Biting into Apple’s 10-K…

October 27, 2011

Apple (AAPL) filed its 10-K yesterday afternoon and given the obsession with all-things Apple (Exhibit A is the new Steve Jobs tome which ranks No. 1 for sales in several categories on Amazon) we thought it was worth taking a closer look.

One of the first things that jumped out at us was that Jobs, who died on October 5, was not mentioned once in the 106-page filing. The last time that happened was 1996, back when he was exiled from Apple and running Next.

But there were plenty of other interesting tidbits in the filing too. While we’ve noticed a few other rundowns of Apple’s 10-K (see here and here for example), we thought it was still worth giving the filing the full footnoted treatment. Here’s a look at what we found:

  • Spending on R&D increased by 36% to $2.4 billion last year. As Apple notes in the filing, the “increase was due primarily to an increase in headcount and related expenses to support expanded R&D activities. Although total R&D expense increased 36% during 2011 compared to 2010, it declined slightly as a percentage of net sales, due to the 66% year-over-year growth in the Company’s net sales during 2011.”

 

  • Apple’s fast growth curve — measured several different ways — continued to explode. Employee headcount rose by nearly 30% to 60,400 people from 46,600 people at the end of fiscal 2011. The company added 2.6 million square-feet of space and it purchased another 104 acres over the past year. While we haven’t poked around too much, we find it hard to believe that any other 30-plus year old company is growing quite that rapidly.

 

  • Sales outside of the US continue to grow sharply. In 20011, 61% of the company’s sales came from outside the US, compared with 54% in 2010.

 

  • Apple listed its iOS mobile operating system (which runs both iPhones and iPads) as a risk factor

 

  • Its first risk-factor about the economy was tweaked a bit to refer to the global economy (prior filings just talked about the economy) and mentioned unemployment in a laundry-list of economic-related risks that included high fuel and energy costs and real estate issues.

 

  • Apple removed all references to specific third-party contractors in the filing, including its well-known relationship with Foxconn and Quanta Computer. Instead, Apple notes that “a significant concentration of this manufacturing is only performed by a small number of outsourcing partners.”

 

  • The company warned about the growing number of “allegations of patent infringement” noting that “patent holding companies seek to monetize patents they have purchased or otherwise obtained. In particular, the Company’s cellular enabled products compete with mobile communication and media device companies that hold significant patent portfolios, and the number of patent claims against the Company has significantly increased.”

 

Image source: Apple

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