Wolverine Tooling Company

Summary & Assumptions

Summary Overview
Wolverine Tooling Company manufactures and distributes custom industrial tools to the commercial and retail markets. The Company has been a break-even operation
since 2006 before experiencing significant losses in 2010. The Company has a $30 million Term Note due in 2012 and its lender is concerned about the Company's
ability to refinance the note. The Company began enduring financial problems in 2010 due to a problematic history with product line C.
Senior Associate Karl Freimuth began building the 13-week cash flow projection, but gladly gave up his career in financial services
to play professional baseball. You've been hired by the bank to complete the 13-week cash flow model using the following assumptions:

Assumptions

Balance Sheet
1 - Inventory has been adjusted from the discontinuance of product line C. Accordingly, an Inventory Reserve was recorded for $18.75 million on 12/31/10 based on the Company's belief
that they will be able to liquidate the $25 million in inventory for $0.25 cents on the dollar in the first quarter of 2011.
2 - The Company's revolving line of credit is for working capital purposes with a maximum availability of $25 million and is based upon an ABL formula.
3 - The Company straight-line depreciates PPE over a 25-year period.

Income Statement
1 - Company has provided projections for the six month period January 2011 through June 2011.
2 - Sales are projected to increase 5% YOY in 2011.
3 - COGS is assumed to be 85% of sales in 2011.
4 - COGS consists of direct materials (70%), direct labor (20%) and other sundry product A & product B materials (10% combined).
5 - COGS was adjusted for the inventory reserve writeoff of $18.75M at December 31, 2010.
6 - SGA expense is fixed at approximately $800K per month.
7 - Tax rate is assumed to be 40%. If the Company incurs negative net income, the Company doesn't pay income taxes.

Cash Flow Detail

1 - The Company uses free cash flows to paydown the revolving LOC in a contemporaneous manner.
2 - The Company's bank imposed a covenant requiring Wolverine to maintain a minimum cash balance of $1M at all times.

Receipts
1 - Company has been collecting its credit sales (100% of sales) in the 60-day range since 2007.
2 - Based on the Company's 60 day AR collection rate with its customers, sales made on October 31, 2010 will be collected 60 days later on or around December 30, 2010.
3 - The Company's sales mix consists of Product A (60%) and Product B (40%)

Disbursements
1 - Inventory material vendors are paid net 7 FOB destination.
2 - Product A & Product B are miscellaneous items used in production with terms of net 60 days.
3 - Rent is paid the first week of every month.
4 - Utilities for the previous month are due the second week of the following month.
5 - Advertising expense is paid the first week of every month.
6 - The Company's advertising contract expires on February 28, 2011. Handley Global Marketing requires a $100K retainer with monthly payments
due the first five business days of each month. The Company renewed its contract with Handley Global Marketing and paid the retainer.

AR Aging
1 - Wolverine shipped bad product during the third quarter of 2010 resulting in a potential uncollectible receivable of over $6.8 million.
Accordingly, Wolverine expects to book on reserve for uncollectible AR of $6.8 million in the first three months of 2011.

AP Aging
1 - The Company received $6 million in bad material components from Defective Material Supply in August 2010. Once the Company deems the AR
associated with the Defective Material Supply uncollectible, Wolverine will writeoff the corresponding AP.
2 - Based on discussions with the Accounts Payable department as of 12/31/10, Wolverine had open purchase orders for Product A of $630K and
Product B of $270K that were scheduled to be delivered to the plant the week of January 5, 2011 with net 60 day terms.

Payroll
1 - Payroll budget was provided from Production Planning for the first quarter of 2011.

Inventory Schedule
1 - At the end of FY 2010, the Company discontinued product line C, which was valued at $25 million.
The Company is liquidating the product C inventory line and expects to receive $0.25 cents on the dollar during the final week of the projection period.
2 - Based on a new inventory reduction initiative and aggressive marketing campaign, the Company's goal is to maintain approximately 4 months of inventory.
Inventory orders from suppliers are triggered when ending inventory balance drops below $30 million and are tied to projected sales.
Director of Production Planning assesses inventory at the end of each week and places an inventory order valued at 50% of the following month's projected sales.
Inventory terms are FOB destination net 7 days and goods are usually delivered within 7 days of the order.
3 - Per discussions with the Director of Production Planning, $5 million of materials were ordered (FOB destination net 7 days) in December 2010
and were received during the first week of January 2011.

