NCH (NCH) SC TO-T Third party tender offer statement

Strictly private & confidential

Exhibit (c)(iii)

Project Ranger

Discussion materials

April 4, 2001

Deutsche Banc Alex. Brown represents the Investment Banking activities of Deutsche Banc Alex. Brown Inc. (US) and Deutsche Bank Securities Ltd. (Canada). Deutsche Banc Alex. Brown Inc. and Deutsche Bank Securities Ltd. are subsidiaries of Deutsche Bank AG.

These materials were prepared by Deutsche Banc Alex. Brown based on publicly available information, without independent verification by Deutsche Banc Alex. Brown. These materials are subject to further due diligence and discussion and do not constitute a specific transaction recommendation or an opinion as to valuation or otherwise, and should not be relied upon as the basis for any investment decision. No representation or warranty (express or implied) is made by Deutsche Banc Alex. Brown as to the accuracy or completeness of the information herein. The materials are intended solely for review by the client and are not for publication or distribution to any other parties.

Contents

Section
1	Executive summary	1
2	Ranger financial overview	11
3	Review of Ranger market performance and shareholder base	30
4	Going private transaction analysis	41
5	Preliminary valuation analysis and observations	45
Appendix
I	Analysis of selected publicly traded companies	50
II	Analysis of selected precedent transactions	57
III	Analysis of premiums paid in going private transactions	59
IV	Going private issues and considerations	61

Executive summary Section 1

Section 1

Executive summary

1

Executive summary Section 1

Today’s agenda

• Review strategic and financial alternatives for the Company given the family’s desire to retain control

• Review of historical and projected financial performance

• Review of trading characteristics of Ranger’s common stock

• Review Ranger’s leverage and cash flow characteristics assuming various going private transaction scenarios

• Assess implied valuation metrics for Ranger based on a number of commonly accepted valuation methods

• Review key financial, legal and tactical issues related to a potential going private transaction

2

Executive summary Section 1

Review of strategic / financial alternatives

The following alternatives are available to the Company, given the family’s desire to retain control of the Company.

Strategy	Implementation	Advantages/Disadvantages
Run business as is	Manage existing business	Low risk
		Path of least resistance
		Lackluster share price/earnings prospects
		No identified use of cash flow
Acquisitions	Grow business through add-on acquisitions	Accretive transactions will grow earnings
		Growth strategy could reinvigorate stock
		Execution risk
		Not a near-term solution
		Management depth to run large scale business
Divestitures	Sale of business segments	Refocus on core business
		No identified use of cash proceeds
		Tax inefficient
		Creates less interesting public stock story
Recapitalization/Special Dividend	Borrow and pay dividend to all shareholders	Simple; uses currently available cash and borrowing capacity
		Tax inefficient to shareholders
		Reduces already small public market valuation
Share Repurchase	Open market purchase or self-tender	Simple; uses currently available cash and borrowing capacity
		Capital gains treatment to selling shareholders
		Reduces already small float
		Low volume makes open market purchases difficult
Going Private	Purchase existing public shareholders’ interests via negotiated merger agreement	Offers liquidity to all public shareholders at negotiated price
		Capital gains treatment to selling shareholders
		Eliminate public company expenses
		Uses currently available cash and borrowing capacity
		Increases financial risk to remaining shareholders

3

Executive summary Section 1

Observations regarding financial performance

		Observations		Commentary
2000 vs. 2001E	•	11.3% decline in revenue	•	Domestic business: sale of NE Thing and other businesses; stable or increasing revenue in all divisions except Plumbmaster; increased operating margin in Chemicals offset by other divisions.
	•	Operating margin increases from 5.2% to 7.6%	•	International: Revenue decline due to Western European operations and currency fluctuations. Stable/increasing margins in all regions except Far East.
	•	Cash and marketable securities expected to be $88 million at 4/30/01	•	Expectations for fiscal quarter ended April 30, 2001?
			•	Free cash flow generation, sale of surplus land, and sale of NE Thing.
Management’s projections for 2002-2006	•	Revenue increases from $646 million in 2001 to $751 million in 2006 for a CAGR of 3%	•	Domestic business: moderate revenue growth, stable margins.
	•	Operating income increases from $49 million in 2001 to $51 million in 2006	•	International business: declining revenue through 2003 primarily due to the Western European Region. Declining operating margin due to maturation of Eastern European and Far Eastern operations.

4

Executive summary Section 1

Summary financial projections

($ in millions)			Fiscal year ended April 30,
									Projected
			Actual			Est.
			2000			2001				2002			2003			2004			2005			2006
Income Statement Data:
	Revenue		$	728.2		$	646.1			$	650.7		$	673.2		$	701.6		$	725.2		$	751.4
		Revenue growth					-11.3	%			0.7	%		3.5	%		4.2	%		3.4	%		3.6	%
	EBITDA			68.9			63.0				55.7			57.7			60.6			63.1			65.8
		EBITDA margin		9.5	%		9.8	%			8.6	%		8.6	%		8.6	%		8.7	%		8.8	%
	Operating income			55.1			49.1				41.7			43.6			46.4			48.4			50.7
		Operating income margin		7.6	%		7.6	%			6.4	%		6.5	%		6.6	%		6.7	%		6.7	%
	Net income			26.7			35.6				29.5			31.6			34.4			36.8		��	39.4
		Net income margin		3.7	%		5.5	%			4.5	%		4.7	%		4.9	%		5.1	%		5.2	%
Balance Sheet Data:
	Cash & Marketable Securities		$	52.6		$	87.9			$	102.3		$	122.7		$	151.2		$	182.1		$	215.7
	Total Debt (1)			139.3			128.1				120.3			116.8			116.8			116.8			116.8
	Equity			212.8			224.2				249.5			277.0			307.2			339.8			375.0

(1) Includes deferred compensation.

5

Executive summary Section 1

Share price performance

($mm, except per share data)

Market statistics

Stock price (3/30/01)	$	47.62
Fully-diluted shares outstanding (mm)(1)		5.307
Equity value	$	252.7
Net debt(2)		45.2
Total enterprise value	$	297.9

(1)	Fully diluted shares outstanding based on treasury stock method.
(2)	Net debt includes retirement and deferred compensation plans less cash.

52-week trading statistics

($000) Average daily volume		5,570
high (3/23/01)	$	49.76
low (10/12/00)		33.00

(1)	10/17/97: Irvin L. Levy begins selling a portion of his holdings in Ranger.
(2)	04/22/98: Ranger completes sale of two subsidiaries.
(3)	05/26/98: Ranger agrees to purchase 1,213,738 shares from members of the Levy family for $60.89.
(4)	09/01/98: Ranger reports sales of $198.9 million for FY1999 Q1, up slightly from last year’s comparable period.
(5)	11/30/98: Ranger reports FY1999 Q2 results posting slight decline in revenue and net income.
(6)	03/03/99: Ranger reports FY1999 Q3 results, recording slight sales and earnings growth.
(7)	09/01/99: Ranger reports net sales of $200.2 million and net income of $6.3 million for FY2000 Q1.
(8)	10/29/99: Ranger announces sale of subsidiary, Resource Electronics Inc.
(9)	03/02/00: Ranger reports sales of $183.3 million for FY2000 Q3.
(10)	07/27/00: Ranger initiates stock buyback of 300,000 shares.
(11)	08/25/00: Ranger announces divestiture of N-E Thing Co.
(12)	12/08/00: Ranger reports operating income of $13 million and EPS of $1.92 for FY2001 Q2.
(13)	03/07/01: Ranger reports net sales of $159.0 million and operating income of $13.9 million for FY 2001 Q3.

6

Executive summary Section 1

Summary going private transaction analysis

($ in millions)
Purchase price per share	$	45.00		$	50.00		$	55.00		$	60.00		$	65.00		$	70.00
Market premium ($47.62 - 3/30/01)		-5.5	%		5.0	%		15.5	%		26.0	%		36.5	%		47.0	%
Premium to “normalized” share price ($39.53 - 12/01/00)(1)		13.8	%		26.5	%		39.1	%		51.8	%		64.4	%		77.1	%
Fully diluted shares outstanding (2)		5.3			5.3			5.7			5.7			5.7			5.7
Equity value		238.8			265.4			314.0			342.6			371.1			399.7
Net debt (as of April 30, 2001)(3)		40.2			40.2			19.1			19.1			19.1			19.1
Aggregate value	$	279.0		$	305.6		$	333.1		$	361.7		$	390.2		$	418.8
Multiple of Aggregate Value to:
LTM Revenue ($678.4 mm)		0.4x			0.5x			0.5x			0.5x			0.6x			0.6x
LTM EBITDA ($61.3 mm)		4.6x			5.0x			5.4x			5.9x			6.4x			6.8x
LTM EBIT ($48.6 mm)		5.7x			6.3x			6.9x			7.4x			8.0x			8.6x
LTM Net income ($26.6 mm)		9.0x			10.0x			11.8x			12.9x			14.0x			15.0x
Shares to be purchased (4)		2.2			2.2			2.2			2.2			2.2			2.2
Take-out equity value (5)	$	104.6		$	115.8		$	127.0		$	138.3		$	149.5		$	160.7
Excess cash and marketable securities used in take-out (6)		57.9			57.9			57.9			57.9			57.9			57.9
Incremental bank debt from going private transaction		46.7			57.9			69.1			80.4			91.6			102.8

(1)	Adjusted Ranger closing price. Applied median share price discount of selected companies from 12/01/00 to 03/30/01 to Ranger’s actual closing price on 12/01/00.
(2)	Represents shares and in-the-money options outstanding.
(3)	Represents $128.1mm debt (including $116.8mm deferred comp) less cash, marketable securities and option proceeds from in the money options.
(4)	Represents non-family owned shares (approximately 41.5%).
(5)	Represents cost to repurchase non-family owned shares (approximately 41.5%) including fees and expenses.
(6)	Based upon a minimum cash balance of $30 million.

7

Executive summary Section 1

Summary going private transaction analysis (continued)

($ in millions)
Purchase price per share	Base		$	45.00		$	50.00		$	55.00		$	60.00		$	65.00		$	70.00
Debt outstanding:(1)
Pro Forma 4/30/01	$	11.3		$	58.1		$	69.4		$	80.7		$	91.9		$	103.2		$	114.5
4/30/02		3.5			40.2			52.0			63.8			75.6			87.4			99.3
4/30/03		—			20.4			32.8			45.1			57.5			69.9			82.3
4/30/04		—			—			9.0			21.9			34.9			48.0			61.0
4/30/05		—			—			—			—			9.9			23.6			37.2
4/30/06		—			—			—			—			—			—			10.7
Leverage Statistics — Debt / EBITDA:
FY, ‘01 Pro Forma		0.2x			0.9x			1.1x			1.3x			1.5x			1.6x			1.8x
FY, ‘02		0.1x			0.7x			0.9x			1.1x			1.4x			1.6x			1.8x
FY, ‘03		—			0.4x			0.6x			0.8x			1.0x			1.2x			1.4x
FY, ‘04		—			—			0.1x			0.4x			0.6x			0.8x			1.0x
FY, ‘05		—			—			—			—			0.2x			0.4x			0.6x
FY, ‘06		—			—			—			—			—			—			0.2x
Net income:
FY, ‘01	$	35.6		$	35.6		$	35.6		$	35.6		$	35.6		$	35.6		$	35.6
FY, ‘02		29.5			24.3			23.7			23.1			22.5			21.9			21.3
FY, ‘03		31.6			26.4			25.8			25.2			24.5			23.9			23.3
FY, ‘04		34.4			29.3			28.6			28.0			27.3			26.7			26.0
FY, ‘05		36.8			31.6			31.0			30.4			29.7			29.1			28.4
FY, ‘06		39.4			34.1			33.5			33.0			32.4			31.7			31.0

(1) Includes environmental note, excludes deferred compensation.

