Leveraged Buyout (LBO) Model

Input Values
*Enter values in yellow cells.
Estimated Cost of Deal:
Curent Stock Price
Offer Premium
Offer Price Per Share
No. of Shares outstanding
Equity Purchase Price

$6.00
10.00%
6.60
100,000
$660,000

$ amt
%
$ amt
nos.
$ amt

Existing Debt Retired

Assumed Debt
Expensed Transaction Costs
Capitalized Financing Costs
Cash Infusion

$185,000
$65,000
$2,500
$10,888
$27,500

$ amt
$ amt
$ amt
$ amt
$ amt

Total Funds Requirement

$950,888 $ amt

Sources of Funds:
Excess Cash
Debt:
Assumed Debt
Bank Revolver
Term Loan "A"
Term Loan "B"
Senior Notes
Subordinated Notes
Mezzanine Debt
Seller Notes
Preferred:
Preferred Stock
Equity:
Common - Sponsor Equity
Management Equity
New Equity
Total

Goodwill / Bargain Purchase:

Equity Purchase Price
Add:
Existing Goodwill
Less:
Net Assets (Book Value)
Fixed Assets (PP&E) Write-up
Identifiable Tangibles Write-up
Deferred Tax Liability - existing
DTL Created on Assets Write-up
Goodwill/(Gain from Bargain Purchase)

Debt Assumptions:
Assumed Debt
Maturity Year
Annual Repayment
Coupon Rate
Average Interest
Optional Prepayment
Bank Revolver
Coupon Rate
Revolver limit
Undrawn Commitment Fee

$5,000 $ amt
Fees
$65,000
$200,888
$80,000
$55,000
$65,000
$40,000
$70,000
$25,000

Term Loan "A"

Term Years
Annual Repayment
Coupon Rate
Average Interest
Optional Prepayment

$ amt
$ amt
$ amt
$ amt
$ amt
$ amt
$ amt
$ amt

0.75%
1.50%
1.75%
2.00%
2.50%
2.75%
0.00%

Term Loan "B"

Term Years
Annual Repayment
Bullet Year Repayment
Coupon Rate
Average Interest
Optional Prepayment

$60,000 $ amt

2.00%

Senior Notes
Maturity Year
Coupon Rate
Average Interest
Optional Prepayment

$220,000
$40,000
$25,000
$950,888

$ amt
$ amt
$ amt
$ amt

$660,000 $ amt
$20,000 $ amt
$464,749
$2,450
$1,200
$1,400
($1,278)
$211,479

$ amt
$ amt
$ amt
$ amt
$ amt
$ amt

Subordinated Notes
Maturity Year
Coupon Rate
Average Interest
Years PIK
Optional Prepayment
Mezzanine Debt
Maturity Year
Coupon Rate
Average Interest
Years PIK
Optional Prepayment
Seller Notes
Term Years
Annual Repayment
Coupon Rate

Average Interest
Years PIK
Optional Prepayment
Preferred Stock
Preferred Stock Dividend
Years PIK
Pref Stock Retired Year

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9
11.11%
4.25%
1
1

select no.
% of FV
% annual
1=Yes 0=No
1=Yes 0=No

4.75% % annual
$600,000 $ amt
1.00% % annual

8
12.50%
5.50%
1
1

select no.
% of FV
% annual
1=Yes 0=No
1=Yes 0=No

11
4.00%
60.00%
5.25%
1
1

select no.
% of FV
% of FV
% annual
1=Yes 0=No
1=Yes 0=No

9
4.25%
1
1

select no.
% annual
1=Yes 0=No
1=Yes 0=No

12
4.50%
0
5
1

select no.
% annual
1=Yes 0=No
enter no.
1=Yes 0=No

14
4.50%
0
5
1

select no.
% annual
1=Yes 0=No
enter no.
1=Yes 0=No

7 select no.
14.29% % of FV
5.25% % annual

Income/BS Assumptions:
Income Statement:
Sales Year 1
Sales - Annual Increase
Cost of goods sold
Cost of goods sold - Annual Increase
SG&A expenses
SG&A expenses - Annual Increase
Other expenses
Other expenses - Annual Increase

$1,100,000
10.00%
45.00%
0.25%
14.00%
0.50%
12.00%
0.15%

$ amt
%
% of revenue
%
% of revenue
%
% of revenue
%

Balance Sheet:
Accounts receivable
Accounts receivable - Annual Increase
Inventories
Inventories - Annual Increase
Prepaids
Prepaids - Annual Increase
Other current assets
Other current assets - Annual Increase
Other long-term assets
Other long-term assets - Annual Increase

18.00%
5.00%
20.00%
4.00%
4.50%
2.00%
12.00%
2.50%
4.00%
0.50%

% of revenue
%
% of COGS
%
% of revenue
%
% of revenue
%
% of revenue
%

Accounts payable
Accounts payable - Annual Increase
Accrued expenses
Accrued expenses - Annual Increase
Other current liabilities
Other current liabilities - Annual Increase
Capex
Capex Start Year
Capex Interval

15.00%
2.00%
6.00%
1.50%
8.00%
1.00%
10.00%
1
1

% of COGS plus inventory increase

%
% of revenue
%
% of revenue
%
% of revenue
in years
in years

Other Assumptions:
Cash Minimum
On / Off
Tax Rate
Year 1

DCF Assumptions:
Discount Rate (WACC)
Discount Rate Range
EBITDA Terminal Value Multiple
EBITDA Multiple Range
Perpetuity Growth Rate
Perpetuity Growth Range
Net Debt

$50,000 $ amt
1 1=On. 0=Off.
35.00% %
2010 year

7.00%
1.0%
6.0x
2.0x
3.00%
0.5%
$583,388

%
%
x
x
%
%
$ amt

1 1=Yes 0=No
5 enter no.
1 1=Yes 0=No

7.00% % annual
5 enter no.
select no.

