what if model

What-If Model – Users Guide Input Template: Project Costs Segregate Capitalized and Expensed Project Costs based on the expenditure characteristics. Include project fees Historical Financial Information Income Statement -Based on audited financial report data, categorize revenues and expenses into the broad categories Balance Sheet -Further, categorize assets, liabilities and equity into the appropriate balance sheet line items provided. Operating Assumptions Pre-Implementation and Base Year: these are darkened to illustrate that they are not inputs, but calculations for information Income Statement Assumptions are percentage changes in the current year from the prior year. Balance Sheet Assumptions are the assumption’s percentage of total assets. Post-Implementation: Machinery & Equipment and Building and Plant, for all projected years, are estimated capital expenditures in whole The following items’ projected years’ costs are constant (i.e. equal to the base year) and are direct inputs from historical controllable expenses, other accrued expenses, taxes payable, other current liabilities, long-term notes payable, deferred The following items use growth percentage changes for all projected years: R&D expenses, G&A expenses, interest payable, notes payable, and distributions payable. The financial statements use these percentages by multiplying the by one plus the growth rate input for each year. Growth is not proportionate to sales. The following items use growth percentage changes for all projected years: selling expenses, accounts receivable, inventory, expenses, other current assets, other noncurrent assets, accounts payable, unearned revenue, and current portion of long-financial statements multiply the prior year dollars by one plus the growth rate input. Further, this product is multiplied sales growth input for each year to vary these items proportionally with sales. The What-If Model will allow a team the ability to model the potential financial impact of a variety of initiatives upon financial statements. This scenario, or “what-if”, modeling will incorporate the company’s historical financial statements projections in conjunction with inputs provided by the Quantitative Model. The historical and projected financial statements by the client will serve as the models “base” or “null” state. The inputs provided by the Quantitative Model provide modeled with the client projections. The What-If Model will then provide expected changes in financial statements statement metrics from the base assumptions. These expected changes allow the team to target and prioritize the scenarios greatest expected benefits. This prioritization will aid further discussions with management when determining further performed. The model is segregated into four sections: inputs, calculations, statements, and analysis. Only the input section is editable. sections are protected and read only. The model’s format does have the capacity to be modified quickly. For example, business’s financial statements cannot be fit into the current format, the current format can be appended or changed different format. Additionally, if the operating assumptions are inaccurate, they can also be altered to accommodate assumptions. Outlined below is a description of Section One, and how particular areas operate within the section. Sections are protected and therefore have no operational details. Sales revenue growth percentages are used for all projected years. The financial statements use these percentages by prior year sales dollars by one plus the growth rate for each year (compounding).Intangible Asset Amortization Additional Assumptions Client should provide their applicable tax rates, weighted average cost of capital, and interest rate on excess