LBO Model

TRANSACTION ASSUMPTIONS

Price of share on March 16, 2005 Premium Purchase Price

$24.77 8% $26.75

Shares outstanding (in millions) Basic equity value (in millions) Diluted shares outstanding (in millions) Diluted equity value

220.55 $5,900.00 $242.69

Plus: Existing debt (in millions) Less: Cash, cash equivalents, short term investments (in millions) Implied enterprise value (in millions)

$2,312.00

Fees

and expenses (in millions) Implied pro forma enterprise value

EBITDA of 2005 EBITDA multiple

Source: http://money.cnn.com/2005/03/17/news/fo

Net Income of 2005/ diluted earnings per share purchase price*Shares outstanding

$6,492.41

sum of short term borrowings, long term debt and cu

-$2,203.00 $6,601.41

$368.00 $6,969.41 $662.00

EV/EBITDA

10.53

CALCULATION OF DILUTED SHARES OUTSTANDING (USING TREASURY STOCK METHO D) Number of options (in millions) Tranch Tranche A 4.70 Tranche B 6.00 Tranche C 12.20 5.40 Tranche D Tranche E 0.70 Total 29.00 SOURCES OF CASH ($ in millions)

vailable cash

$966

Price $8.00 $6.00 $5.00 $6.00 $4.00

USES OF CASH ($ in millions) Purchase of common stock

Purchase of stock options

Dilution (in millions)

3.182034719 4.546628987 9.737343561 4.091966088 0.586960032 22.14493339

$5,900

OPERATING ASSUMPTIONS Historical

2003 Revenue

growth % Cost of Sales % Revenue SG&A % Revenue Depreciation and Amortization % Revenue Restructuring and other charges % Revenue Interest Expense Effective cash interest rate Effective tax rate (income tax/pretax income) Account receivables % revenue Accounts receivales days Inventory % Cost of sales Accounts payables % Cost of sales Accounts payables days Capex % Revenue

2004 0.13%

-1.94%

68.99%

67.54%

67.62%

24.10%

26.73%

26.41%

3.00%

3.25%

3.19%

0.00%

0.56%

0.04%

from debt table

0.83% 36.04%

32.26%

-30.57%

1.29%

1.38%

4.71

5.03

27.39%

25.10%

13.37%

13.63%

48.79

49.75

2.31%

2.42%

TOYS R US INCOME STATEMENT ($ in millions) Net Sales Cost of Sales Gross Margin SG&A EBITDA Depreciation and Amortization Restructuring and other charges EBIT Interest expense Interest and other income Pretax income Income tax (expense)/benefit Net income

2005

2003

2004

2005

$11,305.00 -$7,799.00 $3,506.00 -$2,724.00 $782.00 -$339.00 $0.00 $443.00 -$119.00 $9.00 $333.00 -$120.00 $213.00

$11,320.00 -$7,646.00 $3,674.00 -$3,026.00 $648.00 -$368.00 -$63.00 $217.00 -$142.00 $18.00 $93.00 -$30.00 $63.00

$11,100.00 -$7,506.00 $3,594.00 -$2,932.00 $662.00 -$354.00 -$4.00 $304.00 -$130.00 $19.00 $193.00 $59.00 $252.00

Deferred rent liability Other liabilities Minority interest in Toysrus.com $2 billion senior secured credit facility (5 years term loan) Unsecured bridge loan (6 years term loan) Total liabilities

280.00 225.00 9.00

269.00 212.00 0.00 700.00 973.00

STOCKHOLDERS' EQUITY Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Restricted stock Treasury shares, at cost Total stockholders equity

6291.00

5443.00

30.00 407.00 5308.00 -64.00 0.00 -1707.00

30.00 405.00 5560.00 -7.00 -5.00 -1658.00

3974.00

4325.00

-30.00 895.00

678.00 Total liabilities and stockholders equity Balance check CASH FLOW STATEMENTS ($ in millions) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization Amortization of restricted stock Deferred income taxes Other non cash items Changes in operating assets and liabilities: Accounts and other receivables Merchandise inventories Prepaid expenses and other operating assets Accounts payable, accrued expenses, and other liabilities I bl

10265.00

9768.00

$0

$0

2004

LBO Adjustments

2005 63.00

252.00

368.00 0.00 27.00 56.00

354.00 7.00 -40.00 0.00

62.00 133.00 28.00 117.00 53 00

-5.00 221.00 76.00 -45.00 74 00

Optional principal repayment Ending balance

Valuation in year 5 assuming EBITDA exit multiple of 7

2006

EBITDA Total enterprise value Debt Equity value - future value

1300

IRR

Valuation in year 5 assuming EBITDA exit multiple of 8.0 EBITDA Total enterprise value Debt Equity value - future value IRR

From

annual report 2005

1300

2007

2008

From

annual report 2005

from 10K filing for the fiscal year ended January 28, 2006, NOTE 2  ME RGER TRANSACTION

