dps valuation

Projections and ValuationEstimated price for most recent fiscal year 12/31/2012 = 45.44$

Estimated price for target date 4/8/2014 = 48.48$ Most Recent Projected

12/31/12 12/31/13

Income Statement ($ Thousands)Sales 5,995,000$ 6,010,587$

Costs of goods sold (COGS) 2,449,000 2,455,367

Sales, general and administrative expense (SGA) 2,270,790 2,344,129

Depreciation 175,000 189,333

Operating profit 1,100,210$ 1,021,757$

Interest expense 8,210 181,525

Interest income (123,000) 0

Nonoperating income (Expense) 9,000 9,023

Earnings before taxes (EBT) 978,000$ 849,256$

Tax expense 349,000 301,486

Net income before extraordinary items 629,000$ 547,770$

After-tax extraordinary income (Expense) 0 0

Net income (NI) 629,000$ 547,770$

Dividends-- preferred 0$ 0$

Dividends-- common 284,000$ 306,720$

Additions to RE 345,000$ 241,050$

Balance Sheets ($ Thousands) 12/31/12 12/31/13

Assets

Cash 366,000$ 180,318$

Inventory 197,000 192,339

Accounts receivable 602,000 601,059

Other short-term operating assets 170,000 170,442

Short-term investments 0 501,714

Total current assets 1,335,000$ 1,645,871$

Net plant, property, & equipment (PPE) 1,202,000 1,262,223

Other long-term operating assets 6,377,000 6,287,829

Long-term investments 14,000 13,824

Total Assets 8,928,000$ 9,209,747$

Liabilities and Equity

Accounts payable (AP) 283,000$ 283,736$

Accruals 180,000 180,468

Other operating current liabilities 519,000 520,349

All short-term debt 250,000 0

Total current liabilities 1,232,000$ 984,553$

Long-term debt 2,686,000 3,119,192

Deferred taxes 630,000 661,565

Preferred stock 0 0

Other long-term liabilities 2,100,000 1,923,388

Total liabilities 6,648,000$ 6,688,697$

Par plus PIC Less treasury (and other adjustments) (4,000) (4,000)

Retained earnings (RE) 2,284,000 2,525,050

Total common equity 2,280,000$ 2,521,050$

Total liabilities and equity 8,928,000$ 9,209,747$

Info for making the sheets balanceSpecified assets 8,708,034

Specified liabilities 9,209,747

Net required financing (501,714)

Current debt 0

Short-term investments 501,714

Balance check: TA-TL Balance

Valuation

Calculating Projected FCFMarginal tax rate 35.7% 35.5%

Reported income tax expense 349,000 301,486

Taxes reported but not paid 44,000 31,565

Actual taxes paid 305,000 269,921

Plus tax saved due to net interest expenses 46,823 64,441

Minus tax paid on non-operating income 3,212 3,203

Tax on operating income 348,611 331,159

Net operating profit after taxes (NOPAT) 751,600 690,598

NOPAT adjusted for extraordinary income 751,600 690,598

Operating current assets 1,335,000 1,144,157

Operating current liabilities 982,000 984,553

Net operating working capital 353,000 159,604

Operating long term capital 7,579,000 7,550,052

Operating capital (adjusted for any special asset impairment of accounting changes)7,932,000 7,709,656

Investment in operating capital 125,000 (222,344)

Free cash flow (including extraordinary income) 626,600 912,942

Calculating Projected ROICROIC (NOPAT/ Beginning capital) 9.6% 8.7%

Projected Growth RatesGrowth in Sales 0.3%

Growth in NOPAT -8.1%

Growth in operating capital -2.8%

Growth in FCF 45.7%

Calculating ValueWACC 6.58% 6.58%

Assumed long-term return on invested capital

Horizon value

Value of operations 13,900,886 13,901,950

Value of operations adjusted for half-year

convention 14,350,614 14,351,712

Value of investments 14,000 515,538

Total value of firm 14,364,614 14,867,250

Value of all debt, preferred stock, and other

nonoperating liabilities 5,036,000 5,042,580

Value of equity 9,328,614 9,824,670

Number of shares 205,293 205,293

Estimated price per share, end of fiscal year 45.44$ 47.86$

Price per share on target dateMost recent actual fiscal year end 12/31/2012 Equity value per share (growth rate vs WACC)

Target valuation date 4/8/2014 $48.48

Most recent fiscal year-end prior to target date 12/31/2013 2%Number of days from target to fiscal year-end

prior to target 98.00 3%

Value of operations on target date 14,464,876 4%

Value of investments on target date 580,240 5%

Total value of firm on target date 15,045,117

Value of debt, preferred stock, and other

nonoperating liabilities on target date 5,091,619

Value of equity on target date 9,953,498

Number of shares on target date 205,293

Price per share, target date 48.48$

Selected Projected Ratios and Other DataProjected economic profit (EP) 751,599 169,057

Projected market value added (MVA) 6,418,614 6,642,055

Price/earnings ratio (P/E ratio) 14.8 17.9

Market to book ratio 4.1 3.9

Value/EBITDA ratio 11.3 12.3

Value/Sales ratio 2.4 2.5

Times-interest-earned ratio 8.4 5.6

Long-term debt/value of operations 21.7%

Statement of Cash FlowsOperating Activities

Net income 629,000$ 547,770$

Depreciation 175,000 189,333

Change in deferred tax 44,000 31,565

Change in inventory 15,000 4,661

Change in accounts receivable 33,000 941

Change in other short-term operating assets 39,000 (442)

Change in accounts payable 18,000 736

Change in accruals (483,000) 468

Change in other current liabilities (16,000) 1,349

Net cash from operating activities 454,000$ 776,382$

Investing Activities

Investment in PPE (225,000)$ (249,557)$

Investment in other long-term oper. ass. (16,000) 89,171

Net cash from investing activities (241,000)$ (160,386)$

Financing Activities

Change in short-term investments 0$ (501,714)$

Change in long-term investments (1,000) 176

Change in short-term debt (202,000) (250,000)

Change in long-term debt 332,000 433,192

Preferred dividends 0 0

Change in preferred stock 0 0

Change in other long-term liabilities (65,000) (176,612)

Change in common stock (Par + PIC) (328,000) 0

Common dividends (284,000) (306,720)

Net cash from financing activities (548,000)$ (801,678)$

Net cash flow (335,000)$ (185,682)$

Starting cash 701,000 366,000

Ending cash 366,000$ 180,318$

Projected Projected Projected Projected Projected Projected

12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19

6,122,575$ 6,296,183$ 6,511,847$ 6,758,193$ 7,028,520$ 7,309,661$

2,530,072 2,626,194 2,736,794 2,857,870 2,987,121 3,106,606

2,350,935 2,383,291 2,432,821 2,494,707 2,566,124 2,642,071

197,710 207,608 218,540 230,220 242,484 252,183

1,043,857$ 1,079,090$ 1,123,692$ 1,175,396$ 1,232,791$ 1,308,801$

194,107 207,900 223,984 242,338 263,129 286,712

5,234 13,772 24,441 36,564 49,717 55,513

9,192 9,452 9,776 10,146 10,552 10,974

864,175$ 894,415$ 933,924$ 979,768$ 1,029,931$ 1,088,576$

306,782 317,517 331,543 347,818 365,625 386,444

557,393$ 576,898$ 602,381$ 631,950$ 664,305$ 702,131$

0 0 0 0 0 0

557,393$ 576,898$ 602,381$ 631,950$ 664,305$ 702,131$

0$ 0$ 0$ 0$ 0$ 0$

327,164$ 345,737$ 362,832$ 378,804$ 393,956$ 409,714$

230,229$ 231,160$ 239,549$ 253,146$ 270,349$ 292,417$

12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19

158,006$ 140,873$ 127,397$ 116,665$ 108,090$ 101,139$

188,899 188,343 189,787 192,713 196,799 204,671

612,257 629,618 651,185 675,819 702,852 730,966

176,051 183,306 191,704 200,946 210,856 219,290

726,125 915,739 1,085,727 1,242,933 1,387,833 195,115

1,861,339$ 2,057,880$ 2,245,800$ 2,429,076$ 2,606,429$ 1,451,181$

1,318,067 1,384,054 1,456,933 1,534,801 1,616,560 1,681,222

6,394,800 6,563,962 6,774,181 7,012,824 7,272,039 7,537,186

30,396 46,439 62,236 77,931 93,603 109,160

9,604,603$ 10,052,335$ 10,539,150$ 11,054,632$ 11,588,631$ 10,778,749$

287,236$ 293,719$ 302,225$ 312,198$ 323,312$ 336,244$

183,793 188,970 195,411 202,773 210,856 219,290

502,543 491,203 484,081 479,905 477,939 497,057

0 0 0 0 0 0

973,573$ 973,893$ 981,717$ 994,877$ 1,012,107$ 1,052,591$

3,340,832 3,599,299 3,894,235 4,228,335 4,607,294 4,964,902

654,527 635,832 596,186 524,066 404,140 420,306

0 0 0 0 0 0

1,884,392 1,860,872 1,845,023 1,832,221 1,819,606 1,803,050

6,853,324$ 7,069,896$ 7,317,162$ 7,579,498$ 7,843,147$ 8,240,849$

(4,000) (4,000) (4,000) (4,000) (4,000) (1,504,000)

2,755,279 2,986,439 3,225,988 3,479,134 3,749,484 4,041,901

2,751,279$ 2,982,439$ 3,221,988$ 3,475,134$ 3,745,484$ 2,537,901$

9,604,603$ 10,052,335$ 10,539,150$ 11,054,632$ 11,588,631$ 10,778,749$

8,878,478 9,136,596 9,453,422 9,811,699 10,200,798 10,583,634

9,604,603 10,052,335 10,539,150 11,054,632 11,588,631 10,778,749

(726,125) (915,739) (1,085,727) (1,242,933) (1,387,833) (195,115)

0 0 0 0 0 0

726,125 915,739 1,085,727 1,242,933 1,387,833 195,115

Balance Balance Balance Balance Balance Balance

35.5% 35.5% 35.5% 35.5% 35.5% 35.5%

306,782 317,517 331,543 347,818 365,625 386,444

(7,038) (18,695) (39,645) (72,121) (119,926) 16,166

313,820 336,212 371,188 419,938 485,551 370,279

67,050 68,915 70,838 73,050 75,761 82,076

3,263 3,356 3,470 3,602 3,746 3,896

377,607 401,772 438,556 489,386 557,566 448,459

666,250 677,318 685,136 686,009 675,225 860,342

666,250 677,318 685,136 686,009 675,225 860,342

1,135,214 1,142,141 1,160,073 1,186,143 1,218,597 1,256,066

973,573 973,893 981,717 994,877 1,012,107 1,052,591

161,641 168,248 178,355 191,266 206,490 203,474

7,712,867 7,948,016 8,231,114 8,547,625 8,888,599 9,218,408

7,874,508 8,116,264 8,409,469 8,738,891 9,095,088 9,421,882

164,852 241,756 293,205 329,422 356,197 326,794

501,398 435,562 391,931 356,588 319,028 533,548

8.6% 8.6% 8.4% 8.2% 7.7% 9.5%

1.9% 2.8% 3.4% 3.8% 4.0% 4.0%

-3.5% 1.7% 1.2% 0.1% -1.6% 27.4%

2.1% 3.1% 3.6% 3.9% 4.1% 3.6%

-45.1% -13.1% -10.0% -9.0% -10.5% 67.2%

6.58% 6.58% 6.58% 6.58% 6.58% 6.58%

14,314,626 14,820,273 15,402,798 16,058,969 16,795,843 17,366,648

14,777,740 15,299,745 15,901,116 16,578,516 17,339,230 17,928,502

756,522 962,178 1,147,963 1,320,864 1,481,435 304,276

15,534,261 16,261,923 17,049,080 17,899,380 18,820,665 18,232,778

5,225,225 5,460,171 5,739,258 6,060,556 6,426,900 6,767,952

10,309,037 10,801,752 11,309,822 11,838,824 12,393,765 11,464,826

205,293 205,293 205,293 205,293 205,293 205,293

50.22$ 52.62$ 55.09$ 57.67$ 60.37$ 55.85$

Equity value per share (growth rate vs WACC)

