tutor_vickie

profile9qh0o1k52
uv0291-xls-eng_1.xls
Home>Business & Finance homework help>tutor_vickie

Intro

Brahma.xls
Rev. 4.012 December 22, 2004
This model supports STUDENT preparation of the case study, "Brazilian Beer Merger Negotiations: Companhia Cervejaria Brahma S.A." (UVA-F-1418). This is a working model in which the student may insert alternative forecast assumptions in order to test the sensitivity of results. Note that the model contains an intentional circularity between the income statement and balance sheets for each firm--to resolve this circularity, please set the model to "iterate" 100 times or so, by clicking on tools/options/calculation and checking the iteration box.
Copyright 2003 by Robert F. Bruner and the Trustees of the University of Virginia Darden School Foundation.
Contents
Exh. 5: Analysis of voting control by major investors, before and after the transaction.
Exh. 6: Antarctica and Brahma: Comparative Performance
Exh. 8: Stock price information for Antarctica and Brahma.
Exh. 9: Information on peer companies.
Exh. 10: Information on comparable transactions.
Exhs. 11 and 12: Financial forecast for Antarctica and forecast of free cash flows.
Exhs. 13 and 13: Financial forecast for Brahma and forecast of free cash flows.

Exh. 5

Exhibit 5: Analysis of voting control by major investors, before and after the transaction.
Before Transaction % of Total
Share Ownership in Antarctica
FAHZ 10,572,000 88.1%
Anheuser-Busch 600,000 5.0%
Other investors 828,000 6.9%
Total Shares 12,000,000 100.0%
Share Ownership in Brahma
Garantia 3,522,876 51.0%
Telles 462,809 6.7%
Other investors 2,921,915 42.3%
Total Shares 6,907,600 100.0%

Exh. 6

Exhibit 6: Antarctica and Brahma: Comparative Performance
Antarctica Brahma
1998, Financial Performance per Hectolitre
Net Sales R$ 33.95 R$ 46.98
Cost of Goods Sold -22.85 -26.79
Gross Profit 11.1 20.19
Sales Expenses -4.59 -10.36
General and Administrative Expenses -3.29 -4.85
Pre-tax Income 3.22 4.98
Taxes -0.40 -0.56
Net Income R$ 2.82 R$ 4.42

Exh. 8

Exhibit 8
Recent Stock Price Information
Antarctica and Brahma
Antarctica Brahma Ratio of Antarctica to Brahma
(Reais per share)
May-97 120.0 781.0 0.1536
Jun-97 110.0 822.0 0.1338
Jul-97 100.0 820.0 0.1220
Aug-97 97.0 760.0 0.1276
Sep-97 96.0 805.0 0.1193
Oct-97 96.0 742.0 0.1294
Nov-97 93.0 690.0 0.1348
Dec-97 70.0 695.0 0.1007
Jan-98 70.0 740.0 0.0946
Feb-98 85.0 760.0 0.1118
Mar-98 80.0 800.0 0.1000
Apr-98 74.8 680.0 0.1100
May-98 70.0 670.0 0.1045
Jun-98 60.0 640.0 0.0938
Jul-98 61.5 670.0 0.0918
Aug-98 50.0 550.0 0.0909
Sep-98 38.3 460.0 0.0832
Oct-98 32.0 450.0 0.0711
Nov-98 28.0 520.0 0.0538
Dec-98 28.0 530.0 0.0528
Jan-99 25.5 604.0 0.0422
Feb-99 22.5 605.0 0.0372
Mar-99 28.0 630.0 0.0444
Apr-99 35.7 610.0 0.0585
May-99 39.6 637.5 0.0621
High 120.0 855.0 0.1536
Low 22.0 400.0 0.0372
Average 63.3 657.2 0.0954
Adjusted Beta 0.42 0.49
Volatility 84.6% 62.6%
Source of data: Datastream

