Goldman Stanley, Inc.

Project Yacht
Presentation to the Board of Directors
Strictly Confidential | February 2, 2008

Goldman Stanley Confidential Draft

Table Of Contents

Executive Summary 3

Yacht Valuation 5

Monterrey / Yacht Combination 11

Process Recommendations 18

Appendix 20

Goldman Stanley
 Executive Summary

Goldman Stanley 3
Executive Summary

• On February 1, 2008, Monterrey made an offer to acquire 100% of Yacht’s fully

diluted shares outstanding for $31.00 / share

• $31.00 / share values Yacht well above its average price over the past year; offer
price is also significantly higher than per-share prices implied by valuation

• Given Yacht’s competitive position, market dynamics, and capital structure, another
party is unlikely to step forward with a superior offer

• The combination of Monterrey and Yacht would create a strong #2 player in the
search advertising market and would facilitate a more effective online strategy for the
combined entity

• Attractiveness of offer and next steps depend on Yacht’s 3-year plan and
management’s confidence in ability to hit projections

Goldman Stanley 4
 Yacht Valuation

Goldman Stanley 5
Valuation Summary

• Monterrey’s offer of $31/share exceeds the valuation range implied by traditional

methodologies

• Recent comparable transactions show higher implied per-share prices due to recently
“hot” market and flurry of activity in mid-2007

• Comparable public companies, public company premiums, and discounted cash flow
analysis all show $31/share in the uppermost quartile of the valuation range

• Yacht’s significant equity investments in other entities have been taken into account
in this valuation, but potential value from net operating losses has been excluded

• Yacht’s equity investments contribute approximately $5B worth of value to equity

value of company

• Valuation and all implied share prices are based on Yacht’s “base case” (in-line with
Wall Street estimates) financial projections

Goldman Stanley 6
 Yacht Valuation
($ in Millions Except Per Share Data)

Monterrey Offer
Public Company Comparables

TTM TEV / Revenue:

12/31/2008 TEV / Revenue:
12/31/2009 TEV / Revenue:
TTM TEV / EBITDA:
12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:

Precedent Transactions Min to 25th

TTM TEV / Revenue: 25th to Median
Forward Year 1 TEV / Revenue: Median to 75th
TTM TEV / EBITDA:
75th to Max
Forward Year 1 TEV / EBITDA:
Public Company Premiums
1-Day Premiums:

20-Day Premiums:
Discounted Cash Flow Analysis
5-9% Growth Rate, 11-15% Discount Rate:

$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00

Goldman Stanley 7
 Yacht Comparable Public Companies
Diversified Internet Companies With Over $1 Billion TTM Revenue

($ in Millions Except Per Share Data)

Operating Statistics Capitalization
Equity Enterprise Revenue EBITDA EPS
Company Name Value Value TTM 12/31/2008 12/31/2009 TTM 12/31/2008 12/31/2009 TTM 12/31/2008 12/31/2009
Google Inc. $ 174,565 $ 159,287 $ 11,660 $ 17,212 $ 23,583 $ 6,921 $ 10,118 $ 13,567 $ 13.68 $ 21.16 $ 26.93
eBay Inc. 34,925 29,889 7,672 8,674 9,978 2,908 3,135 3,646 1.30 1.65 1.94
Amazon.com, Inc. 31,964 30,151 14,835 19,258 23,102 1,095 1,407 1,783 1.48 1.86 2.40
IAC/InterActiveCorp 14,408 13,009 6,373 6,817 7,463 817 890 1,048 1.73 1.61 1.97

Maximum $ 174,565 $ 159,287 $ 14,835 $ 19,258 $ 23,583 $ 6,921 $ 10,118 $ 13,567 $ 13.68 $ 21.16 $ 26.93
75th Percentile 69,835 62,435 12,454 17,724 23,222 3,911 4,881 6,126 4.72 6.69 8.53
Median $ 33,444 $ 30,020 $ 9,666 $ 12,943 $ 16,540 $ 2,001 $ 2,271 $ 2,714 $ 1.61 $ 1.76 $ 2.19
25th Percentile 27,575 25,669 7,348 8,210 9,349 1,025 1,278 1,599 1.44 1.64 1.96
Minimum 14,408 13,009 6,373 6,817 7,463 817 890 1,048 1.30 1.61 1.94

