Assumptions for Forecasting Model

Income Statement
Sales
Cost of Sales
Selling, General & Admn. Expenses
Depreciation
Other Net (Income)/ Expenses
Interest Income
Interest Expense

Income Taxes

Balance Sheet
Assets
Cash and Marketable Securities
Accounts Receivable
Inventories
Other Current Assets
Property, Plant and Equipment, Gross
Accumulated Depreciation
Property, Plant and Equipment, Net
Other Non-Current Assets

Liabilities and Shareholders' Equity

Accounts Payable
Short-Term Debt
Other Current Liabilities
Long-Term Debt
Deferred Income Taxes
Other Non-Current Liabilities
Paid-In Capital
Retained Earnings

Other Assumptions
Dividend payout ratio
Interest on short-term debt
Interest on long-term debt
Interest on cash & marketable securities
Number of shares outstanding
P/E ratio
Assumption

Will grow at 5%, based on input from management

52% of sales, little better than historical average
29% of sales, based on expected worsening
8% of Gross PP&E, based on analysis of depreciation schedules
-0.7% of sales, based on historical average
Calculate based on average balance and interest rate specified later
For STD calculate based on average balance and interest rate specified later
For LTD interest expense will remain unchanged at $13.5 million
35% of pre-tax income

2.1%, of sales based on historical average

8.4% of sales, based on historical average
8.8% of sales, based on historical average
7.6% of sales, based on historical average
Will grow at 11% per year, based on discussion with management
Calculated from other items
Calculated from other items
Will grow at 10% per year, based on discussion with management

6.1% of sales, same as historical average

Hold level constant at year-end 2008 level
8.3% of sales, same as 2008
Will remain unchanged at 2008 level
1.4% of sales, based on historical average
7.6% of sales, based on historical average
Will remain unchanged at 2008 level
Calculated from other items

40%, based on discussion with management

7%, based on economic forecast
Rates embedded in existing debt, annual expense $13.5 million
6%, based on economic forecast
Will remain unchanged
Will decline to 16 in 2009 and then improve to 18, 20, and 22 in the following years
Income Statement and Balance Sheet for Vitex Corp.

Income Statement ($ Million)

Historical period Forecast Period
2008 2009 2010
Sales $1,334.4 $1,401.1 $1,471.2
Cost of Sales $667.0 $728.6 $765.0
Gross Operating Income $667.4 $672.5 $706.2

Selling, General & Admn. Expenses $373.3 $406.3 $426.6

Depreciation $75.2 $81.1 $90.0
Other Net (Income)/Expenses ($8.2) ($9.8) ($10.3)
EBIT $227.1 $194.9 $199.8

Interest (Income) ($2.0) ($1.7) ($1.8)

Interest Expense $23.7 $21.2 $21.2
Pre-Tax Income $205.4 $175.5 $180.4

Income Taxes $72.6 $61.4 $63.1

Net Income $132.8 $114.0 $117.3

Dividends $40.1 $45.6 $46.9

Addition to Retained Earnings $92.7 $68.4 $70.4

Balance Sheet ($ Million)

Assets
Cash and Marketable Securities $28.4 $29.4 $30.9
Accounts Receivable $120.1 $117.7 $123.6
Inventories $116.8 $123.3 $129.5
Other Current Assets $97.5 $106.5 $111.8
Total Current Assets $362.8 $376.9 $395.7

Property, Plant and Equipment, Gross $913.1 $1,013.5 $1,125.0

Accumulated Depreciation $427.9 $509.0 $599.0
Property, Plant and Equipment, Net $485.2 $504.6 $526.0

Other Non-Current Assets $456.3 $501.9 $552.1

Total Non-Current Assets $941.5 $1,006.5 $1,078.2

Total Assets $1,304.3 $1,383.4 $1,473.9

Liabilities and Shareholders' Equity

Accounts Payable $80.5 $85.5 $89.7
Short-Term Debt $110.3 $0.0 $110.3
Other Current Liabilities $111.3 $116.3 $122.1
Total Current Liabilities $302.1 $201.8 $322.1

Long-Term Debt $218.1 $218.1 $218.1

Deferred Income Taxes $12.7 $19.6 $20.6
Other Non-Current Liabilities $94.5 $106.5 $111.8
 Total Liabilities $627.4 $546.0 $672.7

