Apple Inc.

- 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

Last Historical Year:
Debt Issue Date:
Share Units:

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:

Options Calculations (in Thousands Except Exercise Price):

Name
Tranche A
Tranche B
Tranche C
Tranche D
Tranche E
Total

FY 2007

Historical
FY 2008

Number
34,375

Exercise
Price
$81.17

Dilution
19,847

19,847

FY 2009

FY 2010E

FY 2011E

Projections
FY 2012E

FY 2013E

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

Equity Value / FCF:
P / E:
P / BV:

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

Operating Assumptions

FY 2007

Historical
FY 2008

FY 2009

FY 2010E

FY 2011E

Projections
FY 2012E

FY 2013E

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%

Stock-Based Compensation % Revenue:
Depreciation & Amortization % Revenue:
Effective Cash Interest Rate:
Debt Interest Rate:
Effective Tax Rate:

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%

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

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%

2.9%

2.7%

2.7%

2.7%

2.7%

2.7%

Accounts Receivable % Revenue:
Accounts Receivable Days:
Inventory % COGS:
Amortization of Intangibles:
Accounts Payable % COGS:
Accounts Payable Days:
Accrued Expenses % Operating Expenses:
Short-Term Deferred Revenue % Revenue:
Long-Term Deferred Revenue % Revenue:
CapEx % Revenue:

3.0%

Income Statement

Revenue:
Cost of Goods Sold:
Gross Profit:
Operating Expenses:

FY 2007

FY 2008

$24,578
$16,282
$8,296

$37,491
$24,049
$13,442

FY 2009
$42,905
$25,324
$17,581

FY 2010E
$53,631
$31,655
$21,976

FY 2011E
$62,749
$37,037
$25,712

FY 2012E
$69,651
$41,111
$28,540

FY 2013E
$75,919
$44,811
$31,109

Research & Development:
Selling, General & Administrative:
Total Operating Expenses:

$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

$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

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

Net Income:

$3,495

$6,119

$8,235

$10,510

$12,327

$14,268

$15,715

Earnings Per Share (EPS):
Diluted Shares Outstanding:

$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

Depreciation & Amortization of PP&E:
Amortization of Intangibles:
Stock-Based Compensation:

EBIT:
EBITDA:
Levered Free Cash Flow:
Book Value Per Share (BV):

$12,450
$13,184
$10,311
$34.56

$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

Balance Sheet
FY 2008

FY 2009

FY 2010E

FY 2011E

FY 2012E

FY 2013E

Assets:
Current Assets:
Cash & Cash-Equivalents:
Short-Term Securities:
Accounts Receivable:
Inventory:
Deferred Tax Assets:

$11,875
$10,236
$2,422
$509
$1,044

$6,559
$26,282
$3,361
$455
$4

$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

554 $2.000 $3.852 $2.766 $2.093 $6.201 $179 $56.383 $8.185 $0 $23.003 $16.129 ($9) $22.263 $0 $60.801 $3.634 $3.502 $22.911 $6.633 $20.177 $2.861 $1.506 $7.361 $5.502 $19.177 $1.432 .253 $2.905 $7.177 $3.140 $39.177 $0 $0 $15.816 $3.654 $2.017 $3.000 $3.509 $1.379 $2.816 $3.766 $63.352 $207 $314 $2.140 $54.617 $11.011 $63.248 $1.111 $0 $46.951 $1.191 $5.245 $3.297 $7.224 $1.455 $207 $285 $839 $36.502 $15.668 $7.089 $7.177 $5.006 $3.828 $9.140 $70.745 $13.001 $4. Property & Equipment: Goodwill: Other Intangible Assets: Other Assets: Total Assets: $2.177 $4.554 $4.333 $18.920 $30.520 $0 $76.011 $47.951 $207 $277 $2.171 $47.371 Shareholders' Equity: Common Stock: Additional Paid-In Capital: Treasury Stock: Retained Earnings: Accumulated Other Comprehensive Income: Total Shareholders' Equity: $7.520 $4.654 $115.839 $207 $354 $2.082 Long-Term Assets: Long-Term Securities: Plants.554 $5.245 $96.577 $1.Other Current Assets: Total Current Assets: $3.066 $1.171 $2.565 $1.874 $179 $43.470 $179 $72.185 $179 $89.360 Long-Term Liabilities: Deferred Revenue: Long-Term Debt: Other Long-Term Liabilities: Total Liabilities: $768 $0 $1.342 $207 $236 $2.053 $11.601 $3.073 $0 $33.617 $207 $249 $2.566 $14.679 $9.554 $3.253 $79.432 Liabilities & Shareholders' Equity: Current Liabilities: Accounts Payable: Accrued Expenses: Deferred Revenue: Total Current Liabilities: $5.000 $3.502 $24.140 $87.385 $1.061 Total Liabilities & SE: $36.011 $96.253 $3.874 $853 $0 $3.140 $105.554 $3.364 $179 $31.502 $26.302 $7.000 $3.011 $115.815 $2.011 $79.245 $2.

