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

1.
1999	1998	1997	1996	1995	
6134	5941	7081	9833	11,062	Net Sales
3.25%	-16.10%	-27.99%	-11.11%		Percentage Change

2.  Given that the company lost nearly half of its sales in a four
year period and only generated a 3.25% growth rate in 1999, the
likelihood of a 20% growth rate in 2000 seems remote based solely upon
this data.

3.
		        2000
Sales	  % of sales	Forecast
$6,134 	       100.0%	$7,360.80 (20% increase)
Cost of Sales 		
$4,438.00 	72.4%	$5,325.60 (72.4% multiplied by $7,360.80)
Gross Margin		
$1,696.00 	27.6%	$2,035.20 (27.6% multiplied by $7,360.80)
R & D		
$314.00 	5.1%	$376.80 (the same methodology as above applies)
Selling, General, and Administrative		
$996.00 	16.2%	$1,195.20 
In-process R & D		
$0 	0.0%	$0.00 
Restructuring costs		
$0 	0.0%	$73.61 (1% of sales forecast)
Total Operating Exp		
$1,310.00 	21.4%	$1,572.00 
Operating income		
$386.00 	6.3%	$463.20 
Total interest and other Income net		
$317.00 	5.2%	$380.40 
Income before provision for Income taxes		
$703.00 	11.5%	$843.60 
Provision for income Taxes (15%) 		
$105.40 	1.7%	$126.48 
Net income		
$597.60 	9.7%	$717.12 

4.  We have assumed an increase of 20% in sales without any change in
gross margin and assuming that all other factors remain the same as a
percentage of sales.  If the 20% increase in sales is possible, it
seems unlikely it could be accomplished without either a change in
margins and/or some evidence of economies of scale in the organization
that would prevent expenses from growing as fast as sales. 
Alternatively, if the sales increase was a result of the launch of a
new product, it is believable that expenses could grow faster than
sales temporarily.  A completely linear relationship between all
factors and sales growth is somewhat questionable.

Sincerely,

Wonko

do anyone have the answer to this question?