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Year
1
2
3
4
5
% of Face Value
58%
71
81
96
100
Exhibit 1
Net sales
Cost of sales
Gross profit on sales
Selling and administrative expenses
Other income and (expense), net
Profit before income taxes
Federal income taxes
Net profit
1981
1982
1983
1984
$9,740
5,836
$3,904
2,216
40
$1,728
816
$10,044
5,648
$4,396
2,072
108
$2,432
972
$11,948
6,994
$4,954
2,470
70
$2,554
920
$13,970
8,304
$5,666
3,022
128
$2,772
942
$15,260
9,298
$5,962
3,274
120
$2,808
842
$912
$1,460
$1,634
$1,830
$1,966
Exhibit 2
ASSETS
Current assets:
Cash and marketable securities
Accounts receivable
Inventories at lower of cost or market
Prepaid expenses
Total current assets
Property, plant, and equipment, net
Miscellaneous assets
Total assets
$5,762
2,540
588
108
$8,998
2,110
74
$11,182
0.515292
0.804686
Current liabilities:
Accounts payable
Accrued expenses
Accrued income taxes
Total current liabilities
Common stock ($1.00 par value)
Retained profits
Shareholders equity
Total liabilities and
shareholders equity
$654
366
246
$1,266
200
9,716
9,916
$11,182
Exhibit 3
Ten-Year Summary of Operations, 1975 -1984 ($ 000s, except per share data)
Net sales
1975
$7,688
1976
$8,356
1977
$8,526
1978
$8,790
1979
$9,350
1980
$9,740
1981
$10,044
1982
$11,948
1983
$13,970
1984
$15,260
Net profit
Net profit margin
Dividends
Dividends payout ratio
Earnings per share
Share
Net profit margin
638
8.3%
600
94%
$3.19
200.00
8.3%
668
8.0%
200
30%
$3.34
200.00
8.0%
742
8.7%
280
38%
$3.71
200.00
8.7%
748
8.5%
280
37%
$3.74
200.00
8.5%
758
8.1%
440
58%
$3.79
200.00
8.1%
912
9.4%
440
48%
$4.56
200.00
9.4%
1,460
14.5%
480
33%
$7.30
200.00
14.5%
1,634
13.7%
1,220
75%
$8.17
200.00
13.7%
1,830
13.1%
1,374
75%
$9.15
200.00
13.1%
1,966
12.9%
1,480
75%
$9.83
200.00
12.9%
Exhibit 4
Cash
% of sales
Accounts receivable
% of sales
Inventories
% of sales
Current liabilities
% of sales
Net working capital
Delta working capital
CAPEX
% of depreciation
Jan.
$5,536
Feb.
$5,714
Mar.
$5,396
Apr.
$4,784
May
$4,328
Jun.
$4,098
Jul.
$2,354
Aug.
$766
Sep.
$2,050
Oct.
$3,830
Nov.
$5,734
Dec.
$5,762
1,480
760
734
804
718
604
3,432
6,104
6,164
4,322
2,398
2,540
1,124
1,666
2,210
2,752
3,294
3,838
2,754
1,670
526
588
608
588
(1,186)
(1,220)
(1,242)
(1,146)
(1,422)
(1,344)
(1,072)
(1,216)
(1,174)
(1,384)
(1,340)
(1,266)
$6,954
$6,920
$7,098
$7,194
$6,918
$7,196
$7,468
$7,324
$7,566
$7,356
$7,400
$7,624
$428
2.80%
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
$1,664
10.90%
1,936
12.69%
2,166
-14.19%
(1,266)
-8.30%
$168
156
$1,763
11.00%
$2,003
12.50%
$2,243
-14.00%
$1,362
-8.50%
$160
162
$1,853
11.00%
$2,106
12.50%
$2,358
-14.00%
$1,432
-8.50%
$168
170
$1,945
11.00%
$2,211
12.50%
$2,476
-14.00%
$1,503
-8.50%
$177
180
$2,043
11.00%
$2,321
12.50%
$2,600
-14.00%
$1,578
-8.50%
$186
190
$2,145
11.00%
$2,437
12.50%
$2,730
-14.00%
$1,657
-8.50%
$195
200
$2,252
11.00%
$2,559
12.50%
$2,866
-14.00%
$1,740
-8.50%
$205
$205
$2,365
11.00%
$2,687
12.50%
$3,009
-14.00%
$1,827
-8.50%
$215
$215
$2,483
11.00%
$2,821
12.50%
$3,160
-14.00%
$1,918
-8.50%
$226
$226
$2,607
11.00%
$2,962
12.50%
$3,318
-14.00%
$2,014
-8.50%
$237
$237
$2,737
11.00%
$3,110
12.50%
$3,484
-14.00%
$2,115
-8.50%
$249
$249
$2,874
11.00%
$3,266
12.50%
$3,658
-14.00%
$2,221
-8.50%
$261
$261
134
82.72%
142
83.53%
150
83.33%
466
245.26%
600
300.00%
Exhibit 4
Cash
% of sales
Accounts receivable
% of sales
Inventories
% of sales
Current liabilities
% of sales
Net working capital
Delta working capital
CAPEX
% of depreciation
Jan.
