Toys R Us LBO Model Blank

These spreadsheet exhibits relate to the case The Toys “R” Us LBO: Shopping for Toys,
Case #5-107-002.
©2007 by the Kellogg School of Management, Northwestern University. This case was
prepared by Professor David Stowell and Matthew Raino ’07. Cases are developed solely
as the basis for class discussion. Cases are not intended to serve as endorsements,
sources of primary data, or illustrations of effective or ineffective management. To order
copies or request permission to reproduce materials, call 847-491-5400 or e-mail
cases@kellogg.northwestern.edu. No part of this publication may be reproduced, stored
in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means
—electronic, mechanical, photocopying, recording, or otherwise—without the permission
of the Kellogg School of Management.
Instructions
Be sure enable iterative calculations, set to at least 1000 iterations.
1. Review the assumptions in the "Static Model Assumptions" section of the model
Do not change any of the assumptions on these worksheets
Become familiar with the sources and uses of the transaction
This model assumes the transaction closed on January 29, 2005 (Toys' fiscal year-end). The actual closing date was July 21, 2005
The case manager section on the bottom of the "Case Manager" worksheet allows you to store 5 operating models in the model at once
Cell "G65" is the trigger to drive which operating case is currently running through the model
2. Review "Operating Model" section to develop operating cases

The model has the ability to hold 5 operating cases at once
Cells with yellow highlighting and blue text are assumptions which can be changed to drive your operating model
You should develop a base case, at least one downside case and one upside case
Developing the cases will allow you to understand the risk / return profile of the deal - by analyzing potential different outcomes
Operating cases should be based on your industry analysis by segment based on materials in the case and your general view on the industries
Default operating case in each scenario is zero growth and constant margins - (e.g., flat EBITDA over projection period)
Assumptions should be changed on each segment tab only - all the numbers flow into a summary financial tab which drives the model
In the Toys R Us - Domestic sections - do not assume more than 150 stores are divested
Remember: only change inputs in the "Operating Model" section of the model and only change cells highlighted in yellow and blue text
3. Analyze "Model Outputs" Section to understand how operating assumptions impact the LBO model
Do not change any cells within the "Model Outputs" section - all outputs are from operating model assumptions
Analyze credit statistics and returns to evaluate the risk / return profile of the transaction
4. Based on outputs from model - use the "Exhibits for Presentation" section to complete your PowerPoint Analysis of the transaction
The exhibits in this section do not need to be altered however feel free to add other outputs you deem relevant
Page 2 11/03/2021 / 17:43:44

Key Inputs & Assumptions
Key Inputs
Units in Model ($ in millions)
Fiscal Year Ending For the FYE January 31
First Year in Model 2003
Market Interest Rate Assumptions

3-Month LIBOR in January 2005 2.75%
LIBOR Step-up Throughout Projection Period 0.50%
Maximum LIBOR in Model 6.00%
Interest Earned on Cash on Balance Sheet 2.75%
Interest Earned on Cash Step-Up 0.50%
Maximum Interest Rate on Cash on Balance Sheet 6.25%
Working Capital Assumptions

Constant days / turns for current assets and current liabilities
Annual Changes in Long-Term Assets 0.0
Annual Changes in Long-Term Liabilities 0.0
Other Assumptions
Tax Rate 35.0%
Assumed Annual Dividends 0
Model Assumptions
For Simplicity - model assumes deal close at end of FYE 2005 - no stub period calculation for July 21, 2005 close
Only sponsors invest in the equity at close - e.g., no co-invest from management
10% option pool for new management - options strike at sponsor purchase price (proxy for restricted stock given to mgmt)
Sponsors take no management fees during investment hold
All equity invested in deal is common - no preferred equity (or associated dividends)
All debt is cash pay - no PIK option
All transaction fees are expensed at close
Existing Debt & Senior Credit Facility is prepaid - excess cash flow generated will accumulate on balance sheet
No Changes in long-term assets or long-term liabilities (workings capital changes on current assets and current liabilities)
For inventory turn calculation - turns based on COGS & SG&A to reconcile with disclosure by segment
No amortization of old or new goodwill
No use of deferred taxes - for simplicity, one tax rate is used
Transaction Assumptions
Purchase Price per Share $26.75

Debt Assumed by Consortium 2,312.0
Cash Remaining on the Balance Sheet 1,247.0
Initial Management Investment $0.0

Management Option Pool 10.0%
Rates on New Debt LIBOR Spread Fixed Rate

Debt Assumed by Consortium 6.50%
Senior Secured Credit Facility 3.50%
Unsecured Bridge Loan 11.00%
Secured European Bridge Loan 9.00%
Mortgage Loan Agreements 8.00%
Note: Debt rates are estimated
Case Manager
Base Case 1
Upside Case 2
Downside Case 3
Open Case #1 4
Open Case #2 5
Active Case Base Case 1 <---Case Trigger
Minimum Cash on Balance Sheet (1) $1,247.0
(1) Based on cash on bal sheet at end of FY 2005 and cash used in deal.
Assumption is this is adequate level of cash to support business
Page 3 11/03/2021 / 17:43:44
Sources & Uses
($ in millions)
Sources Uses
Cash on Balance Sheet $956 Purchase of Common Stock $5,900
Senior Secured Credit Facility 700 Purchase of Stock Options and Restricted Stock 227
Unsecured Bridge Loan 1,900 Settlement of Equity Security Interests 114
Secured European Bridge Loan 1,000 Purchase of all Warrants 17
Mortgage Loan Agreements 800 Transaction Fees 362
Sponsor Equity 1,300 Severance and Bonus Payments 36
Total $6,656 $6,656
Summary of Fees
Advisory Fees & Expenses $78
Financing Fees 135
Sponsor Fees 81
Other 68
Total $362
Note 1: Senior secured credit facility has $2.0 billion of availability.

Note 2: This sources and uses table reflects actual figures from the Toys transaction that closed on July 21, 2005: the $956 million in cash on
balance sheet is from the actual transaction, and will not match the year-end cash balance on January 29, 2005.
Source: Toys R Us - Form 10-Q July 30, 2005
Page 4 11/03/2021 / 17:43:44

Consolidated Balance Sheet
($ in millions) Actual For the Fiscal Year Ended

1/31/2004 1/29/2005
ASSETS
Cash and Cash Equivalents $1,432 $1,250
Short-Term Investments 571 953
Accounts and Other Receivables 146 153
Merchandise Inventories 2,094 1,884
Net Property Assets Held for Sale 163 7
Current Portion of Derivative Assets 162 1
Prepaid Expenses and Other Current Assets 161 159
Total Current Assets $4,729 $4,407
Property, Plant & Equipment

Real Estate, net $2,165 $2,393
Other, net 2,274 1,946
Total PP&E $4,439 $4,339
Goodwill, net 348 353

Derivative Assets 77 43
Deferred Tax Asset 399 426
Other Assets 273 200
Total Assets $10,265 $9,768
LIABILITIES & STOCKHOLDERS' EQUITY

Short-Term Borrowings $0 $0
Accounts Payable 1,022 1,023
Accrued Expenses & Other Current Liabilities 866 881
Income Taxes Payable 319 245
Current Portion of Long-Term Debt 657 452
Total Current Liabilities $2,864 $2,601
Long-Term Debt 2,349 1,860

