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NOTE: Enter actual data for the most recent year on the balance sheet and income statement

pages.
Italized numbers are calculated from formulas.
Items in blue can be revised to fit your data and assumptions.
`
Sheet setup information
Year of most recent actual data -->
1995
Name of Company --> Netscape Communications
Prior year's sales-->
696
Prior year's fixed assets-->
2447
Prior year's owners' equity-->
4483
Net sales
Net plant
Long-term debt
Owner's equity

16,625
6,761 <------These are available for reference purposes
Note that Actual 1995 is a 6 month period
2,236
16,474

Table A. Pro Forma Assumptions

Growth in sales (%)


Gross margin (%)
GSA expenses/sales (%)
Research & Devel./Sales (%)
Non-op income (expense)
Int. rate on excess cash (%)
Interest rate on debt (%)

< this data has been entered from the case

Netscape Communications
Actual
1995
2289%
90%
81%
37%
0
5%
8.0%

1996
10%

<----Forecasts ----->
1997
1998
1999
10%
10%
10%

25%
10%
0%
-

25%
10%
0%
-

25%
10%
0%
-

25%
10%
0%
-

8%

8%

8%

8%

Income tax rate (%)


Ex. gains (loss) net tax
Other gains (losses)

34%

34%
0
0

34%
-

34%
-

34%
-

Dividend payout ratio (%)


Minimum cash balance
Collection period (days)
Inventory turnover (x)
Other current assets

0
8868
182

0%

0%
71

0%
71

0%
71

Growth in fixed assets (%)


Other investments
Other long-term assets
Accts Payable/CGS
Other short-term debt
Accrued taxes
Other accruals
Current portion l-t debt
Long-Term Debt
Other deferrals
Other long-term liabilities

N/A

71
N/A

N/A

N/A

N/A

805

2,605

2,605

2,605

2,605

176.3%
0
1252
265.4%
0

21%
1049
-24
13%
0

21%
1,049
(24)
13%
-

21%
1,049
(24)
13%
-

21%
1,049
(24)
13%
-

0
0
0%
0%
0%
2973
1364
1,364
1,364
1,364
1276
90
90
90
90
2236 Calculated Calculated Calculated Calculated
0
0
0
-

Once FINANCING has been estimated, use items below for fine-tuning
Incr. (decr.) in securities
Incr. (decr.) in long-term debt
Incr. (decr.) in equity

Table B. Pro Forma Balance Sheets


Netscape Communications

ASSETS
Cash
Securities
Accounts receivable
Inventory
Other current assets

Actual
1995
8,868
16,567
8,278
805

1996
$
3,555
2,605

Total current assets

34,518

Net property, plant, etc.


Other investments
Other long-term assets
Total Assets

6,761
1,252
42,531

3,910
2,605

1998
$
4,301
###
2,605

1999
$
4,731
2,605

6,160

6,515

6,906

7,336

8,155
1,049
(24)

9,836
1,049
(24)

11,864
1,049
(24)

14,310
1,049
(24)

17,376

19,795

22,671

Ext'l Fin
1,999
-

Ext'l Fin
2,198
-

Ext'l Fin
2,418
-

1,364
90
3,453

1,364
90
3,652

1,364
90
3,872

15,340

LIABILITIES AND SHAREHOLDERS' EQUITY


Short term debt
Ext'l Fin
Ext'l Fin
Other short-term debt
Accounts payable
4,607
1,817
Accrued taxes
Deferred Revenues
14,964
Other accruals
2,973
1,364
Current portion l-t. debt
1,276
90
Current liabilities
23,820
3,271

1997
$

L-t. debt and capital leases


Other long-term liabilities
Total liabilities

2,236
26,056

2,146
5,417

2,056
5,509

1,966
5,618

1,876
5,748

Owners' equity

16,474

17,647

18,904

20,242

21,659

Total liabilities & equity

42,530

5,417

5,509

5,618

5,748

9,923

11,868

14,177

16,923

External Financing Req'd

Table C. Pro Forma Income Statements


Netscape Communications
(Actual is 6 months in thousands)

Actual
1995
16,625
1,736
14,890

1996
$ 18,288
13,716
4,572

1997
$ 20,117
15,088
5,029

1998
$ 22,128
16,596
5,532

Gen., Selling, and Admin


Research & Development
Operating income

13,449
6,115
(4,675)

1,829
2,743

2,012
3,018

2,213
3,319

Non-op income (expense)


Interest income
Interest expense
Income before tax
Provision for tax
Net income

496
129
(4,308)
-$4,308

965
1,778
604
$1,173

1,114
1,904
647
$1,256

1,291
2,028
689
$1,338

(4,308)

1,173

1,256

1,338

Net sales
Cost of goods sold
Gross profit

Ex. gains (loss) net tax


Other gains (losses)
Available for common
Common dividends
Added to retained earnings

(4,308)

1,173

1,256

1,338

mmunications
onths in thousands)

1999
$ 24,341
18,256
6,085
2,434
3,651
1,504
2,147
730
$1,417
1,417
1,417

Table D. Pro Forma Ratio and Sustainable Growth Analysis


Netscape Communications

Actual
1995

1996

1997

1998

1999

PROFITABILITY RATIOS:
Return on equity (%)
Return on assets (%)
Return on inv. captial (%)
Profit margin (%)
Gross margin (%)

-26.1%
-10.1%
-119.0%
-25.9%
89.6%

6.6%
7.6%
14.9%
6.4%
25.0%

6.6%
7.2%
14.2%
6.2%
25.0%

6.6%
6.8%
13.5%
6.0%
25.0%

6.5%
6.3%
12.8%
5.8%
25.0%

LEVERAGE & LIQUIDITY RATIOS:


Assets to equity (%)
Total liabilities to assets (%)
Total liabilities to equity (%)
Long term debt to equity (%)
Times interest earned (x)
Times burden covered (x)
Current ratio (x)
Acid test (x)

258.2%
61.3%
158.2%
21.3%
(32.5)
(3.0)
1.4
1.4

86.9%
100.0%
86.9%
12.7%
2.8
2.5
0.5
0.5

91.9%
100.0%
91.9%
11.4%
2.7
2.4
0.4
0.4

97.8%
100.0%
97.8%
10.2%
2.6
2.3
0.4
0.4

104.7%
100.0%
104.7%
9.1%
2.4
2.2
0.4
0.4

TURNOVER-CONTROL RATIOS:
Asset turnover (x)
Inventory turnover (x)
Collection period (days)
Days sales in cash (days)
Payables period (days)
Fixed asset turnover (x)

0.4
N/A

1.2
N/A

181.7
194.7
968.7
2.5

1.2
N/A

70.9
48.3
2.2

1.1
N/A

70.9
48.3
2.0

1.1
N/A

70.9
48.3
1.9

70.9
48.3
1.7

Pro Forma Sustainable Growth Analysis


Actual
1995
REQUIRED RATIOS:
Profit margin (P)
-25.9%
Retention ratio (R)
100.0%
Asset turnover (A)
39.1%
Financial leverage# (T)
948.7%

1996

1997

1998

1999

6.4%
100.0%
119.2%
93.1%

6.2%
100.0%
115.8%
#DIV/0!

6.0%
100.0%
111.8%
#DIV/0!

5.8%
100.0%
107.4%
#DIV/0!

Sustainable growth rate (g*)


Actual growth rate (g)

7.1%
10.0%

#DIV/0!
10.0%

#DIV/0!
10.0%

#DIV/0!
10.0%

-96.1%
2288.7%

#Defined as assets divided by beginning-of-period equity.