freeman Spogli & Co./Koll Management Services; (xxxi) Investor
Group/LDB Corp.; (xxxii) Investor Group/Enquirer Star Group, Inc.; (xxxiii)
Investor Group/Forum Group, Inc.; (xxxiv) REMEC, Inc./Humphrey, Inc.; (xxxv)
New Marvel Holdings, Inc./Marvel Entertainment Group, Inc.; (xxxvi) Dundee
Bancorp International/Avalon Corp.; (xxxvii) National Mutual Insurance Co.;
(xxxviii) Investor Group/United Medical Corp.; (xxxix) Investor Group/Fretter
Inc.; (xl) WR Grace & Co./Grace Energy Corp.; (xli) Katy Holdings/Katy
Industries, Inc.
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Robinson-Humphrey considered, among other factors, the percentage of the
target's shares held by the acquirer at the time of the announcement, and the
premiums paid based on the closing price of the target's shares at one day, one
week and four weeks prior to the announcement. The per share premiums at one
day prior to announcement ranged from 1.2% to 107.5%. The per share premiums at
one week prior to announcement ranged from 4.2% to 107.5%. The per share
premiums at four weeks prior to announcement ranged from 3.6% to 143.5%.
Robinson-Humphrey also calculated average per share premiums of 30.4%, 35.1%
and 38.7% at one day, one week and four weeks prior to announcement,
respectively. These premiums, based on the announcement date of November 19,
1997, imply per share equity values for the Company of $13.04, $12.83 and
$14.56, respectively, as compared to the Cash Merger Consideration of $15.90
per share.
Summary
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analysis or of the summary set forth above, without considering
the analysis as a whole, could create an incomplete view of the process
underlying Robinson-Humphrey's opinion. In arriving at its fairness
determination, Robinson-Humphrey considered the results of all such analyses.
Robinson-Humphrey did not separately consider the extent to which any one of
the analyses supported or did not support the Robinson-Humphrey fairness
opinion. No company or transaction used in the above analyses as a comparison
is identical to the Company. The analyses were prepared solely for purposes of
enabling Robinson-Humphrey to provide its opinion to the Special Committee as
to the fairness of the Cash Merger Consideration to be received by the Public
Shareholders in the Merger and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable
than suggested by such analyses. Because such analyses are inherently subject
to uncertainty, being based upon numerous factors or events beyond the control
of the parties or their respective advisors, none of the Company, WG Holding,
Robinson-Humphrey or any other person assumes responsibility if future results
are materially different from those forecast.
As described above, the Robinson-Humphrey opinion was one of the factors
taken into consideration by the Special Committee in making its determination
to recommend that the Board approve the Merger Agreement. The foregoing summary
does not purport to be a complete description of all of the analyses performed
by Robinson-Humphrey, but does include a summary description of all material
analyses, and is qualified by reference to the Robinson-Humphrey opinion set
forth in Appendix B hereto.
Robinson-Humphrey, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and other valuation services. The Special Committee selected
Robinson-Humphrey as financial advisor to the Special Committee because it is a
nationally recognized investment banking firm that has substantial experience
in transactions similar to the Merger and because of Robinson-Humphrey's
historical investment banking relationship with the Company.
Pursuant to a letter agreement dated December 24, 1997 (the "Engagement
Letter"), the Special Committee engaged Robinson-Humphrey to act as its
financial advisor in connection with any transaction that might be proposed by
WG Holding to acquire the shares of the Company's outstanding Common Stock held
by the Public Shareholders. Pursuant to the terms of the Engagement Letter, the
Company paid Robinson-Humphrey a noncontingent fee of $250,000. In addition,
the Company has agreed to reimburse Robinson-Humphrey for its reasonable
out-of-pocket expenses, including attorney's fees, and to indemnify
Robinson-Humphrey against certain liabilities, including certain liabilities
under the federal securities laws.
A copy of the Robinson-Humphrey Evaluation Report provided to the Board at
the March 28 meeting has been filed as an exhibit to the Schedule 13E-3. See
"Available Information." Such materials are available for inspection and
copying at the principal executive offices of the Company during its regular
business hours by any shareholder or any representative of a shareholder who
has been so designated in writing. A copy of such materials will be provided to
any shareholder or any representative of the shareholder who has been so
designated in writing upon written request and at the expense of the requesting
shareholder or representative.
Position of WG Holding as to Fairness of the Merger
General.
WG Holding has concluded that the Merger and the Cash Merger Consideration
are fair to the Public Shareholders based upon the following factors: (i) its
familiarity with the Company and its prospects; (ii) the conclusions and
recommendations of the Special Committee and the Board; (iii) the analyses set
forth in the reports prepared by Broadview, which
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reports are summarized below; (iv) the fact that the Cash Merger Consideration
and the other terms and conditions of the Merger Agreement were the result of
good faith, arm's length negotiations between the Special Committee and its
advisors and the representatives of WG Holding and its advisors; and (v) the
fact that Robinson-Humphrey issued a fairness opinion to the Special Committee
to the effect that the Cash Merger Consideration is fair to the Public
Shareholders from a financial point of view. See " -- Opinion of Special
Committee's Financial Advisor;" " -- Background of the Merger."
WG Holding believes that the manner in which the Merger was considered by
the Company was procedurally fair to the Public Shareholders because (i) the
Special Committee was formed to promote and protect the interests of the Public
Shareholders; (ii) the Special Committee was comprised solely of directors who
are neither employees of the Company nor employees or directors of WG Holding
or WGMC; (iii) all of the members of the Special Committee concluded that the
Merger was substantively and procedurally fair to the Public Shareholders and
voted in favor of the Merger; (iv) the Special Committee retained an
independent financial advisor and independent legal counsel; and (v) the
negotiations between WG Holding and the Special Committee were conducted on an
arm's length basis over the course of several months. In light of the above
factors, WG Holding believes that the Merger was procedurally fair even though
the Merger is not conditioned upon the favorable vote of a majority of the
Public Shareholders.
In reaching the conclusion that the Merger and the Cash Merger
Consideration are fair to the Public Shareholders, WG Holding placed
significant reliance upon the analyses of Broadview, which are summarized
below, and upon the fact that the Cash Merger Consideration and other terms of
the Merger Agreement were the result of arm's length negotiations with the
Special Committee. The recommendations and conclusions of the Special Committee
and the fairness opinion of Robinson-Humphrey supported the conclusions of WG
Holding with respect to the fairness. The factors set forth above include all
material factors considered by WG Holding in concluding that the Merger and
Cash Consideration are fair to the Public Shareholders. WG Holding recognizes
that the interests of WG Holding in the Merger are not the same as the
interests of the Public Shareholders and the foregoing should not be construed
as a recommendation by WG Holding to vote to approve the Merger Agreement. See
" -- Interests of Certain Persons in the Merger" and " -- Certain
Relationships."
Reports of WG Holding's Financial Advisor.
WG Holding retained Broadview to act as its financial advisor in
connection with the Merger. On December 23, 1997, Broadview submitted to WG
Holding the December Broadview Report relating to the possible acquisition by
WG Holding of the equity in the Company not already held by WG Holding.
On March 9, 1998, Broadview submitted the March Broadview Report to WG
Holding which discussed additional information received after the December
Broadview Report. All material analyses performed by Broadview in connection
with the December Broadview Report and the March Broadview Report are discussed
below and are presented in full in the Schedule 13E-3 as exhibits (b)(3) and
(b)(4) thereto.
In connection with preparing the December Broadview Report, Broadview
reviewed the Company's filings with the Commission, the Company's share price
history and current market rating, equity research reports on the Company,
other publicly available information on the Company, information gathered
during Broadview's discussions with the Company's management, information on
publicly traded competitors, information on transactions involving comparable
target companies and information on comparable minority buy-backs. In addition,
the December Broadview Report relied upon the Preliminary Forecasts provided to
Broadview by the Company's management team during the due diligence meeting on
December 18, 1997. See " -- Background of the Merger". The forecasts used by
Broadview in the December Broadview Report did not include any effects of the
Tinwald or Network Intelligence acquisitions which were pending at the time.
The effects of these pending acquisitions were not included because Broadview
concluded that the acquisitions were at an early stage and may or may not have
ultimately been consummated. The December Broadview Report includes discussion
materials on the Company's business and financial outlook and a number of
separate analyses which Broadview relied upon in developing a recommended per
share valuation range for the Company. The following is a summary of the
analyses performed by Broadview in connection with the December Broadview
Report.
Discounted Cash Flow Analysis. Broadview performed an analysis of the
Company's projected future free cash flows in order to obtain a valuation range
for the Company's shares. The analysis was based on the financial forecasts
discussed above and data gathered concerning the worldwide test and measurement
market. A sensitivity analysis was performed applying a range of discount rates
and terminal values. The discounted cash flow analysis provided a range for the
Company's share price from $10.78 per share to $12.82 per share.
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Peer Group Performance and Trading Analysis. Broadview analyzed certain
market, balance sheet and performance data for the Company and compared this
information to comparable data for seven other public test and measurement
companies (the "Peer Group"). The Peer Group included the following companies:
Dynatech Corp., Fluke Corp., IFR Systems, Keithley Instruments, Inc., Lecroy,
Tekelec, Inc., and Tektronix, Inc. These companies were selected as comparables
based on the following criteria: (i) their activities focused on the test and
measurement market, (ii) they had similar product portfolios, (iii) they had
comparable business models and (iv) they were established vendors. The
comparisons were based on financial data as of and for the twelve month
reporting periods prior to December, 1997 for both the Company and its Peer
Group.
Broadview calculated various valuation multiples for the Peer Group which
included multiples of trailing twelve month ("TTM") revenue as of based on each
Peer Group's last available financial statements as of the beginning of
December, 1997, EBITDA, projected calendar 1998 earnings and projected calendar
1999 earnings. The range of multiples of Total Market Capitalization ("TMC")
divided by TTM revenue for the Peer Group had a maximum of 6.63 which
corresponded to a value for the Company's common stock of $71.16 per share, a
minimum of 0.5 which corresponded to a value of $7.71 per share, an average of
1.92 which corresponded to a value of $22.41 per share and a median of 1.14
which corresponded to a value of $14.38 per share. The range of multiples of
TMC divided by EBITDA for the Peer Group had a maximum of 31.4 which
corresponded to a value for the Company's common stock of $13.09 per share, a
minimum of 6.1 which corresponded to a value of $4.58 per share, an average of
13.5 which corresponded to a value of $7.07 per share and a median of 8.3 which
corresponded to a value of $5.32 per share. The range of multiples of Equity
Market Capitalization ("EMC") divided by projected calendar 1998 earnings for
the Peer Group had a maximum of 38.7 which corresponded to a value for the
Company's common stock of $18.45 per share, a minimum of 12.5 which
corresponded to a value of $5.96 per share, an average of 17.7 which
corresponded to a value of $8.44 per share and a median of 13.1 which
corresponded to a value of $6.23 per share. The range of multiples of EMC
divided by projected calendar 1999 earnings for the Peer Group had a maximum of
26.7 which corresponded to a value for the Company's common stock of $23.03 per
share, a minimum of 10 which corresponded to a value of $8.63 per share, an
average of 14.1 which corresponded to a value of $12.16 per share and median of
11.2 which corresponded to a value of $9.66 per share. By applying the median
valuation multiples of the Peer Group (which included multiples of TTM revenue,
EBITDA, projected calendar 1998 earnings and projected calendar 1999 earnings)
to the relevant Company figures, this analysis indicated a valuation range for
the Company of between $9.65 per share to $11.29 per share.
Comparable Acquisitions Analysis. Broadview performed an analysis of
prices paid in merger, acquisition and investment transactions announced since
January 1992 involving test and measurement companies with similar businesses
and financial profiles. The transactions selected were: McAfee Associates
Inc.'s acquisition of Network General Corp. in December, 1997; Thermo Electron
Corp.'s (Thermo Power Corp.) acquisition of Peek plc in October, 1997;
Tektronix Inc.'s acquisition of Siemens AG (Siemens Communications Test
Equipment) in September, 1997; Investors backed by Donaldson, Lufkin & Jenrette
and Green Equity Funds' acquisition of Wavetek Corporation in May, 1997;
Bowthorpe plc's acquisition of Adtech Inc. in May, 1997; Ametek Inc.'s
acquisition of Technitrol Inc. (T&M Product Segment) in April, 1997; Dynatech
Corp.'s acquisition of Tele-Path Industries Inc. in August, 1995; GN Great
Nordic A/S's (GN Great Nordic Ltd.) acquisition of Laser Precision Corp. in
November, 1994; and IFR Systems Inc.'s acquisition of Photon Kinetics Inc. in
February, 1992 and acquisitions of two companies known to Broadview on a
confidential basis including a manufacturer of hardware test equipment for
voice and data networks and a manufacturer of hardware test equipment for data
networks. Broadview calculated various valuation multiples for these
transactions which included multiples of TTM revenue and TTM EBITDA. The range
of multiples of adjusted price divided by TTM revenue for these transactions
had a maximum of 6.40 which corresponded to a value for the Company's common
stock of $68.78 per share, a minimum of 0.62 which corresponded to a value for
the Company's common stock of $68.78 per share, a minimum of 0.62 which
corresponded to a value of $8.95 per share, an average of 2.24 which
corresponded to a value of $25.72 per share and a median of 1.25 which
corresponded to a value of $15.44 per share. The range of multiples of adjusted
price divided by TTM EBITDA for these transactions had a maximum of 23.2 which
corresponded to a value for the Company's common stock of $10.33 per share, a
minimum of 9.2 which corresponded to a value of $5.63 per share, an average of
14.1 which corresponded to a value of $7.27 per share and a median of 9.7 which
corresponded to a value of $5.81 per share. Median of multiples or revenue and
EBITDA were applied to the relevant Company data to arrive at a valuation
range. This range was $5.81 per share to $15.44 per share.
Control Premium Analysis. Broadview performed an analysis of public
takeover transactions in the United States, public takeover transactions in the
technology sector in the United States and transactions involving the purchase
of publicly held minority interests by a majority shareholder. The premiums
were determined relative to the target's share price one, twenty and sixty
trading days prior to announcement. This analysis indicated a premium range of
9% to 27% on the share price twenty trading days prior to announcement, the
most relevant measure for valuation purposes. When applied to
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the Company's share price prior to the public announcement of a possible
transaction, this indicated a valuation range for the Company from $10.86 per
share to $12.70 per share.
Based on these analyses, the December Broadview Report recommended that
any offer by WG Holding to acquire the remaining equity in the Company be in
the range of $12.00 to $13.50 per share. The December Broadview Report also
noted that the present and the past performance of the Company indicated that
the Company could face a number of significant challenges in the near and
long-term future which could materially affect its business and financial
performance.
After delivery of the WG Holding Proposal to the Special Committee,
Broadview had discussions with Robinson-Humphrey during January, February and
March 1998 with respect to certain principles and methodologies underlying the
valuation of the Company. Broadview also met with the Company's management team
on February 24, 1998 to discuss and gather further information on the financial
and operational outlook for the Company. In particular, Broadview obtained
additional information regarding the financial impact of the acquisition of
Tinwald, the timing and strategy of the Company's new product launches
necessary to sustain the forecasted growth by management, and the Company's
ongoing negotiations to acquire Network Intelligence. At this meeting,
Broadview also discussed with the Company's management the Base Income
Projections. The Company also provided Broadview with detailed historical,
year-to-date and projected financial data, including statistics related to
revenue and profitability by product as well as the Company's order book. Based
on the historical data provided by the Company, Broadview performed sensitivity
analyses with respect to the Base Income Projections. As a result of these
analyses and its review of the information provided by the Company and, with
the assistance of WG Holding, Broadview adjusted the Base Income Projections to
reflect potential delays in product releases, increased spending in connection
with establishing a sales and marketing infrastructure and accelerating
research and development expenses and, based on these contingencies, qualified
with the assistance of WG Holding, prepared the Adjusted Income Projections.
See "Certain Forward Looking Information."
Based on this additional information, on March 9, 1998, Broadview
submitted additional discussion materials (the "March Broadview Report") to WG
Holding which discussed the most recent information and reviewed results of
various valuation analyses based on the Adjusted Income Projections. The March
Broadview Report included a number of analyses which separately reviewed the
analyses included in the December Broadview Report. The following is a summary
of the analyses performed by Broadview in the March Broadview Report.
Discounted Cash Flow Analysis. Broadview performed an analysis of the
Company's forecasted future free cash flows in order to obtain a valuation
range for the Company's shares. The analysis was based on the Adjusted Income
Projections and data gathered concerning the worldwide test and measurement
market. A sensitivity analysis was performed applying a range of discount rates
and terminal values. The discounted cash flow analysis provided a range for the
Company's share price from $11.61 per share to $14.16 per share.
Peer Group Performance and Trading Analysis. Broadview analyzed certain
market, balance sheet and performance data for the Company and compared this
information to comparable data for eight public test and measurement and
network management software companies (the "Peer Group"). The Peer Group
included the following companies: Applied Digital Access, Inc., IFR Systems,
Network Associates, Fluke Corp., Keithley Instruments, Inc., Lecroy, Tekelec,
Inc. and Tektronix, Inc. These companies were selected as comparables because
the majority of their activities focused on the T&M and NMS (Network Management
Software) market and their respective business models were comparable. The
comparisons were based on financial data as of and for the twelve month
reporting periods prior to February, 1998 for both the Company and its Peer
Group.
Broadview calculated various valuation multiples for the Peer Group which
included multiples of TTM revenue as of based on each company's last available
financial statements as of the end of February, 1998, EBITDA, projected
calendar 1998 earnings and projected calendar 1999 earnings. The range of
multiples of TMC divided by TTM revenue for the Peer Group had a maximum of
9.12 which corresponded to a value for the Company's common stock of $94.70 per
share, a minimum of 0.43 which corresponded to a value of $5.75 per share, an
average of 3.02 which corresponded to a value of $32.26 per share and a median
of 1.41 which corresponded to a value of $15.82 per share. The range of
multiples of TMC divided by EBITDA for the Peer Group had a maximum of 43.18, a
minimum of 5.98, an average of 14.85 and a median of 8.81. As a result of WGTI
having negative TTM EBITDA, these multiples of EBITDA had no meaningful
corresponding values for the Company's common stock. The range of multiples of
EMC divided by projected calendar 1998 earnings for the Peer Group had a
maximum of 45.06, a minimum of 13.63, an average of 22.11 and a median of
16.44. As a result of WGTI having negative projected calendar 1998 earnings,
these multiples of projected calendar 1998 earnings had no meaningful
corresponding values for the Company's common stock. The range of multiples of
EMC divided by projected
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calendar 1999 earnings for the Peer Group had a maximum of 32.67 which
corresponded to a value of the Company's common stock of $17.39 per share, a
minimum of 11.54 which corresponded to a value of $6.14 per share, an average
of 17.49 which corresponded to a value of $9.31 per share and a median of 13.8
which corresponded to a value of $7.34 per share. By applying the valuation
multiples of the Peer Group (which included multiples of TTM revenue and
projected calendar 1999 earnings) to the relevant Company figures, this
analysis indicated a valuation range for the Company from $7.34 per share to
$15.82 per share.
