These spreadsheet exhibits relate to the case Teuer Furniture (A): Discounted Cash

Flow Valuation, Case #KEL778.

©2014 by the Kellogg School of Management at Northwestern University. This case

was prepared by Professor Mitchell A. Petersen. Teuer Furniture is a fictional company
whose profile was created based on data from real industry leaders. Cases are
developed solely as the basis for class discussion. Cases are not intended to serve as
endorsements, sources of primary data, or illustrations of effective or ineffective
management. To order copies or request permission to reproduce materials, call 800-
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of Kellogg Case Publishing.
Exhibit 1: Teuer Furnitures Showrooms and Square Footage

Stores Total SQ FT Total

Opened Stores Opened SQ FT
2003 1 1 17,200 17,200 40
2004 3 4 17,600 70,000
2005 4 8 18,500 144,000 35
2006 5 13 21,100 249,500 30
2007 6 19 22,100 382,100
2008 2 21 15,500 413,100 25
2009 1 22 14,500 427,600
20
2010 2 24 14,700 457,000
2011 2 26 15,400 487,800 15
2012 3 29 16,300 536,700
10
2013 2 31 16,000 568,700
2014 2 33 16,000 600,700 5
2015 2 35 15,000 630,700 Number of Showroom
0
2003 2005 2007 2009 2011 2013 2
700,000

600,000

500,000

400,000

300,000

200,000

100,000
Number of Showrooms Total Square Feet
0
2007 2009 2011 2013 2015
Exhibit 2: Economic Indicators: GDP and Furniture Sales Growth
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
CPI index 180.9 184.3 190.3 196.8 201.8 210.0 210.2 215.9 219.2 225.7 229.6 233.5 237.7 242.3 247.4 252.1 256.6 261.3
Inflation (CPI) 1.9% 3.3% 3.4% 2.5% 4.1% 0.1% 2.7% 1.5% 3.0% 1.7% 1.7% 1.8% 1.9% 2.1% 1.9% 1.8% 1.8%
GDP (T$) 10,642 11,142 11,853 12,623 13,377 14,029 14,292 13,974 14,499 15,076 15,685 16,238 17,049 18,012 19,021 20,078 21,101
GDP growth 4.7% 6.4% 6.5% 6.0% 4.9% 1.9% -2.2% 3.8% 4.0% 4.0% 3.5% 5.0% 5.6% 5.6% 5.6% 5.1%
Furniture sales ($B) 94.44 96.7 103.8 109.1 112.8 111.1 99.6 86.3 87.3 90.1 93.1 95.9 98.6 101.2 103.6 105.9 108.0 110.2
Furniture sales growth 2.4% 7.3% 5.2% 3.4% -1.5% -10.4% -13.4% 1.2% 3.2% 3.4% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% 2.0%

10.0%

5.0%

0.0%
2003 2005 2007 2009 2011 2013 2015 2017

-5.0%

-10.0%

GDP Growth Furniture Sales Growth Inflation (CPI)

-15.0%
Exhibit 3: Teuer Furniture Income Statement
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sales 2,057 10,415 26,701 51,540 79,191 90,680 111,451 134,093 148,218
Cost of goods sold -1,463 -7,057 -17,424 -30,730 -43,834 -47,290 -49,068 -55,487 -61,955
Selling, general and admin -410 -1,812 -4,958 -9,230 -13,576 -14,679 -16,471 -18,698 -21,253
Advertising -203 -1,019 -2,411 -4,588 -6,585 -7,532 -8,367 -9,545 -10,744
Depreciation -72 -307 -669 -1,264 -2,075 -2,188 -2,032 -1,820 -1,450
Lease -250 -1,080 -2,330 -4,240 -6,770 -7,380 -7,712 -8,450 -9,320
Corporate expense -185 -729 -1,602 -3,092 -4,751 -5,441 -5,573 -6,705 -7,411
Taxes 0 0 0 0 0 -543 -8,892 -13,356 -14,434
Net income -526 -1,588 -2,693 -1,604 1,600 5,626 13,337 20,033 21,651

