The ACG Cup

Sponsored by

Association for Corporate Growth – Cincinnati

January 2008

Case Study Created By:

Evaluating Investment Opportunities

To: MBA Investment Bankers

From: Friend Fund I

Subject: Investment Opportunities

Dear MBA Investment Bankers,

This letter is further to our phone conversation earlier today regarding our need for financial advice. Our firm, Friend Fund, is a fund recently formed by three college buddies who made a significant amount of money in the payphone industry. While this was a very robust business for a long time, we recently wound down all of our business interests due to the virtual obsolescence of the payphone in the United States. We have decided to use our fortunes to become private equity investors. We have set up our first fund (“Fund I”), have capitalized it with $1 billion of our money alongside with some limited partners and are ready to start investing. We would prefer not to invest more than approximately 20% of our equity in an investment opportunity $200,000,000. Our goal is to take equity interests in growing privately held businesses where we can realize high returns upon exit. Fund I is our first foray into private equity, we do not know the finance markets well, nor do we know the aerospace and defense industry. We have not hired an acquisitions team so our attorneys at Hoffmann & Ahmed LLP referred us to you as a potential advisor for our first round of investments.

Situation Overview

We would like your input regarding the two investment opportunities (MarginCo and GrowCo) that have recently been presented to us. Both companies are in the aerospace, defense and government ("ADG") sector. Specifically, both are aircraft components manufacturers. There seem to be many similarities between the companies and both companies are in what we have heard is a "hot" sector. With respect to these companies, we are wrestling with the following questions:

Should we make an offer for MarginCo, GrowCo, both or neither? Why? How much is each target company worth? Based on your valuation, what is each company worth separately? What might change the value if

they were combined? Given these valuations as well as other circumstances, how much should we bid if we were to

bid? Should we finance these offers 100% with equity, should we raise debt? What can we expect in terms of exiting the investment?

The MarginCo opportunity came about when we were approached yesterday by a competitor of yours, Boldman Backs, who is soliciting interest in MarginCo, in a fully shopped auction. There are many other bidders and we are concerned with overpaying for this company.

The second company, GrowCo, came to us through the wife of one of our other college buddies. She is a business broker at Scott & Sons LLP and she has indicated that she would prefer to bring this opportunity

to a limited number of buyers, given that management does not need to sell and is just exploring what the company might be worth.

We are concerned about the recent credit crunch and what this means for future investments. We have heard that deals under $500 million (the “middle market”) are less impacted and that certain sectors are still “hot”, including this one. We understand that many people invest in ADG companies because of their high growth prospects and huge margins. Additionally, our friends at the country club have told us that aircraft component manufacturers are a good investment despite their high multiples. Shooter McGavern mentioned when we were golfing last week that his friend’s family sold one of these companies for 10.0x EBITDA. This sure seems high to us, but we look to you for guidance.

We understand that strong industry growth prospects, good margins, barriers to entry and long-term contracts could make these companies a good investment.

Consultants

We have retained a consulting firm, ADG Consultancy, to provide us with some basic industry and market research, the results of which we have included herein, mostly as exhibits to this letter. Given the short timeframe, you should rely on a lot of this data rather than repeat this research.

MarginCo

MarginCo, located in Seattle, Washington, produces original equipment airframe components and complex functional and control assemblies for commercial aircraft. Its capabilities include multi-axis high speed precision machining of many varieties of both hard (titanium and magnesium) and soft metals (aluminum).

The COO of MarginCo once mentioned that if his company ever merged with GrowCo, he would leave the firm. We heard through the grapevine that he had worked for a high-ranking official at GrowCo early in his career and had been fired for insubordination. The COO of MarginCo has relationships with some of the company’s largest customers who have told him that they would stay loyal to him, and not the company. However we know that the COO might change his tune if given the opportunity to be the CEO and has told people that he would be happy to do a deal with a private equity firm.

There are conflicting opinions between the owner and the COO on whether the rest of MarginCo’s management team would remain with the company post-deal.

While the COO says that some customers would remain loyal to him if he left, the company is the sole supplier to these customers and hence the owner does not believe that the COO has as much power as he claims.

The owner of MarginCo is currently going through a nasty divorce with his wife of 20 years. Since they were married when he bought MarginCo, she is demanding half of MarginCo’s worth in their settlement. As he has no other means of paying her, he is forced to sell the company. However, the owner would stay and lead the company if needed.

The owner of MarginCo mentioned that he would not turn down an offer of $250 million for MarginCo.

MarginCo has recently had an entire operations overhaul, including IT systems and operational procedures. With their new system, during the due diligence phase, they will be able to provide us with not only sales by SKU and customer, but also margin by SKU and customer.

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There is a lot of special management compensation at MarginCo that our referral source has told us is not at "market". She believes that this would total $2.5 million per year in all the years for which she has provided us with financial data.

MarginCo’s top five customers account for 82% of the company’s revenue. MarginCo’s customers are commercial only, not defense based. MarginCo manufactures airframe parts for high-volume commercial aircraft platforms, such as the

Boeing 787 and 737. Making parts for these high volume commercial aircraft has longevity and growth as the 737 is already very popular and the 787 is newer, with a large backlog. In addition, MarginCo provides airframe parts and components for the high end business jet market. This newer Very Light Jet ("VLJ") aircraft currently represents a small volume of airplanes currently in production, but has large growth potential in the upcoming years.

MarginCo manufactures 70% of its components using soft metals and 30% using hard metals.

GrowCo

GrowCo, located in Wichita, Kansas, specializes in the design, engineering and manufacturing of precision components and complex assemblies for the aerospace and defense industries. GrowCo manufactures highly specialized aluminum machined components, sheet metal fabricated parts and complex assemblies for Original Equipment Manufacturer (OEM) aircraft, with a particular focus on high-end cockpits. The company partners with its customers to deliver high quality, cost-effective solutions to meet their demanding delivery, cost and performance requirements. Its value added competencies include a unique combination of experienced and talented people and state-of-the-art technology and processes. These close customer relationships and existing solutions provide a high barrier to entry for any competitors.

The owner and CEO of GrowCo has been with the company for over thirty years. However, he is now 69 years old and his wife just had a severe skin cancer scare so there is now some word on the street that he is considering retiring soon. He has relationships with two big customers that promised to strike deals with GrowCo within the next two years and those deals could fall through if he leaves the company.

The owner of GrowCo has only recently considered selling the company because of the attractive valuations of ADG companies that he has been seeing over recent months. He is curious to see what sort of price he could get for his company. He is not certain that he would sell but agreed to explore a sale of the company. The owner is less motivated by absolute price; he is more concerned with getting his company into the right hands in the long run.

