In March of 2011, Macklemore Corp. considered an acquisition of Blue Scholar Learning, Inc. (BSL), a privately held educational software firm. As a first step in deciding what price to bid for BSL, Macklemore's CFO, Ryan Lewis, has prepared a five-year financial projection for the company assuming the acquisition takes place.
Use BSL's actual financial data for 2010 and its projections for 2011 as shown above. What is BSL's projected free cash flow (in $ millions) for 2011?
Blue Scholar Learning, Inc. (BSL) 5-year Financial Projection (5 millions) Actual 2010 2011 2012 2013 2014 2015 $ 1.996 $ 644 1,352 492 171 212 477 186 291 $ 2,267 $ 742 1.525 785 178 239 323 126 197 $ 2.508 $ 820 1.678 1,061 191 270 2.827 $ 959 1.808 1.301 175 306 S6 34 32 $ 3.138 $ 1.087 2.051 1.009 142 334 3,571 1.241 2330 917 110 374 929 1.56 61 95 $ 221 345 S $ 566 Income statement Net sales Cost of sales Gross income Depreciation Interest expense Operating expenses Net income before tax Provision for taxes Net income after tax Balance sheet Total current assets Gross property and equipment Accumulated depreciation Net property and equipment Goodwill Total assets Accounts payable Short-tem debt Current portion long-term debt Accrued expenses Total curent liabilities Long-term debt Deferred taxes Shareholders' equity Total liabilities and equity 1,412 6,410 2,714 1.121 4.180 SOS 3.312 1.000 3.502 1,234 3.149 1.684 3.495 1.000 3,798 1.923 8.300 5.024 3.176 1.009 6.168 2,179 9,016 5.941 3,075 1.009 1.009 6.177 6.323 104 335 91 SC 165 1.630 7.449 4.015 3.434 1.069 6.153 110 814 200 134 1.258 1.189 454 3.252 6.153 $ 117 585 223 135 393 267 168 77 182 140 97 796 1,354 344 3,104 5,798 $ 86 566 1.694 335 2.907 5.502 $ 99 1.218 1.389 370 3.200 6.177 $ 1.099 906 505 3.598 6.10S $ 4.165 6.323 $ Free cash flows $ (130) $ 215$ 464 $ Blue Scholar Learning, Inc. (BSL) 5-year Financial Projection (5 millions) Actual 2010 2011 2012 2013 2014 2015 $ 1.996 $ 644 1,352 492 171 212 477 186 291 $ 2,267 $ 742 1.525 785 178 239 323 126 197 $ 2.508 $ 820 1.678 1,061 191 270 2.827 $ 959 1.808 1.301 175 306 S6 34 32 $ 3.138 $ 1.087 2.051 1.009 142 334 3,571 1.241 2330 917 110 374 929 1.56 61 95 $ 221 345 S $ 566 Income statement Net sales Cost of sales Gross income Depreciation Interest expense Operating expenses Net income before tax Provision for taxes Net income after tax Balance sheet Total current assets Gross property and equipment Accumulated depreciation Net property and equipment Goodwill Total assets Accounts payable Short-tem debt Current portion long-term debt Accrued expenses Total curent liabilities Long-term debt Deferred taxes Shareholders' equity Total liabilities and equity 1,412 6,410 2,714 1.121 4.180 SOS 3.312 1.000 3.502 1,234 3.149 1.684 3.495 1.000 3,798 1.923 8.300 5.024 3.176 1.009 6.168 2,179 9,016 5.941 3,075 1.009 1.009 6.177 6.323 104 335 91 SC 165 1.630 7.449 4.015 3.434 1.069 6.153 110 814 200 134 1.258 1.189 454 3.252 6.153 $ 117 585 223 135 393 267 168 77 182 140 97 796 1,354 344 3,104 5,798 $ 86 566 1.694 335 2.907 5.502 $ 99 1.218 1.389 370 3.200 6.177 $ 1.099 906 505 3.598 6.10S $ 4.165 6.323 $ Free cash flows $ (130) $ 215$ 464 $
