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Financial Advisory Services
Aerospace and Defense UpdateDeloitte & Touche Corporate Finance LLCInvestment Banking
Third Quarter 2006
www.investmentbanking.deloitte.com
Investment Banking Advisory Services
• Sale & Divestiture
• Acquisition, Joint Venture & Alliance
• Capital Raising
• Corporate Development Advisory
Deloitte & Touche Corporate Finance LLC Transaction Highlight
Deloitte & Touche Corporate Finance LLC (“DTCF”) is pleased to announce its role as the exclusive financial advisor to ThyssenKrupp Budd Company (“TK Budd”) in the sale of TK Budd’s Plastics Division to Continental Structural Plastics, Inc. (“CSP”). Terms were not disclosed.
The transaction includes all the assets of the Plastics Division in the U.S. as well as the equity holdings of its Mexican operations. The Plastics Division produces molded pickup truck cargo boxes, exterior automotive components, structural automotive components, proprietary raw sheet molded compounds (“SMC”), and certain products used in non-automotive applications.
Headquartered in Troy, Michigan, TK Budd is a leading supplier of high-quality body and chassis components and systems to the automotive industry. The company currently supplies approximately 100 vehicle models with sheet metal stampings and assemblies, composite autobody panels and pickup boxes, chassis modules and subframes, bumpers and bumper reinforcements. TK Budd operates 30 facilities with more than 10,000 employees in North America.
This transaction is another example of DTCF’s role as financial advisor to a large corporate entity involved in a carve-out divestiture of non-core assets. Furthermore, the sale highlights DTCF’s experience in the industrial manufacturing segment.
The sale of TK Budd’s Plastics Division to Continental Structural Plastics, Inc., is the second divestiture that DTCF has advised TK Budd on this year, having previously announced the sale of TK Stahl Co. in June.
DTCF Aerospace & Defense Update / Q3 06 / Page 2
Additional Recent DTCF Transactions
The undersigned acted as exclusive financial advisor to ThyssenKrupp Budd Company
Deloitte & Touche Corporate Finance LLC
The Plastics Division of ThyssenKrupp Budd Company
has been acquired by
Continental Structural Plastics
The undersigned acted as exclusive financial advisor to ThyssenKrupp Budd Company
Deloitte & Touche Corporate Finance LLC
The Plastics Division of ThyssenKrupp Budd Company
has been acquired by
Continental Structural Plastics
The undersigned acted as exclusive financial advisor to Duni AB
Deloitte & Touche Corporate Finance LLC
Duni Corporationand
Duni Supply Corporationwholly owned subsidiaries of
Duni AB
have been acquired by
The undersigned acted as exclusive financial advisor to Duni AB
Deloitte & Touche Corporate Finance LLC
Duni Corporationand
Duni Supply Corporationwholly owned subsidiaries of
Duni AB
have been acquired by
The undersigned acted as exclusive financial advisor to United Medical Corporation
Deloitte & Touche Corporate Finance LLC
a division of United Medical Corporation
has been acquired by
Hospital Metropolitano
The undersigned acted as exclusive financial advisor to United Medical Corporation
Deloitte & Touche Corporate Finance LLC
a division of United Medical Corporation
has been acquired by
Hospital Metropolitano
The undersigned acted as exclusive financial advisor to Parkway Products, Inc.
Deloitte & Touche Corporate Finance LLC
has been acquired by
Parkway Mayfair, Inc.
an investment vehicle created and led by
The undersigned acted as exclusive financial advisor to Parkway Products, Inc.
Deloitte & Touche Corporate Finance LLC
has been acquired by
Parkway Mayfair, Inc.
an investment vehicle created and led by
The undersigned acted as exclusive financial advisor to Parkway Products, Inc.
Deloitte & Touche Corporate Finance LLC
has been acquired by
Parkway Mayfair, Inc.
an investment vehicle created and led by
Aerospace & Defense Industry Trends“After more than a decade of consolidation, portfolio shaping and process improvements, is the aerospace and defense industry beginning to hit its stride?”Such was the question posed by Aviation Week and Space Technology in its ‘2006 Top-Performing Companies’ study, released in July. The study, undertaken in partnership with HOLT (a division of Credit Suisse), Deloitte Consulting LLC (“Deloitte Consulting”) and High Strategy, focused on a variety of metrics to analyze and rank the operating performance of publicly traded aerospace and defense companies.
