Reading Guide

Contact Information
NAME:Hongrui (Henry) Chen

Name of the company:

Solera Holdings Inc.

FORMAT

Email: hongrui.chen@mail.mcgill.ca
Telephone:
514-632-4518

$500

Hardcode, but flexible

$500

Hardcode, not flexible

$500

Pulled from another worksheet

$500
$500

Data pull from a Bloomberg, FactSet, CapIQ

Calculated number

Sales scenarios
Projected

Sales Scenarios

2013

2014

2015

2016

2017

10.00%

9.60%

9.60%

9.60%

9.60%

10%
12%
8%

10%
12%
8%

10%
12%
8%

10%
12%
8%

10%
12%
8%

5.70%

5.70%

5.70%

5.70%

5.70%

5.70%
6%
5.20%

5.7%
10%
5.20%

5.7%
10%
5.20%

5.7%
10%
5.20%

5.7%
10%
5.20%

3.34%

3.34%

3.34%

3.34%

3.34%

3.34%
3.84%
2.8400%

3.34%
3.84%
2.84%

3.34%
3.84%
2.84%

3.34%
3.84%
2.84%

3.34%
3.84%
2.84%

5.65%

5.65%

5.65%

5.65%

5.65%

5.65%
6.15%
5.150%

5.65%
6.15%
5.15%

5.65%
6.15%
5.15%

5.65%
6.15%
5.15%

5.65%
6.15%
5.15%

Revenue Growth
Insurance companies
Base case
Best case
Worst case

Collision repair facilities

Base case
Best case
Worst case

Independent assessors
Base case
Best case
Worst case

Automotive recycle and others

Base case
Best case
Worst case

Revenue Schedule
In thousands, except per share data
Fiscal years ended June 30,

Actual
2011

2012

2013

2014

2015

2016

2017

####

275,100
9.6%

######
30.8%

395,890
10.0%

433,895
9.6%

475,549
9.6%

521,202
9.6%

571,238
9.6%

Collision repair facilities

Revenue growth

####

243,600
7.98%

######
5.71%

272,178
5.70%

287,692
5.70%

304,090
5.70%

321,423
5.70%

339,744
5.70%

Independent assessors
Revenue growth

####

71,000
6.61%

74,400
4.79%

76,885
3.34%

79,453
3.34%

82,107
3.34%

84,849
3.34%

87,683
3.34%

95,000
7.71%

98,400
3.58%

103,960
5.65%

109,833
5.65%

116,039
5.65%

######

848,912

910,873

977,785

2010

Revenue from:
Insurance companies
Revenue growth

Automotive recycle and others

Revenue growth

####

Total revenue

6E+05

684,700

Projected

122,595
5.65%

129,522
5.65%

1,050,069

1,128,187

Cost Schedule
In thousands, except per share data
Fiscal years ended June 30,

2010

Actual
2011

2012

2013

2014

2015

2016

2017

Cost of revenue:
Operating expense
As % of revenue
System development and programming costs
As % of revenue
Total cost of revenue

