Using this LBO analysis example, assume that the investor was only able to obtain $1.5 billion in term loan B and $1 billion in senior notes.Keepingall other assumptions equal, assume that the investor expects to be able to increase the exitEV/EBITDAmultiple by 1.5x, (for example, from 8.0x to 9.5x)if the exit is delayed by 2 years. What is the change in the IRR of the LBO investment in ValueCo?
ValueCo Corporation d Buyout Analysis Uses of Funds return Analysis pre orele % of Total per Eline Exit Multiple Cash Return 3.0% W9564 9881 104 1637 1413 33361 2.150.0 1,9453 1,7021 14235 1,110.8 765.8 3953 $2,150.0 $1,423.5 $1,110 $765. $395.3 $1,945.3 1,500.9 $1,702.1 $3.202.9 1.800.0 51.605.9 $1,500.0 $3,650.0 $3,445.3 $3,202.1 $2,923.5$2,610.8 $2,265.8 $1,500.0 $1,895.3 3.8384 $1,500.0 $1,500.0 $1,500,0 $1,500.0 $3,992.1 100.0% 100.0% 27.8% 26.1% $1,500 $4,9429 $6,543.0 9.5% 48.9% 100.0% 20,9% 56.8% 100.0% 2018 & 8.A Nedom ON ($ in millions, fiscal year ending December 31) Income Statement Historical Period LTM 9/30/2012 2009 $2,600.0 NA 2010 $2,900.0 2011 $3,200.0 Year 1 2013 $3,708.8 7.5% Pro forma 2012 $3,450.0 7.8% Year 2 2014 $3,931.3 6.0% Year 3 2015 $4,127.8 5.0% Year 4 2016 $4,293.0 4.0% Projection Period Year 5 Year 6 2017 2018 $4,421.7 $4,554.4 3.0% 3.0% Year 7 2019 $4,691.0 3.0% Sales % growth Year 8 2020 $4,831.8 3.0% Year 9 2021 $4,976.7 3.0% $3,385.0 NA Year 10 2022 $5,126.0 3.0% 11.5% 10.3% Cost of Goods Sold Gross Profit % margin 1,612.0 $988.0 38.0% 1.769.0 $1,131.0 39.0% 1,920.0 $1,280.0 40.0% 2,035.0 $1,350.0 39.9% 2,070.0 $1,380.0 40.0% 2,225.3 $1,483.5 40.0% 2,358.8 $1,572.5 40.0% 2,476.7 $1,651.1 40.0% 2,575.8 $1,717.2 40.0% 2,653.0 $1,768.7 40.0% 2,732.6 $1,821.8 40.0% 2,814.6 $1,876.4 40.0% 2,899.1 $1,932.7 40.0% 2.986.0 $1,990.7 40.0% 3,075,6 $2,050,4 40.0% Selling, General & Administrative % Sales 496.6 19.1% 551.0 19.0% % 608.0 19.0% 650.0 19.2% 655.0 19.0% 704.7 19.0% 746.9 19.0% 784.3 19.0% 815.7 19.0% 840.1 19.0% 865.3 19.0% 891.3 19.0% 918.0 19.0% 945.6 19.0% 973.9 19.0% Other Expense / Income) EBITDA % margin $491.4 18.9% $580.0 20.0% $672.0 21.0% $700.0 20.7% $725.0 21.0% $778.8 21.0% $825.6 21.0% $866.8 21.0% $901.5 $ 21.0% $928.6 21.0% $956.4 21.0% $985.1 21.0% $1,014.7 21.0% $1.045.1 21.0% $1,076,5 21.0% Depreciation Amortization EBIT % margin 116.0 39.0 $336.4 12.9% 121.5 43.5 $415.0 14.3% 145.0 48.0 $479.0 15.0% 150.0 50.0 $500.0 14.8% 155.3 51.8 $517.9 15.0% 166.9 55.6 $556.3 15.0% 176.9 59.0 $589.7 15.0% 185.8 61.9 $619.2 15.0% 193.2 64.4 $643.9 15.0% 199.0 66.3 $663.3 15.0% 204.9 68.3 $683.2 15.0% 211.1 70.4 $703.7 15.0% 217.4 72.5 $724.8 15.0% 224.0 74.7 $746.5 15.0% 230.7 76.9 $768.9 15.0% 123,6 117.7 104.9 89.9 72.9 54.0 34.8 12.4 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 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 Interest Income Net Interest Expense 1.3 0.2 $252.5 12.0 $264.5 1.3 0.2 $246.6 12.0 1.3 0.2 $233.8 12.0 $245.7 1.3 0.2 $218.8 12.0 $230.7 1.3 0.2 $201.8 12.0 $213.7 1.3 0.2 $182.9 12.0 $194.8 1.3 0.2 $163.7 12.0 $175.7 1.3 0.2 $141.3 1.3 0.2 $128.9 1.3 0.2 $128.9 11.4 1.3 0.2 $128.9 6.8 $135.7 (1.1) $134.6 $258.6 $128.9 $152.6 (0.0) $152.6 $128.9 ( (5.4) $123.5 (3.2) $125.7 $258.6 $245.7 $230.7 $213.7 $194.8 $175.7 Earnings Before Taxes Income Tax Expense Net Income % margin 297.7 113.1 $184.6 5.0% 343.9 130.7 $213.2 5.4% 388.4 147.6 $240.8 5.8% 430.2 163.5 $266.7 6.2% 468.4 178.0 $290.4 6.6% 507.4 192.8 $314.6 6.9% 551.1 209.4 $341.7 7.3% 590.2 224.3 $365.9 7.6% 620.8 235.9 $384.9 7.7% 645.4 245.3 $400.1 7.8% NA Income Statement Assumptions Sales (%YOY Growth) Cost of Goods Sold (% sales) SG&A(% sales) Other Expense / (Income) (% sales) Depreciation (% sales) Amortization (% sales) Interest Income Tax Rate NA 62.0% 19.1% - % 4.5% 1.5% 11.5% 61.0% 19.0% - % 4.2% 1.5% 10.3% 60.0% 19.0% - % 4.5% 1.5% 3.0% 60.0% 19.0% 60.1% 19.2% - % 4.4% 1.5% 7.8% 60.0% 19.0% - % 4.5% 1.5% 0.5% - % 7.5% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 6.0% 60.0% 19.0% - % 4.5% % 1.5% 0.5% 38.0% 5.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 4.