This post is by Michelle Leder from footnoted*
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Apple is widely known for being super-secretive (see this post from Quora, for example). But the price of being a public company means that several times a year, they are required to peel the onion back a bit. At least, they have to peel it back enough to file three 10-Qs, a 10-K, and a proxy each year.
Yesterday, the company filed its 10-K. And while you won’t find any juicy details about its high-profile driverless car project, which according to various media reports has been abandoned, or whatever the iPhone 8 will bring, that doesn’t mean that the 120-page filing isn’t worth a close read.
Take, for instance, its disclosure on its real estate holdings. For years, Apple has disclosed a single number for the property it owned and leased; then it broke out the amount that was leased, which included Apple’s retail empire. To get the number for much property the company owned, you had to do a little math.
As you might expect, Apple’s real estate holdings have grown considerably over the past decade. In 2006, the company said it owned 1.9 million square feet of space, mostly in and around its Cupertino headquarters. It reportedly leased another 3.6 million square feet. Five years later, the company said it owned over 6 million square feet of space and leased another 7 million square feet. By 2015, those numbers were 25.6 million owned or leased, with 18.5 million square feet leased.
But this year, the company tweaked its disclosure and said it now owned 7.1 million square feet of space and leased another 22.3 million square feet. That means that sometime over the past year, Apple leased nearly 4 million additional square feet of space for something. But we couldn’t find any additional disclosures on where that space was or what it was being used for. The only real clue is that this space is “primarily in the U.S.,” but apparently not exclusively in the U.S.
In its 2015 filing, the company provided a few more details, including that it owned a manufacturing facility in Cork, Ireland, a warehouse and distribution operation in Elk Grove, Calif., and another facility in Mesa, Arizona. But this year, the company took out those details and instead said it “owned facilities and land for R&D, corporate functions and data centers at various locations throughout the U.S.”
There was also a big increase in the amount of undeveloped land that Apple owns. A year ago, that number was 1,757 acres. But in yesterday’s filing, that number had grown to 2,583 acres. That’s nearly a 50% increase in acreage owned in one year. And yet, unlike in 2015, where the company provided some details about its future land use plans, there was no additional disclosure on where that land was purchased or what it would be used for. There’s obviously the long-delayed new campus, although various media reports put the size of the actual campus at under 200 acres.
This type of limited disclosure means that Apple’s attorneys have decided that neither the big increase in leased space nor the nearly 50% increase in owned acreage are material to the company. And, given Apple’s size, that probably meets the legal definition for purposes of required SEC disclosures.
But it’s still an awful lot of property to acquire and not account for in just one year. And its shows – yet again – that Apple’s secretive nature isn’t just limited to its gadgets.