Financing
Costs

4,500
1,200
963
1,300
1,000
1,925
0
10,888
1,200
12,088

Annual
Amortization

450
150
88
144
83
138
0
1,053

Period (Yrs)
10

Income Statements
Year
Year No.

Net Sales

2010
1

2011
2

2012
3

2013
4

2014
5

1,100,000

1,210,000

1,331,000

1,464,100

1,610,510

Cost of goods sold

495,000

545,861

601,948

663,799

732,004

Gross Margin

605,000

664,139

729,052

800,301

878,506

Operating Expenses
SG&A expenses
Other expenses

286,000
154,000
132,000

315,665
170,247
145,418

348,408
188,208
160,200

384,548
208,064
176,484

424,438
230,015
194,423

EBITDA

319,000

348,474

380,644

415,753

454,068

D&A

72,924

85,024

93,898

104,355

117,776

EBIT

246,076

263,450

286,746

311,398

336,292

32,061
2,609
13,533
4,125
2,830
2,763
1,800
3,150
1,252

30,509
1,228
14,005
3,500
2,714
2,763
1,881
3,292
1,127

26,835
0
14,005
1,575
2,092
2,763
1,966
3,440
995

22,778
0
14,005
0
764
1,505
2,054
3,595
856

20,741
0
14,005
0
0
124
2,147
3,756
709

Interest Expense
Existing Debt
Bank Revolver
Term Loan "A"
Term Loan "B"
Senior Notes
Subordinated Notes
Mezzanine Debt
Seller Notes
Other Expenses (Income)
Amortization of Capitalized
Financing Costs
(Gain) Loss on Asset Sales
Net Income before Taxes
Income Tax Expense (Benefit)
Net Income
Dividend
Preferred Stock Dividend
Common Stock Dividend
Net Income to Common Shareholders

(197)

(297)

1,053
(1,250)

1,053
(1,350)

353
1,803
(1,450)

(35)

(257)

1,515
(1,550)

1,393
(1,650)

214,212

233,238

259,559

288,655

315,807

74,974

81,633

90,846

101,029

110,533

139,238

151,605

168,713

187,625

205,275

6,700
4,200
2,500

7,194
4,494
2,700

7,659
4,809
2,850

8,245
5,145
3,100

8,955
5,505
3,450

132,538

144,411

161,055

179,380

196,319

2015
6

2016
7

2017
8

2018
9

2019
10

1,771,561

1,948,717

2,143,589

2,357,948

2,593,742

807,217

890,159

981,623

1,082,485

1,193,710

964,344

1,058,558

1,161,966

1,275,463

1,400,033

468,468
254,281
214,187

517,067
281,108
235,959

570,709
310,765
259,944

629,918
343,551
286,367

695,271
379,795
315,476

495,876

541,492

591,257

645,545

704,761

128,849

101,532

115,822

128,047

149,661

367,027

439,960

475,435

517,499

555,100

16,059
0
14,005
0
0
0
97
1,640
317

12,049
0
12,049
0
0
0
0
(0)
0

8,161
0
8,161
0
0
0
0
(0)
0

6,000
0
6,000
0
(0)
0
0
(0)
0

6,000
0
6,000
0
(0)
0
0
0
0

521

(1,400)

(1,500)

(1,600)

(1,700)

450
(1,850)

450
(1,950)

450
(2,050)

450
(2,150)

2,271
(1,750)
350,447

429,310

468,774

513,099

550,800

122,656

150,259

164,071

179,585

192,780

227,791

279,052

304,703

333,514

358,020

9,391
5,891
3,500

9,591
5,891
3,700

9,891
5,891
4,000

9,991
5,891
4,100

10,291
5,891
4,400

218,400

269,461

294,813

323,523

347,729

Balance Sheets
Year
Year No.

Pre-Acq

Adj

Post-Acq
0

2010
1

2011
2

2012
3

77,500
85,000
95,999
22,000
45,000

50,000
198,000
99,000
49,500
132,000

50,000
228,690
113,539
55,539
148,830

50,000
264,137
130,213
62,315
167,806

325,499

528,500

596,598

674,471

ASSETS
Current Assets:
Cash in bank
Accounts receivable
Inventories
Prepaids
Other current assets
Total Current Assets

55,000
85,000
95,999
22,000
45,000

22,500

302,999

Non-Current Assets:
Goodwill
Intangible Assets
Capitalized Financing Costs
Other Long-Term Assets
PP&E:
Gross PP&E
Capex
Depreciation (Current)
Accumulated Depreciation
Net PP&E

20,000
950
0
15,000

191,479
1,200
10,888

211,479
2,150
10,888
15,000

211,479
1,971
9,835
44,000

211,479
1,792
8,782
48,642

211,479
1,613
6,979
53,774

500,000
0
0
25,000
475,000

2,450

502,450
0
0
25,000
477,450

502,450
110,000
72,745
97,745
514,705

612,450
121,000
84,845
182,590
550,860

733,450
133,100
93,718
276,308
590,242

Total Non-Current Assets

510,950

716,966

781,989

821,554

864,086

Total Assets

813,949

1,042,465

1,310,489

1,418,152

1,538,557

228,516

LIABILITIES & EQUITY

Current Liabilities:
Accounts payable
Accrued expenses
Other current liabilities

51,800
24,000
22,000

51,800
24,000
22,000

74,700
66,000
88,000

85,741
73,689
97,768

96,542
82,274
108,620

Total Current Liabilities

97,800

97,800

228,700

257,198

287,436

Deferred Tax Liability

Long-Term Debt:
Existing Debt
Bank Revolver
Term Loan "A"
Term Loan "B"
Senior Notes
Subordinated Notes
Mezzanine Debt
Seller Notes
Total Long Term Debt

1,400

(123)

