This spreadsheet supports STUDENT analysis of the case,

"Arcadian Microarray Technologies, Inc." (Case 44)

Please note:
1) This is a working model. Assumptions / Inputs presented can be
changed to vary the results.
2) As long as default spreadsheet calculation is set as "automatic"
impact of changing assumptions will be computed in real time.
Alternatively F9 function key may need to be invoked to recalculate
results. To set numerical calculation settings to automatic look under
tools, options, calculations menu.
Copyright 2005 by the University of Virginia Darden School Foundation.

Exhibit 1
ARCADIAN MICROARRAY TECHNOLOGIES, INC.
Cash Flow Forecast by Arcadian Management

INCOME STATEMENT
Sales
Clinical microarrays
Research microarrays
Royalties and other revenue
Human therapeutics
Total sales
Cost of sales
Gross profits
Contract revenue
Operating expenses
Research & development
Selling, general & admin.
Total expenses
Other income
Income before taxes
Taxes
Net income
FREE CASH FLOW
Net income
Noncash items
Working capital

Actual
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

$0
2
0
0
2
7
(5)
16

$1
12
0
0
13
10
3
21

$15
28
2
0
45
21
24
23

$56
45
13
0
114
41
73
15

$107
75
52
8
242
84
158
12

$181
110
106
57
454
159
295
4

$249
135
146
171
701
246
455
3

$274
165
166
250
855
322
533
3

$282
190
174
330
976
335
641
3

$285
210
186
352
1,033
350
683
3

$289
225
189
362
1,065
361
704
3

14
12
26
3
(12)
0
($12)

20
15
35
2
(9)
0
($9)

24
24
48
2
1
5
($4)

18
45
63
0
25
9
$16

21
93
114
(3)
53
19
$35

21
176
197
(10)
92
32
$60

32
259
291
(25)
142
57
$85

43
323
366
(38)
132
76
$56

51
369
420
(43)
181
89
$92

52
372
424
(37)
225
90
$135

50
349
399
(20)
288
85
$203

($12)
0
(4)

($9)
1
(8)

($4)
2
(12)

$16
2
(22)

$35
6
(63)

$60
10
(101)

$85
18
(118)

$56
19
(100)

$92
15
(61)

$135
8
1

$203
(1)
39

Capital expenditures
Free cash flow

(15)
($31)

(6)
($22)

(5)
($19)

(23)
($27)

(53)
(93) (111)
(98)
($76) ($124) ($126) ($123)

(66)
($20)

(10)
$134

(10)
$231

Exhibit 2
ARCADIAN MICROARRAY TECHNOLOGIES, INC.
Cash Flow Forecast by Sierra Capital

INCOME STATEMENT
Sales
Clinical microarrays
Research microarrays
Royalties and other revenue
Human therapeutics
Total sales
Cost of sales
Gross profits
Contract revenue
Operating expenses
Research & development
Selling, general & admin.
Total expenses
Other income
Income before taxes
Taxes
Net income
FREE CASH FLOW
Net income
Noncash items
Working capital

Actual
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

$0
2
0
0
2
7
(5)
16

$0
4
1
0
5
17
(12)
22

$2
11
4
0
17
20
(3)
22

$11
22
7
0
40
25
15
15

$22
40
12
0
74
39
35
12

$36
59
15
0
110
54
56
4

$56
89
25
0
170
72
98
4

$71
135
50
14
270
96
174
4

$85
145
60
56
346
124
222
4

$95
160
75
80
410
142
268
4

$106
185
91
110
492
154
338
4

14
12
26
3
(12)
0
($12)

23
21
44
0
(34)
0
($34)

25
25
50
0
(31)
(0)
($31)

27
32
59
1
(29)
1
($30)

29
44
73
(1)
(27)
4
($31)

33
64
96
(2)
(38)
(13)
($25)

37
87
124
(2)
(24)
4
($28)

44
104
147
(3)
28
11
$17

52
127
179
(2)
45
15
$30

53
138
191
0
80
27
$53

54
136
191
0
152
39
$112

($12)
2
(6)

($34)
3
(6)

($31)
3
(6)

($30)
3
(7)

($31)
4
(14)

($25)
6
(17)

($28)
8
(19)

$17
10
(20)

$30
14
(28)

$53
18
(16)

$112
20
(6)

Capital expenditures
Free cash flow

(15)
($31)

(9)
($46)

(9)
($43)

(9)
($43)

(10)
($51)

(11)
($47)

(15)
($54)

(18)
($11)

(24)
($8)

(27)
$28

(28)
$98

2015
$114
199
105
140
558
160
398
4
58
136
194
3
210
48
$162

$162
23
(6)

(30)
$149

Exhibit 3
ARCADIAN MICROARRAY TECHNOLOGIES, INC.
Analysis of 5 year Dividends as % of Stock Price

BNSF
Caterpillar
Cooper Industries
Cummins, Inc.
Deluxe Corporation
RR Donnelley
Dun & Bradstreet
Eaton Corp.
Emerson Electric Co.
Equifax
FedEx Corporation
Fluor Corporation
Honeywell Int'l. Inc.
Illinois Tool Works, Inc.
Kelly Services
ServiceMaster
Sherwin-Williams Co.
Smurfit-Stone Cont. Co.
Tenneco
Weyerhauser Co.

