Apple 2001 Annual Report Download - page 15

to expectations, the Company experienced an unanticipated mix shift towards lower priced Power Mac configurations resulting in lower than
anticipated net sales for the quarter of approximately $30 million. The Company ended 2000 with substantially more inventory in its
distribution channels than planned due to the lower than expected sell-through of the Company's products during the fourth quarter.
Segment Operating Performance
The Company manages its business primarily on a geographic basis. The Company's reportable geographic segments include the Americas,
Europe and Japan. The Americas segment includes both North and South America, except for the Company's Retail segment which operates
Apple-owned retail stores in the United States. The European segment includes European countries as well as the Middle East and Africa. The
Japan segment includes only Japan. Each reportable geographic operating segment provides similar
17
hardware and software products and similar services. Further information regarding the Company's operating segments may be found in Part II,
Item 8 on this Form 10-K in the Notes to Consolidated Financial Statements at Note 11, "Segment Information and Geographic Data," which
information is hereby incorporated by reference.
Americas
The Americas segment's 2001 net sales and unit sales declined 30% and 29%, respectively, from 2000. The operating performance of the
Americas segment for 2001 reflects the Company's overall performance characterized by significant declines in year-over-year quarterly net
sales and units sales, particularly during the first quarter and particularly in consumer channels, with sequential increases in unit sales and net
sales during each of the last three quarters of 2001. Net sales in the Americas segment during 2001 were also negatively affected by the
Company's overall reduction in channel inventories during the year. Consumer sales in the Americas were particularly hard hit by current
economic conditions. Outside of the U.S. education channel, unit sales of the Company's consumer oriented iMac fell 64% in 2001. The effect
of falling consumer demand in the Americas segment was partially offset by strong U.S. education sales. The Company's unit sales in U.S.
education markets rose 7% in 2001 driven by the acceptance of the Company's new portable products, particularly the iBook, and reflect a
general shift in demand in the U.S. education market towards portable versus desktop systems. Portable systems accounted for 28% of total
unit sales in the Company's U.S. education market in 2001 compared to 18% during 2000.
During 2001 and 2000, the Americas segment represented approximately 56% and 54%, respectively, of the Company's total net sales and
represented approximately 57% and 55%, respectively, of total Macintosh unit sales.
Net sales and unit sales in the Americas segment increased 22% and 24%, respectively, during 2000 as compared to 1999. The growth of the
Americas' net sales in 2000 was indicative of strong growth in unit sales of iMac and iBook and relatively flat unit sales of professionally
oriented Macintosh systems.
Europe
Net sales in Europe fell $568 million or 31% during 2001 compared to 2000, while Europe's unit sales fell 32%. Europe's results reflect the
worsening economic climate in Europe in the latter half of 2001 and reductions in channel inventories as experienced in the Company's other
geographic operating segments. Combined unit sales of the Company's consumer oriented products in Europe were particularly impacted
during 2001, falling 40% from 2000. Net sales in the Europe segment increased 38% during 2000 compared to 1999 driven by a 53% increase
in Macintosh unit sales. Growth in unit sales resulted from a 96% increase in combined unit sales of iMac and iBook, and an increase of 19%
in combined units sales of the Company's professionally oriented Macintosh systems.
Japan
Net sales and unit sales in Japan fell 47% and 46%, respectively, in 2001 versus 2000. Although unit sales and net sales in Japan have generally
trended upwards as 2001 progressed, the Japan segment has been particularly affected by current unfavorable economic conditions. Reflecting
the continuing harsh consumer climate in Japan, the Japan segment's combined unit sales of iMacs and iBooks during 2001 were down 58%
from 2000, and professionally oriented systems unit sales fell 30%.
Net sales in the Japan segment increased 57% to $1.345 billion in 2000 as compared to 1999, while Japan's Macintosh unit sales increased
39%. The fact that Japan's net sales rose at a higher rate than its unit sales reflects several factors. First, iMac unit sales in Japan were relatively
flat year-over-year. Second, unit sales of iBook, which generally carry a higher price than iMac units and which were first sold in Japan during
2000, accounted for approximately 17% of Japan's total Macintosh unit sales during 2000. Third, Japan saw a 43% increase in combined unit
sales of the Company's professionally oriented Macintosh systems.
18
Retail Segment
Since May of 2001, the Company has opened 27 retail stores in the United States. The Company anticipates opening additional stores in
calendar 2002. The Company has located its retail stores in high traffic locations in shopping malls and urban shopping districts. In addition to