Yale Team 2nd Place

Long Recommendation
Allison Transmission Holdings, Inc. (NYSE: ALSN)
Company Overview
The Allison Brand is the Dominant Market Leader
Largest global manufacturer of fullyautomatic transmissions for mediumand heavy-duty commercial vehicles
The industry may have passed a
demand inflection point net sales
are stabilizing
Premier brand: premium price

components for end users
Consistently strong EBITDA margin

and free cash flow generation
Source: Company filings
LTM Net Sales by End Market
Ex-NA OffHighway
5%
Aftermarket &
Other
18%
NA On-Highway
42%
Ex-NA OnHighway
15%
Defense
13%
NA Off-Highway
2%
NA Hybrid
Transit Bus
5%
Investment Rationale
Limited Downside Risk; Demand-Driven Upside Potential
#1
Long-Term
Revenue
Growth
Potential
#2
Margin
Expansion
Opportunities
#3
Returns to
Shareholders
Global market leader 62% global market share of fully-automatic

transmissions
Cyclical recovery in North America construction, private fleet, and municipal
markets, as well as continued investments in oil & gas services industries
Adoption and increased penetration of fully-automatic transmissions in
emerging markets
Historically strong operating margins (~33% adjusted EBITDA margin)

Superior products give ALSN advantages as end users are willing to pay
premium (higher equipment residual values in the used markets)
Capability and commitment to delivering strong operating margins during
periods of slower demand by executing initiatives to align costs
Multi-tier labor agreement allows ALSN to hire lower-cost employees
Strong FCF generation 7.7% FCF yield and cash conversion cycle of ~35 days
Low CapEx requirements allows free cash flow to paydown debt, resulting
in multiple expansion
During 3Q13, ALSN repurchased $100mm of its common stock
ALSN currently pays a quarterly dividend of $0.12 per share increased from
$0.06 per share
Investment Rationale (#1): LT Revenue Growth Potential

Developed Market Recovery Combined with Continued Adoption in
Emerging Markets
Continued cyclical recovery, from 2009 cyclical

low, expected in core North American end
markets (42% of LTM net sales)
Long-term runway for growth:
End users have deferred equipment
purchases
Incremental demand for fuel efficient
driven by regulatory mandates and
increasing fuel prices
Buyers focus on maximizing productivity:
ALSNs transmissions offer lower
maintenance costs and improved safety
Total NA Production in Core Market (000s)
Emerging markets today predominantly utilize

manual transmissions
Low penetration and increasing adoption
outside North America present a significant
growth opportunity for ALSN
The multi-year conversion could result in
potentially doubling the international
markets within the next five years
Penetration of Fully-Automatic Transmissions
Source: Company filings, ACT Research
North America
Ex-North America
5%
26%
74%
vs.
Fully Automatic
Other
95%
Investment Rationale (#2): Margin Expansion Opportunities

Premium Vocational Pricing Model Combined with Cost Controls and
Productivity Improvements
~90% of NA unit volume was

covered by long-term
customer supply agreements
Average annual CapEx
spending of ~$100mm, or
approximately 14% of
adjusted EBITDA, over the last
3 years
Facility investments in
India and Hungary
should generate
manufacturing efficiency
ALSN also acquires
licenses to obtain
technology to
complement its
portfolio of products
and product initiatives
(development
agreement with Torotrak
and Fallbrook)
ALSNs North American Market Share
100% share in wheeled military vehicles

Exclusive transmission provider on two of
the US Armys three tracked platforms
Adjusted EBITDA Margin
Source: Company filings, ACT Research, and Oppenheimer research as of September 4, 2012
Investment Rationale (#3): Returns to Shareholders

Avenues to Create Shareholder Value via Deleveraging, Dividend
Increases, and Share Repurchases
ALSN generates significant

amount of free cash flow
Positioned for long-term
cash earnings growth
Management is committed
to reducing leverage with
the long-term goal of
investment-grade status
Deleveraging could
result in multiple
growth opportunities
Share repurchases
and/or increases in
dividends paid
Theoretically, ALSN could
buy back ~50% of its total
shares with adjusted FCFs
over the next five years (at
todays share price)
Net Debt-to-Adjusted EBITDA
FCF Generation
Valuation
Based on EBITDA Multiple and DCF Analysis
Assumes 0.5x multiple
expansion
2013E Implied Valuation Based on EBITDA Multiple:
2014E Adjusted EBITDA
$680.0
Enterprise Value / Adjusted EBITDA
11.0x
2013E Implied Valuation Based on DCF:

Assumed Terminal Growth Rate
WACC (Discount Rate)
Implied Enterprise Value
$7,480.5
$7,274.6
Less: 2013E Total Debt

Plus: 2013E Cash and Cash Equivalents
Plus: Present Value of NOLs (US Tax Shield)
Implied Equity Value
(2,731.2)
197.7
825.0
$5,772.0

Plus: Value of NOLs
(2,731.2)
197.7
825.0
$5,566.1
3.0%
10.5%
2013E Diluted Shares Outstanding

Implied Share Price
188.6
$30.60

Implied Share Price
188.6
$29.51
Price Appreciation
Dividend Yield
Total Returns to Shareholders
27.1%
2.0%
29.1%
Price Appreciation
Dividend Yield
22.6%
2.0%
24.6%
Please refer to the

Issues for
Consideration slide
Implied Share Price
$30.06
Price Appreciation
Dividend Yield
24.9%
2.0%
26.9%
Weighting two
methodologies equally
Sensitivity Analysis
Sensitivity on EBITDA Multiple and Gross Margin
Sensitivity on DCF Analysis
38.0%
35.5%
33.0%
30.5%
Gross Margin
Metrics implied by
the current stock
price of $24.07
EBITDA Multiple
28.0%
12.0x
11.5x
11.0x
10.5x
10.0x
50.0%
40.77
38.70
36.62
34.54
32.47
47.5%
37.49
35.55
33.61
31.67
29.73
45.0%
34.21
32.41
30.60
28.80
27.00
42.5%
30.93
29.26
27.60
25.93
24.26
40.0%
27.65
26.12
24.59
23.06
21.53
Sensitivity on Sales Growth and Gross Margin

2014E Net Sales Growth
3.50%
3.25%
3.00%
2.75%
2.50%
9.5%
38.49
36.92
35.47
34.13
32.88
10.0%
34.82
33.50
32.28
31.14
30.07
10.5%
31.68
30.56
29.51
28.53
27.61
11.0%
28.96
28.00
27.09
26.24
25.44
11.5%
26.59
25.75
24.96
24.22
23.52
Gross Margin
WACC
Terminal Growth Rate

8.0%
7.5%
7.0%
6.5%
6.0%
50.0%
36.93
36.77
36.62
36.46
36.31
47.5%
33.89
33.75
33.61
33.47
33.33
45.0%
30.86
30.73
30.60
30.48
30.35
42.5%
27.82
27.71
27.60
27.48
27.37
40.0%
24.79
24.69
24.59
24.49
24.39
Issues for Consideration
Ownership
NOLs
Government
Entities
The Carlyle Group and Onex Corporation each hold a ~34% equity stake in
ALSN (lock-up expired in September 2012)
Large block trades could create downward pressure on ALSN stock price
However, increased liquidity in ALSN stock could expand investor base
Acquisition by the Carlyle Group and Onex Corporation from General Motors
in August 2007 created tax shield due to a step-up in the tax basis of ALSN
assets
ALSN estimates as of 4Q12 that the present value of tax savings from both
amortization of intangibles and federal NOLs is between $825 million and
$1,020 million
Area for further due diligence
Sales of hybrid-propulsion systems in transit buses (5% of LTM net sales) are
negatively impacted as government entities do not elect to subsidize
purchases by end users
Military spending cuts by government entities (13% of LTM net sales) could
reduce ALSNs future earnings potential
Appendix
Allison Transmission Holdings, Inc. (NYSE: ALSN)
Historical Price
Source: Bloomberg
Ownership Summary
Source: Bloomberg
Management
Lawrence E. Dewey
Chairman, President,
and CEO
David S. Graziosi
EVP, CFO, and
Treasurer
David L. Parish
SVP, Operations and
Purchasing
James L. Wanaselja
VP, NA Marketing,
Sales, and Service
Source: Company website
Joined ALSN in 1989

Promoted to the current position since the sale of ALSN to Carlyle and Onex in August
2007
Currently serves on the Board of Directors of the Indiana Chamber of Commerce, the
Indiana Sports Corporation, and the Greater Indianapolis Progress Committee
Joined ALSN in 2007
Between 2006 and 2007, served as EVP and CFO of Covalence Specialty Materials
Corporation
From 2005 to 2006, served as VP of Finance Precursors and Epoxy Resins at Hexion
Specialty Chemicals, Inc.
From 2004 to 2005, served as EVP and CFO at Resolution Performance Products LLC
Joined ALSN in 1977

Responsible for global plant operations, service parts operations, supply chain facilities,
environmental, and manufacturing engineering and has facilitated the growth of ALSNs
global footprint through the construction of new facilities in India and Hungary in August
2012
Joined ALSN in 1995

Prior to joining ALSN, worked for Voith Transmission, Inc. from 1982 through 1995
Prior to joining Voith Transmission, Inc., began career with General Electric in 1974
Comparable Company & WACC Analyses
Market
Cap
Company
Ticker
Price
Eaton
PACCAR
Cummins
Navistar International
ETN
PCAR
CMI
NAV
$70.60 $33,500
56.84 20,127
130.70 24,488
39.82
3,202
Truck-Oriented
Manufacturers
Mean
Median
Allison Transmission
ALSN
Assumptions:
Tax Rate
Risk Free Rate
Equity Risk Premium
Market Cap. Size Premium
$24.07
38.5%
2.75%
6.62%
0.94%
$4,547
Enterprise % 52-Wk.
Debt/
EBITDA/ EV/EBITDA
Value
High
Cap EBITDA Interest 2013E 2014E
$41,899
26,865
23,988
6,877
$7,126
Eaton
PACCAR
Cummins
Pre-Tax Cost of Debt
After-Tax Cost of Debt
Debt/
Capital
17.5%
22.5%
27.5%
32.5%
37.5%
42.5%
47.5%
52.5%
57.5%
Debt/
Mkt Equity
21.2%
29.0%
37.9%
48.1%
60.0%
73.9%
90.5%
110.5%
135.3%
Mean
Unlevered
Beta
1.24
1.24
1.24
1.24
1.24
1.24
1.24
1.24
1.24
Levered
Beta
1.41
1.47
1.53
1.61
1.70
1.81
1.94
2.09
2.28
97%
95%
94%
99%
38%
60%
19%
nm
3.3x
4.1
0.9
nm
9.2x
nm
nm
-2.4x
12.6x
14.5
9.8
nm
10.9x
13.8
8.3
9.1
17.1x
17.3
17.3
nm
14.4x
15.7
14.0
43.4
10%
10%
10%
5%
1.7x
1.7
1.7
na
2.3%
1.4%
1.6%
0.0%
96%
96%
39%
38%
2.8x
3.3
3.4x
3.4
12.3x
12.6
10.5x
10.0
17.2x
17.3
21.9x
15.1
9%
10%
1.7x
1.7
1.3%
1.5%
88%
38%
4.2x
3.8x
11.2x
10.5x
12.3x
10.4x
9%
1.5x
2.0%
Levered
Beta
1.46
1.37
1.66
Company
Cost of
Equity
13.0%
13.4%
13.8%
14.4%
15.0%
15.7%
16.5%
17.5%
18.8%
P/E
LT EPS
Div.
2013E 2014E Growth PEG Yield
4.00%
2.46%
11.15%
10.93%
10.71%
10.49%
10.27%
10.05%
9.83%
9.61%
9.39%
Source: Capital IQ (as of November 8, 2013), Ibbotson, Company filings
Total
Debt
$9,693
9,570
1,793
4.50%
2.77%
Market
Debt /
Equity
Mkt. Equity
$33,500
28.9%
20,127
47.5%
24,488
7.3%
5.00%
3.08%
5.50%
3.38%
Unlevered
Beta
1.13
1.03
1.57
6.00%
3.69%
WEIGHTED AVERAGE COST OF CAPITAL

11.21%
11.26%
11.31%
11.37%
11.00%
11.07%
11.14%
11.21%
10.80%
10.88%
10.97%
11.05%
10.59%
10.69%
10.79%
10.89%
10.39%
10.50%
10.62%
10.73%
10.18%
10.31%
10.44%
10.57%
9.98%
10.12%
10.27%
10.42%
9.77%
9.93%
10.10%
10.26%
9.57%
9.75%
9.92%
10.10%
Financial Projections: Income Statement
($mm, except as noted)

Net Sales
Cost of Sales
Gross Profit
Selling, General and Administrative Expenses
Engineering Research and Development
Operating Income
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
$1,926.3 $2,162.8 $2,141.8 $1,927.5 $2,062.4 $2,240.1 $2,413.7 $2,577.4 $2,755.6
1,098.1 1,208.3 1,187.5 1,077.2 1,134.3 1,226.5 1,315.5 1,398.3 1,488.0
828.2
954.5
954.3
850.3
928.1 1,013.6 1,098.2 1,179.2 1,267.6
CAGR
'13E '18E
7.4%
6.7%
8.3%
384.9
101.5
341.8
409.1
116.4
429.0
419.0
115.1
420.2
347.0
96.4
407.0
366.1
98.0
464.0
392.0
100.8
520.8
416.4
102.6
579.3
438.2
103.1
637.9
461.6
103.3
702.7
5.9%
1.4%
11.5%
3.5
(281.0)
19.0
83.3
0.9
(218.2)
(56.9)
(4.2)
150.6
0.9
(152.1)
(52.8)
216.2
0.8
(140.1)
(9.6)
258.1
0.8
(112.1)
352.8
0.8
(111.7)
410.0
0.8
(86.8)
493.3
0.8
(100.4)
538.4
0.8
(106.8)
596.6
0.0%
(5.3%)
N/A
(100.0%)
18.2%
Income Tax Benefit (Expense)