PPE
1 - The Company's capital expenditures have been negligible over the period 2001 through 2010.
The Company has purchased $6 million in additional machinery and tools to decrease the time and materials necessary to produce Products A and B.
The Company agreed to the following terms to pay for the new equipment: 6 equal installments of $1M payable at the beginning of every other month starting in January 2011.

2 - Due to the Company phasing out Product line C at the end of FY 2010, the Company plans to dispose of machinery and equipment related this line.
The Company expects to receive cash from the disposal of Product Line C assets in January 2011.
The following information was provided by management:

M&E Book Value $ 25,000

Acc. Dep. $ (15,000)
Net Book value $ 10,000

Cash Received from sale $ 5,000

Loss on Sale $ (5,000)

Cash $ 5,000 1/28/11

Loss on Disposal $ 5,000 1/28/11
PPE $ 10,000 1/28/11

Accrued Expenses & Liabilities

1 - The Company pays accrued payroll tax to the federal government at the end of each quarter.
2 - The Company pays workers' compensation, property and casualty insurance and general liability insurance during the first week of each quarter.

1
Wolverine Tooling Company
Balance Sheet
Fiscal Year End December 31
$000s

2007 2008 2009 2010

ASSETS

Cash 1,000 1,000 1,000 1,000

Accounts Receivable, net 15,000 17,500 20,000 26,000
Inventory, net 39,000 42,500 45,000 30,850
Prepaid Expenses 5,000 5,000 5,000 5,000
Total Current Assets 60,000 66,000 71,000 62,850

PPE 172,500 175,000 177,500 180,000

Accumulated Depreciation (7,000) (14,000) (21,000) (28,000)
PPE, net 165,500 161,000 156,500 152,000

TOTAL ASSETS 225,500 227,000 227,500 214,850

LIABILITIES & SHAREHOLDERS' EQUITY

Accounts Payable 4,000 5,000 5,000 8,575

Accrued Expenses 2,000 3,000 4,000 2,000
Current Portion of LT Debt 1,000 1,000 1,000 1,000
Line of Credit 12,225 11,980 13,020 15,795
Total Current Liabilities 19,225 20,980 23,020 27,370

LT Debt 30,000 29,000 28,000 27,000

Paid In Capital 175,000 175,000 175,000 175,000

Retained Earnings 1,275 2,020 1,480 (14,520)
Total Equity 176,275 177,020 176,480 160,480

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 225,500 227,000 227,500 214,850

CHECK - - - -

DPO = (Avg AP / COGS) * 365 18.22 17.34 19.16 28.07

DSO = (Avg AR / Sales) * 365 54.41 49.23 63.36 82.52
Inventory Turns = COGS / Avg Inventory 2.58 3.05 2.56 3.73
Fixed Charge Ratio 1.44 1.26 0.89 (2.30)
Interest Coverage Ratio 2.70 1.99 0.57 (11.80)
Debt / EBITDA 2.89 3.06 3.63 (3.48)

2
Wolverine Tooling Company
Income Statement
Fiscal Year End December 31
$000s

Actual Actual Actual Actual Projected

2007 2008 2009 1/31/10 2/29/2010 3/31/10 4/30/10 5/31/10 6/30/10 7/31/10 8/31/10 9/30/10 10/31/10 11/30/10 12/31/10 2010 1/31/11 2/28/11 3/31/11 4/30/11 5/31/11 6/30/11
Sales $ 100,625 $ 129,750 $ 115,210 $ 9,583 $ 9,583 $ 9,583 $ 9,583 $ 9,583 $ 9,583 $ 9,583 $ 9,583 $ 9,583 $ 9,583 $ 10,000 $ 9,167 $ 115,000 $ 10,063 $ 10,063 $ 10,063 $ 10,063 $ 10,063 $ 10,063