5% 6% 7% 8%

Error: See W96 Error: See W96Error: See W96Error: See W96



$86.24 $86.24 $86.24 $86.24

159,328 159,557 151,479 133,074 100,629 262,326

6,903,231 7,183,481 7,491,647 7,839,624 8,244,142 8,506,620

18.5 18.7 18.8 18.7 18.7 16.3

3.7 3.6 3.5 3.4 3.3 4.5

12.5 12.6 12.7 12.7 12.8 11.7

2.5 2.6 2.6 2.6 2.7 2.5

5.5 5.6 5.6 5.7 5.8 5.7

22.6% 23.5% 24.5% 25.5% 26.6% 27.7%

557,393$ 576,898$ 602,381$ 631,950$ 664,305$ 702,131$

197,710 207,608 218,540 230,220 242,484 252,183

(7,038) (18,695) (39,645) (72,121) (119,926) 16,166

3,439 557 (1,444) (2,925) (4,086) (7,872)

(11,199) (17,361) (21,566) (24,635) (27,033) (28,114)

(5,609) (7,256) (8,397) (9,242) (9,910) (8,434)

3,501 6,483 8,506 9,973 11,114 12,932

3,325 5,177 6,441 7,362 8,082 8,434

(17,806) (11,340) (7,122) (4,176) (1,966) 19,118

723,717$ 742,071$ 757,692$ 766,408$ 763,065$ 966,544$

(253,554)$ (273,595)$ (291,419)$ (308,089)$ (324,242)$ (316,846)$

(106,971) (169,162) (210,218) (238,643) (259,215) (265,147)

(360,525)$ (442,757)$ (501,637)$ (546,732)$ (583,457)$ (581,993)$

(224,412)$ (189,614)$ (169,988)$ (157,206)$ (144,900)$ 1,192,717$

(16,572) (16,042) (15,797) (15,695) (15,671) (15,558)

0 0 0 0 0 0

221,640 258,467 294,935 334,100 378,960 357,608

0 0 0 0 0 0

0 0 0 0 0 0

(38,995) (23,521) (15,848) (12,802) (12,615) (16,556)

0 0 0 0 0 (1,500,000)

(327,164) (345,737) (362,832) (378,804) (393,956) (409,714)

(385,503)$ (316,447)$ (269,531)$ (230,407)$ (188,183)$ (391,503)$

(22,311)$ (17,133)$ (13,476)$ (10,732)$ (8,575)$ (6,951)$

180,318 158,006 140,873 127,397 116,665 108,090

158,006$ 140,873$ 127,397$ 116,665$ 108,090$ 101,139$


12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25

7,602,048$ 7,906,129$ 8,222,375$ 8,551,270$ 8,893,320$ 9,249,053$

3,230,870 3,360,105 3,494,509 3,634,290 3,779,661 3,930,848

2,722,631 2,807,894 2,897,962 2,992,944 3,112,662 3,237,169

262,271 272,761 283,672 295,019 306,820 319,092

1,386,276$ 1,465,369$ 1,546,232$ 1,629,017$ 1,694,178$ 1,761,945$

308,966 332,636 357,767 384,392 412,527 442,553

7,805 20,040 33,800 49,163 66,209 84,913

11,413 11,869 12,344 12,838 13,351 13,885

1,096,527$ 1,164,642$ 1,234,609$ 1,306,625$ 1,361,211$ 1,418,190$

389,267 413,448 438,286 463,852 483,230 503,458

707,260$ 751,194$ 796,323$ 842,773$ 877,981$ 914,733$

0 0 0 0 0 0

707,260$ 751,194$ 796,323$ 842,773$ 877,981$ 914,733$

0$ 0$ 0$ 0$ 0$ 0$

426,103$ 443,147$ 460,873$ 479,308$ 498,480$ 518,419$

281,157$ 308,047$ 335,450$ 363,466$ 379,501$ 396,313$

12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25

95,585$ 91,233$ 87,922$ 85,513$ 88,933$ 92,491$

212,857 221,372 230,226 239,436 249,013 258,973

760,205 790,613 822,237 855,127 889,332 924,905

228,061 237,184 246,671 256,538 266,800 277,472

500,995 845,009 1,229,079 1,655,233 2,122,834 2,629,818

1,797,703$ 2,185,411$ 2,616,136$ 3,091,847$ 3,616,912$ 4,183,659$

1,748,471 1,818,410 1,891,146 1,966,792 2,045,464 2,127,282

7,807,578 8,082,308 8,360,201 8,639,752 8,919,059 9,195,730

124,644 140,091 155,540 171,025 177,866 184,981

11,478,396$ 12,226,220$ 13,023,023$ 13,869,416$ 14,759,301$ 15,691,653$

349,694$ 363,682$ 378,229$ 393,358$ 409,093$ 425,456$

228,061 237,184 246,671 256,538 266,800 277,472

516,939 537,617 559,121 581,486 604,746 628,936

0 0 0 0 0 0

1,094,695$ 1,138,483$ 1,184,022$ 1,231,383$ 1,280,638$ 1,331,864$

5,345,268 5,749,112 6,176,961 6,629,064 7,111,570 7,622,964

437,118 454,602 472,787 491,698 511,366 531,821

0 0 0 0 0 0

1,782,258 1,756,918 1,726,699 1,691,251 1,650,205 1,603,169

8,659,338$ 9,099,115$ 9,560,468$ 10,043,396$ 10,553,779$ 11,089,818$

(1,504,000) (1,504,000) (1,504,000) (1,504,000) (1,504,000) (1,504,000)

4,323,058 4,631,105 4,966,555 5,330,020 5,709,522 6,105,835

2,819,058$ 3,127,105$ 3,462,555$ 3,826,020$ 4,205,522$ 4,601,835$

11,478,396$ 12,226,220$ 13,023,023$ 13,869,416$ 14,759,301$ 15,691,653$

10,977,401 11,381,211 11,793,944 12,214,183 12,636,467 13,061,834

11,478,396 12,226,220 13,023,023 13,869,416 14,759,301 15,691,653

(500,995) (845,009) (1,229,079) (1,655,233) (2,122,834) (2,629,818)

0 0 0 0 0 0

500,995 845,009 1,229,079 1,655,233 2,122,834 2,629,818


35.5% 35.5% 35.5% 35.5% 35.5% 35.5%

389,267 413,448 438,286 463,852 483,230 503,458

16,812 17,485 18,184 18,911 19,668 20,455

372,455 395,963 420,102 444,941 463,562 483,003

106,912 110,972 115,008 119,006 122,943 126,962

4,051 4,214 4,382 4,557 4,740 4,929

475,316 502,721 530,728 559,390 581,765 605,036

910,960 962,648 1,015,504 1,069,627 1,112,412 1,156,909

910,960 962,648 1,015,504 1,069,627 1,112,412 1,156,909

1,296,708 1,340,402 1,387,058 1,436,613 1,494,078 1,553,841

1,094,695 1,138,483 1,184,022 1,231,383 1,280,638 1,331,864

202,013 201,919 203,036 205,230 213,440 221,977

9,556,049 9,900,718 10,251,347 10,606,544 10,964,523 11,323,012

9,758,062 10,102,637 10,454,383 10,811,775 11,177,962 11,544,990

336,180 344,575 351,746 357,392 366,187 367,028

574,781 618,073 663,758 712,235 746,225 789,881

9.7% 9.9% 10.1% 10.2% 10.3% 10.3%

4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

5.9% 5.7% 5.5% 5.3% 4.0% 4.0%

3.6% 3.5% 3.5% 3.4% 3.4% 3.3%

7.7% 7.5% 7.4% 7.3% 4.8% 5.9%

6.58% 6.58% 6.58% 6.58% 6.58% 6.58%

17,933,752 18,494,852 19,047,159 19,587,304 20,128,975 20,662,605

18,513,953 19,093,205 19,663,381 20,221,001 20,780,196 21,331,091

625,639 985,100 1,384,618 1,826,259 2,300,700 2,814,799

19,139,592 20,078,305 21,047,999 22,047,260 23,080,897 24,145,890

7,127,526 7,506,030 7,903,660 8,320,315 8,761,775 9,226,133

12,012,066 12,572,275 13,144,340 13,726,945 14,319,122 14,919,756

205,293 205,293 205,293 205,293 205,293 205,293

58.51$ 61.24$ 64.03$ 66.87$ 69.75$ 72.68$

291,457 321,040 351,239 382,235 401,521 421,940

8,755,891 8,990,568 9,208,998 9,409,226 9,602,234 9,786,101

17.0 16.7 16.5 16.3 16.3 16.3

4.3 4.0 3.8 3.6 3.4 3.2

11.6 11.6 11.5 11.5 11.5 11.6

2.5 2.5 2.6 2.6 2.6 2.6

4.6 4.7 4.8 4.9 4.9 4.9

28.9% 30.1% 31.4% 32.8% 34.2% 35.7%

707,260$ 751,194$ 796,323$ 842,773$ 877,981$ 914,733$

262,271 272,761 283,672 295,019 306,820 319,092

16,812 17,485 18,184 18,911 19,668 20,455

(8,187) (8,514) (8,855) (9,209) (9,577) (9,961)

(29,239) (30,408) (31,625) (32,889) (34,205) (35,573)

(8,772) (9,122) (9,487) (9,867) (10,262) (10,672)

13,450 13,988 14,547 15,129 15,734 16,364

8,772 9,122 9,487 9,867 10,262 10,672

19,882 20,678 21,505 22,365 23,259 24,190

982,250$ 1,037,183$ 1,093,751$ 1,152,099$ 1,199,680$ 1,249,299$

(329,520)$ (342,700)$ (356,408)$ (370,665)$ (385,491)$ (400,911)$

(270,392) (274,730) (277,893) (279,551) (279,306) (276,671)

(599,912)$ (617,431)$ (634,301)$ (650,216)$ (664,798)$ (677,582)$

(305,880)$ (344,014)$ (384,070)$ (426,155)$ (467,601)$ (506,984)$

(15,484) (15,447) (15,448) (15,486) (6,841) (7,115)

0 0 0 0 0 0

380,365 403,845 427,849 452,103 482,506 511,394

0 0 0 0 0 0

0 0 0 0 0 0

(20,792) (25,340) (30,219) (35,448) (41,046) (47,036)

0 0 0 0 0 0

(426,103) (443,147) (460,873) (479,308) (498,480) (518,419)

