RJR Nabisco Valuation Xlsx

Valuing the cash fows to capital under the pre-bid plan when interest tax shields are included in the cash fows(millions of dollars except per share data)1989 1990 1991Cash FlowsCash Flows available for capital payments [a] 517 9! 1"99Cash #nterest [a] 5!$ %%$ %9"Cash Flows available for capital [b] 1&99 1%1& $&9$'isco(nt )ate [c] 1*% 1*% 1*%C(m(lative disco(nt factor [d] &*!7 &*7% &*%%+resent ,al(eValuation-rowth in cash .ows after 199! & $ +resent val(e of cash .ows/ 19!909! 1"55" 1"55" 1"55"+resent ,al(e of terminal val(e [e] !&&! 9$79 11&"&1ess2 3ss(med 'ebt $15%1 $$!"$ $5!"4et ,al(e 1%"57 17%$! 19"794et ,al(e per share [f] 71 77 !5a5case exhibit 5b5cash .ows available for capital e6(al cash .ows available for capital payments pl(s cash interestc5disco(nt rate is comp(ted (sin7 the C3+8/ with an (nlevered asset beta of &*7&/ a ris90free rate of 9: and a ris9 premi(m of !:d5the c(m(lative disco(nt factor for each year is the present val(e of ;1 received at the end of the yeare5calc(lated as the present val(e in 19!! of a 7rowin7 perpet(ity of the 199! cash .ow available to capitalf5ass(mes $$9 million shares o(tstandin7Valuing the cash fows to capital under the pre-bid plan when interest tax shields are included in the cash fows1992 1993 1994 199 199! 199" 1998$&7" $551 $!%9 "$5" "%17 &75 5!9%9& %5! 59 5! 1& $59 0$1$7%" "$&9 "%" "711 &$7 "" 5%!1*% 1*% 1*% 1*% 1*% 1*% 1*%&*5! &*51 &* &*"9 &*" &*$9 &*$%b5cash .ows available for capital e6(al cash .ows available for capital payments pl(s cash interestc5disco(nt rate is comp(ted (sin7 the C3+8/ with an (nlevered asset beta of &*7&/ a ris90free rate of 9: and a ris9 premi(m of !:d5the c(m(lative disco(nt factor for each year is the present val(e of ;1 received at the end of the yeare5calc(lated as the present val(e in 19!! of a 7rowin7 perpet(ity of the 199! cash .ow available to capitalCost o# capital under the pre-bid plan using tax-ad$usted discount rates %&illions o# dollars'3ss(mptionsB,[beta0a]/ where > is the mar9et val(e of =r nabisco and beta0a is the (nlevered asset betad5cac(lated (sin7 the C3+8Cost o# capital under the pre-bid plan using tax-ad$usted discount rates %&illions o# dollars'1993 1994 199 199! 199" 1998"9!$ $5!$ 1!5 & & &$""%1 $%9"9 "1&1% "5%9 &!5" %!1!$%"" $95$1 "$!7& "5%9 &!5" %!1!&*! &*77 &*75 &*7 &*7 &*715* 15*$ 15 1*% 1*% 1*%1*" 1*" 1* 1*% 1*% 1*%a5cost of debt is ass(med to be the ris9 free rate beca(se the beta of the debt is ass(med to be @ero* Ahe tax rate is ":c5 the levered e6(ity beta (beta0e)5>B,[beta0a]/ where > is the mar9et val(e of =r nabisco and beta0a is the (nlevered asset betaValuing the cash fows #or capital under the pre bid plan using tax ad$usted discount rates%&illions o# dollars except per share data'Cash Flows 1989 1990 1991Cash .ows available for capital payments 517 9! 1"993fter tax cash interest "! "7 57Cash .ows available for capitalC 9&1 1"!5 1!5%?3CC(d) 1"*7: 1"*!: 1*&:C(m(lative disco(nt factor &*!! &*77 &*%!+resent val(e 79$*!! 1&%%*5 1$%$*&!3s per sheet 1&7& 1$5!,al(ation-rowth in cash .ows after 199! &:+resent val(e of cash .ows/19!90199! 1$91&+resent val(e of terminal val(e(f) !