[answered] Exhibit 7:

Review USG?s business, it?s past performance, and the outlook for the future.? Why is USG the target of a hostile takeover?

?

Value USG under its current operating and financial strategies.? How does your valuation compare to the current market price?? Value USG under the proposed recapitalization plan.

How should Day respond to Desert Partners? tender offer?? Is the proposed recapitalization the best response?? As Desert Partners, how would you respond to the proposed recapitalization plan?

Rules:

??????????? ?? Address the questions above in a memorandum.

??????????? ?? YOUR PAPER MUST BE INDIVIDUAL.

? They are due to me by email or hard copy by 3PM on Thursday, Dec 22nd.? (There will be a box by Michael Jules ? course assistant by KMC9-87.)

Notes:

??????????? ?? Your paper must be individual

??????????? ?? At most 8 pages of text (and no less than 3 pages)--double spaced with 10-12 pitch.

??????????? ?? Calculations and Exhibits can be attached as Exhibits.

??????????? ?? Put name on cover page only (I grade them blind).

??????????? ?? Your memo should follow the same format as discussed for the previous memos

??????????? ?? Except I expect much more detail and breadth here.

??????????? ?? Please describe your assumptions.

??????????? ?? Your paper should address the issues raised in an integrated essay.

??????????? ? ?I am looking for good arguments and logical descriptions.

Please contact me if you need the original case.

Exhibit 7: Projected Financial Data (in millions)

 

Years Ended December 31

 

At

 

Closing

 

EARNINGS STATEMENT DATA

 

Net Sales

 

Earnings before interest expense and taxes

 

Interest expense, net

 

Earnings before taxes

 

Taxes on income

 

Minority interest, net of tax

 

Gain on asset sales, net of tax

 

Net income from diversified operations

 

Net Earnings

 

CASH FLOW DATA

 

Net earnings from continuous operations

 

Depreciation and amortization

 

Deferred taxes and other

 

Cash provided by continuous operations

 

Capital Expenditures

 

Proceeds from asset sales, net of tax

 

Junior debenture interest expense

 

Unrepatriated cash of foreign subsidiaries

 

Other changes

 

Cash available to service principal repayments 1988 1989 1990 1991 $2,098 $2,179 $2,335 $2,433 312

 

(196)

 

116

 

(49)

 

(9)

 

56

 

22

 

136 405

 

(282)

 

123

 

(53)

 

(8)

 

0

 

0

 

62 479

 

(276)

 

203

 

(84)

 

(8)

 

0

 

0

 

111 507

 

(265)

 

242

 

(100)

 

(9)

 

0

 

0

 

133 80

 

84

 

25

 

189

 

(104)

 

519

 

22

 

(21)

 

29

 

634 62

 

79

 

19

 

160

 

(68)

 

14

 

47

 

(18)

 

(5)

 

130 111

 

74

 

23

 

208

 

(58)

 

1

 

55

 

(20)

 

(11)

 

175 133

 

71

 

14

 

218

 

(89)

 

1

 

64

 

(22)

 

(6)

 

166 995 975 967 1,000 BALANCE SHEET DATA

 

Net Assets

 

Total Debt

 

Senior bank Debt

 

Existing Debt

 

Senior subordinated debentures

 

Junior debentures

 

Total long-term debt 1,600

 

674

 

600

 

260

 

3,134 1,014

 

608

 

550

 

281

 

2,453 890

 

602

 

550

 

328

 

2,370 724

 

593

 

550

 

383

 

2,250 666

 

485

 

550

 

447

 

2,148 Stockholder's equity (deficit) (1,567) (1,458) (1,395) (1,283) (1,148) 1992

 

$2,548

 

545

 

(260)

 

285

 

(116)

 

(9)

 

0

 

0

 

160 160

 

72

 

17

 

249

 

(121)

 

1

 

74

 

(22)

 

(21)

 

160 1,075

 

513

 

478

 

550

 

521

 

2,062

 

(987)

 

---

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