Assumptions for Forecasting Model

Income Statement
Sales
Cost of Sales
Selling, General & Admn. Expenses
Depreciation
Other Net (Income)/ Expenses
Interest Income
Interest Expense
Income Taxes
Balance Sheet
Assets
Cash and Marketable Securities
Accounts Receivable
Inventories
Other Current Assets
Property, Plant and Equipment, Gross
Accumulated Depreciation
Property, Plant and Equipment, Net
Other Non-Current Assets
Liabilities and Shareholders' Equity
Accounts Payable
Short-Term Debt
Other Current Liabilities
Long-Term Debt
Deferred Income Taxes
Other Non-Current Liabilities
Paid-In Capital
Retained Earnings
Other Assumptions
Dividend payout ratio
Interest on short-term debt
Interest on long-term debt
Interest on cash & marketable securities
Number of shares outstanding
P/E ratio

Assumption
Will grow at 5%, based on input from management
52% of sales, little better than historical average
29% of sales, based on expected worsening
8% of Gross PP&E, based on analysis of depreciation schedules
-0.7% of sales, based on historical average
Calculate based on average balance and interest rate specified later
For STD calculate based on average balance and interest rate specified later
For LTD interest expense will remain unchanged at $13.5 million
35% of pre-tax income

2.1%, of sales based on historical average

8.4% of sales, based on historical average
8.8% of sales, based on historical average
7.6% of sales, based on historical average
Will grow at 11% per year, based on discussion with management
Calculated from other items
Calculated from other items
Will grow at 10% per year, based on discussion with management

6.1% of sales, same as historical average

Hold level constant at year-end 2002 level
8.3% of sales, same as 2002
Will remain unchanged at 2002 level
1.4% of sales, based on historical average
7.6% of sales, based on historical average
Will remain unchanged at 2002 level
Calculated from other items

40%, based on discussion with management

7%, based on economic forecast
Rates embedded in existing debt, annual expense $13.5 million
6%, based on economic forecast
Will remain unchanged
Will decline to 16 in 2003 and then improve to 18, 20, and 22 in the following years

Income Statement and Balance Sheet for Vitex Corp.

Income Statement ($ Million)
Forecast Period
2004
$1,471.2
$765.0
$706.2

2002
$1,334.4
$667.0
$667.4

2003
$1,401.1
$728.6
$672.5

Selling, General & Admn. Expenses

Depreciation
Other Net (Income)/Expenses
EBIT

$373.3
$75.2
($8.2)
$227.1

$406.3
$81.1
($9.8)
$194.9

$426.6
$90.0
($10.3)
$199.8

Interest (Income)
Interest Expense
Pre-Tax Income

($2.0)
$23.7
$205.4

($1.7)
$21.2
$175.5

($1.8)
$21.2
$180.4

Income Taxes
Net Income

$72.6
$132.8

$61.4
$114.0

$63.1
$117.3

$40.1
$92.7

$45.6
$68.4

$46.9
$70.4

Assets
Cash and Marketable Securities
Accounts Receivable
Inventories
Other Current Assets
Total Current Assets

$28.4
$120.1
$116.8
$97.5
$362.8

$29.4
$117.7
$123.3
$106.5
$376.9

$30.9
$123.6
$129.5
$111.8
$395.7

Property, Plant and Equipment, Gross

Accumulated Depreciation
Property, Plant and Equipment, Net

$913.1
$427.9
$485.2

$1,013.5
$509.0
$504.6

$1,125.0
$599.0
$526.0

Other Non-Current Assets

Total Non-Current Assets

$456.3
$941.5

$501.9
$1,006.5

$552.1
$1,078.2

$1,304.3

$1,383.4

$1,473.9

Liabilities and Shareholders' Equity

Accounts Payable
Short-Term Debt
Other Current Liabilities
Total Current Liabilities

$80.5
$110.3
$111.3
$302.1

$85.5
$110.3
$116.3
$312.1

$89.7
$110.3
$122.1
$322.1

Long-Term Debt
Deferred Income Taxes
Other Non-Current Liabilities
Total Liabilities

$218.1
$12.7
$94.5
$627.4

$218.1
$19.6
$106.5
$656.3

$218.1
$20.6
$111.8
$672.7

Sales
Cost of Sales
Gross Operating Income

Dividends
Addition to Retained Earnings

Balance Sheet ($ Million)

