Apple Inc.

Prof. Peter Freeman

FI 305
Fall 2010

Presented by:
Narjis Rachad
Yunfeng Lu
Wen Zhang

Agenda

Introduction.

Background of Apple Inc.

Is Apple a profitable company?

Can Apple cover its interest expense?

What are Apple future sales?

Should we invest in Apple?

Conclusion and personal thoughts.

Background of Apple Inc.

Founded in April 1st, 1976
Headquarters: Cupertino, California
Co-founders: Steve Jobs, Steve Wojniak
Industry: Computer software, computer
hardware, consumer electronics and digital
distribution.
Revenue: US$ 65.22 Billion (FY 2010)
Competitors: HP, IBM and DELL.

Background of Apple Inc.

Apple Inc. (Apple) designs, manufactures, and
markets
personal
computers,
mobile
communication devices, and portable digital
music and video players, and sells a variety of
related software, services, peripherals, and
networking solutions.
As of January 2010 the company operates 284
retail stores in ten countries.
As of 2010, it is one of the largest technological
corporation in the world by revenue.

Vision and Mission

Man is the creator of change in this world. As

such he should be above systems and structures,
and not subordinate to them.

Apple is committed to bringing the best personal

computing experience to students, educators,
creative professionals and consumers around the
world through its innovative hardware, software,
and internet offerings.

Apple Inc.
Annual Income Statement
[Standardized in USD Millions]
Period Length
Filed Currency

25-Sep-2010
52 Weeks
USD

26-Sep-2009
52 Weeks
USD

27-Sep-2008
52 Weeks
USD

29-Sep-2007
52 Weeks
USD

30-Sep-2006
53 Weeks
USD

Net Sales
Revenue
Total Revenue

65225
65225
65225

42905
42905
42905

37491
37491
37491

24578
24578
24578

19315
19315
19315

Cost of Revenue
Cost of Revenue, Total
Gross Profit

39541
39541
25684

25683
25683
17222

24294
24294
13197

16426
16426
8152

13717
13717
5598

Selling/General/Administrative Expense
Total SGA Expenses
Research & Development
Restructuring Charge
Unusual Expense (Income)
Total Operating Expense

5517
5517
1782
46840

4149
4149
1333
31165

3761
3761
1109
29164

2963
2963
782
20171

2433
2433
712
0
0
16862

Operating Income

18385

11740

8327

4407

2453

Interest Expense - Non-Operating

Interest Expense, Net Non-Operating
Interest Income - Non-Operating
Investment Income - Non-Operating
Interest/Investment Income - Non-Operating
Interest Income (Expense)
Other Non-Operating Income (Expense)
Other, Net
Income Before Tax

311
311
311
-156
-156
18540

407
407
407
-81
-81
12066

653
653
653
-33
-33
8947

647
647
647
-48
-48
5006

0
0
394
0
394
394
-29
-29
2818

Total Income Tax

4527

3831

2828

1511

829

Net Income

14013

8235

6119

3495

1989

Apple Inc.
Annual Balance Sheet
Cash & Equivalents
Short Term Investments
Cash and Short Term Investments
Accounts Receivable - Trade, Gross
Provision for Doubtful Accounts
Trade Accounts Receivable - Net
Other Receivables
Total Receivables, Net
Total Inventory
Prepaid Expenses
Deferred Income Tax - Current Asset
Other Current Assets
Other Current Assets, Total
Total Current Assets
Buildings
Land/Improvements
Machinery/Equipment
Property/Plant/Equipment - Gross
Accumulated Depreciation
Property/Plant/Equipment - Net
Goodwill - Gross
Goodwill, Net
Intangibles - Gross
Accumulated Intangible Amortization
Intangibles, Net
LT Investments - Other
Long Term Investments
Deferred Income Tax - Long Term Asset
Other Long Term Assets
Other Long Term Assets, Total
Total Assets
Accounts Payable
Accrued Expenses
Notes Payable/Short Term Debt
Customer Advances
Income Taxes Payable
Other Current Liabilities
Other Current liabilities, Total
Total Current Liabilities
Total Long Term Debt
Total Debt
Deferred Income Tax - LT Liability
Deferred Income Tax
Other Long Term Liabilities
Other Liabilities, Total
Total Liabilities

[Standardized in USD Millions]

25-Sep-2010
26-Sep-2009
11261
5263
14359
18201
25620
23464
5565
3413
-55
-52
5510
3361
4414
1696
9924
5057
1051
455
309
1636
1135
3447
1135
5083
2270
41678
31555
2030
1665
1471
955
3733
2047
7234
4667
-2466
-1713
4768
2954
741
206
741
206
587
529
-245
-176
342
353
25391
10528
25391
10528
163
2263
1742
2263
1905
75183
47501

