This spreadsheet was prepared by Elena Loutskina, Assistant ro!essor o! "usiness Ad#inistration. $opyri%ht & 2010 by the 'niversity o! (ir%inia )arden *+hool oundation, $harlottesville, (A. All ri%hts reserved. For reserved. For customer service inquiries, send an e-mail tosales-dardenbusinesspublishin%.+o# tosales-dardenbusinesspublishin%.+o#.. No part of this publication may be reproduced, stored in a retrieval system, posted to the Internet, or transmitted in any f orm or by any means—electronic, means—electronic, mechanical, photocopying, recording, recording, or otherwise—without the permission of the Darden chool Foundation. Rev. Mar. 20, 2013
SUN T $o #arket d
Ticker
Stock Price ($)
Shares Out (MM)
Market Cap ($MM)
Primarily ar!"are Advan+ed Mi+ro )evi+es Apple )ell EM$ 9ewlett:a+kard ntel nternational "usiness Ma+hines
AM) AAL )ELL EM$ 9;
3.56 123.82 11.06 12.71 36.30 15.60 101.2 1.5/ 6.6/
60/ 77/ 1,/88 2,081 2,816 2,562 1,383 330 3/
2,167 10/,13 21,505 26,182 7,07 3/,/6 136,052 5,707 8,/81
Primarily So#t"are Adobe *yste#s Mi+roso!t ra+le Red 9at
A)"E M*T <>(L >R$L R9T
28.0 1/.20 3./8 1/.06 17.32
528 7,7/6 383 5,086 1/0
12,/88 10,/5 1,353 /6,170 3,872
)ata sour+es? @ahoo inan+e, Moodys, "loo#ber%, and +o#pany !ilin%s.
SUN T $o #arket d
Ticker
Stock Price ($)
Shares Out (MM)
Market Cap ($MM)
Primarily ar!"are Advan+ed Mi+ro )evi+es Apple )ell EM$ 9ewlett:a+kard ntel nternational "usiness Ma+hines
AM) AAL )ELL EM$ 9;
3.56 123.82 11.06 12.71 36.30 15.60 101.2 1.5/ 6.6/
60/ 77/ 1,/88 2,081 2,816 2,562 1,383 330 3/
2,167 10/,13 21,505 26,182 7,07 3/,/6 136,052 5,707 8,/81
Primarily So#t"are Adobe *yste#s Mi+roso!t ra+le Red 9at
A)"E M*T <>(L >R$L R9T
28.0 1/.20 3./8 1/.06 17.32
528 7,7/6 383 5,086 1/0
12,/88 10,/5 1,353 /6,170 3,872
)ata sour+es? @ahoo inan+e, Moodys, "loo#ber%, and +o#pany !ilin%s.
Ehibit / ICROSYSTEMS panies inan+ial inan +ial )ata ata as o! April 1, 200/4 % et ($MM)
'e*ere! eta
8,/77 : 2,01 2,011 1 3,808 20,8 20,857 57 1,/7 1,/77 7 33,/ 33,/25 25 1,265 1,25 1,25
2.1/ 1.11 1.12 1.12 1.3/ 1.25 1.25 1.20 1.20 0./3 0./3 1.70 1.3 1.3
350 2,00 2,000 0 122 11,23 1,237 7 :
1.32 0.// 0.// 1.50 1.2 1.2 1.20
o+! Rati+-
" : A2 : A2 A1 A1 : "a1 "a1
: Aaa Aaa "1 A2 ""
Cash & I+*estme+ts ($MM)
'TM Sales ($MM)
'TM EIT ($MM)
'TM EIT, ($MM)
/33 28,8/0 /,58 /,586 6 6,886 10,1 10,180 80 7,78 7,780 0 12,/ 12,/0 0 2,608 3,06 3,061 1
5,707 3,0/6 61,1 61,101 01 18,76 117,6 17,6/ / 3,5 3,576 76 103, 103,63 630 0 3,868 13,8 13,837 37
1,/554 1,/554 ,/78 3,1/ 3,1/0 0 1,56/ 10,3 10,358 58 7,/5 7,/58 8 16, 16,15 15 116 2,2 2,231 3144
324 7,3/ 3,/5 3,/5/ / 2,626 18,1 18,15 5 13,5 13,50 0 22,1 22,165 65 276 1, 1,5 544
2,017 31,8 31,88 8 1,06 12,6 12,628 28 663
3,86
/61 22,1 22,127 27 10 7,80 7,806 6 70
1,231 28,8 28,875 75 55 10,2 10,2/1 /1 11/
61,/ 61,/71 71 /80 23,6 23,630 30 627
'TM Ear+i+-s ($MM)
E"T)A M'LTLE
*ales Multiple
E"T Multiple
3,0/74 5,27 2,87 1,386 7,050 5,2/2 12,338 101 nBa
7.54 /.7 3.5 7.7 6./ 2.8 .1 15.6 1.74
1.0 2.30 0.23 1.55 0.73 0.77 1.52 1.2/ 0.23
3.174 10.6 8.37 18.2 /.8 3.0 /.80 37.3 1.814
70/ 1,232 154 5,3/ 75
/.2 5.7 .8 /.2 23.
