Professional Documents
Culture Documents
Jake Dalpiaz |
jake.dalpiaz@stayingsh
LBO Model
($ millions, Except Per Share Amounts in $s and Share Counts in $000s)
x Transaction Assumptions
Current Share Price
Offer Premium
Offer Price Per Share
Leverage Ratio
$266.70
20.0%
$266.70
6.0 x
909,938
$242,681
928,043
$247,509
$41,704
$0
$0
$0
$0
$205,805
Advisory Fee %
Financing Fee %
Legal & Misc. Fees
6.0 x
10,000
40.0%
30.0%
20.0%
10.0%
Debt Required
Revolver
Term Loan A
Term Loan B
Subordinated Note
PIK Loan
L + 250
L + 350
L + 500
11.00%
13.00%
Revolver
Term Loan A
Term Loan B
Subordinated Note
PIK Loan
26,675
$85.69
x Debt Assumptions
Leverage Ratio
Units for LIBOR
Term Loan A %
Term Loan B %
Subordinated Note %
PIK Loan %
Interest Rates
Revolver
Term Loan A
Term Loan B
Subordinated Note
PIK Loan
Principal Repayment %
Uses
$1,559
$10,547
$7,910
$5,274
$2,637
$219,659
$247,601
$247,509
($31,905)
$207
$215,811
($284)
($53,154)
$0
$16,031
$228,363
x Operating Assumptions
Initial Cash Balance
Minimum Cash Balance
$6,559
$5,000
FY 2007
Revenue Growth %
COGS % Revenue
R&D % Revenue
SG&A % Revenue
Stock-Based Compensation % Revenue
Depreciation & Amortization % Revenue
Effective Cash Interest Rate
Effective Tax Rate
FY 2009
27.2%
66.2%
2.4%
11.1%
52.5%
64.1%
2.0%
8.9%
14.4%
59.0%
1.9%
8.3%
1.0%
1.3%
5.3%
0.0%
1.4%
1.3%
3.4%
0.0%
1.7%
1.7%
1.4%
0.0%
6.5%
23.3
2.1%
7.8%
28.2
1.8%
23.0%
82.6
102.9%
4.3%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
2.9%
2.7%
Historical
FY 2008
3.0%
Transaction Adjustments
Debit
Credit
x Income Statement
FY 2007
Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses
Research & Development
Selling, General & Administrative
Total Operating Expenses
Depreciation & Amortization of PP&E
Depreciation of PP&E Write-Up
New Intangibles Amortization
Historical
FY 2008
FY 2009
$24,578
$16,282
$8,296
$37,491
$24,049
$13,442
$42,905
$25,324
$17,581
$596
$2,724
$3,320
$759
$3,345
$4,103
$830
$3,566
$4,397
$327
$496
$734
Transaction Adjustments
Debit
Credit
$0
$242
$0
$516
$0
$710
Operating Income
Interest Income / (Expense)
Pre-Tax Income
Income Tax Provision
$4,407
$599
$5,006
$1,511
$8,327
$620
$8,947
$2,828
$11,740
$326
$12,066
$3,831
Net Income
EBITDA
$3,495
$4,976
$6,119
$9,339
$8,235
$13,184
x Balance Sheet
Historical
FY 2008
FY 2009
Transaction Adjustments
Debit
Credit
Assets:
Current Assets
Cash & Cash-Equivalents
Short-Term Securities
Accounts Receivable
Inventory
Deferred Tax Assets
Other Current Assets
Total Current Assets
$11,875
$10,236
$2,422
$509
$1,044
$3,920
$30,006
$6,559
$26,282
$3,361
$455
$4
$3,140
$39,801
$0
$0
$0
$0
$0
$0
$1,559
$0
$0
$0
$0
$0
Long-Term Assets
Long-Term Securities
Plants, Property & Equipment
Goodwill
Other Intangible Assets
Capitalized Financing Fees
Other Assets
Total Assets
$2,379
$2,455
$207
$285
$0
$839
$36,171
$2,554
$2,839
$207
$354
$0
$2,011
$47,766
$0
$284
$228,363
$53,154
$49
$0
$0
$0
$207
$0
$0
$0
$0
$5,520
$4,224
$1,617
$11,361
$0
$5,601
$3,852
$2,053
$11,506
$0
$0
$0
$0
$0
$0
$0
$0
Long-Term Liabilities
Deferred Revenue
Existing Long-Term Debt
Term Loan A
Term Loan B
Subordinated Note
PIK Loan:
Deferred Tax Liability
Other Long-Term Liabilities
Total Liabilities
$768
$0
$0
$0
$0
$0
$0
$1,745
$13,874
$853
$0
$0
$0
$0
$0
$0
$3,502
$15,861
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$10,547
$7,910
$5,274
$2,637
$16,031
$0
$7,177
$0
$7,177
$1,185
$7,177
$1,185
$0
$0
Shareholders' Equity
Common Stock
Additional Paid-In Capital
Treasury Stock
Sponsor Common Equity
Retained Earnings
Accumulated Other Comprehensive Income
Total Shareholders' Equity
$0
$0
$15,129
($9)
$22,297
$0
$0
$23,364
$179
$31,905
$36,171
$47,766
Balanced!
