5YR Equity ValuationNOTE: Rule of thumb - 20% growth in forecast of 5 years; 80% residualSelect Market Prices and Other InformationForecast Period Information (Years 1-5)Last Year's Revenue$ 3,392,000,000.00Shares Outstanding100,291,843Revenue Growth Rate 3% then 2%Debt Outstanding (assume book value = market value)$ 685,003,000.00Operating Margin (including depreciation expense)18%Cash and Marketable Securities$ 2,066,000,000.00Incremental Investment in Operating Capital10%WACC6.1%Tax Rate6%Instructions: Calculate the Stock Price based on the given assumptions and under 3 long term growth scenariosNO GROWTHFORCAST YEARSYear 1Year 2Year 3Year 4Year 5Year 6Revenue3,493,760,0003,598,572,8003,706,529,9843,780,660,5843,856,273,7953,933,399,271 Costs2,864,883,2002,950,829,6963,039,354,5873,100,141,6793,162,144,5123,225,387,402EBIT628,876,800647,743,104667,175,397680,518,905694,129,283708,011,869 Taxes35,594,42736,662,26037,762,12738,517,37039,287,71740,073,472NOPAT593,282,373611,080,844629,413,270642,001,535654,841,566667,938,397 Incremental Investment in Operating Capital59,328,23761,108,08462,941,32764,200,15465,484,1570%Perpetuity Cash Flow (forever and ever cash flows)FCF533,954,136549,972,760566,471,943577,801,382589,357,409667,938,39710,956,897,959.88PV FCF503,274,266488,587,912474,330,129456,017,650438,412,162496,867,117No Growth Strategy (Year 6 expected growth rate = 0% and WACC = ROIC)PV of Forecast2,360,622,118PV of Residual or Terminal Value8,150,635,3301) fcf yr 6 (given) 2) perp formula 3) /1+I (wacc)Perp= (fcf YR 6/wacc-g)10,956,897,959.88PV of All Future Cash Flows10,511,257,448add fcf all 6 yearsCash and Marketable Securies2,066,000,000Corporate Valuation12,577,257,448Value of Debt685,003,000Value of Equity Holders11,892,254,448Value per Equity Share118.58GROWTHFORCAST YEARSYear 1Year 2Year 3Year 4Year 5Year 6Revenue3,493,760,0003,598,572,8003,706,529,9843,780,660,5843,856,273,7953,933,399,271 Costs2,864,883,2002,950,829,6963,039,354,5873,100,141,6793,162,144,5123,225,387,402EBIT628,876,800647,743,104667,175,397680,518,905694,129,283708,011,869 Taxes35,594,42736,662,26037,762,12738,517,37039,287,71740,073,472NOPAT593,282,373611,080,844629,413,270642,001,535654,841,566667,938,397 Incremental Investment in Operating Capital59,328,23761,108,08462,941,32764,200,15465,484,157136,313,958.588%FCF166,860,000171,865,800177,021,774180,562,209184,173,454531,624,438PV FCF155,218,605148,721,082142,495,548135,205,078128,287,609145,392,624Growth Strategy (Year 6 expected growth rate = 2% and ROIC = 9.8%)PV of Forecast709,927,921PV of Residual or Terminal Value9,654,796,5761) fcf yr 6 (given) 2) perp formula 3) /1+I (wacc)Perp= (fcf YR 6/wacc-g)12,978,941,717PV of All Future Cash Flows10,364,724,497add fcf all 6 yearsCash and Marketable Securies2,066,000,000Corporate Value12,430,724,497Value of Debt685,003,000Value of Equity Holders11,745,721,497Value per Equity Share 117.12 10YR Equity Valuation NOTE: Rule of thumb - 20% growth in.

1. 5YR Equity ValuationNOTE: Rule of thumb - 20% growth in
forecast of 5 years; 80% residualSelect Market Prices and Other
InformationForecast Period Information (Years 1-5)Last Year's
Revenue$ 3,392,000,000.00Shares
Outstanding100,291,843Revenue Growth Rate 3% then 2%Debt
Outstanding (assume book value = market value)$
685,003,000.00Operating Margin (including depreciation
expense)18%Cash and Marketable Securities$
2,066,000,000.00Incremental Investment in Operating
Capital10%WACC6.1%Tax Rate6%Instructions: Calculate the
Stock Price based on the given assumptions and under 3 long
term growth scenariosNO GROWTHFORCAST YEARSYear
1Year 2Year 3Year 4Year 5Year
6Revenue3,493,760,0003,598,572,8003,706,529,9843,780,660,5
843,856,273,7953,933,399,271
Costs2,864,883,2002,950,829,6963,039,354,5873,100,141,6793,
162,144,5123,225,387,402EBIT628,876,800647,743,104667,175
,397680,518,905694,129,283708,011,869
Taxes35,594,42736,662,26037,762,12738,517,37039,287,71740,
073,472NOPAT593,282,373611,080,844629,413,270642,001,53
5654,841,566667,938,397 Incremental Investment in Operating
Capital59,328,23761,108,08462,941,32764,200,15465,484,1570
%Perpetuity Cash Flow (forever and ever cash
flows)FCF533,954,136549,972,760566,471,943577,801,382589,
357,409667,938,39710,956,897,959.88PV
FCF503,274,266488,587,912474,330,129456,017,650438,412,16
2496,867,117No Growth Strategy (Year 6 expected growth rate
= 0% and WACC = ROIC)PV of Forecast2,360,622,118PV of
Residual or Terminal Value8,150,635,3301) fcf yr 6 (given) 2)
perp formula 3) /1+I (wacc)Perp= (fcf YR 6/wacc-
g)10,956,897,959.88PV of All Future Cash
Flows10,511,257,448add fcf all 6 yearsCash and Marketable
Securies2,066,000,000Corporate Valuation12,577,257,448Value
of Debt685,003,000Value of Equity

2. Holders11,892,254,448Value per Equity
Share118.58GROWTHFORCAST YEARSYear 1Year 2Year
3Year 4Year 5Year
6Revenue3,493,760,0003,598,572,8003,706,529,9843,780,660,5
843,856,273,7953,933,399,271
Costs2,864,883,2002,950,829,6963,039,354,5873,100,141,6793,
162,144,5123,225,387,402EBIT628,876,800647,743,104667,175
,397680,518,905694,129,283708,011,869
Taxes35,594,42736,662,26037,762,12738,517,37039,287,71740,
073,472NOPAT593,282,373611,080,844629,413,270642,001,53
5654,841,566667,938,397 Incremental Investment in Operating
Capital59,328,23761,108,08462,941,32764,200,15465,484,1571
36,313,958.588%FCF166,860,000171,865,800177,021,774180,5
62,209184,173,454531,624,438PV
FCF155,218,605148,721,082142,495,548135,205,078128,287,60
9145,392,624Growth Strategy (Year 6 expected growth rate =
2% and ROIC = 9.8%)PV of Forecast709,927,921PV of
Residual or Terminal Value9,654,796,5761) fcf yr 6 (given) 2)
perp formula 3) /1+I (wacc)Perp= (fcf YR 6/wacc-
g)12,978,941,717PV of All Future Cash
Flows10,364,724,497add fcf all 6 yearsCash and Marketable
Securies2,066,000,000Corporate Value12,430,724,497Value of
Debt685,003,000Value of Equity Holders11,745,721,497Value
per Equity Share 117.12
10YR Equity Valuation NOTE: Rule of thumb - 20% growth in
forecast of 5 years; 80% residualSelect Market Prices and Other
InformationForecast Period Information (Years 1-5)Last Year's
Revenue$ 3,392,000,000.00Shares
Outstanding100,291,843Revenue Growth Rate 3% then 2%Debt
Outstanding (assume book value = market value)$
685,003,000.00Operating Margin (including depreciation
expense)18%Cash and Marketable Securities$
2,066,000,000.00Incremental Investment in Operating
Capital10%WACC6.1%Tax Rate6%Instructions: Calculate the
Stock Price based on the given assumptions and under 3 long
term growth scenariosNO GROWTHFORCAST YEARSYear

