Professional Documents
Culture Documents
Days Sales
in Inventory
61.3
39.5
73.2
31.1
50.0
60.0
42.9
58.1
42.5
50.9
42.5
61.1
Table 2
Mercury Operating Metrics:
Return on net assets
Return on equity
Asset turnover
2004
21.1%
18.5%
3.58x
2005
10.8%
9.6%
2.00x
2006
12.9%
12.1%
2.12x
2004
450,174
223,617
226,557
127,705
31,437
67,415
7,049
60,367
5,092
1,211
54,064
19,192
34,872
2005
469,704
231,583
238,121
130,242
33,938
73,942
7,343
66,599
5,143
(752)
62,208
21,089
41,120
2006
470,286
234,494
235,792
130,471
36,535
68,786
8,366
60,420
5,098
24
55,298
19,349
35,949
Revenue Growth
Gross Profit Margin
EBITDA Margin
EBIT Margin
EBT Margin
Tax Rate
Net Income Margin
1.7%
50.3%
15.0%
13.4%
12.0%
35.5%
7.7%
4.3%
50.7%
15.7%
14.2%
13.2%
33.9%
8.8%
0.1%
50.1%
14.6%
12.8%
11.8%
35.0%
7.6%
RNOA
ROE
ATO
21.1%
18.5%
3.58x
10.8%
9.6%
2.00x
12.9%
12.1%
2.12x
Margins:
2005
2006
Assets:
Cash & Cash Equivalents
Accounts Receivable
Inventory
Prepaid Expenses
Deferred Taxes
Derivative Assets
Total Current Assets
92,735
46,507
38,493
8,298
8,681
0
194,714
63,949
50,649
50,140
10,051
8,080
1,813
184,682
54,509
61,322
56,030
12,223
6,519
53
190,655
23,694
6,414
4,249
2,982
232,053
24,712
12,273
11,851
3,079
236,596
28,392
14,360
11,915
3,249
248,571
15,711
37,211
10,421
0
4,514
67,858
29,188
30,553
13,263
0
0
73,004
33,009
36,718
10,162
0
878
80,767
178,173
3,763
2,180
150,240
4,814
323
140,047
3,919
0
(19,921)
232,053
8,216
236,596
23,837
248,571
Company
D&B Shoe Company
Marina Wilderness
General Shoe Corp.
Kinsley Coulter Products
Victory Athletic
Surfside Footwear
Alpine Company
Heartland Outdoor Footware
Templeton Athletic
Average
Company
D&B Shoe Company
Marina Wilderness
General Shoe Corp.
Kinsley Coulter Products
Victory Athletic
Surfside Footwear
Alpine Company
Heartland Outdoor Footware
Templeton Athletic
Average
Equity
Market Value
420,098
1,205,795
533,463
165,560
35,303,250
570,684
1,056,033
1,454,875
397,709
Net
Debt (1)
125,442
(91,559)
171,835
82,236
7,653,207
195,540
300,550
(97,018)
169,579
EBIT
Margin
4.4%
22.1%
8.8%
6.9%
14.1%
9.3%
10.4%
10.8%
19.9%
11.9%
EBITDA
Margin
6.1%
23.1%
11.5%
8.9%
16.0%
10.8%
12.2%
12.6%
20.2%
13.5%
D/E
29.9%
-7.6%
32.2%
49.7%
21.7%
34.3%
28.5%
-6.7%
42.6%
24.9%
Net Inc.
Margin
2.7%
13.4%
4.9%
5.0%
9.3%
5.9%
6.9%
7.3%
15.3%
7.9%
Equity
Beta
2.68
1.94
1.92
1.12
0.97
2.13
1.27
1.01
0.98
LTM
Revenue
2,545,058
313,556
1,322,392
552,594
15,403,547
1,241,529
1,614,648
1,176,144
516,182
LTM
Earnings
67,679
41,923
64,567
27,568
1,433,760
73,124
112,015
86,156
79,170
EBIT
Multiple
5.5x
18.0x
6.8x
7.3x
22.1x
7.4x
9.0x
12.0x
6.2x
10.5x
EBITDA
Multiple
3.9x
16.9x
5.1x
5.5x
19.2x
6.3x
7.6x
10.1x
6.0x
9.0x
P/E
Multiple
6.8x
31.6x
9.1x
6.6x
27.1x
8.6x
10.4x
18.6x
5.5x
13.8x
(1) Net debt is defined as debt less cash & cash equivalents
Note: Market multiples are based on three year averages. "LTM" denotes latest twelve months.
