January 29, 2000 Confidential
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Project Octopus
Presentation to the Board of Directors of Thermo Instrument Systems
JPMorgan THE BEACON GROUP
This presentation was prepared exclusively for the benefit and internal use of
Thermo Instrument Systems ("Thermo Instrument") in order to indicate, on a
preliminary basis, the feasibility of a possible transaction or transactions and
does not carry any right of publication or disclosure to any other party. This
presentation is incomplete without reference to, and should be viewed solely in
conjunction with, the oral briefing provided by J.P. Morgan and/or The Beacon
Group Capital Services, LLC ("The Beacon Group"). Neither this presentation nor
any of its contents may be used for any other purpose without the prior written
consent of J.P. Morgan and/or The Beacon Group.
The information in this presentation is based upon management forecasts and
reflects prevailing conditions and our views as of this date, all of which are
accordingly subject to change. In preparing this presentation, we have relied
upon and assumed, without independent verification, the accuracy and
completeness of all information available from public sources or which was
provided to us by or on behalf of Thermo Instrument or which was otherwise
reviewed by us. In addition, our analyses are not and do not purport to be
appraisals of the assets, stock, or business of Thermo Instrument.
JPMorgan
THE BEACON GROUP
By spinning in publicly-traded subsidiaries, Thermo Instrument reaps significant
benefits
- --------------------------------------------------------------------------------
- ---------------- o Allows Thermo Instrument to develop a holistic
Strategic strategy for the entire instruments business
- ---------------- (e.g., growth, profitability, role of
acquisitions)
o Enables coordination of market presence across
products, customers, industries in a way that
maximizes value for Thermo Instrument
o Shelters individual business units from public
market visibility and demands
- ---------------- o Makes it possible to combine businesses in
Operational overlapping markets (e.g., ThermoQuest and
- ---------------- BioAnalysis) to mutual advantage
o Enhances cooperation across businesses (e.g.,
joint sales, shared R&D)
o Allows rationalization (e.g., combined
service/support network)
o Makes it easier to redeploy assets (e.g., skilled
people, capital) to best use
- ---------------- o Enables consistent metrics and performance
Organizational management
- ----------------
o Begins to develop a "shared culture" at Thermo
Instrument
o Structurally ensures cooperation
o Provides a wider breadth of career paths for top
performers
JPMorgan
THE BEACON GROUP 3
Spin-in analysis summary
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Implied
Price Proposed spin-in valuation(3)
------------------- 52-week range range ------------------ Public(4) Public(3)
2 weeks --------------- 30-day ---------------- Mid-point(2) 1999 FV/ 2000 FV/ minority spin-in
Company Current(1) prior Low High average Low High premium EBITDA EBITDA shares cost
- ------------------------------------------------------------------------------------------------------------------------------------
[Summary Information for Thermo Optek, ThermoQuest, Thermo
BioAnalysis and Metrika Systems appears here.]
Onix Systems 7.81 6.50 4.50 9.00 6.65 8.00 9.00 31% 8.7x 6.1x 2.5 22
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(1) As of 1/25/00
(2) Calculated versus price 2 weeks prior
(3) Based on midpoint of proposed spin-in range
(4) Does not include impact of options
JPMorgan
THE BEACON GROUP 4
Summary valuation - ONIX Systems
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$ per share and implied 1999 EBITDA multiple
Preliminary
Two-weeks prior Current
$6.50 $7.81
---------
Discounted cash flow(1) $7.50 7.3x 8.4x $8.25
---------
----------
Precedent transactions(2) $7.75 7.6x 10.2x $9.50
----------
----------
Trading multiples $8.50 8.7x 10.2x $9.50
----------
----------------------
52-week high/low $4.50 2.9x 9.5x $9.00
----------------------
--------------------------------------------------------
$3.00 $5.00 $7.00 $9.00 $11.00 $13.00 $15.00
Equity value per share
(1) Assumes WACC of 11.0%-12.0% and terminal value growth of 1.0%-2.0%
(2) Reflects change-of-control transactions where, on average, higher premiums
are paid relative to the purchase of minority stakes. According to J.P.
Morgan's M&A Research group, change-of-control transactions have a median
premium of 33% versus 23% for minority buy-outs since 1988
Note: Valuation is preliminary and is based on management forecasts; prices as
of January 25, 2000
JPMorgan
THE BEACON GROUP 5
Pro forma income statement impact
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Pro forma for year ended December 31, 2000 (highly preliminary) $ millions,
unless indicated otherwise
$ diluted EPS
[The following information was depicted as a bar chart in the printed material.]
[EPS data appears here.]
(0.004) (0.000) (0.001) 0.008 0.006 (0.007) (0.001)
-------------------------------------------------------------------------------------------------------
"Old" Thermo Thermo Thermo Thermo Metrika ONIX Thermo Thermo "New" Thermo
Instrument Optek Quest BioAnalysis Systems Systems Spectra Vision Instrument
Purchase price $51 $83 $189 $19 $24 $44 $12 $422
[EPS data appears here.]
