Market Description and Analysis
Description of Products and Services
Financial Data
Financial Statements
For the purposes of this projection it is assumed the company began operations on 12/31/95. A brief analysis of the 1995 financial statement is as follows:
1995 Income Statement
Sales
Since 12/31/95 is assumed to be the company's start date, no sales were recorded in 1995.
Operating Expenses
Includes primarily start-up expenditures consisting of EDU fees, utility connection/permit expenses, legal costs, bank loan costs and initial advertising/promotional expenses.
1995 Balance Sheet
Paid-In-Capital
There will be approximately $151M in equity investments as of the company's inception date.
Cash
This figure represents management's desired minimum cash balance available for working capital purposes.
Fixed Assets
This will include real estate and equipment. Real estate will be depreciated over 20 years and equipment over seven years, assuming straight line depreciation.
Long-Term Debt
This represents the long-term portion of an original $195M bank mortgage loan at 10% fixed amortizing over 20 years and a $127M equipment loan at 9% fixed amortizing over 7 years. Also included is the long-term portion of a $60M seller note at 8.25% fixed amortizing over 15 years.
Estimated Start-Up Costs
| Desired Minimum Cash Balance | 20,000 | |
| Initial Expenditures | ||
| EDU Fees24,000 | ||
| Utility Connection Fees/Permits | 5,000 | |
| Prepaid Insurance | 3,200 | |
| Prepaid Real Estate Taxes | 5,000 | |
| Deposits | 5,000 | |
| Bank Loan Costs | 8,200 | |
| Advertising and Promotion | 2,000 | |
| Legal and Accounting | 500 | |
| Total Initial Expenditures | 52,900 | |
| Real Estate and Equipment | ||
| Building | 119,000 | |
| Equipment | 181,000 | |
| Site Improvements | 50,000 | |
| Land | 110,000 | |
| Total Real Estate and Equipment | 460,000 | |
| Total Start Up Costs | 532,900 | |
| Financing Requirements | ||
| Seller Note | 60,000 | |
| Mortgage Financing | 322,00 | |
| Equity Investment | 150,900 | |
| Total Financing Requirements | $532,900 | |
Annual Projections: Balance Sheet
| 12/31/95 | 12/31/96 | 12/31/97 | 12/31/98 | 12/31/99 | 12/31/00 | |
| ASSETS | ||||||
| Cash | 20,000 | 38,600 | 69,400 | 115,700 | 167,600 | 225,900 |
| Accounts Receivable | ||||||
| Inventory | ||||||
| Current Assets | 20,000 | 38,600 | 69,400 | 115,700 | 167,600 | 225,900 |
| Gross Fixed | 460,000 | 460,000 | 460,000 | 460,000 | 460,000 | 460,000 |
| Accumulated Depreciation | 0 | 39,800 | 79,600 | 119,400 | 159,200 | 199,000 |
| Net Fixed Assets | 460,000 | 420,200 | 380,400 | 340,600 | 300,800 | 261,000 |
| Prepaid | 8,200 | 9,600 | 11,200 | 12,200 | 13,200 | 14,200 |
| Other Current Assets/Deposits | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 |
| Total Assets | 493,200 | 473,400 | 466,000 | 473,500 | 486,600 | 506,100 |
| LIABILITIES | ||||||
| Accounts Payable | 0 | 3,100 | 3,700 | 4,500 | 5,200 | 5,600 |
| Current Long Term Debt - Bank | 16,900 | 18,500 | 20,300 | 22,200 | 24,300 | 26,700 |
| Curr. Port Long Term Debt - Seller | 2,100 | 2,300 | 2,500 | 2,700 | 2,900 | 3,200 |
| Current Liabilities | ||||||
| Long Term Debt - Bank | 305,100 | 288,200 | 269,700 | 249,400 | 227,200 | 202,900 |
| Long Term Debt - Seller | 57,900 | 55,800 | 53,500 | 51,000 | 48,300 | 45,400 |
| Total Liabilities | 382,000 | 367,900 | 349,700 | 329,800 | 307,900 | 283,800 |
| NET WORTH | ||||||
| Paid in Capital | 150,900 | 150,900 | 150,900 | 150,900 | 150,900 | 150,900 |
| Retained Earnings | (39,700) | (45,400) | (34,600) | (7,200) | 27,800 | 71,400 |