$7"$11!"1ess2 3ss(med debt 5$&4et val(e 159794et val(e per share(7) %9*777$9"3ss(me $$9 million shares o(tstandin73ss(me a ": tax rate e6(als interest in >xhibit 5 times %%:Valuing the cash fows #or capital under the pre bid plan using tax ad$usted discount rates%&illions o# dollars except per share data'1992 1993 1994 199 199! 199" 1998$&7" $551 $!%9 "$5" "%17 &75 5!955 " "9$ "&$ $71 171 01$5$! $9!5 "$%1 "555 "!!7 $% 5751*1: 1*": 1*": 1*: 1*%: 1*%: 1*%:&*59 &*5$ &*5 &* &*"5 &*" &*$%191*5$ 155$*$ 1%7*5 1$$ 1"%&*5 1$7"*!15&$ 155$ 1!" 11$ 1"! 1$!5 1$&!$: :1$91& 1$91&95!% 11"95$$9% $"&5$& 5$&17$9$ 191&&75*51&917 !"*&%11Valuing the cash fows to capital under the &anage&nt group plan when interest tax sheilds are included in the cash fows%&n o# dollrs exceot per share data'Cash Flows 19!9 199&Cash .ows available for capital payments 1$&1! 59"3fter tax cash interest $79$ 1"5"Cash .ows available for capitalC 1!1& 19%?3CC(d) 1*%: 1*%:C(m(lative disco(nt factor &*!7 &*7%+resent val(e 1$!!*7 17!*9%3s per shee 1$9$" 1!$,al(ation-rowth in cash .ows after 199! &:+resent val(e of cash .ows/19!90199! $"9!$+resent val(e of terminal val(e(f) %$7"&&!1ess2 3ss(med debt 5$&4et val(e $5$&4et val(e per share(7) 11&*&%113ss(me $$9 million shares o(tstandin73ss(me a ": tax rate e6(als interest in >xhibit 5 times %%:Cash .ows available for capitalCe6(las Cash .ows available for capital payments pl(s cash interestValuing the cash fows to capital under the &anage&nt group plan when interest tax sheilds are included in the cash fows%&n o# dollrs exceot per share data'1991 199$ 199" 199 1995 199% 1997919 1$!$ 159 19% $" $797 """$1$!% 11!" 1&"7 !5& %$ "51 &$$&5 $%5 $%"1 $79% $9%! "1! """$1*%: 1*%: 1*%: 1*%: 1*%: 1*%: 1*%:&*%% &*5! &*51 &* &*"9 &*" &*$9155*" 1$9*7 1"1*!1 1$"&*$ 1157*5$ 1&7&*"$ 9%%*$!1%5 1$9 1""1 1$" 11" 1&5! 977$: :$"9!$ $"9!$77 !!5$"1$! "$!""5$& 5$&$%$$ $7%$911*515$! 1$&*%5&%%Cash .ows available for capitalCe6(las Cash .ows available for capital payments pl(s cash interestValuing the cash fows to capital under the &anage&nt group plan when interest tax sheilds are included in the cash fows%&n o# dollrs exceot per share data'199!"%%%&"%%%1*%:&*$%95"*1%9"!,-- Capital structure #or ./. -abisco under the &anage&ent group plan %&illions o# dollars'(an* debt3mo(nt 5 ; 15&&& #nterest rate 5 1$ :De7innin7 Dalance#nterest+aydown>ndin7 Dalance0ssu&ed 1ebt 3mo(nt 5 ;5$& #nterest )ate 5 11:De7innin7 Dalance#nterest+aydown>ndin7 Dalance2ubordinated 1ebt 3mo(nt 5 ;"&&& #nterest )ate 5 1:De7innin7 Dalance#nterest+aydown>ndin7 Dalance345 3re#erred 3mo(nt 5 ; 1"7" #nterest )ate 5 1!*!:De7innin7 Dalance+#E dividendsCash 'ividends+aydown>ndin7 DalanceCon+ertible 3mo(nt 5 ; 91% #nterest )ate 51" : (19!9)/ 1!*!: (199& 0 199!)De7innin7 Dalance+#E dividendsCash 'ividends+aydown>ndin7 Dalance,-- Capital structure #or ./. -abisco under the &anage&ent group plan %&illions o# dollars'1989 1990 1991 1992 1993 1994 19915&&& $"9$ "&75 $!77 $11 1$17 &1!&& "95 "%9 "5 $!9 15 &117&! $1! 19! %% 119 1$17 &"$9$ "&75 $!77 $11 1$17 & &5$& !9 519 "79! $9!$ 1!5 &57$ 5"! 97 1! "$! $& &"1& "75 7$1 !1% && 1!5 &!9 519 "79! $9!$ $5! & &"&&& "&&& "&&& "&&& "&&& "&&& "&&&$& $& $& $& $& $& $&& & & & & & &"&&& "&&& "&&& "&&& "&&& "&&& "&&&1"7" 1%"$ 19"! $"&" $7"% "$5& "!