Exhibit
Exhibit 99.1
Apple Reports First Quarter Results
Revenue and EPS Hit New All-Time Records
Active Installed Base of Devices Reaches 1.3 Billion in January
CUPERTINO, California — February 1, 2018 — Apple® today announced financial results for its fiscal 2018 first quarter ended December 30, 2017. The Company posted quarterly revenue of $88.3 billion, an increase of 13 percent from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $3.89, up 16 percent, also an all-time record. International sales accounted for 65 percent of the quarter’s revenue.
“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup. iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November,” said Tim Cook, Apple’s CEO. “We’ve also achieved a significant milestone with our active installed base of devices reaching 1.3 billion in January. That’s an increase of 30 percent in just two years, which is a testament to the popularity of our products and the loyalty and satisfaction of our customers.”
“Thanks to great operational and business performance, we achieved all-time record profitability during the quarter, with EPS up 16 percent,” said Luca Maestri, Apple’s CFO. “Cash flow from operations was very strong at $28.3 billion, and we returned $14.5 billion to investors through our capital return program.”
Apple is providing the following guidance for its fiscal 2018 second quarter:
|
|
• |
revenue between $60 billion and $62 billion |
|
|
• |
gross margin between 38 percent and 38.5 percent |
|
|
• |
operating expenses between $7.6 billion and $7.7 billion |
|
|
• |
other income/(expense) of $300 million |
|
|
• |
tax rate of approximately 15 percent |
Apple’s board of directors has declared a cash dividend of $0.63 per share of the Company’s common stock. The dividend is payable on February 15, 2018 to shareholders of record as of the close of business on February 12, 2018.
Apple will provide live streaming of its Q1 2018 financial results conference call beginning at 2:00 p.m. PST on February 1, 2018 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.
This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), tax rate, and plans for return of capital. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation: the effect of global and regional economic conditions on the Company's business, including effects on purchasing decisions by consumers and businesses; the ability of the Company to compete in markets that are highly competitive and subject to rapid technological change; the ability of the Company to manage frequent product introductions and transitions, including delivering to the marketplace, and stimulating customer demand for, new products, services and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing and product mix, and increases in component and other costs could have on the Company’s gross margin; the dependency of the Company on the performance of distributors of the Company's products, including cellular network carriers and other resellers; the inventory and other asset risks associated with the Company’s need to order, or commit to order, product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components, services and new technologies essential to the Company's business, including components and technologies that may only be available from sole or limited sources; the dependency of the Company on manufacturing and logistics services provided by third parties, many of which are located outside of the U.S. and which may affect the quality, quantity or cost of products manufactured or services rendered to the Company; the effect of product and service quality problems on the Company’s financial performance and reputation; the dependency of the Company on third-party intellectual property and digital content, which may not be available to the Company on commercially reasonable terms or at all; the dependency of the Company on support from third-party software developers to develop and maintain software applications and services for the Company’s products; the impact of unfavorable legal proceedings, such as a potential finding that the Company has infringed on the intellectual property rights of others; the impact of changes to laws and regulations that affect the Company’s activities, including the Company’s ability to offer products or services to customers in different regions; the ability of the Company to manage risks associated with its international activities, including complying with laws and regulations affecting the Company’s international operations; the ability of the Company to manage risks associated with the Company’s retail stores; the ability of the Company to manage risks associated with the Company’s investments in new business strategies and acquisitions; the impact on the Company's business and reputation from information technology system failures, network disruptions or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data protection; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other business interruptions that could disrupt supply or delivery of, or demand for, the Company’s products; financial risks, including risks relating to currency fluctuations, credit risks and fluctuations in the market value of the Company’s investment portfolio; and changes in tax rates and exposure to additional tax liabilities. More information on these risks and other potential factors that could affect the Company’s financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.
Press Contact:
Kristin Huguet
Apple
khuguet@apple.com
(408) 974-2414
Investor Relations Contacts:
Nancy Paxton
Apple
paxton1@apple.com
(408) 974-5420
Matt Blake
Apple
mattblake@apple.com
(408) 974-7406
NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom), or call Apple’s Media Helpline at (408) 974-2042.
