Questions!!!!!!!!! 1) What are your thoughts about ATL Cantial's valuation of Chino - as a stand-alone company - as in a sale to another third party Would your answer differ today versus a year from now? Please use standard valuation approaches, market multiples, comparable transactions, discount cash flows, any other relevant metrics to determine "value". 2) If we are to pursue a sale, how would you recommend pursing that process? Speak to ATL Capital or broaden our process to include others? Why? 3) What are our alternatives to selling the business? Can we just ignore the bid? What else could we do? 4) How can we structure a proposal that is best for the Company, satifies the Martinez family AND placate shareholders? To: Investment Bankers LLC From: John Doe, Board Member of Chino's Subject: Project Endeavor Dear Investment Bankers LLC: As a board member at Chino's, I'm reaching out to you and several of your competitors for assistance in helping us respond to an unwanted takeover advance. As background, Chino's is a publicly traded men's casual retailer. Our stock price has been languishing for some time (trading at $12 per share until last week) even though our operating performance and balance sheet has been strong. Last Friday, ATL Capital, a private cquity fund with a potentially complementary portfolio company (Good Guy Suits), bid $20 per share for our company, or around $200 mm (we have approximately 10 million shares outstanding). Note that we estimate our costs of being public costs are approximately $3 mm. We also understand that ATL believes there are other cost-saving synergies of up to $2 mm but we are skeptical there could be that much as our management tells the board that they run a pretty lean ship. In 2013, we generated EBITDA of around $30 mm on revenues of approximately $500 mm. We have approximately $20 mm of cash on our balance sheet and $50 mm of debt. (As is typical, ATL's bid contemplated assuming the outstanding nct debt.) We started a small dividend program a year ago when a couple of our large institutional shareholders approached us and told us that they were unhappy with our stock price performance and that -- if they couldn't have strong price growth -- the least we could do was to return some capital to investors. Our latest quarterly dividend was $0.03 per share, for an annual yield of approximately 1%. One of your competitors for this investment banking assignment is our existing senior lender -- United American Bank. We understand from UAB that we could borrow as much as $120 mm in a refinancing / recapitalization transaction but we are somewhat skeptical as we know that UA1 is in "pitch mode" so they could be exaggerating our leverage capacity: $120 mm is our entire current market cap! As you may remember, we have been approached by a handful of other potential strategic and private cquity funds in the past about a sale or going-private transaction. While our peers currently trade at over 8x EV / EBITDA, we understand that some of our competitors have been sold for around 7.5x EV / EBITDA. We know that our comparable companies and comparable companies are much larger, growing faster and have higher margins but we feel we're every bit as good as they are. Our CEO Juantia Martinez has been adamant about remaining public: she took the company public, rang the bell on the NYSE and swore that her legacy would be intact only if she retired as the CEO of a publicly traded company with the Company "in good hands". On that note, Juantia will turn 64 this Junc. While she has publicly stated that she would adhere to the Company's retirement policy, privately, she told one of my fellow board