Bank of America Investment Banking Pitch Book
Project PIONEER
Key Observations Regarding CSC Presentation to the Special Committee Provided July 2, 2014
2
Z Quality of Earnings
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1
I
1
Management does not agree with CSC's QoE adjustments to EBITDA (see next page)
In the management forecast calculation of Adjusted EBITDA, public company costs were reduced by 50% pro forma (i.e. $900k audit
costs versus $1.8 million current) which management believes is very reasonable and should not be further adjusted
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The $3 million adjustment for California job losses at Klondyke/PVP is, according to Management, believed to be one-time in nature
and a result of start-up costs for the business and part of the learning curve of entering new territories
■ FCF Underperformance and Debt-Like Items
CSC has cited a management provided estimate of $197.1 million for 6/30/14 net debt. Management's current estimate is $196.2
million and includes Storm AR of $4.5 million which will be collected early in Q1 2015
Debt-like items that CSC appeared to include are:
RSI-related deferred compensation liability, which is disclosed in the Pioneer 2013 Form 10-K and has a total obligation with net
present value of $5.3 million at April 27. This does not appear to be a valid adjustment given the disclosure and the fact that only
$2.1 million out of the $6.6 million is due before 2018
CSC did not provide any visibility into the other PELLC adjustment of $0.8 million in their presentation and Management would need
further information from CSC to respond appropriately
Unfunded liability from multi-employer pension, which Pioneer management and labor attorneys engaged by Pioneer view to be
no liability. CSC has included a $5 million adjustment. Management indicated that any obligation would only be triggered in the
unlikely event that Pioneer exited the union pension plan and reenters the market in a non-union capacity. Additionally the
obligation would only be triggered if Pioneer was in the plan for a minimum of 8 years, which has not occurred
Source: Management views and forecasts from Pioneer Management; CSC views from Court Square Presentation dated July 2, 2014.
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