CEC Entertainment, Inc.

- Leveraged Buyout (LBO) Model

(USD $ in Millions Except Per Share and Per Unit Data)

Transaction Assumptions:

Company Name: CEC Entertainment, Inc. Target - "Undisturbed" Share Price (USD): $ 43.34
Company Type: Public Premium Paid to Target's Share Price: 24.6%
Offer Price per Share (USD): $ 54.00
Last Historical Year: 2013-12-31
Tax Rate: 38.6%
Basic Shares Outstanding: 17.531 Units: 1,000
Rollover Share Count: 0.000 LIBOR Units: 10,000

Allow Circular References? No Sensitivity Toggle - # of Stores per Year: 0.0%

Refinance Target Company's Debt? No Sensitivity Toggle - Sales per Store: 0.0%
Sensitivity Toggle - COGS and Store-Level Expenses: 0.0%
Baseline LTM EBITDA Exit Multiple: 7.9 x Sensitivity Toggle - Total CapEx: 0.0%
LBO Exit Year: FY14

Company Valuation @ Current Share Price: Company Valuation @ Offer Price:

Diluted Shares (Millions) @ Current Share Price: 17.531 Diluted Shares (Millions) @ Offer Price: 17.531

Options - Treasury Stock Method @ Current Share Price: Options - Treasury Stock Method @ Offer Price:

Number Exercise Number Exercise

Name: (Millions): Price: Dilution: Name: (Millions): Price: Dilution:
Options A - Options A - -
Options B - Options B - -
Total: - - Total: - -

Equity Value: $ 759.8 Purchase Equity Value: $ 946.7

Less: Cash & Cash-Equivalents: (20.7) Less: Cash & Cash-Equivalents: (20.7)
Less: Equity Investments: - Less: Equity Investments: -
Less: Other Non-Core Assets, Net: - Less: Other Non-Core Assets, Net: -
Less: Net Operating Losses: - Less: Net Operating Losses: -
Plus: Total Debt: 361.5 Plus: Total Debt: 361.5
Plus: Preferred Stock: - Plus: Preferred Stock: -
Plus: Noncontrolling Interests: - Plus: Noncontrolling Interests: -
Plus: Unfunded Pension Obligations: - Plus: Unfunded Pension Obligations: -
Plus: Capital Leases: 21.4 Plus: Capital Leases: 21.4
Plus: Restructuring & Other Liabilities: - Plus: Restructuring & Other Liabilities: -
Enterprise Value: $ 1,122.0 Purchase Enterprise Value: $ 1,308.9

Valuation of Target: $ in Millions Valuation of Target at Purchase Price: $ in Millions

Current Equity Value: $ 759.8 Purchase Equity Value: $ 946.7
Current Enterprise Value: 1,122.0 Purchase Enterprise Value: 1,308.9

LTM EV / Revenue: 1.4 x LTM EV / Revenue: 1.6 x

LTM EV / EBITDA: 6.8 x LTM EV / EBITDA: 7.9 x
Forward EV / Revenue: 1.3 x Forward EV / Revenue: 1.5 x
Forward EV / EBITDA: 6.4 x Forward EV / EBITDA: 7.4 x

Fees and Other Assumptions: % or # Years: $ in Millions Transaction Funding: % Used: $ in Millions
Advisory Fees: 1.37% $ 13.0 Debt Used: 74.0% $ 747.0
Capitalized Financing Fees: 2.75% 27.8 Equity Used: 26.0% 262.5
Amortization Period: 15
Annual Fee Amortization: 1.9
Legal and Other Fees: 22.0

Minimum Cash Balance: 15.0

Maximum Cash Available to Fund Deal: 5.7

Funds Required: $ in Millions

Equity Purchase Price: $ 946.7
Plus: Debt Refinanced: -
Plus: Transaction and Financing Fees: 62.8
Less: Excess Cash: -
Less: Equity Rollover: -
Total Funds Required: $ 1,009.4
Debt Assumptions:

Revolver Commitment from Bank: $ 110.5

Revolver Drawn? No
Total Debt Raised: $ 747.0

Interest LIBOR Prepay Principal Undrawn Years

Debt Tranche: %: $ in Millions x EBITDA Rate: Floor: Allowed: Repayment: Fee: PIK:

Revolver: 14.8% - 0.0 x L + 325 1.00% Yes 0.0% 0.50%

Term Loan - A: 25.0% 186.7 1.1 x L + 350 0.00% Yes 10.0%
Term Loan - B: 25.0% 186.7 1.1 x L + 450 0.00% Yes 2.0%
Senior Notes: 20.0% 149.4 0.9 x L + 675 1.00% No 0.0%
Subordinated Note: 15.0% 112.0 0.7 x 10.0% 0.00% No 0.0%
Mezzanine: 15.0% 112.0 0.7 x 12.0% 0.00% No 0.0% 5
Total: 114.8% $ 747.0 4.5 x

Non-Revolver Debt Total: 100.0%

Sources & Uses Schedule:

Sources: $ in Millions x EBITDA % Total: Uses: $ in Millions x EBITDA % Total:

Revolver: $ - 0.0 x 0.0% Equity Value of Company: $ 946.7 5.7 x 69.1%
Term Loan - A: 186.7 1.1 x 13.6% Refinance Existing Debt: - 0.0 x 0.0%
Term Loan - B: 186.7 1.1 x 13.6% Assume Existing Debt: 361.5 2.2 x 26.4%
Senior Notes: 149.4 0.9 x 10.9% Advisory, Legal & One-Time Fees: 35.0 0.2 x 2.6%
Subordinated Note: 112.0 0.7 x 8.2% Capitalized Financing Fees: 27.8 0.2 x 2.0%
Mezzanine: 112.0 0.7 x 8.2% Total Uses: $ 1,370.9 8.3 x 100.0%
Excess Cash: - 0.0 x 0.0%
Equity Rollover: - 0.0 x 0.0%
Assume Existing Debt: 361.5 2.2 x 26.4%
Sponsor Common Equity: 262.5 1.6 x 19.1%
Total Sources: $ 1,370.9 8.3 x 100.0%

Ownership Percentages: Pre-Deal: Post-Deal:

Rollover Investor Ownership %: 0.0% 0.0%
Existing Investor Ownership %: 100.0% 0.0%
New Investor Ownership %: 0.0% 100.0%
Total: 100.0% 100.0%
Goodwill Creation & Purchase Price Allocation:

Goodwill Calculation: $ in Millions Fixed Asset Write-Up: %: $ in Millions

Equity Purchase Price: $ 946.7 PP&E Write-Up: 4.0% $ 27.7
Less: Seller's Common Book Value: (160.8) Depreciation Period (Years): 12.5
Plus: Write-Off of Existing Goodwill: - Yearly Depreciation Expense: 2.2
Total Allocable Purchase Premium: 785.9
Intangible Asset Write-Up: %: $ in Millions
Less: Write-Up of PP&E: (27.7) Excess Purchase Price to Allocate: $ 785.9
Less: Write-Up of Intangibles: (414.1)
Less: Write-Down of Existing DTL: (57.8) Indefinite-Lived Intangibles: 50.9% 400.0
Plus: Write-Off of Existing DTA: 2.1
Plus: New Deferred Tax Liability: 170.7 Definite-Lived Intangibles: 1.8% 14.1
Total Goodwill Created: $ 459.1 Amortization Period (Years): 15
Yearly Amortization Expense: 0.9

New Deferred Tax Liability: 170.7

Historical Transaction Adjustments Projected

Revenue Assumptions: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

# of Beginning Stores: # Stores 497 507 507 514 522 532 542 552 562
New and Acquired Stores: # Stores 12 4 13 13 15 16 16 17 17
Closed Stores: # Stores (2) (4) (6) (5) (5) (6) (6) (7) (7)
# of Ending Stores: # Stores 507 507 514 522 532 542 552 562 572
Growth Rate in # of Stores: % 1.9% 1.9% 1.8% 1.8% 1.8%

# of Beginning Stores - Post-Toggle: # Stores 522 532 542 552 562

New and Acquired Stores - Post-Toggle: # Stores 15 16 16 17 17
Closed Stores - Post-Toggle: # Stores (5) (6) (6) (7) (7)
# of Ending Stores - Post-Toggle: # Stores 532 542 552 562 572
Growth Rate in # of Stores: % 1.9% 1.9% 1.8% 1.8% 1.8%

Sales per Comparable Store: $ Thousands $ 1,614 $ 1,596 $ 1,553 $ 1,573 $ 1,589 $ 1,605 $ 1,621 $ 1,637 $ 1,653
Growth in $ per Comparable: % 1.0% 1.0% 1.0% 1.0% 1.0%

Sales per Comparable Store - Post-Toggle: $ Thousands $ 1,589 $ 1,605 $ 1,621 $ 1,637 $ 1,653

Sales per New Store: $ Thousands $ 1,462 $ 1,806 $ 1,573 $ 1,455 $ 1,440 $ 1,426 $ 1,412 $ 1,398 $ 1,384
Growth in $ per New Store: % (1.0%) (1.0%) (1.0%) (1.0%) (1.0%)

Sales per New Store - Post-Toggle: $ Thousands $ 1,440 $ 1,426 $ 1,412 $ 1,398 $ 1,384

# of Comparable Stores: # Stores 473 475 480 485 496 506 515 524 534
% of Total Ending Stores: % 93.3% 93.7% 93.4% 92.9% 93.3% 93.3% 93.3% 93.3% 93.3%

Total Sales, Comparable Stores: $M 763.4 758.1 745.4 762.9 788.7 811.6 834.8 858.5 882.5
Total Sales, New Stores: $M 49.7 57.8 53.5 53.8 51.2 51.6 52.1 52.5 52.9
Total Store Sales: $M $ 813.1 $ 815.9 $ 798.9 $ 816.7 $ 839.9 $ 863.2 $ 886.9 $ 910.9 $ 935.4

Food and Beverage % Store Sales: % 49.0% 47.7% 46.7% 45.1% 45.0% 44.5% 44.0% 43.5% 43.0%
Entertainment and Merchandise % Store Sales: % 51.0% 52.3% 53.3% 54.9% 55.0% 55.5% 56.0% 56.5% 57.0%

Franchising Fees and Royalties: $M 4.1 5.3 4.5 5.0 4.7 4.7 4.7 4.7 4.7
 Historical Transaction Adjustments Projected
Expense Assumptions: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

Cost of Food and Beverage % Revenue - Base: % 22.8% 24.7% 25.0% 24.5% 24.3% 24.3% 24.3% 24.3% 24.3%
Cost of Ent. and Merchandise % Revenue - Base: % 8.3% 7.6% 7.2% 6.6% 6.4% 6.2% 6.0% 6.0% 6.0%

