Apple (AAPL)

Selling, General and Administrative Expense (“SG&A”)

SG&A expenditures increased $388 million or 10% to $4.1 billion in 2009 compared to 2008. These increases are due primarily to the Company’s continued expansion of its Retail segment in both domestic and international markets, higher stock-based compensation expenses and higher spending on marketing and advertising.

Expenditures for SG&A increased $798 million or 27% to $3.8 billion in 2008 compared to 2007. These increases are due primarily to higher stock-based compensation expenses, higher variable selling expenses resulting from the significant year-over-year increase in total net sales and the Company’s continued expansion of its Retail segment in both domestic and international markets. In addition, the Company incurred higher spending on marketing and advertising during 2008 compared to 2007.

Selling, General and Administrative Expense (“SG&A”)

SG&A expenditures increased $388 million or 10% to $4.1 billion in 2009 compared to 2008. These increases are due primarily to the Company’s continued expansion of its Retail segment in both domestic and international markets, higher stock-based compensation expenses and higher spending on marketing and advertising.

Expenditures for SG&A increased $798 million or 27% to $3.8 billion in 2008 compared to 2007. These increases are due primarily to higher stock-based compensation expenses, higher variable selling expenses resulting from the significant year-over-year increase in total net sales and the Company’s continued expansion of its Retail segment in both domestic and international markets. In addition, the Company incurred higher spending on marketing and advertising during 2008 compared to 2007.

Selling, General, and Administrative Expense (“SG&A”)

SG&A increased 14% or $131 million to $1.1 billion in the first quarter of 2009 compared to $960 million in the first quarter of 2008. This increase is primarily due to higher stock-based compensation expenses, higher variable selling expenses resulting from the year-over-year increase in total net sales, an increase in SG&A headcount, the Company’s continued expansion of its Retail segment, and higher spending on marketing and advertising.

Selling, General, and Administrative Expense (“SG&A”)

Expenditures for SG&A increased $798 million or 27% to $3.8 billion in 2008 compared to 2007. These increases are due primarily to higher stock-based compensation expenses, higher variable selling expenses resulting from the significant year-over-year increase in total net sales and the Company’s continued expansion of its Retail segment in both domestic and international markets. In addition, the Company incurred higher spending on marketing and advertising during 2008 compared to 2007.

Expenditures for SG&A increased $530 million or 22% during 2007 compared to 2006. The increase was due primarily to higher direct and indirect channel variable selling expenses resulting from the significant year-over-year increase in total net sales in 2007, the Company’s continued expansion of its Retail segment in both domestic and international markets, and higher spending on marketing and advertising, partially offset by one less week of expenses in the first quarter of 2007.

Selling, General, and Administrative Expense (“SG&A”)

Expenditures for SG&A increased $798 million or 27% to $3.8 billion in 2008 compared to 2007. These increases are due primarily to higher
stock-based compensation expenses, higher variable selling expenses resulting from the significant year-over-year increase in total net sales and the Company’s continued expansion of its Retail segment in both domestic and international
markets. In addition, the Company incurred higher spending on marketing and advertising during 2008 compared to 2007.

Expenditures for SG&A increased
$530 million or 22% during 2007 compared to 2006. The increase was due primarily to higher direct and indirect channel variable selling expenses resulting from the significant year-over-year increase in total net sales in 2007, the Company’s
continued expansion of its Retail segment in both domestic and international markets, and higher spending on marketing and advertising, partially offset by one less week of expenses in the first quarter of 2007.

Selling, General, and Administrative Expense (“SG&A”)

SG&A expenditures increased $206 million or 30% and $452 million or 32%, respectively, for the second quarter and the first six months of 2008 compared to the same periods in 2007. These increases are due primarily to higher stock-based compensation expenses, higher variable selling expenses resulting from the significant year-over-year

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increase in total net sales for the second quarter and first six months of 2008, the Company’s continued expansion of its Retail segment in both domestic and international markets, and higher spending on marketing and advertising.

