APPENDIX J. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE AND 

GOVERNMENT REGULATORY IMPACT MODEL 

TABLE OF CONTENTS 

J.1 MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE............................... J-1 

J.2 BOTTLER IMPACT ANALYSIS INTERVIEW GUIDE ............................................ J-10 

J.3 MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE FOR SMALL 

BUSINESSES................................................................................................................ J-13 

J.4 GOVERNMENT REGULATORY IMPACT MODEL ................................................ J-14 

LIST OF TABLES 

Table J.1.1 Beverage Vending Machines Efficiency Levels .................................................. J-1 

Table J.1.2 Financial Parameters for CRE Manufacturers ..................................................... J-3 

Table J.1.3 Breakdown by Percentage of Full Production Costs for Baseline Beverage 

 Vending Machine ................................................................................................. J-3 

Table J.1.4 2012 Industry-Wide Shipment Projections for Beverage Vending Machines 

 (number of units).................................................................................................. J-4 

Table J.1.5 Percentage of Total Shipments by Efficiency Level for Small-Size Class A 

Beverage Vending Machines in 2012 .................................................................. J-5 

Table J.1.6 Percentage of Total Shipments by Efficiency Level for Medium-Size Class A 

Beverage Vending Machines in 2012 .................................................................. J-5 

Table J.1.7 Percentage of Total Shipments by Efficiency Level for Large-Size Class A 

Beverage Vending Machines in 2012 .................................................................. J-5 

Table J.1.8 Percentage of Total Shipments by Efficiency Level for Small-Size Class B 

Beverage Vending Machines in 2012 .................................................................. J-6 

Table J.1.9 Percentage of Total Shipments by Efficiency Level for Medium-Size Class B 

Beverage Vending Machines in 2012 .................................................................. J-6 

Table J.1.10 Percentage of Total Shipments by Efficiency Level for Large-Size Class B 

Beverage Vending Machines in 2012 .................................................................. J-6 

Table J.1.11 Class A Beverage Vending Machine Conversion Costs ...................................... J-7 

Table J.1.12 Class B Beverage Vending Machine Conversion Costs ...................................... J-8
 

Table J.2.1 Purchase Projections for Beverage Vending Machines in 2012 .........................J-11 

Table J.4.1 Detailed Cash Flow Example..............................................................................J-17 

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APPENDIX J. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE AND 

GOVERNMENT REGULATORY IMPACT MODEL 

J.1 MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE 

Key Issues 

The U.S. Department of Energy (DOE) is currently reviewing eight efficiency levels for 

its refrigerated beverage vending machines rulemaking analyses. In responding to this 

questionnaire, please refer to the values for each equipment class described in Table J.1.1. 

Table J.1.1 Beverage Vending Machines Efficiency Levels 

Equipment Efficiency Baseline Efficiency Level 

Class Metric 1 2 3 4 5 6 7 8 

Small-Size DEC 7.66 5.80 5.21 4.76 4.34 4.16 4.12 3.88 3.71 

Class A kWh/day

Medium-Size DEC 8.23 6.36 5.76 5.30 4.86 4.63 4.59 4.32 4.14 

Class A kWh/day

Large-Size DEC 8.69 6.72 6.11 5.60 5.16 4.91 4.86 4.53 4.34 

Class A kWh/day

Small-Size DEC 10.36 5.49 4.55 4.18 3.93 3.48 3.28 3.26 3.21 

Class B kWh/day 

Medium-Size DEC 10.93 6.02 5.07 4.65 4.26 4.18 3.58 3.55 3.49 

Class B kWh/day 

Large-Size DEC 11.35 6.43 5.49 5.01 4.60 4.51 3.88 3.84 3.78 

Class B kWh/day 

1.1	 What are the key issues for your company regarding energy conservation standards for 

beverage vending machines and this rulemaking? 

1.2	 For the issues identified, how significant are they for each efficiency level? 

1.3	 How can we most effectively incorporate these issues in the manufacturer impact analysis 

(MIA)? 

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS 

DOE is interested in understanding manufacturer impact at the plant or profit center level 

directly pertinent to beverage vending machine production. However, the context within which 

the plant operates and the details of plant production and costs are not readily available from the 

published literature. Therefore, DOE invites you to provide these details confidentially in your 

own words to the extent possible and practical. Understanding the organizational setting around 

the beverage vending machine industry profit center will help DOE understand the probable 

future of the beverage vending machine manufacturing activity with and without energy 

conservation standards. 

2.1	 Do you have a parent company, and/or any subsidiaries relevant to the beverage vending 

machine industry? 

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2.2	 Do you manufacture any equipment other than beverage vending machines? If so, what 

other equipment do you manufacture? 