Parameters:
Corporate tax rate 40%
Exhibit 4: Teuer Furniture Balance Sheet
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Assets
Accounts Receivable 0 751 3,479 8,675 16,946 25,272 29,059 36,625 42,421 48,200
Inventory 671 3,151 8,216 15,125 20,908 21,715 24,868 26,808 29,216 33,343
Total Current Assets 671 3,902 11,695 23,800 37,853 46,987 53,927 63,433 71,637 81,543
PPE 358 1,461 2,969 5,270 8,065 6,914 5,119 3,839 3,142 3,920
Total Assets 1,029 5,364 14,663 29,070 45,918 53,900 59,046 67,272 74,779 85,463

Liabilities and Equity

Accounts Payable 236 1,158 2,781 5,119 7,228 7,767 8,277 9,133 9,986 11,364
Accrued Expenses 29 145 358 658 958 1,055 1,203 1,359 1,519 1,682
Total Current Liabilities 265 1,303 3,139 5,777 8,186 8,822 9,480 10,493 11,505 13,046
Debt 0 0 0 0 0 0 0 0 0 0
Equity 764 4,061 11,525 23,293 37,732 45,079 49,565 56,779 63,274 72,417
Total Liabilities and Equity 1,029 5,364 14,663 29,070 45,918 53,900 59,046 67,272 74,779 85,463

