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

Enterprise Value: $141,401 Total 19,847

Historical ProjectionsFY 2007 FY 2008 FY 2009 FY 2010E FY 2011E FY 2012E FY 2013E

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

Operating Assumptions

Historical ProjectionsFY 2007 FY 2008 FY 2009 FY 2010E FY 2011E FY 2012E FY 2013E

Revenue Growth %: 27.2% 52.5% 14.4% 25.0% 17.0% 11.0% 9.0%COGS % Revenue: 66.2% 64.1% 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%SG&A % Revenue: 11.1% 8.9% 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%Depreciation & Amortization % Revenue: 1.3% 1.3% 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%Debt Interest Rate: 0.0% 0.0% 0.0% 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%

Accounts Receivable % Revenue: 6.5% 7.8% 7.8% 7.8% 7.8% 7.8%Accounts Receivable Days: 23.3 28.2 28.2 28.2 28.2 28.2Inventory % COGS: 2.1% 1.8% 1.8% 1.8% 1.8% 1.8%Amortization of Intangibles: $40 $37 $28 $13

Accounts Payable % COGS: 23.0% 22.1% 22.1% 22.1% 22.1% 22.1%Accounts Payable Days: 82.6 79.6 79.6 79.6 79.6 79.6Accrued Expenses % Operating Expenses: 102.9% 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%Long-Term Deferred Revenue % Revenue: 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%

Income StatementFY 2007 FY 2008 FY 2009 FY 2010E FY 2011E FY 2012E FY 2013E

Revenue: $24,578 $37,491 $42,905 $53,631 $62,749 $69,651 $75,919 Cost of Goods Sold: $16,282 $24,049 $25,324 $31,655 $37,037 $41,111 $44,811

Gross Profit: $8,296 $13,442 $17,581 $21,976 $25,712 $28,540 $31,109 Operating Expenses:

Research & Development: $596 $759 $830 $1,038 $1,214 $1,348 $1,469 Selling, General & Administrative: $2,724 $3,345 $3,566 $4,458 $5,216 $5,789 $6,311

Total Operating Expenses: $3,320 $4,103 $4,397 $5,496 $6,430 $7,137 $7,780

Depreciation & Amortization of PP&E: $327 $496 $734 $917 $1,073 $1,192 $1,299 Amortization of Intangibles: $0 $0 $0 $40 $37 $28 $13 Stock-Based Compensation: $242 $516 $710 $888 $1,038 $1,153 $1,256

Operating Income: $4,407 $8,327 $11,740 $14,635 $17,133 $19,030 $20,761 Interest Income: $647 $653 $407 Err:522 Err:522 Err:522 Err:522Interest Expense: $0 $0 $0 ($45) ($90) ($90) ($90)Other Income & Expense: ($48) ($33) ($81) $0 $0 $0 $0

Pre-Tax Income: $5,006 $8,947 $12,066 Err:522 Err:522 Err:522 Err:522Income Tax Provision: $1,511 $2,828 $3,831 Err:522 Err:522 Err:522 Err:522

Net Income: $3,495 $6,119 $8,235 Err:522 Err:522 Err:522 Err:522

Earnings Per Share (EPS): $3.93 $6.78 $9.08 Err:522 Err:522 Err:522 Err:522Diluted Shares Outstanding: 889,292 902,139 907,005 907,005 907,005 907,005 907,005

EBIT: $4,649 $8,843 $12,450 $15,523 $18,171 $20,183 $22,017 EBITDA: $4,976 $9,339 $13,184 $16,480 $19,282 $21,403 $23,329 Levered Free Cash Flow: $4,735 $8,505 $10,311 Err:522 Err:522 Err:522 Err:522Book Value Per Share (BV): $24.17 $34.56 Err:522 Err:522 Err:522 Err:522

Balance SheetFY 2008 FY 2009 FY 2010E FY 2011E FY 2012E FY 2013E

Assets:Current Assets:

Cash & Cash-Equivalents: $11,875 $6,559 Err:522 Err:522 Err:522 Err:522Short-Term Securities: $10,236 $26,282 $26,282 $26,282 $26,282 $26,282

Accounts Receivable: $2,422 $3,361 $4,201 $4,915 $5,456 $5,947 Inventory: $509 $455 $569 $665 $739 $805 Deferred Tax Assets: $1,044 $4 $4 $4 $4 $4 Other Current Assets: $3,920 $3,140 $3,140 $3,140 $3,140 $3,140

