macabacus.commacabacus.com/excel/xls/perpetuity-growth.xls · xls file · web viewdcf target...

Transaction Assumptions($ in millions, except per share data)

Summary Financial Data M&A Assumptions

Acquirer Target ConsiderationTransaction Price

Code Name BuyerCo TargetCo Percent Cash ConsiderationTicker BBB TTT

Deal StructureCurrent Price 5/17/2008 $31.75 5/17/2008 $12.81 Target LT Debt: 0=refinanced, 1=assumed52-Week High 4/2/2008 $40.36 6/4/2007 $28.22 Acquisition Type: 0=stock, 1=asset52-Week Low 8/24/2007 $27.18 6/13/2006 $10.49 Section 338 Election?

Basic Shares Outstanding 207.050 34.922 Acquisition DebtTreasury Method Shares 2.899 0.099 Interest Rate on DebtIn-the-Money Convertible Shares 0.000 0.000 Amortization Period for New Debt (yrs)Fully Diluted Shares Outstanding 209.949 35.021

CashEquity Value $6,665.9 $448.6 Interest Rate on CashNet Debt (729.6) 83.4 Minimum Cash BalanceEnterprise Value $5,936.3 $532.0

Fees & ExpensesConvert 1 Convert 2 Convert 1 Convert 2 Advisory Fees

Face Value $450.0 $0.0 $230.0 $0.0 Financing FeesConversion Price $43.12 NA $26.77 NA Convertible Shares 10.436 0.000 8.592 0.000 SynergiesInterest Rate 0.5% 0.0% 2.5% 0.0% Include Synergies?In the Money? no no no no Cost Synergies

SG&A SynergiesLTM Date 3/31/2008 3/31/2008Last Fiscal Year End 9/30/2007 12/31/2007 Purchase Price Allocation

% of Excess PP Allocated to Intangibles Research Report Analyst Deutsche Bank Goldman Sachs Amortization Period (yrs)Research Report Date 4/24/2008 4/27/2008 Step-Up of Target's Fixed Assets

Depreciation Period (yrs)Options Data

OtherBuyerCo Tax Rate

Number of Average Cumulative Cumulative Cumulative Treasury Calendar Year or Fiscal Year?Options (m) Strike Options (m) Strike ($m) Avg. Strike Shares Cash or GAAP?

Tranche 1 0.270 $2.31 0.270 $0.6 $2.31 0.250 Tranche 2 1.548 12.31 1.818 19.7 10.82 0.948 Tranche 3 2.855 22.00 4.673 82.5 17.65 0.877 Tranche 4 2.431 25.07 7.104 143.4 20.19 0.511 Tranche 5 2.182 27.88 9.286 204.3 22.00 0.266 Tranche 6 3.394 31.31 12.680 310.5 24.49 0.047 Tranche 7 2.678 34.35 15.358 402.5 26.21 0.000 Tranche 8 2.138 38.63 17.496 485.1 27.73 0.000

Tranche 9 2.631 52.72 20.127 623.8 30.99 0.000 Tranche 10 0.329 70.00 20.456 646.9 31.62 0.000

Total 2.899

TargetCoNumber of Average Cumulative Cumulative Cumulative TreasuryOptions (m) Strike Options (m) Strike ($m) Avg. Strike Shares

Tranche 1 0.209 $9.04 0.209 $1.9 $9.04 0.062 Tranche 2 0.059 10.03 0.268 2.5 9.26 0.013 Tranche 3 0.221 11.53 0.489 5.0 10.28 0.022 Tranche 4 0.300 12.69 0.789 8.8 11.20 0.003 Tranche 5 0.269 19.54 1.058 14.1 13.32 0.000 Tranche 6 0.211 27.06 1.269 19.8 15.60 0.000 Tranche 7 0.187 45.75 1.456 28.4 19.48 0.000 Tranche 8 0.000 0.00 1.456 28.4 19.48 0.000 Tranche 9 0.000 0.00 1.456 28.4 19.48 0.000 Tranche 10 0.000 0.00 1.456 28.4 19.48 0.000

Total 0.099

M&A Assumptions

ConsiderationTransaction Price 3Percent Cash Consideration 40.0%

Deal StructureTarget LT Debt: 0=refinanced, 1=assumed 1Acquisition Type: 0=stock, 1=asset 0Section 338 Election? no

Acquisition DebtInterest Rate on Debt 6.00%Amortization Period for New Debt (yrs) 7

Interest Rate on Cash 2.0% Minimum Cash Balance $100.0

Fees & ExpensesAdvisory Fees $30.0 Financing Fees 1.0%

SynergiesInclude Synergies? yesCost Synergies $25.0 SG&A Synergies $50.0

Purchase Price Allocation% of Excess PP Allocated to Intangibles 25.0% Amortization Period (yrs) 5 Step-Up of Target's Fixed Assets $15.0 Depreciation Period (yrs) 10

13.8% Calendar Year or Fiscal Year? FYCash or GAAP? Cash

T7

This integer value will correspond to a offer price per TargetCo share once we determine what range of offer prices we want to consider for this deal.

T8

Consideration paid to TargetCo's shareholders may comprise cash and/or BuyerCo stock.

T17

The period over which debt used to acquire TargetCo must be repaid.

T20

The rate at which interest would accrue on any cash balance.

T21

This is the minimum amount of cash that the combined company is expected to need to fund its operations.

T39

Always use the acquirer's tax rate. We will plug in this number after building the acquirer's P&L.

Accretion / Dilution Analysis($ in millions, except per share data)

Standalone All StockBuyerCo

Transaction Value Per Share $12.00 $13.00 $14.00 Equity Purchase Price $6,665.9 $419.9 $455.4 $491.1

Multiples AnalysisFY 2008P Revenue 1.90x 1.10x 1.18x 1.25x FY 2009P Revenue 1.71x 1.08x 1.15x 1.23x

FY 2008P EBITDA 8.9x 3.9x 4.1x 4.4x FY 2009P EBITDA 8.1x 4.0x 4.3x 4.5x

FY 2008P Cash P/E 13.6x 4.2x 4.6x 4.9x FY 2009P Cash P/E 11.7x 4.5x 4.9x 5.3x

BuyerCo StandaloneFY 2009P Cash Net Income $606.9 $606.9 $606.9 FY 2009P Shares Outstanding 224.286 224.286 224.286 FY 2009P Cash EPS $2.71 $2.71 $2.71

After-Tax Acquisition AdjustmentsTargetCo FY 2009P Cash Net Income $96.9 $96.9 $96.9 Interest Lost on Cash Used (0.5) (0.5) (0.5)Incremental Interest on New Debt - - - Interest Gained on Conversion of Convert(s) - - - Deferred Stock-Based Compensation - - - Amortization of Indentifiable Intangibles - - - Depreciation of Acquired Tangible Assets (1.3) (1.3) (1.3)Write-Down of Deferred Revenue (12.9) (12.9) (12.9)

Pro Forma Cash Net Income Without Synergies $689.1 $689.1 $689.1 After-Tax Synergies 64.7 64.7 64.7

Pro Forma Cash Net Income With Synergies $753.7 $753.7 $753.7

Dilutes Shares - Treasury MethodBuyerCo FY 2009P Shares Outstanding 224.286 224.286 224.286 Shares Issued for TargetCo Basic Shares 13.225 14.344 15.468

Total Shares Post-Transaction 237.511 238.630 239.754

FY 2009P Cash EPS Without Synergies $2.71 $2.90 $2.89 $2.87 $ Accretion / Dilution $0.20 $0.18 $0.17 % Accretion / Dilution 7.2% 6.7% 6.2% Pre-Tax Synergies to Breakeven ($53.8) ($50.3) ($46.8)% of Combined Opex (Excl. Syngergies) (1.6%) (1.5%) (1.4%)

FY 2009P Cash EPS With Synergies $2.71 $3.17 $3.16 $3.14 $ Accretion / Dilution $0.47 $0.45 $0.44 % Accretion / Dilution 17.3% 16.7% 16.2% Pre-Tax Synergies to Breakeven ($128.8) ($125.3) ($121.8)% of Combined Opex (Excl. Syngergies) (3.9%) (3.8%) (3.7%)

I27

Assume that the only cash outflow in an all-stock transaction, the fees, can be paid for without raising new debt.