JPMorgan
THE BEACON GROUP 6
Pro forma balance sheet impact
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Pro forma as of December 31, 1999 (preliminary)
$ billions
"Old" Thermo Instrument Spin-ins "New" Thermo Instrument
- --------------------------------------------------------------------------------
Cash $0.4 ($0.4) $0.0
Net op. assets 1.9 0.2 2.1
-----------------------------------------------------------
Total net assets $2.3 ($0.2) $2.1
Debt $1.0 $0.0 $1.1
Minority interest 0.2 (0.2) 0.0
Shareholders equity 1.0 0.0 1.0
-----------------------------------------------------------
Total capitalization $2.3 ($0.2) $2.1
Net debt/(cash)(1) $0.9 $1.1
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(1) Includes minority interest
Note: Numbers may not tie due to rounding
JPMorgan
THE BEACON GROUP 7
U.S. minority buy-out premia
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Premia(1) paid in U.S. minority buy-outs since 1988(2)
[The following information was depicted as a bar chart in the printed material.]
All transactions
Premia paid (%) % of transactions
- --------------- -----------------
LESS THAN 0% 4%
0% LESS THAN 10% 8%
10% LESS THAN 20% 30%
20% LESS THAN 30% 25%
30% LESS THAN 40% 5%
40% LESS THAN 50% 11%
50% LESS THAN 60% 7%
60% LESS THAN 70% 4%
GREATER THAN 70% 7%
Source: J.P. Morgan M&A Analysis Group, SDC
(1) Premia based on stock price one week prior to announcement
(2) Analysis of 101 U.S. minority buy-outs
Comments
o Median premium of 23%, average premium of 30%
o 55% of premia paid in 10%-30% range
o Transactions consisted of:
- 25% stock
- 71% cash
- 4% combined cash-stock consideration
o Deal sizes between $50MM and $4.8BN
JPMorgan
THE BEACON GROUP 8
Premia in cash vs. stock transactions
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Premia(1)paid in U.S. minority squeeze-outs since 1988(2)
[The following information was depicted as a bar chart in the printed material.]
Cash transactions
Premia paid (%) % of transactions
- --------------- -----------------
LESS THAN 0% 1%
0% LESS THAN 10% 6%
10% LESS THAN 20% 28%
20% LESS THAN 30% 26%
30% LESS THAN 40% 7%
40% LESS THAN 50% 11%
50% LESS THAN 60% 7%
60% LESS THAN 70% 6%
GREATER THAN 70% 8%
[The following information was depicted as a bar chart in the printed material.]
Stock transactions
Premia paid (%) % of transactions
- --------------- -----------------
LESS THAN 0% 12%
0% LESS THAN 10% 16%
10% LESS THAN 20% 36%
20% LESS THAN 30% 16%
30% LESS THAN 40% 0%
40% LESS THAN 50% 12%
50% LESS THAN 60% 4%
60% LESS THAN 70% 0%
GREATER THAN 70% 4%
Source: J.P. Morgan M&A Analysis Group, SDC
(1) Premia based on stock price one week prior to announcement
(2) Analysis of 101 U.S. minority squeeze-outs
JPMorgan
THE BEACON GROUP 9
Premia analysis by size and free-float
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Premia(1) paid in minority buy-outs since 1988(2)
Buy-outs by size
$MM
[The following information was depicted as a line chart
in the printed material.]
Premia paid (%)
-------------------------------
Low Median High % of
transactions
> 1,000 20% 23% 124% 6%
500-1,000 (67%) 21% 37% 7%
250-500 (5%) 39% 227% 22%
100-250 1% 20% 113% 32%
0-100 (20%) 22% 90% 34%
Buy-outs by free float
% free float
[The following information was depicted as a line chart
in the printed material.]
Premia paid (%)
-------------------------------
Low Median High % of
transactions
40%-50% (67%) 23% 227% 23%
30%-40% 12% 23% 79% 23%
20%-30% 2% 23% 90% 18%
10%-20% (12%) 22% 68% 31%
0%-10% (20%) 18% 39% 5%
Source: J.P. Morgan M&A Analysis Group, SDC
(1) Premia based on stock price one week prior to announcement
(2) Analysis of 101 U.S. minority buy-outs
JPMorgan
THE BEACON GROUP 10
ONIX Systems - Share price performance
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Since IPO
- -------------------------------------------
Summary statistics
- -------------------------------------------
Current price (1/25/00) $7.81
1-month average $6.65
6-month average $5.91
1 year average $6.06
Average since IPO (3/25/98) $7.86
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[The following information was depicted as a line chart
in the printed material.]