2.3	 What percentage of your total manufacturing corresponds to beverage vending machines? 

2.4	 Where are your production facilities located, and what type of equipment is manufactured 

at each location? Could you provide figures for your company’s manufacturing at each 

location by equipment type (beverage vending machines or other), size, and efficiency 

(i.e., provide the equipment mix for each location). 

2.5	 At a particular facility, would potential beverage vending machine redesigns be difficult to 

implement? If so, would your company modify the existing facility or develop a new 

facility? 

2.6	 What are your employment levels at each of these facilities? 

2.7	 What are your company’s total beverage vending machine production volumes (i.e., units 

per year) for the past 5 years? 

2.8	 What are your equipment lines, niches, and relative strengths in the beverage vending 

machine market? 

2.9	 The Small Business Association (SBA) denotes a small business in the beverage vending 

machine industry as having less than 500 employees. By this definition, is your company 

considered a small business? 

2.10	 Are there any niche manufacturers, small businesses, and/or component manufacturers 

(i.e., compressors) for which the adoption of new standards would have an impact? If so, 

would manufacturers of this equipment have different incremental impacts from 

implemented energy conservation standards than from the rest of the industry? 

3 FINANCIAL PARAMETERS 

Navigant Consulting, Inc. has developed a “strawman” model of the beverage vending 

machine industry financial performance called the Government Regulatory Impact Model 

(GRIM), using publicly available data on beverage vending machine manufacturers. This section 

attempts to understand how your company’s financial situation differs from our industry 

aggregate picture. 

3.1	 Please compare your financial parameters to the GRIM parameters tabulated below. 

3.2	 How would you expect new energy conservation standards to impact your company’s 

financial parameters (Table J.1.2)? 

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Table J.1.2 Financial Parameters for CRE Manufacturers 

GRIM Input Definition Beverage Vending 

Machine GRIM 

Estimated Value 

% 

Your Actual (if 

significantly 

different from 

our estimate) 

Income Tax Rate 

Discount Rate 

Working Capital 

SG&A 

R&D 

Depreciation 

Capital 

Expenditures 

Corporate (average) effective income tax paid 

(percentage of earnings before taxes, EBT)

Weighted average cost of capital (inflation-adjusted 

weighted average of corporate cost of debt and 

return on equity) 

Current assets less current liabilities (percentage of 

revenues)

Selling, general, and administrative expenses 

(percentage of revenues)

Research and development expenses (percentage of 

revenues)

Amortization of fixed assets (percentage of 

revenues)

Outlay of cash to acquire or improve capital assets 

(percentage of revenues, not including acquisition 

or sale of business units) 

 31.3 

 9.6 

 14.0 

 19.3 

 2.7 

 3.8 

 3.7 

4 PRODUCTION COST BREAKDOWN 

DOE estimated the full production costs of various beverage vending machine units of 

different efficiencies for all equipment classes. With the combined data, DOE calculated the 

industry average percentage of each cost in the full production cost. 

4.1	 Please compare your full production cost percentages to the estimated GRIM full 

production cost percentages tabulated in Table J.1.3. Are the different percentages of each 

cost representative of your company or the beverage vending machine industry? Please 

explain any differences. 

Table J.1.3 Breakdown by Percentage of Full Production Costs for Baseline Beverage 

Vending Machine 

Components of Full 

Production Costs 

Estimated Full Production Cost 

% 

Your Actual 

(if different from our estimate) 

Materials 86.16 

Labor 9.61 

Overhead 2.83 

Depreciation 1.39 

5 SHIPMENT PROJECTIONS AND MARKET SHARES 

A new energy conservation standard can change overall shipments by changing 

equipment attributes, marketing approaches, equipment availability, and price. The GRIM bases 

revenue projections on shipment projections obtained from the National Energy Savings 

Spreadsheet (NES) prepared by the Pacific Northwest National Laboratory. The NES includes 

shipment forecasts for the baseline (absent new standards) and new standards at each efficiency 

level being analyzed. 

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5.1	 Please compare DOE’s projections of industry-wide shipments for beverage vending 

machines with your company’s projections of industry-wide shipments (Table J.1.4). 

Table J.1.4 2012 Industry-Wide Shipment Projections for Beverage Vending Machines 

(number of units) 

Equipment Class Baseline 

Shipments 

Comments or Your Company’s 

Projection 

Small-Size Class A 

Medium-Size Class A 

Large-Size Class A 

Small-Size Class B 

Medium-Size Class B 

Large-Size Class B 

7,700 

7,700 

7,700 

77,600 

77,600 

77,600 

5.2	 DOE assumed that total industry shipments for 2012 would not be affected by increasing 

standard levels (i.e., total industry shipments remain constant at the various analyzed 

standard levels in comparison to the base case). Is this consistent with your expectations 

for the industry? If possible, please provide explanation if your expectations are different. 

