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Pace University

Valuation of Southwestern Energy Company

Pace University

Fin 667 Valuation of the Firm


Professor Peter Pfau

Yifan Du Shihui Zhou Chongyang Huang May 4, 2011

May 4, 2011

Basic Material / Independent Oil & Gas

NYSSA

May 4, 2011

Ticker: SWN Price: 42.23


Earnings/Share

Recommendation: HOLD Southwestern Energy Co. Price Target: $ 46.74

Mar. 2010A 2011E $0.50 0.39

Jun. $0.35 0.45

Sept. $0.47 0.75

Dec. $0.43 0.69

Year $1.75 $2.28

P/E Ratio 24.1x 20.5x

Highlights

We are placing a HOLD recommendation on the Southwestern Energy Corporation (SWN) with a 52-week target of $46.74. We used relative evaluation and Discounted FCFF methods to arrive at our price target of $46.74. SWN is currently trading at $42.23, and we forecast a 10.7% return in next 52-week period. We estimated that SWNs sale growth rate will be 17%, 13%, and 9% in fiscal 2011, 2012, and 2013 respectively. Increased GDP growth rate, more electric capacity rely on nature-gas-fired, and less gas import stimulate the gas industry. SWN will continue keep its reserve replacement ratio over 500%, as past three years. To support its gas output, SWN continue to actively seek to develop both conventional and unconventional natural gas and oil resource plays with significant exploration and exploitation potential. In 2011, SWN plan to invest approximately $1.6 billion in our E&P program and participate in drilling 580 to 600 gross wells, 480 to 500 of which are planned to be operated by SWN. The trend of gas price which is estimated to decline continually will hurt SWNs profit margin, but it will benefit from the high oil price.

Market Profile 52 Week Price Range Average Daily Volume Beta Dividend Yield(Estimated) Share Outstanding Market Capitalization Institutional Holdings Insider Holdings Book Value per Share Debt to Total Capital Return on Equity $30.61-42.84 5,595,280 1.33 N/A 347.08M 14.63B 86.80% 1.66% 8.89 7.16% 20.17%

STERN RESEARCH

NYSSA

May 4, 2011

Investment Summary
We are initiating the coverage of Southwestern Energy Cop. with a HOLD rating recommendation. Our price target is $46.74 for the next 52 weeks. This company is currently trading at $42.23, implying a 10.7% return on investment for the period. Our price objective forecast that Southwestern Energys total revenues for fiscal 2011 will be $2,172 million, a 17% growth rate (see Appendix I). But the recent decline in gas price trend is a negative factor to the companys stock. Figure 1: Return on SWNs stock (Compared to S&P 500)

Source: Yahoo Finance

From September 2010 to the present, the stock price climbed to approximate $42 per share from a low of $30.6, and currently, the 3-month average trading volume is 5,595,280. The stock (see figure 1) is more volatile than S&P 500 and it can be approved by the result of beta of 1.33, which have higher risk and return than the market.

Valuation
Using the two following valuation approaches (relative valuation and DCF model), we obtained two twelve-month price targets, $49.04 and $44.43 per share. These two valuation techniques allowed us to analyze the company from different vantage points. We arrived at our $46.74 twelve-month price target by taking the average of the two target prices obtained from the following models, supporting our recommendation: HOLD, since now the stock price is $42.23. Relative Valuation We arrived the 52-week price target of $49.04 using two approaches. Firstly, we selected four peer companies based on their Debt/Equity ratios and business orientation, which are Noble Energy (NBL), Gulfport Energy Corporation (GPOR), SM Energy Company (SM) and Cabot Oil & Gas Corporation (COG). These four companies are all similar in sizes and conditions compared with SWN. Secondly, we calculated the arithmetic mean value of forward P/E value between these four peers is 21.51(see Figure 2). Then we multiplied the mean forward P/E by SWNs future earnings per share in a year, and the earning per share is 2.28 as we estimated.

