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05 Apple DCF 1
05 Apple DCF 1
- Financial Statements
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Assumptions & Valuation Overview
Valuation Date:
Company Name:
Share Price:
Basic Shares Outstanding:
Basic Equity Value:
Diluted Shares Outstanding:
Diluted Equity Value:
Less: Cash & Investments
Plus: Debt
Plus: Minority Interest
Plus: Preferred Stock
Plus: Other Liabilities
Enterprise Value:
1/29/2010
Apple Inc.
$192.06
900,678
$172,984
920,526
$176,796
$35,395
$0
$0
$0
$0
$141,401
2009
2010
1000
Days in Year:
Debt Amount:
Tax Rate:
360
$1,000
30%
FY 2007
Historical
FY 2008
FY 2009
Dilution
19,847
19,847
Projections
FY 2010E FY 2011E FY 2012E FY 2013E FY 2014E
EV / Revenue:
EV / EBIT:
EV / EBITDA:
5.8 x
30.4 x
28.4 x
3.8 x
16.0 x
15.1 x
3.3 x
11.4 x
10.7 x
2.6 x
9.1 x
8.6 x
2.3 x
7.8 x
7.3 x
2.0 x
7.0 x
6.6 x
1.9 x
6.4 x
6.1 x
1.7 x
6.0 x
5.7 x
37.3 x
48.9 x
20.8 x
28.3 x
7.9 x
17.1 x
21.2 x
5.6 x
13.5 x
16.6 x
4.1 x
12.1 x
14.1 x
3.1 x
10.9 x
12.2 x
2.4 x
10.1 x
11.1 x
2.0 x
9.1 x
9.8 x
1.6 x
Operating Assumptions
FY 2007
Historical
FY 2008
FY 2009
Projections
FY 2010E FY 2011E FY 2012E FY 2013E FY 2014E
Revenue Growth %:
COGS % Revenue:
R&D % Revenue:
SG&A % Revenue:
27.2%
66.2%
2.4%
11.1%
52.5%
64.1%
2.0%
8.9%
14.4%
59.0%
1.9%
8.3%
25.0%
59.0%
1.9%
8.3%
17.0%
59.0%
1.9%
8.3%
11.0%
59.0%
1.9%
8.3%
9.0%
59.0%
1.9%
8.3%
7.0%
59.0%
1.9%
8.3%
1.0%
1.3%
5.3%
0.0%
30.2%
1.4%
1.3%
3.4%
0.0%
31.6%
1.7%
1.7%
1.4%
0.0%
31.8%
1.7%
1.7%
1.0%
9.0%
30.0%
1.7%
1.7%
1.0%
9.0%
30.0%
1.7%
1.7%
2.0%
9.0%
30.0%
1.7%
1.7%
2.0%
9.0%
30.0%
1.7%
1.7%
3.0%
9.0%
30.0%
6.5%
23.3
2.1%
7.8%
28.2
1.8%
7.8%
28.2
1.8%
$40
7.8%
28.2
1.8%
$37
7.8%
28.2
1.8%
$28
7.8%
28.2
1.8%
$13
7.8%
28.2
1.8%
$10
23.0%
82.6
102.9%
4.3%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
2.9%
2.7%
2.7%
2.7%
2.7%
2.7%
2.7%
3.0%
Income Statement
Revenue:
Cost of Goods Sold:
Gross Profit:
Operating Expenses:
FY 2007
FY 2008
FY 2009
$24,578
$16,282
$8,296
$37,491
$24,049
$13,442
$42,905
$25,324
$17,581
$62,749
$37,037
$25,712
$69,651
$41,111
$28,540
$75,919
$44,811
$31,109
$81,234
$47,948
$33,286
$596
$2,724
$3,320
$759
$3,345
$4,103
$830
$3,566
$4,397
$1,038
$4,458
$5,496
$1,214
$5,216
$6,430
$1,348
$5,789
$7,137
$1,469
$6,311
$7,780
$1,572
$6,752
$8,324
$327
$0
$242
$496
$0
$516
$734
$0
$710
$918
$40
$888
$1,073
$37
$1,038
$1,192
$28
$1,153
$1,299
$13
$1,256
$1,390
$10
$1,344
Operating Income:
Interest Income:
Interest Expense:
Other Income & Expense:
Pre-Tax Income:
Income Tax Provision:
$4,407
$647
$0
($48)
$5,006
$1,511
$8,327
$653
$0
($33)
$8,947
$2,828
$11,740
$407
$0
($81)
$12,066
$3,831
$14,635
$424
($45)
$0
$15,014
$4,504
$17,133
$568
($90)
$0
$17,610
$5,283
$19,030
$1,443
($90)
$0
$20,383
$6,115
$20,761
$1,780
($90)
$0
$22,450
$6,735
$22,218
$3,223
($90)
$0
$25,351
$7,605
Net Income:
$3,495
$6,119
$8,235
$10,510
$12,327
$14,268
$15,715
$17,746
