3-Statement Modeling Strictly Confidential

Table of Contents Model Checks

Model Balance Sheet Unbalanced? No

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 Assumptions & Drivers

All figures in USD thousands unless stated Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Days in Period 365 365 365 365 365 365 365 365

Income Statement
Sales Growth 6.5% 7.4% 6.0% 6.0% 6.0% 6.0% 6.0%
Gross Margin 53.2% 56.5% 57.4% 55.0% 55.0% 55.0% 55.0% 55.0%
Distribution Expense (Percent of Sales) 7.2% 7.4% 6.6% 7.5% 7.5% 7.5% 7.5% 7.5%
Marketing & Admin Expense (Fixed Cost) 23,507 26,569 30,830 32,063 33,346 34,680 36,067 37,509
Research Expense (Percent of Sales) 2.2% 2.2% 2.2% 2.3% 2.3% 2.3% 2.3% 2.3%
Depreciation (Percent of Sales) 3.6% 3.2% 3.1% 3.2% 3.2% 3.2% 3.2% 3.2%
Long-Term Debt Interest Rate (Average Debt) 6.2% 6.2% 6.2% 6.2% 6.2% 6.2% 6.2% 6.2%
Tax Rate (Percent of EBT) 34.7% 24.3% 15.3% 30.0% 30.0% 30.0% 30.0% 30.0%

Balance Sheet
Capital Asset Turnover Ratio (x) 4.23x 4.26x 4.40x 4.25x 4.25x 4.25x 4.25x 4.25x
Receivable Days (Sales Basis) (Days) 57 59 58 60 60 60 60 60
Inventory Days (COGS Basis) (Days) 69 74 74 75 75 75 75 75
Payable Days (COGS Basis) (Days) 96 102 102 100 100 100 100 100
Income Tax Payable (Percent of Taxes) 39.4% 36.8% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0%
Long Term Debt 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Common Share Capital 7,627 7,627 7,627 7,627 7,627 7,627 7,627 7,627
Dividend Payout Ratio 83.2% 55.8% 33.7% 70.0% 70.0% 70.0% 70.0% 70.0%

Introduction to 3-Statement Modeling Page 2 of 8

 Income Statement

All figures in USD thousands unless stated Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Revenues 81,422 86,698 93,086 98,671 104,591 110,867 117,519 124,570

Cost of Goods Sold (38,121) (37,756) (39,639) (44,402) (47,066) (49,890) (52,883) (56,056)
Gross Profit 43,301 48,942 53,447 54,269 57,525 60,977 64,635 68,513

Distribution Expenses (5,884) (6,421) (6,166) (7,400) (7,844) (8,315) (8,814) (9,343)
Marketing and Administration (23,507) (26,569) (30,830) (32,063) (33,346) (34,680) (36,067) (37,509)
Research and Development (1,764) (1,931) (2,026) (2,269) (2,406) (2,550) (2,703) (2,865)
Depreciation (2,960) (2,803) (2,907) (3,157) (3,347) (3,548) (3,761) (3,986)
EBIT (Operating Profit) 9,186 11,218 11,518 9,379 10,582 11,884 13,291 14,810

Interest (1,240) (1,240) (1,240) (1,240) (1,240) (1,240) (1,240) (1,240)

Earnings Before Taxes 7,946 9,978 10,278 8,139 9,342 10,644 12,051 13,570

Taxes (2,761) (2,429) (1,570) (2,442) (2,803) (3,193) (3,615) (4,071)

Net Income 5,185 7,549 8,708 5,697 6,540 7,451 8,436 9,499

Common Dividends 4,312 4,209 2,931 3,988 4,578 5,216 5,905 6,649

Introduction to 3-Statement Modeling Page 3 of 8

 Balance Sheet

All figures in USD thousands unless stated Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

ASSETS
Cash 5,289 5,918 10,159 8,650 8,562 8,627 8,860 9,278
Trade and Other Receivables 12,685 14,074 14,721 16,220 17,193 18,225 19,318 20,477
Inventories 7,168 7,691 8,036 9,124 9,671 10,251 10,866 11,518
Total Current Assets 25,142 27,683 32,916 33,994 35,426 37,103 39,045 41,274

Property Plant and Equipment 19,263 20,371 21,175 23,217 24,610 26,086 27,651 29,311