$5,536
Feb.
$5,714
Mar.
$5,396
Apr.
$4,784
May
$4,328
Jun.
$4,098
Jul.
$2,354
Aug.
$766
Sep.
$2,050
Oct.
$3,830
Nov.
$5,734
Dec.
$5,762
1,480
760
734
804
718
604
3,432
6,104
6,164
4,322
2,398
2,540
1,124
1,666
2,210
2,752
3,294
3,838
2,754
1,670
526
588
608
588
(1,186)
(1,220)
(1,242)
(1,146)
(1,422)
(1,344)
(1,072)
(1,216)
(1,174)
(1,384)
(1,340)
(1,266)
$6,954
$6,920
$7,098
$7,194
$6,918
$7,196
$7,468
$7,324
$7,566
$7,356
$7,400
$7,624
$428
2.80%
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
$1,664
10.90%
1,936
12.69%
2,166
-14.19%
(1,266)
-8.30%
$168
156
$1,763
11.00%
$2,003
12.50%
$2,243
-14.00%
$1,362
-8.50%
$160.24
162
$1,853
11.00%
$2,106
12.50%
$2,358
-14.00%
$1,432
-8.50%
$218.44
170
$1,945
11.00%
$2,211
12.50%
$2,476
-14.00%
$1,503
-8.50%
$246.86
180
$2,043
11.00%
$2,321
12.50%
$2,600
-14.00%
$1,578
-8.50%
$283.70
190
$2,145
11.00%
$2,437
12.50%
$2,730
-14.00%
$1,657
-8.50%
$332.18
200
$2,252
11.00%
$2,559
12.50%
$2,866
-14.00%
$1,740
-8.50%
$362.50
$363
$2,365
11.00%
$2,687
12.50%
$3,009
-14.00%
$1,827
-8.50%
$394.83
$395
$2,483
11.00%
$2,821
12.50%
$3,160
-14.00%
$1,918
-8.50%
$430.75
$431
$2,607
11.00%
$2,962
12.50%
$3,318
-14.00%
$2,014
-8.50%
$468.70
$469
$2,737
11.00%
$3,110
12.50%
$3,484
-14.00%
$2,115
-8.50%
$484.02
$484
$2,874
11.00%
$3,266
12.50%
$3,658
-14.00%
$2,221
-8.50%
$499.99
$500
134
82.72%
142
83.53%
150
83.33%
466
245.26%
600
300.00%
9.9
11.8
10.4
14.6
19.6
14.4
Trading market
Current market price
Indicated dividend yield
Price-earnings ratio
1984
1983
1982
Price range
1984
1983
DeLuther, Inc.a
OTC
$22
5.5%
Wakefield Co.b
OTC
$14
8.7%
Officomp, Inc.c
OTC
$29
3.7%
8.7
6.4
10.8
7.2
5.0
11.9
10.5
10.2
13.8
$2416
$1812
$148
$115
$3326
1912
(I)
110
100
(E)
$1.62
1.97
(I)
82
100
(E)
$2.98
1.68
(I)
177
100
(E)
$9.83
4.56
(I)
216
100
Sales (S)
($ 000s) and Index (I)
1984
1980
(S)
$16,427
11,568
(I)
142
100
(S)
$12,223
11,317
(I)
108
100
(S)
$18,608
11,630
(I)
160
100
(S)
$15,260
9,740
(I)
157
100
(N)
$1,051
902
(I)
117
100
(N)
$501
600
(I)
84
100
(N)
$1,656
930
(I)
178
100
(N)
$1,966
912
(I)
216
100
1984
1980
6.4%
7.8
4.1%
5.3
8.9%
8.0
12.9%
9.4
Profit/Net worth
1984
1983
1982
16.6%
14.2
15.4
6.0%
5.7
8.8
16.9%
15.0
14.7
19.8%
19.0
19.2
Book capitalizationd
($ 000s)
Long-term debt
Common stock and surplus
Total
$3,995
6,318
$10,313
38.7%
61.3
100.0%
$1,822
8,298
$10,120
18.0%
82.0
100.0%
$4,173
9,783
$13,956
29.9%
70.1
100.0%
$9,916
$9,916
100.0
100.0%
$9,456
$4,573
$16,234
425
310
555
200
Exhibit 7
Net sales
YOY
Earnings before interest and taxesa
% of sales
Interest expenseb
Profit before tax
Taxes
% of EBT
Profit after tax
Add back: Noncash charges
% of sales
Cash flow from operations
Less: Increase in working capital
Less: Capital expenditures
Available for debt retirement