3.28 2.27 0.83 8.01 8.8/
11.8 6.3/ 81.08 11.27 35.08
./0
1/2
13/4
,*era-e
Ehibit 10 SUN MICROSYSTEMS Relevant *e+urity @ields, April 200/
Corporate o+! Yiel!s AAA AA AD A A: """D """ """: ""D "" "": "D " ":
U/S/ Treasury Yiel!s 170:)ay 1:@ear 3:@ear 5:@ear 10:@ear 30:@ear
5.50C 5.C 6.2C 6.35C 6.50C .58C .62C 7.68C 11.82C 11.8/C 11.0C 13.27C 18.0C 15.86C
0.38C 0.58C 1.22C 1.1C 2.72C 3.66C
)ata sour+es? Mer%ent "ond Re+ord, '.*. Treasury, and bbotson Asso+iates.
Ehibit 11 SUN MICROSYSTEMS *un Mi+rosyste#s 9istori+al and roe+ted "alan+e *heet in #illions o! '.*. dollars4 5is 888 ,ssets $urrent Assets $ash14 Marketable )ebt *e+urities ther $urrent Assets Total $urrent Assets roperty, lant, F EGuip#ent, ther
>ther $urrent Liabilities n+ludin% Iarranty Reserve Total $urrent Liabilities Lon%:Ter# )ebt )e!erred Lon%:Ter# $har%es 24 >ther ther *to+kholders EGuity Total *to+kholders EGuity Total 'iailities & E;uity
3,620 2,322 2,/68 528 200 1,057 10,677 1,508 2,518 633 8// 129:4:
2,222 1 2,08 1,172 5,851 1,268 65/ 1,275 7,65/
6,/7 3114 17/ 318 ,1/ 129:4:
)ata sour+es? $o#pany !ilin%s and +ase writer esti#ates. 14 *un Mi+rosyste#s4 lon%:ter# strate%y is to #aintain a #ini#u# a#ount o! +ash and +ash eGuivalents in subs invest the re#ainin% a#ount o! our +ash in interest:bearin% and hi%hly liGuid +ash eGuivalents and #arketable debt 24 )e!erred taes and related a++ounts are not epe+ted to vary with sales or +ontinue to a++u#ulate as a +o#pan
34 n+ludes de!erred settle#ent in+o#e !ro# Mi+roso!t as o! =une 30, 200/, 2007, 200, and 2006, lon%:ter# ta l 200, and 2006 and lon%:ter# restru+turin% liabilities.
cal Year6E+! 7u+e 40 888
300
2,22 1,037 3,01/ 670 216 1,217 7,883 1,611 3,215 565 506 1=94=0
1,76 1,175 2,257 566 177 //5 ,067 1,616 1,83 26/ 536 119343
2,121 : 2,236
1,600 558 2,381
1,311 5,667 1,265 673
1,126 5,621 6/5 635
1,136 7,52
/6 ,/2
,3/1 2,264 830 8/3 5,577
,572 2,56/4 2,0554 38 3,305
1=94=0
119343
idiaries !or operational purposes and to se+urities. %rowth.
