Actual

2002

2001
Purchase with Stock
Earnings per Share (EPS)
Cash Earnings per Share (CEPS)
Return on Equity
Net Profit Margin
Asset Turns
Debt/Liabilities & Equity
Accretion (Dilution) in Buyer's EPS and CEPS
EPS without the acquisition
EPS Dilution
CEPS without the acquisitions
CEPS Dilution
Purchase with Cash Financed by an Issue of Debt
Earnings per Share (EPS)
Cash Earnings per Share (CEPS)
Return on Equity
Net Profit Margin
Asset Turns
Debt/Liabilities & Equity
Accretion (Dilution) in Buyer's
EPS without the acquisition
EPS Dilution
CEPS without the acquisitions
CEPS Dilution

$
$

0.660 $
2.299 $
4%
4%
0.41
33%

0.736 $
2.569 $
4%
5%
0.40
38%

2003

Pro Forma
2003

0.621 $
2.163 $
3%
4%
0.41
38%

0.653 $
0.653 $
1%
1%
0.41
38%

0.149
0.184
10%
7%
0.44
18%

0.62 $
5%
0.62 $
5%

0.67
-12%
0.67
10%

0.621 $
2.163 $
3.5%
3.9%
0.41
0.38

0.667 $
0.667 $
1.1%
1.2%
0.41
0.38

0.170
0.241
21.2%
4.2%
0.44
0.76

0.62 $
7%
0.62 $
7%

0.67
1%
0.67
43%

$
$

0.660 $
2.299 $
3.8%
4.2%
0.41
0.33

0.736 $
2.569 $
4.0%
4.7%
0.40
0.38

2003a
5%
5%
7%
7%

EPS, Stock Deal

CEPS, Stock Deal
EPS, Cash Deal
CEPS, Cash Deal

Forecasted
2004

2004f
-12%
10%
1%
43%

2005f
0%
19%
29%
66%

Percentage Dilution/Accretion

Dilution and Accretion of EPS and CEPS

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%

EPS, Stock Deal

CEPS, Stock Deal
EPS, Cash Deal
CEPS, Cash Deal

2003a

2004f

2005f

2006f

Percentage
-10%
-20%

-20%

Forecasted
2005

2006

$
$

0.190 $
0.225 $
11%
8%
0.47
12%

0.226
0.262
12%
9%
0.50
6%

0.89 $
0%
0.89 $
19%

0.72
7%
0.72
23%

$
$

0.243 $
0.315 $
23.3%
5.4%
0.47
0.70

0.308
0.379
22.8%
6.1%
0.50
0.64

0.89 $
29%
0.89 $
66%

0.72
45%
0.72
79%

2006f
7%
23%
45%
79%

d CEPS

EPS, Stock Deal

CEPS, Stock Deal
EPS, Cash Deal
CEPS, Cash Deal

Compd. Avg. Growth Rates

2001a-00a
2003a-06e
-3%
-3%

15%
21%

-3%
-3%

27%
36%

Assumptions:

Dollars

Line
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Payment for Targets equity

Target liabilities to be assumed by buyer
Total payment for Target Assets
FMV of Target's Current Assets
FMV of Target's Gross Fixed Assets
FMV of Target's Intangible Assets (% of equity)
Goodwill
Depreciation as % of depreciable assets
Gross fixed assets/revenues
Tax Rate
Interest rate
Intangible Asset Amortization Years
Hypothetical goodwill impairment in 2005 (% of total)
Materials & Labor as % of Revenue
Synergies as % of Revenue
Historical revenue growth rate, buyer
Historical revenue growth rate, target
Current assets/ revenues
Current liabilities/revenues

Line
1
2
3
4
5
6

Current Assets
Gross Fixed Assets
Accumulated Depreciation
Intangible Assets
Goodwill
Assets

2010
$ 8,607.9
$ 29,221.7
$
(542.0)
$
612.0
$ 37,899.6

Historical
2011
$ 9,547.0
$ 30,520.0
$ (1,038.0)
$
652.0
$ 39,681.0

$
$
$
$

7
8
9
10

Current Liabilities
Debt
Equity
Liabilities & Equity

$ 7,825.4
$ 12,609.2
$ 17,465.0
$ 37,899.6

$ 7,258.0
$ 15,260.0
$ 18,201.0
$ 39,681.0

11
12
13
14
15
16
17

Revenues
Cost of Materials & Labor
Depreciation
Interest Expense
Profit Before Taxes
Taxes @ 40%
Net Profit