cash. Further, Asset lives and additional asset information should be captured. Section Two – Calculations Protected Sheet, Read-only Access Section Three – Financial Statements Protected Sheet, Read-only Access Section Four -Analysis Protected Sheet, Read-only Accessand expenses into the broad categories provided. appropriate balance sheet line items provided. not inputs, but calculations for information purposes. the prior year. estimated capital expenditures in whole dollars. year) and are direct inputs from historical data: other liabilities, long-term notes payable, deferred taxes payable, expenses, G&A expenses, interest expense, interest these percentages by multiplying the prior year dollars expenses, accounts receivable, inventory, prepaid revenue, and current portion of long-term debt. The input. Further, this product is multiplied by one plus the impact of a variety of initiatives upon a company’s company’s historical financial statements and five-year historical and projected financial statements provided by the Quantitative Model provide the variables to be expected changes in financial statements and financial team to target and prioritize the scenarios with the management when determining further work to be analysis. Only the input section is editable. All other to be modified quickly. For example, if a subject format can be appended or changed to accommodate the can also be altered to accommodate company-specific areas operate within the section. Sections Two – Four statements use these percentages by multiplying the and interest rate on excess cash.Maximize ERP Project Financial Model Input -$ASQwhat if model.xls MODEL INPUT I Project 2000 2001 2002 2003 2004 Project Costs-Capitalized 5 0 0 0 0 Project Costs-Expensed 1 1 1 1 1 Project Fees 0.5 0.5 0.5 0.5 0.5 Date (MM/DD/YYYY) 7/1/1999 II Historical Financial Information Pre-Implementation Base Year* Income Statement 1996 1997 1998 1999 Sales Revenue 111,211 Net Sales Revenue 111,211 Cost of Sales 60,001 Selling Expenses 0 R&D Expenses 0 General and Administrative 7,518 Total Non-Sales Expenses 7,518 Depreciation 4,884 Amortization 0 Other Controllable Expenses 250 Interest Expense 647 Interest Income 0 Miscellaneous Income 0 Income Tax 32,631 Preferred Dividends 0 * Current or Post-Implementation Year STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 5 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Input -$ASQwhat if model.xls MODEL INPUT Historical Financial Information Pre-Implementation Base Year* Balance Sheet 1996 1997 1998 1999 Current Assets Cash 1,652 Accounts Receivable 6,860 Inventory 5,472 Prepaid Expenses 875 Other Current Assets 4,790 Noncurrent Assets Machinery and Equipment 0 Building and Plant 61,962 Accumulated Depreciation 0 Deferred Income Tax Asset 0 Other Noncurrent Assets 2,534 Intangible Assets Deferred Fin./License/Startup 0 Goodwill 0 Other Intangibles 0 Accumulated Amortization 0 Current Liabilities Interest Payable 0 Accounts Payable 0 7,677 Other Accrued Expenses 4,445 Unearned Revenue 0 Notes Payable 4,109 Current Portion of Long Term Debt 0 Taxes Payable 2,359 Distributions Payable 0 Other Current Liabilities 8,153 Noncurrent Liabilities Long-Term Notes 10,901 Deferred Income Tax Liability 10,939 Deferred Taxes Payable 770 Shareholder Equity Retained Earnings 49,365 Common Equity 2,822 Additional Paid-in Capital 0 Preferred Stock 668 Treasury Stock (16,977) Other Equity (1,086) Number of Shares -Common Stock 2,428 * Current or Post-Implementation Year STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 6 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Input -$ASQwhat if model.xls MODEL INPUT III Pre-Implementation Base Year* Post-Implementation Growth Operating Assumptions 1996 1997 1998 1999 Benchmark 2000 2001 2002 2003 2004 Income Statement Assumptions Sales Revenue #DIV/0! #DIV/0! #DIV/0! 