Professional Documents
Culture Documents
DEB SAHOO, MBA, ROSS SCHOOL OF BUSINESS, UNIVERSITY OF MICHIGAN, ANN ARBOR
April 25, 2011
INDUSTRY NEWS
Industry Buzz
Target Overview
12
16
19
23
Valuation Summary
25
27
Transaction Analysis
30
36
41
TABLE OF CONTENTS
Executive Summary
EXECUTIVE SUMMARY
Target Overview
Valuation
Buyer
Ticker: MSFT
Stock Price: $25.52
5 Year avg. Sales Growth: 9.70%
Market Cap: $215.2B
Number of Basic Shares: 8,430 MM
2010 EBITDA: $27,363 MM
Total Enterprise Value: $184 B
Ticker: ADBE
Stock Price: $33.48
5 Year avg. Sales Growth: 15.6%
Market Cap: $16.763 B
Number of Basic Shares: 1,310 MM
2010 EBITDA: $1,309 MM
Total Enterprise Value: $43 B
Target
EXECUTIVE SUMMARY
Buyer Overview
TARGET OVERVIEW
Acrobat X Pro
Authorware
BrowserLab
Creative Suite 5.5
Dreamweaver CS5.5
Flash Media Playback
FrameMaker Server 10
Adobe Genesis
Illustrator CS5
Photoshop CS5
Shockwave Player
Adobe SiteSearch
Industry Comparables
Stock Performance
Company Overview
30-Jun-10
30-Jun-09
30-Jun-08
29-Jun-07
30-Jun-06
62,484.0
57,553.0
60,420.0
51,122.0
44,282.0
12,395.0
12,155.0
11,598.0
10,693.0
7,650.0
9,722.0
9,593.0
9,542.0
9,253.0
6,660.0
2,673.0
2,562.0
2,056.0
1,440.0
990.0
1,800.0
1,700.0
1,400.0
1,170.0
863.0
873.0
862.0
656.0
270.0
127.0
Gross Income
50,089.0
45,398.0
48,822.0
40,429.0
36,632.0
SG&A Expense
25,399.0
25,306.0
24,530.0
21,394.0
18,840.0
8,714.0
9,010.0
8,164.0
7,121.0
6,584.0
16,685.0
16,296.0
16,366.0
14,273.0
12,256.0
24,690.0
20,092.0
24,292.0
19,035.0
17,792.0
1,275.0
900.0
1,408.0
1,969.0
1,980.0
843.0
706.0
888.0
1,319.0
1,510.0
432.0
194.0
520.0
650.0
470.0
Interest Expense
151.0
0.0
0.0
0.0
0.0
801.0
1,171.0
1,886.0
869.0
1,728.0
25,013.0
19,821.0
23,814.0
20,135.0
18,044.0
6,253.0
5,252.0
6,133.0
6,036.0
5,663.0
0.0
0.0
0.0
-34.0
218.0
Net Income
18,760.0
14,569.0
17,681.0
14,065.0
12,599.0
EBITDA
27,363.0
22,654.0
26,348.0
20,475.0
18,782.0
EBIT
24,690.0
20,092.0
24,292.0
19,035.0
17,792.0
2,673.0
2,562.0
2,056.0
1,440.0
990.0
Pretax Income
Income Taxes
Equity in Earnings of Affiliates
30-Jun-10
30-Jun-09
30-Jun-08
29-Jun-07
30-Jun-06
36,788.0
31,447.0
23,662.0
23,411.0
34,161.0
13,014.0
11,192.0
13,589.0
11,338.0
9,316.0
740.0
717.0
985.0
1,127.0
1,478.0
5,134.0
5,924.0
5,006.0
4,292.0
4,055.0
55,676.0
49,280.0
43,242.0
40,168.0
49,010.0
7,630.0
7,535.0
6,242.0
4,350.0
3,044.0
7,754.0
4,933.0
6,588.0
10,117.0
9,232.0
Inventories
Intangible Assets
13,552.0
14,262.0
14,081.0
5,638.0
4,405.0
Other Assets
1,501.0
1,599.0
1,691.0
1,509.0
1,295.0
Total Assets
86,113.0
77,609.0
71,844.0
61,782.0
66,986.0
1,000.0
2,000.0
0.0
0.0
0.0
4,025.0
3,324.0
4,034.0
3,247.0
2,909.0
1,074.0
725.0
3,248.0
1,040.0
1,557.0
20,048.0
20,985.0
22,604.0
19,467.0
17,976.0
26,147.0
27,034.0
29,886.0
23,754.0
22,442.0
4,939.0
3,746.0
0.0
0.0
0.0
229.0
-279.0
-949.0
-1,389.0
-2,611.0
Other Liabilities
8,623.0
7,550.0
6,621.0
8,320.0
7,051.0
Total Liabilities
39,938.0
38,051.0
35,558.0
30,685.0
26,882.0
Common Equity
46,175.0
39,558.0
36,286.0
31,097.0
40,104.0
Long-Term Debt
Deferred Taxes
62,856.0
62,382.0
62,849.0
60,557.0
59,005.0
-17,736.0
-23,793.0
-27,703.0
-31,114.0
-20,130.0
-176.0
30.0
270.0
149.0
64.0
1,231.0
939.0
870.0
1,505.0
1,165.0
46,175.0
39,558.0
36,286.0
31,097.0
40,104.0
86,113.0
77,609.0
71,844.0
61,782.0
66,986.0
Retained Earnings
Cumulative Translation Adjustment/Unrealized For. Exc h. Gain
Unrealized Gain/Loss M arketable Securities
10
30-Jun-10
30-Jun-09
30-Jun-08
29-Jun-07
30-Jun-06
18,760.0
14,569.0
17,681.0
14,065.0
12,599.0
2,673.0
2,562.0
2,056.0
1,440.0
903.0
1,800.0
1,700.0
1,400.0
1,170.0
863.0
873.0
862.0
656.0
270.0
40.0
-220.0
762.0
935.0
421.0
219.0
2,199.0
2,339.0
787.0
1,181.0
1,356.0
23,412.0
20,232.0
21,459.0
17,107.0
15,077.0
661.0
-1,195.0
153.0
689.0
-673.0
-2,238.0
2,215.0
-1,569.0
-1,764.0
-2,071.0
Other Assets/Liabilities
2,899.0
-3,410.0
1,722.0
2,453.0
1,398.0
24,073.0
19,037.0
21,612.0
17,796.0
14,404.0
1,977.0
3,119.0
3,182.0
2,264.0
1,578.0
-245.0
-868.0
-8,053.0
-1,150.0
-649.0
Purchase/Sale of Investments
-7,590.0
-11,783.0
6,648.0
9,503.0
10,230.0
Other Funds
-1,502.0
0.0
0.0
0.0
0.0
-11,314.0
-15,770.0
-4,587.0
6,089.0
8,003.0
-4,578.0
-4,468.0
-4,015.0
-3,805.0
-3,545.0
-8,958.0
-8,774.0
-9,039.0
-20,793.0
-17,106.0
190.0
5,746.0
0.0
0.0
0.0
55.0
33.0
120.0
54.0
89.0
-13,291.0
-7,463.0
-12,934.0
-24,544.0
-20,562.0
-39.0
-67.0
137.0
56.0
18.0
-571.0
-4,263.0
4,228.0
-603.0
1,863.0
Investing Activities
Capital Expenditures
Net Assets from Acquisitions
12
30-Nov-10
30-Nov-09
28-Nov-08
30-Nov-07
30-Nov-06
3,800.0
2,945.9
3,579.9
3,157.9
2,575.3
504.2
395.0
433.5
432.6
462.8
211.5
112.5
163.2
117.1
155.0
292.7
282.4
270.3
315.5
307.8
Deprec iation
107.5
95.9
83.3
73.2
67.7
Amortization of Intangibles
185.2
186.5
187.0
242.3
240.1
Gross Income
3,295.8
2,550.9
3,146.4
2,725.3
2,112.5
SG&A Expense
2,279.4
1,819.1
2,086.1
1,867.2
1,541.5
680.3
565.1
662.1
613.2
539.7
1,599.1
1,254.0
1,424.0
1,253.9
1,001.8
1,016.3
731.8
1,060.3
858.1
571.0
13.3
22.4
60.8
89.9
128.4
21.9
35.0
57.6
