Income Statement

1989

1990

1991E

Net Sales
Cost of Goods Sold
Beginning inventory
Purchase
Total
Ending Inventory
Total cost of goods sold

2,013.00 $

2,694.00 $ 3,383.00

$
$
$
$
$

239.00
1,524.00
1,763.00
326.00
1,437.00

326.00
2,042.00
2,368.00
418.00
1,950.00

Gross Profit

576.00 $

744.00 $

994.00

Operating expense
Depreciation
Interest expense
Net income before taxes

$
$
$
$

501.00
14.00
20.00
41.00

644.00
14.00
33.00
53.00

$
$
$
$

821.00
17.00
55.00
101.00

Provision for income taxes

Net Income

$
$

9.00 $
44.00 $

29.00
72.00

$
$
$
$
$

$
$
$
$

7.00 $
34.00 $

$
418.00
$ 2,475.00
$ 2,893.00
$
504.00
$ 2,389.00

Growth '89-'90 Growth '90-'91 Avg Growth

33.8%

25.6%

29.7%

36.4%
34.0%
34.3%
28.2%
35.7%

28.2%
21.2%
22.2%
20.6%
22.5%

32.3%
27.6%

29.2%

33.6%

28.5%
0.0%
65.0%
29.3%

27.5%
21.4%
66.7%
90.6%

28.0%
10.7%
65.8%
59.9%

28.6%
29.4%

222.2%
63.6%

125.4%
46.5%

24.4%
29.1%

Balance Sheet
ASSETS
Cash
Accounts receivable, net inventory
Inventory
Current assests
Property, net
Total assests
LIABILITIES
Notes payable, bank
Accounts payable
Accrued expenses
Long-term debt, current portion
Current liabilities
Long term debt
Total liabilities
EQUITY
Owner's Equity
Total liabilities and net worth

1989

1990

1991E

$
$
$
$
$
$

49.00 $
222.00 $
325.00 $
596.00 $
140.00 $
736.00 $

41.00
317.00
418.00
776.00
157.00
933.00

$
$
$
$
$
$
$

146.00 $
192.00 $
30.00 $
7.00 $
375.00 $
57.00 $
432.00 $

233.00 $
256.00 $
39.00 $
7.00 $
535.00 $
50.00 $
585.00 $

$
$

304.00
736.00

348.00
933.00

$
$

$
53.00
$ 389.00
$ 504.00
$ 946.00
$ 193.00
$ 1,139.00
550.00
70.00
49.00
7.00
676.00
43.00
719.00

$ 420.00
$ 1,139.00

Growth '89-'90 Growth '90-'91 Avg Growth

-16%
43%
29%

29%
23%
21%

6%
33%
25%

12%

23%

18%

60%
33%
30%
0%

136%
-73%
26%
0%

98%
-20%
28%
0%

-12%

-14%

-13%

14%

21%

18%

Data taken from:

http://environment.yale.edu/files/biblio/YaleFES-00000126.pdf
http://large.stanford.edu/publications/coal/references/docs/fplrp595.pdf

Several graphs were used, but the Webpages did not allow to copy them.
The information, however, was taken from these websites and the graphs served as visual support to the understanding of th

al support to the understanding of the Industry

Ben Walter Case drivers

Scenario 1
Pay down debt
Use credit
Rely on own equity financing
Minimum of 14% rate of return - after tax cashflows
Raise prices 3%?
Hire 'higher-end' building contractors
Cut inventory
Limit growth to 5%
Plant, equipment and depreciation grow in proportion to sales
Op expenses include salary for Butler (85,000 - 95,000 - 103,00)
Assumption first 5 years, then on a perpetuity

Scenario 2

Plant, equipment and depreciation grow in proportion to sales

Op expenses include salary for Butler (85,000 - 95,000 - 103,00)

Assumptions - Projected Percentages

1989

Sales Growth (Prices and Market)

Inventory Percentage
Purchase
Operating Expense
Interest expense Growth
Tx Percentage

1990

16.98%

Income Statement - Projected

33.83%
36.40%
33.99%
28.54%
3.99%
28.71%

1989

1990

Net Sales
Cost of Goods Sold
Beginning inventory
Purchase
Total
Ending Inventory
Total cost of goods sold

$ 2,013.00 $ 2,694.00
$
239.00 $
326.00
$ 1,524.00 $ 2,042.00
$ 1,763.00 $ 2,368.00
$
326.00 $
418.00
$ 1,437.00 $ 1,950.00