Comparable Acquisitions Analysis. Broadview performed an analysis of
prices paid in merger, acquisition and investment transactions announced since
January 1992 involving test and measurement companies with similar businesses
and financial profiles. The transactions selected were: IFR Systems Inc.'s
acquisition of GEC (Marconi Instruments Ltd.) in January, 1998; McAfee
Associates Inc.'s acquisition of Network General Corp. in December 1997;
Investors' (Clayton, Dubilier and Rice) acquisition of Dynatech Corp. in
December 1997; GN Great Nordic A/S's (GN Nettest) acquisition of Siemens AG
(Siemens OTE, Inc.) in November 1997; Thermo Electron Corp.'s (Thermo Power
Corp.) acquisition of Peek plc in October 1997; Tektronix Inc.'s acquisition of
Siemens AG (Siemens Communications Test Equipment) in September 1997; Investors
backed by Donaldson, Lufkin & Jenrette and Green Equity Funds' acquisition of
Wavetek Corp. in May 1997; Bowthorpe plc's acquisition of Adtech Inc. in May
1997; Dynatech Corp.'s acquisition of Tele-Path Industries Inc. in August 1995;
GN Great Nordic A/S's (GN Great Nordic Ltd.) acquisition of Laser Precision
Corp. in November 1994; IFR Systems Inc.'s acquisition of Photon Kinetics Inc.
in February 1992; and acquisitions of three companies known to Broadview on a
confidential basis including a manufacturer of hardware test equipment for a
voice and data networks, a manufacturer of hardware test equipment for data
networks and a manufacturer of software test equipment for a voice and data
networks. Broadview calculated various valuation multiples for these
transactions which included multiples of TTM revenue and TTM EBITDA. The range
of multiples of adjusted price divided by TTM revenue for these transactions
had a maximum of 7.13 which corresponded to a value for the Company's common
stock of $74.33 per share, a minimum of 0.62 which corresponded to a value of
$7.69 per share, an average of 2.36 which corresponded to a value of $25.51 per
share and a median of 1.25 which corresponded to a value of $14.11 per share.
The range of multiples adjusted price divided by TTM EBITDA for these
transactions had a maximum of 23.25, a minimum of 8.61, an average of 13.70 and
a median of 9.25. As a result of WGTI having negative TTM EBITDA, these
multiples of EBITDA had no meaningful corresponding values for the Company's
common stock. Median multiples of revenue and EBITDA were applied to the
relevant Company figures and, due to the lack of profitability of the Company,
a single point valuation estimate based on revenue was calculated. This
estimate was $14.11 per share.
Control Premium Analysis. Broadview performed an analysis of minority
buy-out transactions in the United States and the premium paid to minority
shareholders relative to the target's share price twenty and sixty trading days
prior to announcement of an intent to acquire the minority interests. These
precedent transactions indicated a median premium of 27% and 30%, respectively.
When applied to the Company's relevant share prices, this indicated a valuation
range for the Company from $13.36 per share to $14.18 per share.
Notwithstanding the separate factors which are summarized above, Broadview
believes that its analyses should be considered in their entirety and that
selecting portions of its analyses and only certain of the factors considered
by it, without considering all analyses and factors, could create an incomplete
view of the valuation process. The ranges of valuations resulting from any
particular analysis described above should not be taken to be Broadview's view
of the actual value of the Company.
In performing its analyses, Broadview made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of the Company. The analyses
performed by Broadview are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than those
suggested by such analyses. Broadview's various analyses indicated a price
range for the shares held by the Public Shareholders from $7.34 to $15.82 per
share.
The December Broadview Report and the March Broadview Report are not
fairness opinions and Broadview has not rendered an opinion with respect to the
fairness of the Cash Merger Consideration to the Public Shareholders from a
financial point of view.
Pursuant to a letter agreement dated December 5, 1997 (the "Broadview
Engagement Letter"), WG Holding engaged Broadview to act as its financial
advisor in connection with WG Holding's consideration of a transaction in which
WG Holding would acquire the shares of the Company's Common Stock not owned by
WG Holding. Broadview is a leading international investment banking firm
exclusively serving the IT, communications and media industries and is, as part
of its
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investment banking business, continually engaged in the valuation of businesses
and their securities, especially in the context of merger, acquisition and
investment transactions. Since October 1997, Broadview has been advising WG
Holding in connection with a business combination between WG Holding and
Wavetek Corporation. See " -- Conduct of the Company's Business After the
Merger." WG Holding engaged Broadview in connection with the potential
acquisition of the remaining equity in the Company based upon Broadview's
experience in the industry and WG Holding's existing relationship with
Broadview. Pursuant to the terms of the Broadview Engagement Letter, WG Holding
has agreed to pay Broadview a fixed fee of $300,000, which fee is payable in
the event a transaction is completed. WG Holding has also agreed to reimburse
Broadview for its reasonable out-of-pocket expenses, including attorneys' fees,
and to indemnify Broadview against certain liabilities, including certain
liabilities under the federal securities laws. In addition to the fees to be
paid to Broadview pursuant to the Broadview Engagement Letter, WG Holding has
agreed to pay Broadview a fee of $1,750,000 if the merger between WG Holding
and Wavetek is consummated, and WG Holding has agreed to reimburse Broadview
for its reasonable out-of-pocket expenses incurred in connection with its
services, including attorneys' fees, and to indemnify Broadview against certain
liabilities in connection with its financial advisory services relating to the
Wavetek merger.
Copies of the December Broadview Report and the March Broadview Report are
attached as exhibits to the Schedule 13E-3. See "Available Information." The
December Broadview Report and the March Broadview Report are also available for
inspection and copying at the principal offices of the Company during the
Company's regular business hours by any shareholder of the Company or such
shareholder's representative who has been so designated in writing. A copy of
such materials will be provided to any shareholder or any representative of the
shareholder who has been so designated in writing upon written request and at
the expense of the requesting shareholder or representative. The summaries set
forth herein do not purport to be a complete description of the December
Broadview Report and the March Broadview Report as set forth in the exhibits to
the Schedule 13E-3.
Purpose and Reasons for the Merger
The purpose of the Merger is to enable WG Holding, which currently owns
approximately 62% of the outstanding Common Stock, to acquire 100% of the
ownership of the Company pursuant to a transaction in which the Public
Shareholders will receive the Cash Merger Consideration. Among the worldwide
operations of WG Holding, the Company is the only entity controlled directly or
indirectly by WG Holding that is a public company with public shareholders
holding a minority equity interest. The Board believes that the respective
long-term business objectives of the Company and WG Holding can best be
achieved by more closely coordinating the activities and operations of the WG
Holding affiliated group of companies. In this regard, the Board believes that
the operations of the Company can be more efficiently integrated with the
worldwide operations of WG Holding as a private, wholly owned subsidiary. By
aligning the interest and ownership of the Company and the other WG Holding
affiliated companies, internationally coordinated programs for research and
development, product manufacturing, marketing and sales can be implemented. In
addition, the integration of the Company's operations with WG Holding's other
manufacturing and sales affiliates is expected to eliminate potential conflicts
of interest that now exist among the Company and other WG Holding affiliates
related to access to proprietary information and the allocation of the
benefits, through licensing agreements and other arrangements, of proprietary
product developments. The Board also believes that the integration of the
Company, as a private enterprise, into WG Holding is expected to provide the
Company with access to greater financial and technical resources that will
permit the Company to better meet the competitive demands of its industry which
increasingly entail shorter product life cycles, require larger amounts of
capital for product development and coordinated worldwide marketing and sales
efforts.
The determination by the Special Committee and the Board to recommend the
Merger at this time is a consequence of the opportunity afforded by WG
Holding's decision to propose a cash-out merger transaction in January 1998.
The Merger, and the opportunity it affords to consummate a transaction in which
the Public Shareholders will receive the Cash Merger Consideration in exchange
for their Common Stock, is the culmination of a three and one-half month period
of negotiation and analysis by the Special Committee on behalf of the Company,
commencing with the Special Committee's receipt of the WG Holding Proposal in
January 1998. In considering the advisability of the Merger, both the Special
Committee and the Board concluded that pursuing the Merger at this time would
be in the best interest of the Company and its shareholders. The transaction is
structured as a merger because WG Holding proposed this structure in January
1998. The Special Committee and the Board concluded that this structure was
more favorable to the Public Shareholders than other possible structures, such
as a tender offer by WG Holding followed by a cash-out merger, because it
allows the Merger Agreement and the relevant background and other information
relating to the Merger to be presented to the Public Shareholders in one proxy
statement and enables any Public Shareholder, if he wishes, to exercise
Dissenters' Rights to avail himself of this alternative method of determining
the "fair value" of the Common Stock he owns.
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Interests of Certain Persons in the Merger
In considering the recommendations of the Special Committee and the Board
with respect to the Merger Agreement, shareholders should be aware that certain
officers and directors of the Company are also officers and directors of WG
Holding or its affiliates or otherwise have interests in connection with the
Merger which may present them with actual or potential conflicts of interest as
summarized below. The Special Committee and the Board were aware of these
interests and considered them among the other matters described under "Special
Factors -- The Special Committee's and the Board's Recommendation." The Special
Committee and the Board believed that all such interests had been fully
disclosed and were of the view that none of such disclosed interests should
affect their conclusion and recommendations with respect to the Merger.
Directors Affiliated with WG Holding
Peter Wagner. Peter Wagner, a director of the Company, is the President,
Chief Executive Officer and a Managing Director of WG Holding, and is also an
officer and director of WGMC.
Rolf Schmid. Rolf Schmid, a director of the Company, is the Chief
Financial Officer and a Managing Director of WG Holding and an officer and
director of WGMC.
Joachim Simmross. Joachim Simmross, a director of the Company, is a member
of the Supervisory Board of WG Holding, which supervises and monitors the
management of WG Holding by its Managing Directors. In addition, Mr. Simmross
is a director of Hannover Finanz GmbH, an entity that owns approximately 27% of
WG Holding. Mr. Simmross holds an option to purchase 2,000 shares of Common
Stock at an exercise price of $14.31 per share. See " -- Treatment of Stock
Options."
Albrecht L. Wandel. Albrecht L. Wandel, the Chairman of the Board of
Directors of the Company, is the Chairman of the Supervisory Board of WG
Holding, and owns approximately 17% of WG Holding. Certain of Mr. Wandel's
family members also own interests in WG Holding. Mr. Wandel served as the
President, Chief Executive Officer and a Managing Director of WG Holding prior
to Mr. Wagner's appointment to that position in February 1998.
The Company's Chief Executive Officer
Gerry Chastelet. Gerry Chastelet, a director of the Company, is also the
President and Chief Executive Officer of the Company and an officer and
director of WGMC. Mr. Chastelet owns 1,257 shares of Common Stock and holds
options to purchase 109,000 shares of Common Stock with exercise prices of
$9.75 and $14.31 per share. See " -- Treatment of Stock Options."
Mr. Chastelet has an agreement with the Company that provides, among other
things, that if any person acquires more than 25% of the Company's outstanding
voting securities after December 31, 1995, he would be entitled to certain
benefits upon the termination of his employment, including a severance payment
equal to two times his annual salary and acceleration of the vesting of all of
his outstanding options. The Company and Mr. Chastelet have agreed that his
employment with the Company will terminate in the next few months and the
parties are negotiating the terms of a new agreement regarding the benefits he
will receive upon termination.
Members of Special Committee
Sidney Topol and Richard E. Pospisil were appointed to serve as members of
the Special Committee on November 18, 1997. Messrs. Topol and Pospisil have
served as directors of the Company since May 1994. Neither of these directors
are employees of the Company nor employees or directors of WG Holding or WGMC.
At the request of the Board, Mr. Pospisil served as the acting Chief Executive
Officer of the Company from September through November 1995 and was paid
$140,000 for his services. In addition, during the Company's fiscal year ended
September 30, 1996, Mr. Pospisil provided technical and managerial consulting
services to the Company and was paid $25,000 in consulting fees.
Pursuant to the Company's compensation policy for directors who are not
employees of the Company, Messrs. Topol and Pospisil each receive $17,000 per
year in directors' fees, payable quarterly, and $1,500 per day for attending
special Board meetings or special Board committee meetings held on days other
than the dates of regular or special Board meetings. Since October 1, 1996,
Messrs. Topol and Pospisil have each received a total of $42,000 in directors'
fees and per diem payments for attending special meetings of the Board and
Board committees.
For his service as Chairman of the Special Committee, the Company paid Mr.
Topol $50,000, and for his service as a member of the Special Committee, the
Company paid Mr. Pospisil $35,000. These payments to Messrs. Topol and Pospisil
29
<PAGE>
were not dependent upon a favorable recommendation by the Special Committee
respecting the Merger Agreement or successful consummation of the Merger. In
addition, the Company reimbursed Messrs. Topol and Pospisil for the
out-of-pocket expenses they incurred in performing services as members of the
Special Committee.
Each member of the Special Committee, as an outside director, is entitled
to participate in the Company's Outside Director Stock Option Plan (the
"Directors' Plan"), pursuant to which an option to purchase 2,000 shares is
automatically granted to an outside director upon his initial election to the
Board and an option to purchase 2,000 shares is automatically granted to an
outside director upon his annual re-election to the Board. As a result of
option grants under the Directors' Plan, Messrs. Topol and Pospisil each hold
options to purchase 7,000 shares of Common Stock at exercise prices ranging
from $9.25 to $14.31 per share. See " -- Treatment of Stock Options."
Indemnification
The Merger Agreement requires that the Company and WG Holding provide
indemnification for a period of six years from the Effective Time to the
current and former directors and officers of the Company against liabilities
(including reasonable attorneys' fees) relating to actions or omissions arising
out of such person's being a director, officer, employee or agent of the
Company at or prior to the Effective Time (including the transactions
contemplated by the Merger Agreement).
Treatment of Stock Options
Prior to the Effective Time, the Company has agreed, pursuant to the terms
of the Merger Agreement, to take all necessary action to cancel all outstanding
options to purchase Common Stock, whether or not exercisable. Upon the
surrender and cancellation of each such option after the Effective Time, each
holder thereof shall be entitled to receive an amount in cash equal to the
product of (i) the excess of $15.90 over the exercise price per share of Common
Stock issuable pursuant to such option and (ii) the number of shares of Common
Stock subject to such option at the time of such termination regardless of
whether such option is exercisable. See "The Merger -- Termination of the
Company Stock Options" and "Principal Shareholders and Stock Ownership of
Management." As of June 30, 1998, there were options outstanding to purchase an
aggregate of 798,800 shares of Common Stock at a weighted average exercise
price of $12.89 per share, which options were held by 252 persons.
Certain of the directors and executive officers of the Company hold
options to purchase Common Stock that will be terminated upon the effectiveness
of the Merger. The following table sets forth information as to the options
outstanding on June 30, 1998 held by each director and executive officer and
the cash payment that each of them will receive upon completion of the Merger.
<TABLE>
<CAPTION>
Options Outstanding
-----------------------------
Name of Holder Exercisable Unexercisable Cash Payment
- ----------------------------------- ------------- --------------- -------------
<S> <C> <C> <C>
Albrecht Wandel ............. -- -- --
Richard E. Pospisil ......... 4,400 2,600 $ 29,860
Gerry Chastelet ............. 41,729 67,271 510,750
Rolf Schmid ................. -- -- --
Joachim Simmross ............ -- 2,000 3,180
Sidney Topol ................ 4,400 2,600 29,860
Peter Wagner ................ -- -- --
E. Jay Bowers ............... 12,050 24,450 29,365
John T. Goehrke ............. 8,475 33,025 69,585
Adelbert Kuthe .............. 10,620 19,880 97,015
Richard L. Popp ............. 10,000 40,000 207,500
</TABLE>
30
<PAGE>
Market Prices of Common Stock and Dividends
The Common Stock is traded on the NASDAQ National Market (symbol: WGTI).
The following table sets forth the high and low closing prices of the Common
Stock for each quarterly period for the two most recent fiscal years and the
first three quarters of the current fiscal year.
<TABLE>
<CAPTION>
Fiscal Year Ended September 30,
---------------------------------------------------------------------
1996 1997 1998
---------------------- ----------------------- ----------------------
High Low High Low High Low
----------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
First Quarter .......... $ 13.25 $ 9.00 $ 31.50 $ 17.25 $ 13.75 $ 8.50
Second Quarter ......... 16.88 9.00 30.25 18.75 15.63 12.38
Third Quarter .......... 19.75 14.13 23.75 8.50 15.88 14.88
Fourth Quarter ......... 19.75 13.25 13.25 8.88
</TABLE>
On November 18, 1997, the last trading day prior to the announcement by
the Company of the formation of the Special Committee in anticipation of
receiving a possible proposal from WG Holding to acquire the outstanding Common
Stock not owned by WG Holding, the closing price per share of Common Stock as
reported by NASDAQ was $10.00. On January 9, 1998, the last trading day prior
to the announcement by the Company that WG Holding had submitted a proposal to
acquire, through a merger, all of the outstanding Common Stock of the Company
(other than the shares held by WG Holding) for a cash price of $13.00 per
share, the closing price per share of Common Stock reported by NASDAQ was
$12.63. On March 17, 1998, the last trading day prior to the announcement by
the Company that the Special Committee and WG Holding had reached an agreement
in principle on a cash price of $15.90 per share for the acquisition of the
shares of Common Stock not owned by WG Holding, the closing price per share of
Common Stock reported by NASDAQ was $13.13. On March 27, 1998, the last trading
day prior to the announcement of the execution of the Merger Agreement, the
closing price per share of Common Stock as reported by NASDAQ was $15.25. On
July , 1998, the last trading day prior to printing of this Proxy Statement,
the closing price per share of Common Stock as reported by NASDAQ was $ .
On July , 1998, the Company had approximately 1,300 shareholders of which
approximately 49 were record holders of Common Stock.
The Company has never paid any cash dividends on its Common Stock. Under
the Merger Agreement, the Company has agreed not to pay any dividends on the
Common Stock prior to the Effective Time.
