Confidential -- Board Members only

Revenue:
Mechanical (analog) Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Digital electronic Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Sales of replacement parts
% of analog sales
Sales revenue
Non-warranty service
% of analog sales
Sales revenue
License fees and Royalties
Total Revenue

Notes

Student Name: Scott Nguyen

Student NetID: sxn 126530
Acquisition Opportunity
Jan - June 2013
Actual

Alpha portion of NetID here

Baseline

Description

Jan-June
Restated

December
2013

$6,126,530 Avg sales price $410/unit

2.0%
-2.0%
14,943
$410
$6,126,530

15,242

15,546

$402
$6,124,079

$394
$6,121,630

20,691
$525
$10,862,771

4%
0%
21,519
525
$11,297,282

4%
0%
22,379
525
$11,749,173

$842,691 4400 part numbers stocked

13.75%

$842,691

Production - allocated overhead

File: 224528747.xlsx.ms_office
Tab: Projection

842,354

842,017

126,479.39
$0

126,428.80
$0

$18,390,195

$18,839,249

$126,530 Avg hourly rate $84.00

$1,250,000 2 active licenses

$19,208,522

2.07%
$126,530
$1,250,000

$19,208,522

per unit

change in cost

Production - labor

2.0%
-2.0%

$10,862,771 Avg sales price $525/unit

Cost of Production and Sales

Analog and Digital Widgets combined
Production - materials

2014

$2,310,000 per unit

total materials cost
total units produced
no. labor hours

$65
35,634
19,318

change in labor rates

N/A
base labor rate per hour
$44.00
change in labor efficiency
N/A
$850,000 Avg compensation with benefits $44.00/hr.$850,000
$1,530,000 allocated at $1.80 per $1.00 of direct labor cost
Page 1 of 15

0.0%
$65
$2,383,026
36,760
19,928.89
0.00%
$44.00
0.00%
$876,871
1,578,368

0.0%
$65
$2,458,586
37,926
20,560.79
0.00%
$44.00
0.00%
$904,675
1,628,414

DRAFT

Student Name:
Student NetID:
Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Mechanical (analog) Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Digital electronic Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Sales of replacement parts
% of analog sales
Sales revenue
Non-warranty service
% of analog sales
Sales revenue
License fees and Royalties
Total Revenue

2015

2016

2.0%
-2.0%

2017

-2.0%
-2.0%

2018

-5.0%
-2.0%

2019

-7.0%
-2.0%

2020

-10.0%
-2.0%

-10.0%
-2.0%

2021

-12.0%
-2.0%

15,857

15,540

14,763

13,730

12,357

11,121

9,787

$386
$6,119,181

$378
$5,876,862

$371
$5,471,358

$363
$4,986,596

$356
$4,398,177

$349
$3,879,193

$342
$3,345,416

4%
0%
23,275
525
$12,219,140

4%
1%
24,206
530
$12,834,985

8%
1%
26,142
536
$14,000,401

8%
1%
28,233
541
$15,271,638

8%
1%
30,492
546
$16,658,302

10%
1%
33,541
552
$18,507,374

10%
1%
36,895
557
$20,561,693

841,680

808,350

752,574

685,896

604,960

533,575

460,155

126,378.22
$0

121,373.65
$0

112,998.87
$0

102,987.17
$0

90,834.68
$0

80,116.19
$0

69,092.20
$0

$19,306,380

$19,641,570

$20,337,332

$21,047,116

$21,752,274

$23,000,257

$24,436,355

Cost of Production and Sales

Analog and Digital Widgets combined
Production - materials

Production - labor
Production - allocated overhead
File: 224528747.xlsx.ms_office
Tab: Projection