####
#####
####
#####
####

134,649
19.67%
68,932
10.07%
203,581

######
21.74%
73,914
9.35%
######

175,803
20.71%
85,401
10.06%
261,204

188,635
20.71%
91,634
10.06%
280,269

202,492
20.71%
98,366
10.06%
300,858

217,462
20.71%
105,638
10.06%
323,099

233,639
20.71%
113,496
10.06%
347,135

Selling, general and administrative expenses

As % of revenue
Depreciation and amortization
As % of revenue

2E+05
#####
88978
#####

187701
27.41%
83088
12.14%

206639
26.15%
103510
13.10%

228,016
26.86%
103,395
12.18%

244,658
26.86%
94,070
10.33%

262,631
26.86%
87,404
8.94%

282,046
26.86%
55,507
5.29%

303,028
26.86%
50,813
4.50%

####
0.94%
4032
0.64%
32782
5.19%
3964
0.63%
####

7,093
1.04%
9687
1.41%
31102
4.54%
7815
1.14%
530,067

7,057
0.89%
7962
1.01%
53593
6.78%
1665
0.21%
######

11,460
1.35%
63,353
7.46%
5,603
0.66%
681,139

8,699
0.96%
12,297
1.35%
59,660
6.55%
6,109
0.67%
705,763

9,338
0.96%
13,200
1.35%
56,206
5.75%
5,024
0.51%
734,659

10,028
0.96%
14,176
1.35%
52,973
5.04%
6,456
0.61%
744,285

10,774
0.96%
15,231
1.35%
47,924
4.25%
6,766
0.60%
781,672

2010

Actual
2011

2012

2013

2014

2015

2016

2017

####

684,697
8.5%

######
15.4%

848,912
7.4%

910,873
7.3%

977,785
7.3%

1,050,069
7.4%

1,128,187
7.4%

####
####
####
####
####

134,649
68,932
203,581
187,701
83,088

######
73,914
######
######
######

175,803
85,401
261,204
228,016
103,395

188,635
91,634
280,269
244,658
94,070

202,492
98,366
300,858
262,631
87,404

217,462
105,638
323,099
282,046
55,507

233,639
113,496
347,135
303,028
50,813

####
####
####

7,093
9,687
31,102

7,057
7,962
53,593

8,107
11,460
63,352.94

8,699
12,297
59,660.32

9,338
13,200
56,205.52

10,028
14,176
52,973.10

10,774
15,231
47,924.28

Retructuring charges, asset impairments, and other costs associate with exit and disposal activities
As % of revenue
Acquisition and related costs
As % of revenue
Interest expense
As % of revenue
Other expense, net
As % of revenue
Total cost

Projected

8,107
0.96%

Income Statement
In thousands, except per share data
Fiscal years ended June 30,
Revenue
Revenue growth
Cost of revenue:
Operating expense
System development and programming costs
Total cost of revenue
Selling, general and administrative expenses
Depreciation and amortization
Retructuring charges, asset impairments, and other costs associate with exit and disposal activities
Acquisition and related costs
Interest expense

Projected

Other expense, net

####
####
####
####
####
####
####

Income before provision for income taxes

Income taxes proviosion (benefit)
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to Solera Holding, Inc.
Net income attributable to Solera Holding, Inc. per coomon share:
Basic
Diluted
dividends paid per share
Weighted-average shares used in the calculation of net income attributable to
solera Holdings, Inc. per common share:
Basic
Diluted

1.20
1.20
0.25

####
####

7,815
530,067
154,630
(14,427)
169,057
11,680
157,377

1,665
######
######
45,718
######
11,398
######

2.23
2.22
0.30

1.52
1.51
0.40

70,349
70,683

70,178
70,527

5,603
681,139
167,773
46,809
120,965
11,612.60
109,352

6,109
705,763
205,110
57,226
147,885
14,196.92
133,688

5,024
734,659
243,126
67,832
175,294
16,828.18
158,465

6,456
744,285
305,784
85,314
220,470
21,165.17
199,305

6,766
781,672
346,515
96,678
249,837
23,984.35
225,853

Cash flow statement

In thousands, except per share data
Fiscal years ended June 30,

2010

Cash flows operating activities:

Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Provision for doubtful accounts
Stock-based compesation
Deferred income taxes
Gain on derivative instruments
Other
Changes in operating assets and liabilities net of effects from acquisitions of business:
Increase in accounts receivable
(Increase) decrease in other assets
(Decrease) increase in aacounts payable
Increase in accrued expenses and other liabilities
Net cash provided by operating activities
Cash flow from investing activities:
Capital expenditures
Acquisitions and capitalization of intangible assets
Proceeds from sale of property and equipment
Acquisions of and investments in business, net of cash acquired
Proceeds from sales and maturities of short-term investments
Purchases of short-term investments
Decrease (increase) in restricted cash
Net cash used in investing activities
FCF before financing activities
Cash flows from financing activities:
Proceeds from debt issuance, net of issuance costs
Payment of contingent purchase consideration
Proceeds from sale of shares in majority-woned subsidiary
Acquisition of additional shares in majority-owned subsidiary
Principal payments on financed asset acqusitions
Repayments of long-term debt
Cash dividends paid on common shares and participating seccurities
Cash dividends paid to noncontrolling interests
Cash paid to repurchase common stock
Proceeds from stock purchase plan and exercise of stock options
Net cash (used in) provided by financing activities
Effect of foreign currency exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