Post-Toggle Cost of Food and Beverage: $M 91.7 93.2 94.6 96.1 97.5
Post-Toggle Cost of Ent. and Merchandise: $M 29.6 29.7 29.8 30.9 32.0

Labor Expenses per Store - Base: $ Thousands 439 439 435 439 438 438 438 438 438
Other OpEx per Store - Base: $ Thousands 253 250 247 251 250 250 250 250 250
Rent Expense per Store - Base: $ Thousands 139 148 147 150 151 152 152 153 153

Post-Toggle Labor Expenses per Store: $ Thousands 438 438 438 438 438
Post-Toggle Rent Expense per Store: $ Thousands 250 250 250 250 250
Post-Toggle Other OpEx per Store: $ Thousands 151 152 152 153 153

Advertising Expense % Revenue: % 4.3% 4.3% 4.4% 5.0% 5.0% 5.1% 5.3% 5.5% 5.5%
G&A Expense % Revenue: % 6.2% 6.3% 6.7% 6.9% 6.9% 7.1% 7.1% 7.1% 7.1%

Asset Impairments: $M 0.9 2.7 6.8 3.1 - - - - -

Goodwill Impairment: $M - - - - - - - - -

Historical Transaction Adjustments Projected

CapEx and Depreciation Schedule: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

Average Useful Life of PP&E: # Years 12.5

CapEx - Existing Stores: $M $ 65.0 $ 67.8 $ 43.1 $ 19.0 $ 29.0 $ 23.9 $ 28.4 $ 33.1 $ 37.9
CapEx - New Stores: $M 20.0 10.3 37.4 32.0 37.1 40.8 42.4 46.8 48.5
CapEx - Corporate & General: $M 14.8 16.6 22.0 23.0 23.7 26.9 30.3 33.9 37.6
Total CapEx: $M 99.8 94.7 102.5 74.0 89.7 91.6 101.1 113.7 123.9

Stores Renovated or Expanded: # Stores 223 181 125 162 263 199 203 207 210
% of Total Existing Stores: % 44.9% 35.7% 24.7% 31.5% 50.4% 37.4% 37.4% 37.4% 37.4%

CapEx per Existing Store: $M 0.29 0.37 0.34 0.12 0.11 0.12 0.14 0.16 0.18
CapEx per New Store: $M 1.67 2.58 2.88 2.46 2.47 2.55 2.65 2.75 2.85

General CapEx % Revenue: % 1.8% 2.0% 2.7% 2.8% 2.8% 3.1% 3.4% 3.7% 4.0%

Post-Toggle Total CapEx: $M $ 89.7 $ 91.6 $ 101.1 $ 113.7 $ 123.9

% Revenue: % 12.2% 11.5% 12.8% 9.0% 10.6% 10.6% 11.3% 12.4% 13.2%

Depreciation of Existing Assets % Revenue: % 9.9% 9.9% 9.9% 9.6% 8.5% 8.0% 7.5% 7.0% 6.5%
Depreciation of Existing Assets: $M 71.8 69.4 66.9 64.1 61.1

New CapEx Depreciation - Year 1: $M 7.2 7.2 7.2 7.2 7.2

New CapEx Depreciation - Year 2: $M 7.3 7.3 7.3 7.3
New CapEx Depreciation - Year 3: $M 8.1 8.1 8.1
New CapEx Depreciation - Year 4: $M 9.1 9.1
New CapEx Depreciation - Year 5: $M 9.9
Total Depreciation on New CapEx: $M 7.2 14.5 22.6 31.6 41.5

Total Depreciation: $M $ 80.7 $ 81.6 $ 79.5 $ 79.0 $ 79.0 $ 83.9 $ 89.4 $ 95.7 $ 102.7
% Revenue: % 9.9% 9.9% 9.9% 9.6% 9.3% 9.7% 10.0% 10.5% 10.9%

Historical Transaction Adjustments Projected

Balance Sheet and Cash Flow Statement: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

Accounts Receivable % Revenue: % 3.9% 3.0% 3.3% 3.0% 3.3% 3.3% 3.3% 3.3% 3.3%
Inventories % COGS: % 14.8% 14.5% 15.3% 16.0% 16.3% 16.5% 16.7% 16.9% 17.1%
Prepaid Expenses % OpEx: % 2.4% 2.6% 3.0% 3.3% 3.5% 3.7% 3.9% 4.1% 4.3%

Accounts Payable % COGS: % 34.3% 25.6% 26.3% 29.8% 29.0% 29.0% 29.0% 29.0% 29.0%
Accrued Expenses % OpEx: % 5.6% 5.8% 5.9% 5.5% 5.7% 5.7% 5.7% 5.7% 5.7%
Unearned Revenues % Revenue: % 1.1% 1.2% 1.5% 1.8% 1.9% 2.1% 2.3% 2.5% 2.7%
Other Current Liabilities % OpEx: % 0.5% 0.9% 0.4% 0.2% 0.5% 0.5% 0.5% 0.5% 0.5%
Other Noncurrent Liabilities % OpEx: % 17.1% 16.9% 16.9% 16.9% 16.9% 16.9% 16.9% 16.9% 16.9%

Stock-Based Compensation % Revenue: % 0.9% 0.9% 0.9% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9%

