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This excerpt taken from the AAPL 10-K filed Jan 25, 2010. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan and Retail. The Americas, Europe and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S. and in international markets. Each reportable geographic operating segment and the Retail operating segment provide similar hardware and software products and similar services. Further information regarding the Company’s operating segments may be found in Note 10, “Segment Information and Geographic Data” in Notes to Consolidated Financial Statements of this Form 10-K. Under the historical subscription accounting methodology no single customer accounted for more than 10% of
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Table of Contentsnet sales in 2009; under the new accounting principles that were retrospectively adopted in the first quarter of 2010, however, one of the Company’s customers represented 11% of net sales in 2009. There was no single customer that accounted for more than 10% of net sales in 2008 or 2007 under the historical subscription accounting methodology or the new accounting principles. Americas During 2009, net sales in the Americas segment increased $2.4 billion or 15% compared to 2008. The increase in net sales during 2009 was attributable to the significant year-over-year increase in iPhone revenue, higher sales of third-party digital content and applications from the iTunes Store, and increased sales of Mac portable systems, which were partially offset by a decrease in sales of Mac desktop systems and iPods. Americas Mac net sales decreased 6% due primarily to lower average selling prices, while Mac unit sales increased by 4% on a year-over-year basis. The increase in Mac unit sales was due primarily to strong demand for the MacBook Pro, which was updated in June 2009 and October 2008. The Americas segment represented approximately 44% of the Company’s total net sales in both 2009 and 2008. During 2008, net sales in the Americas segment increased $4.5 billion or 38% compared to 2007. The primary drivers of this growth were the significant year-over-year increase in sales of iPhone, iPod touch, Mac portable systems, and content from the iTunes Store. The Company began shipping iPhone in June 2007 and the growth in iPhone sales in 2008 resulted from a full year of iPhone shipments as well as stronger demand for iPhones in the fourth quarter of 2008. The increase in Mac net sales of $1.4 billion or 31% and Mac unit sales of 961 million or 32% is attributable to growth in sales of all of the Mac portable systems, particularly the MacBook, and higher sales of the iMac. Net sales of iPods increased due to a shift in product mix toward higher priced iPods, particularly the iPod touch, which was upgraded in June 2008. In 2008, the Americas segment represented 44% of the Company’s total net sales as compared to 48% in 2007. Europe During 2009, net sales in Europe increased $2.6 billion or 28% compared to 2008. The increase in net sales was due mainly to increased iPhone revenue and strong sales of Mac portable systems, offset partially by lower net sales of Mac desktop systems, iPods, and a stronger U.S. dollar. Mac unit sales increased 13% in 2009 compared to 2008, which was driven primarily by increased sales of Mac portable systems, particularly MacBook Pro, while total Mac net sales declined as a result of lower average selling prices across all Mac products. Although iPod net sales decreased in Europe year-over-year as a result of lower average selling prices, iPod unit sales increased due to iPod touch and market share increases. The Europe segment represented 28% and 25% of total net sales in 2009 and 2008, respectively. Europe’s net sales increased $3.8 billion or 69% during 2008 compared to 2007. The main drivers of this growth were strong sales of iPhone, Mac portable systems and iMac, and increased sales from the iTunes Store. Also contributing to the increase in net sales were higher iPod net sales due primarily to the iPod touch, which was upgraded in June 2008. Sales of Mac portable products increased due to stronger demand for the MacBook Pro and the MacBook, both updated in February 2008, as well as sales of the MacBook Air, introduced in January 2008. Mac desktop sales also increased due primarily to the popularity of the iMac, which was updated in April 2008. The Europe segment represented 25% and 22% of total net sales in 2008 and 2007, respectively. Japan Japan’s net sales increased $551 million or 32% in 2009 compared to 2008. The key contributors to this growth were increased iPhone revenue, stronger demand for certain Mac portable systems and iPods, and strength in the Japanese Yen, partially offset by decreased sales of Mac desktop systems. Net sales and unit sales of Mac portable systems increased during 2009 compared to 2008, driven primarily by stronger demand for MacBook Pro, which was updated in June 2009 and October 2008. Net sales and unit sales of iPods increased during 2009 compared to 2008, driven by strong demand for iPod touch and iPod nano.
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Table of ContentsJapan net sales increased $644 million or 59% in 2008 compared to 2007. The primary contributors to the growth in net sales were increases in sales of iPhones, iPods, iMac, Mac portable systems, and strong sales from the iTunes Store. Net sales, unit sales and the average selling price of iPods increased during 2008 compared to 2007, driven by strong demand for iPod touch and iPod nano. Additionally, Mac net sales and unit sales grew 42% and 29%, respectively, in 2008 compared to 2007 due to increases in sales of iMac and Mac portable systems, particularly MacBook, as well as the introduction of MacBook Air in January 2008. Retail Retail net sales decreased $636 million or 9% during 2009 compared to 2008. The decline in net sales was driven largely by a decrease in net sales of iPhones, iPods and Mac desktop systems, offset partially by strong demand for Mac portable systems. The Company opened 26 new retail stores during 2009, including a total of 14 international stores, ending the year with 273 stores open. This compares to 247 stores open as of September 27, 2008 and 197 open stores as of September 29, 2007. The year-over-year decline in Retail net sales is attributable to continued third-party channel expansion, particularly in the U.S. where most of the Company’s stores are located, and also reflects the challenging consumer-spending environment. With an average of 254 stores and 211 stores opened during 2009 and 2008, respectively, average revenue per store decreased to $26.2 million for 2009 from $34.6 million in 2008. The Retail segment’s net sales grew by $2.9 billion or 67% during 2008 compared to 2007, due in large part to strong demand for the iPhone, increased sales of Mac portable and desktop systems, increased sales of iPod touch and new store openings. The Company opened 50 new retail stores during 2008, bringing the total number of open stores to 247 as of September 27, 2008. This compares to 197 open stores as of September 29, 2007. With an average of 211 stores and 178 stores opened during 2008 and 2007, respectively, average revenue per store increased to $34.6 million for 2008 from $24.5 million in 2007. As measured by the Company’s operating segment reporting, the Retail segment reported operating income of $1.7 billion during 2009 and 2008, and $876 million during 2007. Despite the year-over-year decline in Retail net sales, the Retail segment’s operating income was flat at $1.7 billion in 2009 and 2008 due primarily to a higher gross margin percentage consistent with that experienced by the overall company. The Retail segment’s operating income increased by $785 million during 2008 as compared to 2007 due primarily to the significant Retail net sales growth of 67% as compared to 2007. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment were $369 million in 2009, bringing the total capital asset purchases since inception of the Retail segment to $1.8 billion. As of September 26, 2009, the Retail segment had approximately 16,500 full-time equivalent employees and had outstanding operating lease commitments associated with retail store space and related facilities of $1.5 billion. The Company would incur substantial costs if it were to close multiple retail stores. Such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $482 million, or 17%, during 2009 as compared to 2008 reflecting strong growth in sales of iPhone and Mac portable systems offset partially by a decline in sales related to iPods and Mac desktop systems in the Asia Pacific region, as well as a strengthening of the U.S. dollar against the Australian dollar and other Asian currencies. Mac net sales and unit sales grew in the Asia Pacific region by 4% and 17%, respectively, due to increased sales of the MacBook Pro.