Risk primium on Equity
Present value factor
Present value
NPV
Assume share
P/share
1986
2
$16,024
5.01%
3,433
21.42%
1,675
$1,758
274
15.59%
$1,484
240
1.50%
$1,724
156
$1,448
$16,844
5.12%
3,640
21.61%
1,538
$2,102
364
17.32%
$1,738
260
1.54%
$1,998
162
134
$1,702
11.79%
0.894497 0.800125
$1,295
$1,362
$22,586
200
112.93
Bank loan
Cases loan
Subordinated loan
Debt as % of total capital
$1,448
0
0
89%
$1,702
0
0
80%
9% coupon on subordinated loan of $6 million; 4% coupon on sellers note of $6 million; 12% rate on bank term loan; 10% rate on seasonal loan.
John Cases note is retired from cash flow and a $2.8 million new bank term loan in 1989.
1987
3
1988
4
$17,686
5.00%
3,757
21.24%
1,369
$2,388
440
18.43%
$1,948
284
1.61%
$2,232
170
142
$1,920
1989
5
$18,570
5.00%
3,608
19.43%
908
$2,700
556
20.59%
$2,144 $
300
1.62%
$2,444
180
150
$2,114
0.71571
$1,374
$1,920
0
0
70%
1990
6
$19,498
5.00%
3,788
19.43%
800
$2,988
660
22.09%
2,328 $
310
1.59%
$2,638
190
466
$1,982
1991
7
$20,472
5.00%
3,976
19.42%
800
$3,176
714
22.48%
2,462
340
1.66%
$2,802
200
600
$2,002
1992
8
$21,496
5%
$4,176.60
19.43%
780
$3,397
1189
35.00%
$2,207.79
338
1.58%
$2,546
$
215
$
183
$2,148
1993
9
$22,570
5%
$4,385.42
19.43%
780
$3,605
1262
35.00%
$2,343.53
338
1.58%
$2,682
$
226
$
192
$2,264
$
$
$23,699
5%
4,604.70
19.43%
780
$3,825
1339
35.00%
2,486.05
338
1.58%
$2,824
237
201
$2,386
$930
1,184
0
58%
$0
4,766c
0
47%
$2,002
0
0
35%
$4,004
4,767c
0
23%
$6,006
0
0
11%
1994
10
$8,008
4,768c
0
-1%
$
$
$24,884
5%
4,834.93
19.43%
780
$4,055
1419
35.00%
2,635.71
338
1.58%
$2,974
249
212
$2,513
0.3279363
$824
$10,010
0
0
-13%
1995
11
$
$
$26,128
5%
5,076.68
19.43%
780
$4,297
1504
35.00%
2,792.84
338
1.58%
$3,131
261
222
$2,647
0.29333808
$11,429.63
$12,012
4,769c
0
-25%
Terminal Value
$38,964
Exhibit 7
Net sales
YOY
Earnings before interest and taxesa
% of sales
New business line before IT
Sum EBIT
Interest expenseb
Profit before tax
Taxes
% of EBT
Profit after tax
Add back: Noncash charges
% of PPE
Cash flow from operations
Less: Increase in working capital
% of sales
Less: Capital expenditures
Available for debt retirement
risk primium for equity
Present value factor
Present value
NPV
Assume share
P/share
1986
2
$16,024
5.01%
3,433
21.42%
(650.00)
2,783.00
1,675
$1,108
274
24.73%
$1,484
240
11.37%
$1,724
168
$16,844
5.12%
3,640
21.61%
(590.00)
3,050.00
1,538
$1,512
364
24.07%
$1,738
260
12.32%
$1,998
160
134
$1,448
142
$1,696
12.24%
0.890910998 0.793722406
$1,290
$1,346
$20,684
200
103.42
Bank loan
Cases loan
Subordinated loan
Debt as % of total capital
$1,448
0
0
89%
$1,702
0
0
80%
9% coupon on subordinated loan of $6 million; 4% coupon on sellers note of $6 million; 12% rate on bank term loan; 10% rate on seasonal loan.
