1. Consider a hypothetical using the 2002 numbers (in Millions) in the table below: if this company paid out their entire cash balance as a special dividend at the beginning of 2002, what would be the effect on the value of the firm? On the share price? On earnings and EPS? What if they used all of the cash balance to do a share repurchase at the beginning of 2002 instead? (You can assume that Linear earns a 3.35% interest rate on their cash balance for your calculations.).

June Fiscal Year	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003
Income Statement
Sales	119.4	150.9	200.5	265	377.8	379.3	484.8	506.7	705.9	972.6	512.3	440.8
-Cost of Goods Sold	49.5	57	67.6	83.3	106.8	109.8	137.8	139.8	179	231.1	144.7	114.6
-Research and Development Expense	12.3	14.8	18.4	23.9	31.1	35.4	46.2	54.7	78.3	102.5	79.8	67
-Other Expenses	19.1	23.3	28	29.4	36	29.6	29.6	26.5	31.4	28.4	9.4	18.9
Income Before Taxes	38.5	55.7	86.5	128.5	203.9	204.5	271.3	285.7	417.3	610.7	278.4	240.3
-GAAP Income Taxes	13.5	19.3	29.7	43.8	69.9	70.2	90.4	91.4	129.4	183.2	80.7	69.7
Net Income	25	36.4	56.8	84.7	134	134.4	180.9	194.3	287.9	427.5	197.6	170.6
Common Shares Outstanding	280.2	285.4	290.5	294.3	298.6	303.8	307.3	307.5	315.2	318.9	316.2	312.4
Earnings Per Share	$0.09	$0.13	$0.20	$0.29	$0.45	$0.44	$0.59	$0.63	$0.91	$1.34	$0.63	$0.55
Dividends Paid Preferred	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Dividends Paid - Common	0.0	5.3	8.3	9.8	11.9	15.0	18.3	22.1	28.0	41.2	54.0	47.0
Share Price, Fiscal Year Close	$2.36	$3.61	$5.50	$8.25	$7.50	$12.94	$15.08	$33.63	$63.94	$44.22	$31.43	$30.87
Cash Flow Statement
Net Income	25	36.4	56.8	84.7	134	134.4	180.9	194.3	287.9	427.5	197.6	170.6
+Depreciation and Amortization	4.5	5.8	6.3	8.6	10.3	12.4	20.1	22	25	35.8	46.3	33.5
-Capital Expenditure	9.8	7.6	16.2	22.1	70.4	21.9	24.4	39.1	80.3	127.9	17.9	9.8
-Working Capital Investments	7.2	2.6	6.8	-4.5	-9.1	21.2	-7.4	-9.6	-26.6	19.2	42	14.9
+Tax Adjustmentb	6.4	2.8	6.1	6.2	11.3	25.3	58.6	54.6	102.9	115.5	55.2	0.7
Operating Cash Flow	19	34.8	46.3	81.8	94.3	129.1	242.6	241.3	362	431.7	239.3	180.1
+Stock Issuance	11.7	9.1	13.7	7.6	12.7	18.5	26.6	38.3	54.8	52.7	39.3	27.4
-Stock Purchases	0.7	1.2	1.3	6.1	22.9	11.6	56.5	108.7	0	69.8	221.6	165.7
-Dividends Paid	0	5.3	8.3	9.8	11.9	15	18.3	22.1	28	41.2	54	47
-Other Itemsc	0	4.7	1.5	0	0	0	0	0	0	0	0	-18.4
Net Cash Flow	30	32.6	48.9	73.4	72.3	121	194.5	148.8	388.9	373.4	3	13.2
Cash and Short-Term Investments	95.3	127.9	176.8	250.2	322.5	443.4	637.9	786.7	1,175.60	1,549.00	1,552.00	1,565.20