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Submitted By zoumo8
Words 4550
Pages 19
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Company!Profile! • Industry:!Medical!Device!Industry! • Core!Products:!Vascular,!Urology,! Oncology,!Surgical!Specialty! • Core!Value:!Quality,!Integrity,!Service,! and!Innovation! • Market!Share:!6.1%! Stock!Price!Performance! • Current!Price!(May!10,!2013):104.61! • 52!Week!Price!Range:!108.31!–!93.68!
130! 120! 110! 100! 90! 80!

Profitability!

Profit!Margin!(ttm):! 16.24%! Operating!Margin!(ttm):! 26.37%! Return!on!Asset!(ttm):! 12.18%! Return!on!Equity!(ttm):! 25.57%! Current!Ratio:!4.32! Debt!to!Equity:!74.19! P!/E!Ratio:!18.53!

Highlight!Financials!

Management! Effectiveness!

Liquidity!and! Leveraging!

Market!Ratio!
DCR! S&P500!

EV/EBITDA:!12.6!

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Undervalued! Share!Price!

Advanced! Technology!!

Attractive! New! Products!

Significant! Market! Share!

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Trading(Comparable BCR Enterprise!Value!/!LTM!Rev Enterprise!Value!/!LTM!EBITDA 3.0x 10.1x! BSX 2.15x 9.48x! BDX 2.67X 9.9X! TMO 2.88x 13.76x!

Transaction(Comparable((Medical(Device(Industry Date!Range! Total!Number!of!Deal! Total!Transaction!Value! Median!EV/EBITDA EBITDA!range 5/11/2012!–!5/11/2013 217 $8.51!Billion 12.78x 0.0x!–!64.34x

COMPARABLES!VALUATION! • Trading!Comparable:!13x! • Implied!EV:!!$11.55!Billion! • Implied!Share!Price:!137.17! • Premium:!31.13%!

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DCF(ANALYSIS

With( Synergies(

Without( Synergies(

LBO(ANALYSIS

PE(Firms(–(( General

PE(Firms(O( Professional

!!Enterprise!Value! $!11.57!Billion! $10.85!Billion! !!Enterprise!Value !!Equity!Value! $!11.05!Billion! $10.34!Billion! !!Equity!Value !!Implied!Price! !$137.34! $128.43! !!Purchase!Price! !!Current!Share!Price! !$104.61! $104.61! !!Price!Premium 31.29%( 22.77%( !!IRR !!Price!Premium!

$!11.15!Billion $!11.23!Billion $!10.52!Billion $!10.61!Billion !$130.76! !$131.81! 25%! 26%!

(16%

18%(

Conclusion:! • Equity!Price!Range:! $10.34!Billion!–!$11.57! Billion! • Stock!Price!Range:! $128.43!–!$137.34!!

• Sources!and!Uses!
USES((in(million)
Repay!O/S!Debt Purchase!Equity Transaction!Costs Total!Uses

12,129
Earn!Out! 9%! Cash!on!B/S! 7%! Issue!Debt! 33%!

SOURCES

Equity!Roll! Over! 18%! New!Equity! 33%!

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Appendix( Table(I:(DCF(Analysis(without(Synergy(–(BCR(
INCOME(STATEMENT(ANNUAL(($(IN(MILLION)( Revenues( ( Cost(of(Good(Sold( ( ( Gross(Profit( ( Operating(Expenses( SG&A( ( Research(and(development(Expense( ( Other(Expense(/((Income)([(Net( Operating(Income(/((Loss)( ( Operating!Margin!%! yoy%! yoy%! ! ! yoy%! ! %Revenues! yoy%! ! %Revenues! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! %!Revenue! ! ! ! FY10A( 2,720! ! ! 1,020! ! 37.5%! ! 1,700! ! 62.5%! ! 760! ! ! 185! ! ! 25! ! 730! ! 26.9%! 105! ! 51! ! 1.88%! 0.5x! FY11A( 2,896! ! 6.48%! 1,097! ! 37.9%! 7.58%! 1,799! ! 62.1%! ! 795! ! 4.58%! 185! ! 0.00%! 272! ! 547! ! 18.9%! 115! ! 71! ! 2.47%! 0.6x! FY12A( 2,958! ! 2.13%! 1,125! ! 38.0%! 2.55%! 1,833! ! 61.9%! ! 817! ! 2.86%! 203! ! 9.60%! 40! ! 772! ! 26.10%! 136! ! 73! ! 2.45%! 0.5x! FY13E( 3,136! ! 6.00%! 1,192! ! 38.0%! 5.88%! 1,944! ! 62.0%! ! 854! ! 4.50%! 215! ! 5.60%! 0! ! 875! ! 27.92%! 88! ! 88! ! 2.80%! 1.0x! FY14E( 3,308! ! 5.50%! 1,257! ! 38.0%! 5.50%! 2,051! ! 62.0%! ! 889! ! 4.13%! 224! ! 4.60%! 0! ! 937! ! 28.33%! 93! ! 93! ! 2.80%! 1.0x! FY15E( 3,473! ! 5.00%! 1,320! ! 38.0%! 5.00%! 2,154! ! 62.0%! ! 923! ! 3.75%! 233! ! 3.60%! 0! ! 998! ! 28.74%! 97! ! 97! ! 2.80%! 1.0x! FY16E( 3,612! ! 4.00%! 1,373! ! 38.0%! 4.00%! 2,240! ! 62.0%! ! 950! ! 3.00%! 241! ! 3.60%! 0! ! 1,048! ! 29.02%! 101! ! 101! ! 2.80%! 1.0x! FY17E( 3,721! ! 3.00%! 1,414! ! 38.0%! 3.00%! 2,307! ! 62.0%! ! 972! ! 2.25%! 250! ! 3.60%! 0! ! 1,086! ! 29.18%! 104! ! 104! ! 2.80%! 1.0x! FY18E( 3,832! ! 3.00%! 1,456! ! 38.0%! 3.00%! 2,376! ! 62.0%! ! 994! ! 2.25%! 259! ! 3.60%! 0! ! 1,124! ! 29.33%! 107! ! 107! ! 2.80%! 1.0x! FY19E( 3,947! ! 3.00%! 1,500! ! 38.0%! 3.00%! 2,447! ! 62.0%! ! 1,016! ! 2.25%! 268! ! 3.60%! 0! ! 1,164! ! 29.48%! 111! ! 111! ! 2.80%! 1.0x! FY20E( 4,066! ! 3.00%! 1,545! ! 38.0%! 3.00%! 2,521! ! 62.0%! ! 1,039! ! 2.25%! 278! ! 3.60%! 0! ! 1,204! ! 29.62%! 114! ! 114! ! 2.80%! 1.0x! FY21E( 4,188! ! 3.00%! 1,591! ! 38.0%! 3.00%! 2,596! ! 62.0%! ! 1,062! ! 2.25%! 288! ! 3.60%! 0! ! 1,247! ! 29.77%! 117! ! 117! ! 2.80%! 1.0x! FY22E( 4,313! ! 3.00%! 1,639! ! 38.0%! 3.00%! 2,674! ! 62.0%! ! 1,086! ! 2.25%! 298! ! 3.60%! 0! ! 1,290! ! 29.92%! 121! ! 121! ! 2.80%! 1.0x!