Total Current Assets: $30,006 $39,801 Err:522 Err:522 Err:522 Err:522

Long-Term Assets:Long-Term Securities: $2,379 $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 Goodwill: $207 $207 $207 $207 $207 $207 Other Intangible Assets: $285 $354 $314 $277 $249 $236 Other Assets: $839 $2,011 $2,011 $2,011 $2,011 $2,011

Total Assets: $36,171 $47,766 Err:522 Err:522 Err:522 Err:522

Liabilities & Shareholders' Equity:Current Liabilities:

Accounts Payable: $5,520 $5,601 $7,001 $8,191 $9,093 $9,911 Accrued Expenses: $4,224 $3,852 $4,815 $5,634 $6,253 $6,816 Deferred Revenue: $1,617 $2,053 $2,566 $3,003 $3,333 $3,633

Total Current Liabilities: $11,361 $11,506 $14,383 $16,828 $18,679 $20,360

Long-Term Liabilities:Deferred Revenue: $768 $853 $1,066 $1,248 $1,385 $1,509 Long-Term Debt: $0 $0 $1,000 $1,000 $1,000 $1,000 Other Long-Term Liabilities: $1,745 $3,502 $3,502 $3,502 $3,502 $3,502

Total Liabilities: $13,874 $15,861 $19,951 $22,577 $24,565 $26,371

Shareholders' Equity:Common Stock: $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 Treasury Stock: $0 $0 $0 $0 $0 $0 Retained Earnings: $15,129 $23,364 Err:522 Err:522 Err:522 Err:522Accumulated Other Comprehensive Income: ($9) $179 $179 $179 $179 $179

Total Shareholders' Equity: $22,297 $31,905 Err:522 Err:522 Err:522 Err:522

Total Liabilities & SE: $36,171 $47,766 Err:522 Err:522 Err:522 Err:522

BALANCE CHECK: $0.000 $0.000 Err:522 Err:522 Err:522 Err:522

Cash Flow StatementFY 2007 FY 2008 FY 2009 FY 2010E FY 2011E FY 2012E FY 2013E

Operating Activities:Net Income: $3,495 $6,119 $8,235 Err:522 Err:522 Err:522 Err:522Depreciation & Amortization of PP&E: $327 $496 $734 $917 $1,073 $1,192 $1,299 Amortization of Intangibles: $0 $0 $0 $40 $37 $28 $13 Stock-Based Compensation: $242 $516 $710 $888 $1,038 $1,153 $1,256 Deferred Income Tax Expense: $73 $398 $1,040 $0 $0 $0 $0 Loss on PP&E: $12 $22 $26 $0 $0 $0 $0 Changes in Operating Assets & Liabilities:

Accounts Receivable: ($385) ($785) ($939) ($840) ($714) ($541) ($491)Inventory: ($76) ($163) $54 ($114) ($97) ($73) ($66)Other Current Assets: ($1,279) ($274) $780 $0 $0 $0 $0 Other Assets: $285 $289 ($1,172) $0 $0 $0 $0 Accounts Payable: $1,494 $596 $81 $1,400 $1,190 $901 $818 Deferred Revenue: $566 $718 $521 $727 $618 $468 $425 Other Liabilities: $716 $1,664 $1,385 $963 $819 $620 $563

Cash Flow from Operations: $5,470 $9,596 $11,455 Err:522 Err:522 Err:522 Err:522

Investing Activities:Purchases of Securities: ($11,719) ($22,965) ($46,724) $0 $0 $0 $0 Proceeds from Maturities & Sales: $9,424 $16,243 $30,678 $0 $0 $0 $0 Purchases of LT Investments: ($17) ($38) ($101) $0 $0 $0 $0 Capital Expenditures: ($735) ($1,091) ($1,144) ($1,430) ($1,673) ($1,857) ($2,024)Acquisition of Intangibles: ($251) ($108) ($69) $0 $0 $0 $0 Other: $49 ($230) ($74) $0 $0 $0 $0 Cash Flow from Investing: ($3,249) ($8,189) ($17,434) ($1,430) ($1,673) ($1,857) ($2,024)

Financing Activities:Proceeds from Common Stock: $365 $483 $475 $0 $0 $0 $0 Common Stock Repurchased: $0 $0 $0 $0 $0 $0 $0 Dividends Issued: $0 $0 $0 $0 $0 $0 $0 Tax Benefits from Stock-Based Comp: $377 $757 $270 $0 $0 $0 $0 Raise / (Pay Off) Long-Term Debt $0 $0 $0 $1,000 $0 $0 $0 Cash Used for Equity Awards: ($3) ($124) ($82) $0 $0 $0 $0 Cash Flow from Financing: $739 $1,116 $663 $1,000 $0 $0 $0

