Transdigm Group Inc. · NYSE:TDG
Transdigm — Investor Day (July 2008)
109 slides from Transdigm's investor day presentation, Jul 1, 2008
Slide 1: Analyst Day
Analyst Day July 1, 2008 Exhibit 99.1
Slide 2: Forward Looking Statements
1 Forward Looking Statements The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs, as well as a number of assumptions conce
Slide 3: Agenda
2 Agenda Welcome Sean Maroney TDG Overview Nick Howley Management Ray Laubenthal Process Operating Units Bob Henderson M&A Al Rodriguez Financial Information Greg Rufus Q&A
Slide 4: TDG Overview
TDG Overview W. Nicholas Howley
Slide 5: Experienced Operations with Proven Track Record
4 Experienced Operations with Proven Track Record Proven track record Managed the business through multiple cycles Experience with a leveraged capital structure Deep bench Collectively owns significant equity W. Nicholas Howley Chairman & CEO 1993 Gregory Rufus Executive VP – CFO 2000 Raymond F. Lau
Slide 6: TransDigm Overview
5 TransDigm Overview Highly engineered aerospace components Proprietary and sole source products Significant aftermarket content High free cash flow (1) Midpoint of May 6, 2008 guidance (excluding CEF Industries) (2) EBITDA As Defined represents EBITDA plus acquisition related costs, non-cash compen
Slide 7: Highly Engineered Niche Products
6 Highly Engineered Niche Products Batteries Pumps Transducers Controls/Actuators Main Bus Voltage Harmonic Filter Ignition Systems Rudder Isolation Valves Inverters
Slide 8: Highly Engineered Niche Products
7 Highly Engineered Niche Products Fluid Products Cockpit Security Systems Engineered Connectors Bin Latches Cockpit LCD Display Motors Flight Deck Audio Controls & Systems Linear Actuator
Slide 9: Investment Highlights
8 Investment Highlights Favorable industry dynamics Niche market positions High margin aftermarket Diverse mix Experienced management team Demonstrated value generation Proven acquisition / integration Market growth New business Acquisitions Value pricing Productivity Consistent Growth and Value Cre
Slide 10: Proven Record of Growth and Margin Expansion
9 Proven Record of Growth and Margin Expansion ($ in millions) % of Sales 20% 19% 23% 27% 31% 39% 39% 36% 36% 39% 42% 46% 44% 45% 46% 46% (1) EBITDA As Defined is a non-GAAP financial measure presented here as supplemental disclosures to net income. For a presentation of the most directly comparable
Slide 11: TransDigm
TRANSDIGM
Slide 12: Why Did we Perform Thru 9/11?
11 Why Did we Perform Thru 9/11? I. 3 Value Drivers 1. Cost Reduction 10% / 15% Reduction within 45 days 2. Pricing 3. New Business Cockpit security II. Acquisitions 1. Honeywell pump & Champion – 2001 III. Military
Slide 13: Steady Growth in Passenger Traffic Drives Stable Aftermarket Sales
12 Steady Growth in Passenger Traffic Drives Stable Aftermarket Sales . . . Source: Air Transport Association, Airline Monitor. WORLDWIDE REVENUE PASSENGER MILES (billions of miles)
Slide 14: Recent Analyst Forecast 2009 RPM Growth
13 Recent Analyst Forecast 2009 RPM Growth North America Europe Asia World Analyst # 1 -2% 1% 6% 2% Analyst # 2 - 4% -1% 7% 1% Analyst # 3 0% Average -3% 0% 7% 1% First half of FY 2009 down more TDG modestly Boeing weighted Potential over reactions by A/L
Slide 15: Despite Market Disruptions Domestic Bankruptcies
14 . . . Despite Market Disruptions 14 25 Domestic 25 Domestic Bankruptcies Bankruptcies US Airways US Airways Delta Air Lines Delta Air Lines Northwest Airlines Northwest Airlines Aloha Airlines Aloha Airlines Southeast Airlines Southeast Airlines
Slide 16: Positive Outlook for OEM Production
