Investment Banking

Valuation, Leveraged Buyouts,

and Mergers & Acquisitions
LBO Analysis - Completed

JOSHUA ROSENBAUM
JOSHUA PEARL

ValueCo Corporation
Leveraged Buyout Analysis

Financing Structure:
Operating Scenario:

($ in millions, fiscal year ending December 31)

Structure 1
Base

Transaction Summary
Sources of Funds
% of Total
Amount

Sources

Revolving Credit Facility

Term Loan A

Term Loan B
Term Loan C

450.0
-

Uses of Funds
Multiple of EBITDA
9/30/2008

Purchase Price
Offer Price per Share

% of Total

Cumulative

-%
-%
38.8%

-x
-x
3.1x

-x
-x
3.1x

Pricing
L+325 bps

Amount
$825.0

Purchase ValueCo Equity

NA

Repay Existing Debt

L+350 bps
NA

300.0

Tender / Call Premiums

Financing Fees

20.0

Other Fees and Expenses

15.0

Uses

Fully Diluted Shares

71.1% Equity Purchase Price
25.9% Plus: Existing Net Debt
-%

-%
-%

-x
-x

3.1x
3.1x

-%
25.9%
33.2%
-%
2.2%
100.0%

-x
2.0x
2.6x
-x
0.2x
7.9x

3.1x
5.1x
7.7x
7.7x
7.9x
7.9x

2005
$780.0
NA

2006
$850.0
9.0%

2007
$925.0
8.8%

LTM
9/30/2008
$977.8
NA

Pro forma
2008
$1,000.0
8.1%

Year 1
2009
$1,080.0
8.0%

Year 2
2010
$1,144.8
6.0%

Year 3
2011
$1,190.6
4.0%

Year 4
2012
$1,226.3
3.0%

Gross Profit
% margin

$308.1
39.5%

$337.9
39.8%

$370.0
40.0%

$391.1
40.0%

$400.0
40.0%

$432.0
40.0%

$457.9
40.0%

$476.2
40.0%

$490.5
40.0%

$505.2
40.0%

EBITDA
% margin

$109.2
14.0%

$123.3
14.5%

$138.8
15.0%

$146.7
15.0%

$150.0
15.0%

$162.0
15.0%

$171.7
15.0%

$178.6
15.0%

$183.9
15.0%

$189.5
15.0%

15.0
1.9%

18.0
2.1%

18.5
2.0%

19.6
2.0%

20.0
2.0%

21.6
2.0%

22.9
2.0%

23.8
2.0%

24.5
2.0%

59.9
62.4

58.5
60.9

55.9
58.4

52.7
55.2

$162.0
(58.5)
(30.2)
(21.6)
(8.0)
$43.7
43.7

$171.7
(55.9)
(34.4)
(22.9)
(6.5)
$52.0
95.8

$178.6
(52.7)
(37.9)
(23.8)
(4.6)
$59.6
155.4

NA
NA
10.000%

Total Uses

$1,160.0

2013

50.0 Entry Multiple

$825.0 Exit Multiple
275.0

Enterprise Value

300.0
385.0
25.0
$1,160.0

2nd Lien
Senior Notes
Senior Subordinated Notes
Equity Contribution
Rollover Equity
Cash on Hand
Total Sources

Return Analysis
$16.50 Exit Year

$1,100.0

7.5x
7.5x
20%
2.5x

IRR
Cash Return

1.7%
1.3%

Transaction Multiples
Enterprise Value / Sales
LTM 9/30/2008
$977.8
2008E
1,000.0
Enterprise Value / EBITDA
LTM 9/30/2008
$146.7
150.0
100.0% 2008E

Options
Financing Structure
1.1x Operating Scenario
1.1x Cash Flow Sweep
Cash Balance
7.5x Average Interest
7.3x Financing Fees

1
1
1
1
1
1

Summary Financial Data

Historical Period

Sales
% growth

Capital Expenditures
% sales
Cash Interest Expense
Total Interest Expense
Free Cash Flow
EBITDA
Less: Cash Interest Expense
Plus: Interest Income
Less: Income Taxes
Less: Capital Expenditures
Less: Increase in Net Working Capital
Free Cash Flow
Cumulative Free Cash Flow