iabilities as o! =une 30, 200/, 2007,
Ehibit 12 SUN MICROSYSTEMS >ra+le 9istori+al and roe+ted "alan+e *heet in #illions o! '.*. dollars4
5iscal Year6E+! May 41 300. 300: 300ther $urrent Assets Total $urrent Assets
,020 8,57/ : 1,28 12,773
11,083 5,// : 1,261 17,103
12,628 8,830 : 1,52 17,571
roperty, lant, F EGuip#ent, ther
1,603 13,8/ 5,/68 683 4=92.3
1,677 1,//1 7,3/5 1,0/1 =.93>:
1,/22 17,782 ,26/ 702 =.9=1>
315 1,357
373 1,001
21 1,001
Total $urrent Liabilities Lon%:Ter# )ebt )e!erred Lon%:Ter# $har%es >ther
,18 /,37 6,235 1,121 /10 1,653
7,685 10,02/ 10,235 1,217 2,61 28,283
,7 /,18/ /,23 870 3,860 22,326
*to+kholders EGuity $o##on *to+k Treasury *to+k Retained Earnin%s >ther *to+kholders EGuity Total *to+kholders EGuity
10,2/3 : 6,223 803 16,/1/
12,886 : /,/61 617 23,025
12,/70 : 11,7/8 216 25,0/0
Total 'iailities & E;uity
4=92.3
=.93>:
=.9=1>
'iailities & E;uity
$urrent Liabilities A++ounts ayable *hortB$urrent Lon%:Ter# )ebt >ther $urrent Liabilities
)ata sour+es? $o#pany !ilin%s and +ase writer esti#ates.
Ehibit 13 SUN MICROSYSTEMS >ra+le 9istori+al and roe+ted n+o#e *tate#ent in #illions o! '.*. dollars4
*o!tware Revenues *ervi+es Revenues
5iscal Year6E+! May 41 300. 300: 300
3,75 1,//6 7,/0 2,1/5 77
8,57 22,830 10,867 2,81 1,212
8,35 23,252 10,21 2,6 1,13
15/ 12,022 5,/8
165 18,576 ,788
238 18,/31 7,321
n+o#e Ta on >perations peratin% ro!it A!ter Ta
1,0/ 8,265
2,316 5,527
2,370 5,/81
E!!e+tive $orporate Ta Rate
27.6C
2/.5C
27.6C
>ther >peratin% Epense Total >peratin% Epense >peratin% n+o#e
)ata sour+es? $o#pany !ilin%s and +ase writer esti#ates.
SUN *un Mi+rosyste#s 9ist in #i
300. 13,73 ,607 6,265 3,751 2,007 :
888 13,770 ,825 6,855 3,/55 1,738 KKK
>ther >peratin% Epense Total >peratin% Epense >peratin% n+o#e
/ 5,/56 30/
2/8 6,073 32
)epre+iation F A#ortiJation as ! of "rior #ear ""$%
51 38.8C
86 2/.5C
1,611 11.6C
1,616 11.6C
as C o! *ales )ata sour+es? $o#pany !ilin%s and +ase writer esti#ates.
Ehibit 18 MICROSYSTEMS ori+al and roe+ted n+o#e *tate#ent lions o! '.*. dollars4
300
5iscal Year6E+! 7u+e 40 3010E 3011E 12,665 13,08 ,675 ,573 8,/70 5,868
3013E 13,526 ,35 5,/1
3014E 13,775 ,77/ 5,//6
3/7 6,/6 2,2364
8,73/ 181
8,//2 82
5,121 60
5,28/ 8
88 2/.3C
536 30.0C
856 30.0C
80 30.0C
87 30.0C
1,77 15.6C
1,520 12.0C
1,566 12.0C
1,623 12.0C
1,666 12.0C
301=E 18,283 7,05 6,167
5,32 /6 500 30.0C
1,0/ 12.0C
SUN in #i
ther >peratin% Epense Total >peratin% Epense Operati+- I+come EIT?(16T) E Net PPE
@ith Sy+er-y ther >peratin% Epense Total >peratin% Epense
300. 13,73 ,607 6,265 3,751 2,007 : / 5,/56 40< 301 1,611
1,182
