The document provides a detailed financial analysis of a leveraged buyout (LBO) transaction, including funding sources, uses of funds, and exit analyses over several years. It includes projected revenue, EBITDA, and equity value for 2008 through 2013, along with credit statistics and operating assumptions. The information highlights calculations related to debt repayment, goodwill, and sensitivity analyses for potential exit multiples.

1. Project Name
LBO Transaction Summary
($ in millions, except per share data)
Transaction Assumptions Sources & Uses of Funds
Transaction Date December 2008 Sources Amount Percent Rate Term Fees
Months to End of Year 12 Existing Cash $32.5 22.9%
Minimum Operating Cash $5.0 Line of Credit* 0.0 0.0% 5.6% 5 years 1.5%
12 Month LIBOR 2.80% Senior Debt - Term A 34.8 24.5% 8.3% 5 years 1.5%
Senior Debt - Term B 0.0 0.0% 9.3% 8 years 1.5%
Trading Information Sub Debt 0.0 0.0% 11.8% 10 years 2.0%
Deal Current Rollover Debt 0.0 0.0% 0.0% 0 years 0.0%
Share Price $10.00 $2.03 Equity 74.5 52.6% 1.0%
Diluted Shares 13.3 13.2 Total Sources $141.8 100.0%
Equity Market Value $132.9 $26.9 *Available Line of Credit
Plus: Debt Outstanding 4.7 4.7 Uses $17.5
Less: Cash & Equivalents 37.5 37.5 Purchase of Equity $132.9 93.7%
Enterprise Value $100.1 ($5.9) Debt Repayment 4.7 3.3%
Working Capital 0.0 0.0%
2008P EBITDA Multiple 5.8x -0.3x Financing Fees 1.5 1.1%
Transaction Expenses 2.7 1.9% 2.0%
Debt Capacity Analysis Total Uses $141.8 100.0%
2008P EBITDA $17.4
Senior Debt / EBITDA Coverage 2.0x Equity IRR Calculation
Senior Debt Capacity $34.8 Exit LTM EBITDA Multiple 2011 Exit 2012 Exit 2013 Exit
Sub Debt / EBITDA Coverage 0.0x 5.0x 8.7% 12.5% 14.5%
Sub Debt Capacity $0.0 6.0x 16.1% 17.7% 18.3%
7.0x 22.6% 22.2% 21.7%
Goodwill Calculation 8.0x 28.5% 26.3% 24.7%
Purchase Price of Equity $132.9
Plus: Transaction Costs 4.2 Credit Statistics
Less: Book Value of Equity 90.0 2008PF 2009P 2010P
Total Deal Goodwill $47.1 EBITDA / Interest Exp. 6.6x 8.0x 9.0x
EBITDA - CapEx / Interest Exp. 2.6x 4.4x 5.4x
% of Goodwill Allocated to Intangibles 20.0% Total Debt / EBITDA 2.0x 1.7x 1.1x
Amount Allocated to Intangibles $9.4 EBITDAR / Adj. Interest Exp. 3.6x 3.7x 3.9x
Amortization Period 7 years EBITDAR - CapEx / Adj. Interest Exp. 2.9x 3.2x 3.3x
Annual Amortization of Intangibles $1.3 Adj. Total Debt / EBITDAR 6.0x 6.0x 5.7x
Amount Allocated to Goodwill $37.7
Cumulative Senior 2009P 2010P 2011P 2012P 2013P
Debt Paydown 20.0% 40.0% 62.4% 93.2% 100.0%

2. Project Name
Returns Analysis