Total Assets

Paid-In Capital
Retained Earnings
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity

$44.8
$632.1
$676.9

$44.8
$700.5
$745.3

$44.8
$770.9
$815.7

$1,304.3

$1,401.6

$1,488.3

Discretionary Funding Need (DFN)

Other Data
Stock price (year-end)
Average number of shares outstanding (millions)

$51.40
46.2

($18.2)

($14.4)

$39.50
46.2

$45.69
46.2

Financial Indicators
Valuation Ratios
EPS
Dividend per Share
P/E Ratio
P/B (price to book) Ratio
Dividend Payout Ratio

$2.87
$0.87
17.9
3.5
30%

$2.47
$0.99
16.0
2.4
40%

$2.54
$1.02
18.0
2.6
40%

Profitability Ratios
Return on Equity (ROE)
Return on Sales (ROS)

21.2%
17.0%

16.0%
13.9%

15.0%
13.6%

Growth Rates
EPS Growth Rate
Dividend Growth Rate
Sales Growth Rate
EBIT Growth Rate
Net Income Growth Rate

1.4%
2.1%
2.6%
3.7%
0.1%

-14.1%
13.8%
5.0%
-14.2%
-14.1%

2.8%
2.8%
5.0%
2.5%
2.8%

Liquidity Ratios
Current Ratio
Quick Ratio

1.20
0.49

1.21
0.47

1.23
0.48

Operating Efficiency Ratios

Inventory Turnover Ratio
Receivable Turnover Ratio

5.7
11.1

5.9
11.9

5.9
11.9

32.7%
21.7%
48.5%

30.6%
20.3%
44.1%

28.7%
19.1%
40.3%

9.6
12.8

9.2
13.0

9.4
13.7

Leverage Ratios
Total Debt to Total Capitalization
Long-Term Debt to Total Capitalization
Total Debt to Equity
Coverage Ratios
Times Interest Earned (TIE)
Cash Coverage Ratio

Forecast Period

Forecasting
Factor
5.0%
52.0%

2005
$1,544.7
$803.3
$741.5

2006
$1,622.0
$843.4
$778.5

$448.0
$99.9
($10.8)
$204.4

$470.4
$110.9
($11.4)
$208.6

29.0%
8.0%
-0.7%

($1.9)
$21.2
$185.1

($2.0)
$21.2
$189.4

6.0%
7.0%

$64.8
$120.3

$66.3
$123.1

35.0%

$48.1
$72.2

$49.2
$73.9

40.0%

$32.4
$129.8
$135.9
$117.4
$415.5

$34.1
$136.2
$142.7
$123.3
$436.3

2.1%
8.4%
8.8%
7.6%

$1,248.8
$698.9
$549.9

$1,386.2
$809.8
$576.4

11.0%

$607.3
$1,157.2

$668.1
$1,244.4

10.0%

$1,572.8

$1,680.7

$94.2
$110.3
$128.2
$332.7

$98.9
$110.3
$134.6
$343.9

$218.1
$21.6
$117.4
$689.9

$218.1
$22.7
$123.3
$707.9

6.1%
8.3%

1.4%
7.6%

$44.8
$843.1
$887.9

$44.8
$916.9
$961.7

$1,577.7

$1,669.7

($5.0)

$52.09
46.2

$11.1

$58.64
46.2

$2.60
$1.04
20.0
2.7
40%

$2.67
$1.07
22.0
2.8
40%

14.1%
13.2%

13.3%
12.9%

2.6%
2.6%
5.0%
2.3%
2.6%

2.3%
2.3%
5.0%
2.1%
2.3%

1.25
0.49

1.27
0.50

5.9
11.9

5.9
11.9

27.0%
17.9%
37.0%

25.5%
16.9%
34.1%

9.6
14.3

9.8
15.1

2002
Other Data
Stock Price (year-end)
Average Number of Shares Outstanding (millions)

$51.40
46.2

2003
$39.50
46.2

Forecast Period
2004
$45.69
46.2

Financial Indicators
Valuation Ratios
EPS
Dividend per Share
P/E Ratio
P/B (price to book) Ratio
Dividend Payout Ratio

$2.87
$0.87
17.9
3.5
30%

$2.47
$0.99
16.0
2.4
40%

$2.54
$1.02
18.0
2.6
40%

Profitability Ratios
Return on Equity (ROE)
Return on Sales (ROS)

