Last Earnings Release 04/24/2014. Last Qtr. Actual vs. Est. $11.62 / $ Next Release 07/22/2014 $8.52. Year Ending 09/30/2014 $43.

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1 Grade Earnings Last Earnings Release 04/24/2014 Last Qtr. Actual vs. Est. $11.62 / $10.18 Next Release 07/22/2014 $8.52 Year Ending 09/30/2014 $43.97 Quick Facts Dividend Yield 1.99% 52 Wk High $ Wk Low $ Short Interest 2% of float $ /23/2014 Year Ending 09/30/2015 $47.54 Market Cap $529B Overview Company Scores Remarkable Fundamental Grades MarketGrader currently has a BUY rating on (AAPL), based on a final overall grade of scored by the company's fundamental analysis. scores at the 100th percentile among all 5962 North American equities currently followed by MarketGrader. Our present rating dates to September 25, 2003, when MarketGrader initiated coverage on the stock. With an overall grade of, is the highest graded company in the Computer Processing Hardware subindustry, followed by NCR Corporation (NCR), with an overall grade of The stock, up 10.44% in the last six months, has outperformed both the Computer Processing Hardware group, up 0.54% and the S&P 500 Index, which has returned 5.25% in the same period. Please go to pages two and three of this report for a complete breakdown of AAPL's fundamental analysis. Price, Rating and Sentiment History - 2 Years 1

2 Growth B+ Value A The Company's Recent Reports Reflect Solid Top and Bottom Line Growth Apple's very strong long terms sales growth seems to have virtually Market Growth LT A- ground to a halt during its latest quarter. The $45.53 billion in revenue reported by the company last quarter represents just 4.04% growth from Market Growth ST B+ the $43.76 billion it sold during the same quarter a year earlier. However, EPS Growth A+ when looking at the longer term picture is is clear the company's sales growth has been remarkable for a while. Apple booked $ billion in Growth Potential C 12-month trailing revenue up to--and including--last quarter, % higher than what it sold in the equivalent period ended three years ago, a Earnings Momentum A very impressive increase. Therefore it seems that the company's business deteriorated very rapidly most recently, stalling its otherwise Earnings Surprise B- impressive growth record. The next couple of quarters will be very important in determining if this marks a temporary slowdown as its 12-month trailing sales total calculation will substitute earlier periods of strong growth with more recent lower sales figures. In its latest announcement it also posted healthy profit gains both on a year-to-year basis and over a three year period when comparing full year results, using four rolling quarters of net income for the latter comparison. It posted a First quarter profit increase of 7.08% to $10.22 billion from $9.55 billion (excluding extraordinary items) a year earlier, compared to a 92.85% full year profit increase to $37.71 billion in the 12 months ended last quarter from $19.55 billion three years earlier. The company's margins have been shrinking steadily during the last three quarters, albeit at a slower rate during the latest period. Its EBITDA, operating and net margins fell on average by 7.26% in the latest quarter versus the year ago period. After reporting earnings on April 24, 2014 that beat analysts' consensus estimates by 14.14%, the company's stock jumped 8.99% as investors welcomed the report. Apple's most recent earnings announcement is consistent with its solid long term earnings surprise record, having exceeded the street's consensus estimate by 4.55%, on average, in its last six announcements. The Stock's Valuation is Attractive Based on the Company's Overall Financial Strength Trading currently at times forward 12-month' earnings per share, Capital Structure A+ Apple's stock is priced at a 56.04% discount to the "optimum" P/E ratio of 30.53, calculated by MarketGrader. Our indicator looks at the 12-month P/E Analysis A+ period ended in each quarter within the last two years and calculates the Price/Book Ratio A+ company's annualized EPS growth rate, which in turn determines the stock's optimum P/E. Based on this measure, Apple's earnings per