Paid-In Capital $44.8 $44.8 $44.8

Retained Earnings $632.1 $700.5 $770.9
Total Shareholders' Equity $676.9 $745.3 $815.7

Total Liabilities and Shareholders' Equity $1,304.3 $1,291.3 $1,488.3

Discretionary Funding Need (DFN) ($18.2) ($14.4)

Other Data
Stock price (year-end) $51.40 $39.50 $45.69
Average number of shares outstanding (millions) 46.2 46.2 46.2

Financial Indicators
Valuation Ratios
EPS $2.87 $2.47 $2.54
Dividend per Share $0.87 $0.99 $1.02
P/E Ratio 17.9 16.0 18.0
P/B (price to book) Ratio 3.5 2.4 2.6
Dividend Payout Ratio 30% 40% 40%

Profitability Ratios
Return on Equity (ROE) 21.2% 16.0% 15.0%
Return on Sales (ROS) 17.0% 13.9% 13.6%

Growth Rates
EPS Growth Rate 1.4% -14.1% 2.8%
Dividend Growth Rate 2.1% 13.8% 2.8%
Sales Growth Rate 2.6% 5.0% 5.0%
EBIT Growth Rate 3.7% -14.2% 2.5%
Net Income Growth Rate 0.1% -14.1% 2.8%

Liquidity Ratios
Current Ratio 1.20 1.87 1.23
Quick Ratio 0.49 0.73 0.48

Operating Efficiency Ratios

Inventory Turnover Ratio 5.7 5.9 5.9
Receivable Turnover Ratio 11.1 11.9 11.9

Leverage Ratios
Total Debt to Total Capitalization 32.7% 22.6% 28.7%
Long-Term Debt to Total Capitalization 21.7% 22.6% 19.1%
Total Debt to Equity 48.5% 29.3% 40.3%

Coverage Ratios
Times Interest Earned (TIE) 9.6 9.2 9.4
Cash Coverage Ratio 12.8 13.0 13.7
Forecast Period Forecasting
2011 2012 Factor
$1,544.7 $1,622.0 5.0%
$803.3 $843.4 52.0%
$741.5 $778.5

$448.0 $470.4 29.0%

$99.9 $110.9 8.0%
($10.8) ($11.4) -0.7%
$204.4 $208.6

($1.9) ($2.0) 6.0%

$21.2 $21.2 7.0%
$185.1 $189.4

$64.8 $66.3 35.0%

$120.3 $123.1

$48.1 $49.2 40.0%

$72.2 $73.9

$32.4 $34.1 2.1%

$129.8 $136.2 8.4%
$135.9 $142.7 8.8%
$117.4 $123.3 7.6%
$415.5 $436.3

$1,248.8 $1,386.2 11.0%

$698.9 $809.8
$549.9 $576.4

$607.3 $668.1 10.0%

$1,157.2 $1,244.4

$1,572.8 $1,680.7

$94.2 $98.9 6.1%

$110.3 $110.3
$128.2 $134.6 8.3%
$332.7 $343.9

$218.1 $218.1
$21.6 $22.7 1.4%
$117.4 $123.3 7.6%
 $689.9 $707.9

$44.8 $44.8
$843.1 $916.9
$887.9 $961.7

$1,577.7 $1,669.7

($5.0) $11.1

$52.09 $58.64
46.2 46.2

$2.60 $2.67
$1.04 $1.07
20.0 22.0
2.7 2.8
40% 40%

14.1% 13.3%
13.2% 12.9%

2.6% 2.3%
2.6% 2.3%
5.0% 5.0%
2.3% 2.1%
2.6% 2.3%

1.25 1.27
0.49 0.50

5.9 5.9
11.9 11.9

27.0% 25.5%
17.9% 16.9%
37.0% 34.1%

9.6 9.8
14.3 15.1
 Forecast Period
2008 2009 2010
Other Data
Stock Price (year-end) $51.40 $39.50 $45.69
Average Number of Shares Outstanding (millions) 46.2 46.2 46.2

Financial Indicators
Valuation Ratios
EPS $2.87 $2.47 $2.54
Dividend per Share $0.87 $0.99 $1.02
P/E Ratio 17.9 16.0 18.0
P/B (price to book) Ratio 3.5 2.4 2.6
Dividend Payout Ratio 30% 40% 40%