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Table of ContentsThe Company’s Other Segments experienced an increase in net sales of $1.0 billion, or 59% during 2008 as compared to 2007. These increases are related primarily to strong growth in sales of iPhone, Mac portable systems, iPods and iMac in the Company’s Asia Pacific region. Sales from the iTunes Store in the Company’s Asia Pacific region grew 109% compared to 2007. This excerpt taken from the AAPL 10-K filed Oct 27, 2009. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan and Retail. The Americas, Europe and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S. and in international markets. Each reportable geographic operating segment and the Retail operating segment provide similar hardware and software products and similar services. Further information regarding the Company’s operating segments may be found in Note 9, “Segment Information and Geographic Data” in Notes to Consolidated Financial Statements of this Form 10-K.
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Table of ContentsAmericas During 2009, net sales in the Americas segment increased $1.6 billion or 11% compared to 2008. The increase in net sales during 2009 was attributable to the significant year-over-year increase in iPhone revenue, higher sales of third-party digital content and applications from the iTunes Store, and increased sales of Mac portable systems, which were partially offset by a decrease in sales of Mac desktop systems and iPods. Americas Mac net sales decreased 6% due primarily to lower average selling prices, while Mac unit sales increased by 4% on a year-over-year basis. The increase in Mac unit sales was due primarily to strong demand for the MacBook Pro, which was updated in June 2009 and October 2008. The Americas segment represented approximately 44% and 45% of the Company’s total net sales in 2009 and 2008, respectively. During 2008, net sales in the Americas segment increased $3.0 billion or 26% compared to 2007. The primary drivers of this growth were the significant year-over-year increase in sales of the iPod touch, Mac portable systems, content from the iTunes Store, and iPhone. The Company began shipping iPhone in June 2007 and the growth in iPhone sales in 2008 resulted from a full year of iPhone shipments as well as stronger demand for iPhones in the fourth quarter of 2008. The increase in Mac net sales of $1.3 billion or 30% and Mac unit sales of 961 million or 32% is attributable to growth in sales of all of the Mac portable systems, particularly the MacBook, and higher sales of the iMac. Net sales of iPods increased due to a shift in product mix toward higher priced iPods, particularly the iPod touch, which was upgraded in June 2008. In 2008, the Americas segment represented 45% of the Company’s total net sales as compared to 48% in the same period of 2007. Europe During 2009, net sales in Europe increased $1.7 billion or 23% compared to 2008. The increase in net sales was due mainly to increased iPhone revenue and Mac portable systems, offset partially by lower net sales of Mac desktop systems, iPods, and a stronger U.S. dollar. Mac unit sales increased 13% in 2009 compared to 2008, which was driven primarily by increased sales of Mac portable systems, particularly MacBook Pro, while total Mac net sales declined as a result of lower average selling prices across all Mac products. Although iPod net sales decreased in Europe year-over-year as a result of lower average selling prices, iPod unit sales increased due to iPod touch and market share increases. The Europe segment represented 26% and 23% of total net sales in 2009 and 2008, respectively. Europe’s net sales and Mac unit sales increased 40% and 39%, respectively, during 2008 compared to 2007. The main drivers of this growth were strong sales of Mac portable systems and iMac, increased sales from the iTunes Store, and iPhone. Also contributing to the increase in net sales were higher iPod net sales due primarily to the iPod touch, which was upgraded in June 2008. Sales of Mac portable products increased due to stronger demand for the MacBook Pro and the MacBook, both updated in February 2008, as well as sales of the MacBook Air, introduced in January 2008. Mac desktop sales also increased due primarily to the popularity of the iMac, which was updated in April 2008. The Europe segment represented 23% of total net sales in 2008, consistent with 2007. Japan Japan’s net sales increased $322 million or 21% in 2009 compared to 2008. The key contributors to this growth were increased iPhone revenue, stronger demand for certain Mac portable systems and iPods, and strength in the Japanese Yen, partially offset by decreased sales of Mac desktop systems. Net sales and unit sales of Mac portable systems increased during 2009 compared to 2008, driven primarily by stronger demand for MacBook Pro, which was updated in June 2009 and October 2008. Net sales and unit sales of iPods increased during 2009 compared to 2008, driven by strong demand for iPod touch and iPod nano. Japan net sales increased $427 million or 39% in 2008 compared to 2007. The primary contributors to the growth in net sales were increases in sales of iPods, iMac, Mac portable systems, and strong sales from the iTunes Store. Net sales, unit sales and the average selling price of iPods increased during 2008 compared to 2007, driven by
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Table of Contentsstrong demand for iPod touch and iPod nano. Additionally, Mac net sales and unit sales grew 42% and 29%, respectively, in 2008 compared to 2007 due to increases in sales of iMac and Mac portable systems, particularly MacBook, as well as the introduction of MacBook Air in January 2008. Retail Retail net sales increased $259 million or 4% during 2009 compared to 2008. The growth in net sales was driven largely by increased iPhone revenue and Mac portable systems, offset partially by a decrease in sales of iPods and Mac desktop systems. The Company opened 26 new retail stores during 2009, including a total of 14 international stores, ending the year with 273 stores open. This compares to 247 stores open as of September 27, 2008 and 197 open stores as of September 29, 2007. The year-over-year growth rate of Retail net sales was less than the increase in the average number of stores open during the same period, which the Company believes reflects the challenging consumer-spending environment and continued third-party channel expansion, particularly in the U.S. where most of its stores are located. With an average of 254 stores and 211 stores opened during 2009 and 2008, respectively, average revenue per store decreased to $25.9 million for 2009 from $29.9 million in 2008. The Retail segment’s net sales grew by 53% during 2008 compared to 2007, due in large part to increased sales of Mac portable and desktop systems, strong demand for the iPhone and iPod touch, and new store openings. The Company opened 50 new retail stores during 2008, bringing the total number of open stores to 247 as of September 27, 2008. This compares to 197 open stores as of September 29, 2007. With an average of 211 stores and 178 stores opened during 2008 and 2007, respectively, average revenue per store increased to $29.9 million for 2008 from $23.1 million in 2007. As measured by the Company’s operating segment reporting, the Retail segment reported operating income of $1.4 billion during 2009, as compared to operating income of $1.3 billion and $875 million during 2008 and 2007, respectively. This increase in operating income in 2009 was driven by increased total Retail net sales attributable to a 20% increase in average stores open and higher gross margin percentage consistent with that experienced Company-wide. The Retail segment’s operating income increased by $462 million during 2008 as compared to 2007 due primarily to the significant Retail net sales growth of 53% as compared to 2007. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment were $369 million in 2009, bringing the total capital asset purchases since inception of the Retail segment to $1.8 billion. As of September 26, 2009, the Retail segment had approximately 16,500 full-time equivalent employees and had outstanding operating lease commitments associated with retail store space and related facilities of $1.5 billion. The Company would incur substantial costs if it were to close multiple retail stores. Such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $165 million, or 7%, during 2009 as compared to 2008 reflecting strong growth in sales of iPhone and Mac portable systems offset partially by a decline in sales related to iPods and Mac desktop systems in the Asia Pacific region, as well as a strengthening of the U.S. dollar against the Australian dollar and other Asian currencies. Mac net sales and unit sales grew in the Asia Pacific region by 4% and 17%, respectively, due to increased sales of the MacBook Pro. The Company’s Other Segments experienced an increase in net sales of $707 million, or 40% during 2008 as compared to 2007. These increases are related primarily to strong growth in sales of all Mac portable systems,