$3.93
889,292
$6.78
902,139
$9.08
907,005
$4,649
$4,976
$4,735
$8,843
$9,339
$8,505
$24.17
$12,450
$13,184
$10,311
$34.56
FY 2008
FY 2009
$11,875
$10,236
$2,422
$509
$1,044
$6,559
$26,282
$3,361
$455
$4
EBIT:
EBITDA:
Levered Free Cash Flow:
Book Value Per Share (BV):
$11.59
907,005
$15,523
$16,480
$13,061
$47.17
$13.59
907,005
$18,171
$19,282
$14,618
$61.94
$15.73
907,005
$20,183
$21,403
$16,158
$78.98
$17.33
907,005
$22,017
$23,329
$17,507
$97.70
$19.56
907,005
$23,562
$24,962
$19,382
$118.76
Balance Sheet
Assets:
Current Assets:
Cash & Cash-Equivalents:
Short-Term Securities:
Accounts Receivable:
Inventory:
Deferred Tax Assets:
$20,620
$26,282
$4,201
$569
$4
$35,238
$26,282
$4,915
$665
$4
$51,396
$26,282
$5,456
$739
$4
$68,903
$26,282
$5,947
$805
$4
$88,285
$26,282
$6,364
$861
$4
$3,920
$30,006
$3,140
$39,801
$3,140
$54,816
$3,140
$70,245
$3,140
$3,140
$3,140
$87,017 $105,082 $124,936
Long-Term Assets:
Long-Term Securities:
Plants, Property & Equipment:
Goodwill:
Other Intangible Assets:
Other Assets:
Total Assets:
$2,379
$2,455
$207
$285
$839
$36,171
$2,554
$2,839
$207
$354
$2,011
$47,766
$2,554
$3,352
$207
$314
$2,011
$63,253
$2,554
$3,951
$207
$277
$2,011
$79,245
$2,554
$2,554
$2,554
$4,617
$5,342
$6,118
$207
$207
$207
$249
$236
$226
$2,011
$2,011
$2,011
$96,654 $115,432 $136,052
$5,520
$4,224
$1,617
$11,361
$5,601
$3,852
$2,053
$11,506
$7,001
$4,815
$2,566
$14,383
$8,191
$5,634
$3,003
$16,828
$9,093
$6,253
$3,333
$18,679
$9,911
$6,816
$3,633
$20,360
$10,605
$7,293
$3,887
$21,785
Long-Term Liabilities:
Deferred Revenue:
Long-Term Debt:
Other Long-Term Liabilities:
Total Liabilities:
$768
$0
$1,745
$13,874
$853
$0
$3,502
$15,861
$1,066
$1,000
$3,502
$19,951
$1,248
$1,000
$3,502
$22,577
$1,385
$1,000
$3,502
$24,565
$1,509
$1,000
$3,502
$26,371
$1,615
$1,000
$3,502
$27,902
Shareholders' Equity:
Common Stock:
Additional Paid-In Capital:
Treasury Stock:
Retained Earnings:
Accumulated Other Comprehensive Income:
Total Shareholders' Equity:
$7,177
$0
$0
$15,129
($9)
$22,297
$7,177
$1,185
$0
$23,364
$179
$31,905
$7,177
$2,073
$0
$33,874
$179
$43,302
$7,177
$3,111
$0
$46,201
$179
$56,668
$7,177
$4,263
$0
$60,470
$179
$72,089
$7,177
$7,177
$5,520
$6,864
$0
$0
$76,185 $93,930
$179
$179
$89,061 $108,151
$36,171
$47,766
$63,253
$79,245
BALANCE CHECK:
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
FY 2007
FY 2008
FY 2009
$3,495
$327
$0
$242
$73
$12
$6,119
$496
$0
$516
$398
$22
$8,235
$734
$0
$710
$1,040
$26
$10,510
$918
$40
$888
$0
$0
$12,327
$1,073
$37
$1,038
$0
$0
$14,268
$1,192
$28
$1,153
$0
$0
$15,715
$1,299
$13
$1,256
$0
$0
$17,746
$1,390
$10
$1,344
$0
$0
($385)
($76)
($1,279)
$285
$1,494
$566
$716
$5,470
($785)
($163)
($274)
$289
$596
$718
$1,664
$9,596
($939)
$54
$780
($1,172)
$81
$521
$1,385
$11,455
($840)
($114)
$0
$0
$1,400
$727
$963
$14,491
($714)
($97)
$0
$0
$1,190
$618
$819
$16,292
($541)
($73)
$0
$0
$901
$468
$620
$18,015
($491)
($66)
$0
$0
$818
$425
