...Interco, Inc. “As the above methodology indicates, this Report was a substantial undertaking. It could not have been accomplished efficiently in the time provided without the cooperation of all involved, and the Examiner wishes to acknowledge such cooperation with gratitude. Many parties involved in the Recapitalization placed the examination process and purposes ahead of their personal interests and were forthcoming with information, even when it did not cast them in the best possible light . . . In some ways, the fact that the examination process functioned so well makes this Report all the more difficult to write. It is unpleasant to assess blame when the very parties whose judgment is being questioned are people known to the Examiner to be sincere, cooperative and interested in the welfare of Interco and its creditors—parties whose very candor and cooperation made this Report possible. Nonetheless, it is the essence of the Examiner’s charge to apply the facts as we have found them to the applicable law in a fair and even-handed manner. Since everyone who cooperated with the Examiner expressed an overriding concern for the integrity of the process, we hope everyone will accept the Report in the spirit of fair investigation in which it is offered.” Interco Inc. Examiner’s Report, October 23, 1991 In 1988 St. Louis-based Interco was one of the nation’s leading companies, with $3.37 billion of revenues and $145 million of after-tax...
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...Interco Case Abstract Interco is a target for a hostile take-over by City Capital Associates Limited Partnership. The initial offer of City Capital was $64 per common share of Interco. However, this has been raised to $70 per common share. Interco rejected the offer on the recommendations of Wasserstein Perella. According to Perella the offer of $70 per common share was inadequate, as different analysis resulted in valuation range of $68-$80 per common share. This under valuated offer was not in the best interest of Interco and its shareholders. In this paper analysis it the rejection was reasonable. Team 18 Gary Person (gpn900) 213523 Steven Rampersad (srd220) 2504907 Samier Habiboellah (mhh380) 2506147 Chantal Djabarkhan (cdn490) 1974300 Interco’s Financial Status Interco currently has a healthy financial status, the company’s current ratio equals 3.6[1], which means company is highly liquid. Furthermore, Interco has a debt-to-capitalization ratio of 19.3%[2]. Meaning Interco has comprehensive financial flexibility. This financial flexibility allows Interco to repurchase it common shares and to make acquisitions when these opportunities occur. The overall sale performance (net sales) are healthy and increasing, in 1987 and 1988 the net sales grew with 4.04% and 13.4% respectively. Also the return on invested capital (ROIC) are stable since 1986 till 1988, varying between the 12%...
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...BEST PRACTICE INSIDE DELL COMPUTER CORPORATION: Managing Working Capital By Lawrence M. Fisher The secret to excellence lies in doing many things well. It also requires staying focused on the goal even when tempted to do otherwise. O F ALL THE creators of share- holder value in the 1990’s, the most dramatic have been strategic innovations, those bold new business models that forever changed the rules of the industries in which they were applied. But in today’s competitive world, a brilliant business model alone does not create a sustainable advantage, unless it is supplemented by operational excellence, the continuous identification and adoption of best practices. By any measure, the Dell Computer Corporation’s direct sales model is one of the most successful strategic innovations of the past 15 years. With the deceptively simple concept ............................... L a w rence M. Fisher has covered technology for The New York Times for more than a decade and has written for dozens of other publications. Mr. Fisher, who is based in San Francisco, holds an M.A. in journalism from the University of California at Berkeley. He is a recipient of the Hearst Aw a rd for investigative journalism. 68 F i rs t Q u a r t e r ’ 9 8 Illustrations by Jean Tuttle BEST PRACTICE of bypassing the retail channel to sell directly to consumers, Dell created a model that undercuts its competitors on price, forges closer links with customers and provides shareholders...
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...Interco’s Business Interco was comprised of four major divisions: Apparel, General Retail, Footwear, and Furniture and Home Furnishings. Each operating division had multiple independent companies that designed, manufactured, and distributed their products. The apparel group included eleven different companies whose products included private-label sportswear, casual apparel, and a number of other apparel items. The general retail operation had 201 locations in fifteen states. They sold from home improvement centers, discount stores, men’s specialty apparel shops, and specialty department stores. The footwear division had two major brands, Converse and Florsheim. The group’s operations spread internationally, with distribution reaching Canada, Mexico, and Australia. The furniture division, whose sales accounted for a third of the Interco sales, included brands like Broyhill, Lane, and Hickory Chair. The furniture group of Interco was the largest furniture manufacturer in the world in 1988. Overall sales and net income for fiscal year 1988 increased from their 1987 figures. In August of 1988, a merger proposal from City Capital offered $70 per share. On August 8, 1988, the board of directors met to discuss a restructuring plan that included selling the apparel group, paying a dividend, and/or repurchasing common stock. However, the proposal from City Capital required an evaluation of the takeover bid. Board members approved a “golden parachute” severance package for...
