($ in millions)

Revenue
% Growth
Direct costs of services
Gross profit
Gross margin

2009
Actual
$

Selling, general and administrative expenses

Depreciation and amortization
Operating income
Operating Margin

Interest expense (income)

Cash Interest Rate
Earnings before taxes
Tax expense (1)
Net income

Supplemental Items
EBITDA
Capex

(1) Projected tax rate @ 40%

2010
Actual

2011
Actual

- $
0.0%

- $
0.0%

0.0%

- $
0.0%

- $
0.0%

0.0%

0.0%
- $
0.0%

0.0% #DIV/0!
- $
0.0% #DIV/0!

0.0%
- $

0.0%
- $

$
-

$
-

0.0%
-

Fiscal Year Ended Dece

CAGR
('09-11')
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Fiscal Year Ended December 31,

2012
2013
2014
2015
2016
CAGR
Projected Projected Projected Projected Projected ('12-'15)
$
- $
- $
- $
- $
#DIV/0!
0.0%
0.0%
0.0%
0.0%
0.0%

- $
0.0%

#DIV/0!
$
#DIV/0!

#DIV/0!
$
#DIV/0!

0.0%
- $

$
-

- $
0.0%

#DIV/0!
$
#DIV/0!

0.0%
- $

$
-

- $
0.0%

#DIV/0!
$
#DIV/0!

0.0%
- $

$
-

- $
#DIV/0!
0.0%
0.0%
19.4%
$
#DIV/0!
#DIV/0!

0.0%
0.0%
- $
#DIV/0!

$
-

($ in millions)

CURRENT ASSETS
Excess cash (plug)
Cash and cash equivalents
Accounts receivable, net
Other current assets
Total current assets

Fiscal Year Ended December 31,

2009
% of
2010
Actual
Sales
Actual

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

LONG-TERM ASSETS
Fixed assets, net
Other assets
Total long-term assets
Total assets
CURRENT LIABILITIES
Accounts payable
Accrued expenses
Accrued payroll
Total current liabilities
LONG-TERM LIABILITIES
Long-term debt (plug)
Other liabilities
Total long-term liabilities

% of
Sales

2011
Actual

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

Total liabilities

#DIV/0!

#DIV/0!

Shareholders' equity

#DIV/0!

#DIV/0!

Total liabilities & shareholders' equity

$

#DIV/0!

#DIV/0!

Trial Asset
Trial Liabilities and Equity
Trial Balance

Working Capital Projections

Actual
2010
$0.00
-

(Fiscal Year Ended December 31)

2009
$0.00
-

Revenue
Cost of revenue
SG&A
Current Assets
Accounts receivable, net
Other current assets
Total current assets
Current Liabilities
Accounts payable
Accrued expenses
Accrued payroll
Total current liabilities
Net Working Capital
% of revenue

#DIV/0!

Projected
2011
$0.00
-

2012
$0.00
-

2013
$0.00
-

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!

Change in NWC
Assumptions
Days sales outstanding
Other current assets (% of revenue)

0.00%

0.00%

0.00%

0.00%

0.00%

Days Payables Outstanding

Accrued expenses (% of revenue)

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%
#DIV/0!
#DIV/0!

0.00%
#DIV/0!
#DIV/0!

0.00%
#DIV/0!
#DIV/0!

0.00%
#DIV/0!
#DIV/0!

0.00%
#DIV/0!
#DIV/0!

Cash (% of Sales)
Accrued Payroll (% of Sales)
Other Assets (% of Sales)
Capex
Depreciation & Amortization
Other Liabilities (% of Sales)

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

% of
Sales

2012
Projected

2013
Projected

2014
Projected

2015
Projected

2016
Projected

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
$
#DIV/0!

#DIV/0!
$
#DIV/0!

#DIV/0!
$
#DIV/0!

#DIV/0!
$
#DIV/0!

#DIV/0!
$
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!
#DIV/0!

Trial Assets
l Liabilities and Equity
Trial Balance

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

2012
#DIV/0!
#DIV/0!
#DIV/0!

2013
#DIV/0!
#DIV/0!
#DIV/0!

2014
#DIV/0!
#DIV/0!
#DIV/0!

2015
#DIV/0!
#DIV/0!
#DIV/0!

2016
#DIV/0!
#DIV/0!
#DIV/0!

Projected
2014
$0.00
-

2015
$0.00
-

#DIV/0!
#DIV/0!

2016
$0.00
-

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%
#DIV/0!
#DIV/0!

0.00%
#DIV/0!
#DIV/0!

0.00%
#DIV/0!
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Weighted Average Cost of Capital

($ in millions)
Debt
-

Company A
Company B
Company C
Company D
Median
Mean

Preferred Market Value

Total
Stock
of Equity Capitalization
-

Levered Unlevered Equity Risk

Beta
Beta
Premium
0.00
0.00
0.00%
0.00
0.00
0.00%
0.00
0.00
0.00%

Company A
Company B
Company C
Company D
Median
Mean

0.00
0.00

0.00
0.00

Size Risk
Premium
0.00%
0.00%
0.00%
0.0%
0.0%

Market Assumptions
Risk Free Rate
Equity Risk Premium
Tax Rate

0.00%
0.00%
0.0%

Cost of Debt
Cost of Debt
Tax Rate
After-tax Cost of Debt
Cost of Equity
Risk-free Rate
Market Risk Premium
Unlevered Beta
Size Premium

0%
40%
0%

0.00%
0.00%
0.00
0.00%

Unlevered Beta

ITS: WACC Calculation

Target Capital Structure
0.0%
Debt-to-Total Capitalization
100.0%
Equity-to-Total Capitalization

