ACG_Cup_-_Valuation

ACG Cup - ValuationIT GROUP STRATEGY – DIVEST SSIT, MULTIPLE SHARE CLASSES, IPO W/ IT CONSULTING

Team• MBA/MSF

Candidate, 2017• Bachelor’s in Political

Science - 2015• MBA Intern at Pratt

and Whitney in San Diego, CA

• Previous military service - US Army

Nathan McCutcheon

• MBA/MSF Candidate, 2017

• Bachelor’s in Accountancy –2013

• Accounting Supervisor at Motivate, Inc. in San Diego, CA

Ike Ekeh Shreyas Sreekanth

• MBA Candidate, 2017

• Bachelor’s in Accounting - 2010

• Previous military service- USCG

David White

• MBA Candidate, 2017

• Bachelor’s in Mechanical Engineering, 2012

• Quality Assurance at Cap Gemini India

Section 1EXECUTIVE SUMMARY

Executive SummaryManagement

Options

Factors Evaluated

Three-Options to Consider

• Divest SSIT, then have an IPO of ITServices• LBO entire ITGroup• Maintain Status Quo

• IPO of entire ITGroup• Grow SSIT segment to increase ITGroup’s

equity value, then have an IPO of entire ITGroup

• Future Expectations• Enterprise Value of different ITGroup

segments• Overall intrinsic values

• Family’s ability to continue to have a meaningful stake in future decisions

• Maximizing value of ITGroup• Create a liquidity event for Company

IPO of Entire ITGroup• Keeps ItGroup together• Family legacy is protected• Liquidity event• Does not maximize value

Divest SSIT, IPO ITServices• Maximizes value of ITGroup• Family legacy is protected (with

split-share plan)• Relieves ITGroup of debt burden

Maintain Status Quo• Keeps ITGroup together• Does not increase liquidity• Dream of public company may

not be realized at full-potential

Section 2VALUATION OF IT GROUP

IT Group Football Field

Average Equity Value:$1,525.18

DCF Perpetuity

DCF Multiple

Comparable - Companies

Comparable - Precedence

$500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00

$1,803.64

$1,517.82

$1,047.75

$1,121.45

$2,204.45

$1,855.11

$1,280.59

$1,370.66

IT Group - Football Field

Comparable CompaniesFigures in MillionsIT Group Comparable CompaniesCompany Equity Value Enterprise Value Revenue EBITDA Net Income EV/EBITDAPerficient Inc. $590.07 $642.38 $450.21 $54.44 $21.86 11.8Ciber, Inc. $283.60 $295.42 $812.19 $25.46 $7.76 11.6Acxiom Corporation $1,724.06 $1,752.33 $1,033.37 $157.53 $7.80 11.1Virtusa Corporation $1,704.59 $1,622.33 $526.86 $69.55 $44.53 23.3Science Applications International Corporation $2,110.94 $3,078.94 $4,064.00 $281.00 $128.00 11.0

IT Group NA NA $568.98 $95.01 $54.45 NA

All CompsMean 1,282.65$ 1,478.28$ 1,377.33$ 117.59$ 41.99$ 13.8Median 1,704.59$ 1,622.33$ 812.19$ 69.55$ 21.86$ 11.6

Best CompsMean 1,177.17$ 1,442.27$ 1,589.94$ 129.60$ 41.36$ 11.4Median 1,157.07$ 1,197.36$ 922.78$ 105.98$ 14.83$ 11.4

95.01$ 11.4X

1,079.78$ Net Debt 84.39$ Equity Value 1,164.17$

-10% 1,047.75$ 10% 1,280.59$

Implied Enterprise Value

2014

2014 EBITDA2014 EV/EBITDA Multiplier

Comparable TransactionsTransaction Announced Date

Target Enterprise Value

EV / Revenue

EV / EBITDA

1 4/27/2015 4,453.64$ 3.46 17.92 10/5/2015 15.03$ 0.716 6.013 12/29/2014 55.80$ 1.65 11.014 12/23/2013 203.21$ 0.709 7.355 11/5/2013 1,964.82$ 4.03 13.886 2/21/2012 76.35$ 0.835 7.637 1/27/2012 13.43$ 0.666 14.818 12/12/2011 100.35$ 1.84 7.549 10/3/2011 20.14$ 0.282 6.91

10 8/16/2011 1,299.07$ 1.82 14.9211 6/3/2011 140.94$ 1.45 13.8712 4/1/2011 1,781.52$ 1.02 10.913 2/9/2011 63.89$ 0.71 15.3714 11/4/2010 52.47$ 1.59 17.8115 11/2/2010 93.92$ 0.49 17.49

Best Company Analysis Minimum 13.43$ 0.3 7.4Maximum 4,453.64$ 4.0 17.9Median 93.92$ 1.0 13.9Mean 688.97$ 1.4 12.2

All Companies IncludedMinimum 13.43$ 0.3 6.0Maximum 4,453.64$ 4.0 17.9Median 93.92$ 1.0 13.9Mean 688.97$ 1.4 12.2

IT Comparable Transaction

EBITDA 95.01$ multiple 12.2XEnterprise Value 1,161.67$ Net Debt 84.39$ Equity Value 1,246.06$ -10% 1,121.45$ 10% 1,370.66$

DCFDiscounted Cash Flow Analysis for IT GroupFigures in millions, except per share

Historical year ending December 31, Projected year ending December 31,2012 2013 2014 2015 2016 2017 2018 2019

