| Income Statement |
| All numbers in thousands |
| Revenue | 12/30/17 | 12/31/16 | 12/26/15 |
| Total Revenue | 63,525,000 | 62,799,000 | 63,056,000 |
| Cost of Revenue | 28,785,000 | 28,209,000 | 28,731,000 |
| Gross Profit | 34,740,000 | 34,590,000 | 34,325,000 | | Cash Flow |
| Operating Expenses | | | | | All numbers in thousands |
| Research Development | - | - | - | | Period Ending | 12/31/17 | 12/31/16 | 12/31/15 |
| Selling General and Administrative | 24,231,000 | 24,805,000 | 24,613,000 | | Net Income | 1,248,000 | 6,527,000 | 7,351,000 |
| Non Recurring | - | - | 1,359,000 | | Operating Activities, Cash Flows Provided By or Used In |
| Others | - | - | - | | Depreciation | 1,260,000 | 1,787,000 | 1,970,000 |
| Total Operating Expenses | - | - | - | | Adjustments To Net Income | 923,000 | 680,000 | 1,349,000 |
| Operating Income or Loss | 10,509,000 | 9,785,000 | 8,353,000 | | Changes In Accounts Receivables | - | - | - |
| Income from Continuing Operations | | | | | Changes In Liabilities | - | - | - |
| Total Other Income/Expenses Net | 244,000 | 110,000 | 59,000 | | Changes In Inventories | - | - | - |
| Earnings Before Interest and Taxes | 10,753,000 | 9,895,000 | 8,412,000 | | Changes In Other Operating Activities | 3,537,000 | -221,000 | -157,000 |
| Interest Expense | 1,151,000 | 1,342,000 | 970,000 | | Total Cash Flow From Operating Activities | 6,995,000 | 8,796,000 | 10,528,000 |
| Income Before Tax | 9,602,000 | 8,553,000 | 7,442,000 | | Investing Activities, Cash Flows Provided By or Used In |
| Income Tax Expense | 4,694,000 | 2,174,000 | 1,941,000 | | Capital Expenditures | -1,675,000 | -2,262,000 | -2,553,000 |
| Minority Interest | 92,000 | 104,000 | 107,000 | | Investments | -609,000 | 1,125,000 | -1,752,000 |
| Net Income From Continuing Ops | 4,857,000 | 6,329,000 | 5,452,000 | | Other Cash flows from Investing Activities | -101,000 | 138,000 | -1,881,000 |
| Non-recurring Events | | | | | Total Cash Flows From Investing Activities | -2,385,000 | -999,000 | -6,186,000 |
| Discontinued Operations | - | - | - | | Financing Activities, Cash Flows Provided By or Used In |
| Extraordinary Items | - | - | - | | Dividends Paid | -6,320,000 | -6,043,000 | -5,741,000 |
| Effect Of Accounting Changes | - | - | - | | Sale Purchase of Stock | -2,087,000 | -2,247,000 | -2,319,000 |
| Other Items | - | - | - | | Net Borrowings | 1,089,000 | 1,666,000 | 2,696,000 |
| Net Income | | | | | Other Cash Flows from Financing Activities | -91,000 | 79,000 | 251,000 |
| Net Income | 4,857,000 | 6,329,000 | 5,452,000 | | Total Cash Flows From Financing Activities | -7,409,000 | -6,545,000 | -5,113,000 |
| Preferred Stock And Other Adjustments | - | - | - | | Effect Of Exchange Rate Changes | 242,000 | -6,000 | -878,000 |
| Net Income Applicable To Common Shares | 4,857,000 | 6,329,000 | 5,452,000 | | Change In Cash and Cash Equivalents | -2,549,000 | 1,246,000 | -1,649,000 |
| Balance Sheet |
| All numbers in thousands |
| Period Ending | 12/26/15 | 12/31/16 | 12/30/17 |
| Current Assets |
