APPENDIX P. GOVERNMENT REGULATORY IMPACT MODEL (GRIM)

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TABLE OF CONTENTS

P.1.1 iNTRODUCTION AND PURPOSE P-i

P.1.2 MODEL DESCRIPTION P-i

P.1.3 INCOME STATEMENT P-5

P.1.4 MAJOR ASSUMPTIONS P-7

P.2. EXHIBITS P-12

EE-RM-PET-100 COMMENT 88
APPENDIX P: GOVERNMENT REGULATORY IMPACT MODEL (GRIM)

P.1.1 INTRODUCTION AND PURPOSE

The purpose of the Government Regulatory Impact Model (GRIM) is to help identify the

effects of various efficiency regulations and other regulations on manufacturers. The basic mode of

analysis is to determine the change in value of the manufacturer(s) following a regulation or a series

of regulations. The model structure also allows an analysis of multiple products with regulations

taking effect over a period of time, and of multiple regulations on the same product.

Industry value is defined, for the purposes of this analysis as the present value of cash flows

for the manufacturer(s) in question. Cash flow is calculated by the user specifying shipment volumes

and manufacturer prices (i.e., prices from manufacturers to the first customer, such as a wholesaler)

and then selecting user-defined regulatory levels. The model calculates the actual cash flows by year

and then determines the present value of those cash flows both without regulations (the preregulation base case) and with regulations (the post-regulation standards case).

Output comes from the model in terms of summary statistics, graphs of maj or variables, and,

when appropriate, access to the complete cash flow calculation.

P.1.2 MODEL DESCRIPTION

The basic structure of the GRIM is a standard annual cash flow analysis that uses price and

volume information as an input, builds on fundamental base cost information, and accepts a set of

regulatory conditions as changes in costs and investments. The cash flow analysis is separated into

two major blocks: income and cash flow. The income calculation determines the profit after taxes

but before financial charges. The cash flow calculation converts profit after taxes into an annual cash

flow by including investment and non-cash items. Below are definitions of listed items on the

printout of the output sheet (see Section P1.3).

In addition to the basic structure defined below, several assumptions were added dealing with

the synergies that occur between depreciation - time, ordinary R&D - product conversion, and

ordinary capital expenditures - capital conversion. These synergies occur as a result of cash flow

scenarios incorporating a delay in implementation and a two-tier standard. The supplemental

assumptions and scenarios are explained in section P.1.4.

(1) Income Statement: Overall calculation of Net Income Before Financing (17)

using revenue and cost items subject to income tax effects

as described in (2) through (17).

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EE-RM-PET-100 COMMENT 88
(2) Price/Unit: Actual manufacturer unit price charged to the first level of

distribution (distributor, retailer, etc.)

Price of Baseline Unit = $285.90'

Price of higher efficiency unit = Price of Baseline Unit +

(Incremental Mfg. Cost) * (Mfg. Markup)

It can also be entered as an input by the user

(3) Unit Sales: Annual shipments for the industry is obtained from the

National Energy Savings (NES) Spreadsheet.

It can also be entered as an input by the user

(4) Revenues: Annual revenues; computed by multiplying Price/Unit (2)

by Unit Sales (3).

(5) Base Costs: Costs per unit prior to regulations.

(6) New Costs: Costs per unit following regulations.

(7) Labor: Factory direct labor and fringe benefit costs;

Baseline Labor Cost = $29.3'

New Labor Cost = Baseline Labor Cost +

Incremental Labor Cost

(8) Material: Purchased materials and components.;

Baseline Material Cost = $148.7'

New Material Cost = Baseline Material Cost +

Incremental Material Cost

(9) Overhead: Factory overhead excluding depreciation. Overhead is

treated as both fixed and variable, with the percentage of

overhead (excluding depreciation) that is variable set under

the Major Assumntions.

Baseline Overhead Cost = $33.5

New Overhead Cost = Baseline Overhead Cost +

Incremental Overhead Cost

P-2

EE-RM-PET-100 COMMENT 88
(10) Depreciation: Annual depreciation on pre-regulation assets; computed as

a percentage of Revenues (4). Annual depreciation on postregulation assets is computed by dividing Conversion

Capital Expenditures (25) by a useful life from Major

Assumptions. For post-regulation years, Depreciation is the

sum of depreciation on pre- and post-regulation assets.

Pre-regulation:

Depreciation = % of annual revenues

Post-regulation:

Depreciation = Depreciation_Pre-regulation +

(Conversion Capital Exp./Useful_ life)

(11) Cost of Sales: Total cost of sales, computed by adding Labor (7),

Material (8), Overhead (9) and Depreciation (10).

(12) SG&A: Selling, general and administrative costs are computed as a

percentage of Revenues (4).

(13) R&D: Research and development costs unrelated to regulations;

computed as a percentage of Revenues (4).