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Table of ContentsiPods, the iMac, and content from the iTunes Store in the Company’s Asia Pacific region. Sales from the iTunes Store in the Company’s Asia Pacific region grew 109% compared to 2007. This excerpt taken from the AAPL 10-Q filed Apr 23, 2009. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, Europe, and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S. and in international markets. Each reportable geographic operating segment and the Retail operating segment provide similar hardware and software products and similar services. Americas Net sales in the Americas segment during the second quarter of 2009 increased $249 million or 8% compared to the second quarter of 2008, while Americas Mac unit sales decreased 8% year-over-year. The increase in net sales during the second quarter of 2009 was attributable to increased iPhone revenue and higher sales of third-party digital content and applications from the iTunes Store, which were offset partially by a decrease in sales of iPods and Mac portable and desktop systems. Sales of Mac portable and desktop systems decreased due largely to lower sales of MacBook Pro, MacBook Air, and Mac Pro. The Americas segment represented 43% and 44% of the Company’s total net sales in the second quarters of 2009 and 2008, respectively. During the first six months of 2009, net sales in the Americas segment increased $452 million or 6% compared to the same period in 2008, while Americas Mac unit sales where flat on a year-over-year basis. The increase in net sales during the first six months of 2009 was attributable primarily to the significant year-over-year increase in iPhone revenue and higher sales of third-party digital content and applications from the iTunes Store, which was partially offset by a decrease in sales of iPods, Mac portable and desktop systems, and lower software sales. The Americas segment represented approximately 44% of the Company’s total net sales for the first six months of both 2009 and 2008. Europe Net sales in Europe increased $317 million or 18% during the second quarter of 2009 compared to the second quarter of 2008. The key contributors to this growth were iPhone revenue and sales of third-party digital content and applications from the iTunes Store. The increase in net sales was offset partially by lower year-over-year net sales of Mac desktop and portable systems and iPods. Total Mac unit sales increased 5% year-over-year, due primarily to an increase in unit sales of MacBook and iMac, while total Mac net sales in Europe decreased resulting from lower average selling prices. For the first six months of 2009, net sales and unit sales in Europe increased 15% and 9%, respectively, compared to the same periods in 2008. These increases were due mainly to increased iPhone revenue and strong sales of third-party digital content and applications from the iTunes Store, which were offset partially by lower net sales of Mac desktop systems and iPods. Unit sales of iPods increased due to the strong demand for iPod touch, iPod shuffle and iPod nano, while net sales of iPods decreased due to lower average selling prices during the first six months of 2009 compared to the same period in 2008.
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Japan Japan’s net sales increased $76 million or 18% during the second quarter of 2009 and increased $157 million or 19% during the first six months of 2009 compared to the same periods in 2008. The key contributors to Japan’s net sales growth for both the second quarter and first six months of 2009 were increased iPhone and iPod revenue, and higher sales of third-party digital content and applications from the iTunes Store. Net sales and unit sales of iPods increased during the second quarter of 2009 and first six months of 2009 compared to the same periods in 2008, driven predominantly by strong demand for iPod nano and iPod touch. Retail Retail net sales increased $20 million or 1% during the second quarter of 2009 compared to the second quarter in 2008. The increase in net sales was due predominantly to increased iPhone revenue and strong demand for MacBook, offset partially by a decrease in sales of most other Mac portable and desktop systems and iPods. Retail Mac net sales and unit sales decreased due to lower sales across most Mac portable and desktop systems, partially offset by increased sales of MacBook and Mac mini. The Company opened one new retail store during the second quarter of 2009, ending the quarter with 252 stores open, as compared to 208 stores at the end of the second quarter of 2008. The year-over-year growth rate of Retail net sales was less than the increase in the average number of stores open during the same period, which reflects the challenging consumer-spending environment and continued third-party channel expansion. As a result, with an average of 251 stores and 205 stores open during the second quarters of 2009 and 2008, respectively, average revenue per store declined to $5.9 million for the second quarter of 2009 from $7.1 million in the second quarter of 2008. Retail net sales grew $59 million or 2% during the first six months of 2009 compared to the same period in 2008 due primarily to increased iPhone revenue and strong demand for MacBook, offset partially by a decrease in sales of iPods, Mac desktop systems, MacBook Air, and MacBook Pro. Average revenue per store decreased to $12.8 million for the first six months of 2009 based on an average of 250 stores, down from $15.5 million in the first six months of 2008 based on an average of 203 stores. The Retail segment reported operating income of $308 million during the second quarter of 2009 compared to operating income of $334 million during the second quarter of 2008, and reported operating income of $661 million during the first six months of 2009 compared to $739 million during the first six months of 2008. The decline in operating income during the second quarter of 2009 and first six months of 2009 was attributable primarily to lower average revenue per store. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment since its inception totaled $1.5 billion through the end of the second quarter of 2009. As of March 28, 2009, the Retail segment had approximately 14,000 full-time equivalent employees and had outstanding lease commitments associated with retail space of $1.3 billion. The Company would incur substantial costs if it were to close multiple retail stores and such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced a decrease in net sales of $11 million or 2% during the second quarter of 2009 compared to the second quarter of 2008, and a decrease of $75 million or 6% during the first six months of 2009 compared to the same period in 2008. These decreases were related primarily to lower net sales of most iPod products, Mac desktop systems, and MacBook Pro, offset partially by increased iPhone revenue and net sales of MacBook and iPod touch in the Company’s Asia Pacific region.
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This excerpt taken from the AAPL 10-Q filed Jan 23, 2009. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, Europe, and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S. and in international markets. Each reportable geographic operating segment and the Retail operating segment provide similar hardware and software products and similar services.