888 13,770 ,825 6,855 3,/55 1,738 KKK 2/8 6,073 4.3 3=3 1,616 2 1,875
21. 38.8C 1,611 11.6C
4=4 =.> 2/.5C 1,616 11.6C
13,73 ,607 6,265 3,751 2,007 : / 5,/56
13,770 ,825 6,855 3,/55 1,738 KKK 2/8 6,073
$usto#er Attrition nte%ration $har%es n+rease in >peratin% n+o#e Operati+- I+come EIT?(16T) 5C5 Termi+al %alue E+terprise *alue nterest TaE"T:nterest4 E;uity Cash 5lo" E;uity %alue o# 5irm
Sy+er-y E##ect Usi+- Multiple ndustry E"T #ultiple ndustry E"T)A #ultiple ndustry *ales Multiple
'sin% E"T Multiples !ro# ntel 'sin% E"T Multiples !ro# "M
12/31 817 The +o#panies 1/222 %ood idea to sti 37/5 /7/
Ehibit 18 MICROSYSTEMS lions o! '.*. dollars4 300) (19=24) 1,77 1.3 1,0/3
5iscal Year6E+! 7u+e 40 3010E 3011E 12,665 13,08 ,675 ,573 8,/70 5,868
(4<3) =.= 2/.3C 1,77 15.6C
8,73/ 1=1 <3 1,520 (3>:) 1,20/ 10.6C 11> 24> 30.0C 1,520 12.0C
(.2<)
.:0
<93>< 182.68 :732.52 (:23) .9442
11,88/ 6,17 8,31 3,861 1,687 1,860 3/7 6,/6
3013E 13,526 ,35 5,/1
3014E 13,775 ,77/ 5,//6
8,//2 =.3 40. 1,566 => 1,286 3.0C 4> =2> 30.0C 1,566 12.0C
5,121 >.0 =4> 1,623 2. 1,2/1 3.C => =.0 30.0C 1,623 12.0C
5,28/ .=. =:> 1,666 =4 1,326 2.C 4= =:. 30.0C 1,666 12.0C
>:0
:03
Share Price
:<2 119><4
12.54
/.3 21.5 1.=
/.3 13.82 >3<
/.3 206.2 .20
/.3 233.6 :==
12,665 ,675 8,/70 2,287 1,585
13,08 ,573 5,868 2,31/ 1,5/8
13,526 ,35 5,/1 2,3/ 1,635
13,775 ,77/ 5,//6 2,837 1,66
183 3,/36
187 8,061
152 8,166
155 8,20
85 50 (3934>) (19=24) (.2<)
129... 188.86 :733.16 (:24) 14930<
3=< 1>3 :20
350 19024 >:2 1902: Share Price
188.86 36.8 303
182.68 317.6/ <>2
/00 19>32 1902> 19=34
/00 19.3> 19133 19243 1<.<=
21.35
/.3 581.06 194.1
/.3 56.3 19=:0
>920:
iven in ehibit / are bi%%er than *un Mi+rosyste# and hen+e we #ay end up over valuin% k to industry avera%es.
35C
TaB Rate
301=E 18,283 7,05 6,167
5,32 .<> 21. 1,0/ =4 1,360 2.6C 4= 200 30.0C 1,0/ 12.0C <=0
/.3 250.72 ::<
18,283 7,05 6,167 2,8/5 1,15 15/ 8,30
Sta## EBpe+se
S&,
25C 22C 60C Su+ MicroSystem )ebt "(4 *hares *hare ri+e EGuityM(4 "eta Levered4 R! kd Rp ke IA$$
Oracle )ebt "(4 *hares *hare ri+e EGuityM(4 "eta Levered4 R! kd Rp ke 'nlevered "eta
R& 32C : 2C : 8C
32C
300< 125 Id 3/ 6.6/ 8/88 Ie 1.3 Hiven 3.66C 30 year bond 11.82C Ratin% : "a1 5C 12.31C 11.32C
20C
70C Ehibit / Ehibit 10 Ehibit 10
D301=
11237 Id 5086 1/.06 /61 Ie 1.2 Hiven 3.66C 30 year bond 6.35C Ratin% : A2 5C 11.65C 1.87 1.60 10.76C 2.72C
10C
/0C Ehibit / Ehibit 10 Ehibit 10
/00 19.<: 191>< 192<1
/.3 601.55 192=0
he !ir#. 9en+e it #i%ht be a
30116301= )ebt 03 Id
EGuity
8/88 Ie 'nlevered "eta
12C
77C 1.87 1.62 11.C
Ehibit 1 SUN MICROS in #illions o! '.