Net Income
(53.7)
$29.6
(47.6)
$103.0
298.0
$514.2
(101.5)
$156.6
(135.8)
$217.0
(157.8)
$252.1
(189.9)
$303.4
(207.3)
$331.1
(229.7)
$366.9
17.8%
18.6%
Diluted EPS Attributable to Common Stockholders
$0.16
$0.56
$2.76
$0.83
$1.15
$1.34
$1.61
$1.76
$1.95
18.6%
Dividends per Common Share
$0.00
$0.00
$0.18
$0.42
$0.48
$0.53
$0.55
$0.58
$0.61
7.8%
Weighted Average Shares of Common Stock Outstanding

Dilutive Effect Stock-Based Awards
Diluted Weighted Average Shares of Common Stock Outstanding
181.4
181.4
181.4
1.9
183.3
182.0
4.2
186.2
185.0
3.6
188.6
184.4
3.6
188.0
184.4
3.6
188.0
184.4
3.6
188.0
184.4
3.6
188.0
184.4
3.6
188.0
(0.1%)
0.0%
(0.1%)
Interest Income
Interest Expense
Premiums and Expenses on Tender Offer for Long-Term Debt
Other (Expense) Income, Net
Income before Income Taxes
Financial Projections: Income Statement (contd)
CAGR
'13E '18E

Adjusted Metrics:
Net Income
Interest Expense, Net
Income Tax (Benefit) Expense
Depreciation of Property, Plant and Equipment
Amortization of Intangible Assets
Others
Adjusted EBITDA
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
$29.6
277.5
53.7
99.6
154.2
2.4
$617.0
$103.0
217.3
47.6
103.8
151.9
56.9
31.4
$711.9
$514.2
151.2
(298.0)
102.5
150.0
85.2
$705.1
$156.6
139.3
101.5
110.1
105.4
22.1
$635.0
$217.0
111.3
135.8
117.2
98.8
$680.0
$252.1
110.9
157.8
124.3
97.1
$742.2
$303.4
86.0
189.9
131.5
92.4
$803.1
$331.1
99.6
207.3
138.6
89.7
$866.2
$366.9
106.0
229.7
145.7
86.2
$934.5
(5.3%)
17.8%
5.8%
(3.9%)
N/A
(100.0%)
8.0%
Net Cash Provided by Operating Activities

Additions of Long-Lived Assets
Fee to Terminate Services Agreement with the Sponsors
Technology-Related License Expenses
Adjusted Free Cash Flow
$388.9
(73.8)
$315.1
$469.2
(96.9)
$372.3
$497.5
(123.9)
16.0
12.0
$401.6
$416.3
(72.3)
6.0
$350.0
$462.7
(75.0)
6.0
$393.7
$401.6
(75.0)
6.0
$332.6
$550.9
(75.0)
6.0
$481.9
$537.3
(75.0)
6.0
$468.3
$625.5
(75.0)
6.0
$556.5
8.5%
0.7%
N/A
0.0%
9.7%
Key Metrics:
Gross Profit
SG&A as % of Net Sales
R&D as % of Net Sales
Depreciation as % of Total PP&E
43.0%
20.0%
5.3%
44.1%
18.9%
5.4%
10.2%
44.6%
19.6%
5.4%
9.2%
44.1%
18.0%
5.0%
9.5%
45.0%
17.8%
4.8%
9.5%
45.3%
17.5%
4.5%
9.5%
45.5%
17.3%
4.3%
9.5%
45.8%
17.0%
4.0%
9.5%
46.0%
16.8%
3.8%
9.5%

Net Debt to Adjusted EBITDA
32.0%
32.9%
4.3x
32.9%
3.9x
32.9%
4.0x
33.0%
3.3x
33.1%
2.7x
33.3%
2.0x
33.6%
1.4x
33.9%
0.8x
Effective Tax Rate
64.5%
31.6%
(137.8%)
39.3%
38.5%
38.5%
38.5%
38.5%
38.5%
Financial Projections: Net Sales

Net Sales by End Market:
North America On-Highway
North America Hybrid Propulsion Systems for Transit Bus
North America Off-Highway
Military
Outside North America On-Highway
Outside North America Off-Highway
Service, Parts, Support Equipment & Other
Total Net Sales
Military
Total Net Sales
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
$727
134
280
304
277
87
354
$2,163
$813
115
157
305
290
114
348
$2,142
$848
96
39
212
289
96
366
$1,928
$933
82
52
159
332
101
403
$2,062
$1,003
70
62
143
382
116
463
$2,240
$1,078
63
69
143
421
131
510
$2,414
$1,132
58
74
143
463
147
561
$2,577
$1,189
55
78
143
509
166
617
$2,756
34%
6%
13%
14%
13%
4%
16%
100%
38%
5%
7%
14%
14%
5%
16%
100%
44%
5%
2%
11%
15%
5%
19%
100%
45%
4%
3%
8%
16%
5%
20%
100%
45%
3%
3%
6%
17%
5%
21%
100%
45%
3%
3%
6%
17%
5%
21%
100%
44%
2%
3%
6%
18%
6%
22%
100%
43%
2%
3%
5%
18%
6%
22%
100%
CAGR
'13E '18E
7.0%
(10.6%)
15.0%
(7.6%)
12.0%
11.4%
11.0%
7.4%
Financial Projections: Balance Sheet

Assets
Current Assets
Cash and Cash Equivalents
Accounts Receivable
Inventories
Deferred Income Taxes, Net
Other Current Assets
Total Current Assets
2011A
$314.0
194.7
155.9
3.4
34.7
702.7
Total Property, Plant and Equipment

Accumulated Depreciation and Amortization
Property, Plant and Equipment, Net
Total Intangible Assets
Accumulated Amortization
Intangible Assets, Net
Goodwill
Other Non-Current Assets
Total Assets
2012A
2015E
2016E
2017E
2018E
$349.1
193.4
182.7
54.8
31.9
811.8
$622.2
258.6
215.7
57.5
33.5
1,187.5
$983.6
224.6
208.2
59.5
34.7
1,510.6
CAGR
'13E '18E
2013E
2014E
$80.2
165.0
157.1
55.3
32.7
490.3
$197.7
198.7
165.9
56.9
33.2
652.4
$396.2
162.9
157.3
58.3
34.0
808.8
$62.3
229.9
192.1
53.6
31.3
569.2
1,015.6
(433.8)
581.8
1,111.7
(515.5)
596.2
1,158.7
(625.6)
533.1
1,233.7
(742.8)
490.9
1,308.7
(867.1)
441.6
1,383.7 1,458.7 1,533.7

(998.6) (1,137.1) (1,282.8)
385.1
321.6
250.9
5.8%
15.4%
(14.0%)
2,551.0
(684.9)
1,866.1
2,551.0
(834.9)
1,716.1
2,576.3 2,576.3 2,576.3 2,576.3 2,576.3 2,576.3

(940.3) (1,039.1) (1,136.2) (1,228.6) (1,318.3) (1,404.5)
1,636.0 1,537.2 1,440.1 1,347.7 1,258.0 1,171.8
0.0%
8.4%
(6.5%)
1,941.0 1,941.0 1,941.0 1,941.0 1,941.0 1,941.0 1,941.0 1,941.0

0.8
32.3
1.1
100.2
90.1
73.0
82.6
76.0
77.6
81.4
84.3
$5,192.6 $4,866.0 $4,836.6 $4,860.5 $4,467.9 $4,563.3 $4,789.5 $4,958.6
0.0%
(100.0%)
2.9%
0.5%
37.8%
2.5%
4.7%
0.9%
0.9%
18.3%
Financial Projections: Balance Sheet (contd)
CAGR
'13E '18E

Liabilities
Current Liabilities
Accounts Payable
Product Warranty Liability
Current Portion of Long-Term Debt
Notes Payable
Deferred Revenue
Other Current Liabilities
Total Current Liabilities
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
$162.6
33.9
31.0
2.6
19.9
199.9
449.9
$133.1
36.2
19.5
21.6
167.4
377.8
$163.9
38.6
11.4
21.6
162.8
398.3
$131.3
38.9
21.6
165.3
357.1
$187.9
35.7
21.6
151.9
397.1
$154.5
36.5
21.6
155.2
367.8
$209.4
38.3
21.6
162.8
432.2
$177.9
39.7
21.6
168.6
407.7
1.6%
0.5%
(100.0%)
N/A
0.0%
0.7%
0.5%

Deferred Revenue
Long-Term Debt
Deferred Income Taxes
Other Non-Current Liabilities
Total Liabilities
81.5
40.8
3,345.0
214.2
239.5
4,370.9
73.5
42.6
2,801.3
0.1
213.8
3,509.1
53.1
41.7
2,719.8
37.0
193.5
3,443.4
60.8
43.7
2,620.0
38.9
204.1
3,324.6
55.8
40.2
2,037.5
35.7
187.7
2,754.1
57.0
41.1
1,926.3
36.5
191.7
2,620.3
59.9
43.1
1,815.1
38.3
201.2
2,589.7
62.0
44.6
1,703.9
39.7
208.3
2,466.2
3.1%
1.4%
(8.9%)
1.4%
1.5%
(6.5%)
Stockholders' Equity
Common Stock
Non-Voting Common Stock
Treasury Stock
Paid In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss, Net of Tax
Total Stockholders' Equity
1.8
(0.2)
1,560.8
(683.7)
(57.0)
821.7
1.8
(0.2)
1,601.5
(202.3)
(43.9)
1,356.9
1.8
(99.7)
1,645.2
(119.3)
(34.8)
1,393.2
1.8
(99.7)
1,659.5
9.1
(34.8)
1,535.9
1.8
(99.7)
1,673.8
172.8
(34.8)
1,713.8
1.8
(99.7)
1,688.0
387.6
(34.8)
1,942.9
1.8
(99.7)
1,702.3
630.2
(34.8)
2,199.8
1.8
(99.7)
1,716.6
908.6
(34.8)
2,492.5
0.0%
N/A
0.0%
0.9%
N/A
0.0%
12.3%
$5,192.6 $4,866.0 $4,836.6 $4,860.5 $4,467.9 $4,563.3 $4,789.5 $4,958.6
0.5%
Total Liabilities & Stockholders' Equity
Financial Projections: Cash Flow Statement

Cash Flows from Operating Activities:
Net Income
Add (Deduct) Items:
Unrealized (Gain) Loss on Derivatives
Amortization of Deferred Financing Costs
Impairment Loss on Investments in Technology-Related Initiatives
Stock-Based Compensation
Loss (Gain) on Repurchases and Redemptions of Long-Term Debt
Loss on Re-Measurement of Employee Benefit Plans
Excess Tax Benefit from Stock-Based Compensation
Other
Changes in Assets and Liabilities:
Accounts Receivable
Inventories
Accounts Payable
Other Assets and Liabilities
2010A
CAGR
'13E '18E
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
$29.6
$103.0
$514.2
$156.6
$217.0
$252.1
$303.4
$331.1
$366.9
154.2
99.6
51.5
28.8
11.6
8.5
(3.3)
2.1
151.9
103.8
56.9
39.8
13.9
12.1
8.0
16.0
(1.4)
150.0
102.5
(303.8)
(26.2)
14.5
14.4
6.4
22.1
2.3
(5.3)
(0.2)
105.4
110.1
68.1
(2.7)
11.2
2.5
14.3
0.7
(9.3)
(4.2)
98.8
117.2
3.0
14.3
(10.6)
0.1
97.1
124.3
(3.1)
14.3
(10.6)
(1.8)
92.4
131.5
0.8
14.3
(10.6)
0.4
89.7
138.6
1.8
14.3
(10.6)
1.0
86.2
145.7
1.4
14.3
(10.6)
0.8
(3.9%)
5.8%
N/A
(54.3%)
(100.0%)
(100.0%)
(100.0%)
0.0%
(100.0%)
N/A
2.6%
N/A
23.7
(11.8)
3.2
(8.8)
388.9
(25.0)
(11.0)
24.9
(23.7)
469.2
29.9
(1.8)
(29.4)
7.9
497.5
(33.7)
(8.8)
30.8
(24.6)
416.3
35.8
8.6
(32.6)
11.1
462.7
(66.9)
(34.8)
56.5
(25.5)
401.6
36.5
9.5
(33.4)
6.2
550.9
(65.2)
(33.1)
54.9
14.7
537.3
34.0
7.5
(31.6)
11.0
625.5
N/A
N/A
N/A
N/A
8.5%
18.6%
Financial Projections: Cash Flow Statement (contd)

Cash Flows from Investing Activities:
Investments in Technology-Related Initiatives
Collateral for Interest Rate Derivatives
Proceeds from Disposal of Assets
Net Cash Used for Investing Activities
2010A
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
(73.8)
(21.8)
0.3
(95.3)
(96.9)
38.6
2.4
(55.9)
(123.9)
(14.4)
(1.0)
0.6
(138.7)
(72.3)
(6.3)
1.7
0.5
(76.3)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
0.7%
(100.0%)
(100.0%)
(100.0%)
(0.4%)
Cash Flows from Financing Activities:

Issuance of Long-Term Debt
Debt Issuance Costs
Debt Financing Fees
Repurchases and Redemptions of Long-Term Debt
Repurchase of Common Stock
Payments on Long-Term Debt
Dividend Payments
Issuance of Common Stock
Payments on Notes Payable
Net Cash Used for Financing Activities
(91.9)
(106.0)
(197.9)
500.0
(15.0)
(764.4)
(90.5)
(369.9)
(20.2)
(326.9)
(245.4)
(32.8)
29.0
(2.5)
5.3
(593.5)
(2.6)
(99.5)
(89.6)
(73.6)
33.5
9.3
(222.5)
(111.2)
(88.5)
10.6
(189.2)
(582.5)
(88.5)
10.6
(660.5)
(111.2)
(88.5)
10.6
(189.2)
(111.2)
(88.5)
10.6
(189.2)
(111.2)
(88.5)
10.6
(189.2)
N/A
N/A
(100.0%)
N/A
(100.0%)
4.4%
3.8%
(100.0%)
N/A
2.6%
(3.2%)
Effect of Exchange Rate Changes on Cash

Net (Decrease) Increase in Cash and Cash Equivalents
3.4
99.1
18.4
61.8
0.9
(233.8)
117.5
198.5
(333.8)
286.8
273.1
361.4
N/A
25.2%
153.1
252.2
252.2
314.0
314.0
80.2
80.2
197.7
197.7
396.2
396.2
62.3
62.3
349.1
349.1
622.2
622.2
983.6
50.6%
37.8%
Cash and Cash Equivalents at Beginning of Period

Cash and Cash Equivalents at End of Period
Allison Transmission Holdings, Inc.