Depreciation(and(Amortization(Expenses( Capital(Expenditures( ( Reinvestment(Rate(

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DCF(ANALYSIS( ( EBITDA( ( ( ( ( ( ( ( FCFs( TV( ( ( ( ( Enterprise(Value( ( ( Equity(Value( ( Implied(Price(/(Share( Share(Price( ! ! WACC! Discount!Factors! PV!(FCF)! PV!(TV)! ! Plus!Cash!&!Equivalence! Less!Debt! ! FD!Shares!O/S! ! ! ! ! yoy%! %Revenue! Less!Cash!Taxes! Tax!Rate! Less!Capital!Expenditure! Less!Increase!in!WC! %!Revenue! ( ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ( FY10A( @2! 860! ! ! 31.6%! ! ! ! ! ! ! ! 8.4%( ! ! ! 10,849! ! 896! ! ! 1,410! ! ! 10,336! ! ! 80! ! ! 128! ! ! 105! ! ! 22.77%! ! FY11A( @1! 934! ! 8.64%! 32.3%! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! FY12A( 0! 949! ! 1.54%! 32.1%! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! FY13E( 1! 963! ! 1.54%! 30.7%! 306! ! 35%! 88! ! 9! ! 5%! 560! ! ! ! ! 0.96! ! 538! ! ! ! ! ! ! ! ! ! ! FY14E( 2! 1,030! ! 6.92%! 31.1%! 328! ! 35%! 93! ! 9! ! 5%! 601! ! ! ! ! 0.89! ! 532! ! ! ! ! ! ! ! ! ! ! FY15E( 3! 1,096! ! 6.38%! 31.5%! 349! ! 35%! 97! ! 8! ! 5%! 641! ! ! ! ! 0.82! ! 523! ! ! ! ! ! ! ! ! ! ! FY16E( 4! 1,150! ! 4.93%! 31.8%! 367! ! 35%! 101! ! 7! ! 5%! 675! ! ! ! ! 0.75! ! 508! ! ! ! ! ! ! ! ! ! ! ! ! FY17E( 5! 1,190! ! 3.49%! 32.0%! 380! ! 35%! 104! ! 5! ! 5%! 700! ! ! ! ! 0.70! ! 487! ! ! ! ! ! FY18E( 6! 1,231! ! 3.49%! 32.1%! 393! ! 35%! 107! ! 6! ! 5%! 725! ! ! ! ! 0.64! ! 465! ! ! ! ! ! FY19E( 7! 1,274! ! 3.48%! 32.3%! 407! ! 35%! 111! ! 6! ! 5%! 751! ! ! ! ! 0.59! ! 444! ! ! ! ! ! FY20E( 8! 1,318! ! 3.47%! 32.4%! 422! ! 35%! 114! ! 6! ! 5%! 777! ! ! ! ! 0.55! ! 424! ! ! ! ! ! FY21E( 9! 1,364! ! 3.46%! 32.6%! 436! ! 35%! 117! ! 6! ! 5%! 804! ! ! ! ! 0.50! ! 405! ! ! ! ! ! ! FY22E( 10! 1,411! ! 3.46%! 32.7%! 452! ! 35%! 121! ! 6! ! 5%! 832! ! 13,228! ! ! ! 0.46! ! 386! ! 6,138! ! !

TERMINAL(VALUE(ANALYSIS( EBITDA!x! g! ! ! 9! 0.02! ! ! ! !

12,700! ! ! 13,228! ! ! ! ! ! !

Premium(/((Discount)(to(Current(Share(

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Table(II:(Leveraged(Buyout(without(Synergy(–(BCR(
LEVERAGED(BUYOUT(ANALYSIS(WITHOUT(SYNERGY( Premium(to(Current(Stock(Price( Implied(Stock(Price( Equity(Value( ( ( ( Enterprise(Value( ( ( ( ( ( ( Cash(Flow(to(Equity( EBITDA( ( ( ( ( ( ( Cash(Flow(to(Equity( ! Less!Interest!Expense! Less!Debt!Amortization! Less!Cash!Taxes! Tax!rate! Less!Capital!Expenditure! Less!Increase!in!WC! ! Debt! Debt!%!Cap!Structure! Equity! Equity!%!Cap!Structure! ! ! ! ! ! ! ! ! ! ! ! Repay!Debt! Less!Cash! Plus!Transaction!Costs! ! ! ! ! ! ( ! ! ! ! ! ( ! ! ! ! ! 1%! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! FY13E( 25%! 131! 10,524! 1,410! 896! 110! 11,148! ! 4,459! 40%! 6,689! 60%! ! ! 963! 223! 223! 228! 35%! 88! 9! 192! FY14E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,030! 212! 223! 254! 35%! 93! 9! 240! FY15E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,096! 201! 357! 279! 35%! 97! 8! 153! FY16E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,150! 183! 357! 303! 35%! 101! 7! 199! FY17E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,190! 165! 3,300! 322! 35%! 104! 5! @2,707!

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LEVERAGED(BUYOUT(ANALYSIS(WITHOUT(SYNERGY([(CONTINUED( Exit(Price(Calculations( ( ( ( ( IRR(Calculations( IRR( EBITDA!Multiple! Implied!EV! Less!Debt!O/S!(assumes!no!Cash)! Implied!Equity!Value! ! ! ( ! ! ! ! ! ! ! ( ! ! ! ! ! @6,689! 16%! FY13E( ! ! ! ! ! 192! ! FY14E( ! ! ! ! ! 240! ! FY15E( ! ! ! ! ! 153! ! FY16E( ! ! ! ! ! 199! ! FY17E( ! 13.0x! 15,467! @2,707! 12,760! 12,760! !

