T. PİRELLİ KABLO VE SİSTEMLERİ A.Ş. ACTUAL ACTUAL ACTUAL ACTUAL PREDICTED PREDICTED PREDICTED PREDICTED
BALANCE SHEET 31.12.1998 31.12.1999 31.12.2000 31.12.2001 2002 2003 2004 2005
ASSETS
I.Current Assets 16.619 TL 34.523 TL 48.778 TL 72.157 TL 119.059 TL 196.448 TL 324.139 TL 388.966 TL
 A. Liquid Assets 2.718 TL 12.715 TL 17.578 TL 708 TL 1.169 TL 1.928 TL 3.182 TL 3.818 TL
 B. Marketable Securities 0 TL 1.974 TL 1.351 TL 0 TL 0 TL 0 TL 0 TL 0 TL
 C. Short-term Trade Receivables 6.808 TL 13.888 TL 20.782 TL 53.326 TL 87.987 TL 145.179 TL 239.545 TL 287.454 TL
 D. Other Short-term Receivables 515 TL 486 TL 815 TL 2.765 TL 4.562 TL 7.527 TL 12.419 TL 14.903 TL
 E. Inventories 5.955 TL 4.662 TL 5.662 TL 12.802 TL 21.123 TL 34.853 TL 57.508 TL 69.009 TL
 F. Other Current Assets 623 TL 799 TL 2.591 TL 2.557 TL 4.219 TL 6.961 TL 11.486 TL 13.783 TL
II. Long-term Assets 6.984 TL 9.570 TL 14.181 TL 19.250 TL 31.763 TL 52.409 TL 86.475 TL 103.770 TL
 A. Long-term Trade Receivables 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL
 B. Other Long-term Receivables 19 TL 8 TL 4 TL 2 TL 3 TL 5 TL 8 TL 9 TL
 C. Long-term Financial Assets 1.029 TL 334 TL 334 TL 314 TL 518 TL 855 TL 1.411 TL 1.693 TL
 D. Net Tangible Fixed Assets 5.876 TL 9.156 TL 13.721 TL 18.792 TL 31.007 TL 51.161 TL 84.416 TL 101.300 TL
    8. Accumulated Depreciation (-) 8.547 TL 12.646 TL 22.161 TL 33.086 TL 50.891 TL 80.268 TL 128.739 TL 186.906 TL
 E. Intangible Fixed Assets 46 TL 43 TL 98 TL 136 TL 224 TL 369 TL 609 TL 731 TL
  F. Other Fixed Assets 14 TL 29 TL 24 TL 7 TL 11 TL 19 TL 31 TL 37 TL
TOTAL ASSETS 23.603 TL 44.093 TL 62.959 TL 91.407 TL 150.822 TL 248.857 TL 410.614 TL 492.736 TL
LIABILITIES AND SHAREHOLDERS' EQUITY
 B. Accounts Payable 3.443 TL 13.022 TL 21.245 TL 38.298 TL 63.192 TL 104.267 TL 172.041 TL 206.449 TL
I. Short-term Debt 9.618 TL 11.515 TL 13.655 TL 16.469 TL 29.445 TL 48.584 TL 80.163 TL 96.195 TL
 B. Notes Payable 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL
II. Long-term Debt 2.348 TL 2.428 TL 3.526 TL 5.171 TL 7.595 TL 12.532 TL 20.678 TL 24.814 TL
III. Shareholders' Equity 8.195 TL 17.129 TL 24.533 TL 31.469 TL 50.590 TL 83.474 TL 137.732 TL 165.278 TL
 A. Capital 1.260 TL 1.260 TL 3.780 TL 3.780 TL 13.407 TL 30.586 TL 74.465 TL 90.258 TL
 B. Capital Commitments (-) 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL 0 TL
 C. Premium on Issue of Shares 0 TL 0 TL 33 TL 33 TL 33 TL 33 TL 33 TL 33 TL
 D. Revaluation Surplus 3.368 TL 5.219 TL 10.147 TL 17.116 TL 17.116 TL 17.116 TL 17.116 TL 17.116 TL
 E. Reserves 3.008 TL 7.508 TL 5.699 TL 9.251 TL 9.831 TL 14.423 TL 24.015 TL 33.961 TL
     Retained Earnings 580 TL 4.592 TL 9.592 TL 9.947 TL
 F. Current Year Income 559 TL 3.142 TL 4.875 TL 1.289 TL 10.204 TL 21.316 TL 22.103 TL 23.910 TL
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 23.603 TL 44.093 TL 62.959 TL 91.407 TL 150.822 TL 248.857 TL 410.614 TL 492.736 TL
INCOME STATEMENT 2002 2003 2004 2005
C. Net Sales 53.866 TL 87.173 TL 146.715 TL 242.080 TL 399.432 TL 659.062 TL 790.875 TL
E. Operating Expenses (-) 7.495 TL 13.485 TL 30.598 TL 50.487 TL 83.304 TL 137.451 TL 164.941 TL
Cost of Goods Sold except Depreciation Expense 39.514 TL 61.230 TL 99.544 TL 164.247 TL 271.007 TL 447.162 TL 536.595 TL
Depreciation Expense 4.099 TL 9.515 TL 10.925 TL 17.804 TL 29.377 TL 48.472 TL 58.166 TL
Cost of Goods Sold    51.108 TL 84.230 TL 141.067 TL 232.538 TL 383.688 TL 633.085 TL 759.702 TL
OPERATING PROFIT (LOSS) 2.758 TL 2.943 TL 5.648 TL 9.542 TL 15.744 TL 25.977 TL 31.173 TL
F. Income and Profit from Other Operations 5.975 TL 9.046 TL 31.334 TL 34.468 TL 37.915 TL 41.706 TL 45.877 TL
