Consumer and Retail Industry Update October 2012

Consumer and Retail Industry Update October 2012

Consumer and Retail Industry Update October 2012 Member FINRA/SIPC www.harriswilliams.com Consumer and Retail Industry Update October 2012 What We’ve Been Reading • Reuters reports that U.S. consumer sentiment unexpectedly rose to 83.1, up from 78.3 the month before, and its highest since September 2007. “The new buoyancy among consumers comes shortly after the U.S. unemployment rate tumbled to its lowest in nearly four years in September as more people returned to the workforce and found jobs than economists had predicted.” Read the article here. • New York Times’ DealBook reports that Cerberus has been arranging upwards of $4 billion in financing for a potential takeover of Supervalu, a U.S.-based supermarket operator. Read the article here. • The Wall Street Journal reports that German luxury retailer Douglas Holding AG has received a joint takeover offer from the founding family of Douglas Holding AG alongside private equity firm Advent International. Read the article here. • New York Times’ DealBook reports that Nike is planning to sell its Umbro soccer brand to the Iconix Brand Group for approximately $225 million. Read the article here. Contacts Richmond Boston Cleveland London Minneapolis Philadelphia San Francisco Phone: +1 (804) 648-0072 Phone: +1 (617) 482-7501 Phone: +1 (216) 689-2400 Phone: +44 203 170 8838 Phone: +1 (612) 359-2700 Phone: +1 (267) 675-5900 Phone: +1 (415) 288-4260 Fax: +1 (804) 648-0073 Fax: +1 (617) 482-7503 Fax: +1 (216) 689-2401 Fax: +44 207 681 1907 Fax: +1 (612) 359-2701 Fax: +1 (267) 675-5901 Fax: +1 (415) 288-4269 For more information regarding our consumer experience, please contact Glenn Gurtcheff ([email protected]), Tim Alexander ([email protected]), Jeff Cleveland ([email protected]), Ryan Budlong ([email protected]), or Brant Cash ([email protected]) at +1 (612) 359-2700. 1 of 16 Equity Trading Overview October 2012 Median Median TEV/ Median TEV/ Key Trading Number of Sector Ente rprise Change in Stock Price LTM Multiples Forward Mulitples Statistics Companies Value ($mm) 3 mos. 12 mos. Revenue EBITDA Revenue EBITDA (detail begins Consumer Products on page 6) Apparel & Footwear 35 $1,225 4.3% 7.4% 1.03x 9.3x 0.99x 8.2x Automotive Products 12 2,731 11.4% 27.8% 0.60x 10.2x 0.55x 9.4x Home & Office Furniture & Furnishings 14 808 14.2% 12.5% 0.59x 8.6x 0.65x 6.5x Household Products 11 5,235 10.8% 46.9% 1.37x 8.9x 1.35x 8.3x Personal Care Products 15 2,464 5.9% 22.1% 1.38x 8.9x 1.39x 8.8x Recreational & Leisure Products 21 478 4.4% 25.9% 0.91x 8.2x 0.98x 6.9x Retail Apparel & Footwear Retail 43 960 5.0% 18.7% 0.61x 7.1x 0.60x 6.0x Catalog & Specialty Distribution 8 264 1.9% 8.1% 0.17x 7.5x 0.16x 6.3x Department Chains 9 7,961 14.6% 9.4% 0.59x 6.7x 0.56x 5.9x Discount Stores & Mass Merchants 13 2,309 (4.3%) 11.4% 0.65x 8.4x 0.76x 7.7x Furniture & Furnishings Retailers 13 1,564 14.0% 30.5% 1.00x 8.8x 1.07x 7.8x Internet Retail 13 506 (5.8%) 7.8% 1.15x 14.1x 0.98x 9.3x Specialty & Other Retail 29 1,343 11.7% 26.3% 0.57x 9.5x 0.57x 8.4x Consumer Products 108 $1,845 8.4% 24.0% 0.97x 8.9x 0.98x 8.3x Retail 128 $1,343 5.0% 11.4% 0.61x 8.4x 0.60x 7.7x Consumer & Retail Index 236 $1,343 5.9% 18.7% 0.65x 8.8x 0.76x 7.8x Public Company Household Products Sector Furniture & Furnishings Retailers Performance Automotive Products (12-month % Specialty & Other Retail change in Recreational & Leisure Products stock price) Personal Care Products Apparel & Footwear Retail Consumer & Retail Index Home & Office Furniture & Furnishings S&P 500 Discount Stores & Mass Merchants Department Chains Catalog & Specialty Distribution Internet Retail Apparel & Footwear (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 2 of 16 Equity Markets Overview October 2012 200 88.6% Consumer and Retail 175 Industry Stock Performance 53.4% 150 50.1% 125 Index 100 75 50 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Dow Jones U.S. Consumer Goods Index Dow Jones Retail Index S&P 500 Index Recent Equity Transaction Gross Proceeds Offerings Close Date Filing Date Issuer Ticker Type ($mm) Use of Funds 10/08/12 04/30/12 Sears Hometown & Outlet Stores SHOS Rights Offering $346.5 General Corp. Purp. 10/03/12 