FINANCIAL MODELING INSTRUCTIONS

Please go to "Tools", "Options", "Calculation". In the "Calculation" tab, please set it to "automatic" calculation and "iteration" of 500.
For Apple computers, please go to 'Excel", "Preferences", "Calculations", "Automatic", "use iterative calculations" and "iteration" of 500

Assumptions Tab
Income Statement
Revenue - Assume 5% growth rate in each year of the forecast period. Generally, revenue growth rate of a company will decline even if revenues are increasing.
COGS as % of Sales - Assume 40% for each year of the forecast period.
Depreciation % as of Gross P,P&E - Assume 2% for each year of the forecast period. NOTE that Gross PP&E will
number will come out initially to be $0, but Depreciation will automatically calculate once Gross PP&E is filled in later.
Amortization - No Amortization (enter $0 for each year).
SG&A as % of Sales - Assume 30% for each year of the forecast period.
Other Income (Expenses) - Assume $0 million for each year of the forecast period.
Tax Rate - Assume 40% for each year of the forecast period.

Balance Sheet
Days Accounts Receivable - Assume 30 days for each year of the forecast period.
Days Inventory - Assume 45 days for each year of the forecast period.
Other Current Assets - Assume $1.0 million for each year of the forecast period.
impairment of Goodwill - Assume $0 million for each year of the forecast period.
Capex as % of Sales - Assume 5% for each year of the forecast period.
Asset Disposition - Assume $0 for each year of the forecast period.
Days Payable - Assume 50 days for each year of the forecast period.
Accrued Liabilities as % of COGS - Assume 3% for each year of the forecast period.
Other Current Liabilities as a % of COGS - Assume 2% for each year of the forecast period.

Common Stock - Assume $10 million for each year of the forecast period.

LIBOR % (London InterBank Offered Rate) - It will increase 25 basis points (0.25%) every year after 2016
Interest Earned on Cash - It will increase 25 basis points every year after 2016.

Revolver Interest Rate - Assume Libor + 2.0%

Term Loan Interest Rate - Assume Libor + 2.5%
Unsecured Debt Interest Rate - Assume 12.0% Interest Rate for the forecast period.

Term Loan Amortization - Assume $20 million principal paydown (amortization) per year during the forecast period.
Unsecured Debt Amortization - Assume no paydown in principal during any year of the forecast period.

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FINANCIAL MODELING INSTRUCTIONS

Debt and Interest Schedule

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FINANCIAL MODELING INSTRUCTIONS

If your model has been constructed properly, it should "balance" - the check figures in each year at the bottom of your balance sheet should be "0".

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Generally, revenue growth rate of a company will decline even if revenues are increasing.

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check figures in each year at the bottom of your balance sheet should be "0".

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COMPANY A FINANCIAL MODEL
HISTORIC VARIABLES AND ASSUMPTIONS FOR PROJECTIONS

HISTORICAL VARIABLES AND DRIVERS

Fiscal Year Ending December 31,
2012A 2013A 2014A 2015A 2016A
Income Statement Drivers / Assumptions
Revenue Growth Rate na 6.3% 5.9% 5.6% 5.3%
COGS as % of Revenue 42.0% 41.5% 41.0% 41.0% 40.0%
Depreciation as % of Gross PP&E 1.8% 1.7% 1.7% 1.6% 1.5%
Amortization $0.0 $0.0 $0.0 $0.0 $0.0
SG&A as % of Sales 30.0% 30.0% 30.0% 30.0% 30.0%
Other Income / (Expense) $2.0 $0.0 ($2.0) $1.0 $0.0
Tax Rate 40.0% 40.0% 40.0% 40.0% 40.0%

Balance Sheet Drivers / Assumptions

Days Accounts Receivable 27 28 28 28 29
Days Inventory 43 43 44 44 45
Other Current Assets $1.0 $1.0 $1.0 $1.0 $1.0
Goodwill Impairment $0.0 $0.0 $0.0 $0.0 $0.0
Capex as % of Sales na 5.9% 6.1% 6.3% 6.5%
Asset Disposition na $0.0 $0.0 $0.0 $0.0
Days Payable 46 46 46 46 50
Accrued Liabilities as % of COGS 3.0% 3.0% 3.0% 3.0% 3.0%
Other Current Liabilities as % of COGS 3.0% 0.0% 2.7% 1.3% 0.0%