673) $0 $0 ($1.192 $28 $1.664 $9.494 $566 $716 $5.000 $0.172) $81 $521 $1.495 $327 $0 $242 $73 $12 $6.455 ($840) ($114) $0 $0 $1.000 Cash Flow Statement FY 2007 FY 2008 FY 2009 FY 2010E FY 2011E FY 2012E FY 2013E $3.073 $37 $1.719) ($22.279) $285 $1.434) $0 $0 $0 ($1.BALANCE CHECK: $0.256 $0 $0 ($385) ($76) ($1.299 $13 $1.000 $0.715 $1.190 $618 $819 $16.024) 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 .038 $0 $0 $14.532 ($11.091) ($251) ($108) $49 ($230) ($3.144) ($69) ($74) ($17.965) $9.119 $496 $0 $516 $398 $22 $8.857) $0 $0 ($1.153 $0 $0 $15.000 $0.292 ($541) ($73) $0 $0 $901 $468 $620 $18.040 $26 $10.000 $0.430) $0 $0 ($1.268 $1.673) $0 $0 $0 ($1.430) $0 $0 $0 ($1.189) ($46.724) $30.385 $11.470 ($785) ($163) ($274) $289 $596 $718 $1.243 ($17) ($38) ($735) ($1.249) ($8.424 $16.400 $727 $963 $14.235 $734 $0 $710 $1.000 $0.491 ($714) ($97) $0 $0 $1.596 ($939) $54 $780 ($1.678 ($101) ($1.024) $0 $0 ($2.327 $1.015 ($491) ($66) $0 $0 $818 $425 $563 $19.510 $918 $40 $888 $0 $0 $12.857) $0 $0 $0 ($2.

000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($5.158 $51.523 $11.396 $17.116 $2.960 $9.620 $14.238 $16.000 $0 $1.903 .875 $270 $0 ($82) $663 $0 $1.507 $68.559 $14.618 $35.Tax Benefits from Stock-Based Comp: Raise / (Pay Off) Long-Term Debt Cash Used for Equity Awards: Cash Flow from Financing: Increase / Decrease in Cash: Cash & Cash Equivalents: $377 $0 ($3) $739 $2.316) $6.061 $20.352 $757 $0 ($124) $1.

0 x 5.7 x 9.1 x 9.6 x .7 x 6.000 30% FY 2014E 1.8 x 1.360 $1.

7% 3.0% 1.0% 2.234 $47.8% 28.7% FY 2014E $81.0% 7.2 1.3% 1.FY 2014E 7.0% 30.948 $33.8% $10 22.1% 79.9% 8.8% 2.7% 1.0% 9.6 87.0% 59.6% 4.286 .

324 $1.752 $8.005 $23.218 $3.$1.605 $17.746 $19.364 $861 $4 .285 $26.382 $118.56 907.223 ($90) $0 $25.572 $6.282 $6.562 $24.351 $7.76 FY 2014E $88.344 $22.390 $10 $1.962 $19.

052 $10.151 $136.864 $0 $93.177 $6.140 $124.052 .118 $207 $226 $2.887 $21.936 $2.605 $7.902 $7.$3.785 $1.011 $136.615 $1.293 $3.930 $179 $108.000 $3.554 $6.502 $27.

166) $0 $0 ($2.390 $10 $1.000 FY 2014E $17.548 $0 $0 $0 ($2.166) $0 $0 $0 .344 $0 $0 ($416) ($56) $0 $0 $694 $360 $477 $21.$0.746 $1.

285 .$0 $0 $0 $0 $19.382 $88.

