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Investment Banking

Valuation, Leveraged Buyouts,


and Mergers & Acquisitions

LBO Analysis - Template

JOSHUA ROSENBAUM
JOSHUA PEARL
ValueCo Corporation
Leveraged Buyout Analysis Financing Structure: Structure 1
($ in millions, fiscal year ending December 31) Operating Scenario: Base

Transaction Summary
Sources of Funds Uses of Funds Purchase Price Return Analysis
% of Total Multiple of EBITDA % of Total Offer Price per Share - Exit Year 2013
Amount Sources 9/30/2008 Cumulative Pricing Amount Uses Fully Diluted Shares - Entry Multiple -x
Revolving Credit Facility - -% -x -x NA Purchase ValueCo Equity - - % Equity Purchase Price - Exit Multiple -x
Term Loan A - -% -x -x NA Repay Existing Debt - - % Plus: Existing Net Debt - IRR NA
Term Loan B - -% -x -x NA Tender / Call Premiums - - % Enterprise Value - Cash Return NM
Term Loan C - -% -x -x NA Financing Fees - -%
2nd Lien - -% -x -x NA Other Fees and Expenses - -% Transaction Multiples Options
Senior Notes - -% -x -x NA Enterprise Value / Sales Financing Structure 1
Senior Subordinated Notes - -% -x -x NA LTM 9/30/2008 - - x Operating Scenario 1
Equity Contribution - -% -x -x 2008E - - x Cash Flow Sweep 1
Rollover Equity - -% -x -x Enterprise Value / EBITDA Cash Balance 1
Cash on Hand - -% -x -x LTM 9/30/2008 - - x Average Interest 1
Total Sources - -% -x -x Total Uses - -% 2008E - - x Financing Fees 1

Summary Financial Data


Historical Period Projection Period
LTM Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2005 2006 2007 9/30/2008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Sales - - - - - - - - - - - - - - -
% growth NA - - NA - - - - - - - - - - -
Gross Profit - - - - - - - - - - - - - - -
% margin - - - - - - - - - - - - - - -
EBITDA - - - - - - - - - - - - - - -
% margin - - - - - - - - - - - - - - -
Capital Expenditures - - - - - - - - - - - - - - -
% sales - - - - - - - - - - - - - - -
Cash Interest Expense - - - - - - - - - - -
Total Interest Expense - - - - - - - - - - -
Free Cash Flow
EBITDA - - - - - - - - - -
Less: Cash Interest Expense - - - - - - - - - -
Plus: Interest Income - - - - - - - - - -
Less: Income Taxes - - - - - - - - - -
Less: Capital Expenditures - - - - - - - - - -
Less: Increase in Net Working Capital - - - - - - - - - -
Free Cash Flow - - - - - - - - - -
Cumulative Free Cash Flow - - - - - - - - - -

Capitalization
Cash - - - - - - - - - - -
Revolving Credit Facility - - - - - - - - - - -
Term Loan A - - - - - - - - - - -
Term Loan B - - - - - - - - - - -
Term Loan C - - - - - - - - - - -
Existing Term Loan - - - - - - - - - - -
2nd Lien - - - - - - - - - - -
Other Debt - - - - - - - - - - -
Total Senior Secured Debt - - - - - - - - - - -
Senior Notes - - - - - - - - - - -
Total Senior Debt - - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - - -
Total Debt - - - - - - - - - - -
Shareholders' Equity - - - - - - - - - - -
Total Capitalization - - - - - - - - - - -
% of Bank Debt Repaid - - - - - - - - - - -

