1. From the beginning of 2000 to its peak in 2012, Apples stock price increased by more than

25 times, from $27.97 to $702.10. Examine ONLY the financial reports (in the appendices)

and identify areas that were responsible for this stock performance.

2. From its peak in September 2012 to the end of March 2013, Apples stock price fell by

37%, from $702.10 to $442.66. Examine ONLY the financial reports (in the appendices)

and identify areas that were responsible for this stock performance.

3. Following the events noted in this case, state what Apple actually chose to do with their

cash (2013 - 2014) and any rationale for this decision.

4. State the amount of cash holdings Apple reported in their 2020 annual report (10-k)1 and

state Apples plan to disburse cash holdings for 2020 and beyond.

case study:

Introduction

Tim Cook (TC), Apples CEO, and Peter Oppenheimer (PO), the companys CFO, met in their

Cupertino, California, offices on April 12, 2013. They were addressing shareholder concerns

about Apples cash position, and stockholder pressure to keep developing was intense. They

were notably concerned about Apples cash position, which remained at $137 billion as of the

companys first-quarter report, especially given the companys stock prices drop from well

over $700 in September to around $420 in April. Furthermore, David Einhorn (DE), president

of Greenlight Capital (GLC), incited shareholder resentment by proposing that Apple should

return the majority of its $137 billion in cash to shareholders rather than allowing it to sit idle.

TC and PO were obliged to make a decision about how to address these concerns.

History

Steve Jobs (SJ) and Steve Wozniak (SW) launched Apple Computer in 1976, in SJs parents

garage. SW, would serve as the engineer; SJ the visionary and businessman. While SW was

prepared to give up the design for what would become the Apple I for free, SJ suggested

selling it to a local computer store. Apple Computers was practically profitable within 30

days. SW began designing the Apple II after observing how plain and uninteresting the Apple

I appeared in comparison to other computers. Nearly six million Apple II computers were

sold during a sixteen-year period in a variety of configurations. SJ, however, was restless, as

the computer was always viewed as SWs, not his.

Apples financial situation deteriorated over the next several years. Two new projects, the

Apple III and the Lisa, were experiencing financial difficulties, as such, SJ was fired from the

team while the Lisa was being created.

Between 1985 and 1997, Apple introduced numerous additional computers, which were largely

fruitless. SJ, conversely, was revelling in the recent success of Pixar, which he acquired from

Lucasfilm in 1986. In 1997, when SJ took over as interim CEO, Apple was ninety days away

from insolvency and the companys stock was at a twelve-year low. SJs first priority was to

trim both the projects and teams on which Apple was working. Only a product line of four

items remained after trimming: a consumer desktop and laptop, a professional desktop and

laptop. In 1997, the year before SJ became interim CEO, Apple lost $1.04 billion. They earned

a profit of $309 million a year later. That same year, the iMac was released. Between August

1998 until the end of the year, the iMac sold 800,000 copies. Around 32% of these sales were

to individuals who had never purchased a computer before. Later that year, SJ hired TC as the

companys new chief operating officer. TC was able to reduce Apples inventory from a month

to only six days and halved production time. The board began pressuring SJ to become CEO

rather than interim (or as he referred to himself, the iCEO.) SJ formally became Apples CEO

in January 2000.

The following decade saw numerous changes. In 2001, Apple introduced the iPod, iTune and iTunes store, boosting Apples sales. Various variants of the iPod were released over the next

several years, some with massive storage capacities and others without screens. SJ was di-

agnosed with pancreatic cancer around this period. He kept this information a secret for a

long period of time, but underwent surgery in July 2004, designating TC as his temporary re-

placement while on medical leave. When he returned, he immediately focused on the iPods

successor. Given that it accounted for 45% of Apples sales in 2005, it was critical that they re-

mained innovative. "The device that has the potential to consume our lunch is the cell phone,"

he observed. While they initially attempted to just tweak the iPod, they invented the now-

famous iPhone. The iPhone was a smashing success, selling 270,000 units in its first thirty

hours alone.