Projection Period
Year 5
Year 6
2013
2014
$1,263.1
$1,301.0
3.0%
3.0%

Year 7
2015
$1,340.0
3.0%

Year 8
2016
$1,380.2
3.0%

Year 9
2017
$1,421.6
3.0%

Year 10
2018
$1,464.3
3.0%

$520.4
40.0%

$536.0
40.0%

$552.1
40.0%

$568.7
40.0%

$585.7
40.0%

$195.1
15.0%

$201.0
15.0%

$207.0
15.0%

$213.2
15.0%

$219.6
15.0%

25.3
2.0%

26.0
2.0%

26.8
2.0%

27.6
2.0%

28.4
2.0%

29.3
2.0%

49.2
51.7

45.2
47.6

40.0
42.5

34.0
36.2

30.7
31.7

30.7
31.7

30.7
31.7

$183.9
(49.2)
(40.9)
(24.5)
(3.6)
$65.7
221.1

$189.5
(45.2)
(44.3)
(25.3)
(3.7)
$71.1
292.1

$195.1
(40.0)
(48.1)
(26.0)
(3.8)
$77.2
369.3

$201.0
(34.0)
0.0
(52.5)
(26.8)
(3.9)
$83.9
453.2

$207.0
(30.7)
1.4
(56.7)
(27.6)
(4.0)
$89.5
542.7

$213.2
(30.7)
4.2
(59.8)
(28.4)
(4.1)
$94.4
637.2

$219.6
(30.7)
7.1
(63.0)
(29.3)
(4.3)
$99.6
736.7

Capitalization
Cash

$3.2

$92.7

$187.2

$286.7

Revolving Credit Facility

Term Loan A
Term Loan B
Term Loan C
Existing Term Loan
2nd Lien
Other Debt
Total Senior Secured Debt

450.0
$450.0

406.3
$406.3

354.2
$354.2

294.6
$294.6

228.9
$228.9

157.9
$157.9

80.7
$80.7

Senior Notes
Total Senior Debt

$450.0

$406.3

$354.2

$294.6

$228.9

$157.9

$80.7

Senior Subordinated Notes

Total Debt

300.0
$750.0

300.0
$706.3

300.0
$654.2

300.0
$594.6

300.0
$528.9

300.0
$457.9

300.0
$380.7

300.0
$300.0

300.0
$300.0

300.0
$300.0

300.0
$300.0

370.0
$1,120.0

419.3
$1,125.5

475.3
$1,129.6

537.1
$1,131.7

603.9
$1,132.8

676.2
$1,134.0

754.7
$1,135.4

840.3
$1,140.3

932.8
$1,232.8

1,030.4
$1,330.4

1,133.1
$1,433.1

9.7%

21.3%

34.5%

49.1%

64.9%

82.1%

100.0%

100.0%

100.0%

100.0%

Shareholders' Equity
Total Capitalization
% of Bank Debt Repaid

Credit Statistics
% Debt / Total Capitalization

67.0%

62.7%

57.9%

52.5%

46.7%

40.4%

33.5%

26.3%

24.3%

22.6%

20.9%

EBITDA / Cash Interest Expense

(EBITDA - Capex) / Cash Interest Expense

2.5x
2.2x

2.8x
2.4x

3.1x
2.7x

3.4x
2.9x

3.7x
3.2x

4.2x
3.6x

4.9x
4.2x

5.9x
5.1x

6.8x
5.9x

7.0x
6.0x

7.2x
6.2x

EBITDA / Total Interest Expense

(EBITDA - Capex) / Total Interest Expense

2.4x
2.1x

2.7x
2.3x

2.9x
2.5x

3.2x
2.8x

3.6x
3.1x

4.0x
3.4x

4.6x
4.0x

5.6x
4.8x

6.5x
5.7x

6.7x
5.8x

6.9x
6.0x

Senior Secured Debt / EBITDA

Senior Debt / EBITDA
Total Debt / EBITDA
Net Debt / EBITDA

3.0x
3.0x
5.0x
5.0x

2.5x
2.5x
4.4x
4.4x

2.1x
2.1x
3.8x
3.8x

1.6x
1.6x
3.3x
3.3x

1.2x
1.2x
2.9x
2.9x

0.8x
0.8x
2.4x
2.4x

0.4x
0.4x
2.0x
2.0x

-x
-x
1.5x
1.5x

-x
-x
1.4x
1.0x

-x
-x
1.4x
0.5x

-x
-x
1.4x
0.1x

($ in millions, fiscal year ending December 31)

