1
The following material was compiled on a confidential basis for use
solely by the Special Committee of the Board of Directors of Syratech
Corporation (the "Company") in evaluating a potential transaction involving
Thomas H. Lee Company or its affiliates and not with a view to public disclosure
or filing thereof under the Securities Act of 1933 or the Securities Exchange
Act of 1934 (the "Federal Securities Laws"). This material was prepared for a
specific use by specific persons and was not prepared to conform with any
disclosure standards under the Federal Securities Laws. Neither Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") nor any of its officers,
directors, employees, affiliates, advisors, agents or representatives warrants
the accuracy or completeness of any of the material which follows. Nothing
contained in the accompanying material is, or shall be relied upon as, a promise
or representation as to the past, present or future.
It should be understood that any estimates, valuations and/or
projections contained in the accompanying material relating to the Company were
prepared or derived from information supplied by the Company and that Merrill
Lynch has not assumed any responsibility for independent verification of any
such estimates, valuations and/or projections. Accordingly, no representation
or warranty can be or is made by Merrill Lynch as to the accuracy or
achievability of any such estimates, valuations and/or projections.
2
CONFIDENTIAL
- --------------------------------------------------------------------------------
PRESENTATION TO
THE SPECIAL COMMITTEE OF
THE BOARD OF DIRECTORS OF
SILVER CORPORATION
OCTOBER 21, 1996
3
PROJECT SILVER
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
1. Summary of Offer
2. Public Market Valuation Considerations
3. SILVER Management Projections
4. SILVER Stock Price Performance
5. SILVER Valuation Analysis
Appendix
A. Public Comparables Analysis
B. Comparable Acquisitions Analysis
C. Discounted Cash Flow Analysis
D. Leveraged Buyout Analysis
E. Strategic Acquiror Pro Forma Analyses
F. SILVER Shareholder Profile
[Merrill Lynch Logo]____________________________________________________________
4
[Section Break]
5
- --------------------------------------------------------------------------------
SUMMARY OF OFFER
- --------------------------------------------------------------------------------
6
PROJECT SILVER
- --------------------------------------------------------------------------------
Summary of Offer Value
(dollars in millions, except per share)
T.H. Lee Offer Price Per Share $ 32
Shares Outstanding (a) 8.676
Options Outstanding (a) 0.338
------
OFFER VALUE $288.4
Plus: Average Debt Outstanding (b) 37.6
Less: Average Cash Balance (c) (6.2)
Less: Option Proceeds @
Avg. Exercise Price of $12.38 (d) (4.2)
------
TRANSACTION VALUE $315.6
======
<FN>
- ----------------
(a) As of June 30, 1996. Source: Form S-3 draft dated 9/12/96.
(b) Average 1996 seasonal working capital borrowings, as provided by management.
(c) Average 1996 cash balances, as provided by management.
(d) Mid-point of exercise price range. Source: Form S-3 draft dated 9/12/96.
[Merrill Lynch Logo]____________________________________________________________
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PROJECT SILVER
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SUMMARY OF OFFER MULTIPLES
(dollars in millions, except per share)
T.H. Lee Offer Price $32.00
------------------------------------------------------------
Premium to 10/18/96 Price ($26.25) 21.9%
Premium to 10/14/96 Price ($23.625) 35.4%
Premium to 20 Day Average to 9/24/96 36.7%
Offer Price/1996E EPS 17.1x
Offer Price/1997E EPS 11.3x
------------------------------------------------------------
Transaction Value $315.6
------------------------------------------------------------
Transaction Value/1996E EBITDA 9.9x
Transaction Value/1997E EBITDA 7.1x
Transaction Value/1996E EBIT 11.5x
Transaction Value/1997E EBIT 8.1x
Transaction Value/1996E Sales 1.12x
Transaction Value/1997E Sales 0.97x
------------------------------------------------------------
[Merrill Lynch Logo]____________________________________________________________
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8
PROJECT SILVER
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Summary of Trading Multiples
(millions, except per share)
SILVER Price Per Share (10/18/96) $26.25
52 Week High $27.63
52 Week Low $19.75
Shares Outstanding (a) 8.676
Market Value $227.7
Plus: Average Debt Outstanding (b) 37.6
Less: Average Cash Balance (c)
(6.2)
------
Market Capitalization $259.1 (e)
======
Market Value as Multiple of: (d) Market Capitalization as Multiple of: (d)(e)
-------------------------------- --------------------------------------------
1996E EPS 14.0x 1996E EBITDA 8.1x
1997E EPS 9.2x 1997E EBITDA 5.9x
1996E EBIT 9.4x
1997E EBIT 6.7x
1996E Sales 0.92x
1997E Sales 0.79x
<FN>
(a) As of June 30, 1996. Source: Form S-3 draft dated 9/12/96.
(b) Average 1996 seasonal working capital borrowings, as provided by management.
(c) Average 1996 cash balances, as provided by management.
(d) Based on projections presented to Merrill Lynch on October 1, 1996.
(e) As of 6/30/96, total debt was $56.4 MM and cash balances were $3.4 MM. Current market capitalization
based on actual net debt is therefore $280.7 MM resulting in a 1996E EBITDA multiple of 8.8x and a
1997E EBITDA multiple of 6.3x.
[Merrill Lynch Logo]____________________________________________________________
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9
[Section Break]
10
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PUBLIC MARKET VALUATION CONSIDERATIONS
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11
PROJECT SILVER
- -------------------------------------------------------------------------------
PUBLIC MARKET VALUATION CONSIDERATIONS
At its current stock price of $26.25, SILVER is undervalued by the market. The
following factors contribute to SILVER's low valuation:
[Bullet] Small public float. Insiders hold 42% and institutions hold 40%.
SILVER SHAREHOLDERS PROFILE
---------------------------
[Pie Chart]
Insiders 42%
Public 18%
Institutions 40%
[Bullet] Average daily volume was only 5,705 shares over the past 20 days.
[Bullet] Lack of research coverage. Last research report by C.L. King dated
July 26, 1996. No major Wall Street firm covers SILVER.
[Bullet] Limited interaction with investment community, therefore limited
opportunity to tell SILVER's "story".
[Bullet] Low growth industry. No true "pure play" comparable among publicly
traded companies.
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PROJECT SILVER
- -------------------------------------------------------------------------------
PUBLIC MARKET VALUATION CONSIDERATIONS (cont'd)
[Bullet] Significant growth opportunities exist that may not be factored
into SILVER's stock price:
[Triangle bullet] integration of recent acquisitions: Rauch, Silvestri,
C.J. Vander, Farberware
[Triangle bullet] expanded distribution
[Triangle bullet] new product introduction
[Triangle bullet] continued investment in technology and productivity
[Triangle bullet] additional acquisitions
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PROJECT SILVER
- -------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
[LINE CHART]
1996E P/E
23.0x
---
---
21.0x Rubbermaid
19.0x Newell
---
---
Tupperware ---
17.0x ---
15.0x American Greetings
---
--- ---
CSS Industries --- --- SILVER
---
13.0x --- Ekco
--- --- Stanhome
---
Libbey --- ---
11.0x Lifetime Hoan --- ---
--- Oneida Dept. 56
---
9.0x
7.0x
5.0x
8% 10% 12% 14% 16% 18% 20%
5 YEAR EPS GROWTH RATE(a)
-------------
(a) Source: IBES
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PROJECT SILVER
- --------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
[BAR CHART]
1996 P/E / 5 Year Est. EPS Growth
2.00x
Rubbermaid 1.73x
1.50x CSS
Industries 1.38x
Newell 1.25x
Tupperware American
Greetings 1.23x
1.15x
Oneida 1.10x
Ekco
Group 1.03x
1.00x
Libbey 0.99x
Lifetime
Hoan 0.96x
Dept. 56 0.90x
Stanhome 0.87x
SILVER 0.72x
0.50x
0.00x
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15
SECTION BREAK
16
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SILVER MANAGEMENT PROJECTIONS
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17
PROJECT SILVER
- --------------------------------------------------------------------------------
Summary of SILVER Management Projections(a)
(dollars in millions, except per share)
HISTORICAL
FYE DECEMBER 31, PRO FORMA(b) PROJECTED FYE DECEMBER 31,
---------------- FYE ------------------------------------------------ 1996-2001
1994 1995 1996E 1997(c) 1998 1999 2000 2001 CAGR
------ ------ ------ ------ ------ ------ ------ ------ -----
Net Sales $147.3 $169.5 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1 11.9%
% Growth -- 15.1% 66.6% 15.7% 12.5% 11.0% 10.5% 10.0%
Gross Profit 42.7 49.7 79.4 95.1 106.6 118.8 131.7 145.4 12.9%
Gross Margin 29.0% 29.3% 28.1% 29.1% 29.0% 29.1% 29.2% 29.3%
Selling & Administrative
Expenses 31.6 34.2 54.5 58.8 66.2 73.5 81.2 89.3 10.4%
% of Sales 21.5% 20.2% 19.3% 18.0% 18.0% 18.0% 18.0% 18.0%
EBITDA 14.3 18.7 32.0 44.2 49.2 54.7 60.5 67.2 16.0%
EBITDA Margin 9.7% 11.0% 11.3% 13.5% 13.4% 13.4% 13.4% 13.5%
EBIT 11.1 15.4 27.5 38.8 43.4 48.3 53.5 59.6 16.7%
EBIT Margin 7.5% 9.1% 9.7% 11.9% 11.8% 11.8% 11.9% 12.0%
Net Income $ 7.9 $ 13.2 $ 16.4 $ 25.0 $ 28.0 $ 31.3 $ 35.3 $ 39.9 19.5%
Net Income Margin 5.3% 7.8% 5.8% 7.6% 7.6% 7.7% 7.8% 8.0%
EPS $ 1.69 $ 3.91 $ 1.87 $ 2.84 $ 3.19 $ 3.56 $ 4.01 $ 4.54 19.5%
EPS Growth -- 134.4% -52.3% 52.2% 12.2% 11.8% 12.7% 13.1%
Depreciation & Amortization $ 3.3 $ 3.3 $ 4.5 $ 5.4 $ 5.8 $ 6.4 $ 7.0 $ 7.6
Capital Expenditures(d) (2.6) (2.7) (17.8) (20.8) (5.6) (6.1) (6.7) (7.4)
Change In Working Capital 24.1 (10.1) (38.7) (11.1) (15.6) (14.2) (14.1) (13.9)
------ ------ ------ ------ ------ ------ ------ ------
Net Cash Flow $ 32.6 $ 3.7 $(35.6) $ (1.5) $ 12.6 $ 17.4 $ 21.4 $ 26.3
<FN>
- -----------------
(a) SILVER management projections presented to Merrill Lynch on October 1, 1996.
(b) Pro forma for the acquisition of Rauch, Silvestri, C.J. Vander and Farberware. Excludes gain on Farberware transaction
of $11.9 million and sales of Farberware inventory of $6.0 million, but includes $2.6 million of Farberware licensing
royalties.
(c) Adjusted to exclude $0.25 million of Farberware inventory sales.
(d) 1996 and 1997 Capital Expenditures include the construction of a West Coast distribution facility, expansion of
SILVER's East Boston facility, machinery and equipment for Rauch and C.J. Vander and a building for C.J. Vander.
[MERILL LYNCH LOGO]
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3-1
18
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SILVER STOCK PRICE PERFORMANCE
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19
PROJECT SILVER
- --------------------------------------------------------------------------------
Daily Stock Price and Trading Volume from 10/18/95 to 10/18/96
[Graphic]
[Graphic]
[MERRILL LYNCH LOGO]
-------------------------------------------------------------
4-1
20
PROJECT SILVER
- --------------------------------------------------------------------------------
Weekly Stock Price and Trading Volume from 12/18/92 to 10/18/96
[Graphic]
[Graphic]
[MERRILL LYNCH LOGO]
-------------------------------------------------------------
4-2
21
PROJECT SILVER
- --------------------------------------------------------------------------------
Analysis of Trading Volume, from 10/18/95 to 10/18/96
[Graphic]
[Graphic]
- --------------------------------------------------------------------------------
4-3
22
- --------------------------------------------------------------------------------
SILVER VALUATION ANALYSIS
- --------------------------------------------------------------------------------
23
PROJECT SILVER
- --------------------------------------------------------------------------------
SILVER Valuation Summary
[Bar Graph]
$35
Merrill Lynch Reference Range T.H. Lee Offer Price Current Price
$30 $32 $26.25
-------------------------------------------------------------------------------------------------------
90%-110% 6x-8x Financing
10.5x-12x 1996 P/E to 9x-11x Terminal EBITDA; and 1997E
1997 EPS 5 Yr 1996 EBITDA 11.0%-12.0% Return EPS
of $2.84 Growth Rate of $32MM Discount Rate Constraints Breakeven
-------------------------------------------------------------------------------------------------------
P/E To Strategic
Silver Public Growth Comparable Maximum Acquiror
52 Week Comparables Rate Acquisitions LBO Pro Forma
High/low Analysis Analysis Analysis DCF Analysis Analysis
-------- ----------- -------- ------------ --- -------- ----------
SILVER Value Per Share $27.63-19.75 $34-$30 $40-$33 $36-$29 $39-$28 $33-$30 $50-$28
[Merrill Lynch Logo]____________________________________________________________
5-1
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PROJECT SILVER
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ACQUISITION PRICING MATRIX
(dollars in millions, except per share data)
OFFER VALUE AS MULTIPLE OF:
----------------------------------------------------------
OFFER OFFER OFFER NET TRANSACTION 1996E 1996E 1997E 1996E 1996E
PRICE PREMIUM VALUE DEBT (A) VALUE NET INCOME EPS EPS CASH FLOW BOOK VALUE
----- ------- ----- -------- ----------- ---------- ----- ----- --------- ----------
$26.250 0.0% 236.6 $27.2 $263.8 13.7x 14.0x 9.2x 10.9x 1.36x
28.000 6.7% 252.4 $27.2 279.6 14.6 15.0 9.9 11.6 1.46
30.000 14.3% 270.4 $27.2 297.6 15.6 16.0 10.6 12.4 1.56
-----------------------------------------------------------------------------------------------------------------------
32.000 21.9% 288.5 $27.2 315.7 16.7 17.1 11.3 13.2 1.66
-----------------------------------------------------------------------------------------------------------------------
34.000 29.5% 306.5 $27.2 333.7 17.7 18.2 12.0 14.1 1.77
36.000 37.1% 324.5 $27.2 351.7 18.8 19.3 12.7 14.9 1.87
38.000 44.8% 342.6 $27.2 369.8 19.8 20.3 13.4 15.7 1.98
40.000 52.4% 360.6 $27.2 387.8 20.8 21.4 14.1 16.5 2.08
42.000 60.0% 378.6 $27.2 405.8 21.9 22.5 14.8 17.4 2.18
44.000 67.6% 396.6 $27.2 423.8 22.9 23.5 15.5 18.2 2.29
TRANSACTION VALUE AS MULTIPLE OF:
--------------------------------
1996E 1996E 1996E
SALES EBITDA EBIT
----- ------ -----
0.93x 8.2x 9.6x
0.99 8.7 10.2
1.05 9.3 10.8
----------------------------
1.12 9.9 11.5
----------------------------
1.18 10.4 12.1
1.25 11.0 12.8
1.31 11.6 13.4
1.37 12.1 14.1
1.44 12.7 14.8
1.50 13.2 15.4
- ---------------------------------------------------------------------------------------------------------------------------------
SILVER 1996E(b) Data $17.3 $1.87 $2.84 $21.8 $173.4 $282.4 $32.0 $27.5
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Mean Public Comparable Multiples 16.6x 14.2x 12.4x 9.6x 2.01x 1.36x 8.0x 10.8x
Mean Acquisition Comparable Multiples 15.8x -- -- -- 3.36x 1.00x 8.7x 12.3x
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Based on estimated net debt as of December 31, 1996, calculated as follows:
Average Seasonal Working Capital Borrowings $37.6 million
Less: Average Cash Balances (6.2)
Less: Options Proceeds (4.2)
Net Debt $27.2 million
(b) Pro forma for Rauch, Silvestri, C.J. Vander and Farberware acquisitions
5-2
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PROJECT SILVER
- --------------------------------------------------------------------------------
Public Comparables Analysis(1)
[Bar Graph]
1996 P/E(2)
T.H. Lee Offer Price 17.1x
American CSS Lifetime
Rubbermaid Newell Tupperware SILVER(3) Greetings Industries Ekco Stanhome Libbey Dept.56 Hoan Oneida
- ---------- ------ ---------- --------- --------- ---------- ---- -------- ------ ------- -------- ------
22.4x 18.7x 17.2x 14.0x 13.8x 13.8x 13.4x 12.2x 11.9x 11.7x 11.6x 9.9x
[Bar Graph]
1997 P/E(2)
T.H. Lee Offer Price 11.3x
American CSS Lifetime General
Rubbermaid Ekco Newell Tupperware Greetings Industries Libbey Dept.56 Stanhome Hoan Housewares SILVER(3) Oneida
- ---------- ---- ------ ---------- --------- ---------- ------ ------- -------- -------- ---------- --------- ------
18.3x 17.0x 16.2x 15.2x 12.3x 11.5x 10.4x 10.3x 10.3x 9.6x 9.3x 9.2x 8.0x
<FN>
- --------------------
(1) Earnings estimates from First Call and calendarized to December year-ends, except for Oneida which is from Zack's and is for a
January year-end.