© 2018 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
December 30,
2017 |
|
December 31,
2016 |
Net sales |
$ |
88,293 |
|
|
$ |
78,351 |
|
Cost of sales (1)
|
54,381 |
|
|
48,175 |
|
Gross margin |
33,912 |
|
|
30,176 |
|
|
|
|
|
Operating expenses: |
|
|
|
Research and development (1)
|
3,407 |
|
|
2,871 |
|
Selling, general and administrative (1)
|
4,231 |
|
|
3,946 |
|
Total operating expenses |
7,638 |
|
|
6,817 |
|
|
|
|
|
Operating income |
26,274 |
|
|
23,359 |
|
Other income/(expense), net |
756 |
|
|
821 |
|
Income before provision for income taxes |
27,030 |
|
|
24,180 |
|
Provision for income taxes |
6,965 |
|
|
6,289 |
|
Net income |
$ |
20,065 |
|
|
$ |
17,891 |
|
|
|
|
|
Earnings per share: |
|
|
|
Basic |
$ |
3.92 |
|
|
$ |
3.38 |
|
Diluted |
$ |
3.89 |
|
|
$ |
3.36 |
|
|
|
|
|
Shares used in computing earnings per share: |
|
|
|
Basic |
5,112,877 |
|
|
5,298,661 |
|
Diluted |
5,157,787 |
|
|
5,327,995 |
|
|
|
|
|
Cash dividends declared per share |
$ |
0.63 |
|
|
$ |
0.57 |
|
|
|
|
|
(1) Includes share-based compensation expense as follows:
|
Cost of sales |
$ |
252 |
|
|
$ |
229 |
|
Research and development |
$ |
646 |
|
|
$ |
589 |
|
Selling, general and administrative |
$ |
398 |
|
|
$ |
438 |
|
Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in thousands and par value)
|
|
|
|
|
|
|
|
|
|
December 30,
2017 |
|
September 30,
2017 |
ASSETS: |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
27,491 |
|
|
$ |
20,289 |
|
Short-term marketable securities |
49,662 |
|
|
53,892 |
|
Accounts receivable, less allowances of $59 and $58, respectively
|
23,440 |
|
|
17,874 |
|
Inventories |
4,421 |
|
|
4,855 |
|
Vendor non-trade receivables |
27,459 |
|
|
17,799 |
|
Other current assets |
11,337 |
|
|
13,936 |
|
Total current assets |
143,810 |
|
|
128,645 |
|
|
|
|
|
Long-term marketable securities |
207,944 |
|
|
194,714 |
|
Property, plant and equipment, net |
33,679 |
|
|
33,783 |
|
Goodwill |
5,889 |
|
|
5,717 |
|
Acquired intangible assets, net |
2,149 |
|
|
2,298 |
|
Other non-current assets |
13,323 |
|
|
10,162 |
|
Total assets |
$ |
406,794 |
|
|
$ |
375,319 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
Current liabilities: |
|
|
|
Accounts payable |
$ |
62,985 |
|
|
$ |
49,049 |
|
Accrued expenses |
26,281 |
|
|
25,744 |
|
Deferred revenue |
8,044 |
|
|
7,548 |
|
Commercial paper |
11,980 |
|
|
11,977 |
|
Current portion of long-term debt |
6,498 |
|
|
6,496 |
|
Total current liabilities |
115,788 |
|
|
100,814 |
|
|
|
|
|
Deferred revenue, non-current |
3,131 |
|
|
2,836 |
|
Long-term debt |
103,922 |
|
|
97,207 |
|
Other non-current liabilities |
43,754 |
|
|
40,415 |
|
Total liabilities |
266,595 |
|
|
241,272 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,081,651 and 5,126,201 shares issued and outstanding, respectively |
36,447 |
|
|
35,867 |
|
Retained earnings |
104,593 |
|
|
98,330 |
|
Accumulated other comprehensive income/(loss) |
(841 |
) |
|
(150 |
) |
Total shareholders’ equity |
140,199 |
|
|
134,047 |
|
Total liabilities and shareholders’ equity |
$ |
406,794 |
|
|
$ |
375,319 |
|
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
December 30,
2017 |
|
December 31,
2016 |
Cash and cash equivalents, beginning of the period |
$ |
20,289 |
|
|
$ |
20,484 |
|
Operating activities: |
|
|
|
Net income |
20,065 |
|
|
17,891 |
|
Adjustments to reconcile net income to cash generated by operating activities: |
|
|
|
Depreciation and amortization |
2,745 |
|
|
2,987 |
|
Share-based compensation expense |
1,296 |
|
|
1,256 |
|
Deferred income tax expense/(benefit) |
(33,737 |
) |
|
1,452 |
|
Other |
(11 |
) |
|
(274 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable, net |
(5,570 |
) |
|
1,697 |
|
Inventories |
434 |
|
|
(580 |
) |
Vendor non-trade receivables |
(9,660 |
) |
|
(375 |
) |
Other current and non-current assets |
(197 |
) |
|
(1,446 |
) |
Accounts payable |
14,588 |
|
|
2,460 |
|
Deferred revenue |
791 |
|
|
42 |
|
Other current and non-current liabilities |
37,549 |
|
|
2,124 |
|
Cash generated by operating activities |
28,293 |
|
|
27,234 |
|
Investing activities: |
|
|
|
Purchases of marketable securities |
(41,272 |
) |
|
(54,272 |
) |
Proceeds from maturities of marketable securities |
14,048 |
|
|
6,525 |
|
Proceeds from sales of marketable securities |
16,801 |
|
|
32,166 |
|
Payments made in connection with business acquisitions, net |
(173 |
) |
|
(17 |
) |
Payments for acquisition of property, plant and equipment |
(2,810 |
) |
|
(3,334 |
) |
Payments for acquisition of intangible assets |
(154 |
) |
|
(86 |
) |
Payments for strategic investments, net |
(94 |
) |
|
— |
|
Other |
64 |
|
|
(104 |
) |
Cash used in investing activities |
(13,590 |
) |
|
(19,122 |
) |
Financing activities: |
|
|
|
Payments for taxes related to net share settlement of equity awards |
(1,038 |
) |
|
(629 |
) |
Payments for dividends and dividend equivalents |
(3,339 |
) |
|
(3,130 |
) |
Repurchases of common stock |
(10,095 |
) |
|
(10,851 |
) |
Proceeds from issuance of term debt, net |
6,969 |
|
|
— |
|
Change in commercial paper, net |
2 |
|
|
2,385 |
|
Cash used in financing activities |
(7,501 |
) |
|
(12,225 |
) |
Increase/(Decrease) in cash and cash equivalents |
7,202 |
|
|
(4,113 |
) |
Cash and cash equivalents, end of the period |
$ |
27,491 |
|
|
$ |
16,371 |
|
Supplemental cash flow disclosure: |
|
|
|
Cash paid for income taxes, net |
$ |
3,551 |
|
|
$ |
3,510 |
|
Cash paid for interest |
$ |
623 |
|
|
$ |
497 |
|