Profitability Ratios
Return on Equity (ROE) 21.2% 16.0% 15.0%
Return on Sales (ROS) 17.0% 13.9% 13.6%

Growth Rates
EPS Growth Rate 1.4% -14.1% 2.8%
Dividend Growth Rate 2.1% 13.8% 2.8%
Sales Growth Rate 2.6% 5.0% 5.0%
EBIT Growth Rate 3.7% -14.2% 2.5%
Net Income Growth Rate 0.1% -14.1% 2.8%

Liquidity Ratios
Current Rato 1.20 1.21 1.23
Quick Ratio 0.49 0.47 0.48

Operating Efficiency Ratios

Inventory Turnover Ratio 5.7 5.9 5.9
Receivable Turnover Ratio 11.1 11.9 11.9

Leverage Ratios
Total Debt to Total Capitalization 32.7% 30.6% 28.7%
Long-Term Debt to Total Capitalization 21.7% 20.3% 19.1%
Total Debt to Equity 48.5% 44.1% 40.3%

Coverage Ratios
Times Interest Earned (TIE) 9.6 9.2 9.4
Cash Coverage Ratio 12.8 13.0 13.7
Forecast Period
2011 2012

$52.09 $58.64
46.2 46.2

$2.60 $2.67
$1.04 $1.07
20.0 22.0
2.7 2.8
40% 40%

14.1% 13.3%
13.2% 12.9%

2.6% 2.3%
2.6% 2.3%
5.0% 5.0%
2.3% 2.1%
2.6% 2.3%

1.25 1.27
0.49 0.50

5.9 5.9
11.9 11.9

27.0% 25.5%
17.9% 16.9%
37.0% 34.1%

9.6 9.8
14.3 15.1
Statement of Cash Flows for Vitex Corp.
Millions of Dollars

Historical Period Forecast Period

2008 2008 2010
Cash Flows from Operations
Net Income $132.8 $114.0 $117.3
Depreciation Expense $75.2 $81.1 $90.0
Decrease/(Increase) in Accounts Receivable ($12.8) $2.4 ($5.9)
Decrease/(Increase) in Inventories ($1.9) ($6.5) ($6.2)
Decrease/(Increase) in Other Current Assets $6.2 ($9.0) ($5.3)
Increase/(Decrease) in Accounts Payable $8.7 $5.0 $4.3
Increase/(Decrease) in Other Current Liabilities ($60.8) $5.0 $5.8
Increase/(Decrease) in Deferred Income Taxes ($2.3) $6.9 $1.0
Increase/(Decrease) in Other Non-Current Liabilities ($20.5) $12.0 $5.3
Total Cash Flows from Operations $124.6 $210.9 $206.3

Cash Flows from Investing

(Additions to) Property, Plant & Equipment ($92.3) ($100.4) ($111.5)
(Investment) in Other Non-Current Assets ($49.3) ($45.6) ($50.2)
Total Cash Flows from Investing ($141.6) ($146.1) ($161.7)

Cash Flows from Financing

From Issuance/(Repayment) of Short-Term Debt $30.5 $0.0 $0.0
From Issuance/(Repayment) of Long-Term Debt $16.3 $0.0 $0.0
From Sale/(Repurchase) of Equity $6.6 $0.0 $0.0
Cash Dividends Paid to Shareholders ($40.1) ($45.6) ($46.9)
Total Cash Flows from Financing $13.3 ($45.6) ($46.9)

Net Change in Cash & Marketable Securities ($3.7) $19.2 ($2.3)

Beginning Cash & Marketable Securities $32.1 $28.4 $29.4

Ending Cash & Marketable Securities $28.4 $29.4 $30.9
Net Change in Cash & Marketable Securities ($3.7) $1.0 $1.5
Forecast Period
2011 2012

$120.3 $123.1
$99.9 $110.9
($6.2) ($6.5)
($6.5) ($6.8)
($5.6) ($5.9)
$4.5 $4.7
$6.1 $6.4
$1.0 $1.1
$5.6 $5.9
$219.2 $232.9

($123.8) ($137.4)
($55.2) ($60.7)
($179.0) ($198.1)

$0.0 $0.0
$0.0 $0.0
$0.0 $0.0
($48.1) ($49.2)
($48.1) ($49.2)

($7.9) ($14.4)

$30.9 $32.4
$32.4 $34.1
$1.5 $1.6