Balanced!
Balance Check
$0
$0
$23,433
$179
$0
$216,923
$0
$0
FY 2007
Historical
FY 2008
Net Income:
Depreciation & Amortization of PP&E:
Depreciation of PP&E Write-Up:
New Intangibles Amortization:
Amortization of Financing Fees:
Accrual of PIK Note:
Amortization of Intangibles:
Stock-Based Compensation:
Changes in Operating Assets & Liabilities:
Accounts Receivable:
Inventory:
Other Current Assets:
Other Assets:
Accounts Payable:
Deferred Revenue:
Other Liabilities:
Cash Flow from Operations:
Capital Expenditures:
Cash Flow Available for Debt Repayment:
Revolver:
Term Loan A:
Term Loan B:
Subordinated Note:
PIK Loan:
Total Cash Flow Used to Repay Debt:
Net Change in Cash & Cash Equivalents:
Beginning Cash Balance:
Ending Cash Balance:
x Debt & Interest Schedules
LIBOR Curve
Interest Rate Assumptions
Revolver
LIBOR +
2.50%
Fixed
Interest
FY 2009
Transaction Adjustments
Debit
Credit
Term Loan A
Term Loan B
Subordinated Note
PIK Loan
3.50%
5.00%
11.00%
13.00%
EBITDA
EBITDA Multiple
Enterprise Value
Investor Equity
IRR
Sensitivity Analysis - 5-Year IRR and Purchase Premium vs. Exit Multiple
x
$
$
386.72
373.38
12.1%
45.0%
40.0%
6.0 x
12.1%
12.1%
7.0 x
12.1%
12.1%
8.0 x
12.1%
12.1%
Exit Multiple
9.0 x
10.0 x
12.1%
12.1%
12.1%
12.1%
11.0 x
12.1%
12.1%
$
$
$
$
$
$
$
$
360.05
346.71
333.38
320.04
306.71
293.37
280.04
266.70
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
Leverage Ratio
5.0 x
6.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
7.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
Sensitivity Analysis - 5-Year IRR and Purchase Premium vs. Leverage Ratio:
x
$
$
$
$
$
$
$
$
$
$
386.72
373.38
360.05
346.71
333.38
320.04
306.71
293.37
280.04
266.70
12.1%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
3.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
4.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
$247,509
$205,805
15.6 x
$26,368
$115,669
10.0 x
0.02%
0.06%
$10
18,104
18,104
$26,368
$2,000
$10,547
$7,910
$5,274
$2,637
ncipal Repayment %
NA
10.0%
5.0%
0.0%
0.0%
Uses
$247,509
$50
$17
$10
$247,586
10.0%
$284
8
saction Adjustments
FY 2009
saction Adjustments
FY 2009
$215,811
20.0%
$43,162
5
$16,031
FY 2010E
FY 2011E
Projections
FY 2012E
FY 2013E
FY 2014E
45.0%
57.5%
1.9%
8.3%
30.0%
56.0%
1.9%
8.3%
15.0%
54.5%
1.9%
8.3%
10.0%
53.0%
1.9%
8.3%
7.5%
51.5%
1.9%
8.3%
1.7%
1.7%
1.0%
30.0%
1.7%
1.7%
1.0%
30.0%
1.7%
1.7%
2.0%
30.0%
1.7%
1.7%
2.0%
30.0%
1.7%
1.7%
3.0%
30.0%
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
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%
2.7%
2.7%
2.7%
2.7%
2.7%
FY 2010E
FY 2011E
Projections
FY 2012E
FY 2013E
FY 2014E
$62,212
$35,787
$26,425
$80,876
$45,310
$35,566
$93,007
$50,711
$42,296
$102,308
$54,248
$48,060
$109,981
$56,667
$53,314
$1,204
$5,171
$6,375
$1,565
$6,723
$8,288
$1,800
$7,731
$9,531
$1,980
$8,504
$10,484
$2,128
$9,142
$11,270
$1,064
$35
$8,632
$1,384
$35
$10,631
$1,591
$35
$10,631
$1,750
$35
$10,631
$1,882
$35
$10,631
saction Adjustments
FY 2009
$3
$40
$1,030
$10
$37
$1,338
$10
$28
$1,539
$10
$13
$1,693
$10
$10
$1,820
$9,245
($6,650)
$591
$177
$13,843
($5,277)
$8,566
$2,570
$18,931
($3,254)
$15,677
$4,703
$23,444
($2,222)
$21,222
$6,367
$27,656
($939)
$26,718
$8,015
$413
$20,050
$5,996
$27,278
$10,974
$32,765
$14,856
$37,576
$18,702
$42,044
FY 2010E
FY 2011E
Projections
FY 2012E
FY 2013E
FY 2014E
$5,000
$26,282
$3,361
$455
$4
$3,140
$38,242
$5,000
$26,282
$4,873
$643
$4
$3,140
$39,942
$5,000
$26,282
$6,335
$814
$4
