Apple Reports Record Second Quarter Results
CUPERTINO, Calif., April 23 /PRNewswire-FirstCall/ — Apple(R) today announced financial results for its fiscal 2008 second quarter ended March 29, 2008. The Company posted revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share. These results compare to revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share, in the year-ago quarter. Gross margin was 32.9 percent, down from 35.1 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue.
Apple shipped 2,289,000 Macintosh(R) computers during the quarter, representing 51 percent unit growth and 54 percent revenue growth over the year-ago quarter. The Company sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) sales were 1,703,000.
“We’re delighted to report 43 percent revenue growth and the strongest March quarter revenue and earnings in Apple’s history,” said Steve Jobs, Apple’s CEO. “With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters.”
“We’re thrilled to have generated $4 billion in cash flow from operations in the first half of fiscal 2008, yielding an ending cash balance of $19.4 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third quarter of fiscal 2008, we expect revenue of about $7.2 billion and earnings per diluted share of about $1.00.”
Apple will provide live streaming of its Q2 2008 financial results conference call utilizing QuickTime(R), Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on Wednesday, April 23, 2008 at http://www.apple.com/quicktime/qtv/earningsq208/ and will also be available for replay.
This press release contains forward-looking statements about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; unfavorable results of other legal proceedings; the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s 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 Company’s reliance on sole service providers for iPhone in certain countries; the continued availability on acceptable terms of certain components and services essential to the Company’s 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 Company’s gross margin; the effect that product quality problems could have on the Company’s sales and operating profits; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the effect that the Company’s 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 Company’s dependency on the performance of distributors and other resellers of the Company’s products; the Company’s 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 Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 29, 2007, its Form 10-Q for the quarter ended December 29, 2007, and its Form 10-Q for the quarter ended March 29, 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.
(C) 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 Six Months Ended March 29, March 31, March 29, March 31, 2008 2007 2008 2007 Net sales $7,512 $5,264 $17,120 $12,379 Cost of sales (1) 5,038 3,415 11,314 8,310 Gross margin 2,474 1,849 5,806 4,069 Operating expenses: Research and development (1) 273 183 519 367 Selling, general, and administrative (1) 886 680 1,846 1,394 Total operating expenses 1,159 863 2,365 1,761 Operating income 1,315 986 3,441 2,308 Other income and expense 162 148 362 274 Income before provision for income taxes 1,477 1,134 3,803 2,582 Provision for income taxes 432 364 1,177 808 Net income $1,045 $770 $2,626 $1,774 Earnings per common share: Basic $1.19 $0.89 $2.99 $2.06 Diluted $1.16 $0.87 $2.92 $2.00 Shares used in computing earnings per share (in thousands): Basic 879,546 863,003 877,704 860,347 Diluted 899,329 886,653 899,783 884,896 (1) Includes stock-based compensation expense as follows: Cost of sales $20 $9 $38 $15 Research and development $47 $20 $86 $36 Selling, general, and administrative $65 $34 $118 $58 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share amounts) March 29, September 29, 2008 2007 ASSETS: Current assets: Cash and cash equivalents $9,070 $9,352 Short-term investments 10,378 6,034 Accounts receivable, less allowances of $44 and $47, respectively 1,593 1,637 Inventories 364 346 Deferred tax assets 1,060 782 Other current assets 4,271 3,805 Total current assets 26,736 21,956 Property, plant and equipment, net 1,962 1,832 Goodwill 38 38 Acquired intangible assets, net 300 299 Other assets 1,435 1,222 Total assets $30,471 $25,347 LIABILITIES AND SHAREHOLDERS’ EQUITY: Current liabilities: Accounts payable $4,154 $4,970 Accrued expenses 5,480 4,310 Total current liabilities 9,634 9,280 Non-current liabilities 2,784 1,535 Total liabilities 12,418 10,815 Commitments and contingencies Shareholders’ equity: Common stock, no par value; 1,800,000,000 shares authorized; 881,431,003 