Merger Assumptions for Tony Company Inc & Trick 'n' Porter Co

Assumptions
Transaction Inputs Scenarios
Acquirer Name Tony Company Inc Scenario #
Target Name Trick 'n' Porter Co
Acquirer Share Price $20.35 Synergies
Target Share Price $36.45 Revenue enhancement
Transaction Close Date 7/31/2017 COGS savings
Financial Reporting Units $ 000s Marketing savings
Currency USD General & Admin savings

Restructuring Charges 1,500 Synergies in Year 1 (full yr.)

Equity Issuance Fees 2.5% Synergies in Year 2
Debt Issuance Fees 2.5% Synergies in Years 3+
Other Closing Costs 2,200
Financing
Replace Target Debt Yes Debt Tranche
Replace Acquirer Debt No Senior Debt A
Senior Debt B
Acquirer FD Shares Outstanding 44,000 Subordinated Debt
Target FD Share Outstanding 19,000 Interest Rate
Shares Issued 44,779 Senior Debt A
Pro Forma Shares Outstanding 88,779 Senior Debt B
Subordinated Debt
Share Issuance Discount 1.2%
Share Issuance Price $20.11
Transaction
Takeover Premium
Purchase Price Cash Consideration
Target Share Price $36.45
Takeover Premium 30.0%
Offer Price $47.39
Sources & Uses of Cash
Acquirer Share Price $20.35 Sources of Cash
Share Exchange Ratio 2.357 Cash
Stock Issued
Target Shares Outstanding 19,000 Debt Issued
Offer Price $47.39
Purchase Price 900,315
Target Debt 152,353
Target Cash 286,804
Enterprise Value 765,865 Total Sources

Goodwill and Purchase Price Allocation

Fair Market Value Book Value Fair Value Adjustment
Inventory & Other Current Assets 309,125 457,632 148,507
Target PP&E 55,267 89,656 34,389
Identifiable Intangibles
Net Identifiable Assets 364,392 547,288 182,896

Closing Balance Sheet

Pro Forma Consolidated Balance Sheet
Step # 1 2 3
Acquirer Target Fair Value
7/31/2017 7/31/2017
Assets
Cash 357,722 286,804
Accounts Receivable 16,346 9,567
Inventory 26,464 12,755 148,507
Current Assets 400,533 309,125
Property & Equipment 159,665 55,267 34,389
Goodwill - -
Total Assets 560,198 364,392

Liabilities
Short Term Debt - -
Accounts Payable 10,897 6,560
Current Liabilities 10,897 6,560
Long Term Debt 133,130 152,353
Total Liabilities 144,027 158,913
Shareholder's Equity
Equity Capital 182,804 145,648
Retained Earnings 233,367 59,831
Shareholder's Equity 416,171 205,479
Total Liabilities & Shareholder's Equity 560,198 364,392

Check 0.000 0.000

Accretion/Dilution Analysis

Earnings Per Share

Acquirer Net Earnings
Target Net Earnings
Pro Forma Net Earnings

Acquirer Shares O/S

Target Share O/S
Pro Forma Shares O/S

Acquirer EPS
Target EPS
Pro Forma EPS

Accretion/Dilution

Cash Flow Per Share

Acquirer Cash Flow
Target Cash Flow
Pro Forma Cash Flow

Acquirer Shares O/S

Target Share O/S
Pro Forma Shares O/S

Acquirer CFPS
Target CFPS
Pro Forma CFPS

Accretion/Dilution
 LIVE --> 5 1 2 3 4

nue enhancement 6,700 5,300 6,100 6,300 6,700

865 865 865 865 865
eting savings 1,280 1,280 1,280 1,280 1,280
ral & Admin savings 970 970 970 970 970

gies in Year 1 (full yr.) 25% 25% 25% 25% 25%

gies in Year 2 70% 70% 70% 70% 70%
gies in Years 3+ 100% 100% 100% 100% 100%

115,000 - 115,000 115,000 115,000

40,000 - - 40,000 40,000
rdinated Debt 30,000 - - - 30,000

6% 5.70% 5.70% 5.70% 5.70%

6% 6.10% 6.10% 6.10% 6.10%
rdinated Debt 9% 8.50% 8.50% 8.50% 8.50%

over Premium 30% 10.0% 12.0% 15.0% 20.0%

Consideration 55% 0.0% 25.0% 30.0% 40.0%

es & Uses of Cash

Uses of Cash
479,480 Cash Consideration
405,142 Stock Consideration
185,000 Target Debt - Replace
Acquirer Debt - Replace
Debt Financing Fees
Equity Financing Fees
Other Closing Costs
 1,069,622 Total Uses

Purchase Price Allocation

Total Purchase Price
Net Book Value of Assets
Excess Purchase Price
Write-off Existing Goodwill
Fair Value Adjustments
Excess Purchase Price After Adjustments
Goodwill

4 5 6 7 8 9
Target PF Purchase Financing Financing Financing Total Adj.
Transaction Debt + Equity Fess Re-fi Debt

286,804 (495,173) 185,000 (16,954) (152,353) (192,677)