members that she would like the board to consider amending the retirement policy for her to remain in place. The board has mixed cmotions about this as we all believe that she was instrumental in building Chino's into the terrific company that it is but that we could probably benefit from some more forward-thinking (frankly, younger) leadership. On that note, Juantia has told the board that she believes the most qualified candidate to succeed her is her 30-year old son Max (our COO) but the board is far from convinced that Max is the right person for the Company. The Company recently entered into a new partnership (spearheaded by Max): this Spring, we are introducing a new line of leather jogging shorts designed by South East (yes, the legendary rapper who is also a very creative fashion designer). Max believes that this introduction should help not only raise our brand awareness but should help increase customer traffic and margins. Juantia and Max believe that our EBITDA could climb to as much as $35 mm in 2014 based on the recovering economy and the introduction of the South East line. James Fronter, our CFO, is very concerned about this forecast and he has (quietly) cautioned analysts that Juantia and Max could not only be wrong about growth but that EBITDA could slip to as little as $25 mm if the re-branding effort turns off our existing customers and/or doesn't attract enough customers. Another idea of Max's is to acquire a smaller chain of shoe stores based in Canada called "Boots Electric" as he believes that there could be terrific growth up there. He has not provided us with much detail on Boots Electric at this point other than to say that "they generate around $10 million of EBITDA with some meaningful adjustments that are very defensible". Max believes Boots Electric would sell to us at a bargain for, like, 5x EBITDA". We are looking to hire an investment bank (along with our outside counsel) to assist us in evaluating and potentially executing on one or more alternatives. Information Provided We have included financial and other data for Chino's and companies that we have preliminarily identified as comparable to our client to assist you in your evaluation (though we are not entirely sure which of the comparable companies are and are not appropriate to use as a comparison to Chino's). Please see the attachment to this memo Additional Information for an index of the data provided. S in thousands, December fiscal year Sales $ $ S $ S S S % chage COGS Gross Profit % of Sales Personnel Expenses Depreciation and Amortization Other Operating Expenses Total Operationg Expenses % of Sales Operating Income % of Sales Interest Expenses (income) Income before Tax % of Sales Income Tax Expense Net Income % of Sales 2011 Actual 635.759 $ N/A 501,453 S 134,306 S 21.1% 68,349 $ 14,578 $ 23,874 $ 106,801 $ 16.8% 27,505 S 4.3% 3,863.00 $ 23,642 S 3.7% 9,457.00 $ 14,185 $ 2.2% Consolidated Income Statement 2012 2013 2014 2015 2016 2017 2018 Actual Estimated Projected Projected Projected Projected Projected 585,223 $ 558,354 S 586,272 S 621,448 S 658,735 $ 698,259 $ 726.189 -7.9% -4.6% 5.0% 6.0% 6.0% 6.0% 4.0% 474,984 $ 448,852 $ 470,259 488,701 S 508,813 S 540,547 S 561,892 110,239 S 109,502 S 116,013 $ 132,747 S 149,922 $ 157,712 S 164,297 18.8% 19.6% 19.8% 21.4% 22.8% 22.6% 22.6% 59,642 S 58,770 S 57,428 $ 61,434 $ 69,095 $ 72,545 72,196 16,389 $ 15,865 $ 12,320 S 10,989 S 8,052 $ 9,055 S 9,062 23,619 5 21.218 S 23,245 $ 26,347 S 27,418 $ 24,446 S 30.648 99,650 S 95,853 $ 92,993 $ 98,770 $ 104,565 S 106,046 5 111,906 17.0% 17.2% 15.9% 15.9% 15.9% 15.2% 15.4% 10,589 S 13,649 $ 23,020 S 33,977 S 45,357 S 51,666 S 52,391 1.8% 