LBO Model Disclaimer and Instructions:

Disclaimer:
Please note this is a sample LBO model created for illustrative purposes only. This model simplifies many of the key inputs
in a traditional LBO model. This model should not be used for investment analysis or decision making purposes. This model
should only be used for educational purposes. Do not rely solely on this model to understand how LBO models function. Ther
are other key variables in LBO models that are not included in this model. Muppies is not liable for any inaccuracies or mistak
in this model. Please contact [email protected] if you have any questions or concerns. This model is solely for Muppies mem
non members shall not use this model without explicit authorization from Muppies officers.

Instructions:
This model has been designed by a Muppies member to help you with your interview process. Following are some
steps you may need to take when evaluating an interview case LBO:

1. Build Functioning Historical and Forecasted Income Statement, Balance Sheet and Cash Flow Statements (Not shown in m

2. Determine Impact on Balance Sheet on date of acquisition (e.g Impact on Goodwill etc.) - (Not shown in model)

3. Value company using traditional valuation metrics (DCF, Comparable company comps) - (Not shown in model)

4. Calculate IRR on investment given a leveraged buy-out using various assumptions (shown in model)

5. Incorporate both quantitative and qualitative measures to determine investment decision

many of the key inputs
g purposes. This model
BO models function. There
ny inaccuracies or mistakes
is solely for Muppies members

wing are some

atements (Not shown in model)

own in model)

wn in model)
Transaction Overview
Company Overview Halliburton Company Exit Sources of funds Amount EBITDA Mult. Libor Spread Interest Rate
Ticker hal Exit Year 2010 Excess Cash on Balance Sheet 500
Stock Price (02/03/08) $32.40 Exit Multiple 9.5x Existing Debt
Offer Premium 20% Senior Bank Term "A" 9,123 2.0x 2.0% 7.2%
Purchase Share Price $38.88 Other Senior Bank Term "B" 4,561 1.0x 3.0% 8.2%
Fully Diluted Shares O/S 978.25 Libor Rate 5.2% Senior Subordinated Debt 4,561 1.0x 3.5% 8.7%
Equity Value 38,034 Op. Cash (% rev) 3.0% Junior Subordinated Debt 4,561 1.0x 4.0% 9.2%
Add: Short-term Debt - Interest on cash 5.0% Preferred Stock
Add: Long-term Debt 2,796 Common Equity 18,664
Add: Pension Obligations Returns Total Sources of funds 41,971
Less: Operating Cash (675) IRR 37%
Less: Excess Cash (3,704) MOI 2.6x Uses of funds
Total Enterprise Value 36,451 Equity Purchase Price 38,034
Debt Retired 2,796
Implied Multiples Pre-Acquistion Acquisition Cash Infusion
EV/Rev 06 1.3x 1.6x Advisory fees 1.5% 571
EV/Rev 07 2.0x 2.4x Financing fees 1.5% 571
EV/EBITDA 06 7.8x 9.4x Other uses
EV/EBITDA 07 6.6x 8.0x Other uses
P/E 06 15.0x 18.0x Total Uses Of funds 41,971
P/E 07 13.1x 15.8x
Overall Check ok
Leverage Multiples Pre-Acquistion Acquisition Max
Debt/EBITDA 0.7x 4.1x 4.1x
EBITDA/Interest 22.1x 2.5x 2.5x

IRR Calculations
Exit Year
Exit Year 2010 3 Years 5 Years 8 Years Exit Multiple in Year: 2010
Exit Multiple 9.5x 37% 2010 2012 2015 37% 8.4x 8.9x 9.4x 9.9x 10.4x
Exit EBITDA 6,097 11.4x 47% 32% 22% 21% Err:504 Err:504 Err:504 Err:504 Err:504
10.9x 45% 31% 21% 20% Err:504 Err:504 Err:504 Err:504 Err:504
Exit Enterprise Value 57,922 10.4x 42% 30% 21% 19% Err:504 Err:504 Err:504 Err:504 Err:504
Debt on books 13,102 9.9x 39% 28% 20% 18% Err:504 Err:504 Err:504 Err:504 Err:504
Multi

EBIT

gins
ples
Exit

Mar
Cash on Books 3,204 9.4x 36% 27% 19% 17% Err:504 Err:504 Err:504 Err:504 Err:504