9,567 9,567
161,262 161,262
(21,848)
89,656 89,656
- 511,940 511,940
579,748

- -
6,560 6,560
6,560
152,353 185,000 (152,353) 185,000
191,560

145,648 (145,648) 405,142 405,142

59,831 (59,831) (16,954) (16,954)
388,188
579,748

0.000
 2018 2019 2020 2021

59,344 76,369 82,258 88,232

39,183 52,233 61,232 64,023
96,461 132,040 151,264 161,773

44,000 44,000 44,000 44,000

19,000 19,000 19,000 19,000
88,779 88,779 88,779 88,779

1.35 1.74 1.87 2.01

2.06 2.75 3.22 3.37
1.09 1.49 1.70 1.82

-19.4% -14.3% -8.9% -9.1%

441,443 524,269 610,884 697,025

347,278 402,787 465,508 529,449
400,319 508,900 641,265 778,963

44,000 44,000 44,000 44,000

19,000 19,000 19,000 19,000
88,779 88,779 88,779 88,779

10.03 11.92 13.88 15.84

18.28 21.20 24.50 27.87
4.51 5.73 7.22 8.77

-55.1% -51.9% -48.0% -44.6%

 5

6,700 9,000
865 900
1,280 2,000
970 1,000

25%
70%
100%

115,000
40,000
30,000

5.70%
6.10%
8.50%

30.0%
55.0%

495,173
405,142
152,353
-
4,625
10,129
2,200
1,069,622

900,315
205,479
694,836

182,896
511,940
511,940

10
Consol
7/31/2017

165,046
25,912
187,726
378,685
249,321
511,940
1,139,946

-
17,457
17,457
318,130
335,587

587,946
216,413
804,359
1,139,946

0.000
 2022

99,312
70,891
181,414

44,000
19,000
88,779

2.26
3.73
2.04

-9.5%

798,980
592,504
927,593

44,000
19,000
88,779

18.16
31.18
10.45

-42.5%
 Forecast Per
Pro Forma Model CLOSE 2017 2018
Balance Sheet Check ok ok ok
End of Period 12/31/2016 7/31/2017 12/31/2017 12/31/2018
Days in Period 212 153 365
Fraction of Year 0.600 0.400 1.000

Assumptions

Debt Amortization Schedule Check

Senior Debt A 100% 0% 20% 20%
Senior Debt B 100% 0% 0% 25%
Subordinated Debt 100% 0% 0% 0%

Revenue Growth (% Change)

Cost of Goods Sold (% of Revenue)
Marketing, Advertising & Promotion (% of Revenue)

Depreciation & Amortization (% of PP&E) 18.0% 18.0%

Tax Rate (% of Earnings Before Tax) 28.0% 28.0%
Accounts Receivable (Days) 20 20
Inventory (Days) 78 78
Accounts Payable (Days) 33 33

Equity Issued (Repaid) ($000's) - -

Dividends Paid - -

Income Statement
Revenue 180,407 510,630
Cost of Goods Sold (COGS) 72,163 210,387
Gross Profit 108,244 300,243
Expenses
Marketing, Advertising & Promotion 27,061 76,023
General & Administrative 8,800 21,758
Depreciation & Amortization 18,491 46,273
Interest 9,411 22,216
Total Expenses 63,763 166,270
Earnings Before Tax 44,482 133,974

Taxes 12,455 37,513

Net Earnings 32,027 96,461

Balance Sheet
Assets
Cash 165,046 336,440 400,319
Accounts Receivable 25,912 23,583 27,980
Inventory 187,726 36,789 44,959
Current Assets 378,685 396,812 473,258
Property & Equipment 249,321 238,328 210,800
Goodwill 511,940 511,940 511,940
Total Assets 1,139,946 1,147,080 1,195,998

Liabilities
Short Term Debt -
Accounts Payable 17,457 15,565 19,021
Current Liabilities 17,457 15,565 19,021
Long Term Debt 318,130 295,130 244,130
Total Liabilities 335,587 310,695 263,151
Shareholder's Equity
Equity Capital 587,946 587,946 587,946
Retained Earnings 216,413 248,440 344,901
Shareholder's Equity 804,359 836,386 932,847
Total Liabilities & Shareholder's Equity 1,139,946 1,147,080 1,195,998

Check -0.0000 -0.0000 -0.0000

Cash Flow Statement

Operating Cash Flow
Net Earnings 32,027 96,461
Plus: Depreciation & Amortization 18,491 46,273
Less: Changes in Working Capital 151,375 (9,111)
Cash from Operations 201,892 133,623

Investing Cash Flow

Investments in Property & Equipment (7,498) (18,745)
Investments in Businesses
Cash from Investing (7,498) (18,745)

Financing Cash Flow

Issuance (repayment) of debt (23,000) (51,000)
Issuance (repayment) of equity - -
Payment of Dividends - -
Cash from Financing (23,000) (51,000)

Net Increase (decrease) in Cash 171,394 63,878

Opening Cash Balance 165,046 336,440
Closing Cash Balance 165,046 336,440 400,319

Supporting Schedules
Working Capital Schedule
Accounts Receivable 25,912 23,583 27,980
Inventory 187,726 36,789 44,959
Accounts Payable 17,457 15,565 19,021
Net Working Capital (NWC) 196,182 44,807 53,918
Change in NWC (151,375) 9,111

Depreciation Schedule
PPE Opening 249,321 238,328
Plus Capex 7,498 18,745
Less Depreciation 18,491 46,273
PPE Closing 249,321 238,328 210,800

Debt Schedule
Senior Debt A
Opening Balance 115,000 92,000
Addition (Repayment) (23,000) (23,000)
Closing Balance 115,000 92,000 69,000
Senior Debt B
Opening Balance 40,000 40,000
Addition (Repayment) - (10,000)
Closing Balance 40,000 40,000 30,000

Subordinated Debt
Opening Balance 30,000 30,000
Addition (Repayment) - -
Closing Balance 30,000 30,000 30,000

Target Debt
Opening Balance - -
Addition (Repayment) - -
Closing Balance - - -

Acquirer Debt
Opening Balance 133,130 133,130
Addition (Repayment) - (18,000)
Closing Balance 133,130 133,130 115,130

Total Debt
Opening Balance 318,130 295,130
Addition (Repayment) (23,000) (51,000)
Closing Balance 318,130 295,130 244,130

Interest Schedule
Interest Rates
Senior Debt A 5.7% 5.7%
Senior Debt B 6.1% 6.1%
Subordinated Debt 8.5% 8.5%
Target Debt 7.0% 7.0%
Acquirer Debt 9.0% 9.0%

