Apple 2015 Annual Report Download - page 25

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section and other parts of this Annual Report on Form 10-K (“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, accessories, 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
Apple 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 2015 Highlights
Net sales rose 28% or $50.9 billion during 2015 compared to 2014, driven by a 52% year-over-year increase in iPhone®net sales. iPhone
net sales and unit sales in 2015 increased in all of the Company’s reportable operating segments. The Company also experienced year-
over-year net sales increases in Mac®, Services and Other Products. Apple Watch®, which launched during the third quarter of 2015,
accounted for more than 100% of the year-over-year growth in net sales of Other Products. Net sales growth during 2015 was partially
offset by the effect of weakness in most foreign currencies relative to the U.S. dollar and lower iPad®net sales. Total net sales increased in
each of the Company’s reportable operating segments, with particularly strong growth in Greater China where year-over-year net sales
increased 84%.
In April 2015, the Company announced a significant increase to its capital return program by raising the expected total size of the program
to $200 billion through March 2017. This included increasing its share repurchase authorization to $140 billion and raising its quarterly
dividend to $0.52 per share beginning in May 2015. During 2015, the Company spent $36.0 billion to repurchase shares of its common
stock and paid dividends and dividend equivalents of $11.6 billion. Additionally, the Company issued $14.5 billion of U.S. dollar-
denominated, €4.8 billion of euro-denominated, SFr1.3 billion of Swiss franc-denominated, £1.3 billion of British pound-denominated,
A$2.3 billion of Australian dollar-denominated and ¥250.0 billion of Japanese yen-denominated term debt during 2015.
Fiscal 2014 Highlights
Net sales rose 7% or $11.9 billion during 2014 compared to 2013. This was driven by increases in net sales of iPhone, Mac and Services.
Net sales and unit sales increased for iPhone primarily due to the successful introduction of iPhone 5s and 5c in the latter half of calendar
year 2013, the successful launch of iPhone 6 and 6 Plus beginning in the fourth quarter of 2014, and expanded distribution. Mac net sales
and unit sales increased primarily due to strong demand for MacBook Air®and MacBook Pro®which were updated in 2014 with faster
processors and offered at lower prices. Net sales of Services grew primarily due to increased revenue from sales through the App Store®,
AppleCare®and licensing. Growth in these areas was partially offset by the year-over-year decline in net sales for iPad due to lower unit
sales in many markets, and a decline in net sales of Other Products. All of the Company’s operating segments other than the Rest of Asia
Pacific segment experienced increased net sales in 2014, with growth being strongest in the Greater China and Japan operating
segments.
During 2014, the Company completed various business acquisitions, including the acquisitions of Beats Music, LLC, which offers a
subscription streaming music service, and Beats Electronics, LLC, which makes Beats®headphones, speakers and audio software.
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