3. 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year
10Year 11Revenue$ 3,493,760,000.00$ 3,598,572,800.00$
3,706,529,984.00$ 3,780,660,583.68$ 3,856,273,795.35$
3,933,399,271.26$ 4,012,067,256.69$ 4,092,308,601.82$
4,174,154,773.86$ 4,257,637,869.33$ 4,342,790,626.72
Costs$ 2,864,883,200.00$ 2,950,829,696.00$
3,039,354,586.88$ 3,100,141,678.62$ 3,162,144,512.19$
3,225,387,402.43$ 3,289,895,150.48$ 3,355,693,053.49$
3,422,806,914.56$ 3,491,263,052.85$
3,561,088,313.91EBIT$ 628,876,800.00$ 647,743,104.00$
667,175,397.12$ 680,518,905.06$ 694,129,283.16$
708,011,868.83$ 722,172,106.20$ 736,615,548.33$
751,347,859.29$ 766,374,816.48$ 781,702,312.81 Taxes$
35,594,426.88$ 36,662,259.69$ 37,762,127.48$
38,517,370.03$ 39,287,717.43$ 40,073,471.78$
40,874,941.21$ 41,692,440.04$ 42,526,288.84$
43,376,814.61$ 44,244,350.91NOPAT$ 593,282,373.12$
611,080,844.31$ 629,413,269.64$ 642,001,535.04$
654,841,565.74$ 667,938,397.05$ 681,297,164.99$
694,923,108.29$ 708,821,570.46$ 722,998,001.87$
737,457,961.90 Incremental Investment in Operating Capital$
59,328,237.31$ 61,108,084.43$ 62,941,326.96$
64,200,153.50$ 65,484,156.57$ 66,793,839.71$
68,129,716.50$ 69,492,310.83$ 70,882,157.05$
72,299,800.19$ - 0Perpetuity Cash Flow (forever and ever
cash flows)FCF$ 533,954,135.81$ 549,972,759.88$
566,471,942.68$ 577,801,381.53$ 589,357,409.16$
601,144,557.35$ 613,167,448.49$ 625,430,797.46$
637,939,413.41$ 650,698,201.68$
737,457,961.9012,097,300,700.13PV FCF$ 503,274,265.69$
488,587,911.59$ 474,330,128.98$ 456,017,650.16$
438,412,161.81$ 421,486,369.12$ 405,214,031.07$
389,569,919.70$ 374,529,781.06$ 360,070,297.54$
408,079,670.54No Growth Strategy (Year 6 expected growth
rate = 0% and WACC = ROIC)PV of Forecast4,311,492,517PV
of Residual or Terminal Value6,694,161,2121) fcf yr 6 (given)

4. 2) perp formula 3) /1+I (wacc)Perp= (fcf YR 6/wacc-
g)12,097,300,700.13PV of All Future Cash
Flows11,005,653,729add fcf all 6 yearsCash and Marketable
Securies2,066,000,000Corporate Valuation13,071,653,729Value
of Debt685,003,000Value of Equity
Holders12,386,650,729Value per Equity Share123.51Growth
Strategy (Year 6 expected growth rate = 2% and ROIC =
9.8%)FORCAST YEARSYear 1Year 2Year 3Year 4Year 5Year
6Year 7Year 8Year 9Year 10Year 11Revenue$
3,493,760,000.00$ 3,598,572,800.00$ 3,706,529,984.00$
3,780,660,583.68$ 3,856,273,795.35$ 3,933,399,271.26$
4,012,067,256.69$ 4,092,308,601.82$ 4,174,154,773.86$
4,257,637,869.33$ 4,342,790,626.72 Costs$
2,864,883,200.00$ 2,950,829,696.00$ 3,039,354,586.88$
3,100,141,678.62$ 3,162,144,512.19$ 3,225,387,402.43$
3,289,895,150.48$ 3,355,693,053.49$ 3,422,806,914.56$
3,491,263,052.85$ 3,561,088,313.91EBIT$ 628,876,800.00$
647,743,104.00$ 667,175,397.12$ 680,518,905.06$
694,129,283.16$ 708,011,868.83$ 722,172,106.20$
736,615,548.33$ 751,347,859.29$ 766,374,816.48$
781,702,312.81 Taxes$ 35,594,426.88$ 36,662,259.69$
37,762,127.48$ 38,517,370.03$ 39,287,717.43$
40,073,471.78$ 40,874,941.21$ 41,692,440.04$
42,526,288.84$ 43,376,814.61$ 44,244,350.91NOPAT$
593,282,373.12$ 611,080,844.31$ 629,413,269.64$
642,001,535.04$ 654,841,565.74$ 667,938,397.05$
681,297,164.99$ 694,923,108.29$ 708,821,570.46$
722,998,001.87$ 737,457,961.90 Incremental Investment in
Operating Capital$ 59,328,237.31$ 61,108,084.43$
62,941,326.96$ 64,200,153.50$ 65,484,156.57$
66,793,839.71$ 68,129,716.50$ 69,492,310.83$
70,882,157.05$ 72,299,800.19$ 150,501,624.88FCF$
533,954,135.81$ 549,972,759.88$ 566,471,942.68$
577,801,381.53$ 589,357,409.16$ 601,144,557.35$
613,167,448.49$ 625,430,797.46$ 637,939,413.41$
650,698,201.68$ 586,956,337.03PV FCF$ 503,274,265.69$

5. 488,587,911.59$ 474,330,128.98$ 456,017,650.16$
438,412,161.81$ 421,486,369.12$ 405,214,031.07$
389,569,919.70$ 374,529,781.06$ 360,070,297.54$
324,798,105.13Growth Strategy (Year 6 expected growth rate =
2% and ROIC = 9.8%)PV of Forecast4,311,492,517PV of
Residual or Terminal Value7,929,537,0401) fcf yr 6 (given) 2)
perp formula 3) /1+I (wacc)Perp= (fcf YR 6/wacc-
g)14,329,800,395PV of All Future Cash
Flows12,241,029,556add fcf all 6 yearsCash and Marketable
Securies2,066,000,000Corporate Value14,307,029,556Value of
Debt685,003,000Value of Equity Holders13,622,026,556Value
per Equity Share 135.82
Historical Free Cash FlowsFirst
Solar201420132012201120102014 Tax Rate2013 Tax Rate2012
Tax Rate20112010Net sales$ 3,392.00$ 3,396.00$
3,898.00$ 3,430.00$
2,577.005.66%10.11%9.03%23.70%20.47%Costs of goods sold
except depreciation$ 2,317.00$ 2,207.00$ 2,211.00$
1,398.00$ 1,228.005.66%Other operating expenses$ 403.00$
407.00$ 405.00$ 541.00$ 423.00NOTESEBITDA $
672.00$ 782.00$ 1,282.00$ 1,491.00$ 926.00chang in
working capital ex cashDepreciation and amortization$
248.00$ 239.00$ 265.00$ 232.00$ 151.00change fixed
assetEBIT $ 424.00$ 543.00$ 1,017.00$ 1,259.00$
775.00add back depreciationNOPAT$ 400.00$ 488.10$
925.11$ 960.65$ 616.34NOPAT is the amount of profit a
company would generate if it had no debt and held no financial
assets.NOWC$ 1,734.00$ 1,925.00$ 1,503.00$ 1,397.00$
947.00NOPAT = EBIT × ( 1 - Tax Rate)TNOWC$ 4,317.00$
4,251.00$ 3,832.00$ 3,831.00$ 2,741.00Net Investment
Operating Capital$ 66.00$ 419.00$ 1.00$ 1,090.00$
2,741.00NOWC = Operating Current Assets - Operating Current
LiabilitiesFree Cash Flow$ 334.00$ 69.10$ 924.11$
(129.35)$ (2,124.66)Note:Operating
Margin13%16%26%37%Operating Current Assets and
Liabilities are used to support company's operating