$3,140
$41,576
$13,699
$26,282
$7,286
$911
$4
$3,140
$51,322
$43,040
$26,282
$8,014
$975
$4
$3,140
$81,455
$76,147
$26,282
$8,615
$1,018
$4
$3,140
$115,207
$2,554
$3,123
$228,363
$53,508
$49
$2,011
$327,850
$2,554
$3,682
$228,363
$42,837
$39
$2,011
$319,429
$2,554
$4,419
$228,363
$32,169
$29
$2,011
$311,122
$2,554
$5,273
$228,363
$21,511
$19
$2,011
$311,053
$2,554
$6,215
$228,363
$10,867
$10
$2,011
$331,474
$2,554
$7,230
$228,363
$226
$0
$2,011
$355,592
$0
$5,601
$3,852
$2,053
$11,506
$0
$7,915
$5,585
$2,977
$16,477
$0
$10,021
$7,261
$3,870
$21,152
$0
$11,216
$8,350
$4,450
$24,016
$0
$11,998
$9,185
$4,895
$26,079
$0
$12,533
$9,874
$5,263
$27,670
$853
$0
$10,547
$7,910
$5,274
$2,637
$16,031
$3,502
$150,548
$1,237
$0
$16,509
$22,545
$15,821
$9,010
$16,031
$3,502
$101,132
$1,608
$0
$0
$17,114
$15,821
$10,263
$16,031
$3,502
$85,491
$1,849
$0
$0
$0
$15,821
$11,690
$16,031
$3,502
$72,910
$2,034
$0
$0
$0
$15,821
$13,315
$16,031
$3,502
$76,782
$2,187
$0
$0
$0
$15,821
$15,167
$16,031
$3,502
$80,377
$0
$0
$0
$1,030
$0
$2,368
$0
$3,907
$0
$5,600
$0
$7,420
$0
$216,923
($69)
$0
$216,854
$0
$216,923
$344
$0
$218,297
$0
$216,923
$6,340
$0
$225,631
$0
$216,923
$17,314
$0
$238,144
$0
$216,923
$32,169
$0
$254,692
$0
$216,923
$50,872
$0
$275,215
$367,402
$319,429
$311,122
$311,053
$331,474
$355,592
-39,552
Balanced!
Balanced!
Balanced!
Balanced!
Balanced!
saction Adjustments
FY 2009
FY 2010E
FY 2011E
Projections
FY 2012E
FY 2013E
FY 2014E
$413
$1,064
$35
$10,631
$10
$1,100
$40
$1,030
$5,996
$1,384
$35
$10,631
$10
$1,253
$37
$1,338
$10,974
$1,591
$35
$10,631
$10
$1,427
$28
$1,539
$14,856
$1,750
$35
$10,631
$10
$1,625
$13
$1,693
$18,702
$1,882
$35
$10,631
$10
$1,851
$10
$1,820
($1,512)
($188)
$0
$0
$2,314
$1,308
$1,733
$17,978
($1,462)
($171)
$0
$0
$2,106
$1,264
$1,676
$24,097
($950)
($97)
$0
$0
$1,195
$822
$1,089
$28,293
($729)
($64)
$0
$0
$782
$630
$835
$32,068
($601)
($43)
$0
$0
$535
$520
$689
$36,040
($1,659)
($2,156)
($2,480)
($2,728)
($2,932)
$16,319
$21,940
$25,813
$29,340
$33,108
$0
($15,132)
($1,187)
$0
$0
($16,319)
$0
($16,509)
($5,431)
$0
$0
($21,940)
$0
$0
($17,114)
$0
$0
($17,114)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$8,699
$29,340
$33,108
$5,000
$5,000
$5,000
$5,000
$5,000
$13,699
$13,699
$43,040
$43,040
$76,147
FY 2010E
FY 2011E
Projections
FY 2012E
FY 2013E
FY 2014E
4.55%
4.78%
4.94%
4.75%
4.40%
7.05%
7.28%
7.44%
7.25%
6.90%
FY 2009
$13,184
15.6 x
$205,805
($219,659)
8.05%
9.55%
11.00%
13.00%
8.28%
9.78%
11.00%
13.00%
8.44%
9.94%
11.00%
13.00%
8.25%
9.75%
11.00%
13.00%
7.90%
9.40%
11.00%
13.00%
$0
($1,938)
($2,210)
($1,740)
($1,100)
$338
($6,650)
$0
($683)
($1,939)
($1,740)
($1,253)
$338
($5,277)
$0
$0
($851)
($1,740)
($1,427)
$764
($3,254)
$0
$0
$0
($1,740)
($1,625)
$1,144
($2,222)
$0
$0
$0
($1,740)
($1,851)
$2,653
($939)
$5,000
($5,000)
$16,319
$16,319
$0
$16,319
$5,000
($5,000)
$21,940
$21,940
$0
$21,940
$5,000
($5,000)
$25,813
$25,813
$0
$25,813
$13,699
($5,000)
$29,340
$38,040
$0
$38,040
$43,040
($5,000)
$33,108
$71,147
$0
$71,147
$1,055
$396
$0
$0
$1,450
$3,164
$1,187
$0
$0
$4,351
$0
$1,187
$0
$0
$1,187
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$11,968
$0
$0
$0
$11,968
$0
$13,345
$4,244
$0
$0
$17,589
$0
$0
$15,927
$0
$0
$15,927
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$19,220
$0
$21,940
$8,699
$25,813
$38,040
$38,040
$71,147
$71,147
FY 2010E
FY 2011E
$0
$0
13.0 x
12.1%
12.1%
14.0 x
12.1%
12.1%
12.1%
12.0 x
12.1%
12.1%
FY 2012E
$0
FY 2013E
$0
FY 2014E
$42,044
