Last week, I wrote an article detailing Apple's (AAPL) improvement in its financial statements over the past two years. The article was extremely popular and sparked a lot of conversation, especially on Apple's balance sheet. So today, I'm going to break down Apple's balance sheet as of their 3rd quarter for 2011, which ended in June. To view any of Apple's quarterly filings, click here. So let's first take a look at what Apple's balance sheet is comprised of.
|June 25, 2011||% of Assets||June 26, 2010||% of Assets|
|Cash and Cash Equivalents||$12,091||11.33%||$9,705||14.99%|
|Short Term Investments||$16,304||15.27%||$14,583||22.53%|
|Deferred Tax Assets||$1,892||1.77%||$1,216||1.88%|
|Vendor Non-Trade Receivables||$5,369||5.03%||$2,952||4.56%|
|Other Current Assets||$4,251||3.98%||$3,188||4.93%|
|Total Current Assets||$46,898||43.93%||$36,033||55.67%|
|Long Term Investments||$47,761||44.74%||$21,551||33.30%|
|Property, Plant, Equipment||$6,749||6.32%||$3,990||6.16%|
|Acquired Intangible Assets||$1,169||1.09%||$318||0.49%|
As you can see, long term investments is the big part, and that number has only increased over the years. I'll get into what those holdings actually are in a little bit. Here's a couple of things to focus on. Cash percentage has come down, but don't be alarmed, the asset base has grown tremendously. Accounts receivable is fairly low, and that's a good thing. You don't want people questioning your ability to get paid. Inventory is also really low, because Apple doesn't need to hold a lot of it, and their products don't exactly last long on the shelves. It's nice to see the PP&E number go up, since that means they are investing a bit in the hard assets of their business. I would assume acquired intangibles and goodwill will be going up in the near future as Apple makes some more acquisitions. But since cash and investments make up about 70% of their assets, it would be nice to figure out what they are. Well, here we go.
|Cash and Securities: 9/25/2010||Cash and Equivalents||Short Term Investments||Long Term Investments||Total||Percent of Total|
|Money Market Funds||$1,414||-||-||$1,414||1.86%|
|US Treasury Securities||$1,139||$1,876||$7,772||$10,787||14.16%|
|U.S. Agency Securities||$391||$1,980||$7,631||$10,002||13.13%|
|Non US Government Securities||$427||$1,952||$3,765||$6,144||8.07%|
|CDs and Time Deposits||$893||$1,231||$2,418||$4,542||5.96%|
|Percent of Total||15.88%||21.41%||62.71%|
Most of their holdings are corporate securities, U.S. Treasury securities, and U.S. Agency Securities. The company doesn't go into much detail on these holdings, just to say that "they all are rated a minimum of single A." I would assume that with interest rates going down the values of these holdings has increased a bit, but that also their interest received from them has decreased at the same time. None of these holdings are classified as Level 3, which are the holdings where prices are estimated. All of their holdings are Level 1 or 2, meaning that prices are readily available from a market or from comparable instruments.
The only other section of their balance sheet that is broken down is Property, Plant, and Equipment. This entire section only comprises 6.3% of their assets, so I'm not going to really focus on it. It should be rather explanatory.
|June 25, 2011|
|Land and Buildings||$2,028|
|Machinery, Equipment and Internal Use Software||$5,789|
|Office Furniture and Equipment||$172|
Apple doesn't go into much detail about the rest of the balance sheet for quarterly results. There will be a much more detailed analysis waiting when they release their annual report in the next month or two. Most of the other categories covered by assets should be self-explanatory. This was only going to be a breakdown of the cash and investments, but I provided a little more since it was in the quarterly report. Look for my article soon on the other side of the balance sheet as well as off-balance sheet arrangements. I will do an update on both after Apple releases its 10-K.