8

Executive summary Section 1

Issues for consideration

Valuation	•	Magnitude of a share price premium over current share price given current ownership and board control by the Levy family
	•	Cost basis for major institutional investors
	•	Leverage considerations
	•	Comfort with expected future operational/financial performance
	•	Treatment/nature of retirement and deferred compensation plans
	•	Size and timing of cash outlays related to potential environmental liabilities
	•	Treatment/ nature of continued dividend payments to the Levy family
Transaction structure	•	Liquidity needs of family, if any
	•	Cost and structure of new debt capital
Transaction mechanics	•	Timing
	•	Negotiating strategy
	•	Special Committee views on a “fair and adequate deal”; fairness opinion

9

Executive summary Section 1

Tentative going private transaction timetable

(1) Completion time can vary significantly between a one-step merger, which would require SEC approval of the proxy statement, and a two-step transaction (tender offer followed by a merger), requiring Buyer to get at least 90% in the tender offer to file a short-form merger. Another variable is when Buyer’s proposal is publicly announced.

10

Ranger financial overview Section 2

Section 2

Ranger financial overview

11

Ranger financial overview Section 2

Summary financial projections

($ in millions)			Fiscal year ended April 30,
									Projected
			Actual			Est.
			2000			2001			2002			2003			2004			2005			2006
Income Statement Data:
	Revenue		$	728.2		$	646.1		$	650.7		$	673.2		$	701.6		$	725.2		$	751.4
		Revenue growth					-11.3	%		0.7	%		3.5	%		4.2	%		3.4	%		3.6	%
	EBITDA			68.9			63.0			55.7			57.7			60.6			63.1			65.8
		EBITDA margin		9.5	%		9.8	%		8.6	%		8.6	%		8.6	%		8.7	%		8.8	%
	Operating income			55.1			49.1			41.7			43.6			46.4			48.4			50.7
		Operating income margin		7.6	%		7.6	%		6.4	%		6.5	%		6.6	%		6.7	%		6.7	%
	Net income			26.7			35.6			29.5			31.6			34.4			36.8			39.4
		Net income margin		3.7	%		5.5	%		4.5	%		4.7	%		4.9	%		5.1	%		5.2	%
Balance Sheet Data:
	Cash & Marketable Securities		$	52.6		$	87.9		$	102.3		$	122.7		$	151.2		$	182.1		$	215.7
	Total Debt (1)			139.3			128.1			120.3			116.8			116.8			116.8			116.8
	Equity			212.8			224.2			249.5			277.0			307.2			339.8			375.0

(1) Includes deferred compensation.

12

Ranger financial overview Section 2

Current revenue mix

Source: Ranger management; excludes DBS.

(1) Excludes corporate and international expenses.

13

Ranger financial overview Section 2

Consolidated performance

Expected revenue decline in 2001 due to weakness within the domestic Plumbmaster business and Western Europe. Management expects declining operating margins in 2001 and 2002, due primarily to the International business and certain domestic businesses. Expect declining International revenue to be offset by moderate growth within the domestic business for future periods.

Consolidated revenue and operating income

Source: FY 1998-2000 per Ranger’s public filings; FY 2001-2006 estimates per Management projections.

14

Ranger financial overview Section 2

Segment performance

Domestic Chemical revenue and operating income

Expected moderate revenue growth due to expanded field sales force and expansion of Chem-Aqua. Stable operating margins after 2000 within all divisions.

Plumbmaster revenue and operating income

Revenue growth driven by diversification, growth of the “Big Box” business, and expansion of LSP. Margin expansion in core Plumbmaster business as well as LSP.

Note: The sum of the business segments and international regions may not equal Ranger’s consolidated revenues.

Source: Ranger management.

15

Ranger financial overview Section 2

Segment performance (continued)

Partsmaster revenue and operating income

Expected revenue growth driven by 5% growth within the core Field business. Stable margins for the Field, Reliance and Canadian businesses.

Landmark revenue and operating income

Expected revenue growth driven by expanded sports medicine business, continued growth of Podiatrist equipment sales and acquisitions.

Note: The sum of the business segments and international regions may not equal Ranger’s consolidated revenues.

Source: Ranger management.

16

Ranger financial overview Section 2

Segment performance (continued)

RPG revenue and operating income

Expected revenue growth due to continued penetration of the Veterinarian marketplace and major retailers such as K-Mart, Wal-Mart and Petsmart.

Note: The sum of the business segments and international regions may not equal Ranger’s consolidated revenues.

Source: Ranger management.

17

Ranger financial overview Section 2

International performance by region

Western Europe revenue and operating income

Expected continued revenue decline due to increased competition and continued economic difficulties in major countries such as France. Expected margin stability due to continued cost containment efforts.

Eastern Europe revenue and operating income

Expected moderate revenue growth as market opportunities are offset by competition for adequate salespeople. Expected margin decline due to maturation of the marketplace.

Note: The sum of the business segments and international regions may not equal Ranger’s consolidated revenues.

Source: Ranger management.

18

Ranger financial overview Section 2

International performance by region (continued)

Latin America revenue and operating income

Expected revenue growth due to sales force expansion. Expected margin stability as management faces continued labor productivity issues.

Asia revenue and operating income

         Expected revenue growth capitalizes on market opportunities in Mexico. Expected margin decline due to maturation of the marketplace.

Note: The sum of the business segments and international regions may not equal Ranger’s consolidated revenues.

Source: Ranger management.

19

Ranger financial overview Section 2

Insert blue sheet

20

Ranger financial overview Section 2

Overview of management’s projections

Revenue	Increases from $646.1 million in 2001 to $751.4 million in 2006 representing compounded annual growth of 3.1 %
EBITDA	Increases from $63.0 million in 2001 to $65.8 million in 2006
Operating Income	Increases from $49.1 million in 2001 to $50.7 million in 2006
Consolidated tax rate	37%
Working capital	$3 million annual increase
Acquisitions	$5 million of acquired revenue within Landmark in each of 2002 and 2003
Cash outlays for potential environmental issues	None
Cash outlays for deferred compensation	None
Foreign currency	No adjustments for future fluctuations
Dividends	$4.2 million annually

21

Ranger financial overview Section 2

Issues for consideration

Operational	•	Ability to increase domestic chemicals revenues through an expanded sales force while maintaining profitability
	•	Exposure to Home Depot and other “Big Box” customers
	•	Increased competition within mature international markets
	•	Ability to maintain growth and profitability characteristics within selected emerging markets
Financial	•	Timing/size of cash outlays for environmental liabilities related to Higgins Farm or any other potential locations
	•	Timing/size of cash outlays related to deferred compensation
	•	Future fluctuations in foreign currency values
	•	Dividend policy
Other	•	Country/political risk

22

Ranger financial overview Section 2

Summary projected income statement data

($mm, except per share data)
FYE April 30,		2001E			2002E			2003E			2004E			2005E			2006E
Net sales		$	646.1		$	650.7		$	673.2		$	701.6		$	725.2		$	751.4
	Revenue growth		-11.3	%		0.7	%		3.5	%		4.2	%		3.4	%		3.6	%
Cost of sales			241.8			247.9			261.8			275.1			287.7			301.5
Gross profit			404.4			402.8			411.4			426.6			437.5			449.8
	Gross margin		62.6	%		61.9	%		61.1	%		60.8	%		60.3	%		59.9	%
Marketing & administrative expenses			341.4			347.1			353.7			366.0			374.4			384.0
EBITDA			63.0			55.7			57.7			60.6			63.1			65.8
	EBITDA margin		9.8	%		8.6	%		8.6	%		8.6	%		8.7	%		8.8	%
Depreciation & amortization			13.9			14.0			14.1			14.2			14.6			15.2
Operating income			49.1			41.7			43.6			46.4			48.4			50.7
	Operating income margin		7.6	%		6.4	%		6.5	%		6.6	%		6.7	%		6.7	%
Income from continuing operations			35.6			29.5			31.6			34.4			36.8			39.4
	Net margin		5.5	%		4.5	%		4.7	%		4.9	%		5.1	%		5.2	%
Earnings per share		$	6.67		$	5.56		$	5.96		$	6.49		$	6.93		$	7.43

Source: Ranger management.

23

Ranger financial overview Section 2

Summary projected balance sheet data

($ in millions)
FYE April 30,	2001E		2002E		2003E		2004E		2005E		2006E
Cash & marketable securities	$	87.9	$	102.3	$	122.7	$	151.2	$	182.1	$	215.7
Accounts receivable, net		118.0		119.5		121.0		122.5		124.0		125.5
Inventories		85.0		86.5		88.0		89.5		91.0		92.5
Prepaid expenses		6.2		6.2		6.2		6.2		6.2		6.2
Deferred income taxes		13.7		13.7		13.7		13.7		13.7		13.7
Total current assets		310.8		328.1		351.6		383.1		417.0		453.5
Net property and equipment		62.9		63.1		63.6		62.3		61.0		59.7
Deferred income taxes		35.8		35.8		35.8		35.8		35.8		35.8
Other assets		17.0		17.0		17.0		17.0		17.0		17.0
Total assets	$	426.6	$	444.1	$	468.1	$	498.3	$	530.9	$	566.1
Accounts payable	$	39.4	$	39.4	$	39.4	$	39.4	$	39.4	$	39.4
Accrued expenses		26.7		26.7		26.7		26.7		26.7		26.7
Income taxes payable		6.3		6.3		6.3		6.3		6.3		6.3
Dividends payable		1.9		1.9		1.9		1.9		1.9		1.9
Total current liabilities		74.3		74.3		74.3		74.3		74.3		74.3
Total debt		11.3		3.5		—		—		—		—
Retirement and deferred compensation plans		116.8		116.8		116.8		116.8		116.8		116.8
Stockholders’ equity		224.2		249.5		277.0		307.2		339.8		375.0
Total liabilities and stockholders’ equity	$	426.6	$	444.1	$	468.1	$	498.3	$	530.9	$	566.1

Source: Ranger management.