Recent
Price
$53
49
67
82
33
34
64
63
70
33
81
63
34
82
29
14
46
10
17
68

Annual
Dividend
$0.64
0.80
1.40
1.20
1.48
1.04
0.00
1.08
1.60
0.11
0.29
0.64
0.75
1.00
0.40
0.43
0.68
0.00
0.00
1.60

Projected
Five-Year
Dividend
Growth (%)
13.0%
10.0%
0.0%
1.0%
1.5%
3.5%
0.0%
13.5%
7.5%
3.5%
13.0%
4.0%
3.0%
8.5%
11.0%
2.5%
11.0%
0.0%
0.0%
7.5%

Beta
0.95
1.20
1.20
1.35
0.80
0.95
0.80
1.10
1.10
1.10
1.10
1.20
1.35
1.05
0.95
0.80
1.00
1.30
1.75
1.15

Equity
Cost
11.2%
12.6%
12.6%
13.4%
10.4%
11.2%
10.4%
12.0%
12.0%
12.0%
12.0%
12.6%
13.4%
11.7%
11.2%
10.4%
11.5%
13.1%
15.5%
12.3%

Present
Value of
Five Years'
Dividends
3.36
3.74
4.98
4.30
5.79
4.21
0.00
5.62
7.08
0.44
0.00
2.54
2.84
4.58
1.99
1.73
3.36
0.00
0.00
7.03

Average

Percent of
Market Price Not
Attributable to
Dividends
94%
92%
93%
95%
82%
88%
100%
91%
90%
99%
100%
96%
92%
94%
93%
87%
93%
100%
100%
90%

2006
0.72
0.88
1.40
1.21
1.50
1.08
0.00
1.23
1.72
0.11
0.33
0.67
0.77
1.09
0.44
0.44
0.75
0.00
0.00
1.72

Projected
Annual Dividends Per Share
2007
2008
2009
0.82
0.92
1.04
0.97
1.06
1.17
1.40
1.40
1.40
1.22
1.24
1.25
1.52
1.55
1.57
1.11
1.15
1.19
0.00
0.00
0.00
1.39
1.58
1.79
1.85
1.99
2.14
0.12
0.12
0.13
0.37
0.42
0.47
0.69
0.72
0.75
0.80
0.82
0.84
1.18
1.28
1.39
0.49
0.55
0.61
0.45
0.46
0.47
0.84
0.93
1.03
0.00
0.00
0.00
0.00
0.00
0.00
1.85
1.99
2.14

2010
1.18
1.29
1.40
1.26
1.59
1.24
0.00
2.03
2.30
0.13
0.53
0.78
0.87
1.50
0.67
0.49
1.15
0.00
0.00
2.30

93%

Exhibit 5
ARCADIAN MICROARRAY TECHNOLOGIES, INC.
Cash Flows of Three Deals with Differing Rates of Development

Projected Cash Flows by Investment

350
300
250
200
Millions
150of Dollars
Movie Studio

100

Bottling Plant
Toll Road

50
0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

-50
-100
-150
Year

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

Movie Bottling
Studio
Plant
($20)
($20)
(40)
(60)
(60)
(100)
(20)
5
0
10
20
20
30
40
50
65
75
115
100
150
90
180
80
190
60
200
55
204
70
208
85
212
95
216
105
221
130
225
150
230
140
234
160
239

-100
-150
Year

23
24
25
26
27
28
29
30
31+

190
244
225
249
240
254
230
259
255
264
260
269
265
275
270
280
Steady growth to infinity.

Toll
Road
($20)
90
169
172
176
179
183
187
190
194
198
202
206
210
214
219
223
227
232
237
241
246

251
256
261
266
272
277
283
288
Steady growth to infinity.

Exhibit 6
ARCADIAN MICROARRAY TECHNOLOGIES, INC.
Sensitivity Analysis, Present Value Varying by Terminal Value Growth Assumptions
Arcadian's View
Annual growth rate to infinity
Weighted average cost of capital
Annual capex (net of depr'n.) 2015
Annual addition to NWC 2015
Adjusted free cash flow 2015
Terminal value 2014

2%
20%
$0
202
1,142

3%
20%
($5)
(3)
194
1,173

4%
20%
($12)
(5)
185
1,200

5%
20%
($15)
(7)
180
1,257

6%
20%
($20)
(8)
174
1,314

7%
20%
($28)
(9)
165
1,355

PV of terminal value 2014

PV free cash flows 2005-2014
Total Present Value

185
($151)
$33

189
($151)
$38

194
($151)
$43

203
($151)
$52

212
($151)
$61

219
($151)
$68

Annual growth rate to infinity

Weighted average cost of capital
Annual capex (net of depr'n.) 2016
Annual addition to NWC 2016
Adjusted free cash flow 2016
Terminal value 2015

2%
20%
$0
185
1,049

3%
20%
($5)
(3)
177
1,073

4%
20%
($12)
(5)
168
1,093

5%
20%
($15)
(7)
163
1,142

6%
20%
($20)
(8)
157
1,189

7%
20%
($28)
(9)
148
1,219

PV of terminal value 2015

PV free cash flows 2005-2015

141
($118)

144
($118)

147
($118)

154
($118)

160
($118)

164
($118)

Sierra Capital's View

Total Present Value

$23

$26

$29

$35

$42

$46