John M. Case Income Statement
1985 Sales 16,024 Expansion 0 Net Sales ales 16,0 6,024 COGS 9454 Intial Investment 200 Merchandising 450 S&A Expe Expen nse 3429 34 29 EBIT 2491 Financing Expens 249 Interest Expense 1675 Profit Before Tax 567 1 Fed Tax 88 Profit after Tax 478 E PS 0.96 2.99% 1 - Starting in 1991 we used a
1986 1987 1988 16,844 17,686 18,570 1,000 1,400 1,960 17,8 17 ,84 44 19 19,0 ,086 86 20, 20,5 530 10,528 11,261 12,113 450 3,81 ,819 4,0 4,084 4,3 4,393 3,047 3,741 4,024 175 0 0 1538 1369 908 1334 2372 3116 208 370 486 1126 2002 2630 2.25 4.00 5.26 6.31% 10.49% 12.81% tax rate of 23% and grew the
1989 1990 1991 19,498 20,472 21,496 2,744 3,114 3,535 22, 22,24 242 2 23,5 3,586 25,0 5,030 13,123 13,916 14,768 4,76 4,760 0 5,0 5,047 5,3 5,357 4,359 4,623 4,906 0 0 800 8 00 800 3559 3823 4,106 555 59 6 944 3004 3227 3,162 6.01 6.29 6.17 13.51% 13.68% 12.63% tax rate by 1 percent each ye
Balance Sheet (000's)
1985
1986
1987
1988
1989
1990
9486 4182 1026 14694 2310 122 17126
10564 4657 1142 16363 2270 136 18769
11299 4981 1222 17502 2230 145 19877
12154 5358 1314 18826 2190 156 21172
13167 5805 1423 20396 2150 169 22715
13963 6156 1510 21629 2110 17 9 23918
6023 383 26 6432 500 10194 17126
6461 427 61 6949 500 11320 18769
5490 457 108 6055 500 13322 19877
4087 491 142 4720 500 15952 21172
2565 532 162 3259 500 18956 22715
48 9 56 4 17 4 1228 50 8 22183 23918
1
Assets Cash Acct Rec Inv total Current A Net, P,P,&E2 Misc. Asset. Total Assets Liab. Acct. Payable3 Accrued Expens Accrued Inc. Ta Current liab. Common Stock 6 Retained Earni Total Liab. & S/
1- All assets were calculated using persentage of net sales 2-Assumed a 5 year straight line depreciation with $0 salvage value on the $20 3-Plug figure 4- Calculated as a percentage of Selling and Admin. Expenses 5-Calculated as a percentage of Fed. Income Taxes 6-500,000 shares from Management group plus warrants issued in 1990 to Vent
1992 1993 1994 1995 1996 22,570 23,699 24,884 26,128 27,434 4,012 4,554 5,168 5,866 6,658 26,582 28,253 30,052 31,994 34,093 15,684 16,669 17,731 18,877 20,115 5,689 6,046 6,431 6,847 7,296 5,210 5,538 5,890 6,271 6,682 800 4,410 5,538 5,890 6,271 6,682 1,058 1,384 1,531 1,693 1,871 3,352 4,153 4,359 4,578 4,811 6.54 8.10 8.50 8.93 9.38 12.61% 14.70% 14.50% 14.31% 14.11% ar
Net Working Capital (000's) 1985 1986 Cash 9486 10564 Acct Rec 4182 4657 Inv. 1026 1142 C/L (6432) (6949) NWC 8262 9414
1987 11299 4981 1222 (6055) 11447
1988 12154 5358 1314 (4720) 14106
1989 13167 5805 1423 (3259) 17137
,000 intial investment for the expansion project
ure Capitalists
1990 13963 6156 1510 (1228) 20401
John M Case Free Cash Flow Valuation 1985 1 EBIT*(1-T) 2107 Add Non-Cash 240 Less:Increase in N 156 Less:Cap expense 770 Free Cash Flow 1421
Debt Retirement Schedule Bank Loan 2 1421 Sellers' Debt
1986 2520 260 162 584 2034
1987 3053 284 170 142 3025
2034
2545 480
Subordinated Loan 3
1988 3195 300 180 150 3165
1989 3400 310 190 466 3054
1990 3583 340 200 600 3123
2355 5520 0
699
2801
1988 2630
1989 3004
1990 3227
Price-Earnings Multiple DeLuther Wakefield C Officomp P/E Ratio 8.7 7.2 10.5 Avg. P/E Ratios 8.8
Case Co. Projected Net Inc Avgerage net Inco
1985 478 2078
Multiple EV Selling Price Bank Loan Company Cash Seller's Debt Equity Subordinate Loan
19765 20000 6000 4000 6000 500 3500
1986 1126
1987 2002
28397.6
1 - Starting in 1991 we used a tax rate of 23% and grew the tax rate by 1 percent each yea 2 -Loan paid off by cash flow and new bank term loan of 2.355 million to be paid off the foll 3 - In 1992 the loan to the VC is completely paid off plus a payment of 1.17 million in order
1991 3778 340 210 600 3308
1992 3960 340 220 600 3480
1993 4154 340 230 600 3664
1994 4359 340 240 600 3859
1995 4578 340 250 600 4068
1996 4811 340 260 600 4291
WACC Bank Loa Sellers' Subordin WACC Bank Wei Seller's VC Loan Used th
Bank Loan Case's De Venture ### Assume
wing year to guarantee the VC's 22% IRR
Coupon Rate n 12% ebt 4% ate Loan 9% 8.40% ght ebt
Weight 30.8% 30.8% 38.5%
6000/19500=.308 6000/19500=.308 7500/19500=.385
e Weighted Average Cost of Debt for the WACC due to no anticipated Dividend Payouts until all debts have been repayed is repaid first because it is the Senior debt t is repaid second because of its 5-year term apital debt is repaid last because it is subordinate o the Bank's and Case's debt 5-year term d tax rate as computed in case exhibit
Venture Capitalist Valuation 1985 -3500
1986
Initial Outlay Interest Revenue 315 Principal Repayment 8,160 Warrants @ $55.88 per share
Venture Capitalist Contribution Interest Payments at 9% Warrant Value 13% of 3500
3500 455 3500
1987
1988
315
315
1989
1990
315 699
252 2801 456
Equity Selling P Bank Loa Compan Seller's Equity Subordin
1990 28398 20000 6000 4000 6000 500 3500
1991 0 340 210 600 -470
1992 0 340 220 600 -480
1993 0 340 230 600 -490
1994 0 340 240 600 -500
1995 0 340 250 600 -510
1996 0 340 260 600 -520
1991 21,496 3,535 25,030 14,768 5,357 7,834
1992 22,570 4,012 26,582 15,684 5,689 8,526
1993 23,699 4,554 28,253 16,669 6,046 9,294
1994 24,884 5,168 30,052 17,731 6,431 10,145
1995 26,128 5,866 31,994 18,877 6,847 11,092
1996 27,434 6,658 34,093 20,115 7,296 12,145
Price-Earnings Multiple DeLuthe Wakefiel Officomp P/E Ratio 8.7 7.2 10.5 Avg. P/E 8.8
Case Co. Projecte Avgerag
1985 478 2078
1986 1126
1987 2002
1988 2630
1989 3004
1990 3227