($ in millions, except per share data)
2011 Exit Analysis Sensitivity Analysis - 2011 Exit
Years to Exit 3.0 Price LTM EBITDA Exit Multiple Premium
Exit EBITDA Multiple 5.0x 6.0x 7.0x 8.0x 8.7% 5.0x 6.0x 7.0x
Exit LTM EBITDA 20.6 20.6 20.6 20.6 $8.00 8.7% 8.7% 8.7% 294.1%
Implied Enterprise Value $103.0 $123.6 $144.2 $164.7 $9.00 8.7% 8.7% 8.7% 343.3%
$10.00 8.7% 8.7% 8.7% 392.6%
Less: Debt Outstanding 13.1 13.1 13.1 13.1 $11.00 8.7% 8.7% 8.7% 441.9%
Plus: Cash & Equivalents 5.0 5.0 5.0 5.0 $12.00 8.7% 8.7% 8.7% 491.1%
Implied Equity Value $94.9 $115.5 $136.1 $156.7
Implied IRR 8.7% 16.1% 22.6% 28.5%
Implied Return Multiple 1.3x 1.5x 1.8x 2.1x
2012 Exit Analysis Sensitivity Analysis - 2012 Exit
Years to Exit 4.0 Price LTM EBITDA Exit Multiple Premium
Exit EBITDA Multiple 5.0x 6.0x 7.0x 8.0x 12.5% 5.0x 6.0x 7.0x
Exit LTM EBITDA 23.1 23.1 23.1 23.1 $8.00 12.5% 12.5% 12.5% 294.1%
Implied Enterprise Value $115.7 $138.9 $162.0 $185.2 $9.00 12.5% 12.5% 12.5% 343.3%
$10.00 12.5% 12.5% 12.5% 392.6%
Less: Debt Outstanding 2.3 2.3 2.3 2.3 $11.00 12.5% 12.5% 12.5% 441.9%
Plus: Cash & Equivalents 5.0 5.0 5.0 5.0 $12.00 12.5% 12.5% 12.5% 491.1%
Implied Equity Value $118.4 $141.5 $164.7 $187.8
Implied IRR 12.5% 17.7% 22.2% 26.3%
Implied Return Multiple 1.6x 1.9x 2.2x 2.5x
2013 Exit Analysis Sensitivity Analysis - 2013 Exit
Years to Exit 5.0 Price LTM EBITDA Exit Multiple Premium
Exit EBITDA Multiple 5.0x 6.0x 7.0x 8.0x 14.5% 5.0x 6.0x 7.0x
Exit LTM EBITDA 25.9 25.9 25.9 25.9 $8.00 14.5% 14.5% 14.5% 294.1%
Implied Enterprise Value $129.6 $155.5 $181.4 $207.3 $9.00 14.5% 14.5% 14.5% 343.3%
$10.00 14.5% 14.5% 14.5% 392.6%
Less: Debt Outstanding 0.0 0.0 0.0 0.0 $11.00 14.5% 14.5% 14.5% 441.9%
Plus: Cash & Equivalents 15.6 15.6 15.6 15.6 $12.00 14.5% 14.5% 14.5% 491.1%
Implied Equity Value $145.2 $171.1 $197.0 $222.9
Implied IRR 14.5% 18.3% 21.7% 24.7%
Implied Return Multiple 1.9x 2.3x 2.6x 3.0x

3. Project Name
Summary Financials and Credit Analysis
($ in millions, except per share data)
FY December 31,
2008PF 2009P 2010P 2011P 2012P 2013P
Unadjusted Operating Statistics
Revenue $274.0 $271.5 $276.9 $290.8 $305.3 $320.6
EBITDA 17.4 16.5 18.2 20.6 23.1 25.9
EBIT 5.4 3.2 4.5 6.1 7.7 9.5
Capital Expenditures 10.5 7.4 7.3 8.9 9.1 9.3
Interest Expense 2.6 2.1 2.0 1.4 0.6 0.1
Total Debt 34.8 27.8 20.9 13.1 2.3 0.0
Total Capitalization 109.3 102.7 97.3 92.5 86.2 89.8
Unadjusted Credit Statistics
EBITDA / Interest Expense 6.6x 8.0x 9.0x 14.6x 36.2x 265.7x
EBITDA - CapEx / Interest Expense 2.6x 4.4x 5.4x 0.5x 3.3x N.A.
