EX-99.(C)(3) 3 dex99c3.htm MATERIALS PRESENTED BY GOLDMAN, SACHS & CO. Materials presented by Goldman, Sachs & Co.

Exhibit (c)(3)

 

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Presentation to Board of Directors of West Corporation

Goldman, Sachs & Co.

30-May-2006

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Table of Contents

I. Overview of West Corporation

II. Valuation Analysis

Goldman Sachs does not provide accounting, tax, or legal advice. Notwithstanding anything in this document to the contrary, and except as required to enable compliance with applicable securities law, you (and each of your employees, representatives, and other agents) may disclose to any and all persons the US federal income and state tax treatment and tax structure of the transaction and all materials of any kind (including tax opinions and other tax analyses) that are provided to you relating to such tax treatment and tax structure, without Goldman Sachs imposing any limitation of any kind.

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I. Overview of West Corporation

Overview of West Corporation 1

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[Graphic Appears Here]

$55.0

$50.0

$45.0

$40.0

$35.0

$30.0

$25.0

$20.0

$15.0

$10.0

$5.0

West Annotated Stock Price History

Since IPO on November 26, 1996

[Graphic Appears Here]

06-Feb-2006

Announces acquisition of

Raindance for $110 mm

07-Oct-2005

Pricing of 5 mm shares in the

secondary market by Gary and

Mary West at $35.00 per share

09-May-2005

Announces acquisition of Sprint

conferencing

17-Nov-2004

Announces acquisition of ECI

Conference Call Services

17-Dec-2001

Announces acquisition of

Tel Mark Sales

23-Jul-2002

Announces acquisition of

Attention

23-Jul-2004

Announces acquisition of Worldwide Asset

Management

27-Mar-2003

Announces acquisition of InterCall

30-Jan-2006

Announces

acquisition of

Intrado for $465

mm

8,000

 

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Closing Price Market

[Graphic Appears Here]

Daily from 26-Nov-1996 to 26-May-2006

West

Volume

Volume (000)

Source: Factset and press releases

[Graphic Appears Here]

Nov-1996

Nov-1997

Nov-1998

Nov-1999

Nov-2000

Nov-2001

Nov-2002

Nov-2003

Nov-2004

Nov-2005

2

 

Overview of West Corporation

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West

Historical Reported Financials

($ in millions, except per share data)

[Graphic Appears Here]

Revenue

2001A

2002A

2003A

2004A

2005A

5.2%

23.2%

24.2%

20.4%

$780.2

$820.7

$988.3

$1,217.4

$1,523.9

Revenue Growth

EBITDA

2001A

2002A

2003A

2004A

2005A

$171.2

$168.3

$230.3

$289.0

$377.6

20.5%

23.3%

21.9%

23.7%

24.8%

2001A

2002A

2003A

2004A

2005A

EBITDA Margin

[Graphic Appears Here]

EBIT

$120.8

$106.5

$143.1

$187.9

$266.7

17.5%

14.5%

13.0%

15.4%

15.5%

2001A

2002A

2003A

2004A

2005A

EBIT Margin

EPS (Diluted)

$1.11

$1.01

$1.28

$1.63

$2.11

29.4%

(9.0)%

27.3%

26.7%

2001A

2002A

2003A

2004A

2005A

EPS GROWTH

Source: Management and public filings

Overview of West Corporation 3

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West

Pro Forma Projected Financials 1

($ in millions)

[Graphic Appears Here]

Revenue

$1,791.4

$1,884.1

$2,093.6

$2,288.5

$2,488.0

$2,712.1

5.2%

11.1%

9.3%

8.7%

9.0%

2005A

2006E

2007E

2008E

2009E

2010E

Revenue

 

Growth

EBITDA

$485.5

$493.9

$540.6

$591.6

$651.1

$716.9

26.4%

26.2%

25.9%

27.1%

25.8%

26.2%

2005A

2006E

2007E

2008E

2009E

2010E

EBITDA Margin

EBIT

$337.6

$329.3

$381.8

$439.0

$493.7

$563.8

17.5%

18.2%

19.2%

19.9%

20.8%

18.8%

2005A

2006E

2007E

2008E

2009E

2010E

EBIT Margin

EPS (Diluted)

$2.11

$2.43

$2.80

$3.42

$3.97

$4.58

15.2%

15.2%

22.1%

16.1%

15.4%

2005A

2006E

2007E

2008E

2009E

2010E

EPS Growth

All financials are pro forma for acquisition of Sprint, Intrado and Raindance as if they had occurred 1-Jan-2005, except for 2005 EPS (Diluted), which is reported EPS.