(2) General Housewares has a projected loss in 1996.
(3) SILVER estimates from the Company, and 1996 is pro forma for the Rauch and Farberware transactions.
[Merrill Lynch Logo]____________________________________________________________
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PROJECT SILVER
- --------------------------------------------------------------------------------
Public Comparables Analysis
[Bar Graph]
1996E EBITDA Multiples
T.H. Lee Offer Price 9.9x
American Lifetime CSS General
Tupperware Newell Rubbermaid SILVER(3) Greetings Dept.56 Libbey Stanhome Hoan Industries Housewares Ekco
- ---------- ------ ---------- --------- --------- ------- ------ -------- -------- ---------- ---------- ----
10.3x 9.5x 8.3x 8.1x 7.4x 7.3x 6.6x 6.4x 6.1x 5.7x 4.3x 3.9x
<FN>
- ---------------------
(a) EBITDA estimates are from research reports, and where not provided, depreciation and amortization are LTM; data for Oneida not
available.
(b) Based on SILVER 1996E pro forma EBITDA.
[Merrill Lynch Logo]____________________________________________________________
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PROJECT SILVER
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P/E TO GROWTH RATE ANALYSIS
[LINE CHART]
1996E P/E
23.0x
---
---
21.0x Rubbermaid
19.0x Newell T.H. Lee
--- Offer Price
Tupperware --- --- 17.1
17.0x ---
15.0x American Greetings
---
--- ---
CSS Industries --- --- SILVER
---
13.0x --- Ekco
--- --- Stanhome
---
Libbey --- ---
11.0x Lifetime Hoan --- ---
--- Oneida Dept. 56
---
9.0x
7.0x
5.0x
8% 10% 12% 14% 16% 18% 20%
5 YEAR EPS GROWTH RATE(a)
-------------
(a) Source: IBES.
[MERRILL LYNCH LOGO]-----------------------------------------------------------
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PROJECT SILVER
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P/E TO GROWTH RATE ANALYSIS
1996 P/E
5 YEAR TO 5 YEAR
EST. EPS EST. EPS
1996 P/E GROWTH GROWTH
-------- -------- ------
LARGE CAPITALIZATION
--------------------
AMERICAN GREETINGS 13.8x 12% 1.15x
NEWELL CO. 18.7 15% 1.25
RUBBERMAID INCORPORATED 22.4 13% 1.73
TUPPERWARE CORP. 17.2 14% 1.23
-------------------------------------------
MEAN 18.1x 14% 1.34x
MEDIAN 18.0 14% 1.24
-------------------------------------------
SMALL CAPITALIZATION
--------------------
CSS INDUSTRIES INC. 13.8x 10% 1.38x
DEPARTMENT 56, INC. 11.7 13% 0.90
EKCO GROUP INC. 13.4 13% 1.03
GENERAL HOUSEWARES(a) NM 13% NM
LIBBEY INC. 11.9 12% 0.99
LIFETIME HOAN CORP. 11.6 12% 0.96
ONEIDA LTD. 9.9 9% 1.10
STANHOME INC. 12.2 14% 0.87
-------------------------------------------
MEAN 12.1x 12% 1.03x
MEDIAN 11.9 13% 0.99
-------------------------------------------
SILVER(b) 14.0x 19% 0.72x
- ----------
<FN>
(a) General Housewares has a projected loss in 1996.
(b) 1996-2001 CAGR.
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5-6
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PROJECT SILVER
- --------------------------------------------------------------------------------
P/E TO GROWTH RATE ANALYSIS
SILVER 5 Year Estimated EPS Growth Rate(a) 19.4%
Comparable P/E to Growth Rate(b) 90% -- 110%
Estimated 1996E P/E 17.5x -- 21.3x
SILVER 1996E EPS(a) $1.87
-----------------------------------------------------------------------
VALUE PER SILVER SHARE $32.65 $39.91
-----------------------------------------------------------------------
- --------
<FN>
(a) Based on management projections.
(b) Based on 1996 P/E to 5 year growth rate ratios of CSS Industries,
Department 56, Ekco Group, Libbey, Lifetime Hoan, Oneida, and Stanhome.
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PROJECT SILVER
- --------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS ANALYSIS
[BAR CHART]
LTM EBITDA MULTIPLE
Newell Co./Holson Burnes Group Inc. 11.1x
General Housewares Corp./OXO International LP 9.7x
Newell Co./Intercraft Industries Corp. 9.2x
Ekco Group Inc./Frem Corp. 8.1x
Libbey Inc./Syracuse China Corp. (The Pfaltzgraff Co.) 7.6x
Paper Magic Group/Spearhead Industries Inc. 6.6x
T.H. Lee Offer Price(a) 9.9x
- ---------
<FN>
(a) Based on 1996E EBITDA.
[MERRILL LYNCH LOGO]-----------------------------------------------------------
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PROJECT SILVER
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COMPARABLE ACQUISITIONS ANALYSIS
[BAR CHART]
LTM SALES MULTIPLE
Glacier Holdings Inc./Stylemaster Inc. 1.71x
SILVER/Rauch Industries Inc. 1.61x
General Housewares Corp./OXO International LP 1.39x
Newell Co./Intercraft Industries Corp. 1.24x
Ekco Group Inc./Frem Corp. 1.14x
Libbey Inc./Syracuse China Corp. (The Pfaltzgraff Co.) 1.10x
General Housewares Corp./Olfa Products Corp.,
Walter Absil Co. Ltd. 0.91x
Brown-Forman Corp./Dansk International Designs Ltd. 0.80x
Paper Magic Group/Spearhead Industries Inc. 0.64x
Newell Co./Holson Burnes Group Inc. 0.60x
Frederick Cooper PLC/Bonny Products Inc.
(American Brands Inc.) 0.46x
James River Corp. of Virginia/Mennen Co-Paper Products Business
(Colgate-Palmolive Co.) 0.40x
T.H. Lee Offer Price(a) 1.12x
- ---------
<FN>
(a) Based on 1996E Sales
[MERRILL LYNCH LOGO]-----------------------------------------------------------
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PROJECT SILVER
- -------------------------------------------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
[LINE GRAPH]
----------------------
EBITDA MULTIPLE METHOD
----------------------
Value per SILVER Share
Discount Rate 10.5% 11.5% 12.5%
6x LTM EBITDA $30.33 $27.54
$33.39
8x LTM EBITDA $39.73 $36.13
T.H. Lee Offer Price $32
[MERRILL LYNCH LOGO]-----------------------------------------------------------
5-10
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PROJECT SILVER
- --------------------------------------------------------------------------------
MAXIMUM LBO ANALYSIS
-----------------------------------------------------------------------
HYPOTHETICAL CONSTRAINTS
-----------------------------------------------------------------------
[Bullet] 1996 EBITDA/Interest Coverage 1.6x
[Bullet] Minimum 5 Year Return on Equity 20%
[Bullet] Maximum Bank Debt Repayment Period 7 years
[Bullet] Minimum Equity Investment 20%
-----------------------------------------------------------------------
-----------------------------------------------------------------------
RESULTS
-----------------------------------------------------------------------
[Bullet] Offer Value for Equity $32 per
share
[Bullet] Capital Structure
8.5% Bank Term Loan $ 40MM 13%
7.5% Working Capital Revolver $ 43MM 14%
11.5% Senior Subordinated Notes $100MM 33%
13.0% PIK Preferred $ 50MM 17%
Common Equity $ 67MM 22%
-----------------------------------------------------------------------
[MERRILL LYNCH LOGO]-----------------------------------------------------------
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PROJECT SILVER
- -------------------------------------------------------------------------------
POTENTIAL STRATEGIC ACQUIROR PRO FORMA ANALYSIS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
1997E EPS (a)
BREAKEVEN PURCHASE PRICE
EST. ------------------------
NET DEBT/ BORROWING CASH STOCK
POTENTIAL ACQUIROR MKT. CAP. 1997E P/E MKT. CAP. RATE PURCHASE POOLING
- ------------------ --------- --------- ---------- --------- -------- -----------
American Greetings $2,645.3 12.3x 15.9% 7% $46 $34
CSS Industries, Inc. 267.5 11.5 6.8 9 39 32
Department 56, Inc. 648.2 10.3 16.1 9 39 28
Newell Co. 5,782.5 16.2 16.3 7 46 45
Rubbermaid Inc. 3,820.8 18.3 5.9 7 46 50
Stanhome Inc. 599.9 10.3 17.6 9 39 29
Tupperware Corp. 3,105.8 15.2 6.2 7 46 42
- ------------
<FN>
(a) Assumes no synergies or cost savings.
35
SECTION BREAK
36
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
37
- --------------------------------------------------------------------------------
PUBLIC COMPARABLES ANALYSIS
- --------------------------------------------------------------------------------
38
PROJECT SILVER
Analysis of Selected Companies
Comparative Multiples and Imputed Values
----------------------------------------
(dollar amounts in millions except per share data)
MARKET MULTIPLE ANALYSIS FOR SELECTED INDUSTRY COMPARABLES
- ------------------------------------------------------------------------------------------------------------------------------------
---MARKET CAP. AS A
---MARKET VALUE AS A MULTIPLE OF:---- MULTIPLE OF:--- 1996 P/E/
LTM 1996 1997 LTM LFQ 1996 5-YR.
PRICE MARKET MARKET NET TO EPS EPS CASH COMMON LTM LTM LTM EBITDA EST. EPS
COMPANIES 18-OCT-96 SHARES VALUE CAP.(a) COMMON EST.(b) EST.(b) FLOW(c) EQUITY EBITDA EBIT SALES EST.(f) GROWTH
- --------------- --------- ------ ------ -------- ------ ------- ------- ------- ------ ------ ----- ----- ------- ---------
AMERICAN
GREETING-CL A $29.75 74.8 $2,224.1 $2,645.3 15.9x 13.8x 12.3x 12.5x 1.78x 8.5x 11.1x 1.32x 7.4x 1.15x
CSS INDS INC 23.25 10.7 249.3 267.5 26.6 13.8 11.5 33.8 1.66 8.7 11.9 0.90 5.7 1.38
DEPARTMENT 56,
INC.-SER A 25.25 21.5 544.1 648.2 10.2 11.7 10.3 9.3 3.03 6.2 6.7 2.51 7.3 0.90
EKCO GROUP INC. 3.97 18.5 69.4 202.2 20.2 13.4 17.0 2.5 0.53 4.6 8.9 0.75 3.9 1.03
GENERAL
HOUSEWARES 9.75 4.1 39.5 68.0 80.2 NM 9.3 8.2 0.84 7.6 16.2 0.60 4.3 NM
LIBBEY INC. 25.00 15.0 375.8 613.7 11.9 11.9 10.4 7.6 NM 7.0 9.1 1.56 6.6 0.99
LIFETIME HOAN
CORP 9.13 11.3 102.9 114.9 14.5 11.6 9.6 12.9 1.58 8.6 9.4 1.33 6.1 0.96
NEWELL CO. 30.50 158.8 4,842.9 5,782.5 20.9 18.7 16.2 11.1 3.58 10.5 13.2 2.16 9.5 1.25
ONEIDA LTD 14.88 11.1 165.3 285.3 10.0 9.9 8.0 5.2 1.53 5.6 8.0 0.57 #N/A 1.10
RUBBERMAID
INCORPORATED 24.00 149.8 3,594.4 3,820.8 22.2 22.4 18.3 13.7 3.69 10.1 13.8 1.64 8.3 1.73
STANHOME INC. 27.63 17.9 494.4 599.9 12.6 12.2 10.3 10.2 1.92 7.0 7.8 0.72 6.4 0.87
TUPPERWARE
CORP. 46.88 62.1 2,912.9 3,105.8 17.1 17.2 15.2 12.4 11.89* 10.9 13.9 2.24 10.3 1.23
MAXIMUM(d) 26.x 22.4x 18.3x 13.7x 3.96 10.9x 16.2x 2.51x 10.3x 1.73x
MEAN(d) 16.6 14.2 12.4 9.6 2.01 8.0 10.8 1.36 6.9 1.14
MEDIAN(d) 15.9 13.4 10.9 10.2 1.72 8.1 10.2 1.32 6.6 1.10
MINUMUN(d) 10.0 9.9 8.0 2.5 0.53 4.6 6.7 0.57 3.9 0.87
SILVER(e) $26.25 8.7 $ 227.8 $ 259.0 13.2x 14.0x 9.2x 10.4x 1.31x 8.1x 9.4x 0.92x 8.1x 0.72
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Market Capitalization = Market Value + Preferred Equity at Liquidation Value (Incl. Redeemable) + Short-Term Debt + Long-Term
Debt + Minority Interest - Cash & Marketable Securities
(b) Earnings Estimates were obtained from First Call and were calendarized to December year-ends, except Oneida which is from Zacks
and is for a January year-end and SILVER which is from the Company
(c) Cash Flow = Income Available to Common + Depreciation, Depletion & Amortization + Deferred Taxes - Unremitted Earnings Of
Unconsolidated Subsidiaries
(d) Summary Multiples exclude numbers that are Negative, Not Available, Not Meaningful, and (*) figures
(e) Data for SILVER is 1996 estimaated pro forma to include the acquisition of Rauch, to exclude Farberware transaction gains of
$11.9 million and sales of Farberware inventory of $6.0 million, but to include licensing royalties of $2.6 million; market
capitalization includes average working capital revolver balance of $37.6 million net of average cash balance of $6.2 million
(f) EBITDA estimates are from research reports, and where not provided, depreciation and amortization are LTM; data for Oneida not
available and data for SILVER is from company projections for the year ended 31-Dec-96
A-1
39
PROJECT SILVER
Analysis of Selected Companies
Comparative Multiples and Imputed Values
----------------------------------------
(dollar amounts in millions except per share data)
SUMMARY DATA FOR SELECTED INDUSTRY COMPARABLES
- ------------------------------------------------------------------------------------------------------------------------------------
--52 WEEK LTM 1996 1997 LTM LSQ 1996 5-YR.