(14) Product Conversion: Expensable costs related to meeting a regulation, often

including product redesign costs and expensable factory

conversion expenses. Also includes costs incurred for new

product literature and catalogs, product obsolescence, and

various related marketing expenses. GRIM allocates these

costs over a number of years.

(15) Profit Before Tax: Profit before taxes and any financing costs; computed by

subtracting Cost of Sales (11), SG&A (12), R&D (13), and

Product Conversion (14) from Revenues (4).

(16) Taxes: Taxes on Profits Before Tax; computed by multiplying the

tax rate contained in Major Assumptions by Profit Before

Tax (15).

(17) Net Income Before Profits after taxes; computed by subtracting Taxes

Financing: from Profit Before Tax (15).

P-3

EE-RM-PET-100 COMMENT 88
(18) Cash Flow Statement: Overall assessment including net income, other cash related

items and adjustments and investments.

(19) Net In come: Net income; identical to Net Income Before Financing

(17).

(20) Depreciation: Depreciation is a non-cash cost and is added back into Net

Income (19) as part of the cash flow calculation; identical

to Depreciation (10).

(21) Change in Working Capital: Additional accounts receivable, inventory, and other cash

investments necessary to support increased revenues;

computed by multiplying a percentage from Major

Assumptions by the change in Revenues (4).

(22) Cash Flow from Operations: The cash flow from operating activities; computed by

adding Net Income (19), Depreciation (20) and subtracting

Change in Working Capital (21).

(23) Capital Expenditures: Investment to maintain and replace existing production

assets; computed as a percentage of Revenues (4) using a

percentage contained in Major Assumptions. Postregulation capital expenditures equal pre-regulation

expenditures plus depreciation on Conversion Capital

Expenditures (24).

Pre-regulation:

Capital Exp. = % of annual revenues

Post-regulation:

Capital Exp. Capital Exp._Pre-regulation +

(Conversion Capital Exp./Useful_ life)

(24) Conversion Capital Exp.: Capital costs for meeting regulations, typically including

plant, equipment, tooling and the like. These have been

provided by AHAM for each efficiency level.

(25) Cash Used in Investments: Cash required for assets; computed by adding Capital

Expenditures (23) and Conversion Capital Expenditures

(24).

P-4

EE-RM-PET-100 COMMENT 88
(26) Net Cash Flow: Annual cash flow from operations and investments;

computed by subtracting Cash Used in Investments (25)

from Cash Flow from Operations (22).

(27) Post-Regulation Value: Value of the relevant industry following adoption and

implementation of the regulatory scenario; the present value

of the annual Net Cash Flow (26) from the base year to the

year 2030, plus a terminal value based on the final year's

cash flow valued as an annuity, are computed by model and

listed. The discounted rate for the present value is the

"Discount Rate for NPV" contained in Major Assumptions.

Pre-regulation value is computed in a similar way using

base case Net Cash Flows(26) and terminal value.

P.1.3 INCOME STATEMENT

The Income Statement and Cash Flow are shown in Figure P1.1. Two items are not

shown below because the full cash flow has been cropped. These include how many years the

cash flow is discounted and the terminal value. The cash flow is discounted through 2030. The

terminal value is the final cash flow amount divided by the interest rate. The terminal value does

not consider growth.

P-5

EE-RM-PET-100 COMMENT 88
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P-6

EE-RM-PET-100 COMMENT 88
P.1.4 MAJOR ASSUMPTIONS

The GRIM is linked directly to the current version of the NES shipments model. The

GRJM assumptions page (Figure P.1.2) contains all the NES assumptions required to generate

shipment scenarios for GRIM. The user defines and initiates a new GRIM analysis in a simple 6

step process. Step 1 consists primarily of defining the timing and level of single-tier or two-tier

standards. Step 2 defines the elasticity values used to generate shipments. Step 3 defines the

financial parameters for the GRIM analysis including a description of plant and property used to

calculate stranded assets. Step 4 defines additional scenario parameters: the market share under

investigation (100% for the whole industry, 20%, 4.4% and 2.2% for "typical" manufacturers;

the default mark-up assumptions (high and low); the presence of a delay in implementation; the

assumption used to calculate stranded assets (shipments or revenue based); and consolidation or

no consolidation scenarios. Step 5 contains the major assumptions for the repair industry

analysis. Finally step 6 initiates the analysis calculations.

Three types of analyses are possible with the GRIM:

Single-tier - A single tier standard goes into effect at the specified date. Tier 1 inputs are

repeated in tier 2 input boxes. The model behaves as previous versions of GRIM and is

based on the definitions described in section P1.2.

2. Delay - The sigle-tier standard is implemented more than three years after the

announcement date. A delay is specified in step 3. This scenario gives manufacturers

extra time to ramp up investments and redistribute ordinary costs. The redistribution of

costs changes the way R&D and ordinary capital expenditures are accounted. These

changes are described next in the Additional Assumptions Section.