DA
Exit Equity Value 48,024 8.4x 30% 24% 18% 16% Err:504 Err:504 Err:504 Err:504 Err:504
Entry Equity Value 18,664 7.4x 24% 21% 16% 15% Err:504 Err:504 Err:504 Err:504 Err:504
6.4x 16% 17% 14% 14% Err:504 Err:504 Err:504 Err:504 Err:504
IRR 37% 5.4x 7% 13% 12% 13% Err:504 Err:504 Err:504 Err:504 Err:504
MOI 2.6x 4.4x -3% 8% 9%
 Forecast Assumptions

Choose 2
Historical (Years 1-3) 1
Analyst (Year 1-3) 2
User Defined 3

1 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2 Income Statement
3 Revenue Growth -3.4% 30.0% 22.4% 1.9% 11.0% -33.0% 14.8% 14.2% 11.0% 7.7% 4.5% 4.5% 4.5%
4 Historical growth rate 11.0% -33.0% 14.8% 11.4% #VALUE! 4.5% 4.5% 4.5%
5 Analyst Estimates -33.0% 14.8% 14.2% 11.0% 7.7% 4.5% 4.5% 4.5%
6
8 User Defined
7
12
13 EBITDA margins 2.3% 7.2% 6.6% 14.6% 17.2% 30.3% 27.3% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8%
14 Historical Margins 17.2% 30.3% 27.3% 27.8% 27.8% 27.8% 27.8% 27.8%
15 Analyst Estimates 30.3% 27.3% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8%
16 User Defined
17 Tax Rate -26.9% 43.4% 37.5% 2.8% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3%
18 Historical Margins 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3%
19 Analyst Estimates 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3%
20 User Defined 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3%
21 D&A (% of Revenue) 4.0% 3.2% 2.6% 2.5% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3%
22
23 Balance Sheet
24 WC (% of revenue) 23.4% 23.2% 21.8% 18.5% 17.4% 17.9% 17.8% 17.8% 17.8% 17.8% 17.8% 17.8% 17.8%
25 Operating Cash (% rev) 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
26 Days Inventory 22 17 15 20 25 25 25 25 25 25 25 25 25
27 Days Receivables O/S 95 107 106 86 76 76 76 76 76 76 76 76 76
28 Prepaid-expense (% rev) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
29 Days Payable O/S 32 42 46 41 38 38 38 38 38 38 38 38 38
30 Accrued expenses (% rev) 3.0% 2.5% 2.4% 3.2% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4%
31
32 Choose capex method 1
33 PP&E (% of revenue) 21.0% 15.5% 12.8% 13.1% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5%
34 Capex (% of revenue) 6.1% 3.2% 2.9% 3.2% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
35
36 Cash Flows
37 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
38 Sales 12,498 16,246 19,884 20,266 22,504 15,074 17,312 19,770 21,938 23,635 24,698 25,810 26,971
39 growth 30.0% 22.4% 1.9% 11.0% -33.0% 14.8% 14.2% 11.0% 7.7% 4.5% 4.5% 4.5%
43 EBITDA 289 1,166 1,320 2,953 3,875 4,561 4,725 5,495 6,097 6,569 6,864 7,173 7,496
44 margins 7.2% 6.6% 14.6% 17.2% 30.3% 27.3% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8%
45 Less D&A (505) (518) (509) (504) (527) (353) (405) (463) (514) (553) (578) (604) (632)
46
47 Senior Bank Term "A" (660) (369) (268) (133) - - - -
48 Senior Bank Term "B" (375) (375) (375) (375) (327) (81) - -
49 Senior Subordinated Debt (398) (398) (398) (398) (398) (398) (175) -
50 Junior Subordinated Debt (421) (421) (421) (421) (421) (421) (421) (244)
51 Less: Interest Expense (113) (139) (229) (207) (175) (1,854) (1,563) (1,463) (1,328) (1,147) (900) (596) (244)
