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As Of Filer Filing ForทOnทAs Docs:Size Issuer Agent 3/27/08 Getty Images Inc SC 13E3 10:59M Getty Images Inc Donnelley … Solutions/FA Abe Acquisition Corp. Abe Investment, L.P. Getty Investments L.L.C. Hellman & Friedman Capital Partners VI, L.P. Jonathan Klein Mark Getty |
Document/Exhibit Description Pages Size
1: SC 13E3 Tender-Offer Statement - Going-Private Transaction HTML 140K
2: EX-99.(B)(1) Senior Secured Credit Facilities Commitment HTML 177K
Letter
3: EX-99.(C)(2) Presentation of Goldman Sachs to the Board of HTML 178K
Directors, Dated February 24, 2008
4: EX-99.(C)(3) Draft Presentation of Goldman Sachs, Dated HTML 189K
February 18, 2008
5: EX-99.(C)(4) Draft Presentation of Goldman Sachs, Dated HTML 200K
February 7, 2008
6: EX-99.(C)(5) Draft Presentation of Goldman Sachs, Dated HTML 104K
December 2007
7: EX-99.(C)(6) Draft Presentation of Goldman Sachs, Dated HTML 71K
November 28, 2007
8: EX-99.(C)(7) Draft Presentation of Goldman Sachs, Dated HTML 33K
November 6, 2007
9: EX-99.(C)(8) Draft Presentation of Goldman Sachs, Dated HTML 112K
October 10, 2007
10: EX-99.(C)(9) Draft Presentation of Goldman Sachs, Dated HTML 222K
September 19, 2007
| Draft Presentation of Goldman Sachs, dated October 10, 2007 |
Exhibit (c) (8)
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Discussion Materials for
Gettyimagesฎ
Goldman, Sachs & Co.
10-Oct-2007
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
I. Comparison of Potential Financial Plans
II. Valuation Multiples at Various Prices
III. Illustrative Discounted Cash Flow Analysis
IV. Illustrative Present Value of Future Stock Prices
V. Illustrative LBO Analysis
VI. Initial Process Considerations
Appendix A: Miscellaneous Additional Materials
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.
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
I. Comparison of Potential Financial Plans
1
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
GYI Historical and Projected Financials
Revenue Growth and EBITDA Margin
Annual Revenue Growth %
26.0%
12.3%
5.3%
6.8%
7.5%
6.1%
6.1%
6.1%
5.6%
5.3%
4.4%
6.7%
6.0%
6.2%
7.8%
7.1%
5.1%
8.1%
7.3%
5.3%
9.5%
8.0%
5.6%
1997-2006 CAGR
2001-2006 CAGR
2007-2012 CAGR
2007E
2008E
2009E
2010E
2011E
2012E
EBITDA Margin %
26.5%
32.2%
35.3%
35.8%
35.7%
34.5%
34.5%
34.4%
35.3%
34.9%
34.7%
35.6%
35.2%
35.0%
35.7%
35.6%
35.5%
36.6%
36.5%
35.5%
37.6%
37.5%
35.4%
1997-2006 Average Margin
2001-2006 Average Margin
2007-2012 Average Margin
2007E
2008E
2009E
2010E
2011E
2012E
Historical
Street Case
Management Case
Management with Consumer Case
Source: Company filings and Capital IQ for historical, Wall Street research for Street Case (07-09) and illustrative thereafter, and Management projections
2
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
GYI Historical and Projected Financials
Earnings Per Share
$4.50
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
$(0.50)
$(1.00)
$(1.50)
$(2.00)
Street Case
Management Case
Management with Consumer Case
Street Case
Management Case
Management with Consumer Case
07-12 CAGR
8.9%
15.3%
16.2%
02- 07 EPS CAGR
40.8%
-
-
05-07 EPS CAGR
(1.4)%
-
-
CY 2001A
CY 2002A
CY 2003A
CY 2004A
CY 2005A
CY 2006A
CY 2007E
CY 2008E
CY 2009E
CY 2010E
CY 2011E
CY 2012E
EPS Comparison
Street Case - EPS
$(1.84)
$0.40
$1.16
$1.72
$2.28
$2.11
$2.21
$2.28
$2.48
$2.85
$3.11
$3.39
Street Case - EPS Growth
NM
NM
190.0 %
48.2 %
32.4 %
(7.3)%
4.9 %
2.9 %
8.7 %
15.2 %
9.0 %
9.0 %
Mgmt Case - EPS
$(1.84)
$0.40
$1.16
$1.72
$2.28
$2.11
$2.13
$2.23
$2.61
$3.18
$3.67
$4.33
Mgmt Case - EPS Growth
NM
NM
190.0 %
48.2 %
32.4 %
(7.3)%
0.8 %
4.8 %
17.0 %
21.9 %
15.5 %
18.0 %
Mgmt with Consumer Case - EPS
$(1.84)
$0.40
$1.16
$1.72
$2.28
$2.11
$2.12
$2.22
$2.61
$3.21
$3.74
$4.49
Mgmt with Consumer Case - EPS Growth
NM
NM
190.0 %
48.2 %
32.4 %
(7.3)%
0.5 %
4.6 %
17.7 %
23.1 %
16.4 %
20.2 %
Source: Company filings and Capital IQ for historical, Wall Street research for Street Case (07-09) and illustrative thereafter, and Management projections
3
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
II. Valuation Multiples at Various Prices
4
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Premia and Multiples at Various Share Prices
IBES Median Estimates
8-Oct-07
Getty
Trading Premium
20% 25% 30% 35% 40% 45%
Implied Purchase Price Per Share $ 28.76 $ 34.51 $ 35.95 $ 37.39 $ 38.83 $ 40.26 $ 41.70
Equity Consideration - Diluted $ 1,710 $ 2,058 $ 2,145 $ 2,233 $ 2,321 $ 2,410 $ 2,498