The rest of GrowCo’s senior management team has expressed interest in staying with the company. They each have 10 – 20 years experience in the industry but no significant customer relationships. They would be excited to merge with a strategic buyer. They would be excited to join forces with someone who would diversify their range of products.

GrowCo has historically been against adding leverage because the CEO once worked at a company that filed for bankruptcy.

GrowCo has recently upgraded all of their manufacturing facilities. GrowCo has a very organized, thorough management team which has successfully undertaken and

implemented many strategic initiatives in the past and maintains a strong corporate vision and corporate culture.

The CEO of GrowCo believes there are expense synergies of up to $10 million by merging with MarginCo as both companies have facilities in some of the same states and have similar back office needs. Additionally, he thought that up to $3 million in revenue synergies might be possible if the two companies merged.

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GrowCo’s top 10 customers account for 71% of revenue. GrowCo sells to 60% commercial customers and 40% defense related customers. All of the components supplied to the defense platforms are sole-sourced (GrowCo is the only

supplier). 10% of the components supplied to the commercial platforms are dual-sourced (GrowCo and another competing company are the only suppliers for 10% of the company’s components), while the rest are sole-sourced (provided by GrowCo only).

GrowCo’s commercial platforms include several high volume, commercial aircraft and business jets. Military platforms include several new fighter and cargo jets that the Department of Defense has recognized as critical platforms needed to conduct future operations.

Other Factors

Both companies are high quality product providers and both consider their projections to be conservative. The projections do not include new business lines, and both believe that there are a lot of opportunities to provide additional products to existing customers as well as existing products to new customers.

MarginCo’s top ten customers overlap very little with GrowCo’s top five customers Our friend Chris Lender who works for a well known lender to the ADG sector, Orthus Bank, told us

that he would be able to get us financing for either company of 4.5x debt/ EBITDA for this sector (and perhaps up to 5.0x if the businesses were combined). He said that the upfront fees for the debt raise would be 1.5%. He also said that in this market we can get a 7 year term loan with 0% amortization and a bullet payment at the end of the term for the entire debt placement.

Chris also indicated that MarginCo and GrowCo would have the same cost of debt as that of recent debt financings of Aerostructure Acquisitions LLC. (Assume LIBOR of 4.9%).

Both companies might be a short-term or long-term acquisition target for an OEM, given the current trend of rolling up various suppliers along the supply chain.

ADG Consultancy has advised us that size in this industry influences price and exit opportunities. We have been told that gaining scale provides more exit opportunities in the form of a potential IPO or selling to a larger strategic buyer at higher multiples than those that smaller companies trade at.

As you know, private equity investors generally require at least 25 - 30% returns. While we are aiming for upwards of a 30% return, based on current market conditions, we will consider investments with at least a 20% return.

Industry Overview

The aerospace industry is witnessing strong performance across nearly all of its segments. Forward estimates for aircraft deliveries of commercial aircraft suggest the aerospace industry will enjoy solid growth in the foreseeable future. In addition, the U.S. Defense budget has benefited from strong growth in core spending for a period approaching nearly a decade, and has been further fueled by supplemental spending to advance efforts regarding the Global War On Terrorism. As critical suppliers to the aerospace and defense industries, aerostructures manufacturers benefit from new aircraft purchases, retrofits and sustainability efforts in the aftermarket. Due to this strong growth in the aerospace and defense industries, there has been significant consolidation, especially among the smaller fragmented markets such as aerostructures and component manufacturers.

The vast majority of aircraft structures and parts are created using soft metals such as aluminum due to their exceptional strength to weight ratio. Manufacturing soft metal components are relatively easier than hard metal components. Titanium products are used not only for their exceptional strength to weight ratio, but also elevated temperature performance and corrosion resistance. Titanium applications are most

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significant in jet engine and airframe components that are subject to extreme temperatures in both commercial and military airframes. Although soft metals produce lower profit margins per part than hard metals, the high volume of soft metal parts, particularly aluminum, required in an aircraft contributes to healthy overall profits. Titanium products are used only where needed. Although these products are highly profitable, the volume of such parts ordered in today’s aircraft is much lower than the volume of aluminum parts ordered.

The avionics market is expected to grow rapidly as orders for jets are likely to remain strong. As technologies advance, avionics systems are now an integral part of aircraft design and have vastly increased aircraft capability. Airlines view today’s sophisticated avionics as essential to future operations, helping fly passengers with greater safety, speed, and improved on time performance.

Overall valuations for companies in these markets have increased as they are becoming more desirable assets, both in regards to their considerable growth aspects and due to factors such as increased outsourcing of manufacturing by original equipment manufacturers (“OEMs”) and supply-chain consolidation.

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Next Steps

You should note that we are also inviting a few other investment advisors to provide us with input as well – this is a competitive process so make sure you bring your “A” team and ideas to the meeting.

We have also included financial and company data for the two potential acquisition targets to assist you in your evaluation. Please see the attachment to this letter “Additional Information” for an index of the company information and the other data provided by ADG Consultancy.

We look forward to speaking with you soon. We were pleased to hear from our attorneys that you have dugout seats at the Dodgers and a suite at Staples Center.

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ACG Cup – Competition Rules

You will be given 30 minutes to present your recommendations to the judges (i.e., the partners of Friend Fund and their attorneys, Hoffmann & Ahmed LLP). There will not be a separate time allotted for question and answers – Q&A will take place during your presentation.

The format of your presentation (PowerPoint vs. handouts, discussion only, etc.) is completely up to your discretion – it should be whatever you believe the most likely to persuade the board to hire your investment banking firm.

To facilitate the judges’ ability to evaluate your response versus your competitors’, your analysis should address at least the following topics (all with sufficient supporting detail).

1. Fundamental valuations of MarginCo and GrowCo 2. A recommendation whether to make an offer for MarginCo, GrowCo, or both3. A price to offer for MarginCo, GrowCo or both, as well as how you would fund this (debt vs.

equity) 4. Your thoughts on future exit opportunities in 4 years (December 31, 2011) as well as high level

estimates of the returns that the Fund could expect from investing in these companies.

If you have additional questions regarding content that cannot be answered with the materials provided in this package, you should not conduct additional outside research. Instead, you should:

a. make assumptions about any missing information and b. indicate in your presentations the assumptions you have made.