| Cash And Cash Equivalents | 9,096,000 | 9,158,000 | 10,610,000 |
| Short Term Investments | 2,913,000 | 6,967,000 | 8,900,000 |
| Net Receivables | 6,437,000 | 6,694,000 | 7,024,000 |
| Inventory | 2,720,000 | 2,723,000 | 2,947,000 |
| Other Current Assets | 1,865,000 | 908,000 | 1,546,000 |
| Total Current Assets | 23,031,000 | 26,450,000 | 31,027,000 |
| Long Term Investments | 2,311,000 | 1,950,000 | 2,042,000 |
| Property Plant and Equipment | 16,317,000 | 16,591,000 | 17,240,000 |
| Goodwill | 14,177,000 | 14,430,000 | 14,744,000 |
| Intangible Assets | 13,081,000 | 13,433,000 | 13,838,000 |
| Accumulated Amortization | - | - | - |
| Other Assets | 750,000 | 636,000 | 913,000 |
| Deferred Long Term Asset Charges | - | - | - |
| Total Assets | 69,667,000 | 73,490,000 | 79,804,000 |
| Current Liabilities |
| Accounts Payable | 13,507,000 | 14,243,000 | 15,017,000 |
| Short/Current Long Term Debt | 4,071,000 | 6,892,000 | 5,485,000 |
| Other Current Liabilities | - | - | - |
| Total Current Liabilities | 17,578,000 | 21,135,000 | 20,502,000 |
| Long Term Debt | 29,213,000 | 30,053,000 | 33,796,000 |
| Other Liabilities | 5,887,000 | 6,669,000 | 11,283,000 |
| Deferred Long Term Liability Charges | 4,959,000 | 4,434,000 | 3,242,000 |
| Minority Interest | 107,000 | 104,000 | 92,000 |
| Negative Goodwill | - | - | - |
| Total Liabilities | 57,744,000 | 62,395,000 | 68,915,000 |
| Stockholders' Equity |
| Misc. Stocks Options Warrants | -145,000 | -151,000 | -156,000 |
| Redeemable Preferred Stock | - | - | - |
| Preferred Stock | - | - | - |
| Common Stock | 24,000 | 24,000 | 24,000 |
| Retained Earnings | 50,472,000 | 52,518,000 | 52,839,000 |
| Treasury Stock | -29,185,000 | -31,468,000 | -32,757,000 |
| Capital Surplus | 4,076,000 | 4,091,000 | 3,996,000 |
| Other Stockholder Equity | -13,319,000 | -13,919,000 | -13,057,000 |
| Total Stockholder Equity | 12,068,000 | 11,246,000 | 11,045,000 |
| Net Tangible Assets | -15,190,000 | -16,617,000 | -17,537,000 |
| Cash Flow |
| All numbers in thousands |
| Period Ending | 12/30/17 | 12/31/16 | 12/26/15 |
| Net Income | 4,857,000 | 6,329,000 | 5,452,000 |
| Operating Activities, Cash Flows Provided By or Used In |
| Depreciation | 2,369,000 | 2,368,000 | 2,416,000 |
| Adjustments To Net Income | 3,545,000 | 950,000 | 2,089,000 |
| Changes In Accounts Receivables | -202,000 | -349,000 | -461,000 |
| Changes In Liabilities | -137,000 | 1,326,000 | 1,747,000 |
| Changes In Inventories | -168,000 | -75,000 | -244,000 |
| Changes In Other Operating Activities | -321,000 | 74,000 | -184,000 |
| Total Cash Flow From Operating Activities | 9,994,000 | 10,673,000 | 10,864,000 |
| Investing Activities, Cash Flows Provided By or Used In |
| Capital Expenditures | -2,969,000 | -3,040,000 | -2,758,000 |
| Investments | -1,910,000 | -4,301,000 | -400,000 |
| Other Cash flows from Investing Activities | 476,000 | 193,000 | -411,000 |
| Total Cash Flows From Investing Activities | -4,403,000 | -7,148,000 | -3,569,000 |
| Financing Activities, Cash Flows Provided By or Used In |