0.0%
$65
$2,536,773
39,132
21,214.65
0.00%
$44.00
0.00%
$933,445
1,680,201

-10.0%
$58
$2,318,909
39,746
24,779.55
-50.00%
$22.00
-15.00%
$545,150
981,270

0.0%
$58
$2,386,555
40,905
25,502.40
0.00%
$22.00
0.00%
$561,053

0.0%
$58
$2,448,278
41,963
26,161.97
0.00%
$22.00
0.00%
$575,563

0.0%
$58
$2,499,953
42,849
26,714.15
0.00%
$22.00
0.00%
$587,711

0.0%
$58
$2,605,760
44,662
27,844.79
0.00%
$22.00
0.00%
$612,585

0.0%
$58
$2,723,590
46,682
29,103.90
0.00%
$22.00
0.00%
$640,286

1,009,895

1,036,014

1,057,880

1,102,654

1,152,515

Page 2 of 15

DRAFT

Student Name:
Student NetID:
Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Mechanical (analog) Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Digital electronic Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Sales of replacement parts
% of analog sales
Sales revenue
Non-warranty service
% of analog sales
Sales revenue
License fees and Royalties
Total Revenue

Period

2022

2023

-12.0%
-2.0%

Totals

-15.0%
-2.0%

8,612

7,320

139,876

$335
$2,885,086

$328
$2,403,277

$4,003
$51,610,855

10%
1%
40,585
563
$22,844,040

10%
1%
44,643
568
$25,379,729

331,910

$5,968
$181,323,757

396,837

330,566

$7,098,962

59,585.11
$0

49,634.40
$0

$26,185,549

$28,163,206

$1,065,909
$0
241,099,482

Cost of Production and Sales

Analog and Digital Widgets combined
Production - materials

Production - labor
Production - allocated overhead
File: 224528747.xlsx.ms_office
Tab: Projection

0.0%
$58
$2,870,332
49,197
30,671.97
0.00%
$22.00
0.00%
$674,783

0.0%
$58
$3,031,748
51,964
32,396.85
0.00%
$22.00
0.00%
$712,731

1,214,610

1,282,915

Page 3 of 15

$28,263,511

$7,624,853

DRAFT

Notes

Acquisition Opportunity
Confidential -- Board Members only
Factory overhead:

Variable portion of factory overhead

Fixed factory overhead

Jan - June 2013

Actual
$1,750,000

Description

change in total unit production

change in variable overhead cost
additional variable overhead
$635,000 $18 per unit
change in total unit production
$1,115,000

Jan-June
Restated

$1,115,000

December
2013
1,770,277
1,126
0.00%
20,277
$655,277
1126
$1,115,000

2014
1,791,257
1,166
0.00%
20,980
$676,257
1166
$1,115,000

$635,000

Total production costs

$4,910,000

$4,910,000

$5,030,174

$5,154,518

Gross Margin

$14,298,522

$14,298,522

$13,360,020

$13,684,730

459,551
4,404,029
909,528
134,036

470,772
4,511,568
931,737
137,309

$6,170,000

$5,907,144

$6,051,385

$8,128,522
(2,438,557)
$5,689,965

$7,452,876
(2,235,863)
5,217,013

$7,633,345
(2,290,004)
5,343,342

5,689,965
(65,000,000)

5,217,013
(59,782,987)

5,343,342
5,343,342

Selling costs
Marketing
Advertising
Distribution
Customer relations

480,000 does not include advertising

4,600,000
950,000
140,000
selling cost percentage:
Total selling costs
6,170,000
All other operating costs: ignore for purposes of evaluating this investment
Operating income
Less: 30% income tax
Net income (and approximate cash flow for this project)
Purchase and Residual Value
Net aggregate cash flow (estimated)
Net aggregate cash flow (estimated) with acquisition

8,128,522

selling price

2.50%
23.95%
4.95%
0.73%
32.1%

10.132%

Internal Rate of Return after tax benefits

Net Present Value, discounted at required return

RRR = 18%

$ (17,872,019)

Does the opportunity meet company requirements regarding the required rate of return?
This opportunity does not meet the requirements because the NPV is negative, provided a RRR of 18%.
The company can also see that the internal rate of return is far less than the RRR which is a sign that the investment is unfavorable.
What is the maximum price that buyer could pay and still receive the required rate of return?
If the price of $43.9 million is inputted into cell E66 you can see that the IRR meets the RRR.
Therefore, the company can offer $43.9 million and still obtain the 18% RRR
File: 224528747.xlsx.ms_office
Tab: Projection