Other Non-Cash Items: $M 1.6 1.8 2.2 1.5 1.8 1.8 1.8 1.8 1.8
Other Investing Activities: $M (3.0) 0.0 0.6 3.1 - - - - -

Total Capital Lease Payments: $M 37.2

Amounts Representing Interest: $M 15.9
Capital Lease Payments in Projections: $M 13.0
Interest Payments in Projections: 5.6

Total Capital Lease Expense: $M 2.6 2.6 2.5 2.5 2.9

Less: Interest Portion: $M (1.1) (1.1) (1.0) (1.1) (1.2)
Capital Lease Principal Payments: $M 1.5 1.5 1.4 1.4 1.7

Revolver Borrowing / (Repayments): $M 22.7 12.6 (0.1) (28.0) - - - - -

Payments on Capital Leases: $M (0.9) (0.9) (0.9) (1.0) (1.5) (1.5) (1.4) (1.4) (1.7)
Other Financing Items: $M 3.7 (3.4) (2.0) (1.9) - - - - -
Dividends Paid: $M - (11.5) (19.8) (17.1) - - - - -
Purchases of Treasury Stock: $M (77.6) (79.8) (14.4) (18.1) - - - - -

Effect of FX Rate Changes on Cash: $M 0.1 (0.2) 0.1 (0.6) (0.2) (0.2) (0.2) (0.2) (0.2)
 Historical Transaction Adjustments Projected
Income Statement: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

Revenue:
Food and Beverage: $M $ 398.2 $ 388.9 $ 372.9 $ 368.6 $ 378.0 $ 384.1 $ 390.2 $ 396.3 $ 402.2
Entertainment and Merchandise: $M 414.9 427.0 426.0 448.2 462.0 479.1 496.7 514.7 533.2
Franchising Fees and Royalties: $M 4.1 5.3 4.5 5.0 4.7 4.7 4.7 4.7 4.7
Total Revenue: $M 817.2 821.2 803.5 821.7 844.7 868.0 891.6 915.7 940.1
Revenue Growth: % 0.5% 0.5% (2.2%) 2.3% 2.8% 2.8% 2.7% 2.7% 2.7%

Cost of Goods Sold (COGS):

Cost of Food and Beverage: $M 90.6 96.0 93.4 90.4 91.7 93.2 94.6 96.1 97.5
Cost of Entertainment and Merchandise: $M 34.2 32.4 30.9 29.8 29.6 29.7 29.8 30.9 32.0
Total COGS: $M 124.9 128.4 124.3 120.1 121.2 122.9 124.4 127.0 129.5

Gross Profit: $M 692.4 692.8 679.2 701.6 723.4 745.1 767.2 788.7 810.6
Gross Margin: % 84.7% 84.4% 84.5% 85.4% 85.6% 85.8% 86.0% 86.1% 86.2%

Operating Expenses:
Store Operating Costs:
Labor Expenses: $M 222.3 222.6 223.6 229.2 233.0 237.3 241.7 246.1 250.5
Rent Expense: $M 70.4 75.0 75.3 78.5 133.1 135.6 138.1 140.6 143.1
Other Store Operating Expenses: $M 128.1 126.8 126.9 131.0 80.3 82.4 83.9 86.0 87.5
Depreciation and Amortization: $M 79.7 80.8 78.8 78.2 79.0 83.9 89.4 95.7 102.7
Depreciation of PP&E Write-Up: $M - - - -
New Intangibles Amortization: $M - - - -
Total Store Operating Costs: $M 500.6 505.3 504.5 516.8 525.3 539.2 553.2 568.4 583.7

Other Costs and Expenses:

Advertising: $M 35.3 35.0 35.4 41.2 42.2 44.3 47.3 50.4 51.7
General and Administrative: $M 50.7 51.9 53.4 57.0 58.3 61.6 63.3 65.0 66.7
Asset Impairments: $M 0.9 2.7 6.8 3.1 - - - - -
Goodwill Impairment: $M - - - - - - - - -
Total Other Costs and Expenses: $M 86.9 89.6 95.6 101.3 100.5 105.9 110.6 115.4 118.5

Total Operating Expenses: $M 587.5 594.8 600.1 618.1 625.9 645.1 663.7 683.8 702.2

Operating Income (EBIT): $M 104.9 98.0 79.1 83.5 97.6 100.0 103.5 104.9 108.4
Operating (EBIT) Margin: % 12.8% 11.9% 9.8% 10.2% 11.6% 11.5% 11.6% 11.5% 11.5%

Net Interest Expense: $M (12.1) (8.9) (9.4) (7.5)

Amortization of Financing Fees: $M - - - -
Net Interest Expense: $M (12.1) (8.9) (9.4) (7.5) - - - - -

Pre-Tax Income: $M 92.8 89.1 69.7 76.0 97.6 100.0 103.5 104.9 108.4
Tax Provision / (Benefit): $M 38.7 34.1 26.1 28.2 37.7 38.6 40.0 40.5 41.9

Effective Tax Rate: % 41.7% 38.3% 37.4% 37.1% 38.6% 38.6% 38.6% 38.6% 38.6%

Net Income: $M $ 54.0 $ 55.0 $ 43.6 $ 47.8 $ 59.9 $ 61.3 $ 63.5 $ 64.4 $ 66.5
Net Margin: % 6.6% 6.7% 5.4% 5.8% 7.1% 7.1% 7.1% 7.0% 7.1%

