# Government Regulatc^

Ballast Manufacturer Impact Analysis 

# DOE Workshop April 28, 1998 U.S. Department of Energy Office of Energy Efficiency and Renewable Energy 1000 Independence Avenue, SW Washington, DC 20585 

# Government Regulatory Impact Model (GRIM)

Ballast Manufacturer Impact Analysis DOE Workshop April 28, 1998 U.S. Departmentof Energy Office of Energy Efficiency and Renewable Energy 1000 IndependenceAvenue, SW Washington, DC 20585

# ARTHUR D. LITTLE, INC.

Acorn Park Cambridge, Massachusetts 02140-2390

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

# Government Regulatory Impact Model Draft - Under Development -Ballastl.x Is April 28, 1998 Modified to account for Electronic Ballasts

## Government Regulatory Impact Model



## Assumptions Page for 1, 111 orescent Lamp Ballasts Scenario Description Base Year Announcement Year Standard Year
Tax Rate Discount Rate for NPV Inflation Rate Working Capital 

## Standard SG&A Research and Development Ordinary Depreciation Ordinary Capital Expenditures


## Conversion Costs Design & Marketing Expenses Capital Investment per Electronic Ballast Amortization Period Fluorescent Lamp Ballasts 

## 1998 1999 2002 37.2% 8.0% 0.0% 16.4% 15.9% 1.8% 2.9% -3.4% Beginningyear for analyticalpurposes Yearin which the regulation announcement is made Year in which the regulation takes effect
TBD - The Dept. will seek additional information per annum of Revenue of Revenue of Revenue of Revenue of Revenue



## 0.5 ($000,000)

10

4/28/98 Major Assumptions GRIM_Ballast2.XLS 

## ScenarioDescription BaseYear AnnouncementYear Standard Year TaxRate DiscountRateforNPV InflationRate WorkingCapital



## 1 StandardSG&A Research andDevelopment OrdinaryDepreciation 1 

## OrdinaryCapitalExpenditures

ConversionCosts Design&MarketingExpenses CapitalInvestmentperElectronicBallast Amortization Period

