HORIZONTAL ANALYSIS OF INCOME STATEMENTS
Consolidated income statements for Peach Computer appear below:
|
PEACH COMPUTER, INC.
Consolidated Statements of Income
(In thousands except per share amounts)
|
|
Three fiscal years ended December 31
|
2009
|
2008
|
2007
|
|
Sales
|
$9,188,748
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$7,976,954
|
$7,086,542
|
|
Costs and expenses:
|
|
|
|
|
Cost of goods sold
|
$6,844,915
|
$5,248,834
|
$3,991,337
|
|
Research and development
|
564,303
|
664,564
|
602,135
|
|
Selling, general, and administrative
|
1,384,111
|
1,632,362
|
1,687,262
|
|
Restructuring costs and other
|
(126,855)
|
320,856
|
-
|
|
|
$8,666,474
|
$7,866,616
|
$6,280,734
|
|
Operating income
|
$ 522,274
|
$ 110,338
|
$ 805,808
|
|
Interest and other income, net
|
(21,988)
|
29,321
|
49,634
|
|
Income before income taxes
|
$ 500,286
|
$ 139,659
|
$ 855,442
|
|
Provision for income taxes
|
190,108
|
53,070
|
325,069
|
|
Net income
|
$ 310,178
|
$ 86,589
|
$ 530,373
|
|
Earnings per common and common
|
|
|
|
|
equivalent share
|
$2.61
|
$0.73
|
$4.33
|
|
Common and common equivalent
|
|
|
|
|
shares used in the calculations of
|
|
|
|
|
earnings per share
|
118,735
|
119,125
|
122,490
|
Required:
1. Prepare common size income statements for horizontal analysis.
2. Explain why net income decreased in 2008 and increased in 2009.