1,278

5,873

6,119

6,366

250,000
0
0
0
0
0
0
0
250,000

(185,000)
200,888
80,000
55,000
65,000
40,000
70,000
25,000

65,000
200,888
80,000
55,000
65,000
40,000
70,000
25,000
600,888

57,778
213,470
70,000
52,800
65,000
41,800
73,150
22,680
596,678

0
213,470
57,264
50,600
65,000
43,681
76,442
20,235
526,692

0
213,470
0
29,091
65,000
45,647
79,882
17,659
450,748

Total Long-Term Liabilities

251,400

602,165

602,551

532,811

457,114

Total Liabilities

349,200

699,965

831,251

790,010

744,551

Shareholder's Equity:
Preferred Stock
Common Equity
Retained Earnings

0
440,000
24,749

60,000
285,000
(2,500)

64,200
285,000
130,038

68,694
285,000
274,449

73,503
285,000
435,503

Total Shareholder's Equity

464,749

342,500

479,238

628,143

794,006

Total Liabilities & Equity

813,949

228,516

1,042,465

1,310,489

1,418,152

1,538,557

Balance Sheet Check

60,000
(155,000)
(27,249)

2013
4

2014
5

2015
6

2016
7

2017
8

2018
9

2019
10

50,000
305,078
149,337
69,917
189,201

50,000
352,365
171,268
78,447
213,324

50,000
406,982
196,421
88,018
240,523

50,000
470,064
225,267
98,756
271,190

134,329
542,924
258,350
110,804
305,766

263,486
627,077
296,291
124,322
344,752

352,890
724,274
339,804
139,489
388,707

763,533

865,405

981,943

1,115,277

1,352,173

1,655,928

1,945,165

211,479
1,433
5,464
59,447

211,479
1,254
4,071
65,719

211,479
1,075
1,800
72,652

211,479
896
1,350
80,317

211,479
717
900
88,790

211,479
538
450
98,157

211,479
358
0
108,513

866,550
146,410
104,176
380,485
632,475

1,012,960
161,051
117,597
498,082
675,929

1,174,011
177,156
128,669
626,751
724,416

1,351,167
194,872
101,352
728,103
817,935

1,546,039
214,359
115,643
843,747
916,651

1,760,398
235,795
127,868
971,614
1,024,578

1,996,192
259,374
149,482
1,121,096
1,134,470

910,298

958,451

1,011,421

1,111,976

1,218,536

1,335,202

1,454,820

1,673,831

1,823,856

1,993,365

2,227,253

2,570,709

2,991,130

3,399,985

108,708
91,859
120,677

122,413
102,560
134,072

137,851
114,508
148,954

155,242
127,849
165,488

174,837
142,743
183,857

196,914
159,373
204,266

221,789
177,940
226,939

321,244

359,045

401,313

448,579

501,437

560,552

626,668

8,646

20,303

31,978

52,837

106,242

144,024

139,035

0
213,470
0
0
5,819
47,701
83,476
14,943
365,410

0
213,470
0
0
0
2,147
36,454
12,081
264,152

0
161,317
0
0
0
0
(0)
0
161,317

0
57,619
0
0
0
0
(0)
0
57,619

0
(0)
0
0
0
0
(0)
0
0

0
(0)
0
(0)
0
0
0
0
0

0
0
0
(0)
0
0
0
0
0

374,055

284,455

193,295

110,456

106,242

144,024

139,035

695,300

643,500

594,608

559,036

607,679

704,576

765,703

78,648
285,000
614,884

84,153
285,000
811,203

84,153
285,000
1,029,603

84,153
285,000
1,299,064

84,153
285,000
1,593,877

84,153
285,000
1,917,400

84,153
285,000
2,265,129

978,532

1,180,356

1,398,756

1,668,217

1,963,030

2,286,553

2,634,282

1,673,831

1,823,856

1,993,365

2,227,253

2,570,709

2,991,130

3,399,985

Cash Flows
2010
1

2011
2

2012
3

2013
4

132,538

144,411

161,055

179,380

72,924
1,053
4,595
1,800
3,150
1,252
4,200

85,024
1,053
247
1,881
3,292
1,127
4,494

93,898
1,803
247
1,966
3,440
995
4,809

104,355
1,515
2,280
2,054
3,595
856
5,145

(113,000)
(3,001)
(114,500)
22,900
108,000

(30,690)
(14,539)
(22,869)
11,041
17,457

(35,447)
(16,674)
(25,752)
10,801
19,437

(40,941)
(19,123)
(28,998)
12,166
21,642

121,911

201,928

220,576

243,926

Cash flows from investing activities

Purchase of property & equipment
(Increase) decrease in other long-term assets

(110,000)
(29,000)

(121,000)
(4,642)

(133,100)
(5,132)

(146,410)
(5,673)

Net cash provided by (used in) investing activities

(139,000)

(125,642)

(138,232)

(152,083)

Cash flows from financing activities

Increase (decrease) in Existing Debt
Increase (decrease) in Term Loan "A"
Increase (decrease) in Term Loan "B"
Increase (decrease) in Senior Notes
Increase (decrease) in Subordinated Notes
Increase (decrease) in Mezzanine Debt
Increase (decrease) in Seller Notes
Increase (decrease) in Preferred Stock

(7,222)
(10,000)
(2,200)
0
0
0
(3,571)
0

(57,778)
(12,736)
(2,200)
0
0
0
(3,571)
0

0
(57,264)
(21,509)
0
0
0
(3,571)
0

0
0
(29,091)
(59,181)
0
0
(3,571)
0

Net cash provided by (used in) financing activities

(22,994)

(76,286)

(82,344)

(91,843)

Net increase (decrease) in cash

(40,083)

Year
Year No.
Cash flows from operating activities
Net Income to Common Shareholders
Non-cash adjustments:
Depreciation and amortization
Amortization of Capitalized Financing Costs
Increase (Decrease) in Deferred Tax Liability
Accrued Interest Subordinated Notes
Accrued Interest Mezzanine Debt
Accrued Interest Seller Notes
Accrued Interest Preferred Stock
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(Increase) decrease in inventories
(Increase) decrease in prepaids & other assets
Increase (decrease) in accounts payable
Increase (decrease) in accrued exp & other liabilities
Net cash provided by (used in) operating activities