The study noted that high marks and improvement in the industry have resulted often from an increased focus on return on invested capital, careful pruning of portfolios, focus on cost control and successful integration of acquisitions. Typically, a focus on increasing return on invested capital can lead companies to steer away from their sometimes past practices of chasing top-line growth objectives at any cost. Acquisitions in recent years of outsourced government service businesses reflect this, for while they are typically lower margin businesses, they require far less capital investment than large, new procurement platforms.
According to principals of Deloitte Consulting, good financial and operational discipline, delivering on long-term strategies for profitable growth and relentless attention to continuous improvement are all shared attributes of the leaders of the study. However, while many aerospace companies are showing improved operating results, they remain less efficient when compared to industries such as semiconductors or automobiles. Excess capacity in the industry remains partly to blame, particularly for multi-national European defense contractors.
General Economic TrendsHeadlining economic news for the quarter, the Federal Open Market Committee broke a three-year trend of 17 straight interest rate increases and held its target for the federal funds rate steady at 5.25% during its August 8th and September 20th meetings. This pause was due in large part to moderating economic growth, reduced inflationary pressures, and a cooling of the housing market. More specifically, the increase in real GDP for the second quarter of 2006 tempered to an annual rate of 2.6% according to final estimates released by the Bureau of Economic Analysis. In its most recent report, the Bureau of Labor Statistics reported the unemployment rate to be 4.6%. Additionally, a slow-down in the sales of automobiles and related parts has helped to keep inflationary woes at bay.
Inflation pressures were further alleviated as crude oil prices declined through the close of the quarter to just over $62 a barrel after peaking at a record $78.40 in July. Curtailed Middle East tensions and a mild start to the hurricane season helped provide relief to the record prices.
Feeding off the movement of oil prices and a pause in interest rate hikes, major stock indices rallied to approach record levels near the end of the quarter. Despite nearing its year low in July, the Dow Jones Industrial Average rallied at the end of the third quarter. The index narrowly missed setting a new all-time high close, which was later achieved early in the fourth quarter. Other indices, including the S&P 500 and the Nasdaq Composite, also surged in the later portion of the quarter. The Dow Jones Industrial Average advanced 4.7% during the third quarter, while the S&P 500 and the Nasdaq Composite increased by 5.2% and 4.0% respectively.
In addition to the advancing equity markets, global M&A activity pushed forward in the third quarter with approximately $745 billion in announced deals. This represents an increase of 15.5% over the same period last year, according to Thomson Financial. Private equity investors continue to play an important role in M&A as buyouts flourish in both the middle-market and large cap segments. Thus far, the first nine months have seen more than $460 billion in buyouts, nearly twice that of the same period last year.
Industry Trends
DTCF Aerospace & Defense Update/ Q3 06 / Page 3
U.S. Crude Oil Spot Prices Weighted by Estimated Import Volume
0
10
20
30
40
50
60
70
80
Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06
$ per Barrel
Source: Energy Information Administration (WTI - Cushing, OK)
Department of Defense Budget Authority
$0
$100
$200
$300
$400
$500
$600
2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E
$ Billions
RDT&E Procurement O&M Personnel & Other SupplementalsSource: Department of Defense Budget Authority by Title, Nominal Dollars
$310$360
$438
$537 $559 $536
$441 $464 $484 $494 $504
Aircraft Orders and Deliveries1
0
500
1,000
1,500
2,000
2,500
1999 2000 2001 2002 2003 2004 2005 2006E
Number of Aircraft
Commercial Jet Orders Regional Jet OrdersGeneral Aviation
Source: Jet Information Service, Teal Group, GAMA, Company reports, SpeedNew s
1Commercial jets include Airbus and Boeing models. Regional jets include Embraer and Bombardier models. Business jets include Cessna, Dassault, Gulfstream, Bombardier and Raytheon models.
2Represents annualized estimate of most recently available data.
2
Aerospace & Defense Industry vs. Dow Jones Industrial Average
708090
100110120130140150160170
Sep-05 Dec-05 Mar-06 Jun-06 Sep-06
Indexed Price
Dow Jones Industrial Average Aerospace BroadDefense Defense ITMaintenance, Repair and Overhaul
Source: Capital IQ
Deals Announced
• September 19, 2006 – Senior Plc agreed to acquire Aerospace Manufacturing Technologies Inc (AMT) for $110 million (GBP58.7 million) in cash.