RANGE-- NET TO EPS EPS CASH COMMON LTM LTM LTM EBITDA EST. EPS CFY LTM
COMPANIES TICKER HIGH LOW COMMON EST.(a) EST.(a) FLOW(b) EQUITY EBITDA EBIT SALES EST.(d) GROWTH ENDS ENDED
- --------------- ------ ------ ------ ------ ------- ------- ------- ------- ------ ------ -------- ------- ------- ------ ------
AMERICAN
GREETING-CL A AGREA $33.00 $23.50 $140.0 $ 2.15 $2.42 $178.2 $1,251.4 $310.9 $239.3 $2,011.5 $357.9 12% Feb-97 May-96
CSS INDS INC CSS 25.75 20.50 9.4 1.69 2.03 7.4 149.9 30.6 22.4 297.4 47.2 10% Dec-96 Jun-96
DEPARTMENT 56,
INC.-SER A DFS 48.00 19.50 53.2 2.16 2.45 58.5 179.9 103.8 96.9 258.5 89.3 13% Dec-96 Jun-96
EKCO GROUP INC. EKO 6.38 3.75 3.4 0.28 0.22 27.9 130.0 43.7 22.7 270.4 51.5 13% Dec-96 Jun-96
GENERAL
HOUSEWARES GHW 14.13 7.88 0.5 (0.48) 1.05 4.8 47.0 8.9 4.2 113.5 15.7 13% Dec-96 Jun-96
LIBBEY INC. LBY 28.38 19.75 31.5 2.10 2.40 49.4 (36.6) 87.6 67.1 393.0 92.9 12% Dec-96 Jun-96
LIFETIME HOAN
CORP LCUT 11.25 8.00 7.1 0.79 0.95 8.0 65.1 13.3 12.2 86.5 18.8 12% Dec-96 Jun-96
NEWELL CO. NWL 32.50 23.38 232.2 1.63 1.88 435.3 1,345.3 548.8 437.4 2,673.8 607.4 15% Dec-96 Jun-96
ONEIDA LTD OCQ 18.88 14.38 16.5 1.50 1.85 31.9 107.8 51.1 35.5 504.7 #N/A 9% Jan-97 Jul-96
RUBBERMAID
INCORPORATED RBD 30.38 22.13 161.9 1.07 1.31 261.8 973.5 376.8 277.0 2,329.7 458.8 13% Dec-96 Jun-96
STANHOME INC. STH 32.63 25.38 39.3 2.26 2.67 48.2 257.8 85.7 76.8 836.6 94.3 14% Dec-96 Jun-96
TUPPERWARE
CORP. TUP 49.88 38.25 169.9 2.72 3.09 235.4 245.0 284.7 223.6 1,386.2 302.1 14% Dec-96 Jun-96
SILVER(e) $27.63 $19.75 $ 17.3 $1.87 $2.84 $ 21.8 $ 173.4 $ 32.0 $ 27.5 $ 282.4 $ 32.0 19% DEC-96 DEC-96
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Earnings Estimates were obtained from First Call and were calendarized to December year-ends, except Oneida which is from Zacks
and is for a January year-end and SILVER which is from the Company
(b) Cash Flow = Income Available to Common + Depreciation, Depletion & Amortization + Deferred Taxes - Unremitted Earnings Of
Unconsolidated Subsidiaries
(c) Data for SILVER is 1996 estimaated pro forma to include the acquisition of Rauch, to exclude Farberware transaction gains of
$11.9 million and sales of Farberware inventory of $6.0 million, but to include licensing royalties of $2.6 million; market
capitalization includes average working capital revolver balance of $37.6 million net of average cash balance of $6.2 million
(d) EBITDA estimates are from research reports, and where not provided, depreciation and amortization are LTM; data for Oneida not
available and data for SILVER is from company projections for the year ended 31-Dec-96
A-2
40
- --------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS ANALYSIS
- --------------------------------------------------------------------------------
41
PROJECT SILVER
- --------------------------------------------------------------------------------
ANALYSIS OF SELECTED HOUSEWARES INDUSTRY ACQUISITIONS
(Dollars in Millions, Except Per Share)
Announcement
Date Target & Description
- ------------ ----------------------------------------------------------------------------------------------------------
11-Dec-95 Holson Burnes Group Inc
- Manufactures and markets photo albums and picture frames
7-Dec-95 Rauch Industries Inc
- Manufactures and distributes Christmas decorations, primarily glass and satin Christmas tree ornaments
2-Nov-95 Bonny Products Inc (American Brands Inc)
- Manufactures non-electrical kitchen tools and utensils
11-May-95 Syracuse China Corp (The Pfaltzgraff Co)
- Manufactures ceramic dinnerware, mainly for the foodservice industry
4-Oct-94 Olfa Products Corp, Walter Absil Co Ltd
- Wholesale distributor of cutting tools and accessories for the hobby, craft, hardware and fabric markets
3-Feb-93 Stylemaster Inc
- Manufacturer and marketer of proprietary plastic housewares and supplies, and supplier to Glacier Water
30-Oct-92 OXO International LP
- Marketer of kitchen tools under the Good Grips, Prime and Plus brand names
8-Sep-92 Intercraft Industries Corp
- Manufactures and wholesales picture and mirror frames
20-Jul-92 Mennen Co-Paper Products Business (Colgate-Palmolive Co)
- Manufactures party paper products, tablecloth cutlery and tableware products
13-Nov-91 Frem Corp
- Manufactures and markets injection molded housewares products
10-Jul-91 Spearhead Industries Inc
- Designs, assembles and markets consumer items for Easter and Halloween, and a line of toy products
20-May-91 Dansk International Designs Ltd
- Manufactures tabletop, houseware, and giftware items
Offer Value as Multiple of: Transaction Value as Multiple of:
--------------------------- ---------------------------------
Offer Transaction LTM LFQ LTM LTM LTM
Acquiror Value(a) Value(b) Net Income Book Value Sales EBITDA EBIT
- ------------------------------- -------- ----------- ---------- ---------- ----- ------ ----
Newell Co $ 36.7 $ 82.9 10.8x 1.13x 0.60x 11.1x 18.3x
Syratech Corp 50.3 82.7 NM 1.69 1.61 NM NM
Frederick Cooper PLC 6.0 6.0 5.1 1.22 0.46 N/A N/A
Libbey Inc 40.7 40.6 NM 1.80 1.10 7.6 12.7
General Housewares Corp 13.8 15.1 NM 2.69 0.91 NM NM
Glacier Holdings Inc 2.0 9.6 NM NM 1.71 NM NM
General Housewares Corp 6.3 6.4 20.2 6.16 1.39 9.7 11.0
Newell Co 184.7 184.7 21.5 2.91 1.24 9.2 12.9
James River Corp of Virginia 40.0 40.0 N/A N/A 0.40 N/A N/A
Ekco Group Inc 26.5 32.7 19.1 9.71 1.14 8.1 10.7
Paper Magic Group 13.5 17.5 18.1 2.95 0.64 6.6 8.3
Brown-Forman Corp 66.0 86.0 N/A 3.30 0.80 N/A N/A
-------------------------------------------------------------------
Maximum 21.5x 9.71x 1.71x 11.1x 18.3x
Mean 15.8 3.36 1.00 8.7 12.3
Median 18.6 2.80 1.00 8.6 11.9
Minimum 5.1 1.13 0.40 6.6 8.3
-------------------------------------------------------------------
<FN>
(a) Offer Value = Offer Price per Share x (Shares Outstanding plus Exercisable Options Outstanding)
(b) Transaction Value = Offer Value + Liquidation Value of Preferred Stock + Short Term Debt + Long Term Debt + Minority Interest -
Cash & Equivalents - Exercisable Options Proceeds
42
[Section Break]
43
- --------------------------------------------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
- --------------------------------------------------------------------------------
44
PROJECT SILVER
DISCOUNTED CASH FLOW ANALYSIS - EBITDA MULTIPLE METHOD
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
Fiscal Year Ended December 31, Projected Fiscal Year Ended December 31, (a)
----------------------------------- --------------------------------------------
1993 1994 1995 1996E 1997 1998 1999 2000 2001
----------------------------------- --------------------------------------------
Sales $122.7 $147.3 $169.5 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1
EBITDA 13.4 14.3 18.7 32.0 44.2 49.2 54.7 60.5 67.2
Less: Depreciation (3.1) (3.3) (3.3) (4.3) (5.2) (5.6) (6.2) (6.8) (7.4)
----------------------------------- --------------------------------------------
EBITDA 10.3 11.1 15.4 27.7 39.0 43.6 48.5 53.7 59.7
Less: Taxes @ 35.0% (3.6) (3.9) (5.4) (9.7) (13.7) (15.3) (17.0) (18.8) (20.9)
----------------------------------- --------------------------------------------
Tax-effected EBITDA 6.7 7.2 10.0 18.0 25.4 28.4 31.5 34.9 38.8
Plus: Depreciation 5.2 5.6 6.2 6.8 7.4
Plus: Deferred Taxes 0.0 0.0 0.0 0.0 0.0
Less: Capital Expenditures (20.8) (5.6) (6.1) (6.7) (7.4)
Less: Changes in Working Capital (12.1) (15.8) (14.4) (14.4) (14.1)
--------------------------------------------
Free Cash Flow ($2.3) $12.6 $17.1 $20.6 $24.7
Free Cash Flow Growth Rate -546.1% -647.8% 36.1% 20.1% 20.2%
-------------- --------------------------- ---------------------------
A + B = C
-------------- --------------------------- ---------------------------
PV of Terminal Value as a Terminal Value as a
Discounted (b) Multiple of 2001 EBITDA (c) Firm Value % of Firm Value
Cash Flows --------------------------- --------------------------- --------------------------------
Discount Rate (1997-2001) 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x
- ------------- -------------- --------------------------- --------------------------- --------------------------------
10.5% $49.8 $244.7 $285.5 $326.3 $294.5 $335.2 $376.0 83.1% 85.2% 86.8%
11.0% 48.9 239.2 279.1 319.0 288.2 328.0 367.9 83.0% 85.1% 86.7%
11.5% 48.1 233.9 272.9 311.9 282.0 321.0 360.0 82.9% 85.0% 86.6%
12.0% 47.3 228.8 266.9 305.0 276.1 314.2 352.3 82.9% 84.9% 86.6%
12.5% 46.5 223.7 261.0 298.3 270.2 307.5 344.8 82.8% 84.9% 86.5%
--------------------------------
-------------- ---------------------------
D = E
-------------- ---------------------------
Total Equity Value Value Per Share (e) Equivalent Perpetual Growth Rate
Net Debt --------------------------- --------------------------- --------------------------------
Discount Rate 12/31/96(d) 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x 6.0x 7.0x 8.0x
- ------------- -------------- --------------------------- --------------------------- --------------------------------
10.5% $31.3 $263.2 $304.0 $344.7 $30.33 $35.03 $39.73 4.1% 5.0% 5.6%
11.0% 31.3 256.9 296.8 336.6 29.61 34.20 38.80 4.6% 5.5% 6.1%
11.5% 31.3 250.7 289.7 328.7 28.90 33.39 37.89 5.1% 5.9% 6.6%
12.0% 31.3 244.8 282.9 321.0 28.21 32.60 37.00 5.5% 6.4% 7.1%
12.5% 31.3 239.0 276.2 313.5 27.54 31.84 36.13 6.0% 6.9% 7.6%
--------------------------- --------------------------------
<FN>
- ------------------------------------------------------
(a) Projections are from SILVER management.
(b) Present values are calculated as of 12/31/96.
(c) Discounted 5 years; based on 2001 EBITDA of $67.2 million.
(d) Represents average seasonal working capital revolver balance net of average cash balance for 1996.
(e) Based on 8.7 million shares currently outstanding.
C-1
45
PROJECT SILVER
ANALYSIS OF COST OF CAPITAL
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------
MACROECONOMIC ASSUMPTIONS:
- ------------------------------------------------------------------------------------------------------------------------------------
Three Month Treasury Bill (at 10/19/96) 5.09% Estimated Future Market Return(b) 14.19%
Thirty Year Government Bond (at 10/19/96) 6.79% Estimated Future Risk Free Rate(c) 5.39%
Historical Spread Between Long Bond & Bill(a) 1.40% Estimated Market Risk Premium 8.80%
Historical Spread Between Long Bond & S&P500(a) 7.40%
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------
INDUSTRY BETA ANALYSIS:
- ------------------------------------------------------------------------------------------------------------------------------------
LEVERED BV NET DEBT/ DEBT/ MARGINAL UNLEVERED LEVERED UNLEVERED
COMPARABLE COMPANIES BETA(d) MKT. CAP. EQUITY TAX RATE BETA(e) COST OF CAPITAL COST OF CAPITAL
- -------------------- ------- ----------- ------- -------- --------- --------------- ---------------
American Greetings 0.80 15.9% 18.9% 39.0% 0.72 12.4% 11.7%
CSS Industries Inc. 0.53 6.8% 7.3% 39.0% 0.51 10.1% 9.9%
Department 56, Inc. 0.70 16.1% 19.1% 39.0% 0.63 11.6% 10.9%
Ekco Group, Inc. 1.19 65.7% 191.4% 39.0% 0.55 15.9% 10.2%
General Housewares 0.60 41.9% 72.1% 39.0% 0.42 10.7% 9.1%
Libbey Inc. 0.83 38.8% 63.3% 39.0% 0.60 12.7% 10.7%
Lifetime Hoan Corp. 0.82 10.4% 11.7% 39.0% 0.77 12.6% 12.1%
Newell Co. 0.96 16.3% 19.4% 39.0% 0.86 13.8% 12.9%
Oneida Ltd. 0.83 42.1% 72.6% 39.0% 0.58 12.7% 10.5%
Rubbermaid Inc. 1.27 5.9% 6.3% 39.0% 1.22 16.6% 16.2%
Stanhome Inc. 0.44 17.6% 21.3% 39.0% 0.39 9.3% 8.8%
---- ---- ---- ----
AVERAGE INDUSTRY COST OF CAPITAL 25.2% 39.0% 0.66 11.2%
SILVER COST OF CAPITAL 0.52 12.1% 13.7% 39.0% 0.48 10.0% 9.6%
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------
TARGET WACC CALCULATION:
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIMAL OPTIMAL PRE-TAX LEVERED BETA ASSUMING
DEBT/ DEBT/ SPREAD TO 30-YR LONG TERM UNLEVERED BETA OF COST OF TARGET
CAPITALIZATION EQUITY TREASURIES (BP) COST OF DEBT 0.66 LEVERED EQUITY WACC
-------------- ------ --------------- ------------ --------------------- -------------- ------
0.0% 0.0% 100.0 7.8% 0.66 11.2% 11.2%
10.0% 11.1% 125.0 8.0% 0.70 11.6% 10.9%
20.0% 25.0% 150.0 8.3% 0.76 12.1% 10.7%
30.0% 42.9% 175.0 8.5% 0.83 12.7% 10.4%
40.0% 66.7% 200.0 8.8% 0.92 13.5% 10.3%
50.0% 100.0% 300.0 9.8% 1.06 14.7% 10.3%
60.0% 150.0% 400.0 10.8% 1.26 16.5% 10.5%
70.0% 233.3% 500.0 11.8% 1.59 19.4% 10.9%
80.0% 400.0% 600.0 12.8% 2.26 25.3% 11.3%
90.0% 900.0% 700.0 13.8% 4.26 42.9% 11.9%
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------
<FN>
(a) Source: Ibbottson & Sinquefield 1996 Yearbook.