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% % 0.5% % 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 4.5% 1.5% 0.5% 38.0% (s in millions, fiscal year ending December 31) Balance Sheet Adjustments Pro Forma 2012 Year 1 2013 Year 2 2014 Year 3 2015 Year 4 2016 Projection Period Year 5 Year 6 2017 2018 (2500) Cash and Cash Equivalents Accounts Receivable Inventories Prepaids and Other Current Assets Total Current Assets Opending 2012 $250.0 450.0 600.0 175.0 $1,475.0 450.0 600.0 175.0 $1,225.0 483.7 645.0 189.1 $1,317.8 Year 10 2022 $1,304.6 668.5 891.5 512.7 683.7 200.5 $1,396.9 538.3 717.9 210.5 $1,466.7 559.8 746.6 218.9 $1,525.4 576.6 769.0 225.5 $1,5712 Year 7 2019 $2.9 611.8 815.9 239.2 $1,669.8 593.9 792.1 232.3 $1,618.3 Year 8 2020 $422.2 630.1 840.3 246.4 $2,139.0 Year 9 2021 $855.1 649.0 865.5 253.8 $2,623.4 261.4 $3,126.0 1,850.0 (1,000.0) Property, Plant and Equipment, net Goodwill Intangible Assets Other Assets Deferred Financing Fees Total Assets 2,500.0 1,000.0 875.0 150.0 2,500.0 1,850.0 875.0 150.0 $90.0 $6,690.0 2,500.0 1,850.0 819.4 150.0 $78.0 $6,715.2 2,500.0 1,850.0 760.4 150.0 $66.0 $6,723.3 2,500.0 1,850.0 698.5 150.0 $54.1 $6,719.3 2,500.0 1,850.0 634.1 150.0 $42.1 $ $6,701.6 2,500.0 1,850.0 567.8 150.0 $30.1 $6,669.0 2,500.0 1,850.0 499.4 150.0 $18.1 $6,635.9 2,500.0 1,850.0 429.1 150.0 $6.7 $6,605.6 2,500.0 1,850.0 356.6 150.0 ($0.0) $6,995.7 2,500.0 1,850.0 282.0 150.0 ($0.0) $7,405.4 2,500.0 1,850.0 205.1 150.0 ($0.0) $7,831.1 90.0 $6,000.0 Accounts Payable Accrued Liabilities Other Current Liabilities Total Current Liabilities 215.0 275.0 100.0 $590.0 215.0 275.0 100.0 $590.0 231.1 296.7 107.6 $635.3 244.9 314.5 114.0 $673.4 257.2 330.2 119.7 $707.1 267.5 343.4 124.5 $735.4 275.5 353.7 128.2 $757.5 283.7 364.4 132.1 $780.2 2923 375.3 136.0 $803.6 301.0 386.5 140.1 $827.7 310.1 398.1 144.3 $852.5 319.4 410.1 148.7 $878.1 2,150.0 2,150.0 1,945.3 1,702.1 1,423.5 1,110,8 765.8 395.3 1,000.0 (1,000.0) Revolving Credit Facility Term Loan A Term Loan B Term Loan C Existing Term Loan 2nd Lien Senior Notes Existing Senior Notes Senior Subordinated Notes Other Debt Deferred Income Taxes Other Long-Term Liabilities Total Liabilities 1,500.0 1.500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 500.0 (500.0) 300.0 110.0 $2,500.0 300.0 110.0 $4,650.0 300.0 1100 $4,490.6 300.0 110.0 $4,285.5 300.0 110.0 $4,040.6 300.0 110.0 $3,756.2 300.0 110.0 $3,433.2 300.0 1100 $3,085.5 300.0 110.0 $2,713.6 300.0 110.0 $2,737.7 300.0 110.0 $2,762.5 300.0 110.0 $2,788.1 Noncontrolling Interest Shareholders' Equity Total Shareholders' Equity 2,040.0 3,500.0 $3,500.0 (3,500.0) 2,040.0 $2,040.0 2.224.6 $2,224.6 2,437.8 $2,437.8 2,678,6 $2,678.6 2.945.4 $2,945.4 3.235.8 $3,235.8 3,550.4 $3,550.4 3,892.1 $3,892.1 4,258.0 $4,258.0 4,642.9 $4,642.9 5,043.0 $5,043.0 $ Total Liabilities and Equity $6,000.0 $6,690.0 $6,715.2 $6,723.3 $6,719.3 $6,701.6 $6,669.0 $6,635.9 $6,605.6 $6,995.7 $7,405.4 $7,831.1 Balance Check 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 635.0 635.0 Net Working Capital (Increase) / Decrease in Net Working Capital 682.5 (47.5) 723.5 (41.0) 759.6 (36.2) 790.0 (30.4) 813.7 (23.7) 838.1 (24.4) 863.3 (25.1) 889.2 (25.9) 915.9 (26.7) 943.3 (27.5) Balance Sheet Assumptions Current Assets Days Sales Outstanding (DSO) Days Inventory Held (DIH) Prepaids and Other Current Assets (% sales) 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% % 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 47.6 105.8 5.1% 5.1% Current Liabilities Days Payable Outstanding (DPO) Accrued Liabilities (% sales) Other Current Liabilities (% sales) 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% ($ in millions, fiscal year ending December 31) Returns Analysis Pro forma 2012 Year 1 2013 Year 2 2014 Year 3 2015 Year 4 2016 Projection Period Year 5 Year 6 2017 2018 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 8.Ox $2,100.0 Entry EBITDA Multiple Initial Equity Investment EBITDA Exit EBITDA Multiple Enterprise Value at Exit $778.8 $825.6 $866.8 $901.5 $928.6 $956.4 $985.1 $1,014.7 $1,045.1 $1,076.5 8.Ox $6,230.7 $6,604.5 $6,934.8 $7.212.2 $7,428.5 $7,651.4 $7,880.9 $8,117.3 $8,360.9 $8,611.7 1,945.3 1,702.1 1,423.5 1,110.8 765.8 395.3 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 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 $3,445.3 $3,202.1 $2,923.5 $2,610.8 $2,265.8 $1,895.3 $1,500.0 2.9 $1,497.1 $1,500.0 422.2 $1,077.8 $1,500.0 855.1 $644.9 $1,500.0 1,304.6 $195.4 $3,445.3 $3,202.1 $2,923.5 $2,610.8 $2,265.8 $1,895.3 Equity Value at Exit $2,785.4 $3,402.5 $4,011.2 $4,601.3 $5,162.7 $5,756.1 $6,383.9 $7,039.5 $7,715.9 $8,416.3 Cash Return 1.3x 1.6x 1.9x 2.2x 2.5x 2.7x 3.0x 3.4x 3.7x 4.0x Year 1 2013 ($2,100.0) $2,785.4 Year 2 2014 ($2,100.0) Year 3 2015 ($2,100.0) Year 4 2016 ($2,100.0) Year 5 2017 ($2,100.0) Year 6 2018 ($2,100.0) Year 7 2019 ($2,100.0) Year 8 2020 ($2,100.0) Year 9 2021 ($2,100.0) Year 10 2022 ($2,100.0) Initial Equity Investment Equity Proceeds $3,402.5 $4,011.2 $4,601.3 $5,162.7 $5,756.1 $6,383.9 $7,039,5 $7,715.9 $8,416.3 IRR 32.6% 27.3% 24.1% 21.7% 19.7% 18.3% 17.2% 16.3% 15.6% 14.9% Exit Year IRR 2017 19.7% 19.7% 7.0x 7.5x 8.Ox 8.5x 9.0x IRR - Assuming Exit in 2017E Exit Multiple 7.5x 8.Ox 27.4% 29.8% 21.8% 24.2% 17.5% 19.7% 13.9% 16.1% 10.9% 13.0% 7.0x 24.8% 19.3% 15.1% 11.6% 8.6% Entry Multiple 8.5x 32.1% 26.3% 21.8% 18.1% 15.0% 9.Ox 34.2% 28.3% 23.7% 20.0% 16.8% Exit Multiple 19.7% 7.0x 7.5x 8.Ox 8.5x 9.0x IRR - Assuming 8.0x Entry Multiple Exit Year 2015 2016 2017 14.4% 15.2% 15.1% 19.4% 18.6% 17.5% 24.1% 21.7% 19.7% 28.4% 24.5% 21.8% 32.4% 27.2% 23.7% 2018 14.8% 16.6% 18.3% 19.9% 21.4% 2019 14.4% 15.9% 17.2% 18.5% 19.6% ($ in millions, fiscal year ending December 31) Debt Schedule Pro forma 2012 0.25% Year 1 2013 0.35% Year 2 2014 0.50% Year 3 2015 0.75% Year 4 2016 1.00% Projection Period Year 5 Year 6 2017 2018 1.25% 1.50% Year 7 2019 1.75% Year 8 2020 2.00% Year 9 2021 2 25% Year 10 2022 2.50% Forward LIBOR Curve $371.6 (166.9) $204.7 (21.5) $420.2 (176.9 $243.2 (21.5) $464.3 (185.8) $278.6 (21.5) 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 $505.9 (193.2) $312.7 (21.5) $544.0 (1990) $345.0 (21.5) $575.4 (204.9) $370.5 $609.3 (211.1) $398.2 (21.5) $636.7 (217.4) $419.2 $656.8 (224.0) $432.9 $680.2 (230.7) $449.6 Min Cash (21.5) 2.9 $422.2 422.2 $855.1 855.1 $1,304.6 $183.2 $221.7 $257.1 $291.2 $349.0 $323.5 $376.7 Revolving Credit Facility Revolving Credit Facility Size Spread LIBOR Floor Term Commitment Fee on Unused Portion $250.0 4.250% 1.250% 6 years 0.50% Beginning Balance Drawdown/(Repayment) Ending Balance 5.50% 5.50% 5.50% 5.50% 5.75% 6.00% 6.25% % 6.50% 6.75% Interest Rate Interest Expense Commitment Fee Administrative Agent Fee 5.50% - 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 Term Loan B Facility Size Spread LIBOR Floor Term Repayment Schedule $2,150.0 4.500% 1.250% 7 years 1.0% Per Annum, Bullet at Maturity Beginning Balance Mandatory Repayments Optional Repayments Ending Balance $2,150.0 (21.5) (183.2) $1,945.3 $1,945.3 (21.5) (221.7) $1,702.1 $1,702.1 (21.5) (2571) $1,423.5 $1,423.5 (21.5) (291.2) $1,110.8 $1,110.8 (21.5) (323.5) $765.8 $765.8 (21.5) ) (349.0) $395.3 (21.5) (373.8) $395.3 6.50% 6.75% 7.00% Interest Rate Interest Expense 5.75% 117.7 5.75% 104.9 5.75% 89.9 5.75% 72.9 5.75% 54.0 6.00% 34.8 6.25% 12.4 Senior Notes Size Coupon Term $1,500.0 8.500% 8 years $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 Beginning Balance Repayment Ending Balance $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 Interest Expense 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 Assumptions - Income Statement and Cash Flow Statement Year 2 Year 3 Year 4 Year 1 2013 Projection Period Year 5 Year 6 2017 2018 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 2014 2015 2016 Income Statement Assumptions Sales (% growth) Base Sponsor Management Downside 1 Downside 2 2 3 7.5% 7.5% 10.0% 12.0% 5.0% 2.0% 6.0% 6.0% 8.0% 10.0% 4.0% 2.0% 5.0% 5.0% 6.0% 8.0% 3.0% 2.0% 4.0% 4.0% 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% 3.0% 3.0% 3.0% 4.0% 3.0% 2.0% 2.0% Cost of Goods Sold (% sales) Base Sponsor Management Downside 1 Downside 2 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 2 3 4 51 