COGS 80,125 105,258 95,250 $ 9,292 $ 9,292 $ 9,292 $ 9,292 $ 9,292 $ 9,292 $ 9,292 $ 9,292 $ 9,292 $ 9,292 $ 9,584 $ 9,000 111,500 8,553 8,553 8,553 8,553 8,553 8,553
79.6% 81.1% 82.7% 97.0% 97.0% 97.0% 97.0% 97.0% 97.0% 97.0% 97.0% 97.0% 97.0% 95.8% 98.2% 97.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0%

Gross Margin 20,500 24,492 19,960 292 292 292 292 292 292 292 292 292 292 416 167 3,500 1,509 1,509 1,509 1,509 1,509 1,509
% 20.37% 18.88% 17.32% 3.04% 3.04% 3.04% 3.04% 3.04% 3.04% 3.04% 3.04% 3.04% 3.04% 4.16% 1.82% 3.04% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00%

SG&A 10,125 15,000 12,250 $ 938 $ 938 $ 938 $ 938 $ 938 $ 938 $ 938 $ 938 $ 938 $ 938 $ 938 $ 938 11,250 $ 805 $ 805 $ 805 $ 805 $ 805 $ 805
% 10.06% 11.56% 10.63% 9.78% 9.78% 9.78% 9.78% 9.78% 9.78% 9.78% 9.78% 9.78% 9.78% 9.38% 10.23% 9.78% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%

EBITDA 10,375 9,492 7,710 (646) (646) (646) (646) (646) (646) (646) (646) (646) (646) (522) (771) (7,750) 704 704 704 704 704 704
% 10.3% 7.3% 6.7% -6.7% -6.7% -6.7% -6.7% -6.7% -6.7% -6.7% -6.7% -6.7% -6.7% -5.2% -8.4% -6.7% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%

Depreciation 7,000 7,000 7,000 $ 583 $ 583 $ 583 $ 583 $ 583 $ 583 $ 583 $ 583 $ 583 $ 583 $ 583 $ 583 7,000 583 583 583 583 583 583

EBIT 3,375 2,492 710 (1,229) (1,229) (1,229) (1,229) (1,229) (1,229) (1,229) (1,229) (1,229) (1,229) (1,105) (1,354) (14,750) 121 121 121 121 121 121

Other Income (Expense) (1,250) (1,250) (1,250) $ (104) $ (104) $ (104) $ (104) $ (104) $ (104) $ (104) $ (104) $ (104) $ (104) $ (104) $ (104) (1,250) (5,104) (104) (104) (104) (104) (104)

Net Income Before Taxes 2,125 1,242 (540) (1,333) (1,333) (1,333) (1,333) (1,333) (1,333) (1,333) (1,333) (1,333) (1,333) (1,209) (1,458) (16,000) (4,983) 17 17 17 17 17

Provision for Income Taxes Rate 40% (850) (497) - - - - - - - - - - - - - - - (7) (7) (7) (7) (7)

Net Income $ 1,275 $ 745 $ (540) $ (1,333) $ (1,333) $ (1,333) $ (1,333) $ (1,333) $ (1,333) $ (1,333) $ (1,333) $ (1,333) $ (1,333) $ (1,209) $ (1,458) $ (16,000) $ (4,983) $ 10 $ 10 $ 10 $ 10 $ 10
1.27% 0.57% -0.47% -13.91% -13.91% -13.91% -13.91% -13.91% -13.91% -13.91% -13.91% -13.91% -13.91% -12.09% -15.90% -13.91% -49.52% 0.10% 0.10% 0.10% 0.10% 0.10%

3
Wolverine Tooling Company
Cash Flow Detail
Fiscal Year End December 31
$000s

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6

1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11

Opening Cash Balance 1,000 1,000 1,000 1,000 1,000 1,000

Cash Inflows:
Product A - - - - 6,000 -
Product B - - - - 4,000 -
Other Cash Receipts 64 - 64 5,000 64 -

