Polar Sports, Inc Spreadsheet

Table A Consolidated Income Statement, 2009-2011 (in thousands of dollars) 2009 2010 Net sales 14,079 15,065 COGS 9,011 10,244 Gross profit 5,068 4,821 Operating expense 3,520 3,615 Interest expense 105 125 Interest income 17 19 Pretax profit 1,461 1,099 Income tax 497 374 Net income 964 725

2011 16,360 10,798 5,562 4,090 128 15 1,359 462 897

Table B Balance Sheet at December 31, 2011 (in thousands of dollars) Cash Accounts receivable Inventory Current assets PP&E Total assets

500 5,245 1,227 6,972 2,988 9,960

Accounts payable Notes payable, bank Accrued taxes Long-term debt, current portion Current liabilities Long-term debt Total liabilities Shareholders’ equity Total liabilities and shareholders’ equity

966 826 139 100 2,031 1,000 3,031 6,929 9,960

Table C Monthly Sales (in thousands of dollars) Sales Projected Sales 2011 2012 January 671 702 February 393 486 March 360 414 April 311 378 May 180 162 June 196 180 July 474 378 August 769 540 September 2,896 2,970 October 2,618 2,520 November 4,564 5,724 December 2,928 3,546 16,360 18,000 Total

Exhibit 1 2012 Pro Forma Balance Sheets and Accured Taxes Under Seasonal Production (in thousands of dollars)

Cash Accounts receivableb Inventoryc Current assets Net PP&Ed Total assets a

Accounts payablee Notes payable, bank Accrued taxesf Long-term debt, current portion Current Liabilities Long-term debtg Total liabilities Shareholders' equity Total liabilities and equity Accrued Taxes Beg. accrued taxes Accrual of monthly taxes Tax payments End. accrued taxes

Actual Dec 31, 2011 500 5,245 1,227 6,972 2,988 9,960

Jan

Feb 1,511 2,541 1,227 5,280 2,988 8,268

2,950 832 1,227 5,009 2,988 7,997

Mar 2,768 630 1,227 4,625 2,988 7,613

Apr 2,477 554 1,227 4,259 2,988 7,247

May 2,274 378 1,227 3,879 2,988 6,867

966 826 139 100 2,031 1,000 3,031 6,929 9,960

232 0 94 100 425 1,000 1,425 6,842 8,268

160 0 26 100 286 1,000 1,286 6,710 7,997

137 0 -188 100 49 1,000 1,049 6,564 7,613

125 0 -388 100 -163 1,000 837 6,409 7,247

53 0 -492 100 -339 1,000 661 6,206 6,867

139

139 -45 0 94

94 -68 0 26

26 -75 -139 -188

-188 -80 -120 -388

-388 -105 0 -492

Assumed maintenance of minimum $500,000 balance. Assumed 60-day collection period for wholesale sales and instant collection for retail sales. c Assumed inventories maintained at December 31, 2011 level for all of 2012. d Assumed equipment purchases equal to depreciation. a

b

Assumed equal to 50% of the current month's COGS for seasonal production; and was related to material purchases that accounts for 50% of COGS for 20 seasonal production and sales pattern. e

Taxes payble on 2011 income are due March 15, 2012. On April 15, June 15, September 15, and December 15, 2012, payments of 25% of each of the estim of $480,000. This implies a payment of $120,000 in April, June, September and December. g To be repaid at the at rate of $50,000 each June and December f