Credit Statistics
% Debt / Total Capitalization - - - - - - - - - - -
EBITDA / Cash Interest Expense -x -x -x -x -x -x -x -x -x -x -x
(EBITDA - Capex) / Cash Interest Expense -x -x -x -x -x -x -x -x -x -x -x
EBITDA / Total Interest Expense -x -x -x -x -x -x -x -x -x -x -x
(EBITDA - Capex) / Total Interest Expense -x -x -x -x -x -x -x -x -x -x -x
Senior Secured Debt / EBITDA -x -x -x -x -x -x -x -x -x -x -x
Senior Debt / EBITDA -x -x -x -x -x -x -x -x -x -x -x
Total Debt / EBITDA -x -x -x -x -x -x -x -x -x -x -x
Net Debt / EBITDA NM NM NM NM NM NM NM NM NM NM NM
($ in millions, fiscal year ending December 31)
Income Statement
Historical Period Projection Period
LTM Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2005 2006 2007 9/30/2008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Sales - - - - - - - - - - - - - - -
% growth NA - - NA - - - - - - - - - - -

Cost of Goods Sold - - - - - - - - - - - - - - -


Gross Profit - - - - - - - - - - - - - - -
% margin - - - - - - - - - - - - - - -

Selling, General & Administrative - - - - - - - - - - - - - - -


% sales - - - - - - - - - - - - - - -

Other Expense / (Income) - - - - - - - - - - - - - - -


EBITDA - - - - - - - - - - - - - - -
% margin - - - - - - - - - - - - - - -

Depreciation & Amortization - - - - - - - - - - - - - - -


EBIT - - - - - - - - - - - - - - -
% margin - - - - - - - - - - - - - - -

Interest Expense
Revolving Credit Facility - - - - - - - - - - -
Term Loan A - - - - - - - - - - -
Term Loan B - - - - - - - - - - -
Term Loan C - - - - - - - - - - -
Existing Term Loan - - - - - - - - - - -
2nd Lien - - - - - - - - - - -
Senior Notes - - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - - -
Commitment Fee on Unused Revolver - - - - - - - - - - -
Administrative Agent Fee - - - - - - - - - - -
Cash Interest Expense - - - - - - - - - - -
Amortization of Deferred Financing Fees - - - - - - - - - - -
Total Interest Expense - - - - - - - - - - -
Interest Income - - - - - - - - - -
Net Interest Expense - - - - - - - - - -

Earnings Before Taxes - - - - - - - - - -


Income Tax Expense - - - - - - - - - -
Net Income - - - - - - - - - -
% margin - - - - - - - - - -

Income Statement Assumptions


Sales (% YoY growth) NA -% -% NA -% -% -% -% -% -% -% -% -% -% -%
Cost of Goods Sold (% margin) -% -% -% -% -% -% -% -% -% -% -% -% -% -% -%
SG&A (% sales) -% -% -% -% -% -% -% -% -% -% -% -% -% -% -%
Other Expense / (Income) (% of sales) -% -% -% -% -% -% -% -% -% -% -% -% -% -% -%
Depreciation & Amortization (% of sales) -% -% -% -% -% -% -% -% -% -% -% -% -% -% -%
Interest Income -% -% -% -% -% -% -% -% -% -% -%
Tax Rate -% -% -% -% -% -% -% -% -% -%
($ in millions, fiscal year ending December 31)
Balance Sheet
Projection Period
Opening Adjustments Pro Forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2008 + - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cash and Cash Equivalents - - - - - - - - - - - - -
Accounts Receivable - - - - - - - - - - - -
Inventories - - - - - - - - - - - -
Prepaids and Other Current Assets - - - - - - - - - - - -
Total Current Assets - - - - - - - - - - - -

Property, Plant and Equipment, net - - - - - - - - - - - -


Goodwill and Intangible Assets - - - - - - - - - - - - -
Other Assets - - - - - - - - - - - -
Deferred Financing Fees - - - - - - - - - - - - -
Total Assets - - - - - - - - - - - -

Accounts Payable - - - - - - - - - - - -
Accrued Liabilities - - - - - - - - - - - -
Other Current Liabilities - - - - - - - - - - - -
Total Current Liabilities - - - - - - - - - - - -