Deferred Income Taxes 538 485
Derivative Liabilities 26 16
Deferred Rent Liability 280 269
Other Liabilities 225 212
Minority Interest in Toysrus.com 9 0
Total Liabilities $6,291 $5,443
Stockholders' Equity
Common Stock $30 $30
Additional Paid-in Capital 407 405
Retained Earnings 5,308 5,560
Accumulated Other Comprehensive Loss (64) (7)
Restricted Stock 0 (5)
Treasury Shares, at cost (1,707) (1,658)
Total Stockholders' Equity $3,974 $4,325
Total Liabilities & Stockholders' Equity $10,265 $9,768

Page 5 11/03/2021 / 17:43:44
Toys R Us Domestic
Base Case
For the FYE January 31 Actual Projected CAGR

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Beginning Stores 701 685 685 681 681 681 681 681
Net Closings 16 0 4 0 0 0 0 0
Ending Stores 685 685 681 681 681 681 681 681
Average Stores 693 685 683 681 681 681 681 681
Sales per Store $9.7 $9.2 $8.9 $8.9 $8.9 $8.9 $8.9 $8.9 0.0%
Sales Growth per Store -5.3% -3.2% 0.0% 0.0% 0.0% 0.0% 0.0%
Ending Balance of Owned Stores 315 315 315 315 315 315
Proceeds from Store Sales (Pre-Tax) $0.0 $0.0 $0.0 $0.0 $0.0
Proceeds from Store Sales (After-Tax) 0.0 0.0 0.0 0.0 0.0
Net Sales $6,755 $6,326 $6,104 $6,086 $6,086 $6,086 $6,086 $6,086 -0.1%
Growth -6.4% -3.5% -0.3% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A $6,308 $6,062 $5,782 $5,765 $5,765 $5,765 $5,765 $5,765 -0.1%
Growth -3.9% -4.6% -0.3% 0.0% 0.0% 0.0% 0.0%
Margin 93.4% 95.8% 94.7% 94.7% 94.7% 94.7% 94.7% 94.7%
EBITDA $447 $264 $322 $321 $321 $321 $321 $321 -0.1%
Growth -40.9% 22.0% -0.3% 0.0% 0.0% 0.0% 0.0%
Margin 6.6% 4.2% 5.3% 5.3% 5.3% 5.3% 5.3% 5.3%
D&A 191 194 200 199 199 199 199 199 -0.1%
EBIT $256 $70 $122 $122 $122 $122 $122 $122 -0.1%
Growth -72.7% 74.3% -0.3% 0.0% 0.0% 0.0% 0.0%
Margin 3.8% 1.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Note 1: EBITDA for FY 2005 adjusted by adding back $132 million in inventory markdowns and excluding a $14 million related to a lawsuit settlement - $118M net add back in FY 2005.
Page 6 11/03/2021 / 17:43:44

Toys R Us International
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Net Sales $2,161 $2,470 $2,739 $2,739 $2,739 $2,739 $2,739 $2,739 0.0%
Growth 14.3% 10.9% 0.0% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A $1,951 $2,243 $2,444 $2,444 $2,444 $2,444 $2,444 $2,444 0.0%
Growth 15.0% 9.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 90.3% 90.8% 89.2% 89.2% 89.2% 89.2% 89.2% 89.2%
EBITDA $210 $227 $295 $295 $295 $295 $295 $295 0.0%
Growth 8.1% 30.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 9.7% 9.2% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8%
D&A 52 61 75 75 75 75 75 75 0.0%
EBIT $158 $166 $220 $220 $220 $220 $220 $220 0.0%
Growth 5.1% 32.5% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 7.3% 6.7% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Page 7 11/03/2021 / 17:43:44

Babies R Us
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Net Sales $1,595 $1,738 $1,863 $1,863 $1,863 $1,863 $1,863 $1,863 0.0%
Growth 9.0% 7.2% 0.0% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A $1,398 $1,515 $1,601 $1,601 $1,601 $1,601 $1,601 $1,601 0.0%
Growth 8.4% 5.7% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 87.6% 87.2% 85.9% 85.9% 85.9% 85.9% 85.9% 85.9%
EBITDA $197 $223 $262 $262 $262 $262 $262 $262 0.0%
Growth 13.2% 17.5% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 12.4% 12.8% 14.1% 14.1% 14.1% 14.1% 14.1% 14.1%
D&A 28 31 38 38 38 38 38 38 0.0%
EBIT $169 $192 $224 $224 $224 $224 $224 $224 0.0%
Growth 13.6% 16.7% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 10.6% 11.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0%
Page 8 11/03/2021 / 17:43:44

Toys R Us.com
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Net Sales $340 $371 $366 $366 $366 $366 $366 $366 0.0%
Growth 9.1% -1.3% 0.0% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A $373 $387 $365 $365 $365 $365 $365 $365 0.0%
Growth 3.8% -5.7% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 109.7% 104.3% 99.7% 99.7% 99.7% 99.7% 99.7% 99.7%
EBITDA ($33) ($16) $1 $1 $1 $1 $1 $1 0.0%

Growth -51.5% -106.3% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin -9.7% -4.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
D&A 4 2 0 0 0 0 0 0
EBIT ($37) ($18) $1 $1 $1 $1 $1 $1 0.0%
Growth -51.4% -105.6% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin -10.9% -4.9% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Page 9 11/03/2021 / 17:43:44

Kids R Us (Discontinued)
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Net Sales $454 $415 $28 $0 $0 $0 $0 $0 -100.0%
Growth -8.6% -93.3% -100.0% NM NM NM NM
COGS & SG&A $464 $442 $48 $0 $0 $0 $0 $0 -100.0%

Growth -4.7% -89.1% -100.0% NM NM NM NM
Margin 102.2% 106.5% 171.4% NM NM NM NM NM
EBITDA ($10) ($27) ($20) $0 $0 $0 $0 $0 -100.0%

Growth 170.0% -25.9% -100.0% NM NM NM NM
Margin -2.2% -6.5% -71.4% NM NM NM NM NM
D&A 18 40 5 0 0 0 0 0
EBIT ($28) ($67) ($25) $0 $0 $0 $0 $0 -100.0%
Growth 139.3% -62.7% -100.0% NM NM NM NM
Margin -6.2% -16.1% -89.3% NM NM NM NM NM
Page 10 11/03/2021 / 17:43:44