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...HBS Case Study : Interco 9-291-033 * Started out as shoe company – been around a long time * • Business has spread to other consumer products / services through acquisitions * • Fairly conservative financially, debt level is relatively low * Interco has moved away from apparel and general retail (went from 59% to 40% of total sales) • * Placed more emphasis on the footwear division. (acquired Converse in 1986) • * Placed much more emphasis on the furniture division (sales rose from 20-33% of Interco’s total sales) Current Scenario * • Cheap imports hurting profitability of U.S. apparel manufacturers * • Retailing industry profits reduced due to drop-off in consumer spending and deep discounting programs being offered by retailers in 1987 * • Furniture and home furnishings prospects appear bright given favorable demographic trends in family formations (success of firms like Home Depot proved this ex post!) * • October 1987 stock market crash still in rear-view mirror Operations Currently has four major divisions 1. Apparel (e.g., London Fog) 2. General retail merchandising (Central Hardware) 3. Footware (Converse, Florsheim) 4. Furniture and home furnishings (Ethan Allen) Interco's Goal * • Improve long-term sales and earnings growth • * • Earn increased return on assets and equity Concern Interco concerned stock price may be undervalued * Management felt that bad...
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...1 Mid-Term 1 EXAMINATION Summer 2013 DURATION: 2 HOURS Department Name & Course Number: BUSI 3001A Course Instructor(s) : Maurice, Jacques AUTHORIZED MEMORADA No. of Students: NonProgrammable Calculator Allowed Students MUST count the number of pages in this examination question paper before beginning to write, and report any discrepancy to a proctor. This question paper has 4 pages. This examination question paper MAY be taken from the examination room. no In addition to this question paper, students require: an examination booklet yes a Scantron Sheet yes no There are 40 marks available on this exam This exam comprises of 3 questions and has 4 pages. 2 Question 1 (30 marks) (90 minutes) On January 1, 20x1, Pastel Corporation acquired 70% of the outstanding common shares of Summer Company for $84,000 cash. On that date, Summer had $35,000 of common shares outstanding and $25,000 of retained earnings. On January 1, 20x1, the book values of each of Summer’s identifiable assets and liabilities were equal to their fair values except for a patent with 10 years remaining which had a fair value of $30,000 and a book value of zero. The following are the separate entity financial statements of Pastel and Summer as at December 31, 20x6: Balance Sheets December 31, 20x6 Pastel Assets Cash Accounts receivable Inventory Investment in Summer Equipment Accumulated depreciation Liabilities and shareholders’ equity Accounts payable Long-term debt Common...
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...Therefore, society is going to identify the company according its core values. Many times people say that the brand is an expression of the core values of any organization because each company develops a specific core values according to its necessities and goals. Some focus on the customer service, others on the profits. At Intercos for example, where I work, there are six values in the basic list. However the first and most important is the “value for the customer: Creation of new and value products for our customers” which displays the real importance that the customers should have to each employee in Intercos. Each employee should know perfectly the company’s core values and have the courage to act on them on behalf of the common good. Sometimes excellent workers have their own personal values, which is not necessarily bad, but simply misalignment the organization’s values. When this misalignment occurs, a hopeless situation is presented. The worker may keep having a regular performance. However, the individual becomes frustrated, unhappy and de-motivated. The following is going to present the core values of the organization where I work, Intercos. Next, my personal values and the result of the EAI test. The alignment...
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...QUESTIONS: 1. The elimination of the intercompany sales of merchandise does affect the amount of reported consolidated income. This is because the sales are eliminated from the intercompany financial statements to eliminate the double accounting of recording sales and profits twice. Consolidated net income will be unaffected. 2. The effect of eliminating profit on intercompany sales after deducting selling and administrative expenses rather than gross profit is to include selling and administrative expenses associated with the intercompany sale in consolidated inventories. Support for the gross profit approach is based on the proposition that consolidated inventory balances should include manufacturing costs only and that generally accepted accounting standards normally preclude the capitalization of selling and administrative costs. 3. When the subsidiary is the intercompany seller, the unrealized profit is shown in the accounts of the S Company. These accounts provide the starting point for the calculation of the non-controlling share of current year earnings. If the unrealized profit are not eliminated it would result in the overstatement of the non-controlling share in profits. On the other hand, when the parent is the intercompany seller, the unrealized profit is shown in the accounts of the parent company. Since the non-controlling interest does not share in the earnings of P Co., the non-controlling interest is not affected by the unrealized profit therein. 4. The only...