Page 4 of 15

DRAFT

Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Factory overhead:

Variable portion of factory overhead

Fixed factory overhead
Total production costs

2015
1,812,967
1,206
0.00%
21,710
$697,967
1206
$1,115,000

2016
1,541,951
614
30.00%
7,734
$705,701
614
$836,250

2017
1,556,560
1,159
0.00%
14,609
$720,310
1159
$836,250

2018
1,569,890
1,058
0.00%
13,330
$733,640
1058
$836,250

2019
1,581,050
886
0.00%
11,160
$744,800
886
$836,250

2020
1,603,900
1,814
0.00%
22,850
$767,650
1814
$836,250

2021
1,629,347
2,020
0.00%
25,447
$793,097
2020
$836,250

$5,283,185

$4,406,011

$4,504,168

$4,593,732

$4,668,714

$4,822,245

$4,993,222

$14,023,194

$15,235,559

$15,833,164

$16,453,384

$17,083,561

$18,178,012

$19,443,133

482,445
4,623,435
954,840
140,713

490,821
4,703,705
971,417
143,156

508,208
4,870,324
1,005,828
148,227

525,944
5,040,301
1,040,932
153,400

543,566
5,209,170
1,075,807
158,540

574,751
5,508,034
1,137,529
167,636

610,638
5,851,946
1,208,554
178,103

Total selling costs

$6,201,433
$6,309,100
All other operating costs: ignore for purposes of evaluating this investment

$6,532,587

$6,760,578

$6,987,083

$7,387,949

$7,849,241

Operating income
$7,821,761
Less: 30% income tax
(2,346,528)
Net income (and approximate cash flow for this project) 5,475,233

$8,926,459
(2,677,938)
6,248,521

$9,300,577
(2,790,173)
6,510,404

$9,692,806
(2,907,842)
6,784,965

$10,096,478
(3,028,943)
7,067,534

$10,790,063
(3,237,019)
7,553,044

$11,593,892
(3,478,168)
8,115,724

6,248,521
6,248,521

6,510,404
6,510,404

6,784,965
6,784,965

Gross Margin
Selling costs
Marketing
Advertising
Distribution
Customer relations

Purchase and Residual Value

Net aggregate cash flow (estimated)
Net aggregate cash flow (estimated) with acquisition

5,475,233
5,475,233

7,067,534
7,067,534

7,553,044
7,553,044

8,115,724
8,115,724

Internal Rate of Return after tax benefits

Net Present Value, discounted at required return

Does the opportunity meet company requirements regarding the required rate of return?
This opportunity does not meet the requirements because the NPV is negative, provided a RRR of 18%.
The company can also see that the internal rate of return is far less than the RRR which is a sign that the investment is unfavorable.
What is the maximum price that buyer could pay and still receive the required rate of return?
If the price of $43.9 million is inputted into cell E66 you can see that the IRR meets the RRR.
Therefore, the company can offer $43.9 million and still obtain the 18% RRR
File: 224528747.xlsx.ms_office
Tab: Projection

Page 5 of 15

DRAFT

Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Factory overhead:

Variable portion of factory overhead

Fixed factory overhead
Total production costs

Period

2022
1,661,038
2,515
0.00%
31,691
$824,788
2515
$836,250

2023
1,695,898
2,767
0.00%
34,860
$859,648
2767
$836,250

Totals

$8,179,136
$10,035,000

$5,206,153

$5,440,377

$54,102,500

$20,979,396

$22,722,829

$186,996,982

654,348
6,270,838
1,295,064
190,852

703,768
6,744,441
1,392,874
205,266

$6,024,813

Total selling costs

$8,411,102
$9,046,348
All other operating costs: ignore for purposes of evaluating this investment

$77,443,949

Gross Margin
Selling costs
Marketing
Advertising
Distribution
Customer relations

Operating income
$12,568,294
Less: 30% income tax
(3,770,488)
Net income (and approximate cash flow for this project) 8,797,806
Purchase and Residual Value
Net aggregate cash flow (estimated)
Net aggregate cash flow (estimated) with acquisition

