Consolidated Balace Sheet

1999

2000

2001

$1,144
17,322
34,778
2,774
$56,018

$5,508
11,663
33,155
1,922
$52,247

$2,192
20,390
31,313
712
$54,608

Property and Equipment

Land
Buildings
Machinery and equipment
Gross PP&E
Less accumulated depreciation
Net PP&E
Goodwill
Other non-current assets
Total Assets

2,654
32,729
230,759
266,142
(147,891)
118,250
1,180
3,516
$178,965

2,594
31,859
220,615
255,068
(147,104)
107,964
1,180
3,499
$164,890

2,516
30,308
197,889
230,713
(146,302)
84,411
1,180
2,824
$143,023

Liabilities
Accounts payable
Accrued compensation and benefits
Accrued interest
Other accrued expenses
Current portion of long-term debt
Total Current Liabilities
Long-term debt
Other long-term liabilities
Total Liabilities

12,236
4,148
1,830
4,083
1,009
$23,306
66,991
16,566
$106,863

7,693
3,712
1,090
3,914
1,730
$18,139
66,991
14,081
$99,211

9,667
4,176
961
3,881
0
$18,685
58,000
11,776
$88,461

Shareholder's equity
Common stock, par $0.01
Capital surplus
Retained earnings
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity

50
15,868
56,184
$72,102
$178,965

50
15,678
49,951
$65,679
$164,890

50
15,668
38,845
$54,563
$143,023

Assets
Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total Current Assets

2002
$1,973
26,068
33,278
2,378
$63,697

2,505
30,427
190,410
223,342
(154,658)
68,684
1,180
2,430
$135,991

10,835
4,730
929
3,657
0
$20,151
58,000
10,297
$88,448

50
15,668
31,825
$47,543
$135,991

Consolidated Statement of Operations

1999
187,673
1.3103
0.4447
0.7077

Pounds shipped (000's)

Average selling price / lb
Conversion Cost / lb
Average Raw Material Cost / lb
Net Sales
Raw Material Cost
Cost of Conversion
Gross Margin
SG&A Expenses
Depreciation & Amortization
Operating Profit
Interest Expense
Other Income (Expense)
Asset Impairments*
Earnings Before Income Tax Provision
Income Tax Provision (Benefit) @ 36% tax rate
Net Earnings

$245,908
132,812
83,454
29,641
14,603
15,241
(203)
6,777

(6,980)
(2,513)
($4,467)

1999
$15,038
($203)
$178,965
$72,102
$106,863
$56,018
$23,306
$1,144
$1,830
$34,778
$216,267
$17,322
$245,908
($4,467)

EBITDA
EBIT
TOTAL ASSETS
TOTAL EQUITY
TOTAL DEBT
CURRENT ASSETS
CURRENT LIABILITIES
CASH
INTEREST
INVENTORY
COST OF GOODS SOLD
ACCOUNTS RECEIVABLE
SALES
NET INCOME
EPS(Earning per Share)
Book Price Per Share
Market Price Per Share
Interest bearing debt(Notes Playable+Longterm debt)
RATIOS
Liquidity Ratios
Current Ratio
Quick Ratio
Cash Ratio
Financial Leverage Ratios
Total Debt Ratio
Debt-Equity Ratio
Equity Multiplier
Times interest earned ratio(TIE)

1999
2.404
0.911
0.049
0.597
1.482
2.482
-0.1

Cash Coverage ratio

Asset Management or turnover measures
Inventory turnover
Day's sales in inventory
Receivables turnover
Day's sales in Receivables
Total Asset turnover
Capital intensity
Profitability Ratios
Profit margin
EBITDA margin
Return on assets(ROA)
Return on equity(ROE)

8.2
6.22
58.70
14.20
25.7
1.374
0.73
-1.8%
1635.2%
-2.5%
-6.20%

Operations
2000
190,473
1.2064
0.4421
0.6429

2001
151,893
1.2045
0.4465
0.6487

2002
144,116
1.0235
0.4296
0.4509

$229,787
122,461
84,212
23,114
14,218
13,005
(4,109)
6,773
1,143
(9,739)
(3,506)
($6,233)

$182,955
98,536
67,822
16,597
11,635
11,196
(6,234)
5,130
(1,232)
4,758
(17,354)
(6,247)
($11,106)

$147,503
64,982
61,912
20,609
10,305
9,859
445
3,440
(409)
7,564
(10,968)
(3,949)
($7,020)

2000
$8,896
($4,109)
$164,890
$65,679
$99,211
$52,247
$18,139
$5,508
$1,090
$33,155
$206,673
$11,663
$229,787
($6,233)