5.00% 5.00% 5.00% 5.00% 5.00% Other Controllable Expenses 0.00% 250 250 250 250 250 250 R&D Expenses #DIV/0! #DIV/0! #DIV/0! 0.00% 0.00% 0.00% 0.00% 0.00% Selling Expenses #DIV/0! #DIV/0! #DIV/0! 0.00% 0.00% 0.00% 0.00% 0.00% General and Administrative #DIV/0! #DIV/0! #DIV/0! 0.00% 0.00% 0.00% 0.00% 0.00% Projected Expenses Interest Expense 0 0 0 647 0.0% 0.0% 0.0% 0.0% 0.0% Pre-Implementation Post-Implementation Percentages Gross Margin Percentage N/A N/A N/A 46.0% 46.0% 46.0% 46.0% 46.0% 46.0% Cost of Sales (% Rev) #DIV/0! #DIV/0! #DIV/0! 54% 54.0% 54.0% 54.0% 54.0% 54.0% * Current or Post-Implementation Year STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 7 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Input -$ASQwhat if model.xls MODEL INPUT Pre-Implementation Base Year* Post-Implementation Growth Operating Assumptions 1996 1997 1998 1999 Benchmark 2000 2001 2002 2003 2004 Balance Sheet Items Current Assets Accounts Receivable #DIV/0! #DIV/0! #DIV/0! 8% 0% 0% 0% 0% 0% Inventory #DIV/0! #DIV/0! #DIV/0! 7% 0% 0% 0% 0% 0% Prepaid Expenses #DIV/0! #DIV/0! #DIV/0! 1% 0% 0% 0% 0% 0% Other Current Assets #DIV/0! #DIV/0! #DIV/0! 6% 0% 0% 0% 0% 0% Noncurrent Assets Capital Expenditures: Machinery and Equipment 0 0 #DIV/0! 0% $0.00 $0.00 $0.00 $0.00 $0.00 Building and Plant 0 0 0 74% $0.00 $0.00 $0.00 $0.00 $0.00 Other Noncurrent Assets #DIV/0! #DIV/0! #DIV/0! 3% 0% 0% 0% 0% 0% Current Liabilities Interest Payable 0 0 0 0 0% 0% 0% 0% 0% Accounts Payable #DIV/0! #DIV/0! #DIV/0! 7% 0% 0% 0% 0% 0% Other Accrued Expenses 0 0 0 4,445 0% 0% 0% 0% 0% Unearned Revenue #DIV/0! #DIV/0! #DIV/0! 0% 0% 0% 0% 0% 0% Notes Payable 0 0 0 4,109 0% 0% 0% 0% 0% Current Portion of Long Term Debt #DIV/0! #DIV/0! #DIV/0! 0% 0% 0% 0% 0% 0% Taxes Payable 0 0 0 2,359 0% 0% 0% 0% 0% Distributions Payable 0 0 0 0 0% 0% 0% 0% 0% Other Current Liabilities 0 0 0 8,153 0% 0% 0% 0% 0% Noncurrent Liabilities Long-Term Notes Payable 0 0 0 10,901 0% 0% 0% 0% 0% Deferred Taxes Payable 0 0 0 770 0% 0% 0% 0% 0% Equity Assumptions Preferred Stock 0 0 0 668 668 668 668 668 668 Treasury Stock 0 0 0 (16,977) (16,977) (16,977) (16,977) (16,977) (16,977) Cash Flow Assumptions Preferred Stock Dividends 6% Dividend Distributions to Common Shareholders Days in Year 365 * Current or Post-Implementation Year STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 8 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Input -$ASQwhat if model.xls MODEL INPUT IV Intangible Assets Amortization Percent Period Amortizable Deferred Fin./License/Startup 10 Goodwill 40 Other Intangibles 5 Project Costs-Capitalized 10 Project Fees 10 100.00% V Additional Assumptions Effective Federal Income Tax Rate 86.07% Weighted Average Cost of Capital 10.00% Effective State Income Tax Rate 0.00% Interest Income Rate on Excess Cash Balances 0.00% Asset Lives Machinery and Equipment 7 Building and Plant 15 Fair Market Value of Assets in Excess of Book: Inventory 0 Fixed Assets 0 Current Liabilities Assumed 0 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 9 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Calculations -$ASQwhat if model.xls CALCULATIONS Book Depreciation Existing 2000 2001 2002 2003 2004 Existing Basis Life Basis Machinery and Equipment 7 0 0 0 0 0 0 Building and Plant 12.70 61,962 4,879 4,879 4,879 4,879 4,879 Total 4,879 4,879 4,879 4,879 4,879 Incremental Capital Expenditures 2000 Machinery and Equipment 0 0 0 0 0 2000 Building and Plant 0 0 0 0 0 0 0 0 0 0 2001 Machinery and Equipment 0 0 0 0 2001 Building and Plant 0 0 0 0 0 0 0 0 2002 Machinery and Equipment 0 0 0 2002 Building and Plant 0 0 0 0 0 0 2003 Machinery and Equipment 0 0 2003 Building and Plant 0 0 0 0 2004 Machinery and Equipment 