Revenue
CAGR
2000-06
6.6%
17.8%
11.2%
4.6%
7.9%
10.1%
6.2%
8.5%
14.4%
9.7%
B/V
Multiple
0.9x
6.0x
1.6x
0.7x
6.0x
1.4x
2.0x
3.1x
1.2x
2.5x
2004
340,578
198,115
142,463
102,410
40,053
7,699
32,353
275
32,079
12,190
19,889
2005
358,780
205,820
152,960
113,892
39,067
8,001
31,066
305
30,761
11,689
19,072
2006
431,121
239,383
191,738
139,933
51,804
9,506
42,299
366
41,933
15,934
25,998
Assets:
Cash & Cash Equivalents
Accounts Receivable
Inventory
Prepaid Expenses
Total Current Assets
2004
12,203
29,115
53,552
7,809
102,679
2005
20,187
38,654
70,818
15,810
145,470
2006
10,676
45,910
73,149
10,172
139,908
33,090
1,031
554
5,657
143,011
31,334
35,740
34,605
11,884
259,032
32,618
43,853
43,051
11,162
270,592
12,838
13,040
25,878
14,753
21,955
36,708
16,981
18,810
35,791
1,635
8,131
13,795
9,256
11,654
9,080
107,367
143,011
199,274
259,032
214,067
270,592
Exhibit 5
Men's
Athletic
219,093
31,421
148,576
Men's
Casual
51,663
8,242
28,457
Women's
Athletic
123,563
12,703
27,978
Women's
Casual
36,802
(843)
34,701
Unallocated
Corporate
0
(9,224)
30,880
Consolidated
431,121
42,299
270,592
151,900
18,398
173,482
55,402
9,077
30,842
108,097
11,631
24,267
43,381
(1,013)
12,197
0
(7,027)
18,244
358,780
31,066
259,032
131,636
17,720
39,543
58,787
9,196
34,966
95,897
9,109
22,526
54,258
462
15,056
0
(4,134)
30,919
340,578
32,353
143,011
Men's
Athletic
14.3%
12.1%
13.5%
Men's
Casual
16.0%
16.4%
15.6%
Women's
Athletic
10.3%
10.8%
9.5%
Women's
Casual
-2.3%
-2.3%
0.9%
Unallocated
Corporate
-2.1%
-2.0%
-1.2%
Consolidated
9.8%
8.7%
9.5%
Exhibit 6 Mercury Athletic Footwear: Base Case Projected Segment Performance (in $ thousands)
Men's Athletic:
Revenue
Less: Operating Expenses*
Operating Income
2007
251,957
218,435
33,522
2008
282,192
244,647
37,545
2009
310,411
269,112
41,299
2010
335,244
290,641
44,603
2011
352,006
305,173
46,834
Men's Casual:
Revenue
Less: Operating Expenses*
Operating Income
52,179
43,834
8,345
53,223
44,711
8,512
54,287
45,605
8,682
55,916
46,973
8,943
57,594
48,382
9,211
Women's Athletic:
Revenue
Less: Operating Expenses*
Operating Income
138,390
124,302
14,088
153,613
137,976
15,638
167,438
150,393
17,045
179,159
160,921
18,238
188,117
168,967
19,150
Women's Casual:
Revenue
Less: Operating Expenses*
Operating Income
36,802
37,265
(463)
0
0
0
0
0
0
0
0
0
0
0
0
479,329
423,836
8,487
47,006
489,028
427,333
8,659
53,036
532,137
465,110
9,422
57,605
570,319
498,535
10,098
61,686
597,717
522,522
10,583
64,612
11,983
9,587
12,226
9,781
13,303
10,643
14,258
11,406
14,943
11,954
Consolidated Revenue
Less: Operating Expenses*
Less: Corporate Overhead
Consolidated Operating Income
Estimated Capital Expenditures
Estimated Depreciation
Exhibit 7 Mercury Athletic Footwear: Projection of Selected Balance Seet Accounts; 2007-11 (in $ thousands)
Select Balance Sheet Accounts