3. Two-tier - Two standards are implemented at different dates and efficiency levels.

Besides being linked to the NES shipment model, this GRIM is linked to the Dryer and

Repair GRIMs. This system of impact analysis allows for better aggregation of total economic

impact on clothes washer manufacturers.

P-7

EE-RM-PET-100 COMMENT 88
Figure P1.2: GRIM Major Assumptions Page

P-8

EE-RM-PET-100 COMMENT 88
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P-9

EE-RM-PET-100 COMMENT 88
Additional Assumptions for Delay and two-tier scenarios

For the delay and two-tier scenarios several assumptions were reevaluated based on the

investment dynamics of the industry. The assumptions concern ordinary R&D, ordinary capital

expenditures, and depreciation.

Delay Scenario Ordinary R&D

It is assumed that a delay in implementation date will allow a portion of ordinary R&D

expenditures to be redirected towards meeting standards-induced product conversion costs. This

is modeled in GRIM as a reduction of ordinary R&D expenditures in the standard case in each of

the delay years. Delay years are the years immediately following the statutory three year

implementation time table. For example a standard announced in 2001 would normally be

implemented in 2004. If the effective date is delayed to 2007 then 2004, 2005 and 2006 are

delay years. In these years the magnitude of the reduction in ordinary R&D is the lesser of 50%

of Base Case ordinary R&D and the total standard-induced marketing and design costs divided

by the number of delay years.

Delay Scenario Ordinary Capital Expenditures

Ordinary capital expenditures are the investments associated with maintaining and

replacing existing production assets. In the Base Case the GRIN'! models ordinary capital

expenditures as a percentage of revenues. In the Standards case in the years following the

standard, ordinary capital expenditures are equal to Base Case ordinary capital expenditures plus

the value of capital expenditures necessary to replenish the used portion of standards-induced

capital expenditures (Conversion Capital Expenditures divided by Useful life).

Given a delay in implementation date, manufacturers can better plan their ordinary capital

expenditures and fully depreciate that portion of their production assets that will not be required

after the standard. In order to model this effect the following steps were taken:

The value of "stranded" production assets is estimated for each standard level. This

calculation is detailed in chapter 11 and is incorporated under the sheet labeled "capital

conversion" in the GRIN/I.

Since stranded assets do not need to be maintained, for each delay year, the ordinary capital

expenditures in the Standard Case are equal to Base Case capital expenditures reduced by a

factor equal to the percentage of stranded assets. The total reduction in Capital Expenditures

is capped by the amount of capital conversion costs.

Two-tier Scenario Ordinary R&D

In a two-tier scenario a first standard (tier one)is followed by a new standard (tier two), 3

or more years later. Introducing a delay in the implementation date for either standard reduces

ordinary R&D expenditures as previously described.

P-i 0

EE-RM-PET-100 COMMENT 88
Two-tier Scenario Depreciation

Tier one production assets' depreciation life is the difference between the tier one and

tier two standard years. The maximum number of years the production assets have to

depreciate is still the useful life. For example if tier one standard goes into effect in 2004 and

tier two standard goes into effect in 2007 then the production assets from the tier one

standard depreciate in three years instead of the useful life.

Two-tier Scenario Ordinary Capital Expenditures

As previously described, introducing a delay in the implementation date for tier one

reduces Ordinary Capital expenditures for the delay years leading to tier one. In the years

between implementation dates ordinary capital expenditures consist of two parts. As

previously described for the Delay Scenario Ordinary Capital Expenditures, capital

expenditures equal Base Case ordinary capital expenditures reduced by a factor equal to the

percentage of stranded assets. The total reduction in capital expenditures is capped by the

amount of capital conversion costs. A second part consists of reinvestment in tier 1 assets.

This reinvestment is expressed as a fraction of normal post standard capital expenditures

(Conversion Capital Exp./Useful_ life).

Capital expenditures after tier two are Capital Exp._Pre-regulation + (Conversion Capital

Exp. Tier 2/Useful_ life)

Two-tier Scenario other cash flow outputs

The behavior of the remaining outputs presented in section P1.2. for a two-tier scenario

are additive or standard specific. Costs including unit price, labor, equipment, overhead, and

working capital are standard specific meaning those costs are associated with the standard

being analyzed at the given point in time. The costs change when a new standard is

implemented. Product and capital conversion expenditures are additive and are characterized

by investing activities leading up to the implementation of a new standard.

P.2. EXHIBITS

See exhibits for additional information.