7 x 9. .3 x 4.3 x 10.8 x 29.9 x 0.4 x 19.Valuation Summary .Range of Valuation Multiples / Premiums Minimum Multiple 25th Pecentile Multiple Median Multiple 75th Pecentile Multiple 0.Apple Inc.6 x 6.3 x 5.5 x 0.9 x 2.3 x 2.5 x 13.5 x 7.6 x 1.7 x 15.4 x 3.6 x 5.1 x 6.4 x 8.7 x 16.0 x 17.0 x 5.1 x 16. ($ in Millions.1 x 12.Apple Inc.7 x 2.4 x 0.1 x 16.2 x 1.8 x 2.7 x 14.0 x 7.4 x 2. Methodology Name Public Company Comparables: 2009 EV / Revenue: 2010E EV / Revenue: 2009 EV / EBITDA: 2010E EV / EBITDA: 2009 P / E: 2010E P / E: Precedent Transactions: Trailing EV / Revenue: Forward EV / Revenue: Trailing EV / EBITDA: Forward EV / EBITDA: Discounted Cash Flow Analysis: 11-15% Discount Rate.3 x 0.9 x . Except Per Share Amounts in Dollars and Share Counts in Thousands) Valuation Statistics . 5-9x Terminal Multiple: Apple Inc.6 x 0.5 x 19.1 x 11.3 x 23.1 x 1.0 x 10.

184 $16.46 .36 $ 246.31 202.32 472.62 $ 328.08 $11.82 $ 198.4 x 47.66 162.11 192.7 x 32.29 379.19 129.8 x $42.480 $9.62 $ 163.94 264.6 x 11.80 190.04 244.480 57.98 $ 223.5 x 8.76 424.62 143.85 606.184 $16.631 $13.66 285.6 x $42.10 126.55 181.99 277.19 $ 201.43 203.32 101.76 319.29 189.905 $ $53.94 89.70 165.50 8.77 140.84 136. Figure Minimum Multiple 25th Pecentile Multiple Median Multiple 75th Pecentile Multiple Maximum Multiple 3.88 $ 182.631 $13.53 465.90 137.905 $ $53.08 $ 96.19 188.3 x 7.54 179.2 x 44.68 170.37 $ 173.24 516.Implied Per Share Value Range Applicable Apple Inc.68 59.40 625.41 187.5 x 39.64 $ 66.41 $ 63.1 x 2.49 103.59 52.06 145.40 211.on Multiples / Premiums Maximum Multiple Apple Inc. .08 160.83 146.08 $ 163.95 428.02 129.12 $ 54.

Balance Sheet Adjustment: $35.395 .

19 162. 5-9x Terminal Multiple: $100.08 2010E P / E: 2009 P / E: 2010E EV / EBITDA: 2009 EV / EBITDA: 2010E EV / Revenue: 2009 EV / Revenue: $ $ $ $ $ $ 126.99 163.10 103.70 202.00 11-15% Discount Rate. 5-9x Terminal Multiple: $0.66 57.84 101.88 $ 182.64 .00 $300.77 129.31 129.62 59.68 136.49 54.06 143.41 $ $ $ $ 277.02 66.94 145.19 Forward EV / EBITDA: Trailing EV / EBITDA: Forward EV / Revenue: Trailing EV / Revenue: $ $ $ $ 211.00 Min.00 $200.Public Company Comparables 2009 EV / Revenue: 2010E EV / Revenue: 2009 EV / EBITDA: 2010E EV / EBITDA: 2009 P / E: 2010E P / E: Precedent Transactions Trailing EV / Revenue: Forward EV / Revenue: Trailing EV / EBITDA: Forward EV / EBITDA: Discounted Cash Flow Analysis 11-15% Discount Rate. 25th $ 163.12 $ $ $ $ $ $ 140.40 63.32 52.