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Figure 2: Peers Forward P/E NBL Forward P/E 14.81 Source: Yahoo Finance

GPOR 13.12

SM 22.21

COG 35.91

Mean 21.51

Weighted Average Cost of Capital (WACC) Assumptions The total equity is $14,184,720,000, which accounts for 92.84% of the capital structure. The 30-year Treasury bond rate on April 21th, 2011 is used as risk free rate and beta that measure the standardized correlation between the 5-year weekly return on SWNs stock and S&P 500 is 1.33 that indicates the stock has higher risk than the market risk. The cost of equity is 9.66%. Because the book value of debt, $1,094,200,000, is less than 10% of equity, the book value is adopted as 7.16% in the capital structure and the yield is equal to coupon rate of 7.5%. After the benefit of tax shield of 35% on debt, the weighted average cost of capital is 9.32%. Figure 3: Calculating of WACC Average return S&P 500 SWN 0.08% 0.33% Value (in thousand dollars $) Equity Debt Total Source: Yahoo Finance Discounted FCFF Model Using this model, we arrived at the price target of $44.43 per share at which the company should be valued twelve months from now (see Appendix III). We base our Discounted FCFF model on the forecast that companys sales growth rate will be 17%, 13%, and 9% in fiscal 2011, 2012, and 2013. Our forecasted growth rate is based on these considerations: GDP growth in 2010 partially offsets the decline in 2009, helping GDP to recover to prerecession levels by 2011, which can help Southwestern Energy recover from the financial crisis. The domestic natural gas production increase as a positive economic growth, improvement in exploration, and development technologies. In following 20 years, 80 percent of electric capacity added is natural-gas-fired, due to higher construction costs for other capacity types and uncertain prospects for possible future limitations on GHG emissions. U.S. net imports of natural gas decline in the AEO2011 Reference case from 11 percent of total supply in 2009 to 1 percent in 2035, which is good to domestic gas companies. Southwestern Energy Companys sale growth rate and ROE both outperform the industry in previous five years. Southwestern Energys average sale growth rate was as high as 35% in previous five years and in last year its sales growth rate is 22%. Southwestern Energys reserve replacement ratio, including revisions, has averaged over 500% for the three year period ended December 31, 2010, primarily driven by increases in the reserves associated with our Fayetteville Shale play, which continues to be its primary source. This indicates that Southwestern Energy has a strong support to its future growth. The sales growth rate will decrease gradually to a long-term growth rate in three years as the company become mature. Since the independent oil & gas industry is strongly related to GDP, the real GDP growth rate plus inflation rate will be a reliable reference. U.S. real GDP growth rate and inflation rate are estimated to be 2.7% and 2.1% in following 25 years. But according to Southwestern Energys performance in past five years, we believe that it will outperform the normal GDP growth. So, the perpetuity growth after terminal year will be 7%. The companys intrinsic value is 16,448 million in the end of 2011, and abstracting the debt value, we can get the equity value, 15,354 million. Since Southwestern Energy has 345.6 million common shares outstanding, the estimated price is $44.43. 14,184,720 1,094,200 15,278,920 Variance 0.000944 0.006215 weight 92.84% 7.16% 100.00% Standard Deviatio n 0.030673 0.078835 cost% 9.66% 7.50% 9.32% Statutory Tax Rate 35% Covariance 0.001 1.332 Risk free rate 4.47%

Sensitive Analysis According to our sensitive analysis, we found that the estimated stock price is very sensitive to it perpetuity growth rate (see Figure 4). Figure 4: Price Sensitive Analysis Estimated Stock Price Perpetuity Growth Rate 5% 6% 7% 8% 9% 11% 22.13 29.42 43.02 77.21 325.06 10% 22.58 30.01 43.85 78.66 331.04 WACC 9.32% 22.89 30.42 44.43 79.67 335.20

9% 23.04 30.61 44.70 80.16 337.19

8% 23.51 31.22 45.58 81.69 343.51

We use the multiplier method to calculate the terminal value, instead of Gordon Growth Model. We use the Enterprise Value/EBITDA multiplier to determine the enterprise value in terminal year. The mean of peers Enterprise Value/EBITDA is 13.16 (see Figure 5). Figure 5: Peers Enterprise Value/EBITDA NBL Enterprise Value/EBITDA 11.39 Source: Yahoo Finance

GPOR 17.69

SM 10.4

COG 13.17

Mean 13.16

Using this model, we arrived at the price target of $41.23 per share at which the company should be valued twelve months from now (see Appendix IV). This test supports our price target in DCF model.