Actual
2011

Projected
2012

2013

2014

2015

2016

2017

####

169,057

######

120,965

147,885

175,294

220,470

249,837

####
####
####
####
169

83,088
2,122
13,579
(55,220)
(498)

######
2,278
18,394
(2,111)
(6,628)
2,919

103,395
2,645.70
(1,677.73)
2,919

94,070
2,838.81
(2,051.10)
2,919

87,404
3,047.35
(2,188.13)
2,919

55,507
3,263.69
(2,599.17)
2,919

50,813
3,516.09
(2,772.12)
2,919

####
417
####
####
####

(15,182) (8,268)
(8,393) (10,253)
2,000
(3,062)
20,978
7,827
211,531
######

8,956.16
(148,180)
1,685
(3,530)
87,178

11,617.89
3,230
2,089
1,765
264,363

12,546.11
2,525
2,256
(882)
282,921

13,015.56
2,878
2,341
441
298,235

15,185.11
2,701
2,731
(221)
324,710

#### (19,475) (29,690)

####
(2,155) (2,497)
1,380
1,128
#### (526,248) (16,961)
####
42,826
(42,826)
####
2,940
201
#### (543,558) (47,819)
#### (332,027) ######

(31,058)
(2,300)
(191,227)
1,571
(223,015)
(135,836)

(26,741)
(2,317)
(104,094)
886
(132,267)
132,097

(29,163)
(2,371)
(147,661)
1,228
(177,967)
104,954

(28,987)
(2,330)
(125,877)
1,057
(156,137)
142,098

(28,297)
(2,339)
(136,769)
1,143
(166,263)
158,447

100,000
(320.89)
(1,052)
(57,158.58)
(8,612)
(2,583.56)
30,273
(442)
(106,005)
508,246
402,241

(344.31)
(1,052)
(53,510.95)
(54,907)
10,400
87,590
402,241
489,831

(369.60)
(1,467)
(50,099.74)
(51,936)
(3,368)
49,650
489,831
539,481

(396.93)
0
(1,190)
(46,909.60)
(48,497)
2,197
95,798
539,481
635,279

(426.45)
0
(1,236)
(164,298.70)
(165,962)
3,077
(4,438)
635,279
630,841

2013

2014

2016

2017

####
####
####
####
####
####
####
####
####
####
####

444,301
######
(413)
(220)
2,139
(13,080) (9,491)
(2,545) (2,297)
(5,766) ######
(21,231) (28,284)
(6,373) (8,270)
######
16,008
2,577
410,901 (17,966)
51,705 (20,062)
130,579
######
240,522
######
371,101
######

Balance Sheet
In thousands, except per share data
Fiscal years ended June 30,

Actual
2011

Projected
2012

2015

ASSETS
Current assets:
Cash and cash equivalent
Accounts receivable, net of allowance for doubtful accounts of $2356 and 2769 at June 30,
2012 and 2011, respectively
Other receivables
Other current assets
Deferred income tax assets
Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Other noncurrent assets
Noncurrent deferred income tax assets
Total assets

371,101

######

402,241.23

489,831.28

539,481.17

635,279.36

630,841.06

135,589
19,037
24,895
10,321
560,943
64,485
#######
416,100
19,462
48,396
#######

######
20,953
23,015
7,709
######
58,533
######
######
27,209
47,254
######

136,601.87
22,571
23,955
18,487
603,856
55,598
999,892
260,339
174,449
45,998
2,140,132

146,572.30
24,219
23,485
47,493
731,600
43,529
999,892
205,079
171,689
68,998
2,220,786

157,339.34
25,998
23,720
70,020
816,558
29,223
999,892
161,144
168,929
142,179
2,317,925

168,509.25
27,843
23,603
87,913
943,148
35,197
999,892
128,651
166,169
205,796
2,478,852

181,541.06
29,997
23,661
99,450
965,490
37,079
999,892
104,253
163,409
269,882
2,540,005