• September 11, 2006 – Vneshtorgbank, the second largest Russian state-controlled bank, bought a 5.02 percent stake in European Aeronautic Defence & Space NV (EADS), worth $913m at the then current share price, making it the largest investor in Europe's leading aerospace and defense group outside the group of core EADS shareholders.
• September 6, 2006 – Separately, EADS agreed to acquire the remaining 20% stake in Airbus SAS held by BAE Systems Plc for EUR2.75 billion (US$3.5 billion / GBP1.9 billion).
• August 24, 2006 – Firearms Training Systems Inc (FATS) entered into an agreement to be acquired by Meggitt Plc's subsidiary Meggitt-USA Inc for $144 million.
• August 14, 2006 – L-3 Communications Holdings Inc, a satellite, marine and avionics communications systems provider, agreed to acquire privately-held Nova Engineering Inc for $45 million in cash plus up to an additional $10 million contingent payout based upon Nova's future financial performance. Nova Engineering makes communication systems for warfare and technology-driven applications.
• August 6, 2006 – Cinven Group Ltd, a London-based private equity firm, agreed to acquire Avio SpA, a manufacturer of aero-engine modules and components, from The Carlyle Group LLC and Finmeccanica SpA for approximately EUR2.57 billion (US$3.31 billion) including debt.
• July 28, 2006 – Teledyne Technologies Inc acquired research and development company Rockwell Scientific Co LLC from joint owners Rockwell Automation Inc and Rockwell Collins Inc for $167.5 million in cash.
Deals Closed
• September 29, 2006 – Lockheed Martin Corp acquired Pacific Architects & Engineers Inc for an undisclosed cash sum. PAE is a California-based provider of services that support military readiness, peacekeeping missions, nation building activities, personnel recruitment and training and disaster relief services.
• September 22, 2006 – Avingtrans Plc acquired UK-based B&D Patterns Ltd, a manufacturer and supplier of critical jet engine components to the aerospace industry, for up to GBP10.5 million (US$19.85 million) in cash, stock and deferred consideration.
• September 5, 2006 – Ducommun Technologies Inc, a subsidiary of Ducommun Inc, has acquired CMP Display Systems Inc for an undisclosed amount.
• August 17, 2006 – Teledyne Brown Engineering Inc, a subsidiary of Teledyne Technologies Inc, acquired CollaborX Inc for approximately US$17.5 million. CollaborX Inc, based in Colorado Springs, Colorado, provides government engineering services primarily to the US Air Force and select joint military commands.
• August 3, 2006 – GKN Plc, a manufacturer of automotive drive line systems and engineered products, acquired Stellex Aerostructures Inc, a manufacturer and supplier of integrated aerospace assemblies and precision parts, for an undisclosed price.
Highlighted Transactions
DTCF Aerospace & Defense Update/ Q3 06 / Page 4
U.S. Middle Market M&A Announced Deals
2,2423,382
3,0923,1533,081
5,8395,575
4,8174,316
6,776
$68$66
$63
$60
$55
0
2,000
4,000
6,000