Cash at beginning of year

77,500

50,000

50,000

50,000

Cash available for Bank Revolver

37,417

50,000

50,000

50,000

Added (retired) Bank Revolver

12,583

Cash at end of year

50,000

50,000

50,000

50,000

Free Cash Flows

EBIT
Add: Amortization of non-deductible goodwill & intangibles
EBIT (Adj)
Less: Tax on EBIT (Adj)
Unlevered Net Income
Plus: D&A & other non-cash charges affecting EBIT
Less: Capital Expenditures
Less: Increase in Net (non-cash) Working Capital
Less: (Increase) decrease in Deferred Tax

Unlevered Free Cash Flows (UFCF)

246,076
0
246,076
86,127
159,949
72,924
110,000
99,601
(4,595)
27,868

263,450
0
263,450
92,207
171,242
85,024
121,000
39,600
(247)
95,913

286,746
0
286,746
100,361
186,385
93,898
133,100
47,635
(247)
99,794

311,398
0
311,398
108,989
202,409
104,355
146,410
55,254
(2,280)
107,380

77,500
121,911
(139,000)
60,411
50,000
10,411

50,000
201,928
(125,642)
126,286
50,000
76,286

50,000
220,576
(138,232)
132,344
50,000
82,344

50,000
243,926
(152,083)
141,843
50,000
91,843

7,222
10,000
2,200
0
0
0
3,571
0
22,994

7,222
10,000
2,200
0
0
0
3,571
0
22,994

0
10,000
2,200
0
0
0
3,571
0
15,771

0
0
2,200
0
0
0
3,571
0
5,771

(12,583)
12,583
0

53,292
0
53,292

66,572
0
66,572

86,072
0
86,072

0
0
0
0
0
0
0
0
0

50,556
2,736
0
0
0
0
0
0
53,292

0
47,264
19,309
0
0
0
0
0
66,572

0
0
26,891
59,181
0
0
0
0
86,072

50,000

50,000

50,000

50,000

Debt Repayment
Cash Available for Debt Repayment
Cash at beginning of year
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Sub-total
Minimum Cash Balance
Cash Available for Debt Repayment
Mandatory Repayment
Existing Debt
Term Loan "A"
Term Loan "B"
Senior Notes
Subordinated Notes
Mezzanine Debt
Seller Notes
Preferred Stock
Sub-total
Cash Balance
Incremental Revolver
Cash Available for Optional Repayment
Optional Repayment
Existing Debt
Term Loan "A"
Term Loan "B"
Senior Notes
Subordinated Notes
Mezzanine Debt
Seller Notes
Bank Revolver
Sub-total
Cash at end of year

Cash Flow Check

2014
5

2015
6

2016
7

2017
8

2018
9

2019
10

196,319

218,400

269,461

294,813

323,523

347,729

117,776
1,393
11,657
2,147
3,756
709
5,505

128,849
2,271
11,675
0
0
0
0

101,532
450
20,859
0
0
0
0

115,822
450
53,405
0
0
0
0

128,047
450
37,782
0
0
0
0

149,661
450
(4,989)
0
0
0
0

(47,287)
(21,932)
(32,653)
13,704
24,097

(54,617)
(25,152)
(36,769)
15,438
26,830

(63,082)
(28,846)
(41,405)
17,392
29,874

(72,860)
(33,083)
(46,625)
19,594
33,264

(84,153)
(37,941)
(52,503)
22,077
37,038

(97,197)
(43,513)
(59,123)
24,876
41,240

275,193

286,924

306,235

364,780

374,319

359,134

(161,051)
(6,272)

(177,156)
(6,933)

(194,872)
(7,665)

(214,359)
(8,473)

(235,795)
(9,367)

(259,374)
(10,356)

(167,323)

(184,089)

(202,536)

(222,832)

(245,162)

(269,730)

0
0
0
(5,819)
(47,701)
(50,779)
(3,571)
0

0
0
0
0
(2,147)
(36,454)
(12,081)
0

0
0
0
0
0
(0)
0
0

0
0
(0)
0
0
0
0
0

0
0
(0)
0
0
0
0
0

0
0
(0)
0
0
0
0
0

(107,870)

(50,681)

(0)

52,153

103,698

141,948

129,157

89,404

50,000

50,000

50,000

50,000

134,329

263,486

50,000

102,153

153,698

191,948

263,486

352,890

(52,153)

(103,698)

(57,619)

50,000

50,000

134,329

263,486

352,890

0
50,000

336,292
0
336,292
117,702
218,590
117,776
161,051
64,071
(11,657)
122,901

367,027
0
367,027
128,460
238,568
128,849
177,156
74,270
(11,675)
127,665

439,960
0
439,960
153,986
285,974
101,532
194,872
86,067
(20,859)
127,426

475,435
0
475,435
166,402
309,033
115,822
214,359
99,710
(53,405)
164,192

517,499
0
517,499
181,125
336,374
128,047
235,795
115,483
(37,782)
150,925

555,100
0
555,100
194,285
360,815
149,661
259,374
133,717
4,989
112,395

50,000
275,193
(167,323)
157,870
50,000
107,870

50,000
286,924
(184,089)
152,834
50,000
102,834

50,000
306,235
(202,536)
153,698
50,000
103,698

50,000
364,780
(222,832)
191,948
50,000
141,948

134,329
374,319
(245,162)
263,486
50,000
213,486

263,486
359,134
(269,730)
352,890
50,000
302,890

0
0
0
0
0
0
3,571
0
3,571

0
0
0
0
0
0
3,571
0
3,571

0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0

104,299
0
104,299

99,263
0
99,263

103,698
0
103,698

141,948
0
141,948

213,486
0
213,486

0
0
0
5,819
47,701
50,779
0
0
104,299

0
0
0
0
2,147
36,454
8,509
52,153
99,263

0
0
0
0
0
(0)
0
103,698
103,698

50,000

50,000

50,000

0
0
0
0
0
(0)
0
57,619
57,619
134,329

0
0
0
0
0
(0)
0
(0)
(0)
263,486

0
0
(0)
0
0
0
0
0
(0)
302,890
0
302,890

0
0
0
0
0
0
0
(0)
(0)
352,890

(0)

Depreciation & Amortization

Book Depreciation & Amortization:

Gross PP&E
PP&E Write-up
Fair Value PP&E
Accumulated Depreciation
Net PP&E

Year
Year No.

