NMG Investment Case 3Q17 Update June 14, 2017

Transcription

1 INCOME STATEMENT REVENUES Bergdorf Goodman Y/Y Growth (%) NA 4.4% (7.2)% (7.5)% (10.7)% (7.7)% (5.0)% (7.9)% (2.0)% 0.0% 1.0% 1.5% 0.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Bull (3.5)% (0.5)% 1.5% 2.5% 3.0% 3.5% 3.5% 3.0% 3.0% 3.0% 3.0% Base (5.0)% (2.0)% 0.0% 1.0% 1.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Bear (6.5)% (3.0)% (1.0)% 0.0% 0.5% 1.0% 1.0% 1.3% 1.5% 1.5% 1.5% % of Fiscal Year Total 100% 100% 100% 26% 28% 23% 23% 100% 25% 28% 24% 23% 100% 25% 28% 24% 23% 100% 100% 100% Neiman Marcus/ Last Call 2,876 2,912 2, , , ,515 2,591 2,668 Y/Y Growth (%) NA 1.3% (6.3)% (10.9)% (7.9)% (8.0)% (8.0)% (8.7)% (4.0)% (2.0)% 0.0% 1.0% (1.3)% 1.0% 2.0% 3.0% 3.0% 2.2% 3.0% 3.0% Bull (6.5)% (2.5)% (0.5)% 1.5% 2.5% 2.5% 3.5% 4.0% 4.0% 4.0% 4.0% Base (8.0)% (4.0)% (2.0)% 0.0% 1.0% 1.0% 2.0% 3.0% 3.0% 3.0% 3.0% Bear (9.5)% (5.0)% (3.0)% (1.0)% 0.0% 0.0% 1.0% 2.3% 2.5% 2.5% 2.5% % of Fiscal Year Total 100% 100% 100% 23% 30% 24% 23% 100% 23% 30% 24% 23% 100% 22% 30% 24% 24% 100% 100% 100% Total Store Revenues 3,685 3,757 3, , , ,252 3,342 3,435 % of Total Revenues 76% 74% 71% 71% 69% 68% 69% 69% 70% 68% 67% 68% 68% 69% 67% 67% 68% 68% 67% 66% % of Fiscal Year Total 100% 100% 100% 24% 30% 24% 23% 100% 23% 30% 24% 23% 100% 23% 30% 24% 24% 100% 100% 100% NMG Online 1,154 1,216 1, , , ,189 1,213 1,237 Y/Y Growth (%) NA 5.3% 1.5% (4.8)% (4.8)% (2.1)% (5.0)% (4.2)% (3.5)% (1.5)% 0.0% 1.0% (1.0)% 1.0% 1.5% 2.0% 2.0% 1.6% 2.0% 2.0% Bull (3.0)% (2.0)% 0.0% 1.5% 2.5% 2.5% 3.0% 3.0% 3.0% 3.0% 3.0% Base (5.0)% (3.5)% (1.5)% 0.0% 1.0% 1.0% 1.5% 2.0% 2.0% 2.0% 2.0% Bear (7.5)% (4.5)% (2.5)% (1.0)% 0.0% 0.0% 0.5% 1.3% 1.5% 1.5% 1.5% % of Fiscal Year Total 100% 100% 100% 22% 32% 24% 22% 100% 21% 32% 24% 23% 100% 21% 32% 24% 23% 100% 100% 100% MyTheresa NA Y/Y Growth (%) NA NA 29.4% 29.9% 36.5% 24.0% 27.5% 29.1% 25.0% 22.5% 22.5% 20.0% 22.4% 20.0% 17.5% 17.5% 15.0% 17.4% 15.0% 15.0% Bull 32.5% 30.0% 27.5% 27.5% 25.0% 25.0% 22.5% 22.5% 20.0% 20.0% 20.0% Base 27.5% 25.0% 22.5% 22.5% 20.0% 20.0% 17.5% 17.5% 15.0% 15.0% 15.0% Bear 22.5% 20.0% 17.5% 17.5% 15.0% 15.0% 12.5% 12.5% 10.0% 12.5% 12.5% % of Fiscal Year Total NA 100% 100% 22% 24% 27% 27% 100% 23% 24% 27% 26% 100% 23% 24% 27% 26% 100% 100% 100% Total Online Revenues 1,154 1,338 1, , , ,564 1,644 1,732 % of Total Revenues 24% 26% 29% 29% 31% 32% 31% 31% 30% 32% 33% 32% 32% 31% 33% 33% 32% 32% 33% 34% % of Fiscal Year Total 100% 100% 100% 22% 30% 25% 23% 100% 22% 30% 25% 24% 100% 22% 30% 25% 24% 100% 100% 100% Total Revenues 4,839 5,095 4,949 1,079 1,396 1,111 1,071 4,657 1,058 1,389 1,129 1,096 4,671 