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Bright Horizons Family Solutions Inc, et al. – ‘SC 13E3’ on 2/19/08 re: Bright Horizons Family Solutions Inc – EX-99.(C)(7)

On:  Tuesday, 2/19/08, at 9:48am ET   ·   Accession #:  950144-8-1159   ·   File #:  5-54461

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/19/08  Bright Horizons Family Solut..Inc SC 13E3               12:16M  Bright Horizons Family Solut..Inc Bowne of Atlanta Inc/FA
          Bain Capital Fund X, L.P.
          Joshua Bekenstein
          Swingset Acquistion Corp.
          Swingset Holdings Corp.

Tender-Offer Statement — Going-Private Transaction   —   Schedule 13E-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13E3     Bright Horizons Family Solutions SC 13E3            HTML    110K 
 2: EX-99.(B)(1)  EX-99.(B)(1) Letter Agreement, Dated as of        HTML     61K 
                          January 14, 2008, Among Goldman Sachs                  
                          Credit Partners, L.P., Swingset Holdings               
                          Corp. and Swingset Acquisition Corp.                   
 3: EX-99.(B)(2)  EX-99.(B)(2) Letter Agreement, Dated as of        HTML     67K 
                          January 14, 2008, Among Gs Mezzanine                   
                          Partners V,L.P., Swingset Holdings Corp.               
                          and Swingset Acquisition Corp.                         
 4: EX-99.(B)(3)  EX-99.(B)(3) Limited Guarantee, Dated as of       HTML     41K 
                          January 14, 2008,By Bain Capital Fund X,               
                          L.P. in Favor of Bright Horizons Family                
                          Solutions, Inc.                                        
 5: EX-99.(B)(4)  EX-99.(B)(4) Letter Agreement, Dated as of        HTML     28K 
                          January 14, 2008, Among Bain Capital                   
                          Fund X, L.P. and Swingset Holdings Corp.               
 6: EX-99.(C)(3)  EX-99.(C)(3) Presentation of Goldman, Sachs &     HTML     73K 
                          Co. to the Special Committee of the                    
                          Board of Directors of Bright Horizons                  
                          Family Solutions, Inc., Dated June 13,                 
                          2007.                                                  
 7: EX-99.(C)(4)  EX-99.(C)(4) Presentation of Goldman, Sachs &     HTML     36K 
                          Co. to the Special Committee of the                    
                          Board of Directors of Bright Horizons                  
                          Family Solutions, Inc., Dated November                 
                          6, 2007.                                               
 8: EX-99.(C)(5)  EX-99.(C)(5) Presentation of Goldman, Sachs &     HTML     30K 
                          Co. to the Special Committee of the                    
                          Board of Directors of Bright Horizons                  
                          Family Solutions, Inc. Dated January 9,                
                          2008.                                                  
 9: EX-99.(C)(6)  EX-99.(C)(6) Presentation of Goldman, Sachs &     HTML     21K 
                          Co. to the Special Committee of the                    
                          Board of Directors of Bright Horizons                  
                          Family Solutions, Inc. Dated January 13,               
                          2008.                                                  
10: EX-99.(C)(7)  EX-99.(C)(7) Presentation of Evercore Group       HTML    181K 
                          L.L.C to the Special Committee of the                  
                          Board of Directors of Bright Horizons                  
                          Family Solutions, Inc. Dated November 6,               
                          2007.                                                  
11: EX-99.(C)(8)  EX-99.(C)(8) Presentation of Evercore Group       HTML     91K 
                          L.L.C to the Special Committee of the                  
                          Board of Directors of Bright Horizons                  
                          Family Solutions, Inc. Dated January 9,                
                          2008.                                                  
12: EX-99.(C)(9)  EX-99.(C)(9) Presentation of Evercore Group       HTML     97K 
                          L.L.C. to the Special Committee of the                 
                          Board of Directors of Bright Horizons                  
                          Family Solutions, Inc., Dated January                  
                          13, 2008.                                              


EX-99.(C)(7)   —   EX-99.(C)(7) Presentation of Evercore Group L.L.C to the Special Committee of the Board of Directors of Bright Horizons Family Solutions, Inc. Dated November 6, 2007.


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  EX-99.(c)(7)  

 

Exhibit (c)(7)
()
PROJECT SWINGSET
Discussion Materials November 6, 2007
evercore partners

 



 

()
Confidential
These materials have been prepared by Evercore Group JL.L. C. (“Evercore “) on a confidential basis solely for the use of the Special Committee of the Board of Directors of the Company and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with Evercore. These materials are based on information provided by or on behalf of the Company or from public sources. Evercore assumes no responsibility for independent investigation or verification of such information and has relied on such information being complete and accurate in all material respects. No representation or wamutty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the fntire. Estimates and forecasts of future financial performance contained in the materials have been prepared by the management of the Company or obtainedfmm public sources. Evercow has assumed that such estimates and forecasts (including synergies, if applicable) have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such management (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). Evercore does not undertake to update any fonvard-looking statements presented herein to take into account any new information, future event or other factors. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials have been developed by and are proprietaiy to Evercore and were prepared exclusively for the benefit and internal use of the Special Committee of the ~E>oard of Directors of the Company and not for use by persons not as familiar with the business and affairs of the Company.
These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Evercore (or any affiliate) to provide or arrange any financing for any transaction or to purchase any security in connection therewith. Evercore assumes no obligation to update or otherwise revise these materials. These materials have not been prepared with a view toward public disclosure under state or federal securities laws, and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the prior written consent of Evercore. These materials may not reflect information known to other professionals in other business areas ofEmtwre and its affiliates.
Evercore and its affiliates do not provide legal, accounting or fax advice.
EviiRcore partners

 



 

()
Table of Contents
Confidential
Situation Overview
Preliminary Valuation Analysis
Potential Buyer Universe
Section I
II III
Appendix
Detailed Financial Analysis
Introduction to Evercore Partners
A B
E V E RC O R E P A RT N E R S

 



 

()
L            Situation Overview
evercore partners

 



 

()
Situation Overview
Confidential
Swingset Share Price Performance: Last Two Years
05/31/07: Australian media reports that Swingset might be a takeover target of ABC Learning Centres
04/26/06: Announces Ql EPS of $0.36, exceeding consensi’s estimate of S0.34
60
en
$45 - $40 - $35 H
$50 i
$30 -
$25 -
Current Share Price (11/02/07) $37.84
Prior Share Price 1 Year 2 Year —— — $37.66 $39.40
% Gain / (l^ttss) Since 0.5% (4.0%) Average High (!> $39.50 $38.73$47.75$31.80 Low"1 $47.75$35.57 —— —— —
07/26/07: Announces Q2 EPS of §0.40, exceeding consensus estimate of S0.37
10/26/06: Announces as-expected Q3 EPS of §0.37 and lower than expected revenue; lowers full-year revenue growth guidance to 11—12% from previous guidance of 13- 14%
02/15/07: Announces Q4 EPS of §0.41, exceeding consensus estimate of SQ.39, and forecast 2007 earnings of 31.77 to §1.82
10/17/07: Cuts Q3 EPS forecast from $0.41 to SO.38
07/26/07: Announces Q2 EPS of $0.47, exceeding consensus estimate of $0.46
r 3,000
- 2,500
- 2,000
- 1,500
- 1,000
- 500
cs o o
o >
\ !
$20
11/02/05
03/28/06
08/21/06
01/14/07
06/09/07
11/02/07
Source: i’nciSei, Gimpany press rdi’.ist* .mc.1 industry nuvs sources.
(1) I-year anil 2*yfar hij!;li slwre price \v;is nn (H/1H/07. l-ycur nin.1 2-yenr !mv shun; prict on 1)1/OH/OH.
evercore partners

 



 

()
Situation Overview
Confidential
Swingset Historical Forward Trading Multiples
-J^ . V \ j 14x-i I3x-12x-Ibc -lOx -
3- month prior average: 11. 8x 3-month post average: 11.2x
10/26/06
11 1
ll.lx
14x-| Bx-12x “
n* -
10x -
9x
3-month prior average: 10. Gx Average since: lO.Ox
I 10.2x 1 /
v.f**;^^t^«™™rf
10/17/07
32x -,
3-month prior average: 26. 8x 3-month post average: 25.2x
3-month prior average: 23,6x
Average^sjncc:^_22.1x
28x-
l1/^~-1 V I
24,8s
28x -
24x
20x
10/26/06
10/17/07
Source: l’’;u;ist: IvrnvMrJ I-HI’I’DA multiple ia dcfina.! us ihe multiple of the current i
of full ytar lln^incinl pcrfrnmancc. Evergore partners

 



 

()
Situation Overview
Confidential
Swingset 2-Year Historical Forward P/E/G
1.0x-
l.Ox
0.8x
11/02/OS
03/28/06
08/21/06
01/14/07
OG/09/07
11/02/07
Source: l-’actsL-
evercore partners

 



 

()
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§ g’

 



 

()
Situation Overview
Confidential
Research Analyst Summary Price Targets
| | | | Firm            Analyst            Date            Recommendation            Target Price            Premium to Current —— —— —— —— —
| | | | Matrix USA            Daniel Scnlxi 11/02/07 Sell            NA            NA Robert W. Baird            Amy W. Junker 10/26/07 Neutral            S41.00 8.4% BMO Capital Markets            Jeffrey Silbcr 10/26/07 Market Perform 40.00 5.7% Signal Mill Capital Group            Truce Urdan 10/26/07 Buy            NA            NA ThinkRquity Partners LLC            Nate Swanson 10/26/07 Accumulate 41.00 8,4% SunTrust Robinson Humphrey            Murk Muglies 10/26/07 Buy 57.00 50.6% Stifcl Nicnliius            Robert L. Craig 10/18/07 Mold            NA            NA —— —— — Mean Median $44.75$41.00 18,3% 8.4% —— —— — I (Current Share Price (11/02/07) $37.84
— Firms “On HaM” Ptntfrite Anatvst ( f~3l£l(tt — Lcliman Brothers            Michael Lasser 07/30/07 On Hold            S4I.QQ            S.4% Bunk 0fA/iieri(e> Hoa’art/M. Bhfk, Ph.D. 05/01/07 On Hold 43.00 13.6% Cmtit Siiisse            BlilHlloil Dolh’ll 0-1/30/07 On Hottl 43.00 13.6%
Wall Hired rcsrarclt.
Ev ERGO RE PAR’!’ N E R S

 



 

()
Situation Overview
Confidential
Research Analyst Commentary — 3Q07 Earnings Announcement
Equity research analysts perceive Swingset’s growth profile to be slowing with modestly increasing volatility...
“We are maintaining our Neutral rating based on the carryover effect of underperforming centers, margin deterioration, and lack of visibility into long-term growtb rates,”
”... Underperformance at 35 community P&L centers negatively impacted 3Q07 results. While we have confidence that management will resolve the issues, the underperformnnce will diminish results for die next several quarters.”
”.. .Operating margin declined 60 basis points year on year and the operating margin for 2007 is expected to be flat year on year. This represented die first quarter of margin deterioration in over 10 years.”
”...We are waiting for evidence that the company’s growth rates have stabilized. The revenue guidance for 2007 and 2008 indicates that growth is expected to decelerate in 2008 for the fifth consecutive year. The 10% revenue growth in 2008 would be the lowest in the last ten years.”
“The inability to adjust staffing levels at the 35 centers negatively impacted the gross margin, which was 100 basis points below our expectations. While management has initiatives in place to rejuvenate enrollment growth (through marketing support) and implement more efficient staffing patterns, we believe it could take six to nine months for the company to weather the impact. As such, management lowered its FY07 EPS guidance to §1.68-51.70 from $1.77-$1.80.”
“Q3 is typically a tough enrollment period due to a portion of enrollments that must be back-filled as children leave Swingset centers and move into preschool. An under-cstimation of how quickly the company could back-fill enrollments, as well as underperformance at a select group of centers in Colorado, drove the shortfall vs. our expectations. It is important to note that the enrollment impact at die 35 centers was not related to the economy, or any specific company or industry, except for the Colorado-based centers (acquired in 2005 and 2006).”
“This is the first pre-announcement we can recall from this company whose business tends to be very stable and predictable given long duration contracts, high client retention and client/end market and geographic diversity. The gradual business mix transition to higher margin, but higher risk P&L centers, which now represent 65% of the total (and within that, consortium centers which comprise about 25% of full service locations), does increase enrollment risk and may modestly increase the company’s exposure to economic influences including consumer pressures.”
EV H RCO RE paRT N K R S

 



 

()
Situation Overview
Con fiden tial
Research Analyst Commentary — General
...Overall, however, analysts believe Swingset remains an attractive business with strong growth prospects, margin expansion opportunities and business fundamentals.
“We arc encouraged the company has been able to maintain its wage-price parity of 4% — 5% tuition increases and 3% — 4% wage increases, an important factor in maintaining margin expansion, in addition, we continue to believe Swingset should improve operating performance characteristics through its consortium center model given the potential gross margin contribution these centers can have. However, losses generated from ramping centers continue to drag on margins and should do so through the remainder of 2007. We would become more positive on the company’s potential when we begin to see evidence of increased contribution from consortium centers.”
“Swingset’s shares have been range bound over die past sbc months, mosdy due to the uncertainty of the company’s top-line growth outlook and the overhang of the UAW situation. We believe the key to Swingset’s longer-term price appreciation is evidence that the company can sustain a healthy rate of new center additions for the foreseeable future.” “We believe the corporate daycare market is attractive because of its consistent demand and the opportunity for margin expansion during economic slowdowns, when daycare worker wages lag price increases. Swingset may fail to achieve this target multiple if its new centers are more costly to ramp up than expected or if die company is unable to successfully integrate the acquisition of a competing daycare provider,” “We believe Swingset will enjoy continued margin expansion from several sources: Organic growth of existing centers (higher utilization), acquisitions, transition of management contracts, maturity of international centers, pricing power versus labor costs, and the increasing contributions of the backup center business, Nonetheless, die stock’s performance may be constrained by moderating revenue growth as well as newly moderating gross margin expansion and EPS outperformance.; “Long term we see positive opportunities for the remaining pieces of Swingset’s business as the new center pipeline is solid (60+ centers) and the average center size ramps up (especially in International) as well as ramping contributions from back-up care centers and College Coach. We remain a bit puzzled as to the size of die opportunity relative to the size of Swingset’s sales and execution groups, particularly as we believe existing customers should be a market opportunity ripe for the picking. That said, we also recognize hiring nn additional 5-10 salespeople globally would create a sizable headwind for operating margins, one that management might not be willing to make given the current revenue growth profile.”
evercore partners

 



 