| Dividends Paid | -4,472,000 | -4,227,000 | -4,040,000 |
| Sale Purchase of Stock | -1,543,000 | -2,542,000 | -4,501,000 |
| Net Borrowings | 2,050,000 | 3,746,000 | 4,632,000 |
| Other Cash Flows from Financing Activities | -221,000 | -188,000 | -203,000 |
| Total Cash Flows From Financing Activities | -4,186,000 | -3,211,000 | -4,112,000 |
| Effect Of Exchange Rate Changes | 47,000 | -252,000 | -221,000 |
| Change In Cash and Cash Equivalents | 1,452,000 | 62,000 | 2,962,000 |
| Figure 1 | | | | | | | Liabilities and equity | | 2016 | 2017 |
| MicroDrive’s Most Recent Financial Statements (Thousand, Except for Per Share Data) | | | | | | | Accounts Payable | | $ 14,243,000 | $ 15,017,000 |
| INCOME STATEMENTS | | | BALANCE SHEETS | | | | Short/Current Long Term Debt | | 6,892,000 | 5,485,000 |
| | 2016 | 2017 | Assets | | 2016 | 2017 | Other Current Liabilities | | - | - |
| Net sales | $ 62,799,000 | $ 63,525,000 | Cash And Cash Equivalents | | $ 9,158,000 | $ 10,610,000 | Total Current Liabilities | | 21,135,000 | 20,502,000 |
| COGS (excl. depr.) | 28,209,000 | 28,785,000 | Short Term Investments | | 6,967,000 | 8,900,000 | Long Term Debt | | 30,053,000 | 33,796,000 |
| Depreciation | 2,368,000 | 2,369,000 | Net Receivables | | 6,694,000 | 7,024,000 | Other Liabilities | | 6,669,000 | 11,283,000 |
| Other operating expenses | - | - | Inventory | | 2,723,000 | 2,947,000 | Deferred Long Term Liability Charges | | 4,434,000 | 3,242,000 |
| EBIT | $ 32,222,000 | $ 32,371,000 | Other Current Assets | | 908,000 | 1,546,000 | Minority Interest | | 104,000 | 92,000 |
| Interest expense | 1,342,000 | 1,151,000 | Total Current Assets | | 26,450,000 | 31,027,000 | Negative Goodwill | | - | - |
| Pre-tax earnings | $ 30,880,000 | $ 31,220,000 | Long Term Investments | | 1,950,000 | 2,042,000 | Total Liabilities | | 62,395,000 | 68,915,000 |
| Taxes | (7,849,073) | 15,262,100 | Property Plant and Equipment | | 16,591,000 | 17,240,000 | Stockholders' Equity |
| NI before pref. div. | $ 38,729,073 | $ 15,957,900 | Goodwill | | 14,430,000 | 14,744,000 | Misc. Stocks Options Warrants | | (151,000) | (156,000) |
| Preferred div. | - | - | Intangible Assets | | 13,433,000 | 13,838,000 | Redeemable Preferred Stock | | - | - |
| Net income | $ 38,729,073 | $ 15,957,900 | Accumulated Amortization | | - | - | Preferred Stock | | - | - |
| | | | Other Assets | | 636,000 | 913,000 | Common Stock | | 24,000 | 24,000 |
| Other Data | | | Deferred Long Term Asset Charges | | - | - | Retained Earnings | | 52,518,000 | 52,839,000 |
| Common dividends | $0 | $0 | Total Assets | | 73,490,000 | 79,804,000 | Treasury Stock | | (31,468,000) | (32,757,000) |
| Addition to RE | $52,518,000 | $50,472,000 | | | | | Capital Surplus | | 4,091,000 | 3,996,000 |
| Tax rate | -25% | 49% | | | | | Other Stockholder Equity | | (13,919,000) | (13,057,000) |
| Shares of common stock | 4,000,000 | 4,000,000 | | | | | Total Stockholder Equity | | 11,246,000 | 11,045,000 |
| Earnings per share | $9.68 | $3.99 | | | | | Net Tangible Assets | | (16,617,000) | (17,537,000) |