Common Stock $10.0 $10.0 $10.0 $10.0 $10.0

Interest Rate Assumptions

LIBOR 0.25% 4% 4% 4% 4% 4%
Interest earned on cash 0.25% 2% 2% 2% 2% 2%

Revolver 2.0% + li 6% 6% 6% 6% 6%
Term Loan 2.5% + li 7% 7% 7% 7% 7%
Unsecured Debt 12.00% 12% 12% 12% 12% 12%

Term Loan Amortization - - - - -

Unsecured Debt Amortization - - - - -

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 ASSUMPTIONS FOR PROJECTIONS
Fiscal Year Ending December 31,
2017P 2018P 2019P 2020P 2021P

5.0% 5.0% 5.0% 5.0% 5.0%

40.0% 40.0% 40.0% 40.0% 40.0%
2.0% 2.0% 2.0% 2.0% 2.0%
$0.0 $0.0 $0.0 $0.0 $0.0
30.0% 30.0% 30.0% 30.0% 30.0%
$0.0 $0.0 $0.0 $0.0 $0.0
40.0% 40.0% 40.0% 40.0% 40.0%

30 30 30 30 30
45 45 45 45 45
$1.0 $1.0 $1.0 $1.0 $1.0
$0.0 $0.0 $0.0 $0.0 $0.0
5.0% 5.0% 5.0% 5.0% 5.0%
$0.0 $0.0 $0.0 $0.0 $0.0
50 50 50 50 50
3.0% 3.0% 3.0% 3.0% 3.0%
2.0% 2.0% 2.0% 2.0% 2.0%

$10.0 $10.0 $10.0 $10.0 $10.0

4.25% 4.50% 4.75% 5.00% 5.25%

2.25% 2.50% 2.75% 3.00% 3.25%

6.25% 6.50% 6.75% 7.00% 7.25%

6.75% 7.00% 7.25% 7.50% 7.75%
12.00% 12.00% 12.00% 12.00% 12.00%

$ 20.0 20 20 20 20
$ - $ - $ - $ - $ -

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COMPANY A FINANCIAL MODEL
($ in millions)
HISTORICAL FINANCIAL STATEMENTSPROJECTED FINANCIAL STATEMENTS
Fiscal Year Ending December 31, Fiscal Year Ending December 31,
2015A 2016A 2017P 2018P 2019P 2020P
Income Statement
Revenue $190.0 $200.0 $210.0 $220.5 $231.5 $243.1
% Growth 5.6% 5.3% 5.0% 5.0% 5.0% 5.0%

Cost of Goods Sold (1) $77.9 $80.0 $84.0 $88.2 $92.6 $97.2
COGS as % of Revenue 41.0% 40.0% 40.0% 40.0% 40.0% 40.0%

Gross Profit $112.1 $120.0 $126.0 $132.3 $138.9 $145.9

Gross Profit Margin % 59.0% 60.0% 60.0% 60.0% 60.0% 60.0%

Depreciation $5.0 $5.0 $6.7 $6.9 $7.1 $7.4

Amortization $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

SG&A Expenses $57.0 $60.0 $63.0 $66.15 $69.5 $72.9

SG&A as % of Revenue 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%

Operating Income / EBIT $50.1 $55.0 $56.3 $59.3 $62.3 $65.6

Operating Income / EBIT Margin % 26.4% 27.5% 26.8% 26.9% 26.9% 27.0%

EBITDA $55.1 $60.0 $63.0 $66.2 $69.5 $72.9

EBITDA Margin % 29.0% 30.0% 30.0% 30.0% 30.0% 30.0%
EBITDA Growth 5.6% 8.9% 5.0% 5.0% 5.0% 5.0%

Interest Expense $16.4 $15.6 $14.7 $13.5 $12.1 $10.3

Interest Income $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Net Interest Expense $16.4 $15.6 $14.7 $13.5 $12.1 $10.3

Other Income / (Expense) $1.0 $0.0 $0.0 $0.0 $0.0 $0.0

Pretax Income $34.7 $39.4 $41.6 $45.8 $50.3 $55.2

Taxes $13.9 $15.8 $16.6 $18.3 $20.1 $22.1

Tax Rate 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%

Net Income $20.8 $23.7 $25.0 $27.5 $30.2 $33.1

Net Margin % 10.9% 11.8% 11.9% 12.5% 13.0% 13.6%
Net Income Growth 24.0% 13.8% 5.5% 9.9% 9.9% 9.9%
(1) Excludes depreciation and amortization

