1
EXHIBIT 99(b)(2)
THE FOLLOWING REPORT WAS PRESENTED TO THE BOARDS ON AUGUST 12, 1997.
DURING THE COURSE OF THIS PRESENTATION, PIPER JAFFRAY ORALLY CORRECTED THE
FOLLOWING ERRORS:
(a) On page 4-3 of the report in the "Summation of the Flow of
Values in the Company Sale Scenario", the "Total" column should have included
as the sum of the "Taxes and Expenses" line item, $31.8 million.
(b) An error in the calculation of the weighted average cost of
capital presented in the appendix incorrectly resulted in a weighted average
cost of capital of 13.0% when the correct percentage was actually 16.1%. This
error was caused by using a 0.6 beta factor in the cost of equity calculation
instead of the correct beta factor of 1.31.
(c) An incorrect return on equity of 17% was used in the
calculation of the present value of the dividend stream in the long-term
dividend model. The correct return on equity was 19%. This error was caused
by using the incorrect beta factor discussed in (b).
(d) The premium calculated for the per share value for the
BULB Common Stock in the deemed sale model was incorrectly reported as 121% due
to a clerical error instead of the correct premium of 58%.
2
PROJECT
THOROUGHBRED
Piper Jaffray Inc.
August 12, 1997
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Table of Contents
SECTION
-------
Overview 1
Valuation Methodology 2
Long-Term Dividend Scenario 3
Sale Scenario 4
Valuation Summary 5
Financing Alternatives 6
APPENDIX
--------
Valuation Detail A
Long-Term Dividend Scenario Detail B
Sale Scenario Detail (Arthur Andersen) C
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Overview Summary
5
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Overview Summary
- Analysis of Ownership Structure
- Review of Appropriate Case Law
- BLC Due Diligence
- Valuation of BLC
Company Sale Scenario
Long-Term Dividend Scenario
- Evaluation of Tax Impact
- Distribution of Value to Shareholders
1-1
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-------------------- 100.00%
| ---------------- RCB ---------------
| | -------- |
| | | | |
| | | | |
| | | | 1.11% |
| | 18.93% | [Webco]
| | | | |
| | | | | 13.91%
| | | | |
1.40%| ---------------BLP----------------
| | | | 34.08% | ----------------
| | | | | |
| | | | | |
| | | | FEB |
| | | --------598,711 shares ---| |
22.14% | | 2.27% outstanding | |
------------- | | | | |
| | 0.55%| 77.63% | 24.87% | | 84.98%
| | | | | | |
| | | --------- BUL | |
| | ------------- 386,469 shares | |
OUTSIDER/SBP.-------------------- outstanding --- | |
| | 14.56% | | | |
| | 79.20% | | | |
| | | 4.99%| |
| | | | | |
| 19.40% ---------------- BLC | | |
---------------------------- 120,643 shares ---------
outstanding
OWNERSHIP STRUCTURE
1-2
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Legal Issues
- - The Delaware Court must consider all relevant factors to determine
fair value.
- - Delaware law compels inclusion of control premium when valuing controlled
subsidiaries, [Rapid-American Corporation vs. Harris
(Supreme Court of Delaware 1992)].
1-3
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Valuation Methodology
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Valuation Methodoloy
- Fair Value Concept:
- "Going concern"
- Common Equity - Control Basis - No Discounts
- Price at which Company would change hands between willing
buyer/willing seller, neither under any compulsion to
buy/sell, both having knowledge of relevant facts.
- Three Primary Quantitative Valuation Methodologies:
- Comparable publicly traded company approach
- Comparable merger and acquisition transaction approach
- Discounted cash flow approach
- Consideration of Qualitative Aspects
2-1
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HISTORICAL AND PROJECTED FINANCIAL
SUMMARY
For Years 1992 - 2001*
($ in Millions)
1992 1993 1994 1995 1996 1997E 1998E 1999E 2000E 2001E
Net Sales $85 $99 $104 $118 $122 $136 $145 $155 $166 $178
Gross Profit $36 $45 $50 $52 $59 $66 $71 $76 $81 $87
EBIT 3.7 1.9 5.7 0.9 7.2 11.2 13.1 13.9 15 16.1
* Adjusted for Non-Recurring Expenses
2-2
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HISTORICAL AND PROJECTED
MARGIN SUMMARY
FOR YEARS 1992 - 2001*
(%)
1992 1993 1994 1995 1996 1997E 1998E 1999E 2000E 2001E
Gross Margin 42.2 46.0 47.9 44.4 48.5 48.3 49.0 49.0 49.0 49.0
EBIT Margin 4.4 1.9 5.5 0.8 5.9 8.3 9.0 9.0 9.0 9.1
* Adjusted for Non-Recurring Expenses
2-3
12
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Comparable Public Company Analysis
Manufacturers of Locks, Metal Products,
Tools or Commercial Building Materials
- - Armstrong World Industries Inc. - Knape & Vogt Mfg. Co.
- - Eastern Co. - Masco Corp.
- - Ingersoll-Rand Co. - Stanley Works
2-4
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Comparable Public Companies
Selected Financial Data
Comparable Group
BLC
(Latest Year) 8/1/97 LOW MEDIAN HIGH
------ ----- ------ ------
Net Sales (MM) $130 $59 $2,428 $6,737
Gross Margin 49.5% 24.0% 28.9% 36.7%
Operating Margin 8.6% 7.9% 10.3% 14.7%
Net Margin 4.4% 3.6% 5.1% 9.5%
Return on Assets 9.1% 5.2% 7.1% 9.4%
Return on Equity 23.2% 7.3% 17.6% 25.8%
5 Year Annual Revenue Growth 9.6% -0.9% 7.3% 15.4%
5 Year Annual Operating Income Growth 17.7% 6.4% 23.8% 27.9%
Debt/Total Capital 45.0% 10.0% 35.0% 40.0%
2-5
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Comparable Public Company Analysis
Comparable Group BLC Indicated Equity Value
Low Median High 8/1/97 Low Median High
--- ------ ---- ------ --- ------ ----
($MM)
Price/Earnings
5 Year Average 17.2x 30.7x 36.2x $ 2.6 $44.7 $ 79.7 $ 94.0
Last Twelve Months (LTM) 12.8x 19.8x 30.6x $ 6.0 $76.8 $118.8 $183.5
1997 Estimate 12.1x 18.9x 21.5x $ 5.3 $64.1 $100.2 $113.9
1998 Estimate 11.7x 17.8x 18.6x $ 6.4 $74.9 $113.9 $119.0
Price/Cash Flow
LTM 6.4x 11.0x 19.6x $ 11.4 $72.7 $124.9 $222.7
3 Year Average 7.3x 12.5x 22.9x $ 7.8 $57.0 $ 88.3 $179.0
Enterprise Value/LTM Revenues 0.7x 1.4x 2.5x $130.3 $73.8 $160.0 $287.4
Enterprise Value/LTM Operating Income 8.3x 11.4x 16.8x $ 12.3 $69.9 $103.9 $173.5
Enterprise Value/LTM EBITDA 5.4x 8.5x 13.9x $ 16.7 $67.6 $119.4 $221.3
2-6
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Comparable Public Company Analysis
Indicated Valuation $60 - $65 million
Premium for Control 15.0%
CONTROL VALUATION . . . . . . . . ..$69 - $75 MILLION
2-7
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Mergers & Acquisitions Analysis
- - Manufacturing Companies
- - Transactions from 1/94 to Present
- - Eight meaningful transactions
- - Focus on sales & earnings multiples
2-8
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MERGERS & ACQUISITIONS RESULTS
COMPARABLE GROUP BLC INDICATED EQUITY VALUE
LOW MEDIAN HIGH 8/1/97 LOW MEDIAN HIGH
--- ------ ---- ------ --- ------ ----
($MM)
Enterprise Value/Revenues
3 Year Average 0.4x 0.7x 1.4x $114.7 $45.9 $ 80.3 $160.5
Last Twelve Months (LTM) 0.4x 0.7x 1.4x $130.4 $29.5 $ 68.6 $159.8
1997 Estimate 0.4x 0.7x 1.4x $135.5 $33.4 $ 74.0 $168.9
Enterprise Value/Operating Income
3 Year Average 4.1x 11.5x 22.1x $ 4.6 $18.8 $ 52.8 $101.5
LTM 4.1x 11.5x 22.1x $11.8 $23.1 $105.5 $223.6
1997 Estimate 4.1x 11.5x 22.1x $11.2 $25.1 $108.0 $226.7
Equity Value/Net Income
3 Year Average 6.4x 18.0x 39.9x $ 2.9 $18.6 $ 52.3 $116.0
LTM 6.4x 18.0x 39.9x $ 6.0 $38.4 $104.3 $239.3
1997 Estimate 6.4x 18.0x 39.9x $ 5.3 $33.9 $ 85.3 $211.5
Equity Value/Book Value
LTM 0.8x 2.9x 9.9x $29.4 $23.5 $ 79.1 $291.3
2-9
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Mergers & Acquisitions Analysis
Valuation Range: $60 - 65 Million
2-10
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Discounted Cash Flow Analysis
- -Components
-EBIT & Taxes
-Depreciation/Amortization
-Changes in Working Capital
-Capital Expenditures
-Share Plan Repurchases
-Discount Rate: 13% - 17%
-Terminal Value: 5x-7x EBIT
- -Determine Value of Equity by Adjusting for Debt and Cash
2-11
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DISCOUNTED CASH FLOW
ANALYSIS
(IN MILLIONS)
Operating Working Capital Bonus
Year Income Depreciation Capital Expenditures Plan
- ---- ------ ------------ ------- ------------ ----
1997 $6.7 $2.8 ($1.7) ($2.4) $0.0
1998 $13.1 $5.5 ($1.4) ($5.0) ($0.3)
1999 $13.9 $5.7 ($1.3) ($5.5) ($0.2)
2000 $15.0 $5.8 ($1.6) ($6.0) ($0.3)
2001 $16.1 $5.9 ($1.7) ($6.5) ($0.6)
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Discounted Cash Flow Results
($MM) Low Median High
--- ------ ----
Equity Value* $38.7 $51.8 $65.8
*Calculated after adding cash of $2.9 million and subtracting debt of $22.3
million.
DCF VALUE.........................$50 million to $56 million
2-13
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Company Sale Scenario -
Valuation Summary
Comparable Public Company Analysis $69 - $75 million
Comparable M&A Transaction Analysis $60 - $65 million
Discounted Cash Flow Analysis $46 - $54 million
BLC VALUATION. . . . . . . . . . . . . . . $56 - $60 MILLION
2-14
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Equity Value - BLC
($MM)
Range
------
Comparable Company $71-76
Comparable M&A $60-65
DCF $46-54
2-15
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Long-Term Dividend Scenario
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Long-Term Dividend Scenario
Assumptions
- - Value based exclusively on continuing dividend stream.
- - Dividends for first five years (1997-2001) based on management's
operating plan.
- - After 2001 a normalized dividend capacity is calculated based on
the Company's long-term growth outlook.
- - Present value of all future dividends is distributed to shareholders
in continuous loop until exhausted.
- - Incorporates tax advantages of 80% corporate dividend exclusion.
3-1
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- ------------------------------------------------------------------------------------------------------------------------------------
$100.00
-------------------------------------RCB
| -------------------------------- |
| | | -------------------------- |
| | | | $2.86
| | | |
| | | |
| | $9.66 |
| | | |
| | | |
| | | |
$1.40 | | |-----------------------------BLP-----------------------------------------------
| | | | | | |
| | | | | | |
| | | | $17.38 | | |
| | | | | | |
| | | | | | |
| | | |----------------------------- | | |
| | | | | |
| | $1.67 | | |
| | | | | |
| | | FEB | |
---$11.28---------|------------------------- 598,711 shares -------|------------------ |
| | | | outstanding --- | | $0.04
| | | | | | | | |
| |$0.41| | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | $4.85 |
| | | | | $12.68 | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | $55.85 | | $16.16 | |
| | | | | | | | |
| | | -------------------------- BUL | | Taxes and
Outsiders/ | ---------------------------- 386,469 shares | | Administration
SBP ----------------------$10.71--------- outstanding --|----|------ $6.89----------- Expenses
| | | | |
| | | | |
| | $3.67 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| $79.21 | | |
| | | | |
| | | | |
| | | | |
| BLC ----------
-------- $19.39---------------------------- 120,643 shares
outstanding
Illustration of $100 Dividend
3-2
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SUMMARY OF $100 DIVIDEND
Round 1 Complete
------- --------
Outside Shareholders $ 27.46 $ 39.08
Stock Bonus Plan 13.93 19.82
Inside Shareholders 14.31 20.36
Best Lock Corp. 32.51 0.00
------- -------
$ 88.22 $ 79.25
Administrative Expenses 1.06 1.51
Corporate Taxes 10.72 19.24
------- -------
$100.00 $100.00
======= =======
Note: Reflects impact of BUL A preference
3-3
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PROJECT THOROUGHBRED
Projected Cash Flows
For the Periods Ending December 31,
----------------------------------------------
1997 1998 1999 2000 2001
==============================================
Net Income after tax $5.3 $6.4 $7.0 $7.6 $8.3
Adjustments to reconcile NI to net cash from operating activities
Depreciation 5.4 5.3 5.5 5.6 5.7
Amortization 0.2 0.2 0.2 0.2 0.2
(Increase) decrease in A/R 0.2 (1.2) (1.3) (1.4) (1.5)
(Increase) decrease in inventory 0.1 (0.8) (1.0) (1.1) (1.2)
(Increase) decrease in prepaids and other current assets 0.6 - - - -
Increase (decrease) in A/P, customer advances & accrued exp. (1.4) 0.7 0.9 1.0 1.0
Increase (decrease) in Deferred Income Taxes (0.3) - - - -
Increase (decrease) in Retirement Benefit and Benefit
Obligation (0.6) (0.5) (0.5) (0.5) (0.5)
----------------------------------------------
Total adjustments 4.2 3.8 3.8 3.8 3.8
Net cash provided by operating activities $9.5 $10.2 $10.8 $11.4 $12.1
Capital Expenditures ($4.0) ($5.0) ($5.5) ($6.0) ($6.5)
Cash Used for Stock Bonus Plan Payout $0.0 ($0.3) ($0.2) ($0.3) ($0.6)
----------
Payments on Loan Balance ($3.0) ($3.0) ($3.0) ($3.0) ($3.0) Normalized
---------------------------------------------- ----------
Cash available for Dividend payment $2.5 $1.9 $2.1 $2.1 $2.0 $2.0
$3.0 Loan
Dividend Payment ($0.6) ($0.6) ($0.6) ($0.6) ($0.6) $0.2 Int. Exp
---------------------------------------------- -------
Net Cash Flow $1.9 $1.3 $1.5 $1.5 $1.4 $5.2
Beginning Cash Balance $2.9 $4.8 $6.1 $7.6 $9.1
Ending Cash Balance $4.8 $6.1 $7.6 $9.1 $10.5
Potential Dividend/Net Income (%) 47.2% 29.7% 30.0% 27.6% 24.1%
3-4
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-----------------------------
Required Return on Equity
Risk Free Rate 6.6%
S&P 500 Market Premium 4.4%
Small Company Premium 6.0%
-----
17.0%
-----------------------------
-----------------------------
Normalized Dividends
$MM
-----
Actual 2001 Dividend $2.0
Add: Debt Repayment 3.0
Interest Expense .2
-----
$5.2
-----------------------------
3-5
30
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PRESENT VALUE OF DIVIDEND STREAM
($ MILLIONS)
1997 1998 1999 2000 2001 Normalized
---- ---- ---- ---- ---- ----------
Net Cash Available $2.50 $1.90 $2.10 $2.10 $ 2.00 $5.20
for Dividends
Perpetuity Value of
Future Dividends
@ 10% Growth Rate $81.71
----- ----- ----- ----- ------
Total $2.50 $1.90 $2.10 $2.10 $83.71
- -----------------------------------------------------------------------
Present Value
@ 17% Return on Equity $44.14
- -----------------------------------------------------------------------
3-6
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Present Value Per Share of Dividend Stream
------------------------------------------
BLC $ 523.21
BUL A $ 120.23
BUL B $ 117.52
FEB $ 53.77
BLP $120,017.88
3-7
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LONG-TERM DIVIDEND SCENARIO
FLOW OF VALUES
BLC @ BULA @ $120.23* BLP @
($MM) $523.21 BULB @ $117.52 FEB @ $53.77 $120,017.88 Total
------- -------------- ------------ ----------- -----
Outside Shareholders/SBP $12.2 $ 6.8 $ 7.1 - $26.1
Inside Shareholders .9 .2 6.1 1.6 8.8
BLC - 2.3 8.0 10.5 -
BUL 50.0 - - - -
FEB - 35.3 - - -
BLP - 1.1 11.0 - -
Taxes & Expenses 1.8 4.3 3.1 - 9.2
----- ----- ----- ----- -----
Gross Distribution $64.9 $50.0 $35.3 $12.1 $44.1
Less: Intercompany Flows
From BLC - 50.0 - - -
From BUL 2.3 - 35.3 1.1 -
From FEB 8.0 - - 11.0 -
From BLP 10.5 - - - -
----- ----- ----- ----- -----
Net Distribution $44.1 $ 0.0 $ 0.0 $ 0.0 $44.1
===== ===== ===== ===== =====
* REFLECTS $0.57 PER SHARE DIVIDEND PREFERENCE FOR BUL A
3-8
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Company Sale Scenario
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Company Sale Scenario -
Value Per Share
Assumptions
- - Company sold in competitive auction for $58 million
- - Stock sale structure for tax efficiency
- - Gains on sale reduced by cost basis
- - Corporate tax rate 40%
- - Proceeds of sale flow through ownership loops until exhausted
4-1
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Company Sale Scenario
Value Per Share
-----------------------
Value Per Share
BLC $ 566.97
BUL $ 84.11
FEB $ 25.29
BLP $58,992.03
-----------------------
4-2
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COMPANY SALE SCENARIO
FLOW OF VALUES
($MM) BLC @ BLP @
$566.97 BUL @ $84.11 FEB @$25.29 $58,992.03 Total
-------- ------------ ----------- ---------- -----
Outside Shareholders/SBP $13.3 $ 4.7 $ 3.3 - $21.3
Inside Shareholders .9 .2 2.9 .9 4.9
BLC - 1.6 3.8 5.0 -
BUL 54.2 - - - -
FEB - 25.2 - - -
BLP - .8 5.1 - -
Taxes & Expenses 21.7 10.1 - 31.8
----- ----- ----- ---- -----
Gross Distribution $68.4 $54.2 $25.2 $5.9 $58.0
Less: From BLC - $54.2 - - -
From BUL 1.6 - 25.2 .8 -
From FEB 3.8 - - 5.1 -
From BLP 5.0 - - - -
----- ----- ----- ---- -----
Net Distribution $58.0 $0.00 $ 0.0 $0.0 $58.0
===== ===== ===== ==== =====
4-3
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Valuation Summary
38
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INDICATED VALUES
(Midpoints of 5% Range)
Long-Term Company
$ Per Share Dividend Valuation Sale Valuation
- ----------- ------------------ --------------
BLC $523 $567
BULA $120 $84
BULB $118 $84
FEB $54 $25
5-1
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Premium Analysis
Premium vs. Current Market Price Per Share
Dividend Company Current Dividend Sale
Model Sale Model Market Premium Premium
-------- ------------ ------- -------- -------
BLC $521 $567 $160 226% 254%
BUL A $120 $ 84 $ 53 126% 58%
BUL B $117 $ 84 $ 53 121% 58%
FEB $ 53 $ 25 $ 31 71% -19%
5-2
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COMPARISON TO WENDIN VALUES
($Per Share) Dividend Company Sale Undiscounted Discounted
Model Model Wendin Wendin
-------- ------------ ------------ ----------
BLC $521 $567 $600 $400
BUL A $120 $ 84 $109 $ 69
BUL B $117 $ 84 $109 $ 75
FEB $ 53 $ 25 $ 38 $ 31
5-3
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DISTRIBUTION SUMMARY
($ MILLIONS)
BLC @ $567 BUL A @ $120 FEB @ $54 Total
Shares Value Shares Value Shares Value Distribution
------ ----- ------ ----- ------ ----- ------------
Outside Shareholders
& Stock Bonus Plan 23,400 $13.3 56,267 $6.8 132,420 $7.2 $27.3
Note: Assumes highest valuation for each share class, (i.e. BLC based on company
sale valuation and BUL A & FEB based on long-term dividend valuation).