Sales $437.5 $520.7 $569.0 $624.5 $685.5 $752.4 $826.1 $907.1Cost of goods sold 347.7 423.4 454.3 496.4 542.4 592.7 659.6 724.2Gross Profit 89.8 97.3 114.7 128.1 143.0 159.6 166.5 182.8

SG&A 17.6 17.8 18.1 18.2 18.3 18.8 26.3 28.8EBITDA 72.2 79.5 96.6 109.9 124.7 140.8 140.3 154.0

EBITDA Margin 16.5% 15.3% 17.0% 17.6% 18.2% 18.7% 17.0% 17.0%

Less: Depreciation (1.4) (1.6) (1.8) (2.0) (2.2) (2.4) 4.0 6.3Less: Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0EBIT 71.0 78.0 95.0 108.1 122.7 138.6 144.5 160.5Less: Taxes @ 40.0% (28.4) (31.2) (38.0) (43.2) (49.1) (55.4) (57.8) (64.2)Tax-effected EBIT 42.6 46.8 57.0 64.8 73.6 83.2 86.7 96.3

Plus: Depreciation and amortization 1.6 1.8 2.0 2.2 2.4 (4.0) (6.3)Less: Capital expenditures 2.5 4.1 3.4 5.5 6.4 7.9 5.8 6.3Less: Additions to intangibles 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0(Increase)/decrease in working capital (11.8) (14.7) (5.8) (6.3) (6.9) (7.6) (8.4)Unlevered Free Cash Flow $40.7 $47.6 $66.6 $75.9 $86.5 $80.8 $87.9

Operating AssumptionsSales growth NA 19.0% 9.3% 9.8% 9.8% 9.8% 9.8% 9.8%Cost of goods sold (as a % sales) 79.5% 81.3% 79.8% 79.8% 79.8% 79.8% 79.8% 79.8%SG&A (as a % sales) 4.0% 3.4% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%

Capital Expenditure AssumptionsCapEx (as a % sales) NA (0.8%) (0.6%) (0.7%) (0.7%) (0.7%) (0.7%) (0.7%)Depreciation (as a % of CapEx) NA (40.0%) (52.1%) (21.7%) 8.7% 39.1% 69.6% 100.0%

Additions to Intangibles ($ amount) NA $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0Amortization ($ amount) NA 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Perpetuity Growth Method EBITDA Multiple Method

Weighted average cost of capital: 6.6% Net present value of free cash flow $327.0

Terminal growth rate 2.5%Terminal value $2,193.2 Present value of the terminal value 1,592.6

Enterprise value $1,919.7 Less: Net debt* 84.4 Equity value $2,004.0

-10% $1,803.6410% $2,204.45

EBITDA Multiple Method


Terminal multiple 11.4xTerminal value $1,755.8 Present value of the terminal value 1,275.0


-10% $1,517.8210% $1,855.11

Section 3VALUATION OF SSIT

Football Field SSIT

DCF Perpetuity

DCF Multiple

Comparable - Companies

Comparable - Precedence

LBO

$20.00 $25.00 $30.00 $35.00 $40.00 $45.00

$25.33

$34.09

$35.13

$33.25

$33.50

$32.26

$41.66

$42.94

$40.63

$40.94

SSIT - Football Field

Average Enterprise Value:$35.84

LBOLeveraged Buyout of SSITFigures in millions, except per share Cumulative

Pro Forma Transaction Assumptions Sources Amount % of Total EBITDACurrent share price $0.00 Cash ($6.3) (20.2%) -1.2x

x Offer price premium 0.0% Bank debt 18.3 59.1% 2.3xOffer price per share $0.00 Subordinated debt 13.1 42.2% 4.8xTarget diluted shares outstanding 0.000 Sponsor's equity 5.9 19.0% 5.9xOffer Value $12.1 Total sources $31.1 100.0% 5.9x

+ Debt 18.8+ Preferred 0.0 Uses Amount % of Total+ Noncontrolling interest 0.0 Purchase of equity $12.1 39.1%- Cash & equivalents 6.3 Refinancing of existing debt 18.8 60.5%

Transaction Value $37.2 Transaction expenses @ 1.0% 0.1 0.4%Total uses $31.1 100.0%

Transaction Multiples Pro Forma IRR Returns Year 4 Year 5 Year 6Transaction Value / Sales 0.44x 6.6x 112.4% 62.1% 50.2%Transaction Value / EBITDA 7.1x EBITDA Exit 7.1x 116.5% 64.9% 52.4%Transaction Value / EBIT 8.1x 7.6x 120.3% 67.5% 54.3%

Pro Forma EBITDA $5.2

Pro Forma Projected year ending December 31,Credit stats 2014 2015 2016 2017 2018 2019 2020 2021 2022Senior Debt / EBITDA 3.5x 2.2x 1.3x 0.4x 0.0x 1.0x 0.9x 0.9x 0.9xTotal Debt / EBITDA 6.0x 4.4x 3.4x 2.3x 0.7x 1.7x 1.6x 1.6x 1.6xEBITDA / Interest -3.3x -3.9x -5.7x -5.8x -17.0x 0.0x 0.0x 0.0x 0.0xEBITDA - CapEx / Interest -4.9x -5.6x -8.4x -8.8x -12.7x 0.0x 0.0x 0.0x 0.0x

Notes:• Debt obligation

incurred by purchaser fulfilled by 2018

• Equity Return >50% by 2017

DCFDiscounted Cash Flow Analysis for SSITFigures in millions, except per share

Historical year ending December 31, Projected year ending December 31, 2014-20192012 2013 2014 2015 2016 2017 2018 2019 CAGR

x Sales $72.4 $78.6 $83.6 $86.9 $91.2 $95.8 $97.7 $99.7 3.6%Cost of goods sold 60.7 65.4 70.7 73.7 77.2 80.3 82.6 84.2Gross Profit 11.7 13.2 12.9 13.1 14.0 15.5 15.1 15.4 3.6%