Purchases of Common Stock by the Company and WG Holding
Since October 1, 1995, the Company has purchased 100,000 shares of Common
Stock at a price of $12 7/8 per share. This purchase occurred in an open market
transaction in December 1995. Since October 1, 1995, WG Holding has purchased
316,900 shares of Common Stock in open market transactions. Neither the Company
nor WG Holding have purchased Common Stock within sixty (60) days of the date
of this Proxy Statement.
The following table summarizes all purchases of Common Stock by WG Holding
from October 1, 1995 to the present:
<TABLE>
<CAPTION>
Range of Price Average Price
Number of Shares per Share Paid per Share Paid
Purchased During Quarter During Quarter
------------------ ---------------- ---------------
<S> <C> <C> <C>
Fiscal Year 1996-1st Qtr ........ 2,500 $ 10.00 $ 10.00
Fiscal Year 1997-1st Qtr ........ 13,500 $ 27.50-28.00 $ 27.80
Fiscal Year 1997-2nd Qtr ........ 65,500 $ 22.50-24.50 $ 24.10
Fiscal Year 1997-3rd Qtr ........ 130,100 $ 9.25-13.50 $ 11.71
Fiscal Year 1997-4th Qtr ........ 140,000 $ 9.44-12.75 $ 10.11
</TABLE>
Certain Relationships
A WG Holding affiliate (the "Processing Affiliate") provides certain order
processing, billing, currency conversion and collection services to the
Company. For these services, the Company pays the Processing Affiliate a
quarterly fee of 1.25% of the net wholesale price of products manufactured and
sold internationally by the Company and 0.7% of products sold by the Company in
the United States. The Company also pays WG Holding a license fee of 2.25% of
the net sales price of products manufactured and sold by the Company for the
right to use certain WG Holding trademarks. The Company incurred expenses of
$1,570,000 for the fiscal year ended September 30, 1996 ("Fiscal 1996"),
$1,361,000 for the fiscal year ended
31
<PAGE>
September 30, 1997 ("Fiscal 1997") and $703,000 for the six month period ended
March 31, 1998 (the "Interim Period") related to these services and license
fees.
The Company sells products internationally primarily to distributors
affiliated with WG Holding. The Company's revenues from sales to WG Holding
affiliates were $25,900,000 in Fiscal 1996, $25,545,000 in Fiscal 1997 and
$11,262,000 in the Interim Period. The Company also purchases products
manufactured by WG Holding affiliates for resale in the United States. The
Company purchased products from WG Holding affiliates in the amount of
$7,207,000 in Fiscal 1996, $9,365,000 in Fiscal 1997 and $8,000,200 in the
Interim Period.
The Company has marketing offices in Switzerland, Italy, Singapore and the
United Kingdom which are leased from WG Holding affiliates and staffed by
employees of several WG Holding affiliates. The Company paid such WG Holding
affiliates an aggregate of $712,000 in Fiscal 1996, $447,000 in Fiscal 1997 and
$347,000 in the Interim Period for rent and reimbursement of employee costs
associated with these offices.
In addition, the Company leases its corporate offices and manufacturing
facilities from W&G Associates, a North Carolina general partnership owned by
Frank Goltermann and certain members of his family who are also shareholders of
WG Holding. The Company paid W&G Associates rent of $1,153,000 in Fiscal 1996,
$1,221,000 in Fiscal 1997 and $578,000 in the Interim Period.
Certain Litigation
The Shareholder Litigation consists of five alleged class actions filed in
late January 1998 in the Superior Court of Durham County, North Carolina by
certain minority shareholders shortly after the Company's public announcement
of the receipt of the WG Holding Proposal. The plaintiffs (and the court file
numbers assigned to their respective actions) are: Crondon Capital Partners (98
CVS 145); Robin Kwalbrun (98 CVS 148); Andrew Gordon (98 CVS 149); Stanley
Marketing, Inc. (98 CVS 248); and Charles Collins (98 CVS 303). The defendants
include the Company, its individual directors and, in certain of the actions,
WG Holding. The complaints allege that the defendants breached and will breach
their fiduciary duties owed to the Company's minority shareholders because the
WG Holding Proposal is "unfair and grossly inadequate" and, if accepted, will
usurp the benefits of the Company's growth and future prospects for the
defendants' own benefit. The relief sought in the complaints includes an
injunction barring the defendants from accepting the WG Holding Proposal, or,
if the WG Holding Proposal is accepted and the merger transaction proposed in
it is consummated prior to final judment, rescission of the transaction and an
award of damages. To date, the plaintiffs have filed no motions and have not
sought to enjoin the defendants pendente lite from accepting the WG Holding
Proposal. Moreover, the complaints have not been amended to assert any claims
based on the actual Cash Merger Consideration of $15.90 per share, but,
instead, continue to be based on the WG Holding Proposal of $13.00 per share.
To date, the parties have engaged in limited discovery, and the defendants have
filed motions to dismiss the Shareholder Litigation for failure to state a
claim upon which relief may be granted against the defendants. The Company, WG
Holding and the individual defendants who are currently directors of the
Company believe that the complaints are without merit and intend to contest the
lawsuits vigorously. See " -- The Special Committee's and the Board's
Recommendation -- The Special Committee."
Certain Effects of the Merger
As a result of the Merger, the current shareholders of the Company (other
than WG Holding) will not have an opportunity to continue their equity interest
in the Company and, therefore, will not share in the future earnings and
potential growth of the Company. Upon consummation of the Merger, the Common
Stock will no longer be traded on the NASDAQ National Market, price quotations
will no longer be available and the registration of the Common Stock under the
Exchange Act will be terminated. The termination of registration of the Common
Stock under the Exchange Act will eliminate the requirement to provide
information to the Commission and will make the provisions of the Exchange Act,
such as the short-swing profit recovery provisions of Section 16(b) and the
requirement of furnishing a proxy or information statement in connection with
shareholders meetings, no longer applicable.
Based on WG Holding's current percentage ownership of 62.1% of the
outstanding Common Stock, its interest in the Company's net book value was
approximately $19.0 million at September 30, 1997 and $14.9 million at March
31, 1998. Its interest in the Company's net earnings for the year ended
September 30, 1997 was approximately $260,000 and its interest in the Company's
net loss for the six months ended March 31, 1998 was $4.4 million. Assuming the
Merger had occurred on September 30, 1997 and March 31, 1998, respectively, and
WG Holding had owned all the Company's outstanding Common Stock as of such
dates, (i) WG Holding's pro forma interest in the Company's net book value at
September 30, 1997
32
<PAGE>
and March 31, 1998 would have been approximately $30.7 million and $23.9
million, respectively, (ii) its pro forma interest in the net earnings of the
Company for the year ended September 30, 1997 would have been approximately
$424,000, and (iii) its pro forma interest in the Company's net loss for the
six months ended March 28, 1998 would have been approximately $7.0 million.
At the Effective Time, WG Holding will contribute approximately $35
million to the Company and will own 100% of the equity interest in the Company.
WG Holding will be the sole beneficiary of any future earnings and growth of
the Company and will have the ability to benefit from any corporate
opportunities that may be pursued by the Company in the future. WG Holding will
also bear the risk of any decreases in the value of the Company.
The receipt of cash pursuant to the Merger will be a taxable transaction.
See "Federal Income Tax Consequences."
Conduct of the Company's Business after the Merger
Officers of WG Holding and the Company are continuing to evaluate the
Company's business, assets, practices, operations, properties, corporate
structure, capitalization, management and personnel and to discuss what
changes, if any, will be desirable. Subject to the foregoing, the Company and
WG Holding expect that the day-to-day business and operations of the Company
will be conducted substantially as they are currently being conducted by the
Company. WG Holding does not currently intend to dispose of any assets of the
Company, other than in the ordinary course of business. Additionally, other
than the recent mutual agreement between the Company and Mr. Chastelet
regarding the discontinuance of his service as the President and Chief
Executive Officer upon completion of the Merger, WG Holding does not currently
contemplate any material change in the composition of the Company's current
management, although, after the Merger, the Board of the Company will consist
of Messrs. Wagner and Schmid.
On June 15, 1998, WG Holding and Wavetek Corporation jointly announced
that they had entered into an agreement to merge the two companies. Wavetek
Corporation, headquartered in San Diego, California, is a privately owned
global designer, manufacturer and distributor of a broad range of electronic
test instruments, with a primary focus on application-specific instruments for
testing voice, video and data communications equipment and networks. WG
Holding's proposed business combination with Wavetek, which is subject to
regulatory approvals and certain other conditions, is unrelated to and will
have no effect on the Merger. If the Wavetek transaction is consummated, the
combined company's management will include officers of WG Holding and officers
of Wavetek and, such officers, will continue to evaluate the Company's
business, assets, practices, operations, properties, corporate structure,
capitalization, management and personnel to determine what, if any changes, may
be desirable at that time.
Certain Forward Looking Information
Certain projections that were furnished to the Special Committee and its
advisors and WG Holding and its advisors are included elsewhere in this Proxy
Statement under the heading "Certain Forward Looking Information."
33
<PAGE>
GENERAL INFORMATION ABOUT THE SPECIAL MEETING
Proxy Solicitation
This Proxy Statement is being delivered to the Company's shareholders in
connection with the solicitation by the Board of proxies to be voted at the
Special Meeting to be held on August , 1998 at 10:00 a.m., local time, at
. All expenses incurred in connection with solicitation of the
enclosed proxy will be paid by the Company. In addition to solicitation by
mail, officers, directors and regular employees of the Company, who will
receive no additional compensation for their services, may solicit proxies by
mail, telephone, telegraph or personal call. The cost of soliciting proxies
will be borne by the Company. The Company has requested brokers and nominees
who hold stock in their names to furnish this proxy material to their customers
and the Company will reimburse such brokers and nominees for their related
out-of-pocket expenses. This Proxy Statement and the accompanying proxy card
are being mailed to shareholders on or about July , 1998.
Record Date and Quorum Requirement
The Common Stock is the only outstanding voting security of the Company.
The Board has fixed the close of business on July , 1998 as the record date
(the "Record Date") for the determination of shareholders entitled to notice
of, and to vote at, the Special Meeting and any adjournment or adjournments
thereof. Each holder of record of Common Stock at the close of business on the
Record Date is entitled to one vote for each share then held on each matter
submitted to a vote of shareholders. At the close of business on the Record
Date, there were 5,288,809 shares of Common Stock issued and outstanding held
by approximately 1,300 shareholders, of which 49 were holders of record.
The holders of a majority of the outstanding shares entitled to vote at
the Special Meeting must be present in person or represented by proxy to
constitute a quorum for the transaction of business. Abstentions are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business.
Voting Procedures
Under North Carolina law, approval of the Merger Agreement will require
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote at the Special Meeting. A failure to vote or a
vote to abstain will have the same legal effect as a vote cast against
approval. Brokers and, in many cases, nominees will not have discretionary
power to vote on the proposal to be presented at the Special Meeting.
Accordingly, beneficial owners of shares should instruct their brokers or
nominees how to vote.
Under North Carolina law, holders of Common Stock who do not vote in favor
of the Merger Agreement and who comply with certain notice requirements and
other procedures will have the right to dissent and to be paid cash for the
"fair value" of their shares as finally determined under such procedures, which
may be more or less than the Cash Merger Consideration to be received by other
shareholders of the Company under the terms of the Merger Agreement. Failure to
follow such procedures precisely may result in the loss of Dissenters' Rights.
See "Rights of Dissenting Shareholders."
Voting and Revocation of Proxies
A shareholder giving a proxy has the power to revoke it at any time before
it is exercised by filing with the Secretary of the Company an instrument
revoking it or a duly executed proxy bearing a later date or by voting in
person at the Special Meeting. Subject to such revocation, all shares
represented by each properly executed proxy received by the Secretary of the
Company will be voted in accordance with the instructions indicated thereon,
and if no instructions are indicated, will be voted to approve the Merger
Agreement and in such manner as the persons named on the enclosed proxy card in
their discretion determine upon such other business as may properly come before
the meeting or any adjournment thereof.
The shares represented by the accompanying proxy card and entitled to vote
will be voted if the proxy card is properly signed and received by the
Secretary of the Company prior to the Special Meeting.
THE MERGER
The Merger Agreement provides that WGMC, a newly organized North Carolina
corporation that is wholly-owned by WG Holding, will be merged with and into
the Company and that following the Merger, the separate existence of WGMC will
cease and the Company will continue as the surviving corporation. The terms of
and conditions to the Merger are contained in the Merger Agreement which is
included in full as Appendix A to this Proxy Statement. The discussion in this
Proxy Statement of the Merger and the Merger Agreement, which consists of a
summary description of all of the material
34
<PAGE>
terms of the Merger Agreement, is subject to and qualified in its entirety by
reference to the more complete information set forth in the Merger Agreement.
Effective Time
The Merger will be effective as soon as practicable following shareholder
approval of the Merger Agreement and upon the filing of Articles of Merger with
the Secretary of State of the State of North Carolina. The Effective Time is
currently expected to occur as soon as practicable after the Special Meeting,
subject to approval of the Merger Agreement at the Special Meeting and
satisfaction or waiver of the terms and conditions set forth in the Merger
Agreement. See "Conditions."
Conversion of Securities
At the Effective Time, subject to the terms, conditions and procedures set
forth in the Merger Agreement, each share of issued and outstanding Common
Stock immediately prior to the Effective Time (other than shares held by WG
Holding and the Dissenting Shares) will, by virtue of the Merger, be converted
into the right to receive the Cash Merger Consideration. Except for the right
to receive the Cash Merger Consideration or, with respect to Dissenting Shares,
the right to receive payment as set forth in Article 13, from and after the
Effective Time, all shares, by virtue of the Merger and without any action on
the part of the holders, will no longer be outstanding and will be canceled and
retired and will cease to exist. Each holder of a certificate formerly
representing any shares (other than shares held by WG Holding or Dissenting
Shares) will after the Effective Time cease to have any rights with respect to
such shares other than the right to receive the Cash Merger Consideration for
such shares upon surrender of the certificate. Each holder of a certificate
representing any Dissenting Shares will have the rights set forth in Article 13
as summarized in this Proxy Statement under "Rights of Dissenting
Shareholders."
No interest will be paid or accrued on the amount payable upon the
surrender of any certificate. Payment to be made to a person other than the
registered holder of the certificate surrendered is conditioned upon the
certificate so surrendered being properly endorsed and otherwise in proper form
for transfer, as determined by the Disbursing Agent. Further, the person
requesting such payment will be required to pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the certificate surrendered or establish to the satisfaction of the
Disbursing Agent that such tax has been paid or is not payable. Within one week
following six months after the Effective Time, the Disbursing Agent, without
further action or request, will deliver to the Company any funds made available
to the Disbursing Agent which have not been disbursed to holders of
certificates formerly representing shares outstanding prior to the Effective
Time, and thereafter such holders will be entitled to look to the Company only
as general creditors with respect to cash payable upon due surrender of their
certificates. Notwithstanding the foregoing, no party to the Merger Agreement
will be liable to any holder of certificates formerly representing shares for
any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Each share of WGMC's common stock that is issued and outstanding
immediately prior to the Merger will be converted on the Effective Time into
one share of Common Stock of the Company.
Termination of the Company Stock Options
All outstanding stock options to purchase shares of the Common Stock shall
be canceled or terminated as of the Effective Time. The holders shall receive
for each option (regardless of whether such option was then exercisable) cash
equal to the Cash Merger Consideration per option share less the exercise price
of such option multiplied by the total number of shares that are subject to the
option.
Transfer of Shares
No transfers of shares subject to the Cash Merger Consideration will be
made on the stock transfer books at or after the Effective Time. If, after the
Effective Time, certificates representing such shares are presented to the
Company, such shares will be canceled and exchanged for the Cash Merger
Consideration.
Conditions
Each party's respective obligation to effect the Merger is subject to the
satisfaction, at or prior to the Effective Time, of each of the following
conditions: (i) the Merger Agreement and the transactions contemplated therein
shall have been approved, in the manner required by applicable law by the
holders of a majority of the outstanding shares of Common Stock entitled to
vote thereon; (ii) the Secretary of WGMC shall have certified that the Merger
Agreement and the transactions
35
<PAGE>
contemplated therein have been duly adopted by resolutions of WGMC's Board of
Directors and WG Holding, as the sole shareholder of WGMC; (iii) no court,
government or governmental body, agency or instrumentality having or asserting
jurisdiction over the parties ("Governmental Authority") shall have enacted,
issued, promulgated, enforced, or entered any law or order which is in effect
and which has the effect of making illegal or otherwise prohibiting
consummation of the Merger; and (iv) all actions by or in respect of or filings
with any Governmental Authority required to permit the consummation of the
Merger shall have been made or obtained, other than the filing of the Articles
of Merger. The conditions set forth in subparagraphs (iii) and (iv) above may
be waived, at the appropriate party's discretion, to the extent permitted by
applicable law.
In addition to the conditions set forth above, the obligations of the
Company to effect the Merger are subject to the satisfaction, at or prior to
the Effective Time, of each of the following conditions, unless waived by the
Company: (i) the representations and warranties of WGMC and WG Holding in the
Merger Agreement shall be true and correct in all material respects as of the
Effective Time as though made at the Effective Time, except those
representations and warranties which address matters only as of a particular
date which shall remain true and correct as of such date; (ii) WGMC and WG
Holding shall have performed in all material respects their agreements
contained in the Merger Agreement required to be performed at or prior to the
Effective Time; (iii) the Company shall have received a certificate of the
chief executive officer and chief financial officer of WGMC and WG Holding
certifying to the effect of the preceding clauses (i) and (ii); and (iv) the
Company shall have received all documents reasonably requested relating to the
authority of WGMC and WG Holding to enter into the Merger Agreement.
In addition to the conditions set forth above, the obligations of WGMC and
WG Holding to effect the Merger are subject to the satisfaction at or prior to
the Effective Time, of each of the following conditions, unless waived by WGMC
and WG Holding: (i) the representations and warranties of the Company contained
in the Merger Agreement and in any certificate delivered by the Company thereto
shall be true and correct in all respects, except where the breach or
inaccuracy would not, individually or in the aggregate, have a material adverse
effect on the Company, as of the Effective Time, as though all of such
representations and warranties were made by the Company at the Effective Time,
except those representations and warranties which address matters only as of a
particular date which shall remain true and correct on such date; (ii) the
Company shall have performed in all material respects its agreements contained
in the Merger Agreement required to be performed at or prior to the Effective
Time; (iii) WGMC and WG Holding shall have received a certificate of the chief
executive officer and the chief financial officer of the Company certifying, as
applicable, to the effect of the preceding clauses (i) and (ii); (iv) no matter
that would reasonably be expected to affect materially and adversely the
business condition (financial or otherwise) or results of operations of the
Company shall have occurred; (v) the Company shall have delivered cancellation
instruments of all holders of outstanding options under the Company's option
plans as of the Effective Time; (vi) WGMC and WG Holding shall have received
all documents reasonably requested relating to the authority of the Company to
enter into the Merger Agreement, all in the form and substance reasonably
satisfactory to WGMC and WG Holding; and (vii) WG Holding and WGMC shall have
received an opinion of counsel to the Company on matters reasonably requested
by WG Holding.
