Financial Model

Prepared By:
The Marquee Group
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Summary Outputs and Credit Statistics

SUMMARY VALUES - BASE CASE

Projected
-3A -2A -1F 0 1 2 3 4
Income Statement Items
Net Revenue (C$MM)
Growth (%)

EBITDA (C$MM)
Margin (%)
Growth (%)

Interest Expense (C$MM)

Capital Expenditures (C$MM)

Credit Statistics
Net Debt / EBITDA
Interest Coverage (EBITDA / Interest)
Net Debt / Capitalization

SUMMARY VALUES - WORST CASE

Projected
-3A -2A -1F 0 1 2 3 4
Income Statement Items
Net Revenue (C$MM)
Growth (%)

EBITDA (C$MM)
Margin (%)
Growth (%)

Interest Expense (C$MM)

Capital Expenditures (C$MM)

Credit Statistics
Net Debt / EBITDA
Interest Coverage (EBITDA / Interest)
Net Debt / Capitalization

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 Inputs and Assumptions

GENERAL EQUITY
- First year of forecast in financial model: Current Stock Price
- 5-year cash flow model discounted to December 31, -1 Average Stock Price - -1
- Three scenarios have been used for Inflation, FX and Product Pricing Common Dividend Payout Rate
and sales volume growth Fully Diluted Shares O/S (MM) - Dec. 31, -1
Cost of Equity
PRODUCT PRICING
- The product pricing cases used in the model are as follows: OPERATIONS
Pricing Case 0-4 Terminal Year - Operating Days per Year:
Base Case Research Forecast Avg. of Last 5 Years - Factory Capacity (Units per day):
Best Case Avg. of Last 5 Years
Worst Case Avg. of Last 5 Years TAXES
- Values are calculated assuming a share purchase
DEPRECIATION - Tax rate assumed in the model:
- Depreciation Methodology Used: Straight Line - Blended Tax Dep'n Rate assumed in the model:
- Years remaining for depreciation of existing assets: - Opening NOL balance ($MM):
- Years used for depreciation of new assets: - Opening Tax Basis balance ($MM):

INTEREST RATES AND DEBT COVENANTS COSTS

Interest Rates Cost Item 0 Increases
- Interest rate earned on cash balances: Raw Materials per Unit Inflation on a unit basis
- Interest rate on the Bank Revolver: Chemicals per Unit Inflation on a unit basis
- Interest rate on the Senior Secured Term Debt: Energy MM Inflation on a total $ basis
Supplies MM Inflation on a total $ basis
Debt Covenants Labor MM Inflation on a total $ basis
- Net Debt / EBITDA Salaries MM Inflation on a total $ basis
- Interest Coverage (EBITDA / Interest) Insurance MM Inflation on a total $ basis
- Interest Coverage ((EBITDA-CAPEX) / Int) Other MM Inflation on a total $ basis
- Net Debt / Capitalization SG&A MM Inflation on a total $ basis

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Inputs and Assumptions

CAPITAL EXPENDITURES (CAPEX)

-
- Capex used in the model is maintenance Capex only
- If productivity enhancing (strategic) capex is added, corresponding changes to the model's capacity and/or cost structure
will need to be incorporated

($ millions) 0 1 2 3 4
Maintenance 0.0 0.0 0.0
Environmental 0.0 0.0 0.0 0.0 0.0
Strategic 0.0 0.0 0.0 0.0 0.0
Total $0.0 $0.0 $0.0 $0.0 $0.0

EARNINGS ADJUSTMENTS (PRE-EBITDA)

($ millions) 0 1 2 3 4
Adjustment 1 0.0 0.0 0.0 0.0 0.0
Adjustment 2 0.0 0.0 0.0 0.0 0.0
Adjustment 3 0.0 0.0 0.0 0.0 0.0
Total $0.0 $0.0 $0.0 $0.0 $0.0

WORKING CAPITAL DAYS

(Days) 0 1 2 3 4
Accounts Receivable
Inventories
Accounts Payable

CHANGE IN DEBT AND EQUITY

($ millions) 0 1 2 3 4
Sr. Term Debt Issuance / (Repayment)
Common Stock Issuance / (Buy-back)
Stock Option Grants (MM)