SG&A 7.4 7.3 7.7 7.2 7.8 8.5 9.0 9.2EBITDA 4.4 5.9 5.2 5.9 6.3 7.0 6.1 6.2 3.6%

EBITDA Margin 6.0% 7.5% 6.3% 6.8% 6.9% 7.3% 6.3% 6.3%

Less: Depreciation (0.6) (0.6) (0.7) (0.7) (0.7) (0.8) (2.4) (2.9)Less: Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0EBIT 3.8 5.3 4.6 5.3 5.6 6.3 3.8 3.4 (5.9%)Less: Taxes @ 40.0% (1.5) (2.1) (1.9) (2.1) (2.2) (2.5) (1.5) (1.4)Tax-effected EBIT 2.3 3.2 2.8 3.2 3.4 3.8 2.3 2.1 (5.9%)

Plus: Depreciation and amortization 0.6 0.7 0.7 0.7 0.8 2.4 2.9Less: Capital expenditures (1.9) (2.9) (2.5) (2.6) (3.0) (2.8) (2.9)Less: Additions to intangibles 0.0 0.0 0.0 0.0 0.0 0.0 0.0(Increase)/decrease in working capital 0.3 1.1 (0.2) (0.1) (0.1) (0.1) (0.1)Unlevered Free Cash Flow $2.2 $1.6 $1.2 $1.4 $1.5 $1.7 $2.0 3.7%

Operating Assumptionsx Sales growth NA 8.5% 6.4% 2.0% 2.0% 2.0% 2.0% 2.0%

Cost of goods sold (as a % sales) 83.8% 83.3% 84.5% 84.5% 84.5% 84.5% 84.5% 84.5%SG&A (as a % sales) 10.2% 9.3% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2%

Capital Expenditure AssumptionsCapEx (as a % sales) NA 2.4% 3.4% 2.9% 2.9% 2.9% 2.9% 2.9%Depreciation (as a % of CapEx) NA 33.7% 23.4% 38.7% 54.0% 69.4% 84.7% 100.0%


EBITDA Multiple Method


Terminal multiple 7.4xTerminal value $46.5 Present value of the terminal value 31.7

Enterprise value $37.9 Less: Net debt* (12.5) Equity value $25.4



Terminal growth rate 1.7%Terminal value $32.3 Present value of the terminal value 22.0

Enterprise value $28.1 Less: Net debt* (12.5) Equity value $15.6

Comparable Company AnalysisFigures in MillionsIT Group Comparable CompaniesCompany Equity Value Enterprise Value Revenue EBITDA Net Income EV/EBITDAAlpha & Omega Semiconductor, Ltd. $199.64 $127.55 $321.16 $20.58 -$10.47 6.2Fairchild Semiconductor International Inc. $1,925.31 $1,880.41 $1,389.60 $210.90 -$50.70 8.9IXYS Corp. $397.95 $335.08 $326.56 $43.44 $20.68 7.7Super Micro Computer, Inc. $1,340.57 $1,324.48 $2,067.45 $145.60 $94.70 9.1SunEdison Semiconductor Limited $450.44 $572.14 $801.70 $79.70 -$116.10 7.2

SSIT NA NA $83.64 $5.24 $1.84 NA

All CompsMean $862.78 $847.93 $981.29 $100.04 -$12.38 7.8Median $450.44 $572.14 $801.70 $79.70 -$10.47 7.7

Best CompsMean $743.34 $728.80 $709.75 $88.65 -$39.15 7.5Median $424.19 $453.61 $564.13 $61.57 -$30.59 7.4

$5.247.4X

$39.03-10% $35.1310% $42.94

2014

2014 EBITDA2014 EV/EBITDA MultiplierImplied Enterprise Value

Comparable TransactionsTransaction Announced Date

Target Enterprise Value

EV / Revenue

EV / EBITDA

1 9/22/2015 191.18$ 1.56 7.852 8/6/2015 1,171.59$ 1.2 7.873 6/5/2015 890.63$ 0.484 4.084 4/10/2015 674.58$ 1.3 5.725 1/6/2015 754.54$ 1.52 6.466 11/24/2014 561.23$ 0.665 5.767 10/13/2014 79.27$ 0.775 8.598 7/7/2014 365.00$ 2.37 10.259 6/30/2014 70.64$ 1.52 6.86

10 4/27/2014 93.37$ 1.5 6.7511 4/11/2014 1,706.28$ 2.35 6.8312 3/7/2014 62.42$ 1.32 7.2613 10/14/2013 87.24$ 0.957 6.7614 9/27/2013 596.25$ 1.38 9.0815 7/9/2013 99.77$ 1.23 7.05

Best Company AnalysisMinimum 62.42$ 0.67$ 5.72$ Maximum 754.54$ 1.56$ 9.08$ Median 99.77$ 1.32$ 6.86$

Mean 297.32$ 1.25$ 7.10$

All Companies IncludedMinimum 62.42$ 0.48$ 4.08$ Maximum 1,706.28$ 2.37$ 10.25$ Median 365.00$ 1.32$ 6.86$ Mean 493.60$ 1.34$ 7.14$

