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Use of Proceeds The table below sets forth the sources and uses of funds required to effect the Transactions, assuming the Transactions all occurred on July 3, 2004. The sources and uses are based on the initial public offering price of $15.00 per EIS. Total Sources and Uses of Funds (Dollars in thousands) Sources(1) Amount ---------------------------------------------------------- --------- EISs offered hereby(2) $ 260,870 12.0% senior subordinated notes due 2016 sold separately 22,800 8.0% senior notes due 2011 240,000 Cash on hand(3) 7,082 --------- Total sources $ 530,752 --------- Uses Amount ------------------------------------------------------------------------- ----------- Repayment of existing senior credit facility(4) $ 148,954 Retirement of existing senior subordinated notes(5) 228,823 Repurchase of Class B common stock, preferred equity, options and warrants from existing investors(6)(7)(9) 113,860 Transaction fees, prepayment penalties, expenses and transaction bonuses(8)(9) 39,115 ----------- Total uses $ 530,752 ----------- -------------------------------------------------------------------------------- º (1) º We do not expect any borrowings under the new revolving credit facility upon the completion of the Transactions. º (2) º If the over-allotment option with respect to the EISs is exercised in full, the net proceeds from this offering of EISs and additional senior subordinated notes and the concurrent offering of senior notes are expected to be approximately $531.3 million. º (3) º Immediately following the closing of the Transactions, we expect to have a minimum of $10.0 million of cash on our consolidated balance sheet. º (4) º Reflects the repayment of $149.0 million of term loan borrowings under our existing senior credit facility and accrued and unpaid interest. The proceeds of the six-year term loan and of certain drawings under the five-year revolving credit facility were used to fund the acquisition of the Ortega line of products and to pay related transaction fees and expenses and to fully pay off our remaining obligations under the term loan of our then-existing term loan agreement. With respect to our existing senior credit facility, interest is determined based on several alternative rates, including the base lending rate per annum plus an applicable margin, or LIBOR plus an applicable margin (4.59% at July 3, 2004). We have no revolving credit facility borrowings under our existing senior credit facility. º (5) º Reflects the retirement of $220.0 million aggregate principal amount of our existing 95/8% senior subordinated notes due 2007 plus accrued and unpaid interest. º (6) º Reflects the redemption of all of our issued and outstanding 13% Series A cumulative preferred stock, 13% Series B cumulative preferred stock and Series C senior preferred stock. º (7) º Reflects the repurchase of 2,704,334 shares of our outstanding Class B common stock, including all of our outstanding options and a portion of our warrants to purchase Class B common stock. If the underwriters exercise their over-allotment option in full, we will use all of the additional net proceeds to repurchase an additional 5,231,335 outstanding shares of our Class B common stock, including all of our remaining outstanding warrants, owned by certain of our existing stockholders. The holders of the existing warrants have notified us that any existing warrants not repurchased by us upon the initial closing of the Transactions or on or prior to the date of expiration of the underwriters' over-allotment option will be exercised on such expiration date, and all holders of these remaining warrants will receive shares of Class B common stock pursuant to the terms of their warrants. º (8) º Includes (i) $20.4 million of debt issuance costs related to the Transactions, (ii) fees associated with the Class A common stock portion of the EISs of $10.4 million and (iii) other costs of $10.0 million which will be expensed when incurred. Of these fees, $1.7 million have been paid as of July 3, 2004. º (9) º Our board of directors has approved in principle a transaction bonus plan that will provide our six most senior executive officers upon completion of this offering cash compensation in an aggregate amount, if any, equal to the amount by which the aggregate value of the Class B common stock retained by all members of our management plus the aggregate cash proceeds they receive upon the repurchase of their existing equity does not equal at least 10% of the total equity value of our company. We estimate the total compensation payable to the six most senior executive officers will be approximately $4.5 million (or $4.9 million if the underwriters' over-allotment option is exercised in full). Any such cash compensation paid to the six most senior executive officers will reduce the cash proceeds of the Transactions available to repurchase our existing equity and will not result in any increase in borrowings under our new revolving credit facility or reduce the amount of cash on our consolidated balance sheet at the closing date.