Interest Expense (opening balance)

Senior Debt A 2,622 5,244
Senior Debt B 976 2,440
Subordinated Debt 1,020 2,550
Target Debt - -
Acquirer Debt 4,793 11,982
Total 9,411 22,216

DCF Model
Assumptions
Tax Rate 24%
Discount Rate 11.5%
Perpetual Growth Rate 5%
EV/EBITDA Multiple 8.2x
Current Price $20.35
Shares Outstanding 88,779

Discounted Cash Flow Entry 2017 2018 2019 2020 2021 2022 Exit
Date 7/31/2017 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2022

EBIT 53,892 156,189 202,064 226,842 239,761 265,363

Less: Cash Taxes 12,934 37,485 48,495 54,442 57,543 63,687
NOPAT 40,958 118,704 153,568 172,400 182,219 201,676
Plus: D&A 18,491 46,273 41,318 37,255 33,923 31,191
EBITDA 72,383 202,463 243,382 264,097 273,685 296,554
Less: Capex 7,498 18,745 18,745 18,745 18,745 18,745
Less: Changes in NWC (151,375) 9,111 13,031 7,934 9,778 6,754
Unlevered FCF - 203,326 137,121 163,110 182,976 187,618 207,368 2,431,744

Transaction FCFF

IRR FCFF

Intrinsic Value Market Value Rate of Return

Enterprise Value 2,141,749 Market Cap na IRR
Plus: Cash 165,046 Plus: Debt
Less: Debt 318,130 Less: Cash
Equity Value 1,988,665 Enterprise Value

Equity Value/Share 22.40 Equity Value/Share

Merger Integration
Revenue
Acquirer 113,803 315,803
Target 66,604 193,153
Synergies 1,675
Total 180,407 510,630

Cost of Goods Sold

Acquirer 45,521 129,479
Target 26,642 81,124
Synergies (216)
Total 72,163 210,387

Marketing, Advertising & Promotion

Acquirer 17,070 47,370
Target 9,991 28,973
Synergies (320)
Total 27,061 76,023

General & Administrative

Acquirer 6,400 16,000
Target 2,400 6,000
Synergies (243)
Total 8,800 21,758
 Forecast Period
2019 2020 2021 2022
ok ok ok ok
12/31/2019 12/31/2020 12/31/2021 12/31/2021
365 366 365 365
1.000 1.000 1.000 1.000

20% 20% 20% 0%

25% 15% 15% 20%
0% 0% 0% 100%

18.0% 18.0% 18.0% 18.0%

28.0% 28.0% 28.0% 28.0%
20 20 20 20
92 90 90 90
33 33 33 33

- - - -
- 475 475 475

569,631 635,928 694,960 750,021

221,083 257,697 298,286 322,218
348,548 378,231 396,674 427,802

83,845 93,104 101,959 110,218

21,321 21,030 21,030 21,030
41,318 37,255 33,923 31,191
 18,675 16,754 15,077 13,400
165,159 168,143 171,989 175,839
183,389 210,089 224,685 251,963

51,349 58,825 62,912 70,550

132,040 151,264 161,773 181,414

508,900 641,265 778,963 927,593

31,213 34,750 38,080 41,097
55,725 63,368 73,550 79,451
595,838 739,383 890,593 1,048,141
188,227 169,717 154,539 142,093
511,940 511,940 511,940 511,940
1,296,005 1,421,040 1,557,072 1,702,174

19,988 23,235 26,968 29,132

19,988 23,235 26,968 29,132
211,130 182,130 153,130 115,130
231,118 205,365 180,098 144,262

587,946 587,946 587,946 587,946

476,941 627,730 789,028 969,966
1,064,887 1,215,675 1,376,973 1,557,912
1,296,005 1,421,040 1,557,072 1,702,174

-0.0000 -0.0000 -0.0000 -0.0000

132,040 151,264 161,773 181,414

41,318 37,255 33,923 31,191
(13,031) (7,934) (9,778) (6,754)
160,327 180,585 185,918 205,850

(18,745) (18,745) (18,745) (18,745)

(18,745) (18,745) (18,745) (18,745)

(33,000) (29,000) (29,000) (38,000)

- - - -
- (475) (475) (475)
(33,000) (29,475) (29,475) (38,475)

108,582 132,365 137,698 148,630

400,319 508,900 641,265 778,963
508,900 641,265 778,963 927,593

31,213 34,750 38,080 41,097

55,725 63,368 73,550 79,451
19,988 23,235 26,968 29,132
66,949 74,883 84,662 91,416
13,031 7,934 9,778 6,754

210,800 188,227 169,717 154,539

18,745 18,745 18,745 18,745
41,318 37,255 33,923 31,191
188,227 169,717 154,539 142,093

69,000 46,000 23,000 -

(23,000) (23,000) (23,000) -
46,000 23,000 - -
 30,000 20,000 14,000 8,000
(10,000) (6,000) (6,000) (8,000)
20,000 14,000 8,000 -

30,000 30,000 30,000 30,000

- - - (30,000)
30,000 30,000 30,000 -

- - - -
- - - -
- - - -

115,130 115,130 115,130 115,130

- - - -
115,130 115,130 115,130 115,130

244,130 211,130 182,130 153,130

(33,000) (29,000) (29,000) (38,000)
211,130 182,130 153,130 115,130

5.7% 5.7% 5.7% 5.7%

6.1% 6.1% 6.1% 6.1%
8.5% 8.5% 8.5% 8.5%
7.0% 7.0% 7.0% 7.0%
9.0% 9.0% 9.0% 9.0%

3,933 2,622 1,311 -

1,830 1,220 854 488
2,550 2,550 2,550 2,550
- - - -
10,362 10,362 10,362 10,362
18,675 16,754 15,077 13,400