Selling, General, and Administrative Expense (“SG&A”)

SG&A increased 34% or $246 million to $960 million in the first quarter of 2008 compared to $714 million in the first quarter of 2007. This increase is primarily due to higher variable selling expenses resulting from the significant year-over-year increase in total net sales for the first quarter, the Company’s continued expansion of its Retail segment in both domestic and international markets, and higher spending on marketing and advertising.

Selling, General, and Administrative Expense ("SG&A")

Expenditures for SG&A increased $530 million or 22% during 2007 compared to 2006. The increase was primarily due to higher direct and indirect channel variable selling expenses resulting from the significant year-over-year increase in total net sales in 2007, the Company's continued expansion of its Retail segment in both domestic and international markets, and a current year increase in spending on marketing and advertising, partially offset by one less week of expenses in the first quarter of 2007.

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Selling, General, and Administrative Expense ("SG&A")

Expenditures for SG&A increased $530 million or 22% during 2007 compared to 2006. The increase was primarily due to higher direct and indirect channel variable selling
expenses resulting from the significant year-over-year increase in total net sales in 2007, the Company's continued expansion of its Retail segment in both domestic and
international markets, and a current year increase in spending on marketing and advertising, partially offset by one less week of expenses in the first quarter of 2007.

48

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $162 million or 28% and $332 million or 18%, respectively, for the three and nine-month periods ended June 30, 2007, compared to the same periods in 2006.  The increases were primarily due to higher direct and indirect channel variable selling expenses resulting from the significant year-over-year increase in total net sales for both the third quarter and first nine months of 2007, the Company’s continued expansion of its Retail segment in both domestic and international markets, and a current year increase in spending on marketing and advertising, partially offset by one less week of expenses in the first quarter of 2007.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $88 million or 15% and $170 million or 14%, respectively, for the three and six-month periods ended March 31, 2007, compared to the same periods in 2006. The increases were primarily due to higher direct and indirect channel variable selling expenses resulting from the significant year-over-year increase in total net sales for both the second quarter and first six months of 2007, the Company’s continued expansion of its Retail segment in both domestic and international markets, and a current year increase in spending on marketing and advertising, partially offset by one less week of expenses in the first quarter of 2007.

Selling, General, and Administrative Expense (SG&A)

SG&A increased 13% or $82 million to $714 million in the first quarter of 2007 compared to $632 million in the first quarter of 2006. This increase is primarily due to higher direct and indirect channel variable selling expenses resulting from the significant year-over-year increase in total net sales for the first quarter, the Company’s continued expansion of its Retail segment in both domestic and international markets, and a current year increase in spending on marketing and advertising, partially offset by the expenses associated with the 14th week added to the first quarter of 2006.

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Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $569 million or 31% during 2006 compared to 2005. These increases are due primarily to the Company’s continued expansion of its Retail segment in both domestic and international markets, an increase of $50 million in stock-based compensation expense recognized as

60

SG&A expense resulting from the adoption of SFAS No. 123R, a current year increase in discretionary spending on marketing and advertising, higher direct and channel selling expenses resulting from the increase in net sales and employee salary merit increases, and the expenses associated with the 14th week added to the first fiscal quarter of 2006. Despite the increase in expenditures, SG&A as a percentage of total net sales in 2006 remained flat as compared to 2005.

Expenditures for SG&A increased $434 million or 30% during 2005 compared to 2004. These increases are due primarily to the Company’s continued expansion of its Retail segment in both domestic and international markets, a current year increase in discretionary spending on marketing and advertising, and higher direct and channel selling expenses resulting from the increase in net sales and employee salary merit increases. SG&A as a percentage of total net sales in 2005 was 13%, down from 17% in 2004, which is due to the increase in total net sales of 68% for the Company during 2005.