Volume (000s) Share Price
------------- -----------
3/25/1998 770 $14.69
3/26/1998 354 $14.50
3/27/1998 362.9 $14.50
3/30/1998 354.1 $14.50
3/31/1998 57 $14.50
4/1/1998 48.6 $14.50
4/2/1998 31.4 $14.50
4/3/1998 73.3 $14.56
4/6/1998 70.5 $14.13
4/7/1998 70.8 $13.81
4/8/1998 14.2 $14.00
4/9/1998 9.2 $14.50
4/13/1998 15.3 $14.50
4/14/1998 7.7 $14.44
4/15/1998 56.2 $14.25
4/16/1998 6 $14.25
4/17/1998 6.7 $14.50
4/20/1998 30.2 $14.88
4/21/1998 82.3 $15.75
4/22/1998 23.9 $15.00
4/23/1998 12 $15.00
4/24/1998 6 $14.75
4/27/1998 12.1 $14.63
4/28/1998 115.3 $14.63
4/29/1998 4.9 $14.50
4/30/1998 16.1 $14.38
5/1/1998 1.4 $14.25
5/4/1998 7.1 $14.75
5/5/1998 16.5 $14.75
5/6/1998 14.3 $14.63
5/7/1998 1.7 $14.63
5/8/1998 4 $14.63
5/11/1998 1.3 $14.50
5/12/1998 7.3 $14.50
5/13/1998 8.1 $14.81
5/14/1998 9 $14.63
5/15/1998 5.3 $14.19
5/18/1998 1.6 $13.94
5/19/1998 9.6 $13.88
5/20/1998 6.2 $14.00
5/21/1998 1 $14.13
5/22/1998 4.6 $14.38
5/26/1998 26.7 $14.38
5/27/1998 4.8 $14.00
5/28/1998 11.2 $13.75
5/29/1998 0.6 $13.63
6/1/1998 43.6 $13.25
6/2/1998 13.6 $13.31
6/3/1998 27 $13.13
6/4/1998 1.8 $13.25
6/5/1998 2.2 $13.00
6/8/1998 1.8 $12.94
6/9/1998 0.8 $13.00
6/10/1998 2.1 $13.00
6/11/1998 5.7 $12.88
6/12/1998 0.4 $13.00
6/15/1998 4 $12.88
6/16/1998 11.6 $12.50
6/17/1998 12.5 $12.44
6/18/1998 0.4 $12.44
6/19/1998 7.9 $12.38
6/22/1998 0.8 $12.50
6/23/1998 0.5 $12.50
6/24/1998 25.6 $12.75
6/25/1998 3.9 $12.56
6/26/1998 #N/A $12.69
6/29/1998 10.9 $12.50
6/30/1998 9.9 $12.88
7/1/1998 2.2 $12.75
7/2/1998 2.4 $12.63
7/6/1998 2.1 $12.38
7/7/1998 2.1 $12.25
7/8/1998 11.2 $12.13
7/9/1998 0.3 $12.00
7/10/1998 0.5 $11.88
7/13/1998 #N/A $11.88
7/14/1998 3.2 $12.00
7/15/1998 #N/A $11.88
7/16/1998 1.2 $11.63
7/17/1998 22 $11.88
7/20/1998 0.9 $11.63
7/21/1998 11.5 $11.56
7/22/1998 6.7 $11.63
7/23/1998 9 $11.38
7/24/1998 16.2 $12.00
7/27/1998 2 $12.13
7/28/1998 #N/A $12.06
7/29/1998 0.2 $12.00
7/30/1998 0.5 $12.00
7/31/1998 #N/A $12.06
8/3/1998 3.3 $11.88
8/4/1998 11.5 $11.75
8/5/1998 2.2 $11.88
8/6/1998 4.1 $11.81
8/7/1998 0.6 $11.75
8/10/1998 #N/A $11.69
8/11/1998 2.3 $11.13
8/12/1998 9.4 $10.38
8/13/1998 20.4 $10.38
8/14/1998 8.2 $9.75
8/17/1998 0.5 $10.13
8/18/1998 0.2 $10.06
8/19/1998 6.7 $9.88
8/20/1998 0.5 $9.75
8/21/1998 #N/A $9.75
8/24/1998 2.5 $9.50
8/25/1998 0.1 $9.38
8/26/1998 8.9 $8.50
8/27/1998 2 $8.50
8/28/1998 18.1 $8.00
8/31/1998 5.7 $7.75
9/1/1998 12.6 $7.50
9/2/1998 0.9 $7.25
9/3/1998 1.1 $7.00
9/4/1998 0.8 $6.75
9/8/1998 13.4 $6.50
9/9/1998 0.8 $6.38
9/10/1998 0.6 $6.25
9/11/1998 255.6 $6.88