P-li

EE-RM-PET-100 COMMENT 88
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Exhibit P2. 1 GRIM Major Assumptions

Sheet: Assumptions for the Base Case NPV

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P-i 3

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P- 14

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Year

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Year

1993 2111) 20J1 22 2033 2034 2 2037 2(03 2(03 2010 2011 2012 2013 2014 2015 2016 2011 2010 2819 2020

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975 903993 1803 1022 _ 1042 _ 1003 _ 1085 1164 1124 1142 1161 _ 1170 11 93 1267 1221 1220 125212701203 1307 1328

Reveuues 210.5 212.3 _ 214.5; 217.4 _ 220.0; 225,1 225.6 234.3 _ 220.5. 242.7 _ 246.7 203 254.5 257.7 2.7 203.7 206.9 270.5 274.2 _ 278.2 282.3 24

NInconeBeforeFirricig 105 106 107 109 110 113 _ 115 _ 117 119 _ 121 123 _ 125 127 129 130 132 133 135 137 139 141 143

MOashFuw 105 106 107 _ 108 110 113 _ 115 _ 117 110 121 123 125 127 129 130 132 133 135 137 139 141 143

Terinal Value 215.3

Prese ValueFaor l 09376 _ 08792 _ 08244_ 07720_ 072 _ 0796 _ 06372 _ 03975 03)2 _ 03253_ 025 _

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iscountedCashFluw _____165 100 _ 94 _ 96 _ 05 _ 02 _ 70 _ 75 11 60 _ 65 _ 62 59 56 53 50 48 45 43 41 39 594

IndusI Value 4et Pse Value) $ 2fl02

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P-i 9

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P-20

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P-2 1

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P-22

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-i-: . LPI •'r , '1. '4 - -.., ; t .-i ,-. •r i!i

- I: -r I - . '. = ii U!

-. , iL L ' . •.. ' •:- 4Lp.! -. I - J. 8

ii.: ,i L- rir ,rI .Li .V L44 C.. -. C -

• .. ,. - p

1.' I'1 1I I!'. Ii :1 .: 4 i,. .! T; -- -.

. I

+1 - : '1 I. .I .:: _2 ,p,,

ItS I 'I . .' 1' .1 -' .-. e 1'.- p •:-.pl ' I p p I

pr .ir ..-'.:n 1", Il U1 .• I7I ': - t. I 'I -: ,: '/ a,? -. .'' 1Cr: s-.. 1 411 1C. J!1 p . '= 1 '1r '. I

., - .P-PI' r-r-i I I-p v . L,.r..:- .1; ,p•; , -, LI F pI I.

-.-.----.-r-..,------ '4 c :- :- Ii II. .1. .1 ' .•.',..PI pp' 1' I1L

I ' 11 l Ii,' I 11 I L - I

II 1 1 P .-. P41 Ij

II.. I. 4-! --p . •

- - - -

Wr! 1 14! LI.- I'!!

rn !',: P !1 41I! 11w-' •'

II 1.1 -. L!! 4! 4 ! 111 I 411 p 41 441

rIr'--. P. p ''--IOI. .. ..,... ..€ , - -

Exhibit P2. 12 H-axis Standard Case Cash Flows, 35 percent Standard Level (no consolidation, medium-price elasticity)

P-23

EE-RM-PET-100 COMMENT 88
LII

______________________ , •2.I

I

_i1r U 1....I1I -1 .

___ I. nL _J - I y---

:1'J1 ..I ly' •I i.I ..: ;c ;-.m &t; ii I:-- .!..c

Zfl 11 I . T:. .i •1

- - . . 1i _-.: .I,IL: i. Z4 '.;

Irrl. . -

ln. ii: .- :1,., , .

..,

. ' 1 i- I' : !

.:• .r ..:- ;I •:4 . I'.1 ,UI ilp ,1. 7; rj. i.

oj 441

n.1 - 12:

•. 4 .C -Ji .. . ;. ! 'ni 'I. ii '

.• -,

I:: ;:4::; ': ø .. .-2. all Y .alI .. : ..

.I - •:' : . -: 11111 •J

...........

......

......

. j:;. 14: .4 iJ1 I-lEr i•. r 'U

IlL 1. .121: . L1Ij?_.. 1 jn . .;.' --. 1 ,iIl

Il ' .,; k414 •;. '.1 2t 1. 11 4.1 , I::,

141! .2 11 iLL; .11 1' I •1 i .1 1111 ;1 1T! :p w.. 1

:.i(_7::.pI4IIi.,__ -' '- 1 L 41) .1.2.•.ijlI ;.Ll I •. I.:

. 2 .EL: . 21. . 2. 2.. ;. .,,. ;. 1 . .

n.:.. TI •:'r .! . .-l.: 11. ;.i. .1:;>: .,r. Or ;:''i •i. n;; .; LI.:

jI.,; I.•: 4.11i i l 4.21 4.41 J• j 4J, II.l

- t.• DI.-:- ..I - L11 .(.1I. IL IlV .4.I.. j..l _.

c.n-1'ff.. Il.- •:' Iv 111:1. - 11 ,i: .. SI a i Si . .. t ;. 1 1

- .._

Exhibit. P2.13 Standard Cash Flow, 35 percent Standard Level (no consolidation, medium-price elasticity scenario) -V and Haxis market segments combined

P-24

EE-RM-PET-100 COMMENT 88
medium-price elasticity)

P-25

Exhibit P2. 14 Results for the 35 percent Standard Level (no consolidation,

EE-RM-PET-100 COMMENT 88
;

:.::

;:;

17... --

!•I1

._.,:.-. .