Exh. 9

Exhibit 9: Information on Peer Companies
Price May 99 Mkt Cap (In $ MM) 1998 Rev (In $ MM) 1998 Prof (In $ MM) 1998 EPS 1999E EPS 2000E EPS 1998A P/E 1999E P/E 2000E P/E 1999 E CF/Shr 1999E P/CF Shares Outsdg.
Beverage (Alcoholic) Industry
Anheuser Busch $ 69.0 $ 32,839 $ 11,246 $ 1,233 2.53 2.85 3.10 27.3 24.2 22.3 4.55 15.2 475.9
Beringer Wine Estates Holdings 40.0 780 318 31 1.63 1.95 2.25 24.5 20.5 17.8 2.60 15.4 19.5
Brown-Forman Corp. 'B' 71.0 4,864 1,775 201 2.93 3.20 3.50 24.2 22.2 20.3 3.95 18.0 68.5
Canandaigua Brands 'A' 52.0 931 1,497 64 3.38 4.20 4.80 15.4 12.4 10.8 7.85 6.6 17.9
Coors (Adolph) Co. 'B' 53.0 1,958 1,900 79 2.12 2.35 2.60 25.0 22.6 20.4 5.70 9.3 36.9
Molson Cos. Ltd. 'A' 22.0 1,297 2,150 48 0.80 0.95 1.10 27.5 23.2 20.0 2.80 7.9 58.9
Mondavi (Robt.) Corp. 34.0 525 325 29 1.83 2.15 2.45 18.6 15.8 13.9 3.20 10.6 15.4
Seagram Co. 59.0 23,542 9,714 92 0.26 0.55 0.15 226.9 107.3 393.3 1.05 56.2 399.0
Average (excluding outlier, Seagram) 23.2 20.1 17.9 4.4 11.8
Beverage (Softdrink) Industry
Cadbury Schweppes (ADR) 56.0 14,210 6,816 513 1.99 2.30 2.50 28.1 24.3 22.4 3.45 16.2 253.75*
Coca-Cola Bottling Co. 54.0 452 929 15 1.78 2.00 2.40 30.3 27.0 22.5 8.90 6.1 8.4
Coca-Cola Co. 71.0 175,086 18,813 3,533 1.42 1.43 1.63 50.0 49.7 43.6 1.75 40.6 2,466.0
Coca-Cola Enterprises 35.0 14,051 13,414 113 0.28 0.30 0.35 125.0 116.7 100.0 3.07 11.4 401.5
Cott Corporation 4.1 264 959 10 0.16 0.05 0.10 25.6 82.0 41.0 0.75 5.5 64.5
Pepsi Bottling Group, Inc. 21.0 3,255 7,041 1 0.02 0.35 0.40 1,050.0 60.0 52.5 3.70 5.7 155.0
PepsiCo, Inc. 37.0 54,427 22,348 1,760 1.16 1.20 1.35 31.9 30.8 27.4 1.80 20.6 1,471.0
Tiarc Cos. 'A' 20.0 586 815 11 0.36 0.75 0.85 55.6 26.7 23.5 2.90 6.9 29.3
Whitman Corp. 16.0 1,616 1,635 63 0.61 0.70 0.80 26.2 22.9 20.0 1.50 10.7 101.0
Average (excluding two high outliers) 35.4 37.6 28.6 3.0 15.2
*No. of ADRS
Source: Value Line Investment Survey
Price May 99 Mkt Cap (In $ MM) 1998 Rev (In $ MM) 1998 Prof (In $ MM) 1998 EPS 1999E EPS 2000E EPS 1998A P/E 1999E P/E 2000E P/E 1999 E CE/Shr* 1999E P/CE Shares Out.
Latin American Brewers
Modelo $2.69 $8,743 2,061.0 237 $0.07 $0.07 $0.08 36.9 36.5 31.9 0.13 21 3,250.2
Femsa 35.94 3,839 1,284.7 65 1.29 1.94 2.32 27.8 18.5 15.5 3.82 9.4 106.8
Brahma *** 9.38 3,224 2,720.0 288 0.84 0.26 0.42 11.2 36.1 22.3 1.20 7.8 343.7
Quinsa 11.00 1,173 855.0 95 0.89 0.75 0.89 12.4 14.7 12.4 1.43 7.7 106.6
Compania Cervecarias Unidad (CCU) 23.63 1,465 591.6 83 1.34 1.36 1.47 17.6 17.4 16.1 NA NA 62.0
Average for Latin American Brewers 23.7 21.8 19.0 1.8 12.7
*Cash earnings = Net income plus Depreciation and Amortization
** Values in this table are denominated in US dollars.
*** Shares outstanding for Brahma refer to American Depositary Receipts, traded in New York.
Source: Morgan Stanley Dean Witter research report on Brahma, May 6, 1999.
Modelo is the largest producer of beer in Mexico. The most famous of its beer brands is Corona.
Femsa is the largest beverage company in Mexico. It produces several beer brands (including Dos Equis) and is also the bottler for Coca-Cola in Latin America. It also owns the largest chain of convenience stores in Latin America (OXXO).
Quinsa controls beverage and malting businesses in five Latin American countries - Argentina, Bolivia, Paraguay, Uruguay and Chile. The company also has bottling and franchise agreements with PepsiCo, and accounts for 100% of PepsiCo product sales in Uruguay and more than 80% of PepsiCo product sales in Argentina.
CCU is the leading brewer in Chile, and holds the third place in the Argentinian beer market. In the non-alcoholic beverages sector, CCU is Chile’s second-largest bottler of carbonated beverages and the leader in the mineral water market. It has winemaking operations in Argentina and in Chile.
Company descriptions taken from respective websites.