5-4
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Financing Alternatives
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FINANCING ALTERNATIVES
- -------------------------------------------------------------------------------
Debt Financing Private Equity Placement
- -------------------------------------------------------------------------------
PROS: PROS:
- 100% Ownership - Lower Interest Expense
- Total Compensation/Dividend - Ability to Complete Transaction
Discretion - On-going Source of Capital
- Experienced Advisors/Partners
- Stronger Balance Sheet
- Wealth Creation at Exit
- -------------------------------------------------------------------------------
CONS: CONS:
- High Interest Expense - Share Ownership
- Substantial Leverage - Share Value Creation
- Limited Flexibility for - Plan for Partner Exit
Investment and/or
Unanticipated Problems
- -------------------------------------------------------------------------------
6-1
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VALUATION DETAIL
45
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Historical Income Statements
For the years ending December 31,
LTM Ended Year to Date
June 30, June 30,
---------------------------------------------------- -------- --------
1992 1993 1994 1995 1996 1997 1997
---------------------------------------------------- -------- --------
Net Sales $ 84,865 $ 98,521 $103,955 $117,706 $122,359 $130,299 $ 65,638
% Growth 16.1% 5.5% 13.2% 4.0%
Cost of Goods Sold $ 49,076 $ 53,193 $ 54,111 $ 69,400 $ 64,007 $ 66,807 $ 34,143
---------------------------------------------------- -------- --------
Gross Margin $ 35,790 $ 45,329 $ 49,843 $ 48,305 $ 58,352 $ 63,492 $ 31,495
Gross Margin % 42.2% 46.0% 47.9% 41.0% 47.7% 48.7% 48.0%
Operating Expenses
Selling $ 20,246 $ 27,262 $ 26,998 $ 30,657 $ 33,231
General & Administrative $ 8,151 $ 12,091 $ 16,292 $ 21,386 $ 17,153
Engineering, R&D $ 3,658 $ 4,107 $ 3,776 $ 2,337 $ 997
---------------------------------------------------- -------- --------
Total Operating Expenses $ 32,055 $ 43,459 $ 47,066 $ 54,380 $ 51,381 $ 52,005 $ 26,949
Operating Income (Loss) $ 3,734 $ 1,870 $ 2,778 ($6,074) $ 6,970 $ 11,486 $ 4,546
Operating Margin % 4.4% 1.9% 2.7% -5.2% 5.7% 8.8% 6.9%
Interest Expense ($62) ($48) ($7) ($870) ($1,195) ($1,150) ($533)
Other Income (Expense) $ 229 $ 210 ($368) $ 380 $ 272 $ 329 $172
---------------------------------------------------- -------- --------
Interest & Other
Income (Expense) $ 167 $ 162 ($374) ($490) ($923) ($821) ($361)
Income (Loss) Before
Income Taxes $ 3,902 $ 2,031 $ 2,403 ($6,564) $ 6,048 $ 10,666 $ 4,185
Provision for Income Taxes $ 1,443 $ 882 $ 195 ($2,359) $ 2,593 $ 4,468 $ 1,789
---------------------------------------------------- -------- --------
NET INCOME (LOSS)
Best Lock Corporation
& Subsidiary (1) $ 2,458 $ 1,800 $ 2,208 ($4,204) $ 3,455 $ 6,198 $ 2,396
==================================================== ======== ========
ADJUSTMENTS TO INCOME
- ---------------------
COGS Adjustments (2) $ 3,900 $ 1,000 $ 1,000
Operating Expenses
Adjustments (3) $ 2,900 $ 3,100 ($800) ($1,345) ($545)
---------------------------------------------------- -------- --------
Total Adjustments $ 0 $ 0 $ 2,900 $ 7,000 $ 200 ($345) ($545)
Adjusted Gross Margin $ 35,790 $ 45,329 $ 49,843 $ 52,205 $ 59,352 $ 64,492 $ 31,495
Adjusted Operating Profit $ 3,734 $ 1,870 $ 5,678 $ 926 $ 7,170 $ 11,141 $ 4,001
Adjusted Pretax Income $ 3,902 $ 2,031 $ 5,303 $ 436 $ 6,248 $ 10,321 $ 3,640
Adjusted Net Income (4) $ 2,458 $ 1,800 $ 4,873 $ 279 $ 3,569 $ 5,998 $ 2,084
(1) 1993 Net Income includes $650K adjustment for cumulative effect of change
in accounting principle
(2) COGS Adjustments include Mortise lock warranty service ($1.0MM 1996),
Obsolete inventory ($2.1MM 1995), and Cost impact of 9K redesign ($1.8MM
1995)
(3) Operating expense adjustments include Vacation accrual change (-$0.545MM
YTD 1997), Restructure accrual (-$0.8MM 1996, $3.1MM 1995), Family
settlement accrual ($2.1MM 1994), and Walter Best retirement accrual
($0.8MM 1994)
(4) Adjustments are taxed at the effective audited rate
46
PROJECT THOROUGHBRED
Historical Balance Sheets
As of December 31,
June, 30,
---------------------------------------------- ---------- ---------
1992 1993 1994 1995 1996 1997
---------------------------------------------- ---------- ---------
ASSETS
Current Assets
Cash & Equivalents $ 1,596 $ 1,602 $ 4,792 $ 1,349 $ 2,049 $ 1,849
Trade Receivables $ 10,994 $ 13,539 $ 14,124 $ 13,508 $ 17,696 $ 18,372
Inventories $ 16,383 $ 14,490 $ 14,579 $ 11,383 $ 13,779 $ 14,376
Pre-Paids & Other $ 4,335 $ 3,461 $ 3,870 $ 7,262 $ 3,832 $ 3,071
--------------------------------------------- --------- ---------
Total Current Assets $ 33,307 $ 33,093 $ 37,365 $ 33,503 $ 37,356 $ 37,668
Property Plant & Equipment $ 54,299 $ 57,881 $ 61,220 $ 65,169 $ 63,098 $ 64,603
Accumulated Depreciation ($24,119) ($27,091) ($31,082) ($34,298) ($36,202) ($38,797)
--------------------------------------------- --------- ---------
Net PP&E $ 30,179 $ 30,789 $ 30,137 $ 30,872 $ 26,896 $ 25,806
Other Assets, Net $ 414 $ 335 $ 3,502 $ 4,642 $ 4,631 $ 4,575
Total Assets $ 63,900 $ 64,217 $ 71,003 $ 69,017 $ 68,883 $ 68,050
============================================= ========= =========
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities
Current Portion of
Benefit Obligation $ 829 $ 1,112 $ 1,382 $ 1,362 $ 1,365 $ 1,343
Accounts Payable $ 1,984 $ 1,700 $ 1,644 $ 3,490 $ 2,688 $ 2,904
Customer Advances $ 816 $ 1,501 $ 1,434 $ 1,849 $ 1,853
Accrued Liabilities $ 4,584 $ 4,890 $ 9,813 $ 10,260 $ 9,116 $ 7,102
--------------------------------------------- --------- ---------
Total Current Liabilities $ 7,396 $ 8,517 $ 14,340 $ 16,546 $ 15,017 $ 13,202
Long Term Debt $ 15,197 $ 15,000 $ 14,000
Retirement Benefit Obligation $ 4,552 $ 4,745 $ 4,445 $ 3,870 $ 3,213 $ 3,021
Deferred Income Taxes $ 4,442 $ 2,395 $ 2,269 $ 2,121 $ 2,305 $ 2,322
--------------------------------------------- --------- ---------
Total Liabilities $ 16,391 $ 15,657 $ 21,054 $ 37,735 $ 35,536 $ 32,544
Stock Redeemable Under Bonus Plan $ 8,939 $ 5,932 $ 6,083 $ 6,083
Common Stock $ 1,408 $ 1,408 $ 1,408 $ 1,408 $ 1,408 $ 1,408
Accumulated Earnings $ 46,881 $ 48,024 $ 49,524 $ 44,827 $ 47,568 $ 49,758
Cumulative Translation Adjustment ($15) ($109) ($198) ($141) ($229) ($244)
Stock Redeemable Under Bonus Plan ($8,939) ($5,932) ($6,083) ($6,083)
Treasury Stock ($764) ($764) ($784) ($14,811) ($15,401) ($15,417)
--------------------------------------------- --------- ---------
Total Equity $ 47,510 $ 48,560 $ 41,010 $ 25,350 $ 27,263 $ 29,422
Total Liabilities & Shareholder's Equity $ 63,900 $ 64,217 $ 71,003 $ 69,017 $ 68,883 $ 68,050
============================================= ========= =========
47
Project Thoroughbred
===================================================================================================================================
BEST LOCK CORPORATION
VALUATION ANALYSIS
SUMMARY DATA TARGET COMPANY COMPARABLE COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE)
--------------------------- ---------------------------------------------------------------------
STOCK TICKER SYMBOL (Audited) (Adjusted) ACK EML IR
EXCHANGE WHERE TRADED NYSE AMEX NYSE
COMPANY BEST LOCK CORPORATION ARMSTRONG WORLD EASTERN CO INGERSOLL-RAND CO
INDS INC
FOOTNOTE (1) FOOTNOTE (2) FOOTNOTE (3)
-------------- ------------ -------------------
FISCAL YEAR END DATE 12/31/96 Mean Median 12/96 12/96 12/96
LTM DATE 6/30/97 3/97 3/97 3/97
- ---------------------------------------------------------- ---------------------------------------------------------------------
EARNINGS DATA (LATEST TWELVE MONTHS)
Net Sales $130,299 $ 2,173,500 $ 59,247 $ 6,737,400
Gross Income $ 63,492 $ 63,568 $ 711,100 $ 14,241 $ 1,687,900
% Margin 48.7% 49.5% 29.3% 28.9% 32.7% 24.0% 25.1%
Operating Income $ 11,486 $ 10,841 $ 319,500 $ 5,316 $ 699,500
% Margin 8.8% 8.4% 11.1% 10.3% 14.7% 9.0% 10.4%
EBITDA $ 17,053 $ 16,525 $ 444,700 $ 8,165 $ 906,200
% Margin 13.1% 12.9% 15.1% 13.6% 20.5% 13.8% 13.5%
Net Income $ 6,198 $ 5,795 $ 201,900 $ 2,153 $ 361,300
% Margin 4.8% 4.5% 6.2% 5.1% 9.3% 3.6% 5.4%
- ---------------------------------------------------------- ---------------------------------------------------------------------
CAPITALIZATION (LATEST)
Total Debt $ 24,448 $ 528,300 $ 3,290 $ 1,337,300
Preferred Equity $ 0 $ 0 $ 0 $ 0
Common Equity $ 29,422 $ 781,100 $ 30,120 $ 2,114,400
Total Capital $ 53,870 $ 1,309,400 $ 33,410 $ 3,451,700
Debt/Total Capital 0.45 0.32 0.35 0.40 0.10 0.39
COMMON SHARES OUTSTANDING (Latest) 1 40,828,000 2,764,164 108,402,000
- ---------------------------------------------------------- ---------------------------------------------------------------------
BALANCE SHEET DATA & RATIOS (LATEST)
Cash $ 1,849 $ 31,800 $ 2,168 $ 473,200
Company Value NA $ 3,494,806 $ 43,967 $ 8,221,886
Current Ratio 2.85 2.72 2.58 1.62 2.84 1.99
Tangible Book Value per Share (Latest) 294.22 19.13 10.16 8.64
Asset Turnover 1.91 1.24 1.26 0.99 1.35 1.19
Return on Average Common Equity 23.2% 16.3% 17.6% 25.8% 7.3% 18.6%
Return on Average Total Assets 9.1% 7.2% 7.1% 9.4% 5.2% 6.5%
- ---------------------------------------------------------- ---------------------------------------------------------------------
EARNINGS PER SHARE DATA
1996 $ 3,455 $ 3,569 $ 4.67 $ 0.50 $ 3.33
1995 ($4,205) $ 279 $ 3.96 $ 0.99 $ 2.55
1994 $ 2,208 $ 4,873 $ 4.60 $ 0.88 $ 2.00
1993 $ 1,800 $ 1,800 $ 2.37 $ 1.03 $ 1.59
1992 $ 2,458 $ 2,458 $ 0.53 $ 1.10 $ 1.57
5 Year Average $ 1,143 $ 2,596 3.23 0.90 2.21
3 Year Average $ 486 $ 2,907 4.41 0.79 2.63
Latest 12 Months $ 6,198 $ 5,998 4.89 0.80 3.35
1997E $ 5,300 5.69 NA 3.66
1998E $ 6,400 6.26 NA 4.09
Date of Latest 12 Months Earnings
Per Share 4/97 3/97 3/97 3/97
Date of Current Year IBES Estimate 12/97 12/97 NA 12/97
- ---------------------------------------------------------- ---------------------------------------------------------------------
PRICE/EARNINGS RATIOS
5 Year Average NA 28.1 30.7 22.8 17.2 30.7
3 Year Average NA 23.7 22.7 16.7 19.6 25.8
Latest 12 Months NA 20.3 19.8 15.0 19.4 20.3
1997E NA 17.1 18.5 13.1 NA 18.5
1998E NA 16.4 17.4 12.0 NA 16.6
- ---------------------------------------------------------- ---------------------------------------------------------------------
MARKET & DIVIDEND DATA (AS OF 6/05/97)
Price Per Share NA $ 73.44 $ 15.50 $ 67.88
52 Week High NA 75.25 16.31 68.38
52 Week Low NA 58.13 12.25 40.63
Dow Jones Industrial Average = 7,305
Enterprise Value/Revenues (LTM) NA 1.41 1.40 1.61 0.74 1.22
Enterprise Value/Operating Income (LTM) NA 12.33 11.35 10.94 8.27 11.75
Enterprise Value/EBITDA (LTM) NA 9.24 8.47 7.86 5.38 9.07
Price/Book Value (Latest) NA 4.36 4.58 3.84 1.53 7.86
Dividend Per Share (LTM) 5.42 1.60 0.46 0.80
Current Yield NA 0.02 0.02 0.02 0.03 0.01
Common Dividend Payout Ratio 0.12 0.42 0.45 0.33 0.58 0.24
- ---------------------------------------------------------- ---------------------------------------------------------------------
CASH FLOW DATA & RATIOS (FISCAL YEAR END)
Cash Flow (Net Income plus $ 11,765 $ 11,565 $ 327,100 $ 5,002 $ 568,000
Depreciation, LTM)
Cash Flow Per Share
LTM $ 11,765 $ 11,565 $ 8.07 $ 1.85 $ 5.27
1996 $ 8,919 $ 9,034 $ 7.97 $ 1.59 $ 5.21
1995 $ 700 $ 5,184 $ 7.95 $ 1.94 $ 4.24
1994 $ 6,573 $ 9,238 $ 8.53 $ 1.76 $ 3.26
3 Year Average Cash Flow Per Share $ 5,398 $ 7,818 8.15 1.76 4.24
Price/Cash Flow Per Share (LTM) NA 12.4 11.0 9.1 7.4 10.5
Price/3 Year Average Cash
Flow Per Share NA 14.0 12.5 9.0 7.7 13.1
===================================================================================================================================
===================================================================================================================================
BEST LOCK CORPORATION Page 1
VALUATION ANALYSIS 06/09/97
SUMMARY DATA COMPARABLE COMPANIES 09:22 AM
($ IN THOUSANDS, EXCEPT PER SHARE) --------------------------
Analyst: SSH
---------------------------------------------------------------------------------------------------
STOCK TICKER SYMBOL KNAP MAS SWK
EXCHANGE WHERE TRADED NASDAQ-NMS NYSE NYSE
COMPANY KNAPE & VOGT MFG CO MASCO CORP STANLEY WORKS
FOOTNOTE (4) FOOTNOTE (5) FOOTNOTE (6)
------------------- --------------- --------------
FISCAL YEAR END DATE 6/96 12/96 12/96
LTM DATE 3/97 3/97 3/97
- ------------------------------------------------------------------------------------------------------
EARNINGS DATA (LATEST TWELVE MONTHS)
Net Sales $ 172,948 $ 3,327,000 $ 2,682,100
Gross Income $ 42,308 $ 1,219,760 $ 884,500
% Margin 24.5% 36.7% 33.0%
Operating Income $ 13,664 $ 480,500 $ 271,800
% Margin 7.9% 14.4% 10.1%
EBITDA $ 21,436 $ 580,180 $ 344,900
% Margin 12.4% 17.4% 12.9%
Net Income $ 7,783 $ 316,700 $ 129,880
% Margin 4.5% 9.5% 4.8%
- ------------------------------------------------------------------------------------------------------
CAPITALIZATION (LATEST)
Total Debt $ 33,800 $ 1,222,770 $ 352,600
Preferred Equity $ 0 $ 0 $ 0
Common Equity $ 72,061 $ 1,886,590 $ 791,900
Total Capital $ 105,861 $ 3,109,360 $ 1,144,500
Debt/Total Capital 0.32 0.39 0.31
COMMON SHARES OUTSTANDING (Latest) 5,890,000 161,240,000 88,931,000
- ------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA & RATIOS (LATEST)
Cash $ 304 $ 327,590 $ 76,400
Company Value $ 133,626 $ 8,443,228 $ 4,250,304
Current Ratio 4.72 2.84 2.32
Tangible Book Value per Share (Latest) 9.02 8.81 7.79
Asset Turnover 1.34 0.90 1.64
Return on Average Common Equity 11.0% 18.1% 17.1%
Return on Average Total Assets 6.0% 8.5% 7.8%
- ------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE DATA
1996 $ 1.01 $ 1.84 $ 1.41
1995 $ 1.29 $ 1.25 $ 1.25
1994 $ 1.24 $ 1.22 $ 1.40
1993 NA $ 1.45 $ 1.03
1992 NA $ 1.21 $ 1.08
5 Year Average 1.18 1.39 1.23
3 Year Average 1.18 1.44 1.35
Latest 12 Months 1.33 1.97 1.46
1997E 1.40 2.25 2.11
1998E NA 2.57 2.39
Date of Latest 12 Months Earnings
Per Share 3/97 3/97 3/97
Date of Current Year IBES Estimate 6/97 12/97 12/97
- ------------------------------------------------------------------------------------------------------
PRICE/EARNINGS RATIOS
5 Year Average NA 33.6 36.2
3 Year Average 14.4 32.6 33.0
Latest 12 Months 12.8 23.8 30.6
1997E 12.1 20.8 21.2
1998E NA 18.2 18.7
- ------------------------------------------------------------------------------------------------------
MARKET & DIVIDEND DATA (AS OF 6/05/97)
Price Per Share $ 17.00 $ 46.81 $ 44.69
52 Week High 18.50 48.25 47.38
52 Week Low 13.50 28.63 23.63
Dow Jones Industrial Average = 7,305
Enterprise Value/Revenues (LTM) 0.77 2.54 1.58
Enterprise Value/Operating Income (LTM) 9.78 17.57 15.64
Enterprise Value/EBITDA (LTM) 6.23 14.55 12.32
Price/Book Value (Latest) 1.88 5.31 5.73
Dividend Per Share (LTM) 0.66 0.78 0.74
Current Yield 0.04 0.02 0.02
Common Dividend Payout Ratio 0.50 0.40 0.50
- ------------------------------------------------------------------------------------------------------
CASH FLOW DATA & RATIOS (FISCAL YEAR END)
Cash Flow (Net Income plus $ 15,555 $ 416,380 $ 202,980
Depreciation, LTM)
Cash Flow Per Share
LTM $ 2.64 $ 2.59 $ 2.29
1996 $ 2.26 $ 2.46 $ 2.25
1995 $ 2.46 $ 1.82 $ 2.16
1994 $ 2.28 $ 1.85 $ 2.31
3 Year Average Cash Flow Per Share 2.33 2.04 2.24
Price/Cash Flow Per Share (LTM) 6.0 14.8 17.6
Price/3 Year Average Cash
Flow Per Share 6.8 18.7 17.9
===================================================================================================================================
48
Project Thoroughbred
===================================================================================================================================
BEST LOCK CORPORATION
Historical Earnings Data TARGET COMPANY COMPARABLE COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE)
========================== =====================================================================
ARMSTRONG WORLD
INDS INC EASTERN CO INGERSOLL-RAND CO
BEST LOCK CORPORATION FOOTNOTE (1) FOOTNOTE (2) FOOTNOTE (3)
-------------- -------------- -----------------
FISCAL YEAR END DATE 12/96 Mean Median 12/96 12/96 12/96
LTM DATE 4/30/97 3/97 3/97 3/97
- ---------------------------------------------------------- ---------------------------------------------------------------------
REVENUES
LTM $130,299 $ 2,173,500 $ 59,247 $ 6,737,400
1996 $122,359 $ 2,156,400 $ 57,854 $ 6,702,900
1995 $117,706 $ 2,325,000 $ 59,352 $ 5,729,000
1994 $103,955 $ 2,226,000 $ 58,381 $ 4,507,469
1993 $ 98,521 $ 2,075,700 $ 52,546 $ 4,021,071
1992 $ 84,865 $ 2,111,400 $ 60,060 $ 3,783,787
5 Year Compound Annual Growth Rate 9.6% 7.0% 7.3% 0.5% -0.9% 15.4%
3 Year Compound Annual Growth Rate 8.5% 6.8% 4.5% -1.6% -0.5% 21.9%
- ---------------------------------------------------------- ---------------------------------------------------------------------
GROSS INCOME
LTM $ 63,492 $ 64,492 $ 711,100 $ 14,241 $ 1,687,900
1996 $ 58,352 $ 59,352 $ 696,500 $ 12,681 $ 1,673,000
1995 $ 48,305 $ 52,205 $ 743,900 $ 14,115 $ 1,418,800
1994 $ 49,844 $ 49,844 $ 742,100 $ 13,641 $ 1,130,400
1993 $ 45,329 $ 45,329 $ 622,000 $ 13,304 $ 1,004,400
1992 $ 35,790 $ 35,790 $ 575,300 $ 13,981 $ 901,900
5 Year Compound Annual Growth Rate 13.0% 13.5% 7.0% 5.4% 5.4% 0.5% 17.0%
3 Year Compound Annual Growth Rate 8.2% 9.1% 6.9% 4.6% -2.1% 2.2% 22.2%
- ---------------------------------------------------------- ---------------------------------------------------------------------
OPERATING INCOME
LTM $ 11,486 $ 11,141 $ 319,500 $ 5,316 $ 699,500
1996 $ 6,970 $ 7,170 $ 302,400 $ 4,046 $ 683,500
1995 ($6,074) $ 926 $ 293,100 $ 4,347 $ 497,000
1994 $ 2,778 $ 5,678 $ 294,600 $ 3,963 $ 377,000
1993 $ 1,870 $ 1,870 $ 187,800 NA $ 296,514
1992 $ 3,734 $ 3,734 $ 128,900 NA $ 255,239
5 Year Compound Annual Growth Rate 16.9% 17.7% 19.4% 23.8% 23.8% NM 27.9%
3 Year Compound Annual Growth Rate 58.4% 12.4% 5.9% 1.2% 1.3% 1.0% 34.6%
- ---------------------------------------------------------- ---------------------------------------------------------------------
EBITDA
LTM $ 17,053 $ 16,708 $ 444,700 $ 8,165 $ 906,200
1996 $ 12,435 $ 12,635 $ 426,100 $ 6,999 $ 886,100
1995 ($1,170) $ 5,831 $ 429,200 $ 6,975 $ 676,400
1994 $ 7,143 $ 10,043 $ 428,000 $ 6,416 $ 509,540
1993 $ 5,927 $ 5,928 $ 317,800 NA $ 420,035
1992 $ 7,353 $ 7,353 $ 265,800 NA $ 371,818
5 Year Compound Annual Growth Rate 14.0% 14.5% 13.8% 12.5% 12.5% NM 24.2%
3 Year Compound Annual Growth Rate 31.9% 12.2% 6.0% 1.2% -0.2% 4.4% 31.9%
- ---------------------------------------------------------- ---------------------------------------------------------------------
NET INCOME
LTM $ 6,198 $ 5,998 $ 201,900 $ 2,153 $ 361,300
1996 $ 3,455 $ 3,569 $ 192,700 $ 1,336 $ 358,000
1995 ($4,205) $ 279 $ 163,000 $ 2,747 $ 270,300
1994 $ 2,208 $ 4,873 $ 187,200 $ 2,437 $ 211,100
1993 $ 1,800 $ 1,800 $ 102,580 $ 2,830 $ 166,500
1992 $ 2,458 $ 2,458 $ 33,080 $ 3,037 $ 163,600
5 Year Compound Annual Growth Rate 8.9% 9.8% 16.2% 14.0% 55.4% -18.6% 21.6%
3 Year Compound Annual Growth Rate 25.1% -14.4% 4.4% 0.8% 1.5% -26.0% 30.2%
- ---------------------------------------------------------- ---------------------------------------------------------------------
GROSS MARGIN
LTM 48.7% 49.5% 29.3% 28.9% 32.7% 24.0% 25.1%
1996 47.7% 48.5% 28.7% 28.6% 32.3% 21.9% 25.0%
1995 41.0% 44.4% 29.0% 28.4% 32.0% 23.8% 24.8%
1994 47.9% 47.9% 30.0% 29.5% 33.3% 23.4% 25.1%
1993 46.0% 46.0% 28.1% 28.5% 30.0% 25.3% 25.0%
1992 42.2% 42.2% 27.2% 27.2% 27.2% 23.3% 23.8%
