tech quarterly

www.fitchratings.com September 23, 2011

Corporates

Technology / U.S.

Technology Quarterly Handbook Company Financial Trends and Liquidity Analysis Special Report

Overview

High-Grade Technology Well Positioned for Recession: The high-grade technology sector

continues to be well positioned for a double-dip recession, given strong competitive positions in

the enterprise space, high cash balances, exposure to emerging markets, and reasonable

maturity schedules. The biggest concern continues to be companies using their liquidity for

high-premium acquisitions on the heels of an economic downturn. The technology sector pulled

back significantly on share repurchases and acquisitions during the last downturn, and it is

Fitch’s expectation that companies would behave similarly this time around despite coming out

of the 2008/2009 recession relatively unscathed (see pages 11–12 for additional detail).

Good Runway for High-Yield, but Issues Remain: High-yield issuers could find a double-dip

recession difficult to work through. Despite improved leverage ratios, companies such as

Freescale, First Data, Seagate, and SunGard did not experience material upside to their FCF

profile during the last economic up-tick as high coupon debt was used to replace low coupon

debt to extend maturities, and capital expenditures returned to necessary levels. For a few

companies, intense competition and pressure from supply chain partners remain, and secular

shifts in their business models continue. Positively, these companies benefit from a strong

maturity profile over the next 2–3 years, and adequate liquidity resources.

HP’s ‘A+’ Remains on Watch Negative: Fitch placed Hewlett-Packard (HP) on Rating Watch

Negative after the company announced its intention to acquire Autonomy Company

(Autonomy) and explore alternatives for its Personal Systems Group (PSG). Ratings may be

downgraded 0–2 notches depending on potential proceeds from a PSG spin; ultimate financing

of the Autonomy transaction; elimination of nondilutive share repurchases; a commitment to

pay down debt; and greater clarity on long-term strategy and business mix. The 0–2 notches

also take into account recent changes with management and the board of directors.

Supply Chain Outlook Continues to Dim: The following is a select overview of management

quotes over the last few weeks:

Related Research Fitch Rates Hewlett-Packard’s Senior Unsecured Note Offering ‘A+’; Rating Watch Negative, Sept. 13, 2011

Expedia Inc.: Post TripAdvisor Evaluation, Aug. 23, 2011

Advanced Micro Devices, Inc., Aug. 16, 2011

Global IT Services Insights: Quarterly Snapshot — First-Quarter 2010, July 25, 2011

Texas Instruments Incorporated, July 12, 2011

Technology Quarterly (Company Financial Trends and Liquidity Analysis), July 8, 2011

Freescale Semiconductor Holdings I, Ltd., July 6, 2011

Tax Reform Impact on Corporate Issuers, June 22, 2011

Another Tax Holiday: U.S. Technology (Potential for Leverage Increase), March 8, 2011

Technology Sector Cash: Keeping the Cash Cushion in Perspective, Feb. 7, 2011

2011 Outlook: U.S. Technology, Dec. 14, 2010

Analysts Jamie Rizzo, CFA +1 212 908-0548 [email protected]

Brian Taylor, CFA +1 212 908-0620 [email protected]

Jason Paraschac, CFA +1 212 908-0746 [email protected]

Jason Pompeii +1 312 368-3210 [email protected]

John Witt, CFA +1 212 908-0673 [email protected]

William Dickson +1 212 908-0808 [email protected]

Recent Supply Chain Quotes Supply Chain Company Date Subsector CEO/CFO Paraphrased Quote(s)

Begin KLA Tencor July 28 Semi Equipment

“Near-term industry demand has cooled off significantly, with customers reassessing capacity expansion plans.”

Applied Materials Aug. 25

Semi Equipment

“Next quarter sequential revenue will be down 15%–30%”; “Customers started pulling back about six weeks ago, before the macro situation started to worsen.”

TSMC Sept. 2 Semi Manufacturing “Customer confidence has weakened.”

Dell Aug. 16 OEM “Continue to see solid demand for the server, storage, and services businesses.”

Infosys Aug. 23 IT Services “Existing projects are not being canceled. However, spending decisions are being delayed and clients might not spend all of their IT budgets this year.”

End SAIC Aug. 31 IT Services

“Government services is entering a period where spending will be flat for the next couple of years, and most likely, low-single-digit declines for several years afterwards.”

OEM – Original equipment manufacturer. Source: Company filings, Wall Street Journal, Bloomberg News, Fitch Ratings.

http://www.fitchratings.com/creditdesk/press_releases/detail.cfm?pr_id=728386

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Technology Quarterly Handbook 2

September 23, 2011

Corporates

Table of Contents

Financial Profile Summaries.....................................................................49

Liquidity Summary ......................................................................................10

Operating Trends..................................................................................1112

Supply Chain ..............................................................................................14

Sub-Sector Snapshots..........................................................................1323

Potential Acquisition Targets......................................................................24

Technology Industry Secular Issues ..........................................................24

Company Pages .........................................................................................25

Accenture plc............................................................................................26

Advanced Micro Devices..........................................................................28

Agilent Technologies, Inc. ........................................................................30

Anixter International Inc............................................................................32

Arrow Electronics, Inc...............................................................................34

Avnet, Inc..................................................................................................36

Broadridge Financial Solutions.................................................................38

CA, Inc. .....................................................................................................40

Computer Sciences Corp. ........................................................................42

Convergys Corp........................................................................................44

Corning Inc. ..............................................................................................46

Dell Inc......................................................................................................48

Eastman Kodak Company........................................................................50

eBay Inc....................................................................................................52

Expedia, Inc..............................................................................................54

Fidelity National Information Services, Inc. ..............................................56

First Data Corporation ..............................................................................58

Flextronics International Ltd. ...................................................................60

Freescale Semiconductor, Inc..................................................................62

Hewlett-Packard Co..................................................................................64

International Business Machines Corp. (IBM)..........................................66

Ingram Micro Inc. .....................................................................................68

International Rectifier Corp.......................................................................70

Jabil Circuit, Inc. .......................................................................................72

KLA-Tencor Corp. ....................................................................................74


September 23, 2011

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Table of Contents (Continued)

Microsoft Corporation ...............................................................................76

Moneygram International, Inc...................................................................78

Motorola Solutions, Inc. ...........................................................................80

National Semiconductor Corporation .......................................................82

Oracle Corp. .............................................................................................84

Sanmina-SCI Corp. ..................................................................................86

Seagate Technology plc...........................................................................88

SunGard Data Systems, Inc.....................................................................90

TE Connectivity ........................................................................................92

Tech Data Corporation. ............................................................................94

Texas Instruments Incorporated...............................................................96

Unisys Corp. .............................................................................................98

Western Union Company (The)..............................................................100

Xerox Corporation ..................................................................................102


September 23, 2011

Corporates

U.S. Technology Financial Profile Summary Hardware, Software, and IT Services ($ Mil., For the Most Recent LTM Period)

Issuer MSFT IBM HPQ DELL ORCL CSCO

Rating (IDR) AA+ A+ A+ A A+ Outlook Stable Stable RWN Stable Stable Period Ending 6/30/11 6/30/11 7/31/11 7/31/11 5/31/11 4/30/11

Income Statement

Revenue 69,943.0 104,562.0 128,401.0 61,761.0 35,622.0 42,859.0

Revenue Growth (%) 11.9 7.4 3.8 6.1 32.8 13.6

Operating EBITDA 32,093.0 25,982.0 18,262.7 6,072.0 16,024.0 12,630.0

Operating EBITDA Growth (%) 9.5 8.0 0.5 44.0 27.9 7.7

Operating EBITDA Margin (%) 45.9 24.8 14.2 9.8 45 29.5

Gross Interest Expense 326 938 487.0 240 808 649

Balance Sheet

Total Debt with Equity Credit 11,921.0 29,773.0 25,696.0 7,740.0 15,922.0 16,749.0

Cash Flow

Funds From Operations 28,948.0 20,562.0 17,729.0 6,055.0 12,091.0 10,889.0

Change in Working Capital (1,954.0) (1,145.0) (4,339.0) (820.0) (877) (402.0)

Cash Flow from Operations 26,994.0 19,417.0 13,390.0 5,235.0 11,214.0 10,487.0

Total Nonrecurring Cash Flow —

Capital Expenditures (2,355.0) (4,890.0) (4,386.0) (549.0) (450.0) (1,239.0)

Dividends (5,180.0) (3,326.0) (786.0) (1,061.0) (329.0)

FCF 19,459.0 11,201.0 8,218.0 4,686.0 9,703.0 8,919.0

Net (Acquisitions)/Divestitures (71.0) (4,243.0) (3,234.0) (2,043.0) (1,742.0) (595.0)

Net Debt Proceeds/(Repayments) 5,960.0 2,572.0 5,644.0 2,489.0 1,211.0 1,480.0

Net Stock Issuance/(Repurchases) (9,133.0) (11,777.0) (12,625.0) (1,948.0) 216.0 (5,974.0)

Select Credit Metrics (x) (LTM)

Total Debt/Operating EBITDA 0.4 1.1 1.4 1.3 1 1.3

FCF/Total Debt (%) 163.2 37.6 32.0 60.5 60.9 53.3

FCF + Dividend/Total Debt (%) 206.7 48.8 35.0 60.5 67.6 55.2

Operating EBITDA/Gross Interest Expense 98.4 27.7 37.5 25.3 19.8 19.5

Capital Expenditure/Revenue (%) 3.4 4.7 3.4 0.9 1.3 2.9

Equity Metrics

Enterprise Value 174,889 217,911 62,565 19,062 124,160 57,545

Enterprise Value Multiple (EV/EBITDA) (x) 5.4 8.4 3.4 3.1 7.7 4.6

IDR – Issuer default rating. RWN – Rating Watch Negative. Continued on next page. Source: Company filings, Bloomberg, Fitch Ratings.


September 23, 2011

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U.S. Technology Financial Profile Summary Hardware, Software, and IT Services (Continued) ($ Mil., For the Most Recent LTM Period)

Issuer CA CSC XRX STX SDS EK

Rating (IDR) BBB+ BBB+ BBB BB+ B CCC

Outlook Stable Stable Stable Stable Stable Negative

Period Ending 6/30/11 7/1/11 6/30/11 7/1/11 6/30/11 6/30/11

Income Statement

Revenue 4,501.0 16,133.0 22,483.0 10,971.0 5,056.0 6,204.0

Revenue Growth (%) 2.4 (0.2) 24.1 (3.7) (5.5) (10.0)

Operating EBITDA 1,777.0 2,165.0 3,151.0 1,629.0 1,285.0 (305.0)

Operating EBITDA Growth (%) 4.5 (12.5) 33.6 (39.7) (10.1) (267.6)

Operating EBITDA Margin (%) 39.5 13.4 14.0 14.8 25.4 (4.9)

Gross Interest Expense 68.0 169.0 535.0 214.0 585.0 146.0

Balance Sheet

Total Debt with Equity Credit 1,307.0 2,848.0 9,484.5 3,512.0 8,078.0 1,451.0

Cash Flow

Funds From Operations 1,283.0 1,689.0 2,299.0 1,180.0 721.0 (259.0)

Change in Working Capital 120.0 (111.0) (309.0) 84.0 (77.0) (175.0)

Cash Flow from Operations 1,403.0 1,578.0 1,990.0 1,264.0 644.0 (434.0)

Total Nonrecurring Cash Flow (12.0) Capital Expenditures (264.0) (1,038.0) (562.0) (843.0) (297.0) (147.0)

Dividends (86.0) (108.0) (237.0) (74.0) FCF 1,045.0 432.0 1,191.0 347.0 354.0 (579.0)

Net (Acquisitions)/Divestitures (275.0) 62.0 (312.0) 77.0 (95.0) 64.0

Net Debt Proceeds/(Repayments) (194.0) (1,371.0) (315.0) 947.0 (314.0) 136.0

Net Stock Issuance/(Repurchases) (318.0) 5.0 76.0 (739.0) Select Credit Metrics (x)

Total Debt/Operating EBITDA 0.7 1.3 3.0 2.2 6.3 (4.8)

FCF/Total Debt (%) 80.0 15.2 12.6 9.9 4.4 (39.9)

FCF+Dividend/Total Debt (%) 86.5 19.0 15.1 12.0 4.4 (39.9)

Operating EBITDA/Gross Interest Expense 26.1 12.8 5.9 7.6 2.2 (2.1)

Capital Expenditure/Revenue (%) 5.9 6.4 2.5 7.7 5.9 2.4

Equity Metrics

Enterprise Value 8,627 5,600 19,838 4,963 1,325

Enterprise Value Multiple (EV/EBITDA) (x) 4.9 2.6 6.3 3.0 N.A. (4.3)

IDR – Issuer default rating. N.A. – Not available. Source: Company filings, Bloomberg, Fitch Ratings.


September 23, 2011

Corporates

U.S. Technology Financial Profile Summary Miscellaneous Technology Companies ($ Mil., For the Most Recent LTM Period)

Other Technology-Related Credits

Issuer GLW A TEL MOT EXPE

Rating (IDR) A BBB+ BBB+ BBB BBBOutlook Stable Stable Stable Stable RWN

Period Ending 6/30/11 7/31/11 6/24/11 7/2/11 6/30/11

Income Statement

Revenue 7,295.0 6,463.0 13,538.0 12,763.0 3,642.0

Revenue Growth (%) 16.2 28.4 18.6 (41.0) 17.4

Operating EBITDA 2,518.0 1,307.0 2,448.0 1,420.0 984.8

Operating EBITDA Growth (%) 12.1 65.9 21.4 (24.1) 6.2

Operating EBITDA Margin (%) 34.5 20.2 18.1 11.1 27.0

Gross Interest Expense 135.0 90.0 158.0 174.0 122.4

Balance Sheet

Total Debt with Equity Credit 2,274.0 2,168.0 2,655.0 2,154.0 1,645.2

Cash Flow

Funds From Operations 3,897.0 1,440.0 2,119.0 687.0 960.4

Change in Working Capital (305.0) (317.0) (452.0) 453.0 103.7

Cash Flow from Operations 3,592.0 1,123.0 1,667.0 1,140.0 1,064.1

Total Nonrecurring Cash Flow — (153.0) Capital Expenditures (1,724.0) (172.0) (511.0) (249.0) (191.1)

Dividends (315.0) — (291.0) (77.6)

FCF 1,600.0 951.0 821.0 1,362.0 795.4

Net (Acquisitions)/Divestures (209.0) (93.0) (682.0) 969.0 (27.1)

Net Debt Proceeds/(Repayments) 258.0 (1,500.0) (416.0) (1,146.0) 742.5

Net Stock Issuance/(Repurchases) 99.0 (180.0) (569.0) 239.0 (319.0)

Select Credit Metrics (x) (LTM)

Total Debt/Operating EBITDA 0.9 1.7 1.1 1.5 1.7

FCF/Total Debt (%) 70.4 43.9 30.9 63.2 48.3

FCF + Dividend/Total Debt (%) 84.2 43.9 41.9 63.2 53.1Operating EBITDA/Gross Interest Expense 18.7

14.515.5 8.2 8.0

Capital Expenditure/Revenue (%) 23.6 2.7 3.8 2.0 5.2

Equity Metrics

Enterprise Value 18,419 11,312 14,291 10,429 7,783

Enterprise Value Multiple (EV/EBITDA) (x) 7.3 8.7 5.8 7.3 7.9

IDR – Issuer default rating. RWN – Rating Watch Negative. N.A. – Not available Source: Company filings, Bloomberg, Fitch Ratings.


September 23, 2011

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U.S. Technology Financial Profile Summary Distributors and EMS ($ Mil., For the Most Recent LTM Period) Distributors EMS Issuer ARW AVT AXE IM TECD FLEX JBL SANM

Rating (IDR) BBB BBB BB+ BBB BB+ BBB BBB B+Outlook Stable Stable Stable Stable Stable Stable Stable PositivePeriod Ending 7/2/11 7/2/11 7/1/11 7/2/11 7/31/11 7/1/11 5/31/11 7/2/11Income Statement Revenue 20,658.9 26,534.4 5,962.6 35,809.4 26,062.5 29,661.8 16,099.5 6,593.5 Revenue Growth (%) 23.5 38.5 16.2 10.4 13.2 19.2 30.4 10.2 Operating EBITDA 1,053.7 1,138.2 364.1 562.2 417.5 1,240.7 968.1 354.8 Operating EBITDA Growth (%) 55.6 51.8 29.5 6.8 18.8 15.5 47.3 26.3 Operating EBITDA Margin (%) 5.1 4.3 6.1 1.6 1.6 4.2 6.0 5.4 Gross Interest Expense 96.6 92.5 50.4 53.3 32.7 90.8 92.7 105.4 Balance Sheet Total Debt with Equity Credit 2,115.0 1,516.6 964.2 642.6 487.1 2,213.7 1,187.6 1,212.3 Cash Flow Funds From Operations 755.5 829.5 247.6 352.3 286.9 983.6 623.8 216.4 Change in Working Capital (462.1) (551.4) (150.9) 12.8 33.7 (283.0) 91.7 (73.6)Cash Flow from Operations 293.4 278.1 96.7 365.1 320.6 700.6 715.7 142.9Total Nonrecurring Cash Flow Capital Expenditures (116.0) (148.7) (24.0) (102.5) (23) (475.0) (474.3) (120.0)Dividends — — (111.8) (60.3) FCF 177.4 129.4 (39.1) 262.6 297 225.6 181.1 22.8Net (Acquisitions)/Divestures (857.0) (661.3) (36.4) (5.5) (132.8) 43.7 (6.8) 23.6 Net Debt Proceeds/(Repayments) 728.5 59.3 70.9 294.9 (77.4) 17.1 163.3 (92.2)Net Stock Issuance/(Repurchases) (141.5) 17.9 (16.5) (201.1) (470.2) 12.6 4.7 Select Credit Metrics (x) (LTM) Total Debt/Operating EBITDA 2.0 1.3 2.6 1.1 1.2 1.8 1.2 3.4FCF/Total Debt (%) 8.4 8.5 (4.1) 40.9 58.3 10.2 15.2 1.9FCF + Dividend/Total Debt (%) 8.4 8.5 7.5 40.9 58.3 10.2 20.3 1.9EBITDA/Interest Expense 10.9 12.3 7.2 10.5 12.8 13.7 10.4 3.4Capital Expenditure/Revenue (%) 0.6 0.6 0.4 0.3 0.1 1.6 2.9 1.8Equity Metrics Enterprise Value 5,040 4,729 2,856 2,047 1,616 4,767 3,875 1,201 Enterprise Value Multiple (EV/EBITDA) (x) 4.8 4.2 7.8 3.6 3.9 3.8 4.0 3.4

EMS – Electronics manufacturing services. IDR – Issuer default rating. Source: Company filings, Bloomberg, Fitch Ratings.


September 23, 2011

Corporates

U.S. Technology Financial Profile Summary Semiconductors ($ Mil., For the Most Recent LTM Period) Semiconductors Issuer TXN INTC NSM XLNX AMD FSLRating (IDR) A+ BBB B CCCOutlook Stable RWP Stable PositivePeriod Ending 6/30/11 7/2/11 5/29/11 7/2/11 7/2/11 7/1/11Income Statement Revenue 14,115.0 48,438.0 1,520.4 2,390.2 6,454.0 4,747.0 Revenue Growth (%) 12.2 18.1 7.1 16.5 0.4 19.5 Operating EBITDA 5,270.0 22,545.0 612.5 907.5 859.0 1,155.0 Operating EBITDA Growth (%) 9.1 23.5 19.1 26.8 (33.0) 39.3 Operating EBITDA Margin (%) 37.3 46.5 40.3 38.0 13.3 24.3 Gross Interest Expense 6.0 155.0 55.1 50.5 189.4 598.0 Balance Sheet Total Debt with Equity Credit 3,498.0 2,161.0 1,042.8 894.5 2,370.0 7,462.0 Cash Flow Funds From Operations 3,927.0 18,137.0 437.3 868.9 886.0 530.0 Change in Working Capital (232.0) (1,026.0) (63.8) (11.8) (313.0) (256.0)Cash Flow from Operations 3,695.0 17,111.0 373.5 857.1 573.0 274.0 Total Nonrecurring Cash Flow Capital Expenditures (1,167.0) (8,438.0) (100.0) (60.5) (174.0) (218.0)Dividends (599.0) (3,711.0) (91.6) (175.8) FCF 1,929.0 4,962.0 181.9 620.8 399.0 56.0 Net (Acquisitions)/Divestures (51.0) (8,389.0) 0.6 1.0 65.0 Net Debt Proceeds/(Repayments) 3,485.0 (88.0) (250.0) (0.4) (476.0) (298.0)Net Stock Issuance/(Repurchases) (1,565.0) (6,909.0) 154.8 89.7 23.0 838.0 Select Credit Metrics (x) (LTM) Total Debt/Operating EBITDA 0.70 0.1 1.7 1.0 2.8 6.5FCF/Total Debt (%) 55.1 229.6 17.4 69.4 16.8 0.8FCF + Dividend/Total Debt (%) 72.3 401.3 26.2 89.1 16.8 0.8EBITDA/Interest Expense 878.3 145.5 11.1 18.0 4.5 1.9Capital Expenditure/Revenue (%) 8.3 17.4 6.6 2.5 Equity Metrics Enterprise Value 26,905 95,634 6,213 7,038 4,930 9,424 Enterprise Value Multiple (EV/EBITDA) (x) 5.1 4.2 10.1 7.8 5.7 8.2

IDR – Issuer default rating. RWP – Rating Watch Positive. Source: Company filings, Bloomberg, Fitch Ratings.


September 23, 2011

Corporates

U.S. Technology Financial Profile Summary Financial Processors ($ Mil., For the Most Recent LTM Period) Financial Processors Issuer EBAY WU FISV FIS FDC MGIRating (IDR) A A BB+ B B+Outlook Stable Stable Stable Stable StablePeriod Ending: 6/30/11 6/30/11 6/30/11 6/30/11 6/30/11 6/30/11Income Statement Revenue 10,050.7 5,335.9 4,216.0 5,558.9 10,657.6 1,198.2 Revenue Growth (%) 11.4 3.9 4.6 19.0 6.1 2.1 Operating EBITDA 3,380.2 1,549.1 1,375.0 1,755.9 2,212.8 234.6 Operating EBITDA Growth (%) 7.6 8.3 1.7 45.1 5.4 (4.8)Operating EBITDA Margin (%) 33.6 29.0 32.6 31.6 20.8 19.6 Gross Interest Expense 177.6 200.0 265.9 1,801.4 93.8 Balance Sheet Total Debt with Equity Credit 2,545.7 3,585.5 3,653.0 4,884.4 22,754.0 839 Cash Flow Funds From Operations 3,393.6 1,176.2 972.0 1,060.8 810.1 219.7 Change in Working Capital (310.0) (1.6) (27.0) 88.8 155.8 (5.3)Cash Flow from Operations 3,083.6 1,174.6 945.0 1,149.6 965.9 214.4 Total Nonrecurring Cash Flow (7.0) Capital Expenditures (752.8) (145.5) (193.0) (319.4) (407.8) (48.9)Dividends (180.2) — (68.8) (131.2) (20.5)FCF 2,330.8 848.9 766.0 761.4 426.9 145.0 Net (Acquisitions)/Divestures (2,930.5) (140.4) (58.0) (363.4) (9.5) 7.4 Net Debt Proceeds/(Repayments) 2,302.5 298.5 131.0 1,887.1 (179.2) 75.7 Net Stock Issuance/(Repurchases) (1,200.1) (701.0) (558.0) (2,318.4) (2.0) (2.6)Select Credit Metrics (x) (LTM) Total Debt / Operating EBITDA 0.8 2.3 2.7 2.8 10.3 3.5FCF/Total Debt (%) 91.6 23.7 21.0 15.6 1.9 11.3FCF + Dividend/Total Debt (%) 91.6 28.7 21.0 17.0 2.5 12.9Operating EBITDA/Gross Interest Expense 8.7 6.9 6.6 1.2 2.5Capital Expenditure/Revenue (%) 7.5 2.7 4.6 5.7 3.8 4.1Equity Metrics Enterprise Value 36,592 11,489 10,545 12,734 25,614 1,869Enterprise Value Multiple (EV/EBITDA) (x) 10.8 7.4 7.7 7.3 11.6 8.0

IDR – Issuer default rating. Source: Company filings, Bloomberg, Fitch Ratings.


September 23, 2011

Corporates

U.S. Technology Liquidity Summary ($ Mil., For the Most Recent LTM Period) Credit Facility Maturities Schedule

Company Name LTM FCF Cash Availabilitya Committed Expiration

A/R Facility Availability

Total Liquidityb 2011c 2012 2013 2014

Hardware

Dell Inc. 4,686.0 16,180.0 3,000.0 3,000.0 April 2015, April 2013 100.0 19,280.0 2.0 400.0 1,100.0 1,200.0

Eastman Kodak Company (579.0) 957.0 235.0 400.0 April 2013 1,192.0 50.0 49.0 293.0

Hewlett-Packard Co. 8,218.0 12,953.0 7,500.0 7,500.0 May 2012,

Feb 2015 1,399.0 21,852.0 3,343.0 4,050.0 5,450.0 4,500.0

Seagate Technology 347.0 3,151.0 350.0 350.0 Jan. 2015 3,501.0 560.0 416.0Xerox Corporation 1,191.0 1,098.0 2,000.0 2,000.0 April 2013 3,098.0 1,068.0 1,133.0 420.0 1,074.0IT Services/Software Accenture plc 2,300.3 5,303.3 1,021.0 1,200.0 July 2012 6,324.3 4.6 CA, Inc. 1,045.0 2,845.0 1,000.0 1,000.0 Aug. 2012 3,845.0 19.0 11.0 10.0 523.0Computer Sciences Corp. 432.0 1,666.0 1,300.0 1,500.0 March 2015 2,966.0 430.0 119.0 1,113.0 87.0Convergys Corp. 78.6 181.3 266.0 300.0 March 2015 105.0 552.3 6.3 1.9 0.7 6.7International Business Machines Corp. 11,201.0 11,764.0 10,000.0 10,000.0 June 2012 21,764.0 7,858.0 4,209.0 5,451.0 1,329.0Microsoft Corporation 19,459.0 52,772.0 52,772.0 2,000.0 2,250.0 Oracle Corp. 9,703.0 28,848.0 1,150.0 1,150.0 June 2011 29,998.0 1,150.0 1,250.0 1,500.0

SunGard Data Systems Inc. 354.0 821.0 820.0 850.0 May 2013, May 2013 1,641.0 10.0 8.0 47.0 2,482.0

Unisys Corp. 213.0 625.0 150.0 150.0 June 2016 775.0 0.9 68.0 0.2 206.2Communications Equipment/Electronics Agilent Technologies, Inc. 951.0 3,101.0 330.0 330.0 May 2012 — 3,431.0 — 250.0 250.0 —

Corning Inc. 1,600.0 6,357.0 1,620.0 1,620.0 Dec. 2015, June 2016 7,977.0 26.0 42.0 141.0 138.0

Motorola Solutions, Inc. 1,362.0 6,627.0 1,500.0 1,500.0 June 2014 8,127.0 606.0 405.0 5.0 4.0TE Connectivity 821.0 1,212.0 1,038.0 1,500.0 June 2016 2,250.0 1.0 717.0 300.0Semiconductors Advanced Micro Devices, Inc. 399.0 1,861.0 1,861.0 4.0 491.0 6.0 6.0Freescale Semiconductor, Inc. 56.0 805.0 403.0 425.0 July 2016 1,208.0 869.0 29.0 29.0 384International Rectifier Corp. 15.6 484.2 484.2 KLA-Tencor Corp. 604.5 2,038.5 2,038.5 Texas Instruments Inc. 1,929.0 6,400.0 1,000.0 1,000.0 Aug. 2012 7,400.0 1,500.0 1,000.0National Semiconductor 181.9 1,133.5 7.8 10.0 Oct. 2011 1,141.3 375.0 29.7 Distributors and Electronic Manufacturing Services

Anixter Inc. (39.1) 98.7 202.4 57.4 April 2016, April 2012 30.0 331.1 7.1 300.0 30.6

Arrow Electronics, Inc. 177.4 531.0 577.5 800.0 Jan. 2012 530.0 1,638.5 550.7 349.9 Avnet, Inc. 129.4 675.3 361.3 500.0 Sept. 2012 440.0 1,476.6 243.1 124.5 301.6 0.3Ingram Micro Inc. 262.6 1,366.8 270.3 275.0 Aug. 2012 995.0 2,631.8 120.2 225.0 Tech Data Corporation 297.3 905.1 168.6 250.0 March 2012 300.0 1,373.7 424.3 0.9 0.9 0.9Flextronics International Ltd. 225.6 1,557.8 1,840.0 2,000.0 May 2012 198.3 3,596.1 19.6 651.9 386.7 1,155.7Jabil Circuit, Inc. 181.1 911.1 997.6 1,000.0 Dec. 2015 230.7 2,139.4 80.4 Sanmina-SCI Corp. 22.8 582.8 250.0 250.0 Nov. 2013 832.8 60.4 30.4 380.0 257.4Financial Services/Other Broadridge Financial Solutions 110.3 241.5 200.0 500.0 March 2012 441.5 400.0 Fidelity National Information Services, Inc. 761.4 427.3 907.0 1,033.7

Jan. 2012, July 2014 1,334.3 564.4 652.7 315.4 1,409.9

eBay, Inc. 2,330.8 4,396.9 800.0 1,800.0 Nov. 2012 5,196.9 400.0 15.8Expedia Inc. 795.4 2,290.6 723.0 750.0 Aug. 2014 3,013.6 First Data Corp. 426.9 611.5 1,470.4 1,515.3 June 2015 2,081.9 169.7 6,515.0MoneyGram International, Inc. 145.0 140.8 150.0 Nov. 2017 140.8 The Western Union Company 848.9 2,089.7 1,500.0 1,500.0 Sept. 2012 3,589.7 696.3 300.0 500.0Total 73,244.7 185,869.9 45,084.7 47,981.4 4,328.0 235,282.6 19,344.0 16,043.3 22,080.1 25,041.5aReduced for letters of credit and available borrowing base. bCash and total Liquidity do not deduct for repatriation taxes. The technology sector on average has 60%–70% of its cash held overseas. cIncludes commercial paper and other short-term debt where applicable. A/R – Accounts receivable. Source: Company filings, Fitch Ratings.