Balance sheet check

Exhibit 5: Teuer Furniture Income Statement for Individual Showrooms
# Avg Size 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2003 1 17,200 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Sales 2,057 3,754 5,224 6,148 6,341 5,503 5,636 5,871 6,034 6,053 6,073 6,092 6,112 6,131 6,151 6,171
CGS 1,463 2,309 3,018 2,394 2,753 2,311 2,194 2,150 2,416 2,414 2,421 2,429 2,437 2,445 2,453 2,460
SGA 410 640 857 856 815 765 767 687 791 823 826 828 831 834 836 839
Advertising 203 334 399 434 422 423 391 401 457 434 435 436 438 439 441 442
Depreciation 72 72 72 72 72 0 0 0 65 65 65 65 65 0 0 0
Lease 250 250 250 250 250 250 302 302 302 302 302 302 381 381 381 381
2004 3 17,600 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Sales 6,661 11,907 15,158 16,488 15,446 16,187 17,279 17,869 17,926 17,983 18,041 18,099 18,157 18,215 18,273
CGS 4,748 7,428 7,894 7,216 6,031 6,675 6,691 7,176 7,148 7,170 7,193 7,217 7,240 7,263 7,286
SGA 1,171 2,148 2,631 2,323 2,239 2,224 2,395 2,319 2,438 2,446 2,453 2,461 2,469 2,477 2,485
Advertising 685 971 1,266 1,213 1,235 1,241 1,245 1,287 1,284 1,288 1,292 1,296 1,301 1,305 1,309
Depreciation 235 235 235 235 235 0 0 0 187 187 187 187 187 0 0
Lease 830 830 830 830 830 830 1,003 1,003 1,003 1,003 1,003 1,003 1,193 1,193 1,193
2005 4 18,500 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Sales 9,570 16,651 19,785 20,951 22,847 24,451 24,499 24,578 24,657 24,736 24,815 24,895 24,975 25,055
CGS 6,978 10,917 11,430 8,499 9,387 9,857 9,042 9,800 9,831 9,863 9,895 9,926 9,958 9,990
SGA 1,953 2,977 3,371 3,039 3,021 3,228 3,693 3,342 3,353 3,364 3,375 3,385 3,396 3,407
Advertising 1,041 1,488 1,587 1,598 1,605 1,645 1,793 1,760 1,766 1,772 1,777 1,783 1,789 1,795
Depreciation 363 363 363 363 363 0 0 0 301 301 301 301 301 0
Lease 1,250 1,250 1,250 1,250 1,250 1,250 1,510 1,510 1,510 1,510 1,510 1,510 1,706 1,706
2006 5 21,100 1 2 3 4 5 6 7 8 9 10 11 12 13
Sales 13,583 21,142 23,592 29,702 34,105 34,824 34,936 35,048 35,160 35,273 35,386 35,499 35,613
CGS 9,526 11,229 13,594 9,902 13,259 13,932 13,930 13,975 14,019 14,064 14,109 14,155 14,200
SGA 2,767 4,016 4,237 3,780 4,895 4,946 4,751 4,766 4,781 4,797 4,812 4,828 4,843
Advertising 1,400 1,784 1,964 2,014 2,327 2,287 2,502 2,510 2,518 2,527 2,535 2,543 2,551
Depreciation 594 594 594 594 594 0 0 0 490 490 490 490 490
Lease 1,910 1,910 1,910 1,910 1,910 1,910 2,203 2,203 2,203 2,203 2,203 2,203 2,481
2007 6 22,100 1 2 3 4 5 6 7 8 9 10 11 12
Sales 15,435 22,001 30,466 39,628 43,541 44,216 44,357 44,500 44,642 44,786 44,929 45,073
CGS 11,205 14,801 16,422 15,232 17,856 17,630 17,687 17,743 17,800 17,857 17,915 17,972
SGA 3,050 3,878 5,471 5,166 5,917 6,013 6,032 6,052 6,071 6,090 6,110 6,130
Advertising 1,578 1,986 2,458 2,748 3,109 3,167 3,177 3,187 3,198 3,208 3,218 3,228
Depreciation 812 812 812 812 812 0 0 0 655 655 655 655
Lease 2,530 2,530 2,530 2,530 2,530 2,530 2,824 2,824 2,824 2,824 2,824 2,824
2008 2 15,500 1 2 3 4 5 6 7 8 9 10 11
Sales 3,187 5,176 7,244 9,257 10,156 10,314 10,347 10,380 10,413 10,447 10,480
CGS 2,053 3,467 4,421 3,764 4,050 4,112 4,126 4,139 4,152 4,165 4,179
SGA 522 951 1,225 1,243 1,381 1,403 1,407 1,412 1,416 1,421 1,425
Advertising 326 499 598 675 727 739 741 743 746 748 751
Depreciation 185 185 185 185 185 0 0 0 152 152 152
Lease 610 610 610 610 610 610 673 673 673 673 673
2009 1 14,500 1 2 3 4 5 6 7 8 9 10
Sales 1,437 2,507 3,540 4,349 4,772 4,846 4,861 4,877 4,893 4,908
CGS 1,021 1,652 1,887 1,734 1,903 1,932 1,938 1,945 1,951 1,957
SGA 257 480 615 591 649 659 661 663 665 667
Advertising 158 227 303 312 342 347 348 349 350 352
Depreciation 79 79 79 79 79 0 0 0 64 64
Lease 280 280 280 280 280 280 321 321 321 321
2010 2 14,700 1 2 3 4 5 6 7 8 9
Sales 3,008 5,300 7,074 8,691 9,535 9,683 9,714 9,745 9,776
CGS 2,226 3,526 3,976 3,465 3,802 3,861 3,873 3,886 3,898
SGA 623 1,028 1,223 1,182 1,297 1,317 1,321 1,325 1,329
Advertising 353 473 578 623 683 694 696 698 700
Depreciation 150 150 150 150 150 0 0 0 123
Lease 565 565 565 565 565 565 664 664 664
2011 2 15,400 1 2 3 4 5 6 7 8
Sales 3,354 5,707 7,617 9,358 10,267 10,426 10,459 10,493
CGS 2,357 3,633 4,282 3,731 4,094 4,157 4,170 4,184
SGA 701 1,045 1,317 1,273 1,396 1,418 1,422 1,427
Advertising 358 507 623 670 735 747 749 752
Depreciation 160 160 160 160 160 0 0 0
Lease 610 610 610 610 610 610 710 710
2012 3 16,300 1 2 3 4 5 6 7
Sales 5,379 9,153 12,217 15,009 16,467 16,722 16,776
CGS 3,812 5,826 6,867 5,985 6,566 6,668 6,689
SGA 1,039 1,676 2,112 2,041 2,239 2,274 2,281
Advertising 569 813 999 1,075 1,180 1,198 1,202
Depreciation 259 259 259 259 259 0 0
Lease 1,000 1,000 1,000 1,000 1,000 1,000 1,150
2013 2 16,000 1 2 3 4 5 6
Sales 3,622 6,164 8,227 10,108 11,090 11,261
CGS 2,567 3,924 4,625 4,030 4,422 4,490
SGA 700 1,129 1,422 1,375 1,508 1,531
Advertising 383 548 673 724 794 807
Depreciation 172 172 172 172 172 0
Lease 668 668 668 668 668 668
2014 2 16,000 1 2 3 4 5
Sales 3,731 6,349 8,474 10,411 11,423
CGS 2,644 4,041 4,763 4,151 4,555
SGA 721 1,163 1,465 1,416 1,553
Advertising 395 564 693 746 818
Depreciation 175 175 175 175 175
Lease 682 682 682 682 682
2015 2 15,000 1 2 3 4
Sales 3,597 6,121 8,169 10,037
CGS 2,549 3,896 4,592 4,002
SGA 695 1,121 1,412 1,365
Advertising 381 544 668 719
Depreciation 167 167 167 167
Lease 652 652 652 652

