STANDALONE VALUATION OF SUN MICROSYSTEMS

(in millions of U.S. dollars)

Fiscal Year-End June 30

2009E 2010

VALUATION AS IN YEAR 2009 T=0 1

2010
EBIT (2,336) 141
EBIT (1-T) (Tax rate 35% - given) (1,518) 47
Less Net Capex 5 (96)
Less Change in NWC -946 458.63
Free Cash Flows (577) (316)
PV of Free Cash Flows (577) (282.06)
Total PV of Free Cash Flows 13,582.95

Terminal Value as a growing perpetuity

Terminal Value as per multiples approach

Enterprise Value
Add Non Operating Assets
Firm Value
Less Debt
Equity Value
O/S Shares

WACC
0.00

Growth rate
rs)

al Year-End June 30
2011 2012 2013 2014E

2 3 4 5
2011 2012 2013 2014E 0.202802
472 670 747 796 6198.167
1,207 1,336 1,386 1,417 WACC 12.03% 0.797198
46 57 43 43 g 4.80%
30.09 37.73 28.28 28.20 Kd 0.1142
1,131 1,241 1,314 1,346 1,410.82 Ke 0.132
900.94 882.49 834.41 762.92 19,518.78
PV of TV 11061.6474
WACC 0.120284

WACC
(US Dollar Millions, except the multiples and per share data)
Multiple Financial Metric Multiple range Implied Enterprise V
Sales LTM
Implied Enterprise Value Less: Net Debt Implied Equity Value Shares Outstandi
Average
Median
High
Low

Implied Share price