Valuation Summary
Current Capitalization Summary:
Stock Price as of November 8, 2013
Current Valuation Metrics:

Enterprise Value / 2014E Adjusted EBITDA
$680.0
10.5x
Total Debt to Total Market Capitalization
37.5%
Last Quarter Annualized Dividends per Share

Implied Dividend Yield
$0.48
1.99%

$680.0
Enterprise Value / Adjusted EBITDA
11.0x

3.0%
10.5%
$7,480.5
$7,274.6

Plus: Present Value of NOLs (US Tax Shield)
(2,731.2)
197.7
825.0
$5,772.0

Plus: Value of NOLs
(2,731.2)
197.7
825.0
$5,566.1
$24.07
Common Stock Outstanding

Non-Voting Common Stock Outstanding
Dilution from Options Outstanding
Diluted Shares Outstanding
182.4
0.0
6.5
188.9
Equity Market Capitalization
$4,546.7
Plus: Current Portion of Long-Term Debt

Plus: Long-Term Debt
Total Market Capitalization
11.4
2,719.8
$7,277.9
Less: Cash and Cash Equivalents

Enterprise Value
(152.3)
$7,125.6

Implied Share Price
188.6
$30.60

Implied Share Price
188.6
$29.51
Price Appreciation
Dividends Yield
27.1%
2.0%
29.1%
Price Appreciation
Dividends Yield
22.6%
2.0%
24.6%
Implied Share Price
$30.06
Price Appreciation
Dividends Yield
24.9%
2.0%
26.9%

Discounted Cash Flow Analysis
Operating Income (EBIT)
Income Tax Expense
Effective Tax Rate
Change in Net Working Capital
Free Cash Flow from Continuing Operations
(1)
Terminal Value
Total Free Cash Flow
2013E
$407.0
2015E
$520.8
2016E
$579.3
2017E
$637.9
2018E
$702.7
(160.0)
39.3%
(178.7)
38.5%
(200.5)
38.5%
(223.0)
38.5%
(245.6)
38.5%
(270.5)
38.5%
110.1
105.4
(72.3)
(36.3)
117.2
98.8
(75.0)
22.9
124.3
97.1
(75.0)
(70.7)
131.5
92.4
(75.0)
18.8
138.6
89.7
(75.0)
(28.6)
145.7
86.2
(75.0)
20.9
$353.8
Discount Period
Discount Rate
Discount Factor
Discounted Free Cash Flow
Sum of Discounted FCFs (Implied Enterprise Value)
$7,274.6

Plus: Value of NOLs (US Tax Shield)
(2,731.2)
197.7
825.0
$5,566.1

Implied Share Price
2014E
$464.0
$449.3
$396.0
$523.9
$517.0
$449.3
$396.0
$523.9
$517.0
$609.9
8,376.0
$8,985.9
0.5
10.5%
0.951
1.5
10.5%
0.861
2.5
10.5%
0.779
3.5
10.5%
0.705
4.5
10.5%
0.638
$427.4
$340.9
$408.2
$364.5
$5,733.6
188.6
$29.51
(1) Based on assumed terminal growth rate of 3.0% and assumed WACC of 10.5%.

Income Statement
Net Sales
Cost of Sales
Gross Profit
CAGR
'13E '18E
7.4%
6.7%
8.3%
2010A
$1,926.3
1,098.1
828.2
2011A
$2,162.8
1,208.3
954.5
2012A
$2,141.8
1,187.5
954.3
2013E
$1,927.5
1,077.2
850.3
2014E
$2,062.4
1,134.3
928.1
2015E
$2,240.1
1,226.5
1,013.6
2016E
$2,413.7
1,315.5
1,098.2
2017E
$2,577.4
1,398.3
1,179.2
2018E
$2,755.6
1,488.0
1,267.6

Engineering Research and Development
Operating Income
384.9
101.5
341.8
409.1
116.4
429.0
419.0
115.1
420.2
347.0
96.4
407.0
366.1
98.0
464.0
392.0
100.8
520.8
416.4
102.6
579.3
438.2
103.1
637.9
461.6
103.3
702.7
5.9%
1.4%
11.5%
Interest Income
Interest Expense
3.5
(281.0)
19.0
83.3
0.9
(218.2)
(56.9)
(4.2)
150.6
0.9
(152.1)
(52.8)
216.2
0.8
(140.1)
(9.6)
258.1
0.8
(112.1)
352.8
0.8
(111.7)
410.0
0.8
(86.8)
493.3
0.8
(100.4)
538.4
0.8
(106.8)
596.6
0.0%
(5.3%)
N/A
(100.0%)
18.2%

Net Income
(53.7)
$29.6
(47.6)
$103.0
298.0
$514.2
(101.5)
$156.6
(135.8)
$217.0
(157.8)
$252.1
(189.9)
$303.4
(207.3)
$331.1
(229.7)
$366.9
17.8%
18.6%
$0.16
$0.56
$2.76
$0.83
$1.15
$1.34
$1.61
$1.76
$1.95
18.6%
Dividends per Common Share
$0.00
$0.00
$0.18
$0.42
$0.48
$0.53
$0.55
$0.58
$0.61
7.8%
Weighted Average Shares of Common Stock Outstanding

Dilutive Effect Stock-Based Awards
Diluted Weighted Average Shares of Common Stock Outstanding
181.4
181.4
181.4
1.9
183.3
182.0
4.2
186.2
185.0
3.6
188.6
184.4
3.6
188.0
184.4
3.6
188.0
184.4
3.6
188.0
184.4
3.6
188.0
184.4
3.6
188.0
(0.1%)
0.0%
(0.1%)
Adjusted Metrics:
Net Income
Income Tax (Benefit) Expense
Others
Adjusted EBITDA
$29.6
277.5
53.7
99.6
154.2
2.4
$617.0
$103.0
217.3
47.6
103.8
151.9
56.9
31.4
$711.9
$514.2
151.2
(298.0)
102.5
150.0
85.2
$705.1
$156.6
139.3
101.5
110.1
105.4
22.1
$635.0
$217.0
111.3
135.8
117.2
98.8
$680.0
$252.1
110.9
157.8
124.3
97.1
$742.2
$303.4
86.0
189.9
131.5
92.4
$803.1
$331.1
99.6
207.3
138.6
89.7
$866.2
$366.9
106.0
229.7
145.7
86.2
$934.5
(5.3%)
17.8%
5.8%
(3.9%)
N/A
(100.0%)
8.0%

Fee to Terminate Services Agreement with the Sponsors
Technology-Related License Expenses
Adjusted Free Cash Flow
$388.9
(73.8)
$315.1
$469.2
(96.9)
$372.3
$497.5
(123.9)
16.0
12.0
$401.6
$416.3
(72.3)
6.0
$350.0
$462.7
(75.0)
6.0
$393.7
$401.6
(75.0)
6.0
$332.6
$550.9
(75.0)
6.0
$481.9
$537.3
(75.0)
6.0
$468.3
$625.5
(75.0)
6.0
$556.5
8.5%
0.7%
N/A
0.0%
9.7%
43.0%
20.0%
5.3%
44.1%
18.9%
5.4%
10.2%
44.6%
19.6%
5.4%
9.2%
44.1%
18.0%
5.0%
9.5%
45.0%
17.8%
4.8%
9.5%
45.3%
17.5%
4.5%
9.5%
45.5%
17.3%
4.3%
9.5%
45.8%
17.0%
4.0%
9.5%
46.0%
16.8%
3.8%
9.5%

Net Debt to Adjusted EBITDA
32.0%
32.9%
4.3x
32.9%
3.9x
32.9%
4.0x
33.0%
3.3x
33.1%
2.7x
33.3%
2.0x
33.6%
1.4x
33.9%
0.8x
Effective Tax Rate
64.5%
31.6%
(137.8%)
39.3%
38.5%
38.5%
38.5%
38.5%
38.5%
Key Metrics:
Gross Profit
SG&A as % of Net Sales
R&D as % of Net Sales
Depreciation as % of Total PP&E

Balance Sheet
Assets
Current Assets
Accounts Receivable
Inventories
Other Current Assets
2011A
$314.0
194.7
155.9
3.4
34.7
702.7

Goodwill
Total Assets
2012A
2013E
2014E
$80.2
165.0
157.1
55.3
32.7
490.3
$197.7
198.7
165.9
56.9
33.2
652.4
$396.2
162.9
157.3
58.3
34.0
808.8
1,015.6
(433.8)
581.8
1,111.7
(515.5)
596.2
1,158.7
(625.6)
533.1
2,551.0
(684.9)
1,866.1
2,551.0
(834.9)
1,716.1
2,576.3
(940.3)
1,636.0
2015E
CAGR
'13E '18E
2016E
2017E
2018E
$62.3
229.9
192.1
53.6
31.3
569.2
$349.1
193.4
182.7
54.8
31.9
811.8
$622.2
258.6
215.7
57.5
33.5
1,187.5
$983.6
224.6
208.2
59.5
34.7
1,510.6
37.8%
2.5%
4.7%
0.9%
0.9%
18.3%
1,233.7
(742.8)
490.9
1,308.7
(867.1)
441.6
1,383.7
(998.6)
385.1
1,458.7
(1,137.1)
321.6
1,533.7
(1,282.8)
250.9
5.8%
15.4%
(14.0%)
2,576.3
(1,039.1)
1,537.2
2,576.3
(1,136.2)
1,440.1
2,576.3
(1,228.6)
1,347.7
2,576.3
(1,318.3)
1,258.0
2,576.3
(1,404.5)
1,171.8
0.0%
8.4%
(6.5%)
1,941.0
0.8
100.2
$5,192.6
1,941.0
32.3
90.1
$4,866.0
1,941.0
1.1
73.0
$4,836.6
1,941.0
82.6
$4,860.5
1,941.0
76.0
$4,467.9
1,941.0
77.6
$4,563.3
1,941.0
81.4
$4,789.5
1,941.0
84.3
$4,958.6
0.0%
(100.0%)
2.9%
0.5%
Liabilities
Current Liabilities
Accounts Payable
Notes Payable
Deferred Revenue
$162.6
33.9
31.0
2.6
19.9
199.9
449.9
$133.1
36.2
19.5
21.6
167.4
377.8
$163.9
38.6
11.4
21.6
162.8
398.3
$131.3
38.9
21.6
165.3
357.1
$187.9
35.7
21.6
151.9
397.1
$154.5
36.5
21.6
155.2
367.8
$209.4
38.3
21.6
162.8
432.2
$177.9
39.7
21.6
168.6
407.7
1.6%
0.5%
(100.0%)
N/A
0.0%
0.7%
0.5%