Total Cash Inflows (A) 64 - 64 5,000 10,064 -

Cash Outflows:
Inventory Purchases - 5,000 - - - 5,031
AP: Product A 650 - - - 671 -
AP: Product B 279 - - - 288 -
Payroll & Benefits 900 - 900 - 855 -
Rent 300 - - - - 300
Utilities - - 150 - - -
Advertising 250 - - - - 250
Administrative Overhead - - 238 - - -
Payroll Taxes - - - - - -
Insurance / Workers Compensation 500 - - - - -

Total Direct & Indirect Job Outflows 2,879 5,000 1,288 - 1,814 5,581

Capital Expenditures 1,000 - - - - -

Total Cash Outflows (B) 3,879 5,000 1,288 - 1,814 5,581

Cash Surplus / (Deficit) (A - B) (3,815) (5,000) (1,223) 5,000 8,250 (5,581)

4
Financing:
Beginning Revolver 15,795 19,610 24,610 25,833 20,833 12,583
Cash Need 3,815 5,000 1,223 - - 5,581
Paydown - - - 5,000 8,250 -
Ending Revolver 19,610 24,610 25,833 20,833 12,583 18,164

Total Commitment $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000

Cushion $ 5,390 $ 390 $ (833) $ 4,167 $ 12,417 $ 6,836

Low Cushion

Ending Cash Balance 1,000 1,000 1,000 1,000 1,000 1,000

5
Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

- - 5,500 - - - 6,038 17,538

- - 3,667 - - - 4,025 11,692
64 - 64 - 64 - 6,314 11,699

64 - 9,231 - 64 - 16,377 40,929

- - - 5,031 - - - 15,063
- - 630 - - - 599 2,550
- - 270 - - - 257 1,093
855 - 855 - 855 - 855 6,077
- - - 300 - - - 900
150 - - - 150 - - 450
- - 100 250 - - - 850
105 - - - 105 - - 448
- - - - - - 834 834
- - - - - - 500 1,000

1,110 - 1,855 5,581 1,110 - 3,045 29,264

- - 1,000 - - - - 2,000

1,110 - 2,855 5,581 1,110 - 3,045 31,264

(1,046) - 6,376 (5,581) (1,046) - 13,332 9,665

6
 18,164 19,210 19,210 12,834 18,416 19,462 19,462 15,795
1,046 - - 5,581 1,046 - - 23,293
- - 6,376 - - - 13,332 32,958
19,210 19,210 12,834 18,416 19,462 19,462 6,130 6,130

$ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000

$ 5,790 $ 5,790 $ 12,166 $ 6,584 $ 5,538 $ 5,538 $ 18,870 $ 18,870

1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

7
Wolverine Tooling Company
Receipts
Fiscal Year End December 31
$000s

AR Days 60

Actual Projected
GAAP - Billings 10/31/10 11/30/10 12/31/10 1/31/11 2/28/11 3/31/11 4/30/11 5/31/11 6/30/11

Total Sales $ 9,583 $ 10,000 $ 9,167 10,063 10,063 10,063 10,063 10,063 10,063

Product A $ 5,750 $ 6,000 $ 5,500 $ 6,038 $ 6,038 $ 6,038 $ 6,038 $ 6,038 $ 6,038
% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00% 60.00%

Product B $ 3,833 $ 4,000 $ 3,667 $ 4,025 $ 4,025 $ 4,025 $ 4,025 $ 4,025 $ 4,025
% 40.00% 40.00% 40.00% 40.00% 40.00% 40.00% 40.00% 40.00% 40.00%

Total Sales $ 9,583 $ 10,000 $ 9,167 $ 10,063 $ 10,063 $ 10,063 $ 10,063 $ 10,063 $ 10,063

Collection Assumption (Days) 12/30/04 1/29/05 3/1/05 4/1/05 4/29/05 5/30/05 6/29/05 7/30/05 8/29/05

### Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
CASH 1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

Product Cash Receipts:

Product A (See AR & GAAP Billings above) $ - $ - $ - $ - $ 6,000 $ - $ - $ - $ 5,500 $ - $ - $ - $ 6,038 $ 17,538
Product B (See AR & GAAP Billings above) $ - $ - $ - $ - $ 4,000 $ - $ - $ - $ 3,667 $ - $ - $ - $ 4,025 $ 11,692
Total Product Cash Receipts $ - $ - $ - $ - $ 10,000 $ - $ - $ - $ 9,167 $ - $ - $ - $ 10,063 $ 29,230

Other Cash Receipts:

PPE Sales (see PPE) $ - $ - $ - $ 5,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 5,000
Inventory Sales (See Inventory) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 6,250 $ 6,250
Employee Payroll Taxes (See Accrued Exp.) $ 64 $ - $ 64 $ - $ 64 $ - $ 64 $ - $ 64 $ - $ 64 $ - $ 64 $ 449
Total Other Cash Receipts $ 64 $ - $ 64 $ 5,000 $ 64 $ - $ 64 $ - $ 64 $ - $ 64 $ - $ 6,314 $ 11,699

Total Cash Receipts $ 64 $ - $ 64 $ 5,000 $ 10,064 $ - $ 64 $ - $ 9,231 $ - $ 64 $ - $ 16,377 $ 40,929

NOTES:

Product Mix
A - 60%
B - 40%

GAAP - Cash Accrual Example:

Based on the Company's 60 day AR collection rate with its customers, sales made on October 31, 2010 will be collected 60 days later on or around December 30, 2010.

8
Wolverine Tooling Company
A/R Aging
As of 12/31/10
$000s

Days Outstanding
0 - 30 31 - 60 61 - 90 > 90

Home Depot 3,667 4,000 - 2,733

Lowes 2,750 3,000 - 2,050
Caterpillar 1,833 2,000 - 1,367
Jonny Construction Company 458 500 - 342
We Must Protect This House Builders 458 500 - 342
Total AR 9,167 10,000 - 6,833

35.26% 38.46% 0.00% 26.28%

The Company expects to book on reserve uncollectible AR of $6.8 million in the first six months of 2005.

Accounting Entries

Book Reserve:
COGS (or some expense account) 6,833
Reserve 6,833

AR Writeoff:
Reserve 6,833
AR 6,833
 Total

10,400
7,800
5,200
1,300
1,300
26,000

100.00%

months of 2005.
Wolverine Tooling Company
Disbursements
Fiscal Year End December 31
$000s

Product A & B Terms (Days) 60

Rent Terms (Days) 5
Utilities Terms (Days) 15
Advertising Terms (Days) 5
Administrative OH Terms (Days) 15

Actual Projected
GAAP 10/31/10 11/30/10 12/31/10 1/31/11 2/28/11 3/31/11 4/30/11 5/31/11 6/30/11

COGS $ 9,292 $ 9,584 $ 9,000 $ 8,553 $ 8,553 $ 8,553 $ 8,553 $ 8,553 $ 8,553
SGA $ 938 $ 938 $ 938 $ 805 $ 805 $ 805 $ 805 $ 805 $ 805
$ 10,229 $ 10,522 $ 9,938 $ 9,358 $ 9,358 $ 9,358 $ 9,358 $ 9,358 $ 9,358

COGS:
DM: Cost of Materials $ 6,504 $ 6,709 $ 6,300 $ 5,987 $ 5,987 $ 5,987 $ 5,987 $ 5,987 $ 5,987
DM: Product A $ 650 $ 671 $ 630 $ 599 $ 599 $ 599 $ 599 $ 599 $ 599
DM: Product B $ 279 $ 288 $ 270 $ 257 $ 257 $ 257 $ 257 $ 257 $ 257
DL: Payroll & Benefits $ 1,858 $ 1,917 $ 1,800 $ 1,711 $ 1,711 $ 1,711 $ 1,711 $ 1,711 $ 1,711
Total COGS $ 9,292 $ 9,584 $ 9,000 $ 8,553 $ 8,553 $ 8,553 $ 8,553 $ 8,553 $ 8,553