52 EBITDA / Interest 2.6x 8.4x 5.8x 14.3x 22.1x 2.5x 3.0x 3.8x 4.6x 5.7x 7.6x 12.0x 30.7x
53
54 Add: Interest Income 32 30 44 64 162 160 160 160 160 160 160 160 160
55 4.4% 2.3% 2.0% 3.6% 4.4% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
56
57 EBT (297) 539 626 2,306 3,335 2,514 2,916 3,729 4,415 5,029 5,546 6,133 6,780
58 Less: Taxes (80) (234) (235) (64) (1,144) (863) (1,000) (1,279) (1,515) (1,725) (1,902) (2,104) (2,326)
59 ADD: D&A 505 518 509 504 527 353 405 463 514 553 578 604 632
60 Less Changes in Working Capital (852) (555) 580 (168) 1,222 (381) (440) (385) (302) (189) (198) (206)
61 Less: Gross Capex (114) (161) (259) (716) 795 (546) (611) (602) (562) (491) (513) (536)
62 Free Cash Flow Before Debt Paydown (143) 184 3,067 1,834 4,022 1,393 1,862 2,428 2,994 3,542 3,923 4,344
63
64 Debt Paydown Schedule
65 Senior Bank Term "A" 5,101 3,708 1,845 - - - - -
66 BOY Debt 9,123 5,101 3,708 1,845 - - - -
67 Debt Paydown (4,022) (1,393) (1,862) (1,845) - - - -
68 EOY Debt 5,101 3,708 1,845 - - - - -
69
70 Senior Bank Term "B" 4,561 4,561 4,561 3,979 985 - - -
71 BOY Debt 4,561 4,561 4,561 4,561 3,979 985 - -
72 Debt Paydown - - - (582) (2,994) (985) - -
73 EOY Debt 4,561 4,561 4,561 3,979 985 - - -
74
75 Senior Subordinated Debt 4,561 4,561 4,561 4,561 4,561 2,005 - -
76 BOY Debt 4,561 4,561 4,561 4,561 4,561 4,561 2,005 -
77 Debt Paydown - - - - - (2,556) (2,005) -
78 EOY Debt 4,561 4,561 4,561 4,561 4,561 2,005 - -
79
80 Junior Subordianted Debt 4,561 4,561 4,561 4,561 4,561 4,561 2,644 -
81 BOY Debt 4,561 4,561 4,561 4,561 4,561 4,561 4,561 2,644
82 Debt Paydown - - - - - - (1,918) (2,644)
83 EOY Debt 4,561 4,561 4,561 4,561 4,561 4,561 2,644 -
84
85 Total EOY Debt 18,785 17,392 15,530 13,102 10,108 6,566 2,644 -
86 Debt/EBITDA 4.1x 3.7x 2.8x 2.1x 1.5x 1.0x 0.4x 0.0x
 Reinvstment Summary
1 Working Capital 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2 Excess Cash (excluded) 732 1,328 2,211 1,783 3,704 3,204 3,204 3,204 3,204 3,204 3,204 3,204 3,204
3 Operating Cash 375 487 597 608 675 452 519 593 658 709 741 774 809
4 Inventory 734 695 791 953 1,261 712 853 967 1,073 1,156 1,208 1,262 1,319
5 Accounts Receivable 3,257 4,765 5,751 4,801 4,674 3,131 3,596 4,106 4,557 4,909 5,130 5,361 5,602
6 Pre-paid Expenses - - - - - - - - - - - - -
7 Accounts Payable (1,077) (1,776) (2,339) (1,967) (1,931) (1,091) (1,306) (1,481) (1,643) (1,770) (1,850) (1,933) (2,020)
8 Accrued Expenses (370) (400) (473) (648) (764) (512) (588) (671) (745) (802) (839) (876) (916)
9 Working Capital 2,919 3,771 4,327 3,747 3,915 2,693 3,074 3,514 3,900 4,201 4,390 4,588 4,794
10 -13% 4% -31% 14%
11 Capex 21% 16% 13% 13% 14%
12 Gross PP&E 5,952 6,066 6,227 6,486 7,202 6,407 6,954 7,564 8,166 8,727 9,218 9,731 10,267
13 Accumulated Depreciation (3,323) (3,540) (3,674) (3,838) (4,154) (4,366) (4,609) (4,886) (5,194) (5,526) (5,873) (6,236) (6,614)
14 Net PP&E 2,629 2,526 2,553 2,648 3,048 2,042 2,345 2,678 2,971 3,201 3,345 3,496 3,653
Depreciation 0 (217) (134) (164) (316) (212) (243) (278) (308) (332) (347) (362) (379)
Depreciation (% of NPPE) 0% -9% -5% -6% -10% -10% -10% -10% -10% -10% -10% -10% -10%

