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
Capital expenditures
Free cash flow

Actual
2004

2005

2006

2007

2008

2009

$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

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

($12)
0
(4)
(15)
($31)

($9)
1
(8)
(6)
($22)

($4)
2
(12)
(5)
($19)

$16
2
(22)
(23)
($27)

21
93
114
(3)
53
19
$35

21
176
197
(10)
92
32
$60

2010
$249
135
146
171
701
246
455
3
32
259
291
(25)
142
57
$85

2011
$274
165
166
250
855
322
533
3
43
323
366
(38)
132
76
$56

$35
$60
$85
$56
6
10
18
19
(63) (101) (118) (100)
(53)
(93) (111)
(98)
($76) ($124) ($126) ($123)

2012

2013

2014

$285
210
186
352
1,033
350
683
3

$289
225
189
362
1,065
361
704
3

51
369
420
(43)
181
89
$92

52
372
424
(37)
225
90
$135

50
349
399
(20)
288
85
$203

$92
15
(61)
(66)
($20)

$135
8
1
(10)
$134

$203
(1)
39
(10)
$231

$282
190
174
330
976
335
641
3

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
Capital expenditures
Free cash flow

Actual
2004

2005

2006

2007

2008

2009

2010

2011

$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

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

($12)
2
(6)
(15)
($31)

($34)
3
(6)
(9)
($46)

($31)
3
(6)
(9)
($43)

($30)
3
(7)
(9)
($43)

($31)
4
(14)
(10)
($51)

($25)
6
(17)
(11)
($47)

($28)
8
(19)
(15)
($54)

$17
10
(20)
(18)
($11)

2012

2013

2014

2015

$85
145
60
56
346
124
222
4

$95
160
75
80
410
142
268
4

$106
185
91
110
492
154
338
4

$114
199
105
140
558
160
398
4

52
127
179
(2)
45
15
$30

53
138
191
0
80
27
$53

54
136
191
0
152
39
$112

58
136
194
3
210
48
$162

$30
14
(28)
(24)
($8)

$53
18
(16)
(27)
$28

$112
20
(6)
(28)
$98

$162
23
(6)
(30)
$149

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%
93%

Projected
Annual Dividends Per Share
2006
2007
2008
2009
0.72
0.82
0.92
1.04
0.88
0.97
1.06
1.17
1.40
1.40
1.40
1.40
1.21
1.22
1.24
1.25
1.50
1.52
1.55
1.57
1.08
1.11
1.15
1.19
0.00
0.00
0.00
0.00
1.23
1.39
1.58
1.79
1.72
1.85
1.99
2.14
0.11
0.12
0.12
0.13
0.33
0.37
0.42
0.47
0.67
0.69
0.72
0.75
0.77
0.80
0.82
0.84
1.09
1.18
1.28
1.39
0.44
0.49
0.55
0.61
0.44
0.45
0.46
0.47
0.75
0.84
0.93
1.03
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.72
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

ARCADIAN MICROARRAY TECHNOLOGIES, INC.

Cash Flows of Three Deals with Differing Rates of Development

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

Projected Cash Flows by Investment

350
300

250
200
Millions of Dollars

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

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
190
244
225
249

150
Movie Studio
100

Bottling Plant
Toll Road

50
0
1

11

13

15

-50

-100
-150
Year

17

19

21

23

25
26
27
28
29
30
31+

240
254
261
230
259
266
255
264
272
260
269
277
265
275
283
270
280
288
Steady growth to infinity.

Projected Cash Flows by Investment

Movie Studio
Bottling Plant
Toll Road

23

25

27

29

ARCADIAN MICROARRAY TECHNOLOGIES, INC.

Sensitivity Analysis, Present Value Varying by Terminal Value Growth Assumptions
WACC

20%

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

POPULATION GROWTH RATE

Real growth rate

1%

Rate of Inflation

2%

Nominal growth rate

3.02%

ECONOMY
Real growth rate

3%

Rate of Inflation

2%

Nominal growth rate

5.06%

PHARMACEUTICAL
Real growth rate

5%

Rate of Inflation

2%

Nominal growth rate

7.10%

ARCADIAN MANAGEMENT
Real growth rate

7%

Rate of Inflation

2%

Nominal growth rate

9.14%

1 +
+ 1 +

WACC
Multiples

20%
15

20

PRICE/EARNINGS RATIO
P/E
Net Income(2014)
Terminal Value
PV Terminal Value
PV (Cash Flow 2005 - 2014)
PV
Ownership 60%