John Cases note is retired from cash flow and a $2.8 million new bank term loan in 1989.
1987
3
1988
4
$17,686
5.00%
3,757
21.24%
84.00
3,841.00
1,369
$2,472
440
17.80%
$1,948
284
13.46%
$2,232
218
150
$1,864
1990
6
1991
7
$18,570
$19,498
$20,472
5.00%
5.00%
5.00%
3,608
3,788
3,976 $
19.43%
19.43%
19.42%
117.60
164.64
189.34
3,725.60
3,952.64
4,165.34
908
800
800
$2,818
$3,153
$3,365
556
660
714
19.73%
20.93%
21.22%
$2,144 $
2,493 $
2,651 $
300
310
340 $
14.22%
14.69%
16.11%
$2,444
$2,638
$2,991
247
284
332
466
$1,731
0.707136021 0.629995258
$1,318
$1,091
$1,920
0
0
70%
1989
5
$930
1,184
0
58%
600
$1,754
222
$2,101
0.5612697 0.50004135
$985
$1,223
0.44549234
$936
$2,002
0
0
35%
1993
9
1994
10
$21,496
$22,570
$23,699
$24,884
5%
5%
5%
5%
4,176.60 $4,385.42 $ 4,604.70 $ 4,834.93
19.43%
19.43%
19.43%
19.43%
215.84
246.06
278.05
282.22
4,392.44
4,631.49
4,882.75
5,117.15
780
780
780
780
$3,612
$3,851
$4,103
$4,337
1264
1348
1436
1518
35.00%
35.00%
35.00%
35.00%
2,348.08 $2,503.47 $ 2,666.78 $ 2,819.15
338 $
338 $
338 $
338
16%
16%
16%
16%
$2,686
$2,841
$3,004
$3,157
363
395
431
469
213
$2,446
$0
4,766c
0
47%
1992
8
$4,004
4,767c
0
23%
232
$2,214
243
$2,331
244
$2,444
$6,006
0
0
11%
$8,008
4,768c
0
-1%
$10,010
0
0
-13%
1995
11
$26,128
5%
$ 5,076.68
19.43%
286.45
5,363.13
780
$4,583
1604
35.00%
$ 2,979.03
$
338
16%
$3,317
484
245
$2,587
0.28065806
$10,022.54
$12,012
4,769c
0
-25%
Terminal Value
$35,711
Cost of capital
Risk primium
WACC
1985
E/A
D/A
Tax rate
Kd
Ke
Rf
Rm
B
Explaination
65%
Equity/asset
35%
Debt/asset
15.59%
9.15%
13.99%
Ke=Rf+B(Rm-Rf)
6.75%
13.39%
1.09
13.99%
Beta
11.79%
Nasdaq
Year
BeginningPrice
EndingPrice
GainorLoss
PercentGainorLoss
1975
77.62
17.8
29.76%
59.82
1976
77.62
97.88
20.26
26.10%
1977
97.88
105.05
7.17
7.33%
1978
105.05
117.98
12.93
12.31%
1979
117.98
151.14
33.16
28.11%
1980
151.14
202.34
51.2
33.88%
1981
202.34
195.84
-6.5
-3.21%
1982
195.84
232.41
36.57
18.67%
1983
232.41
278.6
46.19
19.87%
1984
278.6
247.35
-31.25
-11.22%
1985
247.35
324.93
77.58
31.36%
1986
324.93
348.83
23.9
7.36%
1987
348.83
330.47
-18.36
-5.26%
1988
330.47
381.38
50.91
15.41%
1989
381.38
454.82
73.44
19.26%
1990
454.82
373.84
-80.98
-17.80%
1991
373.84
586.34
212.5
56.84%
1992
586.34
676.95
90.61
15.45%
1993
676.95
776.8
99.85
14.75%
1994
776.8
751.96
-24.84
-3.20%
1995
751.96
1052.13
300.17
39.92%
1996
1052.13
1291.03
238.9
22.71%
1997
1291.03
1570.35
279.32
21.64%
1998
1570.35
2192.69
622.34
39.63%
1999
2192.69
4069.31
1876.62
85.59%
2000
4069.31
2470.52
-1598.79
-39.29%
2001
2470.52
1950.4
-520.12
-21.05%
2002
1950.4
1335.51
-614.89
-31.53%
2003
1335.51
2003.37
667.86
50.01%
2004
2003.37
2175.44
172.07
8.59%
2005
2175.44
2205.32
29.88
1.37%
2006
2205.32
2415.29
209.97
9.52%
2007
2415.29
2652.28
236.99
9.81%
2008
2652.28
1577.03
-1075.25
-40.54%
2009
1577.03
2269.15
692.12
43.89%
2010
2269.15
2652.87
383.72
16.91%
2011
2652.87
2605.15
-47.72
-1.80%
2012
2605.15
3019.51
414.36
15.91%
2013
3019.51
4176.59
1157.08
38.32%
2014
4176.59
4736.05
559.46
13.40%
2015
4736.05
5007.41
271.36
5.73%
13.39%
Interest e loan
interest
Loan
6,000
9%
Note
6,000
4%
Bank
0
12%
seasonal
0
10%
1985
1,675
1986
1,538
1987
1,369
1988
908
1989
800
1990
800
9% coupon on subordinated loan of $6 million; 4% coupon on sellers note of $6 million; 12% rate on bank term loan; 10% rate
on seasonal loan.