SSIT Comparable Transaction

EBITDA 5.20$ multiple 7.1XEnterprise Value 36.94$ -10% 33.25$ 10% 40.63$

Section 4VALUATION OF STANDALONE IT CONSULTING GROUP

DCF

Equity Value without SSIT $100M more than when combined

*Includes expansion Cost estimates

Discounted Cash Flow Analysis for ITCFigures in millions, except per share

Historical year ending December 31, Projected year ending December 31, 2014-20192012 2013 2014 2015 2016 2017 2018 2019 CAGR

Sales $437.5 $520.7 $569.0 $537.6 $594.2 $656.6 $753.8 $865.3 8.7%Cost of goods sold 347.7 423.4 454.3 422.7 465.2 512.5 601.8 690.9Gross Profit 89.8 97.3 114.7 115.0 129.0 144.1 151.9 174.4 8.7%

SG&A 17.8 18.1 18.2 11.1 11.1 10.9 24.2 27.7EBITDA 72.0 79.2 96.5 103.9 117.9 133.2 127.8 146.7 8.7%

EBITDA Margin 16.5% 15.2% 17.0% 19.3% 19.8% 20.3% 17.0% 17.0%

Less: Depreciation 1.4 1.6 1.8 1.3 1.4 1.6 (3.7) (6.0)Less: Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0EBIT 70.6 77.6 94.7 102.6 116.5 131.6 131.4 152.7 10.0%Less: Taxes @ 40.0% (28.2) (31.0) (37.9) (41.0) (46.6) (52.6) (52.6) (61.1)Tax-effected EBIT 42.4 46.6 56.8 61.6 69.9 79.0 78.9 91.6 10.0%

Plus: Depreciation and amortization (1.6) (1.8) (1.3) (1.4) (1.6) 3.7 6.0Less: Capital expenditures (2.5) (4.1) (3.4) (3.0) (7.5) (8.3) (5.3) (6.0)Less: Additions to intangibles 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0(Increase)/decrease in working capital (39.9) (46.7) 21.2 (16.1) (17.7) (27.7) (31.7)Unlevered Free Cash Flow $0.9 $4.8 $78.5 $44.9 $51.4 $49.6 $59.9 65.3%

Operating AssumptionsSales growth NA 19.0% 9.3% 7.8% 14.8% 14.8% 14.8% 14.8%Cost of goods sold (as a % sales) 79.5% 81.3% 79.8% 79.8% 79.8% 79.8% 79.8% 79.8%SG&A (as a % sales) 4.1% 3.5% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%

Capital Expenditure AssumptionsCapEx (as a % sales) NA 0.8% 0.6% 0.7% 0.7% 0.7% 0.7% 0.7%Depreciation (as a % of CapEx) NA (40.0%) (52.1%) (21.7%) 8.7% 39.1% 69.6% 100.0%




Terminal growth rate 3.3%Terminal value $1,851.8 Present value of the terminal value 1,346.0


Section 5MANAGEMENT OPTIONS

Management Consideration

IPO (Current Structure) Divest SSIT Status Quo Divest SSIT, IPO ITC (Class B Shares)0

2

4

6

8

10

12

Option Analysis

Liquidity Event Long-Term Ownershitp Growth Rate

Section 6OUR RECOMMENDATION

RecommendationDivest SSIT

• Divesting SSIT will create a liquidity event equivalent to $40M • Remove heavy debt burden created by 55% Debt – 45% Equity structure• Gives IT Group best shot at highest IPO offering• Retaining SSIT in Company portfolio creates a negative Enterprise Value

IPO

• IPO with IT Consulting• Generate a liquidity event, and return value to shareholder• Without SSIT, valuation $183M higher

Class B Shares

• Create a dual-class share structure• Class-B shares allow owner to maintain voting majority• Able to pass down to heir or family (non-transferable outward)

Section 7APPENDIX AND SUPPORTING DOCUMENTATION

IT Group Income StatementFiscal Year Ended December 31,

2011 2012 2013 2014 2015E 2016P 2017P Sales $395.5 $437.5 $520.7 $569.0 $624.5 $685.5 $752.4

% Growth 10.6% 19.0% 9.3% 9.8% 9.8% 9.8%Cost of Goods Sold 328.4 347.7 423.4 454.3 496.4 542.4 592.7 Gross Profit $67.1 $89.8 $97.3 $114.7 $128.1 $143.0 $159.6

Gross Profit Margin 17.0% 20.5% 18.7% 20.2% 20.5% 20.9% 21.2%

Selling General & Admin Exp. $17.6 $17.8 $18.1 $18.2 $18.3 $18.8 $19.4Depreciation & Amortization 1.2 1.4 1.6 1.8 2.0 2.2 2.4 Other Operating Expenses/(Income) - - - - - - - Total Operating Expenses $18.8 $19.2 $19.7 $20.0 $20.3 $21.0 $21.8

Operating Income $48.3 $70.6 $77.6 $94.7 $107.8 $122.0 $137.9Operating Margin 12.2% 16.1% 14.9% 16.6% 17.3% 17.8% 18.3%

Interest Expense, Net 2.5 2.6 2.6 2.5 3.3 3.3 3.3 Other (Income) / Expenses 1.5 1.5 1.5 1.5 1.5 1.5 1.5 EBT $44.3 $66.5 $73.6 $90.8 $103.0 $117.3 $133.1

Income Taxes (1) 17.7 26.6 29.4 36.3 41.2 46.9 53.2 Net Income Available to Common $26.6 $39.9 $44.1 $54.5 $61.8 $70.4 $79.8

Plus: Taxes $17.7 $26.6 $29.4 $36.3 $41.2 $46.9 $53.2Plus: Interest Expense 2.5 2.6 2.6 2.5 3.3 3.3 3.3Plus: Depreciation & Amortization 1.2 1.4 1.6 1.8 2.0 2.2 2.4Adjusted EBITDA $48.1 $70.5 $77.8 $95.0 $108.4 $122.7 $138.8Adjusted EBITDA Margin 12.2% 16.1% 14.9% 16.7% 17.3% 17.9% 18.4%

Capital Expenditures $3.2 $2.5 $4.1 $3.4 $5.5 $6.4 $7.9

(1) Assuming 40% tax rate.