Parameters:
Lease rate (2013) 20.88
Lease inflation 2.0%

2013 2014 2015 2016 2017 2018 2019

20.88 21.298 21.724 22.158 22.601 23.053 23.514
Exhibit 6: Teuer Furniture Balance Sheet for Individual Showrooms
# Avg Size 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2003 1 17,200 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Cap expenditure 358 324
Accts receivable 751 1,187 1,665 1,975 2,040 1,700 1,745 1,742 1,902 1,964 1,970 1,976 1,982 1,989 1,995
Inventory 671 1,090 1,330 1,206 1,167 980 972 1,082 1,027 1,090 1,148 1,152 1,155 1,159 1,163 1,167
Accts payable 236 396 448 405 403 350 345 370 369 390 394 395 397 398 399 401
Accr expenses 29 49 62 61 61 53 54 57 58 58 57 57 58 58 61 61

2004 3 17,600 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Cap expenditure 1,175 936
Accts receivable 2,292 3,870 5,029 5,526 5,276 5,599 5,612 5,691 5,815 5,833 5,852 5,871 5,890 5,908
Inventory 2,061 3,590 4,304 3,352 2,851 3,042 3,248 3,397 3,619 3,400 3,410 3,421 3,432 3,443 3,454
Accts payable 762 1,255 1,421 1,124 1,025 1,090 1,124 1,139 1,153 1,167 1,171 1,175 1,179 1,182 1,186
Accr expenses 95 158 193 173 162 162 175 177 179 170 170 171 172 172 182

2005 4 18,500 0 1 2 3 4 5 6 7 8 9 10 11 12 13
Cap expenditure 1,814 1,506
Accts receivable 3,140 5,508 6,296 6,231 7,149 7,751 7,950 7,972 7,998 8,024 8,049 8,075 8,101
Inventory 3,296 5,271 4,640 3,975 4,075 4,427 4,354 5,114 4,661 4,676 4,691 4,706 4,721 4,736
Accts payable 1,078 1,760 1,742 1,381 1,523 1,572 1,565 1,631 1,601 1,606 1,611 1,616 1,621 1,626
Accr expenses 138 212 240 203 240 244 251 259 245 232 232 233 234 235

