# Furnaces & Boilers Government Regulatory Impact Model

NAVIGANT CONSULTING, INC. 1801 K Street NW, Suite 500 Washington DC 20006 September, 2007

DRAFT Residential Furnace and Boiler Rulemaking

Because software is inherently complex and may not be completely free of errors, you are advised to verify your work. **In no event will Navigant Consulting be liable for direct, indirect, special, incidental, or**  **consequential dam ages arising out of the use of**  **or inability to use the software or docum entation,**  even if advised of the possibility of such damages.

# Furnaces & Boilers Government Regulatory Impact Model

September, 2007

# Welcome to the Government Regulatory **Impact Model (GRIM) for Residential Furnaces and Boilers** 

**User Instructions**

2. Pink cells designate input information. Green cells designate intermediate calculations.

3. By clicking on sheet names in column B of the "Index" sheet, the workbook can be quickly navigated.

4. Use the "Major Assumptions" sheet to choose the desired scenario. Cells C3 to C8 let the user select key scenario assumptions

5. After selecting the desired scenario, go to the blue-tabbed sheet entitled "Summary Report." Rows 16-18 summarize the impact on Industry Net Present Value (INPV). 1. The red-tabbed sheets pertain to overview information. The pink-tabbed sheets refer to input information. The green-tabbed sheets represent calculations. The blue-tabbed sheets contain numerical and graphical output.

6. Other blue-tabbed sheets provide graphical information summarizing the scenario. **Note, on some computers, the workbook may need to be closed and re opened before the graphical information will completely update.** 

## 3. By clicking on sheet names in column B of the "Index" sheet, the workbook can be quickly navigated.

4. Use the "Major Assumptions" sheet to choose the desired scenario. Cells C3 to C8 let the user select key scenario assumptions 1. The red-tabbed sheets pertain to overview information. The pink-tabbed sheets refer to input information. The green-tabbed sheets represent calculations.

**Note, on some computers, the workbook may need to be closed and re-**

# Sheet/A **rea** Cover Index Glossary Calculation Flow (INPV) Major Assumptions Product Costs NW GF Ship WG F Ship MHF Ship OF Ship GB Ship OB Ship Conversion Cost Timing Base Revenue & Costs Standard Revenue & Costs Base Case Standard Case 

# Output Summary Report

Graph - Shipments Graph - Revenue by Year Graph - ROIC Graph - Profits Graph - Investments Graph - Operating Cash Flow Graph - Net Cash Flow Graph - Industry Value (NPV) Graph - Income After Tax Graph - Average Unit Price Data for Graphs 

# Calculations **Navigation**

**Input**

# Description

Nameplate Links to Sheets Manufacturer Impact Analy sis Glossary Description of the industry net present value (NPV) calculation method Scenario selection, all major assumptions, including conversion costs Detailed product cost assumptions Non-weatherized Gas Furnace shipment forecasts We atherized Gas Furnace shipment forecasts Manufactured Home Furnace shipment forecasts Oil Furnace shipment forecasts Gas Boiler shipment forecasts Oil Boiler shipment forecasts Table showing how fast conversion costs are incurred Revenues and costs, for the Base case Revenues and costs, for the Standards case Calculation of cash flow, for the Base case Calculation of cash flow, for the Standards case Sum ma ry

of results Shipm ents by

y ear Total Revenue by

y ear Return on Invested Capital by y ear Profit Before Tax by

y ear Capital expenditure by

y ear Operating Cash Flow by y ear Cash Flow by

y ear Total Net Present Value of the Industry (Base vs. Standard cases) Income After Tax by

y ear Unit price by

y ear Underly ing data for graphs.

## Advanced Notice of Proposed Rulemaking

(ANOPR)

Annual Com pliance Costs

Base Case

Beta

Capital Asset Pricing Model (CAPM) Capital Expenditures

Conversion Capital Expenditures Conversion Costs Cost of Debt, Kd Cost of Equity , Ke

Cost of Goods Sold (COGS)

Depreciation

Direct Labor Cost Direct Material Cost

Earnings Before Interest and Taxes (EBIT) EPACT Free Cash Flow

Full Cost of Product

Full Production Cost

Governmental Regulatory Impact Model (GRIM) (Income) Tax Rate

Manufacturer Impact Analy sis (MIA) Net Operating Profit After Taxes (NOPAT) Net Present Value (NPV), or Industry NPV

(Net) W orking Capital (NW C)

Non-Production Cost Markup

Notice of Proposed Rulemaking (NOPR)

Overhead (factory

overhead)

Product Conversion Expenses

## Product Mix

Property , Plant, & Equipm ent, net (PPE, net)

Return on Invested Capital (ROIC) Return on Sales Revenue

Risk Premium Riskless Rate Selling, General, and Adm inistrative Expenses (SG&A)

Shipm ent Model Standard Case

Techical Support Document (TSD) Trial Standard Level (TSL)

We ighted Average Cost of Capital (W ACC)

## Federal Register notice detailing preliminary analy ses conducted by the DOE to establish the economic feasibility of increased minimum efficiency standards. Ongoing annual costs required to comply with an appliance efficiency standard. These are incurred on and after the standard effective date, ty pically as a result of testing requirements. The "no standard" case. The industry valuation is conducted assuming that an appliance energy efficiency standard is not implemented. The covariance of a stock in relation to the rest of the stock market. If B>1, the stock is more volatile than the rest of the stockmarket. If B<1, the stock is less volative than the rest of the stockmarket. A standard financial model expressing the relationship between expected risk and expected return. The return on an asset equals the riskless rate plus a risk premium. Outlay of money

to acquire or improve capital assets such as plant, property , and equipm ent. One-time investments in plant, property , and equipm ent; resulting from an appliance energy efficiency

standard's im plem entation. Conversion costs include Product Conversion Expenses and Capital Conversion Costs. The average interest rate a company is pay ing on all of its debt. The required return of a company 's stockholders. The cost of buy ing raw m aterials and producing finished goods. COGS includes materials, labor, and overhead, where part of overhead is depreciation. Am ortization of fixed assets (such as PPE), so as to allocate the cost over their depreciable life. Depreciation does not reduce free cash flow, but it does reduce taxable income. The portion of COGS that includes direct labor, commissions, dismissal pay , bonuses, vacation, sick leave, social security contributions, fringe, and assembly labor up-time. The portion of COGS that includes direct materials and scrap. Revenue less COGS and SG&A expenses (including R&D, product conversion expenses, and annual compliance costs). Energy Policy Act (of 1992). Cash available after operations and investments. The result of apply ing the Non-Production Cost markup to the Full Production Cost. The full Cost of Product is the same as the Manufacturer Selling Price. Includes direct labor, direct material, and (factory ) overhead (including depreciation). This includes the same cost categories that comprise Cost of Goods Sold in the discounted cash flow analy sis. The industry

cash flow model used by the US Department of Energy to assess impacts on manufacturers due to proposed appliance efficiency standards. The effective tax rate assessed on a company 's earnings before taxes (EBT). The analy sis of potential impacts on manufacturers resulting from various Trial Standard Levels (TSLs). The MIA will influence the appliance energy efficiency

standards that are proposed in the NOPR. The MIA will be published in the TSD that accompanies the NOPR. EBIT less taxes. The discounted sum of industry free cash flows plus a discounted terminal value. Current assets less current liabilities. The change in working capital is the difference in required working capital between a given y ear and the previous y ear. The markup that converts Full Production Cost to a Full Cost of Product (i.e, Manufacturer Selling Price). The Non-Production Cost markup includes SG&A, R&D, interest, and profit. Federal Register notice detailing analy ses conducted by the DOE to establish proposed appliance energy efficiency

standards. The GRIM and associated Manufacturer Impact Analy sis (MIA) will be incorporated in the NOPR and the NOPR TSD. The portion of COGS that includes indirect labor, indirect material, energy use, maintenance, depreciation, property taxes, and insurance related to assets. Conversion expenses incurred prior to the appliance efficiency standard's effective date including R&D, engineering design costs, marketing, and preparation for testing.



# GLOSSA **RY**

## The mix of product efficiencies sold by a company

or industry

. PPE is fixed assets, or long-lived assets, including building, machinery , and equipm ent. PPE, net is PPE less accumulated depreciation. ROIC is equal to NOPAT / (PPE, net + NW C). W hen ROIC is greater than W ACC, a company or industry

is creating value. Return on Sales is equal to EBIT / revenue. Net sales. The difference between the total return and the riskless return from a risky investment. In the CAPM, the market risk premium reflects sy stematic risk as measured by Beta (as opposed to idiosy nchratic risk). For GRIM, the

ma rket risk premium is assumed to be 9.2% (nominal). Assumed to be the historical average y ield on 10-y ear treasuries. A m ajor component of the manufacturer selling price, accounted for in the GRIM as part of the Non-Production Cost markup. A sub-model used in the National Impact Analy sis that provides base case and standard case shipment projections. The case where appliance energy efficiency

standards are implemented. Compare to base case. TSD's are published by the DOE as companion documents to Federal Register notices (e.g., ANOPRs and NOPRs). The TSD's include technical detail that supports the notices. The NOPR's TSD will include the discussion of the Manufacturer Impact Analy sis (MIA), based on the GRIM. A trial appliance energy efficiency

standard evaluated by the DOE during the NOPR phase analy ses. The weighted average cost of debt and equity capital for a firm or industry , weighted by the proportions of each source. The cost of debt is reduced by the tax shield provided by debt-financing. The GRIM's W ACC is ty pically specified in real terms (inflation-adjusted).