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SUPPORTING(CALCULATIONS( Debt(Calculations( ( ( ( Debt(Amortization( Interest(Payment(%( Interest( ! Opening!Balance! Decrease!/!(Increase)! Closing!Balance! ! ! ! ( ! ! ! ! ! ! ! ( ! ! ! ! ! ! ! FY13E( ! 4,459! 223! 4,236! 5%! 5%! 223! FY14E( ! 4,236! 223! 4,013! 5%! 5%! 212! FY15E( ! 4,013! 357! 3,656! 8%! 5%! 201! FY16E( ! 3,656! 357! 3,300! 8%! 5%! 183! FY17E( ! 3,300! 3,300! 0! 74%! 5%! 165!

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CREDIT(ANALYSIS( Leverage(Ratio((Total(Debt(/(EBITDA)( Fixed(Charge(Coverage(("FCC")(Ratio( ( ( FCC! Operating!CFs! Fixed!Charges! ! ( ! ! ! ! ! ( ! ! ! ! ! FY13E( 4.63! ! 647! 446! 1.45! FY14E( 4.11! ! 683! 435! 1.57! FY15E( 3.66! ! 719! 557! 1.29! FY16E( 3.18! ! 745! 540! 1.38! FY17E( 2.77! ! 763! 3,465! 0.22!

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Table(III:(DCF(Analysis(with(Synergy(–(BCR(
INCOME(STATEMENT([(ANNUAL( Organic(Revenue( ( Revenues((Synergies)( ( Total(Revenue( ( Cost(of(Good(Sold( ( Gross(Profit( ( Operating(Expenses( SG&A( ( Cost(Synergy((SG&A)( ( D&A( ( yoy%! ! ! ! ! ! %!Revenue! ! ! %!SG&A! ! ! yoy%! ! ! ! %Revenues! ! yoy%! ! ! yoy%! ! ! %!Revenue! ! ! yoy%! ! ! ( ! ! FY10A( 2,720! ! 0! ! 2,720! ! 1,020! ! 1,700! 62.50%! ! 760! ! 0! ! 185! ! 25! 730! 26.85%! 105! 51! 1.88%! 0.5x! FY11A( 2,896! 6.48%! 0! ! 2,896! 6.48%! 1,097! 7.58%! 1,799! 62.12%! ! 795! 4.58%! 0! ! 185! 0.00%! 272! 547! 18.89%! 115! 71! 2.47%! 0.6x! FY12A( 2,958! 2.13%! 0! ! 2,958! 2.13%! 1,125! 2.55%! 1,833! 61.96%! ! 817! 2.86%! 0! ! 203! 9.60%! 40! 772! 26.10%! 136! 73! 2.45%! 0.5x! FY13E( 3,136! 6.00%! 31! 1.00%! 3,167! 7.06%! 1,203! 6.94%! 1,964! 62.62%! ! 861! 5.30%! 9! 1.00%! 215! 5.60%! 0! 897! 28.61%! 89! 89! 2.80%! 1.0x! FY14E( 3,308! 5.50%! 66! 2.00%! 3,374! 6.54%! 1,282! 6.54%! 2,092! 63.24%! ! 903! 4.91%! 18! 2.00%! 224! 4.60%! 0! 983! 29.71%! 94! 94! 2.80%! 1.0x! FY15E( 3,473! 5.00%! 104! 3.00%! 3,578! 6.03%! 1,360! 6.03%! 2,218! 63.86%! ! 944! 4.52%! 28! 3.00%! 233! 3.60%! 0! 1,070! 30.81%! 100! 100! 2.80%! 1.0x! FY16E( 3,612! 4.00%! 108! 3.00%! 3,721! 4.00%! 1,414! 4.00%! 2,307! 63.86%! ! 972! 3.00%! 29! 3.00%! 241! 3.60%! 0! 1,123! 31.09%! 104! 104! 2.80%! 1.0x! FY17E( 3,721! 3.00%! 112! 3.00%! 3,832! 3.00%! 1,456! 3.00%! 2,376! 63.86%! ! 994! 2.25%! 30! 3.00%! 250! 3.60%! 0! 1,162! 31.24%! 107! 107! 2.80%! 1.0x! FY18E( 3,832! 3.00%! 115! 3.00%! 3,947! 3.00%! 1,500! 3.00%! 2,447! 63.86%! ! 1,016! 2.25%! 30! 3.00%! 259! 3.60%! 0! 1,203! 31.39%! 111! 111! 2.80%! 1.0x! FY19E( 3,947! 3.00%! 118! 3.00%! 4,066! 3.00%! 1,545! 3.00%! 2,521! 63.86%! ! 1,039! 2.25%! 31! 3.00%! 268! 3.60%! 0! 1,245! 31.54%! 114! 114! 2.80%! 1.0x! FY20E( 4,066! 3.00%! 122! 3.00%! 4,188! 3.00%! 1,591! 3.00%! 2,596! 63.86%! ! 1,062! 2.25%! 32! 3.00%! 278! 3.60%! 0! 1,288! 31.69%! 117! 117! 2.80%! 1.0x! FY21E( 4,188! 3.00%! 126! 3.00%! 4,313! 3.00%! 1,639! 3.00%! 2,674! 63.86%! ! 1,086! 2.25%! 33! 3.00%! 288! 3.60%! 0! 1,333! 31.83%! 121! 121! 2.80%! 1.0x! FY22E( 4,313! 3.00%! 129! 3.00%! 4,443! 3.00%! 1,688! 3.00%! 2,755! 63.86%! ! 1,111! 2.25%! 33! 3.00%! 298! 3.60%! 0! 1,379! 31.97%! 124! 124! 2.80%! 1.0x!