24

Ranger financial overview Section 2

Summary projected cash flow data

($ in millions)
FYE April 30,	2002E			2003E				2004E			2005E			2006E
Net income from continuing operations	$	29.5			$	31.6		$	34.4		$	36.8		$	39.4
Depreciation and amortization		14.0				14.1			14.2			14.6			15.2
(Increase)/Decrease in net working capital		(3.0	)			(3.0	)		(3.0	)		(3.0	)		(3.0	)
Cash from operations		40.5				42.7			45.6			48.4			51.6
Capital expenditures		(12.2	)			(12.6	)		(12.9	)		(13.4	)		(13.8	)
Acquisitions, net of cash acquired		(2.0	)			(2.0	)		—			—			—
Cash from investing activities		(14.2	)			(14.6	)		(12.9	)		(13.4	)		(13.8	)
Cash before financing activities	$	26.4			$	28.2		$	32.7		$	35.1		$	37.8
Net cash used in financing activities		(12.1	)			(7.7	)		(4.2	)		(4.2	)		(4.2	)
Net increase (decrease) in cash and cash equivalents	$	14.3			$	20.5		$	28.5		$	30.9		$	33.6

Source: Ranger management.

25

Ranger financial overview Section 2

Insert blue sheet

26

Ranger financial overview Section 2

Summary historical income statement data

($mm, except per share data)
											LTM			9 months			9 months
FYE April 30,		1998A			1999A			2000A			1/31/01(1)			01/31/00(1)			01/31/01(1)
Net sales		$	715.5		$	723.2		$	728.2		$	678.4		$	532.8		$	504.0
Cost of sales			354.4			366.4			375.1			356.4			272.8			264.9
Gross profit			361.1			356.9			353.1			322.0			260.0			239.1
	Gross margin		50.5	%		49.3	%		48.5	%		47.5	%		48.8	%		47.4	%
Marketing & administrative expenses(2)			295.9			292.8			284.2			260.7			212.2			194.1
EBITDA			65.3			64.0			68.9			61.3			47.8			44.9
	EBITDA margin		9.1	%		8.9	%		9.5	%		9.0	%		9.0	%		8.9	%
Depreciation & amortization			14.7			13.8			13.9			12.7			9.9			8.9
Operating income			50.6			50.2			55.1			48.6			37.9			36.1
	Operating income margin		7.1	%		6.9	%		7.6	%		7.2	%		7.1	%		7.2	%
Net income			35.7			24.4			26.7			26.6			18.9			18.8
	Net margin		5.0	%		3.4	%		3.7	%		3.9	%		3.5	%		3.7	%
Earnings per share		$	4.97		$	4.25		$	4.94		$	4.97		$	3.48		$	3.52

Source: Public filings.

(1)	Excludes results of DBS and gains on sales of assets.
(2)	Excludes $16.1 million charge related to environmental remediation for 2000 and LTM.

27

Ranger financial overview Section 2

Summary historical balance sheet data

($ in millions)
FYE April 30,	1998A		1999A		2000A		1/31/01A
Cash & marketable securities	$	118.8	$	23.0	$	52.6	$	84.3
Accounts receivable, net		140.8		139.1		133.8		116.5
Inventories		108.5		94.2		93.5		78.4
Prepaid expenses		9.4		9.5		6.2		8.9
Deferred income taxes		19.1		21.5		13.7		13.6
Total current assets		396.5		287.3		299.9		301.7
Net property and equipment		79.2		76.2		70.2		62.6
Deferred income taxes		30.8		31.5		36.8		35.8
Net assets of discontinued operations		—		19.6		—		3.2
Other assets		13.2		16.0		20.2		17.0
Total assets	$	519.7	$	430.6	$	427.1	$	420.3
Accounts payable	$	49.1	$	44.4	$	40.2	$	36.2
Accrued expenses		28.0		29.1		26.8		27.3
Income taxes payable		20.7		23.9		6.2		7.1
Dividends payable		2.5		1.9		1.9		1.9
Total current liabilities		100.3		99.3		75.0		72.5
Total debt		8.9		6.7		24.0		12.7
Retirement and deferred compensation plans		111.1		115.2		115.3		116.8
Stockholders’ equity		299.4		209.4		212.8		218.4
Total liabilities and stockholders’ equity	$	519.7	$	430.6	$	427.1	$	420.3

Source: Public filings

28

Ranger financial overview Section 2

Summary historical cash flow data

($ in millions)
										9 months			9 months
FYE April 30,	1998A			1999A			2000A			01/31/00			01/31/01
Net Income from continuing operations(1)	$	35.1		$	25.5		$	21.2		$	20.9		$	27.8
Depreciation and amortization		14.7			13.8			13.9			9.9			8.9
Other non-cash items		(2.6	)		6.3			25.5			11.2			(2.2	)
(Increase)/Decrease in net working capital		(18.5	)		(12.7	)		(19.3	)		1.2			(4.9	)
Cash provided from discontinued operations		(0.9	)		2.0			(1.3	)		(2.6	)		5.8
Cash from operations		27.7			34.9			40.0			40.7			35.4
Capital expenditures		(13.9	)		(12.7	)		(8.8	)		(6.5	)		(6.5	)
Acquisitions, net of cash acquired		(4.6	)		(2.8	)		(2.0	)		(2.0	)		—
Other investing activities		(1.3	)		98.3			(4.2	)		(6.0	)		(16.3	)
Cash from investing activities		(19.8	)		82.8			(15.1	)		(14.6	)		(22.8	)
Cash before financing activities	$	8.0		$	117.7		$	24.9		$	26.1		$	12.6
Net cash used in financing activities		(8.1	)		(112.8	)		(7.4	)		(4.9	)		(12.6	)
Effect of exchange rate changes on cash and cash equivalents		(4.0	)		(2.3	)		(5.1	)		(2.9	)		(4.5	)
Net increase (decrease) in cash and cash equivalents	$	(4.1	)	$	2.7		$	12.3		$	18.3		$	(4.4	)

Source: Public filings

(1) 9 months ended 1/31/01 includes gains on sales of assets.

29

Review of Ranger market performance and shareholder base Section 3

Section 3

Review of Ranger market performance and shareholder base

30

Review of Ranger market performance and shareholder base Section 3

Market valuation

($mm, except per share data)

Market performance

Current price (3/30/01)		$	47.62
One month average			48.26
YTD average			45.98
52-week high (3/23/01)			49.76
	low (10/12/00)		33.00
Equity value		$	252.7
Net debt(1)			45.2
Total enterprise value (“TEV”)		$	297.9

1-year trading price bands

Implied valuation metrics

	Statistic(2)		Implied multiple
TEV/LTM revenues	$	678.4		0.4	x
TEV/LTM EBITDA		61.3		4.9
Equity value/LTM net income		26.6		9.6
TEV/2001E revenues		710.0		0.4	x
TEV/2001E EBITDA		64.2		4.6
Equity value/2001E net income		28.0		9.0

2-year trading price bands

(1)	Net debt includes retirement and deferred compensation plans less cash.
(2)	Source for 2001 estimates: Value Line.

31

Review of Ranger market performance and shareholder base Section 3

Share price performance

($mm, except per share data)

Market statistics
Stock price (3/30/01)	$	47.62
Fully-diluted shares outstanding (mm)(1)		5.307
Equity value	$	252.7
Net debt(2)		45.2
Total enterprise value	$	297.9

(1)	Fully diluted shares outstanding based on treasury stock method.
(2)	Net debt includes retirement and deferred compensation plans less cash.

52-week trading statistics
($000)
Average daily volume		5,570
high (3/23/01)	$	49.76
low (10/12/00)		33.00

Historical share price performance

(1)	10/17/97: Irvin L. Levy begins selling a portion of his holdings in Ranger.
(2)	04/22/98: Ranger completes sale of two subsidiaries.
(3)	05/26/98: Ranger agrees to purchase 1,213,738 shares from members of the Levy family for $60.89.
(4)	09/01/98: Ranger reports sales of $198.9 million for FY1999 Q1, up slightly from last year’s comparable period.
(5)	11/30/98: Ranger reports FY1999 Q2 results posting slight decline in revenue and net income.
(6)	03/03/99: Ranger reports FY1999 Q3 results, recording slight sales and earnings growth.
(7)	09/01/99: Ranger reports net sales of $200.2 million and net income of $6.3 million for FY2000 Q1.
(8)	10/29/99: Ranger announces sale of subsidiary, Resource Electronics Inc.
(9)	03/02/00: Ranger reports sales of $183.3 million for FY2000 Q3.
(10)	07/27/00: Ranger initiates stock buyback of 300,000 shares.
(11)	08/25/00: Ranger announces divestiture of N-E Thing Co.
(12)	12/08/00: Ranger reports operating income of $13 million and EPS of $1.92 for FY2001 Q2.
(13)	03/07/01: Ranger reports net sales of $159.0 million and operating income of $13.9 million for FY 2001 Q3.

32

Review of Ranger market performance and shareholder base Section 3

Relative Ranger stock performance last 3 years

(1) Composite group index includes Applied Industrial Technologies Inc., Ecolab Inc., Lawson Products Inc., MSC Industrial Direct Inc., National Service Industries, Inc., W.W. Grainger Inc. and Wesco International Inc.

33

Review of Ranger market performance and shareholder base Section 3

Relative Ranger stock performance – 1 year

(1) Composite group index includes Applied Industrial Technologies Inc., Ecolab Inc., Lawson Products Inc., MSC Industrial Direct Inc., National Service Industries, Inc., W.W. Grainger Inc. and Wesco International Inc.

34

Review of Ranger market performance and shareholder base Section 3

Relative Ranger stock performance – last 4 months

         

(1) Composite group index includes Applied Industrial Technologies Inc., Ecolab Inc., Lawson Products Inc., National Service Industries, Inc., MSC Industrial Direct Inc., W.W. Grainger Inc. and Wesco International Inc.

35

Review of Ranger market performance and shareholder base Section 3

Selected companies trading analysis

	Price on		Price on			% change since
	12/01/00		3/30/01			12/01/00
Applied Industrial Technologies Inc.	$	17.88	$	16.40			(8.3	%)
Ecolab Inc.		43.25		42.42			(1.9	)
Lawson Products Inc.		25.05		24.75			(1.2	)
MSC Industrial Direct Inc.		16.06		16.01			(0.3	)
National Service Industries, Inc.		20.88		23.45			12.3
W.W. Grainger Inc.		37.38		33.85			(9.4	)
Wesco International Inc.		7.63		9.25			21.3
					High		21.3	%
					Low		(9.4	)
					Mean		1.8
					Median		(1.2	)
Ranger	$	40.00	$	47.62			19.1	%

36

Review of Ranger market performance and shareholder base Section 3

Implied premium analysis

Purchase price per share	$	45.00		$	47.50		$	50.00		$	52.50		$	55.00		$	57.50
Premium to market ($47.62 - 03/30/01)		-5.5	%		-0.3	%		5.0	%		10.2	%		15.5	%		20.7	%
Premium to implied share price ($39.53 - 12/01/00) (1)		13.8	%		20.2	%		26.5	%		32.8	%		39.1	%		45.5	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

Purchase price per share	$	60.00		$	62.50		$	65.00		$	67.50		$	70.00
Premium to market ($47.62 - 03/30/01)		26.0	%		31.2	%		36.5	%		41.7	%		47.0	%
Premium to implied share price ($39.53 - 12/01/00) (1)		51.8	%		58.1	%		64.4	%		70.8	%		77.1	%

(1) Adjusted Ranger closing price on 12/01/00. Applied median share price discount of selected companies from 12/01/00 to 03/30/01 to Ranger’s actual closing price on 12/01/00.