2010
1

Existing PP&E (incl Write-up)

Beginning Amt Remaining Life
Class 1
$90,000
12
Class 2
85,000
10
Class 3
60,000
8
Class 4
242,450
6
477,450

Salvage
$900
800
600
600
2,900

2011
2

$500,000
$2,450
$502,450
25,000
$477,450

2012
3

7,425
8,420
7,425
40,308
63,578

7,425
8,420
7,425
40,308
63,578

7,425
8,420
7,425
40,308
63,578

9,167
0
0
0
0
0
0
0
0
0
9,167

9,167
12,100
0
0
0
0
0
0
0
0
21,267

9,167
12,100
8,873
0
0
0
0
0
0
0
30,140

Computed Depreciation
Manual Depreciation

72,745
40,000

84,845
40,000

93,718
40,000

Total Book Depreciation

72,745

84,845

93,718

179
0

179
0

179
0

1,053
450
150
88
144
83
138
0

1,053
450
150
88
144
83
138
0

1,803
450
900
88
144
83
138
0

Capex
Year
1
2
3
4
5
6
7
8
9
10

Capex
$110,000
121,000
133,100
146,410
161,051
177,156
194,872
214,359
235,795
259,374
1,753,117

Useful Life
12
10
15
14
12
16
15
15
12
12

Amortization of Intangibles (incl Write-up)

Impairment of Goodwill
Amortization of Capitalized Financing Costs
Bank Revolver
Term Loan "A"
Term Loan "B"
Senior Notes
Subordinated Notes
Mezzanine Debt
Seller Notes

Salvage

Period (Yrs)
12
Total Cost ($)
10,888

Tax Depreciation & Amortization:

Existing PP&E (Tax)

Beginning Amt Remaining Life
Class 1
$130,000
12
Class 2
105,000
10
Class 3
95,000
8
Class 4
85,000
6
415,000

Tax PP&E

Salvage
$900
800
600
600
2,900

$415,000

10,758
10,420
11,800
14,067
47,045

10,758
10,420
11,800
14,067
47,045

10,758
10,420
11,800
14,067
47,045

9,167
0
0
0
0
0
0
0
0
0
9,167

9,167
15,125
0
0
0
0
0
0
0
0
24,292

9,167
15,125
8,873
0
0
0
0
0
0
0
33,165

56,212

71,337

80,210

143
14,099

143
14,099

143
14,099

Capex
Year
1
2
3
4
5
6
7
8
9
10

Capex
$110,000
121,000
133,100
146,410
161,051
177,156
194,872
214,359
235,795
259,374
1,753,117

Useful Life
12
8
15
9
4
16
15
2
12
12

Salvage

Total Tax Depreciation

Amortization of Intangibles (incl Write-up)

Amortization of Goodwill

Period (Yrs)
15
15

Depreciation Method
0=SLN 1=Sum of Years

Goodwill & Intangibles Amortization

0=Not Deductible 1=Tax Deductible
1
Tax Deductible

Manual or Computed Depreciation

1
0=Manual 1=Computed

2013
4

2014
5

2015
6

2016
7

2017
8

2018
9

2019
10

7,425
8,420
7,425
40,308
63,578

7,425
8,420
7,425
40,308
63,578

7,425
8,420
7,425
40,308
63,578

7,425
8,420
7,425
0
23,270

7,425
8,420
7,425
0
23,270

7,425
8,420
0
0
15,845

7,425
8,420
0
0
15,845

9,167
12,100
8,873
10,458
0
0
0
0
0
0
40,598

9,167
12,100
8,873
10,458
13,421
0
0
0
0
0
54,019

9,167
12,100
8,873
10,458
13,421
11,072
0
0
0
0
65,091

9,167
12,100
8,873
10,458
13,421
11,072
12,991
0
0
0
78,082

9,167
12,100
8,873
10,458
13,421
11,072
12,991
14,291
0
0
92,373

9,167
12,100
8,873
10,458
13,421
11,072
12,991
14,291
19,650
0
112,023

9,167
12,100
8,873
10,458
13,421
11,072
12,991
14,291
19,650
21,615
133,637

104,176
40,000

117,597
40,000

128,669
40,000

101,352
40,000

115,643
40,000

127,868
40,000

149,482
40,000

104,176

117,597

128,669

101,352

115,643

127,868

149,482

179
0

179
0

179
0

179
0

179
0

179
0

179
0

1,515
450
0
700
144
83
138
0

1,393
450
0
0
722
83
138
0

2,271
450
0
0
0
583
1,238
0

450
450
0
0
0
0
0
0

450
450
0
0
0
0
0
0

450
450
0
0
0
0
0
0

450
450
0
0
0
0
0
0

Depreciation Method
0=SLN 1=Sum of Years

10,758
10,420
11,800
14,067
47,045

10,758
10,420
11,800
14,067
47,045

10,758
10,420
11,800
14,067
47,045

10,758
10,420
11,800
0
32,978

10,758
10,420
11,800
0
32,978

10,758
10,420
0
0
21,178

10,758
10,420
0
0
21,178

9,167
15,125
8,873
16,268
0
0
0
0
0
0
49,433

9,167
15,125
8,873
16,268
40,263
0
0
0
0
0
89,696

9,167
15,125
8,873
16,268
40,263
11,072
0
0
0
0
100,768

9,167
15,125
8,873
16,268
40,263
11,072
12,991
0
0
0
113,759

9,167
15,125
8,873
16,268
40,263
11,072
12,991
107,179
0
0
220,939

9,167
15,125
8,873
16,268
0
11,072
12,991
107,179
19,650
0
200,325

9,167
0
8,873
16,268
0
11,072
12,991
0
19,650
21,615
99,636

96,478

136,741

147,813

146,738

253,917

221,504

120,814

143
14,099

143
14,099

143
14,099

143
14,099

143
14,099

143
14,099

143
14,099

Income Tax Calculation

Year
Year No.

