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DEB SAHOO, MBA, ROSS SCHOOL OF BUSINESS, UNIVERSITY OF MICHIGAN, ANN ARBOR
April 25, 2011
INDUSTRY NEWS
Industry Buzz
Company Overview
LBO Rationale
Financials
10
Industry Comparables
11
21
Transaction Analysis
23
Return Analysis
32
Exit Strategies
36
TABLE OF CONTENTS
Executive Summary
EXECUTIVE SUMMARY
Price Performance
Valuation
Key Financials
Purchase Price
$15.31
1,037.0
$15,877.2
531.0
$16,408.2
Return
Exit Year
Entry Multiple
Exit Multiple
IRR
Cash Return
5
2016
4.6x
4.6x
28.4%
3.5x
Ticker: MU
Market Cap: $11.5B
Number of Shares: 1001.5MM
2011 EBITDA: $3,567.0MM
LTM P/EPS: 7.91
Total Enterprise Value: $16,408.0MM
5 Year Sales Growth: 15.5%
5 Year EBITDA Growth: 36.3%
5 Year Avg. ROE: 5.2%
Leverage: 0.17x
Price to Book Value: 1.3x
Price to Sales: 1.27x
S&P Rating: B+
EXECUTIVE SUMMARY
Target Overview
COMPANY OVERVIEW
Industry Comparables
Customers
COMPANY OVERVIEW
Company Overview
LBO RATIONALE
Strong Financials
Industry Positioning
LBO RATIONALE
Value Creation
FINANCIALS
10
31-Aug-10
31-Aug-09
29-Aug-08
31-Aug-07
31-Aug-06
8,482.0
4,803.0
5,841.0
5,688.0
5,272.0
5,768.0
4,639.0
5,896.0
4,610.0
4,072.0
3,763.0
2,500.0
3,836.0
2,892.0
2,791.0
2,005.0
2,139.0
2,060.0
1,718.0
1,281.0
Gross Income
2,714.0
164.0
-55.0
1,078.0
1,200.0
SG&A Expense
1,152.0
1,001.0
1,135.0
1,415.0
1,116.0
0.0
0.0
0.0
0.0
0.0
1,562.0
-837.0
-1,190.0
-337.0
84.0
89.0
-101.0
157.0
228.0
374.0
178.0
135.0
82.0
40.0
25.0
-447.0
731.0
496.0
19.0
0.0
1,920.0
-1,804.0
-1,611.0
-168.0
433.0
Income Taxes
-19.0
2.0
18.0
30.0
18.0
-39.0
-140.0
0.0
0.0
0.0
1,900.0
-1,946.0
-1,629.0
-198.0
415.0
50.0
-111.0
-10.0
122.0
7.0
1,850.0
-1,835.0
-1,619.0
-320.0
408.0
Sales/Revenue
Cost of Goods Sold (COGS) incl. D&A
Net Income
11
FINANCIALS
Assets
Cash & ST Investments
2,913.0
1,485.0
1,362.0
2,616.0
3,079.0
1,531.0
798.0
1,032.0
994.0
956.0
Inventories
1,770.0
987.0
1,291.0
1,532.0
963.0
119.0
74.0
94.0
92.0
103.0
6,333.0
3,344.0
3,779.0
5,234.0
5,101.0
6,601.0
7,081.0
8,811.0
8,279.0
5,888.0
936.0
360.0
26.0
27.0
21.0
Intangible Assets
323.0
344.0
422.0
916.0
890.0
Other Assets
355.0
219.0
318.0
297.0
272.0
Total Assets
14,548.0
11,348.0
13,356.0
14,753.0
12,172.0
712.0
424.0
373.0
557.0
289.0
Accounts Payable
799.0
526.0
597.0
856.0
854.0
51.0
32.0
27.0
15.0
20.0
1,140.0
910.0
601.0
598.0
498.0
2,702.0
1,892.0
1,598.0
2,026.0
1,661.0
1,648.0
2,674.0
2,451.0
1,987.0
405.0
Deferred Taxes
-129.0
-103.0
-65.0
-40.0
-21.0
Other Liabilities
511.0
245.0
329.0
421.0
445.0
Total Liabilities
4,732.0
4,708.0
4,313.0
4,394.0
2,490.0
0.0
0.0
0.0
0.0
0.0
8,020.0
4,654.0
6,178.0
7,752.0
8,114.0
8,020.0
4,654.0
6,178.0
7,752.0
8,114.0
1,796.0
1,986.0
2,865.0
2,607.0
1,568.0
9,816.0
6,640.0
9,043.0
10,359.0
9,682.0
14,548.0
11,348.0
13,356.0
14,753.0
12,172.0
12
FINANCIALS
Operating Activities
Net Income before Extraordinaries
1,850.0
-1,835.0
-1,619.0
-320.0
408.0
2,005.0
2,139.0
2,060.0
1,718.0
1,281.0
0.0
0.0
0.0
-11.0
-24.0
-260.0
1,007.0
773.0
141.0
26.0
3,595.0
1,311.0
1,214.0
1,528.0
1,691.0
-499.0
-105.0
-196.0
-591.0
328.0
Receivables
-516.0
126.0
-26.0
5.0
-62.0
Inventories
-121.0
-356.0
-40.0
-591.0
-12.0
Accounts Payable
54.0
107.0
-92.0
-1.0
130.0
Other Assets/Liabilities
84.0
18.0
-38.0
-4.0
272.0
3,096.0
1,206.0
1,018.0
937.0
2,019.0
616.0
488.0
2,529.0
3,603.0
1,365.0
0.0
0.0
0.0
-73.0
--
612.0
26.0
187.0
94.0
152.0
Purchase/Sale of Investments
-168.0
-243.0
204.0
1,230.0
-858.0
Other Funds
-276.0
31.0
46.0
-39.0
315.0
-448.0
-674.0
-2,092.0
-2,391.0
-1,756.0
8.0
276.0
4.0
69.0
284.0
-970.0
143.0
-248.0
620.0
-624.0
Other Funds
-258.0
-709.0
369.0
1,526.0
984.0
-1,220.0
-290.0
125.0
2,215.0
644.0
Miscellaneous Funds
0.0
0.0
0.0
0.0
0.0
1,428.0
242.0
-949.0
761.0
907.0
Other Funds
Funds from Operations
Changes in Working Capital
Investing Activities
Capital Expenditures
Net Assets from Acquisitions
Sale of Fixed Assets & Businesses