SG&A:
Rent $ 300 $ 300 $ 300 $ 300 $ 300 $ 300 $ 300 $ 300 $ 300
Utilities $ 150 $ 150 $ 150 $ 150 $ 150 $ 150 $ 150 $ 150 $ 150
Advertising $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250
Overhead $ 238 $ 238 $ 238 $ 105 $ 105 $ 105 $ 105 $ 105 $ 105
Total SG&A $ 938 $ 938 $ 938 $ 805 $ 805 $ 805 $ 805 $ 805 $ 805

Total Expenses $ 10,229 $ 10,522 $ 9,938 $ 9,358 $ 9,358 $ 9,358 $ 9,358 $ 9,358 $ 9,358

Product A & B Payment Assumption (Days) 1/2/11 1/29/11 3/1/11 4/1/11 4/29/11 5/30/11 6/29/11 7/30/11 8/29/11
Rent Payment Assumption (Days) 11/5/10 12/5/10 1/5/11 2/5/11 3/5/11 4/5/11 5/5/11 6/5/11 7/5/11
Utilities Payment Assumption (Days) 11/15/10 12/15/10 1/15/11 2/15/11 3/15/11 4/15/11 5/15/11 6/15/11 7/15/11
Advertising Payment (Days) 11/5/10 12/5/10 1/5/11 2/5/11 3/5/11 4/5/11 5/5/11 6/5/11 7/5/11
Administrative OH Payment Assumption (Days) 11/15/10 12/15/10 1/15/11 2/15/11 3/15/11 4/15/11 5/15/11 6/15/11 7/15/11

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
### 1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total
CASH

COGS:
Materials Supplier (See Inventory) $ - $ 5,000 $ - $ - $ - $ 5,031 $ - $ - $ - $ 5,031 $ - $ - $ - $ 15,063
Product A (See AP and GAAP above) $ 650 $ - $ - $ - $ 671 $ - $ - $ - $ 630 $ - $ - $ - $ 599 $ 2,550
Product B (See AP and GAAP above) $ 279 $ - $ - $ - $ 288 $ - $ - $ - $ 270 $ - $ - $ - $ 257 $ 1,093
Payroll & Benefits $ 900 $ - $ 900 $ - $ 855 $ - $ 855 $ - $ 855 $ - $ 855 $ - $ 855 $ 6,077
Total COGS $ 1,829 $ 5,000 $ 900 $ - $ 1,814 $ 5,031 $ 855 $ - $ 1,755 $ 5,031 $ 855 $ - $ 1,711 $ 24,782

SG&A:
Rent (see AP and above) $ 300 $ - $ - $ - $ - $ 300 $ - $ - $ - $ 300 $ - $ - $ - $ 900
Utilities (see AP and above) $ - $ - $ 150 $ - $ - $ - $ 150 $ - $ - $ - $ 150 $ - $ - $ 450
Advertising (see AP and above) $ 250 $ - $ - $ - $ - $ 250 $ - $ - $ 100 $ 250 $ - $ - $ - $ 850
Overhead (see AP and above) $ - $ - $ 238 $ - $ - $ - $ 105 $ - $ - $ - $ 105 $ - $ - $ 448
Total SG&A $ 550 $ - $ 388 $ - $ - $ 550 $ 255 $ - $ 100 $ 550 $ 255 $ - $ - $ 2,648

Payroll Taxes (see accrued exp.) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 834 $ 834

Workers Compensation / Insurance (see accrued exp.) $ 500 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 500 $ 1,000
Capital Expenditures (See PPE) $ 1,000 $ - $ - $ - $ - $ - $ - $ - $ 1,000 $ - $ - $ - $ - $ 2,000

Total Cash Disbursements $ 3,879 $ 5,000 $ 1,288 $ - $ 1,814 $ 5,581 $ 1,110 $ - $ 2,855 $ 5,581 $ 1,110 $ - $ 3,045 $ 31,264

Notes:
The Company's advertising contract expires on February 28, 2011. Handley Global Marketing requires a $100K retainer with monthly payments due the first five business days of each month.