2010
1

2011
2

2012
3

2013
4

2014
5

Net Income before Tax

214,212

233,238

259,559

288,655

315,807

Add: Book Depreciation

Add: Book (Gain) Loss on Assets Sale
Add: Book Impairment of Goodwill
Add: Book Amortization of Intangibles
Add: Non-Deductible Expenses

72,745
1,250
0
179
0

84,845
1,350
0
179
0

93,718
1,450
0
179
0

104,176
1,550
0
179
0

117,597
1,650
0
179
0

Less: Tax Depreciation

Less: Tax (Gain) Loss on Assets Sale
Less: Tax Amortization of Goodwill
Less: Tax Amortization of Intangibles

56,212
1,350
14,099
143

71,337
1,500
14,099
143

80,210
1,600
14,099
143

96,478
1,700
14,099
143

136,741
1,750
14,099
143

216,582

232,534

258,855

282,140

282,501

15,500

201,082
70,379

232,534
81,387

258,855
90,599

282,140
98,749

282,501
98,875

Total Book Tax

Increase (Decrease) in Deferred
Tax Liability

74,974

81,633

90,846

101,029

110,533

4,595

247

247

2,280

11,657

Beginning NOL Balance

Current Year NOL
NOLs Used
Ending NOL Balance

15,500
0
15,500
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

Estimated Sale Proceeds

4,000

4,500

5,000

5,500

6,000

Book Basis of Assets

Tax Basis of Assets

2,750
2,650

3,150
3,000

3,550
3,400

3,950
3,800

4,350
4,250

Book Gain (Loss) on Sale

Tax Gain (Loss) on Sale

1,250
1,350

1,350
1,500

1,450
1,600

1,550
1,700

1,650
1,750

Allocation to Balance Sheet:

PP&E:
Other Long-Term Assets

1,500
1,250

1,700
1,450

1,900
1,650

2,100
1,850

2,300
2,050

Pre-NOL Taxable Income

Less: NOLs Used
Post-NOL Taxable Income
Cash Taxes Payable

Projected Asset Sales:

2015
6

2016
7

2017
8

2018
9

2019
10

350,447

429,310

468,774

513,099

550,800

128,669
1,750
0
179
0

101,352
1,850
0
179
0

115,643
1,950
0
179
0

127,868
2,050
0
179
0

149,482
2,150
0
179
0

147,813
1,900
14,099
143

146,738
2,000
14,099
143

253,917
2,200
14,099
143

221,504
2,300
14,099
143

120,814
2,500
14,099
143

317,091

369,713

316,188

405,150

565,055

317,091
110,982

369,713
129,399

316,188
110,666

405,150
141,802

565,055
197,769

122,656

150,259

164,071

179,585

192,780

11,675

20,859

53,405

37,782

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

6,500

7,000

7,500

8,000

8,500

4,750
4,600

5,150
5,000

5,550
5,300

5,950
5,700

6,350
6,000

1,750
1,900

1,850
2,000

1,950
2,200

2,050
2,300

2,150
2,500

2,500
2,250

2,700
2,450

2,900
2,650

3,100
2,850

3,300
3,050

(4,989)

Weighted Average Cost of Capital

Risk Free Rate (Treasury Bill Rate)
Market Risk Premium
Levered Beta

Estimated Cost of Debt

Existing Debt
Bank Revolver
Term Loan "A"
Term Loan "B"
Senior Notes
Subordinated Notes
Mezzanine Debt
Seller Notes
Total Debt

5.00%
4.50%
1.20

Amount
65,000
200,888
80,000
55,000
65,000
40,000
70,000
25,000

Int. Rate Wtd. Rate

4.25%
0.46%
4.75%
1.59%
5.50%
0.73%
5.25%
0.48%
4.25%
0.46%
4.50%
0.30%
4.50%
0.52%
5.25%
0.22%

600,888
Post-Tax

Estimated Cost of Preferred Stock

Preferred Stock

60,000

7.00%

Estimated Cost of Equity (CAPM)

Total Book Equity

282,500

16.03%

Beta Calculation
Levered Beta

1.20

Pre-Acquisition:
Debt
Equity
Preferred Stock
Debt/Equity Ratio
Preferred Stock/Equity Ratio

$250,000
$600,000
$0
0.42
0.00

Post-Acquisition:
Debt
Equity
Preferred Stock
Debt/Equity Ratio
Preferred Stock/Equity Ratio

$600,888
$282,500
$60,000
2.13
0.21

Tax Rate

35.00%

Unlevered Beta

0.94

Relevered Beta

2.45

WACC
0 = Manual 1 = Computed
1
Computed

4.76%
3.10%

Computed WACC
Cost of Debt (Post-Tax)
Cost of Preferred Stock
Cost of Equity
WACC

WACC
nual 1 = Computed
Computed

Manual
WACC
8.50%

Computed WACC
Proportion
Rate
Wtd. Cost
63.69%
3.10%
1.97%
6.36%
7.00%
0.45%
29.95%
16.03%
4.80%
7.22%

Discounted Cash Flow Analysis

NPV of Free Cash Flow
NPV of FCFF @ 6.00%
NPV of FCFF @ 7.00%
NPV of FCFF @ 8.00%

802,189
760,040
720,896

FV of Terminal Value (EBITDA)

Terminal Value @ 4.0x
Terminal Value @ 6.0x
Terminal Value @ 8.0x

PV of Terminal Value (E

2,819,044
4,228,567
5,638,089

FV of Terminal Value (Perpetuity)

2.5%
3.0%
Terminal Value @ 6.00%
3,291,577
3,858,906
Terminal Value @ 7.00%
2,560,116
2,894,180
Terminal Value @ 8.00%
2,094,640
2,315,344

