TABLE 19.10 SPREADSHEET Ideko's Free Cash Flow Forecast Year 2005 2006 2007 2008 2009 2010 Free Cash Flow ($ 000) 1 Net Income 5,193 6,247 6,960 8,382 10,545 2 Plus: After-Tax Interest Expense 3 Unlevered Net Income 4 Plus: Depreciation 5 Less: Increases in NWC 4,420 4,420 4,420 5,083 5,304 6 Less: Capital Expenditures (5,000) 9,613 10,667 11,380 5,450 5,405 6,865 7,678 7,710 3,412 (3,663) (4,089) (4,685) (5,231) (5,000) (20,000) (15,000) (8,000) 13,465 15,849 7 Free Cash Flow of Firm 13,475 7,409 (5,845) 1,458 10,328 8 Plus: Net Borrowing - - 9 Less: After-Tax Interest Expense (4,420) 10 Free Cash Flow to Equity 9,055 2,989 (4,420) 15,000 5,000 (4,420) (5,083) (5,304) 4,735 1,375 5,024 Based on: (Click on the following icon in order to copy its contents into a spreadsheet.) Ideko's Working Capital Requirements Working Capital Days Assets 2005 > 2005 Days Days Accounts Receivable Sales Revenue 90 60 Raw Materials Finished Goods Minimum Cash Balance Liabilities Wages Payable Raw Materials Costs 45 Raw Materials + Labor Costs Sales Revenue 45 440 30 45 30 30 Direct Labor + Admin Costs 15 15 Other Accounts Payable Raw Materials + Sales and Marketing 45 45 55 Working Capital ($ 000) 2005 2006 2007 2008 2009 2010 Assets Accounts Receivable 18,261 13,817 15,631 17,633 19,841 22,274 Raw Materials 1,996 1,495 1,674 1,868 2,081 2,312 Finished Goods 4,223 4,820 5,485 6,226 7,051 7,968 Minimum Cash Balance 6,087 6,908 7,815 8,817 9,921 11,137 Total Current Assets 30,567 27,040 30,605 34,544 38,894 43,691 Labilities Wages Payable 1,293 1,380 1,581 1,762 1,959 2,229 Other Accounts Payable 3,365 3,961 4,643 5,420 6,156 6,874 Total Current Liabilities 4,658 5,341 6,224 7,182 8,115 9,103 Net Working Capital 25,909 21,699 24,381 27,362 30,779 34,588 Increase in Net Working Capital (4,210) 2,682 2,981 3,417 3,809 Income Statement ($ 000) Sales 2005 2006 2007 2008 2009 2010 74,058 84,051 95,088 107,270 120,701 135,498 Cost of Goods Sold Raw Materials Direct Labor Costs Gross Profit Sales and Marketing (16,191) (18,186) (20,362) (22,733) (25,317) (28,128) (18,060) (20,909) (24,130) (27,768) (31,874) (36,501) 39,807 44,956 50,596 56,769 63,510 70,869 (11,101) (13,944) (17,297) (21,229) (24,611) (27,628) (13,397) (12,683) (14,349) (15,114) (15,800) (17,737) Administrative EBITDA Depreciation 15,309 18,329 18,950 (5,580) (5,512) (5,451) 20,426 23,099 25,504 (5,396) (5,346) (6,792) EBIT Interest Expense (net) 9,729 (73) (6,698) 12,817 13,499 15,030 17,753 18,712 (6,698) (6,698) (6,698) (6,698) Pretax Income Income Tax 9,656 6,119 (3,380) (2,142) (2,380) 6,801 8,332 11,055 12,014 (2,916) (3,869) (4,205) Net Income 6,276 3,977 4,421 5,416 7,186 7,809 (Click on the following icon in order to copy its contents into a spreadsheet.) Estimated 2005 Balance Sheet Data for Balance Sheet ($ 000) Assets Ideko Corporation Cash and Equivalents Accounts Receivable Inventories Total Current Assets Property, Plant, and Equipment Goodwill Total Assets 6,164 18,261 6,165 30,590 50,220 72,332 153,142 Liabilities and Stockholders' Equity Accounts Payable 4,654 Debt 98,500 Total Liabilities 103,154 Stockholders' Equity 49,988 Total Liabilities and Equity 153,142