9/14/1998 21.3 $7.88
9/15/1998 49.2 $8.50
9/16/1998 0.7 $8.63
9/17/1998 #N/A $8.44
9/18/1998 1.6 $8.69
9/21/1998 1.4 $8.75
9/22/1998 0.4 $8.75
9/23/1998 10.5 $9.00
9/24/1998 4.2 $9.13
9/25/1998 1 $9.06
9/28/1998 57 $9.00
9/29/1998 0.2 $8.88
9/30/1998 493.6 $8.75
10/1/1998 6.3 $8.75
10/2/1998 98.7 $8.19
10/5/1998 214.6 $7.94
10/6/1998 8.2 $7.94
10/7/1998 232.1 $7.38
10/8/1998 184.6 $7.38
10/9/1998 7.6 $6.63
10/12/1998 110 $6.50
10/13/1998 0.7 $6.75
10/14/1998 143.9 $6.50
10/15/1998 41.1 $6.50
10/16/1998 #N/A $6.44
10/19/1998 0.3 $6.38
10/20/1998 1.9 $6.63
10/21/1998 #N/A $6.56
10/22/1998 44.5 $6.13
10/23/1998 8 $6.25
10/26/1998 0.2 $6.38
10/27/1998 157 $6.13
10/28/1998 6.1 $6.13
10/29/1998 212.2 $5.88
10/30/1998 5.4 $6.25
11/2/1998 10.4 $7.25
11/3/1998 13.4 $7.50
11/4/1998 2.3 $7.50
11/5/1998 0.6 $7.44
11/6/1998 5.1 $7.50
11/9/1998 0.2 $7.38
11/10/1998 3.7 $7.00
11/11/1998 255.6 $7.00
11/12/1998 8.6 $6.56
11/13/1998 0.2 $6.75
11/16/1998 5.1 $7.00
11/17/1998 3.7 $6.88
11/18/1998 4.5 $6.63
11/19/1998 3 $6.75
11/20/1998 8.5 $6.50
11/23/1998 17.6 $6.50
11/24/1998 0.9 $6.25
11/25/1998 0.6 $6.25
11/27/1998 0.1 $6.25
11/30/1998 11.1 $5.25
12/1/1998 60.7 $5.88
12/2/1998 5.5 $5.50
12/3/1998 19.5 $5.50
12/4/1998 3.7 $5.81
12/7/1998 10 $5.50
12/8/1998 2.9 $5.88
12/9/1998 20.4 $5.88
12/10/1998 1.6 $5.81
12/11/1998 1.8 $6.00
12/14/1998 4.6 $5.88
12/15/1998 0.2 $5.88
12/16/1998 1.4 $5.88
12/17/1998 4.2 $6.25
12/18/1998 12.3 $6.25
12/21/1998 4 $6.25
12/22/1998 3.6 $6.13
12/23/1998 17.9 $6.13
12/24/1998 #N/A $6.19
12/28/1998 1 $6.13
12/29/1998 5 $6.25
12/30/1998 16.8 $6.19
12/31/1998 2.7 $6.38
1/4/1999 8.2 $6.63
1/5/1999 0.1 $6.63
1/6/1999 9.3 $6.88
1/7/1999 138.3 $6.88
1/8/1999 3.8 $7.31
1/11/1999 5 $7.25
1/12/1999 118.8 $7.00
1/13/1999 24.2 $6.63
1/14/1999 3 $7.13
1/15/1999 2 $7.13
1/19/1999 14.5 $6.88
1/20/1999 1.5 $7.00
1/21/1999 3.1 $7.38
1/22/1999 1 $7.50
1/25/1999 4.3 $7.25
1/26/1999 3.8 $7.13
1/27/1999 #N/A $7.00
1/28/1999 20.1 $7.00
1/29/1999 0.7 $7.00
2/1/1999 #N/A $6.94
2/2/1999 #N/A $7.06
2/3/1999 1.3 $7.06
2/4/1999 0.6 $7.00
2/5/1999 1.8 $7.13
2/8/1999 1.1 $6.88
2/9/1999 #N/A $6.88
2/10/1999 #N/A $6.94
2/11/1999 #N/A $6.94
2/12/1999 1.9 $6.94
2/16/1999 1 $6.88
2/17/1999 2.7 $6.63
2/18/1999 2.2 $6.69
2/19/1999 #N/A $6.63
2/22/1999 18.7 $6.88
2/23/1999 0.1 $6.75
2/24/1999 #N/A $6.81
2/25/1999 1 $6.88
2/26/1999 0.6 $6.88
3/1/1999 5.7 $6.88
3/2/1999 5.4 $6.75
3/3/1999 0.5 $6.63
3/4/1999 1 $6.63
3/5/1999 0.5 $6.50
3/8/1999 0.2 $6.44
3/9/1999 0.7 $6.31
3/10/1999 3.5 $6.13
3/11/1999 8.8 $6.13