Toys Corporate / Other
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Net Sales by Segment
Toys R Us Domestic $6,755 $6,326 $6,104 $6,086 $6,086 $6,086 $6,086 $6,086 -0.1%
Toys R Us International 2,161 2,470 2,739 2,739 2,739 2,739 2,739 2,739 0.0%
Babies R Us 1,595 1,738 1,863 1,863 1,863 1,863 1,863 1,863 0.0%
Toys R Us.com 340 371 366 366 366 366 366 366 0.0%
Kids R Us (Discontinued) 454 415 28 0 0 0 0 0 -100.0%
Consolidated Net Sales $11,305 $11,320 $11,100 $11,054 $11,054 $11,054 $11,054 $11,054 -0.1%
Growth 0.1% -1.9% -0.4% 0.0% 0.0% 0.0% 0.0%
Corporate / Other Expenses $29 $23 $80 $80 $80 $80 $80 $80 -0.1%
Growth -20.7% 247.8% -0.4% 0.0% 0.0% 0.0% 0.0%
Margin 0.3% 0.2% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7%
Other D&A $46 $40 $36 $36 $36 $36 $36 $36 -0.1%
Growth -13.0% -10.0% -0.4% 0.0% 0.0% 0.0% 0.0%
Margin 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Restructuring Charges $0 $63 $4 $0 $0 $0 $0 $0 -100.0%
Net Capex $395 $262 $269 $268 $268 $268 $268 $268 -0.1%
Growth -33.7% 2.7% -0.4% 0.0% 0.0% 0.0% 0.0%
Margin 3.5% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
Page 11 11/03/2021 / 17:43:44

Consolidated Financial Results by Segment
($ in millions)
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Babies R Us 1,595 1,738 1,863 1,863 1,863 1,863 1,863 1,863 0.0%
Toys R Us.com 340 371 366 366 366 366 366 366 0.0%
Growth 0.1% -1.9% -0.4% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A by Segment

Babies R Us 1,398 1,515 1,601 1,601 1,601 1,601 1,601 1,601 0.0%
Toys R Us.com 373 387 365 365 365 365 365 365 0.0%
COGS & SG&A by Segment $10,494 $10,649 $10,240 $10,175 $10,175 $10,175 $10,175 $10,175 -0.1%
Growth 1.5% -3.8% -0.6% 0.0% 0.0% 0.0% 0.0%
Margin 92.8% 94.1% 92.3% 92.0% 92.0% 92.0% 92.0% 92.0%
EBITDA by Segment
Toys R Us Domestic $447 $264 $322 $321 $321 $321 $321 $321 -0.1%
Toys R Us International 210 227 295 295 295 295 295 295 0.0%
Babies R Us 197 223 262 262 262 262 262 262 0.0%
Toys R Us.com (33) (16) 1 1 1 1 1 1 0.0%
Kids R Us (Discontinued) (10) (27) (20) 0 0 0 0 0 -100.0%
EBITDA by Segment $811 $671 $860 $879 $879 $879 $879 $879 0.4%
Growth -17.3% 28.2% 2.2% 0.0% 0.0% 0.0% 0.0%
Margin 7.2% 5.9% 7.7% 8.0% 8.0% 8.0% 8.0% 8.0%
Corporate / Other Expenses 29 23 80 80 80 80 80 80 -0.1%

Consolidated EBITDA $782 $648 $780 $799 $799 $799 $799 $799 0.5%
Growth -17.1% 20.4% 2.5% 0.0% 0.0% 0.0% 0.0%
Margin 6.9% 5.7% 7.0% 7.2% 7.2% 7.2% 7.2% 7.2%
Page 12 11/03/2021 / 17:43:44

Consolidated Financial Results by Segment (Cont'd)
($ in millions)
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
D&A by Segment
Toys R Us Domestic $191 $194 $200 $199 $199 $199 $199 $199 -0.1%
Toys R Us International 52 61 75 75 75 75 75 75 0.0%
Babies R Us 28 31 38 38 38 38 38 38 0.0%
Toys R Us.com 4 2 0 0 0 0 0 0 NM
D&A by Segment $293 $328 $318 $312 $312 $312 $312 $312 -0.4%
Growth 11.9% -3.0% -1.8% 0.0% 0.0% 0.0% 0.0%
Margin 2.6% 2.9% 2.9% 2.8% 2.8% 2.8% 2.8% 2.8%
Other D&A 46 40 36 36 36 36 36 36 -0.1%

Restructuring Charges 0 63 4 0 0 0 0 0 -100.0%
Consolidated EBIT $443 $217 $422 $451 $451 $451 $451 $451 1.3%
Growth -51.0% 94.5% 6.9% 0.0% 0.0% 0.0% 0.0%
Margin 3.9% 1.9% 3.8% 4.1% 4.1% 4.1% 4.1% 4.1%
Net Capex $395 $262 $269 $268 $268 $268 $268 $268 -0.1%
Margin 3.5% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
Proceeds from Store Sales (After-Tax) $0.0 $0.0 $0.0 $0.0 $0.0
$1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Page 13 11/03/2021 / 17:43:44

Consolidated Summary Financial Results
($ in millions)
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Growth 0.1% -1.9% -0.4% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A $10,494 $10,649 $10,240 $10,175 $10,175 $10,175 $10,175 $10,175 -0.1%
Growth 1.5% -3.8% -0.6% 0.0% 0.0% 0.0% 0.0%
Margin 92.8% 94.1% 92.3% 92.0% 92.0% 92.0% 92.0% 92.0%
EBITDA $811 $671 $860 $879 $879 $879 $879 $879 0.4%
Growth -17.3% 28.2% 2.2% 0.0% 0.0% 0.0% 0.0%
Margin 7.2% 5.9% 7.7% 8.0% 8.0% 8.0% 8.0% 8.0%

Growth -17.1% 20.4% 2.5% 0.0% 0.0% 0.0% 0.0%
Margin 6.9% 5.7% 7.0% 7.2% 7.2% 7.2% 7.2% 7.2%
D&A $293 $328 $318 $312 $312 $312 $312 $312 -0.4%
Other D&A 46 40 36 36 36 36 36 36 -0.1%
Growth -51.0% 94.5% 6.9% 0.0% 0.0% 0.0% 0.0%
Margin 3.9% 1.9% 3.8% 4.1% 4.1% 4.1% 4.1% 4.1%
Net Capex $395 $262 $269 $268 $268 $268 $268 $268 -0.1%
Margin 3.5% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
Proceeds from Store Sales (After-Tax) $0 $0 $0 $0 $0
Page 14 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Transaction Summary Sources Uses

($ in millions) Interest
Value % of Total Rate
Value Cash on Balance Sheet $956.0 10.7% 2.75% Purchase of Common Stock
Equity Price per Share $26.75 Senior Secured Credit Facility 700.0 7.8% 6.8% Purchase of Stock Options and Restricted Stock
Implied Shares Purchased 220.6 Unsecured Bridge Loan 1,900.0 21.2% 11.0% Settlement of Equity Security Interests
Equity Value $5,900 Secured European Bridge Loan 1,000.0 11.2% 9.0% Purchase of all Warrants
Mortgage Loan Agreements 800.0 8.9% 8.0% Transaction Fees
Other Transaction Value (Ex Fees) 394 Sponsor Equity 1,300.0 14.5% Severance and Bonus Payments
Assumed Debt 2,312
Remaining Cash on Balance Sheet (1,247) Total Cash Sources $6,656.0 74.2% Total Cash Uses
Enterprise Value $7,359
Transaction Fees 362 Assumed Debt 2,312 25.8% Assumed Debt
Enterprise Value w/Fees $7,721
Total Sources $8,968.0 100.0% Total Uses
FYE 2005 EBITDA $780
EV (Excluding Fees) / FYE 2005 EBITDA 9.43x
Total EV / FYE 2005 EBITDA 9.90x