10.0 x
$420,440
$494,436
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
8.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
9.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
10.0 x
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
12.1%
Apple (AAPL)
Summary Model
($ millions, Except Per Share Amounts in $s and Share Counts in $000s)
Share Prices
Current Share Price
(As of 6/25/2010)
$266.70
Price Target
$323.90
Implied Growth
21.4%
Multiples and Valuations
Revenue
y-o-y growth%
EBIT
y-o-y growth%
EBITDA
y-o-y growth%
Net Income
y-o-y growth%
EPS (Diluted)
y-o-y growth%
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
37,491
42,905
62,212
80,876
93,007
102,308
52.5%
14.4%
45.0%
30.0%
15.0%
10.0%
8,843
12,450
18,946
25,858
31,146
35,813
90.2%
40.8%
52.2%
36.5%
20.5%
15.0%
9,339
13,184
20,050
27,278
32,765
37,576
87.7%
41.2%
52.1%
36.1%
20.1%
14.7%
6,119
8,235
12,849
17,606
21,933
25,459
75.1%
Base Case
Upside:
Assumes: Strong demand for iPad and iPhone 4, no effect on
costs due to refunds and free cases, falling costs starting in 2H 2010, iPhone will be
offered on Verizon network starting in 2011 with heavy demand, and continued
market penetration and high growth in China.
Base Case: Assumes: Moderate demand for iPad and iPhone 4, Neglible effect
on costs in 2010 due to refund policy and free cases, falling costs starting in 2011,
and iPhone will be offered on Verizon network starting in 2011 with moderate
demand.
Downside:
Assumes: Less than expected demand for iPad, low demand for
iPhone 4 given antenna problems, increased costs due to free cases and refund
policy, no Verizon contract, and smaller costs reductions.
34.6%
56.0%
37.0%
24.6%
16.1%
$6.78
$9.08
$14.17
$19.41
$24.18
$28.07
72.6%
33.9%
56.0%
37.0%
24.6%
16.1%
39.3 x
29.4 x
18.8 x
13.7 x
11.0 x
9.5 x
NA
11.0 x
7.7 x
5.3 x
3.8 x
2.8 x
For WACC:
29.1 x
24.0 x
14.6 x
11.4 x
10.0 x
9.0 x
For DCF:
P / E:
P / BV:
Eq. Value / Levered FCF:
EV / Revenue:
5.5 x
4.8 x
3.3 x
2.5 x
2.2 x
2.0 x
EV / EBIT:
23.3 x
16.5 x
10.9 x
8.0 x
6.6 x
5.7 x
EV / EBITDA:
22.0 x
15.6 x
10.3 x
7.5 x
6.3 x
5.5 x
Enterprise Value
Options Calculations
Go To
909,938
242,681
Name
928,043
Tranche A
247,509
Tranche B
M&A Comps
Exercise
Number
26,675
Price
$
85.69
Dilution
18,104
Valuation Summary
Cash Flows
Public Comps
Disclosures
41,704
Tranche C
Plus: Debt
---
Tranche D
WACC
---
Tranche E
---
Total
---
Enterprise Value:
205,805
Income Statement
18,104
Balance Sheet
change
Multiple Method
change
Historical Beta
Apple (AAPL)
Valuation Summary
($ millions, Except Per Share Amounts in $s and Share Counts in $000s)
75th to Max
2010E EV / EBITDA:
Median to 75th
2009 P / E:
25th to Median
2010E P / E:
Precedent Transactions
Min to 25th
Trailing EV / Revenue:
Forw ard EV / Revenue:
Trailing EV / EBITDA:
Forw ard EV / EBITDA:
$200.00
$400.00
$600.00
$800.00
Valuation Statistics
Range of Valuation Multiples / Premiums
Methodology Name
Public Company Comparables
2009 EV / Revenue
2010E EV / Revenue
2009 EV / EBITDA
2010E EV / EBITDA
2009 P / E
2010E P / E
Precedent Transactions
Trailing EV / Revenue
Forward EV / Revenue
Trailing EV / EBITDA
Forward EV / EBITDA
Discounted Cash Flow Analysis
11-15% Discount Rate, 5-9x Terminal Multiple
Minimum
Multiple
25th
Pecentile
Multiple
0.4 x
0.3 x
5.6 x
4.5 x
14.6 x
10.7 x
0.5 x
0.6 x
7.4 x
5.1 x
16.0 x
11.3 x
0.4 x
0.4 x
8.7 x
9.6 x
1.9 x
2.1 x
11.5 x
13.4 x
Median
Multiple
75th
Pecentile
Multiple
Applicable
Apple Inc.