- ---------------------------------------------------------- ---------------------------------------------------------------------
OPERATING MARGIN
LTM 8.8% 8.6% 11.1% 10.3% 14.7% 9.0% 10.4%
1996 5.7% 5.9% 10.5% 10.1% 14.0% 7.0% 10.2%
1995 NM 0.8% 10.1% 9.1% 12.6% 7.3% 8.7%
1994 2.7% 5.5% 10.8% 9.8% 13.2% 6.8% 8.4%
1993 1.9% 1.9% 8.5% 9.0% 9.0% NA 7.4%
1992 4.4% 4.4% 7.4% 6.7% 6.1% NA 6.7%
- ---------------------------------------------------------- ---------------------------------------------------------------------
EBITDA MARGIN
LTM 13.1% 12.8% 15.1% 13.6% 20.5% 13.8% 13.5%
1996 10.2% 10.3% 14.5% 13.0% 19.8% 12.1% 13.2%
1995 NM 5.0% 14.0% 12.6% 18.5% 11.8% 11.8%
1994 6.9% 9.7% 15.0% 13.5% 19.2% 11.0% 11.3%
1993 6.0% 6.0% 12.8% 12.7% 15.3% NA 10.4%
1992 8.7% 8.7% 11.8% 12.6% 12.6% NA 9.8%
- ---------------------------------------------------------- ---------------------------------------------------------------------
NET MARGIN
LTM 4.8% 4.6% 6.2% 5.1% 9.3% 3.6% 5.4%
1996 2.8% 2.9% 5.7% 5.0% 8.9% 2.3% 5.3%
1995 NM 0.2% 5.3% 4.7% 7.0% 4.6% 4.7%
1994 2.1% 4.7% 5.7% 5.0% 8.4% 4.2% 4.7%
1993 1.8% 1.8% 4.6% 4.5% 4.9% 5.4% 4.1%
1992 2.9% 2.9% 3.8% 4.4% 1.6% 5.1% 4.3%
===================================================================================================================================
===================================================================================================================================
BEST LOCK CORPORATION Page 2
HISTORICAL EARNINGS DATA 06/09/97
($ IN THOUSANDS, EXCEPT PER SHARE) COMPARABLE COMPANIES 09:22 AM
======================================================================== --------------------------
Analyst: SSH
--------------------------
KNAPE & VOGT MFG CO MASCO CORP STANLEY WORKS
FOOTNOTE (4) FOOTNOTE (5) FOOTNOTE (6)
-------------------- ------------- -------------
FISCAL YEAR END DATE 6/96 12/96 12/96
LTM DATE 3/97 3/97 3/97
- ------------------------------------------------------------------------------------------------------
REVENUES
LTM $ 172,948 $ 3,327,000 $ 2,682,100
1996 $ 163,012 $ 3,237,000 $ 2,670,800
1995 $ 168,191 $ 2,927,000 $ 2,624,300
1994 $ 145,505 $ 2,583,000 $ 2,510,900
1993 $ 114,011 $ 2,243,000 $ 2,273,100
1992 $ 111,816 $ 2,042,000 $ 2,217,700
5 Year Compound Annual Growth Rate 9.9% 12.2% 4.8%
3 Year Compound Annual Growth Rate 5.8% 11.9% 3.1%
- ------------------------------------------------------------------------------------------------------
GROSS INCOME
LTM $ 42,308 $ 1,219,760 $ 884,500
1996 $ 38,603 $ 1,188,930 $ 875,300
1995 $ 40,894 $ 1,080,670 $ 838,600
1994 $ 37,803 $ 1,008,900 $ 826,900
1993 $ 32,528 NA $ 720,100
1992 $ 31,767 NA $ 735,800
5 Year Compound Annual Growth Rate 7.4% NM 4.7%
3 Year Compound Annual Growth Rate 5.8% 10.0% 3.4%
- ------------------------------------------------------------------------------------------------------
OPERATING INCOME
LTM $ 13,664 $ 480,500 $ 271,800
1996 $ 11,165 $ 480,500 $ 266,800
1995 $ 14,090 $ 402,340 $ 251,900
1994 $ 13,067 $ 430,750 $ 266,500
1993 NA NA $ 207,800
1992 NA NA $ 208,000
5 Year Compound Annual Growth Rate NM NM 6.4%
3 Year Compound Annual Growth Rate -7.6% 5.6% 0.1%
- ------------------------------------------------------------------------------------------------------
EBITDA
LTM $ 21,436 $ 580,180 $ 344,900
1996 $ 18,511 $ 580,180 $ 341,500
1995 $ 20,988 $ 492,430 $ 333,100
1994 $ 19,154 $ 551,380 $ 348,300
1993 NA NA $ 288,500
1992 NA NA $ 286,500
5 Year Compound Annual Growth Rate NM NM 4.5%
3 Year Compound Annual Growth Rate -1.7% 2.6% -1.0%
- ------------------------------------------------------------------------------------------------------
NET INCOME
LTM $ 7,783 $ 316,700 $ 129,880
1996 $ 5,928 $ 295,200 $ 125,580
1995 $ 7,591 $ 200,050 $ 110,400
1994 $ 7,314 $ 172,710 $ 125,300
1993 NA NA $ 92,600
1992 NA NA $ 98,100
5 Year Compound Annual Growth Rate NM NM 6.4%
3 Year Compound Annual Growth Rate -10.0% 30.7% 0.1%
- ------------------------------------------------------------------------------------------------------
GROSS MARGIN
LTM 24.5% 36.7% 33.0%
1996 23.7% 36.7% 32.8%
1995 24.3% 36.9% 32.0%
1994 26.0% 39.1% 32.9%
1993 28.5% NA 31.7%
1992 28.4% NA 33.2%
- ------------------------------------------------------------------------------------------------------
OPERATING MARGIN
LTM 7.9% 14.4% 10.1%
1996 6.8% 14.8% 10.0%
1995 8.4% 13.7% 9.6%
1994 9.0% 16.7% 10.6%
1993 NA NA 9.1%
1992 NA NA 9.4%
- ------------------------------------------------------------------------------------------------------
EBITDA MARGIN
LTM 12.4% 17.4% 12.9%
1996 11.4% 17.9% 12.8%
1995 12.5% 16.8% 12.7%
1994 13.2% 21.3% 13.9%
1993 NA NA 12.7%
1992 NA NA 12.9%
- ------------------------------------------------------------------------------------------------------
NET MARGIN
LTM 4.5% 9.5% 4.8%
1996 3.6% 9.1% 4.7%
1995 4.5% 6.8% 4.2%
1994 5.0% 6.7% 5.0%
1993 NA NA 4.1%
1992 NA NA 4.4%
===================================================================================================================================
49
Project Thoroughbred
===================================================================================================================================
BEST LOCK CORPORATION
Historical Earnings Data TARGET COMPANY COMPARABLE COMPANIES
($ IN THOUSANDS, EXCEPT PER SHARE)
========================== =====================================================================
ARMSTRONG WORLD
INDS INC EASTERN CO INGERSOLL-RAND CO
BEST LOCK CORPORATION FOOTNOTE (1) FOOTNOTE (2) FOOTNOTE (3)
-------------- ------------ -----------------
FISCAL YEAR END DATE 12/96 Mean Median 12/96 12/96 12/96
LTM DATE 6/30/97 3/97 3/97 3/97
- ---------------------------------------------------------- ---------------------------------------------------------------------
STOCKHOLDERS' EQUITY (RESTATED)
Latest Quarter $ 29,422 $ 781,100 $ 30,120 $ 2,114,400
Average LTM $ 26,737 $ 773,550 $ 29,546 $ 1,978,450
1996 $ 27,263 $ 790,000 $ 29,355 $ 2,090,800
1995 $ 25,350 $ 775,000 $ 29,807 $ 1,795,500
1994 $ 41,010 $ 735,100 $ 29,843 $ 1,531,342
1993 $ 48,560 $ 569,500 $ 28,383 $ 1,349,825
1992 $ 47,510 $ 569,200 $ 26,926 $ 1,293,375
- ---------------------------------------------------------- ---------------------------------------------------------------------
RETURN ON AVERAGE COMMON EQUITY
LTM 23.2% 22.4% 16.1% 17.3% 25.5% 7.3% 18.3%
1996 13.1% 13.6% 14.7% 16.7% 23.5% 4.5% 18.4%
1995 NM 0.8% 13.5% 12.9% 19.1% 9.2% 16.2%
1994 4.9% 10.9% 14.3% 12.9% 25.8% 8.4% 14.7%
1993 3.7% 3.7% 12.7% 13.0% 14.6% 10.2% 12.6%
- ---------------------------------------------------------- ---------------------------------------------------------------------
TOTAL ASSETS (RESTATED)
LATEST QUARTER $ 68,050 $ 2,191,000 $ 43,988 $ 5,660,500
1996 $ 68,883 $ 2,135,600 $ 42,492 $ 5,621,600
1995 $ 69,017 $ 2,149,800 $ 41,090 $ 5,563,297
1994 $ 71,003 $ 2,159,000 $ 41,883 $ 3,596,921
1993 $ 64,217 $ 1,869,200 $ 40,459 $ 3,375,332
1992 $ 63,900 $ 1,944,300 $ 40,203 $ 3,387,552
INTANGIBLE ASSETS (Fiscal Year End) 0 0 2,045 1,178,000
- ---------------------------------------------------------- ---------------------------------------------------------------------
COMMON SHARES ISSUED AND OUTSTANDING
Latest Quarter 1 40,828 2,764 108,402
1996 1 41,164 2,716 109,482
- ---------------------------------------------------------- ---------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING
Latest Quarter 1 41,300 2,723 108,200
LTM 1 40,550 2,705 107,800
1996 1 39,700 2,699 107,500
1995 1 37,600 2,772 106,069
1994 1 37,600 2,772 105,458
- ---------------------------------------------------------- ---------------------------------------------------------------------
DEPRECIATION (FROM CASH FLOW STATEMENT)
LTM $ 5,567 $ 125,200 $ 2,850 $ 206,700
1996 $ 5,465 $ 123,700 $ 2,953 $ 202,600
1995 $ 4,905 $ 136,100 $ 2,628 $ 179,400
1994 $ 4,365 $ 133,400 $ 2,453 $ 132,540
1993 $ 4,058 $ 130,000 $ 2,322 $ 123,521
1992 $ 3,619 $ 136,900 $ 2,237 $ 116,579
- ---------------------------------------------------------- ---------------------------------------------------------------------
PREFERRED DIVIDENDS
LTM $ 0 $ 4,400 $ 0 $ 0
1996 $ 0 $ 8,800 $ 0 $ 0
1995 $ 0 $ 18,800 $ 0 $ 0
1994 $ 0 $ 19,000 $ 0 $ 0
1993 $ 0 $ 19,200 $ 0 $ 0
- ---------------------------------------------------------- ---------------------------------------------------------------------
EXTRA INFORMATION
Date of Latest Quarterly Information 4/97 3/97 3/97 3/97
Primary Business Segment FLOOR COVERING SECURITY STANDARD
PROCUCTS MACHINERY
SIC Code (3089, 2891) (3429, 3325) (3563, 3531)
SIC Code Definition PLASTICS PRODUCTS, CUTLERY,HAND GENERAL
NEC TOOLS,GEN HRDWR INDUSTRIAL
MACH & EQ
- -----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
BEST LOCK CORPORATION Page 2
HISTORICAL EARNINGS DATA 06/09/97
($ IN THOUSANDS, EXCEPT PER SHARE) COMPARABLE COMPANIES 09:22 AM
======================================================================== --------------------------
Analyst: SSH
--------------------------
KNAPE & VOGT MFG CO MASCO CORP STANLEY WORKS
FOOTNOTE (4) FOOTNOTE (5) FOOTNOTE (6)
FISCAL YEAR END DATE 6/96 12/96 12/96
LTM DATE 3/97 3/97 3/97
- ------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (RESTATED)
Latest Quarter $ 72,061 $ 1,886,590 $ 791,900
Average LTM $ 71,340 $ 1,785,380 $ 767,600
1996 $ 69,174 $ 1,839,810 $ 780,100
1995 $ 72,714 $ 1,655,430 $ 734,600
1994 $ 67,974 $ 2,112,680 $ 744,200
1993 $ 63,876 $ 1,998,430 $ 680,900
1992 $ 62,067 $ 1,886,880 $ 696,300
- ------------------------------------------------------------------------------------------------------
RETURN ON AVERAGE COMMON EQUITY
LTM 10.9% 17.7% 16.9%
1996 8.4% 16.9% 16.6%
1995 10.8% 10.6% 14.9%
1994 11.1% 8.4% 17.6%
1993 NM NM 13.4%
- ------------------------------------------------------------------------------------------------------
TOTAL ASSETS (RESTATED)
LATEST QUARTER $ 129,445 $ 3,684,130 $ 1,633,500
1996 $ 129,225 $ 3,701,650 $ 1,659,600
1995 $ 131,434 $ 3,778,630 $ 1,670,000
1994 $ 133,656 $ 4,390,039 $ 1,701,000
1993 $ 95,173 $ 4,021,060 $ 1,576,900
1992 $ 87,236 $ 3,986,560 $ 1,607,600
INTANGIBLE ASSETS (Fiscal Year End) 18,916 466,360 98,900
- ------------------------------------------------------------------------------------------------------
COMMON SHARES ISSUED AND OUTSTANDING
Latest Quarter 5,890 161,240 88,931
1996 5,881 160,870 88,720
- ------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING
Latest Quarter 5,901 161,000 88,755
LTM 5,889 160,750 88,807
1996 5,883 160,600 88,824
1995 5,891 159,600 88,720
1994 5,878 158,800 89,550
- ------------------------------------------------------------------------------------------------------
DEPRECIATION (FROM CASH FLOW STATEMENT)
LTM $ 7,772 (7)$99,680 $ 73,100
1996 $ 7,345 $ 99,680 $ 74,700
1995 $ 6,898 $ 90,090 $ 81,200
1994 $ 6,087 $ 120,630 $ 81,800
1993 NA $ 115,990 $ 80,700
1992 NA $ 114,450 $ 78,500
- ------------------------------------------------------------------------------------------------------
PREFERRED DIVIDENDS
LTM $ 0 $ 0 $ 0
1996 $ 0 $ 0 $ 0
1995 $ 0 $ 0 $ 0
1994 $ 0 $ 0 $ 0
1993 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------
EXTRA INFORMATION
Date of Latest Quarterly Information 3/97 3/97 3/97
Primary Business Segment SPECIALTY HARDWARE KITCHEN AND BATH TOOLS
PRODUCTS PRODUCTS
SIC Code (2540,3429) (2434, 3432) (3423, 3546)
SIC Code Definition PARTITIONS,SHELVING, HEATING EQ, CUTLERY,HAND
LOCKERS PLUMBING FIXTURE TOOLS, GEN HRDWR
- ------------------------------------------------------------------------------------------------------
FOOTNOTES & ADJUSTMENTS
(1) Historical financial statement are adjusted to represent continuing
operations only. Presented net of unusual and/or non recurring charges,
marginal tax rate of 40% used on adjustments for net income. Adjustments
include 1996 - $46.5mm, 1995 - $249.0mm, 1993 - $89.3mm, 1992 - $160.8mm.
(2) Historical financial statement are adjusted to represent continuing
operations only. Presented net of 1996 defense costs ($456 OK or $0
17/Share after tax).
(3) Presented net of unusual and/or non recurring charges, marginal tax rate
of 40% used on adjustments for net income. Adjustments include 1993-$5 OMM,
1992-$80 OMM.
(4) Historical financial statement are adjusted to represent continuing
operations only. Presented net of unusual costs ($2.825MM or $0.48/Share
after tax for year ended 6/96, $0.246MM or $0.04/Share after tax for quarter
ended 3/97).
(5) Historical financial statement are adjusted to represent continuing
operations only, and to reflect pooling of interests.
(6) Presented net of unusual and/or non recurring charges; marginal tax rate of
40% used on adjustments for net income. Adjustments include before tax
LTM-$43.2MM, 1996-$47.8MM, 1995-$85.5MM. Marginal tax rate of 40% used for
net income adjustments.
(7) estimated.
===============================================================================
50
- ---------------------------------------------------------------------------------------------------------
COMPANY NAME: PROJECT THOROUGHBRED
COMPARABLE PUBLIC COMPANY ANALYSIS:
- ---------------------------------------------------------------------------------------------------------
VALUATION PURPOSE: CORPOATE INFORMATION
VALUATION DATE: 6/5/97
- ---------------------------------------------------------- ----------------------------
COMPARABLE GROUP BLC (1) INDICATED VALUE
-----------------------------------------------------------------------
INPUT LOW MEDIAN HIGH 6/5/97 LOW MEDIAN HIGH
- ---------------------------------------------------------------------------------------------------------
PRICE/EARNINGS
5 Year Avg. 17.2X 30.7X 36.2X $2,596 $44,651 $79,697 $93,975
3 Year Avg. 14.4X 22.7X 33.0X $2,907 $41,861 $65,989 $95,931
Last Twelve Months (LTM) 12.8X 19.8X 30.6X $5,998 $76,774 $118,760 $183,539
1997 Est. 12.1X 18.9X 21.5X $5,300 $64,130 $100,170 $113,950
1998 Est. 11.7X 17.8X 18.6X $6,400 $74,880 $113,920 $119,040
PRICE/BOOK VALUE 1.5X 4.6X 7.9X $29,422 $45,016 $135,341 $231,257
PRICE/CASHFLOW 6.4X 11.0X 19.6X $11,362 $72,717 $124,982 $222,695
LTM 7.3X 12.5X 22.9X $7,818 $57,071 $97,725 $179,032
3 Yr. Avg.
ENTERPRISE VALUE/REVENUES (2)
LTM 0.7X 1.4X 2.5X $130,299 $73,822 $159,820 $308,360
ENTERPRISE VALUE/ OP INCOME (2)
LTM 8.3X 11.4X 17.6X $11,141 $69,871 $103,851 $173,483
ENTERPRISE VALUE/EBITDA (2) 5.4X 8.5X 14.6X $16,708 $67,624 $119,419 $221,338
LTM
DIVIDEND CAPACITY
Yield 2% 2% 4%
Payout Ratio 24% 45% 58% $5,998 $71,976 $134,955 $86,971
----------------------------
(1) BLC has been adjusted for extraordinary
and non-recurring income and expenses MEAN: $63,366 $112,886 $169,131
(2) Enterprise Value = Market Cap + Pref MEDIAN: $68,748 $116,340 $176,257
Equity + Debt - Cash
Indicated value is enterprise value minus
pref stock minus debt plus cash ----------------------------
INDICATED VALUATION: $60,000 to $65,000
Debt - Cash on 4/30/97 = $ 22,355
PREMIUM FOR CONTROL: 15%
ADJUSTED VALUE: $69,000 $74,750
- ---------------------------------------------------------------------------------------------------------
51
- ----------------------------------------------------------------------------------------------------------------------------
COMPANY NAME: PROJECT THOROUGHBRED
COMPARABLE PUBLIC COMPANY ANALYSIS:
VALUATION PURPOSE: CORPORATE INFORMATION
VALUATION DATE: 6/5/97
MULTIPLE OF: INDICATED MULTIPLE COMPARISON
MIDPOINT OF COMPARABLE COMPANY GROUP
UNDISCOUNTED VALUATION RANGE MEAN MEDIAN
$60,000.00
5 Yr. Avg. Earnings 24.1X 21.6X 21.3X
3 Yr. Avg. Earnings 21.5X 19.8X 18.0X
LTM 10.4X 17.1X 15.8X
1997 Estimate 11.8X 14.4X 13.6X
1998 Estimate 9.8X 13.5X 13.7X
Book Value 2.1X 3.6X 3.9X
LTM Cash Flow 5.5X 10.4X 8.7X
3 Yr. Avg Cash Flow 8.0X 11.6X 9.8X
Enterprise Value/Revs 0.7X 1.2X 1.2X
Enterprise Value/Op Income 7.6X 10.6X 9.5X
Enterprise Value/EBITDA 5.1X 7.9X 7.0X
Yield 0.90% 3.0% 2.0%
Payout Ratio 11.5% 42.0% 45.0%
- ----------------------------------------------------------------------------------------------------------------------------
52
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY NAME: PROJECT THOROUGHBRED
COMPARABLE PUBLIC COMPANY ANALYSIS:
- ------------------------------------------------------------------------------------------------------------------------------------
VALUATION PURPOSE: Corporate Information
VALUATION DATE: 6/5/97
- ------------------------------------------------------------------------------------------------------------------------------------
| | Selected Comparables | BLC (1) | Indicated Value
| |---------------------------------|------------|------------------------------------------
INPUT | | KNAP EML | 6/5/97 | KNAP EML
- ------------------------------------------------------------------------------------------------------------------------------------
PRICE/EARNINGS
5 Year Avg. NA 15.1X $2,596 #VALUE! $39,200
3 Year Avg. 13.3X 17.2X $2,907 $38,663 $50,000
Last Twelve Months (LTM) 11.8X 17.0X $5,679 $67,012 $96,543
1997 Est. 11.3X NA $5,300 $59,890 #VALUE!
1998 Est. NA NA $6,400 #VALUE! #VALUE!
PRICE/BOOK VALUE 1.7X 1.3X $27,263 $47,438 $36,532
PRICE/CASHFLOW
LTM 8.7X 7.4X $11,479 $99,867 $84,945
3 Yr. Avg. 9.8X 7.7X $7,500 $73,500 $57,750
ENTERPRISE VALUE/REVENUES(2)
LTM 0.7X 0.7X $128,312 $71,313 $61,048
ENTERPRISE VALUE/ OP INCOME(2)
LTM 9.2X 7.3X $10,841 $77,816 $56,784
ENTERPRISE VALUE/EBITDA (2)
LTM 5.9X 4.8X $16,525 $74,977 $56,139
DIVIDEND CAPACITY
Yield 4% 3%
Payout Ratio 50% 58% $5,679 $70,988 $109,794
------- --------
(1) BLC has been adjusted for non-recurring and extraordinary income and expenses MEAN: $68,146 $64,873
(2) Enterprise Value = Market Cap + Pref Equity + Debt - Cash MEDIAN: $71,150 $57,267
Indicated value is enterprise value minus pref stock minus debt plus cash
Debt - Cash on 4/30/97 = $22,355
------------------------------------
INDICATED VALUATION: $58,000 to $65,000
Premium for Control: 15%
Adjusted Value: $66,700 $74,750
- ------------------------------------------------------------------------------------------------------------------------------------
53
- ------------------------------------------------------------------------------------------------------------------------------
COMPANY NAME: PROJECT THOROUGHBRED
COMPARABLE PUBLIC COMPANY ANALYSIS:
VALUATION PURPOSE: CORPORATE INFORMATION
VALUATION DATE: 6/5/97
INDICATED MULTIPLE COMPARISON
MIDPOINT OF SELECTED COMPARABLES
MULTIPLE OF: UNDISCOUNTED VALUATION RANGE KNAP EML
$61,500.00
5 Yr. Avg. Earnings 23.7X NA 15.1X
3 Yr. Avg. Earnings 21.2X 13.3X 17.2X
LTM 10.8X 11.8X 17.0X
1997 Estimate 11.6X 11.3X NA
1998 Estimate 9.6X NA NA
Book Value 2.3X 1.7X 1.3X
LTM Cash Flow 5.4X 8.7X 7.4X
3 Yr. Avg Cash Flow 8.2X 9.8X 7.7X
Enterprise Value/Revs 0.7X 0.7X 0.7X
Enterprise Value/Op Income 7.7X 9.2X 7.3X
Enterprise Value/EBITDA 5.1X 5.9X 4.8X
Yield 0.90% 4% 3%
Payout Ratio 11.5% 50% 58%
- ------------------------------------------------------------------------------------------------------------------------------
54
Project Thoroughbred
Selected Transaction Analysis
All Numbers in 000's, except per share amount
DATE OF
LATEST
FOOT DATE DATE TARGET BUSINESS FINANCIAL
NOTES ANNOUNCED EFFECTIVE TARGET NAME DESCRIPTION ACQUIROR NAME STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
(1) 12/16/96 1/27/97 Eljer Industries Manufacture Zurn Industries 9/29/96
plumbing fixtures
1/8/96 5/31/96 Medalist Industries Inc. Mfr screws, bolts Illinois Tools 12/31/95
Works Inc
(2) 9/26/95 1/3/96 Larizza Industries Inc. Mnfr vehicle Collins & Aikman 9/30/95
components Corp.
