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All numbers in Lit, billions unless otherwise noted

General Assumptions
Sources & Uses

General Assumptions

Sources

Tax Rate

Texas Pacific Group Equity

161.1

Subordinated Debt

177.1

7.0x

151.8

6.0x

Senior Debt
Total Sources

Debt/LTM EBITDA

6.5x

% Equity Value to Management

490.0

Uses
Purchase Price
Working Capital Funding
Transaction Costs
Total Uses

53.5%

Enterprise Value / EBITDA Exit Multiple

10.0%

Debt Assumptions

400.0
50.0
40.0
490.0

Subordinated Debt Assumptions


Total Subordinated Debt Facility
Cash Interest Rate
PIK Interest Rate
Warrants (as a % of Equity Value)

151.8
7.0%
6.0%
5.0%

Senior Debt
Total Senior Debt Facility
Interest Rate
Amortization Period

177.1
0.1
5.0

Income Statement Calculations


LTM
1996

Last Twelve Months (Projected)


1997

1998

1999

2000

2001

Motorcycle Revenue
Apparel Revenue
Total Revenue

199.5
0.0
199.5

260.0
0.0
260.0

343.1
0.0
343.1

426.2
0.0
426.2

509.3
0.0
509.3

614.9
0.0
614.9

Material Costs
Direct Labor & Other Direct Expenses
Variable Sales Expense

109.1
13.1
6.0

137.9
16.0
7.4

166.6
18.9
8.8

195.4
21.7
10.1

224.1
24.6
11.5

252.9
27.5
12.9

Gross Profit

71.3

98.8

148.9

198.9

249.0

321.7

S,G&A (excluding D&A)

46.0

54.2

62.4

70.6

78.8

87.0

EBITDA

25.3

44.6

86.5

128.3

170.2

234.7

Depreciation
Amortization

6.0
24.7

8.3
27.0

10.7
27.0

13.0
27.0

15.3
27.0

17.6
27.0

EBIT

(5.4)

9.3

48.8

88.3

127.9

190.0

Interest Expense (Including Non-Cash Interest)

11.0

33.6

32.8

32.0

31.3

30.7

(16.4)

(24.4)

16.0

56.4

96.6

159.3

0.0

16.9

51.7

85.2

(24.4)

16.0

39.5

44.9

74.1

30.3%
38.0%
17.1%

32.0%
43.4%
25.2%

24.2%
46.7%
30.1%

19.5%
48.9%
33.4%

20.8%
52.3%
38.2%

23.0

23.0

23.0

23.0

23.0

4.0

4.0

4.0

4.0

4.0

27.0

27.0

27.0

27.0

27.0

Taxable Income
Current Period Increase in Net Operating Loss Balance
Net Operating Loss Balance Available Before Current Period use of NOLs
Net Operating Loss Used for Tax Shield in Current Period
Net Operating Loss Balance Available After Current Period use of NOLs

(24.4)
(24.4)
16.4
0.0
40.8

16.0
0.0
40.8
16.0
24.8

56.4
0.0
24.8
24.8
0.0

96.6
0.0
0.0
0.0
0.0

159.3
0.0
0.0
0.0
0.0

Taxable Income Adjusted for Use of Net Operating Loss


Tax Rate
Taxes Paid

(24.4)
53.5%
0.0

0.0
53.5%
0.0

31.6
53.5%
16.9

96.6
53.5%
51.7

159.3
53.5%
85.2

Taxable Income
Taxes

0.0

Net Income

(16.4)

0.0

Operating Metrics
YoY Revenue Growth %
Gross Margin %
EBITDA Margin %
Amortization Schedule
Purchase Price
Net Asset Value
Goodwill
Amortization Period (Years)
Goodwill Amortization

400.0
170.0
230.0
10.0

Transaction Costs
Amortization Period (Years)
Transaction Costs Amortization

40.0
10.0

Total Amortization
Tax Schedule

Page 1 of 9

Balance Sheet Calculations


Closing Balance Sheet as of 12/31/96
Pre-Deal
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets (Excl Cash)
P,P&E
Goodwill
Capitalized Transaction Costs
Total Long-Term Assets
Total Assets
Accounts Payable
Other Current Liabilities
Total Current Liabilities
New Subordinated Debt
New Senior Debt
Total Debt