September 23, 2011

Corporates

U.S. Technology — Operating Trends and Credit Metrics

10.0

12.5

15.0

17.5

20.0

22.5

EBITDA Margin 18.5 18.6 20 21.6 21.5

2007 2008 2009 2010 LTM

EBITDA Margin(%)

0

20

40

60

80

100

120

2007 2008 2009 2010 LTM

05101520253035404550

FCF ($) FCF/DebtFCF($) (%)

Note: Data includes non-Fitch rated companies Adobe, Cisco, EMC, and Intel, among others; 2007–2010 uses closest LTM period for companies without Dec. 31 fiscal years. Source: Company filings, Fitch Ratings.

200300400500600700800900

1,000

2007 2008 2009 2010 LTM

(15)(10)(5)05101520

Revenue Growth (%)

Revenue

Note: LTM Revenue Growth is compared to prior calendar year.

($ Bil.) (%)

0

40

80

120

160

200

240

280

2007 2008 2009 2010 LTM

1.0

1.1

1.2

1.3

Total Debt Leverage

Total Debt and Leverage

($ Bil.) (x)


September 23, 2011

Corporates

U.S. Technology – Uses of Cash

0

10

20

30

40

50

2007 2008 2009 2010 LTM

3.0

3.2

3.4

3.6

3.8

4.0

4.2

CapEx CapEx/RevenueCapital Expenditures

($ Bil.) (%)

Note: Data includes non-Fitch rated companies Adobe, Cisco, EMC, and Intel, among others; 2007–2010 uses closest LTM period for companies without Dec. 31 fiscal years. Source: Company filings, Fitch Ratings.

0

10

20

30

40

50

60

70

80

2007 2008 2009 2010 LTM

Net Cash Acquisitions($ Bil.)

0

10

20

30

40

50

60

70

2007 2008 2009 2010 LTM

Net Equity Buybacks($ Bil.)

0

4

8

12

16

20

2007 2008 2009 2010 LTM

Dividends($ Bil.)

46

48

50

52

54

56

58

2007 2008 2009 2010

R&D($ Bil.)


September 23, 2011

Corporates

Sub-Sector Snapshots


September 23, 2011

Corporates

Supply Chain Summary(All Figures for Most Recent LTM)

IT Services

Accenture plcComputer Sciences Corp.Dell Inc.Hewlett-Packard Co.IBM

12.86.3

N.A.10.714.3

Margin (%)

Software

Oracle Corp.IBMMicrosoft CorporationAdobe Systems Inc.

37.144.741.931.0

Margin (%)

Resellers

Industrial OEMs

BoeingDeereEchoStarFordJ&J Medical DevicesLockheed MartinNCRWaters Corp

(0.7)27.2(3.8)(0.6)

1.04.07.2

12.7

RevenueGrowth (%)

Industrial OEMs

BoeingDeereEchoStarFordJ&J Medical DevicesLockheed MartinNCRWaters Corp

(0.7)27.2(3.8)(0.6)

1.04.07.2

12.7

RevenueGrowth (%)

End CustomerConsumer Government Enterprise

Leading Indicators:GDPFixed Investment SpendingConsumer Confidence

IBM – International Business Machines Corp. N.A. – Not available. YoY – Year over year. NM – Not meaningful. Margins – EBIT margins. IBM Margin – Pretax income margin. Note: CDW margins are from March 2011. Source: Company filings, Fitch Ratings, U.S. Department of Commerce, Bloomberg.

1.54.9

(16.4)

Current Quarter (%)

2.27.4

(1.6)

Prior Quarter (%)

YoY Growth

14.3(0.2)13.1

6.24.7

RevenueGrowth (%)

CDW 5.3

Margin (%)

16.6

RevenueGrowth (%)

32.816.411.962.0

RevenueGrowth (%)

Broadline and Value-Added Distributors

Tech Data CorporationIngram Micro Inc.Arrow (Enterprise)Avnet (Enterprise)

1.41.43.71.4

Margin (%)

13.210.417.632.1

RevenueGrowth (%)

Broadline and Value-Added Distributors

Tech Data CorporationIngram Micro Inc.Arrow (Enterprise)Avnet (Enterprise)

1.41.43.71.4

Margin (%)

13.210.417.632.1

RevenueGrowth (%)

Tech Hardware OEMs

AppleCisco SystemsDell Inc.Hewlett-Packard Co.IBMRIMMXerox Corporation

30.423.8N.A.11.2

7.821.719.4

Margin (%)

75.713.6

5.25.07.7

30.51.4

RevenueGrowth (%)

Tech Hardware OEMs

AppleCisco SystemsDell Inc.Hewlett-Packard Co.IBMRIMMXerox Corporation

30.423.8N.A.11.2

7.821.719.4

Margin (%)

75.713.6

5.25.07.7

30.51.4

RevenueGrowth (%)

Rev. GrowthCapEx GrowthMargin

Intel Corp.18.1%

110.9%35.6%

AMD0.4NM7.9

TI12.2

0.330.8

Broadcom20.9

107.221.8

Xilinx16.545.135.4

Altera42.3

109.045.5

SanDisk17.7

104.830.4

Micron25.4

538.113.5

Seagate(3.7)31.9

8.0

WD1.15.69.5

Tyco18.665.414.0

Molex19.314.312.4

MPU Analog Logic Memory HDD Misc.

Semiconductors Components (%)

TSMC24.439.536.6

GFN.A.N.A.N.A.

Foundries

Component Distributors

Arrow (Components)Avnet (Components)

5.75.6

Margin (%)

26.237.9

RevenueGrowth (%)

Component Distributors

Arrow (Components)Avnet (Components)

5.75.6

Margin (%)

26.237.9

RevenueGrowth (%) EMS/ODM

Jabil Circuit, Inc.Flextronics International Ltd.Celestica Inc.Sanmina-SCI Corp.

4.1%2.6%3.3%3.9%

Margin (%)

30.4%19.2%11.5%10.2%

RevenueGrowth (%)

57.084.938.5

120.1

CapExGrowth

EMS/ODM

Jabil Circuit, Inc.Flextronics International Ltd.Celestica Inc.Sanmina-SCI Corp.

4.1%2.6%3.3%3.9%

Margin (%)

30.4%19.2%11.5%10.2%

RevenueGrowth (%)

57.084.938.5

120.1

CapExGrowth


September 23, 2011

Corporates

Semiconductor Snapshot Stable Outlook Primer Type/Terminology Description Key Players (and End Products) Central Processors: Central data processor and controller device, based

upon programmable instruction sets Intel (PCs and Servers), AMD (PCs), ARM (mobile, various), QUALCOMM (mobile), Samsung (mobile), Broadcom (home, networking), Marvell (storage, mobile, networking),

Embedded Processors: Single-function processor that houses microprocessor, memory, etc. on single chip

TI (home appliances, industrial, automotive), Freescale (automotive, industrial)

System-on-a-Chip (SoC) General term for multiple functionality on one chip Various

Connectivity Connects portable devices and wireless networks (WiFi, Bluetooth, etc.) Broadcom (mobile), Atheros (acquired by QUALCOMM)

Logic: Interchange management Xilinx, Altera, LSI, Cypress, Broadcom Memory: Data and instruction storage Samsung, Micron, SanDisk, Toshiba, Hynix Analog: Power management, amplifiers, interface, TI, Analog Devices, Maxim, Linear and data converters National Semiconductor, ST Micro, Renesas, FreescaleFoundries: Contract manufacturers Taiwan Semiconductor, UMC, Global Foundries, SMICPassive Components: Connectors, relays, wires, and cables TE Connectivity, Molex Semi Equipment: Tools for design, manufacture, assembly, and test KLA-Tencor, LAM, Applied Materials, • High gross and operating margins business for industry leaders with meaningful technology differentiation. • High fixed investments for next generation capital equipment and research and development. • Substantial demand cyclicality for all subsectors, but amplified by memory providers’ capacity addition cycles. Financial Profile • Growth Expectations: 4%6% for 2011, although meaningful industry variance is customary. Mid-cycle growth should converge to more mature levels of 3%6% over the intermediate term. • Expected Margin Range: 25%40% depending upon subsector and point in cycle, given high fixed costs. • Volatile FCF given capacity investments and technology upgrades. Key Industry Trends • Increased use of foundry partners to outsource high volume/advanced technology manufacturing. • Increasing collaboration on R&D, including the development of next-generation processes. • Continued convergence of handheld devices and PCs should drive shift of industry standards/market leaders. • Foundry consolidation of substantial advanced technology manufacturing capacity. • Move towards multi-functions SoCs enabling smaller form factors and lower power consumption. • Longer term consolidation and use of 300 mm wafers in analog space. Strengths Concerns • Solid secular growth prospects. • Fixed investments remain significant despite increased role of foundries. • Significant design and engineering collaboration enable product development for customers.

• Short product life cycles in consumer markets with rapidly shifting share among OEMs.

• Maturing supply chain with improved inventory discipline. • Significant supply-driven pricing pressures in memory markets.

Supply Chain

Source: Company filings, Fitch Ratings.

Components

ComponentDistributors

EMS/ODM

OEMs

Broadline Distributors, VARs,

etc.

SoftwareIT Services

EndCustomer

GovernmentEnterpriseConsumer


September 23, 2011

Corporates

Distributor Snapshot Stable Outlook Primer Type Description Key Players Components: Distribution of semiconductors and other components to EMS and OEMs Arrow, Avnet, Future, World Peace Broadline: Distribution of a wide array of finished products to resellers Tech Data, Ingram Micro Value-Added Distributors: System and software distribution in conjunction with technical services for resellers Arrow, Avnet Specialty Distributors: Distribution of a narrower product set, e.g. communications and specialty wire, cable products, and

fasteners, to end-users in the SMB and OEM markets Anixter

VARs: System and software distribution to end-customers CDW • Low-margin, high working capital intensity. • Highly competitive pricing environment. Financial Profile • Growth Expectations: 5% organic. 10% including acquisitions. • Countercyclical nature of working capital that tends to generate cash flow in a downturn. • Expected EBITDA Margin Range: 1%2% for Broadline; 4% for VAD; 7%8% for Components and VARs. • Working capital at roughly 10% of revenue. Key Industry Trends • Continued M&A and consolidation given stabilizing economic backdrop. • Asia-Pacific remains a key area of growth. However, it requires substantial investment to capture market share. • Industry reacts to changes in OEMs distribution strategy (i.e. Dell and Cisco recently adding two-tier distribution). • Steady end-market demand and stabilization of industry financial profiles offset by expectations of moderate deterioration in liquidity and heightened event risk. • Cost reduction initiatives from the past two years and revenue growth expected to push operating margins to near-term highs temporarily. • Normalizing sales volumes with some organic growth should enhance cash flows as working capital reinvestment decreases. Strengths Concerns • Increasingly mature industry has resulted in greater stability of revenue and metrics.

• Thin margins, even at peak performance.

• Strong supplier relationships • Ongoing threat of competition from direct sales. • Ability to generate cash from operations in a downturn from reduced working capital requirements.

• Exposure to cyclicality of end-market demand and global economy.

• Increasing end-market and geographic diversification, driven by higher growth rates in the Asia-Pacific region.

• Significant investment levels required to increase share in the faster- growing Asia-Pacific region, including potentially debt-financed acquisitions.

• Solid customer and supplier diversification. • Potential for greater shareholder-friendly initiatives. • Horizontal expansion of product offerings increases diversification. • Integration risk from acquisitions.

Supply Chain


Components


EMS/ODM

OEMs


etc.

SoftwareIT Services

EndCustomer



September 23, 2011

Corporates

IT Distributors Margins and ROIC (%, All Periods Reflect Calendar Years and Quarters) CY 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 LTM 2005 2006 2007 2008 2009 2010 6/09 10/09 12/09 3/10 6/10 9/10 12/10 3/11 6/11 6/10 6/11Arrow Gross Margin 15.6 15.0 14.3 13.6 11.9 12.9 11.9 11.5 11.8 12.7 12.8 13.1 13.0 13.8 13.9 12.2 13.5EBITDA Margin 4.8 5.1 4.9 4.1 3.3 4.7 2.8 2.9 4.1 4.2 4.8 4.9 5.0 4.9 5.2 4.0 5.1ROIC 12.0 14.0 15.5 13.7 8.6 14.5 10.0 8.3 8.6 9.8 12.8 13.8 14.5 14.4 15.0 12.3 16.5Avnet Gross Margin 12.9 13.0 13.0 12.9 11.7 11.9 11.8 11.5 11.4 12.3 12.4 11.7 11.4 11.8 11.9 11.9 11.7EBITDA Margin 3.4 4.6 4.9 4.4 3.2 4.3 2.8 3.2 3.8 4.4 4.6 4.1 4.1 4.1 4.3 4.0 4.3ROIC 10.7 15.0 15.2 13.9 9.8 13.4 11.3 9.9 9.8 11.6 13.1 13.0 13.4 14.0 15.2 14.0 15.5Anixter Gross Margin 24.0 24.3 24.1 23.5 22.7 23.1 22.7 22.6 22.4 22.8 22.9 23.2 23.3 23.2 23.1 22.7 23.2EBITDA Margin 5.7 7.5 8.3 7.3 5.1 5.4 4.5 5.7 4.9 5.5 5.7 6.2 4.1 5.8 6.8 5.5 6.1ROIC 13.3 16.5 18.0 15.5 9.6 10.4 11.9 9.8 10.1 10.5 11.5 11.9 11.3 11.2 12.9 11.3 13.7Ingram Micro Gross Margin 5.5 5.4 5.4 5.6 5.7 5.5 5.9 5.4 5.7 5.5 5.4 5.4 5.7 5.2 5.2 5.5 5.4EBITDA Margin 1.5 1.6 1.7 1.5 1.4 1.6 1.1 1.3 2.0 1.6 1.6 1.5 1.8 1.3 1.4 1.6 1.6ROIC 11.8 11.7 11.5 10.5 8.0 9.3 8.8 8.2 8.2 9.0 10.5 9.5 9.3 8.7 8.9 10.2 9.1Tech Data Gross Margin N.A. 4.7 4.8 5.0 5.3 5.3 5.3 5.2 5.3 5.2 5.2 5.3 5.3 5.3 5.3 5.2 5.3EBITDA Margin N.A. 1.0 1.3 1.3 1.6 1.6 1.3 1.4 1.5 1.9 1.5 1.5 1.6 1.8 1.4 1.6 1.6ROIC N.A. 8.9 8.1 9.4 8.5 9.4 9.6 9.2 8.7 8.6 9.1 9.9 9.3 9.5 9.2 9.2 9.8IT Distributors Consolidated Gross Margin 10.4 9.2 9.2 9.2 8.7 9.0 8.9 8.6 8.6 8.8 9.1 9.2 9.1 9.2 9.5 8.8 9.2EBITDA Margin 2.9 2.9 3.1 2.8 2.3 2.9 2.0 2.2 2.7 2.8 3.0 3.0 3.0 3.0 3.1 2.7 3.1ROIC 11.7 13.4 13.6 12.6 8.9 11.9 10.1 8.9 8.9 9.9 11.5 11.7 11.8 11.9 12.5 11.5 13.2

IT Distributors — FCF ($ Mil., All Periods Reflect Calendar Years and Quarters) Arrow FFO 332 376 506 453 349 636 64 97 128 109 83 181 263 121 191 418 756 W/C 70 (255) 345 166 501 (415) 242 15 72 (391) (18) (204) 199 (301) (156) (322) (462)CFO 403 121 851 620 850 221 306 112 201 (282) 65 (24) 462 (180) 35 95 294 FCF 369 55 712 461 728 109 271 86 178 (310) 36 (50) 433 (198) (7) (10) 178 Avnet FFO 327 508 676 614 247 648 43 98 127 153 175 147 173 205 305 552 829 W/C (264) (155) (123) 114 466 (778) 286 (92) (224) (217) (51) (259) (252) (17) (23) (583) (551)CFO 63 353 554 728 712 (131) 330 6 (98) (63) 124 (112) (79) 188 281 (30) 278 FCF 23 298 490 621 627 (243) 309 (4) (112) (82) 100 (144) (117) 153 238 (97) 129 Anixter FFO 40 47 126 336 283 93 172 134 (260) 75 37 54 63 59 130 (14) 306 W/C (39) (87) 12 (211) 158 103 0 0 307 0 0 0 (34) (64) (112) 307 (209)CFO 1 (40) 138 125 441 195 172 134 47 75 37 54 30 (5) 18 293 97 FCF (15) (65) 101 92 418 65 165 128 43 71 31 49 (86) (12) 10 273 (39)Ingram Micro FFO 432 388 214 383 338 371 95 41 137 115 108 53 95 108 96 401 352 W/C (424) (337) 72 171 (98) (192) 177 (263) (375) (112) (20) (89) 29 (282) 355 (770) 13 CFO 8 51 286 554 241 179 272 (222) (238) 3 88 (36) 124 (174) 451 (369) 365 FCF (31) 12 236 473 172 103 256 (232) (260) (13) 70 (47) 93 (207) 423 (435) 263 Tech Data FFO 0 108 156 197 282 268 46 84 63 85 44 60 76 88 49 276 286 W/C 0 (69) 131 42 336 (238) 70 327 (0) (130) (207) 136 (182) 87 (64) (10) 34 CFO 0 39 286 239 618 30 115 410 63 (44) (163) 196 (105) 175 (14) 266 320 FCF 0 (1) 247 206 591 (2) 112 405 55 (57) (169) 188 (112) 164 (17) 235 297 Distributors Consolidated FFO 1,131 1,427 1,678 1,983 1,499 2,015 420 454 195 537 447 495 671 580 771 1,633 2,530 W/C (657) (904) 436 283 1,362 (1,521) 775 (13) (220) (850) (296) (417) (239) (576) 0 (1,378) (1,176)CFO 474 523 2,115 2,266 2,862 495 1,195 441 (25) (312) 151 78 432 4 771 255 1,353 FCF 348 298 1,786 1,853 2,537 31 1,113 383 (95) (391) 68 (5) 212 (100) 647 (36) 828

LTM Latest 12 months. ROIC – Return on invested capital. N.A. – Not available. W/C – Working capital. Source: Company filings, Fitch estimates.


September 23, 2011

Corporates

Hardware Snapshot Stable Outlook Primer Type Key Players (Listed by Market Share in Descending Order) Consumer PCs: HP, Acer, Dell, Lenovo, Apple Commercial PCs: Dell, HP, Lenovo, Acer Industry Standard Servers: HP, Dell, IBM, Fujitsu High-End Servers: IBM, HP, Oracle Networking: Cisco, HP, Juniper Storage: EMC, HP, IBM, NetApp, Dell Printers: HP, Xerox, Canon, Epson • PC market is extremely price-competitive due to commoditization. • Server and networking market are higher margin than PCs, but also facing pricing pressure due to increasing commodization of x86 servers, and more formidable (HP/3Com) and lower cost (Huawei Technologies/ZTE) providers in networking industry. • Printers typically sold at or below cost with profits generated from the sale of high margin ink. Financial Profile • Growth Expectations: Low-single-digit growth. Pricing pressure offset by enterprise demand and emerging market growth. • Expected Operating Margin Range: 5%15% with the low end reflecting consumer PCs, and the mid to high end including networking, printing, and servers. Key Industry Trends • Companies continue to encroach on each other’s product portfolios:

• Oracle’s acquisition of Sun Microsystems increases competition with IBM. • Cisco entered the x86 server market competing against HP, Dell, and IBM. • Acquisitions made by Dell in storage and networking, HP in networking, and Oracle in hardware weakened/terminated prior partnerships with EMC, Cisco, and HP, respectively leading to greater competition.

• Leadership of Google, Amazon, and Microsoft in cloud computing could pressure server margins. • Server virtualization results in greater utilization, thereby potentially reducing long-term unit sales volumes. • Potential for tablets to cannibalize or extend the consumer PC and printer hardware replacement cycle, potentially resulting in an unwind of A/P for Dell unless they launch a competitive product. Tablets could also adversely affect industry print volumes and ink replacements. • Custom-made servers by former clients (Facebook, Google, etc.) cuts out traditional OEMs. Strengths Concerns • Strong growth in emerging markets. • Pricing pressure and intense competition. • Ongoing enterprise hardware refresh. • High cyclicality. • Potential to attach higher margin software or • Continued market transition to lower margin x86 servers. services to hardware (HW) sales. • Virtualization impact on long-term server unit demand. • Unabated data growth and increasing regulatory • Effects of tablet on consumer PCs and overall print industry. risk sustain storage demand. • Proposed HDD industry consolidation moderates pricing • Intel and Microsoft’s weak position in mobility (tablet/smartphone) and viable declines for OEMs, thereby pressuring gross margin. PC component alternatives (ARM microprocessors/Google OS) could strengthen • Long-term server pricing pressure in the event that a long-term HW margins. few major cloud providers establish industry dominance.

Supply Chain


Components


EMS/ODM

OEMs

Broadline Distributiors, VARs,

etc.

SoftwareIT Services

EndCustomer



September 23, 2011

Corporates

EMS Snapshot Stable Outlook Primer Type Description Key Players

Manufacturing: Outsourced manufacturing for hardware OEMs from PC board manufacturing, PC board assembly, and final product assembly (also medical, aerospace, and industrial)

Jabil, Flextronics, Hon Hai, Celestica, Sanmina, Plexus

Design: Engineering services and subsystem design Jabil, Flextronics, Plexus, Hon Hai

ODMs: Design and manufacture entire product with OEM branding. Quanta, ASUSTEK, Compal, Wistron, Inventec, HTC

After-Market Services: Warranty repair and refurbishing services Jabil, Flextronics • Historically a low-margin manufacturing business. • Success in the EMS sector is highly dependent on a companies’ ability to execute. This includes meeting timing deadlines, project management, inventory purchases, and contract terms. • High fixed-cost base relative to profit margin. Financial Profile • Growth Expectations: 2x3x GDP due to overall outsourcing trends. • Expected Margin Range: 3%7% depending on product mix. • Working capital to revenue ranges from 5% to 10%, usually proportional to margin. • Use of off-balance sheet accounts receivable securitization facilities as a source of liquidity. Key Industry Trends • Industrial/medical segments show robust growth, while networking, consumer, and computing grow at mid-single-digit rates. • Operating margins facing increasing pressure from commodity price increases. • Global manufacturing base and scale has been increasingly important to servicing global OEM customers, including the ability to manufacture product in or near the geographic end-market. • Continues to benefit from the trend of increased outsourcing of manufacturing and increasingly strategic relationship to OEMs given growing suite of service offerings, including product-design consultation, component sourcing, manufacturing and fulfillment logistics, and after-market services (AMS). Strengths Concerns • Strong track records of execution and disciplined approach to business growth.

• Highly competitive market sector has historically led to volatility across all North American Tier I competitors.

• Countercyclical nature of working capital cash flows which tend to provide a significant source of liquidity during business downturns.

• Significant execution risks in managing a large global manufacturing operation are compounded by the inherently low profit margins in the business model.

• Significant scale among larger EMS players.

• Acquisitive growth strategies and the need for vertical integration could lead to additional debt-financed acquisitions and heightened execution risk.

• Broad geographical distribution that alleviates reliance on any one region. • Significant customer concentration risk and some product concentration risk. • Long-term trend of increased outsourcing by OEMS to EMS companies with increasingly sticky customer relationships

• Increasing complexity of EMS offerings, including product design and AMS.

Supply Chain


Components


EMS/ODM

OEMs


etc.

SoftwareIT Services

EndCustomer



September 23, 2011

Corporates

EMS Snapshot (%, All Periods Reflect Calendar Years and Quarters) CY 4Q 1Q 2Q 3Q 4Q 1Q 2Q LTM 2006 2007 2008 2009 2010 12/09 3/10 6/10 9/10 12/10 3/11 6/11 6/10 6/11Celestica FFO 128 151 278 204 208 68 64 40 60 44 72 (25) 217 151 W/C (124) 295 156 90 (57) (23) (83) (15) 30 10 (102) 61 12 (2)CFO 4 446 433 294 151 45 (19) 26 90 54 (30) 36 229 149 FCF (185) 383 344 216 90 24 (26) 14 74 29 (49) 44 178 98 Flextronics FFO 473 707 423 379 1,033 80 110 296 248 380 (37) 394 712 984 W/C (1,066) 282 867 704 (504) 123 (123) (77) 105 (409) 279 (258) 27 (283)CFO (592) 989 1,290 1,083 529 203 (13) 219 353 (29) 242 135 738 701 FCF (1,128) 646 799 874 72 162 (69) 100 198 (157) 172 12 481 226 Jabil FFO 397 416 290 470 571 107 149 54 161 196 182 85 440 624 W/C (393) 209 70 139 (712) (90) (136) (48) 9 (586) 11 657 (231) 92 CFO 4 625 360 609 (141) 17 13 6 170 (390) 194 742 209 716 FCF (315) 261 (81) 331 (672) (36) (81) (137) 1 (506) 73 614 (153) 181 Sanmina FFO 41 17 113 96 192 81 48 34 60 50 52 54 192 216 W/C (375) 559 85 103 (263) (70) (93) (44) (73) (53) 55 (3) (148) (74)CFO (334) 576 198 199 (71) 11 (45) (11) (13) (2) 107 51 44 143 FCF (470) 469 86 148 (173) (2) (68) (19) (50) (35) 85 23 (11) 23 Plexus FFO 108 125 128 94 140 24 32 33 41 39 36 (40) 112 76 W/C (42) (70) (42) 36 (145) (34) (17) (64) (13) (60) 37 23 (77) (13)CFO 66 55 86 131 (5) (10) 15 (32) 29 (21) 73 (17) 34 63 FCF 28 7 25 81 (81) (23) (4) (48) 1 (34) 58 11 (28) 36 Benchmark FFO 0 169 164 92 106 24 32 33 41 39 36 (40) 104 50 W/C 0 113 15 32 (20) (34) (17) (64) (13) (60) 37 23 (76) 54 CFO 0 282 179 124 86 (10) 15 (32) 29 (21) 73 (17) 28 104 FCF 0 265 143 101 50 (23) (4) (48) 1 (34) 58 11 (4) 87 EMS Consolidated FFO 1,379 1,695 1,396 1,335 2,249 391 429 485 597 731 328 445 1,776 2,101 W/C (2,266) 836 1,150 1,103 (1,701) (119) (473) (301) 44 (1,029) 271 488 (495) (225)CFO (887) 2,531 2,546 2,438 548 272 (44) 184 641 (298) 599 933 1,281 1,876 FCF (2,294) 1,462 1,317 1,751 (714) 124 (252) (125) 228 (621) 327 716 463 651

EMS Margins and ROIC Celestica (%) Gross Margin 5.1 5.2 6.9 7.1 6.8 6.6 7.0 6.8 6.9 6.5 6.5 6.9 6.8 6.7EBITDA 3.2 3.0 4.3 4.7 4.4 4.1 4.8 4.8 4.6 3.5 4.5 3.3 4.7 3.9ROIC 10.1 10.2 16.2 15.6 15.8 15.5 16.2 16.4 15.6 15.1 17.7 12.5 16.6 15.2Flextronics (%) Gross Margin 5.7 5.8 5.6 5.1 5.6 5.8 5.7 5.6 5.4 5.5 5.6 5.3 5.6 5.4EBITDA 4.6 4.4 3.9 3.5 4.3 4.4 4.4 4.3 4.2 4.3 4.4 4.1 4.3 4.2ROIC 10.3 11.7 11.6 10.5 16.1 15.9 15.1 15.2 17.0 17.2 16.0 14.5 14.7 16.1Jabil (%) Gross Margin 6.7 6.9 6.6 6.6 7.5 7.5 7.4 7.6 7.4 7.6 7.5 7.5 7.4 7.5EBITDA 4.7 4.7 4.7 4.7 5.9 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.3 6.0ROIC 17.2 14.9 14.3 14.7 21.3 19.2 17.1 19.6 22.0 22.1 23.1 24.3 17.7 22.8Sanmina (%) Gross Margin 5.7 5.5 7.0 6.7 7.7 7.4 7.7 7.6 7.8 7.7 7.4 7.9 7.4 7.7EBITDA 3.2 2.7 3.9 3.7 5.3 4.7 5.0 4.9 5.6 5.7 5.0 5.4 4.7 5.4ROIC 10.0 8.9 10.9 8.9 13.5 8.9 10.4 11.5 11.9 12.4 13.1 13.5 12.4 13.3Plexus (%) Gross Margin 11.0 10.9 10.9 9.6 10.2 10.3 10.3 10.4 10.1 9.7 9.8 9.7 10.2 9.8EBITDA 7.2 7.3 7.0 6.0 6.8 6.8 6.1 7.0 7.2 6.9 6.7 6.6 6.5 6.8ROIC 24.5 17.2 16.1 12.0 14.3 14.0 13.5 14.8 15.1 13.5 13.6 12.8 13.8 13.7Benchmark (%) Gross Margin 6.9 6.8 6.8 7.0 7.9 7.3 7.9 8.0 7.8 7.8 7.1 6.4 7.6 7.3EBITDA 4.5 5.6 4.8 4.8 5.7 5.2 5.8 5.8 5.6 5.6 4.7 1.1 5.5 4.2ROIC 26.5 10.0 10.8 9.5 11.3 11.5 11.9 11.3 10.9 11.1 7.7 21.4 11.1 10.2EMS Consolidated (%) Gross Margin 5.9 5.9 6.3 6.0 6.7 6.7 6.7 6.7 6.6 6.6 6.6 6.5 6.6 6.6EBITDA 3.9 3.9 4.2 4.1 4.9 4.8 4.9 4.9 4.9 4.9 5.0 4.7 4.8 4.9ROIC 11.8 11.4 12.6 11.7 16.3 12.1 13.4 14.2 15.2 15.1 16.2 15.4 15.0 16.3

LTM Latest 12 months. W/C – Working capital. ROIC – Return on invested capital. Note: Historical Solectron figures are included in Consolidated figures but have not been added back to Flextronics. Source: Company filings, Fitch estimates.