EBITDA: $M 186.5 182.3 165.3 165.6 176.5 183.9 192.9 200.6 211.0
EBITDA Margin: % 22.8% 22.2% 20.6% 20.1% 20.9% 21.2% 21.6% 21.9% 22.4%
 Historical Transaction Adjustments Projected
Deferred Tax and NOL Schedule: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

Initial Net Operating Losses (NOLs): $M $ -

Pre-Tax Income: $M
Plus: Depreciation of PP&E Write-Up: $M
Plus: New Intangibles Amortization: $M
Pre-NOL Taxable Income: $M

Increase / (Decrease) in DTL: $M

Beginning NOL Balance: $M

Plus: NOLs Created: $M
Less: NOLs Used: $M
Ending NOL Balance: $M

NOL-Adjusted Pre-Tax Income: $M

Cash Taxes Payable: $M

Increase / (Decrease) in DTA: $M

 Historical Transaction Adjustments Projected
Balance Sheet: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18
ASSETS:
Current Assets:
Cash and Cash Equivalents: $M $ 19.3 $ 18.7 $ 19.6 $ 20.7 $ - $ - $ 20.7 $ 78.5 $ 144.3 $ 208.3 $ 267.6 $ 325.4
Accounts Receivable: $M 32.2 24.3 26.4 24.9 - - 24.9 27.9 28.7 29.5 30.2 31.1
Inventories: $M 18.5 18.7 19.0 19.3 - - 19.3 19.8 20.3 20.8 21.5 22.1
Prepaid Expenses: $M 13.9 15.4 18.2 20.1 - - 20.1 21.9 23.9 25.9 28.0 30.2
Deferred Tax Assets: $M 3.4 3.7 2.9 2.1 - (2.1) - - - - - -
Total Current Assets: $M 87.4 80.7 86.1 87.0 84.9 148.1 217.1 284.4 347.4 408.8

Noncurrent Assets:
Property and Equipment, Net: $M 683.2 683.4 704.0 691.5 27.7 - 719.1 729.8 737.5 749.2 767.1 788.4
Goodwill: $M - - - - 459.1 - 459.1 459.1 459.1 459.1 459.1 459.1
Other Intangible Assets: $M - - - - 414.1 - 414.1 414.1 414.1 414.1 414.1 414.1
Capitalized Financing Fees: $M - - - - 27.8 - 27.8 27.8 27.8 27.8 27.8 27.8
Other Noncurrent Assets: $M 7.5 8.4 11.8 13.1 - - 13.1 11.4 9.6 7.8 6.0 4.2
Total Noncurrent Assets: $M 690.7 691.8 715.7 704.6 1,633.3 1,642.2 1,648.1 1,658.0 1,674.2 1,693.7

Total Assets: $M $ 778.0 $ 772.5 $ 801.8 $ 791.6 $ 1,718.2 $ 1,790.3 $ 1,865.2 $ 1,942.5 $ 2,021.5 $ 2,102.5

LIABILITIES AND EQUITY:

Current Liabilities, Excluding Debt:
Accounts Payable: $M $ 42.8 $ 32.9 $ 32.7 $ 35.8 $ - $ - $ 35.8 $ 35.2 $ 35.6 $ 36.1 $ 36.8 $ 37.6
Accrued Expenses: $M 33.0 34.6 35.5 34.0 - - 34.0 35.8 36.9 37.9 39.1 40.1
Unearned Revenues: $M 9.4 9.9 11.8 14.5 - - 14.5 16.0 18.2 20.5 22.9 25.4
Other Current Liabilities: $M 2.9 5.5 2.1 1.4 - - 1.4 3.1 3.2 3.3 3.4 3.5
Total Current Liabilities, Excl. Debt: $M 88.1 82.9 82.1 85.7 85.7 90.1 93.9 97.8 102.2 106.6

Noncurrent Liabilities, Including All Debt:

Existing Debt: $M 377.0 389.6 389.5 361.5 - - 361.5 361.5 361.5 361.5 361.5 361.5
Total Capital Leases: $M 11.3 10.9 22.7 21.4 - - 21.4 19.9 18.4 17.0 15.5 13.9
Other Noncurrent Liabilities: $M 100.5 100.6 101.3 104.4 - - 104.4 106.1 109.3 112.5 115.9 119.0
Deferred Tax Liability: $M 43.0 64.4 62.9 57.8 (57.8) 170.7 170.7 170.7 170.7 170.7 170.7 170.7
Revolver: $M - - - - - - -
Term Loan - A: $M - - - - - 186.7 186.7
Term Loan - B: $M - - - - - 186.7 186.7
Senior Notes: $M - - - - - 149.4 149.4
Subordinated Note: $M - - - - - 112.0 112.0
Mezzanine: $M - - - - - 112.0 112.0 112.0 112.0 112.0 112.0 112.0
Total Noncurrent Liabilities + Debt: $M 531.8 565.4 576.5 545.2 1,405.0 770.2 772.0 773.8 775.7 777.2

Total Liabilities: $M $ 620.0 $ 648.3 $ 658.5 $ 630.8 $ 1,490.7 $ 860.3 $ 866.0 $ 871.6 $ 877.9 $ 883.8