# Base Case Standard Case

 FCF t 

#  FCF t 

### 4. Industry **1. Revenues**

Costs

Prices Shipments Revenue

X 

### =

• Efficiency Level

• Markups • Efficiency

Level 

### Prices Shipments Revenue

X 

### =

**3. Free Cash Flow (**  **FCF t**  

### ) NOPAT Change in Working Capital Depreciation Cash Used in Investment 

## FCF t 

### + +

+ = 

# Distribution Transformer GRIM Model

• Conversion CAPEX

• Efficiency Level • Conversion CAPEX

• Efficiency Level NOPAT Change in Working Capital Depreciation Cash Used in Investment 

## FCF t 

### + +

+ = **2. Net Operating**  **Profit after Taxes**  **(NOPAT)** NOPAT = • Efficiency Level • Conversion

CAPEX • Product Conversion

Expenses

• Efficiency Level 

### Revenue

– ( COGS w/ Depreciation + SG&A + Taxes) Revenue

– (COGS w/ Depreciation + SG&A + Taxes)



# Base Case Standard Case

 FCF t 

#  FCF t 

### 4. Industry **1. Revenues**

Costs

Prices Shipments Revenue

X 

### =

Costs Prices Shipments Revenue

X 

### =

• Efficiency Level

• Markups • Efficiency

Level 

### Prices Shipments Revenue

X 

### =

• Efficiency Level

• Markups • Efficiency

Level 

### Prices Shipments Revenue

X 

### =

**3. Free Cash Flow (**  **FCF t**  

### ) NOPAT Change in Working Capital Depreciation Cash Used in Investment 

## FCF t 

### + +

+ = 

# Distribution Transformer GRIM Model

• Conversion CAPEX

• Efficiency Level • Conversion CAPEX

• Efficiency Level NOPAT Change in Working Capital Depreciation Cash Used in Investment 

## FCF t 

### + +

+ = **2. Net Operating**  **Profit after Taxes**  **(NOPAT)** NOPAT = • Efficiency Level • Conversion

CAPEX • Product Conversion

Expenses

• Efficiency Level 

### Revenue

– ( COGS w/ Depreciation + SG&A + Taxes) Revenue

– (COGS w/ Depreciation + SG&A + Taxes) 

# In **dex**



# Change in INPV = INPV Standard 

# – INPV Base INPV Base 

## = 

#  FCF

(1 + WACC) t

t 

### + Discounted

Terminal Value INPV Standard 

## = 

#  FCF
(1 + WACC) t

t 

### + Discounted

Terminal Value **4. Industry Net Present**  **Value (INPV)**  Level Level



# Change in INPV = INPV Standard 

# – INPV Base INPV Base 

## = 

#  FCF

(1 + WACC) t

t 

### + Discounted

Terminal Value INPV Standard 

## = 

#  FCF
(1 + WACC) t

t 

### + Discounted

Terminal Value **4. Industry Net Present**  **Value (INPV)**  Level Level**Assumptions Page for** 

## 0.00%

**Mobile Home Furnaces** 

## Ac **tive Class Selected: Mobile Home Furnaces**  **Standard Case A FUE (%):**  **75% Markup Scenario:**  **Flat Economic Growth Scenario:**  **Reference GA**  **MA Min/Max Cost Scenario:**  **Low Manufacturer Shipments?**  **Y** Trial Standard Level 0 

## Class Index 3 

## Scenario Index 183 

## Economic Grow

th Index 0

**Financial Parameters Base Year**  2006 **Announcement Year** 2007 **Standard Year** 2015 **Terminal Year** 2038 **PPE Depreciation Period (y ears)**  10 **Growth Rate @ Terminal Year** 1% **Inflation: Nominal Terms Off** 

**Selected MHF**  **Tax rate 37.9%**  37.9% of EBT **Working Capital 22.0%**  22.0% of Revenue **Standard SG&A 16.6%**  16.6% of Revenue **Capital Expenditures 1.8%**  1.8% of Revenue **Depreciation 1.9%**  1.9% of Revenue **R&D 1.0%**  1.0% of Revenue **Net Property , Plant, & Equipment**  **15%** 14.7% of Revenue **Discount Rate 5%**  5.1% of Revenue **Inflation Rate 0%**  0.0% per year **% of Conv Capex to replace Stranded Assets 100%**  100.0% 0.0% **Markup Scenario Flat**  Flat **Markup Index** 1 1 **Average Markup 1.285**  1.29

**Market Share 100%**  100%

**Base Case AFUE (%) 75%**  75% **Standard Case AFUE (%) 75%**  75%

### 26% Avg Markup

AFUE Material Labor Transportation Overhead Depreciation Total w/o Depreciation Base

Markup Base

Case Price Standard

Case Markup Standard

Case Price **1.29**

1 75% $208.00 $41.82 $42.44 $22.30 $5.80 $308.75 1.29 $396.75 1.29 $396.75 15% 2 76% 3 77% 4 78% 5 79% 6 80% $237.14 $46.28 $42.44 $23.92 $6.22 $343.55 1.29 $441.46 1.29 $441.46 80% 7 81% $240.05 $47.67 $43.71 $23.92 $6.22 $349.12 1.29 $448.62 1.29 $448.62 0% 9 82% 10 83% 11 84% 12 85% 13 86% 14 87% 15 88% 16 89% 17 90% $327.45 $58.34 $50.93 $28.70 $7.46 $457.96 1.29 $588.48 1.29 $588.48 5% 18 91% 19 92% 20 93% 21 94% 22 95% 

# Manufactured Home Furnaces

23 96% 24 97% 25 98% 26 99%

100%



# Manufacturer Markup:MHF

**Flat 75%**  **80% 81%**  **90% AFUE**  **75%** 1.29 1.29 1.29 1.29 **STD 80%**  1.29 1.29 1.29

### 81% 1.29 1.29

**90%** 1.29



## Exponential **5%**
**75% 80%**  **81% 90%**  **AFUE 75%**  1.29 1.29 1.29 1.29 **STD 80%**  1.29 1.29 1.29

**81%** 1.29 1.29 **90%** 1.29



## Custom **60%**

**75% 80%**  **81% 90%**  **AFUE 75%**  1.285 1.285 1.285 1.285 **STD 80%**  1.300 1.285 1.300

**81%** 1.270 1.285 **90%** 1.210

22.77696 0 232.15 0.01 232.15 0.02 232.15

### 0.03 232.15 0.04 232.15 0.05 232.15 0.06 232.15 0.07 232.15 0.08 232.15 0.09 232.15 0.1 232.15 0.11 232.15 0.12 232.15 0.13 232.15 0.14 232.15 0.15 232.15 0.16 232.15 0.17 232.15 0.18 232.15 0.19 232.15 0 232.15 0.001 232.15 0.002 232.15 0.003 232.15 0.004 232.15 0.005 232.15 0.006 232.15 0.007 232.15 0.008 232.15 0.009 232.15 0.01 232.15 0.011 232.15 0.012 232.15 0.013 232.15 0.014 232.15 0.015 232.15 0.016 232.15 0.017 232.15 0.018 232.15 0.019 232.15 0.02 232.15 -0.001 232.15 -0.0009 232.15 -0.0008 232.15 -0.0007 232.15 -0.0006 232.15 -0.0005 232.15 -0.0004 232.15 -0.0003 232.15 -0.0002 232.15 -1E-04 232.15

### 1.89735E-19 232.15 0.0001 232.15 0.0002 232.15 0.0003 232.15 0.0004 232.15 0.0005 232.15 0.0006 232.15 0.0007 232.15 0.0008 232.15 0.0009 232.15 0.001 232.15 -0.001