Other(Expense(/((Income)([(Net( Operating(Income(/((Loss)( Operating!Margin!%! D&A( Capital(Expenditures( ( Reinvestment(Rate(

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DCF(ANALYSIS( ( ! ( ! ! yoy%! %Revenue! Less!Cash!Taxes! Tax!Rate! Less!Capex! Less!Increase!in!WC! %!Revenue! ! ! ! ! ! ! ! ! ! ! ! ! ! ! FY10A( @2! 860! ! 31.6%! ! ! ! ! ! ! ! 8.4%! ! ! ! 11,567! 896! ! ! ! ! ! ! 1,410! 11,053! ! FY11A( @1! 934! 8.64%! 32.3%! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! FY12A( 0! 949! 1.54%! 32.1%! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! FY13E( 1! 986! 3.90%! 31.4%! 314! 35%! 89! 10! 5%! 573! ! ! 0.96! ! 550! ! ! ! ! ! ! ! ! ! FY14E( 2! 1,077! 9.30%! 32.6%! 344! 35%! 94! 10! 5%! 628! ! ! 0.89! ! 557! ! ! ! ! ! ! ! ! ! FY15E( 3! 1,170! 8.65%! 33.7%! 375! 35%! 100! 10! 5%! 686! ! ! 0.82! ! 560! ! ! ! ! ! ! ! ! ! FY16E( 4! 1,227! 4.86%! 33.98%! 393! 35%! 104! 7! 5%! 723! ! ! 0.75! ! 545! ! ! ! ! ! ! ! ! ! ! ! FY17E( 5! 1,270! 3.46%! 34.13%! 407! 35%! 107! 6! 5%! 750! ! ! 0.70! ! 521! ! ! ! ! FY18E( 6! 1,314! 3.45%! 34.28%! 421! 35%! 111! 6! 5%! 776! ! ! 0.64! ! 498! ! ! ! ! FY19E( 7! 1,359! 3.44%! 34.42%! 436! 35%! 114! 6! 5%! 803! ! ! 0.59! ! 475! ! ! ! ! FY20E( 8! 1,406! 3.44%! 34.57%! 451! 35%! 117! 6! 5%! 831! ! ! 0.55! ! 453! ! ! ! ! FY21E( 9! 1,454! 3.43%! 34.72%! 467! 35%! 121! 6! 5%! 860! ! ! 0.50! ! 433! ! ! ! ! ! ! ! ! ! FY22E( 10! 1,504! 3.42%! 34.86%! 483! 35%! 124! 6! 5%! 890! 14,143! ! 0.46! ! 413! ! 6,562! ! ! ! !

EBITDA( ( ( ( ( ( ( ( FCFs( TV( ( ( ( ( WACC! Discount!Factors! PV!(FCF)! PV(TV)!

Enterprise(Value( ( ( Plus!Cash!&!Equivalence! Less!Debt!

Equity(Value( ( FD!Shares!O/S!

TERMINAL!VALUE!ANALYSIS! EBITDA! ! g! ! ! 9x! 0.02! ! ! ! ! ! ! 13,532! 14,143!

! 80! ! ! 137! 105! 31.3%! ! ! !

Implied(Price(/(Share( Share(Price( Premium(to(Current(Share(

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Table(IV:(Leverage(Buyout(Analysis(with(Synergy(–(BCR(
LEVERAGED(BUYOUT(ANALYSIS( Premium(to(Current(Stock(Price( Implied(Stock(Price( Equity(Value( ( ( ( Enterprise(Value( ( ( ( ( ( ( Cash(Flow(to(Equity( EBITDA( ( ( ( ( ( ( Cash(Flow(to(Equity( ! Debt! Debt!%!Cap!Structure! Equity! Equity!%!Cap!Structure! ! ! ! less!Int!Expense! less!Debt!Amort! less!Cash!Taxes! tax!rate! less!Capex! less!Incr!in!WC! ! ! ! ! ! ! ! ! ! ! ! Repay!Debt! Less!Cash! Plus!Transaction!Costs! ! ! ! ! ! ( ! ! ! ! ! ( ! ! ! ! ! 1%! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! FY13E( 26%! 131.81! 10,608! 1,410! 896! 111! 11,233! ! 4,493! 40%! 6,740! 60%! ! ! 986! 225! 225! 235! 35%! 89! 10! 202! FY14E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,077! 213! 225! 269! 35%! 94! 10! 265! FY15E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,170! 202! 359! 304! 35%! 100! 10! 195! FY16E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,227! 184! 359! 329! 35%! 104! 7! 244! FY17E( ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1,270! 166! 3,325! 349! 35%! 107! 6! @2,683!

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LEVERAGED(BUYOUT(ANALYSIS([(CONTINUED( ( Exit(Price(Calculations( ( ( ( ( IRR(Calculations( IRR( EBITDA!Multiple! Implied!EV! less!Debt!O/S!(assumes!no!Cash)! Implied!Equity!Value! ! ! !

( ! ! ! !

( ! ! ! ! !

FY13E( ! ! ! ! ! ! @6,740! 18%! 202! !

FY14E( ! ! ! ! ! ! 265! !

FY15E( ! ! ! ! ! ! 195! !

FY16E( ! ! ! ! ! ! 244! !

FY17E( ! ! 13.0x! 16,507! @2,683! 13,824! 13,824! !

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SUPPORTING(CALCULATIONS( Debt(Calculations( ( ( ( Debt(Amortization( Interest(Payment(%( Interest( ! Opening!Balance! Decrease!/!(Increase)! Closing!Balance! ! ! ! ( ! ! ! ! ! ! ! ( ! ! ! ! ! ! ! FY13E( ! ! ! ! 5%! 5%! ! FY14E( ! ! ! ! 5%! 5%! ! FY15E( ! ! ! ! 8%! 5%! ! FY16E( ! ! ! ! 8%! 5%! ! FY17E( ! ! ! ! 74%! 5%! !

CREDIT(ANALYSIS( Leverage(Ratio((Total(Debt(/(EBITDA)( Fixed(Charge(Coverage(("FCC")(Ratio( ( ( ( Operating!CFs! Fixed!Charges! FCC!

( ! ! ! ! !

( ! ! ! ! !

FY13E( ! ! ! ! !

FY14E( ! ! ! ! !

FY15E( ! ! ! ! !

FY16E( ! ! ! ! !

FY17E( ! ! ! ! !

