Capital Costs by Rating Category

AAA AA A BBB BB B
Cost of Debt (Pretax) 5.47% 5.50% 5.70% 6.30% 9.00% 12.00%
Cost of Equity 10.25% 10.35% 10.50% 10.60% 12.00% 14.25%
WACC 5.68% 5.72% 5.85% 6.14% 7.74% 9.75%

Wt Eq 32.76%
Wt Debt 67.24%
Tax 37.00%
Wacc 5.68%

Vale of Firm
2002 2003 2004 2005 2006
Year 1 2 3 4 5
FCF 212.2 216.1 220 224.6 229.7
Firm Value 200.8037 193.5117 186.4239 180.1005 174.298
Terminal Value 0 (taking the most conservative estimate of firm running for 5 years)
Total Firm Value 935.1378

Debt
Equity
 Current Debt Level (Million USD) 161.5
Equity 78.7

ng for 5 years)
Income Statement (million $) (Year ended December 31)
2001 2000
Revenue 1278.4 1262.7
COGS 453.8 453
SG&A 514.4 518.2
Goodwill amortization expense 6.2 5.2
Asset impairment and disposition losses 2.1 7.3
Total costs 976.5 983.7
Profit/(loss) from operations 301.9 279
Interest income 2.4 4.8
Other income -1.2 1.2
Interest Expense -5.6 -11.4
Earnings/(loss) before taxes 297.5 273.6
Tax expense 111.6 104 0.375126 0.380117 (TAX Rate)
Discontinued operations income/(loss) 0 -7.5
Net earnings/(loss) 185.9 162.1
Balance Sheet (Million $)
2001 2000
Assets
Current Assets
Cash and cash equivalents 9.6 80.7
Marketable securities 0 18.5
Trade accounts receviable - net 37.7 46
Inventories 11.2 11.3
Supplies 11.1 11.8
Deferred income taxes 4.6 7.4
Prepaid expenses and other 9.9 12
Total current assets 84.1 187.7
Long-term investments 37.7 35.6
Property, plant, and equipment - net 151.1 174
Intangibles - net 115 134.5
Goodwill - net 82.2 88.4
Other noncurrent assets 67.9 36.2
Total assets 538 656.4

Liabilities and Stockholder's Equity

Current Liabilities
Account Payable 52.8 44.7
Accrued liabilities 162.9 148.5
Short-term debt 150 0
Long-term debt due within one year 1.4 100.7
Total current liablities 367.1 293.9
Long-term debt 10.1 10.2
Deferred income taxes 44.9 51.1
Other long-term liabilities 37 38.3
Total liabilities 459.1 393.5
Common stockholders' equity
Common shares 64.1 72.6
Additional paid-in capital 0 44.2
Retained earnings 14.6 146.2
Unearned compensation 0.1 0.1
Accum. Other comprehensive income 0 -0.2
Total common stockholders' equity 78.8 262.9
Total liabilities and stockholders' equity 537.9 656.4
Current Debt L 161.5
Equity 78.8
Capital Market Conditions (as of July 31, 2002)

U.S. Treasury Bill Obligations Yield Other Instruments Yield

90-Day Bills 1.69% Discount Notes 1.70%
180-day bills 1.68% Certificates of Deposit (3-month) 1.72%
2-year notes 2.23% Commercial Paper (6-month) 1.75%
3-year notes 2.79% Term fed Funds 1.78%
5-year notes 3.45%
10-year notes 4.46%
30-year notes 5.30%

Corporate Debt Obligations (10-year) Yield

AAA 5.51%
AA 5.52%
A 5.70%
BBB 6.33%
BB 9.01%
B 11.97%