Levered Consideration - Diluted 1,806 2,155 2,242 2,330 2,418 2,506 2,594
Premia Over Various Trading Periods
Averages
Current (08-Oct-07) $ 28.76 0 % 20 % 25 % 30 % 35 % 40 % 45 %
Last 10 Days 27.91 3 % 24 % 29 % 34 % 39 % 44 % 49 %
1 Month 28.15 2 % 23 % 28 % 33 % 38 % 43 % 48 %
3 Months 35.11(18)%(2)% 2 % 6 % 11 % 15 % 19 %
6 Months 42.35(32)%(19)%(15)%(12)%(8)%(5)%(2)%
1 Year 44.53(35)%(22)%(19)%(16)%(13)%(10)%(6)%
Implied Multiples
Street Estimates
Revenue CY2007E $ 856 2.1 x 2.5 x 2.6 x 2.7 x 2.8 x 2.9 x 3.0 x
CY2008E 894 2.0 2.4 2.5 2.6 2.7 2.8 2.9
Cash EBITDA CY2007E $ 294 6.1 x 7.3 x 7.6 x 7.9 x 8.2 x 8.5 x 8.8 x
CY2008E 316 5.7 6.8 7.1 7.4 7.7 7.9 8.2
Cash EPS CY2007E $ 2.21 13.0 x 15.6 x 16.3 x 16.9 x 17.6 x 18.2 x 18.9 x
CY2008E 2.28 12.6 15.1 15.8 16.4 17.0 17.7 18.3
PEG Ratio CY2007E 1.0 x 1.2 x 1.3 x 1.4 x 1.4 x 1.5 x 1.5 x
CY2008E 1.0 1.2 1.3 1.3 1.4 1.4 1.5
1 Yr Avg 6 M Avg
8.0 x 7.6 x
17.5 x 17.1 x
Note: 1yr average and 6 month average EBITDA comparisons compare NTM EBITDA to CY2008E. 1 year average and 6 month average p/e compares NTM P/E to CY2008E. Source: IBES median estimates and FactSet
5
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
III. Illustrative Discounted Cash Flow Analysis
6
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative 5-Year Discounted Cash Flow Analysis
Perpetuity Growth Method
($ per share)
Street Case
WACC
Terminal Growth Rate
$ 40.99 2.0% 2.5% 3.0% 3.5% 4.0%
10.0% $ 45.08 $ 47.34 $ 49.91 $ 52.89 $ 56.36
11.0% 39.99 41.70 43.62 45.80 48.30
11.5% 37.81 39.31 40.99 42.88 45.02
12.0% 35.90 37.23 38.71 40.37 42.23
13.0% 32.55 33.61 34.77 36.06 37.49
2012E LTM EBITDA at 11.5% WACC
6.3 x 6.7 x 7.1 x 7.6 x 8.1 x
2012E LTM P/E at 11.5% WACC
11.5 x 12.3 x 13.1 x 14.0 x 15.0 x
Management Case
WACC
Terminal Growth Rate
46.34 2.0% 2.5% 3.0% 3.5% 4.0%
10.0% $ 50.99 $ 53.57 $ 56.52 $ 59.93 $ 63.90
11.0% 45.18 47.14 49.34 51.84 54.69
11.5% 42.70 44.42 46.34 48.50 50.95
12.0% 40.52 42.05 43.74 45.63 47.76
13.0% 36.70 37.91 39.25 40.72 42.36
2012E LTM EBITDA at 11.5% WACC
6.3 x 6.7 x 7.2 x 7.6 x 8.2 x
2012E LTM P/E at 11.5% WACC
10.0 x 10.6 x 11.3 x 12.1 x 13.0 x
Management with Consumer Case
WACC
Terminal Growth Rate
$ 48.99 2.0% 2.5% 3.0% 3.5% 4.0%
10.0% $ 53.94 $ 56.69 $ 59.84 $ 63.47 $ 67.70
11.0% 47.76 49.84 52.19 54.85 57.89
11.5% 45.11 46.94 48.99 51.30 53.91
12.0% 42.80 44.42 46.23 48.24 50.51
13.0% 38.73 40.02 41.44 43.01 44.76
2012E LTM EBITDA at 11.5% WACC
6.5 x 6.9 x 7.3 x 7.8 x 8.4 x
2012E LTM P/E at 11.5% WACC
10.3 x 10.9 x 11.7 x 12.5 x 13.4 x
Source: Wall Street research dated 20-Sept-07 for 2007-2009, illustrative thereafter based on extrapolation for Street case, Management projections
Note: Assumes mid-year convention discounting. Discount rate of 11.5% based on risk free rate of 4.64% (10 year Treasury as of 8-Oct-2007), risk premium of 5.16% (Ibbotson) and beta of 1.65 (Barra predicted beta), cost of debt of 6.49% and current capitalization. 2012 LTM P/E calculated on Net Income for Street Case of $205.7mm, Management Case of $272.9mm, Management with Consumer Case of $283.0mm
7
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative 5-Year Discounted Cash Flow Analysis
Multiple of Terminal LTM EBITDA Method
($ per share)
Street Case
WACC
Terminal Multiple of 2012E EBITDA
40.54 5.0 x 6.0 x 7.0 x 8.0 x 9.0 x
10.0% $ 34.63 $ 38.82 $ 43.01 $ 47.20 $ 51.39
11.0% 33.32 37.34 41.35 45.36 49.38
11.5% 32.68 36.61 40.54 44.47 48.39
12.0% 32.08 35.92 39.77 43.62 47.46
13.0% 30.89 34.58 38.26 41.95 45.64
Management Case
WACC
Terminal Multiple of 2012E EBITDA
45.65 5.0 x 6.0 x 7.0 x 8.0 x 9.0 x
10.0% $ 38.91 $ 43.68 $ 48.44 $ 53.21 $ 57.97
11.0% 37.43 42.00 46.56 51.13 55.69
11.5% 36.71 41.18 45.65 50.11 54.58
12.0% 36.03 40.40 44.78 49.15 53.52
13.0% 34.69 38.88 43.08 47.27 51.46
Management with Consumer Case
WACC
Terminal Multiple of 2012E EBITDA
$ 47.38 5.0 x 6.0 x 7.0 x 8.0 x 9.0 x
10.0% $ 40.40 $ 45.34 $ 50.29 $ 55.23 $ 60.18
11.0% 38.86 43.59 48.33 53.07 57.81
11.5% 38.10 42.74 47.38 52.01 56.65
12.0% 37.39 41.93 46.47 51.01 55.55
13.0% 35.99 40.35 44.70 49.05 53.40
Source: Wall Street research dated 20-Sept-07 for 2007-2009, illustrative thereafter based on extrapolation for Street case, Management projections
Note: Assumes mid-year convention discounting. Discount rate of 11.5% based on risk free rate of 4.64% (10 year Treasury as of 8-Oct-2007), risk premium of 5.16% (Ibbotson) and beta of 1.65 (Barra predicted beta), cost of debt of 6.49% and current capitalization.