6. activitiesRevenue Increase-0.12%-12.88%13.64%33.10%Basic
Rule of thumb:Reinvestment Rate-84.25%41800.00%-
99.91%39.77%If a current assest earns interest, assume it is a
non-operating current assetIf a current liabity charges interest,
assume it is a non-operating current liabilityTotal Funds
Provided by InvestorsNOWC=Cash and equivalents-Accounts
payableNotes payable$ - 0$ - 0$ - 0Accounts
receivableAccrualsLong-term bonds$ 165.00$ 163.00$
500.00InventoriesPreferred stock$ - 0$ - 0$ - 0TNOC =
NOWC + Net Plant and EquipmentTotal common equity$
5,027.00$ 4,503.00$ 3,606.00Total investor supplied funds$
5,192.00$ 4,666.00$ 4,106.00Total Funds Provided by
Investors for OperationsTotal investor supplied funds$
5,192.00$ 4,666.00$ 4,106.00Less short-term investments$
584.00$ 439.00$ 108.00Total investor supplied funds for
operations$ 4,608.00$ 4,227.00$ 3,998.00-0.12%-13%14%
ROICIn Millions $Year201420132012Revenue$ 3,392.00$
3,309.00$ 3,369.00$ 2,766.00Operating
Margin12.50%13.75%14.46%21.51%EBIT$ 424.00$ 455.00$
487.00$ 595.00Implied tax Rate: Taxes$ 24.00$ 46.00$
44.00$ 141.00 EBT$ 427.00$ 378.00$ (40.00)
Williams, Jason: Williams, Jason:
Add back in 1 time expense--at revenue level
$ (54.00) Tax Rate5.66%10.11%9.03%24%Implied Taxes$
24.00$ 46.00$ 44.00$ 141.00NOPAT$ 400.00$ 409.00$
443.00$ 736.00Invested Assets2014201320122011AR$
225.00$ 658.00$ 972.00$ 844.00Inventory$ 630.00$
523.00$ 534.00$ 530.00Other current Asset$ 270.00$
848.00$ 317.00$ 568.00Net PPE$ 1,449.00$ 1,385.00$
1,525.00$ 1,816.00IntangiblesGoodwill$ 85.00$ 85.00$
65.00$ 65.00AP$ 215.00$ 261.00$ 350.00$
176.00Accrual$ 388.00$ 320.00$ 554.00$ 407.00
Invested Assets$ 3,262.00$ 4,080.00$ 4,317.00$
4,406.00ROICROIC using Beg. Invested Assets201420132012
NOPAT400409443 Invested Assets4,0804,3174,406 ROIC

7. (Beg Invested Assets)9.8%9.5%10.1%ROIC using Avg Invested
Assets201220112010 NOPAT40040944 Invested Assets -
Beg4,0804,3174,406 Invested Assets - End3,2624,0804,317
Invested Assets - Avg3,6714,1994,362 ROIC (Avg Invested
Assets)10.9%9.7%1.0%
WACCWACC6.1%Share Outstanding10 YR TreasCredit
RatingDefault Risk PremDebt Liquidity Risk PremiumStock
PriceEquity BetaEquity market Risk
Premium100,291,843.002.10%AA3.25%0%$612.145%Calculati
onIncome Statement (most recent)Balance Sheet (assume book
value of debt if market value debt)Capital
StructureDecimalEBIT$424,000,000.00Liabilities%
Debt10.06%0.0010Interest Exp.$10,000,000.00Current
Liabilities% Equity 89.94%0.7500EBT$427,000,000.00Accts
PayableTaxes$24,000,000.00Accrued LiabilitiesTax
Rate5.66%Earnings After Taxes$400,000,000.00Current Portion
of LT Debt$520,000,000.00Cost of Debt5.35%0.0005Total
Current Liabilities$520,000,000.00Cost of
Equity12.80%0.0013EquityDebt + EquityNon-Current
Liabilities1-Tax
Rate94.34%0.0600$6,123,819,934$6,808,822,933.58Long Term
Debt$165,003,000.00WACC6.0961%Total
Liabilities$685,003,000.00Cash & marketable Sec.2066000000
Balance SheetAssetsAll numbers in millions of US Dollars2014
(12/31/14)2013 (12/31/13)2012 (12/31/12)2011 (12/31/11)2010
(12/31/10)Current AssetsCash and Short-Term Investments –
Total2,0661,7641,009672934Cash1,4821,325901606766Short-
Term Investments58443910866168Receivables –
Total225658972844307Receivables –
Trade212658955844307Income Tax Refund00000Receivables –
Current – Other1201800Key ComponentReceivables – Net Est.
Doubtful71242100Inventories –
Total630523534530200Inventories – Raw Materials----------
Inventories – Work in Progress----------Inventories – Finished
Goods----------Inventories – Other----------Current Assets –
Other – Total270848317568143Prepaid Expenses and Accrued

8. Income42254015246Current Assets –
Other(Sundry)22782427841697Current Assets
Total3,1903,7932,8322,6131,584Non-Current AssetsProperty
Plant and Equipment – Total
(Net)1,4491,3851,5251,8161,431Property Plant and Equipment
– Total (Gross)2,5832,3262,3292,4341,794Depreciation,
Depletion and Amortization
(Accumulated)1,134941804618363Investment and Advances –
Equity25012000Investment and Advances –
Other31229125190Intangible Assets – Total2042026968434Key
ComponentGoodwill85856565433Non-Current Assets – Other –
Total1,6001,4691,9131,155742Deferred Charges----------Assets
– Other (Sundry)1,6001,4691,9131,155742Non–Current Assets
Total3,5343,0913,5163,1642,796ASSETS
TOTAL6,7246,8846,3495,7784,380Liabilities and Shareholders'
EquityAll numbers in millions of US Dollars2014
(12/31/14)2013 (12/31/13)2012 (12/31/12)2011 (12/31/11)2010
(12/31/10)LiabilitesCurrent LiabilitiesDebt in Current
Liabilities5261624527Long-Term Debt Due in One
Year5261624527Notes Payable (Short-Term
Borrowings)00000Account Payable/Creditors –
Trade21526135017682Income Taxes Payable2751017Current
Liabilities – Other7331,259683743344Accrued
Expenses388320554407244Current Liabilities – Other
(Sundry)345939129337100Current Liabilities
Total1,0011,5881,101974470Long–Term LiabilitiesLong-Term
Debt Total165163500619211Deferred Taxes and Investment Tax
Credit--10162018Deferred Taxes – Balance Sheet----------
Investment Tax Credit – Balance Sheet00000Liabilities
(Other)5316191,125521227Long-Term Liabilities
Total6967921,6421,160456Liabilities
Total1,6972,3802,7432,134925Minority Interest – Balance
Sheet00000Shareholders' EquityPreferred/Preference Stock
(Capital) –
Total00000Redeemable00000Nonredeemable00000Key
ComponentPreferred Stock–Convertible00000Common/Ordinary