Pro Forma Leverage Summary Model Summary
Value Multiple Actual Projected CAGR
FYE 2005 EBITDA $780.0 2005 2006 2007 2008 2009 2010 '05-'10
Consolidated Net Sales $11,100.0 $11,054.1 $11,054.1 $11,054.1 $11,054.1 $11,054.1 -0.1%
Senior Secured Credit Facility 700.0 0.90x Growth -1.9% -0.4% 0.0% 0.0% 0.0% 0.0%
Unsecured Bridge Loan 1,900.0 3.33x
Secured European Bridge Loan 1,000.0 4.62x Consolidated EBITDA $780.0 $799.4 $799.4 $799.4 $799.4 $799.4 0.5%
Mortgage Loan Agreements 800.0 5.64x Growth 20.4% 2.5% 0.0% 0.0% 0.0% 0.0%
Assumed Debt 2,312.0 8.61x Margin 7.0% 7.2% 7.2% 7.2% 7.2% 7.2%
Total Debt $6,712.0 8.61x
Total Interest Expense $560.2 $562.8 $565.1 $567.3 $569.1
Cumul. Pay Down
Total Debt $6,712.0 $6,700.5 $6,685.0 $6,665.7 $6,642.2 $6,614.3 $97.7
Cash and Cash Equivalents 1,247.0 1,247.0 1,247.0 1,247.0 1,247.0 1,247.0
Ownership Table Net Debt $5,465.0 $5,453.5 $5,438.0 $5,418.7 $5,395.2 $5,367.3
Initial Fully
Investment Initial Diluted Total Debt / EBITDA 8.61x 8.38x 8.36x 8.34x 8.31x 8.27x
Sponsors $1,300.0 100.0% 90.0% Net Debt / EBITDA 7.01x 6.82x 6.80x 6.78x 6.75x 6.71x
Management 0.0 0.0% 10.0% EBITDA / Interest Expense 1.43x 1.42x 1.41x 1.41x 1.40x
Total $1,300.0 100.0% 100.0% (EBITDA-Capex) / Interest Expense 0.95x 0.94x 0.94x 0.94x 0.93x
Summary of Fees & Expenses Returns Summary

Value EBITDA ROI
Advisory Fees & Expenses $78.0 Multiple ROI Gain w/Fee Gain
Financing Fees 135.0 7.00x -29.4% ($1,071.6) -28.5% ($990.6)
Sponsor Fees 81.0 7.50x -13.5% (671.9) -12.4% (590.9)
Other 68.0 8.00x -4.6% (272.2) -3.4% (191.2)
Total $362.0 8.50x 1.9% 127.5 3.2% 208.5
9.00x 6.4% 474.5 7.8% 555.5
9.50x 10.4% 834.2 11.9% 915.2
10.00x 13.9% 1,193.9 15.4% 1,274.9
Page 15 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Value
$5,900.0
227.0
114.0
17.0
362.0
36.0
$6,656.0
2,312
$8,968.0
y Down
Page 16 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Consolidated Balance Sheet @ Transaction Close
($ in millions) Actual For the Fiscal Year Ended Acquisition Adjusted

1/31/2004 1/29/2005 Adjustments Balance Sheet @ Close
ASSETS
Cash and Cash Equivalents $2,003 $2,203 ($956) $1,247
Accounts and Other Receivables 146 153 153
Merchandise Inventories 2,094 1,884 1,884
Other Current Assets 486 167 167
Total Current Assets $4,729 $4,407 ($956) $3,451
Net, PP&E $4,439 $4,339 $4,339
Goodwill, net 348 353 (353) 0

New Goodwill 0 0 2,684 2,684
Other Assets 749 669 669
Total Assets $10,265 $9,768 $1,375 $11,143

Accounts Payable 1,022 1,023 1,023
Accrued Expenses & Other Current Liabilities 1,185 1,126 1,126
Total Current Liabilities $2,207 $2,149 $0 $2,149
Assumed Debt 3,006 2,312 2,312

Senior Secured Credit Facility 0 0 700 700
Unsecured Bridge Loan 0 0 1,900 1,900
Secured European Bridge Loan 0 0 1,000 1,000
Mortgage Loan Agreements 0 0 800 800
Total Debt 3,006 2,312 4,400 6,712
Deferred Income Taxes 538 485 485

Other Liabilities 540 497 497
Total Liabilities $6,291 $5,443 $4,400 $9,843
New Preferred Stock $0 $0 $0
Sponsor Equity 0 0 1,300 1,300
Retained Earnings 3,974 4,325 (4,325) 0
Total Stockholders' Equity $3,974 $4,325 ($3,025) $1,300
Total Liabilities & Stockholders' Equity $10,265 $9,768 $1,375 $11,143

Note: Cash includes short-term investments.
Check 1 1 1 1
Check 1 1
Note: Goodwill Calculation
Equity Purchase Price (Incl. Fees) $6,656
Less Tangible Net Worth 3,972
New Goodwill $2,684
Page 17 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Income Statement
($ in millions)
Base Case
For the FYE January 31 Actual Projected

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Consolidated Net Sales $11,305.0 $11,320.0 $11,100.0 $11,054.1 $11,054.1 $11,054.1 $11,054.1 $11,054.1 $11,054.1 $11,054.1 $11,054.1 $11,054.1
Growth 0.1% -1.9% -0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A $10,494.0 $10,649.0 $10,240.0 $10,175.1 $10,175.1 $10,175.1 $10,175.1 $10,175.1 $10,175.07 $10,175.07 $10,175.07 $10,175.07
Margin 92.8% 94.1% 92.3% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0%
EBITDA $811.0 $671.0 $860.0 $879.1 $879.1 $879.1 $879.1 $879.1 $879.1 $879.1 $879.1 $879.1
Margin 7.2% 5.9% 7.7% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Corporate / Other Expenses 29.0 23.0 80.0 79.7 79.7 79.7 79.7 79.7 79.7 79.7 79.7 79.7
Margin 0.3% 0.2% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7%
Consolidated EBITDA $782.0 $648.0 $780.0 $799.4 $799.4 $799.4 $799.4 $799.4 $799.4 $799.4 $799.4 $799.4
Growth -17.1% 20.4% 2.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 6.9% 5.7% 7.0% 7.2% 7.2% 7.2% 7.2% 7.2% 7.2% 7.2% 7.2% 7.2%
D&A 293.0 328.0 318.0 312.4 312.4 312.4 312.4 312.4 312.4 312.4 312.4 312.4
Margin 2.6% 2.9% 2.9% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8%
Other D&A 46.0 40.0 36.0 35.9 35.9 35.9 35.9 35.9 35.9 35.9 35.9 35.9
Margin 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Restructuring Charges 0.0 63.0 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Consolidated EBIT $443.0 $217.0 $422.0 $451.1 $451.1 $451.1 $451.1 $451.1 $451.1 $451.1 $451.1 $451.1
Growth -51.0% 94.5% 6.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 3.9% 1.9% 3.8% 4.1% 4.1% 4.1% 4.1% 4.1% 4.1% 4.1% 4.1% 4.1%
Interest Expense
Assumed Debt $149.9 $149.0 $147.9 $146.5 $144.8 $142.9 $140.5 $137.9 $135.1
Senior Secured Credit Facility 47.3 50.8 54.3 57.8 61.3 64.8 66.5 66.5 66.5
Unsecured Bridge Loan 209.0 209.0 209.0 209.0 209.0 209.0 209.0 209.0 209.0
Secured European Bridge Loan 90.0 90.0 90.0 90.0 90.0 90.0 90.0 90.0 90.0
Mortgage Loan Agreements 64.0 64.0 64.0 64.0 64.0 64.0 64.0 64.0 64.0
Total Interest Expense $560.2 $562.8 $565.1 $567.3 $569.1 $570.6 $570.0 $567.4 $564.6
Interest Income on Cash Balance 40.5 46.8 53.0 59.2 65.5 71.7 77.9 77.9 77.9
Pre-Tax Income ($68.5) ($64.9) ($61.0) ($56.9) ($52.5) ($47.8) ($41.0) ($38.3) ($35.5)
Use of NOLs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Taxes 35.0% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Income ($68.5) ($64.9) ($61.0) ($56.9) ($52.5) ($47.8) ($41.0) ($38.3) ($35.5)
Growth -5.3% -6.0% -6.8% -7.7% -9.0% -14.3% -6.5% -7.4%
Margin -0.6% -0.6% -0.6% -0.5% -0.5% -0.4% -0.4% -0.3% -0.3%
Proceeds from Store Sales (After-Tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Retained Earnings ($68.5) ($64.9) ($61.0) ($56.9) ($52.5) ($47.8) ($41.0) ($38.3) ($35.5)
Page 18 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
2015
$11,054.1
0.0%
$10,175.07
92.0%
$879.1
8.0%
79.7
0.7%
$799.4
0.0%
7.2%
312.4
2.8%
35.9
0.3%
0.0
$451.1
0.0%
4.1%
$132.0
66.5
209.0
90.0
64.0
$561.5
77.9
($32.5)
0.0
0.0
($32.5)
-8.5%
-0.3%
0.0
0.0
($32.5)
Page 19 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Cash Flow Statement