8
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
IV. Illustrative Present Value of Future Stock Prices
9
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative Present Value of Future Stock Prices
Street Case
($ per share)
Undiscounted Future Share Price
$ 70.00
$ 60.00
$ 50.00
$ 40.00
$ 30.00
$ 20.00
$ 10.00
$ 0.00
Undiscounted Future Share Prices
$ 28.76
$ 44.55
$ 37.13
$ 29.70
$ 51.33
$ 42.78
$ 34.22
$ 55.93
$ 46.61
$ 37.28
$ 60.94
$ 50.79
$ 40.63
Today
Sep, 2008
Sep, 2009
Sep, 2010
Sep, 2011
Present Value of Future Share Price
CY2008E CY2009E CY2010E CY2011E CY2012E
EPS $ 2.28 $ 2.48 $ 2.85 $ 3.11 $ 3.39
12.0 x 27.33 26.25 26.73 25.73 24.78
15.0 x 34.16 32.81 33.41 32.17 30.98
18.0 x 40.99 39.37 40.09 38.60 37.18
Source: Wall Street research dated 20-Sept-07 for 2007-2009, illustrative thereafter based on extrapolation for Street case
Note: Assumes refinancing of extant $265mm convertible, $40mm in related taxes and $120mm line of credit with new $425mm bank loan at L+75bps. Assumes illustrative cost of equity discount rate of 13% based on risk free rate of 4.64% (10 year Treasury as of 8-Oct-2007), risk premium of 5.16% (Ibbotson) and beta of 1.65 (Barra predicted beta)
10
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative Present Value of Future Stock Prices
Management Case
($ per share)
Undiscounted Future Share Price
$ 90.00
$ 80.00
$ 70.00
$ 60.00
$ 50.00
$ 40.00
$ 30.00
$ 20.00
$ 10.00
$ 0.00
Undiscounted Future Share Prices
$ 28.76
$ 46.96
$ 39.13
$ 31.30
$ 57.25
$ 47.71
$ 38.17
$ 66.13
$ 55.11
$ 44.09
$ 78.00
$ 65.00
$ 52.00
Today
Sep, 2008
Sep, 2009
Sep, 2010
Sep, 2011
Present Value of Future Share Price
CY2008E CY2009E CY2010E CY2011E CY2012E
EPS $ 2.23 $ 2.61 $ 3.18 $ 3.67 $ 4.33
12.0 x 26.75 27.67 29.81 30.43 31.72
15.0 x 33.44 34.58 37.26 38.04 39.65
18.0 x 40.13 41.50 44.71 45.65 47.58
Source: Based on Management EPS estimates
Note: Assumes illustrative cost of equity discount rate of 13% based on risk free rate of 4.64% (10 year Treasury as of 8-Oct-2007), risk premium of 5.16% (Ibbotson) and beta of 1.65 (Barra predicted beta)
11
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative Present Value of Future Stock Prices
Management with Consumer Case
($ per share)
Undiscounted Future Share Price
$ 90.00
$ 80.00
$ 70.00
$ 60.00
$ 50.00
$ 40.00
$ 30.00
$ 20.00
$ 10.00
$ 0.00
Undiscounted Future Share Prices
$ 28.76
$ 47.00
$ 39.17
$ 31.33
$ 57.84
$ 48.20
$ 38.56
$ 67.32
$ 56.10
$ 44.88
$ 80.90
$ 67.42
$ 53.93
Today Sep, 2008 Sep, 2009 Sep, 2010 Sep, 2011
Present Value of Future Share Price
CY2008E CY2009E CY2010E CY2011E CY2012E
EPS $ 2.22 $ 2.61 $ 3.21 $ 3.74 $ 4.49
12.0 x 26.61 27.69 30.12 30.98 32.90
15.0 x 33.27 34.61 37.65 38.72 41.12
18.0 x 39.92 41.54 45.18 46.47 49.35
Source: Based on Management EPS estimates
Note: Assumes illustrative cost of equity discount rate of 13% based on risk free rate of 4.64% (10 year Treasury as of 8-Oct-2007), risk premium of 5.16% (Ibbotson) and beta of 1.65 (Barra predicted beta)
12
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
V. Illustrative LBO Analysis
13