()
Situation Overview
Confiden tial
Historical and Projected Consolidated Revenue
($ in millions)
20 0%
111%
0.0%
2007E
13.0%
2012E
i, ^”,. 1- -t, Jit”, ,, -.- ‘-£’:• ; I ^§k^mhmi 1^5Slilf^ “* — — >”“ r /-’ ‘” ___• ^ “iK-^ —— — ^-^^rrV            if j-_r|+i^ -^ ^ •*** ^ -1 — $1,000 5-Year CAGR: 13.7% — $776 $800 $698 $625 r-, ,-, r’:..,-..,.i v:‘::*:::i      ,;•«’.>; mz            m:: i^ ; 5 5? fe v/] U^H $600 $552 $473 $408 r_1 fVii :—;:-;:”- ‘: [,:•:•:•:.••.,.; !•• .;v-.::-.-i $400 — li            ill            II            fi.T.^Ti            fcwsl            f-:<-,,::-1 S-iJi            ti->;;S;] I..:-:. ;fi :..^-:VS            KIsJ            t ,;;•:;;;) tesi            Hi » $200 I’-Hs-i            p&3;:i ;.-:?’ e k m         .••.•:,•-’<! ;-..:-+—:| ;, :-. V :- p:-.:..:— -.’I :-:-=::—«;- :,:;.”.:.r:i ;. ‘ ••:. ‘ "•’• •’ • •$ j •’-::• ‘•.••! : ‘•:-’”. ••!”•’•• $0 ’ ” ‘~’” ~ ’ i -. 2002 2003 2004 2005 2006 2007E”1 —— —
- J- A’"51 ‘ ‘ ^rf^* £-^>££ T\ -,,-’*” “ — ‘ ‘*iS-if.ia,1ituhd(L,,.u.,(i?;>*H “ *_,- — -7 ‘ -” — ‘ r ^ ^. 1 ~ “^ — *” ‘"'^liil.jfl!^ *v^*^>^vl m *ty Si 1 MtSH3^ ‘ r            i -
—— — •* ^ * ^., * ,,•’- r^^.^^. .x. ..’’.,        , — , — T» -jjr-J-’-’-n. 1 _ —— — $1,500 5-Year CAGR: 12.5% $1,396
— $1^35 pPJi:
$1,093 s—i            l-ia-* $966 r-— !«: fi            fen! $1,000 $776 •’ -:-:;H !V.:;’£:: J:;j-::S!-. :v’i:<.___‘:’••!. :... !:;<:•>.••’,- i-i::-1 ••”.! ti~:"' p;-l;1 P-S ::::V;;-: IP’ ‘ |. 7v; i.”‘E;-:"- •} v.’’.;::::‘-h i:”‘-"-:-!:-;.:
•:-;:vH •:•••:;*••-:: ^ •’-•.•- ‘•.I            fl> S;:i         .•-••:”.’ i” •.-.:•.•-::.] • <;-’••..’. K”‘H:-:1 -j-.t-l’’ ‘ >"-” ''• !i:!:!:Q\j ‘:-;::-"'.::‘^;.-i “•• :... ;- $500 w-fd            h..^ ^-^ 1 II 13
:—,::.”:::..— !:•••:•:-::.•:•-.•. !-\::: ,
h? :•:•:’. •l-y >:.S’-> —
2008E 2010E 2009E 2007E
2011E 2012E
20.0% 15.0"/, 10.0% - 5.0% 0.0% !
16.0%
20S3
10.1%
2008E
2004
13.2% ill KiWC5§srl lllil 11
2009E
13.3%
2005
13.1%
2010E
1L7%
2006
13.0%
2011E
St Hircc: (^( unp;i ny tmnnigumtn?.
(1) Includes pLtni;i! year rrVL-nm.1 from UAW omlr;icl. I’lNcLu&jin^ cffvci ofthf ions of UA\V cnnirLtcu 2fH)71\ Ti^ruciisioiJ tjrovvih r;iiu would bu ;ipprosim:iloly
evercore partners

 



 

()
Situation Overview
Confidential
Summary of Projected Revenue by Business
($ in millions)
$1,000 $800 $600 $400 $200 $0
% Groti’th
5-YcarCAGR: 3.9%
$762
131111
ll
2008E
6.0%
2007E
9.6%
$848
2009E
5.1%
£878
2010B
}.5%
$901
2WE
2012E
2.5%
$500 $400
$200 $100
$0
% Grvn’th # of Centers
2007E
5-Year CAGR: NA
$286 $177 tm^». — “•i:v’..”:l .. feai-i —— — 2008E 2009E 2010E 2011E
a Organic Acquisition 0 Transition
NA 244.9% 97.6% 61.8% 52 56 62 6S
$414
|:’.if—.,.::..:
2012E
44.8% 75
i *H ~> -^; ~- S-^ tj^isy jSfeig^”
4. v t^H + rf^” X _^.J._~ ^ .Irf... ^ —d * “^” ^ ...* , ,, , ..^l...^.,..!,.??!..
r ^j jr.?>
?6° 1 I 5-Year CAGR: 39.1%
5-Year CAGR: 25.0%
$40
$20
$0 % Grow///
2007E
2008E
69.3%
$25
$18
2009E 2010E
SO.S% 39.0%
$32
2011E
25.6%
$37
2012E
16.9%
$40 -
$20 ,,_ $7
$0
2007E 2008E
% Growth 25.0%
2009E
25,0%
$13
2010E
25.13%
?17
2011E
25.0%
$21
2012E
25.0%
Sourcu; Corop;u1\’ m:taiif
(1) Includes cfft’cl nf lust IJAW cnnirnci anil forecastuJ center closings.
(2) IncltKles incrcmenlnl rtvcnuu in cunsiirlium backup or full-SL’r\-:cf CfiHcrs,
evercore partners

 



 

