BTR Dunlop Holdings, Inc. - Page 27




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          there to be a greater risk in the Schlegel UK automotive segment            
          due to the competitive nature of winning business for new models            
          and Schlegel UK reliance on Rover and Ford for a majority of its            
          revenue.  Due to this concern, Gooch also chose to apply a                  
          company-specific risk premium of 2 percent to the automotive                
          division.  No such adjustment was made with respect to the                  
          building products division.                                                 
               For the automotive group, Gooch calculated his projected               
          synergistic cash-flows from financial forecasts developed by the            
          managers of Schlegel UK.  He made adjustments to these                      
          projections based on his 1998 or 1999 discussions with management           
          and his overall view of the automotive industry in the United               
          Kingdom during those years.  He also took into consideration the            
          potential close of the Leeds plant in early 1989.  Gooch                    
          concluded that the stand-alone scenario was slightly less                   
          profitable than the synergistic scenario.                                   
               With respect to the building products division, Gooch noted            
          that there had been rapid growth over the mid- to late 1980's in            
          the housing industry; however, Gooch found that there had been a            
          drop in house building starts in early 1989 and the likelihood of           
          reduced sales of other Schlegel UK building products.  Thus, he             
          reduced the building product projections for stand-alone                    
          projects, while adjusting for higher sales under the synergistic            
          approach for economies achieved from synergies.                             





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