TOTAL ASSETS 44,405 48,054 54,091 57,211 60,036 63,190 66,696 70,584

LIABILITIES
Trade and Other Payables 10,001 10,504 11,077 12,165 12,895 13,669 14,489 15,358
Income Taxes Payable 1,088 894 581 903 1,037 1,181 1,338 1,506
Total Current Liabilities 11,089 11,398 11,658 13,068 13,932 14,850 15,826 16,864

Long-Term Debt 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Total Liabilities 31,089 31,398 31,658 33,068 33,932 34,850 35,826 36,864

EQUITY
Common Stock and Additional Paid-In Capital 7,627 7,627 7,627 7,627 7,627 7,627 7,627 7,627
Retained Earnings 5,689 9,029 14,806 16,515 18,477 20,713 23,243 26,093
Total Shareholders' Equity 13,316 16,656 22,433 24,142 26,104 28,340 30,870 33,720

Total Liabilities & Equity 44,405 48,054 54,091 57,211 60,036 63,190 66,696 70,584

Balance Sheet Check – – – – – – – –

Introduction to 3-Statement Modeling Page 4 of 8

 Cash Flow Statement

All figures in USD thousands unless stated Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Cash Flows from Operating Activities

Net Income 5,185 7,549 8,708 5,697 6,540 7,451 8,436 9,499
Depreciation 2,960 2,803 2,907 3,157 3,347 3,548 3,761 3,986
Changes in Operating Assets and Liabilities:
Trade and Other Receivables (1,280) (1,389) (647) (1,499) (973) (1,032) (1,093) (1,159)
Inventories (470) (523) (345) (1,087) (547) (580) (615) (652)
Trade and Other Payables 490 503 573 1,088 730 774 820 869
Income Taxes Payable 50 (194) (313) 322 134 144 156 169
Cash Flows from Operating Activities 6,935 8,749 10,883 7,679 9,229 10,305 11,464 12,712

Investing Activities
Acquisitions of Property and Equipment (3,005) (3,911) (3,711) (5,199) (4,740) (5,024) (5,326) (5,645)
Cash Flows from Investing Activities (3,005) (3,911) (3,711) (5,199) (4,740) (5,024) (5,326) (5,645)

Financing Activities
Issuance of Common Stock – – – – – – – –
Dividends (current year) (4,312) (4,209) (2,931) (3,988) (4,578) (5,216) (5,905) (6,649)
Increase/(Decrease) in Long-Term Debt – – – – – – – –
Cash Flows from Financing Activities (4,312) (4,209) (2,931) (3,988) (4,578) (5,216) (5,905) (6,649)

Cash and Equivalents, Beginning of the Year 5,671 5,289 5,918 10,159 8,650 8,562 8,627 8,860
Increase/(Decrease) in Cash and Equivalents (382) 629 4,241 (1,508) (88) 65 233 418
Cash and Equivalents, End of the Year 5,289 5,918 10,159 8,650 8,562 8,627 8,860 9,278

Introduction to 3-Statement Modeling Page 5 of 8

 Working Capital and PP&E Schedule

All figures in USD thousands unless stated Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Days in Period 365 365 365 365 365 365 365 365
Revenue 81,422 86,698 93,086 98,671 104,591 110,867 117,519 124,570
Cost of Goods Sold 38,121 37,756 39,639 44,402 47,066 49,890 52,883 56,056
Taxes 2,761 2,429 1,570 2,442 2,803 3,193 3,615 4,071

Trade and Other Receivables (Days) 57 59 58 60 60 60 60 60

Inventory (Days) 69 74 74 75 75 75 75 75
Trade and Other Payables (Days) 96 102 102 100 100 100 100 100
Income Tax Payable (Percent of Taxes) 39.4% 36.8% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0%

Working Capital
Trade and Other Receivables 12,685 14,074 14,721 16,220 17,193 18,225 19,318 20,477
Inventory 7,168 7,691 8,036 9,124 9,671 10,251 10,866 11,518
Trade and Other Payables 10,001 10,504 11,077 12,165 12,895 13,669 14,489 15,358
Income Tax Payable 1,088 894 581 903 1,037 1,181 1,338 1,506