Income Statement
Historical Period
2005
$780.0
NA

2006
$850.0
9.0%

2007
$925.0
8.8%

Cost of Goods Sold

Gross Profit
% margin

471.9
$308.1
39.5%

512.1
$337.9
39.8%

555.0
$370.0
40.0%

586.7
$391.1
40.0%

600.0
$400.0
40.0%

648.0
$432.0
40.0%

686.9
$457.9
40.0%

714.4
$476.2
40.0%

735.8
$490.5
40.0%

757.9
$505.2
40.0%

Selling, General & Administrative

% sales

198.9
25.5%

214.6
25.3%

231.3
25.0%

244.4
25.0%

250.0
25.0%

270.0
25.0%

286.2
25.0%

297.6
25.0%

306.6
25.0%

Other Expense / (Income)

EBITDA
% margin

$109.2
14.0%

$123.3
14.5%

$138.8
15.0%

$146.7
15.0%

$150.0
15.0%

$162.0
15.0%

$171.7
15.0%

$178.6
15.0%

Depreciation & Amortization

EBIT
% margin

15.6
$93.6
12.0%

17.0
$106.3
12.5%

18.5
$120.3
13.0%

19.6
$127.1
13.0%

20.0
$130.0
13.0%

21.6
$140.4
13.0%

22.9
$148.8
13.0%

29.3
30.0
0.5
0.2
$59.9
2.5
$62.4

27.8
30.0
0.5
0.2
$58.5
2.5
$60.9

Interest Income
Net Interest Expense
Earnings Before Taxes
Income Tax Expense

Sales
% growth

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
Cash Interest Expense
Amortization of Deferred Financing Fees
Total Interest Expense

Pro forma
2008
$1,000.0
8.1%

Year 1
2009
$1,080.0
8.0%

Year 2
2010
$1,144.8
6.0%

Year 3
2011
$1,190.6
4.0%

Year 4
2012
$1,226.3
3.0%

Projection Period
Year 5
Year 6
2013
2014
$1,263.1
$1,301.0
3.0%
3.0%

LTM
9/30/2008
$977.8
NA

Net Income
% margin
Income Statement Assumptions
Sales (% YoY growth)
Cost of Goods Sold (% margin)
SG&A (% sales)
Other Expense / (Income) (% of sales)
Depreciation & Amortization (% of sales)
Amortization (% of sales)
Interest Income
Tax Rate