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Americas Net sales in the Americas segment during the first quarter of 2009 increased $203 million or 5% over the first quarter of 2008, while Americas Mac unit sales increased 8% year-over-year. The increase in net sales during the first quarter of 2009 was attributable to higher sales of iPhone, Mac portable systems, and sales from the iTunes Store, which were partially offset by a decrease in sales of iPods, iMac, and software, as well as the weakening of the Canadian dollar against the U.S. dollar. Sales of Mac portable products increased due primarily to strong demand for MacBook and MacBook Pro, both of which were updated in October 2008. The Americas segment represented 44% and 45% of the Company’s total net sales in the first quarters of 2009 and 2008, respectively. Europe Net sales in Europe increased $300 million or 12% during the first quarter of 2009 compared to the first quarter in 2008. This growth was driven primarily by iPhone, with Mac portable systems and sales from the iTunes Store also contributing to the increase in net sales. The net sales increase was partially offset by lower year-over-year sales of iPods and iMac, as well as the effect of foreign currency movements against the U.S. dollar during the first quarter of 2009. Total Mac unit sales in Europe increased 13% year-over-year, due primarily to an increase in net sales of Mac portable systems, particularly MacBook. Japan Japan’s net sales increased $81 million or 20% during the first quarter of 2009 compared to the first quarter of 2008, while Mac unit sales increased 9% year-over-year. The key contributors to Japan’s net sales growth were increased sales of iPhone, Mac portable systems, and iPods, as well as a weaker U.S. dollar compared to the Japanese yen, which were partially offset by a decrease in sales of iMac. Net sales and unit sales of iPods increased during the first quarter of 2009 compared to the first quarter in 2008, driven primarily by strong demand for iPod nano, which was updated in September 2008. Retail Retail net sales increased $39 million or 2% during the first quarter of 2009 compared to the first quarter of 2008, and Mac unit sales increased 2% over the same period. The increase in net sales was due to higher sales of iPhone and Mac portable systems, which were partially offset by lower sales of iPods, iMac, and software. Retail Mac unit sales grew due to increased sales of Mac portable systems, partially offset by lower sales of iMac. The Company opened four new retail stores during the first quarter of 2009, ending the quarter with 251 stores open as compared to 204 stores at the end of the first quarter of 2008. The growth in Retail net sales was less than the growth in the number of stores open. As a result, with an average of 249 stores and 201 stores open during the first quarters of 2009 and 2008, respectively, average revenue per store declined to $7.0 million for the first quarter of 2009 from $8.5 million in the first quarter of 2008. The Retail segment reported operating income of $353 million during the first quarter of 2009 compared to operating income of $405 million during the first quarter in 2008. The year-over-year decrease in operating income is attributable primarily to lower average revenue per store. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment since its inception totaled $1.5 billion through the end of the first quarter of 2009. As of December 27, 2008, the Retail segment had approximately 15,600 full-time equivalent employees and had outstanding lease commitments associated with retail space of $1.3 billion. The Company would incur substantial costs if it were to close multiple retail stores and such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced a decrease in net sales of $64 million, or 9% during the first quarter of 2009 as compared to the same quarter in 2008. The decrease in net sales was due primarily to lower net sales of iPods and iMacs, as well as a strengthening of the U.S. dollar against the Australian dollar and other Asian currencies, which were partially offset by increased net sales of iPhone and Mac portable systems. Mac unit sales increased 14% during the first quarter of 2009 compared to the first quarter of 2008, related primarily to strong demand for the MacBook, which was updated in October 2008.
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This excerpt taken from the AAPL 10-K filed Nov 5, 2008. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, Europe, and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S. and in international markets. Each reportable geographic operating segment and the Retail operating segment provide similar hardware and software products and similar services. Further information regarding the Company’s operating segments may be found in Note 9, “Segment Information and Geographic Data” in Notes to Consolidated Financial Statements of this Form 10-K.
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Table of ContentsAmericas During 2008, net sales in the Americas segment increased $3.0 billion or 26% compared to 2007. The primary drivers of this growth were the significant year-over-year increase in sales of the iPod touch, Mac portable systems, content from the iTunes Store, and iPhone. The Company began shipping iPhone in June 2007 and the growth in iPhone sales in 2008 resulted from a full year of iPhone shipments. The increase in Mac net sales of $1.3 billion or 30% and Mac unit sales of 961 million or 32% is attributable to growth in all of the Mac portable systems, particularly the MacBook, and higher sales of the iMac. Net sales of iPods increased due to a shift in product mix toward higher priced iPods, particularly the iPod touch, which was upgraded in June 2008. In 2008, the Americas segment represented 45% of the Company’s total net sales as compared to 48% in the same period of 2007. During 2008, U.S. education channel net sales and Mac unit sales increased by 14% and 19%, respectively, compared to 2007. Net sales from the higher education market grew 15% during 2008 compared to 2007, while net sales in the K-12 market grew 12% during the same period. During 2007, net sales in the Americas segment increased $2.2 billion, or 23%, compared to 2006. The main sources of this growth were Mac portable products, iMacs, iPods, and the sales of third-party content from the iTunes Store. Sales of Mac portable products increased due to the popularity of the MacBook, introduced in May 2006 and updated in May 2007, as well as the MacBook Pro, introduced in January 2006 and updated in June 2007. Sales of iMacs grew due to a shift in desktop product mix away from the Mac mini and discontinued eMac as well as the strong reception of the new iMac introduced in August 2007. Sales of iPods grew due to increased demand for the iPod nano and iPod shuffle and the introduction of the iPod touch in September 2007. During 2007, the Americas segment represented 48% of the Company’s total net sales as compared to 49% in the same period of 2006. During 2007, U.S. education channel net sales and Mac unit sales increased by 14% and 18%, respectively, compared to 2006. Net sales from the higher education market grew 17% during 2007 compared to 2006, while net sales in the K-12 market grew 10% during the same period. Europe For 2008, net sales and unit sales in Europe increased 40% and 39%, respectively, compared to the same period in 2007. The main drivers of this growth were strong sales of Mac portable systems and iMac, increased sales from the iTunes Store, and iPhone. Also contributing to the increase in net sales were higher iPod net sales due primarily to the iPod touch, which was upgraded in June 2008. Sales of Mac portable products increased due to the MacBook Pro and the MacBook, both updated in February 2008, as well as the MacBook Air, introduced in January 2008. Mac desktop sales also increased due primarily to the popularity of the iMac, which was updated in April 2008. Sales from the iTunes Store grew substantially by 79% from 2007 as a result of heightened consumer interest in downloading digital content and the expansion of third-party audio and video content available for sale via the iTunes Store. The Europe segment represented 23% of total net sales in 2008, consistent with 2007. Europe segment net sales increased $1.4 billion or 33% during 2007 compared to 2006. Consistent with the Americas segment, the primary drivers of this growth were Mac portable products, iMacs, iPods, and the sales of third-party content from the iTunes Store. Sales of Mac portable products increased due to the popularity of both the MacBook and MacBook Pro. Sales of iMacs grew due to a shift in desktop product mix away from the Mac mini and discontinued eMac as well as the strong reception of the new iMac introduced in August 2007. Sales of iPods grew due primarily to increased demand for the iPod nano and iPod shuffle. The Company believes that the growth in iTunes Store sales was the result of heightened consumer interest in downloading digital content and the expansion of third-party audio and video content available for sale via the iTunes Store. Japan Japan net sales increased $427 million or 39% in 2008 compared to 2007. The primary contributors to the growth in net sales were increases in sales of iPods, iMac, Mac portable systems, and strong sales from the iTunes Store. Net sales, unit sales and the average selling price of iPods increased during 2008 compared to 2007, driven by strong demand for iPod touch and iPod nano. Additionally, Mac net sales and unit sales grew 42% and 29%, respectively, in 2008 compared to 2007 due to increase in sales of the iMac and Mac portable systems, particularly MacBook, as well as the introduction of MacBook Air in January 2008.
