Is there a good rationale for raising $30 to $60 million at the time of the case What do you estimate the companys value (total and per share) to be as of March 2007 This does not mean looking back and reading from history It means estimating value as we have done before projected net cash flows have to be appropriately discounted Estimate the discount rate The resultant estimated company value can be checked using market multiples of comparable companies Consider the debt vs equity discussion How much value would be created if $50 million debt were to be added Would the Weighted Average Cost of Capital change How What would EPS be under the two alternatives at a low future EBITDA At a high future EBITDA Is debt or equity preferable What is the condition of the equity markets Is an IPO at the time of the case a good bet Which party benefits from the sale Recommend a course of action to Mr McDonald LULULEMON ATHLETICA STORE NETWORK IN JANUARY 2007 Canada British Columbia Ontario Alberta Quebec Manitoba Saskatchewan Total Canada United States California Colorado Illinois Massachusetts New York Oregon Virginia Washington Total United States International Japan Australia Total International Total stores Corporate Stores 9 14 7 4 1 35 8 ' 2 1 14 3 3 52 Franchise Stores 2 1 3 1 1 3 1 1 7

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Is there a good rationale for raising $30 to $60 million at the time of the case? What do you estimate the companys value (total

Is there a good rationale for raising $30 to $60 million at the time of the case?
What do you estimate the company’s value (total and per share) to be as of March 2007? This does not mean looking back and reading from history. It means estimating value as we have done before – projected net cash flows have to be appropriately discounted. Estimate the discount rate. The resultant estimated company value can be checked using market multiples of comparable companies.
Consider the debt vs. equity discussion.

How much value would be created if $50 million debt were to be added?
Would the Weighted Average Cost of Capital change? How?
What would EPS be under the two alternatives at a low future EBITDA? At a high future EBITDA?
Is debt or equity preferable?

What is the condition of the equity markets? Is an IPO at the time of the case a good bet? Which party benefits from the sale?
Recommend a course of action to Mr. McDonald

HISTORICAL INCOME STATEMENTS FOR YEARS ENDED JANUARY 31 (In thousands, except for per share amounts) 2007 148,885 72,903 75,9 HISTORICAL BALANCE SHEETS AS OF JANUARY 31 2007 2006 Assets Current assets Cash & cash equivalents Accounts receivable Invent PROFIT AND CASH FLOW FORECAST BY FEDERAL (In $000s) 2008 260,548 75.0% 2009 364,768 40.0% 2010 455,960 25.0% 2011 569,950 25. Exhibit 5 FEDERALS ESTIMATES FOR LULULEMONS CURRENT SHAREHOLDINGS Dennis (Chip) Wilson Advent International Corporation Hig DATA ON SELECTED COMPARATORS VF Corp Polo Ralph Lauren Hanesbrands 01-Apr 01-Jul $ 3,746,300 $ 4,472,832 $ 82.05 $ 25.58 Lulu Exhibit 8 SELECTED MARKET INFORMATION, FEBRUARY 28, 2007 U.S. Treasuries 1 month 3 month 6 month 1 year 2 year 3 year 5 year INTRODUCTION It was late March 2007, and Richard McDonald, a managing director at Federal Securities (Federal), was briefing designing stylish clothing from technical fabrics that could repel rain, allow perspiration vapour to escape, and wick moistu (see Exhibit 1). Lululemon garments were also made available at wholesale prices to retailers in non- competing territories. However, serious competition could come from large companies such as Nike, Polo Ralph Lauren, Hanesbrands or VF Corp. Nike wa In media articles, Lululemon management had indicated that it would open 25 more stores in 2007 and another 30 to 35 stores i expense management. In a pessimistic scenario, the Federal team felt that selling and administration expenses could rise back had no long-term debt, aside from capitalized leases, and its profit record could support a higher leverage ratio. If Lululem

LULULEMON ATHLETICA STORE NETWORK IN JANUARY 2007 Canada British Columbia Ontario Alberta Quebec Manitoba Saskatchewan Total Canada United States California Colorado Illinois Massachusetts New York Oregon Virginia Washington Total United States International Japan Australia Total International Total stores Corporate Stores 9 14 7 4 1 - 35 8 ' 2 1 - 14 3 3 52 Franchise Stores 2 1 3 1 ||||| 1 3 1 1 7

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