share Price/Cash Flow Ratio A have grown at an annualized rate of 1.02% during this period. This rate of growth could decelerate soon given the company's recent margin Price/Sales Ratio B- contraction, despite such good Profitability grades. This could in turn put pressure on the stock price. The stock also trades at times forward Market Value A earnings estimates for the next four quarters, lower than its trailing P/E and the S&P 500 index's forward P/E of By placing a lower multiple on the company's future earnings than it does on the market as a whole, investors may see the company as financially strong but with relatively poor growth prospects. This may offer a valuable opportunity for patient investors willing to wait for future earnings reports. Apple's current market value is 4.73 times its tangible book value, which excludes intangible assets such as goodwill; this valuation seems attractive, especially considering that only 4.98% of the company's total stockholders' equity is based on intangible assets. When the value of those assets is added back into total book value, the price to book ratio is an even lower Relative to the $60.84 in cash flow per share generated by the company in the last twelve months, the stock is attractively priced at times cash flow per share considering its strengths across our fundamental indicators. Its price to sales ratio of 3.02 is slightly higher than the Computer Processing Hardware's average of 1.67, both based on trailing 12-month sales. Finally, from a value perspective, we look at how much bigger the company's market capitalization is than its latest operating profits after subtracting taxes. From this perspective Apple's market cap of $ billion, which is only times larger than its latest quarterly net income (plus depreciation), seems like an attractive valuation. Revenue Qtrly. 03/31/2014 $45.5B Revenue Qtrly. Year Ago $43.8B Revenue 1 Yr. Chg. 4.04% Revenue 12 Mo. Tr. Latest $175.5B Revenue 12 Mo. Tr. 3Y Ago $87.6B Revenue 12 Mo. Tr. 3Y Chg % Net Income Qtrly. 03/31/2014 $10.2B Net Income Qtrly. Year Ago $9.5B Net Income 1 Yr. Chg. 7.08% Net Income 12 Mo. Tr. Latest $37.7B Net Income 12 Mo. Tr. 3Y Ago $19.6B Net Income 12 Mo. Tr. 3Y Chg % P/E Ratio 12 Mo. Tr. 03/31/ Optimum P/E Ratio Forward P/E Ratio S&P 500 Forward P/E Ratio Price to (Tangible) Book Ratio 4.50 Price-to-Cash Flow Ratio Price/Sales Ratio

3 Profitability A+ Company's Profitability Is Remarkable, Reflective of Excellent Operating Conditions and Strong Management Apple is a very profitable company with strong overall indicators in this Asset Utilization A+ section of our analysis. The company's different measures of return to shareholders and margins are typically above those of its peers. In the Capital Utilization A- last four quarters Apple earned a profit of $37.71 billion, equivalent to Operating Margins A 21.48% of its sales in the period. The Computer Processing Hardware industry had an average operating margin of 10.99% in the period. The Relative Margins A+ company's operating margin of 28.13% exceeded that average by %. Apple's return on equity, based on trailing 12-month earnings, Return on Equity A+ is not only outstanding at 31.38%, but it's higher than the 29.28% return on equity from the year earlier period. This is an important metric of Quality of Revenues A+ management efficiency in our grading system, as it measures the amount earned on an investment in the company's common stock. Given such strong returns the company's capital structure seems to conservative, especially assuming it could raise debt capital to invest into what is a steady and profitable business. Apple's long term debt accounts for only 12.37% of total capital. Apple's core operations, as measured by the company's EBITDA, have generated $58.01 billion in earnings over the last twelve months, a modest -0.70% decline from the $58.42 billion earned in the equivalent period ended a year ago. EBITDA is used as a way of measuring core earnings since it includes money earned in its operations such as interest expense, income taxes paid and depreciation and amortization, both of which are non-cash charges. Cash Flow A Company's Cash Flow Is Very