This spreadsheet supports STUDENT STUDENT analysis analysis of the case, "Deluxe Corporation" (Case 3! Please note:
This is a #or$in% &odel 'ssu&ptions )nputs presented )nputs presented can *e chan%ed to +ary the results Please press - to recalculate results after chan%in% assu&ptions This &odel contains an intentional circularity To resol+e this circularity, please set Excel to recalculate the &odel a nu&*er of ti&es (./ to /! See T001S0PT)0NSC'1CU1'T)0N, T001S0PT)0NSC'1CU1' T)0N, and chec$ )TE2'T)0N
Copyright © 2005, by the University of Virginia Virginia Darden School Foundation
Exh. 1
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Selected )nco&e State&ent )nfor&ation
!et sales *perating e+penses rofit fro- operations .nterest e+pense !et earnings Co--on shares, end of year /000s Co--on shares repurchased /000s Co--on shares issued /000s ?arnings per share # Dividend per share Selected 8alance Sheet )nfor&ation
1oring capital !et property, plant, 3 e4uip-ent otal assets 6ong7ter- debt Co--on stocholders8 e4uity 9oo value: 6 debt;capital =aret value: 6 debt;capital Selected 9aluation )nfor&ation (yearend!
Delu+e Corp stoc price S3 500 Co-posite .nde+
"
Delu+e Corp average ;? 2 2
S3 500 Co-posite average ;? Delu+e Corp -aret;boo ratio Delu+e Corp 9eta >ield on 20 year 7bonds >ield on (07day 7bills otal annual ret on large co stocs
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!otes:
Page 2
Exh. 2
?+hibit 2 Deluxe Corp Consolidated State-ent of .nco-e /in US " -illions >ears ended Dece-ber $# .// ./// @evenue Cost of goods sold Selling, general, and ad-in e+pense AoodBill a-ortiation e+pense sset i-pair-ent and disposition losses otal costs rofit;/loss fro- operations .nterest inco-e
"#,2'&%
"#,2)2'
%5$& 5#%% )2 2# (')% $020
%5$0 5#&2 52 '$ (&$& 2'&(
2%
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Exh. 2
?+hibit 2 Deluxe Corp Consolidated State-ent of .nco-e /in US " -illions >ears ended Dece-ber $# .// ./// @evenue
"#,2'&%
"#,2)2'
%5$& 5#%% )2 2# (')% $020
%5$0 5#&2 52 '$ (&$& 2'&(
2% /#2 /5) 2(') ###) 7 "#&5(
%& #2 /##% 2'$% #0%0 /'5 "#)#(
Cost of goods sold Selling, general, and ad-in e+pense AoodBill a-ortiation e+pense sset i-pair-ent and disposition losses otal costs rofit;/loss fro- operations .nterest inco-e *ther inco-e .nterest e+pense ?arnings;/loss before ta+es a+ e+pense Discontinued operations inco-e;/loss !et earnings;/loss
Source of data: Co-pany regulatory filings
Page 3
Exh. 3
?+hibit $ Deluxe Corp Consolidated 9alance Sheets /in US " -illions .//
.///
"()
"&0'
7
#&5
rade accounts receivable E net .nventories
$'' ##2
%)0 ##$
Supplies
###
##&
Deferred inco-e ta+es
%)
'%
repaid e+penses and other
((
#20
otal current assets
&%0
#&'&
6ong7ter- invest-ents
$''
$5)
'ssets
Current assets Cash and cash e4uivalents =aretable securities
roperty, plant, and e4uip-ent E net
#5##
#'%0
.ntangibles E net
##50
#$%5
AoodBillEnet
&22
&&%
*ther noncurrent assets
)'(
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Current liabilities ccounts payable
"52&
"%%'
ccrued liabilities Short7ter- debt
#)2( #500
#%&5 7
#%
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2($(
6ong7ter- debt
#0#
#02
Deferred inco-e ta+es
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otal assets 1ia*ilities and Stoc$holders; E
6ong7ter- debt due Bithin one year otal current liabilities
*ther long7ter- liabilities otal liabilities Co--on stocholders8 e4uity Co--on shares dditional paid7in capital @etained earnings Unearned co-pensation ccu- other co-prehensive inco-e otal co--on stocholders8 e4uity otal liabilities and stocholders8 e4uity
Source of data: Co-pany regulatory filings
Page 4
Exh. 4
?+hibit % Deluxe Corp inancial orecast, .//..//5 (values in U.S. $ millions) ctual .// #2< 2$)< $'0< (#<
nnual increase in sales *perating profit;sales a+ rate 1oring capital;sales Dividend payout ratio )nco&e State&ent !et sales *perating profit .nterest e+pense, net reta+ inco-e a+ e+pense !et inco-e Dividends @etentions to earnings
.//. #%< 2))< $&0< (#< 520<
roected .//3 .//4 #)< 20< 2)'< 2)'<
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8alance Sheet Cash 1oring capital /Bithout debt
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!et fi+ed assets otal assets
#5## 2''2
#5## $($)
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#5## )$($
Debt /long7 and short7ter- *ther long7ter- liabilities
#)#5 $'0
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ree Cash lo#s ?9. 6ess ta+es on ?9. lus depreciation 6ess capital e+penditures
"$%%& /#$#0 500 /500
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6ess additions to;plus reductions in Borng capital Free cash floB
/#) "2#22
/#( "2#)#
/2% "2200
?4uity otal capital
Source: Case Briters8 analysis, consistent Bit h forecast e+pectations of securities analysts
Page 5
Exh. 4
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Page 6
Exh. 6
?+hibit ) =ey )ndustrial inancial 2atios *y 2atin% Cate%ories
=ey )ndustrial inancial 2atios (Threeyear &edians .///>/.!