9/12/95 10/20/95 Elco Industries Mfr fasteners, Textron 6/30/95
hardware
(3) 8/29/95 9/29/95 Amercian Consumer Mfr consumer Vista 2000 Inc. 7/1/95
Products, Inc. hardware products
(4) 10/26/94 3/31/95 RB&W Corp Mfr wholesale Park-Ohio 9/30/94
fasteners Industries Inc.
(5) 2/11/94 5/20/94 Bettis Corp Mnfr fluid power Shareholders of 12/31/93
valve cntrls Galveston Houston
1/3/94 4/27/94 Mark Controls Corp Mnfr valves, bldg Crane Co. 12/31/93
control systms
PER LATEST LTM LMT
SHARE AMOUNT REPORTED LTM TARGET TARGET
NUMBER PRICE PAID FOR AMOUNT ENTERPRISE TARGET OPERATING NET
OF SHARES PAID EQUITY OF DEBT CASH VALUE NET SALES INCOME INCOME
- --------------------------------------------------------------------------------------------------------------------
7,915 $24.00 $189,961 $85,395 $21,325 $254,031 $393,533 $30,563 $14,085
3,898 $14.50 $56,525 $36,393 $434 $92,484 $126,016 $5,752 $1,729
22,088 $6.50 $143,573 $34,742 $837 $177,478 $196,954 $20,874 $13,199
5,137 $36.00 $184,923 $41,860 $3,110 $223,673 $249,300 $19,100 $10,300
2,598 $5.30 $13,772 $24,713 $103 $38,382 $107,313 $3,424 ($480)
6,016 $8.84 $53,208 $29,976 $719 $82,465 $163,550 $6,243 $1,332
8,445 $2.82 $23,799 $5,895 $504 $29,190 $52,699 $7,133 $3,737
5,038 $19.50 $98,247 $31,640 $4,027 $125,860 $87,789 $5,706 $3,112
EQUITY EQUITY
TARGET ENTERPRISE VALUE VALUE
TANGIBLE ENTERPRISE VALUE/ PAID/ PAID/
BOOK VALUE/NET OPERATING NET BOOK
VALUE SALES INCOME INCOME VALUE
- -----------------------------------------------------------------------------------
($33,953) 0.6 x 8.3 x 13.5 x NM
$11,006 0.7 x 16.1 x 32.7 x 5.1 x
$14,465 0.9 x 8.5 x 10.9 x 9.9 x
$64,178 0.9 x 11.7 x 18.0 x 2.9 x
$17,568 0.4 x 11.2 x NM 0.8 x
$23,431 0.5 x 13.2 x 39.9 x 2.3 x
$14,604 0.6 x 4.1 x 6.4 x 1.6 x
$21,738 1.4 x 22.1 x 31.6 x 4.5 x
- -----------------------------------------------------------------------------------
Mean: 0.8 x 11.9 x 21.8 x 3.9 x
Median: 0.7 x 11.5 x 18.0 x 2.9 x
===================================================================================
(1) LTM has been adjusted for Litigation settlement benefit of $1.28MM,
and unusual charge of $3.45MM; marginal tax rate of 40% was used for net
income and tangible equity adjustment.
(2) Net Income has been presented for continuing operations only.
(3) LTM has been adjusted for loss on sale of Sharon Finance Division
totaling $2.428MM before tax; marginal tax rate of 40% was used for net
income and tangible equity adjustment.
(4) LTM has been adjusted for "special charge" benefit in quarter 4 of
1993 for $0.456MM before tax, benefit was marginally taxed at 40% for net
income and tangible equity adjustment. Price paid per share calculated from
exchange ratio agreed, using Park-Ohio's stock price close on 10/25/94.
(5) Price paid per share calculated from exchange ratio agreed, using
Galveston-Houston Co's stock price close on 2/10/94
55
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY NAME: PROJECT THOROUGHBRED
MERGERS AND ACQUISITIONS ANALYSIS
VALUATION PURPOSE: Equity Value
VALUATION DATE: 6/5/97
COMPARABLE GROUP BLC(1) INDICATED VALUE
INPUT LOW MEDIAN HIGH 6/5/97 LOW MEDIAN HIGH
ENTERPRISE VALUE/REVENUES(2)
3 Year Avg 0.4X 0.7X 1.4X $114,673 $45,869 $80,271 $160,542
LTM 0.4X 0.7X 1.4X $130,299 $29,521 $68,984 $159,820
1997 Est 0.4X 0.7X 1.4X $135,500 $31,601 $72,251 $167,101
ENTERPRISE VALUE/ OP INCOME(2)
3 Year Avg 4.1X 11.5X 22.1X $4,591 $18,823 $52,797 $101,461
LTM 4.1X 11.5X 22.1X $11,141 $23,614 $105,523 $223,617
1997 Est 4.1X 11.5X 22.1X $11,200 $25,086 $106,201 $224,921
EQUITY VALUE/NET INCOME
3 Year Avg 6.4X 18.0X 39.9X $2,907 $18,605 $52,326 $115,989
LTM 6.4X 18.0X 39.9X $5,998 $38,387 $107,964 $239,320
1997 Est 6.4X 18.0X 39.9X $5,300 $33,920 $95,400 $211,470
EQUITY VALUE/BOOK VALUE
LTM 0.8X 2.9X 9.9X $29,442 $23,538 $85,324 $291,278
(1) BLC has been adjusted for extraordinary income and expenses. MEAN: $28,666 $82,667 $189,552
(2) Enterprise Value = Market Cap + Pref Equity + Debt - Cash
Indicated value is enterprise value minus pref stock minus
debt plus cash MEDIAN: $26,529 $82,797 $189,286
BLC Debt - Cash on 6/30/97 = $22,599
INDICATED VALUATION: $60,000 to $65,000
- ------------------------------------------------------------------------------------------------------------------------------------
56
PROJECT THOROUGHBRED
Projected Income Statements
For the years ending December 31,
----------------------------------------------------------------
1997 1998 1999 2000 2001
================================================================
Net Sales $135,500 $145,000 $155,100 $166,000 $177,600
% Growth 10.7% 7.0% 7.0% 7.0% 7.0%
Cost of Goods Sold $70,000 $73,900 $79,100 $84,600 $90,500
----------------------------------------------------------------
Gross Margin $65,500.0 $71,100.0 $76,000.0 $81,400.0 $87,100.0
Gross Margin % 48.3% 49.0% 49.0% 49.0% 49.0%
Total Operating Expenses $54,300 $58,000 $62,100 $66,400 $71,000
----------------------------------------------------------------
Operating Income (Loss) $11,200 $13,100 $13,900 $15,000 $16,100
Operating Margin % 8.3% 9.0% 9.0% 9.0% 9.1%
Interest & Other Income (Expense) ($1,900) ($1,900) ($1,700) ($1,600) ($1,500)
----------------------------------------------------------------
Income (Loss) Before Income Taxes $9,300 $11,200 $12,200 $13,400 $14,600
Provision for Income Taxes $4,000 $4,800 $5,200 $5,800 $6,300
----------------------------------------------------------------
NET INCOME (LOSS)
Best Lock Corporation & Subsidiary $5,300 $6,400 $7,000 $7,600 $8,300
================================================================
57
PROJECT THOROUGHBRED
Historical Balance Sheets
As of December 31,
------------------------------------------------------
1997 1998 1999 2000 2001
------------------------------------------------------
ASSETS
Current Assets
Cash & Equivalents $4,800 $6,100 $7,600 $9,100 $10,600
Trade Receivables $17,800 $19,100 $20,400 $21,800 $23,400
Inventories $13,700 $14,500 $15,500 $16,600 $17,700
Pre-Paids & Other $3,000 $3,000 $3,000 $3,000 $3,000
------------------------------------------------------
Total Current Assets $39,300 $42,700 $46,500 $50,500 $54,700
Property Plant & Equipment $67,100 $72,100 $77,600 $83,600 $90,100
Accumulated Depreciation ($41,600) ($46,900) $52,400 $58,000 ($63,800)
------------------------------------------------------
Net PP&E $25,500 $25,200 $25,200 $26,600 $26,300
Other Assets, Net $4,100 $3,800 $3,600 $3,300 $3,100
Total Assets $68,900 $71,700 $75,300 $79,400 $84,100
======================================================
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities
Current Portion of
Benefit Obligation $1,300 $1,300 $1,300 $1,300 $1,300
Accounts Payable $3,600 $3,700 $4,000 $4,200 $4,500
Customer Advances $2,000 $2,100 $2,300 $2,450 $2,600
Accrued Liabilities $6,600 $7,100 $7,600 $8,150 $8,700
------------------------------------------------------
Total Current Liabilities $13,500 $14,200 $15,200 $16,100 $17,100
Long Term Debt $12,000 $9,000 $6,000 $3,000 $0
Retirement Benefit Obligation $2,700 $2,200 $1,700 $1,200 $700
Deferred Income Taxes $2,000 $2,000 $2,000 $2,000 $2,000
------------------------------------------------------
Total Liabilities $30,200 $27,400 $24,900 $22,300 $19,800
Stock Redeemable Under Bonus Plan $6,000 $5,700 $5,500 $5,200 $4,600
Common Stock $1,400 $1,400 $1,400 $1,400 $1,400
Accumulated Earnings $52,900 $58,700 $65,100 $72,100 $79,900
Cumulative Translation Adjustment ($200) ($200) ($200) ($200) ($200)
Stock Redeemable Under Bonus Plan ($6,000) ($6,000) ($6,000) ($6,000) ($6,000)
Treasury Stock ($15,400) ($15,400) ($15,400) ($15,400) ($15,400)
------------------------------------------------------
Total Equity $32,700 $38,500 $45,900 $51,900 $59,700
Total Liabilities & Shareholder's Equity $68,900 $71,600 $75,300 $79,400 $84,100
======================================================
58
PROJECT THOROUGHBRED
- --------------------------------------------------------------------------------
($ MILLIONS)
CASH FLOW FROM OPERATIONS
------------------------------------------------
1997 1998 1999 2000 2001
------------------------------------------------
Net Income after tax $5.3 $6.4 $7.0 $7.6 $8.3
Adjustments to reconcile NI to net cash from operating activities
Depreciation 5.4 5.3 5.5 5.8 6.0
Amortization 0.2 0.2 0.2 0.2 0.2
(Increase) decrease in A/R 0.2 (1.2) (1.3) (1.4) (1.5)
(Increase) decrease in inventory 0.1 (0.7) (1.0) (1.1) (1.2)
(Increase) decrease in prepaids and other current assets 0.6 - - - -
Increase (decrease) in A/P, customer advances & accrued exp. (1.4) 0.7 0.9 1.0 1.0
Increase (decrease) in Deferred Income Taxes (0.3) - - - -
Increase (decrease) in Retirement Benefit and Benefit Obligation (0.6) (0.5) (0.5) (0.5) (0.5)
------------------------------------------------
Total adjustments 4.2 3.8 3.8 3.8 3.8
Net cash provided by operating activities $9.5 $10.2 $10.8 $11.4 $12.1
Cash Used for Stock Bonus Plan $0.0 ($0.3) ($0.2) ($0.3) ($0.6)
Capital Expenditures ($4.0) ($5.0) ($5.5) ($6.0) ($6.5)
Payments on Loan Balance ($3.0) ($3.0) ($3.0) ($3.0) ($3.0)
------------------------------------------------
Cash available for Dividend payment $2.5 $1.9 $2.1 $2.1 $2.0
Dividend Payment ($0.6) ($0.6) ($0.6) ($0.6) ($0.6)
------------------------------------------------
Net Cash Flow $1.9 $1.3 $1.5 $1.5 $1.4
Beginning Cash Balance $2.9 $4.8 $6.1 $7.6 $9.1
Ending Cash Balance $4.8 $6.1 $7.6 $9.1 $10.5
Potential Dividend / Net Income (%) 47.2% 29.7% 30.0% 27.6% 24.1%
Normalized
----------
Cash Available for
Dividend payment $2.0
$3.0 Loan
Dividend Payment $0.2 Int. Exp
-------------
Net Cash Flow $5.2
59
PROJECT THOROUGHBRED
- -------------------------------------------------------------------------------
RELEVERED WEIGHTED AVERAGE COST OF CAPITAL (WACC) ANALYSIS 8/11/97
11:40 AM
ANALYST: SSH
- -------------------------------------------------------------------------------
WEIGHTED AVERAGE COST OF CAPITAL
- -------------------------------------------------------------------------------
COST OF DEBT:
Kd = Yield to Maturity on Long-Term Debt Obligations
Kd = Unrated Corporate Bond Yields
KD = 12.0%
COST OF EQUITY:
Ke = Risk Free Rate + Company Risk Premium
Ke = Rf + [Relevered Comparable Co. Beta x Equity Risk Premium] + Small Co.
Risk Premium +
Ke = 6.6% + [0.6 x 7.4%] + 5.0% + 1.0% Company Risk Premium
KE = 17.1%
WEIGHTED AVERAGE COST OF CAPITAL:
WACC = [(D/C)(I-t)Kd] + [(E/C)Ke]
WACC = [40.7% x 60.0% x 12.0%] + [59.3% x 17.1%]
WACC = 13.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
WACC COMPONENTS
- -------------------------------------------------------------------------------
Rf(1) 6.63%
Date of Rf 8/08/97
Kd(2) 12.0%
Ke 17.1%
Equity Risk Premium (Rm-Rf) 7.4%
Tax Rate 40.0%
Tax Complement (1-t) 60.0%
Relevered Beta (Median) 0.60
Target Company's Debt 19,467
Target Company's Equity 28,324
Target Company's Debt to Equity 68.7%
- -------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
COMPARABLE COMPANY BETA & DEBT TO CAPITAL RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
MARKET
RELEVERED PRICE SHARES VALUE OF TOTAL TOTAL DEBT/ EQUITY/ DEBT/
SYMBOL COMPANY BETA(L)(3) BETA(U) BETA 8/08/97 OUT.(4) EQUITY DEBT(5) CAPITAL CAPITAL CAPITAL EQUITY
ACK ARMSTRONG WORLD
INDS INC. 0.90 0.81 1.14 $73.56 40,828.0 3,003.4 528.3 3,531.7 15.0% 85.0% 17.6%
EML EASTERN CO. 0.34 0.33 0.46 $14.75 2,764.0 40.8 3.3 44.1 7.5% 92.5% 8.1%
IR INGERSOLL
-RAND CO. 1.22 1.09 1.54 $62.88 108,402.0 6,815.8 1,337.3 8,153.1 16.4% 83.6% 19.6%
KNAP KNAPE & VOGT
MFG CO. 0.65 0.54 0.77 $17.50 5,890.0 103.1 33.8 136.9 24.7% 75.3% 32.8%
MAS MASCO CORP. 1.15 1.05 1.48 $47.00 161,240.0 7,578.3 1,222.8 8,801.1 13.9% 86.1% 16.1%
SWK STANLEY WORKS 1.19 1.13 1.59 $43.50 88,931.0 3,868.5 352.6 4,221.1 8.4% 91.6% 9.1%
MEAN 0.91 0.82 1.16 3,568.3 579.7 4,148.0 14.3% 85.7% 17.2%
MEDIAN 1.02 0.93 1.31 3,436.0 440.5 3,876.4 14.4% 85.6% 16.9%
- -----------------------------------------------------------------------------------------------------------------------------------
(1) The risk free rate (Rf) is estimated to be the 30 year Treasury Yield @
8/08/97.
(2) The current yield for an unrated corporate bond in today's market is
between 11% and 13%.
(3) Last 60 month Beta vs S&P 500.
(4) Latest quarterly figures.
60
PROJECT THOROUGHBRED
Discounted Cash Flow Analysis
Discounted to June 30, 1997
6 Mo's Ended Fiscal Years Ending
December 31, December 31,
---------------------------------------------------------------
1997 1998 1999 2000 2001
---------------------------------------------------------------
Operating Income $6,654 $13,100 $13,900 $15,000 $16,100
Tax at 43.0% ($2,861) ($5,633) ($5,977) ($6,450) ($6,923)
Plus
Depreciation & Amortization $2,765 $5,500 $5,700 $5,800 $5,900
Less
Increase in Working Capital ($1,661) ($1,400) ($1,300) ($1,600) ($1,700)
Payments to Stock Plan $0 ($300) ($200) ($300) ($600)
Capital Expenditures ($2,360) ($5,000) ($5,500) ($6,000) ($6,500)
---------------------------------------------------------------
Free Cash Flows $5,858 ($6,267) $6,623 $6,450 $6,277
Terminal Value 6.0x 96,600
---------------------------------------------------------------
Total Free Cash Flows $5,858 $6,267 $6,623 $6,450 $102,877
===============================================================
- -------------------------------------------------- --------------------------------------------------
NPV Calculation 6/30/97 Assumptions
- -------------------------------------------------- --------------------------------------------------
NPV of Free Cash Flows $22,500 30.4% Discount Rate 15% Tax Rate 43.0%
NPV of Terminal Value $51,454 69.6% EBIT Multiple 6.0 x
------------- ==================================================
Enterprise Value $73,955 --------------------------------------------------
Sensitivity Analysis - Equity Value
Plus Cash $1,849 --------------------------------------------------
Less Debt ($24,448) 17% 15% 13%
-------------
5.0 x $38,719 $42,781 $47,228
Equity Value $51,356 6.0 x $46,653 $51,356 $56,510
7.0 x $54,588 $59,982 $65,791
================================================== ==================================================
61
PROJECT THOROUGHBRED
- --------------------------------------------------------------------------------
LONG-TERM DIVIDEND
SCENARIO DETAIL
62
PROJECT THOROUGHBRED
Long-Term Dividend Model
- -----------------------------------------------------------------------------------------------------------
Current Ownership BLC BUL FEB BLP
- ----------------- ----------- -------- ------- -------
Shares Pct. Shares Pct. Shares Pct. Shares Pct.
-------- -------- --------- ------- ---------- ------- ------- ------
Outsiders
- ---------
Edward McLaughlin 0.0000 6,798.00 1.7590 0.0000 0.0000
Cede & Co. 4,365.00 3.6181 5,671.00 1.4674 63,921.00 10.6765 0.0000
Della & Co. 2,416.15 2.0027 0.0000 0.0000 0.0000
Martin Nelson & Assoc 100.00 0.0829 100.00 0.0259 0.0000 0.0000
All Other Outsiders 5,981.17 4.9577 16,436.00 4.2529 68,499.00 11.4411 0.0000
---------- ------- ---------- ------- ----------- -------- ------- --------
12,862.32 10.6615 29,005.00 7.5051 132,420.00 22.1176 0.00 0.0000
Insiders
- --------
Russell Best 1,686.00 1.3975 2,127.00 0.5504 113,311.00 18.9259 15.02 15.0200
Mariea Best 1.00 0.0008 1.00 0.0003 1.00 0.0002 0.0000
---------- ------- ---------- ------- ----------- -------- ------- --------
1,687.00 1.3983 2,128.00 0.5506 113,312.00 18.9260 15.02 15.0200
Stock Bonus Plan 10,537.19 8.7342 27,262.00 7.0541 0.0000 0.0000
Best Lock Corp 0.0000 19,287.00 4.9906 148,925.00 24.8743 84.98 84.9800
Best Universal Lock 95,556.34 79.2060 0.0000 0.0000 0.0000
Frank E. Best 0.0000 300,000.00 77.6259 0.0000 0.0000
Best Lock Partners 8,787.00 2.2737 204,053.00 34.0821 0.0000
---------- ------- ---------- ------- ----------- -------- ------- --------
Total 120,642.85 100.0000 386,469.00 100.0000 598,710.00 100.0000 100.00 100.0000
========== ======== ========== ======== ========== ======== ======= ========
Version: 44.1
- -----------------------------------------------------------------------------------------------------------
Confidential
------------
Ownership
Page 1
63
Piper Jaffray Inc.
PROJECT THOROUGHBRED
Long-Term Dividend Model
- --------------------------------------------------------------------------------
BLC Dividend Paid 100.00
======
Corporate Tax Exclusion 80%
Corporate Tax Rate 43%
Effective Tax Rate 9%
BLC Shareholders
================================================================================
Shares Pct. Dividend
------------------------------
Outsiders
0.00 0.0000 0.00
4,365.00 3.6181 3.62
2,416.15 2.0027 2.00
100.00 0.0829 0.08
5,981.17 4.9577 4.96
------------------------------
12,862.32 10.6615 10.66
Insiders
1,686.00 1.3975 1.40
1.00 0.0008 0.00
------------------------------
1,687.00 1.3983 1.40
Stock Bonus Plan 10,537.19 8.7342 8.73
Best Lock Corp. 0.00 0.0000 0.00
Best Universal Lock 95,556.34 79.2060 79.21
Frank E. Best 0.00 0.0000 0.00
Best Lock Partners 0.00 0.0000 0.00
-------------------------------
Total 120,642.85 100.0000 100.0000
- --------------------------------------===============================
- --------------------------------------------------------------------------------
BUL Dividend Rec'd (From BLC) 79.21
Administrative Expenses 1% 0.60
-----
Taxable Income 78.61
Corporate Tax Exclusion 80%
Corporate Tax Rate 40%
Corporate Taxes Paid 6.29
-----
BUL Dividend Paid 72.32
=====
BUL Shareholders
===============================================================================
Shares Pct. Dividend
-----------------------------
Outsiders
6,798.00 1.7590 1.27
5,671.00 1.4674 1.06
0 0.0000 0.00
100.00 0.0259 0.02
16,436.00 4.2529 3.08
-----------------------------
29,005.00 7.5051 5.43
Insiders
2,127.00 0.5504 0.40
1.00 0.0003 0.00
-----------------------------
2,128.00 0.5506 0.40
Stock Bonus Plan 27,262.00 7.0541 5.10
Best Lock Corp 19,287.00 4.9906 3.61
Best Universal Lock 0.00 0.0000 0.00
Frank E. Best 300,000.00 77.6259 56.14
Best Lock Partners 8,787.00 2.2737 1.64
-----------------------------
Total 386,469.00 100.0000 72.32
- --------------------------------------------------=============================
Confidential
------------
BLC & BUL Flows
Page 2
64
PROJECT THOROUGHBRED
Piper Jaffray Inc.
