Leitch Technology Corporation Acquisition
Leitch Technology Corporation Acquisition
Leitch Technology Corporation Acquisition
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<strong>Leitch</strong> <strong>Technology</strong><br />
<strong>Corporation</strong> <strong>Acquisition</strong><br />
Investor presentation<br />
assuredcommunications <br />
August 31, 2005
<strong>Leitch</strong> overview<br />
• Global leader in high-performance video systems<br />
– Digital Media: news post-production, branding and graphics,<br />
video servers and storage networks<br />
– Infrastructure: routing and distribution, signal processing,<br />
signal management, test and measurement<br />
• Founded in 1971, <strong>Leitch</strong> has an excellent brand and market<br />
position, and a reputation for technical innovation<br />
• Fiscal 2005 revenue (ending April 30) was US$183 million<br />
• Headquarters and largest operations in Toronto, Canada;<br />
other major locations in the U.S., UK, and Asia<br />
• 850 employees worldwide<br />
• 3,000 customers in 100 countries<br />
Investor presentation – slide 2 assuredcommunications <br />
31-Aug-2005
Deal rationale and value creation<br />
• Digital content and High-Definition (HD) broadcasting is driving<br />
change in the global broadcast industry<br />
– Requires significant investment in new technology and know-how<br />
– Creating attractive market growth rates of 10-12% per year<br />
• The acquisition further positions Harris as the supplier of choice,<br />
with broadest end-to-end hardware and software offering<br />
– Products are complementary with limited overlap<br />
– Expands addressable market and creates opportunities in adjacent<br />
markets, including cable, satellite and content providers<br />
– Complementary sales and distribution channels<br />
• Combination provides Harris Broadcast division with increased scale,<br />
global market presence, and expanded digital offering<br />
• <strong>Leitch</strong> has an experienced management team with strong domain<br />
knowledge and customer relationships<br />
Investor presentation – slide 3 assuredcommunications <br />
31-Aug-2005
Financial turnaround is on track<br />
• CEO Tim Thorsteinson brought in 18 months ago<br />
– Management team is expected to remain with the business<br />
• Cost reductions are being implemented and progress is impressive<br />
• R&D was refocused towards introducing new HD products<br />
– New products are delivering market-leading functionality<br />
– 80% of revenue is from products introduced since 2003<br />
• Fiscal 2005 revenue grew by 41% year-over-year to US$183 million<br />
– Strong organic revenue growth of 18%<br />
– Videotek and Inscriber <strong>Technology</strong> added US$30 million<br />
in revenue<br />
– 70% of revenue is Infrastructure; 30% is Digital Media<br />
• Gross margins substantially improved to 52% in 4Q FY05<br />
<strong>Leitch</strong> is clearly on upslope of financial turnaround<br />
Investor presentation – slide 4 assuredcommunications <br />
31-Aug-2005
<strong>Leitch</strong> digital products overview<br />
News and<br />
post-production<br />
editing<br />
VelocityHD<br />
VelocityX<br />
Digital Media<br />
Branding and<br />
graphics<br />
LogoMotion II<br />
DTP<br />
Inca Station<br />
Video servers /<br />
storage and<br />
retrieval<br />
NEXIO HD<br />
DTP<br />
NEXIO MTS<br />
DDM-800<br />
TrimStation<br />
Investor presentation – slide 5 assuredcommunications <br />
Routing /<br />
distribution<br />
