Integrated Financial Statement Exercise

Cash Flow Statement Exercise (Answer)

Balance Sheet

Income Statement
12/31/07

12/31/08

ASSETS
Cash and equivalents
Accounts Receivable
Inventories
Total Current Assets

34.60
74.80
132.60
242.00

364.30
82.40
145.70
592.40

PP&E
Intangibles
Deferred Taxes
Other Long Term Assets
Total Assets

212.70
34.20
12.60
123.90
625.40

259.30
42.50
34.60
145.30
1,074.10

Accounts payable
Notes payable
Current portion of long-term debt
Current Liabilities

120.50
23.50
49.60
193.60

130.50
34.20
68.40
233.10

Long-term debt
Deferred taxes
Total Liabilities

214.00
43.50
451.10

214.00
52.30
499.40

1/1/08-12/31/08

Cash Flow Statement

1/1/08-12/31/08

Net Revenues
1,340.30
Net Income
Cost of Goods Sold (COGS)
432.40
Depreciation and amortization
Selling, general, & Administrative
123.40
Changes in working capital
Research and development
56.30
Accounts Receivable
Depreciation & Amortization1
20.00
Inventories
Other operating expenses
12.30
Accounts payable
Net Interest expense
45.60
Deferred taxes (both asset and liability)
Pretax income
650.30
Cash from operations
Income tax expense (35%)
227.61
Net income
422.70
Capital expenditures
Dividends2
31.40
Purchases of intangible assets
1
Footnote in 10K reveals that amortization expense was $5m
Increases in all other long-term assets
2
Assume all dividends were cash dividends
Cash from investing

422.70
20.00

B.A.S.E Calculations
Beginning PP&E
Add: Capital Expenditures
Sub: Depreciation
Ending PP&E

Increase in Notes Payable

Increase in long term debt (incl. current portion)
Increase in preferred stock
Increase in common stock
Increase in APIC (additional paid in capital)
Increase in Treasury stock
Dividends
Cash from financing

10.70
18.80
1.10
1.80
17.10
(10.90)
(31.40)
7.20

Beginning cash balance (12/2007)

Total change in cash
Ending cash balance (12/2008)

34.60
329.70
364.30

(7.60)
(13.10)
10.00
(13.20)
418.80
(61.60)
(13.30)
(21.40)
(96.30)

LIABILITIES

Shareholder's equity
Preferred Stock
Common Stock par value
Additional paid-in-capital
Treasury Stock
Retained Earnings
Total liabilities and SE

12.40
5.60
146.40
(112.30)
122.20
625.40

13.50
7.40
163.50
(123.20)
513.50
1,074.10

Beginning Intangibles
Add: Purchases of Intangibles
Sub: Amortization
Ending Intangibles

212.70
61.60
15.00
259.30
34.20
13.30
5.00
42.50

Discounted Cash Flow Analysis for Company XYZ

Basic Exercise
Free cash flows for year ending December 31:

1/1/2008
1,359.1
1,509.0
1,689.7
1,961.4
2,237.6
38,784.7

Valuation date:
2008
2009
2010
2011
2012
Terminal value in 2012
Weighted average cost of capital

10%

Assumptions for Basic Example

Current Share Price
Fully Diluted Shares Outstanding
Net Debt
WACC

$45.00
510.0
2,750.0
10%

Questions:
1.Estimate the present value of the projected FCF discounted at the stated WACC Discount the terminal value back to t
2.Calculate XYZs implied enterprise value
3.Calculate XYZs equity value
4.Derive fair value per share
5.According to the DCF valuation method, are XYZs shares overvalued or undervalued?

