Goldman Stanley, Inc.

Project Yacht
Presentation to the Board of Directors
Strictly Confidential | February 2, 2008

Goldman Stanley

Confidential Draft

Table Of Contents

Executive Summary

Yacht Valuation

Monterrey / Yacht Combination

11

Process Recommendations

18

Appendix

20

Goldman Stanley

Executive Summary

Goldman Stanley

Executive Summary

On February 1, 2008, Monterrey made an offer to acquire 100% of Yachts fully

diluted shares outstanding for $31.00 / share

$31.00 / share values Yacht well above its average price over the past year; offer
price is also significantly higher than per-share prices implied by valuation

Given Yachts competitive position, market dynamics, and capital structure, another
party is unlikely to step forward with a superior offer

The combination of Monterrey and Yacht would create a strong #2 player in the
search advertising market and would facilitate a more effective online strategy for the
combined entity

Attractiveness of offer and next steps depend on Yachts 3-year plan and
managements confidence in ability to hit projections

Goldman Stanley

Yacht Valuation

Goldman Stanley

Valuation Summary

Monterreys offer of $31/share exceeds the valuation range implied by traditional

methodologies

Recent comparable transactions show higher implied per-share prices due to recently
hot market and flurry of activity in mid-2007

Comparable public companies, public company premiums, and discounted cash flow
analysis all show $31/share in the uppermost quartile of the valuation range

Yachts significant equity investments in other entities have been taken into account
in this valuation, but potential value from net operating losses has been excluded

Yachts equity investments contribute approximately $5B worth of value to equity

value of company

Valuation and all implied share prices are based on Yachts base case (in-line with
Wall Street estimates) financial projections

Goldman Stanley

Yacht Valuation
($ in Millions Except Per Share Data)
Monterrey Offer

Public Company Comparables

TTM TEV / Revenue:
12/31/2008 TEV / Revenue:
12/31/2009 TEV / Revenue:
TTM TEV / EBITDA:
12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:
Min to 25th

Precedent Transactions
TTM TEV / Revenue:

25th to Median

Forward Year 1 TEV / Revenue:

Median to 75th

TTM TEV / EBITDA:

75th to Max

Forward Year 1 TEV / EBITDA:

Public Company Premiums

1-Day Premiums:
20-Day Premiums:

Discounted Cash Flow Analysis

5-9% Growth Rate, 11-15% Discount Rate:
$0.00

$10.00

Goldman Stanley

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

Yacht Comparable Public Companies

Diversified Internet Companies With Over $1 Billion TTM Revenue
($ in Millions Except Per Share Data)
Operating Statistics
Company Name
Google Inc.
eBay Inc.
Amazon.com, Inc.
IAC/InterActiveCorp

Capitalization
Equity Enterprise
Revenue
EBITDA
EPS
Value
Value
TTM
12/31/2008 12/31/2009
TTM
12/31/2008 12/31/2009
TTM
12/31/2008 12/31/2009
$ 174,565 $ 159,287 $ 11,660 $ 17,212 $ 23,583 $ 6,921 $ 10,118 $ 13,567 $ 13.68 $ 21.16 $ 26.93
34,925
29,889
7,672
8,674
9,978
2,908
3,135
3,646
1.30
1.65
1.94
31,964
30,151
14,835
19,258
23,102
1,095
1,407
1,783
1.48
1.86
2.40
14,408
13,009
6,373
6,817
7,463
817
890
1,048
1.73
1.61
1.97

Maximum
75th Percentile
Median
25th Percentile
Minimum

$ 174,565 $ 159,287 $ 14,835 $ 19,258 $ 23,583 $

69,835
62,435
12,454
17,724
23,222
$ 33,444 $ 30,020 $ 9,666 $ 12,943 $ 16,540 $
27,575
25,669
7,348
8,210
9,349
14,408
13,009
6,373
6,817
7,463

6,921 $ 10,118 $ 13,567 $

3,911
4,881
6,126
2,001 $ 2,271 $ 2,714 $
1,025
1,278
1,599
817
890
1,048

Yacht

$ 25,473 $ 18,509 $

1,927 $

Valuation Statistics
Company Name
Google Inc.
eBay Inc.
Amazon.com, Inc.
IAC/InterActiveCorp

