EX-99.C3 3 dex99c3.htm PRESENTATION, DATED AUGUST 7, 2006 Presentation, dated August 7, 2006
Project Arrow
CONFIDENTIAL
THESE MATERIALS MAY NOT BE USED OR RELIED UPON FOR ANY PURPOSE OTHER THAN AS SPECIFICALLY CONTEMPLATED BY A
WRITTEN AGREEMENT WITH CREDIT SUISSE.
Presentation to the Special Committee
August 7, 2006

1
CONFIDENTIAL
Table of Contents
1.
Overview of the Consortium’s Proposal
2.
Arrow Overview
3.
Financial Overview
A.
Overview of Financial Projections
B.
Financial Analysis
Appendices
A.
Management Case Financial Projections
B.
Enterprise Value Adjustments
C.
Segment DCF Detail and DCF Sensitivities
D.
Precedent Transaction Premiums
E.
Historical Trading Multiples
F.
Illustrative LBO Assumptions

2
CONFIDENTIAL
1.
Overview of the
Consortium’s Proposal

3
CONFIDENTIAL
Overview of Consortium’s Current Proposal
(1) Based on treasury method.
(2) Adjustments based on management guidance.  Debt and A/R facility balance as of
June 30, 2006.
Note: LTM EBITDA and EBIT as of June 30, 2006.
Financials include $22mm, $22mm and $17mm of option and RSU expenses in
LTM 6/30/06, 2006E and 2007E, respectively.  Excluding these expenses,
multiples are 9.0x, 8.9x and 8.4x  for LTM, 2006E and 2007E EBITDA, 13.9x, 13.8x
and
13.0x
for
LTM,
2006E
and
2007E
EBIT,
and
20.8x
and
19.0x
for
2006E
and
2007E EPS, respectively.
(3)
Management estimates provided to CS on May 25, as adjusted on July 6 and
August 2, 2006, based on management guidance.
(4)
I/B/E/S consensus data as of August 7, 2006.
($ in millions, except per share prices)
Proposed Share Price
$33.80
Diluted Shares Outstanding
(1)
184.5
Equity Value
$6,236
Adjustments
(2)
Funded Debt
1,982
A/R Facility
225
Minority Interest
13
SURP Liability
81
Enterprise Value
$8,537
% Premium to Pre-Announcement:
Share Price as of 4/28/06 ($28.11)
20.2%
30–Trading Days Prior ($29.05)
16.4%
10–Trading Day Average ($27.88)
21.2%
30–Trading Day Average ($28.67)
17.9%
60–Trading Day Average ($28.42)
18.9%
LTM High –
3/27/06 –
($29.93)
12.9%
LTM Low –
4/29/05 –
($24.51)
37.9%
Implied Multiples –
Management Case
(3)
Implied
Enterprise Value /
Metric
Multiple
LTM EBITDA
$928
9.2x
2006E EBITDA
937
9.1x
2007E EBITDA
1,005
8.5x
LTM EBIT
$594
14.4x
2006E EBIT
598
14.3x
2007E EBIT
640
13.3x
Price /
2006E EPS
$1.55
21.8x
2007E EPS
1.73
19.6x
Implied Multiples –
I/B/E/S Consensus
(4)
Implied
Enterprise Value /
Metric
Multiple
2006E EBITDA
$951
9.0x
2007E EBITDA
1,029
8.3x
2006E EBIT
$596
14.3x
2007E EBIT
671
12.7x
Price /
2006E EPS
$1.61
21.0x
2007E EPS
1.83
18.5x

4
CONFIDENTIAL
2.
Arrow Overview

5
CONFIDENTIAL
Dec - 01
Aug - 02
Apr - 03
Dec - 03
Aug - 04
Apr - 05
Dec - 05
Aug - 06
$0
$5
$10
$15
$20
$25
$30
$35
$40
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Arrow Stock Performance –
IPO to Today
Despite its consistent EPS growth, Arrow’s stock price has remained relatively flat in
absolute terms and has experienced P/E multiple contraction.
Source: FactSet.
Note:
Data reflects daily closing price and shares traded.
24.2% of public float traded on day of announcement.
(1)
Excludes day of announcement.
Date:
4/28/06
Price:
$28.11
% CAGR:
4.7%
NTM EPS:
$1.68
% CAGR:
11.1%
NTM P/E:
16.7x
Date:
12/11/01
Price:
$23.00
% CAGR:
NA
NTM EPS:
$1.06
% CAGR:
NA
NTM P/E:
21.7x
5/1/06
Consortium
Announces
Proposal:
$32.00
Date:
2/18/04
Price:
$26.98
% CAGR:
7.6%
NTM EPS:
$1.42
% CAGR:
14.3%
NTM P/E:
19.0x
Pre-Ann’t
Post-Ann’t
High:
$29.93
$34.24
Low:
$18.75
$31.80
Pre-Announcement: $28.11
-
$23
Stock price has remained relatively flat since IPO, despite solid
earnings growth
Multiple contraction has occurred since IPO
The stock has traded heavily since the Consortium’s
announcement (average daily volume of approximately 530,000
shares since IPO vs. 1.7 million since announcement
(1)
)
Observations

6
CONFIDENTIAL
Wall Street Research Analyst Price Target Summary:
Pre-Announcement
20.3x CY06 EPS (slight premium to CTAS)
7.0x CY06E EBITDA; 14.8x CY06E EPS
(current valuation)
16.5x Forward EPS (flat valuation levels)
DCF & EVA Models (equates to 15x CY07E EPS)
15–18x CY06E EPS (historical levels)
17.5x NTM EPS (historical levels)
Valuation Method
Mean
$30.72
Median
$30.00
Source:
Investext
equity
research
and
FactSet
Research
Systems.
Note:
As of 4/28/06.
Mean and median calculations derived using mid-point of Wachovia’s valuation range ($27.50).
Excludes
William
Blair,
Thomas
Weisel,
JP
Morgan,
Oddo
Securities
and
Oscar
Gruss
research
reports
due
to
lack
of
price
target
or
availability.
(1)
Represents valuation range.  Specific price target not disclosed. 
7.5x CY07E EBITDA; 16.5x CY07E EPS (peers)
17.0x CY06E EPS (historical levels)
Sum-of-the-Parts
Report Date
02/08/06
04/13/06
02/09/06
04/28/06
02/08/06
02/09/06
02/08/06
02/08/06
02/09/06
$30
(1)
$28
$29
$30
$30
$31
$33
$33
$35
$25
Credit Suisse
Goldman Sachs
Wachovia
Lehman Brothers
CIBC
Morgan Stanley
Robert W. Baird
Citigroup
Deutsche Bank

7
CONFIDENTIAL
Wall Street’s View on Arrow’s Financial Outlook
“Regarding fundamentals, operating performance has been mixed in recent quarters, but we see scope for better growth and
margins going forward.  Given a few quarters, we expect the healthy top line growth to translate into modest operating
leverage…Longer term, we see room for this business to become less commoditized, and assuming that the company’s efforts
continue to gain traction, this should have positive implications for growth and margins in the longer term.”
Morgan Stanley –
July 12, 2006
“…Given today’s pre-announcement, we have less visibility on an improvement in the company’s operating fundamentals.  In our
opinion, Arrow continues to face relatively easy margin comparisons over the next few quarters due to a poor performance at its
international operations and the hurricanes, which hurt its F2H’05 results.  However, given the apparent larger-than-expected
profitability problems in Uniform Direct Marketing operations, we no longer expect Arrow to return to posting year-over-year
operating
margin
expansion
(on
an
apples-to-apples
ex-options
expense
basis)
in
FY
‘06…
”
Lehman Brothers –
July 12, 2006
“We think Arrow is well-positioned to capitalize on the worldwide outsourcing trend, given the company’s strong position in the
outsourced market for food service, and uniform and career apparel.”
Wachovia Securities –
July 12, 2006
“…Arrow is pursuing areas perceived to have higher growth, which are not as far along on the outsourcing spectrum but obviously in
need of Arrow’s services, such as correction institutions.  There remains considerable scope for further international expansion as
well.  Finally, we believe the company has the opportunity to improve margins over time, in part from the continued reversal of
deterioration in certain problem areas that plagued 2004 margins, and in part due to potential upside within its uniform division,
which has profitability levels well below its primary competitor, Cintas.”
Citigroup –
July 12, 2006