15 …with a Positive Outlook for OEM Production 1,000 1,250 1,500 '96 '98 '00 '02 '04 '06 '08E '10E COMMERCIAL TRANSPORTS Source: Wall Street Research / Airline Monitor / Management estimates. REGIONAL & BUSINESS JETS 1,000 1,250 1,500 '96 '98 '00 '02 '04 '06 '08E '10E Regional Jet Business Jet (unit
Slide 17: Stable Outlook for Military Spending
16 Stable Outlook for Military Spending $165.3 $174.4 $180.6 $184.4 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 '08 '09 '10 '11 O&M BUDGET ($ in billions) Source: National Defense Budget Estimates for FY 2008
Slide 18: Significant Barriers to Entry
17 Significant Barriers to Entry Selection / Qualification Process FAA Certification Niche Markets Risk / Reward Trade-Off
Slide 19: Recurring Stream of Profitable Aftermarket Revenue
18 Recurring Stream of Profitable Aftermarket Revenue OE Production Profitability / % of Sales Airframe Program Life Cycle (Years) Aftermarket
Slide 20: Strong Focus on High-Margin Aftermarket
19 Strong Focus on High-Margin Aftermarket Approximately 60% of pro forma net sales and a much higher percentage of EBITDA are from the stable, high-margin aftermarket. Other Aftmkt 1% Comm Aerospace OEM 29% Def Aerospace Aftmkt 15% Other OEM 2% Def Aerospace OEM 9% Comm Aerospace Aftmkt 44% Afterma
Slide 21: Significant Proprietary and Sole Source Revenue Base
20 Significant Proprietary and Sole Source Revenue Base Proprietary and sole source products represent a significant barrier to entry and a stable, recurring revenue stream. Sole Source 80% Non-Sole Source 20% Proprietary 95% Non-Proprietary 5% Proprietary and sole source products represent a signif
Slide 22: Strong Positions on Diverse and Growing Platforms
21 Strong Positions on Diverse and Growing Platforms TOP 15 PLATFORMS B737 A320 B747 B777 CRJ Family B767 A330/A340 Cessna Citation Series Gulfstream Series Learjet Series F-18 Embraer RJ Family Challenger Family B757 Apache Helicopter 28% sales 15% sales 8% sales Based on management estimates of pr
Slide 23: Modest Exposure to Old Platforms
22 Modest Exposure to Old Platforms DC9/MD80 737 Classics 747 Classics * Based on management estimates of pro forma sales for the fiscal year ended 9/30/07. 3% Revenue * 1.5% Revenue *
Slide 24: Proven Operating Strategy
23 Proven Operating Strategy Profitable new business Productivity and cost improvement Value-based pricing 3 Value Drivers
Slide 25: Proven Record of Acquisition & Integration
24 Proven Record of Acquisition & Integration 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Management has acquired 22 businesses since 1993, including five since October 2006. 2008 Adams Rite Aerospace Christie Champion Honeywell Lube Pump Fuelcom Norco Adel Aeroproduct
Slide 26: Management Process
Management Process Raymond F. Laubenthal
Slide 27: Organizational Philosophy
26 Organizational Philosophy Corporate Control Local Autonomy Economy of Scale Mgmt Resources Value Generation Strategy Structure Execution Motivation Central Control Local Autonomy Emp- loyees Owners CORPORATE OPERATING UNIT
Slide 28: Nick Howley
Nick Howley CEO Rufus fRay Laubenthal CFO coo obHenderson ete Advis aosrransit ‘Skurka: Cramer Aone Es ne Adams Rite TRANSDIGM El
Slide 29: Division Organization Structure
Division Organization Structure 28
Slide 30: Proven Operating Strategy
29 Proven Operating Strategy Profitable new business Productivity and cost improvement Value-based pricing 3 Value Drivers Operating Unit Accountability Value driven down through each Product Line Mid-Quarter and Quarter- End Reporting Emphasize Value Creation, Ownership and Accountability
Slide 31: TransDigm
TRANSDIGIV