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Economic and Sales Scenarios

SCENARIO SWITCH: 1 0 1 2 3 4

ECONOMIC SCENARIOS
Cost Inflation
Base Case
Best Case
Worst Case

FX Rate - US$ / C$
Base Case 0.95 0.94 0.93 0.92 0.91
Best Case 0.96 0.95 0.94 0.93 0.92
Worst Case 0.94 0.93 0.92 0.91 0.90

SALES SCENARIOS
Gross Sales Price in the U.S. - US$/Unit
Base Case

Gross Sales Price in Canada - C$/Unit

Base Case
0 0.0 0.0 0.0 0.0 0.0
0 0.0 0.0 0.0 0.0 0.0

Sales Volume Growth

Base Case 5.0% 4.0% 4.0% 4.0% 3.0%
Best Case 5.0% 4.0% 4.0% 5.0% 5.0%
Worst Case 5.0% 4.0% 3.0% 3.0% 2.0%

Sales Volume Distribution - % to U.S.

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Revenue Schedule
Projected
-3A -2A -1F 0 1 2 3 4
Exchange Rate (US$ / C$) 0.74 0.85 0.90
Cost Inflation (for Freight) (%)

Pricing to the U.S.

Gross Sales Price f (US$/unit) 820.0 860.0 800.0
Freight & Warehousing (US$/unit) 75.0 81.0 83.0
Net Sales Price (US$/unit) 745.0 779.0 717.0
Pricing to Canada
Gross Sales Price (CDN$/unit) 795.0 785.0 730.0
Gross Sales Price (US$/unit) 588.3 667.3 657.0
Freight & Warehousing (US$/unit) 95.0 102.0 103.0
Net Sales Price (US$/unit) 493.3 565.3 554.0

Capacity
Operating Days (Days) 350.0 350.0 350.0
Units per day (Units) 1,200.0 1,200.0 1,200.0
Capacity (000's units) 420.0 420.0 420.0
Sales Volume
Operating Days (Days) 340.0 335.0 348.0
Sales Volume Growth (%) 2.0% 1.6% 1.5%
Units per day (Units) 960.0 975.0 990.0
Annual Sales Volume (000's units) 326.4 326.6 344.5
Sales Volume Distribution
Sales Volume to U.S. (%) 35.0% 36.0% 38.0%
Sales Volume to Canada (%) 65.0% 64.0% 62.0%
Total Sales Volume (%) 100.0% 100.0% 100.0%
Sales Volume to U.S. (000's units) 114.2 117.6 130.9
Sales Volume to Canada (000's units) 212.2 209.0 213.6
Total Sales Volume (000's units) 326.4 326.6 344.5

Revenue
Gross Revenue - U.S. ($ MM) 93.7 101.1 104.7
Gross Revenue - Canada ($ MM) 124.8 139.5 140.3
Freight & Warehousing ($ MM) 28.7 30.8 32.9
Net Revenue ($ MM) $189.8 $209.8 $212.2

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Costs of Production
Projected
-3A -2A -1F 0 1 2 3 4

Annual Sales Volume (000's units) 326.4 326.6 344.5 0.0 0.0 0.0 0.0 0.0
Cost Inflation (%) 0.0% 0.0% 0.0% 0.0%

COSTS PER UNIT

Variable Costs
Raw Material ($/unit) 218.1 226.0 219.0
Chemicals ($/unit) 63.0 64.0 65.0
Total Variable Costs ($/unit) 281.1 290.0 284.0
Fixed Costs
Energy ($/unit) 30.6 30.6 29.0
Supplies ($/unit) 36.8 36.7 37.7
Operating Labor ($/unit) 76.6 76.5 72.6
Salaries & Benefits ($/unit) 30.6 30.6 29.0
Insurance ($/unit) 18.4 18.4 17.4
Other ($/unit) 6.1 6.1 8.7
Total Fixed Costs ($/unit) 199.1 199.0 194.5
Total Costs ($/unit) $480.2 $489.0 $478.5