..

1'

. ,

...

J. 'i

::,

ii 1

-

i

- ..

- ": . . .. .

F _ . F.

-j

;.::F

ii

I LI

N

EE-RM-PET-100 COMMENT 88
Dryer Shipitiens _________

5.51 $ 5.29 --

Total Revenues -

$JOUOO[r) $ 1,213.6 1$ 1,166.5 -

Profit After Tax I ($UUUUCUj $ 43.0 $ 40.0 -

lndusfry Value ThiPrisrdVthie) C$U0UaOO) $ 665.1 $ 64&3

Change in Tndusfry Value $OOCç000) .$ (1 6.8

%CIiangeinlndustr7Value -23^

Exhibit P2. 16 Results: Dryer Cash Flows, 35 percent Standard Level (mediumprice elasticity)

P-27

EE-RM-PET-100 COMMENT 88
sosniss 3504 BieYeir

Stindrd

Vein

19 2WJ 2(01 102 2(03 2(04 2(05 201 211)7 201 21029 2010 2011 2012 2013 2(114 2015 2016 2017 2018 2019 2020

Rairs 9.7455 9.8202 9.9327. l5542 102227 10.6207 10.5 11.1355 11.348) 115420 11.7169 11.1043 12.0192 121259 1221(0 12.2820 12.3512 12.4446 12.5710 12.7431 12.9559 13.1841

Renenues 216.5 212.3. 214.5 217.4 220.8 235.6 235.1 240.5 245.1 249.3 253.1 255.7 259.6 261.9 _ 263.7 255.3_ 256.8 10.8 271.5 275.3 279.8 284."

NetlncomeBereFinancing 16.5 10.6 10.7 10.9 11.0 11.5 11.8 12.0 12.3 12.5 12.7 12.8 13.0 13,1 13.2 13.3 13.3 13.4 13.6 13.8 14.0 14.2

Net Cash Flow 16.5 10.6 10.7 _ 10.9 _ 11.0 _ 11.5 _ 11.8 12.0 12.3 12.5 12.7 12.8 13.0 _ 13.1 13.2 13.3 13.3 13.4 13.6 13.8 14.0 14.2

Terminal Value

________ ___________ 214.1

Present Value Factor 1. 09376 02792 02241_ 0.7730 0.71 07% 0372 _ 05975 0.2 _ 05253 _ 0.4525 6.4510 0.4330 0.

______________

07 03570

___ _

0.3347

________

0.3130

__

0.2943 02759 02507

DiscauntedCashFlow _______ 16.5 10.6 9.4 9.0 8.5 8.3 8.0 7.7 7.3 7.0 6.6 6.3 6.0 6.7 5.4 6.0 4,8 4.5 4.3 4.6 3.9 59.1

Industry Value (Net Present Value) $ 21112

Exhibit P2. 17 Standard Case Repair Cash Flows, 35 percent Standard Level (medium-price elasticity)

P-28

EE-RM-PET-100 COMMENT 88
price elasticity)

P-29

Exhibit P2. 18 Results: Repair Cash Flow, 35 percent Standard Level (mediumEE-RM-PET-100 COMMENT 88
.04p 2: NESIe.prLe

ENERGY PRICE PROJECTION j AEO 1999- Refrenne Case

STANDARD CASEDESIGN(rierul &TierO2) MEF = 1.04 MEF 1.26

StaedaStsrtlCesre 20041 I 20011

Water earolafloes rate Medimes -

Diocmmt Rate: I 3.:4

Ammal % increase of H-e,da oJuoI

........

2 Skioeaoi Sneoa,4ao

Selartp,*ce ekosIicity top.iuadkegfaohr,e DftIv, ap.dntuodaefeyeL

Real diothAR aesdpmvided ha the She,oent Forecast sheet

Detailed ,eeoodelhqesait um in yelio.e cells Jo inpads' eheei

Price Elasticity Income EIasticit:

Medium None

Top-Loading Elasticity: Price/Income Elasticity:

Medium None

Price Markup: - Interest or Credit Elasticity:

Medium Markup None

Set Cmrent Scenario

__________

tiearsrdyeurno.to

Baseline scot 2004.