1

 

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4

 

Overview of West Corporation

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West Analyst Expectations

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2002

2001

2004

2003

2006

2005

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$0.00

May-2001 Jun-2002 Jul-2003 Aug-2004 Sep-2005

$50.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$1.15

2001A2002A

$1.01

2003A

$1.28

2004A

$1.63

2005A

$2.11

2005A

2006E

$2.30

$2.65

2007E

Closing Price 2007

FactSet Source:

[Graphic Appears Here]

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Overview of West Corporation

EPS Estimate Closing Stock price

Monthly from 26-May-2001 to 26-May-2006

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Analyst Estimates

($ in millions, except per share data)

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EPS Estimates

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Brokers’ Ratings

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High Median

Low

   

$

$

$

2.8

2.6

2.4

$2.40

$2.30

 

$2.23

 

FY 2006

   

FY
2007

Brokers’ Ratings

Hold 42%

Strong Buy 25%

Buy 33%

Broker

   

Price
Target

   

Date of
Estimate

   

Rating

   

EPS Estimates

           

2006 2007

Bank of America

   

$

50.00

   

20-Apr-2006

   

Hold

   

$

2.35

   

$

2.70

Boenning & Scattergood

   

$

55.00

   

24-Apr-2006

   

Buy

   

$

2.28

   

$

2.63

CIBC

   

 

NA

   

24-Apr-2006

   

Hold

   

 

2.35

   

 

2.65

CL King

   

 

NA

   

4-Feb-2006

   

Hold

   

 

2.25

   

 

2.45

Credit Suisse

   

$

61.00

   

24-Apr-2006

   

Buy

   

 

2.29

   

 

2.83

First Analysis

   

$

56.00

   

10-Apr-2006

   

Strong
Buy

   

 

2.26

   

 

2.62

Goldman Sachs

   

 

NA

   

20-Apr-2006

   

Buy

   

 

2.31

   

 

2.75

JMP Securities

   

$

53.00

   

8-May-2006

   

Buy

   

 

2.40

   

 

2.75

Robert W. Baird

   

$

56.00

   

24-Apr-2006

   

Strong
Buy

   

 

2.30

   

 

2.64

Susquehanna Financial Group

   

 

NA

   

25-May-2006

   

Hold

   

 

2.30

   

 

2.66

Sun Trust

   

$

53.00

   

20-Apr-2006

   

Strong
Buy

   

 

2.28

   

 

2.64

William Blair

   

 

NA

   

24-Apr-2006

   

Hold

   

 

2.23

   

 

NA

Note: EPS estimates and brokers’ ratings as per IBES. Brokers’ ratings based on 12 analysts.

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6

 

Overview of West Corporation

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West Shares Traded at Various Prices

[Graphic Appears Here]

6

 

Months

    

10,000

                                           

Weighted Average
Price:

   

$

   

42.96

     
                                                         

 
 

Total Shares
Traded as Percent

            
    

8,000

                                                                             
                                                         

 
 

of Shares
Outstanding:

   

33.02%

     

Volume(000)

                                                                                  
    

6,000

                                                                             
    

4,000

                                                                             
    

2,000

                                                                             
    

0

                                                                             
         

$

38.00-$

   

39.99

   

$

40.00-$

   

41.99

   

$

42.00-$

   

43.99

   

$

44.00-$

   

45.99

   

$

46.00-$

   

47.99

        

$

48.00-$

   

50.00

                                 

 
 

