Basic Merger Model

($ in Millions Except Per Share Amounts)

Transaction Assumptions

Purchase Price: $600

% Cash: 33.3% Cash Used:
% Debt: 33.3% Debt Issued:
% Stock: 33.3% New Shares Issued:
Foregone Cash Interest Rate: 4.0% Debt Interest Rate:

Buyer - Financial Profile Seller - Financial Profile

Share Price: $10.00 Share Price:

Shares Outstanding: 100.0 Shares Outstanding:
Market Cap: $1,000 Market Cap:
Tax Rate: 40% Tax Rate:

Buyer - Income Statement Seller - Income Statement

Year 1 Year 2
Revenue: $200 $250 Revenue:
Cost of Goods Sold: $40 $50 Cost of Goods Sold:

Operating Expenses: $80 $90 Operating Expenses:

Operating Income: $80 $110 Operating Income:

Interest Income / (Expense): $10 $10 Interest Income / (Expense):
Pre-Tax Income: $90 $120 Pre-Tax Income:
Income Taxes: $36 $48 Income Taxes:

Net Income: $54 $72 Net Income:

Earnings Per Share (EPS): $0.54 $0.72 Earnings Per Share (EPS):

Combined Income Statement

Year 1 Year 2
Combined Revenue: $300 $360
Cost of Goods Sold: $70 $82

Operating Expenses: $110 $123

Operating Income: $120 $155

 Interest Income / (Expense): $10 $10
Foregone Interest on Cash: ($8) ($8)
Interest Paid on New Debt: ($18) ($18)
Pre-Tax Income: $104 $139
Income Tax Provision: $42 $56

Net Income: $62 $83

Earnings Per Share (EPS): $0.52 $0.70

Shares Outstanding: 120.0 120.0

Accretion / Dilution: ($0.02) ($0.02)

Accretion / Dilution %: (3.7%) (3.5%)
 $200
$200
20.0
9.0%

$10.00
50.0
$500
35%

Year 1 Year 2
$100 $110
$30 $32

$30 $33

$40 $45
$0 $0
$40 $45
$14 $16

$26 $29

$0.52 $0.59