4/28/98 GovernmentRegulatory ImpactModel

AssumptionsPagefor FluorescentLampBallasts FluorescentLampBallasts 1998 

## Beginningyear foranalyticalpurposes 1999 

## Yearinwhichtheregulationannouncementismade 2002 

## Yearinwhichtheregulationtakeseffect 37.2%

8.0% 

## TBD

- The Dept. will

## seekadditional information 0.0%

## perannum 16.4% 

## of Revenue 15.9%IOf Revenue 1.8% of Revenue 2.9%IOf Revenue -3.4% of Revenue 

# §($Ooo,Ooo) 0.5 { .

10

MajorAssumptions GRIM_Ballast2.XLS

### SHIPMENT SCENARIO
Baseline Case (Magnetic Ballast Sales)

0 1998 2000 2002 2004 2006 2008 2010 2012



### Baseline Case (Electronic Ballast Sales) 35 30 -o 1 F40T12 

### 25 -D-- 2F40T12 

### 20 -*- 2F96T12 

### 15 - 2F96T12H0 

### 10 5 

### 0 Std. Year 

### Standards Case (Magnetic Ballast Sales)

1998 2000 2002 2004 2006 2008 2010 2012

35- 35 1F40T12 30- 30 2F40T12 25 25 3F40T12 

### 20 20 4F40T12 15 15 

### 10 2F96T12 10 5 2F96T12H0 5 0 0 1998 2000 2002 2004 2006 2008 2010 2012 Std. Year 

### Standards Case (Electronic Ballast Sales)

1998 2000 2002 2004 2006 2008 2010 -4-1 F40T12 2F40T12 -s<- 2F96T12 --*- 2F96T12H0

-®-1 F40T12 2F40T12 -^- 3F40T12 ^E-- 4F40T12 -e- 2F96T12 - 2F96T12H0 

### SHIPMENTSCENARIO

25 20 15 10 5 

## o 1998

35 30 25 20 15 10 5 0 1998 2000

2000 2002

2002 

### Baseline Case (Magnetic BallastSales)

2004 2006 2008



### Baseline Case (Electronic Ballast Sales)

2004 2006 2008 2010 2012

2010 2012 -+-1F40T12

__2F40T12 --.lk-2F96T12 -7f-2F96T12HO

1F40T12 2F40T12 3F40T12 4F40T12 2F96T12 2F96T12HO SId.Vear 35 30 25 20 15 10 5 0 1998 2000 2002

SId.Ve.r 35 30 25 20 15 10 5 0 1998 2000 2002 

### Standards Case (Magnetic BallastSales)

2004 2006 2008



### Standards Case (Electronic Ballast Sales)

2004 2006 2008 2010 2012

2010 2012 -+-1F40T12

__2F40T12 --.lk-2F96T12**-~-** 2F96T12HO

-+-1F40T12

__2F40T12 --.lk-3F40T12 ··K··4F40T12 --G-2F96T12 -2F96T12HOInputs-Base Case

BASE CASE SCENARIO Magnetic Ballasts Electronic Ballasts Shipment Base Year 1998 Default Value 

### IF411TI2 2F40T12 2F96C12 2F96T12H0 Default Value 1F40'T12 

### 2F40T12 3F40T12 4F40T32 2F96T12 ZF96T12HO wei hted avg.



### Price/Unit ($) (from CIR) 7.26 5.80 10.56 14.54 (from CIR) 15.76 15.76 15,76 15.76 22.03 33.78 $6:89 Unit Sales (millions) (from NESS) 

### 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Unit Sales (millions) (Mont facnrrer) Cost of Sales ($) (% OfPrice/Unit) (% OfPrice/Untr)



### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57

* NESS: National Energy Savings Spreadsheet (developed by LBNL) - NESS is under development. These values are preliminary ". 

### Ma eticBallasts Electronic Ballasts Shipment 

### 1999 1)rfnult V'nlue 

### 1F40T12 2F40T12 2F96T12 

### 2F96T12H0 l)ufault VsIuc 

### 1F40T12 2F40T12 3F40T12 4F40T12 2F96T12 2F06T12U0 weighted avg. Price/Unit ($) (from CIR) 7.26 5.80 10.56 14.54 (from CJR) 15.76 15.76 15.76 15.76 22.03 33.78 $6.89 Unit Sales (millions) (from NESS) 

### 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Cost of Sales ($) (% ofPrfcelunit) (% OfPrice/Unit)



### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57
Magnetic Ballasts Electronic Ballasts Shipment 

### 2000 Default Value 1F40T12 2F40T12 2F96C12 2F96T12H0 Default Value 1F40T12 2F40T12 3F40T12 4F40T12 2F96T12 2F06T12H0 weighted avg. Price/Unit ($) (from CIR) 

### 7.26 5.80 10.56 14.54 (from CIR) 

### 15.76 15.76 15.76 15.76 22.03 33. 78 $6.89 Unit Sales (millions) (from NESS) 

### 2.20 23.00 6.00 0.30 (fromNESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Cost of Sales ($) (% OfPrice/Unit) (% OfPrice/Unit)



### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8,46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 

### 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57
Ma eticBallasts FlcctronicBallast s 

### Shipment 20{11 Default Value 1F40T12 2F411T12 2F96T12 2F96T12H0 

### Default Value 1F40T12 2F4t1T12 3F40T12 4F40T12 2F96T12 2F96T12H0 weigh I ena_tis. Price/Unit ($) (from CIR) 7.26 5.80 10.56 14.54 (from CIR) 15.76 15:70 15.76 15.76 ` 22.03 33. 78 $6.89 

### Unit Sales (millions) (from NESS) 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Cost of Sales ($) (% Ofpnce/Unit) (% OfPrice bolt)



### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57
Magnetic Ballasts 

### Elc-etrrmieBallasts Shipment Std. Year 2002 Default Value 1F40T12 2F40T12 

### 2F96T12 2F96T12H0 Default Value IF40T12 

### 2F40T12 I 3F40T12 4F40T12 2F96T12 2F96T12H0 wet hted avg.

Price/Unit ($) (from CIR) 7.26 5.80 10.56 14.54 (from CIR) 15.76 15.76 15.76 15.76 22.03 33.78 $6.89 Unit Sales (millions) (from NESS) 