I32

Assume the transaction closes in FY09 and the write-down occurs in that year.

All Stock 60.0% Stock / 40.0% Cash

$15.00 $16.00 $17.00 $18.00 $12.00 $13.00 $14.00 $15.00 $526.8 $562.5 $598.3 $634.0 $419.9 $455.4 $491.1 $526.8

1.33x 1.41x 1.49x 1.57x 1.10x 1.18x 1.25x 1.33x 1.30x 1.38x 1.46x 1.53x 1.08x 1.15x 1.23x 1.30x



$606.9 $606.9 $606.9 $606.9 $606.9 $606.9 $606.9 $606.9 224.286 224.286 224.286 224.286 224.286 224.286 224.286 224.286

$2.71 $2.71 $2.71 $2.71 $2.71 $2.71 $2.71 $2.71

$96.9 $96.9 $96.9 $96.9 $96.9 $96.9 $96.9 $96.9 (0.5) (0.5) (0.5) (0.5) - - - -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(1.3) (1.3) (1.3) (1.3) (1.3) (1.3) (1.3) (1.3)(12.9) (12.9) (12.9) (12.9) (12.9) (12.9) (12.9) (12.9)

$689.1 $689.1 $689.1 $689.1 $689.6 $689.6 $689.6 $689.6 64.7 64.7 64.7 64.7 64.7 64.7 64.7 64.7

$753.7 $753.7 $753.7 $753.7 $754.3 $754.3 $754.3 $754.3

224.286 224.286 224.286 224.286 224.286 224.286 224.286 224.286 16.593 17.718 18.843 19.967 7.935 8.606 9.281 9.956

240.879 242.004 243.129 244.253 232.221 232.892 233.567 234.242

$2.86 $2.85 $2.83 $2.82 $2.97 $2.96 $2.95 $2.94 $0.15 $0.14 $0.13 $0.12 $0.26 $0.26 $0.25 $0.24 5.7% 5.2% 4.7% 4.3% 9.7% 9.4% 9.1% 8.8%

($43.2) ($39.7) ($36.2) ($32.6) ($71.0) ($68.9) ($66.8) ($64.6)(1.3%) (1.2%) (1.1%) (1.0%) (2.2%) (2.1%) (2.0%) (2.0%)

$3.13 $3.11 $3.10 $3.09 $3.25 $3.24 $3.23 $3.22 $0.42 $0.41 $0.39 $0.38 $0.54 $0.53 $0.52 $0.51

15.6% 15.1% 14.6% 14.0% 20.0% 19.7% 19.3% 19.0% ($118.2) ($114.7) ($111.2) ($107.6) ($146.0) ($143.9) ($141.8) ($139.6)

(3.6%) (3.5%) (3.4%) (3.3%) (4.5%) (4.4%) (4.3%) (4.3%)

X26

If the cash consideration is assumed to be either 0% or 100% of the total, you must first plug in 50% for "pct_cash" to get the values in this row, copy/paste the values (without equations) in place, then set "pct_cash" back to 0% or 100% as desired. This is because the equation in these cells cannot handle the default 50% cash/stock mix when "pct_cash" is set to 0% or 100%.

60.0% Stock / 40.0% Cash All Cash

$16.00 $17.00 $18.00 $12.00 $13.00 $14.00 $15.00 $16.00 $562.5 $598.3 $634.0 $419.9 $455.4 $491.1 $526.8 $562.5




$606.9 $606.9 $606.9 $606.9 $606.9 $606.9 $606.9 $606.9 224.286 224.286 224.286 224.286 224.286 224.286 224.286 224.286

$2.71 $2.71 $2.71 $2.71 $2.71 $2.71 $2.71 $2.71

$96.9 $96.9 $96.9 $96.9 $96.9 $96.9 $96.9 $96.9 - - - (7.8) (8.4) (9.0) (9.6) (10.2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(1.3) (1.3) (1.3) (1.3) (1.3) (1.3) (1.3) (1.3)(12.9) (12.9) (12.9) (12.9) (12.9) (12.9) (12.9) (12.9)

$689.6 $689.6 $689.6 $681.8 $681.2 $680.6 $680.0 $679.4 64.7 64.7 64.7 64.7 64.7 64.7 64.7 64.7

$754.3 $754.3 $754.3 $746.5 $745.9 $745.3 $744.7 $744.0

224.286 224.286 224.286 224.286 224.286 224.286 224.286 224.286 10.631 11.306 11.980 - - - - -

234.917 235.592 236.266 224.286 224.286 224.286 224.286 224.286

$2.94 $2.93 $2.92 $3.04 $3.04 $3.03 $3.03 $3.03 $0.23 $0.22 $0.21 $0.33 $0.33 $0.33 $0.33 $0.32 8.5% 8.2% 7.9% 12.3% 12.2% 12.1% 12.0% 11.9%

($62.5) ($60.4) ($58.3) ($86.9) ($86.2) ($85.5) ($84.8) ($84.0)(1.9%) (1.8%) (1.8%) (2.7%) (2.6%) (2.6%) (2.6%) (2.6%)

$3.21 $3.20 $3.19 $3.33 $3.33 $3.32 $3.32 $3.32 $0.50 $0.50 $0.49 $0.62 $0.62 $0.62 $0.61 $0.61

18.7% 18.3% 18.0% 23.0% 22.9% 22.8% 22.7% 22.6% ($137.5) ($135.4) ($133.3) ($161.9) ($161.2) ($160.5) ($159.8) ($159.0)

(4.2%) (4.1%) (4.1%) (5.0%) (4.9%) (4.9%) (4.9%) (4.9%)

AM27

To get these values, first plug in the exact same equations used in cells AA27:AM27. Next, set "pct_cash" to 100% on the Assumptions tab. Then, copy/paste in place the values (without equations) in cells AP27:BB27. Lastly, reset "pct_cash" on the Assumptions tab to its prior value. Each time certain assumptions change, such as "pct_cash", remember to repeat this process. These cumbersome steps are necessary because there is no easy way to formulaically compute these values.