37

Review of Ranger market performance and shareholder base Section 3

Shareholder ownership analysis

Significant insider holdings(1)
Irvin L. Levy	1,444,576	27.2	%
Lester A. Levy	1,437,612	27.1
John I. Levy	75,014	1.4
Robert Milton Levy	60,000	1.1
Milton P. Levy, Jr.	44,000	0.8
Walter M. Levy	14,998	0.3
Lester A. Levy Jr.	14,722	0.3
Thomas B. Walker, Jr.	10,000	0.2
Robert L. Blumenthal	2,683	0.1
Rawles Fulgham	2,000	0.0
Total	3,105,605	58.5	%

Top ten 13-F institutions
Dimensional Fund Advisors, inc.	337,600	6.4	%
Kestrel Investment Mgmt Corp.	217,500	4.1
Franklin Resources Inc	200,000	3.8
Barclays Bank plc	98,863	1.9
Pennsylvania Public School Fund	65,100	1.2
Vanguard Group	62,194	1.2
Zurich Scudder Investments, Inc.	54,200	1.0
First Pacific Advisors, Inc.	52,600	1.0
LSV Asset Management	51,380	1.0
Legg Mason Inc.	50,858	1.0
Total	1,190,295	22.4	%

Ownership summary
Holders	Total		% of total
Directors and officers(1)		3,105,605		58.5	%
Institutions — Top 5(2)		919,063		17.3
Institutions — total		1,703,660		32.1
Retail		498,065		9.4
Total shares outstanding		5,307,330		100.0	%

(1)	Source: Definitive Proxy statement, April 30, 2000, excludes stock options held by officers and directors, includes life estate interest and a family trust held by several members of the Levy family.
(2)	Includes Dimensional Fund Advisors, Inc., Kestrel Investment Mgmt Corp., Franklin Resources, Inc. Barclays Bank plc and Pennsylvania Public School Fund.

Source: CDA/Spectrum unless otherwise noted.

38

Reviews of Ranger market performance and shareholder base Section 3

Historical institutional ownership

Owner Name	31-Dec-00		30-Jun-00		31-Dec-99		30-Jun-99		31-Dec-98
Dimensional Fund Advisors, Inc.		337.6		340.3		340.2		302.0		182.2
Kestrel Investment Management Corp.		217.5		210.1		219.0		205.2		200.7
Franklin Resources Inc		200.0		200.0		200.0		200.0		200.0
Barclays Bank Plc		98.9		105.7		82.9		55.4		97.0
Pennsylvania Public School Fund		65.1		65.4
Vanguard Group		62.2		56.1		36.5		29.6		29.0
Zurich Scudder Investments, Inc.		54.2		54.2		53.8		56.5		55.4
First Pacific Advisors, Inc.		52.6		52.6		52.6		52.6		52.6
LSV Asset Management		51.4		49.0		57.4		53.2		51.3
Legg Mason Inc		50.9		52.8
Royce & Associates, Inc.		47.0		42.0		29.8		22.8		18.8
AXA Financial, Inc.		44.5		41.6		9.3		43.7		8.4
New York State Common Retirement Fund		40.9		40.9		35.1		35.1		35.1
State Street Corporation		39.0		39.9		26.3		20.5		19.8
Mellon Bank NA		34.6		38.2		56.3		70.9		68.8
Bank Of America Corporation		34.2		35.7		35.7		35.0		35.2
College Retire Equities		25.8		30.8		30.2		30.4		31.1
General Motors Investment Management		25.6		25.6		19.2
Northern Trust Company		24.6		22.7		26.0		27.8		24.0
Total Institutional Shares Held		1,703.7		1,729.7		1,781.9		1,879.5		2,065.0
Minimum Share Price During Period	$	33.00	$	35.19	$	44.25	$	46.06	$	52.44
Mean Share Price During Period		37.68		42.03		46.88		53.78		62.29
Maximum Share Price During Period		42.88		46.63		51.19		65.38		72.38

[Additional columns below]

[Continued from above table, first column(s) repeated]

Owner Name	30-Jun-98		31-Dec-97		30-Jun-97		31-Dec-96
Dimensional Fund Advisors, Inc.		176.5		169.4		129.9		116.1
Kestrel Investment Management Corp.		146.5		84.5		53.8		38.5
Franklin Resources Inc		200.0		200.0		200.0		200.0
Barclays Bank Plc		109.0		110.2		125.3		133.8
Pennsylvania Public School Fund
Vanguard Group		28.1		22.9		21.5
Zurich Scudder Investments, Inc.		54.8		25.5		13.3
First Pacific Advisors, Inc.		72.4		72.4		72.4		72.4
LSV Asset Management		43.7		34.6
Legg Mason Inc
Royce & Associates, Inc.		30.0
AXA Financial, Inc.		9.7		12.7		14.6		15.7
New York State Common Retirement Fund		42.2		42.2		42.2		51.2
State Street Corporation		23.4		25.6		19.3		27.1
Mellon Bank NA		77.4		68.1		70.2		30.4
Bank Of America Corporation		32.2		31.9		32.1		31.9
College Retire Equities		27.1		30.1		30.1		30.1
General Motors Investment Management
Northern Trust Company		17.2		12.1		10.5		9.4
Total Institutional Shares Held		2,094.5		2,369.7		2,231.7		2,150.9
Minimum Share Price During Period	$	60.06	$	61.38	$	57.00	$	53.75
Mean Share Price During Period		64.03		67.18		60.91		56.33
Maximum Share Price During Period		72.25		72.63		65.50		62.50

39

Reviews of Ranger market performance and shareholder base Section 3

Shareholder profile and liquidity analysis

Shareholder profile

13F institutional holdings
Shareholders	Shares		%
Dimensional Fund Advisors, Inc.		337,600		6.4	%
Kestrel Investment Mgmt Corp.		217,500		4.1
Franklin Resources Inc.		200,000		3.8
Barclays Bank plc		98,863		1.9
Pennsylvania Public School Fund		65,100		1.2
Vanguard Group		62,194		1.2
Zurich Scudder Investments,  Inc.		54,200		1.0
First Pacific Advisors, Inc.		52,600		1.0
LSV Asset Management		51,380		1.0
Legg Mason Inc.		50,858		1.0
Top ten 13F institutional holdings		1,190,295

Liquidity analysis

Divestiture based on 25 percent of
average daily trading volume
30-day	60-day		90-day		180-day
243.9		246.3		241.6		269.3
157.1		158.7		155.7		173.5
144.5		145.9		143.1		159.5
71.4		72.1		70.8		78.9
47.0		47.5		46.6		51.9
44.9		45.4		44.5		49.6
39.2		39.6		38.8		43.2
38.0		38.4		37.6		42.0
37.1		37.5		36.8		41.0
36.7		37.1		36.4		40.6

Public float analysis

	Shares		%
Basic shares outstanding		5,307,330		100	%
Float(3)		1,864,125		35
Adjusted float(4)		1,282,662		24

Average daily

Period	Volume		Turnover(1)			Adj. turnover(2)
30-day		5,537		0.30	%		0.43	%
60-day		5,482		0.29			0.43
90-day		5,589		0.30			0.44
180-day		5,014		0.27			0.39

(1)	Average Daily Turnover = Avg. Daily Trading Volume/Float.
(2)	Adjusted Daily Turnover = Avg. Daily Trading Volume/Adjusted Float.
(3)	Float represents shares outstanding, less insider holdings and other 5 percent holders.
(4)	Adjusted Float represents Float less five largest institutional investors.

Source: CDA/Spectrum and Factset.

40

Going private transaction analysis Section 4

Section 4

Going private transaction analysis

41

Going private transaction analysis Section 4

Overview of going private scenarios

Summary assumptions

• Transaction closing date of 4/30/01 strictly for purposes of financial modeling

• Purchase the approximate 2.2 million shares not currently held by members of the Levy family

• Utilize approximately $58 million of existing cash and marketable securities as part of the transaction financing (assumes a minimum cash balance of $30 million for working capital and general corporate purposes)

• Debt capital structure consistent with current general market conditions

• Maintain current dividend policy

• No net cash payments for contingent liability and deferred compensation over the horizon period

42

Going private transaction analysis Section 4

Going private sensitivity analysis

($ in millions)
Purchase price per share	$	45.00		$	50.00		$	55.00		$	60.00		$	65.00		$	70.00
Market premium ($47.62 - 3/30/01)		-5.5	%		5.0	%		15.5	%		26.0	%		36.5	%		47.0	%
Premium to “normalized” share price ($39.53 - 12/01/00) (1)		13.8	%		26.5	%		39.1	%		51.8	%		64.4	%		77.1	%
Fully diluted shares outstanding (2)		5.3			5.3			5.7			5.7			5.7			5.7
Equity value		238.8			265.4			314.0			342.6			371.1			399.7
Net debt (as of April 30, 2001) (3)		40.2			40.2			19.1			19.1			19.1			19.1
Aggregate value	$	279.0		$	305.6		$	333.1		$	361.7		$	390.2		$	418.8
Multiple of Aggregate Value to:
LTM Revenue ($678.4 mm)		0.4x			0.5x			0.5x			0.5x			0.6x			0.6x
LTM EBITDA ($61.3 mm)		4.6x			5.0x			5.4x			5.9x			6.4x			6.8x
LTM EBIT ($48.6 mm)		5.7x			6.3x			6.9x			7.4x			8.0x			8.6x
LTM Net income ($26.6 mm)		9.0x			10.0x			11.8x			12.9x			14.0x			15.0x
Shares to be purchased (4)		2.2			2.2			2.2			2.2			2.2			2.2
Take-out equity value (5)	$	104.6		$	115.8		$	127.0		$	138.3		$	149.5		$	160.7
Excess cash and marketable securities used in take-out (6)		57.9			57.9			57.9			57.9			57.9			57.9
Incremental bank debt from going private transaction		46.7			57.9			69.1			80.4			91.6			102.8

(1)	Adjusted Ranger closing price. Applied median share price discount of selected companies from 12/01/00 to 03/30/01 to Ranger’s actual closing price on 12/01/00.
(2)	Represents shares and in-the-money options outstanding.
(3)	Represents $128.1mm debt (including $116.8mm deferred comp) less cash, marketable securities and option proceeds from in the money options.
(4)	Represents non-family owned shares (approximately 41.5%).
(5)	Represents cost to repurchase non-family owned shares (approximately 41.5%) including fees and expenses.
(6)	Based upon a minimum cash balance of $30 million.