### 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Cost of Sales ($) (% Of Pnce/Unis (% OfPrice/Unit)



### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 8.20% 1,29 1.29 1.29 1.29 1.81 2.77 $0.57

Page i Inputs-BaseCase

Page 1Inputs-Std. Case

STANDARD CASE SCENARIO Magnetic Ballasts Electronic Ballasts Shipment Base Year 1998 Default Value 1F40'f12 2F40TI2 2F96T12 

### 2F96T12H0 Default Value 

### IF40TI2 2F40T12 3F40T12 4F40T12 2F96TI2 

### 2F96T12H0 wei kited av .



### PricelUnit ($) (front CIR) 

### 7.26 5.80 10,56 14.54 (from CIR) 15.76 15.76 15.76 15.76 22.03 33.78 $6.89 Unit Sales (millions) (front NESS) 2.20 23.00 6.00 0.30 (from NESS) 

### 0.00 0.00 0:00 0.00 0.00 0.00 31.50 Unit Sales (millions) (Mmmfacturer) Cost of Sales ($) (% OfPricelUnit) (% OfPrice/Unit)



### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 

### 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 

### 8.20% 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57 Magnetic Ballasts I I,,trnnic Ballasts Shipment 1999 Default Valet 1140T12 

### 2F40T12 2F96T12 2F96T12H0 Default Value 1F40T12 2F40T1< [ 3140 T-1-2 41 0TQ 

### 2F967 1 1 ; 2F06112HO wei kited avg Price/Unit ($) (front CIR) 7.26 5.80 10.56 14.54 (from CIR) 15.76 15.76 15.76 15.76 22.03 33. 78 . $6.89 Unit Sales (millions) (from NESS) 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Cost of Sales ($) (%OfPricelUnit) (% OfPrice lUnit) 

### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11,83 18.14 $3.70 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57
Magnetic Ballasts Electronic Ballasts Srt^ipmuut 

### 2000 Default Value IF40T12 2F40T12 2F96T12 

### 2F96T12H0 Default Value IF40T12 2F40TI2 3F40T12 4F40T12 2F96T12 2F96T12110 wei kited av Price/Unit ($) (from CIR) 7.26 5.80 10.56 14.54 (from CIR) 15.76 15.76 15.76 1 , 

### 15.76 22.03 33.78 g. $6.89 Unit Sales (millions) (from NESS) 

### 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Cost of Sales ($) (%Of PricelUnit (% Of Price/Unit)



### Labor/Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 8.209/, 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57
Magnetic Ballau, 

### II e ctrnuic Ballasts 5hipmrnc 

### 2001 Uefault Value IF40T12 

### 2F40T12 2F96T12 2F9sT12H0 DefaultValue IF40TI2 2F40T12 31,40T12 4F40T12 2F96T12 2F96T12130 wei htea ut/. Price/Unit ($) (front CIR) 

### 7.26 5.80 10.56 14.54 (front CIR) 

### 15.76 15.76 15.76 15.76 22.03 33. 78 $6.89 Unit Sales (millions) (front NESS) 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 0.00 0.00 31.50 Cost of Sales ($) (%OfPrice/Unit) (%gPricelUnit)



### Labor(Unit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $0.77 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $3.70 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $0.57
Magnetic Ballasts Electronic Ballasts Sitipntcut 

### Std. Year 2002 Default Value 1F40T12 2F40T)2 2F96T12 2F96T12H0 Default Value 1F40TI2 2F40T12 3F40T12 4F40TI2 2F96T12 2F96T12H0 weiihtc l avg.