0.82
0.92
1.02
1.12
1.22
1.32
1.42
1.52
1.62
1.72
1.82
1.92

Cost of Equity

0.00%

WACC

0.00%

st of Capital
Debt to
Preferred to Equity to
Debt
Total
Total
Total
to Equity CapitalizationCapitalizationCapitalization
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Cost of
Equity
0.0%
0.0%
0.0%

Cost of
Debt
0.0%
0.0%
0.0%

Cost of
Preferred
0.0%
0.0%
0.0%

WACC
0.0%
0.0%
0.0%

0.0%
0.0%

0.0%
0.0%

0.0%
0.0%

0.0%
0.0%

Size Premium
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%
1.76%

2.26%
2.26%
2.26%
2.26%
2.26%
2.26%
2.26%
2.26%
2.26%
2.26%
2.26%
2.26%
2.26%

2.76%
2.76%
2.76%
2.76%
2.76%
2.76%
2.76%
2.76%
2.76%
2.76%
2.76%
2.76%
2.76%

3.26%
3.26%
3.26%
3.26%
3.26%
3.26%
3.26%
3.26%
3.26%
3.26%
3.26%
3.26%
3.26%

3.76%
3.76%
3.76%
3.76%
3.76%
3.76%
3.76%
3.76%
3.76%
3.76%
3.76%
3.76%
3.76%

4.26%
4.26%
4.26%
4.26%
4.26%
4.26%
4.26%
4.26%
4.26%
4.26%
4.26%
4.26%
4.26%

4.76%
4.76%
4.76%
4.76%
4.76%
4.76%
4.76%
4.76%
4.76%
4.76%
4.76%
4.76%
4.76%

5.26%
5.26%
5.26%
5.26%
5.26%
5.26%
5.26%
5.26%
5.26%
5.26%
5.26%
5.26%
5.26%

Revenue
% Growth
Cost of Revenue
Gross Profit
% Margin
Selling, General and Administrative
EBITDA
% Margin
Depreciation & Amortization
EBIT
% Margin
Taxes @ 40%
EBIAT
Plus: Depreciation & Amortization
Less: Capital Expenditures
Less: Change in Net Working Capital
Unlevered Free Cash Flow
Terminal Value
Discount Period
Discount Factor
Present Value of Free Cash Flow

Assumptions
WACC (All Equity)
Terminal Growth Rate

Actual
2009
2010
$
$
4%
#DIV/0!
$
$
#DIV/0!
#DIV/0!
$
$
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
$
$
-

0.00%
3.0%

Enterprise Value ($ in millions)

Cumulative PV of FCF
PV of Terminal Value
% of Enterprise Value
Enterprise Value

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

PV of Tax Shield

2011
$
#DIV/0!
$
#DIV/0!
$
#DIV/0!
#DIV/0!
$
-

CAGR
('09-'11)
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Debt-to-Total Capitalization
Equity-to-Total Capitalization
Preferred Equity
Debt-to-Equity

% Senior
% Mezzanine
Cost of Senior Debt
Cost of Mezzanine Debt
Tax Rate
After-tax Cost of Debt

Cost of Preferred Equity

NPV all Equity

APV

Adjusted Present Value

PV of Tax Shield
41,732,000
NPV all Equity
200,000,000
APV
241,732,000

Risk-free Rate
Market Risk Premium
Unlevered Beta
Relevered Beta
Size Premium
Cost of Equity
WACC

1
0.90
#DIV/0!

34.7%
39.7%
25.3%
0.87

59.4%
38.4%
8.5%
12.0%
40.0%
5.8%

8.0%

2
0.81
#DIV/0!

3
0.73
#DIV/0!

Capital Structure
18.9%
0.2%
32.6%
43.4%
48.4%
56.4%
0.58
0.00

52.4%
42.3%
8.5%
12.0%
40.0%
5.7%

Debt
42.2%
57.8%
8.5%
12.0%
40.0%
6.3%

Preferred Equity
8.0%
8.0%

2015
$
#DIV/0!
$
#DIV/0!
$
#DIV/0!
#DIV/0!
$
#DIV/0!
#DIV/0!
4
0.65
#DIV/0!

0.0%
47.4%
52.6%
0.00

2016
$
#DIV/0!
$
#DIV/0!
$
#DIV/0!
#DIV/0!
$
#DIV/0!
#DIV/0!
#DIV/0!

CAGR
('12-'16)
#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!
0
#DIV/0!

5
0.49
#DIV/0!

Enterprise Value

0.0%
100.0%
0.0%
-

0.0%
100.0%
8.5%
12.0%
40.0%
7.2%

0.0%
100.0%
8.5%
12.0%
40.0%
7.2%

8.0%

8.0%

Terminal Growth Rate

2012
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

Projection
2013
2014
$
$
#DIV/0!
#DIV/0!
$
$
#DIV/0!
#DIV/0!
$
$
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
$
$
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%

Terminal G
4.5%
5.8%
1.32
2.02
3.3%
19.4%
11.73%

Common Equity
4.5%
4.5%
5.8%
5.8%
1.32
1.32
1.78
1.33
3.3%
3.3%
18.0%
15.4%
10.84%

11.20%

4.5%
5.8%
1.32
1.32
3.3%
15.4%

4.5%
5.8%
1.32
1.32
3.3%
15.4%

11.50%

15.37%

5.0%
5.5%
6.0%

Discounted Cash Flow Valuation

Enterprise Value
Enterprise Value
#DIV/0!
EBITDA Multiple
#DIV/0!
Mean

100.0

4.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

5.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

120.0

6.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

140.0

7.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

160.0

8.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

180.0

200.0

9.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

WACC
10.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

11.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

12.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

13.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!

#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!

#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!

14.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

15.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

16.0%
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!