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
Copyright 2009 by Joshua Rosenbaum and Joshua Pearl. All rights reserved.
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