Yacht $ 25,473 $ 18,509 $ 5,113 $ 5,801 $ 6,500 $ 1,927 $ 2,045 $ 2,194 $ 0.86 $ 0.86 $ 0.87

Valuation Statistics Capitalization Enterprise Value / Enterprise Value /

Equity Enterprise Revenue EBITDA P / E Multiple
Company Name Value Value TTM 12/31/2008 12/31/2009 TTM 12/31/2008 12/31/2009 TTM 12/31/2008 12/31/2009
Google Inc. $ 174,565 $ 159,287 13.7 x 9.3 x 6.8 x 23.0 x 15.7 x 11.7 x 40.1 x 25.9 x 20.4 x
eBay Inc. 34,925 29,889 3.9 x 3.4 x 3.0 x 10.3 x 9.5 x 8.2 x 20.3 x 15.9 x 13.6 x
Amazon.com, Inc. 31,964 30,151 2.0 x 1.6 x 1.3 x 27.5 x 21.4 x 16.9 x 50.0 x 39.9 x 30.9 x
IAC/InterActiveCorp 14,408 13,009 2.0 x 1.9 x 1.7 x 15.9 x 14.6 x 12.4 x 29.4 x 31.6 x 25.8 x

Maximum $ 174,565 $ 159,287 13.7 x 9.3 x 6.8 x 27.5 x 21.4 x 16.9 x 50.0 x 39.9 x 30.9 x
75th Percentile 69,835 62,435 6.3 x 4.9 x 3.9 x 24.1 x 17.2 x 13.5 x 42.6 x 33.7 x 27.1 x
Median $ 33,444 $ 30,020 3.0 x 2.7 x 2.4 x 19.5 x 15.2 x 12.1 x 34.7 x 28.8 x 23.1 x
25th Percentile 27,575 25,669 2.0 x 1.8 x 1.6 x 14.5 x 13.3 x 10.9 x 27.1 x 23.4 x 18.7 x
Minimum 14,408 13,009 2.0 x 1.6 x 1.3 x 10.3 x 9.5 x 8.2 x 20.3 x 15.9 x 13.6 x

Yacht $ 25,473 $ 18,509 3.6 x 3.2 x 2.8 x 9.6 x 9.1 x 8.4 x 22.1 x 22.2 x 21.9 x

Goldman Stanley 8
 Yacht Precedent Transactions
Internet M&A Deals Worth Over $500MM With US-Based Sellers Since January 2006

($ in Millions Except Per Share Data)

Yacht - Comparable M&A Transactions Operating Metrics Valuation Multiples - Acquisition

Forward Forward Forward Forward
Acquisition Equity Enterprise TTM Year 1 TTM Year 1 TTM Year 1 TTM Year 1
Acquirer Name Target Name Date Value Value Revenue Revenue EBITDA EBITDA Revenue Revenue EBITDA EBITDA
Monterrey aQuantive 5/18/2007 $ 6,356 $ 6,041 $ 493 $ 610 $ 128 $ 154 12.3 x 9.9 x 47.0 x 39.1 x
Google DoubleClick 4/13/2007 3,100 3,100 232 297 72 98 13.4 x 10.4 x 43.1 x 31.7 x
Publicis Digitas 12/21/2006 1,285 1,137 713 743 64 63 1.6 x 1.5 x 17.8 x 18.0 x
Yacht Right Media (Remaining 80%) 4/29/2007 850 850 N/A 70 N/A 18 N/A 12.1 x N/A 48.6 x
Investor Group Vertrue 3/22/2007 641 730 697 680 93 102 1.0 x 1.1 x 7.9 x 7.1 x
NBC Universal iVillage 3/6/2006 660 604 91 109 17 26 6.6 x 5.5 x 34.8 x 23.4 x
WPP Group 24/7 Real Media 5/17/2007 669 603 215 269 21 27 2.8 x 2.2 x 28.7 x 22.4 x