5.3	 What is your company’s approximate market share of the beverage vending machine 

industry? 

5.4	 Would you expect your market share to change once higher energy conservation standards 

become effective? 

6 EQUIPMENT MIX 

Current differences in equipment mix (distribution of equipment sales by efficiency 

level) among manufacturers can lead to different reactions to and impacts from new energy 

conservation standards. 

6.1	 If your company offers multiple equipment lines with different efficiency levels, how does 

your mix of beverage vending machine sales by equipment efficiency compare to our 

projected 2012 Industry Average distribution for the baseline case as shown in Table J.1.5 

through Table J.1.10? If your company does not offer multiple equipment lines with 

different efficiency levels, are the projected distributions representative of the beverage 

vending machine industry? A new energy conservation standard affects the equipment mix 

by eliminating the sale of equipment below the minimum efficiency level. The NES 

forecasts the distribution of beverage vending machine sales by efficiency level after 

standards. Are the NES forecasts described in the tables below for 2012 consistent with 

your own expectations for the industry? Do you expect any changes in your estimated 

profitability following the new energy conservation standard? If so, please explain why. 

6.2	 Do you expect the equipment mix to change over time absent any new energy conservation 

standards? If so, please explain how it will change. 

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Table J.1.5 Percentage of Total Shipments by Efficiency Level for Small-Size Class A 

Beverage Vending Machines in 2012 

Analysis 

Efficiency 

Level 

DEC -

kWh/day 

Efficiency Level 

% 

Baseline 

(7.66) 

1 (5.80) 2 (5.21) 3 (4.76) 4 (4.34) 5 (4.16) 6 (4.12) 7 (3.88) 8 (3.71) 

Baseline 

(7.66) 

0.0 26.6 14.1 13.9 13.2 12.1 11.6 7.1 1.3 

1 (5.80) -- 26.6 14.1 13.9 13.2 12.1 11.6 7.1 1.3 

2 (5.21) -- -- 40.8 13.9 13.2 12.1 11.6 7.1 1.3 

3 (4.76) -- -- -- 54.6 13.2 12.1 11.6 7.1 1.3 

4 (4.34) -- -- -- -- 67.8 12.1 11.6 7.1 1.3 

5 (4.16) -- -- -- -- -- 79.9 11.6 7.1 1.3 

6 (4.12) -- -- -- -- -- -- 91.6 7.1 1.3 

7 (3.88) -- -- -- -- -- -- -- 98.7 1.3 

8 (3.71) -- -- -- -- -- -- -- -- 100 

Table J.1.6 Percentage of Total Shipments by Efficiency Level for Medium-Size Class A 

Beverage Vending Machines in 2012 

Analysis 

Efficiency 

Level 

DEC -

kWh/day 

Efficiency Level 

% 

Baseline 

(8.23) 

1 (6.36) 2 (5.76) 3 (5.30) 4 (4.86) 5 (4.63) 6 (4.59) 7 (4.32) 8 (4.14) 

Baseline 

(8.23) 

0.0 26.7 14.2 13.8 13.2 12.1 11.7 7.3 1.1 

1 (6.36) -- 26.7 14.2 13.8 13.2 12.1 11.7 7.3 1.1 

2 (5.76) -- -- 40.8 13.8 13.2 12.1 11.7 7.3 1.1 

3 (5.30) -- -- -- 54.6 13.2 12.1 11.7 7.3 1.1 

4 (4.86) -- -- -- -- 67.8 12.1 11.7 7.3 1.1 

5 (4.63) -- -- -- -- -- 79.9 11.7 7.3 1.1 

6 (4.59) -- -- -- -- -- -- 91.6 7.3 1.1 

7 (4.32) -- -- -- -- -- -- -- 98.9 1.1 

8 (4.14) -- -- -- -- -- -- -- -- 100 

Table J.1.7 Percentage of Total Shipments by Efficiency Level for Large-Size Class A 

Beverage Vending Machines in 2012 

Analysis 

Efficiency 

Level 

DEC -

kWh/day 

Efficiency Level 

% 

Baseline 

(8.69) 

1 (6.72) 2 (6.11) 3 (5.60) 4 (5.16) 5 (4.91) 6 (4.86) 7 (4.53) 8 (4.34) 

Baseline 

(8.69) 