Terminal Value @ 6.00%

Terminal Value @ 7.00%
Terminal Value @ 8.00%

PV of Terminal Value (Pe

3.5%
4,653,167
3,323,690
2,585,093

Terminal Value @ 6.00%

Terminal Value @ 7.00%
Terminal Value @ 8.00%

6.0%
7.0%
8.0%

Total Enterprise Value

EBITDA Multiple Method
4.0x
6.0x
8.0x
$2,376,329
$3,163,399
$3,950,468
6.0%
$2,193,100
$2,909,629
$3,626,159
7.0%
$2,026,659
$2,679,541
$3,332,422
8.0%

Perpetuity Growth Method

2.5%
3.0%
$2,640,189
$2,956,982
$2,061,474
$2,231,295
$1,691,120
$1,793,348

6.0%
7.0%
8.0%

Total Equity Value

EBITDA Multiple Method
4.0x
6.0x
8.0x
$1,792,941
$2,580,011
$3,367,081
$1,609,712
$2,326,242
$3,042,771
$1,443,272
$2,096,153
$2,749,035

6.0%
7.0%
8.0%

Perpetuity Growth Method

2.5%
3.0%
$2,056,801
$2,373,595
$1,478,086
$1,647,907
$1,107,732
$1,209,961

Total Equity Value Per Share

EBITDA Multiple Method
4.0x
6.0x
8.0x
$17.93
$25.80
$33.67
6.0%
$16.10
$23.26
$30.43
7.0%
$14.43
$20.96
$27.49
8.0%

Perpetuity Growth Method

2.5%
3.0%
$20.57
$23.74
$14.78
$16.48
$11.08
$12.10

6.0%
7.0%
8.0%

PV of Terminal Value (EBITDA)

4.0x
6.0x
1,574,140
2,361,210
1,433,059
2,149,589
1,305,763
1,958,645

8.0x
3,148,279
2,866,119
2,611,526

PV of Terminal Value (Perpetuity)

2.5%
3.0%
1,838,000
2,154,793
1,301,433
1,471,254
970,224
1,072,452

3.5%
2,598,304
1,689,596
1,197,398

uity Growth Method

3.5%
$3,400,493
$2,449,636
$1,918,294

uity Growth Method

3.5%
$2,817,105
$1,866,249
$1,334,907

uity Growth Method

3.5%
$28.17
$18.66
$13.35

Percentage Split of DCF Analysis

Cash Flow % of TEV:

@ 6.00%
@ 7.00%
@ 8.00%
Terminal Value % of TEV:
@ 6.00%
@ 7.00%
@ 8.00%

Cash Flow % of TEV:

@ 6.00%
@ 7.00%
@ 8.00%
Terminal Value % of TEV:
@ 6.00%
@ 7.00%
@ 8.00%

EBITDA Multiple Method

4.0x
6.0x
8.0x
33.8%
25.4%
20.3%
34.7%
26.1%
21.0%
35.6%
26.9%
21.6%
66.2%
65.3%
64.4%

74.6%
73.9%
73.1%

79.7%
79.0%
78.4%

Perpetuity Growth Method

2.5%
3.0%
3.5%
30.4%
27.1%
23.6%
36.9%
34.1%
31.0%
42.6%
40.2%
37.6%
69.6%
63.1%
57.4%

72.9%
65.9%
59.8%

76.4%
69.0%
62.4%

IRR / Returns Calculation

Exit Year

2018

Equity Allocation on Exit

Investment

Common - Sponsor Equity

Management Equity
New Equity
Subordinated Notes
Mezzanine Debt
Preferred Stock
Management Performance Equity
Total

Cash Flows & IRR

Subordinated Notes
Initial Investment
Cash Interest
Repayment
Principal
Participation on Exit
IRR

Mezzanine Debt
Initial Investment
Cash Interest
Repayment
Principal
Participation on Exit
IRR

Preferred Stock
Initial Investment
Cash Dividend
Repayment
Principal
Participation on Exit
IRR

Common - Sponsor Equity

Initial Investment
Cash Dividend
Participation on Exit
IRR

Management Equity

9
Undiluted

% Allocation

Diluted

Allocation

$220,000
40,000
25,000
40,000
70,000
60,000
N/A

77.19%
14.04%
8.77%
N/A
N/A
N/A
N/A

0.00%
0.00%
2.00%
3.00%
5.00%
4.00%
4.00%

63.30%
11.51%
9.19%
3.00%
5.00%
4.00%
4.00%

2,565,228
466,405
372,555
121,578
202,630
162,104
162,104

455,000

100.00%

18.00%

100.00%

4,052,606

Post-Acq
0

2010
1

2011
2

2012
3

2013
4

(40,000)

21.41%

(40,000)

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

0
0
0
0
0

1,930
0
1,930

2,084
0
2,084

2,200
0
2,200

2,393
0
2,393

(70,000)

20.56%

(70,000)

(60,000)

18.54%

(60,000)

(220,000)

31.82%

(220,000)

Initial Investment
Cash Dividend
Participation on Exit
IRR

New Equity
Initial Investment
Cash Dividend
Participation on Exit
IRR

(40,000)

36.21%

(40,000)

351
0
351

379
0
379

400
0
400

435
0
435

219
0
219

237
0
237

250
0
250

272
0
272

(25,000)

35.42%

(25,000)

Allocation of Exit Proceeds

EBITDA Multiple (Exit Year)
EBITDA (Exit Year)
Exit Year Enterprise Value

6.0x
645,545
3,873,273

Less: Debt
Less: Preferred Stock
Add: Excess Cash

0
84,153
263,486

Equity Value - Allocable Proceeds

2014
5

2015
6

2016
7

4,052,606

2017
8

2018
9

2019
10

0
47,701
0
0
47,701

97
2,147
0
0
2,243

0
0
0
0
0

0
0
0
0
0

0
0
0
121,578
121,578

0
0
0
0
0

0
50,779
0
0
50,779

1,640
36,454
0
0
38,094

(0)
(0)
0
0
(0)

(0)
(0)
0
0
(0)

(0)
(0)
0
202,630
202,630

0
0
0
0
0

0
0
0
0
0

5,891
0
0
0
5,891

5,891
0
0
0
5,891

5,891
0
0
0
5,891

5,891
0
84,153
162,104
252,148

0
0
0
0
0

2,663
0
2,663

2,702
0
2,702

2,856
0
2,856

3,088
0
3,088

3,165
2,565,228
2,568,393

0
0
0

484
0
484

491
0
491

519
0
519

561
0
561

575
628,509
629,085

0
0
0

303
0
303

307
0
307

325
0
325

351
0
351

360
372,555
372,915

0
0
0

Ratio Analysis
Year
Year No.