Deferred Revenue
Long-Term Debt
Total Liabilities
81.5
40.8
3,345.0
214.2
239.5
4,370.9
73.5
42.6
2,801.3
0.1
213.8
3,509.1
53.1
41.7
2,719.8
37.0
193.5
3,443.4
60.8
43.7
2,620.0
38.9
204.1
3,324.6
55.8
40.2
2,037.5
35.7
187.7
2,754.1
57.0
41.1
1,926.3
36.5
191.7
2,620.3
59.9
43.1
1,815.1
38.3
201.2
2,589.7
62.0
44.6
1,703.9
39.7
208.3
2,466.2
3.1%
1.4%
(8.9%)
1.4%
1.5%
(6.5%)
Common Stock
Non-Voting Common Stock
Treasury Stock
Paid In Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss, Net of Tax
1.8
(0.2)
1,560.8
(683.7)
(57.0)
821.7
1.8
(0.2)
1,601.5
(202.3)
(43.9)
1,356.9
1.8
(99.7)
1,645.2
(119.3)
(34.8)
1,393.2
1.8
(99.7)
1,659.5
9.1
(34.8)
1,535.9
1.8
(99.7)
1,673.8
172.8
(34.8)
1,713.8
1.8
(99.7)
1,688.0
387.6
(34.8)
1,942.9
1.8
(99.7)
1,702.3
630.2
(34.8)
2,199.8
1.8
(99.7)
1,716.6
908.6
(34.8)
2,492.5
0.0%
N/A
0.0%
0.9%
N/A
0.0%
12.3%
$5,192.6
Key Metrics:
Days Sales Outstanding
Days Inventories Outstanding
Days Payable Outstanding
Cash Conversion Cycle
Deferred Income Taxes (Current Asset) as % of Total Assets
Other Current Assets as % of Total Assets
Deferred Income Taxes (Asset) as % of Total Assets
Other Non-Current Assets as % of Total Assets
Product Warranty Liability (Current Asset) as % of Total Assets
Other Current Liabilities as % of Total Assets
Product Warranty Liability as % of Total Assets
Deferred Revenue as % of Total Assets
Deferred Income Taxes (Liability) as % of Total Assets
Other Non-Current Liabilities as % of Total Assets
0.1%
0.7%
0.0%
1.9%
0.7%
3.8%
1.6%
0.8%
4.1%
4.6%
$4,866.0
$4,836.6
$4,860.5
$4,467.9
$4,563.3
$4,789.5
$4,958.6
30.6
48.1
45.4
33.3
34.4
54.7
50.3
38.8
32.0
52.0
47.5
36.5
32.0
52.0
47.5
36.5
32.0
52.0
47.5
36.5
32.0
52.0
47.5
36.5
32.0
52.0
47.5
36.5
1.1%
0.7%
0.7%
1.9%
0.7%
3.4%
1.5%
0.9%
0.0%
4.4%
1.2%
0.7%
0.0%
1.5%
0.8%
3.4%
1.1%
0.9%
0.8%
4.0%
1.2%
0.7%
0.0%
1.7%
0.8%
3.4%
1.3%
0.9%
0.8%
4.2%
1.2%
0.7%
0.0%
1.7%
0.8%
3.4%
1.3%
0.9%
0.8%
4.2%
1.2%
0.7%
0.0%
1.7%
0.8%
3.4%
1.3%
0.9%
0.8%
4.2%
1.2%
0.7%
0.0%
1.7%
0.8%
3.4%
1.3%
0.9%
0.8%
4.2%
1.2%
0.7%
0.0%
1.7%
0.8%
3.4%
1.3%
0.9%
0.8%
4.2%
0.5%

Cash Flow Statement
Net Income
Add (Deduct) Items:
Unrealized (Gain) Loss on Derivatives
Amortization of Deferred Financing Costs
Impairment Loss on Investments in Technology-Related Initiatives
Loss (Gain) on Repurchases and Redemptions of Long-Term Debt
Loss on Re-Measurement of Employee Benefit Plans
Other
Accounts Receivable
Inventories
Accounts Payable
2010A
$29.6
2011A
$103.0
2012A
$514.2
2013E
2014E
2015E
2016E
2017E
2018E
$156.6
$217.0
$252.1
$303.4
$331.1
$366.9
CAGR
'13E '18E
18.6%
154.2
99.6
51.5
28.8
11.6
8.5
(3.3)
2.1
151.9
103.8
56.9
39.8
13.9
12.1
8.0
16.0
(1.4)
150.0
102.5
(303.8)
(26.2)
14.5
14.4
6.4
22.1
2.3
(5.3)
(0.2)
105.4
110.1
68.1
(2.7)
11.2
2.5
14.3
0.7
(9.3)
(4.2)
98.8
117.2
3.0
14.3
(10.6)
0.1
97.1
124.3
(3.1)
14.3
(10.6)
(1.8)
92.4
131.5
0.8
14.3
(10.6)
0.4
89.7
138.6
1.8
14.3
(10.6)
1.0
86.2
145.7
1.4
14.3
(10.6)
0.8
(3.9%)
5.8%
N/A
(54.3%)
(100.0%)
(100.0%)
(100.0%)
0.0%
(100.0%)
N/A
2.6%
N/A
23.7
(11.8)
3.2
(8.8)
388.9
(25.0)
(11.0)
24.9
(23.7)
469.2
29.9
(1.8)
(29.4)
7.9
497.5
(33.7)
(8.8)
30.8
(24.6)
416.3
35.8
8.6
(32.6)
11.1
462.7
(66.9)
(34.8)
56.5
(25.5)
401.6
36.5
9.5
(33.4)
6.2
550.9
(65.2)
(33.1)
54.9
14.7
537.3
34.0
7.5
(31.6)
11.0
625.5
N/A
N/A
N/A
N/A
8.5%
(73.8)
(21.8)
0.3
(95.3)
(96.9)
38.6
2.4
(55.9)
(123.9)
(14.4)
(1.0)
0.6
(138.7)
(72.3)
(6.3)
1.7
0.5
(76.3)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
(75.0)
0.7%
(100.0%)
(100.0%)
(100.0%)
(0.4%)

Issuance of Long-Term Debt
Debt Issuance Costs
Debt Financing Fees
Repurchases and Redemptions of Long-Term Debt
Repurchase of Common Stock
Payments on Long-Term Debt
Dividend Payments
Issuance of Common Stock
Payments on Notes Payable
(91.9)
(106.0)
(197.9)
500.0
(15.0)
(764.4)
(90.5)
(369.9)
(20.2)
(326.9)
(245.4)
(32.8)
29.0
(2.5)
5.3
(593.5)
(2.6)
(99.5)
(89.6)
(73.6)
33.5
9.3
(222.5)
(111.2)
(88.5)
10.6
(189.2)
(582.5)
(88.5)
10.6
(660.5)
(111.2)
(88.5)
10.6
(189.2)
(111.2)
(88.5)
10.6
(189.2)
(111.2)
(88.5)
10.6
(189.2)
N/A
N/A
(100.0%)
N/A
(100.0%)
4.4%
3.8%
(100.0%)
N/A
2.6%
(3.2%)
Effect of Exchange Rate Changes on Cash

3.4
99.1
18.4
61.8
0.9
(233.8)
117.5
198.5
(333.8)
286.8
273.1
361.4
N/A
25.2%
153.1
252.2
252.2
314.0
314.0
80.2
80.2
197.7
197.7
396.2
396.2
62.3
62.3
349.1
349.1
622.2
622.2
983.6
50.6%
37.8%

Investments in Technology-Related Initiatives
Collateral for Interest Rate Derivatives
Proceeds from Disposal of Assets


Net Sales
Military
Total Net Sales
Military
Total Net Sales
2011A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
$727
134
280
304
277
87
354
$2,163
$813
115
157
305
290
114
348
$2,142
$848
96
39
212
289
96
366
$1,928
$933
82
52
159
332
101
403
$2,062
$1,003
70
62
143
382
116
463
$2,240
$1,078
63
69
143
421
131
510
$2,414
$1,132
58
74
143
463
147
561
$2,577
$1,189
55
78
143
509
166
617
$2,756
34%
6%
13%
14%
13%
4%
16%
100%
38%
5%
7%
14%
14%
5%
16%
100%
44%
5%
2%
11%
15%
5%
19%
100%
45%
4%
3%
8%
16%
5%
20%
100%
45%
3%
3%
6%
17%
5%
21%
100%
45%
3%
3%
6%
17%
5%
21%
100%
44%
2%
3%
6%
18%
6%
22%
100%
43%
2%
3%
5%
18%
6%
22%
100%
Net Sales by Country

United States
China
Canada
United Kingdom
Japan
Germany
India
Other
Total Net Sales
$1,411.0
67.3
133.1
49.0
33.7
33.9
24.6
173.7
$1,926.3
$1,532.7
93.3
165.6
58.2
46.5
42.9
7.9
215.7
$2,162.8
$1,509.6
136.4
123.0
74.1
52.0
39.1
6.9
200.7
$2,141.8
Net Sales by Country

United States
China
Canada
United Kingdom
Japan
Germany
India
Other
Total Net Sales
73%
3%
7%
3%
2%
2%
1%
9%
100%
71%
4%
8%
3%
2%
2%
0%
10%
100%
70%
6%
6%
3%
2%
2%
0%
9%
100%
CAGR
'13E '18E
7.0%
(10.6%)
15.0%
(7.6%)
12.0%
11.4%
11.0%
7.4%

Debt
Long-Term Debt:
Senior Secured Credit Facility Term B-1 Loan, Variable, Due 2014
Senior Cash Pay Notes, Fixed 7.125%, Due 2019
Total Long-Term Debt
Less: Current Maturities of Long-Term Debt
Total Long-Term Debt Less Current Portion
Interest Expense:
Beginning Balance
Retirement (Assumes Refinancing in 2017E)
Ending Balance
2010A
2012A
2013E
2014E
2015E
2016E
2017E
2018E
$2,594.9
471.3
309.8
$3,376.0
$411.4
793.1
1,145.0
471.3
$2,820.8
$0.0
1,123.5
1,136.4
471.3
$2,731.2
$0.0
1,023.5
1,125.2
471.3
$2,620.0
$0.0
923.5
1,114.0
$2,037.5
$0.0
823.5
1,102.8
$1,926.3
$0.0
723.5
1,091.6
$1,815.1
$0.0
623.5
1,080.4
$1,703.9
N/A
(11.1%)
(1.0%)
(100.0%)
N/A
(9.0%)
31.0
$3,345.0
19.5
$2,801.3
11.4
$2,719.8
$2,620.0
$2,037.5
$1,926.3
$1,815.1
$1,703.9
(100.0%)
(8.9%)
$1,123.5
$1,123.5 $1,023.5
(100.0)
(100.0)
$1,023.5
$923.5
$923.5
(100.0)
$823.5
$823.5
(100.0)
$723.5
$723.5
(100.0)
$623.5
$1,073.5
$973.5
$873.5
$773.5
$673.5
3.36%
$36.1
3.71%
$36.1
4.52%
$39.5
5.51%
$42.6
6.23%
$41.9
Average Balance
Interest Rate (LIBOR + 3.00%)
Interest Expense
3.00%
Beginning Balance
Principal Payment
Retirement
Ending Balance
$1,136.4
Average Balance
Interest Expense
2.75% LIBOR has a floor of 1.00%

Beginning Balance
Retirement
Ending Balance
Average Balance
Interest Rate
Interest Expense
7.125%
Key Metrics:
Interst Expense
Debt Principal Payment + Debt Retirement
CAGR
'13E '18E
2011A
$471.3
$1,136.4 $1,125.2 $1,114.0 $1,102.8 $1,091.6

(11.2)
(11.2)
(11.2)
(11.2)
(11.2)
$1,125.2 $1,114.0 $1,102.8 $1,091.6 $1,080.4
$1,130.8
$1,119.6
$1,108.4
$1,097.2
$1,086.0
3.75%
$42.4
3.75%
$42.0
4.27%
$47.3
5.26%
$57.7
5.98%
$64.9
$471.3
$471.3
$471.3
(471.3)
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$471.3
$471.3
$0.0
$0.0
$0.0
7.125%
$33.6
7.125%
$33.6
7.125%
$0.0
7.125%
$0.0
7.125%
$0.0
$112.1
111.2
$111.7
582.5
$86.8
111.2
$100.4
111.2
$106.8
111.2
N/A
N/A
(11.1%)
N/A
N/A
N/A
(1.0%)
N/A
N/A
(100.0%)
Short Recommendation
DigitalGlobe, Inc. (NYSE: DGI)
Company Overview
Global Provider of Earth Imagery Solutions
US market leader in
Earth Observation (EO)
image services
Exclusive commercial provider of
satellite imaging to
US government
Actively integrating GeoEye, its
recently acquired
primary competitor
Diversifying into high margin

services opportunities
2013 YTD Net Revenues

By Customer Type
Commercial
41%
US
Government
59%
By Customer Domicile
International
31%
US
69%
Investment Rationale
Current Valuation Implies Perfect Execution by Management
#1
Competition is
Overlooked
#2
Highly
Concentrated
Customer Base
#3
Growing Pains
International competition is underappreciated by the market

Imaging is a commodity and can be accomplished by non-satellite
technology
DGIs best commercial customers (e.g. Google) are also its competition in
information services
The US government accounts for over half of DGIs revenue

National Geospatial-Intelligence Agency (NGA) is the price setter and
holds all the power in customer relationship
NGA has option to renegotiate contract annually
Consensus revenue growth expectations for government-related revenue is
optimistic given current budget situation
Multi-year satellite build time and massive CapEx requirements make
CapEx/Revenue matching extremely challenging: New satellite sidelined
Significant operating leverage will create margin pressure if revenue
continues to miss growth targets
Asset light segments must drive revenue and margin growth, but DGIs
customers are increasingly able to insource these services
Investment Rationale (#1): Overlooked Competition

Competitors and Customers Can Compete for EO Demand
Established
Competitors are
Well Positioned
Aside from US government contracts, EO industry is a globally competitive

business
Astrium and RapidEye have a larger constellation of satellites and daily
collection capabilities than DGI
Competitors also have satellites in production comparable to GeoEye-2 and
WorldView-3
Before the GeoEye acquisition, the market mistakenly characterized and
labeled the EO market as a duopoly
The earth observation industry is a duopoly and the market is largely divided between
DigitalGlobe and its biggest competitor GeoEye.
Macquarie (4/27/11)
PostIntegration
Pricing
Concerns
Multiple Growth Drivers and High Barriers to Entry: DigitalGlobe and GeoEye represent a
domestic duopoly serving the need for high-resolution Earth imagery from space.
Morgan Stanley (8/17/09)
Recent equity research has not reflected this inaccuracy, but the current
environment is hardly a land grab with public and private competitors
With potential increased competition for commercial sales, there is no
certainty that DGI can maintain high margins or its dominant market share
Source: Company website, Company filings, Equity research
Investment Rationale (#1): Overlooked Competition (contd)