9. Equity – Total5,0274,5033,6063,6443,455Common/Ordinary
Stock (Capital)00000Capital Surplus/Share Premium
Reserve2,6982,6462,0662,0231,815Retained
Earnings2,3301,8571,5401,6211,639Treasury Stock – Total (All
Capital)00000Shareholders' Equity
Total5,0274,5033,6063,6443,455LIABILITIES AND
SHAREHOLDERS' EQUITY
TOTAL6,7246,8846,3495,7784,380SupplementalLiabilities
DataAll numbers in millions of US Dollars2014 (12/31/14)2013
(12/31/13)2012 (12/31/12)2011 (12/31/11)2010 (12/31/10)LIFO
Reserve00000Working Capital (Balance
Sheet)2,1892,2051,7311,6401,115Invested Capital
Total5,1924,6664,1064,2633,666Common Equity
(Tangible)4,8234,3013,5363,5763,021Convertible Debt and
Preferred Stock00000Preferred Dividends in
Arrears00000Common Shares
Outstanding100,289,00099,507,00087,145,00086,468,00085,844
,000
Income StatementNet IncomeAll numbers in millions of US
Dollars2014 (12/31/14)2013 (12/31/13)2012 (12/31/12)2011
(12/31/11)2010 (12/31/10)Sales/Turnover
(Net)3,3923,3093,3692,7662,564Key ComponentNet of Excise
Taxes00000Operating Expenses –
Total2,7202,6152,6161,9391,651Cost of Goods
Sold2,3172,2072,2111,3981,228Gross Profit
(Loss)1,0751,1021,1581,3681,335Selling, General and
Administrative Expenses403407405541423Key
ComponentsResearch and Development
Expense14413413214195Staff Expense – Total----------Pension
Expense----------Rental Expense1814191616Advertising
Expense32121Operating Income Before
Depreciation672694752828912Depreciation and Amortization –
Total248239265232151Key ComponentAmortization of
Intangibles11220Operating Income After
Depreciation424455487595762Interest and Related
Expense1012201510Key ComponentNet of Interest

10. Capitalized810101510Non–operating Income (Expense) –
Total1321223023Key ComponentInterest Income –
Total1817131314Special Items Income (Expense)0-87-529-664-
13Pretax Income427378-40-54762Expense (Credit)Key
ComponentsDomestic1397697-36744Foreign293302-
137313718Income Taxes Expense (Credit)----------Income
Taxes – Current244644141156Federal16443811393State21-
151Foreign7172362Other00000Income Taxes – Deferred6-2113-
156-58Federal3-127-140-56State52-3-8-5Foreign-2-119-
73Minority Interest – Income Account00000Income Before
Extraordinary Items397353-96-39664Dividends –
Preferred/Preference00000Income Before Extraordinary Items –
397353-96-39664Available for CommonCommon Stock
Equivalents – Dollar Savings00000Income Before Extraordinary
Items –397353-96-39664Adjusted for Common Stock
EquivalentsExtraordinary Items and Discontinued Operations
Credit (Expense)00000Extraordinary Items00000Discontinued
Operations00000NET INCOME (LOSS)397353-96-
39664SupplementalNet Income DataAcquisitions – Income
Contribution----------Acquisitions – Sales Contribution----------
Earnings Before Interest and Taxes424455487595762Earnings
Before Interest672694752828912Net Income Effect Capitalized
Interest----------Goodwill Amortization----------Implied Option
Expense00000Intrest Expense on Long-term Debt----------Stock
Compensation Expense445537114100Equity in Earnings –
Unconsolidated Subsidiaries-5--000Rental Income----------For
Financial Services CompaniesInterest Expense – Total----------
Interest Income – Total----------Provision for Loan/Asset
Losses----------Earnings Per ShareAll numbers in US Dollars
(excluding shares)2014 (12/31/14)2013 (12/31/13)2012
(12/31/12)2011 (12/31/11)2010 (12/31/10)Earnings per Share –
Basic Excluding Extraordinary Items3.973.77-1.11-
0.467.82Earnings per Share – Basic Including Extraordinary
Items3.973.77-1.11-0.467.82Earnings per Share – Diluted
Excluding Extraordinary Items3.913.7-1.11-0.467.68Earnings
per Share – Diluted Including Extraordinary Items3.913.7-1.11-

11. 0.467.68Earnings per Share from Operations –
Basic3.714.444.9568.08Earnings per Share from Operations –
Diluted3.654.364.967.94Dilution Adjustment00000Common
Shares used to Calculate EPS – Basic10094878685Common
Shares used to Calculate EPS – Diluted10295878686Dividends
Common/Ordinary00000
Cash FlowsOperating ActivitiesAll numbers in millions of US
Dollars2014 (12/31/14)2013 (12/31/13)2012 (12/31/12)2011
(12/31/11)2010 (12/31/10)Income Before Extraordinary
Items397353-96-39664Extraordinary Items and Discontinued
Operations00000Depreciation and
Amortization246234263235156Deferred Taxes14-2115-156-
58Equity in Net – Loss (Earnings)----000Sale of PP&E and
Investments – Loss (Gain)000-5-4Funds from Operations –
Other3310337846839Accounts Receivable – Decrease
(Increase)454565-388-530-92Inventory – Decrease (Increase)-
10015-76-348-70Accounts Payable and Accrued Liabilites –
Increase (Decrease)----------Income Taxes – Accrued – Increase
(Decrease)-1366395--Assets and Liabilities – Other (Net
Change)-362-43060424669OPERATING ACTIVITIES - NET
CASH FLOW681856762-33705Investing ActivitiesAll numbers
in millions of US Dollars2014 (12/31/14)2013 (12/31/13)2012
(12/31/12)2011 (12/31/11)2010 (12/31/10)Investments –
Increase (Decrease)981829331462Sale of
Investments500109493647Short-Term Investments – Increase
(Decrease)-77-341------Capital
Expenditures258283379732589Sale of Property, Plant &
Equiptment2116000Acquisitions431221296Investing Activities
– Other-12619-82-85-42INVESTING ACTIVITIES – NET
CASH FLOW-512-537-384-676-742Financing ActivitiesAll
numbers in millions of US Dollars2014 (12/31/14)2013
(12/31/13)2012 (12/31/12)2011 (12/31/11)2010
(12/31/10)Common and Preferred Stock – Sale0429089Excess
Tax Benefit of Stock Options – Cash Flow
Financing31352711169Common and Preferred Stock –
Purchase00000Cash Dividends00000Long-Term Debt –

12. Issuance663351,375920100Long-Term Debt –
Reduction606701,48448428Current Debt – Increase (Decrease)-
---------Other – Increase (Decrease)-29-28-8160FINANCING
ACTIVITIES - NET CASH FLOW7101-89571150Other
AdjustmentsAll numbers in millions of US Dollars2014
(12/31/14)2013 (12/31/13)2012 (12/31/12)2011 (12/31/11)2010
(12/31/10)Exchange Rate Effect-1946-21-13Change in Cash and
Cash EquivalentsAll numbers in millions of US Dollars2014
(12/31/14)2013 (12/31/13)2012 (12/31/12)2011 (12/31/11)2010
(12/31/10)CASH AND CASH EQUIVALENTS - INCREASE
(DECREASE)157424296-160101SupplementalInterest Paid –
Net8920148Income Taxes Paid17-2-224680
CompetCategoryFIRST SOLARYINGLI GREEN ENERGY
HOLDINGS CO LTDSUNPOWER CORPTRINA SOLAR
LTDMarket Capitalization$ 6.3B$
425.30M $ 4.3B $ 1.2BStock Price$
60.79$ 2.08$ 32.37$ 12.23Earning Per Share$ 3.91$
(1.55)$ 1.55$ 0.86Full Time
Employee6,06019,3067,18813,974Total Revenue $ 3.4B
$ 2.2B $
3.0B $ 2.1BGross Profit
Magin(TTM)31.65%15.95%26.12%17.23%Operating Margin
(TTM)12.51%-1.01%10.58%5.71%
About Hershey
The company was founded by Milton S. Hershey in 1894 and is
headquartered in Hershey, PA.
Hershey has approximately 13,000 employees worldwide.

13. It operates in the geographic regions North America and
International (50 different countries).
With more than 80 brands, Hershey produces chocolate and
sugar confectionery products .
90% of its revenue come from the United States.
Chocolate industry sales of the U.S. from 2013 – 2017 (in
Billion $)
http://www.statista.com/statistics/262473/chocolate-sales-of-
the-united-states/2013201420152016201720.120.621.221.722.7
Hershey’s Products
Its principal product groups include chocolate and confectionery
products, gum and mint refreshment products, and pantry items
such as baking ingredients, toppings and beverages. Its brands
include Hershey's, Reese's, and Kisses.
Hershey’s Competitors
Hershey has the largest share of the US Chocolate market.
Its closest competitor is Mars (Mars, Snickers, M&M, Twix...).
Threat of competition from Nestlé & Cadbury Schweppes (now
part of Kraft Foods) is mitigated trough licensing agreements.