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Table of ContentsJapan’s net sales declined by $129 million or 11% in 2007 compared to 2006. Total Mac unit sales in Japan declined 1% during 2007. The decrease in the Japan segment’s overall net sales was attributable primarily to decreases in iPod and Mac desktop sales, partially offset by an increase in revenue from MacBooks and sales of third-party content from the iTunes Store. The decline in net sales and Mac unit sales is partially attributable to Japan’s declining consumer PC market, and the iPod sales decline is due primarily to lower average selling prices. The Company is continuing to evaluate ways to improve the future results of its Japan segment. Retail Retail net sales grew by 53% during 2008 compared to 2007, due in large part to increased sales of Mac portable and desktop products, strong demand for the iPhone and iPod touch, and new store openings. The Company opened 50 new retail stores during 2008, including a total of 19 international stores, bringing the total number of open stores to 247 as of September 27, 2008. This compares to 197 open stores as of September 29, 2007 and 165 open stores as of September 30, 2006. With an average of 211 stores and 178 stores opened during 2008 and 2007, respectively, average revenue per store increased to $29.9 million for 2008, compared to $23.1 million in 2007. Retail Mac net sales and Mac unit sales grew by 42% and 47%, respectively, during 2008 compared to the 2007, due primarily to strong demand for MacBook, iMac, and MacBook Air, introduced in January 2008. Net sales of iPods increased due to the popularity of the iPod touch, which was upgraded in June 2008, and a higher average selling price compared to 2007. The higher iPod average selling price was due to strong demand for the iPod touch. The Retail segment’s net sales increased by 27% to $4.1 billion during 2007 compared to 2006. Retail segment Mac unit sales increased 56% during 2007 as compared to 2006. With an average of 178 stores open during 2007, average revenue per store was $23.1 million, compared to $22.9 million in 2006. The increase in Retail segment net sales during 2007 compared to 2006 was due primarily to stronger sales of Mac portable products, iMacs, accessories and services. The increase was partially offset primarily by lower net sales of iPods and other music related products due to the expanded availability of those products through third-party resellers. As measured by the Company’s operating segment reporting, the Retail segment reported operating income of $1.3 billion during 2008 as compared to operating income of $875 million and $600 million during 2007 and 2006, respectively. This improvement in 2008 was attributable primarily to the significant Retail net sales growth of 53% as compared to 2007. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment were $389 million in 2008, bringing the total capital asset purchases since inception of the Retail segment to $1.4 billion. As of September 27, 2008, the Retail segment had approximately 15,900 full-time equivalent employees and had outstanding operating lease commitments associated with retail store space and related facilities of $1.4 billion. The Company would incur substantial costs if it were to close multiple retail stores. Such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $707 million, or 40% during 2008 as compared to 2007. These increases are related primarily to strong growth in sales of all Mac portable systems, iPods, the iMac, and content from the iTunes Store in the Company’s Asia Pacific region. Sales from the iTunes Store in the Company’s Asia Pacific region grew significantly by 109% over 2007. Mac net sales and unit sales grew by 52% and 50%, respectively, due to increased sales of the iMac and all Mac portables. The Company’s Other Segments experienced an increase in net sales of $406 million, or 30% during 2007 compared to 2006. This increase related primarily to a 58% increase in sales of Mac portable products and strong iPod sales in the Company’s Asia Pacific region.
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Table of ContentsThis excerpt taken from the AAPL 10-Q filed Jul 23, 2008. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, Europe, and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S., Canada, Japan, the U.K., Italy, and Australia. Each reportable segment provides similar hardware and software products and similar services to the same types of customers. Americas Net sales in the Americas segment during the third quarter of 2008 increased $755 million or 28%, compared to the same period in 2007, while Americas Mac unit sales increased 38% year-over-year. The increase in net sales during the third quarter of 2008 was attributable primarily to higher sales of Mac portable systems, iMac, sales from the iTunes Store, and iPhone. Sales of Mac portable products increased largely due to strong demand for MacBook. Net sales and unit sales of iPods increased during the third quarter of 2008 as compared to the third quarter of 2007 as a result of strong demand for iPod touch, which was introduced at the high end of the iPod product line in September 2007. During the third quarters of 2008 and 2007, the Americas segment represented 46% and 50%, respectively, of the Company’s total net sales. During the first nine months of 2008, net sales in the Americas segment increased $2.3 billion or 27% compared to the same period in 2007, while Americas Mac unit sales increased 39%. The main sources of this growth were the significant year-over-year increase in sales of Mac portable systems, iMac, content from the iTunes Store, and iPhone. The Company believes that the growth in iTunes Store sales was the result of heightened consumer interest in downloading third-party digital content and the expansion of third-party audio and video content available for sale and rent via the iTunes Store. During the first nine months of 2008, net sales of iPods increased due to a higher average selling price compared to the same period in 2007. The higher average selling price was due to strong demand for the higher priced iPod touch. The Americas segment represented approximately 45% and 49% of the Company’s total net sales for the first nine months of 2008 and 2007, respectively. Europe Net sales in Europe increased $488 million or 42% during the third quarter of 2008 compared to the same period in 2007, while total Mac unit sales in Europe increased 47% on a year-over-year basis. Consistent with the Americas segment, the primary drivers of this growth were Mac portable systems, as well as increased sales of iMac, sales from the iTunes Store, and iPhone. The increase in net sales of portable systems is attributable primarily to the strong demand for MacBook Pro and MacBook Air, which was introduced in January 2008. A weaker U.S. dollar also contributed to the increase in overall net sales. For the first nine months of 2008, net sales and unit sales in Europe increased 43% and 45%, respectively, compared to the same period in 2007. The main sources of this growth were strong growth in net sales of Mac portable systems and iMac, and increased sales from the iTunes Store. Also contributing to the growth in net sales were higher iPod net sales due primarily to the introduction of the iPod touch in September 2007.