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Pro Forma Capitalization 4.0x 2007 EBITDA Leverage
Illustrative Multiples at $37.39 Per Share Purchase Price (30% Premium to Market)
($ in millions)
Getty LBO Pro Forma% of x2007PF Expected Illustrative
Dec-07 Adjustments Dec-07 Cap Adj. EBITDA Rating Pricing
Cash and Cash Equivalents $ 289($ 139) $ 150
Revolving Credit Facility $ 120($ 120) $ 0 0.0% 0.0x
New First Lien Term Loan 0 883 883 34.5% 3.0x BBB-/BB+ L + 250
First Lien Senior Secured Debt $ 120 $ 883 34.5% 3.0x
Second Lien Debt 0 0 0 0.0% 3.0x
Senior Secured Debt $ 120 $ 883 34.5% 3.0x
Senior Notes 0 294 294 11.5% 4.0x B/B- 10.0%
Extant Convert 265(265) 0 0.0% 4.0x
Other Debt 0 0 0 0.0% 4.0x
Total OpCo Debt $ 385 $ 1,177 46.1% 4.0x
Total Debt 385 1,177 46.1% 4.0x
New / Rollover Equity 0 1,379 1,379 53.9% 8.7x
Total Capitalization $ 385 $ 2,556 100.0% 8.7x
Getty PF EBITDA PF. Adj. EBITDA
LTM Adj. EBITDA $ 294.3 $ 294.3 $ 294.3
LTM Capex (ex -Acquisitions) 62.5 62.5 62.5
LTM PF Interest Expense 5.7 97.7 97.7
EBITDA / Interest Expense 51.2x 3.0x 3.0x
(EBITDA - Capex) / Interest Expense 40.3x 2.4x 2.4x
First Lien Senior Secured Debt / Adj. EBITDA 0.4x 3.0x 3.0x
Total Senior Secured Debt / Adj. EBITDA 0.4x 3.0x 3.0x
Total OpCo Debt / Adj. EBITDA 1.3x 4.0x 4.0x
Total Debt / Adj. EBITDA 1.3x 4.0x 4.0x
Total Debt / (Adj. EBITDA - Capex) 1.7x 5.1x 5.1x
14
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Preliminary LBO Returns Analysis
4.0x PF Leverage Illustrative for Current Credit Markets
IRR Sensitivity to Offer Price and Forward Exit Multiple
Street Case
Implied Forward P/E Mult.
12.1 x
14.3 x
16.5 x
18.7 x
21.0 x
LTM EBITDA Mult.
% Premium
Exit LTM EBITDA
Multiple
Offer Price
7.3 x 7.6 x 7.9 x 8.2 x 8.5 x
20.0 % 25.0 % 30.0 % 35.0 % 40.0 %
$ 34.51 $ 35.95 $ 37.39 $ 38.83 $ 40.26
6.0 x 11.0% 9.4% 8.0% 6.7% 5.4%
7.0 x 14.8% 13.2% 11.7% 10.3% 9.1%
8.0 x 18.1% 16.5% 15.0% 13.6% 12.2%
9.0 x 21.2% 19.5% 17.9% 16.5% 15.1%
10.0 x 23.9% 22.2% 20.6% 19.1% 17.7%
Management Case
Implied Forward P/E Mult.
9.9 x
11.7 x
13.4 x
15.1 x
16.8 x
Exit LTM EBITDA
Multiple
LTM EBITDA Mult.
% Premium
Year 5 IRR
Offer Price
7.4 x 7.7 x 8.0 x 8.3 x 8.6 x
20.0 % 25.0 % 30.0 % 35.0 % 40.0 %
$ 34.51 $ 35.95 $ 37.39 $ 38.83 $ 40.26
6.0 x 14.8% 13.3% 11.8% 10.5% 9.2%
7.0 x 18.6% 16.9% 15.4% 14.0% 12.7%
8.0 x 21.9% 20.2% 18.7% 17.2% 15.9%
9.0 x 24.9% 23.2% 21.6% 20.1% 18.7%
10.0 x 27.6% 25.8% 24.2% 22.7% 21.3%
Management with Consumer Case
Implied Forward P/E Mult.
9.5 x
11.2 x
12.8 x
14.4 x
16.0 x
Exit LTM EBITDA
Multiple
LTM EBITDA Mult.
% Premium
Year 5 IRR
Offer Price
7.5 x 7.8 x 8.1 x 8.4 x 8.7 x
20.0 % 25.0 % 30.0 % 35.0 % 40.0 %
$ 34.51 $ 35.95 $ 37.39 $ 38.83 $ 40.26
6.0 x 15.9% 14.3% 12.8% 11.5% 10.2%
7.0 x 19.6% 18.0% 16.5% 15.0% 13.7%
8.0 x 22.9% 21.2% 19.7% 18.2% 16.9%
9.0 x 25.9% 24.2% 22.6% 21.1% 19.7%
10.0 x 28.6% 26.9% 25.2% 23.7% 22.3%
Note: Assumes 4.0x leverage of LTM EBITDA; 3.0x Bank Debt at L+250bps and 1.0x Subordinated Notes at L+475bps. Illustrative purchase price of $37.39 (30% premium to $28.76 share price on 8-Oct-07). Assumes LIBOR of 5.24%; $150mm cash balance; IRR returns to equity holders shown after 5% equity allocated to employees.