14. 5Y Stock Comparison Competitors
(HSY – Mars – Mondelèz – S&P500 – Nestlé)
Historical Financial & Value
DriversHistorical20102011201220132014Revenue5,671,009
6,080,788 6,644,252 7,146,079 7,421,768 COGS4,765,711
5,025,760 5,533,104 5,806,404 6,032,193 EBIT905,298
1,055,028 1,111,148 1,339,675 1,389,575 Taxes299,065
333,883 354,648 430,849 459,131 EBT808,864 962,845
1,015,579 1,251,319 1,306,043 Implied Taxes 334,720
365,849 388,021 461,271 488,496 NOPAT 570,578 689,179
723,127 878,404 901,079 Depreciation 215,763 210,037
201,033 211,532 Fixed + WC Investment (10,652) (64,673)
115,697 (902,030)FCF 894,290 868,491 1,195,134 210,581
Value DriversHistorical2011201220132014Sales
Growth6.57%6.74%8.48%7.02%3.71%Operating Profit
Margin15.96%17.35%16.72%18.75%18.72%Effective Tax
Rate36.97%34.68%34.92%34.43%35.15%Investment
Rate1.5%8.9%-13.2%100.1%Cost of Capital
(WACC)6.02%ROIC25.26%27.46%26.89%27.66%
Sales Growth = (sales– sales-1 )/ salesn
Operating profit margin = Sales / EBIT
Tax rate = Taxes / EBT
Investment rate = (FC+WC)/NOPAT
ROIC = NOPAT / ((InvCapBeg+InvCapEnd)/2)
WACC – Capital Asset Pricing ModelBook ValueMarket
ValueDebt 2,325,771 2,325,771 Equity 1,519,530
22,480,000,000 Total Debt and Equity 3,845,301

15. 22,482,325,771 Capital structure of debt60.48%0.01%Capital
structure of
equity39.52%99.99%Total100.00%100.00%DEBTCredit rating
(Moody AA)3.56%3.56%Tax rate35.15%35.15%After tax cost
of debt Rd(1-T)2.31%2.31%EQUITYRF (30YR)2.49%2.49%β
current beta <1 = more stable (1 = price moves with market)
0.64 64.00%Expected return8.00%8.00%MRP = expected return
– risk free rate 5.51%5.51%Re(1-t)3.90%3.90%CAPM = re =
RF + β (MRP)6.0164%6.0164%WACC3.2829%6.0159%
http://finra-markets.morningstar.com/BondCenter/Results.jsp
https://www.moodys.com/research/Moodys-Disclosures-on-
Credit-Ratings-of-The-Hershey-Company--PR_238214
http://www.bondsonline.com/Todays_Market/Composite_Bond_
Yields_table.php
http://www.treasury.gov/resource-center/data-chart-
center/interest-
rates/Pages/TextView.aspx?data=yieldYear&year=2015
http://finance.yahoo.com/echarts?s=HSY+Interactive#symbol=H
SY;range=
Forecast & Residual PeriodForecast
Residual20152016201720182019Revenue 7,792,856 8,221,464
8,714,751 9,281,210 9,930,895 10,104,686 COGS 6,331,465
6,589,259 7,071,762 7,717,051 8,157,936 8,199,653 EBIT
1,461,392 1,632,204 1,642,989 1,564,159 1,772,959
1,905,033 Taxes 514,848 575,026 578,825 551,053 624,614
671,143 NOPAT 946,543 1,057,179 1,064,164 1,013,106
1,148,346 1,233,890 Depreciation 209,591 209,591 209,591
209,591 209,591 209,591 Fixed + WC Investment 47,327
74,003 31,925 (81,048) 45,934 74,459 FCF 1,203,462
1,340,772 1,305,680 1,141,649 1,403,871 1,517,940 PV
1,135,341 1,193,283 1,096,274 904,293 1,049,054
26,589,567 Value DriversForecast

16. Residual20152016201720182019Sales
Growth5.00%5.50%6.00%6.50%7.00%7.00%Operating Profit
Margin18.75%19.9%18.9%16.9%17.9%18.9%Effective Tax
Rate35.2%35.2%35.2%35.2%35.2%35.2%Investment
Rate5.0%7.0%3.0%-8.0%4.0%Cost of Capital
(WACC)6.02%6.02%6.02%6.02%6.02%6.02%ROIC
estimated29.00%Spread (ROIC – WACC)22.98%Residual
Growth estimated1.75%Residual Investment Rate
calculated6.034%
Estimate of Corporate ValueGROWTH RATE MODELPV of
Forecast 17%
5,378,245 PV of Residual or Terminal Value
83% 26,589,567 PV of All Future Cash Flows 31,967,811 Cash
and Marketable Securies 471,985 Corporate Value 32,439,796
Value of Debt 22,480,000,000 Value of Equity Holders
22,447,560,204 Value per Equity Share 105.64
Summary
In conclusion, Hershey Corporation will continue to be
successful in the Chocolate and Confectioners Market.
The emergence of business in Asia and continued growth in
North America and Europe will keep the company on its path of
steady growth.
Chocolate is a staple that is consumed during all cycles of the
economy and the brand name recognition and promise of
Hershey will keep the company in good standing.

17. References
http://www.thehersheycompany.com/investors/stock-
information/stock-quote-and-charts.aspx
http://www.thehersheycompany.com/investors/company-
profile.aspx
http://www.marketwatch.com/investing/stock/hsy/financials/
http://finra-markets.morningstar.com/BondCenter/Results.jsp
https://www.moodys.com/research/Moodys-Disclosures-on-
Credit-Ratings-of-The-Hershey-Company--PR_238214
http://www.bondsonline.com/Todays_Market/Composite_Bond_
Yields_table.php
http://www.treasury.gov/resource-center/data-chart-
center/interest-
rates/Pages/TextView.aspx?data=yieldYear&year=2015
http://finance.yahoo.com/echarts?s=HSY+Interactive#symbol=H
SY;range=
http://www.statista.com/statistics/238794/market-share-of-the-
leading-chocolate-companies-in-the-us/
http://www.statista.com/statistics/262473/chocolate-sales-of-
the-united-states/
AnalysisHISTORICAL VIEW – FORECAST – RESIDUAL
PERIOD12345ESTIMATE CORPORATE VALUETHE
HERSHEY COMPANYHistoricalForecastResidualBALANCE
SHEETS2010201120122013201420152016201720182019PV of
Forecast5,378,24516.8%FCF = 20% for first 5 years(in
thousands, except share
data)Revenue5,671,0096,080,7886,644,2527,146,0797,421,7687
,792,8568,221,4648,714,7519,281,2109,930,89510,104,686PV