Maximum $ 6,356 $ 6,041 $ 713 $ 743 $ 128 $ 154 13.4 x 12.1 x 47.0 x 48.6 x
75th Percentile 2,192 2,119 646 645 87 100 10.9 x 10.2 x 41.0 x 35.4 x
Median $ 850 $ 850 $ 362 $ 297 $ 68 $ 63 4.7 x 5.5 x 31.8 x 23.4 x
25th Percentile 664 667 219 189 32 26 1.9 x 1.9 x 20.5 x 20.2 x
Minimum 641 603 91 70 17 18 1.0 x 1.1 x 7.9 x 7.1 x

Goldman Stanley 9
Yacht Discounted Cash Flow Analysis
($ in Millions Except Per Share Data)
Yacht - DCF Cash Flow Projections Assumptions:

FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E Discount Rate: 13%

Revenue: $ - $ 5,801 $ 6,500 $ 7,217 $ 8,043 $ 8,784 Terminal Growth

EBITDA: - 2,045 2,194 2,380 2,634 2,885 Rate: 7%
Operating Income: - 803 867 876 950 994
Model Uses “Base
Less: Taxes - 321 347 351 380 398
Case” Financial
Projections
Plus: Depreciation - 365 477 602 742 897
Plus: Amortization - 247 139 106 60 34
Mid-Year Convention
Plus: Stock-Based Compensation - 630 711 795 882 960
Used For PV Of Cash
Less: Changes in Working Capital: - (130) (67) (88) (82) (80) Flows
Less: Capital Expenditures - 696 780 866 965 1,054

Unlevered Free Cash Flow $ - $ 1,157 $ 1,134 $ 1,251 $ 1,371 $ 1,513

Present Value of Free Cash Flow $ - $ 1,089 $ 945 $ 922 $ 895 $ 874
Yacht - Net Present Value Sensitivity - Terminal Growth Rates
Discount Rate
$ 20.47 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0%
4.0% $ 21.75 $ 19.41 $ 17.65 $ 16.28 $ 15.19 $ 14.30 $ 13.56 $ 12.93
Growth Rate

5.0% $ 24.35 $ 21.28 $ 19.01 $ 17.31 $ 15.99 $ 14.93 $ 14.07 $ 13.35

Terminal

6.0% $ 28.29 $ 23.80 $ 20.82 $ 18.63 $ 16.98 $ 15.70 $ 14.68 $ 13.84

7.0% $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26 $ 16.66 $ 15.43 $ 14.43
8.0% $ 45.85 $ 33.46 $ 26.99 $ 22.78 $ 19.96 $ 17.90 $ 16.36 $ 15.16
9.0% $ 80.73 $ 44.72 $ 32.72 $ 26.37 $ 22.35 $ 19.56 $ 17.56 $ 16.07

Goldman Stanley 10
 Monterrey / Yacht Combination

Goldman Stanley 11
Key Assumptions For “Base Case” Merger Model

• Financial Assumptions:

Projected Closing Date: 6/30/2009

50% Cash / 50% Stock Transaction

$31.00 / Share (63% Premium to Current Share Price)

4.4% Foregone Interest Rate on Cash; $32.20 Monterrey Share Price

Purchase Price Allocation & Balance Sheet Assumptions:
• 10% Yacht PP&E Write-Up
• 20% Allocated to Intangibles
• 50% Deferred Revenue Write-Down
• Operational Assumptions:

10% Revenue Synergies (~$500 Million in Monterrey FY 2010E / FY 2011E)

10% Expense Synergies (~$400 Million in Monterrey FY 2010E / FY 2011E)

30% Book Tax Rate Assumed

Goldman Stanley 12
Monterrey & Yacht Summary Income Statements
($ in Millions Except Per Share Data)

Buyer Income Statement ($MM) - Summary - Monterrey Yacht Financial

Historical Projected Projections Have Been
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E Calendarized To Match
Monterrey’s Fiscal
Revenue: $44,282 $51,122 $60,141 $67,702 $73,825 $78,993 $82,942 Years
Operating Income: $16,472 $18,524 $24,163 $26,127 $28,087 $30,053 $31,556
Pre-Tax Income: $18,262 $20,101 $25,360 $27,779 $30,336 $32,958 $35,184
Pro-Forma Net Income: $13,870 $15,315 $18,763 $20,456 $22,208 $24,051 $25,640
Pro-Forma EPS: $1.32 $1.55 $1.98 $2.19 $2.43 $2.63 $2.80