G. Losses and Expenses from Other Operations (-) 3 TL 744 TL 1.471 TL 1.618 TL 1.780 TL 1.958 TL 2.154 TL
I. Extraordinary Income and Profit 1.054 TL 582 TL 759 TL 835 TL 919 TL 1.011 TL 1.112 TL
J. Extraordinary Losses and Expenses (-) 58 TL 48 TL 412 TL 453 TL 499 TL 548 TL 603 TL
EARNINGS BEFORE INTEREST AND TAXES 9.726 TL 11.779 TL 35.859 TL 42.773 TL 52.299 TL 66.188 TL 75.404 TL
H. Interest Expense (-) 5.558 TL 5.483 TL 31.923 TL 27.075 TL 19.505 TL 32.183 TL 38.619 TL
EARNINGS BEFORE TAXES 4.168 TL 6.296 TL 3.936 TL 15.698 TL 32.794 TL 34.005 TL 36.785 TL
K. Taxes (-) 1.026 TL 1.421 TL 2.647 TL 5.494 TL 11.478 TL 11.902 TL 12.875 TL
NET PROFIT 3.142 TL 4.875 TL 1.289 TL 10.204 TL 21.316 TL 22.103 TL 23.910 TL
Dividend per Share 200 TL 2.250 TL 0 TL
Total Dividends Paid 252 TL 2.835 TL 0 TL
Dividend Payout Ratio 0,9023 0
ASSUMPTIONS
Sales Growth Rate 0,6183 0,6830 Average 0,651
Assumption 1 - Sales Growth Rate over the first three years is 65% and it will be 20% after year 2004.
Assumption 2 - All assets will increase at the same rate as sales.
Depreciation Rate=Dep Expense/Net Assets 0,4477 0,6935 0,5814 Average 0,5742
Assumption 3 - Depreciation Rate is 0.5742 percent of net tangible assets
Assumption 4 - Accounts Payable and Notes Payable will change at the same rate as Sales.
weight of short-term debt 0,3360 0,3706 0,3273 0,3101
weight of long-term debt 0,0867 0,0781 0,0845 0,0974
weight of shareholders equity 0,5773 0,5513 0,5881 0,5925
Total Capital Needed=total assets-(A/P+N/P) 87.630 TL 144.590 TL 238.573 TL 286.287 TL
Assumption 5 - New financing is obtained in order to keep the capital structure the same.
Interest Rate = Cost of Debt 0,731 0,399 0,319 1,475
Assumption 6 - The interest on debt is the average of three years for 2002 but it declines to interest rate in Year 2000 for the rest.
Assumption 7 - Other expenses and income and extraordinary expense and income will increase by 20% in every year.
Assumption 8 - Income tax rate is 35%, if company has a loss, no tax is paid.
Assumption 9 - Shareholders' Equity accounts, "Capital Commitments", "Premium on Issue of Shares" and "Revaluation Surplus," do not change over the years.
Assumption 10 - Company distributes 45 percent of their income as dividends.
CALCULATION OF FREE CASH FLOWS
Free Cash Flow = Net Operating Profit After Tax - Net Investment in Operating Capital
Net Operating Profit After Tax 6.322 TL 7.656 TL 23.308 TL 27.803 TL 33.994 TL 43.022 TL 49.013 TL
EBIT*(1-T)
Net Investment in Operating Capital 8.502 TL 8.581 TL 21.546 TL 37.821 TL 62.404 TL 31.682 TL
Net Operating Working Capital 9.987 TL 13.878 TL 17.389 TL 26.422 TL 43.597 TL 71.935 TL 86.322 TL
Net Fixed Assets 9.570 TL 14.181 TL 19.250 TL 31.763 TL 52.409 TL 86.475 TL 103.770 TL
Total Operating Capital 19.557 TL 28.059 TL 36.640 TL 58.186 TL 96.006 TL 158.410 TL 190.092 TL
Free Cash Flows -845 TL 14.728 TL 6.257 TL -3.826 TL -19.382 TL 17.331 TL
CALCULATION OF FREE CASH FLOWS
Free Cash Flow = Operating Cash Flow - Gross Investment in Operating Capital
Operating Cash Flow  10.421 TL 17.172 TL 34.233 TL 45.607 TL 63.371 TL 91.494 TL 107.179 TL
Net Operating Profit After Tax = EBIT * (1-T) 6.322 TL 7.656 TL 23.308 TL 27.803 TL 33.994 TL 43.022 TL 49.013 TL
Depreciation 4.099 TL 9.515 TL 10.925 TL 17.804 TL 29.377 TL 48.472 TL 58.166 TL
Gross Investment in Operating Capital 18.017 TL 19.506 TL 39.350 TL 67.197 TL 110.876 TL 89.848 TL
Net Investment in Operating Capital 8.502 TL 8.581 TL 21.546 TL 37.821 TL 62.404 TL 31.682 TL
Depreciation 9.515 TL 10.925 TL 17.804 TL 29.377 TL 48.472 TL 58.166 TL
Free Cash Flows -845 TL 14.728 TL 6.257 TL -3.826 TL -19.382 TL 17.331 TL