18. of Residual or Terminal Value26,569,59383.2%FCF = 80% for
the futureDecember
31,20102011201220132014COGS4,765,7115,025,7605,533,1045
,806,4046,032,1936,331,4656,589,2597,071,7627,717,0518,157,
9368,199,653PV of All Future Cash
Flows31,947,838ASSETSEBIT905,2981,055,0281,111,1481,339
,6751,389,5751,461,3921,632,2041,642,9891,564,1591,772,959
1,905,033Cash and Marketable Securies471,985Current
assets:Taxes299,065333,883354,648430,849459,131514,848575
,026578,825551,053624,614671,143Corporate
Value32,419,823Cash and cash
equivalents884,642693,686728,2721,118,508374,854EBT808,86
4962,8451,015,5791,251,3191,306,043946,5431,057,1791,064,1
641,013,1061,148,3461,233,890Value of
Debt22,480,000,000Short-term investments97,131Implied
Taxes334,720365,849388,021461,271488,496514,848575,02657
8,825551,053624,614671,143Value of Equity
Holders22,447,580,177Accounts receivable—trade,
net390,061399,499461,383477,912596,940NOPAT570,578689,1
79723,127878,404901,079946,5431,057,1791,064,1641,013,106
1,148,3461,233,890Value per Equity Share
101.64Inventories533,622648,953633,262659,541801,036Depre
ciation215,763210,037201,033211,532209,591209,591209,5912
09,591209,591209,591Deferred income
taxes55,760136,861122,22452,511100,515Fixed + WC
Investment(10,652)(64,673)115,697(902,030)47,32774,00331,9
25(81,048)45,93474,459Prepaid expenses and
other141,132167,559168,344178,862276,571FCF894,290868,49
11,195,134210,5811,203,4621,340,7721,305,6801,141,6491,403
,8711,517,940Total current
assets2,005,2172,046,5582,113,4852,487,3342,247,047PV1,135,
3411,193,2831,096,274904,2931,049,05426,569,593Property,
plant and equipment,
net1,437,7021,559,7171,674,0711,805,3452,151,901Goodwill52
4,134516,745588,003576,561792,955ROIC > WACC –>
GROWTH MODELOther

19. intangibles123,080111,913214,713195,244294,841Value
DriversHistoricalForecastResidualDeferred income
taxes21,38733,43912,44820112012201320142015201620172018
2019Other assets161,212138,722152,119293,004142,772Sales
Growth6.57%6.74%8.48%7.02%3.71%5.00%5.50%6.00%6.50%
7.00%7.00%6.50%Total
assets4,272,7324,407,0944,754,8395,357,4885,629,516Operatin
g Profit
Margin15.96%17.35%16.72%18.75%18.72%18.75%19.9%18.9%
16.9%17.9%18.9%17.50%Effective Tax
Rate36.97%34.68%34.92%34.43%35.15%35.2%35.2%35.2%35.
2%35.2%35.2%35.23%LIABILITIES AND STOCKHOLDERS’
EQUITYInvestment Rate
Christiane Russ: Christiane Russ:
Working Capital
supports higher level of sales
Fixed Capital - drive incremental sales
1.5%
Christiane Russ: Christiane Russ:
dependent on FC + WC Investments which may differ...
8.9%-13.2%100.1%5.0%7.0%3.0%-8.0%4.0%24.36%Current
liabilities:Cost of Capital
(WACC)6.02%6.02%6.02%6.02%6.02%6.02%6.02%6.02%Acco
unts
payable410,655420,017441,977461,514482,017ROIC25.26%27.
46%26.89%27.66%estimated29.00%26.82%Accrued
liabilities593,308612,186650,906699,722813,513Spread (ROIC
– WACC)22.98%Accrued income
taxes9,4021,8992,32979,9114,616Residual
Growthestimatd1.75%Short-term
debt24,08842,080118,164165,961384,696Residual Investment
Ratecalculated6.034%IR = G/ROICCurrent portion of long-term
debt261,39297,593257,734914250,805Total current
liabilities1,298,8451,173,7751,471,1101,408,0221,935,647Long

20. -term
debt1,541,8251,748,5001,530,9671,795,1421,548,963FIXED
AND WORKING CAPITAL – ROICOther long-term
liabilities494,461603,876668,732434,068526,003Deferred
income taxes3,335,13135,657104,20499,373Change in Invested
Assets2011201220132014Total
liabilities3,539,5513,706,4663,741,4364,109,986Net Operating
Working CapitalStockholders’ equity:Accounts
Receivable(9,438)(61,884)(16,529)(119,028)The Hershey
Company stockholders’
equityInventory(115,331)15,691(26,279)(141,495)Preferred
stock, shares issued: none
Prepaid(26,427)(785)(10,518)(97,709)Common stock, shares
issued:299,195299,269299,272299,281299,281Accounts
Payable9,36221,96019,53720,503Class B common stock, shares
issued:60,70660,63260,62960,62060,620Accrual18,87838,72048
,816113,791 Additional paid-in
capital434,865490,817592,975664,944754,186Total Change in
WC(122,956)13,70215,027(223,938)Retained
earnings4,374,7184,707,8925,027,6175,454,2865,860,784Fixed
AssetsTreasury—common stock shares, at cost: 138,856,786 in
2014 and 136,007,023 in 2013
(4,052,101)(4,258,962)(4,558,668)(4,707,730)(5,161,236)PPE(1
22,015)(114,354)(131,274)(346,556)Accumulated other
comprehensive
loss(215,067)(442,331)(385,076)(166,567)(358,573)Goodwill7,
389(71,258)11,442(216,394)The Hershey Company
stockholders’
equity902,316849,0221,036,7491,604,8341,455,062Other
intangibles11,167(102,800)19,469(99,597)Noncontrolling
interests in
subsidiaries35,28523,62611,62411,21864,468Depreciation215,7
63210,037201,033211,532Total stockholders’
equity937,601880,9431,048,3731,616,0521,519,530Total
Change in Fixed Assets112,304(78,375)100,670(451,015)Total
liabilities and stockholders’

21. equity4,272,7324,407,0944,754,8395,357,4885,629,516Total
Invested
Assets(10,652)(64,673)115,697(902,030)STATEMENTS OF
INCOMEOperating Assets for ROIC20102011201220132014For
the years ended December 31,2011201220132014Net Operating
Working CapitalNet
sales6,080,7886,644,2527,146,0797,421,768Accounts
Receivable390,061399,499461,383477,912596,940Costs and
expenses:Inventory533,622648,953633,262659,541801,036Cost
of sales
3,548,8963,784,3703,865,2314,085,602Prepaid141,132167,5591
68,344178,862276,571Selling, marketing and
administrative1,477,7501,703,7961,922,5081,900,970Accounts
Payable(410,655)(420,017)(441,977)(461,514)(482,017)
Business realignment and impairment charges
(886)44,93818,66545,621Accrual(593,308)(612,186)(650,906)(
699,722)(813,513)Total costs and
expenses5,025,7605,533,1045,806,4046,032,193Total
WC60,852183,808170,106155,079379,017EBIT Income before
interest and income taxes
1,055,0281,111,1481,339,6751,389,575Fixed AssetsInterest
expense,
net92,18395,56988,35683,532PPE1,437,7021,559,7171,674,071
1,805,3452,151,901EBT Income before income
taxes962,8451,015,5791,251,3191,306,043Goodwill524,134516,
745588,003576,561792,955Provision for income
taxes333,883354,648430,849459,131Other
intangibles123,080111,913214,713195,244294,841Net income
628,962660,931820,470846,912Total Fixed
Assets2,084,9162,188,3752,476,7872,577,1503,239,697Total
Operating
Assets2,145,7682,372,1832,646,8932,732,2293,618,714Net
income per share - basic:Common stock2.853.013.763.91ROIC
using Beg. Invested Assets2011201220132014Classic B
common stock2.582.733.393.54
NOPAT570,578689,179723,127878,404 Invested Assets -