2.4% 3.9% 5.5% 6.9% 7.4% 7.2% 3,687.00 $ 3,348.00 $ 3,071.00 $ 2,544.00 $ 2.615.00 $ 2,555.00 $ 2,489.00 6,902 $ 10,301 $ 19,949 $ 31,433 $ 42,742 S 49,111 S 49,902 1.2% 1.8% 3.4% 5.1% 6.5% 7.0% 6.9% 2,761.00 S 4.120.00 S 7.980.00 $ 12,573.00 $ 17,097.00 $ 19.644.00 $ 19.961.00 4,141 6,181 $ 11,969 $ 18,860 $ 25,645 S 29,467 S 29,941 0.7% 1.1% 2.0% 3.0% 3.9% 4.2% 4.1% S S $ S $ Capital Expenditures Stock Based Compensation S S 4,212 $ 2,174 $ 4,390 2,425 $ 4,664 S 1,855 S 4,883 $ 1,928 S 5,044 $ 2,001 S 5.185 S 2,074 S 5,346 S 2,147 $ 5,513 2,200 2012 Actual 2013 Estimated Consolidated Balance Sheet (S in thousands, December fiscal year) 2011 Actual Assets Cash and cash equivalents S 5,246 S AR S 22,225 S Inventories S 22,953 S Other current Assets S 12,384 S Total current Assets S 62,808 $ PP&E, net S 14,230 S Goodwill S 11,934 S Other Assets S 4,011 S Total long-term Assets S 30,175 S Total Assets S 92,983 S 8,520 S 24,934 $ 26,579S 12,758 S 72,791 S 13,994 S 11.934 S 4,038 S 29,966 $ 102,757 S 19.812 28,269 32,584 12,981 93,646 13,360 11,934 4,124 29,418 123,064 Liabilities and stockholder's equity Short-term Debt and Current Maturities of Long-term Debt Accounts Payable and Accrued Expenses Other Current Liabilities Total Current Liabilities Long-term Debt Other long-term Liabilities Total long-term liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity $ S S S $ S 10,445 $ 18,934 S 2,581 S 31,960 $ 48,471 $ 3,132 S 51,603 $ 9,419 $ 92,982 S 7,378 $ 20,761 S 11,099 $ 39,238 $ 45,609 S 1,156 $ 46,765 S 16,754 S 102,757 S 7,622 26,742 11,520 45,884 42,922 2,399 45,321 31,859 123,064 $ S $ Company Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Company 8 Company 9 Comparable Companies (figures in millions except per share amount) Stock Shares Debt Cash Price Outstandin 33.58 104.5 1291.1 627.7 58.3 30.2 373.6 3543 2.79 38.8 124.5 15.5 58.99 132.4 450.8 1166.2 31.08 149 84 800 44.12 46.5 291.3 24.9 23.8 65.8 265.8 159.6 8.51 29.7 7.8 10 47.18 76.4 2085.4 248.8 Minority Interest 56.6 14.7 13.8 42.5 0.2 0.1 0.9 0.3 140.2 LTM Operating Indicators LTM Margins 2-Year Annual Growth Rate NFY Operating (figures in millions) Indicators Gross Net Revenue Gross Net Net Company Profit EBITDA EBIT Adjusted Adjusted Income Profit Adjusted Adjusted Incom Revenue Incom Revenue EBITDA Company 1 $ 8,185.00 433.4 $493.10 $ 383.10 $ 212.10 5.3% 6.0% 4.7% 2.6% 9.30% 6.70% 6.90% -5.70% $ 8,335.00 $ 502.70 Company 2 $ 6,206.40 1159 $ 254.30 $ 175.20 S 102.20 18.7% 4.1% 2.8% 1.6% 6.60% 2.80% -1.10% 3.40% S 6,207.50 S 292.40 Company 3 S 441.00 187.1 $ 27.00 $ 15.40 $ (4.10) 42.4% 6.1% 3.39 -0.9% 4.50% -20.60% -46.00% NMF $ 511.00 $ 43.10 Company 4 S 11,153.90 1780.4 S 751.60 S 653.60 $ 409.20 16.0% 6.7% 5.9% 3.7% 4.70% 11.90% 12.20% 18.10% $ 12,087.00 S 795.80 Company 5 $ 7,713.00 695 $ 528.00 $ 465.00 $ 217.60 9.0% 6.8% 6.0% 2.8% -11.40% -13.00% -14.70% -16.00 S 7,852.00 S 667.80 Company 6 $ 1,566.00 858.7 $ 224.80 $ 176.40 $ 121.00 54.8% 14.4% 11.3% 7.7% 12.70% 11.20% 12.80% 15.00% $ 1,799.30 $ 240.90 Company 7 $ 2,071.30 359.6 $ 215.50 $ 158.40 $ 101.00 17.4% 10.4% 7.6% 4.9% 15.10% 13.30% 10.10% 11.20% $ 2,074.10 $ 229.10 Company 8 $ 312.80 51.9 $ 21.50 $ 15.10 $ 15.50 16.6% 6.9% 4.8% 5.0% 14.80% 20.20% NMF NMF $ 332.50 $ 23.30 Company 9 $ 11,413.50 670.9 $ 951.50 $ 687.60 $ 309.10 5.9% 8.3% 6.0% 2.7% 9.30% 15.60% 11.30% 3.10% S 11,718.00 $ 889.90 Low $ 312.80 $ 51.90 $ 21.50 S 15.10! S (4.10) 5.3% 4.1% 2.8% -0.9% -11% -21% -46% -16% S 332.50 S 23.30 High $ 11,413.50 $ 1,780.40 S 951.50 S 687.60 S $ 409.20 54.8% 14.49 11.3% 7.7% 15% 20% 13% 18% S 12,087.00 S 889.90 Median $ 6,206.40 $ 670.90 $ 254.30 $ 176.40 12100.00% 16.6% 6.8% 5.9% 