8,797,806
8,797,806

$13,676,481
(4,102,944)
9,573,537
47,867,683
57,441,220
57,441,220

11,924,109

$109,553,033
($32,865,910)
$76,687,123

Internal Rate of Return after tax benefits

Net Present Value, discounted at required return

Does the opportunity meet company requirements regarding the required rate of return?
This opportunity does not meet the requirements because the NPV is negative, provided a RRR of 18%.
The company can also see that the internal rate of return is far less than the RRR which is a sign that the investment is unfavorable.
What is the maximum price that buyer could pay and still receive the required rate of return?
If the price of $43.9 million is inputted into cell E66 you can see that the IRR meets the RRR.
Therefore, the company can offer $43.9 million and still obtain the 18% RRR
File: 224528747.xlsx.ms_office
Tab: Projection

Page 6 of 15

DRAFT

Notes

Acquisition Opportunity
Jan - June 2013
Confidential -- Board Members only
Actual
Would the opportunity provide a return greater than buyers opportunity costs?
With a $65 million price of an investment that generates negative NPV,
the buyer would be better off investing in similar of the bonds they currently hold.
The interest payments alone would prove more favorable than negative returns.

Description

Jan-June
Restated

December
2013

2014

Is the plan to move production offshore beneficial to the buyer? By how much?
It does benefit the buyer by increasing the target company's gross margin by $5,949,599 (used projection(2) worksheet to determine figures without Offshoring)

Describe how the buyer might manage fixed costs in a way other than moving production offshore.
One way to reduce fixed cost is to improved efficiency with better equipment and training.
Improved efficiency allows more units to be produced and the fixed cost per unit will decrease.
Another way is to renegotiate leases on land and equipment.
Calculate and report the total revenue, production costs, gross margin, selling costs, operating incomelife of this investment,
and net income for the first five years, the second five years and the life of this investment.
See Spreadsheet Above

File: 224528747.xlsx.ms_office
Tab: Projection

Page 7 of 15

DRAFT

Acquisition Opportunity
Confidential -- Board Members only
2015
2016
Revenue:
Would the opportunity provide a return greater than buyers opportunity costs?
With a $65 million price of an investment that generates negative NPV,
the buyer would be better off investing in similar of the bonds they currently hold.
The interest payments alone would prove more favorable than negative returns.

2017

2018

2019

2020

2021

Is the plan to move production offshore beneficial to the buyer? By how much?
It does benefit the buyer by increasing the target company's gross margin by $5,949,599 (used projection(2) worksheet to determine figures without Offshoring)

Describe how the buyer might manage fixed costs in a way other than moving production offshore.
One way to reduce fixed cost is to improved efficiency with better equipment and training.
Improved efficiency allows more units to be produced and the fixed cost per unit will decrease.
Another way is to renegotiate leases on land and equipment.
Calculate and report the total revenue, production costs, gross margin, selling costs, operating incomelife of this investment,
and net income for the first five years, the second five years and the life of this investment.
See Spreadsheet Above

File: 224528747.xlsx.ms_office
Tab: Projection

Page 8 of 15

DRAFT

Acquisition Opportunity

Period

Confidential -- Board Members only

2022
2023
Revenue:
Would the opportunity provide a return greater than buyers opportunity costs?
With a $65 million price of an investment that generates negative NPV,
the buyer would be better off investing in similar of the bonds they currently hold.
The interest payments alone would prove more favorable than negative returns.