21.2%
17.0%

16.0%
13.9%

15.0%
13.6%

Growth Rates
EPS Growth Rate
Dividend Growth Rate
Sales Growth Rate
EBIT Growth Rate
Net Income Growth Rate

1.4%
2.1%
2.6%
3.7%
0.1%

-14.1%
13.8%
5.0%
-14.2%
-14.1%

2.8%
2.8%
5.0%
2.5%
2.8%

Liquidity Ratios
Current Ratio
Quick Ratio

1.20
0.49

1.21
0.47

1.23
0.48

Operating Efficiency Ratios

Inventory Turnover Ratio
Receivable Turnover Ratio

5.7
11.1

5.9
11.9

5.9
11.9

32.7%
21.7%
48.5%

30.6%
20.3%
44.1%

28.7%
19.1%
40.3%

9.6
12.8

9.2
13.0

9.4
13.7

Leverage Ratios
Total Debt to Total Capitalization
Long-Term Debt to Total Capitalization
Total Debt to Equity
Coverage Ratios
Times Interest Earned (TIE)
Cash Coverage Ratio

Forecast Period
2005
$52.09
46.2

2006
$58.64
46.2

$2.60
$1.04
20.0
2.7
40%

$2.67
$1.07
22.0
2.8
40%

14.1%
13.2%

13.3%
12.9%

2.6%
2.6%
5.0%
2.3%
2.6%

2.3%
2.3%
5.0%
2.1%
2.3%

1.25
0.49

1.27
0.50

5.9
11.9

5.9
11.9

27.0%
17.9%
37.0%

25.5%
16.9%
34.1%

9.6
14.3

9.8
15.1

Statement of Cash Flows for Vitex Corp.

Millions of Dollars
Forecast Period
2004

2002

2003

$132.8
$75.2
($12.8)
($1.9)
$6.2
$8.7
($60.8)
($2.3)
($20.5)
$124.6

$114.0
$81.1
$2.4
($6.5)
($9.0)
$5.0
$5.0
$6.9
$12.0
$210.9

$117.3
$90.0
($5.9)
($6.2)
($5.3)
$4.3
$5.8
$1.0
$5.3
$206.3

($92.3)
($49.3)
($141.6)

($100.4)
($45.6)
($146.1)

($111.5)
($50.2)
($161.7)

Cash Flows from Financing

From Issuance/(Repayment) of Short-Term Debt
From Issuance/(Repayment) of Long-Term Debt
From Sale/(Repurchase) of Equity
Cash Dividends Paid to Shareholders
Total Cash Flows from Financing

$30.5
$16.3
$6.6
($40.1)
$13.3

$0.0
$0.0
$0.0
($45.6)
($45.6)

$0.0
$0.0
$0.0
($46.9)
($46.9)

Net Change in Cash & Marketable Securities

($3.7)

$19.2

($2.3)

Beginning Cash & Marketable Securities

Ending Cash & Marketable Securities
Net Change in Cash & Marketable Securities

$32.1
$28.4
($3.7)

$28.4
$29.4
$1.0

$29.4
$30.9
$1.5

Cash Flows from Operations

Net Income
Depreciation Expense
Decrease/(Increase) in Accounts Receivable
Decrease/(Increase) in Inventories
Decrease/(Increase) in Other Current Assets
Increase/(Decrease) in Accounts Payable
Increase/(Decrease) in Other Current Liabilities
Increase/(Decrease) in Deferred Income Taxes
Increase/(Decrease) in Other Non-Current Liabilities
Total Cash Flows from Operations
Cash Flows from Investing
(Additions to) Property, Plant & Equipment
(Investment) in Other Non-Current Assets
Total Cash Flows from Investing

Forecast Period
2005

2006

$120.3
$99.9
($6.2)
($6.5)
($5.6)
$4.5
$6.1
$1.0
$5.6
$219.2

$123.1
$110.9
($6.5)
($6.8)
($5.9)
$4.7
$6.4
$1.1
$5.9
$232.9

($123.8)
($55.2)
($179.0)

($137.4)
($60.7)
($198.1)

$0.0
$0.0
$0.0
($48.1)
($48.1)

$0.0
$0.0
$0.0
($49.2)
($49.2)

($7.9)

($14.4)

$30.9
$32.4
$1.5

$32.4
$34.1
$1.6