NA
60.5%
25.5%
-%
2.0%
-%

9.0%
60.3%
25.3%
-%
2.0%
-%

8.8%
60.0%
25.0%
-%
2.0%
-%

NA
60.0%
25.0%
-%
2.0%
-%

8.1%
60.0%
25.0%
-%
2.0%
-%
3.0%

Year 7
2015
$1,340.0
3.0%

Year 8
2016
$1,380.2
3.0%

Year 9
2017
$1,421.6
3.0%

Year 10
2018
$1,464.3
3.0%

780.6
$520.4
40.0%

804.0
$536.0
40.0%

828.1
$552.1
40.0%

853.0
$568.7
40.0%

878.6
$585.7
40.0%

315.8
25.0%

325.2
25.0%

335.0
25.0%

345.1
25.0%

355.4
25.0%

366.1
25.0%

$183.9
15.0%

$189.5
15.0%

$195.1
15.0%

$201.0
15.0%

$207.0
15.0%

$213.2
15.0%

$219.6
15.0%

23.8
$154.8
13.0%

24.5
$159.4
13.0%

25.3
$164.2
13.0%

26.0
$169.1
13.0%

26.8
$174.2
13.0%

27.6
$179.4
13.0%

28.4
$184.8
13.0%

29.3
$190.4
13.0%

25.3
30.0
0.5
0.2
$55.9
2.5
$58.4

22.1
30.0
0.5
0.2
$52.7
2.5
$55.2

18.6
30.0
0.5
0.2
$49.2
2.5
$51.7

14.5
30.0
0.5
0.2
$45.2
2.5
$47.6

9.4
30.0
0.5
0.2
$40.0
2.5
$42.5

3.3
30.0
0.5
0.2
$34.0
2.2
$36.2

30.0
0.5
0.2
$30.7
1.0
$31.7

30.0
0.5
0.2
$30.7
1.0
$31.7

30.0
0.5
0.2
$30.7
1.0
$31.7

$60.9

$58.4

$55.2

$51.7

$47.6

$42.5

(0.0)
$36.1

(1.4)
$30.2

(4.2)
$27.5

(7.1)
$24.6

79.5
30.2

90.4
34.4

99.6
37.9

107.7
40.9

116.6
44.3

126.7
48.1

138.1
52.5

149.2
56.7

157.3
59.8

165.8
63.0

$49.3
4.6%

$56.1
4.9%

$61.8
5.2%

$66.8
5.4%

$72.3
5.7%

$78.5
6.0%

$85.6
6.4%

$92.5
6.7%

$97.5
6.9%

$102.8
7.0%

8.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

6.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

4.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

3.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

3.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

3.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

3.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

3.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

3.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

3.0%
60.0%
25.0%
-%
2.0%
-%
3.0%
38.0%

($ in millions, fiscal year ending December 31)

Balance Sheet
Opening

Year 2

Year 3

Year 4

2008

2009

2010

2011

2012

Projection Period
Year 5
Year 6

Year 9

Year 10

196.4
148.8

202.3
153.3

208.4
157.9

214.7
162.6

10.0
$300.0

10.8
$324.0

11.4
$343.4

11.9
$357.2

12.3
$367.9

12.6
$378.9

13.0
$390.3

13.4
$405.2

13.8
$506.8

14.2
$613.6

14.6
$726.0

650.0
300.0
75.0
20.0

650.0
300.0
75.0
17.5

650.0
300.0
75.0
15.1

650.0
300.0
75.0
12.6

650.0
300.0
75.0
10.2

650.0
300.0
75.0
7.7

650.0
300.0
75.0
5.3

650.0
300.0
75.0
3.1

650.0
300.0
75.0
2.1

650.0
300.0
75.0
1.0

650.0
300.0
75.0
-

$1,225.0

$1,345.0

$1,366.5

$1,383.5

$1,394.8

$1,403.1

$1,411.7

$1,420.6

$1,433.3

$1,533.9

$1,639.7

$1,751.0

75.0
100.0

75.0
100.0

81.0
108.0

85.9
114.5

89.3
119.1

92.0
122.6

94.7
126.3

97.6
130.1

100.5
134.0

103.5
138.0

106.6
142.2

109.8
146.4

Other Current Liabilities

Total Current Liabilities

25.0
$200.0

25.0
$200.0

27.0
$216.0

28.6
$229.0

29.8
$238.1

30.7
$245.3

31.6
$252.6

32.5
$260.2

33.5
$268.0

34.5
$276.0

35.5
$284.3

36.6
$292.9

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

300.0
25.0
$525.0

450.0
300.0
25.0
$975.0

406.3
300.0
25.0
$947.3

354.2
300.0
25.0
$908.2

294.6
300.0
25.0
$857.7

228.9
300.0
25.0
$799.2

157.9
300.0
25.0
$735.5

80.7
300.0
25.0
$665.9

300.0
25.0
$593.0

300.0
25.0
$601.0

300.0
25.0
$609.3

300.0
25.0
$617.9

Noncontrolling Interest
Shareholders' Equity
Total Shareholders' Equity

700.0
$700.0

370.0
$370.0

419.3
$419.3

475.3
$475.3

537.1
$537.1

603.9
$603.9

676.2
$676.2

754.7
$754.7

840.3
$840.3

932.8
$932.8

1,030.4
$1,030.4

1,133.1
$1,133.1

Total Liabilities and Equity

$1,225.0

$1,345.0

$1,366.5

$1,383.5

$1,394.8

$1,403.1

$1,411.7

$1,420.6

$1,433.3

$1,533.9

$1,639.7

$1,751.0

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

Net Working Capital

(Increase) / Decrease in Net Working Capital

100.0

100.0

108.0
(8.0)

114.5
(6.5)

119.1
(4.6)

122.6
(3.6)

126.3
(3.7)

130.1
(3.8)

134.0
(3.9)

138.0
(4.0)

142.2
(4.1)

146.4
(4.3)