ther >peratin% Epense Total >peratin% Epense Operati+- I+come EIT?(16T) E Net PPE
@ith Sy+er-y ther >peratin% Epense Total >peratin% Epense
888 13,73 ,607 6,265 3,751 2,007 : / 5,/56 40< 301 1,611
1,182
888 13,770 ,825 6,855 3,/55 1,738 : 2/8 6,073 4.3 3=3 1,616 2 1,875
300) (19=24) 1,77 1.3 1,0/3
21. 38.8C 1,611 11.6C
4=4 =.> 2/.5C 1,616 11.6C
(4<3) =.= 2/.3C 1,77 15.6C (19344) 4934< 182.68 :732.52 (1943>) 19.=1
13,73 ,607 6,265 3,751 2,007 : / 5,/56
13,770 ,825 6,855 3,/55 1,738 : 2/8 6,073
11,88/ 6,17 8,31 3,861 1,687 1,860 3/7 6,/6
$usto#er Attrition nte%ration $har%es n+rease in >peratin% n+o#e Operati+- I+come EIT?(16T) 5C5 Termi+al %alue E+terprise *alue nterest TaE"T:nterest4 E;uity Cash 5lo" E;uity %alue o# 5irm
(3934>) (19=24) (19344) <9.=. 188.86 :733.16 (1943.) .9>12
Sy+er-y E##ect Usi+- Multiple ndustry E"T #ultiple ndustry E"T)A #ultiple ndustry *ales Multiple
'sin% E"T Multiples !ro# ntel 'sin% E"T Multiples !ro# "M
>920:
12/31 817 The +o#panies %iven in ehibit / 1/222 be a %ood idea to sti+k to industry 37/5 /7/
8 STEMS . dollars4 5iscal Year6E+! 7u+e 40 3010E 3011E 12,665 13,08 ,675 ,573 8,/70 5,868
8,73/ 1=1 <3 1,520 (3>:) 1,20/ 10.6C 11> 24> 30.0C 1,520 12.0C 3=4
3013E 13,526 ,35 5,/1
3014E 13,775 ,77/ 5,//6
301=E 18,283 7,05 6,167
8,//2 =.3 40. 1,566 => 1,286 3.0C 4> =2> 30.0C 1,566 12.0C
5,121 >.0 =4> 1,623 2. 1,2/1 3.C => =.0 30.0C 1,623 12.0C
5,28/ .=. =:> 1,666 =4 1,326 2.C 4= =:. 30.0C 1,666 12.0C
5,32 .<> 21. 1,0/ =4 1,360 2.6C 4= 200 30.0C 1,0/ 12.0C
33=
443
=0: 29=.>
==0
Share Price
4.38
/.3 21.5 (4>3)
/.3 13.82 1.4
/.3 206.2 3:1
/.3 233.6 42.
/.3 250.72 4:<
12,665 ,675 8,/70 2,287 1,585
13,08 ,573 5,868 2,31/ 1,5/8
13,526 ,35 5,/1 2,3/ 1,635
13,775 ,77/ 5,//6 2,837 1,66
18,283 7,05 6,167 2,8/5 1,15
183 3,/36
187 8,061
152 8,166
155 8,20
15/ 8,30
85 50 3=< 1>3 414
350 19024 >:2 >03 Share Price
188.86 36.8 (442)
182.68 317.6/ 210
/00 19>32 1902> <24
/00 19.3> 19133 190=2 142..
/00 19.<: 191>< 190<3
/.3 56.3 <<4
/.3 601.55 190=0
13.19
/.3 581.06 <03
re bi%%er than *un Mi+rosyste# and hen+e we #ay end up over valuin% the !ir#. 9en+e it #i%ht avera%es.
Ta Rate
Sta## EBpe+se
35C
S&, R& 25C 32C : 22C 2C : 60C 8C
32C
Su+ MicroSystem )ebt "(4 *hares *hare ri+e EGuityM(4 "eta Levered4 R! kd Rp ke IA$$
300< 125 Id 3/ 6.6/ 8/88 Ie 1.3 Hiven 3.66C 30 year bond 11.82C Ratin% : "a1 5C 12.31C 11.32C
Oracle )ebt "(4 *hares *hare ri+e EGuityM(4 "eta Levered4 R! kd Rp ke 'nlevered "eta
D301= 11237 Id 5086 1/.06 /61 Ie 1.2 Hiven 3.66C 30 year bond 6.35C Ratin% : A2 5C 11.65C 1.87 1.60 10.76C 2.72C
30116301= 20C )ebt
70C EGuity Ehibit / Ehibit 10 Ehibit 10
10C
/0C Ehibit / Ehibit 10 Ehibit 10
03 Id
8/88 Ie 'nlevered "eta
12C
77C 1.87 1.62 11.C