15
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Pro Forma Capitalization 6.0x 2007 EBITDA Leverage
Illustrative Multiples at $37.39 Per Share Purchase Price (30% Premium to Market)
($ in millions)
Getty LBO Pro Forma% of x2007PF Expected Illustrative
Dec-07 Adjustments Dec-07 Cap Adj. EBITDA Rating Pricing
Cash and Cash Equivalents $ 289($ 139) $ 150
Revolving Credit Facility $ 120($ 120) $ 0 0.0% 0.0x
New First Lien Term Loan 0 1,030 1,030 40.1% 3.5x BB+/BB L + 362.5
First Lien Senior Secured Debt $ 120 $ 1,030 40.1% 3.5x
Second Lien Debt 0 0 0 0.0% 3.5x
Senior Secured Debt $ 120 $ 1,030 40.1% 3.5x
Senior Notes 0 736 736 28.7% 6.0x B-/CCC+ 12.1%
Extant Convert 265(265) 0 0.0% 6.0x
Other Debt 0 0 0 0.0% 6.0x
Total OpCo Debt $ 385 $ 1,766 68.8% 6.0x
Total Debt 385 1,766 68.8% 6.0x
New / Rollover Equity 0 802 802 31.2% 8.7x
Total Capitalization $ 385 $ 2,568 100.0% 8.7x
Getty PF EBITDA PF. Adj. EBITDA
LTM Adj. EBITDA $ 294.3 $ 294.3 $ 294.3
LTM Capex (ex - Acquisitions) 62.5 62.5 62.5
LTM PF Interest Expense 5.7 180.4 180.4
EBITDA / Interest Expense 51.2x 1.6x 1.6x
(EBITDA - Capex) / Interest Expense 40.3x 1.3x 1.3x
First Lien Senior Secured Debt / Adj. EBITDA 0.4x 3.5x 3.5x
Total Senior Secured Debt / Adj. EBITDA 0.4x 3.5x 3.5x
Total OpCo Debt / Adj. EBITDA 1.3x 6.0x 6.0x
Total Debt / Adj. EBITDA 1.3x 6.0x 6.0x
Total Debt / (Adj. EBITDA - Capex) 1.7x 7.6x 7.6x
16
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Preliminary LBO Returns Analysis
6.0x PF Leverage Illustrative for Current Credit Markets
IRR Sensitivity to Offer Price and Forward Exit Multiple
Implied Forward P/E Mult.
11.1 x
14.6 x
18.1 x
21.6 x
25.1 x
LTM EBITDA Mult.
% Premium
Exit LTM EBITDA
Multiple
Street Case
Year 5 IRR
Offer Price
7.3 x 7.6 x 7.9 x 8.2 x 8.5 x
20.0 % 25.0 % 30.0 % 35.0 % 40.0 %
$ 34.51 $ 35.95 $ 37.39 $ 38.83 $ 40.26
6.0 x 13.6% 10.7% 8.2% 5.9% 4.0%
7.0 x 20.0% 16.9% 14.2% 11.9% 9.8%
8.0 x 25.3% 22.0% 19.2% 16.8% 14.6%
9.0 x 29.7% 26.4% 23.5% 21.0% 18.7%
10.0 x 33.7% 30.2% 27.3% 24.6% 22.3%
Management Case
Implied Forward P/E Mult.
8.6 x
10.8 x
13.1 x
15.3 x
17.5 x
LTM EBITDA Mult.
% Premium
Exit LTM EBITDA
Multiple
Year 5 IRR
Offer Price
7.4 x 7.7 x 8.0 x 8.3 x 8.6 x
20.0 % 25.0 % 30.0 % 35.0 % 40.0 %
$ 34.51 $ 35.95 $ 37.39 $ 38.83 $ 40.26
6.0 x 19.9% 16.9% 14.4% 12.1% 10.0%
7.0 x 25.6% 22.5% 19.8% 17.4% 15.3%
8.0 x 30.4% 27.2% 24.4% 21.9% 19.7%
9.0 x 34.6% 31.3% 28.4% 25.8% 23.5%
10.0 x 38.3% 34.9% 31.9% 29.3% 26.9%
Management with Consumer Case
Implied Forward P/E Mult.
8.2 x
10.2 x
12.3 x
14.3 x
16.4 x
LTM EBITDA Mult.
% Premium
Exit LTM EBITDA
Multiple
Year 5 IRR
Offer Price
7.5 x 7.8 x 8.1 x 8.4 x 8.7 x
20.0 % 25.0 % 30.0 % 35.0 % 40.0 %
$ 34.51 $ 35.95 $ 37.39 $ 38.83 $ 40.26
6.0 x 21.5% 18.5% 15.9% 13.6% 11.5%
7.0 x 27.1% 23.9% 21.2% 18.8% 16.6%
8.0 x 31.8% 28.6% 25.7% 23.2% 21.0%
9.0 x 35.9% 32.6% 29.7% 27.1% 24.8%
10.0 x 39.6% 36.2% 33.2% 30.5% 28.2%
Note: Assumes 6.0x leverage of LTM EBITDA; 3.5x Bank Debt at L+363bps and 2.5x Subordinated Notes at L+688bps. Illustrative purchase price of $37.39 (30% premium to $28.76 share price on 8-Oct-07). Assumes LIBOR of 5.24%; $150mm cash balance; IRR returns to equity holders shown after 5% equity allocated to employees.