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Additional Information

I. Historical and Projected Financial StatementsA. Income Statement – MarginCo B. Income Statement – GrowCo C. Balance Sheet – MarginCo D. Balance Sheet – GrowCo

II. Comparable CompaniesA. Comparable Companies - DescriptionsB. Comparable Companies - Operating Metrics C. Comparable Companies - Weighted Average Cost of Capital

III. Comparable TransactionsA. Comparable Transactions - Operating Metrics

IV. Observed Control Premiums A. Control Premium % Paid In Recent Transactions

V. Industry OverviewA. Market Environment OverviewB. Debt Market OverviewC. M&A Market Overview

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I. Historical and Projected Financial Statements

A. Income Statement – MarginCo

($ in millions)Fiscal Year Ended December,

2004 2005 2006 2007 2008 2009 2010 2011Actual Actual Actual Actual Projected Projected Projected Projected

Revenue 136.0$ 139.9$ 148.8$ 151.3$ 155.9$ 162.2$ 168.6$ 175.4$ % Growth NA 2.9% 6.4% 1.7% 3.1% 4.0% 4.0% 4.0%

Cost of Goods Sold 94.6$ 100.8$ 103.1$ 106.2$ 108.2$ 111.3$ 116.7$ 123.7$

Gross Profit 41.4$ 39.1$ 45.7$ 45.0$ 47.7$ 50.9$ 51.9$ 51.7$ Gross Margin 30.5% 27.9% 30.7% 29.8% 30.6% 31.4% 30.8% 29.5%

Selling, General & Administrative 15.5$ 17.2$ 17.4$ 16.8$ 18.2$ 19.1$ 19.8$ 20.1$ Depreciation 5.0 4.9 5.2 5.3 5.5 5.8 5.8 6.1 Amortization - - - - 2.0 2.0 2.0 2.0 Other Expenses / (Income) (0.8) (0.1) (0.4) (0.5) (0.5) (0.5) (0.5) (0.5)

Operating Income (EBIT) 21.7$ 17.1$ 23.5$ 23.5$ 22.6$ 24.5$ 24.9$ 24.1$ Operating Margin 15.9% 12.2% 15.8% 15.5% 14.5% 15.1% 14.7% 13.7%

Interest Expense, net 0.3 0.2 0.3 0.3 0.3 - - - Other (Income) / Expenses (0.0) 0.0 (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)

EBT 21.4$ 16.8$ 23.3$ 23.3$ 22.4$ 24.7$ 25.0$ 24.2$ Taxes (1) 8.6 6.7 9.3 9.3 9.0 9.9 10.0 9.7

Net Income Available to Common 12.8$ 10.1$ 14.0$ 14.0$ 13.4$ 14.8$ 15.0$ 14.5$

Add: Taxes 8.6$ 6.7$ 9.3$ 9.3$ 9.0$ 9.9$ 10.0$ 9.7$ Add: Interest expense 0.3 0.2 0.3 0.3 0.3 - - - Add: Other (Income) / Expenses (0.0) 0.0 (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)

Plus: Depreciation 5.0 4.9 5.2 5.3 5.5 5.8 5.8 6.1 Plus: Amortization - - - - 2.0 2.0 2.0 2.0

Adjusted EBITDA 26.7$ 22.0$ 28.7$ 28.8$ 30.1$ 32.3$ 32.7$ 32.1$ EBITDA Margin 19.6% 15.7% 19.3% 19.0% 19.3% 19.9% 19.4% 18.3%

Capital Expenditures 6.2$ 6.4$ 6.0$ 6.8$ 7.1$ 7.5$ 7.7$ 8.1$

Footnotes:(1) Tax rate @ 40.0%

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I. Historical and Projected Financial Statements (continued)

B. Income Statement – GrowCo

($ in millions)Fiscal Year Ended December,

2004 2005 2006 2007 2008 2009 2010 2011

actual actual actual projected projected projected projected projected

Revenue 131.6$ 146.8$ 173.6$ 198.8$ 239.4$ 266.7$ 302.4$ 346.5$ % Growth NA 11.5% 18.3% 14.5% 20.4% 11.4% 13.4% 14.6%

Cost of Goods Sold 116.6$ 134.7$ 152.9$ 177.8$ 209.4$ 230.3$ 264.2$ 298.6$

Gross Profit 15.0$ 12.1$ 20.7$ 21.0$ 30.0$ 36.4$ 38.2$ 48.0$ Gross Margin 11.4% 8.2% 11.9% 10.6% 12.5% 13.7% 12.6% 13.8%

Selling, General & Administrative 7.7$ 7.8$ 9.0$ 9.5$ 10.9$ 13.9$ 15.5$ 18.0$ Depreciation 4.1 4.3 5.5 6.2 7.6 8.4 9.5 10.4 Amortization - - - - - - - - Other Expenses / (Income) - - - - - - - -

Operating Income (EBIT) 3.1$ (0.1)$ 6.1$ 5.3$ 11.5$ 14.2$ 13.3$ 19.5$ Operating Margin 2.4% (0.1%) 3.5% 2.7% 4.8% 5.3% 4.4% 5.6%

Interest Expense, Net 1.6 1.3 1.3 1.3 0.4 0.0 - - Other (Income) / Expenses (0.0) (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 EBT 1.6$ (1.3)$ 4.8$ 4.0$ 11.1$ 14.1$ 13.3$ 19.5$ Taxes (1) 0.6 (0.5) 1.9 1.6 4.5 5.7 5.3 7.8

Net Income Available to Common 0.9$ (0.8)$ 2.9$ 2.4$ 6.7$ 8.5$ 8.0$ 11.7$

Add: Taxes 0.6$ (0.5)$ 1.9$ 1.6$ 4.5$ 5.7$ 5.3$ 7.8$ Add: Interest expense 1.6 1.3 1.3 1.3 0.4 0.0 - - Add: Other (Income) / Expenses (0.0) (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 Plus: Depreciation 4.1 4.3 5.5 6.2 7.6 8.4 9.5 10.4 Plus: Amortization - - - - - - - -

Adjusted EBITDA 7.3$ 4.3$ 11.7$ 11.5$ 19.1$ 22.6$ 22.8$ 29.9$ EBITDA Margin 5.5% 2.9% 6.7% 5.8% 8.0% 8.5% 7.5% 8.6%

Capital Expenditures 8.1$ 9.0$ 11.2$ 11.8$ 14.2$ 13.1$ 13.5$ 14.6$

Footnotes:(1) Projected Tax rate @ 40.0%

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I. Historical and Projected Financial Statements (continued)

C. Balance Sheet – MarginCo

($ in millions) EstimatedFiscal Year Ended December 31,

2004 2005 2006 2007CURRENT ASSETS

Cash and cash equivalents 1.5$ 1.8$ 2.2$ 2.0$ Accounts receivable 16.3 21.9 23.3 23.7Inventory 17.5 32.7 40.7 33.4Prepaid expenses 1.3 1.1 2.0 1.7

Total Current Assets 36.5$ 57.5$ 68.3$ 60.8$

LONG TERM ASSETSProperty and equipment 12.9$ 16.2$ 19.1$ 31.1$ Land, net 1.2 1.7 1.7 1.7 Deferred Charges and Other Assets 2.0 2.0 1.9 1.9