1,084 1,427 1,171 1,135 4,816 4,986 5,167 Y/Y Growth (%) NA 5.3% (2.9)% (7.4)% (6.1)% (4.9)% (5.1)% (5.9)% (2.0)% (0.5)% 1.6% 2.3% 0.3% 2.5% 2.7% 3.7% 3.5% 3.1% 3.5% 3.6% % of Fiscal Year Total 100% 100% 100% 23% 30% 24% 23% 100% 23% 30% 24% 23% 100% 23% 30% 24% 24% 100% 100% 100% GROSS PROFIT COGS 3,248 3,305 3, , , ,203 3,291 3,411 Gross Profit 1,591 1,790 1, , , ,613 1,695 1,757 Margin (%) 32.9% 35.1% 32.9% 35.1% 29.6% 34.3% 26.1% 31.2% 35.1% 29.6% 35.4% 27.1% 31.7% 36.6% 31.4% 37.4% 29.1% 33.5% 34.0% 34.0% Bull 27.1% 36.1% 30.6% 36.4% 28.1% 37.6% 32.4% 38.4% 30.1% 35.0% 35.0% Base 26.1% 35.1% 29.6% 35.4% 27.1% 36.6% 31.4% 37.4% 29.1% 34.0% 34.0% Bear 25.1% 34.1% 28.6% 34.4% 26.1% 35.6% 30.4% 36.4% 28.1% 33.0% 33.0% OPERATING EPENSES SG&A 1,101 1,162 1, , , ,100 1,120 1,140 Bull ,160 1,180 Base ,120 1,140 Bear ,140 1,160 % of Revenues 23% 23% 23% 26% 22% 24% 24% 24% 26% 22% 23% 22% 23% 25% 21% 23% 22% 23% 22% 22% CCP Income (55) (53) (61) (14) (17) (15) (13) (59) (13) (17) (14) (14) (58) (14) (18) (15) (14) (60) (62) (65) % of Revenues 1.14% 1.04% 1.23% 1.27% 1.20% 1.35% 1.25% 1.26% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% Bull 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% Base 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% Bear 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% Author: marc.bode@duke.edu / (212) Model Page 1 out of 7

2 OTHER EPENSES Impairment Charges Other Expenses Bull Base Bear Total Other Expenses EBITDA (37) Check Margin (%) 7.0% 12.6% 1.5% 10.1% (2.6)% 10.7% 3.1% 4.8% 10.4% 8.9% 12.7% 5.6% 9.4% 12.1% 10.9% 15.2% 7.9% 11.5% 12.4% 12.8% Adjusted EBITDA Margin (%) 14.0% 13.9% 11.8% 11.4% 9.1% 12.2% 4.0% 9.2% 11.0% 9.4% 13.5% 6.6% 10.1% 13.1% 11.3% 15.7% 8.5% 12.1% 12.9% 13.3% New Store/ Remodeling Expens Strategic Growth Initiative Other Expenses (2) 1 2 (0) Purchase Acct Adjustments Non-Cash Stock Compensation 9 0 (10) 1 (1) Transaction Costs (1) D&A Depreciation Bull Base Bear % of CapEx NA 69% 75% 87% 118% 117% 109% 106% 109% 92% 92% 71% 89% 200% 200% 200% 200% 200% 200% 200% Intangible Amortization Lease Amortization Total D&A EBIT (262) 25 (120) 38 (52) (109) (24) Margin (%) 0.7% 6.2% (5.3)% 2.3% (8.6)% 3.4% (4.8)% (2.3)% 2.4% 2.8% 5.3% (2.2)% 2.1% 4.3% 5.0% 8.0% 0.5% 4.5% 5.8% 6.6% Adjusted EBIT (42) (12) Margin (%) 7.6% 7.6% 5.0% 3.6% 3.1% 4.9% (3.9)% 2.0% 3.0% 3.3% 6.1% (1.1)% 2.9% 5.4% 5.5% 8.6% 1.1% 5.2% 6.3% 7.1% INTEREST EXPENSES Asset Backed Revolver Floating Rate 2.60% 2.6% 2.75% 2.90% 3.05% 3.20% 3.2% 3.35% 3.50% 3.65% 3.80% 3.7% 4.30% 4.75% ABR 1.85% 2.00% 2.15% 2.30% 2.45% 2.60% 2.75% 2.90% 3.05% 3.55% 4.00% Fed Funds + 50 bps 1.35% 