Representations and Warranties
The Company has made representations and warranties in the Merger
Agreement regarding, among other things, its organization and good standing and
authority to enter into the Merger Agreement, its capitalization, its financial
statements, the absence of certain changes in the business of the Company since
September 30, 1997, the content and submission of forms and reports required to
be filed by the Company with the Commission, requisite governmental and other
consents and approvals, compliance with all applicable laws, absence of
litigation to which the Company is a party, the absence of material violations
of laws and obligations, brokers and finders fees, the absence of defaults
under its organizational documents and material contracts, and the absence of
material undisclosed liabilities.
WGMC and WG Holding have made representations and warranties in the Merger
Agreement regarding, among other things, their organization and good standing
and authority to enter into the Merger Agreement, compliance with all
applicable laws, the absence of any filing with or action by any governmental
authority, other than the filing of the Articles of Merger and compliance with
requirements of the Commission, no violation of the organizational documents of
either WGMC or WG Holding or any applicable governmental regulation, and the
absence of brokers and finders.
The representations and warranties of the parties in the Merger Agreement
will expire upon consummation of the Merger.
36
<PAGE>
Covenants
Pursuant to the Merger Agreement, the Company has agreed that prior to the
Effective Time, the Company shall: (i) conduct business only in the ordinary
course substantially consistent with past practice; (ii) cause a meeting of its
shareholders to be held as soon as reasonably practicable for the purpose of
voting on the approval of the Merger Agreement and the transactions
contemplated therein; (iii) cause the appropriate documents to be filed with
the Commission in accordance with its requirements and without any untrue
statement of material fact or omission of a material fact; (iv) permit WG
Holding and WGMC and their agents access to the books, records and properties
of the Company; and (vi) notify WG Holding and WGMC of certain events. The
Merger Agreement also provides that WG Holding and WGMC shall make no material
misstatement of fact or omit a material fact to be used in the Company's
filings with the Commission and shall notify the Company of certain events.
The parties to the Merger Agreement covenant to (i) use their best efforts
in consummating the transactions contemplated therein, (ii) cooperate with each
other in the consummation of the transactions contemplated in the Merger
Agreement, (iii) consult with each other before making any public announcement
and (iv) take such further actions as may be necessary to consummate the
Merger.
Indemnification
The Merger Agreement provides that the current directors and officers of
the Company will be indemnified for six years from the Effective Time by the
Company and WG Holding with respect to acts or omissions occurring at or prior
to the Effective Time to the fullest extent provided under the Company's
articles of incorporation and bylaws in effect on the date of the Merger
Agreement.
Expenses
The parties have agreed to pay their own costs and expenses in connection
with the Merger Agreement and the transactions contemplated thereby.
Termination, Amendment and Waiver
At any time prior to the Effective Time, the Merger Agreement may be
terminated by the mutual consent of the parties.
Any of the parties may terminate the Merger Agreement prior to the
Effective Time by written notice to the other parties if (i) the Merger is not
completed by October 31, 1998, (ii) approval of the shareholders of the Company
necessary to consummate the Merger has not been obtained or (iii) any court of
competent jurisdiction or other governmental entity issues an order, decree or
ruling or takes any action enjoining, restraining or prohibiting the Merger and
such order, decree, ruling or action becomes final and nonappealable.
Subject to the provisions of applicable law, the Merger Agreement may be
modified or amended, and provisions thereof waived, by written agreement of the
parties. However, after approval of the principal terms of the Merger Agreement
by the shareholders of the Company, no amendment or waiver of a provision may
be made which reduces the amount or changes the form of the Cash Merger
Consideration to be received by the shareholders or that would adversely affect
the shareholders of the Company unless such amendment or waiver of a provision
is approved by the shareholders.
Source of Funds for the Merger
The total amount of funds required to pay the Cash Merger Consideration to
the Public Shareholders, to make cash payments to holders of outstanding
options upon their cancellation and to pay the Company's related fees and
expenses in connection with the Merger is estimated to be approximately $35
million. Such amounts will be provided by an equity contribution to the Company
by WG Holding prior to the consummation of the Merger.
To fund this capital contribution, WG Holding intends to borrow: (i) DM 25
million (approximately $13.8 million based on exchange rates at June 30, 1998)
under a new credit facility (the "New Facility") which WG Holding will enter
into in connection with the Merger with a syndicate of banks for which
Commerzbank AG, Frankfurt, Germany ("Commerzbank"), serves as agent and (ii)
the remaining funds required under an existing credit facility (the "Existing
Credit Facility") that WG Holding has with a syndicate of banks for which
Commerzbank, serves as agent. The New Facility will be for a total amount of DM
25 million, will bear interest at approximately 5.5% per annum and will be due
and payable within five years. WG Holding has in excess of DM 75 million ($41.5
million based on exchange rates at June 30, 1998) of availability under its
Existing Credit Facility. Borrowings under the Existing Credit Facility bear
interest at approximately 6% per annum and
37
<PAGE>
are due and payable (subject to certain prepayment obligations) on December 31,
1999. The Existing Credit Facility is, and the New Facility will be, secured by
substantially all of the assets of WG Holding and its subsidiaries located in
Germany. Other than its plan to repay borrowings under the Existing Credit
Facility and the New Credit Facility out of funds from operations, WG Holding
has no specific plans or arrangements to finance or repay such borrowings.
Expenses of the Transaction
Assuming the Merger is consummated, the estimated costs and fees in
connection with the Merger, financing and the related transactions, which will
be paid by the Company and WG Holding are as follows:
<TABLE>
<CAPTION>
Estimated
Cost or Fee Amount
- --------------------------------------------- -------------
<S> <C>
Financial advisory fees ............... $ 550,000
Legal fees and expenses ............... 320,000
Special Committee fees ................ 85,000
Printing and mailing expenses ......... 22,500
Commission filing fees ................ 6,370
Disbursing Agent fees ................. 10,000
Miscellaneous ......................... 10,000
----------
Total ............................... $1,003,870
==========
</TABLE>
Of the total estimated costs and fees, $300,000 of the financial advisory
fees will be paid by WG Holding to its financial advisor and $100,000 of the
legal fees and expenses will be paid by WG Holding to its legal counsel. The
balance of the estimated costs and fees will be paid by the Company. See
"Special Factors -- Opinion of the Special Committee's Financial Advisor" for a
description of the fees to be paid to Robinson-Humphrey in connection with its
engagement. For a description of certain fees paid to the members of the
Special Committee, see "Special Factors -- Interests of Certain Persons in the
Merger."
RIGHTS OF DISSENTING SHAREHOLDERS
Under North Carolina law, holders of Common Stock who do not vote in favor
of the Merger and who comply with certain notice requirements and other
procedures will have the right to dissent and to be paid cash for the "fair
value" of their shares. The "fair value" of the Common Stock as finally
determined under such procedures may be more or less than the $15.90 cash which
the shares held by non-dissenting shareholders will be converted into the right
to receive in the Merger. Failure to follow such procedures precisely may
result in the loss of Dissenters' Rights.
The following discussion is not a complete statement of the law pertaining
to Dissenters' Rights under Article 13 and is qualified in its entirety by the
full text of Article 13 which is reprinted in its entirety as Appendix C to
this Proxy Statement.
A record shareholder may assert Dissenters' Rights as to fewer than all
the shares of Common Stock registered in his name only if he dissents with
respect to all shares beneficially owned by any one person and notifies the
Company in writing of the name and address of each person on whose behalf he
asserts Dissenters' Rights. The rights of a partial dissenter will be
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders. A beneficial owner may
assert Dissenters' Rights as to shares of Common Stock held on his behalf only
if he: (a) submits to the Company the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights and (b) asserts Dissenters' Rights with respect to all
shares of which he is the beneficial owner.
A holder of shares of Common Stock wishing to exercise Dissenters' Rights
must: (a) give to the Company, and the Company must actually receive before the
vote on the Merger Agreement is taken, written notice of the holder's intent to
demand payment for his shares if the Merger is consummated and (b) must not
vote his shares in favor of the Merger Agreement. Such notice may be sent to
the Company at the following address: 1030 Swabia Court, Research Triangle
Park, North Carolina 27709-3585, Attn: Bert Kuthe, Secretary. If the Merger
Agreement is approved by holders of the requisite number of outstanding shares
of Common Stock, the Company will, no later than ten days following the
consummation of the Merger, mail a written dissenters' notice to all of its
shareholders who gave the aforementioned notice of intent to demand payment.
Such dissenters' notice will: (a) state where the payment demand must be sent
and where and when certificates for shares must be deposited; (b) supply a form
for demanding payment; (c) set a date by which the Company must receive the
38
<PAGE>
payment demand, which date may not be fewer than 30 nor more than 60 days after
the date on which the dissenters' notice is sent; and (d) be accompanied by a
copy of Article 13. To exercise his Dissenters' Rights, a shareholder must send
a dissenters' notice, must demand payment and deposit his share certificates in
accordance with the terms of the notice. A shareholder failing to do so will
not be entitled to payment for his shares under Article 13. A shareholder who
demands payment and deposits his or her share certificates in accordance with
the terms of the notice will retain all other rights of a shareholder until
consummation of the Merger.
As soon as the Merger is completed, or within 30 days after the Company's
receipt of a payment demand by a shareholder made in compliance with the
above-described procedures, the Company will pay such shareholder the amount
the Company estimates to be the value of his shares, plus interest accrued to
the date of payment. Such payment will be accompanied by: (a) the Company's
balance sheet as of the fiscal year ended September 30, 1997, an income
statement and a statement of cash flows for that year and the latest available
interim financial statements; (b) an explanation of how the Company estimated
the fair value of the shares; (c) an explanation of how the interest was
calculated; (d) a statement of the dissenter's right to notify the Company of
his own estimate of the value of his shares and the amount of interest due if
(i) he believes the amount paid by the Company is less than the fair value of
his shares or that the interest due was incorrectly calculated, (ii) the
Company fails to make a payment within the time period described in the first
sentence of this paragraph, or (iii) the Company, having failed to consummate
the Merger, fails to return deposited share certificates within 60 days after
the date set for demanding payment; and (e) a copy of Article 13.
If: (a) a dissenter believes that the amount paid by the Company is less
than the fair value of his shares, or that the interest due is incorrectly
calculated; (b) the Company fails to make payment within the time period set
forth in the first sentence of the immediately preceding paragraph; or (c) the
Company, having failed to consummate the Merger, fails to return deposited
stock certificates to a dissenter within 60 days after the date set for
demanding payment, the dissenter may notify the Company in writing of his own
estimate of the fair value of his shares and amount of interest due and demand
payment of the amount in excess of the Company's payment to him. A dissenter
will waive his right to demand payment as described in this paragraph, and will
be deemed to have withdrawn his dissent and demand for payment, unless he
notifies the Company of his demand in writing within 30 days after the Company
(x) made payment for his shares or (y) fails to take the actions described in
clauses (b) and (c) of this paragraph, as the case may be.
If a demand for payment as described above remains unsettled, a
shareholder may commence a proceeding within 60 days after the earlier of (i)
the date of the Company's payment to him as described in the second immediately
preceding paragraph, or (ii) the date of his payment demand as described in the
immediately preceding paragraph and file a complaint with the Superior Court
Division of the North Carolina Court of Justice to determine the fair value of
the shares and accrued interest. A dissenter who does not commence a proceeding
within this 60 day period will be deemed to have withdrawn his dissent and
demand for payment.
The court may, in its discretion, make all dissenters whose demands remain
unsettled parties to the proceeding as in an action against their shares and
all parties must be served with a copy of the complaint. The jurisdiction of
the Superior Court is plenary and exclusive. The court may appoint one or more
appraisers to receive evidence and recommend a decision on the question of fair
value. Parties to the proceeding are entitled to the same discovery rights as
parties in other civil proceedings. The proceeding will be tried as in other
civil actions; however, since the Company is a "public corporation," no party
to any proceeding described herein will have the right to trial by jury.
Each dissenter made a party to the proceeding by the court will be
entitled to judgment for the amount, if any, by which the court finds that the
fair value of his shares, plus interest, exceeds the amount paid by the
Company. The court may assess the costs of a proceeding described above,
including the compensation and expenses of appointed appraisers, as it finds
equitable. With respect to the fees and expenses of counsel and experts for the
parties to the proceeding, the court may assess such costs as it finds
equitable (a) against the Company, and in favor of any or all dissenters, if it
finds that the Company did not substantially comply with the above-described
procedures or (b) against either the Company or a dissenter or in favor of
either or any other party, if it finds that the party against whom such costs
are assessed acted arbitrarily, vexatiously, or not in good faith with respect
to the dissenters' rights provided under Article 13. In addition, if the court
finds that the services of counsel to any dissenter were of substantial benefit
to other dissenters and that the costs of such services should not be assessed
against the Company, the court may award to such counsel reasonable fees to be
paid out of the amounts owed to the dissenters who were benefited.
39
<PAGE>
The provisions of Article 13 are technical in nature and complex.
Shareholders desiring to exercise Dissenters' Rights and to obtain a
determination of the fair market value of their shares should consult counsel,
since the failure to comply strictly with the provisions of Chapter 13 may
result in a waiver or forfeiture of their Dissenters' Rights.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
considerations relevant to the Merger that are generally applicable to holders
of Common Stock. This discussion is based on currently existing provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury Regulations thereunder and current administrative rulings and
court decisions, all of which are subject to change. Any such change, which may
or may not be retroactive, could alter the tax consequences to the holders of
Common Stock as described herein. Special tax consequences not described below
may be applicable to particular classes of taxpayers, including financial
institutions, broker-dealers, persons who are not citizens or residents of the
United States or who are foreign corporations, foreign partnerships or foreign
estates or trusts as to the United States and holders who acquired their stock
through the exercise of an employee stock option or otherwise as compensation.
The receipt of the Cash Merger Consideration in the Merger by holders of
Common Stock will be a taxable transaction for federal income tax purposes.
Except as provided in the following paragraph, each holder's gain or loss per
share will be equal to the difference between $15.90 and the holder's basis per
share in the Common Stock. Such gain or loss generally will be a capital gain
or loss. In the case of individuals, such capital gain will be subject to
maximum federal income tax rates of 20% for Common Stock held for more than 18
months and 28% for Common Stock held for more than one year but for not more
than 18 months. The foregoing discussion may not be applicable to shareholders
who acquired their Common Stock pursuant to the exercise of options or other
compensation arrangements or who are not citizens or residents of the United
States or who are otherwise subject to special tax treatment under the Code.
A holder of Common Stock may be subject to backup withholding at the rate
of 31% with respect to payments of Cash Merger Consideration received pursuant
to the Merger, unless the holder (a) is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact or (b)
provides a correct taxpayer identification number ("TIN"), certifies as to no
loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholdings rules. To prevent the
possibility of backup federal income tax withholding on payments made to
certain holders with respect to shares of Common Stock pursuant to the Merger,
each holder must provide the Disbursing Agent with his correct TIN by
completing a Form W-9 or Substitute Form W-9. A holder of Common Stock who does
not provide the Company with his or her correct TIN may be subject to penalties
imposed by the Internal Revenue Service (the "IRS"), as well as backup
withholding. Any amount withheld under these rules will be creditable against
the holder's federal income tax liability. The Company (or its agent) will
report to the holders of Common Stock and the IRS the amount of any "reportable
payments," as defined in Section 3406 of the Code, and the amount of tax, if
any, withheld with respect thereto.
The foregoing tax discussion is included for general information only and
is based upon present law. Each holder of the Common Stock should consult such
holder's own tax advisor as to the specific tax consequences of the Merger to
such holder, including the application and effect of federal, state, local and
other tax laws and the possible effect of changes in such tax laws.
40
<PAGE>
BUSINESS OF THE COMPANY
General
The Company develops, manufactures, markets and supports test,
measurement, diagnostic and monitoring products for local area data networks
("LANs") and wide area data networks ("WANs"). The Company's network analysis
products, which primarily consist of the Domino and DA-3x product families,
enable customers to analyze and solve interoperability and performance problems
across all the principal configurations of network topologies and communication
protocols. In the United States, the Company also markets specialized test,
measurement and monitoring instruments primarily for use by operators of
telecommunication and data transmission systems. These products are primarily
purchased for resale from the foreign manufacturing affiliates of WG Holding,
and include ANT-20, a physical layer test instrument for SDH, SONET and ATM,
and 8610 and 8620 cellular communications test systems.
The Company introduced its first DA-3x product in the fall of 1990. As new
and more advanced networks and communication methods have been developed, the
Company has expanded its DA-3x family through releases of new or enhanced
hardware and software modules. In fiscal 1994, the Company began manufacturing
and distributing its Domino product family, a line of protocol analyzers
designed specifically for use by field technicians who install and maintain
large multi-site LANs and WANs. The Company introduced DominoLANTM, DominoWANTM
and DominioFDDITM in fiscal 1995 followed by DominoWIZARDTM, Domino REMOTE, and
SNA Session Generator in fiscal 1996 and DominoFastEthernet in fiscal 1997.
In fiscal 1997, the Company began development of the NetForce product
line, a proposed new family of products designed to maximize network
availability for network managers through proactive and interactive network
analysis and management tools. Planned for availability in the second half of
fiscal 1998, NetForce Ranger is believed to be the internetworking industry's
first network analysis product that is able to search for, detect, isolate and
pinpoint problems before the network fails. Designed for routed and switched
networks, NetForce Ranger addresses both LANs and WANs.
The Company sells its products and services to domestic end users
principally through its direct sales force, although the Company maintains
indirect distribution channels. Internationally, the Company sells its products
through sales affiliates of WG Holding. The Company's major customers include
AT&T, Cisco Systems, Deutsche Telekom, Embratel, GTE, IBM, MCI, Nortel, NCR,
Telecom Italia and various U.S. government agencies.