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COMPANY A FINANCIAL MODEL
($ in millions)
HISTORICAL FINANCIAL STATEMENTSPROJECTED FINANCIAL STATEMENTS
Fiscal Year Ending December 31, Fiscal Year Ending December 31,
2015A 2016A 2017P 2018P 2019P 2020P

Balance Sheet
Assets
Cash $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Accounts Receivable $15.0 $16.0 $17.5 $18.4 $19.3 $20.3
Inventory $9.5 $10.0 $10.5 $11.0 $11.6 $12.2
Other Current Assets $1.0 $1.0 $1.0 $1.0 $1.0 $1.0
Total Current Assets $25.5 $27.0 $29.0 $30.4 $31.9 $33.4

Gross PP&E $310.2 $323.2 $333.7 $344.7 $356.3 $368.5

Accumulated Depreciation $40.0 $45.0 $51.7 $58.6 $65.7 $73.1
Net PP&E $270.2 $278.2 $282.0 $286.2 $290.6 $295.4

Goodwill $5.0 $5.0 $5.0 $5.0 $5.0 $5.0

Total Assets $300.7 $310.2 $316.0 $321.6 $327.5 $333.8

Liabilities
Accounts Payable $10.0 $11.0 $11.7 $12.3 $12.9 $13.5
Accrued Liabilities $2.3 $2.4 $2.5 $2.6 $2.8 $2.9
Other Current Liabilities $1.0 $0.0 $1.7 $1.8 $1.9 $1.9
Total Current Liabilities $13.3 $13.4 $15.9 $16.7 $17.5 $18.4

Revolving Credit Facility $37.2 $42.9 $41.3 $38.6 $33.5 $25.8

Term Loan $120.0 $100.0 $80.0 $60.0 $40.0 $20.0
Unsecured Debt $50.0 $50.0 $50.0 $50.0 $50.0 $50.0
Total Liabilities $220.5 $206.3 $187.2 $165.2 $141.0 $114.2

Shareholders Equity
Retained Earnings $70.2 $93.9 $118.9 $146.3 $176.5 $209.6
Common Stock $10.0 $10.0 $10.0 $10.0 $10.0 $10.0
Total Shareholders Equity $80.2 $103.9 $128.9 $156.3 $186.5 $219.6

Total Liabilities and Equity $300.7 $310.2 $316.0 $321.6 $327.5 $333.8
Check $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

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COMPANY A FINANCIAL MODEL
($ in millions)
HISTORICAL FINANCIAL STATEMENTSPROJECTED FINANCIAL STATEMENTS
Fiscal Year Ending December 31, Fiscal Year Ending December 31,
2015A 2016A 2017P 2018P 2019P 2020P

Cash Flow
Net Income $20.8 $23.7 $25.0 $27.5 $30.2 $33.1
Goodwill Impairment $0.0 $0.0 $0.0 $0.0
Plus / (minus):
Depreciation and Amortization $5.0 $5.0 $6.7 $6.9 $7.1 $7.4
Changes in Working Capital
Accounts Receivable ($1.0) ($1.0) ($1.5) ($0.9) ($0.9) ($1.0)
Inventory ($0.5) ($0.5) ($0.5) ($0.5) ($0.6) ($0.6)
Other Current Assets $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Accounts Payable $0.5 $1.0 $0.7 $0.6 $0.6 $0.6
Accrued Liabilities $0.1 $0.1 $0.1 $0.1 $0.1 $0.1
Other Current Liabilities ($1.0) ($1.0) $1.7 $0.1 $0.1 $0.1
Cash Flows from Operations $23.9 $27.3 $32.1 $33.7 $36.7 $39.8

Cash Flows from Investing

Capital Expenditures ($12.0) ($13.0) ($10.5) ($11.0) ($11.6) ($12.2)
Asset Dispositions $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Cash Flows from Investing ($12.0) ($13.0) ($10.5) ($11.0) ($11.6) ($12.2)

Cash Flows from Financing

Change in Revolver $8.1 $5.7 ($1.6) ($2.7) ($5.1) ($7.7)
Change in Term Loan ($20.0) ($20.0) ($20.0) ($20.0) ($20.0) ($20.0)
Change in Unsecured Debt $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Total Cash Flows from Financing ($11.9) ($14.3) ($21.6) ($22.7) ($25.1) ($27.7)

Total Cash Flow $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Beginning Cash Position $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Change in Cash Position $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Ending Cash Position $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