8,000
10,000
2002 2003 2004 2005 2006E
No. of Deals
$50
$55
$60
$65
$70
$75
Avg. Val. ($M)
Disclosed Deals Undisclosed Deals Average Size
U.S. Middle Market M&A Announced Deals
10.4x10.7x10.5x
8.7x8.5x
113
152150
241
202
4.0x
6.0x
8.0x
10.0x
12.0x
2002 2003 2004 2005 LTM -Sep 2006
EV/EBITDA
100
130
160
190
220
250
No. of Deals
Average EV/ EBITDA Deals w ith Multiples
Source: Thomson Financial
Source: Thomson Financial
Aerospace & Defense M&A ActivityAnnounced Deals
47 48 115 9696
87
42 44
107
73
$105 $205
$197$239
$374
0
30
60
90
120
150
180
210
240
2002 2003 2004 2005 2006E
No. of Deals
$0
$200
$400
$600
$800
Average Deal Value ($mm)
Disclosed Deals Undisclosed Deals Average Size
Aerospace & Defense M&A ActivityAnnounced Deals
9.2x
10.8x
9.6x 9.7x 9.9x
4
7
13
10
12
4.0x
7.0x
10.0x
13.0x
16.0x
2002 2003 2004 2005 LTM - Sep 2006
EV/EBITDA
0
5
10
15
20
No. of Deals
Average EV/EBITDA Deals with Multiples
Source: Thomson Financial, CapitalIQ, Mergerstat, Factiva
Source: Thomson Financial, CapitalIQ, Mergerstat, Factiva
Market Snapshot
DTCF Aerospace & Defense Update/ Q3 06 / Page 5
Aerospace Broad Trading MultiplesEnterprise Value/EBITDA
11.0x10.3x10.4x10.3x 10.2x10.3x11.4x
10.6x
5.0x
7.0x
9.0x
11.0x
13.0x
Q3 06Q2 06Q1 06Q4 05Q3 05Q2 05Q1 05Q4 04
Source: Capital IQ
Defense Trading MultiplesEnterprise Value/EBITDA
10.1x10.5x10.7x10.5x 10.3x10.0x
11.7x10.2x
5.0x
7.0x
9.0x
11.0x
13.0x
Q3 06Q2 06Q1 06Q4 05Q3 05Q2 05Q1 05Q4 04Source: Capital IQ
Maintenance, Repair and Overhaul Trading MultiplesEnterprise Value/EBITDA
10.8x11.7x
12.6x12.1x
9.6x9.6x10.6x10.6x
5.0x
7.0x
9.0x
11.0x
13.0x
Q3 06Q2 06Q1 06Q4 05Q3 05Q2 05Q1 05Q4 04
Source: Capital IQ
Defense IT Trading MultiplesEnterprise Value/EBITDA
11.1x12.3x
11.7x12.9x
9.2x9.3x
10.9x9.8x
5.0x
7.0x
9.0x
11.0x
13.0x
Q3 06Q2 06Q1 06Q4 05Q3 05Q2 05Q1 05Q4 04Source: Capital IQ
$U.S. in millions Reported Market Enterprise EBITDA ReportedDate Cap Value (EV) Sales EBITDA Margin P/E Quarter LTM
Aerospace BroadAerosonic Corp. 07/28/06 $22 $23 0.7x 11.6x 6.1% 10.9x (18.1%) 1.7%Arotech Corp. 06/30/06 $17 $28 0.7x N.M. (14.0%) N.M. (17.8%) (81.8%)Astronics Corp. 07/01/06 $125 $141 1.5x 12.6x 11.8% 24.5x 17.7% 63.2%Avcorp Industries Inc. 06/30/06 $38 $61 0.6x N.M. 1.0% N.M. 18.1% 57.9%Axsys Technologies Inc. 07/01/06 $181 $179 1.2x 8.6x 14.1% 18.2x 12.8% (13.3%)Babcock International Group plc 03/31/06 $715 $753 0.9x 13.2x 6.8% 21.7x 5.7% 94.8%BE Aerospace Inc. 06/30/06 $1,649 $1,943 2.0x 13.5x 15.0% 13.8x (7.7%) 27.3%Boeing Co. 06/30/06 $62,679 $65,006 1.1x 18.6x 6.2% 30.5x (3.7%) 16.0%Bombardier Inc. 07/31/06 $6,109 $8,529 0.6x 8.6x 6.9% 45.1x 12.2% 21.6%CAE Inc. 03/31/06 $2,393 $2,583 2.3x 12.6x 18.0% 29.6x 12.1% 21.9%Ceradyne Inc. 03/31/06 $1,102 $1,098 2.2x 7.2x 29.9% 15.8x (17.0%) 12.0%Ceramic Protection Corp. 06/30/06 $189 $216 3.6x 9.8x 36.6% 16.0x (11.8%) 3.3%Chemring Group plc 04/30/06 $437 $513 3.1x 15.4x 19.9% 36.0x 28.3% 141.7%Cobham plc 06/30/06 $2,038 $2,038 2.0x 9.2x 21.2% 17.3x 8.7% 14.7%CPI Aerostructures Inc. 06/30/06 $26 $25 1.2x