2006 5 21,100 0 1 2 3 4 5 6 7 8 9 10 11 12
Cap expenditure 2,971 2,450
Accts receivable 4,433 6,593 7,974 10,040 10,908 11,761 11,332 11,368 11,405 11,442 11,478 11,515
Inventory 4,344 6,518 6,635 5,870 6,689 6,854 6,348 6,625 6,647 6,668 6,689 6,711 6,732
Accts payable 1,533 2,227 2,181 1,889 2,165 2,325 2,377 2,275 2,282 2,290 2,297 2,304 2,312
Accr expenses 193 272 300 291 337 343 362 349 350 327 328 330 331

2007 6 22,100 0 1 2 3 4 5 6 7 8 9 10 11
Cap expenditure 4,058 3,277
Accts receivable 4,817 6,829 9,849 12,400 13,920 14,342 14,388 14,434 14,481 14,527 14,574
Inventory 5,232 6,246 8,710 7,320 8,121 9,022 8,385 8,412 8,439 8,466 8,493 8,521
Accts payable 1,732 2,480 2,712 2,631 2,712 2,919 2,879 2,889 2,898 2,907 2,916 2,926
Accr expenses 213 293 362 381 436 435 441 443 444 414 415 417

2008 2 15,500 0 1 2 3 4 5 6 7 8 9 10
Cap expenditure 924 761
Accts receivable 1,048 1,758 2,212 2,905 3,294 3,345 3,356 3,367 3,378 3,389
Inventory 1,028 1,711 2,147 1,727 1,911 1,926 1,956 1,962 1,969 1,975 1,981
Accts payable 349 547 662 586 690 661 672 674 676 678 680
Accr expenses 43 72 88 94 101 92 103 103 104 97 97

2009 1 14,500 0 1 2 3 4 5 6 7 8 9
Cap expenditure 394 322
Accts receivable 484 840 1,191 1,411 1,548 1,572 1,577 1,582 1,587
Inventory 488 882 881 823 825 905 919 922 925 928
Accts payable 171 261 327 281 283 311 316 317 318 319
Accr expenses 21 34 43 44 40 44 48 49 49 46

2010 2 14,700 0 1 2 3 4 5 6 7 8
Cap expenditure 752 616
Accts receivable 956 1,787 2,295 2,819 3,093 3,141 3,151 3,161
Inventory 1,013 1,787 1,913 1,891 1,648 1,808 1,836 1,842 1,848
Accts payable 348 577 683 649 566 621 631 633 635
Accr expenses 44 71 91 79 79 88 97 97 97

2011 2 15,400 0 1 2 3 4 5 6 7
Cap expenditure 798
Accts receivable 1,093 1,851 2,471 3,035 3,330 3,382 3,393
Inventory 1,067 1,795 1,728 2,036 1,775 1,947 1,977 1,984
Accts payable 387 623 593 699 609 669 679 681
Accr expenses 47 76 67 86 86 95 104 104

2012 3 16,300 0 1 2 3 4 5 6
Cap expenditure 1,293
Accts receivable 1,745 2,969 3,963 4,869 5,341 5,424
Inventory 1,708 1,813 2,771 3,266 2,846 3,123 3,171
Accts payable 617 623 952 1,122 977 1,072 1,089
Accr expenses 79 65 107 137 137 152 167

2013 2 16,000 0 1 2 3 4 5
Cap expenditure 860
Accts receivable 1,175 1,999 2,669 3,279 3,597
Inventory 1,221 1,866 2,200 1,917 2,103
Accts payable 419 641 755 658 722
Accr expenses 44 72 92 93 102

2014 2 16,000 0 1 2 3 4
Cap expenditure 876
Accts receivable 1,210 2,060 2,749 3,377
Inventory 1,258 1,922 2,266 1,974
Accts payable 432 660 778 678
Accr expenses 45 75 95 95