41 42 43 44 45 46 47 48 49 50 51 52 53 93 94

### 95 96 97 98 99 100 101 102 103 104 105 106 107 108

### 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124

### 125

## 1 2 3 4 5 6 7 8 9 10 11 12 FALSE Total mln 75% 75% 75% 75% 75% 80% 80% 80% 80% 80% 81% 75% 80% 81% 90% Total 75% 80% 81% 90% Total 75% 0.143 2003 0.021 0.114 0.000 0.007 0.143 0.021 0.114 0.000 0.007 0.143 0.021 0.144 2004 0.022 0.115 0.000 0.007 0.144 0.022 0.115 0.000 0.007 0.144 0.022 0.139 2005 0.021 0.111 0.000 0.007 0.139 0.021 0.111 0.000 0.007 0.139 0.021 0.139 2006 0.021 0.111 0.000 0.007 0.139 0.021 0.111 0.000 0.007 0.139 0.021 0.142 2007 0.021 0.113 0.000 0.007 0.142 0.021 0.113 0.000 0.007 0.142 0.021 0.146 2008 0.022 0.117 0.000 0.007 0.146 0.022 0.117 0.000 0.007 0.146 0.022 0.155 2009 0.023 0.124 0.000 0.008 0.155 0.023 0.124 0.000 0.008 0.155 0.023 0.164 2010 0.025 0.131 0.000 0.008 0.164 0.025 0.131 0.000 0.008 0.164 0.025 0.173 2011 0.026 0.139 0.000 0.009 0.173 0.026 0.139 0.000 0.009 0.173 0.026 0.183 2012 0.027 0.146 0.000 0.009 0.183 0.027 0.146 0.000 0.009 0.183 0.027 0.193 2013 0.029 0.154 0.000 0.010 0.193 0.029 0.154 0.000 0.010 0.193 0.029 0.200 2014 0.030 0.160 0.000 0.010 0.200 0.030 0.160 0.000 0.010 0.200 0.030 0.196 2015 0.029 0.154 0.000 0.010 0.192 0.000 0.182 0.000 0.010 0.192 0.000 0.185 2016 0.028 0.149 0.000 0.009 0.186 0.000 0.177 0.000 0.009 0.186 0.000 0.172 2017 0.026 0.140 0.000 0.009 0.175 0.000 0.166 0.000 0.009 0.175 0.000 0.158 2018 0.025 0.131 0.000 0.008 0.164 0.000 0.156 0.000 0.008 0.164 0.000 0.140 2019 0.023 0.120 0.000 0.008 0.150 0.000 0.143 0.000 0.008 0.150 0.000 0.123 2020 0.020 0.107 0.000 0.007 0.134 0.000 0.127 0.000 0.007 0.134 0.000 0.109 2021 0.018 0.098 0.000 0.006 0.122 0.000 0.116 0.000 0.006 0.122 0.000 0.097 2022 0.016 0.087 0.000 0.005 0.109 0.000 0.104 0.000 0.005 0.109 0.000 0.093 2023 0.015 0.082 0.000 0.005 0.103 0.000 0.098 0.000 0.005 0.103 0.000 0.095 2024 0.015 0.082 0.000 0.005 0.102 0.000 0.097 0.000 0.005 0.102 0.000 0.098 2025 0.016 0.083 0.000 0.005 0.104 0.000 0.099 0.000 0.005 0.104 0.000 0.106 2026 0.017 0.088 0.000 0.006 0.110 0.000 0.105 0.000 0.006 0.110 0.000 0.113 2027 0.017 0.092 0.000 0.006 0.115 0.000 0.109 0.000 0.006 0.115 0.000 0.119 2028 0.018 0.095 0.000 0.006 0.119 0.000 0.113 0.000 0.006 0.119 0.000 0.123 2029 0.018 0.098 0.000 0.006 0.123 0.000 0.117 0.000 0.006 0.123 0.000 0.124 2030 0.019 0.100 0.000 0.006 0.125 0.000 0.119 0.000 0.006 0.125 0.000 0.123 2031 0.019 0.102 0.000 0.006 0.127 0.000 0.121 0.000 0.006 0.127 0.000 0.121 2032 0.019 0.102 0.000 0.006 0.128 0.000 0.122 0.000 0.006 0.128 0.000 0.118 2033 0.019 0.102 0.000 0.006 0.128 0.000 0.122 0.000 0.006 0.128 0.000 0.114 2034 0.019 0.103 0.000 0.006 0.129 0.000 0.123 0.000 0.006 0.129 0.000 0.111 2035 0.019 0.103 0.000 0.006 0.129 0.000 0.123 0.000 0.006 0.129 0.000 0.108 2036 0.019 0.103 0.000 0.006 0.129 0.000 0.123 0.000 0.006 0.129 0.000 0.105 2037 0.019 0.103 0.000 0.006 0.129 0.000 0.123 0.000 0.006 0.129 0.000 0.103 2038 0.019 0.103 0.000 0.006 0.129 0.000 0.123 0.000 0.006 0.129 0.000 5.081 5.081

## 13 14 15 16 17 18 19 20 21

81% 81% 81% 81% 90% 90% 90% 90% 90% 80% 81% 90% Total 75% 80% 81% 90% Total 0.114 0.000 0.007 0.143 0.021 0.114 0.000 0.007 0.143 0.115 0.000 0.007 0.144 0.022 0.115 0.000 0.007 0.144 0.111 0.000 0.007 0.139 0.021 0.111 0.000 0.007 0.139 0.111 0.000 0.007 0.139 0.021 0.111 0.000 0.007 0.139 0.113 0.000 0.007 0.142 0.021 0.113 0.000 0.007 0.142 0.117 0.000 0.007 0.146 0.022 0.117 0.000 0.007 0.146 0.124 0.000 0.008 0.155 0.023 0.124 0.000 0.008 0.155 0.131 0.000 0.008 0.164 0.025 0.131 0.000 0.008 0.164 0.139 0.000 0.009 0.173 0.026 0.139 0.000 0.009 0.173 0.146 0.000 0.009 0.183 0.027 0.146 0.000 0.009 0.183 0.154 0.000 0.010 0.193 0.029 0.154 0.000 0.010 0.193 0.160 0.000 0.010 0.200 0.030 0.160 0.000 0.010 0.200 0.000 0.174 0.009 0.183 0.000 0.000 0.000 0.124 0.124 0.000 0.171 0.009 0.180 0.000 0.000 0.000 0.117 0.117 0.000 0.162 0.009 0.170 0.000 0.000 0.000 0.109 0.109 0.000 0.152 0.008 0.160 0.000 0.000 0.000 0.101 0.101 0.000 0.133 0.007 0.140 0.000 0.000 0.000 0.094 0.094 0.000 0.124 0.007 0.130 0.000 0.000 0.000 0.086 0.086 0.000 0.105 0.006 0.110 0.000 0.000 0.000 0.078 0.078 0.000 0.095 0.005 0.100 0.000 0.000 0.000 0.062 0.062 0.000 0.095 0.005 0.100 0.000 0.000 0.000 0.062 0.062 0.000 0.095 0.005 0.100 0.000 0.000 0.000 0.062 0.062 0.000 0.095 0.005 0.100 0.000 0.000 0.000 0.062 0.062 0.000 0.095 0.005 0.100 0.000 0.000 0.000 0.062 0.062 0.000 0.105 0.006 0.110 0.000 0.000 0.000 0.070 0.070 0.000 0.105 0.006 0.110 0.000 0.000 0.000 0.070 0.070 0.000 0.105 0.006 0.110 0.000 0.000 0.000 0.070 0.070 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 0.000 0.114 0.006 0.120 0.000 0.000 0.000 0.078 0.078 4.903 3.854

## Prod Hold Factor 0.98 Product Conversion Factors

1 2 3 4 5 6 std yr 2% 2% 2% 2% 2% 2% std yr-1 98% 44% 39% 44% 44% 44% std yr-2 54% 34% 35% 35% 35% std yr-3 25% 17% 17% 17% std yr-4 2% 2% 2% std yr-5 0% 0% std yr-6 0% std yr-7 std yr-8 std yr-9 std yr-10 std yr-11 std yr-12 std yr-13 std yr-14

Conversion Expenditure Factors 1 2 3 4 5 6 std yr 0% 0% 0% 0% 0% 0% std yr-1 100% 45% 40% 45% 45% 45% std yr-2 55% 35% 36% 36% 36% std yr-3 25% 17% 17% 17% std yr-4 2% 2% 2% std yr-5 0% std yr-6 std yr-7 std yr-8 std yr-9 std yr-10 std yr-11 std yr-12 std yr-13 std yr-14

100% 100% 100% 100% 100% 100%

## 7 8 9 10 11 12 13 14

2% 2% 2% 2% 2% 2% 2% 2% 44% 44% 44% 44% 44% 44% 44% 44% 35% 35% 35% 35% 35% 35% 35% 35% 17% 17% 17% 17% 17% 17% 17% 17% 2% 2% 2% 2% 2% 2% 2% 2% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

0% 0% 0% 0% 0% 0% 0%

0% 0% 0% 0% 0% 0%

0% 0% 0% 0% 0%

0% 0% 0% 0%

0% 0% 0%

0% 0%

0%

7 8 9 10 11 12 13 14 0% 0% 0% 0% 0% 0% 0% 0% 45% 45% 45% 45% 45% 45% 45% 45% 36% 36% 36% 36% 36% 36% 36% 36% 17% 17% 17% 17% 17% 17% 17% 17% 2% 2% 2% 2% 2% 2% 2% 2% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

0% 0% 0% 0% 0% 0% 0%

0% 0% 0% 0% 0% 0% 

# In **dex**

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

0% 0% 0% 0% 0%

0% 0% 0% 0%

0% 0% 0%

0% 0%

0%

100% 100% 100% 100% 100% 100% 100% 100%



# In **dex Mobile Home Furnaces** 

**Base Year Announcement**  **Year Standard**  **Year** 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 

### Mobile Home Furnaces

**Income Statement 75%**  **AFUE** Unit Price 397 $ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ Unit Sales 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.561 Revenues 9 $ 9