Revolving Credit Facility - - - - - - - - - - - - -


Term Loan A - - - - - - - - - - - - -
Term Loan B - - - - - - - - - - - - -
Term Loan C - - - - - - - - - - - - -
Existing Term Loan - - - - - - - - - - - - -
2nd Lien - - - - - - - - - - - - -
Senior Notes - - - - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - - - - -
Other Debt - - - - - - - - - - - -
Other Long-Term Liabilities - - - - - - - - - - - -
Total Liabilities - - - - - - - - - - - -

Noncontrolling Interest - - - - - - - - - - - -
Shareholders' Equity - - - - - - - - - - - - - -
Total Shareholders' Equity - - - - - - - - - - - -

Total Liabilities and Equity - - - - - - - - - - - -

Balance Check 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Net Working Capital - - - - - - - - - - - -


(Increase) / Decrease in Net Working Capital - - - - - - - - - -

Balance Sheet Assumptions


Current Assets
Days Sales Outstanding (DSO) - - - - - - - - - - - -
Days Inventory Held (DIH) - - - - - - - - - - - -
Prepaid and Other Current Assets (% of sales) -% -% -% -% -% -% -% -% -% -% -% -%

Current Liabilities
Days Payable Outstanding (DPO) - - - - - - - - - - - -
Accrued Liabilities (% of sales) -% -% -% -% -% -% -% -% -% -% -% -%
Other Current Liabilities (% of sales) -% -% -% -% -% -% -% -% -% -% -% -%
($ in millions, fiscal year ending December 31)
Cash Flow Statement
Projection Period
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Operating Activities
Net Income - - - - - - - - - -
Plus: Depreciation & Amortization - - - - - - - - - -
Plus: Amortization of Financing Fees - - - - - - - - - -

Changes in Working Capital Items


(Inc.) / Dec. in Accounts Receivable - - - - - - - - - -
(Inc.) / Dec. in Inventories - - - - - - - - - -
(Inc.) / Dec. in Prepaid and Other Current Assets - - - - - - - - - -

Inc. / (Dec.) in Accounts Payable - - - - - - - - - -


Inc. / (Dec.) in Accrued Liabilities - - - - - - - - - -
Inc. / (Dec.) in Other Current Liabilities - - - - - - - - - -
(Inc.) / Dec. in Net Working Capital - - - - - - - - - -
Cash Flow from Operating Activities - - - - - - - - - -

Investing Activities
Capital Expenditures - - - - - - - - - -
Other Investing Activities - - - - - - - - - -
Cash Flow from Investing Activities - - - - - - - - - -

Financing Activities
Revolving Credit Facility - - - - - - - - - -
Term Loan A - - - - - - - - - -
Term Loan B - - - - - - - - - -
Term Loan C - - - - - - - - - -
Existing Term Loan - - - - - - - - - -
2nd Lien - - - - - - - - - -
Senior Notes - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - -
Other Debt - - - - - - - - - -
Dividends - - - - - - - - - -
Equity Issuance / (Repurchase) - - - - - - - - - -
Cash Flow from Financing Activities - - - - - - - - - -

Excess Cash for the Period - - - - - - - - - -


Beginning Cash Balance - - - - - - - - - -
Ending Cash Balance - - - - - - - - - -

Cash Flow Statement Assumptions


Capital Expenditures (% of sales) -% -% -% -% -% -% -% -% -% -%
($ in millions, fiscal year ending December 31)
Debt Schedule
Projection Period
Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Forward LIBOR Curve -% -% -% -% -% -% -% -% -% -% -%

Cash Flow from Operating Activities - - - - - - - - - -


Cash Flow from Investing Activities - - - - - - - - - -
Cash Available for Debt Repayment - - - - - - - - - -
Total Mandatory Repayments MinCash - - - - - - - - - -
Cash From Balance Sheet - - - - - - - - - - -
Cash Available for Optional Debt Repayment - - - - - - - - - -

Revolving Credit Facility


Revolving Credit Facility Size -
Spread -%
Term 0 years
Commitment Fee on Unused Portion -%

Beginning Balance - - - - - - - - - -
Drawdown/(Repayment) - - - - - - - - - -
Ending Balance - - - - - - - - - -