(387,893)$ (424,104)$ (462,761)$ (504,293)$ (531,462)$ (568,160)$

(5,555)$ (4,351)$ (3,311)$ (2,410)$ 3,421$ 3,557$

101,139 95,585 91,233 87,922 85,513 88,933

95,585$ 91,233$ 87,922$ 85,513$ 88,933$ 92,491$


12/31/26 12/31/27 12/31/28 12/31/29 12/31/30 12/31/31

9,619,015$ 10,003,776$ 10,403,927$ 10,820,084$ 11,252,887$ 11,703,003$

4,088,082 4,251,605 4,421,669 4,598,536 4,782,477 4,973,776

3,366,655 3,501,322 3,641,374 3,787,029 3,938,511 4,096,051

331,856 345,130 358,935 373,293 388,225 403,754

1,832,422$ 1,905,719$ 1,981,948$ 2,061,226$ 2,143,675$ 2,229,422$

474,377 507,979 543,295 580,201 618,493 657,866

105,193 127,166 150,954 176,683 204,473 234,441

14,441 15,018 15,619 16,244 16,893 17,569

1,477,679$ 1,539,924$ 1,605,226$ 1,673,952$ 1,746,548$ 1,823,567$

524,576 546,673 569,855 594,253 620,025 647,366

953,103$ 993,251$ 1,035,371$ 1,079,699$ 1,126,524$ 1,176,200$

0 0 0 0 0 0

953,103$ 993,251$ 1,035,371$ 1,079,699$ 1,126,524$ 1,176,200$

0$ 0$ 0$ 0$ 0$ 0$

539,156$ 560,722$ 583,151$ 606,477$ 630,736$ 655,966$

413,947$ 432,529$ 452,220$ 473,222$ 495,787$ 520,235$

12/31/26 12/31/27 12/31/28 12/31/29 12/31/30 12/31/31

96,190$ 100,038$ 104,039$ 108,201$ 112,529$ 117,030$

269,332 280,106 291,310 302,962 315,081 327,684

961,902 1,000,378 1,040,393 1,082,008 1,125,289 1,170,300

288,570 300,113 312,118 324,603 337,587 351,090

3,179,142 3,773,861 4,417,070 5,111,827 5,861,031 6,667,255

4,795,137$ 5,454,495$ 6,164,930$ 6,929,601$ 7,751,516$ 8,633,360$

2,212,374 2,300,868 2,392,903 2,488,619 2,588,164 2,691,691

9,466,785 9,728,523 9,976,372 10,204,704 10,406,605 10,573,611

192,380 200,076 208,079 216,402 225,058 234,060

16,666,676$ 17,683,962$ 18,742,284$ 19,839,326$ 20,971,343$ 22,132,722$

442,475$ 460,174$ 478,581$ 497,724$ 517,633$ 538,338$

288,570 300,113 312,118 324,603 337,587 351,090

654,093 680,257 707,467 735,766 765,196 795,804

0 0 0 0 0 0

1,385,138$ 1,440,544$ 1,498,165$ 1,558,092$ 1,620,416$ 1,685,232$

8,162,932 8,730,440 9,323,492 9,938,828 10,571,523 11,214,493

553,093 575,217 598,226 622,155 647,041 672,923

0 0 0 0 0 0

1,549,730 1,489,451 1,421,870 1,346,499 1,262,824 1,170,300

11,650,894$ 12,235,652$ 12,841,754$ 13,465,574$ 14,101,804$ 14,742,948$

(1,504,000) (1,504,000) (1,504,000) (1,504,000) (1,504,000) (1,504,000)

6,519,782 6,952,310 7,404,530 7,877,752 8,373,539 8,893,774

5,015,782$ 5,448,310$ 5,900,530$ 6,373,752$ 6,869,539$ 7,389,774$

16,666,676$ 17,683,962$ 18,742,284$ 19,839,326$ 20,971,343$ 22,132,722$

13,487,533 13,910,101 14,325,214 14,727,499 15,110,312 15,465,467

16,666,676 17,683,962 18,742,284 19,839,326 20,971,343 22,132,722

(3,179,142) (3,773,861) (4,417,070) (5,111,827) (5,861,031) (6,667,255)

0 0 0 0 0 0

3,179,142 3,773,861 4,417,070 5,111,827 5,861,031 6,667,255


35.5% 35.5% 35.5% 35.5% 35.5% 35.5%

524,576 546,673 569,855 594,253 620,025 647,366

21,273 22,124 23,009 23,929 24,886 25,882

503,303 524,549 546,847 570,324 595,138 621,484

131,060 135,189 139,281 143,249 146,977 150,316

5,126 5,331 5,545 5,767 5,997 6,237

629,237 654,407 680,583 707,806 736,118 765,563

1,203,185 1,251,313 1,301,365 1,353,420 1,407,557 1,463,859

1,203,185 1,251,313 1,301,365 1,353,420 1,407,557 1,463,859

1,615,995 1,680,634 1,747,860 1,817,774 1,890,485 1,966,104

1,385,138 1,440,544 1,498,165 1,558,092 1,620,416 1,685,232

230,856 240,091 249,694 259,682 270,069 280,872

11,679,158 12,029,391 12,369,275 12,693,323 12,994,769 13,265,302

11,910,015 12,269,482 12,618,970 12,953,005 13,264,838 13,546,174

365,025 359,467 349,488 334,035 311,834 281,336

838,160 891,846 951,877 1,019,385 1,095,723 1,182,523

10.4% 10.5% 10.6% 10.7% 10.9% 11.0%

4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

3.2% 3.0% 2.8% 2.6% 2.4% 2.1%

6.1% 6.4% 6.7% 7.1% 7.5% 7.9%

6.58% 6.58% 6.58% 6.58% 6.58% 6.58%

21,183,043 21,684,016 22,157,896 22,595,428 22,985,389 23,314,191

21,868,366 22,385,547 22,874,758 23,326,445 23,729,022 24,068,462

3,371,523 3,973,936 4,625,148 5,328,229 6,086,088 6,901,315

25,239,889 26,359,483 27,499,906 28,654,673 29,815,111 30,969,778

9,712,662 10,219,891 10,745,362 11,285,327 11,834,347 12,384,793

15,527,226 16,139,592 16,754,544 17,369,346 17,980,764 18,584,984

205,293 205,293 205,293 205,293 205,293 205,293

75.63$ 78.62$ 81.61$ 84.61$ 87.59$ 90.53$

444,084 468,211 494,628 523,703 555,876 591,675

9,958,351 10,116,065 10,255,788 10,373,440 10,464,184 10,522,288

16.3 16.2 16.2 16.1 16.0 15.8

3.1 3.0 2.8 2.7 2.6 2.5

11.7 11.7 11.7 11.8 11.8 11.8

2.6 2.6 2.6 2.6 2.6 2.6

5.0 5.0 5.1 5.1 5.2 5.3

37.3% 39.0% 40.8% 42.6% 44.6% 46.6%

953,103$ 993,251$ 1,035,371$ 1,079,699$ 1,126,524$ 1,176,200$

331,856 345,130 358,935 373,293 388,225 403,754

21,273 22,124 23,009 23,929 24,886 25,882

(10,359) (10,773) (11,204) (11,652) (12,118) (12,603)

(36,996) (38,476) (40,015) (41,616) (43,280) (45,012)

(11,099) (11,543) (12,005) (12,485) (12,984) (13,503)

17,018 17,699 18,407 19,143 19,909 20,705

11,099 11,543 12,005 12,485 12,984 13,503

25,157 26,164 27,210 28,299 29,431 30,608

1,301,052$ 1,355,118$ 1,411,713$ 1,471,094$ 1,533,575$ 1,599,534$

(416,947)$ (433,625)$ (450,970)$ (469,009)$ (487,769)$ (507,280)$

(271,055) (261,738) (247,849) (228,331) (201,901) (167,006)

(688,002)$ (695,363)$ (698,820)$ (697,340)$ (689,671)$ (674,287)$

(549,324)$ (594,718)$ (643,209)$ (694,757)$ (749,204)$ (806,225)$

(7,399) (7,695) (8,003) (8,323) (8,656) (9,002)

0 0 0 0 0 0

539,968 567,508 593,053 615,335 632,695 642,970

0 0 0 0 0 0

0 0 0 0 0 0

(53,439) (60,279) (67,581) (75,371) (83,675) (92,524)

0 0 0 0 0 0

(539,156) (560,722) (583,151) (606,477) (630,736) (655,966)

(609,350)$ (655,907)$ (708,892)$ (769,593)$ (839,576)$ (920,746)$

3,700$ 3,848$ 4,002$ 4,162$ 4,328$ 4,501$

92,491 96,190 100,038 104,039 108,201 112,529

96,190$ 100,038$ 104,039$ 108,201$ 112,529$ 117,030$

Projected

12/31/32

12,171,123$

5,172,727

4,259,893

419,904

2,318,599$

697,878

266,690

18,272

1,905,683$

676,518

1,229,166$

0

1,229,166$

0$

682,204$

546,961$

12/31/32

121,711$

340,791

1,217,112

365,134

1,681,275

3,726,024$

2,799,358

10,695,376

243,422

17,464,181$

559,872$

365,134

827,636

0

1,752,642$

11,857,852

699,840

0

1,217,112

15,527,446$

(7,504,000)

9,440,735

1,936,735$

17,464,181$

15,782,905

17,464,181

(1,681,275)

0

1,681,275

Balance

35.5%

676,518

26,917

649,601

153,072

6,487

796,186

1,522,413

1,522,413

2,044,749

1,752,642

292,107

13,494,734

13,786,841

240,667

1,281,746

11.2%

4.0%

4.0%

1.8%

8.4%

6.58%

6.58%

23,565,389

23,565,389

24,327,787

1,924,698

26,252,485

13,074,964

13,177,520

205,293

64.19$

631,731

10,540,946

10.7

6.8

9.6

2.2

5.4

48.7%

1,229,166$

419,904

26,917

(13,107)

(46,812)

(14,044)

21,534

14,044

31,832

1,669,433$

(527,571)$

(121,764)

(649,336)$

4,985,980$

(9,362)

0

643,359

0

0

46,812

(6,000,000)

(682,204)

(1,015,416)$

4,681$

117,030

121,711$

Inputs for Projections and Valuation

Key Output of Valuation:

Projected ROIC at horizon = 11.2%

Estimated price for 12/31/2012 = 45.44$

Estimated price for 4/8/2014 = 48.48$ 2013 2014

Inputs Projected Projected

Number of years historical data analyzed 6

Historical Values for Ratios Used to Project

Financial Statements Average Trend Most Recent

Starting

rate

Long

Term

rate

Time until

long term

(years)

Fade

Rate gra

ph

2013 2014Year of analysis 0 1 2

Ratios to calculate operating profit

Sales growth rate 0.9% 4.6% 1.6% 0.26% 4.00% 5 0.50 0.3% 1.9%

COGS / Sales 41.2% 38.8% 40.9% 40.85% 42.50% 5 0.20 40.9% 41.3%

SGA / Sales 37.5% 39.7% 37.9% 39.00% 35.00% 10 0.10 39.0% 38.4%

Depreciation / Net PPE 17.7% 12.9% 14.6% 15.00% 15.00% 5 0.10 15.0% 15.0%

Ratios to calculate operating capital

Cash / Sales 5.6% 10.6% 6.1% 3.00% 1.00% 10 0.20 3.0% 2.6%

Inventory/ Sales 4.4% 2.8% 3.3% 3.20% 2.80% 5 0.20 3.2% 3.1%

Accts. rec. / Sales 10.5% 9.9% 10.0% 10.00% 10.00% 5 0.10 10.0% 10.0%

Other short term operating assets/Sales 3.0% 3.2% 2.8% 2.84% 3.00% 5 0.10 2.8% 2.9%

