Revenues

COGS
Gross Margin
SG&A Non Adv
SG&A Adv
Other Expenses
Operating Margin
Other Income
PBT
Income Tax
PAT
Profit Percentage

Income Statement Forecast for 2006-2010 (all figures in $)

(When Mountain Man produces only the Lager Beer)
2005
2006
2007
50440000
49,431,200
48,442,576
34803600
34,107,528
33,425,377
15636400
15323672
15017198.56
8,221,720
8,221,720
8,221,720
1,361,880
1,334,642
1,307,950
1412320
1384073.6
1356392.128
4,640,480
4,383,236
4,131,137
151,320
148,294
145,328
4,791,800
4,531,530
4,276,465
1677130
1586035.36
1496762.613
3,114,670
2,945,494
2,779,702
6.18
5.96
5.74
(When Mountain Man produces only the Light Beer)

Selling Price/lager beer

Base Market Share
Market Increase
Total Market Revenue of Light
Mkt Share Increase
Sales of Light Beer
Revenues Total (Light)

Revenues
COGS
Gross Margin
SG&A Non Adv
SG&A Adv
Other Expenses
Operating Margin
PBT
Income Tax
PAT
Profit Margin

97

18744303.00

0
0

97
46860.76
4.00%
19494075.12
0.25%

97
4.00%
20273838.12
0.50%

48,735
4,727,313

101,369
9,832,811

Income Statement Forecast for 2006-2010 (all figures in $)

2005
2006
2007
0
4,727,313
9,832,811
0
3,488,757
7,256,615
0
1,238,556
2,576,197
0
900,000
900,000
0
0
0
0
0
0

750,000
132,365
-543,809
-529,627
0
-529,627
-11.20

265,486
275,319
1,135,392
1,164,890
407711.64
757,179
7.70

Income Statement Forecast for 2006-2010 (all figures in $) after considering cannibalisation of lager in first
After considering cannibalisation of lager in first year (12.5%)
Revenue from Light
4727313.22
9832811.49
Revenue from Lager without canb
50440000.00
49431200.00
48442576.00

Cannibalization
Revenue from Lager WITH canb

50440000.00

12.50%
47979613.22

10.00%
53431129.89

2005

2006

2007

50,440,000

47,979,613

53,431,130

COGS
Gross Margin
SG&A Non Adv
SG&A Adv
Other Expenses
Operating Margin
Other Income
PBT
Income Tax
PAT
Profit Percentage

34,803,600
15,636,400
8,221,720
1,361,880
1412320
4,640,480
151,320
4,791,800
1677130
3,114,670
6.18

33,105,933
14,873,680
9,121,720
1,295,450
1343429.17
3,113,081
143,939
3,257,020
1139957.073
2,117,063
4.41

36,867,480
16,563,650
9,121,720
1,442,641
1496071.637
4,503,218
160,293
4,663,512
1632229.029
3,031,282
5.67

Total Revenue
Total PAT (Light +Lager)
Total Profit Percentage

50,440,000
3,114,670
6.18

47,979,613
2,117,063
4.41

53,431,130
3,031,282
5.67

PAT(Lager only)
PAT(Light only)
PAT(Combination)

2005
3,114,670
0
3,114,670

2006
2,945,494
-529,627
2,117,063

2007
2,779,702
757,179
3,031,282

Total Revenues

7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
2004
-1,000,000

2005

2006

2007

2008

2009

10 (all figures in $)
the Lager Beer)
2008
47,473,724
32,756,870
14716854.59
8,221,720
1,281,791
1329264.285
3,884,080
142,421
4,026,501
1409275.321
2,617,226
5.51

2009
46,524,250
32,101,732
14422517.5
8,221,720
1,256,155
1302679
3,641,964
139,573
3,781,536
1323537.774
2,457,999
5.28

2010
45,593,765
31,459,698
14134067.15
8,221,720
1,231,032
1276625.42
3,404,690
136,781
3,541,471
1239514.979
2,301,956
5.05

the Light Beer)

97

97

97

4.00%
21084791.65
0.75%

4.00%
21928183.32
1.00%

4.00%
22805310.65
1.25%

158,136
15,339,186

219,282
21,270,338

285,066
27,651,439

10 (all figures in $)
2008
15,339,186
11,320,319
4,018,867
900,000

2009
21,270,338
15,697,509
5,572,829
900,000

2010
27,651,439
20,406,762
7,244,677
900,000

414,158
429,497
2,275,211
2,321,229
812430.17
1,508,799
9.84

574,299
595,569
3,502,960
3,566,771
1248369.83
2,318,401
10.90

746,589
774,240
4,823,848
4,906,802
1717380.78
3,189,421
11.53

ering cannibalisation of lager in first year (12.5%)

in first year (12.5%)
15339185.93
21270337.82
27651439.16
47473724.48
46524249.99
45593764.99

8.00%
59015012.45

6.00%
65003132.81

5.00%
70965515.90

2008

2009

2010

59,015,012

65,003,133

70,965,516

40,720,359
18,294,654
9,121,720
1,593,405
1652420.349
5,927,108
177,045
6,104,153
2136453.624
3,967,700
6.72

44,852,162
20,150,971
9,121,720
1,755,085
1820087.719
7,454,079
195,009
7,649,088
2677180.892
4,971,907
7.65