13
FINANCIALS
1.1x
Enterprise Value/EBIT
0.8x
1.3x
0.5x
1.1x
1.6x
4.9x
--
--
--
144.4x
Enterprise Value/EBITDA
7.1x
2.1x
7.6x
8.7x
8.1x
8.9x
Enterprise Value/Sales
1.7x
0.9x
2.1x
1.3x
2.0x
2.3x
Gross Margin
15.2%
32.0%
3.4%
-0.9%
19.0%
22.8%
Operating Margin
-4.7%
18.4%
-17.4%
-20.4%
-5.9%
1.6%
Net Margin
-8.4%
21.8%
-38.2%
-27.7%
-5.6%
7.7%
Return on Equity
-5.2%
29.2%
-33.9%
-23.2%
-4.0%
5.8%
Receivables Turnover
6.0x
7.3x
5.2x
5.8x
5.8x
6.0x
61.2
50.1
69.5
63.3
62.6
60.6
Inventory Turnover
4.2x
4.2x
4.1x
4.2x
3.7x
4.7x
88.1
87.2
89.6
87.4
98.8
77.7
Payables Turnover
7.7x
9.9x
7.7x
7.8x
6.1x
6.8x
48.9
36.9
47.3
46.9
60.3
53.4
Current Ratio
2.43
2.34
1.77
2.36
2.58
3.07
Quick Ratio
1.76
1.69
1.25
1.56
1.83
2.49
Cash Ratio
1.17
1.08
0.78
0.85
1.29
1.85
0.2x
-0.2x
1.2x
1.7x
-0.1x
-1.7x
Profitability
Efficiency
Liquidity
Credit Analysis
Net Debt/EBITDA
Net Debt/(EBITDA-Capex)
-0.2x
2.0x
-0.9x
0.0x
--
1.7x
0.7x
2.4x
3.2x
1.8x
0.5x
EBITDA/Interest Expense
20.3x
20.0x
9.4x
9.2x
23.8x
39.0x
-2.6x
8.8x
-6.1x
-12.5x
-5.8x
2.4x
-2.6x
8.8x
-6.1x
-12.5x
-5.8x
2.4x
36.6%
29.4%
66.6%
45.7%
32.8%
8.6%
Total Debt/EBITDA
14
FINANCIALS
INDUSTRY COMPARABLES
15
16
INDUSTRY COMPARABLES
17
TXN
INTC
STM
IFX
NXPI
BRCM
XLNX
MXIM
NSM
ALTR
ADI
NVDA
LLTC
35.13
21.41
12.02
10.81
33.56
39.54
31.72
25.59
24.06
45.63
38.98
18.57
34.53
Shares
Outstndg
1,001.5
Shares
Out
Diluted
1,037.3
1,169.0
5,385.2
910.4
1,086.7
250.8
485.7
261.1
296.5
244.8
322.0
299.6
595.1
226.9
887.2
322.0
1,213.0
5,696.0
911.1
1,167.0
238.7
544.6
263.6
303.3
247.0
313.9
308.8
588.7
232.2
925.2
313.9
Equity Enterprise
Value
Value
11,814.8
12,462.8
42,612.7
121,951.4
10,952.2
12,610.0
8,011.9
21,534.0
8,361.8
7,760.4
5,942.8
14,323.8
12,038.9
10,931.9
8,017.9
21,926.9
10,952.2
37,995.0
95,526.2
10,605.1
10,008.1
12,328.2
17,242.6
7,403.3
7,088.5
6,031.7
12,354.8
9,255.2
8,586.0
7,861.5
18,637.4
10,008.1
Total
Debt
1,740.0
Total
Assets
14,398.0
Long
Term
Debt
1,320.0
D/
D+E
0.17x
0.0
2,115.0
1,770.0
504.4
4,649.0
697.0
887.2
300.0
1,042.6
500.0
537.5
25.1
776.2
1,061.8
697.0
12,474.0
62,897.0
13,020.0
6,434.1
7,911.0
7,944.3
3,858.4
3,365.7
1,933.0
3,722.5
4,542.3
4,495.2
1,446.2
10,311.1
4,542.3
0.0
2,077.0
1,050.0
331.4
4,140.0
697.0
887.2
300.0
1,042.6
500.0
523.0
23.4
776.2
949.8
697.0
0.00x
0.04x
0.19x
0.12x
0.81x
0.11x
0.29x
0.11x
0.62x
0.18x
0.14x
0.01x
0.74x
0.26x
0.14x
INDUSTRY COMPARABLES
Capitalization Comparison
18
MU
TXN
INTC
STM
IFX
NXPI
BRCM
XLNX
MXIM
NSM
ALTR
ADI
NVDA
LLTC
Price/EPS
Enterprise Value /
Price to
Book
Price
to
Sales
9,290.0
EBITDA
3,285.0
LTM
7.91
FY1
18.57
FY2
9.22
Sales
1.34x
EBIT
9.9x
EBITDA
3.8x
Value
1.3x
Sales
1.27x
13,966.0
43,623.0
10,346.0
4,444.5
4,618.6
6,818.3
2,310.6
2,313.9
1,544.8
1,954.4
2,887.0
3,543.3
1,449.7
7,678.5
3,543.3
5,316.0
20,148.0
1,711.0
1,173.5
717.2
1,291.0
835.9
752.5
647.0
895.9
1,103.2
579.6
800.3
2,767.0
895.9
13.21
10.65
11.63
9.76
(13.08)
19.87
13.50
30.83
18.94
18.33
14.82
43.19
15.77
16.0
14.8
13.96
9.52
12.23
13.56
14.20
14.16
13.63
15.77
19.86
18.42
14.05
18.19
14.43
14.8
14.2
12.50
8.89
10.90
12.70
11.10
12.93
15.31
13.98
19.05
17.15
13.38
14.87
14.48
13.6
13.4
2.72x
2.19x
0.93x
2.07x
2.67x
2.53x
3.20x
3.06x
3.90x
6.32x
3.21x
2.42x
5.42x
3.1
2.7
8.6x
6.2x
20.4x
13.5x
531.8x
14.9x
9.5x
11.9x
10.7x
14.2x
9.1x
21.9x
10.4x
52.6
11.9
7.1x
4.7x
5.6x
7.8x
17.2x
13.4x
8.9x
9.4x
9.3x
13.8x
8.4x
14.8x
9.8x
10.0
9.3
3.9x
2.4x
1.3x
2.9x
7.8x
3.7x
3.8x
3.2x
9.0x
6.3x
3.5x
3.4x
28.0x
6.1
3.7
3.05x
2.80x
0.93x
2.46x
1.82x
3.16x
3.62x
3.85x
7.33x
4.17x
3.09x
3.3
3.1
INDUSTRY COMPARABLES
Valuation Comparison
19
TXN
INTC
STM
IFX
NXPI
BRCM
XLNX
MXIM
NSM
ALTR
ADI
NVDA
LLTC
Gross Margin %
FY-1
FY0 LTM
32.0 27.9
47.9
55.6
30.9
21.8
22.4
50.4
63.0
51.2
62.7
66.8
55.8
35.4
75.4
49.2
51.2
53.6
65.2
38.8
37.5
25.2
51.4
63.2
60.0
65.9
71.0
65.2
44.9
77.0
55.3
60.0
53.6
65.2
38.8
53.2
51.4
65.3
62.0
72.7
71.0
67.3
44.9
78.3
60.3
63.6
