Year Ended December 31, 2008
Net Sales Growth rate
Net sales $191,100,000.00
New Construction $120,010,800.00
62.80%
Repair and Conversion $71,089,200.00
37.20%
78.09% Cost of sales $149,231,000.00
21.91% Gross profit 41,869,000
Operating expenses:
0% General and administrative
Rent -
3% Selling and marketing 5,480,000
28.37% EBIT 36,389,000
36% Taxes 13,023,000
EBIT(1-T) 23,366,000
+ Depreciation 457
-3% - Capital Expenditures (6,000,000)
-7.85% - Chg WC (15,007,853)
FCFF 2,358,604
-
Discounted Cash Flows at WACC
FCFF 2,358,604
Terminal Value
Total Discounted Cash Flows 2,358,604
Enterprise Value 116,785,783
Cost of Capital 15%
Terminal Value Growth Rate 1%
Summary DCF Valuation
DCF Enterprise Value $116,785,783.2
Less: Net Debt (10,905,000)
Equity Value ###
Shares Outstanding 6,987,000
Price per Share $15.1540
2009 2010 2011 2012
-42.00% 1.00% 1.00% 1.00%
$110,838,000.00 $111,946,380.00 $113,065,843.80 $114,196,502.24
$39,748,800.00 $40,857,180.00 $41,976,643.80 $43,107,302.24
0.00% 0.00% 20.00% 0.00%
$71,089,200.00 $71,089,200.00 $71,089,200.00 $71,089,200.00
$86,553,980.00 $87,419,519.80 $88,293,715.00 $89,176,652.15
24,284,020 24,526,860 24,772,129 25,019,850
- - - -
3,178,400.00 3,210,184.00 3,242,285.84 3,274,708.70
31,444,741 31,759,188 32,076,780 32,397,548
11,253,534 11,366,070 11,479,730 11,594,528
20,191,206 20,393,118 20,597,050 20,803,020
265 268 270 273
(3,480,000) (3,514,800) (3,549,948) (3,585,447)
(6,303,298) 87,046 87,916 88,795
10,408,173 16,965,632 17,135,288 17,306,641
Year
1 2 3 4
10,408,173 16,965,632 17,135,288 17,306,641
9,050,585 12,828,455 11,266,730 9,895,128
2013 Terminal Year
1.00% 1.00%
$115,338,467.26
$44,249,267.26
0.00%
$71,089,200.00
$90,068,418.67
25,270,049
3,307,455.79
32,721,523
11,710,473
21,011,050
276
(3,621,302)
89,683
17,479,707 17,654,504
5 TV
10%
17,479,707 126,103,603 -50% -0.38
126,103,603 -40% 0.05
71,386,281 -30% 0.47
-20% 0.9
Sales 2010 Increase
-10% 1.32
0% 1.75
5% 1.96
10% 2.17
EBIT Margins
12% 14% 16% 18% 20%
0.43 1.24 2.05 2.86 3.67
0.99 1.92 2.86 3.79 4.73
1.54 2.6 3.66 4.72 5.79
2.09 3.28 4.47 5.66 6.84
2.64 3.95 5.27 6.59 7.9
3.19 4.63 6.07 7.52 8.96
3.46 4.97 6.48 7.98 9.49
3.74 5.31 6.88 8.45 10.02
average $6.12
22% 24% 26%
4.48 5.29 6.1
5.67 6.6 7.54
6.85 7.91 8.98
8.03 9.22 10.41
9.22 10.53 11.85
10.4 11.84 13.29
10.99 12.5 14
11.58 13.15 14.72
DJO Sum
FY Est.
12/31/07E
Revenue Growth Rate
Revenue 873,572
26.50% EBITDA 253,833
-Interest Expense -176,485
16.39% -Change WC -15,700
8.28% -Taxes 10,969
8.28% -Capex -21,286
FCF 51,331
NOL
EBITDA/Interest Expense 1.44
EBITDA Margin 29.06%
EBITDA-Capex/Int Exp 1.32
Leverage Test
Consolidated Secured Debt Ratio
Senior Debt
EBITDA Requirement
EBITDA
Covenant Violation
Se
-4%
a 15% 0.62
M
20% 0.90
a 22% 1.00
r 24% 1.11
g
i
n 26.50% 1.25
s 28% 1.33
DJO Summary Financials and Projections
FY Est.
12/31/08E 12/31/09E 12/31/10E 12/31/11E
8.28% 8.28% 8.28%
980,194 1,061,354 1,149,234 1,244,391
259,600 281,259 304,547 329,764
-173,067 -173,067 -173,067 -173,067
-17,472 -13,300 -14,401 -15,594
-10,728 -11,616 -12,578 -13,620
-34,613 -37,479 -40,583 -43,943
23,720 45,797 63,919 83,541
1.50 1.63 1.76 1.91
26.48% 26.50% 26.50% 26.50%
1.30 1.41 1.53 1.65
4.25 3.5
1055 1055
248,235 301,429
281,259 304,547
No No
Sensitivity Analysis: EBITDA-Capex/Interest Expense (2009)
Revenue Growth
-2% 0% 2% 4%
0.64 0.65 0.66 0.68
0.91 0.93 0.95 0.97
1.03 1.05 1.07 1.09
1.14 1.16 1.18 1.21
1.27 1.30 1.33 1.35
1.36 1.39 1.41 1.44
12/31/12E
8.28%
1,347,426
357,068
-173,067
-16,885
-14,747
-47,581
104,788
2.06
26.50%
1.79
nse (2009)
6% 8% 10%
0.69 0.70 0.71
0.99 1.01 1.03
1.11 1.13 1.15
1.23 1.25 1.28
1.38 1.40 1.43
1.47 1.50 1.52
Year Ended December 31, 2008
Net sales
Cost of sales 374,080
Gross profit 606,114
Operating expenses:
Selling, general and administrative 445,396
Research and development 26,938
Amortization and impairment of
acquired intangibles 98,954
EBIT (loss) 34,826
Taxes
EBIT(1-t)
+ Depreciation
- Capital Expenditures
- Chg WC
FCFF
Other income (expense):
Interest income 1,662
Interest expense ($173,162.00)
Other income (expense), net ($9,134.00)
Loss on early extinguishment of debt -
Loss from continuing
operations before income
taxes and minority interests ($145,808.00)
Benefit for income taxes ($49,071.00)
Minority interests 1,049
Loss from continuing operations ($97,786.00)
Discontinued operations:
Net loss
ember 31, 2008
$980,194.00
($97,786.00)
Q2 2009 Q3 2009
Sales Sales Increase
Hip 5%
US 16%
Knee 3%
US 8%
Dental -16%
US -10%
Other 6%
US 26%
Total Reconstructive Products 449.31 453.8 1%
US 0 13%
Fixation 57 57 0%
US 0 1%
Spine 50.28 53.8 7%
US 0 15%
Other Products (Including Braces) 47.55 50.4 6%
US 0 14%
Total net Sales 604.81 $615 2%
US 352.64 $387.90 10%
Europe 192.87 167.8 -13%
Other Int'l 59.3 59.3 0%
604.81