All Cash

$17.00 $18.00 $598.3 $634.0

1.49x 1.57x 1.46x 1.53x

5.2x 5.5x 5.4x 5.7x

6.0x 6.3x 6.4x 6.8x

$606.9 $606.9 224.286 224.286

$2.71 $2.71

$96.9 $96.9 (10.8) (11.5)

- - - - - - - -

(1.3) (1.3)(12.9) (12.9)

$678.8 $678.1 64.7 64.7

$743.4 $742.8

224.286 224.286 - - 224.286 224.286

$3.03 $3.02 $0.32 $0.32

11.8% 11.7% ($83.3) ($82.6)(2.5%) (2.5%)

$3.31 $3.31 $0.61 $0.61

22.5% 22.4% ($158.3) ($157.6)

(4.8%) (4.8%)

Contribution Analysis($ in millions, except per share data)

BuyerCo TargetCoFY08 FY09 FY08 FY09 FY08 FY09

Revenue $3,120.0 $3,470.0 $458.1 $468.0 $3,578.1 $3,938.0 % Growth 10.0% 11.2% 13.8% 2.2% 10.5% 10.1%

EBITDA $667.9 $734.2 $130.2 $126.5 $798.1 $860.7 % Margin 21.4% 21.2% 28.4% 27.0% 22.3% 21.9%

GAAP Net Income $415.5 $507.1 $76.3 $70.6 $491.9 $577.8 % Margin 13.3% 14.6% 16.7% 15.1% 13.7% 14.7%

Cash Net Income $516.3 $606.9 $102.8 $96.9 $619.1 $703.8 % Margin 16.5% 17.5% 22.4% 20.7% 17.3% 17.9%

ContributionRevenue 87.2% 88.1% 12.8% 11.9% 100.0% 100.0% EBITDA 83.7% 85.3% 16.3% 14.7% 100.0% 100.0% GAAP Net Income 84.5% 87.8% 15.5% 12.2% 100.0% 100.0% Cash Net Income 83.4% 86.2% 16.6% 13.8% 100.0% 100.0%

(1) Excludes acquisition accounting and financing adjustments and synergies.(2) Excludes acquisition accounting and financing adjustments.

Combined (1)

SynergiesFY08 FY09 FY08 FY09

$0.0 $0.0 $3,578.1 $3,938.0 10.5% 10.1%

$0.0 $75.0 $798.1 $935.7 22.3% 23.8%

$0.0 $64.7 $556.5 $642.4 15.6% 16.3%

$0.0 $64.7 $683.7 $768.5 19.1% 19.5%

Pro Forma (2)

Purchase Price Ratio Analysis($ in millions, except per share data)

TargetCo Transaction Prices Per TargetCo Share$12.81 $12.00 $13.00 $14.00

Common Stock $447.4 $419.1 $454.0 $488.9 Stock Options 1.3 0.8 1.4 2.2 ITM Convertible Securities 0.0 0.0 0.0 0.0

Total Diluted Equity Value $448.6 $419.9 $455.4 $491.1 Net Debt 83.4 83.4 83.4 83.4

Total Enterprise Value $532.0 $503.3 $538.8 $574.5

Premiums Analysis: TargetCo

Current Price $12.81 0.0% (6.3%) 1.5% 9.3% 52-Week High 28.22 (54.6%) (57.5%) (53.9%) (50.4%)52-Week Low 10.49 22.1% 14.4% 23.9% 33.5% 7-Day Trading Average 12.64 1.3% (5.1%) 2.8% 10.8% 30-Day Trading Average 12.12 5.7% (1.0%) 7.3% 15.5% 60-Day Trading Average 11.71 9.4% 2.5% 11.0% 19.6% 90-Day Trading Average 12.03 6.5% (0.2%) 8.1% 16.4%

Multiples Analysis:

FY 2008P Revenue $458.1 1.16x 1.10x 1.18x 1.25x FY 2009P Revenue 468.0 1.14x 1.08x 1.15x 1.23x FY 2010P Revenue 470.5 1.13x 1.07x 1.15x 1.22x

FY 2008P EBITDA $130.2 4.1x 3.9x 4.1x 4.4x FY 2009P EBITDA 126.5 4.2x 4.0x 4.3x 4.5x FY 2010P EBITDA 125.9 4.2x 4.0x 4.3x 4.6x

FY 2008P EBITA $116.1 4.6x 4.3x 4.6x 4.9x FY 2009P EBITA 112.4 4.7x 4.5x 4.8x 5.1x FY 2010P EBITA 111.8 4.8x 4.5x 4.8x 5.1x

FY 2008P Cash P/E $2.85 4.5x 4.2x 4.6x 4.9x FY 2009P Cash P/E 2.65 4.8x 4.5x 4.9x 5.3x FY 2010P Cash P/E 2.64 4.9x 4.6x 4.9x 5.3x

Transaction Prices Per TargetCo Share BuyerCo$15.00 $16.00 $17.00 $18.00 $31.75

$523.8 $558.8 $593.7 $628.6 $6,573.8 3.0 3.8 4.6 5.4 92.1 0.0 0.0 0.0 0.0 0.0

$526.8 $562.5 $598.3 $634.0 $6,665.9 83.4 83.4 83.4 83.4 (729.6)

$610.2 $645.9 $681.6 $717.4 $5,936.3

BuyerCo

17.1% 24.9% 32.7% 40.5% 0.0% $31.75 (46.8%) (43.3%) (39.8%) (36.2%) (21.3%) 40.36 43.0% 52.5% 62.1% 71.6% 16.8% 27.18 18.7% 26.6% 34.5% 42.4% (0.5%) 31.92 23.8% 32.0% 40.3% 48.5% 3.9% 30.56 28.1% 36.6% 45.2% 53.7% 5.7% 30.04 24.7% 33.0% 41.3% 49.6% 3.2% 30.77

1.33x 1.41x 1.49x 1.57x 1.90x $3,120.0 1.30x 1.38x 1.46x 1.53x 1.71x 3,470.0 1.30x 1.37x 1.45x 1.52x 1.54x 3,856.0

4.7x 5.0x 5.2x 5.5x 8.9x $667.9 4.8x 5.1x 5.4x 5.7x 8.1x 734.2 4.8x 5.1x 5.4x 5.7x 7.1x 832.7



Sources & Uses of Funds($ in millions, except per share data)

CurrentPrice Transaction Prices Per TargetCo Share

$12.81 $12.00 $13.00

Sources & Uses

UsesTargetCo Common Consideration $448.6 $419.9 $455.4 TargetCo Options Consideration 6.9 6.1 7.0 TargetCo Preferred Consideration 0.0 0.0 0.0

Total Equity Consideration $455.5 $426.0 $462.4

TargetCo Revolver Refinanced 0.0 0.0 0.0 TargetCo Convertible Debt Assumed 230.0 230.0 230.0 TargetCo Convertible Debt Refinanced/Retired 0.0 0.0 0.0 TargetCo Non-Convertible LT Debt Assumed 0.0 0.0 0.0 TargetCo Non-Convertible LT Debt Refinanced/Retired 0.0 0.0 0.0

Total Levered Consideration $685.5 $656.0 $692.4

Acquirer Refinanced Debt 0.0 0.0 0.0 Financing Fees 0.0 0.0 0.0 Advisory Fees 30.0 30.0 30.0

