Apple Inc 8-K 2008-07-21
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Exhibit 99.1
Apple Reports Record Third Quarter Results
Revenue Up 38 Percent Year-Over-Year
Mac Sales Reach All-Time High
CUPERTINO, California July 21, 2008 Apple® today announced financial results for its fiscal 2008 third quarter ended June 28, 2008. The Company posted revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share. These results compare to revenue of $5.41 billion and net quarterly profit of $818 million, or $.92 per diluted share, in the year-ago quarter. Gross margin was 34.8 percent, down from 36.9 percent in the year-ago quarter. International sales accounted for 42 percent of the quarters revenue.
Apple shipped 2,496,000 Macintosh® computers during the quarter, representing 41 percent unit growth and 43 percent revenue growth over the year-ago quarter. The Company sold 11,011,000 iPods during the quarter, representing 12 percent unit growth and seven percent revenue growth over the year-ago quarter. Quarterly iPhone units sold were 717,000 compared to 270,000 in the year-ago-quarter.
Were proud to report the best June quarter for both revenue and earnings in Apples history, said Steve Jobs, Apples CEO. We set a new record for Mac sales, we think we have a real winner with our new iPhone 3G, and were busy finishing several more wonderful new products to launch in the coming months.
Were extremely pleased with the growth of our business and the generation of almost $5.4 billion in cash in the first three quarters of fiscal 2008, said Peter Oppenheimer, Apples CFO. Looking ahead to the fourth quarter of fiscal 2008, we expect revenue of about $7.8 billion and earnings per diluted share of about $1.00.
Apple will provide live streaming of its Q3 2008 financial results conference call utilizing QuickTime®, Apples standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on Monday, July 21, 2008 at www.apple.com/quicktime/qtv/earningsQ308/ and will also be available for replay.
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This press release contains forward-looking statements including without limitation those about the Companys estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Companys consolidated financial statements; unfavorable results of other legal proceedings; the effect of competitive and economic factors, and the Companys reaction to those factors, on consumer and business buying decisions with respect to the Companys products; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; continued competitive pressures in the marketplace; the Companys reliance on sole service providers for iPhone in certain countries; the continued availability on acceptable terms of certain components and services essential to the Companys business currently obtained by the Company from sole or limited sources; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Companys gross margin; the effect that product quality problems could have on the Companys sales and operating profits; the inventory risk associated with the Companys need to order or commit to order product components in advance of customer orders; the effect that the Companys dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Companys dependency on the performance of distributors and other resellers of the Companys products; the Companys reliance on the availability of third-party digital content; and the potential impact of a finding that the Company has infringed on the intellectual property rights of others. More information on potential factors that could affect the Companys financial results is included from time to time in the Companys public reports filed with the SEC, including the Companys Form 10-K for the fiscal year ended September 29, 2007; its Forms 10-Q for the quarters ended December 29, 2007 and March 29, 2008; and its Form 10-Q for the quarter ended June 28, 2008, to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.
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Press Contact:
Steve Dowling
Apple
dowling@apple.com
(408) 974-1896
Investor Relations Contacts:
Nancy Paxton
Apple
paxton1@apple.com
(408) 974-5420
Joan Hoover
Apple
hoover1@apple.com
(408) 974-4570
NOTE TO EDITORS: For additional information visit Apples PR website (www.apple.com/pr/), or call Apples Media Helpline at (408) 974-2042.
© 2008 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh, iPhone and QuickTime are trademarks of Apple. Other company and product names may be trademarks of their respective owners.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||
| June 28, 2008 |
June 30, 2007 |
June 28, 2008 |
June 30, 2007 |
|||||||||
| Net sales |
$ | 7,464 | $ | 5,410 | $ | 24,584 | $ | 17,789 | ||||
| Cost of sales (1) |
4,864 | 3,415 | 16,178 | 11,725 | ||||||||
| Gross margin |
2,600 | 1,995 | 8,406 | 6,064 | ||||||||
| Operating expenses: |
||||||||||||
| Research and development (1) |
292 | 208 | 811 | 575 | ||||||||
| Selling, general, and administrative (1) |
916 | 746 | 2,762 | 2,140 | ||||||||
| Total operating expenses |
1,208 | 954 | 3,573 | 2,715 | ||||||||
| Operating income |
1,392 | 1,041 | 4,833 | 3,349 | ||||||||
| Other income and expense |
