HANSSON PRIVATE LABEL
Operating Results:
Revenue
Less: Cost of Goods Sold
Gross Profit
Less: Selling, General & Administrative
EBITDA
Less: Depreciation
EBIT
Less: Interest Expense
EBT
Less: Taxes
Net Income
Revenue Growth
Gross Margin
Selling, General & Administrative/Revenue
EBITDA Margin
EBIT Margin
Net Income Margin
Effective Tax Rate
Income Statement
2003
$503.4
405.2
98.2
37.8
60.4
6.8
53.6
5.5
48.1
19.2
$28.9
2004
$543.7
432.3
111.4
44.6
66.8
6.2
60.6
5.8
54.8
22.0
$32.8
2005
$587.2
496.2
91.0
45.8
45.2
6.0
39.2
5.9
33.3
13.3
$20.0
2006
$636.1
513.4
122.7
51.5
71.2
5.9
65.3
5.3
60.0
24.0
$36.0
2007
$680.7
558.2
122.5
49.0
73.5
6.1
67.4
3.3
64.1
25.6
$38.5
Margins:
NA
19.5%
7.5%
12.0%
10.6%
5.7%
39.9%
8.0%
20.5%
8.2%
12.3%
11.1%
6.0%
40.1%
8.0%
15.5%
7.8%
7.7%
6.7%
3.4%
39.9%
8.3%
19.3%
8.1%
11.2%
10.3%
5.7%
40.0%
7.0%
18.0%
7.2%
10.8%
9.9%
5.7%
39.9%
Harvard Business Publishing
HANSSON PRIVATE LABEL
Assets:
Cash & Cash Equivalents
Accounts Receivable
Inventory
Total Current Assets
Balance Sheet
2003
$4.3
62.1
57.7
124.1
2004
$5.1
70.1
58.0
133.2
2005
$4.8
78.8
61.2
144.8
2006
$7.8
87.1
61.9
156.8
2007
$5.0
93.3
67.3
165.6
201.4
12.3
$337.8
202.9
12.1
$348.2
203.1
11.8
$359.7
202.3
12.5
$371.6
204.4
10.8
$380.8
$42.2
$45.0
$51.6
$53.4
$58.1
91.6
82.8
73.8
65.8
54.8
204.0
$337.8
220.4
$348.2
234.3
$359.7
252.4
$371.6
267.9
$380.8
62.1
57.7
42.2
77.6
70.1
58.0
45.0
83.1
78.8
61.2
51.6
88.4
87.1
61.9
53.4
95.6
93.3
67.3
58.1
102.5
Net Working Capital/Revenue
15.4%
15.3%
15.1%
15.0%
15.1%
Days Sales Outstanding
Days Sales Inventory
Days Payable Outstanding (1)
Cash-to-Cash
44.4x
41.3x
34.3x
51.4x
46.4x
38.4x
34.0x
50.8x
48.3x
37.5x
34.3x
51.6x
49.3x
35.0x
34.0x
50.3x
49.3x
35.6x
34.4x
50.5x
Property, Plant & Equipment
Other Non-Current Assets
Total Assets
Liabilities & Owners' Equity:
Accounts Payable & Accrued Liabilities
Long-Term Debt
Owners' Equity
Total Liabilities & Owners' Equity
Net Working Capital:
Accounts Receivable
Plus: Inventory
Less: Accounts Payable & Accrued Expenses
Net Working Capital
(1) Based on total operating expenses excluding depreciation.