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 4.5% Depreciation (% sales) Base Sponsor Management Downside 1 Downside 2 2 3 4 5 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% Amortization (% sales) Base Sponsor Management Downside 1 Downside 2 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 3 4 5 1.5% Cash Flow Statement Assumptions Capital Expenditures (% sales) Base Sponsor Management Downside 1 Downside 2 or AWN 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 52 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 5.0% Assumptions - Balance Sheet Year 1 2013 Year 2 2014 Year 3 2015 Year 4 2016 Projection Period Year 5 Year 6 2017 2018 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 47.6 Current Assets Days Sales Outstanding (DSO) Base Sponsor Management Downside 1 Downside 2 2 31 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 50.0 55.0 105.8 105.8 105.8 Days Inventory Held (DIH) Base Sponsor Management Downside 1 Downside 2 2 3 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 110.0 115.0 Prepaids and Other Current Assets (% sales) Base Sponsor Management Downside 1 Downside 2 1 2 3 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5 Current Liabilities Days Payable Outstanding (DPO) Base Sponsor Management Downside 1 Downside 2 37.9 37.9 37.9 1 2 3 4 5 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 35.0 30.0 Accrued Liabilities (% sales) Base Sponsor Management Downside 1 Downside 2 2 3 4 5 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 2.9% Other Current Liabilities (% sales) Base Sponsor Management Downside 1 Downside 2 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 4 5 2.9% ($ in millions, fiscal year ending December 31) Assumptions - Financing Structures and Fees Financing Structures Purchase Price Public/Private Target 2 1 Structure 1 $250.0 2 Structure 2 $250.0 Structure 3 Structure 3 $250.0 5 Status Quo Structure 4 $250.0 Entry EBITDA Multiple LTM 9/30/2012 EBITDA Enterprise Value 8.0x 700.0 $5,600.0 2,150.0 500.0 1,650.0 2,100.0 1,750.0 (1,500.0) Sources of Funds Revolving Credit Facility Size Revolving Credit Facility Draw Term Loan A Term Loan B Term Loan C 2nd Llen Senior Notes Senior Subordinated Notes Equity Contribution Rollover Equity Cash on Hand Less: Total Debt Less: Preferred Stock Less: Noncontrolling Interest Plus: Cash and Cash Equivalents Equity Purchase Price 1,500.0 1,500.0 1,000.0 700.0 700.0 2,250.0 250.0 $4,350.0 1,000.0 2.250.0 2,100.0 2,100.0 250.0 Calculation of Fully Diluted Shares Outstanding Offer Price per Share 250.0 250.0 Total Sources of Funds $6,000.0 $6,000.0 $6,000.0 $6,000.0 Uses of Funds Equity Purchase Price Repay Existing Bank Debt Tender / Call Premiums Financing Fees Other Fees and Expenses Basis Shares Outstanding Plus: Shares from In-the-Money Options Less: Shares Repurchased Net New Shares from Options Plus: Shares from Convertible Securities Fully Diluted Shares Outstanding $4,350.0 1,500.0 20.0 90.0 40.0 $4,350.0 1,500,0 20.0 90.0 40.0 - $4,350.0 1,500.0 20.0 90.0 40.0 $4,350.0 1,500.0 20.0 90.0 40.0 Exercise Price In-the-Money Shares Proceeds Total Uses of Funds $6,000.0 $6,000.0 $6,000.0 $6,000.0 Options/Warrants Number of Tranche Shares Tranche 1 Tranche 2 Tranche 3 Tranche 4 Tranche 5 Total Financing Fees Structure 1 Size $250.0 ($) $3.8 2,150.0 32.3 Convertible Securities Fees (%) 1.500% 1.500% 1.500% 1.500% 2.250% 2.250% 2.250% 1.000% 1.000% Conversion Price Conversion Ratio New Shares 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 Other Financing Fees & Expenses Total Financing Fees Amount 1,500.0 33.8 1,500.0 15.0 Issue 1 Issue 2 Issue 3 Issue 4 Issue 5 Total 5.3 $90.0 Amortization of Financing Fees Year 1 2013 $0.6 Year 2 2014 $0.6 Year 3 2015 $0.6 Term Year 4 2016 $0.6 Year 5 2017 $0.6 Year 6 2018 $0.6 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 6 7 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 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 Other Financing Fees & Expenses Annual Amortization 8 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 8 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 