01—Abstract
Summary
Summary of the 10-K filed October 27, 2009. Cited figures are marked; the original filing is the authoritative source.
Apple Inc.'s 2009 10-K report highlights a period of strong growth, primarily driven by the nascent but rapidly expanding iPhone business.
Despite a challenging economic environment, the company demonstrated resilience, with total net sales increasing by 12% to $36.5 billiona. The iPhone segment saw an extraordinary 266% surge in revenue, fueled by expanded distribution and the introduction of the iPhone 3GS. This growth, alongside continued strong performance in music-related products and services (like the iTunes Store and App Store), significantly offset a decline in Mac and iPod sales.
The company's strategy of controlling hardware, software, and services integration, coupled with significant investments in R&D and retail expansion, continues to be a key differentiator. Financially, Apple maintained a robust cash position, ending the year with over $33 billionb in cash, cash equivalents, and marketable securities, with no long-term debt.
The company's gross margin percentage improved to 36.0%c, reflecting lower component costs and a favorable sales mix. However, management anticipates future gross margin pressures due to product transitions and component cost fluctuations.
02—Key points
Key Highlights
- iPhone revenue experienced explosive growth of 266%, reaching $6.8 billion, driven by expanded distribution and the launch of the iPhone 3GS.
- Total net sales increased by 12% to $36.5 billion, showcasing resilience despite economic headwinds.
- Mac sales declined 3% year-over-year, with lower average selling prices impacting revenue despite a 7% increase in unit sales.
- iPod sales decreased by 12% in revenue, with a slight 1% dip in unit sales, also affected by lower average selling prices.
- The iTunes Store and App Store continued to show strong growth, contributing significantly to the 'other music related products and services' category, which grew 21%.
- Apple maintained a very strong liquidity position, ending the fiscal year with over $33.9 billion in cash, cash equivalents, and marketable securities, with no outstanding long-term debt.
- Gross margin percentage improved to 36.0% from 34.3% in the prior year, driven by lower costs and a favorable product mix, though future declines are anticipated.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Apple Inc. kept $0.19.
- Revenue$42.91B100.0%
- Cost of revenue−$25.68B59.9%
- Gross profit$17.22B40.1%
- Operating costs−$5.48B12.8%
- Operating income$11.74B27.4%
- Interest, other & tax−$3.50B8.2%
- Net income$8.23B19.2%
Where FY2009 revenue went
$42.91B- Cost of revenue: $25.68B, 60% of revenue
- Net income: $8.23B, 19% of revenue
- R&D: $1.33B, 3.1% of revenue
- SG&A: $4.15B, 9.7% of revenue
- Interest, other & tax: $3.50B, 8.2% of revenue
Kept 19% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed October 27, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $42.91B$37.49B | +14.4% |
| Cost of Revenue | $25.68B$24.29B | +5.7% |
| Gross Profit | $17.22B$13.20B | +30.5% |
| R&D Expenses | $1.33B$1.11B | +20.2% |
| SG&A Expenses | $4.15B$3.76B | +10.3% |
| Operating Expenses | $5.48B$4.87B | +12.6% |
| Operating Income | $11.74B$8.33B | +41.0% |
| Net Income | $8.23B$6.12B | +34.6% |
| EPS (Basic) | $0.33$0.25 | +32.9% |
| EPS (Diluted) | $0.32$0.24 | +33.9% |
| Shares Outstanding (Basic) | 25.00B24.68B | +1.3% |
| Shares Outstanding (Diluted) | 25.40B25.26B | +0.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of Apple's revenue growth in fiscal year 2009?
The primary driver of Apple's revenue growth in fiscal year 2009 was the iPhone, which saw a remarkable 266% increase in revenue, reaching $6.8 billion. This was due to expanded distribution channels and strong consumer demand, particularly following the release of the iPhone 3GS.
How did the performance of Macs and iPods compare to the iPhone in 2009?
While the iPhone experienced significant growth, Mac sales declined by 3% in revenue despite a 7% increase in unit sales, primarily due to lower average selling prices. iPod revenue also fell by 12%, with a slight decrease in unit sales, also impacted by lower average selling prices. The growth in iPhone and iTunes-related services helped to offset these declines.
What is Apple's financial health and outlook regarding margins?
Apple maintained a very strong financial position in 2009, ending the year with over $33.9 billion in cash and no long-term debt. The company also saw an improvement in its gross margin percentage to 36.0%. However, management projected a future decline in gross margin percentage, anticipating pressures from product transitions, pricing strategies, and potential increases in component costs.
What were the significant risks and challenges highlighted in the 2009 10-K?
Key risks highlighted include intense competition in all product categories, rapid technological change, reliance on single or limited-source suppliers for critical components, the need to manage inventory effectively due to product obsolescence, and potential adverse effects from economic conditions. The company also noted ongoing patent infringement litigation as a risk factor.
06—Continue