Competitors and Customers Can Compete for EO Demand
Location Based
Services is
Old News
DGIs Customers
Can Capture
Value
DGI management cites Location Based Services (LBS) as a key growth

area, but LBS is not a new commercial technology
Value chain includes image processors, analysts, resellers and end users
including Google, Apple and Garmin
There is nothing special about satellite images taken by DGI. The value of
LBS is tying GPS to the users location, which can be represented by a map,
satellite imagery or aerial imagery
Images need context, which is ultimately provided by end users

GeoEyes information analytics capabilities touted by DGI as growth driver,
but DGIs information-focused customers are increasingly able to insource
these services
Investment Rationale (#1): Overlooked Competition (contd)

Aerial Imagery is Vastly Superior to Satellite Imagery for LBS
Aerial Imagery
Unrestricted image resolution

Easily tailored to customers needs
Satellite Imagery
Governments prohibits satellite image

resolution below 50cm
Why hasnt Google updated its satellite image of One World Trade Center?
Why is management making broad generalizations about LBS rather than talking in specifics?
Where do you think the growth in LBS is more likely to be?
Source: Google (accessed 11/7/2013)
Invest. Rationale (#2): Highly Concentrated Customer Base

NGAs Renegotiation Power and Budget Limitations Reduce Revenue
Visibility
NGA can
Renegotiate
Each Year
Streets Bull
Case Ignores
Budget Realities
The 10 year contract with NGA includes a series of one-year options

for NGA to continue at the current terms
Precedent for NGA not renewing its EnhancedView SLA
NGA previously cited budget reasons in choosing to
discontinue its involvement with GeoEye
Equity research analysts are not cautious enough about NGA
revenue growth forecasts
Value-added services has driven recent growth but sustaining this

trend is uncertain
Information leaked by Edward Snowden indicates that the NGAs
budget for 2013 was $4.9bn and grew at an annual rate of 8.5% since
2004. However, the Street continues to forecast 16% US government
revenue growth for the foreseeable future
We believe there is significant downside risk to this revenue source,
because DGI is likely to be a budget casualty before the National
Reconnaissance Office loses resources
Source: DGI and GEOY financial disclosures, Washington Post
Investment Rationale (#3): Growing Pains

DGI Must Ramp Up Its High Margin Services and Meet or Exceed Expectations
Operating
Leverage Cuts
Both Ways
Market is
Receptive to
Managements
Mixed Message
The high fixed costs and long build times for satellites makes DGIs
constellation of satellites difficult to forecast and budget
While operating leverage enables margin improvement if new opportunities
are available, incorrectly forecasting the need for new satellites can create
significant challenges:
Newest satellite in storage indefinitely
Downside case reflects 300bps reduction in EBITDA margin to reflect
adverse affect from high operating leverage
DGI must grow into its current valuation, but is struggling to meet
managements revenue guidance
Management is currently targeting the low end of their original 2013
revenue guidance of $635mm-$660mm, and on October 31 warned they may
not even get to the guidance range
Commercial revenue growth missed analysts estimates in 3Q13
The market reacted positively to the Oct. 31 earnings announcement and the
price has increased 14% since
2 out of 3 aint bad. [] Better than expected government revenue growth (up 53% y/y vs.
our 37%E), but a miss on commercial revenues (up 47% vs. our 87%E). [] we acknowledge
that better growth here will be key to demonstrating to investors that DGI is truly evolving
from an aerospace/defense firm into an information services business.
Piper Jaffray (10/31/13)
Source: Company earnings call transcripts, Company filings, Equity research
Investment Rationale (#3): Growing Pains (contd)

DGI Must Successfully Execute GEOY Integration Plan
GeoEye
Acquisition
DGI acquired GeoEye in 2012 for $1.3bn to consolidate the domestic

industry, get access to GeoEye-2, and improve IT infrastructure
Management estimates NPV of synergies (revenues and cost savings) to be
$1.8bn
Integration is ahead of schedule and DGI management expects EBITDA
margins to normalize by 2H14
GeoEye-2 is scheduled to go into storage after completion
I know we used to badmouth GeoEye a lot but theres a lot of good things -- now that
were on the same team -- that they do [sic], but were benefitting from that
Yancey Spruill, CFO (Citi Investor Conference, 11/5/13)
How credible is DGI management at assessing the industry?

Will mothballing GeoEye-2 prevent value creation?
Source: Company earnings call transcripts, Company filings, Equity research, Citi
Valuation Downside Case

Based on EBITDA Multiple and DCF Analysis
Assumes current market
multiple contracts upon
poor performance
2014E EBITDA
$332.3
Enterprise Value / 2014E EBITDA
9.0x

$2,990.8
$2,657.2
Less: 2013E Debt

(1,142.2)
404.1
$2,252.7
Less: 2013E Debt

(1,142.2)
404.1
$1,919.1
3.0%
9.0%

Implied Share Price
76.4
$29.49

Implied Share Price
76.4
$25.12
Price Appreciation/(Depreciation)
(15.0%)
15.0%
(27.6%)
27.6%
Projected Total Returns
(1)
Implied Share Price
Larger expected stock price

decline as prolonged effect of
decline in business prospects
weighs on intrinsic (DCF)
valuation
(1) Does not include the cost of borrowing
$27.31
(1)
(1)
(21.3%)
21.3%
Weighting two
methodologies equally
Risks to Our Thesis
Competition
Stumbles
Short squeeze could occur if results exceed expectations and the resulting
operating leverage boosts DGI stock price
US federal budget issues are permanently resolved and there is more clarity
into long-term contracts
DGI may use CapEx holiday if GeoEye-2 continues to be mothballed and uses
free cash flow to de-lever or pursue bolt-on acquisitions
If value-added services grows faster than current estimates, DGI has excess
capacity to meet demand by launching GeoEye-2
Risks to Valuation
Miscellaneous
Lifting the ban on commercial satellite image resolution better than 50 cm

would give DGI a decisive advantage over competition
DGI would benefit from its competitors failing to execute their strategies
given long lead times
Appendix
DigitalGlobe, Inc. (NYSE: DGI)
Historical Price
Source: Bloomberg
Ownership Summary
Source: Bloomberg
Short Interest
Source: Bloomberg
Management
Jeffrey Tarr
President and CEO
Yancey Spruill
EVP, CFO and
Treasurer
Timothy Hascall
EVP Operations and
Customer Experience
Walter Scott
EVP Chief Technical
Officer and Founder
Source: Company website
Joined DGI in 2011

Between 2008 and 2010, served as President and Chief Operating Officer of IHS Inc.
Between 2004 and 2008, served at IHS as Co-President and Co-COO, and President and
COO of one of the companys two operating divisions
Between 2001 and 2004, served as CEO and President of Hoovers
Joined DGI in 2004

Between 2000 and 2004, served as a Principal in the Investment Banking group at
Thomas Weisel Partners
Prior investment banking positions at Lehman Brothers and JPMorgan
Joined DGI in 2011

Between 2004 and 2011, served as a senior executive at TriZetto Corporation
Prior positions at Equitant, Andersen Consulting and Accenture
Former Major in United States Marine Corps, serving as an imagery intelligence officer
Founded DGI in 1992

Between 1986 and 1992, held technical, program and department management
positions at Lawrence Livermore National Laboratory
Currently serves on Board of Directors of The Open Geospatial Consortium
Comparable Company Analysis
Company
Ticker
Price
Satellite Communication
Intelsat
Macdonald Dettwiler
I
TSX:MDA
$19.01
75.30
Satellite
Communication
Mean
Median
Other Defense & Communication

Lockheed Martin
LMT
Raytheon
RTN
Northrop Grumman
NOC
ViaSat
VSAT
Orbital Sciences
ORB
Iridium Communications
IRDM
$138.11
85.36
110.73
64.92
22.72
5.45
Market
Cap
$2,006
2,713
$43,989
27,270
24,581
2,950
1,374
418
Enterprise % 52-Wk.
Debt/
EBITDA/ EV/EBITDA
Value
High
Cap EBITDA Interest 2013E 2014E
$17,263
3,291
$47,484
28,276
25,565
3,464
1,277
1,084
P/E
LT EPS
Div.
2013E 2014E Growth PEG Yield
71% 107%
93% 52%
8.0x
3.0
1.6x
5.9x
8.7x
11.2
8.5x
9.5
nm
15.3
6.7x
13.0
2%
6%
na
2.5
0.0%
0.8%
82%
82%
80%
80%
5.5x
5.5
3.8x
3.8
10.0x
10.0
9.0x
9.0
15.3x
15.3
9.9x
9.9
4%
4%
2.5x
2.5
0.4%
0.4%
100%
100%
100%
88%
95%
59%
83%
34%
39%
39%
16%
50%
1.2x
1.4
1.6
3.9
0.9
5.0
14.7x
15.8x
15.5x
3.6x
nm
nm
8.3x
8.5
7.2
16.5
8.3
5.3
7.9x
8.2
7.4
11.7
8.0
5.0
14.2x
14.7
13.6
nm
20.1
7.5
13.6x
13.8
13.3
50.0
19.5
5.8
7%
8%
6%
32%
13%
12%
2.2x
1.8
2.3
na
1.6
0.6
3.3%
2.5%
2.1%
0.0%
0.0%
0.0%
Other Defense &

Communication
Mean
Median
90%
97%
43%
39%
2.3x
1.5
12.4x
15.1
9.0x
8.3
8.0x
8.0
14.0x
14.2
19.3x
13.7
13%
10%
1.7x
1.8
1.3%
1.0%
Total Comparable
Universe
Mean
Median
88%
94%
53%
45%
3.1x
2.3
9.5x
10.3
9.2x
8.4
8.3x
8.1
14.2x
14.5
17.0x
13.4
11%
7%
1.8x
2.0
1.1%
0.4%
95%
46%
4.7x
nm
18.5x
10.5x
nm
56.2x
16%
na
0.0%
18.5x
9.9x
nm
43.0x
DigitalGlobal - Base Case DGI
$34.70
DigitalGlobal - Street Case
Source: Capital IQ (as of November 8, 2013)
$2,610
$3,498
WACC Analysis
$ in millions, except per share amounts

Assumptions:
Tax Rate
Risk Free Rate
Equity Risk Premium
Market Cap. Size Premium
35.0% Company
2.75% Lockheed Martin
6.62% Raytheon
1.17% Northrop Grumman
ViaSat
Orbital Sciences
Pre-Tax Cost of Debt
After-Tax Cost of Debt
Debt/
Capital
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
Debt/
Mkt Equity
33.3%
42.9%
53.8%
66.7%
81.8%
100.0%
122.2%
150.0%
185.7%
Historical
Unlevered
Beta
0.94
0.94
0.94
0.94
0.94
0.94
0.94
0.94
0.94
Levered
Beta
1.14
1.20
1.27
1.34
1.44
1.55
1.68
1.85
2.07
Cost of
Equity
11.5%
11.9%
12.3%
12.8%
13.4%
14.2%
15.1%
16.2%
17.6%
Source: Capital IQ (as of November 8, 2013), Ibbotson, Company filings
Levered
Beta
0.88
0.80
1.10
1.07
1.32
3.25%
2.11%
9.13%
8.93%
8.74%
8.54%
8.34%
8.14%
7.94%
7.74%
7.54%
Total
Debt
$6,156
$4,733
$5,928
$588
$145
4.25%
2.76%
Market
Debt /
Equity
Mkt. Equity
$43,989
14.0%
$27,270
17.4%
$24,581
24.1%
$2,950
19.9%
$1,374
10.6%
5.25%
3.41%
6.25%
4.06%
Unlevered
Beta
0.80
0.72
0.95
0.99
1.23
7.25%
4.71%
WEIGHTED AVERAGE COST OF CAPITAL

9.30%
9.46%
9.62%
9.78%
9.13%
9.32%
9.52%
9.71%
8.96%
9.19%
9.42%
9.65%
8.80%
9.06%
9.32%
9.58%
8.63%
8.92%
9.22%
9.51%
8.46%
8.79%
9.11%
9.44%
8.30%
8.65%
9.01%
9.37%
8.13%
8.52%
8.91%
9.30%
7.96%
8.39%
8.81%
9.23%
Financial Projections: Income Statement Base Case

Net Sales
Cost of Sales
Gross Profit
2014E
$722.4
183.5
538.9
2015E
$814.1
202.7
611.4
2016E
$880.1
217.4
662.7

Impairment Charges
Total Expenses
252.6
252.6
206.6
206.6
228.8
228.8
245.5
245.5
264.5
264.5
286.0
286.0
2.5%
N/A
2.5%
EBITDA
189.4
332.3
382.6
417.2
456.5
501.3
21.5%
Depreciation and Amortization