IT Group Balance SheetFiscal Year Ended December 31,

2011 2012 2013 2014Current Assets

Cash and Equivalents $40.5 $55.1 $83.1 $115.2Accounts Receivable 60.7 75.8 92.5 113.4 Inventory 16.0 16.9 17.2 17.9

Total Current Assets $117.2 $147.8 $192.9 $246.5

Property and Equipment $12.6 $16.9 $22.4 $26.9Land 8.6 8.1 8.4 9.1 Other Long-Term Assets 8.0 11.3 8.9 10.2

Total Assets $146.4 $184.1 $232.6 $292.7

LiabilitiesAccounts Payable $17.8 $14.6 $15.9 $17.7Accrued Exp. 41.5 43.0 46.0 49.5 Current Portion of Long Term Debt 11.6 12.7 12.3 10.3 Other Current Liabilities 4.4 2.6 3.5 5.1

Total Current Liabilities $75.3 $72.9 $77.7 $82.6

Long-Term Debt 20.0 20.2 19.7 20.5 Total Liabilities $95.3 $93.1 $97.4 $103.1

Net Stockholder's Equity $51.1 $91.0 $135.2 $189.6

Total Liabilities And Stockholders' Equity $146.4 $184.1 $232.6 $292.7

SSIT Income StatementFiscal Year Ended December 31,

2011 2012 2013 2014 2015E 2016P 2017P Sales $65.5 $72.4 $78.6 $83.6 $86.9 $91.2 $95.8

% Growth 10.6% 8.5% 6.4% 3.9% 5.0% 5.0%Cost of Goods Sold 55.2 60.7 65.4 70.7 73.7 77.2 80.3 Gross Profit $10.3 $11.7 $13.2 $12.9 $13.1 $14.0 $15.5

Gross Profit Margin 15.7% 16.2% 16.7% 15.5% 15.1% 15.4% 16.2%

Selling General & Admin Exp. $6.2 $7.4 $7.3 $7.7 $7.2 $7.8 $8.5Depreciation & Amortization 0.5 0.6 0.6 0.7 0.7 0.7 0.8 Other Operating Expenses/(Income) - - - - - - - Total Operating Expenses $6.8 $8.0 $7.9 $8.4 $7.9 $8.5 $9.3

Operating Income $3.5 $3.8 $5.2 $4.6 $5.2 $5.5 $6.2Operating Margin 5.4% 5.2% 6.7% 5.5% 6.0% 6.1% 6.5%

Interest Expense, Net 1.2 1.5 1.6 1.5 1.1 1.2 1.1 Other (Income) / Expenses 0.0 (0.1) 0.0 0.0 0.0 0.0 0.0 EBT $2.3 $2.4 $3.7 $3.1 $4.1 $4.3 $5.1

Income Taxes (1) 0.9 1.0 1.5 1.2 1.7 1.7 2.1 Net Income Available to Common $1.4 $1.4 $2.2 $1.8 $2.5 $2.6 $3.1

Plus: Taxes $0.9 $1.0 $1.5 $1.2 $1.7 $1.7 $2.1Plus: Interest Expense 1.2 1.5 1.6 1.5 1.1 1.2 1.1Plus: Depreciation & Amortization 0.5 0.6 0.6 0.7 0.7 0.7 0.8Adjusted EBITDA $4.1 $4.5 $5.9 $5.2 $5.9 $6.3 $7.0Adjusted EBITDA Margin 6.2% 6.1% 7.5% 6.3% 6.8% 6.9% 7.3%

Capital Expenditures $1.5 $1.9 $2.9 $2.5 $2.6 $3.0 $3.7

(1) Assuming 40% tax rate.

SSIT Balance SheetFiscal Year Ended December 31,

2011 2012 2013 2014Current Assets

Cash and Equivalents $5.3 $5.8 $6.4 $6.3Accounts Receivable 6.0 6.6 7.2 7.7 Inventory 13.1 15.2 14.9 15.1

Total Current Assets $24.5 $27.6 $28.5 $29.0

Property and Equipment $8.9 $9.5 $13.3 $16.7Land 3.3 3.4 3.4 3.5 Other Long-Term Assets 4.2 6.7 6.1 4.8

Total Assets $40.9 $47.3 $51.3 $54.0

LiabilitiesAccounts Payable $6.0 $6.4 $6.7 $7.4Accrued Exp. 9.2 10.9 11.0 11.7 Other Current Liabilities 0.4 0.0 0.2 0.6

Total Current Liabilities $15.6 $17.3 $17.9 $19.6

Long-Term Debt 15.2 18.4 19.7 18.8 Total Liabilities $30.8 $35.7 $37.6 $38.4

Net Stockholder's Equity $10.1 $11.5 $13.7 $15.6

Total Liabilities And Stockholders' Equity $40.9 $47.3 $51.3 $54.0

Comparable CapitalizationComparable Company Analysis - Capitalization

($ in millions)Total Market

Ticker Company Debt Capitalization Cash

AOSL Alpha & Omega Semiconductor, Ltd. $0.8 $199.6 $72.9 FCS Fairchild Semiconductor International Inc. 198.0 1,925.3 243.1 IXYS IXYS Corp. 54.0 398.0 116.9 SMCI Super Micro Computer, Inc. 94.8 1,340.6 110.9 SEMI SunEdison Semiconductor Limited 212.5 450.4 90.8