Gross Profit

576.00 $

Operating expense
Depreciation
Interest expense
Net income before taxes
Percentage of TX
Provision for income taxes
Net Income

$
$
$
$

$
$
$
$

501.00
14.00
20.00
41.00
16.98%
$
7.00
$
34.00

$
$

744.00
644.00
14.00
33.00
53.00
28.71%
9.00
44.00

1991E

1992

1993

1994

1995

1996

25.58%
28.22%
21.20%
27.48%
5.12%
30.00%

8.00%
10.00%
7.98%
13.74%
6.70%
30.00%

8.00%
10.00%
4.98%
13.74%
8.64%
30.00%

8.00%
10.00%
1.87%
13.74%
11.15%
30.00%

8.00%
10.00%
1.17%
13.74%
14.38%
30.00%

8.00%
10.00%
0.44%
13.74%
18.55%
30.00%

1991E

1992

1993

1994

1995

1996

$ 3,383.00 $ 3,653.64 $ 3,945.93 $ 4,261.61 $ 4,602.53 $ 4,970.74

$
418.00
$ 2,475.00
$ 2,893.00
$
504.00
$ 2,389.00

$
459.80 $
505.78
$ 2,672.40 $ 2,805.38
$ 3,132.20 $ 3,311.16
$
554.40 $
609.84
$ 2,577.80 $ 2,701.32

$
556.36 $
611.99
$ 2,857.89 $ 2,891.26
$ 3,414.24 $ 3,503.25
$
670.82 $
737.91
$ 2,743.42 $ 2,765.34

$
673.19
$ 2,903.95
$ 3,577.15
$
811.70
$ 2,765.45

994.00 $ 1,075.84 $ 1,244.61 $ 1,518.19 $ 1,837.19 $ 2,205.29

$
$
$
$

821.00
17.00
55.00
101.00
30.00%
29.00
72.00

$
$

$
$
$
$
$
$

933.82
58.68
83.33
30.00%
25.00
58.33

$ 1,062.15 $ 1,208.12 $ 1,374.14 $ 1,562.97

$
$
$
$
$
63.76 $
70.86 $
81.05 $
96.09
$
118.70 $
239.21 $
382.00 $
546.22
30.00%
30.00%
30.00%
30.00%
$
35.61 $
71.76 $
114.60 $
163.87
$
83.09 $
167.44 $
267.40 $
382.36

Assumptions - Projected Percentages

1989

Sales Increase
Operating Expense Inc
Depreciation Inc
Tx Percentage

Income Statement - Projected

1989

1990

1991E

0.00%
0.00%
0.00%
17%

33.83%
28.54%
0.00%
29%

1990

1991E

Net Sales
Cost of Goods Sold
Beginning inventory
Purchase
Total

2,013.00 $ 2,694.00 $

3,383.00

$
$
$

239.00 $ 326.00 $
1,524.00 $ 2,042.00 $
1,763.00 $ 2,368.00 $

418.00
2,475.00
2,893.00

Ending Inventory
Total cost of goods sold

$
$

326.00 $ 418.00 $
1,437.00 $ 1,950.00 $

504.00
2,389.00

Gross Profit

576.00 $

744.00 $

994.00

Operating expense
Depreciation
Interest expense
Net income before taxes
Percent of TX
Provision for income taxes
Net Income

