BIWS - Comprehensive (AAPL)
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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:
360
Company Name:
Apple Inc.
Debt Issue Date:
2010
Debt Amount:
$1,000 Share Price:
$192.06 Share Units:
1000
Tax Rate:
30%
Basic Shares Outstanding:
900,678
Options Calculations (in Thousands Except Exercise Price):
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
Projections
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
EV / Revenue:
5.8 x
3.8 x
3.3 x
2.6 x
2.3 x
2.0 x
1.9 x
1.7 x
EV / EBIT:
30.4 x
16.0 x
11.4 x
9.1 x
7.8 x
7.0 x
6.4 x
6.0 x
EV / EBITDA:
28.4 x
15.1 x
10.7 x
8.6 x
7.3 x
6.6 x
6.1 x
5.7 x
Equity Value / FCF:
37.3 x
20.8 x
17.1 x
13.5 x
12.1 x
10.9 x
10.1 x
9.1 x
P / E:
48.9 x
28.3 x
21.2 x
16.6 x
14.1 x
12.2 x
11.1 x
9.8 x
P / BV:
7.9 x
5.6 x
4.1 x
3.1 x
2.4 x
2.0 x
1.6 x
Operating Assumptions
Historical
Projections
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Revenue Growth %:
27.2%
52.5%
14.4%
25.0%
17.0%
11.0%
9.0%
7.0%
COGS % Revenue:
66.2%
64.1%
59.0%
59.0%
59.0%
59.0%
59.0%
59.0%
R&D % Revenue:
2.4%
2.0%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
SG&A % Revenue:
11.1%
8.9%
8.3%
8.3%
8.3%
8.3%
8.3%
8.3%
Stock-Based Compensation % Revenue:
1.0%
1.4%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
Depreciation & Amortization % Revenue:
1.3%
1.3%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
Effective Cash Interest Rate:
5.3%
3.4%
1.4%
1.0%
1.0%
2.0%
2.0%
3.0%
Debt Interest Rate:
0.0%
0.0%
0.0%
9.0%
9.0%
9.0%
9.0%
9.0%
Effective Tax Rate:
30.2%
31.6%
31.8%
30.0%
30.0%
30.0%
30.0%
30.0%
Accounts Receivable % Revenue:
6.5%
7.8%
7.8%
7.8%
7.8%
7.8%
7.8%
Accounts Receivable Days:
23.3
28.2
28.2
28.2
28.2
28.2
28.2
Inventory % COGS:
2.1%
1.8%
1.8%
1.8%
1.8%
1.8%
1.8%
Amortization of Intangibles:
$40 $37 $28 $13 $10 Accounts Payable % COGS:
23.0%
22.1%
22.1%
22.1%
22.1%
22.1%
22.1%
Accounts Payable Days:
82.6
79.6
79.6
79.6
79.6
79.6
79.6
Accrued Expenses % Operating Expenses:
102.9%
87.6%
87.6%
87.6%
87.6%
87.6%
87.6%
Short-Term Deferred Revenue % Revenue:
4.3%
4.8%
4.8%
4.8%
4.8%
4.8%
4.8%
Long-Term Deferred Revenue % Revenue:
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
CapEx % Revenue:
3.0%
2.9%
2.7%
2.7%
2.7%
2.7%
2.7%
2.7%
Income Statement
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Revenue:
$24,578 $37,491 $42,905 $53,631 $62,749 $69,651 $75,919 $81,234 Cost of Goods Sold:
$16,282 $24,049 $25,324 $31,655 $37,037 $41,111 $44,811 $47,948
Gross Profit:
$8,296 $13,442 $17,581 $21,976 $25,712 $28,540 $31,109 $33,286 Operating Expenses:
Research & Development:
$596 $759 $830 $1,038 $1,214 $1,348 $1,469 $1,572 Selling, General & Administrative:
$2,724 $3,345 $3,566 $4,458 $5,216 $5,789 $6,311 $6,752 Total Operating Expenses:
$3,320 $4,103 $4,397 $5,496 $6,430 $7,137 $7,780 $8,324 Depreciation & Amortization of PP&E:
$327 $496 $734 $918 $1,073 $1,192 $1,299 $1,390 Amortization of Intangibles:
$0 $0 $0 $40 $37 $28 $13 $10 Stock-Based Compensation:
$242 $516 $710 $888 $1,038 $1,153 $1,256 $1,344 Operating Income:
$4,407 $8,327 $11,740 $14,635 $17,133 $19,030 $20,761 $22,218 Interest Income:
$647 $653 $407 $424 $568 $1,443 $1,780 $3,223 Interest Expense:
$0 $0 $0 ($45)
($90)
($90)
($90)
($90)
Other Income & Expense:
($48)
($33)
($81)
$0 $0 $0 $0 $0 Pre-Tax Income:
$5,006 $8,947 $12,066 $15,014 $17,610 $20,383 $22,450 $25,351 Income Tax Provision:
$1,511 $2,828 $3,831 $4,504 $5,283 $6,115 $6,735 $7,605 Net Income:
$3,495 $6,119 $8,235 $10,510 $12,327 $14,268 $15,715 $17,746 Earnings Per Share (EPS):
$3.93 $6.78 $9.08 $11.59 $13.59 $15.73 $17.33 $19.56 Diluted Shares Outstanding:
889,292
902,139
907,005
907,005
907,005
907,005
907,005
907,005
EBIT:
$4,649 $8,843 $12,450 $15,523 $18,171 $20,183 $22,017 $23,562 EBITDA:
$4,976 $9,339 $13,184 $16,480 $19,282 $21,403 $23,329 $24,962 Levered Free Cash Flow:
$4,735 $8,505 $10,311 $13,061 $14,618 $16,158 $17,507 $19,382 Book Value Per Share (BV):
$24.17 $34.56 $47.17 $61.94 $78.98 $97.70 $118.76 Balance Sheet
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Assets:
Current Assets:
Cash & Cash-Equivalents:
$11,875 $6,559 $20,620 $35,238 $51,396 $68,903 $88,285 Short-Term Securities:
$10,236 $26,282 $26,282 $26,282 $26,282 $26,282 $26,282
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Accounts Receivable:
$2,422 $3,361 $4,201 $4,915 $5,456 $5,947 $6,364 Inventory:
$509 $455 $569 $665 $739 $805 $861 Deferred Tax Assets:
$1,044 $4 $4 $4 $4 $4 $4 Other Current Assets:
$3,920 $3,140 $3,140 $3,140 $3,140 $3,140 $3,140 Total Current Assets:
$30,006 $39,801 $54,816 $70,245 $87,017 $105,082 $124,936 Long-Term Assets:
Long-Term Securities:
$2,379 $2,554 $2,554 $2,554 $2,554 $2,554 $2,554 Plants, Property & Equipment:
$2,455 $2,839 $3,352 $3,951 $4,617 $5,342 $6,118 Goodwill:
$207 $207 $207 $207 $207 $207 $207 Other Intangible Assets:
$285 $354 $314 $277 $249 $236 $226 Other Assets:
$839 $2,011 $2,011 $2,011 $2,011 $2,011 $2,011 Total Assets:
$36,171 $47,766 $63,253 $79,245 $96,654 $115,432 $136,052 Liabilities & Shareholders' Equity:
Current Liabilities:
Accounts Payable:
$5,520 $5,601 $7,001 $8,191 $9,093 $9,911 $10,605 Accrued Expenses:
$4,224 $3,852 $4,815 $5,634 $6,253 $6,816 $7,293 Deferred Revenue:
$1,617 $2,053 $2,566 $3,003 $3,333 $3,633 $3,887 Total Current Liabilities:
$11,361 $11,506 $14,383 $16,828 $18,679 $20,360 $21,785 Long-Term Liabilities:
Deferred Revenue:
$768 $853 $1,066 $1,248 $1,385 $1,509 $1,615 Long-Term Debt:
$0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 Other Long-Term Liabilities:
$1,745 $3,502 $3,502 $3,502 $3,502 $3,502 $3,502 Total Liabilities:
$13,874 $15,861 $19,951 $22,577 $24,565 $26,371 $27,902 Shareholders' Equity:
Common Stock:
$7,177 $7,177 $7,177 $7,177 $7,177 $7,177 $7,177 Additional Paid-In Capital:
$0 $1,185 $2,073 $3,111 $4,263 $5,520 $6,864 Treasury Stock:
$0 $0 $0 $0 $0 $0 $0 Retained Earnings:
$15,129 $23,364 $33,874 $46,201 $60,470 $76,185 $93,930 Accumulated Other Comprehensive Income:
($9)
$179 $179 $179 $179 $179 $179
Total Shareholders' Equity:
$22,297 $31,905 $43,302 $56,668 $72,089 $89,061 $108,151 Total Liabilities & SE:
$36,171 $47,766 $63,253 $79,245 $96,654 $115,432 $136,052 BALANCE CHECK:
$0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 Cash Flow Statement
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Operating Activities:
Net Income:
$3,495 $6,119 $8,235 $10,510 $12,327 $14,268 $15,715 $17,746 Depreciation & Amortization of PP&E:
$327 $496 $734 $918 $1,073 $1,192 $1,299 $1,390 Amortization of Intangibles:
$0 $0 $0 $40 $37 $28 $13 $10 Stock-Based Compensation:
$242 $516 $710 $888 $1,038 $1,153 $1,256 $1,344 Deferred Income Tax Expense:
$73 $398 $1,040 $0 $0 $0 $0 $0 Loss on PP&E:
$12 $22 $26 $0 $0 $0 $0 $0 Changes in Operating Assets & Liabilities:
Accounts Receivable:
($385)
($785)
($939)
($840)
($714)
($541)
($491)
($416)
Inventory:
($76)
($163)
$54 ($114)
($97)
($73)
($66)
($56)
Other Current Assets:
($1,279)
($274)
$780 $0 $0 $0 $0 $0 Other Assets:
$285 $289 ($1,172)
$0 $0 $0 $0 $0 Accounts Payable:
$1,494 $596 $81 $1,400 $1,190 $901 $818 $694 Deferred Revenue:
$566 $718 $521 $727 $618 $468 $425 $360 Other Liabilities:
$716 $1,664 $1,385 $963 $819 $620 $563 $477 Cash Flow from Operations:
$5,470 $9,596 $11,455 $14,491 $16,292 $18,015 $19,532 $21,548 Investing Activities:
Purchases of Securities:
($11,719)
($22,965) ($46,724)
$0 $0 $0 $0 $0 Proceeds from Maturities & Sales:
$9,424 $16,243 $30,678 $0 $0 $0 $0 $0 Purchases of LT Investments:
($17)
($38)
($101)
$0 $0 $0 $0 $0 Capital Expenditures:
($735)
($1,091)
($1,144)
($1,430)
($1,673)
($1,857)
($2,024)
($2,166)
Acquisition of Intangibles:
($251)
($108)
($69)
$0 $0 $0 $0 $0 Other:
$49 ($230)
($74)
$0 $0 $0 $0 $0 Cash Flow from Investing:
($3,249)
($8,189) ($17,434)
($1,430)
($1,673)
($1,857)
($2,024)
($2,166)
Financing Activities:
Proceeds from Common Stock:
$365 $483 $475 $0 $0 $0 $0 $0 Common Stock Repurchased:
$0 $0 $0 $0 $0 $0 $0 $0 Dividends Issued:
$0 $0 $0 $0 $0 $0 $0 $0 Tax Benefits from Stock-Based Comp:
$377 $757 $270 $0 $0 $0 $0 $0 Raise / (Pay Off) Long-Term Debt
$0 $0 $0 $1,000 $0 $0 $0 $0 Cash Used for Equity Awards:
($3)
($124)
($82)
$0 $0 $0 $0 $0 Cash Flow from Financing:
$739 $1,116 $663 $1,000 $0 $0 $0 $0 Increase / Decrease in Cash:
$2,960 $2,523 ($5,316)
$14,061 $14,618 $16,158 $17,507 $19,382 Cash & Cash Equivalents:
$9,352 $11,875 $6,559 $20,620 $35,238 $51,396 $68,903 $88,285
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Valuation Summary - Apple Inc.
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Valuation Statistics - Apple Inc.
Apple Inc. - Range of Valuation Multiple
25th
75th
Minimum
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 x
2010E EV / Revenue:
0.3 x
0.5 x
1.0 x
2.3 x
2009 EV / EBITDA:
4.4 x
7.3 x
7.6 x
10.6 x
2010E EV / EBITDA:
3.7 x
5.1 x
5.5 x
6.8 x
2009 P / E:
15.0 x
16.1 x
19.7 x
29.1 x
2010E 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 x
Forward EV / Revenue:
0.4 x
2.1 x
2.7 x
5.0 x
Trailing EV / EBITDA:
8.7 x
11.5 x
14.4 x
17.3 x
Forward EV / EBITDA:
9.6 x
13.4 x
19.1 x
23.9 x
Discounted Cash Flow Analysis:
11-15% Discount Rate, 5-9x Terminal Multiple:
es / Premiums
Apple Inc. - Implied Per Share Value Range
Applicable
25th
75th
Maximum
Apple Inc.
Minimum
Pecentile
Median
Pecentile
Maximum
Multiple
Figure
Multiple
Multiple
Multiple
Multiple
Multiple
3.1 x
$42,905 $ 52.12 $ 59.64 $ 89.08 $ 170.37 $ 181.29 2.6 x
$53,631 54.32 66.62 96.83 173.80 189.43 11.5 x
$13,184 101.49 143.02 146.90 190.08 203.41 8.4 x
$16,480 103.84 129.06 137.54 160.94 187.95 47.2 x
$9.08 136.10 145.77 179.19 264.11 428.24 44.6 x
$11.59 126.68 140.94 188.68 192.55 516.50 8.3 x
$42,905 $ 57.41 $ 129.08 $ 165.82 $ 319.62 $ 424.32 7.5 x
$53,631 63.66 163.31 198.04 328.66 472.85 39.7 x
$13,184 162.40 202.99 244.29 285.53 606.40 32.8 x
$16,480 211.19 277.70 379.76 465.76 625.62 $ 163.88 $ 182.19 $ 201.98 $ 223.36 $ 246.46
Balance Sheet Adjustment:
$35,395
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Min.
