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Stockholder Information
Earnings Per Share $ 2.91 $ 1.88 $ 3.25 $ 2.74 $ 2.23
Dividends Per Share 1.60 1.60 1.60 1.60 1.60
Book Value Per Share 49.40 49.68 51.33 52.47 53.10
Market Price 33-46 35-48 29-41 25-33 23-32
Price/Earnings Ratio 11-16 10-26 9-13 9-12 10-14
Shares Outstanding 584,000 584,000 584,000 584,000 584,000
0.387097 0.384615 0.409091 0.409091
Exhibit 2 Balance Sheet at December 31, 2002, Robertson Tool Company
(millions of dollars)
Assets Liabilities and Net Worth
$ Amount
Cash $ 1 Accounts Payable $ 2
Accounts Receivable 8 Other 2
Inventories 18 Current Liabilities 4
Other 1 Long-term Debt 12
Current Assets 28
Net Plant and Equipment 19 Net Worth 31
Total Assets $ 47 Total $ 47
Financial Position
Current Assets $ 25 $ 46 $ 49 $ 41 $ 46
Current Liabilities 6 11 15 10 13
Net Working Capital 19 35 34 31 33
Long-term Debt 10 18 16 15 17
Shareholders Equity 21 36 40 41 41
Stockholders Information
Earnings Per Share $ .78 $ .61 $ .59 $ .21 $ .54
Dividends Per Share 0 0 0 0.20 0
Book Value Per Share 8.31 6.86 7.37 7.38 7.45
Market Price 6-17 10-18 7-18 4-10 5-8
Price/Earnings Ratio 8-22 16-30 12-31 19-48 9-15
Shares Outstanding 2,525,600 5,245,900 5,430,100 5,510,000 5,501,000
Exhibit 4 ProFormas for Robertson Tool (millions of dollars)
Actual Forecasts
2002 2003 2004 2005 2006 2007 to Infinity
Times Interest Earned 3.8 3.2 7.1 11.5 7.8 9.3 3.5
Debt % Capital D/E Equity%cap.
balance sheet 98% 52% 30% 27% 29% 40% 28% 0.388889
values 0.37 0.587302
market values 29% 37% 20% 17% 19% 24% 0.63
Bond Rating BB- BB+ BBB - A+ A -
Share Price $ 42 $ 42 $ 29 $ 22 $ 26 $ 27 $ 30
Earnings Per Share 2.80 3.20 2.00 1.78 1.80 2.32 2.32
Price/Earnings 15.0 13.1 14.5 12.4 14.4 11.6 13.5
Equity Beta 1.00 1.00 1.00 .75 1.05 .95 Tax 40%
Asset Beta .71 .63 .80 .63 .85 .73 0.73 Beta
Levered 0.98047619
Exhibit 7 Information on United States Capital Markets
I. Interest Rates in May 2003
30-Year U.S. U.S. Corporate Bonds Rated
Treasury Bonds AA A BBB BB
4.10% 4.52% 5.07% 6.07% 7.96%
IV. Debt and Times Interest Earned Ratios for Selected Industries
AAA AA A BBB BB
Food Processing
Debt % Capital 44% - 51% 54% 53%
Times Interest Earned 7.9 - 6.7 4.3 2.9
Electrical Equipment
Debt % Capital - - 36% 48% 72%
Times Interest Earned - - 7.3 3.2 1.6
Electric Utilities
Debt % Capital - 46% 54% 57% 73%
Times Interest Earned - 4.0 3.4 2.7 2.0
Robertson Corporation
Discounted Cash Flow Analysis
Operating Scenario 1
Mid Year Convention Y Historical Period CAGR
1998 1999 2000 2001 ('98-'01) 2002
Sales $ 48.5 $ 49.1 $ 53.7 $ 54.8 3.10% $ 55.3
% Growth NA 1.24% 9.37% 2.05% 0.91%
Cost of Goods 32.6 33.1 35.9 37.2 37.9
Gross Profit $ 15.90 $ 16.00 $ 17.80 $ 17.60 2.57% 17.4
% Margin 32.78% 32.59% 33.15% 32.12% 31.46%
Selling, General and 10.7 11.1 11.5 11.9 12.3
EBITDA 5.2 4.9 6.3 ### 2.32% 5.1
%Margin 10.7% 10.0% 11.7% 10.4% 9.2%
Depreciation Expense 2 2.3 2.4 2.3 2.1
EBIT 3.2 2.6 3.9 ### 1.53% 3
%Margin 6.6% 5.3% 7.3% 6.2% 5.4%
Taxes 1.28 1.04 1.56 1.36 1.2
EBIAT 1.92 1.56 2.34 2.04 1.53% 1.8
Plus:Depreciation and amort. 2 2.3 2.4 2.3 2.1
Less: Capital Expenditures
Less:Inc.(dec.) in NWC
Unlevered FCF
WACC 8.97%
Discount Period
Discount Factor
PV of FCF
Enterprise Value
Exit Multiple
$ 28.90 1.9x 2.4x 2.9x 3.4x 3.9x
WACC
8.0%
8.5%
WACC
9.0%
9.5%
10.0%
1 2 3 4 5
0.917684 0.8421435 0.772821 0.709206 0.6508265
$ 0.75 $ 1.99 $ 2.64 $ 2.85