Cash Changes from Working Capital

Trade and Other Receivables (1,280) (1,389) (647) (1,499) (973) (1,032) (1,093) (1,159)
Inventory (470) (523) (345) (1,087) (547) (580) (615) (652)
Trade and Other Payables 490 503 573 1,088 730 774 820 869
Income Taxes Payable 50 (194) (313) 322 134 144 156 169
Cash from Working Capital Items (1,210) (1,603) (732) (1,176) (657) (694) (732) (773)

Revenue 81,422 86,698 93,086 98,671 104,591 110,867 117,519 124,570

Capital Asset Turnover Ratio (x) 4.23x 4.26x 4.40x 4.25x 4.25x 4.25x 4.25x 4.25x
Depreciation (Percent of Sales) 3.6% 3.2% 3.1% 3.2% 3.2% 3.2% 3.2% 3.2%

Property, Plant & Equipment (PP&E)

Beginning of Period 19,218 19,263 20,371 21,175 23,217 24,610 26,086 27,651
Capital Expenditures/Additions (Disposals) 3,005 3,911 3,711 5,199 4,740 5,024 5,326 5,645
Depreciation Expense (2,960) (2,803) (2,907) (3,157) (3,347) (3,548) (3,761) (3,986)
Net PP&E, End of Period 19,263 20,371 21,175 23,217 24,610 26,086 27,651 29,311

Introduction to 3-Statement Modeling Page 6 of 8

 Capital Structure Schedules

All figures in USD thousands unless stated Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Long Term Debt (LTD)

Beginning of Period 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Additions (Repayments) – – – – – – – –
LTD, End of Period 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000

Long-Term Debt Interest (Average Debt) 6.2% 6.2% 6.2% 6.2% 6.2% 6.2% 6.2% 6.2%

Long Term Debt Interest 1,240 1,240 1,240 1,240 1,240 1,240 1,240 1,240
Total Interest 1,240 1,240 1,240 1,240 1,240 1,240 1,240 1,240

Common Stock and Additional Paid-In Capital

Beginning of Period 7,627 7,627 7,627 7,627 7,627 7,627 7,627 7,627
Additions (Repayments) – – – – – – – –
Common Stock, End of Period 7,627 7,627 7,627 7,627 7,627 7,627 7,627 7,627

Net Income 5,185 7,549 8,708 5,697 6,540 7,451 8,436 9,499
Dividends 4,312 4,209 2,931 3,988 4,578 5,216 5,905 6,649

Retained Earnings (RE)

Beginning of Period 4,816 5,689 9,029 14,806 16,515 18,477 20,713 23,243
Net Income 5,185 7,549 8,708 5,697 6,540 7,451 8,436 9,499
Dividends (4,312) (4,209) (2,931) (3,988) (4,578) (5,216) (5,905) (6,649)
RE, End of Period 5,689 9,029 14,806 16,515 18,477 20,713 23,243 26,093

Introduction to 3-Statement Modeling Page 7 of 8

 Charts & Graphs

All figures in USD thousands unless stated Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Income Statement
Revenue 81,422 86,698 93,086 98,671 104,591 110,867 117,519 124,570
EBITDA 12,146 14,021 14,425 12,536 13,929 15,432 17,052 18,797
EBITDA Margin 14.9% 16.2% 15.5% 12.7% 13.3% 13.9% 14.5% 15.1%

Net Income 5,185 7,549 8,708 5,697 6,540 7,451 8,436 9,499
Net Income Margin 6.4% 8.7% 9.4% 5.8% 6.3% 6.7% 7.2% 7.6%

Cash Flow
Operating 6,935 8,749 10,883 7,679 9,229 10,305 11,464 12,712
Investing (3,005) (3,911) (3,711) (5,199) (4,740) (5,024) (5,326) (5,645)
Financing (4,312) (4,209) (2,931) (3,988) (4,578) (5,216) (5,905) (6,649)
Change in Cash (382) 629 4,241 (1,508) (88) 65 233 418

Income Statement Cash Flow Statement

Revenue EBITDA Margin Net Income Margin Investing Financing Operating Change in Cash
140,000 30.0% 15,000

120,000 25.0% 10,000

100,000
20.0% 5,000
80,000
15.0% –
60,000
10.0% (5,000)
40,000

20,000 5.0% (10,000)

– – (15,000)
Year -2 Year -1 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Introduction to 3-Statement Modeling Page 8 of 8