Jun 1,946 239 1,227 3,413 2,988 6,401

Jul 1,625 391 1,227 3,243 2,988 6,231

Aug 1,246 643 1,227 3,116 2,988 6,104

59 0 -715 100 -556 950 394 6,007 6,401

125 0 -795 100 -571 950 379 5,851 6,231

-492 -103 -120 -715

-715 -80 0 -795

Sep

Oct

Nov

Dec

758 2,457 1,227 4,442 2,988 7,430

500 3,843 1,227 5,570 2,988 8,558

500 5,771 1,227 7,498 2,988 10,486

500 6,489 1,227 8,216 2,988 11,204

178 0 -857 100 -578 950 372 5,732 6,104

980 0 -757 100 323 950 1,273 6,158 7,430

832 785 -590 100 1,126 950 2,076 6,482 8,558

1,889 80 -55 100 2,014 950 2,964 7,522 10,486

1,170 847 111 100 2,228 900 3,128 8,076 11,204

-795 -61 0 -857

-857 219 -120 -757

-757 167 0 -590

-590 536 0 -55

-55 285 -120 111

ounts for 50% of COGS for 2012. This represents a 30-day payment period. Since inventories are level, purchases will follow

nts of 25% of each of the estimated tax for 2012 are due. In estimating its tax liability for 2012, the company uses a tax liability

Exhibit 2 2012 Pro Forma Income Statement Under Seasonal Production (in thousands of dollars) Jan Feb Mar Apr Net sales 702 486 414 378 a COGS 463 321 273 249 Gross profit 239 165 141 129 Operating expensesb Interest expense Interest incomec Profit (loss) before tax Income taxesd Net income

360 11 1 -132 -45 -87

360 7 3 -200 -68 -132

360 7 5 -222 -75 -146

360 7 5 -234 -80 -155

May 162 107 55 360 7 4 -308 -105 -203

Assumed cost of goods sold equal to 66% sales. Assumed to be same for each month throughout the year. c 2% annualized rate of return on monthly cash balances. d Negative figures are tax credits from operating losses, and reduced accured taxes shown on balance sheets. The federal tax rate on all earnings was 34% a

b

Jun

Jul

Aug

Sep

Oct

Nov

Dec

180 119 61

378 249 129

540 356 184

2,970 1,960 1,010

2,520 1,663 857

5,724 3,778 1,946

3,546 2,340 1,206

360 7 4 -302 -103 -200

360 7 3 -235 -80 -155

360 7 3 -181 -61 -119

360 7 2 645 219 426

360 7 1 491 167 324

360 11 1 1,576 536 1,040

360 7 1 839 285 554

The federal tax rate on all earnings was 34%.

Total 18,000 11,880 6,120 4,320 94 32 1,737 591 1,147

Exhibit 3 2012 Pro Forma Cash Flow Statement Under Seasonal Production (in thousands of dollars) Jan Feb Mar Operating Activities Net income -87 -132 -146 Depreciation 25 25 25 Less: Increase (Decrease) in A/R -2,704 -1,710 -202 Less: Increase (Decrease) in Inventory 0 0 0 Add: Increase (Decrease) in A/P -735 -71 -24 Add: Increase (Decrease) in Accrued Taxes -45 -68 -214 Cash flow from operations 1,862 1,464 -157 Investing Activities Less: capital expenditures Cash flow from operating and investing Cash available before financing activities Financing Activities Less: bank note repayment Less: debt repayment Add: bank note issuance Cash flow from financing Total Cash Flow

Apr -155 25 -76 0 -12 -200 -265

-25 1,837 1,837

-25 1,439 2,450

-25 -182 2,268

-25 -290 1,977

826 0 0 -826

0 0 0 0

0 0 0 0

0 0 0 0

1,011

1,439

-182

-290

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

-203 25 -176 0 -71 -105 -178

-200 25 -139 0 6 -223 -253

-155 25 151 0 65 -80 -296

-119 25 252 0 53 -61 -354

426 25 1,814 0 802 99 -463

324 25 1,386 0 -149 167 -1,018

1,040 25 1,928 0 1,057 536 731

554 25 718 0 -719 165 -693

-25 -203 1,774

-25 -278 1,496

-25 -321 1,125

-25 -379 746

-25 -488 258

-25 -1,043 -785

-25 706 706

-25 -718 -718

0 0 0 0

0 50 0 -50

0 0 0 0

0 0 0 0

0 0 0 0

0 0 785 785

706 0 0 -706

0 50 768 718

-203

-328

-321

-379

-488

-258

0

0

Exhibit 4 2012 Pro Forma Balance Sheets and Accured Taxes Under Level Production (in thousands of dollars) Actual Dec 31, 2011 Cash