Total Long-Term Assets 16.1$ 19.8$ 22.7$ 34.8$

Total Assets 52.6$ 77.3$ 91.0$ 95.5$

CURRENT LIABILITIESCurrent maturities of long-term debt 1.5$ 1.8$ 2.1$ 1.6$ Accounts payable 12.3 23.6 19.4 21.2 Accrued Expenses 3.3 6.5 12.8 12.0 Unearned Revenue 14.1 13.5 13.8 14.7

Total Current Liabilities 31.3$ 45.4$ 48.2$ 49.5$

LONG-TERM LIABILITIESLong-term debt 11.3 14.3 15.5 13.4

Total Long-Term Liabilities 11.3$ 14.3$ 15.5$ 13.4$

Total Liabilities 42.6$ 59.7$ 63.7$ 62.9$

Net stockholders' equity 10.0 17.5 27.3 32.6

Total liabilities and stockholders' equity 52.6$ 77.3$ 91.0$ 95.5$

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I. Historical and Projected Financial Statements (continued)

D. Balance Sheet – GrowCo

($ in millions) Jul-07Fiscal Year Ended December 31,

2004 2005 2006 2007CURRENT ASSETS

Cash and cash equivalents $ 1.1 $ 1.5 $ 1.9 $ 2.1 Accounts receivable 20.1 19.8 20.5 22.8 Inventory 23.2 22.2 29.5 39.6 Deferred tax asset and receivables - 1.1 0.6 0.2 Prepaid expenses 0.8 1.5 1.0 1.0

Total Current Assets 45.3$ 46.1$ 53.4$ 65.7$

LONG TERM ASSETSProperty and equipment $ 21.0 $ 24.1 $ 26.0 $ 20.9 Notes receivable, net of current 0.2 0.4 0.5 10.5 Deferred compensation 1.3 1.7 1.9 1.9 Goodwill and organization costs, net 5.5 5.5 5.5 5.5

Total Long-Term Assets 28.0$ 31.6$ 33.9$ 38.8$

Total Assets 73.2$ 77.7$ 87.3$ 104.5$

CURRENT LIABILITIESAccounts payable $ 18.4 $ 17.2 $ 24.2 $ 30.6 Accrued expenses 4.5 2.8 4.9 4.2 Unearned Revenue 7.1 12.9 11.4 10.0 Long-term debt, current portion 4.6 4.5 4.6 4.0 Due to related parties 0.1 2.8 0.4 0.0

Total current liabilities 34.8$ 40.2$ 45.5$ 48.9$

LONG-TERM LIABILITIESLong-term debt, net of current portion $ 18.2 $ 14.3 $ 13.6 $ 8.1 Deferred compensation 1.2 1.6 1.9 1.9 Deferred tax liability and imputed interest 0.6 0.3 0.9 2.8

Total Long-Term Liabilities 20.1$ 16.2$ 16.3$ 12.7$

Total Liabilities 54.9$ 56.4$ 61.8$ 61.6$

Minority Interest $ - $ 1.6 $ 1.8 $ 3.9 Capital stock 12.4 15.1 15.4 15.8 Retained earnings 6.0 4.6 8.4 23.3

Net stockholders' equity 18.4$ 21.2$ 25.5$ 43.0$

Total liabilities and stockholders' equity 73.2$ 77.7$ 87.3$ 104.5$

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II. Comparable Companies

A. Comparable Companies - Descriptions

ADG Consultancy has identified the following publicly traded comparable companies:

■ Moog, Inc . Moog, Inc. engages in the design, manufacture, and sale of precision motion and fluid controls, and control systems for various applications in aerospace, defense, industrial, and medical device markets worldwide. It operates in five segments: Aircraft Controls, Space and Defense Controls, Industrial Controls, Components, and Medical Devices. The Aircraft Controls segment offers primary and secondary flight controls for military and commercial aircraft, as well as provides aftermarket support services. Its systems control commercial transports, supersonic fighters, multirole military aircraft, business jets, and rotorcrafts. The Space and Defense Controls segment provides satellites and space vehicles, launch vehicles, strategic and tactical missiles, missile defense, and defense controls. The Industrial Controls segment offers systems, such as systems for all axes of injection and blow molding machines; control assemblies for fuel, steam, and variable geometry control applications; high precision electrical and hydraulic servovalves; controls for automotive, structural, and fatigue testing; and hydraulic and electromechanical motion simulation bases. The Components segment provides electromechanical actuators for military, aerospace, and commercial applications; and fiber optic modems that provide electrical to optical conversion of communication and data signals, avionic instrumentation, optical switches, and resolvers. The Medical Devices segment offers electronic ambulatory infusion pumps, which are used to control the delivery of fluids to the body, nutrition, post-operative pain management, regional anesthesia, chemotherapy, and antibiotics.

Aircraft Controls’ net sales in military aircraft and commercial aircraft in 2007 were $326 million and 261 million, respectively. Space and Defense Controls, Industrial Systems, Components and Medical Devices’ net sales in 2007 were $185, $436, $283 and $68 million, respectively. Approximately 48% of the sales relate to global military defense or government-funded programs. Most of these sales were within Aircraft Controls and Space and Defense Controls. Approximately 33%, 18% and 8% of the 2007 sales were in industrial, commercial aircraft programs (including business jets), and medical markets.

Moog was founded in 1951 and is headquartered in East Aurora, New York.

■ Barnes Group, Inc. Barnes Group, Inc. engages in the manufacture and distribution of aerospace and industrial products worldwide. It operates in three segments: Barnes Distribution, Associated Spring, and Barnes Aerospace. Barnes Distribution segment distributes maintenance, repair, operating, and production supplies, as well as provides inventory management and logistic services. Associated Spring segment manufactures precision mechanical springs; compressor reed valves; nitrogen gas products; nitrogen gas manifold systems used to control stamping presses; retaining rings; reed valves used in compressors; high-precision punched and fine-blanked components used in transportation and industrial applications; and injection-molded plastic-on-metal and metal-in-plastic components and assemblies used in electronics, medical devices, and consumer products. Barnes Aerospace segment produces precision-machined and fabricated components and assemblies for original equipment manufacturer turbine engine, airframe, and industrial gas turbine builders worldwide, and the military. It also provides jet engine component overhaul and repair services for various turbine engine manufacturers, commercial airlines, and the military. This segment also supplies designated aftermarket parts for the life of the related aircraft engine program. Barnes Aerospace also specializes in hot and cold forming of complex parts made from difficult-to-process materials such as titanium,

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II. Comparable Companies (continued)

cobalt, inconel, and other aerospace alloys. Customers include airframe and gas turbine engine manufacturers for commercial and military jets, business jets, and land-based industrial gas turbines.