48,966,206
21,999,310
9,121,720
1,916,069
1987034.445
8,974,487
212,897
9,187,383
3215584.086
5,971,799
8.42

59,015,012
3,967,700
6.72

65,003,133
4,971,907
7.65

70,965,516
5,971,799
8.42

2008
2,617,226
1,508,799
3,967,700

2009
2,457,999
2,318,401
4,971,907

2010
2,301,956
3,189,421
5,971,799

PAT(Lager only)
PAT(Light only)
PAT(Combination)

2010

2011

References

Exhibit 1 Page 8. 2006 onwards 2% decrease in revenue per year

Assuming 69% of revenue is COGS (66.93/97=0.69) pg8, Exhibit 1
Gross Margin = Revenues - COGS
Given non adv SG&A remain constant
Assuming 2.7% of revenue - pg8, Exhibit 1
Assuming 2.8% of revenue - pg8, Exhibit 1
Operating Margin = Gross Margin - SG&A - Other Expenses
Assuming 0.3% of revenue - pg8, Exhibit 1
PBT = Operating Margin + Other Income
Assuming 35% of PBT (2005 Data of Exhibit1 page8)
PAT = PBT - Income Tax

(PAT*100)/Revenue

Revenues = 50440000 (Exhibit 1), Volume = 520,000 (pg2.para3), SP = Revenue/Volume

18744303 Exhibit 5A Page 10 and Base mkt share = .25% (Page7, para2 line6)
Page7 para2 line5
Page7 para2 line6. Also Increasing @ 0.25% every year
4% . 2006 onwards mkt grows at 4%. Product growth increases at .25%.
Revenue= Sales Volume * SP

As Calculated above in RevenuesTotal

Assuming 73.8% COGS (as % revenue): (66.93+4.69)/97 = 0.738
Gross Margin = Revenues - COGS
Fixed Non SG&A of 900000 - pg6 para4
Adv. Expense of 2.7% of revenue after first year. 1st year = 750000 - pg6
para 4
Exhibit1 Page8 (2.8% of Revenue)
Operating Margin = Gross Margin - SG&A - Other Expenses
PBT = Operating Margin +Other Income
Assuming 35% of PBT
PAT = PBT - Income Tax

(PAT*100)/Revenue

From Revenue of Only Ligh Case Above

From Revenue of Only Lager Case Above

Page6 para3 line5 (5+20)/2=12.5%. Then assuming lesser cannib

in further years
Rev from Lager * (100 - Canb. Rate)

Assuming 2% decrease in revenue per year; 2006 cannibalisatino of

12.5%. Cannibalization Rate reduced each year.
Assuming 69% of revenue is COGS (66.93/97=0.69) pg8, Exhibit 1
Gross Margin = Revenues - COGS
Given non adv SG&A remain constant
Assuming 2.7% of revenue - pg8, Exhibit 1
Assuming 2.8% of revenue - pg8, Exhibit 1
Operating Margin = Gross Margin - SG&A - Other Expenses
Assuming 0.3% of revenue - pg8, Exhibit 1
PBT = Operating Margin +Other Income
Assuming 35% of PBT
PAT = PBT - Income Tax

Fixed cost
Advertising
SG&A
Total fixed cost
Variable cost/barrel
Variable cost
Additional VC
Total variable cost/barrel
price/barrel
Breakeven (no. of light barrels)

Breakeven analysis (No Cannibalization)

$
References
750000 Line 8, Para 4, Page 6,
900000 Line 9, para 4, page 6
1650000

66.93 Line 12, para 4, page 6

4.699 Line 12, para 4, page 6
71.629
Net Revenue (Exhibit 1)/ 520000 (line2, para3,
97 page2)
65034.88 TFC/(SP-TVC)

Demand
No of barrels of Light

=SUM(PAT!C24:D24) Sum of sales volumes of

150,104 2005 & 2006

As Breakeven barrels is less than the demand, it can be conculded that the Light beer will be able to recover its fixed costs

Assumption: price is same for Light and lager (page 6, para 4, line 11
)

ble to recover its fixed costs within two years which was consistent with the company's expectations

Cash flow
12%
-1,650,000
3,114,670
2,117,063
3,031,282
3,967,700
4,971,907
5,971,799

Year
Annual Discount rate
Initial Investment
Cash flow from Year 1
Cash flow from Year 2
Cash flow from Year 3
Cash flow from Year 4
Cash flow from Year 5
Cash flow from Year 6

$13,344,509.94 =A4+NPV(A3,A5,A6,A7,A8,A9,A10)

Formula for NPV

Reference
Footnote 6, Page 7
Line 8 &9, Para 4, Page 6
PAT from Combination 2005
PAT from Combination 2006
PAT from Combination 2007
PAT from Combination 2008
PAT from Combination 2009
PAT from Combination 2010

Rate(r )
Year(Y)
0
1
2
3
4
5
6

0.12
Discount factor (D)
1
0.892857143
0.797193878
0.711780248
0.635518078
0.567426856
0.506631121

NPV

Footnote 6, Page 7
PV = D*Y
-1650000
2780955.357 D = 1 / (1.12)^Y
1687709.771
2157606.997
2521544.817
2821193.767
3025499.231

13344509.94

P=D*Y