(b) Thirty year government bond yield plus the historical spread between the long bond and the S&P 500.
(c) Thirty year government bond yield less the historical spread between the long bond and the three month bill.
(d) Source: Merrill Lynch Securities Risk Evaluation Book dated September 1996.
(e) Unlevered beta equals Levered Beta/(1 + (Debt/Equity) * (1 - Tax Rate). Assumes beta of debt equals zero.
C-2
46
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
47
- --------------------------------------------------------------------------------
LEVERAGED BUYOUT ANALYSIS
- --------------------------------------------------------------------------------
48
PROJECT SILVER
LBO ANALYSIS - TRANSACTION SUMMARY
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
- -----------------------------------------------------------------------------------------------------------------------------
SOURCES: AMOUNT PERCENT INTEREST RATE OWNERSHIP TERM POINTS FEES
- -------- ------ ------- ------------- --------- ---- ------ ----
Existing Cash Balances $ 0.0 0.0% 6.00%
Option Proceeds 4.2 1.4%
Working Capital Revolver (a) 42.7 14.1% 7.50% 0.0% 7 2.5% $3.5
Bank Debt (Term Loan) 40.0 13.2% 8.50% 0.0% 10 2.5% 1.0
Senior Sub. Debentures 100.0 32.9% 11.50% 0.0% 10 3.0% 3.0
PIK Preferred 50.0 16.5% 13.00% 0.0% 7 0.0% 0.0
Seller Rollover Equity 16.7 5.5% 25.0%
T.H. Lee Common Equity 50.0 16.5% 75.0%
------ ------ ------ ----
Total Sources $303.6 100.0% 100.0% $7.5
USES:
- -----
Refinance Debt $ 1.8 ------------------------------------------------------------
Financing Fees 7.5 8.7 total shares outstanding
Transaction Expenses @ 2.0% 5.8 0.3 exerc. options outst. ex. @ $12.38 per share
Purchase of Equity @ $32.00 per share 288.5 ---
Total Uses $303.6 9.0 fully diluted shares outstanding
- -----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------- ------------------------------------------------------
GOODWILL CALCULATION: (b) INTEREST CONVERAGE SUMMARY:
- ------------------------- ---------------------------
1996E 1997 1998
----- ---- ----
Purchase Price $0.0 EBITDA / Total Interest 1.6x 2.1x 2.3x
Existing Goodwill -- EBITDA-CAPX/Tot. Int. 0.7x 1.1x 2.1x
Non-Financing Transaction Expenses -- EBITDA-Norm. CAPX/Tot. 1.3x 1.9x 2.1x
Less: Book Value Acquired (incl. option proceeds) 0.0 EBIT / Total Interest -- 1.9x 2.0x
Goodwill $0.0 Tot. Funded Debt / EBITD 5.7x 4.4x 4.0x
Amortization Period 40 Funded Sr. Debt / EBITDA 1.2x 2.2x 2.0x
Annual Goodwill Amortization $0.0 Tot. Cmtd. Debt / EBITDA 8.6x 5.8x 5.4x
- ---------------------------------------------------------- Cmtd. Sr. Debt / EBITDA 4.1x 3.6x 3.4x
- ---------------------------------------------------------- Cumulative Bank Debt Pay -- -16.7% -17.6%
Tender Price / 1996 EPS(c) 17.1x ------------------------------------------------------
Tender Price / 1997 EPS(c) 11.3x
- ----------------------------------------------------------
- ---------------------------------------------------------- ------------------------------------------------------
MULTIPLE ANALYSIS: TV 12/31/96 Adj. TV 12/31/96(d) RETURNS SUMMARY:
- ------------------ ----------- ------------------- ----------------
3 YEAR 4 YEAR 5 YEAR
------ ------ ------
Transaction Value $284.2 $315.6 EBITDA Multiple:
TV / 1996E EBITDA 8.9x 9.9x ----------------
TV / 1997 EBITDA 6.4x 7.1x 6.0x -16.7% 0.9% 10.2%
TV / 1996E EBIT 10.3x 11.5x 7.0x 11.8% 18.1% 21.3%
TV / 1997 EBIT 7.3x 8.1x 8.0x 30.4% 29.9% 29.5%
- ---------------------------------------------------------- -------------------------------------------------------
<FN>
(a) Assumes $140.0 million of availablity
(b) Assumes recap accounting.
(c) Earnings estimates of $1.87 for 1996 and $2.84 for 1997 are from SILVER management.
(d) Includes average working capital revolver balance of $37.6 million net average cash balance of $6.2 million for 1996.
D-1
49
PROJECT SILVER
OWNERSHIP ANALYSIS
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
PRE-TRANSACTION PRICE PER POST-TRANSACTION EFFECTIVE
NUMBER SHARE GROSS CASH FULLY DILUTED NUMBER NEW EQUITY PRICE PER
OF SHARES % RECEIVED RECEIVED OF SHARES % INVESTMENT NEW SHARE
---------------------- --------------------- --------------------------- ---------------------
Leonard Florence 2,875,600 32.9% $32.00 $ 91.4 2,000,000 20.0% $13.3 $6.67
All Other Insiders 785,725 9.1% 32.00 25.1 500,000 5.0% 3.3 6.67
Thomas H. Lee 0 0.0% 32.00 0.0 7,500,000 75.0% 50.0 6.67
Public 5,033,306 58.0% 32.00 161.1 0 0.0% 0.0 --
--------- ----- ------ ------ ---------- ----- ----- -----
Total 8,676,631 100.0% $32.00 $277.7 10,000,000 100.0% $66.7 $6.67
========= ===== ====== ====== ========== ===== ===== =====
NET CASH
RECEIVED/
PROMOTE (INVESTED)
--------- ----------
Leonard Florence 0.0% $ 78.1
All Other Insiders 0.0% 21.8
Thomas H. Lee 0.0% (50.0)
Public -- 161.1
-- ------
Total -- $211.0
=== ======
D-2
50
PROJECT SILVER
CONSOLIDATED INCOME STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
FISCAL YEAR ENDED DECEMBER 31, PROJECTED FISCAL YEAR ENDED DECEMBER 31, (a)
------------------------------------ ----------------------------------------------
1993 1994 1995 1996E(b) 1997 1998 1999 2000 2001
------------------------------------ ----------------------------------------------
Sales $122.7 $147.3 $169.5 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1
Cost of Sales 84.6 104.6 119.8 203.0 231.8 261.1 289.4 319.3 350.7
------------------------------------ ----------------------------------------------
Gross Profit $ 38.0 $ 42.7 $ 49.7 $ 79.4 $ 95.1 $106.6 $118.8 $131.7 $145.4
Selling & Administrative 27.7 31.6 34.2 54.4 58.8 62.2 73.5 81.2 89.3
LBO Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Income (Expense) 0.0 0.0 0.0 2.6 2.6 3.0 3.0 3.0 3.5
------------------------------------ ----------------------------------------------
EBIT 10.3 11.1 15.4 27.5 38.8 43.4 48.3 53.5 59.6
Interest Income (0.1) (0.1) (4.9) (0.6) (0.1) (0.1) (0.1) (0.1) (0.1)
Working Capital Revolver Interest Expense 0.0 0.0 0.0 0.0 3.8 4.5 4.7 4.6 4.4
Bank Debt (Term Loan) Interest Expense 0.0 0.0 0.0 0.0 3.3 3.1 2.8 2.4 1.8
Seasonal Revolver Interest Expense 0.9 0.6 0.3 2.9 1.5 1.7 1.9 2.1 2.3
Senior Sub. Debentures Interest Expense 0.0 0.0 0.0 0.0 11.5 11.5 11.5 11.5 11.5
Capital Leases Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Amortization of Financing Fees 0.0 0.0 0.0 0.0 0.5 0.5 0.5 0.5 0.5
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Interest Expense 0.9 0.5 (4.6) 2.3 20.5 21.2 21.2 20.9 20.3
Pretax Income 9.4 10.6 20.0 25.2 18.4 22.3 27.1 32.6 39.3
Taxes 2.4 2.8 6.9 8.9 6.5 7.9 9.6 11.5 13.8
PIK Preferred Dividends 0.0 0.0 0.0 0.0 6.5 7.3 8.3 9.4 10.6
------------------------------------ ----------------------------------------------
Net Income $ 7.1 $ 7.9 $ 13.2 $ 16.4 $ 5.4 $ 7.1 $ 9.2 $ 11.7 $ 14.9
==================================== ==============================================
EBIT 10.3 11.1 15.4 27.5 38.8 43.4 48.3 53.5 59.6
Depreciation 3.1 3.3 3.3 4.3 5.2 5.6 6.2 6.8 7.4
Old Goodwill Amortization 0.0 0.0 0.0 0.1 0.2 0.2 0.2 0.2 0.2
LBO Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------------------------------------ ----------------------------------------------
EBITDA 13.4 14.3 18.7 32.0 44.2 49.2 54.7 60.5 67.2
Revenue Growth -- 20.1% 15.1% 66.6% 15.7% 12.5% 11.0% 10.5% 10.0%
Gross Margin 31.0% 29.0% 29.3% 28.1% 29.1% 29.0% 29.1% 29.2% 29.3%
Selling & Administrative (% Sales) 26.6% 21.5% 20.2% 19.3% 18.0% 18.0% 18.0% 18.0% 18.0%
EBITDA Margin 10.9% 9.7% 11.0% 11.3% 13.5% 13.4% 13.4% 13.4% 13.5%
Depreciation (% of Net PP&E) 4.4% 10.7% 11.0% 6.4% 6.2% 6.7% 7.4% 8.1% 8.9%
Tax Rate 25.3% 26.0% 34.2% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
- ------------
<FN>
(a) Projections are from SILVER management.
(b) 1996E excludes gain on Farberware transaction of $11.9 million and sales of Farberware inventory of $6.0 million, but includes
$2.6 million of pro forma Farberware licensing royalties (included in other income).
D-3
51
PROJECT SILVER
INCOME STATEMENTS BY DIVISION
- --------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
Fiscal Year Ended December 31, Projected Fiscal Year Ended December 31, (a)
------------------------------------------ -------------------------------------------------------
1994 1995 1996(b) 1996E 1997 1998 1999 2000 2001
------------------------------------------ -------------------------------------------------------
Wallace
Sales $ 29.6 $ 26.9 $ 30.6 $ 30.6 $ 33.0 $ 34.3 $ 35.1 $ 35.9 $ 36.8
Sales Growth - -9.0% 13.4% 13.4% 8.0% 3.9% 2.3% 2.4% 2.3%
Cost of Sales 22.4 17.0 19.6 19.6 20.9 21.8 22.3 22.8 23.3
------------------------------------------ -------------------------------------------------------
Gross Profit $ 7.2 $ 10.0 $ 10.9 $ 10.9 $ 12.1 $ 12.5 $ 12.8 $ 13.1 $ 13.4
Gross Margin 24.5% 37.1% 35.7% 35.7% 36.5% 36.5% 36.5% 36.5% 36.5%
Towle
Sales $ 22.8 $ 20.8 $ 23.5 $ 23.5 $ 25.4 $ 26.4 $ 27.0 $ 27.6 $ 28.3
Sales Growth - -8.9% 13.0% 13.0% 8.0% 4.0% 2.3% 2.4% 2.3%
Cost of Sales 14.1 12.8 13.3 13.3 14.5 15.0 15.4 15.7 16.1
------------------------------------------ -------------------------------------------------------
Gross Profit $ 8.7 $ 8.0 $ 10.2 $ 10.2 $ 10.9 $ 11.4 $ 11.6 $ 11.9 $ 12.2
Gross Margin 38.1% 38.2% 43.4% 43.4% 43.1% 43.1% 43.1% 43.1% 43.1%
Hong Kong
Sales $ 33.0 $ 46.6 $ 57.2 $ 57.2 $ 65.7 $ 76.6 $ 87.9 $ 99.2 $111.5
Sales Growth - 41.0% 22.7% 22.7% 15.0% 16.6% 14.7% 12.9% 12.4%
Cost of Sales 22.9 32.2 39.7 39.7 45.1 53.3 61.1 69.0 77.5
------------------------------------------ -------------------------------------------------------
Gross Profit $ 10.2 $ 14.3 $ 17.5 $ 17.5 $ 20.6 $ 23.4 $ 26.8 $ 30.3 $ 34.0
Gross Margin 30.8% 30.8% 30.5% 30.5% 31.4% 30.5% 30.5% 30.5% 30.5%
LFA
Sales $ 61.4 $ 75.2 $ 87.1 $ 87.1 $100.2 $114.3 $128.9 $144.1 $159.2
Sales Growth - 22.4% 15.8% 15.8% 15.0% 14.1% 12.7% 11.8% 10.5%
Cost of Sales 48.9 57.8 67.1 67.1 76.5 90.3 101.8 113.8 125.8
------------------------------------------ -------------------------------------------------------
Gross Profit $ 12.6 $ 17.4 $ 20.0 $ 20.0 $ 23.7 $ 24.0 $ 27.1 $ 30.3 $ 33.4
Gross Margin 20.5% 23.1% 22.9% 22.9% 23.6% 21.0% 21.0% 21.0% 21.0%
Rauch
Sales - - - $ 60.2 $ 66.6 $ 74.4 $ 81.8 $ 90.0 $ 98.5
Sales Growth - - - - 10.6% 11.7% 9.9% 10.0% 9.5%
Cost of Sales - - - 47.7 51.9 54.2 58.7 63.6 68.8
------------------------------------------ -------------------------------------------------------
Gross Profit - - - $ 12.5 $ 14.6 $ 20.1 $ 23.1 $ 26.4 $ 29.7
Gross Margin - - - 20.7% 22.0% 27.1% 28.2% 29.3% 30.2%
Silvestri
Sales - - - $ 19.3 $ 30.0 $ 35.0 $ 40.1 $ 46.1 $ 52.9
Sales Growth - - - - 55.8% 16.6% 14.7% 14.8% 14.8%
Cost of Sales - - - 12.6 19.2 22.3 25.6 29.4 33.8
------------------------------------------ -------------------------------------------------------
Gross Profit - - - $ 6.6 $ 10.8 $ 12.6 $ 14.5 $ 16.6 $ 19.1
Gross Margin - - - 34.4% 36.1% 36.1% 36.1% 36.1% 36.1%
C.J. Vander
Sales - - - $ 4.7 $ 6.0 $ 6.7 $ 7.4 $ 8.1 $ 8.9
Sales Growth - - - - 28.5% 11.7% 10.0% 10.0% 10.0%
Cost of Sales - - - 2.9 3.7 4.1 4.5 4.9 5.4
------------------------------------------ -------------------------------------------------------
Gross Profit - - - $ 1.8 $ 2.3 $ 2.6 $2.9 $ 3.2 $ 3.5
Gross Margin - - - 38.0% 39.0% 39.0% 39.0% 39.0% 39.0%
Gonsolidated
Sales $146.9 $169.5 $198.3 $282.4 $326.8 $367.7 $408.1 $451.0 $496.1
Sales Growth - 15.4% 17.0% 66.6% 15.7% 12.5% 11.0% 10.5% 10.0%
Cost of Sales 108.2 119.8 139.8 203.0 231.8 261.1 289.4 319.3 350.7
------------------------------------------ -------------------------------------------------------
Gross Profit $ 38.7 $ 49.7 $ 58.5 $ 79.4 $ 95.1 $106.6 $118.8 $131.7 $145.4
Gross Margin 26.3% 29.3% 29.5% 28.1% 29.1% 29.0% 29.1% 29.2% 29.3%
<FN>
- ----------------
(a) Projections are from SILVER management.