Adjustments

As of December 31,
Post-Deal

1997

1998

1999

2000

2001

11.3

50.0

61.3

14.9

10.0

29.4

55.4

111.6

84.5
37.2
2.2
123.9

0.0
0.0
0.0
0.0

84.5
37.2
2.2
123.9

101.9
44.9
7.9
154.6

119.2
52.6
13.5
185.3

136.6
60.3
19.2
216.1

153.9
68.0
24.8
246.8

171.3
75.8
30.5
277.5

64.8
0.0
0.0
64.8

0.0
230.0
40.0
270.0

64.8
230.0
40.0
334.8

71.4
207.0
36.0
314.4

77.6
184.0
32.0
293.6

83.5
161.0
28.0
272.5

89.1
138.0
24.0
251.1

94.4
115.0
20.0
229.4

200.0

320.0

520.0

483.9

488.9

518.0

553.3

618.5

30.3
9.4
39.7

0.0
0.0
0.0

30.3
9.4
39.7

38.7
9.1
47.8

47.1
8.7
55.8

55.5
8.4
63.9

63.8
8.1
71.9

72.2
7.8
80.0

0.0
0.0
0.0

177.1
151.8
328.9

177.1
151.8
328.9

187.7
121.4
309.2

199.0
91.1
290.1

210.9
60.7
271.6

223.6
30.4
253.9

237.0
0.0
237.0

151.4

127.0

143.0

182.5

227.4

301.5

520.0

483.9

488.9

518.0

553.3

618.5

106.9
OK

129.5
OK

152.2
OK

174.8
OK

197.5
OK

143.0
118.9
102.4

126.8
115.3
103.1

117.0
112.7
103.6

110.3
110.8
104.0

101.7
109.4
104.3

Total Shareholder's Equity*

160.3

Total Liabilities & Equity

200.0

(8.9)
320.0

Working Capital Calculation


Balance Check:

84.2
OK

*Equals prior period's shareholder's equity plus current period's net income
Working Capital Statistics
Days Receivable
Days Inventory
Days Payable
Cash Flow Statement
Last Twelve Months (Projected)
1996

1997

1998

1999

2000

2001

Cash Flow from Operations


Net Income
Depreciation & Amortization
Non Cash Interest Expense Owed On Subordinated Debt
(Increase) / Decrease in Working Capital Change

(24.4)
35.3
10.6

16.0
37.7
11.3

39.5
40.0
11.9

44.9
42.3
12.7

(22.7)

(22.7)

(22.7)

(22.7)

(22.7)

42.3

68.7

77.2

109.5

(14.9)
(14.9)

(16.9)
(16.9)

(18.9)
(18.9)

(20.9)
(20.9)

(22.9)
(22.9)

Subordinated Debt (Principal Payments)


Senior Debt (Principal Payments)
Total Cash Flow from Financing Activities

0.0
(30.4)
(30.4)

0.0
(30.4)
(30.4)

0.0
(30.4)
(30.4)

0.0
(30.4)
(30.4)

0.0
(30.4)
(30.4)

Net Cash Flow

(46.4)

(5.0)

19.5

26.0

56.2

Total Cash Flow From Operations

(1.1)

74.1
44.6
13.4

Cash Flow from Investing


Capital Expenditures
Total Cash Flow from Investing

(12.9)

Cash Flow from Financing Activities

Page 2 of 9

Debt Schedule
Last Twelve Months (Projected)
1997

1998

1999

2000

2001

Subordinated Debt Facility


Opening Balance
Principal Paydown
PIK Interest (See Below)
Closing Balance

177.1
0.0
10.6
187.7

187.7
0.0
11.3
199.0

199.0
0.0
11.9
210.9

210.9
0.0
12.7
223.6

223.6
0.0
13.4
237.0

PIK Interest Rate


PIK Interest (Payable on Opening Balance for Simplicity)

6.0%
10.6

6.0%
11.3

6.0%
11.9

6.0%
12.7

6.0%
13.4

Cash Interest Rate


Cash Interest (Payable on Average Balance)

7.0%
12.8

7.0%
13.5

7.0%
14.3

7.0%
15.2

7.0%
16.1

Total Non-Cash Interest Owed On Subordinated Debt


Total Cash Interest Owed On Subordinated Debt
Total Interest Owed On Subordinated Debt