22. Beg2,145,7682,372,1832,646,8932,732,229Net income per share
- diluted: ROIC (Beg Invested
Assets)27%29%27%32%Common stock2.742.893.613.77Class B
common stock2.562.713.373.52ROIC using Avg Invested Assets
NOPAT570,578689,179723,127878,404Dividends paid per
share: Invested Assets -
Beg2,145,7682,372,1832,646,8932,732,229Common
stock1.381.561.812.04 Invested Assets -
End2,372,1832,646,8932,732,2293,618,714Class B common
stock1.251.411.631.84 Invested Assets -
Avg2,258,9762,509,5382,689,5613,175,472 ROIC (Avg
Invested Assets)25.26%27.46%26.89%27.66%CASH
FLOWSWACC - CAPM LIABILITIES AND STOCKHOLDERS’
EQUITYBook ValueMarket ValueFor the years ended December
31,2011201220132014Current liabilities:Debt
Christiane Russ: Christiane Russ:
what contributes to the debt equipment?...
2,325,7712,325,771101.79price per sharebonds, long-term notes
payable, current portion of long term debt, notes payable (the
footnotes tell you more about how much debt is short
term...)Operating ActivitiesAccounts payable
(Verbindlichkeiten)482,0178.6%Equity1,519,53022,480,000,000
220,846,842shares outstandingcommon stock, preferred stock,
retained earnings≠ shares outstanding = 10K or annual
reportNet income628,962660,931820,470846,912Accrued
liabilities (Rückstellungen)813,51314.5%Total Debt and
Equity3,845,30122,482,325,771no accounts payable - no
working capitalAdjustments to reconcile net income to net cash
provided from operations: Accrued income taxes
(Steuerrückstellungen, aktive
Rechnungsabrenzung)4,6160.1%Depreciation and
amortization215,763210,037201,033211,532Short-term debt
(kurzfristige Fremdfinanzierung)
Christiane Russ: Christiane Russ:s384,6966.8%Capital structure

23. of debt60.48%0.010%Stock-based compensation
expense43,46850,48253,96754,068Current portion of long-term
debt (actuelle langfristige
Fremdfinanzierung/Verbindlichkeiten)250,8054.5%Capital
structure of equity39.52%99.99%Excess tax benefits from
stock-based
compensation(13,997)(33,876)(48,396)(53,497)Total current
liabilities
(Gesamtverbindlichkeiten=1,935,64734.4%Total100.00%100.00
%Deferred income taxes33,61113,7857,45718,796Long-term
debt (langfristige Fremdfinanzierung)1,548,96327.5%Non-cash
business realignment and impairment
charges34,66038,14439,988Other long-term
liabilities526,0039.3%Contributions to pension and other
benefits plans(31,671)(44,208)(57,213)(53,110)Deferred income
taxes99,3731.8%DEBTMoodyS&Phttp://finra-
markets.morningstar.com/BondCenter/Results.jspChanges in
assets and liabilities, net of effects from business acquisitions
and divestitures:Total liabilities4,109,98673.0%Credit rating
(Moody AA) 20Y3.56%
Christiane Russ: Christiane Russ:
20YR
Christiane Russ: Christiane Russ:
what contributes to the debt equipment?...
Christiane Russ: Christiane Russ:s
Christiane Russ: Christiane Russ:
Working Capital
supports higher level of sales
Fixed Capital - drive incremental sales

24. Christiane Russ: Christiane Russ:
dependent on FC + WC Investments which may differ...
3.56%AAAhttps://www.moodys.com/research/Moodys-
Disclosures-on-Credit-Ratings-of-The-Hershey-Company--
PR_238214Accounts receivable—trade,
net(9,438)(50,470)(16,529)(67,464)Stockholders’ equity:Tax
rate35.15%35.15%http://www.bondsonline.com/Todays_Market/
Composite_Bond_Yields_table.phpInventories(115,331)26,598(
26,279)(88,497)The Hershey Company stockholders’
equityAfter tax cost of debt rd(1-T)2.31%2.31%Accounts
payable and accrued
liabilities7,86069,645102,411(13,847)Preferred stock
(Vorzugsaktie)Other assets and
liabilities(194,948)153,759151,484(56,660)Common stock
(Stammaktien)299,2815.3%Net cash provided by operating
activities587,8671,094,8271,188,405838,221Class B common
stock, shares issued:60,6201.1%EquityInvesting
ActivitiesCapital surplus (Kapitalrücklage, Eigenkapitalzuwachs
aus sonstigen Quellen)754,18613.4%RF
(10YR)2.49%2.49%retrieved from
http://www.treasury.gov/resource-center/data-chart-
center/interest-
rates/Pages/TextView.aspx?data=yieldYear&year=2015Capital
additions(323,961)(258,727)(323,551)(345,947)Retained
earnings (Gewinnrücklagen)5,860,784104.1%β current beta <1
= more stable (1 = price moves with
market)0.6464.00%retrieved from
http://finance.yahoo.com/echarts?s=HSY+Interactive#symbol=H
SY;range=Capitalized software
additions(23,606)(19,239)(27,360)(24,842)Treasury—common
stock shares, at cost: (eigene Anteile)(5,161,236)-
91.7%Expected return8.00%8.00%Proceeds from sales of
property, plant and equipment31245315,3311,612Accumulated
other comprehensive loss (akkumulierter umfassender
Verlust)(358,573)-6.4%Proceeds from sale of trademark
licensing rights 20,000The Hershey Company stockholders’

25. equity (Eigenkapital)1,455,06225.8%MRP = expected return –
risk free rate 5.51%5.51%Loan to
affiliate(7,000)(23,000)(16,000)Noncontrolling interests in
subsidiaries64,4681.1%Re(1-t)3.90%3.90%Business
acquisitions, net of cash and cash equivalents
acquired(5,750)(172,856)(396,265)Total stockholders’
equity1,519,53027.0%CAPM = re = RF + β
(MRP)6.0164%6.0164%(Captial Asset Pricing Model CAPM =
Risk free rate RF + Beta (MRP) + Bond Yield Premium)Total
liabilities and stockholders’
equity5,629,516100.0%WACC3.2829%6.0159%WACC = E/V *
Re + D/V *Rd * (1-Tc)Net cash used in investing
activities(340,005)(473,369)(351,580)(862,573)Financing
ActivitiesNet increase in short-term
debt10,83477,69854,351117,515Long-term
borrowings249,1264,025250,5953,051Repayment of long-term
debt(256,189)(99,381)(250,761)(1,442)Proceeds from lease
financing agreement 47,601Cash dividends
paid(304,083)(341,206)(393,801)(440,414)Exercise of stock
options184,411261,597147,255122,306Excess tax benefits from
stock-based compensation13,99733,87648,39653,497Payments
to noncontrolling interests(15,791)WACC = E/V * Re + D/V
*Rd * (1-Tc)Contributions from noncontrolling
interests2,9402,9402,940Re = cost of equityRepurchase of
common stock(384,515)(510,630)(305,564)(576,755)Rd = cost
of debtNet cash used in financing
activities(438,818)(586,872)(446,589)(719,302)E = market
value of the firm's equity(Decrease) increase in cash and cash
equivalents(190,956)34,586390,236(743,654)D = market value
of the firm's debtCash and cash equivalents at January
1884,642693,686728,2721,118,508V = E + DCash and cash
equivalents at December
31693,686728,2721,118,508374,854E/V = percentage of
financing that is equitySupplemental DisclosureD/V =
percentage of financing that is debtInterest
paid97,892100,26992,55187,801Tc = corporate tax rateIncome

26. taxes paid 292,315327,230373,902384,318capital sources =
common stock, preferred stock, bonds, other long-term debt
WACC increases when beta and return on equity
increasesOperating Activities201220132014WACC increase
notes a decrease in valuation and higher riskNet Income
BEFORE preferred dividends660,931820,470846,912Tells you
how much interest a company has to pay for every dollar it
financesNoncash adjustmentsUsed as the discount rate to
estimate PV of future cash flows Depreciation and
amortizationa210,037201,033211,532equity = assets -
liabilityWorking capital adjustmentsequity holders: owner of
the company, shareholderIncrease in accounts
receivableb(61,884)(16,529)(119,028)common share: no
guarantee of dividendsIncrease in
inventories15,691(26,279)(141,495)preferred shareholders: get
a certain amount of dividends per yearIncrease in accounts
payable21,96019,53720,503equity sources: net profits that end
in retained earnings, issuing of sharesIncrease in
accruals38,72048,816113,791Net cash provided (used) by
operating activities885,4551,047,048932,215Investing
ActivitiesCash used to acquire fixed
assetsc(276,964)(574,882)28,755Sale of short-term investments-
0- 0(97,131)Net cash provided (used) by investing
activities(276,964)(574,882)(68,376)Financing
ActivitiesIncrease in notes payableIncrease in bondsPayment of
common and preferred dividendsNet cash provided (used) by
financing activitiesSummaryNet change in cash and
equivalentsCash and securities at beginning of the yearCash and
securities at end of the yearHersheyMars IncMondelez
InternationalNestlé SATOTAL
REVENUE7,421,768815,0008,830,00091,610,000COST4,085,60
2467,0005,684,00047,550,000GROSS
PROFIT3,336,166349,0003,146,00044,060,000EBIT1,389,5756
9,000589,000(2,760,000)NET
INCOME846,912(51,000)500,00014,460,000CompanyNet Sales
2014 (US$ millions)Mars Inc (USA)18,480Mondelēz

