Apple 10-K reveals details on company operations

Apple on Thursday filed their Form 10-K, an annual report with the Securities and Exchanges Commission (SEC) that provides a thorough overview of the company for its past fiscal year, which ended in late September.

Highlights include the news that Mac net sales have increased 27 percent year over year — to the tune of US$1.4 billion in review. Unit sales of Macs increased an impressive 1.2 million units, as well. The average price of a Mac fell 7 percent year over year — indicative that while Apple is selling more Macs, it’s also selling less expensive models. No surprise, given that the company made inroads in the low-end consumer market in January, 2005 with the introduction of the $499 Mac mini.

Apple saw positive movement in its sales to the educational market — an area where Apple once dominated, but where it’s seen increased competition from competitors like Dell and continued challenges due to smaller budgets. Apple saw a 21 percent year-over-year growth in net and unit sales in higher education, and 11 percent growth in the K-12 market.

Music and iPod sales are important factors in Apple’s revenue matrix. The company sold 28 million iPods, 248 percent revenue and 409 percent unit increase year over year. Highlights of the company’s iPod line this year included the introduction of the iPod shuffle and iPod nano — the nano was introduced near the end of Apple’s fiscal 2005. Helping along iPod sales are sales at Apple’s iTunes Music Store, an international operation that operates in more than 20 countries worldwide, totaling $621 million in revenue.

Apple opened up 38 new brick and mortar retail stores in 2005, expanding operations internationally into Canada, Japan and the U.K. Retail sales grew almost double, to $2.4 billion during 2005. Apple reports annualized revenue per store of $22.4 million. The retail segment of Apple’s operations reported operating income of $151 million during 2005, compared to $39 during 2004.

Research & Development (R&D) spending increased substantially for 2005 — up 9 percent from 2004 to $534 million. But with Apple having a banner year for Macintosh and iPod sales, the R&D spending as a percentage of total net sales dropped year over year from 6 percent to 4 percent.

Apple highlighted lawsuits it’s currently fighting and a few that it’s settled, as well. The company noted its disagreement with Beatles management company Apple Corps. Ltd., which is scheduled to go to court on March 27, 2006, as well as class action suits for Apple’s wireless networking products, allegations of defective memory in PowerBook G4s, sales tax, patent violations, iPod battery life and more.

Pending or issued settlements include undisclosed arrangements over a “music jukebox” patent, a false advertising claim against DVD Studio Pro, and a settlement with mail-order company Tiger Direct Inc. over Apple’s use of the word “Tiger” in its promotional literature for Mac OS X v10.4.

This story, "Apple 10-K reveals details on company operations" was originally published by PCWorld.

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