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Table(V:(Sources(and(Uses(Analysis(with(Synergy(–(BCR(
SOURCES( ( Cash(on(B/S( Issue(Debt( New(Equity( Equity(Roll(Over( Earn(Out( Total(Sources( ! ! ! ! ! ! ! ( ( %!Cap! ! ! ! ! ! ! ! ! ! Structure! ! ! ! ! ! ( ! ! ! ! ! ( ( ! Repay!O/S!Debt! Purchase!Equity! Transaction!Costs! ! ! Total(Uses( ! USES( ! ! ! ! ! ! ( ! ! ! ! ! ! 12,129(

! Table(VI:(Sensitivity(Analysis(–(BCR(
(

Sensitivity(Analysis([(Implied(Stock(Price((WACC(vs.(g)( Long[Term(Growth(Rate( 137.34! 6.00%! 6.50%! WACC( 7.00%! 7.50%! 8.00%! 8.50%! 9.00%! 1.00%! 191.35! 172.99! 157.72! 144.81! 133.76! 124.19! 115.83! 1.50%! 206.32! 184.77! 167.15! 152.48! 140.08! 129.46! 120.26! 2.00%! 225.04! 199.16! 178.46! 161.54! 147.45! 135.53! 125.33! 2.50%! 249.11! 217.14! 192.29! 172.41! 156.16! 142.62! 131.17! 3.00%! 281.20! 240.26! 209.57! 185.70! 166.61! 150.99! 137.98! 3.50%! 326.13! 271.10! 231.79! 202.31! 179.39! 161.04! 146.04! 4.00%! 393.52! 314.26! 261.42! 223.67! 195.35! 173.33! 155.70!

! ! ! ! !

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MERGERS&AND&ACQUISITIONS&–&FINAL&PROJECT&
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!
( Sensitivity(Analysis([(Implied(Stock(Price((Rev(and(Cost(Synergies)( Revenue(Synergy( ! ! ! Cost( Synergy( ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

!
( Sensitivity(Analysis(–(Internal(Rate(of(Return((Rev(and(Cost(Synergies)( Revenue(Synergy( ! ! ! Cost( Synergy( ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! !

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Table(VI:(WACC(Calculation(–(BCR(
WACC(CALCULATIONS( COST(OF(DEBT( ( ( ( Cost!of!Debt! Tax! After!Tax!Cost!of!Debt! ! ! 3.79%! 35.00%! 2.46%!

COST(OF(EQUITY( ( ( ( ( Risk!Free!Rate! Market!Risk!Premium! Beta!(levered)! Cost!of!Equity! ! ! ! ! 1.81%! 6.50%! ! 1.77! ! 13.29%!

TARGET(CAPITAL(STRUCTURE( ( ( WACC( BETA(CALCULATIONS( Industry(Beta((Unlevered)( Optimal(Capital(Structure( ( ( Tau( Beta((Debt)( Beta((Equity(or(Leveraged)( %!D! %!E! ! ! ! ! ! ! ! 1.03! ! 45%! 55%! 35%! 0.2! ! 1.77! ! %!D! %!E! ! ! ! 45%! 55%! 8.42%!

! !

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MERGERS&AND&ACQUISITIONS&–&FINAL&PROJECT&
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Table(VII:(Comparable(Calculation(–(BCR(
Company(Name( CR(BARD( Ticker( BCR! FYE( 2/20/13! FD(Shares(O/S( 80.48! Source( 4/24/2013!10Q! Date( 4/6/12! Stock(Price( $104.61! Mkt(Cap( 8,419! Debt( 1,410! Cash(&(Eq( 896! EV( 8,933!

!
Revenue( Q1(2013( 740( ( ! EBITDA( Q1(2013( 174.4( Q1(2012( 234.3! FY(2012( 948.6! LTM( 889! Q1(2012( 730! ! FY(2012( 2,958! ! LTM( 2,968! ! ( ( ! LTM(Rev( 3.0x! ( ( ! ! Q1(2013( 139! ! EBIT( Q1(2012( 201! ! ENTERPRISE(VALUE(/( LTM(EBIT( 12.6x! LTM(EBITDA( 10.1x! FY(2012( 772! ! ! ! ! LTM( 710!

! ! ! ! ! ! ! ! ! ! ! ! ! !

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Key&Assumptions& I.&WACC&–&Key&Assumptions& Cost&of&Equity& We& use& CAPM& model& to& calculate& the& cost& of& equity& of& BARD& C& R& INC& (BCR).& The& function&of&CAPM&model&is:& !"#$!!"!!"#$%&! = !!"#$!!"##!!"#$! + !!"#"$"%!!"#$!×!"#$%&!!"#$!!"#$%&$! Risk& Free& Rate& In& this& paper,& we& use& 10Ryear& Treasury& rate& as& the& riskRfree& rate.& Since& we& intend& to& predict& cash& flows& of& BCR& in& next& 10& years,& we& should& use& the& treasury&rate&with&same&or&similar&duration,&which&is&10&years.&At&the&end&of&April&19,& 2013,&the&10Ryear&Treasury&rate&is&1.81.& Equity& Risk& Premium& (ERP)& According& to& Shannon& Pratt& and& Roger& Grabowski,& equity& risk& premium& is& the& extra& return& over& the& expected& yield& on& risk& free& securities& that& investors& expect& to& receive& from& an& investment& in& a& diversified& portfolio& of& common& stocks.& Historical& research& shown& that& the& ERP& is& cyclical& during&business&cycles&and&that&the&ERP&can&fluctuate&within&its&historic&range&based& on& current& and& forecasted& economic& conditions.& If& the& economic& condition& is& prosperous,&the&ERP&will&be&at&the&lower&level&of&its&range.&If&the&economic&condition& is&during&its&recession,&the&ERP&will&be&at&the&higher&level&of&its&range.&According&to& American&Appraisal’s&research&the&ERP&is&6.5%.&In&this&paper,&we&use&6.5%&as&ERP.&