Figure
Minimum
Multiple
25th
Pecentile
Multiple
Median
Multiple
75th
Pecentile
Multiple
Maximum
Multiple
1.1 x
1.0 x
8.0 x
6.4 x
19.6 x
12.0 x
3.1 x
2.3 x
10.6 x
6.6 x
29.2 x
16.6 x
3.1 x
2.7 x
13.2 x
8.4 x
48.7 x
27.7 x
42,905
62,212
13,184
20,050
9.08
14.17
62.28
65.87
124.92
141.76
132.78
151.73
68.96
82.15
149.82
155.09
145.20
160.06
93.90
110.24
158.08
183.38
178.02
170.07
186.18
202.47
194.86
186.93
265.56
234.65
187.66
222.88
231.95
227.22
442.15
392.76
2.7 x
2.7 x
14.4 x
19.1 x
6.0 x
5.0 x
17.3 x
23.9 x
8.3 x
7.5 x
39.7 x
32.8 x
42,905
62,212
13,184
20,050
63.74
73.94
167.88
253.39
134.83
188.60
208.15
333.66
171.27
228.56
249.11
456.82
323.83
378.86
290.02
560.60
427.68
544.76
608.28
753.51
244.36
274.82
307.75
343.33
381.78
Apple (AAPL)
Public Comparables
($ millions, Except Per Share Amounts in $s and Share Counts in $000s)
Share Price Data as of 6/25/2010
US-Based Hardware & Networking Companies with Over $20 Billion Revenue
Operating Statistics
Capitalization
Share
Equity
Enterprise
Revenue
Company Name
Price
Value
Value
2009
2010E
Hewlett-Packard Company
45.92
110,484
121,320
114,552
124,533
Dell Inc.
12.93
25,511
19,290
51,430
61,781
Cisco Systems, Inc.
22.18
130,174
106,336
34,807
40,059
Intel Corporation
20.03
113,790
101,207
32,784
43,069
Motorola, Inc.
7.07
16,553
12,190
23,457
21,961
Maximum
75th Percentile
Median
25th Percentile
Minimum
Apple, Inc
45.92
22.18
20.03
12.93
7.07
130,174
113,790
110,484
25,511
16,553
121,320
106,336
101,207
19,290
12,190
114,552
51,430
34,807
32,784
23,457
124,533
61,781
43,069
40,059
21,961
16,433
12,708
10,076
3,426
926
266.70
247,509
205,805
42,905
62,212
13,184
US-Based Hardware & Networking Companies with Over $20 Billion Revenue
Valuation Statistics
Capitalization
Enterprise Value /
Share
Equity
Enterprise
Revenue
Company Name
Price
Value
Value
2009
2010E
Hewlett-Packard Company
45.92
110,484
121,320
1.1 x
1.0 x
Dell Inc.
12.93
25,511
19,290
0.4 x
0.3 x
Cisco Systems, Inc.
22.18
130,174
106,336
3.1 x
2.7 x
Intel Corporation
20.03
113,790
101,207
3.1 x
2.3 x
Motorola, Inc.
7.07
16,553
12,190
0.5 x
0.6 x
Maximum
75th Percentile
Median
25th Percentile
Minimum
Apple, Inc
EBITDA
2009
16,433
3,426
10,076
12,708
926
Enterprise Value /
EBITDA
2009
7.4 x
5.6 x
10.6 x
8.0 x
13.2 x
45.92
22.18
20.03
12.93
7.07
130,174
113,790
110,484
25,511
16,553
121,320
106,336
101,207
19,290
12,190
3.1 x
3.1 x
1.1 x
0.5 x
0.4 x
2.7 x
2.3 x
1.0 x
0.6 x
0.3 x
13.2 x
10.6 x
8.0 x
7.4 x
5.6 x
266.70
247,509
205,805
4.8 x
3.3 x
15.6 x
6782
2010E
18,460
4,304
12,603
19,849
1,902
2009
3.14
0.79
0.97
0.41
(1.70)
2010E
4.06
1.08
1.34
1.87
0.26
Projected
Revenue
Growth
8.7%
20.1%
15.1%
31.4%
(6.4%)
19,849
18,460
12,603
4,304
1,902
3.14
0.97
0.79
0.41
(1.70)
4.06
1.87
1.34
1.08
0.26
31.4%
20.1%
15.1%
8.7%
(6.4%)
38.8%
28.9%
14.3%
6.7%
3.9%
46.1%
31.5%
14.8%
8.7%
7.0%
20,050
9.08
14.17
45.0%
30.7%
32.2%
EBITDA
EPS
Enterprise Value /
EBITDA
2010E
6.6 x
4.5 x
8.4 x
5.1 x
6.4 x
8.4 x
6.6 x
6.4 x
5.1 x
4.5 x
10.3 x
P / E Multiple
2009
2010E
14.6 x
11.3 x
16.4 x
12.0 x
22.8 x
16.6 x
48.7 x
10.7 x
NM
27.7 x
48.7 x
29.2 x
19.6 x
16.0 x
14.6 x
27.7 x
16.6 x
12.0 x
11.3 x
10.7 x
29.4 x
18.8 x
EBITDA Margin
2009
2010E
14.3%
14.8%
6.7%
7.0%
28.9%
31.5%
38.8%
46.1%
3.9%
8.7%
Apple (AAPL)
Comparable M&A Transactions
($ millions, Except Per Share Amounts in $s and Share Counts in $000s)
Networking & Hardware M&A Transactions Over $1 Billion with US-Based Sellers Since 1/1/2008
Acquirer Name
Hewlett-Packard Company
Cisco Systems, Inc.