Slide 32: Management Process – Product Line Value Reporting Tools
Management Process – Product Line Value Reporting Tools 31 New Business Consistent Product Line Metrics Accountability Quarterly Mid Quarterly
Slide 33: Product Line Income Statement
Product Line Income Statement 32 FY 2007 % to Q1 08 % to Q2 08 % to Q3 08 % to Q4 08 % to YTD Fcst % to YTD Plan % to Actual Sls Actual Sls Actual Sls Fcst Sls Fcst Sls Through Q3 Sls Through Q3 Sls Top Line Activity: 1,172 3.3% New Biz Bookings 4.6% 3.1% 4.8% 1.8% 1,159 4.1% 2.5% 38,648 109.8% Tota
Slide 34: Pricing
Pricing 33 0.0% 5.0% 10.0% Comm Transp Reg Bus Jet Defense OEM Comm Aftmkt Gov Aftmkt Total YTD FY Plan Inflation YTD Product Line “A” Pricing Results SAMPLE
Slide 35: New Business - Bookings Cessna Citation III
New Business - Bookings ($K) 34 Cessna Citation III Major Activities for the Quarter: Captured New Engine Application Won New Bus Jet Airframe Application Delivered New Airframe Prototype SAMPLE
Slide 36: New Business - Pipeline
New Business - Pipeline 35 5,000 10,000 15,000 20,000 Q3 '07 Q4 '07 Q1 '08 Q2'08 Q3 '08 A/B Trend ($K ) A B 3Q07 4Q07 1Q08 2Q08 Q308 Prototype Trend SAMPLE Program Customer P/N 3 Yr. Pot. $000 Q1 2008 Q2 2008 Q3 2008 Q4 2008 2008 Bookings Forecast A Project A Various XXXX-X $5,715 $0 $52 $60 $65 $17
Slide 37: Productivity
Productivity 36 Plan Forecast Cross Training Outsourcing Savings Cell Weighing Project Sintering Inline Measuring Automatic Brusher Lean Mfg Dept 360 Heat Treat Savings Automatic Plate Loader Load Testing Automation Auto Inkjet Part Marking All Other Projects 2008 Total Productivity ($000) Sales Per
Slide 38: Talent Development
37 Talent Development
Slide 39: Talent Demand
Talent Demand 38 Organic Growth & Mgt. Turnover Acquired Growth & Mgt. Transitions Growth Requires Talent
Slide 40: Talent Development & Talent Inventory Management
Talent Development & Talent Inventory Management 39 Quarterly Update by Operating Unit Roster by Management Level Bench Strength Development Actions Press Weed-out Actions Press Recruiting Efforts Press for ACTION and CHANGE
Slide 41: Weed-out or Promote Talent Distribution & Action
Weed-out or Promote Talent Distribution & Action 40 Talent Pool Weed-out Develop Expand Test Promote Individual Effectiveness High Low
Slide 42: Succession Sort, Develop, Promote
Succession Sort, Develop, Promote New Acquisition Existing Unit Prod Line Mgr Mfg Mgr Eng Lead Prod Line Mgr Mfg Mgr Eng Lead 41 President Dir of S&M Dir of Eng Dir of Mfg . Controller Prod Line Mgr Mfg Mgr Eng Lead HR, QC Other President Dir of S&M Dir of Eng Dir of Mfg . Controller Prod Line Mgr M
Slide 43: Recent Internal Succession & Growth Activity
Recent Internal Succession & Growth Activity 42 Recent Promotions: 2006 thru 2008 Presidents & Significant Corp. Positions Op Unit Staff Directors & Managers Product Line & Significant Managers
Slide 44: TransDigm
TRANSDIGM
Slide 45: Acquisition Value Creation
44 Acquisition Value Creation Acquisition Integration
Slide 46: Proven Acquisition Integration
45 Proven Acquisition Integration Incorporate TDG Pricing Methods Right-size the Cost Structure Focus the New Business Organize Into Product Lines Add Value Driver Metrics Align Financial Reporting Acquisition Value Generation $6.0 $2.8 $1.7 $1.5 $12.0 $0 $2 $4 $6 $8 $10 $12 $14 Acquired EBITDA Pric
Slide 47: Performance Stability
Performance Stability 46 Consistent Value Creation Strategy Product Line Detail Focus Active Talent Growth Disciplined Acquisition Integration Solid Value Growth Process
Slide 48: Operating Units
Operating Units Robert S. Henderson
Slide 49: TransDigm
TRANSDICM
Slide 50: TransDigm Group Inc.