17
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
VI. Initial Process Considerations
18
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Sample of Potentially Interested Financial Sponsors
Firms Agreed on In Last Discussion
Sponsor B
H&F
Firms to Discuss
Sponsor G
Sponsor C
Sponsor A
19
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Appendix A: Miscellaneous Additional Materials
20
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative Discounted Cash Flow Analysis
Multiple of Terminal LTM EBITDA Method Financial Plan Sensitivities
($ per share)
Street Case
Incr. FY08E - FY12E
Operating Margin
Incremental FY08E-FY12E Annual Revenue Growth
-4.0% -2.0% 0.0% 2.0% 4.0%
-4.0% $ 31.47 $ 33.43 $ 35.54 $ 37.80 $ 40.23
-2.0% 33.58 35.73 38.04 40.52 43.18
0.0% 35.69 38.03 40.54 43.24 46.13
2.0% 37.81 40.33 43.04 45.95 49.08
4.0% 39.92 42.63 45.54 48.67 52.03
Implied 07- 12 Rev CAGR 1.3% 3.3% 5.3% 7.3% 9.3%
Management Case
Incr. FY08E - FY12E
Operating Margin
Incremental FY08E-FY12E Annual Revenue Growth
-4.0% -2.0% 0.0% 2.0% 4.0%
-4.0% $ 34.83 $ 37.49 $ 40.36 $ 43.44 $ 46.74
-2.0% 37.07 39.93 43.00 46.31 49.86
0.0% 39.31 42.36 45.65 49.18 52.97
2.0% 41.54 44.79 48.29 52.05 56.08
4.0% 43.78 47.22 50.93 54.92 59.20
Implied 07- 12 Rev CAGR 2.8% 4.8% 6.8% 8.8% 10.8%
Management with Consumer Case
Incr. FY08E - FY12E
Operating Margin
Incremental FY08E-FY12E Annual Revenue Growth
-4.0% -2.0% 0.0% 2.0% 4.0%
-4.0% $ 36.18 $ 38.95 $ 41.93 $ 45.13 $ 48.56
-2.0% 38.49 41.46 44.65 48.09 51.77
0.0% 40.79 43.96 47.38 51.04 54.98
2.0% 43.10 46.47 50.10 54.00 58.18
4.0% 45.40 48.98 52.82 56.95 61.39
Implied 07- 12 Rev CAGR 3.5% 5.5% 7.5% 9.5% 11.5%
Source: Management guidance and Wall Street research dated 6-Aug-07 for 2007-2009, illustrative thereafter.
Note: LTM EBITDA as of 2012E. Assumes discount rate of 11.5% based on risk free rate of 4.64% (10 year Treasury as of 8-Oct-2007), risk premium of 5.16% (Ibbotson) and beta of 1.65 (Barra predicted beta), cost of debt of 6.49% and current capitalization
21
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative Discounted Cash Flow Analysis
Cash Flow Projections
Street Case
07E - 12E 08E - 12E
2007P 2008E 2009E 2010E 2011E 2012E CAGR CAGR
Revenue $ 856.2 $ 893.5 $ 947.2 $ 995.5 $ 1,048.6 $ 1,107.1 5.3% 5.5%
Base growth rate 4.4% 6.0% 5.1% 5.3% 5.6%
Gross Profit $ 623.3 $ 645.2 $ 683.5 $ 717.8 $ 755.5 $ 796.8
Gross Margin % 72.8% 72.2% 72.2% 72.1% 72.0% 72.0%
EBIT $ 204.3 $ 215.8 $ 232.9 $ 249.6 $ 262.4 $ 276.6 6.2% 6.4%
EBIT Margin % 23.9% 24.2% 24.6% 25.1% 25.0% 25.0%
Growth % -9.5% 5.6% 7.9% 7.1% 5.2% 5.4%
D&A (including SBC) $ 89.9 $ 100.0 $ 104.0 $ 104.0 $ 109.3 $ 115.1
EBITDA $ 294.3 $ 315.8 $ 336.9 $ 353.6 $ 371.8 $ 391.7 5.9% 5.5%
EBITDA Margin % 34.4% 35.3% 35.6% 35.5% 35.5% 35.4%
Growth % -6.2% 7.3% 6.7% 4.9% 5.1% 5.4%
Taxes $ 74.4 $ 77.7 $ 81.5 $ 87.3 $ 91.9 $ 96.8
Tax rate 36.4% 36.0% 35.0% 35.0% 35.0% 35.0%
Change in OWC $(31.7) $ 7.5 $ 3.9 $(0.2) $(0.3) $(0.3)
OWC as percent revenue -1.9% -1.0% -0.5% -0.5% -0.5% -0.5%
Capex (excluding Acquisitions) $ 62.5 $ 65.0 $ 65.0 $ 65.0 $ 65.0 $ 65.0
Unlevered free cash flow $ 189.1 $ 165.6 $ 186.5 $ 201.4 $ 215.2 $ 230.2 4.0% 8.6%
Growth % 28.9% -12.4% 12.6% 8.0% 6.8% 7.0%
Net Income $ 132.9 $ 137.8 $ 150.4 $ 173.2 $ 188.8 $ 205.7 9.1% 10.5%
Growth % -12.3% 3.7% 9.1% 15.2% 9.0% 9.0%
Source: Wall Street research dated 20-Sept-07 for 2007-2009, illustrative thereafter based on extrapolation.
