KFT_Valuation

KFT_Valuation - Kraft Foods Inc. (NYSE: KFT) Discounted...

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Kraft Foods Inc. (NYSE: KFT) Discounted Cash Flow Valuation ($ in Millions) Historical Projected Key Drivers: Fiscal Year Ended December 31, 2005A 2006A 2007A 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Total Revenues $34,113.0 $34,356.0 $37,241.0 $39,059.8 $40,877.0 $42,665.2 $44,665.4 $46,595.4 $48,485.7 $50,463.3 $52,380.7 Beta 0.646 % Growth - 0.7% 8.4% 4.9% (0.3%) 9.2% 9.3% 9.2% 8.6% 8.3% 8.0% Market Risk Premium 8.00% Risk-free Rate 3.64% Cost of Sales 21,845.0 21,940.0 24,651.0 26,560.7 27,387.6 28,159.1 29,479.2 30,753.0 32,000.6 33,305.8 34,571.3 Tax Rate 30.0% Gross Profit $12,268.0 $12,416.0 $12,590.0 $12,499.1 $13,489.4 $14,506.2 $15,186.2 $15,842.4 $16,485.1 $17,157.5 $17,809.4 WACC 7.33% % Margin 36.0% 36.1% 33.8% 32.0% 33.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% Terminal Growth Rate 4.00% SG&A Expense 7,135.0 7,249.0 7,809.0 8,397.9 8,788.6 8,959.7 9,379.7 9,785.0 10,182.0 10,597.3 10,999.9 WACC Threshold 13.18% Other Expense 381.0 641.0 450.0 585.9 613.2 640.0 670.0 698.9 727.3 756.9 785.7 Operating Income (EBIT) $4,752.0 $4,526.0 $4,331.0 $3,515.4 $4,087.7 $4,906.5 $5,136.5 $5,358.5 $5,575.9 $5,803.3 $6,023.8 % Margin 13.9% 13.2% 11.6% 9.0% 10.0% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% Interest Expense 657.0 579.0 604.0 1,258.7 1,315.5 1,387.6 1,462.9 1,541.1 1,622.1 1,706.1 1,792.8 Taxable Income $4,095.0 $3,947.0 $3,727.0 $2,256.6 $2,772.2 $3,518.9 $3,673.6 $3,817.4 $3,953.7 $4,097.2 $4,231.0 Tax Expense 1,209.0 951.0 1,137.0 677.0 831.6 1,055.7 1,102.1 1,145.2 1,186.1 1,229.2 1,269.3 Net Income $2,886.0 $2,996.0 $2,590.0 $1,579.7 $1,940.5 $2,463.2 $2,571.5 $2,672.1 $2,767.6 $2,868.0 $2,961.7 D&A Expense 879.0 891.0 886.0 976.5 1,021.9 1,066.6 1,116.6 1,164.9 1,212.1 1,261.6 1,309.5 EBITDA $5,631.0 $5,417.0 $5,217.0 $4,491.9 $5,109.6 $5,973.1 $6,253.2 $6,523.4 $6,788.0 $7,064.9 $7,333.3 Capital Expenditures 1,171.0 1,169.0 1,241.0 1,367.1 1,430.7 1,493.3 1,563.3 1,630.8 1,697.0 1,766.2 1,833.3 0 123456 Terminal Cash Flows 2008E 2009E 2010E 2011E 2012E 2013E 2014E Perpetuity Net Income 1,579.7 1,940.5 2,463.2 2,571.5 2,672.1 2,767.6 2,868.0 2,961.7 Depreciation & Amortization 976.5 1,021.9 1,066.6 1,116.6 1,164.9 1,212.1 1,261.6 1,309.5 Change in NWC 199.0 (186.6) (183.6) (205.4) (198.2) (194.1) (203.1) (196.9) Capital Expenditures (1,367.1)
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