In 2008, SJs disease resurfaced; his physical appearance overshadowed the debut of the iPhone

3G in June. Journalists and investors began to press for information about his health. The com-

pany said that he was simply experiencing a common glitch. Apples stock price began to de-

cline. SJ took another medical break in January 2009. His cancer had spread to his liver, rapidly

deteriorating his condition. SJ underwent a liver transplant in March 2009, even though cancer

had spread beyond his liver and physicians were gloomy about his health. However, SJ healed

and returned to Apple in May. Apples stock began to skyrocket. Revenues increased by more

than 65 per cent over the previous fiscal year. A year later, cancer returned and SJ was forced

to take his third medical absence, reestablishing TC as CEO. He would not return this time. SJ

died on October 5, 2011, leaving TC as Apples new CEO.

Post-2012

By late 2012, Apple stockholders and devotees were growing restless since the company had

produced no new ground-breaking devices since the iPad in 2010. The stock price had con-

tinued to fall from its September 2012 high. Apples market share in the phone and tablet in-

dustries has been declining significantly, owing primarily to Android-powered devices. While

Apples cash had grown over the previous decade, shareholders began to worry that it was

neither spending it nor returning it to stockholders. While some regard Apples cash collec-

tion as a testament to SJs paranoia, the fact that Apple could amass so much so quickly is

owing to their high profitability, cost reductions, and efficient capital use.

TC asserted that Apples reluctance to return funds was not motivated by a fear that share-

holders would view it negatively. He reassured shareholders that financial returns would not

constitute a white flag for innovation. As SJ stated on Apples 2010 Q4 earnings call:

"We are confident that we will be able to grab one or more incredibly strategic opportunities. I feel

we have a solid track record of cash management discipline. So we wont be tempted to make unwise

purchases. To keep our options open. Thats the main reason.".

As indicated by their quarterly earnings calls, several shareholders got upset with Apples

tight-lipped approach to managing its extra cash. Below is an excerpt of a call:

Mark: Regarding the use of cash, is it any different from what youve done in the past? Are you thinking

more productively about cash than you have in the past?

PO: Weve always talked about cash internally and with our Board. The cash balance is improving for

the correct reasons, and I would classify our discussions today as active in choosing the best course of

action. We have nothing to announce today.

Marl: Is there a deadline? Will you actually inform us when youve concluded those discussions?

PO: When we have something to announce, we will. I emphasise that we are actively debating the best

use of our cash balance.

David: Could you give us a sense of what youre thinking? Dividends and buybacks?

PO Were investigating all possible uses, however, I have nothing to share with you today.

The US authorities were also interested in Apples cash management methods, seeing it as

proof of corporate tax evasion. The Senate Permanent Subcommittee on Investigations called

Apple to testify on offshore profit shifting, suggesting moving revenues to a low-tax foreign

refuge was not enough - Apple sought the holy grail of avoidance by setting up offshore com-

panies worth billions of dollars and claiming tax exemption in every jurisdiction.

Offshore Funds

Apples global activities necessitated the creation of a multi-tiered organisational structure.

Their cash was primarily held in Ireland, which has a low corporate tax rate. Profits earned by

American corporations abroad are taxed in the United States, but only after they are repatriated

to the country. Repatriation tax is the difference between the US rate and the local foreign tax

rates. If foreign income were never taxed, this rate might reach 35%. Numerous American

businesses retain international profits as a result of these advantages. Given that around 69%

of Apples cash is held abroad, a repatriation tax of 35% on all of their foreign reserves would

equal to slightly under one-quarter of their entire cash reserves.

In the US, a corporations tax residence is established by its physical location. This means

that neither the profits of Apples international companies nor the profits transferred from

these subsidiaries to Apples Irish subsidiaries are taxed by the US government. On the other

hand, Ireland determines a companys tax residence based on its controlling location. Because

the Irish subsidiaries are managed by executives based in California, their profits are also not

taxed by the Irish government. This means that three of Apples subsidiaries do not have a

tax residence. Apple officials stated that these international divisions were necessary due to

the companys broad international operations: In 2012, foreign earnings accounted for 61% of

Apples revenue, while around 69% of total cash was retained overseas. Despite accusations,

Apple maintained that it pays all applicable taxes domestically and internationally.