Daily From 26-Nov-2005 to 26-
May-2006

                             

[Graphic Appears Here]

12,000

Weighted Average Price: $40.97 10,000

Total Shares Traded as Percent of Shares Outstanding: 60.47%

8,000

Volume(000)

6,000

4,000

2,000 0

$35.00 - $36.99

$37.00 - $38.99

$39.00 - $40.99

$41.00 - $42.99

$43.00 - $44.99

$45.00 - $46.99

$47.00 - $48.99

$49.00 - $51.00

Daily From 26-Nov-2005 to 26-May-2006

% of Total Shares Traded

13.5%

23.7%

33.8% 12 Months

9.6%

13.3%

6.1%

[Graphic Appears Here]

Daily From 26-May-2005 to 26-May-2006

11.8%

Source: FactSet

% of Total Shares Traded

16.7%

26.6%

21.9%

10.0%

7.6%

4.6%

0.8%

[Graphic Appears Here]

7

 

Overview of West Corporation

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II. Valuation Analysis

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8

 

Valuation Analysis

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Summary of Historical and Projected Financials

($ in millions per share data)

    

Reported
Historical

                

Pro Forma Projected

          

CAGR

  
    

 

2003

 

  

 

2004

 

  

 

2005

 

  

 

2006

 

  

 

2007

 

  

 

2008

 

  

 

2009

 

  

 

2010

 

  

‘03-’05

 

  

‘06-’10

 

Revenue

   

$

988

 

  

$

1,217

 

  

$

1,524

 

  

$

1,884

 

  

$

2,094

 

  

$

2,289

 

  

$

2,488

 

  

$

2,712

 

  

24.2

%

  

9.5

%

EBITDA

   

 

230

 

  

 

289

 

  

 

378

 

  

 

494

 

  

 

541

 

  

 

592

 

  

 

651

 

  

 

717

 

  

28.2

%

  

9.8

%

EBIT

   

 

143

 

  

 

188

 

  

 

267

 

  

 

329

 

  

 

382

 

  

 

439

 

  

 

494

 

  

 

564

 

  

36.6

%

  

14.4

%

Net Income (After Min. Int.)

   

 

88

 

  

 

113

 

  

 

150

 

  

 

176

 

  

 

205

 

  

 

250

 

  

 

290

 

  

 

335

 

  

30.6

%

  

17.5

%

EPS

   

$

1.28

 

  

$

1.63

 

  

$

2.11

 

  

$

2.43

 

  

$

2.80

 

  

$

3.42

 

  

$

3.97

 

  

$

4.58

 

  

28.4

%

  

17.2

%

IBES Estimated EPS

                           

 

2.30

 

  

 

2.65

 

                                    

Revenue Growth

   

 

NA

 

  

 

23.2

%

  

 

25.2

%

          

 

11.1

%

  

 

9.3

%

  

 

8.7

%

  

 

9.0

%

            

EBIT Margin

   

 

14.5

%

  

 

15.4

%

  

 

17.5

%

  

 

17.5

%

  

 

18.2

%

  

 

19.2

%

  

 

19.9

%

  

 

20.8

%

            

Net Income Growth

   

 

NA

 

  

 

28.4

%

  

 

32.7

%

          

 

16.5

%

  

 

22.0

%

  

 

16.0

%

  

 

15.5

%

            

EPS Growth

   

 

NA

 

  

 

27.3

%

  

 

29.4

%

          

 

15.2

%

  

 

22.1

%

  

 

16.1

%

  

 

15.4

%

            

Source: Note: Pro forma projected are fully synergized and are from management Reported Historical financials from management and SEC filings. 2006 pro forma projected includes full year impact of acquisition of Intrado and Raindance.