Basic Exercise (Answer)

1. PV of FCF

Periods

2. Enterprise Value

PV of Terminal Value
Sum of PV of FCF and Terminal Value

24,082.2
30,563.4

3. Equity Value

Net Debt
Equity value

2,750.0
27,813.4

4. Equity value per share

Fully Diluted Shares

Equity value per share

5. Overvalued / Undervalued?

Current Share Price

DCF Equity value per share
Difference
Answer:

Advanced Exercise (Answer)

1
2
3
4
5

1,235.6
1,247.1
1,269.5
1,339.6
1,389.4

510.0
$54.54
$45.00
$54.54
($9.54)
Undervalued

Free cash flow buildup

Projected
12/31/08
1
6,600.0
2,431.0
2,046.0
40.0%
1,227.6
385.0
(150.0)
(15.4)
(5.0)
(20.0)
16.9
10.0
130.0
0.0
(220.0)
1,359.1
10%
1,235.6
6,481.2

Year
Period
Total Revenues
EBITDA
EBIT
Tax rate
EBIAT
Depreciation & Amortization
Accounts receivable
Inventories
Prepaid expenses
Other current assets
Accounts payable
Accrued expenses
Other current liabilities
Deferred tax (liabilities)
Capital expenditures
Unlevered free cash flows
Discount Rate (WACC)
Present value of free cash flows
Sum of present values of FCFs
Terminal value
Growth in perpetuity method
Long term growth rate
Free cash flow (t+1)
Terminal value
Present value of terminal value

4.0%
2,327.1
38,784.7
24,082.2

Enterprise value to Equity value

Enterprise value
Less: Net Debt
Equity Value
Fully Diluted Shares Outstanding
Equity Value per share

30,563.4
2,750.0
27,813.4
510.0
$54.54

12/31/09
2
7,326.0
2,698.4
2,271.1
40.0%
1,362.6
427.4
(181.5)
(55.3)
(6.1)
(24.2)
60.9
12.1
157.3
0.0
(244.2)
1,509.0
10%
1,247.1

Company XYZ

Discount the terminal value back to the present

12/31/10
3
8,205.1
3,022.2
2,543.6
40.0%
1,526.2
478.6
(219.8)
(96.9)
(7.3)
(29.3)
106.6
14.7
190.5
0.0
(273.5)
1,689.7
10%
1,269.5

12/31/11
4
9,271.8
3,507.8
2,967.0
40.0%
1,780.2
540.9
(266.7)
(116.1)
(8.9)
(35.6)
127.7
17.8
231.1
0.0
(309.1)
1,961.4
10%
1,339.6

12/31/12
5
10,477.1
4,000.0
3,388.8
40.0%
2,033.3
611.2
(301.3)
(126.6)
(10.0)
(40.2)
139.3
20.1
261.2
0.0
(349.2)
2,237.6
10%
1,389.4

WACC Analysis for Company XYZ

WACC - Basic

WACC - Basic (Ans

WACC Assumptions
Share Price
Shares Outstanding
Debt
Cost of Debt
Tax Rate
Cost of Equity

Total Capital
Debt
Equity
Total
Cost of Capital
Cost of Debt
Tax Rate
After-Tax Cost of Debt

$45.00
510.0
2,750.0
5.2%
40%
15%

Cost of Equity
Capital Weighting
Debt Weighting
Equity Weighting
WACC =

WACC - Advanced (Answer)

Analysis of WACC
Cost of debt
Cost of debt
Marginal tax rate
Cost of debt after tax shield

Capital structure
5.2%
40.0%
3.1%

Cost of equity
Risk-Free Rate (rf)
Market Risk Premium (rm-rf)
Raw (observed) beta
Cost of equity using industry beta
Cost of equity using raw beta

Current capital structure

Net debt
Equity
Total

4.7%
6.0%
0.79
9.1%
9.5%

Market value
2,750.0
22,950.0
25,700.0

Weighted average cost of capital

Weighted average cost of capital: raw
Weighted average cost of capital: industry

Industry beta calculation

Comps

Company XYZ
Company A
Company B
Company C

Raw beta

Share price

Shares

Market cap.