()
Situation Overview
Confidential
| | | { Historical and Projected Operating Profit ($ in millions) — ~*“i «Z/ijr-l. t,^’~"<i@&33B’ } f&H&iF”-’ ’ v;>t/— “*—.’... \ l>y-’’>:,-/-~ — r’-(%msW^^!t^if0Mv:iii, :>:^~ ~-:~- y- } £ - * — “-y ~? *•- . } !I ,_,,,,,,,,.,,,, . v            t .. ..- ‘_•: -t , -,^,,,lu,,.,,,,,t,;,. - -’ . —;’.”-"' . ‘,, — :.___} —— —— $350 ; } S250 | } —— CAGR ^H i J^ VJ } —— { $225 ‘02-’07E 21.1% $305 ‘02-’07E 24.6% } $300 ‘07E-’012E 14.4% { “S ‘07E-’012E 15.8% JS —— • :•"•:•:.•; S196 J:.: :•"••! $268 !-;;| $200 - l^ci^ ;’-i:i:-:!::l            i.”::, :V:i;i’: !•• •’ :~i .’’;:‘.’:1 £250 • $235i’:‘NG;::1 $171>||: pq            fe; ^ H 0 “S: $205 !/• ! Kji      ,:v:s ,,,, ! $146 liSs ‘-f FS: } :-.:;;.: ;?:«] ;s;1 $150 i !:*••; ‘:J 3 fc- } $200 -j } !» I’:.: W<] ;M! i;.q ;s «i            a S177 l:^ Ii |?a •|;;i «19C •••••* •-"* S            S.—1: 5)125 /-j :;v-:, .,:,) •,:..] <Ricr tm -:3 ;3 P            Kj ::::;:;;.:i      ,:;j-:. l:::.:;::j :r^ U:::: =;—3 ::;:; ;•;,;) : ! :.;;:;: j |i;;:k .:;| ^!::,r :j $108|;;]i|jpv fjf| $150 •• $138 || I} |j |] pSj            y] $100 — S94 H            g| Ij            I 1 | $ 115 Hrj { fe:l            S-s ?;.•;.; ^1 Kii ^’-a ,,,,, fes ::*>;j            fCl            s.1 S; ifei            fS m m ic| rq |gj            g] S76 :m si            as ii i            i            i m } $92 JH % $100 — ‘/•B( ‘?&’•• $60p|f;3[S|||[i t:-.i.:,! [i;;;y.. -^..j -’jr^ t’:::-i;.;f :;”:i $60 ^ 1 1 1 -1 if; tl ‘:”••! f’li            ftl            S5o — 536 p ^ 1 li 1 1] li 1 fi li •;ii ;i !’ i            ; N ^- ;;!;i :;>i ki m f.;,:;; $50 — JW #1 ;|:i m te            fri ^ Bi:3 ?•;•] i:£i -fi            k:S &;i .vrj            K-;-.i            b!1 i::—;:?; l-:‘<] i::;:;1 t::‘;| K♫ 6;:a ll] i?! m [M [; s            i-/; •;::, ff] ;::;.j            j.1 ^ ;:••:.:•;! !•.::•;:; [;;,.:;| jjt; oja [;^i ^- j’^ l-^ -ri pji ••:;::,•, i ‘ ‘—i !’- -’ “‘•’••i            Hi’-:’ i.:.::;*i            ii’’ ‘ H-’:‘! “>:.! ‘"'rl            fct’j ••* ; $0 i li li 1 i            i| §___Rj N II ^51 i-:.-;”..; •:.-;• p.;’:: !.;;::.,< !.;.;>.:., f..:;.-;:;. i :, j ;. ••;.;! • : • j u.:—: ..”..•••! 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E 2012E 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E 2012E }
| | | % Margin 14.7% 15.}% 16.7% 18.4% !<).$% 7ft /% -’tt“i ^r.^’K, 21.5% 21.7% 21.9% % Muryn            S.H% 9.7% 10.H% 12.2% 1 3.i% D.9% /4.ff’/« ti.2% 15.6% !>.<}% !6.!% % Gmsslh 20.H% 27.1% 25.4% 19.9% 12.7% !).)% 15.$% 14.7% 14.2% 14.0% % Grain li 26.7% U.7% 2ti,l>% 2}.i% 14.9% 15.4% 17.4% IK.ff’/,, 15.0% 14.5% Source: Company m:ni:ij>i/mail. (1) lixcludcs non-rash equity expanse. —
evercore partners
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Situation Overview
Confidential
| | | | | | | | | | | Analysis of Projected Growth } ($in            millions) —— —— —— The forecasted growth of Swingset is driven, in } large part, by a modest acceleration } of new            center launches, a } consistent acquisition program, }{ and expansion } of the relatively new businesses of BUCA and College Coach. } —— —— —— """- — ‘r • , “ ~~ J -’ — a *? f i J^J » *- . ; ,, — * —*_* ~ ~* -t-1 — i ___if —•^—^ f r ___% < J ‘ “ -"- — ,, ^ ^n&Bnfta ^•t ~ ..*-, ^ ‘-"» ,, — "< ~ — ___\ • -.-, — i^&| i / “, ^-’ r "- "'“i. ‘. l~^f ‘,£ ,-jr. 1,-n-l-^ fr , — ” , t , —‘,T-^ .——.Q.^-*— ___^ — — -___ — ___^ } “,” ‘. “ ~"'- ~5 ‘l ‘ — Iss^a *i:rv:^^&.’.—ii ^ ___^ fl’r- “* «r ^ ^ H J —— —— —— —— —— —— —— — % Total      % Total 2007E 2012E            CAGR $ Change            Change } 2007E 2012E            CAGR $        Change            Change } —— —— —— —— —— —— —— Net Base Center $762 5923 3.9% $ 162 26.1% Net Base Center (l) } $149 $208 6.9% $ 59 39.1% New Cettfer — Organic 0 240 NA 240 38.7% New Center — Organic 0 29 NA 29 1.9.1% New Center — Acquisition 0 115 NA 115 18.5% New Center — Acquisition 0 25 NA 25 16.9% New Center — Transition            Q 59 NA 59 9.6% New Center — Transition 0 13 NA 11 O CO/ — —— — Subtotal- — New Center $0 5414 NA            S414 66.8% Subtotal- — New Center } $0 $67 NA $ 67 44.5% BUCA p) $7 537 39.1% $ 30 4.8% BUCA p) $3 $18 47.6% S16 10.5% College Coach 2 21 25.0% 14 2,3% College Coach 4 13 255% 9 5.9% —— —— —— —— — Total Revenue $776 $1,39612.5 % } $ 620 100,0% Total Center Profit } $156 $305 14,4% $150 100.0% 2002 2003 2004 2005 2006 2007E } 2008E 2009E 201 OE 201 IE 201 2E } —— —— —— —— —— —— —— —— —
| | | | | | | | | | | New Center Additions — Organic 26 21 16 15 23 32 34 36 38 41 44
Acquisition 53 27 17 45 19 10 10 12 15 17 21
Transition 8 12 27 12 Z 8 a 8 2 10 10
Total 87 60 60 72 49 50 52 56 62 68 75
New Center Additions -J’/LGrovvth — Organic (19.2%) (23.8%) (6.3%) 53.3% 39.1% 6.3% 5.9% 5.6% 7.9% 7.3% Acquisition (49.1%) (37,0%) 164.7% (57.8%) (47.4%) 0.0% 20.0% 25.0% 13.3% 23.5% Transition 50.0% 125J3_% (55/1%) (41.7%) 14.3% 0,0% 0,0% 12.5% 1JL1% 0.0% —— —— —— —— —— —— — Total (31.0%) 0.0% 20.0% (31.9%) 2.0% 4.0% 7.7% 10.7% 9.7% 10.3% Source: Company managemtin. (1) IncluJes effect nl’lnsl UAW con! fact anil forecasted cen ler closings. (2) Includes incfLmenial revenue in            consortium backup or full-service cenlL-re, —— —
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I. Prelimlnarv Valuation Analysis
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Preliminary Valuation Analysis
Confidential
Illustrative Valuation Range for Swingset
Current Price: S37.8-I Prc-Q3 Earnings Closini; Shiire Price: 547,20
52-Wcck Intraday Trading Range
Peer Group Trading Analysis 9.5x — 1 !.5x 2008ETEV/EBITDA
20.0x — 30,0x 2008R P/l:’” 1.0s-1.5x2008liP/(.v/G(
Precedent Transactions Analysis
l.Sx — 2.0x 2007];- TEW Revenue
11.Ox- 15.0x 2007ETEV/EBITDA
Present Value of Future Stock Price 9.0x — 11.Ox 2012E EBITDA multiple 10.0%-12.0% Cost of Equity
Discounted Cash Flow Analysis
9.0x — 11,Ox EBITDA cxir multiple; 10.0%-12.0% WACC
Leveraged Buyout Analysis
9.0.\ — 11.0s EBITDA exit multiple; 15.0% — 20.0% IRR; 6.7x Leverage Management Cast - Iiitliratiiv Tains
Management Case — Maximum F/i’.v Scnsilirirj Case — \m\icatin Terms ''' Sensitivity Cue — Maximum f/i’.y o>
S35.57 1
lilliilllllliBMls-’7-75
S53.43
S-4-1.25 IliBfl
S58-95
s^’J-io
S58.14
S38.VG
S57.71
S-I3.’15
S44.40
S60.29
S48 28 563,09 S5I.96 566.71
1 558.00 ‘S^fii’S^’s^^S^BS^iSSS^SSi^^l! 557.78 |g||||S50.15 1SII1 S49.92
S-15.18 S45.01
539.87||iligii^il SW,69
S3S.OO
$40.00
$45.00
S50.00
$55.00
£60.00
S65.00
$70.00
Niiti:: This summary of ccn.itn nualysus i^ provided fur illusir^uvc purposes only, dots noi rcprL-^’ni ;pill of the imalysus performed by F.veTCoru uml shnultl bt; consuk-rcd loj^cilje-r \\~illi iht1 infnniij.iikni fit’i fonh dsu^’hert’ irt (his prusuni;ui(>n-NnLu: Vnhi;iti’.ni ;is <jf 12/31/07. i^isl-^ i’n 20117J; yu^r L-nd 111:1 (Mil (nut cash) pt-r Ciimpany innn^tiit’iit
(1) hnscdnn mitlfMiimof SiMrtl-^ruidjinct ofS) 94 -Sl.’JUKiy.
(2) Striiiittiviiy c:isl- based <m 3tH!iM:. m:uSii^L-»i«;iH projcciinns and )»% rL-vt’iiuo growih :uui i5“Ji I-“111*1*13A msrj,;iii from 2(MlHl;-3<M2tv
(1)EVERCORB PARTN ERS
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Preliminary Valuation Analysis
Confidential
Analysis at Various Prices ($ in millions, except per share data) — Share Price            Current            I Implied Premium tn Current — $37.84 ?47.00 24,2% $48.00 $49,00 $50.00 $51.00)4.S% $52.0037.4% $53.00 $54.00 26.8% 29.5% 32.1% 40.1% 42.7% Implied Premium la Pre-Q3 Announcement (S 47.20) (0.4%) 1.7% 3.8% 5.9% S.l% 10.2% 12.3% 14.4% Implied Premium to ‘1-Week Average (S3S. 14) 23.2% 25.8% 28.5% 31.1% 33.7% 36.3% 38.9% 41.6% Implied Premium to 1 -Month Average ($41.73) 12.6% 15.0% 17.4% 19.8% 22.2% 24.6% 27.0% 29.4% Implied Premium fo 2-Mon/b Average ($41.78) 12.5% 14,9% 17.3% 19.7% 22.1% 24.5% 26.9% 29.3% Implied Premium to 3-Month Average ($41.74) 12.6% 15.0% 17.4% 19.8% 22.2% 24.6% 27.0% 29.4% Implied Premium to 6-Month Average ($41,44) 13.4% 15.8% 18.2% 20.6% 23.1% 25.5% 27.9% 30.3% Implied Premium to 1 -Year Average ($39.50) 19.0% 21.5% 24.1% 26.6% 29.1% 31.7% 34.2% 36.7% FD Shares 27.2 27.4 21 A 27.4 27.5 27.5 27.5 27.5 27.5 —— —— —— —— —— —— —— —— —
Equity Value $1,029 $1,288 $1,316 $1,344 $1,373 $1,401 $1,429 $1,457 $1,486
Net Debt’” 19 19 19 19 19 19 19 19 19
— —— —— —— —— —— —— —— — Enterprise Value $1,048 $1,306 $1,335 $1,363 $1,391 $1,419 $1,448 $1,476 $1,504
Revenue Metric — 2007E $776 1.4x 1.7x 1.7s            l.Sx            l.Sx            l.Sx 1.9x 1.9x            l,9x 2008E 854 1.2 1.5 1.6 1.6 1.6 1.7 1.7 1.7 1.8
EBITDA 2007E . 1108 9.7x 12.1x 12.3x 12.6x 12.9x 13.1x 13.4x 13.7x 13.9x 2008E 125 8.4 10.5 10.7 10.9 11.2 11.4 11.6 11.8 12.1
EPS 2007E (Midpoint) pt §1.69 22.4x 27.8x 28.4x 29.0x 29,6x 30.2x 30.8x 31. 3x 31.9x 2008E (Low) <” 1.94 19.5 24.2 24.7 25.3 25.8 26.3 26.8 27.3 27.8
2008E (High) (1) 1.99 19.0 23.6 24.1 24.6 25.1 25.6 26.1 26.6 27.1
Snurcu: Projections busud on Omipuny rmniigmu’nl, 1’ully JtiuEud Hh:ifc coun! biucd ml mo.^1 rrrx’iu Company filings. (1) Net Jubl (iiL’t c;ish) biscJ on 2007] i yt:ir u-nd pur Company m;in:i,nfmi;ni. (I) Haat-J i)ii midpoint of ‘KJ07 guid:inci- of SO.-12 — SD.-14 iil’S, per Compuny 3(JI)7 conlcmKL call, plus diluted lil’S for V months ended <W/3(l/n7.
(!,) Hastd un 200HE guidnncc of SI.’M — Sl.’J’J lil’S pur Company 3Q07 confcruncc rail.
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Preliminary Valuation Analysis
Con fiden tinl
Analysis of Select Publicly Traded Companies % of            Market            Total Share Price 52-\Vcek            Equity            Enterprise Company 11/02/07 ($ in millions, except per share data) High            Value            Value            TEV/ Sales            TEV / EBITDA            P/E            P/E/G —— —— — 2007E 200BE 2007E 2008E 2007E 2008E 2007E 2008E —— —— —— —— — Swingsct — Research Estimates Swingsct — ManagemciK $37.8437.84 79.2% 79.2% 51,029 1,029 $1,038 1,038 1.3x 1.3 1.2s 1.2 10.2x 9.6 8.“x 8,3 22.4x 22.4 19.3x            l.bt            l.Ox 19.3 Estimates ‘” 1.1 1.0
l>,?-K-t2St/!ot,/s/C.tn/tr.f — ABC Learning Centres The Princeton Review, Inc. $5.918.77 73.2% 81.2% 52,806 258 $3,794 264 2.1x 1.8 l.7x 1.7 10.8s 36.2 8.6x 26,3 I6.3x NM 13.4x            l.lx 0.9x NM NA            NA Nobel Learning Communities, Inc. 1 5,1-1 92.7% 162 160 0.8 0,7 9,2 8.5 21.0 20.7 1.0 1.0
-— -— -— -— -— —— — Mean 1.6x 1.4x 18.7x 14.5x 18.6x 17.bt            tlx            l.Ox Fnr-Prnfrf C.alltpes Median 1.8 17 10.8 8.6 18.6 17.1 1.1 1.0
—— -— — —— -— —— — Apollo G rmip, I nc. iT!’ Educational Services, Itic, 580.25 12-1.33 99.7% 95.3% SI 4,1 51 5,243 513,176 5,093 4.7x 5.8 4,2x 5.0 17.4x 19.5 1S.4x 31. Ix 33.9 26.9x 2.3x 2.0x 28.0 16.1 1.9 1.5
DeVty Inc. Career Education Corp. Strayer Education 53.05 34.79 185.00 95.4% 94.8% 97.4% 3,830 3,210 2,762 3,686 2,861 2,594 3.7 1.7 8.2 1.4 5.0 3.3 1.6 6.9 1,2 4.1 23.4 12.8 23.8 14.5 18,4 10.8 20.1 11.1 41.8 32.7 41.6 42,7 29.2 2.0 1.4 24.4 Corp. Corinthian Colleges, inc. Cnpeihi Education 16.04 69.99 18.92 94.9% 98.5% 09.8% 1,361 1,228 538 1,375 1,119 508 1.4 1.4 29.4 10.4 22.9 9.2 56.6 24.5 2.9 2.2 35.1 Company Universal Technical Institute 2.4 2.1 29.8 2.3 1,6 43.7 2,2
1.7 23.7 1.7
1.7
IJncoln Education a! Services Corporation 13.90 83.1% 365 389 1.2 !.l 8.7 7.0 23.8 18,0 1.6 1.2
-— -— -— -— -— —— — Menu 3.7x 3.2x 17.8s 14.6x 36.5x 28.8x 2.1x 1.7x Ctthtr Ediiratinii Sen<ias Median 3.7 3.3 17.4 15,4 33.9 28.0 2.2 1.7
—— -— -— —— —— —— — Washington Post Scholastic Corp. Blackboard Inc. SS00.15 37.60 43.60 90.4% 94.0% 87.4% 57,607 1,484 1,318 57,325 2,022 1,307 1.8x 0,9 5.5 1,6x 0.9 4.7 I0.6x 8.7 24.3 9.5x 8.4 18,3 27. Ix 17.7 50.3 22.8x 3.5x 3.0x 15.8 1.3 1,1 37,6 2,0 1.5
School Specialty, Inc. Uennissance Learning, Inc. 33.50 12.73 83.1% 67.7% 719 369 1,217 347 1.1 1.1 3.1 9.3 25.6 8.5 !6.l 17.7 55,3 14.8 1,2 1.0 31.8 3.3 NA            NA —— -— —— —— —— —— — Mean 2.5x 2.3x 15.7x 12.2x 33.6x 24.6x 2.0.x 1.6x Source: Compiinv ftlmgs ;uul IBHS consensus eslmi;ileK. (1) 20II7K HI’S based on midpoim of -1Q07 guidance of SO. -12 — SO Om^p:mv 3Q07 conference cill. 44 Kl’S, perG            orop;inv 3Q07 Median 1.8 1.6 10.6 y.s 27.1 22.8 1.6 1.3
—— -— -— —— -— —— — conference ciH, pin.1; Jilnictj 1 .PS lor 9 monlli.^ em            cd ()’)/ 3(1/07. 2(iimi-; KPSbnseJ            on jpjklunce of S1.9-) — 51.99 UPS per —— —— —— —— —— —