Jan

Feb

Mar

1,511

5,245

2,541

832

630

554

1,227

1,227

1,227

1,227

1,227

Current assets

6,972

5,280

5,009

4,625

4,259

Net PP&E

2,988

2,988

2,988

2,988

2,988

9,960

8,268

7,997

7,613

7,247

Accounts payablee

966

232

160

137

125

Notes payable, bank

826

0

0

0

0

Accrued taxes

139

94

26

-188

-388

100

100

100

100

100

2,031

425

286

49

-163

1,000

1,000

1,000

1,000

1,000

Total liabilities

3,031

1,425

1,286

1,049

837

Shareholders' equity

6,929

6,842

6,710

6,564

6,409

Total liabilities and equity

9,960

8,268

7,997

7,613

7,247

Beg. accrued taxes

139

94

26

-188

Accrual of monthly taxes

-45

-68

-75

-80

0

0

-139

-120

94

26

-188

-388

Accounts receivable

b

Inventoryc d

Total assets

f

Long-term debt, current portion Current Liabilities Long-term debt

g

2,950

Apr

500

a

2,768

2,477

Accrued Taxes

Tax payments End. accrued taxes

139

May

Jun

2,274

Jul 1,946

Aug 1,625

Sep

Oct

Nov

Dec

1,246

758

500

500

500

378

239

391

643

2,457

3,843

5,771

6,489

1,227

1,227

1,227

1,227

1,227

1,227

1,227

1,227

3,879

3,413

3,243

3,116

4,442

5,570

7,498

8,216

2,988

2,988

2,988

2,988

2,988

2,988

2,988

2,988

6,867

6,401

6,231

6,104

7,430

8,558

10,486

11,204

53

59

125

178

980

832

1,889

1,170

0

0

0

0

0

785

80

847

-492

-715

-795

-857

-757

-590

-55

111

100

100

100

100

100

100

100

100

-339

-556

-571

-578

323

1,126

2,014

2,228

1,000

950

950

950

950

950

950

900

661

394

379

372

1,273

2,076

2,964

3,128

6,206

6,007

5,851

5,732

6,158

6,482

7,522

8,076

6,867

6,401

6,231

6,104

7,430

8,558

10,486

11,204

-388

-492

-715

-795

-857

-757

-590

-55

-105

-103

-80

-61

219

167

536

285

0

-120

0

0

-120

0

0

-120

-492

-715

-795

-857

-757

-590

-55

111

Exhibit 2 2012 Pro Forma Income Statement Under Level Production (in thousands of dollars) Jan

Feb

Mar

Apr

May

Jun

Net sales

702

486

414

378

162

180

COGSa

421

292

273

227

97

108

Gross profit

281

194

141

151

65

72

Operating expensesb

360

360

360

360

360

360

Interest expense

11

7

7

7

7

7

Interest income

5

4

4

3

3

2

Profit (loss) before tax

-86

-169

-223

-213

-299

-293

Income taxesd

-29

-57

-76

-72

-102

-100

Net income

-57

-111

-147

-140

-198

-193

c

a

Assumed cost of goods sold equal to 60% sales.

b

Assumed to be same for each month throughout the year.

c

2% annualized rate of return on monthly cash balances.

d

Negative figures are tax credits from operating losses, and reduced accured taxes shown on balance sheets. The federal tax rate on all earnings was 34%. Jan

Feb

Mar

Apr

May

Jun

Net sales

702

486

414

378

162

180

COGSa

421

292

248

227

97

108

Gross profit

281

194

166

151

65

72

92

50

50

50

50

50

Operating expensesb Interest expense Interest incomec Profit (loss) before tax Income taxesd Net income