92.8
62.5
-8.6
-12.6
3.2
-2.9
66.0
Interest Expense
57.0
3.4
10.0
0.3
0.0
29.6
49.3
32.6
0.6
19.7
--
--
--
--
--
23.3
41.3
32.1
0.6
19.7
--
--
--
--
--
6.3
8.0
0.6
--
--
0.0
0.0
0.0
0.0
0.0
Pretax Income
943.2
701.5
1,078.5
947.2
679.7
168.5
315.0
206.7
223.4
173.9
774.7
386.5
871.8
723.8
505.8
Net Income
774.7
386.5
871.8
723.8
505.8
EBITDA
1,309.1
1,014.2
1,330.6
1,173.6
878.8
EBIT
1,016.3
731.8
1,060.3
858.1
571.0
292.7
282.4
270.3
315.5
307.8
All figures in millions of U.S. Dollar, exc ept per share items
Sales/Revenue
13
30-Nov-10
30-Nov-09
28-Nov-08
30-Nov-07
30-Nov-06
2,468.0
1,904.5
2,019.2
1,993.9
2,280.9
554.3
410.9
467.2
362.8
408.7
193.7
158.3
248.7
216.3
194.9
3,216.1
2,473.6
2,735.1
2,573.0
2,884.5
448.9
388.1
313.0
289.8
227.2
246.0
287.1
307.3
274.1
173.1
--
0.0
0.0
0.0
2.4
4,170.6
4,106.3
2,440.3
2,550.7
2,655.9
Other Assets
59.6
27.1
25.8
26.1
19.5
Total Assets
8,141.1
7,282.2
5,821.6
5,713.7
5,962.5
8.8
0.0
0.0
0.0
0.0
Accounts Payable
52.4
58.9
55.8
41.7
55.0
53.7
46.6
27.1
215.1
178.4
953.1
739.0
679.6
595.6
443.9
1,068.1
844.6
762.6
852.4
677.3
1,513.7
1,000.0
350.0
0.0
0.0
164.7
223.5
123.2
0.0
0.0
Deferred Taxes
103.1
252.5
117.3
148.9
70.7
Other Liabilities
99.2
71.1
58.1
62.3
62.6
Total Liabilities
2,948.8
2,391.7
1,411.2
1,063.7
810.7
Common Equity
5,192.4
4,890.6
4,410.4
4,650.0
5,151.9
5,192.4
4,890.6
4,410.4
4,650.0
5,151.9
8,141.1
7,282.2
5,821.6
5,713.7
5,962.5
Long-Term Debt
14
30-Nov-10
30-Nov-09
28-Nov-08
30-Nov-07
30-Nov-06
774.7
386.5
871.8
723.8
505.8
292.7
282.4
270.3
315.5
307.8
-172.3
49.6
46.6
58.4
-4.3
240.5
216.0
218.3
269.8
171.7
1,135.6
934.6
1,406.9
1,367.5
981.1
Other Funds
Funds from Operations
Changes in Working Capital
-22.6
183.2
-126.2
71.8
-53.8
-134.3
172.3
-153.4
-103.2
-112.8
Accounts Payable
-10.1
-13.6
14.1
11.5
11.8
-48.7
109.6
-57.7
61.4
27.2
Other Accruals
101.0
-61.8
10.4
61.5
-72.1
Other Assets/Liabilities
69.4
-23.3
60.3
40.6
92.1
1,113.0
1,117.8
1,280.7
1,439.3
927.2
169.6
119.6
111.8
132.1
83.3
-193.3
-1,582.7
-4.3
-77.2
0.0
Receivables
Investing Activities
Capital Expenditures
Net Assets from Acquisitions
Sale of Fixed Assets & Businesses
Purchase/Sale of Investments
Other Funds
Net Investing Cash Flow
32.2
0.0
0.0
13.0
0.0
-830.7
202.4
-189.3
360.9
-160.7
2.2
2.8
0.7
-81.3
439.1
-1,159.3
-1,497.1
-304.7
83.3
195.2
0.0
0.0
0.0
0.0
0.0
-710.8
-170.4
-1,403.6
-1,435.4
-854.9
479.1
636.1
350.0
0.0
0.0
16.4
12.0
32.0
85.1
80.2
-215.3
477.7
-1,021.6
-1,350.4
-774.7
12.0
14.7
-14.4
1.7
3.9
-249.6
113.0
-60.0
173.9
351.7
Financing Activities
Cash Dividends Paid
Change in Capital Stock
Issuance/Reduction of Debt, Net
Other Funds
Net Financing Cash Flow
Exchange Rate Effect
Net Change in Cash
15
16
FY Ending December 30
CAGR
2010
2011
2012
2013
2014
2015
Revenue
% Growth
$3,800.0
29.0%
$4,115.1
8.3%
$4,564.4
10.9%
$5,023.4
10.1%
$5,073.6
1.0%
$5,124.4
1.0%
5.6%
EBITDA
% Margin
1,309.1
34.5%
1,705.9
41.5%
1,888.9
41.4%
2,061.2
41.0%
2,081.8
41.0%
2,102.6
41.0%
5.4%
Less: Depreciation
EBITA
Tax Rate
(107.5)
1,201.6
25.0%
(65.4)
1,640.5
25.0%
(64.0)
1,824.9
25.0%
(63.8)
1,997.4
25.0%
(64.4)
2,017.4
25.0%
(65.1)
2,037.5
25.0%
$901.2
Plus: Depreciation
Less: Capital Expenditures
Less: Change in Working Capital
Free Cash Flow
Net Debt
FDSO
17
107.5
(137.5)
(9.5)
$861.7
($954.2)
1,312.830
$1,230.4
65.4
(133.9)
8.3
$1,170.2
$1,368.7
64.0
(159.4)
3.1
$1,276.4
$1,498.1
63.8
(175.6)
1.6
$1,387.9
$1,513.0
64.4
(202.9)
1.9
$1,376.4
$1,528.2
2011-2015
5.6%
5.6%
65.1
(205.0)
2.3
$1,390.6
4.4%
Discount
Rate
(WACC)
Discount
Rate
(WACC)
5.0%
6.0%
7.0%
5.0%
6.0%
7.0%
(1)
Discount
Rate
(WACC)
5.0%
6.0%
7.0%
Discount
Rate
(WACC)
5.0%
6.0%
7.0%
16.0x
$25.1
$24.1
$23.1
Discount
Rate
(WACC)
Discount
Rate
(WACC)
18
5.0%
6.0%
7.0%
5.0%
6.0%
7.0%
Discount
Rate
(WACC)
5.0%
6.0%
7.0%
5.0%
6.0%
7.0%
(2)
Discount
Rate
(WACC)
(1)
19
20
Industry Comparables
Capitalization Analysis
LTM as of 21-Apr-2011
Company Name
Ticker
Price
(21-Apr-2011)
Apple, Inc.
Microsoft Corp.
Autodesk, Inc.
Yahoo!, Inc.
Google, Inc.
Oracle Corp.
AAPL
MSFT
ADSK
YHOO
GOOG
ORCL
350.70
25.52
44.88
16.85
525.10
34.75
Mean
Median
166.3
39.8
Market
Value
Diluted
Shares
Outstanding
Equity
Value
Enterprise
Value
Cash
and ST
Investments
Total
Debt
Preferred
Equity
Minority
Interest
Total
Assets
Long
Term
Debt
D/
D+E
324,279.5
214,428.8
10,228.2
22,063.6
169,206.6
175,852.9
935.9
8,570.0
234.2
1,364.6
323.3
5,149.0
328,231.8
218,706.4
10,510.9
22,993.7
169,739.1
178,927.8
295,045.5
182,847.8
8,953.9
19,285.8
137,696.6
166,691.9
29,234.0
41,252.0
1,274.3
2,884.1
34,975.0
24,355.0
0.0
9,671.0
0.0
68.0
3,465.0
14,752.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
38.3
0.0
442.0
94,904.0
92,306.0
2,696.9
14,885.1
57,586.0
66,147.0
0.0
9,671.0
0.0
61.0
0.0
14,752.0
0.00x
0.17x
0.00x
0.01x
0.07x
0.29x
152,676.6
172,529.8
152,676.6
172,529.8
2,762.8
1,150.3
154,851.6
174,333.4
135,086.9
152,194.3
22,329.1
26,794.5
4,659.3
1,766.5
80.0
-
54,754.2
61,866.5
4,080.7
30.5
Margin Analysis
LTM as of 21-Apr-2011
Company Name
Ticker
Apple, Inc.