($ in millions)
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Consolidated EBITDA $799.4 $799.4 $799.4 $799.4 $799.4 $799.4 $799.4 $799.4 $799.4
Net Capex 267.9 267.9 267.9 267.9 267.9 267.9 267.9 267.9 267.9
EBITDA - Capex $531.5 $531.5 $531.5 $531.5 $531.5 $531.5 $531.5 $531.5 $531.5
(Increase) / Decrease in Working Capital ($0.4) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
(Increase) / Decrease in Other LT Assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Increase / (Decrease) in Other LT Liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash on Balance Sheet in Excess of Minimum Balance 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Sources / (Uses) of Cash ($0.4) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Proceeds from Store Sales (After-Tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash Available for Debt Service $531.1 $531.5 $531.5 $531.5 $531.5 $531.5 $531.5 $531.5 $531.5
Total Interest Expense $560.2 $562.8 $565.1 $567.3 $569.1 $570.6 $570.0 $567.4 $564.6
Interest Income on Cash Balance 40.5 46.8 53.0 59.2 65.5 71.7 77.9 77.9 77.9
Cash Available for Debt Amortization / Repayment $11.5 $15.5 $19.4 $23.5 $27.9 $32.6 $39.4 $42.1 $44.9
Assumed Debt ($11.5) ($15.5) ($19.4) ($23.5) ($27.9) ($32.6) ($39.4) ($42.1) ($44.9)
Senior Secured Credit Facility $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Excess Cash After Debt Repayment $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Minimum Cash Balance 1,247.0 1,247.0 1,247.0 1,247.0 1,247.0 1,247.0 1,247.0 1,247.0 1,247.0
Ending Cash Balance $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0
Credit Statistics
Total Debt / EBITDA 8.61x 8.38x 8.36x 8.34x 8.31x 8.27x 8.23x 8.18x 8.13x 8.08x
Net Debt / EBITDA 7.01x 6.82x 6.80x 6.78x 6.75x 6.71x 6.67x 6.62x 6.57x 6.52x
EBITDA / Interest Expense 1.43x 1.42x 1.41x 1.41x 1.40x 1.40x 1.40x 1.41x 1.42x
(EBITDA-Capex) / Interest Expense 0.95x 0.94x 0.94x 0.94x 0.93x 0.93x 0.93x 0.94x 0.94x
Tax Loss Carryforward

Beginning Balance $0.0 $68.5 $133.4 $194.4 $251.3 $303.8 $351.6 $392.6 $430.9
Additions 68.5 64.9 61.0 56.9 52.5 47.8 41.0 38.3 35.5
Use of NOLs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Ending Balance $68.5 $133.4 $194.4 $251.3 $303.8 $351.6 $392.6 $430.9 $466.4
Page 20 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
2015
$799.4
267.9
$531.5
$0.0
0.0
0.0
0.0
0.0
$0.0
0.0
$531.5
$561.5
77.9
$47.9
($47.9)
$0.0
$0.0
1,247.0
$1,247.0
8.02x
6.46x
1.42x
0.95x
$466.4
32.5
0.0
$498.9
Page 21 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Balance Sheet
($ in millions)
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
ASSETS
Cash and Cash Equivalents $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0 $1,247.0
Accounts and Other Receivables 153.0 152.4 152.4 152.4 152.4 152.4 152.4 152.4 152.4 152.4
Merchandise Inventories 1,884.0 1,872.1 1,872.1 1,872.1 1,872.1 1,872.1 1,872.1 1,872.1 1,872.1 1,872.1
Other Current Assets 167.0 166.3 166.3 166.3 166.3 166.3 166.3 166.3 166.3 166.3
Total Current Assets $3,451.0 $3,437.7 $3,437.7 $3,437.7 $3,437.7 $3,437.7 $3,437.7 $3,437.7 $3,437.7 $3,437.7
Net, PP&E 4,339.0 $4,258.6 $4,178.2 $4,097.9 $4,017.5 $3,937.1 $3,856.7 $3,776.4 $3,696.0 $3,615.6
Goodwill, net 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
New Goodwill 2,684.0 2,684.0 2,684.0 2,684.0 2,684.0 2,684.0 2,684.0 2,684.0 2,684.0 2,684.0
Other Assets 669.0 669.0 669.0 669.0 669.0 669.0 669.0 669.0 669.0 669.0
Total Assets $11,143.0 $11,049.4 $10,969.0 $10,888.6 $10,808.2 $10,727.8 $10,647.5 $10,567.1 $10,486.7 $10,406.3