Price/Unit ($) (front CIR) 7.26 5.80 10.56 14.54 (front CIR) 15.76 15.76 15.76 15.76 22.03 33.78 $17.54 Unit Sales (millions) (front NESS) 

### 0.00 0.00 0.00 0.00 (from NESS) 1.17 8.74 1.92 6.10 6.00 0.30 24.22 Cost of Sales ($) (%Of )"ice/Unit) (% Of Price/Unit)



### LaborfUnit 11.20% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 2.47 3.78 $1.96 Material/Unit 53.70% 3.90 3.11 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 11.83 18.14 $9.42 Overhead/Unit 8.20% 0.60 0.48 0.87 1.19 8.20% 1.29 1.29 1.29 1.29 1.81 2.77 $1.44

Page I Inputs-Std. Case

Page 1Government Regulatory Impact Model
Fluorescent Lamp Ballasts

BASE CASE SCENARIO Base Year 1998 Income Statement Price/Unit 6.89 Unit Sales 31.50 Revenues 217.1 Cost of Sales Labor 24.3

Material 116.6 Overhead 17.8 Depreciation 6.3 Selling, General and Administrative

Standard SG&A 34.5 R&D 3.8 Product Conversion Expense (Electronic Ballast) Profit Before Tax 13.8 Taxes 5.1 Net Income Before Financing 8.7

Cash Flow Statement Net Income 8.7 Depreciation 6.3 Change in Working Capital Cash Flows from Operations 15.0

Ordinary Capital Expenditures (7.4) Conversion Capital Expenditures Cash Used In Investment (7.4) Net Cash Flow 7.6 Terminal Value Present Value Factor 1.0000 Discounted Cash Flow 7.6 Industry Value (Net Present Value) $ 102.2 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89 6.89 31.50 31.50 31.50 31.50 31.50 31.50 31.50 31.50 31.50 31,50 31.50 31.50 31.50 31.50 217.1 217.1 217.1 217.1 217.1 217.1 217.1 217.1 217.1 217.1 217.1 217.1 217.1 217.1
24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3
34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8
13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7

8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 94.6 0.9259 0.8573 . 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.3405 7.0 6.5 6.0 5.6 5.2 4.8 4.4 4.1 3.8 3.5 31 3.0 2.8 34.8

4/28/98 Base Case GRIM_Ballast2.XLS GovernmentRegulatory ImpactModel

FluorescentLampBallasts
BASECASE SCENARIO Base Year 1998 1999 2000 2001 2002 2003 2004 200S 2006 2007 2008 2009 2010 2011 2012
PricelUnit UnitSales Revenues Costof Sales Labor 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 Material 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 116.6 Overhead 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 17.8 Depredation 6.3 6.3 6.3 6.3 6.3 6.3 6.3 

### 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 Selling, GeneralandAdministrative StandardSG&A 34.S 34.5 34.5 34.S 34.5 34.5 34.5 34.5 34.S 34.5 34.5 34.5 34.5 34.5 34.S R&D 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 ProductConversionExpense (ElectronicBallast) ProfitBeforeTax 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 Taxes S.I S.I S.I S.I S.I S.I S.I S.I S.I S.I S.I S.I S.I S.I S.I NetIncomeBeforeFinancing 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7

### l~if~:!£{{>'~;ji!)i~IFlllWiSfil~n~l?~'iiljgP!i~<lifl!~J Net Income 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 Depreciation 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 ChangeinWorkingCapital CashFlows fromOperations IS.O IS.0 IS.O IS.O IS.O IS.O IS.O IS.O IS.O IS.O IS.O IS.O IS.O IS.O IS.O OrdinaryCapital Expenditures (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) ConversionCapital Expenditures CashUsedIn Investmenl (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) (7.4) NetCashFlow 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 TerminalValue 94.6 PresentValueFactor 1.0000 0.92S9 0.8S73 0.7938 0.73S0 0.6806 0.6302 0.583S 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.340S Discounted Cash Flow 7.6 7.0 6.5 6.0 S.6 S.2 4.8 4.4 4.1 3.8 3.5 3.2 3.0 2.8 34.8 IndustryValue (NetPresentValue) $ 102.2

4/28198 BaseCase GRIM_Ballast2XLSGovernment Regulatory Impact Model

Fluorescent Lamp Ballasts
STANDARD CASE SCENARIO Base Year 1998 PricelUnit 6.89 Unit Sales 31.50 Revenues 217.1 Cost of Sales Labor 24.3

Material 116.6 Overhead 17.8 Depreciation 6.3 Selling, General and Administrative

Standard SG&A 34.5 R&D 3.8 Product Conversion Expense (ElectronicBallast) Profit Before Tax 13.8 Taxes 5.1 Net Income Before Financing 8.7