2006 sales of Barnes Distribution, Associated Spring, and Barnes Aerospace were $526.9 million, $445.9 million and $296.9 million. Barnes Aerospace’s sales to OEMs grew by 15.6% on the strength of its increasing backlog particularly from the commercial OEM business. Barnes Aerospace generated orders of $429.4 million in 2006 which included $246.0 million of commercial OEM orders driven in large part by increased orders received on strategic engine programs. Military orders were $76.4 million, a 14.4% increase over 2005.

The company was founded in 1857 and is headquartered in Bristol, Connecticut.

■ Triumph Group, Inc Triumph Group, Inc., through its subsidiaries, engages in the design, engineering, manufacture, repair, overhaul, and distribution of aircraft components worldwide. Its aircraft components comprise hydraulic, mechanical, and electromechanical control systems; aircraft and engine accessories; structural components and assemblies; non-structural composite components; auxiliary power units; avionics; and aircraft instruments. The company offers various products and services to the aerospace industry through two groups, Aerospace Systems group and Aftermarket Services group. The Aerospace Systems group provides main engine gear box assemblies, high lift actuation, hydraulic systems, landing gear actuation systems, primary and secondary flight control systems, and thermal management systems. This group also engages in the manufacturing, machining, and forming of processes for a range of structural components, as well as assemblies and subassemblies, such as wing spars and stringers; stretch-formed leading edges and fuselage skins; formed structural sheet metal components; floor beams; landing gear components and assemblies; composite structures; composite floor panels, environmental control system ducting and non-structural composite flight deck, and other interior components; and bonded components. The Aftermarket Services group provides services for auxiliary power units; nacelles, thrust reversers, and flight control surfaces; constant speed drives, integrated drive generators, and air-cycle machines; cockpit instrumentation; interior sidewalls, ceiling panels, and overhead bins; and ground support equipments. It also manufactures precision investment castings of super alloys, titanium, and aluminum alloys. The company serves original equipment manufacturers of commercial, regional, business, and military aircraft and components, as well as commercial regional airlines and air cargo carriers.

Triumph added a significant number of new products, capabilities and services in 2007. Triumph now has the capability to produce and maintain virtually any aircraft component with the exception of main engines and landing gear, which have their own dedicated supply chains. Sales from commercial aerospace, military, business jets, regional aircraft and non-aviation markets were 44%, 33%, 10%, 8% and 5%, respectively.

Triumph Group was founded in 1993 and is based in Wayne, Pennsylvania.

■ Ladish Co .Ladish Co., Inc. engages in the engineering, production, and marketing of forged and cast metal components for various load-bearing and fatigue-resisting applications in the jet engine, aerospace, and industrial markets in the United States and internationally. It offers jet engine parts, missile components, landing gear, helicopter rotors, and other aerospace products. The company markets its products primarily to the manufacturers of jet engines; commercial, business, and defense aircraft; helicopters; satellites; heavy-duty off-road vehicles; and industrial and marine turbines.

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II. Comparable Companies (continued)

Ladish has a diverse portfolio of customers and products (62% jet engines, 19% aerospace and 19% general industrial), with a strategic split of commercial (78%) and defense businesses (22%). In addition, U.S. sales are balanced equally between domestic (49%) and international customers (51%).

Ladish Co. was founded in 1905 and is headquartered in Cudahy, Wisconsin.

■ Magellan Aerospace Corp Magellan is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries, Magellan designs, engineers, and manufactures aeroengine and aerostructure components for aerospace markets, advanced products for military and space markets, and complementary specialty products. The Corporation also supports the aftermarket through supply of spare parts as well as performing repair and overhaul services. The Corporation’s strategy has been to focus on several core competencies within the aerospace industry. These include precision machining of a wide variety of aerospace material, composites, complex high technology magnesium and aluminum alloy castings, repair and overhaul technologies and design of structures. The Corporation is now seeking to leverage these core competencies by achieving growth in both aerospace and non-aerospace applications where these abilities are critical in meeting customer needs.Magellan is organized and managed as a single business segment and is viewed as a single operating segment by the chief operating decision-maker, for the purpose of resource allocations, assessing performance, and strategic planning. Within the single operating segment, the Corporation has two major product groupings: aerostructures and aeroengines. Aerostructure and aeroengine products are used both in new aircraft, and for spares and replacement parts. Within the aeroengines product grouping, the Corporation also performs repair and overhaul services for jet engines and related components. The Corporation serves both the commercial and defense markets. In 2006, 64% of sales were derived from the commercial markets (2005–68%, 2004–65%) while 36% of sales related to defense markets (2005–32%, 2004–35%). The company markets its products primarily in Canada (48%), the United States (32%), the United Kingdom (20%).

The company was founded in 1994 and is headquartered in Mississauga, Canada.

■ Ducommun Inc Ducommun Incorporated, through its subsidiaries, engages in the design, engineer, and manufacture of aerostructure and electromechanical components and subassemblies. It engineers and manufactures aerospace structural components and subassemblies. The company provides aluminum stretch-forming, titanium hot-forming, machining, composite lay-up, metal bonding, and chemical milling services principally for domestic and foreign commercial and military aircraft. The company also designs, engineers, and manufactures electromechanical components and subassemblies, and provides engineering, technical, and program management services principally for the aerospace industry. It designs and manufactures illuminated push button switches and panels, microwave switches and filters, fractional horsepower motors and resolvers, and mechanical and electromechanical subassemblies, as well as provides engineering, technical, and program management services.

Sales related to commercial business were approximately 32% of total sales in 2006 and 35% of total sales in 2005. Military components manufactured by the Company are employed in many of the country’s front-line fighters, bombers, helicopters and support aircraft, as well as many sea-based vehicles. Sales related to military programs wee approximately 66% of total sales in 2006 and 61% of total sales in 2005. Sales related to space programs were approximately 2% of total sales in 2006 and 4% of total sales in 2005.

The company was founded in 1849 and is based in Carson, California.

16

II. Comparable Companies (continued)

■ Heroux-Devtek Inc Heroux-Devtek, Inc. engages in the design, development, manufacture, and repair of aerospace (91% of FY2007 Sales) and industrial products (9% of FY2007 Sales) primarily in the United States and Canada. It offers primarily landing gears, aerostructures, and gas turbine components. The company specializes in the design, development, manufacture, repair, and overhaul of aircraft landing gear, hydraulic flight control actuators, and fracture-critical components to original equipment manufacturers in the commercial and military markets. Heroux-Devtek also manufactures aluminum-lithium and titanium aircraft structural components; components and structural aircraft sub-assemblies; electronic enclosures, heat exchangers, and cabinets; and electro-mechanical assemblies, including power dividers. In addition, it provides kitting services, as well as manufactures and sells various components for aircraft engines, power generation equipment, and earth moving equipment. Further, the company offers industrial power turbines, information technology systems, and heavy industrial components.