Business Description
Southwestern Energy Company (SWN) is a growing independent energy company primarily engaged in natural gas and crude oil exploration, development and production (E&P) within North America. In addition, SWN also concentrate on creating and capturing additional value by its natural gas gathering and marketing businesses, which it refer to as Midstream Services. The vast majority of SWNs EBITDA is derived from its E&P business. In 2010, 81% of operating income and 86% of EBITDA were generated from its E&P business, compared to 86% of operating income and 90% of EBITDA in 2009. In 2010, 19% of its operating income and 14% of EBITDA were generated from Midstream Services, compared to 14% of operating income and 10% of EBITDA in 2009. Business Strategy SWN focused on providing long-term growth in the net asset value of its business. In E&P business, SWN prepare and economic analysis for each investment opportunity based upon the expected present value added for each dollar to be invested, which it refer to as Present Value Index, or PVI. The PVI of the future expected cash flows for each project is determined using a 10% discount rate. Recent Developments SWN planned capital investment program for 2011 is approximately 1.9 billion, which includes approximately $1.6 billion for E&P segment, $225 million for Midstream services segment and $60 million for corporate and other purposes. The 2011 capital program is expected to be primarily funded by cash flow from operations and borrowings under $1.5 billion revolving credit facility. Southwestern is targeting total gas and oil production of 465 to 475 Bcfe, up approximately 18% over the companys expected 2010 levels. Approximately 410 to 420 Bcf of the 2011 targeted gas production is projected to come from the companys activities in the Fayetteville Shale play, up from the 2010 projected production of approximately 346 to 349 Bcf.

Industry Overview and Competitive Positioning


Independent oil and gas industry, as a part of the Basic Materials sector, faces different elasticity. Oil price is more sensitive than gas price when demands change and also oil price is heavily influenced by economy condition. In 2011, the market capital of basic materials sector is 126,132 billion dollars while market capital of independent oil and gas industry is 2,159 billion dollars, which account for 2% of the whole sector. Competition

Exploration and Production: All phases of the oil and natural gas industry are highly competitive. SWN compete in the acquisition of properties, the search for and development of reserves, the production and sale of natural gas and oil and the securing of labor and equipment required oil and natural gas companies and individual producers and operators. SWNs competitors include major oil and natural gas companies, other independent oil and natural gas companies and individual producers and operators. Many of these competitors have financial and other resources that substantially exceed those available to SWN. Midstream Services: Gas gathering and marketing activities compete with numerous other companies offering the same services, many of which possess larger financial and other resources than SWN have. Factors affecting competition are the cost and availability of alternative fuels, the level of consumer demand and the cost of and proximity to pipelines and other transportation facilities. Future Overview For prediction of the future production demand, the uncertainty increases. In the near term, companies are constantly revising their production targets downwards, and, longer term, the published estimates of supply and demand show a large margin for error. Recent analysis by ExxonMobil, for instance, indicates that, over the next 10 years, oil and gas demand will increase by around 2% a year, while current fields in production will deplete at an average of 3% to 5% per year.

Financial Analysis
SWNs primary business is exploration for and production of natural gas within the United, as well as other two segments of midstream services and natural gas distribution. SWN are focused on providing long-term growth in the net asset value of the E&P business. The company derives vast majority of operating income and cash flow from the natural gas production of the E&P business and expects this to continue in the future. General and administrative expenses for the E&P segment were $120.3 million in 2010, $105.0 million in 2009 and $80.2 million in 2008. The increases in general and administrative expenses since 2008 were primarily a result of increased payroll, incentive compensation and employee-related costs associated with the expansion of the E&P operations. Earnings Net income for the fiscal year in 2010, 2009 and 2008 were $604.1 million, (35.7 million), and 567.9 million. The loss in 2009 included a $907.8 million of test impairment of the United States natural gas and oil properties. Cash Flow Southwestern Energy Company reported cash flow from operating activities increased 21% to $1,642.6 million in 2010 due to an increase in net income adjusted for non-cash expenses and changes in working capital. Balance Sheet & Financing At December 31, 2010, SWNs capital structure consisted of 27% debt and 73% equity compared to 30% debt and 70% equity at December 31, 2009. Its debt percentage of total capital decreased in 2010, primarily due to profitable results and the minimal funding of capital investments and operational needs through debt. Equity at December 31, 2010 included an accumulated other comprehensive gain of $96.5 million related to hedging activities and a loss for $12.5 million related to pension and other postretirement liabilities. Working capital SWN had negative working capital of $113.1 million in 2010 and positive working capital of $28.1 million in 2009. The decrease in working capital is largely influenced by current hedging activities.

Investment Risks

Natural gas and oil prices are volatile and they can adversely affect the results and the price of SWNs common stock. This volatility also makes valuation of natural gas and oil producing properties difficult and can disrupt markets. A significant decline in natural gas and oil prices would have a serious negative effect on SWN in forms of cash flow would be reduced, certain reserves would no longer be economic to

produce, leading to both lower proved reserves and cash flow, capital could be severely limited or unavailable.

