The annual report of Apple Inc. is divided into three major parts, which are further subdivided into items, for example, Part I contains Items 1, 2, 3, and 4. Individual items are again divided into subdivisions. Discussed herein are the major sections of Apple’s annual report.
Part I of the annual report gives details about company’s background information, business strategies of the company such as its marketing strategies for individual consumers and small businesses, business organizational structure, and various products of the company, for example, iPhone, iPad, iTunes, iPod, Mac hardware and software products, and iOS (operating system). This part also gives additional information about non-computer related products such as LED Cinema Displays and Apple TV (Apple Computer, Inc., 2011). Moreover, Part I also lists various support services that the company offers to its customers, for example, technical assistance, distribution and delivery of products, warranties, research and development, and provision of product licenses and copyrights. Part I also gives information about employees of the company, various risks faced by the company such as global economic crisis, legal proceedings and high interest rates, investment opportunities as well as a list of various properties held by the company.
Part II of the report gives financial information about operations of the company. This includes information on common and preferred shares, debentures, working capital, owners’ equity, and dividend payouts. It also shows the performance of company’s stock in the stock exchange market. Part II gives a report on selected financial data which includes net sales of the company, net income, and liabilities of Apple Inc. It also includes a detailed discussion and analysis of the financial position of the company by the executive management. Part II of the report also contains a comparison of financial performance of Apple Inc. in the current year with performance in the fiscal year 2009/2010. This part also contains consolidated statement of operations, consolidated statement of shareholders’ equity, statements of cash flow for three consecutive years, consolidated balance sheet and additional notes of the financial statements. It also contains an independent report by the Ernst & Young LLP, the company’s auditor.
Part III of the annual report gives general information about the board of directors, chief executive officers and management team of the company. It outlays their efforts and commitment to the success of the firm as well as their remunerations.
Part IV outlines various schedules of financial statements for the financial year, the signatories of the company, and exhibit indices.
Lastly, Part IV gives an overview of the overall conduct of business of the company, for example, its responsibilities to customers, corporate social responsibility, commitment to offer high quality products, and business ethics.
Key Factors that Influenced Apple’s Financial Performance during 2010/2011 Fiscal Year.
The major factors that affected the performance of the company during the 2010/2011 fiscal year included development of open source software that reduced revenues earned from licenses and copyrights, high operational costs, high interest rates charged by financial institutions, fluctuations of domestic currency, which posed high foreign exchange risks to the firm, and increased marketing costs. The expenditure of the company also increased due to increased law suits and legal proceedings, increased income taxes, and increased funding for research and development activities, acquisition of new assets, patents and copyrights.
According to Gibson and Gibson, the performance of Apple Inc. was also affected by global economic crisis which resulted into reduced sales volumes hence lower returns (2012). Furthermore, increased trade regulations and export control imposed by various countries and stiff competition from new firms that entered technology industry negatively affected the performance of Apple Inc. Lastly, natural calamities such as earthquakes and tsunamis in Japan and floods in Thailand resulted into reduced sales in the affected areas (White, Sondhi & Fried, 2012).
Primary Assets held by the Company
The company holds both long-term and current assets. As per the consolidated balance sheet in the annual report, long-term assets of the company include plant and buildings, machinery and equipment, goodwill and long-term marketable securities, whereas current assets include cash and cash equivalents, accounts receivable, inventories, and deferred tax assets.
Management and the Internal Control Environment of Apple Inc.
In my opinion, management of Apple Inc. has various impacts on the internal control of the company. Executive management is responsible for development of innovative products such as software, hardware, and other customer services as well as overseeing smooth running of day-to-day operations of the firm. Management is also responsible for control of finances of the firm. Additionally, management ensures that Apple Inc. strictly adheres to international accounting policies and requirements and other legislations. Last but not least, management is accountable for exploring investment opportunities, inventory, and management of company’s properties and products.