Dixon Corporation: The Collinsville Plant
Cash Flow Assumption (No Lamination)
We have taken the pro-‐forma financial statements as is and have extended them forward by 5 years under the following assumptions.
Item Assumption Basis The capacity of the plant is 40,000 and to be conservative we have taken the 1984 level that is Sales in tons 38,000 below capacity, as continuous for the remaining life of the plant. The five-‐year average in price growth is 17%, however the growth has been declining from 24% in Average Growing at 8% 77’ to 7% in 78’ and 5% in 79’, due to industry Price/Ton per annum overcapacity. However, with the projected increase in demand for sodium chlorate, it is reasonable to take Dixon’s projection of 8% growth per annum. After 1985, we will assume growth rates of 12% per annum, although we are not increasing productions. The reason being energy costs have been following Growing at 12% Power costs an increasing trend, with an average of 10.5% per per annum annum based on the cost $.019 per KWH in 77’ to $.025 per KWH in 79’. To be conservative we will take the 12% projection made by Dixon. Based on the historical average and
We have taken the pro-‐forma financial statements as is and have extended them forward by 5 years under the following assumptions.
Item Assumption Basis The capacity of the plant is 40,000 and to be conservative we have taken the 1984 level that is Sales in tons 38,000 below capacity, as continuous for the remaining life of the plant. The five-‐year average in price growth is 17%, however the growth has been declining from 24% in Average Growing at 8% 77’ to 7% in 78’ and 5% in 79’, due to industry Price/Ton per annum overcapacity. However, with the projected increase in demand for sodium chlorate, it is reasonable to take Dixon’s projection of 8% growth per annum. After 1985, we will assume growth rates of 12% per annum, although we are not increasing productions. The reason being energy costs have been following Growing at 12% Power costs an increasing trend, with an average of 10.5% per per annum annum based on the cost $.019 per KWH in 77’ to $.025 per KWH in 79’. To be conservative we will take the 12% projection made by Dixon. Based on the historical average and