ATH
MIT OpenCourseWare
http://ocw.mit.edu
____________
15.963 Management Accounting and Control
Spring 2007
For information about citing these materials or our Terms of Use, visit: ________________ http://ocw.mit.edu/terms. 15.963 Managerial Accounting and Control
Spring 2007
Prof. Mozaffar Khan
MIT Sloan School of Management
ATH: Chronological Stages
1986
1989
1990
Founding
15.963 [Spring 2007]
1991
Growth
1992
Push to
Profitability
1993
1994
Focus on
Process
Managerial Accounting & Control
1995
1996
New
Management
2
ATH: Chronological Stages
1986
1989
1990
Founding
1991
1992
Push to
Profitability
Growth
1993
1994
1995
Focus on
Process
1996
New
Management
ATH Achievements
- developed new product
- capitalized new venture
- attracted new capital
- earn-out plan
- built market share
15.963 [Spring 2007]
- 4 X Revenues
- first profit
- rewarded all employees - developed a vision
- customer focused measures - sales and earnings growth Managerial Accounting & Control
-
$60 million sales
52% gross margin
$102 million assets
$60 million accumulated
R&D investment
3
ATH Technologies
We trace the evolution of ATH through five stages.
What is the competitive environment?
The business is technology driven.
Technology is evolving rapidly, so product life cycles are likely to be short. Product development pipeline is critical.
What do you think of Scepter’s decision to purchase ATH?
Did they earn an appropriate return on investment?
The total price, if all earn-out conditions are met, is probably around $150m in
1990 dollars, after discounting at about 18%.
The target income for 1994 is $24m. This would need to grow substantially, and for a long period, in order to earn an appropriate ROI.
Is this likely given short product life cycles?
15.963 [Spring 2007]
Managerial Accounting & Control
4
ATH Technologies
Was this a poor investment decision?
There may have been non-financial
http://ocw.mit.edu
____________
15.963 Management Accounting and Control
Spring 2007
For information about citing these materials or our Terms of Use, visit: ________________ http://ocw.mit.edu/terms. 15.963 Managerial Accounting and Control
Spring 2007
Prof. Mozaffar Khan
MIT Sloan School of Management
ATH: Chronological Stages
1986
1989
1990
Founding
15.963 [Spring 2007]
1991
Growth
1992
Push to
Profitability
1993
1994
Focus on
Process
Managerial Accounting & Control
1995
1996
New
Management
2
ATH: Chronological Stages
1986
1989
1990
Founding
1991
1992
Push to
Profitability
Growth
1993
1994
1995
Focus on
Process
1996
New
Management
ATH Achievements
- developed new product
- capitalized new venture
- attracted new capital
- earn-out plan
- built market share
15.963 [Spring 2007]
- 4 X Revenues
- first profit
- rewarded all employees - developed a vision
- customer focused measures - sales and earnings growth Managerial Accounting & Control
-
$60 million sales
52% gross margin
$102 million assets
$60 million accumulated
R&D investment
3
ATH Technologies
We trace the evolution of ATH through five stages.
What is the competitive environment?
The business is technology driven.
Technology is evolving rapidly, so product life cycles are likely to be short. Product development pipeline is critical.
What do you think of Scepter’s decision to purchase ATH?
Did they earn an appropriate return on investment?
The total price, if all earn-out conditions are met, is probably around $150m in
1990 dollars, after discounting at about 18%.
The target income for 1994 is $24m. This would need to grow substantially, and for a long period, in order to earn an appropriate ROI.
Is this likely given short product life cycles?
15.963 [Spring 2007]
Managerial Accounting & Control
4
ATH Technologies
Was this a poor investment decision?
There may have been non-financial