Total Uses $715.5 $686.0 $722.4

SourcesBuyerCo Common Consideration $269.2 $251.9 $273.2 BuyerCo Options Consideration 6.9 6.1 7.0 BuyerCo Preferred Consideration 0.0 0.0 0.0 Cash Consideration 209.4 198.0 212.2 BuyerCo Revolver 0.0 0.0 0.0 Acquisition Debt 0.0 0.0 0.0 TargetCo LT Debt Assumed 230.0 230.0 230.0

Total Sources $715.5 $686.0 $722.4

Check 0.000 0.000 0.000

Cash Schedule

Cash AvailableBuyerCo Existing Cash $1,181.8 $1,181.8 $1,181.8 TargetCo Existing Cash 146.6 146.6 146.6 Minimum Cash Balance (100.0) (100.0) (100.0)

Total Cash Available $1,228.4 $1,228.4 $1,228.4

Cash NeededCash Paid to TargetCo Shareholders $179.4 $168.0 $182.2 Financing Fees 0.0 0.0 0.0 Advisory Fees 30.0 30.0 30.0 BuyerCo Debt Retired 0.0 0.0 0.0 TargetCo Debt Retired 0.0 0.0 0.0

F30

By linking directly to the target's options consideration, we assumed that the target's options are rolled over with acquirer options. If the FV of the replacement options exceeds the FV of the Target's options assumed, the difference should be immediately recognized as compensation expense.

Cash Needed Before Revolver $209.4 $198.0 $212.2 Optional Paydown of TargetCo Revolver 0.0 0.0 0.0 Optional Paydown of BuyerCo Revolver 0.0 0.0 0.0

Total Cash Needed $209.4 $198.0 $212.2

Transaction Prices Per TargetCo Share$14.00 $15.00 $16.00 $17.00 $18.00

Sources & Uses

$491.1 $526.8 $562.5 $598.3 $634.0 8.0 8.9 9.9 10.9 12.0 0.0 0.0 0.0 0.0 0.0

$499.1 $535.8 $572.5 $609.2 $646.0

0.0 0.0 0.0 0.0 0.0 230.0 230.0 230.0 230.0 230.0

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

$729.1 $765.8 $802.5 $839.2 $876.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

30.0 30.0 30.0 30.0 30.0 $759.1 $795.8 $832.5 $869.2 $906.0

$294.7 $316.1 $337.5 $359.0 $380.4 8.0 8.9 9.9 10.9 12.0 0.0 0.0 0.0 0.0 0.0

226.4 240.7 255.0 269.3 283.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

230.0 230.0 230.0 230.0 230.0 $759.1 $795.8 $832.5 $869.2 $906.0

0.000 0.000 0.000 0.000 0.000

Cash Schedule

$1,181.8 $1,181.8 $1,181.8 $1,181.8 $1,181.8 146.6 146.6 146.6 146.6 146.6

(100.0) (100.0) (100.0) (100.0) (100.0)$1,228.4 $1,228.4 $1,228.4 $1,228.4 $1,228.4

$196.4 $210.7 $225.0 $239.3 $253.6 0.0 0.0 0.0 0.0 0.0

30.0 30.0 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

$226.4 $240.7 $255.0 $269.3 $283.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

$226.4 $240.7 $255.0 $269.3 $283.6

Purchase Price Allocation and Accounting Adjustments($ in millions, except per share data)

CurrentPrice Transaction Prices Per TargetCo Share

$12.81 $12.00 $13.00

Fair Value of Options Issued by Acquirer

Unvested OptionsWeighted Average Strike $14.60 $14.60 $14.60 Weighted Average Remaining Term (yrs) 4.0 4.0 4.0 Black Scholes Value Per Option $5.89 $5.30 $6.03 Options Outstanding 0.980 0.980 0.980

Fair Value of Unvested Options $5.8 $5.2 $5.9

Vested OptionsWeighted Average Strike $29.49 $29.49 $29.49 Weighted Average Remaining Term (yrs) 2.7 2.7 2.7 Black Scholes Value Per Option $2.28 $1.96 $2.35 Options Outstanding 0.476 0.476 0.476

Fair Value of Vested Options $1.1 $0.9 $1.1

Purchase Price Calculation

Common Equity Consideration $448.6 $419.9 $455.4 Fair Value of Unvested Options 5.8 5.2 5.9 Fair Value of Vested Options 1.1 0.9 1.1 Fair Value of Preferred Stock 0.0 0.0 0.0

Total Purchase Price $455.5 $426.0 $462.4

Unearned Compensation $0.0 $0.0 $0.0 Adjusted Purchase Price $455.5 $426.0 $462.4

Purchase Price Allocation

Adjusted Purchase Price $455.5 $426.0 $462.4 Less: Target Book Value of Net Assets (97.9) (97.9) (97.9)

Excess Purchase Price to Allocate $357.6 $328.2 $364.6

Write-Up of Tangible Assets $15.0 $15.0 $15.0 Write-Up of Identifiable Intangible Assets 89.4 82.0 91.1 Write-Off of Target's Existing Goodwill (61.1) (61.1) (61.1)Write-Off of Target's Existing DTL 0.0 0.0 0.0

Allocation to Goodwill (Before DTL Allocation) $314.3 $292.2 $319.5

DTL From Write-Up of Assets ($14.4) ($13.4) ($14.6)DTL From Deferred Compensation 0.0 0.0 0.0

Total Goodwill Created $328.7 $305.6 $334.1

Amortization of Identifiable Intangibles

Excess of Purchase Price Over Book Value $357.6 $328.2 $364.6

J14

In millions.

J21

In millions.

% Allocated to Identifiable Intangibles 25.0% 25.0% 25.0% Write-Up of Intangible Assets $89.4 $82.0 $91.1

Amortization Period (yrs) 5.0 5.0 5.0 Annual Incremental Amortization Expense $17.9 $16.4 $18.2

Marginal Tax Rate 13.8% 13.8% 13.8% After-Tax Annual Amortization Expense $15.4 $14.1 $15.7

Depreciation of Fixed Asset Write-Up

Write-Up of Tangible Assets $15.0 $15.0 $15.0 Depreciation Period (yrs) 10.0 10.0 10.0

Annual Incremental Depreciation Expense $1.5 $1.5 $1.5

Marginal Tax Rate 13.8% 13.8% 13.8% After-Tax Annual Depreciation Expense $1.3 $1.3 $1.3

Deferred Revenue Write-Down

TargetCo Deferred Revenue Balance $20.0 $20.0 $20.0 % Fair Value to Book Value 25.0% 25.0% 25.0%

Deferred Revenue Write-Down $15.0 $15.0 $15.0

Deferred Revenue Period (yrs) 1.0 1.0 1.0 Annual Deferred Revenue Write-Down $15.0 $15.0 $15.0

Marginal Tax Rate 13.8% 13.8% 13.8% After-Tax Annual Write-Down Expense $12.9 $12.9 $12.9

Deferred Stock-Based Compensation Expense (FIN 44)

Intrinsic Value of Unvested Options $0.0 $0.0 $0.0 Write-Up for Deferred Compensation 0.0 0.0 0.0 Annual Compensation Expense 0.0 0.0 0.0 Margin Tax Rate 13.8% 13.8% 13.8%