ever core pa rt n e r s
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Preliminary Valuation Analysis
Confidential
Analysis of Select Precedent Transactions ($in mUhons) Ann. TEV / LTM Date            Target            Acquirer            TEV            Revenue            EBITDA —
08/13/07 Leapfrog Day Nurseries Ltd l” Busy Bees Childcare Ltd            S63 0.7x 12, -Sx 06/28/07 Asquith Day Nurseries Ltd            Dawnay Day, Swortl fish Investments 190 NA            NA — 06/04/07 Laureate Education !nc            Doug Becker (CEO), KKR, Citigroup PE, SAC Capital 3,883 3.1 1 6.6 12/M/06 Busy ikes Chiltkare Ltd !3i ABC Learning Centres Ltd 110 2.2 5.9
12/13/06 La Petite Academy Inc. (J1 ABC Learning Centres Ltd 330 0.8 10.2
09/25/06 Educate Inc (l> Educate Management, Sterling Capital, Citigroup PE 534 1.5 10.7
09/05/06 College Coach, LLC            Bright Horizons Family Solutions 12 1.9 NA 08/08/06 Children’s Courtyard LP (5) Learning Care Group Inc 66 NA 6.1
07/07/06 Hutchisons Child Care Svsc Ltd            ABC Learning Centres Ltd 78 1.8 16.5
06/21/06 Concede Career Colleges, Inc            Liberty Partners 97 1.0 12.6
03/15/06 Kids Campus Ltd            ABC Learning Centres Ltd 133 3.4 4t.<\ 03/06/06 Education Management Corporation            Providence Equity, Goldman Sachs Capita! 3,141 2.9 10.9
11/15/05 Learning Care Group Inc            ABC Learning Centres Ltd 176 0.8 16.! 06/28/05 ChildrenFirst Sue            Bright Horizons Family 50 1.6 NA 1 1 /05/04 kindcrCnre Learning Ctr Inc            Knowledge Learning Corp 973 1.1 6.9
09/09/04 ChiSd Care Centres Australia            ABC Learning Centres Ltd 53 2.0 17.7
09/09/04 Peppercorn Mgmt G rp Ltd            ABC Learning Centres Ltd 160 2.0 !8.9 04/30/04 Leapfrog Day Nurseries            Nortl Anglia Education PLC 107 2.7 16.6
03/26/03 Whitman Education Group, Inc            Career Education Corp 268 2.4 15,7
03/18/03 Ross University            DeVry 310 3,0 12.4
03/11/03 Sylvan Learning Systems; K-1 2 Tutoring’’0 Apollo Management LP 288 1.3 8.5
03/04/03 Aramark Educational Resources m Knowledge Learning Corp 265 0.6 5,0
04/27/96 CorporateJ;ami!y Solutions Inc            Bright Horizons Holdings Inc 118 1.4 38.”! 03/30/98 Children’s Discovery Centers            Knowledge Beginnings Inc 91 1.0 8.7
03/30/98 Jigsaw Day Nurseries Ltd            Jigsaw Management / 3i 50 4.3 NA 03/19/98 La Petite Academy (Vestar/LPA) Chase Capital Partners 290 NA            NA — Mean 2.0x 14.7x Median 1.8 12.4
— (l) Based un 2(11 Wli HBSTDA estimate per Company press release. (2) Based on 2DOBE EBITDAK estimate per Company press release, LTM revenue estimated from Company investor presentation.
0)/ 1\ WaseJ on IliQ of last repfiriud quarter endinfi O-l/OH/Of) and 10K of fiscal year ending 07/02/05.b
-il-,. t ,*.,\ ~)tMY7l< l,“Hrn“l A /if ^0 i^illi^n r\i-r { ‘/^mrvimr nrjiv^- ^1 -iti-m, -nl (fl^/ 1 ! lt’i~l\. 1 T* I I.’UIT^ .V      , .T CO/. .-^H:. .., l.,v^i:...- ^D C..         .^,, i1rlnl,.
(‘) Hnseil on 2(K)7i’v IvBl’l’DA estimate in ( jjmpany press release. 1 1 \) i }i i .. i ni i ;i n ) ij i \ i?f ^i-^ii i i-iifiiiji i ji i jj nii_.> ~~\f.*.r,\ inuKJi’iL. (5)
(ty HaseJ on avenge csi;maii-’J tr.insnciion value of S275-S30II million,
(7) Includes S’K) million ussuniud Jebl, which is sub|ect In ri^lit nl” S25 million \vuhin 12 niunilis ol cNisnit;, prepay meni for —— —— —
evhrcore partners
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Preliminary Valuation Analysis
Confidential
Present Value of Future Stock Price Analysis
($ in millions, except per share data)
Potential future values are discounted to the present at an assumed equity cost of capital
201 2E EBITDA 9.0x 9.5x            lO.Ox 10.5x            ItOx —— — $224.7$224.7$224.7$224.7 §224.7 TEV- 12/31/12 $2,02252,135$2,24732,359 $ 2,472
Less: Net Debt 292292292292 292
Equity Value- 12/31/12 FD Shares Outstanding Share Price- 12/31/12 $2,314 $2,426 $2,539 $2,651 $2,76327.2
27,2 27.2 27.2
27.2
—— — $85.08$89.21$93.35$97.48 $ 101.61
PV of Future Share Price            S50.49 $52.94 $55.40 $57.85 $ 60.30
Plus: PV of Future Dividends Received            SO.OO $0.00 $0.00 SO.OO $ 0.00
—— — Implied Value per Share — 12/31/07 $50.49$52.94$55.40$57.85 $ 60.30
Assumed Cost of Equity            Assumed 2012E EBITDA Multiple — 9.0x 9.5x            lO.Ox            lO.Sx 11.0x —— — 10,0% $52.83$55.40S57.96$60.53 $ 63.09
11.0% 50.49 52.94 55.40 57.85 60.30
12.0% Sourer. I’roJL-L’ii-il 201 Z\:. liBi’l’DA niltl nut dubl (nul rash) b:uicil <m Company nwnfl^irmciil. !’’ully UitutcJ slutx1 48.28 50,62 52.97 55.31 57.66
—— — count b;isud on nnnu rucuiii (^impunv filings. —
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Preliminary Valuation Analysis
Confidential
Discounted Cash Flow Analysis — Management Case
($ in millions, except per share data)
Terminal EBITDA Multiple lO.Ox lO.Sx 9.0x 9.5x 11.0x
Discount Rate
10.0% 31,554 51,624 51,693 51,763 551,833
10,5% 1,522 1,590 1,658 !,727 1,795
11.0% 1,491 1,558 1,625 1,691 1,758
11.5% 1,461 1,526 1,591 1,657 1,722
12.0% 1,432 1,496 1,559 1,623 1,687 —— —— —— —— —
Terminal EBITDA Multiple
Discount Rate
9.0x 9.5x ll.Ox lO.Sx
lO.Ox
10.0% $56.45 859.01 ?61.58 $64.14 166,71
10.5% 55.28 57.79 60,30 62.80 65.31
11,0% 54,15 56.60 59.05 61.50 63.95
11.5% 53.04 55.44 57.83 60.23 62.63
12,0% 51.96 54.31 56.65 58.99 61.34 —— —— —— —— —
Terminal EBITDA Multiple
Discount Rate
9.5x ll.Ox 9.0x lO.Sx
lO.Ox
10.0% 4.2% 4.5% 4.7% 5.0% 5.2%
10.5% 4.6% 4.9% 5.2% 5.4% 5.6%
11.0% 5.1% 5.4% 5.7% 5.9% 6.1%
11.5% 5.5% 5.8% 6.1% 6.4% 6.6%
12.0% 6.0% 6.3% 6,6% 6.8% 7.1% —— —— —— —— —
Source: Projections b;iseii nn Company n’Miiiifjcnu’nl, I’iilly diluted sli:irc count baseil on most recent Company filings, Net dubl (tK’t c:isli) b:iscti nn 2007K ye;ir t-nJ per Company mimiKcmenl.
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Preliminary Valuation Analysis
Confidential
| | | Leveraged Buyout Analysis — Sources and Uses } ($ in millions) —— —— —— { 2007E EBITDA            Coupon            Net } Share Price ED Shares (mm) $50.00 S54.00 27.5 Equity Value Net Debt Total Enterprise Value 27.5 — Si, 372.6 $1,485.6 18.5 18.5 Si ,391. 2 SI ,504.2 —— Amount Leverage Indicative            Flex            OID            Amount —— —
| | | Revolver            SO.O — L + 1.0% SO.O L + 500 1.0% 346.5 3.0% 350 Term Loan 350.0 3,2x            L + 350 291.0
Mezzanine Debt 300.0 2.8 11.50% HoldCoPIK 75.0 0.7 13.00% 3.0% 72.8 As a Mulriple of: 2QQ7E 2008E 2007E 2008E —— —— —— —
Total Debt            S725.0 6.7:c            S710.3 Revenue 1.8x 1.6x 1.9x 1.8x EBITDA 12.9 11.2 13,9 12.1
EPS ‘” 29.6 25.4 31.9 27,5
—— — ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^P — 1 Sources 1 [ Sources            I —— — —— -
Term Loan (net of OID) Amount      % Total            Term Loan (net of OID} Amount      % Total —— — S346.5 24.2% 3346,5 22.4% Mezzanine Debt (net of OID) 291.0 20.3% Mezzanine Debt (net of OID) 291.0 18.8% HoldCoPIK (net of OID) 72.8 5.1% HoldCoPIK (net of OID) 72.8 4.7% Sponsor Equity 720,9 50,4% Sponsor Equity 833.9 54.0% —— — Total Sources $1,431.2 100.0% Total Sources $1,544.2 100.0% —— —— —— —
| Uses 1 j            Uses ___J —— — —— —
Equity Purchase Price @ $50.00 51,372.6 Equity Purchase Price @ £54.00 51,485.6
Refinance Existing Debt 24.2 Refinance Existing Debt 24.2
Existing C;)sh (5.7) Existing Cash (5.7)
Transaction Expenses (estimated) 40,0 Transaction Expenses (estimated) 40,0
— Total Uses $1,431.2 Total Uses $1,544.2
Source: b:isl-ij nil indiciliu.1 fireman^ IcriiiK per CSS proposal, i’’u!lv diluted sh;tre count biised on most fL’Cent C(Hiip:Lnv filing Nut dubt (net c-.ish) based on 2IHI7K \’u.ir uiitl per Compunv miinii^L’meni. —
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Preliminary Valuation Analysis
Confidential
| | | Leveraged Buyout Analysis — Management Case } —
| | | Required IRR            Assumed Total Debt / 2007E EBITDA            Required            Assumed 2012E EBITDA            Exit Multiple —— —— — 6.2x 6.5x 6.7x 7.0x 7.2x            IRR 9.0x 9.5x            lO.Ox 10.5x            ll.Ox —— —— — 15.0% 16.3% $53.50 §53.82 $54.14 S54.45 $54,77 15.0% S50.27 $52.20 $54.14 556.07 $58.00 54.37 17.5% 18.8% 51.84 52.19 52.54 52.89 53.24 16.3% 48.87 50.71 52.54 56,20 52.77 20.0% 50.27 50.65 51,04 51.42 51.80 17.5% 47,57 49.30 51.04 54.51 51.28 52.92
Note: Assume 48.80 49,22 49.63 50.04 50.46 18.8% 46.34 47.98 49.63 49.87 51.43
47.43 47.87 48.31 48.75 49.19 20.0% 45.18 45.75 48.31
—— —— — s IO.(K 2012E EBITDA exit multiple. Now; Assumes leverage of fi.7x Tow! Debt / 2007E EBITOA —— — Required            Assumed Total Debt / 2007E EBITDA            Required            Assumed 2012E EBITDA Exit Multiple —— —
6.5x 6.7x 7.0x
7.2x
15.0% $53.31 $53.61 553.92 S54.22 $54.52
16.3% 51.65 51.99 52.33 52.66 53.00
17.5% 50.10 50.47 50.84 51.21 51.58
18.8% 48.64 49.04 49.44 49.84 50.24
20.0% 47.27 47.70 48.13 48.56 48.99 —— —— —— —— —
15.0% S50.05 $51.98 $53.92 $55.85 357.78
16.3% 48.66 50.50 52.33 54.16 55.99
17.5% 47.37 49,10 50.84 52.57 54.31
18.8% 46.15 47.80 49.44 51.09 52.74
20.0% 45.01 46.57 48,13 49,69 51.26 —— —— —— —— —
Note: Assumes H).0x 20I2K ttlHTDA exit multiple.
Note: Assumes k-ver^e of 6.7x Tottl Di:br / 20SJ7]- liBITDA
Simrtc PiMJL’ctimis b:tSL-ti on G>mp:my mini;i^muni. l:ully Jilulcd shnru count based itn must rucunl Cnmpaiiy filing, Nt-i dcbi (net cash) hnsud un 20U7F, ix-jir end ptrr Cmnp:iiiy in:in:i|>,i:n)L-ni, nor;: Luvcfum: asiiumcd to rum.iin pn)poflnni;i! buUvutTl tcntl lund, mc/:^ftnMlc tk’bl rtittl [liiliicr* P1K. (1) IVi^i^ii i>ti indicaiiv^ finiiricin^lcrins pur liS proposal. (2) afsuiiiux interest oil- i.>n Senior [)cbf inciiM^-s ihc ma^mum I5s*bps per I’IS prupussl (125 l*ps mutkl flcfc pluR 25 bps Kniin^ OmUhiim flex).
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Pf eliminaiy Valuation Analysis
Confidential
| | Leveraged Buyout Analysis — Sensitivity Case } —
| |
Required IRR            Assumed Total Debt / 2007E EB1TDA            Required            Assumed 2012E EBITDA Exit Multiple —— —
6.2x 6.5x 6.7x 7.0x 7.2x            IRR 9.0x 9.5x            lO.Ox 10.5x            ll.Ox —— —
15.0% 16.3% 5546.29 $46.61 S46.93 $47.24 5547.56 15.0% $43.70 $45.31 S46.93 §48.54 $50,15 17.5% 18.8% 45.00 45.35 45.71 46.06 16.3% 42.65 44.18 45.71 47.23 48.76 20.0% 46.41 43.80 44.18 44.56 44.94 17.5% 41.66 43.11 44.56 46.01 47.46 Note: Assume 45.33 42.66 43.08 43.49 43.90 18.8% 40.74 42.11 43.49 44.86 46.24 44.31 41.60 42.04 42.48 42.92 20.0% 39.87 41.18 42.48 43.78 45.09 43.36 —— —
s lO.Ox 2012E liBITDA unit multiple. Most;: Assumes leverage offi.Tx Tmal Dcbi / 20l)7l’i EBI’TOA —— —
Re quired            Assumed Total Debt / 2007E EBITDA            Required            Assumed 2012E EBITDA Exit Multiple —— —
6.5x 6.7x 7.2x
7.0x
15.0% 546.09 ?46.39 5?46.69 $47.00 5547.30
16.3% 44.81 45.15 45.49 45.82 46.16
17.5% 43.61 43.98 44.35 44.72 45.09
18.8% 42.49 42.89 43.29 43.69 44.09
20.0% 41.44 41.87 42.29 42.72 43.15 —— —— —— —— —
15.0% S43.47 ?45.08 5546.69 §48.31 S49.92
16.3% 42.43 43.96 45.49 47.01 48.54
17.5% 41.46 42.91 44.35 45.80 47.25
18.8% 40.54 41.92 43.29 44.67 46.04
20.0% 39.69 40.99 42.29 43.60 44.90 —— —— —— —— —
More: Assumes I0,()s 2012H EBITOA uxil multiple. Niirc: Assumes k-vcrngc of 6<7x Toul Debt / 3W\:, [’iBITDA
Sntirct:: Sensitivity tasc b;t^d on 201JRI-! nv.in:ij;t:nicnr pfojccli(nis ;mJ 10"« rvvirnnu ^ruwili :iniJ \5"\i liHt’J’DA margin from 2lt()8fv2n)3iv RiUy UJhitaJ shrttt- cikhi! hflsuJ <m most tucciit {^Mtiipauv riiiiij^s. Net uk’bi {nci cash) b:»SL-J on 2U!(7M yL-:ir<rm! ptr (jmip.iny
rtiaiMjt^nficfU. N«ik-: Ixvurngt’ iiKsuincd to ruiiinin prupotlion^ btt\\’tfii tL-nn lonnt int’KxnntiK1 Ucbi nniJ! loMcn I1 IK.
(1) l^iM’d on jndtL”:itivL’ finimcmi;twins pur l?S proposal.
(2) Ansunn;1: intcrL’st talc on Snimr D“
Ju iiit;ti::v;t.-s rhit iii.ixtnitim 150 bjis pi:i’ (IS pntprtsjji (!2fi bps m:irl;t:i hcn plus 23 bps K;iim(.;,:. Condition fits).
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III. Process Considerations
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Process Considerations $ Confidential Potential Financial Buyers ($ hi millions) Already Contacted Tier I Tier II 21