0.0 26.6 14.1 13.8 13.3 12.3 11.9 7.0 1.1 

1 (8.72) -- 26.6 14.1 13.8 13.3 12.3 11.9 7.0 1.1 

2 (6.11) -- -- 40.6 13.8 13.3 12.3 11.9 7.0 1.1 

3 (5.60) -- -- -- 54.4 13.3 12.3 11.9 7.0 1.1 

4 (5.16) -- -- -- -- 67.7 12.3 11.9 7.0 1.1 

5 (4.91) -- -- -- -- -- 80.0 11.9 7.0 1.1 

6 (4.86) -- -- -- -- -- -- 91.9 7.0 1.1 

7 (4.53) -- -- -- -- -- -- -- 98.9 1.1 

8 (4.34) -- -- -- -- -- -- -- -- 100 

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Table J.1.8 Percentage of Total Shipments by Efficiency Level for Small-Size Class B 

Beverage Vending Machines in 2012 

Analysis 

Efficiency 

Level 

DEC -

kWh/day 

Efficiency Level 

% 

Baseline 

(10.36) 

1 (5.49) 2 (4.55) 3 (4.18) 4 (3.93) 5 (3.48) 6 (3.28) 7 (3.26) 8 (3.21) 

Baseline 

(10.36) 

0.0 26.4 16.7 15.6 14.3 10.0 8.2 7.8 0.9 

1 (5.49) -- 26.4 16.7 15.6 14.3 10.0 8.2 7.8 0.9 

2 (4.55) -- -- 43.1 15.6 14.3 10.0 8.2 7.8 0.9 

3 (4.18) -- -- -- 58.8 14.3 10.0 8.2 7.8 0.9 

4 (3.93) -- -- -- -- 73.0 10.0 8.2 7.8 0.9 

5 (3.48) -- -- -- -- -- 83.1 8.2 7.8 0.9 

6 (3.28) -- -- -- -- -- -- 91.3 7.8 0.9 

7 (3.26) -- -- -- -- -- -- -- 99.1 0.9 

8 (3.21) -- -- -- -- -- -- -- -- 100 

Table J.1.9 Percentage of Total Shipments by Efficiency Level for Medium-Size Class B 

Beverage Vending Machines in 2012 

Analysis 

Efficiency 

Level 

DEC -

kWh/day 

Efficiency Level 

% 

Baseline 

(10.93) 

1 (6.02) 2 (5.07) 3 (4.65) 4 (4.26) 5 (4.18) 6 (3.58) 7 (3.55) 8 (3.49) 

Baseline 

(10.93) 

0.0 25.8 16.2 15.5 14.4 10.5 8.6 8.2 0.8 

1 (6.02) -- 25.8 16.2 15.5 14.4 10.5 8.6 8.2 0.8 

2 (5.07) -- -- 42.1 15.5 14.4 10.5 8.6 8.2 0.8 

3 (4.65) -- -- -- 57.6 14.4 10.5 8.6 8.2 0.8 

4 (4.26) -- -- -- -- 71.9 10.5 8.6 8.2 0.8 

5 (4.18) -- -- -- -- -- 82.4 8.6 8.2 0.8 

6 (3.58) -- -- -- -- -- -- 91.0 8.2 0.8 

7 (3.55) -- -- -- -- -- -- -- 99.2 0.8 

8 (3.49) -- -- -- -- -- -- -- -- 100 

Table J.1.10 Percentage of Total Shipments by Efficiency Level for Large-Size Class B 

Beverage Vending Machines in 2012 

Analysis 

Efficiency 

Level 

DEC -

kWh/day 

Baseline 

(11.35) 

1 (6.43) 2 (5.49) 3 (5.01) 4 (4.60) 5 (4.51) 6 (3.88) 7 (3.84) 8 (3.78) 

Baseline 

(11.35) 

0.0 25.7 16.0 15.5 14.4 10.6 8.8 8.4 0.7 

1 (6.43) -- 25.7 16.0 15.5 14.4 10.6 8.8 8.4 0.7 

2 (5.49) -- -- 41.7 15.5 14.4 10.6 8.8 8.4 0.7 

3 (5.01) -- -- -- 57.2 14.4 10.6 8.8 8.4 0.7 

4 (4.60) -- -- -- -- 71.6 10.6 8.8 8.4 0.7 

5 (4.51) -- -- -- -- -- 82.2 8.8 8.4 0.7 

6 (3.88) -- -- -- -- -- -- 90.9 8.4 0.7 

7 (3.84) -- -- -- -- -- -- -- 99.3 0.7 

8 (3.78) -- -- -- -- -- -- -- -- 100 

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7 CONVERSION COSTS 

An increase in energy conservation standards may cause your company to incur one-time 

capital and equipment conversion costs. DOE calls these conversion costs because they are the 

costs of changing your business to comply with new energy conservation standards. 