Increase / Decrease in Cash: $2,960 $2,523 ($5,316) Err:522 Err:522 Err:522 Err:522Cash & Cash Equivalents: $9,352 $11,875 $6,559 Err:522 Err:522 Err:522 Err:522

360$1,000

30%

ProjectionsFY 2014E

1.7 x6.0 x5.7 x

Err:522Err:522Err:522

ProjectionsFY 2014E

7.0%59.0%

1.9%8.3%

1.7%1.7%3.0%9.0%

30.0%

7.8%28.21.8%$10

22.1%79.6

87.6%4.8%2.0%

2.7%

FY 2014E

$81,234 $47,948

$33,286

$1,572 $6,752 $8,324

$1,390 $10

$1,344

$22,218 Err:522

($90)$0

Err:522Err:522

Err:522

Err:522907,005

$23,562 $24,962

Err:522Err:522

FY 2014E

Err:522$26,282

$6,364 $861

$4 $3,140 Err:522

$2,554 $6,118

$207 $226

$2,011 Err:522

$10,605 $7,293 $3,887

$21,785

$1,615 $1,000 $3,502

$27,902

$7,177 $6,864

$0 Err:522

$179

Err:522

Err:522

Err:522

FY 2014E

Err:522$1,390

$10 $1,344

$0 $0

($416)($56)

$0 $0

$694 $360 $477

Err:522

$0 $0 $0

($2,166)$0 $0

($2,166)

$0 $0 $0 $0 $0 $0 $0

Err:522Err: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

Discounted Cash Flow Analysis:11-15% Discount Rate, 5-9x Terminal Multiple:

Apple Inc. - Range of Valuation Multiples / Premiums Apple Inc. - Implied Per Share Value Range

Applicable 25th 75thMaximum Apple Inc. Minimum Pecentile Median Pecentile MaximumMultiple 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 Err:522 Err:522 Err:522 Err:522 Err:522 Err:522

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

Min. 25th11-15% Discount Rate, 5-9x Terminal Multiple: $ 163.88 $ 182.19

Forward EV / EBITDA: $ 211.19 $ 277.70 Trailing EV / EBITDA: $ 162.40 $ 202.99 Forward EV / Revenue: $ 63.66 $ 163.31 Trailing EV / Revenue: $ 57.41 $ 129.08

2010E P / E: Err:522 Err:5222009 P / E: $ 136.10 $ 145.77 2010E EV / EBITDA: $ 103.84 $ 129.06 2009 EV / EBITDA: $ 101.49 $ 143.02 2010E EV / Revenue: $ 54.32 $ 66.62 2009 EV / Revenue: $ 52.12 $ 59.64

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 $600.00 $700.00

Min to 25th

25th to Median

Median to 75th

75th to Max

Public Company Comparables

Precedent Transactions

Discounted Cash Flow Analysis

Median 75th Max Min Point 25 Point Med Point 75 Point $ 201.98 $ 223.36 $ 246.46 $ 163.88 $ 18.31 $ 19.79 $ 21.38

$ 379.76 $ 465.76 $ 625.62 $ 211.19 $ 66.51 $ 102.06 $ 86.00 $ 244.29 $ 285.53 $ 606.40 $ 162.40 $ 40.59 $ 41.30 $ 41.24 $ 198.04 $ 328.66 $ 472.85 $ 63.66 $ 99.65 $ 34.73 $ 130.62 $ 165.82 $ 319.62 $ 424.32 $ 57.41 $ 71.67 $ 36.74 $ 153.80

Err:522 Err:522 Err:522 Err:522 Err:522 Err:522 Err:522 $ 179.19 $ 264.11 $ 428.24 $ 136.10 $ 9.67 $ 33.43 $ 84.92 $ 137.54 $ 160.94 $ 187.95 $ 103.84 $ 25.23 $ 8.47 $ 23.41 $ 146.90 $ 190.08 $ 203.41 $ 101.49 $ 41.53 $ 3.87 $ 43.18 $ 96.83 $ 173.80 $ 189.43 $ 54.32 $ 12.31 $ 30.21 $ 76.97 $ 89.08 $ 170.37 $ 181.29 $ 52.12 $ 7.53 $ 29.44 $ 81.29