EBIT Margin %
FY-1
FY0
LTM
18.4
13.50
21.13
16.92
(11.08)
(8.23)
(28.33)
4.47
24.74
6.11
22.41
26.31
17.36
(2.97)
42.95
10.1
16.9
31.5
35.6
4.6
12.5
(21.3)
16.9
25.2
14.2
24.3
44.4
33.3
11.1
48.2
21.6
24.3
31.53
35.55
4.55
15.29
0.50
16.92
33.65
25.85
36.53
44.43
35.08
11.08
52.00
26.4
31.5
EBITDA Margin %
FY-1
FY0
LTM
42.1
35.4
30.0
31.3
5.0
9.3
(5.0)
6.8
28.7
18.6
30.6
28.7
24.3
2.9
47.9
19.9
24.3
38.1
46.2
16.5
24.2
1.2
18.9
28.8
22.6
31.0
45.8
37.7
16.4
52.0
29.2
28.8
38.1
46.2
16.5
26.4
15.5
18.9
36.2
32.5
41.9
45.8
38.2
16.4
55.2
32.9
36.2
Net Margin %
FY-1
FY0
21.8
14.10
12.44
(13.29)
(7.43)
(66.14)
1.45
20.58
0.64
5.02
21.00
12.28
(2.04)
29.86
2.2
5.0
23.1
26.3
8.0
9.4
(4.6)
15.9
19.5
6.3
14.7
40.1
25.8
7.1
30.9
17.1
15.9
LTM
16.2
23.1
26.3
8.0
15.5
(14.3)
15.9
27.3
10.9
20.1
40.1
28.0
7.1
34.9
18.7
20.1
INDUSTRY COMPARABLES
Margin Comparison
52 Week
High
Low
11.95
6.36
Beta
1.75
1 Week
7.25
1 Month
13.11
3 Months
18.65
36.71
24.25
13.55
11.40
34.80
47.39
35.42
28.44
24.16
45.68
41.66
26.17
36.14
31.2
34.8
0.94
0.96
0.83
1.54
2.78
0.95
0.99
1.11
0.80
1.27
0.98
1.39
1.03
1.2
1.0
2.30
8.24
1.15
8.15
6.40
3.73
1.73
2.90
0.00
6.76
2.99
4.56
6.05
4.2
3.7
5.31
7.43
(1.19)
6.32
21.81
(0.33)
(0.16)
5.79
72.84
14.65
3.07
5.39
6.38
11.3
5.8
3.60
2.20
2.65
9.41
54.87
(12.13)
1.47
(0.04)
67.43
21.16
0.13
(17.21)
(1.00)
10.2
2.2
20
TXN
INTC
STM
IFX
NXPI
BRCM
XLNX
MXIM
NSM
ALTR
ADI
NVDA
LLTC
22.65
17.60
6.56
5.05
10.23
29.05
22.75
15.67
11.84
21.97
26.28
8.65
26.25
17.3
17.6
Price Change %
6 Months
9 Months
48.11
34.79
25.06
9.01
50.85
36.78
175.08
6.26
21.95
33.14
85.51
57.62
23.59
64.48
12.81
46.3
33.1
41.82
(1.11)
42.26
70.65
7.10
11.49
42.80
67.20
61.18
29.72
73.23
9.97
38.0
42.0
1 Year
5.95
2 Years
148.15
3 Years
53.92
5 Years
(32.20)
31.82
(11.24)
13.44
49.41
11.01
14.84
22.97
53.05
70.58
26.76
8.98
10.07
25.1
18.9
102.83
42.73
87.86
473.92
81.46
54.21
83.31
106.17
162.54
88.49
68.05
58.76
117.5
85.6
18.68
(5.06)
8.97
51.66
71.39
28.79
26.20
17.08
112.63
23.12
(2.37)
3.29
29.5
20.9
(1.21)
10.08
(37.39)
5.85
(13.61)
16.96
(31.71)
(19.83)
110.86
(0.26)
(4.34)
(3.66)
2.6
(2.4)
INDUSTRY COMPARABLES
21
Income Statement
Sales (% growth)
Cost of Goods Sold (% sales)
SG&A (% sales)
Other Expense / (Income) (% of sales)
Depreciation & Amortization (% sales)
Amortization (% sales)
Interest Income
Projection Period
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
8.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
7.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
6.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
5.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
Projection Period
22
Projection Period
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
61.0
88.0
1.0%
48.0
4.0%
16.0%
TRANSACTION ANALYSIS
23
Purchase Price
Public (1) / Private (2)
Entry EBITDA Multiple
LTM 1/1/2011 EBITDA
Enterprise Value
Less: Total Debt
Less: Preferred Securities
Less: Noncontrolling Interest
Plus: Cash and Cash Equivalents
Equity Purchase Price
Premium Calculation (If Public)
Stock Trading at (If Public)
Implied Premium Paid (If Public)
$15.31
$11.00
1,037.0
1,037.000
Number of
Shares
Exercise
Price
$11.00 Tranche 1
39% Tranche 2
Tranche 3
Tranche 4
Tranche 5
Total
Tranche
In-the-Money
Shares
Proceeds
Convertible Securities
Conversion
Price
Amount
Issue 1
Issue 2
Issue 3
Issue 4
Issue 5
Total
24
Conversion
Ratio
-
New
Shares
-
TRANSACTION ANALYSIS
Sources of Funds
% of Total
Equity %
Amount
Multiple of EBITDA
Sources
1/1/2011
Pricing
Revolving Credit
Term Loan A
6,000.0
-%
30.3%
-x
1.7x
-x
1.7x
L+325 bps
L+300 bps
Term Loan B
2,000.0
1,000.0
7,904.5
2,913.0
0.6x
-x
-x
0.3x
-x
2.2x
-x
-x
0.8x
5.6x
2.2x
2.2x
2.2x
2.5x
2.5x
4.7x
4.7x
4.7x
5.6x
5.6x
L+350 bps
Term Loan C
2nd Lien
Senior Notes
10.1%
-%
-%
5.0%
-%
39.9%
-%
-%
14.7%
100.0%
100%
0%
0%
Total Sources
$19,817.5
Uses of Funds
$15,877.2
1,648.0
Noncontrolling Interest
1,796.0