According to Apples evidence before the Senate, Apple was arguably the highest corporate

taxpayer in the US, paying $16 million every day. In other words, Apple paid around $1 of every $40 in corporate income taxes collected by the US Treasury in 2012.

Dividends and Share Repurchases

Apple declared a quarterly dividend of $2.65 per share in March 2012, coupled with a $10

billion three-year share repurchase program. According to PO, Apples share repurchase pro-

gram and dividends would cost the company $45 billion in domestic cash over the next three

years. This was Apples first dividend authorisation since 1995. Despite its efforts to bol-

ster shareholder trust, Apples stock price has continued to decline from its September 2012

peak, particularly when compared to the NASDAQ index. Despite this initiative, numerous

prominent and vocal stockholders remained dissatisfied. Simultaneously, TC was also aware

of Apples progenitors fluctuating fortunes, particularly Palm and Blackberry.

Preferred Share - iPref

In February 2013, DE sent an open letter to Apple shareholders urging the company to finally

"unlock shareholder value" and halt the growth of Apples cash hoard. DE proposed a perpet-

ual preferred stock, which he named "iPref." Apple would issue five preferred shares for every

common share to all present owners. Each of these preferred shares would have a face value

of $50 and would pay a quarterly dividend of 50 cents. DE was well aware of Apples corpo-

rate tax situation and ensured that the dividends would be paid by free cash flow. Apple may

issue five iPrefs for each common share without depleting its cash reserves. DE anticipated

that this five-iPref distribution would unlock $150 in value for each share, or nearly 33% of the

Q1 2013 stock price of $450.50. DE asserted that this was greater than the value unlocked by a

share repurchase program or a special dividend. The iPref would also resolve the repatriation

issue by utilising exclusively free cash flows. With roughly 939.1 million shares outstanding in

Q1 2013, the programs first year costs would be around $9.4 billion. Many thought that DEs

proposal was a viable solution to Apples dilemma.

Conclusion

Apple was the non-financial institution with the greatest cash reserves. Apples closest com-

petitor in terms of cash reserves was Microsoft, which held little more than half of Apples.

TC and PO needed to develop a solution that satisfied shareholders while still allowing the

company to innovate. TC and PO had to first decide whether or not to return money to share-

holders and, if so, how much. TC and PO began by generating a financial estimate to see how

much cash Apple would accumulate over the next five years if they returned all of it in 2012.

They were sceptical of DEs calculations for dividends, repurchases, and iPref and chose to

perform their own computations. TC and PO were reminded that even with such a vast sum

of money and the pressure it generated, high-class problems remained problems.