Long-Term Dividend Model
- ------------------------------------------------------------------------------------------------------------------------------------
FEB Dividends Rec'd (From BUL) 56.14 BLP Dividends Rec'd (From FEB) 17.47
Administrative Expenses 1% 0.42 (From BUL) 1.64
----- -------
Taxable Income 55.72 19.11
Corporate Tax Exclusion 80% Administrative Expenses 0% 0.04
-------
Corporate Tax Rate 40% Taxable Income 19.07
Corporate Taxes Paid 4.46 Corporate Tax Exclusion 100%
-----
Corporate Tax Rate 0%
FEB Dividend Paid 51.26 Corporate Taxes 0
===== -------
BLP Dividend Paid 19.07
=======
FEB Shareholders BLP Shareholders
Shares Pct. Dividend Shares Pct. Dividend
---------- -------- -------- --------- ------- --------
Outsiders Outsiders
0.00 0.0000 0.00 0.00 0.0000 0.00
63,921.00 10.6765 5.47 0.00 0.0000 0.00
0.00 0.0000 0.00 0.00 0.0000 0.00
0.00 0.0000 0.00 0.00 0.0000 0.00
68,499.00 11.4411 5.86 0.00 0.0000 0.00
----------- -------- ------ --------------------------
132,420.00 22.1176 11.34 0.00 0.0000 0.00
Insiders Insiders
113,311.00 18.9259 9.70 15.02 15.0200 2.86
1.00 0.0002 0.00 0.00 0.0000 0.00
----------- -------- ------ --------------------------
113,312.00 18.9260 9.72 15.02 15.0200 2.86
Stock Bonus Plan 0.00 0.0000 0.00 Stock Bonus Plan 0.00 0.0000 0.00
Best Lock Corp 148,925.00 24.8743 12.75 Best Lock Corp 84.98 84.9800 16.21
Best Universal Lock 0.00 0.0000 0.00 Best Universal Lock 0.00 0.0000 0.00
Frank E. Best 0.00 0.0000 0.00 Frank E. Best 0.00 0.0000 0.00
Best Lock Partners 204,053.00 34.0821 17.47 Best Lock Partners 0.00 0.0000 0.00
------------------------------- --------------------------
598,710.00 100.0000 51.26 100.00 100.0000 19.07
===============================
- ------------------------------------------------------------------------------------------------------------------------------------
Confidential
------------
FEB & BLP Flows
Page 3
65
PROJECT THOROUGHBRED
Long-Term Dividend Model Piper Jaffray Inc.
- ----------------------------------------------------------------------
Dividends Retained BLC BUL FEB BLP Total Dividends
- ------------------ ----- ----- ----- ----- ---------------
Outsiders
Edward McLaughlin 0.00 1.27 0.00 0.00 1.27
Cede & Co. 3.62 1.06 5.47 0.00 10.15
Della & Co. 2.00 0.00 0.00 0.00 2.00
Martin Nelson & Assoc. 0.08 0.02 0.00 0.00 0.10
All Other Outsiders 4.96 3.08 5.86 0.00 13.90
----- ---- ----- ----- ------
10.66 5.43 11.34 0.00 27.43
Insiders
Russell Best 1.40 0.40 9.70 2.86 14.36
Mariea Best 0.00 0.00 0.00 0.00 0.00
----- ---- ----- ----- ------
1.40 0.40 9.70 2.86 14.36
Stock Bonus Plan 8.73 5.10 0.00 0.00 13.84
Best Lock Corp 0.00 3.61 12.75 16.21 32.57
Best Universal Lock 0.00 0.00 0.00 0.00 0.00
Frank E. Best 0.00 0.00 0.00 0.00 0.00
Best Lock Partners 0.00 0.00 0.00 0.00 0.00
----- ---- ----- ----- ------
Sub-Total 20.79 14.54 33.79 19.07 88.19
Administrative Expenses 0.60 0.42 0.04 1.06
Corporate Taxes Paid 6.29 4.46 0 10.75
----- ---- ----- ----- ------
Total Payments 20.79 20.83 38.25 19.07 100.00
===== ===== ===== ===== ======
- ----------------------------------------------------------------------
Confidential
----------------
Dividend Summary
Page 4
66
PROJECT THOROUGHBRED
Long-Term Dividend Model Piper Jaffray Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Distribution Initial Dividend % Initial Div % TOT Dividend
- ----------------------- ---------------- ------------- --------------
Outsiders
Edward McLaughlin 1.27 1.27 1.81 Note:
Cede & Co. 10.15 10.15 14.48
Della & Co. 2.00 2.00 2.85 For Shareholders
Martin Nelson & Assoc. 0.10 0.10 0.14 Where DIV is the initial dividend percent for each owner,
All Other Outsiders 13.90 13.90 19.79 and BLC is the dividend percent returned to BLC,
----- ----- ----- and TR is BLC's Effective Tax Rate
27.43 27.43 39.05 TOT is the percent of cumulative dividends received by
Insiders each owner in a continous payment loop
Russell Best 14.36 14.36 20.45
Mareia Best 0.00 0.00 0.00
----- ----- ----- (2)
14.36 14.36 20.45 TOT=DIV+DIV((1-TR)*BLC)+DIV((1-TR)*BLC) +DIV((1-TR)
(3)
*BLC) ... or
Stock Bonus Plan 13.84 13.84 19.70 TOT=DIV/(1-((1-TR)*BLC))
Best Lock Corp 32.57 32.57 0.00 For Corporate Taxes
(2)
Best Universal Lock 0.00 0.00 0.00 TOT=DIV+DIV((1-TR)*BLC)+DIV((1-TR)*BLC) +DIV((1-TR)
(3) (2)
*BLC) ... +TR*BLC+TR*BLC((1-TR)*BLC)+TR*BLC((1-TR)*BLC)
(3)
+TR*BLC((1-TR)*BLC)...
Frank E. Best 0.00 0.00 0.00 or
TOT=DIV/(1-((1-TR)*BLC)) + TR*BLC/(1-((1-TR)*BLC))
Best Lock Partners 0.00 0.00 0.00
----- ----- -----
Sub-Total 88.19 88.19 79.20
Administrative Expenses 1.06 1.06 1.51
Corporate Taxes Paid 10.75 10.75 19.29
------ ----- -----
Total 100.00 100.00 100.00
- ------------------------------------------------------------------------------------------------------------------------------------
Confidential
------------
Cumulative Distribution
Page 5
67
PROJECT THOROUGHBRED
Long-Term Dividend Model Piper Jaffray Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
------------
BLC Operations Value 44,140,000
------------
Share Solutions % TOT Dividend Value Shares
- --------------- -------------- ------- --------
BLC BUL FEB BLP
------ ------ ----- ------
Outsiders
Edward McLaughlin 1.81 799,504.84 0.00 6,798.00 0.00 0.00
Cede & Co. 14.45 6,380,355.45 4,365.00 5,671.00 63,921.00 0.00
Della & Co. 2.85 1,258,679.82 2,416.15 0.00 0.00 0.00
Martin Nelson & Assoc. 0.14 63,855.32 100.00 100.00 0.00 0.00
All Other Outsiders 19.79 8,734,683.15 5,981.17 16,436.00 68,499.00 0.00
------- ------------- ---------- ---------- ---------- ------
39.05 17,237,078.59 12,862.32 29,005.00 132,420.00 0.00
Insiders
Russell Best 20.45 9,026,017.93 1,686.00 2,127.00 113,311.00 15.02
Mariea Best 0.00 692.36 1.00 1.00 1.00 0.00
------- ------------- ---------- ---------- ---------- ------
20.45 9,026,710.29 1,687.00 2,128.00 113,312.00 15.02
Stock Bonus Plan 19.70 8,695,542.16 10,537.19 27,262.00 0.00 0.00
Best Lock Corp 0.00 0.00 0.00 19,287.00 148,925.00 84.98
Best Universal Lock 0.00 0.00 95,556.34 0.00 0.00 0.00
Frank E. Best 0.00 0.00 0.00 300,000.00 0.00 0.00
Best Lock Partners 0.00 0.00 0.00 8,787.00 204,053.00 0.00
------- ------------- ---------- ---------- ---------- ------
Sub-Total 79.20 34,959,331.04 120,642.85 386,469.00 598,710.00 100.00
========== ========== ========== ======
Administrative Expenses 1.51 666,666.67
Corporate Taxes Paid 19.29 8,514,002.29
Total 100.00 44,140,000.00
======= =============
Per Share Calculations:
Value BLC BUL FEB BLP Per Share Entity
--------- ------- ------- -------- ------- ---------- ---------
Della & Co. 1,258,679.82 = 2,416.15 520.94 BLC
Edward McLaughlin 799,504.84 = 6,798.00 117.61 BUL A&B
Cede & Co. 6,380,355.45 = 4,365.00 5,671.00 63,921.00 0.00
= 2,273,922.33 666,959.69
= 2,940,882.01
3,439,473.43 = 53.81 FEB
Russell Best 9,026,017.93 = 1,686.00 2,127.00 113,311.00 15.02
= 878,312.27 250,153.99 6,097,060.03
= 7,225,526.28
1,800,491.65 = 119,872.95 BLP
- ------------------------------------------------------------------------------------------------------------------------------------
Confidential
------------
Share Solutions
Page 6
68
PROJECT THOROUGHBRED
Long-Term Dividend Model Piper Jaffray Inc.
- -----------------------------------------------------------------------------------------------------------------------
BLC 520.94 BUL 117.61 FEB 53.81
------ ----
Shares Value Shares Value Shares Value
-------- -------- -------- -------- -------- --------
Outsiders
Edward McLaughlin 0.00 0.00 6,798.00 799,504.84 0.00 0.00
Cede & Co. 4,365.00 2,273,922.33 5,671.00 666,959.69 63,921.00 3,439,473.43
Della & Co. 2,416.15 1,258,679.82 0.00 0.00 0.00 0.00
Martin Nelson & Assoc. 100.00 52,094.44 100.00 11,760.88 0.00 0.00
All Other Outsiders 5,981.17 3,115,857.04 16,436.00 1,933,018.77 68,499.00 3,685,807.33
---------- ------------- ---------- ------------- ---------- -------------
12,862.32 6,700,553.63 29,005.00 3,411,244.19 132,420.00 7,125,280.77
Insiders
Russell Best 1,686.00 878,312.27 2,127.00 250,153.99 113,311.00 6,097,060.03
Maria Best 1.00 520.94 1.00 117.61 1.00 53.81
---------- ------------- ---------- ------------- ---------- -------------
1,687.00 878,833.21 2,128.00 250,271.60 113,312.00 6,097,113.84
Stock Bonus Plan 10,537.19 5,489,290.17 27,262.00 3,206,251.99 0.00 0.00
Best Lock Corp 0.00 0.00 19,287.00 2,268,321.55 148,925.00 8,013,384.97
Best Universal Lock 95,556.34 49,779,540.65 0.00 0.00 0.00 0.00
Frank E. Best 0.00 0.00 300,000.00 35,282,649.74 0.00 0.00
Best Lock Partners 0.00 0.00 8,787.00 1,033,428.81 204,053.00 10,979,722.98
---------- ------------- ---------- ------------- ---------- -------------
0.00
Sub-Total 120,642.85 62,848,217.66 386,469.00 45,452,167.87 598,710.00 32,215,502.55
========== ========== ==========
Administrative Expenses 375,010.35 265,799.14
Corporate Taxes Paid 1,760,291.81 3,952,362.42 2,801,348.05
------------- ------------- -------------
Total Outflows 64,608,509.47 49,779,540.65 35,282,649.74
============= ============= =============
Less: Intercompany Flows
From BLC 49,779,540.65
From BUL 2,268,321.55 35,282,649.74
From FEB 8,013,384.97
From BLP 10,186,802.95
------------- ------------- -------------
20,468,509.47 49,779,540.65 35,282,649.74
Net Cash Flow 44,140,000.00 (0.00) (0.00)
============= ============= =============
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
BLP 119,872.95 Total Value
------ ----------- -------------
Shares Value
------- ---------
Outsiders
Edward McLaughlin 0.00 0.00 779,504.84
Cede & Co. 0.00 0.00 6,380,355.45
Della & Co. 0.00 0.00 1,258,679.82
Martin Nelson & Assoc. 0.00 0.00 63,855.32
All Other Outsiders 0.00 0.00 8,734,683.15
------- ------ --------------
0.00 0.00 17,237,078.59
Insiders
Russell Best 15.02 1,800,491.65 9,026,710.29
Maria Best 0.00 0.00 692.36
------- -------------- --------------
15.02 1,800,491.65 9,026,710.29
Stock Bonus Plan 0.00 0.00 8,695,542.16
Best Lock Corp 84.98 10,186,802.95 20,468,509.47
Best Universal Lock 0.00 0.00 49,779,540.65
Frank E. Best 0.00 0.00 35,282,649.74
Best Lock Partners 0.00 0.00 12,013,151.79
------- -------------- --------------
Sub-Total 100.00 11,987,294.60 152,503,182.68
=======
Administrative Expenses 25,857.19 666,666.67
Corporate Taxes Paid 0.00 8,514,002.29
-------------- --------------
Total Outflows 12,013,151.79 161,683,851.64
============== ==============
Less: Intercompany Flows
From BLC 49,779,540.65
From BUL 1,033,428.81 38,584,400.10
From FEB 10,979,722.98 18,993,107.95
From BLP 10,186,802.95
-------------- --------------
12,013,151.79 117,543,851.64
Net Cash Flow 0.00 44,140,000.00
============== ==============
- -----------------------------------------------------------------------------------------------------------------------
Confidential
------------
Shareholder Values
Page 7
69
PROJECT THOROUGHBRED
Long-Term Dividend Model Piper Jaffray Inc.
- --------------------------------------------------------------------------------
Value of Insider Holdings
Russell Best 9,026,017.93
Mariea Best 692.36
-------------
Total Insiders 9,026,710.29
Value of Outsider Holdings
Edward McLaughlin 799,504.84
Cede & Co. 6,380,355.45
Della & Co. 1,258,679.82
Martin Nelson & Assoc. 63,855.32
All Other Outsiders 8,734,683.15
-------------
17,237,078.00
Stock Bonus Plan 8,695,542.16 Note: Administrative Expenses
-------------
Total Outsiders 25,932,620.75 calculated as follows:
Administrative Expenses 666,666.67
Corporate Taxes 8,514,002.29 BUL 35,000.00
-------------
FEB 35,000.00
BLP 10,000.00
---------
Total Value 44,140,000.00 80,000.00
=============
Discount Rate: 17%
Inflation: 5%
Present Value: 666,666.67
- --------------------------------------------------------------------------------
Confidential
------------
Value Summary
Page 8
70
BUL Adjustments
BUL Price
Shares 117.61 % BUL Value
BUL A 86,469 10,169,518 22.37%
BUL B 300,000 35,282,650 77.63%
386,469 45,452,168 100.00%
BUL A Preference 0.57
Required Equity Return 0.21
PV BUL Preference 2.71
Adjustment Price Distributions % BUL Value
BUL A Adj 2.11 119.72 10,351,707 22.77%
BUL B Adj 0.61 117.00 35,100,461 77.23%
45,452,168 100.00%
Page 9
Confidential
------------
Adjustments for BUL A&B
71
Piper Jaffrey Inc.
PROJECT THOROUGHBRED
Long-Term Dividend Model
Current Ownership BLC BUL FEB BLP
- ----------------- -------------------- ------------------------------- -------------------- ------------------
Shares Pct. Shares Pct. Pct. Adj. Shares Pct. Shares Pct.
Outsiders
- -----------------
Edward McLaughlin 0.0000 6,798.00 1.7590 1.7590 0.0000 0.0000
Cede & Co. 4,365.00 3.6181 5,671.00 1.4674 1.4937 63,921.00 10.6765 0.0000
Della & Co. 2,416.15 2.0027 0.0000 0.0000 0.0000 0.0000
Martin Nelson & Assoc 100.00 0.0829 100.00 0.0259 0.0263 0.0000 0.0000
All Other Outsiders 5,981.17 4.9577 16,436.00 4.2529 4.3291 68,499.00 11.4411 0.0000
-------------------- ------------------------------- -------------------- ------------------
12,862.32 10.6615 29,005.00 7.5051 7.6396 132,420.00 22.1176 0.00 0.0000
Insiders
- -----------------
Russell Best 1,686.00 1.3975 2,127.00 0.5504 0.5602 113,311.00 18.9259 15.02 15.0200
Mariea Best 1.00 0.0008 1.00 0.0003 0.0003 1.00 0.0002 0.0000
-------------------- ------------------------------- -------------------- ------------------
1,687.00 1.3983 2,128.00 0.5506 0.5605 113,312.00 18.9260 15.02 15.0200
Stock Bonus Plan 10,537.19 8.7342 27,262.00 7.0541 7.1805 0.0000 0.0000
Best Lock Corp 0.0000 19,287.00 4.9906 5.0800 148,925.00 24.8743 84.98 84.9800
Best Universal Lock 95,556.34 79.2060 0.0000 0.0000 0.0000 0.0000
Frank E. Best 0.0000 300,000.00 77.6259 77.2251 0.0000 0.0000
Best Lock Partners 8,787.00 2.2737 2.3144 204,053.00 34.0821 0.0000
-------------------- ------------------------------- -------------------- ------------------
Total 120,642.85 100.0000 386,469.00 100.0000 100.0000 598,710.00 100.0000 100.00 100.0000
==================== =============================== ==================== ==================
==================
Version: 44.1
==================
Page 10
Confidential
------------
Adjusted Ownership
72
PROJECT THOROUGHBRED
Long-Term Dividend Model Piper Jaffray Inc.
BLC Dividend Paid 100.00 BUL Dividend Rec'd (From BLC) 79.21
======
Corporate Tax Exclusion 80% Administrative Expenses 1% 0.60
---------
Corporate Tax Rate 43% Taxable Income 78.61
Effective Tax Rate 9% Corporate Tax Exclusion 80%
Corporate Tax Rate 40%
Corporate Taxes Paid 6.29
---------
BUL Dividend Paid 72.32
=========
BLC Shareholders BUL Shareholders
====================================================================================================================================
Shares Pct. Dividend Shares Adj. Pct. Dividend
------------------------------ -------------------------------
Outsiders Outsiders
0.00 0.0000 0.00 6,798.00 1.7905 1.29
4,365.00 3.6181 3.62 5,671.00 1.4937 1.08
2,416.15 2.0027 2.00 0 0.0000 0.00
100.00 0.0829 0.08 100.00 0.0263 0.02
5,981.17 4.9577 4.96 16,436.00 4.3291 3.13
------------------------------ -------------------------------
12,862.32 10.6615 10.66 29,005.00 7.6396 5.52
Insiders Insiders
1,686.00 1.3975 1.40 2,127.00 0.5602 0.41
1.00 0.0008 0.00 1.00 0.0003 0.00
------------------------------ -------------------------------
1,687.00 1.3983 1.40 2,128.00 0.5605 0.41
Stock Bonus Plan 10,537.19 8.7342 8.73 Stock Bonus Plan 27,262.00 7.1805 5.19
Best Lock Corp 0.00 0.0000 0.00 Best Lock Corp 19,287.00 5.0800 3.67
Best Universal Lock 95,556.34 79.2060 79.21 Best Universal Lock 0.00 0.0000 0.00
Frank E. Best 0.00 0.0000 0.00 Frank E. Best 300,000.00 77.2251 55.85
Best Lock Partners 0.00 0.0000 0.00 Best Lock Partners 8,787.00 2.3144 1.67
----------------------------- --------------------------------
Total 120,642.85 100.0000 100.0000 Total 386,469.00 100.0000 72.32
Page 11
CONFIDENTIAL
------------
ADJUSTED BLC & BUL FLOWS
73
PROJECT THOROUGHBRED
Long-Term Dividend Model
Piper Jaffray, Inc.
FEB Dividends Rec'd (From BUL) 55.85 BLP Dividends Rec'd (From FEB) 17.38
Administrative Expenses 1% 0.42 (From BUL) 1.67
------ ------
Taxable Income 55.43 19.05
Corporate Tax Exclusion 80% Administrative Expenses 0% 0.04
------
Corporate Tax Rate 40% Taxable Income 19.01
Corporate Taxes Paid 4.43 Corporate Tax Exclusion 100%
------
Corporate Tax Rate 0%
FEB Dividend Paid 50.99 Corporate Taxes 0
====== ------
BLP Dividend Paid 19.01
======
FEB Shareholders BLP Shareholders
====================================================================================================================================
Shares Pct. Dividend Shares Pct. Dividend
------------------------------ --------------------------
Outsiders Outsiders
0.00 0.0000 0.00 0.00 0.0000 0.00
63,921.00 10.6765 5.44 0.00 0.0000 0.00
0.00 0.0000 0.00 0.00 0.0000 0.00
0.00 0.0000 0.00 0.00 0.0000 0.00
68,499.00 11.4411 5.83 0.00 0.0000 0.00
------------------------------ --------------------------
132,420.00 22.1176 11.28 0.00 0.0000 0.00
Insiders Insiders
113,311.00 18.9259 9.65 15.02 15.0200 2.86
1.00 0.0002 0.00 0.00 0.0000 0.00
------------------------------ --------------------------
113,312.00 18.9260 9.65 15.02 15.0200 2.86
Stock Bonus Plan 0.00 0.0000 0.00 Stock Bonus Plan 0.00 0.0000 0.00
Best Lock Corp 148,925.00 24.8743 12.68 Best Lock Corp 84.98 84.9800 16.16
Best Universal Lock 0.00 0.0000 0.00 Best Universal Lock 0.00 0.0000 0.00
Frank E. Best 0.00 0.0000 0.00 Frank E. Best 0.00 0.0000 0.00
Best Lock Partners 204,053.00 34.0821 17.38 Best Lock Partners 0.00 0.0000 0.00
------------------------------ --------------------------
598,710.00 100.0000 50.99 100.00 100.0000 19.01
============================== ==========================
Page 12
Confidential
------------
Adjusted FEB & BLP Flows
74
PROJECT THOROUGHBRED
Long-Term Dividend Model
Piper Jaffray, Inc.