Financing Fees
Investment Banking Fees
Legal Fees
Other Fees and Expenses
Miscellaneous Expenses 1
Miscellaneous Expenses 2
10.000%
177.8
158.8
158.8
1.0
-
% of Total
$15.31
Uses
1,037.0
80.1%
Equity Purchase Price
8.3% Plus: Existing Net Debt
9.1%
Enterprise Value
0.9%
0.8%
Return
0.8%
Exit Year
0.0%
Entry Multiple
-%
- % Exit Multiple
IRR
Cash Return
Total Uses
L+350 bps
L+350 bps
3.000%
Purchase Price
Amount
25
Cumulative
$19,817.5
100.0%
$15,877.2
531.0
$16,408.2
2016
4.6x
4.6x
28.4%
3.5x
TRANSACTION ANALYSIS
TRANSACTION ANALYSIS
Size
(%)
$300.0
6,000.0
2,000.0
Term Loan C
2nd Lien
$5.3
105.0
35.0
Senior Notes
Senior Subordinated Notes
Senior Bridge Facility
Senior Subordinated Bridge Facility
Other Financing Fees & Expenses
($)
1.750%
1.750%
1.750%
1,000.0
1,000.0
-
2.250%
2.250%
1.000%
1.000%
22.5
10.0
$177.8
26
6
5
7
7
10
10
10
10
10
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
$0.9
21.0
5.0
2.3
1.0
-
$0.9
21.0
5.0
2.3
1.0
-
$0.9
21.0
5.0
2.3
1.0
-
$0.9
21.0
5.0
2.3
1.0
-
$0.9
21.0
5.0
2.3
1.0
-
$0.9
5.0
2.3
1.0
-
5.0
2.3
1.0
-
2.3
1.0
-
2.3
1.0
-
2.3
1.0
-
$30.1
$30.1
$30.1
$30.1
$30.1
$9.1
$8.3
$3.3
$3.3
$3.3
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
$ in Millions
Income Statement
Historical Period
2009
2008
Sales
% growth
Cost of Goods Sold
Gross Profit
% margin
Selling, General & Administrative
% sales
$5,841.0
NA
Projection Period
2010
$4,803.0
(17.8%)
$8,482.0
76.6%
LTM
1/1/2011
Pro forma
2011
$8,482.0
NA
$8,500.0
0.2%
Year 1
2012
Year 2
2013
$9,180.0
8.0%
$9,822.6
7.0%
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
$10,412.0
6.0%
$10,932.6
5.0%
$11,260.5
3.0%
$11,598.3
3.0%
$11,946.3
3.0%
$12,304.7
3.0%
$12,673.8
3.0%
$13,054.0
3.0%
3,836.0
2,500.0
3,763.0
3,763.0
3,825.0
4,131.0
4,420.2
4,685.4
4,919.6
5,067.2
5,219.3
5,375.8
5,537.1
5,703.2
5,874.3
$2,005.0
34.3%
$2,303.0
47.9%
$4,719.0
55.6%
$4,719.0
55.6%
$4,675.0
55.0%
$5,049.0
55.0%
$5,402.4
55.0%
$5,726.6
55.0%
$6,012.9
55.0%
$6,193.3
55.0%
$6,379.1
55.0%
$6,570.5
55.0%
$6,767.6
55.0%
$6,970.6
55.0%
$7,179.7
55.0%
1,135.0
19.4%
1,001.0
20.8%
1,152.0
13.6%
1,152.0
13.6%
1,190.0
14.0%
1,377.0
15.0%
1,473.4
15.0%
1,561.8
15.0%
1,639.9
15.0%
1,689.1
15.0%
1,739.8
15.0%
1,791.9
15.0%
1,845.7
15.0%
1,901.1
15.0%
1,958.1
15.0%
EBITDA
% margin
$870.0
14.9%
$1,302.0
27.1%
$3,567.0
42.1%
$3,567.0
42.1%
$3,485.0
41.0%
$3,672.0
40.0%
$3,929.0
40.0%
$4,164.8
40.0%
$4,373.0
40.0%
$4,504.2
40.0%
$4,639.3
40.0%
$4,778.5
40.0%
$4,921.9
40.0%
$5,069.5
40.0%
$5,221.6
40.0%
2,060.0
2,139.0
2,005.0
2,005.0
2,550.0
2,754.0
2,946.8
3,123.6
3,279.8
3,378.2
3,479.5
3,583.9
3,691.4
3,802.1
3,916.2
Amortization
EBIT
% margin
($1,190.0)
(20.4%)
($837.0)
(17.4%)
$1,562.0
18.4%
$1,562.0
18.4%
$935.0
11.0%
$918.0
10.0%
$982.3
10.0%
$1,041.2
10.0%
$1,093.3
10.0%
$1,126.1
10.0%
$1,159.8
10.0%
$1,194.6
10.0%
$1,230.5
10.0%
$1,267.4
10.0%
$1,305.4
10.0%
360.0
130.0
30.0
1.5
0.2
268.1
129.4
30.0
1.5
0.2
91.9
131.0
30.0
1.5
0.2
1.7
66.6
30.0
1.5
0.2
30.0
1.5
0.2
30.0
1.5
0.2
30.0
1.5
0.2
30.0
1.5
0.2
30.0
1.5
0.2
30.0
1.5
0.2
30.0
1.5
0.2
$521.7
30.1
$429.1
30.1
$254.6
30.1
$100.0
30.1
$31.7
30.1
$31.7
30.1
$31.7
9.1
$31.7
8.3
$31.7
3.3
$31.7
3.3
$31.7
3.3
$551.8
$459.2
-
$284.7
-
$130.1
(5.9)
$61.8
(28.8)
$61.8
(63.5)
$40.8
(99.4)
$39.9
(136.6)
$34.9
(175.2)
$34.9
(215.1)
$34.9
(256.4)
$459.2
$284.7
$124.2
$33.0
($58.6)
($96.7)
($140.3)
($180.2)
($221.5)
458.8
174.4
697.6
265.1
916.9
348.4
1,060.2
402.9
1,127.7
428.5
1,218.5
463.0
1,291.4
490.7
1,370.7
520.9
1,447.5
550.1
1,526.9
580.2
$284.5
$432.5
$568.5
$657.3
$699.2
$755.5
$800.6
$849.9
$897.5
$946.7
3.1%
4.4%
5.5%
6.0%
6.2%
6.5%
6.7%
6.9%
7.1%
7.3%
Pro forma
2011
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
0.2%
45.0%
14.0%
-%
30.0%
-%
1.0%
8.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
7.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
6.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
