General Meeting 2

January 29, 2013

Meeting Agenda

New Partnership & Meeting Structure

Market Overview
Question of the Day
Pitch
Announcements

Market News

Feds plan low rates in the near term

Boeing probe leaves $5B at risk
Amazon Earnings announcement
S&P/Case Shiller composite home price index
Wall Street executives fret about talent drain
Jefferies Grants CEO $58 mm in 2012 Pay

Dow hits 5-year high

Kerry Wins Senate Confirmation for Sec. State
Aubrey McClendon Resignation

S&P 500

NASDAQ

Commodities

Question of the Day

Is it time for the Federal reserve to begin raising
rates?

Apple

Andrew Smith
Noah Pentecost
Patrick Scott
Kareem Klink
Sloane Bain

Investment
Thesis

Company
Overview

Risks/Mitigations

Valuation

Conclusion

Investment
Thesis

Company
Overview

Undervalued/
Oversold

Hold to fair value

and
re-evaluate to
ride growth

Risks/Mitigations

Powerful brand
recognition

Valuation

Conclusion

Short/medium
term growth play

15%
Stop loss

Investment
Thesis

Company
Overview
Risks/Mitigations
Valuation

Company
Overview

High-tech giant at 52
week low

$11 dividend per

share

Conclusion

Zero Debt

5-star Strong Buy

rating from S&P

Investment
Thesis

Company
Overview
Risks/Mitigations
Valuation

Company
Overview

Conclusion

Record breaking Q4 2012

$54.5B Sales

58% unit
growth
iPhones

26% unit
growth
iPads

$8.2B profit

Investment
Thesis

Company
Overview

Risks/Mitigations

Valuation

Conclusion

Apple vs. Competitors

Company
Apple

Ticker
AAPL

IBM Corporation IBM

EPS

P/E

EV/EBITDA

P/BV

44.11

9.97

6.30x

3.2x

14.37

14.26

9.64x

12.2x

Microsoft

MSFT

1.82

15.32

6.20x

3.2x

Dell

DELL

1.47

8.96

4.65x

2.2x

Hewlett-Packard HPQ

-6.41

N/A

3.43x

1.5x

EPS Comparables

P/E

50
40
30
20
10
0

20
15
10
5
0

Apple

IBM
Corporation

Microsoft

Dell

Apple

IBM
Corporation

Microsoft

Dell

Investment
Thesis

Company
Overview

Risks/Mitigations

Valuation

Fiscal 2013
iCloud is Apples
strategy for the next
decade. Signed up
250M users in first 15
months

The Next Big Thing in

the worksiTV
projected release in Q4
2013

Conclusion

Investment
Thesis

Company
Overview

Risks/Mitigations

Valuation

Conclusion

Lawsuits

Shrinking Margins

Outsourced Labor

Protection of
Confidential
Information

Investment
Thesis

Revenue

Company
Overview

Risks/Mitigations

Valuation

Conclusion

2010

2011

2012

2013E

2014E

2015E

2016E

2017E

Assumptions

$65,225.00

$108,249.00

$156,508.00

$227,362.23

$302,225.15

$375,059.40

$425,741.27

$454,717.99

Net Debt

$0.00

66%

45%

45%

33%

24%

14%

7%

Shares

939.06

Growth rate
Cost of Sales

$39,541.00

$64,431.00

$87,846.00

$128,821.12

$174,543.25

$230,516.65

$271,503.92

$284,874.29

Tax Rate

35.0%

Gross Profit

$25,684.00

$43,818.00

$68,662.00

$98,541.11

$127,681.90

$144,542.75

$154,237.35

$169,843.70

Terminal EV/EBIT

5.0

39%

40%

44%

43%

42%

39%

36%

37%

WACC

14.0%

SG&A Expenses

$5,517.00

$7,599.00

$10,040.00

$13,045.00

$16,440.15

$20,217.83

$24,160.79

$28,084.60

R&D Expenses

$1,782.00

$2,429.00

$3,381.00

$4,657.34

$6,449.09

$8,906.91

$12,317.48

$17,022.91

$18,385.00

$33,790.00

$55,241.00

$80,838.78

$104,792.65

$115,418.01

$117,759.07

$124,736.20

28%

31%

35%

36%

35%

31%

28%

27%

$18,385.00

$33,790.00

$55,241.00

$52,545.21

$68,115.22

$75,021.71

$76,543.39

$81,078.53

D&A

$1,027.00

$1,814.00

$3,277.00

$4,543.26

$5,435.81

$5,932.81

$6,193.52

$6,612.75

Change in NWC

-$5,763.00

$2,732.00

$2,093.00

$2,302.30

$2,532.53

$2,785.78

$3,064.36

$3,370.80

CapEx

$2,600.00

$4,600.00

$10,300.00

$11,000.00

$15,000.00

$15,986.98

$17,021.62

$15,579.18

$16,140.25

$16,445.50

$26,790.65

$43,786.16

$56,018.50

$62,181.76

$62,650.94

$68,741.30

Total Enterprise Value

Equity Value

Value per Share

$508,542.68

$508,542.68

$541.54

Gross Margin

EBIT
EBIT Margin

NOPAT

FCF

Current Price Implied discount

$439.88

23%

Investment
Thesis

Company
Overview

Risks/Mitigations

Valuation

Conclusion

Terminal EV/EBIT

WACC

$541.54

3.5

4.5

5.5

11.0%

$418.77

$462.52

$506.27

$550.02

$593.77

$637.52

$681.27

11.5%

$412.72

$455.69

$498.66

$541.63

$584.60

$627.57

$670.54

12.0%

$406.79

$449.00

$491.20

$533.41

$575.62

$617.83

$660.04

12.5%

$400.98

$442.44

$483.91

$525.37

$566.83

$608.29

$649.76

13.0%

$395.29

$436.02

$476.76

$517.49

$558.23

$598.96

$639.69

13.5%

$389.71

$429.74

$469.76

$509.78

$549.80

$589.82

$629.84

14.0%

$384.25

$423.57

$462.90

$502.22

$541.54

$580.87

$620.19

Investment
Thesis

Company
Overview

Risks/Mitigations

Valuation

Conclusion

Announcements

Mr. McCombs Competition

Andrew Smith is our
candidate!
Bring 10 cans to next
meeting for 1 pt per 10 cans
(max of 5 pts)
Come to the actual
competition, Feb. 8th for two
social points!

If we win, USIT will get a

pizza party at a general
meeting

Announcements

Texas Investment Conference

Wall Street Journal
Bowling Social
Speaker 2.19.13