Interest Rate - - - - - - - - - -
Average Interest Expense - - - - - - - - - -
Commitment Fee - - - - - - - - - -

Term Loan B Facility


Size -
Spread -%
Term 0 years
Repayment Schedule - % Per Annum, Bullet at Maturity

Beginning Balance - - - - - - - - - -
Mandatory Repayments - - - - - - - - - -
Optional Repayments - - - - - - - - - -
Ending Balance - - - - - - - - - -

Interest Rate - - - - - - - - - -
Interest Expense - - - - - - - - - -

Senior Subordinated Notes


Size -
Coupon -%
Term 0 years

Beginning Balance - - - - - - - - - -
Repayment - - - - - - - - - -
Ending Balance - - - - - - - - - -

Interest Expense - - - - - - - - - -
($ in millions, fiscal year ending December 31)
Returns Analysis
Projection Period
Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Entry EBITDA Multiple -x
Initial Equity Investment -
EBITDA - - - - - - - - - -
Exit EBITDA Multiple -x
Enterprise Value at Exit - - - - - - - - - -

Less: Net Debt


Revolving Credit Facility - - - - - - - - - -
Term Loan A - - - - - - - - - -
Term Loan B - - - - - - - - - -
Term Loan C - - - - - - - - - -
Existing Term Loan - - - - - - - - - -
2nd Lien - - - - - - - - - -
Senior Notes - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - -
Other Debt - - - - - - - - - -
Total Debt - - - - - - - - - -
Less: Cash and Cash Equivalents - - - - - - - - - -
Net Debt - - - - - - - - - -

Equity Value at Exit - - - - - - - - - -

Cash Return NM NM NM NM NM NM NM NM NM NM

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Initial Equity Investment - - - - - - - - - -
Equity Proceeds - - - - - - - - - -
- - - - - - - - -
- - - - - - - -
- - - - - - -
- - - - - -
- - - - -
- - - -
- - -
- -
-
IRR NA NA NA NA NA NA NA NA NA NA

IRR - Assuming Exit in 2013E IRR - Assuming 0.0x Entry Multiple


Exit Multiple Exit Year
NA -1.0x -0.5x 0.0x 0.5x 1.0x -2 -1 0 1 2
-1.0x NA NA NA NA NA 6.5x NA NA NA NA NA
Entry -0.5x NA NA NA NA NA Exit 7.0x NA NA NA NA NA
Multiple 0.0x NA NA NA NA NA Multiple 7.5x NA NA NA NA NA
0.5x NA NA NA NA NA 8.0x NA NA NA NA NA
1.0x NA NA NA NA NA 8.5x NA NA NA NA NA
Assumptions Page 1 - Income Statement and Cash Flow Statement
Projection Period
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Income Statement Assumptions


Sales (% growth) -% -% -% -% -% - - - - -
Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -

Cost of Goods Sold (% sales) -% -% -% -% -% - - - - -


Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -

SG&A (% sales) -% -% -% -% -% - - - - -
Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -

Depreciation & Amortization (% sales) -% -% -% -% -% - - - - -


Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -

Interest Income -% -% -% -% -% - - - - -
Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -

Cash Flow Statement Assumptions


Capital Expenditures (% sales) -% -% -% -% -% - - - - -
Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -
Assumptions Page 2 - Balance Sheet
Projection Period
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Current Assets
Days Sales Outstanding (DSO) - - - - - - - - - -
Base 1 - - - - - - - - - -
Sponsor 2 - - - - - - - - - -
Management 3 - - - - - - - - - -
Downside 1 4 - - - - - - - - - -
Downside 2 5 - - - - - - - - - -

Days Inventory Held (DIH) - - - - - - - - - -


Base 1 - - - - - - - - - -
Sponsor 2 - - - - - - - - - -
Management 3 - - - - - - - - - -
Downside 1 4 - - - - - - - - - -
Downside 2 5 - - - - - - - - - -