7.1	 What level of conversion costs do you anticipate incurring under the different efficiency 

levels? What portion of your capital conversion expenditures do you expect to go towards 

replacing existing assets, which would become obsolete under a new energy conservation 

standard? Refer to Table J.1.11 and Table J.1.12 below to provide your company’s 

estimates. Please provide additional qualitative information to help DOE understand the 

nature of your investments. 

Table J.1.11 Class A Beverage Vending Machine Conversion Costs 

Efficiency Level Small-Size Class A 

Capital 

Conversion 

Expenses* 

Product 

Conversion 

Expenses** 

Stranded 

Assets 

Baseline 

1 

2 

3 

4 

5 

6 

7 

8 

Medium-Size Class A 

Baseline 

1 

2 

3 

4 

5 

6 

7 

8 

Large-Size Class A 

Baseline 

1 

2 

3 

4 

5 

6 

7 

8 *

 Capital Conversion Expenditures: one-time investments in plant, property, and 

equipment (PPE) necessitated by an energy conservation standard. These may be 

completely incremental to existing PPE, or they could be replacement of existing PPE. ** Product Conversion Expenditures: one-time expenses in research, product development, 

testing, and marketing necessitated by an appliance energy conservation standard. 

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Table J.1.12 Class B Beverage Vending Machine Conversion Costs 

Efficiency Level Small-Size Class B 

Capital 

Conversion 

Expenses* 

Product 

Conversion 

Expenses** 

Stranded 

Assets 

Baseline 

1 

2 

3 

4 

5 

6 

7 

8 

Medium-Size Class B 

Baseline 

1 

2 

3 

4 

5 

6 

7 

8 

Large-Size Class B 

Baseline 

1 

2 

3 

4 

5 

6 

7 

8 

7.2	 What is your depreciation period for the capital expenditures (building, equipment, and 

tooling)? 

8 MARKUPS AND PROFITABILITY 

One of the primary objectives of the MIA is to assess the impact of efficiency levels on 

industry profitability. In this section, DOE would like your assistance in understanding how the 

efficiency levels would impact your company’s markups and profitability. 

8.1	 Do profit levels vary by equipment class? Do profit levels vary by efficiency level? Please 

explain. 

8.2	 Based on publicly available information, DOE calculated a 1.36 manufacturer markup for 

beverage vending machine manufacturing. The manufacturer markup is a multiplier that 

converts manufacturer production cost (MPC) to manufacture selling price. The 

manufacture markup is a fixed percentage applied to MPCs to cover standard SG&A 

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expenses; standard research and development expenses; interest; and profit. It is calculated 

using the following formula: Manufacturer Markup = 1/(1-Gross Margin). DOE is aware 

that the manufacturer markup calculated using public information is based on companies 

that may manufacture other equipment in addition to beverage vending machines. Does 

this figure seem accurate, or is it too high or low? 

8.3	 Do you expect changes in your estimated profitability following the new energy 

conservation standard? If so, please explain. 

9 CUMULATIVE REGULATORY BURDEN 

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects of 

new or revised DOE standards, voluntary standards, and/or other regulatory actions affecting the 

same equipment or industry. 

9.1	 Are there other recent or impending regulations, excluding refrigerant phase-out, that 

beverage vending machine manufacturers face (from DOE or otherwise)? What level of 

expense are you expecting to incur as a result of these regulations? How would new 

standards affect your ability to compete? 

9.2	 Under what circumstances would you be able to coordinate any expenditures related to 

these other regulations thereby lessening the cumulative burden? 

10 EXPORTS/FOREIGN COMPETITION/ OUTSOURCING 

Disparity between domestic and foreign energy conservation standards could impact 

exports or imports. Labor content and material changes, resulting from energy conservation 

standards, may impact sourcing decisions. 

10.1	 What percentage of your company’s beverage vending machine sales is domestic? Absent 

standards, are production facilities being relocated to foreign countries? Would new energy 

conservation standards impact your domestic vs. foreign manufacturing decision? 

10.2	 If applicable, to what foreign countries or regions do you export your equipment? What 

percentage of sales can be attributed to each? 

10.3	 Would a new standard be expected to affect your export sales? What would the resulting 

impact be, if any, on your manufacturing operations and profitability? 

10.4	 Are your foreign exports affected by energy conservation standards in other countries? 

10.5	 What percentage of the U.S. market for beverage vending machines has been captured by 

foreign competition? Would standards have an impact on foreign competition? 

10.6	 What is your outlook for the future operation of your company and the beverage vending 

machine industry with regards to exports? 

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11 DIRECT EMPLOYMENT IMPACT 

The impact of new energy conservation standards on employment is an important 

consideration in the rulemaking process. This section of the interview guide seeks to explore 

current trends in beverage vending machine production employment and solicit manufacturer 

views on how domestic employment patterns might be affected by new energy conservation 

standards. 