September 23, 2011

Corporates

IT Services Snapshot Stable Outlook Primer Type Description Key Players IT Outsourcing (ITO): Application development and maintenance, IBM, HP, Accenture, Fujitsu, CSC and IT infrastructure. Business Process Transaction processing, finance and accounting, Accenture, IBM, HP, Xerox Outsourcing (BPO): HR, and customer-relationship management. Consulting: Technology and management consulting. Accenture, IBM, McKinsey, Boston Consulting Systems Integration: Integrate multiple enterprise data systems, typically Accenture, IBM, HP, CSC involves enterprise resource planning software and/or post-acquisition. Financial Profile • Growth Expectations: Growth ranking by service line in descending order: BPO (6%8%), ITO (3%5%), and C&SI (3%4%). • Forecast Average Operating Margin Range: 7%9% for public sector and 11%16% for commercial sector. Margins could continue to be pressured by adverse currency fluctuations, declining utilization rates due to significant headcount growth in advance of demand, and potential pricing pressures. • CapEx: Capital intensity ranking by service line in descending order: ITO, BPO, and C&SI. Key Industry Trends • Increasing competitiveness, scope of services, and geographic expansion by India-based vendors. • Strong demand for offshore delivery services. • Multisourcing intensifies competition due to greater number of vendors that can compete for smaller, more manageable deal sizes relative to mega deals. • Shorter contract durations lead to more frequent contract renewals, higher pursuit costs, and potential for higher customer attrition, but reduce vendor risk associated with long-term unprofitable contracts. • Potential acquisitions to expand geographically, gain scale, and/or expand capabilities, including industry expertise. Strengths Concerns • Lower financial volatility, attributable to long-term outsourcing contracts.

• Intense competition for contract awards, especially in the commercial sector.

• Solid long-term demand for outsourcing services. • Sustainability of government IT spending as a result of sizable budget deficits.

• Historical stability of IT spending and operating margin in the government sector.

• Wage inflation in key offshore delivery regions, such as the Philippines and India.

• Ample technology C&SI opportunities relating to cloud, security, mobility, and analytics.

• Risk of problem contracts due to poor contract pricing and/or delivery execution.

• Continued globalization and regulatory pressures support demand for management consulting and SI.

• Escalating currency exposure, with more commercial projects delivered offshore.

• Onerous switching costs for infrastructure and BPO. • Regulatory risks associated with the federal government’s procurement process.

Supply Chain


Components


EMS/ODM

OEMs


etc.

SoftwareIT Services

EndCustomer



September 23, 2011

Corporates

IT Services Snapshot

Note: Data is based on 23 of the largest IT Services companies.

010,00020,00030,00040,00050,00060,00070,00080,000

Q12 Q19 Q8 Q5 Q4 Q1 Q0

(8)

(4)

0

4

8

12

16

Revenue Y/Y Growth

Quarterly IT Services Revenue

Y/Y – Year over year. Source: Fitch Ratings.

($ Mil.) (%)

0

50,000

100,000

150,000

200,000

250,000

300,000

TTM-4 TTM-3 TTM-2 TTM-1 TTM

(5)

0

5

10

15

Revenue Y/Y Growth

TTM IT Services Revenue

TTM – Trailing 12 months. Y/Y – Year over year. Source: Fitch Ratings.

($ Mil.) (%)

05

101520253035

TTM-4 TTM-3 TTM-2 TTM-1 TTM0

(100)

0

100

200

300

400

500

Gross Margin Y/Y BPS Change

TTM IT Services Gross Margin

TTM – Trailing 12 months. Y/Y – Year over year. BPS – Basis points. Source: Fitch Ratings.

(%) (BPS)

02468

10121416


(40)(20)020406080100

EBITDA Y/Y Change

TTM IT Services EBITDA Margin

Y/Y – Year over year. TTM – Trailing 12 months. Source: Fitch Ratings.

(%, EBITDA Margin) (Y/Y BPS Change)

05,000

10,00015,00020,00025,00030,00035,000


(20)

(10)

0

10

20

30

40

FCF Y/Y Change

TTM IT Services FCF

Based on consolidated results. Y/Y – Year over year. TTM – Trailing 12 months. Source: Fitch Ratings.

($ Mil.) (Y/Y % Change)

05,000

10,00015,00020,00025,00030,00035,000

TTM-4 TTM-3 TTM-2 TTM-1 TTM

(30)(20)(10)010203040

Net Cash Cost FCF Y/Y Growth

TTM IT Services Industry Acquisitions

TTM – Trailing 12 months. Reflects all acquisitions closed, not just IT Services.FCF – Free cash flow. Y/Y – Year over year. Source: Fitch Ratings.

($ Mil.) (%)


September 23, 2011

Corporates

Software Snapshot Stable Outlook Primer Type Description Key Players

Operating Systems: Control and execution of a PC, server, mobile device: Windows, Linux, UNIX, Z/OS, Mac O/S, Solaris, Android

Microsoft, Red Hat, Oracle, IBM, Apple, Google

Applications: Programs that perform specific tasks such as Excel, ERP, Peoplesoft Oracle, SAP, Salesforce, Microsoft Middleware: Various meanings including software between database and applications, media-rich

functionality, integration ability, etc. IBM, Oracle, Tibco Database: Creates, stores and manipulates data Oracle, IBM, Teredata, Microsoft Management Tools: Surveillance of Data Center CA, BMC, IBM, HP, Oracle Analytics: Quant-based software that uses historical and external factors for better planning. SAP, Oracle, SAS Institute, IBM, Microsoft • High-margin business with recurring revenues due to maintenance contracts for software updates and support. • The software industry is characterized by industry standards, i.e. open-source code. Financial Profile • Growth Expectations: 2x GDP; high switching costs result in pricing leverage on maintenance contracts. • Expected Margin Range: >40% when including maintenance contracts. Key Industry Trends • Free operating systems on mobile devices and the roll-out of Google Android notebooks. • Software as a Service (SaaS) allows applications to be used on an as-needed basis, i.e. renting versus buying. • A move towards one-stop complete offerings (server, O/S, middleware, applications). • Oracle and IBM continue to dominate the lucrative middleware and database products. Strengths Concerns • High switching costs.

• Strong adoption of lower cost open source software at expense of proprietary software.

• Mission critical functionality. • Event risk associated with ongoing industry consolidation.

Supply Chain


Components


EMS/ODM

OEMs


etc.

SoftwareIT Services

EndCustomer



September 23, 2011

Corporates

Potential Acquisition Targets

Company Current EV ($ Mil.) EV/EBITDA (x)52-Week % Change

in Stock PriceTTM Sales

Growth (%) Product(s) EMC Corp./Mass 44,981 10.2 28.3 21 Storage VMware Inc.-Class A 36,189 41.7 55.6 41 Virtualization Salesforce.com 17,682 87.9 52.2 27 SaaS Cognizant Tech-A 17,407 15.5 34.7 40 Computer Services Research in Motion 13,519 2.4 16.9 33 Mobile Symantec Corp. 12,483 7.2 36.2 3 Internet Security Cerner Corp. 10,852 18.0 96.6 11 Medical Information Sys CheckPoint Software 10,631 16.5 78.6 19 Applications Software NetApp Inc. 10,291 10.4 12.1 30 Storage Citrix Systems 9,808 19.1 16.7 16 Virtualization Juniper Networks 9,042 9.5 8.7 23 Networking Teradata Corp. 8,216 16.7 59.6 13 Data Warehouse Red Hat Inc. 6,922 33.6 45.9 22 Linux OS Harris Corp. 6,584 5.6 30.9 14 Telecommunication Equip F5 Networks 6,204 17.8 18.5 35 Networking Nuance Communications 6,190 23.3 50.3 18 Applications Software BMC Software Inc. 6,035 8.1 21.5 8 Management Software CGI Group Inc. A 5,766 7.1 38.2 (2) Computers-Integrated Sys Microchip Technology 5,439 9.2 43.9 57 Electronic Compo-SemiconANSYS Inc. 4,406 14.5 73.7 12 Computer Aided Design Informatica Corp. 3,841 21.6 25.2 30 Enterprise Software/Serv Verifone Systems 3,767 21.1 30.8 19 Transactional Software Polycom Inc. 3,638 17.1 51.6 26 Networking Products TIBCO Software 3,470 18.8 39.8 21 Middleware Riverbed Technology 3,407 32.5 19.5 40 Networking Acme Packet Inc. 3,073 33.7 35.4 63 Security Fortinet Inc. 2,530 31.1 42.8 29 Networking Brocade Communications Systems 2,378 6.1 20.6 7 Networking Netsuite Inc. 2,041 168.2 55.5 16 Applications, SaaS CommVault Systems, Inc. 1,330 28.8 46.8 16 Data Processing/Mgmt Pegasystems Inc. 1,256 48.2 52.2 27 Analytics

EV Enterprise value. SaaS Software as a service. TTM – Trailing 12 months. Source: Company filings, Bloomberg, Fitch Ratings.

Technology Industry Secular Issues Issue Fitch’s Outlook Desktop Virtualization • Negative for PC Incumbents (Dell, HP) unless they offer complete VDI solution. • Economics of only virtual clients is not sufficient to offset lost PC revenue. • New commercial desktop entrants (IBM, Oracle, Cisco) that can provide complete VDI offering. • Do not expect widespread near-term adoption due to offline limitations and customer performance concerns using existing network

infrastructure. Server Virtualization • Positive short-term effect due to server demand. (Hardware) • Neutral to slightly negative long term. Higher ASP offset by fewer units. • x86 servers should continue to be the standard for most offerings. Cloud • Private clouds will likely be a bigger opportunity than public clouds. • Positive impact due to increased demand for servers, storage, and security. • Hardware sold into public clouds could be low margin due to strength of customer base (Google, Amazon, Microsoft, etc.). SaaS • Unlikely for many mission critical applications (Oracle). • Rent versus buy economics could disrupt nonmission-critical applications. • Free and cheap offerings (Google Docs, Free Office, etc.) pose a threat to consumer software, e.g. Microsoft. Tablets • Likely to extend life cycles of consumer PCs and printers. Unlikely to completely replace them. • Large working capital deficits of Dell could unwind if they do not produce a competitive product.

ASP – Average selling price. SaaS – Software as a service. Source: Fitch Ratings.


September 23, 2011

Corporates

Company Pages


September 23, 2011

Corporates

Accenture plc Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR A+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 25,313.8 23,171.0 23,094.1 26,011.9 EBITDA 3,525.9 3,391.7 3,399.1 3,834.5Senior Unsecured Bank Facility A+ Margin (%) 13.9 14.6 14.7 14.7 Total Debt 8.3 1.0 1.5 4.6 Cash 3,642.1 4,578.6 4,882.3 5,303.3 FCF 2,149.1 2,538.3 2,029.3 2,300.3 Interest Coverage 155.3 240.5 231.2 262.6 Leverage 0.0 0.0 0.0 0.0 Liquidity Analysis Period Ended 5/31/11 2011 Maturities 5 LTM FCF 2,300 2012 Maturities Cash 5,303 2013 Maturities Credit Facility Availability 1,021 2014 Maturities Expiration July 2012 A/R Securitization Facility Availability 0 Expiration Total Liquidity 6,324

Key Credit Strengths/Concerns Strengths: • Strong balance sheet with negligible debt. • Solid liquidity supported by consistent FCF. • Established, long-term client relationships, industry expertise, and extensive offshore delivery capability. • Recurring revenue from longer term outsourcing contracts (approximately 40% of total revenue). • Diversified revenue base. Concerns: • Potential for sizeable debt-funded share repurchases or acquisitions. • Pricing pressures due to intense competition from U.S. global, India-based, regional, and niche IT services providers. • Long-term effect of software as a service (SaaS) on demand for traditional systems integration, particularly ERP software.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Neutral Long-term effect of SaaS on demand for traditional systems integration, particularly ERP software. Secular Competitive Trends: Neutral Capital Structure Change: Downside Currently zero debt.

Key Credit Considerations Revenue Model: Recurring revenue from longer term outsourcing contracts (approximately 40% of total revenue). Economic Sensitivity: Neutral Growth should be in line with GDP. Concentration Risk: Strength Highly diversified customer base. Customer Financial Strength: Strength Customers are generally large institutions. Level of Competition: Neutral Accenture competes at high end with IBM, McKinsey, and CSC. Switching Costs: Strength Entry Barriers: Neutral Industry expertise and global footprint. Fixed versus Variable Costs: Strength Primarily variable costs. Variability in COGS: Strength Headcount fluctuates relative to client demand. Pricing Pressures: Neutral Pressure from global, India-based, and niche service providers Capital Spending: Strength Minimal due to asset light strategy and BPO focus. Working Capital: Strength Not applicable. Importance of Rating to Ops: Neutral Facilitates long-term commercial contract signings. Capital Strategy: Neutral Strong balance sheet with minimal debt. Competitive Position: Strength Established, long-term client relationships, industry expertise, and extensive offshore delivery capability.


September 23, 2011

Corporates

Organization Structure — Accenture plc($ Mil.)

Accenture plc(Ireland)

A+/Stable

Other DebtTotal DebtLTM EBITDALeverage Ratio


5 5

3,834.5 0.0

—

AmountOutstanding

Long-TermRating

Accenture SCA(Luxembourg)

89%

11%

Communications and Tech

RevenueEBITMargin (%)

5,167 700 13.5

Financial


5,124 902 17.6

Senior Executives(Current and Former)

Health and Public


3,724 258 6.9

Products


5,613 625 11.1

Resources


4,597 777 16.9

CommunicationsElectronicsTechnologyMedia and Entertainment

BankingCapital MarketsInsurance

HealthPublic Service

AutomotiveAir, FreightConsumer GoodsIndustrial EquipmentInfrastructure and TransportLife SciencesRetail

ChemicalsEnergyNatural ResourcesUtilities

Accenture International Capital SCA(Luxembourg)

Accenture Capital Inc.(U.S.)

Co-Borrowers $1.2 Billion Credit Facility

Guarantee


September 23, 2011

Corporates

Advanced Micro Devices, Inc. Primary Analyst: Jason Pompeii +1 312 368-3210 Ratings Fiscal Year-End and Most Recent LTM IDR B 2008 2009 2010 LTMOutlook/Watch Stable Revenues 5,617.0 5,403.0 6,494.0 6,454.0 EBITDA 367.0 690.0 1,031.0 859.0Senior Unsecured B+/RR3 Margin (%) 6.5 12.8 15.9 13.3 Total Debt 4,988.0 4,560.0 2,363.0 2,370.0 Cash 1,096.0 2,676.0 1,789.0 1,861.0 FCF (1,095.0) 542.0 355.0 399.0 Interest Coverage 1.0 1.6 5.2 4.5 Leverage 13.6 6.6 2.3 2.8 Liquidity Analysis Period Ended 7/2/11 2011 Maturities 4 LTM FCF 399 2012 Maturities 491 Cash 1,861 2013 Maturities 6 Credit Facility Availability 0 2014 Maturities 6 Expiration — A/R Securitization Facility Availability 0 Expiration — Total Liquidity 1,861

Key Credit Strengths/Concerns Strengths: • Sustainably higher operating profitability from outsourced manufacturing and restructuring. • Strengthening FCF from significantly lower capital intensity associated with outsourced manufacturing. • AMD’s essential role as a credible second source for microprocessors. Concerns: • Intel’s dominant market position in microprocessors, resulting in meaningfully greater financial flexibility and manufacturing advantages. • Limited share in markets for small form factor mobility. • Greater than industry average ongoing R&D investment requirements.

Risks to the Ratings Economic Cyclicality: Upside Credit ratings could withstand a downturn. Secular Demand Trends: Neutral Long-term PC demand driven by developing markets offset by minimal share in tablet market. Secular Competitive Trends: Downside A price-taker from Intel, which dominates PC market. ARM Holdings LLC’s significant tablet share. Capital Structure Change: Upside

Key Credit Considerations Revenue Model: New product design wins enable volume production, and require timely technology transitions. Economic Sensitivity: Strength Highly product/technology sensitive, but PC growth remains positive. Concentration Risk: Weakness PC OEMs are main customer and Global Foundries is primary supplier. Customer Financial Strength: Strength Highly rated customers. Level of Competition: Weakness Intel dominates the microprocessor space with 80% share of traditional PC markets. Switching Costs: Weakness IP licensing from Intel reduces customers’ switching costs from technology generations. Entry Barriers: Strength Onerous capital spending and R&D, and Intel’s dominance limit attractiveness for new entrants. Fixed versus Variable Costs: Strength Outsource all manufacturing but required R&D investments are substantial. Variability in COGS: Neutral Largely volume driven but potential for improved longer term foundry pricing from diversification.. Pricing Pressures: Weakness Rapid ASP erosion with continuation of Moore’s Law. Capital Spending: Neutral No manufacturing, but R&D intensive and significant relative to gross profits. Working Capital: Neutral Inventory obsolescence risk if late in technology transitions. Importance of Rating to Ops: Weakness Not meaningful, given historical ratings. Capital Strategy: Neutral Strengthening balance sheet from weak historical position. Competitive Position: Neutral OEMs need a second supplier to offset Intel’s significant share.


September 23, 2011

Corporates

Organization Structure — Advanced Micro Devices, Inc. ($ Mil.)

Advanced Micro Devices, Inc.

B/Outlook Stable

5.750% Convertible Senior Notes due 20126.000% Convertible Senior Notes due 20158.125% Senior Notes due 20177.750% Senior Notes due 2020

Other Debt/Fair Value AdjustmentTotal DebtLTM EBITDALeverage Ratio (x)

aGlobalfoundries' numbers are as of 12/25/10.Source: Company filings, Fitch Ratings.

485.0900.0500.0449.0

36.0 2,370.0

859.0 2.8

B+/RR3B+/RR3B+/RR3B+/RR3

AmountOutstanding

Long-TermRating

Government of Abu Dhabi(AA/Stable)

West Coast Hitech LP Public

20% 80%

Computing Solutions


4,852497

10.2

Graphics


1,594 815.1

Global Foundries, Inc.a

1,314.0 741.0

(1,567.0)

1,429.0

663.0 539.0

375.0

Cash CFOFCF

Debt:Mandatory Convertible NotesGuaranteed Term Loans

due 2012–2017Other Term LoansSr. Unsecured Notes

due 2013–2015

Wafer Supply

Agreement

13%

ATIC

Export-Import Bank of

U.S.

Guarantee

100%

87%

Funding Agreement $3.6 Billion–$6.0 Billion Over Five Years

Letter of Intent Wafer Supply Agreement

ATIC Holds Convertible Notes


September 23, 2011

Corporates

Agilent Technologies, Inc. Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR BBB+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 5,774.0 4,481.0 5,444.0 6,463.0 EBITDA 1,106.0 547.0 898.0 1,307.0Senior Unsecured Bank Facility BBB+ Margin (%) 19.2 12.2 16.5 20.2Senior Unsecured Notes BBB+ Total Debt 2,125.0 2,904.0 3,691.0 2,168.0

Cash 1,429.0 2,493.0 2,649.0 3,101.0FCF 602.0 280.0 597.0 951.0Interest Coverage 9.0 6.2 9.4 14.5Leverage 1.9 5.3 4.1 1.7

Liquidity Analysis Period Ended 7/31/11 2011 Maturities LTM FCF 951 2012 Maturities 250 Cash 3,101 2013 Maturities 250 Credit Facility Availability 330 2014 Maturities Expiration May 2012 A/R Securitization Facility Availability 0 Expiration Total Liquidity 3,431

Key Credit Strengths/Concerns Strengths: • Leading market positions in faster growing and more profitable bio-analytical markets. • Conservative financial policies with sufficient liquidity augmented by solid and growing annual FCF. • Global footprint and diversified vertical markets further reduce operating cyclicality. Concerns: • Mature growth rates and increasing commoditization within electronics measurement markets. • Higher debt levels likely over time, given anticipated cash build overseas. • Significant R&D requirements to maintain and develop technology leadership.

Risks to the Ratings Economic Cyclicality: Neutral Bio-analytical segment uncorrelated with business cycle and countercyclical working capital model. Secular Demand Trends: Upside Increasing measurement and test applications for bio-analytical markets. Secular Competitive Trends: Upside Market leader in each of its core markets, albeit lower technological barriers to entry. Capital Structure Change: Neutral Potential for modest incremental debt to fund additional acquisitions/expansion.

Key Credit Considerations Revenue Model: Transactional of varying size with increasing consumables mix. Economic Sensitivity: Neutral In line with macroeconomic conditions with significant exposure to China. Concentration Risk: Neutral Highly diversified with slight concentration to consolidating cellular handset OEMs. Customer Financial Strength: Strength A mixture of government and enterprises with some exposure to EMS. Level of Competition: Neutral Strong competitors in all markets offset by only diversified technology portfolio. Switching Costs: Weakness Next-generation training requirements and data loss not material. Entry Barriers: Strength Significant R&D, customer relationships, and global footprint. Fixed versus Variable Costs: Neutral Mostly in-house manufacturing with some outsourcing. Variability in COGS: Neutral Should be able to pass -through component/commodity inflation. Pricing Pressures: Weakness Rapid price erosion offset by new product introductions and increased focus on less elastic customers. Capital Spending: Strength Capex typically 2%3% of revenue. Working Capital: Neutral Modestly counter-cyclical model. Importance of Rating to Ops: Weakness Potentially some importance for incremental government business. Capital Strategy: Strength Conservative, but higher debt levels likely over time, given anticipated overseas cash build M&A to build out life

sciences and bio-analytical verticals. Competitive Position: Strength Leading market positions in most segments.


September 23, 2011

Corporates

Organization Structure — Agilent Technologies, Inc.($ Mil.)

Agilent Technologies, Inc.BBB+/Rating Stable Outlook

Sr. Unsecured RCF due 20124.45% Sr. Unsecured Notes due 20122.50% Sr. Unsecured Notes due 20135.50% Sr. Unsecured Notes due 20156.50% Sr. Unsecured Notes due 20175.00% Sr. Unsecured Notes due 2020

Other DebtTotal DebtLTM EBITDALeverage Ratio (x)


—250 250 499 598 498

73 2,1681,307

1.7

AmountOutstanding

Chemical Analysis

RevenueEBITEBIT (%)

1,499 319 21

Electronics Measurement

RevenueEBITEBIT (%)

3,225 842 26

Life Sciences

RevenueEBITEBIT (%)

1,747 248 14

Chemical and Energy TestingEnvironmental TestingFood TestingForensic and Drug Testing

CommunicationsGeneral Purpose Electronics

For-Profit (Pharma/Bio Tech)Not-for-Profit (Academic and Government)

BBB+BBB+BBB+BBB+BBB+BBB+

AmountOutstanding


September 23, 2011

Corporates

Key Credit Considerations Revenue Model: Majority is transactional or demand-based contract. Economic Sensitivity: Weakness Hyper-cyclical; tracks commercial construction. Concentration Risk: Strength Solid customer, market, and geographical diversification outside of Asia. Customer Financial Strength: Neutral Generally large businesses although some SMB and project risk. Level of Competition: Neutral Niche distributor, although direct is always potential competition. Switching Costs: Weakness Essentially none if large enough to buy direct. Entry Barriers: Neutral Significant scope and global reach. Fixed versus Variable Costs: Strength Basically a cost-plus model. Variability in COGS: Weakness Significant and unhedged exposure to copper prices. Pricing Pressures: Neutral Minimal protection as a distributor although niche focus helps. Capital Spending: Strength Minimal capex required; ERP deployment source of increase in past few years. Working Capital: Weakness Large counter-cyclical flows. Importance of Rating to Ops: Weakness Liquidity needs to fund working capital growth. Capital Strategy: Weakness Historical use of debt and FCF for M&A and share repurchases. Competitive Position: Strength Leading market positions in most segments.

Anixter International Inc. (See Also Anixter Inc.) Primary Analyst: Brian Taylor +1 212 908-0620 Ratings Fiscal Year-End and Most Recent LTM IDR BB+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 6,136.6 4,982.4 5,472.1 5,962.6 EBITDA 446.5 252.8 313.3 364.1Senior Unsecured Debt (Anixter Inc.) BB+ Margin (%) 7.3 5.1 5.7 6.1Senior Unsecured Debt (Anixter International) BB Total Debt 1,167.0 830.1 892.4 964.2 Cash 65.3 111.5 78.4 98.7 FCF 91.6 418.4 64.6 (39.1) Interest Coverage 9.3 3.8 5.8 7.2 Leverage 2.6 3.3 2.8 2.6 Liquidity Analysis Period Ended 7/1/11 2011 Maturities 7 LTM FCF (39) 2012 Maturities —Cash 99 2013 Maturities 300 Credit Facility Availability 202.4 2014 Maturities 31 Expiration April 2016, April 2012 A/R Securitization Facility Availability 30 Expiration May 2013 Total Liquidity 331

Key Credit Strengths/Concerns Strengths: • Leading market positions with significant scope and global reach. • Product, supplier, and customer diversification. • Distributors’ working capital efficiency generates significant cash during a downturn, and funds sales growth of up to 10%. Concerns: • Distribution industry’s thin operating margins. • Historical use of debt and FCF for acquisitions and share repurchases. • Significant and unhedged exposure to copper prices.

Risks to the Ratings Economic Cyclicality: Neutral Unlikely, would only be to the downside. Secular Demand Trends: Neutral Secular Competitive Trends: Neutral Capital Structure Change: Downside Risk of LBO due to ownership. Share buybacks generally incorporated into ratings.


September 23, 2011

Corporates

Organization Structure — Anixter International Inc. (See Also Anixter Inc.)($ Mil.)

Anixter International Inc. (See Also Anixter Inc.)BB+/Outlook Stable

1% Sr. Unsecured Convertibles due 2013Sr. Unsecured Notes due 2033A/R Securitization Facility (Consolidated)Total Debt


300 12

245 557

BB–BB–

AmountOutstanding

Long-TermRating

Sam Zell Public

14% 86%

North America


4,218 2826.7

Europe


1,106 3

0.3

Anixter Inc.

BB+/Outlook Stable

10.00% Sr. Unsecured Notes due 20145.95% Sr. Unsecured Notes due 2015Sr. Unsecured Credit Facility due 2012


31 200 198

(21)964 3682.6

BB+BB+BB+

AmountOutstanding

Long-TermRating

Emerging Markets


638 35 5.5


September 23, 2011

Corporates

Arrow Electronics, Inc. Primary Analyst: Brian Taylor +1 212 908-0620

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 16,761.0 14,684.1 18,744.7 20,658.9 EBITDA 693.5 478.4 896.2 1,053.7Senior Unsecured Debt BBB Margin (%) 4.1 3.3 4.8 5.1Senior Unsecured Credit Facility BBB Total Debt 1,276.9 1,399.2 1,822.4 2,115.0 Cash 451.3 1,137.0 926.3 531.0 FCF 461.2 728.3 108.4 177.4 Interest Coverage 6.6 5.5 11.0 10.9 Leverage 1.8 2.9 2.0 2.0 Liquidity Analysis Period Ended 7/2/11 2011 Maturities 551 LTM FCF 177 2012 Maturities —Cash 531 2013 Maturities 350 Credit Facility: Availability 578 2014 Maturities — Expiration January 2012 A/R Securitization Facility: Availability 530 Expiration April 2012 Total Liquidity 1,639

Key Credit Strengths/Concerns Strengths: • Leading market positions in all regions. • Consistently generates cash from operations at sales growth of 10%15%. • Diversified customer portfolio and supplier base. • Significant scope and scale of operations. Concerns: • Cyclical demand patterns and volatile pricing of semiconductor market. • Low operating margins associated with distribution industry. • Expectations for continued debt-financed acquisitions.