8
CONFIDENTIAL
Arrow Historical Financial Performance
Source: Management.  Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance.
(1)
Non-cash
FAS
123 and
RSU expenses are included in corporate overhead.
YTD
2006 and 2006E include add-back of $42.9mm and $45.9mm, respectively,
for asset writedown related to AUCA Direct Marketing.
($ in millions)
Historical
YTD
Projected
FYE 9/30,
2001
2002
2003
2004
2005
6/30/06
2006E
Total Revenue
$7,359
$8,264
$9,448
$10,192
$10,963
$8,689
$11,581
% Growth
7.7%
12.3%
14.3%
7.9%
7.6%
–
5.6%
% Organic Growth
5.1%
1.7%
2.6%
5.7%
4.0%
–
5.6%
Avg. Margin
Total EBITDA
(1)
$630
$710
$809
$833
$900
$668
$937
'01A–'05A
% Margin
8.6%
8.6%
8.6%
8.2%
8.2%
7.7%
8.1%
8.4%
Total Capex
$204
$223
$303
$330
$295
$226
$316
% of Revenue
2.8%
2.7%
3.2%
3.2%
2.7%
2.6%
2.7%
Acquisition Capex
$73
$898
$272
$161
$90
$121
$20
Total Capex w/ Acquisitions
$277
$1,121
$575
$490
$385
$347
$336

9
CONFIDENTIAL
$431
$623
$600
$575
$553
$417
$598
$580
$538
$552
Budget
Actual
2003
2004
2005
2006E
2006YTD
(1)(3)
(2)(4)
Historical Performance vs.
Budget
Sales
EBIT
$8,675
$11,664
$11,030
$10,059
$9,466
$8,689
$11,581
$10,963
$10,192
$9,448
Budget
Actual
2003
2004
2005
2006E
2006YTD
(1)
(2)
Note:  Budget reflects Arrow’s Board plan submitted to Board in fiscal Q2 each year.
(1)
Original
plan
as
of
late
summer
2005.
Current
forecast
reflects
Management
Case
and
was
provided
to
CS
on
May
25,
as
adjusted
on
July
6
and
August
2,
2006,
based
on
management
guidance.
(2)
YTD through June 2006.
(3)
EBIT excludes $45.9mm asset impairment charge.
(4)
EBIT excludes $42.9mm asset impairment charge.
($ in millions)
($ in millions)
Original
Forecast
Current
Forecast
Original
Forecast
Current
Forecast
Percent Difference (Actual / Budget)
(0.2%)
1.3%
(0.6%)
(0.7%)
0.2%
Percent Difference (Actual / Budget)
(0.2%)
(6.9%)
(3.4%)
(4.2%)
(3.4%)

10
CONFIDENTIAL
3.
Financial Overview

11
CONFIDENTIAL
A.
Overview of Financial Projections

12
CONFIDENTIAL
The financial results detailed below provide a summary of the financial projections provided
to CS by Arrow management updated based on supplemental information and guidance
provided to CS by the Company (the “Management Case”). 
Management submitted its 6-year projections to CS on May 25
On July 6, Arrow management notified CS of several issues that resulted in a downward
revision to the 2006 financial projections, and verbally communicated downward adjustments to
its 2007 projections
Certain contract performance issues impacted 2006 results
Ongoing
operational
challenges
in
AUCA
Direct
Marketing
are
expected
to
impact
2006
and
2007
On August 2, Arrow management provided revised 2006 and 2007 guidance to reflect a decline
in several business units
Overview of Management Case Projections
(1) Includes adjustment for AUCA Direct Marketing and new monthly financial data gathered by management since May 25, 2006.  August 2 adjustment
excludes AUCA Direct Marketing asset impairment of $45.9mm.
(2) Adjustment
based
on
management’s
current
estimate
of
an
anticipated
$20
–
$30mm
shortfall
in
EBIT
vs.
May
25
projection
relating
primarily
to
performance
in
Arrow’s
uniform
business,
certain
segments
of
its
FSS
business
and
the
performance
of
a
recent
acquisition.
For
purposes
of
this
analysis, CS has assumed the midpoint.
($ in millions)
  Projected EBITDA – Management Case
  5/25 – 8/2 Variance
May 25
July 6
August 2
$
%
2006
(1)
954
940
937
(17)
(1.8%)
2007
(2)
1,030
1,022
1,005
(25)
(2.5%)

13
CONFIDENTIAL
Management Case Financial Summary
Management Case
Source:
Management.
Management
estimates
provided
to
CS
on
May
25,
as
adjusted
on
July
6
and
August
2,
2006,
based
on
management
guidance.
(1)
Non-cash
FAS
123
and
RSU
expenses
are
included
in
corporate
overhead.
2006E
includes
add-back
of
$45.9mm
for
asset
writedown
related
to
AUCA
Direct
Marketing.
(2)
Net amount and includes Seamless Web earnout.
($ in millions)
Historical
Projected
CAGR
FYE 9/30,
2001
2002
2003
2004
2005
2006E
2007E
2008E
2009E
2010E
2011E
'01A–'05A
'05A–'11E
Total Revenue
$7,359
$8,264
$9,448
$10,192
$10,963
$11,581
$12,222
$12,904
$13,624
$14,378
$15,162
10.5%
5.6%
% Growth
7.7%
12.3%
14.3%
7.9%
7.6%
5.6%
5.5%
5.6%
5.6%
5.5%
5.5%
% Organic Growth
5.1%
1.7%
2.6%
5.7%
4.0%
5.6%
5.5%
5.6%
5.6%
5.5%
5.5%
3.5%
5.6%
Avg. Margins
Total EBITDA
(1)
$630
$710
$809
$833
$900
$937
$1,005
$1,103
$1,171
$1,248
$1,320
9.4%
6.6%
'01A–'05A
'05A–'11E
% Margin
8.6%
8.6%
8.6%
8.2%
8.2%
8.1%
8.2%
8.5%
8.6%
8.7%
8.7%
8.4%
8.4%
Total Capex
(2)
$204
$223
$303
$330
$295
$316
$341
$351
$436
$409
$416
9.6%
5.9%
% of Revenue
2.8%
2.7%
3.2%
3.2%
2.7%
2.7%
2.8%
2.7%
3.2%
2.8%
2.7%
Acquisition Capex
$73
$898
$272
$161
$90
$20
$20
$20
$20
$20
$20
Total Capex w/ Acquisitions
$277
$1,121
$575
$490
$385
$336
$361
$371
$456
$429
$436
8.5%
2.1%

14
CONFIDENTIAL
Management Case vs.
Wall Street
Arrow’s internal forecasted top-line growth and EBITDA
are lower than Wall Street estimates.
$12,904
$12,222
$11,581
$13,162
$12,337
$11,645
Management Case
Wall Street
2006E
2007E
2008E
(1)
(2)
$937
$1,005
$1,103
$951
$1,029
$1,106
Management Case
Wall Street
2006E
2007E
2008E
(2)
(1)
(1) Management
Case
was
provided
to
CS
on
May
25,
as
adjusted
on
July
6
and
August
2,
2006,
based
on
management
guidance.
(2) Based
on
I/B/E/S
consensus
estimates
as
of
August
7,
2006.
($ in millions)
($ in millions)
Sales
EBITDA
Percent Difference (Management Case / Wall Street)
(1.5%)
(2.4%)
(0.3%)
Percent Difference (Management Case / Wall Street)
(0.5%)
(0.9%)
(2.0%)