Capitalization
Equity Enterprise
Value
Value
$ 174,565 $ 159,287
34,925
29,889
31,964
30,151
14,408
13,009

Maximum
75th Percentile
Median
25th Percentile
Minimum

$ 174,565 $ 159,287
69,835
62,435
$ 33,444 $ 30,020
27,575
25,669
14,408
13,009

13.7 x
6.3 x
3.0 x
2.0 x
2.0 x

9.3 x
4.9 x
2.7 x
1.8 x
1.6 x

6.8 x
3.9 x
2.4 x
1.6 x
1.3 x

27.5 x
24.1 x
19.5 x
14.5 x
10.3 x

21.4 x
17.2 x
15.2 x
13.3 x
9.5 x

16.9 x
13.5 x
12.1 x
10.9 x
8.2 x

50.0 x
42.6 x
34.7 x
27.1 x
20.3 x

39.9 x
33.7 x
28.8 x
23.4 x
15.9 x

30.9 x
27.1 x
23.1 x
18.7 x
13.6 x

Yacht

$ 25,473 $ 18,509

3.6 x

3.2 x

2.8 x

9.6 x

9.1 x

8.4 x

22.1 x

22.2 x

21.9 x

5,113 $

5,801 $

6,500 $

Enterprise Value /
Revenue
TTM
12/31/2008 12/31/2009
13.7 x
9.3 x
6.8 x
3.9 x
3.4 x
3.0 x
2.0 x
1.6 x
1.3 x
2.0 x
1.9 x
1.7 x

Goldman Stanley

2,045 $

2,194 $

Enterprise Value /
EBITDA
TTM
12/31/2008 12/31/2009
23.0 x
15.7 x
11.7 x
10.3 x
9.5 x
8.2 x
27.5 x
21.4 x
16.9 x
15.9 x
14.6 x
12.4 x

13.68 $
4.72
1.61 $
1.44
1.30

21.16 $
6.69
1.76 $
1.64
1.61

26.93
8.53
2.19
1.96
1.94

0.86 $

0.86 $

0.87

P / E Multiple
TTM
12/31/2008 12/31/2009
40.1 x
25.9 x
20.4 x
20.3 x
15.9 x
13.6 x
50.0 x
39.9 x
30.9 x
29.4 x
31.6 x
25.8 x

Yacht Precedent Transactions

Internet M&A Deals Worth Over $500MM With US-Based Sellers Since January 2006
($ in Millions Except Per Share Data)

Yacht - Comparable M&A Transactions

Acquirer Name
Monterrey
Google
Publicis
Yacht
Investor Group
NBC Universal
WPP Group

Target Name
aQuantive
DoubleClick
Digitas
Right Media (Remaining 80%)
Vertrue
iVillage
24/7 Real Media
Maximum
75th Percentile
Median
25th Percentile
Minimum

Acquisition
Equity Enterprise
TTM
Date
Value
Value
Revenue
5/18/2007 $ 6,356 $ 6,041 $
493
4/13/2007
3,100
3,100
232
12/21/2006
1,285
1,137
713
4/29/2007
850
850
N/A
3/22/2007
641
730
697
3/6/2006
660
604
91
5/17/2007
669
603
215
$
$

Goldman Stanley

6,356 $
2,192
850 $
664
641

6,041 $
2,119
850 $
667
603

Operating Metrics
Forward
Year 1
TTM
Revenue
EBITDA
$
610 $
128
297
72
743
64
70
N/A
680
93
109
17
269
21

713 $
646
362 $
219
91

743 $
645
297 $
189
70

Forward
Year 1
EBITDA
$
154
98
63
18
102
26
27

128 $
87
68 $
32
17

154
100
63
26
18

Valuation Multiples - Acquisition

Forward
Forward
TTM
Year 1
TTM
Year 1
Revenue Revenue
EBITDA
EBITDA
12.3 x
9.9 x
47.0 x
39.1 x
13.4 x
10.4 x
43.1 x
31.7 x
1.6 x
1.5 x
17.8 x
18.0 x
N/A
12.1 x
N/A
48.6 x
1.0 x
1.1 x
7.9 x
7.1 x
6.6 x
5.5 x
34.8 x
23.4 x
2.8 x
2.2 x
28.7 x
22.4 x
13.4 x
10.9 x
4.7 x
1.9 x
1.0 x