Exh. 10

Recent Beverage Company Deals
(01/01/1998 to 03/31/1999)
Exhibit 10: Information on Comparable Transactions
Date Announced Target Name Acquiror Name Value of Transaction ($mil) Offering Price Earnings Ratio Premium 1 week prior to ann. % of Shares Acq.
03/03/98 FEMSA Valores Industriales SA 1,886.7 60.1 109.5 47.6
01/14/99 Sanyo Coca-Cola Bottling Co Kita Kyushu Coca-Cola Bottling 614.8 19.8 42.9 100
04/24/98 Lion Nathan Ltd Kirin Brewery Co Ltd 495.3 19.2 9.5 30
11/26/98 Marston Thompson & Evershed Wolverhampton & Dudley 465.2 12.5 63.7 100
11/03/98 Matthew Clark PLC Canandaigua Ltd 355.8 8.5 40.1 100
09/18/98 Coca-Cola Beverages PLC Coca-Cola Co 110.7 39.1 17.7 3.4
11/02/98 AquaPenn Spring Water Co Inc Danone Group 110.3 61.6 100.0 100
08/25/98 San Miguel Corp{SMC} Exchange Capital Corp 69.7 19.8 27.0 NA
05/22/98 Pete's Brewing Co Gambrinus Co 69.4 nm 39.7 100
02/15/99 Australian Premium Wines Ltd Cranswick Estate Wines Ltd 21.5 15.3 9.7 100
03/31/98 Fresh Juice Co Inc Saratoga Beverage Group Inc 18.9 47.9 (2.5) 100
08/26/98 Lion Brewery Inc Malt Acquiring Inc 18.3 8.8 17.5 100
NA = Not available.
Source: SDC Platinum
Notes:
Lion Nathan is an Australian based alcoholic beverages company with operations in Australia, New Zealand and China. It brews and distributes around 1 billion litres of beer annually.
Marston Thompson & Evershed is a UK-based brewery.
Matthew Clark plc is a UK-based producer of many brands in the categories of light table wine, cider, fortified wines, wine-style drinks, flavoured alcoholic beverages (FABs) and bottled waters.
San Miguel Corp. is a Philippine based producer of beer and spirits, and a bottler for Coca-Cola.