Seller Income Statement ($MM) - Summary - Yacht - Based on Buyer Fiscal Years Projections Based On
Historical Projected Consensus Wall Street
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E Estimates & Goldman
Stanley Model
Revenue: $4,836 $5,457 $6,150 $6,859 $7,630 $8,414
Operating Income: $818 $749 $835 $872 $913 $972
Pre-Tax Income: $974 $869 $915 $946 $994 $1,064
Pro-Forma Net Income: $1,147 $1,182 $1,215 $1,241 $1,297 $1,367
Pro-Forma EPS: $0.80 $0.84 $0.86 $0.88 $0.92 $0.97

Goldman Stanley 13
An Acquisition Of Yacht By Monterrey Is Expected To
Be Dilutive To Monterrey’s Pro-Forma EPS
($ in Millions Except Per Share Data)
Combined Income Statement and Transaction Adjustments ($MM)
Adjustments Combined Years Pro-Forma EPS Figures
FY 2009E Debit Credit FY 2009E FY 2010E FY 2011E FY 2012E
Exclude:
Buyer + Seller Revenue: $80,684 $86,623 $91,356
Revenue Synergies: $469 $537 $608 -Amortization Of Intangibles
Revenue: $81,153 $87,160 $91,964
-Stock-Based Compensation
Buyer + Seller Operating Income: $28,959 $30,966 $32,528 -Deferred Revenue Write-Down
Revenue Synergies: $469 $537 $608
Expenses Associated with Revenue Synergies: ($94) ($109) ($125)
Cost Synergies: $334 $367 $400 Projections Based On
Operating Income: $29,668 $31,762 $33,411 Consensus Wall Street
Interest / Investment Income: $2,324 $2,985 $3,720
Estimates & Goldman
Stanley Model
Acquisition Effects:
Foregone Interest on Cash: ($944) ($985) ($1,028)
New Interest Expense: $0 $0 $0
New Amortization Expense: ($1,482) ($1,482) ($1,482)
Even With Generous
Financing Fees Amortization: $0 $0 $0 Synergy Assumptions,
New Depreciation Expense: ($23) ($23) ($23) Transaction Is Still
Deferred Revenue Write-Down: ($218) $0 $0
Slightly Dilutive To
Pre-Tax Income: $29,325 $32,257 $34,597
Monterrey Pro-Forma
Book Taxes: $8,797 $9,677 $10,379 EPS:
Equity & Minority Interest Earnings: $148 $148 $148

Diluted Shares Outstanding: 9,142 9,142 9,142

Shares Issued in Transaction: 666 666 666
Total New Shares Outstanding: 9,808 9,808 9,808 EPS Accretion / Dilution: ($0.04)

Pro-Forma Net Income: $23,451 $25,391 $27,093 Accretion / Dilution %: (1.5%)

Pro-Forma EPS: $2.39 $2.59 $2.76
Pro-Forma EPS - Buyer Standalone: $2.43 $2.63 $2.80
Pro-Forma EPS Accretion / Dilution: (1.6%) (1.6%) (1.5%)

Goldman Stanley 14
Sensitivity Tables – Pro-Forma EPS Accretion / Dilution
($ in Millions Except Per Share Data)
Per-Share Purchase Price vs. Cash / Stock Split:
Purchase Consideration - % Cash: Monterrey Needs To
(1.6%) 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% Pay 70%+ In Cash For
$ 35.00 (4.6%) (4.2%) (3.8%) (3.4%) (2.9%) (2.5%) (2.0%) (1.6%) (1.1%) Transaction To Be
(0.8%) Accretive At $31/Share
Per Share Purchase Price

$ 34.00 (4.2%) (3.8%) (3.4%) (3.0%) (2.6%) (2.2%) (1.7%) (1.3%)