[Graphic Appears Here]

[Graphic Appears Here]

9

Valuation Analysis

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West Stock Price Chart

[Graphic Appears Here]

$50.00 $47.50 $45.00 $42.50 $40.00 $37.50 $35.00 $32.50 $30.00 $27.50 $25.00

Nov-2004

 

Jan-2005 May-2005 Aug-2005 Oct-2005 Jan-2006 May-2006

2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

Daily from 1-Nov-2004 to 26-May-2006

Volume

 

(000) West

Closing Market Price (USD)

Volume (000)

Source: FactSet

[Graphic Appears Here]

10

Valuation Analysis

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Stock Price versus S&P500 and BPO Index

180% 170% 160% 150% 140% 130% 120% 110% 100% 90% 80%

Nov-2004 Dec-2004 Feb-2005 Apr-2005 Jun-2005 Aug-2005 Oct-2005 Nov-2005 Jan-2006 Mar-2006 Apr-2006

Daily from 1-Nov-2004 to 26-May-2006

West

 

BPO Index S&P 500 Index

Source: FactSet. BPO Index includes: Acxiom, Advo, Affiliated Computer Services, Alliance Data, Bearingpoint, Bisys, Ceridian, Choicepoint, DST, Fiserv, Harte Hanks, Perot Systems and Reynolds & Reynolds.

11

Valuation Analysis

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Historical P/E Multiple vs. Small / Mid Cap Business Process Outsourcing Companies

[Graphic Appears Here]

Average P/E Multiples 6 Month 12 Month 18 Month

West

   

20.1
x

   

19.8
x

   

19.8
x

S&P 500

   

16.8

   

16.7

   

17.0

BPO Index

   

20.2

   

20.6

   

20.8

26x

23x

20x

17x

14x

Price to FY1 EPS Estimates

Nov-2004 Jan-2005 Mar-2005 Jun-2005 Aug 2005 Oct-2005 Jan-2006 Mar-2006 May 2006

20.0x

18.4x

15.4x

Daily from 1-Nov-2004 to 26-May-2006

BPO Index West

S&P 500

FactSet. Source: Acxiom, Advo, Affiliated Computer Services, Alliance Data, Bearingpoint, Bisys, Ceridian, Choicepoint, DST, Fiserv, Harte Hanks, Perot Systems and Reynolds & BPO Index includes: Reynolds.

[Graphic Appears Here]

12

Valuation Analysis

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Analysis at Various Prices

($ in millions, except per share data)

Stock price as of 26 May 2006

   

$

 

   

42.14

                                                        

Multiple of LTM PF Adjusted EBITDA

                      

 

8.1 x

 

  

 

9.0 x

 

  

 

9.0 x

 

  

 

9.1 x

 

  

 

9.1 x

 

  

 

9.2 x

 

Premium to Market Price

                      

 

0.0

%

  

 

13.9

%

  

 

14.5

%

  

 

15.1

%

  

 

15.7

%

  

 

16.3

%

Price Per Share ($)

                      

$

42.14

 

  

$

48.00

 

  

$

48.25

 

  

$

48.50

 

  

$

48.75

 

  

$

49.00

 

Equity Consideration - Diluted ($) (1)(2)

                      

$

3,060

 

  

$

3,500

 

  

$

3,519

 

  

$

3,537

 

  

$

3,556

 

  

$

3,575

 

Enterprise Value (3)

                      

 

3,790

 

  

 

4,229

 

  

 

4,248

 

  

 

4,267

 

  

 

4,285

 

  

 

4,304

 

Enterprise Value / Sales (4)

   

 

LTM PF

   

$

1,831

   

 

2.1 x

 

  

 

2.3 x

 

  

 

2.3 x

 

  

 

2.3 x

 

  

 

2.3 x

 

  

 

2.4 x

 

    

 
 

FY 2006E
PF1.884

   

 

2.0

 

  

 

2.2

 

  

 

2.3

 

  

 

2.3

 

  

 

2.3

 

  

 

2.3

 

Enterprise Value / Adjusted EBITDA (4)

   

 

LTM PF

   

$

470

   

 

8.1 x

 

  

 

9.0 x

 

  

 

9.0 x

 

  

 

9.1 x

 

  

 

9.1 x

 

  

 

9.2 x

 

    

 
 
 

FY
2006E
PF

   

 

481

   

 

7.9

 

  