(b) Shows only organic growth.
D-4
52
PROJECT SILVER
CONSOLIDATED BALANCE SHEET AND CASH FLOW STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
Fiscal Year Ended December 31, Projected Fiscal Year Ended December 31,(a)
------------------------------------ Pro Forma -------------------------------------------
1993 1994 1995 1996E 12/31/96 1997 1998 1999 2000 2001
------------------------------------ --------- -------------------------------------------
Cash and Equivalents $ 3.8 $ 1.9 $109.1 $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9
Net Working Capital 76.9 52.8 62.9 119.1 119.1 131.2 147.0 161.4 175.8 189.9
PP&E 68.7 30.7 29.6 68.1 68.1 83.7 83.7 83.6 83.6 83.6
Other Assets 0.9 0.6 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.2
Net Assets of Discontinued Operations 0.0 85.9 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Deferred Financing Fees 0.0 0.0 0.0 0.0 7.5 7.0 6.6 6.1 5.7 5.2
Old Goodwill 0.0 0.0 0.0 0.0 6.0 5.8 5.6 5.4 5.2 5.0
LBO Goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------------------------------------ --------- -------------------------------------------
Total Assets $150.3 $171.8 $203.7 $195.6 $203.1 $230.1 $245.1 $258.8 $272.5 $285.9
==================================== ========= ===========================================
Working Capital Revolver $ 9.9 $ 15.4 $ 51.7 $ 1.8 $ 42.7 58.5 62.3 62.2 60.4 56.2
Bank Debt (Term Loan) 0.0 0.0 0.0 0.0 40.0 38.0 35.0 31.0 25.0 17.0
Senior Sub. Debentures 0.0 0.0 0.0 0.0 100.0 100.0 100.0 100.0 100.0 100.0
Capital Leases 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Liabilities 9.5 4.3 5.4 20.3 20.3 21.6 21.5 21.8 22.0 22.3
PIK Preferred 0.0 0.0 0.0 0.0 50.0 56.5 63.8 72.1 81.5 92.1
Common Equity 131.0 152.1 146.6 173.4 (49.9) (49.9) (49.9) (49.9) (49.9) (49.9)
Retained Earnings 0.0 0.0 0.0 0.0 0.0 5.4 12.4 21.7 33.4 48.3
------------------------------------ --------- -------------------------------------------
Total Liabilities and Equity $150.3 $171.8 $203.7 $195.6 $203.1 $230.1 $245.1 $258.8 $272.5 $285.9
==================================== ========= ===========================================
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 5.4 $ 7.1 $ 9.2 $ 11.7 $ 14.9
Depreciation 3.1 3.3 3.3 4.3 5.2 5.6 6.2 6.8 7.4
Amortization of Financing Fees 0.5 0.5 0.5 0.5 0.5
Old Goodwill Amortization 0.1 0.2 0.2 0.2 0.2 0.2
LBO Goodwill Amortization 0.0 0.0 0.0 0.0 0.0
Non-Cash Interest/Dividends 6.5 7.3 8.3 9.4 10.6
Change in Working Capital 24.1 (10.1) (56.2) (12.1) (15.8) (14.4) (14.4) (14.1)
Capital Expenditures (2.8) (2.6) (2.7) (17.8) (20.8) (5.6) (6.1) (6.7) (7.4)
Change in Other Assets/Liabilities 1.3 (0.0) 0.3 0.3 0.3
-------------------------------------------
Free Cash Flow (13.8) (0.7) 4.1 7.7 12.3
Required Debt Amortization (2.0) (3.0) (4.0) (6.0) (8.0)
Amortization of Capital Leases 0.0 0.0 0.0 0.0 0.0
-------------------------------------------
Cash Flow Available for Debt Paydown (15.8) (3.7) 0.1 1.7 4.3
Debt Paydown 15.8 3.7 (0.1) (1.7) (4.3)
-------------------------------------------
Increase in Cash Balances 0.0 0.0 0.0 0.0 0.0
Beginning Balance 1.9 1.9 1.9 1.9 1.9
-------------------------------------------
Ending Balance $ 1.9 $ 1.9 $ 1.9 $ 1.9 $ 1.9
- ------------------------------------------------------------------------------------------------------------------------------------
Net Working Capital (% of Sales) 62.6% 35.8% 37.1% 42.2% 40.1% 40.0% 39.6% 39.0% 38.3%
Change in NWC/Change in Sales -- 97.8% -45.4% -49.8% -27.2% -38.7% -35.7% -33.5% -31.4%
CAPX (% of Sales) 23% 1.8% 1.6% 6.3% 6.4% 1.5% 1.5% 1.5% 1.5%
CAPX (% of Net PP&E) 4.0% 8.5% 9.1% 26.1% 24.8% 6.6% 7.3% 8.1% 8.9%
Depreciation (% of Sales) 2.5% 2.2% 1.9% 1.5% 1.6% 1.5% 1.5% 1.5% 1.5%
Depreciation (% of Net PP&E) 4.4% 10.7% 11.0% 6.4% 6.2% 6.7% 7.4% 8.1% 8.9%
Normalized CAPX $ 5.0 $ 5.0 $ 5.0 $ 5.0 $ 5.0 $ 5.0
<FN>
- --------------------
(a) Projections are from SILVER management.
53
\
PROJECT SILVER
WORKING CAPITAL
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
FISCAL YEAR ENDED DECEMBER 31, PROJECTED FISCAL YEAR ENDED DECEMBER 31,(a)
------------------------------ PRO FORMA ------------------------------------------------------
1994 1995 1996E 12/31/96 1997 1998 1999 2000 2001
------------------------------ --------- ------------------------------------------------------
Assets
Accounts Receivable $28.2 $31.9 $ 73.4 $ 73.4 $ 78.6 $ 88.4 $ 98.1 $108.4 $119.3
Inventory 40.3 41.2 68.2 68.2 73.5 82.7 91.7 101.4 111.5
Prepaids & Other 0.2 1.6 2.0 2.0 1.9 2.1 2.2 2.3 2.5
Deferred Taxes 3.0 5.1 4.0 4.0 4.1 4.1 4.1 4.1 4.1
------------------------------ --------- ------------------------------------------------------
71.7 79.8 147.6 147.6 158.1 177.3 196.2 216.2 237.4
Liabilities
Accounts Payable 7.6 6.4 9.2 9.2 10.3 11.5 12.8 14.2 15.6
Accrued Liabilities 2.7 4.4 10.5 10.5 7.5 8.7 10.1 11.7 13.4
Accrued Compensation 3.2 2.5 3.2 3.2 3.5 3.7 3.9 4.1 4.3
Accrued Advertising 1.6 2.0 3.0 3.0 2.4 2.8 3.2 3.7 4.3
Taxes Payble 3.8 1.5 2.7 2.7 3.2 3.6 4.8 6.8 9.9
------------------------------ --------- ------------------------------------------------------
18.9 16.9 28.5 28.5 26.9 30.3 34.8 40.4 47.5
Net Working Capital 52.8 62.9 119.1 119.1 131.2 147.0 161.4 175.8 189.9
Accounts Receivable (% Sales) 19.2% 18.8% 26.0% 26.0% 24.0% 24.0% 24.0% 24.0% 24.0%
Inventory (% Sales) 27.4% 24.3% 24.1% 24.1% 22.5% 22.5% 22.5% 22.5% 22.5%
Prepaids & Other (% Sales) 0.1% 0.9% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5%
Deferred Taxes (% Sales) 2.0% 3.0% 1.4% 1.4% 1.3% 1.1% 1.0% 0.9% 0.8%
Accounts Payable (% Sales) 5.2% 3.8% 3.2% 3.2% 3.1% 3.1% 3.1% 3.1% 3.1%
Accrued Liabilities (% Sales) 1.8% 2.6% 3.7% 3.7% 2.3% 2.4% 2.5% 2.6% 2.7%
Accrued Compensation (% Sales) 2.1% 1.5% 1.1% 1.1% 1.1% 1.0% 0.9% 0.9% 0.9%
Accrued Advertising (% Sales) 1.1% 1.2% 1.1% 1.1% 0.7% 0.8% 0.8% 0.8% 0.9%
Taxes Payable (% Sales) 2.6% 0.9% 1.0% 1.0% 1.0% 1.0% 1.2% 1.5% 2.0%
Net Working Capital (% Sales) 12.8% 9.9% 42.2% 42.2% 40.1% 40.0% 39.6% 39.0% 38.3%
<FN>
- ------------------
(a) Projections are from SILVER management.
54
PROJECT SILVER
CALCULATION OF WORKING CAPITAL REVOLVER
- -------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
PROJECTED FISCAL YEAR ENDED DECEMBER 31, (a)
---------------------------------------------------
1996E 1997 1998 1999 2000 2001
---------------------------------------------------
Accounts Receivable
Qtr 1 $ 28.1 $ 37.6 $ 42.3 $ 47.0 $ 51.9 $ 57.1
Qtr 2 56.4 38.5 43.4 48.1 53.2 58.5
Qtr 3 119.0 106.8 120.2 133.4 147.4 162.2
Qtr 4 73.4 78.6 88.4 98.1 108.4 119.3
Inventory
Qtr 1 $ 68.7 $ 87.0 $ 97.8 $108.6 $120.0 $132.0
Qtr 2 109.1 109.3 123.0 136.5 150.8 165.9
Qtr 3 114.0 101.4 114.1 126.6 139.9 153.9
Qtr 4 68.2 73.5 82.7 91.7 101.4 111.5
Net Work Capital (including cash)
Qtr 1 $ 93.5 $114.1 $128.4 $142.5 $157.4 $173.2
Qtr 2 90.1 111.6 125.6 139.4 154.0 169.4
Qtr 3 119.6 122.5 137.8 153.0 169.0 185.9
Qtr 4 119.3 130.0 146.2 162.3 179.3 197.3
Borrowing Base
(75% of Accounts Receivable + 50% of Inventory
Qtr 1 $ 55.4 $ 71.7 $ 80.6 $ 89.5 $ 98.9 $108.8
Qtr 2 96.9 83.5 94.0 104.3 115.3 126.8
Qtr 3 146.2 130.8 147.2 163.4 180.5 198.6
Qtr 4 89.2 95.7 107.6 119.5 132.0 145.2
Working Capital Revolver Outstanding
Qtr 1 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Qtr 2 56.4 19.5 21.9 24.4 26.9 29.6
Qtr 3 92.2 61.1 68.8 76.3 84.4 92.8
Qtr 4 1.8 2.7 3.0 3.3 3.7 4.0
Interest Expense @ 7.895% 7.500% 7.500% 7.500% 7.500% 7.500%
Qtr 1 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Qtr 2 1.1 0.4 0.4 0.4 0.5 0.5
Qtr 3 1.8 1.1 1.3 1.4 1.5 1.7
Qtr 4 0.0 0.0 0.1 0.1 0.1 0.1
---------------------------------------------------
Total $ 2.9 $ 1.5 $ 1.7 $ 1.9 $ 2.1 $ 2.3
Average Working Capital Revolver Balance $ 37.6 $ 20.8 $ 23.4 $ 26.0 $ 28.7 $ 31.6
Cash Balance
Qtr 1 $ 11.5 $ 1.0
Qtr 2 3.4 1.0
Qtr 3 7.9 1.0
Qtr 4 1.9 1.0
Average Cash Balance $ 6.2
<FN>
- ----------------------
(a) Projections are from SILVER management.
55
PROJECT SILVER
FINANCIAL RATIOS
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions, except per share)
FISCAL YEAR ENDED DECEMBER 31, PROJECTED FISCAL YEAR ENDED DECEMBER 31,(a)
------------------------------------ -----------------------------------------------
1993 1994 1995 1996E 1997 1998 1999 2000 2001
------------------------------------ -----------------------------------------------
CAPITALIZATION
- --------------
Senior Debt $ 40.0 $ 40.0 $ 40.0 $ 40.0 $ 96.5 $ 97.3 $ 93.2 $ 85.4 $ 73.2
Other Debt 142.7 142.7 142.7 142.7 100.0 100.0 100.0 100.0 100.0
------------------------------------ -----------------------------------------------
Total Debt 182.7 182.7 182.7 182.7 196.5 197.3 193.2 185.4 173.2
Less: Cash (1.9) (1.9) (1.9) (1.9) (1.9) (1.9) (1.9) (1.9) (1.9)
------------------------------------ -----------------------------------------------
Net Debt 180.8 180.8 180.8 180.8 194.6 195.4 191.2 183.5 171.2
Book Equity + Preferred 0.1 0.1 0.1 0.1 11.9 26.3 43.9 65.0 90.5
Total Capitalization 182.8 182.8 182.8 182.8 208.5 223.6 237.1 250.5 263.6
Working Capital Revolver Committed $ 92.2 $ 92.2 $ 92.2 $ 92.2 $ 61.1 $ 68.8 $ 76.3 $ 84.4 $ 92.8
- ------------------------------------------------------------------------------------------------------------------------------------
COVERAGE RATIOS:
- ----------------
Total Interest Expense $ 20.6 20.6 $ 20.6 $ 20.6 $ 20.6 $ 21.3 $ 21.3 $ 21.0 $ 20.4
Net Interest Expense + Pfd. Divs. 27.0 27.0 27.0 27.0 27.0 28.5 29.5 30.3 30.9
EBITDA $ 13.4 $ 14.3 $18.7 $ 32.0 $ 44.2 $ 49.2 $ 54.7 $ 60.5 $ 67.2
vs. Total Interest 0.6x 0.7x 0.9x 1.6x 2.1x 2.3x 2.6x 2.9x 3.3x
vs. Net Interest + Pfd. Divs. 0.5x 0.5x 0.7x 1.2x 1.6x 1.7x 1.9x 2.0x 2.2x
EBITDA - CAPX $ 10.6 $ 11.7 $ 16.0 $ 14.2 $ 23.4 $ 43.7 $ 48.5 $ 53.7 $ 59.8
vs. Total Interest 0.5x 0.6x 0.8x 0.7x 1.1x 21.x 2.3x 2.6x 2.9x
vs. Net Interest + Pfd. Divs. 0.4x 0.4x 0.6x 0.5x 0.9x 1.5x 1.6x 1.8x 1.9x
EBITDA - Norm. CAPX(b) $ 10.6 $ 11.7 $ 16.0 $ 27.0 $ 39.2 $ 44.2 $ 49.7 $55.5 $ 62.2
vs. Total Interest 0.5x 0.6x 0.8x 1.3x 1.9x 2.1x 2.3x 2.6x 3.0x
vs. Net Interest + Pfd. Divs. 0.4x 0.4x 0.6x 1.0x 1.5x 1.6x 1.7x 1.8x 2.0x
EBIT -- -- -- -- $ 38.8 $ 43.4 $ 48.3 $ 53.5 $ 59.6
vs. Total Interest -- -- -- -- 1.9x 2.0x 2.3x 2.5x 2.9x
vs. Net Interest + Pfd. Divs. -- -- -- -- 1.4x 1.5x 1.6x 1.8x 1.9x
- ------------------------------------------------------------------------------------------------------------------------------------
LEVERAGE RATIOS:
- ----------------
Total Funded Debt/Total Capitalization 100.0% 100.0% 100.0% 100.0% 94.3% 88.2% 81.5% 74.0% 65.7%
Net Funded Debt/Total Capitalization 98.9% 98.9% 98.9% 98.9% 93.3% 87.3% 80.7% 73.3% 64.9%
Total Funded Debt/Equity -- -- -- -- 1645.7% 748.8% 440.1% 285.2% 191.4%
Net Funded Debt/Equity -- -- -- -- 1629.4% 741.4% 435.7% 282.2% 189.3%
Total Funded Debt/EBITDA 13.7x 12.7x 9.8x 5.7x 4.4X 4.0x 3.5x 3.1x 2.6x
Net Funded Debt/EBITDA 13.5x 12.6x 9.7x 5.6x 4.4x 4.0x 3.5x 3.0x 2.5x
Funded Senior Debt/EBITDA 3.0x 2.8x 2.1x 1.2x 2.2x 2.0x 1.7x 1.4x 1.1x
Total Committed Debt/EBITDA 20.6x 19.2x 14.7x 8.6x 5.8x 5.4x 4.9x 4.5x 4.0x
Committed Senior Debt/EBITDA 9.9x 9.2x 7.1x 4.1x 3.6x 3.4x 3.1x 2.8x 2.5x
Cumulative Bank Debt Paydown -- -- -- -- -16.7% -17.6% -12.7% -3.3% 11.5%
<FN>
- ------------------------------------
(a) Projections are from SILVER management.