TransDigm Group Inc. 48 Operating Units 12 Operating Units 34 Product Lines 34 Product Lines $705 M Revenue $705 M Revenue
Slide 51: Common Distinguishing Characteristics
Common Distinguishing Characteristics 49 Aerospace components Proprietary engineered products Significant aftermarket content Results in High Cash Flow and EBITDA
Slide 52: Transdigm Group - Locations
50 Transdigm Group - Locations AeroControlex CDA Champion MarathonNorco ADS/Transicoil AI2 Avtech Bruce Skurka AdelWiggins Adams Rite CEF
Slide 53: TransDigm Locations – Adams Rite Aerospace
51 TransDigm Locations – Adams Rite Aerospace Fullerton, CA
Slide 54: TransDigm Location – AeroControlex Group
52 TransDigm Location – AeroControlex Group Painesville, OH
Slide 55: TransDigm Locations – Champion Aerospace
53 TransDigm Locations – Champion Aerospace Liberty, SC
Slide 56: TransDigm Location – AdelWiggins Group
54 TransDigm Location – AdelWiggins Group Commerce, CA
Slide 57: TransDigm Locations – Avionic Instruments
55 TransDigm Locations – Avionic Instruments Avenel, NJ Avionic Instruments Inc
Slide 58: TransDigm Location – Skurka Aerospace
56 TransDigm Location – Skurka Aerospace Camarillo, CA
Slide 59: TransDigm Locations – CDA Intercorp
57 TransDigm Locations – CDA Intercorp Deerfield Beach, FL CDA InterCorp
Slide 60: TransDigm Locations – MarathonNorco Aerospace
58 TransDigm Locations – MarathonNorco Aerospace Waco, TX
Slide 61: TransDigm Location – ADS/Transicoil
59 TransDigm Location – ADS/Transicoil Collegeville, PA
Slide 62: TransDigm Location – Avtech
60 TransDigm Location – Avtech Seattle, WA
Slide 63: TransDigm Location – Bruce Aerospace
61 TransDigm Location – Bruce Aerospace Dayton, NV
Slide 64: TransDigm Location – CEF Industries
TransDigm Location – CEF Industries 62 Addison, IL
Slide 65: Recurring Stream of Profitable Aftermarket Revenue
63 Recurring Stream of Profitable Aftermarket Revenue OE Production Profitability/% of Sales Airframe Program Life Cycle (Years) Aftermarket
Slide 66: Life Cycle Revenue Stream
Life Cycle Revenue Stream 64 Low OEM Revenue / Margin High Spares Parts Generation / Margin
Slide 67: Life Cycle Revenue Stream
Life Cycle Revenue Stream 65 Aftermarket Various Components Replaced on average every 5 years High annual average spare parts sales Aftermarket revenue 70 to 100x OEM revenue
Slide 68: Life Cycle Revenue Stream
Life Cycle Revenue Stream 66 Low OEM Revenue / Negative Margin Consumable – High Aftermarket Sales / Margin
Slide 69: Life Cycle Revenue Stream
Life Cycle Revenue Stream 67 Replaced / Consumed Annually Aftermarket Revenue 100 to 150x OEM Revenue
Slide 70: Life Cycle Revenue Stream
Life Cycle Revenue Stream 68 Low OEM Revenue / Margin High Spares Parts Generation / Margin
Slide 71: Life Cycle Revenue Stream
Life Cycle Revenue Stream 69 Aftermarket Various Components Replaced as needed High annual average spare parts sales Aftermarket revenue 50 to 100x OEM revenue
Slide 72: Diverse Products, Platforms and Markets
Diverse Products, Platforms and Markets 70
Slide 73: Mergers & Acquisitions
Mergers & Acquisitions Albert J. Rodriguez
Slide 74: Focused Acquisition Strategy
72 Focused Acquisition Strategy KEY ACQUISITION CRITERIA Aerospace components Proprietary engineered products Significant aftermarket content
Slide 75: Significant Opportunities to Complete Accretive Acquisitions
Significant Opportunities to Complete Accretive Acquisitions 73 EBITDA Margin Distribution Annual Revenue $/Yr. OPPORTUNITY TO CREATE VALUE (1) FRAGMENTED BASE (1) 0% 5% 10% 15% 20% 25% 30% 35% 0-5% 6-10% 11-15% 16-20% 21-25% 26-30% 31-35% 36-40% 0% 10% 20% 30% 40% 50% 60% < $10M $10-$40M $40-$150M
Slide 76: Proven Record of Acquisition & Integration
Proven Record of Acquisition & Integration 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Management has acquired 22 businesses since 1993, including five since October 2006. 2008 74 Adams Rite Aerospace Christie Champion Honeywell Lube Pump Fuelcom Norco Adel Aeroproduct
Slide 77: Organization Structure
75 Organization Structure A. Rodriguez K. Kates C. Egan Broker U.K. R. Williams Broker U.S. Direct Company Contact Investment Bankers Regional Brokers Select OEM’s Direct Company Contact Lead Generation
Slide 78: Lead Generation is a Systematic Process
Lead Generation is a Systematic Process 76 Privately Held Strategic OEM Auction
Slide 79: Lead Generation Techniques
Lead Generation Techniques 77 Acquisition Lists Privately Held Strategic OEM Auctions Conferences/Shows Networking Internet Searches Cold Calling = Visit, Visit, Visit!