Totals

Is the plan to move production offshore beneficial to the buyer? By how much?
It does benefit the buyer by increasing the target company's gross margin by $5,949,599 (used projection(2) worksheet to determine figures without Offshori

Describe how the buyer might manage fixed costs in a way other than moving production offshore.
One way to reduce fixed cost is to improved efficiency with better equipment and training.
Improved efficiency allows more units to be produced and the fixed cost per unit will decrease.
Another way is to renegotiate leases on land and equipment.
Calculate and report the total revenue, production costs, gross margin, selling costs, operating incomelife of this investment,
and net income for the first five years, the second five years and the life of this investment.
See Spreadsheet Above

File: 224528747.xlsx.ms_office
Tab: Projection

Page 9 of 15

DRAFT

Confidential -- Board Members only

Revenue:
Mechanical (analog) Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Digital electronic Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Sales of replacement parts
% of analog sales
Sales revenue
Non-warranty service
% of analog sales
Sales revenue
License fees and Royalties
Total Revenue

Notes

Student Name: Scott Nguyen

Student NetID: sxn 126530
Acquisition Opportunity
Jan - June 2013
Actual

Alpha portion of NetID here

Baseline

Description

Jan-June
Restated

December
2013

$6,126,530 Avg sales price $410/unit

2.0%
-2.0%
14,943
$410
$6,126,530

15,242

15,546

$402
$6,124,079

$394
$6,121,630

20,691
$525
$10,862,771

4%
0%
21,519
525
$11,297,282

4%
0%
22,379
525
$11,749,173

$842,691 4400 part numbers stocked

13.75%

$842,691

Production - allocated overhead

File: 224528747.xlsx.ms_office
Tab: Projection (2)

842,354

842,017

126,479.39
$0

126,428.80
$0

$18,390,195

$18,839,249

$126,530 Avg hourly rate $84.00

$1,250,000 2 active licenses

$19,208,522

2.07%
$126,530
$1,250,000

$19,208,522

per unit

change in cost

Production - labor

2.0%
-2.0%

$10,862,771 Avg sales price $525/unit

Cost of Production and Sales

Analog and Digital Widgets combined
Production - materials

2014

$2,310,000 per unit

total materials cost
total units produced
no. labor hours

$65
35,634
19,318

change in labor rates

N/A
base labor rate per hour
$44.00
change in labor efficiency
N/A
$850,000 Avg compensation with benefits $44.00/hr.$850,000
$1,530,000 allocated at $1.80 per $1.00 of direct labor cost
Page 10 of 15

0.0%
$65
$2,383,026
36,760
19,928.89
0.00%
$44.00
0.00%
$876,871
1,578,368

0.0%
$65
$2,458,586
37,926
20,560.79
0.00%
$44.00
0.00%
$904,675
1,628,414

DRAFT

Student Name:
Student NetID:
Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Mechanical (analog) Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Digital electronic Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Sales of replacement parts
% of analog sales
Sales revenue
Non-warranty service
% of analog sales
Sales revenue
License fees and Royalties
Total Revenue

2015

2016

2.0%
-2.0%

2017

-2.0%
-2.0%

2018

-5.0%
-2.0%

2019

-7.0%
-2.0%

2020

-10.0%
-2.0%

-10.0%
-2.0%

15,857

15,540

14,763

13,730

12,357

11,121

$386
$6,119,181

$378
$5,876,862

$371
$5,471,358

$363
$4,986,596

$356
$4,398,177

$349
$3,879,193

4%
0%
23,275
525
$12,219,140

4%
1%
24,206
530
$12,834,985

8%
1%
26,142
536
$14,000,401

8%
1%
28,233
541
$15,271,638

8%
1%
30,492
546
$16,658,302

10%
1%
33,541
552
$18,507,374

841,680

808,350

752,574

685,896

604,960

533,575

126,378.22
$0

121,373.65
$0

112,998.87
$0

102,987.17
$0

90,834.68
$0

80,116.19
$0

$19,306,380

$19,641,570

$20,337,332

$21,047,116

$21,752,274

$23,000,257

Cost of Production and Sales

Analog and Digital Widgets combined
Production - materials

Production - labor
Production - allocated overhead
File: 224528747.xlsx.ms_office
Tab: Projection (2)