Under a contract with WG Holding, the Company serves as the exclusive
United States distributor and servicer of products developed and produced by
foreign manufacturing affiliates of WG Holding. These products are purchased by
the Company at prices established by the manufacturing affiliates and resold by
the Company to U.S. customers. These products consist primatily of test,
measurement and monitoring instruments for telecommunications companies. They
include advanced network test equipment for telecommunications networks,
telecom test systems for cellular networks, hand-held test instruments for
installation and other network system test instruments. The Company markets and
sells these products primarily to large network operators and developers and
manufacturers of communication equipment. Major customers for these products
include AT&T, GTE, MCI, Nortel and Qualcomm.
Recent Acquisitions
In January 1998, the Company acquired privately-held Tinwald for
approximately $5.0 million plus possible additional payments conditioned on the
achievement of performance goals. Tinwald is an Ontario, Canada-based developer
of the LinkView family of software analysis tools. Management believes that the
purchase of Tinwald adds a full range of cost effective, highly distributable
set of analysis solutions to the Company's product lines to maximize and
enhance customer network reliability and availability. Products in this new
family include LAN Monitor and Internet Monitor, as well as LinkView Pro and
LinkView Pro with WG Examine.
In March 1998, the Company acquired the assets of privately-held Network
Intelligence for $1.25 million plus possible additional payments conditioned on
the achievement of performance goals. Network Intelligence is a Palo Alto,
California-based network performance management software company. The
technology purchased in this transaction is intended to accelerate the
development of the distributed analysis tools of the NetForce product family.
Year 2000
The Company is still assessing the impact that year 2000 issues will have
on its products and internal information systems and has begun corrective
efforts in these areas. The Company does not anticipate that addressing the
year 2000 problem for its internal information systems and current and future
products will have a material impact on its operations or
41
<PAGE>
financial results. However, there can be no assurance that the costs to address
these issues will not be greater than anticipated, or corrective actions
undertaken will be completed before any year 2000 problems could occur.
The Company has certain key relationships with suppliers. If these
suppliers fail to adequately address year 2000 issues for the products they
provide the Company, this could have a material adverse impact on the Company's
operations and financial results. The Company is still assessing the potential
effect that year 2000 issues may have on its suppliers and, at this time,
cannot determine the impact, if any, that it may have on the Company's
operations or financial results.
SELECTED FINANCIAL DATA
The following table sets forth selected historical combined and
consolidated financial data of the Company for each of the five fiscal years
ended September 30, 1997, which are derived from the audited combined and
consolidated financial statements of the Company. The combined and consolidated
financial statements for the five fiscal years ended September 30, 1997 have
been audited by Arthur Andersen LLP, independent auditors. The historical
results of operations of the Company for the six month periods ended March 31,
1997 and 1998 and the historical financial position of the Company as of March
31, 1998 are derived from unaudited consolidated financial statements included
in the Company's Form 10-Q Quarterly Report for the three months ended March
31, 1998, incorporated herein by reference. The consolidated financial
statements include all adjustments, consisting of normal recurring accruals,
which the Company considers necessary for a fair presentation of the
consolidated financial position and consolidated results of operations for
these periods. The data are qualified by reference to, and should be read in
conjunction with, the consolidated financial statements, related notes and
other financial information included in the Company's Form 10-K Annual Report
for the year ended September 30, 1997, incorporated by reference herein.
<TABLE>
<CAPTION>
Six Months Ended March
Fiscal Year Ended September 30, 31,
------------------------------------------------------ -----------------------
1997 1996 1995 1994 1993 1998 1997
---------- ---------- ---------- ---------- ---------- ------------ ----------
(In thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues:
Nonaffiliates ......................... $29,001 $ 33,186 $23,658 $ 21,785 $18,005 $ 15,556 $13,729
Affiliates ............................ 25,454 25,900 21,604 18,387 15,080 11,262 16,068
------- -------- ------- -------- ------- -------- -------
Total revenues ....................... 54,455 59,086 45,262 40,172 33,085 26,818 29,797
Cost of revenues ........................ 24,381 23,234 16,576 12,731 12,176 13,931 12,372
------- -------- ------- -------- ------- -------- -------
Gross profit ......................... 30,074 35,852 28,686 27,441 20,909 12,887 17,425
Selling, general & admin. expenses ...... 19,360 18,934 15,872 12,984 10,603 9,395 9,807
Product development expenses ............ 10,712 9,804 10,469 9,059 6,545 5,791 4,932
Restructuring charges ................... -- -- 1,279 -- -- -- --
Acquired in-process research and
development and other non-recurring
charges ............................... -- -- -- -- -- 5,825 --
------- -------- ------- -------- ------- -------- -------
Operating income (loss) .............. 2 7,114 1,006 5,398 3,761 (8,124) 2,686
Interest expense ........................ -- -- -- (460) (779) -- --
Interest income ......................... 639 350 313 295 274 285 320
Foreign currency gains (losses) ......... (271) (104) (245) 213 498 34 (270)
------- -------- ------- -------- ------- -------- -------
Income (loss) before income taxes ..... 424 7,360 1,134 5,446 3,754 (7,805) 2,736
Benefit from (provision for) income
taxes ................................. -- (2,208) (98) (2,124) 867 779 (821)
------- -------- ------- -------- ------- -------- -------
Income from continuing operations ....... 424 5,152 1,036 3,322 4,621 (7,026) 1,915
Income from discontinued operations ..... -- -- -- 204 135 -- --
------- -------- ------- -------- ------- -------- -------
Net income (loss) .................... $ 424 $ 5,152 $ 1,036 $ 3,526 $ 4,756 $ (7,026) $ 1,915
======= ======== ======= ======== ======= ======== =======
Per Share Data:
Net income (loss) per share (assuming
dilution) ............................. $ 0.08 $ 0.98 $ 0.20 $ 0.80 $ 1.27 $ (1.33) $ 0.35
Weighted average number of common
shares outstanding (assuming
dilution) ............................. 5,359 5,231 5,245 4,398 3,750 5,274 5,395
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
As of September 30,
-----------------------------------------------------
1997 1996 1995 1994 1993 As of March 31, 1998
---------- ---------- ---------- ---------- --------- ---------------------
(In thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital ................................ $27,036 $24,869 $20,117 $20,041 $ 6,569 $19,986
Total assets ................................... 37,292 34,298 29,344 28,272 20,381 30,300
Short-term debt, including current maturities
of long-term debt ............................. -- -- -- -- 5,978 --
Long-term debt ................................. -- -- -- -- 4,370 --
Shareholders' equity ........................... 30,659 28,822 24,354 23,113 5,303 23,976
</TABLE>
<TABLE>
<CAPTION>
As of
--------------------------------------
September 30, 1997 March 31, 1998
-------------------- ---------------
<S> <C> <C>
Book Value Per Share ......... $ 5.83 $ 4.53
</TABLE>
CERTAIN FORWARD LOOKING INFORMATION
The Company does not, as a matter of course, make public forecasts or
projections of future financial results. However, in December 1997, the
Company's management prepared the Base Income Projections, which are comprised
of a projected income statement for the balance of the fiscal year ending
September 30, 1998 and for each of the three fiscal years ending September 30,
2001 (the "Projection Period") which took into account management's estimate of
the potential effects of the Tinwald acquisition (which was then at the
negotiation stage and was expected to be completed in January 1998) and the
Network Intelligence acquisition (which was then in the early stages of
negotiation but was expected to be completed in the second quarter of fiscal
1998). The Base Income Projections were provided to Broadview and
Robinson-Humphrey in connection with their respective reviews and analyses of
the Company. See "Special Factors -- Background of the Merger."
The principal assumptions made by management of the Company in preparing
the Base Income Projections (which management considered reasonable) were as
follows:
(a) the economic growth in the target markets for the Company's
products would approximate 20% per year;
(b) the Company would maintain its current market share of its
existing markets for the sale of current products;
(c) the Company would gain market shares ranging from 4% to 14% for
products targeted for new markets;
(d) the Company's revenues would increase at approximately the same
rate per year as the anticipated growth in target markets;
(e) the Company's revenues would increase from sales of products to
customers in new targeted markets where the Company would gain market
shares;
(f) the Company's new products, including enhancements to the Domino
product family and the NetForce product family, would be developed and
released as scheduled in fiscal 1998 and 1999;
(g) the Company's estimates of research and development expenses over
the Projection Period would be sufficient to maintain and enhance
existing products and develop new products for release as scheduled;
(h) the Tinwald and Network Intelligence acquisitions would be
successfully completed and integrated into the Company's product
development, marketing and sales efforts in fiscal 1998;
(i) the Company would continue to sell in the United States
complimentary products produced by foreign affiliates of WG Holding and
such product sales would represent approximately 25% of annual projected
revenues;
(j) the Company would continue to be able to attract and retain highly
skilled engineering, marketing, sales and management personnel; and
(k) the Company would not be subject to any significant adverse
competitive developments during the Projection Period.
43
<PAGE>
In late February 1998, following a meeting at the Company's offices on
February 24, 1998 among members of the Company's management and representatives
of Broadview and Robinson-Humphrey, Broadview, based on the information it had
received at that meeting relating to, among other things, the Base Income
Projections and the principal assumptions made by management in preparing them,
performed sensitivity analyses with respect to the Base Income Projections and
reviewed and discussed the assumptions underlying the Base Income Projections
with representatives of WG Holding. As a result of this process, Broadview
adjusted the Base Income Projections to reflect the perceived risk of potential
delays in product releases by the Company, increased spending associated with
establishing a sales and marketing infrastructure and accelerating research and
development expenses, resulting in the Adjusted Income Projections. See
"Special Factors -- Background of the Merger."
Following a meeting on March 11, 1998 at which the Base Income Projections
and the Adjusted Income Projections were discussed at length by the Special
Committee and representatives of WG Holding, it became apparent to the Special
Committee that significant differences existed between management of the
Company and representatives of WG Holding regarding the attainability by the
Company of the Base Income Projections which forecasted more favorable
operating results for the Projection Period than the Adjusted Income
Projections. The Special Committee noted that the differences between the Base
Income Projections and the Adjusted Income Projections discussed at the March
11 meeting related primarily to risks and uncertainties associated with the
attainability of the projected revenues contained in the Base Income
Projections which, in large part, were based on the timing and market
acceptance of planned new product releases. In light of these risks and
uncertainties, the Special Committee determined that it would be appropriate to
prepare a set of income statement projections that represented a balanced
approach between the Base Income Projections and the Adjusted Income
Projections. Accordingly, the Special Committee asked Robinson-Humphrey to
prepare a set of projections representing an average of the Base Income
Projections and the Adjusted Income Projections. The Average Income Projections
were provided to the Special Committee and Broadview. See "Special Factors --
Background of the Merger."
Set forth below are the Revenues, Operating income, Net income and Net
income per share reflected in the Base Income Projections, the Adjusted Income
Projections and the Average Income Projections. The effect of the Company's
then anticipated write-off of approximately $6.3 million of purchased
technology in the second quarter of fiscal 1998 is excluded from each set of
projections.
Base Income Projections
<TABLE>
<CAPTION>
Fiscal Year Ended September 30
-----------------------------------------------------
(In thousands, except for per share amounts)
1998 1999 2000 2001
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Revenues ..................... $ 68,800 $ 90,500 $ 118,600 $ 150,200
Operating income ............. 2,500 6,300 11,400 18,700
Net income ................... 2,300 5,100 8,900 14,500
Net income per share ......... $ 0.44 $ 0.96 $ 1.68 $ 2.46
</TABLE>
Adjusted Income Projections
<TABLE>
<CAPTION>
Fiscal Year Ended September 30
----------------------------------------------------
(In thousands, except for per share amounts)
1998 1999 2000 2001
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues ..................... $ 64,200 $ 80,575 $ 99,944 $ 121,913
Operating income ............. 408 3,343 6,551 10,669
Net income ................... 208 2,800 5,227 8,396
Net income per share ......... $ 0.04 $ 0.53 $ 0.99 $ 1.42
</TABLE>
Average Income Projections
<TABLE>
<CAPTION>
Fiscal Year Ended September 30
-----------------------------------------------------
(In thousands, except for per share amounts)
1998 1999 2000 2001
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Revenues ..................... $ 66,500 $ 85,538 $ 109,272 $ 136,057
Operating income ............. 1,454 4,822 8,976 14,685
Net income ................... 1,254 3,950 7,064 11,448
Net income per share ......... $ 0.24 $ 0.74 $ 1.33 $ 1.94
</TABLE>
44
<PAGE>
None of the projections were prepared with a view to public disclosure or
compliance with published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections. Arthur Andersen LLP, the Company's independent auditors, have not
performed any procedures with respect to the projections and assume no
responsibility for them. Such forward-looking statements are subject to risks
and uncertainties which could cause actual results to differ materially from
those projected. Such risks and uncertainties include: the rapidly changing
technology for the Company's products; the Company's ability to anticipate
changes in technology and industry standards in order to continue to develop
and introduce both new and enhanced products on a timely basis and to meet
changing customer requirements for network analysis products; the ability of
the Company to integrate successfully into planned new product releases the
software technology recently acquired from Tinwald and Network Intelligence;
the risks associated with delays in releases of new products and the fact that
such products, when first released, may contain undetected errors that could
require design modifications; the risks associated with marketing new products
to operators of medium and large multi-site local area and wide area networks
and the related longer selling cycles required to complete sales to these
potential users of network analysis and monitoring products; the difficulty of
estimating sales of the Company's products by foreign sales affiliates of WG
Holding with respect to which the Company does not exercise control; the
uncertainties associated with the capital spending patterns of the Company's
customers; the risks related to the Company's reliance upon a limited number of
sole source suppliers; and the risks associated with the Company's dependence
upon its ability to attract and retain highly skilled engineering, marketing,
sales and management personnel.
45
<PAGE>
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of June 30, 1998 by: (i) each
person known to the Company to beneficially own more than 5% of the Common
Stock; (ii) each director of the Company; (iii) each executive officer named in
the Summary Compensation Table included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1997; and (iv) all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature Percent of Total
of Shares
Name of Beneficial Owner Beneficial Ownership(1) Outstanding(1)
- ---------------------------------------------------------------- ------------------------- -----------------
<S> <C> <C>
Wandel & Goltermann Management Holding GmbH(2) ................. 3,285,600 62.1%
Albrecht Wandel (2)(3) ......................................... -- --
Richard E. Pospisil(4) ......................................... 5,067 *
Gerry Chastelet(4) ............................................. 48,693 *
Rolf Schmid (2)(3) ............................................. -- --
Joachim Simmross (4) ........................................... 667 --
Sidney Topol (4) ............................................... 14,034 *
Peter Wagner (2)(3) ............................................ -- --
E. Jay Bowers(4) ............................................... 13,711 *
John T. Goehrke(4) ............................................. 16,248 *
Adelbert Kuthe(4) .............................................. 13,790 *
Richard L. Popp(4) ............................................. 10,000 *
All Executive Officers and Directors as a Group (15 persons)(5) 159,328 3.0
</TABLE>
- ---------
* Less than 1%
(1) In accordance with the Commission rules, each beneficial owner's holdings
have been calculated assuming full exercise of outstanding options and
exercisable by such holder within 60 days after June 30, 1998, but no
exercise of outstanding options held by any other person. Except as
indicated in the footnotes to this table, the persons named in the table
have sole voting and investment power with respect to all shares of the
Common Stock shown as beneficially owned by them.
(2) The address of Wandel & Goltermann Management Holding GmbH ("WG Holding")
and Messrs. Schmid, Wagner and Wandel is Box 1262, D-72795 Eningen u.A.,
Federal Republic of Germany. WG Holding is a German limited liability
company that directly owns 3,285,600 shares of Common Stock. The officers
of WG Holding are Mr. Wagner who serves as the President, Chief Executive
Officer and a Managing Director, Mr. Schmid who serves as a Managing
Director and Karl-Heinz Eisemann who serves as a Managing Director. In
their capacities with WG Holding, any two of Messrs. Wagner, Schmid and
Eisemann acting together, can exercise voting and investment power with
respect to the shares of Common Stock held directly by WG Holding, and
accordingly, may be deemed to share beneficial ownership of such shares.
Messrs. Wagner, Schmid and Eisemann disclaim individual beneficial
ownership of the shares of Common Stock held directly by WG Holding.
(3) Excludes shares of Common Stock owned by WG Holding. See Note (1).
(4) Includes for each of these beneficial owners the number of shares set forth
below that are issuable upon exercise of options that are exercisable
within 60 days of June 30, 1998:
<TABLE>
<S> <C> <C> <C>
Richard E. Pospisil ..... 5,067 E. Jay Bowers .......... 13,316
Joachim Simmross ........ 677 John T. Goehrke ........ 15,825
Gerry Chastelet ......... 47,436 Adelbert Kuthe ......... 12,179
Sidney Topol ............ 5,067 Richard L. Popp......... 10,000
</TABLE>
(5) Includes 145,590 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days of June 30, 1998.
46
<PAGE>
SHAREHOLDER PROPOSALS
The Company's annual meeting of Shareholders is normally held in February
of each year. When the Company received WG Holding's proposal in January 1998
for a proposed merger, management postponed the annual meeting of shareholders.
If the proposal to approve the Merger is not approved at the Special Meeting,
the annual meeting of shareholders will be held in November 1998. Proposals of
shareholders intended to be presented at the 1998 annual meeting of
shareholders must be submitted, by registered or certified mail, to the
attention of the Company's secretary at its principal executive offices by
September 1, 1998 in order to be considered for inclusion in the Company's
proxy statement and form of proxy for that meeting. If the Merger is
consummated, the annual meeting of shareholders may be scheduled for an earlier
or later date consistent with the Company's organizational documents.
INDEPENDENT AUDITORS
The Consolidated Balance Sheets as of September 30, 1997 and September 30,
1996, and the related Consolidated Statements of Income, Shareholders' Equity
and Cash Flows for each of the three fiscal years in the period ended September
30, 1997, incorporated herein by reference, have been audited by Arthur
Andersen LLP, independent auditors, as stated in their report.
OTHER MATTERS
Management knows of no other business to be presented at the Special
Meeting. If other matters do properly come before the meeting, or any
adjournment or adjournments thereof, it is the intention of the persons named
in the proxy to vote on such matters according to their best judgment unless
the authority to do so is withheld in such proxy.
47
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF
MARCH 28, 1998
AMONG
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
WG MERGER CORP.
