Edo Corp - Additional Proxy Soliciting Materials (definitive) (DEFA14A)
30 11월 2007 - 3:12AM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
Filed
by
the Registrant
x
Filed
by a
Party other than the Registrant
o
Check
the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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Registrant as Specified in its Charter)
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
Title
of each class of securities to which transaction
applies:
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(2)
Aggregate
number of securities to which transaction applies:
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(3)
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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Proposed
maximum aggregate value of transaction:
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Subject
Company: EDO Corporation
Commission
File No.: 1-3985
The
following is a presentation made to Institutional Shareholder Services (ISS)
by
EDO Corporation on November 29, 2007.
Supplemental
Proxy Material Presentation to RiskMetrics Group (ISS Governance Services)
SubTitle: November 29, 2007
Disclaimer
This communication is being made in respect of the proposed merger involving
EDO
and ITT Corporation. In connection with the proposed merger, EDO filed a
definitive proxy statement with the U.S. Securities and Exchange Commission
(the
“SEC”), a copy of which was mailed to the shareholders of EDO. Before making any
voting decision, EDO’S SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND
ANY OTHER RELEVANT DOCUMENTS FILED BY EDO WITH THE SEC REGARDING THE MERGER
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT
THE PROPOSED MERGER. EDO’s shareholders may obtain, without charge, a copy of
the proxy statement and other relevant documents filed with the SEC from
the
SEC’s website at www.sec.gov. EDO’s shareholders may obtain, without charge, a
copy of the proxy statement and other relevant documents by directing a request
by mail or telephone to EDO Corporation, 60 East 42nd Street, 42nd Floor,
New
York, NY 10165, telephone: 212-716-2000, or from EDO’s website,
www.edocorp.com. EDO and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from EDO’s shareholders
with respect to the proposed merger. Information regarding EDO’s directors and
executive officers and their ownership of EDO common stock is set forth in
EDO’s
annual report on Form 10-K for the fiscal year ended December 31, 2006, which
was filed on March 8, 2007, and EDO’s proxy statement for EDO’s 2007 Annual
Meeting of Shareholders, which was filed on April 30, 2007. Other information
regarding the participants in the proxy solicitation and a description of
their
direct and indirect interests, by security holdings or otherwise, in the
proposed merger is contained in the definitive proxy statement and other
relevant documents filed with the SEC regarding the proposed merger.
Forward-Looking Statements Statements made in this presentation, including
statements about projected revenue and earnings, long-term organic revenue
growth, projected expenses, EBITDA margins, and debt levels, are forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of
1995. These statements are based on current expectations, estimates and
projections about the Company’s business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks and uncertainties that are difficult to predict. Therefore,
actual
outcomes and results may differ materially from what is expressed or forecasted
in such forward-looking statements due to numerous factors, including those
described above and the following: changes in demand for EDO’s products and
services, product mix, the timing of customer orders and deliveries, changes
in
the government’s funding priorities, the impact of competitive products and
pricing, and other risks discussed from time to time filings and reports.
In
addition, such statements could be affected by general industry and market
conditions and growth rates, and general domestic and international economic
conditions. Such forward-looking statements speak only as of the date on
which
they are made, and EDO does not undertake any obligation to update any
forward-looking stat
ement
to reflect events or circumstances after the date of this release.
Agenda
Governance Considerations BOD Considerations CREW 2.1 Contract Discussion
Highlights of BOD P
rocess
and Review Financial Section Executive Summary EDO’s Financial Projections &
Significance of MRAP- Related Deliveries Summary
Governance
Considerations EDO is committed to the highest standards of corporate governance
All directors, other than Chairman, are independent of management All board
committees are composed solely of independent directors Each director
stands for election annually. Our board members collectively bring a diversity
of background and perspective We have no anti-takeover provisions EDO’s Board
considered under NY BCL (Business Corporate Law) several key factors affecting
shareholder value: Valuation Customers & potential response to a transaction
National security & potential impact on US military troops deployed EDO’s
business as a defense contractor is based on our ability to field equipment
that
protects our troops and country
BOD
Decision Points BOD was not contemplating selling the company but did receive
two unsolicited bids (Party A & ITT). Both were considered as well as other
alternatives including an auction or continuing as to operate independently
EDO
was at a critical point of initiating production on a major program (CREW
2.1)
that is a top priority to the military An auction would have been a major
distraction to EDO’s ability to execute this program Adverse customer reaction
and potential loss of future awards were a major concern This one program
represents a significant portion of the 5 year forecast revenue and EBITDA,
and
therefore the potential downside risk would have been tremendous (“Concentration
Risk”) Negotiated Merger Agreement permits consideration and response to
superior offers (“window shop” provision) Breakup fee 3% of equity
value* ($1.65/share), a relatively low barrier for a competing bid EDO is
well
known in industry and by potential acquirers * Equity value
includes common sha
res,
options, SSARs and Convertible Notes (as converted to common shares including
make-whole related shares)
CREW
2.1 Details Company was awarded two CREW 2.1 contracts for up to 10,000 units
each (20,000 units total) to be mounted on HUMVEEs As of 11/21/07, approximately
8,700 units have been ordered Requirement was expanded to include units for
insertion on MRAP (Mine Resistant Ambush Protected) Vehicles Current estimates
range between 17,000 to 25,000 vehicles to be fielded Government
recently approved sole source justification modification to our initial CREW
2.1
contracts, allowing for the procurement of up to an additional 15,000 units
(35,000 total) Causes a near-term surge of sales to supply initial deployment
All of the above quantities were included in the forecasted revenue and earnings
disclosed to shareholders in the proxy statement Same forecast provided to
ITT
in connection with its $56 offe
r
BOD
process and review extended over a 9-month period /9/07: BOD reviewed Party
A’s
indication of interest and authorized management to provide Party A with
access
to non-public information. 1/31/07: ITT expressed interest in acquiring EDO
at a
price in the high $20s. 2/19/07 2/20/07: BOD reviewed Party A’s
proposal, concluding that the proposed price of $38.00 per share was inadequate.
