Form 10-K
`
`Page 1 of 85
`
`lO-K l d4ll355d10k.htm FORM 10-K
`
`Table of Contents
`
`
`SECURITIES AND EXCHANGE COMMISSION
`
`UNITED STATES
`
`Washington, D.C. 20549
`
`Form 10-K
`
`(MarkOne)
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
`1934
`
`For the fiscal year ended September 29, 2012
`01‘
`
`El TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
`1934
`
`to
`For the transition period from
`Commission file number: 000-10030
`
`APPLE INC.
`(Exact name of registrant as specified in its charter)
`
`California
`(State or other jurisdiction ofincorporation or organization)
`1 Infinite Loop
`
`94-2404110
`(I.R.S. Employer Identification No.)
`
`Cupertino, California
`(Address of principal executive offices)
`
`95014
`(Zip Code)
`
`Registrant’s telephone number, including area code: (408) 996-1010
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`Common Stock, no par value
`(Title of class)
`
`The NASDAQ Stock Market LLC
`(Name of exchange on which registered)
`
`Securities registered pursuant to Section 12(g) of the Act: None
`
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
`Yes
`No El
`
`Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
`Yes El No
`
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
`Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
`file such reports), and (2) has been subject to such filing requirements for the past 90 days.
`Yes
`No El
`
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
`Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
`during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
`
`http://www.sec.gov/Archives/edgar/data/320193/000119312512444068/d411355d10k.htm 12/29/2013
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2130
`
`CBM2013-00020 (APPLE V. SIGHTSOUND)
`PAGE 000001
`
`

`

`Form 10-K
`
`Page 2 of 85
`
`Yes
`
`No El
`
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (section 229.405 of this
`chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or
`information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. El
`
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
`smaller reporting company. See the defimtions of “large accelerated filer,” “accelerated filer” and “smaller reporting
`company” in Rule 12b-2 of the Exchange Act.
`
`Large accelerated filer
`Non-accelerated filer El (Do not check if a smaller reporting company)
`
`El
`Accelerated filer
`Smaller reporting company El
`
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
`Yes El No
`
`The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, as of March 30, 2012,
`the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $560,356,000,000
`based upon the closing price reported for such date on the NASDAQ Stock Market LLC. Solely for purposes of this
`disclosure, shares of common stock held by executive officers and directors of the registrant as of such date have been
`excluded because such persons may be deemed to be affiliates. This determination of executive officers and directors as
`affiliates is not necessarily a conclusive determination for any other purposes.
`
`940,692,000 shares of common stock were issued and outstanding as of October 19, 2012.
`
`DOCUMENTS INCORPORATED BY REFERENCE
`
`Portions of the registrant’s defimtive proxy statement relating to its 2013 annual meeting of shareholders (the “2013 Proxy
`Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2013 Proxy
`Statement will be filed with the US. Securities and Exchange Commission within 120 days after the end of the fiscal year to
`which this report relates.
`
`http://www.sec.gov/Archives/edgar/data/320193/000119312512444068/d411355d10k.htm 12/29/2013
`PAGE 000002
`
`

`

`Form lO-K
`
`Page 3 of 85
`
`Table of Contents
`
`The Business section and other parts ofthis Annual Report on Form 1 0-K (“Form 1 0-K”) contain forward-looking statements,
`within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the
`forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of
`Operations.” Forward-looking statements provide current expectations offuture events based on certain assumptions and
`include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be
`»
`identified by words such as “future, ” “anticzpates, ” “believes,” “estimates,” “expects, ” “intends, ” “plans, ” “predicts, ”
`would ” “coul , ” “can,
`“wil,” “
`“may,” and similar terms. Forward-looking statements are not guarantees of future
`performance and the Company ’s actual results may dijfer significantly from the results discussed in the forward-looking
`statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item [A of this
`Form 1 0-K under the heading “Risk Factors, ” which are incorporated herein by reference. Each of the terms the “Company”
`and “Apple” as used herein refers collectively to Apple Inc. and its wholly-owned subsidiaries, unless otherwise stated The
`Company assumes no obligation to revise or update anyforward-looking statementsfor any reason, except as required by law.
`
`PART I
`
`Item 1.
`
`Business
`
`Company Background
`
`The Company designs, manufactures and markets mobile communication and media devices, personal computers, and portable
`digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital
`content and applications. The Company’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple TV®, a portfolio
`of consumer and professional software applications,
`the iOS and OS X® operating systems,
`iCloud®, and a variety of
`accessory, service and support offerings. The Company also sells and delivers digital content and applications through the
`iTunes Store®, App StoreSM, Bookstore“, and Mac App Store. The Company sells its products worldwide through its retail
`stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and
`value-added resellers. In addition, the Company sells a variety of third-party iPhone, iPad, Mac and iPod compatible products,
`including application software, and various accessories, through its online and retail stores. The Company sells to consumers;
`small and mid-sized businesses (“SMB”); and education, enterprise and government customers. The Company’s fiscal year is
`the 52 or 53-week period that ends on the last Saturday of September. Unless otherwise stated, all information presented in this
`Form 10-K is based on the Company’s fiscal calendar. The Company is a California corporation established in 1977.
`
`Business Strategy
`
`The Company is committed to bringing the best user experience to its customers through its innovative hardware, software,
`peripherals, and services. The Company’s business strategy leverages its unique ability to design and develop its own
`operating systems, hardware, application software, and services to provide its customers new products and solutions with
`superior ease-of-use, seamless integration, and innovative design. The Company believes continual investment in research and
`development, marketing and advertising is critical to the development and sale of innovative products and technologies. As
`part of its strategy, the Company continues to expand its platform for the discovery and delivery of third-party digital content
`and applications through the iTunes Store. As part of the iTunes Store, the Company’s App Store and iBookstore allow
`customers to discover and download applications and books through either a Mac or Windows-based computer or through
`“iOS devices,” namely iPhone, iPad and iPod touch®. The Company’s Mac App Store allows customers to easily discover,
`download and install Mac applications. The Company also supports a community for the development of third-party software
`and hardware products and digital content that complement the Company’s offerings. The Company’s strategy also includes
`expanding its distribution network to effectively reach more customers and provide them with a high-quality sales and post-
`sales support experience.
`
`http://www.sec.gov/Archives/edgar/data/320193/000119312512444068/d4ll355d10khtm 12/29/2013
`PAGE 000003
`
`