37,798
140,270
10,837
1,187
24,042
214,134
#######
24,127
30,541
#######
94,841

26,940
######
7,279
2,216
2,861
######
######
32,181
22,067
######
88,603

28,625
139,773
9,058
1,702
20,534
199,692
1,006,180.13
28,154
26,304
1,260,330
91,722

30,714
139,525
8,169
1,959
19,464
199,830
953,739.39
30,168
25,098
1,208,835
90,163

32,971
139,649
7,012
1,830
18,462
199,924
904,641.64
29,161
23,013
1,156,740
80,942

35,311
139,587
7,036
1,898
17,524
201,356
858,670.24
29,664
24,056
1,113,746
85,552

38,042
139,618
6,987
1,864
14,238
200,749
697,657.51
29,413
23,534
951,353
83,247

587,265
######
151,366
######
36,413 (47,273)
775,044
######
10,065 10,147
785,109
######
####### ######

582,693
242,554
(47,273)
777,974
10,106
788,080
2,140,132

582,693
376,242
(47,273)
911,662
10,127
921,788
2,220,786

582,693
534,707
(47,273)
1,070,127
10,116
1,080,243
2,317,925

582,693
734,012
(47,273)
1,269,432
10,121
1,279,554
2,478,852

582,693
959,865
(47,273)
1,495,285
10,119
1,505,404
2,540,004

2013

2014

2016

2017

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Income taxes payable
Deferred income tax liabilities
Current portion of long-term debt
Total current liabilities
Long-term debt
Other noncurrent liabilities
Noncurrent deferred income tax liabilities
Total liabilities
Redeemable noncontrolling interests
Stockholders' equity:
solera Holdings, Inc. stockholders' equity:
Common shares, $0.01 par value: 15000 shares authorized; 68895 and 70795 issued and
outstanding as of June 30, 2012 and 2011 respectively
Retained earnings
Accumulated other comprehensive income (loss)
Total Solera Holdings, Inc. stockholders' equity
Noncontrolling interests
Total stockholders' equity
Total liabilities and stockholders' equity

Depreciation Schedule
In thousands, except per share data
Fiscal years ended June 30,

2010
Years remaining on existing asset:

Building
Machinery and equipment
Furniture and fixture
Data processing equipment
Leasehold improvement
Software licenses

20
3
4
3
5
3
Deprecation years on new assets:

Value as 2012
14,280
2,113
5,489
42,416
20,090
31,374

Actual
2011

Projected
2012

714
704
1,372
14,139
4,018
10,458

714
704
1,372
14,139
4,018
10,458

2015

714
704
1,372
14,139
4,018
10,458

714
1,372
4,018
-

714
4,018
-

Depreciation to existing assets

CAPEX
2013
2014
2015
2016
2017

####
####
####
####
####

Total Depreciation

Revenue
Capex
Capex as a % of Revenue

31,405

31,405

31,405

6,104

4,732

2,588

5,176
2,228

5,176
4,457
2,430

5,176
4,457
4,861
2,416

5,176
4,457
4,861
4,831
2,358

23,014

26,415

58,192

59,710

33,993

38,810

43,469

####
####
3.57%

684,697
19,475
2.84%

######
29,690
3.76%

848,912
31,058
3.66%

910,873
26,741
2.94%

977,785
29,163
2.98%

2010

Actual
2011

2012

2013

2014

365

365

366

365

365

1,050,069
28,987
2.76%

1,128,187
28,297
2.51%

2015

2016

2017

365

366

365

Working Capital Schedule

In thousands, except per share data
Fiscal years ended June 30,
Days per year

Projected

Income statement items

Net revenue
Cost of sales

######
######

848,912
261,204

910,873
280,269

977,785
300,858

1,050,069
323,099

1,128,187
347,135

60
10
40

60
10
40

60
10
40

60
10
40

60
10
40

60
10
40

######
20,953
26,940
######

139,248
22,571
28,625
133,194

149,411
24,219
30,714
142,915

160,387
25,998
32,971
153,414

171,773
27,843
35,311
164,305

185,057
29,997
38,042
177,012

(10,498)

(10,891)

(12,707)

2016

2017

Days in
Account receivable
Other receivable
Account payable

Account Balance
Account receivable
Other receivable
Account payable
Net working capital
Change in working capital