 

8.8

 

  

 

8.8

 

  

 

8.9

 

  

 

8.9

 

  

 

9.0

 

Enterprise Value / EBIT (4)

   

 

LTM PF

   

$

337

   

 

11.2 x

 

  

 

12.5 x

 

  

 

12.6 x

 

  

 

12.7 x

 

  

 

12.7 x

 

  

 

12.8 x

 

    

 
 
 

FY
2006E
PF

   

 

329

   

 

11.5

 

  

 

12.8

 

  

 

12.9

 

  

 

13.0

 

  

 

13.0

 

  

 

13.1

 

Purchase Price Per Share / EPS (5)

   

 
 

FY
2005A

   

$

2.11

   

 

20.0 x

 

  

 

22.7 x

 

  

 

22.9 x

 

  

 

23.0 x

 

  

 

23.1 x

 

  

 

23.2 x

 

    

 
 
 
 

FY
2006E
PF
(Mgmt.)

   

 

2.43

   

 

17.4

 

  

 

19.8

 

  

 

19.9

 

  

 

20.0

 

  

 

20.1

 

  

 

20.2

 

    

 
 
 

FY
2006E
(IBES)

   

 

2.30

   

 

18.4

 

  

 

20.9

 

  

 

21.0

 

  

 

21.1

 

  

 

21.2

 

  

 

21.4

 

Note: All pro forma financial figures are fully synergized. LTM figures are as of March 31, 2006.

(1)

 

Assumes 71.1 million basic shares outstanding.

(2) Assumes exercise of 6.1 million options outstanding with a weighted average strike price of $24.93. Assumes 100.0% of options outstanding are tax-deductible. Assumes 37.0% tax rate. (3) Assumes net debt of $729.3 million as per Management.

(4)

 

Estimates as per Management dated May 2006. Adjusted EBITDA equals EBITDA—minority interest.

(5)

 

FY 2006E IBES estimate as of 26 May 2006. FY 2005A EPS not pro forma for acquisitions of Intrado and Raindance.

[Graphic Appears Here]

13

Valuation Analysis

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West 2006E P/E vs. Small / Mid-Cap Business Process Outsourcing Companies

[Graphic Appears Here]

26.1x

23.9x

23.4x

23.3x

21.3x

20.0x

19.9x

19.2x

19.4x

 

Median = 19.9x

18.4x

17.3x

 

17.3x

16.0x

15.2x

Bearing-Point Ceridian Choice-Point Acxiom Bisys DST Alliance Data Advo Harte Hanks West Fiserv Convergys Perot Stystems ACS

Note: All multiples based on IBES median EPS estimates. No IBES 2006E EPS estimates are available for Reynolds & Reynolds, so the company is omitted. Median excludes West.

[Graphic Appears Here]

14

Valuation Analysis

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West 2006E P/E Multiple vs. Business Segment Comparables ($ in millions)

Market Cap

$3,102

$1,489

$847

$344

$2,669

$547

$626

$789

$668

$514

$211

17.3x 17.3x

23.4x

18.4x

18.2x

 

14.6x

12.7x

12.4x

12.1x

10.4x

Communications Services (41% of West’s Operating Income)

Conferencing (44% of West’s Operating Income)

Accounts Receivables Management (15% of West’s Operating Income)

Source: IBES, Factset Note: All multiples based on IBES median EPS estimates. Percentages of West’s operating income based on management’s pro forma FY 2006 estimates excluding corporate costs. NCO Group market cap and multiple based on undisturbed price: closing stock price the day prior to acquisition proposal ($19.36 on May 12, 2006).