$ 8

$ 8

$ 8

$ 9

$ 9

$ 10

$ 10

$ 11

$ 11

$ 12

$ 11

$ 11

$ 10

$ 10

$ 9

$ 8

$ 7

$ 6

$ 6

$ 6

$ 6

$ 7

$ 7

$ 7

$ 7

$ 7

$ 8

$ 8

$ 8

$ 8

$ 8

$ 8

$ 8

$ 8

$

Cost of Sales

Labor 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ Material 4 $ 4

$ 4

$ 4

$ 4

$ 5

$ 5

$ 5

$ 5

$ 6

$ 6

$ 6

$ 6

$ 6

$ 5

$ 5

$ 5

$ 4

$ 4

$ 3

$ 3

$ 3

$ 3

$ 3

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ Overhead 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ Freight 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

**80% AFUE**  Unit Price 441 $ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 15,893 $ Unit Sales 0.11 0.11 0.11 0.11 0.11 0.12 0.12 0.13 0.14 0.15 0.15 0.16 0.15 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.08 0.08 0.09 0.09 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 2.990 Revenues 50 $ 51

$ 49

$ 49

$ 50

$ 52

$ 55

$ 58

$ 61

$ 65

$ 68

$ 71

$ 68

$ 66

$ 62

$ 58

$ 53

$ 47

$ 43

$ 38

$ 36

$ 36

$ 37

$ 39

$ 41

$ 42

$ 43

$ 44

$ 45

$ 45

$ 45

$ 46

$ 46

$ 46

$ 46

$ 46

$ 1.452804 1 2 Cost of Sales

Labor 5 $ 5

$ 5

$ 5

$ 5

$ 5

$ 6

$ 6

$ 6

$ 7

$ 7

$ 7

$ 7

$ 7

$ 6

$ 6

$ 6

$ 5

$ 5

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ Material 27 $ 27

$ 26

$ 26

$ 27

$ 28

$ 29

$ 31

$ 33

$ 35

$ 37

$ 38

$ 36

$ 35

$ 33

$ 31

$ 28

$ 25

$ 23

$ 21

$ 20

$ 19

$ 20

$ 21

$ 22

$ 23

$ 23

$ 24

$ 24

$ 24

$ 24

$ 24

$ 24

$ 24

$ 24

$ 24

$ Material $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Overhead 2 $ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 3

$ 3

$ 3

$ 3

$ 3

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 1

$ 1

$ 1

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ Freight 5 $ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ 6

$ 6

$ 6

$ 7

$ 7

$ 7

$ 6

$ 6

$ 6

$ 5

$ 5

$ 4

$ 4

$ 3

$ 3

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$

**81% AFUE**  Unit Price 449 $ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 16,150 $ Unit Sales

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0.000 Revenues

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

Cost of Sales

Labor

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$ Material

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$ Overhead

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$ Freight

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

**90% AFUE**  Unit Price 588 $ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 21,185 $ Unit Sales 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.187 Revenues 4 $ 4

$ 4

$ 4

$ 4

$ 4

$ 5

$ 5

$ 5

$ 5

$ 6

$ 6

$ 6

$ 5

$ 5

$ 5

$ 4

$ 4

$ 4

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$

Cost of Sales

Labor 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ Material 2 $ 2

$ 2

$ 2

$ 2

$ 2

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ Overhead 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ Freight 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 1

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$

Average Price per Unit 442 $ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ Average Price per Unit $

## Mobile Hom **e Furnaces**

**Base Year An**  **nouncem ent Year**  

## 2003 2004 2005 2006 2007 2008 

# NWGF
0.05131 1

**Incom e Statem**  **ent** 1 **75% AFUE**  Unit Price 397 $ 397

$ 397

$ 397

$ 397

$ 397

$ Unit Sales 0.02 0.02 0.02 0.02 0.02 0.02 Revenues 9 $ 9

$ 8

$ 8

$ 8

$ 9

$

Cost of Sales

Labor 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ Material 4 $ 4

$ 4

$ 4

$ 4

$ 5

$ Overhead 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ Freight 1 $ 1

$ 1

$ 1

$ 1

$ 1

$

**80% AFUE**  Unit Price 441 $ 441

$ 441

$ 441

$ 441

$ 441

$ Unit Sales 0.11 0.11 0.11 0.11 0.11 0.12 Revenues 50 $ 51

$ 49

$ 49

$ 50

$ 52

$

Cost of Sales

Labor 5 $ 5

$ 5

$ 5

$ 5

$ 5

$ Material 27 $ 27

$ 26

$ 26

$ 27

$ 28

$ Overhead 2 $ 2

$ 2

$ 2

$ 2

$ 2

$ Freight 5 $ 5

$ 5

$ 5

$ 5

$ 5

$

**81% AFUE**  Unit Price 449 $ 449

$ 449

$ 449

$ 449

$ 449

$ Unit Sales

- - - - - - Revenues

- $

-

$

-

$

-

$

-

$

-

$

Cost of Sales

Labor

- $

-

$

-

$

-

$

-

$

-

$ Material

- $

-

$

-

$

-

$

-

$

-

$ Overhead

- $

-

$

-

$

-

$

-

$

-

$ Freight

- $

-

$

-

$

-

$

-

$

-

$

**90% AFUE**  Unit Price 588 $ 588

$ 588

$ 588

$ 588

$ 588

$ Unit Sales 0.01 0.01 0.01 0.01 0.01 0.01 Revenues 4 $ 4

$ 4

$ 4

$ 4

$ 4

$

Cost of Sales

Labor 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ Material 2 $ 2

$ 2

$ 2

$ 2

$ 2

$ Overhead 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ Freight 0 $ 0

$ 0

$ 0

$ 0

$ 0

$

## Average Price per Unit 442 $ 442

$ 442

$ 442

$ 442

$ 442

$

### Standard **Year** 

## 2009 2010 2011 2012 2013 2014 2015 2016 2017

397 $ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 0.02 0.02 0.03 0.03 0.03 0.03 0.03 0.03 0.03 9 $ 10

$ 10

$ 11

$ 11

$ 12

$ 11

$ 11

$ 10

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 5 $ 5

$ 5

$ 6

$ 6

$ 6

$ 6

$ 6

$ 5

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

441 $ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 0.12 0.13 0.14 0.15 0.15 0.16 0.15 0.15 0.14 55 $ 58

$ 61

$ 65

$ 68

$ 71

$ 68

$ 66

$ 62

$

6 $ 6

$ 6

$ 7

$ 7

$ 7

$ 7

$ 7

$ 6

$ 29 $ 31

$ 33

$ 35

$ 37

$ 38

$ 36

$ 35

$ 33

$ 2 $ 2

$ 2

$ 3

$ 3

$ 3

$ 3

$ 3

$ 2

$
5 $ 6

$ 6

$ 6

$ 7

$ 7

$ 7

$ 6

$ 6

$

449 $ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$

- - - - - - - - -

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

588 $ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 5 $ 5

$ 5

$ 5

$ 6

$ 6

$ 6

$ 5

$ 5

$

0 $ 0

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 3 $ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 3

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0 $ 0

$ 0

$ 0

$ 0

$ 1

$ 0

$ 0

$ 0

$

## 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

## 2018 2019 2020 2021 2022 2023 2024 2025 2026

397 $ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 10 $ 9

$ 8

$ 7

$ 6

$ 6

$ 6

$ 6

$ 7

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 5 $ 5

$ 4

$ 4

$ 3

$ 3

$ 3

$ 3

$ 3

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

441 $ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 0.13 0.12 0.11 0.10 0.09 0.08 0.08 0.08 0.09 58 $ 53

$ 47

$ 43

$ 38

$ 36

$ 36

$ 37

$ 39

$

6 $ 6

$ 5

$ 5

$ 4

$ 4

$ 4

$ 4

$ 4

$ 31 $ 28

$ 25

$ 23

$ 21

$ 20

$ 19

$ 20

$ 21

$ 2 $ 2

$ 2

$ 2

$ 2

$ 1

$ 1

$ 1

$ 2

$
6 $ 5

$ 5

$ 4

$ 4

$ 3

$ 3

$ 4

$ 4

$

449 $ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$

- - - - - - - - -

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

588 $ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 5 $ 4

$ 4

$ 4

$ 3

$ 3

$ 3

$ 3

$ 3

$

0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 3 $ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$

## 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

## 2027 2028 2029 2030 2031 2032 2033 2034 2035

397 $ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 397

$ 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 7 $ 7

$ 7

$ 7

$ 8

$ 8

$ 8

$ 8

$ 8

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 4 $ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

441 $ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 441

$ 0.09 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 41 $ 42

$ 43

$ 44

$ 45

$ 45

$ 45

$ 46

$ 46

$

4 $ 4

$ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ 5

$ 22 $ 23

$ 23

$ 24

$ 24

$ 24

$ 24

$ 24

$ 24

$ 2 $ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$
4 $ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$