Total Market Ticker Company Debt Capitalization Cash

PRFT Perficient Inc. $61.0 $590.1 $8.7 CBR Ciber, Inc. 30.0 283.6 18.2 ACXM Acxiom Corporation 209.2 1,724.1 180.9 VRTU Virtusa Corporation - 1,704.6 178.5 SAIC Science Applications International Corporation 1,131.0 2,110.9 163.0

Comparable Company MultiplesComparable Company Multiples

(figures in millions except per share amount)

SSIT Comparable Companies Shares LTM LTM LTM LTMCompany Ticker Stock Price Outstanding Debt Cash Sales EBITDA EBIT Earnings

Alpha & Omega Semiconductor, Ltd. AOSL $8.88 22.5 $0.8 $72.9 $321.2 $20.6 ($6.3) ($10.5)

Fairchild Semiconductor International Inc. FCS 16.68 115.4 198.0 242.9 1,389.6 210.9 73.6

(50.7)IXYS Corp. IXYS 12.46 31.9 54.0 116.9 326.6 43.4 28.1 20.7 Super Micro Computer, Inc. SMCI 28.21 47.5 94.8 110.9 2,067.5 145.6 136.6 94.7

SunEdison Semiconductor Limited SEMI 10.75 41.9 212.5 90.8 801.7 79.7

(30.8) (116.1)

IT Group Comparable Companies Shares LTM LTM LTM LTMCompany Ticker Stock Price Outstanding Debt Cash Sales EBITDA EBIT Earnings

Perficient Inc. PRFT $16.72 35.3 $61.0 $8.7 $450.2 $54.4 $35.6 $21.9 Ciber, Inc. CBR 3.57 79.4 30.0 18.2 812.2 25.5 19.7 7.8 Acxiom Corporation ACXM 22.12 77.9 209.2 180.9 1,033.4 157.5 67.7 7.8 Virtusa Corporation VRTU 57.43 29.7 - 82.3 526.9 69.6 56.2 44.5 Science Applications International Corporation SAIC 45.86 46.0 1,131.0 163.0 4,064.0 281.0 246.0 128.0

Comparable PerformanceComparable Company Multiples

($ in millions)

LTM Operating Indications LTM Margins 2-Year Compound Annual Growth RateSSIT Comparable Companies Gross Net CapEx Gross NetCompany Revenue Profit EBITDA EBIT Income CapEx % of Rev. Profit EBITDA EBIT Income Revenues EBITDA EBIT Net Income

Alpha & Omega Semiconductor, Ltd. $321.2 $57.4 $20.6 ($6.3) ($10.5) $25.1 7.8% 17.9% 6.4% -2.0% -3.3% -0.7% -15.3% NM NM

Fairchild Semiconductor International Inc. 1,389.6 456.3 210.9 73.6 (50.7) $64.9 4.7% 32.8% 15.2% 5.3% -3.6% -0.3% 13.2% 63.3% NMIXYS Corp. 326.6 102.4 43.4 28.1 20.7 $6.9 2.1% 31.4% 13.3% 8.6% 6.3% 6.5% 24.6% 45.7% 111.0%Super Micro Computer, Inc. 2,067.5 323.3 145.6 136.6 94.7 $40.0 1.9% 15.6% 7.0% 6.6% 4.6% 31.2% 80.3% 90.8% 83.6%

SunEdison Semiconductor Limited 801.7 85.5 79.7 (30.8) (116.1) $105.9 13.2% 10.7% 9.9% -3.8% -14.5% -7.7% 2.2% NM NM

Low $321.2 $57.4 $20.6 ($30.8) ($116.1) $6.9 1.9% 10.7% 6.4% -3.8% -14.5% -7.7% -15.3% 45.7% 83.6%High 2,067.5 456.3 210.9 136.6 94.7 105.9 13.2% 32.8% 15.2% 8.6% 6.3% 31.2% 80.3% 90.8% 111.0%

Median 801.7 102.4 79.7 28.1 (10.5) 40.0 4.7% 17.9% 9.9% 5.3% -3.3% -0.3% 13.2% 63.3% 97.3%

Mean 981.3 205.0 100.0 40.2 (12.4) 48.6 5.9% 21.7% 10.4% 2.9% -2.1% 5.8% 21.0% 66.6% 97.3%

LTM Operating Indications LTM Margins 2-Year Compound Annual Growth RateIT Group Comparable Companies Gross Net CapEx Gross NetCompany Revenue Profit EBITDA EBIT Income CapEx % of Rev. Profit EBITDA EBIT Income Revenues EBITDA EBIT Net Income

Perficient Inc. $450.2 $151.9 $54.4 $35.6 $21.9 $3.5 0.8% 33.7% 12.1% 7.9% 4.9% 14.5% 12.9% 5.8% 3.8%Ciber, Inc. 812.2 211.7 25.5 19.7 7.8 $6.6 0.8% 26.1% 3.1% 2.4% 1.0% -3.6% 7.3% 11.4% NMAcxiom Corporation 1,033.4 228.6 157.5 67.7 7.8 $60.0 5.8% 22.1% 15.2% 6.5% 0.8% -2.0% -8.7% -18.3% -60.8%Virtusa Corporation 526.9 189.1 69.6 56.2 44.5 $15.6 3.0% 35.9% 13.2% 10.7% 8.5% 20.8% 21.7% 22.8% 18.9%Science Applications International Corporation 4,064.0 372.0 281.0 246.0 128.0 $18.0 0.4% 9.2% 6.9% 6.1% 3.1% -5.4% -1.9% -6.6% -6.4%