09-Dec-2021 23:35 Apple Inc Balance Sheet Balance Sheet Annual Common Size (% of Total Assets) 2007 2008 2009 2012 2013 2006 NIA 30-Sep-2006 -- 2010 91 2011 67 97 97 97 67 90 28-Sep-2013 - 29-Sep-2007 27-Sep-2008 26-Sep-2009 25-Sep-2010 24-Sep-2011 29-Sep-2012 58.76% 22.30% 16.54% Earnings Quality Score Period End Date Assets (5 Millions) Cash and Short Term Investments Cash Cash & Equivalents Short Term Investments Accounts Receivable - Trade, Net - Total Receivables, Net Total Inventory Total Current Assets 2.49% 1.16% 35.99% 21.61% 60.70% 1.01% 35.89% 23.81% 61.13% 1.02% 31.81% 28.30% 49.40% 2.40% 8.68% 38.32% 34.08% 2.25% 12.73% 19.59% 4.21% 2.68% 12.70% 5.94% 13.87% 19.10% 1.77% 4.34% 10.44% 6.21% 10.62% 0.45% 6.46% 6.33% 7.28% 16.54% 7.33% 13.20% 15.90% 6.70% 13.00% 1.41% 82 96% 7.08% 10.65% 0.96% 4.61% 10.07% 0.67% 1.57% 1.40% 1.37% 86.62% 9.97% 0.85% 35.40% 84.33% 66.43% 55.44% 38.66% 32.75% % 11.21% 10.11% 12.06% 4.42% 3.64% 10.36% 3.66% 9.83% 3.51% 9.62% 2.70% 1.96% 13.78% 1.92% 4.02% 3.01% 4.00% 2.23% 1.77% 6.11% 6.68% 4.18% Property/Plant/Equipment, Total - Gross , Buildings - Gross . Land/Improvements - Gross Machinery/Equipment - Gross / Property/PlantEquipment, Total - Net Goodwill, Net LT Investments - Other Total Assets 4.97% 2.24% 4.46% 6.79% 0.57% 7.45% 12.43% 1.97% 1.39% 9.08% 8.78% % 0.64% 52.32% 2.01% 4.31% 6.22% 0.43% 22.16% 100.00% 7.23% 1.60% 10.26% 8.02% 0.76% 51.31% 100.00% 0.22% 6.34% 0.99% 33.77% 100.00% 0.15% 0.77% 47.79% 6.58% 100.00% 100.00% 100.00% 100.00% 100.00% 11.79% 12.57% 10.81% 19.70% 13.08% 15.26% 12.50% 15.98% 9.46% 9.71% 9.38% 7.98% Liabilities (5 Millions) Accounts Payable Other Current liabilities, Total Customer Advances Income Taxes Payable Total Current Liabilities 19.61% 13.96% 7.64% 1.93% 12.03% 8.00% 4.23% 0.87% 4.80% 4.85% 5.27% 4.20% 6.06% 2.26% 37.45% 6.35% 1.40% 0.91% 0.88% 27.56% 0.98% 24.04% 0.58% 21.09% 36.61% 31.41% 24.22% 21.89% 0.00% 0.00% 0.00% 8.19% 0.00% 0.00% 0.00% 0.00% Total Long Term Debt Long Term Debt Total Debt Total Liabilities 0.00% 0.00% 0.00% 42.67% 0.00% 0.00% 0.00% 38.36% 0.00% 0.00% 0.00% 32.86% 0.00% 0.00% 33.39% 0.00% 41.97% 0.00% 0.00% % 34.16% 8.19% 8.19% 40.31% 36.43% Figure 2: Common size Balance Sheet 2006 - 2013 09-Dec-2021 23:35 Apple Inc Balance Sheet Balance Sheet Annual Common Size (% of Total Assets) 2007 2008 2009 2012 2013 2006 NIA 30-Sep-2006 -- 2010 91 2011 67 97 97 97 67 90 28-Sep-2013 - 29-Sep-2007 27-Sep-2008 26-Sep-2009 25-Sep-2010 24-Sep-2011 29-Sep-2012 58.76% 22.30% 16.54% Earnings Quality Score Period End Date Assets (5 Millions) Cash and Short Term Investments Cash Cash & Equivalents Short Term Investments Accounts Receivable - Trade, Net - Total Receivables, Net Total Inventory Total Current Assets 2.49% 1.16% 35.99% 21.61% 60.70% 1.01% 35.89% 23.81% 61.13% 1.02% 31.81% 28.30% 49.40% 2.40% 8.68% 38.32% 34.08% 2.25% 12.73% 19.59% 4.21% 2.68% 12.70% 5.94% 13.87% 19.10% 1.77% 4.34% 10.44% 6.21% 10.62% 0.45% 6.46% 6.33% 7.28% 16.54% 7.33% 13.20% 