$ 15,650.8
$ (13,004.0)
$
(480.0)
$ (1,006.0)
$ 1,160.8
$
(501.0)
$
659.8

$ 15,776.0
$ (13,105.0)
$
(496.0)
$ (1,007.0)
$ 1,168.0
$
(432.0)
$
736.0

18
19
20
21
22
23
24

Number of Shares
Earnings per Share
Operating Cash Flow per share
Return on Equity
Net Profit Margin
Asset Turns
Debt/Liabilities & Equity
Value per Share
Discounted Cash Flow
Multiple of Earnings
KO
Earnings Multiple

$
$
$
$
1.5x $
25% $
$

Shares

EPS, Stk

12.00
6
26.45
Share
38.45
Price
29.15 $
2.00
153.45
3.00
(147.15)
7.0%
186.7%
40.0%
0.5%
7
0%
85.0%
0.1%
0.8%
2.0%
55.0%
50.0%

Step up in Asset Value

0.75
1.00
1.25
1.50
1.75

EPS, Cash
7%
6%
6%
5%
5%

0.09
8.6%
8.0%
7.4%
6.8%

Buyer Firm

$
$

$
$

Target Firm
Forecasted
2014
8,847.5
30,034.9
(706.0)
590.8
$ 38,767.2

2015
$ 8,918.3
$ 30,275.1
$ (1,207.0)
$
595.6
$ 38,582.0

$ 7,979.3
$ 30,080.6
$
800.0
$ 38,859.9

$
8,043.2
$ 29,035.2
$
1,688.8
$ 38,767.2

$ 8,107.5
$ 28,065.5
$ 2,408.9
$ 38,582.0

$ 15,958.7
$ (13,789.0)
$
(404.0)
$
(650.0)
$ 1,115.7
$
(446.3)
$
669.4

$ 16,086.3 $ 16,215.0
$ (13,499.0) $ (13,782.8)
$
(406.0) $
(501.0)
$
(700.0) $
(731.0)
$
1,481.3 $ 1,200.3
$
(592.5) $
(480.1)
$
888.8 $
720.2