N.M. (2.9%) N.M. (34.7%) (52.9%)Cubic Corp. 06/30/06 $523 $555 0.7x 17.4x 3.8% 23.6x (0.2%) 14.4%Curtiss-Wright Corp. 06/30/06 $1,333 $1,685 1.4x 9.0x 15.9% 17.4x (1.7%) (1.6%)Dassault Aviation SA 12/31/05 $6,557 $4,847 1.4x 10.9x 13.0% 21.5x 8.3% 15.6%Ducommun Inc. 07/01/06 $191 $230 0.8x 8.3x 10.1% 13.7x 0.8% (15.2%)DynCorp International Inc 06/30/06 $718 $1,334 0.6x 7.9x 8.1% N.M. 21.3% N/AElbit Systems Ltd. 12/31/05 $1,227 $1,393 1.1x 9.1x 12.0% 37.3x 10.9% 36.1%Embraer-Empresa Brasileira De Aeronáutica S.A 03/31/06 $7,087 $7,586 1.8x 18.0x 10.1% 26.0x 7.7% 1.7%Esterline Technologies Corp. 07/28/06 $860 $1,111 1.2x 8.9x 13.5% 16.3x (18.8%) (10.9%)European Aeronautic Defence & Space Co. NV 06/30/06 $18,146 $14,237 0.4x 3.1x 12.4% 10.5x 1.0% (23.1%)Finmeccanica SpA 03/31/06 $7,442 $9,239 0.8x 8.3x 9.4% 10.2x 1.4% 6.7%First Aviation Services Inc. 07/31/06 $26 $38 0.3x N.M. 0.5% N.M. (12.6%) (13.3%)GenCorp Inc. 05/31/06 $713 $1,117 1.7x N.M. 3.1% N.M. (19.9%) (31.2%)Goodrich Corp. 06/30/06 $5,054 $6,597 1.2x 7.8x 14.9% 12.3x 0.6% (8.6%)Hampson Industries plc 03/31/06 $130 $191 1.8x 20.8x 8.8% N.M. 8.6% 15.7%Harris Corp. 06/30/06 $5,971 $6,378 1.8x 10.7x 17.1% 24.9x 7.2% 6.4%HEICO Corp. 07/31/06 $869 $922 2.6x 12.8x 20.1% 29.2x 21.0% 47.8%Herley Industries Inc. 04/30/06 $182 $159 0.9x 7.1x 12.7% 16.0x 10.4% (33.5%)Heroux-Devtek Inc. 06/30/06 $145 $194 0.7x 8.5x 8.6% N.M. (6.1%) 12.2%Hexcel Corp. 06/30/06 $1,325 $1,744 1.5x 9.8x 15.1% 7.8x (9.9%) (22.6%)Honeywell International Inc. 06/30/06 $33,495 $37,792 1.3x 9.4x 13.7% 18.0x 1.5% 9.1%Innovative Solutions & Support Inc. 06/30/06 $244 $182 9.0x N.M. (16.9%) N.M. 3.3% (6.4%)Irvine Sensors Corp. 07/02/06 $26 $41 1.5x N.M. (3.9%) N.M. (34.3%) (49.4%)ITT Corporation 06/30/06 $9,468 $10,130 1.3x 9.7x 13.4% 30.3x 3.6% (9.7%)K&F Industries Holdings Inc. 06/30/06 $744 $1,479 3.7x 10.1x 36.8% 18.0x 5.9% 12.3%Kreisler Manufacturing Corp. 06/30/06 $18 $15 0.7x 6.3x 11.9% 15.1x (28.2%) 60.0%Ladish Co. Inc. 06/30/06 $410 $460 1.4x 9.4x 15.2% 17.9x (22.9%) 65.6%LMI Aerospace Inc. 06/30/06 $207 $187 1.6x 9.9x 16.4% 19.7x 1.6% 136.0%Magellan Aerospace Corp. 06/30/06 $204 $414 0.7x 11.2x 6.5% N.M. (11.8%) (26.2%)Meggitt plc 12/31/05 $1,354 $1,668 2.6x 10.6x 24.4% 20.3x (2.3%) (3.8%)Moog Inc. 07/01/06 $1,448 $1,800 1.4x 9.8x 14.7% 17.9x 1.3% 17.4%MTU Aero Engines GmbH 06/30/06 $1,621 $1,818 0.8x 6.1x 13.1% 22.7x 14.0% 13.6%Northstar Aerospace Inc. 06/30/06 $145 $207 1.4x 10.9x 13.3% N.M. 3.2% (18.3%)Orbit International Corp. 06/30/06 $32 $32 1.3x 9.1x 14.0% 12.1x (2.6%) (28.9%)Precision Castparts Corp. 07/02/06 $8,557 $9,584 2.5x 13.3x 18.9% 21.7x 5.7% 18.9%RAE Systems Inc. 06/30/06 $178 $155 2.5x N.M. 1.8% N.M. (23.8%) (11.3%)Reinhold Industries Inc. 06/30/06 $41 $39 1.1x 5.4x 19.6% 7.6x 4.1% (35.7%)Rockwell Collins Inc. 06/30/06 $9,400 $9,520 2.5x 12.3x 20.5% 21.1x (1.8%) 13.5%Rolls Royce Group plc 06/30/06 $7,932 $6,782 1.0x 6.5x 15.4% 9.3x 9.4% 21.3%Safran SA 12/31/05 $6,524 $6,971 0.8x N.M. 2.5% N.M. (6.3%) (11.2%)Senior plc 06/30/06 $172 $247 