Terminal Value
EV/EBITDA 2,431,744
350,541 389,100 424,119 458,049
214,400 240,128 264,141 285,272
4,690 6,700 6,700 6,700
569,631 635,928 694,960 750,021

140,216 167,313 190,854 206,122

81,472 91,249 108,298 116,961
(606) (865) (865) (865)
221,083 257,697 298,286 322,218

52,581 58,365 63,618 68,707

32,160 36,019 39,621 42,791
(896) (1,280) (1,280) (1,280)
83,845 93,104 101,959 110,218

16,000 16,000 16,000 16,000

6,000 6,000 6,000 6,000
(679) (970) (970) (970)
21,321 21,030 21,030 21,030
 Historical Results Forecast Per
Tony Company Inc Model 2012 2013 2014 2015 2016 2017 2018
Balance Sheet Check ok ok ok ok ok ok ok
End of Period 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018
Days in Period 366 365 365 365 366 365 365
Fraction of Year 1.000 1.000 1.000 1.000 1.000 1.000 1.000

Assumptions
LIVE SCENARIO 1

SCENARIO 1
Revenue Growth (% Change) 11.0% 11.0%
Cost of Goods Sold (% of Revenue) 40.0% 41.0%
Salaries and Benefits (% of Revenue) 15.0% 15.0%
Rent and Overhead ($000's) 16,000 16,000
Depreciation & Amortization (% of PP&E) 18.0% 18.0%
Interest (% of Debt) 9.0% 9.0%
Tax Rate (% of Earnings Before Tax) 27.0% 27.0%
Accounts Receivable (Days) 21 21
Inventory (Days) 77 81
Accounts Payable (Days) 35 35
Capital Expenditures ($000's) 13,500 13,500
Debt Issuance (Repayment) ($000's) - (18,000)
Equity Issued (Repaid) ($000's) - -
Payment of Dividends - -

SCENARIO 2
Revenue Growth (% Change) 4.5% 4.0%
Cost of Goods Sold (% of Revenue) 37.0% 37.0%
Salaries and Benefits (% of Revenue) 15.0% 15.0%
Rent and Overhead ($000's) 10,000 10,000
Depreciation & Amortization (% of PP&E) 18.0% 18.0%
Interest (% of Debt) 5.0% 5.0%
Tax Rate (% of Earnings Before Tax) 27.0% 27.0%
Accounts Receivable (Days) 21 21
Inventory (Days) 70 70
Accounts Payable (Days) 35 35
Capital Expenditures ($000's) 13,500 13,500
Debt Issuance (Repayment) ($000's) - (18,000)
Equity Issued (Repaid) ($000's) - -
Payment of Dividends - -

LIVE SCENARIO
Revenue Growth (% Change) 11.0% 11.0%
Cost of Goods Sold (% of Revenue) 40.0% 41.0%
Marketing, Advertising & Promotion (% of Revenue) 15.0% 15.0%
General & Administrative ($000's) 16,000 16,000
Depreciation & Amortization (% of PP&E) 18.0% 18.0%
Interest (% of Debt) 9.0% 9.0%
Tax Rate (% of Earnings Before Tax) 27.0% 27.0%
Accounts Receivable (Days) 21 21
Inventory (Days) 77 81
Accounts Payable (Days) 35 35
Capital Expenditures ($000's) 13,500 13,500
Debt Issuance (Repayment) ($000's) - (18,000)
Equity Issued (Repaid) ($000's) - -
Payment of Dividends - -

Income Statement
Revenue 173,412 200,746 223,287 241,980 256,312 284,507 315,803
Cost of Goods Sold (COGS) 66,339 81,607 83,509 89,512 96,407 113,803 129,479
Gross Profit 107,073 119,139 139,777 152,468 159,905 170,704 186,323
Expenses
Marketing, Advertising & Promotion 44,926 38,519 40,582 39,103 42,917 42,676 47,370
General & Administrative 18,637 17,213 17,148 18,734 19,400 16,000 16,000
Depreciation & Amortization 25,500 23,735 22,499 21,634 21,028 33,229 29,678
Interest 4,250 3,850 2,550 2,550 2,550 11,982 11,982
Total Expenses 93,313 83,316 82,779 82,021 85,895 103,887 105,030
Earnings Before Tax 13,760 35,824 56,998 70,447 74,010 66,817 81,293

Taxes 1,490 6,461 11,282 14,508 15,425 18,041 21,949

Net Earnings 12,270 29,362 45,716 55,939 58,585 48,776 59,344

Balance Sheet
Assets
Cash 165,804 167,163 193,161 245,933 301,027 388,944 441,443
Accounts Receivable 18,871 21,846 24,299 26,333 27,893 16,369 18,169
Inventory 28,877 35,523 36,351 38,964 41,965 24,008 28,734
Current Assets 213,552 224,532 253,811 311,230 370,885 429,320 488,346
Property & Equipment 174,164 171,889 170,850 170,677 171,108 151,379 135,201
Goodwill - -
Total Assets 387,716 396,421 424,662 481,907 541,993 580,699 623,547

Liabilities
Short Term Debt - -
Accounts Payable 14,439 17,761 18,176 19,482 20,983 10,913 12,416
Current Liabilities 14,439 17,761 18,176 19,482 20,983 10,913 12,416
Long Term Debt 175,000 151,020 133,130 133,130 133,130 133,130 115,130
Total Liabilities 189,439 168,781 151,306 152,612 154,113 144,043 127,546
Shareholder's Equity
Equity Capital 182,804 182,804 182,804 182,804 182,804 182,804 182,804
Retained Earnings 15,474 44,836 90,552 146,491 205,077 253,853 313,197
Shareholder's Equity 198,278 227,640 273,356 329,295 387,880 436,657 496,001
Total Liabilities & Shareholder's Equity 387,716 396,421 424,662 481,907 541,993 580,699 623,547