The new financial reform legislation could have negative influence on its ability to use derivative instruments to retard the effect of commodity price, interest rate and other risks accompanied with its business that might have a serious negative influence on its financial position, results of operations and cash flows. SWNs ability to produce natural gas could be impaired if it fail to get enough water to operate the project or, under applicable environmental rules, the cost will be increase if it unable to dispose of the water.

TM

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Appendix I: Income Statement


$ in thousands
Source: Company Documents, Student Estimates Fiscal Year Ending 12/31 Operating Revenue: Gas sales % growth Gas marketing % growth Oil sales % growth Gas gathering % growth Other Operating Costs and Expenses: Gas purchases midstream services Gas purchases gas distribution Operating expenses General and administrative expenses Depreciation, depletion and amortization Impairment of natural gas and oil properties Taxes, other than income taxes Operating Income (Loss) Interest Expense: Interest on debt Other interest charges Interest capitalized Other Income, Net Gain on Sale of Utility Assets Income (Loss) Before Income Taxes Provision (Benefit) for Income Taxes: Current Deferred Net Income (Loss) Less: Net Income (Loss) Attributable to Noncontrolling Interest Net Income (Loss) Attributable to Southwestern Energy Earnings Per Share: Net income (loss) attributable to Southwestern Energy stockholders-Basic Net income (loss) attributable to Southwestern Energy stockholders-Diluted Weighted Average Common Shares Outstanding: Basic Diluted 2006A 2007A 2008A $1,500,40 8 72.45% 719,909 127.16% 41,240 -2.81% 41,748 62.20% 8,247 2,311,552 710,129 61,439 107,577 101,959 414,408 0 29,272 1,424,784 886,768 2009A $1,578,25 6 5.19% 488,663 -32.12% 6,843 -83.41% 74,281 77.93% -2,264 2,145,779 482,836 0 136,541 122,618 493,658 907,812 37,280 2,180,745 -34,966 2010A $1,856,24 1 17.61% 615,913 26.04% 13,111 91.60% 122,912 65.47% 2,486 2,610,663 611,161 0 191,771 145,563 590,332 0 50,608 1,589,435 1,021,228 2011E $2,171,80 2 17.00% 720,618 17.00% 15,340 17.00% 143,807 17.00% 2,909 3,054,476 720,023 0 207,249 187,909 751,106 0 60,939 1,927,226 1,127,249 2012E $2,454,13 6 13.00% 814,299 13.00% 17,334 13.00% 162,502 13.00% 3,287 3,451,558 813,626 0 234,192 212,338 871,450 0 68,861 2,200,467 1,251,091 2013E $2,675,00 8 9.00% 887,585 9.00% 18,894 9.00% 177,127 9.00% 3,583 3,762,198 886,852 0 255,269 231,448 984,739 0 75,059 2,433,367 1,328,831

$572,354 136,698 40,742 13,318 0 763,112 128,387 79,363 66,579 66,112 151,290 0 25,109 516,840 246,272

$870,047 52.01% 316,912 131.83% 42,434 4.15% 25,738 93.26% 0 1,255,131 306,336 85,445 85,826 80,269 293,914 0 21,875 873,665 381,466

11,099 1,402 -11,822 679 17,079 0 262,672 0 99,399 99,399 163,273 637 $162,636

36,191 1,474 -13,792 23,873 -219 0 357,374 0 135,855 135,855 221,519 345 $221,174

61,152 2,284 -34,532 28,904 4,404 57,264 919,532 122,000 228,999 350,999 568,533 587 $567,946

55,581 3,266 -40,209 18,638 1,449 0 -52,155 -64,969 48,606 -16,363 -35,792 -142 -$35,650

57,144 1,935 -32,916 26,163 427 0 995,492 11,939 379,720 391,659 603,833 -285 $604,118