0.79
0.85
0.78
0.75

$45.00
$30.00
$40.00
$145.00

510.0
200.0
500.0
600.0

22,950.0
6,000.0
20,000.0
87,000.0
135,950.0

WACC - Basic (Answer)

otal Capital
2,750.0
22,950.0
25,700.0

ost of Capital

ter-Tax Cost of Debt

5.2%
40%
3.1%

ost of Equity

15%

apital Weighting
ebt Weighting
quity Weighting

10.7%
89.3%
13.7%

Current capital structure

% Weight
10.7%
89.3%

Target capital structure

override

age cost of capital

ge cost of capital: raw
ge cost of capital: industry

% Weight
10.7%
89.3%

8.8%
8.5%

Debt

D/E

2,750.0
2,800.0
5,600.0
17,950.0

11.98%
46.67%
28.00%
20.63%

Tax rate

40.00%
40.00%
40.00%
40.00%
Average:

Unl. Beta

Weigh. Beta

Relev.
Beta

0.74
0.66
0.67
0.67
0.68

0.12
0.03
0.10
0.43
0.68

0.73

Leveraged Buyout Analysis for Company XYZ

Current Year
Exit Year

2007
2012

LBO Assumptions
2007 Data
Current Share Price
Fully Diluted Shares Outstanding
Net Debt
Enterprise Value
LTM EBITDA
EV / EBITDA
Debt Capacity (Net debt/EBITDA)
2012 Data
EBITDA
Net Debt Outstanding
EBITDA multiple in exit year
Required Equity Return

$45.00
510.0
2,750.0
25,700.0
2,150.0
12.0x
5.0x

4,000.0
9,750.0
12.0x
25%

Periods

Questions:
1.What is the implied Enterprise Value in the exit year?
2.What is the implied Equity Value at the exit year?
3.What is the initial Equity Value required by the sponsors?
Answers:
1.
2.
3.

48,000.0
38,250.0
12,533.8

Questions:
1.What is the initial implied Enterprise Value (the total funds raised for buying oldco debt and equity)?
2.What is the highest purchase price the sponsors would be willing to pay for CVS shares today?
3.Given CVS market trading level, is an LBO likely?
Answers:
1.
2.
3.

23,283.8
$40.26
No Deal

ny XYZ

M&A Analysis for Company XYZ

M&A Assumptions
Share Price
EPS next year
Wtd. Avg. Shares Outstanding

Acuirer
Target
$25.00
$45.00
$1.50
$2.28
1,000.0
500.0

Basic Exercise
Assumptions
Acquirer purchases 100% of target by issuing additional stock to
purchase target shares.
No premium is offered above target's current share price.

Share price at announcement

P/E ratio
EPS Next year
Shares outstanding
Net income next year

Acquirer Target
Pro forma
$25.00
$45.00
16.7x
19.7x
$1.50
$2.28
1,000.0
500.0

Acquirer shares issued

Offer value (offer price/share x target shares out.)
Exchange ratio (acquirer shares issued/target shares out.)
Accretion/Dilution ($ per share)
Accretion/Dilution (%)

Basic Exercise (Answer)

Assumptions
Acquirer purchases 100% of target by issuing additional stock to
purchase target shares.
No premium is offered above target's current share price.

Share price at announcement

P/E ratio
EPS Next year
Shares outstanding
Net income next year

Acquirer Target
Pro forma
$25.00
$45.00
16.7x
19.7x
$1.50
$2.28
$1.39
1,000.0
500.0
1,900.0
1,500.0
1,140.6
2,640.6

Acquirer shares issued

Offer value (offer price/share x target shares out.)
Exchange ratio (acquirer shares issued/target shares out.)

900.0
22,500.0
1.8x

Accretion/Dilution ($ per share)

Accretion/Dilution (%)

($0.11)
-7.35%

Advanced Exercise (Answer)

Assumptions
1. Acquirer purchases 100% of target
2. A 20% premium is offered above target's current share price
3. The acquisition is paid for via 50% debt and 50% stock
4. Interest rate on new debt is 5%
5. Financing fees on debt are 0%
6. Useful life of debt is 0 years
7. PP&E write-up of $20,000 has a useful life of 20 years
8. Intangibles write-up of $5,000 has a useful life of 10 years
9. Goodwill of $10,000 is created
10. Pre-tax synergies of $1,000
11. Acquiror's Tax Rate is 40%

Deal Information
Offer Price
Offer value (offer price/share x target shares out.)
Acquirer shares issued
Exchange ratio (acquirer shares issued/target shares out.)
Debt Issued
Accretion/Dilution
Share price at announcement
P/E ratio