Well Managed as Our Analysis Reflects a Very Healthy Operation Apple showed a small improvement in its quarterly cash flow during the Cash Flow Growth B- latest period, in which it grew by 7.75% to $13.47 billion from the $12.50 billion reported in the same period last year. This is a marked EBIDTA Margin A- improvement from the 3.15% decline in cash flow in the last twelve Debt/Cash Flow Ratio A+ months versus a year before and could represent a turning point for the company's operating profitability and its future earnings growth. Even Interest Cov. Capacity A+ though the company has $16.96 billion in total debt, its net debt is virtually zero since it has $41.35 billion in cash on hand; and since it generated Economic Value A+ $15.85 billion in earnings before interest, taxes, depreciation and amortization last quarter, it's safe to say its liquidity is remarkable. Retention Rate A+ Therefore the company's debt is not only very manageable with its own cash flow but could be increased if it wanted to pursue strategic growth opportunities. The company also has the ability to enhance shareholder returns through dividends or by repurchasing its own shares, boosting the future value of its earnings. <b> ** </b> An important indicator of management efficiency used by MarketGrader is Economic Value Added, or EVA, which measures each company's true return to shareholders after accounting not only for the cost of running the business (operating costs) but also the cost of the capital it employs. By measuring the real cost of capital, both equity and debt, EVA measures the creation of true economic profit. In this case Apple had $ billion in invested capital in its most recent quarter, a combination of both equity and long term debt. However, the company's weighted cost of equity of 5.70% is much larger than the weighted cost of debt, which is 0.16%. When combined, the two result in a total cost of capital of 5.86%, quite low compared to the company's total return on invested capital of 36.00% based on 12-month trailing operating income. The result is an excellent economic value added of 30.13%, a very high return to investors after all capital costs are covered. The company hiked its quarterly common dividend in its latest quarter, reported on December 31, 2013, to 3.29 cents a share from 3.05 cents, a 7.87% increase. It has now been paying dividends regularly since June 30, 2012 and the stock's current yield is 1.99%. Apple paid out a total of $11.01 billion in common dividends in the 12 months ended last quarter, or 20.57% of the cash flow it generated during the period, and 29.20% of total after-tax earnings. This payout level, which seems sustainable given the company's generally healthy fundamentals, is actually lower than the 29.27% of earnings paid out in the year ended just a quarter ago. No further payout reductions seem necessary if the company's grades remain at least at the current level or higher. Cash Flow Qtrly. 03/31/2014 $13.5B Cash Flow Qtrly Year Ago $12.5B Cash Flow 1 Yr. Chg. 7.75% Cash Flow 12 Mo. Tr. Latest $53.5B Cash Flow 12 Mo. Tr. 3Y Ago $26.5B Cash Flow 12 Mo. Tr. 3Y Chg % Free Cash Flow Last Qtr. $9.4B Economic Value Total Invested Capital $137.1B Return on Inv. Capital 36.00% Weighted Cost of Equity 5.70% Weighted Cost of Debt 0.16% Total Cost of Capital 5.86% Economic Value Added 30.13% 3

4 Profile Apple, Inc. designs, manufactures and markets personal computers and related personal computing, and mobile communication devices. It is engaged in designing of Mac laptops, along with OS X, ilife, iwork and professional software. Apple provides the digital music revolution with its ipods and itunes online store. The company's products and services include Macintosh computers, iphone, ipad, ipod, Apple TV, Xserve, a portfolio of consumer and professional software applications, peripherals and ios operating systems, third-party digital content and applications through the itunes Store and a variety of accessory, service and support offerings. It sells its products worldwide through its retail stores, online stores, and direct sales force and third-party cellular network carriers, wholesalers, retailers, and value-added