Net PPE / Sales 18.8% 22.0% 20.1% 21.00% 23.00% 5 0.15 21.0% 21.5%

Other long-term op. A. / Sales 112.2% 104.6% 106.4% 104.61% 85.00% 20 -0.15 104.6% 104.4%

Accts. pay./ Sales 4.6% 4.9% 4.7% 4.72% 4.60% 5 0.10 4.7% 4.7%

Accruals / Sales 2.9% 7.8% 3.0% 3.00% 3.00% 5 0.10 3.0% 3.0%

Other current liabilities / Sales 10.3% 6.8% 8.7% 8.66% 6.80% 5 0.10 8.7% 8.2%

Ratios to calculate operating taxes

Deferred taxes/Net PPE 90.2% 25.6% 52.4% 52.41% 25.00% 5 -0.30 52.4% 49.7%

Average tax rate (Taxes/EBT) 33.0% 36.6% 35.7% 35.50% 35.50% 5 0.10 35.5% 35.5%

Marginal tax rate 33.0% 36.6% 35.7% 35.50% 35.50% 5 0.10 35.5% 35.5%

Dividend and debt ratios

Dividend policy: growth rate #N/A 13.1% 13.1% 8.00% 4.00% 5 0.30 8.0% 6.7%

Long-term debt / market value of firm #N/A #N/A 21.7% 21.73% 51.00% 20 -0.05 21.7% 22.6%

Preferred stock / market value of firm #N/A #N/A #N/A 0.00% 0.00% 0 0.00 0.0% 0.0%

Coupon rate on preferred stock #N/A #N/A #N/A 0.00% 0.00% 0 0.00 0.0% 0.0%

Permanent component of short-term debt / market value of firm#N/A #N/A #N/A 0.01% 0.00% 0 0.00 0.0% 0.0%

Ratios to calculate rest of income statement and

balance sheet

Nonop. inc. / Sales -0.01% -0.22% 0.15% 0.15% 0.15% 5 0.10 0.15% 0.15%

Extr. inc. / Sales -2.70% 2.18% 0.00% 0.00% 0.00% 5 0.10 0.00% 0.00%

Long-term investments / Sales 0.50% -0.36% 0.23% 0.23% 2.00% 10 0.10 0.23% 0.50%

Other long-term liab. / Sales 22.85% 49.53% 35.03% 32.00% 10.00% 18 0.00 32.00% 30.78%

Interest rates

Interest rate on cash 0.00% 0.00% 5 0.10 0.00% 0.00%

Interest rate on short-term invest. 0.10% 4.00% 5 0.10 0.10% 1.04%

Interest rate on all current debt 5.75% 5.75% 5 0.10 5.75% 5.75%

Interest rate on long-term debt 6.22% 6.22% 5 0.10 6.22% 6.22%

Cost of Capital and L-T ROIC

Weighted Average Cost of Capital (WACC) 6.58%

Long-term return on invested capital 6.58%

Target valuation date 4/8/2014

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

2005 2010 2015 2020 2025 2030 2035

Other long-term op. A. / SalesHistorical

Sales g

CGS

SGA

Depr

Cash

Invty

AcctRec

Othr STA

Net PPE

Othr LTA

Acct Pay

Accruals

Othr CL

Def Tax

Avg Tax

Marg Tax

Div g

LTD/MV

PFS/MV

PFS Cpn

Perm STD

N-OP Inc

Ex Inc

LT Inv

Othr LT L

Cash Int

STinv Int

Cur D Int

LT D Int

13

14

16

17

18

20

21

22

23

24

26

27

28

29

31

32

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 20313 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

2.8% 3.4% 3.8% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

41.7% 42.0% 42.3% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5% 42.5%

37.9% 37.4% 36.9% 36.5% 36.1% 35.8% 35.5% 35.2% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%

15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%

2.2% 2.0% 1.7% 1.5% 1.4% 1.3% 1.2% 1.1% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

3.0% 2.9% 2.9% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8%

10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

2.9% 2.9% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

22.0% 22.4% 22.7% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0%

104.3% 104.0% 103.8% 103.5% 103.1% 102.7% 102.2% 101.7% 101.0% 100.3% 99.4% 98.4% 97.2% 95.9% 94.3% 92.5% 90.3%

4.7% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6%

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

7.8% 7.4% 7.1% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8%

45.9% 40.9% 34.1% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%

35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5%

35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5%

5.7% 4.9% 4.4% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

23.5% 24.5% 25.5% 26.6% 27.7% 28.9% 30.1% 31.4% 32.8% 34.2% 35.7% 37.3% 39.0% 40.8% 42.6% 44.6% 46.6%

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

0.74% 0.96% 1.15% 1.33% 1.49% 1.64% 1.77% 1.89% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

29.56% 28.33% 27.11% 25.89% 24.67% 23.44% 22.22% 21.00% 19.78% 18.56% 17.33% 16.11% 14.89% 13.67% 12.44% 11.22% 10.00%

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

1.90% 2.67% 3.37% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75%

6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22%

13

14

16

17

18

20

21

22

23

24

26

27

28

29

31

32

2032

Projected

203220 1

4.0%

42.5%

35.0%

15.0%

1.0%

2.8%

10.0%

3.0%

23.0%

87.9%

4.6%

3.0%

6.8%

25.0%

35.5%

35.5%

4.0%

48.7%

0.0%

0.0%

0.0%

0.15%

0.00%

2.00%

10.00%

0.00%

4.00%

5.75%

6.22%

ProjectionsHistorical

Year #N/A #N/A #N/A #N/A 2007 2008 2009 2010 2011 2012

Other long-term op. A. / Sales#N/A #N/A #N/A #N/A 118.44% 112.07% 115.33% 113.04% 107.76% 106.37%

Other long-term op. A. / Sales

10 10

1 Sales growth rate 1 Sales growth rate

2 COGS / Sales 2 COGS / Sales

3 SGA / Sales 3 SGA / Sales

4 Depreciation / Net PPE 4 Depreciation / Net PPE

6 Cash / Sales 6 Cash / Sales

7 Inventory/ Sales 7 Inventory/ Sales

8 Accts. rec. / Sales 8 Accts. rec. / Sales

9 Other short term operating assets/Sales 9 Other short term operating assets/Sales

10 Net PPE / Sales 10 Net PPE / Sales

11 Other long-term op. A. / Sales 11 Other long-term op. A. / Sales

12 Accts. pay./ Sales 12 Accts. pay./ Sales

13 Accruals / Sales 13 Accruals / Sales

14 Other current liabilities / Sales 14 Other current liabilities / Sales

16 Deferred taxes/Net PPE 16 Deferred taxes/Net PPE

17 Average tax rate (Taxes/EBT) 17 Average tax rate (Taxes/EBT)

18 Marginal tax rate 18 Marginal tax rate

20 Dividend policy: growth rate 20 Dividend policy: growth rate

21 Long-term debt / market value of firm 21 Long-term debt / market value of firm

22 Preferred stock / market value of firm 22 Preferred stock / market value of firm

23 Coupon rate on preferred stock 23 Coupon rate on preferred stock

24 Permanent component of short-term debt / market value of firm24 Long-term debt / market value of firm

26 Nonop. inc. / Sales 26 Nonop. inc. / Sales

27 Extr. inc. / Sales 27 Extr. inc. / Sales

28 Long-term investments / Sales 28 Long-term investments / Sales

29 Other long-term liab. / Sales 29 Other long-term liab. / Sales

31 Interest rate on cash 30 blank

32 Interest rate on short-term invest.

33 Interest rate on all current debt

34 Interest rate on long-term debt

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## 99.423% 98.417% 97.249% 95.890%

2029 2030 2031 2032

94.313% 92.479% 90.350% 87.875%

Cost of Capital

Enter inputs in yellow cells.Key Output of Valuation:

Estimate of WACC =

Estimated price at end of most recent fiscal year=

Estimated price at target date=

Inputs to Estimate WACC Input

Enter Current Market Value for Equity

Current stock price $47.71

Number of shares common stock outstanding 203,570

Market value of common stock $9,712,325

Enter Current Market Value for Long-Term Debt

Estimated value of long-term debt $2,697,322

Enter Current Market Value for Short-Term Debt

Estimated value of short-term debt $1,000

Enter Current Market Value for Preferred Stock

Estimated value of preferred stock $0

Estimate Percent of Firm that will be Financed by Long-term Debt

Current percent of firm financed with long-term

debt 21.73%

Target percent financed with long-term debt= 51%

Estimate Percent of Firm that will be

Financed by Preferred Stock

Current percent of firm financed with preferred

stock 0.00%

Target percent financed with preferred stock = 0.00%

Estimate Percent of Firm that will be

Financed by Short-term Debt

Current percent of firm financed with short-term

debt 0.01%

Target percent financed with short-term debt = 0.00%

Estimate Cost of Equity

Beta= 0.94

Risk-free rate= 2.50%

Market risk premium = 7.17%

Cost of equity= 9.24%

Estimate Cost of Long-term Debt

Bond rating for company's debt BBB+

Spread for bond rating 3.72%

Tax rate= 35.5%

Cost of long-term debt= 6.22%

After-tax cost of long-term debt= 4.01%

Inputs to Estimate Cost of Preferred Stock

Yield on preferred stock 0.00%

Current coupon rate (preferred

dividend/preferred stock) 0.00%

Cost of preferred stock = 0.00%

Inputs to Estimate Cost of Short-term Debt

Prime rate 3.25%

Adjustment to prime 2.50%

Cost of short-term debt 5.75%

After-tax cost of short-term debt 3.71%

Estimated WACC 6.58%

6.58%

$45.44

$48.48

Suggested Sources

(1) www.thomsonfn.com Enter ticker symbol, get quote.

(2) finance.yahoo.com, enter ticker symbol, get quote, then select

Key Statistics.

(1) www.thomsonfn.com, enter ticker symbol, get quote, then

select TipSheet.

(2) finance.yahoo.com, enter ticker symbol, get quote.

Estimate Percent of Firm that will be Financed by Long-term Debt

Judgment, based on historical ratios in Hist Analys sheet and

market conditions. In our experience, virtually all solvent firms

should be financed with at least 15% debt, with stronger

companies having at least 20% and up to 40%.


market conditions. We usually choose the default value, which is

the current value.


market conditions. We usually choose the default value, which is

the current value (unless the current sum of shor-term debt and

long-term debt produces a ratio greater than 40%, in which case

we choose sufficient short-term debt so the total is 40%).

(1) www.thomsonfin.com.

(2) www.bloomberg.com.

(3) yahoofinance.com.

Yield to maturity on long-term Treasury securities.

(1) www.federalreserve.gov, Research and Data, Statistics,

Selected Interest Rates

(2) www.bloomberg.com, U.S. Treasuries

(3) bonds.yahoo.com/rates.html

5% to 7% for U.S.; toward the low end when the stock market is

high, toward the upper end when the market is low. See discussion

in Ch 11.

(1) www.moodys.com.

(2) www.bondsonline.com.

www.bondsonline.com,

We usually look at the most recent value and average value from

the Hist Analys worksheet. If both are between 36% and 40%, we

usually choose a value similar to the average rate.

yahoo.finance.com

Actual coupon rate as shown in footnotes to financial statements or

as shown at finance.yahoo.com.

Judgment, based on yield on preferred and/or current coupon rate.

(1) www.federalreserve.gov, Research and Data, Statistics,

Selected Interest Rates

(2) www.bloomberg.com, Markets, Key Rates

Judgment, based on risk of company.

Judgment, based on yield on preferred and/or current coupon rate.

