Konys, Inc.

, Spreadsheet Supplement
Harvard Business School Case N9-613-065
Courseware 9-613-703

This courseware was prepared solely as the basis for class discussion.  Cases are not intended to
serve as endorsements, sources of primary data, or illustrations of effective or ineffective
management.  Copyright © 2012, 2013 President and Fellows of Harvard College.  This product
may not be digitized, photocopied, or otherwise reproduced, posted or transmitted, without the
permission of Harvard Business School.
Demand, Pricing, and Contract Terms Forecast Q2
Customer Demand 2,159,071 1257580

Purchase contract
Purchase contract price per unit $17.00 17
Purchase contract quantity 2,170,000 1198120

Spot market
Spot price per unit $19.76

Salvage value per unit $5.30

Additional production cost per unit $102.50
Sales price per unit $150.00

Calculations Q3 2013
Revenue $323,860,650 188637000

Cost calculations
Quantity from purchase contract 2,170,000 1198120
Quantity left unused 10,929
Quantity needed to be supplemented from spot market 0 59460

Breakdown of costs
Cost of units from purchase contract $36,890,000 20368040
Cost of units supplemented from spot market $0 1174751
Total LCD costs $36,890,000 21542791
Total other costs $221,304,778 128901950
Total Production Costs $258,194,778 150444741
Salvage value of unused LCD units $57,924 0
Cost of sales $258,136,854 150444741

Gross profit $65,723,796 38192259

Operating expenses
Selling, general, and administrative $37,920,000
Design and research $17,837,500
Total operating expenses $55,757,500

Net Profit $9,966,296 -17565241

Q3 Q4 Q1 Q2 Q3
2170000 3700000 2100000 1500000

17 17 17 17
2938154 3808241 2064126 1173249

325500000 555000000 315000000 225000000

2938154 3808241 2064126 1173249

768154 108241
35874 326751

49948619 64740096 35090138 19945236

0 0 708768 6455616
49948619 64740096 35798905 26400852
222425000 379250000 215250000 153750000
272373619 443990096 251048905 180150852
4071217 573677 0 0
268302403 443416419 251048905 180150852

57197597 111583581 63951095 44849148

1440097 55826081 8193595 -10908352 36986180

0
Demand, Pricing, and Contract Terms
Customer demand 2,159,071

Purchase contract
Purchase contract price per unit $17.00
Purchase contract quantity 2,170,000

Option contract
Option contract quantity 1,000,000
Option reservation price $0.50
Option exercise price $16.75

Spot market
Spot price per unit $19.76

Salvage value per unit $5.30

Additional production cost per unit $102.50
Sales price per unit $150.00

Calculations Q3 2013
Revenue $323,860,650

Cost calculations
Quantity from purchase contract 2,170,000
Quantity left unused 10,929
Quantity needed to be supplemented 0

First supplement source Options

Quantity supplemented from option contract 0
Quantity supplemented from spot market 0

Breakdown of costs
Cost of units from purchase contract $36,890,000
Reservation fee $500,000
Cost of units supplemented from option contract $0
Cost of units supplemented from spot market $0
Total LCD costs $37,390,000
Total other costs $221,304,778
Total production costs $258,694,778
Salvage value of unused LCD units $57,924
Cost of sales $258,636,854

Gross profit $65,223,796

Operating expenses
Selling, general, and administrative $37,920,000
Design and research $17,837,500
Total operating expenses $55,757,500

Net profit $9,466,296

Demand, Pricing, and Contract Terms
Q3 2013 Q4 2013
Customer demand 2,159,071 3,660,046

Purchase Contract
Purchase contract price per unit $17.00 $17.00
Purchase contract quantity 2,170,000 3,700,000

Option contract
Option contract quantity 1,000,000 1,000,000
Option reservation price $0.50 $0.50
Option exercise price $16.75 $16.75

Spot market
Spot price per unit $19.76 $19.76

Salvage value per unit $5.30 $5.30

Additional production cost per unit $102.50 $102.50
Sales price per unit $150.00 $150.00

Calcuations Q3 2013 Q4 2013

Revenue $323,860,650 $549,006,900

Cost Calculations
Beginning inventory 0 10,929
Quantity from purchase contract 2,170,000 3,700,000
Quantity left unused 10,929 50,883
Quantity needed to be supplemented 0 0