b
1991
780
540
240
0
0
1992
780
540
240
0
0
1993
780
540
240
0
0
1994
780
540
240
0
0
1995
780
540
240
0
0
1985
1986
$1,000.00
1987
1988
1989
1990
$1,400.00 $1,960.00 $2,744.00 $3,155.60
40%
40%
40%
15%
6%
6%
6%
6%
6%
$ 60.00 $ 84.00 $ 117.60 $ 164.64 $ 189.34
$ 450.00 $ 450.00 $
$
$
$
0%
0%
0%
0%
0%
0%
200
$(650.00) $ (590.00) $
84.00 $
66.67
117.60
$ 164.64
$ 189.34
83.16
$ 103.72
$ 106.27
1991
1992
1993
1994
1995
$3,597.38 $4,101.02 $4,634.15 $4,703.66 $4,774.22
14%
14%
13%
2%
2%
6%
6%
6%
6%
6%
$ 215.84 $ 246.06 $ 278.05 $ 282.22 $ 286.45
$
$
$
$
$
0%
0%
0%
0%
0%
$ 215.84
$ 246.06
$ 278.05
$ 107.93
$ 109.62 $
110.36
$ 282.22
$ 286.45
99.79
90.24
Exhibit 7
Net sales
YOY
COGS
% sales
SG&A
% sales
Earnings before interest and taxesa
% of sales
Interest expenseb
Profit before tax
1986
2
$16,024
$12,819
5.01%
-20.00%
8,012
6,890
50.00%
86.00%
4,578.06
4,028.69
28.57%
88.00%
3,434
2,862
3,433 $1,900.19
21.42%
14.82%
1,675
1,538
$1,758
$362
$1
0.01%
9% coupon on subordinated loan of $6 million; 4% coupon on sellers note of $6 million; 12% rate on bank term loan; 10% rate on seasonal loan.
John Cases note is retired from cash flow and a $2.8 million new bank term loan in 1989.
1987
3
1988
4
1989
5
1990
6
1991
7
1992
8
1993
9
1994
10
$10,255
$8,204
$6,563
$5,251
$4,201
$3,360
$2,688
$2,151
-20.00% -20.00%
-20.00%
-20.00%
-20%
-20%
-20%
-20%
5,926
5,096
4,383
3,769
3,241
2,788
2,397
2,062
86.00%
86.00%
86.00%
86.00%
86.00%
86.00%
86.00%
86.00%
3,545.25 3,119.82
2,745.44
2,415.99
2,126.07
1,870.94
1,646.43
1,448.86
88.00%
88.00%
88.00%
88.00%
88.00%
88.00%
88.00%
88.00%
2,380
1,976
1,637
1,353
$ 784.44 $ (11.61) $ (564.64) $ (934.30) $ (1,166.87) $ 652.94 $ 522.35 $ 417.88
7.65%
-0.14%
-8.60%
-17.79%
19.43%
19.43%
19.43%
19.43%
1,369
908
800
800
780
780
780
780
$585
$920
$1,365
$1,734
$1,947
$127
$258
$362
1995
11
$1,721
-20%
1,773
86.00%
1,274.99
88.00%
$
334.31
19.43%
780
$446