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1996 1997 1998 1999

Revenue 318.20 363.00 408.20 414.60


Growth Rate 14.08% 12.45% 1.57%

EBITDA 29.60 36.90 43.00 38.80


Margin 9.30% 10.17% 10.53% 9.36%

Net Working Capital 70.80 87.50 99.50 81.50


Percent of Revenue 22.25% 24.10% 24.38% 19.66%
2000 2001E 2002P 2003P 2004P
471.40 537.30 597.24 663.87 737.92
13.70% 13.98% 11.16% 11.16% 11.16%

58.00 75.10 67.30 74.80 83.15


12.30% 13.98% 11.27% 11.27% 11.27%

84.30 81.50 104.93 116.64 129.65


17.88% 15.17% 17.57% 17.57% 17.57%
2005P 2006P
820.24 844.85
11.16% 3.00%

92.42 95.20
11.27% 11.27%

144.11 148.44
17.57% 17.57%
2001E 2002P 2003P

Income Statement

Revenue 537.30 597.24 663.87


Management Forcast 15.20% 15.00%
Our Forcast 11.16% 11.16%

EBITDA 67.30 74.80


Management Forcast 14.30% 15.30%
Our Forcast 11.27% 11.27%

D&A 21.10 21.80

EBIT 46.20 53.00

Interest 4.30%
Revolver 7.300% 1.28 2.18
Term Loan 8.0500% 10.06 10.06
Notes 10.88% 19.03 19.03
Pre-Tax Income 15.82 21.73
Taxes 40.00% 6.33 8.69

After-Tax Income 9.49 13.04

Balance Sheet

Net Working Capital 81.50 104.93 116.64

Revolver 17.50 29.84 27.71


Term Loan 125.00 125.00 125.00
Notes 175.00 175.00 175.00

Statement of Cash Flow

After Tax Income 9.49 13.04

D&A 21.10 21.80


CapEx 19.50 21.00
Net Working Capital Investment 23.43 11.71

Equity Cash Flow -12.34 2.13


Net Interest Expense 30.37 31.27
Capital Cash Flow 18.03 33.40
2004P 2005P 2006P

737.92 820.24 844.85


14.90% 14.90% 5.00%
11.16% 11.16% 3.00%

83.15 92.42 95.20


16.40% 17.20%
11.27% 11.27% 11.27%

24.40 28.10 29.50

58.75 64.32 65.70

2.02 1.55 0.72


10.06 10.06 10.06
19.03 19.03 19.03
27.63 33.68 35.88
11.05 13.47 14.35

16.58 20.21 21.53

129.65 144.11 148.44

21.24 9.89 -14.31


125.00 125.00 125.00
175.00 175.00 175.00

16.58 20.21 21.53

24.40 28.10 29.50


21.50 22.50 22.50
13.01 14.46 4.32

6.47 11.34 24.20


31.12 30.64 29.82
37.58 41.99 54.02
CAPM

Risk-Free Rate 5.20%

Asset Beta 1.01


Market Risk Premium 6.62%

Pre-Tax Cost of Capital 11.89%


Equity Beta EBITDA Debt
Company
Nike 1.00 1211.60 1296.60
Jones Apparel Group 1.10 757.30 1482.10
Tommy Hilfiger 1.30 302.10 567.00
Liz Claiborne 1.20 417.90 519.60

Average
Median
Equity D/(D+E) Asset Beta EBITDA Multiple

7224.30 8.40% 0.92 7.03


5343.60 17.10% 0.91 9.01
1245.70 18.10% 1.06 6.00
2650.20 4.40% 1.15 7.59

1.01 7.41
0.99 7.31
2001E 2002P 2003P
Capital Cash Flow 18.03 33.40
Terminal Value
(1+g)/(pre-tax WACC-g)

Discount Factors 0.89 0.80

PV of Capital Cash Flow 16.12 26.68


PV of Terminal Value

Total Value

Initial Debt

Equity Value
2004P 2005P 2006P
37.58 41.99 54.02
626.18
11.59

0.71 0.64 0.57

26.83 26.79 30.81


357.13

484.36

317.50

166.86
Enterprise Value
Growth Rate
#REF! 2.0% 2.5% 3.0% 3.5%
Pre-tax WACC

11.0% 500 521 543 569


11.5% 471 489 509 531
12.0% 445 461 $478 497
12.5% 421 435 450 467
13.0% 400 412 425 440
4.0%
599
556
518
485
456