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The following is supporting analysis for Exhibit 12.
CASH FLOW PROJECTIONS ($000,000)
Sales growth rate
7.2%
Tax rate
41%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1. Sales
3,582
3,840
4,116
4,413
4,730
5,071
5,436
5,828
6,247
6,697
2. Operating margin
9.20%
9.30%
9.40%
9.50%
9.60%
9.70%
9.80%
9.90%
10.00%
10.10%
3. Operating earnings (1x2)
330
357
387
419
454
492
533
577
625
676
Plus: other income
29
Less: corporate expense
43
4. EBIT
316
343
373
406
440
478
519
563
611
663
5. Taxes
129
140
153
166
180
195
212
230
250
271
6. Net income
187
203
221
240
260
283
307
333
361
392
7. Change in NWC
-
40
42
45
49
52
8. Cash flow (6-7)
243
265
288
313
340
Note: The tax rate is the same as in first quarter 1988. Other income and corporate expense is the same as in year ending Feb. 29, 1988. Corporate expense was inferred from Exhibit 8, using interest expense and other income data from Exhibit 7.
The following compares historical operating results to the projections.
HISTORICAL
PROJECTED
1986
1987
1988
Net sales
2,832
2,947
3,341
Operating earnings
252
264
301
Operating margin
8.9%
9.0%
Curent assets
1,216
1,287
1,359
Current liabilities
358
Net working capital
966
928
986
NWC as % of sales
34%
32%
30%
Cash
17
21
Marketable securities
127
64
11
NWC less cash and securities
822
848
954
Adjusted NWC as % of sales
29%
4.0%
13.4%
Net property plant and equipment
442
485
479
Change (=investment less depreciation)
(6)
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