$54.00
27,000.0
540.0
1.08x
13,500.0

Acquirer Target Pro forma

$25.00 $45.00
16.7x
19.7x

EPS Next year

$1.50
$2.28
Shares outstanding
1,000.0
500.0
Net income (pre adjustments)
1,500.0 1,140.6
Adjustments:
Plus: Planned Synergies
Less: Addtl. Interest Expense
Less: Addtl. Depreciation
Less: Amort. of ID'd Intangibles
Total Pretax Adjustments (Taxable)
Tax Impact of adjustments at acquirer's 40% tax rate
Total Adjustments
Pro Forma Net Income (post adjustments)
Diluted Shares Outstanding
Pro Forma EPS

Inputs
Premium
Consideration
Interest Exp.
Financing Fees
Useful Life Debt
PP&E Write Up
Intangibles Write Up
Goodwill
Synergies
Tax Rate

2,640.6
1,000.0
(675.0)
(1,000.0)
(500.0)
(1,175.0)
470.0
(705.0)
1,935.6
1,540.0
$1.26

Accretion/Dilution -- per share

Accretion/Dilution -- %

($0.24)
(16.2%)

20%
50% stock
5%

$20,000
$5,000
$10,000
$1,000

20 years
10 years

40%

Trading Comps Analysis for Company XYZ

Trading Comparables
Company A
2007
2008 E
Share Price
Fully Diluted Shares Outstanding

$30.00
200.0

Income Statement
Revenues
COGS
SG&A
D&A
EBIT
Interest
Pre-Tax Income
Taxes
Net Income
Wtd. Avg. Diluted Shares
Diluted EPS

2,000.0
800.0
440.0
200.0
560.0
150.0
410.0
164.0
246.0
180.0
$1.37

Income statement assumptions

Revenue growth (%)
Gross profit margin (%)
SG&A margin (% sales)
Effective tax rate (%)
D&A (% sales)

60.0%
22.0%
40.0%
10.0%

Company B
2007
2008 E
$40.00
500.0

2,200.0
880.0
484.0
220.0
616.0
140.0
476.0
190.4
285.6
180.0
$1.59

10.0%
60.0%
22.0%
40.0%
10.0%

5,000.0
1,900.0
1,100.0
500.0
1,500.0
220.0
1,280.0
512.0
768.0
450.0
$1.71

62.0%
22.0%
40.0%
10.0%

Company C
2007
$145.00
600.0

5,600.0
2,128.0
1,232.0
560.0
1,680.0
180.0
1,500.0
600.0
900.0
450.0
$2.00

12.0%
62.0%
22.0%
40.0%
10.0%

20,000.0
7,200.0
4,400.0
2,000.0
6,400.0
300.0
6,100.0
2,440.0
3,660.0
540.0
$6.78

64.0%
22.0%
40.0%
10.0%

Balance Sheet
Cash and equivalents
Accounts receivable
Inventories
Prepaid expenses
Other current assets
PP&E
Goodwill
Intangibles
Other non-current assets
Total Assets

1,000.0
350.0
850.0
100.0
50.0
2,500.0
1,850.0
650.0
1,000.0
8,350.0

500.0
1,200.0
1,400.0
200.0
150.0
5,000.0
4,000.0
400.0
1,500.0
14,350.0

3,500.0
2,850.0
6,000.0
2,600.0
2,550.0
10,000.0
4,350.0
3,150.0
3,500.0
38,500.0

Accounts payable
Accrued expenses
Other current liabilities
Short Term Debt (Revolver)
Current portion of debt
Long term debt
Deferred income taxes

950.0
75.0
500.0
850.0
600.0
2,350.0
150.0

600.0
125.0
250.0
1,350.0
750.0
4,000.0
100.0

2,400.0
2,575.0
2,000.0
3,350.0
3,100.0
15,000.0
500.0

Other non-current liabilities

Total Liabilities

850.0
6,325.0

450.0
7,625.0

2,000.0
30,925.0

Minority interest
Preferred stock
Retained earnings
Total Shareholders' Equity

400.0
250.0
1,375.0
2,025.0

1,000.0
0.0
5,725.0
6,725.0

2,000.0
1,500.0
4,075.0
7,575.0

Total Liabilities + Equity

Balance check

8,350.0
0.0

14,350.0
0.0

38,500.0
0.0

Exercise (Answer)
Comparables Output Worksheet

Company A
Company B
Company C
Target
Company XYZ

Share price
$30.00
40.00
145.00
$45.00

Market
Enterprise
Cap.
value
$6,000.0
$9,450.0
20,000.0
26,600.0
87,000.0 108,450.0
$22,950.0