8 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $11.4 0.7 $6.8 ValueCo Corporation d Buyout Analysis Uses of Funds return Analysis pre orele % of Total per Eline Exit Multiple Cash Return 3.0% W9564 9881 104 1637 1413 33361 2.150.0 1,9453 1,7021 14235 1,110.8 765.8 3953 $2,150.0 $1,423.5 $1,110 $765. $395.3 $1,945.3 1,500.9 $1,702.1 $3.202.9 1.800.0 51.605.9 $1,500.0 $3,650.0 $3,445.3 $3,202.1 $2,923.5$2,610.8 $2,265.8 $1,500.0 $1,895.3 3.8384 $1,500.0 $1,500.0 $1,500,0 $1,500.0 $3,992.1 100.0% 100.0% 27.8% 26.1% $1,500 $4,9429 $6,543.0 9.5% 48.9% 100.0% 20,9% 56.8% 100.0% 2018 & 8.A Nedom ON ($ in millions, fiscal year ending December 31) Income Statement Historical Period LTM 9/30/2012 2009 $2,600.0 NA 2010 $2,900.0 2011 $3,200.0 Year 1 2013 $3,708.8 7.5% Pro forma 2012 $3,450.0 7.8% Year 2 2014 $3,931.3 6.0% Year 3 2015 $4,127.8 5.0% Year 4 2016 $4,293.0 4.0% Projection Period Year 5 Year 6 2017 2018 $4,421.7 $4,554.4 3.0% 3.0% Year 7 2019 $4,691.0 3.0% Sales % growth Year 8 2020 $4,831.8 3.0% Year 9 2021 $4,976.7 3.0% $3,385.0 NA Year 10 2022 $5,126.0 3.0% 11.5% 10.3% Cost of Goods Sold Gross Profit % margin 1,612.0 $988.0 38.0% 1.769.0 $1,131.0 39.0% 1,920.0 $1,280.0 40.0% 2,035.0 $1,350.0 39.9% 2,070.0 $1,380.0 40.0% 2,225.3 $1,483.5 40.0% 2,358.8 $1,572.5 40.0% 2,476.7 $1,651.1 40.0% 2,575.8 $1,717.2 40.0% 2,653.0 $1,768.7 40.0% 2,732.6 $1,821.8 40.0% 2,814.6 $1,876.4 40.0% 2,899.1 $1,932.7 40.0% 2.986.0 $1,990.7 40.0% 3,075,6 $2,050,4 40.0% Selling, General & Administrative % Sales 496.6 19.1% 551.0 19.0% % 608.0 19.0% 650.0 19.2% 655.0 19.0% 704.7 19.0% 746.9 19.0% 784.3 19.0% 815.7 19.0% 840.1 19.0% 865.3 19.0% 891.3 19.0% 918.0 19.0% 945.6 19.0% 973.9 19.0% Other Expense / Income) EBITDA % margin $491.4 18.9% $580.0 20.0% $672.0 21.0% $700.0 20.7% $725.0 21.0% $778.8 21.0% $825.6 21.0% $866.8 21.0% $901.5 $ 21.0% $928.6 21.0% $956.4 21.0% $985.1 21.0% $1,014.7 21.0% $1.045.1 21.0% $1,076,5 21.0% Depreciation Amortization EBIT % margin 116.0 39.0 $336.4 12.9% 121.5 43.5 $415.0 14.3% 145.0 48.0 $479.0 15.0% 150.0 50.0 $500.0 14.8% 155.3 51.8 $517.9 15.0% 166.9 55.6 $556.3 15.0% 176.9 59.0 $589.7 15.0% 185.8 61.9 $619.2 15.0% 193.2 64.4 $643.9 15.0% 199.0 66.3 $663.3 15.0% 204.9 68.3 $683.2 15.0% 211.1 70.4 $703.7 15.0% 217.4 72.5 $724.8 15.0% 224.0 74.7 $746.5 15.0% 230.7 76.9 $768.9 15.0% 123,6 117.7 104.9 89.9 72.9 54.0 34.8 12.4 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 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 Interest Income Net Interest Expense 1.3 0.2 $252.5 12.0 $264.5 1.3 0.2 $246.6 12.0 1.3 0.2 $233.8 12.0 $245.7 1.3 0.2 $218.8 12.0 $230.7 1.3 0.2 $201.8 12.0 $213.7 1.3 0.2 $182.9 12.0 $194.8 1.3 0.2 $163.7 12.0 $175.7 1.3 0.2 $141.3 1.3 0.2 $128.9 1.3 0.2 $128.9 11.4 1.3 0.2 $128.9 6.8 $135.7 (1.1) $134.6 $258.6 $128.9 $152.6 (0.0) $152.6 $128.9 ( (5.4) $123.5 (3.2) $125.7 $258.6 $245.7 $230.7 $213.7 $194.8 $175.7 Earnings Before Taxes Income Tax Expense Net Income % margin 297.7 113.1 $184.6 5.0% 343.9 130.7 $213.2 5.4% 388.4 147.6 $240.8 5.8% 430.2 163.5 $266.7 6.2% 468.4 178.0 $290.4 6.6% 507.4 192.8 $314.6 6.9% 551.1 209.4 $341.7 7.3% 590.2 224.3 $365.9 7.6% 620.8 235.9 $384.9 7.7% 645.4 245.3 $400.1 7.8% NA Income Statement Assumptions Sales (%YOY Growth) Cost of Goods Sold (% sales) SG&A(% sales) Other Expense / (Income) (% sales) Depreciation (% sales) Amortization (% sales) Interest Income Tax Rate NA 62.0% 19.1% - % 4.5% 1.5% 11.5% 61.0% 19.0% - % 4.2% 1.5% 10.3% 60.0% 19.0% - % 4.5% 1.5% 3.0% 60.0% 19.0% 60.1% 19.2% - % 4.4% 1.5% 7.8% 60.0% 19.0% - % 4.5% 1.5% 0.5% - % 7.5% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 6.0% 60.0% 19.0% - % 4.5% % 1.5% 0.5% 38.0% 5.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 4.