Microsoft Corp.
Autodesk, Inc.
Yahoo!, Inc.
Google, Inc.
Oracle Corp.
AAPL
MSFT
ADSK
YHOO
GOOG
ORCL
Mean
Median
LTM
FY-1
39.6
78.9
88.8
54.9
62.6
72.0
39.1
78.4
89.9
58.0
64.5
68.3
26.7
34.9
7.9
7.9
35.1
36.8
66.1
67.3
39.3
80.2
89.9
58.0
64.5
71.2
67.2
67.8
66.3
66.4
24.9
30.8
LTM
LTM
FY-1
29.0
39.6
14.5
13.1
35.4
34.4
28.4
39.4
13.3
19.4
41.6
45.3
30.6
43.5
19.9
23.9
40.2
42.3
19.3
25.3
3.4
9.3
27.6
24.1
27.7
31.7
31.2
33.9
29.7
43.8
19.9
23.9
40.2
45.1
33.8
34.9
33.4
35.4
18.2
21.7
LTM
22.4
30.8
10.9
19.5
29.0
22.4
22.5
22.4
Valuation Analysis
LTM as of 21-Apr-2011
Company Name
Ticker
Market
Value
Apple, Inc.
Microsoft Corp.
Autodesk, Inc.
Yahoo!, Inc.
Google, Inc.
Oracle Corp.
AAPL
MSFT
ADSK
YHOO
GOOG
ORCL
324,279.5
214,428.8
10,228.2
22,063.6
169,206.6
175,852.9
Mean
Median
Low
High
21
152,676.6
172,529.8
10,228.2
324,279.5
Enterprise
Value
Sales
EBITDA
295,045.5
182,847.8
8,953.9
19,285.8
137,696.6
166,691.9
87,451.0
66,690.0
1,951.8
6,324.7
29,321.0
34,353.0
26,774.0
28,987.0
387.6
1,513.0
11,777.0
14,518.0
135,086.9
152,194.3
8,953.9
295,045.5
37,681.9
31,837.0
1,951.8
87,451.0
13,992.8
13,147.5
387.6
28,987.0
LTM
Price / EPS
FY1
FY2
16.72
10.86
49.87
18.72
24.43
23.01
14.31
10.03
27.21
22.02
15.45
15.92
12.41
9.26
22.98
18.98
13.18
14.55
3.4x
2.7x
4.6x
3.0x
4.7x
4.9x
11.6x
6.9x
31.7x
23.2x
13.3x
14.1x
23.9
20.9
10.9
49.9
17.5
15.7
10.0
27.2
15.2
13.9
9.3
23.0
3.9x
4.0x
2.7x
4.9x
16.8x
13.7x
6.9x
31.7x
Price to
Book
Value
Price
to
Sales
11.0x
6.3x
23.1x
12.7x
11.7x
11.5x
5.3x
4.4x
6.3x
1.8x
3.6x
4.8x
3.8x
3.3x
5.4x
3.6x
5.8x
5.2x
12.7x
11.6x
6.3x
23.1x
4.4x
4.6x
1.8x
6.3x
4.5x
4.5x
3.3x
5.8x
Enterprise Value /
Sales
EBIT
EBITDA
($954.2)
1,312.830
4.0
2.2
2.4
3,800.0
1,016.4
1,309.1
$
$
$
$
$
$
Median
Low
22,704.9
50,209.5
48,670.0
14,757.2
17,091.6
16,658.1
23,953.1
45,029.2
44,303.2
15,126.5
13,919.4
15,168.4
9,118.6
28,785.1
29,604.1
10,418.7
7,043.9
8,257.7
22
High
Mean
Median
Low
32,870.8
78,115.1
73,458.0
18,438.8
32,249.1
30,241.2
17.3
38.2
37.1
12.0
13.7
13.4
18.2
34.3
33.7
12.2
11.3
12.3
6.9
21.9
22.5
8.7
6.1
7.0
High
-
25.0
59.5
56.0
14.8
25.3
23.8
23
Precedent Transactions
Deal
Buyer
Target
Deal Details
Year
Name
Industry
Ticker
Name
Industry
Ticker
2009
2009
2010
2009
2010
Adobe Systems
IBM Corp.
Intel Corp.
Intel Corp.
SAP AG
Software
IT Services
Hardware
Hardware
Software
ADBE
IBM
INTC
INTC
SAP
Omniture
SPSS
McAfee
Wind River
Sybase Inc.
Software
Software
Software
Software
Software
OMTR
SPSS
MFE
WIND
SYBS
Mean
Median
Low
High
Enterprise Value
EV/Revenue
EV/EBITDA
Premium
$1,800.0
$785.0
$6,800.0
$790.0
$5,800.0
4.6x
2.7x
3.4x
2.2x
4.5x
22.3x
18.0x
16.1x
21.0x
15.7x
45%
42%
60%
44%
56%
$3,195.0
$1,800.0
$785.0
$6,800.0
3.5x
3.4x
2.2x
4.6x
18.6x
18.0x
15.7x
22.3x
49%
45%
42%
60%
$
$
($954.2)
1,312.830
3,800.0
1,309.1
Mean
Median
Low
High
Mean
Median
Low
High
13,224.0
24,375.4
12,920.0
23,563.8
8,360.0
20,552.9
17,480.0
29,192.9
10.8
19.3
10.6
18.7
7.1
16.4
14.0
23.0
24
VALUATION SUMMARY
25
DCF Analysis
Low
Range
High
26
5% -7% WACC
$27,870.1
$2,534.9
$30,405.0
Precedent Transactions
2.2x -4.6x Revenue
$8,360.0
$9,120.0
$17,480.0
Comparable Companies
3.2x - 4.7x Revenue
$12,160.0
$5,700.0
$17,860.0
VALUATION SUMMARY
27
FY Ended December 30
Total Revenue
% Growth
CAGR
2009A
2010A
2011P
2012P
2013P
2014E
2015E
$60,420.0
NA
$57,553.0
(4.7%)
$62,484.0
8.6%
$69,590.0
11.4%
$74,123.0
6.5%
$79,131.0
6.8%
$84,477.4
6.8%
$90,184.9
6.8%
2011-2015
6.7%
9,542.0
15.8%
9,593.0
16.7%
9,722.0
15.6%
12,481.6
17.9%
13,551.1
18.3%
15,796.9
20.0%
16,864.2
20.0%
18,003.6
20.0%
$50,878.0
84.2%
$47,960.0
83.3%
$52,762.0
84.4%
$57,108.4
82.1%
$60,571.9
81.7%
$63,334.1
80.0%
$67,613.2
80.0%
$72,181.3
80.0%
SG&A
% of Sales
24,530.0
40.6%
25,306.0
44.0%
25,399.0
40.6%
26,789.0
38.5%
28,519.4
38.5%
28,537.5
36.1%
30,465.6
36.1%
32,523.9
36.1%
EBITDA
% Margin
$26,348.0
43.6%
$22,654.0
39.4%
$27,363.0
43.8%
$30,319.4
43.6%
$32,052.5
43.2%
$34,796.6
44.0%
$37,147.6
44.0%
$39,657.4
44.0%
1,400.0
2.3%
656.0
1.1%
$2,056.0
3.4%
1,700.0
3.0%
862.0
1.5%
$2,562.0
4.5%
1,800.0
2.9%
873.0
1.4%
$2,673.0
4.3%
1,850.0
2.7%
835.0
1.2%
$2,685.0
3.9%
1,720.0
2.3%
800.0
1.1%
$2,520.0
3.4%
1,900.0
2.4%
906.2
1.1%
$2,806.2
3.5%
2,028.4
2.4%
906.2
1.1%
$2,934.6
3.5%
2,165.4
2.4%
906.2
1.0%
$3,071.6
3.4%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
EBIT
% Margin
$24,292.0
40.2%
$20,092.0
34.9%
$24,690.0
39.5%
$27,634.4
39.7%
$29,532.5
39.8%
$31,990.4
40.4%
$34,213.0
40.5%
$36,585.8
40.6%
7.3%
EBITA
% Margin
$24,948.0
41.3%
$20,954.0
36.4%
$25,563.0
40.9%
$28,469.4
40.9%
$30,332.5
40.9%
$32,896.6
41.6%