3/12/1999 0.2 $6.00
3/15/1999 1 $6.13
3/16/1999 1.3 $5.75
3/17/1999 2.7 $5.88
3/18/1999 5.6 $5.63
3/19/1999 #N/A $5.50
3/22/1999 6.8 $6.00
3/23/1999 3.2 $6.50
3/24/1999 3 $6.00
3/25/1999 1 $5.88
3/26/1999 1 $5.63
3/29/1999 11.4 $5.50
3/30/1999 5.7 $5.50
3/31/1999 1.6 $5.38
4/1/1999 2.4 $5.44
4/5/1999 0.6 $5.38
4/6/1999 5.9 $5.25
4/7/1999 #N/A $5.38
4/8/1999 0.4 $5.38
4/9/1999 14.7 $6.13
4/12/1999 8.3 $5.94
4/13/1999 0.1 $6.00
4/14/1999 0.5 $5.63
4/15/1999 10.4 $5.88
4/16/1999 5.6 $5.88
4/19/1999 0.8 $5.75
4/20/1999 #N/A $5.81
4/21/1999 #N/A $5.81
4/22/1999 #N/A $5.81
4/23/1999 #N/A $5.81
4/26/1999 0.2 $5.63
4/27/1999 #N/A $5.56
4/28/1999 3 $5.38
4/29/1999 19.2 $5.13
4/30/1999 2.6 $5.50
5/3/1999 0.5 $5.50
5/4/1999 0.5 $5.75
5/5/1999 0.2 $5.75
5/6/1999 #N/A $5.88
5/7/1999 8.2 $6.13
5/10/1999 1 $6.00
5/11/1999 4.2 $6.00
5/12/1999 27 $6.50
5/13/1999 7.5 $6.25
5/14/1999 4.3 $6.19
5/17/1999 0.2 $6.13
5/18/1999 2 $6.19
5/19/1999 0.5 $5.94
5/20/1999 15 $6.00
5/21/1999 31.5 $6.50
5/24/1999 19.9 $6.50
5/25/1999 17.5 $6.63
5/26/1999 29.5 $7.13
5/27/1999 1.2 $6.88
5/28/1999 1.1 $7.00
6/1/1999 11 $6.75
6/2/1999 1 $7.00
6/3/1999 #N/A $6.94
6/4/1999 4.5 $6.50
6/7/1999 0.3 $6.50
6/8/1999 2.2 $6.63
6/9/1999 0.2 $6.69
6/10/1999 4.6 $6.88
6/11/1999 2.7 $6.88
6/14/1999 #N/A $6.88
6/15/1999 7.9 $6.56
6/16/1999 0.6 $6.50
6/17/1999 7 $6.50
6/18/1999 0.1 $6.38
6/21/1999 13.5 $5.75
6/22/1999 2 $5.63
6/23/1999 10 $5.56
6/24/1999 1.3 $5.63
6/25/1999 4.2 $6.13
6/28/1999 2.2 $5.94
6/29/1999 9 $6.00
6/30/1999 0.2 $6.00
7/1/1999 6 $5.75
7/2/1999 #N/A $5.88
7/6/1999 #N/A $5.81
7/7/1999 13.2 $5.88
7/8/1999 #N/A $5.81
7/9/1999 18.7 $6.38
7/12/1999 #N/A $6.25
7/13/1999 14.8 $6.63
7/14/1999 1.5 $6.50
7/15/1999 2.7 $6.50
7/16/1999 1 $6.50
7/19/1999 6.7 $7.00
7/20/1999 1.6 $6.75
7/21/1999 #N/A $6.63
7/22/1999 #N/A $6.63
7/23/1999 1 $6.50
7/26/1999 #N/A $6.50
7/27/1999 0.7 $6.38
7/28/1999 0.1 $6.38
7/29/1999 #N/A $6.31
7/30/1999 1.7 $6.25
8/2/1999 1 $6.25
8/3/1999 #N/A $6.38
8/4/1999 2.2 $6.25
8/5/1999 0.4 $6.38
8/6/1999 1.4 $6.13
8/9/1999 #N/A $6.13
8/10/1999 #N/A $6.19
8/11/1999 0.1 $6.06
8/12/1999 #N/A $6.19
8/13/1999 #N/A $6.19
8/16/1999 1.2 $6.00
8/17/1999 0.2 $6.00
8/18/1999 3 $6.00
8/19/1999 4.6 $6.00
8/20/1999 2.3 $5.94
8/23/1999 11.5 $6.00
8/24/1999 #N/A $6.00
8/25/1999 #N/A $6.00
8/26/1999 0.3 $6.13
8/27/1999 #N/A $6.13
8/30/1999 1.7 $5.88
8/31/1999 1 $6.00
9/1/1999 #N/A $6.06
9/2/1999 1.3 $6.06
9/3/1999 3.2 $6.00
9/7/1999 #N/A $6.06
9/8/1999 #N/A $6.06
9/9/1999 3 $6.00
9/10/1999 #N/A $5.94