43

Going private transaction analysis Section 4

Going private sensitivity analysis(continued)

($ in millions)
Purchase price per share	Base		$	45.00	$	50.00	$	55.00	$	60.00	$	65.00	$	70.00
Debt outstanding:(1)
Pro Forma 4/30/01	$	11.3	$	58.1	$	69.4	$	80.7	$	91.9	$	103.2	$	114.5
4/30/02		3.5		40.2		52.0		63.8		75.6		87.4		99.3
4/30/03		—		20.4		32.8		45.1		57.5		69.9		82.3
4/30/04		—		—		9.0		21.9		34.9		48.0		61.0
4/30/05		—		—		—		—		9.9		23.6		37.2
4/30/06		—		—		—		—		—		—		10.7
Leverage Statistics — Debt / EBITDA:
FY ’01 Pro Forma		0.2x		0.9x		1.1x		1.3x		1.5x		1.6x		1.8x
FY ’02		0.1x		0.7x		0.9x		1.1x		1.4x		1.6x		1.8x
FY ’03		—		0.4x		0.6x		0.8x		1.0x		1.2x		1.4x
FY ’04		—		—		0.1x		0.4x		0.6x		0.8x		1.0x
FY ’05		—		—		—		—		0.2x		0.4x		0.6x
FY ’06		—		—		—		—		—		—		0.2x
Net income:
FY ’01	$	35.6	$	35.6	$	35.6	$	35.6	$	35.6	$	35.6	$	35.6
FY ’02		29.5		24.3		23.7		23.1		22.5		21.9		21.3
FY ’03		31.6		26.4		25.8		25.2		24.5		23.9		23.3
FY ’04		34.4		29.3		28.6		28.0		27.3		26.7		26.0
FY ’05		36.8		31.6		31.0		30.4		29.7		29.1		28.4
FY ’06		39.4		34.1		33.5		33.0		32.4		31.7		31.0

(1) Includes environmental note, excludes deferred compensation.

44

Preliminary valuation analysis and observations Section 5

Section 5

Preliminary valuation analysis and observations

45

Preliminary valuation analysis and observations Section 5

Comparative statistics

LTM Revenues
1          W.W. Grainger Inc.	$	4,977.0
2          Wesco International Inc.		3,762.7
3          National Service Industries, Inc.		2,589.9
4          Ecolab Inc.		2,213.4
5          Applied Industrial Technologies Inc.		1,630.4
6          MSC Industrial Direct Inc.		821.2
7          Ranger		678.4
8          Lawson Products Inc.		349.0

3 Year Revenue CAGR
1          MSC Industrial Direct Inc.	16.6	%
2          Wesco International Inc.	14.8
3          Ecolab Inc.	12.6
4          National Service Industries, Inc.	12.4
5          Lawson Products Inc.	7.5
6          W.W. Grainger Inc.	5.9
7          Applied Industrial Technologies Inc.	2.7
8          Ranger	(0.6	)

LTM EBITDA
1          Ecolab Inc.	$	460.7
2          W.W. Grainger Inc.		452.3
3          National Service Industries, Inc.		284.6
4          Wesco International Inc.		161.5
5          MSC Industrial Direct Inc.		113.5
6          Applied Industrial Technologies Inc.		85.4
7          Ranger		61.3
8          Lawson Products Inc.		48.5

3 Year EBITDA CAGR
1          Wesco International Inc.	26.1	%
2          National Service Industries, Inc.	16.4
3          Ecolab Inc.	15.3
4          MSC Industrial Direct Inc.	13.4
5          Lawson Products Inc.	11.4
6          Applied Industrial Technologies Inc.	0.7
7          Ranger	(0.8	)
8          W.W. Grainger Inc.	(3.6	)

LTM Operating Income
1          W.W. Grainger Inc.	$	345.5
2          Ecolab Inc.		317.1
3          Wesco International Inc.		138.1
4          National Service Industries, Inc.		199.6
5          MSC Industrial Direct Inc.		98.6
6          Applied Industrial Technologies Inc.		62.5
7          Ranger		48.6
8          Lawson Products Inc.		41.8

3 Year Operating Income CAGR
1          Wesco International Inc.	25.0	%
2          Ecolab Inc.	15.2
3          National Service Industries, Inc.	11.7
4          Lawson Products Inc.	11.6
5          MSC Industrial Direct Inc.	10.7
6          Ranger	(0.1	)
7          Applied Industrial Technologies Inc.	(0.7	)
8          W.W. Grainger Inc.	(8.0	)

46

Preliminary valuation analysis and observations Section 5

Comparative statistics (continued)

LTM EBITDA Margin
1          Ecolab Inc.	20.8	%
2          Lawson Products Inc.	13.9
3          MSC Industrial Direct Inc.	13.8
4          National Service Industries, Inc.	11.0
5          W.W. Grainger Inc.	9.1
6          Ranger	9.0
7          Applied Industrial Technologies Inc.	5.2
8          Wesco International Inc.	4.3

LTM Operating Margin
1          Ecolab Inc.	14.3	%
2          MSC Industrial Direct Inc.	12.0
3          Lawson Products Inc.	12.0
4          National Service Industries, Inc.	7.7
5          Ranger	7.2
6          W.W. Grainger Inc.	6.9
7          Applied Industrial Technologies Inc.	3.8
8          Wesco International Inc.	3.7

LTM Net Income Margin
1          Ecolab Inc.	8.8	%
2          Lawson Products Inc.	8.7
3          MSC Industrial Direct Inc.	6.8
4          W.W. Grainger Inc.	4.0
5          Ranger	3.9
6          National Service Industries, Inc.	3.6
7          Applied Industrial Technologies Inc.	2.1
8          Wesco International Inc.	1.2

3 Year Net Income CAGR
1          Lawson Products Inc.	19.9	%
2          Ecolab Inc.	14.6
3          MSC Industrial Direct Inc.	5.7
4          Applied Industrial Technologies Inc.	1.5
5          Wesco International Inc.	(1.5	)
6          National Service Industries, Inc.	(3.6	)
7          W.W. Grainger Inc.	(8.6	)
8          Ranger	(13.5	)

Expected Net Income Growth Rate
1          MSC Industrial Direct Inc.		26.7	%
2          Wesco International Inc.		19.0
3          Ecolab Inc.		14.2
4          W.W. Grainger Inc.		11.3
5          Applied Industrial Technologies Inc.		10.0
6          Ranger		5.3
7          National Service Industries, Inc.		5.0
8          Lawson Products Inc.	NA

47

Preliminary valuation analysis and observations Section 5

Going private premium analysis

	Initial offer's premium on acquisition of minority interest over price prior to announcement(1)
	1 day			1 week			1 month
High		96.5	%		96.5	%		95.4	%
Low		(16.3	)		(6.4	)		(3.9	)
Mean		25.5			30.5			26.3
Median		17.1			27.0			21.0

	Final offer's premium on acquisition of minority interest over price prior to announcement(1)
	1 day			1 week			1 month
High		135.1	%		135.1	%		133.8	%
Low		4.7			11.5			11.2
Mean		48.4			54.4			49.2
Median		41.8			51.8			50.3

	Final offer's premium on acquisition of minority interest over initial offer(1)
High		40.8	%
Low		0.0
Mean		18.9
Median		18.8

(1) Acquisitions of 20 percent to 50 percent of remaining interests.

Note: See analysis of premiums paid in going private transactions in Appendix III for further detail.
Source: Securities Data Corporation.

48

Preliminary valuation analysis and observations Section 5

Discounted cash flow analysis – base case

($ in millions, except price per share)
	Projected FYE 4/30
	2002			2003			2004			2005			2006
Operating Income	$	41.7		$	43.6		$	46.4		$	48.4		$	50.7
Taxes		15.4			16.1			17.2			17.9			18.7
Operating Income after Tax		26.3			27.5			29.3			30.5			31.9
Depreciation and Amortization		14.0			14.1			14.2			14.6			15.2
Capital Expenditures		(12.2	)		(12.6	)		(12.9	)		(13.4	)		(13.8	)
(Increase)/ decrease in Net Working Capital		(3.0	)		(3.0	)		(3.0	)		(3.0	)		(3.0	)
Acquisitions		(2.0	)		(2.0	)		—			—			—
Payment of contingent liability		—			—			—			—			—
Free Cash Flows	$	23.1		$	24.0		$	27.5		$	28.8		$	30.2

			PV of TV as a multiple of EBITDA						Net Debt
Discount Rate	PV of FCF		6.0x		7.0x		8.0x		@ 4/30/01 (1)
11%	$	97.3	$	234.4	$	273.5	$	312.6	$	19.1
13%		92.4		214.4		250.1		285.9		19.1
15%		87.8		196.4		229.1		261.9		19.1

	Equity Value								Equity Value Per Share
							Shares
Discount Rate	6.0x		7.0x		8.0x		Outstanding (2)		6.0x		7.0x		8.0x
11%	$	312.7	$	351.8	$	390.8		5.7	$	54.77	$	61.61	$	68.45
13%		287.7		323.5		359.2		5.7	$	50.39	$	56.65	$	62.91
15%		265.2		297.9		330.6		5.7	$	46.44	$	52.18	$	57.91

(1)	Represents estimated debt of $128.1 million including $116.8 million of deferred compensation, less estimated cash and marketable securities of $87.9 million and $21.1 of option proceeds at April 30, 2001.
(2)	Represents shares and in the money options outstanding.