$35,119.2
41.6%
$37,492.0
41.6%
7.1%
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
COGS
% of Sales
Gross Profit
% Margin
Depreciation
% of Sales
Amortization
% of Sales
Total D&A
% of Sales
Stock-Based Comp
% of Sales
0.0
(1,886.0)
0.0
1,408.0
0.0
(1,171.0)
0.0
900.0
(151.0)
(801.0)
0.0
1,275.0
6.0%
6.9%
$25,426.0
$21,225.0
$25,240.0
$28,469.4
$30,332.5
$32,896.6
$35,119.2
$37,492.0
6,133.0
24.1%
5,252.0
24.7%
6,253.0
24.8%
6,798.2
23.9%
7,441.6
24.5%
8,119.6
24.7%
8,668.2
24.7%
9,253.8
24.7%
$19,293.0
31.9%
$15,973.0
27.8%
$18,987.0
30.4%
$21,671.2
31.1%
$22,890.9
30.9%
$24,777.0
31.3%
$26,451.0
31.3%
$28,238.1
31.3%
6.8%
7.5%
7.1%
$2.04
$1.81
$2.13
$2.53
$2.73
$3.01
$3.19
$3.38
9,455.100
8,823.700
8,933.300
8,554.600
8,370.600
8,240.300
8,300.000
8,350.000
$497.8
0.0
0.0
$648.7
0.0
0.0
$656.7
0.0
0.0
$635.6
0.0
0.0
$603.7
0.0
0.0
$682.5
0.0
0.0
$682.5
0.0
0.0
$682.5
0.0
0.0
$18,795.2
31.1%
$15,324.3
26.6%
$18,330.3
29.3%
$21,035.6
30.2%
$22,287.2
30.1%
$24,094.5
30.4%
$25,768.5
30.5%
$27,555.6
30.6%
7.0%
$1.99
$1.74
$2.05
$2.46
$2.66
$2.92
$3.10
$3.30
7.6%
$3,182.0
5.3%
$3,119.0
5.4%
$1,977.0
3.2%
$2,407.0
3.5%
$2,565.5
3.5%
$2,524.3
3.2%
$2,534.3
3.0%
$2,615.4
2.9%
28
FY Ending December 30
2008A
Capex
% of Sales
FY Ended December 30
2008A
FY Ending December 30
CAGR
2010A
2011P
2012P
2013P
2014E
2015E
2011-2015
Total Revenue
% Growth
$3,579.9
NA
$2,945.9
(17.7%)
$3,800.0
29.0%
$4,115.1
8.3%
$4,564.4
10.9%
$5,023.4
10.1%
$5,073.6
1.0%
$5,124.4
1.0%
COGS
% of Sales
Gross Profit
% Margin
163.2
4.6%
$3,416.7
95.4%
112.5
3.8%
$2,833.4
96.2%
211.5
5.6%
$3,588.5
94.4%
194.2
4.7%
$3,920.9
95.3%
233.4
5.1%
$4,331.0
94.9%
1,175.5
23.4%
$3,847.9
76.6%
1,187.3
23.4%
$3,886.4
76.6%
1,199.1
23.4%
$3,925.2
76.6%
SG&A
% of Sales
2,086.1
58.3%
1,819.1
61.8%
2,279.4
60.0%
2,215.0
53.8%
2,442.1
53.5%
1,786.7
35.6%
1,804.6
35.6%
1,822.6
35.6%
EBITDA
% Margin
$1,330.6
37.2%
$1,014.3
34.4%
$1,309.1
34.5%
$1,705.9
41.5%
$1,888.9
41.4%
$2,061.2
41.0%
$2,081.8
41.0%
$2,102.6
41.0%
83.3
2.3%
187.0
5.2%
$270.3
7.6%
95.9
3.3%
186.5
6.3%
$282.4
9.6%
107.5
2.8%
185.2
4.9%
$292.7
7.7%
65.4
1.6%
120.0
2.9%
$185.4
4.5%
64.0
1.4%
120.0
2.6%
$184.0
4.0%
63.8
1.3%
140.0
2.8%
$203.8
4.1%
64.4
1.3%
140.0
2.8%
$204.4
4.0%
65.1
1.3%
140.0
2.7%
$205.1
4.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
EBIT
% Margin
$1,060.3
29.6%
$731.9
24.8%
$1,016.4
26.7%
$1,520.5
36.9%
$1,704.9
37.4%
$1,857.4
37.0%
$1,877.4
37.0%
$1,897.5
37.0%
5.7%
EBITA
% Margin
$1,247.3
34.8%
$918.4
31.2%
$1,201.6
31.6%
$1,640.5
39.9%
$1,824.9
40.0%
$1,997.4
39.8%
$2,017.4
39.8%
$2,037.5
39.8%
5.6%
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Depreciation
% of Sales
Amortization
% of Sales
Total D&A
% of Sales
Stock-Based Comp
% of Sales
(10.0)
(32.60)
0.0
60.8
(3.4)
(49.30)
0.0
22.40
(57.00)
(29.60)
0.0
13.30
5.6%
0.0%
5.4%
$1,229.1
$948.7
$1,274.9
$1,640.5
$1,824.9
$1,997.4
$2,017.4
$2,037.5
296.5
24.1%
234.8
24.7%
315.8
24.8%
391.7
23.9%
447.7
24.5%
493.0
24.7%
497.9
24.7%
502.9
24.7%
$932.6
26.1%
$713.9
24.2%
$959.1
25.2%
$1,248.8
30.3%
$1,377.2
30.2%
$1,504.4
29.9%
$1,519.4
29.9%
$1,534.6
29.9%
5.3%
5.1%
5.6%
$1.97
$1.07
$1.83
$2.19
$2.43
$2.66
$2.67
$2.67
472.800
667.800
523.400
571.100
565.700
566.000
570.000
575.000
$141.9
0.0
0.0
$140.4
0.0
0.0
$139.3
0.0
0.0
$91.3
0.0
0.0
$90.6
0.0
0.0
$105.4
0.0
0.0
$105.4
0.0
0.0
$105.4
0.0
0.0
$790.7
22.1%
$573.6
19.5%
$819.7
21.6%
$1,157.4
28.1%
$1,286.6
28.2%
$1,399.0
27.8%
$1,414.0
27.9%
$1,429.2
27.9%
5.4%
$1.67
$0.86
$1.57
$2.03
$2.27
$2.47
$2.48
$2.49
5.2%
$111.8
3.1%
$119.6
4.1%
$137.5
3.6%
$133.9
3.3%
$159.4
3.5%
$175.6
3.5%
$202.9
4.0%
$205.0
4.0%
29
2009A
Capex
% of Sales
TRANSACTION ANALYSIS
30
Current
Price
$33.48
$39.00
$40.00
$41.00
$42.00
$43.00
$44.00
$45.00
Uses
Adobe Systems Inc. Common Consideration
Adobe Systems Inc. Options Consideration
Adobe Systems Inc. Preferred Consideration
Total Equity Consideration
$44,865.7
0.0
0.0
$44,865.7
$52,262.9
0.0
0.0
$52,262.9
$53,603.0
0.0
0.0
$53,603.0
$54,943.1
0.0
0.0
$54,943.1
$56,283.2
0.0
0.0
$56,283.2
$57,623.2
0.0
0.0
$57,623.2
$58,963.3
0.0
0.0
$58,963.3
$60,303.4
0.0
0.0
$60,303.4
0.0
0.0
0.0
1,513.7
0.0
$46,379.4
0.0
0.0
0.0
1,513.7
0.0
$53,776.6
0.0
0.0
0.0
1,513.7
0.0
$55,116.7
0.0
0.0
0.0
1,513.7
0.0
$56,456.8
0.0
0.0
0.0
1,513.7
0.0
$57,796.9
0.0
0.0
0.0
1,513.7
0.0
$59,136.9
0.0
0.0
0.0
1,513.7
0.0
$60,477.0
0.0
0.0
0.0
1,513.7
0.0
$61,817.1
0.0
0.0
30.0
0.0
0.0
30.0
0.0
0.0
30.0
0.0
0.0
30.0
0.0
0.0
30.0
0.0
0.0
30.0
0.0
0.0
30.0
0.0
0.0
30.0
Total Uses
$46,409.4
$53,806.6
$55,146.7
$56,486.8
$57,826.9