EBIT
215.4
(25.9)
293.1
39.2
337.0
45.6
308.2
109.0
313.3
143.2
277.9
223.5
5.2%
N/A

29.7
3.8
33.3
72.5
37.1
82.7
48.4
157.4
61.2
204.4
66.3
289.8
17.4%
N/A
138.2%

Net Income to all Stockholders
(1.2)
2.5
(25.4)
47.1
(28.9)
53.7
(55.1)
102.3
(71.5)
132.8
(101.4)
188.3
141.0%
136.7%
$0.03
$0.62
$0.70
$1.34
$1.74
$2.47
41.3%
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
% Net Sales
COGS
SG&A
EBITDA
30.0%
40.0%
30.0%
25.4%
28.6%
46.0%
24.9%
28.1%
47.0%
24.7%
27.9%
47.4%
24.5%
27.7%
47.8%
24.3%
27.5%
48.2%
Margin
Gross Profit
EBITDA
Net
70.0%
30.0%
0.4%
74.6%
46.0%
6.5%
75.1%
47.0%
6.6%
75.3%
47.4%
11.6%
75.5%
47.8%
13.9%
75.7%
48.2%
18.1%
Other
Tax Rate
33.0%
35.0%
35.0%
35.0%
35.0%
35.0%

Shares of Common Stock Outstanding
Dilutive Effect Options Outstanding
Diluted Shares of Common Stock Outstanding
2017E
2018E
$955.0 $1,040.1
234.0
252.7
721.0
787.4
CAGR
'13E '18E
10.5%
5.9%
12.2%
2013E
$631.4
189.4
442.0
Financial Projections: Net Sales Base Case

Net Sales
US Government NGA (contractual)
Other US Government
Total US Government
2013E
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
$266.4
158.3
$424.7
$300.0
171.8
$471.8
$300.0
186.4
$486.4
$300.0
202.2
$502.2
$300.0
219.4
$519.4
$300.0
238.0
$538.0
2.4%
8.5%
4.8%
297.7
$722.4
342.4
$814.1
393.7
$880.1
452.8
$955.0
520.7
$1,040.1
598.8
$1,136.9
15.0%
9.5%
Net Sales Growth

Other US Government
Total US Government
na
na
na
12.6%
8.5%
11.1%
0.0%
8.5%
3.1%
0.0%
8.5%
3.3%
0.0%
8.5%
3.4%
0.0%
8.5%
3.6%
Commercial
Net Sales
na
na
15.0%
12.7%
15.0%
8.1%
15.0%
8.5%
15.0%
8.9%
15.0%
9.3%
Commercial
Net Sales
Financial Projections: Balance Sheet Base Case

Assets
Current Assets
Accounts Receivable
Prepaid and Other Current Assets
2013E

3,156.6 3,285.2 3,432.6 3,690.0 3,951.1 4,216.4

(945.0) (1,229.0) (1,557.8) (1,859.8) (2,167.0) (2,438.3)
2,211.7 2,056.3 1,874.8 1,830.2 1,784.1 1,778.1

Goodwill
Total Assets
$404.1
118.0
50.8
30.3
603.3
83.3
(41.0)
42.3
2014E
2015E
$626.4
135.0
50.8
34.7
846.9
$987.9 $1,370.5 $1,571.3 $1,787.3

152.2
164.5
178.5
194.4
50.8
50.8
50.8
50.8
39.1
42.3
45.9
49.9
1,230.0 1,628.1 1,846.5 2,082.4
83.3
(50.1)
33.2
83.3
(58.3)
25.0
2016E
83.3
(64.5)
18.8
2017E
83.3
(70.6)
12.7
2018E
83.3
(77.2)
6.1
382.6
382.6
382.6
382.6
382.6
382.6
98.4
112.5
126.8
137.1
148.8
162.0
$3,338.2 $3,431.6 $3,639.3 $3,996.8 $4,174.6 $4,411.3
CAGR
'13E '18E
34.6%
10.5%
0.0%
10.5%
28.1%
6.0%
20.9%
(4.3%)
0.0%
13.5%
(32.1%)
0.0%
10.5%
5.7%
Financial Projections: Balance Sheet Base Case (contd)

Liabilities
Current Liabilities
Accounts Payable
Deferred Revenue
2013E
$23.2
5.5
60.8
134.2
223.7
$22.4
5.5
68.5
153.6
250.0
$24.8
5.5
74.0
173.1
277.4
$26.6
5.5
80.3
187.1
299.5
$28.6
5.5
87.5
203.0
324.6
$30.9
5.5
95.6
221.1
353.1
5.9%
0.0%
9.5%
10.5%
9.6%
Deferred Revenue
Long-Term Debt
Deferred Tax Liability
Total Liabilities
388.8
1,136.7
189.0
3.0
1,941.2
388.8
1,131.1
189.0
3.5
1,962.4
388.8
1,232.3
189.0
3.9
2,091.4
388.8
1,440.1
189.0
4.2
2,321.6
388.8
1,434.6
189.0
4.6
2,341.6
388.8
1,429.0
189.0
5.0
2,365.0
0.0%
4.7%
0.0%
10.5%
4.0%
Common Stock
Treasury Stock
Additional Paid In Capital
Retained Earnings (Accumulated Deficit)
0.2
(2.0)
1,426.9
(28.1)
1,397.0
0.2
(2.0)
1,451.9
19.0
1,469.1
0.2
(2.0)
1,476.9
72.8
1,547.9
0.2
(2.0)
1,501.9
175.1
1,675.2
0.2
(2.0)
1,526.9
307.9
1,833.0
0.2
(2.0)
1,551.9
496.3
2,046.4
0.0%
0.0%
1.7%
N/A
7.9%
$3,338.2 $3,431.6 $3,639.3 $3,996.8 $4,174.6 $4,411.3
5.7%
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
Financial Projections: Cash Flow Statement Base Case

Net Income
Add (Deduct) Items:
Depreciation of Long-Lived Assets
Other
Accounts Receivable
Accounts Payable
2013E
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
$2.5
$47.1
$53.7
$102.3
$132.8
$188.3
7.6
207.8
25.0
(7.9)
9.1
284.0
25.0
(14.2)
8.2
328.8
25.0
(14.3)
6.2
302.0
25.0
(10.3)
6.1
307.2
25.0
(11.7)
6.6
271.3
25.0
(13.3)
(2.7%)
5.5%
0.0%
11.0%
(9.4)
7.9
16.2
249.7
(17.0)
(0.7)
23.1
356.5
(17.1)
2.4
21.1
407.8
(12.3)
1.8
17.5
432.1
(14.0)
2.0
19.8
467.4
(15.9)
2.3
22.6
486.9
11.0%
(21.8%)
6.8%
14.3%
(185.0)
(31.6)
(216.6)
(92.5)
(36.1)
(128.6)
(106.7)
(40.7)
(147.4)
(213.4)
(44.0)
(257.4)
(213.4)
(47.7)
(261.1)
(213.4)
(52.0)
(265.4)
2.9%
10.5%
4.1%
1.0
(5.1)
(4.1)
(5.5)
(5.5)
101.1
101.1
207.8
207.8
(5.5)
(5.5)
(5.5)
(5.5)
NA
1.8%
6.3%
$29.0
$222.3
$361.5
$382.6
$200.8
$216.0
49.4%

375.1
404.1
404.1
626.4
626.4
987.9
987.9
1,370.5
1,370.5
1,571.3
1,571.3
1,787.3
33.2%
34.6%

Capital Expenditures for Satellites
Adjustment to Debt, net of discounts
Mandatory Payments on Long-Term Debt
136.7%
Financial Projections: Income Statement Street Case

Net Sales
Cost of Sales
Gross Profit
2014E
$723.7
166.5
557.3
2015E
$859.1
193.3
665.8

Impairment Charges
Total Expenses
252.6
252.6
202.6
202.6
236.3
236.3
265.8
265.8
291.5
291.5
313.7
313.7
4.4%
N/A
4.4%
EBITDA
189.4
354.6
429.6
490.8
546.5
597.0
25.8%

EBIT
215.4
(25.9)
293.2
61.4
340.2
89.4
314.7
176.0
321.8
224.7
286.7
310.3
5.9%
N/A

29.7
3.8
33.3
94.7
37.1
126.4
48.4
224.4
61.2
285.9
66.3
376.6
17.4%
N/A
151.0%

(1.2)
2.5
(33.2)
61.6
(44.3)
82.2
(78.5)
145.9
(100.1)
185.9
(131.8)
244.8
154.0%
149.5%
$0.03
$0.81
$1.08
$1.91
$2.43
$3.21
44.5%
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
% Net Sales
COGS
SG&A
EBITDA
30.0%
40.0%
30.0%
23.0%
28.0%
49.0%
22.5%
27.5%
50.0%
22.3%
27.3%
50.4%
22.1%
27.1%
50.8%
21.9%
26.9%
51.2%
Margin
Gross Profit
EBITDA
Net
70.0%
30.0%
0.4%
77.0%
49.0%
8.5%
77.5%
50.0%
9.6%
77.7%
50.4%
15.0%
77.9%
50.8%
17.3%
78.1%
51.2%
21.0%
Other
Tax Rate
33.0%
35.0%
35.0%
35.0%
35.0%
35.0%

2016E
2017E
2018E
$973.7 $1,075.8 $1,166.1
217.1
237.7
255.4
756.6
838.0
910.7
CAGR
'13E '18E
13.1%
6.2%
15.6%
2013E
$631.4
189.4
442.0
Financial Projections: Net Sales Street Case

Net Sales
Other US Government
Total US Government
2013E
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
$266.4
158.3
$424.7
$300.0
200.3
$500.3
$300.0
250.3
$550.3
$300.0
288.9
$588.9
$300.0
318.3
$618.3
$300.0
336.8
$636.8
2.4%
16.3%
8.4%
299.0
$723.7
358.8
$859.1
423.4
$973.7
486.9
$1,075.8
547.8
$1,166.1
602.6
$1,239.4
15.0%
11.4%
Net Sales Growth

Other US Government
Total US Government
na
na
na
12.6%
26.5%
17.8%
0.0%
25.0%
10.0%
0.0%
15.4%
7.0%
0.0%
10.2%
5.0%
0.0%
5.8%
3.0%
Commercial
Net Sales
na
na
20.0%
18.7%
18.0%
13.3%
15.0%
10.5%
12.5%
8.4%
10.0%
6.3%
Commercial
Net Sales
Financial Projections: Balance Sheet Street Case

Assets
Current Assets
Accounts Receivable
2013E

3,156.6 3,285.3 3,434.9 3,697.0 3,964.1 4,235.8

(945.0) (1,229.1) (1,561.0) (1,869.6) (2,185.3) (2,465.4)
2,211.7 2,056.3 1,873.9 1,827.4 1,778.9 1,770.4

Goodwill
Total Assets
$404.2
118.0
50.8
30.3
603.4
83.3
(41.0)
42.3
2014E
2015E
2016E
2017E
2018E
$642.4 $1,030.7 $1,453.7 $1,706.1 $1,978.1

135.3
160.6
182.0
201.1
218.0
50.8
50.8
50.8
50.8
50.8
34.8
41.3
46.8
51.7
56.0
863.2 1,283.3 1,733.3 2,009.6 2,302.8
83.3
(50.1)
33.2
83.3
(58.3)
25.0
83.3
(64.5)
18.8
83.3
(70.6)
12.7
83.3
(77.2)
6.1
382.6
382.6
382.6
382.6
382.6
382.6
98.4
112.7
133.8
151.7
167.6
181.6
$3,338.3 $3,448.0 $3,698.7 $4,113.8 $4,351.4 $4,643.6
CAGR
'13E '18E
37.4%
13.1%
0.0%
13.1%
30.7%
6.1%
21.1%
(4.4%)
0.0%
13.5%
(32.1%)
0.0%
13.1%
6.8%
Financial Projections: Balance Sheet Street Case (contd)

Liabilities
Current Liabilities
Accounts Payable
Deferred Revenue
2013E
$23.2
5.5
60.9
134.2
223.8
$20.4
5.5
72.2
153.8
252.0
$23.6
5.5
81.9
182.6
293.7
$26.6
5.5
90.5
207.0
329.5
$29.1
5.5
98.1
228.7
361.3
$31.2
5.5
104.2
247.9
388.9
6.2%
0.0%
11.4%
13.1%
11.7%
Deferred Revenue
Long-Term Debt
Total Liabilities
388.8
1,136.7
189.0
3.0
1,941.3
388.8
1,131.1
189.0
3.5
1,964.4
388.8
1,232.3
189.0
4.1
2,107.9
388.8
1,440.1
189.0
4.7
2,352.1
388.8
1,434.6
189.0
5.2
2,378.9
388.8
1,429.0
189.0
5.6
2,401.3
0.0%
4.7%
0.0%
13.1%
4.3%
Common Stock
Treasury Stock
0.2
(2.0)
1,426.9
(28.1)
1,397.0
0.2
(2.0)
1,451.9
33.5
1,483.6
0.2
(2.0)
1,476.9
115.7
1,590.8
0.2
(2.0)
1,501.9
261.5
1,761.6
0.2
(2.0)
1,526.9
447.4
1,972.5
0.2
(2.0)
1,551.9
692.2
2,242.3
0.0%
0.0%
1.7%
N/A
9.9%
$3,338.3 $3,448.0 $3,698.7 $4,113.8 $4,351.4 $4,643.6
6.8%
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
Financial Projections: Cash Flow Statement Street Case