Risks to the Ratings Economic Cyclicality: Neutral Unlikely, would only be to the downside. Secular Demand Trends: Neutral Depends on growth of two-tier distribution model or move into new product vertical which is uncertain. Secular Competitive Trends: Neutral Continued consolidation of market is positive. Capital Structure Change: Downside Potential for debt-financed M&A,

Key Credit Considerations Revenue Model: 100% Transactional. Economic Sensitivity: Weakness Hyper-cyclical. Concentration Risk: Strength Generally strong with concentration of suppliers in servers. Customer Financial Strength: Weakness Significant exposure to small VARs. Level of Competition: Neutral Potential threat from direct sales. Switching Costs: Weakness Some protection given role of working capital in customer relations. Entry Barriers: Neutral Significant scope and global reach. Fixed versus Variable Costs: Strength Largely a cost plus model with some inventory risk in components. Variability in COGS: Neutral Some exposure to fx and semiconductor ASP volatility. Pricing Pressures: Weakness Price pressure from suppliers a constant threat. Capital Spending: Strength Minimal capex required. Working Capital: Weakness Large counter-cyclical flows. Importance of Rating to Ops: Neutral Working capital intensity benefits from IG rating. Capital Strategy: Neutral Expectations for continued debt-financed acquisitions. Competitive Position: Strength Leading market positions in most segments.


September 23, 2011

Corporates

Organization Structure — Arrow Electronics, Inc. ($ Mil.)


Components


14,543 831 5.7

Enterprise Computing Solutions


6,116 227 3.7

Arrow Electronics, Inc.BBB–/Outlook Stable

6.875% Sr. Unsecured Notes due 20133.375% Sr. Unsecured Notes due 20156.875% Sr. Unsecured Notes due 20186.000% Sr. Unsecured Notes due 20205.125% Sr. Unsecured Notes due 20217.500% Sr. Unsecured Notes due 2027Sr. Unsecured Credit Facility due 2012Term Loan due 2012A/R Securitization Facility (Consolidated)


350 250 200 300 250 200 223 200

70

68 2,115 1,054

2.0

BBB–BBB–BBB–BBB–BBB–BBB–BBB–BBB–

AmountOutstanding

Long-TermRating

Semiconductors, Connectors Servers, Software, and Storage


September 23, 2011

Corporates

Avnet, Inc. Primary Analyst: Brian Taylor +1 212 908-0620 Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 17,952.7 16,229.9 19,160.2 26,534.4 EBITDA 833.9 575.6 750.0 1,138.2Senior Unsecured Notes BBB Margin (%) 4.6 3.5 3.9 4.3Senior Unsecured Bank Facility BBB Total Debt 1,225.3 969.9 1,280.2 1,516.6 Cash 640.4 943.9 1,092.1 675.3 FCF 363.9 1,007.8 (97.3) 129.4 Interest Coverage 11.5 8.7 12.2 12.3 Leverage 1.5 1.7 1.7 1.3 Liquidity Analysis Period Ended 7/2/11 2011 Maturities 243 LTM FCF 129 2012 Maturities 125 Cash 675 2013 Maturities 302 Credit Facility Availability 361 2014 Maturities 0 Expiration September 2012 A/R Securitization Facility Availability 440 Expiration August 2011 Total Liquidity 1,477

Key Credit Strengths/Concerns Strengths: • Leading market positions in all regions. • Ability to generate FCF at sales growth of 10%15%. • Diversified customer portfolio with significant scope and scale. • Significant scope and scale of operations. Concerns: • Cyclical demand and volatile pricing of semiconductor market. • Low operating margins associated with distribution industry. • Expectations for continued debt-financed acquisitions.

Risks to the Ratings Economic Cyclicality: Neutral Unlikely, would only be to the downside. Secular Demand Trends: Neutral Depends on growth of two-tier distribution model or move into new product vertical which is uncertain. Secular Competitive Trends: Neutral Continued consolidation of market is positive.

Capital Structure Change: Downside Potential M&A, particularly in Asia-Pacific. Expect more aggressive shareholder-friendly actions ($500 million share repurchase authorized)

Key Credit Considerations Revenue Model: 100% Transactional. Economic Sensitivity: Weakness Hypercyclical. Concentration Risk: Neutral Generally strong with concentration of suppliers in servers. Customer Financial Strength: Weakness Significant exposure to small VARs. Level of Competition: Neutral Potential threat from direct sales. Switching Costs: Weakness Some protection given role of working capital in customer relations. Entry Barriers: Neutral Significant scope and global reach. Fixed versus Variable Costs: Strength Largely a cost plus model with some inventory risk in components. Variability in COGS: Neutral Some exposure to fx and semiconductor ASP volatility. Pricing Pressures: Weakness Price pressure from suppliers a constant threat. Capital Spending: Strength Minimal capex required. Working Capital: Weakness Large counter-cyclical flows. Importance of Rating to Ops: Neutral Working capital intensity benefits from IG rating. Capital Strategy: Neutral Expectations for continued debt-financed acquisitions, share repurchases authorized. Competitive Position: Strength Leading market positions in most segments.


September 23, 2011

Corporates

Organization Structure — Avnet, Inc. ($ Mil.)


Electronics Marketing


15,128 841 5.6

Technology Solutions


10,821 156 1.4

Avnet, Inc.BBB–/Outlook Stable

5.875% Sr. Unsecured Notes due 20146.000% Sr. Unsecured Notes due 20156.625% Sr. Unsecured Notes due 20165.875% Sr. Unsecured Notes due 2020Sr. Unsecured Credit Facility due 2012A/R Securitization Facility (Consolidated)


300 250 300 300 122 160

84 1,517 1,138

1.3

AmountOutstanding

Long-TermRating

Semiconductors, Connectors Servers, Software, and Storage

BBB–BBB–BBB–BBB–BBB–


September 23, 2011

Corporates

Broadridge Financial Solutions

Primary Analyst: Jason Paraschac +1 212 908-0746 Ratings Fiscal Year-End and Most Recent LTM IDR BBB+ 2008 2009 2010 2011Outlook/Watch Stable Revenues 2,207.5 2,149.3 2,209.2 2,166.9 EBITDA 457.0 436.3 435.5 382.1Senior Unsecured Bank Facility BBB+ Margin (%) 20.7 20.3 19.7 17.6Senior Unsecured Notes BBB+ Total Debt 447.9 324.1 324.1 524.3Senior Unsecured Term Loan BBB+ Cash 198.3 280.9 412.6 241.5 FCF 401.9 291.0 373.9 216.5 Interest Coverage 14.6 30.5 44.4 38.6 Leverage 1.0 0.7 0.7 1.4 Liquidity Analysis Period Ended 6/30/11 2011 Maturities LTM FCF 217 2012 Maturities 400Cash 110.3 2013 Maturities Credit Facility Availability 200 2014 Maturities Expiration March 2012 A/R Securitization Facility Availability 0 Expiration Total Liquidity 442

Key Credit Strengths/Concerns Strengths: • Leading share in the proxy distribution market. • Steady FCF with minimal exposure to economic volatility. • Long-term customer contracts/relationships in core businesses. • Diverse customer base. • The low capital intensity of Broadridge’s business model. Concerns: • Changing regulations could negatively affect the proxy-distribution business. • Increasing competition in securities-processing business.

Risks to the Ratings Economic Cyclicality: Neutral Modest exposure to cyclicality. Secular Demand Trends: Downside Constant potential for regulatory change to negatively impact business. Secular Competitive Trends: Neutral Modest competitive pressure in nonproxy business. Capital Structure Change: Downside More aggressive shareholder actions possible. Could be potential LBO target, but not likely.

Key Credit Considerations Revenue Model: Generally long-term contracts with some regulated pricing mechanism. Economic Sensitivity: Strength Modest exposure to economic variability. Concentration Risk: Weakness Customer diversification is moderate, highly exposed to proxy market. Customer Financial Strength: Strength Customers include most blue chips and S&P 500. Level of Competition: Strength Regulatory requirements limit competition. Switching Costs: Strength Regulations and business outsourcing service provide significant barriers. Entry Barriers: Strength Long-term customer relationships in core businesses. Fixed versus Variable Costs: Weakness High fixed costs although with significant reimbursable expense. Variability in COGS: Strength Pricing Pressures: Neutral Increasing competition in processing segment. Capital Spending: Neutral Working Capital: Neutral Importance of Rating to Ops: Neutral Investment Grade rating helps standing with regulators. Capital Strategy: Strength Low leverage. Competitive Position: Strength Leading market position in proxy-distribution segment.


September 23, 2011

Corporates

Organization Structure — Broadridge Financial Solutions Inc.($ Mil.)

Broadridge Financial Solutions Inc.BBB+/Stable

Term Loan FacilityRevolving Credit FacilitySr. Unsecured Notes



200200

124.2

—524 382 1.4

BBB+BBB+BBB+

AmountOutstanding

Long-TermRating

Investor Communications


1,559 213 13.7

Securities Processing


594 87

14.7

Proxy Distribution andVote Tabulation

Back-Office SecuritiesProcessing Systems


September 23, 2011

Corporates

CA, Inc. Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR BBB+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 4,277.0 4,271.0 4,353.0 4,501.0 EBITDA 1,358.0 1,594.0 1,716.0 1,777.0Senior Unsecured Bank Facility BBB+ Margin (%) 31.8 37.3 39.4 39.5Senior Unsecured Notes BBB+ Total Debt 2,582.0 1,937.0 1,545.0 1,307.0 Cash 2,796.0 2,713.0 2,583.0 2,845.0 FCF 792.0 917.0 1,010.0 1,045.0 Interest Coverage 9.7 17.1 16.8 26.1 Leverage 1.9 1.2 0.9 0.7 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 19 LTM FCF 1,045 2012 Maturities 11 Cash 2,845 2013 Maturities 10 Credit Facility Availability 1,000 2014 Maturities 523 Expiration August 2012 A/R Securitization Facility Availability 0 Expiration — Total Liquidity 3,845

Key Credit Strengths/Concerns Strengths: • Consistent annual FCF in the $750 million$1 billion range. • Depth of product line, and size and diversity of installed base. • High barriers to entry with significant switching costs drive high customer retention rates and stable recurring revenue. Concerns: • Significant competition from larger rivals with superior financial flexibility. • Lack of participation in industry consolidation could constrain long-term growth rates. • Lower organic software growth rates could drive a more aggressive acquisition strategy.

Risks to the Ratings Economic Cyclicality: Neutral Limited exposure to upgrade delays caused by macroeconomic cyclicality. Secular Demand Trends: Upside Demand for cloud, security, and virtualization products. Secular Competitive Trends: Neutral Growing need for cloud offerings could result in new competitor entrants. Capital Structure Change: Neutral Limited need for high ratings, but consistently conservative financial policies.

Key Credit Considerations Revenue Model: Multi-year contracts for management software tools with significant recurring component. Economic Sensitivity: Strength Long-term contracts and stickiness limit economic sensitivity. Concentration Risk: Neutral Diverse customer base with exposure to mainframe customers. Customer Financial Strength: Strength Enterprises with significant variance in size and vertical markets. Level of Competition: Neutral Larger and more integrated competitors mitigated by customers wanting an independent third-party provider. Switching Costs: Strength Onerous and expensive due to rewriting of significant amount of code. Entry Barriers: Strength Installed base, developers, and sales and support forces limit potential for meaningful new entrants. Fixed versus Variable Costs: Neutral Software development and commission. Variability in COGS: Strength Limited variability in software development. Pricing Pressures: Neutral Considerable but offset by license extensions and software bundling. Capital Spending: Strength Negligible. Working Capital: Neutral Deferred revenue adds variability to working capital. Importance of Rating to Ops: Weakness Historical legal issues behind company with limited need for high ratings. Capital Strategy: Neutral Low leverage, but room for incremental debt for M&A. Competitive Position: Weakness Does not have end-to-end product offering such as servers, databases, and networking.


September 23, 2011

Corporates

Organization Structure — CA ($ Mil.)

CABBB+/Outlook Stable

Sr. Unsecured Revolving Credit Facility due 20126.125% Sr. Unsecured Notes due 20145.375% Sr. Unsecured Notes due 2019



—500750

57 1,3071,777

0.7

BBB+ BBB+ BBB+

AmountOutstanding

Long-TermRating

Walter Haefner Public

25% 75%

Management Software


4,501 1,358 30.2

Subscription and Maintenance Revenue: Service Management and Assurance, Identity and Access Management


September 23, 2011

Corporates

Computer Sciences Corp. Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR BBB+ 2008 2009 2010 2011Outlook/Watch Stable Revenues 16,499.5 16,739.9 16,114.0 16,133.0 EBITDA 2,551.9 2,516.4 2,449.0 2,165.0ST IDR and Commercial Paper F2 Margin (%) 15.5 15.0 15.2 13.4Senior Unsecured Bank Facility BBB+ Total Debt 3,473.7 4,234.5 3,744.0 2,848.0Senior Unsecured Notes BBB+ Cash 698.9 2,297.3 2,784.0 1,666.0 FCF 129.3 959.5 716.0 432.0 Interest Coverage 13.8 9.7 9.7 12.8 Leverage 1.4 1.7 1.5 1.3 Liquidity Analysis Period Ended 7/1/11 2011 Maturities 430 LTM FCF 432 2012 Maturities 119 Cash 1,666 2013 Maturities 1,113 Credit Facility Availability 1,300 2014 Maturities 87 Expiration March 2015 A/R Securitization Facility Availability 0 Expiration — Total Liquidity 2,966

Key Credit Strengths/Concerns Strengths: • Consistency of CSC’s North American public sector. • Significant recurring revenues from long-term contracts (75%80%). • Global scale. Concerns: • Pressured new contract signings in CSC’s North American public sector. • SEC investigation into Nordic accounting adjustments. • National Health Services contract and pending memorandum of understanding. • Long-term risk of additional debt-financed acquisitions and share repurchases. • Risk of tax or procurement reforms instituted by the U.S. federal government that materially reduce federal and/or commercial demand for IT services.

Risks to the Ratings Economic Cyclicality: Neutral

Secular Demand Trends: Neutral Execution risk related to the changing landscape of ITO (physically taking over infrastructure, versus managing in cloud).

Secular Competitive Trends: Neutral Risk of procurement reforms or budget cuts instituted by the U.S. government that materially reduce federal demand for IT services.

Capital Structure Change: Downside Depressed stock price could result in more aggressive financial policies

Key Credit Considerations Revenue Model: Recurring revenue from long term contracts (75%80%). Economic Sensitivity: Strength Long-term contracts and government work. Concentration Risk: Neutral U.S. government accounts for 35% of revenue. Customer Financial Strength: Strength Level of Competition: Neutral Competes against all top IT Service firms, such as IBM and Accenture. Switching Costs: Strength Outsourcing deals provide some stickiness. Entry Barriers: Neutral Expertise and global footprint. Fixed versus Variable Costs: Strength Personnel is fixed but highly scaleable. Variability in COGS: Strength Pricing Pressures: Neutral Government continuing to look at insourcing and increasing competition from Indian providers. Capital Spending: Weakness ITO is highly capital intensive. Working Capital: Neutral Importance of Rating to Ops: Neutral Government sector less concerned with credit ratings than commercial. Capital Strategy: Neutral Concerns of more aggressive strategy given low market multiples. History with aggressive share repurchases and M&A.


September 23, 2011

Corporates

Organization Structure — Computer Sciences Corp. ($ Mil.)

Computer Sciences Corp.BBB+/Outlook Positive

Commercial PaperCredit Facility, due March 20155.00% Term Notes due February 20135.50% Term Notes due March 20136.50% Term Notes due March 2018



200.0 —

299.0 699.0 997.0

653 2,8482,165

1.3

F2BBB+BBB+BBB+BBB+

AmountOutstanding

Long-TermRating

North America Public


6,0195148.5

Managed Services


6,6043725.6

Business Services


3,7102817.6

U.S. Government IT Services:Civil DepartmentsU.S. MilitaryHomeland Security

Systems IntegrationOutsourcingNetworkingTraining and Simulation

IT Outsourcing ConsultingBPOSystems IntegrationSoftware Solutions

$431 Million Foreign Subsidiary Debt

Guarantee


September 23, 2011

Corporates

Convergys Corp. Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 2,775.8 2,704.9 2,203.4 2,225.4 EBITDA 299.6 311.7 245.0 262.3ST IDR and Commercial Paper F3 Margin (%) 10.8 11.5 11.1 11.8Sr. Unsecured Bank Facility BBB Total Debt 665.9 538.3 278.7 240.8Senior Unsecured Debt BBB Cash 240.0 331.7 186.1 181.3 FCF 91.8 189.8 97.5 78.6 Interest Coverage 13.3 10.8 12.6 15.2 Leverage 2.2 1.7 1.1 0.9 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 6 LTM FCF 79 2012 Maturities 2 Cash 181 2013 Maturities 1 Credit Facility Availability 266 2014 Maturities 7 Expiration March 2015 A/R Securitization Facility Availability 105 Expiration June 2014 Total Liquidity 552

Key Credit Strengths/Concerns Strengths: • Reduction in business and financial risks following sale of HR business. • Improvement in credit-protection measures as significant debt reduction more than offset revenue and profitability pressures. • Strengthened liquidity profile due to full repayment of its $400 million credit facility. • Fitch expects financial pressures in customer management and information management will continue to moderate. Concerns: • Weak economic conditions continue to pressure CM call volumes. • Wage inflation in the Philippines, a core region for delivering offshore services. • Fitch believes the volatility of IM’s financial results have increased due to the greater importance of new software license sales. • The revenue base for Convergys is highly concentrated by customer and industry. • Convergys is subject to significant currency market risk exposure.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Upside Low- to mid-single-digit annual growth. Secular Competitive Trends: Upside Capital Structure Change: Neutral Limited debt outstanding relative to historical standards.

Key Credit Considerations Revenue Model: Long-term contracts partially offset by call volume fluctuations. Economic Sensitivity: Neutral Demand for clients’ services affects call volume and software license demand. Concentration Risk: Weakness Significant client (top 3 equal 38%) and industry concentration. Customer Financial Strength: Strength AT&T (21.4% of revenue rated ‘A’/RWN), DirecTV (‘BBB’/Stable) and Comcast (‘BBB+’/Stable). Level of Competition: Weakness Significant number of strong competitors from multiline and niche service providers. Switching Costs: Strength Risk of disruptions to customer service during transition. Entry Barriers: Neutral Long-term relationships with existing clients and global footprint. Fixed versus Variable Costs: Neutral Variable headcount offset by fixed costs for call centers. Variability in COGS: Neutral Adversely affected by offshore wage inflation and weak USD. Pricing Pressures: Neutral Cost of service delivery generally similar across industry. Capital Spending: Neutral Primarily for call center expansion. Working Capital: Neutral Generally equivalent to 5% of annual revenue. Importance of Rating to Ops: Neutral Facilitates the signing of long-term contracts with commercial clients. Capital Strategy: Neutral Competitive Position: Strength


September 23, 2011

Corporates

Organization Structure — Convergys Corporation($ Mil.)

Convergys CorporationBBB–/Stable

Commercial PaperRevolving Credit FacilityConvertible Debentures due 2029a


aIncludes $68 million in equity credit. Note: Chart is pro forma for sale of cellular partnerships.Source: Company filings, Fitch Ratings.

——

125

116 241 262 0.9

F3BBB–BBB–

AmountOutstanding

Long-TermRating

Customer Management


1,858 133 7.1

Information Management


337 39

11.5

Call Center Functions:Customer ServiceTechnical SupportSalesCollections ManagementInteractive Voice Response Technology

Data Information Analysis

AT&T, Comcast, and DirecTV account for more than 35%–40% of revenue.

Convergys Funding Inc.

A/R SecuritizationTotal Debt

5858

100%


September 23, 2011

Corporates

Corning Inc. Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR A 2008 2009 2010 LTMOutlook/Watch Stable Revenues 5,948.0 5,395.0 6,632.0 7,295.0 EBITDA 2,012.0 1,558.0 2,369.0 2,518.0Senior Unsecured Bank Facility A Margin (%) 33.8 28.9 35.7 34.5Senior Unsecured Notes A Total Debt 1,605.0 2,004.0 2,319.0 2,274.0 Cash 2,816.0 3,583.0 6,350.0 6,357.0 FCF (106.0) 875.0 2,515.0 1,600.0 Interest Coverage 22.4 14.0 18.4 18.7 Leverage 0.8 1.3 1.0 0.9 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 26 LTM FCF 1,600 2012 Maturities 42 Cash 6,357 2013 Maturities 141 Credit Facility Availability 1,620 2014 Maturities 138 Expiration December 2015, June 2016 A/R Securitization Facility Availability 0 Expiration Total Liquidity 7,977

Key Credit Strengths/Concerns Strengths: • Strong market positions, particularly within display technologies. • Conservative financial policies with solid liquidity. • Relatively consistent cash dividends from joint ventures. • High barriers to entry from manufacturing footprint and IP portfolio. Concerns: • Capital-expenditure requirements for LCD and next-generation businesses will remain significant. • Pressures in telecommunications infrastructure spending, especially in wireline. • Slower than anticipated growth in non-LCD businesses in the intermediate term.

Risks to the Ratings Economic Cyclicality: Neutral Secular and Chinese growth mitigates some economic cyclicality. Secular Demand Trends: Upside LCD emerging market demand trends and developed countries' replacement cycles. Penetration into the mobile market

with gorilla glass. Secular Competitive Trends: Upside Technology and capacity leadership in manufacturing with significant market share. Capital Structure Change: Neutral Potential over longer term, given ultimate maturity of LCD. Manufacturing expansion in China is short-term priority.

Key Credit Considerations Revenue Model: Transactional but leading positions in consolidated market. Economic Sensitivity: Neutral Cyclical based on consumer spending habits, but secular and Chinese growth mitigates some economic cyclicality. Concentration Risk: Neutral Customer concentration mitigated by Corning’s consolidated share, and consumer end-market diversification. Customer Financial Strength: Strength Leading consumer electronics makers: Sony, LG, and Toshiba. Level of Competition: Strength Technology leadership could shrink over time, given lack of additional glass scaling. Switching Costs: Neutral Minimal at trailing technology levels, but only high volume provider of leading technology glass. Entry Barriers: Strength Significant manufacturing footprint and IP portfolio. Fixed versus Variable Costs: Weakness Significantly fixed manufacturing costs and R&D investments. Variability in COGS: Neutral Sand is main input but process is energy-intensive. Pricing Pressures: Weakness Constant declining ASP must be offset by manufacturing efficiencies. Capital Spending: Weakness High capex will continue for at least the next five years. Glass manufacturing is fundamentally capital-intensive. Working Capital: Neutral Potential for excess inventories through the supply chain, including panel makers, TV OEMs, and retailers. Importance of Rating to Ops: Weakness Largely irrelevant to customers or suppliers. Capital Strategy: Strength Conservative financial policies with consistently declining total leverage. Competitive Position: Strength Financial flexibility enables commitment to R&D and advanced manufacturing. Other: Strength Material cash dividends from JV investments Dow Corning (polysilicone) and Samsung Corning (Korean LCD).


September 23, 2011

Corporates

Organization Structure — Corning Inc. ($ Mil.)

Corning Inc.A–/Outlook Stable

Sr. Unsecured Revolver due 20156.750% Sr. Unsecured Debt due 20135.900% Sr. Unsecured Notes due 20146.200% Sr. Unsecured Notes due 20168.875% Sr. Unsecured Debt due 20166.625% Sr. Unsecured Notes due 20194.250% Sr. Unsecured Notes due 20208.875% Sr. Unsecured Debt due 20217.000% Sr. Unsecured Notes due 20246.850% Sr. Unsecured Debt due 20297.250% Sr. Unsecured Bonds due 20365.750% Sr. Unsecured Notes due 2040

Other Debt/Fair Value AdjustmentTotal Debt

LTM EBITDALeverage Ratio (x)

JV – Joint venture. EE – Equity earnings.Source: Company filings, Fitch Ratings.

—100.0 100.0 74.0 75.0

250.0 300.0 75.0

100.0 150.0 250.0 400.0

400.0 2,274

2,518.0 0.90

A–A–A–A–A–A–A–A–A–A–A–A–

AmountOutstanding

Long-TermRating

Display (CDT)

RevenueEBITDAEBITDA (%)

2,945.02,522.0

86

Life Sciences

564.0123.0

22

Samsung

LCD and LED Glassfor TV and PC MarketsIncludes Gorilla GlassSpecialty Material

Telecom

1,929.0328.0

17

Environmental

957.0233.0

24

50/50 JV

Specialty Materials

893.0159.0

18

Samsung Corning

RevenueEEMargin (%)Dividends

4,800.31,389.0

291,506.00

Dow Corning

RevenueEEMargin (%)Dividends

6,346.3407.0

5291.0

Manufactures and Distributes Glass for Korean TV Makers

Manufacturer of Silicone

Dow Corporation

50/50 JV






September 23, 2011

Corporates

Dell Inc. Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR A 2008 2009 2010 LTMOutlook/Watch Stable Revenues 61,133.0 61,101.0 52,902.0 61,761.0ST IDR and Commercial Paper F1 EBITDA 4,685.0 4,569.0 3,864.0 6,072.0 Margin (%) 7.7 7.5 7.3 9.8Senior Unsecured Bank Facility A Total Debt 587.0 2,011.0 4,080.0 7,740.0Senior Unsecured Notes A Cash 9,532.0 9,546.0 11,789.0 16,180.0 FCF 3,118.0 1,454.0 3,539.0 4,686.0 Interest Coverage 104.1 49.1 24.2 25.3 Leverage 0.1 0.4 1.1 1.3 Liquidity Analysis Period Ended 7/31/11 2011 Maturities 2 LTM FCF 4,686 2012 Maturities 400 Cash 16,180 2013 Maturities 1,100 Credit Facility: Availability 2,001 2014 Maturities 1,200 Expiration April 2015, April 2013 A/R Securitization Facility: Availability 100 Expiration Multiple Total Liquidity 18,281

Key Credit Strengths/Concerns Strengths: • Financial flexibility supported by significant liquidity. • Strong credit-protection measures, especially core metrics after adjusting for finance receivables. • Solid market positions across several product categories. Concerns: • Market share losses in the PC market. • Event risk in terms of a large acquisition to accelerate its ongoing transformation to a global provider of enterprise solutions. • Minimal operating profit generated by expanding consumer business. • Sustainability of hardware demand amid uncertain economic environment.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Neutral Potential cannibalization of PC business from tablets or virtual desktop infrastructure (VDI). Secular Competitive Trends: Downside

Capital Structure Change: Neutral M&A remains a priority. However, company has acquired storage, security, and networking products all at prudent prices.

Key Credit Considerations Revenue Model: Predominantly transactional (PC/servers/storage) with 4% from longer term outsourcing contracts. Highly competitive,

low-margin PC business accounts for 55% of revenue. Economic Sensitivity: Neutral Customer demand highly correlated to the economic cycle. Concentration Risk: Strength Highly diversified revenue by geography and customers. Customer Financial Strength: Neutral 24% of revenue derived from small and medium businesses. Level of Competition: Weakness IBM, HP, Oracle, and others offer a broader product portfolio. Switching Costs: Neutral Entry Barriers: Neutral Scale or differentiated product offering necessary to compete. Fixed versus Variable Costs: Neutral Fixed component declining due to greater reliance on contract manufacturers. Variability in COGS: Neutral Short-term exposure to component pricing volatility. Pricing Pressures: Weakness Highly competitive PC market with steady declines in PC prices. Capital Spending: Strength Minimal (0.7% of sales) due to increased reliance on contract manufacturers. Working Capital: Neutral Negative cash conversion cycle generates cash with revenue growth. Susceptible to unwind during downturn or secular shift. Importance of Rating to Ops: Strength Key to growth and profitability of Dell Financial Services (DFS). DFS also facilitates the sale of Dell's hardware products. Capital Strategy: Neutral Increasing debt to fund growth of DFS financing assets. Core leverage (non-DFS) strong at 0.5x. Competitive Position: Strength Strong in hardware, but weak in software and services. Lacks global scale.


September 23, 2011

Corporates

Organization Structure — Dell Inc. ($ Mil.)

