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Butler Lumber Company

BUTLER LUMBER COMPANY EXHIBIT 1 Operating Expenses for Years Ending December 31, 1988-1990, and for First Quarter 1991 (thousands of dollars) 1988 Net sales Cost of goods sold: Beginning inventory Purchases

1989

1990

1st Qtr 1991

$1,697

$2,013

$2,694

$718

$183 $1,278 $1,461 Ending inventory $239 Total cost of goods sold $1,222 Gross Profit $475 Operating expenses $425 Interest expense $13 Net income before income taxes $37 Provision for income taxes $6 Net income $31

$239 $1,524 $1,763 $326 $1,437 $576 $515 $20 $41 $7 $34

$326 $2,042 $2,368 $418 $1,950 $744 $658 $33 $53 $9 $44

$418 $660 $1,078 $556 $522 $196 $175 $10 $11 $2 $9

a. In the first quarter of 1990 sales were $698,000 and net income was $7,000. b. Operating expenses include a cash salary for Mr. Butler of $75,000 in 1988, $85,000 in 1989, $95,000 in 1990, and $22,000 in the first quarter of 1991. Mr. Butler also received some of the perquisites commonly taken by owners of privately held businesses.

Memo items Purchases to sales Cogs to sales Operating expenses/sales

75.3% 72.0% 25.0%

75.7% 71.4% 25.6%

75.8% 72.4% 24.4%

Butler Lumber Company

BUTLER LUMBER COMPANY EXHIBIT 2 Balance Sheets at December 31, 1988-1990, and March 31, 1991 (thousands of dollars) 1st Qrtr 1988 1989 1990 1991 Cash Accounts receivable, net Inventory Current assets Property, net Total assets

$58 $171 $239 $468 $126 $594

$49 $222 $325 $596 $140 $736

$41 $317 $418 $776 $157 $933

$31 $345 $556 $932 $162 $1,094

Notes payable, bank Notes payable, Mr. Stark Notes payable, trade Accounts payable Accrued expenses Long-term debt, current portion Current liabilities Long-term debt Total liabilities Net worth Total liabilities & net worth

$0 $105 $0 $124 $24 $7 $260 $64 $324 $270 $594

$146 $0 $0 $192 $30 $7 $375 $57 $432 $304 $736

$233 $0 $0 $256 $39 $7 $535 $50 $585 $348 $933

$247 $0 $157 $243 $36 $7 $690 $47 $737 $357 $1,094

Working capital Nonfinancial working capital

$208 $262

$221 $325

$241 $440

$242 $465

Cash/sales AR/sales Net property/sales Accrued exp/sales

3.4% 10.1% 7.4% 1.4%

2.4% 11.0% 7.0% 1.5%

1.5% 11.8% 5.8% 1.4%

Memo items

BUTLER LUMBER COMPANY

1988

1989

1990

Average

Percent of sales Purchases Cost of goods sold Operating expenses Cash Accounts receivable Inventory Fixed assets (net) Total assets

75.3% 72.0% 25.0% 3.4% 10.1% 14.1% 7.4% 35.0%

75.7% 71.4% 25.6% 2.4% 11.0% 16.1% 7.0% 36.6%

75.8% 72.4% 24.4% 1.5% 11.8% 15.5% 5.8% 34.6%

75.6% 71.9% 25.0% 2.5% 11.0% 15.2% 6.7% 35.4%

Percent of total assets Current liabilities Long-term liabilities Equity

43.8% 10.8% 45.5%

51.0% 7.7% 41.3%

57.3% 5.4% 37.3%

50.7% 8.0% 41.4%

Current ratio Return on sales (margin) Return on assets Return on equity

1.80 1.8% 5.2% 11.5%

1.59 1.7% 4.6% 11.2%

1.45 1.6% 4.7% 12.6%

1.61 1.7% 4.9% 11.8%

1.83% 2.86

1.69% 2.74 2.73 1.00 12.59% 18.62% 23.91%

1.63% 2.89 3.07 1.00 14.47% 33.83% 26.77%

Sustainable Growth: Margin Asset Turnover Leverage (using bop equity) Retention ratio G-star Actual Growth (Sales) Actual Growth (Assets)

Butler Lumber Company

BUTLER LUMBER COMPANY Sources and Uses of Funds, 1988 - 1990, (thousands of dollars) 1988 to 1989 1989 to 1990 Sources of Funds: Retained Earnings $34 $44 Decrease in Cash Account $9 $8 Increase in Trade Payables $68 $64 Increase in Accrued Expenses $6 $9 Bank Borrowing $146 $87 Total Sources $263 $212 Uses of Funds: Increase in Accounts Receivable Increase in Inventory Increase in Fixed Asset Account Buyout of Mr. Stark Decrease in Long Term Debt Total Uses

$51 $86 $14 $105 $7 $263

$95 $93 $17 $0 $7 $212

1988 to 1990 $78 $17 $132 $15 $233 $475

16.4% 3.6% 27.8% 3.2% 49.1% 100.0%

$146 $179 $31 $105 $14 $475

30.7% 37.7% 6.5% 22.1% 2.9% 100.0%

Butler Lumber Company

BUTLER LUMBER COMPANY Sources and Uses of Funds, 1988 - 1990, (thousands of dollars) 1988 to 1989 1989 to 1990 1988 to 1990 Cash From Operations: Retained Earnings (=WC from Operations) $34 $44 $78 Less: Change in Nonfinancial working capital $63 $115 $178 Equals: Cash from Operations ($29) ($71) ($100) Sources of Cash: From Operations From Short term Bank Loans Total Sources of Cash Uses of Cash: For Buyout of Mr. Stark For Fixed Assets For LTD Paydown Total Uses of Cash Change in Cash Holding: Change in cash (check)

($29) $146 $117

($71) $87 $16

($100) $233 $133

$105 $14 $7 $126 ($9)

$0 $17 $7 $24 ($8)

$105 $31 $14 $150 ($17)

($9)

($8)

BUTLER LUMBER COMPANY

Projected income statement for 1991 (thousands of dollars) 1991 Net sales Cost of goods sold: Beginning inventory Purchases

$

3,600 $418 $2,736 $3,154 $562 $2,592 $1,008 $900 $108 $42 $53 $97 $21 $76

Ending inventory Total cost of goods sold Gross Profit Operating expenses Operating Profit Purchase Discounts* Interest expense** Net income before income taxes Provision for income taxes Net income

Value $ 3,600

76%

72% 25% 2% 10.50% 34%

*Assume purchase discounts of 2% taken on all purchases after April 1, 1991. **10.5% on the average outstanding balance.

Projected balance sheet for December 31, 1991 (thousands of dollars) 1991 Assets: Cash $54 Accounts recievable, net (12% of sales) $432 Inventory $562 Current Assets $1,048 Property, net $216 Total Assets $1,264 Liabilities: Accounts payable Accrued expenses Long-term debt, current portion Bank note payable (plug) Current Liabilities Long-term debt Total Liabilities Net worth Total Liabilities plus net worth

Asset - (TL+NW except for Bank note)

$

$75 $54 7 $661 $797 $43 $840 $424 $1,264

$661

1.50% 12%

6%

10 1.50% $ 7

UTLER LUMBER COMPANY

ROA ROE ROBE

5.99% 17.87% 21.76%