Apple ’s figure 10 - Q is a quarterly account the company is command to file away with the U.S. Securities and Exchange Commission ( SEC ) . The text file provides a comprehensive overview of Apple ’s current state of business for Apple ’s first quarter of its financial year 2005 , which ending December 25 , 2004 . Among the highlights of this quarter ’s write up are item about how unexampled method of accounting procedure affect Apple ’s net income and indications that interest group in young consumer Macs may have cannibalized pro sales .
By the numbers
Apple remark that change follow out by the Financial Accounting Standards Board ( FASB ) in December 2004 need it to account for stock - based compensation otherwise , and this will have an impact on the caller ’s last income . “ Although the Company will continue to evaluate the practical software of [ the FASB ’s new normal ] , direction expects adoption to have a stuff encroachment its answer of operations , ” said Apple .
In this pillow slip , the new rules force a $ 20 million down result in the Apple ’s last earnings for the period ending December 25 , 2004 — from $ 295 million to $ 275 million . Similarly , this new accounting system procedure knocked down Apple ’s last income for the same quarter a class ago from $ 63 million to $ 34 million .
Apple drop a aggregate of about $ 23 million in restructuring charge during the year terminate September 25 , 2004 , according to the news report , with $ 14.4 million spend in severance costs , $ 5.5 million in asset deterioration and $ 3.5 million in bursting charge pertain to the cancellation of leases . Apple also spent a total of $ 419,000 and $ 282,000 to recoup chief executive officer Steve Jobs for disbursal related to his Gulfstream jet plane , during the first after part of 2005 and 2004 respectively .
Are consumer gross sales cannibalise Apple ’s pro line ?
In recapping its quarterly net sales performance , Apple noted that demand for its consumer systems is on an upswing . Apple move 456,000 iMacs and 271,000 iBooks during the twenty-five percent , generating $ 620 million and $ 297 million in net sales , respectively . That ’s a 147 percent and 34 percent year - over - year increase . Apple attributes this inviolable growth to the increase availableness of the iMac G5 , which date strained delivery in the previous quarter , as well as the origination of promote iBooks paired with seasonal demand related to the Christmas vacation .
Bullish iBook and iMac G5 sales event underscore unsatisfying results for Apple ’s pro line . Power Mac G5 net sales and unit sales event were off 4 percent and 19 percent respectively ; PowerBook G4 net and unit sales were off 23 and 22 percentage , severally .
Apple retrieve the Power Mac G5 ’s sale are abide because the great unwashed are turning towards the iMac G5 , and Apple also pins the PowerBook ’s laggard sales event “ in part to a shift to the new iBooks . ” Apple aver that such apparent motion between its Cartesian product lines “ is typical after raw merchandise launching , ” however .
It ’ll be interesting to see if this vogue continues through the current quarter , which has thus far seen refresh PowerBooks and Apple ’s new Mac miniskirt , its least expensive Macintosh model ever — another system squarely aimed at consumer .
Dramatic year - over - twelvemonth improvements in Apple ’s educational channel sales were also attributed to interest group in the iMac G5 and iBook . First quarter gross revenue render 20 percent and 11 percent increases in net sales and building block sale , respectively . This also helped Apple ’s U.S. education transmission channel sales yield their highest first quarter revenue in seven years .
cut-rate sale at Apple ’s brick - and - trench mortar retail stock likewise saw unattackable growth — $ 561 million during the quarter , from $ 273 million for the same quarter in fiscal 2004 , a 105 per centum gain . Apple attributes that promote to the increase in the number of store — up to 101 , from 73 — as well as a concert effort to ameliorate revenue per memory board , which yielded a 48 per centum increment .
Tiger R&D costs wax
Apple is readying a major novel operating system release in 2005 — Mac OS X v10.4 , codification - mention “ Tiger , ” is on track for a vent in the first one-half of the calendar twelvemonth . The new operating system of rules release will debut a number of new technologies Apple has gasconade since first demonstrate off the software system at last year ’s Worldwide Developer Conference ( WWDC ) in San Francisco , including a new search engineering shout out Spotlight , a new port bid Dashboard , Core Image applied science and much more .
Apple routinely drop more for research and development than its rivalry ; it promptly admits that in its 10 - Q. Quarterly R&D costs bloomed to $ 123 million from $ 119 million for the same one-fourth a year ago . Because of Apple ’s increase net gross sales , however , that was really a pocket-size per centum : 4 percent versus 6 per centum . Apple articulate that $ 14.8 million of those costs were associated with the exploitation of Tiger , compare to none the twelvemonth before ( Tiger was announced in June , 2004 ) . Apple attribute most of the increase in R&D costs to novel personnel hires .
sound proceedings
Perhaps no other part of Apple ’s 10 - Q draw more attention than the “ Legal Proceedings ” entry . In it , Apple bid sum-up descriptions of any outstanding and latterly reconcile lawsuits it has been party to .
Apple take note that its defense carry on against Apple Corps Ltd. , the Beatles ’ disk company . Apple Corps filed suit against Apple Computer Inc. in July , 2003 , allege the computer maker breached a 1991 accord by launch its iTunes Music Store . Apple say that it “ filed a defense ” on December 23 , 2004 after being served by Apple Corps with “ an Amended Bill of Particulars ” the preceding month .
Apple is also expecting a opinion before long on a social class action wooing call in Cagney v. Apple Computer Inc. filed in January , 2004 , which alleged the company improperly collected California state sales tax in transactions involving mail - in discount . judicial proceeding with Compression Labs Inc. over a patent of invention regard JPEG image compression continues ; the case is n’t bear to go to trial before October , 2005 .
Apple also noted that litigation with five resellers , including Elite Computers and Macadam , continues . “ One of the resellers , Macadam , was deauthorized as an Apple reseller . Macadam file a gesture for a temporary order to reinstate it as a reseller , which the courtroom deny , ” allege Apple . In an unfastened alphabetic character to customers earlier this week , Macadam possessor Tom Santos said he ’s decided to close for near , partially because of what he draw as “ The uniform bad behavior of our number one supplier , Apple Computer . ”
at long last , Apple enjoin that it will put out a answer in February to Slattery v Apple Computer Inc. , a class activity wooing that say Apple has exercised “ monopoly market great power ” to squeeze iTunes Music Store user to buy an iPod and vice versa .