15.90% 6.70% 13.00% 1.41% 82 96% 7.08% 10.65% 0.96% 4.61% 10.07% 0.67% 1.57% 1.40% 1.37% 86.62% 9.97% 0.85% 35.40% 84.33% 66.43% 55.44% 38.66% 32.75% % 11.21% 10.11% 12.06% 4.42% 3.64% 10.36% 3.66% 9.83% 3.51% 9.62% 2.70% 1.96% 13.78% 1.92% 4.02% 3.01% 4.00% 2.23% 1.77% 6.11% 6.68% 4.18% Property/Plant/Equipment, Total - Gross , Buildings - Gross . Land/Improvements - Gross Machinery/Equipment - Gross / Property/PlantEquipment, Total - Net Goodwill, Net LT Investments - Other Total Assets 4.97% 2.24% 4.46% 6.79% 0.57% 7.45% 12.43% 1.97% 1.39% 9.08% 8.78% % 0.64% 52.32% 2.01% 4.31% 6.22% 0.43% 22.16% 100.00% 7.23% 1.60% 10.26% 8.02% 0.76% 51.31% 100.00% 0.22% 6.34% 0.99% 33.77% 100.00% 0.15% 0.77% 47.79% 6.58% 100.00% 100.00% 100.00% 100.00% 100.00% 11.79% 12.57% 10.81% 19.70% 13.08% 15.26% 12.50% 15.98% 9.46% 9.71% 9.38% 7.98% Liabilities (5 Millions) Accounts Payable Other Current liabilities, Total Customer Advances Income Taxes Payable Total Current Liabilities 19.61% 13.96% 7.64% 1.93% 12.03% 8.00% 4.23% 0.87% 4.80% 4.85% 5.27% 4.20% 6.06% 2.26% 37.45% 6.35% 1.40% 0.91% 0.88% 27.56% 0.98% 24.04% 0.58% 21.09% 36.61% 31.41% 24.22% 21.89% 0.00% 0.00% 0.00% 8.19% 0.00% 0.00% 0.00% 0.00% Total Long Term Debt Long Term Debt Total Debt Total Liabilities 0.00% 0.00% 0.00% 42.67% 0.00% 0.00% 0.00% 38.36% 0.00% 0.00% 0.00% 32.86% 0.00% 0.00% 33.39% 0.00% 41.97% 0.00% 0.00% % 34.16% 8.19% 8.19% 40.31% 36.43% Figure 2: Common size Balance Sheet 2006 - 2013 Apple Inc Income Statement 09-Dec-2021 23:35 Income Statement Annual Standardised in Millions of U.S. Dollars 2006 2007 2008 2009 2011 2012 2013 Period End Date 29-Sep-2007 30-Sep-2006 19,315 27-Sep-2008 37,491 37,491 24,578 2010 25-Sep-2010 65,225 65,225 26-Sep-2009 42,905 42,905 24-Sep-2011 108,249 108 249 29-Sep-2012 156,50B 156,508 28-Sep-2013 170,910 170,910 19,315 24,578 65.225 108,249 170,910 Revenue Net Sales Total Revenue Cost of Revenue, Total Cost of Revenue Gross Profit 19,315 13,717 13.717 24,578 16,426 37,491 24,294 42,905 25,683 25,683 39,541 156,50B 87,846 87,846 24,294 16,426 8,152 64.431 64,431 43,818 39,541 25,684 106,606 106,606 64,304 5,598 13,197 17,222 68,662 10,040 10,830 2.433 2.433 2,963 2,963 4,149 4,149 5,517 5,517 3,761 3,761 1,109 29.164 7,599 7,599 2,429 74.459 10,040 3.381 9,844 4,475 712 782 1,333 1,782 20,171 31,165 16,862 2,453 46,840 18.385 8.327 11,740 33.790 Selling/General Admin. Expenses, Total Selling/General Administrative Expense Research & Development Total Operating Expense Operating Income Interest Inc.(Exp.), Net-Non-Op., Total Net Income Before Taxes Provision for Income Taxes Net Income After Taxes Net Income Before Extra. Items . Net Income 4,407 647 101,267 55,241 1,088 55,763 121,911 48,999 1,180 50,155 394 653 407 311 519 2,818 5,006 8,947 12,066 34,205 18,540 4,527 829 1,511 2,828 3,831 8,283 14,030 13,118 1,989 1,989 1,989 3,495 3,495 3,495 6,119 6,119 8,235 8,235 8,235 14,013 14,013 14,013 25,922 25,922 25,922 41,733 41,733 37,037 37,037 37,037 6,119 41,733 Figure 3: Income Statement 2006 - 2013 2008 2009 2010 2011 2007 29-Sep-2007 estety 2012 29-Sep-2012 . 