| Dividends per share | $0.00 | $0.00 |
| Price per share | $5.67 | $6.89 |
| Figure 2 |
| Pepsi's Forecast: Inputs for the Selected Scenario |
| Status Quo | KO | Pepsi Actual | | Pepsi |
| Inputs | Actual | Actual | | Forecast |
| 1. Operating Ratios | 2017 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| Sales growth rate | 5% | -1% | 1% | 8% | 6% | 7% | 5% | 5% |
| COGS (excl. depr.) / Sales | 76% | 223% | 221% | 200% | 178% | 178% | 178% | 178% |
| Depreciation / Net PP&E | 9% | 14% | 14% | 35% | 35% | 35% | 35% | 35% |
| Other op. exp. / Sales | 10% | 0% | 0% | 18% | 18% | 18% | 19% | 20% |
| Cash / Sales | 1% | 15% | 17% | 6% | 6% | 7% | 7% | 7% | | | Actual Historical Financing |
| Acc. rec. / Sales | 8% | 11% | 11% | 10% | 8% | 8% | 8% | 8% | | | | | | 2016 | 2017 |
| Inventory / Sales | 15% | 4% | 5% | 20% | 5% | 4% | 4% | 4% | | | | | Long-term debt | $30,053,000 | $33,796,000 |
| Net PP&E / Sales | 33% | 26% | 27% | 40% | 55% | 60% | 60% | 60% | | | | | Short-term debt | $6,892,000 | $5,485,000 |
| Acc. pay. / Sales | 4% | 23% | 24% | 20% | 20% | 23% | 23% | 23% | | | | | Preferred stock | $0 | $0 |
| Accruals / Sales | 7% | 6% | 6% | 6% | 6% | 6% | 6% | 5% | | | | | Market value of equity = (Price x # shares) | $0 | $0 |
| Tax rate | 40% | -25% | 49% | 9% | 12% | 13% | 13% | 13% | | | | | Total | $36,945,000 | $39,281,000 |
| 2. Capital Structure | Actual Market Weights | | | Target Market Weights |
| % Long-term debt | 22% | 48% | 49% | 50% | 50% | 44% | 55% | 57% | See the box to the right for calculations of the actual capital structures, based on market values, for the past two years. | | | | Percent long-term debt | 49% | 54% |
| % Short-term debt | 3% | 11% | 8% | 8% | 8% | 6% | 7% | 9% | | | | | Percent short-term debt | 8% | 8% |
| % Preferred stock | 0% | 0% | 0% | 0% | 0% | 0% | 2% | 3% | | | | | Percent preferred stock | 0% | 0% |
| % Common stock | 75% | 100% | 100% | 80% | 80% | 80% | 5% | 5% | | | | | Percent market value of equity | 0% | 0% |
| 3. Costs of Capital | | | | Forecast | | | | | | | | | Total | 57% | 62% |
| Rate on LT debt | | | | 9.0% | 9% | 9% | 9% | 9% |
| Rate on ST debt | | | | 10.0% | 10% | 10% | 10% | 10% |
| Rate on preferred stock (ignoring flotation costs) | | | | 8.0% | 8% | 8% | 8% | 8% |
| Cost of equity | | | | 13.58% | 14% | 14% | 14% | 14% |
| 4. Target Dividend Policy | | Actual |
| Growth rate of dividends | | 0% | 0.0% | 0% | 0% | 0% | 0% | 0% |
| Figure 3 |
| Pepsi's Forecast of Operations for the Selected Scenario (Thousands of Dollars, Except for Per Share Data) |
| INCOME STATEMENTS | KO | Pepsi | | Pepsi |
| Panel A: Inputs | Actual | Actual | | Forecast |
| A1. Operating Ratios | 2017 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| Sales growth rate | 5% | -7% | 7% | 8% | 6% | 7% | 5% | 5% |
| COGS (excl. depr.) / Sales | 76% | 211% | 182% | 200% | 178% | 178% | 178% | 178% |
| Depreciation / Net PP&E | 9% | 33% | 41% | 35% | 35% | 35% | 35% | 35% |
| Other op. exp. / Sales | 10% | 22% | 15% | 18% | 18% | 18% | 19% | 19% |