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...Strategic investment: own more than an passive amount, not enough to control, has power to participate in financial and operational decision of investee IAS28. Classification require professional judgement. * Presentation of board of directors * Interco transaction and relationship * Who own the other shares * Any debt financing intermingled * Sharing technology and patent * Participation in policy making process Investor need to disclose share of investment income, * Also disc, opns * Error correction * Acct policy changes, * Capital transaction included amount in OCI Have influence or not : 20% Users and objectives 1. Public shareholder: a. investors are interested in the performance of the company b. owner: tony Antonio: the liquidation of the company, if its performing well and be able to generate profit. Ability to distribute dividend. 2. Government/CRA: due to the variety of the investment, if it records the investment recognize it properly. Prepare consolidated financial statement under necessary circumstance. Report the income tax and deferral properly. Constraints: 1. IFRS since it becomes public in 2005 Identify issues * Bach Burgers Inc: 80% which is more than passive amount, under IAS28, Teresa;Antonio’s wife has power to participate financial and operational decision. * One of the 12 board of directors * 20% of the shares is owned by other 11 directors...
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...Finance 725 Spring 2006 J. E. Hodder Corporation Finance Course Schedule Tuesday, January 17: Introduction Thursday, January 19: Clarkson Lumber Company Reading: Note on Financial Analysis a. How is the company's financial performance? (Examine appropriate financial ratios.) b. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? c. How has Mr. Clarkson met the financing needs of the company during the period 1993 through 1995? Has the financial strength of Clarkson Lumber improved or deteriorated? d. How attractive is it to take trade discounts? Tuesday, January 24: Clarkson Lumber Company (continued) Reading: a. Note on Financial Forecasting b. Note on Bank Loans a. How much of a loan will Mr. Clarkson need to finance the expected expansion in sales to $5.5 million in 1996 and to take all the trade discounts? (Prepare a projected income statement for 1996 and a pro forma balance sheet as of December 31, 1996.) b. As Mr. Clarkson’s financial adviser, would you urge him to go ahead with, or to reconsider, his anticipated expansion and plans for additional debt financing? c. As the banker, would you approve Mr. Clarkson’s loan request; and if so, what conditions would you put on the loan? Thursday, January 26: SureCut Shears, Inc. ...
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...Case Questions. A. Williams, 2002. 1. Evaluate the terms of the proposed $900 million financing from the perspective of both parties. How would you calculate the return to investors in this transaction? If you need more information, what information do you need? 2. What is the purpose of each of the terms of the proposed financing? 3. Conduct an analysis of Williams’ sources and uses of funds during the first half of 2002. How do you expect these numbers to evolve over the second half of 2002? What is the problem facing Williams? How did it get into this situation? How has it tried to address the problem it is facing? 4. Some might describe Williams as “financially distressed”. What evidence is there that Williams’ business may be compromised as a result of its previous financial decisions? 5. As the CEO of Williams, would you recommend accepting the proposed $900 million financing offer? If not, what alternatives would you pursue? B. Dividend Policy at Linear Technology. 1. Describe Linear Technology payout policy. 2. What are Linear’s financing needs? Should Linear return cash to its shareholders? What are the tax consequences of keeping cash inside the firm? 3. If Linear were to pay out its entire cash balance as a special dividend, what would be the effect on value? On the share price? On earnings? On earnings per share? What if Linear repurchased shares instead? Assume a 3% rate of interest. 4. What should...
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...CASES IN FINANCIAL MANAGEMENT SYLLABUS FIN 522 Professor James A. Gentry Cases In Financial Management 343M Wohlers Hall Spring Semester 2009 333-7995 2043 BIF j-gentry@uiuc.edu Office Hours: 10:30 a.m. to 11:45 a.m. on Mon. and Wed/. or by Appointment I. Teaching Objectives Financial decision making cases are used to… • Create a highly interactive learning environment; • Learn about the application of financial management and credit analysis concepts; • Discover what you do not know about the practice of financial management; • Show what you have learned; • Highlight the relationships between strategic goals and the creation of firm value; • Develop techniques for interpreting a firm’s financial data and strategic plans; • Enhance your critical thinking and problem solving skills; • Expand your understanding of financial theory and its application; • Improve your listening and cooperative learning skills. II. Learning Promises At the end of this course your will be able to… • Think like a financial manager; • Interpret a company’s financial health by evaluating the performance...