Dividends Retained BLC BUL FEB BLP Total Dividends
- ------------------ ----- ---- ----- ---- ---------------
Outsiders
- ------------------
Edward McLaughlin 0.00 1.29 0.00 0.00 1.29
Cede & Co. 3.62 1.08 5.44 0.00 10.14
Della & Co. 0.00 0.00 0.00 0.00 2.00
Martin Nelson & Assoc. 0.00 0.02 0.00 0.00 0.10
All Other Outsiders 4.96 3.13 5.83 0.00 13.92
----- ---- ----- ----- ---------------
10.66 5.52 11.28 0.00 27.46
Insiders
- ------------------
Russell Best 1.40 0.41 9.65 2.86 14.31
Mariea Best 0.00 0.00 0.00 0.00 0.00
----- ---- ----- ----- ---------------
1.40 0.41 9.65 2.86 14.31
Stock Bonus Plan 8.73 5.19 0.00 0.00 13.93
Best Lock Corp 0.00 3.67 12.68 16.16 32.51
Best Universal Lock 0.00 0.00 0.00 0.00 0.00
Frank E. Best 0.00 0.00 0.00 0.00 0.00
Best Lock Partners 0.00 0.00 0.00 0.00 0.00
----- ---- ----- ----- ---------------
Sub-Total 20.79 14.80 33.61 19.04 88.22
Administrative Expenses 0.60 0.42 0.04 1.06
Corporate Taxes Paid 6.29 4.43 0 10.72
----- ---- ----- ----- ---------------
Total Payments 20.79 21.09 38.05 19.01 100.00
Page 13
Confidential
------------
Adjusted Dividend Summary
75
PROJECT THOROUGHBRED Piper Jaffray Inc.
Long-Term Dividend Model
Cumulative Distribution Initial Dividend % Initial Div % TOT Dividend
======================= ================ ============= ==============
Outsiders
- -----------------------
Edward McLaughlin 1.29 1.29 1.84 Note:
Cede & Co. 10.14 10.14 14.43
Della & Co. 2.00 2.00 2.85 For Shareholders
Martin Nelson & Assoc. 0.10 0.10 0.15 Where DIV is the initial dividend percent for each owner,
All Other Outsiders 13.92 13.92 19.81 and BLC is the dividend percent returned to BLC,
------------ -------- --------- and TR is BLC's Effective Tax Rate
27.46 27.46 39.08 TOT is the percent of cumulative dividends received by
Insiders each owner in a continous payment loop
- -----------------------
Russell Best 14.31 14.31 20.36
Mareia Best 0.00 0.00 0.00
------------ -------- --------- 2
14.31 14.31 20.36 TOT=DIV+DIV((1-TR)*BLC)+DIV((1-TR)*BLC) +
3
DIV((1-TR)*BLC) ...
or
Stock Bonus Plan 13.93 13.93 19.82 TOT=DIV/(1-((1-TR)*BLC))
Best Lock Corp 32.51 32.51 0.00 For Corporate Taxes
2
Best Universal Lock 0.00 0.00 0.00 TOT=DIV+DIV((1-TR)*BLC)+DIV((1-TR)*BLC) +
3
DIV((1-TR)*BLC) ... +TR*BLC+TR*BLC((1-TR)*BLC)+
2 3
TR*BLC((1-TR)*BLC) +TR*BLC((1-TR)*BLC) ...
Frank E. Best 0.00 0.00 0.00 or
TOT=DIV/(1-((1-TR)*BLC)) + TR*BLC/(1-((1-TR)*BLC))
Best Lock Partners 0.00 0.00 0.00
------------ -------- ---------
Sub-Total 88.22 88.22 79.25
Administrative Expenses 1.06 1.06 1.51
Corporate Taxes Paid 10.72 10.72 19.24
------------ -------- ---------
Total 100.00 100.00 100.00
============ ======== =========
Confidential
------------
Adj. Cumulative Distribution
Page 14
76
PROJECT THOROUGHBRED Piper Jaffray Inc.
Long-Term Dividend Model
- -------------------------------------------------------------------------------------------------------------------------------
===============
BLC Operations Value 44,140,000
===============
Share Solutions % TOT Dividend Value Shares
=============== --------------- ------------- -----------------------------------------------
BLC BUL FEB BLP
-----------------------------------------------
Outsiders
- ---------------
Edward McLaughlin 1.84 813,237.47 0.00 6,798.00 0.00 0.00
Cede & Co. 14.43 6,369,891.79 4,365.00 5,671.00 63,921.00 0.00
Della & Co. 2.85 1,257,793.98 2,416.15 0.00 0.00 0.00
Martin Nelson & Assoc. 0.15 64,020.67 100.00 100.00 0.00 0.00
All Other Outsiders 19.81 8,743,918.04 5,981.17 16,436.00 68,499.00 0.00
----------- -------------- -----------------------------------------------
39.08 17,248,861.94 12,862.32 29,005.00 132,420.00 0.00
Insiders
- ----------------
Russell Best 20.36 8,986,604.59 1,686.00 2,127.00 113,311.00 15.02
Mariea Best 0.00 693.70 1.00 1.00 1.00 0.00
----------- -------------- -----------------------------------------------
20.36 8,987,298.28 1687.00 2,128.00 113,312.00 15.02
Stock Bonus Plan 19.85 8,746,750.77 10,537.19 27,262.00 0.00 0.00
Best Lock Corp 0.00 0.00 0.00 19,287.00 148,925.00 84.98
Best Univeral Lock 0.00 0.00 95,556.34 0.00 0.00 0.00
Frank E. Best 0.00 0.00 0.00 300,000.00 0.00 0.00
Best Lock Partners 0.00 0.00 0.00 8,787.00 204,053.00 0.00
----------- -------------- -----------------------------------------------
Sub-Total 79.25 34,982,910.99 120,642.85 386,469.00 598,710.00 100.00
===============================================
Administrative Expenses 1.51 666,666.67
Corporate Taxes Paid 19.24 8,490,422.33
----------- --------------
Total 100.00 44,140,000.00
=========== ==============
Per Share Calculations:
========================
Value BLC BUL FEB BLP
-------------- -----------------------------------------------
Della & Co. 1,257,793.98 = 2,416.15
Edward McLaughlin 813,237.47 = 6,798.00
Cede & Co. 6,369,891.79 = 4,365.00 5,671.00 63,921.00 0.00
= 2,272,321.97 678,415.66
= 2,950,737.63
3,419,154.15 =
Russell Best 8,986,604.59 = 1,686.00 2,127.00 113,311.00 15.02
= 877,694.12 254,450.73 6,0610,040.60
= 7,193,185.46
1,793,419.13 =
=====================
Per Share Entity
Della & Co. 520.58 BLC
Edward McLaughlin 119.63 BUL A BUL A 86,469 10,344,194 22.77%
116.92 BUL B BUL B 300,000 35,074,984 77.23%
------ -------------------
Cede & Co. 2.71 45,419,178 100.00%
53.49 FEB
Russell Best
119,402.07 BLP
- -------------------------------------------------------------------------------------------------------------------------------
Confidential
------------
Adjusted Share Solutions
Page 15
77
PROJECT THOROUGHBRED Piper Jaffray Inc.
Long-Term Dividend Model
- ------------------------------------------------------------------------------------------------------------------------------------
BUL A 119.63
BLC 520.58 BUL B 116.92 FEB 53.49 BLP 119,402.07
========================= ========================= ========================= ======================
Shares Value Shares Value Shares Value Shares Value
------------------------- ------------------------- ------------------------- ----------------------
Outsiders
- ---------
Edward McLaughlin 0.00 0.00 6,798.00 813,237.47 0.00 0.00 0.00 0.00
Cede & Co. 4,365.00 2,272,321.97 5,671.00 678,415.66 63,921.00 3,419,154.15 0.00 0.00
Della & Co. 2,416.15 1,257,793.98 0.00 0.00 0.00 0.00 0.00 0.00
Martin Nelson & Assoc. 100.00 52,057.78 100.00 11,962.89 0.00 0.00 0.00 0.00
All Other Outsiders 5,981.17 3,113,664.14 16,436.00 1,966,221.10 68,499.00 3,664,032.80 0.00 0.00
------------------------- ------------------------- ------------------------- ----------------------
12,862.32 6,695,837.87 29,005.00 3,469,837.12 132,420.00 7,083,186.95 0.00 0.00
Insiders
- --------
Russell Best 1,686.00 877,694.12 2,127.00 254,450.73 113,311.00 6,061,040.60 15.02 1,793,419.13
Mariea Best 1.00 520.58 1.00 119.63 1.00 53.49 0.00 0.00
------------------------- ------------------------- ------------------------- ----------------------
1,687.00 878,214.70 2,128.00 254,570.36 113,312.00 6,061,094.09 15.02 1,793,419.13
Stock Bonus Plan 10,537.19 5,485,426.88 27,262.00 3,261,323.89 0.00 0.00 0.00 0.00
Best Lock Corp 0.00 0.00 19,287.00 23,074,984.36 148,925.00 7,966,044.53 84.98 10,146,788.12
Best Universal Lock 95,556.34 49,744,506.42 0.00 0.00 0.00 0.00 0.00 0.00
Frank E. Best 0.00 0.00 300,000.00 35,074,984.36 0.00 0.00 0.00 0.00
Best Lock Partners 0.00 0.00 8,787.00 1,051,179.41 204,053.00 10,914,858.33 0.00 0.00
------------------------- ------------------------- ------------------------- ----------------------
0.00
Sub-Total 120,642.85 62,803,985.86 386,469.00 45,419,178.32 598,710.00 32,025,183.96 100.00 11,940,207.24
========== ========== ========== ======
Administrative Expenses 375,834.33 265,001.79 25,830.55
Corporate Taxes Paid 1,756,129.96 3,949,493.77 2,784,798.61 0.00
------------- ------------- ------------- -------------
Total Outflows 64,560,115.82 49,744,506.42 35,074,984.36 11,966,037.79
============= ============= ============= =============
Less: Intercompany Flows
From BLC 49,744,506.42
From BUL 2,307,283.18 35,074,984.36 1,051,179.41
From FEB 7,966,044.53 10,914,858.38
From BLP 10,146,788.12
-------------- -------------- ------------- -------------
20,420,115.82 49,744,506.42 35,074,984.36 11,966,037.79
Net Cash Flow 44,140,000.00 (0.00) (0.00) (0.00)
============== ============== ============= =============
- ------------------------------------------------------------------------------------------------------------------------------------
Total Value
--------------
Outsiders
- ---------
Edward McLaughlin 813,237.47
Cede & Co. 6,369,891.79
Della & Co. 1,257,793.93
Martin Nelson & Assoc. 64,020.67
All Other Outsiders 8,743,918.04
---------------
17,248,861.94
Insiders
- --------
Russell Best 8,986,604.59
Mariea Best 693.70
---------------
8,987,298.28
Stock Bonus Plan 8,746,750.77
Best Lock Corp 20,420,115.82
Best Universal Lock 49,744,506.42
Frank E. Best 35,074,984.36
Best Lock Partners 11,966,037.79
---------------
Sub-Total 152,188,555.39
Administrative Expenses 666,666.67
Corporate Taxes Paid 8,490,422.33
---------------
Total Outflows 161,345,644.40
===============
Less: Intercompany Flows
From BLC 49,744,506.42
From BUL 38,433,466.94
From FEB 18,880,902.92
From BLP 10,146,788.12
---------------
117,205,644.40
Net Cash Flow 44,140,000.00
===============
- ---------------------------------------------------------------
Confidential
------------
Page 16 Adjusted Shareholder Values
78
PROJECT THOROUGHBRED Piper Jaffray Inc.
Long-Term Dividend Model
Value of Insider Holdings
- -------------------------
Russell Best 8,986,604.59
Mariea Best 693.70
-------------
Total Insiders 8,987,298.28
Value of Outsider Holdings
- --------------------------
Edward McLaughlin 813,237.47
Cede & Co. 6,369,891.79
Della & Co. 1,257,793.98
Martin Nelson & Assoc. 64,020.67
All Other Outsiders 8,743,918.04
-------------
17,248,861.94
Stock Bonus Plan 8,746,750.77
-------------
Total Outsiders 25,995,612.71
Administrative Expenses 666,666.67
Corporate Taxes 8,490,422.33
-------------
Total Value 44,140,000.00
=============
Confidential
------------
Page 17 Adjusted Value Summary
79
Project Thoroughbred
- -------------------------------------------------------------------------------
Sale Scenario Detail
(Arthur Andersen)
80
PROJECT THOROUGHBRED
BUL SALE OF BLC STOCK -- SUMMARY
Cash Received From Stock Sale $ 58,000,000.00
- -------------------------- ---------------------- --------------------
SHAREHOLDER DISTRIBUTION RECEIVED % TOTAL DISTRIBUTION
- -------------------------- ---------------------- --------------------
---------
Outsiders
---------
Edward McLaughlin 571,795.77 0.986%
Cede & Co. 4,568,284.75 7.876%
Della & Co. 1,369,895.93 2.362%
Martin Nelson & Assoc. 65,108.71 0.112%
All Other Outsiders 6,505,850.53 11.217%
--------
Insiders
--------
Russell Best 4,886,303.63 8.425%
Mariea Best 676.38 0.001%
Stock Bonus Plan 8,267,391.09 14.254%
--------------- -------
Subtotal $ 26,235,306.78 45.233%
Corporate Taxes Paid 31,764,693.16 54.767%
--------------- -------
Total $ 57,999,999.94 100.000%
=============== =======
- ------------- ---------------
ENTITY VALUE PER SHARE
- ------------- ---------------
BLC $ 566.97
BUL $ 84.11
FEB $ 25.29
BLP $ 58,992.03
-----------------------------
PRELIMINARY AND TENTATIVE FOR
81
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Proof of Value Per Share
------------------------------------------- -------------------------------------------
BLC BUL
- ----------- -------------------------------------------- ------------------------------------------
Shareholder Cash Received Shares Value Per Share Cash Received Shares Value Per Share
- ----------- -------------- --------- ---------------- ------------- --------- ---------------
- -----------
Outsiders
- -----------
Edward McLaughlin
Cede & Co. $ 2,474,844.57 4,365.00 $ 566.97 $ 571,795.77 6,798.00 $ 84.11
Della & Co. $ 1,369,895.93 2,416.15 566.97 $ 477,001.15 5,671.00 $ 84.11
Martin Nelson & Assoc. $ 56,697.47 100.00 566.97 $ 8,411.24 100.00 84.11
All Other Outsiders $ 3,391,172.08 5,981.17 566.97 $ 1,382,470.61 16,436.00 84.11
-------------- ---------- --------------- -------------- ---------- ---------------
$ 7,292,610.05 12,862.32 $ 566.97 $ 2,439,678.76 29,005.00 $ 84.11
-------------- ---------- --------------- -------------- ---------- ---------------
- ----------
Insiders
- ----------
Russell Best $ 955,919.35 1,686.00 $ 566.97 $ 178,906.97 2,127.00 $ 84.11
Mariea Best $ 566.97 1.00 566.97 $ 84.11 1.00 84.11
-------------- ---------- --------------- -------------- ---------- ---------------
$ 956,486.32 1,687.00 $ 566.97 $ 178,991.08 2,128.00 $ 84.11
-------------- ---------- --------------- --------------- ---------- ---------------
Stock Bonus Plan $ 5,974,320.16 10,537.19 $ 566.97 $ 2,293,070.93 27,262.00 $ 84.11
BLC $ 1,622,274.93 19,287.00 $ 84.11
BUL $54,178,027.40 95,556.34 $ 566.97
FEB $25,233,705.50 300,000.00 $ 84.11
BLP $ 739,095.23 8,787.00 $ 84.11
------------- ---------- --------------- -------------- ---------- ----------------
Total $68,401,443.94 120,642.85 $ 566.97 $32,506,816.44 386,469.00 $ 84.11
============== ========== =============== ============== ========== ================
------------------------------------------- -------------------------------------------
FEB BLP
- ----------- -------------------------------------------- ------------------------------------------
Shareholder Cash Received Shares Value Per Share Cash Received Shares Value Per Share
- ----------- -------------- --------- --------------- -------------- --------- ---------------
- -----------
Outsiders
- -----------
Edward McLaughlin
Cede & Co. $ 1,616,439.03 63,921.00 $ 25.29
Della & Co.
Martin Nelson & Assoc. $
All Other Outsiders $ 1,732,207.84 68,499.00 25.29
-------------- ---------- --------------- -------------- ---------- ---------------
$ 3,348,646.87 132,420.00 $ 25.29 - - #DIV/0!
-------------- ---------- --------------- -------------- ---------- ---------------
- ----------
Insiders
- ----------
Russell Best $ 2,865,417.05 113,311.00 $ 25.29 $ 886,060.26 15.02 $ 58,992.03
Mariea Best $ 25.29 1.00 25.29
-------------- ---------- ---------------- --------------- ---------- ---------------
$ 2,865,442.34 113,312.00 $ 25.29 $ 886,060.26 15.02 $ 58,992.03
-------------- ---------- --------------- -------------- ---------- ---------------
Stock Bonus Plan
BLC $ 3,766,026.55 148,925.00 $ 25.29 $ 5,013,142.52 84.98 $ 58,992.03
BUL
FEB
BLP $ 5,160,107.54 204,053.00 $ 25.29
-------------- ---------- --------------- -------------- ---------- ----------------
Total $15,140,223.30 598,710.00 $ 25.29 $ 5,899,202.77 100.00 $ 58,992.03
============== ========== =============== ============== ========== ================
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
82
PROJECT THOROUGHBRED
CURRENT OWNERSHIP STRUCTURE
------------------ ------------------ ------------------ ----------------
BLC BUL FEB BLP
------------------ ------------------ ------------------ ----------------
SHARES PERCENT SHARES PERCENT SHARES PERCENT SHARES PERCENT
------------------ ------------------ ------------------ ----------------
---------
Outsiders
---------
Edward McLaughlin 6,798.00 1.7590%
Cede & Co. 4,365.00 3.6181% 5,671.00 1.4674% 63,921.00 10.6765%
Della & Co. 2,416.15 2.0027%
Martin Nelson & Assoc. 100.00 0.0829% 100.00 0.0259%
All Other Outsiders 5,981.17 4.9577% 16,436.00 4.2529% 68,499.00 11.4411%
---------- -------- ---------- -------- ---------- -------- ------ --------
12,862.32 10.6615% 29,005.00 7.5051% 132,420.00 22.1176% - 0.0000%
---------- -------- ---------- -------- ---------- -------- ------ --------
--------
Insiders
--------
Russell Best 1,686.00 1.3975% 2,127.00 0.5504% 113,311.00 18.9259% 15.02 15.0200%
Mariea Best 1.00 0.0008% 1.00 0.0003% 1.00 0.0002%
---------- -------- ---------- -------- ---------- -------- ------ --------
1,687.00 1.3983% 2,128.00 0.5506% 113,312.00 18.9260% 15.02 15.0200%
---------- -------- ---------- -------- ---------- -------- ------ --------
Stock Bonus Plan 10,537.19 8.7342% 27,262.00 7.0541%
BLC 19,287.00 4.9906% 148,925.00 24.8743% 84.98 84.9800%
BUL 95,556.34 79.2060%
FEB 300,000.00 77.6259%
BLP 8,787.00 2.2737% 204,053.00 34.0821%
---------- -------- ---------- -------- ---------- -------- ------ --------
Total 120,642.85 100.0000% 386,469.00 100.0000% 598,710.00 100.0000% 100.00 100.0000%
========== ======== ========== ======== ========== ======== ====== ========
Corporate Tax Rate 40%
Assumed BLC Value 58,000,000
PRELIMARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
83
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 1 Distribution
- ---------------------------------- ----------------------------------------- ---------------------------------------
BUL SALE OF BLC STOCK FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- ---------------------------------- ----------------------------------------- ---------------------------------------
Cash Received from
Sale $45,939,462.80 Cash Received from BUL $21,396,550.06 Cash Received from BUL $ 626,704.95
Tax Basis - Tax Basis - Cash Received from FEB 4,375,437.42
-------------- -------------- -------------
Gain on Sale $45,939,462.80 Gain from Distribution $21,396,550.06 Total Cash Received $5,002,142.37
Tax Rate 40% Tax Rate 40% Tax Basis 5,002,142.37
-------------- -------------- -------------
Tax Due $18,375,785.12 Tax Due $8,558,620.02 Gain from Distribution $ -
-------------- -------------- -------------
Cash Distributed $27,563,677.68 Cash Distributed $12,837,930.04
============== ==============
Gain/Basis Alloc. to BLC $ -
=============
Cash Distributed $5,002,142.37
=============
- ------------------------------------------------ ----------------------------------------------
BUL SHAREHOLDERS FEB SHAREHOLDERS
- ------------------------------------------------ ----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
------- ------------ ------- --------
- ------------------- -------------------
Outsiders Outsiders
- ------------------- -------------------
Edward McLaughlin 1.7590% $484,845.82 Edward McLaughlin
Cede & Co. 1.4674% $404,466.12 Cede & Co. 10.6765% $1,370,635.74
Della & Co. Della & Co.
Martin Nelson & Martin Nelson &
Assoc. 0.0259% $ 7,132.18 Assoc.
All Other Outsiders 4.2529% $1,172,245.66 All Other Outsiders 11.4411% 1,468,800.20
------------------------- -----------------------------
7.5051% $2,068,689.78 22.1176% $2,839,435.95
------------------------- -----------------------------
- ------------------ ------------------
Insiders Insiders
- ------------------ ------------------
Russell Best 0.5504% $151,701.54 Russell Best 18.9259% $2,429,688.31
Mariea Best 0.0003% $ 71.32 Mariea Best 0.0002% 21.44
------------------------- ------------------------------
0.5506% $151,772.86 18.9260% $2,429,709.76
------------------------- ------------------------------
Stock Bonus Plan 7.0541% $1,944,375.83 Stock Bonus Plan
BLC 4.9906% $1,375,584.20 BLC 24.8743% $3,193,346.91
BUL BUL
FEB 77.6259% $21,396,550.06 FEB
BLP 2.2737% $626,704.95 BLP 34.0821% $4,375,437.42
------------------------- ------------------------------
Total 100.0000% $27,563,677.68 Total 100.0000% $12,837,930.04
=========================== ==============================
Total Taxes Paid $26,934,405.14
BLC's Beginning Basis in
FEB, BUL, & BLP 10,562,483.20
Basis Used This Round 0.00
Basis Allocated From BLP
This Round 0.00
--------------
BLC's Ending Basis This Round 10,562,483.20
==============
- ----------------------------------------------------------------
BLP SHAREHOLDERS
- ----------------------------------------------------------------
PERCENT DIVIDEND
---------------- -------------
- ------------------
Outsiders
- ------------------
Edward McLaughlin
Cede & Co.
Della & Co.
Martin Nelson & Assoc.