15
CONFIDENTIAL
$1,240
$1,160
$1,080
$990
$1,171
$1,103
$1,005
$937
2006E
2007E
2008E
2009E
Management Case vs. December 2005 Forecast
Sales
EBITDA
$13,100
$12,300
$11,700
$11,000
$13,624
$12,904
$12,222
$11,581
2006E
2007E
2008E
2009E
(1) December 2005 forecast as presented to Board of Directors on
December 6, 2005.
(2) Management Case was provided to CS on May 25, as adjusted on
July 6 and August 2, 2006, based on management guidance.
($ in millions)
($ in millions)
December 2005
Management Case
(1)
(2)
December 2005
Management Case
(1)
(2)
December 2005 Forecast
–
reflects top-down forecast prepared by senior management
Management Case
–
based on review by management with operating segment heads in Q2/Q3 2006
(provided by management to Consortium)
Percent Difference (Management Case / Dec. 2005)
(5.3%)
(7.0%)
(4.9%)
(5.6%)
Percent Difference (Management Case / Dec. 2005)
5.3%
4.5%
4.9%
4.0%

16
CONFIDENTIAL
9.4%
5.7%
5.7%
4.6%
1.2%
0.4%
(3.4%)
Rentokil
Davis
Arrow
AUCA
UniFirst
Arrow
Consolidated
G&K
Services
Cintas
8.6%
6.2%
7.8%
5.7%
3.9%
2.9%
2.4%
Centerplate
Compass
Arrow
FSS
Arrow
Consolidated
Elior
Autogrill
Sodexho
Performance vs.
Segment Peers –
Arrow Revenue and EBITDA Growth
2005A–2007E Revenue CAGR
2005A–2007E EBITDA CAGR
2005A–2007E Revenue CAGR
2005A–2007E EBITDA CAGR
6.5%
6.4%
6.1%
5.9%
5.7%
5.6%
3.7%
Centerplate
Arrow
Consolidated
Arrow
FSS
Elior
Sodexho
Autogrill
Compass
Source: Company public filings and management projections provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on
management guidance.
Note: 
Growth and EBITDA margins based on 9/30 calendarized financials.
Arrow segment EBITDA and EBITDA margins include corporate overhead allocated based on EBITDA contribution.
Compass 2005 results PF for sale of SSP.
11.7%
8.2%
8.1%
5.6%
5.0%
3.5%
2.1%
Davis
Rentokil
Arrow
AUCA
Arrow
Consolidated
UniFirst
G&K
Services
Cintas
Note:
Percentages
inside
bars
reflect
average
margins
from
2005A
–
2007E.
Note:
Percentages
inside
bars
reflect
average
margins
from
2005A
–
2007E.
6.9%
8.1%
7.5%
13.4%
6.2%
8.2%
32.8%
13.0%
14.9%
13.9%
20.5%
23.3%
8.2%
8.1%

17
CONFIDENTIAL
B.
Financial Analysis

18
CONFIDENTIAL
Summary Financial Analysis
Pre-Announcement
Price
$28.11
Implied Per Share Values
Source: Management projections and public filings.
Note:
Corporate expense allocated based on EBITDA contribution.
Implied multiples unadjusted for options and RSU expenses.
(1)
The
Management
Case
–
As
Adjusted
represents
the
Management
Case
excluding
$20mm
of
acquisition
spending.
(1)
Consortium Proposal
$33.80
Implied EV / EBITDA Multiples
LTM 6/30/06
7.4x
–
9.1x
9.1x
–
10.7x
8.3x
–
11.0x
8.4x
–
11.0x
FY06E
7.3x
–
9.0x
9.0x
–
10.6x
8.3x
–
10.9x
8.3x
–
10.9x
FY07E
6.8x
–
8.4x
8.4x
–
9.9x
7.7x
–
10.1x
7.7x
–
10.1x
Implied EV / EBIT Multiples
LTM 6/30/06
11.5x
–
14.3x
14.2x
–
16.7x
13.0x
–
17.1x
13.1x
–
17.1x
FY06E
11.4x
–
14.2x
14.1x
–
16.6x
12.9x
–
17.0x
13.0x
–
17.0x
FY07E
10.7x
–
13.3x
13.2x
–
15.5x
12.1x
–
15.9x
12.1x
–
15.9x
$33.95
$41.00
$43.00
$43.05
$25.25
$33.35
$30.50
$30.65
Selected Companies
Analysis
Selected Acquisitions
Analysis
DCF –
Management Case
DCF –
Management Case –
As Adjusted

19
CONFIDENTIAL
Preliminary Selected Companies Analysis
($ in millions, except per share values)
Share
2007E
(1)
I/B/E/S LT
Tot. Debt /
Price as of
Equity
Enterprise
EV / EBITDA
EV / EBIT
P/E
Revenue
EBITDA
Growth
LTM
Dividend
Company
8/7/06
Value
Value
LTM
2006E
2007E
2006E
2007E
2006E
2007E
Growth
Margin
Rate
(2)
EBITDA
Yield
Ratio
Arrow (Current)
$33.05
$6,037
$8,089
8.7x
8.5x
7.9x
13.2x
11.7x
20.5x
18.1x
7.3%
8.2%
11.9%
2.3x
0.8%
16.7%
Arrow (Pre-Offer)
28.11
5,066
7,118
7.6x
7.5x
6.9x
11.6x
10.3x
17.1x
15.2x
7.3%
8.2%
11.9%
2.3x
1.0%
16.7%
Food and Support Services
Autogrill
$15.48
$3,939
$5,203
8.4x
8.0x
7.5x
12.6x
11.5x
20.8x
18.5x
4.8%
13.6%
10.0%
2.0x
2.0%
39.1%
Centerplate
(3)
14.30
322
503
9.5x
9.2x
9.1x
19.3x
18.8x
NM
NM
2.6%
8.1%
3.0%
4.0x
10.9%
NA
Compass
4.80
10,346
12,665
8.9x
8.9x
8.5x
13.1x
12.3x
22.3x
16.5x
4.6%
6.7%
7.0%
2.0x
3.9%
65.7%
Elior
(4)
13.74
1,815
2,348
8.3x
7.9x
7.4x
11.0x
10.2x
15.1x
13.5x
5.4%
8.3%
NA
2.3x
1.3%
41.7%
Sodexho
51.01
8,203
9,630
9.9x
9.7x
8.9x
13.2x
12.0x
21.1x
18.2x
5.2%
6.4%
5.0%
2.5x
1.9%
68.6%
Mean
9.0x
8.7x
8.3x
13.8x
13.0x
19.8x
16.7x
4.5%
8.6%
6.3%
2.6x
4.0%
53.8%
Median
8.9x
8.9x
8.5x
13.1x
12.0x
21.0x
17.4x
4.8%
8.1%
6.0%
2.3x
2.0%
53.7%
Uniform and Career Apparel
United States
Cintas
$35.26
$5,939
$6,496
9.2x
8.9x
8.2x
11.5x
10.5x
17.5x
15.7x
12.0%
20.0%
14.3%
1.1x
1.0%
18.0%
G&K Services
32.92
702
910
7.7x
7.6x
7.0x
11.9x
10.3x
16.3x
14.4x
6.5%
13.8%
13.2%
1.9x
0.2%
3.6%
Unifirst
30.89
595
793
7.0x
6.7x
6.1x
10.8x
9.5x
15.2x
12.6x
8.5%
14.6%
14.0%
1.8x
0.5%
7.1%
International
Davis Service Group
$9.15
$1,562
$1,974
4.7x
4.8x
4.6x
11.5x
11.0x
13.9x
13.1x
2.8%
32.4%
7.0%
1.5x
3.6%
57.1%
Rentokil
3.12
5,664
7,320
7.5x
8.1x
7.8x
13.2x
12.5x
16.0x
14.4x
7.5%
22.0%
NA
2.3x
4.5%
41.4%
Mean
7.2x
7.2x
6.7x
11.8x
10.8x
15.8x
14.0x
7.5%
20.6%
12.1%
1.7x
2.0%
25.4%
Median
7.5x
7.6x
7.0x
11.5x
10.5x
16.0x
14.4x
7.5%
20.0%
13.6%
1.8x
1.0%
18.0%
Overall Mean
8.1x
8.0x
7.5x
12.8x
11.9x
17.6x
15.2x
6.0%
14.6%
9.2%
2.2x
3.0%
38.0%
Overall Median
8.3x
8.1x
7.7x
12.2x
11.2x
16.3x
14.4x
5.3%
13.7%
8.5%
2.0x
1.9%
41.4%
Source:
I/B/E/S, Investext equity research and Company filings.
Note:
Multiples based on financial estimates calendarized to Arrow's fiscal year end of 9/30.
Research reports for foreign peers do not explicitly breakout amortization expense during the forecast period.  As a result, EBIT and earnings metrics may not be directly comparable with U.S. peers.
(1)
(2)
Based on I/B/E/S 5-year long-term growth rates.
(3)
Centerplate trades as an Income Deposit Security.
(4)
As of January 11, 2006, the day before Robert Zolade announced he was reviewing the possibility of opening his share capital to new investors; on June 27, 2006, a take-over bid from HBI and Charterhouse Capital was approved by
the EU at €13.40 per share.
8.1% and 13.5%, respectively.
2007E FSS revenue growth and EBITDA margin before corporate expense allocation are 5.4% and 8.1%, respectively.  2007E AUCA revenue growth and EBITDA margin before corporate expense allocation are