23 41.50 428.32 52.67 $ $ $ $ 102.85 424.76 285.83 89.19 137.88 $ 18.49 54.19 162.00 41.53 $ $ $ $ $ $ 47.31 $ 19.11 160.73 36.41 $ $ $ $ 66.00 $400.84 101.43 8.41 189.68 179.12 $ $ $ $ $ $ 14.06 41.00 $500.10 103.82 $ $ $ $ 465.90 96.92 23.54 146.53 328.31 7.40 472.43 181.62 606.37 $ $ $ $ $ $ 516.87 30.62 153.62 $ $ $ $ 625.53 12.74 $ $ $ $ 86.98 $ 223.44 $ $ $ $ $ $ 3.08 173.38 $ $ $ $ 379.00 Median 75th Max Min Point 25 Point Med Point 75 Point $ 201.24 130.80 170.04 165.32 $ $ $ $ 211.97 81.66 57.00 $600.29 .59 99.30 34.29 198.68 136.41 43.55 264.08 $ $ $ $ $ $ 192.65 71.94 190.80 $ $ $ $ $ $ 188.21 29.46 $ 163.47 3.18 76.51 40.26 9.67 25.79 $ 21.66 319.40 63.24 187.74 33.36 $ 246.00 $700.29 $ $ $ $ $ $ 126.76 244.Min to 25th 25th to Median Median to 75th 75th to Max $300.95 203.87 84.

13 27.10 $ $ $ $ 159.63 10.93 .85 320.33 15.70 $ $ $ $ $ $ 323.Max Point $ 23.86 144.95 164.19 104.01 13.

665 23.739 $ 124.5 x 0.807 41. Capitalization Share Equity Enterprise Price Value Value $ 47.380 3.07 $ 114.3 x 11.3 x 0.430 55.426 6.5 x 10.784 39.779 106.665 Enterprise Value / Revenue 2009 2010E 1.5 x 0.241 15.47 131.3 x 11.1 x 2.430 12.080 6.90 25.3 x 2.631 $13.15 14. $ 192.552 $ 124.6 x 10.401 3.6 x 7.779 $ 124.056 926 Apple Inc.5 x Maximum 75th Percentile Median 25th Percentile Minimum $ 47.241 15.6 x 2.224 $ 92. Except Per Share Amounts in Dollars and Share Counts in Thousands) Operating Statistics Company Name Hewlett-Packard Company Dell Inc.0 x 0.224 92.6 x 7.239 10.552 $ 124.07 $ 131.457 22.47 114.426 22.224 $ 92.3 x 3.941 12.739 106. Inc.163 $ 10.179 $ 16.671 51.665 3.786 6.239 10.0 x 0. Cisco Systems.40 $ 107.3 x 0.430 55.239 10. Inc.163 10. $ 192. Capitalization Share Equity Enterprise Revenue EBITDA Price Value Value 2009 2010E 2009 $ 47.8 x 1.433 12.239 10.784 39.905 $ 53.080 51.1 x 1.708 $ 19.47 131.241 15.47 114.06 $ 176.739 106.US-Based Hardware & Networking Companies with Over $20 Billion Revenue ($ in Millions.779 106.080 32.4 x Apple Inc.796 $ 141.3 x 2.1 x 0.056 926 Maximum 75th Percentile Median 25th Percentile Minimum $ 47.6 x 2.8 x 2.90 25.07 $ 131.401 $42.90 25. Inc.671 19.786 12.779 $ 124.179 $ 16.708 6.40 107.457 22.15 14.7 x .15 14. Intel Corporation Motorola.3 x 4.06 $ 176.184 Valuation Statistics Company Name Hewlett-Packard Company Dell Inc. Intel Corporation Motorola.665 23.430 $ 114.941 3.671 $ 19.4 x 10.1 x 2.90 25.40 107.786 $ 34. Inc.224 92. Cisco Systems.080 22.07 $ 114.739 $ 124.076 19.433 22.3 x 1.430 22.786 32.076 12.40 $ 107.380 12.6 x 7.807 $ 41.5 x 0.241 15.6 x 4.15 14.671 34.796 $ 141.430 $ 114.5 x Enterprise Value / EBITDA 2009 7.Comparable Companies .