resellers to the consumer, small and mid-sized business, education, enterprise, government and creative markets. In addition, the company also sells a variety of third-party Mac, iphone, ipad and ipod compatible products, including application software, printers, storage devices, speakers, headphones and various other accessories through its online and retail stores. The company was founded by Steven Paul Jobs, Steve Wozniak and Ronald Gerald Wayne on April 1, 1976 and is headquartered in Cupertino, CA. Key Facts: 1 Infinite Loop Cupertino,CA Phone: Biggest Company in Sub-Industry (AAPL) Grade Market Cap:$ billion Smallest Company in Sub-Industry XRS Corporation (XRSC) Grade 31.6 Market Cap:$30.18 million MarketGrader Dilution Analysis Impact of Change in Shares on EPS - Q Dilution Summary *EPS Latest $11.62 *EPS Year Ago $10.09 EPS Change 1 Yr. 15% C. Shares - Latest(M) 880 C. Shares - Yr Ago(M) 946 C. Shares - 1Yr Chg. (7%) EPS if Yr. Ago Shares $10.81 EPS Chg. if Yr. Ago 7% EPS Loss from Dilution $0.82 *Earnings per share are based on fully diluted net income per share excluding extrodinary items. This number may not match the headline number reported by the company. Income Statement Last Qtr (03/2014) 12 Mo. Trailing Revenue $45.5B $175.5B Op. Income $13.6B $49.4B Net Income $10.2B $37.7B *EPS $ *Earnings per share are based on fully diluted net income per share excluding extrodinary items. This number may not match the headline number reported by the company. Balance Sheet Total Assets Total Debt Latest $206.0B Stockholders Eq. $120.2B All numbers in millions except EPS Ratios Price/Earnings (12 mo. trailing) Price/Tangible Book 4.50 Price/Cash Flow Price/Sales 3.02 Debt/Cash Flow Return on Equity 31.38% Gross Margin (12 mo. trailing) 39.47% Total Assets Intangible Assets Long Term Debt Total Debt Book Value Enterprise Value $206.0B $6.0B $120.2B ($24.4B) '09 '10 '11 '12 '13 '14 Qtr Qtr Qtr Qtr Operating Margin (12 mo. trailing) 28.13% Net Profit Margin (12 mo. trailing) 21.48% 4

5 Top Down Analysis Technology Stocks in Sector: 846 Buys: 138 (16.31%) Holds: 118 (13.95%) Sells: 590 (69.74%) No. of stocks at: 52-Wk. High: Wk. Low: 22 Above 50 & 200-day MA: 243 Below 50 & 200-day MA: 400 Computer Processing Hardware Stocks in Sub-Industry: 10 Buys: 2 (20.00%) Holds: 1 (10.00%) Sells: 7 (70.00%) No. of stocks at: 52-Wk. High: 2 52-Wk. Low: 0 Above 50 & 200-day MA: 2 Below 50 & 200-day MA: 6 # Ticker Grade Sentiment Name Price Next EPS 1 AAPL P $ /22/ PHO.CA N Photon Control Inc. $ /27/ SFUN N SouFun Holdings Ltd. $ /14/ MU P Micron Technology, Inc. $ /18/ WAN.CA N WANTED Technologies Corporation $ /21/ OLED N Universal Display Corporation $ /11/ SYNT N Syntel, incorporated $ /17/ XX.CA N Avante Logixx Inc. $ /28/ AZPN P Aspen Technology, Inc. $ /19/ AFOP P Alliance Fiber Optic Products, Inc. $ /22/2014 # Ticker Grade Sentiment Name Price Next EPS 1 AAPL P $ /22/ NCR N NCR Corporation $ /24/ CCUR N Concurrent Computer Corporation $ /30/ HPQ P Hewlett-Packard Company $ /20/ XPLR N Xplore Technologies Corp. $ /25/ CRAY P Cray Inc. $ /05/ XRSC N XRS Corporation $ /03/ PAR N PAR Technology Corporation $ /30/ ARUN N Aruba Networks, Inc. $ /26/ ADAT N Authentidate Holding Corp. $ /27/ Price Trend. A+ 2. Price Momentum. A- 3. Earnings Guidance. A- 4. Short Interest. A+ 9.5 Copyright 2010 MarketGrader.com Corp. All rights reserved. Any unauthorized use or disclosure is prohibited. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or any options, futures or other derivatives related to such securities ("related investments"). The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regards to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. MarketGrader does not make markets in any of the securities mentioned in this report. MarketGrader does not have any investment banking relationships. MarketGrader and its employees may have long/short positions or holdings in the securities or other related investments of companies mentioned herein. Officers or Directors of MarketGrader.com Corp. are not employees of covered companies. MarketGrader or any of its employees do not own shares equal to one percent or more of the company in this report. 5