Apple Inc. - Financial Statements ($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands) Assumptions & Valuation Overview Valuation Date: 1/29/2010 Last Historical Year 2009 Company Name: Apple Inc. Debt Issue Date: 2010 Share Price: $192.06 Share Units: 1000 Basic Shares Outstanding: 900,678 Options Calculations (in Thousands Except Ex Basic Equity Value: $172,984 Diluted Shares Outstanding: 920,526 Exercise Diluted Equity Value: $176,796 Name Number Price Dilution Less: Cash & Investments $35,395 Tranche A 34,375 $81.17 19,847 Plus: Debt $0 Tranche B Plus: Minority Interest $0 Tranche C Plus: Preferred Stock $0 Tranche D Plus: Other Liabilities $0 Tranche E Enterprise Value: $141,401 Total 19,847 Historical FY 2007 FY 2008 FY 2009 FY 2010E FY 2011E EV / Revenue: 5.8 x 3.8 x 3.3 x 2.6 x 2.3 x EV / EBIT: 30.4 x 16.0 x 11.4 x 9.1 x 7.8 x EV / EBITDA: 28.4 x 15.1 x 10.7 x 8.6 x 7.3 x Equity Value / FCF: 37.3 x 20.8 x 17.1 x Err:522 Err:522 P / E: 48.9 x 28.3 x 21.2 x Err:522 Err:522 P / BV: 7.9 x 5.6 x Err:522 Err:522 Operating Assumptions
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Apple Inc. - Financial Statements($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Assumptions & Valuation Overview
Valuation Date: 1/29/2010 Last Historical Year: 2009 Days in Year:Company Name: Apple Inc. Debt Issue Date: 2010 Debt Amount:Share Price: $192.06 Share Units: 1000 Tax Rate:
Basic Shares Outstanding: 900,678 Options Calculations (in Thousands Except Exercise Price):Basic Equity Value: $172,984 Diluted Shares Outstanding: 920,526 ExerciseDiluted Equity Value: $176,796 Name Number Price Dilution
Less: Cash & Investments $35,395 Tranche A 34,375 $81.17 19,847Plus: Debt $0 Tranche BPlus: Minority Interest $0 Tranche CPlus: Preferred Stock $0 Tranche DPlus: Other Liabilities $0 Tranche E
EV / Revenue: 5.8 x 3.8 x 3.3 x 2.6 x 2.3 x 2.0 x 1.9 xEV / EBIT: 30.4 x 16.0 x 11.4 x 9.1 x 7.8 x 7.0 x 6.4 xEV / EBITDA: 28.4 x 15.1 x 10.7 x 8.6 x 7.3 x 6.6 x 6.1 x
Equity Value / FCF: 37.3 x 20.8 x 17.1 x Err:522 Err:522 Err:522 Err:522P / E: 48.9 x 28.3 x 21.2 x Err:522 Err:522 Err:522 Err:522P / BV: 7.9 x 5.6 x Err:522 Err:522 Err:522 Err:522
Valuation Summary - Apple Inc.($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Valuation Statistics - Apple Inc. Apple Inc. - Range of Valuation Multiples / Premiums
25th 75thMinimum Pecentile Median Pecentile
Methodology Name Multiple Multiple Multiple Multiple
Public Company Comparables:2009 EV / Revenue: 0.3 x 0.5 x 1.1 x 2.8 x2010E EV / Revenue: 0.3 x 0.5 x 1.0 x 2.3 x2009 EV / EBITDA: 4.4 x 7.3 x 7.6 x 10.6 x2010E EV / EBITDA: 3.7 x 5.1 x 5.5 x 6.8 x2009 P / E: 15.0 x 16.1 x 19.7 x 29.1 x2010E P / E: 10.9 x 12.2 x 16.3 x 16.6 x
Precedent Transactions:Trailing EV / Revenue: 0.4 x 1.9 x 2.7 x 6.0 xForward EV / Revenue: 0.4 x 2.1 x 2.7 x 5.0 xTrailing EV / EBITDA: 8.7 x 11.5 x 14.4 x 17.3 xForward EV / EBITDA: 9.6 x 13.4 x 19.1 x 23.9 x
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)
Apple Inc. $ 192.06 $ 176,796 $ 141,401 $42,905 $ 53,631 $13,184
Valuation Statistics Capitalization Enterprise Value / Enterprise Value / Share Equity Enterprise Revenue EBITDA