`

`Form 10-K
`
`Page 33 of 85
`
`Table of Contents
`
`Fiscal Year 2012 versus 2011
`
`Net sales during 2012 increased $48.3 billion or 45% compared to 2011. Several factors contributed positively to this increase,
`including the addition of a 14th week in the first quarter of 2012, as well as the following:
`
`-
`
`-
`
`-
`
`-
`
`Net sales of iPhone and related products and services were $80.5 billion in 2012, representing an increase of $33.4
`billion or 71% compared to 2011. iPhone unit sales totaled 125.0 million during 2012, representing an increase of
`52.8 million units or 73% compared to 2011. The year-over-year growth in iPhone net sales and unit sales during
`2012 reflects strong demand for iPhone in all of the Company’s operating segments, which is primarily a result of
`the launches of iPhone 48 in the first quarter of 2012 and iPhone 5 in the fourth quarter of 2012, ongoing demand
`for iPhone 4 and iPhone 3G8, and expanded distribution with new carriers and resellers. Net sales of iPhone and
`related products and services were 51% and 43% of the Company’s total net sales for 2012 and 2011, respectively.
`
`Net sales of iPad and related products and services were $32.4 billion in 2012, representing an increase of $12.1
`billion or 59% compared to 2011. Unit sales of iPad were 58.3 million during 2012, an increase of 80% from 2011.
`The year-over-year increase in iPad net sales and unit sales during 2012 was driven by strong demand for iPad in all
`of the Company’s operating segments as a result of the launch of the new iPad in March 2012, continued demand for
`iPad 2, and expanded distribution with new resellers. The year-over-year growth rate of iPad unit sales was higher
`than the growth rate of iPad net sales during 2012 due to a reduction of average selling prices as a result of a shift in
`product mix toward lower-priced iPad models, the price reduction for iPad 2 and an increase in indirect sales due to
`expanded distribution through third-party resellers. Net sales of iPad and related products and services were 21%
`and 19% of the Company’s total net sales for 2012 and 2011, respectively.
`
`Mac net sales were $23.2 billion in 2012, representing an increase of $1.4 billion or 7% compared to 2011. Mac unit
`sales totaled 18.2 million during 2012, representing an increase of 1.4 million or 9% compared to 2011. The year-
`over-year growth in Mac net sales and unit sales during 2012 reflects increased demand for Mac portables in all of
`the Company’s operating segments driven by 2012 releases of updated models of MacBook Air and MacBook Pro,
`including the new MacBook Pro with Retina display in June 2012. Partially offsetting the increase in net sales of
`Mac portables was a decline in net sales of Mac desktops that reflected the overall decline in the market for desktop
`personal computers during 2012. Additionally, the Company did not introduce updated versions of its Mac desktop
`products in 2012. Mac net sales were 15% and 20% of the Company’s total net sales for 2012 and 2011,
`respectively.
`
`Net sales of other music related products and services were $8.5 billion in 2012, representing an increase of $2.2
`billion or 35% compared to 2011. The increase was due primarily to growth of the iTunes Store, which generated
`total net sales of $7.5 billion for 2012 compared to net sales of $5.4 billion during 2011. The strong results of the
`iTunes Store reflect growth of the App Store; growth of the Company’s customer base; and the continued expansion
`of third-party audio, video and book content available for sale or rent via the iTunes Store. The Company continues
`to expand its iTunes content and applications offerings around the world. Net sales of other music related products
`and services were 5% and 6% 0f the Company’s total net sales for 2012 and 2011, respectively.
`
`Partially offsetting the positive factors contributing to the overall increase in net sales was a decrease in iPod net sales
`experienced across all operating segments.
`iPod net sales were $5.6 billion in 2012, a decrease of $1.8 billion or 25%
`compared to 2011. Similarly, iPod unit sales decreased by 17% in 2012 compared to 2011. Declines in net sales and unit sales
`of iPod reflect the continuing contraction of the overall market for MP3 players. Net sales of iPod were 4% and 7% of the
`Company’s total net sales for 2012 and 2011, respectively.
`
`The Company has historically experienced higher net sales in its first fiscal quarter compared to other quarters in its fiscal year
`due in part to holiday seasonal demand. Actual and anticipated timing of new product introductions
`
`31
`
`http://www.sec.gov/Archives/edgar/data/320193/000119312512444068/d411355d10k.htm 12/29/2013
`PAGE 000004
`
`