(b) 1996-2001 adjusted to reflect Normalized CAPX = $5.0 million.
D-8
56
PROJECT SILVER
RETURN ANALYSIS
- ----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
PROJECTED FISCAL YEAR ENDED DECEMBER 31, (a)
------- ----------------------------------------------
1996E 1997 1998 1999 2000 2001
------- ----------------------------------------------
EBITDA $ 32.0 $ 44.2 $ 49.2 $ 54.7 $ 60.5 $ 67.2
Firm Value [at] EBITDA Multiple of:
6.0x 192.0 265.4 295.4 327.9 362.8 403.1
7.0x 224.0 309.6 344.7 382.6 423.3 470.3
8.0x 256.0 353.8 393.9 437.2 483.8 537.5
Less: Net Debt (180.8) (194.6) (195.4) (191.2) (183.5) (171.2)
Less: Avg. Wkg. Capital Revolver (37.6) (20.8) (23.4) (26.0) (28.7) (31.6)
Less: PIK Preferred (50.0) (56.5) (63.8) (72.1) (81.5) (92.1)
Equity Value [at] EBITDA Multiple of:
6.0x (26.3) (6.6) 12.8 38.5 69.1 108.2
7.0x 5.7 37.7 62.1 93.2 129.6 175.4
8.0x 37.7 81.9 111.3 147.8 190.0 242.6
Initial Equity Investment $ 50.0
Ownership 75.0% 75.0% 75.0% 75.0% 75.0% 75.0%
- ----------------------------------------------------------------------------------------------------------------------
Equity Return [at] EBITDA Multiple of:
6.0x #N/A #NUM! -56.2% -16.7% 0.9% 10.2%
7.0x #N/A -43.5% -3.5% 11.8% 18.1% 21.3%
8.0x #N/A 22.9% 29.2% 30.4% 29.9% 29.5%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
SENIOR SUB. DEBENTURES RETURNS
Equity Ownership 0.0%
-------
IRR
-------
6.0x #VALUE! (100.0) 11.5 11.5 11.5 11.5 11.5
7.0x #VALUE! (100.0) 11.5 11.5 11.5 11.5 11.5
8.0x #VALUE! (100.0) 11.5 11.5 11.5 11.5 11.5
- ----------------------------------------------------------------------------------------------------------------------
PIK PREFERRED RETURNS
Equity Ownership 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
-------
IRR
-------
6.0x 13.0% (50.0) 0.0 0.0 0.0 0.0 92.1
7.0x 13.0% (50.0) 0.0 0.0 0.0 0.0 92.1
8.0x 13.0% (50.0) 0.0 0.0 0.0 0.0 92.1
-------
- -------------
<FN>
(a) Projections are from SILVER management.
D-9
57
- --------------------------------------------------------------------------------
STRATEGIC ACQUIROR PRO FORMA ANALYSES
- --------------------------------------------------------------------------------
58
----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
AMERICAN GREETINGS ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
American Greetings Stock Price@ 19-Oct-96 $29.75
SILVER Stock Price@ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
American Greetings 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing American Greetings Shares 74.758
Pro Forma American Greetings Shares 74.758
Transaction Expenses $10.0
American Greetings Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
American Greetings Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
AMERICAN GREETINGS SILVER COMBINED
MAY-96 JUN-96 ADJUSTMENTS MAY-96
---------------------------------------------------------
Cash $43.0 $6.2 $0.0 $49.2
Total Debt 464.2 37.6 242.4 744.3
----- ---- -----
Net Debt 421.2 31.4 695.1
Equity 1,251.4 155.5 (155.5) 0.0 1,251.4
Total Capitalization 1,751.6 193.1 1,995.7
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 27.1% 19.5% 37.3%
NET DEBT/TOTAL CAP. 24.6% 16.3% 34.8%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
AMERICAN GREETINGS
Projected American Greetings Standalone EPS $2.15 $2.42 $2.71
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (17.0) (17.0) (17.0)
--------------------------
Total Pre-Tax Acquisition Adjustments ($19.3) ($19.3) ($19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (10.4) (10.4) (10.4)
--------------------------
Total After-Tax Acquisition Adjustments ($12.7) ($12.7) ($12.7)
PRO FORMA EPS CALCULATION
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
--------------------------
Pro Forma Combined Net Income $164.3 $192.9 $217.6
Pro Forma Combined Shares Outstanding 74.758 74.758 74.758
Pro Forma EPS $2.20 $2.58 $2.91
Projected American Greetings Standalone EPS $2.15 $2.42 $2.71
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.05 $0.16 $0.20
% PICK-UP (DILUTION) 2.2% 6.6% 7.4%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($5.8) ($19.6) ($24.6)
- ---------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 2.2% 6.6% 7.4%
10% 28.88 1.2% 5.7% 6.6%
20% 31.50 0.2% 4.8% 5.8%
30% 34.13 (0.8%) 4.0% 5.0%
40% 36.75 (1.8%) 3.1% 4.2%
50% 39.38 (2.8%) 2.2% 3.4%
60% 42.00 (3.8%) 1.3% 2.7%
70% 44.63 (4.8%) 0.4% 1.9%
80% 47.25 (5.8%) (0.5%) 1.1%
90% 49.88 (6.8%) (1.4%) 0.3%
100% 52.50 (7.8%) (2.2%) (0.5%)
- --------------------------------------------------------------------------------
E-1
59
PROJECT SILVER 0% CASH
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- -------------------------------------------------------------------------------
(dollars in millions, except per share)
- -------------------------------------------------------------------------------
AMERICAN GREETINGS ACQUIRES SILVER
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
KEY ASSUMPTIONS
- -------------------------------------------------------------------------------
American Greetings Stock Price[at] 19-OCt-96 $ 29.75
SILVER Stock Price@ 19-OCt-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus: Existing Net Debt $ 31.4
Less: Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
American Greetings 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill - Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.882
Existing American Greetings Shares 74.758
Pro Forma American Greetings Shares 82.571
Transaction Expenses $ 10.0
American Greetings Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
American Greetings Ownership of New Entity 90.5%
SILVER Ownership of New Entity 9.5%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -------------------------------------------------------------------------------
AMERCIAN GREETINGS SILVER
- -------------------------------------------------------------------------------
COMBINED
MAY-96 JUN-96 ADJUSTMENTS MAY-96
-----------------------------------------------
Cash $ 43.0 $ 6.2 $(10.0) $ 39.2
Total Debt 464.2 37.6 0.0 501.8
-------- ------ --------
Net Debt 421.2 31.4 462.6
Equity 1,251.4 155.5 0.0 (10.0) 1,396.9
Total Capitalization 1,715.6 193.1 1,898.7
- -------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 27.1% 19.5% 26.4%
NET DEBT/TOTAL CAP. 24.6% 16.3% 24.4%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DILUTION ANALYSIS
- -------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
AMERICAN GREETINGS
Projected American Greetings Standalone EPS $ 2.15 $ 2.42 $ 2.71
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total Pre-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total After-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
PRO FORMA EPS CALCULATION
Projected American Greetings Standalone Net Income $160.7 $180.9 $202.6
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Aqcuisition Adjustments 0.0 0.0 0.0
------------------------
Pro Forma Combined Net Income $177.0 $205.6 $230.3
Pro Forma Combined Shares Outstanding 82.571 82.571 82.571
Pro Forma EPS $ 2.14 $ 2.49 $ 2.79
Projected American Greetings Standalone EPS $ 2.15 $ 2.42 $ 2.71
- -------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $(0.01) $ 0.07 $ 0.08
% PICK-UP (DILUTION) (0.3%) 2.9% 2.9%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ 0.9 $ (9.4) $(10.7)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 (0.3%) 2.9% 2.9%
10% 28.88 (1.3%) 1.9% 1.9%
20% 31.50 (2.2%) 0.9% 1.0%
30% 34.13 (3.1%) (0.0%) 0.0%
40% 36.75 (4.0%) (0.9%) (0.9%)
50% 39.38 (4.9%) (1.9%) (1.8%)
60% 42.00 (5.8%) (2.8%) (2.7%)
70% 44.63 (6.6%) (3.6%) (3.6%)
80% 47.25 (7.5%) (4.5%) (4.5%)
90% 49.88 (8.3%) (5.3%) (5.3%)
100% 52.50 (9.1%) (6.2%) (6.1%)
- -------------------------------------------------------------------------------
60
-----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
CSS INDUSTRIES INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
CSS Industries Inc Stock Price @ 20-Oct-96 $ 23.25
SILVER Stock Price @ 20-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
CSS Industries Inc 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill - Incl. Transaction Exp. $ 93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing CSS Industries Inc Shares 10.722
Pro Forma CSS Industries Inc Shares 10.722
Transaction Expresses $ 10.0
CSS Industries Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
CSS Industries Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
CSS INDUSTRIES INC SILVER
COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
Cash $ 3.4 $ 6.2 $ 0.0 $ 9.6
Total Debt 21.5 37.6 242.4 301.6
------ ------ ------
Net Debt 18.2 31.4 292.0
Equity 149.9 155.5 (155.5) 0.0 149.9
Total Capitalization 171.4 193.1 451.4
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 12.6% 19.5% 66.8%
NET DEBT/NET CAP. 10.6% 16.3% 64.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
CSS INDUSTRIES INC
Projected CSS Industries Inc Standalone EPS $ 1.69 $ 2.03 $ 2.23
Projected CSS Industries Inc Standalone Net Income $ 18.1 $ 21.8 $ 23.9
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (21.8) (21.8) (21.8)
------------------------
Total Pre-Tax Acquisition Adjustments ($24.1) ($24.1) ($24.1)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (13.3) (13.3) (13.3)
------------------------
Total After-Tax Acquisition Adjustments ($15.6) ($15.6) ($15.6)
PRO FORMA EPS CALCULATION
Projected CSS Industries Inc Standalone Net Income $ 18.1 $ 21.8 $ 23.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Aqcuisition Adjustments (15.6) (15.6) (15.6)
-------------------------
Pro Forma Combined Net Income $ 18.7 $ 30.8 $ 36.0
Pro Forma Combined Shares Outstanding 10.722 10.722 10.722
Pro Forma EPS $ 1.75 $ 2.87 $ 3.36
Projected CSS Industries Inc Standalone EPS $ 1.69 $ 2.03 $ 2.23
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.06 $ 0.84 $ 1.12
% PICK-UP (DILUTION) 3.3% 41.4% 50.3%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (1.0) $(14.8) $(19.7)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 3.3% 41.4% 50.3%
10% 28.88 (7.2%) 32.7% 42.4%
20% 31.50 (17.6%) 24.0% 34.5%
30% 34.13 (28.0%) 15.3% 26.6%
40% 36.75 (38.5%) 6.6% 18.7%
50% 39.38 (48.9%) (2.1%) 10.8%
60% 42.00 (59.3%) (10.7%) 2.9%
70% 44.63 (69.8%) (19.4%) (5.0%)
80% 47.25 (80.2%) (28.1%) (12.9%)
90% 49.88 (90.7%) (36.8%) (20.8%)
100% 52.50 (101.1%) (45.5%) (28.7%)
- --------------------------------------------------------------------------------
E-3
61
-----------
PROJECT SILVER 0% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
CSS INDUSTRIES INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
CSS Industries Inc Stock Price@ 20-Oct-96 $23.25
SILVER Stock Price@ 20-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
------
Total Fully-Dilited Shares 9.014
Office Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
CSS Industries Inc 1996E P/E Multiple 13.8x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 1.129
Existing CSS Industries Inc Shares 10.722
Pro Forma CSS Industries Inc Shares 20.719
Transaction Expenses $10.0
CSS Industries Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
CSS Industries Inc Ownership of New Entity 51.7%
SILVER Ownership of New Entity 48.3%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
CSS INDUSTRIES INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS MAY-96
---------------------------------------------------------
Cash $3.4 $6.2 ($10.0) ($0.4)
Total Debt 21.5 37.6 0.0 59.1
----- ---- -----
Net Debt 18.2 31.4 59.6
Equity 149.9 155.5 0.0 (10.0) 295.4
Total Capitalization 171.4 193.1 354.5
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 12.6% 19.5% 16.7%
NET DEBT/TOTAL CAP. 10.6% 16.3% 16.8%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
CSS INDUSTRIES INC
Projected CSS Industries Inc Standalone EPS $1.69 $2.03 $2.23
Projected CSS Industries Inc Standalone Net Income $18.1 $21.8 $23.9
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 9.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 9.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected CSS Industries Inc Standalone Net Income $18.1 $21.8 $23.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $34.3 $46.4 $51.6
Pro Forma Combined Shares Outstanding 20.719 20.719 20.719
Pro Forma EPS $1.66 $2.24 $2.49
Projected CSS Industries Inc Standalone EPS $1.69 $2.03 $2.23
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) ($0.03) $0.21 $0.26
% PICK-UP (DILUTION) (1.9%) 10.3% 11.6%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $1.1 ($7.1) ($8.8)
- ---------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 (1.9%) 10.3% 11.6%
10% 28.88 (6.5%) 5.2% 6.3%
20% 31.50 (10.7%) 0.5% 1.6%
30% 34.13 (14.5%) (3.8%) (2.8%)
40% 36.75 (18.0%) (7.8%) (6.8%)
50% 39.38 (21.3%) (11.4%) (10.4%)
60% 42.00 (24.2%) (14.8%) (13.8%)
70% 44.63 (27.0%) (17.9%) (17.0%)
80% 47.25 (29.6%) (20.8%) (19.9%)
90% 49.88 (32.0%) (23.5%) (22.6%)
100% 52.50 (34.2%) (26.0%) (25.2%)
- --------------------------------------------------------------------------------
E-4
62
-----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
DEPARTMENT 56, INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Department 56, Inc Stock Price @ 19-Oct-96 $ 25.25
SILVER Stock Price @ 19-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Department 56, Inc 1996E P/E Multiple 11.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Department 56, Inc Shares 21.550
Pro Forma Department 56, Inc Shares 21.550
Transaction Expenses $ 10.0
Department 56, Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Department 56, Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
DEPARTMENT 56, INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
