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C-BLVASM - LBO Structuring and Valuation Model Overview...

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LBO Structuring and Valuation Model Overview Objectives: Develop a model capable of simulating alternative capital structures and associated rates of returns. Identify clearly all assumptions underlying the model's financial projections. Summarize key performance metrics associated with the model. Worksheets: 1 Model Overview 2 Model Output Summary 3 Income Statement and Forecast Assumptions 4 Balance Sheet and Forecast Assumptions 5 Cash Flow Statement and Forecast Assumptions 6 Loan Amortization Schedules and Forecast Assumptions 7 Internal Rate of Return Calculations and Assumptions 8 Present Value of Adjusted Equity Cash Flow
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Model Output Summary Sources and Uses of Funds: Pro Forma Capital Struct Interest Market Sources of Funds Amount ($)Rate (%) Uses of Funds Amount ($) Revolving Loan Value Cash From Balance Sheet $0.0 0.0% Cash to Owners $70.0 Revolving Loan $12.0 New Revolving Loan $12.0 9.0% Seller Equity $0.0 Senior Debt $20.0 New Senior Debt $20.0 9.0% Seller's Note $0.0 Subordinated Debt $15.0 New Subordinated Debt $15.0 12.0% Excess Cash $0.0 Total Debt $47.0 New Preferred Stock (PIK) $22.0 12.0% Paid to Owners $70.0 Preferred Equity $22.0 New Common Stock $3.0 0.0% Debt Repayment $0.0 Common Equity $3.0 $72.0 Buyer Expenses $2.0 Total Equity $25.0 $72.0 Total Capital $72.0 Equity Investment: Ownership Distribution ($) % Distribution Fully Diluted Ownership Distribution Pre-Option Perform. Common Preferred Total Common Preferred Common Warrants Ownership Options Equity Investor 1.5 22.0 23.5 50.0% 100.0% 50.0% 0.0% 50.0% 0.0% Management 1.5 0.0 1.5 50.0% 0.0% 50.0% 0.0% 50.0% 0.0% Total $3.0 $22.0 $25.0 100.0% 100.0% 100.0% 0.0% 100.0% 0.0% Internal Rates of Return: Total Investor Return (%) Equity Investor Investment Gain ($) Management Investme Year 4 Year 5 Year 6 Year 4 Year 5 Year 6 Year 4 Year 5 8 0.42 0.35 0.33 $66.6 $78.9 $96.0 $4.3 $5.0 9 0.46 0.39 0.35 $73.8 $86.6 $104.5 $4.7 $5.5 10 0.51 0.42 0.37 $81.0 $94.2 $113.0 $5.2 $6.0 Financial Projections and Analysis: 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net Sales $177.6 $183.5 $190.4 $197.1 $205.0 $214.2 $223.8 $233.9 $244.4 Annual Growth Rate 4.2% 3.3% 3.8% 3.5% 4.0% 4.5% 4.5% 4.5% 4.5% EBIT as % of Net Revenue 5.5% 1.3% 5.1% 8.5% 9.5% 10.2% 11.2% 11.4% 11.4% $4.2 $0.2 $0.1 $9.5 $9.6 $10.8 $13.0 $13.4 $14.2 Adjusted Equity Cash Flow $4.2 $0.2 $0.1 $0.3 $0.2 $1.8 $7.4 $7.7 $8.1 Total Debt Outstanding 0 0 $47.0 $39.5 $31.5 $23.8 $19.2 $14.3 $8.8 Total Debt/Adjusted Enterprise Cash Flow 0.0 0.0 NA 4.1 3.3 2.2 1.5 1.1 0.6 EBIT/Interest Expense 0 0 0 3.6 4.9 6.6 10.1 13.3 18.6 PV of Adj. Equity Cash Flow @ 26% $57.2 2004-10 Adj. Eq. CF/Terminal Value 28.1% Multiple of Adjusted Equity Cash Flow 1 Adjusted Enterprise Cash Flow 2 1 Net Income + Interest Expense(1-t) + Depreciation & Amortization - Gross Capital Spending - Chg. In Working Capital - Principal Repayments - C Invest. Available for Sale (I.e., Increases in such investments are a negative cash flow entry, but represent cash in excess of normal operating ne 2 EBIT(1-t) + Depreciation & Amortization - Gross Capital Spending - Chg. in Working Capital - Chg. In Invest Available for Sale
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ture % of Total Capital 16.7% 27.8% 20.8% 65.3% 30.6% 4.2% 34.7% n Fully Diluted Ownership 50.0% 50.0% 100.0% ent Gain ($) Year 6 $6.1 $6.7 $7.2 2010 $255.4 4.5% 11.4% $14.9 $8.5 $2.7 0.2 30.9 Chg. In eeds.)
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Income Statement and Forecast Assumptions Historical Period Projections: Twelve Months Ending December 31, Income Statement Assumptions: 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Net Sales Growth (%) 0.042 0.033 0.038 0.035 0.040 0.045 0.045 0.045 0.045 0.045 Cost of Sales as % of Sales 0.805 0.814 0.780 0.765 0.758 0.755 0.750 0.750 0.750 0.750 SG&A as % of Sales 0.133 0.144 0.142 0.135 0.130 0.125
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