Assumptions for Forecasting Model

Income Statement

Sales

Cost of Sales

Selling, General & Admn. Expenses

Depreciation

Other Operating Income

Interest Income

Interest Expense

Income Taxes

Balance Sheet

Assets

Cash and Marketable Securities

Accounts Receivable

Inventories

Other Current Assets

Gross Fixed Assets

Accumulated Depreciation

Net Fixed Assets

Other Non-Current Assets

Liabilities and Shareholders' Equity

Accounts Payable

Short-Term Debt

Other Current Liabilities

Long-Term Debt

Deferred Income Taxes

Other Non-Current Liabilities

Paid-In Capital

Retained Earnings

Other Assumptions

Dividend payout ratio

Interest on short-term debt

Interest on long-term debt

Interest on cash & marketable securities

Number of shares outstaning

P/E ratio

Assumption

Will grow at 5%, based on input from management

52% of sales, little better than historical average

29% of sales, based on expected worsening

8% of Gross Fixed Assets, based on analysis of depreciation schedules

0.7% of sales, based on historical average

Calculate based on average balance and interest rate specified later

For STD calculate based on average balance and interest rate

For LTD interest expense will remain unchanged at $ 13.5 million

35% of pre-tax income

2.1%, of sales based on historical average

8.4% of sales, based on historical average

8.8% of sales, based on historical average

7.6% of sales, based on historical average

Will grow at 11% per year, based on discussion with management

Calculated from other items

Calculated from other items

Will grow at 10% per year, based on discussion with management

6.1% of sales, same as historical average

Read Handout

8.3% of sales, same as 2013

Will remain unchanged

1.4% of sales, based on historical average

7.6% of sales, based on historical average

Will remain unchanged

Calculated from other items

40%, based on discussion with management

7%, based on economic forecast

Rates embedded in existing debt, annual expense $13.5 million

6%, based on economic forecast

Will remain unchanged

Will decline to 16 in 2014 and then improve to 18, 20, and 22 in the following years

Income Statement and Balance Sheet for OLP Limited

Income Statement ($. Million)Historical period

2010 2011 2012

Sales 1234.9 1251.7 1300.4

Cost of Sales 679.1 659 681.3

Other Operating Income 11.8 7.6 7

Gross Operating Income 567.6 600.3 626.1

Selling, General & Admn. Expenses 339.7 348.6 351.2

Depreciation 47.5 52 55.9

EBIT 180.4 199.7 219

Interest Income 1.3 1.4 1.7

Interest Expense 16.2 15.1 20.5

Pre-Tax Income 165.5 186 200.2

Income Taxes 56.8 64.2 67.5

Net Income 108.7 121.8 132.7

Dividends 38.3 38.7 39.8

Addition to Retained Earnings 70.4 83.1 92.9

Balance Sheet ($ Million)Assets

Cash and Marketable Securities 25.6 23 32.1

Accounts Receivable 99.4 102.9 107.3

Inventories 109.6 108 114.9

Other Current Assets 96.7 91.4 103.7

Total Current Assets 331.3 325.3 358

Gross Fixed Assets 680.9 734.3 820.8

Accumulated Depreciation 244.8 296.8 352.7

Net Fixed Assets 436.1 437.5 468.1

Other Non-Current Assets 203.2 205.1 407

Total Non-Current Assets 639.3 642.6 875.1

Total Assets 970.6 967.9 1233.1

Liabilities and Shareholders' Equity

Accounts Payable 82.8 77.1 71.8

Short-Term Debt 39.1 29.7 79.8

Other Current Liabilities 152 123.8 172.1

Total Current Liabilities 273.9 230.6 323.7

Long-Term Debt 163.5 145 201.8

Deferred Income Taxes 22.3 19.6 15

Other Non-Current Liabilities 100.6 80.1 115

Total Liabilities 560.3 475.3 655.5

Share Capital 46.9 46.1 38.2

Retained Earnings 363.4 446.5 539.4

Total Shareholders' Equity 410.3 492.6 577.6

Total Liabilities and Shareholders' Equity 970.6 967.9 1233.1

Discretionary Funding Need (DFN)

Historical period2013

1334.4

667

8.2

675.6

373.3

75.2

227.1

2

23.7

205.4

72.6

132.8

40.1

92.7

28.4

120.1

116.8

97.5

362.8

913.1

427.9

485.2

456.3

941.5

1304.3

80.5

110.3

111.3

302.1

218.1

12.7

94.5

627.4

44.8

632.1

676.9

1304.3

Statement of Cash Flows for OLP LimitedMillions of $

Historical Period

2010 2011 2012

Cash Flows from Operations

Net Income 121.8 132.7

Depreciation Expense 52 55.9

Decrease/(Increase) in Accounts Receivable -3.5 -4.4

Decrease/(Increase) in Inventories 1.6 -6.9

Decrease/(Increase) in Other Current Assets 5.3 -12.3

Increase/(Decrease) in Accounts Payable -5.7 -5.3

Increase/(Decrease) in Other Current Liabilities -28.2 48.3

Increase/(Decrease) in Deferred Income Taxes -2.7 -4.6

Increase/(Decrease) in Other Non-Current Liabilities -20.5 34.9

Total Cash Flows from Operations 120.1 238.3

Cash Flows from Investing

(Additions to) Gross Fixed Assets -53.4 -86.5

(Investment) in Other Non-Current Assets -1.9 -201.9

Total Cash Flows from Investing -55.3 -288.4

Cash Flows from Financing

From Issuance/(Repayment) of Short-Term Debt -9.4 50.1

From Issuance/(Repayment) of Long-Term Debt -18.5 56.8

From Sale/(Repurchase) of Equity -0.8 -7.9

Cash Dividends Paid to Shareholders -38.7 -39.8

Total Cash Flows from Financing -67.4 59.2

Net Change in Cash & Marketable Securities -2.6 9.1

Beginning Cash & Marketable Securities 25.6 23

Ending Cash & Marketable Securities 23 32.1

Net Change in Cash & Marketable Securities -2.6 9.1

Historical Period

2013

132.8

75.2

-12.8

-1.9

6.2

8.7

-60.8

-2.3

-20.5

124.6

-92.3

-49.3

-141.6

30.5

16.3

6.6

-40.1

13.3

-3.7

32.1

28.4

-3.7