Cash flow Statement Net Income 8.7 Depreciation 6.3 Change in Working Capital - Cash Flows from Operations 15.0

Ordinary Capital Expenditures (7.4) Conversion Capital Expenditures - Cash Used In Investment (7.4) Net Cash Flow 7.6 Terminal Value Present Value Factor 1.0000 Discounted Cash Flow 7.6 Industry Value (Net Present Value) $ 24.0 Announce year Standard Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ' 2010 2011 2012 6.89 6.89 6.89 17.54 17.54 1T.54 17.54 17.54 17.54 17.54 17.54 17.54 17.54 17.54 31.50 31.50 31.50 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 217.1 217.1 217.1 424.7 424.7 424.7 424.7 424.7 424.7 424.7 424.7 424.7 424.7 424.7
24.3 24.3 24.3 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 116.6 116.6 116.6 228.1 228.1 228.1 228.1 228.1 228.1 228.1 228.1 228.1 228.1 228.1 17.8 17.8 17.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 6.3 6.3 6.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3
34.5 34.5 34.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 3.8 3.8 3.8 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4
13.8 13.8 13.8 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 5.1 5.1 5.1 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 8.7 8.7 8.7 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9

8.7 8.7 8.7 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 6.3 6.3 6.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3
- - - (34.0) - - - - - - - - - - 15.0 15.0 15.0 (4.8) 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 (7.4) (7.4) (7.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4)
- - (157.5) - - - - - - - - - (7.4) (7.4) (164.9) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) 7.6 7.6 (149.9) (19.2) 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 185.2 0.9259 0.8573 . 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.3405 7.0 6.5 (119.0) (14.1) 10.1 9.3 8.6 8.0 7.4 6.9 6.4 5.9 5.4 68.1

4/2&98 Standard Case GRIM Batlast2.XLS GovernmentRegulatory ImpactModel

Fluorescent**L.m~**Ballasts Announce STANDARDCASESCENARIO Base Year Year StandardYear 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
. 2008 2C()9 2010 2011 2012

### 11tf%$'~~~~~i~i}{;J;t:~s.a~~~~~W:0{~~S~~Q~1 PriceiUnit 17.54 17.54 17.54 17.54 17.54 UnitSales 24.22 24.22 24.22 24.22 24.22 Revenues 424.7 424.7 424.7 424.7 424.7 Costof Sales Labor 24.3 24.3 24.3 24.3 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 Material 116.6 116.6 116.6 116.6 228.1 228.1 228.1 228.1 228.1 228) 228.1 228.1 228.1 228.1 228.1 Overhead 17.8 17.8 17.8 17.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 34.8 Depreciation 6.3 6.3 6.3 6.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 Selling, GeneralandAdministrative Standard SG&A 34.5 34.5 34.5 34.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 R&D 3.8 3.8 3.8 3.8 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4 7.4 ProductConversionExpense (ElectronicBallast) ProfitBeforeTax 13.8 13.8 13.8 13.8 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 27.0 Taxes 5.1 5.1 5.1 5.1 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 NetIncomeBeforeFinancing 8.7 8.7 8.7 8.7 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9

### 1~i\;$i"~.~1IIOW"$Iil~f;73!Y~a\\!I~'l!rl -NetIncome 8.7 8.7 8.7 8.7 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 16.9 Depreciation 6.3 6.3 6.3 6.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 12.3 ChangeinWorkingCafital (34.0) CashF10wsfrom Operations 15.0 15.0 15.0 15.0 (4.8) 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 OrdinaryCapital Expenditures (7.4) (7.4) (7.4) (7.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) ConversionCapital Expenditures (157.5) Cash UsedIn Investment (7.4) (7.4) (7.4) (164.9) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) (14.4) NetCashFlow 7.6 7.6 7.6 (149.9) (19.2) 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 TerminalValue 185.2 PresentValueFactor 1.0000 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 O.340S DiscountedCashF10w 7.6 7.0 6.5 (119.0) (14.1) 10.1 9.3 8.6 8.0 7.4 6.9 6.4 5.9 5.4 68.1 IndustryValue (NetPresentValue) 24.0

4/28/98 StandardCase GRIM_Ballast2.xLS