Check -0.0000 -0.0000 -0.0000 -0.0000 -0.0000 -0.0000 -0.0000

Cash Flow Statement

Operating Cash Flow
Net Earnings 12,270 29,362 45,716 55,939 58,585 48,776 59,344
Plus: Depreciation & Amortization 25,500 23,735 22,499 21,634 21,028 33,229 29,678
Less: Changes in Working Capital 33,310 6,298 2,867 3,341 3,060 (19,412) 5,023
Cash from Operations 4,460 46,799 65,348 74,232 76,553 101,417 83,999

Investing Cash Flow

Investments in Property & Equipment (21,460) (21,460) (21,460) (21,460) (21,460) (13,500) (13,500)
Investments in Businesses
Cash from Investing (21,460) (21,460) (21,460) (21,460) (21,460) (13,500) (13,500)

Financing Cash Flow

Issuance (repayment) of debt - (23,980) (17,890) - - - (18,000)
Issuance (repayment) of equity 182,804 - - - - - -
Payment of Dividends - - - - - - -
Cash from Financing 182,804 (23,980) (17,890) - - - (18,000)

Net Increase (decrease) in Cash 165,804 1,359 25,998 52,772 55,093 87,917 52,499
Opening Cash Balance - 165,804 167,163 193,161 245,933 301,027 388,944
Closing Cash Balance 165,804 167,163 193,161 245,933 301,027 388,944 441,443

Supporting Schedules
Working Capital Schedule
Accounts Receivable 18,871 21,846 24,299 26,333 27,893 16,369 18,169
Inventory 28,877 35,523 36,351 38,964 41,965 24,008 28,734
Accounts Payable 14,439 17,761 18,176 19,482 20,983 10,913 12,416
Net Working Capital (NWC) 33,310 39,607 42,474 45,815 48,876 29,464 34,487
Change in NWC 33,310 6,298 2,867 3,341 3,060 (19,412) 5,023

Depreciation Schedule
PPE Opening 178,204 174,164 171,889 170,850 170,677 171,108 151,379
Plus Capex 21,460 21,460 21,460 21,460 21,460 13,500 13,500
Less Depreciation 25,500 23,735 22,499 21,634 21,028 33,229 29,678
PPE Closing 174,164 171,889 170,850 170,677 171,108 151,379 135,201

Debt & Interest Schedule

Debt Opening 175,000 175,000 151,020 133,130 133,130 133,130 133,130
Issuance (repayment) - (23,980) (17,890) - - - (18,000)
Debt Closing 175,000 151,020 133,130 133,130 133,130 133,130 115,130
Interest Expense 4,250 3,850 2,550 2,550 2,550 11,982 11,982

DCF Model
Assumptions
Tax Rate 24%
Discount Rate 11.5%
Perpetual Growth Rate 5%
EV/EBITDA Multiple 8.2x
Current Price $20.35
Shares Outstanding 44,000
Discounted Cash Flow Entry 2017 2018 2019 2020 2021 2022 Exit
Date 7/31/2017 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2022
Year Fraction 0.42 1.00 1.00 1.00 1.00 1.00 1.00

EBIT 93,275 114,977 123,044 131,228 146,405 45,703

Less: Cash Taxes 22,386 27,595 29,531 31,495 35,137 10,969
NOPAT
Plus: D&A
EBITDA
Less: Capex
Less: Changes in NWC
Unlevered FCF

Transaction FCFF

IRR FCFF

Intrinsic Value Market Value Rate of Return

Enterprise Value Market Cap IRR
Plus: Cash Plus: Debt
Less: Debt Less: Cash
Equity Value Enterprise Value

Equity Value/Share Equity Value/Share

 Forecast Period Stub
2019 2020 2021 2022 7/31/2017 12/31/2017
ok ok ok ok
12/31/2019 12/31/2020 12/31/2021 12/31/2022 7/31/2017 12/31/2017
365 366 365 365 212 153
1.000 1.000 1.000 1.000 0.580 0.420

11.0% 11.0% 9.0% 8.0% 11.0% 11.0%

40.0% 43.0% 45.0% 45.0% 41.0% 41.0%
15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
16,000 16,000 16,000 16,000 16,000 16,000
18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
27.0% 27.0% 27.0% 27.0% 27.0% 27.0%
21 21 21 21 21 21
90 90 100 100 85 80
35 35 35 35 35 35
13,500 13,500 13,500 13,500 13,500 13,500
- - - - - -
- - - - - -
- 220 220 - - -

3.5% 3.0% 3.0% 2.5% 4.5% 4.5%

36.0% 36.0% 35.0% 35.0% 37.0% 37.0%
15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
10,000 10,000 10,000 10,000 10,000 10,000
18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
27.0% 27.0% 27.0% 27.0% 27.0% 27.0%
21 21 21 21 21 21
70 70 70 70 70 70
35 35 35 35 35 35
13,500 13,500 13,500 13,500 13,500 13,500
- - - - - -
 - - - - - -
- 120 120 - - -

11.0% 11.0% 9.0% 8.0% 11.0% 11.0%

40.0% 43.0% 45.0% 45.0% 41.0% 41.0%
15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
16,000 16,000 16,000 16,000 16,000 16,000
18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
27.0% 27.0% 27.0% 27.0% 27.0% 27.0%
21 21 21 21 21 21
90 90 100 100 85 80
35 35 35 35 35 35
13,500 13,500 13,500 13,500 13,500 13,500
- - - - - -
- - - - - -
- 220 220 - - -

350,541 389,100 424,119 458,049 165,014 119,493

140,216 167,313 190,854 206,122 66,006 47,797
210,324 221,787 233,266 251,927 99,008 71,696