Harvard Business Publishing
HANSSON PRIVATE LABEL
Cash From Operations:
Net Income
Plus: Depreciation
Less: Increase in Accounts Receivable
Less: Increase in Inventory
Plus: Increase in Accounts Payable
Total Cash From Operations
Cash From Investing:
Capital Expenditures
Plus: Increases in Other Non-Current Assets
Total Cash Used in Investing
Cash From Financing:
Repayment of Debt
Plus: Dividend Payments
Cash Used in Financing
Total Cash Generated
Cash Flow
2003
$28.9
6.8
3.1
0.5
0.3
$32.4
2004
$32.8
6.2
8.0
0.3
2.8
$33.5
2005
$20.0
6.0
8.7
3.2
6.6
$20.7
2006
$36.0
5.9
8.3
0.7
1.8
$34.7
2007
$38.5
6.1
6.2
5.4
4.7
$37.7
$7.3
0.5
$7.8
$7.7
(0.2)
$7.5
$6.2
(0.3)
$5.9
$5.1
0.7
$5.8
$8.2
(1.7)
$6.5
$8.0
14.4
$22.4
$8.8
16.4
$25.2
$9.0
6.1
$15.1
$8.0
17.9
$25.9
$11.0
23.0
$34.0
$2.2
$0.8
($0.3)
$3.0
($2.8)
Harvard Business Publishing
HANSSON PRIVATE LABEL
Comparable Companies
ho
Company:
Cathleen Sinclair
General Health & Bea
Women's Care Compa
Skin Care Enterprises
Company:
Cathleen Sinclair
General Health & Beauty
Women's Care Company
Skin Care Enterprises
Average
Market
Value
298.9
319.3
498.6
1,204.2
NetEnterprise
Debt
Value
1,329.6
1,628.5
63.1
382.4
55.3
553.9
371.9
1,576.1
EBITDA
19.0%
13.9%
13.3%
12.5%
14.6%
Equity
Beta Revenue EBITDA
2.22
1,346.8
255.3
1.95
446.1
61.9
1.14
397.3
52.7
1.35
1,247.6
155.8
EBIT
163.4
51.9
49.3
125.4
Net
Income
21.5
23.8
77.0
65.3
Book
Value
(1,112.8)
204.2
43.7
316.2
EBIT Earnings Revenue EBITDA
12.1%
1.6%
1.2x
6.4x
11.6%
5.3%
0.9x
6.2x
12.4%
19.4%
1.4x
10.5x
10.1%
5.2%
1.3x
10.1x
11.6%
7.9%
1.2x
8.3x
EBIT
10.0x
7.4x
11.2x
12.6x
10.3x
P/E
13.9x
13.4x
6.5x
18.4x
13.1x
P/B
NM
1.6x
11.4x
3.8x
5.6x
Harvard Business Publishing
HANSSON PRIVATE LABEL
Company:
Cathleen Sinclair
General Health & Beauty
Women's Care Company
Skin Care Enterprises
Average
Dbet/
Value
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Debt/
Equity
0.0%
5.3%
11.1%
17.6%
25.0%
33.3%
Weighted Average Cost of Capital
Debt/
Value
81.6%
16.5%
10.0%
23.6%
32.9%
Debt/
Equity
444.9%
19.8%
11.1%
30.9%
49.1%
Equity
Beta
2.22
1.95
1.14
1.35
1.67
Debt
Beta
0.25
0.00
0.00
0.00
0.06
Asset
Beta
0.79
1.74
1.07
1.14
1.18
Asset
Beta
1.18
1.18
1.18
1.18
1.18
1.18
Equity
Beta
1.18
1.22
1.26
1.31
1.36
1.42
Cost of
Equity
9.67%
9.86%
10.07%
10.30%
10.56%
10.86%
Cost of
Debt
7.75%
7.75%
7.75%
7.75%
7.75%
7.75%
WACC
9.67%
9.60%
9.53%
9.45%
9.38%
9.31%
Assumptions:
10-Year Treasury
Market Risk Premium
3.75%
5.00%
Tax Rate
40.0%
Est. Hansson EBITDA Multiple
Est. Hansson Enterprise Value
7.0x
514.5
Existing Net Debt
Plus: New Expansion Debt
Total Estimated Debt
49.8
57.8
107.6
Existing D/V
Estimated New D/V
9.7%
20.9%
Assumed Debt Beta
Estimated Cost of Debt
0.00
7.75%
Harvard Business Publishing
HANSSON PRIVATE LABEL
Cost Components:
Facility Expansion
Manufacturing Equipment
Packaging Equipment
Working Capital (1)
Total Investment
Amount
$10,000
20,000
15,000
12,817
57,817
Investment
Est. Life
20yrs.