25th
Median
75th
Max
11-15% Discount Rate, 5-9x Terminal Multiple:
$ 163.88 $ 182.19 $ 201.98 $ 223.36 $ 246.46 Forward EV / EBITDA:
$ 211.19 $ 277.70 $ 379.76 $ 465.76 $ 625.62 Trailing EV / EBITDA:
$ 162.40 $ 202.99 $ 244.29 $ 285.53 $ 606.40 Forward EV / Revenue:
$ 63.66 $ 163.31 $ 198.04 $ 328.66 $ 472.85 Trailing EV / Revenue:
$ 57.41 $ 129.08 $ 165.82 $ 319.62 $ 424.32 2010E P / E:
$ 126.68 $ 140.94 $ 188.68 $ 192.55 $ 516.50 2009 P / E:
$ 136.10 $ 145.77 $ 179.19 $ 264.11 $ 428.24 2010E EV / EBITDA:
$ 103.84 $ 129.06 $ 137.54 $ 160.94 $ 187.95 2009 EV / EBITDA:
$ 101.49 $ 143.02 $ 146.90 $ 190.08 $ 203.41 2010E EV / Revenue:
$ 54.32 $ 66.62 $ 96.83 $ 173.80 $ 189.43 2009 EV / Revenue:
$ 52.12 $ 59.64 $ 89.08 $ 170.37 $ 181.29 11-15% Discount Rate, 5-9x Terminal Multiple:
Forward EV / EBITDA:
Trailing EV / EBITDA:
Forward EV / Revenue:
Trailing EV / Revenue:
2010E P / E:
2009 P / E:
2010E EV / EBITDA:
2009 EV / EBITDA:
2010E EV / Revenue:
2009 EV / Revenue:
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.
Public Company Compara-
bles
Precedent Transactions
Discounted Cash Flow Analysis
Min Point
25 Point
Med Point75 Point
Max Point
$ 163.88 $ 18.31 $ 19.79 $ 21.38 $ 23.10 $ 211.19 $ 66.51 $ 102.06 $ 86.00 $ 159.85 $ 162.40 $ 40.59 $ 41.30 $ 41.24 $ 320.86 $ 63.66 $ 99.65 $ 34.73 $ 130.62 $ 144.19 $ 57.41 $ 71.67 $ 36.74 $ 153.80 $ 104.70 $ 126.68 $ 14.26 $ 47.74 $ 3.87 $ 323.95 $ 136.10 $ 9.67 $ 33.43 $ 84.92 $ 164.13 $ 103.84 $ 25.23 $ 8.47 $ 23.41 $ 27.01 $ 101.49 $ 41.53 $ 3.87 $ 43.18 $ 13.33 $ 54.32 $ 12.31 $ 30.21 $ 76.97 $ 15.63 $ 52.12 $ 7.53 $ 29.44 $ 81.29 $ 10.93 .00
$700.00
Min to 25th
25th to Median
Median to 75th
75th to Max
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
Capitalization
Share
Equity
Enterprise
Revenue
EBIT
Company Name
Price
Value
Value
2009
2010E
2009
Hewlett-Packard Company
$ 47.07 $ 114,779 $ 124,430 $ 114,552 $ 124,179 $ 16,433 Dell Inc.
12.90 25,241 15,080 51,430 55,380 3,426 Cisco Systems, Inc.
22.47 131,739 106,671 34,807 41,163 10,076 Intel Corporation
19.40 107,224 92,786 32,784 39,941 12,708 Motorola, Inc.
6.15 14,239 10,665 23,457 22,056 926 Maximum
$ 47.07 $ 131,739 $ 124,430 $ 114,552 $ 124,179 $ 16,433 75th Percentile
22.47 114,779 106,671 51,430 55,380 12,708 Median
$ 19.40 $ 107,224 $ 92,786 $ 34,807 $ 41,163 $ 10,076 25th Percentile
12.90 25,241 15,080 32,784 39,941 3,426 Minimum
6.15 14,239 10,665 23,457 22,056 926 Apple Inc.
$ 192.06 $ 176,796 $ 141,401 $42,905 $ 53,631 $13,184 Valuation Statistics
Capitalization
Enterprise Value / Enterprise
Share
Equity
Enterprise
Revenue
EBIT
Company Name
Price
Value
Value
2009
2010E
2009
Hewlett-Packard Company
$ 47.07 $ 114,779 $ 124,430 1.1 x
1.0 x
7.6 x
Dell Inc.
12.90 25,241 15,080 0.3 x
0.3 x
4.4 x
Cisco Systems, Inc.
22.47 131,739 106,671 3.1 x
2.6 x
10.6 x
Intel Corporation
19.40 107,224 92,786 2.8 x
2.3 x
7.3 x
Motorola, 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 x
75th Percentile
22.47 114,779 106,671 2.8 x
2.3 x
10.6 x
Median
$ 19.40 $ 107,224 $ 92,786 1.1 x
1.0 x
7.6 x
25th Percentile
12.90 25,241 15,080 0.5 x
0.5 x
7.3 x
Minimum
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
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Projected
TDA
EPS
Revenue
EBITDA Margin
2010E
2009
2010E
Growth
2009
2010E
$ 18,186 $ 3.14 $ 3.87 8.4%
14.3%
14.6%
4,129 0.79 1.18 7.7%
6.7%
7.5%
12,774 0.97 1.38 18.3%
28.9%
31.0%
18,332 0.41 1.17 21.8%
38.8%
45.9%
1,927 (1.70) 0.14 (6.0%)
3.9%
8.7%
$ 18,332 $ 3.14 $ 3.87 21.8%
38.8%
45.9%
18,186 0.97 1.38 18.3%
28.9%
31.0%
$ 12,774 $ 0.79 $ 1.18 8.4%
14.3%
14.6%
4,129 0.41 1.17 7.7%
6.7%
8.7%
1,927 (1.70) 0.14 (6.0%)
3.9%
7.5%
$16,480 $9.08 $ 11.59 25.0%
30.7%
30.7%
e Value / TDA
P / E Multiple
2010E
2009
2010E
6.8 x
15.0 x
12.2 x
3.7 x
16.4 x
10.9 x
8.4 x
23.1 x
16.3 x
5.1 x
47.2 x
16.6 x
5.5 x
NM
44.6 x
8.4 x
47.2 x
44.6 x
6.8 x
29.1 x
16.6 x
5.5 x
19.7 x
16.3 x
5.1 x
16.1 x
12.2 x
3.7 x
15.0 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
Equity
Enterprise
Acquirer 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 Multiples
EV / EV / EV / EV / Trailing
Forward
Trailing
Forward
Trailing
Forward
Trailing
Forward
Revenue
Revenue
EBITDA
EBITDA
Revenue
Revenue
EBITDA
EBITDA
$ 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
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Discounted Cash Flow Analysis - Apple Inc.
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Apple Inc. - Cash Flow Projections
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Revenue:
$53,631 $ 62,749 $ 69,651 $ 75,919 $ 81,234 EBITDA:
$16,480 $ 19,282 $ 21,403 $ 23,329 $ 24,962 Operating Income:
$14,635 $ 17,133 $ 19,030 $ 20,761 $ 22,218 Less: Taxes
($4,391)
($5,140)
($5,709)
($6,228)
($6,665)
Plus: Depreciation
$918 $1,073 $1,192 $1,299 $1,390 Plus: Amortization
$40 $37 $28 $13 $10 Plus: Stock-Based Compensation
$888 $1,038 $1,153 $1,256 $1,344 Less: Increase in Working Capital:
$2,136 $1,815 $1,374 $1,248 $1,058 Less: Capital Expenditures
($1,430)
($1,673)
($1,857)
($2,024)
($2,166)
Unlevered Free Cash Flow
$12,795 $ 14,284 $ 15,211 $ 16,324 $ 17,189 Present Value of Free Cash Flow
$12,064 $ 11,971 $ 11,332 $ 10,811 $ 10,119 Normal Discount Period:
1.000
2.000
3.000
4.000
5.000
Mid-Year Discount:
0.500
1.500
2.500
3.500
4.500
Free Cash Flow Growth Rate:
11.6%
6.5%
7.3%
5.3%
Apple Inc. - Net Present Value Sensitivity - Terminal Growth Rates
Discount Rate
$ 204.96 10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Apple Inc. - Net Present Value Sensitivity - Terminal EBITDA Multiples
Discount Rate
$ 204.96 10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
4.0 x 5.0 x Terminal Growth Rate
BITDA e
6.0 x 7.0 x 8.0 x 9.0 x Terminal EB
Multiple
Apple Inc. - DCF Assumptions & Output
Use Multiples Method?