$59,166.9
$60,507.0
$61,847.1
Sources
Microsoft Corp. Common Consideration
Microsoft Corp. Options Consideration
Microsoft Corp. Preferred Consideration
Cash Consideration
Microsoft Corp. Revolver
Acquisition Debt
Adobe Systems Inc. LT Debt Assumed
Total Sources
$26,919.4
0.0
0.0
17,976.3
0.0
0.0
1,513.7
$46,409.4
$31,357.8
0.0
0.0
20,935.2
0.0
0.0
1,513.7
$53,806.6
$32,161.8
0.0
0.0
21,471.2
0.0
0.0
1,513.7
$55,146.7
$32,965.8
0.0
0.0
22,007.2
0.0
0.0
1,513.7
$56,486.8
$33,769.9
0.0
0.0
22,543.3
0.0
0.0
1,513.7
$57,826.9
$34,573.9
0.0
0.0
23,079.3
0.0
0.0
1,513.7
$59,166.9
$35,378.0
0.0
0.0
23,615.3
0.0
0.0
1,513.7
$60,507.0
$36,182.0
0.0
0.0
24,151.4
0.0
0.0
1,513.7
$61,847.1
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
Check
Cash Schedule
31
Cash Available
Microsoft Corp. Existing Cash
Adobe Systems Inc. Existing Cash
Minimum Cash Balance
$36,788.0
2,468.0
(100.0)
$36,788.0
2,468.0
(100.0)
$36,788.0
2,468.0
(100.0)
$36,788.0
2,468.0
(100.0)
$36,788.0
2,468.0
(100.0)
$36,788.0
2,468.0
(100.0)
$36,788.0
2,468.0
(100.0)
$36,788.0
2,468.0
(100.0)
$39,156.0
$39,156.0
$39,156.0
$39,156.0
$39,156.0
$39,156.0
$39,156.0
$39,156.0
Cash Needed
Cash Paid to Adobe Systems Inc. Shareholders
Financing Fees
Advisory Fees
Microsoft Corp. Debt Retired
Adobe Systems Inc. Debt Retired
Cash Needed Before Revolver
Optional Paydown of Adobe Systems Inc. Revolver
Optional Paydown of Microsoft Corp. Revolver
$17,946.3
0.0
30.0
0.0
0.0
$17,976.3
0.0
0.0
$20,905.2
0.0
30.0
0.0
0.0
$20,935.2
0.0
0.0
$21,441.2
0.0
30.0
0.0
0.0
$21,471.2
0.0
0.0
$21,977.2
0.0
30.0
0.0
0.0
$22,007.2
0.0
0.0
$22,513.3
0.0
30.0
0.0
0.0
$22,543.3
0.0
0.0
$23,049.3
0.0
30.0
0.0
0.0
$23,079.3
0.0
0.0
$23,585.3
0.0
30.0
0.0
0.0
$23,615.3
0.0
0.0
$24,121.4
0.0
30.0
0.0
0.0
$24,151.4
0.0
0.0
$17,976.3
$20,935.2
$21,471.2
$22,007.2
$22,543.3
$23,079.3
$23,615.3
$24,151.4
TRANSACTION ANALYSIS
$41.00
Assets
Current Assets
Cash and Equivalents
Accounts Receivable
Inventory
Deferred Income Taxes
Other Current Assets
Total Current Assets
Microsoft Corp.
25-04-11
25-04-11
Adjustments
Write-Up
Pro Forma
Financing
$36,788.0
13,014.0
740.0
0.0
5,134.0
$55,676.0
$2,468.0
554.3
0.0
0.0
193.7
$3,216.0
$7,630.0
12,394.0
1,158.0
7,754.0
0.0
0.0
1,501.0
$448.9
3,641.8
528.8
246.0
0.0
0.0
59.6
Total Assets
$86,113.0
$8,141.1
$124,949.5
$4,025.0
0.0
1,074.0
0.0
20,048.0
1,000.0
$26,147.0
$52.4
0.0
53.7
0.0
953.1
8.8
$1,068.0
$4,077.4
0.0
1,127.7
0.0
21,001.1
1,008.8
$27,215.0
Revolver
Non-Convertible Debt
Convertible Debt
Deferred Income Taxes
Other Long-Term Liabilities
Total Liabilities
$0.0
4,939.0
0.0
229.0
8,623.0
$39,938.0
$0.0
1,513.7
0.0
103.1
263.9
$2,948.7
$0.0
62,856.0
0.0
0.0
(176.0)
1,231.0
(17,736.0)
$0.0
0.1
2,458.3
(3,264.3)
7.8
9.6
5,980.9
Net PP&E
Goodwill
Intangibles
Investments/Restricted Cash
Unearned Compensation
Deferred Financing Fees
Other Assets
($22,007.2)
25-04-11
15.0
40,250.0
12,437.7
0.0
0.0
3,055.1
$0.0
0.0
0.0
(103.1)
$0.0
32,965.7
(2,458.3)
3,264.3
(7.8)
(9.6)
(6,010.9)
$17,248.8
13,568.3
740.0
0.0
5,327.7
$36,884.8
$8,093.9
56,285.8
14,124.5
8,000.0
0.0
0.0
1,560.6
$0.0
6,452.7
0.0
3,284.1
8,886.9
$45,838.7
$0.0
95,821.8
0.0
0.0
(176.0)
1,231.0
(17,766.0)
$46,175.0
$5,192.4
$79,110.8
$86,113.0
$8,141.1
$124,949.5
0.000
0.000
0.000
32
Check
TRANSACTION ANALYSIS
FY Ended December 30
2008A
2009A
FY Ending December 30
CAGR
2010A
2011E
2012E
2013E
2014E
2015E
Total Revenue
% Growth
$63,999.9
NA
$60,498.9
(5.5%)
$66,284.0
9.6%
$73,705.1
11.2%
$78,687.4
6.8%
$84,154.4
6.9%
$89,551.0
6.9%
$95,309.3
6.9%
COGS
COGS Synergies
% of Sales
Gross Profit
% Margin
9,705.2
0.0
15.2%
$54,294.7
84.8%
9,705.5
0.0
16.0%
$50,793.4
84.0%
9,933.5
0.0
15.0%
$56,350.5
85.0%
12,675.8
0.0
17.2%
$61,029.3
82.8%
13,784.5
(25.0)
17.5%
$64,927.9
82.5%
16,972.4
(25.0)
20.1%
$67,207.0
79.9%
18,051.4
(25.0)
20.1%
$71,524.5
79.9%
19,202.7
(25.0)
20.1%
$76,131.6
79.9%
SG&A
SG&A Synergies
% of Sales
26,616.1
0.0
41.6%
27,125.1
0.0
44.8%
27,678.4
0.0
41.8%
29,004.0
0.0
39.4%
30,961.5
(50.0)
39.3%
30,324.2
(50.0)
36.0%
32,270.2
(50.0)
36.0%
34,346.6
(50.0)
36.0%
$27,678.6
43.2%
$23,668.3
39.1%
$28,672.1
43.3%
$32,025.3
43.5%
$34,016.4
43.2%
$36,932.8
43.9%
$39,304.4
43.9%
$41,835.0
43.9%
1,483.3
0.0
2.3%
843.0
0.0
1.3%
2,326.3
3.6%
1,795.9
0.0
3.0%
1,048.5
0.0
1.7%
2,844.4
4.7%
1,907.5
0.0
2.9%
1,058.2
0.0
1.6%
2,965.7
4.5%
1,915.4
1.5
2.6%
955.0
2,487.5
4.7%
5,359.4
7.3%
1,784.0
1.5
2.3%
920.0
2,487.5
4.3%
5,193.0
6.6%
1,963.8
1.5
2.3%
1,046.2
2,487.5
4.2%
5,499.0
6.5%
2,092.8
1.5
2.3%
1,046.2
2,487.5
3.9%
5,628.0
6.3%
2,230.5
1.5
2.3%
1,046.2
2,487.5