First supplement source Options Options

Quantity supplemented from option contract 0 0
Quantity supplemented from spot market 0 0

Breakdown of costs
Cost of units from purchase contracts $36,890,000 $62,900,000
Reservation fee $500,000 $500,000
Cost of units supplemented from option contract $0 $0
Cost of units supplemented from spot market $0 $0
Total LCD costs $37,390,000 $63,400,000
Total other costs $221,304,778 $375,154,715
Total production costs $258,694,778 $438,554,715
Salvage value of ending inventory N/A N/A
Cost of sales $258,694,778 $438,554,715

Gross profit $65,165,872.50 $110,452,185.00

Operating Expenses
Selling, general, and administrative $37,920,000 $37,920,000
Design and research $17,837,500 $17,837,500
Total operating expenses $55,757,500 $55,757,500

Net Profit $9,408,373 $54,694,685

Q1 2014 Q2 2014
2,019,275 1,442,975

$17.00 $17.00
2,100,000 1,500,000

1,000,000 1,000,000
$0.50 $0.50
$16.75 $16.75

$19.76 $19.76

$5.30 $5.30
$102.50 $102.50
$150.00 $150.00

Q1 2014 Q2 2014 FY 2014

$302,891,250 $216,446,250 $1,392,205,050

50,883 131,608
2,100,000 1,500,000
131,608 188,633
0 0

Options Options
0 0
0 0

$35,700,000 $25,500,000
$500,000 $500,000
$0 $0
$0 $0
$36,200,000 $26,000,000
$206,975,688 $147,904,938
$243,175,688 $173,904,938
N/A $999,755
$243,175,688 $172,905,183 $1,113,330,363

$59,715,562.50 $43,541,067.40 $278,874,687

$37,920,000 $37,920,000
$17,837,500 $17,837,500
$55,757,500 $55,757,500 $223,030,000

$3,958,063 -$12,216,433 $55,844,687

Demand, Pricing, and Contract Terms
Q3 2013 Q4 2013
Customer demand 2,938,154 3,808,241

Purchase Contract
Purchase contract price per unit $17.00 $17.00
Purchase contract quantity 2,170,000 3,700,000

Option contract
Option contract quantity 1,000,000 1,000,000
Option reservation price $0.50 $0.50
Option exercise price $16.75 $16.75

Spot market
Spot price per unit $19.76 $19.76

Salvage value per unit $5.30 $5.30

Additional production cost per unit $102.50 $102.50
Sales price per unit $150.00 $150.00

Calcuations Q3 2013 Q4 2013

Revenue $440,723,113 $571,236,139

Cost Calculations
Beginning inventory 0 0
Quantity from purchase contract 2,170,000 3,700,000
Quantity left unused 0 0
Quantity needed to be supplemented 768,154 108,241

First supplement source Options Options

Quantity supplemented from option contract 768,154 108,241
Quantity supplemented from spot market 0 0

Breakdown of costs
Cost of units from purchase contracts $36,890,000 $62,900,000
Reservation fee $500,000 $500,000
Cost of units supplemented from option contract $12,866,581 $1,813,035
Cost of units supplemented from spot market $0 $0
Total LCD costs $50,256,581 $65,213,035
Total other costs $301,160,794 $390,344,695
Total production costs $351,417,375 $455,557,730
Salvage value of ending inventory N/A N/A
Cost of sales $351,417,375 $455,557,730

Gross profit $89,305,738.10 $115,678,408.45

Operating Expenses
Selling, general, and administrative $37,920,000 $37,920,000
Design and research $17,837,500 $17,837,500
Total operating expenses $55,757,500 $55,757,500

Net Profit $33,548,238 $59,920,908

Q1 2014 Q2 2014
2,064,126 1,173,249

$17.00 $17.00
2,100,000 1,500,000

1,000,000 1,000,000
$0.50 $0.50
$16.75 $16.75

$19.76 $19.76

$5.30 $5.30
$102.50 $102.50
$150.00 $150.00

Q1 2014 Q2 2014 FY 2014

$309,618,862 $175,987,375 $1,497,565,489

0 35,874
2,100,000 1,500,000
35,874 362,625
0 0

Options Options
0 0
0 0

$35,700,000 $25,500,000
$500,000 $500,000
$0 $0
$0 $0
$36,200,000 $26,000,000
$211,572,889 $120,258,039
$247,772,889 $146,258,039
N/A $1,921,913
$247,772,889 $144,336,126 $1,199,084,121