2012
9,284.0
29,560.0
(1,010.0)
620.0
38,454.0

2013
$ 8,777.3
$ 29,796.5
$
(300.0)
$
586.2
$ 38,859.9

$
$
$
$

7,265.0
14,449.0
17,750.0
38,454.0

$
$
$
$
$
$
$

15,832.0
(13,376.0)
(493.0)
(1,026.0)
937.0
(316.0)
621.0

$
$
$
$

Historical
2011
27.7
99.3
(73.0)
3.0
$
57.0

$
$
$
$

mn Euros
Forecasted
2014
29.9
104.8
(78.0)
3.0
$
59.7

$
$
$
$

2010
26.9
100.2
(71.0)
3.0
59.1

2012
28.1
102.3
(74.0)
3.0
59.4

2013
29.2
103.6
(76.0)
3.0
59.8

2015
30.6
106.2
(80.0)
3.0
59.8

$
$
$
$

24.5
1.0
16.0
59.1

$
$
$
$

25.2
1.2
16.8
57.0

$
$
$
$

25.6
0.9
17.7
59.4

$
$
$
$

26.5
1.3
18.5
59.8

$
$
$
$

27.2
1.6
19.2
59.7

$
$
$
$

27.8
1.9
19.8
59.8

$
$
$
$
$
$
$

48.9
(34.2)
(7.0)
0.3
8.0
(2.8)
5.2

$
$
$
$
$
$
$

50.3
(35.2)
(7.0)
0.4
8.5
(3.0)
5.6

$
$
$
$
$
$
$

51.1
(35.8)
(7.2)
0.5
8.7
(3.0)
5.6

$
$
$
$
$
$
$

53.0
(37.1)
(7.3)
0.6
9.2
(3.2)
6.0

$
$
$
$
$
$
$

54.3
(38.0)
(7.3)
0.6
9.6
(3.3)
6.2

$
$
$
$
$
$
$

55.6
(38.9)
(7.4)
0.7
9.9
(3.5)
6.5

$
$
$
$

$
$
$
$

$
$
$
$

$
$
$
$

287
0.66 $
3.97 $
4%
4%
0.41
33%

287
0.74 $
4.30 $
4%
5%
0.40
38%

287
0.62 $
3.88 $
3%
4%
0.41
38%

287
0.67 $
3.74 $
84%
4%
0.41
77%

287
0.89 $
4.51 $
53%
6%
0.41
75%

287
0.72 $
4.25 $
30%
4%
0.42
73%

36
0.01 $
0.34 $
32%
11%
0.83
2%

36
0.01 $
0.35 $
33%
11%
0.88
2%

36
0.01 $
0.36 $
32%
11%
0.86
2%

36
0.01 $
0.37 $
32%
11%
0.89
2%

36
0.01 $
0.38 $
32%
11%
0.91
3%

36
0.01
0.39
33%
12%
0.93
3%

72.91 $
2.96 $
10%
4.5

77.24 $
3.30 $
10%
4.5

71.46 $
2.78 $
10%
4.5

87.28 $
3.00 $
10%
4.5

94.56 $
3.00 $
10%
3.4

89.96 $
3.00 $
10%
4.2

2.46 $
0.02 $
10%
4.5

2.53 $
0.02 $
10%
4.5

2.57 $
0.03 $
10%
4.5

2.66 $
0.03 $
10%
4.5

2.73 $
0.02 $
10%
3.4

2.80
0.03
10%
4.2

Buyer Firm
Purchase Accounting: Stock-for-Stock Deal

Line
1 Current Assets
2 Gross Fixed Assets
3 Accumulated Depreciation
Intangible Assets
4 Goodwill
5 Assets
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Current Liabilities
Debt
Equity
Liabilities & Equity
Revenues
Cost of Materials & Labor
Depreciation
Synergies
Amortization of Intangibles
Goodwill Impairment
Interest Expense
Profit Before Taxes
Taxes @ 40%
Net Profit
Number of Shares
Earnings per Share (EPS)
Cash Flow per share (CFPS)
Return on Equity
Net Profit Margin
Asset Turns
Debt/Liabilities & Equity

Accretion (Dilution) in Buyer's EPS and CEPS

27 EPS without the acquisition
28 EPS after the acquisition
29 EPS dilution by year
30 CEPS without the acquisition
31 CEPS after the acquisition
32 CEPS dilution by year

Historical
2001
2002
2003
8,607.9 $ 9,547.0 $ 9,284.0 $
29,221.7
30,520.0
29,560.0
(542.0)
(1,038.0)
(1,010.0)
612.0
652.0
620.0
37,899.6
39,681.0
38,454.0
7,825.4
12,609.2
17,465.0
37,899.6

7,258.0
15,260.0
18,201.0
39,681.0

7,265.0
14,449.0
17,750.0
38,454.0

15,650.8
15,776.0
15,832.0
(13,004.0)
(13,105.0)
(13,376.0)
(480.0)
(496.0)
(493.0)
(1,006.0)
(1,007.0)
(1,026.0)
1,160.8
1,168.0
937.0
(501.0)
(432.0)
(316.0)
$
659.8 $
736.0 $
621.0
287
287
287
$
0.660 $
0.736 $
0.621
$
2.299 $
2.569 $
2.163
4%
4%
3%
4%
5%
4%
0.41
0.40
0.41
33%
38%
38%

As if combined in
2003, Pro Forma
Forecasted
Entries
New Balance
2004
2005
29.2
a $
9,313.2 $ 8,806.4 $ 8,877.3 $
153.5 b
29,713.5
29,900.1
30,139.7
(1,010.0)
(3,089.9)
(5,182.9)
3.0
c
623.0
622.6
622.1
(147.2) d
(147.2)
(147.2)
(147.2)
38.5
38,492.5
36,092.0
34,309.0
25.6
0.9
12.0
38.5
51.1
(35.8)
(1,586.9)
953.8

e
f
g

7,290.6
14,449.9
17,762.0
38,492.5

h
i
j
k
l

$
6

m
$
$

8,005.8
680.5
2,929.2
36,092.0

8,070.3
467.5
3,308.3
34,309.0

2006
8,948.8
30,381.3
(7,292.7)
621.7
(147.2)
32,512.0
8,135.3
228.3
3,760.7
32,512.0

15,883.1
16,011.7
16,140.6
16,270.6
(13,411.8)
(13,826.1)
(13,537.0)
(13,821.7)
(2,079.9)
(2,079.9)
(2,093.0)
(2,109.8)
12.8
12.9
13.0
(0.4)
(0.4)
(0.4)
(72.2)
(68.1)
(46.8)
(22.8)
319.1
495.3
631.8
754.0
(127.7)
(198.1)
(252.7)
(301.6)
191.5 $
297.2 $
379.1 $
452.4
293
293
293
293
0.653 $
0.149 $
0.190 $
0.226
0.653 $
0.184 $
0.225 $
0.262
1%
10%
11%
12%
1%
7%
8%
9%
0.41
0.44
0.47
0.50
38%
18%
12%
6%