AND
WANDEL & GOLTERMANN MANAGEMENT HOLDING GmbH
A-1
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of March 28, 1998, by and
among Wandel & Goltermann Management Holding GmbH, a German limited liability
company ("Holding"), WG Merger Corp., a North Carolina corporation and
wholly-owned subsidiary of Holding ("Merger Subsidiary" or "Merger Sub")
(Holding and Merger Subsidiary are sometimes referred to collectively as
"Buyer"), and Wandel & Goltermann Technologies, Inc., a North Carolina
corporation (the "Company").
WHEREAS:
A. The authorized capital stock of the Company consists of (i) 20,000,000
shares of common stock, $.01 par value (the "Company Common Stock"), of which
5,287,778 shares were issued and outstanding as of close of business on March
27, 1998, and (ii) 2,000,000 shares of Preferred Stock, $.01 par value (the
"Preferred Stock"), of which no shares were issued and outstanding as of the
close of business on March 27, 1998.
B. Holding currently owns, and will own immediately prior to the Effective
Time, 3,285,600 shares of Company Common Stock representing approximately
sixty-two percent (62%) of the total issued and outstanding Company Common
Stock.
C. A special committee of the Board of Directors of the Company appointed
on November 18, 1997 and comprised entirely of directors who are neither
members of management of the Company nor affiliated with Buyer or any Affiliate
of Buyer (other than the Company) (the "Special Committee") has unanimously
determined that the Merger is fair to and in the best interests of the
shareholders of the Company other than Buyer (the "Public Shareholders") and
has unanimously approved this Agreement and unanimously recommends its approval
and adoption by the Board of Directors (the "Board") and by the shareholders of
the Company.
D. The Board, based in part on the recommendation of the Special Committee
and the written opinion of The Robinson-Humphrey Company, LLC, the financial
advisor to the Special Committee (the "Financial Advisor"), has determined that
the Merger is fair to and in the best interests of the Public Shareholders and
has resolved to approve and adopt this Agreement and its contemplated
transactions and, subject to the following terms and conditions, to recommend
the approval and adoption of this Agreement by the shareholders of the Company.
E. The Board, Holding, and Merger Sub each have approved the merger of
Merger Subsidiary with and into the Company (the "Merger") in accordance with
the North Carolina Business Corporation Act (the "NCBCA") and the terms and
conditions provided below, pursuant to which each share (other than shares of
Company Common Stock held by the Company as treasury stock, shares of Company
Common Stock owned by Holding immediately prior to the Effective Time, and
shares of Company Common Stock as to which dissenters' rights have been
perfected in accordance with the NCBCA) shall be converted into the right to
receive the Merger Consideration.
F. Certain capitalized terms are defined in Section 10.1 hereof.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants, representations, warranties, and agreements herein, the parties
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Company Action.
The Company represents that its Board of Directors, at a meeting called
and held, and relying in part on the unanimous recommendation of the Special
Committee, has (i) unanimously determined that this Agreement and its
contemplated transactions, including the Merger, are fair to and in the best
interests of the Public Shareholders, (ii) unanimously approved and adopted
this Agreement and its contemplated transactions, including the Merger, and
(iii) unanimously resolved to recommend the approval and adoption of this
Agreement and the Merger by the Company's shareholders, provided that such
recommendation may be withdrawn, modified, or amended by the Board if the Board
deems such withdrawal, modification, or amendment necessary in light of its
fiduciary obligations to the Company's shareholders after consultation with
counsel.
Section 1.2 The Merger.
(a) At the Effective Time, Merger Subsidiary will be merged with and into
the Company in accordance with Article 11 of the NCBCA, the separate
existence of Merger Subsidiary shall cease, and the Company shall be the
Surviving Corporation.
A-2
<PAGE>
(b) As soon as practicable after satisfaction of all conditions to the
Merger, or waiver of conditions to the extent permitted herein, the Company
and Merger Subsidiary will file articles of merger ("Articles of Merger")
with the Secretary of State of the State of North Carolina and make all
other filings or recordings required by the NCBCA in connection with the
Merger. The Merger shall become effective when the Articles of Merger are
filed with the Secretary of State of the State of North Carolina or at such
later time as is specified in the Articles of Merger (the "Effective
Time").
(c) After the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, and powers, and be subject to all of the
restrictions, disabilities, and duties of the Company and Merger
Subsidiary, all as provided under the NCBCA.
Section 1.3 Conversion of Shares.
At the Effective Time:
(a) Each share of Company Common Stock (a "Share") which is outstanding
immediately prior to the Effective Time, except as otherwise provided in
Section 1.3(b) or as provided in Section 1.5 with respect to Shares for
which dissenters' rights have been perfected, shall be converted into the
right to receive $15.90 in cash, without interest (the "Merger
Consideration").
(b) Each Share held by the Company as treasury stock immediately prior to
the Effective Time and each share held by Holding immediately prior to the
Effective Time shall be canceled and no payment shall be made for it.
(c) Each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same
rights, powers, and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
Section 1.4 Surrender and Payment.
(a) At or before the Effective Time, the Company shall appoint First
Union National Bank, as agent (the "Exchange Agent"), for the purpose of
exchanging certificates representing Shares for the Merger Consideration.
At or immediately prior to the Effective Time, Holding shall make a capital
contribution to the Company in an amount that, together with funds
available to the Company, is sufficient to permit the Company to make the
aggregate Merger Consideration available to the Exchange Agent in
accordance herewith. At the Effective Time, the Company shall make the
aggregate Merger Consideration available to the Exchange Agent for all
applicable outstanding Shares to be converted in accordance with Section
1.3(a) hereof. At or promptly following the Effective Time, the Company or
Surviving Corporation will send or cause the Exchange Agent to send to each
holder of Shares at the Effective Time a letter of transmittal for use in
such exchange. This letter of transmittal shall specify that the delivery
shall be effected and risk of loss and title shall pass only upon proper
delivery of the certificates representing Shares to the Exchange Agent.
(b) Each holder of Shares that have been converted into a right to
receive Merger Consideration will be entitled to receive the Merger
Consideration payable for such holder's Shares upon surrender to the
Exchange Agent of a certificate or certificates representing such Shares,
together with a properly completed letter of transmittal covering such
Shares. After the Effective Time and until surrendered with the letter of
transmittal, each such certificate shall only represent the right to
receive Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the registered holder of the Shares represented by the
certificate(s) surrendered in exchange, it will be a condition to payment
that the certificate(s) surrendered be properly endorsed or otherwise be in
proper form for transfer. Additionally, the Person requesting such payment
must pay to the Exchange Agent any transfer or other taxes required as a
result of payment to a Person other than the registered holder of such
Shares, or establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, no further transfers of Shares will be
registered. After the Effective Time, if certificates representing Shares
are presented to the Surviving Corporation, they will be canceled and
exchanged for the Merger Consideration in accordance with the procedures
set forth in this Article I.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.4(a) that remains unclaimed by the
holders of Shares six (6) months after the Effective Time shall be returned
within one week after the end of the six (6) month period, without further
action or request, to the Surviving Corporation, and any such
A-3
<PAGE>
holder who has not exchanged such Shares for the Merger Consideration in
accordance with this Section prior to that time shall thereafter look only
to the Surviving Corporation for payment of the Merger Consideration in
respect of such Shares. However, neither Buyer nor the Surviving
Corporation shall be liable to any holder of Shares for any amount paid to
a public official pursuant to applicable abandoned property Laws. Any
amounts remaining unclaimed by holders of Shares two years after the
Effective Time (or an earlier date immediately prior to such time as the
amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled to them. Nothing in this section
limits the obligations of the Buyer under Section 1.4(a).
Section 1.5 Dissenting Shares.
Notwithstanding Section 1.3, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of this
Agreement or consented in writing and who has demanded payment of the fair
value of such Shares in accordance with the NCBCA shall not be converted into a
right to receive the Merger Consideration, but shall be converted into the
right to receive such consideration as may be determined to be due in respect
of such dissenting Shares pursuant to Article 13 of the NCBCA; provided,
however, that if the holder of such dissenting Shares shall have failed to
perfect or shall have waived, rescinded or otherwise lost (in each such
instance, to the reasonable satisfaction of the Surviving Corporation) its
status as a "dissenter" pursuant to Article 13 of the NCBCA, then such holder
shall forfeit the right to dissent from the Merger and such Shares shall be
deemed to have been converted into the right to receive the Merger
Consideration as of the Effective Time. The Company shall give Buyer prompt
notice of any demands received by the Company for appraisal of Shares, and
Buyer shall have the right to participate in all negotiations and proceedings
with respect to such demands. The Company shall not, except with the prior
written consent of Buyer, make any payment with respect to, or settle, or offer
to settle, any such demands.
Section 1.6 Stock Options and Employee Stock Purchase Plan.
(a) Prior to the Effective Time, the Company shall take all steps
necessary to give written notice to each holder of options granted under
the Wandel & Goltermann Technologies, Inc. Omnibus Stock Plan, as amended
and the Wandel & Goltermann Technologies, Inc. Outside Directors' Stock
Option Plan, as amended (collectively, the "Option Plans") that are
outstanding that: (i) all such options outstanding as of the Effective
Time, whether vested or unvested (collectively the "Options"), shall be
cancelled effective as of the Effective Time and (ii) upon the execution
and delivery to the Company by such holder of an instrument acknowledging
cancellation of all Options held by such holder effective as the Effective
Time ("Cancellation Instrument"), the Company shall pay such holder,
promptly following the Effective Time, an amount determined by multiplying
(a) the excess, if any, of the Merger Consideration over the applicable
exercise price per share of the Options held by such holder by (b) the
number of share such holder could have purchased had such holder exercised
such Options in full immediately prior to the Effective Time (assuming all
such Options were fully vested, including any unvested Options). The Board
or any committee thereof responsible for the administration of the Option
Plan shall take any and all action necessary to effectuate matters
described in this Section 1.6(a) on or before the Effective Time.
(b) Effective at April 1, 1998, the Company shall terminate the Wandel &
Goltermann Technologies, Inc. Employee Stock Purchase Plan, as amended (the
"Purchase Plan"), in accordance with the terms of Article VII of the
Purchase Plan, whereupon the entire amount credited to the "stock purchase
account" of each participant shall be distributed to each such participant.
Section 1.7 Closing.
Subject to the terms and conditions of this Agreement, the Closing of the
Merger (the "Closing") shall take place at the offices of the Company at 1030
Swabia Court, Research Triangle Park, North Carolina, as promptly as
practicable after satisfaction or waiver, if permissible, of the conditions set
forth in Article VIII hereof, or at such other location, time, or date as may
be agreed to in writing by the parties hereto. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
A-4
<PAGE>
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation.
The articles of incorporation of the Company in effect at the Effective
Time shall be the articles of incorporation of the Surviving Corporation until
amended in accordance with applicable Law.
Section 2.2 Bylaws.
The bylaws of the Company in effect at the Effective Time shall be the
bylaws of the Surviving Corporation until amended in accordance with applicable
Law.
Section 2.3 Directors and Officers.
From and after the Effective Time, until successors are elected or
appointed and qualified in accordance with applicable Law, (i) the directors of
Merger Subsidiary at the Effective Time shall be the directors of the Surviving
Corporation, and (ii) the officers of the Company at the Effective Time shall
be the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Holding and Merger Sub that, except
as set forth in the Disclosure Schedule delivered by the Company to Holding
prior hereto (the "Disclosure Schedule"), which shall identify exceptions by
specific Section references:
Section 3.1 Corporate Organization.
The Company and each of its Subsidiaries (the "Company Subsidiaries") has
been duly organized and is validly existing and in good standing under the laws
of the jurisdiction of its organization, has all requisite power and authority
to own, operate and lease its properties and to carry on its business as it is
now being conducted, and is qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification
necessary, other than where failure to be so qualified or licensed,
individually or in the aggregate, would not have a Material Adverse Effect.
Neither the Company nor any Company Subsidiary is in violation of any provision
of its charter or bylaws or other organizational documents, as the case may be.
Section 3.2 Capitalization.
As of the date of this Agreement, the authorized capital stock of the
Company consists in its entirety of (i) 20,000,000 shares of common stock, $.01
par value per share, and (ii) 2,000,000 shares of preferred stock, none of
which are issued and outstanding. As of the date of the Agreement, (i)
5,287,778 shares of Company Common Stock were issued and outstanding, and (ii)
options to acquire 810,251 shares of Company Common Stock were outstanding
under the Company Option Plans. All of the outstanding shares of capital stock
of each of the Company Subsidiaries is owned beneficially and of record by the
Company or a Company Subsidiary free and clear of all liens, charges,
encumbrances, options, rights of first refusal or limitations or agreements
regarding voting rights of any nature. All of the outstanding shares of capital
stock of the Company and each of the Company Subsidiaries have been duly
authorized, validly issued and are fully paid and nonassessable and are not
subject to preemptive rights created by statute, their respective charter or
bylaws or any agreement to which any such entity is a party or by which any
such entity is bound. Except as set forth in Section 1.6(b) and this Section
3.2, there are no options, warrants or other rights (including registration
rights), agreements, arrangements or commitments of any character to which the
Company or any Company Subsidiary is a party relating to the issued or unissued
capital stock, or other interest in, of the Company or any Company Subsidiary
or obligating the Company or any Company Subsidiary to grant, issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Company Subsidiary, by sale, lease, license or otherwise.
Section 3.3 Authority Relative to this Agreement.
The Company has all requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated on its part hereby to be consummated by the
Company. The execution and delivery of this Agreement by the Company and the
consummation of the transactions contemplated
A-5
<PAGE>
on its part hereby have been duly authorized by all necessary corporate action,
and, other than the approval of the Company's shareholders as provided in
Section 8.1(a) hereof, no other corporate proceedings on the part of the
Company are necessary to authorize the consummation of the transactions
contemplated on its part hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by Holding and Merger Sub, constitutes the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general equity
principles.
Section 3.4 No Violation.
The execution and delivery of this Agreement by the Company do not, the
performance by the Company of its obligations hereunder will not, and the
consummation by the Company of the transactions contemplated to be performed by
it hereby will not (i) violate or conflict with any provision of any Laws in
effect on the date of this Agreement and applicable to the Company or any
Company Subsidiary or by which any of their respective properties or assets is
bound or subject, (ii) require the Company or any Company Subsidiary to obtain
any consent, waiver, approval, license or authorization or permit of, or make
any filing with, or notification to, any Governmental Entities, based on Laws,
rules, regulations and other requirements of Governmental Entities in effect as
of the date of this Agreement (other than (a) filings or authorizations
required in connection or in compliance with the provisions of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the NCBCA and (b) any
other filings and approvals expressly contemplated by this Agreement or listed
in Section 3.4 to the Company Disclosure Schedule), (iii) require the consent,
waiver, approval, license or authorization of any person (other than
Governmental Entities) other than as listed on Section 3.4 of the Company
Disclosure Schedule, (iv) violate, conflict with or result in a breach of or
the acceleration of any obligation under, or constitute a default (or an event
which with notice or the lapse of time or both would become a default) under,
or give to others any rights of, or result in any, termination, amendment,
acceleration or cancellation of, or loss of any benefit or creation of a right
of first refusal, or require any payment under, or result in the creation of a
lien or other encumbrance on any of the properties or assets of the Company or
any Company Subsidiary pursuant to or under any provision of any indenture,
mortgage, note, bond, lien, lease, license, agreement, contract, order,
judgment, ordinance, Company Permit (as defined below) or other instrument or
obligation to which the Company or Company Subsidiary is a party or by which
the Company or any Company Subsidiary or any of their respective properties is
bound or subject to, or (v) conflict with or violate the articles of
incorporation or bylaws, or the equivalent organizational documents, in each
case as amended or restated, of the Company or any of the Company Subsidiaries,
except for any such conflicts or violations described in clause (i) or
breaches, defaults, events, rights of termination, amendment, acceleration or
cancellation, payment obligations or liens or encumbrances described in clause
(iv) that would not have a Material Adverse Effect and except where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications would not, either individually or in the aggregate,
prevent the Company from performing any of its obligations under this Agreement
and would not have a Material Adverse Effect.
Section 3.5 Compliance with Laws.
(a) As of the date of this Agreement, each of the Company and the Company
Subsidiaries holds all licenses, franchises, grants, permits, easements,
variances, exemptions, consents, certificates, identification numbers,
approvals, orders, and other authorizations (collectively, "Company
Permits") necessary to own, lease and operate its properties and to carry
on its business as it is now being conducted and are in compliance with all
Company Permits and all Laws governing their respective businesses, except
where the failure to hold such Company Permits or to so comply,
individually or in the aggregate, would not have a Material Adverse Effect.
(b) Except as set forth in Section 3.5 of the Company Disclosure
Schedule, no action or proceeding is pending or, to the Company's
knowledge, threatened that may result in the suspension, revocation or
termination of any the Company Permit, the issuance of any cease-and-desist
order, or the imposition of any administrative or judicial sanction, and
neither the Company nor any Company Subsidiary has received any notice from
any governmental authority in respect of the suspension, revocation or
termination of any Company Permit, or any notice of any intention to
conduct any investigation or institute any proceeding, in any such case
where such suspension, revocation, termination, order, sanction,
investigation or proceeding would result, individually or in the aggregate,
in a Material Adverse Effect.
Section 3.6 Litigation.
As of the date of this Agreement, except as may be disclosed in the
Company 10-K (as defined below), reports filed on Forms 10-Q or 8-K for periods
subsequent to the period covered by the Company 10-K, in each case filed prior
to the date hereof (such reports and filings, including the Company 10-K,
collectively, the "the Company Current Reports"), or
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<PAGE>
except as set forth on Section 3.6 of the Company Disclosure Schedule, there is
no claim, litigation, suit, arbitration, mediation, action, proceeding, unfair
labor practice complaint or grievance pending or, to the Company's knowledge,
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to the Company's knowledge,
threatened in writing against the Company or any Company Subsidiary or with
respect to any property or asset of any of them, except for claims,
litigations, suits, arbitrations, mediations, actions, proceedings, complaints,
grievances or investigations which, individually or in the aggregate, would not
have a Material Adverse Effect. Neither the Company nor any Company Subsidiary
nor any property or asset of any of them is subject to any continuing order,
judgment, settlement agreement, injunction, consent decree or other similar
written agreement with or, to the Company's knowledge, continuing investigation
by, any Governmental Entity, or any judgment, order, writ, injunction, consent
decree or award of any Governmental Entity or arbitrator, including, without
limitation, cease-and-desist or other orders, except for such matters which
would not reasonably be expected to have a Material Adverse Effect.
Section 3.7 Financial Statements and Reports.