The main raw materials purchased by the company are aluminum, steel and titanium. FY2007 sales for Landing Gear, Aerostructures, and Gas Turbines were $165.3 million, $87.9 million and $30.1 million.

The company was founded in 1942 as Heroux Machine Parts Limited and changed its name to Héroux, Inc. Further, it changed its name to Heroux-Devtek, Inc. in 2000. Heroux-Devtek is headquartered in Longueuil, Canada.

■ Northstar Aerospace, Inc Northstar Aerospace, Inc. manufactures flight-critical parts for military and commercial aircraft applications, and nonflight-critical parts for commercial aircraft. The company offers gears, shafts, gearboxes, and other related components for helicopter transmissions; helicopter rotor heads; accessory gearboxes for aircraft engines; and components for auxiliary power units. It also provides machining and fabrication services for various aerospace applications, as well as offers maintenance, repair, and overhaul (MRO) services. The MRO operations service military helicopter transmissions; and Pratt and Whitney PT6T, and PT6A engines used for helicopters and small turboprop aircraft. Northstar Aerospace serves defense and commercial aerospace markets in the United States, Canada, and Europe.

Defense and commercial market sales in 2006 were 64% and 36%, respectively. The company markets its products through direct sales force personnel and agents.

Northstar Aerospace was founded in 1984. It was formerly known as Derlan Industries, Ltd. and changed its name to Northstar Aerospace, Inc. in 2002. The company is based in Bedford Park, Illinois.

■ LMI Aerospace, Inc LMI Aerospace, Inc. provides structural components, assemblies, and kits to the aerospace, defense, and technology industries primarily in the United States. It fabricates, machines, finishes, and integrates close tolerance aluminum and specialty alloy components, and sheet metal products. The company’s aerospace products include wing slats and flapskins; winglets; fuselage and wing skins; helicopter cabin and aft section components and assemblies; wing panels; door components and assemblies and components; floorbeams; thrust reversers and engine nacelles/cowlings; cockpit window frames and landing lights; detail interior components; structural sheet metal and extruded components; and auxiliary power units. It also produces components and assemblies for laser equipment used by semiconductor and medical equipment manufacturers in the technology industry,

17

II. Comparable Companies (continued)

as well as provides prototyping and design capabilities to support new product development. In addition, the company offers services, including kitting; assembly; just-in-time delivery; warehousing; engineered tool design, fabrication, and repair; prototyping and manufacturing producibility design; polishing and painting; heat treating and aging of components; chemical milling; and metal finishing.

2006 sales from regional and corporate jet, commercial aircraft, military markets, and non-aerospace sectors were 38%, 33%, 21% and 8%, respectively. The company was founded in 1948 and is headquartered in St. Charles, Missouri.

18

II. Comparable Companies (continued)

B. Comparable Companies - Operating Metrics

The following charts detail operating metrics for the comparable companies:

(figures in millions except per share amount)

Shares FYE 2007 FYE 2007 FYE 2007 FYE 2007Company Stock Price Outstanding Debt Cash Sales EBITDA EBIT EarningsBarnes Group Inc. 33.83$ 53.78 422.0$ 22.6$ 1,409.4$ 202.9$ 154.9$ 102.2$ Ducommun Inc. 38.26 10.48 34.3 0.4 361.6 36.4 26.2 18.5 Heroux-Devtek Inc. 8.10 31.63 59.8 4.2 302.8 38.9 22.0 14.0 Ladish Co. Inc. 40.64 14.53 52.3 2.5 409.7 60.3 49.5 28.9 LMI Aerospace Inc. 24.46 11.43 33.7 0.4 144.1 22.1 17.9 12.0 Magellan Aerospace Corp. 1.42 90.85 246.1 3.8 586.9 41.8 13.5 (7.7) Moog Inc. 43.23 42.49 617.5 83.9 1,558.1 225.0 174.5 100.9 Northstar Aerospace Inc. 4.25 29.72 79.1 - 155.6 21.7 11.2 (12.5) Triumph Group Inc. 77.25 16.71 326.8 9.1 1,069.7 151.0 109.9 56.2

19

II. Comparable Companies (continued)

($ in millions)

FYE 2007 Operating Indications FYE 2007 Margins 2-Year Compound Annual Growth RateGross Net Gross Net

Company Revenue Profit EBITDA EBIT Income Profit EBITDA EBIT Income Revenues EBITDA EBIT Net IncomeBarnes Group Inc. 1,409.39$ 537.53$ 202.86$ 154.94$ 102.21$ 38.1% 14.4% 11.0% 7.3% 14.4% 37.1% 45.7% 45.4%Ducommun Inc. 361.65 74.67 36.41 26.22 18.47 20.6% 10.1% 7.3% 5.1% 21.2% 18.7% 19.7% 13.4%Heroux-Devtek Inc. 302.83 56.72 38.93 22.01 13.98 18.7% 12.9% 7.3% 4.6% 12.4% 50.2% 664.2% 42.3%Ladish Co. Inc. 409.73 66.10 60.34 49.47 28.94 16.1% 14.7% 12.1% 7.1% 28.0% 41.3% 55.0% 57.0%LMI Aerospace Inc. 144.09 38.72 22.12 17.94 12.01 26.9% 15.4% 12.5% 8.3% 23.4% 33.7% 50.8% 76.3%Magellan Aerospace Corp. 586.94 56.81 41.78 13.48 (7.67) 9.7% 7.1% 2.3% -1.3% 2.1% 5.5% -2.2% NMMoog Inc. 1,558.10 529.25 225.01 174.47 100.94 34.0% 14.4% 11.2% 6.5% 21.7% 24.5% 26.6% 24.8%Northstar Aerospace Inc. 155.58 34.52 21.70 11.23 (12.47) 22.2% 14.0% 7.2% -8.0% 3.8% -0.8% -2.7% NMTriumph Group Inc. 1,069.71 303.40 151.02 109.93 56.17 28.4% 14.1% 10.3% 5.3% 22.4% 41.5% 58.0% 81.2%

Low 144.09$ 34.52$ 21.70$ 11.23$ (12.47)$ 9.7% 7.1% 2.3% -8.0% 2.1% -0.8% -2.7% 13.4%High 1,558.10$ 537.53$ 225.01$ 174.47$ 102.21$ 38.1% 15.4% 12.5% 8.3% 28.0% 50.2% 664.2% 81.2%

Median 409.73$ 66.10$ 41.78$ 26.22$ 18.47$ 22.2% 14.1% 10.3% 5.3% 21.2% 33.7% 45.7% 45.4%Mean 666.45$ 188.63$ 88.91$ 64.41$ 34.73$ 23.9% 13.0% 9.0% 3.9% 16.6% 28.0% 101.7% 48.6%

