Eskimo Pie Case SOLUTION

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Sheet1

Exhibit 1 Historical Financial Information Year Ended December 31,
1989 1990
Year Ended December 31, Exhibit 1 Historical Financial Information
1987 1988 1989 1990 Operating activities: Exhibit 6 Projected Income Statements for Eskimo Pie by Goldman Sachsa
Net income $ 2,422 $ 2,526 Year Ended December 31,
Income Statement Data (in thousands): Depreciation 1,006 1,352 1987 1988 1989 1990 Year Ended December 31,
Net salesa $ 30,769 $ 36,695 $ 46,709 $ 47,198 Amortization 175 118 1991 1992 1993
Cost of goods sold 21,650 25,635 31,957 31,780 Deferred income taxes 250 (58) Income Statement Data (in thousands):
Gross profita 9,119 11,060 14,752 15,418 Pension liability and other (154) (156) Net salesa $ 30,769 $ 36,695 $ 46,709 $ 47,198 Net Sales $56,655 $59,228 $59,961
Advertising and sales promotions 4,742 4,241 5,030 5,130 Decrease (increase) in receivables 1,212 (734) Cost of goods sold 21,650 25,635 31,957 31,780 Operating expenses 52,610 54,755 55,337
General and administrative 6,068 5,403 6,394 7,063 Decrease (increase) in inventories and Gross profita 9,119 11,060 14,752 15,418 Operating income (EBIT) 4,045 4,473 4,624
Operating income (loss) (1,691) 1,416 3,328 3,225 prepaid expenses (524) (51) Advertising and sales promotions 4,742 4,241 5,030 5,130 Interest income 828 890 1,058
Interest income 308 550 801 1,004 Increase (decrease) in payables to parent 2,054 (621) General and administrative 6,068 5,403 6,394 7,063 Interest expense 52.5 38.5 24.5
Interest expense (88) (107) (88) (67) Increase (decrease) in accounts payable and Operating income (loss) (1,691) 1,416 3,328 3,225 Pretax income 4,821 5,324 5,657
Other income (expense)-netb 1,738 (77) (108) (20) accrued expenses 143 3,006 Interest income 308 550 801 1,004 Income taxes 1,928 2,130 2,263
Income taxes 96 729 1,511 1,616 Net cash provided by operating activities 6,595 5,382 Interest expense (88) (107) (88) (67) Tax rate 40.00% 40.00% 40.00%
Net income $ 171 $ 1,053 $ 2,422 $ 2,526 Other income (expense)-netb 1,738 (77) (108) (20) Net income $2,893 $3,195 $3,394
Investing activities Income taxes 96 729 1,511 1,616 Margin 5.10% 5.40% 5.70%
Balance Sheet Data (in thousands): Capital expendituresa (2,358) (1,311) Net income $ 171 $ 1,053 $ 2,422 $ 2,526 Earning per share $0.87 $0.96 $1.03
Cash $ 5,550 $ 8,109 $ 10,723 $ 13,191 Other (121) (101) Average shares outstanding 3,316.00 3,316.00 3,316.00
Working capital 9,342 11,107 10,830 11,735 Net cash used in investing activities (2,479) (1,412) Balance Sheet Data (in thousands):
Total assets 20,857 23,006 26,159 29,518 Cash $ 5,550 $ 8,109 $ 10,723 $ 13,191
Long-term debt 1,269 1,094 919 744 Financing activities Working capital 9,342 11,107 10,830 11,735
Stockholders' equity 16,162 17,215 18,215 19,496 Cash dividends (1,327) (1,327) Total assets 20,857 23,006 26,159 29,518
Principal payments on long-term debt (175) (175) Long-term debt 1,269 1,094 919 744
Per Share Data: Net cash used in financing activities (1,502) (1,502) Stockholders' equity 16,162 17,215 18,215 19,496
Weighted average number Increase (decrease) in cash and cash equivalents 2,614 2,468
of common shares outstanding 3,316 3,316 3,316 3,316 Cash and cash equivalents at beginning of year 8,109 10,723 Per Share Data:
Net income per share $ 0.05 $ 0.32 $ 0.73 $ 0.76 Cash and cash equivalents at end of year $ 10,723 $ 13,191 Weighted average number
Cash dividend per share - - $ 0.40 $ 0.40 of common shares outstanding 3,316 3,316 3,316 3,316
Net income per share $ 0.05 $ 0.32 $ 0.73 $ 0.76
Cash dividend per share - - $ 0.40 $ 0.40
bIncludes the gain on sale of building of approximately $1,700,000 in 1987.
Exhibit 6 Projected Income Statements for Eskimo Pie by Goldman Sachsa bIncludes the gain on sale of building of approximately $1,700,000 in 1987.
Exhibit 7 Hypothetical Proceeds from an Initial Public Offering
Year Ended December 31,
1991 1992 1993 Total for firm:
Offer Price $ 14.00 $ 16.00
Net Sales $56,655 $59,228 $59,961 Special dividend 4.52 4.52
Operating expenses 52,610 54,755 55,337 Total per share $ 18.52 $ 20.52
Operating income (EBIT) 4,045 4,473 4,624
Interest income 828 890 1,058 Shares outstandinga 3,316 3,316
Interest expense 52.5 38.5 24.5 Total Proceedsa $ 61,412 $ 68,044
Pretax income 4,821 5,324 5,657
Income taxes 1,928 2,130 2,263 1991 Net Incomea $ 3,749 $ 3,749
Tax rate 40.00% 40.00% 40.00% Implied P/E Multiple 12.38 14.15
Net income $2,893 $3,195 $3,394
Margin 5.10% 5.40% 5.70% Reynolds' proceeds:
Earning per share $0.87 $0.96 $1.03 Shares owneda 2,789 2,789
Average shares outstanding 3,316.00 3,316.00 3,316.00 Per share proceeds:
Stock price 14.00 16.00
Special dividend 4.52 4.52
Total per share 18.52 20.52
Total for holdingsa 51, 645 57,222

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