0.7x 7.2x 9.4% 11.3x (3.1%) (6.7%)Sequa Corp. 06/30/06 $1,057 $1,671 0.8x 7.5x 10.6% 28.2x 15.2% 59.1%SIFCO Industries Inc. 06/30/06 $22 $18 0.2x 9.5x 2.1% 30.1x (12.9%) 18.3%Smiths Group plc 01/31/06 $5,052 $5,052 1.4x 8.6x 16.7% 21.5x 0.6% (6.5%)Societe Industrie d'Aviation Latecoere 12/31/05 $220 $446 1.3x 9.5x 13.2% 9.1x (7.6%) (24.4%)TAT Technologies Ltd. 12/31/05 $83 $87 1.3x 9.7x 13.4% 23.6x 51.5% 94.4%Teledyne Technologies Inc. 07/02/06 $1,362 $1,399 1.1x 10.0x 10.9% 18.8x 20.9% 14.9%Textron Inc. 07/01/06 $11,048 $18,872 1.8x 12.1x 14.8% 17.6x (5.1%) 22.0%Thales 06/30/06 $5,901 $6,687 0.7x 6.6x 9.9% 17.3x 14.6% (9.4%)TransDigm Group Incorporated 07/01/06 $1,089 $1,993 4.7x 11.2x 41.8% N.M. 2.0% N/ATriumph Group Inc. 06/30/06 $684 $895 1.1x 9.4x 11.8% 18.4x (11.8%) 13.9%TVI Corp. 06/30/06 $70 $64 1.9x 8.8x 22.0% 17.7x (39.7%) (46.8%)Ultra Electronics Holdings plc 06/30/06 $705 $736 2.0x 11.7x 17.2% 20.3x 8.6% 12.3%UMECO plc 03/31/06 $215 $241 0.8x 10.4x 7.9% 16.6x (1.0%) (19.8%)VT Group plc 03/31/06 $842 $857 1.2x 9.5x 12.7% 20.2x (0.7%) 29.3%Zodiac SA 02/28/06 $2,517 $4,004 1.8x 13.3x 13.8% 23.2x 6.4% (4.7%)
Average Aerospace Broad 1.5x 10.2x 12.4% 19.9x (0.1%) 9.4%
DefenseAlliant Techsystems Inc. 07/02/06 $2,812 $4,005 1.2x 9.4x 12.9% 18.9x 6.2% 8.6%Allied Defense Group Inc. 09/30/05 $99 $100 0.9x N.M. (6.2%) N.M. (25.2%) (27.1%)Applied Signal Technology Inc. 07/28/06 $176 $158 0.9x 7.8x 11.7% 25.2x (12.9%) (22.2%)Argon ST, Inc. 07/02/06 $531 $465 1.7x 11.7x 14.4% 23.7x (10.0%) (18.3%)Armor Holdings Inc. 06/30/06 $2,035 $2,845 1.5x 9.8x 15.3% 14.4x 4.6% 33.3%BAE Systems plc 06/30/06 $12,722 $12,722 1.0x 11.1x 9.4% 19.8x 6.9% 15.1%DRS Technologies Inc. 06/30/06 $1,754 $3,633 1.8x 13.0x 13.8% 16.1x (10.4%) (11.5%)EDO Corporation 06/24/06 $466 $565 0.9x 9.9x 8.8% 18.3x (6.0%) (23.8%)Firearms Training Systems Inc. 06/30/06 $80 $137 1.7x 12.5x 13.9% 24.9x 31.9% 7.7%General Dynamics Corp. 07/02/06 $28,912 $31,162 1.4x 11.0x 12.4% 18.1x 9.5% 19.9%L-3 Communications Holdings Inc. 06/30/06 $9,637 $14,155 1.2x 10.5x 11.8% 19.9x 3.9% (0.9%)Lockheed Martin Corp. 06/30/06 $36,478 $37,879 1.0x 9.9x 9.9% 17.3x 20.0% 41.0%Northrop Grumman Corp. 06/30/06 $23,451 $27,685 0.9x 9.2x 9.9% 16.8x 6.3% 25.2%Raytheon Co. 06/25/06 $21,543 $24,654 1.1x 10.6x 10.4% 19.1x 7.7% 26.3%United Industrial Corp. 06/30/06 $611 $641 1.1x 8.4x 13.2% 15.7x 18.2% 49.7%
Average Defense 1.2x 10.3x 10.8% 19.2x 3.4% 8.2%
Defense ITCACI International Inc. 06/30/06 $1,685 $2,029 1.2x 10.2x 11.3% 19.6x (5.7%) (9.2%)Dynamics Research Corp. 06/30/06 $92 $115 0.4x 4.8x 8.3% 11.7x (26.7%) (37.9%)ManTech International Corp. 06/30/06 $1,108 $1,132 1.0x 10.9x 9.6% 19.8x 7.0% 25.0%MTC Technologies Inc. 06/30/06 $379 $464 1.2x 9.9x 11.8% 17.9x 1.7% (24.8%)SI International Inc. 07/01/06 $412 $495 1.1x 11.5x 9.7% 20.3x 4.3% 3.3%SRA International Inc. 06/30/06 $1,683 $1,500 1.3x 11.7x 10.9% 26.5x 12.9% (15.3%)VSE Corp. 06/30/06 $71 $66 0.2x 5.6x 3.9% 10.7x 1.1% (14.0%)
Average Defense IT 0.9x 9.2x 9.4% 18.1x (0.8%) (10.4%)