4 x 10.8% 18.1 x 5.7% P / E Multiple 2009 2010E 15.9 x 23.129 1.EBITDA EPS 2010E 2009 2010E $ 18.927 $16.332 $ 18.41 (1.1 x 19.14 $ 18.18 12.59 25.7 x 8.332 0.14 $ 0.70) 0.17 0.0%) 38.6% 6.7 x 16.3% 21.480 Enterprise Value / EBITDA 2010E 6.97 0.2 x 16.186 $ 3.87 4.8 x 5.9 x 8.79 $ 0.87 1.1 x 15.2 x 10.08 $ 11.0% 14.3 x 12.9% 3.9% 8.9% 14.3% 6.79 1.5 x Projected Revenue Growth 8.0% 38.7% 3.14 $ 3.0 x 12.7% 18.7% 3.6 x 8.8% (6.774 0.129 0.927 (1.17 1.774 $ 4.3% 14.41 1.7 x 47.0 x 44.6 x 16.8 x 3.7% (6.7% 7.9% 45.186 $ 12.38 18.18 1.6 x 21.8% 28.8% 45.4 x 6.9% 31.97 1.5 x 5.38 1.7% 30.3 x 47.6% 8.4 x 5.1 x 3.1 x 16.7% 7.6 x 16.9% 31.70) 3.0% 30.2 x 16.14 21.0%) EBITDA Margin 2009 2010E 14.5% $9.4% 7.2 x 16.3% 8.4% 7.5% 28.6 x NM 44.2 x 29.6 x .

110 2.180 $ 2.714 10/13/2009 2.114 1.Comparable M&A Transactions Acquirer Name Hewlett-Packard Company Cisco Systems.075 5.362 2.Networking & Hardware M&A Transactions Over $1 Billion with US-Based Sellers Since 1/1/2008 ($ in Millions.777 2.147 .632 2. . EMC Corporation Oracle Corporation Brocade Communication Systems.085 4/20/2009 7.392 7/21/2008 2. Except Per Share Amounts in Dollars and Share Counts in Thousands) Apple Inc. Inc.466 1.838 $ 2.114 5.075 $ 3.386 10/6/2009 1.392 2.068 1.235 2. Inc.063 $ $ 7.899 2.147 7/8/2009 2. Emerson Electric Co. 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.

3 x 14.0 x 2.5 x 8.5 x 2.9 x 6.4 x Valuation Multiples EV / EV / Forward Trailing Revenue EBITDA 2.6 x 16.256 12.3 x 8.9 x 19.075 $ 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 2.4 x 8.7 x 0.256 $ 12.7 x 3.8 x 9.223 288 320 611 542 301 375 13.7 x 17.7 x 2.6 x 12.6 x 21.265 $ 1.7 x 1.8 x 23.5 x 32.4 x 9.4 x 11.1 x 8.2 x 17.4 x 3.1 x 0.1 x 10.7 x EV / Forward EBITDA 24.9 x 0.5 x 15.6 x 39.462 $ 1.0 x 2.9 x 0.104 1.9 x 5.4 x 39.3 x 6.8 x 7.3 x 1.3 x 32.3 x 13.1 x 13.6 x .2 x 7.Operating Metrics Trailing Forward Revenue Revenue $ 1.5 x 5.462 621 633 Trailing EBITDA $ 152 154 105 53 623 156 $ 13.