0.0%
$65
$2,536,773
39,132
21,214.65
0.00%
$44.00
0.00%
$933,445

0.0%
$65
$2,576,566
39,746
21,547.43
0.00%
$44.00
0.00%
$948,087

0.0%
$65
$2,651,728
40,905
22,176.00
0.00%
$44.00
0.00%
$975,744

0.0%
$65
$2,720,309
41,963
22,749.54
0.00%
$44.00
0.00%
$1,000,980

0.0%
$65
$2,777,725
42,849
23,229.70
0.00%
$44.00
0.00%
$1,022,107

0.0%
$65
$2,895,289
44,662
24,212.86
0.00%
$44.00
0.00%
$1,065,366

1,680,201

1,706,557

1,756,339

1,801,763

1,839,792

1,917,659

Page 11 of 15

DRAFT

Student Name:
Student NetID:
Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Mechanical (analog) Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Digital electronic Widgets
Change in unit sales
Change in pricing
Unit sales
Selling prices
Sales revenue
Sales of replacement parts
% of analog sales
Sales revenue
Non-warranty service
% of analog sales
Sales revenue
License fees and Royalties
Total Revenue

Period

2021

2022

-12.0%
-2.0%

2023

-12.0%
-2.0%

Totals

-15.0%
-2.0%

9,787

8,612

7,320

139,876

$342
$3,345,416

$335
$2,885,086

$328
$2,403,277

$4,003
$51,610,855

10%
1%
36,895
557
$20,561,693

10%
1%
40,585
563
$22,844,040

10%
1%
44,643
568
$25,379,729

331,910

$5,968
$181,323,757

460,155

396,837

330,566

$7,098,962

69,092.20
$0

59,585.11
$0

49,634.40
$0

$24,436,355

$26,185,549

$28,163,206

$1,065,909
$0
241,099,482

Cost of Production and Sales

Analog and Digital Widgets combined
Production - materials

Production - labor
Production - allocated overhead
File: 224528747.xlsx.ms_office
Tab: Projection (2)

0.0%
$65
$3,026,211
46,682
25,307.74
0.00%
$44.00
0.00%
$1,113,541

0.0%
$65
$3,189,258
49,197
26,671.28
0.00%
$44.00
0.00%
$1,173,536

0.0%
$65
$3,368,609
51,964
28,171.17
0.00%
$44.00
0.00%
$1,239,532

2,004,373

2,112,365

2,231,157

Page 12 of 15

$30,584,080

$11,253,882

DRAFT

Factory overhead:

Variable portion of factory overhead

Fixed factory overhead

Notes

Acquisition Opportunity
Confidential -- Board Members only

Jan - June 2013

Actual

Description

Jan-June
Restated

$1,750,000
change in total unit production
change in variable overhead cost
additonal variable overhead
$635,000 $18 per unit
change in total unit production
$1,115,000

December
2013

2014

$1,115,000

1,770,277
1,126
0.00%
20,277
$655,277
1126
$1,115,000

1,791,257
1,166
0.00%
20,980
$676,257
1166
$1,115,000

$635,000

Total production costs

$4,910,000

$4,910,000

$5,030,174

$5,154,518

Gross Margin

$14,298,522

$14,298,522

$13,360,020

$13,684,730

459,551
4,404,029
909,528
134,036

470,772
4,511,568
931,737
137,309

$6,170,000

$5,907,144

$6,051,385

$8,128,522
(2,438,557)
$5,689,965

$7,452,876
(2,235,863)
5,217,013

$7,633,345
(2,290,004)
5,343,342

5,689,965
(65,000,000)

5,217,013
(59,782,987)

5,343,342
5,343,342

Selling costs
Marketing
Advertising
Distribution
Customer relations

480,000 does not include advertising

4,600,000
950,000
140,000
selling cost percentage:
Total selling costs
6,170,000
All other operating costs: ignore for purposes of evaluating this investment
Operating income
Less: 30% income tax
Net income (and approximate cash flow for this project)
Purchase and Residual Value
Net aggregate cash flow (estimated)
Net aggregate cash flow (estimated) with acquisition

8,128,522

selling price

9.174%

Internal Rate of Return after tax benefits

Net Present Value, discounted at required return

File: 224528747.xlsx.ms_office
Tab: Projection (2)

2.50%
23.95%
4.95%
0.73%
32.1%

RRR = 18%

Page 13 of 15

$ (19,613,285)