Emerson Electric Co.
EMC Corporation
Oracle Corporation
Brocade Communication Systems, Inc.
Target Name
3Com
Starent Networks
Avocent
Data Domain
Sun Microsystems
Foundry Networks
Maximum
75th Percentile
Median
25th Percentile
Minimum
Date
11/11/2009
10/13/2009
10/6/2009
7/8/2009
4/20/2009
7/21/2008
Equity
Value
3,180
2,777
1,114
2,362
7,075
2,899
Enterprise
Value
2,714
2,386
1,147
2,085
5,392
2,063
7,075
3,110
2,838
2,466
1,114
5,392
2,632
2,235
2,068
1,147
Operating Metrics
Trailing
Revenue
1,265
288
611
301
13,256
621
Forward
Revenue
1,223
320
542
375
12,462
633
Trailing
EBITDA
152
154
105
53
623
156
Forward
EBITDA
110
110
93
64
559
125
EV /
Trailing
Revenue
2.1 x
8.3 x
1.9 x
6.9 x
0.4 x
3.3 x
13,256
1,104
616
378
288
12,462
1,075
587
417
320
623
155
153
117
53
559
121
110
97
64
8.3 x
6.0 x
2.7 x
1.9 x
0.4 x
Valuation Multiples
EV /
EV /
Forward
Trailing
Revenue
EBITDA
2.2 x
17.8 x
7.5 x
15.5 x
2.1 x
10.9 x
5.6 x
39.7 x
0.4 x
8.7 x
3.3 x
13.2 x
7.5 x
5.0 x
2.7 x
2.1 x
0.4 x
39.7 x
17.3 x
14.4 x
11.5 x
8.7 x
EV /
Forward
EBITDA
24.6 x
21.6 x
12.3 x
32.8 x
9.6 x
16.5 x
32.8 x
23.9 x
19.1 x
13.4 x
9.6 x
Apple (AAPL)
Discounted Cash Flow Analysis
($ millions, Except Per Share Amounts in $s and Share Counts in $000s)
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Revenue
EBITDA
Operating Income
62,212
20,050
17,916
80,876
27,278
24,519
93,007
32,765
29,607
102,308
37,576
34,120
109,981
42,044
38,332
Less: Taxes
(5,375)
(7,356)
(8,882)
(10,236)
(11,500)
Plus: Depreciation
Plus: Amortization
Plus: Stock-Based Compensation
1,064
40
1,030
1,384
37
1,338
1,591
28
1,539
1,750
13
1,693
1,882
10
1,820
3,655
(1,659)
3,413
(2,156)
2,058
(2,480)
1,455
(2,728)
1,099
(2,932)
16,671
15,796
21,179
18,015
23,461
17,916
26,067
17,870
28,711
17,670
1.000
0.500
2.000
1.500
3.000
2.500
4.000
3.500
5.000
4.500
27.0%
10.8%
11.1%
10.1%
Discount Rate
Terminal Growth
Rate
323.90
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
0.0%
338.95
328.01
317.62
307.75
298.35
289.40
280.89
1.0%
338.95
328.01
317.62
307.75
298.35
289.40
280.89
2.0%
338.95
328.01
317.62
307.75
298.35
289.40
280.89
3.0%
338.95
328.01
317.62
307.75
298.35
289.40
280.89
4.0%
338.95
328.01
317.62
307.75
298.35
289.40
280.89
5.0%
338.95
328.01
317.62
307.75
298.35
289.40
280.89
Terminal EBITDA
Multiple
323.90
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
4.0 x
254.56
247.36
240.50
233.98
227.76
221.83
216.18
5.0 x
282.69
274.24
266.21
258.57
251.29
244.36
237.75
6.0 x
310.82
301.13
291.92
283.16
274.82
266.88
259.32
7.0 x
338.95
328.01
317.62
307.75
298.35
289.40
280.89
8.0 x
367.08
354.90
343.33
332.33
321.88
311.93
302.46
9.0 x
395.21
381.78
369.04
356.92
345.41
334.45
324.03
Multiple Method
11.4%
7.0 x
3.0%
294,308
171,621
87,267
258,888
66.3%
258,888
41,704
300,592
$323.90
21.4%
Apple (AAPL)
WACC Analysis
($ millions, Except Per Share Amounts in $s and Share Counts in $000s)
Beta and Risk Free Data as of 6/25/2010
Discount Rate Calculation - Assumptions
Risk-Free Rate:
Equity Risk Premium:
Interest Rate on Debt:
3.89%
5.00%
0.00%
1.24
Apple Inc.