Equity:
Common Stock & APIC: $M $ 442.2 $ 448.1 $ 453.6 $ 459.9 $ (459.9) $ - $ - $ 7.9 $ 16.0 $ 24.3 $ 32.9 $ 41.6
Retained Earnings: $M 756.4 795.6 823.0 853.5 (888.4) - (35.0) 24.9 86.2 149.7 214.1 280.5
Accum. Other Compr. Income: $M 4.5 5.3 5.9 4.8 (4.8) - - (0.2) (0.4) (0.5) (0.7) (0.9)
Treasury Stock: $M (1,045.1) (1,124.9) (1,139.2) (1,157.3) 1,157.3 - - - - - - -
Equity Rollover: $M - - - - - - - - - - - -
Sponsor Common Equity: $M - - - - - 262.5 262.5 262.5 262.5 262.5 262.5 262.5
Total Equity: $M $ 158.1 $ 124.2 $ 143.3 $ 160.8 $ 227.5 $ 295.1 $ 364.3 $ 435.9 $ 508.7 $ 583.7

Total Liabilities and Equity: $M $ 778.0 $ 772.5 $ 801.8 $ 791.6 $ 1,718.2 $ 1,155.4 $ 1,230.3 $ 1,307.5 $ 1,386.6 $ 1,467.5

Balance Sheet Check: OK! OK! OK! OK! OK! $635 $635 $635 $635 $635
 Historical Transaction Adjustments Projected
Cash Flow Statement: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income: $M $ 54.0 $ 55.0 $ 43.6 $ 47.8 $ 59.9 $ 61.3 $ 63.5 $ 64.4 $ 66.5
Adjustments for Non-Cash Charges:
Depreciation & Amortization: $M 80.7 81.6 79.5 79.0 79.0 83.9 89.4 95.7 102.7
Depreciation of PP&E Write-Up: $M - - - -
New Intangibles Amortization: $M - - - -
Amortization of Financing Fees: $M - - - -
Accrual of PIK Interest: $M - - - -
Change in Deferred Tax Liability: $M 7.2 20.3 (0.8) (3.0)
Change in Deferred Tax Asset: $M - - - -
Stock-Based Compensation: $M 7.3 7.2 7.5 8.5 7.9 8.1 8.3 8.5 8.8
Asset Impairments: $M 0.9 2.7 6.8 3.1 - - - - -
Goodwill Impairment: $M - - - - - - - - -
Other Non-Cash Items: $M 1.6 1.8 2.2 1.5 1.8 1.8 1.8 1.8 1.8
Changes in Operating Assets and Liabilities:
Accounts Receivable: $M 1.1 3.1 (1.6) 0.6 (3.0) (0.8) (0.8) (0.8) (0.8)
Inventories: $M (0.4) (0.7) (0.6) (0.4) (0.5) (0.5) (0.5) (0.7) (0.7)
Prepaid Expenses: $M 0.0 (1.7) (4.2) (1.3) (1.8) (2.0) (2.0) (2.2) (2.2)
Accounts Payable: $M 6.7 (2.4) 0.4 (2.4) (0.6) 0.5 0.5 0.7 0.7
Accrued Expenses: $M 0.3 (0.3) 1.1 (0.3) 1.8 1.1 1.1 1.1 1.1
Unearned Revenues: $M 1.7 0.5 1.9 2.7 1.5 2.2 2.3 2.4 2.5
Other Current Liabilities: $M 0.1 (0.0) (0.4) (0.7) 1.7 0.1 0.1 0.1 0.1
Other Noncurrent Liabilities: $M (4.5) 10.4 1.6 3.5 1.6 3.3 3.2 3.4 3.1
Net Cash Provided by Operating Activities: $M $ 156.9 $ 177.2 $ 137.1 $ 138.7 $ 149.2 $ 159.0 $ 166.8 $ 174.6 $ 183.5

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of Property & Equipment: $M (99.8) (94.7) (99.5) (74.1) (89.7) (91.6) (101.1) (113.7) (123.9)
Other Investing Activities: $M (3.0) 0.0 0.6 3.1 - - - - -
Net Cash Used in Investing Activities: $M $ (102.9) $ (94.7) $ (98.9) $ (70.9) $ (89.7) $ (91.6) $ (101.1) $ (113.7) $ (123.9)

CASH FLOWS FROM FINANCING ACTIVITIES:

Revolver Borrowing / (Repayments): $M 22.7 12.6 (0.1) (28.0) - - - - -
Payments on Capital Leases: $M (0.9) (0.9) (0.9) (1.0) (1.5) (1.5) (1.4) (1.4) (1.7)
Other Financing Items: $M 3.7 (3.4) (2.0) (1.9) - - - - -
Dividends Paid: $M - (11.5) (19.8) (17.1) - - - - -
Purchases of Treasury Stock: $M (77.6) (79.8) (14.4) (18.1) - - - - -
Net Cash Used in Financing Activities: $M $ (52.2) $ (83.0) $ (37.3) $ (66.0) $ (1.5) $ (1.5) $ (1.4) $ (1.4) $ (1.7)

Effect of FX Rate Changes on Cash: $M 0.1 (0.2) 0.1 (0.6) (0.2) (0.2) (0.2) (0.2) (0.2)

Cash Flow Available for Debt Repayment: $M $ 57.8 $ 65.8 $ 64.1 $ 59.3 $ 57.8

Existing Debt: $M
Revolver: $M
Term Loan - A: $M
Term Loan - B: $M
Senior Notes: $M
Subordinated Note: $M
Mezzanine: $M
Total Cash Flow Used to Repay Debt: $M

