Anne Clemens' Ratio Analysis and Forecast of Free Cash Flows

Ratio Analysis
1994
1995
1996
1997
1.316635 1.53215 1.799186 2.04866
1.242051 1.242697 1.326964 1.479592
0.669641 0.594272 0.497345 0.389358

EBIT/(Interest and Principal))*
Current Ratio
Debt/Assets
DuPont System of Ratios:
Profit/Sales
Sales/Assets
Assets/Equity
Return on Equity

0.106056 0.116706 0.126974 0.135171
0.746635 0.788845 0.850223 0.876679
3.561877 2.82383 2.223294 1.799868
0.282049 0.25997 0.240018 0.213287

Forecast of Free Cash Flows
(In thousands of dollars)
At Closing
EBIT
EBIAT (T=37%)
+Depreciation
-Capital Expenditures**
+Amort. of Organiz. Costs
-Additions to Net Wkg. Cap.
FREE CASH FLOW

1994
1995
1996
1997
929.6707 1084.506 1223.636 1300.627
585.6926 683.2389 770.8905 819.3948
116.4
166.4
216.4
266.4
-4122
-250
-250
-350
-350
60
60
60
60
-519.527 -301.994 -200.797 -215.468
-4122 -7.43397 357.6446 496.4938 580.3266

* In computing the EBIT coverage ratio, interest expense includes interest on both the revolving loan and term loan;

** The forecast of capital expenditures reflects Anne Clemens' belief that they would amount to $350,000 (not $250

478 769.937644 1. .000 (not $250.426 894.449989 0.7899 revolving loan and term loan.000) in the years 1996-1998.253449 0. principal payments include only the scheduled annual payments necessary to amortize the term loan.146894 0.1998 2. amount to $350.476959 2.4 -350 60 -151.163565 0.199713 1998 1420.8681 316.

.ry to amortize the term loan.

Forecast Assumptions Key Assumptions: Case Sales $/Case Gross Margins Estates Select-other Chardonnay California Generic Special Accts Winery Dividend Payout: Exhibit 11 Exhibit 11 0.5 0.38 0.29 0.49 Now-1996 1997&After 0 0 .38 0.4 0.36 0.

02 .1 1 0.02 0.1 0. 50 0.Cash Minimum (m) AR/Sales INV(T)/COGS(T+1) CL(T)/COGS(T+1) SGA/Sales Depreciation Capital Expenditures Interest Rate Tax Rate Inflation Rate Real Price Growth Amortiz. S-L 250 0.14 5-yr.37 0. Organization Costs: 5 years.095 0.

73 7666 5210 1350 33.61 37.65 5864 1353 322 Generic White Table Wine Red Table Wine 17685 4657 22.09 13301 2976 23.82 6133 2993 1599 8633 11794 5835 38.15 2957 55.1 20.74 38.13 30.98 39.88 37.5 34.83 2090 12715 3155 3633 54.Historical Case Sales and Prices by Variety 1991 Cases Estates Sauvignon Blanc Cabernet Sauvignon Petite Sirah 1991 $/Case 1992 Cases 1992 $/Case 1993 Cases 4436 3258 2547 46.25 46.59 0 23465 2157 38.52 33.85 45.85 38.42 20.54 42.42 2924 2887 1574 48.13 31.69 7716 2337 TOTAL WHOLESALE 81009 Special Accounts Hotels Gigantic Airlines Altar Wines 0 11320 2388 37.92 47.42 41.17 11569 3444 2112 9472 5393 7299 32.03 16537 9750 4482 40.05 38.78 2188 Select Vineyards Chardonnay Savignon/Fume Blanc White/Rose Zinfandel California Petite Sirah Chenin Blanc Other Winery 68657 45442 TOTAL NON WHOLESALE 17341 28579 20148 TOTAL CASE SALES 98350 97236 65590 .56 46.

25 40.9 39.25 41.6 23.35 34.1993 $/Case 49.31 39.15 32.7 48.45 .5 35.7 44.12 57.79 21.15 40.33 49.

93388 16500 44.7914 2500 23.77206 2000 41.8526 0 39.28729 5000 38.44065 5000 35.45965 3500 43.51196 16500 41.97027 6000 54.75112 2500 22.69803 Select Vineyards Chardonnay Savignon/Fume Blanc White/Rose Zinfandel California Petite Sirah Chenin Blanc Other Winery TOTAL NON WHOLESALE 26790 26790 26790 TOTAL CASE SALES 89518 95790 102290 .8938 1728 36.34391 0 38.97256 3500 47.28253 2500 51.75106 2500 23.9165 8000 41.90245 4000 43.79688 6000 52.57006 1000 33.30388 3500 45.21542 5000 45.77098 2790 62.04749 0 35.18573 2790 64.2397 12000 53.70788 5000 50.70865 3500 49.68629 2790 59.71289 Generic White Table Wine Red Table Wine 10000 24.31395 3000 53.91704 5000 37.58461 0 36.42743 3000 55.99852 TOTAL WHOLESALE 62728 69000 75500 Special Accounts Hotels Gigantic Airlines Altar Wines 4000 41.75691 4000 44.Forecast Case Sales and Prices by Variety 1994 Cases Estates Sauvignon Blanc Cabernet Sauvignon Petite Sirah 1994 $/Case 1995 Cases 1995 $/Case 1996 Cases 1996 $/Case 9000 51.98014 19000 44.65033 8000 43.30978 14000 55.18904 16500 42.67614 22000 46.06663 10000 26.4542 8000 45.17092 10000 25.4635 16000 42.

73922 10000 27.28352 8000 48.51488 3500 51.6263 3000 57.39408 3500 53.03123 26790 26790 104290 107290 .18642 5000 40.27646 24000 50.04212 5000 47.1961 5000 42.74921 16500 46.18383 0 38.1997 Cases 1997 $/Case 1998 Cases 1998 $/Case 14000 58.97677 77500 80500 4000 46.78203 2790 67.84765 0 39.31183 2790 70.914 3000 60.03548 24000 48.33095 8000 47.87378 2500 24.42225 0 41.96806 10000 28.94263 5000 49.58402 7000 58.63788 16500 48.99988 2500 25.05531 0 42.23147 6000 56.69361 4000 48.70422 16000 60.

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