Exhibit TN-1 Discounted Cash Flow Valuation of Netscape Communications Corporation

Actual
1995
$16,625
1,736
14,890

1996
$25,790
2,693
23,097

1997
$40,007
4,177
35,830

1998
$62,061
6,480
55,581

6,115
13,449

9,486
18,284

14,715
24,362

22,827
31,585

35,411
39,370

54,931
46,138

85,211
48,405

Operating income
Taxes
Net income

(4,675)
0
$(4,675)

(4,672)
0
$(4,672)

(3,247)
0
$(3,247)

1,169
0
$1,169

11,440
5
$11,435

32,680
11,111
$21,569

73,862
25,113
$48,749

Cumulative tax loss carry forward

$(4,675)

$(9,347) $(12,594) $(11,426)

Capital expenduture 45.8%

Depreciation
Change NWC

$7,618
918
0

$15,404
3,427
0

$17,157
5,316
0

$16,161
8,246
0

$25,070
12,792
0

$38,889
19,843
0

$60,327
30,782
0

$93,582
47,751
0

$145,170
74,073
0

Free cash flows

Terminal value FCF1/(K-g)

$(11,375) $(13,260) $(13,769) $(10,809)

$(406)

$13,654

$36,471

$56,576

$87,763

Present value of cash flows

Present value of terminal
value
Total present value

$173,587

Revenues g=55%
Cost of Goods Sold 10.4%
Gross Profit
Research and development 36.8%
Other operating expenses

Current shares outstanding

New shares (1995 IPO)
Total shares
Value per share

$883,971
$1,057,558

$10,012
1,424
0

$12,731
2,209
0

Forecast
1999
2000
2001
2002
2003
2004
2005
$96,272 $149,342 $231,666 $359,372 $557,476 $864,785 $1,341,497
10,051
15,592
24,188
37,521
58,205
90,290
140,062
86,220
133,749
207,478
321,851
499,271
774,495
1,201,435
132,184
75,088

205,051
116,481

318,085
180,691

493,430
280,297

114,579
177,739
275,719
38,957
60,431
93,744
$75,622 $117,308 $181,975

427,708
145,421
$282,287

$136,144

$211,190
2,745,481

$ 1bil. Market Value vs. $16mil. Book Value

32,764
5,000
37,764
$28.00

Assumptions
Riskless rate
Discounted rate
Growth rate of sales
Terminal value perpetual
growth rate
Changes in net working
capital

6.71%
12.00%
55.12%
4.00%
0.00%

Cost of revenues
R&D
Other operating expenses
Capital expenditures
Depreciation

10.4% of sales
36.8% of revenues
Decline to 20.9% of sales by 2001
45.8% Decline to 10.8% of revenues by 2001
5.5% of revenues