$25,700.0
Median
Mean

Shares out.
Company XYZ

510.0

Net Debt
$2,750.0

Last twelve months (LTM)

EV /
P/E
REV
22.0x
4.7x
23.4x
5.3x
21.4x
5.4x
21.3x

4.3x

21.7x
22.0x

5.0x
4.9x

EPS

Last twelve months (LTM)

REV

$2.11

6,000.0

Mean Valuation- Price per Share

$46.51

$52.70

High

$53.65

Low

$44.24

Current price

$45.00

y XYZ
Company C
2008 E

22,400.0
8,064.0
4,928.0
2,240.0
7,168.0
280.0
6,888.0
2,755.2
4,132.8
540.0
$7.65

12.0%
64.0%
22.0%
40.0%
10.0%

ast twelve months (LTM)

EV /
EV /
EBIT
EBITDA
16.9x
12.4x
17.7x
13.3x
16.9x
12.9x

P/E
18.9x
20.0x
18.9x

Year 1
EV /
EV /
EV /
REV
EBIT
EBITDA
4.3x
15.3x
11.3x
4.8x
15.8x
11.9x
4.8x
15.1x
11.5x

14.3x

12.0x

19.7x

3.9x

12.6x

10.6x

16.9x
16.5x

12.7x
12.6x

19.3x
19.4x

4.5x
4.4x

15.2x
14.7x

11.4x
11.3x

Last twelve months (LTM)

EBIT

Year 1
EBITDA

EPS

REV

EBIT

EBITDA

1,800.0

2,150.0

$2.28

6,600.0

2,046.0

2,431.0

$52.69

$47.93

$44.24

$52.13

$53.65

$48.56

Transaction Comps Analysis for Company XYZ

Transaction Comparables
Company A
2007
2008 E
Share Price
Fully Diluted Shares Outstanding
Offer Premium

$30.00
200.0
10%

Income Statement
Revenues
COGS
SG&A
D&A
EBIT
Interest
Pre-Tax Income
Taxes
Net Income
Wtd. Avg. Diluted Shares
Diluted EPS

2,000.0
800.0
440.0
200.0
560.0
150.0
410.0
164.0
246.0
180.0
$1.37

Income statement assumptions

Revenue growth (%)
Gross profit margin (%)
SG&A margin (% sales)
Effective tax rate (%)
D&A (% sales)

60%
22%
40%
10%

Company B
2007
2008 E
$40.00
500.0
10%

2,200.0
880.0
484.0
220.0
616.0
140.0
476.0
190.4
285.6
180.0
$1.59

10%
60%
22%
40%
10%

5,000.0
1,900.0
1,100.0
500.0
1,500.0
220.0
1,280.0
512.0
768.0
450.0
$1.71

62%
22%
40%
10%

Company C
2007
$145.00
600.0
10%

5,600.0
2,128.0
1,232.0
560.0
1,680.0
180.0
1,500.0
600.0
900.0
450.0
$2.00

12%
62%
22%
40%
10%

20,000.0
7,200.0
4,400.0
2,000.0
6,400.0
300.0
6,100.0
2,440.0
3,660.0
540.0
$6.78

64%
22%
40%
10%

Balance Sheet
Cash and equivalents
Accounts receivable
Inventories
Prepaid expenses
Other current assets
PP&E
Goodwill
Intangibles
Other non-current assets
Total Assets

1,000.0
350.0
850.0
100.0
50.0
2,500.0
1,850.0
650.0
1,000.0
8,350.0

500.0
1,200.0
1,400.0
200.0
150.0
5,000.0
4,000.0
400.0
1,500.0
14,350.0

3,500.0
2,850.0
6,000.0
2,600.0
2,550.0
10,000.0
4,350.0
3,150.0
3,500.0
38,500.0

Accounts payable
Accrued expenses
Other current liabilities
Short Term Debt (Revolver)
Current portion of debt
Long term debt

