Leverage Covenant Calculation

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# Leverage Covenant Calculation - PowerPoint PPT Presentation

Leverage Covenant Calculation. Leverage Covenant Calculation Summary December 31, 2009 (millions) Leverage Covenant Calculation Detail Covenant Debt LTM Adjusted EBITDA Comments

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## Leverage Covenant Calculation

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Presentation Transcript
Leverage Covenant Calculation Summary

December 31, 2009

(millions)

Leverage Covenant Calculation Detail

Covenant Debt

(a) Adjustment to convert debt denominated in euros to weighted average FX rate for the 12 month period ended 12/31/09. (See “Key Points”)

(b) Per the covenant agreement, only \$100.0 million of cash can be used to offset debt in the leverage calculation. Note the Company had \$300.5 million of cash as of 12/31/09. The Company can utilize the \$200.5 of cash not included in the covenant calculation to prepay debt at any time which will lower this leverage ratio.

(c) Represents projected synergy benefits (e.g. headcount reduction savings) not already realized for acquisitions as permitted by the covenant in the debt agreement.

Key Points

• The FX rate used to determine Adjusted EBITDA for financial statement purposes (\$540.5) and covenant purposes (\$540.3) is the weighted average for the 12 month period ended 12/31/09 (\$1.39/€1.00).
• The FX rate used to determine senior secured debt on our financial statements as of 12/31/09 (\$1,964.2) is the balance sheet rate as of 12/31/09 (\$1.43/€1.00).
• However, the FX rate used in the leverage ratio calculation is the same for determining Adjusted EBITDA as it is for total debt.
• LTM FX rate is applied to debt denominated in euros.
• Changes in FX rates do not significantly impact the leverage ratio since:
• The same FX rate is used for senior secured debt and Adjusted EBITDA.
• The percentage of euro senior secured debt is less than the portion of Adjusted EBITDA generated in euros, but not enough to change the covenant ratio significantly as FX rates change.

12/31/09 Senior Secured Debt

(a) Total debt using 12/31/09 balance sheet FX rate.

(b) Total debt using LTM 12/31/09 weighted average FX rate.

Example

(millions)

Assume Adjusted EBITDA is equal to LTM 12/31/09 Adjusted EBITDA of \$540.3 at three different FX rates:

• AS REFLECTED ABOVE, THE LEVERAGE RATIO DOES NOT CHANGE SIGNIFICANTLY IF FX RATES CHANGE. THE PERCENTAGE OF EURO SENIOR SECURED DEBT IS LESS THAN THE PERCENTAGE OF ADJUSTED EBITDA GENERATED IN EUROS, BUT THAT DIFFERENCE IS NOT ENOUGH TO CHANGE THE RATIO SIGNIFICANTLY AS FX RATES CHANGE.

NOTES:

PER THE COVENANT AGREEMENT, ONLY \$100.0 MILLION OF CASH CAN BE USED TO OFFSET DEBT IN THE LEVERAGE CALCULATION. NOTE THE COMPANY HAD \$300.5 MILLION OF CASH AS OF 12/31/09. THE COMPANY CAN UTILIZE THE \$200.5 OF CASH NOT INCLUDED IN THE COVENANT CALCULATION TO PREPAY DEBT AT ANY TIME WHICH WILL LOWER THIS LEVERAGE RATIO. THROUGH THE FIRST QUARTER OF 2010 THE MAXIMUM LEVERAGE RATIO ALLOWED IS 4.40X. FROM 4/1/10 THROUGH 9/30/10, THE MAXIMUM LEVERAGE RATIO DECREASES TO 4.25X AND DECREASES TO 4.00X FROM 10/1/10 THROUGH THE REMAINDER OF THE AGREEMENT TO 2014.