3.7%
5,765.7
6.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
EBIT
% Margin
$25,352.3
39.6%
$20,823.9
34.4%
$25,706.4
38.8%
$26,665.9
36.2%
$28,823.4
36.6%
$31,433.8
37.4%
$33,676.3
37.6%
$36,069.3
37.8%
7.8%
EBITA
% Margin
$26,195.3
40.9%
$21,872.4
36.2%
$26,764.6
40.4%
$30,108.4
40.8%
$32,230.9
41.0%
$34,967.5
41.6%
$37,210.1
41.6%
$39,603.0
41.6%
7.1%
0.0
0.0
0.0
0.0
440.1
0.0
0.0
0.0
440.1
0.0
0.0
0.0
440.1
0.0
0.0
0.0
440.1
0.0
0.0
0.0
EBITDA
% Margin
Existing Depreciation
New Depreciation
% of Sales
Existing Amortization
New Amortization
% of Sales
Total D&A
% of Sales
Stock-Based Comp
% of Sales
6.6%
5.7%
6.9%
0.0
0.0
0.0
0.0
0.0
$30,108.4
$31,790.8
$34,527.4
$36,769.9
$39,162.9
7,386.6
24.5%
7,799.4
24.5%
8,470.7
24.5%
9,020.9
24.5%
9,608.0
24.5%
$22,721.8
30.8%
$23,991.4
30.5%
$26,056.6
31.0%
$27,749.0
31.0%
$29,554.9
31.0%
6.8%
7.4%
$2.31
$2.48
$2.73
$2.89
$3.07
9,846.365
9,662.365
9,532.065
9,591.765
9,641.765
Accredition/Dulition
33
2011-2015
$2.53
($0.23)
(8.9%)
$2,944.1
$2.73
($0.25)
(9.2%)
$3,222.7
$3.01
($0.27)
(9.1%)
$3,451.2
$3.19
($0.29)
(9.2%)
$3,735.0
$3.38
($0.32)
(9.4%)
$4,043.9
Capex
% of Sales
$2,540.9
3.4%
$2,724.9
3.5%
$2,699.9
3.2%
$2,737.3
3.1%
$2,820.3
3.0%
6.8%
TRANSACTION ANALYSIS
$44,865.7
0.0
0.0
0.0
$44,865.7
$52,262.9
0.0
0.0
0.0
$52,262.9
$53,603.0
0.0
0.0
0.0
$53,603.0
$54,943.1
0.0
0.0
0.0
$54,943.1
$56,283.2
0.0
0.0
0.0
$56,283.2
$57,623.2
0.0
0.0
0.0
$57,623.2
$58,963.3
0.0
0.0
0.0
$58,963.3
$60,303.4
0.0
0.0
0.0
$60,303.4
Unearned Compensation
Adjusted Purchase Price
$0.0
$44,865.7
$0.0
$52,262.9
$0.0
$53,603.0
$0.0
$54,943.1
$0.0
$56,283.2
$0.0
$57,623.2
$0.0
$58,963.3
$0.0
$60,303.4
$44,865.7
(5,192.4)
$39,673.3
$52,262.9
(5,192.4)
$47,070.5
$53,603.0
(5,192.4)
$48,410.6
$54,943.1
(5,192.4)
$49,750.7
$56,283.2
(5,192.4)
$51,090.8
$57,623.2
(5,192.4)
$52,430.8
$58,963.3
(5,192.4)
$53,770.9
$60,303.4
(5,192.4)
$55,111.0
$15.0
9,918.3
(3,641.8)
103.1
$33,278.7
$15.0
11,767.6
(3,641.8)
103.1
$38,826.6
$15.0
12,102.7
(3,641.8)
103.1
$39,831.7
$15.0
12,437.7
(3,641.8)
103.1
$40,836.7
$15.0
12,772.7
(3,641.8)
103.1
$41,841.8
$15.0
13,107.7
(3,641.8)
103.1
$42,846.8
$15.0
13,442.7
(3,641.8)
103.1
$43,851.9
$15.0
13,777.7
(3,641.8)
103.1
$44,856.9
($2,437.0)
0.0
$35,715.7
($2,890.7)
0.0
$41,717.3
($2,972.9)
0.0
$42,804.5
($3,055.1)
0.0
$43,891.8
($3,137.3)
0.0
$44,979.0
($3,219.4)
0.0
$46,066.3
($3,301.6)
0.0
$47,153.5
($3,383.8)
0.0
$48,240.8
$39,673.3
25.0%
$9,918.3
5.0
$1,983.7
$47,070.5
25.0%
$11,767.6
5.0
$2,353.5
$48,410.6
25.0%
$12,102.7
5.0
$2,420.5
$49,750.7
25.0%
$12,437.7
5.0
$2,487.5
$51,090.8
25.0%
$12,772.7
5.0
$2,554.5
$52,430.8
25.0%
$13,107.7
5.0
$2,621.5
$53,770.9
25.0%
$13,442.7
5.0
$2,688.5
$55,111.0
25.0%
$13,777.7
5.0
$2,755.5
24.5%
$1,497.0
24.5%
$1,776.1
24.5%
$1,826.7
24.5%
$1,877.3
24.5%
$1,927.8
24.5%
$1,978.4
24.5%
$2,029.0
24.5%
$2,079.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
24.5%
$1.1
24.5%
$1.1
24.5%
$1.1
24.5%
$1.1
24.5%
$1.1
24.5%
$1.1
24.5%
$1.1
24.5%
$1.1
34
TRANSACTION ANALYSIS
$33.48
Common Stock
Stock Options
ITM Convertible Securities
Total Diluted Equity Value
Net Debt
Total Enterprise Value
Premiums Analysis
Current Price
52-Week High
52-Week Low
1 Week Trading Average
1 Month Trading Average
3 Months Trading Average
6 Months Trading Average
$43,858.8
1,006.9
0.0
$44,865.7
(945.5)
$43,920.2
$40.00
$41.00
$42.00
$43.00
$44.00
$45.00
$51,090.0
1,172.9
0.0
$52,262.9
(945.5)
$51,317.4
$52,400.0
1,203.0
0.0
$53,603.0
(945.5)
$52,657.5
$53,710.0
1,233.1
0.0
$54,943.1
(945.5)
$53,997.6
$55,020.0
1,263.2
0.0
$56,283.2
(945.5)
$55,337.7
$56,330.0
1,293.2
0.0
$57,623.2
(945.5)
$56,677.7
$57,640.0
1,323.3
0.0
$58,963.3
(945.5)
$58,017.8
$58,950.0
1,353.4
0.0
$60,303.4
(945.5)
$59,357.9
16.5%
7.3%
66.3%
19.4%
12.5%
15.8%
(3.6%)
19.5%
10.0%
70.6%
22.5%
15.4%
18.7%
(1.2%)
FY 2011P Revenue
FY 2012P Revenue
FY 2013P Revenue
$4,115.1
4,564.4
5,023.4
10.67x
9.62x
8.74x
12.47x
11.24x
10.22x
12.80x
11.54x
10.48x
13.12x
11.83x
10.75x
13.45x
12.12x
11.02x
13.77x
12.42x
11.28x
FY 2011P EBITDA
FY 2012P EBITDA
FY 2013P EBITDA
$1,705.9
1,888.9
2,061.2
25.7x
23.3x
21.3x
30.1x
27.2x
24.9x
30.9x
27.9x
25.5x
31.7x
28.6x
26.2x
32.4x
29.3x
26.8x
FY 2011P EBITA
FY 2012P EBITA
FY 2013P EBITA
$1,640.5
1,824.9
1,997.4
26.8x
24.1x
22.0x
31.3x
28.1x
25.7x
32.1x
28.9x
26.4x
32.9x
29.6x
27.0x
$2.19
2.43
2.66
15.3x
13.8x
12.6x
17.8x
16.0x
14.7x
18.3x
16.4x
15.0x
18.8x
16.8x
15.4x
Multiples Analysis
35
$25.52
$215,133.6
4,772.2
0.0
$219,905.8
(30,849.0)
$189,056.8
$33.48
36.35
23.45
32.65
34.66
33.69
40.47
Microsoft Corp.