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Japan Japan’s net sales increased $107 million or 41% during the third quarter of 2008 and $362 million or 44% during the first nine months of 2008 compared to the same periods in 2007. Additionally, Mac unit sales grew 26% and 35% during the third quarter and first nine months of 2008, respectively, compared to the same periods in 2007. The primary contributors to the net sales growth were increases in sales of iPods, iMac, Mac portable systems, and strong sales from the iTunes Store. Net sales and unit sales of iPods increased during the third quarter and first nine months of 2008 compared to the same periods in 2007, driven by strong demand for iPod touch and iPod nano. In addition, the weaker U.S. dollar contributed to the increase in overall net sales. Retail Retail net sales grew by 58% during the third quarter of 2008 compared to the same period in 2007 due primarily to strong growth in sales of Mac products, strong sales of iPhone and new store openings. Mac unit sales increased by 44% due to greater demand for iMac and MacBook and sales of MacBook Air. The Company opened 8 new retail stores during the third quarter of 2008, ending the quarter with 216 stores open compared to 185 stores at the end of the third quarter of 2007. With an average of 211 stores and 180 stores open during the third quarters of 2008 and 2007, respectively, average revenue per store increased to $6.8 million for the third quarter of 2008, compared to $5.1 million in the third quarter of 2007. Retail net sales and Mac unit sales grew by 61% and 58%, respectively, during the first nine months of 2008 compared to the same period in 2007, due primarily to strong demand for Mac portables, iMac, iPhone and iPod touch. Average revenue per store increased by $5.9 million to $22.4 million for the first nine months of 2008 based on an average of 205 stores, up from $16.5 million in the first nine months of 2007 based on an average of 174 stores. The Retail segment had operating income of $297 million during the third quarter of 2008 compared to operating income of $184 million during the third quarter of 2007, and had operating income of $1.0 billion during the first nine months of 2008 compared to $607 million during the first nine months of 2007. The increased operating profit in the third quarter of 2008 compared to the same period in 2007 is attributable to higher sales, specifically higher average revenue per store, and increased operating expense leverage. For the first nine months of 2008 compared to the same period in 2007, Retail profitability increased due primarily to higher sales, an increase in gross margin percentage due to favorable standard costs experienced by the Company overall, and operating expense leverage. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment since its inception totaled $1.3 billion through the end of the third quarter of 2008. As of June 28, 2008, the Retail segment had approximately 13,600 full-time equivalent employees and had outstanding lease commitments associated with retail space of $1.3 billion. The Company would incur substantial costs if it were to close multiple retail stores. Such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $174 million, or 44% during the third quarter of 2008 as compared to the same period in 2007, and increased 45% or $589 million to $1.9 billion during the first nine months of 2008 compared to the same period in 2007. Mac unit sales increased 53% and 58% during the third quarter and first nine months of 2008, respectively, as compared to the same periods in 2007. These increases are related primarily to strong growth in sales of all Mac portable systems, iMac, and iPod touch in the Company’s Asia Pacific region.
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This excerpt taken from the AAPL 10-Q filed May 1, 2008. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, Europe, and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S., Canada, Japan, the U.K. and Italy. Each reportable segment provides similar hardware and software products and similar services to the same types of customers. Americas Net sales in the Americas segment during the second quarter of 2008 increased $801 million or 32%, compared to the same period in 2007, while Americas Mac unit sales increased 46% year-over-year. The increase in net sales during the second quarter of 2008 was attributable primarily to higher sales of Mac portable and desktop systems, iPhone and sales from the iTunes Store. The increase in net sales of Mac portable systems is attributable primarily to sales of the new MacBook Air, which was introduced in January 2008. Net sales and unit sales of iPods remained relatively flat as compared to the second quarter of 2007. During the second quarters of 2008 and 2007, the Americas segment represented 44% and 47%, respectively, of the Company’s total net sales. During the first six months of 2008, net sales in the Americas segment increased $1.6 billion or 26% compared to the same period in 2007, while Americas Mac unit sales increased 40% during the same period in 2007. The increase in net sales during the first six months of 2008 was attributable primarily to the significant year-over-year increase in sales of all Mac portable systems, the iMac, iPhone and content from the iTunes Store. During the first six months of 2008, unit sales of iPods remained relatively flat while net sales of iPods increased due to higher average selling prices as compared to the same period in 2007. The higher average selling prices were due to strong demand for the iPod touch, which was introduced at the high end of the iPod product line in September 2007. The Americas segment represented approximately 44% and 48% of the Company’s total net sales for the first six months of 2008 and 2007, respectively. Europe Net sales in Europe increased $531 million or 43% during the second quarter of 2008 compared to the same period in 2007, while total Mac unit sales in Europe increased 45% on a year-over-year basis. The increase in net sales was due mainly to strong growth in net sales of all Mac portable and desktop systems, as well as increased sales of iPhone and sales from the iTunes Store. The increase in net sales of desktop and portable systems is attributable primarily to the strong demand for the iMac and the new MacBook Air, which was introduced in January 2008. A weaker U.S. dollar also contributed to the increase in overall net sales. For the first six months of 2008, net sales and unit sales in Europe increased 44% compared to the same period in 2007. These increases were due mainly to strong growth in net sales of all Mac portable and desktop systems, strong demand for iPhone, and increased sales from the iTunes Store. Although unit sales of iPods remained relatively flat, net sales of iPods increased due to the strong demand for the iPod touch during the first six months of 2008.