Total Debt / EBITDA 2.0x 1.7x 1.1x 0.6x 0.1x 0.0x
Total Debt / Total Capitalization 31.8% 27.1% 21.4% 14.1% 2.7% 0.0%
Cumulative Senior Debt Paydown 20.0% 40.0% 62.4% 93.2% 100.0%
Adjusted Operating Statistics
EBITDAR $53.3 $52.1 $54.5 $58.7 $63.2 $67.9
Adjusted Interest Expense 14.6 13.9 14.1 14.1 14.0 14.1
Adjusted Total Debt 322.1 312.5 311.2 317.9 322.5 336.1
Adjusted Total Capitalization 396.6 387.4 387.7 397.4 406.3 425.9
Adjusted Credit Statistics
EBITDAR / Adj. Interest Exp. 3.6x 3.7x 3.9x 4.2x 4.5x 4.8x
EBITDAR - CapEx / Adj. Interest Exp. 2.9x 3.2x 3.3x 3.5x 3.9x 4.2x
Adj. Total Debt / EBITDAR 6.0x 6.0x 5.7x 5.4x 5.1x 4.9x
Adj. Total Debt / Adj. Total Cap. 81.2% 80.7% 80.3% 80.0% 79.4% 78.9%
Adjustment Calculations
Rent Expense $35.9 $35.6 $36.3 $38.1 $40.0 $42.0
Rent Factor 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x
Adjustment to Total Debt $287.3 $284.7 $290.4 $304.9 $320.1 $336.1
Expense Attributable to Interest 33.3% 33.3% 33.3% 33.3% 33.3% 33.3%
Adjustment to Interest Expense $12.0 $11.9 $12.1 $12.7 $13.3 $14.0

4. Project Name
Operating Assumptions
($ in millions, except per share data)
FY December 31, FY December 31,
2006A 2007A 2008P 2009P 2010P 2011P 2012P 2013P
Income Statement
Revenue Growth 0.0% 3.2% (0.1%) (0.9%) 2.0% 5.0% 5.0% 5.0%
EBITDA Growth (12.2%) (40.0%) (14.7%) (5.0%) 10.4% 13.0% 12.4% 11.9%
Net Income Growth (13.6%) (53.7%) (47.9%) (90.0%) 324.5% 86.8% 51.7% 34.1%
COGS (% of Revenue) 50.5% 53.7% 55.5% 56.0% 56.0% 56.0% 56.0% 56.0%
SG&A (% of Revenue) 23.2% 25.7% 25.0% 24.8% 24.3% 23.8% 23.3% 22.8%
Rent Expense (% of Revenue) 13.5% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1%
Interest Income (% of Cash) 4.9% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6%
Other Income (% of Revenue) 0.0% (0.1%) (0.1%) 0.0% 0.0% 0.0% 0.0% 0.0%
Effective Tax Rate 39.0% 34.6% 36.6% 37.5% 37.5% 37.5% 37.5% 37.5%
Gross Margin 49.5% 46.3% 44.5% 44.0% 44.0% 44.0% 44.0% 44.0%
EBITDA Margin 12.8% 7.4% 6.3% 6.1% 6.6% 7.1% 7.6% 8.1%
Net Income Margin 5.8% 2.6% 1.3% 0.1% 0.6% 1.0% 1.5% 1.9%
Balance Sheet
Accounts Receivable Days 6.4 6.4 6.6 6.6 6.6 6.6 6.6
Inventory Turnover 4.5x 5.5x 5.5x 5.5x 5.5x 5.5x 5.5x
Prepaid Expenses (% of Revenue) 2.7% 0.9% 2.0% 2.2% 2.2% 2.2% 2.2% 2.2%
Other Current Assets (% of Revenue) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other Assets (% of Revenue) 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
Accounts Payable Days 28.3 21.8 20.9 20.9 20.9 20.9 20.9
Accrued Expenses (% of Revenues) 0.6% 0.7% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9%