[Graphic Appears Here]

15

Valuation Analysis

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West 2006E EBITDA Multiple vs. Business Segment Comparables ($ in millions)

[Graphic Appears Here]

Market Cap

$3,102

$1,489

$847

$344

$2,669

$547

$668

$789

$211

$626

Communications Services (45% of West’s EBITDA)

Conferencing (43% of West’s EBITDA)

Accounts Receivables Management (13% of West’s EBITDA)

Communications

 

Services

(45%

 

of West’s EBITDA) (

Conferencing

43% of West’s EBITDA)

Accounts Receivables Management

(13% of West’s EBITDA)

Source: Note:West enterprise value does not include minority interest. All other EBITDA figures based on IBES projections. No 2006 IBES EBITDA estimate IBES, Factset, Public Filings Percentages of West’s EBITDA based on management’s pro forma FY 2006 estimates excluding corporate costs. Total percentage may not add up to 100% due to rounding. NCO Group market cap and multiple based on undisturbed price: closing stock price the day prior to acquisition proposal ($19.36 on May 12). West multiple based on 2006E fully synergized pro forma EBITDA (per management) less minority interest (per management). available for ASTA. Therefore, the company is excluded.

[Graphic Appears Here]

16

Valuation Analysis

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Comparable Transactions

[Graphic Appears Here]

                   

Trans.

                

Ann.

                       

 

Value

 

  

LTM EV
Multiples

Date

        

Acquirer

   

Target (Seller)

        

(US$

m

)

  

Sales

   

EBITDA

General BPO

                                      

13-Feb-06

   

Deutsche Post (1)

        

Williams Lea

        

$

440

 

  

0.8x

   

10.0x

31-Mar-05

   

Northgate Information Solutions PLC (2)

        

Sx3 (Viridian Group PLC)

         

1.2x

   

NA

28-Mar-05

   

Silver Lake, Bain Capital, The Blackstone Group, Goldman Sachs Capital Partners, KKR,

   

SunGard Data Systems

         

3.2x

   

10.8x

Providence and TPG

                                      

24-Mar-04

   

Convergys Corp

        

DigitalThink Inc

         

2.8x

   

NA

22-Aug-00

   

Teletech

        

Newgen Results Corporation

         

2.4x

   

15.8x

18-Apr-05

   

RR Donnelley

        

Astron (PPM Ventures)

         

1.8x

   

NA

16-Mar-05

   

Affiliated Computer Services

        

Mellon Fin’l HR unit (Mellon)

        

 

445

 

  

0.7x

   

NA

8-Nov-04

   

Williams Lea

        

Bowne Business Solutions

         

0.7x

   

10.3x

16-Dec-04

   

Serco Group

        

ITNET

         

1.2x

   

9.6x

18-May-04

   

Marsh & McLennan

        

Kroll

         

3.5x

   

16.4x

1-Mar-04

   

3i

        

Williams Lea

        

 

37

 

  

NA

   

NA

2-Dec-02

   

General Atlantic

        

Liberata (Deloitte partners)

         

1.7x

   

13.0x

4-Apr-02

   

Warburg Pincus

        

WNS (British Airways)

        

 

NA

 

  

NA

   

NA

11-May-00

   

Permira (65%), Mgmt

        

Hogg Robinson

         

0.1x

   

6.4x

General BPO Median

                       

 

355

 

  

1.5x

   

10.6x

Communication Services

                                      

30-Jan-06

   

West Corp

        

Intrado

         

3.2x

   

13.1x

21-Sep-05

   

GTCR Golder Rauner

        

Sorenson Communications

        

 

NA

 

  

NA

   

NA

12-May-05

   

ABRY

        

Language Line

         

NA

   

NA

18-Nov-03

   

NCO Group Inc

        

RMH Teleservices Inc

         

0.4x

   

7.2x

5-Sep-00

   

Teletech

        

Contact Center Holding

         

1.8x

   

NA

Communication Services Median

                       

 

286

 

  

1.8x

   

10.2x

Conferencing

                                      

6-Feb-06

   

West Corp

        

Raindance Communications Inc

         

1.5x

   

9.4x

9-May-05

   

West Corp

        

Sprint Corp-Fon Conferencing

         

1.5x

   

4.5x

27-Mar-03

   

West Corp

        

Intercall

         

2.0x

   

6.0x

Conferencing Median

                       

 

207

 

  

1.5x

   

6.0x

Accounts Receivables Management

                                      

16-May-06

   

Michael J. Barrist / One Equity Partners

        

NCO Group

         

1.2x

   

8.8x

23-Jul-04

   

West Corp

        

Worldwide Asset Management LLC

         

1.6x

   

7.0x

22-Dec-03

   

Affiliated Computer Services

        

Patient Accounting Service Center

         

1.5x

   

N.A.