Maintenance, Repair and OverhaulAAR Corp. 05/31/06 $875 $1,061 1.1x 10.3x 11.0% 22.7x 7.2% 38.8%Global Aircraft Solutions Inc. 06/30/06 $39 $44 1.0x 6.8x 14.3% 9.7x (19.2%) (35.3%)Hong Kong Aircraft Engineering Co. Ltd. 06/30/06 $18,412 $17,470 5.0x 15.3x 32.7% 25.3x 21.6% 86.4%Pemco Aviation Group Inc. 06/30/06 $35 $68 0.4x N.M. (0.1%) N.M. (19.0%) (61.5%)Singapore Technologies Engineering Ltd. 06/30/06 $8,328 $8,648 2.2x 8.5x 26.2% 20.5x (1.4%) 12.2%Timco Aviation Services Inc. 06/30/06 $83 $135 0.4x N.M. (3.6%) N.M. 17.6% (37.4%)Vector Aerospace Corp. 06/30/06 $157 $232 0.7x 7.1x 10.0% 9.6x (16.0%) 12.0%
Average Maintenance, Repair and Overhaul 1.6x 9.6x 12.9% 17.6x (1.3%) 2.2%
Source: Capital IQ
Enterprise Value to: Stock Performance
In addition to information regarding the aerospace & defense industry being provided by DTCF, you may be interested in additional events and informational sources available through DTCF and the subsidiaries of Deloitte & Touche USA LLP.
Deloitte Research* ReportGlobal Economic Outlook 2007Is a crisis imminent, or are things better than we thought?The global economy is currently robust with strong growth in many markets. Yet the global economy is also plagued by serious imbalances that threaten to derail the current strength. Debate rages over how and when these imbalances might be corrected and whether that process will be disruptive or benign. In this report, that debate is examined, future scenarios are considered and suggestions are offered for managing the risks. In addition, the report provides analyses of economic prospects in each major region, discusses threats to globalization and assesses the declining risk of doing business in emerging markets. Read the report (or www.deloitte.com/research).
Deloitte Insights PodcastDeloitte Insights is a complimentary audio news magazine that examines important business issues of the day.
Finding a Suitable Match: Why Private Equity Firms are Investing in Mid-Sized CompaniesPrivate equity investors are becoming extremely discriminating about where to put their money. Some twenty-seven hundred private equity firms around the world are studying the balance sheets of thousands of mid-sized private companies in hope of finding a good match. Click here to listen to or download the podcast (or www.deloitte.com/us/podcasts).
ReportBehind the Curtain: What Mid-Sized Private Companies Need to Know about What Drives Private Equity InvestmentsAs a private business executive in a highly active M&A market, shouldn’t you have a better understanding of how private equity investors evaluate private companies? Know confidently how to attract the attention of investors and investment in your business? Understand the key factors of a successful investment? Deloitte & Touche USA, LLP asked 269 private equity senior executives insightful questions to help demystify the private equity investment process for mid-sized, privately held businesses. Access our report to read the key findings (or www.deloitte.com/us/tax).