52,581 58,365 63,618 68,707 24,752 17,924

16,000 16,000 16,000 16,000 9,280 6,720
26,766 24,378 22,420 20,815 19,273 13,956
10,362 10,362 10,362 10,362 6,949 5,032
105,709 109,105 112,400 115,884 60,255 43,633
104,616 112,682 120,866 136,043 38,754 28,063

28,246 30,424 32,634 36,732 10,464 7,577

76,369 82,258 88,232 99,312 28,290 20,486
524,269 610,884 697,025 798,980 357,722 388,944
20,168 22,387 24,401 26,353 16,346 16,369 4
34,574 41,255 52,289 56,472 26,464 24,008
579,011 674,526 773,715 881,805 400,533 429,320
121,935 111,056 102,136 94,822 159,665 151,379
- - - - - -
700,946 785,582 875,851 976,627 560,198 580,699

- - - - - -
13,445 16,044 18,301 19,765 10,897 10,913
13,445 16,044 18,301 19,765 10,897 10,913
115,130 115,130 115,130 115,130 133,130 133,130
128,575 131,174 133,431 134,895 144,027 144,043

182,804 182,804 182,804 182,804 182,804 182,804

389,566 471,604 559,616 658,928 233,367 253,853
572,370 654,408 742,420 841,732 416,171 436,657
700,946 785,582 875,851 976,627 560,198 580,699

-0.0000 -0.0000 -0.0000 -0.0000 -0.0000 -0.0000

76,369 82,258 88,232 99,312 28,290 20,486

26,766 24,378 22,420 20,815 19,273 13,956
6,809 6,302 10,791 4,671 (16,962) (2,449)
96,326 100,335 99,861 115,455 64,526 36,892

(13,500) (13,500) (13,500) (13,500) (7,830) (5,670)

(13,500) (13,500) (13,500) (13,500) (7,830) (5,670)

- - - - - -
- - - - - -
- (220) (220) - - -
 - (220) (220) - - -

82,826 86,615 86,141 101,955 56,696 31,222

441,443 524,269 610,884 697,025 301,027 357,722
524,269 610,884 697,025 798,980 357,722 388,944

20,168 22,387 24,401 26,353 16,346 16,369

34,574 41,255 52,289 56,472 26,464 24,008
13,445 16,044 18,301 19,765 10,897 10,913
41,297 47,598 58,389 63,060 31,913 29,464
6,809 6,302 10,791 4,671 (16,962) (2,449)

135,201 121,935 111,056 102,136 171,108 159,665

13,500 13,500 13,500 13,500 7,830 5,670
26,766 24,378 22,420 20,815 19,273 13,956
121,935 111,056 102,136 94,822 159,665 151,379

115,130 115,130 115,130 115,130 133,130 133,130

- - - - - -
115,130 115,130 115,130 115,130 133,130 133,130
10,362 10,362 10,362 10,362 6,949 5,032
Terminal Value
EV/EBITDA
 Historical Results Forecast Per
Trick 'n' Porter Co Model 2012 2013 2014 2015 2016 2017 2018
Balance Sheet Check ok ok ok ok ok ok ok
End of Period 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018
Days in Period 366 365 365 365 366 365 365
Fraction of Year 1.000 1.000 1.000 1.000 1.000 1.000 1.000

Assumptions
LIVE SCENARIO 1

SCENARIO 1
Revenue Growth (% Change) 16.0% 16.0%
Cost of Goods Sold (% of Revenue) 40.0% 42.0%
Salaries and Benefits (% of Revenue) 15.0% 15.0%
Rent and Overhead ($000's) 6,000 6,000
Depreciation & Amortization (% of PP&E) 18.0% 18.0%
Interest (% of Debt) 7.0% 7.0%
Tax Rate (% of Earnings Before Tax) 30.0% 30.0%
Accounts Receivable (Days) 20 16
Inventory (Days) 70 70
Accounts Payable (Days) 36 36
Capital Expenditures ($000's) 5,245 5,245
Debt Issuance (Repayment) ($000's) - -
Equity Issued (Repaid) ($000's) - -
Payment of Dividends - -

SCENARIO 2
Revenue Growth (% Change) 6.0% 5.2%
Cost of Goods Sold (% of Revenue) 35.0% 35.0%
Salaries and Benefits (% of Revenue) 15.0% 15.0%
Rent and Overhead ($000's) 11,500 11,500
Depreciation & Amortization (% of PP&E) 18.0% 18.0%
Interest (% of Debt) 4.8% 4.8%
Tax Rate (% of Earnings Before Tax) 26.0% 26.0%
Accounts Receivable (Days) 19 19
Inventory (Days) 71 71
Accounts Payable (Days) 35 35
Capital Expenditures ($000's) 13,500 13,500
Debt Issuance (Repayment) ($000's) - -
Equity Issued (Repaid) ($000's) - -
Payment of Dividends - -

LIVE SCENARIO
Revenue Growth (% Change) 16.0% 16.0%
Cost of Goods Sold (% of Revenue) 40.0% 42.0%
Marketing, Advertising & Promotion (% of Revenue) 15.0% 15.0%
General & Administrative ($000's) 6,000 6,000
Depreciation & Amortization (% of PP&E) 18.0% 18.0%
Interest (% of Debt) 7.0% 7.0%
Tax Rate (% of Earnings Before Tax) 30.0% 30.0%
Accounts Receivable (Days) 20 16
Inventory (Days) 70 70
Accounts Payable (Days) 36 36
Capital Expenditures ($000's) 5,245 5,245
Debt Issuance (Repayment) ($000's) - -
Equity Issued (Repaid) ($000's) - -
Payment of Dividends - -