Dell Inc. A/Outlook Stable

Commercial PaperSr. Unsecured RCF due 2013Sr. Unsecured RCF due 20153.375% Sr. Unsecured Notes due 20124.700% Sr. Unsecured Notes due 20131.400% Sr. Unsecured Notes due 20135.625% Sr. Unsecured Notes due 2014Floating Rate Sr. Unsecured Notes due 20142.100% Sr. Unsecured Notes due 20142.300% Sr. Unsecured Notes due 20153.100% Sr. Unsecured Notes due 20165.650% Sr. Unsecured Notes due 20185.875% Sr. Unsecured Notes due 20194.625% Sr. Unsecured Notes due 20217.100% Sr. Unsecured Debentures due 20286.500% Sr. Unsecured Notes due 20385.400% Sr. Unsecured Notes due 2040



———

400607499500300400700400499600398386400300

1,351 7,740 6,072

1.3

F1AAAAAAAAAAAAAAAA

AmountOutstanding

Long-TermRating

Large Enterprises


18,079 1,854

10.3

Consumer


12,152 278 2.3

Dell Financial Services LLC

Finance Receivables 3,141

Public


16,639 1,671

10.0

SMB


14,891 1,708

11.5

ABS Conduits

Finance Receivables Structured Debt

1,4961,300

Fully Consolidated

100%

ProductsMobility (Laptops)DesktopPeripherals and Software Servers and Networking Services Storage

% of Revenue 31231713133


September 23, 2011

Corporates

Eastman Kodak Company Primary Analyst: Brian Taylor +1 212 908-0620

Ratings Fiscal Year-End and Most Recent LTM IDR CCC 2008 2009 2010 LTMOutlook/Watch Negative Revenues 9,062.0 7,173.0 6,349.0 6,204.0 EBITDA 173.0 134.0 (86.0) (305.0)Senior Secured Bank Facility B+/RR1 Margin (%) 1.9 1.9 (1.4) (4.9)2nd Lien Notes B+/RR1 Total Debt 1,303.0 1,191.0 1,245.0 1,451.0Senior Unsecured Notes CC/RR5 Cash 2,145.0 2,024.0 1,624.0 957.0 FCF (240.0) (288.0) (368.0) (579.0) Interest Coverage 1.6 1.1 (0.6) (2.1) Leverage 7.5 8.9 (14.5) (4.8) Liquidity Analysis Period Ended 6/30/11 2011 Maturities 50 LTM FCF (579) 2012 Maturities 49 Cash 957 2013 Maturities 293 Credit Facility Availability 235 2014 Maturities Expiration April 2013 A/R Securitization Facility Availability 0 Expiration Total Liquidity 1,192

Key Credit Strengths/Concerns Strengths: • Large cash balance. • Recognizable brand name. • Leading market position in traditional film market despite secular declines. Concerns: • Significant negative FCF of recent years expected to continue. • Persistent declines in revenue and profitability in digital portfolio, despite significant nonrecurring royalties. • Uncertainty of nonrecurring license royalties in the future. • Declines in traditional film group as digital substitution accelerates and margins erode. • Significant underfunded pension liability. • Significant competition and pricing pressure across entire product portfolio.

Risks to the Ratings Economic Cyclicality: Downside Significant exposure to consumer spending and overall economic growth. Secular Demand Trends: Downside Declining demand for digital still cameras and film. Varied demand environment for printed media. Secular Competitive Trends: Downside Significant secular decline in filmed entertainment segment; intensely competitive environment for consumer digital

products.

Capital Structure Change: Downside Management may attempt to refund subordinate notes ahead of senior secured debt with intellectual property sale proceeds.

Key Credit Considerations Revenue Model: Transactional: consumer and commercial products. Nonrecurring IP licensing revenues. Economic Sensitivity: Weakness Dependence on uncertain future nonrecurring intellectual property lawsuit revenues. Concentration Risk: Neutral Limited group of major tech companies provide significant IP license revenues, while continuing operations revenues

are diversified by geography and customers. Customer Financial Strength: Neutral Consumers and small to medium printing businesses. Level of Competition: Weakness Consumer products and graphics communication segments are highly competitive. Switching Costs: Weakness Graphics communications group has higher switching costs for customers. Digital and film have low switching costs. Entry Barriers: Neutral Global manufacturing, sales force, significant R&D, and stiff competition. Fixed versus Variable Costs: Weakness Substantial fixed costs given R&D and manufacturing facilities. Variability in COGS: Weakness Silver prices significantly affect gross margins. Little leverage to pass through increased costs. Pricing Pressures: Weakness Consumer products continue to have declining ASPs. Capital Spending: Weakness Ongoing efforts to transition to a digital business struggle to gain traction. Working Capital: Neutral Inventory-intensive operations. Importance of Rating to Ops: Neutral Helps to access increasingly needed liquidity. Capital Strategy: Neutral Seek profitability, extend out maturities. Competitive Position: Weakness Most products are weakly positioned.


September 23, 2011

Corporates

Organization Structure — Eastman Kodak Company ($ Mil.)

Eastman Kodak CompanyCCC/Outlook Negative

7.250% Sr. Unsecured Notes due 20137.000% Sr. Unsecured Convertibles due 20179.200% Sr. Unsecured Notes due 20219.950% Sr. Unsecured Notes due 20189.750% 2nd Lien Notes due 201810.625% Sr. Secured 2nd Lien due 2019Term NotesTerm NotesSr. Secured Credit Facility due 2013


N.A. – Not applicable.Source: Company filings, Fitch Ratings.

250 400 10 3

500 250 112 28 —

(102)1,451 (305)N.A.

CC CC CC CC B+ B+ B+ B+ B+

AmountOutstanding

Long-TermRating

Consumer Digital Imaging Group (CDG)


1,808 (562)(31.1)

Graphic Communications Group

(GCG)


2,724 (123)(4.5)

Film, Photofinishing and Entertainment Group

(FPG)


1,633 4

0.2

Kodak Ltd.

Pension Liability 870

Guarantee


September 23, 2011

Corporates

eBay Inc. Primary Analyst: Jason Paraschac +1 212 908-0746

Ratings Fiscal Year-End and Most Recent LTM IDR A 2008 2009 2010 LTMOutlook/Watch Stable Revenues 8,541.3 8,727.4 9,156.3 10,050.7 EBITDA 3,196.6 3,043.8 3,219.1 3,380.2Senior Unsecured Bank Facility A Margin (%) 37.4 34.9 35.2 33.6Senior Unsecured Notes A Total Debt 1,000.0 0.0 1,794.2 2,545.7Commercial Paper F1 Cash 3,458.8 6,325.6 6,622.8 4,396.9 FCF 2,316.1 2,341.0 2,021.9 2,330.8 Interest Coverage 399.6 Leverage 0.3 0.0 0.6 0.8 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 1,016 LTM FCF 2,331 2012 Maturities Cash 4,397 2013 Maturities 400 Credit Facility Availability 800 2014 Maturities 16 Expiration November 2012 A/R Securitization Facility Availability 0 Expiration Total Liquidity 5,197

Key Credit Strengths/Concerns Strengths: • Market-leading payments business. • Strong user base of Marketplaces. • Strong FCF. • Solid international presence. Concerns: • Longer term concern over potential split of PayPal and Marketplaces. • Potential debt issuance for acquisitions. • Increase in consumer-lending services.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Upside PayPal acceptance and brand recognition. Secular Competitive Trends: Downside New technologies could weaken PayPal’s market position.

Capital Structure Change: Downside Divergence of PayPal and Marketplaces could increase. However, recent acquisitions of GSI Commerce and Milo could bridge the two segments under the company’s online-offline strategy.

Key Credit Considerations Revenue Model: Predominantly transactional: Markets (e.g. auctions) and PayPal. Small amount related to advertising. Economic Sensitivity: Weakness Correlated to consumer spending, but benefits from share gains. Concentration Risk: Strength Solid international presence. Customer Financial Strength: Strength Exposure to consumer mitigated by credit card payments. Level of Competition: Neutral Amazon, Overstock, etc. have been unsuccessful at auctions. Switching Costs: Strength Sellers’ reputation depends on vast historical user feedback rating database. Entry Barriers: Neutral Aggregation and above switch costs provide barriers. Fixed versus Variable Costs: Neutral Online platform can be leveraged with increased transactions. Variability in COGS: Strength No exposure to COGS. Pricing Pressures: Neutral Users have consistently complained about fee structure. Capital Spending: Neutral Working Capital: Strength Importance of Rating to Ops: Neutral PayPal and Bill Me Later benefit from strong rating. Marketplaces does not require a strong rating. Capital Strategy: Strength Risk of more aggressive policies given stagnant stock price. This includes the risk of spinning off higher-growth PayPal. Risk of consumer credit Bill Me Later expansion. Competitive Position: Strength Market leader in auctions.


September 23, 2011

Corporates

Organization Structure — eBay Inc. ($ Mil.)

eBay Inc.A/Stable Outlook

0.875% Sr. Unsecured Notes due 20131.625% Sr. Unsecured Notes due 20153.250% Sr. Unsecured Notes due 2020Commercial Paper



400 600 500

1,000

46 2,546 3,380

0.8

AAAF1

AmountOutstanding

Long-TermRating

Marketplaces


6,072 2,432 40.1

Payments


3,875 833 21.5

GSI Commerce


24 ——

25% Craigslist

eBay.comStubHub.comHalf.comRent.comShopping.com

PaypalBill Me Later

Logistics and ProcurementServices for the Online Operations of Big-Box Retailers


September 23, 2011

Corporates

Expedia, Inc. Primary Analyst: Jason Paraschac +1 212 908-0746

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch RWN Revenues 2,937.0 2,955.4 3,348.1 3,642.0 EBITDA 835.9 869.2 947.2 984.8Senior Unsecured Bank Facility BBB Margin (%) 28.5 29.4 28.3 27.0Senior Unsecured BBB Total Debt 1,544.5 895.1 1,644.9 1,645.2 Cash 758.2 688.3 1,229.9 2,290.6 FCF 360.9 584.0 543.2 795.4 Interest Coverage 11.6 10.3 9.4 8.0 Leverage 1.8 1.0 1.7 1.7 Liquidity Analysis Period Ended 6/30/11 2011 Maturities LTM FCF 795 2012 Maturities Cash 2,291 2013 Maturities Credit Facility Availability 723 2014 Maturities Expiration August 2014 A/R Securitization Facility Availability 0 Expiration Total Liquidity 3,014

Key Credit Strengths/Concerns Strengths: • The largest on-line travel agent (OTA) with advantages in scale. • Broad customer and geographic diversification. • Expected continued secular shift toward use of OTAs. Concerns: • History of aggressive debt-financed share repurchase programs. • Liberty Media and Expedia’s chairman, Barry Diller, are majority shareholders. • Potentially significant contingent liability related to hotel occupancy tax disputes. • Recent public disputes between airline industry, OTAs, and global distribution systems.

Risks to the Ratings Economic Cyclicality: Neutral Rating not driven by metrics at this point. Secular Demand Trends: Upside Expected continued secular shift toward use of OTAs. Secular Competitive Trends: Neutral Airline dispute more noise than material Capital Structure Change: Downside Planned TripAdvisor spin plus Liberty Media overhang

Key Credit Considerations Revenue Model: Predominantly transactional post-spin of TripAdvisor. Economic Sensitivity: Weakness Correlated to consumer spending but benefits from share gains. Concentration Risk: Strength Broad customer and geographic diversification. Customer Financial Strength: Strength All major airlines and hotel chains. Level of Competition: Weakness Other OTAs and direct. Switching Costs: Neutral Brand loyalty provides some stickiness to business. Entry Barriers: Weakness Scale and supplier relationships provide some barrier. Fixed versus Variable Costs: Strength Online platform can be leveraged with increased transactions. Variability in COGS: Weakness Availability of discounted hotel rooms will vary. Pricing Pressures: Weakness Overhang of direct connections with airlines and hotels provides meaningful pressure. Capital Spending: Neutral Working Capital: Weakness Positive float on travel bookings can unwind during downturn. Importance of Rating to Ops: Weakness No compelling business reason to be investment-grade. Capital Strategy: Neutral History of aggressive debt-financed share repurchase. Competitive Position: Strength The largest OTA with advantages in scale.


September 23, 2011

Corporates

Organization Structure — Expedia, Inc.($ Mil.)

Expedia, Inc.BBB–/Rating Watch Negative

Sr. Unsecured Revolver due 20148.500% Sr. Unsecured Notes due 20167.456% Sr. Unsecured Notes due 20185.950% Sr. Unsecured Notes due 2020

Total DebtLTM EBITDALeverage Ratio (x)

aTo be spun off third-quarter 2011.Source: Company filings, Fitch Ratings.

—396500749

1,645984 1.7

BBB–BBB–BBB–BBB–

AmountOutstanding

Long-TermRating

Leisure


3,114824

26.4

Egencia


16317

10.5

Liberty Media

29% Economic61% Voting

Business ModelMerchantAgencyAdvertising

Public

71% Economic39% Voting

TripAdvisor


365290

79.5

% of Revenue672013

Domestic Subsidiary Guarantees That Can be Removed in 7.456% and 5.950% Notes Upon a Divestiture of Such Subsidiary

Expedia.comHotels.comHotwire.com

TripAdvisor.coma Corporate Clients


September 23, 2011

Corporates

Fidelity National Information Services, Inc. Primary Analyst: Jason Paraschac +1 212 908-0746

Ratings Fiscal Year-End and Most Recent LTM IDR BB+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 3,446.0 3,769.5 5,269.5 5,558.9 EBITDA 861.0 919.8 1,634.2 1,755.9Senior Secured Bank Facility BB+ Margin (%) 25.0 24.4 31.0 31.6Senior Secured Term Loan BB+ Total Debt 2,514.5 3,253.3 5,192.1 4,884.4Senior Unsecured Notes BB Cash 220.9 430.9 338.0 427.3 FCF 302.8 451.9 681.3 761.4 Interest Coverage 5.3 6.9 9.1 6.6 Leverage 2.9 3.5 3.2 2.8 Liquidity Analysis Period Ended 6/31/11 2011 Maturities 564 LTM FCF 761 2012 Maturities 653 Cash 427 2013 Maturities 315 Credit Facility Availability 907 2014 Maturities 1,410 Expiration January 2012/July 2014 A/R Securitization Facility Availability 0 Expiration Total Liquidity 1,334

Key Credit Strengths/Concerns Strengths: • Strong market position in core businesses. • Solid FCF and liquidity. • Recurring revenue base with solid customer diversification. Concerns: • History of debt-financed acquisitions. • Ongoing consolidation of its financial institution customer base. • Significant industry competitors, as well as emerging competition from larger service providers entering the financial vertical.

Risks to the Ratings Economic Cyclicality: Neutral Rating is largely driven by capital strategy. Secular Demand Trends: Neutral Increased outsourcing marginally positive to rating. Secular Competitive Trends: Downside Increased competition from nontraditional providers (Oracle, IBM) could negatively affect ratings. Capital Structure Change: Downside Potential LBO candidate; Aggressive buybacks/dividends largely incorporated into rating.

Key Credit Considerations Revenue Model: Contract based with some volume component. Economic Sensitivity: Strength Minimal. Some exposure to cyclical regulatory and outsourcing changes. Concentration Risk: Strength Diverse customer set, heavily reliant on banking sector. Customer Financial Strength: Weakness Small and mid-tier banks. Level of Competition: Neutral In-house captives and Fiserv are largest competitors, but could see Oracle, IBM, and others make bigger push.Switching Costs: Strength Customer loss usually only on acquisition. Entry Barriers: Strength Significant, but would not prevent adjacent competitors from entering (Oracle, IBM). Fixed versus Variable Costs: Weakness High fixed-cost structure. Variability in COGS: Strength Minimal. Pricing Pressures: Neutral Customary low-single-digit annual deflation. Capital Spending: Weakness Can be significant. Working Capital: Neutral Importance of Rating to Ops: Weakness Manage to BB range. Capital Strategy: Weakness Aggressive with shareholder returns. Competitive Position: Strength Leading provider with broad product offering.


September 23, 2011

Corporates

Organization Structure — Fidelity National Information Services, Inc.($ Mil.)

Fidelity National Information Services, Inc.BB+/Stable

7.625% Sr. Unsecured Notes due 20177.875% Sr. Unsecured Notes due 2020Revolver due 2012Term Loan A due 2014Term Loan B due 2016



600500112

2,1251,489

584,884

1,755.92.8

BBBBBB+BB+BB+

AmountOutstanding

Long-TermRating

Financial Solutions


1,838612

33.3

International


932132

14.2

Payment Solutions


2,493800

32.1

Guarantee of Bank Debt

Bank Op Outsourcing:Account ProcessingGeneral LedgerTransaction Fraud

Card ProcessingElectronic TransfersePayments

Domestic Subsidiaries


September 23, 2011

Corporates

First Data Corporation Primary Analyst: Jason Paraschac +1 212 908-0746

Ratings Fiscal Year-End and Most Recent LTM IDR B 2008 2009 2010 LTMOutlook/Watch Stable Revenues 8,811.3 9,313.8 10,380.4 10,657.6 EBITDA 2,354.9 2,017.5 2,141.3 2,212.8Senior Secured Bank Facility BB/RR2 Margin (%) 26.7 21.7 20.6 20.8Second-Lien Debt CCC/RR6 Total Debt 22,572.5 22,609.8 22,709.3 22,754.0Senior Unsecured CCC/RR6 Cash 406.3 737.0 509.5 611.5Senior Subordinated CC/RR6 FCF (14.0) 620.5 370.1 426.9 Interest Coverage 1.2 1.1 1.2 1.2 Leverage 9.6 11.2 10.6 10.3 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 170 LTM FCF 427 2012 Maturities —Cash 612 2013 Maturities —Credit Facility Availability 1,470 2014 Maturities 6,515 Expiration June 2015 A/R Securitization Facility Availability 0 Expiration Total Liquidity 2,082

Key Credit Strengths/Concerns Strengths: • Stable revenue model with long-term customer contracts. • Strong revenue diversification by customer and product offering. • Significant growth opportunity in international markets. • Leading market share with a distinct competitive advantage in terms of scope and scale of operations. Concerns: • Limited financial flexibility, given high leverage. • Ongoing consolidation among financial institutions. • Changing regulations in credit card industry. • Higher mix of debit card transactions negatively affects merchant profitability.

Risks to the Ratings Economic Cyclicality: Neutral Could move rating both ways but more susceptible to another economic downturn. Secular Demand Trends: Upside Increased card usage, particularly international, should boost growth rates. Secular Competitive Trends: Neutral Potential for regulatory change impacts to be positive. Capital Structure Change: Neutral IPO in near term unlikely.

Key Credit Considerations Revenue Model: Mostly transactional with volume-based contracts in financial services segment. Economic Sensitivity: Neutral Generally tracks consumer spending boosted by secular growth trends. Concentration Risk: Strength Highly diversified between merchant, consumer, and financial institution exposure, more heavily weighted to U.S. than

the rest of the world. Customer Financial Strength: Strength Consumers and large financial institutions. Level of Competition: Weakness Moderate on merchant business, captive threat in financial institutions business. Switching Costs: Neutral Low in merchant and moderate in financial institution segment. Entry Barriers: Strength Significant in terms of scale, process, and relationships. Fixed versus Variable Costs: Weakness High fixed-cost basis. Variability in COGS: Strength Minimal variability. Pricing Pressures: Weakness Generally above average. Capital Spending: Neutral Significant. Working Capital: Strength Minimal exposure. Importance of Rating to Ops: Weakness None. Capital Strategy: Weakness Longer term deleverging. Competitive Position: Strength Leading provider in both segments in the U.S.


September 23, 2011

Corporates

Organization Structure — First Data Corporation ($ Mil., All Segment Data Based on Proportionate Financials)

First Data Corp.B/Outlook Stable

Term Loan B due 20149.875% Sr. Unsecured Notes due 201510.550% Unsecured PIK Notes due 201511.250% Sr. Sub Notes due 2016Term Loan B (Extension) due 20187.375% Sr. Secured Notes due 20198.875% Sr. Secured Notes due 20208.250% Sr. 2nd Lien Notes due 202112.625% Sr. Unsecured Notes due 20218.750% 2nd Lien PIK Notes due 2022

Other Debt/Fair Value AdjustmentTotal DebtEBITDAOpCo Leverage Ratio (x)

PIK – Paid in kind. BAMS – Bank of America Merchant Services. AIB – Allied Irish Bank. WFMS – Wells Fargo Merchant Services. Source: Company filings, Fitch Ratings.

6,515784711

2,5004,700

750500

2,0003,0001,000

29522,7542,21310.3

AmountOutstanding

Retail and Alliance Services


3,1971,25339.2

International


1,709380

22.2

Management Shareholders2% Equity Owners

KKR, Citi, Goldman, HSBC98% Equity Owners

Financial Services


1,383604

43.7

Account Management:PostingsAuthorizationSettlementFraudOnline BankingCard Issuance and ActivationCustomer CommunicationSTAR ATM Network

Consolidated Alliances:Minority Interest — $146 Million

Retail and Alliance andFinancial Services

Allied Irish, et al

BofA

AIB, etc.

BAMS

Other

Wells Fargo

Other

WFMS

Non-Consolidated Alliances:Equity Earnings — $110 Million

Approval, Processing, and Settlement between local merchants, their local banks, and the issuing financial entity of the consumers credit/debit card.

49% 51%

<50% >50%

<50%>50%

60% 40%

First Data Holdings Inc.$1.4 Billion Goldman 11.5% PIK Notes (Sept. 16)


September 23, 2011

Corporates

Flextronics International Ltd. Primary Analyst: Brian Taylor +1 212 908-0620

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 2011Outlook/Watch Stable Revenues 27,558.1 30,948.6 24,110.7 29,661.8 EBITDA 1,195.7 1,098.5 1,217.2 1,240.7Senior Unsecured Bank Facility BBB Margin (%) 4.3 3.5 5.0 4.2 Total Debt 3,416.9 2,969.7 2,256.9 2,213.7 Cash 1,719.9 1,137.7 510.9 1,557.8 FCF 695.3 963.9 622.5 225.6 Interest Coverage 6.4 5.4 7.7 13.7 Leverage 2.9 2.7 1.9 1.8 Liquidity Analysis Period Ended 7/1/11 2011 Maturities 20 LTM FCF 226 2012 Maturities 652 Cash 1,558 2013 Maturities 387 Credit Facility Availability 1,840 2014 Maturities 1,156 Expiration May 2012 A/R Securitization Facility Availability 198 Expiration October 2011 Total Liquidity 3,596

Key Credit Strengths/Concerns Strengths: • Significant advantage in scale and scope of operations. • Very strong track record of execution. • Blue chip customer base with strong exposure to faster growing market segments. • High working capital provides an additional source of liquidity in a market downturn. • Vertically integrated operations which typically drive higher margins in periods of growth. Concerns: • Vertical integration efforts represent an ongoing strategic shift, and could lead to additional debt-financed acquisitions or execution risk in an industry with minimal room for execution missteps due to the relatively low profit margin inherent in the business model. • Difficult competitive environment, which has pressured industry profitability. • Customer concentration, though less than peers; top 10 represent approximately 50% of revenue.

Risks to the Ratings Economic Cyclicality: Neutral Not likely to impact rating all else being equal. Secular Demand Trends: Neutral Expect demand trends to be positive, but upside to rating is limited. Secular Competitive Trends: Downside Significant increase in margin pressure could affect the ratings. Capital Structure Change: Neutral Expect continued share buybacks but limited by Singapore law. LBO possible but unlikely.

Key Credit Considerations Revenue Model: Contractual, but demand-based. Economic Sensitivity: Weakness Significant exposure to cyclical consumer and IT equipment demand. Concentration Risk: Neutral Perhaps the most diversified of all electronics manufacturing services (EMS) providers. Customer Financial Strength: Strength Most customers are considered blue-chip. Level of Competition: Weakness Highly competitive market. Switching Costs: Neutral Some switching costs, but not impossible. Entry Barriers: Strength Scale, technology, logistics, and operational expertise take time to match. Fixed versus Variable Costs: Weakness High fixed costs relative to profit margin. Variability in COGS: Strength Largely a fixed-cost and pass-through model. Pricing Pressures: Weakness Significant, but improved from recent years. Capital Spending: Weakness Significant relative to profit margin. Working Capital: Neutral Has the leanest working capital of EMS providers. Importance of Rating to Ops: Neutral Investment grade rating helps access to liquidity but not required. Capital Strategy: Neutral Conservative, but not afraid of debt-financed acquisitions. Competitive Position: Strength One of the top EMS providers worldwide.


September 23, 2011

Corporates

Organization Structure — Flextronics International Ltd.($ Mil.)

Flextronics International Ltd.BBB–/Outlook Stable

Term Loan B due 2012Revolving Credit Facility due 2012Asia Term Loans

Other Debt/Fair Value AdjustmentTotal DebtLTM EBITDALeverage Ratio

aTotal debt and leverage ratio do not include off-balance sheet A/R securitization debt.Source: Company filings, Fitch Ratings.

1,681 160 353

20 2,2141,241

1.8x

BBB–BBB–BBB–

AmountOutstanding

Long-TermRating

Integrated Network Solutions

RevenueRevenue Grow (%)

10,73814.4

High Velocity SolutionsIndustrial and Emerging Industries

Guarantee of Bank Debt by

Material Subsidiaries

(Greater than 5% of revenue

or 10% of assets)

High Reliability Solutions

Global Services:Products:End Markets:

Design, Manufacturing, and After-Market Services (AMS)Printed Circuit Boards, Enclosures, Display and Touch, ODM ProductsMobile, Computers, Printers, Game Consoles, Automotive, Aerospace and Defense, Medical Devices

Global Services:Products:End Markets:

Design, Manufacturing, and After-Market Services (AMS)Printed Circuit Boards, Enclosures, Display and Touch, ODM ProductsMobile, Computers, Printers, Game Consoles, Automotive, Aerospace and Defense, Medical Devices

A/R Securitization

Total North American and Global A/R Facility Debt

Trade Accounts Receivable Sale Programs

Total Debta

601.7

54.1655.8

Flextronics International USA Ltd.

Term Loan B Co-Borrower


4,09423.1


12,79221.6


2,03922.6


September 23, 2011

Corporates

Freescale Semiconductor, Inc. Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR CCC 2008 2009 2010 LTMOutlook/Watch Positive Revenues 5,226.0 3,508.0 4,458.0 4,747.0 EBITDA 1,104.0 385.0 1,008.0 1,155.0Senior Secured Bank Facility B/RR3 Margin (%) 21.1 11.0 22.6 24.3Senior Secured Notes B/RR3 Total Debt 9,773.0 7,544.0 7,616.0 7,462.0Senior Unsecured Notes C/RR6 Cash 1,394.0 1,359.0 1,043.0 805.0Senior Subordinated Notes C/RR6 FCF 171.0 (13.0) 113.0 56.0 Interest Coverage 1.7 0.7 1.7 1.9 Leverage 8.9 19.6 7.6 6.5 Liquidity Analysis Period Ended 7/1/11 2011 Maturities (Pro Forma) 119LTM FCF 56 2012 Maturities 29 Cash 805 2013 Maturities 29 Credit Facility Availability 403 2014 Maturities 384 Expiration July 2016 A/R Securitization Facility Availability 0 Expiration — Total Liquidity 1,208

Key Credit Strengths/Concerns Strengths: • Leading share positions in microcontrollers and embedded processors, particularly automotive, which are characterized by longer product lifecycles. • Increasing customer and end-market diversification from microcontrollers and embedded processor design wins with increasing analog attach rates. • Low capital intensity from Freescale’s asset light manufacturing strategy. Concerns: • Challenges generating sufficient organic FCF to meet significant long-term debt maturities. • Revenue growth challenges, given increased focus in incumbent supplier dominated end markets. • Structurally lower revenue and EBITDA levels from market share losses by Tier 1 domestic automotive suppliers and Motorola handset division.

Risks to the Ratings Economic Cyclicality: Downside Very challenged to withstand another downturn. Secular Demand Trends: Neutral Secular Competitive Trends: Neutral TI/NSM combination a mix: more formidable competitor offset by increased need for second supplier. Capital Structure Change: Downside Unlikely, considering modest FCF. Less favorable market for IPO.

Key Credit Considerations Revenue Model: Transactional, but driven by design wins and commercial success to enable volume production. Economic Sensitivity: Weakness Need for revenue growth and exposure to domestic automotive customers exacerbates economic sensitivity. Concentration Risk: Neutral Top 10 customers account for over 35% of revenue. Customer Financial Strength: Neutral Meaningful exposure to domestic automotive. Deals with customers of varying sizes and vertical markets. Level of Competition: Neutral Various competitors within fragmented markets, such as Texas Instruments, NXP, Renesas, and Analog Devices. Switching Costs: Neutral Difficult to switch upon winning product design, although second source suppliers typically identified. Entry Barriers: Neutral Expertise and customer relationships, although longer term opportunities for fabless model increases risk. Fixed versus Variable Costs: Neutral Outsource 25% of manufacturing. Meaningful restructuring reduced fixed costs and cellular R&D investments. Variability in COGS: Neutral Relatively consistent yields reduce variability in COGS, but are subject to commercial success of products. Pricing Pressures: Neutral Moderate pressure, given multi-year production runs. Capital Spending: Strength Minimal given asset light model. Working Capital: Strength Modestly countercyclical model with moderate inventory obsolescence risk. Importance of Rating to Ops: Weakness Business not being meaningfully affected by low ratings. Capital Strategy: Weakness Highly levered and unlikely to generate sufficient organic FCF to meet significant long-term maturities. Competitive Position: Neutral Leading positions in microcontrollers and embedded offset by challenges displacing incumbent suppliers.