 



 

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Process Considerations $ Confidential Potential Financial Buyers (cont’d) ($ hi millions) Company Fund Size Relevant Previous and Current Investments Tier II (cont’d) 22

 



 

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Process Considerations
Confiden tini
Potential Strategic Buyer Universe
agj|ga|S|$g|W! m            B —— — -
Knowledge I earning            corporation1
ABC LEARNING CENTRES
Category
Representative Companies
Strategic Rationale
Education Services
The Washington Post/ K APLaN, Company /
a Expand local center presence, extend education services to a broader age group, and create a more comprehensive learning solution from infant to professional
Education Publishers
B Create a more local, center-based educational program ® May complement VUE’s test center business
HR Services
-^enioiAN PAYCHEX’
/B® Mmmistaff Q
m Extend HR and benefits solutions
m Create greater client loyalty and a more defensible position with respect to outsourced HR services
Other Business Services
Sodexho
7.
i COMPASS
B Extend outsourced business to HR solutions (food, maintenance, etc)
H Create greater client loyalty and a more comprehensive business services solutions
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Process Considerations
Confidential
ABC Learning — Illustrative Ability to Pay Analysis
($ in millions, except per share data)
All Cash Transaction
All Cash Transaction
Pre-Tax Interest Rate
Purchase Price per Share
$56.00
$48.00 $50.00 $52.00 $54.00
8.0% ($0.02) (30.03) ($0.03) (50.04) ($0.04)
9.0% (0.04) (0.04) (0.05) (0.06) (0.06)
10.0% (0.05) (0.06) (0.07) (0.07) (0.08)
11.0% (0.07) (0.08) (0.09) (0.09) (0.10)
12.0% (0.09) (0.10) (0.10) (0.11) (0.12) —— —— —— —— —
Pre-Tax Interest Rate
Purchase Price per Share
$56.00
$48.00 $50.00 $52.00 $54.00
8.0% $15 $20 $24 ?29 S33
9.0% 28 33 38 44 49
10.0% 41 47 53 58 64
11.0% 55 61 67 73 79
12.0% 68 75 81 88 95 -— -— -— — —
50%/50% Cash/Stock Transaction
Pre-Tax Interest Rate
Purchase Price per Shate
$48.00 $50.00 $52.00 $54.00 $56.00
8.0% (S0.04) ($0.05) ($0.05) ($0.06) ($0.06)
9.0% (0.05) (0.05) (0.06) (0.06) (0.07)
10.0% (0.05) (0,06) (0.07) (0.07) (0.08)
11.0% (0.06) (0.07) (0.07) (0.08) (0.08)
12.0% (0.07) (0.07) (0.08) (0.09) (0.09) —— —— —— —— —
| | | | | | | 1 50%/50% Cash/Stock Transaction 1 - —— - Pte-Tax            Purchase Price per ShareInterest Rate $48.00 $50.00 $52.00 $54.00 $56.00 —— —— —
| | | | | | | 8.0% $31 536 540 544 $48
9.0% 37 41 45 50 54
10.0% 42 47 51 55 60
11.0% 47 52 57 61 66
12.0% 53 58 62 67 72
—— —— —— —— —
Source: \\\(\ Learning productions basuiJ on Citigroup research uSlimvitcs (1(1/29/07).
Note: Aj^umr£ “10“Ji ux fiiiL1 ;md 11 lav ilubt niiscij to fimJ C;ish portion of hcljuikuhmv Assume H”» hiiltl-si nilf. Kxtsim^ c;isli nol u^td in triiii^iicuon. I includes l.r;ins:itlioii i’cus.
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Process Considerations
Confidential
| | | | ABC Learning — } Illustrative Ability            to Pay Analysis (cont’d) } { ($ in millions) } —— —— — jE pHa!i;;ii^MfeJgggg —
| | | |
· Macquaric Research (08/28/07): “Around §285mm of existing debt facilities are unused and a §40Qmm equity injection from Temasek is still to be paid, providing ABC with A$685mrn of capital to pursue further acquisitions” a            Austock Securities (08/28/07): “A new facility of $1.48bn, and $600mm in a completed convertible note issue results in additional existing headroom of ~A$870 mm, i.e. $9 50mm less Leapfrog acquisition of A $7 5 mm”
1 All Cash Transaction —
Purchase Price per Share Standalone ABC —
$4S.OO $50,00$52.00$54.00 $56,00 —— —— —
2.8x 4.9x 5,0x 5.1x 5.2x 5.4x PreTax Synergies —— —— —— —
si o.o 4.8x 4.7 4.6 4.5 4.4 4.9x 5.0x 5.2x 5.1 5.0 4.9 4.8 20.0 5.1x 4.8 4.9 30.0 5.0 4.7 4.8 40.0 4.9 4.6 4.7 50,0 4.8 4.5 4.6 4.7 —— —— —
| 50%/50% Cash/ Stock Transaction —
Purchase Price per Share Standalone ABC —
$48.00 $50.00$52.00$54.00 $56.00 —— —— —
2.8x 3.5x 3.6x 3.6s 3.7x 3.7x Pre-Tax Synergies —— —— —— —
SI 0.0 20.0 30.0 40.0 3.4x 3.4 3.3 3.2 3.2 3.5x 3.5s 3.7x 3.6 3.5 3.4 3.4 50.0 3.6x 3.4 3.5 SfJurcL1: 3.5 3.3 3.4 A1K, i^umnij^ pro 3.5 3.3 3.3 Nniu: lixcliiJi-’s 3.4 3.2 3.3 ij’imsiicUiM 3.3 —— —— —
L-ciiims b;isc fvuK. J on Gifinroup rtiscnrcli i:slim;iics {HI/2’J/(I7). —— —
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Appendix
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A. Detailed Financial Analysis
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Detailed Financial Analysis
Confidential
Financial Projections — Management Case ($ in millions) CAGR Revenue 2006 2007E 2008E 2009E 2010E 2011E 2012E ‘07E-’12E —— —— —— —— —— —— —— —
§697.9 $775.5 §853.6 $ 966.3 §1,092.9 $1,235.0 Si, 395.5 12.5% % Growth 11.1% 10.1% 13.2% 13.1% 13.0% 13.0% COGS (ex. Depreciation) (544.1) (15.5) (600.4) (19.2) (655.5) (21.5) (738.4) (23.4) (831.6) (26.8) (937,8) (29.3) (1,058.3) (31.8) Depreciation Gross Margin % Margin % Growth —— —— —— —— —— —— — §138,3 19.S% $155.920.1%12.7% Si 76.6 20.7% 13.3% $204.521.2%15.8% $234.521.5%14.7% $267.921.7%14.2% $305.521.9%14.0% 14.4% SG&A Amortization (63.2)(34) (71.6) (4.8) (78.9) (4.9) (87.3) (5.1) (96.7) (5.3) (107,2) (5.6) (119.1) (5.8) Operating Income % Margin % Growth —— —— —— —— —— —— — §71,7 10.3% S79.6 10.3% 11.0% $92.810.9%16.7% £112.1 11.6% 20.8% S132.5 12. 1% IS. 2% SI 55.1 12.6% 17.!% $180.612.9%16.4% 17.8% D&A EBITDA 18.9 24.0 26.4 28.5 32.1 34.8 37.6
—— —— —— —— —— —— — $ 90.5 $103.5 S119.2 5140.6 $164.6 $ 190.0 $218.2 16.1% Equity Expense Adjusted 3.6 4.6 5.6 5.8 6.0 6.2 6.5
EBITDA % Margin % Growth —— —— —— —— —— —— — S94.1 §108.1 13.9% §124.7 14.6% 15.4% S146.4 15.2% 17.4% $170.615.6%16.6% $196.215.9%15.0% $224.716.1%14.5% 15.8% 13.5% !4.<J% Net Interest Expense PBT            fO.4) (0.9) (0.0) 1.8 3.9 6.8 10.6
—— —— —— —— —— —— — 571.3 S78.7 $92.8 5113.9 SI 36.4 $ 161.9 $191.2 19.4% Taxes Tax Rate (29.6) 11.5% (33.0) 41.9% (38.7) 41.7% (47.3) 41.5% (56.5) 41.4% (66.9) 41.3% (78.8) 41.2% Net Income —— —— —— —— —— —— — §41.7 $ 45.7 $54.1 S66.6 $ 80,0 $ 95.1 $112.4 19.7% % Marc/n % Growth 6.0% 3.9% 6.3% IS.4% 6.9% 23.1% 7.3% 20.0% 7.7% IS. 9% S.l% 1S.3% 9.7% Snurci;: Cump;iny rramgcmcni. —
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Detailed Financial Analysis
Confidential
Financial Projections — Sensitivity Case ($ in millions) CAGR Revenue 2006 2007E 2008E 2009E 2010E 2011E 2012E ‘07E-’12E —— —— —— —— —— —— —— —
S697.9 S775.5 3853.6 $939.0 $1,032.9 SI, 136.2 51,249.8 10.0% % Grwth 11,1% 10.1% 10.0% 10.0% 10.0% 10.0% COGS (ex. Depreciation) Depreciation Gross Margin (544.1) (15.5) (600.4) (19.2) (655.5) (21.5) (719.1) (22.7) (792.6) (25.3) (873.3) (26.9) (962.2) (28.5) % Margin % Growth —— —— —— —— —— —— — $138.3m’% SI 55.9 20.1% 12.7% SI 76.6 20.7% 13.3% SI 97.2 21.0% 11.6% $215.020.S%9.0% $235.920.5%9.7% S259.1 20.7% 9.8% 10.7% SG&A Amortisation Operating Income % Margin % (63.2) (3.4) (71.6) (4.8) (78.9) £9) (84.8) (5.0) (91.3) (5.0) (98.6) (5.1) (106.6) (5.2) Growth —— —— —— —— —— —— — 571.7 10.3% S79.6 10.3% 11.0% $ 92.8 SI 07.4 11.4% If. 7% $118.6 11,5% $132.1 11.6% 11.4% $147.3/1.S%11.5% 131% ;o.r/o 10.4% ^.7% D&A EBITDA 18.9 24.0 26.4 21.1 30.4 32.0 33.7
—— —— —— —— —— —— — $ 90.5 SI 03.5 $ 119.2 S13S.1 S148.9 $164.2 $ 181.0 11.8% Equity Expense Adjusted EBITDA % Margin % Gron’lh 3.6 4.6 5.6 5.8 6.0 6,2 6.5
—— —— —— —— —— —— — $94.113.5% $108.1 13.9% 14.9% 5124.7 / /.<?% SI 40,8 fxO% 12.9% $154.915.0%10.0% SI 70.4 15.0% 10.0% $187.515.0%10.0% 11.6% /j.J% Net Interest Expense PBT (0.4) (0.9) (0.0) 1.8 3.9 6.8 10.6
—— —— —— —— —— —— — $ 71.3 S78.7 S92.8 SI 09.1 $ 122.5 $138.9 $ 157.9 15.0% Tuxes Tax Rii/<” (29.6) 41.5% (33.0) 41.9% (38.7) 41.7% (45.3) //,5% (50.7) 41.4% (57.4) ft. 3% (65.1) 41.2% Net Income —— —— —— —— —— —— — 141.7 $45,7 554.1 563.8 S71.8 $ 81.6 $ 92.8 15.2% % Margin % Gniii’f/i tf.0% 5.9% 9.7% 6.3% IS. 4% tf.tf% 1S.O% 6.6% 12.4% 6.6% 13.6% 6.7% 13.8% N<Hc: Sciisiliviiy cast lnsu\ on 200BK niiin^unicni projections ami HI”. i rt-’VL’iinc growth :inJ 15% IDA margin fn            im2(l!IHi;-20l21’. JiBI1 —— —— —— —— —
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Detailed Financial Analysis
Confidential
Financial Projections — Balance Sheet ($ in thousands) 2007E 2008E 2009E 2010E 20HE 2012E —— —— —— —— —— — ASSETS (lash & Kt|uiv:!fents 55,681 52-!, -182575 ,510 5130,291 5205,384 5291,689
Accounts Receivable 39,837 42,096 46,201 52,401 59,045 66,528
Prepaid Expenses 19,388 21,340 24,156 27,323 30,876 34,889
Deferred income Taxes 14,332 14,832 15,832 17,332 19,332 21 ,332 —— —— —— —— —— — Total (Current Assets 579,238 SI 02,750 5161,699 5227,347 5314,637 5414,438
Net Fixed Assets 5153,076 5166,426 5181,692 5205,512 5221,245 5236,813
Other Assets (incl intangibles) 216,578 230,138 247,000 266,157 289,400 320,521
—— —— —— —— —— —— —
Total Assets $ 448,892 $499,314 $590,391 $699,016 $ 825,282 5971,772
—— —— —— —— —— —— —
LIABILITIES Accounts Payable 556,024 563,061570,344 580,550 591,410 5103,037
Line of Credit 24,128 — — — . -
Current Portion of Long-Term Deb; 100 — — — . -
Income Taxes Payable 5,507 5,000 5,250 5,250 5,500 6,000
Deferred Revenue 44,591 49,083 55,560 62,844 71,015 80,244
Other Current Liabilities 11,917 12,513 13,139 13,796 14,486 15,210
—— —— —— —— —— — Total Current Liabilities 5142,267 5129,657 5144,293 SI62/MO 5182,411 5204,491
Deferred Income Taxes 53,182 53,682 54,182 54,682 55,182 55,682
Other Deferrals 14,140 14,8-17 1 5,590 16,369 17,188 18,047
Accrued Rent 11,077 11,520 11,981 ! 2,460 12,959 13,477
Other Liabilities 7,755 8,536 9,663 10,929 12,350 13,955
—— —— —— —— —— — Total Non-Current Liabilities 536,154 538,5855-11 ,416 544,440 547,679551 ,161
Total Liabilities 5178,421 5168,242 5185,709 5206,880 5230,090 5255,652
EQUITY Total lit]uity 5270,471 5331,072 S-104,682 5492,136 5595,! 92 5716,120
—— —— —— —— —— —— —
Total Liabilities & Equity $ 448,892 5499,314 $590,391 $699,016 $ 825,282 5971,772
—— —— —— —— —— —— —
Simrce: Company m;imi;tiiii>in —
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Detailed Financial Analysis
Confidential
Financial Projections — Cash Flow Projections ($ in thousands) 2007E 2008E 2009E 2010E 2011E 2012E —— —— — Net Income 545,623 554,102 566,009 579,954 595,056 5112,428
Depreciation 19,236 21,450 23,384 26,780 29,266 31,832
Amortisation 4,750 4,940 5,138 5,343 5,557 5,779
Changes in Assets /Liabilities 6,672 8,837 9,047 9,804 10,514 11,565
—— —— — Operating Cash How 570,281 589,329 5104,178 5121,881 5140,393 5161,604
Investments Capital 535,000 534,800 538,650 550,600 545,000 547,400
Acquisitions 28,500 18,000 21,500 24,000 28,300 36,400
—— —— — Total Investments 503,500 552,800 560,150 574,600 573,300 583,800
Financing Debt incr (deer) (S15,1’!B) (524,228) .
Hijuity Issuances/Option Exercises 6,000 6,500 57,000 57,500 58,000 58,500
Treasury Stock (5,195) — .
Other 128 — .
—— — - Financing Cash How (514,215) (517,728) 57,000 57,500 58,000 58,500
Net Cash How {51,434) 518,801 551,028 554,781 575,093 586,30-1
Bejjpnmng Cash 57,115 55,681 524,482 575,510 5130,291 5205,38-1
—— —— — Ivnding Cash 55,681 52-5,482 575,510 5130,291 5205,384 5291,688
—— —— — Source; Company managcrornL —
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Detailed Financial Analysis
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| | | \X/AC*C Ajtialvsis ($ in millions, except per share data) } Murkul            Toinl Btbl            IMil and Sliurc! Pritri! liijuily            Tnlni            I’teferrnd            nnd            Prill☺ 48;. / Totiil            Adjusted            Unlt!vt>rt.’d Company            lt/«2/07 Virtue            Debt { Slock            Preferred^ Cap. Ik-ln            Hcia } —
| | | fc^Iife^afaj AIM I 1 .eimi ii/; Owin^ S^.’Jl The I’niimmi Kiu-jcw. hir. 11.77 Nubd 1 j_%imiiij* flnmmimiiiL-s. Inc. 15. M ApnlluGnmp, hie. SH(K25 1’IT ]£diicntion;il Service, hie. 12-1.33 HcVry hit 53.03 (InrctT ff.ilucuiinu Corp. 3-4.79 Sinytr iuluc:itii>n Coqi. 1B5.00 Curtiiilki.in Culk^cji, Inc. 52,765 Si.filfp            Sli            Sl.rilA 25S .16,’.J”,, 1.11
lft.OI Oapdfo lldncilian (^niupnin* l« d 2-1 lf,2 2 H.-r:-;. (mm fi’J.’/J (1 2 !.3% (1.36 M.B2 11.01 11.35 —— —— — jMcun 15.f,% _MLJ —— —— — SI -1,1 51 Sli            SO            SO 5,21.1 o,(ir:;, «.!)6 2, »;. !!.% 151) fl 1511 3.SHI (I.D7 (i.ori            l.is (1.5% it.’;r> l.lll 11 (1 1! 3.21(1 15 (1.70 ().!)% 11,7’J 0.69 0,7V O.’Jt 0,7!) 0.81 0,7!) (I 15 2,7d2 (1 ft.r.’.i            i.no il (i l.Jfil            I2S (H>‘A            O.T) (Ml1;!, il            i2H 1,228 (1 (1 O.H1 0 5311 1) (1 7.y:-r. «.i!3 1) 3li5 31 (1 31