Net Income
Add (Deduct) Items:
Other
Accounts Receivable
Accounts Payable
2013E
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
$2.5
$61.6
$82.2
$145.9
$185.9
$244.8
7.6
207.8
25.0
(7.9)
9.1
284.1
25.0
(14.4)
8.2
332.0
25.0
(21.1)
6.2
308.5
25.0
(17.9)
6.1
315.7
25.0
(15.9)
6.6
280.1
25.0
(14.1)
(2.7%)
6.2%
0.0%
12.4%
(9.4)
7.9
16.3
249.8
(17.2)
(2.8)
27.0
372.4
(25.3)
3.3
32.6
436.8
(21.4)
2.9
28.0
477.2
(19.1)
2.5
24.9
525.1
(16.9)
2.2
21.5
549.2
12.4%
(22.8%)
5.7%
17.1%
(185.0)
(31.6)
(216.6)
(92.5)
(36.2)
(128.7)
(106.7)
(43.0)
(149.6)
(213.4)
(48.7)
(262.0)
(213.4)
(53.8)
(267.1)
(213.4)
(58.3)
(271.7)
2.9%
13.1%
4.6%
1.0
(5.1)
(4.1)
(5.5)
(5.5)
101.1
101.1
207.8
207.8
(5.5)
(5.5)
(5.5)
(5.5)
NA
1.8%
6.3%
$29.1
$238.1
$388.3
$423.0
$252.4
$272.0
56.3%

375.1
404.2
404.2
642.4
642.4
1,030.7
1,030.7
1,453.7
1,453.7
1,706.1
1,706.1
1,978.1
35.4%
37.4%

149.5%
DigitalGlobe, Inc.
Valuation Summary - Base Case

$34.70
75.2
1.2
76.4
$2,650
Plus: Debt
1,143.9
3,794.4

Enterprise Value

2014E EBITDA
$332.3
10.2x
30.1%
(404.1)
$3,390.3

2014E EBITDA
$332.3
9.0x

$2,990.8
$2,657.2
Less: 2013E Debt

(1,142.2)
404.1
$2,252.7
Less: 2013E Debt

(1,142.2)
404.1
$1,919.1
3.0%
9.0%

Implied Share Price
76.4
$29.49

Implied Share Price
76.4
$25.12
(15.0%)
15.0%
(27.6%)
27.6%
(1)
Implied Share Price
$27.31
(21.3%)
Projected Total Returns(1)
21.3%
(1)
DigitalGlobe, Inc.
Base Case
2013E
($25.9)
2014E
$39.2
2015E
$45.6
2016E
$109.0
2017E
$143.2
2018E
$223.5
Income Tax Expense

Effective Tax Rate
8.6
33.0%
(13.7)
35.0%
(16.0)
35.0%
(38.1)
35.0%
(50.1)
35.0%
(78.2)
35.0%
Depreciation of PP&E and Satellites

207.8
7.6
(216.6)
14.6
284.0
9.1
(128.6)
5.4
328.8
8.2
(147.4)
6.3
302.0
6.2
(257.4)
6.9
307.2
6.1
(261.1)
7.9
271.3
6.6
(265.4)
8.9
$195.4
$225.6
$128.6
$153.2
$195.4
$225.6
$128.6
$153.2
$166.7
2,861.7
$3,028.4
0.5
9.0%
0.958
1.5
9.0%
0.879
2.5
9.0%
0.806
3.5
9.0%
0.740
4.5
9.0%
0.679
$187.1
$198.2
$103.7
$113.3
$2,054.9

Terminal Value (1)
Discount Period
Discount Rate
Discount Factor
$2,657.2
Less: 2013E Long-Term Debt

(1,142.2)
404.1
$1,919.1

Implied Share Price
76.4
$25.12
DigitalGlobe, Inc.
Income Statement
Base Case
2013E
$631.4
189.4
442.0
2014E
$722.4
183.5
538.9
2015E
$814.1
202.7
611.4
2016E
$880.1
217.4
662.7
2017E
$955.0
234.0
721.0
2018E
$1,040.1
252.7
787.4
CAGR
'13E '18E
10.5%
5.9%
12.2%

Impairment Charges
Total Expenses
252.6
252.6
206.6
206.6
228.8
228.8
245.5
245.5
264.5
264.5
286.0
286.0
2.5%
N/A
2.5%
EBITDA
189.4
332.3
382.6
417.2
456.5
501.3
21.5%

EBIT
215.4
(25.9)
293.1
39.2
337.0
45.6
308.2
109.0
313.3
143.2
277.9
223.5
5.2%
N/A

29.7
3.8
33.3
72.5
37.1
82.7
48.4
157.4
61.2
204.4
66.3
289.8
17.4%
N/A
138.2%

(1.2)
2.5
(25.4)
47.1
(28.9)
53.7
(55.1)
102.3
(71.5)
132.8
(101.4)
188.3
141.0%
136.7%
$0.03
$0.62
$0.70
$1.34
$1.74
$2.47
41.3%
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
% Net Sales
COGS
SG&A
EBITDA
30.0%
40.0%
30.0%
25.4%
28.6%
46.0%
24.9%
28.1%
47.0%
24.7%
27.9%
47.4%
24.5%
27.7%
47.8%
24.3%
27.5%
48.2%
Margin
Gross Profit
EBITDA
Net
70.0%
30.0%
0.4%
74.6%
46.0%
6.5%
75.1%
47.0%
6.6%
75.3%
47.4%
11.6%
75.5%
47.8%
13.9%
75.7%
48.2%
18.1%
Other
Tax Rate
33.0%
35.0%
35.0%
35.0%
35.0%
35.0%

Net Sales
Cost of Sales
Gross Profit

DigitalGlobe, Inc.
Balance Sheet
Base Case
Assets
Current Assets
Accounts Receivable
2013E

3,156.6
3,285.2
3,432.6
3,690.0
3,951.1
4,216.4
(945.0) (1,229.0) (1,557.8) (1,859.8) (2,167.0) (2,438.3)
2,211.7
2,056.3
1,874.8
1,830.2
1,784.1
1,778.1

$404.1
118.0
50.8
30.3
603.3
2014E
2015E
2016E
2017E
2018E
$626.4
135.0
50.8
34.7
846.9
$987.9
152.2
50.8
39.1
1,230.0
$1,370.5
164.5
50.8
42.3
1,628.1
$1,571.3
178.5
50.8
45.9
1,846.5
$1,787.3
194.4
50.8
49.9
2,082.4
CAGR
'13E '18E
34.6%
10.5%
0.0%
10.5%
28.1%
6.0%
20.9%
(4.3%)
83.3
(41.0)
42.3
83.3
(50.1)
33.2
83.3
(58.3)
25.0
83.3
(64.5)
18.8
83.3
(70.6)
12.7
83.3
(77.2)
6.1
382.6
98.4
$3,338.2
382.6
112.5
$3,431.6
382.6
126.8
$3,639.3
382.6
137.1
$3,996.8
382.6
148.8
$4,174.6
382.6
162.0
$4,411.3
0.0%
10.5%
5.7%
$23.2
5.5
60.8
134.2
223.7
$22.4
5.5
68.5
153.6
250.0
$24.8
5.5
74.0
173.1
277.4
$26.6
5.5
80.3
187.1
299.5
$28.6
5.5
87.5
203.0
324.6
$30.9
5.5
95.6
221.1
353.1
5.9%
0.0%
9.5%
10.5%
9.6%
Deferred Revenue
Long-Term Debt
Total Liabilities
388.8
1,136.7
189.0
3.0
1,941.2
388.8
1,131.1
189.0
3.5
1,962.4
388.8
1,232.3
189.0
3.9
2,091.4
388.8
1,440.1
189.0
4.2
2,321.6
388.8
1,434.6
189.0
4.6
2,341.6
388.8
1,429.0
189.0
5.0
2,365.0
0.0%
4.7%
0.0%
10.5%
4.0%
Common Stock
Treasury Stock
0.2
(2.0)
1,426.9
(28.1)
1,397.0
0.2
(2.0)
1,451.9
19.0
1,469.1
0.2
(2.0)
1,476.9
72.8
1,547.9
0.2
(2.0)
1,501.9
175.1
1,675.2
0.2
(2.0)
1,526.9
307.9
1,833.0
0.2
(2.0)
1,551.9
496.3
2,046.4
0.0%
0.0%
1.7%
N/A
7.9%
Goodwill
Total Assets
Liabilities
Current Liabilities
Accounts Payable
Deferred Revenue
$3,338.2
$3,431.6
$3,639.3
$3,996.8
$4,174.6
$4,411.3
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
Key Metrics:
A/R Days
Prepaid and Other Current Assets as % of Sales
A/P Days
Other Current Liabilities as % of Sales
0.0%
13.5%
(32.1%)
5.7%
DigitalGlobe, Inc.
Cash Flow Statement
Base Case
Net Income
Add (Deduct) Items:
Other
Accounts Receivable
Accounts Payable
2013E
2014E
2015E
2016E
2017E
2018E
$102.3
$132.8
$188.3
CAGR
'13E '18E
$2.5
$47.1
$53.7
136.7%
7.6
207.8
25.0
(7.9)
9.1
284.0
25.0
(14.2)
8.2
328.8
25.0
(14.3)
6.2
302.0
25.0
(10.3)
6.1
307.2
25.0
(11.7)
6.6
271.3
25.0
(13.3)
(2.7%)
5.5%
0.0%
11.0%
(9.4)
7.9
16.2
249.7
(17.0)
(0.7)
23.1
356.5
(17.1)
2.4
21.1
407.8
(12.3)
1.8
17.5
432.1
(14.0)
2.0
19.8
467.4
(15.9)
2.3
22.6
486.9
11.0%
(21.8%)
6.8%
14.3%
(185.0)
(31.6)
(216.6)
(92.5)
(36.1)
(128.6)
(106.7)
(40.7)
(147.4)
(213.4)
(44.0)
(257.4)
(213.4)
(47.7)
(261.1)
(213.4)
(52.0)
(265.4)
2.9%
10.5%
4.1%
1.0
(5.1)
(4.1)
(5.5)
(5.5)
101.1
101.1
207.8
207.8
(5.5)
(5.5)
(5.5)
(5.5)
NA
1.8%
6.3%
$29.0
$222.3
$361.5
$382.6
$200.8
$216.0
49.4%

375.1
404.1
404.1
626.4
626.4
987.9
987.9
1,370.5
1,370.5
1,571.3
1,571.3
1,787.3
33.2%
34.6%
DigitalGlobe, Inc.
Revenue Model
Base Case
Net Sales
Other US Government
Total US Government
Commercial
Net Sales
2013E
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
$266.4
158.3
$424.7
$300.0
171.8
$471.8
$300.0
186.4
$486.4
$300.0
202.2
$502.2
$300.0
219.4
$519.4
$300.0
238.0
$538.0
2.4%
8.5%
4.8%
297.7
$722.4
342.4
$814.1
393.7
$880.1
452.8
$955.0
520.7
$1,040.1
598.8
$1,136.9
15.0%
9.5%
Net Sales Growth

Other US Government
Total US Government
na
na
na
12.6%
8.5%
11.1%
0.0%
8.5%
3.1%
0.0%
8.5%
3.3%
0.0%
8.5%
3.4%
0.0%
8.5%
3.6%
Commercial
Net Sales
na
na
15.0%
12.7%
15.0%
8.1%
15.0%
8.5%
15.0%
8.9%
15.0%
9.3%
DigitalGlobe, Inc.
Debt
Base Case
Long-Term Debt:
Senior Secured Term Loan Facility, Variable, Due 2020, Mand. Amort.
Senior Secured Revolving Credit Facility, $150mm, Due 2018 (Currently Unused)
Senior Notes, Fixed, Due 2021, Mand. Amort.
Total Long-Term Debt
2013E
2014E
2015E
2016E
2017E
2018E
$544.0
598.2
$1,142.2
$540.5
596.2
$1,136.7
$536.9
106.7
594.2
$1,237.8
$533.4
320.0
592.2
$1,445.6
$529.8
320.0
590.3
$1,440.1
$526.3
320.0
588.3
$1,434.6
Less: Current Maturities of Long-Term Debt

Total Long-Term Debt Less Current Portion
5.5
$1,136.7
5.5
$1,131.1
5.5
$1,232.3
5.5
$1,440.1
5.5
$1,434.6
5.5
$1,429.0
Interest Expense:
Senior Secured Term Loan Facility, Variable, Due 2020, Mand. Amort.
Beginning Balance
Issuance, net of discount
Mandatory Amortization
0.7%
Ending Balance
Average Balance
Interest Expense
0.00%
Senior Secured Revolving Credit Facility, $150mm, Due 2018 (Currently Unused)
Beginning Balance
Drawdown
Retirement
Ending Balance
$0.0
$547.3
($3.3)
$544.0
$544.0
($3.6)
$540.5
$540.5
($3.6)
$536.9
$536.9
($3.6)
$533.4
$533.4
($3.6)
$529.8
$529.8
($3.6)
$526.3
$545.7
$542.3
$538.7
$535.1
$531.6
$528.0
0.17%
$0.9
0.36%
$2.0
0.71%
$3.8
1.52%
$8.1
2.51%
$13.4
3.23%
$17.0
$0.0
$0.0
$0.0
$0.0
$0.0
106.7
$106.7
$106.7
213.4
$320.0
$320.0
$320.0
$320.0
$320.0
$0.0
$53.3
$213.4
$320.0
$320.0
3.75%
3.4
3.75%
3.2
4.27%
3.5
5.26%
3.2
5.73%
2.9
$0.0
$2.0
$9.1
$16.8
$18.3
Average Balance
Leverage (Debt/EBITDA)
Commitment Fee
Interest Expense
2.75% 1% LIBOR Floor, Spread decreases at leverage < 2.5
Senior Notes, Fixed, Due 2021, Mand. Amort.