September 23, 2011

Corporates

Organization Structure — Freescale Semiconductor, Inc. ($ Mil., As of July 1, 2011)

Freescale Semiconductor, Inc.CCC/Outlook Positive

Sr. Secured Revolver due 2016Extended Maturity Term Loan due 2016Sr. Secured 10.125% Notes due 2018Sr. Secured 9.250% Notes due 2018Sr. Unsecured Floating Rate Notes due 2014Sr. Unsecured 9.125%/9.875% PIK Notes due 2014Sr. Unsecured 8.875% Notes due 2014Sr. Subordinated 10.125% Notes due 2016Sr. Unsecured 10.750% Notes due 2020Sr. Unsecured 8.050% Notes due 2020


Note: Pro forma for IPO and net debt issuance.Source: Company filings, Fitch Ratings.

—2,222.0

750.01,380.0

57.0162.0886.0764.0488.0750.0

3.0 7,462.0

1,155.00 6.5

B–/RR3B–/RR3B–/RR3B–/RR3C/RR6C/RR6C/RR6C/RR6C/RR6C/RR6

AmountOutstanding

Long-TermRating

Microcontrollers

RevenueRevenue % Total

1,68736

Freescale Semiconductor Holdings III–V Restricted Subsidiaries and Intermediate Holding Companies

i) Restrictedii) Parent Guarantee

Freescale Holdings, LP(Parent)

Networking and Multimedia


1,291 27

Freescale Semiconductor Holdings I and II, Ltd.Guarantors, CCC/Positive Outlook

Cellular


46110

RF, Analog, and Sensors


1,16224


September 23, 2011

Corporates

Hewlett-Packard Co. Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR A+ 2008 2009 2010 LTMOutlook/Watch RWN Revenues 118,364.0 114,552.0 126,033.0 128,401.0 EBITDA 14,791.0 16,407.0 18,403.0 18,262.7ST IDR and CP F1 Margin (%) 12.5 14.3 14.6 14.2Senior Unsecured Bank Facility A+ Total Debt 17,852.0 15,830.0 22,304.0 25,696.0Senior Unsecured Notes A+ Cash 10,246.0 13,334.0 10,934.0 12,953.0 FCF 10,805.0 8,918.0 7,018.0 8,218.0 Interest Coverage 31.7 27.5 44.1 37.5 Leverage 1.2 1.0 1.2 1.4 Liquidity Analysis Period Ended 7/31/11 2011 Maturities 3,343LTM FCF 8,218 2012 Maturities 4,050Cash 12,953 2013 Maturities 5,450Credit Facility Availability 7,500 2014 Maturities 4,500 Expiration May 2012, February 2015 A/R Securitization Facility Availability 1,399 Expiration Multiple Total Liquidity 21,852

Key Credit Strengths/Concerns Strengths: • Strong financial flexibility and liquidity. • Significant recurring revenue (more than one-third of total revenue). • Broad product portfolio with strong market share positions in printing, PCs, IT services, and enterprise systems. • Geographically diversified revenue base, with 66% outside the U.S. Concerns: • Aggressive share repurchases and dividend increase despite deteriorating business conditions and capital requirements for strategic transformation. • Uncertainty of long-term business model following sudden and unexpected shift in strategic direction, including amount and use of any proceeds from proposed divestiture of the $40 billion PC business. • Significant market premiums for recent (3Par) and pending acquisitions ($11 billion or 11x revenue for Autonomy). • Risk of core debt (nonfinancing) increase to achieve financial and/or business objectives, such as sizeable debt-financed share repurchases, particularly in light of HP’s pressured stock price and/or acquisitions, resulting in a material reduction of credit protection measures. • Weak consumer demand in mature markets, which Fitch attributes to a shift in consumer demand priorities toward tablets and smartphones, and overall economic uncertainty. • Continued threat to high-margin, recurring supplies revenue from tablets and remanufactured cartridges.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Neutral High-margin, recurring print supplies at risk from remanufactured cartridges and/or lower print volume due to tablet

adoption. Potential cannibalization of PC business from tablets or VDI. Secular Competitive Trends: Neutral Greater share of customer IT spend and integrated solutions increase hardware competition. Capital Structure Change: Downside Risk of debt-financed acquisitions and/or share repurchases.

Key Credit Considerations Revenue Model: 65% transactional (PC/servers/storage) and 35% recurring (supplies/outsourcing/tech support/financing). Economic Sensitivity: Neutral Customer demand highly correlated to the economic cycle. Concentration Risk: Strength Highly diversified revenue by geography and customers. Customer Financial Strength: Neutral Level of Competition: Weakness Beyond hardware and services, HP competition can also offer a full suite of software products (IBM, Oracle). Switching Costs: Neutral Entry Barriers: Neutral Scale or differentiated product offering necessary to compete. Fixed versus Variable Costs: Strength Outsource manufacturing; R&D headcount could increase. Variability in COGS: Neutral Short-term exposure to component pricing volatility. Pricing Pressures: Neutral Highly competitive PC market with steady declines in prices. Capital Spending: Neutral Equivalent to 3.3% of total revenue. Working Capital: Neutral Scale provides material leverage with suppliers and A/P days.

Importance of Rating to Ops: Strength Key to growth and profitability of HP Financial Services (HPFS). HPFS also facilitates the sale of HP's hardware products.

Capital Strategy: Neutral Historically conservative. However, recent aggressive actions and risk of debt-financed acquisitions and/or share repurchases.

Competitive Position: Strength Broad product portfolio with strong positions in printing, PCs, and enterprise systems.


September 23, 2011

Corporates

Organization Structure — Hewlett-Packard Company($ Mil.)

Hewlett-Packard Company A+/Rating Watch Negative

Commercial PaperSr. Unsecured Revolving Credit Facility due 2012Sr. Unsecured Revolving Credit Facility due 20156.500% Sr. Unsecured Notes due 2012LIBOR plus 0.11% Sr. Unsecured Notes due 20125.250% Sr. Unsecured Notes due 20124.250% Sr. Unsecured Notes due 20122.950% Sr. Unsecured Notes due 2012LIBOR plus 0.125% Sr. Unsecured Notes due 20124.500% Sr. Unsecured Notes due 20131.250% Sr. Unsecured Notes due 2013LIBOR plus 0.28% Sr. Unsecured Notes due 20136.125% Sr. Unsecured Notes due 20144.750% Sr. Unsecured Notes due 2014LIBOR plus 0.4% Sr. Unsecured Notes due 20141.550% Sr. Unsecured Notes due 20142.125% Sr. Unsecured Notes due 20152.200% Sr. Unsecured Notes due 20152.650% Sr. Unsecured Notes due 20165.400% Sr. Unsecured Notes due 20175.500% Sr. Unsecured Notes due 20183.750% Sr. Unsecured Notes due 20204.300% due Sr. Unsecured Notes 2021

OtherTotal DebtLTM EBITDALeverage Ratio (x)

aTotal debt and leverage ratio do not include A/R securitization debt.Source: Company filings, Fitch Ratings.

2,864 ——

500 600 900

1,000 250 800

1,500 1,099 1,750 1,996 1,500

500 500

1,099 649

1,000 499 750

1,348 1,248

1,907 25,696 18,263

1.4

F1A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+A+

AmountOutstanding

Long-TermRating

Enterprise


61,2769,33115.2

Imaging and Printing


26,4574,38516.6

Personal Systems


39,7392,340

5.9

HP Financial Services

AssetsThird-Party Debt

RevenueEBTMargin (%)

12,273 —

3,4533239.4

Storage and Servers ServicesSoftware

Commercial PCs Consumer PCs

Inkjet, Laserjet and Supplies Managed Enterprise Solutions Graphic Solutions

Guarantee

EDS LLC

$1,122 million 6.00% due 2013$315 million 7.45% due 2029

A/R Securitization

Total A/R Facility Debta 12,273


September 23, 2011

Corporates

International Business Machines Corp. (IBM) Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR A+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 103,630.0 95,758.0 99,870.0 104,562.0 EBITDA 23,199.0 23,742.0 24,765.0 25,982.0ST IDR and CP F1 Margin (%) 22.4 24.8 24.8 24.8Senior Unsecured Bank Facility A+ Total Debt 33,925.0 26,100.0 28,624.0 29,773.0Senior Unsecured Notes A+ Cash 12,907.0 13,974.0 11,651.0 11,764.0 FCF 11,338.0 13,836.0 11,618.0 11,201.0 Interest Coverage 15.7 21.2 26.7 27.7 Leverage 1.5 1.1 1.2 1.1 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 7,858LTM FCF 11,201 2012 Maturities 4,209Cash 11,764 2013 Maturities 5,451Credit Facility Availability 10,000 2014 Maturities 1,329 Expiration June 2012 A/R Securitization Facility Availability 0 Expiration Total Liquidity 21,764

Key Credit Strengths/Concerns Strengths: • Solid credit-protection measures. • Significant liquidity supported by solid cash, and strong and consistent FCF. • Substantial recurring revenue from services, software, and financing, which, in aggregate, account for more than 50% of total revenue. • Highly diversified revenue base from a geographic and product perspective. Concerns: • Risk of sizable debt-financed share repurchases and/or acquisitions. • Consistent material increases in cash dividends over the long term in excess of cash flow growth.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Upside Strong position in high-growth initiatives, such as analytics, Smarter Planet, cloud, and emerging markets.

Sustainability of long-term demand for high-margin mainframes. Secular Competitive Trends: Upside Leading revenue share in services, servers and middleware, and strong patent portfolio. Capital Structure Change: Neutral

Conservative leverage. Dividend increases greater than cash flow growth. Risk of sizable debt-financed share repurchases.

A/R Securitization Facility Availability 0 Expiration

Key Credit Considerations Revenue Model: Substantial recurring revenue (greater than 50% of total revenue) from services and software licenses (middleware,

analytics). Economic Sensitivity: Strength Customer demand highly correlated to the economic cycle mitigated by substantial recurring revenue. Concentration Risk: Strength Revenue highly diversified by geography, customer, and product. Customer Financial Strength: Strength Level of Competition: Neutral Leading revenue share in services, servers and middleware, and strong patent portfolio. Switching Costs: Strength High switching costs for software (compatibility/integration/data migration/hardware requirements/training) and

outsourcing. Entry Barriers: Strength Global scale across all businesses, significant patent portfolio from sizable and consistent R&D spend and strong brand.Fixed versus Variable Costs: Neutral Predominantly scaleable services headcount. High fixed costs associated with fabs. Variability in COGS: Strength Mitigated by high and consistent gross margin for software. Pricing Pressures: Neutral Most pricing pressure related to services and hardware lacking differentiation. Capital Spending: Neutral Equivalent to 4.8% of sales. Working Capital: Neutral Scale provides material leverage with suppliers and A/P days. Importance of Rating to Ops: Strength Important for captive financing. Capital Strategy: Neutral Conservative leverage; Dividend increases greater than cash flow growth. Competitive Position: Strength Complete end-to-end high-value product offerings.


September 23, 2011

Corporates

Organization Structure — International Business Machines Corp. (IBM)($ Mil.)

International Business Machines Corp. (IBM)A+/Outlook Stable

Commercial PaperSr. Unsecured Credit Facility due 20120.853% Sr. Unsecured Notes due 20110.313% Sr. Unsecured Notes due 20114.000% Sr. Unsecured Notes due 20114.500% Sr. Unsecured Notes due 20114.750% Sr. Unsecured Notes due 2012Floating Rate Notes due 20124.200% Sr. Unsecured Notes due 20132.100% Sr. Unsecured Notes due 20137.500% Sr. Unsecured Notes due 20131.000% Sr. Unsecured Notes due 20136.500% Sr. Unsecured Notes due 20131.250% Notes due 20142.000% Sr. Unsecured Notes due 20165.700% Sr. Unsecured Notes due 20177.625% Sr. Unsecured Notes due 20188.375% Sr. Unsecured Notes due 20197.000% Sr. Unsecured Debt due 20256.220% Sr. Unsecured Notes due 20276.500% Sr. Unsecured Notes due 20285.875% Sr. Unsecured Debt due 20328.000% Sr. Unsecured Notes due 20385.600% Sr. Unsecured Notes due 20397.000% Sr. Unsecured Debt due 20450.071% Sr. Unsecured Debt due 2096Euro Notes Japanese Yen NotesSwiss Franc Notes



1,913 —

1,000 750 600 500

1,400 1,000

1 1,250

550 1,500 1,400 1,000 1,000 3,000 1,600

750 600 469 313 600 187

1,517 27

350 1,897 1,162

540

1,298 29,773 25,982

1.1

—A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+

AmountOutstanding

Long-TermRating

Global Services


58,676 8,670

14.8

Systems and Technology


19,303 2,087

10.8

Software


23,667 9,027

38.1

Global Financing

AssetsThird Party Debt

RevenueEBTMargin (%)

24,418 —

4,244 2,084 49.1

IT InfrastructureBPOConsulting

Middleware:Websphere (Powers Web Sites; Transactions)Tivoli (Identity, Security, Automation)LotusInformation-Management Software

ServersStorage

Guarantee

IBM International Group Capital LLC

Commercial Paper5.05% Sr. Unsecured Notes due 2012Subtotal

100 1,500 1,600

F1A+

AmountOutstanding

Long-TermRating


September 23, 2011

Corporates

Ingram Micro Inc. Primary Analyst: Brian Taylor +1 212 908-0620

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 34,362.2 29,515.4 34,589.0 35,809.4 EBITDA 502.6 413.5 574.1 562.2Senior Unsecured Bank Facility BBB Margin (%) 1.5 1.4 1.7 1.6Senior Unsecured Term Loan BBB Total Debt 478.4 379.5 636.4 642.6Senior Unsecured Notes BBB Cash 763.5 910.9 1,155.6 1,366.8 FCF 472.5 172.1 103.0 262.6 Interest Coverage 7.8 14.7 14.6 10.5 Leverage 1.0 0.9 1.1 1.1 Liquidity Analysis Period Ended 7/2/11 2011 Maturities 120 LTM FCF 263 2012 Maturities 225 Cash 1,367 2013 Maturities Credit Facility Availability 270 2014 Maturities Expiration August 2012 A/R Securitization Facility Availability 995 Expiration April 2014 Total Liquidity 2,631

Key Credit Strengths/Concerns Strengths: • Broad customer and geographic diversification. • Scale of operations is a significant competitive advantage. • Leading industry positions in the Americas, Europe, and Asia/Pacific. • Importance of wholesale distribution model to OEMs. • Working capital represents significant source of liquidity during business downturns. Concerns: • Exposure to cyclical IT demand and global economic conditions. • Low-margin nature of the wholesale distribution model. • Acquisition activity due to fragmented competitive landscape. • Significant reliance on Hewlett-Packard as a supplier.

Risks to the Ratings Economic Cyclicality: Downside Susceptible to further reductions in profit margins. Secular Demand Trends: Neutral Secular Competitive Trends: Neutral Capital Structure Change: Neutral Not expected and not considered in rating.

Key Credit Considerations Revenue Model: Largely transactional, although VAR customers have committed relationships. Economic Sensitivity: Weakness Consumer and business IT spending exposure. Concentration Risk: Strength Highly diversified customer base, strong geographic diversification. Customer Financial Strength: Weakness Small VARs. Level of Competition: Neutral Largely confined to Tech Data with Direct a possible source of competition. Switching Costs: Weakness None outside of committed working capital lines offered to customers. Entry Barriers: Neutral Scale and supplier relationships. Fixed versus Variable Costs: Strength Largely a cost-plus model, although warehousing is a modest fixed cost relative to profitability. Variability in COGS: Strength Cost-plus. Pricing Pressures: Weakness Capital Spending: Strength Minimal. Working Capital: Weakness Significant component of cash flow; counter-cyclical. Importance of Rating to Ops: Neutral IG not needed but helps access to liquidity. Capital Strategy: Strength Remains conservative, although increase in long-term debt reduces credit profile. Competitive Position: Strength One of the leading distributors.


September 23, 2011

Corporates

Organization Structure — Ingram Micro Inc.($ Mil.)

Ingram Micro Inc.BBB–/Outlook Stable

5.25% Sr. Unsecured Notes due 2017Sr. Unsecured Credit Facility due 2012Sr. Unsecured Term Loan due 2012



300 —

235

108 643 562 1.1

BBB–BBB–BBB–

AmountOutstanding

Long-TermRating

North America


14,965 261 1.7

Asia Pacific and Latin America


9,485 115 1.2

Europe


11,351 128 1.1

A/R Securitization

USD500 Million North American A/R Facility DebtEUR100 Million EMEA A/R Facility DebtGBP60 Million EMEA A/R Facility DebtEUR90 Million EMEA A/R Facility DebtAUD160 Million Asia-Pacific A/R FacilityOther Uncommitted A/R Facility DebtTotal Debt

00000

164164


September 23, 2011

Corporates

International Rectifier Corp. Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR BB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 984.8 740.4 895.3 1,176.6 EBITDA 143.7 18.5 106.2 244.6 Margin (%) 14.6 2.5 11.9 20.8 Total Debt 0.0 0.0 0.0 0.0 Cash 725.9 600.5 583.0 484.2 FCF (5.3) (62.0) (5.9) 15.6 Interest Coverage 36.8 14.2 212.4 407.7 Leverage 0.0 0.0 0.0 0.0 Liquidity Analysis Period Ended 6/26/11 2011 Maturities LTM FCF 16 2012 Maturities Cash 484 2013 Maturities Credit Facility Availability 0 2014 Maturities Expiration A/R Securitization Facility Availability 0 Expiration Total Liquidity 484

Key Credit Strengths/Concerns Strengths: • Technology leadership and resultant leading share in a number of power management markets. • Expanding addressable markets from increased electronics content and demand for energy efficiency. • Meaningful customer and geographic diversification, and cost-reduction roadmap should further reduce operating volatility. Concerns: • Substantial ongoing capital spending and R&D requirements as percentage of sales. • Some profitability pressures from increased mix of commoditized product sales. • Relatively small size compared with primary competitors.

Risks to the Ratings Economic Cyclicality: Neutral Operating results in line with macroeconomic activity. Secular Demand Trends: Upside Secular growth in power-management. Secular Competitive Trends: Neutral Competitive in core markets. Capital Structure Change: Neutral

Key Credit Considerations Revenue Model: Transactional in distribution business but driven by design wins and commercial success to enable volume production. Economic Sensitivity: Neutral Operating results in line with macroeconomic activity. Concentration Risk: Strength Limited customer or end-market concentration. Customer Financial Strength: Strength A large and diversified set of customers with varying scale. Level of Competition: Neutral Highly fragmented market. Switching Costs: Neutral Meaningful with production cycle, but minimal intergenerational switching costs. Entry Barriers: Neutral Consequential, given IP and design relationships with customers. Fixed versus Variable Costs: Neutral Largely fixed costs associated with manufacturing and R&D. Variability in COGS: Neutral COGS primarily yield-driven, which is function of extent of volume production. Pricing Pressures: Neutral Modest, given narrow focus in value chain. Capital Spending: Neutral Moderate at 5%10% of revenues. Working Capital: Neutral Modestly counter-cyclical with moderate inventory obsolescence risk. Importance of Rating to Ops: Weakness Limited importance. Capital Strategy: Neutral Conservative in part due to historical revenue recognition issues, but capacity for some debt. Competitive Position: Neutral Small size but solid share positions and potential leadership in emerging technology platforms.


September 23, 2011

Corporates

Organization Structure — International Rectifier Corp.($ Mil.)

International Rectifier Corp.BB/Stable

Total DebtLTM EBITDALeverage Ratio


—244.6

—

———

AmountOutstanding

Long-TermRating

Power Management

RevenueProfitGross Margin (%)

456.7 144.1 31.6

High Reliability


190.6 97.5 51.2

Energy Savings


275.0 122.9 44.7

Enterprise Power


134.6 59.4 44.1

Automotive Products


112.2 33.6 29.9


September 23, 2011

Corporates

Jabil Circuit, Inc. Primary Analyst: Brian Taylor +1 212 908-0620

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 12,779.7 11,684.5 13,409.4 16,099.5 EBITDA 618.9 500.6 748.3 968.1Senior Unsecured Bank Facility BBB Margin (%) 4.8 4.3 5.6 6.0Senior Unsecured Notes BBB Total Debt 1,369.4 1,234.5 1,186.5 1,187.6 Cash 772.9 876.3 744.3 911.1 FCF 105.9 320.5 (30.9) 181.1 Interest Coverage 6.6 6.1 9.4 10.4 Leverage 2.2 2.5 1.6 1.2 Liquidity Analysis Period Ended 5/31/11 2011 Maturities 80LTM FCF 181 2012 Maturities Cash 911 2013 Maturities Credit Facility Availability 998 2014 Maturities Expiration December 2015 A/R Securitization Facility Availability 230 Expiration November 2011 Total Liquidity 2,139

Key Credit Strengths/Concerns Strengths: • Track record of delivering best-in-class execution. • Advantages in scale as one of the largest of the Tier I EMS vendors. • Countercyclical cash-generation from working capital significantly enhances liquidity. • Vertically integrated operations, which typically drive higher margins in periods of growth. Concerns: • Vertical integration efforts represent an ongoing strategic shift and could lead to additional debt-financed acquisitions or execution risk in an industry with minimal room for execution missteps due to the relatively low profit margin inherent in the business model. • A difficult competitive environment, which has pressured profitability across the industry. • Jabil has customer concentration risk with its top 10 customers accounting for approximately 60% of revenue.

Risks to the Ratings Economic Cyclicality: Neutral Not likely to affect the rating, all else being equal. Secular Demand Trends: Neutral Expect demand trends to be positive, but upside to rating is limited. Secular Competitive Trends: Downside Significant increase in margin pressure could affect the ratings. Capital Structure Change: Neutral Would not expect current management to get more aggressive

Key Credit Considerations Revenue Model: Contract based with demand element. Economic Sensitivity: Weakness Tied to consumer electronic and business IT spend, but with increasing exposure to industrial sector. Concentration Risk: Weakness Top 5 customers account for 47% of revenue. Customer Financial Strength: Strength Largely blue-chip customers. Level of Competition: Weakness Highly competitive market, although Jabil is differentiated by scale and service offering. Switching Costs: Neutral Some stickiness but not impossible; should increase with more service offerings. Entry Barriers: Strength Scale, technology, logistics, and operational expertise take time to match. Fixed versus Variable Costs: Weakness High fixed costs relative to margin. Variability in COGS: Strength Largely a fixed-cost and pass-through model. Pricing Pressures: Weakness Significant but improved from recent years. Capital Spending: Weakness Significant relative to profit margin. Working Capital: Neutral Among the leanest working capital of EMS providers. Importance of Rating to Ops: Neutral IG rating helps access to liquidity but not required. Capital Strategy: Strength Conservative, but would consider debt-financed acquisitions. Competitive Position: Strength One of the top EMS providers worldwide.


September 23, 2011

Corporates

Organization Structure — Jabil Circuit, Inc. ($ Mil.)

Jabil Circuit, Inc. BBB–/Outlook Stable

7.750% Sr Unsecured Bonds due 20168.250% Sr Unsecured Notes due 20185.625% Sr Unsecured Notes due 2020Revolver due 2015


aTotal debt and leverage ratio do not include A/R securitization debt.Source: Company filings, Fitch Ratings.

312 400 400

2

73 1,188

968 1.2

BBB–BBB–BBB–BBB–

AmountOutstanding

Long-TermRating

Diversified Manufacturing Services


5,340276

5.16

High Velocity Systems


5,16889

1.72

Enterprise and Infrastructure


4,795163

3.41

A/R Securitization

Total A/R Facility Debta 327.2

Cell PhoneTelevisionPrinters

Aerospace and DefenseAutomotiveTelcoComputing

Warranty and Repair


September 23, 2011

Corporates

KLA-Tencor Corp. Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 2,521.7 1,520.2 1,820.8 3,175.2 EBITDA 801.8 267.4 491.9 1,327.8Senior Unsecured Notes BBB Margin (%) 31.8 17.6 27.0 41.8 Total Debt 744.7 745.2 745.7 746.3 Cash 1,537.2 1,329.9 1,534.0 2,038.5 FCF 502.4 71.4 315.1 604.5 Interest Coverage 74.2 4.8 9.0 24.5 Leverage 0.9 2.8 1.5 0.6 Liquidity Analysis Period Ended 6/30/11 2011 Maturities —LTM FCF 605 2012 Maturities —Cash 2,039 2013 Maturities —Credit Facility Availability 0 2014 Maturities — Expiration A/R Securitization Facility Availability 0 Expiration 6/30/11 Total Liquidity 605

Key Credit Strengths/Concerns Strengths: • Technology leadership and strong share positions in the process-control market. • Large installed base supports recurring service revenues and consistent FCF. • Fitch's belief that the company will maintain conservative financial policies with a net cash position over the intermediate term. Concerns: • Highly cyclical demand patterns associated with the semiconductor equipment market. • Significant customer concentration to foundries and memory makers. • Substantial R&D investments required to maintain technology leadership.

Risks to the Ratings Economic Cyclicality: Neutral Ratings incorporate steep semiconductor equipment/tools investment cycles. Secular Demand Trends: Upside Solid from rising costs associated with Moore’s Law. Secular Competitive Trends: Upside Technology leader in core markets. Capital Structure Change: Downside Consistent FCF with limited rating upside could drive incremental debt issuance.

Key Credit Considerations Revenue Model: Largely transactional offset by significant design collaboration with customers. Economic Sensitivity: Neutral Highly sensitive to semiconductor buying cycles that often are in line with macroeconomic activity. Concentration Risk: Weakness Consolidating customer base, due to high costs of Moore's Law. Customer Financial Strength: Neutral Majority of significant capital equipment buyers have substantial financial flexibility. Level of Competition: Neutral Solid competitors but clear market leader at advanced technology nodes. Switching Costs: Strength Significant, given support and maintenance and minimal competition at leading edge. Entry Barriers: Strength Substantial IP and software expertise Fixed versus Variable Costs: Neutral Outsource majority of equipment to EMS. Variability in COGS: Neutral Modest variability driven by raw materials pricing.

Pricing Pressures: Neutral Limited, due to lack of competition, but constrained by foundries’ theoretical ability to reverse-engineer equipment.

Capital Spending: Neutral Modest at 5%–6% of revenues. Working Capital: Weakness Significant qualification period for inventory. Importance of Rating to Ops: Weakness Limited importance to business operations. Capital Strategy: Neutral Conservative, but potential for more aggressive policies given constraints on credit ratings. Competitive Position: Strength Technology, market share, and profitability leader within industry.


September 23, 2011

Corporates

Organization Structure — KLA-Tencor Corp.($ Mil.)

KLA-Tencor Corp.BBB/Stable

6.9% Sr. Unsecured Note due 2018Total Debt

LTM EBITDALeverage Ratio (x)


746.3 746.3

1,327.8 0.6

BBB

AmountOutstanding

Long-TermRating

Defect Inspection

RevenueRevenue Mix (%)

2,039.964

Services and Apps


561.718

Metrology


498.916

Software and Other


74.72


September 23, 2011

Corporates

Microsoft Corporation Primary Analyst: Jason Paraschac +1 212 908-0746 Ratings Fiscal Year-End and Most Recent LTM IDR AA+ 2008 2009 2010 2011Outlook/Watch Stable Revenues 60,420.0 58,437.0 62,484.0 69,943.0 EBITDA 27,827.0 25,246.0 29,313.0 32,093.0ST IDR and CP F1+ Margin (%) 46.1 43.2 46.9 45.9Senior Unsecured Notes AA+ Total Debt 0.0 5,746.0 5,939.0 11,921.0 Cash 21,171.0 31,447.0 36,788.0 52,772.0 FCF 14,415.0 11,450.0 17,518.0 19,459.0 Interest Coverage 187.9 98.4 Leverage 0.0 0.2 0.2 0.4 Liquidity Analysis Period Ended 6/30/11 2011 Maturities LTM FCF 19,459 2012 Maturities 2,250Cash 52,772 2013 Maturities 2,000Credit Facility Availability 0 2014 Maturities 1,750 Expiration A/R Securitization Facility Availability 0 Expiration Total Liquidity 52,772

Key Credit Strengths/Concerns Strengths: • Leading market share in core software segments. • Superior balance sheet with exceptional financial flexibility. • Industry-leading liquidity supported by a considerable cash position and consistent FCF. • Unparalleled financial performance, complemented by sizable recurring revenue. Concerns: • Substantially lower operating margins in nonsoftware segments. • Emergence of competitors within the smartphone and tablet market could ultimately challenge Microsoft’s dominant position in the PC market. • New software models that could challenge Microsoft’s license model. • Gross margin pressures from investments in emerging markets.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Downside Continued shift to non-PC-based platforms could affect ratings. Secular Competitive Trends: Downside Growth of Android, iOS and Google Docs in Microsoft’s core markets could affect ratings. Capital Structure Change: Downside Cash location could drive debt issuance; potential for more aggressive shareholder actions.

