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    John M Case

    Uploaded by

    adrian_simm
    This document contains financial statements for John M. Case from 1985 to 1996 including income statements, balance sheets, and cash flow statements. It also contains calculations for valuing the company using free cash flow valuation and determining the weighted average cost of capital. Key information includes annual sales growth from $16 million to $27 million over the period. Net income grew from $478,000 to $4.8 million. The company took on debt in 1985, 1987, and 1990 to fund expansion that was eventually paid off from free cash flows.

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    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd

    John M Case

    Uploaded by

    adrian_simm
    5K views10 pages
    This document contains financial statements for John M. Case from 1985 to 1996 including income statements, balance sheets, and cash flow statements. It also contains calculations for valuing the company using free cash flow valuation and determining the weighted average cost of capital. Key information includes annual sales growth from $16 million to $27 million over the period. Net income grew from $478,000 to $4.8 million. The company took on debt in 1985, 1987, and 1990 to fund expansion that was eventually paid off from free cash flows.

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    © Attribution Non-Commercial (BY-NC)

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    This document contains financial statements for John M. Case from 1985 to 1996 including income statements, balance sheets, and cash flow statements. It also contains calculations for valuing the company using free cash flow valuation and determining the weighted average cost of capital. Key information includes annual sales growth from $16 million to $27 million over the period. Net income grew from $478,000 to $4.8 million. The company took on debt in 1985, 1987, and 1990 to fund expansion that was eventually paid off from free cash flows.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    5K views10 pages

    John M Case

    Uploaded by

    adrian_simm
    This document contains financial statements for John M. Case from 1985 to 1996 including income statements, balance sheets, and cash flow statements. It also contains calculations for valuing the company using free cash flow valuation and determining the weighted average cost of capital. Key information includes annual sales growth from $16 million to $27 million over the period. Net income grew from $478,000 to $4.8 million. The company took on debt in 1985, 1987, and 1990 to fund expansion that was eventually paid off from free cash flows.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
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    At a glance
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    The document shows the income statement and balance sheet of John M. Case company from 1985 to 1996, tracking its sales, expenses, assets, liabilities and equity over time.

    Sales generally increased each year, as did expenses like cost of goods sold and selling/administrative expenses. Expenses grew but at a lower rate than sales, leading to increased profits over time.

    The company took on an initial investment, bank loans and subordinate loans from venture capitalists to finance an expansion. It used its increasing cash flows to repay these debts over several years.

    John M.

    Case
    Income Statement
    1985 1986 1987 1988 1989 1990 1991 1992
    Sales 16,024 16,844 17,686 18,570 19,498 20,472 21,496 22,570
    Expansion 0 1,000 1,400 1,960 2,744 3,114 3,535 4,012
    Net Sales 16,024 17,844 19,086 20,530 22,242 23,586 25,030 26,582
    COGS 9454 10,528 11,261 12,113 13,123 13,916 14,768 15,684
    Intial Investment 200 - - - - - - -
    Merchandising 450 450 - - - - - -
    S&A Expense 3429 3,819 4,084 4,393 4,760 5,047 5,357 5,689
    EBIT 2491 3,047 3,741 4,024 4,359 4,623 4,906 5,210
    Financing Expense 249 175 0 0 0 0
    Interest Expense 1675 1538 1369 908 800 800 800 800
    Profit Before Tax 567 1334 2372 3116 3559 3823 4,106 4,410
    Fed Tax 1 88 208 370 486 555 596 944 1,058
    Profit after Tax 478 1126 2002 2630 3004 3227 3,162 3,352
    EPS 0.96 2.25 4.00 5.26 6.01 6.29 6.17 6.54
    2.99% 6.31% 10.49% 12.81% 13.51% 13.68% 12.63% 12.61%
    1 - Starting in 1991 we used a tax rate of 23% and grew the tax rate by 1 percent each year

    Balance Sheet Net Working Capital


    (000's) 1985 1986 1987 1988 1989 1990 (000's)
    Assets1 Cash
    Cash 9486 10564 11299 12154 13167 13963 Acct Rec.
    Acct Rec 4182 4657 4981 5358 5805 6156 Inv.
    Inv 1026 1142 1222 1314 1423 1510 C/L
    total Current Asset 14694 16363 17502 18826 20396 21629 NWC
    Net, P,P,&E2 2310 2270 2230 2190 2150 2110
    Misc. Asset. 122 136 145 156 169 179
    Total Assets 17126 18769 19877 21172 22715 23918
    Liab.
    Acct. Payable3 6023 6461 5490 4087 2565 489
    Accrued Expenses4 383 427 457 491 532 564
    Accrued Inc. Tax5 26 61 108 142 162 174
    Current liab. 6432 6949 6055 4720 3259 1228
    Common Stock6 500 500 500 500 500 508
    Retained Earnings 10194 11320 13322 15952 18956 22183
    Total Liab. & S/E 17126 18769 19877 21172 22715 23918