After-Tax Annual Compensation Expense $0.0 $0.0 $0.0

Options Calculations

Intrinsic Value at Transaction Price of:Options Ex. Price $12.81 $12.00 $13.00

Tranche 1 0.000 $0.00 $0.0 $0.0 $0.0 Tranche 2 0.000 $0.00 0.0 0.0 0.0 Tranche 3 0.000 $0.00 0.0 0.0 0.0 Tranche 4 0.000 $0.00 0.0 0.0 0.0 Tranche 5 0.000 $0.00 0.0 0.0 0.0 Tranche 6 0.000 $0.00 0.0 0.0 0.0 Tranche 7 0.000 $0.00 0.0 0.0 0.0 Tranche 8 0.000 $0.00 0.0 0.0 0.0 Tranche 9 0.000 $0.00 0.0 0.0 0.0 Tranche 10 0.000 $0.00 0.0 0.0 0.0 Total 0.000 $0.0 $0.0 $0.0

Vesting Period

Life Remaining Unearned Compensation EntryTranche 1 0.0 0.0 $0.0 $0.0 $0.0 Tranche 2 0.0 0.0 0.0 0.0 0.0 Tranche 3 0.0 0.0 0.0 0.0 0.0 Tranche 4 0.0 0.0 0.0 0.0 0.0 Tranche 5 0.0 0.0 0.0 0.0 0.0 Tranche 6 0.0 0.0 0.0 0.0 0.0 Tranche 7 0.0 0.0 0.0 0.0 0.0 Tranche 8 0.0 0.0 0.0 0.0 0.0 Tranche 9 0.0 0.0 0.0 0.0 0.0 Tranche 10 0.0 0.0 0.0 0.0 0.0 Total $0.0 $0.0 $0.0

RemainingVest. Per. Annual Compensation Expense

Tranche 1 0.0 $0.0 $0.0 $0.0 Tranche 2 0.0 0.0 0.0 0.0 Tranche 3 0.0 0.0 0.0 0.0 Tranche 4 0.0 0.0 0.0 0.0 Tranche 5 0.0 0.0 0.0 0.0 Tranche 6 0.0 0.0 0.0 0.0 Tranche 7 0.0 0.0 0.0 0.0 Tranche 8 0.0 0.0 0.0 0.0 Tranche 9 0.0 0.0 0.0 0.0 Tranche 10 0.0 0.0 0.0 0.0 Total $0.0 $0.0 $0.0

Unvested Black Scholes ValueStock Price $12.81 $12.00 $13.00 Strike Price $14.60 $14.60 $14.60 Expiration (yrs) 4.0 4.0 4.0 Volatility 60.0% 60.0% 60.0% Dividend Yield 0.0% 0.0% 0.0% Risk-Free Rate 4.0% 4.0% 4.0% d1 0.6243 0.5699 0.6366 d2 (0.5757) (0.6301) (0.5634)N(d1) 0.7338 0.7156 0.7378 N(d2) 0.2824 0.2643 0.2866

Black Scholes Value Per Option $5.89 $5.30 $6.03

Vested Black Scholes ValueStock Price $12.81 $12.00 $13.00 Strike Price $29.49 $29.49 $29.49 Expiration (yrs) 2.7 2.7 2.7 Volatility 60.0% 60.0% 60.0% Dividend Yield 0.0% 0.0% 0.0% Risk-Free Rate 4.0% 4.0% 4.0% d1 (0.2433) (0.3095) (0.2283)d2 (1.2292) (1.2954) (1.2142)N(d1) 0.4039 0.3785 0.4097 N(d2) 0.1095 0.0976 0.1123

Black Scholes Value Per Option $2.28 $1.96 $2.35

J140

Dividend yield equals a company's most recent full-year dividend payout divided by the average share price over that period.

J141

4.0% is a commonly used value for the risk-free rate.

Transaction Prices Per TargetCo Share$14.00 $15.00 $16.00 $17.00 $18.00

Fair Value of Options Issued by Acquirer

$14.60 $14.60 $14.60 $14.60 $14.60 4.0 4.0 4.0 4.0 4.0

$6.77 $7.54 $8.32 $9.12 $9.93 0.980 0.980 0.980 0.980 0.980

$6.6 $7.4 $8.2 $8.9 $9.7

$29.49 $29.49 $29.49 $29.49 $29.49 2.7 2.7 2.7 2.7 2.7

$2.78 $3.23 $3.71 $4.22 $4.74 0.476 0.476 0.476 0.476 0.476

$1.3 $1.5 $1.8 $2.0 $2.3

Purchase Price Calculation

$491.1 $526.8 $562.5 $598.3 $634.0 6.6 7.4 8.2 8.9 9.7 1.3 1.5 1.8 2.0 2.3 0.0 0.0 0.0 0.0 0.0

$499.1 $535.8 $572.5 $609.2 $646.0

$0.0 $0.0 $0.0 $0.0 $0.0 $499.1 $535.8 $572.5 $609.2 $646.0

Purchase Price Allocation

$499.1 $535.8 $572.5 $609.2 $646.0 (97.9) (97.9) (97.9) (97.9) (97.9)

$401.2 $437.9 $474.6 $511.3 $548.1

$15.0 $15.0 $15.0 $15.0 $15.0 100.3 109.5 118.7 127.8 137.0 (61.1) (61.1) (61.1) (61.1) (61.1)

0.0 0.0 0.0 0.0 0.0 $347.0 $374.5 $402.1 $429.6 $457.2

($15.9) ($17.1) ($18.4) ($19.7) ($20.9)0.0 0.0 0.0 0.0 0.0

$362.9 $391.7 $420.5 $449.3 $478.1

Amortization of Identifiable Intangibles

$401.2 $437.9 $474.6 $511.3 $548.1

25.0% 25.0% 25.0% 25.0% 25.0% $100.3 $109.5 $118.7 $127.8 $137.0

5.0 5.0 5.0 5.0 5.0 $20.1 $21.9 $23.7 $25.6 $27.4

13.8% 13.8% 13.8% 13.8% 13.8% $17.3 $18.9 $20.5 $22.0 $23.6

Depreciation of Fixed Asset Write-Up

$15.0 $15.0 $15.0 $15.0 $15.0 10.0 10.0 10.0 10.0 10.0 $1.5 $1.5 $1.5 $1.5 $1.5

13.8% 13.8% 13.8% 13.8% 13.8% $1.3 $1.3 $1.3 $1.3 $1.3

Deferred Revenue Write-Down

$20.0 $20.0 $20.0 $20.0 $20.0 25.0% 25.0% 25.0% 25.0% 25.0% $15.0 $15.0 $15.0 $15.0 $15.0

1.0 1.0 1.0 1.0 1.0 $15.0 $15.0 $15.0 $15.0 $15.0

13.8% 13.8% 13.8% 13.8% 13.8% $12.9 $12.9 $12.9 $12.9 $12.9

Deferred Stock-Based Compensation Expense (FIN 44)

$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

13.8% 13.8% 13.8% 13.8% 13.8% $0.0 $0.0 $0.0 $0.0 $0.0

Options Calculations

Intrinsic Value at Transaction Price of:$14.00 $15.00 $16.00 $17.00 $18.00

$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 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

Unearned Compensation Entry$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 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

Annual Compensation Expense$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 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

$14.00 $15.00 $16.00 $17.00 $18.00 $14.60 $14.60 $14.60 $14.60 $14.60

4.0 4.0 4.0 4.0 4.0 60.0% 60.0% 60.0% 60.0% 60.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% 4.0%