Income Statement
Revenue 97,117 112,425 125,048 135,517 143,544 166,511 193,153
Cost of Goods Sold (COGS) 37,152 45,703 46,768 50,130 53,991 66,604 81,124
Gross Profit 59,965 66,722 78,280 85,387 89,553 99,907 112,029
Expenses
Marketing, Advertising & Promotion 18,160 21,572 22,728 21,899 24,035 24,977 28,973
General & Administrative 8,437 9,640 9,603 10,492 10,865 6,000 6,000
Depreciation & Amortization 18,565 17,280 16,380 15,750 15,310 11,550 10,415
Interest 12,380 14,657 8,764 16,783 12,556 10,665 10,665
Total Expenses 57,543 63,148 57,475 64,924 62,765 53,192 56,053
Earnings Before Tax 2,422 3,574 20,805 20,463 26,787 46,715 55,976

Taxes 420 1,158 10,606 9,906 12,398 14,014 16,793

Net Earnings 2,002 2,416 10,199 10,557 14,390 32,700 39,183

Balance Sheet
Assets
Cash 139,621 160,507 158,489 203,020 252,570 303,620 347,278
Accounts Receivable 10,569 12,234 13,608 14,747 15,621 9,124 8,467
Inventory 16,172 19,894 20,358 21,821 23,502 12,773 15,558
Current Assets 166,362 192,636 192,455 239,589 291,693 325,517 371,303
Property & Equipment 94,282 84,343 75,303 66,893 58,924 52,619 47,448
Goodwill - - - - - - -
Total Assets 260,644 276,978 267,758 306,482 350,617 378,136 418,751

Liabilities
Short Term Debt - - - - -
Accounts Payable 8,086 9,947 10,179 10,911 11,751 6,569 8,001
Current Liabilities 8,086 9,947 10,179 10,911 11,751 6,569 8,001
Long Term Debt 103,607 115,664 96,013 123,448 152,353 152,353 152,353
Total Liabilities 111,693 125,611 106,192 134,359 164,104 158,922 160,355
Shareholder's Equity
Equity Capital 145,648 145,648 145,648 145,648 145,648 145,648 145,648
Retained Earnings 3,303 5,719 15,918 26,475 40,865 73,565 112,748
Shareholder's Equity 148,951 151,367 161,566 172,123 186,513 219,213 258,396
Total Liabilities & Shareholder's Equity 260,644 276,978 267,758 306,482 350,617 378,136 418,751

Check -0.0000 -0.0000 -0.0000 -0.0000 -0.0000 -0.0000 -0.0000

Cash Flow Statement

Operating Cash Flow
Net Earnings 2,002 2,416 10,199 10,557 14,390 32,700 39,183
Plus: Depreciation & Amortization 18,565 17,280 16,380 15,750 15,310 11,550 10,415
Less: Changes in Working Capital 18,655 3,527 1,606 1,871 1,714 (12,044) 696
Cash from Operations 1,912 16,169 24,974 24,437 27,985 56,295 48,903

Investing Cash Flow

Investments in Property & Equipment (7,341) (7,341) (7,341) (7,341) (7,341) (5,245) (5,245)
Investments in Businesses
Cash from Investing (7,341) (7,341) (7,341) (7,341) (7,341) (5,245) (5,245)

Financing Cash Flow

Issuance (repayment) of debt - 12,058 (19,652) 27,436 28,905 - -
Issuance (repayment) of equity 145,049 - - - - - -
Payment of Dividends - - - - - - -
Cash from Financing 145,049 12,058 (19,652) 27,436 28,905 - -

Net Increase (decrease) in Cash 139,621 20,886 (2,018) 44,532 49,550 51,050 43,658
Opening Cash Balance - 139,621 160,507 158,489 203,020 252,570 303,620
Closing Cash Balance 139,621 160,507 158,489 203,020 252,570 303,620 347,278

Supporting Schedules
Working Capital Schedule
Accounts Receivable 10,569 12,234 13,608 14,747 15,621 9,124 8,467
Inventory 16,172 19,894 20,358 21,821 23,502 12,773 15,558
Accounts Payable 8,086 9,947 10,179 10,911 11,751 6,569 8,001
Net Working Capital (NWC) 18,655 22,182 23,787 25,658 27,372 15,328 16,024
Change in NWC 18,655 3,527 1,606 1,871 1,714 (12,044) 696

Depreciation Schedule
PPE Opening 105,507 94,282 84,343 75,303 66,893 58,924 52,619
Plus Capex 7,341 7,341 7,341 7,341 7,341 5,245 5,245
Less Depreciation 18,565 17,280 16,380 15,750 15,310 11,550 10,415
PPE Closing 94,282 84,343 75,303 66,893 58,924 52,619 47,448

Debt & Interest Schedule

Debt Opening 103,607 103,607 115,664 96,013 123,448 152,353 152,353
Issuance (repayment) - 12,058 (19,652) 27,436 28,905 - -
Debt Closing 103,607 115,664 96,013 123,448 152,353 152,353 152,353
Interest Expense 12,380 14,657 8,764 16,783 12,556 10,665 10,665

DCF Model
Assumptions
Tax Rate 24%
Discount Rate 11.5%
Perpetual Growth Rate 5%
EV/EBITDA Multiple 8.2x
Current Price $36.45
Shares Outstanding 19,000
Discounted Cash Flow Entry 2017 2018 2019 2020 2021 2022 Exit
Date 7/31/2017 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2022
Year Fraction 0.42 1.00 1.00 1.00 1.00 1.00 1.00

EBIT 57,380 66,640 85,283 98,138 102,126 111,937

Less: Cash Taxes 13,771 15,994 20,468 23,553 24,510 26,865
NOPAT 43,608 50,647 64,815 74,585 77,616 85,072
Plus: D&A 11,550 10,415 9,485 8,722 8,096 7,583
EBITDA 68,930 77,056 94,768 106,860 110,222 119,520
Less: Capex 5,245 5,245 5,245 5,245 5,245 5,245
Less: Changes in NWC (12,044) 696 964 1,987 2,693 1,733
Unlevered FCF 61,958 55,122 68,091 76,075 77,774 85,676 980,061

