EXHIBIT (c)(10)
PRELIMINARY
Project Closeup: Board Update
Goldman, Sachs & Co.
11-Feb-2008
Operating Plan Summary
Street Estimates
| | | | | | | | |
| | | 2008E | | | 2009E | |
| Revenue | | $ | 895.6 | | | $ | 925.6 | |
| Growth % | | | 4.4 | % | | | 3.4 | % |
| EBIT | | $ | 194.4 | | | $ | 202.7 | |
| Margin % | | | 21.7 | % | | | 21.9 | % |
| Growth % | | | (6.4 | )% | | | 4.3 | % |
Management Plan
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| | | 2005A | | | 2006A | | | 2007A | | | 2008E | | | 2009E | | | 2010E | | | 2011E | | | 2012E | | | 07-‘12
CAGR | |
Revenue | | $ | 733.2 | | | $ | 806.6 | | | $ | 857.6 | | | $ | 940.0 | | | $ | 1,008.0 | | | $ | 1,087.7 | | | $ | 1,163.6 | | | $ | 1,255.7 | | | 7.9 | % |
Growth % | | | 17.8 | % | | | 10.0 | % | | | 6.3 | % | | | 9.6 | % | | | 7.2 | % | | | 7.9 | % | | | 7.0 | % | | | 7.9 | % | | | |
| | | | | | | | | |
EBIT - Adjusted | | $ | 225.4 | | | $ | 226.0 | | | $ | 207.6 | | | $ | 221.8 | | | $ | 255.1 | | | $ | 301.4 | | | $ | 337.9 | | | $ | 389.7 | | | 13.4 | % |
Margin % | | | 30.7 | % | | | 28.0 | % | | | 24.2 | % | | | 23.6 | % | | | 25.3 | % | | | 27.7 | % | | | 29.0 | % | | | 31.0 | % | | | |
Growth % | | | 32.9 | % | | | 0.3 | % | | | (8.1 | )% | | | 6.8 | % | | | 15.0 | % | | | 18.2 | % | | | 12.1 | % | | | 15.3 | % | | | |
| | | | | | | | | |
Proforma EPS | | $ | 2.34 | | | $ | 2.46 | | | $ | 2.22 | | | $ | 2.25 | | | $ | 2.55 | | | $ | 3.15 | | | $ | 3.60 | | | $ | 4.22 | | | 13.7 | % |
Growth % | | | 36.0 | % | | | 5.1 | % | | | (9.8 | )% | | | 1.6 | % | | | 13.0 | % | | | 23.6 | % | | | 14.3 | % | | | 17.2 | % | | | |
“Adjusted -2.5% on Revenue Growth and -2.5% on EBIT Margin” Plan1
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| | | 2005A | | | 2006A | | | 2007A | | | 2008E | | | 2009E | | | 2010E | | | 2011E | | | 2012E | | | 07-‘12
CAGR | |
Revenue | | $ | 733.2 | | | $ | 806.6 | | | $ | 857.6 | | | $ | 918.6 | | | $ | 962.1 | | | $ | 1,014.1 | | | $ | 1,059.4 | | | $ | 1,116.9 | | | 5.4 | % |
Growth % | | | 17.8 | % | | | 10.0 | % | | | 6.3 | % | | | 7.1 | % | | | 4.7 | % | | | 5.4 | % | | | 4.5 | % | | | 5.4 | % | | | |
| | | | | | | | | |
EBIT - Adjusted | | $ | 225.4 | | | $ | 226.0 | | | $ | 207.6 | | | $ | 202.4 | | | $ | 219.4 | | | $ | 255.7 | | | $ | 281.2 | | | $ | 318.7 | | | 9.0 | % |
Margin % | | | 30.7 | % | | | 28.0 | % | | | 24.2 | % | | | 22.0 | % | | | 22.8 | % | | | 25.2 | % | | | 26.5 | % | | | 28.5 | % | | | |
Growth % | | | 32.9 | % | | | 0.3 | % | | | (8.1 | )% | | | (2.5 | )% | | | 8.4 | % | | | 16.5 | % | | | 10.0 | % | | | 13.3 | % | | | |
| | | | | | | | | |
Proforma EPS | | $ | 2.34 | | | $ | 2.46 | | | $ | 2.22 | | | $ | 2.05 | | | $ | 2.16 | | | $ | 2.64 | | | $ | 2.96 | | | $ | 3.41 | | | 9.0 | % |
Growth % | | | 36.0 | % | | | 5.1 | % | | | (9.8 | )% | | | (7.6 | )% | | | 5.5 | % | | | 22.0 | % | | | 12.1 | % | | | 15.1 | % | | | |
Source: Management plan estimates per GYI management; IBES for Street Estimates; Adjusted plan per GYI Board discussion.
Note: 1 IBES “EBIT” approximated by IBES “Operating Profit” given greater number of estimates available. Proforma EPS excludes one-time items
| | 1 | Adjustments to 2008E management plan include EPS per guidance to street for CY2008, 2008 revenue assumes 2008 revenue growth is 2.5% lower than management plan growth rate; 2009E-2012E revenue growth and operating margin reduced by (2.5)% in each year relative to management plan. |
PRELIMINARY
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 | | Illustrative Discounted Cash Flow Analysis “Adjusted -2.5% on Revenue Growth and -2.5% on EBIT Margin” Plan |
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| | ($ in millions) |
| | | | |
EV/LTM EBITDA Multiples |
| Current (4-Feb-08) | | 5.1 | | x |
| Undist Price (18-Jan-08) | | 4.2 | | x |
| | | | | | | | | | | | | | | |
| | | | | | Terminal Multiple of 2012E EBITDA |
| | | | | | 4.5x | | 5.5x | | 6.5x | | 7.5x |
| | 10.0 | % | | $ | 32.83 | | $ | 37.00 | | $ | 41.15 | | $ | 45.30 |
| | 11.0 | % | | | 31.72 | | | 35.71 | | | 39.67 | | | 43.63 |
| WACC | | 12.0 | % | | | 30.65 | | | 34.47 | | | 38.26 | | | 42.06 |
| | 13.0 | % | | | 29.63 | | | 33.29 | | | 36.93 | | | 40.55 |
| | 14.0 | % | | | 28.65 | | | 32.17 | | | 35.66 | | | 39.13 |
Source: Adjusted plan per GYI Board discussion.
Note: Assumes mid-year convention discounting for cash flows in CY08-CY12. Terminal value based on LTM EBITDA in year 5 is discounted 5 years. WACC analysis suggests 11.93% based on risk free rate of 4.83% (10 year average of 10 year U.S. Treasury as of 4-Feb-2008), risk premium of 5.16% (Ibbotson) and GYI beta of 1.65 (Barra historical beta), cost of debt of 8.5% and current capitalization.
2