5.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
3.0%
45.0%
15.0%
-%
30.0%
-%
1.0%
38.0%
Interest Expense
Revolving Credit Facility
Term Loan A
Term Loan B
Term Loan C
Existing Term Loan
2nd Lien
Senior Notes
Senior Subordinated Notes
Commitment Fee on Unused Revolver
Administrative Agent Fee
Net Income
% margin
27
2008
NA
65.7%
19.4%
-%
35.3%
-%
2009
(17.8%)
52.1%
20.8%
-%
44.5%
-%
2010
76.6%
44.4%
13.6%
-%
23.6%
-%
LTM
1/1/2011
NA
44.4%
13.6%
-%
23.6%
-%
($1.7)
TRANSACTION ANALYSIS
$ in Millions
Balance Sheet
Projection Period
Opening
2011
Cash and Cash Equivalents
Accounts Receivable
Inventories
Prepaids and Other Current Assets
Total Current Assets
Property, Plant and Equipment, net
Goodwill and Intangible Assets
Other Assets
Deferred Financing Fees
Total Assets
Accounts Payable
Accrued Liabilities
Other Current Liabilities
Total Current Liabilities
Revolving Credit Facility
Term Loan A
Term Loan B
Term Loan C
Existing Term Loan
2nd Lien
Senior Notes
Senior Subordinated Notes
Other Debt
Other Long-Term Liabilities
Total Liabilities
Noncontrolling Interest
All Shareholders' Equity
Adjustments
(+)
(-)
$2,913.0
1,531.0
1,770.0
119.0
(2,913.0)
Pro Forma
2011
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
1,531.0
1,770.0
119.0
1,534.2
996.0
91.8
1,641.6
1,065.7
98.2
$1,172.2
1,740.1
1,129.6
104.1
$4,579.1
1,827.1
1,186.1
109.3
$8,114.8
1,881.9
1,221.7
112.6
$11,770.1
1,938.4
1,258.3
116.0
$15,556.4
1,996.5
1,296.1
119.5
$19,476.2
2,056.4
1,335.0
123.0
$23,535.6
2,118.1
1,375.0
126.7
$27,738.9
2,181.6
1,416.3
130.5
$6,333.0
$3,420.0
$2,622.0
$2,805.5
$4,146.0
$7,701.6
$11,331.0
$15,082.8
$18,968.4
$22,990.6
$27,155.4
$31,467.4
6,601.0
323.0
1,291.0
-
6,601.0
8,180.2
1,291.0
177.8
4,306.0
8,180.2
1,291.0
147.6
1,850.4
8,180.2
1,291.0
117.5
$14,548.0
$19,670.0
$16,546.8
$14,244.5
$12,952.0
$13,744.2
$14,528.5
$15,371.5
$16,262.3
$17,205.0
$18,198.2
$19,243.4
799.0
346.0
1,557.0
799.0
346.0
1,557.0
543.3
367.2
1,468.8
581.3
392.9
1,571.6
616.2
416.5
1,665.9
647.0
437.3
1,749.2
666.4
450.4
1,801.7
686.4
463.9
1,855.7
707.0
477.9
1,911.4
728.2
492.2
1,968.7
750.0
507.0
2,027.8
772.5
522.2
2,088.6
$2,702.0
$2,379.3
$2,545.8
$2,698.6
$2,833.5
$2,918.5
$3,006.0
$3,096.2
$3,189.1
$3,284.8
$3,383.3
7,857.2
177.8
$2,702.0
1,648.0
(129.0)
511.0
6,000.0
2,000.0
(1,648.0)
1,000.0
-
$4,732.0
1,796.0
8,020.0
7,586.0
(1,796.0)
(8,020.0)
6,000.0
2,000.0
1,000.0
(129.0)
511.0
2,935.1
1,980.0
1,000.0
(129.0)
511.0
53.8
1,960.0
1,000.0
(129.0)
511.0
(752.6)
8,180.2
1,291.0
87.4
1,000.0
(129.0)
511.0
(3,485.8)
8,180.2
1,291.0
57.3
1,000.0
(129.0)
511.0
(6,300.9)
8,180.2
1,291.0
27.1
1,000.0
(129.0)
511.0
(9,200.5)
8,180.2
1,291.0
18.0
1,000.0
(129.0)
511.0
(12,187.1)
8,180.2
1,291.0
9.8
1,000.0
(129.0)
511.0
(15,263.2)
8,180.2
1,291.0
6.5
1,000.0
(129.0)
511.0
(18,431.7)
8,180.2
1,291.0
3.3
1,000.0
(129.0)
511.0
(21,695.2)
8,180.2
1,291.0
(0.0)
1,000.0
(129.0)
511.0
$12,084.0
$8,676.4
$5,941.6
$4,080.6
$4,215.5
$4,300.5
$4,388.0
$4,478.2
$4,571.1
$4,666.8
$4,765.3
7,586.0
7,870.4
8,302.9
8,871.4
9,528.8
10,228.0
10,983.4
11,784.1
12,633.9
13,531.4
14,478.1
$9,816.0
$7,586.0
$7,870.4
$8,302.9
$8,871.4
$9,528.8
$10,228.0
$10,983.4
$11,784.1
$12,633.9
$13,531.4
$14,478.1
$14,548.0
$19,670.0
$16,546.8
$14,244.5
$12,952.0
$13,744.2
$14,528.5
$15,371.5
$16,262.3
$17,205.0
$18,198.2
$19,243.4
Balance Check
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
718.0
718.0
242.7
475.3
259.7
(17.0)
275.3
(15.6)
289.0
(13.8)
297.7
(8.7)
306.6
(8.9)
315.8
(9.2)
325.3
(9.5)
335.1
(9.8)
345.1
(10.1)
28
Opening
2011
Pro forma
2011
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
65.7
168.9
1.4%
65.7
168.9
1.4%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
61.0
88.0
1.0%
76.2
4.1%
18.3%
76.2
4.1%
18.3%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
48.0
4.0%
16.0%
TRANSACTION ANALYSIS
$ in Millions
Cash Flow Statement
Projection Period
Year 1
2012