$61,845,973.10 $31,651,248.29 $298,481,368

$37,920,000 $37,920,000
$17,837,500 $17,837,500
$55,757,500 $55,757,500 $223,030,000

$6,088,473 -$24,106,252 $75,451,368

 Quarterly demand for version of the MC cellphone

Version Q3 Q4 Q1 Q2 total
1994 1 2,723,463 3,911,950 2,258,557 1,487,500 10,381,470
1995 2 2,464,345 4,223,390 2,661,807 1,390,197 10,739,740
1996 3 2,223,094 3,239,262 2,269,364 1,611,672 9,343,392
1997 4 2,738,725 3,907,584 1,882,534 1,964,036 10,492,880
1998 5 3,199,565 4,241,820 1,041,438 1,765,438 10,248,260
1999 6 3,212,175 2,408,890 2,003,061 1,292,325 8,916,451
2000 7 2,356,641 1,898,799 1,967,978 1,675,483 7,898,901
2001 8 1,680,760 4,540,613 1,316,541 1,926,489 9,464,404
2002 9 994,350 3,757,408 1,373,626 1,382,849 7,508,234
2003 10 872,841 3,333,856 2,400,883 721,844 7,329,424
2004 11 2,146,563 2,034,586 2,024,890 1,197,403 7,403,442
2005 12 2,647,838 5,091,078 2,039,626 1,638,323 11,416,865
2006 13 1,511,062 3,548,140 1,784,336 1,401,582 8,245,119
2007 14 1,895,864 4,677,350 1,955,100 1,432,602 9,960,915
2008 15 2,418,814 3,998,852 2,453,802 1,542,571 10,414,039
2009 16 1,011,569 4,429,538 2,466,539 1,063,391 8,971,037
2010 17 1,126,667 3,268,046 2,365,305 1,162,356 7,922,375
2011 18 2,551,808 3,209,706 1,240,559 1,317,488 8,319,560
2012 19 3,246,210 3,820,014 2,860,287 1,198,120 11,124,632
2013 20 2938154 3808241 2064126 1173249 9,983,770
 0
0
 Historical unit price of the LCD module in the spot market
Week 1 21.14
Week 2 21.70
Week 3 17.73
Week 4 12.75
Week 5 26.97
Week 6 16.72
Week 7 20.22
Week 8 13.83
Week 9 17.22
Week 10 19.87
Week 11 17.21
Week 12 26.12
Week 13 15.42
Week 14 19.67
Week 15 19.16
Week 16 12.78
Week 17 16.54
Week 18 21.68
Week 19 23.75
Week 20 17.59
Week 21 19.00
Week 22 17.39
Week 23 17.36
Week 24 23.63
Week 25 20.05
Week 26 16.80
Week 27 25.51
Week 28 17.44
Week 29 25.84
Week 30 18.61
Week 31 12.71
Week 32 16.18
Week 33 13.46
Week 34 21.76
Week 35 26.68
Week 36 22.28
Week 37 17.57
Week 38 13.51
Week 39 21.12
Week 40 26.89
Week 41 26.70
Week 42 23.93
Week 43 24.91
Week 44 14.97
Week 45 24.69
Week 46 25.12
Week 47 24.50
Week 48 17.31
Week 49 15.42
Week 50 17.38
Week 51 18.42
Week 52 21.19
Week 53 15.89
Week 54 19.52
Week 55 12.54
Week 56 14.05
Week 57 23.82
Week 58 18.10
Week 59 25.02
Week 60 16.60
Week 61 24.92
Week 62 16.47
Week 63 25.22
Week 64 25.97
Week 65 23.31
Week 66 21.99
Week 67 23.95
Week 68 18.27
Week 69 14.36
Week 70 14.69
Week 71 18.61
Week 72 14.16
Week 73 17.49
Week 74 21.27
Week 75 14.20