Selling, General,
and Administrative Expense (SG&A)

Expenditures for SG&A increased $569 million or
31% during 2006 compared to 2005. These increases are due primarily to the
Company’s continued expansion of its Retail segment in both domestic and
international markets, an increase of $50 million in stock-based compensation
expense recognized as

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SG&A expense resulting from the adoption of SFAS No. 123R,
a current year increase in discretionary spending on marketing and advertising,
higher direct and channel selling expenses resulting from the increase in net
sales and employee salary merit increases, and the expenses associated with the 14th week added to the first fiscal
quarter of 2006. Despite the increase in expenditures, SG&A as a
percentage of total net sales in 2006 remained flat as compared to 2005.

Expenditures for SG&A
increased $434 million or 30% during 2005 compared to 2004. These increases are
due primarily to the Company’s continued expansion of its Retail segment in
both domestic and international markets, a current year increase in
discretionary spending on marketing and advertising, and higher direct and
channel selling expenses resulting from the increase in net sales and employee
salary merit increases. SG&A as a percentage of total net sales in 2005 was
13%, down from 17% in 2004, which is due to the increase in total net sales of
68% for the Company during 2005.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $111 million or 23% and $415 million or 30%, respectively, for the three and nine months ended July 1, 2006, compared to the same periods in 2005.  These increases were primarily due to higher direct and channel variable selling expenses resulting from the significant year-over-year increase in total net sales for the third quarter and first nine months of 2006, the Company’s continued expansion of its Retail segment in both domestic and international markets, increases of $9 million and $37 million for the three and nine months ended July 1, 2006, respectively, in stock-based compensation expense recognized as SG&A expense resulting from the adoption of SFAS No. 123R, a current year increase in discretionary spending on marketing and advertising, and the expenses associated with the 14th week added to the first fiscal quarter of 2006.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $145 million or 32% and $307 million or 33%, respectively, for the three and six-month periods ended April 1, 2006, compared to the same periods in 2005. These increases were primarily due to higher direct and channel variable selling expenses resulting from the significant year-over-year increase in total net sales for the second quarter and first six months of 2006, the Company’s continued expansion of its Retail segment in both domestic and international markets, increases of $16 million and $32 million for the three and six-month periods ended April 1, 2006, respectively, in stock-based compensation expense resulting from the adoption of SFAS

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Selling, General, and Administrative Expense (SG&A)

SG&A increased 34% or $162 million to $632 million in the first quarter of 2006 compared to $470 million in the first quarter of 2005. This increase is primarily due to higher direct and channel variable selling expenses resulting from the significant year-over-year increase in total net sales for the first quarter, the Company’s continued expansion of its Retail segment in both domestic and international markets, a $16 million increase in stock-based compensation expense recognized as SG&A resulting from the adoption of SFAS No. 123R, a current year increase in discretionary spending on marketing and advertising, and the associated expenses with the 14th week added to the first fiscal quarter of 2006.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $438 million or 31% during 2005 compared to 2004. These increases are due primarily to the Company’s continued expansion of its Retail segment in both domestic and international markets, a current year increase in discretionary spending on marketing and advertising, and higher direct and channel selling expenses resulting from the increase in net sales and employee salary

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merit increases. SG&A as a percentage of total net sales in 2005 was 13%, down from 17% in 2004, which is due to the increase in total net sales of 68% for the Company during 2005.

Expenditures for SG&A increased $209 million or 17% during 2004 compared to 2003. These increases were due primarily to the Company’s continued expansion of its Retail segment in both domestic and international markets, an increase in discretionary spending on marketing and advertising, an increase in amortization costs associated with restricted stock compensation, and higher direct and channel selling expenses resulting from the increase in net sales and employee salary merit increases. SG&A as a percentage of total net sales in 2004 was 17%, down from 20% in 2003 due to the increase in total net sales for the Company of 33% during 2004.