24-Jul-02

   

West Corp (3)

        

Attention LLC

        

 

90

 

  

3.3x

   

6.0x

Accounts Receivables Management Median

                       

 

141

 

  

1.6x

   

7.0x

Median of All Transactions

                       

 

270

 

  

1.6x

   

9.5x

(1)

 

No financial details of Williams Lea available, sales and EBITDA are press speculation.

(2)

 

Includes earn out benefits of $50mm.

(3)

 

Includes earn out benefits of $50mm.

(4) West Weighted Median is weighted median of Communication Services Median, Conferencing Median and Accounts Receivables Management Median, weighted based on West’s segment distribution of FY

2006E EBITDA, per management.

[Graphic Appears Here]

17

Valuation Analysis

LOGO

 

Discounted Cash Flow Analysis

($ in millions, except per share data)

[Graphic Appears Here]

                

Base
Case

                          
          

 

Implied Equity Value

 

          

 

Implied Share Price

 

        
          

 
 

2010
Perpetuity

 
 

          

 
 

Growth
Rate

 
 

  

 
 

2010
Perpetuity

 
 

          

 
 

Growth
Rate

 
 

          

 

2.0

%

  

 

3.0

%

  

 

4.0

%

  

 

2.0

%

  

 

3.0

%

  

 

4.0

%

    

9.0

%

  

$

3,689

 

  

$

4,276

 

  

$

5,098

 

  

$

49.78

 

  

$

57.39

 

  

$

68.04

 

    

10.0

%

  

 

3,136

 

  

 

3,562

 

  

 

4,131

 

  

 

42.61

 

  

 

48.14

 

  

 

55.50

 

Discount Rate

                                                       
    

11.0

%

  

 

2,706

 

  

 

3,027

 

  

 

3,441

 

  

 

37.04

 

  

 

41.20

 

  

 

46.56

 

    

12.0

%

  

 

2,363

 

  

 

2,612

 

  

 

2,923

 

  

 

32.59

 

  

 

35.82

 

  

 

39.85

 

    

Revenue Growth / EBIT Margin
Sensitivity

                    
          

 
 

Implied Equity
Value

 
 

          

 
 

Implied Share
Price

 
 

        
          

 

Revenue Growth

 

          

 

Revenue Growth

 

        
          

 

(1.0

)%

  

 

0.0

%

  

 

1.0

%

  

 

(1.0

)%

  

 

0.0

%

  

 

1.0

%

    

(3.0

)%

  

$

2,762

 

  

$

2,902

 

  

$

3,046

 

  

$

37.77

 

  

$

39.58

 

  

$

41.44

 

    

(2.0

)%

  

 

2,974

 

  

 

3,122

 

  

 

3,275

 

  

 

40.51

 

  

 

42.43

 

  

 

44.42

 

EBIT Margin

   

(1.0

)%

  

 

3,185

 

  

 

3,342

 

  

 

3,505

 

  

 

43.24

 

  

 

45.28

 

  

 

47.39

 

    

0.0

%

  

 

3,396

 

  

 

3,562

 

  

 

3,734

 

  

 

45.98

 

  

 

48.14

 

  

 

50.36

 

    

1.0

%

  

 

3,607

 

  

 

3,783

 

  

 

3,964

 

  

 

48.72

 

  

 

50.99

 

  

 

53.34

 

[Graphic Appears Here]

Note: Sensitivities based on 10.0% discount rate and 3.0% perpetuity growth rate. Analysis based on management projections. 2006 EBIT margin projected at 17.5% and 2010 EBIT margin projected at 20.8%.