Stp3 FesoadoiropsJrfo. GRtMne.lyd

Tarhete 420%

Discacorot Rot, foe NPV

loftationRote

___________

0% I"•' cnnc:c:

WockiugCapitel

Net Pcopeety,F1.oat&Eytpment

10

24.30%

n(fc

I: /1o.::.-

ta.o4oedSD&A 100%

Research andOevelopotent 12% cr

Oadiao.eyDepee:iotion 3.01% p Ooc.,:cc,

OcdooeyCepctd itçpeccdthccee .390% ccfc.cc

Shoat_temnVari.hieOv,ehe,4o.,% 60% :l):. . ccc c crc/ccc2cfc cc9.cccc

ofTatsi c..c ncocc,:c% c . ccdc:ccf c :2cc '_l:

Slop 4c Scasasfarfor GRIM aoiyo,

Dely yes

0:-,:.: :cc:cc 0..: 0hen:o beset

100%

Coosoid.tiosoScenscio no

Range 2 42'r-i hOoc

SOapS: 01,pair GRIMle.pseto

AveesgyRepsiccoet iiooo

000%

[Put. Split 200%

öeep.irmsek,t close, - lthor 1021%

OEMeepeieoteeketeheee.pute

Pratt 2.90% -.2cl%c.c,::co

'Stop hRaoeoeodal

Exhibit P2. 19 GRIM Major Assumptions

Sheet: Two-Tier Standard Level (no

consolidation, medium-price elasticity

scenario)

P-30

EE-RM-PET-100 COMMENT 88
1

LJ.r j.I ':: 1.1

I) JJ

Car! 1'

YAthI ILA'

T' 1JrTPt 47. I(ij.4'!!

I i I

tI 032 Ti4:

Jiai )

__L. _^L:'.Jp'.i11

L'pLL.:. 3 Ip--;

IrE

iiiirn.fi'i __________________________________

h ' Fiii_..l a.Pi Ii I

Eir T rrmrL Z

_

__________________________

1f$Ir MO

w Trw,ir l4Ur

Uwt

N'

i.tiI (iL LiLC.

i'ii:

iii V i nI 'ijt;

U

.n lwbIid

i.Ihj tidjI!* (4IVthi

1JI1 LW

M ai .f 1r.u

uIi

rit L!LI

g9 L'•

.) 4• iifr

M3• r .'r i'IFiE1i 2ot . - .2 i .. kp

•1•fl •:

1

ii rjq (r.•(i;

%jiI.J iibIi. Tc..R-+ IYCn-i! -- 1 I(.!I)

- I ______

Piri1 pi1-J tIriI!ii ic. L? i5 - - - - . Ip' wflJ

DwpErouciviip ]-1

_________________________

_________ I

Exhibit P2. 20 Welcome GRIM Sheet: Assumption for the Two-Tier Standard Level (no

consolidation, medium-price elasticity scenario)

P-3 1

EE-RM-PET-100 COMMENT 88
-.

4 - I r

• ••:• -i L1 •' -.

4,

-- _______________________... . _._. - - I I I

i'El -* 1]

' i

I i'1 j -i -

_______ I• _ ;

L J -- EL H 1 '[ I1!1J W ! i 7dIJ ]f"l Y U! I Ii

- TcT I'1 V1 j W J1IJ_ U !! pr p.

!

I -' . .h1 i I!! k€! ]

- - _ -- .. iii1_ LI II ____Ll u__ iJ ial_u1i 4_

.J 4i 1t J U'; L I".' IYi U1 U:•: -- .u

I!) i i . :i. j III ct-. i FI - .;j .i ii

.. -i fl - I I flU It 1U fl

I

. - 11 .U '12 A U I I lxi I .11 1.1I lt Ii 1 r r IL.

'I i1 ILl i lu, i iii q ' j

,, f. i! p J, , I, .

ii.;: 1111 L.I 1'ii r xl: l xi :1:; c'i

- I I LU 1 1 I1 4&I tiI .U i.1 T1T1_ -

___ r1 ___ ITTI_: _ I'!l'.I_( 1'] •i: n]_ri 1I_L _1 _ 1

TT Il ,I IT' V.L JYZ'.L II 1l II .T.Ip 1 r: JL. ElI iL"I •L2 IT.

11111 .- -. ill. :1 lJi di 1 ,'i i "II P MU Ml Hi :

2-, ..::lJ I.Iil ,'T.: J'4 1i! a IlU IU Iai IilI 1ii N Il' !l ':'ij LiiIfl'

li :• - l.• l7 x Ii 11 .i i .i' • IJI ; 1

Exhibit J2. 21 V-Axis Standard Case Cash Flows, Two-Tier Standard Level (no consolidation, medium-ps

scenario)

P-32

EE-RM-PET-100 COMMENT 88
- -

- - .. - . -

--

-. - . -.

-

.

F.1 !TIt: . ...