11.1	 Would your domestic employment levels be expected to change significantly under new 

energy conservation standards? If so, please explain how they would change. 

11.2	 Would the workforce skills necessary under new energy conservation standards require 

extensive retraining or replacement of employees? 

11.3	 Would mandating higher efficiency levels result in larger sized equipment to compensate 

for larger, more efficient components? Have you found direct labor costs to be proportional 

to material costs? 

12 CONSOLIDATION 

New energy conservation standards can alter the competitive dynamics of the market. 

This can include prompting companies to enter or exit the market, or to merge. DOE and the 

Department of Justice are both interested in any potential reduction in competition that would 

result from a new energy conservation standard. 

12.1	 Please comment on industry consolidation and related trends over the last 5 years. 

12.2	 In the absence of new standards, do you expect any further industry consolidation? Please 

describe your expectations. 

12.3	 How would new standards affect your ability to compete? 

J.2 BOTTLER IMPACT ANALYSIS INTERVIEW GUIDE 

INTRODUCTION 

DOE is currently undertaking a rulemaking for refrigerated beverage vending machines. 

As part of the rulemaking process, DOE requests information from all stakeholders regarding 

possible impacts from energy conservation standards. Although the questions are intended for 

bottlers and not manufacturers, all the information provided will be valuable to help complete the 

MIA. All of the information gathered is completely confidential and will only be reported in 

aggregate across the industry. 

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1 KEY ISSUES 

1.1	 What are the key issues for your company regarding energy conservation standards for 

beverage vending machines and this rulemaking? 

1.2	 How can we most effectively incorporate these issues in the MIA and this rulemaking in 

general? 

2 BOTTLER COMPANY CHARACTERISTICS 

2.1	 Could you briefly explain how the bottler industry is organized and operates? Are there 

several distribution chains? Who owns the machines at each stage in the distribution chain? 

2.2 Do you consider the bottling industry fragmented or concentrated? 

2.3	 How many distributors/bottlers does your company associate with? 

2.4	 Do bottlers fill and/or service their own beverage vending machines or do they rely on 

third-party vending operators to perform this service? 

2.5	 Does your company purchase or lease beverage vending machines? If owned, does your 

company lease the beverage vending machines to third parties? 

2.6	 Who are the largest vending operators you work with? 

2.7	 What are some example host sites you service? 

3 BEVERAGE VENDING MACHINE PURCHASING 

3.1	 What are the key factors influencing your beverage vending machine purchasing 

decisions? 

3.2	 Approximately how many vending machines do you own and or operate? Please provide 

figures by type of beverage vending machine. 

3.3	 How many new beverage vending machines do you purchase each year? 

3.4	 Could you provide projected purchases of beverage vending machines for 2012 for your 

company (Table J.2.1)? 

Table J.2.1 Purchase Projections for Beverage Vending Machines in 2012 

Equipment Class Purchase 

number of 

units 

Comments or Your Company’s Projection 

Small-Size Class A 

Medium-Size Class A 

Large-Size Class A 

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Small-Size Class B 

Medium-Size Class B 

Large-Size Class B 

3.5	 Over the past 5 years has the number of new beverage vending machine purchases per year 

changed? If so, how and why has it changed? 

3.6	 Over the past 5 years has the equipment mix of new beverage vending machine purchases 

per year changed? If so, how and why has it changed? 

3.7	 How many new beverage vending machines do you place in new locations each year? How 

many beverage vending machines do you remove from existing locations each year? Have 

you noticed any trends related to the placement of beverage vending machines in new 

locations versus the removal of beverage vending machines from existing locations? 

3.8	 From which manufacturers do you purchase beverage vending machines? What percentage 

of your total purchases does each manufacturer represent? 

3.9	 Are there significant switching costs associated with moving from one manufacturer to 

another? Are there manufacturer-specific investments you must make? 

3.10	 Does purchasing quantities of beverage vending machines affect the price per unit? 

3.11	 Does your company have any purchasing preference for ENERGY STAR or other energy 

efficient beverage vending machines? If so, why? 

3.12	 What is the price premium for ENERGY STAR Tier II compared to ENERGY STAR Tier 

I? Compared to other non-ENERGY STAR models? 

3.13	 Does the energy efficiency of beverage vending machines significantly affect the price of 

the equipment from a purchaser point of view? 

3.14	 Do you require servicing/parts/warranties from manufacturers? 

3.15	 What are the types of refrigerants that are used in the beverage vending machines you 

purchase (e.g., R-134a)? What alternate refrigerants are used (e.g., R-744, CO2 refrigerant) 

and what is the prevalence of such machines? What is your long-term plan for refrigerants 

in beverage vending machines? 

