Exhibit (b)(2)
Discounted Cash Flow Analysis
Net Present Value per Share of Projected Dividends
Net Income Discount Terminal Value Multiples
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CAGR Rates 8x 9x 10x 11x 12x 13x 14x 15x
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5% 12.5% $10 $11 $12 $13 $14 $15 $16 $17
15.0 9 10 11 12 13 14 15 15
10% 12.5% $11 $12 $13 $14 $15 $16 $17 $18
15.0 10 11 12 13 14 15 16 17
15% 12.5% $11 $13 $14 $15 $16 $17 $19 $20
15.0 11 12 13 14 15 16 17 18
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Assumptions:
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Cash Flows discounted to December 31, 1995.
Cash Flows represent yearly dividends plus a terminal value at year-end 1999
based on a multiple of 1999 net income.
Management projections (as of Fall 1995) for 1995-1997 EPS and assumed growth
applied thereafter.
Dividend payout ratio of 34%.
Analysis at Various Prices
(dollars in millions except per share amounts)
Consideration per Common Share $11.25(a) $13.00 $13.50 $14.00 $14.50 $14.83(b) $15.10(c) $15.50 $16.00
Price for Common Stock (d) 41 47 49 51 52 54 55 56 58
Price for Convertible (e) 76 76 76 76 76 76 76 76 76
-- -- -- -- -- -- -- -- --
Aggregate Consideration $117 $123 $125 $127 $128 $130 $131 $132 $134
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Premium Over Market Price
9/19/95 $11.25 0.0 % 15.6 % 20.0 % 24.4 % 28.9 % 31.8 % 34.2 % 37.8 % 42.2 %
Multiple of EPS
LTM $0.96 11.7 x 13.5 x 14.1 x 14.6 x 15.1 x 15.4 x 15.7x 16.1 x 16.7x
1995E (f) 1.01 11.1 12.9 13.4 13.9 14.4 14.7 15.0 15.3 15.8
1996E (f) 1.19 9.5 10.9 11.3 11.8 12.2 12.5 12.7 13.0 13.4
Multiple of Book Value/Share
Stated at 9/31/95 $15.10 0.74 x 0.86 x 0.89 x 0.93 x 0.96 x 0.98 x 1.00 x 1.03 x 1.06 x
Tangible at 9/31/95 (g) 14.83 0.76 0.88 0.91 0.94 0.98 1.00 1.02 1.04 1.08
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(a) Equals market value as of 9/19/95.
(b) Equals tangible book value per share as of 9/31/95.
(c) Equals book value per share as of 9/31/95.
(d) Based on acquisition of all 3.6 million publicly traded shares of common
stock.
(e) Assumes price for convertible is greater of (i) the par value of the
convertible ($76.0 million) or (ii) the value of the underlying shares to
be issued upon conversion.
(f) Projected data from Arctic management's Fall 1995 revision to the Strategic
Profitability Plan.
(g) Assumes 6/30/95 intangibles of approximately $5 million.