(9,917)

(9,722)

2013

2014

Tax Schedule
In thousands, except per share data
Fiscal years ended June 30,

2010

Income tax provision at U.S statutory rate

Actual
2011

Projected
2012

2015

35%

Income before provision for income taxes

167,773

205,110

243,126

305,784

346,515

Income taxes proviosion (benefit)

Income tax provision at U.S. statutory rate
(Increase) decrease in provision (benefit) from:
State taxes, net of federal tax benefit
foreign tax rate differential
Impact on deferred taxes due to increase(reduction) due to change in tax rate
Change in valluation allowance
Withholding taxes
Nondectible stock-based compensation
Dividend
Foreign tax credits
Unrecigized tax benefit
Other
Total income tax provision (benefit)
Income taxes proviosion (benefit)
Total deferred tax
Deferred tax rate

35%

58,721

71,789

85,094

107,025

121,280

1.30%
-11.50%
-0.40%
-1.30%
1.10%
1.30%
0%
-0.40%
2.50%
0.30%

2,181
(19,294)
(671)
(2,181)
1,846
2,181
(671)
4,194
503
46,809

2,666
(23,588)
(820)
(2,666)
2,256
2,666
(820)
5,128
615
57,226

3,161
(27,959)
(973)
(3,161)
2,674
3,161
(973)
6,078
729
67,832

3,975
(35,165)
(1,223)
(3,975)
3,364
3,975
(1,223)
7,645
917
85,314

4,505
(39,849)
(1,386)
(4,505)
3,812
4,505
(1,386)
8,663
1,040
96,678

167,773
(1,677.73)
-1.00%

205,110
(2,051.10)
-1.00%

243,126
(2,188.13)
-0.90%

305,784
(2,599.17)
-0.85%

346,515
(2,772.12)
-0.80%

48,486.52

59,276.88

70,020.17

87,912.99

99,449.68

####
####
#####

Total current tax

Amortization of Intangible and goodwill

In thousands, except per share data
Fiscal years ended June 30,

154,630
(55,220)
-35.71%

######
(2,111)
-1.29%

Projected
2013

2014

2015

2016

2017

Intangible assets:
Amount outstanding-Beginning
Estimated amortiozation amount
Amount outstanding-Ending

329,741
69,402
260,339

260,339
55,260
205,079

205,079
43,935
161,144

161,144
32,493
128,651

128,651
24,398
104,253

Goodwill
Amount outstanding-Beginning
Impairment
Amount outstanding-Ending

999,892
0
999,892

999,892
0
999,892

999,892
0
999,892

999,892
0
999,892

999,892
0
999,892

69,402

55,260

43,935

32,493

24,398

Net Amortization

Debt and interest schedule

In thousands, except per share data
Fiscal years ended June 30,
LIBOR forecast
EURIBOR forecast

Long-term debt:
Minimum principal payment

Projected
2013

2014

2015

2016

2017

0.29%
0.202%

0.29%
0.202%

0.29%
0.202%

0.29%
0.202%

0.29%
0.202%

2861

2861

2861

2861

273984

Senior unsecured notes

Amount outstanding-Beginning
Scheduled repayment
Amount outstanding-Ending

860,445
55,929
804,516

804,516
52,294
752,223

752,223
48,894
703,328

703,328
45,716
657,612

657,612
45,716
611,895

Average balance
Interest rate
Annul interest expense

832,481
6.75%
56,192

778,369
6.75%
52,540

727,775
6.75%
49,125

680,470
6.75%
45,932

634,754
6.75%
42,846

Senior secured domestic term loan due May 2017:

Amount outstanding-Beginning
Schedule repayment:
Q1
Q2
Q3
Q4
Annual total
Amount outstanding-Ending

principle payment of

Average balance
Spread to LIBOR
Interest rate (LIBOR+Spread)
Annual interest expense

Senior secured european term loan due May 2017:

Amout outstanding-Beginning
Schedule repayment:
Q1
Q2
Q3
Q4
Annual total
Amount outstanding-Ending

principle payment of

106,235

105,177

104,129

103,091

102,064

265.59
264.92
264.26
263.60
1,058
105,177

262.94
262.28
261.63
260.97
1,048
104,129

260.32
259.67
259.02
258.37
1,037
103,091

257.73
257.08
256.44
255.80
1,027
102,064

25,516.09
25,516.09
25,516.09
25,516.09
102,064
-

105,706
3%
3.29%
3,478

104,653
3%
3.29%
3,443

103,610
3%
3.29%
3,409

102,578
3%
3.29%
3,375

17,193

17,022

16,852

16,684

16,518

42.98
42.88
42.77
42.66
171.29
17,022

42.55
42.45
42.34
42.24
169.58
16,852

42.13
42.03
41.92
41.82
167.89
16,684

41.71
41.61
41.50
41.40
166.22
16,518

4,129.51
4,130
4,130
4,130
16,518.03
-

17,107
3%
3.202%
547.78

16,937
3%
3.202%
542.32

16,768
3%
3.202%
536.92

16,601
3%
3.202%
531.57

8,259
3%
3.202%
264.45

402,241
(57,159)
11,195
356,278

489,831
(53,511)
543,342

539,481
(50,100)
589,581

635,279
(46,910)
682,189

630,841
(164,299)
795,140

0.25%

51,032
3%
3.29%
1,679

0.25%

Average balance
Spread to EURIBOR
Interest rate (EURIBOR+Spread)
Annual interest expense

Revolver (drawn amount):

FCF before debt issuance/(repayment)
Schedule debt repayment
Dividends
FCF after scheduled debt repayment and dividends
Revolver amount out standing-Beginning
Addition/(repayment)
Revolver amount outstanding-Ending
Average balance
Spread to EURIBOR
Interest rate (EURIBOR+Spread)
Annual interest expense

3%
3.20%
-

3%
3.20%
-

3%
3.20%
-

3%
3.20%
-

3%
3.20%
-

Revolver (Undrawn Amount)

Maximum revoolver amount available

100,000

100,000

100,000

100,000

100,000

Undraw amount at Beginning

Repayment/(drawings)
Less: reduction in max amount available
Amount available-Ending

100,000
100,000

100,000
100,000

100,000
100,000

100,000
100,000

100,000
100,000

Average balance
Interest rate
Interest expense (stand-by fee) on undrawn amount

100,000
0.375%
375.00

100,000
0.375%
375.00

100,000
0.375%
375.00

100,000
0.375%
375.00

100,000
0.375%
375.00

Net Interest expense

Total long-term debt outsatnding-Ending

63,352.94

59,660.32

56,205.52

52,973.10

47,924.28

1,026,714.42

973,203.46

923,103.72

876,194.12

711,895.42

Amortization of issurance cost:

Issurance cost (Senior unsecure notes):
Amortization
Amout outstanding-Ending
Interest expense (amortization)

12700
2540
10160
2540

10160
2540
7620
2540

7620
2540
5080
2540

5080
2540
2540
2540

2540
2540
0
2540

1100
220
880
220

880
220
660
220

660
220
440
220

440
220
220
220

220
220
0
220

2013

2014

2015

2016

2017

Issurance cost(Senior secured credit facilities):

Amortization
Amout outstanding-Ending
Interest expense (amortization)

Shareholders' equity schedule

In thousands, except per share data
Fiscal years ended June 30,

Projected

Common shares:
Amount outstanding-Beginning
Stock-based compensation
Issuance of common shares under employee stock award plans, net
Sale of shares of majority-owned subsidiary
Share-repurchase
Amount outstanding-Ending

582,693
582,693

Dividend payout rate

Net income to common
Common Dividend

8%
109352
8611.9

Retained earnings:
Amount outstanding-Beginning
Net income
Common dividend
Amount outstanding-Ending

141,814
109,352
8611.9
242,554

Discounted Cash Flow Analysis

In thousands, except per share data
Fiscal years ended June 30,
Dyas per year
Revenue
Revenue growth
EBITDA
EBITDA Margin
Less: depreciation
EBIt
Add: depreciation
EBITDA
Less: unlevered cash taxes
Less: Change in NWC
Less CAPEX
Unlevered free cash flow