71,857 3,826 -44,452 31,230 0 0 1,096,019 0 308,907 308,907 787,112 0 $787,112

81,198 4,323 -50,231 35,290 0 0 1,215,801 0 349,065 349,065 866,736 0 $866,736

88,506 4,712 -54,752 38,466 0 0 1,290,365 0 380,481 380,481 909,884 0 $909,884

$0.97 $0.95

$1.31 $1.27

$1.66 $1.64

-$0.10 -$0.10

$1.75 $1.73

$2.28 $2.25

$2.51 $2.48

$2.63 $2.60

167,303 171,288

169,477 173,721

341,622 346,246

343,421 343,421

345,582 349,311

345,582 349,311

345,582 349,311

345,582 349,311

Appendix II: Balance Sheet


$ in thousands

Source: Company Documents, Student Estimates Fiscal Year Ending 12/31 ASSETS Current Assets: Cash and cash equivalents Accounts receivable Inventories Hedging asset Other Total current assets Property and Equipment: Natural gas and oil properties Gathering systems Other Total property and equipment Less: Accumulated depreciation, depletion and amortization 42,867 100,139 25,981 64,082 81,015 314,084 2,651,42 7 51,836 88,631 2,791,89 4 913,233 1,878,66 1 186,324 2,379,06 9 727 177,680 33,034 64,472 87,428 363,341 196,277 254,557 50,377 343,320 44,734 889,265 13,184 263,076 30,009 163,069 95,163 564,501 16,055 351,573 35,098 130,412 47,755 580,893 7,749,86 3 817,465 413,557 8,980,88 5 3,682,68 8 5,298,19 7 138,373 6,017,46 3 104,976 391,083 66,947 250,353 157,497 970,856 497,444 441,924 75,650 282,899 177,972 1,475,889 10,317,52 0 1,088,305 845,632 12,251,45 7 5,305,244 6,946,213 377,319 8,799,422 1,036,305 481,697 82,458 308,360 193,989 2,102,810 11,246,09 7 1,186,252 1,429,006 13,861,35 5 6,289,983 7,571,372 411,278 10,085,46 1 2006A 2007A 2008A 2009A 2010A 2011E 2012E 2013E

4,020,448 158,604 99,332 4,278,384 1,200,754 3,077,630 181,745 3,622,716

4,836,077 341,474 151,363 5,328,914 1,615,307 3,713,607 157,286 4,760,158

6,329,117 547,637 305,030 7,181,784 3,054,531 4,127,253 78,496 4,770,250

9,130,549 963,101 487,235 10,580,88 5 4,433,794 6,147,091 333,911 7,451,859

Other Assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities: Current portion of long-term debt Accounts payable Taxes payable Interest payable Advances from partners Hedging liability Current deferred income taxes Other Total current liabilities Long-Term Debt Other Liabilities: Deferred income taxes Long-term hedging liability Pension Other long-term liabilities

1,200 261,177 10,271 2,213 25,048 15,799 19,162 43,990 378,860 136,600

1,200 313,070 5,087 2,213 32,005 8,598 20,909 47,813 430,895 977,600

61,200 464,145 31,951 20,857 70,603 10,899 122,448 10,758 792,861 674,200

1,200 404,695 25,500 19,775 52,406 20,052 0 12,788 536,416 997,500

1,200 473,890 50,051 19,954 81,705 7,685 44,089 15,409 693,983 1,093,00 0 1,130,29 2 40,188 15,777 79,347 1,265,60 4 3,477 862,423 2,018,44 5 83,975 -3,444 2,964,87 6 0 2,964,87 6 6,017,46 3

1,200 710,227 38,114 18,660 88,327 27,220 68,194 83,188 1,035,129 1,303,092

1,200 802,556 43,069 21,086 99,809 30,758 77,059 94,002 1,169,539 1,472,494

1,200 874,786 46,945 22,983 108,792 33,527 83,994 102,463 1,274,690 1,605,018

354,702 4,902 11,697 46,631 417,932

479,196 15,186 14,618 48,151 557,151 3,416 752,369 882,031 13,348 -4,664 1,646,500 10,570 1,657,070 3,622,716

721,707 5,934 15,436 32,057 775,134 3,436 811,492 1,449,977 247,665 -4,740 2,507,830 10,133 2,517,963 4,760,158

811,902 3,057 12,630 67,764 895,353 3,461 833,494 1,414,327 84,276 -4,333 2,331,225 9,756 2,340,981 4,770,250

1,203,549 23,158 27,846 107,097 1,361,650 3,477 862,423 2,805,557 83,975 -3,444 3,751,988 0 3,751,988 7,451,859

1,360,011 26,169 31,466 121,019 1,538,664 3,477 862,423 3,672,293 83,975 -3,444 4,618,724 0 4,618,724 8,799,422

1,482,412 28,524 34,297 131,911 1,677,144 3,477 862,423 4,582,177 83,975 -3,444 5,528,608 0 5,528,608 10,085,46 1