| Total Net Worth | 111,200 | 105,500 | 116,300 | 143,700 | 178,700 | 222,300 |
| Total Liabilities & Net Worth | 493,200 | 473,400 | 466,100 | 473,560 | 486,600 | 506,100 |
Annual Projections: Income Statement
| 12/31/95 | 12/31/96 | 12/31/97 | 12/31/98 | 12/31/99 | 12/31/00 | |
| SALES | ||||||
| 5 Self Service Bays | 0 | 72,000 | 96,000 | 108,000 | 120,000 | 132,000 |
| 1 Automatic Bay | 0 | 18,000 | 24,000 | 30,000 | 36,000 | 42,000 |
| 7 Vacuums | 0 | 16,800 | 25,200 | 33,600 | 33,600 | 33,600 |
| Total Annual Revenue | 0 | 106,800 | 136,800 | 171,600 | 189,600 | 206,700 |
| OPERATING EXPENSES | ||||||
| Chemical and Vending | 0 | 5,300 | 6,800 | 8,600 | 9,500 | 10,400 |
| Gas and Electric | 0 | 6,400 | 8,200 | 10,300 | 11,400 | 12,500 |
| EDU Fees | 24,000 | 0 | 0 | 0 | 0 | 0 |
| Water & Sewer | 0 | 3,200 | 4,100 | 5,200 | 5,700 | 6,300 |
| Utility Connections/Permits | 5,000 | 0 | 0 | 0 | 0 | 0 |
| Telephone | 0 | 250 | 250 | 300 | 350 | 400 |
| Trash Removal | 0 | 1,100 | 1,400 | 1,700 | 1,900 | 2,100 |
| Insurance | 0 | 3,200 | 4,100 | 5,200 | 5,700 | 6,200 |
| Real Estate Taxes | 0 | 5,000 | 5,500 | 6,000 | 6,500 | 7,000 |
| Accounting & Legal | 500 | 300 | 500 | 600 | 700 | 800 |
| Repairs & Maintenance | 0 | 2,100 | 2,700 | 3,400 | 5,700 | 6,200 |
| Labor | 0 | 8,000 | 9,400 | 10,700 | 12,100 | 13,500 |
| Depreciation | 0 | 39,800 | 39,800 | 39,800 | 39,800 | 39,800 |
| Bank Charges | 0 | 250 | 250 | 300 | 350 | 400 |
| Bank Loan Costs | 8,200 | 0 | 0 | 0 | 0 | 0 |
| Advertising and Promotion | 2,000 | 2,300 | 2,500 | 2,500 | 2,500 | 2,500 |
| Total Operating Expenses | 39,700 | 72,400 | 85,500 | 94,600 | 102,200 | 108,100 |
| Operating Profit/Loss | (39,700) | 29,400 | 51,300 | 77,000 | 87,400 | 99,500 |
| Interest Expense | 0 | 35,100 | 33,300 | 31,300 | 29,100 | 26,800 |
| Pre-Tax Loss/Income | (39,700) | (5,700) | 18,000 | 45,700 | 58,300 | 72,700 |
| Taxes | 0 | 0 | 7,200 | 18,300 | 23,300 | 29,100 |
| NET INCOME(LOSS) | (39,700) | (5,700) | 10,800 | 27,400 | 35,000 | 43,600 |
Annual Projections: Cash Flow Analysis
| 12/31/95 | 12/31/96 | 12/31/97 | 12/31/98 | 12/31/99 | 12/31/00 | |
| CASH FLOW FROM | ||||||
| OPERATING ACTIVITIES | ||||||
| Net Income (Loss) | (39,700) | (5,700) | 10,800 | 27,400 | 35,000 | 43,600 |
| Depreciation | 0 | 39,800 | 39,800 | 39,800 | 39,800 | 39,800 |
| Increase/(Decrease) in Accounts Payable | 0 | 3,100 | 600 | 800 | 700 | 400 |
| (Increase)/Decrease in Other Assets | (13,200) | (1,400) | (1,600) | (1,000) | (1,000) | (1,000) |
| Net Cash in Operating Activities | (52,900) | 35,800 | 49,600 | 67,000 | 74,500 | 82,800 |
| CASH FLOW FROM | ||||||
| INVESTMENT ACTIVITIES | ||||||
| Purchase of Equip. & Real Estate | (460,000) | 0 | 0 | 0 | 0 | 0 |
| Net Cash in Investment Activities | (460,000) | 0 | 0 | 0 | 0 | 0 |
| CASH FLOW FROM | ||||||
| FINANCING ACTIVITIES | ||||||
| Increase/(Decrease) in CPLTD | 19,000 | 1,800 | 2,000 | 2,100 | 2,300 | 2,700 |
| Incr/(Decr) in Long Term Debt | 363,000 | (19,000) | (20,800) | (22,800) | (24,900) | (27,200) |
| Increase - Paid in Capital | 150,900 | 0 | 0 | 0 | 0 | 0 |
| Net Cash from Financing Activities | 532,900 | (17,200) | (18,800) | (20,700) | (22,600) | (24,500) |
| Net Change in Cash | 20,000 | 18,600 | 30,800 | 46,300 | 51,900 | 58,300 |
| Beginning Cash | 0 | 20,000 | 38,600 | 69,400 | 115,700 | 167,600 |
| Ending Cash | 20,000 | 38,600 | 69,400 | 115,700 | 167,600 | 225,900 |
Five-Year Financial Projections and Assumptions