0 2004 Building and Plant 00 Total Book Depreciation 4,879 4,879 4,879 4,879 4,879 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 10 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Calculations -$ASQwhat if model.xls CALCULATIONS Income Taxes 2000 2001 2002 2003 2004 Income from Continuing Operations 40,475 43,164 45,986 48,951 52,063 Taxable Income Before NOL 40,475 43,164 45,986 48,951 52,063 Less: NOL Utilized 0 0 0 0 0 Taxable Income 40,475 43,164 45,986 48,951 52,063 Blended Cash Income Taxes State @0.00% Federal @86.07% 86.07% 34,837 37,151 39,581 42,132 44,810 Income Taxes, per Books 34,837 37,151 39,581 42,132 44,810 Current Year Deferred Income Tax Benefit (Expense) -Temporary Difference 0 0 0 0 0 Cumulative Deferred Income Tax Asset (Liability) 0 0 0 0 0 Net Operating Loss (“NOL”), Beginning Balance 0 0 0 0 0 Additional NOL Created 0 0 0 0 0 NOL Utilized 0 0 0 0 0 NOL, Ending Balance 0 0 0 0 0 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 11 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Calculations -$ASQwhat if model.xls CALCULATIONS Intangible Asset Amortization Existing 2000 2001 2002 2003 2004 Life Basis Lic. Agr. /Def. Fin. 10 Beginning Balance 0 0 0 0 0 Amortization 0 0 0 0 0 Ending Balance 0 0 0 0 0 Goodwill 40 Beginning Balance 0 0 0 0 0 Amortization 0 0 0 0 0 Ending Balance 0 0 0 0 0 Incremental Project Expenditures Project Costs-Capitalized 10 Project Fees 10 2000 Project Costs-Capitalized 0 1 1 1 1 2000 Project Fees 0 0 0 0 0 0 1 1 1 1 2001 Project Costs-Capitalized 0 0 0 0 2001 Project Fees 0 0 0 0 0 0 0 0 2002 Project Costs-Capitalized 0 0 0 2002 Project Fees 0 0 0 0 0 0 2003 Project Costs-Capitalized 0 0 2003 Project Fees 0 0 0 0 2004 Project Costs-Capitalized 0 2004 Project Fees 00 Other Intangibles 5 Beginning Balance 0 0 0 0 0 Amortization 0 0 0 0 0 Ending Balance 0 0 0 0 0 Total Amortization 0 1 1 1 1 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 12 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Calculations -$ASQwhat if model.xls CALCULATIONS Pre-Implementation Post-Implementation 1996 1997 1998 1999 2000 2001 2002 2003 2004 SVA Income From Continuing Operations 0 0 0 37,911 40,475 43,164 45,986 48,951 52,063 Less: W.A.C.C. x (Total Noncurrent Assets + Working Capital) 0 0 0 5,740 6,300 6,897 7,534 8,212 8,933 SVA 0 0 0 32,171 34,175 36,266 38,453 40,739 43,130 NPV & IRR Net Cash Flow 9,829 10,177 10,536 10,914 11,310 Less: Total Project Costs 7 2 2 2 2 Cash Outflow/Inflow 9,823 10,175 10,535 10,912 11,309 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 13 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Statements -$ASQwhat if model.xls BALANCE SHEET (Million of Dollars) Pre-Implementation Post-Implementation ASSETS 1996 1997 1998 1999 2000 2001 2002 2003 2004 Current Assets Cash 0 0 0 1,652 11,481 21,658 32,194 43,108 54,418 Accounts Receivable 0 0 0 6,860 7,203 7,563 7,941 8,338 8,755 Inventory 0 0 0 5,472 5,746 6,033 6,335 6,651 6,984 Prepaid Expenses 0 0 0 875 919 965 1,013 1,064 1,117 Other Current Assets 0 0 0 4,790 5,030 5,281 5,545 5,822 6,113 Total Current Assets 0 0 0 19,649 30,378 41,500 53,028 64,983 77,387 Noncurrent Assets Machinery and Equipment 0 0 0 0 0 0 0 0 0 Building and Plant 0 0 0 61,962 61,962 61,962 61,962 61,962 61,962 Less: Accumulated Depreciation 0 0 0 0 (4,879) (9,758) (14,637) (19,516) (24,394) Net Fixed Assets 0 0 0 61,962 57,083 52,204 47,325 42,446 37,568 Deferred Income Tax Asset 0 0 0 0 0 0 0 0 0 Other Noncurrent Assets 0 0 0 2,534 2,661 2,794 2,933 3,080 3,234 Intangible Assets Deferred Fin./License/Startup 0 0 0 0 0 0 0 0 0 Goodwill 0 0 0 0 0 0 0 0 0 Project Costs-Capitalized 5 5 5 5 5 Project Fees 1 1 2 2 3 Other Intangibles 0 0 0 0 0 0 0 0 0 Less: Accumulated Amortization (0) (1) (1) (2) (3) Total Intangible Assets 