The Company has made available to Holding true and complete copies (in
each case, as amended) of (i) its Annual Report on Form 10-K for the year ended
September 30, 1997 (the "Company 10-K"), as filed with the Securities and
Exchange Commission (the "Commission") and (ii) all other reports (including
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed by it
with the Commission subsequent to September 30, 1997. The reports referred to
in the immediately preceding sentence (including, without limitation, any
financial statements or schedules or other information included or incorporated
by reference therein) are referred to in this Agreement as the "the Company SEC
Filings." As of the respective times such documents were filed, the Company SEC
Filings complied in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Exchange Act, as the case may be,
and the rules and regulations promulgated thereunder, except for such
noncompliance which, individually or in the aggregate, would not have a
Material Adverse Effect, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the Company SEC Filings comply as to form in all material respect
with applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereto, were prepared in accordance
with generally accepted accounting principles (as in effect from time to time)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto or, in the case of the unaudited
interim financial statements, as permitted by Form 10-Q of the Commission) and
present fairly the consolidated financial position, consolidated results of
operations and consolidated cash flows of the Company and the Company
Subsidiaries as of the dates and for the periods indicated, except (i) in the
case of unaudited interim consolidated financial statements, to normal
recurring year-end adjustments and any other adjustments described therein and
(ii) any pro forma financial information contained therein is not necessarily
indicative of the consolidated financial position of the Company and the
Company Subsidiaries as of the respective dates thereof and the consolidated
results of operations and cash flows for the periods indicated. No Company
Subsidiary is required to file any form, report or other document with the
Commission.
Section 3.8 Absence of Certain Changes or Events.
Other than as disclosed in the Company Current Reports, or otherwise
disclosed in this Agreement or in Section 3.8 of the Company Disclosure
Schedule, since September 30, 1997 and through the date hereof, the business of
the Company and of each of the Company Subsidiaries has been conducted in the
ordinary course, and there has not been (i) any Material Adverse Effect on the
Company; (ii) any material indebtedness incurred by the Company or any Company
Subsidiary for money borrowed; (iii) any material transaction or commitment,
except in the ordinary course of business or as contemplated by this Agreement,
entered into by the Company or any of the Company Subsidiaries; (iv) any
damage, destruction or loss, whether covered by insurance or not, which,
individually or in the aggregate, would have a Material Adverse Effect on the
Company; (v) any material change by the Company in accounting principles or
methods except insofar as may be required by a change in generally accepted
accounting principles; (vi) any material revaluation by the Company or any
Company Subsidiary of any asset (including, without limitation, any writing
down of the value of inventory or writing off of notes or accounts receivable);
(vii) any mortgage or pledge of any of the assets or properties of the Company
or any Company Subsidiary or the subjection of any of the assets or properties
of the Company or any Company Subsidiary to any material liens, charges,
encumbrances, imperfections of title, security interest, options or rights or
claims of others with respect thereto other than in the ordinary course
consistent with past practice; or (viii) any assumption or guarantee by the
Company or a Company Subsidiary of the indebtedness of any person or entity,
other than in the ordinary course consistent with past practice.
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Section 3.9 No Undisclosed Material Liabilities.
Except as disclosed in the Company Current Reports, neither the Company
nor any of the Company Subsidiaries has incurred any liabilities of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, that, individually or in the aggregate, would have a Material
Adverse Effect other than (i) liabilities incurred in the ordinary course of
business consistent with past practice since September 30, 1997, (ii)
liabilities that have been repaid, discharged or otherwise extinguished and
(iii) liabilities under or contemplated by this Agreement.
Section 3.10 No Default.
Except as set forth in Section 3.10 of the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries is in default or
violation (and no event has occurred which with notice or the lapse of time or
both would constitute a default or violation) of any term, condition or
provision of (a) its articles of incorporation or bylaws or other
organizational document, (b) indenture, mortgage, note, bond, lien, lease,
license, agreement, contract, order, judgment, ordinance, the Company Permit or
other instrument or obligation to which the Company or Company Subsidiary is a
party or by which the Company or any Company Subsidiary or any of their
respective properties is bound or subject to, or (c) any order, writ,
injunction, decree or Law applicable to the Company or any of the Company
Subsidiaries, except in the case of clauses (b) and (c) above for defaults or
violations which would not have a Material Adverse Effect on the Company.
Section 3.11 Finders' and Bankers' Fees.
Except for the Financial Advisor, a copy of whose engagement agreement has
been provided to Buyer, there is no investment banker, broker, finder, or other
intermediary which has been retained by or is authorized to act on behalf of
the Company, the Special Committee or any Company Subsidiary who might be
entitled to any fee or commission from the Company, Buyer or any of their
respective Affiliates upon consummation of the transactions contemplated by
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
Section 4.1 Corporate Organization.
Holding is a validly existing limited liability company (GmbH) in good
standing under the laws of Germany. Merger Subsidiary has been duly
incorporated and is validly existing and in good standing under the laws of
North Carolina. Each has all corporate powers and all material governmental
licenses, authorizations, consents, and approvals required to consummate the
transactions contemplated by this Agreement. Since the date of its
incorporation, Merger Subsidiary has not engaged in any material activities
other than in connection with or as contemplated by this Agreement.
Section 4.2 Corporate Authorization.
The execution, delivery, and performance by Holding and Merger Subsidiary
of this Agreement and the consummation of the contemplated transactions
contemplated are within the corporate powers of Holding and Merger Subsidiary
and are duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of Holding and Merger Subsidiary
enforceable against them in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equity principles.
Section 4.3 Governmental Authorization.
The execution, delivery and performance by Holding and Merger Subsidiary
of this Agreement and the consummation by Holding and Merger Subsidiary of the
transactions contemplated by this Agreement require no action by or in respect
of, or filing with, any Governmental Authority other than (i) the filing of
Articles of Merger in accordance with the NCBCA and (ii) compliance with any
applicable requirements of the Exchange Act.
Section 4.4 Non-Contravention.
The execution, delivery and performance by Holding and Merger Subsidiary
of this Agreement and the consummation by Holding and Merger Subsidiary of the
contemplated transactions contemplated do not and will not (i) contravene or
conflict with organizational documents of Holding or the articles of
incorporation or bylaws of Merger Subsidiary, or (ii) assuming compliance with
the matters referred to in Section 4.3, contravene or conflict with any
material provision of Law or Order binding upon or applicable to Holding or
Merger Subsidiary.
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Section 4.5 Finders' and Bankers' Fees.
There is no investment banker, broker, finder, or other intermediary which
has been retained by or is authorized to act on behalf of Buyer who is entitled
to any fee or commission from the Company or any of the Company Subsidiaries if
the transactions contemplated by this Agreement are not consummated.
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1 Conduct of the Company.
From the date of this Agreement until the Effective Time, the Company
shall conduct its business in the ordinary course consistent with past practice
and (except for acts in connection with the Merger) shall use its best efforts
to preserve intact its business relationships with third parties and to keep
available the services of its present officers and employees.
Section 5.2 Shareholder Meeting; Proxy Material.
The Company shall cause a meeting of its shareholders (the "Company
Shareholder Meeting") to be called and held as soon as reasonably practicable
for the purpose of voting on the approval and adoption of this Agreement and
the Merger. The directors of the Company, acting in part in reliance upon the
unanimous recommendation of the Special Committee, shall, subject to their
fiduciary duties after consultation with counsel, recommend approval and
adoption of this Agreement and the Merger by the Company's shareholders. In
connection with this meeting, but subject to the terms hereof, the Company (i)
will promptly prepare and file with the Commission, will use its best efforts
to have cleared by the Commission and will then mail to its shareholders as
promptly as practicable the Company Proxy Statement and all other proxy
materials for such meeting, and will cooperate with Holding to prepare and file
the Schedule 13E-3 Transaction Statement required to be filed by the Company
and Holding pursuant to Section 13(e) of the Exchange Act (the "Schedule
13E-3"), (ii) will use its best efforts to obtain the necessary approvals by
its shareholders of this Agreement and the transactions contemplated hereby and
(iii) will otherwise comply with all legal requirements applicable to such
meeting.
Section 5.3 Disclosure Documents.
(a) Each document required to be filed by the Company with the Commission
in connection with the transactions contemplated by this Agreement (the
"Company Disclosure Documents"), including without limitation the proxy
statement of the Company (the "Company Proxy Statement") to be filed with
the Commission in connection with the Merger, and any amendments or
supplements will, when filed, comply as to form in all material respects
with the applicable requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or any amendment or
supplement is first mailed to shareholders of the Company, at the time such
shareholders vote on adoption of this Agreement, and at the Effective Time,
the Company Proxy Statement, as supplemented or amended if applicable will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements not misleading in
the light of the circumstances under which they were made. At the time of
the filing of any Company Disclosure Document other than the Company Proxy
Statement and at the time of any distribution, such Company Disclosure
Document will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements not
misleading in the light of the circumstances under which they were made.
The representations and warranties contained in this Section 5.3(b) will
not apply to statements or omissions included in any Company Disclosure
Documents (including without limitation the Company Proxy Statement) based
upon information furnished to the Company in writing by Buyer specifically
for use therein.
Section 5.4 Access to Information.
From the date of this Agreement until the Effective Time, the Company will
give Buyer, its counsel, financial advisors, auditors, and other authorized
representatives full access to the offices, properties, books and records of
the Company, will furnish to Buyer, its counsel, financial advisors, auditors,
and other authorized representatives such financial and operating data and
other information as such Persons may reasonably request and will instruct the
Company's employees, counsel, financial advisors, and auditors to cooperate
with Buyer in its investigation of the business of the Company; provided that
no investigation pursuant to this Section shall affect any representation or
warranty given by the Company to Buyer hereunder.
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Section 5.5 Notices of Certain Events.
The Company shall promptly notify Buyer of:
(a) any notice or other communication received by the Company from any
Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement; and
(b) any notice or other communication received by the Company from any
Governmental Authority in connection with the transactions contemplated by
this Agreement.
ARTICLE VI
COVENANTS OF BUYER
Section 6.1 Director and Officer Liability.
For six years after the Effective Time, each of the Surviving Corporation
and Holding shall indemnify and hold harmless the present officers and
directors of the Company with respect to acts or omissions occurring at or
prior to the Effective Time to the fullest extent provided under the Company's
articles of incorporation and bylaws in effect on the date hereof. The
provisions of this Section 6.1 are intended to be for the benefit of, and shall
be enforceable by, the indemnified parties referred to in this Section 6.1 and
their heirs and personal representatives, and shall be binding upon Holding and
the Surviving Corporation and their respective successors and assigns.
Section 6.2 Disclosure Documents.
The information with respect to Buyer and its Affiliates that Buyer
furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements not
misleading in the light of the circumstances under which they were made (i) in
the case of the Company Proxy Statement, at the time the Company Proxy
Statement or any amendment or supplement is first mailed to shareholders of the
Company, at the time the shareholders vote on adoption of this Agreement and at
the Effective Time, and (ii) in the case of any Company Disclosure Document
other than the Company Proxy Statement, at the time of filing, and at the time
of any distribution thereof.
Section 6.3 Notices of Certain Events.
Buyer shall promptly notify the Company of:
(a) any notice or other communication received by Buyer from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement; and
(b) any notice or other communication received by Buyer from any
Governmental Authority in connection with the transactions contemplated by
this Agreement.
ARTICLE VII
COVENANTS OF BUYER AND THE COMPANY
Section 7.1 Best Efforts.
Subject to the terms and conditions of this Agreement, each party will use
its best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper, or advisable under applicable Laws to
consummate the transactions contemplated by this Agreement.
Section 7.2 Certain Filings.
The Company and Buyer shall cooperate with one another (i) in connection
with the preparation of the Company Disclosure Documents, including without
limitation the Company Proxy Statement and the Schedule 13E-3, (ii) in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement, and (iii) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
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Section 7.3 Public Announcements.
Buyer and the Company will consult with each other before issuing any
press release or making any public statement with respect to this Agreement and
the transactions contemplated hereby and, except as may be required by
applicable Law or any agreement with NASDAQ, will not issue any such press
release or make any such public statement prior to such consultation.
Section 7.4 Further Assurances.
After the Effective Time, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver in the name and on behalf
of the Company or Merger Subsidiary any deeds, bills of sale, assignments,
agreements, certificates, other documents, or assurances and to take and do in
the name and on behalf of the Company or Merger Subsidiary any other actions
and things they may deem desirable to vest, perfect, or confirm of record or
otherwise in the Surviving Corporation, any and all right, title, and interest
in, to, and under any of the rights, properties, or assets of the Company
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.1 Conditions to the Obligations of Each Party.
The obligations of the Company, Holding, and Merger Subsidiary to
consummate the Merger are subject to the satisfaction at or before the
Effective Time of the following conditions, any or all of which may be waived,
in whole or in part, by each of the parties intended to benefit therefrom, to
the extent permitted by applicable Law:
(a) this Agreement and the Merger shall have been approved and adopted by
a majority of all shares of the Company Common Stock entitled to vote
thereon, in accordance with Section 53-11-03 of the NCBCA;
(b) such parties shall have received a copy, certified by the Secretary
of Merger Subsidiary, of consent resolutions duly adopted (and not
subsequently rescinded or modified) by the Board of Directors and sole
shareholder of Merger Subsidiary, by the terms of which resolutions such
Board of Directors shall have adopted and approved this Agreement and the
Merger and recommended the Merger to Holding, as the sole shareholder of
Merger Subsidiary, and Holding shall have adopted and approved this
Agreement and the Merger;
(c) no Governmental Authority shall have enacted, issued, promulgated,
enforced, or entered any Law or Order (whether temporary, preliminary, or
permanent) which is in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger; and
(d) all actions by or in respect of or filings with any Governmental
Authority required to permit the consummation of the Merger shall have been
obtained, other than the filing of the requisite Articles of Merger with
the Secretary of State of North Carolina.
Section 8.2 Additional Conditions to the Obligations of Buyer and Merger
Subsidiary.
The obligations of Buyer and Merger Subsidiary to consummate the Merger
are also subject to the satisfaction at or prior to the Effective Time of the
following further conditions, any or all of which may be waived, in whole or in
part, by each of the parties intended to benefit therefrom, to the extent
permitted by applicable Law:
(a) the Company shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, the representations and warranties of the Company contained
in this Agreement and in any certificate delivered by the Company pursuant
hereto shall be true and correct in all respects, except where the breach
or inaccuracy thereof would not, individually or in the aggregate, have a
Material Adverse Effect, at and as of the Effective Time as if made at and
as of such time, except that those representations and warranties which
address matters only as of a particular date shall remain true and correct
as of such date, and Buyer shall have received a certificate signed by the
chief executive officer and the principal financial officer of the Company
to the foregoing effect;
(b) no Material Adverse Effect shall have occurred;
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(c) Buyer shall have received or be satisfied that it will receive all
consents and approvals contemplated by Section 3.4 of the Company
Disclosure Schedule and any other consents of third parties necessary in
connection with the consummation of the Merger if the failure to obtain any
such consent or consents would have a Material Adverse Effect;
(d) The Company shall deliver Cancellation Instruments executed by all
holders of Options with respect to all outstanding Options as of the
Effective Time;
(e) Buyer shall have received all documents it may reasonably request
relating to the authority of the Company to enter into this Agreement, all
in form and substance reasonably satisfactory to Buyer; and
(f) Buyer shall have received from Moore & Van Allen, counsel to the
Company, an opinion or opinions dated as of the Effective Time covering
such matters as shall be reasonably requested by Holding.
Section 8.3 Additional Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are also subject
to the satisfaction at or prior to the Effective Time of the following further
conditions, any or all of which may be waived, in whole or in part, by the
Company to the extent permitted by applicable Law:
(a) Buyer and Merger Subsidiary shall have performed in all material
respects all of their respective obligations required to be performed by
them at or prior to the Effective Time, the representations and warranties
of Buyer contained in this Agreement and in any certificate delivered by
Buyer or Merger Subsidiary pursuant hereto shall be true and correct in all
material respects at and as of the Effective Time as if made at and as of
such time, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of
such date, and the Company shall have received a certificate signed by the
chief executive officer and chief financial officer of each of Holding and
Merger Subsidiary to the foregoing effect; and
(b) the Company shall have received all documents it may reasonably
request relating to the authority of Buyer or Merger Subsidiary to enter
into this Agreement, all in form and substance reasonably satisfactory to
the Company.
ARTICLE IX
TERMINATION
Section 9.1 Termination.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of this
Agreement by the shareholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Merger has not been
consummated by October 31, 1998;
(c) by either the Company or Buyer, if there shall be any Law that makes
consummation of the Merger illegal or otherwise prohibited or if any Order
enjoining Buyer or the Company from consummating the Merger is entered and
such Order shall become final and nonappealable; or
(d) by either the Company or Buyer if this Agreement and the Merger shall
fail to be approved and adopted by the shareholders of the Company at the
Company Shareholder Meeting called for such purpose, as set forth in
Section 8.1(a) above.
Section 9.2 Effect of Termination.
If this Agreement is terminated pursuant to Section 9.1, this Agreement
shall become void and of no effect with no liability on the part of any party,
except that the agreements contained in Section 10.5 shall survive the
termination hereof; provided however, that, except as specifically provided,
nothing herein shall relieve any party of liability for any breach of this
Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.1 Definitions.
As used in this Agreement, the following terms have the following
respective meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"AFFILIATE" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such given Person.
"AGREEMENT" means this Agreement and Plan of Merger, as the same may be
supplemented, modified, or amended from time to time.
"EXPENSES" means all reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants, investment bankers,
experts, consultant and commitment fees and other financing fees and expenses)
incurred by Holding, Merger Subsidiary, or the Company, or on behalf of any
such party in connection with or related to the authorization, preparation,
negotiation, execution, and performance of this Agreement, the preparation,
printing, filing, and mailing of the Company Proxy Statement and Schedule
13E-3, the solicitation of the shareholder approvals, and all other matters
related to the consummation of the contemplated transactions.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"GOVERNMENTAL AUTHORITY" means any federal, state, county, local, foreign,
or other governmental or public agency, instrumentality, commission, authority,
board, or body, and any court, arbitrator, mediator, or tribunal.
"LAW" means any code, law, ordinance, regulation, rule, or statute of any
Governmental Authority.
"LIEN" means any security interest, lien, mortgage, deed to secure debt,
deed of trust, pledge, charge, conditional sale, or other title retention
agreement, or other encumbrance of any kind.
"MATERIAL ADVERSE EFFECT" means any matter that would reasonably be
expected to affect materially and adversely the business, condition (financial
or otherwise), or results of operations of the Company and its Subsidiaries
considered as a whole.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or other Governmental Authority.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization, including a government or political subdivision, or any agency or
instrumentality thereof.