11
Wolverine Tooling Company
A/P Aging
As of 12/31/10
$000s

Days Outstanding
0 - 30 31 - 60 61 - 90 > 90 Total

Product A $ - $ 671 $ 650 $ - $ 1,321

Product B $ - $ 288 $ 279 $ - $ 566
Jones Lang Lasalle $ 300 $ - $ - $ - $ 300
Comed $ 150 $ - $ - $ - $ 150
Overhead $ 238 $ - $ - $ - $ 238
Defective Material Supply $ - $ - $ - $ 6,000 $ 6,000
Total AP $ 688 $ 958 $ 929 $ 6,000 $ 8,575 $ 8,575

Based on discussions with the Accounts Payable department as of 12/31/10, Wolverine had open purchase orders for Product A of $630K and
Product B of $270K that were scheduled to be delivered to the plant the week of January 7, 2011 with net 60 day terms.

12
Wolverine Tooling Company
Inventory
Fiscal Year End December 31
$000s

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
Inventory Delivery Schedule ### 1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

Beginning Inventory Balance (GAAP) $ 30,850 $ 34,353 $ 32,856 $ 31,360 $ 29,863 $ 33,397 $ 31,900 $ 30,404 $ 28,907 $ 32,741 $ 31,543 $ 30,346 $ 29,148 $ 30,850

+ Inventory Received $ 5,000 $ - $ - $ - $ 5,031 $ - $ - $ - $ 5,031 $ - $ - $ - $ 5,031 $ 20,094

- Cost of Materials Sold $ 1,497 $ 1,497 $ 1,497 $ 1,497 $ 1,497 $ 1,497 $ 1,497 $ 1,497 $ 1,197 $ 1,197 $ 1,197 $ 1,197 $ 1,197 $ 17,962

= Ending Balance (GAAP) $ 34,353 $ 32,856 $ 31,360 $ 29,863 $ 33,397 $ 31,900 $ 30,404 $ 28,907 $ 32,741 $ 31,543 $ 30,346 $ 29,148 $ 32,982 $ 32,982
PLACE ORDER PLACE ORDER PLACE ORDER

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
Inventory Order Schedule 1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

Material Purchases $ - $ - $ - $ 5,031 $ - $ - $ - $ 5,031 $ - $ - $ - $ 5,031 $ - $ 15,094

Expected Delivery Date 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 4/8/11

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
Inventory Payment Schedule 1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

Payments to Suppliers $ - $ 5,000 $ - $ - $ - $ 5,031 $ - $ - $ - $ 5,031 $ - $ - $ - $ 15,063

Inventory Proceeds $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 6,250 $ 6,250
Total Inventory Cash Flows $ - $ 5,000 $ - $ - $ - $ 5,031 $ - $ - $ - $ 5,031 $ - $ - $ (6,250) $ 8,813

Notes & Assumptions

1 - At the end of FY 2010, the Company discontinued product line C, which was valued at $25 million.
The Company is liquidating the product C inventory line and expects to receive $0.25 cents on the dollar during the final week of the projection period.

2 - Based on a new inventory reduction initiative and aggressive marketing campaign, the Company's goal is to maintain approximately 4 months of inventory.
Inventory orders from suppliers are triggered when ending inventory balance drops below $30 million and are tied to historical and projected sales trends.
Director of Production Planning assesses inventory at the end of each week and places an inventory order valued at 50% of the following month's projected sales.
Inventory terms are FOB destination COD 7 days and goods are usually delivered within 7 days of the order.

3 - Per discussions with the director of Production Planning, $5 million of materials were ordered (FOB destination COD - 7 days) in December 2010 and were received during the first week of January 2011.