$39.00
22.5%
12.8%
74.8%
25.6%
18.3%
21.7%
1.3%
25.4%
15.5%
79.1%
28.6%
21.2%
24.7%
3.8%
28.4%
18.3%
83.4%
31.7%
24.1%
27.6%
6.3%
Microsoft Corp.
31.4%
21.0%
87.6%
34.8%
26.9%
30.6%
8.7%
$25.52
31.58
22.73
25.62
25.71
23.24
25.62
34.4%
23.8%
91.9%
37.8%
29.8%
33.6%
11.2%
0.0%
(19.2%)
12.3%
(0.4%)
(0.7%)
9.8%
(0.4%)
14.10x
12.71x
11.55x
14.42x
13.00x
11.82x
2.72x
2.55x
2.39x
$69,590.0
74,123.0
79,131.0
33.2x
30.0x
27.5x
34.0x
30.7x
28.1x
34.8x
31.4x
28.8x
6.2x
5.9x
5.4x
$30,319.4
32,052.5
34,796.6
33.7x
30.3x
27.7x
34.5x
31.1x
28.4x
35.4x
31.8x
29.0x
36.2x
32.5x
29.7x
6.6x
6.2x
5.7x
$28,469.4
30,332.5
32,896.6
19.2x
17.3x
15.8x
19.7x
17.7x
16.2x
20.1x
18.1x
16.6x
20.6x
18.5x
16.9x
10.1x
9.3x
8.5x
$2.53
2.73
3.01
TRANSACTION ANALYSIS
36
Standalone
Microsoft Corp.
Transaction Value Per Share
Equity Purchase Price
$215,290.7
$39.00
$52,262.9
$40.00
$53,603.0
$41.00
$54,943.1
$42.00
$56,283.2
$43.00
$57,623.2
$44.00
$58,963.3
$45.00
$60,303.4
2.72x
2.55x
12.47x
11.24x
12.80x
11.54x
13.12x
11.83x
13.45x
12.12x
13.77x
12.42x
14.10x
12.71x
14.42x
13.00x
6.2x
5.9x
30.1x
27.2x
30.9x
27.9x
31.7x
28.6x
32.4x
29.3x
33.2x
30.0x
34.0x
30.7x
34.8x
31.4x
10.1x
9.3x
17.8x
16.0x
18.3x
16.4x
18.8x
16.8x
19.2x
17.3x
19.7x
17.7x
20.1x
18.1x
20.6x
18.5x
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$1,377.2
(0.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(0.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(0.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(0.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(0.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(0.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(0.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$24,266.5
56.6
$24,323.1
$24,266.5
56.6
$24,323.1
$24,266.5
56.6
$24,323.1
$24,266.5
56.6
$24,323.1
$24,266.5
56.6
$24,323.1
$24,266.5
56.6
$24,323.1
$24,266.5
56.6
$24,323.1
8,370.600
2,047.920
10,418.520
8,370.600
2,100.431
10,471.031
8,370.600
2,152.942
10,523.542
8,370.600
2,205.453
10,576.053
8,370.600
2,257.963
10,628.563
8,370.600
2,310.474
10,681.074
8,370.600
2,362.985
10,733.585
Accretion/Dilution Summary
FY 2012P Cash EPS Without Synergies
$ Accretion / Dilution
% Accretion / Dilution
Pre-Tax Synergies to Breakeven
% of Combined Opex (Excl. Syngergies)
FY 2012P Cash EPS With Synergies
$ Accretion / Dilution
% Accretion / Dilution
Pre-Tax Synergies to Breakeven
% of Combined Opex (Excl. Syngergies)
37
All Stock
$2.73
$2.33
($0.41)
(14.8%)
$5,598.2
11.2%
$2.32
($0.42)
(15.3%)
$5,788.5
11.6%
$2.31
($0.43)
(15.7%)
$5,978.8
12.0%
$2.29
($0.44)
(16.1%)
$6,169.1
12.4%
$2.28
($0.45)
(16.5%)
$6,359.4
12.7%
$2.27
($0.46)
(16.9%)
$6,549.7
13.1%
$2.26
($0.47)
(17.3%)
$6,739.9
13.5%
$2.73
$2.33
($0.40)
(14.6%)
$5,523.2
11.1%
$2.32
($0.41)
(15.1%)
$5,713.5
11.4%
$2.31
($0.42)
(15.5%)
$5,903.8
11.8%
$2.30
($0.43)
(15.9%)
$6,094.1
12.2%
$2.29
($0.45)
(16.3%)
$6,284.4
12.6%
$2.28
($0.46)
(16.7%)
$6,474.7
13.0%
$2.27
($0.47)
(17.1%)
$6,664.9
13.3%
80.3%
19.7%
100.0%
79.9%
20.1%
100.0%
79.5%
20.5%
100.0%
79.1%
20.9%
100.0%
78.8%
21.2%
100.0%
78.4%
21.6%
100.0%
78.0%
22.0%
100.0%
Standalone
Microsoft Corp.
Transaction Value Per Share
Equity Purchase Price
$215,290.7
$39.00
$52,262.9
$40.00
$53,603.0
$41.00
$54,943.1
$42.00
$56,283.2
$43.00
$57,623.2
$44.00
$58,963.3
$45.00
$60,303.4
2.72x
2.55x
12.47x
11.24x
12.80x
11.54x
13.12x
11.83x
13.45x
12.12x
13.77x
12.42x
14.10x
12.71x
14.42x
13.00x
6.2x
5.9x
30.1x
27.2x
30.9x
27.9x
31.7x
28.6x
32.4x
29.3x
33.2x
30.0x
34.0x
30.7x
34.8x
31.4x
10.1x
9.3x
17.8x
16.0x
18.3x
16.4x
18.8x
16.8x
19.2x
17.3x
19.7x
17.7x
20.1x
18.1x
20.6x
18.5x
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$1,377.2
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
$24,267.0
56.6
$24,323.6
$24,267.0
56.6
$24,323.6
$24,267.0
56.6
$24,323.6
$24,267.0
56.6
$24,323.6
$24,267.0
56.6
$24,323.6
$24,267.0
56.6
$24,323.6
$24,267.0
56.6
$24,323.6
8,370.600
1,228.752
9,599.352
8,370.600
1,260.259
9,630.859
8,370.600
1,291.765
9,662.365
8,370.600
1,323.272
9,693.872
8,370.600
1,354.778
9,725.378
8,370.600
1,386.284
9,756.884
8,370.600
1,417.791
9,788.391
Accretion/Dilution Summary
FY 2012P Cash EPS Without Synergies
$ Accretion / Dilution
% Accretion / Dilution
Pre-Tax Synergies to Breakeven
% of Combined Opex (Excl. Syngergies)
FY 2012P Cash EPS With Synergies
$ Accretion / Dilution
% Accretion / Dilution
Pre-Tax Synergies to Breakeven
% of Combined Opex (Excl. Syngergies)
38
$1,377.2
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
$2.73
$2.53
($0.21)
(7.6%)
$2,629.2
5.3%
$2.52
($0.21)
(7.9%)
$2,743.4
5.5%
$2.51
($0.22)
(8.2%)
$2,857.6
5.7%
$2.50
($0.23)
(8.5%)
$2,971.7
6.0%
$2.50
($0.24)
(8.8%)
$3,085.9
6.2%
$2.49
($0.25)
(9.1%)
$3,200.1
6.4%
$2.48
($0.26)
(9.3%)
$3,314.2
6.6%
$2.73
$2.53
($0.20)
(7.3%)
$2,554.2
5.1%
$2.53
($0.21)
(7.6%)
$2,668.4
5.3%
$2.52
($0.22)
(7.9%)
$2,782.6
5.6%
$2.51
($0.23)
(8.2%)
$2,896.7
5.8%
$2.50
($0.23)
(8.5%)
$3,010.9
6.0%
$2.49
($0.24)
(8.8%)
$3,125.1
6.3%
$2.48
($0.25)
(9.1%)
$3,239.2
6.5%
87.2%
12.8%
100.0%
86.9%
13.1%
100.0%
86.6%
13.4%
100.0%
86.3%
13.7%
100.0%
86.1%
13.9%
100.0%
85.8%
14.2%
100.0%
85.5%
14.5%
100.0%
All Cash
Standalone
Microsoft Corp.