Exhs. 11 and 12

Exhibits 11 and 12: Antarctica's Financial Forecast and Forecast of Free Cash Flows
Assumptions Note: "#DIV/0!" likely indicates the needs to enter data somewhere in the model.
Projected
Operating Assumptions 1997 1998 1999 2000 2001 2002 2003 2004
Unit growth in sales of beer 4.0% 6.0% 6.0% 6.0% 6.0%
Unit growth in sales of soft drinks 1.7% 3.0% 3.0% 3.0% 3.0%
Forecasted inflation rate 5.5% 3.8% 3.8% 3.8% 3.8%
% Weight of beer in revenue 73.0% 73.0% 73.0% 73.0% 73.0%
% Weight of soft drinks in revenue 27.0% 27.0% 27.0% 27.0% 27.0%
Nominal Revenue Growth (weighted average) 1.8% 9.1% 9.2% 9.2% 9.2% 9.2%
COGS (Excl Depr) / Revenues 67.3% 61.7% 60.0% 59.0% 58.0% 58.0% 57.0%
SG&A / Revenues 28.8% 35.7% 34.0% 34.0% 34.0% 33.0% 33.0%
Licensing Exp (Income) / Revenues -9.4% -8.9% -8.9% -8.9% -8.9% -8.9% -8.9%
Effective Tax Rate 12.1% -3.3% 14.0% 14.0% 14.0% 14.0% 14.0%
Wgtd Average Shares Outstanding (millions) 12 12 12 12 12 12 12 12
Common Dividends payout % 0 0 0 45% 45% 45% 45% 45%
Common Dividends per Share $0.00 $1,883.33 $1,883.33 $1,883.33 $1,883.33 $1,883.33 $1,883.33 $1,883.33
Minimum Cash Balance 0.0 0.0 100.0 100.0 100.0 100.0 100.0 100.0
Operating Cash Balance/Sales 9% 21% 15% 15% 15% 15% 15%
Days in Receivables 85.9 89.9 89.9 89.9 89.9 89.9 89.9
Days in Inventory 83.4 77.8 77.8 77.8 77.8 77.8 77.8
Days in Payables 38.9 42.9 42.9 42.9 42.9 42.9 42.9
Other Current Assets / Revenues 7.0% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%
Other Current Liabilities / Revenues 18.7% 29.1% 29.1% 29.1% 29.1% 29.1% 29.1%
Capital Expenditures (excl Acquisitions) 0.0 0.0 140.0 110.0 110.0 110.0 110.0 105.0
Depreciation, Amortization, & Other Years x Declining Financing Assumptions Coupon
Existing Intangible Book Amortization 40 yrs 1.0 x Straight Debt 15.0%
Existing PPE Book Depreciation 20 yrs 1.0 x
Future CapEx Book Depreciation 20 yrs 1.0 x
Int. Rate on Excess Cash 4.0%
Use of Excess Cash Flow 1
(1=Build Cash; 2=Repay Debt)
Interest Rate on Revolver 15.0%
Income Statement
Projected
1997.0 1998 1999 2000 2001 2002 2003 2004
Revenues 0.0 $1,381.9 $1,406.5 $1,534.0 $1,674.9 $1,828.8 $1,996.8 $2,180.3
COGS (excluding Depreciation) 0.0 929.5 868.4 920.4 988.2 1,060.7 1,158.2 1,242.8
Selling, General, & Administrative 0.0 397.6 502.0 521.6 569.5 621.8 659.0 719.5
EBITDA 0.0 54.8 36.1 92.0 117.2 146.3 179.7 218.0
Depreciation 0.0 67.0 80.0 93.8 100.8 107.8 114.8 121.8
Licensing Expense (Income) 0.0 (130.0) (125.0) (136.3) (148.9) (162.5) (177.5) (193.8)
EBIT 0.0 117.8 81.1 134.6 165.3 201.1 242.4 290.0
Interest (Income) 0.0 (2.5) (8.3) (10.4) (9.6) (10.5) (11.5) (12.5) (8.5)
Interest Expense - Straight Debt 0.0 41.9 649.9 231.7 257.6 271.7 281.7 286.2 143.4
Pre-Tax Income 0.0 78.4 (560.5) (86.7) (82.6) (60.1) (27.8) 16.3
Income Taxes 0.0 9.5 18.3 (12.1) (11.6) (8.4) (3.9) 2.3
Net Income 0.0 68.9 (578.8) (74.5) (71.1) (51.7) (23.9) 14.1
Common dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.3
Net Income to Retained Earnings 0.0 68.9 (578.8) (74.5) (71.1) (51.7) (23.9) 7.7
Earnings per Share (R$/share): NM $5.75 ($48.23) ($6.21) ($5.92) ($4.31) ($1.99) $0.64
Balance Sheet
Projected