20

II. Comparable Companies (continued)

($ in millions)

Total Net Income Net Income Current Quick Inventory A/R A/P Net WorkingCompany Assets ROA ROE Ratio Ratio Turnover Days Days Capital

Barnes Group Inc. 1,488.2$ # 6.9% # 18.0% # 1.4 # 0.7 # 4.3 # 56.0 # 68.2 # 197.5$ Ducommun Inc. 313.2 # 5.3% # 9.5% # 2.4 # 0.9 # 4.1 # 48.0 # 29.3 # 81.6 Heroux-Devtek Inc. 326.0 # 4.3% # 8.5% # 2.2 # 0.7 # 2.8 # 48.0 # 100.3 # 89.5 Ladish Co. Inc. 372.9 # 8.6% # 17.3% # 2.6 # 1.1 # 2.9 # 68.6 # 49.0 # 137.9 LMI Aerospace Inc. 165.3 # 8.3% # 12.8% # 3.4 # 1.5 # 3.0 # 59.2 # 31.7 # 54.4 Magellan Aerospace Corp. 666.4 # 1.2% # -2.7% # 1.0 # 0.2 # 1.9 # 33.6 # 81.4 # 233.6 Moog Inc. 2,006.2 # 6.0% # 12.3% # 2.9 # 1.6 # 3.2 # 89.0 # 66.1 # 538.7 Northstar Aerospace Inc. 188.3 # 4.1% # -23.8% # 2.2 # 0.7 # 1.8 # 67.1 # 83.3 # 75.4 Triumph Group Inc. 1,267.0 # 5.6% # 9.5% # 1.5 # 0.5 # 2.5 # 57.1 # 41.1 # 377.1

Max 2,006.2$ 8.6% 18.0% 3.4 1.6 4.3 89.0 100.3 538.7$ Min 165.3$ 1.2% -23.8% 1.0 0.2 1.8 33.6 29.3 54.4$ Mean 754.8$ 5.6% 6.8% 2.2 0.9 2.9 58.5 61.2 198.4$ Median 372.9$ 5.6% 9.5% 2.2 0.7 2.9 57.1 66.1 137.9$

21

II. Comparable Companies (continued)

($ in millions)Total Market

Company Debt Capitalization Cash

Barnes Group Inc. 422.0$ ## 1,819.2$ ## 22.6$ Ducommun Inc. 34.3 ## 400.8 ## 0.4 Heroux-Devtek Inc. 59.8 ## 256.2 ## 4.2 Ladish Co. Inc. 52.3 ## 590.7 ## 2.5 LMI Aerospace Inc. 33.7 ## 279.6 ## 0.4 Magellan Aerospace Corp. 246.1 ## 129.0 ## 3.8 Moog Inc. 617.5 ## 1,836.9 ## 83.9 Northstar Aerospace Inc. 79.1 ## 126.3 ## - Triumph Group Inc. 326.8 ## 1,290.7 ## 9.1

22

II. Comparable Companies (continued)

C. Comparable Companies - Weighted Average Cost of Capital

($ in millions)

Debt to Preferred to Equity toPreferred Market Value Total Debt Total Total Total

Debt Stock of Equity Capitalization to Equity Capitalization Capitalization CapitalizationBarnes Group Inc. $322.0 # $0.0 # $1,814.2 # $2,136.2 # 17.8% # 15.1% # 0.0% # 84.9%Ducommun Inc. 34.3 # 0.0 # 390.6 # 424.9 # 8.8% # 8.1% # 0.0% # 91.9%Heroux-Devtek Inc. 59.8 # 0.0 # 268.7 # 328.5 # 22.3% # 18.2% # 0.0% # 81.8%Ladish Co. Inc. 52.3 # 0.0 # 642.9 # 695.2 # 8.1% # 7.5% # 0.0% # 92.5%LMI Aerospace Inc. 33.7 # 0.0 # 282.2 # 315.9 # 11.9% # 10.7% # 0.0% # 89.3%Magellan Aerospace Corp. 246.0 # 19.9 # 104.4 # 370.3 # 235.5% # 66.4% # 5.4% # 28.2%Moog Inc. 617.5 # 0.0 # 1,946.0 # 2,563.5 # 31.7% # 24.1% # 0.0% # 75.9%Northstar Aerospace Inc. 79.1 # 0.0 # 122.1 # 201.2 # 64.8% # 39.3% # 0.0% # 60.7%Triumph Group Inc. 125.6 # 0.0 # 1,463.6 # 1,589.1 # 8.6% # 7.9% # 0.0% # 92.1%

Median $79.1 $0.0 $390.6 $424.9 17.8% 15.1% 0.0% 84.9%Mean $174.5 $2.2 $781.6 $958.3 45.5% 21.9% 0.6% 77.5%

Levered Unlevered Equity Risk Size Risk Cost of Cost of Cost ofBeta Beta Premium Premium Equity Debt Preferred WACC

Barnes Group Inc. 1.06 # 0.96 # 5.50% 1.45% 11.7% # 6.8% # 0.0% # 10.6%Ducommun Inc. 1.84 # 1.74 # 5.50% 2.70% 17.2% # 7.8% # 0.0% # 16.2%Heroux-Devtek Inc. 0.81 # 0.71 # 5.50% 2.70% 11.6% # 5.7% # 0.0% # 10.1%Ladish Co. Inc. 1.49 # 1.42 # 5.50% 2.28% 14.9% # 6.3% # 0.0% # 14.1%LMI Aerospace Inc. 1.46 # 1.36 # 5.50% 2.70% 15.2% # 6.7% # 0.0% # 14.0%Magellan Aerospace Corp. 0.82 # 0.34 # 5.50% 6.27% 15.2% # 6.0% # 8.0% # 7.1%Moog Inc. 1.10 # 0.93 # 5.50% 1.45% 12.0% # 6.4% # 0.0% # 10.0%Northstar Aerospace Inc. 0.38 # 0.27 # 5.50% 6.27% 12.8% # 8.1% # 0.0% # 9.7%Triumph Group Inc. 1.44 # 1.37 # 5.50% 1.67% 14.0% # 6.4% # 0.0% # 13.2%

Median 1.10 0.96 14.0% 6.4% 0.0% 10.6%Mean 1.15 1.01 13.8% 6.7% 0.9% 11.7%

23

III. Comparable Transactions

A. Comparable Transactions - Operating Metrics

($ in millions)