20
CONFIDENTIAL
Preliminary Selected Companies Analysis (cont’d)
Source: Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance, and public filings.
Note:
Financials
include
$22mm,
$22mm
and
$17mm
of
option
and
RSU
expenses
in
LTM
6/30/06,
2006E
and
2007E,
respectively.
(1)
Includes total unallocated corporate expenses multiplied by a segment weighted FY 2006E EBITDA multiple.
(2)
Adjustments
include
proceeds
from
options
exercised,
$1,982mm
of
reported
debt
as
of
6/30/06,
$225mm
A/R
facility
and
SURP
liability
which
varies
with share price.
($ in millions, except per share values)
Arrow
Multiple Range
Implied Enterprise Value
Performance
Low
–
High
Low
–
High
Food
and
Support
Services
FY 2006E EBITDA
$780
7.5x
–
9.5x
$5,848
–
$7,408
FY 2007E EBITDA
831
7.0x
–
9.0x
5,818
–
7,480
13.5x
FY 2006E EBIT
519
11.0x
–
13.5x
5,708
–
7,005
FY 2007E EBIT
549
10.0x
–
12.5x
5,489
–
6,861
Segment Reference Range
$5,700
–
$7,200
Uniform
and
Career
Apparel
FY 2006E EBITDA
$218
7.5x
–
9.0x
$1,633
–
$1,960
FY 2007E EBITDA
232
7.0x
–
8.5x
1,622
–
1,969
FY 2006E EBIT
140
11.0x
–
12.0x
1,539
–
1,679
FY 2007E EBIT
154
10.0x
–
11.0x
1,539
–
1,693
Segment Reference Range
$1,600
–
$1,850
Subtotal
$7,300
–
$9,050
Unallocated Corporate Expense
(1)
($60)
7.5x
–
9.4x
(453)
–
(567)
Implied Enterprise Value Range
$6,847
–
$8,483
(–) Enterprise Value Adjustments
(2)
(2,161)
–
(2,182)
Implied Equity Value Reference Range
$4,686
–
$6,301
–
Diluted Shares Outstanding
185.5
–
185.5
Implied Equity Value per Share Reference Range
$25.26
–
$33.96
Enterprise Value /
LTM 6/30/06 EBITDA
7.4x
–
9.1x
FY 2006E EBITDA
7.3x
–
9.1x
FY 2007E EBITDA
6.8x
–
8.4x

21
CONFIDENTIAL
Preliminary Selected Acquisitions Analysis
Implies a
2006E forward
EBITDA
multiple of 9.5x
($ in millions)
ANNOUNCE
ENTERPRISE
ENTERPRISE VALUE / LTM
EBITDA
DATE
ACQUIROR
TARGET
VALUE
SALES
EBITDA
EBIT
(1)
MARGIN
Food and Support Services
Apr-06
EQT / Macquarie Bank
Compass Group's SSP Unit
$3,172
1.0x
10.9x
16.0x
9.3%
Mar-06
Holding Bercy
Investissement
(2)
Elior
2,909
0.8x
10.1x
14.2x
8.2%
Jan-06
Compass Group
Levy Restaurants
490
0.9x
NA
NA
NA
Jul-05
EQT and Goldman Sachs
ISS A/S
4,774
0.7x
10.2x
13.0x
7.2%
May-04
Charterhouse Capital Partners
Autobar
Ltd.
960
0.7x
NA
NA
NA
Oct-02
ARAMARK
Fine Host
102
0.3x
NA
NA
NA
Mar-02
Compass Group
Bon Appetit
156
0.6x
NA
NA
NA
Dec-01
Compass Group
Seiyo Food Systems
535
0.9x
NA
NA
NA
Dec-01
ARAMARK
ServiceMaster
791
0.4x
8.9x
11.4x
4.7%
Aug-01
Compass Group
Crothall
Services Group
170
0.5x
NA
9.7x
NA
Jun-01
Sodexho
Alliance SA
(3)
Sodexho
Marriott Services
2,984
0.6x
10.1x
14.3x
6.1%
Apr-01
Sodexho
Alliance SA
Sogeres
and Wood Dining Services
475
0.7x
NA
NA
NA
Mar-01
LSG Lufthansa AG
Sky Chefs Inc.
2,406
1.3x
NA
22.8x
NA
Jan-01
Sodexho
Alliance SA
(4)
Sodexho
Marriott Services
2,624
0.5x
8.9x
12.4x
6.2%
Feb-01
Compass Group
Selecta
790
1.6x
8.6x
15.1x
18.3%
Feb-01
Compass Group
Morrison Management Specialists
634
1.2x
17.5x
21.2x
7.1%
Dec-00
Autogrill
Passaggio
Holding AG
149
1.0x
12.8x
NA
7.8%
Apr-00
Granada
Compass
10,273
1.3x
17.8x
24.2x
7.1%
Jul-99
Autogrill
Host Marriott Services
948
0.7x
7.1x
13.8x
9.3%
May-99
SAir
Group
Dobbs International Services
780
0.9x
NA
10.9x
NA
May-97
Compass
Daka
183
0.5x
10.2x
NA
4.5%
Feb-97
Investcorp
Welcome Break
762
1.4x
NA
14.8x
NA
Median
0.8x
10.2x
14.2x
7.2%
Jul-03
Unifirst
Textilease
$178
1.9x
18.7x
27.4x
10.0%
Apr-03
California Investment Fund
National Services Industries
104
0.2x
7.3x
NM
2.8%
Jul-02
Paribas Affaires Industrielles
Elis
Group
1,516
1.9x
NA
NA
NA
Mar-02
Davis Service Group
Sophus
Berendsen
607
1.3x
NA
14.1x
NA
Mar-02
Cintas
Omni Services
657
2.0x
11.6x
18.4x
17.5%
Mar-99
Cintas
Unitog
449
1.6x
10.2x
17.8x
15.7%
Apr-98
Cintas
Uniforms To You
169
1.1x
NA
9.9x
NA
Jun-97
G&K Services
29 NLS Facilities
287
1.4x
NA
NA
NA
Median
1.5x
10.9x
17.8x
12.9%
Overall Median
0.9x
10.2x
14.3x
7.5%
Source: Company filings, press releases, SDC, Capital IQ.  Excludes non-recurring items.
(1)         Excludes goodwill amortization where applicable.
(2)
As
of
July
17,
2006,
HBI
held94.2%
ofElior'soutstandingshares
and
96.7%of
Oceanes
(convertible
debt);
the
tenderofferhas
beenapproved
by
theEU.
(3)         Represents final offer price of $32.00 per share.
(4)         Represents initial offer price of $27.00 per share.
Uniform and Career Apparel
(2)         Holding Bercy
Investissement
(HBI) is controlled by Robert Zolade
(Elior'sfounder and president), Charterhouse and Chequers
Capital.