-

H .6 JY 3

- .-

- - . . .-

- . . .J . - - . . rc 54

.5- -.1 . - . . ... .• . . . -

H ;- !. r t cr c..! .s

H. :: -- - . .•• H J cc .

- 44.

r i'c .1 c: . .r i.:. - ,. . .iuc .

c-c ;- c-- - .-c ;.H •.cr

- .1 -r• :. -

.

..

-.-

cc

-

,.. •,.

:-

--

. H . .. . .. -. . H:.

-, -. . .

. .., .:.c. •c.c L. c. •H: •c• ..!-

.1, H.! F t c cc. .-. -. .1' . c! is. c*4 1...

.

4!

..:.:.

.L . ç fl

-

-. -5 ,.-

• FIN! .. - I . . - : - . - .. .5-

•it-a •

..-i5r

5H.-..-c H rs 55r_

. - I ..• - - . .S -

51

cc 4.

44.5: 444444 .sc L4M4

- .L 4

Exhibit J2. 22 H-Axis Standard Case Cash Flows, Two-Tier Standard Level (no consolidation, medium-price elasticity

scenario)

P-33

EE-RM-PET-100 COMMENT 88
tra can in - lam - 71*

___ - ___ . .U u

..........

L&. 71 ; I'c 1 1c I*i rI .

IF' L' ..1 ji; JI ulc'T I.J i1r tj IF F•.••

I-;- :. Iti

- - -

l.F CI ii jtA -'-: _ .. . -

" . ' -

FYC .-- ^' _.-. __ . .L -C.. _•.

k.1 uaiJ1*icj

! j:1 cjic U tc cc --C 1Ji cJ r_ _: ;-.i; i iFI.! cc. .& i

41. 4.1 :- Cc C. .J .1 1 .1:1 ._4 .4F flP . -

-' Ui 3p *j3 ffl

:F Ci F4, ZI F 4 -i•• 1. 1 .1C 1! 1. . 1: c

I4C 41 iF F. ..C. cc .c.. I .,

1 ,,-. Cc FIC! -h C ti FJ ci.. i Lc iL c i 1cP

1-ic- . :: . - ;.,.. c cc

I

c H '.92 i.- ii .F 1)919 :i: .1 - I_cl C. 1.1: IJI c .. i1 c

.- .i .. •• C' .r _c _i c .c,c ..!c A) .-c .•i_ _-Fc .1. L)i.i

4..-, ..*4.-., -cJ9 ;..4 J . IC :1Cc F:.-.,J.a,,,.L . F, I 1 1 .1 F. . . F - - . 91.

I _• F 1. r Iii c In r:'n' : iy. F r- T'I '21 a. . - . I -

,?. •- c'l -:I. 2- :ITI iIiiC Ei. ..F, FSFU :1:. (9I. .21 .1 cC.'

14 .L.) 9t9 IJ., c). .J..c_. .41. %r ',. i : .1 'I 91 'i.

.9_F: '.1 CI'Lc JItJt 034 cclii -.• 1.- 4l- ci... ..i_. i., a_c. ,acL ,.. .. cc. _.i ...

9393 i3cq l4c (a'i c k4J 3.i li 3iC3 fl4 Ri3 LU3 m

1 331 C'.9L lc 3 (. 131 13 13.43 c. .j 131341 1331

U 1)9 .J) .2'. ccl CC .34 i& i3 F.9. .923 -ci C.. CP 13ti9

-.-.----.- -__-.- -rn-rn- -rn-... -rn- _______ ":.-'-- -

Exhibit J2. 23 Standard Case Cash Flows, Two-Tier Standard Level (no consolidation, medium-price elasticity scenario) -V

and H-axis market segment combined

P-34

EE-RM-PET-100 COMMENT 88
tS!n _______________

j(UOC'JJOD) 7.74 $ 7.89 7.39

Price per unit $ 292.8 $ 338.0 450.3

TotaiRevenues ($UOD,000) $ 2,311.9 $ 2,666.0 3,552.1

Profit After Tax ________ -($JOI:',COCI) $ 87.9 $ 179.5 108.9

Net CashFlow (IJ11JCF(Jr)) $ 63.5 $ 23.1 27.7

btdus1ry Value (tPsuitVo1u2) (]DO.UUO) $ 1,439.1 $ 1,027.3 NA

__________ ________ ______ ________

çJLa.1Igei]1l4V __ _________ _________

28.6 ___

Conversion Cost

________

Caita1Ependitures ($OOUDDQ

Design &Marlcetin Expenses ft$000.000)

$

$

268.6

83.4

633.4

181.8

Exhibit J2. 24 Results for the Two-Tier Standard Level (no consolidation,

medium-price elasticity)

P-35

EE-RM-PET-100 COMMENT 88
1k.. F..

_______________ II T 1f• .. 1.111 (1 l1 5it 'I Th

__

i -r- __________!._ 1_•i_ -p.

