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Anne Clemens' Ratio Analysis and Forecast of Free Cash Flows

Ratio Analysis
1994
1995
1996
1997
1.316635 1.53215 1.799186 2.04866
1.242051 1.242697 1.326964 1.479592
0.669641 0.594272 0.497345 0.389358

EBIT/(Interest and Principal))*


Current Ratio
Debt/Assets
DuPont System of Ratios:
Profit/Sales
Sales/Assets
Assets/Equity
Return on Equity

0.106056 0.116706 0.126974 0.135171


0.746635 0.788845 0.850223 0.876679
3.561877 2.82383 2.223294 1.799868
0.282049 0.25997 0.240018 0.213287

Forecast of Free Cash Flows


(In thousands of dollars)
At Closing
EBIT
EBIAT (T=37%)
+Depreciation
-Capital Expenditures**
+Amort. of Organiz. Costs
-Additions to Net Wkg. Cap.
FREE CASH FLOW

1994
1995
1996
1997
929.6707 1084.506 1223.636 1300.627
585.6926 683.2389 770.8905 819.3948
116.4
166.4
216.4
266.4
-4122
-250
-250
-350
-350
60
60
60
60
-519.527 -301.994 -200.797 -215.468
-4122 -7.43397 357.6446 496.4938 580.3266

* In computing the EBIT coverage ratio, interest expense includes interest on both the revolving loan and term loan;

** The forecast of capital expenditures reflects Anne Clemens' belief that they would amount to $350,000 (not $250

1998
2.476959
2.163565
0.253449
0.146894
0.937644
1.449989
0.199713

1998
1420.426
894.8681
316.4
-350
60
-151.478
769.7899
revolving loan and term loan; principal payments include only the scheduled annual payments necessary to amortize the term loan.

amount to $350,000 (not $250,000) in the years 1996-1998.

ry to amortize the term loan.

Forecast Assumptions
Key Assumptions:
Case Sales
$/Case
Gross Margins
Estates
Select-other
Chardonnay
California
Generic
Special Accts
Winery
Dividend Payout:

Exhibit 11
Exhibit 11
0.5
0.38
0.4
0.36
0.29
0.38
0.49
Now-1996
1997&After

0
0

Cash Minimum (m)


AR/Sales
INV(T)/COGS(T+1)
CL(T)/COGS(T+1)
SGA/Sales
Depreciation
Capital Expenditures
Interest Rate
Tax Rate
Inflation Rate
Real Price Growth
Amortiz. Organization Costs: 5 years.

50
0.1
1
0.1
0.14
5-yr, S-L
250
0.095
0.37
0.02
0.02

Historical Case Sales and Prices by Variety


1991
Cases
Estates
Sauvignon Blanc
Cabernet Sauvignon
Petite Sirah

1991
$/Case

1992
Cases

1992
$/Case

1993
Cases

4436
3258
2547

46.85
45.56
46.42

2924
2887
1574

48.25
46.92
47.82

6133
2993
1599

8633
11794
5835

38.88
37.85
38.03

16537
9750
4482

40.05
38.98
39.17

11569
3444
2112

9472
5393
7299

32.52
33.13
30.73

7666
5210
1350

33.5
34.13
31.65

5864
1353
322

Generic
White Table Wine
Red Table Wine

17685
4657

22.42
20.09

13301
2976

23.1
20.69

7716
2337

TOTAL WHOLESALE

81009

Special Accounts
Hotels
Gigantic Airlines
Altar Wines

0
11320
2388

37.61
37.42
41.59

0
23465
2157

38.74
38.54
42.83

2090
12715
3155

3633

54.15

2957

55.78

2188

Select Vineyards
Chardonnay
Savignon/Fume Blanc
White/Rose Zinfandel
California
Petite Sirah
Chenin Blanc
Other

Winery

68657

45442

TOTAL NON WHOLESALE

17341

28579

20148

TOTAL CASE SALES

98350

97236

65590

1993
$/Case
49.7
48.33
49.25

41.25
40.15
40.35

34.5
35.15
32.6

23.79
21.31

39.9
39.7
44.12
57.45

Forecast Case Sales and Prices by Variety

1994
Cases
Estates
Sauvignon Blanc
Cabernet Sauvignon
Petite Sirah

1994
$/Case

1995
Cases

1995
$/Case

1996
Cases

1996
$/Case

9000 51.70788
5000 50.28253
2500 51.2397

12000 53.79688
6000 52.31395
3000 53.30978

14000 55.97027
6000 54.42743
3000 55.4635

16000 42.9165
8000 41.77206
2000 41.98014

19000 44.65033
8000 43.45965
3500 43.67614

22000 46.4542
8000 45.21542
5000 45.44065

5000 35.8938
1728 36.57006
1000 33.91704

5000 37.34391
0 38.04749
0 35.28729

5000 38.8526
0 39.58461
0 36.71289

Generic
White Table Wine
Red Table Wine

10000 24.75112
2500 22.17092

10000 25.75106
2500 23.06663

10000 26.7914
2500 23.99852

TOTAL WHOLESALE

62728

69000

75500

Special Accounts
Hotels
Gigantic Airlines
Altar Wines

4000 41.51196
16500 41.30388
3500 45.90245

4000 43.18904
16500 42.97256
3500 47.75691

4000 44.93388
16500 44.70865
3500 49.68629

2790 59.77098

2790 62.18573

2790 64.69803

Select Vineyards
Chardonnay
Savignon/Fume Blanc
White/Rose Zinfandel
California
Petite Sirah
Chenin Blanc
Other

Winery
TOTAL NON WHOLESALE

26790

26790

26790

TOTAL CASE SALES

89518

95790

102290

1997
Cases

1997
$/Case

1998
Cases

1998
$/Case

14000 58.23147
6000 56.6263
3000 57.70422

16000 60.58402
7000
58.914
3000 60.03548

24000 48.33095
8000 47.04212
5000 47.27646

24000 50.28352
8000 48.94263
5000 49.18642

5000 40.42225
0 41.18383
0 38.1961

5000 42.05531
0 42.84765
0 39.73922

10000 27.87378
2500 24.96806

10000 28.99988
2500 25.97677

77500

80500

4000 46.74921
16500 46.51488
3500 51.69361

4000 48.63788
16500 48.39408
3500 53.78203

2790 67.31183

2790 70.03123

26790

26790

104290

107290

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