Dbriefs WebcastsStay on top of the latest issues and strategies. Deloitte & Touche USA LLP and its subsidiaries offer Dbriefs, live webcasts that provide you with insights on important developments affecting your business. Webcasts are complimentary, 1-hour live sessions; you can participate from the convenience of your office.Financial Executives: Transactions & Business Events
Driving Value in Divestitures: Weighing Your Strategic Alternatives and Communicating ValueNovember 7, 2:00 pm ETPresenters: Charles Alsdorf 2, Ellen Clark 1, Chris Ruggeri 2
Is now the time to divest all or part of your business? Many factors can impact your decision, and timing is critical. We will describe a general framework to help you regularly assess your business and assets and evaluate alternatives to drive value. We’ll discuss assessing market and competitive conditions, measuring and communicating value, and working with advisors. Learn leading practices for evaluating your strategic alternatives, placing your deal, and measuring and managing the associated risks. To register for this webcast, click here (or www.deloitte.com/us/dbriefs).
Tax Executives: Private CompaniesPrivate Company Valuation: Why You Should Consider an Objective PerspectiveNovember 16, 2:00 pm ETPresenters: Andy Isgrig 1, Wendy Sharon 2
There are many reasons to value your closely-held business, including raising capital, succession planning, tax planning, and acquisition or sale. But how do you make the most of it? We’ll discuss the value disconnect, private equity investors, and valuation concepts. Know what factors can make a business valuation most rewarding, and learn how to look at your business from the outside in to maximize your results. To register for the webcast, click here (or www.deloitte.com/us/dbriefs).
Industries: ManufacturingCan You Really Buy Happiness? Leveraging M&As and Ventures in Mature Manufacturing SectorsDecember 14, 1:00 pm ETPresenters: Duane Dickson 3, Kevan Flanigan 1
Manufacturing M&A markets are hot, but are acquisitions the right long-term growth vehicle for your business or just a quick way to boost the bottom-line? We’ll provide an overview of the M&A landscape and alternatives to M&A, discuss the make versus buy debate and successful deal execution. Discover key benefits and pitfalls of using M&A as a strategic tool for growth and strategies for managing the growth process more effectively. To register for the webcast, click here (or www.deloitte.com/us/dbriefs).
ArticleThe Rise of the Carve-OutAn article from The DealCarve-outs, which involve the divestiture of a business unit or product line from a parent company to establish a stand-alone company, have become an increasingly appealing type of transaction for private equity firms. In an article appearing in The Deal, professionals from Deloitte Consulting LLP's Merger and Acquisition practice discuss the rise of the private equity carve-out, some of the reasons for buyer and seller appeal, and offer suggestions for how to overcome some of a carve-out’s unique set of challenges and risks. Read the article (or www.investmentbanking.deloittte.com).
Deloitte & Touche Corporate Finance LLC Quarterly M&A Industry UpdatesInterested in receiving additional DTCF Consumer Business or Manufacturing industry updates? Click here to subscribe, or visit www.deloitte.com/us/subscriptions. Select the appropriate boxes, and fill in your information at the bottom of the page.
1 Deloitte & Touche Corporate Finance LLC; 2 Deloitte Financial Advisory Services LLP; 3 Deloitte Consulting LLP.* Deloitte Research, part of Deloitte Services LP, identifies, analyzes, and explains the major issues driving today’s business dynamics and shaping tomorrow’s global marketplace. Deloitte Services LP is a subsidiary if Deloitte & Touche USA LLP
DTCF Aerospace & Defense Update/ Q3 06 / Page 6
Related Content
Corporate Finance Practices of DTT Member Firms and Affiliates*
DTCF and the corporate finance practices of the member firms of Deloitte Touche Tohmatsu (DTT) or their affiliates are able to work together to provide industry-specific experience and execution capabilities to assist in the completion of M&A advisory assignments around the globe.
* In all office locations outside the United States listed above, corporate finance services are offered by the DTT member firm of the applicable country or an affiliate thereof. DTCF works closely with these DTT member firms or their affiliates to give clients access to global investment banking coverage. Each of the DTT member firms is a separate and independent legal entity.
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Jim SchwendingerNational Managing DirectorAerospace & DefenseDeloitte Consulting LLP(512) [email protected]
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DTCF Aerospace & Defense Update/ Q3 06 / Page 7
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