ARCADIAN 2005-2014
15
$203
$
3,039.00
$
490.82
($151.19)
$
339.63
$
203.78

Multiples
BV of Equity

$
$
$
$

20
$203
4,052.00
654.42
($151.19)
503.23
301.94

8.5
3.50

PRICE/BOOK RATIO
ARCADIAN 2005-2014
P/B
BV of Equity
Terminal Value
PV Terminal Value
PV (Cash Flow 2005 - 2014)
PV
Ownership 60%

$
$
$
$
$
$

SIERRA 2005-2014
8.5
671.50
5,707.75
921.83
(151.19)
770.65
462.39

P/B
BV of Equity
Terminal Value
PV Terminal Value
PV (Cash Flow 2005 - 2014)
PV
Ownership 60%
SIERRA 2005-2015
P/B
BV of Equity
Terminal Value
PV Terminal Value
PV (Cash Flow 2005 - 2015)
PV
Ownership 60%

PRICE/EARNINGS RATIO
SIERRA 2005-2014
P/E
Net Income (2014)
Terminal Value
PV Terminal Value
PV (Cash Flow 2005 - 2014)
PV
Ownership 60%
P/E
Net Income (2015)
Terminal Value
PV Terminal Value
PV (Cash Flow 2005 - 2015)
PV
Ownership 60%

15
$112
$
1,683.75
$
271.94
($138.44)
$
133.49
$
80.10
SIERRA 2004-2015
15
$162
$
2,431.50
$
327.25
($118.38)
$
208.87
$
125.32

ATIO
SIERRA 2005-2014
$
$
$
$
$
$
SIERRA 2005-2015
$
$
$
$
$

8.5
36.89
313.52
50.64
(138.44)
(87.81)
(52.68)
8.5
198.99
1,691.37
227.64
($118.38)
109.26
65.56

$
$
$
$

$
$
$
$

20
$112
2,245.00
362.58
($138.44)
224.14
134.48
20
$162
3,242.00
436.33
($118.38)
317.96
190.77

ARCADIAN MICROARRAY TECHNOLOGIES, INC.

Sensitivity Analysis, Present Value Varying by Terminal Value Growth Assumptions
WACC

20%

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
(231)
(1,307)

3%
20%
($5)
(3)
(239)
(1,446)

3.02%
20%
($5)
($3)
($239)
(1,448)

4%
20%
($12)
(5)
(248)
(1,609)

PV of terminal value 2014

PV free cash flows 2005-2014
Total Present Value
Ownership 60%

-211
($151)
($362)
($217)

-233
($151)
($385)
($231)

-234
($151)
($385)
($231)

-260
($151)
($411)
($247)

2%
20%
$0
(149)
(845)

3%
20%
($5)
(3)
(157)
(952)

3.02%
20%
($5)
($3)
($157)
(953)

4%
20%
($12)
(5)
(166)
(1,080)

-114
($118)
($232)
($139)

-128
($118)
($246)
($148)

-128
($118)
($247)
($148)

-145
($118)
($264)
($158)

Sierra Capital's View

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
PV of terminal value 2015
PV free cash flows 2005-2015
Total Present Value
Ownership 60%

5%
20%
($15)
(7)
(253)
(1,768)

5.06%
20%
($15)
($7)
($253)
(1,776)

6%
20%
($20)
(8)
(259)
(1,958)

7%
20%
($28)
(9)
(268)
(2,203)

7.10%
20%
($29)
($9)
($269)
(2,229)

9.14%
20%
($31)
($9)
($270)
(2,718)

-286
($151)
($437)
($262)

-287
($151)
($438)
($263)

-316
($151)
($467)
($280)

-356
($151)
($507)
($304)

-360
($151)
($511)
($307)

-439
($151)
($590)
($354)

5%
20%
($15)
(7)
(171)
(1,198)

5.06%
20%
($15)
($7)
($171)
(1,203)

6%
20%
($20)
(8)
(177)
(1,341)

7%
20%
($28)
(9)
(186)
(1,532)

7.10%
20%
($29)
($9)
($187)
(1,553)

9.14%
20%
($31)
($9)
($189)
(1,899)

-161
($118)
($280)
($168)

-162
($118)
($280)
($168)

-180
($118)
($299)
($179)

-206
($118)
($325)
($195)

-209
($118)
($327)
($196)

-256
($118)
($374)
($224)