$ 33.00 (3.9%) (3.5%) (3.1%) (2.7%) (2.3%) (1.8%) (1.4%) (1.0%) (0.6%)
$ 32.00 (3.5%) (3.1%) (2.7%) (2.3%) (1.9%) (1.5%) (1.1%) (0.7%) (0.3%)
$ 31.00 (3.1%) (2.7%) (2.3%) (2.0%) (1.6%) (1.2%) (0.8%) (0.4%) 0.0%
$ 30.00 (2.7%) (2.3%) (2.0%) (1.6%) (1.2%) (0.8%) (0.5%) (0.1%) 0.3%
$ 29.00 (2.3%) (2.0%) (1.6%) (1.3%) (0.9%) (0.5%) (0.1%) 0.2% 0.6%
$ 28.00 (2.0%) (1.7%) (1.3%) (0.9%) (0.6%) (0.2%) 0.1% 0.5% 0.9%
$ 27.00 (1.6%) (1.3%) (1.0%) (0.6%) (0.3%) 0.1% 0.4% 0.8% 1.1%
$ 26.00 (1.3%) (1.0%) (0.6%) (0.3%) 0.0% 0.4% 0.7% 1.1% 1.4%
Per-Share Purchase Price vs. Revenue Synergies:
Revenue Synergies - % Seller Existing Revenue: Combined Entity Needs
(1.6%) 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% To Achieve Synergies
$ 35.00 (4.0%) (3.8%) (3.6%) (3.4%) (3.1%) (2.9%) (2.7%) (2.5%) (2.3%) Well Beyond $1B Level
Monterrey Anticipates
Per Share Purchase Price

$ 34.00 (3.7%) (3.5%) (3.2%) (3.0%) (2.8%) (2.6%) (2.4%) (2.2%) (1.9%)
$ 33.00 (3.4%) (3.1%) (2.9%) (2.7%) (2.5%) (2.3%) (2.0%) (1.8%) (1.6%) For Transaction To Be
$ 32.00 (3.0%) (2.8%) (2.6%) (2.4%) (2.1%) (1.9%) (1.7%) (1.5%) (1.3%) Accretive At $31/Share
$ 31.00 (2.7%) (2.5%) (2.2%) (2.0%) (1.8%) (1.6%) (1.4%) (1.1%) (0.9%)
$ 30.00 (2.3%) (2.1%) (1.9%) (1.7%) (1.4%) (1.2%) (1.0%) (0.8%) (0.6%)
$ 29.00 (2.0%) (1.8%) (1.6%) (1.3%) (1.1%) (0.9%) (0.7%) (0.5%) (0.2%)
$ 28.00 (1.7%) (1.5%) (1.3%) (1.0%) (0.8%) (0.6%) (0.4%) (0.1%) 0.1%
$ 27.00 (1.4%) (1.2%) (1.0%) (0.7%) (0.5%) (0.3%) (0.1%) 0.2% 0.4%
$ 26.00 (1.1%) (0.9%) (0.6%) (0.4%) (0.2%) 0.0% 0.2% 0.5% 0.7%

Goldman Stanley 15
Yacht Potential Revenue Synergies
($ in Millions Except Per Unit Data)

Transaction Assumptions - Revenue Synergies ($MM Except Per Search and Per Pageview Data) Even A 10%
Improvement To
Revenue Synergies from Improved Monetization (Seller): Yacht’s Revenue Per
Search And Revenue
Combined Years Per Pageview Would
FY 2010E FY 2011E FY 2012E Yield ~$500MM In
Search Advertising: $1,706 $1,971 $2,236 Synergies
Display Advertising: $2,993 $3,409 $3,848

Revenue Per Search (RPS) - Yacht: $0.016 $0.017 $0.018

% Increase from Buyer: 10.0% 10.0% 10.0%
New Revenue Per Search (RPS): $0.018 $0.019 $0.020

Search Revenue Synergies: $170 $197 $223

Revenue Per Pageview - Yacht: $0.0015 $0.0016 $0.0016

% Increase from Buyer: 10.0% 10.0% 10.0%
New Revenue Per Pageview: $0.0016 $0.0017 $0.0018

Display Revenue Synergies: $299 $341 $384

Total Revenue Synergies: $469 $537 $608

Seller Existing Gross Margin: 80.0% 79.7% 79.5%
Cost of Revenue Synergies: $94 $109 $125

