Valuation Assignment

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Valuation Assignment

Valuation Assignment AC414

You are required to value the equity of AptarGroup as of December 31, 2012.  Aptar’s 2012 financial statements are posted on smgtools. I have edited out sections of the annual report that are not relevant for this assignment, so you will see some pages and missing sections of pages.  Your analysis should be based only on the information given in the financial statements (+ notes) provided and in this assignment sheet.  You should not use news reports, analysts’ reports on the company or the industry, or any other external source.  However, I have also posted Aptar’s primary financial statements in spreadsheet form.

 Content of assignment.  Your assignment should include the following spreadsheets (with values, not formulae):

(a) the projected (partial) income statement,

(b) the projected (partial) balance sheet,

(c) the projected (partial) cash flow statement,

(d) the value of financial assets and financial liabilities,

(e) the valuation of equity using the free cash flow method and

(f) the valuation of equity using the residual NOPAT method

Your spreadsheets should clearly show how you arrive at the final value of equity for the shareholders of Aptar under each method.

  1. Your income statement and balance sheet assumptions. These may be on the spreadsheets or provided separately.

 Grading.  I will grade the assignment out of 20 points, along three dimensions:

(1) Projections. 16 points.

Correctly executed statements

Correct computation of NOPAT

Correct classification and valuation of financial and operating assets/liabilities

Correct treatment of accounting issues:

nonrecurring items






income taxes

equity method investments

noncontrolling interests

Internal consistency of three statements.


(2) Valuation.  4 points.


Two methods (Free Cash Flow, Residual NOPAT) correctly done.



This is an individual assignment.  Please be sure to do it on your own.  This means you should not discuss the assignment at all with anyone else or share spreadsheets or other materials with any other student.




I expect to receive a hard copy.  However, if you will be out of town on 12/16/2014, please get my permission to email the assignment (to @bu.edu). If you are emailing, please send the file as a Word or PDF attachment, ensuring that I will be able to print your paper out formatted in the way you intend.  Please do not send me an Excel spreadsheet with several worksheets that are not formatted to print out neatly.  Please include your name on the assignment.  Also, if you email the assignment, please do not assume I have received it unless you get an acknowledgement from me.





Please make the following assumptions.


  1. Your task is to value Aptar’s stockholders’ equity, and not the equity of the consolidated firm.


  1. The weighted average cost of capital is 9%.


  1. Assume Aptar’s sales will grow at the following rate:




  1. Assume the following item is nonrecurring: Restructuring cost.  Assume the restructuring amount is $4,678 thousand, of which $3,102 thousand is reported on the income statement as “Restructuring Initiatives” and the remainder is included in depreciation expense.


  1. Depreciation should be projected as a fixed percentage of net property plant and equipment (excluding land). Do not include the depreciation that was a part of the 2012 restructuring in estimating the projected depreciation.


  1. Days AR will increase by 2 days from the 2012 level, and then stay constant from 2013-2017.


  1. Days Inventory and Days AP will be at 2012 levels in 2013-2017.


  1. Net PP&E will stay a fixed percentage of sales.


  1. Investments in affiliates are equity method investments. Equity method investments should be valued at 1.3 times their 2012 book value.


  1. Assume that $111,031 thousand of Goodwill is impaired in 2015. Assume also that the impairment is NOT tax-deductible.


  1. Assume intangible assets will not grow. They will be amortized as per Note 3.


  1. “Miscellaneous assets” should be classified as operating assets.


  1. The fair value of the firm’s debt is reported in Note 18.


  1. The operating leases should be capitalized using the implicit rate for capital leases.


  1. Any operating assets or liabilities not specifically mentioned here should vary with sales.


  1. Noncontrolling Interests should be valued at 1.4 times their 2012 book value.


  1. For the Free Cash Flow method, assume that sales are flat beyond 2017.


  1. For the residual NOPAT method assume that there are no residual NOPATs beyond 2017.


  1. Where you need to make additional assumptions, please briefly document your assumption.

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