This model is for illustrative purposes only and contains no formulas

Log on to www.wallstreetprep.com to purchase actual model and for complete program details

Leveraged Buyout (LBO) Valuation

Fiscal Year
Number of weeks
In millions

Forward Estimates
2004
2005
52
52

2007
53

3
$31,315.1
2,004.2

4
$33,820.3
2,181.4

5
$35,849.5
2,294.0

6
$38,000.5
2,412.4

1,515.3
575.8
939.5
317.4
(209.7)
1,047.2
(850.0)
197.2

1,671.7
635.2
1,036.4
332.5
(216.3)
1,152.6
(850.0)
302.6

1,830.8
695.7
1,135.1
350.6
(221.5)
1,264.2
(850.0)
414.2

1,922.3
730.5
1,191.8
371.7
(221.5)
1,342.0
(850.0)
492.0

6.30%
1.15%
5.15%
38.0%
3.2%
2.80x

6.35%
1.10%
5.25%
38.0%
2.9%
2.68x

6.40%
1.06%
5.34%
38.0%
2.7%
2.56x

6.45%
1.04%
5.41%
38.0%
2.5%
2.42x

9.5%
9.8%
-2.1%
12.8%

9.0%
9.9%
4.5%
11.1%

8.5%
9.4%
4.7%
10.3%

Reduce Annual Capital Expenditures By:

New (Reduced) Capital Expenditures

300.0
(550.0)

300.0
(550.0)

Corresponding D&A Epense Reduction:

New (Reduced) D&A Expense

107.3
196.6

NOPAT (Adjusted for lower D&A expense)

Unlevered FCF
Interest expense (pre-tax)
Amortizable Bank debt (5% interest)
Notes (9%)
Financing Fee Amortization
Total Interest expense inc. FFA (after-tax)
FCF Available for Debt Amortization

Operating profit (EBIT)

Taxes
NOPAT
Depreciation and amortization
Change in WC providing/(requiring) cash
Operating Cash Flows
CapX - Additions to PP&E
Unlevered FCF
% Margin
EBITDA
D&A
EBIT
Tax rate
Capex % of sales
Capex/DA

2001
52

2002
52

2003
53

$20,087.5
1,600.1

$22,241.4
1,440.4

$24,181.5
1,519.7

1
$26,478.7
1,668.2

2
$28,861.8
1,832.7

1,303.5
521.4
782.1
296.6
(306.2)
772.5
(695.3)
77.2

1,119.6
467.7
651.9
320.8
(322.4)
650.3
(713.6)
(63.3)

1,209.4
459.6
749.8
310.3
106.1
1,166.2
(1,108.8)
57.4

1,364.3
518.4
845.8
303.9
(203.2)
946.5
(850.0)
96.5

7.97%
1.48%
6.49%
40.0%
3.5%
2.34x

6.48%
1.44%
5.03%
41.8%
3.2%
2.22x

6.28%
1.28%
5.00%
38.0%
4.6%
3.57x

10.7%
-10.0%
8.2%
-14.1%

8.7%
5.5%
-3.3%
8.0%

LT Forward Estimates
2008
2009
52
52

2006
52

Projection Year
Net sales
EBITDA

2000
52

% Growth
Sales
EBITDA
D&A
EBIT

Balance Sheet
Ending Balance Amortizable Bank Debt (5% est. interest rate)
Total Other Debt
Total Debt outstanding

3,419.3
3,419.3
$6,838.7

2010
52

2011
53

7
$40,280.5
2,537.0

8
$42,697.3
2,668.0

9
$45,259.2
2,805.8

2,018.4
767.0
1,251.4
394.0
(221.5)
1,423.9
(850.0)
573.9

2,119.3
805.3
1,314.0
417.6
(221.5)
1,510.1
(850.0)
660.1

2,225.3
845.6
1,379.7
442.7
(221.5)
1,600.8
(850.0)
750.8

2,336.6
887.9
1,448.7
469.2
(221.5)
1,696.4
(850.0)
846.4

6.40%
1.04%
5.36%
38.0%
2.4%
2.29x

6.35%
1.04%
5.31%
38.0%
2.2%
2.16x

6.30%
1.04%
5.26%
38.0%
2.1%
2.04x

6.25%
1.04%
5.21%
38.0%
2.0%
1.92x

6.20%
1.04%
5.16%
38.0%
1.9%
1.81x

8.0%
8.8%
5.5%
9.5%

6.0%
5.2%
6.0%
5.0%

6.0%
5.2%
6.0%
5.0%

6.0%
5.2%
6.0%
5.0%

6.0%
5.2%
6.0%
5.0%

6.0%
5.2%
6.0%
5.0%

300.0
(550.0)

300.0
(550.0)

300.0
(550.0)

300.0
(550.0)

300.0
(550.0)

300.0
(550.0)

300.0
(550.0)

112.0
205.4

117.4
215.1

123.8
226.9

131.2
240.5

139.1
254.9

147.4
270.2

156.2
286.4

165.6
303.6

912.3
355.8

1,008.9
454.7

1,109.2
558.0

1,211.8
667.2

1,273.2
742.1

1,337.6
821.0

1,405.4
904.1

1,476.6
991.5

1,551.4
1,083.5

477.3
169.6
307.7
6.8
300.2
55.6

472.0
164.2
307.7
6.8
296.9
157.8

461.3
153.6
307.7
6.8
290.3
267.7

445.0
137.2
307.7
6.8
280.1
387.0

423.4
115.7
307.7
6.8
266.8
475.4

397.3
89.5
307.7
6.8
250.5
570.5

366.2
58.4
307.7
6.8
231.3
672.8

329.8
22.1
307.7
6.8
208.7
782.8

270.2
1.2
269.0
6.8
171.8
911.7

3,363.7
3,419.3
$6,783.1

3,205.9
3,419.3
$6,625.3

2,938.2
3,419.3
$6,357.5

2,551.2
3,419.3
$5,970.5

2,075.8
3,419.3
$5,495.1

1,505.3
3,419.3
$4,924.6

832.5
3,419.3
$4,251.8

49.7
3,419.3
$3,469.0

0.0
2,557.3
$2,557.3

For Illustrative Purposes Only

Copyright 2003 by Wall Street Prep, Inc. All rights reserved.