Company Name Price Value Value 2009 2010E 2009Hewlett-Packard Company $ 47.07 $ 114,779 $ 124,430 1.1 x 1.0 x 7.6 xDell Inc. 12.90 25,241 15,080 0.3 x 0.3 x 4.4 xCisco Systems, Inc. 22.47 131,739 106,671 3.1 x 2.6 x 10.6 xIntel Corporation 19.40 107,224 92,786 2.8 x 2.3 x 7.3 xMotorola, Inc. 6.15 14,239 10,665 0.5 x 0.5 x 11.5 x
Maximum $ 47.07 $ 131,739 $ 124,430 3.1 x 2.6 x 11.5 x75th Percentile 22.47 114,779 106,671 2.8 x 2.3 x 10.6 xMedian $ 19.40 $ 107,224 $ 92,786 1.1 x 1.0 x 7.6 x25th Percentile 12.90 25,241 15,080 0.5 x 0.5 x 7.3 xMinimum 6.15 14,239 10,665 0.3 x 0.3 x 4.4 x
Apple Inc. $ 192.06 $ 176,796 $ 141,401 3.3 x 2.6 x 10.7 x
Comparable Companies - US-Based Hardware & Networking Companies with Over $20 Billion Revenue
2010E 2009 2010E6.8 x 15.0 x 12.2 x3.7 x 16.4 x 10.9 x8.4 x 23.1 x 16.3 x5.1 x 47.2 x 16.6 x5.5 x NM 44.6 x
8.4 x 47.2 x 44.6 x6.8 x 29.1 x 16.6 x5.5 x 19.7 x 16.3 x5.1 x 16.1 x 12.2 x3.7 x 15.0 x 10.9 x
8.6 x 21.2 x Err:522
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
Equity EnterpriseAcquirer Name Target Name Date Value Value
Hewlett-Packard Company 3Com 11/11/2009 $ 3,180 $ 2,714 Cisco Systems, Inc. Starent Networks 10/13/2009 2,777 2,386 Emerson Electric Co. Avocent 10/6/2009 1,114 1,147 EMC Corporation Data Domain 7/8/2009 2,362 2,085 Oracle Corporation Sun Microsystems 4/20/2009 7,075 5,392 Brocade Communication Systems, Inc. Foundry Networks 7/21/2008 2,899 2,063
Maximum $ 7,075 $ 5,392 75th Percentile 3,110 2,632
Median $ 2,838 $ 2,235 25th Percentile 2,466 2,068
Minimum 1,114 1,147
Operating Metrics Valuation MultiplesEV / EV / EV / EV /
$ 1,265 $ 1,223 $ 152 $ 110 2.1 x 2.2 x 17.8 x 24.6 x 288 320 154 110 8.3 x 7.5 x 15.5 x 21.6 x 611 542 105 93 1.9 x 2.1 x 10.9 x 12.3 x 301 375 53 64 6.9 x 5.6 x 39.7 x 32.8 x 13,256 12,462 623 559 0.4 x 0.4 x 8.7 x 9.6 x 621 633 156 125 3.3 x 3.3 x 13.2 x 16.5 x
$ 13,256 $ 12,462 $ 623 $ 559 8.3 x 7.5 x 39.7 x 32.8 x 1,104 1,075 155 121 6.0 x 5.0 x 17.3 x 23.9 x $ 616 $ 587 $ 153 $ 110 2.7 x 2.7 x 14.4 x 19.1 x 378 417 117 97 1.9 x 2.1 x 11.5 x 13.4 x 288 320 53 64 0.4 x 0.4 x 8.7 x 9.6 x
Discounted Cash Flow Analysis - Apple Inc.($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Apple Inc. - Cash Flow ProjectionsFY 2010E FY 2011E FY 2012E FY 2013E FY 2014E
Goodwill Calculation: Fixed Asset Write-Up:Equity Purchase Price: $43,049 PP&E Write-Up %:Less: Seller Book Value: ($6,987) PP&E Write-Up Amount:Plus: Write-Off of Existing Goodwill: $147 Depreciation Period (Years):
Total Allocable Purchase Premium: $36,209 Intangible Asset Write-Up:
Less: Write-Up of PP&E: ($174) Purchase Price to Allocate:Less: Write-Up of Intangibles: ($7,242) % Allocated to Intangibles:Less: Write-Down of DTL: ($43) Intangibles Write-Up Amount:Plus: New Deferred Tax Liability: $2,225 Amortization Period (Years):
Total Goodwill Created: $30,975 New Deferred Tax Liability:
Depreciation of PP&E: $917 $1,073 Depreciation of PP&E:Amortization of Intangibles: $40 $37 Amortization of Intangibles:Stock-Based Compensation: $888 $1,038 Stock-Based Compensation:
Operating Income: $14,635 $17,133 Operating Income:Interest Income / (Expense): Err:522 Err:522 Interest Income / (Expense):