27. International (USA)14,350Ferrero Group (Luxembourg /
Italy)10,911Nestlé SA (Switzerland)10,466Meiji Co Ltd
(Japan)9,818*Hershey Foods Corp
(USA)7,485Chocoladenfabriken Lindt & Sprüngli AG
(Switzerland)4,022Arcor (Argentina)3,500*Ezaki Glico Co Ltd
(Japan)3,049*August Storck KG (Germany)2,272
notesWACCused to find PV of future cash flows – therefore we
should not use weights based on past history of the
companyincludescapital provided by investors – interst bearing
debt, preferred stock, and common equityliabilities and equity
from BSpercentage of total liabilites and equity comprised by
(beinhalted in) each l. or e. accountbook values (BS) and % of
financing from investor-supplied capitalcurrent market values
and % of financing from investor-supplied capitaltarget capital
structure weights (future average capital structure weights based
on market values)exclude from capital structure
weightsaccounts payableaccruals WACCused to find PV of
future cash flows – therefore we should not use weights based
on past history of the companyincludescapital provided by
investors – interst bearing debt, preferred stock, and common
equityChoose weights for WACCliabilities and equity from
BSpercentage of total liabilites and equity comprised by
(beinhalted in) each l. or e. accountbook values (BS) and % of
financing from investor-supplied capitalcurrent market values
and % of financing from investor-supplied capitaltarget capital
structure weights (future average capital structure weights based
on market values)exclude from capital structure
weightsaccounts payableaccruals rd(1-T) and rstd(1-T): After-
tax Cost of Debtrstd - before-tax cost of short term debtinclude
short-term debt only if permanent source of financing - which is
the case hereWACC = E/V * Re + D/V *Rd * (1-Tc)Re = cost of
equityRd = cost of debtE = market value of the firm's equityD =
market value of the firm's debtV = E + DE/V = percentage of
financing that is equityD/V = percentage of financing that is
debtTc = corporate tax ratecapital sources = common stock,
preferred stock, bonds, other long-term debt WACC increases

28. when beta and return on equity increasesWACC increase notes a
decrease in valuation and higher riskTells you how much
interest a company has to pay for every dollar it financesUsed
as the discount rate to estimate PV of future cash flows equity =
assets - liabilityequity holders: owner of the company,
shareholdercommon share: no guarantee of dividendspreferred
shareholders: get a certain amount of dividends per yearequity
sources: net profits that end in retained earnings, issuing of
sharesPROJECT 2Pick an industry and company with less
revenue than 1B a yearpublic companyannual revenue <
1Bpotential buyer is a company in that industrytodaynext
timeübernächste weekproject Cost of Capital Chapter
6presentationscase questionsSection 4.2project risk
analysisvaluation (forecast, res. Value)Working
CapitalForecast201412345Revenue1,0001,1001,2001,3001,4001
,500How much working capital do I need to support this
revenue growth? For example inventoryCash 250MCash of
Working Capital - you have to guess - make
analysis1011121%Inventory50555.0%5%When do I invest the
5% ? MC Caset Consulting3 GROWTH MODELSno growthg =
0 in year 6 and beyondROIC = WACCNOPAT - IR =
FCFNOPAT = FCFNOPATNOPAT - IR +DEPR50IR =
Investment Ratenegative growth (harvesting)g = negROIC =
WACC = FCF - New PPE-50 = FCFgrowthg = positiveROIC >
WACCWe are here with HersheyWe estimate g and calculate
growthWACC = 8%growth = IR * ROICgrowth rate is
dependend on how much money I invest and how efficient I do
itROIC is to assess if we are making money or not and to find
out whether we are creating value for shareholders
(WACC)IRROICGrowth rate - this is what we have to estimate
in advanceTherefore the assumption is ROIC =
WACC0.100.22.0%0.100.33.0%0.100.080.8%0.400.083.2%IR =
G/ROICwe have to calculate the IR!!!ForecastResidual Period
or Terminal Value2014123456...infinityPV =
FV/(1*i)^NFCF1,5001,500 infinityPV0 = PMT1 in one year / i-
gi = WACCno growth18,750harvesting15,000careful with + and

29. - between growth and interest
rategrowth30,000WACC80%Debtcurrent portion of long term
debt, notes payable (the footnotes tell you more about how
much debt is short term...)20%Equity≠ shares outstanding =
10K or annual reportAssumptionscurrent stock priceCurrent
Capital Structure is the target or optimal capital structure no
accounts payable - no working capitalDebt3.514%Don't need
historical capital structureEquity 21.586%Market value not
book valueTotal 25CAPM re = RF + B(MRP)MRP = E(RM) -
RFRF = 10 Year treasury bond =2.1%B = Beta = draw them
from bloomberg, etc. (or calculate it yourself)when beta is 0.2 it
is too lowput all betas from google, morningstar, yahoo, into the
presentation and say which one you pickedMRP = Market risk
premium 5%E(RM) = 7.1Return of the marketRF = 2.1 = MRP =
5%Cost of Debtwe want to find out what the cost of new
debtWhat is the company's credit rating. Bondsonline.com - or
finrahttp://finra-
markets.morningstar.com/BondCenter/Results.jspWACC = (1 -
Tax rate)* rd cost of debt + %D percentage of debt + re%E
percentage of EquityT = FCFWhere:Re = cost of equityRd =
cost of debtE = market value of the firm's equityD = market
value of the firm's debtV = E + DE/V = percentage of financing
that is equityD/V = percentage of financing that is debtTc =
corporate tax rateFixed Capital1. Historical Free Cash
FlowsNew EquipmentFCF3 yearsAcquisitionsannual report of
the 10kDepreciationIncome StatementChange in Fixed
CapitalRevenue3084370costs2730415Working
CapitalEBIT353955Accounts Receivableinterest expense find it
out the tax rateInventoryTaxes138770taxes paid / earnings
before taxes EBTprovision for income taxes / income before
income taxesPrepaids39.21%Accounts
PayableNOPAT215185more stores, you need more equipment,
more inventory, look for change in fixed capital and change in
working capitalAccruelsChange in Working CapitalChange in
fixed capital-79359Fixed Capital – new equipmentstatement of
cash flows-140528statement of cash flows – new

30. acquisitionspurchases of equipment, businesses, -
10924purchases of equipment, businesses, working capital-
101852 + add back depreciationdepreciation and
amortization72093depreciation and amortizationthey spend
more money than they have depreciation expense which means
that they want to grow-79359FCF33974working capital HR-
69883upusebalance sheetCurrent assets – current
liabilitiesInventory prepaid-67708upusesource of cash or use of
cash??Prepaid-23189upuseAccounts
payable44976upsourcesomeone else is paying for
businessAccruals13952upsource-
101852ROICCash245,686593,175347,489NOPATWhich
accounts?Acc rec69,883279,835209,952Invested Assets
BeginninHow much did they change bye?Inventories
67,708536,714469,006Invested Assets EndWas it a use or a
source?Prepaid 23,19087,17763,987Invested Assets AVGWho is
paying for the business?
0.8 0.2