950.0
75.0
500.0
850.0
600.0
2,350.0

600.0
125.0
250.0
1,350.0
750.0
4,000.0

2,400.0
2,575.0
2,000.0
3,350.0
3,100.0
15,000.0

Deferred income taxes

Other non-current liabilities
Total Liabilities

150.0
850.0
6,325.0

100.0
450.0
7,625.0

500.0
2,000.0
30,925.0

Minority interest
Preferred stock
Retained earnings
Total Shareholders' Equity

400.0
250.0
1,375.0
2,025.0

1,000.0
0.0
5,725.0
6,725.0

2,000.0
1,500.0
4,075.0
7,575.0

Total Liabilities + Equity

Balance check

8,350.0
0.0

14,350.0
0.0

38,500.0
0.0

Exercise (Answer)
Comparables Output Worksheet

Last twelve m
Acquirer
Company D
Company E
Company F

Target
Company A
Company B
Company C

Announce
Effective
date
date
11/3/2006
2/27/2007
2/8/2006
3/31/2006
11/23/2005 3/1/2006

Offer Value
$6,600.0
22,000.0
95,700.0

Transaction
value
$10,050.0
28,600.0
117,150.0

Median
Mean

Last twelve m
Shares out.
Company XYZ

510.0

Net Debt
$2,750.0

Mean Valuation- Offer Price per Share

High
Low
Current price
Implied Premium

any XYZ
Company C
2008 E

22,400.0
8,064.0
4,928.0
2,240.0
7,168.0
280.0
6,888.0
2,755.2
4,132.8
540.0
$7.65

12%
64%
22%
40%
10%

Last twelve months (LTM)

TV /
TV /
TV /
REV
EBIT
EBITDA
5.0x
17.9x
13.2x
5.7x
19.1x
14.3x
5.9x
18.3x
13.9x

5.7x
5.5x

18.3x
18.4x

13.9x
13.8x

Last twelve months (LTM)

REV
EBIT
EBITDA

TV /
REV
4.6x
5.1x
5.2x

5.1x
5.0x

REV

Year 1
TV /
TV /
EBIT
EBITDA
16.3x
12.0x
17.0x
12.8x
16.3x
12.5x

16.3x
16.6x

Year 1
EBIT

12.5x
12.4x

EBITDA

6,000.0

1,800.0

2,150.0

6,600.0

2,046.0

2,431.0

$59.72

$59.69

$52.88

$58.90

$61.05

$53.78

$61.05
$52.88
$45.00
33%

33%

18%

31%

36%

20%

Company XYZ
Current Market Info
Current share price
Current date
Basic Shares Outstanding (in millions)

$45.00
1/1/08
500.0

Income Statement
Year
Period
Total Revenues
Cost of goods sold
SG&A
Operating profit - EBIT
Interest expense
Pretax income - EBT
Taxes
Net Income
Weighted Avg. Diluted Shares
Diluted EPS
Pro Forma EBITDA
EBIT
Depreciation & amortization
EBITDA
Income statement assumptions
Revenue growth (%)
Gross profit margin (%)
EBIT margin (%)
Effective tax rate (%)
D&A growth (%)
CapEx Growth (%)

6,000.0
2,600.0
1,600.0
1,800.0
150.0
1,650.0
594.0
1,056.0
500.0
$2.11

2008
1
6,600.0
2,640.0
1,914.0
2,046.0
145.0
1,901.0
760.4
1,140.6
500.0
$2.28

Projected Annual Forecast

2009
2010
2
3
7,326.0
8,205.1
2,783.9
3,035.9
2,271.1
2,625.6
2,271.1
2,543.6
111.3
105.0
2,159.8
2,438.6
863.9
975.4
1,295.9
1,463.2
500.0
500.0
$2.59
$2.93

1,800.0
350.0
2,150.0

2,046.0
385.0
2,431.0

2,271.1
427.4
2,698.4

2007

57%
30%
36%

Supplemental cash flow statement information

Capital expenditures

2,543.6
478.6
3,022.2

10.0%
60.0%
31.0%
40.0%
5.8%
10.0%

11.0%
62.0%
31.0%
40.0%
5.8%
11.0%

12.0%
63.0%
31.0%
40.0%
5.8%
12.0%

220.0

244.2

273.5

Balance Sheet
Cash and equivalents
Accounts receivable
Inventories
Prepaid expenses
Other current assets
PP&E
Goodwill
Intangibles
Other non-current assets
Total Assets
Accounts payable