Yes
Discount Rate:
12.5%
Terminal EBITDA Multiple:
7.0 x
Terminal Growth Rate:
3.0%
Terminal Value:
$ 174,733 PV of Terminal Value:
$96,980 Sum of PV of Cash Flows:
$56,296 Enterprise Value:
$153,276 Terminal Value % EV:
63.3%
Enterprise Value:
$153,276 Balance Sheet Adjustment:
$35,395 Implied Equity Value:
$188,671 Implied Price Per Share:
$ 204.96
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WACC Analysis - Apple Inc.
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Discount Rate Calculation - Assumptions
Risk-Free Rate:
4.38%
Equity Risk Premium:
7.00%
Interest Rate on Debt:
9.00%
Comparable Companies - Unlevered Beta Calculation
Levered
Equity
Unlevered
Name
Beta
Debt
Value
Tax Rate
Beta
Hewlett-Packard Company
1.04 $ 15,830 $ 114,779 20.0% 0.94 Dell Inc.
1.31 3,793 25,241 27.0% 1.18 Cisco Systems, Inc.
1.23 10,273 131,739 22.0% 1.16 Intel Corporation
1.17 2,224 107,224 33.0% 1.15 Motorola, Inc.
1.87 3,925 14,239 34.0% 1.58 Median
1.23 1.16 Apple Inc.
1.57 Apple Inc. - Levered Beta & WACC Calculation
Unlevered
Equity
Levered
Beta
Debt
Value
Tax Rate
Beta
Apple Inc.
1.16 $0 $ 176,796 30% 1.16 Cost of Equity Based on Comparables:
12.50%
Cost of Equity Based on Historical Beta:
15.37%
WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Pr
WACC
12.50%
referred Stock
Merger Model - Apple Inc. and Research in Motion Limited
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Transaction Assumptions
Per Share Purchase Price:
$75.00 Equity Purchase Price:
% Cash:
33.3%
Cash Used:
% Debt:
33.3%
Debt Issued:
% Stock:
33.3%
New Shares Issued:
Foregone Cash Interest Rate:
1.0%
Debt Interest Rate:
Revenue Synergy %:
10.0%
Revenue Synergy COGS %:
Cost Synergies % OpEx:
10.0%
Goodwill Creation & Balance Sheet Adjustments
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:
Buyer - Financial Profile
Seller - Financial Profile
Buyer Name:
Apple Inc.
Seller Name:
Research in Motio
Share Price:
$192.06 Share Price:
Diluted Shares Outstanding:
920,526
Diluted Shares Outstanding:
Diluted Equity Value:
$176,796 Diluted Equity Value:
Enterprise Value:
$141,401 Enterprise Value:
Tax Rate:
30%
Tax Rate:
Buyer - Income Statement
Seller - Income Statement
FY 2010E
FY 2011E
FY 2010E
Revenue:
$53,631 $62,749 Revenue:
$17,231 Cost of Goods Sold:
$31,655 $37,037 Cost of Goods Sold:
$9,755 Gross Profit:
$21,976 $25,712 Gross Profit:
$7,476
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Operating Expenses:
$5,496 $6,430 Operating Expenses:
$2,698 Depreciation of PP&E:
$918 $1,073 Depreciation of PP&E:
$431 Amortization of Intangibles:
$40 $37 Amortization of Intangibles:
$359 Stock-Based Compensation:
$888 $1,038 Stock-Based Compensation:
$52 Operating Income:
$14,635 $17,133 Operating Income:
$3,937 Interest Income / (Expense):
$379 $478 Interest Income / (Expense):
$25 Pre-Tax Income:
$15,014 $17,610 Pre-Tax Income:
$3,962 Income Tax Provision:
$4,504 $5,283 Income Tax Provision:
$1,148 Net Income:
$10,510 $12,327 Net Income:
$2,814 Earnings Per Share (EPS):
$11.59 $13.59 Earnings Per Share (EPS):
$5.03 Diluted Shares Outstanding:
907,005
907,005
Diluted Shares Outstanding:
560,000
Combined Income Statement
FY 2010E
FY 2011E
Combined Revenue:
$70,862 $83,617 Revenue Synergies:
$1,723 $2,087 Cost of Goods Sold:
$41,410 $48,905 Revenue Synergy COGS:
$862 $1,043 Gross Profit:
$30,313 $35,755 Operating Expenses:
$8,193 $9,689 OpEx Synergies:
$270 $326 Depreciation of PP&E:
$1,348 $1,637 Depr. of PP&E Write-Up:
$22 $22 Amortization of Intangibles:
$399 $470 Amort. of New Intangibles
$1,448 $1,448 Stock-Based Compensation:
$939 $1,101 Operating Income:
$18,233 $21,713 Interest Income / (Expense):
$404 $510 Foregone Interest on Cash:
($143)
($143)
Interest Paid on New Debt:
($1,291)
($1,291)
Pre-Tax Income:
$17,203 $20,789 Income Tax Provision:
$5,161 $6,237 Net Income:
$12,042 $14,552 Earnings Per Share (EPS):
$12.27 $14.82
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Diluted Shares Outstanding:
981,719
981,719
Accretion / Dilution:
$0.68 $1.23 Accretion / Dilution %:
5.9%
9.1%
Sensitivity Analysis - Year 1 EPS Accretion/Dilution and Purchase Price vs. Operating Expense Synergies:
Expense Synergies % Seller OpEx:
5.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Per Share Purchase Price
$ 110.00 $ 105.00 $ 100.00 $ 95.00 $ 90.00 $ 85.00 $ 80.00 $ 75.00 $ 70.00 $ 65.00 Sensitivity Analysis - Year 1 EPS Accretion/Dilution and Purchase Price vs. Revenue Synergies:
Revenue Synergies % Seller Revenue:
5.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Per Share Purchase Price
$ 110.00 $ 105.00 $ 100.00 $ 95.00 $ 90.00 $ 85.00 $ 80.00 $ 75.00 $ 70.00 $ 65.00
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$43,049 $14,350 $14,350 74,714
9.0%
50.0%
10.0%
$174 8 $36,209 20.0%
$7,242 5 $2,225 on Limited
$62.91 572,951
$36,044 $33,547 28%
FY 2011E
$20,868 $11,869 $9,000
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$3,259 $563 $433 $63 $4,682 $33 $4,714 $1,343 $3,371 $6.02 560,000
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16.0%
16.0%
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Merger Model - Seller Diluted Share Count & Combined Balance Sheets
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Diluted Share & Enterprise Value Calculations - Seller
Company Name:
Research in Motion Limited
Options Calculations - Current Pr
Share Price:
$62.91 Offer Price Per Share:
$75.00 Tax Rate:
28%
Exercise
Name
Number
Price
Current Share Price:
Purchase Price:
Tranche A
10,470
$38.57 Basic Shares Outstanding:
568,900
Basic Shares Outstanding:
568,900
Tranche B
Basic Equity Value:
$35,789 Basic Equity Value:
$42,668 Total
Diluted Shares Outstanding:
572,951
Diluted Shares Outstanding:
573,986
Diluted Equity Value:
$36,044 Diluted Equity Value:
$43,049 Options Calculations - Purchase P
Less: Cash & Investments
$2,498 Less: Cash & Investments
$2,498 Plus: Debt
$0 Plus: Debt
$0 Exercise
Plus: Minority Interest
$0 Plus: Minority Interest
$0 Name
Number
Price
Plus: Preferred Stock
$0 Plus: Preferred Stock
$0 Tranche A
10,470
$38.57 Plus: Other Liabilities
$0 Plus: Other Liabilities
$0 Tranche B
Enterprise Value:
$33,547 Enterprise Value:
$40,551 Total
Balance Sheets - Buyer, Seller & Combined
Assets:
Buyer
Seller
Adjustments
Combined
Current Assets:
Cash & Short-Term Securities:
$32,841 $1,664 ($14,350)
$20,156 Accounts Receivable:
$3,361 $2,613 $5,974 Inventory:
$455 $573 $1,028 Deferred Tax Assets:
$4 $176 $180 Other Current Assets:
$3,140 $190 $3,330 Total Current Assets:
$39,801 $5,215 ($14,350)
$30,667
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Long-Term Assets:
Long-Term Securities:
$2,554 $834 $3,388 Plants, Property & Equipment:
$2,839 $1,737 $174 $4,750 Goodwill:
$207 $147 $30,828 $31,182 Other Intangible Assets:
$354 $1,291 $7,242 $8,887 Other Assets:
$2,011 $0 $2,011 Total Assets:
$47,766 $9,224 $23,894 $80,884 Liabilities & Shareholders' Equity:
Current Liabilities:
Accounts Payable:
$5,601 $496 $6,097 Accrued Expenses:
$3,852 $1,604 $5,456 Deferred Revenue:
$2,053 $67 $2,120 Total Current Liabilities:
$11,506 $2,167 $0 $13,673 Long-Term Liabilities:
Deferred Revenue:
$853 $0 $853 Long-Term Debt:
$0 $0 $14,350 $14,350 Deferred Income Tax Liability:
$0 $43 $2,181 $2,225 Other Long-Term Liabilities:
$3,502 $28 $3,530 Total Liabilities:
$15,861 $2,238 $16,531 $34,630 Shareholders' Equity:
Common Stock:
$7,177 $2,236 ($2,236)
$7,177 Additional Paid-In Capital:
$1,185 $139 $14,211 $15,535 Treasury Stock:
$0 ($45)
$45 $0 Retained Earnings:
$23,364 $4,664 ($4,664)
$23,364 Accumulated Other Comprehensive Income:
$179 ($8)
$8 $179 Total Shareholders' Equity:
$31,905 $6,987 $7,363 $46,255 Total Liabilities & SE:
$47,766 $9,224 $23,894 $80,884
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rice:
Dilution
4,051
4,051
Price:
Dilution
5,086
5,086
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Apple Inc. - Basic LBO Model
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Transaction Assumptions
Current Share Price:
$192.06 Equity Purchase Price:
$212,713 Offer Premium:
20.0%
Enterprise Value:
$177,318 Offer Price Per Share:
$230.47 EBITDA Purchase Multiple:
13.4 x
% Debt:
50.0%
Debt Required:
$106,357 % Equity:
50.0%
Equity Used:
$106,357 EBITDA Exit Multiple:
10.0 x
Purchase Price Calculations:
Basic Shares Outstanding:
900,678
Advisory Fee %:
0.02%
Basic Equity Value:
$207,581 Financing Fee %:
0.06%
Diluted Shares Outstanding:
922,947
Diluted Equity Value:
$212,713 Options Calculations - Purchase Price:
Less: Cash & Investments
$35,395 Plus: Debt
$0 Exercise
Plus: Minority Interest
$0 Name
Number
Price
Dilution
Plus: Preferred Stock
$0 Tranche A
34,375
$81.17 22,268
Plus: Other Liabilities
$0 Tranche B
Enterprise Value:
$177,318 Total
22,268
Debt Assumptions
Debt %:
50.0%
Debt Required:
$106,357 Bank Debt %:
75.0%
Bank Debt:
$79,768 High-Yield Debt %:
25.0%
High-Yield Debt:
$26,589 Bank Debt Interest Rate:
8.0%
Bank Debt Principal Repayment %:
10.0%
High-Yield Debt Interest Rate:
11.0%
High-Yield Debt Principal Repayment %:
0.0%
Sources & Uses
Sources:
Uses:
Bank Debt:
$79,768 Equity Value of Company:
$212,713 High-Yield Debt:
$26,589 Advisory Fees:
$43 Investor Equity:
$106,463 Financing Fees:
$64
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Total Sources:
$212,820 Total Uses:
$212,820 Operating Assumptions
Initial Cash Balance:
$6,559 Minimum Cash Balance:
$5,000 Historical
Projections
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Revenue Growth %:
27.2%
52.5%
14.4%
25.0%
17.0%
11.0%
9.0%
7.0%
COGS % Revenue:
66.2%
64.1%
59.0%
59.0%
59.0%
59.0%
59.0%
59.0%
R&D % Revenue:
2.4%
2.0%
1.9%
1.9%
1.9%
1.9%
1.9%
1.9%
SG&A % Revenue:
11.1%
8.9%
8.3%
8.3%
8.3%
8.3%
8.3%
8.3%
Stock-Based Compensation % Revenue:
1.0%
1.4%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
Depreciation & Amortization % Revenue:
1.3%
1.3%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
Effective Cash Interest Rate:
5.3%
3.4%
1.4%
1.0%
1.0%
2.0%
2.0%
3.0%
Effective Tax Rate:
30.2%
31.6%
31.8%
30.0%
30.0%
30.0%
30.0%
30.0%
Amortization of Intangibles:
$40 $37 $28 $13 $10 Change in Working Capital % Revenue:
5.4%
5.5%
1.7%
4.0%
2.9%
2.0%
1.6%
1.3%
CapEx % Revenue:
3.0%
2.9%
2.7%
2.7%
2.7%
2.7%
2.7%
2.7%
Income Statement
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Revenue:
$24,578 $37,491 $42,905 $53,631 $62,749 $69,651 $75,919 $81,234 Cost of Goods Sold:
$16,282 $24,049 $25,324 $31,655 $37,037 $41,111 $44,811 $47,948 Gross Profit:
$8,296 $13,442 $17,581 $21,976 $25,712 $28,540 $31,109 $33,286 Operating Expenses:
Research & Development:
$596 $759 $830 $1,038 $1,214 $1,348 $1,469 $1,572 Selling, General & Administrative:
$2,724 $3,345 $3,566 $4,458 $5,216 $5,789 $6,311 $6,752 Total Operating Expenses:
$3,320 $4,103 $4,397 $5,496 $6,430 $7,137 $7,780 $8,324 Depreciation & Amortization of PP&E:
$327 $496 $734 $918 $1,073 $1,192 $1,299 $1,390 Amortization of Intangibles:
$0 $0 $0 $40 $37 $28 $13 $10 Stock-Based Compensation:
$242 $516 $710 $888 $1,038 $1,153 $1,256 $1,344
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Operating Income:
$4,407 $8,327 $11,740 $14,635 $17,133 $19,030 $20,761 $22,218 Interest Income / (Expense):
$599 $620 $326 ($8,627)
($7,954)
($6,850)
($5,947)
($4,563)
Pre-Tax Income:
$5,006 $8,947 $12,066 $6,008 $9,179 $12,180 $14,813 $17,655 Income Tax Provision:
$1,511 $2,828 $3,831 $1,802 $2,754 $3,654 $4,444 $5,297 Net Income:
$3,495 $6,119 $8,235 $4,205 $6,425 $8,526 $10,369 $12,359 EBITDA:
$4,976 $9,339 $13,184 $16,480 $19,282 $21,403 $23,329 $24,962 Cash Flow Statement
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Operating Activities:
Net Income:
$4,205 $6,425 $8,526 $10,369 $12,359 Depreciation & Amortization of PP&E:
$918 $1,073 $1,192 $1,299 $1,390 Amortization of Intangibles:
$40 $37 $28 $13 $10 Stock-Based Compensation:
$888 $1,038 $1,153 $1,256 $1,344 Decrease (Increase) in Working Capital:
$2,136 $1,815 $1,374 $1,248 $1,058 Cash Flow from Operations:
$8,186 $10,389 $12,273 $14,186 $16,161 Capital Expenditures:
($1,430)
($1,673)
($1,857)
($2,024)
($2,166)
Free Cash Flow:
$6,756 $8,716 $10,415 $12,161 $13,995 Beginning Cash Balance:
$6,559 $5,000 $5,000 $5,000 $5,000 Plus: Free Cash Flow:
$6,756 $8,716 $10,415 $12,161 $13,995 Less: Minimum Cash Balance:
($5,000)
($5,000)
($5,000)
($5,000)
($5,000)
Cash Available for Debt Repayment:
$8,315 $8,716 $10,415 $12,161 $13,995 Cash Used for Debt Repayment:
($8,315)
($8,716)
($10,415)
($12,161)
($13,995)
Beginning Cash Balance:
$6,559 $5,000 $5,000 $5,000 $5,000 Net Change in Cash:
($1,559)
$0 $0 $0 $0 Ending Cash Balance:
$5,000 $5,000 $5,000 $5,000 $5,000 Debt & Interest Schedules
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
Beginning Bank Debt:
$79,768 $71,453 $62,736 $52,321 $40,159 Mandatory Repayment:
($7,977)
($7,977)
($7,977)
($7,977)
($7,977)
Optional Repayment:
($338)
($740)
($2,439)
($4,185)
($6,018)
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Ending Bank Debt:
$71,453 $62,736 $52,321 $40,159 $26,165 Beginning High-Yield Debt:
$26,589 $26,589 $26,589 $26,589 $26,589 Mandatory Repayment:
$0 $0 $0 $0 $0 Optional Repayment:
$0 $0 $0 $0 $0 Ending High-Yield Debt:
$26,589 $26,589 $26,589 $26,589 $26,589 Interest Paid on Debt:
($8,974)
($8,292)
($7,527)
($6,624)
($5,578)
Interest Earned on Cash:
$346 $338 $677 $677 $1,015 Net Interest Income / (Expense):
($8,627)
($7,954)
($6,850)
($5,947)
($4,563)
Investor Returns
FY 2007
FY 2008
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
EBITDA:
$13,184 $24,962 EBITDA Multiple:
13.4 x
10.0 x
Enterprise Value:
$177,318 $249,618 Investor Equity:
($106,463)
$0 $0 $0 $0 $230,700 IRR:
16.7%
Sensitivity Analysis - 5-Year IRR and Purchase Premium vs. Exit Multiple
Exit Multiple:
16.7%
6.0 x
7.0 x
8.0 x
9.0 x
10.0 x
11.0 x
12.0 x
13.0 x
14.0 x
$ 278.49 45.0%
$ 268.88 40.0%
$ 259.28 35.0%
$ 249.68 30.0%
$ 240.08 25.0%
$ 230.47 20.0%
$ 220.87 15.0%
$ 211.27 10.0%
$ 201.66 5.0%
$ 192.06 0.0%
Sensitivity Analysis - 5-Year IRR and Purchase Premium vs. % Debt:
Purchase Premium / Per-
Share Price
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% Debt:
16.7%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
$ 278.49 45.0%
$ 268.88 40.0%
$ 259.28 35.0%
$ 249.68 30.0%
$ 240.08 25.0%
$ 230.47 20.0%
$ 220.87 15.0%
$ 211.27 10.0%
$ 201.66 5.0%
$ 192.06 0.0%
Purchase Premium / Per-
Share Price
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Apple Inc. - More Advanced LBO Model
($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)
Transaction Assumptions
Current Share Price:
$192.06 Equity Purchase Price:
Offer Premium:
20.0%
Enterprise Value:
Offer Price Per Share:
$230.47 EBITDA Purchase Multiple:
Leverage Ratio:
6.0 x
Debt Required:
Equity Used:
EBITDA Exit Multiple:
Purchase Price Calculations:
Basic Shares Outstanding:
900,678
Advisory Fee %:
Basic Equity Value:
$207,581 Financing Fee %:
Diluted Shares Outstanding:
922,947
Legal & Misc. Fees:
Diluted Equity Value:
$212,713 Less: Cash & Investments
$35,395 Options Calculations - Purcha
Plus: Debt
$0 Plus: Minority Interest
$0 Name
Number
Plus: Preferred Stock
$0 Tranche A
34,375
Plus: Other Liabilities
$0 Tranche B
Enterprise Value:
$177,318 Total
Debt Assumptions
Leverage Ratio:
6.0 x
Debt Required:
Units for LIBOR:
10,000
Revolver:
Term Loan A %:
40.0%
Term Loan A:
Term Loan B %:
30.0%
Term Loan B:
Subordinated Note %:
20.0%
Subordinated Note:
PIK Loan %:
10.0%
PIK Loan:
Interest Rates:
Principa
Revolver:
L + 250
Revolver:
Term Loan A:
L + 350
Term Loan A:
Term Loan B:
L + 500
Term Loan B:
Subordinated Note:
11.00%
Subordinated Note:
PIK Loan:
13.00%
PIK Loan:
Sources & Uses
Sources:
Excess Cash:
$1,559 Term Loan A:
$31,642
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Term Loan B:
$23,731 Equity Value of Company:
Subordinated Note:
$15,821 Advisory Fees:
PIK Loan:
$7,910 Capitalized Financing Fees:
Investor Equity:
$132,152 Legal & Misc. Fees:
Total Sources:
$212,815 Total Uses:
Goodwill Creation & Balance Sheet Adjustments
Goodwill Calculation:
Fixed Asset Write-Up:
Equity Purchase Price:
$212,713 PP&E Write-Up %:
Less: Seller Book Value:
($31,905)
PP&E Write-Up Amount:
Plus: Write-Off of Existing Goodwill:
$207 Depreciation Period (Years):
Total Allocable Purchase Premium:
$181,015 Intangible Asset Write-Up:
Less: Write-Up of PP&E:
($284)
Purchase Price to Allocate:
Less: Write-Up of Intangibles:
($36,203)
% Allocated to Intangibles:
Less: Write-Down of DTL:
$0 Intangibles Write-Up Amount
Plus: New Deferred Tax Liability:
$10,946 Amortization Period (Years):
Total Goodwill Created:
$155,475 Financing Fees Amortization Period:
5 New Deferred Tax Liability:
Operating Assumptions
Initial Cash Balance:
$6,559 Minimum Cash Balance:
$5,000 Historical
Transac
FY 2007
FY 2008
FY 2009
Debit
Revenue Growth %:
27.2%
52.5%
14.4%
COGS % Revenue:
66.2%
64.1%
59.0%
R&D % Revenue:
2.4%
2.0%
1.9%
SG&A % Revenue:
11.1%
8.9%
8.3%
Stock-Based Compensation % Revenue:
1.0%
1.4%
1.7%
Depreciation & Amortization % Revenue:
1.3%
1.3%
1.7%
Effective Cash Interest Rate:
5.3%
3.4%
1.4%
Effective Tax Rate:
30.2%
31.6%
31.8%
Accounts Receivable % Revenue:
6.5%
7.8%
Accounts Receivable Days:
23.3
28.2
Inventory % COGS:
2.1%
1.8%
Amortization of Intangibles:
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Accounts Payable % COGS:
23.0%
22.1%
Accounts Payable Days:
82.6
79.6
Accrued Expenses % Operating Expenses:
102.9%
87.6%
Short-Term Deferred Revenue % Revenue:
4.3%
4.8%
Long-Term Deferred Revenue % Revenue:
2.0%
2.0%
CapEx % Revenue:
3.0%
2.9%
2.7%
Income Statement
Historical
Transac
FY 2007
FY 2008
FY 2009
Debit
Revenue:
$24,578 $37,491 $42,905 Cost of Goods Sold:
$16,282 $24,049 $25,324 Gross Profit:
$8,296 $13,442 $17,581 Operating Expenses:
Research & Development:
$596 $759 $830 Selling, General & Administrative:
$2,724 $3,345 $3,566 Total Operating Expenses:
$3,320 $4,103 $4,397 Depreciation & Amortization of PP&E:
$327 $496 $734 Depreciation of PP&E Write-Up:
New Intangibles Amortization:
Amortization of Financing Fees:
Amortization of Intangibles:
$0 $0 $0 Stock-Based Compensation:
$242 $516 $710 Operating Income:
$4,407 $8,327 $11,740 Interest Income / (Expense):
$599 $620 $326 Pre-Tax Income:
$5,006 $8,947 $12,066 Income Tax Provision:
$1,511 $2,828 $3,831 Net Income:
$3,495 $6,119 $8,235 EBITDA:
$4,976 $9,339 $13,184 Balance Sheet
Historical
Transac
FY 2008
FY 2009
Debit
Assets:
Current Assets:
Cash & Cash-Equivalents:
$11,875 $6,559 $0 Short-Term Securities:
$10,236 $26,282 $0 Accounts Receivable:
$2,422 $3,361 $0 Inventory:
$509 $455 $0 Deferred Tax Assets:
$1,044 $4 $0
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Other Current Assets:
$3,920 $3,140 $0 Total Current Assets:
$30,006 $39,801 Long-Term Assets:
Long-Term Securities:
$2,379 $2,554 $0 Plants, Property & Equipment:
$2,455 $2,839 $284 Goodwill:
$207 $207 $155,475 Other Intangible Assets:
$285 $354 $36,203 Capitalized Financing Fees:
$0 $0 $49 Other Assets:
$839 $2,011 $0 Total Assets:
$36,171 $47,766 Liabilities & Shareholders' Equity:
Current Liabilities:
Revolver:
$0 $0 $0 Accounts Payable:
$5,520 $5,601 $0 Accrued Expenses:
$4,224 $3,852 $0 Deferred Revenue:
$1,617 $2,053 $0 Total Current Liabilities:
$11,361 $11,506 Long-Term Liabilities:
Deferred Revenue:
$768 $853 $0 Existing Long-Term Debt:
$0 $0 $0 Term Loan A:
$0 $0 $0 Term Loan B:
$0 $0 $0 Subordinated Note:
$0 $0 $0 PIK Loan:
$0 $0 $0 Deferred Tax Liability:
$0 $0 $0 Other Long-Term Liabilities:
$1,745 $3,502 $0 Total Liabilities:
$13,874 $15,861 Shareholders' Equity:
Common Stock:
$7,177 $7,177 $7,177 Additional Paid-In Capital:
$0 $1,185 $1,185 Treasury Stock:
$0 $0 $0 Sponsor Common Equity:
$0 $0 $0 Retained Earnings:
$15,129 $23,364 $23,417 Accumulated Other Comprehensive Income:
($9)
$179 $179 Total Shareholders' Equity:
$22,297 $31,905 Total Liabilities & SE:
$36,171 $47,766 BALANCE CHECK:
$0 $0 Cash Flow Statement
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Historical
Transac
FY 2007
FY 2008
FY 2009
Debit
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:
Debt & Interest Schedules
LIBOR Curve:
Fixed
Interest Rate Assumptions:
LIBOR + Interest
Revolver:
2.50%
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Term Loan A:
3.50%
Term Loan B:
5.00%
Subordinated Note:
11.00%
PIK Loan:
13.00%
Interest Income / (Expense) Calculations:
Revolver:
Term Loan A:
Term Loan B:
Subordinated Note:
PIK Loan:
Cash:
Net Interest Income / (Expense):
Sources of Funds:
Beginning Cash Balance:
Less: Minimum Cash Balance:
Plus: Cash Flow Available for Debt Repayment:
Subtotal Before Revolver:
Revolver Borrowing Required:
Total Sources of Funds:
Uses of Funds:
Mandatory Debt Repayment:
Term Loan A:
Term Loan B:
Subordinated Note:
PIK Loan:
Mandatory Repayment Total:
Optional Debt Repayment:
Revolver:
Term Loan A:
Term Loan B:
Subordinated Note:
PIK Loan:
Optional Repayment Total:
Cash Generated on Balance Sheet:
Total Uses of Funds:
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$212,713 $177,318 13.4 x
$79,104 $133,609 10.0 x
0.02%
0.06%
$10 ase Price:
Exercise
Price
Dilution
$81.17 22,268
22,268
$79,104 $2,000 $31,642 $23,731 $15,821 $7,910 al Repayment %:
N/A
10.0%
5.0%
0.0%
0.0%
Uses:
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$212,713 $43 $49 $10 $212,815 10.0%
$284 8 $181,015 20.0%
t:
$36,203 5 $10,946 ction Adjustments
Projections
Credit
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
25.0%
17.0%
11.0%
9.0%
7.0%
59.0%
59.0%
59.0%
59.0%
59.0%
1.9%
1.9%
1.9%
1.9%
1.9%
8.3%
8.3%
8.3%
8.3%
8.3%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.7%
1.0%
1.0%
2.0%
2.0%
3.0%
30.0%
30.0%
30.0%
30.0%
30.0%
7.8%
7.8%
7.8%
7.8%
7.8%
28.2
28.2
28.2
28.2
28.2
1.8%
1.8%
1.8%
1.8%
1.8%
$40 $37 $28 $13 $10
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22.1%
22.1%
22.1%
22.1%
22.1%
79.6
79.6
79.6
79.6
79.6
87.6%
87.6%
87.6%
87.6%
87.6%
4.8%
4.8%
4.8%
4.8%
4.8%
2.0%
2.0%
2.0%
2.0%
2.0%
2.7%
2.7%
2.7%
2.7%
2.7%
ction Adjustments
Projections
Credit
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
$53,631 $62,749 $69,651 $75,919 $81,234 $31,655 $37,037 $41,111 $44,811 $47,948 $21,976 $25,712 $28,540 $31,109 $33,286 $1,038 $1,214 $1,348 $1,469 $1,572 $4,458 $5,216 $5,789 $6,311 $6,752 $5,496 $6,430 $7,137 $7,780 $8,324 $918 $1,073 $1,192 $1,299 $1,390 $40 $37 $28 $13 $10 $888 $1,038 $1,153 $1,256 $1,344 $14,635 $17,133 $19,030 $20,761 $22,218 $14,635 $17,133 $19,030 $20,761 $22,218 $4,391 $5,140 $5,709 $6,228 $6,665 $10,245 $11,993 $13,321 $14,532 $15,552 $16,480 $19,282 $21,403 $23,329 $24,962 ction Adjustments
Projections
Credit
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
$1,559 $5,000 $17,795 $32,079 $47,290 $63,614 $80,803 $0 $26,282 $26,282 $26,282 $26,282 $26,282 $26,282 $0 $3,361 $4,201 $4,915 $5,456 $5,947 $6,364 $0 $455 $569 $665 $739 $805 $861 $0 $4 $4 $4 $4 $4 $4