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

60.2
76.0

1.0%

1.0%

1.0%

1.0%

1.0%

1.0%

1.0%

1.0%

1.0%

1.0%

1.0%

1.0%

650.0
175.0
75.0
-

Total Assets
Accounts Payable
Accrued Liabilities

Balance Sheet Assumptions

Current Assets
Days Sales Outstanding (DSO)
Days Inventory Held (DIH)
Prepaid and Other Current Assets (% of sales)
Current Liabilities
Days Payable Outstanding (DPO)
Accrued Liabilities (% of sales)
Other Current Liabilities (% of sales)

125.0
20.0

450.0
(300.0)
300.0

370.0

(700.0)

2014

Year 8

188.9
143.1

Property, Plant and Equipment, net

Goodwill and Intangible Assets
Other Assets
Deferred Financing Fees

2013

Year 7

178.2
135.0

10.0
$325.0

(25.0)

Year 1

165.0
125.0

Prepaids and Other Current Assets

Total Current Assets

Pro Forma

2015
$3.2
221.1
167.5

Cash and Cash Equivalents

Accounts Receivable
Inventories

2008
$25.0
165.0
125.0

Adjustments

2016
$92.7
227.7
172.5

2017
$187.2
234.6
177.7

2018
$286.7
241.6
183.0

45.6

45.6

45.6

45.6

45.6

45.6

45.6

45.6

45.6

45.6

45.6

45.6

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

10.0%
2.5%

($ in millions, fiscal year ending December 31)

Cash Flow Statement

Year 1
2009
Operating Activities
Net Income
Plus: Depreciation & Amortization
Plus: Amortization of Financing Fees

Year 2
2010

Year 3
2011

Projection Period
Year 5
Year 6
2013
2014

Year 4
2012

Year 7
2015

Year 8
2016

Year 9
2017

Year 10
2018

$49.3
21.6
2.5

$56.1
22.9
2.5

$61.8
23.8
2.5

$66.8
24.5
2.5

$72.3
25.3
2.5

$78.5
26.0
2.5

$85.6
26.8
2.2

$92.5
27.6
1.0

$97.5
28.4
1.0

$102.8
29.3
1.0

(13.2)
(10.0)
(0.8)

(10.7)
(8.1)
(0.6)

(7.6)
(5.7)
(0.5)

(5.9)
(4.5)
(0.4)

(6.1)
(4.6)
(0.4)

(6.3)
(4.7)
(0.4)

(6.4)
(4.9)
(0.4)

(6.6)
(5.0)
(0.4)

(6.8)
(5.2)
(0.4)

(7.0)
(5.3)
(0.4)

6.0
8.0

4.9
6.5

3.4
4.6

2.7
3.6

2.8
3.7

2.8
3.8

2.9
3.9

3.0
4.0

3.1
4.1

3.2
4.3

2.0
(8.0)
$65.3

1.6
(6.5)
$74.9

1.1
(4.6)
$83.4

0.9
(3.6)
$90.2

0.9
(3.7)
$96.3

0.9
(3.8)
$103.2

1.0
(3.9)
$110.7

1.0
(4.0)
$117.1

1.0
(4.1)
$122.9

1.1
(4.3)
$128.8

Investing Activities
Capital Expenditures
Other Investing Activities
Cash Flow from Investing Activities

(21.6)
($21.6)

(22.9)
($22.9)

(23.8)
($23.8)

(24.5)
($24.5)

(25.3)
($25.3)

(26.0)
($26.0)

(26.8)
($26.8)

(27.6)
($27.6)

(28.4)
($28.4)

(29.3)
($29.3)

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

(43.7)
($43.7)

(52.0)
($52.0)

(59.6)
($59.6)

(65.7)
($65.7)

(71.1)
($71.1)

(77.2)
($77.2)

(80.7)
($80.7)

$3.2
$3.2

$89.5
3.2
$92.7

$94.4
92.7
$187.2

$99.6
187.2
$286.7

2.0%

2.0%

2.0%

2.0%

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

Excess Cash for the Period

Beginning Cash Balance
Ending Cash Balance
Cash Flow Statement Assumptions
Capital Expenditures (% of sales)

2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

($ in millions, fiscal year ending December 31)

Debt Schedule
Pro forma
2008
Forward LIBOR Curve

Year 1
2009

Year 3
2011

Projection Period
Year 5
Year 6
2013
2014

Year 4
2012

Year 7
2015

Year 8
2016

Year 9
2017

Year 10
2018

3.00%

3.15%

3.30%

3.60%

4.00%

4.35%

4.80%

4.85%

5.10%

5.25%

$65.3
(21.6)
$43.7
(4.5)