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...ASSIGNMENT SHEET TUESDAY, JANUARY 17, 2012 CLASS 1– INTRODUCTION AND GOALS FOR THE SEMESTER A. CLASS LECTURE Review of Topics, Assignment Sheets, and Course Outline The Case Method - Rules for Classroom Discussion Instruction for the Formation of Study & Project Groups B. Professor/Student Introductions C. Readings from Course Packet: 1. Fin 394.4 Syllabus - Course Outline and Grading Policy 2. “Course Introduction” 3. Note to the Student: How to Study and Discuss Cases 4. “The Case Method” - Jeff Sandefer 5. “Classroom Discussion” - Jeff Sandefer 6. “Note on Study Groups” - Jeff Sandefer ASSIGNMENT: 1. PURCHASE THE COURSE PACKET 2. BRING YOUR RESUME TO THE NEXT CLASS 3. BROWSE THE CLASS BLACKBOARD SITE: (HTTP://COURSES.UTEXAS.EDU/) AND LOOK AT THE EXTERNAL LINKS AND COURSE DOCUMENTS POSTED. a. Case Exhibits b. Case Solutions c. Valuation Templates d. Valuation External Links e. Project Information ASSIGNMENT SHEET THURSDAY, JANUARY 19, 2012 CLASS 2 – WORK FOR MONEY OR MONEY WORK FOR YOU? A. Turn in Resume B. Form study groups (self-select 4-6 people with different education, concentration, work experience and cultural background). Send e-mail to the professor with...
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...CHAPTER 23: TRANSFER PRICING Chapter Contents: - Definition and Overview - Transfer Pricing Options - Market-based Transfer Prices - Cost-based Transfer Prices - Negotiated Transfer Prices - Survey of Practice - External Reporting - Dual Transfer Pricing - Transfer Pricing and Multinational Income Taxes - Other Regulatory Issues Definition and Overview: A transfer price is what one part of a company charges another part of the same company for goods or services. In the excerpt from Casablanca, Rick apparently loaned Ferrari 100 cartons of cigarettes for which he was never repaid. Now that Ferrari owns both the Blue Parrot and Rick’s Café, he jokes about the fact that what was previously a debt that he owed to Rick, is now a “debt” from one nightclub that he owns to another nightclub that he owns. If Ferrari continues to transfer cartons of cigarettes between the two clubs, he might wish to establish a “transfer price” for cigarettes, but knowing Ferrari, he won’t bother. We will restrict attention to transfers that involve a tangible product, and we will refer to the two corporate entities engaged in the transfer as divisions. Hence, the transfer price is the price that the “selling” division charges the “buying” division for the product. Because objects that float usually flow downstream, the selling division is called the upstream division and the buying division is called the downstream division...
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...Case Studies Solutions Case Studies Solutions,Article Writing,Assignments,Research Work,Home Work MenuSkip to content Home How We Work ? Refund Policy How to Order ? Disclaimer Contact Us Finance Cases List POSTED ON MARCH 8, 2013 Hello, If u want us to solve any case study from below list, do contact us anytime, We are here to provide the experience, expertise, and professionalism that you are looking for , Our tutors are available 24/7 to assist you what you need, Click Here to submit your Order. ======================================================================================= Acquisition of Consolidated Rail Corp. by Benjamin C. Esty Airbus A3XX: Developing the World’s Largest Commercial Jet by Benjamin C. Esty American Chemical Corp.by William E. Fruhan, John P. Goldsberry American Home Products Corp.by David W. Mullins AQR’s Momentum Funds by Daniel B. Bergstresser, Lauren H. Cohen, Randolph B. Cohen, Christopher Malloy Arundel Partners: The Sequel Project by Timothy A. Luehrman AXA MONY by Andre F. Perold, Lucy White Beta Management Co. by Michael E. Edleson Butler Lumber Co. by Thomas R. Piper Cartwright Lumber Co.by Thomas R. Piper Citigroup 2007: Financial Reporting and Regulatory Capital by Edward J. Riedl, Suraj Srinivasan Clarkson Lumber Co. by Thomas R. Piper Cooper Industries, Inc. by Thomas R. Piper Cost of Capital at Ameritrade by Erik Stafford, Mark L. Mitchell Debt Policy at UST, Inc. by Mark L. Mitchell Dell’s Working Capital...
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