Goldman Stanley 16
Yacht Potential Cost Synergies
($ in Millions Except Per Unit Data)
Transaction Assumptions - Cost Synergies ($MM Except Per Employee Data)
A 10% Reduction In Force In
Cost Synergies from Reduction in Force (Seller): Yacht’s Sales & Marketing And
General & Administrative
Combined Years Departments Would Result In
FY 2010E FY 2011E FY 2012E $300MM + Of Synergies
# Employees - Sales & Marketing: 5,047 5,615 6,192
# Employees - General & Administrative: 4,249 4,727 5,212
Average Expense Per S&M Employee: $427,763 $432,040 $434,152
Average Expense Per G&A Employee: $202,749 $205,565 $207,389

Reduction in Force - Sales & Marketing: 10.0% 10.0% 10.0%

Reduction in Force - General & Administrative: 10.0% 10.0% 10.0%

S&M Employees Post-Transaction: 4,543 5,054 5,573

G&A Employees Post-Transaction: 3,824 4,254 4,691

Sales & Marketing Expense Synergies: $216 $243 $269

General & Administrative Expense Synergies: $86 $97 $108

Cost Synergies from Building Consolidation and Rental Savings (Buyer & Seller):
Synergies Via Operating Lease
Combined Years Consolidation Are Also
FY 2010E FY 2011E FY 2012E
Buyer - Operating Lease Commitments: $202 $174 $150
Possible, But Upside Is More
Seller - Operating Lease Commitments: $117 $99 $85 Limited
Total Operating Lease Commitments: $319 $273 $235

Incremental Savings from Consolidation: 10.0% 10.0% 10.0%

Rental Expense Synergies: $32 $27 $23

Total Expense Synergies: $334 $367 $400

Goldman Stanley 17
 Process Recommendations

Goldman Stanley 18
Key Recommendations

• We recommend engaging in discussions with Monterrey and focusing negotiation

efforts on raising offer price to $35/share range

• Negotiations, Definitive Agreement signing, and regulatory approval may take up to

1.5 years

• During this period, we recommended contacting a limited number of other financial

and strategic partners to gauge interest and win a competing offer

• Likelihood of receiving a competitive 100% acquisition offer is low, but more “creative”
transaction scenarios are possible

• Should negotiations with Monterrey fail or if no other parties express interest in Yacht,
other possibilities include selling certain assets or outsourcing operations to other
strategic partners

Goldman Stanley 19
 Appendix

Goldman Stanley 20
Yacht Revenue & Expense Detail
($ in Millions Except Per Share Data)

Total Net Revenue (Ex-TAC) ($MM) - Yacht

Historical Projected
FY 2005 FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
Search Advertising: $977 $1,181 $1,384 $1,597 $1,815 $2,126 $2,346
Display Advertising: $1,730 $2,052 $2,415 $2,791 $3,195 $3,624 $4,071
Affiliate Site Revenue: $728 $625 $656 $683 $703 $724 $746
Premium Fees: $798 $881 $934 $981 $1,020 $1,050 $1,071
Other Revenue: $326 $374 $412 $449 $485 $519 $550
Total Net Revenue (Ex-TAC): $3,696 $4,560 $5,113 $5,801 $6,500 $7,217 $8,043 $8,784
Net Revenue Growth %: N/A 23.4% 12.1% 13.5% 12.1% 11.0% 11.4% 9.2%

Cost of Revenue & Operating Expenses ($MM) - Yacht

Historical Projected
FY 2005 FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
Cost of Revenue (Ex-TAC): $534 $810 $982 $1,122 $1,284 $1,457 $1,642 $1,814
Product Development: $570 $833 $1,084 $1,265 $1,443 $1,630 $1,830 $2,013
Sales & Marketing: $1,034 $1,322 $1,610 $1,785 $2,031 $2,289 $2,564 $2,813
General & Administrative: $341 $529 $633 $708 $809 $915 $1,029 $1,133
Total COGS and Operating Expenses: $2,479 $3,494 $4,310 $4,880 $5,566 $6,290 $7,065 $7,774
% Revenue (Ex-TAC): 67.1% 76.6% 84.3% 84.1% 85.6% 87.2% 87.8% 88.5%