12/31/07
1,500.0
1,500.0
1,000.0
50.0
200.0
3,000.0
2,000.0
800.0
150.0
10,200.0

12/31/08
972.1
1,650.0
1,015.4
55.0
220.0
2,860.0
2,000.0
825.0
150.0
9,747.5

12/31/09
2,164.4
1,831.5
1,070.7
61.1
244.2
2,701.9
2,000.0
850.0
150.0
11,073.7

12/31/10
3,591.0
2,051.3
1,167.7
68.4
273.5
2,521.7
2,000.0
875.0
150.0
12,698.6

1,100.0

1,116.9

1,177.8

1,284.4

Accrued expenses
Other current liabilities
Short Term Debt (Revolver)
Current portion of debt
Long term debt
Deferred income taxes
Other non-current liabilities
Total Liabilities

100.0
1,300.0
1,000.0
750.0
2,500.0
300.0
1,000.0
8,050.0

110.0
1,430.0
0.0
200.0
2,300.0
300.0
1,000.0
6,456.9

122.1
1,587.3
0.0
150.0
2,150.0
300.0
1,000.0
6,487.2

136.8
1,777.8
0.0
100.0
2,050.0
300.0
1,000.0
6,648.9

Retained earnings
Total Shareholders' Equity

2,150.0
2,150.0

3,290.6
3,290.6

4,586.5
4,586.5

6,049.6
6,049.6

10,200.0
0.0

9,747.5
0.0

11,073.7
0.0

12,698.6
0.0

Total Liabilities + Equity

Balance check
Balance Sheet assumptions
Working Capital Assets
Accounts receivable (% sales)
Inventories (% cogs)
Prepaid expenses (% sales)
Other current assets (% sales)
Working Capital Liabilities
Accounts payable (% cogs)
Accrued expenses (% sales)
Other current liabilities (% sales)

12/31/07

12/31/08

12/31/09

12/31/10

25%
38%
1%
3%

25%
38%
1%
3%

25%
38%
1%
3%

25%
38%
1%
3%

42%
2%
22%

42%
2%
22%

42%
2%
22%

42%
2%
22%

50.0
(25.0)
800.0

800.0
50.0
(25.0)
825.0

825.0
50.0
(25.0)
850.0

850.0
50.0
(25.0)
875.0

3,000.0
220.0
(360.0)
2,860.0

2,860.0
244.2
(402.4)
2,701.9

2,701.9
273.5
(453.6)
2,521.7

12/31/08
1,140.6
385.0

12/31/09
1,295.9
427.4

12/31/10
1,463.2
478.6

(150.0)
(15.4)
(5.0)
(20.0)
16.9

(181.5)
(55.3)
(6.1)
(24.2)
60.9

(219.8)
(96.9)
(7.3)
(29.3)
106.6

B.A.S.E Calculations
Intangible assets
Beginning Intangibles
Add: Acquisition of intangibles
Sub: Amortization
Ending Intangibles
PP&E
Beginning PP&E
Add: Capital expenditures
Sub: Depreciation
Ending PP&E

200.0
3,000.0

Cash Flow Statement

Net Income
Depreciation & amortization
Changes in working capital
Accounts receivable
Inventories
Prepaid expenses
Other current assets
Accounts payable

Accrued expenses
Other current liabilities
Deferred tax liabilities
Other non-current liabilities
Cash from operations

10.0
130.0
0.0
0.0
1,492.1

Capital Expenditures
Purchase of intangible assets
Other long-term assets
Cash from investing
Increases / (decreases) in debt
Cash from financing
Total increase/decrease of cash

12.1
157.3
0.0
0.0
1,686.4

14.7
190.5
0.0
0.0
1,900.2

(220.0)
(50.0)
0.0
(270.0)

(244.2)
(50.0)
0.0
(294.2)

(273.5)
(50.0)
0.0
(323.5)