_______________ --I--

-- JJ_ Fr

-

$'4iIr]L!jJlj L.:. I.:;r 1.1II lj.11J LI( .' .:..ti JI. LcFi Irl I;.. .j ;.. I4 i.s: I!Ql

IS: ! r :i O 1l II) H; u. U H. 4 i; i k;i I4 k iJl

. I S .:Hk .............•.H O :4:.. L . T442 IF! Fl!

..,.l..i .-.p.J 1.4 U I •1!.r II

II 1414 r. lt 4U : çF 414SF JLi Ill .! II. Ii.- 7 Il III

li. 4.2 43 4J 2 Ii: IF 1:1 4 I' I.F • II.

'2J• 7. TJ:I... I .j:•.. . :.'L ;Hr .InI M4$ i .: :.I 2514 254' .nI Iii.

:lD I . r.s 1 251 ..r 4t .. 1 L 25 .i.41 I

1ft1L&jiT.. - . T4 I'.-' Fl 4 141 Hr H Fr ' 91 sJ r 5 F 914 91 t!4

I2 S4 Fl : i i' ti 41 :J: .' ;• s

FFFF[.FI: Fl.I. 41 414 '1€ Ll IL 444

p: 4L. F. 1. •F '445

. .11 •.

I 411 F I . F 414

IjI!. "F -H 4r .:

49114

F '4 4; 45 254 447 144 444 3*4 474 444

9n,sj

49 255 .

Exhibit P2. 25 Standard Case Dryer Cash Flows, Two-Tier Stand:

1r ':J 441 . IF lid F5 PU

4 44 4 HI iL !:. a l- •. 4.1 rj :19 i

F .1 Fr;'J- 'I..

rH Jr 255 r r V •r Ir-n r.' lrr nj

"i' 45 IjII L S.. ,; .. n.. .,.U 44' 59.

iIF4 ' Fl 4* .•. ...• p41.

494 444 34. 34 445 444 4 I MT 449 MI I

FIai:- is, 4 9541 nj 4_- 4."- •r

445 p :n. 4111 ii 4 I Il-I 14 I.; : F ilk.:-.

ird Level (medium-price elasticity)

P-36

EE-RM-PET-100 COMMENT 88
price elasticity)

P-37

Exhibit P2. 26 Results: Dryer Cash Flows, Two-Tier Standard Level (mediumEE-RM-PET-100 COMMENT 88
-_2% Ve

Stndd

Uer

l39 103 101 2932 2933 2934 29 2ff0 2927 20)3 109 2010 2011 112 113 2014 2015 2016 2011 2019 2019 2020

rs ___

123220 123232fl24775 01 1Th1 i3 13 1510

Revenues 210 2121 214,5 217,4: 220. 231 231.6. 232.6 24&024 25326L423.5 20 267269.57 2741216210.3 i

tlncaieBereFascing 10.6 16.6 10.7 10.9 11.0 11.3 11.6 11.6 12.2' 12.4 12.7 12.9 13.0 13.2 13.3 13.4 13.6 13.6 13.7 13.8 14.6 14.2

Oet Cash Flow 10.6 10.6 10.7 10.9 11.0 11.3 11.6 11.0 12.2 12.4 12.7 12.9 13.0 13.2 13.3 13.4 13.6 13.6 13.7 iao 14.0 14.2

leveival Velu _________ ________ -__________________________________-rn -______________ ______________ 213.6•

Prese ValueFaor 1. 09376 02792 _ 0.8244 0.77 _ 0.7249 _ 0.67% _

___

0.6372 _ 0.5975 _ 0.5601

_-____________

0.52.53 0.4925 0.4910 0.4334 _

-

0. 0.3017 0.3570 0.3347

-- -

02130 0.43 02759 0.2507

scounled Cash Flow 10.5 10.0 _ 9.4 7.5 727.0 _ 6.6 _ 6.3 6 51 6.4 _ SlOtS t3 4i 3.9

Exhibit P2. 27 Standard Case Repair Cash Flows, Two-Tier Standard Level (medium-price elasticity)

P-3 8

EE-RM-PET-100 COMMENT 88
# of Repairs ____________

(UDi)1JQU) 9.75 $ 10.50 11.29

Total Revenues ($Oi]U,C100) $ 210.5 $ 226.7 244.0

Profit After Tax $UD[i,UUO) $ 10.5 $ 11.3 12.2

litciustry Value ( tPisit Vithi) ($UDUUUO) $ 200.2 $ 201.0 ________

Clianga ii hulustry Value C(JOOOCI) $ 0.9

%ChaiigeinlitdustryValue _____ _____ _____

0.4%

Exhibit P2. 28 Results: Repair Cash Flow, Two-Tier Standard Level (medium-price

elasticity)

P-39

EE-RM-PET-100 COMMENT 88