    1- All assets were calculated using persentage of net sales


    2-Assumed a 5 year straight line depreciation with $0 salvage value on the $200,000 intial investment for the expansion pro
    3-Plug figure
    4- Calculated as a percentage of Selling and Admin. Expenses
    5-Calculated as a percentage of Fed. Income Taxes
    6-500,000 shares from Management group plus warrants issued in 1990 to Venture Capitalists
    1993 1994 1995 1996
    23,699 24,884 26,128 27,434
    4,554 5,168 5,866 6,658
    28,253 30,052 31,994 34,093
    16,669 17,731 18,877 20,115
    - - - -
    - - - -
    6,046 6,431 6,847 7,296
    5,538 5,890 6,271 6,682

    - - - -
    5,538 5,890 6,271 6,682
    1,384 1,531 1,693 1,871
    4,153 4,359 4,578 4,811
    8.10 8.50 8.93 9.38
    14.70% 14.50% 14.31% 14.11%

    Net Working Capital


    1985 1986 1987 1988 1989 1990
    9486 10564 11299 12154 13167 13963
    4182 4657 4981 5358 5805 6156
    1026 1142 1222 1314 1423 1510
    (6432) (6949) (6055) (4720) (3259) (1228)
    8262 9414 11447 14106 17137 20401

    nt for the expansion project


    John M Case
    Free Cash Flow Valuation
    1985 1986 1987 1988 1989 1990
    1
    EBIT*(1-T) 2107 2520 3053 3195 3400 3583
    Add Non-Cash 240 260 284 300 310 340
    Less:Increase in NWC 156 162 170 180 190 200
    Less:Cap expense 770 584 142 150 466 600
    Free Cash Flow 1421 2034 3025 3165 3054 3123

    Debt Retirement Schedule


    Bank Loan 2 1421 2034 2545 2355
    Sellers' Debt 480 5520
    Subordinated Loan 3 0 699 2801

    Price-Earnings Multiple
    DeLuther Wakefield Co. Officomp
    P/E Ratio 8.7 7.2 10.5
    Avg. P/E Ratios 8.8

    Case Co. 1985 1986 1987 1988 1989 1990


    Projected Net Income 478 1126 2002 2630 3004 3227
    Avgerage net Income 2078

    Multiple EV 19765 28397.6


    Selling Price 20000
    Bank Loan 6000
    Company Cash 4000
    Seller's Debt 6000
    Equity 500
    Subordinate Loan 3500

    1 - Starting in 1991 we used a tax rate of 23% and grew the tax rate by 1 percent each year
    2 -Loan paid off by cash flow and new bank term loan of 2.355 million to be paid off the following year
    3 - In 1992 the loan to the VC is completely paid off plus a payment of 1.17 million in order to guarantee the VC's 22% IRR
    WACC Coupon Rate
    Bank Loan 12%
    1991 1992 1993 1994 1995 1996 Sellers' Debt 4%
    3778 3960 4154 4359 4578 4811 Subordinate Loan 9%
    340 340 340 340 340 340 WACC 8.40%
    210 220 230 240 250 260
    600 600 600 600 600 600 Bank Weight 6000/19500=.308
    3308 3480 3664 3859 4068 4291 Seller's Debt 6000/19500=.308
    VC Loan 7500/19500=.385

    Used the Weighted Average Cost of Debt for the


    Payouts until all debts hav

    Bank Loan is repaid first because it is the Senior d


    Case's Debt is repaid second because of its 5-yea
    Venture Capital debt is repaid last because it is
    the Bank's and Case's debt 5-year te
    19764800
    Assumed tax rate as computed in case exhibi

    arantee the VC's 22% IRR


    Coupon Rate Weight
    30.8%
    30.8%
    38.5%

    6000/19500=.308
    6000/19500=.308
    7500/19500=.385

    Average Cost of Debt for the WACC due to no anticipated Dividend


    Payouts until all debts have been repayed

    rst because it is the Senior debt


    second because of its 5-year term
    bt is repaid last because it is subordinate to
    k's and Case's debt 5-year term

    as computed in case exhibit


    Venture Capitalist Valuation
    1985 1986 1987 1988 1989
    Initial Outlay -3500
    Interest Revenue 315 315 315 315
    Principal Repayment 699
    8,160 Warrants @ $55.88 per share

    Venture Capitalist Contribution 3500


    Interest Payments at 9%
    Warrant Value 13% of 3500 455

    3500
    1990

    252
    2801
    456

    1990
    Equity 28398
    Selling Pric 20000
    Bank Loan 6000
    Company C 4000
    Seller's De 6000
    Equity 500
    Subordinat 3500
    1991 1992 1993 1994 1995 1996
    0 0 0 0 0 0
    340 340 340 340 340 340
    210 220 230 240 250 260
    600 600 600 600 600 600
    -470 -480 -490 -500 -510 -520

    1991 1992 1993 1994 1995 1996


    21,496 22,570 23,699 24,884 26,128 27,434
    3,535 4,012 4,554 5,168 5,866 6,658
    25,030 26,582 28,253 30,052 31,994 34,093
    14,768 15,684 16,669 17,731 18,877 20,115
    - - - - - -
    - - - - - -
    5,357 5,689 6,046 6,431 6,847 7,296
    7,834 8,526 9,294 10,145 11,092 12,145
    Price-Earnings Multiple
    DeLuther Wakefield Officomp
    P/E Ratio 8.7 7.2 10.5
    Avg. P/E Ra 8.8

    Case Co. 1985 1986 1987 1988 1989 1990


    Projected 478 1126 2002 2630 3004 3227
    Avgerage n 2078

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