$74.9
(22.9)
$52.0
(4.5)

$83.4
(23.8)
$59.6
(4.5)

$90.2
(24.5)
$65.7
(4.5)

$96.3
(25.3)
$71.1
(4.5)

$103.2
(26.0)
$77.2
(4.5)

$110.7
(26.8)
$83.9
(4.5)

$117.1
(27.6)
$89.5
-

$122.9
(28.4)
$94.4
-

$128.8
(29.3)
$99.6
-

$39.2

$47.5

$55.1

$61.2

$66.6

$72.7

$79.4

3.2
$92.7

92.7
$187.2

187.2
$286.7

Beginning Balance

Drawdown/(Repayment)
Ending Balance

6.25%
0.5

6.40%
0.5

6.55%
0.5

6.85%
0.5

7.25%
0.5

7.60%
0.5

8.05%
0.5

8.10%
0.5

8.35%
0.5

8.50%
0.5

Cash Flow from Operating Activities

Cash Flow from Investing Activities
Cash Available for Debt Repayment
Total Mandatory Repayments
Cash From Balance Sheet
Cash Available for Optional Debt Repayment
Revolving Credit Facility
Revolving Credit Facility Size
Spread
Term
Commitment Fee on Unused Portion

3.00%

Year 2
2010

MinCash
-

$100.0
3.250%
6 years
0.50%

Interest Rate
Average Interest Expense
Commitment Fee
Term Loan B Facility
Size
Spread
Term
Repayment Schedule

$450.0
3.500%
7 years
1.0% Per Annum, Bullet at Maturity

Beginning Balance
Mandatory Repayments

$450.0
(4.5)

$406.3
(4.5)

$354.2
(4.5)

$294.6
(4.5)

$228.9
(4.5)

$157.9
(4.5)

$80.7
(4.5)

Optional Repayments
Ending Balance

(39.2)
$406.3

(47.5)
$354.2

(55.1)
$294.6

(61.2)
$228.9

(66.6)
$157.9

(72.7)
$80.7

(76.2)
-

Interest Rate
Interest Expense

6.50%
27.8

6.65%
25.3

6.80%
22.1

7.10%
18.6

7.50%
14.5

7.85%
9.4

8.30%
3.3

8.35%
-

8.60%
-

8.75%
-

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

$300.0
$300.0

30.0

30.0

30.0

30.0

30.0

30.0

30.0

30.0

30.0

30.0

Senior Subordinated Notes

Size
Coupon
Term
Beginning Balance
Repayment
Ending Balance
Interest Expense

$300.0
10.000%
10 years

($ in millions, fiscal year ending December 31)

Returns Analysis

Entry EBITDA Multiple

Initial Equity Investment
EBITDA
Exit EBITDA Multiple
Enterprise Value at Exit

Pro forma

Year 1

Year 2

Year 3

Year 4

2008

2009

2010

2011

2012

2014

Year 7

Year 8

Year 9

Year 10

2015

2016

2017

2018

$385.0
$162.0

$171.7

$178.6

$183.9

$189.5

$195.1

$201.0

$207.0

$213.2

$219.6

$1,215.0

$1,287.9

$1,339.4

$1,379.6

$1,421.0

$1,463.6

$1,507.5

$1,552.8

$1,599.3

$1,647.3

406.3
300.0
$706.3
$706.3

354.2
300.0
$654.2
$654.2

294.6
300.0
$594.6
$594.6

228.9
300.0
$528.9
$528.9

157.9
300.0
$457.9
$457.9

80.7
300.0
$380.7
$380.7

300.0
$300.0
3.2
$296.8

300.0
$300.0
92.7
$207.3

300.0
$300.0
187.2
$112.8

300.0
$300.0
286.7
$13.3

$508.7

$633.7

$744.8

$850.7

$963.1

$1,083.0

$1,210.7

$1,345.5

$1,486.5

$1,634.0

2.8x

3.1x

3.5x

3.9x

4.2x

7.5x

Equity Value at Exit

Cash Return

1.3x
Year 1
2009
($385.0)
$508.7

Initial Equity Investment

Equity Proceeds

IRR

Entry
Multiple

2013

7.5x

Less: Net Debt

Revolving Credit Facility
Term Loan A
Term Loan B
Term Loan C
Existing Term Loan
2nd Lien
Senior Notes
Senior Subordinated Notes
Other Debt
Total Debt
Less: Cash and Cash Equivalents
Net Debt