98 $ 196.39 $ 165.90 $ 214.90 $ 214.0% 190.68 185.329 $ 24.85 190.500 5.234 $16.28 $ $ $ $ $ $ 15.77 .795 $ 14.857) $1.192 $28 $1.3% 5.635 $ 17.815 ($1.19 $ 177.282 $ 21.332 $ 10.673) $1.391) Plus: Depreciation Plus: Amortization Plus: Stock-Based Compensation $918 $40 $888 ($5.500 3.374 ($1.0% 14.0% 11.000 2.68 185.5% 7.28 4.0% $ 220.119 Normal Discount Period: Mid-Year Discount: Free Cash Flow Growth Rate: 1.000 1. .6% 6.90 $ 214.27 $ 207.140) ($5.299 $13 $1.27 $ 207.68 185.97 $ 201.324 $ 17.390 $10 $1.68 185.030 $ 20.20 $ 172.85 190. Except Per Share Amounts in Dollars and Share Counts in Thousands) Apple Inc.54 $ 168.96 10.27 $ 207.68 185.218 Less: Taxes ($4.0% 11.500 2.97 $ 201.Discounted Cash Flow Analysis .3% Terminal Growth Rate Apple Inc.136 ($1.0% $ 220.153 $1.28 3.Terminal EBITDA Multiples Discount Rate $ 204.90 $ 214.0% $ 220.403 $ 23.0% 13.058 ($2.23 $ 182.0% $ 220.03 $ 150.430) Unlevered Free Cash Flow Present Value of Free Cash Flow $12.27 $ 207.919 $ 81.99 $ 161.27 $ 207.28 5.27 $ 207.85 190.Net Present Value Sensitivity .59 $ 187.0% 16.344 $1.038 $1.06 $ 198.97 $ 201.0% 12.98 $ 196.665) $1.86 6.18 $ 192.09 $ 177.166) Less: Increase in Working Capital: Less: Capital Expenditures $2.0 x $ 170.85 190.37 $ 172.11 $ 163.064 $ 11.97 $ 201.0% $ 220.98 $ 196.000 4.480 $ 19.90 $ 214.Cash Flow Projections FY 2010E FY 2011E FY 2012E FY 2013E FY 2014E Revenue: EBITDA: Operating Income: $53.26 $ 182.709) ($6.97 $ 201.962 $14.631 $ 62.96 10.28 1.90 $ 214.749 $ 69.Net Present Value Sensitivity .500 11. ($ in Millions.761 $ 22.97 $ 201.28 2.073 $37 $1.651 $ 75.0% 13.0% $ 220.0% 12. .256 $1.189 $12.0% 4.248 ($2.024) $1.85 190.0% 15. .0% 14.Apple Inc.81 $ 157.228) ($6.971 $ 11.133 $ 19.68 Terminal EBITDA Multiple Apple Inc.85 $ $ $ $ $ $ 16.Terminal Growth Rates Discount Rate $ 204.0% 185.0 x $ 204.98 $ 196.95 5.0 x $ 187.811 $ 10.40 $ 146.98 $ 196.0% 0.284 $ 15.500 4.000 0.83 $ 154.000 3.211 $ 16.98 $ 196.88 $ 159.

0 x $ 220.37 $ 223.97 $ 201.27 $ 207.44 $ 217.70 $ 210.50 .90 $ 214.36 $ 204.42 $ 224.Terminal EBITDA Multiple 7.0 x $ 254.58 $ 246.75 $ 231.98 $ 196.28 $ 190.33 $ 198.36 $ 216.0 x $ 237.85 $ 185.46 $ 238.59 9.68 8.81 $ 211.74 $ 230.

0% $ 174.DCF Assumptions & Output Use Multiples Method? Discount Rate: Yes 12.980 $56.395 $188.3% Enterprise Value: Balance Sheet Adjustment: Implied Equity Value: $153.0 x 3.276 $35. .96 .276 Terminal Value % EV: 63.5% Terminal EBITDA Multiple: Terminal Growth Rate: Terminal Value: 7.733 PV of Terminal Value: Sum of PV of Cash Flows: Enterprise Value: $96.671 Implied Price Per Share: $ 204.296 $153.Apple Inc.

17 2.16 1.16 12.Assumptions Risk-Free Rate: Equity Risk Premium: Interest Rate on Debt: 4.58 1. Inc.241 Cisco Systems.0% 34.31 3.0% 22.00% 9.WACC Analysis .Tax Rate) + Cost of Preferred Stock * % Preferred Stock WACC 12.94 1.04 $ 15.0% 33. ($ in Millions.793 25.239 Median 1.23 Apple Inc. 1. . 1.50% .00% Comparable Companies .830 $ 114.87 3.0% 27.Unlevered Beta Calculation Levered Equity Name Beta Debt Value Hewlett-Packard Company 1.796 Tax Rate 30% Levered Beta 1.224 Motorola.18 1.57 Apple Inc.50% 15.Levered Beta & WACC Calculation Unlevered Beta Apple Inc. Except Per Share Amounts in Dollars and Share Counts in Thousands) Discount Rate Calculation .Apple Inc.38% 7. 1.224 107. Cost of Equity Based on Comparables: Cost of Equity Based on Historical Beta: 1. 1.273 131.0% Unlevered Beta 0.37% WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 . Inc.16 Debt Equity Value $0 $ 176.925 14.739 Intel Corporation 1.16 Tax Rate 20.23 10.15 1.779 Dell Inc.

referred Stock * % Preferred Stock .