Cash paid to suppliers = COGS - Increase in AP + Increase in Inventory

13
Wolverine Tooling Company
Payroll Budget
Q1 2011

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

Payroll & Benefits:

A Production $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 243,600.00 $ 3,166,800.00
Quantity 203 203 203 203 203 203 203 203 203 203 203 203 203
Hourly Rate $ 20 $ 20 $ 20 $ 20 $ 20 $ 20 $ 20 $ 20 $ 20 $ 20 $ 20 $ 20 $ 20
Hours / Week 60.00 60 60 60 60 60 60 60 60 60 60 60 60

B Supervisors $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 48,000.00 $ 624,000.00
Quantity 20 20 20 20 20 20 20 20 20 20 20 20 20
Hourly Rate $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40
Hours / Week 60.00 60 60 60 60 60 60 60 60 60 60 60 60

C Engineers $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 67,500.00 $ 877,500.00
Quantity 30 30 30 30 30 30 30 30 30 30 30 30 30
Hourly Rate $ 50.00 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50
Hours / Week 45.00 45 45 45 45 45 45 45 45 45 45 45 45

D Quality Control $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 68,750.00 $ 893,750.00
Quantity 25 25 25 25 25 25 25 25 25 25 25 25 25
Hourly Rate $ 50.00 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50
Hours / Week 55.00 55 55 55 55 55 55 55 55 55 55 55 55

Total Direct Labor (A+B+C+D) $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 427,850.00 $ 5,562,050.00

Notes:
1 - Received production schedule from Production Planning department for the first quarter 2011.
2 - Shaded areas represent payment weeks.

14
Wolverine Tooling Company
PPE
Fiscal Year End December 31
$000s

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
GAAP 1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

PPE Beginning Balance $ 152,000 $ 158,000 $ 158,000 $ 158,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 152,000

+ Capital Expenditures $ 6,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 6,000

- Asset Disposals $ - $ - $ - $ 10,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 10,000

= Ending Balance $ 158,000 $ 158,000 $ 158,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000 $ 148,000

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
Cash 1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

- Capital Expenditures $ 1,000 $ - $ - $ - $ - $ - $ - $ - $ 1,000 $ - $ - $ - $ - $ 2,000

+ Asset Disposals $ - $ - $ - $ 5,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 5,000

Notes & Assumptions

1 - The Company's capital expenditures have been negligible over the period 2007 through 2010.
The Company has purchased additional machinery and tools to decrease the time and materials necessary to produce products A and B.
The Company agreed to the following terms to pay for the new equipment: 6 equal installments of $1M payable at the beginning of every other month starting in January 2011.

2 - Due to the Company phasing out Product line C at the end of FY 2010, the Company plans to dispose of machinery and equipment related to producing product line C.
The Company expects to receive cash from the disposal of Product Line C assets in January 2011.
The following information was provided by management:

M&E Book Value $ 25,000

Acc. Dep. $ (15,000)
Net Book value $ 10,000

Cash Received from sale $ 5,000

Loss on Sale $ (5,000)

Cash $ 5,000 1/28/2011

Loss on Disposal $ 5,000 1/28/2011
PPE $ 10,000 1/28/2011

15
Wolverine Tooling Company
Accrued Expenses & Liabilities
Q1 2011
$000s
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
1/7/11 1/14/11 1/21/11 1/28/11 2/4/11 2/11/11 2/18/11 2/25/11 3/4/11 3/11/11 3/18/11 3/25/11 4/1/11 Total

I Total Payroll & Benefits $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 428 $ 5,562
Employee Payroll Tax Rate 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50%
Employer Payroll Tax Rate 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50%

II Accrual: Employee Payroll Tax $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 417

Accrual: Employer Payroll Tax $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 32 $ 417

Cash: Payroll Tax Payment $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 834 $ 834

III Accrual: WC / Insurance $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 500

Cash: WC / Insurance Payment $ 500 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 500 $ 1,000

Notes:
1 - The Company pays accrued payroll tax to the federal government at the end of each quarter.
2 - The Company pays workers' compensation, property and casualty insurance and general liability insurance during the first week of each quarter.

16