Cash $ 2.8 $ 6.2 $ 0.0 $ 9.0
Total Debt 106.9 37.6 242.4 386.9
------ ------ ------
Net Debt 104.1 31.4 377.9
Equity 179.9 155.5 (155.5) 0.0 179.9
Total Capitalization 286.8 193.1 566.8
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 37.3% 19.5% 68.3%
NET DEBT/TOTAL CAP. 36.3% 16.3% 66.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
DEPARTMENT 56, INC
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (21.8) (21.8) (21.8)
-------------------------
Total Pre-Tax Acquisition Adjustments $(24.1) $(24.1) $(24.1)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% (13.3) (13.3) (13.3)
-------------------------
Total After-Tax Acquisition Adjustments $(15.6) $(15.6) $(15.6)
PRO FORMA EPS CALCULATION
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (15.6) (15.6) (15.6)
-------------------------
Pro Forma Combined Net Income $ 47.1 $ 61.8 $ 71.7
Pro Forma Combined Shares Outstanding 21.550 21.550 21.550
Pro Forma EPS $ 2.19 $ 2.87 $ 3.33
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.03 $ 0.42 $ 0.56
% PICK-UP (DILUTION) 1.3% 17.1% 20.2%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (1.0) $(14.8) $(19.7)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 1.3% 17.1% 20.2%
10% 28.88 (2.8%) 13.5% 17.0%
20% 31.50 (6.9%) 9.9% 13.8%
30% 34.13 (10.9%) 6.3% 10.7%
40% 36.75 (15.0%) 2.7% 7.5%
50% 39.38 (19.0%) (0.8%) 4.3%
60% 42.00 (23.1%) (4.4%) 1.2%
70% 44.63 (27.2%) (8.0%) (2.0%)
80% 47.25 (31.2%) (11.6%) (5.2%)
90% 49.88 (35.3%) (15.2%) (8.3%)
100% 52.50 (39.3%) (18.8%) (11.5%)
- --------------------------------------------------------------------------------
E-5
63
-----------
PROJECT SILVER 0% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
DEPARTMENT 56, INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Department 56, Inc Stock Price @ 19-Oct-96 $ 25.25
SILVER Stock Price @ 19-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Department 56, Inc 1996E P/E Multiple 11.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 0.0
Goodwill Amortization Period 40
Exchange Ratio 1.040
Existing Department 56, Inc Shares 21.550
Pro Forma Department 56, Inc Shares 30.755
Transaction Expenses $ 10.0
Department 56, Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Department 56, Inc Ownership of New Entity 70.1%
SILVER Ownership of New Entity 29.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
DEPARTMENT 56, INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
Cash $ 2.8 $ 6.2 $(10.0) $ (1.0)
Total Debt 106.9 37.6 0.0 144.5
------ ------ ------
Net Debt 104.1 31.4 145.5
Equity 179.9 155.5 0.0 (10.0) 325.3
Total Capitalization 286.8 193.1 469.9
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 37.3% 19.5% 30.8%
NET DEBT/TOTAL CAP. 36.3% 16.3% 31.0%
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DILUTION ANALYSIS
- -------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
DEPARTMENT 56, INC
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% 0.0 0.0 0.0
------------------------
Total Pre-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% 0.0 0.0 0.0
------------------------
Total After-Tax Acquisition Adjustments $ 0.0 0.0 0.0
PRO FORMA EPS CALCULATION
Projected Department 56, Inc Standalone Net Income $ 46.5 $ 52.8 $ 59.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
-------------------------
Pro Forma Combined Net Income $ 62.8 $ 77.4 $ 87.3
Pro Forma Combined Shares Outstanding 30.755 30.755 30.755
Pro Forma EPS $ 2.04 $ 2.52 $ 2.84
Projected Department 56, Inc Standalone EPS $ 2.16 $ 2.45 $ 2.77
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $(0.12) $ 0.07 $ 0.07
% PICK-UP (DILUTION) (5.5%) 2.8% 2.6%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ 6.0 $ (3.4) $ (3.6)
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 (5.5%) 2.8% 2.6%
10% 28.88 (8.3%) (0.3%) (0.5%)
20% 31.50 (10.9%) (3.1%) (3.3%)
30% 34.13 (13.4%) (5.8%) (6.0%)
40% 36.75 (15.8%) (8.4%) (8.6%)
50% 39.38 (18.0%) (10.8%) (11.0%)
60% 42.00 (20.1%) (13.1%) (13.3%)
70% 44.63 (22.1%) (15.3%) (15.5%)
80% 47.25 (24.0%) (17.4%) (17.5%)
90% 49.88 (25.8%) (19.3%) (19.5%)
100% 52.50 (27.6%) (21.2%) (21.4%)
- -------------------------------------------------------------------------------
E-6
64
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
NEWELL CO ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Newell Co Stock Price@ 19-Oct-96 $30.50
SILVER Stock Price@ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants@ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Newell Co 1996E P/E Multiple 18.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Newell Co Shares 158.784
Pro Forma Newell Co Shares 158.784
Transaction Expenses $10.0
Newell Co Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Newell Co Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
NEWELL CO SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
Cash $45.5 $6.2 $0.0 $51.7
Total Debt 985.1 37.6 242.4 1,265.2
----- ---- -----
Net Debt 939.6 31.4 1,213.5
Equity 1,354.3 155.5 (155.5) 0.0 1,354.3
Total Capitalization 2,339.4 193.1 2,619.5
- ----------------------------------------------------------------------------------------------
Total Debt/Total Cap. 42.1% 19.5% 48.3%
Net Debt/Total Cap. 40.2% 16.3% 46.3%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
NEWELL CO
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (17.0) (17.0) (17.0)
--------------------------
Total Pre-Tax Acquisition Adjustments ($19.3) ($19.3) ($19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (10.4) (10.4) (10.4)
--------------------------
Total After-Tax Acquisition Adjustments ($12.7) ($12.7) ($12.7)
PRO FORMA EPS CALCULATION
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
--------------------------
Pro Forma Combined Net Income $262.4 $310.5 $358.3
Pro Forma Combined Shares Outstanding 158,784 158,784 158,784
Pro Forma EPS $1.65 $1.96 $2.26
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.02 $0.08 $0.09
% PICK-UP (DILUTION) 1.4% 4.0% 4.4%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($5.8) ($19.6) ($24.6)
- ---------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 1.4% 4.0% 4.4%
10% 28.88 0.8% 3.5% 3.9%
20% 31.50 0.1% 2.9% 3.4%
30% 34.13 (0.5%) 2.4% 3.0%
40% 36.75 (1.1%) 1.9% 2.5%
50% 39.38 (1.7%) 1.3% 2.0%
60% 42.00 (2.3%) 0.8% 1.6%
70% 44.63 (3.0%) 0.3% 1.1%
80% 47.25 (3.6%) (0.3%) 0.6%
90% 49.88 (4.2%) (0.8%) 0.2%
100% 52.50 (4.8%) (1.4%) (0.3%)
- --------------------------------------------------------------------------------
E-7
65
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
NEWELL CO ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Newell Co Stock Price @ 19-Oct-96 $30.50
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Newell Co 1996E P/E Multiple 18.7x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.861
Existing Newell Co Shares 158.784
Pro Forma Newell Co Shares 166.405
Transaction Expenses $10.0
Newell Co Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Newell Co Ownership of New Entity 95.4%
SILVER Ownership of New Entity 4.6%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
NEWELL CO SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
Cash $45.5 $6.2 ($10.0) $41.7
Total Debt 985.1 37.6 0.0 1,022.7
----- ---- -------
Net Debt 939.6 31.4 981.0
Equity 1,354.3 155.5 0.0 (10.0) 1,499.8
Total Capitalization 2,339.4 193.1 2,522.5
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 42.1% 19.5% 40.5%
NET DEBT/TOTAL CAP. 40.2% 16.3% 38.9%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
NEWELL CO
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected Newell Co Standalone Net Income $258.8 $298.5 $343.3
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $275.0 $323.2 $371.0
Pro Forma Combined Shares Outstanding 166.405 166.405 166.405
Pro Forma EPS $1.65 $1.94 $2.23
Projected Newell Co Standalone EPS $1.63 $1.88 $2.16
- ---------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.02 $0.68 $0.07
% PICK-UP (DILUTION) 1.4% 3.3% 3.1%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($6.2) ($16.9) ($18.4)
- ---------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 1.4% 3.3% 3.1%
10% 28.88 0.9% 2.8% 2.6%
20% 31.50 0.5% 2.3% 2.2%
30% 34.13 0.0%) 1.9% 1.7%
40% 36.75 (0.5%) 1.4% 1.2%
50% 39.38 (0.9%) 0.9% 0.8%
60% 42.00 (1.4%) 0.5% 0.3%
70% 44.63 (1.8%) 0.0% (0.1%)
80% 47.25 (2.2%) (0.4%) 0.6%
90% 49.88 (2.7%) (0.9%) (1.0%)
100% 52.50 (3.1%) (1.3%) (1.5%)
- --------------------------------------------------------------------------------
E-8
66
-----------
PROJECT SILVER 100% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
RUBBERMAID INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Rubbermaid Inc Stock Price @ 20-Oct-96 $ 24.00
SILVER Stock Price @ 20-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Rubbermaid Inc 1996E P/E Multiple 22.4x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Rubbermaid Inc Shares 149.768
Pro Forma Rubbermaid Inc Shares 149.768
Transaction Expenses $ 10.0
Rubbermaid Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Rubbermaid Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
RUBBERMAID INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
Cash $ 33.0 $ 6.2 $ 0.0 $ 39.2
Total Debt 259.4 37.6 242.4 539.5
------- ------ -------
Net Debt 226.4 31.4 500.2
Equity 973.5 155.5 (155.5) 0.0 973.5
Total Capitalization 1,232.9 193.1 1,513.0
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 21.0% 19.5% 35.7%
NET DEBT/TOTAL CAP. 18.4% 16.3% 33.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
RUBBERMAID INC
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (17.0) (17.0) (17.0)
-------------------------
Total Pre-Tax Acquisition Adjustments $ (19.3) $(19.3) $ (19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ (2.3) $ (2.3) $ (2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (10.4) (10.4) (10.4)
-------------------------
Total After-Tax Acquisition Adjustments $ (12.7) $(12.7) $ (12.7)
PRO FORMA EPS CALCULATION
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
-------------------------
Pro Forma Combined Net Income $ 163.8 $ 208.2 $ 236.7
Pro Forma Combined Shares Outstanding 149.768 149.768 149.768
Pro Forma EPS $ 1.09 $ 1.39 $ 1.58
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.02 $ 0.08 $ 0.10
% PICK-UP (DILUTION) 2.2% 6.1% 6.8%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (5.8) $ (19.6) $ (24.6)
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 2.2% 6.1% 6.8%
10% 28.88 1.2% 5.3% 6.0%
20% 31.50 0.2% 4.5% 5.3%
30% 34.13 (0.8%) 3.6% 4.6%
40% 36.75 (1.8%) 2.8% 3.9%
50% 39.38 (2.8%) 2.0% 3.2%
60% 42.00 (3.8%) 1.2% 2.4%
70% 44.63 (4.8%) 0.4% 1.7%
80% 47.25 (5.8%) (0.4%) 1.0%
90% 49.88 (6.8%) (1.3%) 0.3%
100% 52.50 (7.8%) (2.1%) (0.5%)
- -------------------------------------------------------------------------------
E-9
67
-----------
PROJECT SILVER 0% CASH ---------
PRO FORMA ACQUISITION ANALYSIS 100% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
RUBBERMAID INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Rubbermaid Inc Stock Price @ 20-Oct-96 $ 24.00
SILVER Stock Price @ 20-Oct-96 $ 26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
-------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $ 26.25
-------
Offer Value $ 236.6
Plus Existing Net Debt $ 31.4
Less Option & Warrant Proceeds (4.2)
-------
Transaction Value $ 263.8
=======
Rubbermaid Inc 1996E P/E Multiple 22.4x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $ 149.4
Purchase Premium - % 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill Incl. Transaction Exp. $ 0.0
Goodwill Amortization Period 40
Exchange Ratio 1.094
Existing Rubbermaid Inc Shares 149.768
Pro Forma Rubbermaid Inc Shares 159.453
Transaction Expenses $ 10.0
Rubbermaid Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Rubbermaid Inc Ownership of New Entity 93.9%
SILVER Ownership of New Entity 6.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- --------------------------------------------------------------------------------
RUBBERMAID INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
------------------------------------------------
Cash $ 33.0 $ 6.2 $(10.0) $ 29.2
Total Debt 259.4 37.6 0.0 297.0
Net Debt 226.4 31.4 267.8
Equity 973.5 155.5 0.0 (10.0) 1.119.0
Total Capitalization 1,232.9 193.1 1,416.0
- --------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 21.0% 19.5% 21.0%
NET DEBT/TOTAL CAP. 18.4% 16.3% 18.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DILUTION ANALYSIS
- --------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
RUBBERMAID INC
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
SILVER
Projected SILVER EPS $ 1.87 $ 2.84 $ 3.19
Projected SILVER Standalone Net Income $ 16.2 $ 24.6 $ 27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total Pre-Tax Acquisition Adjustments $ 0.0 $ 0.0 $ 0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $ 0.0 $ 0.0 $ 0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
------------------------
Total After-Tax Acquisition Adjustments $ 0.0 0.0 0.0
PRO FORMA EPS CALCULATION
Projected Rubbermaid Inc Standalone Net Income $ 160.3 $ 196.2 $ 221.7
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
-------------------------
Pro Forma Combined Net Income $ 176.5 $ 220.8 $ 249.4
Pro Forma Combined Shares Outstanding 159.453 159.453 159.453
Pro Forma EPS $ 1.11 $ 1.38 $ 1.56
Projected Rubbermaid Inc Standalone EPS $ 1.07 $ 1.31 $ 1.48
- --------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $ 0.04 $ 0.07 $ 0.08
% PICK-UP (DILUTION) 3.4% 5.7% 5.7%
PROJECTED PRO-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $ (9.6) $ (19.6) $ (21.9)
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- -------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 3.4% 5.7% 5.7%