2013 28-Sep-2013 27-Sep-2008 26-Sep-2009 25-Sep-2010 24-Sep-2011 22,111 23,464 25,620 14,359 10.236 15,386 6,034 4,029 2,392 346 25,952 16,137 11,717 18,201 5,057 1,696 29,129 18,383 18,692 40,546 26,287 20,641 4,704 9,924 2,282 7.762 Apple Inc Balance Sheet 09-Dec-2021 23:35 Balance Sheet Annual Standardised in Millions of U.S. Dollars 2006 Period End Date 30-Sep-2006 - Assets (5 Millions) Cash and Short Term Investments 10,110 Short Term Investments 3,718 Total Receivables, Net 2,845 Receivables - Other 1,593 Total Inventory 270 Other Current Assets, Total 1,076 Total Current Assets 14,509 Property/Plant/Equipment, Total - Gross 2,075 Buildings - Gross 760 Land/Improvements - Gross 626 Goodwill, Net , 38 Intangibles, Net 139 Long Term Investments Total Assets 17,205 7,539 6,348 776 509 4,414 1,051 5,083 455 791 1,764 1,778 2,207 30,006 3,747 2,270 31,555 4,667 6,543 44,988 21,956 10,335 73,286 9,041 57,653 21,887 41,678 2,841 7,234 11,768 28,519 1,019 1,665 2,030 3,464 1,324 810 3,968 3,309 762 955 2,599 2,059 896 1,471 2,439 38 207 206 741 1,577 1,135 4,224 382 342 3,536 352 2,379 36,171 353 10,528 4,179 106,215 25,391 75.183 55,618 116,371 92,122 176,064 25,347 47,501 207,000 3,390 12,015 14,632 4,970 3,538 5,520 4,521 5,601 4,612 21,175 14,084 22,367 16,509 2,250 7,114 10,910 6,129 1,042 1,936 2,278 3,647 7,445 Liabilities (5 Millions) 5 Accounts Payable Other Current liabilities, Total , Customer Advances Income Taxes Payable Total Current Liabilities Total Long Term Debt Long Term Debt Total Liabilities 2.298 506 488 388 6,443 430 11,506 658 20,722 1,140 27,970 1,535 38,542 8,697 1,200 43,658 16,960 9,280 11,361 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7.221 16,960 83,451 10,815 13,874 15,861 27,392 39,756 57,854 13,331 Shareholders Equity (s Millions) Common Stock, Total Retained Earnings (Accumulated Deficit) Total Equity Total Liabilities & Shareholders' Equity 4,355 5,607 5,368 9,101 7,177 15,129 22 297 8,210 23,353 19,764 104,256 62,841 10,668 37,169 47.791 75,183 16,422 101,289 118,210 176,064 9,984 76,615 123,549 14,532 25,347 31,640 47,501 17,205 36,171 116,371 207,000 Figure 4: Balance Sheet 2006 - 2013 2009 2010 2007 29-Sep-2007 2008 27-Sep-2008 2011 24-Sep-2011 2012 29-Sep-2012 - 26-Sep-2009 25-Sep-2010 3,495 6,119 8.235 14,013 25,922 327 496 734 1,027 1,814 Apple Inc Cash Flow 09-Dec-2021 23:36 Cash Flow Annual Standardised in Millions of U.S. Dollars 2006 Period End Date 30-Sep-2006 Cash Flow-Operating Activities (5 Millions) Net Income/Starting Line 1,989 Depreciation/Depletion 225 Depreciation 225 Deferred Taxes 53 Changes in Working Capital -221 Accounts Receivable -357 Inventories -105 Other Assets -2,666 Accounts Payable 1,611 Other Liabilities 1.296 Cash from Operating Activities 2,220 327 496 734 1,027 1,814 41,733 3,277 3,277 4,405 -299 -6,965 73 398 1,040 1,440 2,868 1,321 2,045 -586 1,212 -385 -785 -939 -4,860 5,757 -1,791 275 -76 -163 54 -596 -15 -994 15 -153 - 1,391 -3,162 1,494 596 92 -1,634 6,307 1,995 4,467 2,515 6,149 1,282 2,382 360 5,376 50,856 5,470 9,596 10,159 18,595 37,529 -657 -986 -1.213 -2,121 -9,402 -1,199 -1,091 -7,452 -4,260 -657 -735 -1,144 -8.295 -2,005 -116 0 -251 -108 -69 -3,192 -1,107 Cash Flow-Investing Activities ($ Millions) Capital Expenditures Purchase of Fixed Assets Purchase/Acquisition of Intangibles Other Investing Cash Flow Items, Total Acquisition of Business Sale/Maturity of Investment / Purchase of Investments Cash from Investing Activities 1,014 -2.263 -6,990 - 16,221 -11,733 -32,967 0 0 -638 -244 -220 16,243 8,312 9,424 0 30,678 -46,825 69,853 -38,825 -350 112,805 -151,232 -48,227 -7.280 -23,003 46,718 -57,811 -13,854 -11,736 -3,249 -102,317 -40,419 357 -8.189 -17.434 361 374 633 188 345 613 125 Cash Flow-Financing Activities (5 Millions) Financing Cash Flow Items Other Financing Cash Flow Total Cash Dividends Paid Cash from Financing Activities 361 374 633 188 345 613 125 0 -2,488 324 739 1,116 663 1,257 1,444 -1,698 Free Cash Flow 1,563 4,484 8,397 8,946 16.474 30,077 41,454 Figure 5: Cash Flow Statement 2006 - 2012 2008 2009 2010 2013 2012 390 247 416 2011 357 40.50% 31.20% Apple Inc | Ratios - Key Metrics 09-Dec-2021 23:36 Ratios - Key Metrics - Annual Standardised in Millions of U.S. Dollars Industry Median 2006 # Stores 165 Gross Margin 40.80% 29.00% Operating Margin 6.60% 12.70% Pretax Margin 3.70% 14.60% Effective Tax Rate 11.20% 29.40% Net Margin 3.10% 10.30% Asset Turnover 0.75 1.35 Pretax ROA 3.30% 19.60% ROE 5.70% 22.80% Reinvestment Rate 3.80% 22.80% Liquidity 273 - 40.10% 27.40% 28.10% 35.20% 22.20% 23.90% 43.90% 35.30% 2007 197 33.20% 17.90% 20.40% 30.20% 14.20% 1.16 37.60% 28.70% 39.40% % 28.20% 28.40% 24.40% 31.60% 35.60% 24.20% 25.20% 31.60% 16.30% 31.80% 19.20% 29.30% 26.20% 21.70% 21.50% 23.90% 26.70% 1.22 1.03 1.06 1.13 0.89 1.07 38.10% 30.20% 35.70% 26.20% 23.50% 28.50% 29.10% 33.20% 28.80% 30.50% 35.30% 41.70% 42.80% 30.60% 28.50% 33.20% 30.50% 35.30% 41.70% 40.30% 21.90% 1.01 2.21 2.33 2.6 2.7 1.96 1.58 1.48 1.64 1.61 2.25 2.37 2.64 2.74 2.01 1.61 1.5 1.68 360.3 4.7. 67.4 -28.1 -34.9 -29.8 -30.6 -32.3 -33.7 -35.6 -28.1 2.4 1.72 1.74 1.62 1.5 1.57 1.52 1.49 1.68 0.07 0 0 0 0 0 0 0.14 0 0.00% 24.50% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 12.10% Quick Ratio Current Ratio Times Interest Earned Cash Cycle (Days) Leverage Assets/Equity / Debt/Equity % LT Debt to Total Capital Operating A/R Turnover R Avg. A/R Days Inv Turnover Avg. Inventory Days Avg. A/P Days A/ Fixed Asset Turnover WC / Sales Growth ROIC 5.9 10.3 7.2 8.6 8.8 8.7 10 10.3 8.7 62.1 35.9 50.9 42.4 41.4 41.8 36.4 35.4 41.9 5.9 63.1 53.3 56.8 53.3 52.5 70.5 112.1 83.4 5.9 6.8 6.4 6.8 6.9 5.2 4.4 62.1 74.3 7.59 3.2 74.2 69.9 78.6 78.8 81.1 75.3 17.26 74.3 10.67 18.41 17.49 15.86 16.89 13.48 92.6 15.79 3.70% 26.10% -0.90% 3.30% -13.70% -13.90% 2.70% -1.70% 21.20% -0.40% 29.90% -6.00% 36.90% 27.10% 31.00% 36.30% 