9/13/1999 #N/A $5.94
9/14/1999 #N/A $5.94
9/15/1999 #N/A $5.94
9/16/1999 3 $6.00
9/17/1999 #N/A $5.94
9/20/1999 0.4 $5.94
9/21/1999 0.3 $5.94
9/22/1999 #N/A $5.94
9/23/1999 0.4 $5.88
9/24/1999 2.2 $5.88
9/27/1999 2.5 $5.88
9/28/1999 7 $5.75
9/29/1999 3.7 $5.63
9/30/1999 1.7 $5.56
10/1/1999 4.5 $5.50
10/4/1999 1.3 $5.56
10/5/1999 5.1 $5.50
10/6/1999 8 $5.25
10/7/1999 8.9 $5.13
10/8/1999 8.6 $5.31
10/11/1999 0.8 $5.25
10/12/1999 7.7 $5.00
10/13/1999 19 $4.50
10/14/1999 8.6 $4.50
10/15/1999 5.5 $4.75
10/18/1999 14 $4.50
10/19/1999 5 $4.69
10/20/1999 9.8 $4.63
10/21/1999 29.2 $4.69
10/22/1999 0.2 $4.75
10/25/1999 12.5 $4.75
10/26/1999 122.7 $5.00
10/27/1999 1.2 $5.25
10/28/1999 5.7 $6.25
10/29/1999 13.5 $5.75
11/1/1999 10.1 $5.25
11/2/1999 3.8 $5.13
11/3/1999 0.8 $5.25
11/4/1999 18.1 $5.88
11/5/1999 0.5 $5.88
11/8/1999 28.7 $5.88
11/9/1999 #N/A $5.75
11/10/1999 1.7 $5.63
11/11/1999 23.7 $5.75
11/12/1999 1.1 $5.63
11/15/1999 4.6 $5.63
11/16/1999 4.2 $5.63
11/17/1999 25.2 $5.50
11/18/1999 33.8 $5.63
11/19/1999 1.5 $5.75
11/22/1999 #N/A $5.75
11/23/1999 #N/A $5.75
11/24/1999 #N/A $5.75
11/26/1999 #N/A $5.69
11/29/1999 3.8 $6.00
11/30/1999 0.6 $5.88
12/1/1999 #N/A $5.75
12/2/1999 1.8 $5.63
12/3/1999 0.2 $5.63
12/6/1999 25.8 $5.38
12/7/1999 7 $5.38
12/8/1999 8.5 $5.25
12/9/1999 3 $5.38
12/10/1999 0.1 $5.25
12/13/1999 3.5 $5.50
12/14/1999 1 $5.75
12/15/1999 10.3 $5.75
12/16/1999 0.1 $5.75
12/17/1999 0.1 $5.63
12/20/1999 5 $5.25
12/21/1999 39.4 $5.38
12/22/1999 4.4 $5.50
12/23/1999 5.4 $5.38
12/27/1999 18.2 $5.38
12/28/1999 19 $5.00
12/29/1999 42.6 $5.06
12/30/1999 91.4 $5.50
12/31/1999 11.6 $6.13
1/3/2000 8.8 $6.50
1/4/2000 4.6 $6.31
1/5/2000 16.4 $6.50
1/6/2000 #N/A $6.38
1/7/2000 1.7 $6.25
1/10/2000 #N/A $6.25
1/11/2000 4.8 $6.50
1/12/2000 2.1 $6.50
1/13/2000 12.4 $7.13
1/14/2000 27.2 $7.50
1/18/2000 7.5 $7.63
1/19/2000 17.8 $8.00
1/20/2000 8.5 $7.88
1/21/2000 3.1 $7.75
1/24/2000 0.3 $7.75
1/25/2000 #N/A $7.81
JPMorgan
THE BEACON GROUP 11
ONIX Systems - Historical trading statistics
- --------------------------------------------------------------------------------
[The following information was depicted as a bar chart in the printed material.]
Since IPO
Volume
(shares
Cumulative Trading volume as % total MM)
---------- ------------------------- -------
$4.00-$6.50 21.7% 21.7% 2.1
$6.50-$9.00 48.9% 27.2% 2.6
$9.00-$11.50 50.2% 1.3% 0.1
$11.50-$14.00 54.3% 4.1% 0.4
$14.00-$16.50 100.0% 45.7% 4.4
-------
9.7
[The following information was depicted as a bar chart in the printed material.]