Beginning Balance
Issuance
0.3%
Ending Balance
Average Balance
Interest Rate (5.25%)
Interest Expense
Key Metrics:
Interest Expense
Implied Cost of Debt
5.25%
$0.0
$600.0
($1.8)
$598.2
$598.2
($2.0)
$596.2
$596.2
($2.0)
$594.2
$594.2
($2.0)
$592.2
$592.2
($2.0)
$590.3
$590.3
($2.0)
$588.3
$599.1
$597.2
$595.2
$593.2
$591.3
$589.3
5.25%
$28.8
5.25%
$31.4
5.25%
$31.2
5.25%
$31.1
5.25%
$31.0
5.25%
$30.9
$29.7
2.60%
$5.1
$33.3
2.93%
$5.5
$37.1
2.99%
$5.5
$48.4
3.35%
$5.5
$61.2
4.25%
$5.5
$66.3
4.62%
$5.5
DigitalGlobe, Inc.
Valuation Summary - Street Case

$34.70
75.2
1.2
76.4
$2,650
Plus: Debt
1,143.9
3,794.4

Enterprise Value

2014E EBITDA
$354.6
9.6x
30.1%
(404.2)
$3,390.2

2014E EBITDA
$354.6
9.5x

$3,368.9
$3,482.2
Less: 2013E Debt

(1,142.2)
404.2
$2,630.9
Less: 2013E Debt

(1,142.2)
404.2
$2,744.2

Implied Share Price
(1)
76.4
$34.44
(0.7%)
0.7%
Implied Share Price
Projected Total Returns(1)

Implied Share Price
$35.19
1.4%
(1.4%)
(1)
3.0%
9.0%
76.4
$35.93
3.5%
(3.5%)
DigitalGlobe, Inc.
Street Case
2013E
($25.9)
2014E
$61.4
2015E
$89.4
2016E
$176.0
2017E
$224.7
2018E
$310.3
Income Tax Expense

Effective Tax Rate
8.6
33.0%
(21.5)
35.0%
(31.3)
35.0%
(61.6)
35.0%
(78.6)
35.0%
(108.6)
35.0%
Depreciation of PP&E and Satellites

207.8
7.6
(216.6)
14.7
284.1
9.1
(128.7)
7.0
332.0
8.2
(149.6)
10.5
308.5
6.2
(262.0)
9.5
315.7
6.1
(267.1)
8.3
280.1
6.6
(271.7)
6.7
$211.4
$259.2
$176.6
$209.0
$211.4
$259.2
$176.6
$209.0
$223.5
3,836.6
$4,060.1
0.5
9.0%
0.958
1.5
9.0%
0.879
2.5
9.0%
0.806
3.5
9.0%
0.740
4.5
9.0%
0.679
$202.5
$227.8
$142.4
$154.6
$2,755.0

Terminal Value (1)
Discount Period
Discount Rate
Discount Factor
$3,482.2
Less: 2013E Long-Term Debt

(1,142.2)
404.2
$2,744.2

Implied Share Price
76.4
$35.93
DigitalGlobe, Inc.
Income Statement
Street Case
2013E
$631.4
189.4
442.0
2014E
$723.7
166.5
557.3
2015E
$859.1
193.3
665.8
2016E
$973.7
217.1
756.6
2017E
$1,075.8
237.7
838.0
2018E
$1,166.1
255.4
910.7
CAGR
'13E '18E
13.1%
6.2%
15.6%

Impairment Charges
Total Expenses
252.6
252.6
202.6
202.6
236.3
236.3
265.8
265.8
291.5
291.5
313.7
313.7
4.4%
N/A
4.4%
EBITDA
189.4
354.6
429.6
490.8
546.5
597.0
25.8%

EBIT
215.4
(25.9)
293.2
61.4
340.2
89.4
314.7
176.0
321.8
224.7
286.7
310.3
5.9%
N/A

29.7
3.8
33.3
94.7
37.1
126.4
48.4
224.4
61.2
285.9
66.3
376.6
17.4%
N/A
151.0%

(1.2)
2.5
(33.2)
61.6
(44.3)
82.2
(78.5)
145.9
(100.1)
185.9
(131.8)
244.8
154.0%
149.5%
$0.03
$0.81
$1.08
$1.91
$2.43
$3.21
44.5%
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
75.2
1.2
76.4
% Net Sales
COGS
SG&A
EBITDA
30.0%
40.0%
30.0%
23.0%
28.0%
49.0%
22.5%
27.5%
50.0%
22.3%
27.3%
50.4%
22.1%
27.1%
50.8%
21.9%
26.9%
51.2%
Margin
Gross Profit
EBITDA
Net
70.0%
30.0%
0.4%
77.0%
49.0%
8.5%
77.5%
50.0%
9.6%
77.7%
50.4%
15.0%
77.9%
50.8%
17.3%
78.1%
51.2%
21.0%
Other
Tax Rate
33.0%
35.0%
35.0%
35.0%
35.0%
35.0%

Net Sales
Cost of Sales
Gross Profit

DigitalGlobe, Inc.
Balance Sheet
Street Case
Assets
Current Assets
Accounts Receivable
2013E

3,156.6
3,285.3
3,434.9
3,697.0
3,964.1
4,235.8
(945.0) (1,229.1) (1,561.0) (1,869.6) (2,185.3) (2,465.4)
2,211.7
2,056.3
1,873.9
1,827.4
1,778.9
1,770.4

$404.2
118.0
50.8
30.3
603.4
2014E
$642.4
135.3
50.8
34.8
863.2
2015E
2016E
2017E
2018E
$1,030.7
160.6
50.8
41.3
1,283.3
$1,453.7
182.0
50.8
46.8
1,733.3
$1,706.1
201.1
50.8
51.7
2,009.6
$1,978.1
218.0
50.8
56.0
2,302.8
CAGR
'13E '18E
37.4%
13.1%
0.0%
13.1%
30.7%
6.1%
21.1%
(4.4%)
83.3
(41.0)
42.3
83.3
(50.1)
33.2
83.3
(58.3)
25.0
83.3
(64.5)
18.8
83.3
(70.6)
12.7
83.3
(77.2)
6.1
382.6
98.4
$3,338.3
382.6
112.7
$3,448.0
382.6
133.8
$3,698.7
382.6
151.7
$4,113.8
382.6
167.6
$4,351.4
382.6
181.6
$4,643.6
0.0%
13.1%
6.8%
$23.2
5.5
60.9
134.2
223.8
$20.4
5.5
72.2
153.8
252.0
$23.6
5.5
81.9
182.6
293.7
$26.6
5.5
90.5
207.0
329.5
$29.1
5.5
98.1
228.7
361.3
$31.2
5.5
104.2
247.9
388.9
6.2%
0.0%
11.4%
13.1%
11.7%
Deferred Revenue
Long-Term Debt
Total Liabilities
388.8
1,136.7
189.0
3.0
1,941.3
388.8
1,131.1
189.0
3.5
1,964.4
388.8
1,232.3
189.0
4.1
2,107.9
388.8
1,440.1
189.0
4.7
2,352.1
388.8
1,434.6
189.0
5.2
2,378.9
388.8
1,429.0
189.0
5.6
2,401.3
0.0%
4.7%
0.0%
13.1%
4.3%
Common Stock
Treasury Stock
0.2
(2.0)
1,426.9
(28.1)
1,397.0
0.2
(2.0)
1,451.9
33.5
1,483.6
0.2
(2.0)
1,476.9
115.7
1,590.8
0.2
(2.0)
1,501.9
261.5
1,761.6
0.2
(2.0)
1,526.9
447.4
1,972.5
0.2
(2.0)
1,551.9
692.2
2,242.3
0.0%
0.0%
1.7%
N/A
9.9%
Goodwill
Total Assets
Liabilities
Current Liabilities
Accounts Payable
Deferred Revenue
$3,338.3
$3,448.0
$3,698.7
$4,113.8
$4,351.4
$4,643.6
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
68.2
4.8%
44.6
21.3%
Key Metrics:
A/R Days
Prepaid and Other Current Assets as % of Sales
A/P Days
Other Current Liabilities as % of Sales
0.0%
13.5%
(32.1%)
6.8%
DigitalGlobe, Inc.
Cash Flow Statement
Street Case
Net Income
Add (Deduct) Items:
Other
Accounts Receivable
Accounts Payable
2013E
2014E
2015E
2016E
2017E
2018E
$145.9
$185.9
$244.8
CAGR
'13E '18E
$2.5
$61.6
$82.2
149.5%
7.6
207.8
25.0
(7.9)
9.1
284.1
25.0
(14.4)
8.2
332.0
25.0
(21.1)
6.2
308.5
25.0
(17.9)
6.1
315.7
25.0
(15.9)
6.6
280.1
25.0
(14.1)
(2.7%)
6.2%
0.0%
12.4%
(9.4)
7.9
16.3
249.8
(17.2)
(2.8)
27.0
372.4
(25.3)
3.3
32.6
436.8
(21.4)
2.9
28.0
477.2
(19.1)
2.5
24.9
525.1
(16.9)
2.2
21.5
549.2
12.4%
(22.8%)
5.7%
17.1%
(185.0)
(31.6)
(216.6)
(92.5)
(36.2)
(128.7)
(106.7)
(43.0)
(149.6)
(213.4)
(48.7)
(262.0)
(213.4)
(53.8)
(267.1)
(213.4)
(58.3)
(271.7)
2.9%
13.1%
4.6%
1.0
(5.1)
(4.1)
(5.5)
(5.5)
101.1
101.1
207.8
207.8
(5.5)
(5.5)
(5.5)
(5.5)
NA
1.8%
6.3%
$29.1
$238.1
$388.3
$423.0
$252.4
$272.0
56.3%

375.1
404.2
404.2
642.4
642.4
1,030.7
1,030.7
1,453.7
1,453.7
1,706.1
1,706.1
1,978.1
35.4%
37.4%
DigitalGlobe, Inc.
Revenue Model
Street Case
Net Sales
Other US Government
Total US Government
Commercial
Net Sales
2013E
2014E
2015E
2016E
2017E
2018E
CAGR
'13E '18E
$266.4
158.3
$424.7
$300.0
200.3
$500.3
$300.0
250.3
$550.3
$300.0
288.9
$588.9
$300.0
318.3
$618.3
$300.0
336.8
$636.8
2.4%
16.3%
8.4%
299.0
$723.7
358.8
$859.1
423.4
$973.7
486.9
$1,075.8
547.8
$1,166.1
602.6
$1,239.4
15.0%
11.4%
Net Sales Growth

Other US Government
Total US Government
na
na
na
12.6%
26.5%
17.8%
0.0%
25.0%
10.0%
0.0%
15.4%
7.0%
0.0%
10.2%
5.0%
0.0%
5.8%
3.0%
Commercial
Net Sales
na
na
20.0%
18.7%
18.0%
13.3%
15.0%
10.5%
12.5%
8.4%
10.0%
6.3%

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Long Recommendation

Allison Transmission Holdings, Inc. (NYSE: ALSN)

Premier brand: premium price

Consistently strong EBITDA margin

LTM Net Sales by End Market

Global market leader 62% global market share of fully-automatic

Historically strong operating margins (~33% adjusted EBITDA margin)

Investment Rationale (#1): LT Revenue Growth Potential

Continued cyclical recovery, from 2009 cyclical

Total NA Production in Core Market (000s)

Emerging markets today predominantly utilize

Penetration of Fully-Automatic Transmissions

Source: Company filings, ACT Research

Investment Rationale (#2): Margin Expansion Opportunities

~90% of NA unit volume was

ALSNs North American Market Share

100% share in wheeled military vehicles

Adjusted EBITDA Margin

Investment Rationale (#3): Returns to Shareholders

ALSN generates significant

Source: Company filings

Net Debt-to-Adjusted EBITDA

2013E Implied Valuation Based on DCF:

Implied Enterprise Value

Implied Enterprise Value

Less: 2013E Total Debt

Less: 2013E Total Debt

2013E Diluted Shares Outstanding

2013E Diluted Shares Outstanding

Please refer to the

Implied Share Price

Sensitivity on EBITDA Multiple and Gross Margin

Sensitivity on DCF Analysis

Adjusted EBITDA Margin

Sensitivity on Sales Growth and Gross Margin

Terminal Growth Rate

Issues for Consideration

Source: Company filings

Source: Company website

Joined ALSN in 1989

Joined ALSN in 1977

Joined ALSN in 1995

Comparable Company & WACC Analyses

Source: Capital IQ (as of November 8, 2013), Ibbotson, Company filings

WEIGHTED AVERAGE COST OF CAPITAL

Financial Projections: Income Statement

($mm, except as noted)

Income Tax Benefit (Expense)

Diluted EPS Attributable to Common Stockholders

Dividends per Common Share

Weighted Average Shares of Common Stock Outstanding

Financial Projections: Income Statement (contd)

($mm, except as noted)

Net Cash Provided by Operating Activities

Adjusted EBITDA Margin

Effective Tax Rate

Financial Projections: Net Sales

($mm, except as noted)

Financial Projections: Balance Sheet

($mm, except as noted)

Total Property, Plant and Equipment

1,383.7 1,458.7 1,533.7

2,576.3 2,576.3 2,576.3 2,576.3 2,576.3 2,576.3

1,941.0 1,941.0 1,941.0 1,941.0 1,941.0 1,941.0 1,941.0 1,941.0