1.50
Debt
17,662
4,661
15,246
2,382
3,904
Equity
Value
110,484
25,511
130,174
113,790
16,553
Tax Rate
20.0%
27.0%
22.0%
33.0%
34.0%
Unlevered
Beta
0.92
1.18
1.14
1.11
1.52
1.14
Apple Inc.
Unlevered
Beta
Debt
Equity
Value
Tax Rate
Levered
Beta
1.14
---
247,509
30%
1.14
9.57%
11.39%
Choose Cost of Equity Methodology:
WACC
Historical Beta
11.39%
Apple (AAPL)
Income Statement
($ millions, except per share data in $000s)
Fiscal Years
2006A
x Revenue
2007A
2008A
2009A
2010E
24,578
37,491
42,905
62,212
16,282
24,049
25,324
35,787
Gross Profit
8,296
13,442
17,581
26,425
Operating Expenses
Research & Development
596
759
830
1,204
2,724
3,345
3,566
5,171
3,320
4,103
4,397
6,375
327
496
734
1,064
---
---
---
40
242
516
710
1,030
4,407
8,327
11,740
17,916
647
653
407
439
---
---
---
---
(48)
(33)
(81)
---
Pre-Tax Income
5,006
8,947
12,066
18,355
1,511
2,828
3,831
5,507
Net Income
3,495
6,119
8,235
12,849
$3.93
$6.78
$9.08
$14.17
889,292
902,139
907,005
907,005
EBIT
4,649
8,843
12,450
18,946
EBITDA
4,976
9,339
13,184
20,050
4,735
8,505
10,311
24.17
34.56
16,978
$
49.90
27.2%
52.5%
14.4%
45.0%
COGS % Revenue
66.2%
64.1%
59.0%
57.5%
2.4%
2.0%
1.9%
1.9%
11.1%
8.9%
8.3%
8.3%
1.0%
1.4%
1.7%
1.7%
1.3%
1.3%
1.7%
1.7%
1.0%
R&D % Revenue
SG&A % Revenue
5.3%
3.4%
1.4%
---
---
---
0.0%
30.2%
31.6%
31.8%
30.0%
x Scenarios
Revenues
1 Upside
2 Base Case
3 Downside
2
50.0%
45.0%
27.5%
45.0%
Costs
1 Upside
2 Base Case
3 Downside
2
57.5%
59.0%
62.5%
59.0%
Fiscal Years
2011E
2012E
80,876
2013E
2014E
93,007
102,308
109,981
45,310
50,711
54,248
56,667
35,566
42,296
48,060
53,314
1,565
1,800
1,980
2,128
6,723
7,731
8,504
9,142
8,288
9,531
10,484
11,270
1,384
1,591
1,750
1,882
37
28
13
10
1,338
1,539
1,693
1,820
24,519
29,607
34,120
38,332
632
1,727
2,250
4,265
---
---
---
---
---
---
---
---
25,151
31,333
36,370
42,597
7,545
9,400
10,911
12,779
17,606
21,933
25,459
29,818
$19.41
$24.18
$28.07
$32.88
907,005
907,005
907,005
907,005
25,858
31,146
35,813
40,152
27,278
32,765
37,576
42,044
21,621
24,670
27,642
70.83
96.74
126.69
31,696
$
161.58
30.0%
15.0%
10.0%
7.5%
56.0%
54.5%
53.0%
51.5%
1.9%
1.9%
1.9%
1.9%
8.3%
8.3%
8.3%
8.3%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.0%
2.0%
2.0%
3.0%
0.0%
0.0%
0.0%
0.0%
30.0%
30.0%
30.0%
30.0%
35.0%
30.0%
18.0%
30.0%
25.0%
15.0%
12.0%
15.0%
17.5%
10.0%
8.0%
10.0%
10.0%
7.5%
5.0%
7.5%
56.0%
57.5%
58.0%
57.5%
54.5%
56.0%
58.0%
56.0%
53.0%
54.5%
57.0%
54.5%
51.5%
53.0%
57.0%
53.0%
Apple (AAPL)
Balance Sheet
($ millions, except per share data in $000s)
Balance Sheet Check
Balanced!
Balanced!
2006A
2007A
Balanced!
Balanced!
2008A
2009A
Balanced!