1997.0 1998 1999 2000 2001 2002 2003 2004
Cash and Equivalents 0.0 127.0 289.4 230.1 251.2 274.3 299.5 327.0 100.0 0.0
Accounts Receivable 0.0 325.2 346.6 378.0 412.7 450.7 492.1 537.3
Inventory 0.0 212.4 185.2 196.3 210.8 226.2 247.0 265.0
Other Current Assets 0.0 97.0 45.0 49.1 53.6 58.5 63.9 69.8
Total Current Assets 0.0 761.6 866.2 853.5 928.3 1,009.7 1,102.5 1,199.1
Property , Plant, & Equipment 0.0 2,811.9 2,922.9 3,032.9 3,142.9 3,252.9 3,362.9 3,467.9
Accumulated Depreciation 0.0 1,137.2 1,187.2 1,281.0 1,381.8 1,489.6 1,604.3 1,726.1
Net Property, Plant, & Equipment 0.0 1,674.7 1,735.7 1,751.9 1,761.1 1,763.3 1,758.6 1,741.8
Other Long-Term Assets 0.0 965.7 965.7 965.7 965.7 965.7 965.7 965.7
Total Assets 0.0 3,402.0 3,567.6 3,571.1 3,655.2 3,738.8 3,826.7 3,906.6
Accounts Payable 0.0 99.0 102.1 108.2 116.2 124.7 136.2 146.1
Other Current Liabilities (excl. S/T Debt) 0.0 257.8 409.7 446.8 487.9 532.7 581.7 635.1
Total Current Liabilities 0.0 356.8 511.8 555.1 604.1 657.4 717.8 781.2
Debt (plug) 0.0 1,038.5 1,424.7 1,664.1 1,770.2 1,852.1 1,903.6 1,912.3 0.0
Other Long-Term Liabilities 0.0 85.4 84.0 84.0 84.0 84.0 84.0 84.0
Total Liabilities 0.0 1,480.7 2,020.5 2,303.1 2,458.2 2,593.5 2,705.4 2,777.5
Common Stock (Par + APIC+ Other Equity) 0.0 1,106.3 1,106.3 1,106.3 1,106.3 1,106.3 1,106.3 1,106.3 1106.3
Retained Earnings 0.0 815.0 236.2 161.7 90.6 38.9 15.0 22.8
Total Liabilities & Stockholders' Equity 0.0 3,402.0 3,363.0 3,571.1 3,655.2 3,738.8 3,826.7 3,906.6
Forecast of Free Cash Flows Projected
1998 1999 2000 2001 2002 2003 2004
Net Operating Profit After Tax 103.5 83.7 115.7 142.2 172.9 208.5 249.4
Add: Depreciation 67.0 80.0 93.8 100.8 107.8 114.8 121.8
(Increase) / Decrease in NWC (95.0) 112.8 (3.3) (4.7) (5.0) (7.2) (5.7)
Cash Flow from Operations 75.5 276.5 206.2 238.3 275.7 316.1 365.5
Less: Capital Expenditures 35.0 140.0 110.0 110.0 110.0 110.0 105.0
Free Cash Flow 40.5 136.5 96.2 128.3 165.7 206.1 260.5
Book Depreciation Schedule Projected
2000 2001 2002 2003 2004
On Existing PP&E 86.8 86.8 86.8 86.8 86.8
Capital Expenditures (2000-2004): Amount
2000 140.0 7.0 7.0 7.0 7.0 7.0
2001 140.0 7.0 7.0 7.0 7.0
2002 140.0 7.0 7.0 7.0
2003 140.0 7.0 7.0
2004 140.0 7.0
Total Book Depreciation 93.8 100.8 107.8 114.8 121.8
Summary Ratios Projected
1999 2000 2001 2002 2003 2004 2005
EBITDA / Revenues 4.0% 2.6% 6.0% 7.0% 8.0% 9.0% 10.0%
EBIT / Revenues 8.5% 5.8% 8.8% 9.9% 11.0% 12.1% 13.3%
Return on Revenues 5.0% -41.1% -4.9% -4.2% -2.8% -1.2% 0.6%
EBITDA / Interest Expense 1.31 x 0.06 x 0.40 x 0.46 x 0.54 x 0.64 x 0.76 x
EBIT / Interest Expense 2.81 x 0.12 x 0.58 x 0.64 x 0.74 x 0.86 x 1.01 x
Return on Average Equity 7.2% -35.5% -5.7% -5.8% -4.4% -2.1% 0.7%
Return on Average Assets 4.1% -16.6% -2.1% -2.0% -1.4% -0.6% 0.2%
Return on Average (Debt+Equity) Capital 4.7% -20.2% -2.6% -2.4% -1.7% -0.8% 0.3%
Total Debt / Book Capitalization 35.1% 51.5% 56.8% 59.7% 61.8% 62.9% 62.9%
Total Debt / Book Equity 54.1% 106.1% 131.2% 147.9% 161.7% 169.8% 169.4%
Total Debt / EBITDA 18.95 x 39.47 x 18.08 x 15.10 x 12.66 x 10.59 x 8.77 x
Book Value per Share $160.11 $111.88 $105.67 $99.74 $95.44 $93.44 $94.09
&R&8&D&T Page &P