Last twelve months
Volume
(shares
Cumulative Trading volume as % total MM)
---------- ------------------------- -------
$4.50-$5.25 27.6% 27.6% 0.4
$5.25-$6.00 64.8% 37.2% 0.5
$6.00-$6.75 85.8% 21.0% 0.3
$6.75-$7.50 95.6% 9.8% 0.1
$7.50-$8.25 100.0% 4.4% 0.1
-------
1.5
JPMorgan
THE BEACON GROUP 12
ONIX Systems - Shareholder profile(1)
- --------------------------------------------------------------------------------
IPO: 3/25/98
Shares held (000)
-----------------------------------
%
Shareholder 9/30/99 outstanding 6/30/98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thermo Instrument(2) 11,524.9 76.7%
Octopus(2) 294.3 2.0%
Directors and executives(3) 315.5 2.1%
- --------------------------------------------------------------------------------
Total insiders 12,134.6 80.8%
Wanger Asset Management, L.P. 266.1 1.8% 266.1
Pecks Management Ptnr. 210.5 1.4%
Brundage, Story and Rose, LLC 121.4 0.8%
Wellington Management Co., LLP 118.5 0.8%
Loeb Arbitrage Mgmt. Inc. 79.7 0.5%
Barclays Bank PLC 54.8 0.4%
Aberdeen Asset Management PLC 23.3 0.2%
Mellon Private Asset Mgmt. 21.8 0.1% 408.0
Vanguard Group 3.0 0.0%
Charles Schwab Investment Mgmt. 2.5 0.0%
-----------------------------------
Top 10 institutions 901.7 6.0%
Other institutional holders 86.6 0.6%
----------------------
Total institutional holdings 988.2 6.6%
General public 1,893.7 12.6%
======================
Total shares outstanding(4) 15,016.5 100.0% 16,265.3
- --------------------------------------------------------------------------------
Current price (1/25/00) $7.81
Average price(5) 6.34 13.93
Minimum price(5) 5.13 12.38
Maximum price(5) 8.75 15.75
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Source: CDA Spectrum
(2) From November budget
(3) From 5/27/99 Proxy; including options
(4) Includes options
(5) 12 months ending 9/30 and 6/30
JPMorgan
THE BEACON GROUP 13
ONIX - 92700
- --------------------------------------------------------------------------------
$ millions
- -----------------------------------------------------------------------------------------------
Valuation Summary
- -----------------------------------------------------------------------------------------------
Value Range Per Share Implied Premium
Low High Low High Low High
--- ---- --- ---- --- ----
DCF $69 $81 $7.38 $8.18 -2% 9%
7.1x 8.2x
Trading 85 100 $8.47 $9.51 13% 27%
(1999) '00 Imp. Sales Multiple 0.6x 0.7x 0.6x 0.7x
'00 Imp. EBITDA Multiple 6.0x 7.1x 8.7x 10.2x
Transaction 75 100 $7.77 $9.51 4% 27%
'00 Imp. Sales Multiple 0.5x 0.7x 0.5x 0.7x
'00 Imp. EBITDA Multiple 5.3x 7.1x 7.7x 10.2x
Overall FV 80 95 $8.12 $9.17 8% 22%
'00 Imp. Sales Multiple 0.6x 0.7x 0.6x 0.7x
'00 Imp. EBITDA Multiple 5.7x 6.7x 8.2x 9.7x
Less: Net Debt (37) (37)
------------------------ ---- ---- ----- -----
Overall EV $117 $132 $8.12 $9.17
Less: Tax Leakage 0 0 $0.00 $0.00
------------------------ ---- ---- ----- -----
Net Value - Overall $117 $132 $8.12 $9.17
Net Value -TMO $84 $95
- -----------------------------------------------------------------------------------------------
- ---------------------------------------------------
Market Information
- ---------------------------------------------------
Total Octopus
----- -------
Stock Price $7.50 $7.50
# of Shares 14 10
Options 1
Strike $11.24
FD shares 14
Equity Value 108 78
Net Debt (37)
------------------- ------
Firm Value 71
- ---------------------------------------------------
- ---------------------------------------------------
Tax Basis
- ---------------------------------------------------
Divest (1= yes, 0= no) 0
Tax Basis 100
Tax Rate on Gains 40%
- ---------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Trading Comparables
- -----------------------------------------------------------------------------------------------------------------------
Equity Value Firm Value
------------- -------------------------------------------
Share prices as of: 1/25/00 Equity Firm Net Income 1999 2000 Long Term
Value Value 1999E 2000E Sales EBITDA EBIT Sales EBITDA EBIT Growth Rate
----- ----- ----- ----- ----- ------ ---- ----- ------ ---- -----------
Milltronics Ltd(1) $124 $118 23.0x 17.5x 1.4x 13.8x 22.1x NA NA NA NA
Roxbury Group PLC $212 $232 10.6x 9.1x 1.2x 7.4x 9.2x 1.1x 5.8x 6.9x NA
Moore Products Co(2) $126 $124 28.6x NA 0.7x 13.0x 24.2x NA NA NA NA
Median 23.0x 13.3x 1.2x 13.0x 22.1x 1.1x 5.8x 6.9x #NUM!