?9. interest coverage / x ?9.D interest coverage /x Funds fro- operations;total debt /< Free operating cash floB;total debt /< @eturn on capital /< *perating inco-e;sales /< 6ong7ter- debt;capital /< otal debt;capital, incl short7ter- debt /<
'''
.nvest-e ''
2$% 25$ 2#%2 #5)) $50 2$% /## 50
#$$ #)( )5' $$) 2)) 2%0 2## $5(
Standard 3 oor8s defined these ratios based on the boo value of t hese ite-s as folloBs: ?9. interest coverage G ?9.;interest e+pense ?9.D interest coverage G /?9. plus depreciation and a-ortiation;interest e+pense 6ong7ter- debt;capital G long7ter- debt;/long7ter- debt H stocholders8 e4uity otal debt;capital, incl short7ter- debt G /short7ter- debt H long7ter- debt;/short7ter- debt H long7ter- debt Source of data: Standard 3 oor8s CreditStats
Page 7
Exh. 6
Credit 2atin%
t grade '
888
)$ &5 %22 22$ #&# #&# $$& %2)
$( 5% $0) #2& #$# #55 %0$ %'0
!oninvest-ent grade 88 8 22 $2 #(' '$ ##5 #5% 5$) 5''
#0 #' #0% #5 &0 #%' '2) '5#
H stocholders8 e4uity
Page 8
)00+
500+
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?+hibit & Capital Costs *y 2atin% Cate%ory '''
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'
888
88
8
Cost of de*t (pretax!
5%'<
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)$0<
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Cost of e
#025<
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Source of data: Hudson Bancorp
200#
?+hibit & Capital Costs *y 2atin% Cate%ory '''
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888
88
8
Cost of de*t (pretax!
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Cost of e
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Source of data: Hudson Bancorp
?+hibit ( Capital ?ar$et Conditons /as of Iuly $#, 2002
US Treasury 0*li%ations (07day bills #&07day bills 27year notes $7year notes 57year notes #07year notes $07year notes
Corporate De*t 0*li%ations (/year! 999 99 9
@ield #)(< #)&< 22$< 2'(< $%5< %%)< 5$0<
0ther )nstru&ents Discount !otes Certificates of Deposit /$7-onth Co--ercial aper /)7-onth er- Fed Funds
@ield 55#< 552< 5'0< )$$< (0#< ##('<
Source of data: Bloomberg LP, S&Ps !esearc" #nsig"t, alue Line #nvestment Surve%, atastream 'dvance
@ield #'0< #'2< #'5< #'&<
?+hibit ' Delu+e Corp E8)T )nterest Co+era%e 2atios 8y @ear
?9. .nterest e+pense Co+era%e ratio (x!
--. $222 #5% ./x
--3 2&0& #0$ .63x
--4 2$$' ##$ ./6x
-- 2$)$ #%' 5x
--5 2)2& #20 .-x
--6 $#5( (' 3.4x
--7 $#)) (' 3.7x
--2($& (5 3/x
./// 2&%' #0& .53x
.// $0&2 5) .x
Sources of data: S38s @esearch .nsight, Value 6ine .nvest
DE1UAE C02P .CJ?@: D6K S.C: 2'&0 A.CS: 2020#0#0
Sales Cost of Sales Aross rofit ?9.D ?9. .nterest ?+pense otal a+es Depreciation !et .nco-e Co- Shares *utstanding reasury Stoc7L Co- Shares reasury Stoc7otal " -t ?arnings er Share /Value 6ine Div er Share /Value 6ine
Dec-. Dec-3 #5$%$5# #5&#')' '22#55 '$(%($ #(5( &%22'% $&&&$% $5$#%' $222#( 2&0&2' #5$'# #02') #2#((( (%052 )))#5 '2$2 202'&% #%#&)#
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1oring Capital /Value 6ine 3?7otal !et ssets7otal 6 Debt7otal referred Stoc Co--on ?4uity7otal
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6ong7er- Debt;otal Capital
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rice7Close Fiscal >ear vg nnl ;? /Value 6ine rice to 9oo Fiscal >r ?nd 9eta Aov 9onds720 >ear 79ill7$ =onth S3 500 /Datastrea- S3 500 ;? /Datastrea-
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