Key Credit Considerations Revenue Model: Mix of transaction, contractual/consumer, and business. Economic Sensitivity: Weakness Significant exposure to PC cycle and consumer electronics spending. Concentration Risk: Strength Highly diversified across markets, geographies, and customers. Customer Financial Strength: Strength Governments, businesses, and consumers. Level of Competition: Strength Dominates core business, but facing increasing competition. Switching Costs: Strength High but not insurmountable barriers to consumers switching to non-MSFT platforms. Entry Barriers: Strength Significant IP and technology interoperability required. Fixed versus Variable Costs: Strength Significant R&D spend, but small relative to margins. Variability in COGS: Strength Largely a software model with minimal COGS. Pricing Pressures: Neutral Historical pricing power is eroding. Capital Spending: Strength Not significant to profitability. Working Capital: Neutral Importance of Rating to Ops: Weakness No business reason to maintain IG rating despite corporate philosophy. Capital Strategy: Strength Maintain significant cash balance and low leverage. Competitive Position: Strength Dominant market position will take years, if ever, to reduce meaningfully.


September 23, 2011

Corporates

Organization Structure — Microsoft Corporation($ Mil.)

Microsoft CorporationAA+/Outlook Stable

0.875% Sr. Unsecured Notes due 20132.950% Sr. Unsecured Notes due 20141.625% Sr. Unsecured Notes due 20152.500% Sr. Unsecured Notes due 20164.200% Sr. Unsecured Notes due 20193.000% Sr. Unsecured Notes due 20204.000% Sr. Unsecured Notes due 20215.200% Sr. Unsecured Notes due 20394.500% Sr. Unsecured Notes due 20405.300% Sr. Unsecured Notes due 2041Commercial PaperConvertible Sr. Unsecured Notes due 2013



1,000 2,000 1,750

750 1,000 1,000

500 750

1,000 1,000

—1,250

(79)11,921 32,093

0.4

AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+

AmountOutstanding

Long-TermRating

Windows


19,024 12,281

64.6

Microsoft Business


22,186 14,124

63.7

Server and Tools


17,096 6,608 38.7

Windows O/S (Windows 7) Server Software:Windows AzureMicrosoft SQLSilverlight

Consulting and Services

Microsoft Office:WordExcelPowerPoint

Online, Entertainment, and Other


11,441 (1,233)(10.8)

BingMSNXboxWindows Phones


September 23, 2011

Corporates

Moneygram International, Inc. Primary Analyst: Jason Paraschac +1 212 908-0746

Ratings Fiscal Year-End and Most Recent LTM IDR B+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 927.1 1,171.9 1,166.7 1,198.2 EBITDA (96.4) 251.1 246.9 234.6Senior Secured Debt BB+/RR1 Margin (%) (10.4) 21.4 21.2 19.6Second-Lien Notes BB-/RR3 Total Debt 1,164.5 1,012.9 889.7 839 Cash 0.0 0.0 0.0 0.0 FCF (4,678.3) 44.6 20.5 145.0 Interest Coverage (1.0) 2.3 2.4 2.5 Leverage (12.1) 4.0 3.6 3.5 Liquidity Analysis Period Ended 6/30/11 2011 Maturities LTM FCF 145 2012 Maturities Cash 0 2013 Maturities Credit Facility Availability 141 2014 Maturities Expiration November 2016 A/R Securitization Facility Availability 0 Expiration Total Liquidity 141

Key Credit Strengths/Concerns Strengths: • Solid market position as the second largest global provider of international money transfers. • Significant organic growth potential. • Largely unrestricted excess asset balance of approximately $300 million provides liquidity cushion. Concerns: • Ability to renew existing agents and attract new agents given its highly leveraged balance sheet. • Significant reliance on Wal-Mart Stores, Inc. as a remittance agent. • Ability to invest in new remittance technologies.

Risks to the Ratings Economic Cyclicality: Upside EBITDA growth expected to aid deleveraging. Secular Demand Trends: Neutral Modestly helps longer term EBITDA growth. Secular Competitive Trends: Neutral Capital Structure Change: Upside Conversion of preferred debt to equity a positive.

Key Credit Considerations Revenue Model: Transaction oriented. Economic Sensitivity: Neutral Tracks employment and GDP rates. Concentration Risk: Strength Diversified customer and geography; singular exposure to remittance market. Customer Financial Strength: Strength Consumers with cash paid up front. Level of Competition: Neutral Varies by geography. Switching Costs: Weakness Largely none with some brand loyalty. Entry Barriers: Strength Scale and compliance hurdles. Fixed versus Variable Costs: Strength Primarily a commission-driven model. Variability in COGS: Strength Primarily a commission-driven model. Pricing Pressures: Weakness Has been severe in certain geographies. Capital Spending: Neutral Working Capital: Neutral Importance of Rating to Ops: Neutral An IG rating would positively affect relationship with banks. Capital Strategy: Neutral Trying to delever from recap in 2008. Competitive Position: Neutral A leading provider but much smaller than WU.


September 23, 2011

Corporates

Organization Structure — MoneyGram International, Inc.($ Mil.)

MoneyGram Payment Systems Worldwide, Inc.B+/Stable

$150 Million Secured Revolver due 2016$390 Million Secured Term Loan due 201713.25% Second Lien Notes due 2018

Total DebtLTM EBITDALeverage Ratio (x)

Note: Ownership is on an as-converted basis.Source: Company filings, Fitch Ratings.

0339500

839 234.6

3.5

BB+/RR1BB+/RR1BB–/RR3

AmountOutstanding

Long-TermRating

Money TransferBill PaymentsProperty Bridge Apartment Payments

Guarantee and Security(Property Bridge is Onlyfor Second Lien Notes)

Global Funds Transfer


1,100.1 133.0

12.1

MoneyGram International, Inc.

B+/Stable

Common Stockholders:Thomas H. Lee — 55%Goldman Sachs — 30%Other Common — 15%

MoneyGram PaymentSystems Inc.

MoneyGram of NY LLC Property Bridge Inc.(Second Lien Only)

Financial Paper Products


101.5 33.8 33.3

Money OrdersOfficial Check Services


September 23, 2011

Corporates

Motorola Solutions, Inc. Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 30,146.0 22,044.0 19,282.0 12,763.0 EBITDA 1,355.0 1,340.0 1,626.0 1,420.0ST IDR and CP F2 Margin (%) 4.5 6.1 8.4 11.1Senior Secured Bank Facility BBB Total Debt 4,184.0 3,901.0 2,799.0 2,154.0Senior Unsecured BBB Cash 6,979.0 7,963.0 8,863.0 6,627.0 FCF (715.0) 240.0 1,632.0 1,362.0 Interest Coverage 6.0 6.3 7.4 8.2 Leverage 3.1 2.9 1.7 1.5 Liquidity Analysis Period Ended 7/2/11 2011 Maturities 606 LTM FCF 1,362 2012 Maturities 405 Cash 6,627 2013 Maturities 5 Credit Facility Availability 1,500 2014 Maturities 4 Expiration June 2014 A/R Securitization Facility Availability 0 Expiration Total Liquidity 8,127

Key Credit Strengths/Concerns Strengths: • Leading market positions in public safety and enterprise markets with solid IP and brand name. • Consistent operating performance and solid annual FCF. • Conservative capital structure and solid liquidity position. Concerns: • Maturing enterprise and public safety markets limit significant longer term organic growth opportunities. • Strained government budgets and cautious enterprise customers mute near-term revenue growth. • Significant under-funded pension liability ($1.8 billion in the U.S.).

Risks to the Ratings Economic Cyclicality: Neutral Ratings unlikely to move from economic downturn. Secular Demand Trends: Neutral Mature enterprise and government and public safety markets in U.S. Secular Competitive Trends: Neutral Capital Structure Change: Neutral Manage for solid investment-grade ratings.

Key Credit Considerations Revenue Model: Majority transactional: sales of two-way radios, hand held data capture, RFID, mobile computers, rugged devices. Economic Sensitivity: Neutral Mission critical public sector exposure limits volatility. Concentration Risk: Neutral Exposure to diverse set of states and municipalities. Customer Financial Strength: Weakness Material exposure to state and local government budget constraints. Level of Competition: Neutral Leading positions and entrenched relationships in public sector. Enterprise is far more fragmented. Switching Costs: Neutral Increased systems penetration increases switching costs, but not a structural impediment. Entry Barriers: Neutral Significant scale and IP portfolio, as well as access to international growth markets. Fixed versus Variable Costs: Neutral Largely variable, given that manufacturing is substantially outsourced to EMS. Variability in COGS: Neutral Not material. Pricing Pressures: Neutral Expectations for greater pressure from government clients must be offset with new product introductions/greater

enterprise. Capital Spending: Neutral Low at approximately 5% of sales. Working Capital: Neutral Modestly countercyclical with low obsolescence risk. Importance of Rating to Ops: Neutral Moderately important, given focus on growing federal government/military customer base. Capital Strategy: Strength Low leverage and large cash. However event risk from smaller size, expectations for M&A, and 13% ownership by Carl

Icahn. Competitive Position: Neutral Solid market positions with strong competitors in specific markets. M&A and organic investments into nonpublic verticals such as manufacturing, heathcare, and education.


September 23, 2011

Corporates

Organization Structure — Motorola Solutions, Inc.($ Mil.)

Motorola Solutions, Inc.

BBB/Outlook Stable

Commercial PaperSr. Unsecured Revolving Credit Facility due 20148.000% Unsecured Notes due 20115.375% Sr. Unsecured Notes due 20126.000% Sr. Unsecured Notes due 20176.500% Unsecured Debentures due 20257.500% Unsecured Debentures due 20256.500% Unsecured Debentures due 20286.625% Unsecured Sr. Notes due 20375.220% Unsecured Debentures due 2097


aOnly six months ended July 2.Source: Company filings, Fitch Ratings.

——

600400399117346355489

114 2,1541,420

1.5

F2BBBBBBBBBBBBBBBBBBBBBBBBBBB

AmountOutstanding

Long-TermRating

Carl Icahn Public

11% 89%

Enterprise Mobility Solutionsa


1,442155

10.75

Governmenta


2,497215

8.61

"Sigma Fund“

Four Asset Managers$4,422 Assets

Mobile ComputingRFID InfrastructureData Capture ProductsScanners

Two-way RadiosPublic Safety SystemsDesign, Installation, and

Maintenance of Systems


September 23, 2011

Corporates

National Semiconductor Corporation Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch RWP Revenues 1,885.9 1,460.4 1,419.4 1,520.4 EBITDA 758.9 520.7 514.2 612.5Senior Unsecured Notes BBB Margin (%) 40.2 35.7 36.2 40.3 Total Debt 1,477.3 1,289.9 1,277.5 1,042.8 Cash 736.8 700.3 1,027.0 1,133.5 FCF 482.4 212.7 283.9 181.9 Interest Coverage 8.9 7.2 8.5 11.1 Leverage 1.9 2.5 2.5 1.7 Liquidity Analysis Period Ended 5/29/11 2011 Maturities —LTM FCF 182 2012 Maturities 375 Cash 1,134 2013 Maturities 30 Credit Facility Availability 8 2014 Maturities — Expiration October 2011 A/R Securitization Facility Availability 0 Expiration Total Liquidity 1,141

Key Credit Strengths/Concerns Strengths: • Strong profitability drives consistent FCF through the semiconductor cycle. • Solid share positions in less volatile, high-performance analog and power-management markets. • Relatively conservative capital structure and liquidity position. Concerns: • Customer consolidation and share losses by Nokia Corp., one of NSM’s largest customers, will pressure revenues and profitability. • Challenges growing revenues in markets with substantial incumbent supplier advantages. • Management’s commitment to a disciplined approach to share repurchases.

Risks to the Ratings Economic Cyclicality: Neutral Components makers more sensitive to macroeconomic cycles. Secular Demand Trends: Neutral Stable growth characteristics associated with analog, and embedded with stronger growth from smartphones. Secular Competitive Trends: Neutral Customer consolidation and smartphone share losses by Nokia Capital Structure Change: Upside Potential for meaningful activity reduced by TI acquisition.

Key Credit Considerations Revenue Model: Transactional; Analog focused on power-management for cell phones, automobiles, and networking equipment. Economic Sensitivity: Neutral Components makers more sensitive to macroeconomic cycles. Concentration Risk: Neutral Concentration to wireless handset OEMs with Nokia Corp. accounting for nearly 10% of revenue. Customer Financial Strength: Neutral Diversified set of customers with varying degrees of financial flexibility. Level of Competition: Neutral NSM's acquisition by Texas Instruments reduces the landscape. Switching Costs: Neutral Difficult intraproduct life cycle, but each generation must be won. Entry Barriers: Strength R&D and customer relationships. Fixed versus Variable Costs: Neutral Manufacture essentially all in-house. Substantial operating leverage from low capacity utilization and R&D. Variability in COGS: Neutral Pricing Pressures: Neutral Less acute ASP erosion associated with analog space, within longer product life cycles. Capital Spending: Neutral Current manufacturing capacity is less than 60% utilized. Working Capital: Neutral Countercyclical model with potential for obsolescence. Importance of Rating to Ops: Weakness Limited importance. Capital Strategy: Neutral Relatively conservative capital structure and liquidity position. Competitive Position: Neutral Challenges growing in markets with substantial incumbent supplier advantages.


September 23, 2011

Corporates

Organization Structure — National Semiconductor Corporation($ Mil.)

National Semiconductor CorporationBBB/Rating Watch Positive

6.15% Sr. Unsecured Notes due 20123.95% Sr. Unsecured Notes due 20156.60% Sr. Unsecured Notes due 2017

Other Debt/Fair Value Adjustment Total DebtLTM EBITDALeverage Ratio (x)


375 250375

43 1,043

613 1.7

BBBBBBBBB

AmountOutstanding

Long-TermRating

Analog Segment


1,418 441

31.10

Other


102(38)

(37.64)

Analog/Power Management Semiconductors


September 23, 2011

Corporates

Oracle Corp. Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR A+ 2008 2009 2010 2011Outlook/Watch Stable Revenues 22,430.0 23,252.0 26,820.0 35,622.0 EBITDA 9,746.0 10,871.0 12,530.0 16,024.0ST IDR and CP F1 Margin (%) 43.5 46.8 46.7 45.0Senior Unsecured Notes A+ Total Debt 11,236.0 10,238.0 14,655.0 15,922.0 Cash 11,043.0 12,624.0 18,469.0 28,848.0 FCF 7,159.0 7,476.0 7,447.0 9,703.0 Interest Coverage 24.7 17.3 16.6 19.8 Leverage 1.2 0.9 1.2 1.0 Liquidity Analysis Period Ended 5/31/11 2011 Maturities 1,150 LTM FCF 9,703 2012 Maturities —Cash 28,848 2013 Maturities 1,250 Credit Facility Availability 1,150 2014 Maturities 1,500 Expiration June 2011 A/R Securitization Facility Availability 0 Expiration Total Liquidity 29,998

Key Credit Strengths/Concerns Strengths: • Ample liquidity supported by consistent and increasing annual FCF in excess of $7 billion. • Strong customer attach and renewal rates for software maintenance provides a steadily increasing, high-margin recurring revenue stream. • Strong competitive position, especially in database and middleware software, and opportunity to differentiate and strengthen hardware through complete ownership of the system’s stack. • Size and diversity with respect to its installed software base and significant switching costs associated with mission-critical enterprise software. • Established track record of integrating large acquisitions. Concerns: • Aggressive acquisition strategy, including a broader list of potential targets outside of the software industry following the Sun acquisition. • Limited overall growth prospects in the high-end server market partially offset by strong potential for appliance servers. • Adaptability and long-term profitability of Oracle’s enterprise applications business as demand accelerates for SaaS.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Neutral Adaptability and long-term profitability of Oracle’s enterprise applications business as demand accelerates for SaaS. Secular Competitive Trends: Upside Capital Structure Change: Neutral

Key Credit Considerations Revenue Model: Substantial recurring revenue (48% of total revenue), primarily from software license updates and support. Economic Sensitivity: Strength Recurring maintenance contracts with built-in escalations. Concentration Risk: Strength Highly diverse customer base. Customer Financial Strength: Strength Most major global corporations.

Level of Competition: Neutral Oracle database products and server appliances compete with IBM. Applications such as PeopleSoft compete with SAP.

Switching Costs: Strength Significant switching costs for mission critical software. Entry Barriers: Strength Sizeable existing installed base and high switching costs. Fixed versus. Variable Costs: Neutral R&D and Sales personnel. Variability in COGS: Strength Not an issue. Pricing Pressures: Strength Maintains significant renewal rates, even during economic downturns. Capital Spending: Strength Limited capital expenditures (1.3% of total revenue). Working Capital: Neutral Importance of Rating to Ops: Neutral Cost of capital. Capital Strategy: Neutral Leverage generally for M&A and to access offshore cash. Competitive Position: Strength Strong competitive position, especially in database and middleware software; opportunity to differentiate and

strengthen hardware through complete ownership of the system’s stack. Other: Neutral M&A, including a potential broader list of nonsoftware targets following Sun acquisition.


September 23, 2011

Corporates

Organization Structure — Oracle Corp.($ Mil.)

Oracle Corp.A+/Outlook Stable

Commercial PaperRevolving Credit Facility4.950% Sr. Notes due April 20133.750% Sr. Notes due July 20145.250% Sr. Notes due January 20165.750% Sr. Notes due April 20185.000% Sr. Notes due July 20193.875% Sr. Notes due July 20206.500% Sr. Notes due April 20386.125% Sr. Notes due July 20395.375% Sr. Notes due July 2040


Note: Gross profit represents the company’s direct controllable margin, which includes selling expenses, but excludes R&D and G&A.Source: Company filings, Fitch Ratings.

——

1,2501,5691,9952,4991,745

9981,2481,2422,225

1,151 15,922 16,024

1.0

F1A+A+A+A+A+A+A+A+A+A+

AmountOutstanding

Long-TermRating

Larry Ellison Public

23% 77%

Software

RevenueGross ProfitMargin (%)

23,860 22,651

94.94

Hardware and Support


7,032 3,684 52.39

DatabaseApplicationsMiddlewareMySQLJava

Services


4,781 844

17.65

Sun MicrosystemsSPARC Semiconductors


September 23, 2011

Corporates

Sanmina-SCI Corp. Primary Analyst: Brian Taylor +1 212 908-0620

Ratings Fiscal Year-End and Most Recent LTM IDR B+ 2008 2009 2010 LTMOutlook/Watch Positive Revenues 7,202.4 5,177.5 6,318.7 6,593.5 EBITDA 311.6 168.8 318.9 354.8Senior Secured Bank Facility BB+/RR1 Margin (%) 4.3 3.3 5.0 5.4Senior Unsecured Notes BB/RR2 Total Debt 1,482.0 1,437.7 1,305.7 1,212.3Senior Subordinated Notes B/RR6 Cash 869.8 899.2 592.8 582.8 FCF 183.9 139.4 (159.7) 22.8 Interest Coverage 2.4 1.4 3.0 3.4 Leverage 4.8 8.5 4.1 3.4 Liquidity Analysis Period Ended 7/2/11 2011 Maturities 60 LTM FCF 23 2012 Maturities 30 Cash 583 2013 Maturities 380 Credit Facility Availability 250 2014 Maturities 257 Expiration November 2013 A/R Securitization Facility Availability 0 Expiration Total Liquidity 833

Key Credit Strengths/Concerns Strengths: • Large global EMS provider with focus on high-end complex manufacturing services. • Long-term growth opportunities in nontraditional sectors should improve EBITDA margins. Concerns: • A difficult competitive environment which has pressured profitability across the industry. • Management's history of underperformance, prior to the most recent 18-month period, in managing a global manufacturing operation in an industry with minimal room for execution missteps. • A high degree of vertically integrated operations (components represent 20% of revenue) which, while typically a driver of higher margins in growth periods, presents additional challenges for management execution and higher fixed costs. • Highly working capital-intensive business which tends to be a drain on liquidity in periods of growth, although it may provide some measure of liquidity during business downturns. • Sanmina's downsized operations make it significantly smaller than leading Tier 1 service providers in a market where scale is of significant importance, though this is less of a concern in the higher complexity manufacturing space. • Modest segment concentration with almost 47% of revenue coming from the networking and communications segment. • Customer concentration risk with Sanmina's top 10 customers representing roughly 50% of revenue.

Risks to the Ratings Economic Cyclicality: Neutral Higher than industry average exposure to complex manufacturing services, which tend to be more stable and less prone

to competitive threats. Secular Demand Trends: Neutral Expect continued outsourcing of manufacturing in nontraditional market segments to be positive, but upside to rating is

limited. Secular Competitive Trends: Neutral Potential for prolonged pricing pressure to negatively impact rating. Capital Structure Change: Neutral Management has reiterated its intentions for continued modest debt reduction.

Key Credit Considerations Revenue Model: Contract-based with demand element, generally three- to five-year contracts. Economic Sensitivity: Weakness Tied to consumer electronic and business IT spend, but with increasing exposure to industrial, defense, and medical

segment. Concentration Risk: Weakness Top 10 customers represent approximately 50% of sales. Customer Financial Strength: Strength Serves predominantly well established global OEMs with strong financial profiles. Level of Competition: Neutral Highly competitive market. Switching Costs: Neutral Consolidation of OEMs to larger EMS vendors could negatively affect business, though vertically integrated offerings

bring higher switching costs. Entry Barriers: Strength Global manufacturing base and logistics expertise are difficult, costly, and time-consuming to replicate. Fixed versus Variable Costs: Weakness High fixed costs relative to profit margin. Variability in COGS: Strength Largely a fixed-cost and pass-through model. Pricing Pressures: Neutral Significant but improved from recent years; product mix affects profitability. Capital Spending: Weakness Significant relative to profit margin, though below peers. Working Capital: Weakness High percentage of W/C to revenue relative to peers, reflecting greater exposure to low-volume, high-mix businesses

with lower velocity. Importance of Rating to Ops: Weakness Rating affects costs of capital; customers prefer balance sheet stability in EMS provider, though an investment-grade

rating is not a necessity. Capital Strategy: Weakness Has been reducing debt, but remains highly levered relative to peers. Competitive Position: Neutral Lags larger scale competitors in scale.


September 23, 2011

Corporates

Organization Structure — Sanmina-SCI Corp.($ Mil.)

Sanmina-SCI Corp.B+/Positive Outlook

3.0595% Sr. Unsecured Notes due 20148.1250% Sr. Sub Notes due 20167.0000% Sr. Unsecured Notes due 2019Revolver due 2013



257 400 500

—

55 1,212

355 3.4

BB B–BB BB+

AmountOutstanding

Long-TermRating

Multimedia

Revenue Growth (%)

953 (13.45)

Multimedia

Revenue Growth (%)

953 (13.45)

Industrial, Defense, and Medical

Revenue Growth (%)

1,626 2.60

Industrial, Defense, and Medical

Revenue Growth (%)

1,626 2.60

Enterprise Computing and Storage

Revenue Growth (%)

901 (17.77)

Enterprise Computing and Storage

Revenue Growth (%)

901 (17.77)

Communications

Revenue Growth (%)

3,113 41.38

Communications

Revenue Growth (%)

3,113 41.38


September 23, 2011

Corporates

Seagate Technology plc Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR BB+ 2008 2009 2010 2011Outlook/Watch Stable Revenues 12,708.0 9,805.0 11,395.0 10,971.0 EBITDA 2,421.0 882.2 2,701.2 1,629.0Senior Secured Credit Facility BBB Margin (%) 19.1 9.0 23.7 14.8Second-Lien Notes BBB Total Debt 2,030.0 2,727.0 2,502.0 3,512.0Senior Unsecured Notes BB+ Cash 1,141.0 1,541.0 2,515.0 3,151.0 FCF 1,392.0 58.0 1,293.0 347.0 Interest Coverage 19.2 6.6 15.5 7.6 Leverage 0.8 3.1 0.9 2.2 Liquidity Analysis Period Ended 7/1/11 2011 Maturities 560 LTM FCF 347 2012 Maturities Cash 3,151 2013 Maturities Credit Facility Availability 350 2014 Maturities 416 Expiration January 2015 A/R Securitization Facility Availability 0 Expiration Total Liquidity 3,501

Key Credit Strengths/Concerns Strengths: • Broad product portfolio and leading revenue market share in the hard disk drive (HDD) industry. • Scale and vertically integrated model, which reduces per-unit manufacturing costs. • Continued growth of digital-rich media by consumers and enterprise storage requirements bode favorably for longer term HDD unit demand. Concerns: • Weak consumer PC demand. • Difficult to pass through commodity cost inflation. • Substantial volatility in earnings and FCF due to the cyclicality of the HDD industry and significant fixed costs. • Event risk associated with revival of leveraged buyout negotiations or implementation of shareholder-friendly activities. • Ability to sustain a time-to-market advantage critical to market share gains and profitability. • Consistent declines in average selling prices for HDDs due to intense competition and low switching costs. • Long-term threat of technology substitution from flash-based solid state drives, including risk of consumers substituting notebooks for tablets equipped with flash-based storage.

Risks to the Ratings Economic Cyclicality: Downside Secular Demand Trends: Downside Substitution risk from flash-based SSDs, including risk of consumers adopting tablets in lieu of notebooks. Positively,

continued growth of digital-rich media by consumers and enterprise storage requirements bode favorably for longer term HDD demand. Fitch fully expects HDD to coexist with SSD on the enterprise side.

Secular Competitive Trends: Neutral Proposed industry consolidation strengthens competitive position of Western Digital, especially enterprise. Capital Structure Change: Downside

Key Credit Considerations Revenue Model: Purely transactional, with persistent declines in ASPs due to intense competition and low switching costs. Economic Sensitivity: Weakness Hypercyclical based on end-market demand and high fixed costs. Concentration Risk: Weakness Dell and HP account for 11% and 16% of revenue, respectively. Customer Financial Strength: Strength Sales primarily to global OEMs account for 70% of total revenue. Level of Competition: Weakness Intense competition expected to moderate, assuming proposed acquisition activity is consummated. Switching Costs: Weakness Minimal unless time-to-market advantage with differentiated HDD. Entry Barriers: Strength Significant scale, broad product portfolio, significant R&D and capital expenditures, and global distribution. Fixed versus Variable Costs: Weakness Significant fixed costs due to vertically integrated model. Variability in COGS: Neutral Exposure to short-term component inflation. Pricing Pressures: Weakness Consistent declines in ASPs. Capital Spending: Weakness Vertical integration requires significant capital expenditures (8%10% revenue) Working Capital: Strength Leverage with suppliers minimizes working capital requirements. Importance of Rating to Ops: Neutral Cost of capital. Capital Strategy: Neutral The company has considered a LBO and increased debt levels. Competitive Position: Strength Broad product portfolio and leading industry revenue share overall and in the higher margin enterprise sector.


September 23, 2011

Corporates

Organization Structure — Seagate HDD Cayman($ Mil.)

Seagate HDD Cayman

BB+/Outlook Stable

6.375% Senior Notes due 20116.800% Senior Notes due 20167.750% Senior Notes due 20186.875% Senior Notes due 20207.000% Senior Notes due 2021 Senior Secured Credit FacilityOther Debt/Fair Value AdjustmentTotal DebtLTM EBITDALeverage Ratio (x)

Note: Debt is pro forma issuance of 2021 notes.Source: Company filings, Fitch Ratings.

559.0599.0750.0600.0600.0

—1

3,512 1,629

2.2

BB+ BB+BB+BB+BB+BBB–

AmountOutstanding

Long-TermRating

Seagate Technology HDD Holdings(Cayman)

Seagate Technology(Cayman)

6.800% and 6.375% NotesOriginally Issued by HDDHoldings Were Assumed

by HDD Cayman Per a March 2010 Supplemental

Indenture. The NotesAre Guaranteed by HDD

Holdings.

Seagate Technology Public Limited Company(Ireland)

BB+/Outlook Stable

Sr. Secured Revolving Credit Facility — BBB–

AmountOutstanding

Long-TermRating

Seagate Technology InternationalBB+/Rating Outlook Stable

10% Second Lien due 2014 403 BBB–

AmountOutstanding

Long-TermRating

Seagate Technology U.S. Holdings Inc.All Debt Has Been Redeemed

Restricted SubsidiariesUnrestricted Subsidiaries

Guarantee

Guarantee

Guarantee


September 23, 2011

Corporates

SunGard Data Systems, Inc. Primary Analyst: Jason Paraschac +1 212 908-0746

Ratings Fiscal Year-End and Most Recent LTM IDR B 2008 2009 2010 LTMOutlook/Watch Stable Revenues 5,596.0 5,508.0 4,992.0 5,056.0 EBITDA 1,489.0 1,451.0 1,315.0 1,285.0Senior Secured Bank Facility BB/RR2 Margin (%) 26.6 26.3 26.3 25.4Senior Secured Term Loan BB/RR2 Total Debt 8,875.0 8,379.0 8,055.0 8,078.0Senior Notes B/RR4 Cash 975.0 664.0 778.0 821.0Senior Unsecured Notes B/RR5 FCF 357.0 389.0 409.0 354.0Senior Subordinated Notes CCC/RR6 Interest Coverage 2.5 2.3 2.1 2.2 Leverage 6.0 5.8 6.1 6.3 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 10 LTM FCF 354 2012 Maturities 8 Cash 821 2013 Maturities 47 Credit Facility Availability 820 2014 Maturities 2,482 Expiration May 2013 A/R Securitization Facility Availability 0 Expiration Total Liquidity 1,641

Key Credit Strengths/Concerns Strengths: • Recurring revenues are approximately 90% of total. • Leading industry positions. • Consistent FCF before acquisitions. • Broad and diversified product and customer portfolio. Concerns: • Highly leveraged. • Highly acquisitive. • Low organic growth over the last few years. • Significant exposure to financial services sector.