Operating Activities
Net Income
Plus: Depreciation & Amortization
Plus: Amortization
Plus: Amortization of Financing Fees
Changes in Working Capital Items
(Inc.) / Dec. in Accounts Receivable
(Inc.) / Dec. in Inventories
(Inc.) / Dec. in Prepaid and Other Current Assets
Inc. / (Dec.) in Accounts Payable
Inc. / (Dec.) in Accrued Liabilities
Inc. / (Dec.) in Other Current Liabilities
(Inc.) / Dec. in Net Working Capital
Cash Flow from Operating Activities
Investing Activities
Capital Expenditures
Other Investing Activities
Cash Flow from Investing Activities
Financing Activities
Revolving Credit Facility
Term Loan A
Term Loan B
Term Loan C
Existing Term Loan
2nd Lien
Senior Notes
Senior Subordinated Notes
Other Debt
Dividends
Equity Issuance / (Repurchase)
Cash Flow from Financing Activities
Year 2
2013
$284.5
2,754.0
30.1
Year 3
2014
$432.5
2,946.8
30.1
$568.5
3,123.6
30.1
Year 4
2015
Year 5
2016
$657.3
3,279.8
30.1
Year 6
2017
$699.2
3,378.2
30.1
Year 7
2018
$755.5
3,479.5
9.1
Year 8
2019
$800.6
3,583.9
8.3
Year 9
2020
$849.9
3,691.4
3.3
Year 10
2021
$897.5
3,802.1
3.3
$946.7
3,916.2
3.3
(3.2)
774.0
27.2
(107.4)
(69.7)
(6.4)
(98.5)
(63.9)
(5.9)
(87.0)
(56.5)
(5.2)
(54.8)
(35.6)
(3.3)
(56.5)
(36.7)
(3.4)
(58.2)
(37.8)
(3.5)
(59.9)
(38.9)
(3.6)
(61.7)
(40.0)
(3.7)
(63.5)
(41.3)
(3.8)
(255.7)
21.2
(88.2)
38.0
25.7
102.8
34.9
23.6
94.3
30.8
20.8
83.3
19.4
13.1
52.5
20.0
13.5
54.1
20.6
13.9
55.7
21.2
14.3
57.3
21.8
14.8
59.1
22.5
15.2
60.8
475.3
$3,543.9
(17.0)
$3,392.4
(15.6)
$3,706.6
(13.8)
$3,953.5
(8.7)
$4,098.8
(8.9)
$4,235.2
(9.2)
$4,383.6
(9.5)
$4,535.0
(9.8)
$4,693.1
(10.1)
$4,856.1
(459.0)
-
(491.1)
-
(520.6)
-
(546.6)
-
(563.0)
-
(579.9)
-
(597.3)
-
(615.2)
-
(633.7)
-
(652.7)
-
($459.0)
($491.1)
($520.6)
($546.6)
($563.0)
($579.9)
($597.3)
($615.2)
($633.7)
($652.7)
(3,064.9)
(20.0)
-
(2,881.3)
(20.0)
-
(53.8)
(1,960.0)
-
($3,084.9)
($2,901.3)
($2,013.8)
$1,172.2
-
$3,406.8
1,172.2
$3,535.8
4,579.1
$3,655.2
8,114.8
$3,786.3
11,770.1
$3,919.8
15,556.4
$4,059.4
19,476.2
$4,203.4
23,535.6
$1,172.2
$4,579.1
$8,114.8
$11,770.1
$15,556.4
$19,476.2
$23,535.6
$27,738.9
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
29
TRANSACTION ANALYSIS
$ in Millions
Debt Schedule
Projection Period
Pro forma
2011
Forward LIBOR Curve
3.00%
MinCash
-
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
3.00%
3.15%
3.30%
3.60%
4.00%
4.35%
4.80%
4.85%
5.10%
5.25%
$3,543.9
(459.0)
$3,392.4
(491.1)
$3,706.6
(520.6)
$3,953.5
(546.6)
$4,098.8
(563.0)
$4,235.2
(579.9)
$4,383.6
(597.3)
$4,535.0
(615.2)
$4,693.1
(633.7)
$4,856.1
(652.7)
$3,084.9
(20.0)
-
$2,901.3
(20.0)
-
$3,186.0
(20.0)
-
$3,406.8
1,172.2
$3,535.8
4,579.1
$3,655.2
8,114.8
$3,786.3
11,770.1
$3,919.8
15,556.4
$4,059.4
19,476.2
$4,203.4
23,535.6
$3,064.9
$2,881.3
$3,166.0
$4,579.1
$8,114.8
$11,770.1
$15,556.4
$19,476.2
$23,535.6
$27,738.9
-%
-%
-%
-%
-%
100.0%
$6,000.0
(3,064.9)
$2,935.1
(2,881.3)
$53.8
(53.8)
$6,000.0
3.000%
5 years
Beginning Balance
Mandatory Repayments
Optional Repayments
Ending Balance
Interest Rate
Interest Expense
Term Loan B
Size
Spread
Term
Repayment Schedule
Year 1
2012
$2,935.1
$53.8
6.00%
268.1
6.15%
91.9
6.30%
1.7
6.60%
-
7.00%
-
7.35%
-
7.80%
-
7.85%
-
8.10%
-
8.25%
-
$2,000.0
3.500%
7 years
1.0% Per Annum, Bullet at Maturity
Beginning Balance
Mandatory Repayments
Optional Repayments
$2,000.0
(20.0)
-
$1,980.0
(20.0)
-
$1,980.0
$1,960.0
6.50%
129.4
6.65%
131.0
6.80%
66.6
7.10%
-
7.50%
-
7.85%
-
8.30%
-
8.35%
-
8.60%
-
8.75%
-
Beginning Balance
Repayment
$1,000.0
-
$1,000.0
-
$1,000.0
-
$1,000.0
-
$1,000.0
-
$1,000.0
-
$1,000.0
-
$1,000.0
-
$1,000.0
-
$1,000.0
-
Ending Balance
$1,000.0
$1,000.0
$1,000.0
$1,000.0
$1,000.0
$1,000.0
$1,000.0
$1,000.0
$1,000.0
$1,000.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
Ending Balance
Interest Rate
Interest Expense
Senior Notes
Size
Coupon
Term
Interest Expense
30
$1,960.0
(20.0)
(1,940.0)
-
$1,000.0
3.000%
10 years