2.8% 9% 11% 9% 3% $ 6,207.50 $ 292.40 Mean $5,451.43 $ 688.44 S 385.26 S 303.31 16484.44% 20.7% 7.8% 5.8% % 3.3% 7% 7 5% -1% 49 $ 5,657.38 S 409.44 Weighted Average Cost of Capital (WACC) Comparable Company Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Company 8 Company 9 Median Mean Debt to Preffered Preffered Total Equity Market Equity Debt to Total Debt Stock to Total Value to Total Equity Market Stock Market Value Capitalization Capitalization Value Capitalization Capitalization $ 1.291.10 OS 3.508.50 S 4.799.60 36.80% 26.90% 0.00% 73.10% S 373.60 OS 1,762.50 2,136.10 21.20% 17.49% 0.00% 82.51% S 124.50 OS 108.20 $ 232.70 115.06% 53.50% 0.00% 46.50% $ 450.80 OS 7,812.10 S 8,262.90 5.77% 5.46% 0.00% 94.54% S 84.00 OS 4,779.70 $ 4,863.70 1.76% 1.73% 0.00% 98.27% S 291.30 OS 2.050.60 $ 2,341.90 14.21% 12.44% 0.00% 87.56% $ 265.80 0 $ 1.567.20 S 1,833.00 16.96% 14.50% 0.00% 85.50% S 7.80 OS 252.60 $ 260.40 3.09% 3.00% 0.00% 97.00% $ 2,085.40 OS 3,604.50 S 5,689.90 57.86% 36.65% 0.00% 63.35% S 291.30 S S 2,050.60 $ 2,341.90 16.96% 14.50% 0.00% 85.50% S 552.70 S S 2,827.32 $ 3,380.02 30.30% 19.07% 0.00% 80.93% Comparable Leveraged Unleveraged Company Beta Beta Equity Risk Premium Size Premium Cost of Equity Cost of Debt WACC 1.37 1.58 2.20 Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Company 8 Company 9 Median Mean 1.12 1.21 1.29 1.33 1.77 0.92 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 1.38 1.79 1.00 1.17 2.27 1.36 1.38 1.57 1.14% 1.72% 6.03% 0.76% 0.92% 1.70% 1.72% 6.03% 1.14% 12.30% 14.10% 22.00% 12.00% 14.50% 10.70% 11.80% 22.40% 12.30% 12.30% 14.68% 2.50% 1.90% 7.50% 1.20% 4.10% 3.40% 2.00% 3.80% 3.80% 3.40% 3.36% Cost of Preffered Stock 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 9.40% 11.80% 12.70% 11.40% 14.30% 9.70% 10.20% 21.80% 8.60% 11.40% 12.21% 1.06 2.22 1.01 1.21 1.33 Questions!!!!!!!!! 1) What are your thoughts about ATL Cantial's valuation of Chino - as a stand-alone company - as in a sale to another third party Would your answer differ today versus a year from now? Please use standard valuation approaches, market multiples, comparable transactions, discount cash flows, any other relevant metrics to determine "value". 2) If we are to pursue a sale, how would you recommend pursing that process? Speak to ATL Capital or broaden our process to include others? Why? 3) What are our alternatives to selling the business? Can we just ignore the bid? What else could we do? 4) How can we structure a proposal that is best for the Company, satifies the Martinez family AND placate shareholders? To: Investment Bankers LLC From: John Doe, Board Member of Chino's Subject: Project Endeavor Dear Investment Bankers LLC: As a board member at Chino's, I'm reaching out to you and several of your competitors for assistance in helping us respond to an unwanted takeover advance. As background, Chino's is a publicly traded men's casual retailer. Our stock price has been languishing for some time (trading at $12 per share until last week) even though our operating performance and balance sheet has been strong. Last Friday, ATL Capital, a private cquity fund with a potentially complementary portfolio company (Good Guy Suits), bid $20 per share for our company, or around $200 mm (we have approximately 10 million shares outstanding). Note that we estimate our costs of being public costs are approximately $3 mm. We also understand that ATL believes there are other cost-saving synergies of up to $2 mm but we are skeptical there could be that much as our management tells the board that they run a pretty lean ship. In 2013, we generated EBITDA of around $30 mm on revenues of approximately $500 mm. We have