4 REFURBISHMENT AND REPLACEMENT OF BEVERAGE VENDING MACHINES 

4.1	 How often is a typical beverage vending machine refurbished (assuming no vandalism or 

other exceptionally harsh conditions) during its life? 

4.2	 Is the refurbishment cycle affected at all by the relocation of a beverage vending machine? 

4.3	 How is the decision between replacement and refurbishment made by your company? 

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4.4	 In your best estimation, what percentage of your units are refurbished each year? What 

percentage of your units are replaced each year? 

4.5	 What percentage of your beverage vending machines are: 

Less than 5 years old? 

5 to 10 years old? 

10 to 15 years old? 

More than 15 years old? 

4.6	 Upon replacement, do your machines have any salvage value? 

5 CONSOLIDATION 

New energy conservation standards can alter the competitive dynamics of the market. This can 

include prompting companies to enter or exit the market, or to merge. DOE and the Department 

of Justice are both interested in any potential reduction in competition that would result from a 

new energy conservation standard. 

5.1	 As a customer of the beverage vending machine industry, please comment on industry 

consolidation and related trends over the last 5 years. 

5.2	 In the absence of new standards, do you expect any further industry consolidation? Please 

describe your expectations. 

J.3	 MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE FOR SMALL 

BUSINESSES 

1. Are you aware of DOE’s ongoing rulemaking to establish national minimum energy 

conservation standards for refrigerated beverage vending machines? For information on 

DOE’s efficiency standards rulemaking for beverage vending machines, visit the 

following website: 

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machi 

nes.html. Would you like to be added to DOE’s email database for updates relating to this 

rulemaking? 

2. We are assessing the impacts of a potential energy conservation standard on small 

businesses. Is your company a small business (defined as less than 500 employees by the 

SBA, including all subsidiaries and parent companies, and employees in all countries 

where you operate)? 

3. What are the key issues for your company regarding energy conservation standards for 

refrigerated beverage vending machines and this rulemaking? 

4. DOE would like to understand the small-business beverage vending machine industry in 

general and your company in particular. Could you please provide information on the 

following: 

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	 Is your company a domestic or international company? 

	 What types of refrigerated beverage vending machines do you manufacture? Do you 

manufacture Class A or Class B refrigerated beverage vending machines, or both? 

Class A refers to a beverage vending machine that cools the entire internal volume. 

Class A machines are also referred to as fully-cooled machines. Class B refers to any 

beverage vending machine not considered to be Class A. Class B machines are often 

zone-cooled machines in that they typically cool only a fraction of the volume of the 

machine. What sizes of refrigerated beverage vending machines do you manufacture, 

measured in vendible capacity and/or refrigerated volume? Could you provide energy 

efficiency figures for those identified models? Does your equipment meet ENERGY 

STAR Tier I, Tier II, or any level above those energy efficiency levels? (Tier I: 

Energy Consumption ≤ 0.55 [8.66 + (0.009 x Vendible Capacity)]; Tier II: Energy 

Consumption ≤ 0.45 [8.66 + (0.009 x Vendible Capacity)]). 

	 Do you manufacture equipment other than refrigerated beverage vending machines? 

Do you manufacture any niche or specialty type refrigerated beverage vending 

machines that do not easily fall in the categories from the previous question? 

	 What are the types of customers you serve in the refrigerated beverage vending 

machine market? 

5. Would a new energy conservation standard for refrigerated beverage vending machines 

(whereby all your competitors are also required to meet the same minimum level of 

energy consumption for their machines) cause any burdens on your business? If so, 

please explain. Please consider costs such as new designs, capital investment, prototype 

testing, and marketing that might be required. 

6. DOE would like to understand your company’s employment impacts as a result of 

standards. Would your company consider relocating manufacturing to outside the United 

States as a result of new energy conservation standards? If not, would standards cause 

your domestic employment level to change (increase or decrease)? 

7. Are there any reasons that a small business such as yours might be at a disadvantage 

relative to a larger business under mandatory energy conservation standards? Please 

consider such factors as technical expertise, access to capital, bulk purchasing power for 

materials, etc. If so, would you be willing to participate in a full manufacturer interview 

where DOE will request detailed information about your business and possible impacts 

due to energy conservation standards? 

J.4	 GOVERNMENT REGULATORY IMPACT MODEL 

1 INTRODUCTION AND PURPOSE 

The purpose of the GRIM is to help quantify the impacts of energy conservation 

standards and other regulations on manufacturers. The basic mode of analysis is to estimate the 

change in value of the industry or manufacturers(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 products. 

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2 

Industry net present value is defined, for the purpose of this analysis, as the discounted 

sum of industry free cash flows plus a discounted terminal value. The model calculates the actual 

cash flows by year and then determines the present value of those cash flows both without an 

energy conservation standard (i.e., the base case) and under different trial standard levels. 