1.50% 1.65% 1.80% 1.95% 2.10% 2.25% 2.40% 2.55% 3.05% 3.55% Prime Rate 1.85% 2.00% 2.15% 2.30% 2.45% 2.60% 2.75% 2.90% 3.05% 3.55% 4.00% LIBOR bps 1.85% 2.00% 2.15% 2.30% 2.45% 2.60% 2.75% 2.90% 3.05% 3.55% 4.00% Margin if 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Availability > 50% of Line Cap 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Availability < 50% of Line Cap 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Senior Secured Term Loan Floating Rate 4.85% 4.6% 5.00% 5.15% 5.30% 5.45% 5.0% 5.60% 5.75% 5.90% 6.05% 5.4% 6.30% 6.75% ABR 1.85% 2.00% 2.15% 2.30% 2.45% 2.60% 2.75% 2.90% 3.05% 3.55% 4.00% Margin if SSNL > 4.0 x 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Margin if SSNL < 4.0 x 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% Cash Pay Notes Coupon Rate (%) NA 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% PIK Toggle Notes Coupon Rate (%) NA 8.75% 8.75% 8.75% 8.73% 8.87% 9.50% 8.78% 9.50% 9.50% 9.50% 9.50% 9.06% 9.50% 8.75% 8.75% 8.75% 8.91% 8.75% 8.75% 2028 Debentures Coupon Rate (%) NA 7.28% 7.27% 7.27% 7.18% 7.27% 7.13% 7.21% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% Amortization of DIC Capitalized Interest - (2) (7) (2) (2) (1) (3) (7) (2) (2) (1) (3) (7) (2) (2) (1) (3) (7) (7) (7) Author: marc.bode@duke.edu / (212) Model Page 2 out of 7

3 Other (1) Net Interest Expense PRE-TAX PROFIT (229) 28 (547) (47) (195) (35) (128) (405) (53) (40) (21) (103) (217) (35) (9) 13 (72) (103) (14) 18 TAXES Income Tax Expense (82) 13 (141) (23) (78) (11) (51) (163) (21) (16) (8) (41) (87) (14) (4) 5 (29) (41) (6) 7 Tax Rate 36% 47% 26% 50% 40% 30% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% NET INCOME (147) 15 (406) (24) (117) (25) (77) (242) (32) (24) (12) (62) (130) (21) (6) 8 (43) (62) (8) 11 Reported (147) 15 (406) (24) (117) (25) Dividend Dividend Payout Ratio BALANCE SHEET ASSETS Cash & Cash Equivalents Merchandise Inventory 1,070 1,155 1,125 1,325 1,213 1,231 1,125 1,125 1,300 1,100 1,150 1,100 1,100 1,275 1,050 1,075 1,000 1,000 1,050 1,050 Bull 1,100 1,275 1,075 1,125 1,075 1,300 1,075 1,100 1,025 1,100 1,100 Base 1,125 1,300 1,100 1,150 1,100 1,275 1,050 1,075 1,000 1,050 1,050 Bear 1,150 1,325 1,125 1,175 1,125 1,300 1,075 1,100 1,025 1,075 1,075 % of COGS 33% 35% 34% 47% 31% 42% 36% 35% 47% 28% 39% 34% 34% 46% 27% 37% 31% 31% 32% 31% % of Revenues 22% 23% 23% 31% 22% 28% 26% 24% 31% 20% 25% 25% 24% 29% 18% 23% 22% 21% 21% 20% Other Current Assets % of Sales 0.7% 0.6% 0.7% 3.7% 3.0% 4.6% 3.1% 2.8% 3.7% 3.0% 4.6% 3.1% 2.8% 3.5% 2.7% 4.3% 2.8% 2.6% 2.8% 2.8% Bull 2.8% 3.5% 2.7% 4.3% 2.8% 3.2% 2.5% 4.1% 2.6% 2.5% 2.5% Base 3.1% 3.7% 