l.mcntu Rdiicntiom! SL-n-iccsi’^qi- 13,’JO QlfaLSidttMfML&ffiiSl JMrais 2.2V» o.I“s ] —— —— — S7.WIV            S-llif. S12 S-M7 t.-lllt 5)11 II 581 1.318 5.2”. ft.53 28.1% Ifil 1! Kil 71!) 501 IS.74 KI.’J”/,, ll.’Js 41.11% (1 51)1 3<W 0 11.74 ll.li% It            I) l..|(i 0.52 O.fill O.ittl 0,52 1,4(i Vih:is]imytiH) P^st SttOIXlS Schnbstic Cuqi. 37. ft) Ifinckbixinl Inc, -I3,«) SchuolSjiccialty.Inc. 33.50
Hcniissnnct lu.viniiii^T luc, 1173
{Mean 17.0% O.fl5 ] —— —— — JTtitatCompSci Mean            B.9% 0.77 | —— —— — [Sftinflacc 557.84 Sl,»2!l 515 50 S15 I.S% 1.27 i.26 ] r.uu-,t:
—— —
Si^u^’JLiYACjGjCak.u!!^ Ilcta Assurnjrltan — RkL-friT Han:”’ UiiluVLTui! Ik’ia r:: Dulu ajul Ptuf. / Ti>ul Opiialixniii AiljusiL’il H^imy Beta MurKcl Ki^k i’rciiiiifin ‘ IvtjtiiivCi^i uf Cipitnl IVu-’l’rtx C’^i^i ofDuhi AfiLT-’J’nx Cusi ofDebi Swini^el            AUC            Far-Profit            Totnl Ciimp Set — Low            Hi^h            Ltnminrj c«hckcs — -M% .1.4"'= -l.-I’Mi -l..l"'ii «.!)(! 1.25 (1.82 IJ.W1 ™i            b.5”;. 1.5”;, w,.’)<‘.u 2.T”,, O.UI !.2d 1,11 O.JW 4.4"'', 0,77 ft.(l% (i.<Jf!i 6,0"',, (i.0% U,8% K.’/’i 0,«2 11.1/:), ll.D’M ‘J.7’”,, 6,11% ‘>,}”!, jut;, i!.o“i, B,oJ‘.> ii. if!;, S.O’l’M         .LBV,, -I,K% -LS1!’., -S.il”;, -l,«°i —— — jSwinfisci \VACC 9.77,, 11.87,, 8.7% !>.«% 8.9% I —— —— —
shjskcv: l-.WK^’l. niiKHTliliui’K ;»«! Ounjviny lllinj^. (13 l^-yi-jr Tiv.^ir>‘.tsiini/n2/H7.. !,n C!lt!l:,t! C,;t,l.,Er.-;ltit,!t ^’in^slrl li3W .Slul Ili^ll tltlk-V^lLd bcM If.lSnJ            nn !t|,;’i;,ir hisluiti;,,! .idfiisu-d |k:i.i i.l) \\’.!ll SlriTI JV!:]JI’,L-, —
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Detailed Financial Analysis
Confidential
Swingset Historical Adjusted Beta
Daily
Weekly
Monthly
| | | | | | | | | { 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years } —
| | | | | | | | |
0.98 1.05 1.07 1.02 0.92 0.90 NA            NA            NA            NA
1.41 1.28 1.17 1.13 0.95 1.00 1.00 0.88 0.84 0.81
1.06 1.15 1.23 1.31 1.11 0.78 0.68 0.79 0.82 0.87
Average Median 1.15 1.06 1.16 1.16 1.17 1.15 1.13 0.99 0.95 0.89 0.90 0.84 0.84 0.84 0.84 0.83 0.83 0,84 0.84 1.15
Low 0.98 1.05 1.07 1.02 0.92 0.78 0.68 0.79 0.82 0.81
High 1.41 1.28 1.23 1.31 1.11 1.00 1.00 0.88 0.84 0.87
—— —— —— —— —— —— —— —— —— —— —
Source: Bloomberg, .is of last pricu- on II /02/07.
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Detailed Financial Analysis
Confidential
Discounted Cash Flow Analysis — Management Case ($ in millions) — | Assumptions j — Closing Date 12/31/07 Terminal EBITDA Multiple lO.Ox Discount Rate 11.0% Revenue 2007E 2008E 2009E 2010E 2011E 2012E —— —— —— — 5775,5 S853.6S9 66.3 SI, 092.9 51,235.0 51,395.5 % Growth 10.1% 13.2% 13.1% 13,0% 13.0% Adjusted EBITDA % Margin % Growth S108.1 S124.7S1 46.4 13.ff% S170.6S 15.6% 16.6% 196,2 15.9% 15.0% S224.7 16.1% 14.5% 14.6% 15.2% 15.4% 17.4% D&A 24.0 26.4 28.5 32.1 34.8 37.6 Ecjuitj’ Expense 4.6 5.6 5.8 6.0 6.2 6.5 EBIT            S79.6 S92.8 SI 12.1 S132.5S 155.1 S180.6 % Margin % Growth 10.3% 10.9% 11,6% 16.7% 12.1% 18.2% 12.6% 17.1% 12.9% 16.4% 20.S% Less: Untevered Taxes Plus: (3S.7) (46.5) 26.4 28.5 (54.9) 32.1 (50.6) (64,1) 34.8 (45.0) (74.4) 37.6 (47.4) U.6 Depreciation & Amortization (34.8) (38.7) 8,8 9,0 9.8 10.5 Less: Capital Expenditures (Increase)/Decrease in Working Capital Unlevercd Free Cash Fknv —— —— —— —
S54.5 S64.5 S69.0 S91.4 S108.0 % of Sahs % Growth 6.4% 6.7% 1SJ% 6.)% 7.0% 7.4% 32.5% 7.7% !S.1% Terminal Value Implied S51.8 S55.1 S53.1 S63.4 52,247,1 5.7% S67.5 51,333.5
Perpetuity Growth Rait PV of Unlevertd Free Cash Flow Total Enterprise Value Less: Net Debt Equity Value FD Shares Outstanding Share Price — | $1,624.5 | — (18.5) SI, 606,0 rj d         ,^.Li,M — S59.05 SourCL1: Oimp:mv nun;ij;i:i’nciu. —
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Detailed Financial Analysis
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Leveraged Buyout Analysis — — Management Case ($lnilli°™) 2007E 2008E 2009E 201 OE 201 IE 2012E —— —— —— — Income Statement            Returns in 2012B EBITDA Exit Multplc — Revenue §775.5 5853.6 $ 966.3 §1,092,9 §1,235.0 §1,395.5 9.0x 9.5x 10.0s 10.5s            il.Ox — EBITDA 108.1 124.7 146,4 170.6 196.2224.7 Enterprise Value at Exit §2,022,4 §2,134,7 §2,247.1 §2,359.4 §2,471.8 D&A 24J] 26.4 28.5 32J 3M 37.6 Debt (520.2) (520.2) (520.2) (520.2) (520.2) —— —— — EBIT §84.1 $ 98,4 §1 17.9 §138.5 §161.4 §187.1 Cash M OJ) OQ            OO            OJ) Inierest Expense, net (72.4) (71,3) (69,5) (66.6) (62.1) Equity Value at Exit §1,502.1 §1,614.5 $1,726.8 §1,839.2 §1,951.5 Tux Expense            mm (19.3) (2R.fi) (39,1) (51.5) Less- Mgmt Ownership (75.1) (80.7) (86,3) (92.0) (97.6) —— — Net Income 315.1 $ 27.3 §40.4 §55.6 §73,5 Plus: Mgmt Options Strike Prici 3_L9 37.9 37.9 37.9 37.9 — Equity Value to Sponsor §1,464.9 §1,571.7 §1,678.4 §1,785.1 §1,891.9 Cash Flow Statement IRR to Investors 15.2% 16.9% 18.4% 19.9% 21.3% — Net Income            SI 5.1 §27.3 §40.4 §55.6 §73.5 — Plus: Non-Cash Interest 10.4 11.9 13.5 15,4 17.6 Reverse LBO EBITDA Exit Multplc — Plus: D&A 26.4 28.5 32.1 34.8 37.6 9.0x 9.5x 10.0.x 10,5s 11. Ox — Less: Change in NWC 8.8 9.0 9,8 10.5 11.6 Target IRR to Investors 17.5% 17,5% 17.5% 17.5% 17.5% Less: Capita! Expenditures (34. R) OM1 (5.0,6) (45.0) (47.4) Required Sponsor Equity §654.1 §701.7 §749.4 §797.0 §844.7 —— — Cash to Service Debt §26.0 S38.1 §45.3 §71.4 §92.8 Enterprise Value §1,324.3 §1,372.0 §1,419.6 §1,467,3 §1,515.0 Equity Purchase Price §1,305.8 §1,353.4 §1,401.1 §1,448.8 §1,496.4 Balance Sheer Implied Share Price §47.57 §49.30 §51,04 §52.77 §54.51 — Cash §0.0 SO 0 too §00 $00 i — if\J.\J 324.0 286,0 ><107 1693 765 ‘ Sources | — L crm j-jOUii Mezzanine Debt 300.0 300.0 300.0 300.0300.0 Amount      % Total —
HoldCo PIK 85.4 97.3 110.8 126.2143.8 Term Loan (net of OID) §346.5 24.2% Net Interest Expense Mezzanine Debt (net of OID) 291 .0 20.3% Income on Cash $ 0,0 so.o            j00 soo 500 HoldCo PIK (net of OID) 72.8 5.1% Interest on Term Loan (8.16%) (27.5) (24.9) (1] S) nrt7) (mm            Sponsor Equity 720.9 50.4% — Interest on Mezz. Debt (11.50°/< (34.5) (34.5) (34.5) (34.5) (34.5) Total Sources $1,431.2 iOO.0% — Interest on PIK Debt (13.00%) OHd) (1L2) (L!5) (LL4} 0241 | Uses \ — Net Interest Expense ($72.4) ($71.3) (§69.5) (§66.6) (§62.1) Credit Ratios Equity Purchase Price @ §50.00 §1 ,372.6 EBITDA / Interest 1.7s 2.!x 2-"« 2.9s 3.6x            Refinance Existing Debt 24.2
(EBITDA — Capex) / Interest 1 .2s 1.5s L7x 23x 19x Existing Cash (5.7)
Total Debt / EBITDA 5.7x 4.7x 3.8x 3.0x 2.3x b. , ‘ i ransacuon bxpcnses (csumntcd) 4».» — Tota! Uses $1,431.2
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Detailed Financial Analysis
Confidential
Leveraged Buyout Analysis — — Sensitivity Case ($in ™m°**s) 2007 E 2008 E 2009E 2010E 201 IE 2012E —— —— —— — Income Statement            Returns in 2012E EBITDA Exit Muhple — Revenue $775.5 §853,6 5939.0 $1,032.9 SI, 136,2 51,249.8 9.0x 9.5x            lO.Ox 10.5x 11, Ox — EBJTDA 108.! 124.7 140.8 154.9 170.4187.5 Enterprise Value at Exit $1,687.2 $1,780.9 $1,874.7 §1,968.4 52,062.1 D&A 211) 2£4 27.7 30>t 32,0 33.7 Debt (567.0) (567.0) (567.0) (567.0) (567.0) —— — EB1T §84. 1 598.4 $ 113.1 S124.6 $138.4 §153.8 Cash            OQ            OQ            OQ            OJ) OQ Interest Expense, net (72.4) (71.4) (70.1) (68. 1) (65.0) Equity Value at Exit 51,120.2 §1,214.0 §1,307.7 §1,401.4 51,495.2 Tax Expense (JOJ) £J73) (22.6) (29,0) 046) Less: Mgmt Ownership (56.0) (60.7) (65.4) (70.1) (74,8) —— — Net Income            SI 5.1 S24.4 $31.9 541.3 $52.2 Plus: Mgmt Options Strike Pric< 37,9 319 37.9 37.9 37.9 — Equity Value to Sponsor 51,102.2 $1,191.2 §1,280.3 $1,369,3 51,458.3 Cash Flow Statement I RR to Investors 8.9% 10.6% 12.2% 13.7% 15.1% — Net Income            SI 5.1 $ 24.4 §31.9 §41.3 552.2 — Plus: Non-Cash Interest 10.4 11.9 13.5 15.4 17.6 Reverse LBO EBITDA Exit Multple — Plus: D&A 26.4 27.7 30.4 32.0 33,7 9.0x 9.5x            iO.Ox            lO.Sx 11. Ox — Less: Change in NWC 8.8 8.8 9.3 9.7 10.4 Target IllR to Investors 17.5% 17.5% 17,5% !7.5% 17.5% Less: Capital Expenditures            OM) (316) {47,8) (4L4) (42.4) Required Sponsor Equity            S492.1 §531.9 §571.6 $611.4 §651, 1 —
Cash to Service Debt $ 26.0 S35.3 537.3 $57.0 $71.3 Enterprise Value “ §1,162.4 §1,202.1 §1,241.9 $1,281.6 §1,321.4 Equity Purchase Price $1,143.8 $1,183.6 §1,223.3 §1,263.1 §1,302.8 Balance Sheet Implied Share Price $41.66 $43.11 $44.56 $46,01 §47.46 — Cash            so.o §0.0 chq ;qp ;oO — l crm I Q’ln 324.0 288.8 ^515 io4£;p3T 1 Sources | — Mezzanine Debt 300.0 300.0 300.0 300.0300.0 Amount      % Total — HoldCo PIK 85,4 97.3 110.8 126.2143.B            Term Loan (net of OID) $346.5 24.2% Net Interest Expense Mezzanine Debt (net of OID) 291.0 20.3% Income on Cash            SO.O            SO.O 500 soo ?00 HaldCoPlK(netofOID) 72.8 5.1% Interest on Term Lonn (8,16%) (27.5) (25.0) (22.0) (18.2) (13.0) Sponsor Equity 720,2 50.4% — Interest on Mezz. Debt (11.50°/i (34,5) (34.5) (34.5) (34.5) (34,5) Total Sources $1,431.2 100.0% — Interest on PIK Debt (13.00%) OH4) (“9) (13.5) (15.4) q.7.,6), | Uscs | —— — Net Interest Expense (§72.4) ($71.4) ($70.1) ($68.1) (565.0)
Credit Ratios Equity Purchase Price @ $50.00 5 1 ,372.6 EBITDA / Interest 1.7x 2. Ox 2,2x 2.5x 2.9x            Refinance Existing Debt 24.2
(EB1TDA — Capex) / Interes: 1.2x 1.4x 1.5x 1.9x 2.2x . , ,, Exisune Cash (.“3.7) Total Debt / EBITDA 5.7x 4.9x 4.3x 3.6x 3.0x ^ ^ ; Fransacuon Expenses (estimated) 40.0
— Total Uses $1,431.2
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Detailed Financial Analysis
Confidential
ABC Learning — Ability To Pay Analysis — All Cash Transaction
($ in millions)
| \ Transaction Assumptions | —
| Purchase Price pur Share            S52.00 l-’D Shares Outstanding 273 1’Vity Value SI, 429 Plus: Transaction Expenses 0,0 Purchase Price Consideration Required SI, 429 ABC 1 .earning Share Price (1 1 / 02/07) S5.9 \ Cash Consideration 100.0% Interest rase 10.0% Tax rate 40.0% — 1 lUSD | | InAUD | I —— —
FY08E ’Y09E            PY10P, I-Y08K            rY09F, FY10E — ABC Learning EBITDA            S326 ABC            S37S            S384 S367 S433 S4G5 212 232
Learning Net Income 173 Implied 195 245 281 Ml            Ml Shares Outstanding 468 ABC 4J8 J67 167 S0.45 S0.50 Learning EPS            S0.37 S0.42 S0.53 S0.60 — LJSD/ALID exchange raw 0,889 0.8C5 0.825
CY08E            CY09E — Status Quo Net Income 5192,6 S222.0 Status Quo Shares Outstanding 467 407 S0.47 Status Quo EPS S0.41 — Plus: Swingset Net Income 554.1 S66.G 0.0 (142,9) 57.2 Plus: Pre-Tax Synergies 0.0 Less: incremental Interest Expense (142.9) Less: Taxes 57.2
Pro Forma Net Income $161.0 S202.9 Shares Issued to Swingset 0 467 50,43 0 Pro l-’orrna Shares Outstanding 4Cs7 Pro i-’orma Cash I.CPS S0.34 —— —
“Cash” EPS Accretion / (Diliuion) — $ ($0.07) “Cash” EPS (SO. 04) (8.6%) S32 Accretion / (Dilution) — % (16.4%) Implied ProTax Synergies to Breakeven 553
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Detailed Financial Analysis
Confidential
ABC Learning — Ability To Pay Analysis — 50%/50% Cash/Stock Transaction <$iniu‘°"s)
Transaction Assumptions
Purchase Price per Share
FD Shares Outsiiindinjf
lii|uiiy Value l’!us: Transaction Expenses Purchase Price Consideration Reqtiireij
ABC 1,earning Share Price (11/02/07) Cash Consideration interest rare Tax rate
S52.00
27.5 SI,-09
an
$1,429
S5.91 50.0% 10.0% W.0%
ABC Learning EBITDA ABC Learning Net Income Implied Shares Outstanding ABC Learning EPS
USD/ADD exchange rate
FYQ8B S326 173 468
S0.37
In USD
V09F. S375 212
MZ 30.45
YlOR
$384 232 467
S0.50
FY08!’ S367
195
4(1 S0.42
0.889
In AUD EY09H            rvior. — S433 S465 245 281 isz m SO, 53 S0.60
0,865
0.825
CY08E            CY09E
Status Quo Nut Income            SI 92.6 S222.0 Status Quo Shares Outstanding            ifil            MZ Status Quo EPS            S0.41 S0.47 Plus: S\vinj>sct Net Income            S54.1 S66.6 Plus: Pre-Tax Synergies 0.0 0.0 Less: Incremental Interest Expense (71.5) (71.5) Less: Taxes 28/> 28.6 —— — Pro Forma Net Income            S 203.8 S245.7 Shares Issued to Swingset .111 121 —— —
Pro Forma Shares Outstanding 588 588
Pro Forma Cash liPS            S0.35 S0.42 —— —— —
“Cash” EPS Accretion / (Dilution) — S ($0.07) ($0.06)
“Cash” EPS Accretion / (Dilution) — % (15.9%) (12.1%) Implied Pre-Tax Synergies to Breakeven            S51 $ 45
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B. Introduction to Evercore Partners
evercore partners