Transaction Value Per Share
Equity Purchase Price
$215,290.7
$39.00
$52,262.9
$40.00
$53,603.0
$41.00
$54,943.1
$42.00
$56,283.2
$43.00
$57,623.2
$44.00
$58,963.3
$45.00
$60,303.4
2.72x
2.55x
12.47x
11.24x
12.80x
11.54x
13.12x
11.83x
13.45x
12.12x
13.77x
12.42x
14.10x
12.71x
14.42x
13.00x
6.2x
5.9x
30.1x
27.2x
30.9x
27.9x
31.7x
28.6x
32.4x
29.3x
33.2x
30.0x
34.0x
30.7x
34.8x
31.4x
10.1x
9.3x
17.8x
16.0x
18.3x
16.4x
18.8x
16.8x
19.2x
17.3x
19.7x
17.7x
20.1x
18.1x
20.6x
18.5x
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$22,890.9
8,370.600
$2.73
$1,377.2
(809.5)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(829.7)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(850.0)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(870.2)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(890.4)
0.0
0.0
0.0
0.0
(1.1)
0.0
$1,377.2
(910.6)
0.0
0.0
0.0
0.0
(1.1)
0.0
$23,477.7
56.6
$23,534.3
$23,457.5
56.6
$23,514.1
$23,437.2
56.6
$23,493.8
$23,417.0
56.6
$23,473.6
$23,396.8
56.6
$23,453.4
$23,376.6
56.6
$23,433.2
$23,356.3
56.6
$23,412.9
8,370.600
0.0
8,370.600
8,370.600
0.0
8,370.600
8,370.600
0.0
8,370.600
8,370.600
0.0
8,370.600
8,370.600
0.0
8,370.600
8,370.600
0.0
8,370.600
8,370.600
0.0
8,370.600
Accretion/Dilution Summary
FY 2012P Cash EPS Without Synergies
$ Accretion / Dilution
% Accretion / Dilution
Pre-Tax Synergies to Breakeven
% of Combined Opex (Excl. Syngergies)
FY 2012P Cash EPS With Synergies
$ Accretion / Dilution
% Accretion / Dilution
Pre-Tax Synergies to Breakeven
% of Combined Opex (Excl. Syngergies)
39
$1,377.2
(789.3)
0.0
0.0
0.0
0.0
(1.1)
0.0
$2.73
$2.80
$0.07
2.6%
($777.5)
(1.6%)
$2.80
$0.07
2.5%
($750.7)
(1.5%)
$2.80
$0.07
2.4%
($723.9)
(1.4%)
$2.80
$0.06
2.3%
($697.1)
(1.4%)
$2.80
$0.06
2.2%
($670.3)
(1.3%)
$2.79
$0.06
2.1%
($643.5)
(1.3%)
$2.79
$0.06
2.0%
($616.7)
(1.2%)
$2.73
$2.81
$0.08
2.8%
($852.5)
(1.7%)
$2.81
$0.07
2.7%
($825.7)
(1.7%)
$2.81
$0.07
2.6%
($798.9)
(1.6%)
$2.80
$0.07
2.5%
($772.1)
(1.5%)
$2.80
$0.07
2.5%
($745.3)
(1.5%)
$2.80
$0.06
2.4%
($718.5)
(1.4%)
$2.80
$0.06
2.3%
($691.7)
(1.4%)
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
Cash
%
-7.9% $ 38.00
30%
-9.1%
35%
-8.2%
40%
-7.3%
45%
-6.3%
50%
-5.3%
$ 39.00
-9.5%
-8.5%
-7.6%
-6.6%
-5.5%
Offer Price
$ 40.00 $ 41.00
-9.8%
-10.2%
-8.9%
-9.2%
-7.9%
-8.2%
-6.8%
-7.1%
-5.8%
-6.1%
$ 42.00
-10.5%
-9.5%
-8.5%
-7.4%
-6.3%
274339.3% $ 38.00
Cash
%
40
30%
35%
40%
45%
50%
$3,238.1
$2,876.6
$2,515.1
$2,153.5
$1,792.0
$ 39.00
$3,371.3
$3,000.3
$2,629.2
$2,258.2
$1,887.1
$ 39.00
-9.3%
-8.3%
-7.3%
-6.3%
-5.3%
Offer Price
$ 40.00 $ 41.00
-9.6%
-10.0%
-8.6%
-9.0%
-7.6%
-7.9%
-6.6%
-6.9%
-5.6%
-5.8%
$ 42.00
-10.3%
-9.3%
-8.2%
-7.2%
-6.1%
Offer Price
$ 40.00 $ 41.00
$3,504.5
$3,124.0
$2,743.4
$2,362.8
$1,982.3
Cash
%
-7.6% $ 38.00
30%
-8.9%
35%
-8.0%
40%
-7.0%
45%
-6.1%
50%
-5.1%
$3,637.7
$3,247.6
$2,857.6
$2,467.5
$2,077.4
$ 42.00
$3,770.9
$3,371.3
$2,971.7
$2,572.1
$2,172.5
Cash
%
86.9% $ 38.00
30%
85.7%
35%
86.6%
40%
87.5%
45%
88.4%
50%
89.4%
$ 39.00
85.4%
86.3%
87.2%
88.1%
89.1%
Offer Price
$ 40.00 $ 41.00
85.1%
84.7%
86.0%
85.7%
86.9%
86.6%
87.9%
87.6%
88.9%
88.6%
$ 42.00
84.4%
85.4%
86.3%
87.3%
88.4%
41
Microsoft Corp.
Combined
(1)
FY11
FY12
FY11
FY12
FY11
FY12
Revenue
% Growth
$69,590.0
11.4%
$74,123.0
6.5%
$4,115.1
8.3%
$4,564.4
10.9%
$73,705.1
11.2%
$78,687.4
6.8%
$0.0
EBITDA
% Margin
$30,319.4
43.6%
$32,052.5
43.2%
$1,705.9
41.5%
$1,888.9
41.4%
$32,025.3
43.5%
$33,941.4
43.1%
$21,035.6
30.2%
$22,287.2
30.1%
$1,157.4
28.1%
$1,286.6
28.2%
$22,193.0
30.1%
$21,671.2
31.1%
$22,890.9
30.9%
$1,248.8
30.3%
$1,377.2
30.2%
94.4%
94.7%
94.8%
94.6%
94.2%
94.4%
94.5%
94.3%
5.6%
5.3%
5.2%
5.4%
5.8%
5.6%
5.5%
5.7%
Contribution
Revenue
EBITDA
GAAP Net Income
Cash Net Income
42
Pro Forma
Synergies
FY11
FY12
(2)
FY11
FY12
$0.0
$73,705.1
11.2%
$78,687.4
6.8%
$0.0
$75.0
$32,025.3
43.5%
$34,016.4
43.2%
$23,573.8
30.0%
$0.0
$56.6
$22,249.6
30.2%
$23,630.4
30.0%
$22,920.0
31.1%
$24,268.1
30.8%
$0.0
$56.6
$22,976.6
31.2%
$24,324.7
30.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Prepared
by
Deb Sahoo
MBA, Ross School of Business
University of Michigan, Ann Arbor
43