221352425.xls.ms_office Hist Analys

6.00

Analysis of Historical Financial

Statements

12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

2012 2011 2010 2009 2008 2007 2006

6 years of data to analyzeHistorical Free Cash Flow (FCF)Assumed marginal tax rate 36% 35% 36% 36% 16% 40% 37%Reported income tax expense 349,000 320,529 294,558 316,139 117,671 328,959 296,739 Taxes reported but not paid 44,000 (497,000) 45,000 57,000 (343,000) 32,000 1,292,000 Actual taxes paid 305,000 817,529 249,558 259,139 460,671 296,959 (995,261) Plus tax saved due to net interest expenses 46,823 40,509 46,322 87,840 37,500 74,672 77,916 Minus tax paid on non-operating income 3,212 4,680 (27,732) 9,123 3,317 2,613 585

Tax on operating income 348,611 853,357 323,612 337,856 494,855 369,018 (917,931) Net operating profit after taxes (NOPAT) 751,600 176,738 705,742 750,192 438,681 645,982 1,930,931 NOPAT/Sales 12.5% 3.0% 12.5% 13.6% 7.7% 11.2% 40.8%NOPAT adjusted for extraordinary income 751,600 176,738 705,742 750,192 (479,037) 639,328 1,934,084 Operating current assets 1,335,000 1,757,000 1,309,000 1,279,000 1,237,000 1,212,000 1,053,000 Operating current liabilities 982,000 1,463,000 934,000 854,000 801,000 1,135,000 1,691,000 Net operating working capital 353,000 294,000 375,000 425,000 436,000 77,000 (638,000) Operating long term capital 7,579,000 7,513,000 7,539,000 7,488,000 7,389,000 7,676,000 7,595,000 Operating capital (adjusted for any special asset impairment of accounting changes) 7,932,000 7,807,000 7,914,000 7,913,000 7,825,000 7,753,000 6,957,000 Operating capital/Sales 132.3% 132.3% 140.4% 143.1% 137.0% 134.9% 146.9%Investment in operating capital 125,000 (107,000) 1,000 88,000 72,000 796,000 6,957,000

Free cash flow from ongoing operations 626,600 283,738 704,742 662,192 366,681 (150,018) (5,026,069)

Free cash flow (including extraordinary income) 626,600$ 283,738$ 704,742$ 662,192$ (551,037)$ (156,672)$ (5,022,916)$

Historical Return on Invested CapitalROIC (NOPAT/ Beginning capital) 9.6% 2.2% 8.9% 9.6% 5.7% 9.3% #N/A

Historical Economic ProfitHistorical weighted average costs of capital 8.0% 9.0% 10.0% 10.0% 10.0% 10.0% 10.0%Economic profit 127,040$ (535,522)$ (85,558)$ (32,308)$ (1,254,337)$ (56,372)$ 1,934,084$

Traditional Ratio Analysis: Fill in

yellow cells with ratios for industry or

for closest competitor for most recent

year. Graph

Most

Recent

Industry

or

Competit

Compan

y's

Historica

l

Average Trend Most Recent

Payout ratio 20.6% 59.2% 45.2% 41.4% 36.7% 0.0% 0.0% 0.0% 0.0%Annual sales growth rate 0.9% 4.6% 1.6% 4.7% 1.9% -3.1% -0.7% 21.4% #DIV/0!Quick ratio 1.18 0.41 0.92 0.81 0.80 1.19 1.22 2.13 0.79 Current ratio 1.41 0.50 1.08 0.92 0.98 1.50 1.54 2.41 0.97LT debt to equity 0.97 1.15 1.18 1.04 0.71 0.94 1.39 0.58 0.95Total debt to equity 1.05 1.36 1.29 1.24 0.88 0.94 1.39 0.58 0.95Interest coverage (Times-interest-earned) 6.51 9.79 8.39 8.80 7.96 4.50 4.05 5.37 4.80Gross margin 58.8% 61.2% 59.1% 58.6% 61.3% 61.5% 56.3% 55.7% 59.4%EBITD margin 21.3% 21.5% 21.3% 20.3% 21.7% 23.7% 20.0% 20.6% 24.3%Operating margin 18.0% 18.5% 18.4% 17.5% 18.3% 19.7% 16.3% 17.7% 21.4%

Pre-tax margin 14.9% 16.6% 16.3% 15.7% 14.6% 15.8% 12.7% 14.5% 17.0%Net profit margin 7.2% 12.8% 10.5% 10.3% 9.4% 10.0% -5.5% 8.6% 10.8%Return on assets 4.5% 8.7% 7.0% 6.5% 6.0% 6.3% -3.6% 4.7% 5.5%Receivable turnover 9.54 10.06 9.96 9.30 9.87 9.67 9.79 8.67 8.09Inventory turnover 9.72 12.71 12.43 11.53 8.93 8.12 9.49 7.83 6.41Asset turnover 0.63 0.69 0.67 0.64 0.64 0.63 0.66 0.55 0.51

Historical Values for Ratios Used to

Project Financial Statements

Most

Recent

Industry

or

Competit Average Trend Most Recent

Ratios to calculate operating profitSales growth rate #N/A 0.9% 4.6% 1.6% 4.7% 1.9% -3.1% -0.7% 21.4% #DIV/0!COGS / Sales #N/A 41.2% 38.8% 40.9% 41.4% 38.7% 38.5% 43.7% 44.3% 40.6%SGA / Sales #N/A 37.5% 39.7% 37.9% 38.3% 39.7% 37.8% 36.3% 35.1% 35.0%Depreciation / Net PPE #N/A 17.7% 12.9% 14.6% 14.5% 16.4% 20.2% 21.0% 19.5% 18.4%Ratios to calculate operating capital Competitor Average Trend Most RecentCash / Sales #N/A 5.6% 10.6% 6.1% 11.9% 5.6% 5.1% 3.7% 1.2% 0.7%Inventory/ Sales #N/A 4.4% 2.8% 3.3% 3.6% 4.3% 4.7% 4.6% 5.7% 6.3%Accts. rec. / Sales #N/A 10.5% 9.9% 10.0% 10.8% 10.1% 10.3% 10.2% 11.5% 12.4%Other short term operating assets/Sales #N/A 3.0% 3.2% 2.8% 3.5% 3.0% 2.9% 3.2% 2.7% 2.3%Net PPE / Sales #N/A 18.8% 22.0% 20.1% 19.5% 20.7% 20.1% 17.3% 15.1% 15.9%Other long-term op. A. / Sales #N/A 112.2% 104.6% 106.4% 107.8% 113.0% 115.3% 112.1% 118.4% 144.5%Accts. pay./ Sales #N/A 4.6% 4.9% 4.7% 4.5% 5.3% 4.6% 4.1% 4.5% 5.4%Accruals / Sales #N/A 2.9% 7.8% 3.0% 11.2% 2.5% 0.1% 0.1% 0.4% 0.3%Other current liabilities / Sales #N/A 10.3% 6.8% 8.7% 9.1% 8.8% 10.8% 9.8% 14.9% 30.1%Ratios to calculate operating taxes Competitor Average Trend Most RecentDeferred taxes/Net PPE #N/A 90.2% 25.6% 52.4% 50.9% 92.7% 93.6% 99.1% 152.5% 171.1%Average tax rate (Taxes/EBT) #N/A 33.0% 36.6% 35.7% 35% 36% 36% 16% 40% 37%Marginal tax rate #N/A 33.0% 36.6% 35.7% 34.6% 36% 36% 16% 40% 37%Dividend and debt ratios Competitor Average Trend Most RecentDividend policy: growth rate #N/A #N/A 13.1% 13.1% 29.4% #N/A #N/A #N/A #N/A #N/ALong-term debt / market value of firm #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/APreferred stock / market value of firm #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/ACoupon rate on preferred stock #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/ALong-term debt / market value of firm #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/ARatios to calculate rest of income statement

and balance sheet Competitor Average Trend Most RecentNonop. inc. / Sales #N/A 0.0% -0.2% 0.2% 0.2% -1.4% 0.5% 0.4% 0.1% 0.0%Extr. inc. / Sales #N/A -2.7% 2.2% 0.0% 0.0% 0.0% 0.0% -16.1% -0.1% 0.1%Long-term investments / Sales #N/A 0.5% -0.4% 0.2% 0.2% 0.2% 0.2% 0.2% 2.0% 2.5%Other long-term liab. / Sales #N/A 22.9% 49.5% 35.0% 36.7% 39.4% 12.4% 11.2% 2.4% 0.6%

Year 2012 2011 2010 2009 2008 2007 #N/A #N/A #N/A #N/A

Receivable turnover 9.9585 9.2961 9.8704 9.6696 9.7942 8.6697 #N/A #N/A #N/A #N/A14 #N/A31 Payout ratio 32 Annual sales growth rate33 Quick ratio 34 Current ratio 35 LT debt to equity 36 Total debt to equity 37 Interest coverage (Times-interest-earned)38 Gross margin 39 EBITD margin 40 Operating margin 41 Pre-tax margin 42 Net profit margin 43 Return on assets 44 Receivable turnover 45 Inventory turnover 46 Asset turnover 51 Sales growth rate52 COGS / Sales53 SGA / Sales54 Depreciation / Net PPE56 Cash / Sales57 Inventory/ Sales58 Accts. rec. / Sales59 Other short term operating assets/Sales60 Net PPE / Sales61 Other long-term op. A. / Sales62 Accts. pay./ Sales63 Accruals / Sales64 Other current liabilities / Sales66 Deferred taxes/Net PPE67 Average tax rate (Taxes/EBT)68 Marginal tax rate70 Dividend policy: growth rate71 Long-term debt / market value of firm72 Preferred stock / market value of firm73 Coupon rate on preferred stock74 Long-term debt / market value of firm76 Nonop. inc. / Sales77 Extr. inc. / Sales78 Long-term investments / Sales79 Other long-term liab. / Sales9 NOPAT/Sales

16 Operating capital/Sales18 Free cash flow from ongoing operations22 ROIC (NOPAT/ Beginning capital)26 Economic profit

Payout Ratio Sales g

Quick Ratio

Current Ratio

L-TD/E

Tot D/E

Int. Cov.

Gross Margin EBITD Margin

Op. Margin

Pre-Tax Mgn.

Net Profit Mgn.

ROA

Rec. TO

Inv. TO

Asset TO

Sales g

CGS %

SGA %

Depr % PPE

Cash %

Inv. %

Acct. Rec. %

Oth. ST OA %

Net PPE %

Other LT A%

Acct. Pay %

Accruals %

Other CL %

Def. Taxes %

Avg. Tax rate

Margn. Tax

Div. g

LTD/MV Firm

Pf. Stk./MV F

Pf. Stk. Coupon

LTD/MV F

Nonop inc %

Extr. inc. %

L-T Inv. %

Othr L-T Liab.%

8.60

8.80

9.00

9.20

9.40

9.60

9.80

10.00

10.20

2005 2010 2015

Receivable turnover Industry

NOPAT/Sales

Op. Capital/Sales

FCF

ROIC

Econ. Prof.

Michael C. Ehrhardt 4/8/2014

221352425.xls.ms_office Condensed

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A D E F G H I J K L M

Condensed Historical Financial Statements

You should not change any formulas in this worksheet.

