How Apple Spends Its Money – Infographic

A Bite Out of Apple: How the World’s Most Valuable Company Spends Its Money

With its explosively popular products and knack for design, Apple, Inc., maintains a wide profit margin on its products while keeping its R&D and lobbying costs relatively low. It’s not always clear how Apple spends its money, but check out this breakdown of expenses for some clues about its formula for success.

Breaking Its Own Records

Apple, Inc., recorded record fourth-quarter revenue and profit in FY 2012 after selling 26.9 million iPhones – a 58% growth over the same quarter in 2011.
– Total operating expenses FY 2012: $13.421 billion
– Net income before taxes FY 2012: $55.763 billion
– Net sales FY 2012: $156.508 billion
– Gross margin, FY 2012: $68.662 billion (cost of sales subtracted)
– Net sales FY 2011: $108.249 billion
– Gross margin, FY 2011: $43.818 billion (cost of sales subtracted)

Spending on the Increase

– Selling, general and administrative, FY 2012: $10.04 billion
– FY 2011: $7.599 billion
– FY 2010: $5.517 billion
– FY 2009: $4.149 billion
– FY 2008: $3.761 billion
– Research and development, FY 2012: $3.381 billion
– FY 2011: $2.429 billion
– FY 2010: $1.782 billion
– FY 2009: $1.333 billion
– FY 2008: $1.109 billion
– Microsoft
– Intel
– International Business Machines (IBM)
– Cisco Systems
– Google

A Few Key Expenses

– CEO Tim Cook’s salary, FY 2011: $378 million
– Bay Area/Silicon Valley’s highest-paid CEO
– $3 million: Median pay for Bay Area/Silicon Valley CEOs
– $7.04 billion estimated expenses on data centers in 2012
– 94% increase from 2011
– Only 7% projected increase for 2013
– $7.1 billion budgeted in 2012 for
– Product tooling/manufacturing process equipment
– Corporate infrastructure and facilities
– Information systems enhancements, software and hardware
– $900 million budgeted for retail stores in 2012
– Up from $614 million in 2011

A Lower Tax Rate

– 25.2% income tax rate, FY 2012
– Income taxes paid, FY 2012: $14.03 billion
– 24.2% income tax rate, FY 2011
– Income taxes paid, FY 2011: $8.283 billion
– 35% statutory income tax rate on companies like Apple
– Reason cited for paying lower rate: Foreign earnings excluded because they’re “intended to be indefinitely reinvested outside the U.S.” – SEC Annual 10-K, 2011
– 9.8%: Apple’s global tax rate, 2011
– 24.4% income tax rate, FY 2010
– 31.8% income tax rate, FY 2009

Building an Image

– Advertising expenses
– Annual spending on advertising
– 2011: $933 million
– <1% of sales
– 2010: $691 million
– 2009: $501 million h
– $647 million advertising the iPhone since 2007
– >$457 million advertising the iPad
– D.C. lobbying
– Apple: $500k
– Other technology/innovation companies:
– Facebook $816k
– Intel $882k
– Amazon $900k
– Microsoft $1.8 million
– Google $5 million

The Real Cost of Apple Products

– 16GB iPhone 5
– $199 bill of materials
– $8 manufacturing cost
– BOM+manufacturing = 15.4% of price without contract
– 16GB iPad 3rd Generation WiFi+4G
– $347.55 bill of materials
– $10.75 manufacturing cost
– BOM+manufacturing = 57% of retail price

Hey, so you might not have a multi-million-dollar salary, but at least you don’t pay $14 billion in taxes, right?

Source: Master Business Administration

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