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Tax&Shield&(tau)&According&to&the&recent&annual&report,&BCR’s&effective&tax&rate&was& 28& percent& in& 2011& and& 29& percent& in& 2012.& However,& in& this& case& we& should& estimate& the& BCR’s& future& tax& rate,& which& is& determined& by& the& US& tax& policy.& It& is& generally&between&20%&and&40%.&In&this&case,&we&use&35%&as&our&tax&shield.& Beta&A&company&has&assets&that&can&generate&cash&flows.&The&cash&flows&have&risks& that&can&either&be&diversified&or&nonRdiversified.&Beta&measures&the&equity’s&risk&that& cannot& be& diversified.& In& order& to& calculate& the& cost& of& equity,& we& need& to& use& predictive&beta,&since&we&need&to&predict&the&future&cost&of&equity.&In&this&paper&we& use& unlevered& industry& Beta& and& reRlever& it& to& account& for& the& BCR’s& target& capital& structure.&The&function&is:& Unleveraged&Beta&=&Asset&Beta&=&%&D&x&Beta&debt&(1Rt)&+&%&E&x&Beta&Equity& Since&BCR&is&in&the&industry&of&medical&device,&its&asset&Beta&or&Unleveraged&Beta&is& 1.03.& Beta& debt& is& assumed& to& be& 0.2.&In& addition,& we& assume& a& certain& constant,& “target”,&and&optimal&capital&structure.&The&debt&to&total&capital&for&BCR&from&2011&to& 2012& is& 39.8%& and& 42.3%,& respectively.& Its& competitors,& such& as& Johnson& and& Johnson& and& Thermo& Fisher& Scientific& Inc.,& have& debt& to& capital& ratio& for20%& and& 31.3%,&respectively.&Therefore,&after&considering&its¤t&capital&structure&and&its& competitors’& capital& structure,& we& determine& that& the& “target”& and& optimal& capital& structure&is&45%&of&debt&and&55%&of&equity.&Based&on&the&above&assumption,&BCR’s& cost&of&equity&is&0.13.& Cost&of&Debt& The&cost&of&debt&should&reflect&the&company&today,&which&may&be&different&from&the& cost& of& debt& in& the& past.& According& to& BCR& annual& report& in& 2012,& it& generated& significant& cash& flow& and& maintained& credit& rating.& Its& company& overall& rating& and& longRterm&rating&by&Moody’s&is&A3&and&by&S&P&is&A.&The&market&yield&of&10Ryear&A& rating& corporate& bonds& is& 2.78%.& However,& according& to& BCR’s& annual& report& in& 2012,& its& current& weighted& average& effective& cost& of& debt& rate& is& 3.79%.& Therefore,& we&assume&the&cost&of&debt&is&3.79%.& II.&DCF&–&Key&Assumptions& Revenues& In& 2011& and& 2012,& BCR’s& net& sales& increased& 6.48%& and& 2.13%& respectively.& By& geographic& region,& BCR& expand& on& its& international& market,& which& increase&3&percent&in&last&year.&By&product&group&category,&its&oncology&and&surgical& specialties& both& increase& 5& percent& and& 4& percent,& respective.& With& the& high&

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expectation&of&its&new&product,&we&assume&the&revenues&increase&6&percent&in&2013.& However,&since&BCR&is&in&a&mature&industry,&it&is&unlikely&that&BCR&will&have&a&high& sales& increase,& we& assume& BCR’s& revenue& grows& will& continuously& decrease& to& 3& percent&in&2017,&in&line&with&inflation,& & Revenue& Synergies& We&assume&if&BCR&acquired&by&the&company&or&private&equity& with&unique&knowledge&of&the&industry,&these&companies&can&employ&better&selling& strategy&or&more&effective&selling&channels.&BCR’s&revenue&will&increase&based&on&the& new& strategy& and& resources.& We& assume& its& revenue& synergies& increase& from& 1& percent&to&3&percent&or&the&revenue&from&2013&to&2015&and&remain&constant&in&the& following&years.& Selling,& General& and& Administrative& Expenses& (SG&A)& BCR’s& SG&A& increased& 4.58&percent&and&2.86&percent&in&2011&and&2012.&Since&SG&A&is&the&sum&of&all&direct& and& indirect& selling& expenses& and& all& general& and& administrative& expenses& of& a& company,& it& is& highly& correlated& with& net& sales.& Therefore,& we& assume& SG&A& grow& rate&at&0.75&of&the&net&sales&growth&rate.& & Cost& Synergy& We& assume& if& BCR& acquired& by& the& company& or& private& equity& with& unique& knowledge& or& resources& of& the& industry,& BCR& can& benefit& from& economic& of& scale&or&cost&deduction&strategy.&Therefore,&we&assume&cost&synergy&increase&from&1& percent& to& 3& percent& of& total& SG&A& in& next& three& years& and& remain& constant& in& the& future.& Research& and& Development& (R&D)& BCR’s& R&D& increase& 9.6& percent& in& last& year.& According&to&the&recent&annual&report,&BCR&will&continuously&increase&research&and& development& expenditures& with& a& focus& on& new& market& categories.& Therefore& we& assume&R&D&will&increase&5.6&percent&in&the&next&year&and&continuously&decrease&to& 3.6&percent&at&2015&and&remain&constant&in&next&five&years.& Other&Expenses&Since&other&expenses&cannot&be&predicted&rely&on&the&past&data&and& they&are&generally¬&to&be&recurring.&Therefore,&we&do¬&forecast&these&expenses.& Capital& Expenditures& According& to& BCR& 2012& annual& report,& its& capital& expenditures& amounted& to& $72.6& million,& $71.4& million& and& $51.2& million& for& the& years& ended& December& 31,& 2012,& 2011& and& 2010,& respectively.& In& general,& capital& expenditures& are& positively& related& to& the& revenue.& Therefore,& we& assume& capital& expenditures&to&revenue&ratio&remain&constant&at&2.8&percent&in&the&next&ten&years.& &

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JOHNS&HOPKINS&–&CAREY&BUSINESS&SCHOOL& MERGERS&AND&ACQUISITIONS&–&FINAL&PROJECT& &

