Pro Forma Income Statements Presented below is the consolidated statement of earnings for Mann & Miller, Inc. Mann & Miller, Inc. Consolidated Statement of Earnings ($ millions) 2015 2014 2013 Sales of customers $37,089 $32,317 $29,172 Cost of goods sold 10,747 9,581 8,957 Gross profit 26,342 22,736 20,215 Selling marketing & administrative expense 12,216 11,260 10,495 Research expense 3,957 3,591 3,105 Purchased in process research & development Interest 189 105 66 income (256) (456) (429) Interest expense, net of portion capitalized 160 153 204 189 105 66 development Interest income (256) (456) (429) Interest 160 153 204 expense, net of portion capitalized Other (income) expense, net 294 185 (94) 13,347 16,560 14,838 9,782 7,898 6,868 Earnings before provision for income taxes Provision for income taxes Net earnings Basic net earnings per share Diluted net earnings per share 2,837 2,230 1,915 $ 6,945 $ 5,668 $ 4,953 $2.20 $1.87 $1.65 $2.16 $1.84 $1.61 Required Required Using the Mann & Miller Inc. (M&M) consolidated statement of earnings as your base year, prepare pro forma income statements for M&M for 2016 and 2017. Relevant assumptions that you should use include: Sales growth is 10 percent per year. Gross profit margin is 65 percent. Effective income tax rate is 29 percent. Selling, marketing & administrative expenses, research expenses, and other income and expenses net all vary as a function of sales. Purchased in-process R&D, and interest income remain constant at the 2015 level. Interest expense is six percent of the beginning balance of long-term debt. Long-term debt at the end of 2015 is $2,850 and increases by five percent each year. . Instructions 1. Round answers to the nearest whole number. 2. Use rounded Sales figure for subsequent calculations. 3. For selling, marketing & administrative expenses, research expenses, and other income and expenses computations - use (2015 expense / 2015 sales) as your factor for both 2016 and 2017 computations. Do not round until your final answer. 4. Use a negative sign with interest income answers. Mann & Miller, Inc. Proforma Financial Statements (in millions) 2016 2017 Sales to customers $ $ Cost of sales Instructions 1. Round answers to the nearest whole number. 2. Use rounded Sales figure for subsequent calculations. 3. For selling, marketing & administrative expenses, research expenses, and other income and expenses computations - use (2015 expense / 2015 sales) as your factor for both 2016 and 2017 computations. Do not round until your final answer. 4. Use a negative sign with interest income answers. Mann & Miller, Inc. Proforma Financial Statements (in millions) 2016 2017 Sales to customers $ $ Cost of sales Gross profit Selling & administrative Research In-process R&D Interest income Interest expense Other (income) expense, net Income before taxes Income taxes Netincome $ $ Check