975 Fixed Asset Write-Up: PP&E Write-Up %: PP&E Write-Up Amount: Depreciation Period (Years): Intangible Asset Write-Up: Purchase Price to Allocate: % Allocated to Intangibles: Intangibles Write-Up Amount: Amortization Period (Years): New Deferred Tax Liability: Buyer .401 30% Buyer .Merger Model .Financial Profile Buyer Name: Share Price: Diluted Shares Outstanding: Diluted Equity Value: Enterprise Value: Tax Rate: Apple Inc.Apple Inc.3% 1.049 ($6.209 Less: Write-Up of PP&E: Less: Write-Up of Intangibles: Less: Write-Down of DTL: Plus: New Deferred Tax Liability: Total Goodwill Created: ($174) ($7.3% 33.242) ($43) $2.06 920. Except Per Share Amounts in Dollars and Share Counts in Thousands) Transaction Assumptions Per Share Purchase Price: % Cash: % Debt: % Stock: Foregone Cash Interest Rate: $75.976 FY 2011E $62. and Research in Motion Limited ($ in Millions. $192.Income Statement FY 2010E $53.655 $21.00 33.Financial Profile Seller .3% 33.0% Revenue Synergy %: Cost Synergies % OpEx: 10.496 $6.987) $147 $36.225 $30.0% Equity Purchase Price: Cash Used: Debt Issued: New Shares Issued: Debt Interest Rate: Revenue Synergy COGS %: Goodwill Creation & Balance Sheet Adjustments Goodwill Calculation: Equity Purchase Price: Less: Seller Book Value: Plus: Write-Off of Existing Goodwill: Total Allocable Purchase Premium: $43.712 $5.Income Statement Revenue: Cost of Goods Sold: Gross Profit: Operating Expenses: Seller Name: Share Price: Diluted Shares Outstanding: Diluted Equity Value: Enterprise Value: Tax Rate: Seller .631 $31.749 $37.796 $141.526 $176.037 $25.430 Revenue: Cost of Goods Sold: Gross Profit: Operating Expenses: .0% 10.

82 981.610 $5.617 $2.327 Net Income: Earnings Per Share (EPS): Diluted Shares Outstanding: $11.59 907.038 Depreciation of PP&E: Amortization of Intangibles: Stock-Based Compensation: Operating Income: Interest Income / (Expense): Pre-Tax Income: Income Tax Provision: $14.9% $1.713 $510 ($143) ($1.504 $17.755 $8.237 Net Income: $12.233 $404 ($143) ($1.291) $17.087 $48.101 Operating Income: Interest Income / (Expense): Foregone Interest on Cash: Interest Paid on New Debt: Pre-Tax Income: Income Tax Provision: $18.291) $20.510 $12.719 $0.59 907.203 $5.68 5.313 FY 2011E $83. of New Intangibles: Stock-Based Compensation: $1.23 9.448 $1.27 981.283 Operating Income: Interest Income / (Expense): Pre-Tax Income: Income Tax Provision: Net Income: $10.Depreciation of PP&E: Amortization of Intangibles: Stock-Based Compensation: $918 $40 $888 $1.723 $41.905 $1.014 $4.073 $37 $1.193 $270 $9.637 $22 $470 $1.042 $14.448 $939 $1.348 $22 $399 $1.133 $478 $17.689 $326 Depreciation of PP&E: Depr.719 $14.043 $35.1% Earnings Per Share (EPS): Diluted Shares Outstanding: .005 $13.635 $379 $15.410 $862 $30.789 $6.005 Combined Income Statement FY 2010E $70.862 $1. of PP&E Write-Up: Amortization of Intangibles: Amort.552 Combined Revenue: Revenue Synergies: Cost of Goods Sold: Revenue Synergy COGS: Gross Profit: Operating Expenses: OpEx Synergies: Earnings Per Share (EPS): Diluted Shares Outstanding: Accretion / Dilution: Accretion / Dilution %: $12.161 $21.

Operating Expense Synergies: Per Share Purchase Price Expense Synergies % Seller OpEx: Sensitivity Analysis .Sensitivity Analysis .Year 1 EPS Accretion/Dilution and Purchase Price vs.Year 1 EPS Accretion/Dilution and Purchase Price vs. Revenue Synergies: Per Share Purchase Price Revenue Synergies % Seller Revenue: .

