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Appendix:
Valuation of 630 Shares of R. Korbel & Bros., Inc. as of 2/15/95
Projected Items 1994 1995 1996 1997 1998 1999
Sales $82,757,920 $86,482,026 $89,941,307 $93,089,252 $95,881,929 $98,758,386
Net Income
Pre-Tax Income 10,637,289 11,062,780 11,449,977 11,793,477 12,147,281
(@ 12.3% op. margin)
Income Taxes (@ 1.5%) (159,559) (165,942) (171,750) (176,902) (182,209)
Net Income 10,477,730 10,896,838 11,278,227 11,616,575 11,965,072
Cashflow Adjustments
+ Depreciation 3,286,317 3,417,770 3,537,391 3,643,513 3,752,819
(3.8% of sales)
(-) Working Capital Additions (2,048,258) (1,902,605) (1,731,370) (1,535,972) (1,582,051)
(55% of incremental sales)
(-) Capital Expenditures (4,000,000) (4,000,000) (4,000,000) (4,000,000) (4,000,OOO)
Yearend Cashflow 7,715,789 8,412,003 9,084,248 9,724,116 10,135,840
Discount Rate (WACC) 14.22% 14.22% 14.22% 14.22% 14.22%
Present Value Interest .8755 .7666 .6712 .5876 .5145
Factor (1/(1.1422)n)
Present Value of Cashflows 6,755,173 6,448,641 6,097,347 5,713,891 5,214,890
Total Present Value of Cashflows $30,229,942
Present Value of Reversion:
10,135,840 (1.03/.1422-.03) 47,861,436
( (1 + .1422)5)
=10,135,840 (4.722)
Present Value of Operating
Assets 78,091,378
Value of Nonoperating Assets 5,517,000
Long-Term Debt (4,918,000)
Enterprise Value of Korbel (w/o discount) 78,690,378
Enterprise Value of Korbel with 35% Discount 51,148,745
Value of 39.629% interest (630 shares) 20,269,736
Value of each share 32,174
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