CONFIDENTIAL
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Board of Directors
AYDIN Corporation
700 Dresher Road
P.O. Box 349
Horsham, PA 19044
March 1, 1999
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of AYDIN Corporation (the "Company") of the
consideration to be received by them in the proposed tender offer by L-3
Communications Corporation (the "Acquiror") (the "Transaction"). The Agreement
and Plan of Merger, dated as of March 1, 1999 (the "Agreement"), between the
Company and the Acquiror, sets forth the principal terms of the Transaction.
The Agreement provides, among other things, that the stockholders of the
Company will receive $13.50 in cash for each issued and outstanding share of
common stock, par value $1.00 per share, of the Company, plus a cancellation
fee (the "Cancellation Fee") for each outstanding option and warrant equal to
the difference between $13.50 and the strike price (below $13.50) of each
option and warrant.
In connection with our opinion, we have:
(a) reviewed the Agreement;
(b) reviewed certain financial and other information relating to the
Company that was publicly available or furnished to us by the Company,
including financial forecasts;
(c) met with members of the Company's management to discuss the business,
operations, historical financial results and future prospects of the
Company;
(d) considered certain financial and securities data of the Company and
compared that data with similar data for other publicly-held companies
in businesses similar to those of the Company;
(e) considered the financial terms of certain recent acquisitions of
companies in businesses similar to those of the Company; and
(f) considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria as we
deemed relevant and appropriate for purposes of this opinion.
The opinion expressed below is subject to the following qualifications and
limitations:
(i) In arriving at our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all
financial and other information that was publicly available or
furnished to us by the Company. With respect to the financial
forecasts used by us, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates
and judgments of the Company's management as to the future financial
performance of the Company.
(ii) We have not made an independent evaluation or appraisal of the assets
of the Company, nor have we been furnished with any such appraisals.
(iii) Our services with respect to the Transaction do not constitute, nor
should they be construed to constitute in any way, a review or audit
of or any other procedures with respect to any financial information
nor should such services be relied upon by any person to disclose
weaknesses in internal controls or financial statement errors or
irregularities.
(iv) Our opinion does not address, and should not be construed to address,
either the underlying business decision to effect the Transaction or
whether the consideration to be received by the stockholders in the
Transaction represents the highest price obtainable. We express no
view as to the federal, state or local tax consequences of the
Transaction.
(v) Our opinion is based on business, economic, market and other
conditions as they exist as of the date hereof or as of the date of
the information provided to us.
(vi) This opinion is effective as of the date hereof. We have no obligation
to update the opinion unless requested by you in writing to do so and
expressly disclaim any responsibility to do so in the absence of any
such request.
Based upon and subject to the foregoing, it is our opinion that as of the date
hereof, the $13.50 per issued and outstanding common share cash consideration
and the Cancellation Fee for each outstanding option and warrant to be received
by the stockholders of the Company is fair to such stockholders from a
financial point of view.
We will receive a fee as compensation for our services in rendering this
opinion. We have also acted as financial advisor to the Company in connection
with the Transaction and will receive a success fee for our financial advisory
services. We will also receive a fixed fee for rendering this opinion.
This letter is for the information of the Board of Directors in connection with
the Transaction described herein and does not constitute a recommendation to
any stockholder.
Very truly yours,
/s/ PricewaterhouseCoopers Securities LLC
PricewaterhouseCoopers Securities LLC