DRAFT

Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Factory overhead:

Variable portion of factory overhead

Fixed factory overhead
Total production costs

2015
1,812,967
1,206
0.00%
21,710
$697,967
1206
$1,115,000

2016

2017

2018

2019

2020

1,541,951
614
30.00%
7,734
$705,701
614
$836,250

1,556,560
1,159
0.00%
14,609
$720,310
1159
$836,250

1,569,890
1,058
0.00%
13,330
$733,640
1058
$836,250

1,581,050
886
0.00%
11,160
$744,800
886
$836,250

1,603,900
1,814
0.00%
22,850
$767,650
1814
$836,250

$5,283,185

$5,066,605

$5,184,032

$5,291,179

$5,380,882

$5,564,555

$14,023,194

$14,574,965

$15,153,300

$15,755,937

$16,371,393

$17,435,702

482,445
4,623,435
954,840
140,713

490,821
4,703,705
971,417
143,156

508,208
4,870,324
1,005,828
148,227

525,944
5,040,301
1,040,932
153,400

543,566
5,209,170
1,075,807
158,540

574,751
5,508,034
1,137,529
167,636

Total selling costs

$6,201,433
$6,309,100
All other operating costs: ignore for purposes of evaluating this investment

$6,532,587

$6,760,578

$6,987,083

$7,387,949

Operating income
Less: 30% income tax
Net income (and approximate cash flow for this project)

$10,047,753
(3,014,326)
7,033,427

Gross Margin
Selling costs
Marketing
Advertising
Distribution
Customer relations

Purchase and Residual Value

Net aggregate cash flow (estimated)
Net aggregate cash flow (estimated) with acquisition

$7,821,761
(2,346,528)
5,475,233

$8,265,865
(2,479,760)
5,786,106

$8,620,713
(2,586,214)
6,034,499

$8,995,359
(2,698,608)
6,296,751

$9,384,310
(2,815,293)
6,569,017

5,475,233
5,475,233

5,786,106
5,786,106

6,034,499
6,034,499

6,296,751
6,296,751

6,569,017
6,569,017

7,033,427
7,033,427

Internal Rate of Return after tax benefits

Net Present Value, discounted at required return

File: 224528747.xlsx.ms_office
Tab: Projection (2)

Page 14 of 15

DRAFT

Acquisition Opportunity
Confidential -- Board Members only
Revenue:
Factory overhead:

Variable portion of factory overhead

Fixed factory overhead
Total production costs

Period

2021

2022

2023

1,629,347
2,020
0.00%
25,447
$793,097
2020
$836,250

1,661,038
2,515
0.00%
31,691
$824,788
2515
$836,250

1,695,898
2,767
0.00%
34,860
$859,648
2767
$836,250

Totals

$8,179,136
$10,035,000

$5,769,098

$6,023,832

$6,304,039

$60,052,099

$18,667,257

$20,161,718

$21,859,167

$181,047,384

610,638
5,851,946
1,208,554
178,103

654,348
6,270,838
1,295,064
190,852

703,768
6,744,441
1,392,874
205,266

$6,024,813

Total selling costs

$7,849,241
$8,411,102
All other operating costs: ignore for purposes of evaluating this investment

$9,046,348

$77,443,949

$12,812,819
(3,843,846)
8,968,973
44,844,867
53,813,840
53,813,840

$103,603,434
($31,081,030)
$72,522,404

Gross Margin
Selling costs
Marketing
Advertising
Distribution
Customer relations

Operating income
$10,818,016
Less: 30% income tax
(3,245,405)
Net income (and approximate cash flow for this project)
7,572,611
Purchase and Residual Value
Net aggregate cash flow (estimated)
Net aggregate cash flow (estimated) with acquisition

7,572,611
7,572,611

$11,750,616
(3,525,185)
8,225,431
8,225,431
8,225,431

11,924,109

Internal Rate of Return after tax benefits

Net Present Value, discounted at required return

File: 224528747.xlsx.ms_office
Tab: Projection (2)

Page 15 of 15

DRAFT