Exhs. 13 and 14

Exhibits 13 and 14: Brahma's financial forecast and forecast of free cash flows
Assumptions Note: "#DIV/0!" likely indicates the needs to enter data somewhere in the model.
Projected
Operating Assumptions 1997 1998 1999 2000 2001 2002 2003 2004
Unit growth in sales of beer 4.0% 6.0% 6.0% 6.0% 6.0%
Unit growth in sales of soft drinks 1.7% 3.0% 3.0% 3.0% 3.0%
Forecasted inflation rate 5.5% 3.8% 3.8% 3.8% 3.8%
% Weight of beer in revenue 78.5% 78.5% 78.5% 78.5% 78.5%
% Weight of soft drinks in revenue 21.5% 21.5% 21.5% 21.5% 21.5%
Revenue Growth 2.9% 9.2% 9.4% 9.4% 9.4% 9.4%
COGS (Excl Depr) / Revenues 47.4% 48.6% 48.6% 48.6% 48.6% 48.6% 48.6%
SG&A / Revenues 28.6% 30.4% 30.4% 30.4% 30.4% 30.4% 30.4%
Other Exp (Income) / Revenues -1.2% -2.3% -2.3% -2.3% -2.3% -2.3% -2.3%
Effective Tax Rate 11.3% 10.3% 14.0% 14.0% 14.0% 14.0% 14.0%
Minority Interest / Pre-tax Income 3.6% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%
Wgtd Average Shares Outstanding (millions) 6.878 6.908 6.908 6.908 6.908 6.908 6.908
Common Dividends payout % 55% 55% 55% 55% 55% 55% 55%
Common Dividend per share R$ 20.50 R$ 14.45 R$ 19.71 R$ 25.42 R$ 30.15 R$ 35.73 R$ 42.26
Minimum Cash Balance R$ 1,000.0 R$ 1,873.0 R$ 1,200.0 R$ 1,200.0 R$ 1,200.0 R$ 1,200.0 R$ 1,200.0
Operating Cash/Revenues 34% 58% 42% 42% 42% 42% 42%
Days in Receivables 35.3 27.5 27.5 27.5 27.5 27.5 27.5
Days in Inventory 91.1 74.0 74.0 74.0 74.0 74.0 74.0
Days in Payables 62.3 67.7 67.7 67.7 67.7 67.7 67.7
Other Current Assets / Revenues 6.3% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9%
Other Current Liabilities / Revenues 13.3% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0%
Other Assets/Revenues 25.7% 31.5% 31.5% 31.5% 31.5% 31.5% 31.5%
Capital Expenditures (excl Acquisitions) 0.0 350.0 350.0 350.0 350.0 350.0 350.0
Depreciation, Amortization, & Other Years x Declining Financing Assumptions Coupon
Existing Intangible Book Amortization 40 yrs 1.0 x Straight Debt 1 15.0%
Existing PPE Book Depreciation 20 yrs 1.0 x
Future CapEx Book Depreciation 20 yrs 1.0 x
Int. Rate on Excess Cash 4.0%
Use of Excess Cash Flow 1
(1=Build Cash; 2=Repay Debt)
Interest Rate on Revolver 15.0%