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% % 0.5% % 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % % 4.5% 1.5% 0.5% 38.0% 3.0% 60.0% 19.0% - % 4.5% 1.5% 0.5% 38.0% 4.5% 1.5% 0.5% 38.0% (s in millions, fiscal year ending December 31) Balance Sheet Adjustments Pro Forma 2012 Year 1 2013 Year 2 2014 Year 3 2015 Year 4 2016 Projection Period Year 5 Year 6 2017 2018 (2500) Cash and Cash Equivalents Accounts Receivable Inventories Prepaids and Other Current Assets Total Current Assets Opending 2012 $250.0 450.0 600.0 175.0 $1,475.0 450.0 600.0 175.0 $1,225.0 483.7 645.0 189.1 $1,317.8 Year 10 2022 $1,304.6 668.5 891.5 512.7 683.7 200.5 $1,396.9 538.3 717.9 210.5 $1,466.7 559.8 746.6 218.9 $1,525.4 576.6 769.0 225.5 $1,5712 Year 7 2019 $2.9 611.8 815.9 239.2 $1,669.8 593.9 792.1 232.3 $1,618.3 Year 8 2020 $422.2 630.1 840.3 246.4 $2,139.0 Year 9 2021 $855.1 649.0 865.5 253.8 $2,623.4 261.4 $3,126.0 1,850.0 (1,000.0) Property, Plant and Equipment, net Goodwill Intangible Assets Other Assets Deferred Financing Fees Total Assets 2,500.0 1,000.0 875.0 150.0 2,500.0 1,850.0 875.0 150.0 $90.0 $6,690.0 2,500.0 1,850.0 819.4 150.0 $78.0 $6,715.2 2,500.0 1,850.0 760.4 150.0 $66.0 $6,723.3 2,500.0 1,850.0 698.5 150.0 $54.1 $6,719.3 2,500.0 1,850.0 634.1 150.0 $42.1 $ $6,701.6 2,500.0 1,850.0 567.8 150.0 $30.1 $6,669.0 2,500.0 1,850.0 499.4 150.0 $18.1 $6,635.9 2,500.0 1,850.0 429.1 150.0 $6.7 $6,605.6 2,500.0 1,850.0 356.6 150.0 ($0.0) $6,995.7 2,500.0 1,850.0 282.0 150.0 ($0.0) $7,405.4 2,500.0 1,850.0 205.1 150.0 ($0.0) $7,831.1 90.0 $6,000.0 Accounts Payable Accrued Liabilities Other Current Liabilities Total Current Liabilities 215.0 275.0 100.0 $590.0 215.0 275.0 100.0 $590.0 231.1 296.7 107.6 $635.3 244.9 314.5 114.0 $673.4 257.2 330.2 119.7 $707.1 267.5 343.4 124.5 $735.4 275.5 353.7 128.2 $757.5 283.7 364.4 132.1 $780.2 2923 375.3 136.0 $803.6 301.0 386.5 140.1 $827.7 310.1 398.1 144.3 $852.5 319.4 410.1 148.7 $878.1 2,150.0 2,150.0 1,945.3 1,702.1 1,423.5 1,110,8 765.8 395.3 1,000.0 (1,000.0) Revolving Credit Facility Term Loan A Term Loan B Term Loan C Existing Term Loan 2nd Lien Senior Notes Existing Senior Notes Senior Subordinated Notes Other Debt Deferred Income Taxes Other Long-Term Liabilities Total Liabilities 1,500.0 1.500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 500.0 (500.0) 300.0 110.0 $2,500.0 300.0 110.0 $4,650.0 300.0 1100 $4,490.6 300.0 110.0 $4,285.5 300.0 110.0 $4,040.6 300.0 110.0 $3,756.2 300.0 110.0 $3,433.2 300.0 1100 $3,085.5 300.0 110.0 $2,713.6 300.0 110.0 $2,737.7 300.0 110.0 $2,762.5 300.0 110.0 $2,788.1 Noncontrolling Interest Shareholders' Equity Total Shareholders' Equity 2,040.0 3,500.0 $3,500.0 (3,500.0) 2,040.0 $2,040.0 2.224.6 $2,224.6 2,437.8 $2,437.8 2,678,6 $2,678.6 2.945.4 $2,945.4 3.235.8 $3,235.8 3,550.4 $3,550.4 3,892.1 $3,892.1 4,258.0 $4,258.0 4,642.9 $4,642.9 5,043.0 $5,043.0 $ Total Liabilities and Equity $6,000.0 $6,690.0 $6,715.2 $6,723.3 $6,719.3 $6,701.6 $6,669.0 $6,635.9 $6,605.6 $6,995.7 $7,405.4 $7,831.1 Balance Check 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 635.0 635.0 Net Working Capital (Increase) / Decrease in Net Working Capital 682.5 (47.5) 723.5 (41.0) 759.6 (36.2) 790.0 (30.4) 813.7 (23.7) 838.1 (24.4) 863.3 (25.1) 889.2 (25.9) 915.9 (26.7) 943.3 (27.5) Balance Sheet Assumptions Current Assets Days Sales Outstanding (DSO) Days Inventory Held (DIH) Prepaids and Other Current Assets (% sales) 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% % 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 5.1% 47.6 105.8 47.6 105.8 5.1% 5.1% Current Liabilities Days Payable Outstanding (DPO) Accrued Liabilities (% sales) Other Current Liabilities (% sales) 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% 37.9 8.0% 2.9% ($ in millions, fiscal year ending December 31) Returns Analysis Pro forma 2012 Year 1 2013 Year 2 2014 Year 3 2015 Year 4 2016 Projection Period Year 5 Year 6 2017 2018 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 8.Ox $2,100.0 Entry EBITDA Multiple Initial Equity Investment EBITDA Exit EBITDA Multiple Enterprise Value at Exit $778.8 $825.6 $866.8 $901.5 $928.6 $956.4 $985.1 $1,014.7 $1,045.1 $1,076.5 8.Ox $6,230.7 $6,604.5 $6,934.8 $7.212.2 $7,428.5 $7,651.4 $7,880.9 $8,117.3 $8,360.9 $8,611.7 1,945.3 1,702.1 1,423.5 1,110.8 765.8 395.3 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 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 $3,445.3 $3,202.1 $2,923.5 $2,610.8 $2,265.8 $1,895.3 $1,500.0 2.9 $1,497.1 $1,500.0 422.2 $1,077.8 $1,500.0 855.1 $644.9 $1,500.0 1,304.6 $195.4 $3,445.3 $3,202.1 $2,923.5 $2,610.8 $2,265.8 $1,895.3 Equity Value at Exit $2,785.4 $3,402.5 $4,011.2 $4,601.3 $5,162.7 $5,756.1 $6,383.9 $7,039.5 $7,715.9 $8,416.3 Cash Return 1.3x 1.6x 1.9x 2.2x 2.5x 2.7x 3.0x 3.4x 3.7x 4.0x Year 1 2013 ($2,100.0) $2,785.4 Year 2 2014 ($2,100.0) Year 3 2015 ($2,100.0) Year 4 2016 ($2,100.0) Year 5 2017 ($2,100.0) Year 6 2018 ($2,100.0) Year 7 2019 ($2,100.0) Year 8 2020 ($2,100.0) Year 9 2021 ($2,100.0) Year 10 2022 ($2,100.0) Initial Equity Investment Equity Proceeds $3,402.5 $4,011.2 $4,601.3 $5,162.7 $5,756.1 $6,383.9 $7,039,5 $7,715.9 $8,416.3 IRR 32.6% 27.3% 24.1% 21.7% 19.7% 18.3% 17.2% 16.3% 15.6% 14.9% Exit Year IRR 2017 19.7% 19.7% 7.0x 7.5x 8.Ox 8.5x 9.0x IRR - Assuming Exit in 2017E Exit Multiple 7.5x 8.Ox 27.4% 29.8% 21.8% 24.2% 17.5% 19.7% 13.9% 16.1% 10.9% 13.0% 7.0x 24.8% 19.3% 15.1% 11.6% 8.6% Entry Multiple 8.5x 32.1% 26.3% 21.8% 18.1% 15.0% 9.Ox 34.2% 28.3% 23.7% 20.0% 16.8% Exit Multiple 19.7% 7.0x 7.5x 8.Ox 8.5x 9.0x IRR - Assuming 8.0x Entry Multiple Exit Year 2015 2016 2017 14.4% 15.2% 15.1% 19.4% 18.6% 17.5% 24.1% 21.7% 19.7% 28.4% 24.5% 21.8% 32.4% 27.2% 23.7% 2018 14.8% 16.6% 18.3% 19.9% 21.4% 2019 14.4% 15.9% 17.2% 18.5% 19.6% ($ in millions, fiscal year ending December 31) Debt Schedule Pro forma 2012 0.25% Year 1 2013 0.35% Year 2 2014 0.50% Year 3 2015 0.75% Year 4 2016 1.00% Projection Period Year 5 Year 6 2017 2018 1.25% 1.50% Year 7 2019 1.75% Year 8 2020 2.00% Year 9 2021 2 25% Year 10 2022 2.50% Forward LIBOR Curve $371.6 (166.9) $204.7 (21.5) $420.2 (176.9 $243.2 (21.5) $464.3 (185.8) $278.6 (21.5) 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 $505.9 (193.2) $312.7 (21.5) $544.0 (1990) $345.0 (21.5) $575.4 (204.9) $370.5 $609.3 (211.1) $398.2 (21.5) $636.7 (217.4) $419.2 $656.8 (224.0) $432.9 $680.2 (230.7) $449.6 Min Cash (21.5) 2.9 $422.2 422.2 $855.1 855.1 $1,304.6 $183.2 $221.7 $257.1 $291.2 $349.0 $323.5 $376.7 Revolving Credit Facility Revolving Credit Facility Size Spread LIBOR Floor Term Commitment Fee on Unused Portion $250.0 4.250% 1.250% 6 years 0.50% Beginning Balance Drawdown/(Repayment) Ending Balance 5.50% 5.50% 5.50% 5.50% 5.75% 6.00% 6.25% % 6.50% 6.75% Interest Rate Interest Expense Commitment Fee Administrative Agent Fee 5.50% - 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 1.3 0.2 Term Loan B Facility Size Spread LIBOR Floor Term Repayment Schedule $2,150.0 4.500% 1.250% 7 years 1.0% Per Annum, Bullet at Maturity Beginning Balance Mandatory Repayments Optional Repayments Ending Balance $2,150.0 (21.5) (183.2) $1,945.3 $1,945.3 (21.5) (221.7) $1,702.1 $1,702.1 (21.5) (2571) $1,423.5 $1,423.5 (21.5) (291.2) $1,110.8 $1,110.8 (21.5) (323.5) $765.8 $765.8 (21.5) ) (349.0) $395.3 (21.5) (373.8) $395.3 6.50% 6.75% 7.00% Interest Rate Interest Expense 5.75% 117.7 5.75% 104.9 5.75% 89.9 5.75% 72.9 5.75% 54.0 6.00% 34.8 6.25% 12.4 Senior Notes Size Coupon Term $1,500.0 8.500% 8 years $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 Beginning Balance Repayment Ending Balance $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 $1,500.0 Interest Expense 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 Assumptions - Income Statement and Cash Flow Statement Year 2 Year 3 Year 4 Year 1 2013 Projection Period Year 5 Year 6 2017 2018 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 2014 2015 2016 Income Statement Assumptions Sales (% growth) Base Sponsor Management Downside 1 Downside 2 2 3 7.5% 7.5% 10.0% 12.0% 5.0% 2.0% 6.0% 6.0% 8.0% 10.0% 4.0% 2.0% 5.0% 5.0% 6.0% 8.0% 3.0% 2.0% 4.0% 4.0% 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% 3.0% 3.0% 3.0% 4.0% 3.0% 2.0% 2.0% Cost of Goods Sold (% sales) Base Sponsor Management Downside 1 Downside 2 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 2 3 4 51 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 19.0% 19.0% 18.0% 18.0% 20.0% 21.0% 4.5% Depreciation (% sales) Base Sponsor Management Downside 1 Downside 2 2 3 4 5 