Subsequently in April, Party A increased its proposed purchase price to $42.00
per share. 6/11/07: In light of the anticipated substantial increase
in the Company’s revenue growth rate attributable to increased production
quantities under one of the recently awarded government contracts, the BOD
concluded that the proposed price of $42.00 per share did not reflect the
Company’s full value and the proposed merger with Party A was rejected. 7/10/07:
Oral indication that Party A was willing to increase its offer to $45.00
per
share as its final price. Party A also indicated that any such transaction
would
have to be announced no later than the firs
t
week in September. Highlights of Board Process and Review Source: EDO
Definitive Proxy Statement.
Highlights
of Board Process and Review (Cont’d) 7/27/07: ITT submitted a proposal to
acquire the Company for a price in the range of $42.00 to $44.00 per
share.
7/30/07: BOD reviewed Party A’s revised final proposal and based on forecasted
future awards from the government determined not to engage in further
discussions with Party A at that time. BOD also authorized management
to enter
into a confidentiality and non disclosure agreement with ITT. Party A
kept
apprised of developments and did not re enter the process. 9/9/07:
BOD held a telephonic meeting in which Mr. Smith reviewed recent conversation
with Mr. Loranger of ITT and the current status of ITT’s due diligence. Based on
the BOD’s familiarity with the Company’s business and estimates for growth, and
following discussion of these and other considerations, BOD determined
that any
price below $56.00 per share would not reflect the full value of the
Company.
ITT indicated its willingness to raise its offer to $56.00 per share
on 9/11/07.
9/16/07: BOD reviewed the proposed transaction with ITT with its legal
and
financial advisors. After considering various factors described in the
EDO
Definitive Proxy Statement, the BOD, by the unanimous vote of the directors
present, adopted resolutions approving the merger, the merger agreement
and the
other transactions contemplated, thereby recommending that the Company’s
shareholders approve and adopt the merger agreement. Source: EDO Definitive
Proxy Statement.
Financial
Executive Summary
Financial
Executive Summary (Cont’d) * Using closing prices from announcement date through
11/27/07
**
Equity value includes common shares, options, SSARs and Convertible Notes
(as
converted to common shares including make whole related shares)
Transaction
was Announced at a Premium to Record EDO Stock Prices Source:
FactSet. Merger Consider
ation $56.00 EDO
Historical Stock Price Performance 1/3/78 – 11/28/07 Transaction
Announcement (09/17/07)
The
Premiums to EDO Shareholders are Significant Average Trading Prices Source:
FactSet. (a) Closing stock price as of 9/14/07. (b) Intra day
high/low. (a) (b) (b)
$56
Represents Attractive Valuation Multiple for EDO
EDO’s
Financial Projections – Impact of CREW 2.1 Revenues ($ in millions) EBITDA ($ in
millions) Source: Projections per EDO Definitive Proxy Statement. Pro forma
2006
data per EDO management. Note: All data is adjusted for non recurring items.
Pro
forma 2006 data is pro forma for the acquisitions of CAS and Impact Science
& Technology. (Gp:) Core Business Revenues (Gp:) Incremental MRAP Revenues
Significance of MRAP related CREW 2.1 Deliveries Incremental MRAP revenues
of
$1.7 billion in projection period (2008 – 2011) Forecast includes recent awards
(3,550 vehicle jammers and related services) that were announced subsequent
to
the transaction with ITT and future projected awards The impact of incremental
MRAP related deliveries on sales and cashflows are largely near term and
nonrecurring Less significant impact in 2010 and beyond (est. 10% of projected
EBITDA) Discussion: Valuation implications of MRAP related cashflow
trajectory (Gp:) Core Business EBITDA (Gp:) Inc
remental
MRAP EBITDA Therefore a simple application of multiples would be
misleading.
Summary
$56 per share Represents a significant premium to near term ( 29%, 30 day)
as
well as historical performance Financial projections reflect significant
impact
from CREW 2.1 award concentration risk Represents an attractive price based
on
relevant valuation metrics* Discounted Cash Flow (DCF) Precedent transaction
multiples Trading multiples EDO strives for excellence in Corporate Governance
BOD followed a thorough process that considered several key factors affecting
shareholder value in fulfilling its fiduciary obligations $56 per share
represents approximately an 100% premium over the initial offer received
for the
Company * See EDO Definitive Proxy
Statement
E D O (NYSE:EDO)
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E D O (NYSE:EDO)
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