6.00 12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

2012 2011 2010 2009 2008 2007 2006

Income Statement

Sales 5,995,000$ 5,903,000$ 5,636,000$ 5,531,000$ 5,710,000$ 5,748,000$ 4,735,000$

Costs of goods sold (COGS) 2,449,000 2,444,000 2,179,000 2,127,000 2,495,000 2,546,000 1,924,000

Sales, general and administrative expense (SGA) 2,270,790 2,261,904 2,236,646 2,091,952 2,073,464 2,018,000 1,659,000

Depreciation 175,000 167,000 191,000 224,000 208,000 169,000 139,000

Operating profit 1,100,210$ 1,030,096$ 1,029,354$ 1,088,048$ 933,536$ 1,015,000$ 1,013,000$

Interest expense 8,210 6,096 4,354 3,048 5,536 0 0

Interest income (123,000) (111,000) (125,000) (239,000) (225,000) (189,000) (211,000)

Nonoperating income (Expense) 9,000 13,529 (77,442) 25,139 20,389 6,613 1,585

Earnings before taxes (EBT) 978,000$ 926,529$ 822,558$ 871,139$ 723,389$ 832,613$ 803,585$

Tax expense 349,000 320,529 294,558 316,139 117,671 328,959 296,739

Net income before extraordinary items 629,000$ 606,000$ 528,000$ 555,000$ 605,717$ 503,654$ 506,846$

After-tax extraordinary income (Expense) 0 0 0 0 (917,717) (6,654) 3,154

Net income (NI) 629,000$ 606,000$ 528,000$ 555,000$ (312,000)$ 497,000$ 510,000$

Dividends-- preferred 0$ 0$ 0$ 0$ 0$ 0$ 0$

Dividends-- common 284,000$ 251,000$ 194,000$ 0$ 0$ 0$ 0$

Additions to RE 345,000$ 355,000$ 334,000$ 555,000$ (312,000)$ 497,000$ 510,000$

Balance SheetAssets

Cash 366,000$ 701,000$ 315,000$ 280,000$ 214,000$ 67,000$ 35,000$

Inventory 197,000 212,000 244,000 262,000 263,000 325,000 300,000

Accounts receivable 602,000 635,000 571,000 572,000 583,000 663,000 585,000

Other short-term operating assets 170,000 209,000 179,000 165,000 177,000 157,000 133,000

Short-term investments 0 0 0 0 0 1,527,000 579,000

Total current assets 1,335,000$ 1,757,000$ 1,309,000$ 1,279,000$ 1,237,000$ 2,739,000$ 1,632,000$

Net plant, property, & equipment (PPE) 1,202,000 1,152,000 1,168,000 1,109,000 990,000 868,000 755,000

Other long-term operating assets 6,377,000 6,361,000 6,371,000 6,379,000 6,399,000 6,808,000 6,840,000

Long-term investments 14,000 13,000 11,000 9,000 12,000 113,000 119,000

Total assets 8,928,000$ 9,283,000$ 8,859,000$ 8,776,000$ 8,638,000$ ######### 9,346,000$


Accounts payable (AP) 283,000$ 265,000$ 298,000$ 252,000$ 234,000$ 257,000$ 256,000$

Accruals 180,000 663,000 139,000 4,000 5,000 22,000 12,000

Other operating current liabilities 519,000 535,000 497,000 598,000 562,000 856,000 1,423,000

All short-term debt 250,000 452,000 404,000 0 0 0 0

Total current liabilities 1,232,000$ 1,915,000$ 1,338,000$ 854,000$ 801,000$ 1,135,000$ 1,691,000$

Long-term debt 2,686,000 2,354,000 1,757,000 3,009,000 3,611,000 2,912,000 3,084,000

Deferred taxes 630,000 586,000 1,083,000 1,038,000 981,000 1,324,000 1,292,000

Preferred stock 0 0 0 0 0 0 0

Other long-term liabilities 2,100,000 2,165,000 2,222,000 688,000 638,000 136,000 29,000

Total liabilities 6,648,000$ 7,020,000$ 6,400,000$ 5,589,000$ 6,031,000$ 5,507,000$ 6,096,000$

Par plus PIC Less treasury (and other adjustments) (4,000) 324,000 875,000 1,937,000 1,912,000 4,014,000 2,740,000

Retained earnings (RE) 2,284,000 1,939,000 1,584,000 1,250,000 695,000 1,007,000 510,000

Total common equity 2,280,000$ 2,263,000$ 2,459,000$ 3,187,000$ 2,607,000$ 5,021,000$ 3,250,000$

Total liabilities and equity 8,928,000$ 9,283,000$ 8,859,000$ 8,776,000$ 8,638,000$ ######### 9,346,000$

Check to see if sheets balance Balance Balance Balance Balance Balance Balance Balance

Statement of Cash FlowsOperating Activities

Net income 629,000$ 606,000$ 528,000$ 555,000$ (312,000)$ 497,000$ 510,000$

Depreciation 175,000 167,000 191,000 224,000 208,000 169,000 139,000

Change in deferred tax 44,000 (497,000) 45,000 57,000 (343,000) 32,000 1,292,000

Change in inventory 15,000 32,000 18,000 1,000 62,000 (25,000) (300,000)

Change in accounts receivable 33,000 (64,000) 1,000 11,000 80,000 (78,000) (585,000)

Change in other short-term operating assets 39,000 (30,000) (14,000) 12,000 (20,000) (24,000) (133,000)

Change in accounts payable 18,000 (33,000) 46,000 18,000 (23,000) 1,000 256,000

Change in accruals (483,000) 524,000 135,000 (1,000) (17,000) 10,000 12,000

Change in other current liabilities (16,000) 38,000 (101,000) 36,000 (294,000) (567,000) 1,423,000

Net cash from operating activities 454,000$ 743,000$ 849,000$ 913,000$ (659,000)$ 15,000$ 2,614,000$


Investment in PPE (225,000)$ (151,000)$ (250,000)$ (343,000)$ (330,000)$ (282,000)$ (894,000)$

Investment in other long-term oper. ass. (16,000) 10,000 8,000 20,000 409,000 32,000 (6,840,000)

Net cash from investing activities (241,000)$ (141,000)$ (242,000)$ (323,000)$ 79,000$ (250,000)$ (7,734,000)$

Financing Activities

Change in short-term investments 0$ 0$ 0$ 0$ 1,527,000$ (948,000)$ (579,000)$

Change in long-term investments (1,000) (2,000) (2,000) 3,000 101,000 6,000 (119,000)

Change in short-term debt (202,000) 48,000 404,000 0 0 0 0

Change in long-term debt 332,000 597,000 (1,252,000) (602,000) 699,000 (172,000) 3,084,000

Preferred dividends 0 0 0 0 0 0 0

Change in preferred stock 0 0 0 0 0 0 0

Change in other long-term liabilities (65,000) (57,000) 1,534,000 50,000 502,000 107,000 29,000

Change in common stock (Par + PIC) (328,000) (551,000) (1,062,000) 25,000 (2,102,000) 1,274,000 2,740,000

Common dividends (284,000) (251,000) (194,000) 0 0 0 0

Net cash from financing activities (548,000)$ (216,000)$ (572,000)$ (524,000)$ 727,000$ 267,000$ 5,155,000$

Net cash flow (335,000)$ 386,000$ 35,000$ 66,000$ 147,000$ 32,000$ 35,000$

Starting cash 701,000 315,000 280,000 214,000 67,000 35,000 0

Ending cash 366,000$ 701,000$ 315,000$ 280,000$ 214,000$ 67,000$ 35,000$

Check for consistency with cash shown in balance sheet OK OK OK OK OK OK OK

Scratch calculations

"Uncapitalizing" Capitalized interest

Annual capitalized interest - - - - - - -

Annual reduction in depreciation (assuming straight-line for 20 years) - - - - - - -

Annual addition to interest expense - - - - - - -

Annual reduction in tax expense - - - - - - -

Annual reduction in RE - - - - - - -

Cumulative reduction in gross PPE - - - - - - -

Cumulative depreciation of capitalized interest - - - - - - -

Cumulative reduction in net PPE - - - - - - -

Cumulative reduction in RE - - - - - - -

Cumulative reduction in book equity as though company had issue special dividend due to extra cash available from tax savings- - - - - - -


221352425.xls.ms_office 221352425.xls.ms_office Comprehensive

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A B C D E F G H I J K L M N

Comprehensive Statements

6 12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

Income StatementTotal net revenues 5,995,000.0 5,903,000.0 5,636,000.0 5,531,000.0 5,710,000.0 5,748,000.0 4,735,000.0

Cost of goods sold expense 2,500,000.0 2,485,000.0 2,243,000.0 2,234,000.0 2,590,000.0 2,617,000.0 1,994,000.0

Cost of services or operations expense

Depreciation expense (for tangible assets, if reported separately)

Amortization expense (for goodwill and Intangible, if reported separately)

Depreciation and amortization expense (if reported combined) 124,000.0 126,000.0 127,000.0 117,000.0 113,000.0 98,000.0 69,000.0

Research & development expense

Sales & marketing expenses (if not included in SGA)

General & administrative expenses (if not included in SGA)

Selling, gen. & admin. expense [if reported as a single item] 2,268,000.0 2,257,000.0 2,233,000.0 2,135,000.0 2,075,000.0 2,018,000.0 1,659,000.0

Minority interest expense (if shown as pre-tax operating expense)

Merger and restructuring costs - - - - 1,096,000.0 82,000.0 27,000.0

Asset impairment losses or write-downs

Extraordinary charges or expenses (if shown on pre-tax basis)

Extraordinary credit or income (if shown on a pre-tax basis)

Other operating expenses (Income) 11,000.0 11,000.0 8,000.0 (40,000.0) 4,000.0 - -

Interest expense (Income)

Interest capitalized

Interest income (123,000.0) (111,000.0) (125,000.0) (239,000.0) (225,000.0) (189,000.0) (211,000.0)

Reserve expense (income) (increase in reserves is expense, decrease is income)

Investment income (Expense) (if shown on pre-tax basis)

Gain (loss) on sale of assets or discontinued operation (if shown on pre-tax basis) - - - - - 71,000.0 32,000.0

Remitted income (Expense) or equity earnings (Losses) in affiliates

Unremitted income (Expense) or equity earnings (Losses) in affiliates

Minority interest expense (if shown as pre-tax nonoperating expense)

Losses on equity investees and other (if shown on pre-tax basis)

Other nonoperating income (Expense) (if shown on pre-tax basis) 9,000.0 12,000.0 (79,000.0) 22,000.0 18,000.0 - -

Special nonrecurring items income (Expense) (if shown on pre-tax basis)

Provision for income tax expense (Rebate) 349,000.0 320,000.0 294,000.0 315,000.0 (61,000.0) 322,000.0 298,000.0

Minority interest expense (if shown on after-tax basis)

Equity in earnings expense (if shown on after-tax basis)

Extraordinary items (if shown on after-tax basis) - - - - - - -

Discontinued operations (if shown on after-tax basis)

Extraordinary items and discontinued operations (if shown on after-tax basis)

Investment gains (Losses) (if shown on after-tax basis) - 1,000.0 1,000.0 2,000.0 2,000.0 2,000.0 3,000.0

All other income (Losses) (if shown on after-tax basis) - - - - - 2,000.0 (2,000.0)

Cumulative effect of accounting changes

Net income from Actual Sheet 629,000.0 606,000.0 528,000.0 555,000.0 (312,000.0) 497,000.0 510,000.0

Calculated net income from Comprehensive Sheet 629,000.0 606,000.0 528,000.0 555,000.0 (312,000.0) 497,000.0 510,000.0

Check to see if calculated net income is consistent with Actual sheet OK OK OK OK OK OK OK