24.60% Figure 6: Select Ratios 2006 - 2013 Templates Daily e T USD APPLE INC 175,08 +3.90 (+2.28%) S&P 500 TOT RET 9842.6834 +30.4862 (+0.31%) USD 3000.0000 25.00 2920.1848 SOTO 2800.0000 23.00 2700.0000 maq - 21.00 2600.0000 quasque 2500.0000 19.00 2400.0000 17.00 2300.0000 wah honum 15.89 2200.0000 why 15.00 2100.0000 - 2000.0000 13.00 1900.0000 >>> 11.00 1800.0000 - Apr Jul Oct 2012 Apr Jul Sep 2013 Apr A - Z 2011 1D 5D 10D 1M 3M 6M YTD 1Y 2Y 3Y 5Y10Y 20Y Maxo 01-Dec-2010 - 29-May-2013 Figure 7: Apple vs S&P 2011-2013 APPLE Comparative Total Return 1400 1200 1000 800 600 400 200 0 -200 2016 2017 2018 2019 2020 2021 2012 2013 2014 2015 Reinvested Total Return APPLE: 1,369.71% Reinvested Total Return S&P 500 COMPOSITE: 355.24% Figure 8: Apple vs S&P 2012-2021 2008 2009 2010 2011 2007 29-Sep-2007 estety 2012 29-Sep-2012 . 2013 28-Sep-2013 27-Sep-2008 26-Sep-2009 25-Sep-2010 24-Sep-2011 22,111 23,464 25,620 14,359 10.236 15,386 6,034 4,029 2,392 346 25,952 16,137 11,717 18,201 5,057 1,696 29,129 18,383 18,692 40,546 26,287 20,641 4,704 9,924 2,282 7.762 Apple Inc Balance Sheet 09-Dec-2021 23:35 Balance Sheet Annual Standardised in Millions of U.S. Dollars 2006 Period End Date 30-Sep-2006 - Assets (5 Millions) Cash and Short Term Investments 10,110 Short Term Investments 3,718 Total Receivables, Net 2,845 Receivables - Other 1,593 Total Inventory 270 Other Current Assets, Total 1,076 Total Current Assets 14,509 Property/Plant/Equipment, Total - Gross 2,075 Buildings - Gross 760 Land/Improvements - Gross 626 Goodwill, Net , 38 Intangibles, Net 139 Long Term Investments Total Assets 17,205 7,539 6,348 776 509 4,414 1,051 5,083 455 791 1,764 1,778 2,207 30,006 3,747 2,270 31,555 4,667 6,543 44,988 21,956 10,335 73,286 9,041 57,653 21,887 41,678 2,841 7,234 11,768 28,519 1,019 1,665 2,030 3,464 1,324 810 3,968 3,309 762 955 2,599 2,059 896 1,471 2,439 38 207 206 741 1,577 1,135 4,224 382 342 3,536 352 2,379 36,171 353 10,528 4,179 106,215 25,391 75.183 55,618 116,371 92,122 176,064 25,347 47,501 207,000 3,390 12,015 14,632 4,970 3,538 5,520 4,521 5,601 4,612 21,175 14,084 22,367 16,509 2,250 7,114 10,910 6,129 1,042 1,936 2,278 3,647 7,445 Liabilities (5 Millions) 5 Accounts Payable Other Current liabilities, Total , Customer Advances Income Taxes Payable Total Current Liabilities Total Long Term Debt Long Term Debt Total Liabilities 2.298 506 488 388 6,443 430 11,506 658 20,722 1,140 27,970 1,535 38,542 8,697 1,200 43,658 16,960 9,280 11,361 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7.221 16,960 83,451 10,815 13,874 15,861 27,392 39,756 57,854 13,331 Shareholders Equity (s Millions) Common Stock, Total Retained Earnings (Accumulated Deficit) Total Equity Total Liabilities & Shareholders' Equity 4,355 5,607 5,368 9,101 7,177 15,129 22 297 8,210 23,353 19,764 104,256 62,841 10,668 37,169 47.791 75,183 16,422 101,289 118,210 176,064 9,984 76,615 123,549 14,532 25,347 31,640 47,501 17,205 36,171 116,371 207,000 Figure 4: Balance Sheet 2006 - 2013