 



 

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Introduction to Evercore Partners Overview Our Businesses
Corporate & Restructuring Advisory - Advised on over $600 billion of transactions
Private Equity Investing — $1,2 billion in funds under management Venture Capital Investing - $100 million fund raised in 2000
Our Principles            Quality Integrity Our People a 41 Senior Managing Directors
Over 300 total employees
Our Presence
U.S. — New York, Los Angeles, San Francisco Europe — London
Latin America — Mexico City, Monterrey Japan — Tokyo
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Introduction to Evercore Partners Confidential
The Leading Boutique Advisory Firm
| | | | | | | | | | | 2002-2006 2006 YTD 09/30/2007 —— —— —
| | | | | | | | | | | i 1 1 I 1
11 i            Evercore Partners $296.5 1 Evercore Partners $176.1 1 Evercore Partners $109.3 | —— —— —— —— —— —— —— — 2 3 4 5 6 7 8 9 10 Houlihan Lokey 182.1 173.5 73.7 2 3 4 5 6 7 8 9 10 Blacks tone Group 109.3 89.3 43.3 2 3 4 5 6 7 8 9 10 Centervicw Partners 69.3 66.8 34.2 Howard & Zukin 60.5 59.4 54.4 35.8 LP Houlihan Lokey 30.6 27.4 21.3 12.4 LLC Grecnhill & Co, 28.0 22.6 22.5 20.8 Blackstone Group LP 30.8 27.4 Howard & Zukin 11.2 11.2 LLC Blackstone 12.0 7.3 Rothschild Duff and            Rothschild Peter J. Group LP Moclis Phelps Greenhill & Solomon Co Ltd            Advisors Houlihan Co, LLC Peter J. Global Leisure            Lokey Howard & Solomon Co Ltd            Partners LLP            Zukin Duff and Joseph Perella            Greenhill & Co, LLC            Phelps Pcrclla Gleacher Partners            Grant Samuel KPMG            Weinberg Partners Global Leisure            Corporate Finance            LP Rothschild Peter Partners LLP            Duff and Phelps            J. Solomon Co. Ltd. 2002-2006 2006 YTD 09/30/2007 1
i - Goldman Sachs & Co            Goldman Sachs & Co Morgan Stanley JP            Morgan Stanley Morgan Citi Lehman            Goldman Sachs & Co            Lehman Brothers Brothers Merrill            Morgan Stanley JP            Citi JP Morgan Lynch Credit Suisse            Morgan Citi Lehman            Credit Suisse UBS Lazard Banc of $1,651.5 1,121.6 Brothers Merrill            Merrill Lynch America Securities 1,060.2 1,047.0 Lynch Credit Suissc $599.7 440.2 417.2 Deutsche Bank AG $577.3 497.1 393.7 1 LLC Bear Stearns & 957.8 838.8 719.1 1 Banc of America 406.5 364.9 344.4 Bane of America 375,5 357.1 292.5 2 3 4 5 6 7 8 9 10 Co Inc Deutsche 611.2 590.6 567.7 2 3 4 Securities LLC UBS 313.9 242.3 234.4 Securities LLC UBS 276.9 220.8 197.0 11 12 Bank AG 466.9 379.0 5 6 7 8 9 10 Lazard 203.3 1 2 3 4 5 6 7 8 9 10 Lazard 181.7 118.6 — i” I — -
|ll            Evercore Partners 176.1 11 -— —— —— — Dcutsche Bank AG Bear Stearns & Co Inc Wachovia Corp 175.7 164.0 109.5 12 Blackstone Group LP 109.3 12 Evercore Partners 109.3 [ — — —— — Bear Stearns & Co Inc Ccntcrview Partners LLC Evercore Partners 296.5 13 13 14 15 Greenhiil & Co, LLC 77.2 69.3 66.8 —— —— — Wachovia Corp Houlihan Lokey 14 15 Howard & Zukin 208.6 182.1 14 15 Source: Thomson Financial — evercore partners 38

 



 

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Introduction to Evercore Partners Recent Significant Evercore Advisory Transactions Confidential Advised            Advised            Advised Advised            Advised CERBERUS            Alliance            Apax            IS
on the $60 billion financing            on its pending $7.8 billion on its $7.8 billion °” its pending $2.8 billion            on its $29.0 billion of its acquisition of            sale to acquisition of            sale to sale to CHRYSLER ‘ THOMSON
2007 2007 2007 2007___2007
Advised            Advised            Advised Advised            Advised
,. Novelis on its $6.0 billion            on its $4.8 billion sale of its on its $9.0 billion 0n___its $26 5 billion merger of sale to            Aerospace division to sale to            equals with            sale of its Winterthur equals with            insurance unit to
CAREMARK
2007 2007 2006 2006___ 2006 Advised            Advised            Advised Advised            Advised on its $7.9 billion sale of a on its $89.4 billion (now The Nielsen Company) on its $21.7 billion 51% interest in            acquisition of °“its $7° billion sP!it-uP            acquisition of
on its $11.5 billion            into 3 publicly traded
sale to a private equity            companies
BELLSOUTH consortium 2006 ___2006 ___2006 2006___ 2005 evhrcore partners 39

 



 

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Introduction to Ever core Partners Confidential Advisor to Boards and Special Committees Relevant Recent            Advised the Special Committee of Lear Corporation in regard to Icahn’s failed $5.3 billion buyout Transaction Experience Advised thc Special Committee of the Board of Directors of Arinc on its sale to The Carlyle Group
Advised the Special Committee of the Board of Directors of Alliance Data on its sale to The Blackstone Group
Advised the Special Committee of the Board of Directors of First Data on its sale to KKR
Advised the Independent Directors of the Board of Directors of Aquila on its sale to Great Plains Energy
Advised the Special Committee of the Board of Directors of Realogy on its sale to Apollo Management
Advised Cox family on valuation of Cox Enterprises, including cable, for estate planning purposes
Advised the Board of Directors of General Motors on its sale of a 51% interest in GMAC to Cerberus
Advised the Board of Directors of Credit Suisse on its sale of the Winterthur insurance unit to AXA
Advised the Board of Directors of Swiss Re on its acquisition of General Electric’s Reinsurance Business
H Advised Swiss Re on its sale of the Fox-Pitt, Kelton business to J.C. Flowers
Advised the Board of Directors of Tyco on its split up into three publicly traded companies
Advised VNU on its sale to a private equity consortium (KKR, The Blackstone Group, The Carlyle Group, Hellman & Friedman, TH Lee, Alplnvest)
Advised the Special Committee of the Board of Directors of Insight Communications on its-sale to controlling shareholders (management) and The Carlyle Group
Advised thc Special Committee of the Board of Directors of Kaman Corporation in its dual-class recapitalization announced in June 2005
Advised the Special Committee of the Board of Directors of PanAmSnt on die its sale to KKR
Advised thc Special Committee of Freedom Communications in the company’s going private transaction
Advised NTL on its acquisition of Telewest
Advised the Special Committee of The Robert Mondavi Corporation in its dual-class recapitalization
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Introduction to Evercore Partners Confidential Trusted Source for Fairness Opinions Selected Fairness Opinions Rendered Date            Client            Transaction            Size            Client            Transaction Size 2007 CERBERUS Acquisition Financing $60.0 billion            IS            Sale to Eurex $2.8 billion Fairness Opinions rendered on
Alliance            Sale to BLACKstone $7.8 billion            Sale to Hindalco $6.0 billion transactions totaling
more than $250bn in
SaletoKKR $29.0 billion            Aquila            Sale to Great $2.8 billion value I
DATA Plains Energy |
2006 REALLOGO $9.0 billion Merger with $26.5 billion . Over 60 opinions            I
Caremark Rx         . 1
rendered over past 3
CREDITSUISSE* Sale of Winterthur $9.9 billion            Acquisition of $2.0 billion            years            insurance unit CVS            Acquisition of $2.0 billion years | at&t            Acquisition of $89.4 billion            stand-alone drug BellSouth ‘ stores
Sale of a majority $7.9\ billion ^, Split-up into 4 §17.1 billion Trusted for 1
fiSSi            cMlrf in f^-MAP ‘ publicly-traded      ,. . . ,,         , ;=1 stake in tjJVUYL cendani companies objectivity and lack |—— of conflicts in time of ffl 2005 !riS5Re GElSu™ S7.8 billion efTRADE Acqu^mon of §0.7 billion increased board and | Business            Acquisition of $1.6 billion management | ra Scientific            Sale of Company to $6.9 billion Brown & Co. scrutiny | ™Jl\. Atlanta Cier-r, “virct-omc ‘ c- 1 r /-
M ^i^co Systems -^InSiqht            Sale of Company to $2.1 billion

 



 

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1 Hi!-! Acquisition of §9.0 billion ‘ Carlyle Group g Telewest .i...^,....,.^^.,,,.,..^, ,, , r,, i C1 fr. Sale of Company to §4.1 billion ___| ^FlaHor^ Sale of Company §0.8 billion »-—— Sun Microsystems ‘ *,-..............-^,*......^........—,..,.......-...-............:^ta?f’"^3 = ‘ toQUALCOMM “ ^ . ... , ‘......”::;.......”...........;:...........         ............;,^.,,,,..,,, ,, -ffjJM^ Acquisition of 591.7 billion ·’’.’. Sale of Company            en c i-n- (c^asfo.’ AT&T ·.-,,,,,:;*,,,, . K1 , — ! — SO.5 billion v_y !?>iettisync            to Nolaa evercore partners 41

 



 

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Introduction to Evercore Partners confidential Evercore Executives |*^S|S^f^^| Roger C. Altman is Chairman of Evercore. He began his investment banking career at Lehman Brothers and became a general partner I^i:;::|^^S2§lBili °f that frrm i’1 1974. Beginning in 1977, lie served ns Assistant Secretary of the U.S. Treasury for (our years. He then returned to fe^jJp’^S’’ Lehman Brothers, later becoming Co-Head of overall investment banking, a member of the firm’s Management Committee and its |®“ftu^-j£;v*^4 board of directors. He remained in those positions until the firm was sold to Sliearson/American Express. In 1987, Mr. Altaian joined The Blackstone Group as Vice Chairman, Head of the Firm’s merger and acquisition advisory business and a member of its Investment Committee, Mr. Altman also had primary responsibility for Blackstone’s international business. Beginning in January 1993, Mr. Altman returned to Washington to serve as Deputy Secretary of the U.S. Treasury for two years. In 1996, he co-founded Evercore Partners. Roger C. Altman ^ pitman js n Trustee of The National Park Foundation, New Visions for Public Schools and The American Museum of Natural History, where he also serves as Chairman of the Investment Committee, He also is a member of the Council on Foreign Relations and serves on its Finance and Investment Committees. He received a B.A. from Georgetown University and an M.B.A. from the University of Chicago. Ip"1**™^“V            Austin M. Beutner, President, Co-Chief Executive Officer and Chief Investment Officer, co-founded the Company in 1996. Mr. 1 Beutner has served as Chairman of the Evercore Capital Partners private equity funds since 1997, Chairman of the Evercore Ventures · private equity fund since 2002 and Chairman of Evercore Asset Management since 2006. From 1994 to 1996, Mr. Beutner was I            President and Chief Executive Officer of The U.S. Russia Investment Fund, a private investment fund capitalized with §440 million 1 ky E^ie ^’^” Government. In 1988, Mr. Beutner joined The Blackstone Group, where he became a General Partner in 1989. From ‘^~ to ^88, Mr. Beutner worked in Smith Barney’s Mergers and Acquisitions Group and, in 1986, he helped establish the firm’s ‘:. Merchant Banking Group. Mr. Beutner currently serves on the boards of directors of American Media, Inc. and Scdgwick CMS, Inc. He also serves as Chairman Austin M. Beutner of the Board of the California Governor’s Council on Physical Fitness and Sports, as Chairman of the Board of Directors of the Co-CEO and Co-Founder            California Institute of the Arts, as Chairman of the board of directors of Carithoip School and is a member of the Council on Foreign Relations. Mr. Beutner has a B.A. in Economics from Dartmouth College. evercore partners 42

 



 

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Introduction to Evercore Partners Confidential Evercore Executives I Ecluardo Mestre, Vice Chairman, is responsible for the firm’s corporate advisory business. From 2001 to 2004, Mr. Mestre served as ! Chairman of Citigroup’s Global Investment Bank. From 1995 to 2001, he served ns Head of investment banking and, prior to that, as \ Co-Head of mergers and acquisitions at Salomon Smith Barney. As Head of investment banking, Mr. Mestre led Salomon’s business j ;f            integration efforts arising from the various mergers that led to the creation of Citigroup. Prior to joining Salomon in 1977, Mr. Mestre ^ 8 practiced law at Geary Gottlieb Stecn & Hamilton LLP, ·’ *; ^1"' ^estre is a niember of the Executive Committee and past Chairman of the Board of WNYC and is Chairman of the Board of Cold Spring Harbor Laboratory. Mr. Mestre has a B.A. from Yale University and a J.D. from Harvard Law School. Eduardo G. Mestre Vice-Chairman evercore partners 43

 



 

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Introduction to Evercore Partners Confidential Evercore Advisory Principals r : ‘” : Saul Goodman is a Senior Managing Director in our advisory business with 15 years of relevant experience. · ] Prior to joining Evercore, Mr. Goodman was a Vice President in die Investment Banking Division of Lehman Brothers, where he | focused on media and telecommunications clients. Since joining Evercore, Mr, Goodman was involved in advising The Hearst :| : Corporation on its investment in Fitch Ratings, CBS on its merger with Viacom Inc., ACNielsen Corporation on its sale to VNU Hj            i            N.V., Robert Mondavi Corporation on its sale to Constellation Brands, Spectrasite Inc. on its merger with American Towers ffiiBi j^’wfe            Corporation and VNU N.V. on its sale to a private equity consortium. He also was involved with Evercore Capita! Partners’ |j||i§j|fl^H|||: investments in American Media, Inc. and Telenet Holding N.V. Mr. Goodman currently serves on the Boards of Directors of Telenet Holding N.V and of American Media, Inc. Mr. Goodman has a Saul D. Goodman g^g___from tne University of Florida and an M.B.A. from the Columbia University Graduate School of Business. Senior Managing Director Gil Ha is a Senior Managing Director in our advisor}’ business with 17 years of relevant experience. ; Prior to joining Evercore, Mr. Ha was a Managing Director at Rohatyn Associates LLC, Prior to Rohatyn Associates, Mr. Ha was a “ ^ana&*n8 Director and Co-Head of Deutsche Bank’s Telecommunications Group for the Americas, He was previously a Managing ^^rcct:or °f Lazard ‘n New York and began his investment banking career at Lehman Brothers. Mr. Ha specializes in providing financial and strategic advice to corporate clients. He has extensive experience advising clients on mergers and acquisitions, capital markets, leveraged finance and restructuring transactions and has advised on some of the largest transactions in recent years, particularly in the TMT sector. Gil H. Ha            Prior to his investment banking career, Mr. Ha was a senior consultant at Andersen Consulting (Accenrure). Senior Managing Director Mr. Ha has a B.S. from Columbia University, a B.S. from Allegheny College and an M.B A. from Columbia University Graduate School of Business. evercore partners 44

 



 

