01—Abstract
Summary
Summary of the 10-K filed October 28, 2015. Cited figures are marked; the original filing is the authoritative source.
Apple Inc.'s 2015 10-K filing highlights a robust fiscal year characterized by significant revenue growth, largely driven by a remarkable 52%a increase in iPhone sales, which constituted 66% of total net sales.
This surge in iPhone performance, particularly with the introduction of the iPhone 6 and 6 Plus, overshadowed a decline in iPad sales, attributed to longer repurchase cycles and potential cannibalization. Geographically, Greater China emerged as a standout performer, with an impressive 84%b year-over-year net sales increase, underscoring its growing importance. The company also saw growth in Services and Other Products, with the new Apple Watch contributing to the latter.
Financially, Apple demonstrated strong operational efficiency, with gross margin increasing to 40.1% from 38.6% in the prior year, benefiting from a favorable product mix and improved leverage on fixed costs. The company continued its aggressive capital return program, authorizing $140 billionc for share repurchases and significantly increasing its quarterly dividend. Despite a strong operating performance, the company acknowledged risks related to intense competition, supply chain dependencies, currency fluctuations, and the ongoing need for innovation to maintain its market leadership.
02—Key points
Key Highlights
- Total net sales increased by 28% to $233.7 billion in fiscal year 2015, primarily driven by a 52% increase in iPhone net sales.
- iPhone sales constituted 66% of total net sales, with unit sales up 37% year-over-year, indicating strong customer demand for the iPhone 6 and 6 Plus models.
- Greater China showed exceptional growth, with net sales increasing by 84% year-over-year, highlighting its strategic importance.
- Gross margin improved to 40.1% from 38.6% in fiscal year 2014, driven by product mix and cost leverage.
- Apple continued its substantial capital return program, announcing an increase in its share repurchase authorization to $140 billion and increasing its quarterly dividend.
- iPad sales experienced a 23% decline in net sales, attributed to longer repurchase cycles and potential cannibalization by other Apple products.
- Research and Development (R&D) expenses increased significantly by 34% to $8.1 billion, reflecting the company's commitment to innovation and new product development.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Apple Inc. kept $0.23.
- Revenue$233.72B100.0%
- Cost of revenue−$140.09B59.9%
- Gross profit$93.63B40.1%
- Operating costs−$22.40B9.6%
- Operating income$71.23B30.5%
- Interest, other & tax−$17.84B7.6%
- Net income$53.39B22.8%
Where FY2015 revenue went
$233.72B- Cost of revenue: $140.09B, 60% of revenue
- Net income: $53.39B, 23% of revenue
- R&D: $8.07B, 3.5% of revenue
- SG&A: $14.33B, 6.1% of revenue
- Interest, other & tax: $17.84B, 7.6% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed October 28, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $233.72B$182.79B | +27.9% |
| Cost of Revenue | $140.09B$112.26B | +24.8% |
| Gross Profit | $93.63B$70.54B | +32.7% |
| R&D Expenses | $8.07B$6.04B | +33.5% |
| SG&A Expenses | $14.33B$11.99B | +19.5% |
| Operating Expenses | $22.40B$18.03B | +24.2% |
| Operating Income | $71.23B$52.50B | +35.7% |
| Interest Expense | $733.00M$384.00M | +90.9% |
| Net Income | $53.39B$39.51B | +35.1% |
| EPS (Basic) | $2.32$1.62 | +43.0% |
| EPS (Diluted) | $2.31$1.61 | +42.9% |
| Shares Outstanding (Basic) | 23.01B24.34B | −5.5% |
| Shares Outstanding (Diluted) | 23.17B24.49B | −5.4% |
05—Questions
Frequently Asked Questions
What was the primary driver of Apple's revenue growth in fiscal year 2015?
The primary driver of Apple's revenue growth in fiscal year 2015 was the significant increase in iPhone sales, which grew by 52% year-over-year. This strong performance from the iPhone product line, particularly the newer iPhone 6 and 6 Plus models, accounted for the majority of the company's top-line growth.
How did Apple's international performance, particularly in Greater China, contribute to its results?
International performance was strong, with Greater China showing exceptional growth. Net sales in Greater China increased by 84% year-over-year in fiscal year 2015, indicating a significant rise in demand and market penetration in that region.
What is Apple's strategy for returning capital to shareholders?
Apple demonstrated a strong commitment to returning capital to shareholders. In April 2015, the company increased its share repurchase authorization to $140 billion and raised its quarterly dividend. Throughout fiscal year 2015, Apple spent $36.0 billion on share repurchases and paid $11.6 billion in dividends, signaling a robust capital return program.
What challenges or risks did Apple highlight in its 2015 10-K filing?
Apple highlighted several key risks, including intense competition in its product markets, the need to continually innovate and manage product transitions successfully, dependence on third-party suppliers for components and manufacturing, and the impact of foreign currency exchange rate fluctuations. The company also noted the potential risks associated with its extensive international operations and reliance on its retail channels.
06—Continue