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% Amortization (% sales) Base Sponsor Management Downside 1 Downside 2 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 3 4 5 1.5% Cash Flow Statement Assumptions Capital Expenditures (% sales) Base Sponsor Management Downside 1 Downside 2 or AWN 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 52 4.5% 4.5% 4.5% 4.5% 5.0% 5.0% 5.0% Assumptions - Balance Sheet Year 1 2013 Year 2 2014 Year 3 2015 Year 4 2016 Projection Period Year 5 Year 6 2017 2018 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 47.6 Current Assets Days Sales Outstanding (DSO) Base Sponsor Management Downside 1 Downside 2 2 31 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 47.6 50.0 55.0 47.6 47.6 47.6 50.0 55.0 105.8 105.8 105.8 Days Inventory Held (DIH) Base Sponsor Management Downside 1 Downside 2 2 3 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 105.8 105.8 105.8 110.0 115.0 105.8 110.0 115.0 Prepaids and Other Current Assets (% sales) Base Sponsor Management Downside 1 Downside 2 1 2 3 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5 Current Liabilities Days Payable Outstanding (DPO) Base Sponsor Management Downside 1 Downside 2 37.9 37.9 37.9 1 2 3 4 5 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 37.9 37.9 37.9 35.0 30.0 37.9 35.0 30.0 Accrued Liabilities (% sales) Base Sponsor Management Downside 1 Downside 2 2 3 4 5 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 2.9% Other Current Liabilities (% sales) Base Sponsor Management Downside 1 Downside 2 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 4 5 2.9% ($ in millions, fiscal year ending December 31) Assumptions - Financing Structures and Fees Financing Structures Purchase Price Public/Private Target 2 1 Structure 1 $250.0 2 Structure 2 $250.0 Structure 3 Structure 3 $250.0 5 Status Quo Structure 4 $250.0 Entry EBITDA Multiple LTM 9/30/2012 EBITDA Enterprise Value 8.0x 700.0 $5,600.0 2,150.0 500.0 1,650.0 2,100.0 1,750.0 (1,500.0) Sources of Funds Revolving Credit Facility Size Revolving Credit Facility Draw Term Loan A Term Loan B Term Loan C 2nd Llen Senior Notes Senior Subordinated Notes Equity Contribution Rollover Equity Cash on Hand Less: Total Debt Less: Preferred Stock Less: Noncontrolling Interest Plus: Cash and Cash Equivalents Equity Purchase Price 1,500.0 1,500.0 1,000.0 700.0 700.0 2,250.0 250.0 $4,350.0 1,000.0 2.250.0 2,100.0 2,100.0 250.0 Calculation of Fully Diluted Shares Outstanding Offer Price per Share 250.0 250.0 Total Sources of Funds $6,000.0 $6,000.0 $6,000.0 $6,000.0 Uses of Funds Equity Purchase Price Repay Existing Bank Debt Tender / Call Premiums Financing Fees Other Fees and Expenses Basis Shares Outstanding Plus: Shares from In-the-Money Options Less: Shares Repurchased Net New Shares from Options Plus: Shares from Convertible Securities Fully Diluted Shares Outstanding $4,350.0 1,500.0 20.0 90.0 40.0 $4,350.0 1,500,0 20.0 90.0 40.0 - $4,350.0 1,500.0 20.0 90.0 40.0 $4,350.0 1,500.0 20.0 90.0 40.0 Exercise Price In-the-Money Shares Proceeds Total Uses of Funds $6,000.0 $6,000.0 $6,000.0 $6,000.0 Options/Warrants Number of Tranche Shares Tranche 1 Tranche 2 Tranche 3 Tranche 4 Tranche 5 Total Financing Fees Structure 1 Size $250.0 ($) $3.8 2,150.0 32.3 Convertible Securities Fees (%) 1.500% 1.500% 1.500% 1.500% 2.250% 2.250% 2.250% 1.000% 1.000% Conversion Price Conversion Ratio New Shares 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 Other Financing Fees & Expenses Total Financing Fees Amount 1,500.0 33.8 1,500.0 15.0 Issue 1 Issue 2 Issue 3 Issue 4 Issue 5 Total 5.3 $90.0 Amortization of Financing Fees Year 1 2013 $0.6 Year 2 2014 $0.6 Year 3 2015 $0.6 Term Year 4 2016 $0.6 Year 5 2017 $0.6 Year 6 2018 $0.6 Year 7 2019 Year 8 2020 Year 9 2021 Year 10 2022 6 7 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 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 Other Financing Fees & Expenses Annual Amortization 8 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 8 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 8 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $12.0 0.7 $11.4 0.7 $6.8