22
CONFIDENTIAL
Preliminary Selected Acquisitions Analysis (cont’d)
Source: Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance, and public filings.
Note:
Corporate expense allocated based on EBITDA contribution.
Financials
exclude
$22mm,
$22mm
and
$17mm
of
option
and
RSU
expenses
in
LTM
6/30/06,
2006E
and
2007E,
respectively.
Multiples including these expenses are 9.1x to 10.7x, 9.0x to 10.6x and 8.4x to 9.9x for LTM, 2006E and 2007E EBITDA, and 14.2x to 16.7x, 14.1x
to 16.6x and 13.2x to 15.5x for LTM, 2006E and 2007E EBIT.
(1)
Includes unallocated cash corporate expenses multiplied by a segment weighted FY 2006E EBITDA multiple.
(2)
Adjustments
include
proceeds
from
options
exercised,
$1,982mm
of
reported
debt
as
of
6/30/06,
$225mm
A/R
facility
and
SURP
liability
which
varies
with share price.
($ in millions, except per share values)
Arrow
Multiple Range
Implied Enterprise Value
Performance
Low
–
High
Low
–
High
Food and Support Services
LTM 6/30/06 EBITDA
$768
9.0x
–
10.5x
$6,913
–
$8,065
LTM 6/30/06 EBIT
513
13.0x
–
15.0x
6,665
–
7,690
Segment Reference Range
$6,800
–
$7,900
Uniform and Career Apparel
LTM 6/30/06 EBITDA
$214
9.0x
–
11.5x
$1,930
–
$2,466
LTM 6/30/06 EBIT
136
15.0x
–
18.0x
2,038
–
2,445
Segment Reference Range
$2,000
–
$2,450
Subtotal
$8,800
–
$10,350
Unallocated Corporate Expense
(1)
($38)
9.0x
–
10.7x
($346)
–
($412)
Implied Enterprise Value Range
$8,454
–
$9,938
(–) Enterprise Value Adjustments
(2)
(2,043)
–
(2,061)
Implied Equity Value Reference Range
$6,412
–
$7,877
–
Fully Diluted Shares Outstanding
192.1
–
192.1
Implied Equity Value per Share Reference Range
$33.37
–
$41.00
Enterprise Value /
LTM 6/30/06 EBITDA
8.9x
–
10.5x
FY 2006E EBITDA
8.8x
–
10.4x
FY 2007E EBITDA
8.3x
–
9.7x
LTM 6/30/06 EBIT
13.7x
–
16.1x
FY 2006E EBIT
13.6x
–
16.0x
FY 2007E EBIT
12.9x
–
15.1x

23
CONFIDENTIAL
Implied Share Price
Source: Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance.  Projections are discounted to September 2006 and assume debt of
$1,838mm estimated at that time.
Note:
Consolidated financials include corporate overhead.
(1)
Includes Seamless Web earnout.
(2)
Includes other corporate adjustments.
Consolidated DCF Analysis –
Management Case
Arrow est.
5 yr. Low
Oct. 2004
6.9x
Arrow
April 28
7.6x
Arrow
est. 5 yr.
Average
8.2x
Compass
LTM
8.9x
Sodexho
LTM
9.9x
Implied Perpetuity Growth Rate
(3)
(3) Reflects nominal growth.
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
8.5%
2.3%
2.8%
3.4%
3.9%
9.5%
3.3%
3.7%
4.4%
4.9%
10.5%
4.2%
4.7%
5.3%
5.9%
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
8.5%
$31.26
$33.97
$38.48
$42.99
9.5%
$29.61
$32.20
$36.51
$40.81
10.5%
$28.05
$30.52
$34.64
$38.75
($ in millions)
Projected
'06E-'11E
FYE 9/30,
2006E
2007E
2008E
2009E
2010E
2011E
CAGR
Sales
$11,581.5
$12,222.1
$12,904.1
$13,624.5
$14,377.5
$15,162.1
5.5%
% growth
5.6%
5.5%
5.6%
5.6%
5.5%
5.5%
EBITDA
$937.1
$1,004.7
$1,102.6
$1,170.9
$1,248.4
$1,319.8
7.1%
% margin
8.1%
8.2%
8.5%
8.6%
8.7%
8.7%
Unlevered Net Income
$374.0
$399.8
$451.3
$487.7
$523.1
$562.4
8.5%
% margin
3.2%
3.3%
3.5%
3.6%
3.6%
3.7%
Depreciation & Amortization
$338.7
$365.0
$380.6
$390.6
$411.4
$419.9
% of sales
2.9%
3.0%
2.9%
2.9%
2.9%
2.8%
Capital Expenditures
(1)
($336.3)
($360.5)
($371.4)
($455.8)
($428.7)
($436.3)
% of sales
(2.9%)
(2.9%)
(2.9%)
(2.9%)
(2.9%)
(2.9%)
(Incr.)/Decr. in Working Capital
($23.2)
($13.0)
($13.8)
($13.6)
($13.9)
($14.3)
% of sales
(0.2%)
(0.1%)
(0.1%)
(0.1%)
(0.1%)
(0.1%)
Unlevered FCF
(2)
$340.6
$403.1
$460.7
$424.3
$508.8
$550.0
10.1%

24
CONFIDENTIAL
Implied Share Price
Source: Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance.  Projections are discounted to September 2006 and assume debt of
$1,838mm estimated at that time.
Note:
Consolidated financials include corporate overhead.
(1)
Includes Seamless Web earnout.
(2)
Includes other corporate adjustments.
Consolidated DCF Analysis –
Management Case –
As Adjusted
Implied Perpetuity Growth Rate 
(3)
(3) Reflects nominal growth.
The Management Case –
As Adjusted represents the Management Case excluding $20
million of acquisition spending.
Arrow est.
5 yr. Low
Oct. 2004
6.9x
Arrow
April 28
7.6x
Arrow
est. 5 yr.
Average
8.2x
Compass
LTM
8.9x
Sodexho
LTM
9.9x
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
8.5%
2.2%
2.6%
3.3%
3.8%
9.5%
3.1%
3.6%
4.2%
4.8%
10.5%
4.0%
4.5%
5.2%
5.7%
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
8.5%
$31.38
$34.07
$38.56
$43.05
9.5%
$29.73
$32.31
$36.59
$40.88
10.5%
$28.17
$30.63
$34.72
$38.82
($ in millions)
Projected
'06E-'11E
FYE 9/30,
2006E
2007E
2008E
2009E
2010E
2011E
CAGR
Sales
$11,581.5
$12,222.1
$12,904.1
$13,624.5
$14,377.5
$15,162.1
5.5%
% growth
5.6%
5.5%
5.6%
5.6%
5.5%
5.5%
EBITDA
$937.1
$999.6
$1,097.0
$1,164.8
$1,241.9
$1,312.9
7.0%
% margin
8.1%
8.2%
8.5%
8.5%
8.6%
8.7%
Unlevered Net Income
$374.0
$399.8
$451.3
$487.7
$523.1
$562.4
8.5%
% margin
3.2%
3.3%
3.5%
3.6%
3.6%
3.7%
Depreciation & Amortization
$338.7
$360.0
$375.0
$384.5
$404.9
$413.1
% of sales
2.9%
2.9%
2.9%
2.8%
2.8%
2.7%
Capital Expenditures
(1)
($316.3)
($340.5)
($351.4)
($435.8)
($408.7)
($416.3)
% of sales
(2.7%)
(2.8%)
(2.7%)
(2.7%)
(2.7%)
(2.7%)
(Incr.)/Decr. in Working Capital
($23.2)
($13.0)
($13.8)
($13.6)
($13.9)
($14.3)
% of sales
(0.2%)
(0.1%)
(0.1%)
(0.1%)
(0.1%)
(0.1%)
Unlevered FCF
(2)
$360.6
$418.0
$475.1
$438.2
$522.2
$563.1
9.3%

25
CONFIDENTIAL
DCF Acquisition Sensitivity Analysis
Management
Case
–
As
Further
Adjusted
(with $150mm of Acquisitions)
If Arrow were to make $150 million of acquisitions per year and achieve financial 
performance in-line with its historical model, per share value would
increase by approximately $1.00 per share.
Management provided CS with an analysis of incremental results from an assumed
acquisition program.
Management’s
sensitivity
assumes
$150mm
of
acquisitions
per
year,
generally
consistent
with
historical acquisition spending
$100mm of FSS acquisitions
$50mm of AUCA acquisitions
Target sales growth and margin expansion are assumed to be achieved over a 5-year time
horizon per management assumptions
(1)
(1) Represents Arrow estimated 5-year low LTM EBITDA multiple (October 2004).
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
8.5%
$32.31
$35.05
$39.63
$44.20
9.5%
$30.63
$33.25
$37.61
$41.98
10.5%
$29.03
$31.53
$35.71
$39.88