[Graphic Appears Here]

18

Valuation Analysis

LOGO

 

Leveraged Buyout Analysis

Initial Leverage Based on Pro Forma LTM Adjusted EBITDA of $470 mm

($ in millions, except per share data)

[Graphic Appears Here]

    

Sources of Funds

                    

Uses
of
Funds

       
    

 

Amount

 

        

% of

 

  

x LTM
PF

             

 

Amount

 

    

($

mm

)

  

Rate

 

  

Total

 

  

Adj.
EBITDA

             

($

mm

)

Cash

   

$

18

 

  

2.5

%

  

0.4

%

       

Equity Purchased

        

$

3,313

 

Bank Debt

   

 

2,124

 

  

7.5

%

  

49.9

%

  

4.5 x

   

Existing Short-Term Debt Retired

   

 

43

 

Unsecured Debt

   

 

1,100

 

  

9.5

%

  

25.9

%

  

2.3

   

Existing Long-Term Debt Retired

   

 

705

 

Sponsor Equity

   

 

762

 

        

17.9

%

  

1.6

   

Transaction Fees

        

 

155

 

Roll Over Equity

   

 

250

 

        

5.9

%

  

0.5

   

Minimum Cash

        

 

40

 

Total Sources

   

$

4,255

 

        

100.0

%

  

9.0 x

   

Total Uses

        

$

4,255

 

Return to Equity Sponsor in 2010

    

Price

   

Adj.
EBITDA

   

7.0 x

    

8.0 x

    

9.0 x

    

10.0
x

  
    

$

45.50

   

9.0
x

   

15.9

%

  

22.1

%

  

27.3

%

  

31.8

%

    

 

46.00

   

9.1

   

15.1

%

  

21.3

%

  

26.5

%

  

30.9

%

    

 

46.50

   

9.2

   

14.3

%

  

20.5

%

  

25.6

%

  

30.0

%

    

 

47.00

   

9.3

   

13.6

%

  

19.7

%

  

24.8

%

  

29.2

%

Purchase Price

                                     
    

 

47.50

   

9.3

   

12.9

%

  

19.0

%

  

24.0

%

  

28.4

%

    

 

48.00

   

9.4

   

12.2

%

  

18.3

%

  

23.3

%

  

27.6

%

    

 

48.50

   

9.5

   

11.6

%

  

17.6

%

  

22.6

%

  

26.8

%

    

 

49.00

   

9.6

   

10.9

%

  

16.9

%

  

21.9

%

  

26.1

%

[Graphic Appears Here]

Note: Analysis based on management forecasts. Analysis assumes that all free cash flow is used to pay down debt. All financials are pro forma for Intrado and Raindance acquisitions. Assumes tax rate of 37.0%. Assumes 7.5% hypothetical equity to management at exit. LTM PF Adjusted EBITDA equals LTM PF EBITDA—minority interest. LTM PF Adjusted EBITDA multiples take into consideration transaction fees and minimum cash. LTM PF Adjusted EBITDA as of 31-Mar-2006.

[Graphic Appears Here]

[Graphic Appears Here]

19

Valuation Analysis

LOGO

 

Leveraged Buyout Analysis

Margin Sensitivity Analysis Based on $45.50 Offer Price

[Graphic Appears Here]

                

Adj.
EBITDA
Exit
Multiple

        
    

15.9

%

  

7.0
x

 
 

  

8.0
x

 
 

  

9.0
x

 
 

  

10.0
x

 
 

    

(3.0

)%

  

6.3

%

  

13.8

%

  

19.7

%

  

24.7

%

    

(2.0

)%

  

9.9

%

  

16.9

%

  

22.5

%

  

27.2

%

EBIT

   

(1.0

)%

  

13.0

%

  

19.6

%

  

25.0

%

  

29.6

%

Margin Increase / (Decrease)

   

0.0

%

  

15.9

%

  

22.1

%

  

27.3

%

  

31.8

%

    

1.0

%

  

18.5

%

  

24.5

%

  

29.5

%

  

33.8

%

Note: Adjusted EBITDA equals EBITDA—minority interest.

[Graphic Appears Here]

20

Valuation Analysis