Output from the model consists of summary financial metrics, graphs of major variables, 

and, when appropriate, access to the complete cash flow calculation. 

MODEL DESCRIPTION 

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

manufacturer selling prices, manufacturing costs, a shipments forecast, and financial parameters 

as inputs 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 net operating profit after taxes. The cash flow calculation converts net operating 

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 (Table J.4.1). 

(1)	 Unit Sales: Total annual shipments for the industry were obtained from the National 

Energy Savings Spreadsheet; 

(2)	 Revenues: Annual revenues computed by multiplying unit costs at each efficiency level by 

the appropriate manufacturer markup; 

(3)	 Labor: The portion of cost of goods sold (COGS) that includes direct labor, commissions, 

dismissal pay, bonuses, vacation, sick leave, social security contributions, fringe, and 

assembly labor up-time; 

(4)	 Material: The portion of COGS that includes materials; 

(5)	 Overhead: The portion of COGS that includes indirect labor, indirect material, energy use, 

maintenance, depreciation, property taxes, and insurance related to assets. While included 

in overhead, the depreciation is shown as a separate line item; 

(6)	 Depreciation: The portion of overhead that includes an allowance for the total amount of 

fixed assets used to produce that one unit. Annual depreciation computed as a percentage of 

COGS. While included in overhead, the depreciation is shown as a separate line item; 

(7)	 Stranded Assets: In the year the standard becomes effective, a one time write-off of 

stranded assets (i.e., plant, property, and equipment rendered obsolete due to the standard) 

is accounted for; 

(8)	 Standard SG&A: Selling, general, and administrative costs are computed as a percentage of 

Revenues (2); 

(9)	 R&D: GRIM separately accounts for ordinary research and development (R&D) as a 

percentage of Revenues (2); 

(10) Equipment Conversion Costs: Equipment conversion costs are one-time investments in 

research, development, testing, and marketing focused on making products designs comply 

with the new energy conservation standard. GRIM allocates these costs over the period 

between the standard’s announcement and effective dates; 

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(11) Earnings Before Interest and Taxes (EBIT): Includes profits before deductions for interest 

paid and taxes; 

(12) EBIT as a Percentage of Sales (EBIT/Revenues): GRIM calculates EBIT as a percentage 

of sales to compare with the industry’s average reported in financial statements; 

(13) Taxes: Taxes on EBIT (11) are calculated by multiplying the tax rate contained in Major 

Assumptions by EBIT (11). 

(14) Net Operating Profits After Taxes (NOPAT): Computed by subtracting Cost of Goods 

Sold ((3) to (6)), SG&A (8), R&D (9), Equipment Conversion Costs (10), and Taxes (13) 

from Revenues (2). 

(15) NOPAT repeated: NOPAT is repeated in the Statement of Cash Flows; 

(16) Depreciation repeated: Depreciation and Stranded Assets are added back in the Statement 

of Cash Flows because they are non-cash expenses; 

(17) Change in Working Capital: Change in cash tied up in accounts receivable, inventory, and 

other cash investments necessary to support operations is calculated by multiplying 

working capital (as a percentage of revenues) by the change in annual revenues. 

(18) Cash Flow From Operations: Calculated by taking NOPAT (15), adding back non-cash 

items such as a Depreciation (16), and subtracting out Change in Working Capital (17); 

(19) Ordinary Capital Expenditures: Ordinary investments in property, plant, and equipment to 

maintain and replace existing production assets, computed as a percentage of Revenues (2); 

(20) Capital Conversion Costs: Capital conversion costs are one-time investments in property, 

plant, and equipment to adapt or change existing production facilities so that new product 

designs can be fabricated and assembled under the new regulation; 

(21) Capital Investment: Total investments in property, plant, and equipment are computed by 

adding Ordinary Capital Expenditures (19) and Conversion Capital Expenditures (20); 

(22) Free Cash Flow: Annual cash flow from operations and investments; computed by 

subtracting Capital Investment (21) from Cash Flow from Operations (18); 

(23) Terminal Value: Estimate of the continuing value of the industry after 2042. Computed by 

growing the Free Cash Flow in year 2042 at a constant rate in perpetuity; 

(24) Present Value Factor: Factor used to calculate an estimate of the present value of an 

amount to be received in the future; 

(25) Discounted Cash Flow: Free Cash Flows (22) multiplied by the Present Value Factor 

(24). For 2042 the discounted cash flow includes the discounted Terminal Value (23); and 

(26) Industry Value thru 2042: The sum of Discounted Cash Flows (25). 

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Table J.4.1 Detailed Cash Flow Example 

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