and 872,328,972 shares issued and outstanding, respectively 6,342 5,368 Retained earnings 11,642 9,101 Accumulated other comprehensive income 69 63 Total shareholders’ equity 18,053 14,532 Total liabilities and shareholders’ equity $30,471 $25,347 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Six Months Ended March 29, March 31, 2008 2007 Cash and cash equivalents, beginning of the period $9,352 $6,392 Operating Activities: Net income 2,626 1,774 Adjustments to reconcile net income to cash generated by operating activities: Depreciation, amortization, and accretion 222 143 Stock-based compensation expense 242 109 Provision for deferred income taxes 6 122 Loss on disposition of property, plant, and equipment 10 6 Changes in operating assets and liabilities: Accounts receivable, net 44 324 Inventories (18) 62 Other current assets (444) 589 Other assets (150) 261 Accounts payable (740) (987) Deferred revenue 1,585 235 Other liabilities 597 (91) Cash generated by operating activities 3,980 2,547 Investing Activities: Purchases of short-term investments (12,740) (6,223) Proceeds from maturities of short-term investments 6,683 2,961 Proceeds from sales of short-term investments 1,676 1,505 Purchases of long-term investments (17) (5) Payment for acquisition of property, plant, and equipment (384) (247) Payment for acquisition of intangible assets (63) (216) Other 21 13 Cash used in investing activities (4,824) (2,212) Financing Activities: Proceeds from issuance of common stock 233 176 Excess tax benefits from stock-based compensation 445 192 Cash used to net share settle equity awards (116) – Cash generated by financing activities 562 368 (Decrease) increase in cash and cash equivalents (282) 703 Cash and cash equivalents, end of the period $9,070 $7,095 Supplemental cash flow disclosure: Cash paid for income taxes, net $753 $501 UNAUDITED CONSOLIDATED SCHEDULE OF DEFERRED REVENUE (In millions) March 29, December 29, September 29, 2008 2007 2007 Deferred revenue-current: iPhone and Apple TV $1,170 $816 $346 AppleCare 504 467 430 Other 742 776 * 615 * Total deferred revenue-current 2,416 2,059 1,391 Deferred revenue-non-current: iPhone and Apple TV 763 624 290 AppleCare 559 529 495 Other 87 76 * 64 * Total deferred revenue-non-current 1,409 1,229 849 Total deferred revenue $3,825 $3,288 $2,240 * Certain prior period amounts have been reclassified to conform to the current period presentation. Apple Inc. Q2 2008 Unaudited Summary Data Q1 2008 Q2 2007 Q2 2008 CPU Rev CPU Rev CPU Rev Operating Segments Units $M Units $M Units $M Americas 841 $4,298 605 $2,467 884 $3,268 Europe 705 2,471 433 1,249 627 1,780 Japan 91 400 79 284 118 424 Retail 504 1,701 275 834 458 1,451 Other Segments (1) 178 738 125 430 202 589 Total Operating Segments 2,319 $9,608 1,517 $5,264 2,289 $7,512 Units Rev Units Rev Units Rev Product Summary K $M K $M K $M Desktops (2) 977 $1,515 626 $914 856 $1,352 Portables (3) 1,342 2,037 891 1,354 1,433 2,142 Subtotal CPUs 2,319 3,552 1,517 2,268 2,289 3,494 iPod 22,121 3,997 10,549 1,689 10,644 1,818 Other Music Related Products and Services (4) 808 653 881 iPhone and Related Products & Services (5) 2,315 241 – – 1,703 378 Peripherals and Other Hardware 382 309 412 Software, Service and Other Sales 628 345 529 Total Apple $9,608 $5,264 $7,512 Sequential Change Year/Year Change CPU CPU Operating Segments Units Revenue Units Revenue Americas 5% – 24% 46% 32% Europe – 11% – 28% 45% 43% Japan 30% 6% 49% 49% Retail – 9% – 15% 67% 74% Other Segments (1) 13% – 20% 62% 37% Total Operating Segments – 1% – 22% 51% 43% Sequential Change Year/Year Change Product Summary Units Revenue Units Revenue Desktops (2) – 12% – 11% 37% 48% Portables (3) 7% 5% 61% 58% Subtotal CPUs – 1% – 2% 51% 54% iPod – 52% – 55% 1% 8% Other Music Related Products and Services (4) 9% 35% iPhone and Related Products & Services (5) – 26% 57% N/M N/M Peripherals and Other Hardware 8% 33% Software, Service and Other Sales – 16% 53% Total Apple – 22% 43% (1) Other Segments include Asia Pacific and FileMaker. (2) Includes iMac, Mac mini, Mac Pro, PowerMac and Xserve product lines. (3) Includes MacBook, iBook, MacBook Air, MacBook Pro and PowerBook product lines. (4) Consists of iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories. (5) Units consist of iPhone handset sales; Revenue is derived from handset sales, carrier agreements, and Apple-branded and third-party iPhone accessories. N/M: Not Meaningful
Apple
CONTACT: Press, Steve Dowling, +1-408-974-1896, dowling@apple.com, orInvestor Relations, Nancy Paxton, +1-408-974-5420, paxton1@apple.com, or JoanHoover, +1-408-974-4570, hoover1@apple.com, all of Apple
Web site: http://www.apple.com/