Risks to the Ratings Economic Cyclicality: Upside Could positively affect ability to deleverage. Secular Demand Trends:

Downside Financial institution exposure and availability services (AS) lag could negatively affect ratings. Disaster recovery being replaced with AS and server virtualization effect on AS business.

Secular Competitive Trends: Neutral No material issues. Capital Structure Change: Upside AS spin and potential IPO could possibly improve credit.

Key Credit Considerations Revenue Model: Contract-based. Economic Sensitivity: Strength Modest cyclicality; exposure to municipal and education budget concerns. Concentration Risk: Strength Solid diversification across products and markets, largely U.S.-based. Customer Financial Strength: Strength Mix of business and government exposure. Level of Competition: Neutral Level of competition varies. Switching Costs: Strength Most products have high switching costs. Entry Barriers: Strength Technology and scale barriers. Fixed versus Variable Costs: Weakness High fixed cost. Variability in COGS: Strength Mostly fixed cost. Pricing Pressures: Neutral Capital Spending: Weakness Working Capital: Neutral Importance of Rating to Ops: Weakness Not material. Capital Strategy: Neutral Expect some deleveraging and potential equity event, significant M&A activity. Competitive Position: Strength A leader in most of its markets.


September 23, 2011

Corporates

Debt Structure — SunGard Data Systems, Inc. ($ Mil.)

SunGard Data Systems, Inc.B/Outlook Stable

Sr. Secured Revolver due 2013Sr. Secured Term Loan due 20144.875% Sr. Unsecured Notes due 201410.625% Sr. Unsecured Notes due 201510.250% Subordinate Notes due 2015Sr. Secured Term Loan B due 20167.375% Sr. Unsecured Notes due 20187.625% Sr. Unsecured Notes due 2020

Other Debt/Fair Value AdjustmentsTotal DebtLTM EBITDALeverage Ratio (x)

aThe company has signed a definitive agreement for the sale of its Higher Education business for approximately $1.8 billion. Net proceeds are expected to be used for debt reduction. bFitch Estimates.Source: Company filings, Fitch Ratings.

—1,926

250500

1,0002,468

900700

1348,0551,285

6.3

BB–BB–BB–CCCBB–B–B–

AmountOutstanding

Long-TermRating

Financial Systems


2,720633

23.3

SunGard Holdco, LLC

SunGard Holding Corp.

SunGard Capital Corp. I & II

100%

100%

100%

Availability Services


1,458332

22.8

Alternative InvestmentsBanksCapital MarketsInvestment Banking

U.S.IntermediateSubsidiariesa

Americas Division Higher Educationa


516 120 23.3

Public Sector


330 50

15.16

Americas Division SunGard SAS Holdings,and other

U.S. Intermediatesb

SunGard AR Financing, LLC

$327 Million A/R FacilityTotal Debt

327 327

Guarantee from U.S. Wholly Owned

Subsidiaries

International Division

International DivisionBrokerage and ClearanceCFO ProductsOrder ManagementComplianceWealth Management

ERP SystemsDigital CampusEnrollment ManagementPerformance Management

ERP SystemsAccountingHuman ResourcesPayroll Recovery Services

(Server, Storage, etc.)Managed Data Center

(On-Site or Off)Consulting ServicesBusiness Continuity Software Solutions

Guarantee of Secured Debt


September 23, 2011

Corporates

TE Connectivity Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR BBB+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 14,834.0 10,256.0 12,070.0 13,538.0 EBITDA 2,720.0 1,178.0 2,251.0 2,448.0ST IDR and CP F2 Margin (%) 18.3. 11.5 18.6 18.1Senior Unsecured Bank Facility BBB+ Total Debt 3,181.0 2,417.0 2,413.0 2,655.0Senior Unsecured Notes BBB+ Cash 1,086.0 1,521.0 1,990.0 1,212.0 FCF 99.0 707.0 1,005.0 821.0 Interest Coverage 14.5 7.1 14.5 15.5 Leverage 1.2 2.1 1.1 1.1 Liquidity Analysis Period Ended 6/24/11 2011 Maturities 1 LTM FCF 821 2012 Maturities 717 Cash 1,212 2013 Maturities —Credit Facility Availability 1,038 2014 Maturities 300 Expiration June 2016 A/R Securitization Facility Availability 0 Expiration Total Liquidity 2,250

Key Credit Strengths/Concerns Strengths: • Industry-leading positions in large and relatively fragmented markets. • Substantial scale and scope, which should lead to share gains in developing economies. • Relatively diversified product, customer, and end-market portfolios. • Conservative financial policies with sufficient liquidity with consistent annual FCF. Concerns: • The cyclical demand patterns associated with electronics components. • Ongoing average selling price (ASP) pressures in the majority of its end markets. • The company’s financial policies and use of FCF over the longer term, given maturing organic revenue growth expectations.

Risks to the Ratings Economic Cyclicality: Neutral Ratings incorporate high cyclicality of business. Secular Demand Trends: Neutral Increased electronics content partially offset by pricing pressures. Secular Competitive Trends: Neutral Fragmented competition unlikely to change ratings. Capital Structure Change: Upside Manage for solid investment-grade ratings.

Key Credit Considerations Revenue Model: Driven by design wins and achieving volume production. Economic Sensitivity: Neutral Components maker with exposure to automotive makes more susceptible to economic downturns. Concentration Risk: Strength Highly diversified set of customers. Customer Financial Strength: Neutral Greater exposure to Asian and European automotive manufacturers versus U.S. Level of Competition: Neutral Strong competitors in one market offset by competing across all end markets. Switching Costs: Weakness Difficult intraproduct life cycle, but minimal for next-generation designs. Entry Barriers: Strength Global footprint and relationships with Asian suppliers difficult to replicate. Fixed versus Variable Costs: Neutral In-house manufacturing with substantial operating leverage. Variability in COGS: Neutral Able to pass through component/commodity inflation with a lag. Pricing Pressures: Weakness Rapid price erosion offset by new product introductions. Capital Spending: Strength Capex is typically less than 5% of revenue. Working Capital: Neutral Highly countercyclical, enabling FCF through the cycle. Importance of Rating to Ops: Neutral Limited reasons other than cost of capital and lack of tax shield. Capital Strategy: Strength Conservative, but slightly higher debt levels likely over time for M&A and share buybacks. Competitive Position: Strength Market leader across components end markets.


September 23, 2011

Corporates

Organization Structure — TE Connectivity($ Mil.)

Tyco Electronics Group S.A.(Issues all Debt, Fully and Unconditionally Guaranteed by TE Connectivity Ltd.)

BBB+/Outlook Stable

Commercial PaperSr. Unsecured Revolving Credit Facility6.000% Sr. Unsecured Notes due 20125.950% Sr. Unsecured Notes due 20143.500% Sr. Unsecured Convertible

Subordinated Notes due 20156.550% Sr. Unsecured Notes due 20174.875% Sr. Unsecured Notes due 20217.125% Sr. Unsecured Notes due 2037



——

717.0 300.0

90.0 737.0 257.0 475.0

79.0 2,655.02,448.0

1.1

F2BBB+BBB+BBB+BBB+BBB+BBB+BBB+BBB+

AmountOutstanding

Long-TermRating

Transportation Solutions


5,302.0771.014.5

Communications Solutions


5,043.0663.013.1

Connectivity Components

TE Connectivity Ltd.(Holdco Incorporated in Switzerland)

BBB+/Outlook StableAssets — Equity Interests in Subsidiaries/Does Not Issue Debt

Network Solutions


3,193.0348.010.9


September 23, 2011

Corporates

Tech Data Corporation Primary Analyst: Brian Taylor +1 212 908-0620

Ratings Fiscal Year-End and Most Recent LTM IDR BB+ 2008 2009 2010 LTMOutlook/Watch Stable Revenues 23,423.1 24,080.5 22,099.9 26,062.5 EBITDA 283.2 305.4 321.0 417.5Senior Unsecured Bank Facility BB+ Margin (%) 1.2 1.3 1.5 1.6Senior Unsecured BB+ Total Debt 383.1 418.7 403.6 487.1 Cash 447.3 528.0 1,116.6 905.1 FCF 360.7 356.3 515.1 297 Interest Coverage 9.8 9.9 11.6 12.8 Leverage 1.4 1.4 1.3 1.2 Liquidity Analysis Period Ended 7/31/11 2011 Maturities 424 LTM FCF 297 2012 Maturities 1 Cash 905 2013 Maturities 1Credit Facility Availability 169 2014 Maturities 1 Expiration March 2012 A/R Securitization Facility Availability 300 Expiration August 2012 Total Liquidity 1,374

Key Credit Strengths/Concerns Strengths: • Broad customer and geographic diversification. • Scale of operations is a significant competitive advantage. • Working capital represents significant source of liquidity during business downturns. • Importance of wholesale distribution model to OEMs. Concerns: • Exposure to cyclical IT demand and global economic conditions. • Low-margin nature of the wholesale distribution model. • Use of debt for acquisitions and shareholder-friendly actions. • Significant reliance on Hewlett-Packard as a supplier.

Risks to the Ratings Economic Cyclicality: Downside Susceptible to further reductions in profit margins Secular Demand Trends: Neutral Secular Competitive Trends: Neutral Capital Structure Change: Downside Potential M&A in Asia; buybacks not expected, but not considered in rating

Key Credit Considerations Revenue Model: Largely transactional although VAR customers have committed relationships. Economic Sensitivity: Weakness Consumer and business IT spending exposure. Concentration Risk: Neutral Highly diversified customer base, strong geographic diversification, and significant supplier concentration Customer Financial Strength: Weakness Small VARs. Level of Competition: Neutral Largely confined to Ingram Micro with Direct a possible source of competition. Switching Costs: Weakness None outside of committed working capital lines offered to customers. Entry Barriers: Neutral Scale and supplier relationships. Fixed versus Variable Costs: Strength Largely a cost-plus model, although warehousing is a modest fixed cost relative to profitability. Variability in COGS: Strength Cost-plus. Pricing Pressures: Weakness Capital Spending: Strength Minimal. Working Capital: Weakness Significant component of cash flow; countercyclical. Importance of Rating to Ops: Neutral Investment grade not needed but helps access to liquidity. Capital Strategy: Neutral Remains conservative, although increase in long-term debt reduces credit profile. Competitive Position: Strength One of the leading distributors but no Asian presence.


September 23, 2011

Corporates

Organization Structure — Tech Data Corporation($ Mil.)

Tech Data CorporationBB+/Outlook Stable

2.75% Sr. Unsecured Convertibles due 2026Sr. Unsecured Revolver due 2012

Other Debt/Fair Value Adjustment Total DebtLTM EBITDALeverage Ratio (x)


350 —

1374874201.2

BB+ BB+

AmountOutstanding

Long-TermRating

Americas


10,787 190 1.76

EMEA


15,276 173 1.13

Semiconductors, Connectors

Servers, Software, and Storage

AR Securitization

$300 Million A/R FacilityTotal Debt

00


September 23, 2011

Corporates

Texas Instruments Incorporated Primary Analyst: Jason Pompeii +1 312 368-3210

Ratings Fiscal Year-End and Most Recent LTM IDR A+ Outlook/Watch Stable 2008 2009 2010

LTM (Pro Forma)

Revenues 12,501.0 10,427.0 13,966.0 14,115.0ST IDR and CP F1 EBITDA 3,963.0 3,314.0 5,506.0 5,270.0Senior Unsecured Bank Facility A+ Margin (%) 31.7 31.8 39.4 37.3Senior Unsecured Notes A+ Total Debt 0.0 0.0 0.0 3,498.0 Cash 2,540.0 2,925.0 3,072.0 6,400.0 FCF 2,030.0 1,323.0 2,029.0 1,929.0 Interest Coverage 878.3 Leverage 0.0 0.0 0.0 0.7 Liquidity Analysis Period Ended 6/30/11 2011 Maturities LTM FCF 1,929 2012 Maturities Cash 6,400 2013 Maturities 1,500Credit Facility Availability 1,000 2014 Maturities 1,000 Expiration August 2012 A/R Securitization Facility Availability 0 Expiration Total Liquidity 7,400

Key Credit Strengths/Concerns Strengths: • Leading market positions in a diversified set of products, customers, and end markets, including relatively stable analog. • Annual FCF of more than $1 billion. • Strong liquidity and financial flexibility. Concerns: • Significant ongoing R&D and capital expenditure requirements. • Revenue growth somewhat constrained by challenges displacing incumbent suppliers in attractive analog markets. • Fitch’s expectations that longer term revenue growth will be somewhat offset by share erosion at and by Nokia Corp.

Risks to the Ratings Economic Cyclicality: Neutral Secular Demand Trends: Neutral Stable growth characteristics associated with analog and embedded, with stronger growth from smartphones. Secular Competitive Trends: Neutral Ratings already reflect TI’s large sales force, breadth of leading market position in analog, and technology leadership in

applications processors. Capital Structure Change: Downside Potential incremental debt issuance to fund M&A.

Key Credit Considerations Revenue Model: Driven by design wins and achieving volume production. Economic Sensitivity: Neutral Components makers more susceptible to economic cyclicality.

Concentration Risk: Strength Diverse set of customers across a variety of end markets. Nokia concentration mostly related to low-margin baseband business that is expected to move away from TI.

Customer Financial Strength: Neutral Exposure to a diversified portfolio of customers limits downside.

Level of Competition: Neutral Substantial competition from variety of players in fragmented markets, but dominant position in applications processors.

Switching Costs: Neutral Difficult intraproduct life cycle and technology leadership in applications processors is difficult to displace. Entry Barriers: Strength Significant Intellectual Property and ramp of sales force and design teams to develop relationships. Fixed versus Variable Costs: Neutral Outsource next generation process development with Taiwan Semiconductor reduces fixed costs. Variability in COGS: Neutral Outsource approximately 20% of manufacturing, and yields could be challenged by 300mm wafers for analog. Pricing Pressures: Neutral Price erosion associated with Moore's Law offset by new product introductions and technology leadership in

applications processors. Capital Spending: Strength Minimal as a percentage of revenues. Working Capital: Neutral Modestly countercyclical, although company hubs standard products for distributors. Importance of Rating to Ops: Weakness Limited. Capital Strategy: Strength Consistently conservative. Competitive Position: Strength Leading positions in all markets augmented by potential National Semiconductor acquisition.


September 23, 2011

Corporates

Organization Structure — Texas Instruments Incorporated($ Mil.)

Texas Instruments IncorporatedA+/Stable

Commercial PaperSr. Unsecured Credit FacilityFRN Senior Notes due 20130.875% Sr. Notes due 20131.375% Sr. Notes due 20142.375% Sr. Notes due 2016

Less Unamortized DiscountTotal DebtLTM EBITDALeverage Ratio (x)

FRN– Floating rate notes.Source: Company filings, Fitch Ratings.

——

1,000 500

1,000 1,000

(2)3,498 5,270

0.7

F1A+A+A+A+A+

AmountOutstanding

Long-TermRating

Analog


6,224 1,859 29.9

Embedded Processing


2,246 541

24.1

— Semiconductors ThatConvert Real WorldPhenomena (e.g.Temperature, Sound) IntoReadable Digital Signals

— Power-Management Chips

— Highly Customizable Chips

— Digital Signal ProcessorsThat PerformMathematical Computations

— Traditional Embedded Chips(Lower Power Functionalitywith Microprocessor, Memory, etc. All On the Same Chip)

Wireless


2,750 575

20.9

Other


2,895 1,268 43.8

— Application ProcessorsThat Enhance the Performance of WirelessOperating Systems

— Chips That Connect toNoncellular WiFi, NFC,and Blue-Tooth

— Calculators— Royalties

Computing: Printers, Monitors, Notebooks, TabletsIndustrial: HVAC, Power Tools, Smart MetersConsumer Electronics: Home AppliancesAutomotive: Driver Information, Chassis, Entertainment, Safety, Security


September 23, 2011

Corporates

Unisys Corp. Primary Analyst: John M. Witt, CFA +1 212 908-0673 Ratings Fiscal Year-End and Most Recent LTM IDR BB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 5,233.2 4,597.7 4,019.6 3,813.4 EBITDA 535.6 698.8 644.7 537.3Senior Secured First-Lien Notes BB+ Margin (%) 10.2 15.2 16.0 14.1Senior Secured Second-Lien Notes BB+ Total Debt 1,060.6 911.7 824.0 572.3Senior Unsecured Notes BB Cash 544.0 647.6 828.3 625.0Convertible Preferred Stock B+ FCF (39.9) 195.5 133.7 213.0 Interest Coverage 5.7 6.8 5.8 5.6 Leverage 2.0 1.3 1.3 1.1

Liquidity Analysis Period Ended 6/30/11 2011 Maturities 1 LTM FCF 213 2012 Maturities 68 Cash 625 2013 Maturities 0 Credit Facility Availability 150 2014 Maturities 206 Expiration June 2016 A/R Securitization Facility Availability 0 Expiration Total Liquidity 775

Key Credit Strengths/Concerns Strengths: • Conservative financial policies including a commitment to reduce debt by 75% by year-end 2013. • Approximately 35%–40% of total revenue is recurring due to long-term outsourcing contracts. • Significant market opportunities in cloud, mobility, cyber security, and application modernization. • Domain expertise in targeted vertical markets, including public sector, financial services, communications, and transportation. • Diversified commercial revenue base with respect to both customers and geography. Concerns: • Consistent year-over-year declines in constant-currency revenue (21 consecutive quarters). • Increasing legally mandated cash contributions to underfunded defined benefit pension plans. • Inconsistent FCF generation. • Secular decline of highly profitable Clearpath servers. • Risk of material changes to federal government procurement process.

Risks to the Ratings Economic Cyclicality: Neutral

Secular Demand Trends: Neutral Risk of decline in government IT spending and material changes to federal government procurement process. Secular decline of highly profitable Clearpath mainframes.

Secular Competitive Trends: Downside India-based providers continue to expand into new servers and geographies. Capital Structure Change: Upside Emphasis has been on debt reduction.

Key Credit Considerations Revenue Model: Long-term service contracts with recurring revenue base. Economic Sensitivity: Neutral Cyclical growth should be in line with GDP. Concentration Risk: Neutral Geographic and industry diversity of customer base, but U.S. Government accounts for nearly 20% of revenue. Customer Financial Strength: Neutral Level of Competition: Neutral Highly competitive for manageable deal sizes. Switching Costs: Neutral Entry Barriers: Neutral Level of expertise and global footprint. Fixed versus Variable Costs: Neutral Significant cost reductions resulting in improving profitability.

Variability in COGS: Neutral Pricing Pressures: Neutral Pressure from global, India-based, and niche service providers Capital Spending: Neutral Capital intensity decreased 1% point to 4.5% in the past two years. Working Capital: Neutral Importance of Rating to Ops: Strength Government sector less concerned with credit ratings than commercial. Capital Strategy: Strength Improved balance sheet and liquidity. Competitive Position: Weakness Growth consistently underperforms the IT services industry. Established expertise in targeted vertical end markets. Other: Weakness Significantly underfunded pension plans in U.S. and U.K.


September 23, 2011

Corporates

Organization Structure — Unisys Corporation($ Mil.)

Unisys CorporationBB–/Outlook Stable

Sr. Secured Revolving Credit Facility due 201612.75% Sr. Secured Notes due 201414.25% Sr. Secured Notes due 20158.00% Sr. Unsecured Notes due 20126.25% Preferred Stock Mandatory Convertible in 2014 12.50% Sr. Unsecured Notes due 2016


aOperating income based on segment reporting. Note: Debt and leverage are pro forma for May 2011 debt exchanges.Source: Company filings, Fitch Ratings.

—206.225.568.0

124.9150.6

—575 537 1.1

BB+BB+BB+BB–B+BB–

AmountOutstanding

Long-TermRating

Services

RevenueEBITa

Margin (%)

3,318 229 6.9

Technology

RevenueEBITa

Margin (%)

496 93

18.7

Outsourcing (Data Center Management)Systems Integration and ConsultingIT Infrastructure Design and Support

ClearPath Mainframes

Guanrantee from MaterialDomestic Subsidiaries

(In Excess of $5 MillionAssets and/or Revenue)

U.S.International

% Revenue33.077.0


September 23, 2011

Corporates

Key Credit Considerations Revenue Model: Pure consumer transaction orientation. Economic Sensitivity: Neutral Tracks GDP and employment rates closely. Concentration Risk: Strength Very diverse customer and geographic exposure, singular market exposure. Customer Financial Strength: Strength Migrant workers represent majority of customer base (paid with cash). Level of Competition: Neutral Limited to specific geographies, new technology could be competitive. Switching Costs: Weakness Some brand loyalty and need for agent presence on both sides of a transaction. Entry Barriers: Strength Scale and compliance requirements represent significant competitive hurdles. Fixed versus Variable Costs: Strength Highly variable cost model. Variability in COGS: Strength Commission-based, and rates generally decrease when volume decreases. Pricing Pressures: Weakness Has been severe at times in certain markets. Capital Spending: Strength Minimal capex relative to profit. Working Capital: Neutral Minimal working capital needs. Importance of Rating to Ops: Neutral Not necessary, but important to carry investment grade rating. Capital Strategy: Neutral Has become more aggressive in past year. Competitive Position: Strength By far the leading remittance provider in the world.

Western Union Company (The) Primary Analyst: Jason Paraschac +1 212 908-0746

Ratings Fiscal Year-End and Most Recent LTM IDR A 2008 2009 2010 LTMOutlook/Watch Stable Revenues 5,282.0 5,083.6 5,192.7 5,335.9 EBITDA 1,608.2 1,468.8 1,511.9 1,549.1ST IDR and CP F2 Margin (%) 30.4 28.9 29.1 29.0Senior Unsecured Bank Facility A Total Debt 3,143.5 3,048.5 3,289.9 3,585.5Senior Unsecured Notes A Cash 1,295.6 1,685.2 2,157.4 2,089.7 FCF 1,071.8 1,078.0 715.4 848.9 Interest Coverage 9.4 9.3 8.9 8.7 Leverage 2.0 2.1 2.2 2.3 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 696 LTM FCF 849 2012 Maturities Cash 2,090 2013 Maturities 300 Credit Facility Availability 1,500 2014 Maturities 500 Expiration September 2012 A/R Securitization Facility Availability 0 Expiration Total Liquidity 3,590

Key Credit Strengths/Concerns Strengths: • Extensive domestic and international agent network. • Strong worldwide brand. • Industry-leading size and geographic scope. • Consistent FCF. Concerns: • Increasing competition. • Uncertainty related to immigration policies and regulations. • Heightened worldwide regulatory environment.

Risks to the Ratings Economic Cyclicality: Neutral Would not be expected to influence rating. Secular Demand Trends: Neutral Should be positive but not material to rating. Secular Competitive Trends: Neutral No material changes expected. Capital Structure Change: Downside Could become more aggressive with buybacks.


September 23, 2011

Corporates

Organization Structure — Western Union Company (The)($ Mil.)

Western Union Company (The)A–/Outlook Stable

Revolver due 20125.400% Sr. Unsecured Notes due 20110.889% Sr. Unsecured Notes due 20136.500% Sr. Unsecured Notes due 20145.930% Sr. Unsecured Notes due 20165.253% Sr. Unsecured Notes due 20206.200% Sr. Unsecured Notes due 20366.200% Sr. Unsecured Notes due 2040



—696300500

1,000325500250

15 3,5861,549

2.3

A–A–A–A–A–A–A–A–

AmountOutstanding

Long-TermRating

Consumer-to-Consumer


4,5131,28728.5

Global Business Payments


729118

16.2

Custom House Ltd.FX Derivates for SMB


September 23, 2011

Corporates

Xerox Corporation Primary Analyst: John M. Witt, CFA +1 212 908-0673

Ratings Fiscal Year-End and Most Recent LTM IDR BBB 2008 2009 2010 LTMOutlook/Watch Stable Revenues 17,608.0 15,179.0 21,633.0 22,483.0 EBITDA 2,137.0 1,759.0 2,984.0 3,151.0ST IDR and CP F2 Margin (%) 12.1 11.6 13.8 14.0Senior Unsecured Bank Facility BBB Total Debt 8,546.0 9,426.2 8,856.7 9,484.5Senior Unsecured Notes BBB Cash 1,229.0 3,799.0 1,211.0 1,098.0 FCF 442.0 1,766.0 1,992.0 1,191.0 Interest Coverage 3.8 3.3 5.0 5.9 Leverage 4.0 5.4 3.0 3.0 Liquidity Analysis Period Ended 6/30/11 2011 Maturities 1,068 LTM FCF 1,191 2012 Maturities 1,133 Cash 1,098 2013 Maturities 420 Credit Facility Availability 2,000 2014 Maturities 1,074 Expiration April 2013 A/R Securitization Facility Availability 0 Expiration Total Liquidity 3,098

Key Credit Strengths/Concerns Strengths: • The significant reduction in total and core debt, and resulting improvement in credit metrics subsequent to closing the partially debt-financed acquisition of Affiliated Computer Services. • Solid projected growth in services and color will more than offset revenue declines related to black and white print volumes. • Significant percentage of total revenue is recurring (83%). • Solid liquidity supported by consistent FCF. • Increasingly diverse revenue mix. Concerns: • Potential for long-term black and white revenue pressures. • New managed print services with existing Xerox clients could cannibalize equipment and post-sale revenue. • Xerox's active worldwide defined benefit pension plan was underfunded by $1.8 billion on a projected benefit obligation basis as of year-end 2010. • The print industry is intensely competitive, resulting in consistent equipment pricing pressure.

Risks to the Ratings Economic Cyclicality: Neutral Acquisition of ACS mitigates correlation to business cycle. Secular Demand Trends: Downside Decreasing digital print volume as black and white declines, particularly high-end transaction printing, more than offset

color growth. Services and color revenue growth expected to offset declines in black and white revenue. Potential long-term margin pressure as high margin black and white supplies decline.

Secular Competitive Trends: Neutral New managed print services with existing clients cannibalizes equipment and post-sale revenue. Capital Structure Change: Neutral No material changes anticipated.

Key Credit Considerations Revenue Model: 82% of revenue is recurring (services, maintenance, supplies, rentals, and financing). Economic Sensitivity: Neutral Product sales are highly cyclical; print supplies more stable. Concentration Risk: Strength Increasingly diverse revenue mix. Customer Financial Strength: Strength Highly diversified customer base. Level of Competition: Neutral Switching Costs: Neutral Entry Barriers: Neutral Global manufacturing, sales force, and significant R&D. Fixed versus Variable Costs: Neutral Office product manufacturing outsourced; Fuji Xerox joint venture also manufactures products. Variability in COGS: Neutral Exposure to short-term component and currency (Fuji Xerox) volatility. Pricing Pressures: Weakness Highly competitive with consistent pricing pressure on equipment. Capital Spending: Neutral Working Capital: Neutral Shift to services model requires less working capital than manufacturing. Importance of Rating to Ops: Strength Captive financing unit benefits from strong credit rating. Capital Strategy: Strength Significant reduction in core debt after the ACS acquisition. Competitive Position: Strength Industry-leading size and geographic scope. Other: Weakness Active worldwide pension plan was underfunded by $1.8 billion.


September 23, 2011

Corporates

Organization Structure — Xerox Corporation($ Mil.)

Xerox CorporationBBB/Outlook Stable

Commercial PaperSr. Unsecured Revolving Credit Facility due 20130.09% Sr. Unsecured Notes due 20116.59 % Sr. Unsecured Notes due 20115.59% Sr. Unsecured Notes due 20125.65% Sr. Unsecured Notes due 20139.00% Sr. Unsecured Convertible Notes due 20148.25% Sr. Unsecured Notes due 2014Floating Rate Sr. Unsecured Notes due 20144.29% Sr. Unsecured Notes due 20157.20% Sr. Unsecured Notes due 20166.48% Sr. Unsecured Notes due 20166.83% Sr. Unsecured Notes due 20176.37% Sr. Unsecured Notes due 20185.66% Sr. Unsecured Notes due 20194.50% Sr. Unsecured Notes due 2021Zero Coupon Sr. Unsecured Notes due 20236.78% Sr. Unsecured Notes due 2039


Note: ACS debt not guaranteed.Source: Company filings, Fitch Ratings.

——1

7501,100

40019

750300

1,000250700500

1,000650700283350

349 9,4853,151

3.0

F2 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

AmountOutstanding

Long-TermRating

Technology


10,358 1,145

11.1

Services


10,521 1,198

11.4

Other


1,604 (284)(17.7)

Affiliated Computer Svc Inc.BBB/Stable

5.20% Notes due 2015 250

Equipment and SuppliesTechnical Service

BPOITODocument

Outsourcing

A/R Sales Facility

Xerox Financial Services

AssetsThird-Party Debt

7,1700

Customer FinancingArrangements

Fuji Xerox25%


September 23, 2011

Corporates

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