49

Analysis of selected publicly traded companies Appendix I

Appendix I

Analysis of selected publicly traded companies

50

Analysis of selected publicly traded companies Appendix I

Summary market statistics

	Enterprise Value								Equity Value
	as a Multiple of:								as a Multiple of:
											CY 2000		CY 2001
	LTM		LTM		LTM		LTM		LTM		EPS		EPS		Book
	Revenues		EBITDA		EBIT		NI		EPS		Est.		Est.		Value
Small Cap Summary:
Min		0.2x		4.4x		5.1x		8.0x		8.1x		8.1x		8.1x		1.1x
Mean		0.4		5.1		6.5		9.4		9.7		9.8		9.9		1.8
Median		0.4		5.2		6.5		9.5		10.1		9.8		10.8		1.5
Max		0.6		5.6		8.0		10.4		10.4		11.3		10.9		3.2
Large Cap Summary:
Min		0.7x		7.6x		10.0x		15.9x		16.0x		16.0x		17.2x		2.1x
Mean		1.6		10.4		13.6		21.6		21.7		21.6		20.4		4.1
Median		1.5		10.6		12.2		20.1		19.9		20.6		18.8		2.6
Max		2.7		12.9		18.8		28.9		29.1		28.3		25.3		7.5
Summary:
Min		0.2x		4.4x		5.1x		8.0x		8.1x		8.1x		8.1x		1.1x
Mean		0.9		7.3		9.6		14.6		14.8		14.8		15.2		2.8
Median		0.6		5.6		8.0		10.4		10.4		11.3		14.1		2.1
Max		2.7		12.9		18.8		28.9		29.1		28.3		25.3		7.5

[Additional columns below]

[Continued from above table, first column(s) repeated]

							LTM Margins
	Projected
	3-5 Year			2000 PE /
	Earnings			Growth									Net
	CAGR			Rate			EBITDA			EBIT			Income
Small Cap Summary:
Min		5.0	%		50.2	%		4.3	%		3.7	%		1.2	%
Mean		11.3			121.8			8.6			6.8			3.9
Median		10.0			113.1			8.1			5.8			2.8
Max		19.0			202.0			13.9			12.0			8.7
Large Cap Summary:
Min		11.3	%		77.3	%		9.1	%		6.9	%		4.0	%
Mean		17.4			139.3			14.6			11.1			6.5
Median		14.2			141.5			13.8			12.0			6.8
Max		26.7			199.2			20.8			14.3			8.8
Summary:
Min		5.0	%		50.2	%		4.3	%		3.7	%		1.2	%
Mean		14.4			130.5			11.2			8.6			5.0
Median		12.8			127.3			11.0			7.7			4.0
Max		26.7			202.0			20.8			14.3			8.8

51

Analysis of selected publicly traded companies Appendix I

Summary statistics: Small-cap

(in millions, except per share data)
				Share
Company Name /		FYE /		Price		Shares		Equity		Total		Cash &		Enterprise		LTM
Ticker		LTM		3/30/01		Out		Value		Debt		Equiv.		Value (a)		Revenues
Small Cap:
Applied Industrial Technologies Inc.			6/30/00	$	16.40		20.0	$	327.4	$	118.9	$	14.4	$	431.9	$	1,630.4
	AIT		12/31/00
Lawson Products Inc.			12/31/00		24.75		9.7		240.7		11.0		37.9		213.8		349.0
	LAWS		12/31/00
National Service Industries, Inc.			8/31/00		23.45		41.1		962.7		628.8		3.1		1,588.3		2,589.9
	NSI		11/30/00
Wesco International Inc.			12/31/99		9.25		43.8		405.5		459.8		18.1		847.2		3,762.7
	WCC		9/30/00
Ranger			4/30/00		47.62		5.3		252.7		129.5		84.3		297.9		678.4
			1/31/01

[Additional columns below]

[Continued from above table, first column(s) repeated]

(in millions, except per share data)
								CY 1999		CY 2000		CY 2001
Company Name /		LTM		LTM		LTM		EPS		EPS		EPS		Book
Ticker		EBITDA		EBIT		EPS		Est. (b)		Est. (b)		Est. (b)		Value
Small Cap:
Applied Industrial Technologies Inc.		$	85.4	$	62.5	$	1.66	$	1.22	$	1.45	$	1.52	$	303.9
	AIT
Lawson Products Inc.			48.5		41.8		3.06		2.37		3.06	NA			159.9
	LAWS
National Service Industries, Inc.			284.6		199.6		2.27		2.72		2.32		2.15		673.3
	NSI
Wesco International Inc.			161.5		138.1		0.90		0.74		0.97		1.14		128.5
	WCC
Ranger			61.3		48.6		4.97	NA			5.18		5.43		218.4

Note: LTM calculations are based on financial results reported in the most recent SEC filings. All revenues, operating expenses and EPS figures have been restated to exclude extraordinary credits/charges and discontinued operations.

(a)	Defined as equity value plus total debt less cash and equivalents.
(b)	Source: First Call. Value Line used for Ranger.

52

Analysis of selected publicly traded companies Appendix I

Market statistics: Small-cap

Enterprise Value (a)

Equity Value

as a Multiple of:

as a Multiple of:

CY 2000

CY 2001

Company Name/

LTM

LTM

LTM

LTM

EPS

EPS

Book

Ticker

Revenues

EBITDA

EBIT

EPS

Est. (b)

Est. (b)

Value

Small Cap:

Applied Industrial Technologies Inc.

0.3x

5.1x

6.9x

9.9x

11.3x

10.8x

1.1x

AIT

Lawson Products Inc.

0.6x

4.4x

5.1x

8.1x

8.1x

NM

1.5x

LAWS

National Service Industries, Inc.

0.6x

5.6x

8.0x

10.4x

10.1x

10.9x

1.4x

NSI

Wesco International Inc.

0.2x

5.2x

6.1x

10.3x

9.5x

8.1x

3.2x

WCC

Small Cap Summary:

Min

0.2x

4.4x

5.1x

8.1x

8.1x

8.1x

1.1x

Mean

0.4

5.1

6.5

9.7

9.8

9.9

1.8

Median

0.4

5.2

6.5

10.1

9.8

10.8

1.5

Max

0.6

5.6

8.0

10.4

11.3

10.9

3.2

Ranger

0.4x

4.9x

6.1x

9.6x

9.2x

8.8x

1.2x

[Additional columns below]

[Continued from above table, first column(s) repeated]

								LTM Margins
		Projected
		3-5 Year			2000 PE /
Company Name/		Earnings			Growth									Net
Ticker		CAGR			Rate			EBITDA			EBIT			Income
Small Cap:
Applied Industrial Technologies Inc.			10.0	%		113.1	%		5.2	%		3.8	%		2.1	%
	AIT
Lawson Products Inc.		NA				NM			13.9	%		12.0	%		8.7	%
	LAWS
National Service Industries, Inc.			5.0	%		202.0	%		11.0	%		7.7	%		3.6	%
	NSI
Wesco International Inc.			19.0	%		50.2	%		4.3	%		3.7	%		1.2	%
	WCC
Small Cap Summary:
Min			5.0	%		50.2	%		4.3	%		3.7	%		1.2	%
Mean			11.3			121.8			8.6			6.8			3.9
Median			10.0			113.1			8.1			5.8			2.8
Max			19.0			202.0			13.9			12.0			8.7
Ranger			5.3	%		173.6	%		9.0	%		7.2	%		3.9	%

Note: LTM calculations are based on financial results reported in the most recent SEC filings. All revenues, operating expenses and EPS figures have been restated to exclude extraordinary credits/charges and discontinued operations.

(a)	Defined as equity value plus total debt less cash and equivalents.
(b)	Source: First Call. Value Line used for Ranger. (in millions, except per share data)

53

Analysis of selected publicly traded companies Appendix I

Summary statistics: Large-cap

				Share
Company Name /		FYE /		Price		Shares		Equity		Total		Cash &		Enterprise		LTM
Ticker		LTM		3/30/01		Out		Value		Debt		Equiv.		Value (a)		Revenues
Large Cap:
Ecolab Inc.			12/31/99	$	42.42		131.9	$	5,595.6	$	396.0	$	45.1	$	5,946.5	$	2,213.4
	ECL		9/30/00
MSC Industrial Direct Inc.			8/26/00		16.01		70.1		1,123.1		79.7		4.8		1,198.0		821.2
	MSM		11/25/00
W.W. Grainger Inc.			12/31/00		33.85		93.9		3,179.3		321.6		63.4		3,437.5		4,977.0
	GWW		12/31/00
Ranger			4/30/00		47.62		5.3		252.7		129.5		84.3		297.9		678.4
			1/31/01

[Additional columns below]

[Continued from above table, first column(s) repeated]

								CY 1999		CY 2000		CY 2001
Company Name /		LTM		LTM		LTM		EPS		EPS		EPS		Book
Ticker		EBITDA		EBIT		EPS		Est. (b)		Est. (b)		Est. (b)		Value
Large Cap:
Ecolab Inc.		$	460.7	$	317.1	$	1.46	$	1.31	$	1.50	$	1.68	$	745.2
	ECL
MSC Industrial Direct Inc.			113.5		98.6		0.80		0.72		0.78		0.85		436.2
	MSM
W.W. Grainger Inc.			452.3		345.5		2.12		1.92		2.12		1.97		1,537.4
	GWW
Ranger			61.3		48.6		4.97	NA			5.18		5.43		218.4

Note: LTM calculations are based on financial results reported in the most recent SEC filings. All revenues, operating expenses and EPS figures have been restated to exclude extraordinary credits/charges and discontinued operations.

(a)	Defined as equity value plus total debt less cash and equivalents.
(b)	Source: First Call. Value Line used for Ranger.

54

Analysis of selected publicly traded companies Appendix I

Market statistics: Large-cap

Enterprise Value (a)

Equity Value

as a Multiple of:

as a Multiple of:

CY 2000

CY 2001

Company Name/

LTM

LTM

LTM

LTM

EPS

EPS

Book

Ticker

Revenues

EBITDA

EBIT

EPS

Est. (b)

Est. (b)

Value

Large Cap:

Ecolab Inc.

2.7x

12.9x

18.8x

29.1x

28.3x

25.3x

7.5x

ECL

MSC Industrial Direct Inc.

1.5x

10.6x

12.2x

19.9x

20.6x

18.8x

2.6x

MSM

W.W. Grainger Inc.

0.7x

7.6x

10.0x

16.0x

16.0x

17.2x

2.1x

GWW

Large Cap Summary:

Min

0.7x

7.6 x

10.0x

16.0x

16.0x

17.2x

2.1x

Mean

1.6

10.4

13.6

21.7

21.6

20.4

4.1

Median

1.5

10.6

12.2

19.9

20.6

18.8

2.6

Max

2.7

12.9

18.8

29.1

28.3

25.3

7.5

Ranger

0.4x

4.9 x

6.1 x

9.6x

9.2x

8.8x

1.2x

[Additional columns below]

[Continued from above table, first column(s) repeated]

								LTM Margins
		Projected
		3-5 Year			2000 PE /
Company Name/		Earnings			Growth									Net
Ticker		CAGR			Rate			EBITDA			EBIT			Income
Large Cap:
Ecolab Inc.			14.2	%		199.2	%		20.8	%		14.3	%		8.8	%
	ECL
MSC Industrial Direct Inc.			26.7	%		77.3	%		13.8	%		12.0	%		6.8	%
	MSM
W.W. Grainger Inc.			11.3	%		141.5	%		9.1	%		6.9	%		4.0	%
	GWW
Large Cap Summary:
Min			11.3	%		77.3	%		9.1	%		6.9	%		4.0	%
Mean			17.4			139.3			14.6			11.1			6.5
Median			14.2			141.5			13.8			12.0			6.8
Max			26.7			199.2			20.8			14.3			8.8
Ranger			5.3	%		173.6	%		9.0	%		7.2	%		3.9	%

Note: LTM calculations are based on financial results reported in the most recent SEC filings. All revenues, operating expenses and EPS figures have been restated to exclude extraordinary credits/charges and discontinued operations.