2010

2011

0.9844%

0.7809%

Source: http://www.moneycafe.com/library/libor.htm

Projections

2006

2007

2008

2009

2010

2011

7% 68.05% 25.75% 3.15% 0.02%

7% 68.05% 25.75% 3.15% 0.02%

7% 68.05% 25.75% 3.15% 0.02%

7% 68.05% 25.75% 3.15% 0.02%

7% 68.05% 25.75% 3.15% 0.02%

7% 68.05% 25.75% 3.15% 0.02%

Avg of 2003, 2004, 2005 = Avg of 2003, 2004, 2005 = Avg of 2003, 2004, 2005 = Avg of 2003, 2004, 2005 =

68.05% 25.75% 3.15% 0.20%

from debt table 0.83%

0.83%

0.83%

0.83%

0.83%

0.83%

34.00%

34.00%

34.00%

34.00%

34.00%

34.00%

1.33%

1.33%

1.33%

1.33%

1.33%

1.33%

4.87

4.87

4.87

4.87

4.87

4.87

26.24%

26.24%

26.24%

26.24%

26.24%

26.24%

13.50%

13.50%

13.50%

13.50%

13.50%

13.50%

49.27

49.27

49.27

49.27

49.27

49.27

2.37%

2.37%

2.37%

2.37%

2.37%

2.37%

2006

2007

2008

$11,877.00 -$8,082.30 $3,794.70 -$3,058.33 $736.37 -$374.13 -$2.38 $359.87 -$212.99 $14.64 $161.52 $106 60

$12,708.39 -$8,648.06 $4,060.33 -$3,272.41 $787.92 -$400.31 -$2.54 $385.06 -$208.52 $0.00 $176.55 $116 52

$13,597.98 -$9,253.42 $4,344.55 -$3,501.48 $843.07 -$428.34 -$2.72 $412.02 -$123.57 $2.34 $290.80 $191 93

2009

2010

2011

$14,549.84 $15,568.32 $16,658.11 -$9,901.16 -$10,594.24 -$11,335.84 $4,648.67 $4,974.08 $5,322.27 -$3,746.58 -$4,008.84 -$4,289.46 $902.09 $965.24 $1,032.80 -$458.32 -$490.40 -$524.73 -$2.91 -$3.11 -$3.33 $440.86 $471.72 $504.74 -$96.86 -$86.54 -$59.02 $0.00 $0.00 $0.00 $344.00 $385.18 $445.72 $227 04 $254 22 $294 17

Average of 2003, 2004. We ignored 2005 because they lost revenu Average of 2004, 2005 1.33% Average of 2004, 2005 4.87 Average of 2004, 2005 26.24% Average of 2004, 2005 13.50% Average of 2004, 2005 49.27 Average of 2004, 2005 2.37%

269.00

269.00

269.00

269.00

269.00

269.00

212.00

212.00

212.00

212.00

212.00

212.00

0.00

0.00

0.00

0.00

0.00

0.00

700.00

700.00

700.00

0.00

0.00

0.00

973.00

973.00

973.00

973.00

0.00

0.00

5671.93

4948.30

5030.01

5117.44

4510.99

3638.09

0.00

0.00

0.00

0.00

0.00

0.00

1300.00

1300.00

1300.00

1300.00

1300.00

1300.00

5560.00

5560.00

5560.00

5560.00

5560.00

5560.00

-7.00

-7.00

-7.00

-7.00

-7.00

-7.00

-5.00

-5.00

-5.00

-5.00

-5.00

-5.00

-1658.00

-1658.00

-1658.00

-1658.00

-1658.00

-1658.00

5190.00

5190.00

5190.00

5190.00

5190.00

5190.00

10861.93

10138.30

10220.01

10307.44

9700.99

8828.09

$3,624

$1,379

$2,539

2007

2008

2009

$266 2006

$256 2010

1120.88327

2011

268.12

293.07

482.72

571.04

639.41

739.89

374.13

400.31

428.34

458.32

490.40

524.73

7.00

7.00

7.00

7.00

7.00

7.00

-40.00

-40.00

-40.00

-40.00

-40.00

-40.00

0.00

0.00

0.00

0.00

0.00

0.00

-5.45

-164.09

-22.96

-24.57

-26.29

-28.13

-237.07

-2032.47

-307.34

-328.86

-351.88

-376.51

0 00

1120 00

0 00

0 00

0 00

0 00

2009

2010

2011

$1,032.80

1) a new 2.0 billion secured revolving credit facility, of which 700 million was drawn at closing, (2) a new $1.9 billion unsecured bridge loan agreement, all of which was drawn at closing, (3) a new secured $1.0 billion European bridge loan facility and multi-currency revolving credit facilities in an amount of up to £95 million and 145 million, of which $1.0 billion was drawn at closing, and (4) $800 million of new mortgage loan agreements

Build-A-Bear Worksho GameStop Corp. Mothercare Plc.

2003

2004

2005

2006

Average

26.33%

41.18%

19.94%

20.80%

27.06%

20.66%

16.71%

16.72%

67.78% 5.58%

Median

23.57%