TRANSACTION ANALYSIS
Debt Schedule
Historical Period
2008
2009
2010
LTM
1/1/2011
Pro forma
2011
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
Sales
% growth
$5,841.0
NA
$4,803.0
(17.8%)
$8,482.0
76.6%
$8,482.0
NA
$8,500.0
0.2%
$9,180.0
8.0%
$9,822.6
7.0%
$10,412.0
6.0%
$10,932.6
5.0%
$11,260.5
3.0%
$11,598.3
3.0%
$11,946.3
3.0%
$12,304.7
3.0%
$12,673.8
3.0%
$13,054.0
3.0%
Gross Profit
% margin
$2,005.0
34.3%
$2,303.0
47.9%
$4,719.0
55.6%
$4,719.0
55.6%
$4,675.0
55.0%
$5,049.0
55.0%
$5,402.4
55.0%
$5,726.6
55.0%
$6,012.9
55.0%
$6,193.3
55.0%
$6,379.1
55.0%
$6,570.5
55.0%
$6,767.6
55.0%
$6,970.6
55.0%
$7,179.7
55.0%
EBITDA
% margin
$870.0
14.9%
$1,302.0
27.1%
$3,567.0
42.1%
$3,567.0
42.1%
$3,485.0
41.0%
$3,672.0
40.0%
$3,929.0
40.0%
$4,164.8
40.0%
$4,373.0
40.0%
$4,504.2
40.0%
$4,639.3
40.0%
$4,778.5
40.0%
$4,921.9
40.0%
$5,069.5
40.0%
$5,221.6
40.0%
Capital Expenditures
% sales
2,529.0
43.3%
488.0
10.2%
616.0
7.3%
616.0
7.3%
616.0
7.2%
459.0
5.0%
491.1
5.0%
520.6
5.0%
546.6
5.0%
563.0
5.0%
579.9
5.0%
597.3
5.0%
615.2
5.0%
633.7
5.0%
652.7
5.0%
521.7
551.8
429.1
459.2
254.6
284.7
100.0
130.1
31.7
61.8
31.7
61.8
31.7
40.8
31.7
39.9
31.7
34.9
31.7
34.9
31.7
34.9
$3,672.0
(429.1)
(174.4)
(459.0)
475.3
$3,929.0
(254.6)
(265.1)
(491.1)
(17.0)
$4,164.8
(100.0)
5.9
(348.4)
(520.6)
(15.6)
$4,373.0
(31.7)
28.8
(402.9)
(546.6)
(13.8)
$4,504.2
(31.7)
63.5
(428.5)
(563.0)
(8.7)
$4,639.3
(31.7)
99.4
(463.0)
(579.9)
(8.9)
$4,778.5
(31.7)
136.6
(490.7)
(597.3)
(9.2)
$4,921.9
(31.7)
175.2
(520.9)
(615.2)
(9.5)
$5,069.5
(31.7)
215.1
(550.1)
(633.7)
(9.8)
$5,221.6
(31.7)
256.4
(580.2)
(652.7)
(10.1)
$3,084.9
3,084.9
$2,901.3
5,986.2
$3,186.0
9,172.2
$3,406.8
12,579.1
$3,535.8
16,114.8
$3,655.2
19,770.1
$3,786.3
23,556.4
$3,919.8
27,476.2
$4,059.4
31,535.6
$4,203.4
35,738.9
$1,172.2
$4,579.1
$8,114.8
$11,770.1
$15,556.4
$19,476.2
$23,535.6
$27,738.9
Capitalization
Cash
Revolving Credit Facility
Term Loan A
Term Loan B
Term Loan C
Existing Term Loan
2nd Lien
Other Debt
Total Senior Secured Debt
Senior Notes
Total Senior Debt
Senior Subordinated Notes
Total Debt
Shareholders' Equity
Total Capitalization
% of Bank Debt Repaid
6,000.0
2,000.0
(129.0)
2,935.1
1,980.0
(129.0)
53.8
1,960.0
(129.0)
(129.0)
(129.0)
(129.0)
(129.0)
(129.0)
(129.0)
(129.0)
(129.0)
$7,871.0
$4,786.1
$1,884.8
($129.0)
($129.0)
($129.0)
($129.0)
($129.0)
($129.0)
($129.0)
($129.0)
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
$8,871.0
$5,786.1
$2,884.8
$871.0
$871.0
$871.0
$871.0
$871.0
$871.0
$871.0
$871.0
$8,871.0
$5,786.1
$2,884.8
$871.0
$871.0
$871.0
$871.0
$871.0
$871.0
$871.0
$871.0
7,586.0
7,870.4
8,302.9
8,871.4
9,528.8
10,228.0
10,983.4
11,784.1
12,633.9
13,531.4
14,478.1
$16,457.0
$13,656.5
$11,187.7
$9,742.4
$10,399.8
$11,099.0
$11,854.4
$12,655.1
$13,504.9
$14,402.4
$15,349.1
38.6%
74.8%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Credit Statistics
% Debt / Total Capitalization
53.9%
42.4%
25.8%
8.9%
8.4%
7.8%
7.3%
6.9%
6.4%
6.0%
5.7%
6.7x
5.5x
8.6x
7.5x
15.4x
13.5x
41.7x
36.4x
138.2x
120.9x
142.3x
124.5x
146.6x
128.3x
151.0x
132.1x
155.5x
136.1x
160.2x
140.2x
165.0x
144.4x
6.3x
5.2x
8.0x
7.0x
13.8x
12.1x
32.0x
28.0x
70.8x
61.9x
72.9x
63.8x
113.8x
99.6x
119.8x
104.8x
141.0x
123.4x
145.3x
127.1x
149.6x
130.9x
2.3x
2.5x
2.5x
2.5x
1.3x
1.6x
1.6x
1.6x
0.5x
0.7x
0.7x
0.7x
(0.0x)
0.2x
0.2x
(0.1x)
(0.0x)
0.2x
0.2x
(0.8x)
(0.0x)
0.2x
0.2x
(1.6x)
(0.0x)
0.2x
0.2x
(2.3x)
(0.0x)
0.2x
0.2x
(3.1x)
(0.0x)
0.2x
0.2x
(3.8x)
(0.0x)
0.2x
0.2x
(4.5x)
(0.0x)
0.2x
0.2x
(5.1x)
31
TRANSACTION ANALYSIS
RETURN ANALYSIS
32
$ in Millions
Returns Analysis
Initial Sponsor Equity
Initial Rollover Equity
Initial Management Equity
Total Initial Equity
$7,904.5
$7,904.5
100%
0%
0%
100%
Projection Period
Pro forma
2011
4.6x
EBITDA
Exit EBITDA Multiple
4.6x
Year 1
2012
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
$3,672.0
$3,929.0
$4,164.8
$4,373.0
$4,504.2
$4,639.3
$4,778.5