Capex based on PP&E (114) (161) (259) (716) 795 (546) (611) (602) (562) (491) (513) (536)
Capex based on Capex/rev (764) (515) (575) (651) (891) (597) (685) (783) (869) (936) (978) (1,022) (1,068)
Selected Capex - (114) (161) (259) (716) 795 (546) (611) (602) (562) (491) (513) (536)
 2/3/2008
Checks OK
Sources & Uses OK
Balance Sheet OK
Cash Usage OK
Row for Hlookup OK
 2015

4.5%
4.5%
4.5%

27.8%
27.8%
27.8%

34.3%
34.3%
34.3%
34.3%
2.3%

17.8%
3.0%
25
76
0.0%
38
3.4%

13.5%
4.0%

2015
28,185
4.5%
7,833
27.8%
(660)

-
-
-
-
-

160
 5.0%

7,333
(2,516)
660
(216)
(560)
4,702

-
-
-
-
-
-
-
-

-
-
-
-

-
-
-
-

-
0.0x
 2015
3,204
846
1,378
5,854
-
(2,111)
(957)
5,010

10,828
(7,010)
3,817
(396)
-10%

(560)
(1,116)
(560)
hal

2002 2003 2004 2005 12/06 03/07

995 996 997 998 999 497 498
Income Statement
Sales 12,939 12,498 16,246 19,884 20,266 6,016 3,422
COGS 12,379 15,268 18,720 17,437 - 2,566
SG&A 335 330 353 380 36 69
Operating income (216) 648 811 2,449 1,043 787

EBITDA (216) 289 1,166 1,320 2,953 1,174 918

D&A 505 518 509 504
EBIT (216) 648 811 2,449 1,043 787
Interest & Inv Income 32 30 44 64 52 38
Interest Expense (113) (139) (229) (207) (43) (38)
EBT (329) 509 582 2,242
Tax provision (80) (234) (235) (64) 343 259
Net income (346) 339 374 2,327 667 529
EPS $(0.40) $0.39 $0.42 $2.24 $0.65 $0.52

Shares - primary 864 868 874 1,010 996 992

Shares - diluted 864 874 882 1,038 1,030 1,025

Balance Sheet
Cash 1,107 1,815 2,808 2,391 4,379 3,043
Inventory 734 695 791 953 1,261 1,430
A/R 3,257 4,765 5,751 4,801 4,674 2,700
Pre-paid Expenses - - - - - -
Other Current Assets 462 644 680 1,241 869 4,542
Total Current Assets 5,560 7,919 10,030 9,386 11,183 11,715

Gross PP&E 5,952 6,066 6,227 6,486 7,202 6,646

D&A (3,323) (3,540) (3,674) (3,838) (4,154) (3,888)
Net PP&E 2,629 2,526 2,553 2,648 3,048 2,758

Goodwill 723 670 795 765 775 593

Other Intangible Assets - - - - - -
Other Long-term assets 3,932 4,384 2,486 2,249 1,814 2,572
Total Assets 12,844 15,499 15,864 15,048 16,820 17,638

Accounts Payable 1,077 1,776 2,339 1,967 1,931 739

Accrued Expenses 370 400 473 648 764 383
Short-term Debt 49 18 15 - - -
Total Current Liabilities 1,496 2,194 2,827 2,615 2,695 1,122

Long-term Debt 1,181 3,415 3,593 2,813 2,786 2,785

Minority Interest 71 100 108 145 447 65
Other Debt 6,538 7,243 5,404 3,103 3,516 5,774
Total Liabilities 9,286 12,952 11,932 8,676 9,444 9,746

Preferred Equity - - - - - -
Common Equity 3,558 2,547 3,932 6,372 7,376 7,892
Other Equity - - - - - -
Total Liabilities & Equity 12,844 15,499 15,864 15,048 16,820 17,638

Checks
Balance Sheet balance - - - - - -
Assets Check - - - - - -

Supplemental
Depreciation - - - - - -
Capex (764) (515) (575) (651)
06/07 09/07 2006
499 500 1000

3,735 3,928 22,504

2,809 2,956 18,706
82 63 450
844 909 3,348

984 1,055 3,875

527
844 909 3,348
36 26 162
(41) (39) (175)
3,173
284 152 (1,144)
595 726 2,272
$0.63 $0.79 $2.16

905 880 1,014

942 917 1,054

2,223 1,891 4,379

1,500 1,560 1,261
2,948 3,109 4,674
- - -
601 661 869
7,272 7,221 11,183

6,898 7,328 7,202

(3,910) (3,991) (4,154)
2,988 3,337 3,048

594 731 775

- - -
1,135 1,180 1,814
11,989 12,469 16,820

856 798 1,931

447 525 764
- - -
1,303 1,323 2,695

2,784 2,796 2,786

71 90 447
1,973 2,063 3,516
6,131 6,272 9,444

- - -
 5,858 6,197 7,376
- - -
11,989 12,469 16,820

- - -
- - -

- - -
(891)