Selling, General,
and Administrative Expense (SG&A)

Expenditures for SG&A increased $438 million or
31% during 2005 compared to 2004. These increases are due primarily to the
Company’s continued expansion of its Retail segment in both domestic and
international markets, a current year increase in discretionary spending on
marketing and advertising, and higher direct and channel selling expenses
resulting from the increase in net sales and employee salary

38

merit increases. SG&A as a percentage of total net
sales in 2005 was 13%, down from 17% in 2004, which is due to the increase in
total net sales of 68% for the Company during 2005.

Expenditures for SG&A
increased $209 million or 17% during 2004 compared to 2003. These increases
were due primarily to the Company’s continued expansion of its Retail segment
in both domestic and international markets, an increase in discretionary
spending on marketing and advertising, an increase in amortization costs
associated with restricted stock compensation, and higher direct and channel
selling expenses resulting from the increase in net sales and employee salary
merit increases. SG&A as a percentage of total net sales in 2004 was 17%,
down from 20% in 2003 due to the increase in total net sales for the Company of
33% during 2004.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $118 million and $347 million, respectively, for the three and nine-month periods ended June 25, 2005, or approximately 33% compared to the same periods in 2004.  These increases are primarily due to higher direct and channel variable selling expenses resulting from the significant year-over-year increase in total net sales for the third quarter and first nine months of 2005, the Company’s continued expansion of its Retail segment in both domestic and international markets, and a current year increase in discretionary spending on marketing and advertising. SG&A as a percentage of net sales decreased to 13.4% and 13.5% for the three and nine months ended June 25, 2005, respectively, as compared to 17.6% in the same periods of the prior year due to the increase in total net sales for the Company of 75% and 73% for the three and nine month periods, respectively.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $102 million and $229 million, respectively, for the three and six month periods ended March 26, 2005, or approximately 30% and 33%, respectively, compared to the same periods in 2004.  These increases are due primarily to higher direct and channel variable selling expenses resulting from the significant year-over-year increase in total net sales for the second quarter and first half of 2005, the Company’s continued expansion of its Retail segment in both domestic and international markets, and a current year increase in discretionary spending on marketing and advertising. SG&A as a percentage of net sales decreased to approximately 14% for the three and six months ended March 26, 2005 as compared to approximately 18% in the same periods of the prior year due to the leverage realized on fixed costs as a result of the significant year-over-year increase in total net sales for the Company of 70% and 72% for the three and six month periods, respectively.

Selling, General, and Administrative Expense (SG&A)

SG&A increased 37% or $127 million to $470 million in the first quarter of 2005 compared to $343 million in the same quarter of 2004. This increase is due primarily to higher direct and channel variable selling expenses resulting from the significant year-over-year increase in total net sales for the first quarter, the Company’s continued expansion of its Retail segment in both domestic and international markets, and a current year increase in discretionary spending on marketing and advertising.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $209 million or 17% during 2004 compared to 2003. These increases are due primarily to the Company's continued expansion of its Retail segment in both domestic and international markets, a current year increase in discretionary spending on marketing and advertising, an increase in amortization costs associated with restricted stock compensation, and higher direct and channel selling expenses resulting from the increase in net sales and employee salary merit increases. SG&A as a percentage of total net sales in 2004 was 17%, down from 20% in 2003. This decrease is due to the increase of 33% in total net sales of the Company for fiscal 2004, reflecting leverage on the Company's fixed costs.

SG&A increased $103 million or 9% during 2003 as compared to 2002 due primarily to the Company's continued expansion of the Retail segment and increases in headcount. The overall increase was partially offset by a decrease in 2003 discretionary spending on marketing and advertising and by savings resulting from the 2003 and 2002 restructuring activities described below.

Selling, General, and Administrative Expense (SG&A)

Expenditures for SG&A increased $209 million or 17% during 2004 compared to 2003. These increases are due primarily to the Company's continued expansion of its Retail
segment in both domestic and international markets, a current year increase in discretionary spending on marketing and advertising, an increase in amortization costs associated with restricted stock
compensation, and higher direct and channel selling expenses resulting from the increase in net sales and employee salary merit increases. SG&A as a percentage of total net sales in 2004 was 17%, down
from 20% in 2003. This decrease is due to the increase of 33% in total net sales of the Company for fiscal 2004, reflecting leverage on the Company's fixed costs.