10yrs.
10yrs.
Percent
Cost of
Depr' Maintenance Maintenance
500
5.0%
500
2,000
5.0%
1,000
1,500
5.0%
750
0
0.0%
0
4,000
2,250
(1) The increase in working capital is not expected to ocurr upfront
at the time of the initial investment. It is assumed to take place
throughout the year, and should be considered as part of the
2009 cash flows.
Note: working capital is defined as accounts receivable plus inventory
less accounts payable and accrued expenses. At the end of the
project, working capital will be returned in an amount equal to
accounts receivable less accounts payable.
Harvard Business Publishing
HANSSON PRIVATE LABEL
Operating Assumptions
Operating Assumptions
Revenue Projection:
Total Capacity (000's)
Capacity Utilization
Unit Volume
Selling Price Per Unit - Growing at
Revenue
2009
80,000
60.0%
48,000
1.77
84,960
2010
80,000
65.0%
52,000
1.81
93,881
2011
80,000
70.0%
56,000
1.84
103,124
2012
80,000
75.0%
60,000
1.88
112,700
2013
80,000
80.0%
64,000
1.92
122,618
2014
80,000
85.0%
68,000
1.95
132,887
2015
80,000
85.0%
68,000
1.99
135,545
2016
80,000
85.0%
68,000
2.03
138,256
2017
80,000
85.0%
68,000
2.07
141,021
2018
80,000
85.0%
68,000
2.12
143,841
1.0%
3.0%
3.0%
0.94
3,920
2,250
0.95
4,038
2,318
0.96
4,159
2,387
0.97
4,283
2,459
0.98
4,412
2,532
0.99
4,544
2,608
1.00
4,681
2,687
1.01
4,821
2,767
1.02
4,966
2,850
1.03
5,115
2,936
3.5%
4
160.0
640.0
4
165.6
662.4
6
171.4
1,028.4
6
177.4
1,064.4
6
183.6
1,101.6
6
190.0
1,140.2
6
196.7
1,180.1
6
203.6
1,221.4
6
210.7
1,264.1
6
218.1
1,308.4
20.00
2,000
40,000
450
18,000.0
20.70
2,000
41,400
473
19,570.9
21.42
2,000
42,849
509
21,814.0
22.17
2,000
44,349
545
24,190.2
22.95
2,000
45,901
582
26,706.0
23.75
2,000
47,507
618
29,368.2
24.59
2,000
49,170
618
30,396.1
25.45
2,000
50,891
618
31,460.0
26.34
2,000
52,672
618
32,561.1
27.26
2,000
54,516
618
33,700.7
18,640.0
20,233.3
22,842.4
25,254.6
27,807.6
30,508.4
31,576.2
32,681.4
33,825.2
35,009.1
Selling, General & Administrative/Revenue
7.8%
7.8%
7.8%
7.8%
7.8%
7.8%
7.8%
7.8%
7.8%
7.8%
Working Capital Assumptions (1):
Days Sales Outstanding
Days Sales Inventory
Days Payable Outstanding
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
47.6x
37.6x
34.2x
Hourly Labor Cost Per Unit
0.38
0.38
0.39
0.40
0.42
0.43
0.45
0.46
0.48
0.50
Units Per Total Labor Hours
0.05
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
Production Costs:
Raw Materials Per Unit Growing at
Manufacturing Overhead Growing at
Maintenance Expense Growing at
Salaried Labor Cost:
Managers
Average Annual Fully Loaded Cost
Total Salaried Labor Cost
Hourly Labor Cost:
Average Fully Loaded Hourly Cost
Hours Per Year
Cost Per Hourly Employee
Number of Hourly Workers
Total Hourly Labor Cost (000's)
Total Labor Cost
2.0%
3.5%
(1) Based on historical averages.
Harvard Business Publishing
