DRESSEN (ABRIDGED) (A

)
Group A Ameya Kadu Anish Bhaskaran Arsiwala Moad Ashish Pandey Deepak .K. Yadav

FLOW OF PRESENTATION Introduction Problem Faced Restructuring Program Effects Funding The Debt Strategy adopted Capital Structure Analysis Conclusion .

. Westinghouse Furniture Systems Division.INTRODUCTION Dressen was founded by Hans and Florence Dressen in 1938. Westinghouse Electric Corporation created Dressen by joining four companies. Reff Inc. Dressen International for $211 million. for $100 million. The Shaw-Walker Company for $68 million.

7% annual rate. Eventually Dressen had no other option but going for ³ buy out´. office furniture shipments grew at a 5.PROBLEM FACED Sales declined 14% in 1992 inspite of 5% increase in industry shipments. Revenues declined by $163million in 1993period during which U. .S. Operating earnings suffered a drop of $62 million in two years.

9 million $ 9.5 million $ 0.6 million $ 5.5 million $ 7.5 million $ 2.7 million - .8 million $ 1.RESTRUCTURING Administrative functions centralized Elimination of excess personnel Cost Reductions North American Sales & Dist.8 million $ 7. COGS Labour Material $5.8 million European $ 8. Marketing General & Adm.

Source Term loans Senior subordinate notes Equity Total Transaction costs Net to Westinghouse $ in Millions $260 165 160 $585 20 $565 . Warburg Pincus Ventures got attracted and approached Westinghouse for buyout of Dressen at a price of $565 million.EFFECTS Back ³ On the Market´. Sales increased by 10% as well as operating income went up to 12% of sales.

1995 COGS 67.4 billion $2 billion bridge loan due. Forecast Reduced COGS.$ 5.3% 2000 64% Operating income and net income growing at a increasing pace. .FUNDING THE DEBT Cash Acqusition.

STRATEGY ADOPTED Innovative products Expand selling efforts Concentrate on existing dealers Reduction in order response and delivery time Reduction in costs .

CAPITAL STRUCTURE o Modigliani and Miller Approach .

7 1993 64% $13-$17 1.2 .ANALYSIS Operating leverage is on the lower side. 1990 Debt % Capital Share Price Times Interest 19% $24-$39 2. 1993 Net Sales EBIT $508 (32) 1994 $563 (14) 1995 $621 65 Highly Leveraged.5 1995 84% $12-$18 1.

ANALYSIS $ IN MILLIONS 1996 EBIT Net Income 70 17 1997 90 30 1998 102 39 1999 109 47 $ IN MILLIONS 2000 112 51 1996 Cash 4 1997 7 1998 20 1999 24 2000 30 .

.CONCLUSION Based on the analysis it is forecasted that Dressen will have enough cash to repay the debt and succefully complete the buyout.

THANK YOU .

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