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COMPANY A FINANCIAL MODEL
($ in millions)
HISTORICAL FINANCIAL STATEMENTSPROJECTED FINANCIAL STATEMENTS
Fiscal Year Ending December 31, Fiscal Year Ending December 31,
2015A 2016A 2017P 2018P 2019P 2020P
Cash Before Revolver ($8.1) ($5.7) $1.6 $2.7 $5.1 $7.7
Debt and Interest Schedule
Revolver
Beginning Revolver Balance $29.1 $37.2 $42.9 $41.3 $38.6 $33.5
(Paydown) / Drawdown $8.1 $5.7 ($1.6) ($2.7) ($5.1) ($7.7)
Ending Revolver Balance $37.2 $42.9 $41.3 $38.6 $33.5 $25.8
Interest Rate 6.0% 6.0% 6.25% 6.50% 6.75% 7.00%
Interest Expense $2.0 $2.4 $2.6 $2.6 $2.4 $2.1

Term Loan
Term Loan Beginning Balance $140.0 $120.0 $100.0 $80.0 $60.0 $40.0
(Paydown) / Drawdown ($20.0) ($20.0) ($20.0) ($20.0) ($20.0) ($20.0)
Term Loan Ending Balance $120.0 $100.0 $80.0 $60.0 $40.0 $20.0
Interest Rate 6.50% 6.50% 6.75% 7.00% 7.25% 7.50%
Interest Expense $8.5 $7.2 $6.1 $4.9 $3.6 $2.3

Unsecured Debt
Unsecured Debt Beginning Balance $50.0 $50.0 $50.0 $50.0 $50.0 $50.0
(Paydown) / Drawdown $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Unsecured Debt Ending Balance $50.0 $50.0 $50.0 $50.0 $50.0 $50.0
Interest Rate 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%
Interest Expense $6.0 $6.0 $6.0 $6.0 $6.0 $6.0

Total Interest Expense $16.4 $15.6 $14.7 $13.5 $12.1 $10.3

Interest Earned on Cash $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

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 STATEMENTS
cember 31,
2021P

$255.3
5.0%

$102.1
40.0%

$153.2
60.0%

$7.6
$0.0

$76.6
30.0%

$69.0
27.0%

$76.6
30.0%
5.0%

$8.3
$0.0
$8.3

$0.0

$60.7

$24.3
40.0%

$36.4
14.3%
9.9%

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 STATEMENTS
cember 31,
2021P

$0.0
$21.3
$12.8
$1.0
$35.0

$381.2
$80.7
$300.5

$5.0
$340.6

$14.2
$3.1
$2.0
$19.3

$15.2
$0.0
$50.0
$84.5

$246.0
$10.0
$256.0

$340.6
$0.0

Page 13
 STATEMENTS
cember 31,
2021P

$36.4
$0.0

$7.6

($1.0)
($0.6)
$0.0
$0.7
$0.1
$0.1
$43.3

($12.8)
$0.0
($12.8)

($10.6)
($20.0)
$0.0
($30.6)

$0.0

$0.0
$0.0
$0.0

Page 14
 STATEMENTS
cember 31,
2021P
$10.6

$25.8
($10.6)
$15.2
7.25%
$1.5

$20.0
($20.0)
$0.0
7.75%
$0.8

$50.0
$0.0
$50.0
12.00%
$6.0

$8.3

$0.0

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COMPANY A DISCOUNTED CASH FLOW MODEL
($ in millions)

Fiscal Year Ending December 31,

2017 2018 2019 2020

Net Sales
EBITDA
EBIT
Less: Taxes
Tax-Adjusted EBIT
Less: Capital Expenditures
Less: (Increase)/Decrease in Working Capital
Plus: Depreciation and Amortization
Unlevered Free Cash Flow
Discount Period
Discount Factor
Present Value of Unlevered Free Cash Flow

Present Value of Enterprise

Less: Debt
Add: Cash
Equity Value
Fully Diluted Shares Outstanding 10.0
Share Price

DCF Sensitivity analysis

Terminal multiple
6.0x 6.5x 7.0x 7.5x
10.0%
Discount Rate

11.0%
12.0%
13.0%
14.0%

Equivalent Growth Rate

Terminal Value Using Gordon Growth Method
Growth Rate
ecember 31,
2021 Terminal Value

DCF Assumptions
Tax Rate 40.0%
Discount rate 12.0%
Terminal multiple 7.0x
Valuation Date 12/31/2016
2021 EBITDA
Terminal multiple
Terminal value
Discount Period
Discount Factor
PV of terminal value

tiple
8.0x