Goldman Stanley 21
Yacht Standalone Income Statement – Base Case
($ in Millions Except Per Share Data)
Income Statement ($MM) - Yacht
Historical Projected
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E

Revenue (Ex-TAC): $4,560 $5,113 $5,801 $6,500 $7,217 $8,043 $8,784

Cost of Revenue (Ex-TAC): $810 $982 $1,122 $1,284 $1,457 $1,642 $1,814
Gross Profit: $3,750 $4,131 $4,679 $5,216 $5,761 $6,401 $6,970
Operating Expenses:
Product Development: $833 $1,084 $1,265 $1,443 $1,630 $1,830 $2,013
Sales & Marketing: $1,322 $1,610 $1,785 $2,031 $2,289 $2,564 $2,813
General & Administrative: $529 $633 $708 $809 $915 $1,029 $1,133
Amortization of Intangibles: $125 $107 $118 $66 $51 $29 $16
Total Operating Expenses: $2,809 $3,435 $3,876 $4,348 $4,884 $5,451 $5,976

Operating Income: $941 $695 $803 $867 $876 $950 $994

Interest / Investment Income: $143 $130 $87 $73 $76 $84 $98
Net Investment Gains / Losses & Other: $14 $24 $0 $0 $0 $0 $0
Pre-Tax Income: $1,098 $849 $890 $940 $952 $1,035 $1,093
Income Tax Provision: ($458) ($337) ($356) ($376) ($381) ($414) ($437)
Effective Income Tax Rate: 41.7% 39.7% 40.0% 40.0% 40.0% 40.0% 40.0%
Earnings in Equity Interests: $112 $151 $151 $151 $151 $151 $151
Minority Interest Earnings: ($1) ($3) ($3) ($3) ($3) ($3) ($3)
Net Income (GAAP): $751 $660 $682 $712 $719 $769 $803
Weighted Avg. Diluted Shares Outstanding: 1,458 1,405 1,405 1,405 1,405 1,405 1,405
Diluted EPS (GAAP): $0.52 $0.47 $0.48 $0.51 $0.51 $0.55 $0.57

Pro-Forma Reconciliation:
Amortization of Intangibles: $238 $250 $247 $139 $106 $60 $34
Stock-Based Compensation: $425 $572 $630 $711 $795 $882 $960
Pro-Forma Pre-Tax Income: $1,761 $1,672 $1,766 $1,790 $1,853 $1,977 $2,086
Effective Tax Rate: 41.7% 39.7% 40.0% 40.0% 40.0% 40.0% 40.0%
Equity & Minority Interest Earnings: $111 $148 $148 $148 $148 $148 $148

Pro-Forma Net Income: $1,138 $1,156 $1,208 $1,222 $1,260 $1,334 $1,400
Pro-Forma EPS: $0.78 $0.82 $0.86 $0.87 $0.90 $0.95 $1.00

Stock-Based Compensation: $425 $572 $630 $711 $795 $882 $960

Depreciation: $302 $409 $365 $477 $602 $742 $897
Amortization: $238 $250 $247 $139 $106 $60 $34
EBITDA: $1,906 $1,927 $2,045 $2,194 $2,380 $2,634 $2,885
EBIT: $1,366 $1,268 $1,433 $1,578 $1,671 $1,833 $1,954

Goldman Stanley 22
Yacht Equity Investments – Valuation
($ in Millions Except Per Share Data)

Yacht - Yacht Japan Ownership Valuation Yacht - Alibaba.com Ownership Valuation

Market Cap (B Yen): ¥2,267,000.0 Market Cap (HKD): HKD 100,800.0

Yen Exchange Rate: 106.9 HKD Exchange Rate: 7.8
Market Cap (USD): $21,206.7 Market Cap (USD): $12,923.1
Ownership Stake: 33% Ownership Stake: 28%
Value of Yacht's Stake: $6,998.2 Value of Yacht's Stake: $3,618.5
Lack of Control Discount: 20% Lack of Control Discount: 20%
Sale Value: $5,598.6 Sale Value: $2,894.8
Taxes: $2,239.4 Taxes: $1,157.9
Proceeds to Yacht: $3,359.1 Proceeds to Yacht: $1,736.9