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 $600.00 $700.00

Min to 25th

25th to Median

Median to 75th

75th to Max

Public Company Comparables

Precedent Transactions

Discounted Cash Flow Analysis

Max Point $ 23.10

$ 159.85 $ 320.86 $ 144.19 $ 104.70

Err:522 $ 164.13 $ 27.01 $ 13.33 $ 15.63 $ 10.93

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 CapitalizationShare Equity Enterprise Revenue EBITDA

Company Name Price Value Value 2009 2010E 2009Hewlett-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 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

ProjectedEBITDA 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 Err:522 25.0% 30.7% 30.7%

Enterprise Value / EBITDA P / E Multiple

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 /

Trailing Forward Trailing Forward Trailing Forward Trailing ForwardRevenue 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

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

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 $917 $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 5.000Mid-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 RatesDiscount Rate

$ 204.96 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0%0.0% $ 220.90 $ 214.27 $ 207.97 $ 201.98 $ 196.28 $ 190.85 $ 185.68 1.0% $ 220.90 $ 214.27 $ 207.97 $ 201.98 $ 196.28 $ 190.85 $ 185.68 2.0% $ 220.90 $ 214.27 $ 207.97 $ 201.98 $ 196.28 $ 190.85 $ 185.68 3.0% $ 220.90 $ 214.27 $ 207.97 $ 201.98 $ 196.28 $ 190.85 $ 185.68 4.0% $ 220.90 $ 214.27 $ 207.97 $ 201.98 $ 196.28 $ 190.85 $ 185.68 5.0% $ 220.90 $ 214.27 $ 207.97 $ 201.98 $ 196.28 $ 190.85 $ 185.68

Apple Inc. - Net Present Value Sensitivity - Terminal EBITDA MultiplesDiscount Rate

$ 204.96 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0%4.0 x $ 170.39 $ 165.99 $ 161.81 $ 157.83 $ 154.03 $ 150.40 $ 146.95 5.0 x $ 187.23 $ 182.09 $ 177.20 $ 172.54 $ 168.11 $ 163.88 $ 159.86

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6.0 x $ 204.06 $ 198.18 $ 192.59 $ 187.26 $ 182.19 $ 177.37 $ 172.77 7.0 x $ 220.90 $ 214.27 $ 207.97 $ 201.98 $ 196.28 $ 190.85 $ 185.68 8.0 x $ 237.74 $ 230.37 $ 223.36 $ 216.70 $ 210.36 $ 204.33 $ 198.59 9.0 x $ 254.58 $ 246.46 $ 238.75 $ 231.42 $ 224.44 $ 217.81 $ 211.50 Te

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Apple Inc. - DCF Assumptions & Output

Use Multiples Method? YesDiscount Rate: 12.5%

Terminal EBITDA Multiple: 7.0 xTerminal 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

WACC Analysis - Apple Inc.($ in Millions, Except Per Share Amounts in Dollars and Share Counts in Thousands)

Discount Rate Calculation - AssumptionsRisk-Free Rate: 4.38%Equity Risk Premium: 7.00%Interest Rate on Debt: 9.00%

Comparable Companies - Unlevered Beta CalculationLevered Equity Unlevered

Name Beta Debt Value Tax Rate BetaHewlett-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 CalculationUnlevered 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 * % Preferred Stock

WACC 12.50%

WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Preferred 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: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 2011ERevenue: $53,631 $62,749 Revenue:Cost of Goods Sold: $31,655 $37,037 Cost of Goods Sold:

Gross Profit: $21,976 $25,712 Gross Profit:

Operating Expenses: $5,496 $6,430 Operating Expenses:

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):

Pre-Tax Income: Err:522 Err:522 Pre-Tax Income:Income Tax Provision: Err:522 Err:522 Income Tax Provision:

Net Income: Err:522 Err:522 Net Income:

Earnings Per Share (EPS): Err:522 Err:522 Earnings Per Share (EPS):Diluted Shares Outstanding: 907,005 907,005 Diluted Shares Outstanding:

Combined Income Statement

FY 2010E FY 2011ECombined 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): Err:522 Err:522Foregone Interest on Cash: ($143) ($143)Interest Paid on New Debt: ($1,291) ($1,291)

Pre-Tax Income: Err:522 Err:522Income Tax Provision: Err:522 Err:522

Net Income: Err:522 Err:522

Earnings Per Share (EPS): Err:522 Err:522

Diluted Shares Outstanding: 981,719 981,719

Accretion / Dilution: Err:522 Err:522Accretion / Dilution %: Err:522 Err:522

Sensitivity Analysis - Year 1 EPS Accretion/Dilution and Purchase Price vs. Operating Expense Synergies:

Expense Synergies % Seller OpEx:

Per S

hare

Pur

chas

e Pr

ice

Sensitivity Analysis - Year 1 EPS Accretion/Dilution and Purchase Price vs. Revenue Synergies:

Revenue Synergies % Seller Revenue:

Per S

hare

Pur

chas

e Pr

ice

$43,049 $14,350 $14,350

74,7149.0%

50.0%

10.0%$174

Depreciation Period (Years): 8

$36,209 20.0%

Intangibles Write-Up Amount: $7,242 Amortization Period (Years): 5

$2,225

Research in Motion Limited$62.91

Diluted Shares Outstanding: 572,951$36,044 $33,547

28%

FY 2010E FY 2011E$17,231 $20,868

$9,755 $11,869 $7,476 $9,000

$2,698 $3,259

$431 $563 Amortization of Intangibles: $359 $433 Stock-Based Compensation: $52 $63

$3,937 $4,682 Interest Income / (Expense): $25 $33

$3,962 $4,714 $1,148 $1,343

$2,814 $3,371

$5.03 $6.02 Diluted Shares Outstanding: 560,000 560,000

Expense Synergies % Seller OpEx:

Revenue Synergies % Seller Revenue:

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 LimitedShare Price: $62.91 Offer Price Per Share: $75.00 Tax Rate: 28%

Current Share Price: Purchase Price:Basic Shares Outstanding: 568,900 Basic Shares Outstanding: 568,900Basic Equity Value: $35,789 Basic Equity Value: $42,668 Diluted Shares Outstanding: 572,951 Diluted Shares Outstanding: 573,986Diluted Equity Value: $36,044 Diluted Equity Value: $43,049

Less: Cash & Investments $2,498 Less: Cash & Investments $2,498 Plus: Debt $0 Plus: Debt $0 Plus: Minority Interest $0 Plus: Minority Interest $0 Plus: Preferred Stock $0 Plus: Preferred Stock $0 Plus: Other Liabilities $0 Plus: Other Liabilities $0

Enterprise Value: $33,547 Enterprise Value: $40,551

Balance Sheets - Buyer, Seller & Combined

Assets: Buyer Seller AdjustmentsCurrent Assets:

Cash & Short-Term Securities: $32,841 $1,664 Accounts Receivable: $3,361 $2,613 Inventory: $455 $573 Deferred Tax Assets: $4 $176 Other Current Assets: $3,140 $190

Total Current Assets: $39,801 $5,215

Long-Term Assets:Long-Term Securities: $2,554 $834 Plants, Property & Equipment: $2,839 $1,737 Goodwill: $207 $147 Other Intangible Assets: $354 $1,291 Other Assets: $2,011 $0

Total Assets: $47,766 $9,224

Liabilities & Shareholders' Equity:Current Liabilities:

Accounts Payable: $5,601 $496 Accrued Expenses: $3,852 $1,604 Deferred Revenue: $2,053 $67

Total Current Liabilities: $11,506 $2,167

Long-Term Liabilities:Deferred Revenue: $853 $0 Long-Term Debt: $0 $0 Deferred Income Tax Liability: $0 $43 Other Long-Term Liabilities: $3,502 $28

Total Liabilities: $15,861 $2,238

Shareholders' Equity:Common Stock: $7,177 $2,236 Additional Paid-In Capital: $1,185 $139 Treasury Stock: $0 ($45)Retained Earnings: $23,364 $4,664 Accumulated Other Comprehensive Income: $179 ($8)

Total Shareholders' Equity: $31,905 $6,987

Total Liabilities & SE: $47,766 $9,224

Options Calculations - Current Price:

ExerciseName Number Price Dilution

Tranche A 10,470 $38.57 4,051Tranche BTotal 4,051

Options Calculations - Purchase Price:

ExerciseName Number Price Dilution

Tranche A 10,470 $38.57 5,086Tranche BTotal 5,086

Adjustments Combined

($14,350) $20,156 $0 $5,974 $0 $1,028 $0 $180 $0 $3,330

($14,350) $30,667

$0 $3,388 $174 $4,750

$30,828 $31,182 $7,242 $8,887

$0 $2,011 $23,894 $80,884

$0 $6,097 $0 $5,456 $0 $2,120 $0 $13,673

$0 $853 $14,350 $14,350

$2,181 $2,225 $0 $3,530

$16,531 $34,630

($2,236) $7,177 $14,211 $15,535

$45 $0 ($4,664) $23,364

$8 $179 $7,363 $46,255

$23,894 $80,884