Balance SheetAssets

Cash and equivalents 366,000.0 701,000.0 315,000.0 280,000.0 214,000.0 67,000.0 35,000.0

Marketable securities

Notes receivable - - - - - 1,527,000.0 579,000.0

Short-term investments or investment securities

Accounts receivable 602,000.0 635,000.0 571,000.0 572,000.0 583,000.0 663,000.0 585,000.0

Tax refund receivable

Progress payments

Prepaid expenses

Current deferred tax asset 66,000.0 96,000.0 57,000.0 53,000.0 93,000.0 81,000.0 61,000.0

Inventories 197,000.0 212,000.0 244,000.0 262,000.0 263,000.0 325,000.0 300,000.0

Other nonoperating current assets

Other operating current assets 104,000.0 113,000.0 122,000.0 112,000.0 84,000.0 76,000.0 72,000.0

Total current assets 1,335,000 1,757,000 1,309,000 1,279,000 1,237,000 2,739,000 1,632,000

Long-term receivables

Investments in unconsolidated subsidiaries 14,000.0 13,000.0 11,000.0 9,000.0 12,000.0 13,000.0 12,000.0

Other investments

Net property, plant, & equip (PPE) 1,202,000.0 1,152,000.0 1,168,000.0 1,109,000.0 990,000.0 868,000.0 755,000.0

Goodwill (if shown separately) 2,983,000.0 2,980,000.0 2,984,000.0 2,983,000.0 2,983,000.0 3,183,000.0 3,180,000.0

Intangibles (if shown separately) 2,684,000.0 2,677,000.0 2,691,000.0 2,702,000.0 2,712,000.0 3,617,000.0 3,651,000.0

Cost in excess of fair value of net assets acquired also called goodwill)

Goodwill and intangibles (if shown combined)

Deferred tax asset (Long-term) 130,000.0 131,000.0 144,000.0 151,000.0 140,000.0 8,000.0 9,000.0

Long-term notes receivable

Other operating long-term assets 580,000.0 573,000.0 552,000.0 543,000.0 564,000.0 - -

Deferred charges

Deposits

Investments & advances to subsidiaries

Other nonoperating long-term assets - - - - - 100,000.0 107,000.0

Total assets from Actual Sheet 8,928,000.0 9,283,000.0 8,859,000.0 8,776,000.0 8,638,000.0 10,528,000.0 9,346,000.0

Calculated total assets from Comprehensive Sheet 8,928,000.0 9,283,000.0 8,859,000.0 8,776,000.0 8,638,000.0 10,528,000.0 9,346,000.0

Check to see if total assets consistent with Actual sheet OK OK OK OK OK OK OK


Notes payable

Current portion of long-term debt

Current portion of capitalized leases 250,000.0 452,000.0 404,000.0 - - - -

All other short-term debt

Accounts payable 283,000.0 265,000.0 298,000.0 252,000.0 234,000.0 257,000.0 256,000.0

Short-term unearned revenue 65,000.0 65,000.0 65,000.0 - - - -

Interest payable (or accrued interest)

Dividends payable 70,000.0 68,000.0 56,000.0 - - - -

Short-term deferred taxes

Taxes payable or accrued taxes 45,000.0 530,000.0 18,000.0 4,000.0 5,000.0 22,000.0 12,000.0

Accrued wages or salary

Other accrued expenses or accruals

Other nonoperating current liabilities

Other operating current liabilities 519,000.0 535,000.0 497,000.0 598,000.0 562,000.0 856,000.0 1,423,000.0

Total current liabilities 1,232,000 1,915,000 1,338,000 854,000 801,000 1,135,000 1,691,000

Non-current portion of long-term debt 2,554,000.0 2,256,000.0 1,687,000.0 2,960,000.0 3,522,000.0 2,912,000.0 3,084,000.0

Mortgages

Non-current portion of capitalized leases

Convertible debt

Any other long-term debt

Provision for risks and charges

Reserve accounts

Deferred tax liability in untaxed reserves 630,000.0 586,000.0 1,083,000.0 1,038,000.0 981,000.0 1,324,000.0 1,292,000.0

Deferred income taxes (Long-term)

Deferred income 1,386,000.0 1,449,000.0 1,515,000.0 - - - -

Long-term unearned revenue

Restructuring obligations

Commitments and contingencies

Other long-term liabilities 714,000.0 716,000.0 707,000.0 688,000.0 638,000.0 136,000.0 29,000.0

Retirement, pension, and health insurance related liabilities 132,000.0 98,000.0 70,000.0 49,000.0 89,000.0 - -

Minority interest

Nonequity reserves

Preferred stock

Common stock (at par)

Common stock capital suprplus or paid-in-capital 1,310,000.0 1,633,000.0 2,087,000.0 3,159,000.0 3,143,000.0 5,001,000.0 3,249,000.0

Revaluation of reserves

Other appropriated reserves

Unappropriated (free) reserves

Retained earnings 1,080,000.0 740,000.0 400,000.0 87,000.0 (430,000.0) - -

Equity in untaxed reserves

ESOP guarantees

Treasury stock

Common stock warrants and stock options

Other equity

Unrealized gain (loss) on marketable securities

Accumulated other comprehensive income or cumulative other adj. (110,000.0) (110,000.0) (28,000.0) (59,000.0) (106,000.0) 20,000.0 1,000.0

Unrealized gain (loss) on foreign exchange

Cumulative foreign currency translations

Total shareholder equity from Actual Sheet 2,280,000.0 2,263,000.0 2,459,000.0 3,187,000.0 2,607,000.0 5,021,000.0 3,250,000.0

Calculated total shareholder equity from Comprehensive Sheet 2,280,000.0 2,263,000.0 2,459,000.0 3,187,000.0 2,607,000.0 5,021,000.0 3,250,000.0

Check to see if shareholder total eq. is consistent with Actual sheets OK OK OK OK OK OK OK

Total Liabilities and Equity from Actual Sheet 8,928,000.0 9,283,000.0 8,859,000.0 8,776,000.0 8,638,000.0 10,528,000.0 9,346,000.0

Calculated Total Liabilities and Equity from Comprehensive Sheet 8,928,000.0 9,283,000.0 8,859,000.0 8,776,000.0 8,638,000.0 10,528,000.0 9,346,000.0

Check to see if Total Liab. & Eq. consistent with Comprehensive sheet OK OK OK OK OK OK OK

Check for balancing of statements Balances Balances Balances Balances Balances Balances Balances

Required Items: You must supply these inputs in the

yellow cells, unless they are truly zero.

Required Items from Statement of Cash Flows

Preferred dividends paid

Common dividends paid (284,000.0) (251,000.0) (194,000.0) - - - -

Depreciation of PPE and tangible Assets 175,000.0 167,000.0 191,000.0 224,000.0 208,000.0 169,000.0 139,000.0

Amortization of goodwill and intangibles

Required Items from Footnotes or Annual Report

Number of shares outstanding 205,292.7 212,130.2 223,936.2 254,109.0 253,685.7 - -

Required Items from Financial Statements or User's Judgment

Assumed marginal tax rate 35.7% 34.6% 35.8% 36.3% 16.3% 39.5% 36.9%

Optional Items for Special Accounting Adjustments: If you

choose to make any of the special accounting

adjustments described in the Chapter 10 Appendix, then

you must supply these inputs in the yellow cells;

otherwise, just leave them as the default values already

here.

LIFO reserve (from Footnotes of Annual Report) - - - - - - - -

Interest rate on pension liabilities 6.22% 6.22% 6.22% 6.22% 6.22% 6.22% 6.22%

Interest rate on operating leases 0% 0% 0% 0% 0% 0% 0%

Capitalized value of operating leases - - - - - - -

Stock options (Warrants) - - - - - - -

Capitalized operating costs - - - - - - - - - -

Special goodwill impairment or accounting change - - - - - - -

Statement of Cash Flows (Calculated from the

Income Sheet and Balance Sheets shown above.

Operating ActivitiesNet income 629,000.0 606,000.0 528,000.0 555,000.0 (312,000.0) 497,000.0 510,000.0

Adjustments for reconciliation of RE account (5,000) (15,000) (21,000) (38,000) (118,000) (497,000) (510,000)

Depreciation and amortization 175,000.0 167,000.0 191,000.0 224,000.0 208,000.0 169,000.0 139,000.0

Change in deferred tax 31,000 (26,000) 3,000 29,000 (144,000) (19,000) (70,000)

Change in operating current assets 57,000.0 (23,000.0) 9,000.0 (16,000.0) 134,000.0 (107,000.0) (957,000.0)

Change in operating current liabilities (481,000) 529,000 80,000 53,000 (334,000) (556,000) 1,691,000

Net cash from operating activities 406,000 1,238,000 790,000 807,000 (566,000) (513,000) 803,000


Investment in PPE (225,000) (151,000) (250,000) (343,000) (330,000) (282,000) (894,000)

Investment in other long-term oper. ass. (18,000) (5,000) (1,000) 34,000 542,000 30,000 (6,843,000)

Net cash from investing activities (243,000) (156,000) (251,000) (309,000) 212,000 (252,000) (7,737,000)

Financing ActivitiesChanges in short-term investments - - - - 1,527,000 (948,000) (579,000)

Changes in long-term investments - - - - 100,000 7,000 (107,000)

Changes in all short-term debt (202,000) 48,000 404,000 - - - -

Changes in all long-term debt 298,000 569,000 (1,273,000) (562,000) 610,000 (172,000) 3,084,000

Changes in all other long-term liabilities 13,000 (526,000) 1,600,000 67,000 248,000 139,000 1,321,000

Change in preferred stock - - - - - - -

Change in Par + PIC (323,000) (454,000) (1,072,000) 16,000 (1,858,000) 1,752,000 3,249,000

Change in common stock warrants and stock options - - - - - - -

Change in treasury and cumulative adjustments - (82,000) 31,000 47,000 (126,000) 19,000 1,000

Preferred dividends - - - - - - -

Common dividends (284,000) (251,000) (194,000) - - - -

Net cash from financing activities (498,000) (696,000) (504,000) (432,000) 501,000 797,000 6,969,000

Net cash flow (335,000) 386,000 35,000 66,000 147,000 32,000 35,000

Starting cash from balance sheet 701,000 315,000 280,000 214,000 67,000 35,000 -

Ending cash 366,000 701,000 315,000 280,000 214,000 67,000 35,000

Check to see if ending cash is consistent with balance sheet OK OK OK OK OK OK OK


Standardized Annual Income Statement Report Date 12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006

Currency USD USD USD USD USD USD USD

Audit Status Not Qualified Not Qualified Not Qualified Not Qualified Not Qualified Not Qualified Not Qualified

Consolidated Yes Yes Yes Yes Yes Yes Yes

Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands

Sales Revenue 5,995,000 5,903,000 5,636,000 5,531,000 5,710,000 5,748,000 4,735,000

Total Revenue 5,995,000 5,903,000 5,636,000 5,531,000 5,710,000 5,748,000 4,735,000

Direct Costs 2,500,000 2,485,000 2,243,000 2,234,000 2,590,000 2,617,000 1,994,000

Gross Profit 3,495,000 3,418,000 3,393,000 3,297,000 3,120,000 3,131,000 2,741,000

Selling General & Admin 2,268,000 2,257,000 2,233,000 2,135,000 2,075,000 2,018,000 1,659,000

Depreciation & Amortization 124,000 126,000 127,000 117,000 113,000 98,000 69,000