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Japan Japan’s net sales increased $140 million or 49% during the second quarter of 2008 and $255 million or 45% during the first six months of 2008 compared to the same periods in 2007. Additionally, Mac unit sales grew 49% and 40% during the second quarter and first six months of 2008, respectively, compared to the same periods in 2007. These increases were attributed to growth in all of the Mac desktop and portable systems particularly the iMac, MacBook, and the new MacBook Air, which was introduced in January 2008. Net sales and unit sales of iPods increased during the second quarter and first six months of 2008 compared to the same periods in 2007, driven by strong demand for the iPod touch and iPod nano. In addition, strong sales from the iTunes Store and the weaker U.S. dollar contributed to the increase in overall net sales. Retail Retail net sales grew by 74% during the second quarter of 2008 compared to the same period in 2007 due primarily to a 67% increase in Mac unit sales, as well as strong sales of iPhone and increased sales in accessories. The Company opened 4 new retail stores during the second quarter of 2008, ending the quarter with 208 stores open compared to 177 stores at the end of the second quarter of 2007. With an average of 205 stores and 172 stores open during the second quarter of 2008 and 2007, respectively, average revenue per store was $7.1 million for the second quarter of 2008, compared to $4.8 million in the second quarter of 2007. Retail net sales and Mac unit sales grew by 62% and 65%, respectively, during the first six months of 2008 compared to the same period in 2007 due primarily to strong demand for the iPod touch, iPhone, and Mac desktop and portable systems. Average revenue per store increased to $15.5 million for the first six months of 2008 based on an average of 203 stores, up from $11.4 million in the first six months of 2007 based on an average of 171 stores. The Retail segment reported operating income of $334 million during the second quarter of 2008 compared to operating income of $164 million during the second quarter of 2007, and reported operating income of $739 million during the first six months of 2008 compared to $423 million during the first six months of 2007. The increased profit in the second quarter and first six months of 2008 was attributable primarily to higher sales and an increase in gross margin percentage due to favorable standard costs experienced by the Company overall and expense leverage, offset partially by increased spending on store personnel. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment since its inception totaled $1.2 billion through the end of the second quarter of 2008. As of March 29, 2008, the Retail segment had approximately 12,000 full-time equivalent employees and had outstanding lease commitments associated with retail space of $1.3 billion. The Company would incur substantial costs if it were to close multiple retail stores. Such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $159 million, or 37% during the second quarter of 2008 as compared to the same period in 2007, and increased 46% or $415 million to $1.3 billion during the first six months of 2008 compared to the same period in 2007. These increases are related primarily to strong growth in sales of all Mac portable systems, the iMac and the iPod touch in the Company’s Asia Pacific region. This excerpt taken from the AAPL 10-Q filed Feb 1, 2008. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, Europe, and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S., Canada, Japan, the U.K. and Italy. Each reportable segment provides similar hardware and software products and similar services to the same types of customers.
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Americas Net sales in the Americas segment during the first quarter of 2008 increased $777 million or 22% compared to the first quarter of 2007, while Mac unit sales increased 35% year-over-year. The increase in net sales is primarily attributable to higher sales of iMacs and Mac portable systems, Mac OS X Leopard and other software, and sales from the iTunes Store. During the first quarters of 2008 and 2007, the Americas segment represented 45% and 49%, respectively, of the Company’s total net sales. Europe Net sales in Europe increased $759 million or 44% during the first quarter of 2008 as compared to the same quarter in 2007. Total Mac unit sales in Europe increased 44% on a year-over-year basis. These increases were mainly a result of strong growth in net sales of iMacs and Mac portable systems, iPods, Mac OS X Leopard and other software, and sales from the iTunes Store. A weaker U.S. dollar also contributed to the increase in net sales. Japan Japan’s net sales and unit sales increased 40% and 30%, respectively, during the first quarter of 2008 compared to the same quarter in 2007. The $115 million increase in net sales was primarily driven by strong sales of iPods and iMac, as well as the decline in the value of the U.S. dollar. Retail Retail revenue grew by 53% year-over-year primarily due to a 64% increase in Mac unit sales, as well as higher sales of iPod and strong sales of iPhone. The Company opened seven new retail stores during the first quarter of 2008, ending the quarter with 204 stores open compared to 170 stores at the end of the first quarter of 2007. With an average of 201 stores open during the first quarter of 2008, average revenue per store was $8.5 million, compared to $6.6 million in the first quarter of 2007. The Retail segment reported operating income of $405 million during the first quarter of 2008 compared to operating income of $259 million during the first quarter of 2007. The increased operating income in the first quarter of 2008 was attributable to higher sales and an increase in gross margin percentage due to favorable standard costs experienced by the Company overall, partially offset by increased spending on store remodeling and personnel. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. Capital asset purchases associated with the Retail segment since its inception totaled $1.1 billion through the end of the first quarter of 2008. As of December 29, 2007, the Retail segment had approximately 11,400 full-time equivalent employees and had outstanding lease commitments associated with retail space of $1.2 billion. The Company would incur substantial costs if it were to close multiple retail stores. Such costs could adversely affect the Company’s financial condition and operating results. Other Segments The Company’s Other Segments, which consist of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $256 million, or 53% during the first quarter of 2008 as compared to the same quarter in 2007. This increase related primarily to strong growth in sales of both Mac desktop and portable products, as well as strong growth in iPod sales in the Company’s Asia Pacific region. These excerpts taken from the AAPL 10-K filed Nov 15, 2007. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company's reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, Europe, and Japan reportable segments do not include activities related to the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the U.S., Canada, Japan, the U.K. and Italy. Each reportable geographic operating segment and the Retail operating segment provide similar hardware and software products and similar services. During 2007, the Company revised the way it measures the Retail Segment's operating results to a manner that is generally consistent with the Company's other operating segments. Prior period results have been reclassified to reflect this change to the Retail Segment's operating results along with the corresponding offsets to the other operating segments. Further information regarding the Company's operating segments may be found in Note 9, 44 "Segment Information and Geographic Data" in Notes to Consolidated Financial Statements of this Form 10-K. Americas During 2007, net sales in the Americas segment increased $2.2 billion, or 23%, compared to 2006. The main sources of this growth were Mac portable products, iMacs, iPods, and the sales of third-party content from the iTunes Store. Sales of Mac portable products increased due to the popularity of the MacBook, introduced in May 2006 and updated in May 2007, as well as the MacBook Pro, introduced in January 2006 and updated in June 2007. Sales of iMacs grew due to a shift in desktop product mix away from the Mac mini and discontinued eMac as well as the strong reception of the new iMac introduced in August 2007. Sales of iPods grew due to increased demand for the iPod nano and iPod shuffle and the introduction of the iPod touch in September 2007. The Company believes that the growth in iTunes Store sales was the result of heightened consumer interest in downloading digital content and the expansion of third-party audio and video content available for sale via the iTunes Store. During 2007, the Americas segment represented 48% of the Company's total net sales as compared to 49% in the same period of 2006. During 2007, U.S. education channel net sales and Mac unit sales increased by 14% and 18%, respectively, compared to 2006. Net sales from the higher education market grew 17% during 2007 compared to 2006, while net sales in the K-12 market grew 10% during the same period. During 2006, net sales in the Americas segment increased $2.8 billion, or 41%, compared to 2005. The