2001
$4,962
($6,234)
$143,023
$54,563
$88,461
$54,608
$18,685
$2,192
$961
$31,313
$166,358
$20,390
$182,955
($11,106)

2002
$10,304
$445
$135,991
$47,543
$88,448
$63,697
$20,151
$1,973
$929
$33,278
$126,894
$26,068
$147,503
($7,020)

2000

2001

2002

2.880
1.053
0.304

2.923
1.247
0.117

3.161
1.510
0.098

0.602
1.511
2.511
-3.8

0.619
1.621
2.621
-6.5

0.650
1.860
2.860
0.5

8.2

5.2

11.1

6.23
58.55
19.70
18.5
1.394
0.72

5.31
68.70
8.97
40.7
1.279
0.78

3.81
95.72
5.66
64.5
1.085
0.92

-2.7%
2583.1%
-3.8%
-9.49%

-6.1%
3686.9%
-7.8%
-20.36%

-4.8%
1431.6%
-5.2%
-14.77%

CASH FLOW 1: SCENARIO U

2002
Volume (units per week)

2003

500,000

Weeks

52

Annual Volume

510,000
###

26,000,000

26,520,000

Price per Unit Index

1.0235

1.0337

Direct materials Cost

0.4500

0.4545

Cost of returns

0.0770

0.0778

Conversion costs exclude returns

0.3530

0.3565

Revenue

26,611,000

27,414,652

Cost of Materials

22,880,000

23,570,976

1,862,770

1,919,026

SG&A Expenses
Depreciation
Operating Income

500,000
1,368,230

Tax rate

36%

NOPAT
+ Depreciation
Operating CashFlow
Inventory

###
1,424,651
36%

875,667
500,000

911,776
500,000

1,375,667

1,411,776

1,880,548

1,937,340

Change in Inventory

56,793

Free CashFlow

1,354,984

WACC (Hurdle Rate)

10%

VNA SCENARIO 1

$8,670,628.00

CASH FLOW 1: SCENARIO USING THE EXISTING RING-SPINING MACHINE

2004

2005

2006

520,200

530,604

52

52

27,050,400

27,591,408

1.0441

2007
552,040

563,081

52

52

28,143,236

28,706,101

29,280,223

1.0545

1.0651

1.0757

1.0865

0.4590

0.4636

0.4683

0.4730

0.4777

0.0785

0.0793

0.0801

0.0809

0.0817

0.3601

0.3637

0.3673

0.3710

0.3747

28,242,575

29,095,500

29,974,185

30,879,405

31,811,963

24,282,819

25,016,161

25,771,649

26,549,952

27,351,761

1,976,980

2,036,685

2,098,193

2,161,558

2,226,837

500,000

500,000

1,482,775

1,542,655

36%

36%

541,216

2008

###

###
1,604,343
36%

2,167,894
36%

2,233,365
36%

948,976
500,000

987,299
500,000

1,026,780
500,000

1,387,452
-

1,429,353
-

1,448,976

1,487,299

1,526,780

1,387,452

1,429,353

1,995,848

2,056,123

2,118,218

2,182,188

2,248,090

58,508

60,275

62,095

63,970

65,902

1,390,468

1,427,024

1,464,685

1,323,482

1,363,451

NE
2009

2010

2011

2012

574,343

585,830

597,546

600,000

52

52

52

52

29,865,827

30,463,144

31,072,407

31,200,000

1.0973

1.1083

1.1194

1.1306

0.4825

0.4873

0.4922

0.4971

0.0826

0.0834

0.0842

0.0851

0.3785

0.3822

0.3861

0.3899

32,772,684

33,762,419

34,782,044

35,274,119

28,177,784

29,028,753

29,905,422

30,328,505

2,294,088

2,363,369

2,434,743

2,469,188

2,300,812
36%

2,370,297
36%

2,441,880
36%

2,476,426
36%

1,472,520
-

1,516,990
-

1,562,803
-

1,584,913
-

1,472,520

1,516,990

1,562,803

1,584,913

2,315,982

2,385,925

2,457,980

2,492,754

67,892

69,943

72,055

34,774

1,404,627

1,447,047

1,490,748

1,550,139

2002
Pounds shipped (000's)

26,000,000

Average selling price

1.0235

Conversion Cost

0.4077

Average Raw Material Cost

0.4509

Net Sales

$26,611,000

Raw Material Cost

11,723,400

Cost of Conversion

10,600,200

Gross Margin

4,287,400

SG&A Expenses

10,305

Depreciation & Amortization

Operating Profit

9,859
4,267,236

Interest Expense

3,440

Other Income (Expense)

(409)