118 | 155 | 480 | 429 | ||||||||
| Income before provision for income taxes |
1,510 | 1,196 | 5,313 | 3,778 | ||||||||
| Provision for income taxes |
438 | 378 | 1,615 | 1,186 | ||||||||
| Net income |
$ | 1,072 | $ | 818 | $ | 3,698 | $ | 2,592 | ||||
| Earnings per common share: |
||||||||||||
| Basic |
$ | 1.21 | $ | 0.94 | $ | 4.20 | $ | 3.01 | ||||
| Diluted |
$ | 1.19 | $ | 0.92 | $ | 4.10 | $ | 2.92 | ||||
| Shares used in computing earnings per share (in thousands): |
||||||||||||
| Basic |
883,738 | 866,806 | 879,753 | 862,500 | ||||||||
| Diluted |
903,167 | 890,671 | 901,028 | 887,095 | ||||||||
| (1) Includes stock-based compensation expense as follows: |
||||||||||||
| Cost of sales |
$ | 21 | $ | 10 | $ | 59 | $ | 25 | ||||
| Research and development |
$ | 47 | $ | 20 | $ | 133 | $ | 56 | ||||
| Selling, general, and administrative |
$ | 65 | $ | 35 | $ | 183 | $ | 93 | ||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
| June 28, 2008 |
September 29, 2007 |
|||||
| ASSETS: | ||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 9,373 | $ | 9,352 | ||
| Short-term investments |
11,401 | 6,034 | ||||
| Accounts receivable, less allowances of $44 and $47, respectively |
1,603 | 1,637 | ||||
| Inventories |
545 | 346 | ||||
| Deferred tax assets |
1,131 | 782 | ||||
| Other current assets |
3,945 | 3,805 | ||||
| Total current assets |
27,998 | 21,956 | ||||
| Property, plant and equipment, net |
2,177 | 1,832 | ||||
| Goodwill |
38 | 38 | ||||
| Acquired intangible assets, net |
291 | 299 | ||||
| Other assets |
1,205 | 1,222 | ||||
| Total assets |
$ | 31,709 | $ | 25,347 | ||
| LIABILITIES AND SHAREHOLDERS EQUITY: | ||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 3,683 | $ | 4,970 | ||
| Accrued expenses |
5,535 | 4,310 | ||||
| Total current liabilities |
9,218 | 9,280 | ||||
| Non-current liabilities |
2,869 | 1,535 | ||||
| Total liabilities |
12,087 | 10,815 | ||||
| Commitments and contingencies |
||||||
| Shareholders equity: |
||||||
| Common stock, no par value; 1,800,000,000 shares authorized; 885,746,656 and 872,328,972 shares issued and outstanding, respectively |
6,831 | 5,368 | ||||
| Retained earnings |
12,714 | 9,101 | ||||
| Accumulated other comprehensive income |
77 | 63 | ||||
| Total shareholders equity |
19,622 | 14,532 | ||||
| Total liabilities and shareholders equity |
$ | 31,709 | $ | 25,347 | ||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| Nine Months Ended | ||||||||
| June 28, 2008 |
June 30, 2007 |
|||||||
| Cash and cash equivalents, beginning of the period |
$ | 9,352 | $ | 6,392 | ||||
| Operating Activities: |
||||||||
| Net income |
3,698 | 2,592 | ||||||
| Adjustments to reconcile net income to cash generated by operating activities: |
||||||||
| Depreciation, amortization, and accretion |
339 | 224 | ||||||
| Stock-based compensation expense |
375 | 174 | ||||||
| Provision for deferred income taxes |
41 | 206 | ||||||
| Loss on disposition of property, plant, and equipment |
15 | 7 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
34 | (158 | ) | |||||
| Inventories |
(199 | ) | 19 | |||||
| Other current assets |
(100 | ) | (363 | ) | ||||
| Other assets |
101 | 254 | ||||||
| Accounts payable |
(1,226 | ) | 270 | |||||
| Deferred revenue |
1,823 | 523 | ||||||
| Other liabilities |
400 | 26 | ||||||
| Cash generated by operating activities |
5,301 | 3,774 | ||||||
| Investing Activities: |
||||||||
| Purchases of short-term investments |
(17,153 | ) | (9,587 | ) | ||||
| Proceeds from maturities of short-term investments |
9,378 | 4,246 | ||||||
| Proceeds from sales of short-term investments |
2,367 | 2,420 | ||||||
| Purchases of long-term investments |
(31 | ) | (6 | ) | ||||
| Payment for acquisition of property, plant, and equipment |
(688 | ) | (530 | ) | ||||
| Payment for acquisition of intangible assets |
(89 | ) | (222 | ) | ||||
| Other |
20 | 34 | ||||||
| Cash used in investing activities |
(6,196 | ) | (3,645 | ) | ||||
| Financing Activities: |
||||||||
| Proceeds from issuance of common stock |
411 | 294 | ||||||
| Excess tax benefits from stock-based compensation |
621 | 303 | ||||||
| Cash used to net share settle equity awards |
(116 | ) | | |||||
| Cash generated by financing activities |
916 | 597 | ||||||
| Increase in cash and cash equivalents |
21 | 726 | ||||||
| Cash and cash equivalents, end of the period |
$ | 9,373 | $ | 7,118 | ||||
| Supplemental cash flow disclosure: |
||||||||
| Cash paid for income taxes, net |
$ | 1,022 | $ | 688 | ||||
UNAUDITED CONSOLIDATED SCHEDULE OF DEFERRED REVENUE
(In millions)
| June 28, 2008 |
March 29, 2008 |
September 29, 2007 |
|||||||
| Deferred revenue-current: |
|||||||||
| iPhone and Apple TV |
$ | 1,389 | $ | 1,170 | $ | 346 | |||
| AppleCare |
547 | 504 | 430 | ||||||
| Other |
791 | 742 | 615 | ||||||
| Total deferred revenue-current |
2,727 | 2,416 | 1,391 | ||||||
| Deferred revenue-non-current: |
|||||||||
| iPhone and Apple TV |
632 | 763 | 290 | ||||||
| AppleCare |
597 | 559 | 495 | ||||||
| Other |
107 | 87 | 64 | ||||||
| Total deferred revenue-non-current |
1,336 | 1,409 | 849 | ||||||
| Total deferred revenue |
$ | 4,063 | $ | 3,825 | $ | 2,240 | |||