3.0% 4.6% 3.1% 3.5% 2.7% 4.3% 2.8% 2.8% 2.8% Bear 3.6% 4.2% 3.5% 5.1% 3.6% 4.0% 3.2% 4.8% 3.3% 3.3% 3.3% % of Total Assets 1.7% 1.4% 1.8% 1.9% 2.0% 2.5% 1.6% 1.6% 1.9% 2.0% 2.5% 1.6% 1.7% 1.9% 2.0% 2.5% 1.6% 1.7% 1.5% 1.5% Bull 1.5% 1.8% 1.9% 2.4% 1.5% 1.8% 1.9% 2.4% 1.5% 1.3% 1.3% Base 1.6% 1.9% 2.0% 2.5% 1.6% 1.9% 2.0% 2.5% 1.6% 1.5% 1.5% Bear 1.7% 2.0% 2.1% 2.6% 1.7% 2.0% 2.1% 2.6% 1.7% 1.7% 1.7% Total Current Assets 1,410 1,354 1,334 1,529 1,429 1,489 1,311 1,311 1,512 1,349 1,408 1,286 1,286 1,482 1,350 1,328 1,207 1,207 1,258 1,326 Property & Equipment 1,390 1,478 1,588 1,607 1,601 1,601 1,596 1,596 1,591 1,596 1,601 1,626 1,626 1,596 1,566 1,536 1,506 1,506 1,386 1,266 % Growth 2.8% 6.3% 7.5% 1.2% (0.4)% (0.0)% (0.3)% 0.5% (0.6)% (0.6)% (0.6)% 1.6% 1.9% (0.6)% (0.6)% (0.6)% (2.0)% (7.4)% (8.0)% (8.7)% Tradenames 1,971 2,037 1,807 1,808 1,654 1,655 1,640 1,640 1,628 1,615 1,603 1,590 1,590 1,578 1,566 1,554 1,541 1,541 1,496 1,454 Favorable Lease Commitments 1,095 1, Other Intangible Assets Total Intangible Assets 3,653 3,599 3,245 3,219 3,036 3,012 2,982 2,982 2,952 2,923 2,893 2,864 2,864 2,835 2,806 2,777 2,748 2,748 2,640 2,537 Goodwill 2,149 2,272 2,073 2,075 2,067 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 2,069 Other Assets Total Assets 8,614 8,720 8,257 8,466 8,157 8,198 7,984 7,984 8,151 7,963 7,998 7,872 7,872 8,009 7,818 7,737 7,558 7,558 7,380 7,225 Author: marc.bode@duke.edu / (212) Model Page 3 out of 7

4 LIABILITIES Accounts Payable % of COGS & SGA 9% 2% 7% 9% 7% 5% 9% 9% 10% 9% 9% 10% 8% 10% 9% 9% 10% 8% 9% 9% Bull % 10% 10% 11% 11% 10% 10% 11% 10% 10% Base % 9% 9% 10% 10% 9% 9% 10% 9% 9% Bear 355 9% 8% 8% 9% 9% 8% 8% 9% 8% 8% % of Revenues 8% 7% 6% 8% 7% 5% 9% 8% 9% 8% 8% 9% 8% 9% 8% 8% 9% 8% 8% 8% Bull 10% 9% 9% 10% 10% 9% 9% 10% 9% 9% Base 9% 8% 8% 9% 9% 8% 8% 9% 8% 8% Bear 8% 7% 7% 8% 8% 7% 7% 8% 7% 7% Accrued Liabilities % of COGS 16% 16% 16% 17% 13% 15% 14% 14% 17% 13% 16% 15% 15% 17% 13% 16% 15% 15% 15% 15% Bull 18% 14% 17% 16% 18% 14% 17% 16% 16% 16% Base 17% 13% 16% 15% 17% 13% 16% 15% 15% 15% Bear 16% 12% 15% 14% 16% 12% 15% 14% 14% 14% % of Revenues 10% 10% 10% 11% 9% 10% 10% 9% 11% 9% 10% 11% 10% 11% 9% 10% 11% 10% 10% 10% Bull 12% 10% 11% 12% 12% 10% 11% 12% 11% 11% Base 11% 9% 10% 11% 11% 9% 10% 11% 10% 10% Bear 10% 8% 9% 10% 10% 8% 9% 10% 9% 9% Current SS Term Loan Total Current Liabilities Asset Backed Revolver Senior Secured Term Loan 2,898 2,869 2,840 2,832 2,825 2,818 2,810 2,810 2,803 2,795 2,788 2,781 2,781 2,773 2,766 2,759 2,601 2,601 2,394 2,186 Cash Pay Notes PIK Toggle Notes Debentures Unamortized DIC (148) (125) (103) (97) (92) (86) (80) (80) (74) (68) (61) (55) (55) (49) (43) (37) (31) (31) (6) - Total LT Debt 4,433 4,556 4,584 4,773 4,586 4,849 4,599 4,599 4,851 4,605 4,779 4,674 4,674 4,876 4,598 4,630 4,445 4,445 4,262 4,061 Deferred Taxes 1,540 1,440 1,297 1,281 1,212 1,243 1,191 1,191 1,170 1,154 1,146 1,105 1,105 1,091 1,087 1,087 1,058 1,058 1,053 1,053 Other LT Liabilities Total Liabilities 7,181 7,306 7,314 7,543 7,347 7,411 7,271 7,271 7,461 7,287 7,325 7,248 7,248 7,401 7,211 7,117 6,976 6,976 6,786 6,601 EQUITY Preferred Stock Paid in Capital 1,584 1,584 1,584 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 1,587 AOCI (17) (51) (116) (115) (111) (109) (109) (109) (109) (109) (109) (109) (109) (109) (109) (109) (109) (109) (109) (109) Retained Earnings (134) (119) (525) (549) (666) (691) (764) (764) (788) (802) (804) (854) (854) (870) (871) (858) (896) (896) (884) (853) Total SHE 1,433 1, Total Liabilites & SHE 8,614 8,720 8,257 8,466 8,157 8,198 7,984 7,984 8,151 7,963 7,998 7,872 7,872 8,009 7,818 7,737 7,558 7,558 7,380 7,225 Balance Author: marc.bode@duke.edu / (212) Model Page 4 out of 7

5 CASH FLOWS OPERATING Net Income NA 15 (406) (24) (117) (25) (77) (242) (32) (24) (12) (62) (130) (21) (6) 8 (43) (62) (8) 11 Depreciation NA Intangible Amortization NA Favorable Lease Amortization NA Other Amortizations NA Impairment Charges NA Changes in Deferred Income Taxes NA (100) (144) (15) (70) 31 (51) (106) (21) (16) (8) (41) (87) (14) (4) - (29) (46) (6) - Capitalized Interest NA (2) (7) (2) (2) (1) (3) (7) (2) (2) (1) (3) (7) (2) (2) (1) (3) (7) (7) (7) Merchandise Inventory NA (85) 30 (200) 112 (18) (175) 200 (50) (175) 225 (25) (50) - Other Current Assets NA 17 (21) (15) (5) (37) (26) (7) (39) 72 (1) (21) (6) (40) (1) Accounts Payable NA (32) (25) (170) (52) 61 (88) 56 (23) (25) 62 (87) 58 8 (2) 13 Accrued Liabilities NA 41 (1) (7) 24 (68) - (51) (37) (6) 32 (35) Unamortized DIC NA Developer Contributions NA Other NA (44) (7) (3) (5) 6 (2) (4) (2) (2) (2) (2) (8) (2) (2) (2) (2) (8) (8) (8) Net Operating Cash Flow NA (132) 248 (186) (191) 347 (132) (166) 401 (83) Reported NA (132) 248 (186) INVESTING Capital Expenditures NA (270) (301) (65) (49) (48) (55) (216) (55) (65) (65) (85) (270) (30) (30) (30) (30) (120) (120) (120) Bull (50) (50) (60) (60) (80) (25) (25) (25) (25) (100) (100) Base (55) (55) (65) (65) (85) (30) (30) (30) (30) (120) (120) Bear (60) (60) (70) (70) (90) (35) (35) (35) (35) (140) (140) % of Depreciation NA 146% 133% 115% 85% 85% 92% 94% 92% 108% 108% 142% 113% 50% 50% 50% 50% 50% 50% 50% % of D&A NA 84% 89% 78% 58% 59% 65% 65% 65% 77% 77% 101% 80% 36% 36% 36% 36% 36% 37% 37% % of Property & Equipment NA 75% 79% 16% 12% 12% 14% 54% 14% 16% 16% 21% 67% 7% 8% 8% 8% 31% 33% 36% MyTheresa Acquisition NA (182) (1) Adjustment NA Net Investing Cash Flow NA (452) (302) (65) (49) (48) (55) (216) (55) (65) (65) (85) (270) (30) (30) (30) (30) (120) (120) (120) Author: marc.bode@duke.edu / (212) Model Page 5 out of 7