Equity: Southwestern Energy stockholders equity: Additional paid-in capital Retained earnings Accumulated other comprehensive income Common stock in treasury Total Southwestern Energy stockholders equity Noncontrolling interest Total Equity TOTAL LIABILITIES AND EQUITY 1,690 740,609 660,857 31,487 0 1,434,64 3 11,034 1,445,67 7 2,379,06 9

Appendix III: Discounted Cash Flow to the Firm


$ in thousands
Source: Company Documents, Student Estimates Fiscal Year Revenue Net Income Add: Depreciation & Amortization Less : Interest Income*(1-Tax Rate) 2006A $763,112 162,636 151,290 441 2007A $1,255,13 1 221,174 293,914 15,517 124,494 1,492,883 32,701 -901,519 2008A $2,311,55 2 567,946 414,408 18,788 242,511 1,050,385 -56,855 212,547 2009A $2,145,77 9 -35,650 493,658 12,115 90,195 907,304 47,601 -418,817 2010A $2,610,66 3 604,118 590,332 17,006 318,390 1,761,276 24,391 -289,833 2011E $3,054,47 6 787,112 751,106 20,300 73,257 1,600,000 -164,977 156,153 2012E $3,451,55 8 866,736 871,450 22,938 156,461 1,670,572 -32,786 233,923 2013E $3,762,19 8 909,884 984,739 25,003 122,401 1,609,898 -25,648 407,771 Terminal Value (Perpetuity Growth Rate=7%) 18,806,697

Add: Increase in Deferred Tax Liabilities Less: Capital Expenditures Less: Change in Working Capital FCFF Discounted FCFF(WACC=9.32%) Intrinsic Value(Ending 2011)

156,153 16,448,02 6

213,980

341,207

15,736,686

(in thousands) Intrinsic Value Less: Debt Equity Value Common Share outstanding Price per Share

16,448,02 6 1,094,200 15,353,82 6 345,582 $44.43

Appendix IV: Other Statements or Exhibits


$ in thousands
Source: Company Documents, Student Estimates Fiscal Year Revenue Net Income Add: Depreciation & Amortization Less : Interest Income*(1-Tax Rate) 2006A $763,112 162,636 151,290 441 2007A $1,255,13 1 221,174 293,914 15,517 124,494 1,492,883 32,701 -901,519 2008A $2,311,55 2 567,946 414,408 18,788 242,511 1,050,385 -56,855 212,547 2009A $2,145,77 9 -35,650 493,658 12,115 90,195 907,304 47,601 -418,817 2010A $2,610,66 3 604,118 590,332 17,006 318,390 1,761,276 24,391 -289,833 2011E $3,054,47 6 787,112 751,106 20,300 73,257 1,600,000 -164,977 156,153 2012E $3,451,55 8 866,736 871,450 22,938 156,461 1,670,572 -32,786 233,923 2013E $3,762,19 8 909,884 984,739 25,003 122,401 1,609,898 -25,648 407,771 Terminal Value (Enterprise Value/EBITDA=13.16 ) 17,487,418

Add: Increase in Deferred Tax Liabilities Less: Capital Expenditures Less: Change in Working Capital FCFF

Discounted FCFF(WACC=9.32%) Intrinsic Value(Ending 2011)

156,153 15,344,10 6

213,980

341,207

14,632,767

(in thousands) Intrinsic Value Less: Debt Equity Value Common Share outstanding Price per Share

15,344,10 6 1,094,200 14,249,90 6 345,582 $41.23

Disclosures:
Ownership and material conflicts of interest: The author(s), or a member of their household, of this report holds a financial interest in the securities of this company. The author(s), or a member of their household, of this report knows of the existence of any conflicts of interest that might bias the content or publication of this report. The conflict of interest is Receipt of compensation: Compensation of the author(s) of this report is not based on investment banking revenue. Position as a officer or director: The author(s), or a member of their household, does serves as an officer, director or advisory board member of the subject company. Market making: The author(s) does not act as a market maker in the subject companys securities. Ratings key: Banks rate companies as either a BUY, HOLD or SELL. A BUY rating is given when the security is expected to deliver absolute returns of 15% or greater over the next twelve month period, and recommends that investors take a position above the securitys weight in the S&P 500, or any other relevant index. A SELL rating is given when the security is expected to deliver negative returns over the next twelve months, while a HOLD rating implies flat returns over the next twelve months. Disclaimer: The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information is not intended to be used as the basis of any investment decisions by any person or entity. This information does not constitute investment advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a recommendation by any individual affiliated with NYSSA or the NYSSA Investment Research Challenge with regard to this companys stock.