Income Statement Projected
1997 1998 1999 2000 2001 2002 2003 2004
Revenues R$ 3,156.0 R$ 3,247.0 R$ 3,545.7 R$ 3,877.5 R$ 4,240.4 R$ 4,637.2 R$ 5,071.2
COGS (excluding Depreciation) 1,495.0 1,579.0 1,724.2 1,885.6 2,062.1 2,255.0 2,466.1
Selling, General, & Administrative 904.0 987.0 1,077.8 1,178.7 1,289.0 1,409.6 1,541.5
EBITDA 757.0 681.0 743.6 813.2 889.3 972.6 1,063.6
Depreciation 305.0 305.0 322.5 340.0 357.5 375.0 392.5
Other Expense (Income) (37.0) (75.0) (81.9) (89.6) (97.9) (107.1) (117.1)
EBIT 489.0 451.0 503.0 562.8 629.8 704.7 788.2
Interest (Income) 0.0 0.0 (67.2) (62.4) (68.2) (74.6) (81.6)
Interest Expense - Straight Debt 188.0 198.3 262.6 228.4 227.4 221.5 210.2 0.0
Pre-Tax Income 301.0 252.7 307.7 396.8 470.6 557.7 659.6
Income Taxes 34.0 26.0 43.1 55.5 65.9 78.1 92.3
Minority Interest 10.7 14.0 17.0 22.0 26.1 30.9 36.5
Net Income 256.3 212.7 247.6 319.2 378.6 448.7 530.7
Common Dividends 141.0 99.8 136.2 175.6 208.2 246.8 291.9
Net Income to Common 115.3 112.9 111.4 143.7 170.4 201.9 238.8
Earnings per Share (R$/share): R$ 37.26 R$ 30.79 R$ 35.84 R$ 46.22 R$ 54.81 R$ 64.96 R$ 76.83
Balance Sheet Projected
1997 1998 1999 2000 2001 2002 2003 2004
Cash and Equivalents 1,081.0 1,873.0 1,489.2 1,628.5 1,781.0 1,947.6 2,129.9 0.0
Accounts Receivable 305.0 245.0 267.5 292.6 320.0 349.9 382.6
Inventory 373.0 320.0 349.4 382.1 417.9 457.0 499.8
Other Current Assets 200.0 29.0 31.7 34.6 37.9 41.4 45.3
Total Current Assets 1,959.0 2,467.0 2,137.8 2,337.9 2,556.7 2,795.9 3,057.6
Property , Plant, & Equipment 3,292.5 3,447.6 3,797.6 4,147.6 4,497.6 4,847.6 5,197.6
Accumulated Depreciation 1,396.6 1,705.0 2,027.5 2,367.5 2,725.0 3,100.0 3,492.5
Net Property, Plant, & Equipment 1,895.9 1,742.6 1,770.1 1,780.1 1,772.6 1,747.6 1,705.1
Other Long-Term Assets 812.2 1,024.2 1,118.4 1,223.1 1,337.5 1,462.7 1,599.6
Total Assets 4,667.1 5,233.8 5,026.3 5,341.1 5,666.8 6,006.3 6,362.3
Accounts Payable 255.0 293.0 320.0 349.9 382.6 418.4 457.6
Other Current Liabilities (excl. S/T Debt) 419.0 391.0 427.0 466.9 510.6 558.4 610.7
Total Current Liabilities 674.0 684.0 746.9 816.8 893.3 976.9 1,068.3
Total Debt (plug) 1,880.0 1,983.0 1,518.1 1,527.0 1,505.1 1,448.6 1,353.7 0.0
