Exhibit (a)(5)(I)
| CONFIDENTIAL FEBRUARY 2010 WORKING DRAFT REVISED PRELIMINARY VALUATION MATERIAL |
| DRAFT – CONFIDENTIAL WORKING 1 DRAFT Revised Offer Summary ($ in millions, except per share data) Revised Public Trading Precedent Minority Buy-In Offer Comparables Transactions (d) Premiums (e) Per Share $11.80 Aggregate Equity Value $577 Net Debt (incl. Minority Interest) 572 Hydraulics Selected Mid-Cap Aggregate Enterprise Value $1,148 Peers (a) Customers (b) Industrials (c) Hydraulics Median Mean Implied Sales Multiple 2008A $2,091 0.55x 1.06x 0.61x 0.93x -- -- -- 2009E 1,158 0.99 1.13 0.92 1.11 1.05x -- -- 2010E 1,250 0.92 1.08 0.91 1.17 -- -- -- 2011E 1,373 0.84 0.98 Implied EBITDA Multiple 2008A $221 5.2x 7.8x 5.9x 6.8x -- -- -- 2009E 15 NM 11.2 8.9 9.2 8.2x -- -- 2010E 122 9.4 8.6 8.4 8.5 -- -- -- 2011E 147 7.8 7.3 Premium to Unaffected Price 1-Day Prior Share Price $8.44 40% -- -- -- -- 38% 45% 1-Week Prior Share Price 9.19 28% -- -- -- -- 41% 47% 4-Week Prior Share Price 8.95 32% -- -- -- -- 31% 42% Source: Management forecasts as of 1/12/2010. Note: EBITDA adjusted to exclude one-time charges. (a) Hydraulics Peers include Eaton, Parker-Hannifin, and Sun Hydraulics. 2011 multiples are for Parker-Hannifin and Eaton only. (b) Selected Customers include AgCo, Cargotec, Caterpillar, CNH, Deere, Doosan Infracore, Haulotte, Manitou, Osh Kosh, Palfinger, Terex, and Toro. (c) Mid-cap Industrials include A.O. Smith, Actuant, Astec, Baldor, CLARCOR, Colfax, Crane, Franklin Electric, Graco, Kaydon, Lindsay, Manitowoc, RBC Bearings, Regal-Beloit, and Robbins & Myers. (d) Includes selected Hydraulics transactions since 1998. (e) Includes pending and completed minority buy-ins with U.S. targets and transaction values in excess of $50 million. 100% cash transactions only. |
| DRAFT – CONFIDENTIAL 2 WORKING DRAFT Preliminary Valuation Analysis: Summary ($ in millions, except per share data) BASIS PRICE PER SHARE RANGE POTENTIAL EST. VALUE OF U.S. TAX ASSETS COMMENTS DISCOUNTED CASH FLOW 6.5x – 7.5x EBITDA Terminal Value 11% – 12% WACC $11.94 $15.56 Midpoint: $13.75 ~$0.60 Based on management forecast PUBLIC COMPARABLES 8.0x – 10.0x 2010E EBITDA 2010E EBITDA: $122 $8.24 $13.22 Midpoint: $10.75 ~$0.60 Comparable multiples of hydraulics peers, customers, and mid-cap industrials used as reference PRECEDENT TRANSACTIONS 0.95x – 1.25x 2009E Revenue 2009E Revenue: $1,158 $10.81 $17.91 Midpoint: $14.25 ~$0.60 Relevant precedent hydraulics transactions since 2000 Used revenue multiples, as 2009/LTM EBITDA depressed MINORITY BUY-IN PREMIUMS 30% – 45% Premium to Unaffected Prices (1 Day, 1 Week, 4 Weeks Prior) $10.97 $13.33 Midpoint: $12.25 ~$0.60 Relevant minority buy-in transactions since 2005 Price per Share $7.50 $10.00 $12.50 $15.00 $17.50 $20.00 Note: Valuation does not account for any pension underfunding. This is subject to change based on additional due diligence which may impact value. Revised Offer: $11.80 Current Price: $11.35 2-Year Avg. Price: $15.01 |
| DRAFT – CONFIDENTIAL 3 WORKING DRAFT Public Market Valuation ($ in millions, except per share data) Hydraulics Peers Parker- Sun Selected Mid-cap Eaton Hannifin Hydraulics Customers (a) Industrials (b) Price Per Share $8.24 $10.73 $13.22 $64.37 $57.14 $22.13 -- -- Equity Value 403 524 646 10,693 9,609 377 -- -- Enterprise Value $974 $1,096 $1,218 $13,428 $10,932 $341 -- -- Sauer-Danfoss EV as Multiple of: Revenue 2008A $2,091 0.47x 0.52x 0.58x 0.87x 1.06x 1.91x 0.61x 0.93x 2009E 1,158 0.84 0.95 1.05 1.13 1.09 3.55 0.92 1.11 2010E 1,250 0.78 0.88 0.97 1.04 1.08 2.96 0.91 1.17 EBITDA 2008A $221 4.4x 5.0x 5.5x 6.9x 8.8x 7.8x 5.9x 6.8x 2009E 15 NM NM NM 13.0 9.3 NM 8.9 9.2 2010E 122 8.0 9.0 10.0 8.7 8.6 NM 8.4 8.5 Memo: Growth CAGR 2009E-2011E 8.9% 8.9% 4.3% 19.0% 9.4% 5.6% EBITDA Margin 2010E 9.7% 12.0% 12.5% 12.8% 8.7% 14.3% (c) (c) (c) (c) Source: Management forecasts as of 1/12/2010. Note: EBITDA adjusted to exclude one-time charges. (a) Selected Customers include AgCo, Cargotec, Caterpillar, CNH, Deere, Doosan Infracore, Haulotte, Manitou, Osh Kosh, Palfinger, Terex, and Toro. (b) Mid-cap Industrials include A.O. Smith, Actuant, Astec, Baldor, CLARCOR, Colfax, Crane, Franklin Electric, Graco, Kaydon, Lindsay, Manitowoc, RBC Bearings, Regal-Beloit, and Robbins & Myers. (c) Growth and margin figures for total company. |
| DRAFT – CONFIDENTIAL 4 WORKING DRAFT Eaton and Parker Stock Price Performance: Since Initial Offer 95 100 105 110 115 12/18/2009 12/25/2009 1/2/2010 1/9/2010 1/17/2010 1/24/2010 2/1/2010 Eaton Parker-Hannfin S&P 500 Dec 22 Initial Offer Index 6% 2% (1%) |