449 $ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$ 449

$

- - - - - - - - -

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

588 $ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 588

$ 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 3 $ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$

0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 2 $ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0 $ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$

## 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

## 2036 2037 2038

397 $ 397

$ 397

$ 0.02 0.02 0.02 0.56 8 $ 8

$ 8

$

1 $ 1

$ 1

$ 4 $ 4

$ 4

$ 0 $ 0

$ 0

$ 1 $ 1

$ 1

$

441 $ 441

$ 441

$ 0.10 0.10 0.10 2.99 46 $ 46

$ 46

$

5 $ 5

$ 5

$ 24 $ 24

$ 24

$ 2 $ 2

$ 2

$
4 $ 4

$ 4

$

449 $ 449

$ 449

$

- - - 0.00

- $

-

$

-

$

- $

-

$

-

$

- $

-

$

-

$

- $

-

$

-

$

- $

-

$

-

$

588 $ 588

$ 588

$ 0.01 0.01 0.01 0.19 4 $ 4

$ 4

$

0 $ 0

$ 0

$ 2 $ 2

$ 2

$ 0 $ 0

$ 0

$ 0 $ 0

$ 0

$

## 442

$ 442

$ 442

$**Mobile Home Furnaces**

**BASE CASE SCENARIO Base Year**  **Announcem ent Year**  **Standard Year**  2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unit Sales 0.14 0.14 0.14 0.14 0.14 0.15 0.15 0.16 0.17 0.18 0.19 0.20 0.19 Revenues 63.17 63.51 61.48 61.29 62.62 64.71 68.35 72.61 76.60 80.85 85.18 88.63 84.88

Cost of Sales Labor 10.5% 6.60 6.64 6.43 6.41 6.55 6.76 7.14 7.59 8.01 8.45 8.90 9.26 8.87

Material 53.7% 33.90 34.09 32.99 32.90 33.61 34.73 36.69 38.97 41.11 43.39 45.72 47.57 45.56 Overhead 4.0% 2.53 2.54 2.46 2.45 2.51 2.59 2.74 2.91 3.07 3.24 3.41 3.55 3.40 Freight 9.7% 6.12 6.16 5.96 5.94 6.07 6.27 6.63 7.04 7.43 7.84 8.26 8.59 8.23 Depreciation 1.90% 1.20 1.21 1.17 1.16 1.19 1.23 1.30 1.38 1.46 1.54 1.62 1.68 1.61

Selling, General and Administrative

Standard SG&A 16.6% 10.46 10.51 10.18 10.14 10.37 10.71 11.31 12.02 12.68 13.38 14.10 14.67 14.05 R&D 1.0% 0.64 0.64 0.62 0.62 0.64 0.66 0.69 0.74 0.78 0.82 0.86 0.90 0.86 Product Conversion Expense

- - - - - - - - - - - - -

Profit Before Tax 2.7% 1.71 1.72 1.67 1.66 1.70 1.75 1.85 1.97 2.08 2.19 2.31 2.40 2.30 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 Taxes 0.65 0.65 0.63 0.63 0.64 0.66 0.70 0.75 0.79 0.83 0.87 0.91 0.87

NOPAT 1.06 1.07 1.04 1.03 1.06 1.09 1.15 1.22 1.29 1.36 1.44 1.49 1.43 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

NOPAT 1.06 1.07 1.04 1.03 1.06 1.09 1.15 1.22 1.29 1.36 1.44 1.49 1.43 Depreciation 1.20 1.21 1.17 1.16 1.19 1.23 1.30 1.38 1.46 1.54 1.62 1.68 1.61 **Cash Flow Statement Income Statement (mln)** 

Depreciation 1.20 1.21 1.17 1.16 1.19 1.23 1.30 1.38 1.46 1.54 1.62 1.68 1.61 Change in Working Capital

- (0.07) 0.45 0.04 (0.29) (0.46) (0.80) (0.94) (0.88) (0.93) (0.95) (0.76) 0.82 Cash Flows from Operations 2.26 2.20 2.65 2.24 1.95 1.86 1.65 1.67 1.87 1.97 2.10 2.42 3.87

Ordinary Capital Expenditures 1.80% (1.14) (1.14) (1.11) (1.10) (1.13) (1.16) (1.23) (1.31) (1.38) (1.46) (1.53) (1.60) (1.53) Conversion Capital Expenditures

- - - - - - - - - - - - - Cash Used In Investment (1.14) (1.14) (1.11) (1.10) (1.13) (1.16) (1.23) (1.31) (1.38) (1.46) (1.53) (1.60) (1.53)

Net Cash Flow 1.13 1.06 1.54 1.13 0.83 0.70 0.42 0.36 0.49 0.51 0.57 0.82 2.34 Terminal Value

- - - - - - - - - - - - - Present Value Factor 1.11 1.05 1.00 0.95 0.90 0.86 0.82 0.78 0.74 0.71 0.67 0.64 0.61 Discounted Cash Flow 1.25 1.11 1.54 1.08 0.75 0.60 0.34 0.28 0.36 0.36 0.38 0.53 1.42

Industry Value thru 2038 **23 $** 

**ROIC Calculation** Seed Value Net Property Plant and Equipment 14.75% 9.32 9.25 9.19 9.13 9.07 9.00 8.93 8.86 8.78 8.70 8.62 8.53 8.44 Net W orking Capital 13.87 13.95 13.50 13.46 13.75 14.21 15.01 15.95 16.82 17.75 18.70 19.46 18.64 Other Operating Assets, Net of other Liabilities

- - - - - - - - - - - - - Operating Invested Capital (beginning of year) 23.19 23.20 22.69 22.59 22.82 23.21 23.94 24.81 25.60 26.46 27.32 27.99 27.08Return on Invested Capital (ROIC) 4.77% 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

We ighted Average Cost of Capital (W ACC) 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

Capex as % of Sales 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 Depre. as % of Sales 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Net PPE as % of Sales 15% 0.15 0.15 0.15 0.15 0.14 0.14 0.13 0.12 0.11 0.11 0.10 0.10 0.10

Tolerance 3%2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

0.19 0.18 0.16 0.15 0.13 0.12 0.11 0.10 0.10 0.10 0.11 0.12 0.12 0.12 0.13 0.13 0.13 0.13 82.23 77.37 72.51 66.32 59.24 53.94 48.19 45.54 45.09 45.98 48.63 50.84 52.61 54.38 55.26 56.15 56.59 56.59

8.60 8.09 7.58 6.93 6.19 5.64 5.04 4.76 4.71 4.81 5.08 5.31 5.50 5.68 5.78 5.87 5.92 5.92 44.13 41.52 38.91 35.59 31.80 28.95 25.86 24.44 24.20 24.68 26.10 27.29 28.24 29.19 29.66 30.13 30.37 30.37 3.29 3.10 2.90 2.65 2.37 2.16 1.93 1.82 1.81 1.84 1.95 2.04 2.11 2.18 2.21 2.25 2.27 2.27 7.97 7.50 7.03 6.43 5.74 5.23 4.67 4.41 4.37 4.46 4.71 4.93 5.10 5.27 5.36 5.44 5.49 5.49 1.56 1.47 1.38 1.26 1.13 1.02 0.92 0.87 0.86 0.87 0.92 0.97 1.00 1.03 1.05 1.07 1.08 1.08

13.61 12.81 12.00 10.98 9.81 8.93 7.98 7.54 7.46 7.61 8.05 8.42 8.71 9.00 9.15 9.29 9.37 9.37 0.83 0.79 0.74 0.67 0.60 0.55 0.49 0.46 0.46 0.47 0.49 0.52 0.53 0.55 0.56 0.57 0.57 0.57

- - - - - - - - - - - - - - - - - -

2.23 2.10 1.97 1.80 1.61 1.46 1.31 1.23 1.22 1.25 1.32 1.38 1.43 1.47 1.50 1.52 1.53 1.53 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.84 0.79 0.74 0.68 0.61 0.55 0.49 0.47 0.46 0.47 0.50 0.52 0.54 0.56 0.57 0.58 0.58 0.58

1.39 1.30 1.22 1.12 1.00 0.91 0.81 0.77 0.76 0.77 0.82 0.86 0.89 0.92 0.93 0.95 0.95 0.95 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

1.39 1.30 1.22 1.12 1.00 0.91 0.81 0.77 0.76 0.77 0.82 0.86 0.89 0.92 0.93 0.95 0.95 0.95 1.56 1.47 1.38 1.26 1.13 1.02 0.92 0.87 0.86 0.87 0.92 0.97 1.00 1.03 1.05 1.07 1.08 1.08 0.58 1.07 1.07 1.36 1.55 1.16 1.26 0.58 0.10 (0.19) (0.58) (0.49) (0.39) (0.39) (0.19) (0.19) (0.10)

- 3.53 3.84 3.67 3.74 3.68 3.10 2.99 2.22 1.71 1.45 1.16 1.34 1.50 1.56 1.79 1.82 1.93 2.03