$563
$19,532
($416)
($56)
$0
$0
$694
$360
$477
$21,548
$0
$0
$0
($1,430)
$0
$0
($1,430)
$0
$0
$0
($1,673)
$0
$0
($1,673)
$0
$0
$0
($1,857)
$0
$0
($1,857)
$0
$0
$0
($2,024)
$0
$0
($2,024)
$0
$0
$0
($2,166)
$0
$0
($2,166)
Operating Activities:
Net Income:
Depreciation & Amortization of PP&E:
Amortization of Intangibles:
Stock-Based Compensation:
Deferred Income Tax Expense:
Loss on PP&E:
Changes in Operating Assets & Liabilities:
Accounts Receivable:
Inventory:
Other Current Assets:
Other Assets:
Accounts Payable:
Deferred Revenue:
Other Liabilities:
Cash Flow from Operations:
Investing Activities:
Purchases of Securities:
Proceeds from Maturities & Sales:
Purchases of LT Investments:
Capital Expenditures:
Acquisition of Intangibles:
Other:
Cash Flow from Investing:
Financing Activities:
Proceeds from Common Stock:
Common Stock Repurchased:
Dividends Issued:
$365
$0
$0
$483
$0
$0
$475
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$377
$0
($3)
$739
$2,960
$9,352
$757
$0
($124)
$1,116
$2,523
$11,875
$270
$0
($82)
$663
$0
$1,000
$0
$1,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
($5,316)
$6,559
$14,061
$20,620
$14,618
$35,238
$16,158
$51,396
$17,507
$68,903
$19,382
$88,285
Methodology Name
Public Company Comparables:
Precedent Transactions:
Minimum
Multiple
25th
Pecentile
Multiple
Median
Multiple
75th
Pecentile
Multiple
Maximum
Multiple
/ Premiums
Minimum
Multiple
25th
Pecentile
Multiple
Median
Multiple
75th
Pecentile
Multiple
Maximum
Multiple
Precedent Transactions
DCF Analysis
$-
$0.20
$0.40
$0.60
Min.
$0.80
25th
Median
Series1
Min to 25th
25th to Median
Median to 75th
$1.00
75th
Max
$1.20
Max Point
Comparable Companies - US-Based Hardware & Networking Companies with Over $20 Billion Revenue
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Operating Statistics
Company Name
Hewlett-Packard Company
Dell Inc.
Cisco Systems, Inc.
Intel Corporation
Motorola, Inc.
Capitalization
Share
Equity
Enterprise
Revenue
EBITDA
Price
Value
Value
2009
2010E
2009
$ 47.07 $ 114,779 $ 124,430 $ 114,552 $ 124,179 $ 16,433
12.90
25,241
15,080
51,430
55,380
3,426
22.47
131,739
106,671
34,807
41,163
10,076
19.40
107,224
92,786
32,784
39,941
12,708
6.15
14,239
10,665
23,457
22,056
926
Maximum
75th Percentile
Median
25th Percentile
Minimum
Apple Inc.
$42,905 $ 53,631
$13,184
Valuation Statistics
Company Name
Hewlett-Packard Company
Dell Inc.
Cisco Systems, Inc.
Intel Corporation
Motorola, Inc.
Capitalization
Share
Equity
Enterprise
Price
Value
Value
$ 47.07 $ 114,779 $ 124,430
12.90
25,241
15,080
22.47
131,739
106,671
19.40
107,224
92,786
6.15
14,239
10,665
Enterprise Value /
Revenue
2009
2010E
1.1 x
1.0 x
0.3 x
0.3 x
3.1 x
2.6 x
2.8 x
2.3 x
0.5 x
0.5 x
Enterprise Value /
EBITDA
2009
7.6 x
4.4 x
10.6 x
7.3 x
11.5 x
Maximum
75th Percentile
Median
25th Percentile
Minimum
3.1 x
2.8 x
1.1 x
0.5 x
0.3 x
2.6 x
2.3 x
1.0 x
0.5 x
0.3 x
11.5 x
10.6 x
7.6 x
7.3 x
4.4 x
Apple Inc.