$
$

0.621 $
0.653 $
5%

0.669 $
0.149 $
-12%

0.889 $
0.190 $
0%

0.720
0.226
7%

$
$

0.621 $
0.653 $
5%

0.669 $
0.184 $
10%

0.889 $
0.225 $
19%

0.720
0.262
23%

Buyer Firm
Purchase Accounting: Cash-for-Stock Deal, Financed by Issue of Debt

Line
1 Current Assets
2 Gross Fixed Assets
3 Accumulated Depreciation
Intangible Assets
4 Goodwill
5 Assets
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Historical
2001
2002
$ 8,607.9 #######
29,221.7 #######
(542.0) (1,038.0)
612.0
652.0
37,899.6 #######

2003
######
######
######
620.0
######

Current Liabilities
Debt
Equity
Liabilities & Equity

7,825.4
12,609.2
17,465.0
37,899.6

7,258.0 7,265.0
####### ######
####### ######
####### ######

Revenues
Cost of Materials & Labor
Depreciation
Synergies
Amortization of Intangibles
Goodwill Impairment
Interest Expense
Profit Before Taxes
Taxes @ 40%
Net Profit
Number of Shares
Earnings per Share (EPS)
Cash Flow per share (CFPS)
Return on Equity
Net Profit Margin
Asset Turns
Debt/Liabilities & Equity

15,650.8
#######
(480.0)
(1,006.0)
1,160.8
(501.0)
$ 659.8
287
$ 0.660
$ 2.299
4%
4%
0.41
33%

####### ######
####### ######
(496.0) (493.0)
(1,007.0) ######
1,168.0
937.0
(432.0) (316.0)
$ 736.0 $ 621.0
287
287
$ 0.736 $ 0.621
$ 2.569 $ 2.163
4%
3%
5%
4%
0.40
0.41
38%
38%

Accretion (Dilution) in Buyer's EPS and CEPS

27 EPS without the acquisition
28 EPS after the acquisition
29 EPS dilution by year
30 CEPS without the acquisition
31 CEPS after the acquisition
32 CEPS dilution by year

As if combined in
2003, Pro Forma
Forecasted
Entries
New Balance
2004
$ 29.2 a $
9,313.2 $ 8,806.4
153.5 b
29,713.5 29,900.1
(1,010.0) (3,089.9)
3.0 c
623.0
622.6
(147.2) d
(147.2)
(147.2)
38.5
38,492.5 36,092.0
25.6
12.9
38.5

e
f
g

51.1 h
(35.8) i
###### j
k
l
953.7 n

7,290.6
14,461.9
17,750.0
38,492.5
15,883.1
(13,411.8)
(2,079.9)
(72.3)
319.1
(127.6)
$
191.4
287
$
0.667
$
0.667
1%
1%
0.41
38%

8,005.8
2,808.2
801.5
36,092.0
16,011.7
(13,826.1)
(2,079.9)
12.8
(0.4)
(280.8)
282.6
(113.0)
$ 169.5
287
$ 0.170
$ 0.241
21%
4%
0.44
76%

$
$

0.621 $
0.667 $
7%

0.669
0.170
1%

$
$

0.621 $
0.667 $
7%

0.669
0.241
43%

sue of Debt

Forecasted
2005
$ 8,877.3
30,139.7
(5,182.9)
622.1
(147.2)
34,309.0
8,070.3
2,731.0
1,044.8
34,309.0

2006
######
######
######
621.7
(147.2)
######
8,135.3
2,636.2
1,352.7
######

16,140.6 ######
(13,537.0) ######
(2,093.0) ######
12.9
13.0
(0.4)
(0.4)
(273.1) (263.6)
405.5
513.2
(162.2) (205.3)
$ 243.3 $ 307.9
287
287
$ 0.243 $ 0.308
$ 0.315 $ 0.379
23%
23%
5%
6%
0.47
0.50
70%
64%

$
$

0.889 $ 0.720
0.243 $ 0.308
29%
45%

$
$

0.889 $ 0.720
0.315 $ 0.379
66%
79%

StandPost
Alone Acquistion
CAGR
CAGR
-3%
38%
-3%
48%