%1$5! "&7 "% "" 51 %11 7$%& & & & & & && & & & & & &1%"$ 19"! $"&" $7"% "$59 "!%1 5!7#nterest )ate 51" : (19!9)/ 1!*!: (199& 0 199!)91% 1&"5 1$$9 1%& 17"5 $&%1 $!119 195 $"1 $75 "$% "!7 %&& &&1&"5 1$$9 1%& 17"5 $&%1 $! $9&9199! 199" 1998& & && & && & && & && & && & && & && & &$51& & &"51 & &$51& & && & &!57 51%$ $!&1!%$ 97& 5$7& & && & &51%$ $!&1 &$9&9 "55 1&557 %5& 77$"55 1&5,--! Cost o# capital under &anage&ent group plan using tax ad$usted discount rates %&illions o# dollars'0ssu&ptions Dan9 'ebtbeta &6(ity Deta (d)Cost of >6(ity (e)?3CC(f)(a) ndin7 Dalance0ssu&ed 1ebt 3mo(nt 5 ;5$& #nterest )ate 5 11:De7innin7 Dalance#nterest+aydown>ndin7 Dalance2ubordinated 1ebt 3mo(nt 5 ;"5&& #nterest )ate 5 1:De7innin7 Dalance#nterest+aydown>ndin7 Dalance345 3re#erred 3mo(nt 5 ; 1"7" #nterest )ate 5 15: (19!90199&)/ 17*$:(19910199$)De7innin7 Dalance+#E dividendsCash 'ividends+aydown>ndin7 DalanceCon+ertible 3mo(nt 5 ; $51! #nterest )ate 515 : (19!90199&)/ 1!*!: (1991 0 199!)De7innin7 Dalance+#E dividendsCash 'ividends+aydown>ndin7 Dalance,--9 capital structure #or ./. -abisco under 55.6s 7perating 3lan %&illions o# dollars'1989 1990 1991 1992 1993 1994 1991$"!& !95! 5!1$ 5119 5195 $%1$ %$91!% 1&75 %97 %1 5&" "1" 7%"$$ "1% %9" 9$ 15!" 19!" %$9!95! 5!1$ 5119 195 $%1$ %$9 &5$& !9 519 "79! $9!$ $5!$ $1!$57$ 5"! 97 1! "$! $! $&"1& "75 7$1 !1% && && $1!$!9 519 "79! $9!$ $5!$ $1!$ &"5&& "5&& "5&& "5&& "5&& "5&& "5&&9& 9& 9& 9& 9& 9& 9&& & & & & & $1"5&& "5&& "5&& "5&& "5&& "5&& "79#nterest )ate 5 15: (19!90199&)/ 17*$:(19910199$)1"7" 15!& 1!17 $1$9 & & &$&% $"7 "1$ "%% & & && & & & & & && & & & & & &15!& 1!17 $1$9 $95 & & nterest )ate 515 : (19!90199&)/ 1!*!: (1991 0 199!)$51! $!9% """1 "95! 7&$ 55!% %%"%"7! "5 %$% 7 !! 1&5& 1$!& & & & & & && & & & & & &$!9% """1 "95! 7&$ 55!% %%"% 7!!"199! 199" 1998& & && & && & && & && & && & && & && & &"79 19 &!7 $1 &"""& 19 &19 & && & && & && & && & && & &7!!" 9"%5 7"$&1!$ 17%1 1"7%& & && "!&% "199"%5 7"$& "77Cost o# capital under 55.6s plan using the tax-ad$usted discount rates 8&illions o# dollars90ssu&ptionsxhibit 5J for the mana7ement 7ro(p strate7y fro >xhibit % and for EE)Hs strate7y from exhibit 7(a) terminal val(es are calc(lated as perpet(ities of the 199! val(e witho(t 7rowth (sin7 a 1*%: disco(nt rate(b) Calc(lated (sin7 a 1*%: disco(nt rate1990 1991 1992 1993 1994 199 199!$$5 $"% $"5 $$ $ 15% 1"979% %79 %$ 9 "7 $7 1%%%& "7 &$ "5" $!9 $1$ 1191%$ 1"5 9"& 7"! 7"5 7"5 7"555% 555 57$ 5!% 59! %1! %"%"!1 "!& "!9 "9% &$ 1$ $$& & & & & & &$7&& & & & & & && & & & & &0#ter-tax operating cash fows %operating proAts @ %1 - tax rates' B depriciation'$99" ""5$ "%"$ $9$ $$! 5%& 9$5"1$1 "1 "%"9 "!95 1%$ 5" 771$$99 $5! $!91 "11! ""57 "%$1 "91&4IA>2 'ata for prebid strate7y are from >xhibit 5J for the mana7ement 7ro(p strate7y fro >xhibit % and for EE)Hs strate7y from exhibit 7terminal val(es are calc(lated as perpet(ities of the 199! val(e witho(t 7rowth (sin7 a 1*%: disco(nt rate199" 19981998 ,er&inal Value %a' 3resent +alue%b'!! 07 & 97&7 & & $!&&& & & $1"&7"5 7"5 5&" %957%5! %7! % "%7"$ $ "&$ $!"%& & & && & & 511&& & & 11&%5"$% 57%1 "95! $9"!551$& 55&1 "7%7! $9&9%$$9 5!& "1"%7 $"1"