0 0 0 0 5 5 5 5 5 Total Noncurrent Assets 0 0 0 64,496 59,749 55,003 50,264 45,531 40,806 Total Assets 0 0 0 84,145 90,127 96,503 103,292 110,515 118,194 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 14 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Statements -$ASQwhat if model.xls BALANCE SHEET (Million of Dollars) Pre-Implementation Post-Implementation LIABILITIES 1996 1997 1998 1999 2000 2001 2002 2003 2004 Current Liabilities Interest Payable 0 0 0 0 0 0 0 0 0 Accounts Payable 0 0 0 7,677 8,061 8,464 8,887 9,331 9,798 Other Accrued Expenses 0 0 0 4,445 4,445 4,445 4,445 4,445 4,445 Unearned Revenue 0 0 0 0 0 0 0 0 0 Notes Payable 0 0 0 4,109 4,109 4,109 4,109 4,109 4,109 Current Portion of Long Term Debt 0 0 0 0 0 0 0 0 0 Taxes Payable 0 0 0 2,359 2,359 2,359 2,359 2,359 2,359 Distributions Payable 0 0 0 0 0 0 0 0 0 Other Current Liabilities 0 0 0 8,153 8,153 8,153 8,153 8,153 8,153 Total Current Liabilities 0 0 0 26,743 27,127 27,530 27,953 28,397 28,864 Noncurrent Liabilities Long-Term Notes 0 0 0 10,901 10,901 10,901 10,901 10,901 10,901 Deferred Income Tax Liability 0 0 0 10,939 10,939 10,939 10,939 10,939 10,939 Deferred Taxes Payable 0 0 0 770 770 770 770 770 770 Total Noncurrent Liabilities 0 0 0 22,610 22,610 22,610 22,610 22,610 22,610 Total Liabilities 0 0 0 49,353 49,737 50,140 50,563 51,007 51,474 SHAREHOLDER’S EQUITY Retained Earnings 0 0 0 49,365 54,963 60,936 67,302 74,080 81,293 Common Equity 0 0 0 1,736 1,736 1,736 1,736 1,736 1,736 Additional Paid in Capital 0 0 0 0 0 0 0 0 0 Preferred Stock 0 0 0 668 668 668 668 668 668 Treasury Stock 0 0 0 (16,977) (16,977) (16,977) (16,977) (16,977) (16,977) Total Shareholder’s Equity 0 0 0 34,792 40,390 46,363 52,729 59,507 66,720 Total Liabilities and Shareholder’s Equity 0 0 0 84,145 90,127 96,503 103,292 110,515 118,194 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 15 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Statements -$ASQwhat if model.xls STATEMENT OF INCOME AND RETAINED EARNINGS (Million of Dollars) Pre-Implementation Post-Implementation 1996 1997 1998 1999 2000 2001 2002 2003 2004 Sales Revenue 0 0 0 111,211 116,772 122,610 128,741 135,178 141,937 Net Sales Revenue 0 0 0 111,211 116,772 122,610 128,741 135,178 141,937 Cost of Sales 0 0 0 60,001 63,001 66,151 69,459 72,932 76,578 Gross Margin on Sales 0 0 0 51,210 53,771 56,459 59,282 62,246 65,358 Gross Margin Percentage N/A 46.05% 46.05% 46.05% 46.05% 46.05% 46.05% Expense Projections '99 Forward Project Costs-Expensed 1 1 1 1 1 R&D Expenses 0 0 0 0 0 0 0 0 0 Other Controllable Expenses 250 250 250 250 250 250 Selling Expenses 0 0 0 0 0 0 0 0 0 General and Admin Expenses 0 0 0 7,518 7,518 7,518 7,518 7,518 7,518 Total Non-Sales Expenses 0 0 0 7,768 7,769 7,769 7,769 7,769 7,769 Earnings Before Interest, Tax, Depr. and Amort. 0 0 0 43,442 46,002 48,690 51,513 54,477 57,589 Depreciation 0 0 0 4,884 4,879 4,879 4,879 4,879 4,879 Amortization 0 0 0 0 0 1 1 1 1 Total Operating Expenses 0 0 0 12,652 12,648 12,648 12,649 12,649 12,649 Earnings Before Interest and Tax (“EBIT”) 0 0 0 38,558 41,122 43,811 46,633 49,598 52,710 Total Interest Expense 0 0 0 647 647 647 647 647 647 Interest Income 0 0 0 0 0 0 Miscellaneous Income 0 0 0 0 0 0 0 0 0 Income from Continuing Operations 0 0 0 37,911 40,475 43,164 45,986 48,951 52,063 Provision for State & Federal Tax 0 0 0 32,631 34,837 37,151 39,581 42,132 44,810 Net Income Before Dividends 0 0 0 5,280 5,638 6,013 6,406 6,819 7,252 Preferred Dividends 0 0 0 0 40 40 40 40 40 Net Income Available to Common Shareholders 0 0 0 5,280 5,598 5,973 6,366 6,779 7,212 Retained Earnings, Beginning of Period 0 49,365 54,963 60,936 67,302 74,080 Less: Dividends (40) (40) (40) (40) (40) Retained Earnings, End of Period 0 0 0 5,280 54,963 60,936 67,302 74,080 81,293 