$
$
$
$

501.00
14.00
20.00
41.00
17%
7.00
34.00

644.00
14.00
33.00
53.00
17%
9.00
44.00

821.00
17.00
55.00
101.00
29%
29.00
72.00

$
$

$
$
$
$
$
$

$
$
$
$
$
$

1992

1993

1994

1995

1996

1996

25.58%
27.48%
25.58%
30%

25.58%
27.48%
25.58%
30%

25.58%
27.48%
25.58%
30%

25.58%
27.48%
25.58%
30%

25.58%
27.48%
25.58%
30%

25.58%
27.48%
25.58%
30%

1992

1993

1994

1995

1996

1996

4,387.84 $

5,691.15 $

7,381.58 $ 9,574.11 $ 12,417.88 $

16,106.33

$
$
$

553.06 $
3,158.03 $
3,711.09 $

731.76 $
4,029.55 $
4,761.31 $

968.20 $ 1,281.04 $ 1,694.96 $

5,141.59 $ 6,560.52 $ 8,371.04 $
6,109.80 $ 7,841.57 $ 10,066.00 $

2,242.63
10,681.20
12,923.83

$
$

626.96 $
3,084.13 $

779.93 $
3,981.39 $

970.21 $ 1,206.92 $
5,139.59 $ 6,634.65 $

1,501.37 $
8,564.63 $

1,867.67
11,056.16

1,303.72 $

1,709.76 $

2,241.99 $ 2,939.46 $

3,853.26 $

5,050.18

$
$
$
$

1,050.99
22.05
91.21
139.47
30%
41.84
97.63

1,345.41
28.60
151.25
184.50
30%
55.35
129.15

1,722.31
37.09
250.83
231.76
30%
69.53
162.23

2,822.44
62.40
689.80
278.61
30%
83.58
195.03

3,613.11
80.94
1,143.91
212.21
30%
63.66
148.55

$
$

$
$
$
$
$
$

$
$
$
$
$
$

$ 2,204.80 $
$
48.11 $
$
415.96 $
$
270.59 $
30%
$
81.18 $
$
189.42 $

$
$
$
$
$
$

Valuation
1
Revenue (Sales)

1999
1
1239.5

2000
2
1161.0

torrington
2001
3
1004.3

Operating Income (EBIT)

Less: Taxes
NOPAT
Add Depreciation
Capex
D NWC
FCF=NOPAT+D- DNWC-Capex
PV (FCF)
Terminal Value

145.7

172.6

78.0

145.7
75.0
84.0
0.0
304.7
281.95
12364.01

172.6
77.0
85.0
0.0
334.6
334.60

78
79.0
45.0
0.0
202
202.00

NPV

2391.65

-286.49

-160.04

IRR
WACC
Pv of Terminal Value
Pv of FCF
Total PV of FCF
Enterprise Value
Net Debt
Net Cash
Fair Value of Equity

#NUM!
8.07%
$6,645.35
-260.89
1685.85
$8,331.20

$8,331.20 In changing the Firms management style, the value wo

2002
4
1204.0

2003E
5
1282.0

2004E
6
1365.3

2005E
7
1454.1

2006E
8
1548.6

85.2

90.7

96.6

102.9

109.5

85.2
80.0
41.0
0.0
206.2
206.20

90.7
84.2
175.0
0.0
349.9
349.90

96.6
90.0
130.0
0.0
316.6
316.60

102.9
96.0
140.0
0.0
338.9
338.90

109.5
102.0
150.0
0.0
361.5
361.50

-151.17

-237.37

-198.74

-196.85

-194.30

agement style, the value would round up to be $3.9M.

Valuation - Scenario 2
Revenue (Sales)
COGS
Gross profit
Less: Op Expenses (other)
Less:Depreciation
Operating Income (EBIT)
Less: Taxes
NOPAT
Add Depreciation
Capex
D NWC
FCF=NOPAT+D- DNWC-Capex
PV (FCF)
NPV
IRR
WACC
Pv of Terminal Value
PV of TV Total
Pv of FCF
Total PV of FCF
Enterprise Value
Net Debt
Net Cash
Fair Value of Equity

1
2013
-1437
576

2
2694
-1950
744

-501
-644
-14
-14
61
86
-7
-9
54
77
14
14
0
-31
-221
-241
-153
-181
-141.57
-154.98
719.05
34%
8.07%
13,795.21
$7,414.59
141.57
154.98
-719.05
13,076.17
719
53
12,304.17 In keeping the company growth rates, the Firm's v

3
3383
-2389
994

4
4387.84
-3084.13
1303.71

5
5691.15
-3981.39
1709.76

6
7381.58
-5139.59
2241.99

7
9574.11
-6634.65
2939.46

-821
-17
156
-29
127
17
-53
-270
-179
-141.82

-1050.99
-22.05
230.67
-41.84
188.83
22.05
-68.9
0
141.98
104.09

-1345.41
-28.6
335.75
-55.35
280.4
28.6
-89.57
0
219.43
148.86

-1722.31
-37.09
482.59
-69.53
413.06
37.09
-116.44
0
333.709
209.48

-2204.8
-48.11
686.55
-81.18
605.37
48.11
-151.37
0
502.1067
291.65

141.82

-104.09

-148.86

-209.48

-291.65

ng the company growth rates, the Firm's value would be 12.3M.

8
12417.88
-8564.63
3853.25
-2822.44
-62.4
968.41
-83.58
884.83
62.4
-196.79
0
750.44471
403.35

-403.35