Yacht - GMarket Ownership Valuation Yacht - Alibaba Group Other Assets Valuation

Market Cap (USD): $1,047.0 Book Value of Alibaba Assets: $1,440.3

Ownership Stake: 10% % in Non-Public Assets: 25%
Value of Yacht's Stake: $104.7 Value of Yacht's Stake: $360.1
Lack of Control Discount: 20% Sale Value: $360.1
Sale Value: $83.8 Taxes: $144.0
Taxes: $33.5 Proceeds to Yacht: $216.0
Proceeds to Yacht: $50.3

Total Value of Non-Core Assets: $5,362.3

Goldman Stanley 23
Yacht DCF Analysis – WACC Calculation
($ in Millions Except Per Share Data)
Discount Rate Calculation - Assumptions
Risk-Free Rate: 4.31%
Equity Risk Premium: 7.00%
Interest Rate on Debt: 0.00%

Comparable Companies - Unlevered Beta Calculation

Levered Equity Unlevered
Name Beta Debt Value Tax Rate Beta
Google Inc. 1.29 $ - $ 174,565 35% 1.29
eBay Inc. 1.96 - 34,925 35% 1.96
Amazon.com, Inc. 1.28 1,299 31,964 35% 1.25
IAC/InterActiveCorp 0.80 946 14,408 35% 0.77

Median 1.27

Yacht 1.39

Yacht - Levered Beta & WACC Calculation

Unlevered Equity Levered
Beta Debt Value Tax Rate Beta

Yacht 1.27 $ 750 $ 25,473 40% 1.29

Cost of Equity Based on Comparables: 13.35%

Cost of Equity Based on Historical Beta: 14.04%

WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Preferred Stock

WACC 12.96%

Goldman Stanley 24
Monterrey / Yacht Transaction Summary
($ in Millions Except Per Share Data)

Current Yacht Market Data: Transaction Metrics:

Current Price: $ 19.05 Consideration Per Share: $ 31.00
Diluted Shares Outstanding: 1,337.2 Diluted Shares Outstanding: 1,383.3
Equity Market Value: $ 25,473 Implied Diluted Equity Value: $ 42,882
Plus: Total Debt $750 Plus: Total Debt $0
Plus: Preferred Stock $0 Plus: Preferred Stock $0
Plus: Minority Interest $12 Plus: Minority Interest $12
Less: Cash & Cash-Equivalents $2,363 Less: Cash & Cash-Equivalents $2,363
Less: Equity Investments $5,362 Less: Equity Investments $5,362
Total Enterprise Value: $ 18,509 Total Enterprise Value: $ 35,168

Current Valuation Multiples: Implied Transaction Multiples:

Current Implied Public Trans.
Statistic Multiple Multiple Comps Comps

TTM TEV / Revenue: $ 5,113 3.6 x TTM TEV / Revenue: 6.9 x 3.0 x 4.7 x
12/31/2008 TEV / Revenue: $ 5,801 3.2 x 12/31/2008 TEV / Revenue: 6.1 x 2.7 x 5.5 x
12/31/2009 TEV / Revenue: $ 6,500 2.8 x 12/31/2009 TEV / Revenue: 5.4 x 2.4 x N/A

TTM TEV / EBITDA: $ 1,927 9.6 x TTM TEV / EBITDA: 18.2 x 19.5 x 31.8 x
12/31/2008 TEV / EBITDA: $ 2,045 9.1 x 12/31/2008 TEV / EBITDA: 17.2 x 15.2 x 23.4 x
12/31/2009 TEV / EBITDA: $ 2,194 8.4 x 12/31/2009 TEV / EBITDA: 16.0 x 12.1 x N/A

TTM Pro-Forma P/E: $ 0.86 22.1 x TTM Pro-Forma P/E: 36.0 x 34.7 x N/A
12/31/2008 Pro-Forma P/E: $ 0.86 22.2 x 12/31/2008 Pro-Forma P/E: 36.1 x 28.8 x N/A
12/31/2009 Pro-Forma P/E: $ 0.87 21.9 x 12/31/2009 Pro-Forma P/E: 35.7 x 23.1 x N/A

Goldman Stanley 25