22
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative Discounted Cash Flow Analysis
Cash Flow Projections
Management Case
07E - 12E 08E - 12E
2007P 2008E 2009E 2010E 2011E 2012E CAGR CAGR
Revenue $ 855.5 $ 900.6 $ 956.7 $ 1,024.4 $ 1,099.0 $ 1,187.3 6.8% 7.2%
Base growth rate 5.3% 6.2% 7.1% 7.3% 8.0%
Gross Profit $ 627.0 $ 651.7 $ 687.6 $ 732.6 $ 782.6 $ 842.7
Gross Margin % 73.3% 72.4% 71.9% 71.5% 71.2% 71.0%
EBIT $ 198.9 $ 212.5 $ 240.4 $ 281.5 $ 320.1 $ 373.2 13.4% 15.1%
EBIT Margin % 23.2% 23.6% 25.1% 27.5% 29.1% 31.4%
Growth % -11.9% 6.9% 13.1% 17.1% 13.7% 16.6%
D&A (including SBC) $ 96.6 $ 101.7 $ 96.6 $ 84.7 $ 82.4 $ 72.4
EBITDA $ 295.5 $ 314.2 $ 337.0 $ 366.2 $ 402.5 $ 445.5 8.6% 9.1%
EBITDA Margin % 34.5% 34.9% 35.2% 35.7% 36.6% 37.5%
Growth % -5.8% 6.3% 7.3% 8.6% 9.9% 10.7%
Taxes $ 72.5 $ 78.8 $ 88.1 $ 99.3 $ 113.2 $ 131.7
Tax rate 36.4% 37.1% 36.6% 35.3% 35.4% 35.3%
Change in OWC $ 8.2 $ 1.1 $(7.4) $(8.2) $(9.5) $(10.4)
OWC as percent revenue 1.0% 1.0% 0.2% -0.6% -1.4% -2.2%
Capex (excluding Acquisitions) $ 64.0 $ 60.1 $ 60.5 $ 59.6 $ 60.3 $ 61.0
Unlevered free cash flow $ 150.9 $ 174.2 $ 195.8 $ 215.4 $ 238.4 $ 263.3 11.8% 10.9%
Growth % -9.8% 15.4% 12.4% 10.0% 10.7% 10.4%
Net Income $ 128.1 $ 135.4 $ 159.9 $ 196.7 $ 229.3 $ 272.9 16.3% 19.1%
Growth % -15.5% 5.7% 18.1% 23.0% 16.6% 19.0%
Source: Management projections.
23
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative Discounted Cash Flow Analysis
Cash Flow Projections
Management with Consumer Case
07E - 12E 08E - 12E
2007P 2008E 2009E 2010E 2011E 2012E CAGR CAGR
Revenue $ 855.5 $ 903.1 $ 963.4 $ 1,038.7 $ 1,122.9 $ 1,229.1 7.5% 8.0%
Base growth rate 5.6% 6.7% 7.8% 8.1% 9.5%
Gross Profit $ 627.0 $ 653.5 $ 692.1 $ 741.6 $ 797.4 $ 868.9
Gross Margin % 73.3% 72.4% 71.8% 71.4% 71.0% 70.7%
EBIT $ 198.1 $ 211.4 $ 240.7 $ 284.7 $ 326.5 $ 388.8 14.4% 16.5%
EBIT Margin % 23.2% 23.4% 25.0% 27.4% 29.1% 31.6%
Growth % -12.2% 6.7% 13.9% 18.3% 14.7% 19.1%
D&A (including SBC) $ 96.7 $ 102.3 $ 96.9 $ 85.2 $ 83.1 $ 73.6
EBITDA $ 294.9 $ 313.7 $ 337.6 $ 369.9 $ 409.6 $ 462.4 9.4% 10.2%
EBITDA Margin % 34.5% 34.7% 35.0% 35.6% 36.5% 37.6%
Growth % -6.0% 6.4% 7.6% 9.6% 10.7% 12.9%
Taxes $ 72.2 $ 78.3 $ 88.2 $ 100.4 $ 115.5 $ 137.2
Tax rate 36.4% 37.1% 36.6% 35.3% 35.4% 35.3%
Change in OWC $ 8.6 $ 1.4 $(8.2) $(10.1) $(11.6) $(16.4)
OWC as percent revenue 1.0% 1.1% 0.2% -0.8% -1.8% -3.0%
Capex (excluding Acquisitions) $ 64.0 $ 60.1 $ 60.5 $ 59.6 $ 60.3 $ 61.0
Unlevered free cash flow $ 150.1 $ 173.8 $ 197.1 $ 220.0 $ 245.3 $ 280.7 13.3% 12.7%
Growth % -10.3% 15.8% 13.4% 11.6% 11.5% 14.4%
Net Income $ 127.6 $ 134.7 $ 160.0 $ 198.7 $ 233.4 $ 283.0 17.3% 20.4%
Growth % -15.8% 5.5% 18.8% 24.2% 17.4% 21.3%
Source: Management projections.