"SUBSIDIARY" OR "SUBSIDIARIES" of any person means any corporation,
partnership, joint venture or other legal entity of which such other person
(either alone or through or together with any other subsidiary) owns, directly
or indirectly, 50% or more of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"SURVIVING CORPORATION" means the Company as the surviving corporation
resulting from the Merger.
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The following terms are defined in the following Sections of this
Agreement:
<TABLE>
<CAPTION>
Term Section
- ---------------------------------- ----------------------
<S> <C>
"Articles of Merger" 1.2(b)
"Board" Recital C
"Buyer" Opening Paragraph
"Closing" 1.7
"Closing Date" 1.7
"Commission" 3.7
"Company" Opening Paragraph
"Company Common Stock" Recital A
"Company Current Reports" 3.6
"Company Disclosure Documents" 5.3
"Company Option Plans" 1.6
"Company Permits" 3.5
"Company Proxy Statement" 5.3
"Company SEC Filings" 3.7
"Company Shareholder Meeting" 5.2
"Company Subsidiaries" 3.1
"Company 10-K" 3.7
"Exchange Act" 3.4
"Exchange Agent" 1.4(a)
"Effective Time" 1.2(b)
"Merger" Recital E
"Merger Consideration" 1.3(a)
"Merger Subsidiary" Opening Paragraph
"NCBCA" Recital E
"Preferred Stock" Recital A
"Public Shareholders" Recital C
"Schedule 13E-3" 5.2
"Share" 1.3(a)
"Special Committee" Recital C
</TABLE>
Section 10.2 Notices.
Unless otherwise specifically provided herein, any notice, demand,
request, or other communication herein requested or permitted to be given shall
be in writing and may be personally served, sent by overnight courier service,
or sent by telecopy with a confirming copy sent by United States first-class
mail, each with any postage or delivery charge prepaid. For the purposes
hereof, the addresses of the parties (until notice of a change is delivered as
provided in this Section) shall be as follows:
<TABLE>
<S> <C>
If to the Company: Wandel & Goltermann Technologies, Inc.
1030 Swabia Court
Research Triangle Park, NC 27709
Fax: (919) 941-9160
If to Holding or Merger Sub: Wandel & Goltermann Management Holding GmbH
Box 1262
D-72795 Eningen u.A.
Germany
Fax: 011-44-7121-88996
</TABLE>
Any notice provided hereunder shall be deemed to have been given on the
date delivered in person, or on the next business day after deposit with an
overnight courier service, or on the date received by telecopy transmissions.
Section 10.3 No Survival of Representations and Warranties.
The representations and warranties contained herein and in any certificate
delivered shall not survive the Effective Time or the termination of this
Agreement.
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Section 10.4 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in writing and
signed by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective; and provided, further, that
after the adoption of this Agreement by the shareholders of the Company, no
such amendment or waiver shall, without the further approval of such
shareholders, alter or change (i) the Merger Consideration or (ii) any of
the terms or conditions of this Agreement if such alteration or change
would adversely affect the Public Shareholders.
(b) No failure or delay by any party in exercising any right, power, or
privilege hereunder shall operate as a waiver nor shall any single or
partial exercise preclude any other or further exercise or the exercise of
any other right, power or privilege. The parties' rights and remedies shall
be cumulative and not exclusive of any rights or remedies provided by law.
Section 10.5 Fees and Expenses.
Except as otherwise provided in this Section, all Expenses incurred in
connection with this Agreement shall be paid by the party incurring such
Expense.
Section 10.6 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, provided
that no party may assign, delegate, or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties
hereto except that Buyer may transfer or assign, in whole or from time to time
in part, to one or more of its Affiliates, its rights under this Agreement, but
any such transfer or assignment will not relieve Buyer of its obligations under
this Agreement or prejudice the rights of shareholders to receive the Merger
Consideration for Shares properly surrendered in accordance with Section 1.4.
This Agreement shall not be construed so as to confer any right or benefit upon
any person other than the parties to this Agreement, and their respective
successors and assigns.
Section 10.7 Governing Law.
Regardless of the place or places where this Agreement may be executed,
delivered or consummated, this Agreement shall be governed by and construed in
accordance with the Laws of the State of North Carolina, without regard to any
applicable conflicts of Laws.
Section 10.8 Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
Section 10.9 Headings and Captions.
The headings and captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
Section 10.10 Interpretations.
Neither this Agreement nor any uncertainty or ambiguity shall be construed
or resolved against any party, whether under any rule of construction or
otherwise. No party to this Agreement shall be considered the drafter. The
parties acknowledge and agree that this Agreement has been reviewed,
negotiated, and accepted by all parties and their attorneys and shall be
construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all the parties.
Section 10.11 Counterparts; Effectiveness.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures were upon the
same instrument. This Agreement shall become effective when each party has
received a counterpart signed by all of the other parties.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as of the day and year first above written.
"The Company" "Holding"
WANDEL & GOLTERMANN WANDEL & GOLTERMANN
TECHNOLOGIES, INC. MANAGEMENT HOLDING GmbH
By: By:
----------------------------------- -------------------------------
Its: Its:
---------------------------------- -------------------------------
By:
-------------------------------
Its:
-------------------------------
"Merger Subsidiary"
WG MERGER CORP.
By:
-------------------------------
Its:
-------------------------------
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APPENDIX B
[GRAPHIC OMITTED]
March 28, 1998
Special Committee of the Board of Directors
Wandel & Goltermann Technologies, Inc.
1030 Swabia Court
Research Triangle Park, North Carolina 27709-3585
Dear Gentlemen:
We understand that Wandel & Goltermann Technologies, Inc. (the "Company")
and Wandel & Goltermann Management Holding GmbH (the "Buyer") proposed to enter
into an Agreement and Plan of Merger dated as of March 28, 1998 (the "Merger
Agreement"). Pursuant to the Merger Agreement, each share of common stock of
the Company (the "Common Stock") that is not presently held by the Buyer (the
"Minority Shares"), will be converted into the right to receive $15.90 per
share in cash (the "Merger"). We understand that approximately 62.1% of the
outstanding shares of Common Stock are owned by the Buyer. The terms and
conditions of the Merger are more fully set forth in the Merger Agreement.
We have been requested by the Special Committee of the Board of Directors
of the Company to render our opinion with respect to the fairness, from a
financial point of view, of the consideration to be received in the Merger by
the holders of the Minority Shares.
In arriving at the opinion set forth below, we have, among other things:
1. Reviewed certain publicly available information concerning the Company
which we believe to be relevant to our analysis;
2. Reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of the
Company;
3. Analyzed certain financial assumptions prepared by the Company;
4. Conducted discussions with members of management of the Company
concerning its business, operations and prospects;
5. Reviewed the reported prices and trading activity for the Common Stock;
6. Reviewed the historical market prices and trading activity for the
Company's shares and compared them with those of certain publicly traded
companies which we deemed to be reasonably similar to the Company;
7. Compared the results of operations and present financial condition of
the Company with those of certain publicly traded companies which we
deemed to be reasonably similar to the Company;
8. Reviewed the financial terms to the extent publicly available, of
certain comparable merger and acquisition transactions;
9. Reviewed the financial terms, to the extent publicly available, of
certain comparable minority buy-out transactions;
10. Performed certain financial analyses with respect to the Company's
projected future operating performance, including a discounted cash flow
analysis;
11. Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary.
We have relied upon the accuracy and completeness of the financial and
other information used by us in arriving at our opinion without independent
verification, and have further relied upon the assurances of management of the
Company that
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they are not aware of any facts that would make such information inaccurate or
misleading. With respect to the financial forecasts of the Company for the
fiscal years 1998 through 2002, we have assumed that the assumptions underlying
the financial forecasts provided to us have been reasonably prepared and
reflect the best currently available estimates and judgments of the management
of the Company as to the future financial performance of the Company. In
arriving at our opinion, we have not conducted an extensive physical inspection
of the properties and facilities of the Company. We have not made nor obtained
any evaluations or appraisals of the assets or liabilities of the Company. Our
opinion is necessarily based upon market, economic and other conditions as they
exist on, and can be evaluated as of, the date of this letter.
In arriving at our opinion, we were not authorized to solicit and did not
solicit, interest from any party with respect to the acquisition of the
Company, any of its assets or minority shares. We have acted as financial
advisor to the Special Committee of the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In
addition, the Company has agreed to indemnify us for certain liabilities
arising out of the rendering of this opinion.
We have also performed various investment banking services for the Company
in the past four years (including the Company's initial public offering) and
have received customary fees for such services. In the ordinary course of our
business, we have traded in the Common Stock for our own account and for the
accounts of our customers.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that the consideration to be received by the holders of Minority
Shares pursuant to the Merger Agreement is fair from a financial point of view
to such holders.
This opinion is for the use and benefit of the Special Committee of the
Board of Directors of the Company and the Board of Directors of the Company and
may not be used for any other purpose without our prior written consent. We
hereby consent, however, to the inclusion of this opinion as an exhibit to any
proxy statement distributed in connection with the Merger.
Very truly yours,
/s/ The Robinson-Humphrey Company, LLC
- --------------------------------------
THE ROBINSON-HUMPHREY COMPANY, LLC
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APPENDIX C
CHAPTER 55, ARTICLE 13 OF THE GENERAL STATUTES OF NORTH CAROLINA
ARTICLE 13.
DISSENTER'S RIGHTS.
PART I. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
ss. 55-13-01. Definitions.
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation
by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when
and in the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion
would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances, giving due consideration to the rate
currently paid by the corporation on its principal bank loans, if any,
but not less than the rate provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on
file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
ss. 55-13-02. Right to Dissent.
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his
shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation (other
than a parent corporation in a merger under G.S. 55-11-04) is a
party unless (i) approval by the shareholders of that corporation is
not required under G.S. 55-11-03(g) or (ii) such shares are then
redeemable by the corporation at a price not greater than the cash
to be received in exchange for such shares;
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, unless
such shares are then redeemable by the corporation at a price not
greater than the cash to be received in exchange for such shares;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than as permitted by G.S.
55-12-01, including a sale in dissolution, but not including a sale
pursuant to court order or a sale pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be
distributed in cash to the shareholders within one year after the
date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because
it (i) alters or abolishes a preferential right of the shares; (ii)
creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption
or repurchase, of the shares; (iii) alters or abolishes a preemptive
right of the holder of the shares to acquire shares or other
securities; (iv) excludes or limits the right of the shares to vote
on any matter, or to cumulate votes; (v) reduces the number of
shares owned by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for cash under G.S.
55-6-04; or (vi) changes the corporation into a nonprofit
corporation or cooperative organization;
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(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the
board of directors provides that voting or nonvoting shareholders
are entitled to dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in
exchange for cash or other property, unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(c) Notwithstanding any other provision of this Article, there shall be no
right of dissent in favor of holders of shares of any class or series
which, at the record date fixed to determine the shareholders entitled
to receive notice of and to vote at the meeting at which the plan of
merger or share exchange or the sale or exchange of property is to be
acted on, were (i) listed on a national securities exchange or (ii)
held by at least 2,000 recorded shareholders, unless in either case:
(1) The articles of incorporation of the corporation issuing the shares
provide otherwise;
(2) In the case of a plan of merger or share exchange, the holders of
the class or series are required under the plan of merger or share
exchange to accept for the shares anything except:
a. Cash;
b. Shares, or shares and cash in lieu of fractional shares of the
surviving or acquiring corporation, or of any other corporation
which, at the record date fixed to determine the shareholders
entitled to receive notice of and vote at the meeting at which
the plan of merger or share exchange is to be acted on, were
either listed subject to notice of issuance on a national
securities exchange or held of record by at least 2,000 record
shareholders; or
c. A combination of cash and shares as set forth in sub-subdivisions
a, and b, of this subdivision.
ss. 55-13-03. Dissent by Nominees and Beneficial Owners.
(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose
behalf he asserts dissenters' rights. The rights of a partial dissenter
under this subsection are determined as if the shares as to which he
dissents and his other shares were registered in the names of different
shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder.
ss. 55-13-04 TO 55-13-19. Reserved for Future Codification Purposes.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
ss. 55-13-20. Notice of Dissenters' Rights.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert
dissenters' rights under this Article and be accompanied by a copy of
this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02 is
taken without a vote of shareholders, the corporation shall no later
than 10 days thereafter notify in writing all shareholders entitled to
assert dissenters' rights that the action was taken and send them the
dissenters' notice described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this
section, such failure shall not invalidate any corporate action taken;
but any shareholder may recover from the corporation any damage which
he suffered from such failure in a civil action brought in his own name
within three years after the taking of the corporate action creating
dissenters' rights under G.S. 55-13-02 unless he voted for such
corporate action.
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ss. 55-13-21. Notice of Intent to Demand Payment.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must actually
receive, before the vote is taken written notice of his intent to
demand payment for his shares if the proposed action is effectuated;
and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
is not entitled to payment for his shares under this Article.
ss. 55-13-22. Dissenters' Notice.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is authorized at a shareholders' meeting, the corporation
shall mail by registered or certified mail, return receipt requested, a
written dissenters' notice to all shareholders who satisfied the
requirement of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10 days after
shareholder approval, or if no shareholder approval is required, after
approval of the board of directors, of the corporate action creating
dissenters' rights under 6.S.55-13-02, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days
after the date the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
ss. 55-13-23. Duty to Demand Payment.
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22
must demand payment and deposit his share certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) retains all other rights of a
shareholder until these rights are canceled or modified by the taking
of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his shares under this Article.
ss. 55-13-24. Share Restriction.
(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the
proposed corporate action is taken or the restrictions released under
G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until
these rights are canceled or modified by the taking of the proposed
corporate action.
ss. 55-13-25. Payment.
(a) As soon as the proposed corporate action is taken, or within 30 days
after receipt of a payment demand, the corporation shall pay each
dissenter who complied with G.S. 55-13-23 the amount the corporation
estimates to be the fair value of his shares, plus interest accrued to
the date of payment.
(b) The payment shall be accompanied by:
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(1) The corporation's most recent available balance sheet as of the end
of a fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of cash
flows for that year, and the latest available interim financial
statements, if any;
(2) As explanation of how the corporation estimated the fair value of
the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under G.S.
55-13-28; and
(5) A copy of this Article.
ss. 55-13-26. Failure to Take Action.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates
and release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a
new dissenters' notice under G.S. 55-13-22 and repeat the payment
demand procedure.
ss. 55-13-27. Reserved for Future Codification Purposes.
ss. 55-13-28. Procedure if Shareholder Dissatisfied with Corporation's Offer or
Failure to Perform.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand
payment of the amount in excess of the payment by the corporation under
G.S. 55-13-25 for the fair value of his shares and interest due, if;
(1) The dissenter believes that the amount offered under G.S. 55-13-25
is less than the fair value of his shares or that the interest due
is incorrectly calculated;
(2) The corporation fails to make payment under G.S. 55-13-25; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after
the date set for demanding payment.
(b) A dissenter waives his rights to demand payment under this section
unless he notifies the corporation of his demand in writing (i) under
subdivision (a)(1) within 30 days after the corporation made payment
for his shares or (ii) under subdivisions (a)(2) and (a)(3) within 30
days after the corporation has failed to perform timely. A dissenter
who fails to notify the corporation of his demand under subsection (a)
within such 30-day period shall be deemed to have withdrawn his dissent
and demand for payment.
ss. 55-13-29. Reserved for Future Codification Purposes.
PART 3. JUDICIAL APPRAISAL OF SHARES.
ss. 55-13-30. Court Action.
(a) If a demand for payment under G.S. 55-13-28 remains unsettled, the
dissenter may commence a proceeding within 60 days after the earlier
of (i) the date payment is made under G.S. 55-13-28, or (ii) the
date of the dissenter's payment demand under G.S. 55-13-28 by filing
a complaint with the Superior Court Division of the General Court of
Justice to determine the fair value of the shares and accrued
interest. A dissenter who takes no action within the 60-day period
shall be deemed to have withdrawn his dissent and demand for
payment.
(a)(1) Repealed by Session Laws 1997-202, s.4, effective October 1, 1997.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to make all dissenters (whether
or not residents of this State) whose demands remain unsettled
parties to the proceeding as in an action against their shares and
all parties must be served with a copy of the complaint.
Nonresidents may be served by registered or certified mail or by
publication as provided by law.
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(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (a) is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the
powers described in the order appointing them, or any amendment to
it. The parties are entitled to the same discovery rights as parties
in other civil proceedings. The proceeding shall be tried as in
other civil actions. However, in a proceeding by a dissenter in a
corporation that was a public corporation immediately prior to
consummation of the corporate action giving rise to the right of
dissent under G.S. 55-13-02, there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the
corporation.
ss. 55-13-31. Court Costs and Counsel Fees.
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30
shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the
court, and shall assess the costs as it finds equitable.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amount the court finds
equitable;
(1) Against the corporation and in favor of any or all dissenters
if the court finds the corporation did not substantially comply
with the requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of
either or any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this Article.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against
the corporation, the court may award to these counsel reasonable
fees to be paid out of the amounts awarded the dissenters who were
benefited.
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WANDEL & GOLTERMANN TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
The undersigned hereby appoints Gerry Chastelet and Adelbert Kuthe, and
each of them, proxies, with power of substitution, to represent the undersigned
at the Special Meeting of Shareholders of Wandel & Goltermann Technologies,
Inc., a North Carolina corporation (the "Company"), to be held on , August
, 1998, at at , and at any adjournments thereof, to vote the
number of shares which the undersigned would be entitled to vote if present in
person in such manner as such proxies may determine, and to vote on the
following proposal as specified below by the undersigned.
(1) Proposal to approve an Agreement and Plan of Merger pursuant to which WG
Merger Corp., a newly-formed North Carolina corporation that is a
wholly-owned subsidiary of Wandel & Goltermann Management Holding GmbH, a
German limited liability company ("WG Holding"), will be merged with and
into the Company and each outstanding share of the Company's common stock,
$.01 par value, (other than shares held by WG Holding and shares held by
shareholders who have properly perfected their dissenters' rights) will be
converted into the right to receive $15.90 in cash.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IN THE ABSENCE OF SPECIFIED DIRECTIONS,
THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL SET FORTH ABOVE. The proxies
are also authorized to vote in their discretion upon such other manners as may
properly come before the meeting or any adjournment thereof.
In signing as attorney,
administrator, executor, guardian,
trustee or as a custodian for a
minor, please add your title as such.
If a corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, please
sign in the partnership's name.
X
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X
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Dated , 1998
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