Other Current Liabilities (% of Revenue) 4.3% 5.2% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8%
Other Liabilities (% of Revenue) 6.7% 5.9% 6.0% 6.2% 6.2% 6.2% 6.2% 6.2%
Store Buildout
Beginning Number of Stores 306 296 297 295 292 297 307 317
New Stores 17 10 14 5 5 10 10 10
Closed Stores 27 9 16 8 0 0 0 0
Stores Opened, net (10) 1 (2) (3) 5 10 10 10
Ending Number of Stores 296 297 295 292 297 307 317 327
Net Store Growth -3.3% 0.3% -0.7% -1.0% 1.7% 3.4% 3.3% 3.2%
New Store Capex $5.1 $3.0 $4.2 $1.5 $1.5 $3.0 $3.0 $3.0
Capex per New Store $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 $0.3 $0.3
Maintenance Capex $7.2 $9.1 $6.3 $5.9 $5.8 $5.9 $6.1 $6.3
Maintenance Capex, per Existing Store $0.02 $0.03 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02
Total Capex $12.3 $12.1 $10.5 $7.4 $7.3 $8.9 $9.1 $9.3

5. Project Name
Actual & Projected Income Statement
($ in millions, except per share data)
FY December 31, FY December 31,
2006A 2007A 2008P 2009P 2010P 2011P 2012P 2013P
Revenue $265.9 $274.5 $274.0 $271.5 $276.9 $290.8 $305.3 $320.6
COGS 134.2 147.5 152.2 152.1 155.2 162.9 171.1 179.6
Gross Profit 131.7 127.0 121.9 119.4 121.8 127.9 134.3 141.0
SG&A 61.8 70.7 68.6 67.3 67.3 69.2 71.1 73.1
EBITDAR $69.9 $56.3 $53.3 $52.1 $54.5 $58.7 $63.2 $67.9
Rent Expense 36.0 36.0 35.9 35.6 36.3 38.1 40.0 42.0
EBITDA $33.9 $20.4 $17.4 $16.5 $18.2 $20.6 $23.1 $25.9
Depreciation of Existing Assets 11.4 12.1 12.0 12.0 12.0 12.0 12.0 12.0
Depreciation of New CapEx 0.0 0.0 0.0 0.0 0.4 1.2 2.1 3.0
Amortization of Intangibles 0.0 0.0 0.0 1.3 1.3 1.3 1.3 1.3
Total D&A 11.4 12.1 12.0 13.3 13.7 14.5 15.4 16.4
EBIT $22.6 $8.2 $5.4 $3.2 $4.5 $6.1 $7.7 $9.5
Other Income 0.0 0.2 0.3 0.0 0.0 0.0 0.0 0.0
Interest Income (2.5) (2.8) (0.7) (0.1) (0.1) (0.1) (0.1) (0.2)
Unused Credit Line Fee 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Existing Debt Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Line of Credit Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Senior Debt - Term A Interest Expense 0.0 0.0 0.0 2.6 2.0 1.4 0.6 0.1
Senior Debt - Term B Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Sub Debt Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Other Expense (2.5) (2.6) (0.4) 2.6 2.0 1.4 0.6 (0.0)
Pretax Income 25.1 10.8 5.8 0.6 2.5 4.7 7.1 9.5
Income Taxes 9.8 3.7 2.1 0.2 0.9 1.8 2.7 3.6
Net Income $15.3 $7.1 $3.7 $0.4 $1.6 $2.9 $4.4 $6.0

6. Project Name
Actual & Projected Balance Sheet
($ in millions, except per share data)
FY December 31, Current FY December 31,
2006A 2007A 2008P Adjust. 2008PF 2009P 2010P 2011P 2012P 2013P