Cash Used in Operations
Accounts Receivable
Inventory
Prepaid Expenses
Property, Plant & Equipment
Trademarks & Other Intangibles
Goodwill
Other Assets
Total Assets Used
Liabilities
Accounts Payable
Accrued Expenses
Deferred Taxes
Pension Obligation
2007
4,161
47,888
83,770
14,474
2008
4,195
48,857
85,465
14,767
2009
4,566
53,164
92,999
16,069
2010
4,894
56,978
99,672
17,222
2011
5,130
59,715
104,460
18,049
35,015
43,853
43,051
11,162
283,374
37,460
43,853
43,051
11,162
288,810
40,120
43,853
43,051
11,162
304,984
42,972
43,853
43,051
11,162
319,804
45,961
43,853
43,051
11,162
331,381
18,830
22,778
18,985
22,966
20,664
24,996
22,149
26,792
23,214
28,081
11,654
9,080
92,869
11,654
9,080
95,484
11,654
9,080
104,918
11,654
9,080
113,277
11,654
9,080
119,275
2007
2008
2009
2010
2011
Revenue
479,329 489,028 532,137 570,319 597,717
Less: Operating Expenses*
423,836 427,333 465,110 498,535 522,522
Less: Corporate Overhead
8,487
8,659
9,422
10,098
10,583
Consolidated Operating Income
47,006
53,036
57,605
61,686
64,612
NOPAT
28203.4439524 31821.583 34562.885 37011.798 38766.954
Plus: Depreciation
9,587
9,781
10,643
11,406
11,954
Less: Changes in Working Capital
3,532
2,615
9,434
8,359
5,998
Less: Estimated Capital Expenditures
11,983
12,226
13,303
14,258
14,943
FCF
22,274
26,761
22,468
25,801
29,781
Discount Factor
0.913055303 0.83367 0.7611868 0.6950056 0.6345786
PV
20337.8353136 22310.258 17102.507 17931.798 18898.079
Terminal value
WACC
g
PV Terminal Value
Enterprise Value
449126.530044
9.52%
2.71%
285006.08
381586.56
Accounts Receivable
Plus: Inventory
Plus: Prepaid Expenses
Less: Accounts Payable
Less: Accrued Expense
Less: Deferred Taxes
WC
Changes in WC
2006
2007
2008
2009
2010
2011
45,910
47,888
48,857
53,164
56,978
59,715
73,149
83,770
85,465
92,999
99,672
104,460
7,809
14,474
14,767
16,069
17,222
18,049
12,838
18,830
18,985
20,664
22,149
23,214
13,040
22,778
22,966
24,996
26,792
28,081
11,654
11,654
11,654
11,654
11,654
11,654
89,337
92,869
95,484
104,918
113,277
119,275
3,532
2,615
9,434
8,359
5,998
WACC
Cost of Debt
D/E
E/V
420,098
125,442
29.86%
77.01%
1,205,795
(91,559)
-7.59%
108.22%
533,463
171,835
32.21%
75.64%
1.92 1.4522215091
165,560
82,236
49.67%
66.81%
1.12 0.7483057739
35,303,250
7,653,207
21.68%
82.18%
0.97
570,684
195,540
34.26%
74.48%
2.13 1.5864249998
1,056,033
300,550
28.46%
77.85%
1.27 0.9886323538
1.94
2.099413191
0.797182897
1,454,875
(97,018)
-6.67%
107.14%
1.01 1.0821636522
397,709
169,579
42.64%
70.11%
0.98 0.6870486423
1.5577777778 1.2783503682
9.52%
Weight of Debt
6.00%
2.68 2.0637602947
Assumptions:
Risk Free Rate 4.02% (US Treasurry Bond Rate 2007)
Risk Premium 4.37%
NOPAT
Invested Capital (1)
ROC
2011
38766.9535827582
331,381
11.70%
Net Reinvestment
NOPAT
Reinvestment Rate
Terminal Growth Rate
8,986
38766.9535827582
23.18%
2.71%