(1.48) (1.39) (1.31) (1.19) (1.07) (0.97) (0.87) (0.82) (0.81) (0.83) (0.88) (0.92) (0.95) (0.98) (0.99) (1.01) (1.02) (1.02)

- - - - - - - - - - - - - - - - - - (1.48) (1.39) (1.31) (1.19) (1.07) (0.97) (0.87) (0.82) (0.81) (0.83) (0.88) (0.92) (0.95) (0.98) (0.99) (1.01) (1.02) (1.02)

2.05 2.45 2.36 2.54 2.61 2.13 2.12 1.40 0.90 0.63 0.29 0.42 0.55 0.58 0.79 0.81 0.91 1.01

- - - - - - - - - - - - - - - - - - 0.58 0.55 0.52 0.50 0.47 0.45 0.43 0.41 0.39 0.37 0.35 0.33 0.32 0.30 0.29 0.27 0.26 0.25 1.18 1.35 1.23 1.26 1.23 0.96 0.91 0.57 0.35 0.23 0.10 0.14 0.17 0.18 0.23 0.22 0.24 0.25

8.36 8.29 8.21 8.15 8.09 8.03 7.99 7.94 7.89 7.85 7.80 7.75 7.70 7.64 7.59 7.53 7.47 7.42 18.06 16.99 15.92 14.56 13.01 11.84 10.58 10.00 9.90 10.10 10.68 11.16 11.55 11.94 12.14 12.33 12.43 12.43

- - - - - - - - - - - - - - - - - - 26.42 25.27 24.13 22.71 21.10 19.88 18.57 17.94 17.80 17.94 18.48 18.91 19.25 19.58 19.72 19.86 19.90 19.840.05 0.05 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.04 0.05 0.05 0.05 0.05 0.05 0.05 0.05

0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

0.10 0.11 0.11 0.12 0.14 0.15 0.17 0.17 0.18 0.17 0.16 0.15 0.15 0.14 0.14 0.13 0.13 0.132034 2035 2036 2037 2038

0.13 0.13 0.13 0.13 0.13 57.03 57.03 57.03 57.03 57.03

5.96 5.96 5.96 5.96 5.96 30.61 30.61 30.61 30.61 30.61 2.28 2.28 2.28 2.28 2.28 5.53 5.53 5.53 5.53 5.53 1.08 1.08 1.08 1.08 1.08

9.44 9.44 9.44 9.44 9.44 0.58 0.58 0.58 0.58 0.58

- - - - -

1.55 1.55 1.55 1.55 1.55 0.03 0.03 0.03 0.03 0.03 0.59 0.59 0.59 0.59 0.59

0.96 0.96 0.96 0.96 0.96 0.02 0.02 0.02 0.02 0.02

0.96 0.96 0.96 0.96 0.96 1.08 1.08 1.08 1.08 1.08 (0.10)

- - - - 1.95 2.04 2.04 2.04 2.04

(1.03) (1.03) (1.03) (1.03) (1.03)

- - - - - (1.03) (1.03) (1.03) (1.03) (1.03)

0.92 1.02 1.02 1.02 1.02

- - - - 24.97 0.24 0.22 0.21 0.20 0.19 0.22 0.23 0.22 0.21 5.00

7.36 7.30 7.25 7.19 7.13 12.52 12.52 12.52 12.52 12.52

- - - - - 19.88 19.83 19.77 19.71 19.660.05 0.05 0.05 0.05 0.05

0.05 0.05 0.05 0.05 0.05 x
x
x
x 0.02 0.02 0.02 0.02 0.02 x 0.02 0.02 0.02 0.02 0.02 x

0.13 0.13 0.13 0.13 0.13 x
x0900006480fa7774.xls

**Mo bile Home Furnaces** 

**STANDARD CASE SCENARIO Base Year**  **Announceme nt Year**  **Standard Year**  2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Unit Sales 0.14 0.14 0.14 0.14 0.14 0.15 0.15 0.16 0.17 0.18 0.19 0.20 0.19 0.19 Revenues 63.17 63.51 61.48 61.29 62.62 64.71 68.35 72.61 76.60 80.85 85.18 88.63 84.88 82.23

Cost of Sales Labor 10.5% 6.60 6.64 6.43 6.41 6.55 6.76 7.14 7.59 8.01 8.45 8.90 9.26 8.87 8.60

Material 53.7% 33.90 34.09 32.99 32.90 33.61 34.73 36.69 38.97 41.11 43.39 45.72 47.57 45.56 44.13 Overhead 4.0% 2.53 2.54 2.46 2.45 2.51 2.59 2.74 2.91 3.07 3.24 3.41 3.55 3.40 3.29 Freight 9.7% 6.12 6.16 5.96 5.94 6.07 6.27 6.63 7.04 7.43 7.84 8.26 8.59 8.23 7.97 Depreciation 1.90% 1.20 1.21 1.17 1.16 1.19 1.23 1.30 1.38 1.46 1.54 1.62 1.68 1.61 1.56

Selling, General and Administrative

Standard SG&A 16.6% 10.46 10.51 10.18 10.14 10.37 10.71 11.31 12.02 12.68 13.38 14.10 14.67 14.05 13.61 R&D 1.0% 0.64 0.64 0.62 0.62 0.64 0.66 0.69 0.74 0.78 0.82 0.86 0.90 0.86 0.83 Product Conversion Expense

- - - - - - - - - - - - - -

- Profit Before Tax 2.7% 1.71 1.72 1.67 1.66 1.70 1.75 1.85 1.97 2.08 2.19 2.31 2.40 2.30 2.23 One-time writeoff on stranded assets

- EBT as % of Revenues 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03

Taxes 37.9% 0.65 0.65 0.63 0.63 0.64 0.66 0.70 0.75 0.79 0.83 0.87 0.91 0.87 0.84 NOPAT 1.06 1.07 1.04 1.03 1.06 1.09 1.15 1.22 1.29 1.36 1.44 1.49 1.43 1.39 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

NOPAT 1.06 1.07 1.04 1.03 1.06 1.09 1.15 1.22 1.29 1.36 1.44 1.49 1.43 1.39 Depreciation 1.20 1.21 1.17 1.16 1.19 1.23 1.30 1.38 1.46 1.54 1.62 1.68 1.61 1.56 Change in Working Capital

- (0.07) 0.45 0.04 (0.29) (0.46) (0.80) (0.94) (0.88) (0.93) (0.95) (0.76) 0.82 0.58 **Income Statement (mln)**

**Cash Flow Statement**

Cash Flows from Operations 2.26 2.20 2.65 2.24 1.95 1.86 1.65 1.67 1.87 1.97 2.10 2.42 3.87 3.53

Ordinary Capital Expenditures (1.14) (1.14) (1.11) (1.10) (1.13) (1.16) (1.23) (1.31) (1.38) (1.46) (1.53) (1.60) (1.53) (1.48) Conversion Capital Expenditures

- - - - - - - - - - - - - - Cash Used In Investm ent (1.14) (1.14) (1.11) (1.10) (1.13) (1.16) (1.23) (1.31) (1.38) (1.46) (1.53) (1.60) (1.53) (1.48)

Net Cash Flow 1.13 1.06 1.54 1.13 0.83 0.70 0.42 0.36 0.49 0.51 0.57 0.82 2.34 2.05 Terminal Value

- - - - - - - - - - - - - - Present Value Factor 1.11 1.05 1.00 0.95 0.90 0.86 0.82 0.78 0.74 0.71 0.67 0.64 0.61 0.58 Discounted Cash Flow 1.25 1.11 1.54 1.08 0.75 0.60 0.34 0.28 0.36 0.36 0.38 0.53 1.42 1.18

Industry Value thru 2038 **23 $** 

**ROIC Calculation** Net Property Plant and Equipment 14.7% 9.32 9.25 9.19 9.13 9.07 9.00 8.93 8.86 8.78 8.70 8.62 8.53 8.44 8.36 Net W orking Capital 13.87 13.95 13.50 13.46 13.75 14.21 15.01 15.95 16.82 17.75 18.70 19.46 18.64 18.06 Other Operating Assets, Net of other Liabilities

- - - - - - - - - - - - - - Operating Invested Capital (beginning of year) 23.19 23.20 22.69 22.59 22.82 23.21 23.94 24.81 25.60 26.46 27.32 27.99 27.08 26.42 Return on Invested Capital (ROIC) 4.77% 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 We ighted Average Cost of Capital (W ACC) 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

Net PPE as % of Revenues 15% 0.15 0.15 0.15 0.15 0.14 0.14 0.13 0.12 0.11 0.11 0.10 0.10 0.10 0.10