Slide 80: Formal Acquisition Process
Formal Acquisition Process 78 Teaser Confidentiality Agreement Offering Document Expression of Interest Management Meeting Due Diligence nd Round Bid Down Select Negotiate Contract Financing Close Deal
Slide 81: Informal Acquisition Process Build Trust
Informal Acquisition Process Build Trust 79 Close Deal Contract Due Diligence Letter of Intent
Slide 82: Active Acquisition Process
80 Active Acquisition Process Typical Multiple 6 – 10x EBITDA Post Acquisition 50%+ multiple reduction 2 Introduction Evaluate Letter of Intent Closed Closed
Slide 83: Common Issues/Opportunities
81 Common Issues/Opportunities Excessive costs Sub optimal pricing Unfocused new business process
Slide 84: One Page “Go” or “Stop”
One Page “Go” or “Stop” 82 Go Go or or Stop Stop Own/Lease Own / lease Proprietary 80% Sales $88,835 Sq. Ft. 270,000 Sole Source 90% COGS $74,903 Headcount Gross Profit $13,931 Sales/Head $250 % 15.7% SG&A $7,960 OEM % 9.0% Union Hds. - Eurofighter $13,650 EBIT $5,971 Embraer $6,750 Market (Nominal)
Slide 85: Real Pricing Total Revenue Revenue Forecast
Real Pricing Total Revenue Revenue Forecast 83 OEM OEM Spares Spares Market Market Trends Trends Real Pricing New Business New Business Total Revenue Base Revenue Shipset Model
Slide 86: Detailed Pricing Review
Detailed Pricing Review 84 Market Segment Typical Actions Comm OEM LTAs Reset Spares Incr. Comm Aftmkt Repairs Inc. .. Defense OEM .. .. Defense Aftmkt .. $ P/N by P/N Review
Slide 87: Productivity
Productivity 85
Slide 88: Due Diligence Goal – validate model
Due Diligence Goal – validate model Look for liabilities/problems 86 Finance / MIS Sales Income Statements Customers/Markets Balance Sheets Platforms Inventory/Valuation Competitors Cost System LTAs MIS System Pricing AR/AP Sales force Liabilities Distribution Engineering Operations Technology MRP/P
Slide 89: TransDigm
TRANSDIGM
Slide 90: Additional Equity Created
Additional Equity Created 88 Beginning EBITDA $8.1 Real Price $3.2 Inflation $0.7 Productivity $2.3 Market Growth ($2.8) New Business $2.0 Target EBITDA $13.5 Source of Equity Multiple Expansion / (Contraction) $27.0 Debt Repayment $22.3 Operating Improvement $43.2 Total $92.5
Slide 91: Investment Evaluation – Example Only
Investment Evaluation – Example Only 89 Purchase Price / Capital Structure EBITDA $ 8,141 Multiple 8.0 Purchase Price $65,128 Fees $1,954 Total Purchase Price $67,082 Debt 4.5x 2008 EBITDA $36,635 Equity Required $30,447 Total $67,082 Debt & Equity Investment Year 1 Year 2 Year 3 Year 4 Year 5 ($30,
Slide 92: Actual Performance – Example
90 Actual Performance – Example 1 % EBITDA 0% 15% 30% 45% Yr. 0 Price Productivity Volume Yr. 6 Actions: Replaced management Increased aftermarket prices Reduced personnel 15%-20% Focused new business program 95% Aerospace 95% Proprietary At Acquisition Date 45% Aftermarket
Slide 93: Actual Performance – Example
91 Actual Performance – Example 2 % EBITDA 20% 25% 30% 35% 40% 45% 50% 55% Year 0 Price Productivity Volume Year 2 Actions: Consolidated into existing TransDigm facility Increased Aftermarket Prices Reduced Personnel 35% Focused development activities 85% Aerospace 90% Proprietary 45% Aftermarket At
Slide 94: Financial Information
Financial Information Greg Rufus
Slide 95: Proven Record of Growth and Margin Expansion
93 Proven Record of Growth and Margin Expansion ($ in millions) % of Sales 20% 19% 23% 27% 31% 39% 39% 36% 36% 39% 42% 46% 44% 45% 46% 46% (1) EBITDA As Defined is a non-GAAP financial measure presented here as supplemental disclosures to net income. For a presentation of the most directly comparabl
Slide 96: Industry Leading Financial Performance
94 Industry Leading Financial Performance TransDigm’s EBITDA margin and free cash flow are at the top of the aerospace sector. 18.7% 14.8% 46.3% 44.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% LTM EBITDA Margin LTM (EBITDA-Capex) Margin Industry Peers TransDigm Note: LTM data as of 9/30/07. EBITDA for Tran
Slide 97: Commonly Asked Questions
Commonly Asked Questions 95 Commonly Asked Questions:
Slide 98: Commonly Asked Questions
Commonly Asked Questions 96 What Time Zone are You In? Answer: Ohio has elected to let New York participate in our Eastern Time Zone!!!
