01—Abstract
Summary
Summary of the 10-K filed October 30, 2013. Cited figures are marked; the original filing is the authoritative source.
Apple Inc.'s 2013 10-K filing reveals a company experiencing robust growth, driven primarily by strong iPhone and iPad sales, alongside continued expansion in its services sector.
Despite a challenging PC market impacting Mac sales, Apple demonstrated resilience with a 9% increase in net sales to $170.9 billiona, fueled by double-digit growth in iPhone units and significant revenue from iTunes, software, and services. The company continued its aggressive capital return program, repurchasing a substantial amount of its own stock and increasing its dividend payments, signaling confidence in its financial health and future cash flow.
Apple also highlighted its strategic focus on innovation, with significant investments in research and development, and expansion of its retail footprint. Key risks identified include intense competition, reliance on component suppliers, potential for supply chain disruptions, and evolving global economic conditions.
02—Key points
Key Highlights
- Net sales increased by 9% to $170.9 billion in fiscal year 2013.
- iPhone sales grew by 16%, becoming Apple's largest product category at 53% of total net sales.
- iTunes, software, and services revenue increased by 25% to $16.1 billion, indicating strong ecosystem growth.
- Apple returned $34.6 billion to shareholders in 2013 through dividends and share repurchases.
- Research and Development (R&D) expenses increased by 32% to $4.5 billion, underscoring a commitment to innovation.
- Gross margin percentage decreased to 37.6% in 2013 from 43.9% in 2012, attributed to new product cost structures and pricing strategies.
- The company held $146.8 billion in cash, cash equivalents, and marketable securities as of September 28, 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Apple Inc. kept $0.22.
- Revenue$170.91B100.0%
- Cost of revenue−$106.61B62.4%
- Gross profit$64.30B37.6%
- Operating costs−$15.30B9.0%
- Operating income$49.00B28.7%
- Interest, other & tax−$11.96B7.0%
- Net income$37.04B21.7%
Where FY2013 revenue went
$170.91B- Cost of revenue: $106.61B, 62% of revenue
- Net income: $37.04B, 22% of revenue
- R&D: $4.47B, 2.6% of revenue
- SG&A: $10.83B, 6.3% of revenue
- Interest, other & tax: $11.96B, 7.0% of revenue
Kept 22% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed October 30, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $170.91B$156.51B | +9.2% |
| Cost of Revenue | $106.61B$87.85B | +21.4% |
| Gross Profit | $64.30B$68.66B | −6.3% |
| R&D Expenses | $4.47B$3.38B | +32.4% |
| SG&A Expenses | $10.83B$10.04B | +7.9% |
| Operating Expenses | $15.30B$13.42B | +14.0% |
| Operating Income | $49.00B$55.24B | −11.3% |
| Interest Expense | $136.00M$0 | — |
| Net Income | $37.04B$41.73B | −11.3% |
| EPS (Basic) | $1.43$1.59 | −10.3% |
| EPS (Diluted) | $1.42$1.58 | −10.0% |
| Shares Outstanding (Basic) | 25.91B26.17B | −1.0% |
| Shares Outstanding (Diluted) | 26.09B26.47B | −1.4% |
05—Questions
Frequently Asked Questions
What were Apple's primary revenue drivers in fiscal year 2013?
Apple's primary revenue drivers in fiscal year 2013 were iPhone sales, which saw a 16% increase, and its iTunes, software, and services segment, which grew by 25%. iPad sales also contributed positively, although at a slower pace of 3% growth.
How did Apple's gross margin perform in 2013 compared to 2012?
Apple's gross margin percentage declined to 37.6% in fiscal year 2013 from 43.9% in fiscal year 2012. The company attributed this decrease to several factors, including the introduction of new products with higher cost structures and flat or reduced pricing, a shift in sales mix towards lower-margin products like the iPad mini, increased warranty costs, and price reductions on certain existing products.
What is Apple's strategy for returning capital to shareholders?
Apple significantly expanded its capital return program in 2013, increasing its share repurchase authorization to $60 billion and raising its quarterly dividend to $3.05 per share. In total, the company utilized approximately $34.6 billion for dividends and share repurchases in fiscal year 2013, demonstrating a strong commitment to returning value to shareholders.
What are the main risks Apple identified in its 2013 10-K filing?
Key risks identified by Apple include intense competition in the mobile and personal computer markets, rapid technological changes, dependence on component suppliers (some of which are single-sourced), supply chain disruptions, inventory management challenges, potential negative impacts from legal proceedings, and risks associated with international operations and foreign currency exchange rates.
06—Continue