Restruct Remediation & Impair 1,096,000 82,000 27,000

Other Operating Expense 11,000 11,000 8,000 -40,000 4,000 0 0

Total Indirect Operating Costs 2,403,000 2,394,000 2,368,000 2,212,000 3,288,000 2,198,000 1,755,000

Operating Income 1,092,000 1,024,000 1,025,000 1,085,000 -168,000 933,000 986,000

Interest Income -123,000 -111,000 -125,000 -239,000 -225,000 -189,000 -211,000

Gains on Sale of Assets 71,000 32,000

Other Non-Operating Income 9,000 12,000 -79,000 22,000 18,000

Total Non-Operating Income -114,000 -99,000 -204,000 -217,000 -207,000 71,000 32,000

Other Income/Expense 2,000 -2,000

Earnings Before Tax 978,000 925,000 821,000 868,000 -375,000 817,000 805,000

Taxation 349,000 320,000 294,000 315,000 -61,000 322,000 298,000

Earnings After Tax 629,000 605,000 527,000 553,000 -314,000 495,000 507,000

Equity Earnings 1,000 1,000 2,000 2,000 2,000 3,000

Extraordinary Items 0 0 0 0 0 0 0

Accounting Changes 0 0 0 0 0 0 0

Net Income 629,000 606,000 528,000 555,000 -312,000 497,000 510,000

Preference Dividends & Similar 0 0 0 0 0 0 0

Net Income to Common 629,000 606,000 528,000 555,000 -312,000 497,000 510,000

Average Shares Basic 210,600,000 218,700,000 240,400,000 254,200,000 254,000,000

EPS Net Basic 3 3 2 2 -1.23

EPS Continuing Basic 3 3 2 2 -1.23

Average Shares Diluted 212,300,000 221,200,000 242,600,000 255,200,000 254,000,000

EPS Net Diluted 3 3 2 2 -1.23

EPS Continuing Diluted 3 3 2 2 -1.23

Shares Outstanding 205,292,657 212,130,239 223,936,156 254,109,047 253,685,733 0 0

Standardized Annual Cash Flows Report Date 12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006


Audit Status Not Qualified Not Qualified Not Qualified Not Qualified Not Qualified Not Qualified Not Qualified


Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands

Net Income 629,000 606,000 528,000 555,000 -312,000 497,000 510,000

Adjustments from Inc to Cash 283,000 -273,000 364,000 332,000 1,058,000 185,000 132,000

Change in Working Capital -454,000 427,000 1,643,000 -22,000 -37,000 -79,000 -61,000

Cash Flow from Operations 458,000 760,000 2,535,000 865,000 709,000 603,000 581,000

Purchase of Pty Plant & Equip -193,000 -215,000 -246,000 -317,000 -304,000 -230,000 -158,000

Purchase of Investments -2,000 -1,000 -165,000 -1,967,000 -526,000

Proceeds from Pty Plant & Equip 7,000 3,000 18,000 5,000 4,000 6,000 16,000

Disposal of Investments 1,540,000 1,008,000 166,000

Other Investing Cash Flows -7,000 -3,000 4,000 61,000 -1,000 96,000 0

Cash Flow from Investing -193,000 -217,000 -225,000 -251,000 1,074,000 -1,087,000 -502,000

Change in ST Debt 0

Change in LT Debt 50,000 600,000 -978,000 -550,000 456,000 -610,000 30,000

Change in Equity -362,000 -492,000 -1,107,000 1,000 4,000 1,000

Payment of Dividends -284,000 -251,000 -194,000

Other Financing Cash Flows -7,000 -9,000 -1,000 -5,000 -2,081,000 1,121,000 -103,000

Cash Flow from Financing -603,000 -152,000 -2,280,000 -554,000 -1,625,000 515,000 -72,000

Effect of Exchange Rate 3,000 -5,000 5,000 6,000 -11,000 1,000

Change in Cash -335,000 386,000 35,000 66,000 147,000 32,000 7,000

Opening Cash 701,000 315,000 280,000 214,000 67,000 35,000 28,000

Closing Cash 366,000 701,000 315,000 280,000 214,000 67,000 35,000

Depn & Amortn (CF) 175,000 167,000 191,000 224,000 208,000 169,000 139,000

Net Purch of Pty Plant & Equip -186,000 -212,000 -228,000 -312,000 -300,000 -224,000 -142,000

EBITDA 1,216,000

As Reported Annual Balance Sheet

Report Date 12/31/2012 12/31/2011 12/31/2010 12/31/2009 12/31/2008 12/31/2007 12/31/2006


Audit Status Not

Qualified

Not

Qualified

Not

Qualified

Not

Qualified

Not

Qualified

Not

Qualified

Not

Qualified


Scale Thousands Thousands Thousands Thousands Thousands Thousands ThousandsCash & cash equivalents 366,000 701,000 315,000 280,000 214,000 67,000 35,000

Accounts receivable, trade, gross 555,000 588,000 541,000 547,000 545,000 558,000 576,000

Less: allowance for doubtful accounts 3,000 3,000 5,000 7,000 13,000 20,000 14,000

Accounts receivable, trade, net 552,000 585,000 536,000 540,000 532,000 538,000 562,000

Accounts receivable, other 50,000 50,000 35,000 32,000 51,000 59,000 18,000

Related party receivable 66,000 5,000

Note receivable from related parties 1,527,000 579,000

Raw materials 114,000 91,000 97,000 105,000 78,000 110,000 105,000

Work in process 5,000 4,000 5,000 4,000 5,000

Finished goods 151,000 171,000 184,000 193,000 235,000 245,000 214,000

Inventories at first-in, first-out (FIFO) 270,000 266,000 286,000

Reduction to last-in, first-out (LIFO) cost 73,000 54,000 42,000 40,000 50,000 30,000 24,000

Inventories 197,000 212,000 244,000 262,000 263,000 325,000 300,000

Deferred tax assets 66,000 96,000 57,000 53,000 93,000 81,000 61,000

Prepaid expenses & other current assets 104,000 113,000 122,000 112,000 84,000 76,000 72,000

Total current assets 1,335,000 1,757,000 1,309,000 1,279,000 1,237,000 2,739,000 1,632,000

Land 72,000 80,000 81,000 90,000 84,000 90,000 79,000

Buildings & improvements 465,000 422,000 408,000 341,000 272,000 284,000 265,000

Machinery & equipment 1,275,000 1,165,000 1,084,000 995,000 911,000 570,000 472,000

Cold drink equipment 308,000 284,000 265,000 201,000 157,000 282,000 258,000

Software 195,000 181,000 153,000 136,000 111,000 125,000 105,000

Construction in progress 50,000 58,000 90,000 135,000 141,000 120,000 75,000

Gross property, plant & equipment 2,365,000 2,190,000 2,081,000 1,898,000 1,676,000 1,471,000 1,254,000

Less: accumulated depreciation & amortization 1,163,000 1,038,000 913,000 789,000 686,000 603,000 499,000

Property, plant & equipment, net 1,202,000 1,152,000 1,168,000 1,109,000 990,000 868,000 755,000

Investments in unconsolidated subsidiaries 14,000 13,000 11,000 9,000 12,000 13,000 12,000

Goodwill, net 2,983,000 2,980,000 2,984,000 2,983,000 2,983,000 3,183,000 3,180,000

Other intangible assets, gross 2,795,000 2,783,000 2,788,000

Less: accumulated amortization - other intangible assets 111,000 106,000 97,000

Other intangible assets, net 2,684,000 2,677,000 2,691,000 2,702,000 2,712,000 3,617,000 3,651,000

Long-term receivables from Cadbury 386,000

Long-term receivables from Kraft Foods Inc. (Kraft) 430,000 419,000 402,000

Long-term receivables Mondelez 439,000

Deferred financing costs, net 13,000 15,000 15,000 23,000 66,000

Customer incentive programs 63,000 82,000 84,000 84,000 83,000

Derivative instruments 26,000 23,000

Other non-current assets 39,000 23,000 34,000 34,000 29,000

Other non-current assets 580,000 573,000 552,000 543,000 564,000

Other non-current assets 100,000 107,000

Non-current deferred tax assets 130,000 131,000 144,000 151,000 140,000 8,000 9,000

Total assets 8,928,000 9,283,000 8,859,000 8,776,000 8,638,000 10,528,000 9,346,000

Trade accounts payable

Customer rebates 226000 225000 224,000 209,000 177,000 200,000 184,000

Accrued compensation 105000 98000 102,000 126,000 86,000 127,000 96,000

Insurance reserves 43000 35000 29,000 68,000 59,000

Third party interest accrual & interest rate swap liability 24,000 58,000

Interest accrual & interest rate swap liability 27000 52000 16,000

Dividends payable 70000 68000 56,000

Other current liabilities 118000 125000 126,000 171,000 182,000 228,000 252,000

Total Other Current Liabilities 589000 603000 553000 598000 562000 555000 532000

Accounts payable & accrued expenses 851,000 850,000 796,000 812,000 788,000

Accounts payable 283,000 265,000 298,000 252,000 234,000 257,000 256,000

Deferred revenue 65,000 65,000 65,000

Related party payable 175,000 183,000

Current portion of long-term debt payable to related parties 126,000 708,000

Current portion of long-term obligations 250,000 452,000 404,000

Income taxes payable 45,000 530,000 18,000 4,000 5,000 22,000 12,000

Total current liabilities 1,232,000 1,915,000 1,338,000 854,000 801,000 1,135,000 1,691,000

Senior unsecured notes 2,748,000 2,701,000 2,081,000 2,542,000

Revolving credit facility 405,000

Less: current portion 250,000 452,000 404,000

Subtotal - long-term obligations 2,498,000 2,249,000 1,677,000 2,947,000

Long-term capital lease obligations 56,000 7,000 10,000 13,000

Long-term obligations 2,554,000 2,256,000 1,687,000 2,960,000

Long-term debt payable to related parties 2,893,000 2,541,000

Long-term debt payable to third parties 3,522,000 19,000 543,000

Non-current deferred tax liabilities 630,000 586,000 1,083,000 1,038,000 981,000 1,324,000 1,292,000

Non-current deferred revenue 1,386,000 1,449,000 1,515,000

Long-term payables due to Cadbury 112,000

Long-term payable due to Mondelez 98,000

Long-term payables due to Kraft 102,000 112,000 115,000

Liabilities for unrecognized tax benefits 515,000

Liabilities for unrecognized tax benefits & other tax related items 574,000 567,000 561,000 534,000

Long-term pension & postretirement liability 55,000 44,000 19,000 49,000 89,000

Insurance liability 77,000 54,000 51,000

Other non-current liabilities 42,000 47,000 34,000 39,000 11,000 136,000 29,000

Other non-current liabilities 846,000 814,000 777,000 737,000 727,000

Total liabilities 6,648,000 7,020,000 6,400,000 5,589,000 6,031,000 5,507,000 6,096,000

Cadbury Schweppes' net investment 5,001,000 3,249,000

Common stock 2,000 2,000 2,000 3,000 3,000

Additional paid-in capital 1,308,000 1,631,000 2,085,000 3,156,000 3,140,000

Retained earnings (accumulated deficit) 1,080,000 740,000 400,000 87,000 -430,000

Net foreign currency translation adjustment -8,000 -27,000 7,000

Net change in pension liability -56,000 -48,000 -31,000

Net cash flow hedges -46,000 -35,000 -4,000

Accumulated other comprehensive income (loss) -110,000 -110,000 -28,000 -59,000 -106,000 20,000 1,000

Total stockholders' equity 2,280,000 2,263,000 2,459,000 3,187,000 2,607,000 5,021,000 3,250,000

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