Spyder Active Sports—2004

Harvard Business School Case 206-027Case Software 9-207-701

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Selected Financial Data about Comparable Companies (in $ millions, as year end 2004)

Company Name Industry Beta

Adidas-Salomon AG Sports Apparel, Footwear, & Equipment 0.81 4,302 1,459 0.39 0.64 0.49Columbia Sportswear Co. Sports Apparel 1.48 2,239 20 0.06 0.06 1.40K2 Inc. Sports Equipment 1.36 559 209 0.41 0.70 0.80Nike Inc. Sports Apparel & Footwear 0.70 20,558 866 0.08 0.09 0.64Quiksilver Inc. Sports Apparel 1.01 1,217 138 0.17 0.20 0.84Skis Rossignol SA Sports Equipment & Apparel 0.55 174 118 0.44 0.79 0.31VF Corp Apparel, incl. Sports Apparel 0.59 5,113 994 0.20 0.25 0.47

Average 0.93 0.25 0.39 0.71

Median 0.81 0.20 0.25 0.64

Current Risk Free Rate (April 2004, 20 Year Treasury) 5.16%Market Risk Premium 6.50%

CAPM Cost of Capital (Unlevered) 9.76%Small Stock Premium 6%Total Cost of Capital 15.76%

Market Value of

Equity

Total Interest-Bearing

Debt

Five-Year Average Debt-to-Total Value

Five Average D/E

Unlvered Beta

Consolidated Income Statement and Cash Flow Adjustments—Historical and Forecasted (in $ thousands)

FY2005E FY2006E FY2007E FY2008E FY2009E

Net Sales 61,366 85,281 105,630 133,223 165,732

Cost of Sales 43,279 55,075 70,419 88,253

Gross Profit 42,002 50,554 62,804 77,479

Total Operating Expenses 28,014 33,571 41,028 49,584

Op. Income Before Depreciation 13,988 16,983 21,777 27,895

EBIT 12,910 14,887 18,517 24,798

Taxes 3,228 3,722 4,629 6,199

Unlevered Net Income 9,683 11,165 13,888 18,598

Add Back Depreciation 1,078 2,097 3,260 3,098

Less Capital Expenditures 2,558 3,169 3,997 4,972

Less Net Working Capital Investment 383 326 441 520

Total Free Cash Flow 7,819 9,767 12,709 16,204

TV 166,660 Discount Rate 15.76%

Terminal Value Growth Rate 6%

PV Cash Flows $31,262

PV Terminal Value $92,819

Enterprise Value $124,081

Implied 2005 EBITDA Multiple 9.6

Implied 2005 Sales Multiple 1.5

Capital Expenditures % 3.00% 3.00% 3.00% 3.00%Capital Expenditures $ 2558.43 3168.89 3996.69 4971.95Net Working Capital Investment 1.60% 1.60% 1.60% 1.60% 1.60%WC 981.86 1364.50 1690.08 2131.57 2651.71Change in NWC 382.64 325.58 441.49 520.14

Percent of SalesNet Sales growth 23.86% 26.12% 24.40%Cost of Sales 50.75% 52.14% 52.86% 53.25%Gross Profit 49.25% 47.86% 47.14% 46.75%

Total Operating Expenses 32.85% 31.78% 30.80% 29.92%Op. Income Before Depreciation 16.40% 16.08% 16.35% 16.83%

EBITDA 15.14% 14.09% 13.90% 14.96%

Depreciation & Amortization 1.26% 1.98% 2.45% 1.87%Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00%

FY2004 Current

Selected Financial Data about Comparable Companies (in $ millions 2004)

Company Name Industry Beta Sales EBITDA EV/Sales EV/EBITDA

Adidas-Salomon AG Sports Apparel, Footwear, & Equipment 0.81 4,302 1,459 0.39 6,221 586 0.93 9.84 Columbia Sportswear Co. Sports Apparel 1.48 2,239 20 0.06 990 220 2.28 10.29 K2 Inc. Sports Equipment 1.36 559 209 0.41 839 63 0.92 12.11 Nike Inc. Sports Apparel & Footwear 0.70 20,558 866 0.08 11,751 1,736 1.82 12.34 Quiksilver Inc. Sports Apparel 1.01 1,217 138 0.17 1,039 130 1.30 10.44 Skis Rossignol SA Sports Equipment & Apparel 0.55 174 118 0.44 479 25 0.61 11.94 VF Corp Apparel, incl. Sports Apparel 0.59 5,113 994 0.20 5,390 725 1.13 8.42

Average 0.93 0.25 1.28 10.77

Median 0.81 0.20 1.13 10.44

Sales EBITCreative Sports Values (2005) $85,281 $13,988

Implied Enterprise Value (Average) $109,586 $150,643Implied Enterprise Value (Median) $96,631 $146,000

Market Value of

Equity

Interest-Bearing

Debt

Five-Year Average Debt-to-Total Value