Calculate the impact on cash flow and income before tax of a changing

Pro Forma Financial Statements

Westwood Plastics, Inc.
Pro Forma Income Statements in $CDN
(CAD$000's, EUR 1.00 = CAD 1.3536)
For the Year Ended February 28, 2007
	EUR		$CDN
	Component		Component	Total
Revenue	$ - 0		$ 160,000	$ 160,000
COGS	45,760		67,935	113,695
Gross Margin	$ (45,760)		$ 92,065	$ 46,305
License Fee	4,061			4,061
Depreciation			9,640	9,640
Selling and Admin			19,232	19,232
EBIT	$ (49,821)		$ 63,193	$ 13,372
Interest	123		1,191	1,314
EBT	$ (49,944)		$ 62,002	$ 12,058
Tax (40%)			4,997	4,997
Net Income (EAT)	$ (49,944)		$ 57,005	$ 7,061
Pro Forma Balance Sheet in $CDN
(CAD$000's, EUR 1.00 = CAD 1.3536)
	EUR		$CDN
	Component		Component	Total
Cash	$ - 0		$ 678	$ 678
A/R			17,280	17,280
Inventory			11,688	11,688
Net Fixed Assets			30,065	30,065
Total	$ - 0		$ 59,711	$ 59,711
A/P	$ - 0		$ 16,160	$ 16,160
Debt	1,353		13,233	14,586
Equity			28,965	28,965
Total	$ 1,353		$ 58,358	$ 59,711
Westwood Plastics, Inc.
Impact on Profitability and Cash Flow of Changing Exchange Rates
Budgeted cash outflow	$ 49,944
Euros payable	36897.16312
@ $1.3536/€
Exchange Rate ($/€)	1.3136	1.3336	1.3536	1.3736	1.3936	1.4136	1.4336
Budgeted cash outflow	$ 49,944	$ 49,944	$ 49,944	$ 49,944	$ 49,944	$ 49,944	$ 49,944
Actual outflow
Change
Forecasted EBT	xxxxxxxxxx	xxxxxxxxxx	$ 12,058	xxxxxxxxxx	xxxxxxxxxx	xxxxxxxxxx	xxxxxxxxxx
Forecasted EAT	xxxxxxxxxx	xxxxxxxxxx	$ 7,061	xxxxxxxxxx	xxxxxxxxxx	xxxxxxxxxx	xxxxxxxxxx
EBT with changed $/€
EAT with changed $/€

Unhedged Cash Flow Changes

Change in cash outflow 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336

Exchange Rate (C$ per €)

Change in Cash Outflows (000s)

Unhedged Cash Flows at Various Exchange Rates

Actual outflow 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336

Exchange Rate (C$ per €)

Actual Canadian $ Payable (000s)

Options

Westwood Plastics
Financial Impact of Using Call Options Versus Remaining Unhedged
Budgeted cash outflow	$ 49,944
Euros payable	36897.16312	@ $1.3536/€
Call option strike price	1.3536	$/€
Average call premium	2.034%	(% of Cdn $ strike price)
Unhedged Cash Impact
Spot price at expiration ($/€)	1.3136	1.3336	1.3536	1.3736	1.3936	1.4136	1.4336
Actual cash flow if unhedged	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0
Unhedged gain (loss) vs budget	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0
Cash Impact With Purchasing Call Options
Price paid per euro ($/€)
Price with call premium
Cash outflow w/call option
Gain (loss) versus budget
Gain (loss) vs unhedged
			At-the-Money European Option
			Strike Price = $1.3536/€
			Percent of Strike Price
		Expiration	Put	Call
		Date	Premium	Premium
		03/31/06	1.14	1.25
		04/30/06	1.44	1.52
		05/31/06	1.65	1.74
		06/30/06	1.73	1.82
		07/31/06	1.82	1.90
		08/31/06	1.90	1.99
		09/30/06	1.98	2.09
		10/31/06	2.06	2.20
		11/30/06	2.14	2.31
		12/31/06	2.24	2.42
		01/31/07	2.35	2.53
		02/28/07	2.45	2.64
		Average	1.91	2.03

Cash Flow Change Using a Call to Hedge

Unhedged gain (loss) vs budget 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336 0 0 0 0 0 0 0 Hedged gain (loss) vs budget Hedge gain (loss) vs unhedged

Exchange Rate (Cdn $ per €)

Cash Gain or Loss (000s)

Cash Outflows : Unhedged vs Hedged With Call

Actual cash flow if unhedged 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336 0 0 0 0 0 0 0 Cash outflow w/call option 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336

Exchange Rate (Cdn $ per €)

Actual Cash Outflow (000s)

Forward Contracts

Westwood Plastics
Financial Impact of Using Forward Contract Hedges Versus Remaining Unhedged
Budgeted cash outflow	$ 49,944
Euros payable	36897.16312	@ $1.3536/€
Average forward rate	1.3629	$/€
Unhedged Cash Impact
Spot price at expiration ($/€)	1.3136	1.3336	1.3536	1.3736	1.3936	1.4136	1.4336
Actual cash flow if unhedged	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0
Unhedged gain (loss) vs budget	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0	$ - 0
Cash Impact With Purchasing Forward Contracts
Price paid per euro ($/€)
Cash outflow w/forward hedge
Gain (loss) versus budget
Gain (loss) vs unhedged
			Forward Contract Rates
			Bid	Offer
		1 month	1.3553	1.3559
		3 months	1.3580	1.3597
		6 months	1.3626	1.3641
		12 months	1.3697	1.3717
		Average	1.3614	1.3629
		Westwood expects to pay the offer rate.

Cash Flow Change Using a Forward Hedge

Unhedged gain (loss) vs budget 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336 0 0 0 0 0 0 0 Hedged gain (loss) vs budget Hedge gain (loss) vs unhedged

Exchange Rate (Cdn $ per €)

Cash Gain or Loss (000s)

Cash Outflow: Unhedged vs Forward Contract Hedge

Actual cash flow if unhedged 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336 0 0 0 0 0 0 0 Cash outflow w/forward hedge 1.3136000000000001 1.3335999999999999 1.3535999999999999 1.3735999999999999 1.3935999999999999 1.4136 1.4336

Exchange Rate (Cdn $ per €)

Actual Cash Outflow (000s)

Sheet3