2010
1

2011
2

2012
3

2013
4

2014
5

Capital Ratios
Debt Ratio
Total Debt / Book Capitalization
Total Debt / Equity

0.7x
0.6x
1.6x

0.6x
0.5x
1.1x

0.5x
0.4x
0.7x

0.5x
0.3x
0.5x

0.4x
0.2x
0.3x

Leverage Ratios
Total Debt / EBITDA
Total Debt / (EBITDA - Capex)
Net Debt / EBITDA
Senior Debt / EBITDA

2.1x
3.2x
1.9x
1.4x

1.7x
2.6x
1.6x
1.1x

1.4x
2.1x
1.2x
0.8x

1.1x
1.6x
0.9x
0.5x

0.8x
1.2x
0.7x
0.5x

Interest Coverage
EBITDA / Total Interest
EBITDA / Senior Interest
EBITDA / Cash Interest

8.8x
12.3x
12.3x

10.0x
14.4x
14.4x

12.0x
18.6x
18.6x

14.9x
25.5x
25.5x

17.3x
32.1x
32.1x

(EBITDA - Capex) / Total Interest

(EBITDA - Capex) / Senior Interest
(EBITDA - Capex) / Cash Interest

5.8x
8.1x
8.1x

6.5x
9.4x
9.4x

7.8x
12.1x
12.1x

9.6x
16.6x
16.6x

11.2x
20.7x
20.7x

EBIT / Total Interest

6.8x

7.5x

9.1x

11.2x

12.8x

Asset Utilization
Total Asset Turnover (Sales)
Fixed Asset Turnover (Sales)

0.9x
2.2x

0.9x
2.3x

0.9x
2.3x

0.9x
2.4x

0.9x
2.5x

Activity Ratios
Inventory Turnover (COGS)
Accounts Receivable Turnover (Sales)
Accounts Payable Turnover (COGS & Inv)
Inventory Holding Period (Days)
Days Receivable (Sales)
Days Payable (COGS & Inv)

5.1x
7.8x
7.9x
71.9
47.0
46.4

5.1x
5.7x
7.0x
71.1
64.4
52.2

4.9x
5.4x
6.8x
73.9
67.6
53.8

4.7x
5.1x
6.7x
76.9
71.0
54.8

4.6x
4.9x
6.5x
79.9
74.5
55.9

Liquidity Ratios
Current Ratio
Quick (Acid Test) Ratio

2.3x
1.1x

2.3x
1.1x

2.3x
1.1x

2.4x
1.1x

2.4x
1.1x

Returns
Return on Equity (ROE)
Return on Assets (ROA)

38.72%
13.25%

30.19%
12.24%

25.61%
12.27%

22.52%
12.28%

20.02%
12.19%

N/A

10.00%

10.00%

10.00%

10.00%

Operating Results
Sales Growth

Gross Margin
EBITDA Margin
EBIT Margin
Pre-Tax Profit Ratio

55.00%
29.00%
22.37%
19.47%

54.89%
28.80%
21.77%
19.28%

54.77%
28.60%
21.54%
19.50%

54.66%
28.40%
21.27%
19.72%

54.55%
28.19%
20.88%
19.61%

2015
6

2016
7

2017
8

2018
9

2019
10

0.3x
0.2x
0.2x

0.3x
0.1x
0.1x

0.3x
0.0x
0.0x

0.3x
0.0x
0.0x

0.2x
0.0x
0.0x

0.5x
0.8x
0.4x
0.3x

0.3x
0.4x
0.2x
0.1x

0.1x
0.2x
-0.1x
0.0x

0.1x
0.2x
-0.3x
0.0x

0.1x
0.2x
-0.4x
0.0x

22.6x
35.4x
22.6x

30.2x
44.9x
30.2x

42.1x
72.5x
42.1x

54.3x
107.6x
54.3x

59.3x
117.5x
59.3x

14.5x
22.8x
14.5x

19.3x
28.8x
19.3x

26.8x
46.2x
26.8x

34.5x
68.3x
34.5x

37.5x
74.2x
37.5x

16.7x

24.5x

33.8x

43.5x

46.7x

0.9x
2.5x

0.9x
2.5x

0.9x
2.5x

0.8x
2.4x

0.8x
2.4x

4.4x
4.7x
6.4x
83.1
78.2
57.1

4.2x
4.4x
6.3x
86.5
82.1
58.2

4.1x
4.2x
6.1x
89.9
86.2
59.4

3.9x
4.0x
6.0x
93.5
90.6
60.6

3.8x
3.8x
5.9x
97.2
95.1
61.8

2.4x
1.1x

2.5x
1.2x

2.7x
1.4x

3.0x
1.6x

3.1x
1.7x

18.41%
12.17%

18.85%
13.32%

17.26%
12.68%

16.05%
11.92%

14.82%
11.14%

10.00%

10.00%

10.00%

10.00%

10.00%

54.43%
27.99%
20.72%
19.78%

54.32%
27.79%
22.58%
22.03%

54.21%
27.58%
22.18%
21.87%

54.09%
27.38%
21.95%
21.76%

53.98%
27.17%
21.40%
21.24%