Accounts Payable $1,023.0 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5
Accrued Expenses & Other Current Liabilities 1,126.0 1,118.9 1,118.9 1,118.9 1,118.9 1,118.9 1,118.9 1,118.9 1,118.9 1,118.9
Total Current Liabilities $2,149.0 $2,135.4 $2,135.4 $2,135.4 $2,135.4 $2,135.4 $2,135.4 $2,135.4 $2,135.4 $2,135.4
Assumed Debt $2,312.0 $2,300.5 $2,285.0 $2,265.7 $2,242.2 $2,214.3 $2,181.7 $2,142.3 $2,100.3 $2,055.4
Senior Secured Credit Facility 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0
Unsecured Bridge Loan 1,900.0 1,900.0 1,900.0 1,900.0 1,900.0 1,900.0 1,900.0 1,900.0 1,900.0 1,900.0
Secured European Bridge Loan 1,000.0 1,000.0 1,000.0 1,000.0 1,000.0 1,000.0 1,000.0 1,000.0 1,000.0 1,000.0
Mortgage Loan Agreements 800.0 800.0 800.0 800.0 800.0 800.0 800.0 800.0 800.0 800.0
Total Debt $6,712.0 $6,700.5 $6,685.0 $6,665.7 $6,642.2 $6,614.3 $6,581.7 $6,542.3 $6,500.3 $6,455.4
Deferred Income Taxes 485.0 485.0 485.0 485.0 485.0 485.0 485.0 485.0 485.0 485.0
Other Liabilities 497.0 497.0 497.0 497.0 497.0 497.0 497.0 497.0 497.0 497.0
Total Liabilities $9,843.0 $9,817.9 $9,802.4 $9,783.0 $9,759.5 $9,731.7 $9,699.1 $9,659.7 $9,617.6 $9,572.7
New Preferred Stock $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Sponsor Equity 1,300.0 1,300.0 1,300.0 1,300.0 1,300.0 1,300.0 1,300.0 1,300.0 1,300.0 1,300.0
Retained Earnings 0.0 (68.5) (133.4) (194.4) (251.3) (303.8) (351.6) (392.6) (430.9) (466.4)
Total Stockholders' Equity $1,300.0 $1,231.5 $1,166.6 $1,105.6 $1,048.7 $996.2 $948.4 $907.4 $869.1 $833.6
Total Liabilities & Stockholders' Equity $11,143.0 $11,049.4 $10,969.0 $10,888.6 $10,808.2 $10,727.8 $10,647.5 $10,567.1 $10,486.7 $10,406.3
Check $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Page 22 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
2015
$1,247.0
152.4
1,872.1
166.3
$3,437.7
$3,535.2
0.0
2,684.0
669.0
$10,326.0
$1,016.5
1,118.9
$2,135.4
$2,007.5
700.0
1,900.0
1,000.0
800.0
$6,407.5
485.0
497.0
$9,524.9
$0.0
1,300.0
(498.9)
$801.1
$10,326.0
$0.000
Page 23 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Interest Rate & Working Capital Assumptions

($ in millions)
Base Case

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Interest Rate Assumptions
LIBOR 2.75% 3.25% 3.75% 4.25% 4.75% 5.25% 5.75% 6.00% 6.00% 6.00%
Interest Earned on Cash 2.75% 3.25% 3.75% 4.25% 4.75% 5.25% 5.75% 6.25% 6.25% 6.25%
Cash Interest Rate on Debt LIBOR Spread Fixed Rate

Assumed Debt 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50%
Senior Secured Credit Facility 3.50% 6.75% 7.25% 7.75% 8.25% 8.75% 9.25% 9.50% 9.50% 9.50%
Unsecured Bridge Loan 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00%
Secured European Bridge Loan 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
Mortgage Loan Agreements 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Workings Capital Assumptions

Accounts and Other Receivables $146.0 $153.0 $152.4 $152.4 $152.4 $152.4 $152.4 $152.4 $152.4 $152.4 $152.4
Days Outstanding 4.7 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
Merchandise Inventories $2,094.0 $1,884.0 $1,872.1 $1,872.1 $1,872.1 $1,872.1 $1,872.1 $1,872.1 $1,872.1 $1,872.1 $1,872.1
Turns 5.1 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4
Other Current Assets $486.0 $167.0 $166.3 $166.3 $166.3 $166.3 $166.3 $166.3 $166.3 $166.3 $166.3
Accounts Payable $1,022.0 $1,023.0 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5 $1,016.5
Accrued Expenses & Other Current Liabilities $1,185.0 $1,126.0 $1,118.9 $1,118.9 $1,118.9 $1,118.9 $1,118.9 $1,118.9 $1,118.9 $1,118.9 $1,118.9
Total Current Assets $2,726.0 $2,204.0 $2,190.7 $2,190.7 $2,190.7 $2,190.7 $2,190.7 $2,190.7 $2,190.7 $2,190.7 $2,190.7
Total Current Liabilities 2,207.0 2,149.0 2,135.4 2,135.4 2,135.4 2,135.4 2,135.4 2,135.4 2,135.4 2,135.4 2,135.4
Working Capital $519.0 $55.0 $55.4 $55.4 $55.4 $55.4 $55.4 $55.4 $55.4 $55.4 $55.4
(Increase) / Decrease in Accounts and Other Receivables ($7.0) $0.6 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
(Increase) / Decrease in Merchandise Inventories 210.0 11.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(Increase) / Decrease in Other Current Assets 319.0 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Increase / (Decrease) in Accounts Payable 1.0 (6.5) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Increase / (Decrease) in Accrued Expenses & Other Current Liabilities (59.0) (7.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(Increase in) Reduction of Working Capital $464.0 ($0.4) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
(Increase) / Decrease in Long-Term Assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Increase / (Decrease) in Long-Term Liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Page 24 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
2015
6.00%
6.25%
6.50%
9.50%
11.00%
9.00%
8.00%
$152.4
5.0
$1,872.1
5.4
$166.3
5.5
$1,016.5
36.5
$1,118.9
40.1
$2,190.7
2,135.4
$55.4
$0.0
0.0
0.0
0.0
0.0
$0.0
0.0
0.0
Page 25 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Returns Summary
($ in millions)
Base Case Exit Enterprise Less: Plus: Net Equity Sponsor Mgmt Total Option Adj. Equity
Multiple Value Debt Cash Debt Value Ownership Ownership Ownership Proceeds Value
Assumed Exit Year 2010 7.00x $5,595.7 ($6,614.3) $1,247.0 ($5,367.3) $228.4 100.0% 0.0% 100.0% $0.0 $228.4
EBITDA $799.4 7.50x 5,995.4 ($6,614.3) $1,247.0 ($5,367.3) $628.1 100.0% 0.0% 100.0% 0.0 628.1
8.00x 6,395.1 ($6,614.3) $1,247.0 ($5,367.3) $1,027.8 100.0% 0.0% 100.0% 0.0 1,027.8
8.50x 6,794.8 ($6,614.3) $1,247.0 ($5,367.3) $1,427.5 100.0% 0.0% 100.0% 0.0 1,427.5
9.00x 7,194.5 ($6,614.3) $1,247.0 ($5,367.3) $1,827.2 90.0% 10.0% 100.0% 144.4 1,971.6
9.50x 7,594.2 ($6,614.3) $1,247.0 ($5,367.3) $2,226.9 90.0% 10.0% 100.0% 144.4 2,371.3
10.00x 7,993.9 ($6,614.3) $1,247.0 ($5,367.3) $2,626.6 90.0% 10.0% 100.0% 144.4 2,771.0
Sponsor Return
Exit Mult. 2005 2006 2007 2008 2009 2010 ROI Gains
7.00 x ($1,300.0) $0.0 $0.0 $0.0 $0.0 $228.4 -29.4% ($1,071.6)
7.50 x (1,300.0) 0.0 0.0 0.0 0.0 628.1 -13.5% (671.9)
8.00 x (1,300.0) 0.0 0.0 0.0 0.0 1,027.8 -4.6% (272.2)
8.50 x (1,300.0) 0.0 0.0 0.0 0.0 1,427.5 1.9% 127.5
9.00 x (1,300.0) 0.0 0.0 0.0 0.0 1,774.5 6.4% 474.5
9.50 x (1,300.0) 0.0 0.0 0.0 0.0 2,134.2 10.4% 834.2
10.00 x (1,300.0) 0.0 0.0 0.0 0.0 2,493.9 13.9% 1,193.9
Sponsor Return Including Initial Fees ROI Gains