SG&A
increased $103 million or 9% during 2003 as compared to 2002 due primarily to the Company's continued expansion of the Retail segment and increases in headcount. The overall increase was
partially offset by a decrease in 2003 discretionary spending on marketing and advertising and by savings resulting from the 2003 and 2002 restructuring activities described below.

Selling, General, and Administrative Expense (SG&A)

SG&A increased $103 million or 9% during 2003 as compared to 2002 due primarily to the Company's continued expansion of the Retail segment and increases in headcount. The overall increase was partially offset by a decrease in current year discretionary spending on marketing and advertising and by savings resulting from the 2003 and 2002 restructuring activities described below.

SG&A decreased $29 million or 3% during 2002 as compared to 2001. The decrease in SG&A in 2002 was primarily the result of lower discretionary spending on marketing and advertising expenses, decreased spending related to information systems, and benefits directly related to the Company's restructuring actions in 2002 and 2001. The decreases were partially offset by higher sales expense in 2002 resulting from increased operating expenses associated with expansion of the Company's Retail segment.

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Selling, General, and Administrative Expense (SG&A)

SG&A increased $103 million or 9% during 2003 as compared to 2002 due primarily to the Company's continued expansion of the Retail segment and increases in headcount.
The overall increase was partially offset by a decrease in current year discretionary spending on marketing and advertising and by savings resulting from the 2003 and 2002 restructuring activities
described below.

SG&A
decreased $29 million or 3% during 2002 as compared to 2001. The decrease in SG&A in 2002 was primarily the result of lower discretionary spending on marketing and advertising expenses,
decreased spending related to information systems, and benefits directly related to the Company's restructuring actions in 2002 and 2001. The decreases were partially offset by higher sales expense in
2002 resulting from increased operating expenses associated with expansion of the Company's Retail segment.

32

Selling, General, and Administrative Expense (SG&A)

SG&A decreased $27 million or 2% during 2002 as compared to 2001. The decrease in SG&A in 2002 is primarily the result of lower discretionary spending on marketing and advertising expenses, decreased spending related to information systems, and benefits directly related to the Company's restructuring

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actions in 2002 and 2001. These decreases were partially offset by higher sales expense in 2002 resulting from increased operating expenses associated with expansion of the Company's Retail segment. SG&A expenditures decreased $28 million or 2% during 2001 as compared to 2000. Declines in SG&A spending in both 2002 and 2001 reflect the Company's overall efforts to stabilize and selectively reduce recurring SG&A costs in light of lower net sales and to reduce discretionary marketing and advertising expenses. Given current economic conditions and the Company's continued strategic investments in new product development and its Retail segment, the Company is currently identifying additional opportunities to make appropriate reductions in SG&A costs.

Selling, General, and Administrative Expense (SG&A)

SG&A decreased $27 million or 2% during 2002 as compared to 2001. The decrease in SG&A in 2002 is primarily the result of lower discretionary spending on marketing and
advertising expenses, decreased spending related to information systems, and benefits directly related to the Company's restructuring

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actions in 2002 and 2001. These decreases were partially offset by higher sales expense in 2002 resulting from increased operating expenses associated with expansion of the Company's Retail segment.
SG&A expenditures decreased $28 million or 2% during 2001 as compared to 2000. Declines in SG&A spending in both 2002 and 2001 reflect the Company's overall efforts to stabilize and selectively
reduce recurring SG&A costs in light of lower net sales and to reduce discretionary marketing and advertising expenses. Given current economic conditions and the Company's continued strategic
investments in new product development and its Retail segment, the Company is currently identifying additional opportunities to make appropriate reductions in SG&A costs.