26
CONFIDENTIAL
Sum-of-the-Parts DCF Analysis –
Management Case
Source: Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance, and public filings.
Note:
Corporate expense allocated based on EBITDA contribution.
Financials
exclude
$22mm,
$22mm
and
$17mm
of
option
and
RSU
expenses
in
LTM
6/30/06,
2006E
and
2007E,
respectively.
Multiples including these expenses are 8.3x to 10.9x, 8.2x to 10.8x and 7.7x to 10.1x for LTM, 2006E and 2007E EBITDA, 13.0x to 17.0x, 12.9x to 16.9x
and 12.0x to 15.8x for LTM, 2006E and 2007E EBIT, and 19.5x to 27.4x and 17.6x to 24.7x for 2006E and 2007E EPS, respectively.
(1)
Adjustments
include
proceeds
from
options
exercised,
$1,838mm
of
estimated
9/30/06
debt,
$210mm
A/R
Facility
and
SURP
liability
which
varies
with
share price.
($ in millions, except per share values)
Arrow FY2006E
Multiple Range
Implied Enterprise Value
Performance
Low
–
High
Low
–
High
Segment Reference Range
Food and Support Services
$780
8.0x
–
10.4x
$6,200
–
$8,100
Uniform and Career Apparel
$218
6.9x
–
9.2x
1,500
–
2,000
Implied Enterprise Value Range
$7,700
–
$10,100
(–) Enterprise Value Adjustments
(1)
(1,876)
–
(1,906)
Implied Equity Value Reference Range
$5,824
–
$8,194
–
Fully Diluted Shares Outstanding
192.1
–
192.1
Implied Equity Value per Share Reference Range
$30.31
–
$42.65
Enterprise Value /
LTM EBITDA
8.1x
–
10.6x
FY 2006E EBITDA
8.0x
–
10.5x
FY 2007E EBITDA
7.5x
–
9.9x
LTM EBIT
12.5x
–
16.4x
FY 2006E EBIT
12.4x
–
16.3x
FY 2007E EBIT
11.7x
–
15.4x
Price /
FY 2006E EPS
18.6x
–
26.2x
FY 2007E EPS
17.0x
–
23.9x

27
CONFIDENTIAL
Arrow Premiums Paid Analysis
Source: SDC.
Median Premium to
Implied per Share Price
Pre-Announcement Share Price
@ Median Premiums
1 Day
1 Month
1 Day
1 Month
Arrow Base Price
$28.11
$29.05
–
–
Consortium Proposal of $33.80
20.2%
16.4%
–
–
High
75.4%
105.8%
U.S. Cash Transactions > $5 billion
Median
33.8%
36.4%
$37.61
$39.62
Low
8.3%
9.6%
High
62.9%
61.9%
LBO Transactions > $3 billion
Median
21.4%
23.2%
$34.13
$35.79
Low
2.7%
4.1%

28
CONFIDENTIAL
Appendices

29
CONFIDENTIAL
A.
Management Case Financial Projections

30
CONFIDENTIAL
Management Case Financial Summary
Source: Management.  Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance.
(1)
Non-cash
FAS
123,
RSU
expenses
and
acquisition
amortization
are
included
in
corporate
overhead.
$45.9mm
of
AUCA
Direct
Marketing
asset
impairment
is
added
back
in
2006.
(2)
EPS
reflects
downward
revision
per
management
guidance
and
excludes
$45.9mm
of
AUCA
Direct
Marketing
asset
impairment
in
2006.
(3)
Net
amount
and
includes
Seamless
Web
earnout.
($ in millions)
Historical
Projected
CAGR
FYE 9/30,
2001
2002
2003
2004
2005
2006E
2007E
2008E
2009E
2010E
2011E
'01A–'05A
'05A–'11E
Revenue
FSS–United States
$4,816
$5,625
$6,545
$6,879
$7,129
$7,444
$7,925
$8,375
$8,853
$9,349
$9,862
10.3%
5.6%
% Growth
9.3%
16.8%
16.4%
5.1%
3.6%
4.4%
6.5%
5.7%
5.7%
5.6%
5.5%
FSS–International
$1,109
$1,201
$1,424
$1,830
$2,280
$2,512
$2,584
$2,739
$2,901
$3,074
$3,258
19.7%
6.1%
% Growth
10.7%
8.2%
18.6%
28.6%
24.6%
10.2%
2.9%
6.0%
5.9%
6.0%
6.0%
AUCA
$1,434
$1,439
$1,479
$1,483
$1,554
$1,625
$1,713
$1,790
$1,870
$1,954
$2,042
2.0%
4.7%
% Growth
0.6%
0.3%
2.8%
0.3%
4.8%
4.6%
5.4%
4.5%
4.5%
4.5%
4.5%
Total Revenue
$7,359
$8,264
$9,448
$10,192
$10,963
$11,581
$12,222
$12,904
$13,624
$14,378
$15,162
10.5%
5.6%
% Growth
7.7%
12.3%
14.3%
7.9%
7.6%
5.6%
5.5%
5.6%
5.6%
5.5%
5.5%
% Organic Growth
5.1%
1.7%
2.6%
5.7%
4.0%
5.6%
5.5%
5.6%
5.6%
5.5%
5.5%
3.5%
5.6%
EBITDA
FSS–United States
$393
$469
$559
$562
$597
$619
$661
$728
$773
$825
$873
11.0%
6.6%
% Margin
8.2%
8.3%
8.5%
8.2%
8.4%
8.3%
8.3%
8.7%
8.7%
8.8%
8.9%
FSS–International
$59
$67
$86
$104
$128
$161
$170
$183
$195
$208
$222
21.3%
9.6%
% Margin
5.3%
5.6%
6.1%
5.7%
5.6%
6.4%
6.6%
6.7%
6.7%
6.8%
6.8%
AUCA
$202
$205
$204
$206
$213
$218
$232
$253
$268
$283
$297
1.4%
5.7%
% Margin
14.1%
14.2%
13.8%
13.9%
13.7%
13.4%
13.5%
14.1%
14.3%
14.5%
14.5%
Corporate
($24)
($30)
($40)
($40)
($37)
($60)
($58)
($61)
($64)
($68)
($72)
11.8%
11.8%
Avg. Margins
Total EBITDA
(1)
$630
$710
$809
$833
$900
$937
$1,005
$1,103
$1,171
$1,248
$1,320
9.4%
6.6%
'01A–'05A
'05A–'11E
% Margin
8.6%
8.6%
8.6%
8.2%
8.2%
8.1%
8.2%
8.5%
8.6%
8.7%
8.7%
8.4%
8.4%
Diluted EPS
(2)
$1.00
$1.25
$1.34
$1.36
$1.53
$1.55
$1.73
$2.07
$2.35
$2.63
$2.95
9.2%
13.7%
% Growth
15.1%
24.8%
7.2%
1.5%
12.5%
1.6%
11.0%
20.0%
13.5%
11.9%
12.2%
Capex
FSS–United States
$96
$130
$174
$185
$168
$220
$222
$226
$239
$253
$267
15.0%
8.0%
% of Revenue
2.0%
2.3%
2.7%
2.7%
2.4%
3.0%
2.8%
2.7%
2.7%
2.7%
2.7%
FSS–International
$29
$22
$35
$43
$63
$46
$55
$58
$62
$65
$69
21.4%
1.5%
% of Revenue
2.6%
1.9%
2.5%
2.4%
2.8%
1.8%
2.1%
2.1%
2.1%
2.1%
2.1%
AUCA
$79
$71
$94
$101
$95
$88
$94
$98
$103
$108
$113
4.6%
3.0%
% of Revenue
5.5%
4.9%
6.4%
6.8%
6.1%
5.4%
5.5%
5.5%
5.5%
5.5%
5.5%
Asset Disposal
–
–
–
–
($31)
($38)
($30)
($31)
($33)
($35)
($36)
Total Capex
(3)
$204
$223
$303
$330
$295
$316
$341
$351
$436
$409
$416
9.6%
5.9%
% of Revenue
2.8%
2.7%
3.2%
3.2%
2.7%
2.7%
2.8%
2.7%
3.2%
2.8%
2.7%
Acquisition Capex
$73
$898
$272
$161
$90
$20
$20
$20
$20
$20
$20
Total Capex w/ Acquisitions
$277
$1,121
$575
$490
$385
$336
$361
$371
$456
$429
$436
8.5%
2.1%
Revenue Mix
FSS–United States
65.4%
68.1%
69.3%
67.5%
65.0%
64.3%
64.8%
64.9%
65.0%
65.0%
65.0%
FSS–International
15.1%
14.5%
15.1%
18.0%
20.8%
21.7%
21.1%
21.2%
21.3%
21.4%
21.5%
AUCA
19.5%
17.4%
15.7%
14.5%
14.2%
14.0%
14.0%
13.9%
13.7%
13.6%
13.5%