approximately $20 mm of cash on our balance sheet and $50 mm of debt. (As is typical, ATL's bid contemplated assuming the outstanding nct debt.) We started a small dividend program a year ago when a couple of our large institutional shareholders approached us and told us that they were unhappy with our stock price performance and that -- if they couldn't have strong price growth -- the least we could do was to return some capital to investors. Our latest quarterly dividend was $0.03 per share, for an annual yield of approximately 1%. One of your competitors for this investment banking assignment is our existing senior lender -- United American Bank. We understand from UAB that we could borrow as much as $120 mm in a refinancing / recapitalization transaction but we are somewhat skeptical as we know that UA1 is in "pitch mode" so they could be exaggerating our leverage capacity: $120 mm is our entire current market cap! As you may remember, we have been approached by a handful of other potential strategic and private cquity funds in the past about a sale or going-private transaction. While our peers currently trade at over 8x EV / EBITDA, we understand that some of our competitors have been sold for around 7.5x EV / EBITDA. We know that our comparable companies and comparable companies are much larger, growing faster and have higher margins but we feel we're every bit as good as they are. Our CEO Juantia Martinez has been adamant about remaining public: she took the company public, rang the bell on the NYSE and swore that her legacy would be intact only if she retired as the CEO of a publicly traded company with the Company "in good hands". On that note, Juantia will turn 64 this Junc. While she has publicly stated that she would adhere to the Company's retirement policy, privately, she told one of my fellow board members that she would like the board to consider amending the retirement policy for her to remain in place. The board has mixed cmotions about this as we all believe that she was instrumental in building Chino's into the terrific company that it is but that we could probably benefit from some more forward-thinking (frankly, younger) leadership. On that note, Juantia has told the board that she believes the most qualified candidate to succeed her is her 30-year old son Max (our COO) but the board is far from convinced that Max is the right person for the Company. The Company recently entered into a new partnership (spearheaded by Max): this Spring, we are introducing a new line of leather jogging shorts designed by South East (yes, the legendary rapper who is also a very creative fashion designer). Max believes that this introduction should help not only raise our brand awareness but should help increase customer traffic and margins. Juantia and Max believe that our EBITDA could climb to as much as $35 mm in 2014 based on the recovering economy and the introduction of the South East line. James Fronter, our CFO, is very concerned about this forecast and he has (quietly) cautioned analysts that Juantia and Max could not only be wrong about growth but that EBITDA could slip to as little as $25 mm if the re-branding effort turns off our existing customers and/or doesn't attract enough customers. Another idea of Max's is to acquire a smaller chain of shoe stores based in Canada called "Boots Electric" as he believes that there could be terrific growth up there. He has not provided us with much detail on Boots Electric at this point other than to say that "they generate around $10 million of EBITDA with some meaningful adjustments that are very defensible". Max believes Boots Electric would sell to us at a bargain for, like, 