Slide 99: Strong Focus on High-Margin Aftermarket
97 Strong Focus on High-Margin Aftermarket Approximately 60% of pro forma net sales and a much higher percentage of EBITDA are from the stable, high-margin aftermarket. Aftermarket OEM NET SALES EBITDA Based on management estimates for the fiscal year ended 9/30/07. Other Aftmkt 1% Comm Aerospace OE
Slide 100: 25,000 20,000 15,000 10,000 5,000 é = “04 "05 "06 ‘07 ‘08E "09E 0E
25,000 20,000 15,000 10,000 5,000 é = 03 “04 "05 "06 ‘07 ‘08E "09E 0E Total Fleet WOEMDeliveries = Retirements ‘Source! The Aifine Monitor January / February 2008 TRANSDIGM
Slide 101: Reported GAAP Sales vs. Installed Base
99 Reported GAAP Sales vs. Installed Base Source: The Airline Monitor May 2008 United States 76% Foreign 24% 2007 GAAP Sales Installed Base of Comm. Aircraft
Slide 102: Margin Fluctuations & Quarterly Comparisons
100 Margin Fluctuations & Quarterly Comparisons % Acquisitions (Purchase Accounting, Operating Margin, Integration Costs) OEM vs. Aftermarket Sales Mix Strategic Investment Avg. Quarterly Sales $175M Commercial Aftermarket 45% Implied Aftermarket Sales $ 79M Qtr. Example: $4M = 5% Real World Items R
Slide 103: Capitalization
101 Capitalization ($ in millions) Cum. Mult. 9/30/08 E EBITDA % of Cap. Cash 200.0 $ Revolver (1) - - - Term Loan 780.0 2.4 25.7% Senior Subordinated Notes 577.2 1.7 19.0% Total Debt 1,357.2 $ 4.1 44.7% Market Equity (2) 1,677.9 55.3% Total Capitalization 3,035.1 $ 100.0% EBITDA As Defined (3) 328.
Slide 104: Historical Leverage Ratio
102 Historical Leverage Ratio (1) Total Debt ÷ Proforma EBITDA as Define (2) Total Debt less cash ÷ Proforma EBITDA as Defined
Slide 105: Significant Free Cash Flow
103 Significant Free Cash Flow ($ in millions) (1) Midpoint of May 6 th, 2008 Guidance (excluding CEF Industries) (2) Excludes interest paid of $62.7 million in November 2005 on the $200 million of promissory notes issued in 2003. 2005 2006 2007 2008 E EBITDA As Defined $164.2 $194.4 $274.7 $328.5 (
Slide 106: Use of Free Cash Flow
Use of Free Cash Flow 104 Repurchase Stock Dividend Value Generating Acquisitions Available Funds Est. Cash Balance @ 9/30/08 $200M Unused Revolver $200M $400M Credit Markets ? Pay Down Debt Subordinated Notes: Breakage fees Senior Credit Facility: Low cost and minimum covenants
Slide 107: Multiple Opportunities to Create Value
Multiple Opportunities to Create Value Value Pricing and Productivity Acquisitions Deleveraging Superior Management Profitable New Business Steady Long Term Growth in Passenger Traffic 105 Value Pricing and Productivity Acquisitions Deleveraging Superior Management Profitable New Business Steady Lon
Slide 108: Q & A
Q & A July 1, 2008
Slide 109: Appendix
107 Appendix Reconciliation of Net Income to EBITDA As Defined (in millions) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Net Income ($5) $0 $1 $3 $14 ($17) $11 $14 $31 ($76) $14 $35 $25 $89 Depreciation and amortization Interest expense, net Income tax provision (2) - (2) (