Deloitte CRG - Turnaround

Deloitte CRG Cash Flow Management:

A balancing act of technical know-how and finesse

Deloitte Transactions and Business Analytics LLP May 22, 2014

Disclaimer

This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation."

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Copyright ? 2014 Deloitte Development LLC. All rights reserved.

Overview of The 13-week Cash Flow

? What is it? A tactical tool to help companies understand and manage short-term liquidity

? When is a Company (typically) required to create one? During a liquidity crisis or at times of distress

? What purpose does it serve?

Provides greater visibility into potential upcoming points of liquidity difficulty, while allowing a better understanding around which to frame a restructuring

? What deliverables may be submitted to the stakeholders? 13-week cash flow forecast (summary level) Borrowing base (if applicable) Weekly forecast vs. actual (variance report)

? How does the 13-week cash flow compare to an integrated business plan model? Tactical vs. strategic view of the near term Indirect and/or direct in integrated model vs. direct method in 13-week cash flow

? Always perform analysis on a "book" basis, not a "bank" basis

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Copyright ? 2014 Deloitte Development LLC. All rights reserved.

13-week Cash Flow Forecast Example

Week Count

Total

Sales and Receipts Operating Disbursements Non-operating Disbursements

Revolver and Availability

3

Days Week Ending

0 18-Jan

7 25-Jan

Projection Period

14

21

28 .... 77

1-Feb

8-Feb 15-Feb ... 5-Apr

84 12-Apr

Total

Total Sales

Cash Receipt Operating Receipt Excess Inventory Receipt

2,000 3,500

6,500 5,000

-

2,950 ..............

500

5,000 ..............

..............

1,750

30,450

36,200 1,500

Total Receipt

3,500

5,000

500

5,000 ..............

1,750

37,700

Disbursement Vendor Payment Gross Payroll Rent and Utilities Equipment Leases Property Tax General Insurance Other

2,000 863 25 50

3,750 288 25 50

-

1,000 ..............

963

288 ..............

225

25 ..............

500

-

..............

-

-

..............

38

-

..............

50

50 ..............

2,950 863 25 50

22,530 8,063

925 1,500 4,000

375 650

Total Op. Disbursements

2,938

4,113

1,775

1,363 ..............

3,888

38,043

Net Operating Cash Flow

Non-operating Disbursement Interest Payment Capital Expenditure Professional Fee

563

888 (1,275) 3,638 ..............

(2,138)

(343)

-

-

376

-

..............

125

125

125

125 ..............

100

..............

-

1,349

125

4,500

300

Total Non-op. Disbursements

125

125

601

125 ..............

125

6,149

Net Cash Flow

438

763 (1,876) 3,513 ..............

(2,263)

(6,491)

Revolver roll-forward Beginning revolver Add: draw Minus: Paydown

Ending revolver

20,500 (438)

20,063

20,063 (763)

19,300

19,300 1,876

-

21,176

21,176 -

(3,513)

17,663

.............. .............. ..............

..............

24,729 2,263

-

26,991

20,500 18,218 (11,727)

26,991

Availability (**)

2,938

3,586

1,824

3,537 ..............

(5,308)

(*) Check outstanding is as of Jan 14, 2013

(**) Availability is the difference between revolver (after covering float) and the lower of borrowing base/facility limit of $25,000

Copyright ? 2014 Deloitte Development LLC. All rights reserved.

Borrowing Base Example

Week Count

Accounts Receivable

Inventory

Total Collateral Value

Revolver and

Availability

Days Week Ending

0 18-Jan

7 25-Jan

Projection Period

14

21

28 .... 77

1-Feb

8-Feb 15-Feb ... 5-Apr

84 12-Apr

Accounts Receivable Ending A/R Ineligible

13,500

15,000

14,500

12,450

..............

9,250

2%

(270)

(300)

(290)

(249)

..............

(185)

Eligible A/R

13,230

14,700

14,210

12,201

..............

9,065

Collateral A/R

85%

11,246

12,495

12,079

10,371

..............

7,705

Inventory Ending Inventory Ineligible

33,505

29,880

32,318

30,775

..............

37,200

5%

(670)

(598)

(646)

(616)

..............

(744)

Eligible Inventory

32,835

29,282

31,671

30,160

..............

36,456

Collateral Inv Limit at

50% $ 18,500

16,417

14,641

15,836

15,080

..............

18,228

Collateral Inv - Applied

16,417

14,641

15,836

15,080

..............

18,228

Total Collateral Value Minus: Open L/C

Total Borrowing Base

27,663 (2,250) 25,413

27,136 (2,250) 24,886

27,914 (2,250) 25,664

25,451 (2,250) 23,201

.............. .............. ..............

25,933 (2,250) 23,683

Availability Calculation Lower of Borrowing Base or Limit

25,000

24,886

25,000

23,201

..............

23,683

Ending Revolver Plus: check outstanding (float) (*)

20,063 2,000

19,300 2,000

21,176 2,000

17,663 2,000

.............. ..............

26,991 2,000

Ending Revolver (after covering float)

22,063

21,300

23,176

19,663

..............

28,991

Availability (**)

2,938

3,586

1,824

3,537

..............

(5,308)

(*) Check outstanding is as of Jan 14, 2013

(**) Availability is the difference between ending revolver (after covering float) and the lower of borrowing base or facility limit of $25,000

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