All Other Outsiders
----------------------------------
0.0000% $ -
----------------------------------
- -----------------
Insiders
- -----------------
Russell Best 15.0200% $ 751,321.78
Mariea Best
----------------------------------
15.0200% $ 751,321.78
----------------------------------
Stock Bonus Plan
BLC 84.9800% $4,250,820.59
BUL
FEB
BLP
---------------------------------
Total 100.0000% $5,002,142.37
---------------------------------
BLP's Beginning Basis in FEB & BUL 6,570,587.40
Basis Used This Round (5,002,142.37)
-------------
BLP's Ending Basis This Round 1,568,445.03
=============
84
PROJECT THOROUGHBRED
BUL Sale of BLS Stock - Round 2 Distribution
- -------------------------------------------- -----------------------------------------
BLC DISTRIBUTION RECEIVED BUL DISTRIBUTION RECEIVED
- -------------------------------------------- -----------------------------------------
Cash Received from BUL $1,375,584.20 Cash Received from BLC $6,985,769.92
Cash Received from FEB 3,193,346.91 Tax Basis -
-------------
Cash Received from BLP 4,250,820.59 Gain on Sale $6,985,769.92
-------------
Total Cash Received $8,819,751.70 Tax Rate 40%
-------------
Tax Basis 8,819,751.70 Tax Due $2,794,307.97
------------- -------------
Gain on Sale $ - Cash Distributed $4,191,461.95
Last Round BLP Income $ - =============
-------------
Total Income $ -
Tax Rate 40%
-------------
Tax Due $ -
-------------
Cash Distributed $8,819,751.70
=============
- -------------------------------------------- ----------------------------------------------
FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- -------------------------------------------- ----------------------------------------------
Cash Received from BUL $3,253,659.63 Cash Received from BUL $ 95,299.69
Tax Basis $ - Cash Received from FEB 665,349.51
------------- -----------
Gain from Distribution $3,253,659.63 Total Cash Received $760,649.20
Tax Rate 40% Tax Basis 760,649.20
------------- -----------
Tax Due $1,301,463.85 Gain from Distribution $ -
------------ ===========
Cash Distributed $1,952,195.78
============= Gain/Basis Alloc. to BLC $ -
===========
Cash Distributed $760,649.20
===========
- -------------------------------------------------------------- --------------------------------------------------------------
BLC SHAREHOLDERS BUL SHAREHOLDERS
- -------------------------------------------------------------- --------------------------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
- --------- ------- -------- ------- -----------
Outsiders Outsiders
- --------- ---------
Edward McLaughlin Edward McLaughlin 1.7590% $ 73,727.93
Cede & Co. 3.6181% $319,108.97 Cede & Co. 1.4674% $ 61,505.01
Della & Co. 2.0027% $176,635.77 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 7,310.63 Martin Nelson & Assoc. 0.0259% $ 1,084.55
All Other Outsiders 4.9577% $437,261.17 All Other Outsiders 4.2529% $178,257.17
------------------------------ ----------------------------
10.6615% $940,316.55 7.5051% $314,574.66
------------------------------ ----------------------------
- --------
Insiders Insiders
- -------- --------
Russell Best 1.3975% $123,257.21 Russell Best 0.5504% $ 23,068.4
Mariea Best 0.0008% $ 73.11 Mariea Best 0.0003% $ 10.85
------------------------------ ----------------------------
1.3983% $123,330.32 0.5506% $ 23,079.29
------------------------------ ----------------------------
Stock Bonus Plan 8.7342% $770,334.91 Stock Bonus Plan 7.0541% $295,670.90
BLC BLC 4.9906% $209,177.76
BUL 79.2060% $6,985,769.92 BUL
FEB FEB 77.6259% $ 3,253,659.63
BLP BLP 2.2737% $95,299.69
------------------------------- ------------------------------
Total 100.0000% $8,819,751.70 Total 100.0000% $ 4,191,461.95
=============================== ==============================
Total Taxes Paid $4,095,771.82
BLC's Beginning Basis in FEB, BUL, & BL 10,562,483.20
Basis Used This Round (8,819,751.70)
Basis Allocated From BLP This Round 0.00
-------------
BLC's Ending Basis This Round 1,742,731.50
=============
- -------------------------------------------------------------- ----------------------------------------------------------
FEB SHAREHOLDERS BLP SHAREHOLDERS
- -------------------------------------------------------------- ----------------------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
------- -------- ------- --------
- --------- ---------
Outsiders Outsiders
- --------- ----------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $208,425.29 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% 223,352.64 All Other Outsiders
--------------------------- -------------------------------
22.1176% $431,777.93 0.0000% $ -
- -------- --------------------------- -------- -------------------------------
Insiders Insiders
- -------- --------
Russell Best 18.9259% $369,469.79 Russell Best 15.0200% $114,249.51
Mariea Best 0.0002% 3.26 Mariea Best
--------------------------- -------------------------------
18.9260% $369,473.05 15.0200% $114,249.51
--------------------------- ------------------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $485,595.29 BLC 84.9800% $646,399.69
BUL BUL
FEB FEB
BLP 34.0821% $665,349.51 BLP
--------------------------- -------------------------------
Total 100.0000% $1,952,195.78 Total 100.0000% $760,649.20
============================ ================================
BLP's Beginning Basis in FEB & BUL 1,568,445.03
Basis Used in This Round (760,649.20)
------------
BLP's Ending Basis in FEB & BUL 807,795.83
============
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
85
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 3 Distribution
- --------------------------------------- -------------------------------------- -----------------------------------
BLC Distribution Received BUL Distribution Received FEB Distribution Received
- --------------------------------------- -------------------------------------- -----------------------------------
Cash Received from BUL $ 209,177.78 Cash Received from BLC $ 1,062,288.90 Cash Received from BUL $ 494,766.73
Cash Received from FEB 485,595.29 Tax Basis - Tax Basis $ -
-------------- ------------
Cash Received from BLP 646,399.69 Gain on Sale $ 1,062,288.90 Gain from Distribution $ 494,766.73
--------------
Total Cash Received $ 1,341,172.76 Tax Rate 40% Tax Rate 40%
-------------- ------------
Tax Basis 1,341,172.76 Tax Due $ 424,915.56 Tax Due $ 197,906.69
-------------- -------------- ------------
Gain on Sale $ - Cash Distributed $ 637,373.34 Cash Distributed $ 296,860.04
Last Round BLP Income $ - ============== ============
--------------
Total Income $ -
Tax Rate 40%
--------------
Tax Due $ -
--------------
Cash Distributed $ 1,341,172.76
==============
- -----------------------------------------
BLP Distribution Received
- -----------------------------------------
Cash Received from BUL $ 14,491.72
Cash Received from FEB 101,176.16
--------------
Total Cash Received $ 115,667.88
Tax Basis 115,667.88
--------------
Gain from Distribution $ -
==============
Gain/Basis Alloc. to BLC $ -
==============
Cash Distributed $ 115,667.88
==============
- ------------------------------------------------------- -----------------------------------------------------
BLC Shareholders BUL Shareholders
- ------------------------------------------------------- -----------------------------------------------------
Percent Dividend Percent Dividend
- ---------------- --------------------------- ---------------- ---------------------------
Outsiders Outsiders
- ---------------- ----------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 11,211.41
Cede & Co. 3.6181% $ 48,525.21 Cede & Co. 1.4674% $ 9,352.74
Della & Co. 2.0027% $ 26,860.06 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 1,111.69 Martin Nelson & Assoc. 0.0259% $ 164.92
All Other Outsiders 4.9577% $ 66,491.98 All Other Outsiders 4.2529% $ 27,106.62
--------------------------- ---------------------------
10.6615% $ 142,988.94 7.5051% $ 47,835.70
--------------------------- ---------------------------
- ---------------- ----------------
Insiders Insiders
- ---------------- ----------------
Russell Best 1.3975% $ 18,743.07 Russell Best 0.5504% $ 3,507.90
Mariea Best 0.0008% $ 11.12 Mariea Best 0.0003% $ 1.65
--------------------------- ---------------------------
1.3983% $ 18,754.19 0.5506% $ 3,509.55
--------------------------- ---------------------------
Stock Bonus Plan 8.7342% $ 117,140.74 Stock Bonus Plan 7.0541% $ 44,961.10
BLC BLC 4.9906% $ 31,808.55
BUL 79.2060% $1,062,288.90 BUL
FEB FEB 77.6259% $ 494,766.73
BLP BLP 2.2737% $ 14,491.72
--------------------------- ---------------------------
Total 100.0000% $1,341,172.76 Total 100.0000% $ 637,373.34
=========================== ===========================
Total Taxes Paid $ 622,822.25
BLCs Beginning Basis in FEB, BUL, & BL 1,742,731.50
Basis Used This Round (1,341,172.76)
Basis Allocated From BLP This Round 0.00
--------------
BLC's Ending Basis This Round 401,558.74
==============
- ------------------------------------------------------- -----------------------------------------------------
FEB Shareholders BLP Shareholders
- ------------------------------------------------------- -----------------------------------------------------
Percent Dividend Percent Dividend
- ---------------- -------------------------- ---------------- ---------------------------
Outsiders Outsiders
- ---------------- ----------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 31,694.13 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% 33,964.05 All Other Outsiders
--------------------------- ---------------------------
22.1176% $ 65,658.17 0.0000% $ -
--------------------------- ---------------------------
- ---------------- ----------------
Insiders Insiders
- ---------------- ----------------
Russell Best 18.9259% $ 56,183.31 Russell Best 15.0200% $ 17,373.32
Mariea Best 0.0002% 0.50 Mariea Best
--------------------------- ---------------------------
18.9260% $ 56,183.80 15.0200% $ 17,373.32
--------------------------- ---------------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 73,841.89 BLC 84.9800% $ 98,294.57
BUL BUL
FEB FEB
BLP 34.0821% $ 101,176.16 BLP
--------------------------- ---------------------------
Total 100.0000% $ 296,860.04 Total 100.0000% $ 115,667.88
=========================== ===========================
BLP's Beginning Basis in FEB & BUL 807,795.83
PRELIMINARY AND TENTATIVE FOR Basis Used in This Round (115,667.88)
DISCUSSION PURPOSES ONLY --------------
BLP's Ending Basis in FEB & BUL 692,127.95
==============
86
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 4 Distribution
- --------------------------------------- -------------------------------------- -----------------------------------
BLC Distribution Received BUL Distribution Received FEB Distribution Received
- --------------------------------------- -------------------------------------- -----------------------------------
Cash Received from BUL $ 31,808.55 Cash Received from BLC $ 161,536.63 Cash Received from BUL $ 75,236.55
Cash Received from FEB 73,841.89 Tax Basis - Tax Basis $ -
-------------- ------------
Cash Received from BLP 96,294.57 Gain on Sale $ 161,536.63 Gain from Distribution $ 75,236.55
--------------
Total Cash Received $ 203,945.01 Tax Rate 40% Tax Rate 40%
-------------- ------------
Tax Basis 203,945.01 Tax Due $ 64,614.65 Tax Due $ 30,094.62
-------------- -------------- ------------
Gain on Sale $ - Cash Distributed $ 96,921.98 Cash Distributed $ 45,141.93
Last Round BLP Income $ - ============== ============
--------------
Total Income $ -
Tax Rate 40%
--------------
Tax Due $ -
--------------
Cash Distributed $ 203,945.01
==============
- -----------------------------------------
BLP Distribution Received
- -----------------------------------------
Cash Received from BUL $ 2,203.68
Cash Received from FEB 15,385.32
--------------
Total Cash Received $ 17,589.00
Tax Basis 17,589.00
--------------
Gain from Distribution $ -
==============
Gain/Basis Alloc. to BLC $ -
==============
Cash Distributed $ 17,589.00
==============
- ------------------------------------------------------- -----------------------------------------------------
BLC Shareholders BUL Shareholders
- ------------------------------------------------------- -----------------------------------------------------
Percent Dividend Percent Dividend
- ---------------- --------------------------- ---------------- ---------------------------
Outsiders Outsiders
- ---------------- ----------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 1,704.86
Cede & Co. 3.6181% $ 7,378.97 Cede & Co. 1.4674% $ 1,422.22
Della & Co. 2.0027% $ 4,084.47 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 169.05 Martin Nelson & Assoc. 0.0259% $ 25.08
All Other Outsiders 4.9577% $ 10,111.08 All Other Outsiders 4.2529% $ 4,121.96
--------------------------- ---------------------------
10.6615% $ 21,743.57 7.5051% $ 7,274.12
--------------------------- ---------------------------
- ---------------- ----------------
Insiders Insiders
- ---------------- ----------------
Russell Best 1.3975% $ 2,850.16 Russell Best 0.5504% $ 533.43
Mariea Best 0.0008% $ 1.69 Mariea Best 0.0003% $ 0.25
--------------------------- ---------------------------
1.3983% $ 2,851.85 0.5506% $ 533.68
--------------------------- ---------------------------
Stock Bonus Plan 8.7342% $ 17,812.97 Stock Bonus Plan 7.0541% $ 6,837.00
BLC BLC 4.9906% $ 4,836.96
79.2060% $ 161,536.63
BUL BUL
FEB FEB 77.6259% $ 75,236.55
BLP BLP 2.2737% $ 2,203.68
--------------------------- ---------------------------
Total 100.0000% $ 203,945.01 Total 100.0000% $ 96,921.98
=========================== ===========================
Total Taxes Paid $ 94,209.27
BLCs Beginning Basis in FEB, BUL, & BL 401,558.74
Basis Used This Round (203,945.01)
Basis Allocated From BLP This Round 0.00
--------------
BLC's Ending Basis This Round 197,613.72
==============
- ------------------------------------------------------- -----------------------------------------------------
FEB Shareholders BLP Shareholders
- ------------------------------------------------------- -----------------------------------------------------
Percent Dividend Percent Dividend
- ---------------- -------------------------- ---------------- ---------------------------
Outsiders Outsiders
- ---------------- ----------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 4,819.56 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% 5,164.73 All Other Outsiders
--------------------------- ---------------------------
22.1176% $ 9,984.29 0.0000% $ -
--------------------------- ---------------------------
- ---------------- ----------------
Insiders Insiders
- ---------------- ----------------
Russell Best 18.9259% $ 8,543.50 Russell Best 15.0200% $ 2,641.87
Mariea Best 0.0002% 0.06 Mariea Best
--------------------------- ---------------------------
18.9260% $ 8,543.57 15.0200% $ 2,641.87
--------------------------- ---------------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 11,228.74 BLC 84.9800% $ 14,947.13
BUL BUL
FEB FEB
BLP 34.0821% $ 15,385.32 BLP
--------------------------- ---------------------------
Total 100.0000% $ 45,141.93 Total 100.0000% $ 17,589.00
=========================== ===========================
BLP's Beginning Basis in FEB & BUL 692,127.95
PRELIMINARY AND TENTATIVE FOR Basis Used in This Round (17,589.00)
DISCUSSION PURPOSES ONLY --------------
BLP's Ending Basis in FEB & BUL 674,538.95
==============
87
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 5 Distribution
- --------------------------------------- -------------------------------------- -----------------------------------
BLC Distribution Received BUL Distribution Received FEB Distribution Received
- --------------------------------------- -------------------------------------- -----------------------------------
Cash Received from BUL $ 4,836.96 Cash Received from BLC $ 24,564.02 Cash Received from BUL $ 11,440.82
Cash Received from FEB 11,228.74 Tax Basis - Tax Basis $ -
-------------- ------------
Cash Received from BLP 14,947.13 Gain on Sale $ 24,564.02 Gain from Distribution $ 11,440.82
--------------
Total Cash Received $ 31,012.83 Tax Rate 40% Tax Rate 40%
-------------- ------------
Tax Basis 31,012.83 Tax Due $ 9,825.61 Tax Due $ 4,576.33
-------------- -------------- ------------
Gain on Sale $ - Cash Distributed $ 14,738.41 Cash Distributed $ 6,864.49
Last Round BLP Income $ - ============== ============
--------------
Total Income $ -
Tax Rate 40%
--------------
Tax Due $ -
--------------
Cash Distributed $ 31,012.83
==============
- -----------------------------------------
BLP Distribution Received
- -----------------------------------------
Cash Received from BUL $ 335.10
Cash Received from FEB 2,339.56
--------------
Total Cash Received $ 2,674.67
Tax Basis 2,674.67
--------------
Gain from Distribution $ -
==============
Gain/Basis Alloc. to BLC $ -
==============
Cash Distributed $ 2,674.67
==============
- ------------------------------------------------------- -----------------------------------------------------
BLC Shareholders BUL Shareholders
- ------------------------------------------------------- -----------------------------------------------------
Percent Dividend Percent Dividend
- ---------------- -------------------------- ---------------- ---------------------------
Outsiders Outsiders
- ---------------- ----------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 259.25
Cede & Co. 3.6181% $ 1,122.08 Cede & Co. 1.4674% $ 216.27
Della & Co. 2.0027% $ 621.10 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 25.71 Martin Nelson & Assoc. 0.0259% $ 3.81
All Other Outsiders 4.9577% $ 1,537.54 All Other Outsiders 4.2529% $ 626.80
--------------------------- ---------------------------
10.6615% $ 3,306.43 7.5051% $ 1,106.14
--------------------------- ---------------------------
- ---------------- ----------------
Insiders Insiders
- ---------------- ----------------
Russell Best 1.3975% $ 433.41 Russell Best 0.5504% $ 81.12
Mariea Best 0.0008% $ 0.26 Mariea Best 0.0003% $ 0.04
--------------------------- ---------------------------
1.3983% $ 433.67 0.5506% $ 81.15
--------------------------- ---------------------------
Stock Bonus Plan 8.7342% $ 2,708.72 Stock Bonus Plan 7.0541% $ 1,039.67
BLC BLC 4.9906% $ 735.53
BUL 79.2060% $ 24,564.02 BUL
FEB FEB 77.6259% $ 11,440.82
BLP BLP 2.2737% $ 335,10
--------------------------- ---------------------------
Total 100.0000% $ 31,012.83 Total 100.0000% $ 14,738.41
=========================== ===========================
Total Taxes Paid $ 14,401.94
BLCs Beginning Basis in FEB, BUL, & BL 197,613.72
Basis Used This Round (31,012.83)
Basis Allocated From BLP This Round 0.00
--------------
BLC's Ending Basis This Round 166,600.89
==============
- ------------------------------------------------------- -----------------------------------------------------
FEB Shareholders BLP Shareholders
- ------------------------------------------------------- -----------------------------------------------------
Percent Dividend Percent Dividend
- ---------------- -------------------------- ---------------- ---------------------------
Outsiders Outsiders
- ---------------- ----------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 732.88 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% 785.37 All Other Outsiders
--------------------------- ---------------------------
22.1176% $ 1,518.26 0.0000% $ -
--------------------------- ---------------------------
- ---------------- ----------------
Insiders Insiders
- ---------------- ----------------
Russell Best 18.9259% $ 1,299.16 Russell Best 15.0200% $ 401.73
Mariea Best 0.0002% 0.01 Mariea Best
--------------------------- ---------------------------
18.9260% $ 1,299.18 15.0200% $ 401.73
--------------------------- ---------------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 1,707.50 BLC 84.9800% $ 2,272.93
BUL BUL
FEB FEB
BLP 34.0821% $ 2,339.56 BLP
--------------------------- ---------------------------
Total 100.0000% $ 6,864.49 Total 100.0000% $ 2,674.67
=========================== ===========================
BLP's Beginning Basis in FEB & BUL 674,538.95
PRELIMINARY AND TENTATIVE FOR Basis Used in This Round (2,674.67)
DISCUSSION PURPOSES ONLY --------------
BLP's Ending Basis in FEB & BUL 671,864.28
==============
88
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 6 Distribution
- ------------------------------------ -----------------------------------
BLC DISTRIBUTION RECEIVED BUL DISTRIBUTION RECEIVED
- ------------------------------------ ------------------------------------
Cash Received from BUL $ 735.53 Cash Received from BLC $ 3,735.32
Cash Received from FEB 1,707.50 Tax Basis -
Cash Received from BLP 2,272.93 ----------
---------- Gain on Sale $ 3,735.32
Total Cash Received $ 4,715.96 Tax Rate 40%
Tax Basis 4,715.96 ----------
---------- Tax Due $ 1,494.13
Gain on Sale $ - ----------
Last Round BLP Income $ - Cash Distributed $ 2,241.19
---------- ==========
Total Income $
Tax Rate 40%
----------
Tax Due $ -
Cash Distributed $ 4,715.96
==========
- ------------------------------------ -----------------------------------
FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- ------------------------------------ -----------------------------------
Cash Received from BUL $ 1,739.74 Cash Received from BUL $ 50.96
Tax Basis $ - Cash Received from FEB $ 355.77
---------- ----------
Gain from Distribution $ 1,739.74 Total Cash Received $ 406.72
Tax Rate 40% Tax Basis 406.72
---------- ----------
Tax Due $ 695.90 Gain from Distribution $ -
---------- ==========
Cash Distributed $ 1,043.85 Gain/Basis Alloc. to BLC $ -
========== ==========
Cash Distributed $ 406.72
==========
- ----------------------------------------------- -----------------------------------------------
BLC SHAREHOLDERS BUL SHAREHOLDERS
- ----------------------------------------------- -----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- ----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 39.42
Cede & Co. 3.6181% $ 170.63 Cede & Co. 1.4674% $ 32.89
Della & Co. 2.0027% $ 94.45 Della & Co.