32.1%

20.1%
6.5x
7.0x
7.5x
8.0x
8.5x

Projection Period
Year 5
Year 6

6.5x
26.6%
19.9%
15.0%
11.0%
7.8%

IRR - Assuming Exit in 2013E

Exit Multiple
7.0x
7.5x
29.5%
32.2%
22.7%
25.3%
17.7%
20.1%
13.6%
16.0%
10.3%
12.6%

8.0x
34.7%
27.7%
22.4%
18.2%
14.8%

1.6x
Year 2
2010
($385.0)
$633.7

28.3%

8.5x
37.1%
29.9%
24.5%
20.3%
16.7%

1.9x
Year 3
2011
($385.0)
$744.8

24.6%

2.2x
Year 4
2012
($385.0)
$850.7

21.9%

Exit
Multiple

2.5x
Year 5
2013
($385.0)
$963.1

20.1%

6.5x
7.0x
7.5x
8.0x
8.5x

Year 6
2014
($385.0)
$1,083.0

18.8%

2011
13.7%
19.4%
24.6%
29.4%
33.9%

Year 7
2015
($385.0)
$1,210.7

17.8%

Year 8
2016
($385.0)
$1,345.5

16.9%

IRR - Assuming 7.5x Entry Multiple

Exit Year
2012
2013
14.7%
15.0%
18.5%
17.7%
21.9%
20.1%
25.1%
22.4%
28.0%
24.5%

Year 9
2017
($385.0)
$1,486.5
16.2%

2014
14.9%
17.0%
18.8%
20.5%
22.1%

Year 10
2018
($385.0)
$1,634.0
15.6%

2015
14.8%
16.3%
17.8%
19.1%
20.4%

Assumptions Page 1 - Income Statement and Cash Flow Statement

Year 1
2009

Year 2
2010

Year 3
2011

Year 4
2012

Projection Period
Year 5
Year 6
2013
2014

Year 7
2015

Year 8
2016

Year 9
2017

Year 10
2018

Income Statement Assumptions

Sales (% growth)
Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

8.0%
8.0%
10.0%
12.0%
5.0%
2.0%

6.0%
6.0%
8.0%
10.0%
4.0%
2.0%

4.0%
4.0%
6.0%
8.0%
3.0%
2.0%

3.0%
3.0%
4.0%
6.0%
3.0%
2.0%

3.0%
3.0%
3.0%
4.0%
3.0%
2.0%

3.0%
3.0%
3.0%
4.0%
3.0%
2.0%

3.0%
3.0%
3.0%
4.0%
3.0%
2.0%

3.0%
3.0%
3.0%
4.0%
3.0%
2.0%

3.0%
3.0%
3.0%
4.0%
3.0%
2.0%

3.0%
3.0%
3.0%
4.0%
3.0%
2.0%

Cost of Goods Sold (% sales)

Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

60.0%
60.0%
60.0%
59.0%
61.0%
62.0%

SG&A (% sales)
Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

25.0%
25.0%
25.0%
24.0%
26.0%
27.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

25.0%
25.0%
25.0%
24.0%
25.0%
26.0%

Depreciation & Amortization (% sales)

Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

Interest Income
Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

3.0%
3.0%
3.0%
3.0%
3.0%
3.0%

Cash Flow Statement Assumptions

Capital Expenditures (% sales)
Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

2.0%
2.0%
2.0%
2.0%
2.5%
2.5%

Assumptions Page 2 - Balance Sheet

Year 1
2009

Year 2
2010

Year 3
2011

Year 4
2012

Projection Period
Year 5
Year 6
2013
2014

Year 7
2015

Year 8
2016

Year 9
2017

Year 10
2018

Current Assets
Days Sales Outstanding (DSO)
Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

60.2
60.2
60.2
65.0
59.0
57.7

Days Inventory Held (DIH)

Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

76.0
76.0
76.0
76.0
80.0
82.0

Prepaids and Other Current Assets (% sales)

Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

1.0%
1.0%
1.0%
1.0%
1.0%
1.0%

Current Liabilities
Days Payable Outstanding (DPO)
Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

45.6
45.6
45.6
47.0
42.5
40.0

Accrued Liabilities (% sales)

Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

10.0%
10.0%
10.0%
10.0%
10.0%
10.0%

Other Current Liabilities (% sales)

Base
Sponsor
Management
Downside 1
Downside 2

1
2
3
4
5

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

2.5%
2.5%
2.5%
2.5%
2.5%
2.5%

($ in millions)

Assumptions Page 3 - Financing Structures and Fees

Financing Structures

Sources of Funds
Revolving Credit Facility Size
Revolving Credit Facility Draw
Term Loan A
Term Loan B
Term Loan C
2nd Lien

Purchase Price
1
Structure 1

Structure
3
Structure 3

2
Structure 2

Public / Private Target

4
Structure 4

5
Status Quo

Entry EBITDA Multiple

7.5x

$100.0
450.0
-

$100.0
125.0
350.0
-

$100.0
25.0
350.0
-

$100.0
425.0
-

LTM 9/30/2008 EBITDA

Enterprise Value
Less: Total Debt
Less: Preferred Securities
Less: Noncontrolling Interest

(300.0)
-

Senior Notes
Senior Subordinated Notes

300.0

300.0

150.0
250.0

325.0

Plus: Cash and Cash Equivalents

Equity Purchase Price

25.0
$825.0

Equity Contribution
Rollover Equity

385.0
-

360.0
-

385.0
-

410.0
-

25.0
-

25.0
-

Calculation of Fully Diluted Shares Outstanding

Offer Price per Share

$16.50

$1,160.0

$1,160.0

Basic Shares Outstanding

Plus: Shares from In-the-Money Options

50.000
-

Cash on Hand
Total Sources of Funds

$1,160.0

20.0
-

$1,160.0

$20.0

Uses of Funds
Equity Purchase Price
Repay Existing Bank Debt

$825.0
300.0

$825.0
300.0

$825.0
300.0

$825.0
300.0

Tender / Call Premiums

Financing Fees
Other Fees and Expenses
-

20.0
15.0
-

20.0
15.0
-

20.0
15.0
-

20.0
15.0
-

Total Uses of Funds

$1,160.0

$1,160.0

$1,160.0

Less: Shares Repurchased

Net New Shares from Options

20.0
-

$1,160.0

Revolving Credit Facility Size

Term Loan A
Term Loan B
Term Loan C
2nd Lien
Senior Notes
Senior Subordinated Notes
Senior Bridge Facility
Senior Subordinated Bridge Facility

(%)
$100.0
450.0
300.0
300.0

Tranche
Tranche 1
Tranche 2
Tranche 3

$1.8
7.9
6.8
3.0

Other Financing Fees & Expenses

Total Financing Fees

Number of

Exercise

Shares

Price

Tranche 4
Tranche 5
Total

($)
1.750%
1.750%
1.750%
2.250%
2.250%
1.000%
1.000%

50.000

Options/Warrants

$20.0

Fees
Size

Plus: Shares from Convertible Securities

Fully Diluted Shares Outstanding

Financing Fees
Structure 1

146.7
$1,100.0

In-the-Money
Shares

Proceeds

Convertible Securities
Conversion
Price

Amount

0.6
$20.0

Conversion
Ratio

New
Shares

Issue 1
Issue 2
Issue 3
Issue 4

Issue 5
Total

Amortization of Financing Fees

Term

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

2009

2010

2011

2012

2013

2014

2015

2016

2017

Year 10
2018

Revolving Credit Facility Size

Term Loan A
Term Loan B
Term Loan C
2nd Lien
Senior Notes
Senior Subordinated Notes
Senior Bridge Facility
Senior Subordinated Bridge Facility

6
7
10
10

$0.3
1.1
0.7
0.3

$0.3
1.1
0.7
0.3

$0.3
1.1
0.7
0.3

$0.3
1.1
0.7
0.3

$0.3
1.1
0.7
0.3

$0.3
1.1
0.7
0.3

1.1
0.7
0.3

0.7
0.3

0.7
0.3

0.7
0.3

Other Financing Fees & Expenses

Annual Amortization

10

0.1
$2.5

0.1
$2.5

0.1
$2.5

0.1
$2.5

0.1
$2.5

0.1
$2.5

0.1
$2.2

0.1
$1.0

0.1
$1.0

0.1
$1.0

0.2

0.2

0.2

0.2

0.2

0.2

0.2

0.2

0.2

0.2

Administrative Agent Fee

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