27-Sep-2008
11875
10236
22111
2469
-47
2422
2282
4704
509
475
1044
1163
2207
30006
1324
810
1613
3747
-1292
2455
207
207
475
-123
352
2379
2379
104
668
772
36171

29-Sep-2007
9352
6034
15386
1684
-47
1637
2392
4029
346
417
782
996
1778
21956
1019
762
1060
2841
-1009
1832
38
38
459
-77
382
88
1051
1139
25347

30-Sep-2006
6392
3718
10110
1304
-52
1252
1593
2845
270
208
607
469
1076
14509
760
626
689
2075
-794
1281
38
38
181
-42
139
1238
1238
17205

12015
1593
0
3647
210
3257
7114
20722

5601
1293
0
2278
430
1904
4612
11506

5520
1320
0
2298
506
1717
4521
11361

4970
772
0
1936
488
1114
3538
9280

3390
803
0
1042
388
820
2250
6443

0
0

0
0

0
0

0
0

0
0

4300
4300
2370
2370
27392

2216
2216
2139
2139
15861

999
999
1514
1514
13874

619
619
916
916
10815

381
381
397
397
7221

Apple Inc.
Annual Cash Flows
[Standardized in USD Millions]
25-Sep-2010
14013
1027
1027
1440
24
879
903
-4860
-596
-1634
6307
1995
1212
18595

26-Sep-2009
8235
734
734
1040
26
710
736
-939
54
-153
92
360
-586
10159

27-Sep-2008
6119
496
496
398
22
516
538
-785
-163
15
596
2382
2045
9596

29-Sep-2007
3495
327
327
73
12
242
254
-385
-76
-994
1494
1282
1321
5470

30-Sep-2006
1989
225
225
53
11
163
174
-357
-105
-2666
1611
1296
-221
2220

-2005
-116
-2121
-638
46718
-57811
-2
-11733
-13854

-1144
-69
-1213
0
30678
-46825
-74
-16221
-17434

-1091
-108
-1199
-220
16243
-23003
-10
-6990
-8189

-735
-251
-986
0
9424
-11736
49
-2263
-3249

-657
0
-657
0
8312
-7280
-18
1014
357

Other Financing Cash Flow

Financing Cash Flow Items
Sale/Issuance of Common
Common Stock, Net
Issuance (Retirement) of Stock, Net
Long Term Debt Reduction
Long Term Debt, Net
Issuance (Retirement) of Debt, Net
Cash from Financing Activities

345
345
912
912
912
1257

188
188
475
475
475
663

633
633
483
483
483
1116

374
374
365
365
365
739

6
6
318
318
318
0
0
0
324

Net Change in Cash

5998

-6612

2523

2960

2901

Net Cash - Beginning Balance

Net Cash - Ending Balance
Cash Interest Paid
Cash Taxes Paid

5263
11261
2697

11875
5263
2997

9352
11875
1267

6392
9352
863

3491
6392
0
194

Net Income/Starting Line

Depreciation
Depreciation/Depletion
Deferred Taxes
Unusual Items
Other Non-Cash Items
Non-Cash Items
Accounts Receivable
Inventories
Other Assets
Accounts Payable
Other Liabilities
Changes in Working Capital
Cash from Operating Activities
Purchase of Fixed Assets
Purchase/Acquisition of Intangibles
Capital Expenditures
Acquisition of Business
Sale/Maturity of Investment
Purchase of Investments
Other Investing Cash Flow
Other Investing Cash Flow Items, Total
Cash from Investing Activities

Is Apple a profitable
company?

Profitability

Is Apple a profitable
company?
Apples 2010 profitability ratio compared to the
industry:

Gross Profit Margin is 39.4% compared to 23.8%

for the industry.

Operating Profit Margin 28.2%, compared to

11% for the industry.

Net Profit Margins is 21.5% compared to 21.48%

for the industry

Can Apple cover its interest

expense?

Can Apple cover its interest

expense?

Interest increased slightly.

EBIT increased almost 10 times from $2,453

million to $18,385 million.

Bankers and creditors should be happy to loan

Apple.

Liquidity

Efficiency

Leverage

Leverage

Financial Ratios
Interest

coverage ratio=EBIT/interest expense

Earnings

per share=(net income-dividends on preferred

stock)/average outstanding shares

Return

on sales (profit margin)=net income + net revenue

What are Apple future

sales?

Should we invest in Apple?

Conclusion and Personal thoughts

For the last ten years Apple has rebranded itself

to become one of the most successful technology
company ever.

All analysts agree that the company will continue

its successful trend in the future.

Thank you!

Thank you!