Transaction FCFF - 25,816 55,122 68,091 76,075 77,774 85,676 980,061

IRR FCFF (558,100) 25,816 55,122 68,091 76,075 77,774 85,676 980,061

Intrinsic Value Market Value Market Value Takeover Rate of Return

Enterprise Value 815,349 Market Cap 692,550 761,805 IRR (Current Share Price)
Plus: Cash 286,804 Plus: Debt 152,353 152,353
Less: Debt 152,353 Less: Cash 286,804 286,804
Equity Value 949,800 Enterprise Value 558,100 627,355

Equity Value/Share 49.99 Equity Value/Share

 Forecast Period Stub
2019 2020 2021 2022 7/31/2017 12/31/2017
ok ok ok ok
12/31/2019 12/31/2020 12/31/2021 12/31/2022 7/31/2017 12/31/2017
365 366 365 365 212 153
1.000 1.000 1.000 1.000 0.580 0.420

11.0% 12.0% 10.0% 8.0% 16.0% 16.0%

38.0% 38.0% 41.0% 41.0% 40.0% 38.0%
15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
6,000 6,000 6,000 6,000 6,000 6,000
18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
30.0% 30.0% 30.0% 30.0% 30.0% 30.0%
16 16 16 16 21 20
70 70 70 70 70 70
36 36 36 36 36 36
5,245 5,245 5,245 5,245 5,245 5,245
- - - (8,200) - -
- - - - - -
- - 240 240 - -

5.2% 3.4% 3.4% 3.4% 6.0% 6.0%

32.0% 35.0% 34.0% 34.0% 38.0% 38.0%
15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
11,500 11,500 11,500 11,500 11,500 11,500
18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
4.8% 4.8% 4.8% 4.8% 4.8% 4.8%
26.0% 26.0% 26.0% 26.0% 26.0% 26.0%
19 19 19 19 19 19
71 71 71 71 71 71
35 35 35 35 35 35
13,500 13,500 13,500 13,500 13,500 13,500
(16,700) - - - - -
 - - - - - -
- - 125 125 - -

11.0% 12.0% 10.0% 8.0% 16.0% 16.0%

38.0% 38.0% 41.0% 41.0% 40.0% 38.0%
15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
6,000 6,000 6,000 6,000 6,000 6,000
18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
30.0% 30.0% 30.0% 30.0% 30.0% 30.0%
16 16 16 16 21 20
70 70 70 70 70 70
36 36 36 36 36 36
5,245 5,245 5,245 5,245 5,245 5,245
- - - (8,200) - -
- - - - - -
- - 240 240 - -

214,400 240,128 264,141 285,272 96,576 69,935

81,472 91,249 108,298 116,961 38,631 27,974
132,928 148,879 155,843 168,310 57,946 41,961

32,160 36,019 39,621 42,791 14,486 10,490

6,000 6,000 6,000 6,000 3,480 2,520
9,485 8,722 8,096 7,583 6,699 4,851
10,665 10,665 10,665 10,665 6,186 4,479
58,309 61,406 64,382 67,038 30,851 22,341
74,618 87,474 91,461 101,272 27,095 19,620

22,386 26,242 27,438 30,382 8,128 5,886

52,233 61,232 64,023 70,891 18,966 13,734
402,787 465,508 529,449 592,504 286,804 303,620
9,398 10,497 11,579 12,505 9,567 9,124
15,625 17,452 20,769 22,431 12,755 12,773
427,810 493,458 561,797 627,440 309,125 325,517
43,208 39,732 36,881 34,543 55,267 52,619
- - - - -
471,018 533,189 598,678 661,983 364,392 378,136

8,036 8,975 10,681 11,536 6,560 6,569

8,036 8,975 10,681 11,536 6,560 6,569
152,353 152,353 152,353 144,153 152,353 152,353
160,389 161,329 163,035 155,689 158,913 158,922

145,648 145,648 145,648 145,648 145,648 145,648

164,981 226,212 289,995 360,646 59,831 73,565
310,629 371,861 435,644 506,294 205,479 219,213
471,018 533,189 598,678 661,983 364,392 378,136

-0.0000 -0.0000 -0.0000 -0.0000 -0.0000 -0.0000

52,233 61,232 64,023 70,891 18,966 13,734

9,485 8,722 8,096 7,583 6,699 4,851
964 1,987 2,693 1,733 (11,610) (434)
60,754 67,967 69,426 76,740 37,276 19,019

(5,245) (5,245) (5,245) (5,245) (3,042) (2,203)

(5,245) (5,245) (5,245) (5,245) (3,042) (2,203)

- - - (8,200) - -
- - - - - -
- - (240) (240) - -
 - - (240) (8,440) - -

55,509 62,722 63,941 63,055 34,233 16,816

347,278 402,787 465,508 529,449 252,570 286,804
402,787 465,508 529,449 592,504 286,804 303,620

9,398 10,497 11,579 12,505 9,567 9,124

15,625 17,452 20,769 22,431 12,755 12,773
8,036 8,975 10,681 11,536 6,560 6,569
16,988 18,974 21,667 23,400 15,762 15,328
964 1,987 2,693 1,733 (11,610) (434)

47,448 43,208 39,732 36,881 58,924 55,267

5,245 5,245 5,245 5,245 3,042 2,203
9,485 8,722 8,096 7,583 6,699 4,851
43,208 39,732 36,881 34,543 55,267 52,619

152,353 152,353 152,353 152,353 152,353 152,353

- - - (8,200) - -
152,353 152,353 152,353 144,153 152,353 152,353
10,665 10,665 10,665 10,665 6,186 4,479
 Terminal Value
EV/EBITDA 980,061

R (Current Share Price) 21%