These Financial Projections are based on estimates and assumptions set forth therein, and have been delivered for the information and convenience of persons who wish to evaluate the feasibility of the company's strategy and goals. Each such person who has received them realizes that financial projections are inherently speculative. The Financial Projections are based upon the company's assumptions, reflecting conditions it expects to exist or the course of action it expects to take. As the company is in the start-up stage, these projections are based on estimates and not on the company's historical results. Because events and circumstances do not occur as anticipated, there will be differences between the Financial Projections and actual results, and those differences may be material. The Financial Projections are based upon detailed underlying assumptions. Interested parties should consult their own professional advisors regarding the validity and reasonableness of the assumptions contained herein.
Income Statement
Sales
Sales are projected to reach $106,800 in 1996 and increase by 28% in 1997, 25% in 1998, 10% in 1999 and 9% in 2000. Sales through the projection period will be fueled by the increase in local population as a result of continued expansion of residential housing developments and from the establishment of new local businesses within the immediate area. J&J will attract and develop these new customers through execution of its advertising/promotional programs.
J&J's principal sources of income will be generated through the self serve bays, automatic bay and from vacuum sales. Self serve bay revenue will comprise between 63% and 70% of total annual revenue throughout the projection period. Monthly sales per self serve bay will increase from $1200 to $2200 through the projection period. Automatic bay revenue is expected to be the fastest growing sales category, increasing from $1,200 per month in 1996 to $2,800 per month in 2000. Income generated through vacuum sales is projected to increase substantially from 1996 to 1998, remaining relatively stable thereafter. The aforementioned sales figures are based on industry averages and assume average daily traffic of 8000 to 10,000 vehicles.
Operating Expenses
Due to significant sales growth through the projection period, expenses are forecasted to increase yet decline as a percentage of sales while remaining within industry averages. Operating expenses are projected to decline from 72% in 1996 to 52% in 2000 as a result of effective management and control of expenses.
Taxes
The effective tax rate is projected to be 40%. For the purposes of this projection, available tax losses are not carried forward, but are available to be used in future periods to reduce taxable income.
Balance Sheet
Fixed Assets
Fixed assets include principally real estate and equipment to be depreciated over 20 years and 7 years respectively, assuming straight line depreciation.
Accounts Payable
The majority of suppliers are expected to extend 30-day terms and J&J will pay within those terms.
Long-Term Debt
Long-term debt will consist of the remaining principal balance of bank real estate and equipment loans. Also included will be the remaining principal balance of the seller note.
Net Worth
J&J expects to achieve profitability in 1997 and thereafter. The company plans to finance growth through cash flow from operations. No additional equity will be required after 1995. Net worth is expected to improve from 1996 and thereafter, comprising a greater percentage of total capitalization.