Low $450.2 $151.9 $25.5 $19.7 $7.8 $3.5 0.4% 9.2% 3.1% 2.4% 0.8% -5.4% -8.7% -18.3% -60.8%High 4,064.0 372.0 281.0 246.0 128.0 60.0 5.8% 35.9% 15.2% 10.7% 8.5% 20.8% 21.7% 22.8% 18.9% Median 812.2 211.7 69.6 56.2 21.9 15.6 0.8% 26.1% 12.1% 6.5% 3.1% -2.0% 7.3% 5.8% -1.3%Mean 1,377.3 230.7 117.6 85.0 42.0 20.8 2.2% 25.4% 10.1% 6.7% 3.6% 4.9% 6.3% 3.0% -11.1%

Comparable – Balance Sheet Stats

Comparable Company Analysis - Balance Sheet Statistics

($ in millions)

SSIT Comparable Companies Total Net Income Net Income Current Quick Inventory A/R A/P Net WorkingCompany Assets ROA ROE Ratio Ratio Turnover Days Days Capital

Alpha & Omega Semiconductor, Ltd. $308.5 -1.2% -4.0% 2.9 1.8 4.0 41.1 55.4 $44.6

Fairchild Semiconductor International Inc. 1,590.5 2.8% -4.3% 3.3 1.7 3.4 39.3 43.0 288.8

IXYS Corp. 388.0 4.5% 7.6% 3.0 1.9 2.5 45.4 23.0 101.0

Super Micro Computer, Inc. 1,082.0 8.9% 16.7% 2.1 1.0 4.3 43.4 47.6 462.9

SunEdison Semiconductor Limited 1,082.5 -1.6% -17.6% 1.5 0.8 6.1 48.7 57.5 33.6

Max $1,590.5 8.9% 16.7% 3.3 1.9 6.1 48.7 57.5 $462.9

Min 308.5 -1.6% -17.6% 1.5 0.8 2.5 39.3 23.0 33.6

Mean 890.3 2.7% -0.3% 2.6 1.4 4.1 43.6 45.3 186.2

Median 1,082.0 2.8% -4.0% 2.9 1.7 4.0 43.4 47.6 101.0

IT Group Comparable Companies Total Net Income Net Income Current Quick Inventory A/R A/P Net WorkingCompany Assets ROA ROE Ratio Ratio Turnover Days Days Capital

Perficient Inc. $450.8 5.0% 6.9% 3.1 2.9 NA 92.9 16.7 $77.2

Ciber, Inc. 500.4 2.4% 2.6% 2.0 1.8 NA 84.5 14.9 92.0

Acxiom Corporation 1,152.6 3.4% 0.3% 2.0 1.7 NA 51.6 20.6 38.3

Virtusa Corporation 522.7 7.1% 10.7% 4.3 3.9 NA 74.3 10.9 79.2

Science Applications International Corporation 2,158.0 8.6% 34.2% 1.4 1.2 NA 58.4 37.4 183.0

Max $2,158.0 8.6% 34.2% 4.3 3.9 NA 92.9 37.4 $183.0

Min 450.8 2.4% 0.3% 1.4 1.2 NA 51.6 10.9 38.3

Mean 956.9 5.3% 10.9% 2.6 2.3 NA 72.3 20.1 94.0

Median 522.7 5.0% 6.9% 2.0 1.8 NA 74.3 16.7 79.2

Comparable TransactionsComparable Company Analysis - Comparable Transactions

($ in millions)

Announced Target EV / EV /Transaction Date Enterprise Value Revenue EBITDA

Transaction 1 09/22/15 191.2 1.56 x 7.9 x

Transaction 2 08/06/15 1,171.6 1.20 x 7.9 x

Transaction 3 06/05/15 890.6 0.48 x 4.1 x

Transaction 4 04/10/15 674.6 1.30 x 5.7 x

Transaction 5 01/06/15 754.5 1.52 x 6.5 x

Transaction 6 11/24/14 561.2 0.67 x 5.8 x

Transaction 7 10/13/14 79.3 0.78 x 8.6 x

Transaction 8 07/07/14 365.0 2.37 x 10.3 x

Transaction 9 06/30/14 70.6 1.52 x 6.9 x

Transaction 10 04/27/14 93.4 1.50 x 6.8 x

Transaction 11 04/11/14 1,706.3 2.35 x 6.8 x

Transaction 12 03/07/14 62.4 1.32 x 7.3 x

Transaction 13 10/14/13 87.2 0.96x 6.8x

Transaction 14 09/27/13 596.3 1.38x 9.1x

Transaction 15 07/09/13 99.8 1.23x 7.1x

Min $62.4 0.5x 4.1xMax 1,706.3 2.4x 10.3xMedian 278.1 1.3x 6.9xMean 493.6 1.3x 7.1x

Comparable Company Analysis - Comparable Transactions (IT Group)

($ in millions)