Assets
Cash & Equivalents $61.5 $50.1 $37.5 ($32.5) $5.0 $3.0 $4.3 $5.0 $5.0 $15.6
Accounts Receivable 4.8 4.8 4.8 4.8 5.0 5.0 5.3 5.5 5.8
Inventory 34.8 30.5 25.0 25.0 30.0 28.1 29.5 30.9 32.5
Prepaid Expenses 7.2 2.5 5.6 5.6 6.0 6.1 6.4 6.7 7.1
Other Current Assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Current Assets 108.3 87.9 73.0 (32.5) 40.5 44.0 43.5 46.2 48.2 61.0
Net PP&E 50.5 49.3 46.4 46.4 41.8 36.8 32.5 27.6 21.9
Existing Goodwill & Intangibles 0.1 11.5 11.4 11.4 11.4 11.4 11.4 11.4 11.4
Acquisition Goodwill 0.0 0.0 0.0 37.7 37.7 37.7 37.7 37.7 37.7 37.7
Acquisition Intangibles 0.0 0.0 0.0 9.4 9.4 8.1 6.7 5.4 4.0 2.7
Other Assets 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5
Total Assets $159.2 $149.1 $131.2 $14.6 $145.8 $143.4 $136.5 $133.6 $129.4 $135.2
Liabilities & Shareholders' Equity
Accounts Payable $11.7 $10.5 $7.0 $7.0 $11.0 $8.9 $9.3 $9.8 $10.3
Accrued Expenses 1.7 1.9 2.7 2.7 2.5 2.6 2.7 2.8 3.0
Other Current Liabilities 11.5 14.3 10.4 10.4 10.4 10.6 11.1 11.7 12.2
Total Current Liabilities 24.9 26.7 20.0 0.0 20.0 23.9 22.0 23.1 24.3 25.5
Other Liabilities 17.8 16.3 16.5 16.5 16.8 17.2 18.0 18.9 19.9
Existing Debt 0.0 5.9 4.7 (4.7) 0.0 0.0 0.0 0.0 0.0 0.0
New Line of Credit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
New Senior Debt - Term A 0.0 0.0 0.0 34.8 34.8 27.8 20.9 13.1 2.3 0.0
New Senior Debt - Term B 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
New Sub Debt 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Accumulated PIK Interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Liabilities 42.7 48.9 41.2 30.1 71.3 68.5 60.0 54.2 45.6 45.4
Existing Shareholders' Equity 116.5 100.3 90.0 (90.0) 0.0 0.0 0.0 0.0 0.0 0.0
New Common Stock 0.0 0.0 0.0 74.5 74.5 74.5 74.5 74.5 74.5 74.5
New Retained Earnings 0.0 0.0 0.0 0.0 0.0 0.4 1.9 4.9 9.3 15.3
Total Shareholders' Equity 116.5 100.3 90.0 (15.4) 74.5 74.9 76.5 79.4 83.9 89.8
Total Liabilities & Shlds. Equity $159.2 $149.1 $131.2 $14.6 $145.8 $143.4 $136.5 $133.6 $129.4 $135.2

7. Project Name
Projected Cash Flow Statement
($ in millions, except per share data)
FY December 31,
2009P 2010P 2011P 2012P 2013P
Net Income $0.4 $1.6 $2.9 $4.4 $6.0
Depreciation on Existing Assets 12.0 12.0 12.0 12.0 12.0
Depreciation on New CapEx 0.0 0.4 1.2 2.1 3.0
Amortization of Intangibles 1.3 1.3 1.3 1.3 1.3
Change in Accounts Receivable (0.2) (0.0) (0.3) (0.3) (0.3)
Change in Inventory (5.0) 2.0 (1.4) (1.5) (1.5)
Change in Prepaid Expenses (0.4) (0.1) (0.3) (0.3) (0.3)
Change in Other Assets (0.0) (0.0) (0.0) (0.0) (0.0)