31
CONFIDENTIAL
B.
Enterprise Value Adjustments

32
CONFIDENTIAL
Preliminary Enterprise Value Adjustments
The enterprise value adjustments table below serves as the bridge between Arrow’s enterprise
value and implied equity value
($ in millions)
Adjustment
Value
Description
(+) Excess Cash
$0
All cash on balance sheet required for working capital per management
(+) Cash Proceeds From Option Exercise
119
–
257
Proceeds received upon option exercise (dependant on stock price)
(–) SURP Liability
(103)
–
(61)
Obligation associated with cash-out of DSU shares held for employee retirement
(–) Est. Funded Debt
(1)
(1,982)
Debt on the balance sheet
(–) A/R Securitization Facility
(225)
Average balance of facility throughout year
(–) Minority Interest
(13)
Minority interest of consolidated JVs
Total Enterprise Value Adjustments
($2,203)
–
($2,023)
Source: Management estimates and public filings.
(1)         Estimated as of June 30, 2006.

33
CONFIDENTIAL
C.
Segment DCF Detail and DCF
Sensitivities

34
CONFIDENTIAL
Source: Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance.
Note:
Corporate
overhead
and
Seamless
Web
earnout
allocated
based
on
EBITDA
contribution.
(1)
Includes Seamless Web earnout.
(2)
Includes other corporate adjustments.
FSS DCF Analysis
(3) Reflects nominal growth.
Implied Enterprise Value
Implied Perpetuity Growth Rate 
(3)
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
8.5%
1.9%
2.4%
3.1%
3.6%
9.5%
2.9%
3.4%
4.0%
4.6%
10.5%
3.8%
4.3%
5.0%
5.5%
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
8.5%
$6,309
$6,724
$7,414
$8,105
9.5%
$6,054
$6,450
$7,110
$7,769
10.5%
$5,812
$6,190
$6,821
$7,451
($ in millions)
Projected
'06E-'11E
FYE 9/30,
2006E
2007E
2008E
2009E
2010E
2011E
CAGR
Sales
$9,956.4
$10,508.9
$11,114.2
$11,754.3
$12,423.3
$13,119.9
5.7%
% growth
5.8%
5.5%
5.8%
5.8%
5.7%
5.6%
EBITDA
$732.5
$785.7
$862.9
$917.1
$979.7
$1,038.3
7.2%
% margin
7.4%
7.5%
7.8%
7.8%
7.9%
7.9%
Unlevered Net Income
$294.8
$311.5
$352.2
$382.0
$410.5
$444.1
8.5%
% margin
3.0%
3.0%
3.2%
3.3%
3.3%
3.4%
Depreciation & Amortization
$260.9
$287.3
$299.4
$305.9
$323.0
$327.7
% of sales
2.6%
2.7%
2.7%
2.6%
2.6%
2.5%
Capital Expenditures
(1)
($252.8)
($269.6)
($276.2)
($342.2)
($320.8)
($326.5)
% of sales
(2.5%)
(2.6%)
(2.5%)
(2.5%)
(2.5%)
(2.5%)
(Incr.)/Decr. in Working Capital
($9.0)
$4.6
$1.6
$2.5
$2.9
$3.3
% of sales
(0.1%)
0.0%
0.0%
0.0%
0.0%
0.0%
Unlevered FCF
(2)
$284.0
$343.1
$387.9
$360.3
$428.8
$463.0
10.3%

35
CONFIDENTIAL
Source: Management estimates provided to CS on May 25, as adjusted on July 6 and August 2, 2006, based on management guidance.
Note:
Corporate
overhead
and
Seamless
Web
earnout
allocated
based
on
EBITDA
contribution.
(1)
Includes Seamless Web earnout.
(2)
Includes other corporate adjustments.
AUCA DCF Analysis
Implied Enterprise Value
Implied Perpetuity Growth Rate 
(3)
(3) Reflects nominal growth.
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
9.0%
$1,550
$1,660
$1,843
$2,026
10.0%
$1,486
$1,591
$1,766
$1,940
11.0%
$1,425
$1,525
$1,692
$1,860
Discount
Terminal LTM EBITDA Multiple
Rate
6.9x
7.5x
8.5x
9.5x
9.0%
4.2%
4.6%
5.1%
5.5%
10.0%
5.1%
5.5%
6.0%
6.4%
11.0%
6.1%
6.5%
7.0%
7.4%
($ in millions)
Projected
'06E-'11E
FYE 9/30,
2006E
2007E
2008E
2009E
2010E
2011E
CAGR
Sales
$1,625.0
$1,713.2
$1,789.9
$1,870.2
$1,954.2
$2,042.1
4.7%
% growth
4.6%
5.4%
4.5%
4.5%
4.5%
4.5%
EBITDA
$204.6
$219.0
$239.7
$253.8
$268.7
$281.5
6.6%
% margin
12.6%
12.8%
13.4%
13.6%
13.8%
13.8%
Unlevered Net Income
$79.2
$85.1
$95.6
$101.9
$108.6
$114.0
7.6%
% margin
4.9%
5.0%
5.3%
5.4%
5.6%
5.6%
Depreciation & Amortization
$77.9
$82.8
$86.8
$90.8
$95.0
$99.1
% of sales
4.8%
4.8%
4.9%
4.9%
4.9%
4.9%
Capital Expenditures
(1)
($83.5)
($91.0)
($95.2)
($113.7)
($107.9)
($109.8)
% of sales
(5.1%)
(5.3%)
(5.3%)
(5.3%)
(5.3%)
(5.3%)
(Incr.)/Decr. in Working Capital
($14.2)
($17.6)
($15.3)
($16.1)
($16.8)
($17.6)
% of sales
(0.9%)
(1.0%)
(0.9%)
(0.9%)
(0.9%)
(0.9%)
Unlevered FCF
(2)
$56.6
$61.9
$74.9
$66.3
$82.4
$89.6
9.6%

36
CONFIDENTIAL
Revenue
Growth
and
EBITDA
Margin
Sensitivity
Analysis
–
Implied
Share
Price
Sensitivity
Other DCF Sensitivity Analyses
Revenue Growth vs. EBITDA Margin
% of Plan Achieved
Implied
Revenue
Growth
and
EBITDA
Margin
Revenue
CAGR
–
5.5%
Avg.
EBITDA
Margin
–
8.5%
Note:
Assumes
terminal
EBITDA
multiple
of
8.5x
and
discount
rate
of
9.5%.
Note:
Assumes
terminal
EBITDA
multiple
of
8.5x
and
discount
rate
of
9.5%.
Management Case
($ in millions)
Percent of Revenue Achieved
96.0%
98.0%
100.0%
102.0%
104.0%
96.0%
$34.10
$35.11
$36.13
$37.14
$38.16
98.0%
$34.28
$35.30
$36.32
$37.34
$38.36
100.0%
$34.45
$35.48
$36.51
$37.53
$38.56
102.0%
$34.63
$35.66
$36.69
$37.73
$38.76
104.0%
$34.81
$35.85
$36.88
$37.92
$38.96
($ in millions)
Average Annual Revenue Growth Achieved
3.5%
4.5%
5.5%
6.5%
7.5%
6.5%
$21.04
$22.86
$24.72
$26.64
$28.62
7.5%
$26.51
$28.53
$30.63
$32.83
$35.13
8.5%
$31.82
$34.11
$36.51
$39.01
$41.63
9.5%
$37.12
$39.69
$42.38
$45.20
$48.14
10.5%
$42.42
$45.27
$48.26
$51.38
$54.65