Debt Assumptions

2002A EBITDA
Net Debt
Leverage Ratio (Net Debt / EBITDA)
Newco Debt Structure
Senior Bank Debt
Notes
Total*

Oldco
1,519.7
412.7
0.3x
Debt
3,419.3
3,419.3
6,838.7

Newco
1,519.7
6,838.7
4.5x
Int. Rate
5.0%
9.0%
7.0%

Allocation
50.0%
50.0%
100.0%

Int. Exp.
171.0
307.7
478.7

Points
1.0%
1.0%
1.0%

Fees
34.2
34.2
68.4

Term
10.0
10.0

Amort.
3.4
3.4
6.8

* Total Debt = Net Debt; assumes entire cash balnce used as a source of funds in LBO transaction

Exit Analysis
Exit Year

Exit Year
Debt Outstanding
EBITDA
EBITDA Multiple
Implied Enterprise Value (EV)
Less: Debt At Exit Year*
Implied Equity Value

Sensitivity
Base Case
475.4
2,294.0
6.0x
13,763.9
475.4
13,288.5

Weak Case
475.4
2,294.0
5.0x
11,469.9
475.4
10,994.5

Best Case
475.4
2,294.0
7.0x
16,057.9
475.4
15,582.5

* Assume zero cash balance at exit year

EBITDA Multiple
Given a Required Rate of Return of:
Implied Initial Equity Investment
Plus: Debt investment (from above)
Less: Transaction Fees
Implied Enterprise Value
Less: Existing Net Debt
Plus: Option Proceeds
Implied Equity Value
Diluted Shares Outstanding
Purchase Price Per Share

27.5%
3,263.1
6,838.7
(68.4)
10,033.3
412.7
55.4
9,676.0
396.6
$24.40

5.0x
30.0%
2,961.2
6,838.7
(68.4)
9,731.4
412.7
55.4
9,374.1
396.6
$23.63

32.5%
2,692.1
6,838.7
(68.4)
9,462.4
412.7
55.4
9,105.1
396.6
$22.96

27.5%
3,943.9
6,838.7
(68.4)
10,714.2
412.7
55.4
10,356.9
396.6
$26.11

6.0x
30.0%
3,579.0
6,838.7
(68.4)
10,349.3
412.7
55.4
9,992.0
396.6
$25.19

32.5%
3,253.9
6,838.7
(68.4)
10,024.1
412.7
55.4
9,666.8
396.6
$24.37

27.5%
4,624.7
6,838.7
(68.4)
11,395.0
412.7
55.4
11,037.7
396.6
$27.83

7.0x
30.0%
4,196.8
6,838.7
(68.4)
10,967.1
412.7
55.4
10,609.8
396.6
$26.75

32.5%
3,815.6
6,838.7
(68.4)
10,585.8
412.7
55.4
10,228.5
396.6
$25.79

Initial Equity as % of total Enterprise Value

32.5%
30.4%
28.5%
36.8%
34.6%
32.5%
40.6%
38.3%
36.0%
Debt as % of total Enterprise Value
67.5%
69.6%
71.5%
63.2%
65.4%
67.5%
59.4%
61.7%
64.0%
* Sensitivity of IRR is intended to arrive at a fair value stock price given specific return requirements by potential equity stakeholders (i.e. Private Equity Firm, Management).

For Illustrative Purposes Only

Copyright 2003 by Wall Street Prep, Inc. All rights reserved.

Sources and Uses of Funds / GW Calculation / Balance Sheet

Given an offer price of:

$25.19

Sources of Funds
Senior Bank Debt
Notes
Total Debt
Cash
Option Proceeds
Common Equity
Total Sources of Funds

3,419.3
3,419.3
6,838.7
700.4
55.4
3,579.0
11,173.5

Uses of Funds
Share Purchase (including option proceeds)
Refinance existing bank debt
Fees and expenses
Total Uses of Funds

9,992.0
1,113.1
68.4
11,173.5

Pro Forma Opening Balance Sheet

Goodwill Calclation
Purchase price of equity
Existing goodwill
Less: Book value
Less: Option Proceeds
Goodwill

2002A

Cash and cash equivalents

Accounts receivable, net
PP&E
Goodwill, net
Fees and expenses
Other Assets
Total Assets

700.4
1,019.3
2,215.8
878.9
0.0
4,830.9
9,645.3

Senior Bank Debt (Total historical LT debt)

Notes
OtherLiabilities
Total Shareholders' Equity
Total Liabilities and Shareholders' equity

1,113.1
0.0
3,335.2
5,197.0
9,645.3

9,992.0
878.9
(5,197.0)
(55.4)
5618.5

PF LBO
Adjustments
(700.4)

(878.9)

5,618.5
68.4

(1,579.3)

5,686.8

(1,113.1)

3,419.3
3,419.3

(5,197.0)
(6,310.1)

3,579.0
10,417.6

0.0
1,019.3
2,215.8
5,618.5
68.4
4,830.9
13,752.8
3,419.3
3,419.3
3,335.2
3,579.0
13,752.8

For Illustrative Purposes Only

Copyright 2003 by Wall Street Prep, Inc. All rights reserved.