Change in Accounts Payable 4.0 (2.1) 0.4 0.5 0.5
Change in Accrued Expenses (0.2) 0.0 0.1 0.1 0.1
Change in Other Liabilities 0.4 0.5 1.4 1.5 1.5
Cash Flow from Operations $12.4 $15.6 $17.4 $19.9 $22.3
Capital Expenditures ($7.4) ($7.3) ($8.9) ($9.1) ($9.3)
Cash Flow from Investing ($7.4) ($7.3) ($8.9) ($9.1) ($9.3)
Repayments of Line of Credit $0.0 $0.0 $0.0 $0.0 $0.0
Repayments of Senior Debt - Term A (7.0) (7.0) (7.8) (10.7) (2.3)
Repayments of Senior Debt - Term B 0.0 0.0 0.0 0.0 0.0
Repayments of Sub Debt 0.0 0.0 0.0 0.0 0.0
Additions to PIK Interest 0.0 0.0 0.0 0.0 0.0
Cash Flow from Financing ($7.0) ($7.0) ($7.8) ($10.7) ($2.3)
Net Cash Flow ($2.0) $1.3 $0.7 ($0.0) $10.6
Beginning Cash & Equivalents 5.0 3.0 4.3 5.0 5.0
Ending Cash & Equivalents $3.0 $4.3 $5.0 $5.0 $15.6

8. Project Name
Projected Debt Schedule
($ in millions, except per share data)
FY December 31,
2009P 2010P 2011P 2012P 2013P 12 Month LIBOR 2.80%
Cash Flow Available to Repay Debt $10.0 $11.2 $12.8 $15.7 $18.0
Minimum Cash Balance 5.0 5.0 5.0 5.0 5.0
Net Cash Available $5.0 $6.2 $7.8 $10.7 $13.0
Terms
Line of Credit Availability $17.5
Beginning Balance $0.0 $0.0 $0.0 $0.0 $0.0 Unused Fee 0.25%
Borrowings / (Repayment) 0.0 0.0 0.0 0.0 0.0 Spread 2.8%
Ending Balance 0.0 0.0 0.0 0.0 0.0 Total Rate 5.6%
Interest Expense 0.0 0.0 0.0 0.0 0.0 Term 5 years
Unused Credit Line Fee $0.0 $0.0 $0.0 $0.0 $0.0 Type Bullet
Senior Debt - Term A Terms
Beginning Balance $34.8 $27.8 $20.9 $13.1 $2.3 Spread 5.5%
Mandatory Amortization 20.0% 20.0% 20.0% 20.0% 20.0% Total Rate 8.3%
Mandatory Repayment (7.0) (7.0) (7.0) (7.0) (2.3) Term 5 years
Additional Repayment 0.0 0.0 (0.8) (3.8) 0.0 Type Amortize
Ending Balance 27.8 20.9 13.1 2.3 0.0
Net Cash Available (2.0) (0.7) 0.0 0.0 10.6
Interest Expense $2.6 $2.0 $1.4 $0.6 $0.1
Senior Debt - Term B Terms
Beginning Balance $0.0 $0.0 $0.0 $0.0 $0.0 Spread 6.5%
Mandatory Amortization 0.0% 0.0% 0.0% 0.0% 0.0% Total Rate 9.3%
Mandatory Repayment 0.0 0.0 0.0 0.0 0.0 Term 8 years
Additional Repayment 0.0 0.0 0.0 0.0 0.0 Type Bullet
Ending Balance 0.0 0.0 0.0 0.0 0.0
Net Cash Available (2.0) (0.7) 0.0 0.0 10.6
Interest Expense $0.0 $0.0 $0.0 $0.0 $0.0
Sub Debt Terms
Beginning Balance $0.0 $0.0 $0.0 $0.0 $0.0 Spread 9.0%
Additional Repayment 0.0 0.0 0.0 0.0 0.0 Total Rate 11.8%
Ending Balance 0.0 0.0 0.0 0.0 0.0 PIK Interest 0.0%
Interest Expense 0.0 0.0 0.0 0.0 0.0 Term 10 years
PIK Interest Expense $0.0 $0.0 $0.0 $0.0 $0.0 Type Bullet
Total Cumulative Interest Expense $2.6 $4.6 $6.0 $6.7 $6.8
Cumulative Senior Debt Paydown 20.0% 40.0% 62.4% 93.2% 100.0%