Minority Interest 50.0 57.5 57.5 57.5 57.5 57.5 57.5 57.5
Other Long-Term Liabilities 637.0 903.0 986.1 1,078.3 1,179.3 1,289.6 1,410.3
Total Liabilities 3,241.0 3,627.5 3,308.6 3,479.7 3,635.1 3,772.6 3,889.8
Common Stock (Par + APIC+ Other Equity) 975.0 990.3 990.3 990.3 990.3 990.3 990.3
Retained Earnings 451.1 616.0 727.4 871.1 1,041.4 1,243.4 1,482.2 0.0
Total Liabilities & Stockholders' Equity 4,667.1 5,233.8 5,026.3 5,341.1 5,666.8 6,006.3 6,362.3
Forecast of Free Cash Flows Projected
1998 1999 2000 2001 2002 2003 2004
Net Operating Profit after Tax 433.8 404.6 432.6 484.0 541.6 606.0 677.9
Add: Depreciation 305.0 305.0 322.5 340.0 357.5 375.0 392.5
(Increase) / Decrease in NWC (125.0) (498.0) 392.1 (130.2) (142.3) (155.7) (170.2)
Cash Flow from Operations 613.8 211.6 1,147.2 693.8 756.8 825.4 900.1
Less: Capital Expenditures 325.0 350.0 350.0 350.0 350.0 350.0 350.0
Free Cash Flow 288.8 (138.4) 797.2 343.8 406.8 475.4 550.1
Projected
Depreciation Schedule 2000 2001 2002 2003 2004
Depreciation on Existing PP&E 305.0 305.0 305.0 305.0 305.0
Capital Expenditures (2000-2004): Amount
2000 350.0 17.5 17.5 17.5 17.5 17.5
2001 350.0 17.5 17.5 17.5 17.5
2002 350.0 17.5 17.5 17.5
2003 350.0 17.5 17.5
2004 350.0 17.5
Total Book Depreciation 322.5 340.0 357.5 375.0 392.5
Summary Ratios Projected
1997 1998 1999 2000 2001 2002 2003 2004
EBITDA / Revenues 24.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0%
EBIT / Revenues 15.5% 13.9% 14.2% 14.5% 14.9% 15.2% 15.5%
Return on Revenues 8.1% 6.6% 7.0% 8.2% 8.9% 9.7% 10.5%
EBITDA / Interest Expense 4.03 x 3.43 x 2.83 x 3.56 x 3.91 x 4.39 x 5.06 x
EBIT / Interest Expense 2.60 x 2.27 x 1.92 x 2.46 x 2.77 x 3.18 x 3.75 x
Return on Average Equity 16.2% 7.4% 6.7% 8.0% 8.8% 9.5% 10.1%
Return on Average Assets 2.5% 2.3% 2.2% 2.8% 3.1% 3.5% 3.9%
Return on Average (Debt+Equity) Capital 6.9% 3.2% 3.2% 4.3% 4.8% 5.5% 6.3%
Total Debt / Book Capitalization 56.0% 54.4% 46.1% 44.3% 41.9% 38.7% 34.9%
Total Debt / Book Equity 131.8% 123.5% 88.4% 82.0% 74.1% 64.9% 54.8%
Total Debt / EBITDA 2.48 x 2.91 x 2.04 x 1.88 x 1.69 x 1.49 x 1.27 x
Book Value per Share R$ 207.35 R$ 232.54 R$ 248.67 R$ 269.47 R$ 294.13 R$ 323.37 R$ 357.94