(a)	Defined as equity value plus total debt less cash and equivalents.
(b)	Source: First Call. Value Line used for Ranger.

55

Analysis of selected publicly traded companies Appendix I

Relative liquidity analysis

								Avg. daily trading volume
	Basic shares
Company	outstanding		Float(1)		%			30 day		60 day		90 day		180 day
Applied Industrial Technologies Inc.(3)		19,805,130		12,933,041		65.3	%		57,413		44,095		40,681		32,608
Ecolab Inc.(4)		127,288,500		120,286,016		94.5			317,863		352,487		391,042		324,027
Lawson Products Inc.(5)		9,706,404		4,846,722		49.9			13,990		9,815		8,843		7,577
MSC Industrial Direct Inc.(6)		69,126,962		52,423,068		75.8			86,350		85,620		82,619		99,176
W.W. Grainger Inc.(7)		93,922,529		66,866,846		71.2			415,710		369,435		381,661		413,064
Wesco International Inc.(8)		40,026,188		5,741,311		14.3			35,047		36,690		31,337		29,937
National Service Industries Inc.(9)		41,052,654		36,019,929		87.7			150,253		153,058		162,161		158,498
Ranger(10)		5,307,330		1,864,125		35.1	%		5,537		5,482		5,589		5,014

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Avg. daily turnover(2)
Company	30 day			60 day			90 day			180 day
Applied Industrial Technologies Inc.(3)		0.44	%		0.34	%		0.31	%		0.25	%
Ecolab Inc.(4)		0.26			0.29			0.33			0.27
Lawson Products Inc.(5)		0.29			0.20			0.18			0.16
MSC Industrial Direct Inc.(6)		0.16			0.16			0.16			0.19
W.W. Grainger Inc.(7)		0.62			0.55			0.57			0.62
Wesco International Inc.(8)		0.61			0.64			0.55			0.52
National Service Industries Inc.(9)		0.42			0.42			0.45			0.44
Ranger(10)		0.30	%		0.29	%		0.30	%		0.27	%

(1)	Float represents shares outstanding, less holdings by any insiders, officer, management and director and other 5 percent holders.
(2)	Average daily turnover equals average daily trading volume/float.
(3)	Float limited by 5 percent holders: National Rural Electric, AIT retirement savings plans, Dimensional Fund Advisors.
(4)	Float limited by 5 percent holders: Fidelity Management & Research Company.
(5)	Float limited by 5 percent holder: Dimensional Fund Advisors.
(6)	Float limited by 5 percent holders: T. Rowe Price Associates, Inc., Waddell & Reed Financial, Inc. Lord Abbett & Co., Capital Research and Management Co., and Reich & Tang Asset Management.
(7)	Float limited by 5 percent holder: Massachusetts Financial Services Company.
(8)	Float limited by 5 percent holders: Cypress Merchant Banking Partners L.P., Cypress Offshore Partners L.P., Chase Equity Associates, and Co-Investment Partners.
(9)	Float limited by 5 percent holders: MSDW & Company, and Shapiro Capital Management Co.
(10)	Float limited by 5 percent holder: Dimensional Fund Advisors.

56

Analysis of selected precedent transactions Appendix II

Appendix II

Analysis of selected precedent transactions

57

Analysis of selected precedent transactions Appendix II

Analysis of selected precedent transactions

Precedent transaction valuations include a control premium.

		% of				Equity		Aggregate
Date		seller			Consideration/	purchase		purchase
ann.	Target/acquiror	acquired			accounting	price		price
08/03/00	Sybron Chemicals Inc./		100.0	%	Cash purchase	$	218,358	$	334,595
	Bayer AG
07/20/00	Westburne, Inc./		100.0		Cash purchase		671,160		727,806
	Rexel S.A.
07/20/00	JLK Direct Distribution,		100.0		Cash purchase		215,910		212,296
	Inc.(1)
	Kennametal, Inc.
07/10/00	Barnett, Inc./		100.0		Cash purchase		225,854		249,151
	Wilmar Industries, Inc
12/23/99	Wilmar Industries, Inc./		100.0		Cash purchase		233,042		207,456
	Investor Group
11/15/99	Vallen Corp./		100.0		Cash purchase		190,882		206,298
	Hegemeyer NV
11/15/99	JA Sexauer, Inc. (Dyson		100.0		Cash purchase		85,000		85,000
	Kissner)/
	Wilmar Industries, Inc
11/01/99	Tristar Aerospace Co/		100.0		Cash purchase		187,372		287,304
	Allied Signal, Inc
06/15/99	Calgon		100.0		Cash purchase	NA			406,000
	Corporation(2)
	/Suez Lyonnaise des
	Eaux SA
10/15/98	BetzDearborn Inc./		100.0		Cash purchase		2,144,520		2,807,920
	Hercules Inc
09/11/98	Bruckner Supply		100.0		Cash/debt/ purchase		99,100		102,600
	Company, Inc./
	WESCO Distribution, Inc
15/18/98	Safety-Kleen/		100.0		Cash/stock/debt/		2,000,000		2,182,542
	Laidlaw Environmental				purchase
08/11/97	National Sanitary		100.0		Cash purchase		131,666		148,649
	Supply Co./
	Uniscource Worldwide
					Mean	$	533,572	$	612,124
					Median		215,910		249,151
					High		2,144,520		2,807,920
					Low		85,000		85,000

[Additional columns below]

[Continued from above table, first column(s) repeated]

							Equity
	Aggregate purchase						purchases price
	price as a multiple of:						as a multiple of:				Premium to market
Date	LTM		LTM		LTM		LTM		Book		Day			4 weeks
ann.	revenue		EBTIDA		EBIT		Net inc.		value		prior			prior
08/03/00		1.2x		8.2x		11.9x		27.7x		2.9x		16.7	%		40.0	%
07/20/00		0.4		7.8		9.5		14.6		2.5		14.0			20.7
07/20/00		0.4		5.7		7.5		12.4		0.9		37.3			26.1
07/10/00		9.0		7.6		9.2		15.4		2.1		25.2			34.9
12/23/99		1.0		8.6		9.5		17.6		2.3		30.4			21.7
11/15/99		0.5		8.6		10.8		15.9		1.8		26.6			83.5
11/15/99		1.1		8.3		9.0		16.2		7.1		N.A			N.A
11/01/99		1.4		8.3		8.7		12.0		2.8		43.4			65.2
06/15/99		1.4		10.3		18.5		N.M		N.M	Subsidiary			Subsidiary
10/15/98		2.2		10.7		15.8		24.8		4.7		0.7			8.0
09/11/98		0.5		7.5		7.6		11.7		N.A	Private			Private
15/18/98		2.1		10.7		17.8		29.9		3.6		17.4			10.2
08/11/97		0.5		10.5		15.9		28.0		2.0		4.3			52.7
Mean		1.0		8.7		11.7		18.9		3.0		21.6	%		36.3	%
Median		1.0		8.3		9.5		15.9		2.3		16.7			21.7
High		2.2		10.7		18.5		29.9		7.1		43.4			83.5
Low		0.4		5.7		7.5		11.7		0.9		0.7			8.0

Note: All revenues, operating expenses and EPS figures have been restated to exclude extraordinary charges/credits and discontinued operations. Any extraordinary credits/charges have been tax effected according to the respective home country tax rate.

(1)	Equity Purchase Price reflects value of JLK Direct Distribution’s Class A and B common shares multiplied by the offer price.
(2)	Calgon was a subsidiary of Imerys SA (Formerly Imetal SA).

58

Analysis of premiums paid in going private transactions Appendix III

Appendix III

Analysis of premiums paid in going private transactions

59

Analysis of premiums paid in going private transactions Appendix III

Going private analysis

Deals where 20 – 50 percent interest being is acquired

													Final
													offer's
									Amended offer				prem.
													over
Date	Date		Target	Tran.		%			Initial		Final		initial
ann.	effective		acquiror	value		acquired			offer		offer		offer
05/27/96		02/16/97	SyStemix Inc. (Novartis AG)		107.6		26.80	%	$	17.00	$	19.50		14.7	%
			Novartis AG
08/08/96		09/17/96	Roto-Rooter Inc. (Chemed Corp.)		93.6		45.06			35.43		41.00		15.7
			Chemed Corp.
11/27/96		03/27/97	Central Tractor Farm & Country		56.7		38.75			14.00		14.25		1.8
			JW Childs Equity Partners LP
01/13/97		09/02/97	Zurich Reinsurance Centre		319.0		34.00			36.00		39.50		9.7
			Zurich Versicherungs GmbH
01/28/97		05/21/97	Calgene Inc. (Monsanto Co.)		242.6		43.67			7.25		8.00		10.3
			Monsanto Co.
02/18/97		07/01/98	Contour Medical (Retirement)		55.2		34.70			8.50		8.50		0.0
			Sun Healthcare Group Inc.
02/20/97		12/09/97	NHP Inc. (Apartment Investment)		114.5		44.90			20.00		25.88		29.4
			Apartment Investment & Mgmt. Co.
06/02/97		07/15/97	Acordia Inc. (Anthem Inc.)		193.2		33.20			40.00		40.00		0.0
			Anthem Inc.
06/03/97		01/15/98	Faulding Inc. (FH Faulding & Co.)		77.3		38.00			11.00		13.50		22.7
			FH Faulding & Co. Ltd.
09/18/97		12/16/97	Guaranty National Corp		117.2		22.70			27.20		36.00		32.4
			Orion Capital Corp.
01/22/98		09/29/98	BT Office Products Int'l Inc		138.1		30.0			10.50		13.75		31.0
			Koninklijke KNP BT NV
04/30/98		11/02/98	Mycogen Corp. (Dow AgroSciences)		379.3		31.7			20.50		28.00		36.6
			Dow AgroSciences (Dow Chemical)
10/22/98		04/29/99	BA Merchant Svcs. (BankAmerica)		339.4		32.8			15.50		20.50		32.3
			Bank of America National Trust
07/24/00		01/12/01	Phoenix Investment Partners		497.9		41.0			12.50		15.75		26.0
			Phoenix Home Life Mutual
03/24/99		11/04/99	Knoll Inc. (Warburg, Pincus)		490.8		41.8			25.00		28.00		12.0
			Warburg, Pincus Ventures Inc.
03/17/98		07/31/98	BET Holdings Inc		462.3		42.1			48.00		63.00		31.3
			Investor Group
09/23/98		12/17/98	J&L Specialty Steel Inc		115.0		46.5			5.75		6.38		10.9
			Usinor SA
01/19/00		02/09/00	Trigen Energy Corp		159.2		47.3			23.50		23.50		0.0
			Elyo (Suez Lyonnaise des Eaux)
04/24/00		07/17/00	Cherry Corp		144.0		48.9			18.75		26.40		40.8
			Investor Group
10/27/00		03/19/01	Azurix Corp		330.1		33.1			7.00		8.38		19.7
			Enron Corp.
12/22/00		03/15/01	Delco Remy International, Inc		109.3		38.20			8.00		9.50		18.8
			Citicorp Venture Capital Ltd.
12/22/00	Pending		Chromcraft Revington Inc		58.7		40.06			10.30	NA		NA
			Citicorp Venture Capital Ltd.
			Median	$	144.0		38.2	%						18.8	%
			Mean		216.0		37.9							18.9