12.1 x
10.2 x
5.5 x
1.9 x
1.1 x

47.0 x
41.0 x
31.8 x
20.5 x
7.9 x

48.6 x
35.4 x
23.4 x
20.2 x
7.1 x

Yacht Discounted Cash Flow Analysis

($ in Millions Except Per Share Data)
Assumptions:

Yacht - DCF Cash Flow Projections

FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
Revenue:
EBITDA:
Operating Income:

- $ 5,801 $ 6,500 $ 7,217 $ 8,043 $ 8,784

2,045
2,194
2,380
2,634
2,885
803
867
876
950
994

Less: Taxes

321

347

351

380

398

Plus: Depreciation
Plus: Amortization
Plus: Stock-Based Compensation

365
247
630

477
139
711

602
106
795

742
60
882

897
34
960

Less: Changes in Working Capital:

Less: Capital Expenditures

(130)
696

(67)
780

(88)
866

(82)
965

Unlevered Free Cash Flow

Present Value of Free Cash Flow

$
$

Terminal
Growth Rate

15.0%
$ 14.30
$ 14.93
$ 15.70
$ 16.66
$ 17.90
$ 19.56

16.0%
$ 13.56
$ 14.07
$ 14.68
$ 15.43
$ 16.36
$ 17.56

13%

Terminal Growth
Rate:
7%
Model Uses Base
Case Financial
Projections

Mid-Year Convention
Used For PV Of Cash
(80) Flows

1,054

- $ 1,157 $ 1,134 $ 1,251 $ 1,371 $ 1,513

- $ 1,089 $
945 $
922 $
895 $
874

Yacht - Net Present Value Sensitivity - Terminal Growth Rates

Discount Rate
$ 20.47
10.0%
11.0%
12.0%
14.0%
13.0%
4.0% $ 21.75 $ 19.41 $ 17.65 $ 16.28 $ 15.19
5.0% $ 24.35 $ 21.28 $ 19.01 $ 17.31 $ 15.99
6.0% $ 28.29 $ 23.80 $ 20.82 $ 18.63 $ 16.98
7.0% $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
8.0% $ 45.85 $ 33.46 $ 26.99 $ 22.78 $ 19.96
9.0% $ 80.73 $ 44.72 $ 32.72 $ 26.37 $ 22.35

Goldman Stanley

Discount Rate:

17.0%
$ 12.93
$ 13.35
$ 13.84
$ 14.43
$ 15.16
$ 16.07

10

Monterrey / Yacht Combination

Goldman Stanley

11

Key Assumptions For Base Case Merger Model

Financial Assumptions:

Projected Closing Date: 6/30/2009

50% Cash / 50% Stock Transaction

$31.00 / Share (63% Premium to Current Share Price)

4.4% Foregone Interest Rate on Cash; $32.20 Monterrey Share Price

Purchase Price Allocation & Balance Sheet Assumptions:
10% Yacht PP&E Write-Up
20% Allocated to Intangibles
50% Deferred Revenue Write-Down

Operational Assumptions:

10% Revenue Synergies (~$500 Million in Monterrey FY 2010E / FY 2011E)

10% Expense Synergies (~$400 Million in Monterrey FY 2010E / FY 2011E)

30% Book Tax Rate Assumed

Goldman Stanley

12

Monterrey & Yacht Summary Income Statements

($ in Millions Except Per Share Data)
Yacht Financial
Buyer Income Statement ($MM) - Summary - Monterrey
Projections Have Been
Historical
Projected
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E Calendarized To Match
Revenue:
Operating Income:
Pre-Tax Income:
Pro-Forma Net Income:
Pro-Forma EPS:

$44,282
$16,472
$18,262
$13,870
$1.32

$51,122
$18,524
$20,101
$15,315
$1.55

$60,141
$24,163
$25,360
$18,763
$1.98

$67,702
$26,127
$27,779
$20,456
$2.19

$73,825
$28,087
$30,336
$22,208
$2.43

$78,993
$30,053
$32,958
$24,051
$2.63

Monterreys Fiscal
$82,942 Years
$31,556
$35,184
$25,640
$2.80

Projections Based On
Seller Income Statement ($MM) - Summary - Yacht - Based on Buyer Fiscal Years
Consensus Wall Street
Historical
Projected
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E Estimates & Goldman
Stanley Model
Revenue:
Operating Income:
Pre-Tax Income:
Pro-Forma Net Income:
Pro-Forma EPS:

Goldman Stanley

$4,836
$818
$974
$1,147
$0.80

$5,457
$749
$869
$1,182
$0.84

$6,150
$835
$915
$1,215
$0.86

$6,859
$872
$946
$1,241
$0.88

$7,630
$913
$994
$1,297
$0.92

$8,414
$972
$1,064
$1,367
$0.97

13

An Acquisition Of Yacht By Monterrey Is Expected To

Be Dilutive To Monterreys Pro-Forma EPS
($ in Millions Except Per Share Data)
Combined Income Statement and Transaction Adjustments ($MM)
Adjustments
Combined Years
FY 2009E
Debit
Credit FY 2009E FY 2010E FY 2011E FY 2012E
Buyer + Seller Revenue:
Revenue Synergies:
Revenue:

$80,684
$469
$81,153

Buyer + Seller Operating Income:

Revenue Synergies:
Expenses Associated with Revenue Synergies:
Cost Synergies:
Operating Income:

$28,959 $30,966 $32,528

$469
$537
$608
($94)
($109)
($125)
$334
$367
$400
$29,668 $31,762 $33,411

Interest / Investment Income:

Acquisition Effects:
Foregone Interest on Cash:
New Interest Expense:
New Amortization Expense:
Financing Fees Amortization:
New Depreciation Expense:
Deferred Revenue Write-Down:
Pre-Tax Income:
Book Taxes:
Equity & Minority Interest Earnings:
Diluted Shares Outstanding:
Shares Issued in Transaction:
Total New Shares Outstanding:
Pro-Forma Net Income:
Pro-Forma EPS:
Pro-Forma EPS - Buyer Standalone:
Pro-Forma EPS Accretion / Dilution:

Goldman Stanley

$2,324

$86,623
$537
$87,160

$2,985

$91,356
$608
$91,964

$3,720

($944)
($985) ($1,028)
$0
$0
$0
($1,482) ($1,482) ($1,482)
$0
$0
$0
($23)
($23)
($23)
($218)
$0
$0
$29,325 $32,257 $34,597
$8,797
$148
9,142
666
9,808

$9,677
$148
9,142
666
9,808

$10,379
$148
9,142
666
9,808

$23,451 $25,391 $27,093

$2.39
$2.59
$2.76
$2.43
$2.63
$2.80
(1.6%)
(1.6%)
(1.5%)

Pro-Forma EPS Figures

Exclude:
-Amortization Of Intangibles
-Stock-Based Compensation
-Deferred Revenue Write-Down
Projections Based On
Consensus Wall Street
Estimates & Goldman
Stanley Model
Even With Generous
Synergy Assumptions,
Transaction Is Still
Slightly Dilutive To
Monterrey Pro-Forma
EPS:

EPS Accretion / Dilution: ($0.04)

Accretion / Dilution %: (1.5%)

14

Sensitivity Tables Pro-Forma EPS Accretion / Dilution

($ in Millions Except Per Share Data)

Per Share Purchase Price

Per-Share Purchase Price vs. Cash / Stock Split:

$
$
$
$
$
$
$
$
$
$

(1.6%)
35.00
34.00
33.00
32.00
31.00
30.00
29.00
28.00
27.00
26.00

30.0%
(4.6%)
(4.2%)
(3.9%)
(3.5%)
(3.1%)
(2.7%)
(2.3%)
(2.0%)
(1.6%)
(1.3%)

35.0%
(4.2%)
(3.8%)
(3.5%)
(3.1%)
(2.7%)
(2.3%)
(2.0%)
(1.7%)
(1.3%)
(1.0%)

Purchase Consideration - % Cash:

40.0%
45.0%
50.0%
55.0%
60.0%
(3.8%)
(3.4%)
(2.9%)
(2.5%)
(2.0%)
(3.4%)
(3.0%)
(2.6%)
(2.2%)
(1.7%)
(3.1%)
(2.7%)
(2.3%)
(1.8%)
(1.4%)
(2.7%)
(2.3%)
(1.9%)
(1.5%)
(1.1%)
(2.3%)
(2.0%)
(1.6%)
(1.2%)
(0.8%)
(2.0%)
(1.6%)
(1.2%)
(0.8%)
(0.5%)
(1.6%)
(1.3%)
(0.9%)
(0.5%)
(0.1%)
(1.3%)
(0.9%)
(0.6%)
(0.2%)
0.1%
(1.0%)
(0.6%)
(0.3%)
0.1%
0.4%
(0.6%)
(0.3%)
0.0%
0.4%
0.7%

65.0%
(1.6%)
(1.3%)
(1.0%)
(0.7%)
(0.4%)
(0.1%)
0.2%
0.5%
0.8%
1.1%

Monterrey Needs To
Pay 70%+ In Cash For
70.0%
(1.1%) Transaction To Be
(0.8%) Accretive At $31/Share
(0.6%)
(0.3%)
0.0%
0.3%
0.6%
0.9%
1.1%
1.4%

Per Share Purchase Price

Per-Share Purchase Price vs. Revenue Synergies:

$
$
$
$
$
$
$
$
$
$

(1.6%)
35.00
34.00
33.00
32.00
31.00
30.00
29.00
28.00
27.00
26.00

0.0%
(4.0%)
(3.7%)
(3.4%)
(3.0%)
(2.7%)
(2.3%)
(2.0%)
(1.7%)
(1.4%)
(1.1%)

2.0%
(3.8%)
(3.5%)
(3.1%)
(2.8%)
(2.5%)
(2.1%)
(1.8%)
(1.5%)
(1.2%)
(0.9%)

Revenue Synergies - % Seller Existing Revenue:

4.0%
6.0%
8.0%
10.0%
12.0%
(3.6%)
(3.4%)
(3.1%)
(2.9%)
(2.7%)
(3.2%)
(3.0%)
(2.8%)
(2.6%)
(2.4%)
(2.9%)
(2.7%)
(2.5%)
(2.3%)
(2.0%)
(2.6%)
(2.4%)
(2.1%)
(1.9%)
(1.7%)
(2.2%)
(2.0%)
(1.8%)
(1.6%)
(1.4%)
(1.9%)
(1.7%)
(1.4%)
(1.2%)
(1.0%)
(1.6%)
(1.3%)
(1.1%)
(0.9%)
(0.7%)
(1.3%)
(1.0%)
(0.8%)
(0.6%)
(0.4%)
(1.0%)
(0.7%)
(0.5%)
(0.3%)
(0.1%)
(0.6%)
(0.4%)
(0.2%)
0.0%
0.2%

Goldman Stanley

14.0%
(2.5%)
(2.2%)
(1.8%)
(1.5%)
(1.1%)
(0.8%)
(0.5%)
(0.1%)
0.2%
0.5%

16.0%
(2.3%)
(1.9%)
(1.6%)
(1.3%)
(0.9%)
(0.6%)
(0.2%)
0.1%
0.4%
0.7%

Combined Entity Needs

To Achieve Synergies
Well Beyond $1B Level
Monterrey Anticipates
For Transaction To Be
Accretive At $31/Share

15

Yacht Potential Revenue Synergies

($ in Millions Except Per Unit Data)
Transaction Assumptions - Revenue Synergies ($MM Except Per Search and Per Pageview Data)
Revenue Synergies from Improved Monetization (Seller):

Search Advertising:
Display Advertising:
Revenue Per Search (RPS) - Yacht:
% Increase from Buyer:
New Revenue Per Search (RPS):
Search Revenue Synergies:
Revenue Per Pageview - Yacht:
% Increase from Buyer:
New Revenue Per Pageview:

Combined Years
FY 2010E FY 2011E FY 2012E
$1,706
$1,971
$2,236
$2,993
$3,409
$3,848
$0.016
10.0%
$0.018

$0.017
10.0%
$0.019

$0.018
10.0%
$0.020

$170

$197

$223

$0.0015 $0.0016 $0.0016

10.0%
10.0%
10.0%
$0.0016 $0.0017 $0.0018

Display Revenue Synergies:

$299

$341

$384

Total Revenue Synergies:

Seller Existing Gross Margin:
Cost of Revenue Synergies:

$469
80.0%
$94

$537
79.7%
$109

$608
79.5%
$125

Goldman Stanley

Even A 10%
Improvement To
Yachts Revenue Per
Search And Revenue
Per Pageview Would
Yield ~$500MM In
Synergies

16

Yacht Potential Cost Synergies

($ in Millions Except Per Unit Data)
Transaction Assumptions - Cost Synergies ($MM Except Per Employee Data)
Cost Synergies from Reduction in Force (Seller):

# Employees - Sales & Marketing:

# Employees - General & Administrative:
Average Expense Per S&M Employee:
Average Expense Per G&A Employee:

Combined Years
FY 2010E FY 2011E FY 2012E
5,047
5,615
6,192
4,249
4,727
5,212
$427,763 $432,040 $434,152
$202,749 $205,565 $207,389

Reduction in Force - Sales & Marketing:

Reduction in Force - General & Administrative:

10.0%
10.0%

10.0%
10.0%

10.0%
10.0%

S&M Employees Post-Transaction:

G&A Employees Post-Transaction:

4,543
3,824

5,054
4,254

5,573
4,691

Sales & Marketing Expense Synergies:

General & Administrative Expense Synergies:

$216
$86

$243
$97

$269
$108

A 10% Reduction In Force In

Yachts Sales & Marketing And
General & Administrative
Departments Would Result In
$300MM + Of Synergies

Cost Synergies from Building Consolidation and Rental Savings (Buyer & Seller):

Buyer - Operating Lease Commitments:

Seller - Operating Lease Commitments:
Total Operating Lease Commitments:
Incremental Savings from Consolidation:
Rental Expense Synergies:
Total Expense Synergies:

Combined Years
FY 2010E FY 2011E FY 2012E
$202
$174
$150
$117
$99
$85
$319
$273
$235
10.0%

10.0%

10.0%

$32
$334

$27
$367

$23
$400

Goldman Stanley

Synergies Via Operating Lease

Consolidation Are Also
Possible, But Upside Is More
Limited

17

Process Recommendations

Goldman Stanley

18

Key Recommendations

We recommend engaging in discussions with Monterrey and focusing negotiation

efforts on raising offer price to $35/share range

Negotiations, Definitive Agreement signing, and regulatory approval may take up to

1.5 years

During this period, we recommended contacting a limited number of other financial

and strategic partners to gauge interest and win a competing offer

Likelihood of receiving a competitive 100% acquisition offer is low, but more creative
transaction scenarios are possible

Should negotiations with Monterrey fail or if no other parties express interest in Yacht,
other possibilities include selling certain assets or outsourcing operations to other
strategic partners

Goldman Stanley

19

Appendix

Goldman Stanley

20

Yacht Revenue & Expense Detail

($ in Millions Except Per Share Data)

Total Net Revenue (Ex-TAC) ($MM) - Yacht

Historical
Projected
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
$977
$1,181
$1,384
$1,597
$1,815
$2,126
$2,346
$1,730
$2,052
$2,415
$2,791
$3,195
$3,624
$4,071
$728
$625
$656
$683
$703
$724
$746
$798
$881
$934
$981
$1,020
$1,050
$1,071
$326
$374
$412
$449
$485
$519
$550
$3,696
$4,560
$5,113
$5,801
$6,500
$7,217
$8,043
$8,784
N/A
23.4%
12.1%
13.5%
12.1%
11.0%
11.4%
9.2%
FY 2005

Search Advertising:
Display Advertising:
Affiliate Site Revenue:
Premium Fees:
Other Revenue:
Total Net Revenue (Ex-TAC):
Net Revenue Growth %:

Cost of Revenue & Operating Expenses ($MM) - Yacht

Cost of Revenue (Ex-TAC):

Product Development:
Sales & Marketing:
General & Administrative:
Total COGS and Operating Expenses:
% Revenue (Ex-TAC):

Historical
Projected
FY 2005 FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
$534
$810
$982
$1,122
$1,284
$1,457
$1,642
$1,814
$570
$833
$1,084
$1,265
$1,443
$1,630
$1,830
$2,013
$1,034
$1,322
$1,610
$1,785
$2,031
$2,289
$2,564
$2,813
$341
$529
$633
$708
$809
$915
$1,029
$1,133
$2,479
$3,494
$4,310
$4,880
$5,566
$6,290
$7,065
$7,774
67.1%
76.6%
84.3%
84.1%
85.6%
87.2%
87.8%
88.5%