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$0 $3,140 $3,140 $3,140 $3,140 $3,140 $3,140 $38,242 $51,991 $67,086 $82,911 $99,793 $117,454 $0 $2,554 $2,554 $2,554 $2,554 $2,554 $2,554 $0 $3,123 $3,635 $4,235 $4,901 $5,626 $6,402 $207 $155,475 $155,475 $155,475 $155,475 $155,475 $155,475 $0 $36,557 $36,517 $36,480 $36,452 $36,439 $36,429 $0 $49 $49 $49 $49 $49 $49 $0 $2,011 $2,011 $2,011 $2,011 $2,011 $2,011 $238,010 $252,232 $267,890 $284,352 $301,946 $320,374 $0 $0 $0 $0 $0 $0 $0 $0 $5,601 $7,001 $8,191 $9,093 $9,911 $10,605 $0 $3,852 $4,815 $5,634 $6,253 $6,816 $7,293 $0 $2,053 $2,566 $3,003 $3,333 $3,633 $3,887 $11,506 $14,383 $16,828 $18,679 $20,360 $21,785 $0 $853 $1,066 $1,248 $1,385 $1,509 $1,615 $0 $0 $0 $0 $0 $0 $0 $31,642 $31,642 $31,642 $31,642 $31,642 $31,642 $31,642 $23,731 $23,731 $23,731 $23,731 $23,731 $23,731 $23,731 $15,821 $15,821 $15,821 $15,821 $15,821 $15,821 $15,821 $7,910 $7,910 $7,910 $7,910 $7,910 $7,910 $7,910 $10,946 $10,946 $10,946 $10,946 $10,946 $10,946 $10,946 $0 $3,502 $3,502 $3,502 $3,502 $3,502 $3,502 $105,911 $109,001 $111,627 $113,615 $115,421 $116,952 $0 $0 $0 $0 $0 $0 $0 $0 $0 $888 $1,926 $3,078 $4,335 $5,679 $0 $0 $0 $0 $0 $0 $0 $132,152 $132,152 $132,152 $132,152 $132,152 $132,152 $132,152 $0 ($53)
$10,192 $22,185 $35,506 $50,039 $65,591 $0 $0 $0 $0 $0 $0 $0 $132,099 $143,231 $156,262 $170,736 $186,525 $203,422 $238,010 $252,232 $267,890 $284,352 $301,946 $320,374 $0 $0 $0 $0 $0 $0
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ction Adjustments
Projections
Credit
FY 2009
FY 2010E
FY 2011E
FY 2012E
FY 2013E
FY 2014E
$10,245 $11,993 $13,321 $14,532 $15,552 $918 $1,073 $1,192 $1,299 $1,390 $40 $37 $28 $13 $10 $888 $1,038 $1,153 $1,256 $1,344 ($840)
($714)
($541)
($491)
($416)
($114)
($97)
($73)
($66)
($56)
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,400 $1,190 $901 $818 $694 $727 $618 $468 $425 $360 $963 $819 $620 $563 $477 $14,225 $15,957 $17,068 $18,349 $19,355 ($1,430)
($1,673)
($1,857)
($2,024)
($2,166)
$12,795 $14,284 $15,211 $16,324 $17,189 $12,795 $14,284 $15,211 $16,324 $17,189 $5,000 $17,795 $32,079 $47,290 $63,614 $17,795 $32,079 $47,290 $63,614 $80,803 Projections
FY 2010E
FY 2011E
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%
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8.05%
8.28%
8.44%
8.25%
7.90%
9.55%
9.78%
9.94%
9.75%
9.40%
11.00%
11.00%
11.00%
11.00%
11.00%
13.00%
13.00%
13.00%
13.00%
13.00%
$0 $0 $0 $0 $0 ($2,547)
($2,620)
($2,671)
($2,610)
($2,500)
($2,266)
($2,321)
($2,359)
($2,314)
($2,231)
($1,740)
($1,740)
($1,740)
($1,740)
($1,740)
($1,028)
($1,028)
($1,028)
($1,028)
($1,028)
$402 $538 $1,370 $1,686 $3,031 ($7,180)
($7,172)
($6,428)
($6,007)
($4,468)
$5,000 $17,795 $32,079 $47,290 $63,614 ($5,000)
($5,000)
($5,000)
($5,000)
($5,000)
$12,795 $14,284 $15,211 $16,324 $17,189 $12,795 $27,079 $42,290 $58,614 $75,803 $0 $0 $0 $0 $0 $12,795 $27,079 $42,290 $58,614 $75,803 $3,164 $3,164 $3,164 $3,164 $3,164 $1,187 $1,187 $1,187 $1,187 $1,187 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $4,351 $4,351 $4,351 $4,351 $4,351 $0 $0 $0 $0 $0 $8,445 $22,729 $28,477 $28,477 $28,477 $0 $0 $9,462 $22,545 $22,545 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $8,445 $22,729 $37,939 $51,022 $51,022 $0 $0 $0 $3,242 $20,430 $12,795 $27,079 $42,290 $58,614 $75,803
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Capitalization Amount is $64,800. Cost per share is $13.33
Looking for Net inocme
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Please do not give solution in image format thanku
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Accurate answer
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WACC-Book weights and market weights Webster Company has compiled the information shown in the following table:
a. Calculate the weighted average cost of capital using book value weights.
b. Calculate the weighted average cost of capital using market value weights.
c. Compare the answers obtained in parts a and b. Explain the differences.
a. The firm's weighted average cost of capital using book value weights is
%. (Round to two decimal places.)
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ed
A company has the following balance sheet (market values):
Liabilities + Equity
Debt
Equity
Assets
Cash
Operating Assets
600
1000
400
1200
If the firm has 300, find its fair share price after it repurchases 100 worth of shares:
(round your answer to the nearest 0.01)
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Instruction: Compute for the following with solution
Question:
______1. Number of preference share issued
______2. Number of ordinary share issued
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Problem 2: (Paid-In Capital is also called Share Premium)
Shown below are account balances found in the ledger of Emerald Green Corporation at
the end of 2014:
720,000
364,000
Subscription Receivable- Preference Shares
Subscription Receivable- Ordinary Share
10% Preference Share Capital, P50 par value,
authorized, 100,000 shares
P 2,880,000
1,440,000
Issued
Subscribed
4,320,000
Ordinary Share Capital, no par, P10 stated value,
authorized, 300,000 shares
Issued
Subscribed
P 2,720,000
560,000
3,280,000
Paid-In Capital in Excess of Par or Stated Value
Préference share
Ordinary share
432,000
656,000
P.
1,088,000
Instructions: Compute for each of the item shown below. Present supporting computation
in good form in a separate work sheet.
1.
Number of preference share issued.
2.
Number of ordinary shares issued.
3.
Number of preference shares subscribed.
4.
Number of ordinary shares subscribed.
Average price per share received by the corporation on its preference
share capital including…
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