868 $11.91 572.547 28% ller .951 $36.044 $33.714 9.209 20.242 5 ew Deferred Tax Liability: $2.0% xed Asset Write-Up: &E Write-Up %: &E Write-Up Amount: epreciation Period (Years): 10.Financial Profile luted Shares Outstanding: luted Equity Value: terprise Value: Research in Motion Limited $62.350 74.0% $174 8 tangible Asset Write-Up: rchase Price to Allocate: Allocated to Intangibles: tangibles Write-Up Amount: mortization Period (Years): $36.350 $14.uity Purchase Price: $43.Income Statement ost of Goods Sold: Gross Profit: perating Expenses: FY 2010E $17.0% ew Shares Issued: ebt Interest Rate: venue Synergy COGS %: 50.231 $9.049 $14.259 .869 $9.225 ller .755 $7.0% $7.000 $2.476 FY 2011E $20.698 $3.

814 $3.000 rnings Per Share (EPS): luted Shares Outstanding: .937 $25 $3.02 560.148 $4.Depreciation of PP&E: Amortization of Intangibles: Stock-Based Compensation: $431 $359 $52 $563 $433 $63 perating Income: nterest Income / (Expense): e-Tax Income: come Tax Provision: $3.371 $5.682 $33 $4.343 $2.714 $1.000 $6.03 560.962 $1.

Expense Synergies: nergies % Seller OpEx: ergies % Seller Revenue: .

140 $39.Merger Model .801 Seller $1.951 $36.613 $573 $176 $190 $5.498 $0 $0 $0 $0 $33.789 572.215 Adjustments .91 $75.Seller Company Name: Share Price: Offer Price Per Share: Research in Motion Limited $62.668 573.551 Balance Sheets .044 $2.547 28% Purchase 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: 568. Except Per Share Amounts in Dollars and Share Counts in Thousands) Diluted Share & Enterprise Value Calculations .498 $0 $0 $0 $0 $40.986 $43.361 $455 $4 $3.Buyer.Seller Diluted Share Count & Combined Balance Sheets ($ in Millions.049 $2.00 Tax Rate: Current 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: 568.900 $42.841 $3.900 $35.664 $2. Seller & Combined Assets: Current Assets: Cash & Short-Term Securities: Accounts Receivable: Inventory: Deferred Tax Assets: Other Current Assets: Total Current Assets: Long-Term Assets: Buyer $32.

506 $496 $1. Property & Equipment: Goodwill: Other Intangible Assets: Other Assets: Total Assets: $2.502 $15.011 $47.766 $834 $1.604 $67 $2.852 $2.224 Liabilities & Shareholders' Equity: Current Liabilities: Accounts Payable: Accrued Expenses: Deferred Revenue: Total Current Liabilities: $5.905 $2.177 $1.861 $0 $0 $43 $28 $2.238 Shareholders' Equity: Common Stock: Additional Paid-In Capital: Treasury Stock: Retained Earnings: Accumulated Other Comprehensive Income: Total Shareholders' Equity: $7.236 $139 ($45) $4.766 $9.224 .554 $2.364 $179 $31.053 $11.167 Long-Term Liabilities: Deferred Revenue: Long-Term Debt: Deferred Income Tax Liability: Other Long-Term Liabilities: Total Liabilities: $853 $0 $0 $3.737 $147 $1.987 Total Liabilities & SE: $47.839 $207 $354 $2.Long-Term Securities: Plants.664 ($8) $6.185 $0 $23.291 $0 $9.601 $3.

57 Dilution 5.350) $0 $0 $0 $0 ($14.Purchase Price: Name Tranche A Tranche B Total Adjustments ($14.051 Options Calculations .028 $180 $3.086 5.350) Number 10.974 $1.Options Calculations .Current Price: Name Tranche A Tranche B Total Number 10.470 Exercise Price $38.470 Exercise Price $38.57 Dilution 4.330 $30.156 $5.667 .051 4.086 Combined $20.

120 $13.181 $0 $16.531 $853 $14.828 $7.097 $5.363 $7.664) $8 $7.350 $2.673 $0 $14.011 $80.456 $2.364 $179 $46.884 .236) $14.750 $31.211 $45 ($4.$0 $174 $30.884 $0 $0 $0 $0 $6.887 $2.242 $0 $23.388 $4.630 ($2.894 $3.894 $80.350 $2.177 $15.182 $8.535 $0 $23.530 $34.225 $3.255 $23.

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