2015 2 15,000 0 1 2 3
Cap expenditure 837
Accts receivable 1,167 1,985 2,650
Inventory 1,212 1,853 2,184
Accts payable 416 636 750
Accr expenses 44 72 92
Exhibit 7: Teuer Furniture Cash Flow Assets
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sales 2,057 10,415 26,701 51,540 79,191 90,680 111,451 134,093 148,218
- Costs -2,583 -12,003 -29,394 -53,144 -77,592 -84,510 -89,222 -100,704 -112,132
- Taxes 0 0 0 0 0 -543 -8,892 -13,356 -14,434
Net income 0 -526 -1,588 -2,693 -1,604 1,600 5,626 13,337 20,033 21,651
- Capital expenditure -358 -1,175 -1,814 -2,971 -4,058 -924 -394 -752 -1,122 -2,229
+ Depreciation 0 72 307 669 1,264 2,075 2,188 2,032 1,820 1,450
- Increase in NWC -406 -2,193 -5,957 -9,467 -11,645 -8,498 -6,281 -8,494 -7,192 -8,365
Cash flow to assets -764 -3,823 -9,052 -14,461 -16,043 -5,747 1,139 6,124 13,539 12,508
Exhibit 8: Forecasting Sales Revenue and Costs
Year 1 2 3 4 5 6 7 8 9
Sales growth 2003 73.6% 34.6% 19.5% 15.1% 0.2% 1.2% 1.0% -0.6%
2004 72.9% 29.2% 21.4% 8.1% 3.6% 3.4% 0.0%
2005 76.6% 32.6% 22.2% 7.8% 3.7% -3.1%
2006 73.8% 28.8% 24.4% 11.3% -1.3%
2007 64.5% 36.8% 26.1% 6.3%
2008 60.5% 35.6% 23.6%
2009 69.0% 36.6%
2010 70.4%
2011
Average 70.2% 33.5% 22.9% 9.7% 1.5% 0.3%

Year 1 2 3 4 5 6 7 8 9
CGS 2003 71.1% 61.5% 57.8% 38.9% 43.4% 42.0% 38.9% 36.6% 40.0%
2004 71.3% 62.4% 52.1% 43.8% 39.0% 41.2% 38.7% 40.2%
2005 72.9% 65.6% 57.8% 40.6% 41.1% 40.3% 40.2%
2006 70.1% 53.1% 57.6% 33.3% 38.9% 40.0%
2007 72.6% 67.3% 53.9% 38.4% 41.0%
2008 64.4% 67.0% 61.0% 40.7%
2009 71.0% 65.9% 53.3%
2010 74.0% 66.5%
2011 70.3%
Average 70.9% 63.7% 56.2% 39.9%

Year 1 2 3 4 5 6 7 8 9
SGA 2003 19.9% 17.1% 16.4% 13.9% 12.9% 13.9% 13.6% 11.7% 13.1%
2004 17.6% 18.0% 17.4% 14.1% 14.5% 13.7% 13.9% 13.0%
2005 20.4% 17.9% 17.0% 14.5% 13.2% 13.2% 15.1%
2006 20.4% 19.0% 18.0% 12.7% 14.4% 14.2%
2007 19.8% 17.6% 18.0% 13.0% 13.6%
2008 16.4% 18.4% 16.9% 13.4%
2009 17.9% 19.2% 17.4%
2010 20.7% 19.4%
2011 20.9%
Average 19.3% 18.3% 17.3% 13.6%

Year 1 2 3 4 5 6 7 8 9
Advertising 2003 9.9% 8.9% 7.6% 7.1% 6.7% 7.7% 6.9% 6.8% 7.6%
2004 10.3% 8.2% 8.3% 7.4% 8.0% 7.7% 7.2% 7.2%
2005 10.9% 8.9% 8.0% 7.6% 7.0% 6.7% 7.3%
2006 10.3% 8.4% 8.3% 6.8% 6.8% 6.6%
2007 10.2% 9.0% 8.1% 6.9% 7.1%
2008 10.2% 9.6% 8.3% 7.3%
2009 11.0% 9.1% 8.6%
2010 11.7% 8.9%
2011 10.7%
Average 10.6% 8.9% 8.2% 7.2%
Exhibit 9: Forecasting Investment
Year 1 2 3 4 5 6 7 8 9
Accounts Receivable 2003 36.5% 31.6% 31.9% 32.1% 32.2% 30.9% 31.0% 29.7% 31.5%
2004 34.4% 32.5% 33.2% 33.5% 34.2% 34.6% 32.5% 31.9%
2005 32.8% 33.1% 31.8% 29.7% 31.3% 31.7% 32.4%
2006 32.6% 31.2% 33.8% 33.8% 32.0% 33.8%
2007 31.2% 31.0% 32.3% 31.3% 32.0%
2008 32.9% 34.0% 30.5% 31.4%
2009 33.7% 33.5% 33.6%
2010 31.8% 33.7%
2011 32.6%
Average 32.4%