primary contributors to this increase were iPods, other music related products and services, Mac portable systems, and APP. Sales of iPods increased primarily due to the introduction of the updated iPod with video-playing capabilities in October 2005 (now referred to as iPod classic) and the iPod nano during September 2005. The increase in other music related products and services was due to increases in sales of Apple-branded and third-party iPod accessories and sales from the iTunes Store. The increase in sales of Mac portable systems in the Americas was due to strong sales of the MacBook and MacBook Pro during 2006. The overall increase in net sales was partially offset by a decline in net sales of desktops, displays, and Mac OS X. The decrease in desktop products and displays net sales reflects the overall shift in product mix toward portable Mac systems. Mac OS X sales decreased from 2005 since the Company had not released a new version of Mac OS X since Tiger began shipping in April 2005. During 2006, the Americas segment represented 49% of the Company's total net sales as compared to 48% in the same period of 2005. Europe Europe segment net sales increased $1.4 billion or 33% during 2007 compared to 2006. Consistent with the Americas segment, the primary drivers of this growth were Mac portable products, iMacs, iPods, and the sales of third-party content from the iTunes Store. Sales of Mac portable products increased due to the popularity of both the MacBook and MacBook Pro. Sales of iMacs grew due to a shift in desktop product mix away from the Mac mini and discontinued eMac as well as the strong reception of the new iMac introduced in August 2007. Sales of iPods grew primarily due to increased demand for the iPod nano and iPod shuffle. The Company believes that the growth in iTunes Store sales was the result of heightened consumer interest in downloading digital content and the expansion of third-party audio and video content available for sale via the iTunes Store. Europe segment net sales increased $1.0 billion or 33% during 2006 compared to 2005. Consistent with the Americas segment, these increases were a result of strong growth in iPod sales, other music related products and services, and Mac portable systems. Sales of iPods increased primarily due to the introduction of the updated iPod with video-playing capabilities in October 2005 and the iPod nano during September 2005. The increase in other music related products and services was due to increases in sales of Apple-branded and third-party iPod accessories and sales from the iTunes Store. The increase in sales of portable systems in Europe was due to strong sales of the MacBook and MacBook Pro that were introduced during 2006. In addition, Europe also reported increased sales in APP related to the increase in Mac unit sales. These increases were partially offset by a decrease in desktop and Mac OS X net sales 45 during 2006 compared to 2005. The decrease in desktop net sales was due to the shift in product mix toward portable Mac systems. Mac OS X sales have decreased from 2005 since the Company has not released a new version of Mac OS X since Tiger began shipping in April 2005. Japan Japan's net sales declined by $129 million or 11% in 2007 compared to 2006. Total Mac unit sales in Japan declined 1% during 2007. The decrease in the Japan segment's overall net sales was primarily attributable to decreases in iPod and Mac desktop sales, partially offset by an increase in revenue from MacBooks and sales of third-party content from the iTunes Store. The decline in net sales and Mac unit sales is partially attributable to Japan's declining consumer PC market, and the iPod sales decline is primarily due to lower average selling prices. The Company is continuing to evaluate ways to improve the future results of its Japan segment. Japan's net sales increased $287 million or 31% during 2006 compared to 2005. The Japan segment experienced increased net sales in iPods, Mac portable products, and other music related products and services. Consistent with the Company's other segments, Japan experienced increases in sales of iPods due to the introduction of the iPod with video-playing capabilities (now referred to as the iPod classic) and the iPod nano in October and September of 2005, respectively. Japan also experienced strong sales of the Intel-based MacBook and increased sales from the iTunes Store. These increases were partially offset by decreases in net sales of Mac desktop products, displays, and Mac OS X. The decreases in desktop products and displays reflect the overall shift in product mix toward portable Mac systems. Mac OS X sales have decreased from 2005 since the Company had not released a new version of Mac OS X since Tiger began shipping in April 2005. Total Mac unit sales during 2006 remained relatively flat compared to 2005. Retail The Company opened 32 new retail stores during 2007, including a total of 5 international stores in the U.K. and Italy, bringing the total number of open stores to 197 as of September 29, 2007. This compares to 165 open stores as of September 30, 2006 and 124 open stores as of September 24, 2005. The Retail segment's net sales increased by 27% to $4.1 billion during 2007 compared to 2006. Retail segment Mac unit sales increased 56% during 2007 as compared to 2006. With an average of 178 stores open during 2007, average revenue per store was $23.1 million, compared to $22.9 million in 2006 and $21.7 million in 2005. The current year increase in Retail segment net sales was primarily due to stronger sales of Mac portable products, iMacs, accessories and services. The increase was partially offset primarily by lower net sales of iPods and other music related products due to the expanded availability of those products through third-party resellers. The Retail segment's net sales increased by 42% to $3.3 billion during 2006 compared to 2005. Retail segment Mac unit sales increased 45% during 2006 compared to 2005. The current year increase was primarily due to strong sales of Mac portable and desktop products, iPods, and other music related products and services. Sales of iPods increased primarily due to the introduction of the updated iPod with video-playing capabilities in October 2005 and the iPod nano during September 2005. The increase in other music related products and services was due to increased sales of Apple-branded and third-party iPod accessories. Mac portable and desktop sales increased due to strong sales of the Intel-based MacBook, MacBook Pro, and iMac. As measured by the Company's operating segment reporting, the Retail segment reported operating income of $875 million during 2007 as compared to operating income of $600 million and $396 million during 2006 and 2005, respectively. This improvement in 2007 was primarily attributable to an increase in the Company's overall gross margin percentage. Expansion of the Retail segment has required and will continue to require a substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. 46 Capital asset purchases associated with the Retail segment were $294 million in 2007, bringing the total capital asset purchases since inception of the Retail segment to $1.0 billion. As of September 29, 2007, the Retail segment had approximately 7,900 employees and had outstanding operating lease commitments associated with retail store space and related facilities of $1.1 billion. The Company would incur substantial costs if it were to close multiple retail stores. Such costs could adversely affect the Company's financial condition and operating results. Other Segments The Company's Other Segments, which consists of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $406 million, or 30% during 2007 compared to 2006. This increase related primarily to a 58% increase in sales of Mac portable products and strong iPod sales in the Company's Asia Pacific region. During 2006, net sales in Other Segments increased 35% compared to 2005 primarily due to an increase in sales of iPod and Mac portable products. Strong sales growth was a result of the introduction of the updated iPods featuring video-playing capabilities and the new Intel-based Mac portable products that translated to a 16% increase in Mac unit sales during 2006 compared to 2005. Segment Operating Performance The Company manages its business primarily on a geographic basis. The Company's reportable operating segments consist of the Americas, Europe, Japan, and Retail. The Americas, 44 "Segment Americas During 2007, net sales in the Americas segment increased $2.2 billion, or 23%, compared to 2006. The main sources of this growth were Mac portable products, iMacs, During Europe Europe segment net sales increased $1.4 billion or 33% during 2007 compared to 2006. Consistent with the Americas segment, the primary drivers of this growth were Mac Europe 45 during Japan Japan's net sales declined by $129 million or 11% in 2007 compared to 2006. Total Mac unit sales in Japan declined 1% during 2007. The decrease in the Japan segment's Japan's Retail The Company opened 32 new retail stores during 2007, including a total of 5 international stores in the U.K. and Italy, bringing the total number of open stores to 197 as of The The As Expansion 46 Capital Other Segments The Company's Other Segments, which consists of its Asia Pacific and FileMaker operations, experienced an increase in net sales of $406 million, or 30% during 2007 During | EXCERPTS ON THIS PAGE:
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