Announced Target EV / EV /Transaction Date Enterprise Value Revenue EBITDA

Transaction 1 04/27/15 $4,453.6 3.46 x 17.9 x

Transaction 2 10/05/15 15.0 0.72 x 6.0 x

Transaction 3 12/29/14 55.8 1.65 x 11.0 x

Transaction 4 12/23/13 203.2 0.71 x 7.4 x

Transaction 5 11/05/13 1,964.8 4.03 x 13.9 x

Transaction 6 02/21/12 76.4 0.84 x 7.6 x

Transaction 7 01/27/12 13.4 0.67 x 14.8 x

Transaction 8 12/12/11 100.4 1.84 x 7.5 x

Transaction 9 10/03/11 20.1 0.28 x 6.9 x

Transaction 10 08/16/11 1,299.1 1.82 x 14.9 x

Transaction 11 06/03/11 140.9 1.45 x 13.9 x

Transaction 12 04/01/11 1,781.5 1.02 x 10.9 x

Transaction 13 02/09/11 63.9 0.71 x 15.4 x

Transaction 14 11/04/10 52.5 1.59 x 17.8 x

Transaction 15 11/02/10 93.9 0.49 x 17.5 x

Min $13.4 0.3x 6.0xMax 4,453.6 4.0x 17.9xMedian 93.9 1.0x 13.9xMean 689.0 1.4x 12.2x

WACC Analysis - SSITComparable Company WACC Analysis

(dollars in millions) Debt to Preferred to Equity toPreferred Market Value Total Debt Total Total Total

Debt Stock of Equity Capitalization to Equity Capitalization Capitalization CapitalizationAlpha & Omega Semiconductor, Ltd. $0.8 $0.0 $199.6 $200.4 0.4% 0.4% 0.0% 99.6%Fairchild Semiconductor International Inc.198.0 0.0 1,925.3 2,123.3 10.3% 9.3% 0.0% 90.7%IXYS Corp. 54.0 0.0 398.0 451.9 13.6% 11.9% 0.0% 88.1%Super Micro Computer, Inc. 94.8 0.0 1,340.6 1,435.4 7.1% 6.6% 0.0% 93.4%SunEdison Semiconductor Limited 212.5 0.0 450.4 662.9 47.2% 32.1% 0.0% 67.9%

All Companies IncludedMedian $94.8 $0.0 $450.4 $662.9 10.3% 9.3% 0.0% 90.7%Mean 112.0 0.0 862.8 974.8 15.7% 12.1% 0.0% 87.9%

Best Companies IncludedMedian 126.0 0.0 424.2 557.4 0.1 0.1 0.0 0.9Mean 116.3 0.0 743.3 859.6 0.2 0.1 0.0 0.9

Levered Unlevered Equity Risk Size Risk Cost of Cost of Cost of

Beta Beta Premium (1) Premium (2) Equity Debt Preferred WACCAlpha & Omega Semiconductor, Ltd. 1.45 1.45 6.00% 5.82% 17.1% 4.2% 0.0% 17.1%Fairchild Semiconductor International Inc. 1.67 1.57 6.00% 1.60% 14.2% 4.5% 0.0% 13.1%IXYS Corp. 1.81 1.68 6.00% 2.56% 16.0% 5.5% 0.0% 14.5%Super Micro Computer, Inc. 1.51 1.45 6.00% 1.50% 13.2% 3.9% 0.0% 12.4%SunEdison Semiconductor Limited 1.66 1.30 6.00% 2.56% 15.1% 4.3% 0.0% 11.1%

Median 1.66 1.45 15.1% 4.3% 0.0% 13.1%Mean 1.62 1.49 15.1% 4.5% 0.0% 13.7%


WACC Analysis - ITGroup Comparable Company WACC Analysis

(dollars in millions) Debt to Preferred to Equity toPreferred Market Value Total Debt Total Total Total

Debt Stock of Equity Capitalization to Equity Capitalization Capitalization CapitalizationPerficient Inc. $61.0 $0.0 $590.1 $651.1 10.3% 9.4% 0.0% 90.6%Ciber, Inc. 30.0 0.0 283.6 313.6 10.6% 9.6% 0.0% 90.4%Acxiom Corporation 209.2 0.0 1,724.1 1,933.3 12.1% 10.8% 0.0% 89.2%Virtusa Corporation 0.0 0.0 1,704.6 1,704.6 0.0% 0.0% 0.0% 100.0%Science Applications International Corporation 1,131.0 0.0 2,110.9 3,241.9 53.6% 34.9% 0.0% 65.1%

All Companies IncludedMedian $61.0 $0.0 $1,704.6 $1,704.6 10.6% 9.6% 0.0% 90.4%Mean 286.2 0.0 1,282.7 1,568.9 17.3% 12.9% 0.0% 87.1%

Best Companies IncludedMedian 135.1 0.0 1,157.1 1,292.2 0.1 0.1 0.0 0.9Mean 357.8 0.0 1,177.2 1,535.0 0.2 0.2 0.0 0.8

Levered Unlevered Equity Risk Size Risk Cost of Cost of Cost ofBeta Beta Premium Premium Equity Debt Preferred WACC

Perficient Inc. 0.28 0.26 6.00% 2.56% 6.8% 2.6% 0.0% 6.3%Ciber, Inc. 1.61 1.51 6.00% 5.82% 18.1% 4.5% 0.0% 16.6%Acxiom Corporation 0.68 0.63 6.00% 1.60% 8.3% 5.5% 0.0% 7.7%Virtusa Corporation 1.31 1.31 6.00% 1.60% 12.0% 4.3% 0.0% 12.0%Science Applications International Corporation 0.81 0.61 6.00% 1.60% 9.0% 4.3% 0.0% 6.8%

All Companies IncludedMedian 0.81 0.63 9.0% 4.3% 0.0% 7.7%Mean 0.94 0.87 10.9% 4.2% 0.0% 9.9%


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