Tolerance 3%0900006480fa7774.xls

net PPE/Gross PPE 50%

**Detailed Depreciation & Capex Calculation**

**Depreciation** 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1.90% Depre. on base-case PPE base 1.20 $ 1.21

$ 1.17

$ 1.16

$ 1.19

$ 1.23

$ 1.30

$ 1.38

$ 1.46

$ 1.54

$ 1.62

$ 1.68

$

-

$

-

$ Depre. post-std

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$ 1.61

$ 1.56

$ **Total Depre 1.20**  **$ 1.21** 

**$ 1.17** 

**$ 1.16** 

**$ 1.19** 

**$ 1.23** 

**$ 1.30** 

**$ 1.38** 

**$ 1.46** 

**$ 1.54** 

**$ 1.62** 

**$ 1.68** 

**$ 1.61** 

**$ 1.56** 

**$** 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90%0900006480fa7774.xls

**Mo bile Home Furnaces** 

**STANDARD CASE SCENARIO**

Unit Sales Revenues

Cost of Sales Labor 10.5%

Material 53.7% Overhead 4.0% Freight 9.7% Depreciation 1.90%

Selling, General and Administrative

Standard SG&A 16.6% R&D 1.0% Product Conversion Expense

Profit Before Tax 2.7% One-time writeoff on stranded assets EBT as % of Revenues

Taxes 37.9% NOPAT

NOPAT

Depreciation Change in Working Capital **Income Statement (mln)**

**Cash Flow Statement** 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

0.18 0.16 0.15 0.13 0.12 0.11 0.10 0.10 0.10 0.11 0.12 0.12 0.12 0.13 77.37 72.51 66.32 59.24 53.94 48.19 45.54 45.09 45.98 48.63 50.84 52.61 54.38 55.26

8.09 7.58 6.93 6.19 5.64 5.04 4.76 4.71 4.81 5.08 5.31 5.50 5.68 5.78 41.52 38.91 35.59 31.80 28.95 25.86 24.44 24.20 24.68 26.10 27.29 28.24 29.19 29.66 3.10 2.90 2.65 2.37 2.16 1.93 1.82 1.81 1.84 1.95 2.04 2.11 2.18 2.21 7.50 7.03 6.43 5.74 5.23 4.67 4.41 4.37 4.46 4.71 4.93 5.10 5.27 5.36 1.47 1.38 1.26 1.13 1.02 0.92 0.87 0.86 0.87 0.92 0.97 1.00 1.03 1.05

12.81 12.00 10.98 9.81 8.93 7.98 7.54 7.46 7.61 8.05 8.42 8.71 9.00 9.15 0.79 0.74 0.67 0.60 0.55 0.49 0.46 0.46 0.47 0.49 0.52 0.53 0.55 0.56

- - - - - - - - - - - - - -

2.10 1.97 1.80 1.61 1.46 1.31 1.23 1.22 1.25 1.32 1.38 1.43 1.47 1.50

0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03

0.79 0.74 0.68 0.61 0.55 0.49 0.47 0.46 0.47 0.50 0.52 0.54 0.56 0.57 1.30 1.22 1.12 1.00 0.91 0.81 0.77 0.76 0.77 0.82 0.86 0.89 0.92 0.93 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

1.30 1.22 1.12 1.00 0.91 0.81 0.77 0.76 0.77 0.82 0.86 0.89 0.92 0.93 1.47 1.38 1.26 1.13 1.02 0.92 0.87 0.86 0.87 0.92 0.97 1.00 1.03 1.05 1.07 1.07 1.36 1.55 1.16 1.26 0.58 0.10 (0.19) (0.58) (0.49) (0.39) (0.39) (0.19) Cash Flows from Operations

Ordinary Capital Expenditures Conversion Capital Expenditures Cash Used In Investm ent

Net Cash Flow Terminal Value Present Value Factor Discounted Cash Flow

Industry Value thru 2038 **23 $** 

**ROIC Calculation** Net Property Plant and Equipment 14.7% Net W orking Capital Other Operating Assets, Net of other Liabilities Operating Invested Capital (beginning of year) Return on Invested Capital (ROIC) 4.77% We ighted Average Cost of Capital (W ACC)

Net PPE as % of Revenues 15%

Tolerance 3% 3.84 3.67 3.74 3.68 3.10 2.99 2.22 1.71 1.45 1.16 1.34 1.50 1.56 1.79

(1.39) (1.31) (1.19) (1.07) (0.97) (0.87) (0.82) (0.81) (0.83) (0.88) (0.92) (0.95) (0.98) (0.99)

- - - - - - - - - - - - - - (1.39) (1.31) (1.19) (1.07) (0.97) (0.87) (0.82) (0.81) (0.83) (0.88) (0.92) (0.95) (0.98) (0.99)

2.45 2.36 2.54 2.61 2.13 2.12 1.40 0.90 0.63 0.29 0.42 0.55 0.58 0.79

- - - - - - - - - - - - - - 0.55 0.52 0.50 0.47 0.45 0.43 0.41 0.39 0.37 0.35 0.33 0.32 0.30 0.29 1.35 1.23 1.26 1.23 0.96 0.91 0.57 0.35 0.23 0.10 0.14 0.17 0.18 0.23

8.29 8.21 8.15 8.09 8.03 7.99 7.94 7.89 7.85 7.80 7.75 7.70 7.64 7.59 16.99 15.92 14.56 13.01 11.84 10.58 10.00 9.90 10.10 10.68 11.16 11.55 11.94 12.14

- - - - - - - - - - - - - - 25.27 24.13 22.71 21.10 19.88 18.57 17.94 17.80 17.94 18.48 18.91 19.25 19.58 19.72 0.05 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.04 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

0.11 0.11 0.12 0.14 0.15 0.17 0.17 0.18 0.17 0.16 0.15 0.15 0.14 0.140900006480fa7774.xls

net PPE/Gross PPE 50%

**Detailed Depreciation & Capex Calculation**

**Depreciation** 1.90% Depre. on base-case PPE base Depre. post-std **Total Depre** 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$ 1.47 $ 1.38

$ 1.26

$ 1.13

$ 1.02

$ 0.92

$ 0.87

$ 0.86

$ 0.87

$ 0.92

$ 0.97

$ 1.00

$ 1.03

$ 1.05

$ **1.47 $**  **1.38**

**$ 1.26** 

**$ 1.13** 

**$ 1.02** 

**$ 0.92** 

**$ 0.87** 

**$ 0.86** 

**$ 0.87** 

**$ 0.92** 

**$ 0.97** 

**$ 1.00** 

**$ 1.03** 

**$ 1.05** 

**$** 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90%0900006480fa7774.xls

**Mo bile Home Furnaces** 

**STANDARD CASE SCENARIO**

Unit Sales Revenues

Cost of Sales Labor 10.5%

Material 53.7% Overhead 4.0% Freight 9.7% Depreciation 1.90%

Selling, General and Administrative

Standard SG&A 16.6% R&D 1.0% Product Conversion Expense

Profit Before Tax 2.7% One-time writeoff on stranded assets EBT as % of Revenues

Taxes 37.9% NOPAT

NOPAT

Depreciation Change in Working Capital **Income Statement (mln)**

**Cash Flow Statement** 2031 2032 2033 2034 2035 2036 2037 2038

0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 3.16 56.15 56.59 56.59 57.03 57.03 57.03 57.03 57.03 1,397 $

5.87 5.92 5.92 5.96 5.96 5.96 5.96 5.96 146 $ 30.13 30.37 30.37 30.61 30.61 30.61 30.61 30.61 2.25 2.27 2.27 2.28 2.28 2.28 2.28 2.28 5.44 5.49 5.49 5.53 5.53 5.53 5.53 5.53 1.07 1.08 1.08 1.08 1.08 1.08 1.08 1.08

9.29 9.37 9.37 9.44 9.44 9.44 9.44 9.44 x 0.57 0.57 0.57 0.58 0.58 0.58 0.58 0.58 x

- - - - - - - - x

x 1.52 1.53 1.53 1.55 1.55 1.55 1.55 1.55 x

0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 x

x 0.58 0.58 0.58 0.59 0.59 0.59 0.59 0.59 x 0.95 0.95 0.95 0.96 0.96 0.96 0.96 0.96 x 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 x

x 0.95 0.95 0.95 0.96 0.96 0.96 0.96 0.96 x 1.07 1.08 1.08 1.08 1.08 1.08 1.08 1.08 x (0.19) (0.10)

- (0.10)

- - - - x Cash Flows from Operations

Ordinary Capital Expenditures Conversion Capital Expenditures Cash Used In Investm ent

Net Cash Flow Terminal Value Present Value Factor Discounted Cash Flow

Industry Value thru 2038 **23 $** 

**ROIC Calculation** Net Property Plant and Equipment 14.7% Net W orking Capital Other Operating Assets, Net of other Liabilities Operating Invested Capital (beginning of year) Return on Invested Capital (ROIC) 4.77% We ighted Average Cost of Capital (W ACC)