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Introduction to Evercore Partners confidential Evercore Advisory Principals gf^it^n’^rmmfifi^fft’^.-. William Hill:/ is a Senior Managing Director of the firm’s corporate advisory business. · i            Poor to joining Evercore, Mr. Hiltz was Head of the Global Energy Group at UBS Warburg and, prior to UBS’ acquisition of Dillon ] Read & Co. Inc., Head of the Energy Group at: Dillon Read since 1995, From 1982-1995, Mr. Hiltz was a Managing Director at Smith ] Barney where at various times lie headed the Energy Group, the High Yield and Merchant Banking Group, the Transportation Group > : and the General Industrial Group. Mr. I-Iiltz has 30 years of experience in die investment banking business, beginning in 1976 when 1 ‘le ^J:st )°’nec’ Dillon Read. ^^^^^^^^H-: Mr. Hiltz has extensive experience in the energy business including representing Louisiana Land and Exploration Company in its William O Hiltz            merger with Burlington Resources, Seagull Energy in its merger with Ocean Energy, Murphy Oil in its acquisition of ODECO and Senior Managing Director            Occidental Petroleum in its acquisition of Altura Energy. He also advised Continental Airlines in its 1993 reorganization and sale of a controlling interest to Air Partners. Since joining Evercore, Mr. Hiltz has advised General Mills on its acquisition of Pills bury, the divestiture of its interest in Ice Cream Partners and the divestiture of its interest in SVE to PepsiCo. He has advised CVS on its acquisition of Eckerd, its acquisition of Albertson’s free standing drugstores and its recently completed $28 billion merger with Caremark. He nas also advised EDS on the sale of UGS PLM, Swiss Re on its acquisition of GE’s reinsurance business, Tyco on its pending split-up into three separately traded companies, Credit Suisse on its sale of Winterthur, Novelis on its sale to Hindalco and Acjuila on its pending sale to Great Plains. Mr. Hiltz serves on die Board of Directors of Energy Partners, Ltd. and Davis Petroleum Corp. He is a former Trustee of the Salisbury School and currently serves as Chairman of the Board of Trustees of Lenox Hill Hospital and its affiliate, Manhattan Eye, Ear and Throat Hospital in New York. He received a B.A. in History and Government from Dartmouth College and an M.B.A. from The Wharton School at the University of Pennsylvania, ItM^^^fMSMaiaiSj; Jonathan Knee is a Senior Managing Director in our advisor)’ business with 17 years of relevant experience. 1 ^^^H5\ ;. I Prior to joining Evercore, Mr. Knee was a Managing Director and Co-head of the Media Group at Morgan Stanley. He was previously I >^^S|^: :! : *’’ Publishing Sector Head in die Communications, Media and Entertainment Group at Goldman, Sachs & Co. Since joining Evercore, I”I’^pSSsKi-: " !’ Mr. Knee has advised NTLon its acquisition ofTelewest, VNU N.V, on its sale to a private equity consortium, Freedom I ‘^^^^lif ^ :| Communications on its recapitalization, The Hearst Corporation on its investment in Fitch Ratings, Dow Jones on its purchase of O(K^^^W._| CBS MarketWatch and J.D. Power and Associates on its sale to McGraw-Hill. Mr. Knee is currently an Adjunct Professor at the I ^& I|B            Columbia University Graduate School of Business, where he teaches Media Mergers and Acquisitions and Media Strategy and serves ‘*"**” “ ""'” as the Director of die Media Program. ,,., .’.,.’ Mr , Knee currently serves on the Boards of Directors of Art Connection, Citizens’ Committee for Children of New York, National Senior Managing Director Women’s Law Center, New Alternatives for Children and the Yale Law School Fund. Mr. Knee has a J.D. from Yale University, an M.B.A. from Stanford University, an M.Sc. from Trinity College Dublin and a B.A. from Boston University. evercore partners 45

 



 

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Introduction to Evercore Partners Confidential Evercore Advisory Principals i ‘""'^^^^"'' l Timothy LaLonde is a Senior Managing Director and the Chief Operating Officer of our advisory business. Mr. LaLonde has 17 years of relevant experience. Prior to joining Evercore, he was an Executive Director at UBS Warburg. Since I            joining Evercore, Mr. LaLonde has advised on General Motors’ sale of a 51% interest in GMAC, AT&T’s acquisition of BellSouth, 1 [ NTL’s acquisition of Telewest, SBC’s acquisition of AT&T, EDS’ sale of UGS PLM, the sale of PanAmSat to an investor group, 1 Cingular’s acquisition of AT&T Wireless, and EPL’s unsolicited tender offer from Woodsidc Petroleum. H E’-^- J^H- Mr. LaLonde has a B.S.B. from the University of Minnesota, an M.Sc, from the London School of Economics and an M.B.A. from ^^^SslinG^^f: the Amos Tuck School of Business Administration, at Dartmouth College, Timothy G. LaLonde Senior Managing Director Francois Maisonrouge is a Senior Managing Director in our advisor;’ business with 15 years of relevant experience. : Prior to joining Evercore, Mr. Maisonrouge was Managing Director and Chairman of Life Sciences at Credit Suisse where he worked : extensively in the fields of pharmaceuticals, specialty pharmaceuticals, biotechnology and medical technology. At Credit Suisse, Mr. ; Maisonrouge was responsible for leading die firm’s relationships with large healthcare clients such as Johnson & Johnson, Schering- : Plough, Wyeth, GlaxoSmithKline, Roche and Teva, most notably in executing mergers and acquisitions and capital raising i            transactions. He is a member of the Board of Advisors of the Harvard Business School Health Care Initiative and was awarded with ; France’s “Ordre National du Merite” in 2003. Mr. Maisonrouge has an M.S. in Engineering from Ecole Centrale de Lyon and an M.B.A. from Harvard Business School. Francois Maisonrouge Senior Managing Director evercore partners 46

 



 

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Introduction to Evercore Partners confidential Evercore Advisory Principals ft ,-.-_-^_~~-..~—~~^.-_. Michael Price is a Senior Managing Director in our advisory business with 27 years of relevant experience. Prior to joining Evercore, he held various positions at FirstMark Communications Europe, which he co-founded, including Chairman and CEO. Prior to FirstMark. Mr. Price spent eleven years at Lazard, where he was a Managing Director and founded and led the : ‘ I ! ’ O t) firm’s global Telecom and Technology Group. : Since joining Evercore, Mr. Price has advised on SBC’s acquisition of AT&T, Cingular’s acquisition of AT&T Wireless, Scientific Atlanta’s sale to Cisco Systems, Flarion Technologies’ sale to Qualcomm, and Nextel Partners’ sale to Sprint. He serves on the Board of Overseers of the College of Arts and Sciences at the University of Pennsylvania and on the Board of the Rockefeller University Michael J. Price Council. Senior Managing Director Mr, Price has a B.S. from The Wharton School at the University of Pennsylvania and an M.B.A. from the Harvard Business School. | jjajBg!^ William Rcpko is a Senior Managing Director in our advisory business with 33 years of relevant experience. He is co-head of the I : firm’s restructuring practice. I            Prior to joining Evercore, Mr. Repko served as a Managing Director and head of The Restructuring Group at J.P. Morgan Chase & I ^°’> wlerele focused on providing comprehensive solutions to clients’ liquidity and reorganization challenges. Mr, Repko entered the banking world in 1973 with Manufacturers Hanover Trust, which after a series of mergers became j.P. Morgan Mr. Repko has a B.S. from Lehigh University. William Repko Senior Managing Director evercore partners 47

 



 

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Introduction to Evercore Partners Confidential Evercore Advisory Principals         .^JSii^H^S^SSJ^SS^^^SSSiSSSS^i, | pKr^yj^^ffiSll            Brian Roberts is a Senior Managing Director of the firm’s corporate advisory business. ! IffiB^:^ “J-S’f            Mr. Roberts joined Evercore Partners in January 2006 to build the firm’s San Francisco-based corporate advisory business. Since joining I IsJiltis ;Sv fefif            Evercore, Roberts has advised IronPort on its $830 million sale to Cisco, BlueLithium on its pending 5300 million sale to Yahoo!, | iP^rt|-::^:r^SIi            Blackbaud on its acquisitions of Target Software, Target Analysis Group and eTapeslry, Winternals on its sale to Microsoft and Orbital | tillifp ‘:.:^*pfl            Data on its sale to Citrix, Prior to Evercore, Roberts, spent five years at Microsoft where most recently., as a Corporate Vice President, he led Microsoft’s Corporate Development organization which handles all domestic and international acquisitions and investments for the company. One of Mr. Roberts’ last transactions was the acquisition of Groove Networks which led to the hiring of Ray Ozzie who replaced Bill Gates ,, . ,, *. ,,. as Chief Software Architect. In addition, Roberts was heavily involved in several significant transactions which did not close including Senior Managing Director ___ i ___... . .. San Francisco            the publicly disclosed §60 billion merger discussions with SAP. Roberts joined Microsoft after leaving Inktomi Corporation, where he was Vice President of Business Development and helped execute nearly $2 billion of transactions. Before working at Inktomi, Roberts spent a number of years on Wall Street providing M&A advisory services. Most recently he was a Vice President at Lazard Freres & Co, LLC and supported the firm’s technology and telecommunications effort. Roberts earned an MBA with distinction from Harvard University. lie previously earned a Bachelor of Arts degree in economics with highest distinction from the University of California at Berkeley, where he was awarded the Departmental Citation. Jane Sadowsky is a Senior Managing Director in our advisory business with 17 years of relevant experience. Prior to joining Evercore, Ms. Sadowsky was a Managing Director and the Co-Head of Citigroup’s (f/k/a Salomon Smith Barney) I            North America Power Group. Her clients included several leading independent power producers, several of the non-regulated * subsidiaries and spin-offs of regulated utilities, merchant traders and regulated utilities. Prior to joining Salomon Smith Barney in July 2QQO> ^s’ Sadowsky spent II years as an investment banker with Donaldson, Lufkin &Jenrette. Before focusing full time on the I            power industry, she had extensive experience in both in and out of court corporate restructurings and bankruptcies, and advised companies such as Wang Computers, Orion Pictures, Trump Organization and TWA, I            c j            i            Ms. Sadowsky has a BA from the University of Pennsylvania and has been an i nvestment banker since earning her MBA from Senior Managing Director            Wharton in 1989. evercore partners 48

 



 

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Introduction to Evercore Partners Confidential Evercore Advisory Principals ts ___.^ _,,,..-:. Stephen Schaible is a Senior Managing Director of the firm’s corporate advisory business, ‘::::: Prior to joining Evercore, Mr. Schaible was a Managing Director and head of Global Energy Investment Banking at Citigroup. I! Previously, he was Cidgroup’s head of Global Chemicals Investment Banking. Prior to joining Citigroup in early 2001, Mr. Schaible fs            was a Managing Director at J. P. Morgan & Co., where lie worked in New York, Tokyo and London, in both mergers and acquisitions W> and industry coverage roles. .. .!:;.. J C3 If            Over the course of his career, Mr. Schaible has advised many clients in the energy, chemicals, industrial and pharmaceutical industries, ·P            including ConocoPhillips in its acquisition of Burlington Resources; Lyondeil Chemical Company in its acquisitions of ARCO n, i            c u -uip            Chemical Company and Millennium Petrochemicals; Crompton Corporation in its acquisition of Great Lakes Chemical Corporation; Senior Managing Director            Dow Chemical in the creation of global joint ventures with Kuwait Petroleum; and Hoechst in the divestiture of its specialty chemicals business to Clariant. Mr. Schaible graduated cum laude from Princeton with a B.A. in History. | William Shutzer is a Senior Managing Dkector in our advisor)’’ business with 34 years of relevant experience, I            Prior Co joining Evercore, he was a Managing Director of Lehman Brothers, where he did both advisory work and was a principal in f            Lehman’s Merchant Banking Group. Prior to rejoining Lehman in 2000, Mr, Shutzer was the President of Furmnn Selz, where he I            coordinated its sale to ING Baring and subsequently became Executive Vice President of ING Baring Furman Selz. Prior to joining I llifeliPtiiiPl||P<lt^l’ s I            Furman Selz in 1994, Mr. Shutzer spent 22 years at Lehman Brothers in various positions, including Head of Corporate Finance. 1 — : :! ‘ ‘ ‘: I 1 Since joining Evercore, Mr. Shutzer has advised Levi Strauss & Co., Cox Enterprises, and Hallmark Cards, among other clients, on a 1 variety of matters. Mr. Shutzer is currently a Director of Tiffany & Co., JupitcrMcdia Corp., CSK Auto Corp., Turbochef ,,,,.,,. “.’ “_, Technologies, Inc., RSI Holding Co. and Test Equity LLC. William A. Shutzer & 6J Senior Managing Director            jvir. Shutzcr has a B.A. from Harvard College and an M.B.A. from the Harvard Business School. evercore partners 49

 



 

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Introduction to Evercore Partners Confidential Evercore Advisory Principals Mark Vander Ploeg is a Senior Managing Director in our advisor)’ business with 30 years of relevant experience. Pri°r to j0"111!? Evercore, Mr. Vander Plocg worked 12 years with Merrill Lynch where he served as Vice Chairman of Investment Banking, Co-Head of Consumer Industries and Head of West Coast Operations. At Merrill Lynch, Mr. Vander Ploeg was responsible for managing the firm’s relationships with such key retail and consumer companies as Lowe’s, Target, SUPERVALU, SYSCO, Cargill, Safeway, Molson Coors, 7~Eieven and Radio-Shack, among others, focusing primarily on strategic advice and transactions. Prior to joining Merrill Lynch, Mr, Vander Ploeg was a Managing Director at Salomon Brothers. IIBJf^l He is involved with several advisory boards at Stanford University and is on the Board of Directors of Project Pericles in New York. Mark Vander Ploeff ^r’ Vander Ploeg has a B.A. from Macalester College where he is Board Chair-Emeritus and an M.B.A. from The University of Senior Managing Director CrtlCagO. f^ff^^^^K1- Jane Wheeler is a Senior Managing Director in our advisory business with 15 years of relevant experience. Prior to joining Evercore, Ms. Wheeler was the Managing Dkector heading the securities industry and financial technology investment banking business at Morgan Stanley. She spent twelve years at Morgan Stanley in New York working on a variety of financings as well as mergers and acquisitions. Before that, she spent two years at JO Hambro Magan in London working on European mergers and acquisitions. Since joining Evercore, Ms. Wheeler has advised The Bank of New York in its formation of BNY ConvergEx, through the combination of BNY Securities Group’s trade execution business with Eze Casde Software and an investment from GTCR Colder Rauner. She also advised TA Associates on its acquisition of eSeclending, Reuters in the creation of FX Market-Space, its joint venture with the Chicago Mercantile Exchange, Hotspot FX in its sale to Knight, E*TRADE FINANCIAL Jane Wheeler            in its acquisitions of Harris direct from Bank of Montreal and BrownCo from JP Morgan, and Silver Lake Partners on its sale of Senior Managing Director            Instinct to Nomura Holdings. Ms. Wheeler was named to the Institutional Investor Online Finance 40 in both 2005 and 2006. She currently serves on the Board of Trustees of the Brearley School. Ms. Wheeler has a B.A. from the University of Virginia. evercore partners 50

 



 

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Introduction to Evercore Partners Confidential Evercore Advisory Principals I            jSSS^fek            David Ying is a Senior Managing Director in our advisory business with 28 years of relevant experience. He is co-head of the firm’s I ‘ restructuring practice. j ; Prior to joining Evercore, Mr. Ying has had extensive experience leading successful restructuring advisory groups. Most recendy, he 1 ;: was for two years a Managing Director of Miller Buckfire Ying & Co., LLC, a boutique restructuring advisory firm. Before that he I :‘K. spent six years as a Senior Managing Director of JLL Partners, a private equity investment firm that invests in turnaround situations. t^B’SP’ Prior to that he led restructuring groups at Donaldson Lufkin & Jenrette, Smith Barney and Drexel Burnham Lambert. Mr. Ying has a B.S. from the Massachusetts Institute of Technology and an M.B.A. from The Wharton School at the University of David Ying Pennsylvania. Senior Managing Director evercore partners 51

 


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