10% 28.88 2.8% 5.1% 5.0%
20% 31.50 2.2% 4.4% 4.4%
30% 34.13 1.6% 3.8% 3.7%
40% 36.75 0.9% 3.2% 3.1%
50% 39.38 0.3%) 2.6% 2.5%
60% 42.00 (0.3%) 1.9% 1.9%
70% 44.63 (0.9%) 1.3% 1.3%
80% 47.25 (1.4%) 0.7% 0.7%
90% 49.88 (2.0%) 0.1% 0.1%
100% 52.50 (2.6%) (0.4%) (0.5%)
- -------------------------------------------------------------------------------
E-10
68
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
STANHOME INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Stanhome Inc Stock Price @ 19-Oct-96 $27.63
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Stanhome Inc 1996E P/E Multiple 12.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Stanhome Inc Shares 17.898
Pro Forma Stanhome Inc Shares 17.898
Transaction Expenses $10.0
Stanhome Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Stanhome Inc Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
STANHOME INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
Cash $20.5 $6.2 $0.0 $26.7
Total Debt 126.0 37.6 242.4 406.0
----- ---- -----
Net Debt 105.5 31.4 379.3
Equity 257.8 155.5 (155.5) 0.0 257.8
Total Capitalization 383.7 193.1 663.8
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 32.8% 19.5% 61.2%
NET DEBT/TOTAL CAP. 27.5% 16.3% 57.1%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
STANHOME INC
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (21.8) (21.8) (21.8)
--------------------------
Total Pre-Tax Acquisition Adjustments ($24.1) ($24.1) ($24.1)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 7.0% (13.3) (13.3) (13.3)
--------------------------
Total After-Tax Acquisition Adjustments ($15.6) ($15.6) ($15.6)
PRO FORMA EPS CALCULATION
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (15.6) (15.6) (15.6)
--------------------------
Pro Forma Combined Net Income $41.0 $56.8 $66.5
Pro Forma Combined Shares Outstanding 17.898 17.898 17.898
Pro Forma EPS $2.29 $3.17 $3.72
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.03 $0.50 $0.67
% PICK-UP (DILUTION) 1.5% 18.8% 22.1%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($1.0) ($14.8) ($19.7)
- -------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 1.5% 18.8% 22.1%
10% 28.88 (3.2%) 14.9% 18.6%
20% 31.50 (7.9%) 10.9% 15.2%
30% 34.13 (12.6%) 7.0% 11.7%
40% 36.75 (17.2%) 3.0% 8.2%
50% 39.38 (21.9%) 0.9% 4.8%
60% 42.00 (26.6%) (4.9%) 1.3%
70% 44.63 (31.3%) (8.8%) (2.2%)
80% 47.25 (35.9%) (12.8%) (5.7%)
90% 49.88 (40.6%) (16.8%) (9.1%)
100% 52.50 (45.3%) (20.7%) (12.6%)
- --------------------------------------------------------------------------------
E-11
69
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
STANHOME INC ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Stanhome Inc Stock Price @ 19-Oct-96 $27.63
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total Fully-Diluted Shares 9.014
Offer Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Stanhome Inc 1996E P/E Multiple 12.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up(0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.950
Existing Stanhome Inc Shares 17.898
Pro Forma Stanhome Inc Shares 26.312
Transaction Expenses $10.0
Stanhome Inc Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Stanhome Inc Ownership of New Entity 68.0%
SILVER Ownership of New Entity 32.0%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
STANHOME INC SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
Cash $20.5 $6.2 ($10.0) $16.7
Total Debt 126.0 37.6 0.0 163.6
----- ---- -----
Net Debt 105.5 31.4 146.9
Equity 257.8 155.5 0.0 (10.0) 403.3
Total Capitalization 383.7 193.1 566.8
- ----------------------------------------------------------------------------------------------
TOTAL DEBT/TOTAL CAP. 32.8% 19.5% 28.9%
NET DEBT/TOTAL CAP. 27.5% 16.3% 25.9%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
STANHOME INC
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense@ 9.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 9.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected Stanhome Inc Standalone Net Income $40.5 $47.8 $54.5
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $56.7 $72.4 $82.2
Pro Forma Combined Shares Outstanding 26.312 26.312 26.312
Pro Forma EPS $2.15 $2.75 $3.12
Projected Stanhome Inc Standalone EPS $2.26 $2.67 $3.04
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) ($0.11) $0.08 $0.08
% PICK-UP (DILUTION) (4.7%) 3.1% 2.6%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN $4.6 ($3.6) ($3.4)
- -------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 (4.7%) 3.1% 2.6%
10% 28.88 (7.7%) (0.2%) (0.7%)
20% 31.50 (10.5%) (3.2%) (3.7%)
30% 34.13 (13.2%) (6.1%) (6.5%)
40% 36.75 (15.7%) (8.8%) (9.2%)
50% 39.38 (18.0%) (11.3%) (11.8%)
60% 42.00 (20.3%) (13.8%) (14.2%)
70% 44.63 (22.4%) (16.0%) (16.5%)
80% 47.25 (24.4%) (18.2%) (18.6%)
90% 49.88 (26.3%) (20.3%) (20.7%)
100% 52.50 (28.1%) (22.2%) (22.6%)
- --------------------------------------------------------------------------------
E-12
70
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK PURCHASE
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
TUPPERWARE CORP ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Tupperware Corp Stock Price @ 19-Oct-96 $46.88
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total fully-Diluted Shares 9.014
Office Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Tupperware Corp 1996E P/E Multiple 17.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $93.0
Goodwill Amortization Period 40
Exchange Ratio 0.000
Existing Tupperware Corp Shares 62.142
Pro Forma Tupperware Corp Shares 62.142
Transaction Expenses $10.0
Tupperware Corp Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Tupperware Corp Ownership of New Entity 100.0%
SILVER Ownership of New Entity 0.0%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
TUPPERWARE CORP SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
Cash $94.2 $6.2 $0.0 $100.4
Total Debt 287.1 37.6 242.4 567.1
----- ---- -----
Net Debt 192.9 31.4 466.7
Equity 245.8 155.5 (155.5) 0.0 245.0
Total Capitalization 532.1 193.1 812.1
- ----------------------------------------------------------------------------------------------
Total Debt/Total Cap. 54.0% 19.5% 69.8%
Net Debt/Total Cap. 36.3% 16.3% 57.5%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
TUPPERWARE CORP
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (17.0) (17.0) (17.0)
--------------------------
Total Pre-Tax Acquisition Adjustments ($19.3) ($19.3) ($19.3)
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill ($2.3) ($2.3) ($2.3)
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% (10.4) (10.4) (10.4)
--------------------------
Total After-Tax Acquisition Adjustments ($12.7) ($12.7) ($12.7)
PRO FORMA EPS CALCULATION
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments (12.7) (12.7) (12.7)
--------------------------
Pro Forma Combined Net Income $172.6 $204.0 $233.9
Pro Forma Combined Shares Outstanding 62.142 62.142 62.142
Pro Forma EPS $2.78 $3.28 $3.76
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.06 $0.19 $0.24
% PICK-UP (DILUTION) 2.1% 6.2% 6.9%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($5.8) ($19.6) ($24.6)
- -------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 2.1% 6.2% 6.9%
10% 28.88 1.2% 5.4% 6.1%
20% 31.50 0.2% 4.6% 5.4%
30% 34.13 (0.7%) 3.7% 4.7%
40% 36.75 (1.7%) 2.9% 3.9%
50% 39.38 (2.6%) 2.1% 3.2%
60% 42.00 (3.6%) (1.2%) 2.5%
70% 44.63 (4.5%) 0.4% 1.7%
80% 47.25 (5.5%) (0.4%) 1.0%
90% 49.88 (6.4%) (1.3%) 0.3%
100% 52.50 (7.4%) (2.1%) (0.5%)
- --------------------------------------------------------------------------------
E-13
71
-----------
PROJECT SILVER 100% CASH ------------
PRO FORMA ACQUISITION ANALYSIS 0% STOCK POOLING
- --------------------------------------------------------------------------------
(dollars in millions, except per share)
- --------------------------------------------------------------------------------
TUPPERWARE CORP ACQUIRES SILVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KEY ASSUMPTIONS
- --------------------------------------------------------------------------------
Tupperware Corp Stock Price @ 19-Oct-96 $46.88
SILVER Stock Price @ 19-Oct-96 $26.25
SILVER Shares Outstanding 8.676
Options and Warrants @ $12.38 0.338
------
Total fully-Diluted Shares 9.014
Office Price Per Share $26.25
------
Offer Value $236.6
Plus: Existing Net Debt $31.4
Less: Option & Warrant Proceeds (4.2)
------
Transaction Value $263.8
======
Tupperware Corp 1996E P/E Multiple 17.2x
SILVER 1996E P/E Multiple 14.0x
Offer Price 1996E P/E Multiple 14.0x
Purchase Premium - % 0.0%
Tangible Book Value $149.4
Purchase Premium - $ 87.2
PP&E Write-Up (0.0%) 0.0
PP&E Depreciation Period 15
Deferred Tax Liability 0.0
New Goodwill-Incl. Transaction Exp. $0.0
Goodwill Amortization Period 40
Exchange Ratio 0.560
Existing Tupperware Corp Shares 62.142
Pro Forma Tupperware Corp Shares 67.101
Transaction Expenses $10.0
Tupperware Corp Marginal Tax Rate 39.0%
SILVER Marginal Tax Rate 39.0%
Tupperware Corp Ownership of New Entity 92.6%
SILVER Ownership of New Entity 7.4%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BALANCE SHEET IMPACT
- -----------------------------------------------------------------------------------------------
TUPPERWARE CORP SILVER COMBINED
JUN-96 JUN-96 ADJUSTMENTS JUN-96
---------------------------------------------------------
Cash $94.2 $6.2 ($10.0) $90.4
Total Debt 287.1 37.6 0.0 324.7
----- ---- -----
Net Debt 192.9 31.4 234.3
Equity 245.8 155.5 0.0 (10.0) 390.5
Total Capitalization 532.1 193.1 715.2
- ----------------------------------------------------------------------------------------------
Total Debt/Total Cap. 54.0% 19.5% 45.4%
Net Debt/Total Cap. 36.3% 16.3% 32.8%
- ----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
DILUTION ANALYSIS
- ---------------------------------------------------------------------------------------
1996E 1997E 1998E
----- ----- -----
TUPPERWARE CORP
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
SILVER
Projected SILVER EPS $1.87 $2.84 $3.19
Projected SILVER Standalone Net Income $16.2 $24.6 $27.7
PRE-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
--------------------------
Total Pre-Tax Acquisition Adjustments $0.0 $0.0 $0.0
AFTER-TAX ACQUISITION ADJUSTMENTS
New Goodwill $0.0 $0.0 $0.0
Incremental Depreciation 0.0 0.0 0.0
Synergies 0.0 0.0 0.0
New Interest Expense @ 7.0% 0.0 0.0 0.0
--------------------------
Total After-Tax Acquisition Adjustments $0.0 $0.0 $0.0
PRO FORMA EPS CALCULATION
Projected Tupperware Corp Standalone Net Income $169.0 $192.0 $218.9
Projected SILVER Standalone Net Income 16.2 24.6 27.7
- - After-Tax Acquisition Adjustments 0.0 0.0 0.0
--------------------------
Pro Forma Combined Net Income $185.3 $216.7 $246.6
Pro Forma Combined Shares Outstanding 67.101 67.101 67.101
Pro Forma EPS $2.76 $3.23 $3.67
Projected Tupperware Corp Standalone EPS $2.72 $3.09 $3.52
- -------------------------------------------------------------------------------------
$ PICK-UP (DILUTION) $0.04 $0.14 $0.15
% PICK-UP (DILUTION) 1.5% 4.5% 4.3%
PROJECTED PRE-TAX SYNERGIES REQUIRED
TO BREAK-EVEN ($4.5) ($15.3) ($16.7)
- -------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS
- --------------------------------------------------------------------------------
1996 1997 1998
PREMIUM OFFER PRICE DILUTION DILUTION DILUTION
------- ----------- -------- -------- --------
0% $26.25 1.5% 4.5% 4.3%
10% 28.88 0.7% 3.7% 3.5%
20% 31.50 (0.0%) 2.9% 2.8%
30% 34.13 (0.7%) 2.2% 2.0%
40% 36.75 (1.5%) 1.4% 1.3%
50% 39.38 (2.2%) 0.7% 0.5%
60% 42.00 (2.9%) (0.0%) 0.2%
70% 44.63 (3.6%) (0.7%) (0.2%)
80% 47.25 (4.3%) (1.4%) (1.6%)
90% 49.88 (4.9%) (2.1%) (2.3%)
100% 52.50 (5.6%) (2.8%) (3.0%)
- --------------------------------------------------------------------------------
E-14
72
- --------------------------------------------------------------------------------
SILVER SHAREHOLDER PROFILE
- --------------------------------------------------------------------------------
73
PROJECT SILVER
SHAREHOLDER PROFILE
- -----------------------------------------------------------------------------------------------------------------
Number of % of % of
Shares Primary Fully Diluted
Held (mm) Ownership Ownership
5% Institutional Shareholders (a)
Gabelli Funds, Inc. & Related Entities 0.900 10.4% 10.0%
Neuberger & Berman 0.400 4.6% 4.4%
Fidelity Management and Research Corp. 0.379 4.4% 4.2%
----- ----- -----
TOTAL 5% SHAREHOLDERS 1.679 19.4% 18.6%
Other Insstitutional Holders (b)
LGT Asset Management Inc. 0.412 4.7% 4.6%
Artisan Partners Ltd. 0.391 4.5% 4.3%
Northern Trust Corp. 0.181 2.1% 4.3%
TCW Group Inc. 0.163 1.9% 1.8%
Barclays Bank PLC 0.129 1.5% 1.4%
PaineWebber Group Inc. 0.100 1.2% 1.1%
Breau Capital Management Inc. 0.074 0.9% 0.8%
----- ----- -----
SUBTOTAL - TOP TEN INSTITUTIONAL HOLDERS 3.128 36.1% 34.7%
Other 0.364 4.2% 4.0%
----- ----- -----
TOTAL INSTITUTIONAL HOLDINGS 3.492 40.3% 38.7%
Management and Directors (a)
Leonard Florence - Chairman, President, CEO and Director 2.858 32.9% 31.7%
Melvin L. Levine - VP of Purchasing and Director 0.202 2.3% 2.2%
Alan R. Kanter - VP of Sales 0.182 2.1% 2.0%
Other Insiders 0.401 4.6% 4.5%
----- ----- -----
TOTAL MANAGEMENT AND DIRECTOR HOLDINGS 3.643 42.0% 40.4%
Other/Public 1.541 17.8% 17.1%
----- ----- -----
TOTAL PRIMARY SHARES OUTSTANDING (a) 8.676 100.0% 96.3%
----- =====
Options Outstanding (a) 0.338 3.7%
----- -----
TOTAL FULLY DILUTED SHARES OUTSTANDING 9.014 100.0%
===== =====
<FN>
- -----------------------------------------
(a) Source: Draft of Form S-3 dated September 6, 1996
(b) Source: CDA/Spectrum Report for the quarter ended June 30, 1996