Apple 2013 Annual Report Download - page 27

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and
other parts of this Form 10-K contain forward-looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current
expectations of future events based on certain assumptions and include any statement that does not directly
relate to any historical or current fact. Forward-looking statements can also be identified by words such as
“future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,”
“could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future
performance and the Company’s actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such differences include, but are not limited to, those
discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors,” which are incorporated herein
by reference. The following discussion should be read in conjunction with the consolidated financial statements
and notes thereto included in Part II, Item 8 of this Form 10-K. All information presented herein is based on the
Company’s fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods
refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those
fiscal years. Each of the terms the “Company” and “Apple” as used herein refers collectively to Apple Inc. and
its wholly-owned subsidiaries, unless otherwise stated. The Company assumes no obligation to revise or update
any forward-looking statements for any reason, except as required by law.
Overview and Highlights
The Company designs, manufactures, and markets mobile communication 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 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 third-party
iPhone, iPad, Mac and iPod compatible products, including application software, and various accessories through
its online and retail stores. The Company sells to consumers; small and mid-sized businesses; and education,
enterprise and government customers.
Fiscal 2013 Highlights
Net sales rose 9% or $14.4 billion during 2013 compared to 2012. This resulted from growth in net sales of
iPhone; iTunes, software, and services; and iPad. Growth in 2013 reflects strong sales of iPhone 5, strong
continuing sales of iPhone 4 and 4s, the introduction of iPhone 5c and 5s, strong performance of the iPad Mini
and fourth generation iPad, and continued growth in the Company’s online sales of apps, digital content, and
services. Growth in these areas was partially offset by declines in net sales of Mac and iPod. All of the
Company’s operating segments experienced increased net sales in 2013, with net sales growth being particularly
strong in the Americas, Greater China and Japan operating segments. Similar to 2012, growth in total net sales
was higher during the first half of 2013, rising $12.6 billion or 14.7% over the same period in 2012. First half
growth in 2013 was driven by iPhone and iPad introductions at or near the beginning of 2013.
During the first quarter of 2013, the Company introduced the fourth generation iPad and iPad Mini, a new
MacBook Pro with Retina display, a new iPod touch, a new iMac, and expanded the rollout of iPhone 5 which
began in September 2012. In June 2013 at its Worldwide Developer Conference, the Company announced iOS 7
and OS X Mavericks, announced iTunes Radio, introduced a significant upgrade to MacBook Air, and provided a
preview of all new Mac Pro desktops expected to be introduced during 2014. In September 2013, the Company
introduced iPhone 5s and iPhone 5c, released iOS 7, launched iTunes Radio, and announced that beginning in
September 2013 iPhoto, iMovie and iWork apps for iOS would be available as free downloads with all new “iOS
devices,” namely iPhone, iPad and iPod touch. In October 2013, the Company announced iPad Air™, its fifth
generation iPad, and iPad mini with Retina display.
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