Form IO-K
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`10-K 1 d4] 1355d10khtm FORM 10-K
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`Table of Contents
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`UNITE-D STATES
`
`SECURITIES AND EXCHANGE COMMISSION
`
`Washington, D.C. 20549
`
`Form 10-K
`
`[Mark One)
`
`IZI ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(6) OF THE SECURITIES EXCHANGE ACT OF
`1934
`
`For the fiscal year ended September 29. 2012
`01'
`
`III
`
`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 charler)
`
`California
`(Stale or otherjurisdiclion ol‘incor poration or organization)
`1 Infinite Loop
`
`94-2404] 10
`(IRS. Employer Idenlificalion No.)
`
`Cu pertino, 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 exchan go 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 IZI No III
`
`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 IXI
`
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 150:1) 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 [2 months (or for such shorter period that the registrant was required to submit and post such files).
`
`htth/www.sec.gov/Archivesfedgaridatafl20193/000119312512444068/d41 1355d10khtm 12/29/2013
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2330
`
`CBM2013-00023 (APPLE v. SIGHTSOUND)
`PAGE 000001
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`Form 10-K
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`Page 2 of 85
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`Yes
`
`No El
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`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.
`III
`
`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 definitions 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)
`
`III
`Accelerated filer
`Smaller reporting company III
`
`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 definitive 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.
`
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`Form 10-K
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`Page 3 of 85
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`Table of Contents
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`The Business section and other parts ofthtsAnnuai Report on Form 1 0-K (“Form 1' 0-K”) contain fomvord-tooiting statements,
`within the meaning of the Private Securities Litigation Reform Act of i995, that invoive risks and uncertainties. ritany of the
`firrward-iooking statements are Iocated in “ill-.tanagement's Discussion and Analysis ofFinrmciat Condition and Restrits of
`Operations. "’ Forward-looking statements provide current expectations offuture events based on certain assumptions and
`inciua'e any statement that does not directiv relate to any historicai or current fact. Forward-tacking statements can also be
`identified by words such as 'fitture, "‘ “anticipates,” "ber'ieves’"' “.estimates,’"' "expects,” “fintends"’ “pian.,’s” predicts”
`'wth'," “would,"’ “,‘couid"’ “can, ’ “more’ and simiiar terms. Forward--iooking statements are not guarantees of.fixture
`performance and the Company ’s actuai results may difier significantly fiom the resutts discussed in the jomard-looking
`statements. Factors that might canso such differences include but are not iimited to those discussedin Par! 1 Itent 1A ofthis
`Form 1’ 0-K under the heading “Risk Factors, ” which are incorporated herein by reference. Each of the terms the "Companv"'
`and “Apple" as used herein refers coiiectiveiy to Apple inc. and its whoh‘y-owned subsidiaries, untess otherwise stated. The
`Company assumes no ohiigation to revise or update an_vfi)rward-iooi(ing statementsfor any reason, except as required by iaw.
`
`PART I
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`Item 1.
`
`Business
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`Company Backgroun d
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`The Company designs, manufactures and markets mobile corrununication 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 iPhoneQ. iPadi“. Maci‘. iPod'f“. 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 ofi‘erings. The Company also sells and delivers digital content and applications through the
`iTunes Store®, App Store-5M, iBookstore”, 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 tlurd-party iPlrone, iPad, Mac and iPod compatible products,
`including application software, and various accessories, through its amino 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 197?.
`
`Business Strategy
`
`The Company is committed to bringing the best user experience to its customers through its irmovative 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 irmovative 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.
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`Form lO-K
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`Page 33 of 85
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`FEst-oi. Year- 2012 versus 201 1
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`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 14‘1' week in the first quarter of 2012, as well as the following:
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`-
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`-
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`-
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`-
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`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 druing
`2012 reflects strong demand for iPhone in all of the Company‘s operating segments, which is primarily a result of
`the launches of iPhone 43 in the first quarter of 2012 and iPhone 5 in the fotuth quarter of 2012, ongoing demand
`for iPhone 4 and iPhone 3G5, 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% front 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% of 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 turit 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
`Companyis total net sales for 2012 and 2011. respectively.
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`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
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