37
CONFIDENTIAL
D.
Precedent Transaction Premiums

38
CONFIDENTIAL
Premiums Paid in Large U.S. Public Cash Transactions
($ in billions)
Date
Transaction
Premium to Price Prior to Announcement
Announced
Target
Acquiror
Value
1 Day
1 Week
1 Month
02/17/04
AT&T Wireless Services Inc
Cingular Wireless LLC
$47.1
75.4%
82.7%
105.8%
07/24/06
Hospital Corporation of America
Investor Group
33.0
17.8%
15.9%
15.3%
05/29/06
Kinder Morgan Inc
Investor Group
26.5
18.5%
19.6%
13.6%
11/13/05
Georgia-Pacific Corp
Koch Forest Products Inc
20.5
38.5%
46.8%
54.7%
06/27/06
Univision Communications Inc
Investor Group
13.4
38.9%
35.4%
29.4%
08/20/04
Rouse Co
General Growth Properties Inc
11.9
33.4%
38.3%
41.2%
02/17/06
KeySpan Corp
National Grid PLC
11.9
16.1%
16.8%
16.0%
01/15/01
Ralston Purina Co
Nestle SA
11.7
36.0%
38.9%
30.4%
03/21/05
SunGard Data Systems Inc
Investor Group
10.8
44.3%
41.5%
37.3%
05/04/04
Charter One Financial
Citizens Financial Group,RI
10.5
24.7%
31.5%
25.7%
06/06/03
PeopleSoft Inc
Oracle Corp
8.9
75.4%
61.7%
64.5%
08/26/01
American Water Works Co Inc
RWE AG
8.1
40.5%
37.6%
47.7%
06/04/04
Mandalay Resort Group
MGM Mirage Inc
7.6
30.0%
29.4%
34.9%
12/20/05
Nextel Partners Inc
Sprint Nextel Corp
7.5
8.3%
8.5%
9.6%
03/17/05
Toys "R" Us Inc
Investor Group
6.1
62.9%
59.0%
61.9%
06/30/06
Michaels Stores Inc
Investor Group
5.6
29.6%
34.2%
37.7%
11/18/05
Scientific Atlanta Inc
Cisco Systems Inc
5.3
18.1%
27.9%
21.8%
07/30/01
Heller Financial Inc
General Electric Capital Corp
5.3
49.7%
48.6%
36.4%
05/02/05
Neiman Marcus Group Inc
Investor Group
5.2
33.8%
37.4%
38.5%
Mean
36.4%
37.5%
38.0%
Median
33.8%
37.4%
36.4%
Source: SDC.

39
CONFIDENTIAL
Premiums Paid in Large LBO Transactions
($ in billions)
Date
Transaction
Premium to Price Prior to Announcement
Announced
Target
Acquiror
Value
1 Day
1 Week
1 Month
07/24/06
Hospital Corporation of America
Investor Group
$33.0
17.8%
15.9%
15.3%
05/29/06
Kinder Morgan Inc
Investor Group
26.5
18.5%
19.6%
13.6%
06/27/06
Univision Communications Inc
Investor Group
13.4
38.9%
35.4%
29.4%
03/21/05
SunGard Data Systems Inc
Investor Group
11.3
44.3%
41.5%
37.3%
11/30/05
TDC A/S
Nordic Telephone Co ApS
10.6
24.4%
22.8%
23.2%
01/16/06
VNU NV
Valcon Acquisition BV
10.3
9.3%
9.9%
11.7%
03/31/06
ITV PLC
Investor Group
10.2
12.2%
16.8%
18.4%
03/29/06
Assoc British Ports Hldgs PLC
Admiral Acquisitions UK Ltd
6.1
30.8%
44.6%
46.7%
03/17/05
Toys "R" Us Inc
Investor Group
6.1
62.9%
59.0%
61.9%
06/30/06
Michaels Stores Inc
Investor Group
5.6
29.6%
34.2%
37.7%
05/02/05
Neiman Marcus Group Inc
Investor Group
5.2
33.8%
37.4%
38.5%
03/29/05
ISS A/S
PurusCo AS
5.1
31.3%
30.6%
33.0%
04/03/06
Gambro AB
Indap AB
4.6
22.3%
26.3%
38.7%
08/27/04
LNR Property Corp
Riley Property Holdings LLC
4.0
6.7%
10.7%
16.8%
05/31/06
West Corp
Investor Group
3.8
13.0%
18.2%
5.8%
06/28/06
Highwoods Properties Inc
Capital Partners Inc
3.7
9.1%
11.8%
16.1%
03/20/06
Kerzner International Ltd
Investor Group
3.6
15.1%
16.7%
19.7%
10/17/03
Chelsfield LTD
Duelguide PLC
3.4
2.7%
4.9%
4.1%
02/21/06
MeriStar Hospitality Corp
Blackstone Group LP
3.4
5.2%
5.5%
9.8%
03/07/05
Insight Communications Co
Investor Group
3.3
21.4%
23.7%
12.6%
03/05/04
Extended Stay America Inc
Blackstone Group LP
3.2
24.6%
26.3%
27.4%
03/06/06
Education Management Corp
Investor Group
3.1
16.3%
13.0%
34.1%
Mean
22.5%
24.2%
25.5%
Median
21.4%
22.8%
23.2%
Source: SDC.
Note:     Includes worldwide LBO transactions in excess of $3.0 billion of deal value.  Premiums adjusted for pre-announcements and other market leaks.

40
CONFIDENTIAL
E.
Historical Trading Multiples

41
CONFIDENTIAL
Historical Trading Multiples
Forward P/E
Enterprise Value / LTM Trailing EBITDA
12.0x
16.0x
20.0x
24.0x
28.0x
1/31/02
6/10/02
10/15/02
2/24/03
7/1/03
11/5/03
3/16/04
7/23/04
11/29/04
4/7/05
8/12/05
12/19/05
4/28/06
Mean:
17.5x
Median:
17.0x
Max:
25.1x
Min:
14.4x
4/28/06:
16.7x
Note:
Based
on
estimated
earnings
for
next
four
unreported
quarters
as
of
each
respective
date.
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
1/31/02
6/10/02
10/15/02
2/24/03
7/1/03
11/5/03
3/16/04
7/23/04
11/29/04
4/7/05
8/12/05
12/19/05
4/28/06
Mean:
8.2x
Median:
8.1x
Max:
10.7x
Min:
6.9x
4/28/06:
7.6x
Minimum
6.9x
10/25/04
Note:
One–
and
two–year
median
multiples
are
7.6x
and
7.7x,
respectively.
Source:
FactSet
Research
Systems.

42
CONFIDENTIAL
F.
Illustrative LBO Assumptions

43
CONFIDENTIAL
Est. Consortium Sources and Uses
Sources and Uses
Source: Management and discussions with Consortium.
Note:
Assumes a purchase price of $33.80 per share.
(1)
Excludes management promote.
($ in millions)
% of
Sources
Amount
Total
Uses
Amount
Term Loan B
$3,755
43.7%
Equity Purchase Price
$6,236
5.0% Notes due 2012
250
2.9%
Refinance Term Loan B
1,588
Senior Unsecured Notes
850
9.9%
Refinance 5.0% Notes due 2012
250
Senior Toggle Notes
850
9.9%
Refinance A/R Securitization Facility
210
Senior Subordinated Notes
770
9.0%
Est. Transaction Expenses
316
A/R Securitization Facility
225
2.6%
Total Debt
$6,700
77.9%
Management's Contribution
(1)
250
2.9%
Sponsor Consortium Equity
1,650
19.2%
Total Equity
$1,900
22.1%
Total Sources
$8,600
100.0%
Total Uses
$8,600

44
CONFIDENTIAL
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