COSTS IN $MM
Variable Costs
Raw Material ($ MM) 71.2 73.8 75.4
Chemicals ($ MM) 20.6 20.9 22.4
Total Variable Costs ($ MM) 91.8 94.7 97.8
Fixed Costs
Energy ($ MM) 10.0 10.0 10.0
Supplies ($ MM) 12.0 12.0 13.0
Operating Labor ($ MM) 25.0 25.0 25.0
Salaries & Benefits ($ MM) 10.0 10.0 10.0
Insurance ($ MM) 6.0 6.0 6.0
Other ($ MM) 2.0 2.0 3.0
Total Fixed Costs ($ MM) 65.0 65.0 67.0
Total Costs ($ MM) $156.8 $159.7 $164.8

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Income Statement

Projected
-3A -2A -1F 0 1 2 3 4
Sales Volume (000's units) 326.4 326.6 344.5 0.0 0.0 0.0 0.0 0.0

Revenue
Gross Revenue - U.S. ($ MM) 93.7 101.1 104.7
Gross Revenue - Canada ($ MM) 124.8 139.5 140.3
Freight & Warehousing ($ MM) 28.7 30.8 32.9
Net Revenue ($ MM) 189.8 209.8 212.2

Cost of Sales ($ MM) 156.8 159.7 164.8

S,G & A ($ MM) 3.4 3.6 3.8
Total Costs ($ MM) 160.2 163.3 168.6

Adjustments ($ MM) 0.0 0.0 0.0

EBITDA ($ MM) 29.6 46.4 43.6

Depreciation ($ MM) 15.4 15.5 15.8

EBIT ($ MM) 14.2 30.9 27.8
Interest Expense ($ MM) 9.0 13.0 14.0
EBT ($ MM) 5.2 17.9 13.8
Current Income Taxes ($ MM) 0.0 0.0 0.0
Deferred Income Taxes ($ MM) 0.0 0.0 0.0
Total Income Taxes ($ MM) 0.0 0.0 0.0

Net Income ($ MM) $5.2 $17.9 $13.8

Average Diluted Shares O/S (MM's) 13.9 14.2 14.6

Earnings per Share ($ / share) $0.38 $1.26 $0.94

Margins
EBITDA Margin 15.6% 22.1% 20.5%
EBIT Margin 7.5% 14.7% 13.1%
Return on Equity 5.9%

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Cash Flow Statement
($ Millions)
Projected
-3A -2A -1F 0 1 2 3 4
Operating Activities
Net Income 5.2 17.9 13.8
Depreciation & Amortization 15.4 15.5 15.8
Deferred Income Taxes 0.0 0.0 0.0
Changes in working capital 0.0 0.0 0.0
Operating Cash Flow 20.6 33.4 29.6

Investing Activities
CAPEX (14.1) (15.0) (15.5)
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Investing Cash Flow (14.1) (15.0) (15.5) 0.0 0.0 0.0 0.0 0.0

Financing Activities
Revolver Issuance / (Repayment)
Term Debt Issuance / (Repayment)
Common Shares Issuance/ (Buy-Back)
Common Dividends
Financing Cash Flow

Change in the Cash Position

Beginning Cash
Ending Cash 0.0

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Balance Sheet
($ Millions)
Projected
-1F 0 1 2 3 4

ASSETS
Cash 0.0
Accounts Receivable 28.3
Inventory 35.1
Other 1.5
Total Current Assets 64.9

Net PP&E 397.7

Other 0.0
Total Assets $462.6

LIABILITIES AND EQUITY

Bank Debt - Revolver 0.0
Accounts Payable 18.2
Other 4.8
Total Current Liabilities 23.0

Deferred Taxes 8.0

Senior Secured Term Debt 200.0
Total Long Term Liabilities 208.0

Total Liabilities 231.0

Common Shares 120.0

Retained Earnings 111.6
Shareholder's Equity 231.6

Total Liabilities and Equity $462.6

Check 0.000 0.000 0.000 0.000 0.000 0.000

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Depreciation Schedule
($ Millions)
Projected
-3A -2A -1F 0 1 2 3 4

Years Remaining on Existing Assets:

Depreciation Years on New Assets:

Depreciation to Existing Assets $15.4 $15.5 $15.8

CAPEX
0
1
2
3
4

Total Depreciation $15.4 $15.5 $15.8

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Income Tax Schedule
($ Millions)
Projected
Tax Rate 0 1 2 3 4

Earnings Before Taxes (as is on I/S) A

Add Back GAAP Depreciation

Deduct Tax Depreciation
Earnings Before NOL after Tax Dep'n

Net Operating Loss Schedule

Existing NOL (Initial Balance) 0.0 0.0 0.0 0.0
Existing NOL Used
Earnings after use of Existing NOL

Newly Created NOL - Beginning 0.0 0.0 0.0 0.0 0.0

Newly Created NOL Used (Added) 0.0 0.0 0.0 0.0 0.0
Newly Created NOL - Ending 0.0 0.0 0.0 0.0 0.0
Remaining Existing NOL 0.0 0.0 0.0 0.0 0.0
Total NOL Available 0.0 0.0 0.0 0.0 0.0

EBT (after Tax Dep'n and NOLs) B $0.0 $0.0 $0.0 $0.0 $0.0

Accounting Tax (0% of A)

Taxes as Appearing on Income Statement

Current Tax (0% of B)
Deferred Tax
Total Income Tax (Same as Accounting Tax Above)

Tax Depreciation Schedule

Blended Tax Dep'n Rate
Tax Basis Beginning C
Plus: New Capex D
1/2 of New Capex
Tax Basis After New Capex (1/2 Year)
Less: Tax Dep'n Available and Used E
Tax Basis Ending (C + D - E)

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Working Capital Schedule
($ Millions)
Projected
-2A -1F 0 1 2 3 4

Days per Year (days)

Income Statement Items

Net Revenue ($ MM)
Cost of Sales ($ MM)

Days In
Accounts Receivable (days)
Inventories (days)
Accounts Payable (days)

Account Balances
Accounts Receivable ($ MM)
Inventories ($ MM)
Accounts Payable ($ MM)
Net Working Capital ($ MM)

Change in Working Capital ($ MM)

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Debt and Interest Schedule
($ Millions)
Projected
-1F 0 1 2 3 4
FINANCING COMPONENT
Cash
Amount Outstanding - Beginning
Change in Cash
Amount Outstanding - Ending
Interest Rate
Annual Interest Income

Revolver
Operating Cash Flow
Investing Cash Flow
Mandatory Debt Repayments
Dividends
FCF After Mandatory Debt Repayment and Dividend

Revolver Outstanding - Beginning

Additions / (Repayments)
Revolver Outstanding - Ending
Interest Rate
Annual Interest Expense

Senior Secured Term Debt

Amount Outstanding - Beginning
Additions / (Repayments)
Amount Outstanding - Ending
Interest Rate
Annual Interest Expense

Net Interest Expense

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Shareholders' Equity Schedule
($ Millions)
Projected
-1F 0 1 2 3 4

Common Shares
Amount Outstanding - Beginning
New Issuance / (Buy-Back)
Amount Outstanding - Ending
Dividend Payout Rate
Net Income
Common Dividend

Retained Earnings
Amount Outstanding - Beginning
Net Income
Common Dividend
Amount Outstanding - Ending

Shares Outstanding
Cost of Equity
Average Stock Price

Fully Diluted Shares O/S (MM) - Beginning

New Issuance / (Buy-Back)
Stock Option Grants
Fully Diluted Shares O/S (MM) - Ending
Average Fully Diluted Shares O/S

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Credit Statistics and Covenants
($ Millions)
Projected
-1F 0 1 2 3 4

Credit Statistic Values

EBITDA ($ MM)
Capital Expenditures ($ MM)
Total Debt ($ MM)
Net Debt ($ MM)
Interest Expense ($ MM)
Total Book Capitalization ($ MM)

Consolidated Ratios
Net Debt / EBITDA Covenant
EBITDA Cushion

Interest Coverage (EBITDA / Interest) Covenant

EBITDA Cushion

Interest Coverage ((EBITDA - CAPEX) / Int.) Covenant

EBITDA Cushion

Net Debt / Capitalization Covenant

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