Net Change in Cash: $M 1.9 (0.6) 1.0 1.1 57.8 65.8 64.1 59.3 57.8
Beginning Cash: $M 17.4 19.3 18.7 19.6 20.7 78.5 144.3 208.3 267.6
Ending Cash: $M $ 19.3 $ 18.7 $ 19.6 $ 20.7 $ 78.5 $ 144.3 $ 208.3 $ 267.6 $ 325.4
 Historical Transaction Adjustments Projected
Debt & Interest Schedule: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

Year Number: Number 1 2 3 4 5

LIBOR Curve: % 0.34% 0.34% 0.43% 0.27% 0.30% 0.30% 0.50% 1.00% 2.00%

Planned Repayments of Existing Debt: $M - - 361.5 - -

Planned Interest on Existing Debt: $M 6.0 5.5 5.5 - -

LIBOR Fixed LIBOR

Interest Rate Assumptions: Spread: Interest: Floor:
Revolver: % 3.25% 1.00%
Term Loan - A: % 3.50% –
Term Loan - B: % 4.50% –
Senior Notes: % 6.75% 1.00%
Subordinated Note: % 10.0%
Mezzanine: % 12.0%

Interest Expense Calculations:

Existing Debt: $M
Capital Lease Interest: $M
Undrawn Revolver Commitment Fee: $M
Revolver: $M
Term Loan - A: $M
Term Loan - B: $M
Senior Notes: $M
Subordinated Note: $M
Mezzanine: $M
Net Interest Expense: $M

Sources of Funds:
Beginning Cash Balance: $M 20.7 78.5 144.3 208.3 267.6
Less: Minimum Cash Balance: $M (15.0) (15.0) (15.0) (15.0) (15.0)
Plus: Cash Flow Available for Debt Repayment: $M 57.8 65.8 64.1 59.3 57.8
Subtotal Before Revolver: $M 63.5 129.3 193.3 252.6 310.4
Revolver Borrowing Required: $M - - 190.6 - -
Total Sources of Funds: $M 63.5 129.3 383.9 252.6 310.4

Uses of Funds:
Mandatory Debt Repayment:
Existing Debt: $M - - 361.5 - -
Revolver: $M - - - - -
Term Loan - A: $M 18.7 18.7 18.7 18.7 18.7
Term Loan - B: $M 3.7 3.7 3.7 3.7 3.7
Senior Notes: $M - - - - -
Subordinated Note: $M - - - - -
Mezzanine: $M - - - - -
Mandatory Repayment Total: $M 22.4 22.4 383.9 22.4 22.4

Optional Debt Repayment:

Existing Debt: $M
Revolver: $M
Term Loan - A: $M
Term Loan - B: $M
Senior Notes: $M
Subordinated Note: $M
Mezzanine: $M
Optional Repayment Total: $M

Excess Cash Generated on BS: $M

Total Uses of Funds: $M

BALANCE CHECK
 Historical Transaction Adjustments Projected
Key Metrics and Ratios: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

EBITDA: $M $ 186.5 $ 182.3 $ 165.3 $ 165.6

EBITDA - CapEx: $M 86.7 87.6 65.8 91.5
EBITDA - CapEx +/- Change in WC: $M 91.8 96.3 64.2 93.2

Total Debt, Including Capital Leases: $M 388.3 400.5 412.2 382.9

Net Debt, Including Capital Leases: $M 369.0 381.8 392.6 362.2
Total Equity: $M 158.1 124.2 143.3 160.8
Total Capital: $M 546.3 524.7 555.5 543.6
Net Capital: $M 527.1 506.0 535.9 523.0

Revenue Growth: % 0.5% 0.5% (2.2%) 2.3%

Operating Margin: % 12.8% 11.9% 9.8% 10.2%
EBITDA Margin: % 22.8% 22.2% 20.6% 20.1%
Net Margin: % 6.6% 6.7% 5.4% 5.8%

Effective Tax Rate: % 41.7% 38.3% 37.4% 37.1%

D&A % Revenue: % 9.9% 9.9% 9.9% 9.6%

CapEx % Revenue: % 12.2% 11.5% 12.8% 9.0%

Total Debt / EBITDA: x 2.1 x 2.2 x 2.5 x 2.3 x

Total Debt / (EBITDA - CapEx): x 4.5 x 4.6 x 6.3 x 4.2 x
Total Debt / (EBITDA - CapEx +/- Change in WC): x 4.2 x 4.2 x 6.4 x 4.1 x

Net Debt / EBITDA: x 2.0 x 2.1 x 2.4 x 2.2 x

Net Debt / (EBITDA - CapEx): x 4.3 x 4.4 x 6.0 x 4.0 x
Net Debt / (EBITDA - CapEx +/- Change in WC): x 4.0 x 4.0 x 6.1 x 3.9 x

EBITDA / Net Interest Expense: x 15.4 x 20.5 x 17.6 x 22.2 x

(EBITDA - CapEx) / Net Interest Expense: x 7.1 x 9.9 x 7.0 x 12.3 x
(EBITDA - CapEx +/- Change in WC) / Net Interest: x 7.6 x 10.9 x 6.8 x 12.5 x

Total Debt / Equity: x 2.5 x 3.2 x 2.9 x 2.4 x

Total Debt / Capital: % 71.1% 76.3% 74.2% 70.4%
Net Debt / Equity: x 2.3 x 3.1 x 2.7 x 2.3 x
Net Debt / Net Capital: % 70.0% 75.5% 73.3% 69.3%