6 FINANCING BOP Cash Balance FCF excluding RCF 265 (239) 289 (189) 120 (187) 364 (120) EOP Cash Balance pre-rcf Draw/(Pay) 319 (184) 344 (105) 175 (132) Minimum Cash Balance Bull Base Bear RCF Draw/(Pay) NA (185) 265 (264) (260) 160 (120) (277) 33 (33) (90) - - Senior Secured Term Loan NA (29) (29) (7) (8) (7) (7) (29) (7) (7) (7) (7) (30) (7) (7) (7) (158) (180) (207) (207) Cash Pay Notes NA PIK Toggle Notes NA First Lien Notes NA Total LT Debt NA (192) 258 (257) (8) 246 (253) 168 (112) (284) 26 (191) (253) (207) (207) Preferred Dividends Common Dividends Other NA (0) (27) (6) 0 (23) - (28) Net Financing Cash Flow NA 100 (22) 177 (192) 235 (257) (37) 246 (253) 168 (112) (284) 26 (191) (253) (207) (207) Reported NA 100 (22) 177 (192) 235 Foreign Exchange Rate Effects NA (1) 2 0 (0) Free Cash Flow NA (124) (11) (20) (7) - 29 (29) (87) Change in Balance Sheet Cash NA (124) (11) (20) (7) - 29 (29) (87) Reported NA (124) (11) (20) 6 5 Balance - (0) (0) Author: marc.bode@duke.edu / (212) Model Page 6 out of 7

7 COVENTANT ANALYSIS SENIOR SECURED NET LEVERAGE Consolidated 1st Lien Debt 3,050 3,151 3,157 3,339 3,147 3,405 3,134 3,134 3,365 3,097 3,250 3,123 3,123 3,302 3,018 3,044 2,853 2,853 2,646 2,438 Unrestricted Cash Ratio 4.2 x 4.3 x 5.3 x 6.1 x 6.4 x 7.5 x 7.2 x 7.2 x 7.9 x 7.1 x 7.2 x 6.5 x 6.5 x 6.5 x 5.4 x 5.3 x 4.7 x 4.7 x 4.0 x 3.3 x TOTAL NET LEVERAGE Consolidated Total Debt 4,610 4,711 4,717 4,899 4,707 4,965 4,708 4,708 4,954 4,702 4,870 4,758 4,758 4,954 4,670 4,696 4,505 4,505 4,298 4,090 Unrestricted Cash Ratio 6.5 x 6.5 x 8.0 x 8.9 x 9.6 x 10.9 x 10.9 x 10.9 x 11.6 x 10.9 x 10.9 x 10.0 x 10.0 x 9.8 x 8.6 x 8.3 x 7.6 x 7.6 x 6.5 x 5.7 x INTEREST COVERAGE Consolidated Interest Expense Cash Dividends on DS / RSP Ratio 2.8 x 2.7 x 2.2 x 2.1 x 1.8 x 1.7 x 1.6 x 1.6 x 1.5 x 1.5 x 1.5 x 1.6 x 1.6 x 1.7 x 1.8 x 1.9 x 2.0 x 2.0 x 2.3 x 2.3 x FIXED CHARGE COVERAGE Maintenance CapEx (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) (60) Cash Taxes (82) 13 (141) (158) (241) (255) (163) (163) (160) (99) (97) (87) (87) (80) (67) (54) (41) (41) (6) 7 Consolidated Interest Expense Scheduled Principal Amortizatio Cash Dividends on DS / RSP Ratio 2.6 x 2.2 x 2.3 x 2.2 x 2.3 x 2.2 x 1.8 x 1.8 x 1.7 x 1.5 x 1.5 x 1.5 x 1.5 x 1.6 x 1.6 x 1.7 x 1.7 x 1.7 x 1.9 x 1.9 x Author: marc.bode@duke.edu / (212) Model Page 7 out of 7