24
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative LBO Credit Statistics - Management Case
4.0x PF Leverage Illustrative for Current Credit Markets
($ in millions)
2004 2005 2006 2007F 2008E 2009E 2010E 2011E 2012E
Total Revenue $ 622.4 $ 733.7 $ 806.6 $ 855.5 $ 900.6 $ 956.7 $ 1,024.4 $ 1,099.0 $ 1,187.3
Revenue growth 17.9% 9.9% 6.1% 5.3% 6.2% 7.1% 7.3% 8.0%
Expected Cost Savings $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Pro Forma Cost Savings 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Pro Forma Adjusted EBITDA $ 225.9 $ 284.0 $ 313.7 $ 295.5 $ 314.2 $ 337.0 $ 366.2 $ 402.5 $ 445.5
EBITDA margin 36.3% 38.7% 38.9% 34.5% 34.9% 35.2% 35.7% 36.6% 37.5%
Free Cash Flow: Pro Forma
EBITDA $ 295.5 $ 314.2 $ 337.0 $ 366.2 $ 402.5 $ 445.5
Interest Expense 96.2 91.5 80.9 68.2 53.1 37.0
Interest Income 7.5 7.5 7.5 7.5 7.5 8.5
Cash Interest Expense, net 88.7 84.0 73.4 60.7 45.6 28.5
Cash Taxes 73.9 44.8 58.4 75.2 94.4 119.0
Capex 64.0 60.1 60.5 59.6 60.3 61.0
Increase in Working Capital 8.2 1.1(7.4)(8.2)(9.5)(10.4)
Free Cash Flow for Debt Service $ 60.8 $ 124.1 $ 152.1 $ 178.9 $ 211.6 $ 247.6
Cumulative Free Cash Flow for Debt Service $ 185.0 $ 276.2 $ 330.9 $ 390.5 $ 459.2
Capitalization and Credit Statistics:
Revolver $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
First Lien Term Loan 869.2 746.6 595.7 417.9 207.1 0.0
First Lien Secured Debt $ 869.2 $ 746.6 $ 595.7 $ 417.9 $ 207.1 $ 0.0
Second Lien Debt $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Total Secured Debt $ 869.2 $ 746.6 $ 595.7 $ 417.9 $ 207.1 $ 0.0
Senior Notes $ 289.7 $ 289.7 $ 289.7 $ 289.7 $ 289.7 $ 289.7
Rollover Other Debt 0 0 0 0 0 0
Total OpCo Debt $ 1,158.9 $ 1,036.3 $ 885.4 $ 707.6 $ 496.8 $ 289.7
Total Debt 1,158.9 1,036.3 885.4 707.6 496.8 289.7
PF Adj. EBITDA / Interest Expense 3.1x 3.4x 4.2x 5.4x 7.6x 12.1x
(PF Adj. EBITDA - Capex) / Interest Expense 2.4x 2.8x 3.4x 4.5x 6.4x 10.4x
First Lien Senior Secured Debt / PF Adj. EBITDA 2.9x 2.4x 1.8x 1.1x 0.5x 0.0x
Senior Secured Debt / PF Adj. EBITDA 2.9x 2.4x 1.8x 1.1x 0.5x 0.0x
Total OpCo Debt / PF Adj. EBITDA 3.9x 3.3x 2.6x 1.9x 1.2x 0.7x
Total Debt / PF Adj. EBITDA 3.9x 3.3x 2.6x 1.9x 1.2x 0.7x
Total Debt / (PF Adj. EBITDA - Capex) 5.0x 4.1x 3.2x 2.3x 1.5x 0.8x
25
PRELIMINARY DRAFT HIGHLY CONFIDENTIAL
Goldman
Sachs
Illustrative LBO Credit Statistics - Management Case
6.0x Leverage Illustrative for Normalized Credit Markets
($ in millions)
2004 2005 2006 2007F 2008E 2009E 2010E 2011E 2012E
Total Revenue $ 622.4 $ 733.7 $ 806.6 $ 855.5 $ 900.6 $ 956.7 $ 1,024.4 $ 1,099.0 $ 1,187.3
Revenue growth 17.9% 9.9% 6.1% 5.3% 6.2% 7.1% 7.3% 8.0%
Expected Cost Savings $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Pro Forma Cost Savings 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Pro Forma Adjusted EBITDA $ 225.9 $ 284.0 $ 313.7 $ 295.5 $ 314.2 $ 337.0 $ 366.2 $ 402.5 $ 445.5
EBITDA margin 36.3% 38.7% 38.9% 34.5% 34.9% 35.2% 35.7% 36.6% 37.5%
Free Cash Flow: Pro Forma
EBITDA $ 295.5 $ 314.2 $ 337.0 $ 366.2 $ 402.5 $ 445.5
Interest Expense 177.7 174.5 167.1 157.5 145.4 130.4
Interest Income 7.5 7.5 7.5 7.5 7.5 7.5
Cash Interest Expense, net 170.2 167.0 159.6 150.0 137.9 122.9
Cash Taxes 73.9 13.6 26.4 43.3 61.3 85.2
Capex 64.0 60.1 60.5 59.6 60.3 61.0
Increase in Working Capital 8.2 1.1(7.4)(8.2)(9.5)(10.4)
Free Cash Flow for Debt Service($ 20.6) $ 72.3 $ 97.9 $ 121.5 $ 152.4 $ 186.8
Cumulative Free Cash Flow for Debt Service $ 51.7 $ 170.2 $ 219.4 $ 273.9 $ 339.2
Capitalization and Credit Statistics:
Revolver $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
First Lien Term Loan 1,014.1 943.3 846.6 726.1 574.6 388.4
First Lien Secured Debt $ 1,014.1 $ 943.3 $ 846.6 $ 726.1 $ 574.6 $ 388.4
Second Lien Debt $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0
Total Secured Debt $ 1,014.1 $ 943.3 $ 846.6 $ 726.1 $ 574.6 $ 388.4
Senior Notes $ 724.3 $ 724.3 $ 724.3 $ 724.3 $ 724.3 $ 724.3
Rollover Other Debt 0 0 0 0 0 0
Total OpCo Debt $ 1,738.4 $ 1,667.6 $ 1,570.9 $ 1,450.5 $ 1,298.9 $ 1,112.7
Total Debt 1,738.4 1,667.6 1,570.9 1,450.5 1,298.9 1,112.7
PF Adj. EBITDA / Interest Expense 1.7x 1.8x 2.0x 2.3x 2.8x 3.4x
(PF Adj. EBITDA - Capex) / Interest Expense 1.3x 1.5x 1.7x 1.9x 2.4x 2.9x
First Lien Senior Secured Debt / PF Adj. EBITDA 3.4x 3.0x 2.5x 2.0x 1.4x 0.9x
Senior Secured Debt / PF Adj. EBITDA 3.4x 3.0x 2.5x 2.0x 1.4x 0.9x
Total OpCo Debt / PF Adj. EBITDA 5.9x 5.3x 4.7x 4.0x 3.2x 2.5x
Total Debt / PF Adj. EBITDA 5.9x 5.3x 4.7x 4.0x 3.2x 2.5x
Total Debt / (PF Adj. EBITDA - Capex) 7.5x 6.6x 5.7x 4.7x 3.8x 2.9x
26