Asset Impairments*

7,564

Earnings Before Income Tax Provision

4,255,823

Income Tax Provision (Benefit) @ 36%

1,532,096

Net Earnings

$2,723,727

Volume growth

2%

Inflation

1%

0.04%

CASH FLOW 2: SCENA

2002
Volume (units per week)

2003
484,500

Weeks

52

Annual Volume

25,194,000

Price per Unit Index

1.1371

Direct materials Cost

0.4545

Cost of returns

0.0840

Conversion costs exclude returns

0.3230

Revenue

28,648,312

Cost of Materials

21,704,631

SG&A Expenses

2,005,382

Depreciation

825,000

Operating Income

4,113,299

Tax rate

36%

NOPAT
+ Depreciation

2,632,511
825,000

Operating CashFlow

3,457,511

Inventory

1,189,295

Change in Inventory
Free CashFlow

(7,242,000)

WACC (Hurdle Rate)

10%

VNA SCENARIO 1

###

3,457,511

CASH FLOW 2: SCENARIO USING THE NEW ZINSER MANCHINE

2004

2005

2006

2007

2008

494,190

504,074

514,155

52

52

52

25,697,880

26,211,838

26,736,074

27,270,796

27,816,212

1.1485

1.1600

1.1716

1.1833

1.1951

0.4590

0.4636

0.4683

0.4730

0.4777

0.0848

0.0857

0.0865

0.0874

0.0883

0.3262

0.3295

0.3328

0.3361

0.3395

29,513,491

30,404,798

31,323,023

32,268,978

33,243,501

22,360,111

23,035,386

23,731,055

24,447,733

25,186,054

2,065,944

2,128,336

2,192,612

2,258,828

2,327,045

825,000

825,000

825,000

4,262,435

4,416,076

4,574,356

36%

36%

36%

524,438
###

534,927
52

###
4,737,417
36%

825,000
4,905,402
36%

2,727,959
825,000

2,826,289
825,000

2,927,588
825,000

3,031,947
825,000

3,139,457
825,000

3,552,959

3,651,289

3,752,588

3,856,947

3,964,457

1,225,212

1,262,213

1,300,332

1,339,602

1,380,058

35,917

37,001

38,119

39,270

40,456

3,517,042

3,614,287

3,714,469

3,817,677

3,924,001

2009

2010

2011

2012

545,626

556,538

567,669

579,022

52

52

52

52

28,372,536

28,939,987

29,518,786

30,109,162

1.2071

1.2191

1.2313

1.2436

0.4825

0.4873

0.4922

0.4971

0.0892

0.0901

0.0910

0.0919

0.3429

0.3463

0.3498

0.3533

34,247,455

35,281,728

36,347,236

37,444,923

25,946,673

26,730,263

27,537,517

28,369,150

2,397,322

2,469,721

2,544,307

2,621,145

825,000

825,000

825,000

825,000

5,078,460

5,256,745

5,440,413

5,629,629

36%

36%

36%

36%

3,250,214
825,000

3,364,317
825,000

3,481,864
825,000

3,602,962
825,000

4,075,214

4,189,317

4,306,864

4,427,962

1,421,736

1,464,672

1,508,905

1,554,474

41,678

42,936

44,233

45,569

4,033,537

4,146,380

4,262,631

4,382,393

2002
Pounds shipped (000's)

25,194,000

Average selling price

1.0235

Conversion Cost

0.4077

Average Raw Material Cost

0.4509

Net Sales

$25,786,059

Raw Material Cost

11,359,975

Cost of Conversion

10,271,594

Gross Margin

4,154,491

SG&A Expenses

10,305

Depreciation & Amortization

Operating Profit

9,859
4,134,327

Interest Expense

3,440

Other Income (Expense)

(409)

Asset Impairments*

7,564

Earnings Before Income Tax Provision

4,122,914

Income Tax Provision (Benefit) @ 36%

1,484,249

Net Earnings

$2,638,665

Volume growth

2%

Inflation

1%

0.04%

CASH FLOW INCREMENTAL: SCENARIO U

0
Machine 2: Zinser

(7,242,000)

Machine 1: Ring
Cash Flow Decision
NVP MACHINE 2
NVP MACHINE 1
NVP DECISION

(7,242,000)
16,147,345
8,670,628
7,501,392

3,457,511

3,517,042

1,354,984

1,390,468

2,102,527

2,126,574

MENTAL: SCENARIO USING THE EXISTING RING-SPINING MACHINE

3

3,614,287

3,714,469

3,817,677

3,924,001

4,033,537

4,146,380

1,427,024

1,464,685

1,323,482

1,363,451

1,404,627

1,447,047

2,187,263

2,249,785

2,494,195

2,560,550

2,628,909

2,699,333

10

4,262,631

4,382,393

1,490,748

1,550,139

2,771,883

2,896,255