Opus HD<br />
Integrator Gold<br />
Panacea<br />
Infrastructure<br />
Signal<br />
processing<br />
NEO<br />
6800+<br />
X75HD<br />
Signal<br />
management / test<br />
and measurement<br />
CCS<br />
MediaNet<br />
VTM-450E SD/HD<br />
TVM950HD<br />
NEO SuiteView<br />
31-Aug-2005
Global infrastructure markets<br />
15%<br />
Americas — $370M market<br />
7%<br />
16%<br />
(US dollars in millions)<br />
<strong>Leitch</strong><br />
19%<br />
Others<br />
43%<br />
<strong>Leitch</strong><br />
17%<br />
Investor presentation – slide 6 assuredcommunications <br />
8%<br />
7%<br />
10%<br />
Asia — $140M market<br />
7% 6%<br />
29%<br />
Others<br />
41%<br />
EMEA — $330M market<br />
<strong>Leitch</strong><br />
11%<br />
14%<br />
Others<br />
50%<br />
31-Aug-2005
Digital media content value chain<br />
CREATE<br />
� News<br />
� Sports<br />
� Entertainment<br />
� Documentaries<br />
� Commercials<br />
� Information<br />
Content Creation<br />
Products & Software<br />
� Servers / storage<br />
� Graphics and branding<br />
� Routing / distribution<br />
� Signal processing<br />
� Display processing<br />
� News editing and<br />
post-production<br />
� Signal management /<br />
test and measurement<br />
� Servers / storage<br />
� Graphics and branding<br />
� Routing / distribution<br />
� Signal processing<br />
� Display processing<br />
� News editing<br />
� Signal management /<br />
test and measurement<br />
MANAGE<br />
� Program Networks<br />
� Broadcast Stations<br />
� Cable MSO’s<br />
� DBS Operators<br />
� Enterprise<br />
� Government<br />
Operations<br />
Products & Software<br />
� Networking solutions<br />
� Encoding<br />
� Multiplexing<br />
� Data encapsulation<br />
� PSIP / metadata<br />
� STL / network transport<br />
DISTRIBUTE<br />
Investor presentation – slide 7 assuredcommunications <br />
� Traffic<br />
� Scheduling<br />
� Digital Asset Mgmt<br />
� Automation<br />
DELIVER<br />
� Over The Air<br />
� Cable<br />
� Satellite<br />
� Telco<br />
� Internet<br />
Delivery<br />
Products & Software<br />
� Transmitters<br />
� Modulators<br />
� Transmission monitoring<br />
� Transmission control<br />
systems<br />
� Network management<br />
� Signal management /<br />
test and measurement<br />
RED = Harris products<br />
BLUE = <strong>Leitch</strong> products<br />
31-Aug-2005
Creates broadest market offering<br />
Harris<br />
<strong>Leitch</strong><br />
Avid/Pinnacle<br />
Grass Valley<br />
Tektronix<br />
Sony Broadcast<br />
Miranda<br />
Evertz<br />
Omnibus<br />
Thales<br />
News postproduction<br />
�<br />
�<br />
�<br />
Digital Media<br />
Branding /<br />
graphics<br />
Storage /<br />
servers<br />
Routing /<br />
distr.<br />
Infrastructure<br />
Signal<br />
proc.<br />
� � � �<br />
� �<br />
� � �<br />
�<br />
�<br />
� �<br />
� �<br />
�<br />
Investor presentation – slide 8 assuredcommunications <br />
Signal<br />
mgmt /<br />
T&M<br />
�<br />
�<br />
Traffic<br />
�<br />
Software<br />
Automation<br />
�<br />
�<br />
Manage /<br />
ingest<br />
�<br />
�<br />
TV<br />
transmitters<br />
�<br />
�<br />
31-Aug-2005
Expands into fast-growth markets<br />
$5B<br />
4<br />
3<br />
2<br />
1<br />
0<br />
$0.5B<br />
Networking tools<br />
TV transmitters<br />
Harris pre-mergers<br />
$0.9B<br />
Traffic<br />
MAM/Ingest<br />
Automation<br />
Networking tools<br />
TV transmitters<br />
Harris + Software<br />
Investor presentation – slide 9 assuredcommunications <br />
$2.4B<br />
Branding/Graphics<br />