TargetTransaction Close Date Enterprise Value Equity Value Revenues EBITDA

Transaction 1 10/31/07 2,969.9$ 2,969.9$ 404.7$ 228.5$ Transaction 2 10/23/07 200.0 NA 87.0 NATransaction 3 08/15/07 1,096.8 1,096.8 582.9 92.8 Transaction 4 08/01/07 1,449.7 1,449.7 788.0 83.4 Transaction 5 07/31/07 65.0 65.0 64.0 9.0 Transaction 6 06/22/07 1,908.5 1,214.9 424.1 168.9 Transaction 7 05/15/07 468.2 468.2 412.7 62.7 Transaction 8 05/04/07 4,800.0 4,800.0 2,444.3 436.4 Transaction 9 03/14/07 335.0 335.0 173.7 22.9 Transaction 10 11/11/06 44.0 44.0 37.1 7.9 Transaction 11 10/27/06 226.0 226.0 380.0 29.0 Transaction 12 09/21/06 2,107.1 2,107.1 1,370.7 138.7 Transaction 13 07/03/06 6,171.9 3,065.0 839.5 624.6 Transaction 14 12/06/05 333.0 333.0 150.0 35.0 Transaction 15 11/01/05 270.0 270.0 210.0 26.0 Transaction 16 06/30/05 7.5 6.1 13.3 0.2 Transaction 17 02/07/05 12.7 12.7 25.6 3.1 Transaction 18 01/31/05 27.6 27.6 102.9 5.9 Transaction 19 01/28/05 4,769.8 3,007.2 952.8 683.8 Transaction 20 12/23/04 6,594.3 5,656.8 8,493.1 1,027.8 Transaction 21 11/30/04 1,063.5 NA 740.0 86.0 Transaction 22 09/20/04 1.3 1.3 3.3 0.1 Transaction 23 08/20/04 4,300.0 3,550.0 831.0 595.2 Transaction 24 07/09/04 1,200.0 1,200.0 300.7 122.4 Transaction 25 05/07/04 238.0 238.0 NA 19.8 Transaction 26 04/02/04 40.0 40.0 39.3 4.2 Transaction 27 02/12/04 183.2 244.1 175.4 22.3

24

IV. Observed Control Premiums

A. Control Premium % Paid in Recent Transactions

Control Number of All Transactions Premium Transactions

2007 21.0% 5612006 21.0% 5652005 24.0% 513

Aerospace, Defense, and Government Companies2007 10.0% - 20.0% 102006 3.0% - 53.0% 72005 2.0% - 40.0% 52004 17.0% - 22.0% 2

25

V. Industry Overview

A. Market Environment Overview

Characterized By:

Sustained Heightened Level of Activity (but off recent high)

Stable or Increased Pricing in High Demand Sub-sectors

Diverse Buyer Interest

Heightened M&A Activity Driven By:

Strong Public Company Pricing in ADG

Active Financial Sponsor Interest

Strong Balance Sheets which Mitigate Effect of Weakening Credit Markets

Positive Industry Growth Dynamics

Wall Street Growth Expectations

26

V. Industry Overview (continued)

B. Debt Market Overview

Recent Financing Transactions

($ in millions)Private / Borrower Rating Debt

Date Borrower Public Sales (1) S&P Moody's Amount Maturity Expiration Rate

09/28/07 Triumph Group Inc. Public $ 954.7 NA NA $ 350.00 45 Months 06/30/11 NA

09/07/07 Honeywell Canada (2) Public NA NA A2 $ 208.4 12 Months 09/06/08 Libor + 25 bps

08/31/07 AAR Corp Public $ 1,061.2 BB- Ba3 $ 250.0 48 Months 08/31/11 Libor + 125 bps

08/10/07 Northrop Grumman Corp. Public $ 30,148.0 BBB+ Baa1 $ 2,000.00 60 Months 08/10/12 Libor + 33 bps

07/31/07 LMI Aerospace Inc. Public $ 123.0 NA NA $ 80.00 60 Months 07/31/12 Libor + 150 bps

07/26/07 Boeing Co. Public $ 61.5 A+ A2 $ 742.0 12 Months 07/25/08 NA

06/26/07 Blackwater USA Private $ 358.2 NA NA $ 225.0 60 Months 06/26/12 NA

05/24/07 Goodrich Corp Public $ 5,878.3 BBB Baa2 $ 500.0 60 Months 05/25/12 Libor + 35 bps

05/14/07 Honeywell International Public $ 31,367.0 A A2 $ 2,800.00 60 Months 05/14/12 Libor + 15 bps

04/02/07 Alliant Techsystems Public $ 3,216.8 BB+ Baa3 $ 775.0 60 Months 04/02/12 Libor + 88 bps

03/30/07 Magellan Aerospace Public $ 487.5 NA NA $ 156.38 12 Months 03/30/08 NA

03/08/07 Northstar Aerospace Public $ 139.0 NA B3 $ 80.00 60 Months 03/08/12 Libor + 275 bps

02/28/07 Aerostructures Acquisition LLC Private $ 61.0 NA NA $ 12.0 60 Months 02/28/12 Libor + 300 bps

02/28/07 Aerostructures Acquisition LLC Private $ 61.0 NA NA $ 73.0 72 Months 02/28/13 Libor + 300 bps

02/28/07 Aerostructures Acquisition LLC Private $ 61.0 NA NA $ 5.0 72 Months 02/28/13 Libor + 300 bps

02/01/07 DeCrane Aircraft Holdings Private $ 45,957.5 B B1 $ 225.0 72 Months 02/01/13 Libor + 275 bps

02/01/07 DeCrane Aircraft Holdings Private $ 45,957.5 B B1 $ 150.0 84 Months 02/01/14 Libor + 700 bps

01/05/07 Astronics Corp Public $ 75.4 NA NA $ 20.0 24 Months 01/05/09 Libor + 145 bps

Notes:(1) Borrower Sales per information available as of transaction date(2) Subsidiary of Honeywell International Inc., a public entity.

27

V. Industry Overview (continued)

C. M&A Market Overview

Sustained heightened level of ADG M&A activity

Aerospace Defense and Government M&A - Number of Transactions by Sector

84 77 67 80 87 86 110 121 11935 42 39

58 76 10298

143 12257 71

4764

7992 90

8782

050

100150200250300350400

1999 2000 2001 2002 2003 2004 2005 2006 2007

Aerospace Defense Government

176 190153

202242

280 298

351323

28

V. Industry Overview (continued)

Aerospace Defense and Government M&A activity by deal size

Stratified Aerospace Defense and Government M&A Announcements*

4732 29

4265 76 68

55 557

15

2014 24

17 201720 20

23

2128 28

47 38

67

1913106

4

4

19

9

0

20

40

60

80

100

120

140

1999 2000 2001 2002 2003 2004 2005 2006 2007

Num

ber o

f Ann

ounc

emen

ts

Purchase Price < = $60M Purchase Price $50M - $100MPurchase Price $100M - $1B Purchase Price >=$1B

* Only includes announcements where deal values were reported.

29