Year 1 2 3 4 5 6 7 8 9
Inventory 2003 45.9% 47.2% 44.0% 50.4% 42.4% 42.4% 44.3% 50.3% 42.5%
2004 43.4% 48.3% 54.5% 46.4% 47.3% 45.6% 48.5% 47.3%
2005 47.2% 48.3% 40.6% 46.8% 43.4% 44.9% 48.2%
2006 45.6% 58.0% 48.8% 59.3% 50.4% 49.2%
2007 46.7% 42.2% 53.0% 48.1% 45.5%
2008 50.1% 49.4% 48.6% 45.9%
2009 47.8% 53.4% 46.7%
2010 45.5% 50.7%
2011 45.3%
Average 47.6%

Year 1 2 3 4 5 6 7 8 9
Accounts Payable 2003 16.1% 17.2% 14.8% 16.9% 14.6% 15.2% 15.7% 17.2% 15.3%
2004 16.1% 16.9% 18.0% 15.6% 17.0% 16.3% 16.8% 15.9%
2005 15.4% 16.1% 15.2% 16.2% 16.2% 15.9% 17.3%
2006 16.1% 19.8% 16.0% 19.1% 16.3% 16.7%
2007 15.5% 16.8% 16.5% 17.3% 15.2%
2008 17.0% 15.8% 15.0% 15.6%
2009 16.8% 15.8% 17.3%
2010 15.6% 16.4%
2011 16.4%
Average 16.3%

Year 1 2 3 4 5 6 7 8 9
Accrued Expenses 2003 4.7% 5.1% 4.9% 4.7% 4.9% 4.5% 4.6% 5.2% 4.7%
2004 5.1% 5.1% 4.9% 4.9% 4.7% 4.7% 4.8% 4.9%
2005 4.6% 4.7% 4.8% 4.4% 5.2% 5.0% 4.6%
2006 4.6% 4.7% 4.8% 5.0% 4.7% 4.7%
2007 4.6% 5.0% 4.6% 4.8% 4.8%
2008 5.1% 5.0% 4.8% 4.9%
2009 5.2% 4.8% 4.7%
2010 4.5% 4.7%
2011 4.4%
Average 4.8%

Nominal Real
Construction costs 2003 20.8 25.9
2004 22.3 26.8
2005 24.5 28.6
2006 28.2 32.0
2007 30.6 33.5
2008 29.8 32.6
2009 27.2 28.9
2010 25.6 26.8
2011 25.9 26.4
2012 26.4 26.4
2013 26.9 26.4
2014 27.4 26.4
2015 27.9 26.4