Company Financials 3 6 $139 10 $6 139 14 9
Implied Valuation - FV 69 73 173 128 124 147 82 65
Market Valuation $108 $71 23.6x 12.9x 0.5x 7.3x 12.7x 0.5x 5.0x 7.5x
- -----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Transaction Comparables
- ---------------------------------------------------------------------------------------------------------------------------------
LTM
Consideration Equity Firm Value
----------------- ---------- ---------------------------
Equity Firm Net Income Sales EBITDA EBIT
------ ---- ---------- ----- ------ ----
Jan-00 Milltronics / Siemens $233 $232 51.3x 2.7x 27.2x 43.4x
Jan-00 Moore Products / Siemens $170 $167 77.1x 1.0x 17.6x 32.6x
Dec-99 Mobrey / Roxboro $36 $36 NM 0.7x NM NM
Dec-99 Drexelbrook Engineering Co. / AMETEK $25 $25 NM 0.8x NM NM
Jun-99 TSI Inc. / Investor Group $179 $188 19.3x 2.0x 10.7x 13.2x
Jun-99 Environmental Systems Corp / TSI Inc $25 $25 13.2x 1.1x NM 7.9x
Dec-98 Inframetrics / FLIR Systems $49 $70 93.6x 1.3x 19.2x 26.0x
Jul-98 Unit Instruments Inc. / United States Filter Corp. $49 $41 NM 0.8x 18.2x NM
May-98 Data Measurement / Metrika Systems $29 $29 NM 0.8x NM NM
Apr-98 Granville-Phillips Co. / Helix Technology Corp. $47 $42 19.4x 1.6x 13.6x 17.4x
Mar-98 Phase Shift Technology Inc. / ADE Corp. $32 $28 13.9x 2.3x NA 7.6x
Oct-97 Computational Systems Inc. / Emerson Electric Co. $159 $160 38.6x 2.6x 17.5x 25.7x
Jul-97 Gems Sensors / Danaher Corp. $85 $88 16.9x 1.1x NA 14.3x
Oct-97 BIE Technologies Inc. / Shareholders $91 $119 30.2x 1.2x 9.6x 18.5x
Jun-97 Numar Corp. / Halliburton Co. $333 $342 505.9x 15.3x 65.2x 472.5x
May-97 Petrotech Inc, / Roper Industries $13 $22 NM 0.7x NM NM
Apr-97 John Chatillon & Sons, Lloyd / AMETEK Inc. $34 $34 NM NM NM NM
Jan-97 Measurex Corp./Honeywell Inc. $566 $553 15.3x 1.3x 7.8x 10.1x
Feb-96 Span Instruments / Tylan General Inc. $16 $37 NM 0.8x 140.1x NM
Feb-96 Semiconductor Systems Inc. / FSI International $21 $25 11.0x 0.8x 7.2x NM
Jan-96 Met One Inc. / Pacific Scientific Co. $23 $26 24.4x 1.7x 13.0x 13.9x
Median 21.9x 1.1x 17.5x 17.4x
Company Financials 3 139 10 6
Implied Valuation - FV 66 159 172 98
- ---------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Financial Information
- -----------------------------------------------------------------------------------------------------------------------
CAGR
1998 1999 2000 2001 2002 2003 2004 00-04
----- ----- ----- ----- ----- ----- ----- -----
Sales $154 $139 $139 $143 $147 $152 $156 3%
% growth 26% (10%) 0% 3% 3% 3% 3%
EBITDA 17 10 14 14 15 15 16 3%
% margin 11% 7% 10% 10% 10% 10% 10%
EBIT $13 $6 $9 $10 $10 $11 $11 4%
% margin 8.2% 4.0% 6.8% 6.9% 7.0% 7.1% 7.2%
Non-tax ded amortization 2 2 2 2 2 2 2
Taxes 5 3 4 4 4 4 5
- ----------------------------- ----- ----- ----- ----- ----- ----- -----
EBIAT $9 $5 $7 $8 $8 $8 $9 4%
Plus: depreciation 3 2 3 3 3 3 2
Less: CapEx 1 4 2 2 2 2 2
% of sales 1% 3% 2% 2% 2% 2% 2%
Deferred taxes 1 0 0 0 0 0 0
Other cash flows for valuation 0 0 0 0 0 0 0
(Increase) in NWI (7) 3 2 (1) (1) (1) (1)
- ----------------------------- ----- ----- ----- ----- ----- ----- -----
Free cash flows $4 $6 $10 $7 $7 $7 $7 -8%
- -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------
DCF Valuation (firm value)
- -------------------------------------------
Sales g 1.00% 1.50% 2.00%
- -------------------------------------------
WACC
----------------------------
11.0% $76 $78 $81
11.5% $72 $75 $77
12.0% $69 $71 $73
- -------------------------------------------
- ----------------------------------------
DCF Valuation (per share)
- ----------------------------------------
Sales g 1.00% 1.50% 2.00%
- ----------------------------------------
WACC
---------------------------
11.0% $7.82 $7.99 $8.18
11.5% $7.59 $7.74 $7.90
12.0% $7.38 $7.51 $7.66
- ----------------------------------------
(1) closing price as of 1/14/00
(2) closing price as of 1/7/00
14