Fiscal Years
2010E
x Assets
Current Assets
Cash & Cash-Equivalents
11,875
6,559
23,537
Short-Term Securities
10,236
26,282
26,282
Accounts Receivable
2,422
3,361
4,873
643
Inventory
509
455
1,044
3,920
3,140
3,140
30,006
39,801
58,480
Long-Term Securities
2,379
2,554
2,554
2,455
2,839
3,434
Goodwill
207
207
207
285
354
314
Other Assets
839
2,011
2,011
36,171
47,766
66,999
Accounts Payable
5,520
5,601
7,915
Accrued Expenses
4,224
3,852
5,585
Total Assets:
Liabilities & Shareholders' Equity
Current Liabilities
Deferred Revenue
1,617
2,053
2,977
11,361
11,506
16,477
768
853
1,237
Long-Term Liabilities
Deferred Revenue
Long-Term Debt
---
---
---
1,745
3,502
3,502
13,874
15,861
21,216
7,177
7,177
7,177
---
1,185
2,215
Treasury Stock
---
---
---
15,129
23,364
36,213
Retained Earnings
(9)
179
179
22,297
31,905
45,783
36,171
47,766
66,999
360
7.8%
28.2
1.8%
7.8%
28.2
1.8%
23.0%
82.6
102.9%
4.3%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
Balanced!
Balanced!
Balanced!
Balanced!
2011E
2012E
2013E
2014E
Fiscal Years
45,158
69,828
97,470
129,166
26,282
26,282
26,282
26,282
6,335
7,286
8,014
8,615
814
911
975
1,018
3,140
3,140
3,140
3,140
81,734
107,451
135,885
168,226
2,554
2,554
2,554
2,554
4,206
5,095
6,073
7,124
207
207
207
207
277
249
236
226
2,011
2,011
2,011
2,011
90,989
117,567
146,966
180,347
10,021
11,216
11,998
12,533
7,261
8,350
9,185
9,874
3,870
4,450
4,895
5,263
21,152
24,016
26,079
27,670
1,608
1,849
2,034
2,187
---
---
---
---
3,502
3,502
3,502
3,502
26,262
29,368
31,615
33,358
7,177
7,177
7,177
7,177
3,553
5,092
6,785
8,605
---
---
---
---
53,818
75,752
101,210
131,028
179
179
179
179
64,727
88,199
115,351
146,989
90,989
117,567
146,966
180,347
7.8%
28.2
1.8%
7.8%
28.2
1.8%
7.8%
28.2
1.8%
7.8%
28.2
1.8%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
22.1%
79.6
87.6%
4.8%
2.0%
Apple (AAPL)
Cash Flows
($ millions, except per share data in $000s)
2006A
2007A
2008A
Fiscal Years
2010E
2009A
x Operating Activities
Net Income
3,495
6,119
8,235
12,849
327
496
734
1,064
---
---
---
40
242
516
710
1,030
73
398
1,040
---
Loss on PP&E
12
22
26
---
(385)
(785)
(939)
(1,512)
(76)
(163)
54
(188)
(1,279)
(274)
780
---
285
289
(1,172)
---
Accounts Payable
1,494
596
81
2,314
Deferred Revenue
566
718
521
1,308
Other Liabilities
716
1,664
1,385
1,733
5,470
9,596
11,455
18,637
(11,719)
(22,965)
(46,724)
---
9,424
16,243
30,678
---
(17)
(38)
(101)
---
Capital Expenditures
(735)
(1,091)
(1,144)
(1,659)
Acquisition of Intangibles
(251)
(108)
(69)
---
Other
Cash Flow from Investing
49
(230)
(74)
---
(3,249)
(8,189)
(17,434)
(1,659)
365
483
475
---
---
---
---
---
Financing Activities
Proceeds from Common Stock
Common Stock Repurchased
Dividends Issued
---
---
---
---
377
757
270
---
---
---
---
---
(3)
(124)
(82)
---
739
1,116
663
---
2,960
2,523
(5,316)
16,978
Beginning Cash
x Ending Cash
6,392
9,352
9,352
11,875
11,875
6,559
6,559
23,537
x CapEx % Revenue
3.0%
2.9%
2.7%
2.7%
Fiscal Years
2011E
2012E
2013E
2014E
17,606
21,933
25,459
29,818
1,384
1,591
1,750
1,882
37
28
13
10
1,338
1,539
1,693
1,820
---
---
---
---
---
---
---
---
(1,462)
(950)
(729)
(601)
(171)
(97)
(64)
(43)
---
---
---
---
---
---
---
---
2,106
1,195
782
535
1,264
822
630
520
1,676
1,089
835
689
23,777
27,150
30,370
34,629
---
---
---
---
---
---
---
---
---
---
---
---
(2,156)
(2,480)
(2,728)
(2,932)
---
---
---
---
---
---
---
---
(2,156)
(2,480)
(2,728)
(2,932)
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
21,621
24,670
27,642
31,696
23,537
45,158
45,158
69,828
69,828
97,470
97,470
129,166
2.7%
2.7%
2.7%
2.7%
Apple (AAPL)
Disclosures
mentioned in
ecurities