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Depreciation& and& Amortization& (D&A)& We& assume& that& the& depreciation& and& amortization&expenses&have&the&reinvestment&rate&of&1x&versus&capital&expenses.&It& also& means& we& keep& the& reinvestment& ratio& at& 1x& in& next& ten& years.& Therefore,& the& capital&expense&equals&to&the&D&A.& Increase& in& Working& Capital& We&assume&increase&in&working&capital&is&positively& correlated&with&increase&in&revenue.&We&assume&increase&in&working&capital&equals&5& percent&of&the&total&increase&in&sales.& III.&LBO&–&Key&Assumption& & Premium& to& Current& Stock& Price& In& leverage& buyout& analysis& we& consider& two& conditions.&Since&private&equity&with&professional&knowledge&in&medical&device&area& may&employ&a&better&strategy.&Therefore,&BCR&will&have&higher&cash&flow.&We&assume& PE& with& professional& knowledge& will& have& 1& percent& higher& premium& than& general& PE&firms,&which&has&a&premium&of&25&percent.& & & Transaction& Cost& In&general&the&transaction&fee&is&the&higher&amount&of&minimum& fees& and& percentage& of& traction& size.& The& transaction& fee& is& 8%& to& 12%& when& deal& size&is&$1&million&to&$5&million,&4%&to&7%&when&deal&size&is&$5&million&to&$25&million,& 3%&to&4%&when&deal&size&is&$25&million&to&$100&million&and&about&2%&or&less&when& deal& size& is& larger& than& $100& million.& In& this& situation,& the& deal& size& is& more& than& 1& billion.&We&assume&the&transaction&cost&equals&1&percent&of&the&transaction&size.& Capital& Structure&Since&it&is&difficult&to&use&all&cash&or&equity&to&purchase&BCR,&we& suggest&private&equity&firms&issue&new&debt&to&acquire&BCR.&Our&analysis&based&on& the&assumption&that&debt&is&40&percent&of&total&the&capital&and&equity&is&60&percent&of& the&total&capital.& EBITDA& Multiple&Based&on&the&trading&comparable&analysis,&in&last&year&the&range& of&EBITDA&multiple&is&between&0&and&64.34.&The&medium&EBITDA&multiple&is&12.78x.& Therefore,&we&assume&the&EBITDA&multiple&in&this&case&is&13x.& Debt& Amortization& We& assume& private& firm& will& sell& BCR& at& 2017.& Therefore,& the& most&amount&of&debt&will&pay&back&at&2017.&We&assume&in&first&two&years,&the&debt& amortization&rate&is&5&percent.&In&next&two&years,&this&ratio&increases&to&8&percent.&In& year&2017,&the&private&firm&will&pay&back&the&remaining74&percent&of&debt&after&sell& the&BCR.& Interest&Expenses&We&assume&the&interest&rate&is&5&percent.&

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JOHNS&HOPKINS&–&CAREY&BUSINESS&SCHOOL& MERGERS&AND&ACQUISITIONS&–&FINAL&PROJECT& &

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IV&Sources&and&Uses&–&Key&Assumption& Our& sources& and& uses& statement& is& based& on& the& LBO& analysis& with& private& equity& firm&have&professional&sources&or&knowledge&in&medical&instrument&industry.& Equity& Rollover& We& assume& the& equity& roll& over& is& 20& percent& of& total& purchase& equity.&Seller&equity&rollover&is&a&popular&method&to&bridge&the&financing&gap.&It&can& mutually& align& the& interest& of& all& the& parties& to& make& the& acquitted& company& successful.& Furthermore,& through& this& method,& the& buyer& can& also& get& governance& rights&to&affect&the&decisions&of&company&operation.&In&general,&seller&equity&stakes&in& the& acquired& company& range& from& 10%& to& 40%.& In& this& case,& we& assume& the& seller& rolls&over&20%&of&the&equity&value.& & EarnVOut& This& is& another& method& to& bridge& the& financing& gap.& Since& BCR’s& future& performance& is& uncertain.& We& suggest& to& use& earn& out& method.& If& BCR& can& achieve& specific&goals,&such&as&revenue,&gross&margin&and&EBITDA,&in&the&next&2&to&5&years,& the&buyer&will&pay&a&portion&of&the&purchase&price&after&the&acquisition&completed.&In& this&case,&we&assume&earRout&equals&10&percent&of&the&purchase&equity.& & &

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...1. - What industry standards body and standards series numbers do you need to reference for Ethernet applications and cabling? A- The IEEE is use as the standard for Ethernet applications and cabling. It is part of the 802.3 series of standards and includes applications such as 1000Base-T, 1000Base-SX, 10GBase-T and 10GBase-SR 2. - What are the different types of category 6 cable and what should be recommended for this network? A- There are two types of 6 cable, Cat-6 and Cat-6a I would recommend a Cat-6a for this network, since its intended use is for 10 Gigabit Ethernet with a 500MHz bandwidth support. 3. - What cable would you recommend to offer the best shielding performance? A- I would recommend a Cat-6a (STP cable) for this project. My recommendation is based on this cable capability to protect the network from EMI and to operate at 10GBase-T. 4. - What type of cable would you use for: 4.1 The horizontal spaces? A- Riser-rated cabling is more durable. However, for this project I would recommend a plenum cabling system to prevent toxic fumes if caught on fire. The client is planning to route the cable thought the same space used for air circulation and HVAC. 4.2 The vertical links? A- I would recommend implementing a riser-rated cabling to avoid fire to be spread between floors. “Plenum rated cables can be used in the riser, BUT riser cables cannot be used in Plenum spaces” (PowerPoint presentation in our 1st class). 5. - What would you look for in...

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...BUAC-2010 STUDY GUIDE FOR FINAL EXAM Study the accounting concepts: matching, cost, revenue recognition, consistency, business entity Three types of businesses: Three types of business organizations---advantages and disadvantages of each type of organization; Rules of debits and credits; classification of accounts; what an account is; what a journal is; what a ledger is; what a chart of account is; Normal balances of each type of account; increase and decrease side of each type of account Accrual basis and cash basis accounting Current assets, long-term or fixed assets: current liabilities and long-term liabilities; 4 basic financial statements; what accounts go on them Two types of inventory systems and the difference between them; calculating inventory and journal entries differences Inventory costing flows: FIFO and LIFO; average costing and specific identification Bank reconciliation: know the major reconciling items that we deal with and where they go on the bank reconciliation; what the term cash includes: Corporation advantages and disadvantages; what the stockholders’ equity section of the balance sheet consists of; dividends—what they are; what is needed before they can be declared: three dates and why the dates are important; Statement of cash flows: what it is; what it consists of –three sections and what goes into those sections There will be 15 terms from everything we have covered—you will be give 15 definitions and asked to identify each from a...