5x EBITDA". We are looking to hire an investment bank (along with our outside counsel) to assist us in evaluating and potentially executing on one or more alternatives. Information Provided We have included financial and other data for Chino's and companies that we have preliminarily identified as comparable to our client to assist you in your evaluation (though we are not entirely sure which of the comparable companies are and are not appropriate to use as a comparison to Chino's). Please see the attachment to this memo Additional Information for an index of the data provided. S in thousands, December fiscal year Sales $ $ S $ S S S % chage COGS Gross Profit % of Sales Personnel Expenses Depreciation and Amortization Other Operating Expenses Total Operationg Expenses % of Sales Operating Income % of Sales Interest Expenses (income) Income before Tax % of Sales Income Tax Expense Net Income % of Sales 2011 Actual 635.759 $ N/A 501,453 S 134,306 S 21.1% 68,349 $ 14,578 $ 23,874 $ 106,801 $ 16.8% 27,505 S 4.3% 3,863.00 $ 23,642 S 3.7% 9,457.00 $ 14,185 $ 2.2% Consolidated Income Statement 2012 2013 2014 2015 2016 2017 2018 Actual Estimated Projected Projected Projected Projected Projected 585,223 $ 558,354 S 586,272 S 621,448 S 658,735 $ 698,259 $ 726.189 -7.9% -4.6% 5.0% 6.0% 6.0% 6.0% 4.0% 474,984 $ 448,852 $ 470,259 488,701 S 508,813 S 540,547 S 561,892 110,239 S 109,502 S 116,013 $ 132,747 S 149,922 $ 157,712 S 164,297 18.8% 19.6% 19.8% 21.4% 22.8% 22.6% 22.6% 59,642 S 58,770 S 57,428 $ 61,434 $ 69,095 $ 72,545 72,196 16,389 $ 15,865 $ 12,320 S 10,989 S 8,052 $ 9,055 S 9,062 23,619 5 21.218 S 23,245 $ 26,347 S 27,418 $ 24,446 S 30.648 99,650 S 95,853 $ 92,993 $ 98,770 $ 104,565 S 106,046 5 111,906 17.0% 17.2% 15.9% 15.9% 15.9% 15.2% 15.4% 10,589 S 13,649 $ 23,020 S 33,977 S 45,357 S 51,666 S 52,391 1.8% 2.4% 3.9% 5.5% 6.9% 7.4% 7.2% 3,687.00 $ 3,348.00 $ 3,071.00 $ 2,544.00 $ 2.615.00 $ 2,555.00 $ 2,489.00 6,902 $ 10,301 $ 19,949 $ 31,433 $ 42,742 S 49,111 S 49,902 1.2% 1.8% 3.4% 5.1% 6.5% 7.0% 6.9% 2,761.00 S 4.120.00 S 7.980.00 $ 12,573.00 $ 17,097.00 $ 19.644.00 $ 19.961.00 4,141 6,181 $ 11,969 $ 18,860 $ 25,645 S 29,467 S 29,941 0.7% 1.1% 2.0% 3.0% 3.9% 4.2% 4.1% S S $ S $ Capital Expenditures Stock Based Compensation S S 4,212 $ 2,174 $ 4,390 2,425 $ 4,664 S 1,855 S 4,883 $ 1,928 S 5,044 $ 2,001 S 5.185 S 2,074 S 5,346 S 2,147 $ 5,513 2,200 2012 Actual 2013 Estimated Consolidated Balance Sheet (S in thousands, December fiscal year) 2011 Actual Assets Cash and cash equivalents S 5,246 S AR S 22,225 S Inventories S 22,953 S Other current Assets S 12,384 S Total current Assets S 62,808 $ PP&E, net S 14,230 S Goodwill S 11,934 S Other Assets S 4,011 S Total long-term Assets S 30,175 S Total Assets S 92,983 S 8,520 S 24,934 $ 26,579S 12,758 S 72,791 S 13,994 S 11.934 S 4,038 S 29,966 $ 102,757 S 19.812 28,269 32,584 12,981 93,646 13,360 11,934 4,124 29,418 123,064 Liabilities and stockholder's equity Short-term Debt and Current Maturities of Long-term Debt Accounts Payable and Accrued Expenses Other Current Liabilities Total Current Liabilities Long-term Debt Other long-term Liabilities Total long-term liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity $ S S S $ S 10,445 $ 18,934 S 2,581 S 31,960 $ 48,471 $ 3,132 S 51,603 $ 9,419 $ 92,982 S 7,378 $ 20,761 S 11,099 $ 39,238 $ 45,609 S 1,156 $ 46,765 S 16,754 S 102,757 S 7,622 26,742 11,520 45,884 42,922 2,399 45,321 31,859 123,064 $ S $ Company Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Company 8 Company 9 Comparable Companies (figures in millions except per share amount) Stock Shares Debt Cash Price Outstandin 33.58 104.5 1291.1 627.7 58.3 30.2 