(1,750.0)
(1,750.0)

(200.0)
(200.0)

(150.0)
(150.0)

(527.9)

1,192.2

1,426.7

12/31/08

12/31/09

12/31/10

1,500.0
1,222.1
(132.0)
(750.0)
0.0
1,840.1

972.1
1,392.2
(146.5)
(200.0)
0.0
2,017.8

2,164.4
1,576.7
(164.1)
(150.0)
0.0
3,426.9

Debt Schedule
Debt
Cash @ beginning of the year (end of last year)
Plus: Free cash flows prior to debt during year
Less: Minimum cash balance
Less: Mandatory Principal Repayments
Less: Optional Principal Repayments
Total cash available for debt paydown / (debt required)
Revolving Credit Facility
Beginning Balance
Mandatory Amortization (enter as -)
Optional Principal Draw (Payment)
Ending Balance
Interest
Long Term Debt
Beginning Balance
Mandatory Amortization (enter as -)
Optional Principal Payment
Ending Balance
Interest

Total Interest
Total Debt

% of sales

2.0%

1,000.0
5.0%

(750.0)
2,500.0
5.0%

1,000.0
0.0
(1,000.0)
0.0
25.0

0.0
0.0
0.0
0.0
0.0

0.0
0.0
0.0
0.0
0.0

2,500.0
(200.0)
0.0
2,300.0
120.0

2,300.0
(150.0)
0.0
2,150.0
111.3

2,150.0
(100.0)
0.0
2,050.0
105.0

145.0
2,300.0

111.3
2,150.0

105.0
2,050.0

Circuit Breaker
1
1= On
2= Off

ed Annual Forecast
2011
4
9,271.8
3,337.8
2,967.0
2,967.0
100.0
2,867.0
1,146.8
1,720.2
500.0
$3.44

2,967.0
540.9
3,507.8

2012
5
10,477.1
3,667.0
3,421.3
3,388.8
95.0
3,293.8
1,317.5
1,976.3
500.0
$3.95

3,388.8
611.2
4,000.0

13.0%
64.0%
32.0%
40.0%
5.8%
13.0%

13.0%
65.0%
32.3%
40.0%
5.8%
13.0%

309.1

349.2

12/31/11
5,342.4
2,317.9
1,283.8
77.3
309.1
2,314.9
2,000.0
900.0
150.0
14,695.4

12/31/12
7,373.0
2,619.3
1,410.4
87.3
349.2
2,078.0
2,000.0
925.0
150.0
16,992.2

1,412.2

1,551.4

154.5
2,008.9
0.0
100.0
1,950.0
300.0
1,000.0
6,925.6

174.6
2,270.0
0.0
100.0
1,850.0
300.0
1,000.0
7,246.1

7,769.8
7,769.8

9,746.1
9,746.1

14,695.4
0.0

16,992.2
0.0

12/31/11

12/31/12

25%
38%
1%
3%

25%
38%
1%
3%

42%
2%
22%

42%
2%
22%

875.0
50.0
(25.0)
900.0

900.0
50.0
(25.0)
925.0

2,521.7
309.1
(515.9)
2,314.9

2,314.9
349.2
(586.2)
2,078.0

12/31/11
1,720.2
540.9

12/31/12
1,976.3
611.2

(266.7)
(116.1)
(8.9)
(35.6)
127.7

(301.3)
(126.6)
(10.0)
(40.2)
139.3

17.8
231.1
0.0
0.0
2,210.4

20.1
261.2
0.0
0.0
2,529.8

(309.1)
(50.0)
0.0
(359.1)

(349.2)
(50.0)
0.0
(399.2)

(100.0)
(100.0)

(100.0)
(100.0)

1,751.4

2,030.6

12/31/11

12/31/12

3,591.0
1,851.4
(185.4)
(100.0)
0.0
5,157.0

5,342.4
2,130.6
(209.5)
(100.0)
0.0
7,163.5

0.0
0.0
0.0
0.0
0.0

0.0
0.0
0.0
0.0
0.0

2,050.0
(100.0)
0.0
1,950.0
100.0

1,950.0
(100.0)
0.0
1,850.0
95.0

100.0
1,950.0

95.0
1,850.0