Annual Growth in Total Net Sales; Sales Goal; Percentage Sales Method

The following selected financial statements for Apple Computer are taken
from the company’s SEC filings. Answer questions 1 and 2 as follows
based on this data.

Fiscal Years

(in millions except share and per share amounts) 1999 1998 1997 1996
1995

Net Sales $ 6,134.00 $ 5,941 $ 7,081 $ 9,833 $11,062

Net Income (loss) $ 601 $ 309 $ (1,045) $ (816) $ 424

Earnings (loss) per common share:





Basic $ 4.20 $ 2.34 $ (8.29) $ (6.59) $ 3.50

Diluted $ 3.61 $ 2.10 $ (8.29) $ (6.59) $ 3.45

Cash Dividends declared per common share $ -- $ -- $ -- $ 0.12 $
0.48

Shares used in computing earnings (loss) per share (in thousands):





Basic 143,157 131,974 126,062 123,734 121,192

Diluted 174,164 167,917 126,062 123,734 123,047

Cash, cash equivalents, and short-term investments $ 3,226 $ 2,300 $
1,459 $ 1,745 $ 952

Total Assets $ 5,161 $ 4,289 $ 4,233 $ 5,364 $ 6,231

Long-term Debt $ 300 $ 954 $ 951 $ 949 $ 303

Shareholder’s Equity $ 3,104 $ 1,642 $ 1,200 $ 2,058 $ 2,901

1. Determine the year-to-year percentage annual growth in total net
sales.

2. Based only on your answers to question #1, do you think the company
will hit its sales goal of +20% annual revenue growth in 2000? Determine
the target revenue figure, and explain why you do or do not feel that
the company can hit this target.

Next, consider Apple’s Consolidated Statement of Operations for the
year ended September 25, 1999 as shown below and answer questions 3 and
4.

3. Use the Percentage Sales Method and a 20% increase in sales to
forecast Apples' Consolidated Statement of Operations for the period
September 26, 1999 through September 25, 2000. Assume a 15% tax rate and
restructuring costs of 1% of the new sales figure.

4. Discuss your results from question number #3. What assumptions have
you made? Do any of your assumptions seem unreasonable?

Consolidated Statements of Operations For the period September 26, 1998
through September 25, 1999





Sales $6,134

Cost of Sales $4,438.00

Gross Margin $1,696.00

Operating expenses:



R & D $314.00

Selling, General, and Administrative $996.00

In-process R & D ---------

Restructuring costs ---------

Total Operating Exp $1,310.00

Operating income $386.00

Total interest and other Income net $317.00

Income before provision for Income taxes $703.00

Provision for income Taxes (15%) $105.40

Net income $597.60