Net PPE as % of Revenues 15%

Tolerance 3% 1.82 1.93 2.03 1.95 2.04 2.04 2.04 2.04 x

x (1.01) (1.02) (1.02) (1.03) (1.03) (1.03) (1.03) (1.03) x

- - - - - - - - x (1.01) (1.02) (1.02) (1.03) (1.03) (1.03) (1.03) (1.03) x

x 0.81 0.91 1.01 0.92 1.02 1.02 1.02 1.02 x

- - - - - - - 24.97 x 0.27 0.26 0.25 0.24 0.22 0.21 0.20 0.19 x 0.22 0.24 0.25 0.22 0.23 0.22 0.21 5.00 x

x
x

x

x 7.53 7.47 7.42 7.36 7.30 7.25 7.19 7.13 x 12.33 12.43 12.43 12.52 12.52 12.52 12.52 12.52 x

- - - - - - - - x 19.86 19.90 19.84 19.88 19.83 19.77 19.71 19.66 x 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 x 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 x

x 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 x

x0900006480fa7774.xls

net PPE/Gross PPE 50%

**Detailed Depreciation & Capex Calculation**

**Depreciation** 1.90% Depre. on base-case PPE base Depre. post-std **Total Depre** x

x

x
x

x 2031 2032 2033 2034 2035 2036 2037 2038

- $

-

$

-

$

-

$

-

$

-

$

-

$

-

$ x 1.07 $ 1.08

$ 1.08

$ 1.08

$ 1.08

$ 1.08

$ 1.08

$ 1.08

$ x **1.07 $**  **1.08**

**$ 1.08** 

**$ 1.08** 

**$ 1.08** 

**$ 1.08** 

**$ 1.08** 

**$ 1.08** 

**$** x 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% x

x

x

x

x

x

x

x

x

x

x

x

x

x

## Flat Markups, Revised NES, GAMA Low 75% AFUE Standard **Pre-Regulation (Base)**  **2015**

Unit Shipm ents (000,000) 

## 0.19 Price per unit (weighted avg.) $442 Total Revenues ($000,000) 

## $85 Net Income Before Financing ($000,000) 

## $1 Net Cash Flow (2016) ($000,000) 

## $2 Industry Value thru 2038 ($000,000) 

## $23

**MA JOR ASSUM** 

**PTIONS**

Manufacturing Costs Materials per Unit 

## $237 Labor per Unit 

## $46 Overhead per Unit 

## $18 Conversion Cost

Capital Expenditures ($000,000) 

## Product Conversion Costs ($000,000) 

## Total Conversion Costs ($000,000) 

## $0 **Summary Report for Mobile Hom**  **e Furnaces**

Change in Industry

Value **Mobile Home Furnaces**

## Post-Regulation

**(Standard) 2015** 

0.19 $442 $85 $1 $2 $23 $0 0%

$237 $46 $18

$0 $0 $0 **Mobile Home Furnaces**

## 0.10 0.15 0.20 0.25**m i** **l l** **i o** **n s**  

# SHIPMENTS

**MOBILE HOME FURNA CES** 

0.00 0.05

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 40.00 50.00 60.00 70.00 80.00 90.00 100.00**m i** **l l** **i o** **n s**  

# REVENUE BY **Y EA**  **R MOBILE HOME FURNA**  **CES**

0.00 10.00 20.00 30.00

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 3.0% 4.0% 5.0% 6.0%**R O** **I C**  

# RETURN ON INVESTED CA **PIT AL**  **(ROIC) MOBILE HOME FURNA**  **CES**

0.0% 1.0% 2.0%

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 2.7%**% R** **e v** **e n** **u e**  

# PROFIT BEFORE T **AX MOBILE HOME FURNA**  **CES**

2.7% 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 0.6 0.8 1.0 1.2 1.4 1.6 1.8**$ m** **i l** **l i** **o n** **s** 

# CA **SH USED IN INVESTMENT** 

**MOBILE HOME FURNA CES** 

0.0 0.2 0.4 0.6

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 2.0 2.5 3.0 3.5 4.0 4.5**$ m** **i l** **l i** **o n** **s** 

# OPERA **TING CA**  **SHFLOW TO**  **TA LS**  **MOBILE HOME FURNA CES** 

0.0 0.5 1.0 1.5

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 1.5 2.0 2.5 3.0**$ m** **i l** **l i** **o n** **s** 

# NET **CASH FLOW TO**  **TA LS**  **MOBILE HOME FURNACES**

0.0 0.5 1.0

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 10.0

15.0 20.0 25.0**$ m** **i l** **l i** **o n** **s** 

# INDUSTR **Y VA**  **LUE (NPV)**  **MOBILE HOME FURNA CES** 

0.0 5.0 10.0

Base 75% AFUE Standard 75% AFUE

## 0.6 0.8 1.0 1.2 1.4 1.6**$ m** **i l** **l i** **o n** **s** 

# INCOME **AF TER**  **TA X**  **MOBILE HOME FURNA CES** 

0.0 0.2 0.4

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

## 442.1 442.1 442.1**$ m** **i l** **l i** **o n** **s** 

# AV **ERAGE UNIT PRICE** 

**MOBILE HOME FURNA CES** 

442.1 442.1

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Base 75% AFUE Standard 75% AFUE

# MOBILE HOME FURNA **CES**

Base 75% AFUE 

# NET CASH FLOW TOTALSMOBILE HOME FURNACES Net Cashflow 

# REVENUE BY YEARMOBILE HOME FURNACES Revenues 

# INCOME AFTER TAXMOBILE HOME FURNACES Income After Tax 

# SHIPMENTSMOBILE HOME FURNACES Shipm ents 

# AVERAGE UNIT PRICEMOBILE HOME FURNACES Avg Price 

# INDUSTRY VALUE (NPV)MOBILE HOME FURNACES Industry Value 

# CASH USED IN INVESTMENTMOBILE HOME FURNACES Investments 

# RETURN ON INVESTED CAPITAL (ROIC)MOBILE HOME FURNACES ROIC 

# OPERATING CASHFLOW TOTALS MOBILE HOME FURNACES Operating Cashflow 

# PROFIT BEFORE TAXMOBILE HOME FURNACES

Standard 75% AFUE Net Cashflow Revenues Income After Tax Shipm ents Price Industry Value Investments ROIC Operating Cashflow

# MOBILE HOME FURNA **CES**

2003 2004 2005 2006 2007 2008 2009 2010 2011

1 $ 1

$ 2

$ 1

$ 1

$ 1

$ 0

$ 0

$ 0

$

63 $ 64

$ 61

$ 61

$ 63

$ 65

$ 68

$ 73

$ 77

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2

442 $ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

23 $

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

5% 5% 5% 5% 5% 5% 5% 5% 5%

2 $ 2

$ 3

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$

1 $ 1

$ 2

$ 1

$ 1

$ 1

$ 0

$ 0

$ 0

$ 63 $ 64

$ 61

$ 61

$ 63

$ 65

$ 68

$ 73

$ 77

$ 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 0.143 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 442 $ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 23 $ 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 5% 5% 5% 5% 5% 5% 5% 5% 5% 2 $ 2

$ 3

$ 2

$ 2

$ 2

$ 2

$ 2

$ 2

$

## 2012 2013 2014 2015 2016 2017 2018 2019 2020

1 $ 1

$ 1

$ 2

$ 2

$ 2

$ 2

$ 3

$ 3

$

81 $ 85

$ 89

$ 85

$ 82

$ 77

$ 73

$ 66

$ 59

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1

442 $ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

1 $ 2

$ 2

$ 2

$ 1

$ 1

$ 1

$ 1

$ 1

$

5% 5% 5% 5% 5% 5% 5% 5% 5%

2 $ 2

$ 2

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$

1 $ 1

$ 1

$ 2

$ 2

$ 2

$ 2

$ 3

$ 3

$ 81 $ 85

$ 89

$ 85

$ 82

$ 77

$ 73

$ 66

$ 59

$ 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 0.2 0.2 0.2 0.192 0.2 0.2 0.2 0.2 0.134 442 $ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

1 $ 2

$ 2

$ 2

$ 1

$ 1

$ 1

$ 1

$ 1

$ 5% 5% 5% 5% 5% 5% 5% 5% 5% 2 $ 2

$ 2

$ 4

$ 4

$ 4

$ 4

$ 4

$ 4

$

## 2021 2022 2023 2024 2025 2026 2027 2028 2029

2 $ 2

$ 1

$ 1

$ 1

$ 0

$ 0

$ 1

$ 1

$

54 $ 48

$ 46

$ 45

$ 46

$ 49

$ 51

$ 53

$ 54

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

442 $ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$

5% 4% 4% 4% 4% 4% 5% 5% 5%

3 $ 3

$ 2

$ 2

$ 1

$ 1

$ 1

$ 1

$ 2

$

2 $ 2

$ 1

$ 1

$ 1

$ 0

$ 0

$ 1

$ 1

$ 54 $ 48

$ 46

$ 45

$ 46

$ 49

$ 51

$ 53

$ 54

$ 1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 442 $ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$ 442

$

1 $ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 1

$ 5% 4% 4% 4% 4% 4% 5% 5% 5% 3 $ 3

$ 2

$ 2

$ 1

$ 1

$ 1

$ 1

$ 2

$

## 2030

1 $

55 $

1 $

0.1

442 $

1 $

5%

2 $

1 $ 55 $ 1 $ 0.1 442 $

1 $ 5% 2 $