News/post-production<br />
Signal Management/T&M<br />
Signal processing<br />
Routing distribution<br />
Servers<br />
Traffic<br />
MAM/Ingest<br />
Automation<br />
Networking tools<br />
TV transmitters<br />
Harris + Software + <strong>Leitch</strong><br />
Other<br />
Post-production<br />
Telco<br />
Satellite<br />
Cable<br />
Branding/Graphics<br />
News/post-production<br />
Signal Management/T&M<br />
Signal processing<br />
Routing distribution<br />
Servers<br />
Traffic<br />
MAM/Ingest<br />
Automation<br />
Networking tools<br />
TV transmitters<br />
Addressable potential<br />
CAGR–new mkts (04-08) 6-8% 10-12% 13-16%<br />
CAGR–overall (04-08) 3-4%<br />
4-6% 8-10% 10%+<br />
Note: in US dollars; excludes $.5B radio market.<br />
$4.8B<br />
31-Aug-2005
<strong>Leitch</strong> will benefit from digital conversion<br />
HD conversion cost for typical station<br />
$4M<br />
3<br />
2<br />
1<br />
0<br />
$1.3M<br />
Other<br />
HD tape machinery<br />
Systems integration<br />
Encoder upgrade<br />
Automation/Traffic<br />
HD playout server<br />
Switches/Routers/Monitoring<br />
HD Master Control<br />
Investor presentation – slide 10 assuredcommunications <br />
$3.3M<br />
Other<br />
Monitoring/distribution<br />
Production/routing switcher<br />
HD production server &<br />
graphics<br />
Non-linear editing<br />
Cameras<br />
Systems<br />
HD Production Studio<br />
Available to Harris / <strong>Leitch</strong> $0.9M $1.8M<br />
Stations already HD capable ≈ 45% ≈ 10%<br />
Note: in US dollars.<br />
Harris offering<br />
<strong>Leitch</strong> offering<br />
31-Aug-2005
Digital transition will also drive significant<br />
international growth<br />
HD uptake - # of broadcast stations<br />
(Major international markets)<br />
500<br />
400<br />
300<br />
200<br />
100<br />
Australia, Japan,<br />
S. Korea, and China<br />
European Union<br />
0<br />
2004 2005 2006 2007 2008 2009 2010<br />
Investor presentation – slide 11 assuredcommunications <br />
CAGR<br />
(2004-2008) (2008-2010)<br />
18%<br />
CAGR<br />
2%<br />
50% 41%
<strong>Leitch</strong> financial highlights<br />
(US dollars in millions)<br />
FY2004 FY2005<br />
FY2006<br />
Total 1Q 2Q 3Q 4Q Total 1Q<br />
Revenue $ 129.8 $ 46.4 $ 46.8 $ 41.7 $ 48.0 $ 182.9 $ 44.8<br />
Gross Margin 45% 47% 45% 50% 52% 49% 54%<br />
EBITDA (5.0)<br />
Oper. Income (loss) (14.7)<br />
4.4<br />
1.9<br />
Note: Amounts are on a non-GAAP basis as disclosed in <strong>Leitch</strong>’s annual report. All amounts are converted to US dollars using a<br />
fixed exchange rate of US$1.00 = CD$0.8394.<br />
3.4<br />
1.0<br />
% to sales 4.1% 2.1% 4.8% 4.6% 3.9% 6.7%<br />
Investor presentation – slide 12 assuredcommunications <br />
4.3<br />
2.0<br />
4.7<br />
2.2<br />
16.8<br />
7.1<br />
5.1<br />
3.0<br />
31-Aug-2005
Deal summary and timeline<br />
• C$14.00 per share offer for 100% of outstanding shares<br />
• Total consideration of US$450 million, net of cash on balance sheet<br />
• Financing will be approximately 50% from off-shore excess cash<br />
and 50% from debt<br />
• Requires affirmative vote by two-thirds of <strong>Leitch</strong> shareholders<br />
• Expect to close within 60 days<br />
• Earning per share neutral in fiscal year 2006, excluding<br />
acquisition costs<br />
• Earnings per share accretive by $.06 in fiscal year 2007<br />
Investor presentation – slide 13 assuredcommunications <br />
31-Aug-2005
assuredcommunications
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