Prepaids and Other Current Assets (% sales) -% -% -% -% -% - - - - -


Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -

Current Liabilities
Days Payable Outstanding (DPO) - - - - - - - - - -
Base 1 - - - - - - - - - -
Sponsor 2 - - - - - - - - - -
Management 3 - - - - - - - - - -
Downside 1 4 - - - - - - - - - -
Downside 2 5 - - - - - - - - - -

Accrued Liabilities (% sales) -% -% -% -% -% - - - - -


Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -

Other Current Liabilities (% sales) -% -% -% -% -% - - - - -


Base 1 -% -% -% -% -% - - - - -
Sponsor 2 -% -% -% -% -% - - - - -
Management 3 -% -% -% -% -% - - - - -
Downside 1 4 -% -% -% -% -% - - - - -
Downside 2 5 -% -% -% -% -% - - - - -
($ in millions)

Assumptions Page 3 - Financing Structures and Fees


Financing Structures Purchase Price
Structure Public / Private Target 2
1 2 3 4 5
Sources of Funds Structure 1 Structure 2 Structure 3 Structure 4 Status Quo Entry EBITDA Multiple -x
Revolving Credit Facility Size - - - - - LTM 9/30/2008 EBITDA -
Revolving Credit Facility Draw - - - - - Enterprise Value -
Term Loan A - - - - -
Term Loan B - - - - - Less: Total Debt -
Term Loan C - - - - - Less: Preferred Securities -
2nd Lien - - - - - Less: Noncontrolling Interest -
Senior Notes - - - - - Plus: Cash and Cash Equivalents -
Senior Subordinated Notes - - - - - Equity Purchase Price -
Equity Contribution - - - - -
Rollover Equity - - - - -
Cash on Hand - - - - - Calculation of Fully Diluted Shares Outstanding
- - - - - Offer Price per Share -
Total Sources of Funds - - - - -
Basic Shares Outstanding -
Uses of Funds Plus: Shares from In-the-Money Options -
Equity Purchase Price - - - - - Less: Shares Repurchased -
Repay Existing Bank Debt - - - - - Net New Shares from Options -
Tender / Call Premiums - - - - - Plus: Shares from Convertible Securities -
Financing Fees - - - - - Fully Diluted Shares Outstanding -
Other Fees and Expenses - - - - -
- - - - - -
- - - - - - Options/Warrants
- - - - - - Number of Exercise In-the-Money
- - - - - - Tranche Shares Price Shares Proceeds
Total Uses of Funds - - - - - Tranche 1 - - - -
Tranche 2 - - - -
Financing Fees Tranche 3 - - - -
Fees Tranche 4 - - - -
Structure 1 Size (%) ($) Tranche 5 - - - -
Revolving Credit Facility Size - - - Total - - -
Term Loan A - - -
Term Loan B - - - Convertible Securities
Term Loan C - - - Conversion Conversion New
2nd Lien - - - Amount Price Ratio Shares
Senior Notes - - - Issue 1 - - - -
Senior Subordinated Notes - - - Issue 2 - - - -
Senior Bridge Facility - - - Issue 3 - - - -
Senior Subordinated Bridge Facility - - - Issue 4 - - - -
Other Financing Fees & Expenses - Issue 5 - - - -
Total Financing Fees - Total -

Amortization of Financing Fees


Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Term 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revolving Credit Facility Size - - - - - - - - - - -
Term Loan A - - - - - - - - - - -
Term Loan B - - - - - - - - - - -
Term Loan C - - - - - - - - - - -
2nd Lien - - - - - - - - - - -
Senior Notes - - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - - -
Senior Bridge Facility - - - - - - - - - - -
Senior Subordinated Bridge Facility - - - - - - - - - - -
Other Financing Fees & Expenses - - - - - - - - - - -
Annual Amortization - - - - - - - - - -

Administrative Agent Fee - - - - - - - - - -


Copyright 2009 by Joshua Rosenbaum and Joshua Pearl. All rights reserved.

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Library of Congress Cataloging-in-Publication Data:

ISBN-13 978-0-470-44220-3
Printed in the United States of America
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