Background

Timberland is a growing company in the retail shoe business. The industry averages used for comparison
include: the Brown Group, Genesco, Nike, Reebok, and Stride Rite.

for comparison

Balance Sheet

Aztec Corp.
Balance Sheet ($ MILLIONS)
Dec-97

Dec-98

Dec-99

22

19

27

Net Receivables

421

541

932

Inventories
Other Current Assets

564
96

705
120

1120
132

1103

1385

2211

Gross Plant, Property & Equipment

462

575

818

Accumulated Depreciation

201

252

335

Net Plant, Property & Equipment

261

323

483

Goodwill

196

189

182

36

46

58

1596

1943

2934

Notes Payable

260

95

180

Accounts Payable

110

141

275

ASSETS
Cash & Equivalents

Total Current Assets

Other Assets
TOTAL ASSETS
LIABILITIES

Page 3

Balance Sheet

Accrued Expenses

158

198

222

Total Current Liabilities

528

434

677

Long Term Debt

332

410

943

Other Liabilities

36

45

60

896

889

1680

300
400

529
525

529
725

700

1054

1254

1596

1943

2934

70%

70%

Dec-97

Dec-98

Dec-99

1.4%

1.0%

0.9%

Net Receivables

26.4%

27.8%

31.8%

Inventories

35.3%

36.3%

38.2%

6.0%

6.2%

4.5%

Total Current Assets

69.1%

71.3%

75.4%

Gross Plant, Property & Equipment

Accumulated Depreciation
Net Plant, Property & Equipment
Goodwill

28.9%
12.6%
16.4%
12.3%

29.6%
13.0%
16.6%
9.7%

27.9%
11.4%
16.5%
6.2%

Other Assets

2.3%

2.4%

2.0%

TOTAL ASSETS

87.7%

90.3%

93.8%

16.3%

4.9%

6.1%

Accounts Payable

6.9%

7.3%

9.4%

Accrued Expenses

9.9%

10.2%

7.6%

33.1%
20.8%

22.3%
21.1%

23.1%
32.1%

2.3%

2.3%

2.0%

56.1%

45.8%

57.3%

TOTAL LIABILITIES
EQUITY
Common Stock
Retained Earnings
TOTAL EQUITY
TOTAL LIABILITIES & EQUITY

Retention Ratio

Aztec Corp.
Common Size Balance Sheet

ASSETS
Cash & Equivalents

Other Current Assets

LIABILITIES
Notes Payable

Total Current Liabilities

Long Term Debt
Other Liabilities
TOTAL LIABILITIES
EQUITY

Page 4

Balance Sheet

Common Stock

18.8%

27.2%

18.0%

Retained Earnings

25.1%

27.0%

24.7%

43.9%

54.2%

42.7%

100.0%

100.0%

100.0%

TOTAL EQUITY
TOTAL LIABILITIES & EQUITY

Page 5

Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

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Balance Sheet

Page 20

Income Statement

Aztec Corp.
Annual Income Statement
($ MILLIONS)

1
2
3
4
5

Dec-97

Dec-98

Dec-99

6 Sales

2477

2914

4,189

1560

1749

2,501

917

1165

1688

645

762

1,033

Cost of Goods Sold

8 Gross Profit
9
10

Selling, General, & Admin.

11

Amortization

12

Depreciation

45

51

83

220

345

565

30

48

87

190

297

478

76

119

191

114

178

287

13 Operating Profit
14

Interest Expense

15 Taxable Income
16

Total Income Taxes

17 Net Income
18
19

Aztec Corp.
Common Size Income Statement

20
21
22
23
24

Dec-97

Dec-98

Dec-99

25 Sales

100.0%

100.0%

100.0%

63.0%

60.0%

59.7%

37.0%

40.0%

40.3%

26.0%

26.1%

24.7%

0.3%
1.8%

0.2%
1.8%

0.2%
2.0%

32 Operating Profit

8.9%

11.8%

13.5%

33

1.2%

1.6%

2.1%

34 Taxable Income

7.7%

10.2%

11.4%

35

3.1%

4.1%

4.6%

4.6%

6.1%

6.9%

26

Cost of Goods Sold

27 Gross Profit
28
29

Selling, General, & Admin.

30
31

Amortization
Depreciation

Interest Expense

Total Income Taxes

36 Net Income

Page 21

Cash Flow Statement

Aztec Corp.
Cash Flow Statement
($ MILLIONS)
Dec-98

Dec-99

178
51
7
(120)
(141)
(24)
(10)
31
40
9
21

287
83
7
(391)
(415)
(12)
(12)
134
24
15
(280)

Gross Plant, Property & Equipment

Total Investinging Cash Flows

(113)
(113)

(243)
(243)

Financing Cash Flows

Notes Payable
Long Term Debt

(165)
78

85
533

229
(53)
89

(87)
531

(3)
22
19

8
19
27

Cash Flows From Operations

Net Income
Depreciation
Amortization
Net Receivables
Inventories
Other Current Assets
Other Assets
Accounts Payable
Accrued Expenses
Other Liabilities
Total Operating Cash Flows
Investing Cash Flows

Common Stock
Dividends
Total Financing Cash Flows
Net Cash Flow
Beginning Cash Balance
Ending Cash Balance

Page 22

Ratios

Aztec Corp.

Selected Ratios
Du pont ROE decomposition

Dec-97

Dec-98

Dec-99

Return on equity (%)

Profit margin (%)
Asset turnover (x)
Asset to equity (x)

16.29%
4.60%
1.55
2.28

16.89%
6.11%
1.50
1.84

22.89%
6.85%
1.43
2.34

Industry
35.41%
3.00%
3.70
3.19

Return on equity (%)

Return on assets (%)

16.29%
7.14%

16.89%
9.16%

22.89%
9.78%

35.41%
11.10%

Profit margin (%)

Operating profit margin
Gross margin (%)

4.60%
8.88%
37.02%

6.11%
11.84%
39.98%

6.85%
13.49%
40.30%

3.00%
9.00%
15.20%

1.55
9.49
5.88
2.77
3.24

1.50
9.02
5.39
2.48
2.38

1.43
8.67
4.49
2.23
2.35

3.70
6.50
6.24
2.57
4.10

62.0
132.0
25.7
168.3

67.8
147.1
29.4
185.5

81.2
163.5
40.1
204.5

58.5
142.0
35.0
165.5

2.28
56.1%
128.0%
7.33
2.09
1.02

1.84
45.8%
84.3%
7.19
3.19
1.57
0.09
0.7%

2.34
57.3%
134.0%
6.49
3.27
1.61
-0.37
-6.7%

3.19
69.00%
220.0%
7.1
3.50
2.40
1.70
0.40

Profitability Ratios :

Turnover-control ratios :
Asset turnover (x)
Fixed-asset turnover (x)
Accounts receivable turnover (x)
Inventory turnover (x)
Days' sales in cash (days)
Collection period (days)
Inventory period (days)
Payable period (days)
Cash conversion cycle (days)
Leverage and liquidity ratios :
Asset to equity (x)
Total liabilities to asset (%)
Total liabilities to equity (%)
Times interest earned (x)
Current ratio (x)
Acid test (x)
Cash Flow Liquidity (x)
Operating Cash Flow / Sales

42.7%
234%

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