[Additional columns below]

[Continued from above table, first column(s) repeated]

							Initial offer's premium									Final offer's premium
	Price of the target prior to						over price prior to									over price prior to
	initial announcement						initial announcement									initial announcement
Date
ann.	1 day		1 week		4 weeks		1 day			1 week			4 weeks			1 day			1 week			4 weeks
05/27/96	$	18.63	$	11.50	$	12.25		(8.7	%)		47.8	%		38.8	%		4.7	%		69.6	%		59.2	%
08/08/96		36.50		36.50		36.88		(2.9	)		(2.9	)		(3.9	)		12.3			12.3			11.2
11/27/96		12.13		12.13		12.00		15.5			15.5			16.7			17.5			17.5			18.8
01/13/97		30.75		30.38		32.25		17.1			18.5			11.6			28.5			30.0			22.5
01/28/97		4.94		5.00		5.00		46.8			45.0			45.0			62.0			60.0			60.0
02/18/97		7.00		5.75		5.38		21.4			47.8			58.1			21.4			47.8			58.1
02/20/97		15.38		15.75		16.88		30.1			27.0			18.5			68.3			64.3			53.4
06/02/97		35.50		35.88		31.75		12.7			11.5			26.0			12.7			11.5			26.0
06/03/97		10.75		11.00		9.25		2.3			0.0			18.9			25.6			22.7			45.9
09/18/97		32.50		29.06		28.19		(16.3	)		(6.4	)		(3.5	)		10.8			23.9			27.7
01/22/98		10.38		7.69		7.75		1.2			36.6			35.5			32.5			78.9			77.4
04/30/98		19.75		20.00		18.38		3.8			2.5			11.6			41.8			40.0			52.4
10/22/98		13.94		13.13		14.44		11.2			18.1			7.4			47.1			56.2			42.0
07/24/00		10.94		11.25		9.69		14.3			11.1			29.0			44.0			40.0			62.6
03/24/99		15.25		18.44		18.63		63.9			35.6			34.2			83.6			51.8			50.3
03/17/98		41.00		39.75		39.81		17.1			20.8			20.6			53.7			58.5			58.2
09/23/98		3.19		3.00		4.63		80.4			91.7			24.3			100.0			112.5			37.8
01/19/00		17.00		16.50		17.81		38.2			42.4			31.9			38.2			42.4			31.9
04/24/00		13.00		12.63		15.50		44.2			48.5			21.0			103.1			109.1			70.3
10/27/00		3.56		3.56		3.58		96.5			96.5			95.4			135.1			135.1			133.8
12/22/00		5.44		6.00		7.06		47.1			33.3			13.3			74.7			58.3			34.5
12/22/00		6.81		7.06		8.00		51.2			45.8			28.8		NA			NA			NA
								17.1	%		27.0	%		21.0	%		41.8	%		51.8	%		50.3	%
								25.5			30.5			26.3			48.4			54.4			49.2

Note: Summary mean/median statistics exclude the CVC-Chromcraft transaction.
Source: Securities Data Corporation. Transactions exceeding US$50m.

60

Going private issues and considerations Appendix IV

Appendix IV

Going private issues and considerations

61

Going private issues and considerations Appendix IV

Going private issues

The following discussion is in the context of going private transactions negotiated pursuant to a merger agreement

Some of the issues that make a going private transaction different from an acquisition by an unaffiliated buyer include:

• The buyer is presumed to have conflicting obligations – it typically is represented on the company’s board, but, as a buyer, has an interest in paying no more than necessary to buy out the public

• If the buyer is a controlling shareholder, the applicable legal test in Delaware is a test of “entire fairness” rather than the normal business judgement rule test

• Because of the buyer’s conflicting interests and the heightened legal standard, going private transactions tend to attract shareholder litigation

• To make the transaction as arm’s length as possible, the company’s board of directors typically appoints a Special Committee of outside directors to review the acquisition proposal, negotiate with the buyer and make recommendations to the full board. The Special Committee appoints its own financial and legal advisors, at the company’s expense

• Under Delaware case law, the negotiation of a transaction by a Special Committee helps satisfy the more stringent “entire fairness” test and shift the burden of proof in shareholder litigation to the plaintiff

62

Going private issues and considerations Appendix IV

General transaction considerations

A firm understanding of the business and legal issues is critical to the successful completion of a “going private” transaction. Following is an outline of topics to be considered at the preliminary stages of a potential 13e(3) transaction

Consideration	•	Cash vs. all or part securities
	•	Amount
	•	Percentage premium over market
	•	As Buyer has a controlling block, Buyer can make clear its block is not for sale, so that the only question is the value of the public’s minority position.
Tactics	•	Will Buyer offer its best price initially, or start somewhere reasonable and negotiate upwards? The latter may demonstrate more clearly that the Special Committee has effectively represented the interests of the public shareholders.
	•	When to announce Buyer’s proposal and the formation of the Special Committee? Buyer may want an early announcement if the market price of the Company’s shares is rising. See “Disclosure Issues.”
Accounting	•	Accounting treatment of ownership
	•	Creation of goodwill
Taxation	•	Capital gains recognition

         

63

Going private issues and considerations Appendix IV

General transaction considerations (continued)

Structure and acquisition process	•	Merger only, vs. merger that has tender offer as first step
	•	Tender offer route is quicker; no need for SEC review of tender offer; if enough stock is tendered there could be short-form merger, without the need for a meeting of shareholders
	•	No appraisal rights for all holders that tender shares
	•	No fiduciary duty to offer a fair price in a tender offer; but duty to make disclosure of all material information
	•	Under the Delaware case law, if there is adequate disclosure to the public shareholders, conditioning a merger on approval by a majority of the publicly held shares will shift to the plaintiff the burden of showing that the transaction is not entirely fair.
Financing	•	What would be the cost of the transaction? How is the transaction to be financed? If the real credit is that of the Company, are there any fraudulent conveyance or state law dividend issues?
Disclosure issues	•	Appointment of special committee
	•	Timing of disclosure of offer/likely impact on market price of Company shares
	•	Disclosure issues in the tender offer or merger proxy statement (Examples: projections; background of transaction; alternatives considered; any material undisclosed positive information about the Company.)

64

Going private issues and considerations Appendix IV

The Rule 13e(3) transaction summary filing requirement

Purpose	•	In a going private transaction, especially in which the Investment Group includes corporate insiders or existing shareholders, issues arise as to the “fairness” of the transaction with regard to the corporation’s outside shareholders. The filing requirement in Section 13e(3) is designed to mitigate this risk by providing for full disclosure of all relevant aspects of the transaction.
Material requirements	•	Section 13e(3) requires the filing of seventeen items detailing all relevant aspects of the transaction. These items range from Issuer and Investment Group background to details of the transaction regarding terms, purpose, and fairness as concluded by financial and legal advisors.
	•	All materials prepared as part of the going private proposal and negotiation, including valuation calculations and materials prepared by investment bankers, must be included.

65

Going private issues and considerations Appendix IV

Company preparatory materials

Although there are no legal requirements as to the extent of preparatory materials Management should assemble upon its approach to the Board of Directors, certain anticipated concerns should be addressed before initial contact is made

Initial offering price	•	A preliminary valuationmaybe conducted to provide a reasonable justification for the initial offering price. However, any such materials would have to be submitted to the Securities and Exchange Commission as part of the Section 13(e)(3) filing.
Availability of financing	•	Although an initial bid could be offered ‘subject to financing’, a bid submitted with a letter of commitment would likely be viewed as more credible.
Investment group	•	Any need for additional equity capital should be identified.
	•	Also, the identity of those constituting the Management will likely be requested.
Business plan	•	The Board will be interested in Management’s underlying intentions following the proposed transaction.
	•	Will the company remain an on-going concern, or is there a subsequent transaction planned?
	•	If the former is contemplated, how will the business benefit from a private ownership structure?

66

Going private issues and considerations Appendix IV

The working group

The large shareholder(s) (“Management”)	•	If Management ownership clearly constitutes control, the public shareholders cannot sell control and receive a control premium. Other considerations include the availability of the Management to block a competing proposal because of a charter or statutory supermajority requirement. The existence of any voting trust or standstill agreement needs to be analyzed.
	•	The Management’s objective, business purpose and timing of an offer need to be clearly articulated.
	•	The fact that the Management is not a seller of its own holdings is a critical consideration.
The outside directors/special committee	•	Independent directors
	•	Function of Special Committee: To look out for interest of public shareholders; to provide an unbiased evaluation of the transaction with regard to the shareholders
	•	Discussions to date with the outside directors
Advisors to Management	•	Financial advisor
	•	Legal advisor
Advisors to Special Committee	•	Special Committee – not Management – should choose the advisors to the Special Committee
	•	Financial advisor
	•	Legal advisor

67

Going private issues and considerations Appendix IV

Special Committee – its duties and advisors

Special Committee’s charter (i.e., its authorization in resolutions adopted by the full board.)	•	In Delaware cases, a merger with a controlling shareholder must be shown to be entirely fair to the public shareholders, but the burden shifts to the plaintiff to show that the transaction was not entirely fair if the transaction is negotiated by a special committee of independent directors that has the freedom to negotiate at arm’s length and does so.
	•	Is the Special Committee also to have power to explore alternatives? Is that realistic, given Buyer’s stockholdings? Is Buyer a seller, or only a buyer?
	•	Ability to hire own advisors at Company’s expense
	•	Compensation and indemnification of Committee members
Record of meetings and careful consideration	•	Attendance; sufficient number of meetings; familiarization with the Company’s business
The committee’s financial advisor	•	Due diligence
	•	Fairness opinion
Valuation	•	Trading history
	•	Comparables
	•	Relevant transactions
	•	Forecasts
	•	Reasons for changes in company or sector valuation

68

Going private issues and considerations Appendix IV

Potential litigation issues

The possibility of litigation	•	Given conflicting interests between Buyer and the public stockholders, shareholder litigation is typical in going private cases. Shareholders may allege that Buyer has breached a fiduciary duty (if the transaction is a merger) or has made inadequate disclosure. In the case of a merger, shareholders may also seek appraisal.
	•	In Delaware, the case law does not require a business purpose; there would be appraisal rights in a cash merger, if a holder tenders shares or in a merger in which shareholders would receive shares of a public company.
	•	Shareholders who sell their shares in a tender offer would not have appraisal rights. In a tender offer, Ranger is likely to owe the public shareholders full fiduciary duties, and would have to disclose all material information.

69