0.6984 0.7559 0.8096 0.8602 0.9078 (0.5016) (0.4441) (0.3904) (0.3398) (0.2922)0.7575 0.7751 0.7909 0.8051 0.8180 0.3080 0.3285 0.3481 0.3670 0.3851 $6.77 $7.54 $8.32 $9.12 $9.93

$14.00 $15.00 $16.00 $17.00 $18.00 $29.49 $29.49 $29.49 $29.49 $29.49

2.7 2.7 2.7 2.7 2.7 60.0% 60.0% 60.0% 60.0% 60.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% 4.0%

(0.1532) (0.0832) (0.0177) 0.0438 0.1018 (1.1391) (1.0691) (1.0036) (0.9421) (0.8841)0.4391 0.4669 0.4929 0.5175 0.5405 0.1273 0.1425 0.1578 0.1731 0.1883 $2.78 $3.23 $3.71 $4.22 $4.74

Pro Forma Balance Sheet($ in millions, except per share data)

Transaction Value Per Share $14.00 BuyerCo TargetCo Adjustments3/31/2008 3/31/2008 Write-Up Financing

AssetsCurrent Assets

Cash and Equivalents $1,181.8 $146.6 ($226.4)Accounts Receivable 568.5 131.4 Inventory 0.0 0.0 Deferred Income Taxes 109.0 8.8 Other Current Assets 113.5 8.2

Total Current Assets $1,972.7 $295.1

Net PP&E $296.3 $33.0 15.0 Goodwill 1,487.6 61.1 301.8 Intangibles 284.7 37.5 100.3 Investments/Restricted Cash 0.0 0.0 Unearned Compensation 0.0 0.0 0.0 Deferred Financing Fees 0.0 0.0 0.0 Other Assets 464.0 14.3

Total Assets $4,505.4 $440.9

Liabilities and Stockholders' EquityCurrent Liabilities

Accounts Payable $186.1 $20.7 Accrued Expenses 395.3 15.4 Income Taxes Payable 35.9 2.9 Deferred Revenue 209.2 20.0 Other Current Liabilities 0.0 36.2 Current Portion of Long-Term Debt 2.2 0.0

Total Current Liabilities $828.7 $95.2

Revolver $0.0 $0.0 $0.0 Non-Convertible Debt 0.0 0.0 0.0 Convertible Debt 450.0 230.0 0.0 Deferred Income Taxes 0.0 0.0 15.9 Other Long-Term Liabilities 503.0 17.9

Total Liabilities $1,781.7 $343.1

Preferred Stock, par value $0.0 $0.0 $0.0 Common Stock, par value 3.9 0.6 294.0 APIC 2,212.7 350.7 (342.8)Treasury Stock (774.7) (667.9) 667.9 Accum. & Other Comp. Income (Loss) 6.6 (0.4) 0.4 Retained Earnings 1,275.2 414.7 (444.7)

Total Stockholders' Equity $2,723.7 $97.9 Total Liabilities and Stockholders' Equity $4,505.4 $440.9

Check 0.000 0.000

N46

Under the new accounting rules (e.g. FAS 141r), advisory fees are expensed as incurred, which we interpret here to mean "immediately".

Pro Forma3/31/2008

$1,102.0 699.9

0.0 117.8 121.7

$2,041.4

$344.3 1,850.5

422.5 0.0 0.0 0.0

478.3 $5,137.0

$206.8 410.7

38.8 229.2

36.2 2.2

$923.9

$0.0 0.0

680.0 15.9

520.9 $2,140.7

$0.0 298.5

2,220.7 (774.7)

6.6 1,245.2

$2,996.3 $5,137.0

0.000

Pro Forma Income Statement($ in millions, except per share data)

FY Ended September 30, FY Ending September 30,2005A 2006A 2007A 2008E 2009E

Total Revenue $2,409.4 $2,860.9 $3,238.7 $3,578.1 $3,938.0 % Growth NA 18.7% 13.2% 10.5% 10.1%

COGS 1,478.1 1,754.4 1,978.7 2,185.1 2,363.3 COGS Synergies - - - - (25.0)

% of Sales 61.3% 61.3% 61.1% 61.1% 59.4% Gross Profit $931.3 $1,106.5 $1,260.0 $1,393.0 $1,599.7

% Margin 38.7% 38.7% 38.9% 38.9% 40.6%

SG&A 300.2 454.2 557.2 594.9 714.0 SG&A Synergies - - - - (50.0)

% of Sales 12.5% 15.9% 17.2% 16.6% 16.9%

EBITDA $631.1 $652.3 $702.8 $798.1 $935.7 % Margin 26.2% 22.8% 21.7% 22.3% 23.8%

Existing Depreciation 92.5 91.4 102.1 122.9 88.8 New Depreciation - - - 1.5 1.5

% of Sales 3.8% 3.2% 3.2% 3.5% 2.3% Existing Amortization 41.1 55.8 93.6 81.4 81.9 New Amortization - - - 20.1 20.1

% of Sales 1.7% 2.0% 2.9% 2.8% 2.6% Total D&A 133.6 147.2 195.7 225.9 192.3

% of Sales 5.5% 5.1% 6.0% 6.3% 4.9%

Stock-Based Comp 61.0 59.6 64.9 65.3 64.3 % of Sales 2.5% 2.1% 2.0% 1.8% 1.6%

EBIT $436.5 $445.5 $442.2 $506.9 $679.1 % Margin 18.1% 15.6% 13.7% 14.2% 17.2%

EBITA $538.6 $560.9 $600.7 $673.7 $845.4 % Margin 22.4% 19.6% 18.5% 18.8% 21.5%

Interest (Income) / Expense (39.2) (39.8)Equity (Income) - - Minority Interest - - Other (Income) / Expense (0.1) - Other Transaction Adjustments 0.0 15.0

Income Before Taxes $713.0 $870.2

Provision for Tax 98.2 119.8 % Tax Rate 13.8% 13.8%

PF Cash Net Income $614.8 $750.4 % Margin 17.2% 19.1%

PF Cash Diluted EPS $2.67 $3.21

Diluted Shares Out 230.380 233.567

BuyerCo Standalone Cash Diluted EPS $2.34 $2.71 $ Accretion / (Dilution) $0.33 $0.51 % Accretion / (Dilution) 14.3% 18.7%

O47

Assume all deferred revenue is written down in FY09.