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...Brian Caprarola 1. a) The balance not being zeroed would cause the mass of the substance and beaker to be different therefore effecting the density calculation seeing that density is found by mass divided by volume. b) This would affect the volume of the substance because when reading the meniscus, you are supposed to look at the bottom of the bend. Reading the volume will cause the density to be wrong again seeing that it is found by mass divided by volume. c) Air bubbles in the substance would cause the volume to be wrong therefore affecting the density. 2. An experiment that you can determine what large supply of unlabeled indicator paper is to put drops of different solutions on the paper and observe if a chemical reaction takes place. By taking a stirring rod and placing a drop of hydrochloric acid on to each paper and record if a color change takes place. The repeat is the process with water and sodium hydroxide solution. Depending if the paper has no change at all or if it turns pink or blue will let you know if an acid, base, or neutral solution was placed on the paper. 3. A simple experiment would allow you to determine which bottle contains what solution is placing a few drops of each on litmus paper. The hydrochloric acid will turn the blue paper red because it is an acidic solution. The sodium chloride solution will not show any change on the paper because it is a neutral solution. Finally, the sodium hydroxide will turn the red litmus paper...

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...Define each of the following: a. Base table: Is a relational data model that contains stored records; it corresponds to relations that are identified in the database conceptual schema. b. Data definition language(DDL) Commands used to define a database, including creating, altering, and dropping tables and establishing constraints. c. data manipulation language(DML) Commands used to maintain and query a database, including those for updating, inserting, modifying, and querying data. d. dynamic view: A virtual table that is created dynamically upon request by a user. Its a definition that is stored in the system catalog, and the contents of the view are materialized as a result of an SQL query that uses the view. e. materialized view: Copies of data, based on SQL queries. A materialized view exists as a table and must be kept synchronized with its associated tables. f. referential integrity constraint: A rule that states that either each foreign key value must match a primary key value in another relation or the foreign key value must be null. g. relational DBMS (RDBMS): A database management system that manages data as a collection of tables in which all data relationships are represented by common values in related tables. h. schema: A structure that contains descriptions of objects created by a user, such as base tables, views, and constraints, as part of a database. i. virtual table: A table constructed automatically as needed by a DBMS...

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...Writing Task 1 Exercise 1.2 - p.24 2.) If the public education fails to improve the quality of instruction in both primary and secondary schools, then it is likely that it will lose additional students to private sector in the years ahead. Answer: Conditional 5.) it is strongly recommended that you have your house inspected for termite damage at the earliest possible opportunity. Answer: Advice 7.) If stem-cell research is restricted, then future cures will not materialize. If future cures do not materialize, then people will die permanently. Therefore, if stem-cell research is restricted, then people will die permanently. Answer: Hypothetical 10.) Five college student who were accused in sneaking into the Cincinnati Zoo and trying to ride the camels pleaded no contest to criminal trespass yesterday. The student scaled a fence to get into the zoo and then climbed another fence to get into the camel pit before security officials caught them, zoo officials said.  Answer: Report 11.) Mortality rates for women undergoing early abortions, where the procedure is legal, appear to be as low as or lower than the rates for normal childbirth. Consequently, any interest of the state in protecting the woman from an inherently hazardous procedure, except when it would be equally dangerous for her to forgo it, has largely disappeared. Answer: Generalization 12.) The pace of reading, clearly, depends entirely upon the reader. He may read as slowly or as rapidly...

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...include the effect on employees who work on that product line, the effect on community if the plant is closed, and the effect on other product lines. 4-24. In the short run, by considering fixed costs in the analysis, the manager might be including irrelevant information. If the fixed costs will be incurred whether the special order is accepted or rejected, these costs should not bear on the decision. So in the short run, the company should accept the special order if the revenue covers the differential costs, assuming that the price of the special order does not affect other business at the company. However, in the long run, all costs should be covered because fixed costs might change and thus become relevant. 4-35. Pricing Decisions 1. 　 Status Quo: Alternative: 　 Reject Special Offer (20,000 bottles) Accept Special Offer (22,000 bottles) Difference Comparison of Totals Sales revenue $ 100,000a $ 107,000c $ 7,000 Variable costs (60,000)b (66,000)d (6,000) Total contribution $ 40,000 $ 41,000 $ 1,000 Fixed costs (20,000) (20,000) - Operating profit $ 20,000 $ 21,000 $ 1,000 a $5.0 x 20,000 = $100,000 b $(1.50+1.00+0.50)x 20,000 = $60,000 c $3.5 x (20,000+2,000) = $107,000 d $60,000 + $3.0 x 2,000 = $66,000 The operating profit would be higher by $1,000 if accepting the special offer. 2. The lowest price per unit should cover only variable cost. So it should be $1.50 + $1.00 + $0.50 = $3.00 per unit. 3.One factor...

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...Homework 1 Due September 25, 2014. The answers can be handed in person or submitted electronically on Blackboard. All problems carry 4 points. 1. The probabilities (or frequencies) of the 26 letters of the English alphabet in English text are as follows. Letter A B C D E F G H I Prob. .082 .015 .028 .043 .127 .022 .020 .061 .070 Letter J K L M N O P Q R Prob. .002 .008 .040 .024 .067 .075 .019 .001 .060 Letter S T U V W X Y Z Prob. .063 .091 .028 .010 .023 .001 .020 .001 Using this information, decrypt the following ciphertext which was encrypted using a Shift Cipher: RUNJAWNMQXFCXLJULDUJCNCQNJVXDWCXOYJYNAWNNMNMO XAJAXXVFQNWRFJBJCBLQXXUHXDVDUCRYUHCQNBZDJANOXXC JPNXOCQNFJUUBKHCQNLDKRLLXWCNWCBXOCQNOUXXAJWMLN RURWPLXVKRWNMJWMMXDKUNRCHXDCQNWJUUXFQJUOCQNCX CJUOXAXYNWRWPBBDLQJBFRWMXFBJWMMXXABCQNWHXDJU UXFCQNXCQNAQJUOOXAVJCLQRWPCQNYJCCNAWCQNWHXDMXDKU NCQNFQXUNCQRWPJPJRWCXPRENJVJAPRWXONAAXAJWMCQNWH XDXAMNACQNYJYNA 2. In a one-time pad, if a message m of length is is encrypted with a key k = 0 (i.e., k consists of all 0s) then enck (m) = m. That is why, it is sometimes suggested to prohibit this key. In other words, the keyspace is restricted to strings which are all not zeros. Is the resulting cryptosystem perfectly secure? 3. For every string s, let s be the string formed by taking the bitwise complement of the string s. For example 101 = 010 and 0010 = 1101. Suppose that G is a psuedorandom number generator (PRG) with expansion factor . Which amongst the following functions are psuedorandom...

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