373.6 3543 2.79 38.8 124.5 15.5 58.99 132.4 450.8 1166.2 31.08 149 84 800 44.12 46.5 291.3 24.9 23.8 65.8 265.8 159.6 8.51 29.7 7.8 10 47.18 76.4 2085.4 248.8 Minority Interest 56.6 14.7 13.8 42.5 0.2 0.1 0.9 0.3 140.2 LTM Operating Indicators LTM Margins 2-Year Annual Growth Rate NFY Operating (figures in millions) Indicators Gross Net Revenue Gross Net Net Company Profit EBITDA EBIT Adjusted Adjusted Income Profit Adjusted Adjusted Incom Revenue Incom Revenue EBITDA Company 1 $ 8,185.00 433.4 $493.10 $ 383.10 $ 212.10 5.3% 6.0% 4.7% 2.6% 9.30% 6.70% 6.90% -5.70% $ 8,335.00 $ 502.70 Company 2 $ 6,206.40 1159 $ 254.30 $ 175.20 S 102.20 18.7% 4.1% 2.8% 1.6% 6.60% 2.80% -1.10% 3.40% S 6,207.50 S 292.40 Company 3 S 441.00 187.1 $ 27.00 $ 15.40 $ (4.10) 42.4% 6.1% 3.39 -0.9% 4.50% -20.60% -46.00% NMF $ 511.00 $ 43.10 Company 4 S 11,153.90 1780.4 S 751.60 S 653.60 $ 409.20 16.0% 6.7% 5.9% 3.7% 4.70% 11.90% 12.20% 18.10% $ 12,087.00 S 795.80 Company 5 $ 7,713.00 695 $ 528.00 $ 465.00 $ 217.60 9.0% 6.8% 6.0% 2.8% -11.40% -13.00% -14.70% -16.00 S 7,852.00 S 667.80 Company 6 $ 1,566.00 858.7 $ 224.80 $ 176.40 $ 121.00 54.8% 14.4% 11.3% 7.7% 12.70% 11.20% 12.80% 15.00% $ 1,799.30 $ 240.90 Company 7 $ 2,071.30 359.6 $ 215.50 $ 158.40 $ 101.00 17.4% 10.4% 7.6% 4.9% 15.10% 13.30% 10.10% 11.20% $ 2,074.10 $ 229.10 Company 8 $ 312.80 51.9 $ 21.50 $ 15.10 $ 15.50 16.6% 6.9% 4.8% 5.0% 14.80% 20.20% NMF NMF $ 332.50 $ 23.30 Company 9 $ 11,413.50 670.9 $ 951.50 $ 687.60 $ 309.10 5.9% 8.3% 6.0% 2.7% 9.30% 15.60% 11.30% 3.10% S 11,718.00 $ 889.90 Low $ 312.80 $ 51.90 $ 21.50 S 15.10! S (4.10) 5.3% 4.1% 2.8% -0.9% -11% -21% -46% -16% S 332.50 S 23.30 High $ 11,413.50 $ 1,780.40 S 951.50 S 687.60 S $ 409.20 54.8% 14.49 11.3% 7.7% 15% 20% 13% 18% S 12,087.00 S 889.90 Median $ 6,206.40 $ 670.90 $ 254.30 $ 176.40 12100.00% 16.6% 6.8% 5.9% 2.8% 9% 11% 9% 3% $ 6,207.50 $ 292.40 Mean $5,451.43 $ 688.44 S 385.26 S 303.31 16484.44% 20.7% 7.8% 5.8% % 3.3% 7% 7 5% -1% 49 $ 5,657.38 S 409.44 Weighted Average Cost of Capital (WACC) Comparable Company Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Company 8 Company 9 Median Mean Debt to Preffered Preffered Total Equity Market Equity Debt to Total Debt Stock to Total Value to Total Equity Market Stock Market Value Capitalization Capitalization Value Capitalization Capitalization $ 1.291.10 OS 3.508.50 S 4.799.60 36.80% 26.90% 0.00% 73.10% S 373.60 OS 1,762.50 2,136.10 21.20% 17.49% 0.00% 82.51% S 124.50 OS 108.20 $ 232.70 115.06% 53.50% 0.00% 46.50% $ 450.80 OS 7,812.10 S 8,262.90 5.77% 5.46% 0.00% 94.54% S 84.00 OS 4,779.70 $ 4,863.70 1.76% 1.73% 0.00% 98.27% S 291.30 OS 2.050.60 $ 2,341.90 14.21% 12.44% 0.00% 87.56% $ 265.80 0 $ 1.567.20 S 1,833.00 16.96% 14.50% 0.00% 85.50% S 7.80 OS 252.60 $ 260.40 3.09% 3.00% 0.00% 97.00% $ 2,085.40 OS 3,604.50 S 5,689.90 57.86% 36.65% 0.00% 63.35% S 291.30 S S 2,050.60 $ 2,341.90 16.96% 14.50% 0.00% 85.50% S 552.70 S S 2,827.32 $ 3,380.02 30.30% 19.07% 0.00% 80.93% Comparable Leveraged Unleveraged Company Beta Beta Equity Risk Premium Size Premium Cost of Equity Cost of Debt WACC 1.37 1.58 2.20 Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Company 8 Company 9 Median Mean 1.12 1.21 1.29 1.33 1.77 0.92 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 1.38 1.79 1.00 1.17 2.27 1.36 1.38 1.57 1.14% 1.72% 6.03% 0.76% 0.92% 1.70% 1.72% 6.03% 1.14% 12.30% 14.10% 22.00% 12.00% 14.50% 10.70% 11.80% 22.40% 12.30% 12.30% 14.68% 2.50% 1.90% 7.50% 1.20% 4.10% 3.40% 2.00% 3.80% 3.80% 3.40% 3.36% Cost of Preffered Stock 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 9.40% 11.80% 12.70% 11.40% 14.30% 9.70% 10.20% 21.80% 8.60% 11.40% 12.21% 1.06 2.22 1.01 1.21 1.33