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 16 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Statements -$ASQwhat if model.xls CASH FLOW STATEMENT (Million of Dollars) Pre-Implementation Post-Implementation 1996 1997 1998 1999 2000 2001 2002 2003 2004 Net Income Before Dividends 5,638 6,013 6,406 6,819 7,252 Adjustments to Reconcile Net Income to Cash from Operations Project Costs-Capitalized (5) 0 0 0 0 Project Fees (1) (1) (1) (1) (1) Depreciation and Amortization 4,879 4,879 4,880 4,880 4,880 Change in Accounts Receivable (343) (360) (378) (397) (417) Change in Inventory (274) (287) (302) (317) (333) Change in Prepaid Expenses (44) (46) (48) (51) (53) Change in Other Current Assets (240) (251) (264) (277) (291) Change in Total Current Assets 0 0 0 0 (900) (945) (992) (1,042) (1,094) Change in Interest Payable 0 0 0 0 0 Change in Accounts Payable 384 403 423 444 467 Change in Current Portion of Long Term Debt 0 0 0 0 0 Accrued Expenses and Bonuses 0 0 0 0 0 Change in Customer Deposits 0 0 0 0 0 Change in Total Current Liabilities 0 0 0 0 384 403 423 444 467 Change in Other Noncurrent Assets (127) (133) (140) (147) (154) Change in Deferred Income Tax 0 0 0 0 0 Change in Deferred Taxes Payable 0 0 0 0 0 Cash Provided (Used) by Operating Activities 0 0 0 0 9,869 10,217 10,576 10,954 11,350 Investing Activities Capital Expenditures: 0 0 0 0 0 Cash Provided (Used) by Investing Activities 0 0 0 0 0 0 0 0 0 Financing Activities Change in Long-Term Notes 0 0 0 0 0 Change in Notes Payable 0 0 0 0 0 Preferred Dividends (40) (40) (40) (40) (40) Cash Provided (Used) by Financing Activities (40) (40) (40) (40) (40) Net Cash Flow Available to Common Shareholders 0 0 0 0 9,829 10,177 10,536 10,914 11,310 Dividend Distributions to Common Shareholders 0 0 0 0 0 Net Cash Flow 0 0 0 0 9,829 10,177 10,536 10,914 11,310 Cash, Beginning Balance 1,652 11,481 21,658 32,194 43,108 Cash, Ending Balance 0 0 0 0 11,481 21,658 32,194 43,108 54,418 STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 17 of 18 1/30/2008, 11:03 AMMaximize ERP Project Financial Model Analyses -$ASQwhat if model.xls ANALYSIS Pre-Implementation Post-Implementation Financial and Operating Ratios 1996 1997 1998 1999 Benchmark 2000 2001 2002 2003 2004 Liquidity Ratios Current Ratio (Current Assets/Current Liabilities) 0.7 1.1 1.5 1.9 2.3 2.7 Quick Ratio (Cash, Equivalents and Accounts Receivable/Current Liabilities) 0.3 0.7 1.1 1.4 1.8 2.2 Working Capital (Current Assets Less Current Liabilities) (7,094) 3,251 13,970 25,075 36,586 48,523 Activity Ratios Sales/Average Receivables 32.4 16.6 16.6 16.6 16.6 16.6 Days in Average Receivables 11.3 22.0 22.0 22.0 22.0 22.0 Cost of Sales/Average Inventory 21.9 11.2 11.2 11.2 11.2 11.2 Days in Average Inventory 16.6 32.5 32.5 32.5 32.5 32.5 Cost of Sales/Average Accounts Payable 15.6 8.0 8.0 8.0 8.0 8.0 Days in Average Accounts Payable 23.4 45.6 45.6 45.6 45.6 45.6 Working Capital Turnover (Net Sales Revenue/(Average Working Capital) (15.7) 35.9 14.2 6.6 4.4 3.3 Fixed Asset Turnover (Net Sales Revenue/Average Net Fixed Assets) 3.6 2.0 2.2 2.6 3.0 3.5 Asset Turnover (Net Sales Revenue/Average Total Assets) 2.6 1.3 1.3 1.3 1.3 1.2 Profitability Ratios Net Income/Average Shareholder’s Equity 0.30 0.15 0.14 0.13 0.12 0.11 Growth Sales Growth 5% 5% 5% 5% 5% EPS 2.17 2.32 2.48 2.64 2.81 2.99 CostNI/Sales (Profit Margin) 5% 5% 5% 5% 5% 5% Gross Margin 46% 46% 46% 46% 46% 46% SG&A as a % of Sales 7% 7% 6% 6% 6% 5% Capital Assets/Sales #DIV/0! #DIV/0! #DIV/0! 76% 77% 79% 80% 82% 83% SVA 0 0 0 32,171 34,175 36,266 38,453 40,739 43,130 Project ROI #DIV/0! #DIV/0! #DIV/0! 15% 14% 13% 12% 11% 11% NPV $39,729 IRR #NUM! STRICTLY CONFIDENTIAL --Unaudited Preliminary Draft For discussion and review purposes only 18 of 18 1/30/2008, 11:03 AM