| Cash / Sales | 1% | 8% | 8% | 6% | 6% | 7% | 7% | 7% |
| Acc. rec. / Sales | 8% | 3% | 12% | 10% | 8% | 8% | 8% | 8% |
| Inventory / Sales | 15% | 4% | 3% | 20% | 5% | 4% | 4% | 4% |
| Net PP&E / Sales | 33% | 63% | 56% | 40% | 55% | 60% | 60% | 60% |
| Acc. pay. / Sales | 4% | 23% | 21% | 20% | 20% | 23% | 23% | 23% |
| Accruals / Sales | 7% | 6% | 6% | 6% | 6% | 6% | 6% | 6% |
| Tax rate | 40% | 8% | 15% | 9% | 12% | 13% | 13% | 13% |
| Panel B: Results | | | Actual | Forecast |
| B1. Sales Revenues | | | 2017 | 2018 | 2019 | 2020 | 2021 | 0 |
| Net sales | | | $63,525,000 | $68,607,000 | $72,723,420 | $77,814,059 | $81,704,762 | $81,704,762 |
| B2. Operating Assets and Operating Liabilities |
| Cash | | | $10,610,000 | $4,116,420 | $4,363,405 | $5,446,984 | $5,719,333 | $0 |
| Accounts receivable | | | $7,024,000 | $7,726,400 | $8,344,512 | $9,012,073 | $9,733,039 | $0 |
| Inventories | | | $2,947,000 | 13721400 | 3636171 | 3112562 | 3268190 | $0 |
| Net PP&E | | | $17,240,000 | $27,442,800 | $39,997,881 | $46,688,436 | $49,022,857 | $0 |
| Accounts payable | | | $15,017,000 | $13,721,400 | $14,544,684 | $17,897,234 | $18,792,095 | $0 |
| Accruals | | | $2,319,863 | $2,282,244 | $2,339,425 | $2,474,740 | $2,647,971 | $0 |
| B3. Operating Income |
| COGS (excl. depr.) | | | $18,969,000 | $137,214,000 | $129,447,688 | $138,509,026 | $145,434,477 | $0 |
| Depreciation | | | $7,848,000 | $24,012,450 | $25,453,197 | $27,234,921 | $28,596,667 | $0 |
| Other operating expenses | | | $5,349,000 | $12,349,260 | $13,090,216 | $14,006,531 | $15,523,905 | $0 |
| EBIT | | | $2,366,000 | $2,507,960 | $2,658,438 | $2,844,528 | $3,043,645 | $81,704,762 |
| Net operating profit after taxes | | | −$12,896,100 | $2,282,244 | $2,339,425 | $2,474,740 | $2,647,971 | $81,704,762 |
| B4. Free Cash Flows |
| Net operating working capital | | | $3,244,137 | $9,560,576 | −$540,021 | −$2,800,354 | −$2,719,504 | $0 |
| Total operating capital | | | $20,484,137 | $37,003,376 | $39,457,860 | $43,888,082 | $46,303,353 | $0 |
| FCF = NOPAT – Δ op capital | | | −$33,380,236 | −$14,236,996 | −$115,059 | −$1,955,482 | $232,700 | $128,008,116 |
| B5. Estimated Intrinsic Value |
| Target WACC | | | | 15.7% | 15.7% | 15.7% | 15.7% | 0.0% |
| Return on invested capital | | | -63.0% | 11.7% | 11.7% | 11.7% | 11.7% | ERROR:#DIV/0! |
| Growth in FCF | | | | | -99% | 1599.6% | -111.9% | 54910.0% |
| Horizon Value: | | | | | | Value of operations | 101745634.55 | $101,745,635 |
| | | | | | | + ST investments | 8900000.00 | $0 |
| | = | −$128,241,239 | | | | Estimated total intrinsic value | 110645634.55 | $101,745,635 |
| | | | | | | − All debt | 45079000.00 | $0 |
| Value of Operations: | | | | | | − Preferred stock | 0.00 | $0 |
| | Present value of HV | $53,495,882 | | | | Estimated intrinsic value of equity | 65566634.55 | $101,745,635 |
| | + Present value of FCF | $48,249,753 | | | | ÷ Number of shares | 4000000.00 | $0 |
| | Value of operations = | $101,745,635 | | | | Estimated intrinsic stock price = | 16.39 | ERROR:#DIV/0! |
Yangqiren
430project.xlsx