Nominal Real
Refresh cost 2003 90.6% 74.0%
2004 79.6% 66.0%
Average 70.0%
Exhibit 10: Forecasting Parameters
1 2 3 4 5 6 7
Sales growth 70.2% 33.5% 22.9% 9.7% 1.5% 0.3%
CGS (% sales) 70.9% 63.7% 56.2% 39.9% 39.9% 39.9% 39.9%
SGA (% sales, excluding dep & advertising) 19.3% 18.3% 17.3% 13.6% 13.6% 13.6% 13.6%
Advertising (% sales) 10.6% 8.9% 8.2% 7.2% 7.2% 7.2% 7.2%
Accounts Receivable (% sales) 32.4%
Inventory (% next year's CGS) 47.6%
Accounts Payable (% next year's CGS) 16.3%
Accrued expenses (next year's SGA adv) 4.8%
Depreciation (years) 5
Refresh cost 70%
Corporate tax rate 40.0%
Corporate expenses 5.0%
Discount rate 12.1%
Long-term growth rate 3.5%
Shares outstanding (K) 9,945
Teuer Furniture Pro Forma Income Statement
2012 2013 2014 2015 2016 2017 2018 2019
Sales 148,218 160,374 172,287 184,726 197,314 205,954 211,705 215,340
CGS -61,955 -68,126 -73,240 -78,274 -82,644 -84,960 -85,748 -85,863
SGA (exc adv & dep) -21,253 -22,647 -24,349 -26,076 -27,641 -28,609 -29,091 -29,284
Advertising -10,744 -11,841 -12,699 -13,589 -14,449 -14,943 -15,247 -15,424
Depreciation -1,450 -1,084 -1,373 -1,959 -2,631 -2,559 -2,178 -1,828
Lease (stores) -9,320 -10,613 -11,575 -12,320 -13,092 -13,382 -13,678 -14,106
Corp Expense (inc lease/adv) -7,411 -8,019 -8,614 -9,236 -9,866 -10,298 -10,585 -10,767
Taxes -14,434 -15,218 -16,175 -17,309 -18,796 -20,481 -22,071 -23,227
Net income 21,651 22,827 24,262 25,963 28,194 30,722 33,107 34,841

Parameters:
Corporate tax rate 40%
Corporate expenses 5%
Teuer Furniture Pro Forma Balance Sheet
2012 2013 2014 2015 2016 2017 2018
Assets
Accounts Receivable 48,200 52,021 55,885 59,920 64,003 66,806 68,671
Inventory 33,343 32,402 34,834 37,229 39,307 40,409 40,783
Total Current Assets 81,543 84,422 90,719 97,148 103,310 107,214 109,454
PPE 3,920 5,203 7,155 9,310 7,440 5,203 3,641
Total Assets 85,463 89,625 97,874 106,459 110,750 112,417 113,096

Liabilities and Equity

Accounts Payable 11,364 11,126 11,962 12,784 13,498 13,876 14,005
Accrued Expenses 1,682 1,605 1,715 1,812 1,896 1,970 2,026
Total Current Liabilities 13,046 12,732 13,676 14,596 15,394 15,846 16,031
Debt 0 0 0 0 0 0 0
Equity 72,417 76,893 84,198 91,863 95,356 96,571 97,065
Total Liabilities and Equity 85,463 89,625 97,874 106,459 110,750 112,417 113,096

Balance sheet check (A=L+E)

Teuer Furniture Pro Forma Cash Flow Assets
Year 0 1 2 3 4 5 6
2012 2013 2014 2015 2016 2017 2018
Sales 148,218 160,374 172,287 184,726 197,314 205,954 211,705
- Costs -112,132 -122,330 -131,850 -141,454 -150,324 -154,751 -156,527
- Taxes -14,434 -15,218 -16,175 -17,309 -18,796 -20,481 -22,071
Net income 21,651 22,827 24,262 25,963 28,194 30,722 33,107
- Capital expenditure -2,229 -2,367 -3,325 -4,114 -761 -322 -616
+ Depreciation 1,450 1,084 1,373 1,959 2,631 2,559 2,178
- Increase in NWC -8,365 -3,194 -5,352 -5,510 -5,364 -3,452 -2,055
Cash flow assets 12,508 18,351 16,957 18,299 24,701 29,507 32,613
Terminal value 392,493
Discount rates 0.89 0.80 0.71 0.63 0.56 0.50
PV 16,370 13,494 12,990 15,642 16,668 214,222

Asset value 289,386

Share value 29.10

Parameters:
Asset discount rate 12.1%
Long-term growth rate 3.5%
Shareholders (#) 187
Shares outstanding (K) 9,945