Martin Nelson & Assoc 0.0829% $ 3.91 Martin Nelson & Assoc 0.0259% $ 0.58
All Other Outsiders 4.9577% $ 233.81 All Other Outsiders 4.2529% $ 95.31
---------------------- ----------------------
10.6615% $ 502.79 7.5051% $ 168.20
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 1.3975% $ 65.91 Russell Best 0.5504% $ 12.33
Mariea Best 0.0008% $ 0.04 Marica Best 0.0003% $ 0.01
---------------------- ----------------------
1.3983% $ 65.95 0.5506% $ 12.34
---------------------- ----------------------
Stock Bonus Plan 8.7342% $ 411.90 Stock Bonus Plan 7.0541% $ 158.10
BLC BLC 4.9906% $ 111.85
BUL 79.2060% $ 3,735.32 BUL
FEB FEB 77.6259% $ 1.739.74
BLP BLP 2.2737% $ 50.96
---------------------- ----------------------
Total 100.0000% $ 4,715.96 Total 100.0000% $ 2,241.19
====================== ======================
Total Taxes Paid $ 2,190.03
BLC's Beginning Basis in FEB, BUL,
& BL 166,600.89
Basis Used This Round (4,715.96)
Basis Allocated From BLP This Round 0.00
-----------
BLC's Ending Basis This Round 161,884.93
===========
- ----------------------------------------------- -----------------------------------------------
FEB SHAREHOLDERS BLP SHAREHOLDERS
- ----------------------------------------------- -----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- ----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 111.45 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc Martin Nelson & Assoc
All Other Outsiders 11.4411% $ 119.43 All Other Outsiders
---------------------- ----------------------
22.1176% $ 230.87 0.0000% $ -
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 18.9259% $ 197.56 Russell Best 15.0200% $ 61.09
Marica Best 0.0002% $ 0.00 Marica Best
---------------------- ----------------------
18.9260% $ 197.56 15.0200% $ 61.09
---------------------- ----------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 259.65 BLC 84.9800% $ 345.63
BUL BUL
FEB FEB
BLP 34.0821% $ 355.77 BLP
---------------------- ----------------------
Total 100.0000% $ 1,043.85 Total 100.0000% $ 406.72
====================== ======================
BLP's Beginning Basis in FEB,
& BUL 671,864.28
Basis Used in This Round (406.72)
-----------
BLP's Ending Basis IN FEB & BUL 671,457.56
===========
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
89
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 7 Distribution
- ------------------------------------ -----------------------------------
BLC DISTRIBUTION RECEIVED BUL DISTRIBUTION RECEIVED
- ------------------------------------ ------------------------------------
Cash Received from BUL $ 111.85 Cash Received from BLC $ 568.01
Cash Received from FEB 259.65 Tax Basis -
Cash Received from BLP 345.63 ----------
---------- Gain on Sale $ 568.01
Total Cash Received $ 717.13 Tax Rate 40%
Tax Basis 717.13 ----------
---------- Tax Due $ 277.20
Gain on Sale $ - ----------
Last Round BLP Income $ - Cash Distributed $ 340.81
---------- ==========
Total Income $ -
Tax Rate 40%
----------
Tax Due $ -
----------
Cash Distributed $ 717.13
==========
- ------------------------------------ -----------------------------------
FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- ------------------------------------ -----------------------------------
Cash Received from BUL $ 264.55 Cash Received from BUL $ 7.75
Tax Basis $ - Cash Received from FEB $ 54.10
---------- ----------
Gain from Distribution $ 264.55 Total Cash Received $ 61.85
Tax Rate 40% Tax Basis 61.85
---------- ----------
Tax Due $ 105.82 Gain from Distribution $ -
---------- ==========
Cash Distributed $ 158.73 Gain/Basis Alloc. to BLC $ -
========== ==========
Cash Distributed $ 61.85
- ----------------------------------------------- -----------------------------------------------
BLC SHAREHOLDERS BUL SHAREHOLDERS
- ----------------------------------------------- -----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- ----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 5.99
Cede & Co. 3.6181% $ 25.95 Cede & Co. 1.4674% $ 5.00
Della & Co. 2.0027% $ 14,36 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 0.59 Martin Nelson & Assoc. 0.0259% $ 0.09
All Other Outsiders 4.9577% $ 35.55 All Other Outsiders 4.2529% $ 14.49
---------------------- ----------------------
10.6615% $ 76.46 7.5051% $ 25.58
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 1.3975% $ 10.02 Russell Best 0.5504% $ 1.88
Mariea Best 0.0008% $ 0.01 Mariea Best 0.0003% $ 0.00
---------------------- ----------------------
1.3983% $ 10.03 0.5506% $ 1.88
---------------------- ----------------------
Stock Bonus Plan 8.7342% $ 62.64 Stock Bonus Plan 7.0541% $ 24.04
BLC BLC 4.9906% $ 17.01
BUL 79.2060% $ 568.01 BUL
FEB FEB 77.6259% $ 264.55
BLP BLP 2.2737% $ 7.75
---------------------- ----------------------
Total 100.0000% $ 717.13 Total 100.0000% $ 340.81
====================== ======================
Total Taxes Paid $ 333.03
BLC's Beginning Basis in FEB, BUL,
& BL 161,884.93
Basis Used This Round (717.13)
Basis Allocated From BLP This Round 0.00
-----------
BLC's Ending Basis This Round 161,167.80
===========
- ----------------------------------------------- ------------------------------------------------
FEB SHAREHOLDERS BLP SHAREHOLDERS
- ----------------------------------------------- ------------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- -----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 16.95 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% $ 18.16 All Other Outsiders
---------------------- ----------------------
22.1176% $ 35.11 0.0000% $ -
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 18.9259% $ 30.04 Russell Best 15.0200% $ 9.29
Mariea Best 0.0002% $ 0.00 Mariea Best
---------------------- ----------------------
18.9260% $ 30.04 15.0200% $ 9.29
---------------------- ----------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 39.48 BLC 84.9800% $ 52.56
BUL BUL
FEB FEB
BLP 34.0821% $ 54.10 BLP
---------------------- ----------------------
Total 100.0000% $ 158.73 Total 100.0000% $ 61.85
====================== ======================
BLP's Beginning Basis in FEB
& BUL 671,457.56
Basis Used in This Round (61.85)
-----------
BLP's Ending Basis in FEB & BUL 671,395.71
===========
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
90
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 8 Distribution
- ------------------------------------ -----------------------------------
BLC DISTRIBUTION RECEIVED BUL DISTRIBUTION RECEIVED
- ------------------------------------ ------------------------------------
Cash Received from BUL $ 17.01 Cash Received from BLC $ 86.37
Cash Received from FEB 39.48 Tax Basis -
Cash Received from BLP 52.56 ----------
---------- Gain on Sale $ 86.37
Total Cash Received $ 109.05 Tax Rate 40%
Tax Basis 109.05 ----------
---------- Tax Due $ 34.55
Gain on Sale $ - ----------
Last Round BLP Income $ - Cash Distributed $ 51.82
---------- ==========
Total Income $ -
Tax Rate 40%
----------
Tax Due $ -
----------
Cash Distributed $ 109.05
==========
- ------------------------------------ -----------------------------------
FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- ------------------------------------ -----------------------------------
Cash Received from BUL $ 40.23 Cash Received from BUL $ 1.18
Tax Basis $ - Cash Received from FEB $ 8.23
---------- ----------
Gain from Distribution $ 40.23 Total Cash Received $ 9.40
Tax Rate 40% Tax Basis 9.40
----------
Tax Due $ 16.09 Gain from Distribution $ -
---------- ==========
Cash Distributed $ 24.14 Gain/Basis Alloc. to BLC $ -
========== ==========
Cash Distributed $ 9.40
==========
- ----------------------------------------------- -----------------------------------------------
BLC SHAREHOLDERS BUL SHAREHOLDERS
- ----------------------------------------------- -----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- ----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 0.91
Cede & Co. 3.6181% $ 3.95 Cede & Co. 1.4674% $ 0.76
Della & Co. 2.0027% $ 2.18 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 0.09 Martin Nelson & Assoc. 0.0259% $ 0.01
All Other Outsiders 4.9577% $ 5.41 All Other Outsiders 4.2529% $ 2.20
---------------------- ----------------------
10.6615% $ 11.63 7.5051% $ 3.89
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 1.3975% $ 1.52 Russell Best 0.5504% $ 0.29
Mariea Best 0.0008% $ 0.00 Mariea Best 0.0003% $ 0.00
---------------------- ----------------------
1.3983% $ 1.52 0.5506% $ 0.29
---------------------- ----------------------
Stock Bonus Plan 8.7342% $ 9.52 Stock Bonus Plan 7.0541% $ 3.66
BLC BLC 4.9906% $ 2.59
BUL 79.2060% $ 86.37 BUL
FEB FEB 77.6259% $ 40.23
BLP BLP 2.2737% $ 1.18
---------------------- ----------------------
Total 100.0000% $ 109.05 Total 100.0000% $ 51.82
====================== ======================
Total Taxes Paid $ 50.64
BLC's Beginning Basis in FEB, BUL,
& BL 161,167.80
Basis Used This Round (109.05)
Basis Allocated From BLP This Round 0.00
-----------
BLC's Ending Basis This Round 161,058.75
===========
- ----------------------------------------------- ------------------------------------------------
FEB SHAREHOLDERS BLP SHAREHOLDERS
- ----------------------------------------------- ------------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- -----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 2.58 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% $ 2.76 All Other Outsiders
---------------------- ----------------------
22.1176% $ 5.34 0.0000% $ -
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 18.9259% $ 4.57 Russell Best 15.0200% $ 1.41
Mariea Best 0.0002% $ 0.00 Mariea Best
---------------------- ----------------------
18.9260% $ 4.57 15.0200% $ 1.41
---------------------- ----------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 6.00 BLC 84.9800% $ 7.99
BUL BUL
FEB FEB
BLP 34.0821% $ 8.23 BLP
---------------------- ----------------------
Total 100.0000% $ 24.14 Total 100.0000% $ 9.40
====================== ======================
BLP's Beginning Basis in FEB
& BUL 671,395.71
Basis Used in This Round (9.40)
-----------
BLP's Ending Basis in FEB & BUL 671,386.31
===========
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
91
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 9 Distribution
- ------------------------------------ -----------------------------------
BLC DISTRIBUTION RECEIVED BUL DISTRIBUTION RECEIVED
- ------------------------------------ ------------------------------------
Cash Received from BUL $ 2.59 Cash Received from BLC $ 13.13
Cash Received from FEB 6.00 Tax Basis -
Cash Received from BLP 7.99 ----------
---------- Gain on Sale $ 13.13
Total Cash Received $ 16.58 Tax Rate 40%
Tax Basis 16.58 ----------
---------- Tax Due $ 5.25
Gain on Sale $ - ----------
Last Round BLP Income $ - Cash Distributed $ 7.88
---------- ==========
Total Income $ -
Tax Rate 40%
----------
Tax Due $ -
----------
Cash Distributed $ 16.58
==========
- ------------------------------------ -----------------------------------
FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- ------------------------------------ -----------------------------------
Cash Received from BUL $ 6.12 Cash Received from BUL $ 0.18
Tax Basis $ - Cash Received from FEB $ 1.25
---------- ----------
Gain from Distribution $ 6.12 Total Cash Received $ 1.43
Tax Rate 40% Tax Basis 1.43
---------- ----------
Tax Due $ 2.45 Gain from Distribution $ -
---------- ==========
Cash Distributed $ 3.67 Gain/Basis Alloc. to BLC $ -
========== ==========
Cash Distributed $ 1.43
==========
- ----------------------------------------------- -----------------------------------------------
BLC SHAREHOLDERS BUL SHAREHOLDERS
- ----------------------------------------------- -----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- ----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 0.14
Cede & Co. 3.6181% $ 0.60 Cede & Co. 1.4674% $ 0.12
Della & Co. 2.0027% $ 0.33 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 0.01 Martin Nelson & Assoc. 0.0259% $ 0.00
All Other Outsiders 4.9577% $ 0.82 All Other Outsiders 4.2529% $ 0.34
---------------------- ----------------------
10.6615% $ 1.77 7.5051% $ 0.59
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 1.3975% $ 0.23 Russell Best 0.5504% $ 0.04
Mariea Best 0.0008% $ 0.00 Mariea Best 0.0003% $ 0.00
---------------------- ----------------------
1.3983% $ 0.23 0.5506% $ 0.04
---------------------- ----------------------
Stock Bonus Plan 8.7342% $ 1.45 Stock Bonus Plan 7.0541% $ 0.56
BLC BLC 4.9906% $ 0.39
BUL 79.2060% $ 13.13 BUL
FEB FEB 77.6259% $ 6.12
BLP BLP 2.2737% $ 0.18
---------------------- ----------------------
Total 100.0000% $ 16.58 Total 100.0000% $ 7.88
====================== ======================
Total Taxes Paid $ 7.70
BLC's Beginning Basis in FEB, BUL,
& BL 161,058.75
Basis Used This Round (16.58)
Basis Allocated From BLP This Round 0.00
-----------
BLC's Ending Basis This Round 161,042.17
===========
- ----------------------------------------------- ------------------------------------------------
FEB SHAREHOLDERS BLP SHAREHOLDERS
- ----------------------------------------------- ------------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- -----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 0.39 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% $ 0.42 All Other Outsiders
---------------------- ----------------------
22.1176% $ 0.81 0.0000% $ -
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 18.9259% $ 0.69 Russell Best 15.0200% $ 0.21
Mariea Best 0.0002% $ 0.00 Mariea Best
---------------------- ----------------------
18.9260% $ 0.69 15.0200% $ 0.21
---------------------- ----------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 0.91 BLC 84.9800% $ 1.22
BUL BUL
FEB FEB
BLP 34.0821% $ 1.25 BLP
---------------------- ----------------------
Total 100.0000% $ 3.67 Total 100.0000% $ 1.43
====================== ======================
BLP's Beginning Basis in FEB
& BUL 671,386.31
Basis Used in This Round (1.43)
----------
BLP's Ending Basis in FEB & BUL 671,384.88
==========
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
92
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 10 Distribution
- ------------------------------------ -----------------------------------
BLC DISTRIBUTION RECEIVED BUL DISTRIBUTION RECEIVED
- ------------------------------------ ------------------------------------
Cash Received from BUL $ 0.39 Cash Received from BLC $ 2.00
Cash Received from FEB 0.91 Tax Basis -
Cash Received from BLP 1.22 ----------
---------- Gain on Sale $ 2.00
Total Cash Received $ 2.52 Tax Rate 40%
Tax Basis 2.52 ----------
---------- Tax Due $ 0.80
Gain on Sale $ - ----------
Last Round BLP Income $ - Cash Distributed $ 1.20
---------- ==========
Total Income $ -
Tax Rate 40%
----------
Tax Due $ -
----------
Cash Distributed $ 2.52
==========
- ------------------------------------ -----------------------------------
FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- ------------------------------------ -----------------------------------
Cash Received from BUL $ 0.93 Cash Received from BUL $ 0.03
Tax Basis $ - Cash Received from FEB $ 0.19
---------- ----------
Gain from Distribution $ 0.93 Total Cash Received $ 0.22
Tax Rate 40% Tax Basis 0.22
---------- ----------
Tax Due $ 0.37 Gain from Distribution $ -
---------- ==========
Cash Distributed $ 0.56 Gain/Basis Alloc. to BLC $ -
========== ==========
Cash Distributed $ 0.22
==========
- ----------------------------------------------- -----------------------------------------------
BLC SHAREHOLDERS BUL SHAREHOLDERS
- ----------------------------------------------- -----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- ----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 0.02
Cede & Co. 3.6181% $ 0.09 Cede & Co. 1.4674% $ 0.02
Della & Co. 2.0027% $ 0.05 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 0.00 Martin Nelson & Assoc. 0.0259% $ 0.00
All Other Outsiders 4.9577% $ 0.13 All Other Outsiders 4.2529% $ 0.05
---------------------- ----------------------
10.6615% $ 0.27 7.5051% $ 0.09
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 1.3975% $ 0.04 Russell Best 0.5504% $ 0.01
Mariea Best 0.0008% $ 0.00 Mariea Best 0.0003% $ 0.00
---------------------- ----------------------
1.3983% $ 0.04 0.5506% $ 0.01
---------------------- ----------------------
Stock Bonus Plan 8.7342% $ 0.22 Stock Bonus Plan 7.0541% $ 0.08
BLC BLC 4.9906% $ 0.06
BUL 79.2060% $ 2.00 BUL
FEB FEB 77.6259% $ 0.93
BLP BLP 2.2737% $ 0.03
---------------------- ----------------------
Total 100.0000% $ 2.52 Total 100.0000% $ 1.20
====================== ======================
Total Taxes Paid $ 1.17
BLC's Beginning Basis in FEB, BUL,
& BL 161,042.17
Basis Used This Round (2.52)
Basis Allocated From BLP This Round 0.00
-----------
BLC's Ending Basis This Round 161,039.65
===========
- ----------------------------------------------- ------------------------------------------------
FEB SHAREHOLDERS BLP SHAREHOLDERS
- ----------------------------------------------- ------------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- -----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 0.06 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% $ 0.06 All Other Outsiders
---------------------- ----------------------
22.1176% $ 0.12 0.0000% $ -
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 18.9259% $ 0.11 Russell Best 15.0200% $ 0.03
Mariea Best 0.0002% $ 0.00 Mariea Best
---------------------- ----------------------
18.9260% $ 0.11 15.0200% $ 0.03
---------------------- ----------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 0.14 BLC 84.9800% $ 0.18
BUL BUL
FEB FEB
BLP 34.0821% $ 0.19 BLP
---------------------- ----------------------
Total 100.0000% $ 0.56 Total 100.0000% $ 0.22
====================== ======================
BLP's Beginning Basis in FEB
& BUL 671,384.88
Basis Used in This Round (0.22)
-----------
BLP's Ending Basis in FEB & BUL 671,384.66
===========
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
93
PROJECT THOROUGHBRED
BUL Sale of BLC Stock - Round 11 Distribution
- ------------------------------------ -----------------------------------
BLC DISTRIBUTION RECEIVED BUL DISTRIBUTION RECEIVED
- ------------------------------------ ------------------------------------
Cash Received from BUL $ 0.06 Cash Received from BLC $ 0.30
Cash Received from FEB 0.14 Tax Basis -
Cash Received from BLP 0.18 ----------
---------- Gain on Sale $ 0.30
Total Cash Received $ 0.38 Tax Rate 40%
Tax Basis 0.38 ----------
---------- Tax Due $ 0.12
Gain on Sale $ - ----------
Last Round BLP Income $ - Cash Distributed $ 0.18
---------- ==========
Total Income $ -
Tax Rate 40%
----------
Tax Due $ -
----------
Cash Distributed $ 0.38
==========
- ------------------------------------ -----------------------------------
FEB DISTRIBUTION RECEIVED BLP DISTRIBUTION RECEIVED
- ------------------------------------ -----------------------------------
Cash Received from BUL $ 0.14 Cash Received from BUL $ 0.00
Tax Basis $ - Cash Received from FEB $ 0.03
---------- ----------
Gain from Distribution $ 0.14 Total Cash Received $ 0.03
Tax Rate 40% Tax Basis 0.03
---------- ----------
Tax Due $ 0.06 Gain from Distribution $ -
---------- ==========
Cash Distributed $ 0.08 Gain/Basis Alloc. to BLC $ -
========== ==========
Cash Distributed $ 0.03
==========
- ----------------------------------------------- -----------------------------------------------
BLC SHAREHOLDERS BUL SHAREHOLDERS
- ----------------------------------------------- -----------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- ----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin 1.7590% $ 0.00
Cede & Co. 3.6181% $ 0.01 Cede & Co. 1.4674% $ 0.00
Della & Co. 2.0027% $ 0.01 Della & Co.
Martin Nelson & Assoc. 0.0829% $ 0.00 Martin Nelson & Assoc. 0.0259% $ 0.00
All Other Outsiders 4.9577% $ 0.02 All Other Outsiders 4.2529% $ 0.01
---------------------- ----------------------
10.6615% $ 0.04 7.5051% $ 0.01
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 1.3975% $ 0.01 Russell Best 0.5504% $ 0.00
Mariea Best 0.0008% $ 0.00 Mariea Best 0.0003% $ 0.00
---------------------- ----------------------
1.3983% $ 0.01 0.5506% $ 0.00
---------------------- ----------------------
Stock Bonus Plan 8.7342% $ 0.03 Stock Bonus Plan 7.0541% $ 0.01
BLC BLC 4.9906% $ 0.01
BUL 79.2060% $ 0.30 BUL
FEB FEB 77.6259% $ 0.14
BLP BLP 2.2737% $ 0.00
---------------------- ----------------------
Total 100.0000% $ 0.38 Total 100.0000% $ 0.18
====================== ======================
Total Taxes Paid $ 0.18
BLC's Beginning Basis in FEB, BUL,
& BL 161,039.65
Basis Used This Round (0.38)
Basis Allocated From BLP This Round 0.00
-----------
BLC's Ending Basis This Round 161,039.26
===========
- ----------------------------------------------- ------------------------------------------------
FEB SHAREHOLDERS BLP SHAREHOLDERS
- ----------------------------------------------- ------------------------------------------------
PERCENT DIVIDEND PERCENT DIVIDEND
--------- ---------- --------- -----------
- --------------------- ---------------------
Outsiders Outsiders
- --------------------- ---------------------
Edward McLaughlin Edward McLaughlin
Cede & Co. 10.6765% $ 0.01 Cede & Co.
Della & Co. Della & Co.
Martin Nelson & Assoc. Martin Nelson & Assoc.
All Other Outsiders 11.4411% $ 0.01 All Other Outsiders
---------------------- ----------------------
22.1176% $ 0.02 0.0000% $ -
---------------------- ----------------------
- --------------------- ---------------------
Insiders Insiders
- --------------------- ---------------------
Russell Best 18.9259% $ 0.02 Russell Best 15.0200% $ 0.00
Mariea Best 0.0002% $ 0.00 Mariea Best
---------------------- ----------------------
18.9260% $ 0.02 15.0200% $ 0.00
---------------------- ----------------------
Stock Bonus Plan Stock Bonus Plan
BLC 24.8743% $ 0.02 BLC 84.9800% $ 0.03
BUL BUL
FEB FEB
BLP 34.0821% $ 0.03 BLP
---------------------- ----------------------
Total 100.0000% $ 0.08 Total 100.0000% $ 0.03
====================== ======================
BLP's Beginning Basis in FEB
& BUL 671,384.66
Basis Used in This Round (0.03)
-----------
BLP's Ending Basis in FEB & BUL 671,384.63
===========
PRELIMINARY AND TENTATIVE FOR
DISCUSSION PURPOSES ONLY
94
Cede & Co. 3.6181% $
0.01
Della & Co. 2.0027% $
0.01
Martin Nelson & $
Assoc. 0.0829% 0.00
All Other Outsiders 4.9577% $
0.02
10.6615% $
0.04
Insiders
Cede & Co. 1.4674% $
0.00
Della & Co.
Martin Nelson & $
Assoc. 0.0259% 0.00
All Other Outsiders 4.2529% $
0.01
7.5051% $
0.01
Insiders
Cede & Co. 10.6765% $
0.01
Della & Co.
Martin Nelson &
Assoc.
All Other Outsiders 11.4411%
22.1176% $
0.02
Insiders
Cede & Co.
Della & Co.
Martin Nelson &
Assoc. 0.01
All Other Outsiders
0.0000% $ -
Insiders
95
Russell Best 1.3975% $
0.01
Mariea Best 0.0008% $
0.00
1.3983% $
0.01
Stock Bonus Plan 8.7342% $
0.03
BLC
BUL 79.2060% $
0.30
FEB
BLP
Total 100.0000% $
0.38
Russell Best 0.5504% $
0.00
Mariea Best 0.0003% $
0.00
0.5506% $
0.00
Stock Bonus Plan 7.0541% $
0.01
BLC 4.9906% $
0.01
BUL
FEB 77.6259% $
0.14
BLP 2.2737% $
0.00
Total 100.0000% $
0.18
Russell Best 18.9259% $
0.02
Mariea Best 0.0002% 0.00
18.9260% $
0.02
Stock Bonus Plan
BLC 24.8743% $
0.02
BUL
FEB
BLP 34.0821% $
0.03
Total 100.0000% $
0.08
Russell Best 15.0200% $
0.00
Mariea Best
15.0200% $
0.00
Stock Bonus Plan
BLC 84.9800% $
0.03
BUL
FEB
BLP
Total 100.0000% $
0.03
96
Total Taxes Paid $
0.18
BLC's Beginning Basis in FEB, BUL, & BLP 161,039.65
Basis Used This Round (0.38)
Basis Allocated From BLP This Round 0.00
BLC's Ending Basis This Round 161,039.26
BLP's Beginning Basis in FEB & BUL 671,384.66
Basis Used in This Round (0.03)
BLP's Ending Basis in FEB & BUL 671,384.63