with with
Exit Mult. 2004 2005 2006 2007 2008 2009 Fee Fee
7.00 x ($1,219.0) $0.0 $0.0 $0.0 $0.0 $228.4 Err:523 ($990.6)
7.50 x (1,219.0) 0.0 0.0 0.0 0.0 628.1 -12.4% (590.9)
8.00 x (1,219.0) 0.0 0.0 0.0 0.0 1,027.8 -3.4% (191.2)
8.50 x (1,219.0) 0.0 0.0 0.0 0.0 1,427.5 3.2% 208.5
9.00 x (1,219.0) 0.0 0.0 0.0 0.0 1,774.5 7.8% 555.5
9.50 x (1,219.0) 0.0 0.0 0.0 0.0 2,134.2 11.9% 915.2
10.00 x (1,219.0) 0.0 0.0 0.0 0.0 2,493.9 15.4% 1,274.9
Page 26 11/03/2021 / 17:43:44

TOYS R US LBO MODEL
Net Value
of Options
$0.0
0.0
0.0
0.0
52.7
92.7
132.7
Page 27 11/03/2021 / 17:43:44

Transaction Overview
($ in millions)
Base Case
Enterprise Value & Leverage Summary

($ in millions) Multiple of
Amount FYE 2005 Adj. EBITDA
Transaction Proceeds (excl. fees) $6,294
Approximate Existing Debt 2,312
Remaining Cash on Balance Sheet (1,247)
Enterprise Value $7,359 9.4x
Transaction Fees 362
Total Transaction Value $7,721 9.9x
FYE 2005 Adjusted EBITDA $780
Leverage Analysis Cumul. Multiple

Approximate Existing Debt $2,312 3.0x
$2BN Senior Secured Credit Facility 700 3.9x
Unsecured Bridge Loan 1,900 6.3x
Secured European Bridge Loan 1,000 7.6x
Mortgage Loan Agreements 800 8.6x
Total $6,712 8.6x
Remaining Cash on Balance Sheet (1,247) -1.6x
Net Leverage $5,465 7.0x
Page 28 11/03/2021 / 17:43:44

Note: Paste these tables into PowerPoint presentation for the company overview slide

$ in millions For the Year Ended
2/1/2003 1/31/2004 1/29/2005
Consolidated Net Sales $11,305 $11,320 $11,100
Growth 0.0% 0.1% -1.9%
EBITDA $811 $671 $860

Growth 0.0% -17.3% 28.2%
Margin 7.2% 5.9% 7.7%
Note: EBITDA for FY05 adjusted by adding back $132 million in inventory markdowns
and excluding a $14 million related to a lawsuit settlement ($118M in net addbacks).
Financial Performance by Segment

$ in millions For the Year Ended
2/1/2003 % of Total 1/31/2004 % of Total
Toys R Us Domestic $6,755 60% $6,326 56%
Toys R Us International $2,161 19% $2,470 22%
Babies R Us $1,595 14% $1,738 15%
Toys R Us.com $340 3% $371 3%
Kids R Us (Discontinued) $454 4% $415 4%
Consolidated Net Sales $11,305 100% $11,320 100%
EBITDA by Segment (Pre-Corporate Overhead)

Toys R Us Domestic $447 55% $264 39%
Toys R Us International $210 26% $227 34%
Babies R Us $197 24% $223 33%
Toys R Us.com ($33) -4% ($16) -2%
Kids R Us (Discontinued) ($10) -1% ($27) -4%
EBITDA by Segment $811 100% $671 100%
Note: Toys "R" Us completed its closing of the Kids "R" Us segment by January 29, 2005.
overview slide
ar Ended For the Year Ended

1/29/2005 % of Total 2/1/2003 1/31/2004 1/29/2005
Growth by Segment
$6,104 55% -6% -4%
$2,739 25% 14% 11%
$1,863 17% 9% 7%
$366 3% 9% -1%
$28 0% -9% -93%
$11,100 100% 0% -2%
Margin by Segment
$322 37% 7% 4% 5%
$295 34% 10% 9% 11%
$262 30% 12% 13% 14%
$1 0% -10% -4% 0%
($20) -2% -2% -7% -71%
$860 100% 7% 6% 8%
Toys R Us Domestic Toys R Us International
($ in millions) ($ in millions)
Base Case Base Case
For the FYE January 31 Actual Projected CAGR For the FYE January 31 Actual Projected
2005 2006 2007 2008 2009 2010 '05-'10 2005 2006 2007 2008 2009 2010
Net Sales $6,104 $6,086 $6,086 $6,086 $6,086 $6,086 -0.1% Net Sales $2,739 $2,739 $2,739 $2,739 $2,739 $2,739
Growth -3.5% -0.3% 0.0% 0.0% 0.0% 0.0% Growth 10.9% 0.0% 0.0% 0.0% 0.0% 0.0%
% of Total Sales 55.1% 55.1% 55.1% 55.1% 55.1% 55.1% % of Total Sales 24.7% 24.8% 24.8% 24.8% 24.8% 24.8%
EBITDA $322 $321 $321 $321 $321 $321 -0.1% EBITDA $295 $295 $295 $295 $295 $295
Growth 22.0% -0.3% 0.0% 0.0% 0.0% 0.0% Growth 30.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 5.3% 5.3% 5.3% 5.3% 5.3% 5.3% Margin 10.8% 10.8% 10.8% 10.8% 10.8% 10.8%
% of Segment EBITDA 36.6% 36.5% 36.5% 36.5% 36.5% 36.5% % of Segment EBITDA 33.5% 33.6% 33.6% 33.6% 33.6% 33.6%
Note: % of total sales & % of total EBITDA excludes Kids R Us in 2005 Note: % of total sales & % of total EBITDA excludes Kids R Us in 2005
Babies R Us Toys R Us.com

($ in millions) ($ in millions)
Base Case Base Case
For the FYE January 31 Actual Projected CAGR For the FYE January 31 Actual Projected
2005 2006 2007 2008 2009 2010 '05-'10 2005 2006 2007 2008 2009 2010
Net Sales $1,863 $1,863 $1,863 $1,863 $1,863 $1,863 0.0% Net Sales $366 $366 $366 $366 $366 $366
Growth 7.2% 0.0% 0.0% 0.0% 0.0% 0.0% Growth -1.3% 0.0% 0.0% 0.0% 0.0% 0.0%
% of Total Sales 16.8% 16.9% 16.9% 16.9% 16.9% 16.9% % of Total Sales 3.3% 3.3% 3.3% 3.3% 3.3% 3.3%
EBITDA $262 $262 $262 $262 $262 $262 0.0% EBITDA $1 $1 $1 $1 $1 $1