2010

Actual
2011

365

365

582,693
582,693
0%
133688
0

242,554
133,688
376,242

0.3

1.3

2013

2014

582,693
582,693
0%
158465
0

376,242
158,465
534,707

582,693
582,693
0%
199305
0

534,707
199,305
734,012

582,693
582,693
0%
225853
0

734,012
225,853
959,865

2.3

3.3

4.3

2015

2016

2017

Projected
2012
366

365

365

365

366

365

######

848,912
7.4%
334,521.76
39%
103,395
231,126.35
103,395
334,521.76
(46,809)
(9,917)
(31,058)
246,738.25

910,873
7.3%
358,840.65
39%
94,070
264,770.65
94,070
358,840.65
(57,226)
(9,722)
(26,741)
265,152.19

977,785
7.3%
386,734.78
40%
87,404
299,331.11
87,404
386,734.78
(67,832)
(10,498)
(29,163)
279,241.34

1,050,069
7.4%
414,263.94
39%
55,507
358,757.41
55,507
414,263.94
(85,314)
(10,891)
(28,987)
289,071.55

1,128,187
7.4%
445,251.83
39%
50,813
394,438.85
50,813
445,251.83
(96,678)
(12,707)
(28,297)
307,570.48

Annualized unlevered cash flow

Terminal value( at WACC discount rate)
Terminal Value (at 16.692x EV/EBITDA)
PV of forecasted cash flow
PV of terminal value (at WACC discount rate)
Discounted UFCF and TV (at 13.692x EV/EBITDA)
Enterprise Value (Gordon Growth)
Enterprise Value (Multiple)
Less: Debt
Add: Cash
Equity value (Gordon Growth)
Equity value (Multiple)
Number of share
Equity value per share (Gordon growth)
Equity value per share(Multiple)
WACC
Growth rate
EV/EBITA

60,391.53

265,152.19

279,241.34

289,071.55

59,126
4,110,507
4,499,866

241,895

237,379

228,982

4,169,633
4,558,992
(1,026,714)
120,965
3,263,883
3,653,242
68895
47.37
53.03
7.32%
1.7%
13.692

307,570.48
5,568,887
6,096,388
227,024

WACC
Levered/Unlevered Beta
Mean Levered Beta
Mean Unlevered Beta

Selected Optimal Capital Structure

1.19
0.84

Debt/Capitalization
Debt/Equity

Relevered Beta
Unlevered Beta
Target Debt/Capitalization
Target Debt/Equity
Cash Tax Rate
Re-Levered Beta

43.5%
0.77
Cost of Equity

0.84
43.5%
0.77
35.0%
1.26

Risk Free Rate (10 Yr US Bond)

Market Risk Premium
Levered Beta
Cost of Equity Before Adjustments
Size Premium
Extraordinary Risk

After Tax Cost of Debt

Cost of Debt
Cash Tax Rate
After Tax Cost of Debt

0.00%

Cost of Equity After Adjustments

4.16%
35.0%
2.70%

2.05%
7%
1.26
10.87%
0.00%
10.87%

Discount Rate (WACC)

Debt/Capitalization
Equity/Capitalization
Weighted Average Cost of Capital (WACC)

43.5%
56.5%
7.32%

Comparable companies
Solera Holdings Inc.
Cost of Debt
Adjusted Levered Beta
Debt/Equity
EV/EBITDA
Marginal Tax Rate
Unlevered Beta

Solera Holdings Inc.

PTC Inc.
Verint System Inc.
Advent Software Inc.
Cadence Design Sys Inc.
Average

0.97
138%
14.10
35.0%
0.51

PTC Inc.

Verint System Inc.

1.60
45%
13.97
35.0%
1.24

State Tax Rate Pre tax cost of debt after tax cost of debt
35%
4.68%
3.04%
35%
1.30%
0.85%
35%
5.47%
3.56%
35%
2.32%
1.51%
38%
7.02%
4.35%
4.16%
2.66%

0.98
123%
12.34
35.0%
0.55

Advent Software Inc.

1.21
31%
15.55
35.0%
1.01

Cadence Design Sys Inc.

1.18
49%
12.50
38%
0.91

AVERAGE
1.19
77%
13.69
36%
0.84