$4,921.9
$5,069.5
$5,221.6
$16,891.2
$18,073.6
$19,158.0
$20,115.9
$20,719.4
$21,341.0
$21,981.2
$22,640.6
$23,319.8
$24,019.4
2,935.1
1,980.0
1,000.0
(129.0)
Total Debt
Less: Cash and Cash Equivalents
Year 2
2013
53.8
1,960.0
1,000.0
(129.0)
1,000.0
(129.0)
1,000.0
(129.0)
1,000.0
(129.0)
$871.0
4,579.1
$871.0
8,114.8
1,000.0
(129.0)
$5,786.1
$2,884.8
($301.2)
168.9
168.9
1.0
180.7
180.7
1.0
191.6
191.6
1.0
201.2
201.2
1.0
207.2
207.2
1.0
213.4
213.4
1.0
219.8
219.8
1.0
226.4
226.4
1.0
233.2
233.2
1.0
240.2
240.2
1.0
338.8
362.5
384.2
403.3
415.4
427.8
440.6
453.8
467.4
481.4
$10,766.3
$14,826.3
$19,075.0
$23,420.6
$27,547.8
$31,812.2
$36,225.9
$40,792.0
$45,517.0
$50,406.0
Sponsor IRR
Sponsor Equity %
Initial Equity Investment
Equity Proceeds
IRR
33
100%
($10,899.1)
($14,685.4)
($18,605.2)
$871.0
23,535.6
1,000.0
(129.0)
$871.0
1,172.2
($7,243.8)
$871.0
19,476.2
1,000.0
(129.0)
$2,884.8
-
($3,708.1)
$871.0
15,556.4
1,000.0
(129.0)
$5,786.1
-
Net Debt
$871.0
11,770.1
1,000.0
(129.0)
($22,664.6)
$871.0
27,738.9
($26,867.9)
1.4x
1.9x
2.4x
3.0x
3.5x
4.0x
4.6x
5.2x
5.8x
6.4x
Year 1
2012
Year 2
2013
Year 3
2014
Year 4
2015
Year 5
2016
Year 6
2017
Year 7
2018
Year 8
2019
Year 9
2020
Year 10
2021
($7,904.5)
$10,766.3
($7,904.5)
$14,826.3
($7,904.5)
$19,075.0
($7,904.5)
$23,420.6
($7,904.5)
$27,547.8
($7,904.5)
$31,812.2
($7,904.5)
$36,225.9
($7,904.5)
$40,792.0
($7,904.5)
$45,517.0
($7,904.5)
$50,406.0
20.4%
36.2%
37.0%
34.1%
31.2%
28.4%
26.1%
24.3%
22.8%
21.5%
RETURN ANALYSIS
Return Analysis
Entry
Multiple
28.4%
3.1x
3.6x
4.1x
4.6x
5.1x
5.6x
3.6x
56.7%
40.2%
30.6%
24.0%
18.9%
14.9%
4.1x
59.6%
42.8%
33.0%
26.2%
21.1%
17.0%
Exit Multiple
4.6x
62.3%
45.2%
35.3%
28.4%
23.2%
19.0%
5.1x
64.8%
47.5%
37.4%
30.4%
25.1%
20.9%
5.6x
67.2%
49.6%
39.3%
32.2%
26.9%
22.6%
IRR Sensitivity Analysis w.r.t Exit Multiple and Exit Year Assuming 4.6x Entry Multiple
Exit
Multiple
34
3.6x
4.1x
4.6x
5.1x
5.6x
2016
28.4%
24.0%
26.2%
28.4%
30.4%
32.2%
2017
26.1%
22.9%
24.6%
26.1%
27.6%
29.0%
Exit Year
2018
24.3%
21.9%
23.1%
24.3%
25.4%
26.5%
2019
22.8%
20.9%
21.8%
22.8%
23.7%
24.5%
2020
21.5%
19.9%
20.7%
21.5%
22.2%
22.9%
RETURN ANALYSIS
IRR Sensitivity Analysis w.r.t Entry Multiple and Exit Multiple Assuming Exit in 2016
Financing Structures
Structure
1
Base
Sources of Funds
2
Structure 1
3
Structure 2
4
Structure 3
5
Structure 4
$300.0
$300.0
$300.0
$300.0
$300.0
5,000.0
1,000.0
500.0
5,000.0
2,000.0
500.0
6,000.0
2,000.0
500.0
6,000.0
2,000.0
1,000.0
5,000.0
2,000.0
1,000.0
100%
10,404.5
9,404.5
8,404.5
7,904.5
8,904.5
0%
0%
2,913.0
-
2,913.0
-
2,913.0
-
2,913.0
-
2,913.0
-
$19,817.5
$19,817.5
$19,817.5
$19,817.5
$19,817.5
$15,877.2
1,648.0
$15,877.2
1,648.0
$15,877.2
1,648.0
$15,877.2
1,648.0
$15,877.2
1,648.0
1,796.0
177.8
1,796.0
177.8
1,796.0
177.8
1,796.0
177.8
1,796.0
177.8
158.8
158.8
158.8
158.8
158.8
Legal Fees
Other Fees and Expenses
158.8
1.0
158.8
1.0
158.8
1.0
158.8
1.0
158.8
1.0
Rollover Equity
Management Equity
Cash on Hand
Other Source
Total Sources of Funds
Uses of Funds
Target Equity Purchase Price
Repay Existing Bank Debt
Noncontrolling Interest
Financing Fees
Miscellaneous Expenses 1
Miscellaneous Expenses 2
$19,817.5
5 Year IRR
35
24.0%
$19,817.5
$19,817.5
$19,817.5
$19,817.5
25.5%
27.3%
28.4%
26.4%
RETURN ANALYSIS
EXIT STRATEGIES
36
Company
37
Business Description
Acquisition Rationale
EXIT STRATEGIES
38
Industry Focus
Comments
Consumer Retail
Media and telecommunications
Industrials
Technology
Travel/leisure
Health care
Investment in On Semiconductor
Inc
Invested to carve out Conexant
from Rockwell Automation
Chemicals
Consumer products
Energy & natural resources
Financial services
Health care
Industrial
Media and communications
Technology
Digital Media
Telecom
Social Commerce
Software
Semiconductor
Clean Technology
Social Network and Gaming
EXIT STRATEGIES
Prepared
by
Deb Sahoo
MBA, Ross School of Business
University of Michigan, Ann Arbor
39