Growth 17.5% 0.0% 0.0% 0.0% 0.0% 0.0% Growth -106.3% 0.0% 0.0% 0.0% 0.0% 0.0%
Margin 14.1% 14.1% 14.1% 14.1% 14.1% 14.1% Margin 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
% of Segment EBITDA 29.8% 29.8% 29.8% 29.8% 29.8% 29.8% % of Segment EBITDA 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
Note: % of total sales & % of total EBITDA excludes Kids R Us in 2005 Note: % of total sales & % of total EBITDA excludes Kids R Us in 2005
Page 31 11/03/2021 / 17:43:44

CAGR
'05-'10
0.0%
0.0%
CAGR
'05-'10
0.0%
0.0%
Page 32 11/03/2021 / 17:43:44

Base Case
($ in millions) 2003 2004 2005 2006 2007 2008 2009 2010 '05-'10
Growth 0.1% -1.9% -0.4% 0.0% 0.0% 0.0% 0.0%
COGS & SG&A $10,494 $10,649 $10,240 $10,175 $10,175 $10,175 $10,175 $10,175 -0.1%
Growth 1.5% -3.8% -0.6% 0.0% 0.0% 0.0% 0.0%
Margin 92.8% 94.1% 92.3% 92.0% 92.0% 92.0% 92.0% 92.0%
EBITDA $811 $671 $860 $879 $879 $879 $879 $879 0.4%
Growth -17.3% 28.2% 2.2% 0.0% 0.0% 0.0% 0.0%
Margin 7.2% 5.9% 7.7% 8.0% 8.0% 8.0% 8.0% 8.0%
Growth -17.1% 20.4% 2.5% 0.0% 0.0% 0.0% 0.0%
Margin 6.9% 5.7% 7.0% 7.2% 7.2% 7.2% 7.2% 7.2%
D&A $293 $328 $318 $312 $312 $312 $312 $312 -0.4%
Other D&A 46 40 36 36 36 36 36 36 -0.1%
Growth -51.0% 94.5% 6.9% 0.0% 0.0% 0.0% 0.0%
Margin 3.9% 1.9% 3.8% 4.1% 4.1% 4.1% 4.1% 4.1%
Net Capex $395 $262 $269 $268 $268 $268 $268 $268 -0.1%
Margin 3.5% 2.3% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 0.0%
Proceeds from Store Sales (After-Tax) 0.0% 0.0% 0.0% $0 $0 $0 $0 $0 0.0%
Page 33 11/03/2021 / 17:43:44

Returns Summary
Base Case
($ in millions) Actual Projected CAGR

2005 2006 2007 2008 2009 2010 '05-'10
Consolidated EBITDA $780.0 $799.4 $799.4 $799.4 $799.4 $799.4 0.5%
Growth 20.4% 2.5% 0.0% 0.0% 0.0% 0.0%
Margin 7.0% 7.2% 7.2% 7.2% 7.2% 7.2%
Capex $267.9 $267.9 $267.9 $267.9 $267.9
Total Interest Expense $560.2 $562.8 $565.1 $567.3 $569.1

Total Debt $6,712 $6,700 $6,685 $6,666 $6,642 $6,614
Cash and Cash Equivalents 1,247 1,247 1,247 1,247 1,247 1,247
Net Debt $5,465 $5,453 $5,438 $5,419 $5,395 $5,367
Total Debt / EBITDA 8.61x 8.38x 8.36x 8.34x 8.31x 8.27x

Net Debt / EBITDA 7.01x 6.82x 6.80x 6.78x 6.75x 6.71x
EBITDA / Interest Expense 1.43x 1.42x 1.41x 1.41x 1.40x
(EBITDA-Capex) / Interest Expense 0.95x 0.94x 0.94x 0.94x 0.93x
Returns
(Including Sponsor Fee)
EBITDA ROI
Multiple ROI Gain w/Fee Gain
7.00x -29.4% ($1,071.6) -28.5% ($990.6)
7.50x -13.5% (671.9) -12.4% (590.9)
8.00x -4.6% (272.2) -3.4% (191.2)
8.50x 1.9% 127.5 3.2% 208.5
9.00x 6.4% 474.5 7.8% 555.5
9.50x 10.4% 834.2 11.9% 915.2
10.00x 13.9% 1,193.9 15.4% 1,274.9
Page 34 11/03/2021 / 17:43:44

Toys R Us LBO Model Blank

Uploaded by

Copyright:

Available Formats

You might also like

Toys R Us LBO Model Blank

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Toys R Us LBO Model Blank

Uploaded by

Copyright:

Available Formats

These spreadsheet exhibits relate to the case The Toys “R” Us LBO: Shopping for Toys,

Be sure enable iterative calculations, set to at least 1000 iterations.

2. Review "Operating Model" section to develop operating cases

Page 2 11/03/2021 / 17:43:44

Market Interest Rate Assumptions

Working Capital Assumptions

Purchase Price per Share $26.75

Initial Management Investment $0.0

Rates on New Debt LIBOR Spread Fixed Rate

Note: Debt rates are estimated

Active Case Base Case 1 <---Case Trigger

Minimum Cash on Balance Sheet (1) $1,247.0

Note 1: Senior secured credit facility has $2.0 billion of availability.

Page 4 11/03/2021 / 17:43:44

($ in millions) Actual For the Fiscal Year Ended

Property, Plant & Equipment

Goodwill, net 348 353

Total Assets $10,265 $9,768

LIABILITIES & STOCKHOLDERS' EQUITY

Long-Term Debt 2,349 1,860

Total Liabilities $6,291 $5,443

Total Liabilities & Stockholders' Equity $10,265 $9,768

For the FYE January 31 Actual Projected CAGR

Page 6 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

Page 7 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

Page 8 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

EBITDA ($33) ($16) $1 $1 $1 $1 $1 $1 0.0%

Page 9 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

COGS & SG&A $464 $442 $48 $0 $0 $0 $0 $0 -100.0%

EBITDA ($10) ($27) ($20) $0 $0 $0 $0 $0 -100.0%

Page 10 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

Restructuring Charges $0 $63 $4 $0 $0 $0 $0 $0 -100.0%

Page 11 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

COGS & SG&A by Segment

Corporate / Other Expenses 29 23 80 80 80 80 80 80 -0.1%

Page 12 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

Other D&A 46 40 36 36 36 36 36 36 -0.1%

Page 13 11/03/2021 / 17:43:44

For the FYE January 31 Actual Projected CAGR

Corporate / Other Expenses 29 23 80 80 80 80 80 80 -0.1%

Proceeds from Store Sales (After-Tax) $0 $0 $0 $0 $0

Page 14 11/03/2021 / 17:43:44

Transaction Summary Sources Uses

EV (Excluding Fees) / FYE 2005 EBITDA 9.43x

Total EV / FYE 2005 EBITDA 9.90x

Summary of Fees & Expenses Returns Summary

Page 15 11/03/2021 / 17:43:44

Page 16 11/03/2021 / 17:43:44

Consolidated Balance Sheet @ Transaction Close

($ in millions) Actual For the Fiscal Year Ended Acquisition Adjusted

Net, PP&E $4,439 $4,339 $4,339

Goodwill, net 348 353 (353) 0