Goldman Stanley

21

Yacht Standalone Income Statement Base Case

($ in Millions Except Per Share Data)
Income Statement ($MM) - Yacht

Historical
Projected
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
Revenue (Ex-TAC):
Cost of Revenue (Ex-TAC):
Gross Profit:
Operating Expenses:
Product Development:
Sales & Marketing:
General & Administrative:
Amortization of Intangibles:
Total Operating Expenses:

$4,560
$810
$3,750

$5,113
$982
$4,131

$5,801
$1,122
$4,679

$6,500
$1,284
$5,216

$7,217
$1,457
$5,761

$8,043
$1,642
$6,401

$8,784
$1,814
$6,970

$833
$1,322
$529
$125
$2,809

$1,084
$1,610
$633
$107
$3,435

$1,265
$1,785
$708
$118
$3,876

$1,443
$2,031
$809
$66
$4,348

$1,630
$2,289
$915
$51
$4,884

$1,830
$2,564
$1,029
$29
$5,451

$2,013
$2,813
$1,133
$16
$5,976

Operating Income:
Interest / Investment Income:
Net Investment Gains / Losses & Other:
Pre-Tax Income:
Income Tax Provision:
Effective Income Tax Rate:
Earnings in Equity Interests:
Minority Interest Earnings:
Net Income (GAAP):
Weighted Avg. Diluted Shares Outstanding:
Diluted EPS (GAAP):

$941
$143
$14
$1,098
($458)
41.7%
$112
($1)
$751
1,458
$0.52

$695
$130
$24
$849
($337)
39.7%
$151
($3)
$660
1,405
$0.47

$803
$87
$0
$890
($356)
40.0%
$151
($3)
$682
1,405
$0.48

$867
$73
$0
$940
($376)
40.0%
$151
($3)
$712
1,405
$0.51

$876
$76
$0
$952
($381)
40.0%
$151
($3)
$719
1,405
$0.51

$950
$84
$0
$1,035
($414)
40.0%
$151
($3)
$769
1,405
$0.55

$994
$98
$0
$1,093
($437)
40.0%
$151
($3)
$803
1,405
$0.57

Pro-Forma Reconciliation:
Amortization of Intangibles:
Stock-Based Compensation:
Pro-Forma Pre-Tax Income:
Effective Tax Rate:
Equity & Minority Interest Earnings:

$238
$425
$1,761
41.7%
$111

$250
$572
$1,672
39.7%
$148

$247
$630
$1,766
40.0%
$148

$139
$711
$1,790
40.0%
$148

$106
$795
$1,853
40.0%
$148

$60
$882
$1,977
40.0%
$148

$34
$960
$2,086
40.0%
$148

Pro-Forma Net Income:

Pro-Forma EPS:

$1,138
$0.78

$1,156
$0.82

$1,208
$0.86

$1,222
$0.87

$1,260
$0.90

$1,334
$0.95

$1,400
$1.00

Stock-Based Compensation:
Depreciation:
Amortization:
EBITDA:
EBIT:

$425
$302
$238
$1,906
$1,366

$572
$409
$250
$1,927
$1,268

$630
$365
$247
$2,045
$1,433

$711
$477
$139
$2,194
$1,578

$795
$602
$106
$2,380
$1,671

$882
$742
$60
$2,634
$1,833

$960
$897
$34
$2,885
$1,954

Goldman Stanley

22

Yacht Equity Investments Valuation

($ in Millions Except Per Share Data)
Yacht - Yacht Japan Ownership Valuation

Market Cap (B Yen):

Yen Exchange Rate:
Market Cap (USD):
Ownership Stake:
Value of Yacht's Stake:
Lack of Control Discount:
Sale Value:
Taxes:
Proceeds to Yacht:

Yacht - Alibaba.com Ownership Valuation

2,267,000.0
106.9
$21,206.7
33%
$6,998.2
20%
$5,598.6
$2,239.4
$3,359.1

Yacht - GMarket Ownership Valuation

HKD 100,800.0
7.8
$12,923.1
28%
$3,618.5
20%
$2,894.8
$1,157.9
$1,736.9

Yacht - Alibaba Group Other Assets Valuation

Market Cap (USD):