3.3 x
2.6 x
10.7 x
EBITDA
EPS
2010E
2009
2010E
$ 18,186 $
3.14 $
3.87
4,129
0.79
1.18
12,774
0.97
1.38
18,332
0.41
1.17
1,927
(1.70)
0.14
$ 18,332 $
18,186
$ 12,774 $
4,129
1,927
$16,480
Enterprise Value /
EBITDA
2010E
6.8 x
3.7 x
8.4 x
5.1 x
5.5 x
Projected
Revenue
Growth
8.4%
7.7%
18.3%
21.8%
(6.0%)
EBITDA Margin
2009
2010E
14.3%
14.6%
6.7%
7.5%
28.9%
31.0%
38.8%
45.9%
3.9%
8.7%
3.14 $
0.97
0.79 $
0.41
(1.70)
3.87
1.38
1.18
1.17
0.14
21.8%
18.3%
8.4%
7.7%
(6.0%)
38.8%
28.9%
14.3%
6.7%
3.9%
45.9%
31.0%
14.6%
8.7%
7.5%
$9.08 $
11.59
25.0%
30.7%
30.7%
P / E Multiple
2009
2010E
15.0 x
12.2 x
16.4 x
10.9 x
23.1 x
16.3 x
47.2 x
16.6 x
NM
44.6 x
8.4 x
6.8 x
5.5 x
5.1 x
3.7 x
47.2 x
29.1 x
19.7 x
16.1 x
15.0 x
44.6 x
16.6 x
16.3 x
12.2 x
10.9 x
8.6 x
21.2 x
16.6 x
Networking & Hardware M&A Transactions Over $1 Billion with US-Based Sellers Since 1/1/2008
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Apple Inc. - Comparable M&A Transactions
Acquirer Name
Hewlett-Packard Company
Cisco Systems, Inc.
Emerson Electric Co.
EMC Corporation
Oracle Corporation
Brocade Communication Systems, Inc.
Target Name
3Com
Starent Networks
Avocent
Data Domain
Sun Microsystems
Foundry Networks
Maximum
75th Percentile
Median
25th Percentile
Minimum
Equity
Enterprise
Date
Value
Value
11/11/2009 $ 3,180 $ 2,714
10/13/2009
2,777
2,386
10/6/2009
1,114
1,147
7/8/2009
2,362
2,085
4/20/2009
7,075
5,392
7/21/2008
2,899
2,063
$
$
7,075 $
3,110
2,838 $
2,466
1,114
5,392
2,632
2,235
2,068
1,147
Operating Metrics
Trailing
Forward
Revenue
Revenue
$ 1,265 $ 1,223
288
320
611
542
301
375
13,256
12,462
621
633
Trailing
EBITDA
$
152
154
105
53
623
156
$ 13,256 $ 12,462 $
1,104
1,075
$
616 $
587 $
378
417
288
320
Forward
EBITDA
$
110
110
93
64
559
125
623 $
155
153 $
117
53
559
121
110
97
64
EV /
Trailing
Revenue
2.1 x
8.3 x
1.9 x
6.9 x
0.4 x
3.3 x
8.3 x
6.0 x
2.7 x
1.9 x
0.4 x
Valuation Multiples
EV /
EV /
Forward
Trailing
Revenue
EBITDA
2.2 x
17.8 x
7.5 x
15.5 x
2.1 x
10.9 x
5.6 x
39.7 x
0.4 x
8.7 x
3.3 x
13.2 x
7.5 x
5.0 x
2.7 x
2.1 x
0.4 x
39.7 x
17.3 x
14.4 x
11.5 x
8.7 x
EV /
Forward
EBITDA
24.6 x
21.6 x
12.3 x
32.8 x
9.6 x
16.5 x
32.8 x
23.9 x
19.1 x
13.4 x
9.6 x
Less: Taxes
($4,391)
Plus: Depreciation
Plus: Amortization
Plus: Stock-Based Compensation
$918
$40
$888
($5,140)
($5,709)
($6,228)
($6,665)
$1,073
$37
$1,038
$1,192
$28
$1,153
$1,299
$13
$1,256
$1,390
$10
$1,344
$1,815
($1,673)
$1,374
($1,857)
$1,248
($2,024)
$1,058
($2,166)
$2,136
($1,430)
1.000
0.500
2.000
1.500
3.000
2.500
4.000
3.500
5.000
4.500
11.6%
6.5%
7.3%
5.3%
Terminal Growth
Rate
$
$
$
$
$
$
15.0%
190.85
190.85
190.85
190.85
190.85
190.85
$
$
$
$
$
$
16.0%
185.68
185.68
185.68
185.68
185.68
185.68
Terminal EBITDA
Multiple
Terminal EBITDA
Multiple
Yes
12.5%
7.0 x
3.0%
$ 174,733
PV of Terminal Value:
Sum of PV of Cash Flows:
Enterprise Value:
$96,980
$56,296
$153,276
63.3%
Enterprise Value:
Balance Sheet Adjustment:
Implied Equity Value:
$153,276
$35,395
$188,671
$ 204.96
4.38%
7.00%
9.00%
1.23
Apple Inc.
1.57
1.16
Tax Rate
20.0%
27.0%
22.0%
33.0%
34.0%
Unlevered
Beta
0.94
1.18
1.16
1.15
1.58
1.16
Debt
Equity
Value
$0 $ 176,796
Tax Rate
30%
Levered
Beta
1.16
12.50%
15.37%
WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Preferred
WACC
12.50%