09/13/12 WageWorks Inc W A GE Follow-On 105.0 General Corporate Purp. / Working Capital 10/03/12 09/19/12 Mattress Firm Holding Corp MFRM Follow-On 162.3 General Corporate Purp. / Working Capital 10/01/12 10/01/12 Aspen Group Inc ASPU - 52.6 General Corp. Purp. 09/27/12 03/01/10 Dollar General Corp DG Follow-On 2,142.5 General Corp. Purp. 09/26/12 09/26/12 Bauer Performance Sports Ltd BAU Follow-On 41.6 General Corp. Purp. 09/13/12 09/13/12 WageWorks Inc W A GE Follow-On 100.0 General Corp. Purp. 09/12/12 - Jarden Corp JAH Convertible 450.0 General Corp. Purp. 09/07/12 09/07/12 Entertainment One Ltd ETO Follow-On 80.7 General Corp. Purp. / Working Capital 09/06/12 06/13/12 SPS Commerce Inc SPSC Follow-On 53.6 General Corp. Purp., Repayment of Debt 08/31/12 08/31/12 Tech Applications Intl Corp N/A IPO 12.4 General Corp. Purp. 08/31/12 08/31/12 National Research Corp NRCI - 198.0 General Corp. Purp. 08/30/12 08/30/12 Taylor & Martin Group Inc TMG IPO 172.5 General Corp. Purposes / Working Capital 08/24/12 08/24/12 Divine Skin Inc DSKX Follow-On 10.0 General Corp. Purp. 3 of 16 M&A Overview October 2012 Announced Quarterly Consumer M&A Activity Last 10 Deals Announced 140 Consumer Announced Target Buyer 10/18/2012 Sleep Innovations, Inc. Sun Capital Partners, Inc. 120 and Retail 10/17/2012 Cybex International Inc. UM Holdings Lt d. 23 M&A 10/11/2012 Access Vans of Louisiana Inc. Superior Van & Mobility LLC 100 10/9/2012 Savage BMW Inc. Penske Automotive Group, Inc. __ 10/9/2012 GTS 3000 Inc. ParTravel Inc. 10/9/2012 Ultramar Travel Management, Inc. Travel and Transport, Inc. 80 10/8/2012 McIntosh Laboratory, Inc. Fin e So un ds Sp a 9 22 5 10/5/2012 Carolina Rustica, Inc. Mattress USA, Inc. 9 13 6 10 13 13 10/4/2012 Catcorp Inc. Wireless Vision, LLC 60 13 10/4/2012 SimplySoles SKYE Associates LLC 11 9 19 101 40 4 72 72 LTM Deal Statistics Number of Transactions 67 65 61 64 64 56 56 50 54 48 46 2 Aggregate Number Transaction Multiples 20 37 Value ($bn) of Deals EV / Revenue EV / EB ITDA 21 0 $28.2 358 0.75x 10.0x 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Note: Transactions based on publicly available information PEG Acquirer Strategic Acquirer Consumer and Announced Consumer Transactions Median Consumer Transaction Multiples Retail M&A 16.0x 1.75x $100 500 Trends 450 14.0x 1.50x $84.9 $79.7 __ $80 400 Number of Transactions 12.0x 11.2x / LTM SalesEV Multiple 11.0x 10.7x 10.3x 9.7x 1.25x 350 10.0x 8.9x $60 300 8.4x 1.00x 250 8.0x $40.3 0.75x $40 200 6.0x $28.6 $29.6 $26.7 150 0.50x $22.1 __ 4.0x __ $20 100 EV / LTM EBITDA Multiple 2.0x 0.25x 50 Aggregate billions) in ($ Value Transaction $0 0 0.0x 0.00x 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 YTD YTD Aggregate Deal Value # of deals EV / LTM EBITDA EV / LTM Sales Median LTM Median LTM Trading Multiples Consumer Private Equity Investments and Exits Trading 12.0x 120 110 Multiples and 10.8x 10.3x 10.4x 10.3x 10.3x 10.1x 9.9x 9.8x 9.9x Announced 10.0x 9.6x 100 97 9.3x 9.4x 9.2x 9.3x 8.9x 9.0x 9.1x 9.0x 9.0x 8.7x 8.7x Private Equity 8.6x 8.5x 8.4x ' 81 M&A Activity 8.0x 80 73 71 73 62 59 59 59 60 6.0x 60 53 54 54 53 49 37 4.0x 40 33 30 Number of Investments Median Trading Multiples 27 2.0x 20 0.0x 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD Number of Investments Number of Exits Consumer Products Retail 4 of 16 Debt Market Overview October 2012 Key Retail Quarterly Retail Loan Volume Average Spread on Retail Loans Credit Statistics $12 L + 500 ___ $10 __ L + 400 $8 L + 300 $6 L + 200 $4 Average Spread Over LIBOR Over Spread Average L + 100 $2 LoanVolumeQuarter by ($billions) in $0 L + 0 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12 Pro Rata Institutional Revolving Credit / Term Loan A Weighted-Average Institutional Credit Statistics Average Secondary Spread 8.0x L + 1200 2007 2008 2009 2010 2011 2012 YTD L + 1000 6.0x L + 800 4.0x L + 600 L + 400 EBITDA Multiple 2.0x Average Spread Average Spread Over LIBOR L + 200 0.0x L + 0 Debt/EBITDA Senior EBITDA/Cash EBITDA - Debt/EBITDA Interest Capex/Cash Interest Recent Date Effective Borrower Name Description Deal Amount Type Rating Spread 10/20/12 Corn Products International Inc Wet corn milling $750,000,000 Revolver/Line >= 1 Yr.

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