Ownership Stake:
Value of Yacht's Stake:
Lack of Control Discount:
Sale Value:
Taxes:
Proceeds to Yacht:

$1,047.0
10%
$104.7
20%
$83.8
$33.5
$50.3

Total Value of Non-Core Assets:

$5,362.3

Goldman Stanley

Market Cap (HKD):

HKD Exchange Rate:
Market Cap (USD):
Ownership Stake:
Value of Yacht's Stake:
Lack of Control Discount:
Sale Value:
Taxes:
Proceeds to Yacht:

Book Value of Alibaba Assets:

% in Non-Public Assets:
Value of Yacht's Stake:
Sale Value:
Taxes:
Proceeds to Yacht:

$1,440.3
25%
$360.1
$360.1
$144.0
$216.0

23

Yacht DCF Analysis WACC Calculation

($ in Millions Except Per Share Data)
Discount Rate Calculation - Assumptions
Risk-Free Rate:
Equity Risk Premium:
Interest Rate on Debt:

4.31%
7.00%
0.00%

Comparable Companies - Unlevered Beta Calculation

Levered
Equity
Unlevered
Name
Beta
Debt
Value
Tax Rate
Beta
Google Inc.
1.29 $
- $ 174,565
35%
1.29
eBay Inc.
1.96
34,925
35%
1.96
Amazon.com, Inc.
1.28
1,299
31,964
35%
1.25
IAC/InterActiveCorp
0.80
946
14,408
35%
0.77
Median
Yacht

1.27
1.39

Yacht - Levered Beta & WACC Calculation

Unlevered
Beta
Debt
Yacht

1.27 $

Cost of Equity Based on Comparables:

Cost of Equity Based on Historical Beta:

750 $

Equity
Value
25,473

Tax Rate

Levered
Beta

40%

1.29
13.35%
14.04%

WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Preferred Stock
WACC

Goldman Stanley

12.96%

24

Monterrey / Yacht Transaction Summary

($ in Millions Except Per Share Data)
Current Yacht Market Data:
Current Price:
Diluted Shares Outstanding:
Equity Market Value:
Plus: Total Debt
Plus: Preferred Stock
Plus: Minority Interest
Less: Cash & Cash-Equivalents
Less: Equity Investments
Total Enterprise Value:

$ 19.05
1,337.2
$ 25,473
$750
$0
$12
$2,363
$5,362
$ 18,509

Current Valuation Multiples:

Transaction Metrics:
Consideration Per Share:
Diluted Shares Outstanding:
Implied Diluted Equity Value:
Plus: Total Debt
Plus: Preferred Stock
Plus: Minority Interest
Less: Cash & Cash-Equivalents
Less: Equity Investments
Total Enterprise Value:

$ 31.00
1,383.3
$ 42,882
$0
$0
$12
$2,363
$5,362
$ 35,168

Implied Transaction Multiples:

Current
Statistic Multiple

Implied
Multiple

TTM TEV / Revenue:

12/31/2008 TEV / Revenue:
12/31/2009 TEV / Revenue:

$ 5,113
$ 5,801
$ 6,500

3.6 x
3.2 x
2.8 x

TTM TEV / Revenue:

12/31/2008 TEV / Revenue:
12/31/2009 TEV / Revenue:

TTM TEV / EBITDA:

12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:

$ 1,927
$ 2,045
$ 2,194

9.6 x
9.1 x
8.4 x

TTM Pro-Forma P/E:

12/31/2008 Pro-Forma P/E:
12/31/2009 Pro-Forma P/E:

$
$
$

Goldman Stanley

0.86
0.86
0.87

22.1 x
22.2 x
21.9 x

Public
Comps

Trans.
Comps

6.9 x
6.1 x
5.4 x

3.0 x
2.7 x
2.4 x

4.7 x
5.5 x
N/A

TTM TEV / EBITDA:

12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:

18.2 x
17.2 x
16.0 x

19.5 x
15.2 x
12.1 x

31.8 x
23.4 x
N/A

TTM Pro-Forma P/E:

12/31/2008 Pro-Forma P/E:
12/31/2009 Pro-Forma P/E:

36.0 x
36.1 x
35.7 x

34.7 x
28.8 x
23.1 x

N/A
N/A
N/A

25