Debt Service Coverage Ratio: x

Cumulative Debt Paydown: $M

Cumulative Paydown % Initial Debt: %

Free Cash Flow Conversion Analysis:

EBITDA: $M $ 186.5 $ 182.3 $ 165.3 $ 165.6
Less: CapEx: $M (99.8) (94.7) (99.5) (74.1)
Less: Net Interest Expense: $M (12.1) (8.9) (9.4) (7.5)
Less: Taxes: $M (38.7) (34.1) (26.1) (28.2)
Plus: Stock-Based Compensation: $M 7.3 7.2 7.5 8.5
Plus/Less: Other Non-Cash Items: $M 8.8 22.1 1.4 (1.5)
Plus/Less: Change in WC: $M 5.1 8.7 (1.6) 1.8
Free Cash Flow: $M $ 57.0 $ 82.6 $ 37.6 $ 64.6
FCF Conversion %: % 30.6% 45.3% 22.7% 39.0%
FCF Yield %: %
 Historical Transaction Adjustments Projected
Returns Calculations: Units FY10 FY11 FY12 FY13 Debit Credit FY13 FY14 FY15 FY16 FY17 FY18

EBITDA Exit Multiple: x

EBITDA: $M

Exit Enterprise Value: $M

Less: Net Debt: $M
Equity Value on Exit: $M
Investor Equity: $M

Returns to Investors:
Sponsor Common Equity:
Initial Investment: $M
Dividends: $M
Investor Equity: $M
Total Cash Flows: $M

Money-on-Money (MoM) Multiple: x

Internal Rate of Return (IRR): %
IRR for Sensitivities: %

Returns Attribution Analysis: Amount: %:

EBITDA Growth: $M
Multiple Expansion: $M
Debt Paydown, Dividends, and Cash: $M
Total Return to Equity Investors: $M
Sensitivity Analyses:

Sensitivity Analysis - IRR and Purchase Premium vs. Exit Multiple:

EBITDA Exit Multiple:

0.0% 6.0 x 6.5 x 7.0 x 7.5 x 7.9 x 8.5 x 9.0 x 9.5 x 10.0 x
$ 47.67 10.0%
49.84 15.0%
Purchase Premium and 52.01 20.0%
Per Share Offer Price in 54.00 24.6%
USD: 56.34 30.0%
58.51 35.0%
60.68 40.0%

Sensitivity Analysis - IRR and Purchase Premium vs. % Debt:

% Debt:
0.0% 55.0% 60.0% 65.0% 70.0% 74.0% 80.0% 85.0% 90.0% 95.0%
$ 47.67 10.0%
49.84 15.0%
Purchase Premium and 52.01 20.0%
Per Share Offer Price in 54.00 24.6%
USD: 56.34 30.0%
58.51 35.0%
60.68 40.0%

Sensitivity Analysis - IRR and Exit Year vs. Exit Multiple:

EBITDA Exit Multiple:

0.0% 6.0 x 6.5 x 7.0 x 7.5 x 7.9 x 8.5 x 9.0 x 9.5 x 10.0 x
FY 2014 2014-12-31
FY 2015 2015-12-31
LBO Exit Year: FY 2016 2016-12-31
FY 2017 2017-12-31
FY 2018 2018-12-31

Sensitivity Analysis - IRR and Purchase Premium vs. # Stores per Year:

Stores per Year - Differential to Base Case Estimates:

Year 5 (4.0%) (3.0%) (2.0%) (1.0%) 0.0% 1.0% 2.0% 3.0% 4.0%
# Stores: 57200.0%
$ 47.67 10.0%
49.84 15.0%
Purchase Premium and 52.01 20.0%
Per Share Offer Price in 54.00 24.6%
USD: 56.34 30.0%
58.51 35.0%
60.68 40.0%
Sensitivity Analysis - IRR and Purchase Premium vs. Sales per Stores:

Sales per Store - Differential to Base Case Estimates:

Year 5 (4.0%) (3.0%) (2.0%) (1.0%) 0.0% 1.0% 2.0% 3.0% 4.0%
Revenue: 94008.3%
$ 47.67 10.0%
49.84 15.0%
Purchase Premium and 52.01 20.0%
Per Share Offer Price in 54.00 24.6%
USD: 56.34 30.0%
58.51 35.0%
60.68 40.0%

Sensitivity Analysis - IRR and Purchase Premium vs. Capital Expenditures:

Total CapEx - Differential to Base Case Estimates:

Year 5 (20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0%
Free Cash Flow: 0.0%
$ 47.67 10.0%
49.84 15.0%
Purchase Premium and 52.01 20.0%
Per Share Offer Price in 54.00 24.6%
USD: 56.34 30.0%
58.51 35.0%
60.68 40.0%

Sensitivity Analysis - IRR and Purchase Premium vs. COGS and Store-Level Expense Differentials:

COGS and Store-Level Expenses - Differential to Base Case Estimates:

Year 5 (4.0%) (3.0%) (2.0%) (1.0%) 0.0% 1.0% 2.0% 3.0% 4.0%
EBITDA Margin: 22.4%
$ 47.67 10.0%
49.84 15.0%
Purchase Premium and 52.01 20.0%
Per Share Offer Price in 54.00 24.6%
USD: 56.34 30.0%
58.51 35.0%
60.68 40.0%