10.6
12.8
23.4

11.3
13.5
24.8

11.9
14.3
26.3

12.7
15.2
27.9

13.4
16.1
29.5

151.8
30.4
121.4

121.4
30.4
91.1

91.1
30.4
60.7

60.7
30.4
30.4

30.4
30.4
0.0

Senior Debt Facility


Opening Balance
Principal Paydown
Closing Balance
Senior Debt Interest Rate
Cash Interest Owed on Senior Debt (Payable on Average Balance)

7.5%
10.2

7.5%
8.0

7.5%
5.7

7.5%
3.4

7.5%
1.1

Credit Statistics
Debt / EBITDA
EBITDA / Cash Interest Expense
(EBITDA-CAPEX) / Cash Interest Expense
(EBITDA-CAPEX) / (Mandatory Principal Payments + Cash Interest Expense)

6.9x
1.9x
1.3x
0.6x

3.4x
4.0x
3.2x
1.3x

2.1x
6.4x
5.5x
2.2x

1.5x
9.1x
8.0x
3.0x

1.0x
13.6x
12.3x
4.4x

IRR Calculations @ Various Exit Multiples (Assuming Exit in 2001)


EV/EBITDA Exit Multiple

5.0x

2001 EBITDA
Enterprise Value @ Exit
Net Debt
Total Equity Value @ Exit

5.5x

6.0x

6.5x

7.0x

7.5x

8.0x

234.7

234.7

234.7

234.7

234.7

234.7

234.7

1,173.3

1,290.6

1,408.0

1,525.3

1,642.6

1,760.0

1,877.3

125.4

125.4

125.4

125.4

125.4

125.4

125.4

1,047.9

1,165.3

1,282.6

1,399.9

1,517.3

1,634.6

1,751.9

% Total Equity Value to Warrants attached to Subordinated Debt

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

Equity Value to Warrants attached to Subordinated Debt

52.4

58.3

64.1

70.0

75.9

81.7

87.6

% Total Equity Value to Management Team

10.0%

10.0%

10.0%

10.0%

10.0%

10.0%

10.0%

Equity Value to Management Team

104.8

116.5

128.3

140.0

151.7

163.5

175.2

Remaining Equity Value Leftover For TPG

890.8

990.5

1,090.2

1,189.9

1,289.7

1,389.4

1,489.1

161.1

161.1

161.1

161.1

161.1

161.1

161.1

TPG IRR

40.8%

43.8%

46.6%

49.2%

51.6%

53.9%

56.0%

TPG ROI

5.5x

6.1x

6.8x

7.4x

8.0x

8.6x

9.2x

Initial TPG Equity Investment

Page 3 of 9

Financing Packages

These financing packages are complete and final. They cannot be mix-and-matched.
Assume fees are identical for all three.

All-Star Finance, LLC Big-Time Capital Group

Capital Capital, Inc.

Total Senior Debt Facility / 1996 LTM EBITDA


Amount
Interest Rate

7.0x
ITL 177.1
7.50%

5.0x
ITL 126.5
8.00%

9.0x
ITL 227.7
8.50%

Mandatory Amortization Period

5 years

7 years

10 years

6.0x
ITL 151.8
7.00%
6.00%
5.00%

8.0x
ITL 202.4
4.00%
10.00%
10.00%

4.0x
ITL 101.2
6.00%
6.00%
1.00%

Senior Debt

Subordinated Debt Assumptions


Total Subordinated Debt Facility / 1996 LTM EBITDA
Amount
Cash Interest Rate
PIK Interest Rate
Warrants (as a % of Equity Value)

Operational Improvements Comparables


Income Statement

Model Assumptions

Revenue
Apparel Revenue
Material Costs
Direct Labor & Other Direct Expenses
Variable Sales Expense
S,G&A (excluding D&A)
Depreciation

ITL 614.94 billion for 2001


No sales, no growth
41.12% of revenue
4.47% of revenue
2.10% of revenue
14.15% of revenue
2.87% of revenue

Balance Sheet
Accounts Receivable
Inventory
Other Current Assets

ITL 171.27 billion for 2001


ITL 75.76 billion for 2001
ITL 30.47 billion for 2001

Accounts Payable
Other Current Liabilities

ITL 72.23 billion for 2001


ITL 7.76 billion for 2001

Capital Expenditures

ITL 22.86 billion for 2001

Assumption Numbers
$614.94
0.00%
41.12%
4.47%
2.10%
14.15%
2.87%

$171.27
75.76
30.47
$72.23
7.76
$22.86