Incremental Pre-Tax Synergies to Breakeven ($89.1) ($137.2)

Capex $199.1 $217.7 % of Sales 5.6% 5.5%

FY Ending September 30, CAGR2010E 2011E 2012E 2008-2012

$4,326.5 $4,760.1 $5,241.5 10.0% 9.9% 9.9% 9.9%

2,600.0 2,863.7 3,156.5 (25.0) (25.0) (25.0)

59.5% 59.6% 59.7% $1,751.5 $1,921.5 $2,110.1 10.9%

40.5% 40.4% 40.3%

767.9 844.0 928.4 (50.0) (50.0) (50.0)

16.6% 16.7% 16.8%

$1,033.6 $1,127.5 $1,231.7 11.5% 23.9% 23.7% 23.5%

99.5 109.1 119.8 1.5 1.5 1.5

2.3% 2.3% 2.3% 82.0 82.0 82.0 20.1 20.1 20.1

2.4% 2.1% 1.9% 203.1 212.7 223.4 4.7% 4.5% 4.3%

70.3 77.0 84.5 1.6% 1.6% 1.6%

$760.2 $837.7 $923.8 16.2% 17.6% 17.6% 17.6%

$932.6 $1,016.8 $1,110.4 13.3% 21.6% 21.4% 21.2%

(47.8) (47.8) (47.8) - - - - - - - - -

0.0 0.0 0.0

$980.4 $1,064.6 $1,158.1 12.9%

135.0 146.6 159.5 13.8% 13.8% 13.8%

$845.4 $918.0 $998.7 12.9% 19.5% 19.3% 19.1%

$3.56 $3.80 $4.07 11.1%

237.567 241.567 245.567

$3.02 $3.28 $3.56 $0.54 $0.52 $0.51

17.8% 16.0% 14.3%

($148.3) ($146.6) ($144.7)

$240.5 $207.1 $204.9 5.6% 4.4% 3.9%

BuyerCo Income Statement($ in millions, except per share data)

FY Ended September 30, FY Ending September 30,2005A 2006A 2007A 2008P 2009P

Total Revenue $2,038.6 $2,480.1 $2,836.2 $3,120.0 $3,470.0 % Growth NA 21.7% 14.4% 10.0% 11.2%

COGS 1,295.6 1,565.8 1,771.0 1,945.5 2,113.5 % of Sales 63.6% 63.1% 62.4% 62.4% 60.9%

Gross Profit $743.0 $914.3 $1,065.2 $1,174.5 $1,356.5 % Margin 36.4% 36.9% 37.6% 37.6% 39.1%

SG&A 253.6 392.3 482.4 506.6 622.3 % of Sales 12.4% 15.8% 17.0% 16.2% 17.9%

EBITDA $489.4 $522.0 $582.8 $667.9 $734.2 % Margin 24.0% 21.0% 20.5% 21.4% 21.2%

Depreciation 78.5 80.3 90.0 108.8 74.7 % of Sales 3.9% 3.2% 3.2% 3.5% 2.2%

Amortization 15.4 37.6 75.0 61.8 62.0 % of Sales 0.8% 1.5% 2.6% 2.0% 1.8%

Total D&A $93.9 $117.9 $165.0 $170.6 $136.7 % of Sales 4.6% 4.8% 5.8% 5.5% 3.9%


EBIT $351.0 $357.9 $364.2 $442.8 $543.8 % Margin 17.2% 14.4% 12.8% 14.2% 15.7%

EBITA $410.9 $441.7 $492.8 $559.1 $659.5 % Margin 20.2% 17.8% 17.4% 17.9% 19.0%

Interest (Income) / Expense (26.6) (45.5) (42.6) (36.8) (44.3)Equity (Income) - - - - - Minority Interest - - - - - Other (Income) / Expense 4.3 3.8 (8.0) - - Income Before Taxes $433.2 $483.4 $543.4 $595.9 $703.8

Provision for Tax 85.8 71.4 57.3 79.6 96.9 % Tax Rate 19.8% 14.8% 10.5% 13.4% 13.8%

Cash Net Income $347.4 $412.0 $486.1 $516.3 $606.9 % Margin 17.0% 16.6% 17.1% 16.5% 17.5%

Cash Diluted EPS $1.63 $1.89 $2.18 $2.34 $2.71

Diluted Shares Out 212.571 218.534 223.256 221.099 224.286

Cash to GAAP Reconciliation:Amortization $12.3 $32.0 $67.1 $53.5 $53.5 Stock-Based Comp 35.7 39.4 47.9 47.2 46.3 One-Time Charges 10.1 21.9 6.1 - -

GAAP Net Income $289.3 $318.7 $365.0 $415.5 $507.1 % Margin 14.2% 12.8% 12.9% 13.3% 14.6%

GAAP Diluted EPS $1.36 $1.46 $1.63 $1.88 $2.26

M5

Source: Deutsche research dated 4/24/2008.

O5


Capex $71.4 $80.7 $166.4 $183.1 $203.6 % of Sales 3.5% 3.3% 5.9% 5.9% 5.9%

FY Ending September 30, CAGR2010P 2011E 2012E 2008-2012

$3,856.0 $4,284.9 $4,761.6 11.1% 11.1% 11.1% 11.1%

2,347.8 2,609.0 2,899.2 60.9% 60.9% 60.9%

$1,508.2 $1,676.0 $1,862.4 12.2% 39.1% 39.1% 39.1%

675.5 750.6 834.1 17.5% 17.5% 17.5%

$832.7 $925.3 $1,028.3 11.4% 21.6% 21.6% 21.6%

85.4 94.9 105.5 2.2% 2.2% 2.2% 62.0 62.0 62.0

1.6% 1.4% 1.3% $147.4 $156.9 $167.5

3.8% 3.7% 3.5%

59.6 66.2 73.6 1.5% 1.5% 1.5%

$625.7 $702.2 $787.2 15.5% 16.2% 16.4% 16.5%

$747.3 $830.4 $922.8 13.3% 19.4% 19.4% 19.4%

(52.3) (52.3) (52.3) - - - - - - - - -

$799.6 $882.7 $975.1 13.1%

110.1 121.5 134.3 13.8% 13.8% 13.8%

$689.5 $761.2 $840.8 13.0% 17.9% 17.8% 17.7%

$3.02 $3.28 $3.56 11.1%

228.286 232.286 236.286

$53.5 $53.5 $53.5 51.4 57.1 63.5

- - -

$584.6 $650.6 $723.9 14.9% 15.2% 15.2% 15.2%

$2.56 $2.80 $3.06 13.0%

Q5


$226.3 $192.8 $190.5 5.9% 4.5% 4.0%

TargetCo Income Statement($ in millions, except per share data)

FY Ended September 30, FY Ending September 30,2005A 2006A 2007A 2008P 2009P

Total Revenue $370.8 $380.8 $402.5 $458.1 $468.0 % Growth NA 2.7% 5.7% 13.8% 2.2%

COGS 182.5 188.6 207.7 239.6 249.8 % of Sales 49.2% 49.5% 51.6% 52.3% 53.4%

Gross Profit $188.3 $192.2 $194.8 $218.5 $218.2 % Margin 50.8% 50.5% 48.4% 47.7% 46.6%

SG&A 46.6 61.9 74.8 88.3 91.7 % of Sales 12.6% 16.3% 18.6% 19.3% 19.6%

EBITDA $141.7 $130.3 $120.0 $130.2 $126.5 % Margin 38.2% 34.2% 29.8% 28.4% 27.0%

Depreciation 14.0 11.1 12.1 14.1 14.1 % of Sales 3.8% 2.9% 3.0% 3.1% 3.0%

Amortization 25.7 18.2 18.6 19.6 19.9 % of Sales 6.9% 4.8% 4.6% 4.3% 4.3%

Total D&A $39.7 $29.3 $30.7 $33.7 $34.0 % of Sales 10.7% 7.7% 7.6% 7.4% 7.3%


EBIT $85.5 $87.6 $78.0 $85.7 $81.9 % Margin 23.1% 23.0% 19.4% 18.7% 17.5%

EBITA $127.7 $119.2 $107.9 $116.1 $112.4 % Margin 34.4% 31.3% 26.8% 25.3% 24.0%

Interest (Income) / Expense 4.9 0.9 - (2.4) - Equity (Income) - - - - - Minority Interest - - - - - Other (Income) / Expense 0.1 - - (0.1) - Income Before Taxes $122.7 $118.3 $107.9 $118.6 $112.4

