Flujos De Caja

Professor Crocker H. Liu Financial Management

Rev. February 13, 2004

Calculating Free Cash Flow to the Firm (FCFF) Objective: The objective of this assignment is to apply the concept of Total Cash Flow that you learned in Chapter 10: Making Capital Investment Decisions (RWJ) to a real world company. This assignment should be done after you have finished the assigned homework problems forChapter 10. Company: P.F Chang Bistro's (Ticker: PFCB) is a fusion of traditional Chinese cuisine inspired by the five culinary regions of China1 served up with upscale American hospitality in a bistro setting. This fusion is not surprising since the "P.F." in P.F. Chang's stands for Paul Fleming, a former oilman who currently owns 6% of the company he founded in 1992. PFCB owns and operates about80 fullservice restaurants in some 30 states. The company also owns and operates 20 limited service Pei Wei Asian Diners in Arizona, California, and Texas. Pei Wei Asian Diners offer a quicker, more casual dining experience as compared to P.F. Chang's China Bistro. The menu for the Company's Pei-Wei limited-service concept is more concise and includes not only Chinese cuisine, but other Asiandishes as well. PFCB is opening 20-25 restaurants a year, mostly in new markets. Competitors: Benihana (BNHN), Brinker (EAT), Carlson Restaurants (Private). Assignment: Download the PFCB data from my website and use the downloaded spreadsheet (PFCB2004) to answer the following questions (all work should be done on this spreadsheet). Assume that your analysis is of February 11, 2004: 1. Imputed Intereston Operating Leases (30 points): Calculate the imputed interest on operating leases for PFCB's for the trailing twelve months (TTM) ending December 21, 2002. In addition to this, go to the yahoo website (http://finance.yahoo.com), type in the ticker for PF Chang Bistro (Ticker: PFCB) and then once the page loads, click on SEC Filings which is located in the left hand column. Next access the FullFiling at EDGAR Online for PFCB’s 10K dated February 12, 2003 and print out the page in the 10K that has the information on operating leases.. the actual per year amount. Assume for purposes of this assignment that February 11, 2004 is the date of our analysis and that lease rent is paid at the end of the year (in December). Do NOT prorate the lease for December 2004. Also assume that PF ChangBistro (PFCB) has an imputed bond rating of AAA and that the maturity of their debt is 10 years. To calculate the pre-tax cost of debt = discount rate for discounting cash flows
1

Canton, Hunan, Mongolia, Shanghai and Szechwan

1

to holders of debt such as leases, you will add the default spread (located in the worksheet labeled Spreads 02112004) which is stated in basis points (100 basispoints = 1%) to the 10 year Treasury bond. To calculate the imputed interest, first discount the operating lease expense (also known as rental expense) by using the pre-tax cost of debt as the discount rate. Since the rental payments after 2007 (the line item labeled “Thereafter”) is the sum of all future lease commitments e.g. Rent Thereafter = Rent2008 + Rent2009 + …. Rent20xx, we will use thefact that operating leases expire in 20232 in converting the final cumulated amount into annual amounts. Example: Suppose that a firm has lease commitments of $294 in Year 1, $291 in Year 2, $263 in Year 3, $245 in Year 4, $236 in Year 5 and a total of $2,701 Thereafter. If operating leases go through year 15, then the Rent Thereafter = $2,701 represents the sum of cumulative rents over theremaining ten years from year 6 through year 15. Consequently, the annual lease payments for each of the remaining ten years is $2,701/10 years = $270.10 per year. Thus, Operating Lease Year 6 $270.10 Year 7 $270.10 Year 8 …………………. $270.10 Year 15 $270.10

Once you have calculated the present value of operating leases i.e., long-term debt due to operating leases, multiply this amount by the pre-tax...