ACG Report

Evaluating Strategic Alternatives January 28, 2009 HoldCo Proprietary and Confidential

Company Overview ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],HoldCo EntCo ApparelCo Objective Opportunity

Operating Performance ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],in $ millions in $ millions in $ millions

Industry Overview ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Publishing & Media Apparel & Accessories ,[object Object]

Transaction Proposal ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Strategic Alternatives Option Advantages Disadvantages Recommendation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],BEST OPTION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],NOT RECOMMENDED ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],NOT RECOMMENDED ,[object Object],(1) No additional financing needed (1) Growth objective not met NOT RECOMMENDED ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],NOT RECOMMENDED ,[object Object],[object Object],[object Object],[object Object],[object Object],NOT RECOMMENDED

Valuation Summary ApparelCo $47m FashionCo $76m NEW HOLDCO VALUE Stand Alone Sum $123m Synergies (Base Case*) $10m Intrinsic CombineCo $133m EntCo $563m *See Page 13 for Base Case

EntCo Valuation ,[object Object],Final Equity Value is based on the average of DCF, Precedent Transactions, and EV/EBITDA Equity Range $529 - $596 in $ millions DCF ,[object Object],Precedent Transactions ,[object Object],EV/Revenue Not a good indicator of operating performance in this industry due to differences in comparable companies’ efficiencies and operating margins EV/EBITDA Based on comparable firms’ EV/EBITDA

ApparelCo Valuation ,[object Object],Final Equity Value is based on DCF with EBITDA Exit Multiple Equity Range$43.6 - $49.2 in $ millions DCF ,[object Object],Precedent Transactions ,[object Object],EV/Revenue Not a good indicator of operating performance due to differences in comparable companies’ efficiencies and operating margins EV/EBITDA Undervalued due to unusually low EBITDA in 2008; does not reflect aggressive growth expected in 2009-11

FashionCo Valuation ,[object Object],Equity Range $71.7 - $80.8 Final Equity Value is based on the average of DCF, Precedent Transactions, and EV/EBITDA in $ millions DCF ,[object Object],Precedent Transactions ,[object Object],EV/Revenue Not a good indicator of operating performance due to differences in comparable companies’ efficiencies and operating margins EV/EBITDA Based on comparable firms’ EV/EBITDA

CombineCo Valuation ,[object Object],Equity Value $125 - $141 Final Equity Value is based on the average of DCF, Precedent Transactions, and EV/EBITDA ,[object Object],in $ millions DCF ,[object Object],Precedent Transactions* ,[object Object],EV/Revenue Not a good indicator of operating performance due to differences in comparable companies’ efficiencies and operating margins EV/EBITDA* Based on comparable firms’ EV/EBITDA

[object Object],[object Object],[object Object],[object Object],[object Object],Anticipated Synergies 0.5% SG&A savings from redundancies CombineCo Value ApparelCo + FashionCo Up to 10% SG&A savings due to scale ,[object Object],CombineCo Value Less: Stand-Alones = Synergies Less: Premium Paid = Economic Gain in $ millions

FashionCo Economic Gain ,[object Object],[object Object],[object Object],In $ millions Synergies

Financing Options ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Equity / Cash Hybrid ,[object Object],[object Object],[object Object],[object Object],100% Equity ,[object Object],100% Debt / Cash ,[object Object],[object Object],[object Object],[object Object],[object Object]

Accretion/Dilution Scenarios ,[object Object],[object Object],Percentages shown are accretive / (dilutive) effects on EPS in $ millions in $ millions

Bidding Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Shareholder/Stakeholder Implications ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Future Considerations (IRR) ,[object Object],[object Object],[object Object],[object Object],Exit EBITDA Multiple in $ millions

1.1 Comparables: EntCo Company Product / Service Type Brands / Web Sites / Strategic Partners Geographical Market Gannett Co., Inc. Publishing: newspapers & publications; internet advertising & online search technology; commercial printing, newswire, marketing & data services Broadcasting: 23 TV stations, web sites offering news, entertainment & ads Web: HighSchoolSports.net Strategic partners: CareerBuilder.com, Classified Ventures, ShopLocal.com, Topix.net, Metromix LLC UK, US, Guam GateHouse Media, Inc. Publishing: print & online publications, directories; local niche publications on recreation, sports, healthcare & real estate Web: Sacramento.com Sacramento, CA Other local markets Journal Register, Co. Publishing: newspapers, print & online publications focusing on local interests Commercial Printing: 3 owned facilities Web: 228 web sites affiliated with newspapers & publications; 20 employment web sites US Lee Enterprises Inc. Publishing: print & online newspapers, specialty publications focusing on local interests; advertising; online infrastructure for 1,500 daily newspapers & shoppers Web: affiliated with publications Strategic partners: Yahoo! Inc. US McClatchy Co. Publishing: newspapers, affiliated web sites offering news, ads, e-commerce, publishing tools, hosting & software development Web: affiliated; 14.4% interest in CareerBuilder.com; 25.6% interest in Classified Ventures US The New York Times Company Publishing: major newspapers & publications Diversified Media: various web services, radio, interests in newsprint & paper manufacturing, cable network Web: Affiliated with newspapers Strategic partners: Monster Worldwide, Inc. US

1.2 Comparables: ApparelCo & FashionCo Company Product Type Distribution Channels Target Customer Geographical Market Cygne Designs Inc. Private label and branded – Apparel Retailers Men & women US Delta Apparel Inc. Private label and branded – Apparel: active wear, specialty sizes Printing companies, retailers, college bookstores, sporting goods stores, other Adults, youth, kids US Ever-Glory International Group, Inc. Private label – Apparel Brands, retailers Men, women, kids Worldwide (focus on China) G-III Apparel Group, Ltd. Branded, minimal private label – Apparel Department stores, specialty stores, catalogs Men & women US Oxford Industries Inc. Private label and branded – Apparel; footwear; bedding, bath, personal & home accessories; luggage Wholesale – chain stores, department stores, mass merchants, specialty stores & catalogs Retail – owned retailers & Internet Men, women, kids US, UK Hartmarx Corp. Branded – Career Department & specialty stores, ecommerce Men & women US Jones Apparel Group, Inc. Branded – Apparel: sports and career; silver jewelry (low end) Department & specialty stores, mass merchants, retailers, factory outlets Women & kids US, Canada Perry Ellis International Inc. Branded – Apparel, swimwear, accessories (upscale) Department stores, national regional chain stores, mass merchants, retailers Men & women US, Worldwide Phillips-Van Heusen Corp. Branded – Apparel , sportswear, footwear, neckwear, accessories, home furnishing, other Department & specialty stores, mass merchants, retailers Men, women & kids Worldwide VF Corp. Branded – Apparel, accessories, sportswear Department & specialty stores, national chain stores, mass merchants, distributors, owned retailers Men & Women US, international

2.1 ApparelCo WACC ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

2.3 FashionCo WACC ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

2.5 EntCo WACC ,[object Object],[object Object],[object Object],[object Object]

2.6 CombineCo WACC ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

3.1 Other Comparable Company Info

4.5 DCF Sensitivity ,[object Object],WACC WACC WACC WACC in $ millions in $ millions

4.6 DCF Sensitivity ,[object Object],WACC WACC WACC WACC in $ millions in $ millions

5.1 Ratio Analysis ,[object Object]

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