Provision for Tax 24.3 17.5 11.4 15.8 15.5 % Tax Rate 19.8% 14.8% 10.5% 13.4% 13.8%

Cash Net Income $98.4 $100.8 $96.5 $102.8 $96.9 % Margin 26.5% 26.5% 24.0% 22.4% 20.7%

Cash Diluted EPS $2.81 $2.98 $2.71 $2.85 $2.65

Diluted Shares Out 35.064 33.880 35.580 36.080 36.580

Cash to GAAP Reconciliation:Amortization $20.6 $15.5 $16.6 $17.0 $17.2 Stock-Based Comp 13.2 11.4 10.1 9.4 9.1 One-Time Charges 8.2 3.4 0.7 0.1 -

GAAP Net Income $56.4 $70.5 $69.1 $76.3 $70.6 % Margin 15.2% 18.5% 17.2% 16.7% 15.1%

GAAP Diluted EPS $1.61 $2.08 $1.94 $2.12 $1.93

Capex $26.0 $12.5 $18.0 $16.0 $14.1 % of Sales 7.0% 3.3% 4.5% 3.5% 3.0%

FY Ending September 30, CAGR2010P 2011E 2012E 2008-2012

$470.5 $475.2 $480.0 1.2% 0.5% 1.0% 1.0%

252.2 254.7 257.3 53.6% 53.6% 53.6% $218.3 $220.5 $222.7 0.5% 46.4% 46.4% 46.4%

92.4 93.3 94.3 19.6% 19.6% 19.6%

$125.9 $127.2 $128.4 (0.3%)26.8% 26.8% 26.8%

14.1 14.2 14.4 3.0% 3.0% 3.0% 20.0 20.0 20.0

4.3% 4.2% 4.2% $34.1 $34.2 $34.4 7.2% 7.2% 7.2%

10.7 10.8 10.9 2.3% 2.3% 2.3%

$81.1 $82.1 $83.1 (0.8%)17.2% 17.3% 17.3%

$111.8 $112.9 $114.0 (0.4%)23.8% 23.8% 23.8%

- - - - - - - - - - - -

$111.8 $112.9 $114.0 (1.0%)

15.4 15.5 15.7 13.8% 13.8% 13.8%

$96.4 $97.4 $98.3 (1.1%)20.5% 20.5% 20.5%

$2.64 $2.66 $2.69 (1.4%)

36.580 36.580 36.580

$17.2 $17.2 $17.2 9.2 9.3 9.4

- - -

$69.9 $70.8 $71.7 (1.6%)14.9% 14.9% 14.9%

$1.91 $1.94 $1.96 (1.9%)

$14.2 $14.3 $14.5 3.0% 3.0% 3.0%

TargetCo DCF Valuation($ in millions, except per share data)

FY Ending September 30,2007 2008 2009 2010

Revenue $402.5 $458.1 $468.0 $470.5 % Growth 5.7% 13.8% 2.2% 0.5%

EBITDA 120.0 130.2 126.5 125.9 % Margin 29.8% 28.4% 27.0% 26.8%

Less: Depreciation (12.1) (14.1) (14.1) (14.1)EBITA 107.9 116.1 112.4 111.8

Tax Rate 35.0% 35.0% 35.0% 35.0%

Unlevered Net Income $70.1 $75.5 $73.1 $72.7

Plus: Depreciation 12.1 14.1 14.1 14.1 Less: Capital Expenditures (18.0) (16.0) (14.1) (14.2)Less: Change in Working Capital (9.5) 8.3 3.1 1.6

Free Cash Flow $54.7 $81.9 $76.2 $74.2

DCF Analysis (2008-2012): EBITDA Multiple Method

Total Enterprise ValueTerminal EBITDA Multiple4.5x 5.0x 5.5x

Discount 11.0% $627.7 $665.8 $703.9 Discount 11.0% Rate 12.0% $605.7 $642.1 $678.6 Rate 12.0%

(WACC) 13.0% $584.8 $619.6 $654.5 (WACC) 13.0%

Implied Perpetuity Growth RateTerminal EBITDA Multiple4.5x 5.0x 5.5x

Discount 11.0% (2.0%) (0.8%) 0.2% Discount 11.0% Rate 12.0% (1.1%) 0.1% 1.1% Rate 12.0%

(WACC) 13.0% (0.2%) 1.0% 2.0% (WACC) 13.0%

DCF Analysis (2008-2012): Perpetuity Growth Method

Total Enterprise ValueTerminal Perpetuity Growth Rate

0.5% 1.0% 1.5% Discount 11.0% $718.4 $742.3 $768.8 Discount 11.0%

Rate 12.0% $656.4 $675.6 $696.6 Rate 12.0% (WACC) 13.0% $604.3 $619.9 $636.9 (WACC) 13.0%

Implied Terminal EBITDA MultipleTerminal Perpetuity Growth Rate

0.5% 1.0% 1.5% Discount 11.0% 5.7x 6.0x 6.4x Discount 11.0%

Rate 12.0% 5.2x 5.5x 5.7x Rate 12.0% (WACC) 13.0% 4.8x 5.0x 5.2x (WACC) 13.0%

H15

We use the target's, rather than the acquirer's, tax rate here because we are valuing the target as a standalone company in the DCF analysis. Normally, this would be taken from the calendarized P&L.

(1) Assumes net debt of $83.4mm as of 5/16/08.(2) Assumes outstanding diluted shares of 35.021 million.

FY Ending September 30, CAGR2011 2012 2008-2012

$475.2 $480.0 1.2% 1.0% 1.0%

127.2 128.4 (0.3%)26.8% 26.8%

(14.2) (14.4)112.9 114.0 (0.4%)

35.0% 35.0%

$73.4 $74.1 (0.4%)

14.2 14.4 (14.3) (14.5)

1.9 2.3

$75.2 $76.4 (1.7%)

Terminal EBITDA Multiple4.5x 5.0x 5.5x

$544.3 $582.4 $620.5 $522.3 $558.7 $595.2 $501.4 $536.2 $571.1

Terminal EBITDA Multiple4.5x 5.0x 5.5x

$15.54 $16.63 $17.72 $14.91 $15.95 $16.99 Net Debt $83.4 $14.32 $15.31 $16.31 FDSO 35.021

Terminal Perpetuity Growth Rate0.5% 1.0% 1.5%

$635.0 $658.9 $685.4 $573.0 $592.2 $613.2 $520.9 $536.5 $553.5

Terminal Perpetuity Growth Rate0.5% 1.0% 1.5%

$18.13 $18.82 $19.57 $16.36 $16.91 $17.51 $14.87 $15.32 $15.80

Total Equity Value (1)

Total Price Per Share (2)

Total Equity Value (1)

Total Price Per Share (2)

H4

Normally, the DCF uses calendar, rather than fiscal, years. We use fiscal years here to keep the example fairly simple.

V39

Fully diluted shares outstanding

macabacus.commacabacus.com/excel/xls/perpetuity-growth.xls · xls file · web viewdcf target...

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