Jul

Aug

Sep

Oct

Nov

Dec

Total

378

540

2,970

2,520

5,724

3,546

18,000

227

324

1,782

1,512

3,434

2,128

10,825

151

216

1,188

1,008

2,290

1,418

7,175

360

360

360

360

360

360

4,320

7

11

7

11

0

0

83

1

1

1

1

0

0

24

-215

-154

821

638

1,930

1,058

2,796

-73

-52

279

217

656

360

951

-142

-102

542

421

1,274

699

1,845

ate on all earnings was 34%. Jul

Aug

Sep

Oct

Nov

Dec

Total

378

540

2,970

2,520

5,724

3,546

18,000

227

324

1,782

1,512

3,434

2,128

10,800

151

216

1,188

1,008

2,290

1,418

7,200

50

50

50

50

50

50

Exhibit 3 2012 Pro Forma Cash Flow Statement Under Level Production (in thousands of dollars) Jan

Feb

Mar

Apr

Operating Activities Net income

-87

-132

-146

-155

Depreciation

25

25

25

25

-2,704

-1,710

-202

-76

Less: Increase (Decrease) in A/R Less: Increase (Decrease) in Inventory

0

0

0

0

-735

-71

-24

-12

-45

-68

-214

-200

1,862

1,464

-157

-265

-25

-25

-25

-25

Cash flow from operating and investing

1,837

1,439

-182

-290

Cash available before financing activities

1,837

2,450

2,268

1,977

Add: Increase (Decrease) in A/P Add: Increase (Decrease) in Accrued Taxes Cash flow from operations Investing Activities Less: capital expenditures

Financing Activities Less: bank note repayment

826

0

0

0

Less: debt repayment

0

0

0

0

Add: bank note issuance

0

0

0

0

-826

0

0

0

1,011

1,439

-182

-290

Cash flow from financing Total Cash Flow

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

-203

-200

-155

-119

426

324

1,040

554

25

25

25

25

25

25

25

25

-176

-139

151

252

1,814

1,386

1,928

718

0

0

0

0

0

0

0

0

-71

6

65

53

802

-149

1,057

-719

-105

-223

-80

-61

99

167

536

165

-178

-253

-296

-354

-463

-1,018

731

-693

-25

-25

-25

-25

-25

-25

-25

-25

-203

-278

-321

-379

-488

-1,043

706

-718

1,774

1,496

1,125

746

258

-785

706

-718

0

0

0

0

0

0

706

0

0

50

0

0

0

0

0

50

0

0

0

0

0

785

0

768

0

-50

0

0

0

785

-706

718

-203

-328

-321

-379

-488

-258

0

0

sales growth projection sales net income in 2011 projection income COGS 2012 under seasonal Op expenses 2012 seasonal or level corporate tax wholesale channel after exhibition under seasonal production in 2012 ac payable total purchase 2011 end cash balance end of 2011 av interest paid in 2011 withdrawal > 2000 oustanding long term bond cap ex net block in 2012 in 2012 storage and handling cost in 2012

4650 in 2001 18000 in 2012 897 1147 in 2012 66% of sales 24% 34% 70% of sales 15% of annual sales same inv held from 31 dec 2011 50% of COGS of that month based on 30 day payment 500 outstanding loan 6% 11% interest 1000 300 won't change cogs 60% 300

Overtime wage premiums 480,000 Other direct labor savings 600,000 Net savings before financial charges, carrying costs, inventory losses, and taxes 1,080,000 Increase in interest expenses 147,923 Reduction in interest income 16,140 Increase in storage cost 300,000 Net pretax savings 615,937 Less tax at 34% 209,418 Net savings 406,518

16360 in 2011

evenly throughout each month

shipped in sep

total purchase in 2012 2012 forcast minimum for operations req.

60 days payment time

5940 826 should not exceed 2/3 of ac receivable+inventory

in balance sheet as on 2011 dec equal to dep as capex=dep won't change monthly under level production

osses, and taxes

coupon 8% amortized evenly divided throughout the yr

saving 480 and 600

eceivable+inventory

50 in june and dec each year

level prodn.